A.C.I.T ,Amravati Circle, Amaravati V. Shri Shyamlal Lahorimal Khatri, Amaravati

ITA 401/NAG/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4530 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,NAGPUR BENCH . . , BEFORE S/SH. D T GARASIYA,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ ITA/401/NAG/2013 , / ASSESSMENT YEAR:2009 - 10. ASSTT. COMMISSIONER OF INCOME - TAX, AMRAVATI CIRCLE, AMRAVATI. VS. SHRI SHYAMLAL LAHORIMAL KHATRI, 34, SHIVKRUPA COLONY, AMRAVATI. ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SMT. AGNES P. THOMAS. ASSESSEE BY: SHRI K.P. DEWANI. / DATE OF HEARING: 30.08.2016 / DATE OF PRONOUNCEMENT: 30.08.2016 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 27 - 08 - 2013 OF CIT ( APPEALS ) - II , NAGPUR THE ASSESSING OFFICER ( AO ) HAS FILED THE PRESENT APPEAL . THE ASSESSEE , AN INDIVIDUAL , FILED HIS RETURN OF INCOME ON 21 - 03 - 2010 , DISCLOSING INCOME OF RS . 10 . 65 LAKHS .T HE AO COMPLETED THE ASSESSMENT U / S 143 ( 3 ) OF THE ACT , ON 30 - 12 - 2011 , DETERMINING HIS INCOME AT RS . 1 . 60 CRORES . THE EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE ADDITION OF RS . 1 . 50 CRORES MADE U / S 68 OF THE ACT . 2 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO NOTED THAT THE ASSESSEE HAD INTRODUCED CAPITAL TO THE EXT ENT OF RS . 1 . 50 CRORES IN HIS BOOKS OF ACCOUNTS . ON BEING ASKED TO FURNISH THE SOURCE OF CAPITAL INTRODUCED , HE EXPLAINED THAT HE HAD WITHDRAWN RS . 2 . 25 CRORES FROM HIS BUSINESS IN THE AY. 2003 - 04 , THAT THE SAID AMOUNT WAS WITHDRAWN AS HIS BUSINESS WAS GOING DOWN AND THERE WERE MANY CASES INSTITUTED AGAINST HIM IN THE CIVIL COURT , THAT TO SAFEGUARD HIS FINANCIAL INTEREST HE MADE THE SAID WITHDRAWAL , THAT THE FACT OF AVAILABILITY OF CASH AND ITS WITHDRAWAL FROM THE CAPITAL ACCOUNT COULD BE VERIFIED FROM THE BAL ANCESHEET FILED FOR THE YEAR ENDING ON 31 - 03 - 2007 AND 31 - 03 - 2008 AND ARRIVED AT THE CONCLUSION THAT CASH BALANCE AVAILABLE WAS SIGNIFICANLY LOW . 3 . LATER ON THE ASSESSEE EXPLAINED THAT THE WITHDRAWN CASH OF RS . 2 . 25 CRORES WAS GIVEN TO HIS SON IN THE AY. 200 3 - 04 , THAT HIS SON HAD INVESTED SAID MONEY FOR ERECTING THE MUCH INFRASTRUCTURE FOR DAIRY PRODUCTS , THAT THE BUSINESS OF HIS SON SUFFERED SET BACK AND HE SOLD THE COWS AND BUFFELLOWS , THAT THE SAID BUSINESS ACTIVITY RESULTED IN LOSS OF RS . 75 LAKHS , THAT HIS SON RETURNED BACK THE REMAINING AMOUNT OF RS . 1 . 5 CRORES , THAT THE ASSESSEE HAD INTRODUCED THE SAME AMOUNT IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION . HOWEVER , THE AO WAS 2 NOT CONVINCED ABOUT THE EXPLANATION AND HELD THAT THE ASSESSEE HAD CHAN GED HIS STAND . FINALLY , HE ADDED AN AMOUNT OF RS . 1 . 50 CRORES , INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE , TREATING IT AS INCOME FROM UNDISCLOSED SOURCES . 4 . AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY ( FAA ). BEFORE HIM , IT WAS ARGUED THAT THERE WAS A CASH WITHDRAWAL OF RS . 2 . 25 CRORES FROM THE CAPITAL ACCOUNT IN THE AY. 2003 - 04 , THAT THERE WAS ENOUGH CASH BALANCE AVAILABLE WITH THE ASSESSEE ON 31 - 03 - 2002 , THAT THE ASSESSMENTS FOR THE AY.S. 2002 - 03 TO 2004 - 05 WERE COMPLETED U / S 143 ( 3 ) OF THE ACT , THAT THE AO HAD DULY CONSIDERED THE WITHDRAWAL OF RS . 2 . 25 CRORES , WHILE SCRUTINIZING THE ASSESSMENT FOR THE AY. 2003 - 04 , THAT THE AO HAD NOT CONSIDERED REPLY FILED BY HIM ON 08 - 08 - 2011 , THAT HE ALSO DID NOT CONSIDER THE CAPITAL ACCOUNT FOR THE AY. 2003 - 04 WHILE FINALIZING THE ASSESSMENT FOR AY. 2009 - 10 , THAT THE AO HAD REFERRED TO THE AVAILABILITY OF CASH AS ON 31 - 03 - 2007 AND 31 - 03 - 2008 , THAT THERE WAS NO WITHDRAWAL OF CASH DURI NG THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 , THAT THE AO SHOULD HAVE LOOKED INTO CAPITAL ACCOUNT FOR THE AY. 2003 - 04 WHEREIN THERE WAS WITHDRAWAL OF RS . 2 . 25 CRORES , THAT HE HAD ADVANCED THE LOAN TO HIS SON TO DEVELOP DAIRY BUSINESS , THAT HIS SON SUFFERED LO SS , THAT THE SON HAD SOLD THE COW , BUFFELLOWS AND OTHER ITEMS / ARTICLES DURING THE YEAR UNDER CONSIDERATION , THAT OUT OF THE SALE PROCEEDS , HIS SON REALIZED AN AMOUNT OF RS . 1 . 15 CRORES , THAT THE BALANCE AMOUNT COULD NOT BE COLLECTED AS HIS SON HAD SUFFERED LOSS TO THAT EXTENT IN THE COURSE OF CARRYING ON HIS VARIOUS BUSINESS ACTIVITIES FROM THE AY. 2003 - 04 TO AY. 2008 - 09 , THAT THE FUNDS RECEIVED FROM HIS SON WERE CREDITED TO CAPITAL ACCOUNT , THAT HIS SON HAD APPEARED BEFORE THE AO ON 28 - 12 - 2011 AND HAD FURNISH ED WRITTEN SUBMISSION , THAT THE ASSESSEE HAD SUBMITTED A RECEIPT PAYMENT CHART REGARDING THE DAIRY ACTIVITY CARRIED OUT BY HIS SON , THAT THE DAIRY ACTIVITIES OF HIS SON WERE CERTIFIED BY A PROFESSIONAL I . E . A CHARTERED ACCOUNTANT ON THE BASIS OF EVIDENCE PRODUCED BY HIS SON AND MAINTAINED FOR THE BUSINSS , THAT ALL THESE DOCUMENTS WERE PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS , THAT HIS SON WAS FILING THE RETURNS OF INCOME AND WOULD MENTION IN THE RETURN THAT HE WAS SUFFERING A LOSS , THAT TH E LOSS WAS NOT CLAIMED BY HIS SON HOLDING THAT IT WAS A CAPITAL LOSS , IT WAS NOT THE CASE OF INTRODUCTION OF NEW CAPITAL BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER , THE F AA HELD THAT WITHDRAWAL OF RS . 2 . 25 CRORES FROM THE BOOKS DURING THE AY. 2003 - 04 STOOD EXPLAINED , THE AO HAD ACKNOWLEDGED THE FACT THAT THE ASSESSEE HAD STATED IN HIS REPLY THAT HE HAD WITHDRAWN RS . 2 . 25 CRORES IN THE FINANCIAL YEAR 2002 - 03 , THAT HE HAD ALSO GIVEN AN EXPLANATION TO THE AO AS TO WHY THE HUGE CASH WAS WITHDRAWN FROM HIS BUSINESS , THAT THE ASSESSMENT FOR THE 3 AY. 2003 - 04 WAS COMPLETED IN A SCRUTINY , THAT SUFFICIENT EVIDENCES WERE AVAILABLE WITH THE AO SO AS TO VERIFY THE CLAIM OF WITHDRAWAL MADE B Y THE ASSESSEE . THE FAA DIRECTED THE AO TO FORWARD THE COPY OF THE CAPITAL ACCOUNT OF THE ASSESSEE FROM THE CASE RECORDS RELEVANT TO AY. 2003 - 04 . AFTER CONSIDERING THE CAPITAL ACCOUNT FOR THAT YEAR , THE FAA OBSERVED THAT THERE WAS AN OPENING BALANCE OF RS . 3 . 06 CRORES , THAT THE ASSESSEE HAD WITHDRAWN RS . 2 . 25 CRORES , THAT THE FACT OF CASH WITHDRAWAL OF RS . 2 . 25 CRORES DURING THE AY. 2003 - 04 STOOD ESTABLISHED , THAT THE AO HAD VERIFIED THE CASH BALANCES FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 WHICH RESULTED I N FORMATION OF HIS BELIEF THAT THE SOURCE OF CASH WAS NOT PROPERLY EXPLAINED , THAT NO EVIDENCE WAS BROUGHT ON RECDORD TO ITSELF PROVED THE ASCERTION OF THE ASSESSEE THAT THE AMOUNT OF RS . 2 . 25 CRORES WAS GIVEN TO HIS SON , THAT HIS SON INCURRED A LOSS OF RS . 75 LAKHS AND EVENTUALLY RETURNED AN AMOUNT OF RS . 1 . 50 CRORES TO THE ASSESSEE , THAT THE SON OF THE ASSESSEE HAD APPEARED BEFORE THE AO AND HAD CONFIRMED THE FACT OF BORROWING OF MONEY , ITS UTILIZATION , THE RESUSLTANT LOSS AND THE SUBSEQUENT RETURN OF THE AM OUNT , THAT THE VOUCHERS MAINTAINED BY HIS SON TO SHOW THE SALE OF VARIOUS ASSETS OF DAIRY BUSINESS WERE ALSO PRESENTED DURING THE ASSESSMENT PROCEEDINGS , THAT THE BOOKS AND BALANCESHEET OF THE DAIRY BUSINESS WERE SEPARATE AND INDEPENDENT , THAT THE SON OF T HE ASSESSEE HAD NOT CLAIMED FOR SET OFF OF THE LOSS SUFFERED BY HIM , THAT HIS SON HAD TREATED THE LOSS IN THE DAIRY BUSINESS UNDER THE HEAD CAPITAL LOSS , THAT HIS SON HAD FILED HIS RETURN OF INCOME , THAT WHILE FILING THE RETURNS FOR AY. 2004 - 05 AND ONWARDS HIS SON HAD MADE ASSERTION THAT LOSS INCURRED BY HIM WAS A CAPITAL LOSS , THAT THERE WERE AMPLE EVIDENCES TO ESTABLISH THAT THE SON OF THE ASSESSEE STARTED DAIRY BUSINESS AND SUFFERED LOSS , THAT HE HAD EVENTUALLY SOLD OF DAIRY INFRASTGRUCTURE AND RETURNED THE REMAINING AMOUNT TO HIS FATHER . FINALLY , THE FAA DIRECTED THE AO TO DELETE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CAPITAL INTRODUCED U / S 68 OF THE ACT , AMOUNTING TO RS . 1 . 50 CRORES . 5 . DURING THE COURSE OF HEARING BEFORE US THE DEPARTMENTAL REPRESE NTATIVE ( DA ) SUPPORTED THE ORDER OF THE AO . THE AUTHORISED REPRESENTATIVE ( AR ) STATED THAT THE ASSESSEE HAD WITHDRAWN THE DISPUTED AMOUNT DURING THE AY. 2003 - 04 AND HAD GIVEN IT TO HIS SON , THAT HIS SON HAD RETURNED BACK THE MONEY DURING THE YEAR UNDER CONS IDERATION . HE REFERRED TO THE BALANCE SHEETS OF THE ASSESSEE AND HIS SON FOR THE AY. 2003 - 04 TO AY. 2007 - 08 ( PAGES 15 TO 54 OF THE PAPER BOOK ). 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US . WE FIND THAT , WHILE COMPLETING THE ASSESSMENT U / S 143 ( 3 ) OF THE ACT FOR THE AY. 2003 - 04 , THE AO HAD ACCEPTED THE FACT THAT THE ASSESSEE HAD WITHDRAWN RS . 2 . 25 CRORES FROM HIS CAPITAL ACCOUNT , THAT THERE WERE 4 EVIDENCES THAT ASSESSEE HAD ADVANCED THE MONEY TO HIS SON FOR STA RTING DAIRY BUSINESS , THAT HIS SON HAD FILED THE RETURNS OF INCOME AND HAD SHOWN LOSSES , THAT HE RETURNED RS . 1 . 5 CRORES TO HIS FATHER DURING THE YEAR UNDER CONSIDERATION , THAT THE AO , WHILE MAKING THE ADDITION U / S 68 OF THE ACT , HAD CONSIDERED THE BALANCE SHEETS OF AY. 2007 - 08 AND 2008 - 09 ONLY , THAT HE DID NOT CONSIDER THE BALANCESHEET OF AY. 2003 - 04 . CONSIDERING THE FACT THAT THE FATHER AND SON WERE FILING THE RETURNS OF INCOME FROM THE AY. 2003 - 04 TO AY. 2008 - 09 AND THAT THE AMOUNT IN QUESTION WAS RFEFLECTED IN THE BALANCESHEETS / RETURNS OF THE INCOME FILED BY THEM , WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY . THEREFORE , UPHOLDING HIS ORDER , WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO . AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH , AUGUST, 20 16. 30 TH , 2016 SD / - SD / - ( . . / D T GARASIYA ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; DATED :30 . 0 8 . 2016. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR NAGPUR BENCH, ITAT, / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT,NAGPUR.