Manik Aggarwal, Khanna V. ITO, Khanna

ITA 416/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9951 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 22-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Assessee Lawyers: ALOK AGGARWAL
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 416/CHD/2016 ASSESSMENT YEAR : 2012-13 SHRI MANIK AGGARWAL, VS THE ITO, S/O SHRI VARINDER KUMAR, WARD-II, HOUSE NO. 94, KHANNA. NAROTAM NAGAR, KHANNA. PAN: AEFPA0285E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK AGGARWAL RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 20.05.2016 DATE OF PRONOUNCEMENT : 01.06.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2, LUDHIANA DATED 16.02.2016 FOR ASSESSMENT YEAR 2012-13 CHALLENGING THE ADDITION OF RS. 3,15,000/-. 2. THE ISSUE BEFORE LD. CIT(APPEALS) WAS REGARDING ADDITION OF RS. 10 LACS ON ACCOUNT OF UNEXPLAINED C ASH SEIZED BY THE POLICE PARTY DURING STATE ASSEMBLY ELECTIONS. 3. THE BRIEF FACTS ARE THAT CASH OF RS. 10 LACS WAS SEIZED BY THE POLICE PARTY OF KHANNA FROM THE ASSES SEE ON 27.12.2011. THEREAFTER, CASH WAS SEIZED BY THE DIT 2 (INVESTIGATION) LUDHIANA UNDER SECTION 132A OF THE ACT. THE ASSESSEE WAS IN BUSINESS OF SPARE PARTS AND WOO D UNDER THE NAME AND STYLE OF M/S KAMDHENU INTERNATIO NAL, MALERKOTLA, KHANNA. DURING SEIZURE OF THE CASH, TH E ASSESSEE STATED THAT CASH BELONGS TO HIS BUSINESS A ND WITHDREW FROM HIS CURRENT BANK ACCOUNT WITH OBC, KHANNA FOR DEPOSITING THE SAME TO HIS BANK ACCOUNT WITH CITI BANK, LUDHIANA FOR IMPORT OF WOOD. LATER, DUR ING THE COURSE OF INQUIRY BY INVESTIGATION WING, THE ASSESS EE CONTENDED THAT OUT OF RS. 10 LACS, RS. 7,50,000/- WITHDREW ON DIFFERENT DATES 10-15 DAYS AGO AND REST WAS RECEIVED FROM 5-7 PARTIES FROM KARNATAKA AND ORISA STATE. THE PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE INITIATED AGAINST THE ASSESSEE AND IT WAS DIRECTED WHY ADDITION OF RS. 10 LACS BEING CASH SEIZED MAY NOT B E MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE AND MADE ADDITION OF RS. 10 LACS ON ACCOUNT OF UNEXPLAI NED CASH SEIZED. THE ASSESSEE SUBMITTED BEFORE THE AUTHORITIES BELOW THAT AMOUNT OF RS. 11,56,353/- WA S WITHDRAWN IN CASH ON DIFFERENT DATES FROM 29.10.201 1 TO 26.12.2011. COPY OF THE CASH BOOK FOR THIS PERIOD WAS ALSO SUBMITTED. THE ASSESSEE EXPLAINED THE AMOUNT OF RS. 11,56,356/- WAS WITHDRAWN FROM THE BANK ACCOUNT OF THE ASSESSEE AND WAS FOUND IN THE CASH BOOK MAINTAI NED BY ASSESSEE. THEREFORE, ADDITION OF RS. 10 LACS IS WHOLLY UNJUSTIFIED. IT WAS ALSO EXPLAINED THAT ADDITION W AS MERELY MADE AS TO WHY THE RTGS FACILITY WAS NOT AVA ILED 3 AND CASH COULD BE TRANSFERRED EASILY THROUGH RTGS. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS INCORPORATED IN THE IMPUGNED ORDER IN WHICH THE ASS ESSEE REITERATED THE SAME FACTS AS WERE SUBMITTED BEFORE ASSESSING OFFICER AND ALSO SUBMITTED THAT ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT WHICH ARE AUDITE D. COPIES OF THE SAME HAVE BEEN PLACED BEFORE AUTHORIT IES BELOW WHICH CLEARLY SHOWS WITHDRAWAL OF CASH FROM T HE BANK ACCOUNT BY ASSESSEE ON DIFFERENT DATES AND ON 27.12.2011, THE ASSESSEE HAS CASH BALANCE IN THE BO OKS OF ACCOUNT IN A SUM OF RS.11,56,356/-. THE ASSESSE E WANTED TO MAKE DEPOSIT OF RS. 10 LACS IN CITI BANK, LUDHIANA AND WHEN HE WAS CARRYING THE SAME, IT WAS SEIZED BY THE POLICE. THE ASSESSEE SUBMITTED COMPL ETE DETAILS OF WITHDRAWALS FROM DIFFERENT BANK ACCOUNTS AND ALSO SUBMITTED THAT IN HIS STATEMENT RECORDED ON TH E DATE OF SEIZURE ITSELF, ASSESSEE EXPLAINED THAT CASH WAS WITHDRAWN FROM THE BANK ACCOUNT AND SOME CASH WAS RECEIVED FROM THE PARTIES. THE ASSESSEE ALSO EXPLAI NED MODUS-OPERANDI OF THE ASSESSEE FOR DOING THE BUSINE SS AND RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT ADDITION IS WHOLLY UNJUSTIFIED. 5. THE LD. CIT(APPEALS), CONSIDERING SUBMISSIONS OF THE ASSESSEE, ALLOWED PART RELIEF TO THE ASSESSEE AND D IRECTED THAT ASSESSEE COULD BE GIVEN BENEFIT OF WITHDRAWALS MADE 4 IN THE LAST MONTH I.E. DECEMBER BEFORE INTERCEPTION ON 27.12.2011 AND ALLOWED THE APPEAL OF THE ASSESSEE P ARTLY. HIS FINDINGS IN PARA 4.4 AND 4.5 OF THE IMPUGNED OR DER ARE REPRODUCED AS UNDER : 4.4 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSION. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. I AM INCLINED TO AGREE WITH THE CONTENTION OF ID. AO. IN MY CONSIDERED OPINION AT T HE TIME OF INTERCEPTION BY THE POLICE ON 27.12.2011 THE APPELLANT HAS GROSSLY FAILED TO EXPLAIN THE SOURCE OF CASH AMOUNTING TO RS. 10 LAKH BEING CARRI ED BY IT. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND ARE FOUND THAT NOWHERE THE APPELLANT HAS MENTIONED THAT IT HAS PRODUCED ITS CA SH BOOK AT THE TIME OF INTERCEPTION ON 27.12.2011. IN MY CONSIDERED OPINIO N IT IS THE AFTERTHOUGHT OF THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDI NGS TO RELY WITHDRAWALS MADE BY IT IN A SPAN OF ROUGHLY 3 MONTHS. IT IS PUR ELY LOGICAL TO BELIEVE THAT THE APPELLANT HAD BEEN WITHDRAWING CASH FROM ITS BA NK ACCOUNT FROM LAST THREE MONTHS JUST TO DEPOSIT IN ONE OF THE BANK AT LUDHIANA WHILE IT HAS SUFFICIENT TIME AVAILABLE WITH IT TO TRANSFER THE S AID AMOUNT DIRECTLY TO ITS LUDHIANA ACCOUNT HAD THERE BEEN ANY NEED FOR URGENC Y AS EXPLAINED BY THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS. IT IS IN LOGICAL AND THEREFORE DIFFICULT TO BELIEVE THAT IN THE TIME OF ELECTRONIC TRANSFER AND SWIFT TRANSFER BETWEEN BANKING CHANNELS THE APPELLANT HAD BEEN WITHDRAWING CASH DEPOSIT IN ITS LUDHIANAS BANK ACCOUNT THAT TO O FROM OCTOBER 2012 ONWARDS. SECONDLY, THE APPELLANT HAS FAILED TO PROD UCE ITS BOOKS OF ACCOUNTS BEFORE THE AUTHORITIES AT THE TIE OF INTERCEPTION O F ITS CASH AND DURING THE COURSE OF ENQUIRY PROCEEDINGS. THEREFORE, A CLEAR I NFERENCE CAN BE WITHDRAWN THAT THE APPELLANT HAS NOT BEEN REGULAR LY MAINTAINING ITS BOOKS OF ACCOUNTS THEREFORE IT WAS UNABLE TO PRODUC E IT AT THE APPROPRIATE TIME IN ORDER TO JUSTIFY ITS CLAIM. EVEN THE CASH B OOK WAS ALSO NOT PRODUCED AT THE TIME OF INTERCEPTION. I HAVE CONSI DERED THE CASE LAWS RELIED UPON BY THE APPELLANT HOWEVER THESE ARE ON DIFFERENT GROUNDS THEREFORE CANNOT BE CONSIDERED IN THE PRESE NT SCENARIO IN THE CASE OF APPELLANT. 4.5 IN MY CONSIDERED OPINION THE APPELLANT HAS CLEARLY FAILED TO ADDUCE ANY PROPER EVIDENCE TO EXPLAIN THE SOUR CE OF CASH DEPOSITS. 5 HOWEVER IN THE INTEREST OF JUSTICE THE APPELLANT CA N BE GIVEN BENEFIT OF WITHDRAWAL MADE IN THE LAST MONTH I.E. DECEMBER BEF ORE INTERCEPTION ON 27/12/2011, AS THE PROBABILITY OF AVAILABILITY OF C ASH DUE TO THESE WITHDRAWAL IS JUSTIFIABLE. ACCORDINGLY THE AO IS ORDERED TO DE LETE THE ADDITION IN ACCORDANCE AND REST OF THE ADDITION IS CONFIRMED. T HESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMI TTED THAT IN THE MONTH OF DECEMBER, ASSESSEE HAS WITHDRA WN RS.6,85,000/- OF WHICH APPEAL HAS BEEN ALLOWED BY T HE LD. CIT(APPEALS). HE HAS REFERRED TO CASH BOOK AND STA TEMENT RECORDED DURING THE COURSE OF SEIZURE AND ALSO REFE RRED THE DAY BOOK AND SUBMITTED THAT ENTIRE ADDITION SHOULD HAVE BEEN DELETED. ON THE OTHER HAND, LD. DR RELIED UPO N ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE IS DOING BUSINESS ACTIVITIES AND WAS MAINTAINING THE BOOKS OF ACCOUNT IN REGULAR COURSE OF BUSINESS. ACCORDING TO THE ASSESSEE, THE ACCOUNT B OOKS OF THE ASSESSEE ARE AUDITED. IT IS ALSO NOT IN DISPUT E THAT FROM 29.10.2011 TO 26.12.2011, ASSESSEE HAS MADE WITHDRAWALS FROM HIS BANK ACCOUNTS RS. 11,56,356/- ON DIFFERENT DATES AND THE SAME HAVE BEEN TAKEN IN THE CASH BOOK OF THE ASSESSEE. COPY OF THE CASH BOOK FOR TH IS PERIOD IS FILED IN THE PAPER BOOK AND AS ON 27.12.2011, AS SESSEE WAS HAVING CASH IN HAND IN A SUM OF RS. 11,56,356/ -. THEREFORE, ASSESSEE WAS HAVING AVAILABILITY OF MORE THAN RS. 10 LACS ON THE DATE OF THE SEIZURE. THE LD. CI T(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO 6 WITHDRAWALS MADE IN THE MONTH OF DECEMBER,2011 BUT HAS NOT COMMENTED ADVERSELY ON THE CASH BOOK MAINTAINED BY ASSESSEE IN REGULAR COURSE OF BUSINESS. THE FINDIN GS ARE MERELY BASED ON INFERENCES. ADDITION SHOULD NOT BE CONFIRMED BECAUSE NO CASH BOOK PRODUCED AT THE TIME OF INTERCEPTION. NO BUSINESSMAN WILL CARRY CASH BOOK ALL THE TIMES WITH HIM. 7(I) FINDINGS OF LD. CIT(APPEALS) SHOWS THAT EVEN LD. CIT(APPEALS) ACCEPTED THE ENTRIES IN THE CASH BOOK MADE AFTER MAKING WITHDRAWALS FROM BANK ACCOUNTS OF THE ASSESSEE BY ASSESSEE FOR THE MONTH OF DECEMBER,2011 . THEREFORE, THERE WAS NO REASON TO DISBELIEVE THE OT HER ENTRIES IN THE CASH BOOK OF THE ASSESSEE FOR THE MO NTH OF OCTOBER AND NOVEMBER,2011. IT MAY ALSO BE NOTED HE RE THAT IN THE MONTH OF DECEMBER,2011, ENTRIES OF WHIC H ARE ACCEPTED BY LD. CIT(APPEALS), THE ASSESSEE HAS OPEN ING CASH BALANCE OF RS. 5,68,154/- BROUGHT FORWARD FROM THE MONTH OF OCTOBER,2011 AND NOVEMBER,2011. THEREFORE, SAME CANNOT BE IGNORED. FURTHER, STATEMENT OF THE ASSES SEE RECORDED AT THE TIME OF SEIZURE HAS BEEN REFERRED T O, COPY OF WHICH IS FILED AT PAGE 46 OF THE PAPER BOOK IN WHIC H ASSESSEE HAS EXPLAINED BEFORE THE DIT (INVESTIGATIO N) THAT BOOKS OF ACCOUNT ON COMPUTER HAVE BEEN KEPT BY THE PART- TIME ACCOUNTANT. THE ASSESSEE ALSO EXPLAINED IN HI S STATEMENT THAT AMOUNT OF RS. 7,50,000/- WAS WITHDRA WN FROM THE BANK ON DIFFERENT DATES AND SOME AMOUNT WA S RECEIVED FROM THE PARTIES WHICH ASSESSEE WANTED TO DEPOSIT IN CITI BANK, LUDHIANA. THESE EVIDENCES ON RECORD CLEARLY 7 SUPPORT THE CASE OF THE ASSESSEE THAT ASSESSEE WAS HAVING AVAILABILITY OF MORE THAN RS. 10 LACS ON THE DATE O F SEIZURE ITSELF. MERELY BECAUSE ASSESSEE DID NOT USE RTGS F ACILITY BY ITSELF IS NO GROUND TO MAKE THE ADDITION AGAINST THE ASSESSEE OF UNEXPLAINED CASH FOUND DURING THE COURS E OF SEARCH BY THE POLICE. HOW THE ASSESSEE HAS TO USE HIS MONEY SHOULD NOT BE DIRECTED BY THE POLICE OR THE I NCOME TAX AUTHORITIES. 8. CONSIDERING THE FACTS, CIRCUMSTANCES AND EXPLANA TION OF THE ASSESSEE AND MATERIAL ON RECORD AND THAT ASS ESSEE HAS SUFFICIENT CASH BALANCE AS CASH IN HAND IN HIS BOOKS OF ACCOUNT MAINTAINED IN THE ORDINARY COURSE OF BUSINE SS CLEARLY PROVE THAT ASSESSEE EXPLAINED THE AVAILABIL ITY OF CASH OF RS. 10 LACS ON THE DATE OF SEIZURE. THEREF ORE, THERE WAS NO JUSTIFICATION TO SUSTAIN EVEN PART ADDITION OF RS. 3,15,000/-. 9. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 3,15,000/-. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 1 ST JUNE, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD