ITO, Ghaziabad V. Shri Swaroop Chand Sharma, Ghaziabad

ITA 4274/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4773 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 12-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: MUKESH KUMAR BANSAL
• Keywords: Principle of natural justice
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.4274/DEL./2016 ASSESSMENT YEAR 2012-2013 THE INCOME TAX OFFICER, WARD-2(3), GHAZIABAD. VS. SHRI SWAROOP CHAND SHARMA S/O. SHRI BHAWAN SAHAI SHARMA, SHAHEED MEMORIAL PUBLIC SCHOOL, SIHANI ROAD, GHAZIABAD. PAN ARLPS6575N (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. FOR ASSESSEE : SHRI MUKESH KUMAR BANSAL, C.A. DATE OF HEARING : 07.09.2017 DATE OF PRONOUNCEMENT : 13.09.2017 ORDER THIS DEPARTMENTAL APPEAL HAS BEEN DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A), GHAZIABAD, DATED 18 TH MAY, 2016, FOR THE A.Y. 2012-2013. 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE REV ENUE HAS RAISED FIVE GROUNDS OF APPEAL, ON WHICH, LD. CIT(A), HAS D ELETED THE ADDITION. 2.1. BEFORE TAKING-UP THE ISSUES ON MERITS, IT WOU LD BE RELEVANT TO POINT OUT THAT THE CONTENTION OF THE LD. D.R. HA D BEEN ON ALL THE 2 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. GROUNDS THAT THE LD. CIT(A) HAS CONSIDERED ADDITION AL EVIDENCES FOR THE PURPOSE OF DELETING THE ADDITIONS. THEREFORE, T HE MATTER MAY BE REMANDED TO THE FILE OF THE LD. CIT(A) FOR FOLLOWIN G RULE-46A OF THE I.T. RULES. HOWEVER, LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT ALL THE PAPERS NOW FILED IN THE PAPER BOOK WERE FIL ED BEFORE THE AUTHORITIES BELOW AND ALSO SUBMITTED THAT SINCE NO GROUND HAVE BEEN RAISED BY THE REVENUE IN THE DEPARTMENTAL APPEAL FO R VIOLATION OF RULE-46A OF THE I.T. RULES, THEREFORE, THE OBJECTIO NS OF THE LD. D.R. MAY BE REJECTED. 3. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. D.R. LD. D.R. HA S NOT POINTED OUT SPECIFICALLY AS TO WHICH OF THE ADDITIONAL DOCUMENT S HAVE BEEN CONSIDERED AND RELIED UPON BY THE LD. CIT(A) AT APP ELLATE STAGE. FURTHER, THE REVENUE HAS NOT RAISED ANY GROUND OF A PPEAL CHALLENGING THE ORDER OF THE LD. CIT(A) FOR VIOLATI ON OF RULE-46A OF THE I.T. RULES. IN THE ABSENCE OF ANY SPECIFIC MATERIAL TO POINT OUT AS TO WHICH OF THE ADDITIONAL DOCUMENTS HAVE BEEN CONSIDE RED BY THE LD. CIT(A) AT APPELLATE STAGE IN VIOLATION OF RULE-46A OF THE I.T. RULES, PARTICULARLY WHEN NO SPECIFIC GROUND HAS ALREADY BE EN RAISED IN THE 3 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. GROUNDS OF APPEAL BY REVENUE, THE CONTENTION OF THE LD. D.R. IS REJECTED. 4. ON GROUND NO.1, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.2,24,675 ON ACCOUNT OF ESTIMATED BUS INESS INCOME. THE A.O. NOTED THAT ASSESSEE FILED RETURN OF INCOME AT RS.2,07,325 STATING AS PER SECTION 44AD OF THE I.T. ACT, WHEN A SSESSEE WAS REQUIRED TO PROVE THE NATURE OF SERVICES RENDERED A ND NATURE OF GOODS TREATED, IT HAS BEEN STATED THAT IN REALITY, INCOME WAS EARNED AGAINST SERVICES RENDERED TO BOOK SELLERS FOR BOOSTING THEI R SALES AND IN NUTSHELL, ASSESSEE ADMITTED THAT NO TRADING ACTIVIT IES WERE CARRIED ON. ASSESSEE HAD ADMITTED THAT CREDITS IN THE BANK, ON DIFFERENT DATES AGGREGATING TO RS.2,33,550 RELATING TO BUSINESS INC OME AND COMMISSION INCOME WHICH WERE RECEIVED IN CASH. THE A.O. THEREFORE, HAD ESTIMATED THE NET INCOME OF ASSESSEE AT RS.4,32 ,000 AND MADE ADDITION OF RS.2,24,675. THE ASSESSEE SUBMITTED BEF ORE LD. CIT(A) THAT ASSESSEE FILED RETURN OF INCOME ON THE BASIS O F THE DETAILS CONTAINED IN THE BANK ACCOUNT AND A.O. MADE THE ADD ITION MERELY ON ESTIMATE BASIS. THE LD. CIT(A) ACCEPTED THE CONTENT ION OF ASSESSEE 4 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. AND HELD THAT A.O. MADE THE ADDITION BASED ON SURMI SES AND CONJECTURES AND ACCORDINGLY, ADDITION WAS DELETED. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM O F THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. T HE A.O. HAS NOT GIVEN ANY REASON FOR ESTIMATING THE HIGHER INCOME OF ASSE SSEE. THE FINDINGS OF THE A.O. ARE NOT CORROBORATED BY ANY EVIDENCE OR MATERIAL ON RECORD. THEREFORE, ON MERE ESTIMATION, ENHANCEMENT OF INCOME, IS WITHOUT ANY BASIS. ACCORDINGLY, THE LD. CIT(A) CORR ECTLY DELETED THE ADDITION. GROUND NO.1 OF THE REVENUE IS DISMISSED. 6. ON GROUND NO.2, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.10 LAKHS AS UNEXPLAINED CASH DEPOSIT IN BANK WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF SHRI DEVENDER SHARMA FROM WHOM ADVANCE HAS BEEN SHOWN. THE A.O. NOTED THAT ASSESSEE HAS DEPOSI TED A SUM OF RS.10 LAKHS IN CASH ON 28 TH APRIL, 2011 IN SYNDICATE BANK. THE ASSESSEE CONTENDED THAT THE SAID CASH WAS RECEIVED BY HIM AS ADVANCE RELATING TO SALE OF RESIDENTIAL HOUSE FROM SHRI DEVENDER SHARMA. THE A.O. HOWEVER, NOTED THAT SINCE ASSESSEE HAS NOT PROVED THE CAPACITY OF THE PERSON FOR ADVANCING SUCH AMOUN T IN CASH, 5 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. ADDITION OF RS.10 LAKHS WAS MADE. ASSESSEE REITERAT ED THE SAME SUBMISSIONS BEFORE THE LD. CIT(A) AND IT WAS SUBMIT TED THAT ADVANCE WAS RECEIVED AGAINST RESIDENTIAL HOUSE IN NOORNAGAR , GHAZIABAD AND TO SUBSTANTIATE THE CAPACITY, COPY OF THE BANK ACCO UNT WAS FILED. THE LD. CIT(A) NOTED THAT ADDITION WAS MADE BECAUSE CRE DITWORTHINESS OF SHRI DEVENDER SHARMA WAS NOT PROVED. LD. CIT(A) NOT ED THAT IT IS NOT A CASE OF CREDIT BUT OF A RECEIPT OF ADVANCE AGAINS T SALE. THE ASSESSEE HAS ADDUCED SALE AGREEMENT AS EVIDENCE AND IDENTITY OF SHRI DEVENDER SHARMA IS NOT DISPUTED AND THAT ASSESSEE P ROVED THE CREDITWORTHINESS OF THE PURCHASER WHEREIN THE CREDI TOR HAS SOLD THE PROPERTY WHOSE SALE PROCEEDS ARE CREDITED IN THE AC COUNT. THE ADDITION WAS ACCORDINGLY, DELETED. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, I DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE FILED COPY OF THE SALE AGREEMENT DATED 20.04.2011 (PB-49) BETWEEN ASSESSEE AND SHRI DEVENDER SHARMA THROUGH WHICH RS. 10 LAKHS WAS RECEIVED BY ASSESSEE IN CASH AS ADVANCE AGAINST SAL E OF THE PROPERTY. PB-52 IS THE COPY OF THE BANK ACCOUNT OF THE PURCHA SER SHRI DEVENDER SHARMA WHICH SHOWS THAT ON 13 TH APRIL, 2011, HE HAS WITHDRAWN 6 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. CASH OF RS.12 LAKHS FROM HIS BANK ACCOUNT. THUS, TH E ASSESSEE HAS BEEN ABLE TO PROVE THAT HE RECEIVED ADVANCE AGAINST SALE OF PROPERTY AND THUS, PROVED THE IDENTITY OF THE PURCHASER AND HIS CREDITWORTHINESS BECAUSE HE HAS WITHDRAWN THE AMOUN T IN CASH FROM HIS BANK PRIOR TO ENTERING INTO AN AGREEMENT TO SAL E WITH THE ASSESSEE. THIS GROUND NO.2 HAS NO MERIT AND THE SAM E IS ACCORDINGLY, DISMISSED. 8. ON GROUND NO.3, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.18 LAKHS MADE AS UNEXPLAINED CASH DE POSITS IN HIS BANK ACCOUNT. THE A.O. REQUIRED THE ASSESSEE TO PRO VE THE IDENTITY / CREDITWORTHINESS OF SHRI SANJAY TYAGI RELATING TO D EPOSIT OF RS.18 LAKHS IN SYNDICATE BANK ON 12.12.2011 WITH EVIDENCE . THE ASSESSEE FILED CERTIFICATE ISSUED BY SHRI SANJAY TYAGI MENTI ONING HIS PERSONAL ACCOUNT NO. WHICH IS CONSIDERED TO BE NOT AN AUTHEN TIC EVIDENCE, THEREFORE, THE ADDITION OF RS.18 LAKHS WAS MADE. TH E ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT ASSESSEE HAS T AKEN LOAN OF RS.18 LAKHS FROM SHRI SANJAY TYAGI FOR THE PURPOSE OF PUR CHASE OF PROPERTY. THE ASSESSEE FILED CERTIFICATE CONTAINING DETAILS A ND PAN. THE ASSESSEE ALSO FILED CONFIRMATION AND COPY OF THE BA NK ACCOUNT ALONG 7 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. WITH ITR AND EVIDENCE OF AVAILABILITY OF THE FUNDS WITH HIM. THE LD. CIT(A) FOUND THAT A.O. REJECTED THE CLAIM OF ASSESS EE BECAUSE MERE CONFIRMATION AND PAN OF THE CREDITOR WAS NOT SUFFIC IENT. THE LD. CIT(A) FOUND THAT THERE IS NOTHING ON RECORD TO SUP PORT THAT A.O. HAS DOUBTED THE IDENTITY OF THE CREDITOR OR HAS ASKED T HE ASSESSEE TO PROVE THE CREDITWORTHINESS. THE ACTION OF THE A.O. WAS UN ILATERAL WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE. THE LD. CIT( A) FOUND THAT SMT. JAVITRI DEVI, GRAND MOTHER OF SHRI SANJAY TYAGI HAS ADVANCED RS.1 CRORE TO SHRI SANJAY TYAGI OUT OF SALE PROCEEDS OF THE FAMILY PROPERTY. SHRI SANJAY TYAGI HAS ADVANCED RS.18 LAKHS TO THE A SSESSEE. THUS, THE ASSESSEE PROVED THE IDENTITY AND GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. THEREFORE, TH E ADDITION WAS DELETED. 9. AFTER CONSIDERING RIVAL CONTENTIONS, I DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF REVENUE. THE ASSESSEE F ILED COPY OF THE CONFIRMATION OF THE CREDITOR IN THE PAPER BOOK AT P AGE-32 IN WHICH IT IS CONFIRMED BY SHRI SANJAY TYAGI FOR GIVING LOAN O F RS.18 LAKHS TO THE ASSESSEE THROUGH BANKING CHANNEL, WHICH IS SUPP ORTED BY THE COPY OF THE BANK STATEMENT. THE ASSESSEE ALSO FILED COPY OF THE BANK 8 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. ACCOUNT OF SMT. JAVITRI DEVI TO SHOW THAT SHE HAS G IVEN RS.1 CRORE TO SHRI SANJAY TYAGI. THEREFORE, THE ASSESSEE PROVED A LL THE INGREDIENTS OF SECTION 68 OF THE I.T. ACT IN THE MATTER. LD. CI T(A) NOTED THAT THIS ADDITION IS MADE BY THE A.O. WITHOUT GIVING OPPORTU NITY TO THE ASSESSEE. THIS FINDING OF FACT HAS NOT BEEN DISPUTE D THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. WHEN A.O. MADE THIS ADDITION WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE TO EXPLA IN CREDIT OF RS.18 LAKHS, THIS ITSELF IS SUFFICIENT TO DELETE THE ADDI TION AGAINST THE ASSESSEE BECAUSE IT VIOLATES PRINCIPLES OF NATURAL JUSTICE. GROUND NO.3 OF THE REVENUE IS ACCORDINGLY DISMISSED. 10. ON GROUND NO.4, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.3,27,000 ON ACCOUNT OF INTEREST ON L OAN. THE A.O. NOTED THAT ASSESSEE HAD ADVANCED RS.40,33,333 TO SM T. SAROJ YADAV ON 21 ST DECEMBER, 2011 AND FURTHER RS.40,33,333 TO SHRI F. K. YADAV AND NO INTEREST HAS BEEN SHOWN. THE A.O. MADE THE A DDITION OF RS.3,27,000. 11. THE ASSESSEE REITERATED THE SAME FACTS BEFORE THE LD. CIT(A) AND IT WAS SUBMITTED THAT THESE TRANSACTIONS ARE PURCHASE CONSIDERATION PAID BY THE ASSESSEE AND NO ADVANCE P AID. THE 9 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. ASSESSEE PURCHASED AGRICULTURAL LAND ALONG WITH TWO OTHER CO-OWNERS AND PURCHASE DEED CLEARLY SUPPORT THE EXPLANATION O F ASSESSEE. THE LD. CIT(A), ACCORDINGLY DELETED THE ADDITION. 12. AFTER CONSIDERING THE RIVAL CONTENTIONS, I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. PB-2 5 IS AGREEMENT OF SALE IN FAVOUR OF ASSESSEE AND OTHERS THROUGH WHICH HAD GIVEN THE ABOVE ADVANCE MONEY TO THE SELLER. THEREFORE, A.O. WITHOUT ANY JUSTIFICATION DISALLOWED THE INTEREST. GROUND NO.4 OF THE REVENUE IS ACCORDINGLY DISMISSED. 13. ON GROUND NO.5, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.7,88,000 ON ACCOUNT OF UNEXPLAINED I NVESTMENT. THE A.O. NOTED THAT ASSESSEE PURCHASED AGRICULTURAL LAN D WITH TWO OTHER CO-OWNERS ON 7 TH JUNE, 2011, OUT OF TOTAL CONSIDERATION OF RS.3.35 CRORES, RS.75 LAKHS WERE PAID AS ADVANCE IN THE YEA R 1 ST APRIL, 2010 TO 31 ST MARCH, 2011 AND DURING THE YEAR ASSESSEE INVESTED RS.92,88,000 RELATING TO HIS 1/3 RD SHARE, OUT OF WHICH RS.85 LAKHS WAS PAID BY CHEQUE AND RS.7,88,000 WAS PAID BY CASH . THE A.O. DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE A SSESSEE COULD NOT PROVE AVAILABILITY OF THE CASH, ADDITION WAS ACCORD INGLY MADE. THE 10 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT TWO REGIS TRIES WERE MADE ON 7 TH JUNE, 2011, THE STAMP PAPER FOR WHICH WERE PURCHAS ED ON 01 ST JUNE 2011 AND CASH WITHDRAWN FROM CENTRAL BANK ON 3 1 ST MAY, 2011 WAS RS.6 LAKHS I.E., ONE DAY BEFORE PURCHASE OF STA MP PAPER AND RS.2 LAKHS ON 7 TH JUNE, 2011 I.E., ON THE DATE OF REGISTRATION. THER EFORE, ADDITION IS UNJUSTIFIED. THE LD. CIT(A) FOUND THAT THERE ARE WITHDRAWALS FROM THE BANK ACCOUNT OF THE ASSESSEE. THEREFORE, THE ADDITION CANNOT BE MADE. 14. AFTER CONSIDERING THE RIVAL CONTENTIONS, I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE FILED COPY OF THE BANK STATEMENT TO SHOW THE WITHDRAWALS FROM HIS BANK ACCOUNT PRIOR TO THE SALE DEED. COPY OF THE SALE DE ED IS ALSO FILED WHICH SUPPORT THE FACT THAT ASSESSEE MADE INVESTMEN T IN PROPERTY OUT OF HIS OWN SOURCE. THUS, THE ASSESSEE EXPLAINED THE SOURCE OF INVESTMENT IN PROPERTY. THIS GROUND HAS NO MERIT AN D ACCORDINGLY, GROUND NO.5 OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DIS MISSED. 11 ITA.NO.4274/DEL./2016 SHRI SWAROOP CHAND SHARMA, GHAZIABAD. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 13 TH SEPTEMBER, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES : DELHI.