Sh. Sumit Jain, Karnal V. ITO, Karnal

ITA 4381/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2706 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K L ANEJA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH G , NEW DELHI BEFORE : S MT DIVA SINGH, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4381/DEL./2012 ASSESSMENT YEAR: 2009 - 10 SH. SUMIT JAIN , HOUSE NO. 16, CLUB LANE KARNAL (HARYANA) (PAN: AEQPJ3055G) (APPELLANT) VS. INCOME - TAX OFFICER, WARD - 4, KARNAL (RESPONDENT) A PPELLANT BY SH. K.L. ANEJA, ADVOCATE RE SPONDENT BY SH. N.K. BANSAL, SR. DR ORDER PER L.P. SAHU, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29.05.2012 PASSED BY LEARNED CIT (A) KARNAL FOR ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF LD. CIT(A) IS ARBITRARY, ILLEGAL AND AGAINST THE FACTS. 2. THAT THE LD. CIT (A) ERRED IN LAW CONFIRMING THE ORDERS OF I.T.O. MAKING ADDITION OF RS. 54000/ - AND 57000/ - UNDER SECTION 68 OF THE INCOME TAX ACT. 3. THAT THE LD. CIT (A) ERRED IN LAW CONFIRMING THE ORDER OF I.T.O. IN MAKING ADDITION OF RS. 57000/ - UNDER SECTION 68 OF THE INCOME TAX ACT. DATE OF HEARING 31.05.2017 DATE OF PRONOUNCEMENT 28 .07.2017 ITA NO. 4381/DEL./2012 2 4. THAT THE LD. CIT (A) ORDER IN LAW IN CONFIRMING THE ORDER OF I.T.O. IN MAKING ADDITION OF RS. 58,000/ - UNDER SECTION 68 OF THE INCOME TAX ACT. 5. THAT THE LD. CIT (A) ERR ED IN LAW CONFIRMING THE ORDER OF I.T.O. IN MAKING ADDITION OF RS. 36,000 UNDER SECTION 68 OF THE INCOME TAX ACT. 6. THAT THE LD. CIT(A) ERRED IN LAW IN ADDITION OF RS. 47,550 CONFIRMING THE ORDER OF INCOME TAX OFFICER IN MAKING ADDITION OF RS. 47,550 ON ACCOUNT OF INCOME FROM TRADITIONAL SOURCES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.03.2010 DECLARING INCOME OF RS. 405752/ - . THE CASE WAS SELECTED FOR SCRUTINY U/S 143(2) AND STATUTORY NOTICES WERE ISSUED TO T HE ASSESSEE. THE ASSESSEE WERE ENGAGED IN SUB - DEALERSHIP OF SHARES BUSINESS ( RELIANCE MONEY FRANCHISE ) AND EARNS COMMISSION FROM THE COMPANY AND ALSO RECEIVE COMMISSION FROM BROKERS. THE TOTAL RECEIPTS WERE RS. 6,78,865/ - . ON PERUSAL OF THE RECORDS SU BMITTED BY THE ASSESSEE THE AO NOTED THAT THE ASSESSEE HAS MAINTAINED TWO BANK ACCOUNTS WITH BANK OF RAJASTHAN AND HDFC BANK. IN THE HDFC BANK ACCOUNT THE ASSESSEE HAD DEPOSITED FREQUENTLY IN CASH. ON BEING ASKED TO FOR THE SOURCE OF DEPOSIT INTO THE HDFC BANK ACCOUNT THE ASSESSEE FURNISHED THE NAME OF THE DEPOSITORS FROM WHOM CASH WERE ITA NO. 4381/DEL./2012 3 RECEIVED AND AFFIDAVITS FROM THE PERSONS IN THE LIST SUBMITTED. FROM THE LIST SUBMITTED ONE OF THE PERSONS SANDEEP SINGH WHO CLAIMED TO HAVE DEPOSITED OF RS. 54,000/ - SERMON S WERE ISSUED BUT RETURNED UNDELIVERED. THE ASSESSEE WAS INFORMED REGARDING THIS AND ASKED TO PRODUCE SANDEEP SINGH FOR VERIFICATION BUT ASSESSEE COULD NOT PRODUCE SANDEEP SINGH. THEREFORE THE LEARNED ASSESSING OFFICERS CONCLUDED THAT THE GENUINENESS OF TH E TRANSACTIONS, IDENTITY OF PERSONS AND CREDITWORTHINESS OF THE DEPOSITORS COULD NOT BE DISCHARGED BY THE ASSESSEE THEREFORE THE LD. AO MADE ADDITION U/S 68. THE LD. AO SENT SUMMON TO SH. PRAVEEN KUMAR AT THE ADDRESS GIVEN IN HIS AFFIDAVIT REGARDING CASH D EPOSIT OF RS. 57,000 / - , BUT THE SAME RETURNED UNDELIVERED . IT WAS CONFRONTED TO THE ASSESSEE. THE LEARNED ASSESSING OFFICER NOTED THAT THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENT OF SECTION 68 OF THE INCOME TAX ACT AND ADDED TO THE INCOME OF THE ASSE SSEE. FURTHER IN RESPONSE TO THE SOMMONS ISSUED TO SH. RAVI POSWAL, SH. MALKHAN SINGH AND RAJNISH ALL OF THE THREE APPEARED BEFORE THE AO AND THEIR STATEMENTS WERE RECORDED. ITA NO. 4381/DEL./2012 4 3. SH. RAVI POSWAL ACCEPTED IN HIS STATEMENTS AND CONFIRMED THAT HE HAS DEPOSITED RS. 57,000 IN CASH WITH THE ASSESSEE FOR INVESTMENT IN SHARES. SH. RAVI POSWAL WAS AN EMPLOYEE OF DIESEL MECHANIC SHOP AND GETTING RS. 3500 PER MONTH AS SALARY. THE STATEMENTS WERE CONFRONTED TO THE ASSESSEE. HE COULD NOT ESTABLISH THE SOURCE OF CASH DEPO SITED WITH THE ASSESSEE THEREFORE THE CREDITWORTHINESS COULD NOT BE ESTABLISHED BY THE ASSESSEE REGARDING THEIR SOURCE OF INCOME. THEREFORE THE LEARNED ASSESSING OFFICER ADDED INTO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. 4. DURING THE STATEMENT OF SH. MALKHAN SINGH HE DENIED THE SIGNATURE ON AFFIDAVITS SUBMITTED BY THE ASSESSEE AND IN THE AMOUNTS MENTIONED IN THE AFFIDAVITS ALSO BUT HE ADMITTED THAT IN 2008 HE HAD MADE INVESTMENT IN SHARES AND RS. 60,000 WERE PAID IN CASH AND HE WAS ENGAGED IN THE DAIRY BUSINESS. THE LD. ASSESSING OFFICER OBSERVED THAT SH. MALKHAN SINGH COULD NOT PROVE THE GENUINENESS OF THE TRANSACTIONS THEREFORE HE ADDED RS. 58,000 / - IN THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT . ITA NO. 4381/DEL./2012 5 5. THE LD. AO NOTED THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVED FROM RAJNISH KUMAR RS. 75,000/ - WHEREAS IN THE STATEMENTS SH RAJNISH KUMAR ACCEPTED ONLY RS. 39,000 WERE GIVEN TO SRI SUMIT JAIN THEREFORE THE DIFFERENCE OF RS. 36,000 WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. 6. ON SCRUTINY OF THE HDFC BANK ACCOUNT THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 2 LAKHS ON 08.04.2008. THE ASSESSEE CLAIMED THAT THE DEPOSIT IS MADE OUT OF TH E BROUGHT FORWARD BALANCE OF RS.1,52,450/ - IN THE CAPITAL ACCOUNT AND FOR REMAINING BALANCE ASSESSEE SUBMITTED THAT IT WAS INCOME UPTO 08.04.2008. THE LD. AO WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE AND ADDED THE DIFFERENCE OF RS. 47550/ - (20 0000 - 152450) TO THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. AGGRIEVED FROM ALL THE ABOVE ADDITIONS THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE ALSO RELIED ON SOME CASE LAWS BEFORE THE LD. CIT(A) BUT THE APPELLATE AUTH ORITY WAS NOT SATISFIED FROM THE SUBMISSIONS ITA NO. 4381/DEL./2012 6 WHICH WERE MADE BEFORE HIM AND UPHELD THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE FIRST APPELLATE AUTHORITY, THE ASSESSEE IS IN APPEAL BEFORE INCOME TAX APPELLATE TRIBUNAL . 7. THE LD. AR SUBMITTED A WRITTEN SYNOPSIS, WHICH IS ON PAPER BOOK 2 TO 6, IN WHICH HE HAS TRIED TO JUSTIFY THE AMOUNTS RECEIVED FROM THE DEPOSITORS, AS FOR THE PURCHASE OF SHARES. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE FURTHER SUBMITTED THAT ALL THE REQUIREMENTS OF SECTION 68 HAVE BEEN SATISFIED, AS THE ASSESSEE HAD SUBMITTED AFFIDAVITS OF MOST OF THE DEPOSITORS. HE SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADING. THEREFORE, THE AMOUNTS WERE RECEIVED TOWARDS PURCHASE OF S HARES ON BEHALF OF THE DEPOSITORS. HE FURTHER SUBMITTED THAT THERE WAS AN OPENING BALANCE OF MORE THAN RS.2,00,000/ - IN THE CAPITAL ACCOUNT. THEREFORE, HE HAD SUFFICIENT CASH TO DEPOSIT INTO HDFC BANK ACCOUNT ON 08.04.2008. DURING THE YEAR, THE NET INCOME OF THE ASSESSEE IS ALSO RS.4,05,752/ - . IN VIEW OF THIS, THE CASH DEPOSIT INTO THE BANK IS JUSTIFIED. ITA NO. 4381/DEL./2012 7 8. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS NOT DISCHARGED THE REQUIREMENT OF SECTION 68. THE NOTICES WERE SENT TO THE CREDITORS WHICH RETURNED UNDELIVERED. THE INVESTORS ALSO DENIED THAT THE AFFIDAVITS HAVE NOT BEEN SIGNED BY THEM. THE INVESTORS WHO ARE EARNING MEAGRE AMOUNTS I.E. RS. 3500/ - CANNOT DEPOSIT AT A TIME MORE THAN RS. 50,000/ - . NO ONE HAS DEMAT ACCOUNT WHEREAS THE SHARE TRANSACTIONS TOOK PLACE ONLY THROUGH DEMAT ACCOUNT. THE ASSESSEE HAS STATED THAT THERE WAS AN OPENING BALANCE OF RS. 2 LACS AND THE ASSESSEE HAS RECEIVED INCOME FROM 01.04.2008 TOO IS NOT CORRECT. THE ASSESSEE HAS NOT PRODUCED THE BALANCE SHEET FOR LAST YEAR. THEREFORE, THE OPENING CASH BALANCE AS ON 01.04.2008 CANNOT BE DETERMINED. ALSO HE DID NOT PRODUCE ANY FRUITFUL DOCUMENTS FROM 01.04.2008 TO 08.04.2008 IN SUPPORT OF CASH DEPOSITE D IN HDFC BANK ACCOUNT. ALL THE CASE LAWS RELIED BY THE ASSESSEE ARE NOT APPLICABLE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE ENTIRE MATERIAL PRODUCED AND ORDERS OF THE LOWER AUTHORITIES. THE ITA NO. 4381/DEL./2012 8 ASSESSEE HAS TAKEN SIX GROUNDS OF APPEAL, O UT OF WHICH GROUND NO. 1 IS GENERAL IN NATURE AND GROUNDS NOS. 2 TO 5 RELATE TO THE ADDITION U/S. 68. THEREFORE, WE ARE DECIDING THE ISSUE INVOLVED IN GROUND NOS. 2 TO 5 SIMULTANEOUSLY. THE ASSESSEE HAS RECEIVED RS.54 LACS FROM SANDEEP SINGH AND RS.57,000/ - FROM PRAVEEN KUMAR. THE SUMMONS WERE ISSUED AND RECEIVED UN - SERVED BACK. THESE FACTS WERE CONFRONTED TO THE ASSESSEE. THE ASSESSEE COULD NOT PRODUCE THE CREDITORS/DEPOSITORS BEFORE THE ASSESSING OFFICER. THE ASSESSEE COULD NOT SATISFY THREE INGREDIENTS, I.E., IDENTITY AND CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS, AS SET OUT UNDER 68, THE BURDEN OF WHICH LAY UPON THE ASSESSEE, BUT HE FAILED TO DISCHARGE BEFORE THE AUTHORITIES BELOW. THE CASE LAWS RELIED BY THE LD. CIT(A) ARE, THEREFORE, SQUARELY APPLICABLE IN THE INSTANT CASE. 10. IN RESPECT OF RAVI POSWAL, HIS STATEMENTS WERE RECORDED BY THE ASSESSING OFFICER AND HE HAS ACCEPTED THAT RS.57,000/ - WERE GIVEN TO SUMIT JAIN FOR INVESTMENT IN SHARES. IN HIS STATEMENTS, HE ACCEPTE D THAT HE WAS AN EMPLOYEE IN DIESEL MECHANIC SHOP AND GETTING RS.3500/ - PER MONTH AS SALARY. HOWEVER, SHRI RAVI ITA NO. 4381/DEL./2012 9 POSWAL COULD NOT PROPERLY EXPLAIN THE SOURCE OF DESPITE WITH THE ASSESSEE. IN OUR CONSIDERED OPINION, THE LD. AUTHORITIES BELOW HAVE RIGHTLY OBS ERVED THAT A PERSON EARNING ONLY RS.3500/ - PER MONTH AS SALARY, WOULD BE ABLE TO INVEST RS.57,000/ - OUT OF HIS SUCH A MEAGER INCOME. THE DEPOSITOR IN HIS STATEMENT COULD ALSO NOT BE ABLE TO DISCLOSE THE NAME OF THE COMPANIES, IN WHOSE SHARES THE AMOUNTS WE RE INVESTED. HE WAS ALSO NOT AWARE OF THE SHARE TRADING NORMS AS EVIDENT FROM HIS STATEMENTS. IN PRESENCE OF ALL THESE FACTS, WE FIND THAT THE CAPACITY OF THE DEPOSITOR DID NOT STAND PROVED AS ALSO THE GENUINENESS OF THE TRANSACTION. THEREFORE, THE ADDITIO N OF RS.57,000/ - SUSTAINED BY THE LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 11. WITH RESPECT TO THE DEPOSITOR SHRI MALKHAN SINGH, IT IS BORNE OUT FROM HIS STATEMENT THAT THE AFFIDAVIT SUBMITTED BY THE ASSESSEE WAS NEITHER SIGNED BY SHRI MALKHAN SING H NOR THE AMOUNT MENTIONED IN THE SAID AFFIDAVIT WAS ADMITTED BY HIM. THEREFORE, THE CONDUCT OF THE ASSESSEE IS FOUND DISCERNIBLE FROM THE FAKE AFFIDAVIT FILED BY HIM BEFORE THE REVENUE AUTHORITIES. THE LD. AR COULD NOT BE ABLE TO SPEAK ANYTHING ON THIS CO UNT. SHRI ITA NO. 4381/DEL./2012 10 MALKHAN SINGH IN HIS STATEMENT, COULD ALSO NOT EXPLAIN THE INCOME FROM HIS DAIRY BUSINESS TO JUSTIFY THE IMPUGNED INVESTMENT IN SHARES. ADMITTEDLY, THE IMPUGNED AMOUNT IS ALLEGED TO HAVE BEEN GIVEN IN CASH. THEREFORE, THE CREDITWORTHINESS OF THE DEPOSITOR AND GENUINENESS OF THE TRANSACTION DID NOT STAND PROVED. ACCORDINGLY, THE LD. AUTHORITIES BELOW HAVE RIGHTLY ADDED THIS SUM AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 12. REGARDING THE NEXT DEPOSITOR SHRI RAJNISH KUMAR, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOTABLE THAT SHRI RAJNISH KUMAR IN HIS STATEMENTS HAS CATEGORICALLY ADMITTED TO HAVE ADVANCED RS.39,000/ - ONLY AND NOT RS.75,000/ - AS CLAIMED BY THE ASSESSEE. HE CLEARLY DENIED THE AMOUNT OF RS.75,000/ - MENTIONED IN THE AFFIDAVIT. THE LD. AR HAS NOT BEEN ABLE TO ADDUCE ANY EVIDENCE ON RECORD THAT SHRI RAJNISH KUMAR ADVANCED HIM A SUM OF RS.75,000/ - EXCEPT THE AFFIDAVIT GOT SIGNED BY THE ASSESSEE FROM THE DEPOSITOR. THE DEPOSITOR DENI ED TO HAVE PURCHASED ANY STAMP FOR THE AFFIDAVIT. IN SUCH STATE OF AFFAIRS, THE LD. ITA NO. 4381/DEL./2012 11 AUTHORITIES BELOW HAVE RIGHTLY MADE ADDITION OF RS.36,000/ - WHICH WAS DENIED TO HAVE BEEN ADVANCED BY THE DEPOSITOR. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO DISTURB THE CONCLUSIONS REACHED BY THE AUTHORITIES BELOW ON THIS COUNT. MOREOVER, IN NONE OF THE ABOVE CASES, THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO SHOW AS TO HOW MUCH SHARES OF WHICH COMPANIES WERE PURCHASED AND ALLOTTED IN THE NAMES OF ABOVE DEPOSITORS A ND HOW MUCH PROFITS OR LOSS WAS THERE TO THEM. IN VIEW OF ALL THIS, GROUNDS NOS. 2 TO 5 RAISED BY THE ASSESSEE ARE DISMISSED. 13. GROUND NO. 6 RELATES TO ADDITION OF RS.47,550/ - ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT. ON PERUSAL OF THE BALANCE SHEET AND CAPITAL ACCOUNT, IT IS NOTED THAT THE ASSESSEE HAD OPENING BALANCE OF CAPITAL ACCOUNT OF RS.1,52,450/ - . THE ASSESSEE HAS NOT FURNISHED THE BALANCE SHEET FOR F.Y. ENDING 31.03.2008. HE HAS ONLY SUBMITTED BALANCE SHEET FOR F.Y. 31.03.2009 SHOWING BROUGHT FOR WARD OF CAPITAL ACCOUNT AT RS.1,52,450/ - . HOWEVER, IT IS NOT CLEAR AS TO HOW MUCH CASH IN HAND WAS AVAILABLE WITH THE ASSESSEE S HAND AT THE YEAR END. THE ASSESSEE HAS ALSO NOT FURNISHED ANY DOCUMENTARY EVIDENCE REGARDING AVAILABILITY OF ITA NO. 4381/DEL./2012 12 CASH IN HAND FROM 01.04.2008 TO 08.04.2008. THEREFORE, THE FINDING OF THE LD. AUTHORITIES BELOW DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO. 6 RAISED BY ASSESSEE DESERVES TO FAIL. 1 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.07.2017 . SD/ - SD/ - ( DIVA SINGH ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28.07.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI