M/s Pooja Decorative Plywood, Yamunanagar V. ITO, Yamunanagar

ITA 442/CHANDI/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68614 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.442 /CHD/2010 (ASSESSMENT YEAR : 2005-06) M/S POOJA DECORATIVE PLYWOOD, VS. THE INCOME TAX OFFICER, YAMUNANAGAR. WARD 3, YAMUNANAGAR. PAN: AAAFP9141P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 02.12.2013 DATE OF PRONOUNCEMENT : 23.12.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PANCHKULA DAT ED 12.03.2010 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS.8, 02,500/- AS UNEXPLAINED TWO CASH CREDITS OF RS.5,00,00 RS.3,02,500/- RECEIVED FROM S HRI INDERJIT SINGH VIRDI AND SMT. JYOTI VIRDI RESPECTIVELY WHICH IS ARBITRARY & UNJUS TIFIED. 2. THAT ALL THE CONDITIONS ENUMERATED IN SECTION 68 OF THE ACT I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF THE CREDITORS STAND PROVED AND AS SUCH UPHOLDING OF THE ADDITION IS ARBITRARY & UN JUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS FURTHER ERRED IN UPHOLDING THE DISALLOWANCE OF L/5 TH OF THE EXPENDITURE AMOUNTING TO RS.75,937/- CLAIMED UNDER THE HEADS CONVEYANCE, TEL EPHONE AND GENERAL EXPENSES WHICH IS ARBITRARY AND UNJUSTIFIED. 2 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 3. THE ISSUE IN GROUND NOS.1 AND 2 RAISED BY THE AS SESSEE ARE AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT TOTAL ING RS.8,02,500/-. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME A T NIL AFTER ADJUSTING UNABSORBED LOSS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD ACCEPTED LO ANS/DEPOSITS FROM DIFFERENT PERSONS OF DIFFERENT AMOUNTS, AS ENLISTED AT APGE-1 OF THE PAPER BOOK. THE ASSESSEE HAD RECEIVED A LOAN OF RS.11 LA CS FROM SHRI INDERJIT SINGH VIRDHI IN TWO INSTALLMENTS I.E. RS.5 LACS AND RS.6 LACS VIDE TWO CHEQUES EACH DATED 16.6.2004. THE AFFIDAVITS OF TH E LOAN CREDITORS WAS FILED BEFORE THE ASSESSING OFFICER WHICH ARE REPROD UCED AT PAGE 2 OF THE ASSESSMENT ORDER UNDER WHICH IT WAS AFFIRMED THAT T HE SAID CHEQUES WERE ISSUED OUT OF THE PROCEEDS COLLECTED FROM SALE OF H OUSE NO.1769, SECTOR 17, HUDA, JAGADHRI. THE ASSESSING OFFICER IN ORDER TO VERIFY THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE L OAN ACCEPTED FROM SHRI INDERJIT SINGH VIRDHI ISSUED SUMMONS UNDER SEC TION 131 OF THE ACT. THE STATEMENT OF SHRI INDERJIT SINGH VIRDHI WAS REC ORDED UNDER SECTION 34 OF THE ACT AND IN WHICH HE ADMITTED THAT HE WAS WORKING A SUPERVISOR IN ASSESSEES FIRM AND DRAWING SALARY OF RS.5000/- PER MONTH. IN THE SAID STATEMENT HE CONFIRMED TO HAVE ADVANCED THE AM OUNT TO THE ASSESSEE AND REGARDING THE SOURCE HE EXPLAINED THAT THE SAME WAS OUT OF SALE PROCEEDS OF HIS RESIDENTIAL HOUSE. THE CONTENTS OF THE STATEMENTS RECORDED IN HINDI ARE REPRODUCED AT PAGES 3 AND 4 O F THE ASSESSMENT ORDER. THE ASSESSING OFFICER ACCEPTED THE EXPLANAT ION IN RESPECT OF THE LOAN OF RS.6 LACS. HOWEVER, FOR THE BALANCE RS.5 L ACS AS THE ASSESSEE HAD NO SOURCE TO EXPLAIN AND CREDITWORTHINESS OF TH E LOAN CREDITORS WAS NOT KNOWN, THE SAME WAS NOT ACCEPTED. ANOTHER LOA N WAS RECEIVED FROM 3 SMT.JYOTI VIRDHI OF RS.3,02,500/- VIDE TWO DIFFEREN T CHEQUES AND THE STATEMENT OF THE LADY WAS ALSO RECORDED WHICH IS RE PRODUCED AT PAGES 6 AND 7 OF THE PAPER BOOK. HOWEVER, IN THE ABSENCE O F THE SOURCE BEING COMPLETELY EXPLAINED, THE ADDITION OF RS.3,02,500/- WAS MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER AT PA GE 10 OF THE ASSESSMENT ORDER HAS GIVEN A FINDING THAT THE COPIE S OF THE STATEMENTS OF SHRI INDERJIT SINGH VIRDHI AND SMT.JYOTI VIRDHI RE CORDED UNDER SECTION 131 OF THE ACT WERE SUPPLIED TO THE ASSESSEE AND AS THE CREDITWORTHINESS OF BOTH THE ALLEGED CREDITORS HAD NOT BEEN PROVED, THERE WAS NO USE TO ISSUE FURTHER SUMMONS UNDER SECTION 131 OF THE ACT FOR CROSS EXAMINATION. THE DOCUMENTS FILED BY THE ASSESSEE T O PROVE THE CREDITWORTHINESS OF THE ALLEGED CREDITORS WERE HELD TO HAVE NO SANCTITY IN THE EYES OF LAW. THE ORDER OF THE ASSESSING OFFICE R WAS UPHELD BY THE CIT (APPEALS). 5. THE ASSESSEE IS AGGRIEVED BY THE AFORESAID ADDIT ION AND THE MAIN GRIEVANCE OF THE ASSESSEE WAS THAT THE STATEMENTS R ECORDED UNDER SECTION 131 OF THE ACT BEFORE THE ASSESSING OFFICER WERE AT VARIANCE WITH THE AFFIDAVITS FILED BY THE ASSESSEE PLACED AT PAGE 11 OF THE PAPER BOOK. IT WAS FURTHER POINTED OUT THAT THE ASSESSEE VIDE LETT ER DATED 9/11.9.2007 PLACED AT PAGES 5 AND 6 OF THE PAPER BOOK HAD MADE A REQUEST TO ALLOW THE ASSESSEE TO CROSS EXAMINE THE SAID PERSONS. HO WEVER, THE SAID EXAMINATION WAS NOT ALLOWED BY THE ASSESSING OFFICE R AND THE ASSESSEE WAS UNABLE TO CONFRONT THE LOAN CREDITORS WITH THE CONFLICTING STATEMENTS GIVEN TO PROVE THE CREDITWORTHINESS OF THE CREDITOR S AND TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. 6. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T THE PERUSAL OF THE STATEMENTS RECORDED BY THE ASSESSING OFFICER RE FLECTS THAT THE STATEMENT OF THE LOAN CREDITORS WAS ELABORATELY REC ORDED AND HE WAS 4 UNABLE TO EXPLAIN THE SOURCE AND AFFIDAVIT WAS FILE D ON 28.9.2007 AND THE ASSESSMENT ORDER WAS PASSED ON 4.10.2007 AFTER CONS IDERING THE TOTAL EVIDENCE. FURTHER RELIANCE WAS PLACED ON THE ORDER OF THE CIT (APPEALS) I.E. PARA 4.2 AT PAGE 7 OF THE APPELLATE ORDER IN W HICH REQUEST OF THE ASSESSEE FOR CROSS EXAMINATION OF THE CREDITORS WAS HELD TO BE RIGHTLY REJECTED BY THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RE CEIVED RS.11 LACS FROM ONE SHRI INDERJIT SINGH VIRDHI AND RS.3,02,500 /- FROM DAUGHTER-IN- LAW OF THE SAID PERSON I.E. SMT. JYOTI VIRDHI. THE EXPLANATION OF THE LOAN CREDITORS VIS--VIS THE SOURCE OF THE SAID CRE DITS WAS OUT OF SALE OF RESIDENTIAL PROPERTY WHEREIN THE LOAN CREDITOR RECE IVED THE AMOUNT VIDE CHEQUES OUT OF WHICH CERTAIN GIFTS WERE MADE TO HIS DAUGHTER-IN-LAW, WHO IN TURN ADVANCED THE MONEY AND OUT OF BALANCE P ROCEEDS, LOAN WAS ADVANCED BY SHRI INDERJIT SINGH VIRDHI ALSO. THE S TATEMENTS OF BOTH THE PERSONS WERE RECORDED. THEREAFTER THE ASSESSEE IN ORDER TO EXPLAIN THE SOURCE OF THE SAID LOANS ALSO FILED AFFIDAVITS OF T HE SAID CREDITORS. HOWEVER, THE CONTENTS OF THE SAID AFFIDAVITS WERE A T VARIANCE WITH THE CONTENTS OF THE STATEMENTS RECORDED. THE ASSESSEE IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSACTION SOUGHT PERMISSIO N FROM THE ASSESSING OFFICER TO ALLOW CROSS EXAMINATION OF THE SAID LOAN CREDITORS. A REQUEST IN WRITING BEFORE THE ASSESSING OFFICER WAS MADE WH ICH WAS REJECTED IN SUMMARILY MANNER. HOWEVER, THE PRINCIPLES OF NATUR AL JUSTICE LAY DOWN THAT A PERSON CANNOT BE CONDEMNED UNHEARD. IN VIEW THEREOF, WE ARE OF THE VIEW THAT BECAUSE OF THE PECULIAR FACTS AND CIR CUMSTANCES AND ALSO BECAUSE OF THE ASSESSEE ASKING FOR CROSS EXAMINATIO N, THE REQUEST OF THE ASSESSEE CANNOT BE SUMMARILY REJECTED BECAUSE IN VI EW OF THE ASSESSING OFFICER THERE WAS NO EXPLANATION VIS--VIS THE SOUR CE OF THE CREDITS 5 RECEIVED BY THE ASSESSEE AS LOAN DURING THE YEAR. IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL ALLOW THE ASSESSEE TO C ROSS EXAMINATION OF THE LOAN CREDITORS. THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN CREDITORS AND ALSO TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. REASONABLE OPPORT UNITY OF HEARING IN THIS REGARD WOULD BE AFFORDED TO THE ASSESSEE. THE GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE ARE THUS ALLOWED FOR STATIST ICAL PURPOSES. 8. THE ISSUE IN GROUND NO. 3 IS AGAINST THE DISALLO WANCE OF 20% OF EXPENDITURE AMOUNTING TO RS.75,937/- CLAIMED UNDER THE HEADS CONVEYANCE, TELEPHONE AND GENERAL EXPENSES. THE AS SESSEE HAD FAILED TO FURNISH COMPLETE DETAILS IN RESPECT OF THE SAID EXP ENDITURE AND VOUCHERS FOR CERTAIN EXPENSES WERE ALSO NOT FURNISHED. AFTE R DISCUSSION WITH THE ASSESSEE THE DISALLOWANCE OF 20% OF EXPENDITURE WAS MADE. IN THE ABOVE FACTS AND CIRCUMSTANCES WHERE THE ASSESSEE HA D AGREED TO THE SAID DISALLOWANCE, THERE IS NO MERIT IN GROUND NO.3 RAIS ED BY THE ASSESSEE AND THE SAME IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD DECEMBER, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6