SH. MANJINDER SINGH SANDHU, JALANDHR V. INCOME TAX OFFICER, WARD 111(4), JALANDHAR

ITA 452/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1432 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM DEB
• Keywords: Cost of acquisition
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 452/(ASR)/2017 ASSES SMENT YEAR: 2011-12 MANJINDER SINGH SANDHU 105, GUPTA COLONY, KAPURTHALA ROAD, JALANDHAR [PAN: ALKPS 4876R] VS. INCOME TAX OFFICER, WARD-III(4), JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SURINDER MAHAJAN (C.A.) RESPONDENT BY: SH. GAUTAM DEB (D.R .) DATE OF HEARING: 01.08.2018 DATE OF PRONOUNCEMENT: 07.09.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, JALANDHAR ( CIT (A) FOR SHORT) DATED 03.04.2017, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HIS ASSESSMENT U/S. 144 OF THE INCOME TAX ACT, 1961, ('THE ACT' HEREINA FTER) DATED 03.02.2014 FOR ASSESSMENT YEAR (AY) 2011-12. 2. THE ONLY ISSUE ON MERITS (OF THE ADJUSTMENT MAD E TO THE RETURNED INCOME FOR THE RELEVANT YEAR ON 29.10.2011) IS AN ADDITION FOR RS.8,46,533/- BY THE ASSESSING OFFICER (AO), SINCE CONFIRMED BY THE LD. CIT(A) PER THE IMPUGNED ORDER. THE SAID ADDITION IS COMPRISED IN THE ADDITION FOR RS.20,67, 233/-, BEING QUA CREDIT ENTRIES IN THE ASSESSEES BANK ACCOUNT WITH CITI BANK, GOBIND NAGAR, JALANDHAR, DURING THE ITA NO. 452/ASR/2017 (AY 2011-12) MANJINDER SINGH SANDHU V. ITO 2 YEAR, FOR WHICH NO EXPLANATION STOOD FURNISHED BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE OTHER COMPONENT OF THE ADDITION, SINCE DELETED, WAS QUA CASH DEPOSITS THEREIN WHICH, BEING SIMILARLY UNEXP LAINED, WERE ADDED BY THE AO APPLYING THE PEAK VALUE, FROM WHICH INCOME ALREA DY RETURNED (RS.1,97,800/-) BY THE ASSESSEE WAS DEDUCTED. THE SAME STOOD DELETE D IN APPEAL ON THE ASSESSEE FURNISHING A CASH FLOW STATEMENT, COMPLIED FROM HIS BOOKS OF ACCOUNT, STATED TO BE MAINTAINED IN THE REGULAR COURSE OF HIS BUSINESS OF PURCHASE AND SALE OF VEHICLES. THE ADDITION FOR RS.8.47 LACS WAS, HOWEVER, CONFIRM ED BY THE LD. CIT(A), HOLDING AS UNDER: 5.10 HOWEVER, AS REGARDS THE ADDITION OF RS.8,46 ,533 MADE BY THE AO ON THE BASIS OF FOUR CREDIT ENTRIES FOUND IN THE BANK ACCOUNT, I FI ND AFTER GOING THROUGH THE EXPLANATION GIVEN BY THE APPELLANT THAT SUFFICIENT EVIDENCE COU LD NOT BE BROUGHT ON RECORD TO SUBSTANTIATE THE SAME. THE APPELLANT HAS MERELY FIL ED A COPY OF THE CAR SALE RECEIPT WITHOUT BRINING ON RECORD A COPY OF THE REGISTRATION CERTIF ICATE OF THE CAR TO PROVE ITS PRIOR OWNERSHIP BY THE APPELLANT OR ITS PURCHASE. THE ONU S IS HIGHER ON THE APPELLANT TO PROVE THE SOURCE OF CREDITS AND OF EACH ENTRY OF CREDIT IN IT S BANK ACCOUNT, ESPECIALLY WHEN NO COMPLIANCE WAS MADE BEFORE THE AO. THEREFORE, I HOL D THAT APPELLANT HAS FAILED TO FILE ANY EVIDENCE OF IDENTITY OF THE PURCHASER, CREDIT WORTH INESS OF THE PURCHASER AND GENUINENESS OF THE TRANSACTION. THUS, IN THE ABSENCE OF ANY EVIDEN CE BEING FILED BY THE APPELLANT, I HOLD THAT SOURCE OF CASH DEPOSITS OF RS.8,46,533 ARE NOT SUBSTANTIATED AND ACCORDINGLY CONFIRM THE ADDITION OF THIS AMOUNT MADE BY THE AO. BEFORE US, THE LD. COUNSEL, SH. SURINDER MAHAJAN, PRODUCED THE CASH-BOOK, AS WELL AS FURNISHED THE COPY OF THE LEDGER ACCOUNTS O F THE PURCHASE AND SALE OF CARS, AS WELL OF ADVANCE FOR CARS (PLACED ON RECORD). THE TRANSACTIONS AS RECORDED THEREIN REFLECT AN ADVANCE OF RS.2.50 LACS FOR A CAR ON 03. 04.2010, WHICH WAS ADJUSTED AGAINST ITS PURCHASE COST (AT RS.4.25 LACS) ON 5.4 .2010, THE DATE OF PURCHASE AS WELL AS SALE, RECEIVING RS. 4.35 LACS FROM THE BUYER, SH . NARENDER SINGH, WHICH IS THE FIRST CREDIT ENTRY UNDER SCRUTINY. THE BALANCE COST (RS.1.75 LACS) WAS PAID IN CASH ON 5.4.2010 ITSELF. ANOTHER CAR WAS PURCHASED IN CA SH ON 29.5.2010 (FOR RS.3.68 LACS), ON WHICH DATE IT WAS SOLD TO, AGAIN, SH. NAR ENDER SINGH, RECEIVING THE SALE PROCEEDS (RS.3.805 LACS) THROUGH A BANK TRANSFER OF THE SAME DATE. THE DIFFERENCE ITA NO. 452/ASR/2017 (AY 2011-12) MANJINDER SINGH SANDHU V. ITO 3 BETWEEN THE PURCHASE AND SALE VALUES OF THE CARS (R S.0.22 LACS) STANDS ADMITTED AS INCOME, SO THAT THERE WAS NOTHING TO DOUBT THE SAID TRANSACTIONS. THE LD. DR WOULD, ON THE OTHER HAND, RELYING ON TH E ORDERS BY THE REVENUE AUTHORITIES, SUBMIT THAT NOTHING HAS BEEN STATED OR EXPLAINED TO REBUT THE DEFINITE FINDINGS OF FACT BY THE LD. CIT(A) TO THE EFFECT TH AT BOTH THE CREDITWORTHINESS OF THE BUYER AS WELL AS THE GENUINENESS OF THE TRANSACTION S HAD NOT BEEN ESTABLISHED, TOWARD WHICH THE LD. CIT(A) ALSO REFERS TO THE ABSE NCE OF THE REGISTRATION OF THE CARS IN THE ASSESSES NAME, I.E., PRIOR TO THEIR SA LE, AS WELL AS ABSENCE OF ANY MATERIAL TO EXHIBIT THE IDENTITY AND CAPACITY OF TH E BUYER, SH. NARENDER SINGH. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ASSESSEE HAS EXPLAINED THE CREDITS BY WAY O F TRANSFER ENTRIES IN HIS BANK ACCOUNT ON THE BASIS OF RECEIPT OF SALE VALUE OF CA RS FROM ONE, NARENDER SINGH, STATED TO BE THE BUYER THEREOF, I.E., AT RS.4.35 LA CS (ON 5.4.2010) AND RS.3.805 LACS (ON 29.05.2010). THE PURCHASE OF THE CARS IS IN CAS H, AT RS.4.25 LACS AND RS.3.68 LACS RESPECTIVELY, MADE BY MAKING PAYMENTS ON THE D ATE/S OF SALE OR PRIOR THERETO. THE AVAILABILITY OF CASH AS PER THE CASH BOOK IS NO T DENIED, AND IN RESPECT OF WHICH NO DEFECT HAS BEEN STATED. THE ASSESSEE, IF HE SO D ESIRED, COULD HAVE DEPOSITED THE CASH IN HIS BANK ACCOUNT ON THE RELEVANT DATES. WHE RE WAS, THEN, THE NEED FOR HIM TO HAVE SHOWN UTILIZATION OR EXHAUSTION OF CASH TO PURCHASE THE CARS, VALUE OF WHICH IS STATED TO HAVE BEEN REALIZED ON THEIR SALE PER THE IMPUGNED CREDITS? THAT IS, THE ASSESEE DOES NOT STAND TO GAIN IN ANY MAN NER BY REFLECTING THE TRANSACTIONS IN THE MANNER THUS, I.E., TOWARD PURCHASE OF CARS ( COMMODITY), SINCE REALIZED. THE REVENUE HAS NOT REGARDED THIS IMPORTANT FACT. THAT OF COURSE DOES NOT MEAN THAT THE ASSESSEE IS NOT OBLIGED TO EXPLAIN THE SAID DEP OSITS IN HIS BANK ACCOUNT, BUT ONLY THAT THE SAME CANNOT BE IMPUGNED WITHOUT COGENT REA SON/S. TRUE, THE CAPACITY OF THE BUYER, SH. NARENDER SINGH, HAS NOT BEEN SHOWN; HIS IDENTITY BEING BORNE OUT BY ITA NO. 452/ASR/2017 (AY 2011-12) MANJINDER SINGH SANDHU V. ITO 4 THE FACT THAT THE TRANSFER IS THROUGH HIS BANK ACCO UNT AS WELL AS THE CAR SALE RECEIPT/S. THE REVENUE, THEREFORE, WHERE IN DOUBT O F THE ASSESSEES EXPLANATION, OUGHT TO HAVE REQUIRED THE ASSESSEE TO PRODUCE SH. NARENDER SINGH, WHO ALSO APPEARS TO BE A DEALER IN CARS, HAVING PURCHASED TW O CARS FOR A TOTAL OF RS.8.155 LACS IN A PERIOD OF 1 MONTHS, AND EXAMINED HIM. IF , ON EXAMINATION, OR OTHERWISE ON THE BASIS OF MATERIAL GATHERED BY THE REVENUE, H IS CAPACITY IS FOUND WANTING OR (SAY) IT IS FOUND THAT HE HAS NOTHING TO DO WITH TH E SAID BUSINESS OR THE CARS UNDER REFERENCE (REGISTRATION NUMBER PROVIDED), SO THAT T HE NATURE OF THE CREDITS, STATED TO BE THE SALE OF CARS, COULD BE REASONABLY AND VALIDL Y DOUBTED, IT COULD BE SAID THAT THE SAID CREDITS HAVE NOT BEEN SATISFACTORILY EXPLA INED. THIS IS AS, AS IS COMMON KNOWLEDGE, THE TRADE PRACTICE, AND WHICH STANDS TO REASON, IS THAT A VEHICLE IS NOT REGISTERED BY THE BUYER IN HIS NAME UNLESS HE WISHE S TO RETAIN IT, I.E., WHERE IT IS BOUGHT AS A STOCK-IN-TRADE, TO BE SOLD. FOR EXAMPLE , ON VERIFICATION FROM THE REGISTERING AUTHORITY, IF IT IS FOUND THAT THE SAID CARS CONTINUE TO BE IN THE NAME OF THEIR ORIGINAL OWNERS, INDICATING NO TRANSACTION/S THEREIN. THERE IS, THUS, NOTHING ON RECORD TO DOUBT THE ASSESSEES EXPLANATION. RATHER, THE VERY FACT THAT SH. NARENDER SINGH ALSO MAINTAINS A BANK ACCOUNT WITH THE SAME B ANK, AS EVIDENT FROM THE IMPUGNED CREDIT ENTRIES ASCRIBED TO HIM, REPRESENTI NG TRANSFER OF FUNDS (THROUGH THE BANK), INDICATES OF HIM TO BE A MAN OF SOME MEANS. THE TWO TRANSACTIONS, IN AN OVERALL VIEW OF THE MATTER, CANNOT BE SAID TO BE DO UBTFUL OR, IN ANY CASE, EXPLANATION BY THE ASSESSEE REJECTED MERELY BY CAST ING A DOUBT THEREON, I.E., WITHOUT UNDERTAKING FURTHER VERIFICATION IN THE MAT TER. THE THIRD CREDIT ENTRY IS FOR RS.31,033/-, STATED TO BE THE PROFIT ON PURCHASE AND SALE OF VEHICLES ON COMMISSION BASIS. THERE IS NO QUESTION OF THE SAID TRANSFER STATED TO A CASH DEPOSIT BY THE LD. CIT(A), BEING A PROFIT ON THE PURCHASE AND SALE OF THE CARS, WHICH (PROFIT) GETS EMBEDDED IN THE SA LE VALUE/S OF THE CAR/S, CREDITED TO THE ASSESSEES BANK ACCOUNT ON 05.04.2010 AND 29.05 .2010. YES, IT COULD WELL BE ITA NO. 452/ASR/2017 (AY 2011-12) MANJINDER SINGH SANDHU V. ITO 5 COMMISSION INCOME RECEIVED BY THE ASSESSEE BY DEALI NG, SIMILARLY, IN VEHICLES. WHY AND HOW, WE WONDER, THEN, IS THE SAME, BEING TH E COMMISSION FOR THE YEAR, RECEIVED PER A SINGLE, CONSOLIDATED CREDIT ENTRY ? THE REVENUE HAS AGAIN NOT UNDERTAKEN ANY VERIFICATION OR CAUSED THE SAME. SO, HOWEVER, THE SAME FORMS PART OF THE ASSESSEES DISCLOSED INCOME. WHERE, THEN, IS THE SCOPE FOR ADDITION IN ITS RESPECT, EVEN AS THE AO HAD, AS OBSERVED, DEDUCTED THE INCOME RETURNED IN MAKING THE ADDITION, SO THAT THERE IS NO DOUBLE ADDITION. IF ANYTHING, THE SAID CREDIT ESTABLISHES THE ASSESSEE TO BE IN THE RELEVANT TRAD E, I.E., PURCHASE AND SALE OF CARS. NO ADVERSE MATERIAL REBUTTING THE ASSESEES EXPLANA TION/S, APART FROM MERELY REJECTING IT, HAS BEEN STATED BY THE LD. CIT(A), WH O SHOULD HAVE, IN OUR VIEW; THE ASSESSEES CASE BEFORE THE AO BEING UNREPRESENTED, SOUGHT A REMAND REPORT FROM THE AO, WHICH HE DOES NOT. THE ADDITIONS ARE, IN OU R VIEW, THUS, NOT SUSTAINABLE; THE ASSESSEE HAVING FURNISHED A REASONABLE EXPLANAT ION TOWARD THE ENTRIES APPEARING IN HIS BOOKS OF ACCOUNT, NEITHER REBUTTED NOR EVEN SUBJECT TO VERIFICATION BY THE REVENUE. 3.2 THE ASSESSEE HAS ALSO CHALLENGED THE ASSESSMENT ON THE GROUND OF NON SERVICE OF NOTICE U/S. 143(2), ON WHICH THE PARTIES WERE HEARD AT LENGTH. AS WE HAVE DELETED THE ADDITION QUA THE IMPUGNED CREDITS, WE DO NOT THINK IT NECESSARY TO ADJUDICATE ON THE MERITS OF THE SAID LEGAL CHALLENG E BY THE ASSESSEE. 3.3 WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 07 , 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: .09.2018 /PK/PS. ITA NO. 452/ASR/2017 (AY 2011-12) MANJINDER SINGH SANDHU V. ITO 6 COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: MANJINDER SINGH SANDHU 105, GUPTA COLONY, KAPURTHALA ROAD, JALANDHAR (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-II I (4), JALANDHAR (3) THE CIT(APPEALS)-2, JALANDHAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER