Deputy Commissioner of Income-tax, V. Shri Sureshkumar Bhikamchand Jain, (HUF), Jalgaon

ITA 462/PUN/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6376 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-10-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI SHRI RAJESH GAWLI
• Keywords: Additional evidence
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 462 /P U N/201 4 / ASSESSMENT YEAR : 20 09 - 10 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON ....... / APPELLANT / V/S. SHRI SURESHKUMAR BHIKAMCHAND JAIN (HUF), 7, SHIVAJI NAGAR, JALGAON 425001 PAN : AAAHJ8491A / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI RAJESH GAWLI REVENUE BY : SHRI RAJESH GAWLI / DATE OF HEARING : 08 - 10 - 2018 / DATE OF PRONOUNCEMENT : 04 - 01 - 201 9 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, NASHIK DATED 06 - 12 - 2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A HUF AND IS ENGAGED IN THE BUS INESS OF TRADING IN C HANA AND 2 ITA NO .462/PUN/2014, A.Y. 2009 - 10 IS ALSO ENGAGED IN TRADING OF SHARES. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 22 - 09 - 2009 DECLARING LOSS OF RS.88,82,866/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER RS.88,82,866/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS , ACCORDINGLY , STATUTORY NOTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 18 - 08 - 2010. IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INTER ALIA MADE ADDITIONS/DISALLOWANCES ON ACCOUNT OF : I . BUSINESS LOSS IN C HANA A CCOUNT RS.44,58,431/ - . II . UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT AT MUMBAI II . UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT AT MUMBAI RS.6 3 ,30,000/ - . AGGRIEVED BY THE ADDITIONS MADE IN ASSESSMENT ORDER DATED 23 - 11 - 2011, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CONTENTION OF ASSESSEE IN RESPECT OF BOTH THE ADDITIONS AND DELETED THE CONTENTION OF ASSESSEE IN RESPECT OF BOTH THE ADDITIONS AND DELETED THE SAME. NOW, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BUSINESS LOSS IN CHANA ACCOUNT OF RS.44,58,431/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH U/S. 69 AT RS.63,30,000/ - . 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE HONBLE CIT, AS PER THE CIRCUMSTANCES OF THE CASE. 4. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONAL EVIDENCE APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 3 ITA NO .462/PUN/2014, A.Y. 2009 - 10 3. SHRI RAJESH GAWLI REPRESENTING THE DEPARTMENT SUBMITTED THAT IN CHANA ACCOUNT THE ASSESSEE HAS CLAIMED LOSS TO SUPPRESS THE INCOME. A PERUSAL OF DOCUMENTS ON RECORD REVEAL THAT THE ASSESSEE IS PURCHASING PERUSAL OF DOCUMENTS ON RECORD REVEAL THAT THE ASSESSEE IS PURCHASING CHANA FROM FARMERS AND IS MAKING PAYMENTS TO THEM AFTER CONSIDERABLE PERIOD OF TIME. NO FARMER CAN WAIT FOR SUCH A LONG PERIOD FOR THE PAYMENTS OF PRODUCE SOLD , ESPECIALLY , WHEN THE FARMERS ARE TRAVELLING FROM DISTANCES AS FAR AS 200 KMS. THE ASSESSEE HAS NOT GIVEN ADDRESS ES OF THE FARMERS TO VERIFY THE FACTS. NO CONFIRMATIONS WERE FILE D BY THE ASSESSEE FROM THE FARMERS. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED FARMERS. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE FOR LOADING AND UNLOADING OF CHANA. NO DETAILS OF INWARD AND OUTWARD STOCK REGISTER ARE MAINTAINED BY THE ASSESSEE. 3.1 THE LD. DR REFER RED TO RULE 16A OF APMC RULES, 1967 TO CONTEND THAT THE APMC RULES MANDATES THAT THE PURCHASER SHALL SETTLE THE ACCOUNT AND PAY THE SELLER OR HIS COMMISSION AGENT FOR THE SALE OF THE PRODUCE ON THE PAY THE SELLER OR HIS COMMISSION AGENT FOR THE SALE OF THE PRODUCE ON THE SAME DAY. THE LD. DR SUBMITTED THAT IF THE ASSESSEE IS NO T MAKING PAYMENT TO THE FARMERS ON THE SAME DAY IT IS CONTRAVENTION OF THE APMC RULES, 1967 AND HENCE, SUCH PAYMENTS ARE NOT ALLOWABLE. THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. JA NSAMPARK ADVERTISING & MARKETING (P.) LTD. REPORTED AS 56 TAXMANN.COM 286 TO CONTEND THAT IF THE ASSESSING LTD. REPORTED AS 56 TAXMANN.COM 286 TO CONTEND THAT IF THE ASSESSING OFFICER HAS FAILED TO DISCHARGE HIS DUTY PROPERLY, OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD NATURALLY SHIFT TO COMMISSIONER OF INCOME TAX (APPEALS). THE TRIBUNAL CANNOT DELETE THE ADDITION MERELY ON THE GROUND THAT THERE WAS LACK OF INQUIRY BY THE ASSESSING OFFICER. THE LD. DR POINTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT CONDUCTING PROPER INQUIRY HAS DELETED THE ADDITION. PROPER INQUIRY HAS DELETED THE ADDITION. 4 ITA NO .462/PUN/2014, A.Y. 2009 - 10 3.2 IN RESPECT OF GROUND NO. 2 THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.63,30,000/ - IN RESPECT OF UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT AT RS.63,30,000/ - IN RESPECT OF UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT AT MUMBAI. THE LD. DR SUBMITTED THAT THE ASSES SEE IS RESIDING IN JALGAON. AS PER THE CONTENTION OF THE ASSESSEE THE ASSESSEE IS TRAVELLING TO MUMBAI FOR DEPOSIT OF CASH. HOWEVER, THE ASSESSEE HAS FAILED TO SHOW HIS MOVEMENT FROM JALGAON TO MUMBAI AND VICE - VERSA FOR / AFTER DEPOSIT OF CASH. THE ASSESS EE HAS FAILED TO ESTABLISH NEXUS BETWEEN THE FUNDS AVAILABLE AT JALGAON AND THE CASH DEPOSITS IN BANK ACCOUNT AT MUMBAI. AVAILABLE AT JALGAON AND THE CASH DEPOSITS IN BANK ACCOUNT AT MUMBAI. THE LD. DR TO SUPPORT HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SMT. KAV ITA CHANDRA VS. COMMISSIONER OF INCOME TAX REPORTED AS 81 TAXMANN.COM 317. 4. ON THE OTHER HAND SHRI SUNIL GANOO APPEARING ON BEHALF OF THE 4. ON THE OTHER HAND SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE AP MC RULES REFERRED TO BY THE DR IN THE COURSE OF HIS SUBMISSIONS DOES NOT APPLY TO APMC AGENTS. THE ASSESSEE IS A AGENT. THE LD. AR REFERRED TO CHANA TRADING ACCOUNT AND P & L ACCOUNT FOR THE FINANCIAL YEAR ENDING ON 31 - 03 - 2009 AT PAGES 34 AND 35 OF THE P APER BOOK . THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECORDED ALL OF THE P APER BOOK . THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECORDED ALL TRANSACTIONS WITH RESPECT TO SALE PURCHASE OF CHANA AND EXPENDITURE INCURRED IN RELATION THERETO. THE LD. AR FURTHER SUBMITTED THAT CONFIRMATION LETTERS FROM BROKERS SHREE JAY TRADING COM PANY AND SHREE RADHESHYAM TRADERS ALONG WITH COPIES OF SALE BILLS WERE FURNISHED BEFORE THE AUTHORITIES BELOW THE SAME ARE AT PAGES 42 TO 5 3 OF THE PAPER BOOK. THE PURCHASE BILLS OF THE CHANA FROM SAGAR SHARADCHAND LATHI ARE AT THE PURCHASE BILLS OF THE CHANA FROM SAGAR SHARADCHAND LATHI ARE AT PAGES 54 TO 60 OF THE PAPER BOOK. ALL THESE TRANSACTIONS WERE CARRIED OUT 5 ITA NO .462/PUN/2014, A.Y. 2009 - 10 BY THE ASSESSEE AT APMC. THE APMC HAS ISSUED RECEIPTS IN RESPECT OF TRANSACTIONS OF PURCHASE AND SALE OF GOODS BY ASSESSEE. THE SAME ARE AT PAGES 83 TO 85 OF THE PAPER BOOK. THE LD. AR POINTED THAT THE ASS ESSING PAGES 83 TO 85 OF THE PAPER BOOK. THE LD. AR POINTED THAT THE ASS ESSING OFFICER IN THE ASSESSMENT ORDER HAS WRONGLY RECORDED THAT THE ASSESSEE HAS ADMITTED THAT NO DELIVERY OF GOODS WAS TAKEN. THESE FINDINGS OF ASSESSING OFFICER WERE REFUTED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME T AX (APPEALS) AFTER TAKING INTO CONSIDERATION ALL THE AFORESAID DOCUMENTS DELETED THE ADDITION. THE LD. AR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS APPRECIATED SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS APPRECIATED THE FACTS AFTER EXAMINING THE RECORDS IN RIGHT PERSPECTIVE. 4.1 TH E LD. AR SUBMITTED THAT IN SO FAR AS THE STORAGE OF GOODS IS CONCERNED THE SAME ARE EITHER STORED IN THE GODOWN OF THE BROKERS OR IN HEAPS IN FRONT OF THE SHOP OF BROKER S. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER HAS ACCEPTED THE FACT THAT THE GOODS CAN BE STORED IN ASSESSMENT ORDER HAS ACCEPTED THE FACT THAT THE GOODS CAN BE STORED IN H EAPS IN FRONT OF SHOP. THEREFORE, THERE WAS NO EXPENDITURE FOR STORAGE OF GOODS. THE LD. AR FURTHER SUBMITTED THAT LOADING AND UNLOADING EXPENSES OF GOODS BROUGHT FOR SALE ARE PAID BY FARMERS AND IN CASE OF SALE OF GOODS THE SAME ARE BORNE BY THE PURCHASER. 4.2 IN RESPECT OF GROUND NO. 2 OF THE APPEAL THE LD. AR SUBMITTED THAT 4.2 IN RESPECT OF GROUND NO. 2 OF THE APPEAL THE LD. AR SUBMITTED THAT THE PRIMARY REASON FOR REJECTING THE CLAIM OF ASSESSEE IN RESPECT OF ADDITION MADE U/S. 69 ON ACCOUNT OF CASH DEPOSIT IN BANK ACCOUNT IN MUMBAI IS THAT T HE ASSESSEE HAS FAILED TO CLAIM TRAVELLING AND INCIDENTAL EXPENDITURE FOR DEPOSIT OF AMOUNTS ON VARIOUS DATES. THE LD. AR SUBMITTED THAT THE ASSESSEE IS AN MLA HE WOULD BE TRAVELLING TO MUMBAI FREQUENTLY IN HIS OWN VEHICLE FOR OFFICIAL PURPOSE. WHILE TRA VELLING TO MUMBAI HE WOULD CARRY VEHICLE FOR OFFICIAL PURPOSE. WHILE TRA VELLING TO MUMBAI HE WOULD CARRY CASH FOR DEPOSITING THE SAME IN HIS BANK ACCOUNT. SINCE, THE ASSESSEE 6 ITA NO .462/PUN/2014, A.Y. 2009 - 10 CARRIED THE CASH DURING OFFICIAL TRAVEL THE EXPENDITURE IS NOT DEBITED TO THE P & L ACCOUNT. SIMILAR IS THE EXPLANATION WITH RESPECT TO EXPENDITURE O N STAY IN MUMBAI. THE LD. AR PRAYED FOR DISMISSING THE APPEAL OF REVENUE. STAY IN MUMBAI. THE LD. AR PRAYED FOR DISMISSING THE APPEAL OF REVENUE. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE REVENUE IN APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON TWO COUNTS : I . DELETING THE ADDITION MADE ON ACCOUNT OF BUSINESS LOSS OF CHANA I . DELETING THE ADDITION MADE ON ACCOUNT OF BUSINESS LOSS OF CHANA ACCOUNT RS.44,58,431/ - . II . DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPO SITS IN BANK AT MUMBAI RS.63,30,000/ - . 6. THE ASSESSING OFFICER HAS DISALLOWED BUSINESS LOSS IN CHANA ACCOUNT PRIMARILY FOR THE REASON THAT THE PAYMENTS MADE BY THE ASSESSEE ACCOUNT PRIMARILY FOR THE REASON THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE FARMERS IS AFTER CONSIDERABLE PERIOD OF TIME, THE DELAY IN MAKING PAYMENTS RAISE AN EYE OF SUSPICION WHETHER SUCH PAYMENTS WERE AT ALL MADE OR NOT. FURTHER, THE ASSESSEE HAS NOT DEBITED A N Y INCIDENTAL EXPENDITURE TOWARDS LOADING AND UNLOADING OF CHANA. WE OBSERVE THAT THE ASSESSING OFFICER HAS DISALLOWED BUSINESS LOSS IN CHANA ACCOUNT MERELY ON ASSUMPTIONS AND PRESUMPTIONS. THERE IS NO MATERIAL AVAILABLE ON ON ASSUMPTIONS AND PRESUMPTIONS. THERE IS NO MATERIAL AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER TO DISCARD CHANA PAYMENT S MADE BY THE ASSESSEE TO THE FARMERS. THE ASSESSING OFFICER HAS FAILED TO CONSIDER THE DOCUMENTARY EVIDENCE FU RNISHED BY ASSESSEE TO SHOW SALE/PURCHASE ACTIVITY IN CHANA WERE CARRIED OUT BY THE ASSESSEE. ON THE CONTRARY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS TAKEN COGNIZANCE OF VARIOUS DOCUMENTARY EVIDENCE S FURNISHED BY THE ASSESSEE TO HOLD THAT TRADING OF DOCUMENTARY EVIDENCE S FURNISHED BY THE ASSESSEE TO HOLD THAT TRADING OF CHANA WAS INDEED CARRIED OUT. THE EVIDENCES BROUGHT ON RECORD BY 7 ITA NO .462/PUN/2014, A.Y. 2009 - 10 ASSESSEE WERE FURTHER CORROBORAT E D BY THE STATEMENTS OF BROKERS. THUS, IN VIEW OF THE DOCUMENTARY EVIDENCE PLACED ON RECORD WE DO NOT FIND REASON TO INTERFERE WITH THE FINDINGS OF COMMISSI ONER OF INCOME TAX (APPEALS) IN TO INTERFERE WITH THE FINDINGS OF COMMISSI ONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION. ACCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 7. IN GROUND NO. 2 OF THE APPEAL THE REVENUE HAS ASSAILED DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH U/S. 69 OF THE ACT. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MADE ADDITION THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MADE ADDITION IN RESPECT OF CASH CREDITS IN THE BANK OF ASSESSEE AT MUMBAI FOR THE REASON THAT THE ASSESSEE HAS FAILED TO ESTABLISH NEXUS BETWEEN CASH DEPOSITS IN BANK ACCOUNT AT MUMBA I AND CASH AVAILABLE IN BOOKS JALGAON. THE AVAILABILITY OF ACCOUNTED CASH AT JAL GAON IS NOT DISPUTED BY THE ASSESSING OFFICER. THE ASSESSEE HAS EXPLAINED THAT WHILE TRAVELLING TO MUMBAI FROM JAL GAON THE ASSESSEE WOULD CARRY CASH AND DEPOSIT THE SAME IN B ANK JAL GAON THE ASSESSEE WOULD CARRY CASH AND DEPOSIT THE SAME IN B ANK ACCOUNT AT MUMBAI. SINCE, THE ASSESSEE IS MEMBERS OF LEGISLATIVE ASSEMBLY DURING THE RELEVANT PERIOD THE ASSESSEE WAS CARRYING CASH TO MUMBAI WHILE ON OFFICIAL TOUR. THEREFORE, THE ASSESSEE HAS NOT CLAIMED TRAVELLING EXPENSES INCURRED FOR DEPOSIT ING THE CASH AT MUMBAI. THE EXPLANATION FURNISHED BY THE ASSESSEE IS PLAUSIBLE . THE ASSESSEE BEING MLA WOULD FREQUENTLY TRAVEL TO MUMBAI FROM JAL GAON TO ATTEND THE MLA WOULD FREQUENTLY TRAVEL TO MUMBAI FROM JAL GAON TO ATTEND THE SESSIONS IN VIDHAN SABHA AND O N VARIOUS OTHER OCCASIONS IN CONNECTION WITH HIS OFFICIAL DUTIES. MERELY FOR THE REASONS THAT THE ASSESSEE HAS NOT CLAIMED EXPENDITURE FOR DEPOSITING THE CASH IN BANK AT MUMBAI CANNOT BE A GROUND FOR MAKING THE ADDITION U/S. 69 OF THE ACT. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SUSPECT THAT THE CASH AVAILABLE AT JALGAON WAS UTILIZED FOR ANY OTHER PURPOSE/INVESTMENT. THE FINDINGS OF AT JALGAON WAS UTILIZED FOR ANY OTHER PURPOSE/INVESTMENT. THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ARE REASONED AND 8 ITA NO .462/PUN/2014, A.Y. 2009 - 10 JUSTIFIABLE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, GROUND NO. 2 RAISED IN THE APPEAL BY REVENUE IS DISMISSED. 8. THE GROUND NOS. 3 AND 4 ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON F R I D A Y , THE 0 4 T H DAY OF JA NUARY, 201 9 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 0 4 T H JANUARY, 201 9 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, NASHIK 4. / THE CIT - II, NASHIK 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, / , / ITAT, PUNE