Shri Dushiant Kumar, Rampura Phul V. The Income-tax Officer, Bathinda

ITA 468/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95060 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: J K GUPTA
• Keywords: Gross profit estimation; Unexplained cash credit; Onus to prove
• Section: 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.468(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN: AKHPK- 7255Q SH. DUSHIANT KUMAR VS. INCOME TAX OFFICER, PROP. S.P. TRADERS, WARD 1(3), RAMPURA PHUL. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. J.K. GUPTA, ADVOCATE RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 06/11/2015 DATE OF PRONOUNCEMENT: 27/11/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2010-11 AGAINST THE ORDER DATED 29.04.2014 PASSED BY THE LD . CIT(A), BATHINDA. THE ASSESSEE HAS RAISED THE FOLLOWING REVISED GROUN DS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION OF RS.30,000/- IN TRADING ACCOUNT. 1A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION WHEN THE AUDITED BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BY THE AO BY INVOKING SECTION 145(3) OF THE ACT. 1B. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION AS THERE IS FALL IN GROSS PROFIT AT 18.86% NOT 51% AS CALCUL ATED BY THE AO AND IGNORING THE FACT THERE IS INCREASE IN SALES BY 37.54%. ITA NO.468/ASR/2014 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE CASH CREDIT OF RS.1,14,500/- IN THE NAME OF SHREE PAL. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION OF RS.1,25,000/- U/S 69 IN RESPECT OF SH. RAJINDER KUM AR MITTAL. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION OF RS.40,030/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) SHOULD HAVE SET OFF THE ADDI TION OF BALANCE HOUSE HOLD EXPENSES WITH CASH CREDIT AS WAS DONE BY HIM IN THE CASE OF TRADING ADDITION. 2. CONCERNING GROUND NO.1, THE AO MADE AN ADDITION OF RS.50,000/- IN THE TRADING ACCOUNT OF THE ASSESSEE. IT WAS OBSE RVED THAT THE ASSESSEE DEALS IN TEA LEAVES; THAT ON THE GROSS TURNOVER OF RS.66,83,514/-, THE GP HAD BEEN SHOWN BY THE ASSESSEE AT RS.4,68,938/- WHI CH WORKED OUT TO 7.01% AS COMPARED TO GP OF 8.64% SHOWN FOR THE IMM EDIATELY PRECEDING ASSESSMENT YEAR, I.E. 2009-10; THAT ON QUERY THE AS SESSEE HAD CONTENDED THAT DURING THE YEAR HIS SALES ROSE TO RS.66.83 LAC AS COMPARED TO THOSE OF RS.48.48 LAC IN THE EARLIER YEAR AND HENCE, THE MARGIN WAS REDUCED TO ACHIEVE HIGHER SALES. THE AO REJECTED THE ASSESSEE S CONTENTION IN PART, FOR THE REASON THAT THOUGH ONE HAS TO COMPROMISE WI TH ONES MARGIN TO ACHIEVE HIGHER SALES, BUT IN ASSESSEES CASE THE FA LL IN GP WAS 51%, WHICH WAS ABNORMALLY HIGH. THUS, THE AO MADE THE AD DITION OF RS.50,000/- ON ACCOUNT OF LOW GP. 3. THE AO REDUCED THE ADDITION TO RS.30,000/-. ITA NO.468/ASR/2014 3 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE LD. CIT(A) HAS FAILED TO TAKEN INTO CONSIDERATION THE FACT THA T THE ASSESSEES AUDITED BOOKS OF ACCOUNT WERE NOT REJECTED AND THAT SO, NO ADDITION COULD HAVE BEEN MADE ON ACCOUNT OF GP. IN THIS REGARD, RELIANC E HAS BEEN PLACED ON THE DECISION DATED 31.10.2014 OF THE SINGH BENCH OF THE AMRITSAR BENCH OF THE TRIBUNAL, IN THE CASE OF VINOD KUMAR VS. IT O, PASSED IN ITA NO. 467/ASR/2014 FOR THE ASSESSMENT YEAR 2010-11. 5. THE LD. DR, ON THE OTHER HAND, PLACED STRONG REL IANCE ON THE IMPUGNED ORDER IN THIS REGARD. 6. THE CONTENTION ON BEHALF OF THE ASSESSEE IS FOUN D TO BE CORRECT. ONCE THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND THAT ASSESSMENT ORDER HAS BEEN PASSED U/S 143(3), NO ADDITION ON AC COUNT OF GP COULD BE MADE. IN THIS REGARD, IN VINOD KUMAR VS. ITO (SUP RA), IT HAS BEEN OBSERVED AS FOLLOWS: 7. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE A.O. HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT AND THE BOOK S OF ACCOUNT HAVE NOT BEEN REJECTED BY INVOKING PROVISIONS OF SE CTION 145(3) OF THE ACT. EVEN IF THIS GROUND HAS NOT BEEN RAISED BE FORE THE LEARNED CIT(A) OR EVEN BEFORE US IN THE GROUNDS OF APPEAL, THE FACT REMAINS THAT NO BOOKS OF ACCOUNT HAVE BEEN REJECTED BY INVO KING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND THEREFO RE, THE TRADING RESULTS WILL BE DEEMED TO HAVE BEEN ACCEPTED BY THE A.O. THEREFORE, NO ADDITIONS CAN BE MADE BY THE A.O. AND THE ADDITIONS SO MADE BY THE AO AND SUSTAINED BY LEARNED CIT(A) A RE DIRECTED TO BE DELETED. THUS, GROUND NO. 1 RAISED BY THE ASSESS EE IS ALLOWED. ITA NO.468/ASR/2014 4 7. NO DECISION TO THE CONTRARY HAS BEEN PRODUCED ON BEHALF OF THE DEPARTMENT. THUS, IN KEEPING WITH VINOD KUMAR VS. ITO (SUPRA), THE AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE HAVING NOT BEEN REJECTED, THE ASSESSEES TRADING RESULTS FOR THE YEAR UNDER CONSI DERATION ARE DEEMED TO HAVE BEEN ACCEPTED BY THE AO. ACCORDINGLY, THE ADDI TION OF RS.50,000/- RESTRICTED TO RS.30,000/- BY THE LD. CIT(A), IS DEL ETED. GROUND NOS. 1, 1A & 1B ARE ACCEPTED. 8. COMING TO GROUND NO.2, THE AO FOUND THE ASSESSEE TO HAVE RAISED FRESH LOANS FROM SHREE PAL S/O SH. BHIM SAIN AND SH . RAJINDER MITTAL AT RS.50,000/- AND RS.1,25,000/- RESPECTIVELY. HOWEVE R, FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE AO OBSERVED THAT SHREE PAL WAS AN EMPLOYEE OF THE ASSESSEE, TO WHOM, SALARY OF RS.64, 500/- WAS CLAIMED TO HAVE BEEN PAID, AS FOLLOWS: I) 29.04.2009 : RS.2,000/- II) 29.05.2009 : RS.2,000/- III) 25.09.2009 : RS.2,500/- IV) 26.09.2009 : RS.2,500/- V) 26.10.2009 : RS.2,500/- VI) 04.12.2009 : RS.3,000/- VII) 05.03.2009 : RS.50,000/- 9. THE AO OBSERVED FROM THE ABOVE THAT ACTUALLY SAL ARY OF RS.14,500/- WAS WITHDRAWN BY SHREE PAL DURING THE W HOLE OF THE YEAR; AS AN AMOUNT OF RS.50,000/- HAD BEEN PAID ONLY THROUGH CHEQUE IN MARCH, 2010. THE AO FOUND IT STRANGE THAT A PERSON DERIVIN G SALARY OF RS.5,000/- HAD RECEIVED SALARY DURING THE WHOLE OF THE YEAR OF RS.14,500/-. THE AO OBSERVED THAT IT WAS HIGHLY IMP ROBABLE TO MANAGE ITA NO.468/ASR/2014 5 ONES AFFAIR WITH A PETTY AMOUNT OF RS.1200/- PER M ONTH ONLY. THE AO ALSO FOUND IT PECULIAR THAT SHREE PAL HAD ADVANCED A LOAN OF RS.50,000/- ON 07.04.2009 TO THE ASSESSEE WITHOUT CHARGING ANY INTEREST, WHICH REMAINED WITH THE ASSESSEE FOR THE WHOLE OF THE YEA R. THE AO OBSERVED THAT IT WAS NOT BELIEVABLE THAT A PERSON OF SUCH ME AGER INCOME , AFTER MEETING THE HOUSEHOLD EXPENSES, WOULD HAVE BEEN IN A POSITION TO SPARE SIZEABLE AMOUNT OF RS.50,000/- WITH THE ASSESSEE WI THOUT CHARGING ANY INTEREST. THE ASSESSEE WAS QUERIED IN THIS REGARD. SHREE PAL WAS ASKED TO BE PRODUCED FOR EXAMINATION. THE ASSESSEE FAILED TO DO SO. THE AO, THUS, CONCLUDED THAT THE SALARY PAID TO SHREE PAL W AS NOTHING BUT ARTIFICIAL FUNDS HAD BEEN GENERATED IN THE HANDS OF SHREE PAL FOR UTILIZING THE ASSESSEES UNACCOUNTED MONEY, WHICH HAD BEEN BR OUGHT BACK IN THE GARB OF LOAN. THE AO, ACCORDINGLY, DISALLOWED THE S ALARY AND LOAN AS BOGUS. AN ADDITION OF RS,1,14,500/- WAS, ACCORDINGL Y, MADE U/S 68 OF THE ACT. 10. THE LD. CIT(A) CONFIRMED THE ADDITION. 11. CHALLENGING THE ACTION OF THE TAX AUTHORITIES, THE LD. COUNSEL FOR THE ASSESSEE HAD DRAWN MY ATTENTION TO APB 7-8, WHI CH IS A COPY OF SALARY ACCOUNT OF SHREE PAL FOR THE FINANCIAL YEARS 2008-09 & 2009-10. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE SPECIFIC SUBMISSION MADE BEFORE HIM, THAT THE ASSES SEE COULD NOT PRODUCE SHREE PAL BEFORE THE AO ON 13.03.2013, AS HE HAD BROUGHT KAVAR FROM HARIDWAR ON 10.03.2013 AND HAD FALLEN IL L DUE TO LONG ITA NO.468/ASR/2014 6 JOURNEY BY FOOT; THAT THREE COLLEAGUES OF SHREE PAL WERE CRUSHED BY TRUCK ON 10.03.2013 AND HE WAS UNDER MENTAL TENSION ALSO; THAT THE AO HAD NOT TRIED TO FIND OUT AS TO WHETHER SHREE PAL WA S DOING THE WORK ON ASSESSEES SHOP AND NO ENQUIRY WAS MADE IN THE MAT TER; THAT SHREE PAL HAD ISSUED ALMOST ALL THE BILLS FOR THE SALE OF TEA LEAF; THAT THE ASSESSEES BOOKS OF ACCOUNT WERE WRITTEN BY SHREE PAL THAT HE WAS GOING ON TOURS TO VARIOUS MANDIS FOR SALE AND UGRAHI; THAT FOR NON-P RODUCTION OF SHREE PAL ON ONE DATE, THE AO WRONGLY JUMPED TO HIS CONCLUSIO N AND DISALLOWED THE SALARY AND CASH CREDIT; THAT IF SHREE PAL HAD WITH DRAWN LESS AMOUNT OF SALARY, THIS COULD NOT BE TAKEN AGAINST THE ASSESSE E AND THE REASONS THERE FOR NOT EXAMINED; THAT IF SHREE PAL WAS EXP LAINING FEWER AMOUNTS FOR HIS HOUSE-HOLD EXPENSES, THE ASSESSEE COULD NOT BE PENALIZED ON THIS COUNT; THAT THOUGH THE ASSESSEE HAD NOT PAID INTERE ST ON THIS LOAN, HE HAD CLAIMED LESS EXPENSE. THE LD. COUNSEL FOR THE A SSESSEE CONTENDS THAT THE LD. CIT(A) ERRED IN NOT CONSIDERING THESE SUBMI SSIONS SPECIFICALLY MADE BEFORE HIM, AS ALSO RECORDED AT PAGE 5 OF THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE ASSESSEE HAD REQUESTED THAT SINCE THE AO HAD NOT GIVEN REASONABLE OPPORTUNITY TO PRODUCE SHR EE PAL ON ANOTHER DATE, SHREE PALL BE ALLOWED TO BE PRODUCED BEFORE T HE LD. CIT(A), WHICH REQUEST WAS ALSO WRONGLY TAKEN INTO CONSIDERATION. 12. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRO NG RELIANCE ON THE IMPUGNED ORDER, IN THIS REGARD. ITA NO.468/ASR/2014 7 13. IT IS SEEN THAT THE LD. CIT(A) CONFIRMED THE A DDITION BY OBSERVING AS FOLLOWS: 3.3. THE AO HAS RIGHTLY MADE ADDITION OF RS.1,14,5 00/- ON ACCOUNT OF UNEXPLAINED CREDIT AND SALARY IN THE ACC OUNT OF SHREE PAL WHO IS AN EMPLOYEE OF THE APPELLANT. THE FINDIN G OF THE AO THAT A PERSON GETTING SALARY OF RS.64500/- CANNOT ADVANC E A LOAN OF RS.50,000/- TO THE APPELLANT AND MAINTAINING HIS FA MILY WITH THE AMOUNT OF RS.14,500/- RECEIVED FROM THE APPELLANT W HICH COMES ABOUT TO RS.1200/- PER MONTH, IS CORRECT. MOREOVER, HE COULD NOT BE PRODUCED BEFORE THE AO TO PROVE THAT SOMEBODY IN THE NAME OF SHREE PAL WAS ACTUALLY WORKING WITH THE APPELLAN T AS EMPLOYEE. THE AO HAS ALSO RECORDED THE FINDING WHICH IS CORRE CT ON FACTS AND SALARY PAID TO THIS EMPLOYEE IS NOTHING BUT ARTIFIC IAL FUNDS HAS BEEN GENERATED IN THE HANDS OF THIS FIRM WHICH HAV E BEEN BROUGHT BACK IN THE BOOKS OF ACCOUNT OF THE APPELLANT IN TH E GARB OF LOAN. IN SUCH CIRCUMSTANCES, THE ADDITION OF RS.1,14,500/- B EING THE AMOUNT OF SALARY AND ADVANCE BOTH IS CONFIRMED AND THE GROUNDS OF APPEAL ARE DISMISSED. THUS, THE ASSESSEE IS CORRECT IN CONTENDING THAT T HE SPECIFIC SUBMISSIONS MADE BEFORE THE LD. CIT(A) WERE ERRONEOUSLY NOT TAK EN INTO CONSIDERATION AND THAT THE LD. CIT(A) CONFIRMED THE ADDITION MERE LY ON THE BASIS THAT THE ASSESSEE HAD FAILED TO PRODUCE SHREE PAL BEFOR E THE A.O. 14. HAVING CONSIDERED THIS MATTER, I FIND IT EXPEDI ENT AND IN THE INTEREST OF SUBSTANTIAL JUSTICE, TO ALLOW THE ASSES SEE AN OPPORTUNITY TO PRODUCE SHREE PAL BEFORE THE AO, WHO, AFTER EXAMINI NG SHREE PAL AND GIVING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO T HE ASSESSEE, SHALL REDECIDE THE MATTER. ACCORDINGLY, GROUND NO.2 IS AC CEPTED FOR STATISTICAL PURPOSES. 15. REGARDING GROUND NO.3, THE AO MADE AN ADDITION OF RS.1,25,000/- , AS LOAN BY THE ASSESSEE FROM SH. RAJENDER KUMAR M ITTAL. AS PER THE ASSESSMENT ORDER, CREDITOR WAS PRODUCED AND WAS EXA MINED ON OATH BY ITA NO.468/ASR/2014 8 THE AO. THE AO OBSERVED THAT ALTHOUGH HE DEPOSED TH AT HE HAD GIVEN LOAN TO THE ASSESSEE, HE ALSO DEPOSED THAT HE EARNE D AROUND RS.1.5 LAC AND RS.2 LAC PER ANNUM AND THE LOAN WAS GIVEN OUT O F HIS SAVINGS; THAT, HOWEVER, FROM THE BANK ACCOUNT OF THE CREDITOR, IT WAS OBSERVED THAT CASH DEPOSITS HAD BEEN MADE IN THIS ACCOUNT BEFORE GIVING LOAN TO THE ASSESSEE AND NO DEPOSITS OUT OF THE SAVINGS HAD BE EN MADE IN THIS ACCOUNT; THAT ON BEING CONFRONTED, THE CREDITOR DEP OSED THAT THE SAVINGS WERE KEPT AT HOME; THAT HE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF DEPOSIT OF RS.2.25 LAC; THAT THE LAND WAS GIVEN TO THE ASSESSEE ON 18.04.2009 AND IT REMAINED WITH THE ASSESSEE THROUG HOUT THE YEAR AND NO INTEREST HAS BEEN CHARGED ON THE AMOUNT; THAT I N RESPONSE TO THE QUESTION AS TO WHEN THE AMOUNT HAD BEEN RECEIVED B ACK, THE CREDITOR CONTENDED THAT THE MONEY HAD BEEN RECEIVED BACK, BU T HE DID NOT REMEMBER AS TO WHEN IT WAS RECEIVED BACK. FROM THES E FACTS, THE AO CONCLUDED THAT THE ASSESSEES OWN UNACCOUNTED MONEY HAD BEEN BROUGHT BACK IN THE GARB OF FRESH UNSECURED LOAN A ND BANK ACCOUNT OF THE ASSESSEE HAD BEEN UTILIZED AS CONDUIT PIPE TO G IVE IT A COLOUR OF LOAN. THE AO ADDED THE AMOUNT OF RS.1,25,000/- TO THE INC OME OF THE ASSESSEE U/S 69 OF THE ACT. THE LD. CIT(A) CONFIRMED THE ADD ITION. 16. THE ASSESSEE CONTENDS THAT THE LD. CIT(A) HAS E RRED IN CONFIRMING THE ADDITION OF RS.1,25,000/-, MADE U/S 69 OF THE A CT; THAT SH.RAJENDER KUMAR MITTAL, THE CREDITOR WAS HAVING INCOME OF RS. 1.5/2.00 LACS PER ANNUM FROM DOING PART TIME WORK; THAT THE MONEY W AS RECEIVED ITA NO.468/ASR/2014 9 THROUGH BANKING CHANNEL; THAT IF THE ASSESSEE HAD N OT PAID INTEREST ON LOAN, THEN THE ASSESSEE HAD, IN FACT, CLAIMED LESS EXPENSE, WHICH GOES IN FAVOUR OF THE DEPARTMENT; THAT IF THE DEPOSITOR DID NOT TELL THE EXACT DATE OF HAVING RECEIVED BACK THE AMOUNT; AND THAT TOO AF TER EXPIRY OF CONSIDERABLE TIME NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE, IT IS NOT THE CASE EITHER OF THE AUTHORI TIES BELOW THAT THE LENDER IS NOT DOING ANY WORK; THAT IT IS NOT THE ASSESSEE S ONUS TO PROVE THE SOURCE OF SOURCE OF DEPOSITS; THAT THE ASSESSEE CAN NOT BE PRESUMED TO HAVE THE KNOWLEDGE OF SOURCE FROM WHICH THE DEPOSIT OR OBTAINED THE MONEY; THAT ONCE THE ASSESSEE HAS ESTABLISHED THE I DENTITY OF HIS CREDITOR AND THE CREDITOR HAS ACCEPTED HAVING ADVANCED THE A MOUNT IN QUESTION TO THE ASSESSEE, THE BURDEN IMMEDIATELY SHIFTS ON T O THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEES CASE IS NOT ACCEPTABL E AND AS TO WHY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO B E IN THE NAME OF THIRD PARTY, STILL REPRESENTS THE INCOME OF THE ASSESSEE FROM THE SUPPRESSED SOURCE; THAT IN THE PRESENT CASE, THERE IS NO MATER IAL WHATSOEVER TO ARRIVE AT SUCH A CONCLUSION; THAT THE AOS REJECTION OF TH E ASSESSEES EXPLANATION REGARDING THE SOURCE OF DEPOSITS BY ITS ELF, AGAIN LEAD TO AN ADVERSE INFERENCE REGARDING NON-GENUINENESS OR FICT ITIOUS CHARACTER OF THE ENTRY IN THE ASSESSEES BOOKS OF ACCOUNT THAT THE MOMENTS THE ASSESSEE GIVES A SATISFACTORY EXPLANATION AND PRODU CES THE CREDITOR, HIS BURDEN IS DISCHARGED AND THE CREDIT ENTRY CANNOT BE TREATED TO BE INCOME OF THE ASSESSEE FOR THE PURPOSES OF INCOME T AX AND IT IS OPEN TO ITA NO.468/ASR/2014 10 THE AO TO TAKE APPROPRIATE ACTION U/S 69 OF THE ACT , AGAINST THE PERSON WHO HAS NOT BEEN ABLE TO EXPLAIN THE INVESTMENT; T HAT IT HAS BEEN SO HELD IN CIT VS. METACHEM INDUSTRIES, 245 ITR 160 (MP); AND THAT IN THIS VIEW OF THE MATTER, THE ADDITION, WHICH IS NOT ENTITLED TO BE SUSTAINED, MAY KINDLY BE DELETED. 17. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED, AS RIGHTLY O BSERVED BY THE LD. CIT(A), NO EXPLANATION HAS COME FORWARD FOR THE CAS H DEPOSIT OF RS.2,25,000/- IN THE BANK ACCOUNT OF THE DEPOSITOR. FURTHER, NO INTEREST WAS PAID BY THE ASSESSEE TO HIS CREDITOR. MOREOVER, SH. RAJENDER KUMAR MITTAL, THE CREDITOR, IN HIS STATEMENT, COULD NOT S TATE AS TO WHETHER MONEY WAS RECEIVED BACK AND IF SO WHEN. THE LD. DR HAS CONTENDED THAT IN THIS MANNER, THE ASSESSEE HAS MISERABLY FAILED T O PROVE HIS CLAIM AND THE ADDITION, THEREFORE, HAS RIGHTLY BEEN CONFIRMED . 18. HERE, THE FIRST OBSERVATION OF THE LD. CIT(A) R EGARDING THERE BEING NO EXPLANATION WITH REGARD TO THE CASH DEPOSIT OF RS.2 .25 LACS IN THE BANK ACCOUNT OF THE DEPOSITOR IS INCORRECT. IT REMAINS U NDISPUTED THAT THE SH. RAJENDER KUMAR MITTAL, THE DEPOSITOR, WAS HAVING IN COME OF RS.1.5/2.00 LAC PER ANNUM FROM DOING PART TIME WORK AS ACCOUNTA NT. HIS DEPOSITION APROPOS QUESTION NO.3, IN HIS STATEMENT DATED 13.03 .2013 RECORDED BY THE AO IN THIS REGARD IS CATEGORICAL AND UNDISPUTED . MOREOVER, IT IS THE CASE OF THE EITHER AUTHORITIES BELOW THAT THE DEPOS ITOR/LENDER WAS NOT DOING ANY WORK. AS PER THE RETURN OF INCOME OF SH. RAJENDER KUMAR ITA NO.468/ASR/2014 11 MITTAL, FOR THE AY 2008-09, FILED ON 3.3.2009, INCO ME OF RS.1,05,120/- HAS BEEN SHOWN. AS PER THE COMPUTATION OF INCOME FO R THE YEAR ENDING 31.03.2008, NET INCOME IS RS.1,05,116/- OR SAY RS.1 ,05,120/-. OUT OF THIS AN AMOUNT OF RS.95,500/- IS BY WAY OF SALARY AND OTHER INCOME, RS.60,000/- HAVING COME FROM M/S. BALANWALI RICE MI LLS AND RS.35,500/-, INCOME FROM PART TIME ACCOUNTS, FOR TH E AY 2009-10, SH. RAJENDER KUMAR MITTAL HAS EARNED RS.84,000/- FROM M /S. PRIME TRADERS, RS.48,200/- FROM PART TIME ACCOUNTS AND RS .1,500/- AS ON-LINE TAX COMMISSION, TOTAL AMOUNTING TO RS.1,33,700/-. F OR THE AY 2010-11, THE GROSS TOTAL INCOME OF SH. RAJENDER KUMAR MITTAL IS RS.2,19,609/-. AFTER CLAIMING DEDUCTION UNDER CHAPTER VI-A AMOUNTI NG TO RS.50,000/-, THE TOTAL INCOME DEPICTED AT RS.1,69,609/-. 19. FURTHERMORE, THE FACTUM OF NO INTEREST HAVING B EEN PAID BY THE ASSESSEE TO HIS CREDITOR, BY ITSELF, CANNOT GO AGAI NST THE ASSESSEE. THE FACTUM OF CREDITOR HAVING NOT RECEIVED ANY INTEREST ON THE LOAN HAS BEEN CATEGORICALLY ADMITTED BY SH. RAJENDER KUMAR MITTAL IN RESPONSE TO QUESTION NO.7 PUT TO HIM BY THE AO IN HIS STATEMENT DATED 13.03.2013. IN FACT, NO FURTHER QUESTION WAS PUT BY THE AO TO S H. RAJENDER KUMAR MITTAL ON THIS ISSUE OF INTEREST. 20. FURTHER, THE LD. CIT(A) HAS GONE WRONG IN OBSER VING THAT CREDITOR IN HER STATEMENT COULD NOT STATE THAT WHETHER THE MONEY WAS RECEIVED BACK AND IF SO WHEN. THIS OBSERVATION IS CLEARLY A RESULT OF COMPLETE MISREADING AND NON-READING OF THE STATEMENT OF SH. RAJENDER KUMAR ITA NO.468/ASR/2014 12 MITTAL RECORDED BY THE AO U/S 131 OF THE ACT, IN AS MUCH AS VIDE THIRD LAST QUESTION, THE AO SPECIFICALLY ASKED THE DEPOSI TOR AS TO WHETHER THIS MONEY HAD COME BACK TO THE DEPOSITOR. THE ANSWER WA S THAT THE MONEY HAS BEEN TAKEN BACK, BUT THE DEPOSITOR DID NOT REME MBER AS TO WHEN COME BACK. THE RELEVANT QUESTION AND ANSWER ARE REP RODUCED HEREUNDER, FOR READY REFERENCE: QUESTION: KYA JEH PAISA AAP KE PASS BAPIS AA GIYA H E ? ANS. PAISA BAPAS LE LIA HE, MUJE YAAD NAHIN HE KAB BAPAS AAYA HE. 21. ON THE OTHER HAND, THE ASSESSEE, IT IS SEEN HAS AMPLY DISCHARGED HIS ONUS BY IDENTIFYING THE DEPOSITOR AND DULY PROD UCING ALONG WITH HIM RELEVANT DOCUMENTS BEFORE THE AO. THE AO RECORDED THE STATEMENT OF THE DEPOSITOR U/S 131 OF THE ACT. THE FACTUM OF THE DEP OSITOR HAVING EARNED INCOME OF RS.1.5/2.00 LACS PER ANNUM FROM DOING PAR T TIME WORK, HAS NO WHERE BEEN QUESTIONED BY THE DEPARTMENT. IT IS ALSO EQUALLY TRUE THAT THE AMOUNT IN QUESTION WAS RECEIVED THROUGH BANKING CHA NNEL. IT IS ALSO TRUE THAT THE DEPOSITOR SPECIFICALLY STATED HAVING RECEI VED BACK THE LOAN AMOUNT. THE ASSESSEE IS ALSO RIGHT IN CONTENDING TH AT IT WAS NOT HIS RESPONSIBILITY TO PROVE THE SOURCE OF THE AMOUNT IN THE ACCOUNT OF THE DEPOSITOR. IN THIS REGARD AS PER THE DECISION OF TH E HONBLE MADRAS HIGH COURT IN THE CASE OF S. HASTIMAL VS. CIT, 49 ITR 273 (MADRAS), THERE IS NO PRESUMPTION THAT THE ASSESSEE HAD SPECIAL KNOWLE DGE OF THE SOURCE OF HIS SOURCE OR THE ORIGIN OF ORIGIN. IN TOLARAM DAG A VS. CIT, 59 ITR 632 (ASSAM), IT HAS BEEN HELD THAT EVEN IF THE CREDIT I S IN THE NAME OF CLOSE ITA NO.468/ASR/2014 13 RELATION, THE ASSESSEE CANNOT BE PRESUMED TO HAVE T HE KNOWLEDGE OF THE SOURCE FROM WHICH THE DEPOSITOR OBTAINED THE MONEY. SO FAR AS REGARDS THE DEPOSIT IN THE ASSESSEES BANK ACCOUNT, THE DEP OSITOR CATEGORICALLY STATED THAT IT WAS OUT OF PREVIOUS SAVINGS. THIS CO NTENTION HAS NOT WHERE BEEN SUCCESSFULLY REPELLED BY EITHER OF THE AUTHOR ITIES BELOW. 22. IN SAROGI CREDIT CORPORATION VS. CIT, 103 ITR 344 (PATNA), IT HAS BEEN HELD THAT IT IS NOT FOR THE ASSESSEE TO EXPLAI N FURTHER AS TO HOW THE OR IN WHAT CIRCUMSTANCES THE DEPOSITOR OBTAINED TH E MONEY, OR HOW HE CAME TO MAKE AN ADVANCE OF THE MONEY AS A LOAN TO T HE ASSESSEE; THAT ONCE SUCH IDENTITY IS ESTABLISHED AND THE CREDITOR S, HAVE PLEDGED THEIR OATH THAT THEY HAVE ADVANCED THE AMOUNTS IN QUESTIO N TO THE ASSESSEE, THE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEES CASE CAN NOT BE ACCEPTED AND AS TO W HY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY, STILL REPRESENTS THE INCOME OF THE ASSESSEE FROM A SUPPR ESSED SOURCE; THAT IN ORDER TO ARRIVE AT SUCH A CONCLUSION, EVEN THE DEPA RTMENT HAS TO BE IN POSSESSION OF SUFFICIENT AND ADEQUATE MATERIALS. IN THE PRESENT CASE, WHEREAS ON THE ONE HAND, THE ASSESSEE HAS SUCCESSFU LLY DISCHARGED, HIS ONUS, THE DEPARTMENT HAS NOT BEEN ABLE TO GATHER AN Y MATERIAL MUCH LESS SUFFICIENT OR ADEQUATE MATERIAL, TO CONCLUDE T HAT THE ENTRY IN QUESTION REPRESENTED THE INCOME OF THE ASSESSEE FRO M SUPPRESSED SOURCE. 23. IN CIT VS. METACHEM INDUSTRIES, 245 ITR 160 ( MP), IT HAS BEEN HELD THAT AS SOON AS THE ASSESSEE GIVES A SATISFACT ORY EXPLANATION AND ITA NO.468/ASR/2014 14 PRODUCES THE PERSON WHO HAS DEPOSITED THE AMOUNT, T HE BURDEN OF THE ASSESSEE IS DISCHARGED AND IN THAT CASE, THE CREDIT ENTRY CANNOT BE TREATED AS TO BE THE INCOME OF THE ASSESSEE FOR TH E PURPOSES OF INCOME TAX AND IT IS OPEN TO THE AO TO TAKE APPROPRIATE AC TION U/S 69 OF THE ACT, AGAINST THE PERSON WHO HAS NOT BEEN ABLE TO EXPLAI N THE INVESTMENT. 24. IN VIEW OF THE ABOVE, FINDING FORCE IN THE GRIE VANCE RAISED BY THE ASSESSEE, BY WAY OF REVISED GROUND NO.3, THE SAME I S ACCEPTED, WHILE DELETING THE ADDITION OF RS.1,25,000/-. 25. APROPOS GROUND NOS. 4 & 5, THE AO MADE AN ADDIT ION OF RS.52,030/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. I T WAS OBSERVED BY THE AO THAT THE CAPITAL ACCOUNT OF THE ASSESSEE SHO WED A PETTY WITHDRAWAL OF RS.43,970/- HAVING BEEN MADE FOR HOUS EHOLD EXPENSES. THIS APPEARED TO THE AO ON THE LOWER SIDE. ON BEING CONFRONTED, THE ASSESSEE SUBMITTED THAT HOUSEHOLD EXPENSES WERE SUF FICIENT FOR HIS FAMILY OF SELF, WIFE AND ONE CHILD. THE AO OBSERVED THAT THE WITHDRAWALS CAME TO RS.3,665/- P.M., WHICH WAS QUITE INSUFFICI ENT. HE ESTIMATED THE HOUSEHOLD EXPENSES @ RS.8,000/- PER MONTH, I.E., AT RS.96,000/- PER ANNUM THEREBY, HE MADE AN ADDITION OF RS.52,030/-. 26. ON APPEAL, THE LD. CIT(A) REDUCED THE HOUSEHOL D EXPENSES TO RS.7,000/- P.M. AND THE AO WAS DIRECTED TO RECOMPU TED THE ADDITION ACCORDINGLY. 27. AS PER THE ASSESSEE, THE LD. CIT(A) HAS ERRED I N UPHOLDING THE ADDITION OF RS.40,030/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. IT HAS ITA NO.468/ASR/2014 15 BEEN CONTENDED THAT THE LD. CIT(A) OUGHT TO HAVE SE T OFF THE ADDITION OF BALANCE HOUSEHOLD EXPENSES WITH CASH CREDIT AS WA S DONE IN THE CASE OF TRADING ADDITION. 28. HERE ALSO, THE LD. DR HAS PLACED STRONG RELIANC E ON THE IMPUGNED ORDER. 29. I, HOWEVER, FIND THE ACTION OF THE LD. CIT(A) T O BE MORE THAN REASONABLE. IT HAS BEEN SHOWN THAT THE HOUSEHOLD WI THDRAWALS @ RS.7,000/- PER MONTH FOR A FAMILY OF THREE INCLUDIN G WIFE AND SINGLE CHILD IS SUFFICIENT AND ADEQUATE. THEREFORE, GROUND NOS. 4 & 5 ARE REJECTED. 30. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH NOV EMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 27/11/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: SH. DUSHIANT KUMAR, RAMPURA PHUL. 2. THE ITO, ITO WARDS 1(3), BATHINDA 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA 5. THE SR. DR, ITAT, ASR.