ITO, HANUMANGARH V. M/s. Rajesh Kumar Hissaria (HUF), HANUMANGARH JUNCTION

ITA 477/JODH/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6515 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N R MERTIA
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 477/JU/2013 ASSESSMENT YEAR: 2009-10 THE INCOME-TAX OFFICER VS. M/S RAJESH KUMAR HI SSARIA[HUF] WARD 2 MAIN BAZAR, DURGA MANDIR ROAD HANUMANGARH HANUMANGARH JUNCTION PAN NO. AABHR 5472 C (APPELLANT) (RESPONDENT) CO NO. 42/JU /2013 A/O ITA NO. 477/JU/2013 ASSESSMENT YEAR: 2009-10 M/S RAJESH KUMAR HISSARIA[HUF] VS. THE INCOME -TAX OFFICER MAIN BAZAR, DURGA MANDIR ROAD WARD 2 HANUMANGARH HANUMANGARH PAN NO. AABHR 5472 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.R. MERTIA DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 22.04.2014 DATE OF PRONOUNCEMENT : 21.05.2014 2 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION [CO] BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF T HE CIT(A), BIKANER DATED 31.07.2013 PERTAINING TO A.Y 2009- 2010. 2. BRIEFLY STATED, THE FACTS APROPOS GROUND NO. 1 A RE THAT THE A.O. HAS ESTIMATED HOUSEHOLD EXPENSES OF T HE ASSESSEE AT RS. 3,66,000/- AND EDUCATION EXPENSES A T RS. 30,000/-. THE ASSESSEE IS A GRAIN/COMMISSION MERCH ANT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SUFFICIENCY OF WITHDRAWALS MADE BY THE ASSESSEE-HUF FOR MEETING OUT HOUSEHOLD EXPENSES WAS EXAMINED. THE ASSESSEE EXPLAINED THAT THE SIZE OF THE ASSESSEES FAMILY IS VERY SMALL AND COMPRISES OF HIMSELF, HIS WIFE AND T WO DAUGHTERS WHO ARE STUDYING IN LOCAL SCHOOL. THE AS SESSEE HAS SHOWN WITHDRAWALS OF RS. 1,07,375/- IN THE CAPI TAL 3 ACCOUNT ATTACHED WITH THE COMPUTATION OF INCOME. I T WAS STATED THAT THE ASSESSEE WAS NOT PAYING RENT BECAUS E HE WAS LIVING IN HIS ANCESTRAL HOUSE AND THE FAMILY WA S LIVING WITH HIS FATHER SHRI RADHEY SHYAM WHOSE WITHDRAWAL HAD SHOWN AT RS. 16,547/-. THE VEHICLES AND PHONES ETC ARE CONNECTED AND RELATED WITH THE BUSINESS. IT WAS FU RTHER STATED THAT CERTAIN REQUIREMENTS OF THE DAY TO DAY HOUSE HOLD LIKE GOOD, GRAIN, VEGETABLES, MILK, ETC. ARE O BTAINED FROM HIS AGRICULTURAL LAND. BUT THE A.O., ON THE B ASIS OF LOCAL INFORMATION GATHERED AND LOOKING INTO THE STA TUS OF THE FAMILY, HAS ESTIMATED THE HOUSE HOLD EXPENSES A T RS. 3,96,000/- AND AFTER REDUCING THE WITHDRAWALS TOTAL ING RS. 1,23,922/- [RS. 1,07,375/- + 16,547/- ] HAS ADDED T HE BALANCE OF RS. 2,72,078/- ON ACCOUNT OF LOW HOUSE H OLD WITHDRAWALS. IN ARRIVING AT THE ABOVE ADDITION, TH E A.O. HAS ESTIMATED THE KITCHEN EXPENSES, ELECTRICAL EXPE NSES, PETROL EXPENSES, WATER AND SANITATION AND FOR MENIA L WORK ASSISTANCE. HE HAS ALSO ESTIMATED EDUCATION EXPENS ES OF TWO DAUGHTERS OF THE FAMILY. FINALLY, HE HAS ADDED RS. 2,72,078/- U/S 69C OF THE INCOME-TAX ACT, 1961 ['TH E ACT', 4 FOR SHORT]. IN FIRST APPEAL, THE LD. CIT(A) HAS RE DUCED THIS EXPENDITURE. BUT THE ASSESSEE IS FURTHER AGGRIEVED AND HAS COME IN APPEAL BEFORE THE APPELLATE TRIBUNAL. 3. BEFORE US, BOTH THE PARTIES HAVE REITERATED THEI R EARLIER ARGUMENTS. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE ESTIMATION OF THE A.O. IS SIMPLY WIL D AND BASED ON SUBJECTIVE CONSIDERATION. WE DO NOT FIND ANY REASONABLE BASIS FOR MAKING SUCH ESTIMATES WITHOUT REFERENCE TO ANY EVIDENCE ON RECORD. WE CANNOT APP ROVE SUCH ADHOC AND BASELESS ESTIMATION AS THE LAW DOES NOT PERMIT TO DO SO. WITHDRAWALS SHOWN Y THE ASSESSEE HUF AND HEAD OF THE FAMILY MAY BE SUFFICIENT AS DIFFERE NT FAMILIES HAVE DIFFERENT PATTERN OF LIVING. THE A.O . HAS NOT SPECIFICALLY MENTIONED ANY SPECIAL CIRCUMSTANCE WHI CH MAY GO TO PROVE THAT THE ASSESSEE FAMILY WAS ENJOYING A VERY HIGH STATUS. THE ASSESSEE HAS STATED THAT THE VEHI CLE AND PHONE ETC. ARE CONNECTED WITH BUSINESS OF GRAIN/ 5 COMMISSION AGENCY WHICH THE A.O. HAS NOT AT ALL CONSIDERED. ACCORDINGLY, WE DO NOT FIND ANY LOGIC IN MAKING ADDITION OF RS. 2,82,078/- ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS. ACCORDINGLY, WE DELETE THIS ADDI TION AND ALLOW GROUND (I) OF THIS APPEAL. 5. FACTS OF GROUND (II) RELATING TO DELETION OF ADD ITION MADE OUT OF GENERAL EXPENSES IS ALMOST ON THE SAME LINE. THIS ADDITION WAS ALSO BASED ON NO LOGIC AND NO EVI DENCE. THEREFORE, THE LD. CIT(A) HAS CORRECTLY DELETED THE SAME. WE DO NOT WANT TO GO INTO MUCH NITTY-GRITTY OF THIS ISSUE. HENCE GROUND NO.(II) STANDS DISMISSED. 6. GROUND NO. (III) PERTAINS TO DELETION OF ADDITIO N OF RS. 18,686/- MADE ON ACCOUNT OF DISALLOWANCE OF INTERES T. THE A.O. HAS DISALLOWED A SUM OF RS. 74,858/- FROM INTEREST PAID ON SBI OD ACCOUNT WHICH WAS OPENED AG AINST FDRS. HE HAS OBSERVED THAT INTEREST OF RS. 74,858/ - WAS PAID ON OD LIMIT ON RS. 13.50 LAKHS TAKEN AGAINST F DRS OF 6 RS. 15 LAKHS AND SUCH INTEREST WAS NOT DEDUCTIBLE F ROM INTEREST INCOME ON FDRS. DURING FIRST APPEAL, IT WA S OBSERVED BY THE LD. CIT(A) THAT THE TRANSACTIONS RE LATING TO INVESTMENT IN FDRS AND OD LIMIT ARE REFLECTED IN TH E BALANCE SHEET OF ASSESSEES BUSINESS CONCERN. THUS HE HAS FOUND THAT BOTH THE TRANSACTIONS ARE INTEGRAL PART OF THE BUSINESS. THE FDRS ARE FOUND TO HAVE BEEN RAISED F ROM THE BUSINESS FUNDS AND OD AMOUNT WAS ADMITTEDLY ALS O USED IN THE BUSINESS. THEREAFTER, HE HAS DELETED TH E IMPUGNED ADDITION. 7. BEFORE US, SAME AND SIMILAR ARGUMENTS HAVE BEE N REPEATED. WE ARE ALSO IN AGREEMENT WITH THE LD. CI T(A) THAT INTEREST PAID ON ODI LIMIT IS DEDUCTIBLE U/S 3 6(1)((III) OF HT ACT BECAUSE THE AMOUNTS RECEIVED AGAINST THE OD LIMIT WERE ULTIMATELY USED IN BUSINESS. BOTH THESE TRANSACTIONS ARE NOT INDEPENDENT BUT ARE DEPENDENT AND RELATED ONES. ACCORDINGLY, WE FIND NO FALLACY IN TH E FINDING OF THE LD. CIT(A) AND THEREFORE, CANNOT ALLOW GROUN D NO. 3 OF REVENUES APPEAL. 7 8. GROUND NO. (IV) OF THIS APPEAL PERTAINS TO DELET ION OF ADDITION OF RS. 8,623/- MADE ON ACCOUNT OF INTEREST NOT CHARGED FROM M/S UJJAWAL TRADING COMPANY. THE ISSU E BEING PETTY IN NATURE, WE DO NOT WISH TO INTERFERE WITH THE FINDING OF THE LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL STANDS DISMISSED. 9. GROUND NO. (V) PERTAINS TO DELETION OF ADDITION OF RS. 74,885/- MADE ON ACCOUNT OF INTEREST CHARGED ON OD LIMITS. THIS GROUND IS ALMOST SAME AND SIMILAR TO GROUND NO. 3 OF THIS APPEAL. THEREFORE, WITH THE SAME REA SONING, WE HOLD THAT THERE IS NO VALID REASON TO INTERFERE IN THIS FINDING OF THE LD. CIT(A) AS WELL. ACCORDINGLY, WE DISMISS GROUND NO. (V) OF REVENUES APPEAL. 10. LAST GROUND NO. (VI) PERTAINS TO DELETION OF AD DITION OF RS. 15,74,319/- MADE U/S 68 OF THE ACT. 11. FACTS LEADING TO THIS GROUND ARE THAT AS PER TH E LIST OF SUNDRY CREDITORS, THE SUNDRY CREDITORS ARE SHOWN AT RS. 8 42,89,490/- IN TOTAL. THE TOTAL SUNDRY CREDITORS A RE 107 WHO ARE ALL FARMERS. THE A.O. ENQUIRED FROM THE AS SESSEE VIDE LETTER DATED 29.8.2011 TO FILE COPIES OF ACCOU NTS OF THESE CREDITORS ALONGWITH THEIR CONFIRMATIONS. THE ASSESSEE REPLIED VIDE LETTER DATED 14.9.2011 BY FIL ING COPIES OF ACCOUNTS OF 19 CREDITORS ALONGWITH THEIR CONFIRMATIONS AND ALSO FILED AFFIDAVITS OF SOME OF THE FARMERS. THE ASSESSEE ALSO FILED COPIES OF ACCOUNT S OF THE REMAINING CREDITORS ALONGWITH LETTER DATED 22.12.20 11. THE A.O. HAS MADE ANNEXURES OF ALL THESE TRANSACTIO NS. BUT THE A.O., RELYING ON NUMEROUS ITEMS APPEARING I N NEWSPAPER, HAS FINALLY FOUND THAT MOST OF THE FARME RS ARE MARGINAL ONES AND EARNINGS ARE SUFFICIENT TO MEET T HEIR DAY TO DAY NEEDS. HE HAS ENUMERATED SUCH FARMERS A ND ALSO GIVEN THEIR OPENING AND CLOSING BALANCE WHICH ARE RELEVANT FOR THE YEAR. THEREAFTER, HE HAS OBSERVED THAT THE IDENTITY OF THE CREDITORS AND THEIR CAPACITY AR E NOT ESTABLISHED ON RECORD. HE HAS ALSO DOUBTED THE GENUINENESS OF THESE TRANSACTIONS. RESULTANTLY, HE HAS 9 ADDED RS. 15,74,319/- U/S 68 OF THE ACT TO THE INCO ME OF THE ASSESSEE DECLARED IN THIS YEAR. 12. IN APPEAL, THE ASSESSEE MADE SAME AND SIMILAR ARGUMENTS AND THE LD. CIT(A) HAS FOUND FAVOUR WITH THE SUBMISSIONS AND HAS FINALLY DELETED THE IMPUGNED AD DITION. WHILE DOING SO, THE LD. CIT(A) HAS OBSERVED THAT TH E CREDITS IN ALL ACCOUNTS HAS OCCURRED ON ACCOUNT OF SALE OF CROPS THROUGH KRISHI UPAJ MANDI SAMITI AGAINST WHIC H THERE ARE SEVERAL WITHDRAWALS AND THERE WAS NO FRESH CASH CREDIT DURING THE YEAR. HE HAS FURTHER OBSERVED THAT IN M OST OF THE CASES, THE OPENING BALANCE AND SALES OF CROPS E FFECTED DURING THE SECOND HALF OF THE YEAR ARE LEFT UNWRITT EN BY THE A.O. THE A.O. HAS NOT GIVEN COMPLETE DETAILS O F THE ENTIRE YEAR. THEREFORE, WITH THESE REASONINGS, HE HAS HELD THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTI TY AND CAPACITY OF THE CREDITORS AS WELL AS THE GENUINITY OF THE TRANSACTIONS. ACCORDINGLY, HE HAS DELETED THE ADDI TION. 10 13. BEFORE US, BOTH THE PARTIES HAVE REITERATED THE IR SAME ARGUMENTS. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS VIS A VIS THE EVIDENCE AVAILABLE ON RECORD, WE CONCUR WITH THE LD . CIT(A)S FINDING BECAUSE THESE CREDITORS WERE PRESC RIBED DURING SALE OF CROPS THROUGH KRISHI UPAJ MANDI SAMI TI AND ASSESSEES BUSINESS IS THAT OF MERCHANDISE/COMMISSI ON AGENT. THE DETAILS INCORPORATED BY THE A.O. IN HIS ANNEXURES ARE DEFINITELY INCOMPLETE AND THE ASSESSE E HAS FILED CONFIRMATION/AFFIDAVIT IN MOST OF THE CASES. THE CREDITORS IN QUESTION ARE VERY LARGE AND THE AMOUNT S OF THEIR CREDITS ARE NOT VERY BIG. THEREFORE, IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES ARISING FROM THE FAC TS OF THIS ISSUE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF REVENUE AS WELL. ACCORDINGLY, WE CONFIRM THE FINDI NG OF THE LD. CIT(A) AND DISMISS GROUND NO. (VI) OF THIS APPEAL. 15. AS A RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 11 16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N ITS CROSS OBJECTION: 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT DELETING THE BALANCE ADDITION OF RS. 50,078/-, WHIC H ADDITION WAS SUSTAINED BY HIM, OUT OF RS. 272,078/- MADE BY ID. A.O. ON A/C OF LOW WITHDRAWAL, VIDE PAR A NO. 3 OF ASST. ORDER. THE SAME MAY VERY KINDLY BE DELETED IN VIEW OF THE SUBMISSION AND MATERIAL ON RECORD BEFORE HIM. 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ID. CIT (A) HAS ERRED IN LAW AND IN FACTS IN NO T DELETING THE BALANCE ADDITION OF RS. 11,863/-, WHIC H ADDITION WAS SUSTAINED BY HIM, OUT OF RS. 29,659/- MADE BY ID. A.O. ON A/C OF GENERAL EXPENSES VIDE PARA NO . 4 OF ASST. ORDER. THE SAME MAY VERY KINDLY BE DELET ED IN VIEW OF THE SUBMISSION AND MATERIAL ON RECORD BEFOR E HIM. 3. IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ID. CIT (A) HAS ERRED IN LAW AND IN FACTS IN NO T DELETING THE BALANCE 50% ADDITION OF RS. 18686/-, W HICH ADDITION WAS SUSTAINED BY HIM, OUT OF RS. 37373/- M ADE BY ID. A.O. ON A/C OF DISALLOWANCE OF INTEREST VIDE PARA 12 NO. 5 OF ASST. ORDER. THE SAME MAY VERY KINDLY BE DELETED IN VIEW OF THE SUBMISSION AND MATERIAL ON RECORD BEFORE HIM. 4. IN THE FACTS ARID IN THE CIRCUMSTANCES OF THE CA SE, THE ID. CIT [A] HAS ERRED IN LAW AND IN FACTS IN NO T DELETING THE BALANCE 50% ADDITION OF RS. 18686/-, W HICH ADDITION WAS SUSTAINED BY HIM, OUT OF RS. 37373/- M ADE BY ID. A.O. ON A/C OF DISALLOWANCE OF INTEREST VIDE PARA NO. 5 OF ASST. ORDER. THE SAME MAY VERY KINDLY BE DELETED IN VIEW OF THE SUBMISSION AND MATERIAL ON RECORD BEFORE HIM. IT IS EVIDENT FROM THE ABOVE GROUNDS THAT THE AMOUN TS INVOLVED IN THE CROSS OBJECTION ARE VERY SMALL. NO SERIOUS EFFORT WAS MADE BY THE LD. A.R. AND THE JUDGMENT WA S LEFT TO THE WISDOM OF THE BENCH. WE HAVE GONE THROUGH A LL THESE ISSUES AND WE ARE OF THE CONSIDERED OPINION T HAT THE AMOUNTS INVOLVED BEING SMALL, WE WOULD NOT LIKE TO DISTURB THE FINDING OF THE LD. CIT(A) WHEN MAJOR RELIEF HAS BEEN GRANTED TO THE ASSESSEE. ACCORDINGLY, WE DISMISS T HE CROSS OBJECTION OF THE ASSESSEE. 13 17. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 ST MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST MAY, 2014 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR