Dy. C.I.T., circle-1, Gwalior V. M/s Shri Ram & Company, Dabra

ITA 48/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0695 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 3 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 48/AGRA/2013 ASSTT. YEAR : 2009-10 D.C.I.T., CIRCLE 1, VS. M/S. SHRI RAM & COMPAN Y, GWALIOR. JAWAHAR GANJ, DABRA. (PAN: AAJFM 6311 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : NONE DATE OF HEARING : 17.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) GWALIOR DATED 08.11.2012 FOR THE ASSESSMENT YEAR 20 09-10. 2. WE HAVE HEARD THE LD. DR AND PERUSED THE FINDING S OF THE AUTHORITIES BELOW. THE LD. DR RELIED UPON THE ORDER OF THE AO AND JUDG MENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION LTD ., 159 ITR 78 AND SUBMITTED THAT EVEN INITIAL CAPITAL INTRODUCED BY THE PARTNER S CAN BE ADDED IN THE HANDS OF THE FIRM. HE ALSO RELIED UPON THE ORDER OF ITAT HYDERAB AD BENCH IN THE CASE OF PARAS ITA NO. 48/AGRA/2013 2 COLLINS DISTILLERIES VS. ITO, 130 ITD 114 AND DECIS ION OF M.P. HIGH COURT IN THE CASE OF CIT VS. SHIV SHAKTI TIMBERS, 90 TAXMAN 349. 3. THE ASSESSEE IS SERVED THROUGH DEPARTMENT FOR TH E DATE OF HEARING. THE SERVICE REPORT IS AVAILABLE ON RECORD. HOWEVER, NON E APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. THEREFORE, THE ASSESSEE IS PROCEEDED EXPARTE. 4. ON GROUND NO. 1, REVENUE CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.81,17,297/- ON ACCOUNT OF INCOME FROM SUPPRESSED SALES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SURRENDERED THE INCOME OF RS.1,04,50,300/- VIDE LETTER DATED 27.12.2011 STATI NG THEREIN THAT THE ASSESSEE TRIED TO RECONCILE DIFFERENCE OF RS.1.04 CRORES, BUT AS T HE DAILY TRANSACTION WITH EACH SHOP ARE NOT AVAILABLE WITH THE ASSESSEE, THEREFORE , THE ASSESSEE IS UNABLE TO SATISFY THE AO. THE ASSESSEE, THEREFORE, SURRENDERED THE AB OVE AMOUNT AS INCOME TO AVOID FURTHER LEGAL PROCEEDINGS AND TO BUY PEACE WITH THE DEPARTMENT. IT WAS ALSO NOTED THAT THIS AS SUCH INCLUDES UN-RECONCILED SALES OF L IQUOR. ACCORDING TO THE ASSESSEE, THE INCOME DECLARED REPRESENTS THE SALE PROCEEDS OF LIQUOR SOLD OUT OF THE BOOKS, WHICH WAS DEPOSITED IN BANK ACCOUNT IN THE FORM OF CASH AS INTRODUCTION OF CAPITAL BY ONE OF THE PARTNERS SHRI HARI BABOO SHIVHARE. TH E AO HAS WORKED OUT SUPPRESSED SALES OF RS.81,17,297/- AND MADE FURTHER ADDITION OF THIS AMOUNT. THE ITA NO. 48/AGRA/2013 3 ASSESSEE, THEREFORE, SUBMITTED THAT SINCE EXCESSIVE SURRENDER IS ALREADY MADE, THEREFORE, FURTHER ADDITION ON ACCOUNT OF SUPPRESSE D SALES SHOULD NOT BE ADDED SEPARATELY. THE ASSESSEES WRITTEN SUBMISSION IS IN CORPORATED IN THE APPELLATE ORDER AT PAGE 3 IN WHICH THE ASSESSEE EXPLAINED THE SAME FACTS. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE VIDE LETTER DATED 27.12.2011 WHILE MAKING SURRENDER OF INCOME OF RS.1.04 CRORE A S MENTIONED IN THEIR LETTER THAT IT WOULD INCLUDE UN-RECONCILED SALES OF LIQUOR. THE LD. CIT(A) CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND EXCESSIVE SURREND ER MADE BY THE ASSESSEE, DELETED SEPARATE ADDITION OF RS.81,17,297/- ON ACCO UNT OF SUPPRESSED SALES. 5. ON CONSIDERATION OF SUBMISSIONS OF THE LD. DR IN THE LIGHT OF FINDINGS OF AUTHORITIES BELOW, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE AO MADE AD DITION OF RS.81,17,297/- ON ACCOUNT OF DIFFERENCE OF SUPPRESSED SALES. THE ASSE SSEE AT THE ASSESSMENT STAGE SURRENDERED ADDITIONAL INCOME OF RS.1.04 CRORE AND MENTIONED SPECIFICALLY IN THE SURRENDER LETTER THAT IT WOULD INCLUDE UN-RECONCILE D SALE OF LIQUOR. THE LD. CIT(A) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT, CONSIDERED AS SUPPRESSED SALES ARE PART OF THE SURRENDER MADE BY THE ASSESSEE, WHICH WAS MORE THAN THE ADDITION MADE BY THE AO. THUS, THERE WAS NO ITA NO. 48/AGRA/2013 4 JUSTIFICATION FOR THE AO TO MAKE SEPARATE ADDITION OF SUPPRESSED SALES. GROUND NO. 1 OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED . 6. ON GROUND NO. 2, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.42,00,000/- AS CAPITAL ACCRETION IN THE ACCOUNT OF PARTNER SHRI HARI BABOO SHIVHARE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, IT WAS EXPLAINED BY THE ASSESSEE THAT OUT OF CASH DEPOSIT IN THE BEGINNING OF APRIL, 2008, RS.42,00,000/- WAS OUT OF CASH IN HAND IN A SUM OF RS.45,00,258/- AS ON 01.04.2008 AVAILABLE WITH SHRI HARI BABOO SHIVHARE. THE AO DISCUSSED THIS ISS UE AT PAGE 13 OF THE ASSESSMENT ORDER AND REJECTED THE CLAIM THAT SOURCE OF CASH OF RS.42,00,000/- DEPOSITED WAS CASH IN HAND AVAILABLE WITH SHRI HARI BABOO SHIVHARE AS ON 01.04.2008. DURING THE COURSE OF APPEAL PROCEEDINGS , THE ASSESSEE SUBMITTED THAT SHRI HARI BABOO SHIVHARE IS REGULARLY FILING RETURN OF INCOME FOR THE LAST 35 YEARS. THE AO HAS MAINLY DISPUTED THE AVAILABILITY OF CASH IN HAND ON THE GROUND THAT THE ASSESSEE HAS RAISED LOAN FROM ICICI BANK AND STATE OF INDORE AND ACCORDING TO THE AO, IT WOULD BE ILLOGICAL TO ASSUME THAT THE ASSESS EE WAS HAVING CASH BALANCE ON ONE HAND AND WAS HAVING BANK LIABILITY ON THE OTHER HAND. THE ASSESSEE SUBMITTED THAT THE NATURE OF BUSINESS HAS TO BE LOOKED INTO B ECAUSE IN THE MONTH OF FEBRUARY/MARCH HUGE AMOUNTS WERE DEPOSITED IN LOTTE RY ALLOTMENT SYSTEM FOR ALLOTMENT OF LIQUOR SHOPS. WHENEVER THE SHOPS ARE A LLOTTED IMMEDIATELY 8% MONEY ITA NO. 48/AGRA/2013 5 HAS TO BE DEPOSITED AGAINST THE BID MONEY. THIS WAS THE REASON THAT HARI BABOO SHIVHARE DEPOSITED CASH IN APRIL, 2008 IN THE FIRM. BANK LIMITS ARE AVAILED TO KEEP AND MAINTAIN LIQUIDITY. DAILY TRANSACTIONS ARE ABOU T RS.3.00 LACS PER DAY. 30 DAYS WORKING CAPITAL MEANS RS.90.00 LACS. HENCE, LOANS A RE TAKEN TO MAINTAIN LIQUIDITY. THE LD. CIT(A) FOUND THAT SHRI HARI BABOO SHIVHARE IS ASSESSED TO TAX REGULARLY, WHICH IS ALSO NOT DISPUTED BY THE AO. IT WAS ALSO A CCEPTED BY THE AO THAT THERE WAS CASH IN HAND OF RS.45,00,258/- AVAILABLE WITH S HRI HARI BABOO SHIVHARE AS ON 01.04.2008. THE LD. CIT(A), THEREFORE, HELD THAT ME RELY BECAUSE HE HAS TAKEN LOANS FROM BANK, THE DOCUMENTARY EVIDENCES SUBMITTED BY T HE ASSESSEE CANNOT BE IGNORED. SINCE SUFFICIENT CASH IS AVAILABLE TO SHRI HARI BABOO SHIVHARE, ONE OF THE PARTNERS OF THE ASSESSEE FIRM, THEREFORE, DEPOSIT O F RS.42,00,000/- IS NOT UNEXPLAINED. THE ASSESSEE WAS ACCORDINGLY DELETED. 7. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF SUBMISSIONS OF THE LD. DR, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E LD. CIT(A) IN DELETING THE ADDITION. THE ASSESSEE IS A FIRM AND IS A LIQUOR CO NTRACTOR. SHRI HARI BABOO SHIVHARE IS A PARTNER IN THE ASSESSEE FIRM. THE LIQ UOR IS SOLD IN CASH. THEREFORE, AVAILABILI9TY OF CASH WITH THE PARTNER OF THE FIRM IS NOT A SURPRISE TO THE REVENUE DEPARTMENT. THE AO ACCEPTED THE OPENING CASH BALANC E WITH THE PARTNER IN A SUM OF RS.45,00258/- AS ON 01.04.2008. THEREFORE, IF OU T OF THE SAME, THE AMOUNT IS ITA NO. 48/AGRA/2013 6 DEPOSITED IN CASH, THERE IS NOTHING UNUSUAL IN THE SUBMISSIONS OF THE ASSESSEE. THE REASONS GIVEN BY THE AO HAVE NO RELEVANCY TO THE MA TTER IN ISSUE FOR OBTAINING LOANS FROM THE BANKS ETC. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS CORRECTLY DELETED THE ADDITION. GROUND NO. 2 IS, THEREFORE, D ISMISSED. 8. ON GROUND NO. 3, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.97,750/- ON ACCOUNT OF UNEXPLAINED INCOME U/S. 6 8 OF THE IT ACT. THERE WAS DEPOSIT OF RS.2,22,750/- IN THE BANK ACCOUNT. THE A SSESSEE EXPLAINED IT TO BE AGRICULTURAL INCOME. THE AO MADE ADDITION OF RS.977 50/- BECAUSE THE AGRICULTURAL INCOME DECLARED BY SHRI HARI BABOO SHIVHARE WAS ONL Y RS.1,25,000/-. THE ASSESSEE EXPLAINED THAT SHRI HARI BABOO SHIVHARE RE CEIVED A CHEQUES OF RS.2,22,750/- FROM GOVERNMENT AGENCY ON ACCOUNT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE. THE AO ON THE BASIS OF THE FA CT THAT SHRI HARI BABOO SHIVHARE HAS ONLY DECLARED AGRICULTURAL INCOME OF R S.1,25,000/-, MADE THE ABOVE ADDITION CONSIDERING IT TO BE UNEXPLAINED. IT WAS S UBMITTED THAT IT IS NOT DENIED THAT A CHEQUE FROM PRATHAMIK KRISHI SAAKH SAHAKARI SAMIT I NO. 121953 DATED 13.01.2009 WAS DEPOSITED IN THE BANK ACCOUNT, WHICH IS REFLECTED IN THE FIRMS ACCOUNT. THE PARTNER HAS DECLARED LESSER AGRICULTUR AL INCOME AFTER DEDUCTING EXPENDITURE. THE LD. CIT(A) ACCEPTED THE CONTENTION OF HE ASSESSEE BECAUSE CHEQUES OF RS.2,22,750/- WAS RECEIVED IN FAVOUR OF SHRI HARI BABOO SHIVHARE, ITA NO. 48/AGRA/2013 7 WHICH WAS DEPOSITED IN THE BANK ACCOUNT, THEREFORE, ADDITION OF RS.97,750/- WAS FOUND UNREASONABLE AND ACCORDINGLY, THE ADDITION WA S DELETED. 9. ON CONSIDERATION OF THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. T HE ASSESSEE EXPLAINED SOURCE OF RS.2,22,750/- BEING THE AMOUNT RECEIVED THROUGH CHE QUES FROM GOVERNMENT AGENCY. THEREFORE, SHOWING OF LESSER INCOME AFTER M EETING EXPENDITURE IS NOT RELEVANT CRITERIA TO MAKE ADDITION OF AFORESAID NAT URE IN THE CASE OF ASSESSEE. THE ADDITION WAS, THEREFORE, RIGHTLY DELETED BY THE LD. CIT(A). GROUND NO. 3 IS DISMISSED. 10. ON GROUND NO. 4, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.9,61,861 U/S. 68 OF THE IT AC ON ACCOUNT OF CRED ITS IN PARTNERS ACCOUNT. THE AO MADE ADDITION OF RS.10,36,861/- ON ACCOUNT OF CAPIT AL INTRODUCED BY SMT. SUMAN SHIVHARE AND SHRI RAKESH SHIVHARE HOLDING THAT THE SOURCE OF THESE DEPOSITS ARE UNEXPLAINED. THE DETAILS OF THE SAME ARE NOTED AT P AGES 13 & 14 OF THE ASSESSMENT ORDER AND PAGE 8 OF THE APPELLATE ORDER. THE ASSESS EE SUBMITTED BEFORE THE LD. CIT(A) THAT IN THE CASE OF PARTNERS SMT. SUMAN SHIV HARE, THERE ARE DEPOSITS OF RS.5,45,911/- ON THREE DATES AND IN THE CASE OF RAK ESH SHIVHARE, THERE ARE DEPOSITS OF RS.3,39,075/-. HENCE, CORRECT AMOUNT IS RS.8,83, 986/- AND NOT RS.10,36,861/- ITA NO. 48/AGRA/2013 8 ADDED BY THE AO. IT WAS EXPLAINED THAT CASH DEPOSIT OF RS.4,50,000/- IN CASE OF SMT.SUMAN SHIVHARE ON 19.11.2008 IS OUT OF WITHDRAW AL OF CASH OF RS.6,00,000/- ON THE SAME DAY FROM HER BANK ACCOUNT WITH OBC, DAB RA. COPY OF ACCOUNT WAS FILED. SIMILARLY, RS.19,911/- WAS REALIZED FROM OBC DABRA A/C NO. 08125010000230 OD MIP. IT WAS A CREDIT BY WAY OF MO NTHLY RENT PAID BY OBC TO SMT. SUMAN SHIVHARE. COPY OF ACCOUNT WAS FILED. THE LD. CIT(A) CONSIDERING THE BANK WITHDRAWALS ON THE SAME DAY FOR INTRODUCING CA PITAL FOUND THE EXPLANATION OF THE ASSESSEE TO BE CORRECT AND ACCORDINGLY, DELETED THE ADDITION OF RS.4,50,000/-. SIMILARLY, THE RENT RECEIVED OF RS.19,911/- WAS ACC EPTED. THEREFORE, THE ADDITION WAS ACCORDINGLY DELETED IN THE CASE OF SMT. SUMAN S HIVHARE. THE LD. CIT(A) MAINTAINED THE ADDITION OF RS.75,000/-, WHICH IS NO T IN ISSUE IN THE DEPARTMENTAL APPEAL. SIMILARLY, IN THE CASE OF RAKESH SHIVHARE, IT WAS EXPLAINED THAT RS.1,87,200/- WAS CREDITED IN OBC ACCOUNT ON ACCOUN T OF COMPENSATION RECEIVED FROM GOVERNMENT ON ACQUISITION OF LAND. RS. 1,51,47 5/- IS CREDITED ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE RECEIVED FROM PRATHMIK KRISHI SAAKH SAHKARI SAMITI VIDE CHEQUES NO.121954 DATED 13.01.2009. THE LD. CI T(A) ON GOING THROUGH THE EVIDENCE OF RECEIPT OF COMPENSATION FOR LAND ACQUIS ITION AND SALE OF AGRICULTURAL PRODUCE, ACCEPTED THE CONTENTION OF THE ASSESSEE AN D HELD THAT BOTH THE AMOUNTS ARE EXPLAINED AND ACCORDINGLY ADDITIONS ARE DELETED. ITA NO. 48/AGRA/2013 9 11. ON CONSIDERATION OF THE SUBMISSIONS OF THE LD. DR, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETIN G THE ADDITION. IT IS NOT IN DISPUTE THAT BOTH THE PARTNERS ABOVE HAVE INTRODUCED FRESH CAPITAL IN THE ASSESSEE FIRM. THEY HAVE EXPLAINED SOURCE OF THE SAME THROUGH EVID ENCE. IN THE CASE OF SMT. SUMAN SHIVHARE, AMOUNT OF RS.4,50,000/- WAS INTRODU CED IN CASH AFTER WITHDRAWAL MADE BY HER FROM HER BANK ACCOUNT AND FURTHER RENTA L INCOME WAS WITHDRAWN FROM THE BANK AND INTRODUCED IN THE ASSESSEE FIRM OF RS. 19911/-. IN THE CASE OF RAKESH SHIVHARE, THE AMOUNT WAS INTRODUCED AFTER RECEIVING THE AMOUNT FROM THE GOVERNMENT ON ACCOUNT OF ACQUISITION OF LAND AS COM PENSATION AND SALE OF AGRICULTURAL PRODUCE. NO MATERIAL IS PRODUCED BEFOR E US TO REBUT THE FINDING OF FACT RECORDED BY THE LD. CIT(A). THEREFORE, SOURCE OF CA PITAL INTRODUCED BY THE PARTNERS ABOVE ARE EXPLAINED. HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. METACHEM INDUSTRIES, 245 ITR 160 HELD AS UNDER : ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN IN VESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL , THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WHETHER THA T PERSON IS AN INCOME TAX PAYER OR NOT AND WHERE HE HAD BROUGHT TH IS MONEY FROM, IS NOT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM GIVES A SATISFACTORY EXPLANATION AND PRODUCES THE PERSON WH O HAS DEPOSITED THE AMOUNT, THEN THE BURDEN OF THE FIRM IS DISCHARG ED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOM E OF THE FIRM FOR THE PURPOSES OF INCOME-TAX. 12. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT ALL PARTNERS ARE ASSESSED TO TAX AND PAN OF THE PARTNERS ARE GIVEN. THEREFORE, T HE DECISION OF THE HONBLE ITA NO. 48/AGRA/2013 10 SUPREME COURT IN THE CASE OF ORISSA CORPORATION PVT . LTD. (SUPRA) RELIED UPON BY THE LD. DR INSTEAD OF SUPPORTING THE CASE OF REVENU E WOULD SUPPORT THE CASE OF THE ASSESSEE. IN THAT CASE, THE ASSESSEE HAD GIVEN NAME S AND ADDRESS OF THE CREDITOR, IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID C REDITORS WERE INCOME-TAX ASSESSEES. THEREFORE, THE TRIBUNAL CONCLUDED THAT I NITIAL BURDEN UPON THE ASSESSEE HAS BEEN DISCHARGED. THE DEPARTMENTAL APPEAL WAS DI SMISSED BY THE HONBLE SUPREME COURT. CONSIDERING THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N. GROUND NO. 4 IS ACCORDINGLY DISMISSED. 13. IN THE RESULT, THE DEPARTMENTAL APPEAL FAILS AN D IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY