ITO, Rohtak V. Sh. Pawan Kumar, Rohtak

ITA 4907/DEL/2010

• Counselvise Citation: 490720114 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Income from undisclosed sources; Salary income; Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F: NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4907 /DEL/ 2010 (ASSESSMENT YEAR: 2006-2007) ITO VS. PAWAN KUMAR WARD-1 S/O SH. RAJ KRISHAN SANGWAN AAYAKAR BHAWAN H.NO. 609, SECTOR-14 ROHTAK ROHTAK (APPELLANT ) (RESPONDENT) ITA NO. 4883/DEL/2010 (ASSESSMENT YE AR: 2006-2007) PAWAN KUMAR VS. ITO H.NO. 1111, WARD 1 SECTOR 14, SONIPAT INCOME TAX OFFICE HARYANA ROHTAK AMEPK8148B ( APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI NAVEEN GUPTA, ADV. REVENUE BY : SHRI BHIM SINGH, SR. D.R. ORDER PER B.C. MEENA, AM : BOTH THESE CROSS APPEALS EMANATES FROM ORDER OF T HE CIT APPEAL, ROHTAK DATED 6.9.2010. THE ASSESSEE IS AN I NDIVIDUAL AND DURING THE RELEVANT PERIOD DERIVING INCOME FROM SALARY AS AN E MPLOYEE WITH THE ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 2 DIVISIONAL RAILWAY MANAGER, NORTHERN RAILWAY, NEW D ELHI. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 20,21,193/- FOR CRE DITS IS ASSESSES BANK A/C NO. 366 WITH SYNDICATE BANK SONEPAT . THE CIT APPEA L HAS GRANTED THE PART RELIEF BY HOLDING AS UNDER :- 7. I HAVE CONSIDERED THE ISSU ES AND THE SUBMISSIONS MADE BY THE AR. THE ASSESSEE COULD NOT GIVE SATISFACTORY EXPLANATION FOR THE CASH DEPOSITS AND CASH WITHDRAWALS IN HIS B ANK ACCOUNT. REGARDING THE ALLEGED LOANS STATED TO HAVE BEEN TAK EN BY THE ASSESSEE, THE AO IN THE ASSESSMENT ORDER CLEARLY BR OUGHT OUT ON RECORD THAT THE ALLEGED CREDITORS ARE NOT CREDITWOR THY. THE ASSESSEE FAILED TO BRING ON RECORD THE NATURE OF TH E TRANSACTIONS IN HIS BANK ACCOUNT AND THE PURPOSE FOR WHICH THEY HAVE BEEN ENTERED INTO. THE ASSESSEE, EITHER DURING THE ASSES SMENT PROCEEDINGS OR DURING THE APPEAL PROCEEDINGS, FAILE D TO BRING ON RECORD AND SUBSTANTIATE THE NATURE AND PURPOSE OF T RANSACTIONS. A PERSON WORKING AS AN EMPLOYEE IN RAILWAYS WOULD N OT HAVE THESE TRANSACTIONS IN THE COURSE OF EMPLOYMENT. THE SE TRANSACTIONS PERTAIN TO SOME ACTIVITIES, WHICH THE ASSESSEE IS NOT READY TO DISCLOSE. UNDER THE CIRCUMSTANCES, THE AO IS JUSTIFIED IN BRINGING TO TAX THE UNEXPLAINED CASH DEPOSITS I N THE BANK ACCOUNT AS INCOME FROM OTHER SOURCES OF THE ASSESSE E. 8. NOW THE ISSUE THAT REMAINS TO BE ADJUDICATED IS WHETHER THE ENTIRE CASH DEPOSITS HAVE TO BE TREATED AS INCOME U NDISCLOSED SOURCES WITHOUT GIVING ANY BENEFIT FOR CASH WITHDRA WALS OR PEAK INVESTMENT OF CASH DEPOSITS IS TO BE TAKEN. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AS ENUMERATED ABOVE, IT IS DEPOSITS AS THE INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE. THE AR FURNISHED A STATEMENT OF PEAK INV ESTMENT OF CASH DEPOSITS AS DERIVED FROM THE BANK ACCOUNT OF T HE ASSESSEE IN THE HEARING DATED 24.8.2010 WHEREIN IT WAS ARRIV ED AT RS. 11,48,850/-. THEREFORE, ADDITION TO THE EXTENT OF R S. 11,48,850/- IS SUSTAINED AND THE AO IS DIRECTED TO VERIFY THE S TATEMENT AND THEREAFTER GIVE EFFECT TO THIS ORDER. ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 3 2. BOTH SIDES ARE BEFORE US BY TAKING THE FOLL OWING GROUNDS OF APPEAL, THE GROUNDS OF ASSESSEES APPEAL NO. 4883/DEL/2010 READ AS UNDER :- 1.THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 11,48,850/- MADE BY THE LD. AO BY TREATING THE LOANS AND DEPOSITS TAKEN BY THE ASSESS EE FROM VARIOUS PARTIES AS INCOME FROM UNDISCLOSED SOURCES BY REJECTING THE EXPLANATION FILED BY THE ASSESSEE AND IGNORING THE CONFIRMATIONS FILED BY PERSONS FROM WHOM LOANS WERE TAKEN. 2. THAT THE APPELLANT RESERVES ITS RIGH T TO ADD OR ALTER ANY GROUND OF APPEAL. THE REVENUE IS IN APPEAL BY TAKIN G FOLLOWING GROUND :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETI NG THE ADDITION OF RS. 8,72,343/- INSPITE OF HIS SPECIFIC FINDING THAT THE ASSESSEE COULD NOT GIVE SATISFACTORY EXPL ANATION FOR THE CASH DEPOSITS AND CASH WITHDRAWALS IN HIS B ANK ACCOUNT. THE ASSESSEE FAILED TO BRING ON RECORD THE NATURE OF TRANSACTIONS IN HIS BANK ACCOAUNT AND THE PURPOS E FOR WHICH THEY HAVE BEEN ENTERED INTO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 8, 72,343/- BY ADOPTING PEAK INVESTMENT WHEN THE ASSESSEE FAI LED TO BRING ON RECORD THE NATURE OF TRANSACTIONS IN HIS B ANK ACCOUNT AND THE PURPOSE FOR WHICH THEY HAVE ENTERED INTO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ADOPTING PEAK INVESTMENT WHEN THE ASSESSEE HAS ONLY INCOME FROM SALARY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING T HE ADDITION OF RS. 8,72,343/- BY NOT CONSIDERING THE F OLLOWING JUDGMENTS, WHICH WERE RELIED UPON BY THE A.O. COVERED BY :- A. ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938 (SC ). B. CIT VS. M. GANAPATHI MUDALIAR (1964) 53 ITR 623(SC). C. CIT VS. R.S. RATHORE (1995) 212 ITR 390 (RAJ. ) ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 4 5. THAT THE APPELLANT CRAVES FOR THE PERMISSION T O ADD, DELETE OR AMEND THE GROUND OF APPEAL BEFORE OR AT T HE TIME OF HEARING OF APPEAL. 3. WHILE PLEADING ON BEHALF OF ASSESSEE THE A SSESSEES AR SUBMITTED THAT ALTHOUGH THE CIT APPEAL HAS DIRECTED TO MAKE THE AD DITION OF PEAK INVESTMENT IN THE FORM OF CASH DEPOSITS IN THE BANK ACCOAUNT O F THE ASSESSEE WHICH COMES TO RS. 11,48,850/-. HOWEVER, THESE AMOUNTS WERE DEP OSITED FROM THE LOAN RECEIVED BY THE ASSESSEE FROM VARIOUS PERSONS. SHRI MANOJ SAROHA RS. 3,00,000/- ON 8.5.2005, SHRI JASVIR RS. 3,00,000/- ON 6.5.2005, SHRI RAJINDER SINGH RS. 2,00,000/- ON 29.1.2006, SHRI RAMESH GAHL AWAT RS. 3,00,000/- ON 28.1.2006, SHRI BALWANT SINGH RS. 1,00,000/- ON 10. 3.2006 AND SHRI SATDEV RS. 2,00,000/- ON 29.1.2005, SHRI MANOJ SAROHA, JAS BIR, RAJENDER SINGH, RAMESH GAHLAWAT AND SHRI BHAWAN SINGH WERE AGRICULT URIST. THEY WERE HOLDING LAND. THESE PERSONS WERE HAVING THE SUFFICI ENT LAND WHICH PROVED THEIR CREDITWORTHYNESS, THEIR IDENTITY WAS PROVED B Y FILING PHOTO IDENTITIES. THESE PERSONS HAVE ALSO SUBMITTED CONFIRMATION OF T HE LOAN GIVING BY THEM TO THE ASSESSEE. PHOTO ID IN THE FORM OF RATION CARD, DRIVING LICENCE, COPY OF PASSPORT AND COPY OF THE ELECTION COMMISSIONS IDENT ITY FORM WERE ALSO FILED. THE ASSESSING OFFICER HAS NOT CONTROVERTED THE CON FIRMATION OF LOAN GIVEN IN THESE AFFIDAVIT BY ALL THESE PERSONS. ALTHOUGH THES E PERSONS ARE NOT ACCESSED TO INCOME TAX BUT THE SUFFICIENT LAND HOLDING PROVE TH EIR CREDITWORTHINESS. THE ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 5 IDENTITY IS PROVED BY THE PHOTO IDS IN VARIOUS FORM S. HE PLEADED TO GRANT FULL RELIEF TO ASSESSEE. LD. AR ALSO RELIED ON THE FOLLO WING DECISION OF ITAT. ITO VS. SHRI INDER SINGH IN ITA NO. 3469/DEL/2010 DATED 16.11.2010, MOONGIPA INVESTMENT LTD. VS. ITO REPORTED IN 30 TAXMAN.COM 1 13 DELHI TRIBUNAL AND ACIT VS. BALDEV RAJ CHARLA 121 TTJ 366 DELHI. 4. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE CIT APPEAL WAS NOT JUSTIFIED IN DIRECTING A.O. TO MAKE ADDITION OF PE AK INVESTMENT IN BANK A/C. THE ASSESSEE HAS FAILED TO GIVE ANY SATISFACTORY EX PLANATION WITH REGARD TO THE CASH DEPOSITS AND WITHDRAWAL MADE FROM THE BANK ACC OUNT. NO CREDIT SHOULD BE GIVEN TO ASSESSEE FOR WITHDRAWALS AS THESE AMOUN TS MIGHT HAVE BEEN SPENT SOMEWHERE. THESE ALLEGED LOANS STATED TO HAVE BEEN TAKEN BY THE ASSESSEE ARE NOT GENUINE. THE CREDITWORTHINESS OF THESE PERSONS IS NOT PROVED. THE ASSESSEE HAS COMPLETELY FAILED TO DISCLOSE THE PURPOSE FOR W HICH THESE LOAN WERE TAKEN. THE ASSESSEE HAS FAILED TO DISCLOSE THE TRUE NATURE AND PURPOSE OF THE TRANSACTIONS. THE ASSESSEE WAS EMPLOYEE OF THE RAIL WAY AND COULD NOT HAVE DONE ANY SUCH TRANSACTIONS DURING THE CURRENCY OF E MPLOYMENT. THE ASSESSEE IS NOT DISCLOSING THE ACTUAL ACTIVITIES CARRIED BY HIM. LD. DR SUBMITTED THAT NOT ONLY THE PEAK CREDIT AMOUNT BUT THE WHOLE AMOUN T DESERVE TO BE ADDED IN ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 6 THE INCOME OF ASSESSEE. THE ASSESSING OFFICER WAS J USTIFIED IN MAKING SUCH ADDITION. THE CIT APPEAL WAS NOT JUSTIFIED IN DELET ING PART OF ADDITION. 5. WE HAVE HEARD BOTH THE SIDES, WE HAVE ALSO PERUSED THE RECORDS AND DOCUMENT SUBMITTED BEFORE US IN PAPER BOOK. THE CON FIRMATIONS FILED ARE ON STAMP PAPERS BUT THESE ARE NOT VERIFIED BY ANY NOTARY OR OTHER AUTHORITY. THE ASSESSEE HAS NOT DISCLOSED THE PURPOSE FOR WHICH THESE LOANS WER E RAISED. LOAN STATED TO HAVE BEEN RAISED WITHOUT ANY PURPOSE. THE AMOUNT WAS NOT UTILIZED FOR ANY PURPOSE DURING THE YEAR. A SALARIED PERSON SHALL NOT RAISE ANY LOAN THAT TOO FROM NON- RELATIVES JUST TO DEPOSIT THE AMOUNT IN HIS BANK AC COUNT. NO EVIDENCE HAD BEEN PLACED ON RECORD TO SHOW THAT SUCH AMOUNT UNUTILIZE D FOR ANY PURPOSE IN FUTURE. NOTHING ON RECORD TO SHOW THE REPAYMENT OF THESE LO ANS. IN VIEW THESE FACTS THE TRUE NATURE OF THESE TRANSACTION REMAINS TO BE EST ABLISHED. AS PER THE SECTION 68 OF THE IT ACT, THE ASSESSEE HAS TO PROVE THE THREE ING REDIENTS IN RESPECT OF ANY DEPOSITS RECEIVED; FIRST IDENTITY TO THE PERSON FROM WHOM, THE MONEY WAS RECEIVED. ASSESSEE HAD FILED PHOTO IDENTITIES OF THESE PERSON S. THESE DOCUMENTS CAN ESTABLISH THAT SUCH PERSON WERE IN EXISTENCE BUT IT DOES NOT PROVE THAT WHY THESE PERSONS HAVE GIVEN SUCH HUGE AMOUNT OF LOAN TO ASSESSEE WIT HOUT INTEREST. AS PER CONFIRMATION ALL THESE LOANS WERE INTEREST FREE. SE CONDLY, ASSESSEE HAVE TO ESTABLISH THE CAPACITY TO LENDER AND THIRDLY, THE TRANSACTION SHOULD BE GENUINE. ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 7 SIMPLY LAND HOLDING SHALL NOT PROVE THE CAPACITY OR CREDITWORTHYNESS OF THESE LENDERS. IT HAS TO BE ESTABLISHED BY YIELD AND AVAI LABILITY OF SUCH MONEY WITH THEM TO LEND THAT TOO WITHOUT INTEREST. THE ASSESSEE WAS IN A GOVERNMENT SERVICE IN THE RAILWAY DEPARTMENT. HE HAS NOT DISCLOSED FOR WHAT P URPOSE, THIS LOANS WAS RAISED BY HIM. THESE AMOUNTS WERE NOT UTILIZED DURING THE FINANCIAL YEAR FOR ANY PURPOSE. NO ONE WILL RAISE LOAN JUST TO DEPOSIT IN THE SB A/ C WITH THE BANK. NOTHING ON RECORD TO SHOW THAT THESE LOANS WERE REPAID. IN VIE W OF THESE FACTS THE ASSESSEE CONTENTION IS NOT JUSTIFIED. WITH REGARD TO THE ADDITION OF PEAK A MOUNT, WE HOLD THAT CIT APPEAL WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THE PEAK A MOUNT. HE HAS RIGHTLY DIRECTED THE AO TO RESTRICT THE ADDITION TO THE PEAK AMOUNT. THE CASE LAWS RELIED UPON BY LD. AR CITED SUPRA FOR THE PROPOSITION THAT ONLY THE PE AK AMOUNT OF THE CREDIT ENTRIES IN THE BANK ACCOUNT OF ASSESSEE CAN BE ADDED TO THE IN COME OF THE ASSESSEE SUPPORTS THE ORDER OF THE CIT APPEAL. IT IS ALSO TO BE NOTED THAT IN REVENUES APPEAL THE TOTAL ADDITION DELETED WAS OF RS. 8,72,349/-. THE TAX EFF ECT ON THIS DELETED AMOUNT COMES BELOW THE THRESHOLD LIMIT OF RS.3,00,000/- PRESCRI BED BY CBDT FOR FILING APPEAL WITH I.T.A.T. ON THIS ACCOUNT ALSO THE REVENUES AP PEAL IS NOT MAINTAINABLE. 6. IN VIEW OF THIS FACTS, THE APPEAL OF THE REV ENUE AS WELL AS APPEAL OF THE ASSESSEE STANDS DISMISSED. ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 8 7. IN THE RESULT, BOTH THE APPEALS STANDS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT 8 AUGUST, 2013. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER BINITA RUKHAIYAR DATE: 8 AUGUST , 2013 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI ITA NO.4907/ DE L/ 2010 ITA NO. 4883/DEL /2010 9