SURENDER KUMAR PANCHOLI, Jaipur V. ACIT(OSD), Jaipur

ITA 503/JPR/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1980 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 10-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DR DHK
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Additional evidence; Corroborative evidences
• Section: 68

Judgement Text

ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 503/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI SURENDER KUMAR PANCHOLI B-4, VISHNU COLONY, OPP. ESI HOSPITAL AJMER ROAD, JAIPUR CUKE VS. THE ITO (OSD) CIRCLE - 2, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACIPG 3453 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI ROHAN SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY :SMT. POONAM RAI, DCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06/10/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 9 /10/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 12-05-2014 FOR THE ASSESSMENT YEAR 2008-09 RA ISING THE FOLLOWING GROUNDS OF APPEAL. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING FOLLOWING DISALLOWANCES. ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 2 PARTICULARS DISALLOWED BY AO RELIEF BY CIT(A) CON FIRMED BY CIT(A) LABOUR WELFARE EXPENSES 4,256 STAFF WELFARE EXPENSES 9,080 COMPUTER EXPENSES 4,182/- DIWALI EXPENSES 8,567/- REPAIR & MAINTENANCE (VEHICLE) EXPENSESQ 3,755/- 37,927/- 60,000/- OFFICE EXPENSES 5,572/- TELEPHONE EXPENSES 14,255/- TRAVELLING EXPENSES 23,933/- TOTAL 97,927/- THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIE D, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE ABOVE DISALLOWANCE OF RS. 60,000/- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF TH E AO IN MAKING ADDITION OF RS. 5,00,000/-AS UNEXPLAINED CREDIT U/S 68 OF THE I.T. ACT, 1961. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIF IED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 5,00,000/-. 2.1 APROPOS GROUND NO. 1 OF THE ASSESSEE, THE AO MA DE THE ADDITION OF RS. 97,927/- ON ACCOUNT OF NON-VERIFIABLE OF ABOVE EXPENSES AS MENTIONED IN THE GROUND NO. 1 OF THE ASSESSEE. THE AO ALSO NOTED THA T SOME OF THE EXPENSE ARE INCURRED IN CASH AND CERTAIN EXPENSES ARE SUPPORTED BY SELF MADE VOUCHERS AND NOT BEARING THE COMPLETE DETAILS AND JUSTIFICATION OF U SE FOR THE PURPOSE OF BUSINESS. IN FIRST APPEAL, THE LD. CIT(A) HAS GRANTED RELIEF OF RS. 37,927/- BY OBSERVING AS UNDER:- 5.5 HAVING CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT, I FIND THAT NO EVIDENCE HAS BEEN PRODUCE D IN THE COURSE OF APPELLATE PROCEEDINGS TO CONTROVERT THE F INDINGS OF THE AO AND THEREFORE, HOLD THAT IT WOULD BE JUST AND FA IR TO RESTRICT ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 3 THE DISALLOWANCE TO RS. 60,000/-. THE APPELLANT WOU LD GET A RELIEF OF RS. 37,927/- ON THIS ACCOUNT. 2.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT PINPOINTED ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE BOOKS OF ACCOUNT OF THE ASSESS EE ARE AUDITED AND NO ADVERSE COMMENT HAS BEEN MADE BY THE AUDITOR. THUS THE ADDI TION CONFIRMED BY THE LD. CIT(A) MAY PLEASE BE DELETED. 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LD. CIT(A). 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE AO HAS MADE THE ADDITI ON OF RS. 97,927/- I.E. 10% OF TOTAL EXPENSES OF RS. 9,79,265/- . IN FIRST APPEAL, THE LD. CIT(A) HAS BEEN SUSTAINED TO THE EXTENT OF RS. 60,000/- GIVING RELIEF OF RS.3 7,927/- TO THE ASSESSEE. IT IS NOTED FROM THE AVAILABLE RECORDS THAT THE BOOKS OF ACCOUN T OF THE ASSESSEE ARE AUDITED AND NO ADVERSE COMMENT HAS BEEN MADE BY THE AUDITOR IN THE CASE OF THE ASSESSEE. LOOKING TO THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND IN ORDER TO MAINTAIN EQUITY AND JUSTICE, THE AMOUNT OF RS. 48,964/- IS S USTAINED I.E. 50% OF TOTAL DISALLOWANCE OF RS. 97,927/- MADE BY THE AO. HENCE, THE GROUND NO. 1 OF THE ASSESSEE IS PARTLY ALLOWED. 3.1 APROPOS GROUND NO. 2 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 4 6.5 I HAVE GONE THROUGH THE ASSESSMENT ORDER, REM AND REPORT AS WELL AS SUBMISSION MADE BY THE APPELLANT AND FIN D THAT AN ADDITION OF RS. 5 LAC WAS MADE BY THE AO ON ACCOUNT OF CAPIT AL INTRODUCTION MADE BY THE APPELLANT IN CASH DURING THE PERIOD UND ER CONSIDERATION. THE ADDITION WAS MADE AS THE APPELLANT COULD NOT SU BSTANTIATE THE SOURCES OF CASH BEING INTRODUCED IN THE BUSINESS AS CAPITAL CONTRIBUTION. THE APPELLANT HAD EXPLAINED THAT AN A DVANCE OF RS. 5,51,000/- WAS RECEIVED IN CASH AGAINST AN AGREEMEN T FOR SALE OF SHOP ON 29-03-2007. AO DID NOT ACCEPT THE EXPLANATION AS NO SUPPORTING EVIDENCES WERE FILED IN THE COURSE OF ASSESSMENT PR OCEEDINGS. 6.6 IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASS ESSEE HAS FILED A COPY OF SALE AGREEMENT AS AN EVIDENTIAL EVI DENCE TO SUBSTANTIATE THE EXPLANATION GIVEN EARLIER. THIS EV IDENCE WAS EXAMINED BY THE AO AND THE REMAND REPORT HAS BEEN R EPRODUCED ABOVE IN THE ORDER. 6.7 IT IS SEEN FROM THE EVIDENCE AVAILABLE ON RECOR D THAT THE SO CALLED AGREEMENT TO SALE HAS NOT BEEN REGISTERED AND HAS NO EVIDENTIARY VALUE. THIS DOCUMENT HAS ONLY BEEN NOTO RIZED AND WHY THE SAME COULD NOT BE PRODUCED AT THE TIME OF ASSES SMENT PROCEEDING, HAS NOT BEEN EXPLAINED. DESPITE THESE SHORTCOMINGS, THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT HAS BEEN ADMITTED I N INTEREST OF NATURAL JUSTICE. HOWEVER, THE EXPLANATION GIVEN BY THE APPE LLANT THAT THE AMOUNT RECEIVED IN CASH AS ADVANCE AGAINST SALE OF PROPERTY ON29-03- 2007 HAS BEEN INTRODUCED IN SMALL INSTALMENT THROUG HOUT THE YEAR SEEMS TO BE STRANGE AND AGINST THE NORMAL BUSINESS CONDUCT. DURING THE COURSE OF ASSESSMENT PROCEEDING, AO HAD FOUND T HAT SUBSTANTIAL CASH HAS BEEN INTRODUCED IN THE BOOKS NOT ON THE SA ME DATE BUT FROM THE APRIL 2007 TO SEPTEMBER 2007. 6.8 THE APPELLANT HAS FURTHER FAILED TO PRODUCE TH E EVIDENCE WITH REGARD TO THE RECEIPT OF FINAL CONSIDERATION ON SAL E OF SHOP AND COPY OF TRANSFER DOCUMENTS FOR SALE OF SHOP ETC. IT IS STAT ED BY THE APPELLANT THAT FINALLY THE SHOP COULD NOT BE REGISTERED AND H OW THE AMOUNT HAS BEEN RETURNED BACK BY THE APPELLANT HAS NOT BEEN E XPLAINED AND ALSO NO EVIDENCE TO SUBSTANTIATE THE SAME COULD BE FURNI SHED IN THE COURSE OF REMAND PROCEEDINGS. THUS THE EXPLANATION GIVEN B Y THE APPELLANT AND THE EVIDENCE PRODUCED IN THE REMAND PROCEEDINGS IS ONLY SELF ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 5 SERVING AND IS MEANT ONLY TO MEEKLY COVER UP THE I NTRODUCTION OF CASH IN THE BOOKS OF ACCOUNT BY THE APPELLANT. 6.9 IT WOULD BE RELEVANT TO NOTE THAT HON'BLE PUNJA B & HARYANAHIGHCOURT IN THE CASE OF CIT VS DEEPAK IRON & STEEL ROLLING MILLS, 338ITR 307 HAS UPHELD THE ADDITION MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED CREDIT ENTRIES FOUND IN THE PARTNER S CAPITAL ACCOUNTS AS MAINTAINED IN THE BOOKS OF THE FIRM. IT WAS HELD BY THE COURT THAT THE UNEXPLAINED CREDITS COULD BE TAXED AS UNEXPLAINED I NCOME OF THE FIRM AS NO SATISFACTORY EXPLANATION COULD BE OFFERED BY THE PARTNER. 6.10 IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF INTRODUCTION OF CAPITAL IN CASH BY THE APPELLANT IS JUSTIFIED AND ACCORDINGLY CONFIRM THE ADDITION OF RS. 5,00,000/- MADE UNDER THIS HEAD. 3.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION OF RS. 5.00 LACS U/S 68 OF THE ACT. THE LD.AR OF THE ASSESSEE ALSO SUBMITTED THAT DUE TO DISPUTE BETWEEN THE PARTIES, THE ASSESSEE COULD NOT DEMAND THE COPY OF SALE AGREEMENT FROM THE PARTY AND THE S AME COULD NOT BE PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDING . 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LOWER AUTHORITIES. 3.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT FACTS AND CIRCUMSTANCES OF T HE CASE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RESTORE THE ISSUE TO THE F ILE OF THE AO TO DECIDE IT AFRESH BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE RELEVANT EVIDENCE /DOC UMENTS BEFORE THE AO AS TO THE ITA NO.503/JP/201 4 SHRI SURENDER KUMAR PANCHOLI VS ACIT (OSD ), CIRCLE 2, JAIPUR 6 ADDITION OF RS. 5.00 LACS U/S 68 OF THE ACT ON ACCO UNT OF SALE CONSIDERATION OF SHOP. THUS THE GROUND NO. 2 OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9/10/2017 . SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 9/10/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SURENDER KUMAR PANCHOLI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT (OSD), CIRCLE 2, JAIPU R 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 503/JP/2014 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR