Sh. Timple Kumar, Dhuri V. ITO, Malerkotla

ITA 509/CHANDI/2013

• Counselvise Citation: 50921514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Transactions in derivatives; Corroborative evidences; Condonation of delay
• Section: 142(1); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 509/CHD/2013 (ASSESSMENT YEAR: 2007-08) SH.TIMPLE KUMAR VS. THE INCOME TAX OFFICER, S/O SH.BRIJ LAL GUPTA, IV(4), MALERKOTLA. 11-24, PATHSHALA ROAD, DHURI. PAN NO. ACJPK6727D (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SUDHIR SEHGAL & SHRI ASHOK GOYAL RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 25.06.2015 DATE OF PRONOUNCEMENT : 16.07.2015 O R D E R PER H.L.KARWA, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 25.2.2013 RELATING TO ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE ASSESSEE RAISED THE FOLLOWI NG GROUNDS : 1. THAT THE IMPUGNED APPELLATE ORDER IS BAD 2 BOTH ON FACTS AND LAW. 2. BECAUSE THE LD. APPELLATE AUTHORITY HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,85,734/- AS INCO ME FROM OTHER SOURCES IGNORING THE PLEADINGS, SUBMISSION, AND MATERIAL ON RECORD AND FURTHER ERRED IN NOT CONSIDERING THAT RS.109182/- WERE GIVEN DURING PREVIOUS YEAR. 3. BECAUSE THE LD. APPELLATE AUTHORITY ERRED IN CONFIRMING THE ADDITION OF RS.70000/- U/S 68 BEING LOAN RECEIVED FROM SMT.LAXMI DEVI IGNORING THE PLEADINGS AND EVIDENCE ON RECORD. 4. BECAUSE THE LD. APPELLATE AUTHORITY ERRED IN CONFIRMING THE ADDITION OF RS.10000/- OUT OF HOUSE HOLD EXPENSES. 5. BECAUSE THE LD. APPELLATE AUTHORITY ERRED IN CONFIRMING THE DISALLOWANCE OF 1/5 TH IN CAR EXPENSES IGNORING THAT WHILE COMPUTING TOTAL CAR EXPENSES, VAT EXPENSES OF RS.24270/- IS ADDED. 3. IT IS OBSERVED THAT THERE IS DELAY OF SEVEN DA YS IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN APPL ICATION FOR CONDONATION OF DELAY, WHEREIN IT IS STATED THAT HE IS RESIDING AT DHURI AND THE COUNSEL TO WHOM THE DOCUMENTS WERE GIVEN FOR PREPARING THE MEMO OF APPEAL IS RESIDING AT LUD HIANA AND, THEREFORE, SOME DELAY HAS BEEN OCCURRED IN REACHING THE DOCUMENTS AT LUDHIANA AND THEN TO CHANDIGARH. ACCORDINGLY, IT WAS SUBMITTED THAT THE DELAY OF SEV EN DAYS MAY BE CONDONED. 4. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, I AM SATISFIED THAT THE EXPLANATION FOR TH E DELAY WAS 3 SATISFACTORY. IT IS TRUE THAT ORDINARILY, A LITIG ANT DOES NOT STAND TO BENEFIT BY LODGING THE APPEAL LATE. IN FA CT, HE RUNS A SERIOUS RISK. AT THE SAME TIME, IT IS ALSO WELL S ETTLED LAW THAT THE JURISDICTION TO CONDONE THE DELAY SHOULD BE EXE RCISED LIBERALLY. THE MATTER RELATING TO CONDONATION OF DELAY SHOULD BE JUDGED BROADLY AND NOT IN A PEDANTIC MANNER. CONSIDERING THE ABOVE, I CONDONE THE DELAY IN FILIN G THE APPEAL. 5. GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE AND, HENCE, NO COMMENTS ARE BEING GIVEN. 6. AT THE TIME OF HEARING OF THE APPEAL, S/SHRI SU DHIR SEHGAL AND ASHOK GOYAL, LEARNED COUNSEL FOR THE ASS ESSEE DID NOT PRESS FOR GROUND NOS. 3 TO 5 OF THE APPEAL AND, HENCE, I DISMISS THESE GROUNDS OF APPEAL AS NOT PRESSED. 7. GROUND NO.2 OF THE APPEAL IS DIRECTED AGAINST T HE ACTION OF LEARNED CIT (APPEALS) IN CONFIRMING THE A DDITION OF RS.10,85,734/- AS INCOME FROM OTHER SOURCES. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 31.10.2007 DECLARING TAXABLE INCOME OF RS.1,16,680/-. THE RE TURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T, 1961 (IN SHORT THE ACT). THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ELECTRONIC GOODS. SUBSEQUENTLY, THE CASE WAS S ELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. ON A PERUSAL OF THE CAPITAL ACCOUNT OF THE ASSESSEE SUBMITTED DU RING THE ASSESSMENT PROCEEDINGS, DEPOSITS OF RS.6 LACS AND 4 RS.4,85,734/- WERE FOUND CREDITED IN THE SAID ACCOU NT ON 30.6.2006 AND 8.7.2006 RESPECTIVELY. AS PER THE A SSESSING OFFICER, SUBSEQUENTLY, THERE WERE TWO DEBIT ENTRIES OF RS.5,01,315/- AND RS.4,78,220/- ON 9.1.2007 AND 24. 1.2007. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO EX PLAIN THE ABOVE ENTRIES, THE ASSESSEE SUBMITTED THAT THE CRED IT ENTRIES IN THE CAPITAL ACCOUNT WERE ON ACCOUNT OF PROFIT EA RNED BY HIM IN COMMODITY TRANSACTIONS THROUGH M/S PASHUPATI SCR IPTS AND THE DEBIT ENTRIES REFLECTED THE LOSS SUSTAINED BY H IM IN COMMODITY TRANSACTIONS. FURTHER, IT WAS ALSO EXP LAINED BY THE ASSESSEE THAT THERE WERE SOME DIFFERENCE BETWEE N HIM AND M/S PASHUPATI SCRIPTS IN RESPECT OF THE SPECULATIVE TRANSACTIONS WHICH RESULTED INTO PROFITS AS WELL AS LOSSES, AND THE ACCOUNT WAS ULTIMATELY SETTLED AT ZERO. IN OR DER TO VERIFY ASSESSEES VERSION, THE ASSESSING OFFICER SUMMONED SHRI SHAGUN GARG, THE BROKER THROUGH WHOM THE COMMODITY TRANSACTIONS WERE CLAIMED TO HAVE BEEN MADE. THE ASSESSING OFFICER ASKED SHRI SHAGUN GARG TO PRODUCE THE BOOKS OF ACCOUNT IN ORDER TO VERIFY THE GENUINENESS OF THE T RANSACTIONS. THE ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO PRODUCE EVIDENCE IN RESPECT OF COMMODITY TRANSACTIONS. NO BOOKS OF ACCOUNT AND SUPPORTING EVIDENCE WITH REGARD TO COMM ODITY TRANSACTIONS WERE PRODUCED. IN SUCH CIRCUMSTANCES , THE ASSESSING OFFICER CONCLUDED THAT THE DEPOSITS OF RS.10,85,734/- APPEARING IN THE CAPITAL ACCOUNT OF THE ASSESSEE AS ALSO IN HIS BANK ACCOUNT REPRESENTED AS SESSEES INCOME FROM OTHER SOURCES. CONSEQUENTLY, THE ASSE SSING OFFICER ADDED THE SUM OF RS.10,85,734/- TO THE TOTA L INCOME OF 5 THE ASSESSEE. 8. ON APPEAL, THE LEARNED CIT (APPEALS) CONFIRMED THE ADDITION HOLDING THAT THE CLAIM OF THE ASSESSEE THA T TWO CREDIT ENTRIES IN HIS CAPITAL ACCOUNT WERE ON ACCOUNT OF P ROFITS FROM COMMODITY TRANSACTIONS IS NOT CORRECT. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS ESTABLISHED BEYOND D OUBT FROM THE INVESTIGATIONS CARRIED OUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THIS CLAIM IS A MERE SELF-SERVING STATEMENT IN ORDER TO JUSTIFY TWO CREDIT ENTRIES. THE LEARNED CIT (APPEALS) ALSO OBSERVED THAT SHRI SHAGUN GARG DID NOT PRODUCE THE BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IN ORDER TO PROVE THE GENUINENESS OF THE CLAIM WITH REGARD TO COMMODITY TRANSACTIONS. THE LEARNED CIT (APPEALS) HAS CATEGORICALLY STATED THAT THE TRANSACTIONS WERE NOT GENUINE TRANSACTIONS AND, THEREFORE, PROVISIONS OF SECTION 68 OF THE ACT WERE ATTRACTED IN THIS CASE. THE LEARNED CIT (APPEALS) HAS ALSO RELIED UPON THE DECISION OF I.T.A.T., CHAN DIGARH BENCH IN THE CASE OF M/S ASHOK TRADING CO. VS. ITO , KAITHAL IN ITA NO.452/CHD/2003 AND HELD THAT IN VIEW OF THE DECISION OF THE TRIBUNAL, THE ONUS TO ESTABLISH THE GENUINEN ESS OF THE CREDIT IN THE BOOKS OF ACCOUNT IS UPON THE ASSESSEE . MERE FILING OF CONFIRMATORY LETTERS OR PARTICULARS IS NO T ENOUGH TO DISCHARGE THE ONUS. EVEN A MERE PAYMENT THROUGH C HEQUES IS NOT SUFFICIENT TO DISCHARGE THE ONUS CAST ON THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE VEHEMENTLY ARGUED THAT THE AUTHORITIES BELOW HAVE N OT 6 CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE AND THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CASE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSACTIONS WITH M/S PASHUPATI SCRIPTS, FIROZ GAND HI MARKET, LUDHIANA ARE ON ACCOUNT OF SPECULATIVE PROF IT AND LOSS IN THE TRANSACTIONS ENTERED THROUGH M/S PASHUP ATI SCRIPTS. M/S PASHUPATI SCRIPTS HAS DONE CERTAIN TRANSACTIONS OF SPECULATIVE NATURE ON BEHALF OF THE ASSESSEE AND PAID SUM OF RS.6 LACS AND RS.4,85,734/- IN THAT ACCOUNT TO THE ASSESSEE, HOWEVER, LATER ON M/S PASHUPATI SC RIPTS DEMANDED THE AMOUNT ON ACCOUNT OF THE LOSSES IN THE SPECULATIVE TRANSACTIONS ENTERED ON BEHALF OF THE A SSESSEE. THERE WERE SOME DIFFERENCES BETWEEN THE ASSESSEE AN D M/S PASHUPATI SCRIPTS IN RESPECT OF THE SPECULATIVE TRA NSACTIONS, WHICH WERE RESULTED INTO PROFITS AS WELL AS LOSSES, THE ACCOUNT IS ULTIMATELY SETTLED WITH THEM AT ZERO ACCOUNT I.E . THE AMOUNT RECEIVED FROM THEM IN EXCESS OF THE ADVANCE OF RS.1,09,182/- HAS BEEN REPAID TO THEM. IT IS STAT ED THAT SHRI SHAGUN GARG IS PROPRIETOR OF MANVI CONFIN SERVICES. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT T HE ASSESSING OFFICER RECORDED THE STATEMENT OF SHRI SH AGUN GARG ON 9.1.2009 WHEN HE APPEARED IN RESPONSE TO SUMMON ISSUED UNDER SECTION 131 OF THE ACT AND CONFIRMED THE SPE CULATIVE TRANSACTIONS OF PROFITS AS WELL LOSSES IN THE ACCOU NT OF THE ASSESSEE AND FURTHER SUBMITTED A LETTER ON 24.12.20 09 CONFIRMING HIS STATEMENT DATED 9.11.2009 AND THE SP ECULATIVE TRANSACTIONS OF PROFIT AND LOSS AND THE TRANSACTION OF CHEQUE. THE COPY OF STATEMENT OF SHRI SHAGUN GARG RECORDED ON OATH 7 ON 9.11.2009 IS AVAILABLE IN ASSESSEES PAPER BOOK AT PAGES 7 TO 12. THE RELEVANT PART OF THE STATEMENT OF SHRI SHAGUN GARG READS AS UNDER : Q. WHAT IS YOUR SOURCE OF INCOME ? ANS. I AM RUNNING A FRANCHISING OF SMC GLOBAL SECURITIES, DRAYEA GANJ NEAR GOLCHA CINEMA, NEW DELHI. IN THESE DAYS, I GET BROKERAGE INCOME FROM THE TRANSACTIONS DONE WITH CLIENT IN STOCKS AND COMMODITIES EXCHANGE ON SHARING BASIS. EARLIER I WAS RUNNING A CONCERN NAMELY M/S PASHUPATI SCRIPTS AT SCO 123, BASEMENT, FEROZE GANDHI MARKET, LUDHIANA. THIS CONCERN WAS IN OPERATION FROM APRIL 2006 TO MARCH 2008. THIS CONCERN WAS DOING THE BUSINESS OF STOCKS AND COMMODITIES BROKING. Q. WHAT WAS WORKING CAPITAL OF THIS FIRM? ANS. AT PRESENT I AM NOT AWARE OF THE AMOUNT BUT WILL TELL LATER ON NEXT DATE. Q. HAVE YOU ADVANCED ANY AMOUNT TO SHRI TIMPLE KUMAR, PROP. M/S GUPTA ELECTRONICS, OLD GRAIN MARKET, DHURI DURING FINANCIAL YEAR 1.4.2006 TO 31.3.2007. ANS. NO. Q. I AM SHOWING A STATEMENT ACCORDING TO WHICH AN AMOUNT OF RS.6 LACS AND. 4 LACS 85 THOUSANDS 7 HUNDRED 34 (TOTAL RS.1085734) HAVE BEEN PAID BY YOU TO SHRI TIMPLE KUMAR VIDE D.D.NO.191054 AND 191055 DATED ON 26.6.2006. PLEASE EXPLAIN THE NATURE OF THESE D.DS AND SOURCE OF 8 THESE D.DS PAID BY YOU? ANS. THESE D.DS HAVE BEEN PAID ON ACCOUNT OF BUSINESS TRANSACTIONS DONE BY SHRI TIMPLE KUMAR THROUGH US IN STOCK AND COMMODITIES. THESE ARE NOT LOAN ENTRIES. I DID NOT GIVEN ANY LOAN TO SHRI TIMPLE KUMAR. Q. THE PERUSAL OF THE STATEMENT REVEALS THAT SHRI TIMPLE KUMAR HAS REPAID AN AMOUNT OF RS.5 LACS ON 10.1.2007 BY D.D.NO.005245 AND AN AMOUNT OF RS.4,76,552/- ON 25.1.2007 BY D.D.NO.005527. PLEASE EXPLAIN THE NATURE OF THESE ENTRIES? ANS. THESE D.DS HAVE BEEN RECEIVED BY US ON ACCOUNT OF STOCK AND COMMODITIES TRADING DONE BY SHRI TIMPLE KUMAR OF DHURI THROUGH M/S PASHUPATI SCRIPTS DHURI. Q. THE FURTHER PERUSAL OF THIS STATEMENT REVEALS THAT THERE IS OPENING CREDIT BALANCE OF RS.109182/- IN THE NAME OF SHRI TIMPLE KUMAR IN YOUR BOOKS OF ACCOUNT. PLEASE EXPLAIN THE NATURE OF THIS CREDIT BALANCE ? ANS. THIS MAY BE AN AMOUNT OF RS.109182/- COLLECTED FROM SHRI TIMPLE KUMAR OF DHURI AS A MARGIN/SECURITIES AGAINST TRADING IN STOCKS AND COMMODITIES. Q. VIDE SUMMON DATED 28.10.2009 WHICH WAS SERVED UPON YOU ON 6.11.2009. YOU ARE ASKED TO PRODUCE COPIES OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND COPY OF YOUR BANK STATEMENT FOR THE RELEVANT PERIOD AND COPY OF CASH BOOK FOR THE MONTH OF JUNE 2006 AND MARCH 2007 BUT DID NOT YOU PRODUCE THESE BOOKS OF ACCOUNT? 9 ANS. AS THE NOTICE WAS SERVED TO ME ON 6.11.2009 ITSELF. MY ACCOUNTANT WHO WAS LOOKING THE ACCOUNT OF M/S PASHUPATI SCRIPTS, HAS GONE TO ATTEND HIS SISTERS MARRIAGE AT PAURII GARHWAL (UTTARAKHAND) AND WILL BE BACK ONLY AFTER 25 TH MAR. 2009. IN HIS ABSENCE I AM NOT AWARE ABOUT THE DOCUMENTS ASKED BY YOU AND WILL BE ABLE TO PRODUCE THE SAME AFTER 25 TH MAR., 2009. 10. FROM THE ABOVE STATEMENT, IT IS CLEAR THAT SHR I SHAGUN GARG WAS RUNNING A BUSINESS CONCERN, AND WAS ENGAGED IN STOCK AND COMMODITY BROKING BUSINESS. S HRI SHAGUN GARG HAS CONFIRMED THE TRANSACTION OF PROFIT AND LOSS IN THE ACCOUNT OF THE ASSESSEE. HE HAS CATEGORICAL LY STATED AND CONFIRMED THAT THE DEMAND DRAFTS OF RS.6 LACS A ND RS.4,85,734/- WERE GIVEN BY HIM TO THE ASSESSEE AND HE HAS ALSO CONFIRMED HAVING RECEIVED DEMAND DRAFT OF RS.5 LACS AND RS.4,76,522/- FROM THE ASSESSEE. HE HAS ALSO FURN ISHED THE COPY OF ACCOUNT. THERE IS NO DISPUTE THAT THE BAN K DRAFTS WERE PREPARED FROM THE BANK ACCOUNT OF M/S MANAVI C OMFIN SERVICES, WHICH BELONGED TO SHRI SHAGUN GARG. IT I S ALSO APPARENT FROM RECORD THAT SHRI SHAGUN GARG SUBMITTE D A COPY OF INCOME TAX RETURN, COPY OF ITR FOR THE ASSESSMEN T YEARS 2005-06 TO 2007-08 WITH PAN NUMBER. BANK ACCOUNT WHEREFROM THE DEMAND DRAFTS HAVE BEEN ISSUED, WERE PROCURED AND PLACED ON RECORD BY THE ASSESSING OFFICER HERSE LF. IT IS ALSO RELEVANT TO STATE THAT THE CONFIRMED COPY OF A CCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S PASHUPATI SCRIPTS, LUDHIANA FOR THE PERIOD 1.4.2006 TO 31.3.2007 IS AVAILABLE A T PAGE 5 OF ASSESSEES PAPER BOOK. FROM THIS ACCOUNT, IT IS C LEAR THAT 10 M/S PASHUPATI SCRIPTS PAID A SUM OF RS.6 LACS AND RS.4,85,734/- TO THE ASSESSEE. THE COPY OF STATEM ENT OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S PASHUPA TI SCRIPTS, LUDHIANA ALONGWITH STATEMENT OF SAUDA (COM MODITY TRANSACTION) AND DIFFERENT BILLS FOR THE ASSESSMENT YEAR 2007- 08 PRODUCED AND FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ARE AVAILABLE AT PAGES 35 TO 41 OF ASSESSEES PAPER BOOK. THE COPY OF RE PLY DATED 23.12.2009 FILED TO THE ASSESSING OFFICER ON 24.12. 2009 BY SHRI SHAGUN GARG IN RESPONSE TO THE SUMMON UNDER SE CTION 131 OF THE ACT IS AVAILABLE AT PAGE 42 OF ASSESSEE S PAPER BOOK. IN THE SAID REPLY, SHRI SHAGUN GARG HAS CAT EGORICALLY STATED THAT HE HAS ALREADY STATED THAT THE NATURE O F ENTRIES WAS OF PROFIT AND LOSS IN COMMODITY TRANSACTIONS DO NE SHRI TIMPLE KUMAR DURING THE FINANCIAL YEAR 2006-07 RELA TING TO ASSESSMENT YEAR 2007-08. THUS, HE HAS AGAIN CONFI RMED GIVING OF DEMAND DRAFTS OF RS.6 LACS AND RS.4,85,73 4/-. 11. IT APPEARS THAT THE AUTHORITIES BELOW HAVE NOT CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE . IN PARA 4.9 OF THE IMPUGNED ORDER, THE LEARNED CIT (APPEALS ) HAS REPRODUCED THE STATEMENT OF THE ASSESSEE, WHICH REA DS AS UNDER : Q. I AM SHOWING YOU A DOCUMENT FILED BY YOU DURI NG ASSESSMENT PROCEEDINGS ACCORDING TO WHICH YOU HAVE RECEIVED RS.6.00 LACS BY DD NO.191054 AND RS.4,85,734/- BY DD NO.191054 FROM SHRI SHAGUN GARG PROP. M/S PASHUPATI SCRIPTS STOCK EXCHANGE, LUDHIAN A ON 28.06.2006 AND FURTHER YOU HAVE GIVEN BACK AMOUNT O F RS.5,01,315/- AND RS.4,78,220/- BACK TO SHRI SHAGUN GARG ON 11 09.01.2007 & 24.01.2007 BY DD NO.005245 & DD NO.005327, RESPECTIVELY. PLEASE EXPLAIN THE NATURE OF THESE ENTRIES ? A. I DO NOT REMEMBER ANYTHING ABOUT THESE ENTRIE S. Q. HOW IT IS POSSIBLE THAT RS.10,85,734/- (RS.6,00 ,000/- + RS.4,85,734/-) WAS DEPOSITED IN YOUR ACCOUNT WITHOU T YOUR KNOWLEDGE? A. I HAVE NOT DONE ANY TYPE OF OTHER TRANSACTION WIT H ANY PARTY. IF THE AMOUNT HAS BEEN RECEIVED AND RETURNED BACK I T CAN BE LOAN ONLY. I HAVE NOT MUCH KNOWLEDGE ABOUT THESE MATTERS. MY COUNSEL CAN BETTER EXPLAIN THESE THINGS. 12. ON THE BASIS OF THE ABOVE STATEMENT, THE LEARN ED CIT (APPEALS) CAME TO THE CONCLUSION THAT THE ASSESSEE DID NOT MAKE ANY CLAIM IN THE STATEMENT REGARDING THE FACT THAT THESE DEPOSITS WERE ON ACCOUNT OF PROFITS RECEIVED FROM C OMMODITY TRANSACTIONS CARRIED OUT THROUGH M/S PASHUPATI SCRI PTS. IT IS RELEVANT TO OBSERVE HERE THAT THE STATEMENT OF T HE ASSESSEE WAS RECORDED ON 23.11.2009 WHEN HE APPEARED BEFORE THE ASSESSING OFFICER TO SEEK ADJOURNMENT OF THE HEARIN G OF THE CASE BECAUSE OF NON-AVAILABILITY OF HIS COUNSEL ON THE SAID DATE. HOWEVER, INSTEAD OF GRANTING THE ADJOURNMEN T, THE ASSESSING OFFICER RECORDED THE STATEMENT OF THE ASS ESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MET WITH A VERY SERIOUS ROAD ACCIDENT ON 25.8.2009 AND HE UNDERGONE THE OPERATION WHERE NAIL ING AND PLATING WAS DONE IN HIS BODY. HE HAD SUFFERED A H EAD INJURY ALSO. IT IS STATED THAT HE COULD ONLY WALK WITH T HE HELP OF STICK. HE WAS NOT MENTALLY UPDATED AND WAS NOT IN A POSITI ON TO REPLY THE QUESTIONS PARTICULARLY IN RESPECT OF THE PAST WORKI NG AS HE COULD NOT RECOLLECT THE PAST ACTIVITIES QUICKLY. THERE WAS LOSS 12 OF MEMORY ALSO. THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT WHEN THE ASSESSEE APPEARED BEFORE TH E ASSESSING OFFICER, EVEN THAT TIME HE WAS WALKING WI TH A STICK AND CATEGORICALLY STATED THAT HE DOES NOT REMEMBER ANYTHING ABOUT THE ENTRIES. THE ASSESSEE HAD STATED BEFORE THE ASSESSING OFFICER THAT HE DOES NOT KNOW MUCH ABOUT THE MATTER, WHICH COULD BE EXPLAINED BY HIS COUNSEL IN A BETTER WAY. ACCORDINGLY, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE LEARNED CIT (APPEALS) HAS WRONGL Y RELIED UPON THE STATEMENT OF THE ASSESSEE RECORDED ON 23.1 1.2009. I HAVE PERUSED THE COPY OF DISCHARGE SLIP OF SHRI T IMPLE KUMAR ISSUED BY DAYANAND MEDICAL COLLEGE & HOSPITAL , LUDHIANA, AND OPD SLIP OF SHREE SANATAN DHARAM CHAR ITABLE HOSPITAL, DHURI. IT IS APPARENT FROM THESE DOCUMEN TS THAT ON 25.8.2009, THE ASSESSEE WAS ADMITTED IN DAYANAND ME DICAL COLLEGE & HOSPITAL, LUDHIANA AND WAS OPERATED UPON AND NAILING OF FEMUR AND K-WIRE FIXATION OF RADIUS WAS DONE ON 26.8.2009. THE ASSESSEE WAS DISCHARGED FROM THE HO SPITAL ON HIS REQUEST ON 2.9.2009 AND A TEAM OF DOCTORS OF TH E SAID HOSPITAL ADVISED TO FOLLOW UP IN ORTHO OPD AFTER SE VEN DAYS FOR SUTURE REMOVAL. AS PER OPD SLIP (NO.12435) DAT ED 10.12.2009 OF SHREE SANATAN DHARAM CHARITABLE HOSPI TAL, DHURI (SANGRUR), THE ASSESSEES CASE WAS OF LOSS OF MEMORY AND SOME ALTERED BEHAVIOR. THE ASSESSING OFFICER RECORDED THE STATEMENT OF THE ASSESSEE ON 23.11.2009 I.E. AF TER FEW DAYS WHEN THE ASSESSEE HAD UNDERGONE SURGERY. EVEN OTHERWISE ALSO, WHEN THERE ARE DOCUMENTARY EVIDENCE AVAILABLE ON RECORD RELATING TO THE TRANSACTIONS, T HEREFORE, THE 13 CIT (APPEALS) WAS NOT JUSTIFIED IN DRAWING AN ADVER SE INFERENCE AGAINST THE ASSESSEE FROM THE STATEMENT RECORDED ON 23.11.2009. THE ASSESSEE HAS NOT MADE ANY ADMI SSION, RATHER HE HAS CATEGORICALLY STATED THAT HE DOES NOT REMEMBER ANYTHING ABOUT THESE ENTRIES. IT WAS ALSO STATED TH AT HE HAS NOT MUCH KNOWLEDGE ABOUT THE MATTER WHICH COULD BE EXPLAINED BY HIS COUNSEL IN A BETTER WAY. IN MY O PINION, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN RELYING ON THE STATEMENT OF THE ASSESSEE RECORDED ON 23.11.2009, W HEN HE WAS NOT MENTALLY FIT TO EXPLAIN THE MATTER. THERE ARE SUFFICIENT DOCUMENTARY EVIDENCE ON RECORD TO EXPLAI N THE DEPOSITS CREDITED IN ASSESSEES CAPITAL ACCOUNT. T HE AMOUNTS IN QUESTION WERE RECEIVED FROM SHRI SHAGUN GARG THR OUGH BANKING CHANNELS AND SHRI SHAGUN GARG HAS CONFIRMED THE PAYMENT OF COMMODITY PROFITS TO THE ASSESSEE. THER E IS NO DISPUTE THAT SHRI SHAGUN GARG IS ASSESSED TO INCOME TAX. HE HAS ALSO CONFIRMED THAT HE HAS RECEIVED BACK AN AMO UNT OF RS.5 LACS ON 10.1.2007 BY D.D.NO.005245 AND AN AMOU NT OF RS.4,76,552/- ON 25.1.2007 BY D.D. NO.005527. THE SE TRANSACTIONS WERE ON ACCOUNT OF STOCK AND COMMODITY TRANSACTIONS DONE BY THE ASSESSEE THROUGH M/S PASHU PATI SCRIPTS DHURI. 13. IN PARA 4.5 OF THE IMPUGNED ORDER, THE LEARNED CIT (APPEALS) HAS REFERRED TO THE REPORT DATED 3.5.2011 SUBMITTED BY THE ASSESSING OFFICER. IT APPEARS THAT THE ASSESSING OFFICER HA S MADE CERTAIN ENQUIRIES FROM MULTI COMMODITY EXCHANGE OF INDIA LT D., MUMBAI. IN THIS REGARD, MCX LTD. VIDE ITS LETTER DATED 7.3.201 1 HAS STATED THAT M/S PASHUPATI SCRIPT, PROPRIETOR SHRI SHAGUN GARG IS NO T REGISTERED AS A 14 MEMBER OF MCX. THEY ALSO STATED THAT THE ASSESSEE IS NOT REGISTERED AS A CLIENT WITH ANY MEMBER(S) OF THE EX CHANGE. MULTI COMMODITY EXCHANGE OF INDIA LTD. ALSO STATED THAT IN THE BILLS ATTACHED, THE BASIC DETAILS LIKE TRADE NU MBER, TRADE TIME, CLIENT CODE, MEMBER CODE ARE NOT MENTIONED. THEREFORE, THEY HAVE STATED THAT IN THE ABSENCE OF EVEN BASIC DETAILS, THEY WERE UNABLE TO VERIFY WHETHER THE TRADES WERE CARRIED OUT AT MCX. THUS, IT IS CLEAR THAT THE ASSESSING OFFI CER HAS NOT CONDUCTED THE PROPER ENQUIRIES WITHOUT MENTIONING T HE BASIC DETAILS LIKE TRADE NUMBER, TRADE TIME, CLIENT CODE, ETC. IN MY OPINION, THIS WAS A FUTILE EXERCISE ON THE PART OF THE ASSESSING OFFICER. THE LEARNED CIT (APPEALS) VIDE HIS LETTE R DATED 1.2.2011 DIRECTED THE ASSESSING OFFICER TO CHECK TH E ASSESSMENT STATUS OF THESE ISSUES IN THE HANDS OF T HE CONCERN BROKERS. IN THIS REGARD, THE ASSESSING OFFICER VI DE HIS REPORT DATED 29.5.2012 SUBMITTED THAT THESE TRANSACTIONS W ERE MADE THROUGH PRINCIPLE TO PRINCIPLE AND NOT THROUGH MCX, WHEREAS IT IS NECESSARY TO MAKE VALID COMMODITY TRANSACTION S THROUGH MCX, MUMBAI AS PER THEIR CLAUSE. ACCORDINGLY, IT WAS STATED BY THE ASSESSING OFFICER THAT THE IMPUGNED ADDITION WAS PROPER. EVEN OTHERWISE, ON THE BASIS OF REPORTS O F THE ASSESSING OFFICER DATED 3.5.2011 AND 29.5.2012, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE BECAUSE THESE REPORTS DO NOT CONTAIN ANY SUBSTANCE TO DEFEAT THE CASE OF THE ASSESSEE. 14. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT IS CLEAR THAT SHRI SHAGUN GARG CONFIRMED 15 HAVING GIVEN DEMAND DRAFTS OF RS.6 LACS AND RS.4,85 ,734/- TO THE ASSESSEE AND RECEIVED DEMAND DRAFTS OF RS.5 LAC S AND RS.4,76,552/-. HE HAS PROVIDED COPY OF ACCOUNT. THERE IS NO DENYING FACT THAT THE BANK DRAFTS WERE PREPARED FROM THE BANK ACCOUNT OF M/S MANAVI CONFIN SERVICES, WHICH B ELONGED TO SHRI SHAGUN GARG. SHRI SHAGUN GARG APPEARED IN PERSON BEFORE THE ASSESSING OFFICER ON 9.1.2009. THERE I S NO DISPUTE AS REGARD THE IDENTITY OF SHRI SHAGUN GARG. AS RE GARDS THE GENUINENESS OF TRANSACTIONS, THE AMOUNTS OF RS.6 LA CS AND RS.4,85,734/- WERE DEPOSITED IN ASSESSEES ACCOUNT BY WAY OF DEMAND DRAFTS WHICH WERE PREPARED FROM THE BANK ACC OUNT OF M/S MANAVI CONFIN SERVICES, WHICH BELONGED TO SHRI SHAGUN GARG. HE HAS SUBMITTED COPY OF THE INCOME TAX RE TURN , COPY OF ITR FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 WITH PAN NUMBER. HE HAS ALSO SUBMITTED BANK ACCOUNT WHEREF ROM THE DEMAND DRAFTS HAVE BEEN ISSUED. THE COPY OF STATE MENT OF ACCOUNT FROM THE BOOKS OF M/S PASHUPATI SCRIPTS REG ARDING PROFIT AND LOSS WAS ALSO PRODUCED BEFORE THE LOWER AUTHORITIES. IN MY CONSIDERED OPINION, THERE WAS NO JUSTIFICATIO N IN MAKING THE ADDITION OF RS.10,85,734/- IN THE HANDS OF THE ASSESSEE. IT IS RELEVANT TO OBSERVE HERE THAT SHRI SHAGUN GAR G IN HIS STATEMENT RECORDED ON 9.11.2009 HAS STATED THAT THE NATURE OF ENTRIES WAS OF PROFIT AND LOSS IN COMMODITY TRANSAC TION DONE BY SHRI TIMPLE KUMAR DURING THE FINANCIAL YEAR 2006 -07 RELEVANT TO ASSESSMENT YEAR 2007-08. IN VIEW OF T HE STATEMENT DATED 9.11.2009 GIVEN BY SHRI SHAGUN GARG AND ALSO IN VIEW OF THE COPY OF REPLY DATED 23.12.2009 FILED TO THE ASSESSING OFFICER ON 24.12.2009 BY SHRI SHAGUN GARG IN 16 RESPONSE TO THE SUMMONS ISSUED UNDER SECTION 131 OF THE ACT, IT IS CLEAR THAT HE WAS ENGAGED IN THE BUSINESS OF COMMODITY TRANSACTIONS. IN MY OPINION, IF THE ASSESSING OFF ICER HAS SUSPICION THAT THE COMMODITY PROFIT WAS NOT GENUINE IN THE HANDS OF SHRI SHAGUN GARG, THE SAME COULD HAVE BEEN ADDED IN HIS ASSESSMENT BY REOPENING OF THE SAME, BUT THE SAME CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE BEC AUSE SHRI SHAGUN GARG HAS CONFIRMED THE PAYMENT OF COMMODITY PROFITS TO THE ASSESSEE BY WAY OF DRAFTS AND HAS FILED THE RELEVANT PAPERS. HE HAS ALSO EXPLAINED THE NATURE OF TRANS ACTIONS AND THE PAYMENTS PAID AND RECEIVED BY HIM. HE IS ASSE SSED TO INCOME TAX. SHRI SHAGUN GARG HAS CLARIFIED THAT H E IS ALSO PROPRIETOR OF MANVI CONFIN SERVICES. THUS, THE AS SESSEE HAS DISCHARGED ONUS OF PROVING THE NATURE AND SOURCE OF DEPOSITS CREDITED IN HIS CAPITAL ACCOUNT. NO BODY HAS DOUB TED THE IDENTITY OF SHRI SHAGUN GARG. IN VIEW OF THE ABOVE , NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE U NDER SECTION 68 OF THE ACT, AND ACCORDINGLY, I ALLOW THE GROUND NO.2 OF THE APPEAL. THE ADDITION OF RS.10,85,734/- STAN DS DELETED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JULY, 2015. SD/- (H.L.KARWA) VICE PRESIDENT DATED : 16 TH JULY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 17