CHANDULAL BISANDAS GOKHLANI, Nagpur V. ITO, WARD- 4(1), Nagpur

ITA 514/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1332 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: K B DAVE
• Keywords: Unexplained cash credit; Unexplained investment; Principle of natural justice
• Section: 131; 68

Judgement Text

1 ITA NO. 514/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.514/NAG/2014. ASSESSMENT YEAR : 2011 - 12. CHANDULAL BISANDAS GOKHLANI, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 4(1), NAGPUR. PAN ADOPG4710C. APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.B. DAVE. RESPONDENT BY : SMT. AGNES P. THOMAS. DATE OF HEARING : 11 - 08 - 2016 DATE OF PRONOUNCEMENT : 12 TH AUGUST, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - NAGPUR DATED 12 - 09 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : ( 01) ASSESSING OFFICER CONTRARY TO THE COGENT AND CONVINCING MATERIAL ON RECORD AND CONTRARY TO THE FACTS OF THE CASE AND THE PROVISIONS OF THE LAW APPLICABLE, ON MERE SURMISE AND WHIMS HELD THAT RS. 5,00,000/ - AND RS. 35,000/ - , TOTAL RS. 5,35,000/ - UNEXPLAINED CASH CREDIT AND RS. 7,00,000/ - PAID ADVANCE FOR PU RCHASE OF LAND AS UNEXPLAINED INVESTMENT OF THE ACCOUNTING YEAR ENDING ON 21 - 03 - 2011RELEVANT TO THE ASSESSMENT YEAR 2011 - 2012 AND THE COMMISSIONER OF INCOME TAX APPEALS WITHOUT PROPERLY AND JUDICIALLY APPRECIATING THE FACTS OF CASE HAS CONFIRMED ORDER OF ASSESSING OFFICER. (02) THE LEARNED ASSESSING OFFICER HAS PASSED AND THE 2 ITA NO. 514/NAG/2014. COMMISSIONER OF INCOME TAX APPEALS HAS CONFIRMED THE IMPUGNED ORDER WITHOUT PROPERLY CONSIDERING THE FACTS OF THE CASE, WITHOUT MAKING PROPER INQUIRY AND MATERIAL ON RECORD AND PROVISIONS OF LAW APPLICABLE. ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER IN TOTAL VIOLATION OF PRINCIPAL OF NATURAL JUSTICE AND EQUITY (03) THE IMPUGNED ORDER PASSED BY THE ASSESSING OFFICER AND AFFIRMED BY THE COMMISSIONER OF INCOME TAX APPE ALS ON THE ABOVE SAID FACTS IS WITHOUT ANY COGENT REASON, TOTALLY NON APPLICATION OF JUDICIAL APPROACH AND IS VEXATIOUS, PERVERSE ON FACT AND LAW AND IS ERRONEOUS RESULTING IN GRAVE MISCARRIAGE OF JUSTICE TO THE ASSESSEE AND THEREFORE IS LIABLE TO SET ASIDE AND CANCEL IN THE INTEREST OF JUSTICE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF RECEIPT AND INVESTMENT ACCOUNT FILED BY THE ASSESSEE AS ON 31 - 03 - 2011 FOUND THAT THE ASSESSEE HAS SHOWN THE LIABILITY OF RS.5,35,000/ - . THE AO ASKED THE A SSESSEE TO FILE THE CONFIRMATIONS FROM THE PARTIES IN RESPECT OF WHOM THE LIABILITY OF RS.5,35,000/ - HAS BEEN SHOWN IN THE RECEIPT AND INVESTMENT ACCOUNT. SIMILARLY, THE AO FURTHER NOTED THAT THE ASSESSEE HAS SHOWN THE INVESTMENT OF RS.7,00,000/ - IN THE RECEIPT & INVESTMENT ACCOUNT AS ON 31 - 03 - 2011. THE AO ASKED THE A SSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.7,00,000/ - BEING ADVANCE PAID FOR LAND DURING THE YEAR. HOWEVER, ACCORDING TO THE AO NO EXPLANATION WAS FILED BY THE ASSESSEE FOR THE SAME. THE AO, T HEREFORE, ISSUED SUMMONS U/S 131 OF THE ACT AND RECORDED THE STATEMENT OF ASSESSEE ON OATH. IN THIS SWORN STATEMENT RECORDED ON OATH, THE ASSESSEE REQUESTED FOR FURTHER TIME TO EXPLAIN THE LIABILITY AND THE INVESTMENT AFORESAID. THE AO HAS DISCUSSED THESE ISSUES IN PARA 4 & 5 OF THE ASSESSMENT ORDER. THE AO HAS RECORDED A FINDING THAT THOUGH THE COUNSEL OF THE ASSESSEE APPEARED AFTER RECORDING THE STATEMENTS OF THE ASSESSEE BUT HE NEITHER FILED CONFIRMATION IN RESPECT OF THE LIABILITY OF RS.5,35,000/ - NOR F ILED ANY EXPLANATION AS REGARDS TO THE INVESTMENT OF 3 ITA NO. 514/NAG/2014. RS.7,00,000/ - SHOWN AS ADVANCE FOR LAND. THE AO, THUS, CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS OF CREDITORS AND ALSO FAILED TO DISCHARGE T HE ONUS TO EXPLAIN THE INVESTMENT OF RS.7,00,000/ - . THEREFORE, THE ADDITION OF RS.12,35,000/ - (RS.5,35,000/ - + RS.7,00,000/ - ) UNDER THESE TWO HEADS WERE MADE BY THE AO IN THE ASSESSMENT ORDER. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONFIRMED THE ADDITION HOLDING AS UNDER : 5.0 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR, THE ORDER OF THE AO AND THE MATERIAL ON RECORD. IT IS SEEN FROM THE BALANCE SHEET FILED BY THE ASSESSEE AS ON 31.03.2010 THAT AN AMOUNT OF RS.5,00,000/ - HAS BEEN SH OWN AS LIABILITY IN RESPECT OF LAND NO. 59 SALE ADVANCE UNDER THE HEAD LOANS AND LIABILITY. THE BALANCE SHEET ALSO SHOWS THE CONSTRUCTION ON PLOT NO. 1272 AT RS.7,00,000/ - ON THE ASSET SIDE. SIMILARLY RS.55,000/ - HAS ALSO BEEN SHOWN ON THE LIABILITY SIDE UNDER THE HEAD BALANCE PAYABLE FOR CONSTRUCTION. 5.1 THE AR OF THE APPELLANT IN HIS SUBMISSIONS HAS RAISED A CONTENTION THAT THE ASSESSEE DURING THE RELEVANT FINANCIAL YEAR ENDED AS ON 31.03.2010 HAS AGREED TO SELL THE AGRICULTURAL LAND TO ONE SHRI MURLI DHAR HIRAMANJI FULBHANDE AND THE AMOUNT OF RS.5,00,000/ - SHOWN AS LIABILITY IN THE ADVANCE IS OUT OF THE AGREED SALE CONSIDERATION OF THE LAND. THE APPELLANT, HOWEVER, HAS NOT BEEN ABLE TO FILE ANY SORT OF DOCUMENTARY EVIDENCE INCLUDING THE AGREEMENT TO SE LL WITH THE SAID PARTY FROM WHOM THE APPELLANT CLAIMED TO HAVE RECEIVED THE ADVANCE OF RS.5,00,000/ - . THE APPELLANT HAS ALSO NOT BEEN ABLE TO EXPLAIN THE MODE OF RECEIPT OF SUCH PAYMENT OF RS.5,00,000/ - FROM THE SAID PROPERTY, IF ANY. THE AO HAD GIVEN AMPL E OPPORTUNITIES TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS; HOWEVER, THE ASSESSEE COULD NOT ADDUCE CONFIRMATION FROM THE PARTY. IN FACT, IN THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT VIDE ORDER SHEET NOTINGS DATED 25.08.2014 HAS C ONCEDED THAT THE CREDITOR PARTY FOR RS.5,00,000/ - IS NOT TRACEABLE, HENCE THE APPELLANT IS UNABLE TO FURNISH ANY CONFIRMATION. THE AR OF THE APPELLANT HAS ALSO SHOWN HIS INABILITY TO FILE ANY SUPPORTING DOCUMENT IN SUPPORT OF HIS CONTENTIONS. SINCE THE AMO UNT IS FOUND CREDITED IN THE BOOKS OF THE APPELLANT AS LIABILITY, ONUS IS ON HIM TO EXPLAIN THE LIABILITY AND DISCHARGE THE ONUS CAST ON HIM. HOWEVER, THE APPELLANT HAS FAILED TO DO SO. THE 4 ITA NO. 514/NAG/2014. APPELLANT THUS HAS NOT BEEN ABLE TO SATISFY THE TRIPLE CONDITIONS OF IDENTITY OF THE PARTY, CREDITWORTHINESS OF THE PARTY AND THE GENUINENESS OF THE TRANSACTION IN RESPECT OF THE CREDIT ENTRY APPEARING IN HIS ACCOUNTS. THE APPELLANT HAS ALSO NOT BEEN ABLE TO FILE ANY PLAUSIBLE EXPLANATION AS REGARDS TO THE AMOUNT OF RS.3 5,000/ - SHOWN AS LIABILITY. THE AR OF THE APPELLANT IN THIS REGARD HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT AS REGARDS TO THE CARRIED FORWARD OF CASH CREDIT BALANCE FROM THE EARLIER YEARS. BUT SINCE, THE APPELLANT HAS FAILED TO EXPLAIN THE FACTUAL MATRIX OF THE CREDIT BALANCE CARRIED FORWARD WITH ANY DOCUMENTARY EVIDENCE AND CONCEDED THAT HE IS UNABLE TO FILE ANY DOCUMENT IN SUPPORT THEREOF, THE RATIO - DECIDENDI LAID DOWN IN THE JUDGEMENT OF DELHI HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. IN THE LIGHT OF THESE FACTS, THE ACTION OF TH E AO, TREATING THE ENTRIES OF CREDITS AS UNEXPLAINED CASH CREDIT U/S 68 IS UPHELD. HENCE, THIS GROUND IS ACCORDINGLY DISMISSED. 5.2 AS REGARDS TO THE INVESTMENT OF RS.7,00,000/ - BEING ADVANCE FOR LAND, IT IS SEEN THAT THE APPELLANT HAS TAKEN CONTRARY STAN D WHILE EXPLAINING THE SAME IN BOTH THE BALANCE SHEET AS ON 31.03.2010 AND 31.03.2011. IN THE BALANCE SHEET AS ON 31.03.2010, THE APPELLANT HAS SHOWN THE AMOUNT UNDER THE HEAD CONSTRUCTION ON PLOT NO. 1372 RS.7,00,000/ - . WHEREAS IN THE BALANCE SHEET FOR T HE SUBSEQUENT YEAR AS ON 31.03.2011, THE SAME AMOUNT OF RS.7,00,000/ - APPEARS UNDER THE HEAD ADVANCE FOR LAND. THEREFORE, THE EXPLANATION FILED BY THE APPELLANT SUFFERS FROM INHERENT DEFICIENCIES. THE CONTENTION OF THE APPELLANT THAT RS.5,00,000/ - RECEIVED AS ADVANCE ON SALE OF LAND HAS BEEN UTILIZED FOR THE SAID INVESTMENT OF RS.7,00,000/ - ALSO GETS REFUTED ON MERITS IN AS MUCH AS THAT THE APPELLANT COULD NOT SATISFACTORILY EXPLAIN THE ADVANCE CLAIMED TO HAVE BEEN RECEIVED OF RS.5,00,000/ - SHOWN AS LIABILI TY, WHICH HAS BEEN TREATED AS UNEXPLAINED CREDITS IN HIS HANDS IN THE FOREGOING PARAS OF THIS ORDER. THEREFORE, THE ADDITION MADE BY AO OF RS.7,00,000/ - IS UPHELD AS UNEXPLAINED INVESTMENT. THIS GROUND IS ACCORDINGLY DISMISSED. 4. AGAINST THE ABOVE ORDER , ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE CONCERNED LIABILITY AND INVESTMENT WERE COMING FROM EARLIER YEARS. HENCE THEY CANNOT BE ADDED IN THIS ASSESSMENT YEAR. FOR THIS PROPOSITION LEARNED COUNSEL PLACED RELIANCE UPON THE DECISION OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. PARMESHWAR 5 ITA NO. 514/NAG/2014. BOHRA 208 CTR 218 AND HONBLE DELHI HIGH COURT DECISION IN THE CASE OF USHA STUD AGRICULTURAL FARMS LTD. 183 TAXMAN 277. 6. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I FIND THAT THE LEARNED CIT(APPEALS) IN HIS APPELLATE ORDER HAS RECORDED THAT THE CONCERNED INVESTMENT AS WELL AS THE CREDIT/LIABILITY WERE APPEARING IN THE BALANCE SHEET FILED BY THE ASSESSEE F OR THE YEAR ENDED ON 31 - 03 - 2010. THIS HAS NOT BEEN DISPUTED BY THE REVENUE. WHEN IT IS UNDISPUTED THAT THE LIABILITY AS WELL AS THE INVESTMENT DO NOT BELONG S TO THE FINANCIAL YEAR UNDER CONSIDERATION THE SAME CANNOT BE ADDED IN THIS ASSESSMENT YEAR. FOR TH IS PROPOSITION THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL OF THE ASSESSEE AS ABOVE SUPPORT THE CASE OF THE ASSESSEE. IN THE CASE OF PARMESHWAR BOHRA (SUPRA) THE HONBLE RAJASTHAN HIGH COURT HAS HELD THAT THE CARRIED FORWARD AMOUNT OF PREVIOUS YEAR DO ES NOT BECOME AN INVESTMENT OR CASH CREDIT GENERATED DURING THE RELEVANT ASSESSMENT YEAR. HENCE THE HONBLE HIGH COURT HAS AFFIRMED THE DELETION IN THIS REGARD. SIMILARLY IN THE CASE OF USHA STUD AGRICULTURAL FARMS LTD. (SUPRA), HONBLE DELHI HIGH COURT HA D HELD THAT SINCE IT IS A FINDING OF FACT RECORDED BY THE COMMISSIONER (APPEALS) THAT THIS CREDIT BALANCE APPEARING IN THE ACCOUNTS OF THE ASSESSEE, DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER WAS NO T JUSTIFIED IN MAKING THE IMPUGNED ADDITION UNDER SECTION 68 OF THE ACT AND AS SUCH NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL WHICH HAS ENDORSED THE DECISION OF THE COMMISSIONER (APPEALS). EXAMINING THE CASE ON THE TOUCH STONE OF ABOVE SAID HI GH COURT DECISIONS, I FIND THAT THE LEARNED CIT(APPEALS) HAS ERRED IN DISTINGUISHING THE SAME. IN MY CONSIDERED OPINION , ON THE TOUCH STONE OF THE AFORESAID CASE LAWS, THE ASSESSEE DESERVE TO SUCCEED INASMUCH AS THE ADDITION DO NOT RELATE TO LIABILITY CREATED OR INVESTMENT MADE DURING THE CONCERNED 6 ITA NO. 514/NAG/2014. ASSESSMENT YEAR. HENCE I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AN D DELETE THE ADDITION IN THIS REGARD. 8. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF AUGUST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 12 TH AUGUST, 2016. COPY FORWARDED TO : 1. CHANDULAL BISANDAS GOKHLANI, SHOP NO. 21, TULSI APARTMENT, ITWARI TELEPHONE EXCHANGE SQUARE, LAKADGANJ, NAGPUR - 440008. 2. I.T.O., WARD - 4(1), NAGPUR. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.