ITO, JODHPUR V. Shri Ritesh Jaggi, JODHPUR

ITA 517/JODH/2013

• Counselvise Citation: 51723314 RSA 2013
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: ANIL BHANSALI
• Keywords: Unexplained investment
• Section: 131

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.517/JODH/2013 (A.Y. 2009-10) ITO, WARD-1(4), VS. SHRI RITESH JA GGI, JODHPUR. P/O M/S. MANOHARLAL & SONS, STATION ROAD, JODHPUR. PAN NO. ADLPJ 2476 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL BHANSALI. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 24/03/2014. DATE OF PRONOUNCEMENT : 09/04/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 10/09/2013 OF LD. CIT(A), JODHPUR. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 21,50,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY. 2. THE LD. CIT(A) HAS ERRED IN ADMITTING THE FRESH EVIDENCE IN FORM OF BANK STATEMENT FOR THE PRECEDING A.Y. WITHOUT GIVIN G AN OPPORTUNITY TO THE AO AS REQUIRED UNDER RULE 46A. 2 3. THE LD. CIT(A) HAS ERRED IN HOLDING THAT CREDIT WORTHINESS OF DEPOSITORS IS ESTABLISHED WITHOUT ANY MATERIAL EVID ENCE AND ALSO IGNORING THE SUPREME COURT DECISION IN CASE OF SUMA TI DAYAL VS. CIT (240) ITR 801) THAT THE ONUS WAS UPON THE ASSESSEE TO PROVE CREDIT WORTHINESS OF THE DEPOSITOR WHICH IN THE PRESENT CA SE WAS NOT PROVED. 4. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N ON TECHNICAL GROUND THAT ADDITION HAS BEEN MADE ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN PROPERTY DUE TO NON-PROVIDING OF CREDIT WORTHINE SS WHICH IS ALIEN CONCEPT BY IGNORING THE SUBSTANCE OF THE ASSESSMENT ORDER AGAINST THE SETTLED PRINCIPLE OF LAW THAT SUBSTANCE SHOULD PREVAIL OVER THE FORM. 2 FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE ON LY GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF RS. 21,50,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPL AINED INVESTMENT IN PROPERTY. 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASS ESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE HAD INVESTED A SUM OF RS. 76,94,216/- IN IMMOVABLE PROP ERTY WHICH WAS CLAIMED TO HAVE BEEN PURCHASED THROUGH LOAN FROM CA NARA BANK AND ALSO LOAN FROM FAMILY MEMBERS. THE ASSESSEE FURNISHED C OPY OF LOAN CERTIFICATE FROM THE BANK AND CONFIRMATIONS FROM TH E FAMILY MEMBERS. THE ASSESSEE RECEIVED LOAN OF RS. 5 LAC FROM SMT. S IKHA JAGGI AND RS. 16.5 LAC FROM SHRI KIRAN KUMAR JAGGI. THE ASSE SSING OFFICER OBSERVED 3 THAT SMT. SIKHA JAGGI HAD SHOWN INCOME OF RS. 42,50 5/- IN HER RETURN FOR THE A.Y. 2009-10 AND SHRI KIRAN KUMAR JAGGI HAD SHO WN NIL INCOME. HE FURTHER OBSERVED THAT SHRI KIRAN KUMAR JAGGI HAD AD VANCED TOTAL LOAN OF RS. 32.6 LAC TO THE ASSESSEE INCLUDING THE LOAN OF RS. 16.5 LAC GIVEN DURING THE YEAR. THE ASSESSING OFFICER ISSUED THE SUMMONS UNDER SECTION 131 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) TO THE ABOVE SAID CREDITORS WHICH WERE RETURNED BY THE NOTICE SERVER BY STATING THAT BOTH THE CREDITORS WERE OUT OF INDIA. THE ASSESSING OFFICER CONSIDERED THE LOAN OF RS. 21.50 LAC AS UNEXPLAINED INVESTMENT IN PROPERTY AND MADE THE ADDITION CONSIDERING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE FROM OTHER SOURCES. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE PURCHASED FLAT FOR RS. 76,94,216/- BY RAISING LOAN OF RS. 50 LAC FROM CANARA BANK AND A S UM OF RS. 15.45 LAC WAS ALREADY PAID FROM TIME TO TIME AS PERIODIC INST ALLMENTS UPTO 31/03/2008 I.E. A.Y. 2008-09 THE SUM OF THESE TWO C OMES TO RS. 65.45 LAC THEREBY LEAVING A SUM OF RS. 11.50 LA C, THEREFORE, THE ADDITION OF RS. 21.50 LAC WAS ERRONEOUS. IT WAS FU RTHER STATED THAT ALL THE PAYMENTS MADE BY THE ASSESSEE TO THE BUILDER TO WARDS PURCHASES OF FLAT DID NOT HAVE A NEXUS OR PROXIMITY TO THE DATE OF LOANS RECEIVED FROM 4 SMT. SHIKHA JAGGI & SHRI KIRAN KUMAR JAGGI. IT WAS ALSO STATED THAT THE SUMMONS TO THE ALLEGED CREDITORS WERE ISSUED ONLY O N 26/12/2011 AND THE ASSESSMENT ORDER HAD BEEN PASSED ON 28/12/2011, THE REFORE, THE ADDITION MADE WAS NOT JUSTIFIED. IT WAS FURTHER ST ATED THAT BOTH SMT. SHIKHA JAGGI & SHRI KIRAN KUMAR JAGGI WERE LIVING I N DUABI HAVING A LLC CO. BY THE NAME OF M/S. LONDON FASHION, DEALING IN TEXTILE AND GARMENTS. SHRI KIRAN KUMAR JAGGI ADVANCED LOAN ON DIFFERENT D ATES AND OCCASIONS AMOUNTING TO RS. 16.5 LAC AND SIMILARLY SMT. SHIKHA JAGGI ADVANCED A SUM OF RS. 5 LAC DURING THE YEAR UNDER CONSIDERATION. IT WAS CONTENDED THAT THE ASSESSING OFFICER PROCEEDED ON TWO MISPLACED AN D WRONG NOTIONS. THE FIRST MISPLACED NOTION WAS THAT THOSE AMOUNTS W ERE INVESTED IN THE HOUSE PROPERTY AND THE SECOND WAS THAT THE RETURNS FILED UNDER THE INDIAN INCOME TAX ACT BY BOTH THE DEPOSITORS WERE OF NOT R EASONABLE AMOUNT. IT WAS FURTHER STATED THAT BOTH THOSE PERSONS WERE NON -RESIDENT AND THE PRINCIPAL SOURCE OF EARNING WAS IN DUBAI AND SUMS A DVANCED WERE OUT OF REMITTANCE FROM DUBAI. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, OBSERVED THAT THERE WAS NO NEXUS BETWEEN INSTALMENTS PAID AGAINST THE PURCHASE OF PROPERTY AND THE LOANS RECE IVED FROM BOTH THE PARTIES THROUGH PROPER BANKING CHANNEL. IT WAS FUR THER OBSERVED THAT THE 5 FINDING OF THE ASSESSING OFFICER THAT INVESTMENT IN PROPERTY TO THE EXTENT OF RS. 21.50 LAC WAS UNEXPLAINED WAS NOT BASED ON T RUE APPRECIATION OF FACTS BECAUSE THE ASSESSING OFFICER MADE THE ADDITI ON ON SOLE GROUND THAT CREDITWORTHINESS OF LENDERS WERE NOT ESTABLISHED AN D HE TRIED TO LINK THOSE LOAN WITH INVESTMENT IN PROPERTY WITHOUT ANY BASIS AND PROCEEDED TO MAKE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN PROPERTY WHICH WAS LEGALLY NOT SUSTAINABLE IN VIEW OF THE FA CT THAT INVESTMENT IN PROPERTY HAD BEEN SHOWN TO HAVE DEFINITIVE AND RECO RDED SOURCES. THE LD. CIT(A) ALSO OBSERVED THAT THE LENDERS WHO WERE RELATIVES OF THE ASSESSEE WERE LIVING IN DUBAI AND DOING BUSINESS TH ERE, THEY WERE FILING THEIR RETURN OF INCOME IN INDIA AND THE INCOME SHOW N IN THESE RETURNS DID NOT PRIMA-FACIE ESTABLISH THAT THEY DID NOT HAVE CA PACITY TO LEND. THE LD. CIT(A) POINTED OUT THAT THE COPIES OF ACCOUNT P AYEE DD REVEALED THAT THOSE WERE ISSUED AGAINST REMITTANCE FROM ABROAD AN D ALL THE PAYMENT HAVE BEEN MADE THROUGH PROPER BANKING CHANNEL AND T HOSE EVIDENCES HAD NOT BEEN REBUTTED BY ANY CONCRETE FINDING BY THE AS SESSING OFFICER. THEREFORE, MERELY BECAUSE SUMMONS ISSUED TO THE ASS ESSEE AT ELEVENTH HOUR OF PROCEEDING COULD NOT BE COMPLIED WITH AS TH E ASSESSEE WAS OUT OF STATION, GENUINENESS OF LOAN COULD NOT BE SUMMARILY REJECTED PARTICULARLY BRUSHING ASIDE THE OTHER EVIDENCE ALREADY SUBMITTED BY THE ASSESSEE. 6 THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING IN PARA 3.4.3 OF THE IMPUGNED ORDER AS UNDER:- 3.4.3 IN THE INSTANT CASE, THE SOURCE OF INVES TMENT IS SUCCESSFULLY EXPLAINED BY THE APPELLANT AND NOW THE ONUS IS ON T HE ASSESSING OFFICER TO DISPROVE THE SAME WITHOUT CONCRETE FINDING WHICH HA S NOT BEEN DONE BY THE ASSESSING OFFICER. IN FACT, THE ASSESSING OFFIC ER HAS BROUGHT NO EVIDENCE ON RECORD TO SUGGEST THAT THERE IS NEXUS B ETWEEN THE PAYMENT OF LOANS AGAINST PURCHASE OF PROPERTY AND LOAN TAKEN F ROM THE ALLEGED CREDITORS OR THAT THE LOAN ACTUALLY REPRESENTS ASSE SSEES OWN UNDISCLOSED INCOME. UNDER THESE CIRCUMSTANCES, THE ASSESSING O FFICERS ACTION CANNOT BE HELD AS JUSTIFIABLE IN ADDING RS. 21,50,000/- BY TREATING IT AS UNEXPLAINED INVESTMENT OUT OF UNDISCLOSED SOURCES. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSM ENT ORDER DATED 27/12/2011. 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A). 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT 7 CASE, THE ASSESSING OFFICER CONSIDERED THE INVESTME NT MADE IN THE PROPERTY TO THE EXTENT OF RS. 21.50 LAC AS UNEXPLA INED. HOWEVER, THE FACTS REMAINED THAT THE ASSESSEE RAISED A LOAN OF R S. 5 LAC AND MADE THE PAYMENT OF INSTALLMENTS TO THE EXTENT OF RS. 15.45 LAC IN PRECEDING YEAR I.E. A.Y. 2008-09. THEREFORE, OUT OF THE INVESTMEN T OF RS. 76,94,216/-, A SUM OF RS. 65.45 LAC WAS NOT AT ALL HAVING ANY NEXU S OR PROXIMITY TO THE DATE OF LOANS RECEIVED BY THE ASSESSEE FROM SMT. SH IKHA JAGGI & SHRI KIRAN KUMAR JAGGI TOWARDS PURCHASE OF FLAT. MOREOV ER, THE CREDITORS WERE DOING BUSINESS IN DUBAI AND LOAN WAS GIVEN TO THE ASSESSEE THROUGH PROPER BANKING CHANNELS VIDE ACCOUNT PAYEE DDS WHI CH WERE ISSUED AGAINST REMITTANCE FROM ABROAD. THE SAID FACT HAS NOT BEEN REBUTTED BY THE ASSESSING OFFICER, THEREFORE, THE ADDITION OF R S. 21.50 LAC BY DOUBTING THE CREDITWORTHINESS OF THE CREDITORS ONLY ON THIS BASIS THAT THE INCOME EARNED AND DECLARED IN INDIA WAS NOT A REASONABLE A MOUNT, WAS NOT JUSTIFIED PARTICULARLY WHEN THE CREDITORS WERE NON- RESIDENT INDIAN AND EARNING INCOME FROM ABROAD WHICH WAS NOT TAXABLE IN INDIA. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY DELETED THE SAME. WE, THEREFORE, DO NOT FIND ANY MERIT IN THIS DEPARTMENTAL APPEAL. 8 9 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMIS SED. (ORDER PRONOUNCED IN THE COURT ON 09 TH APRIL, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH APRIL, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.