Sagari lal Garg, Morena V. ITO, Gwalior

ITA 53/AGR/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6757 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Assessee Lawyers: K C AGARWAL
• Keywords: Income from undisclosed sources
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NOS.52 & 53/AGR/2010 ASST. YEARS: 1998-99 & 2001-02 SHRI SAGARI LAL GARG, VS. INCOME-TAX OFFICER, S/O. SHRI PRAHLAD DAS GARG, WARD 2(2), GWALIOR. SADAR BAZAR, PORSA, MORENA (M.P.) (PAN : ADCPG 5645 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. AGARWAL, ADVOCATE RESPONDENT BY : SHRI R.C. SHARMA, JR. D.R. ORDER THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE A GAINST TWO SEPARATE ORDERS OF THE CIT(A) BOTH DATED 10.12.2009. FOR THE SAKE OF CONV ENIENCE BOTH THE APPEALS ARE BEING DECIDED BY THIS COMMON ORDER. ITA NO.52/AGR/2010 2. THE GROUND NO.1 RELATES TO THE LEGALITY OF THE I NITIATION OF THE PROCEEDINGS UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAF TER). 3. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2002-03, THE A.O. NOTED THAT T HE ASSESSEE HAS CREDITED A SUM OF RS.2,77,000/- IN ITS BANK ACCOUNT NO.01/007027 ON D IFFERENT DATES W.E.F. 06.11.1997 TO 18.03.1998. WHILE THE ASSESSEE HAS DECLARED INCOME AT THE RATE OF RS.30,000/- TO RS.40,000/- IN 2 THE EARLIER YEARS FROM COMPOUNDARY & AGRICULTURE. ACCORDINGLY, NOTICE UNDER SECTION 148 WAS ISSUED AFTER RECORDING THE REASONS. THE ASSESSMENT WAS COMPLETED AFTER MAKING ADDITION OF RS.2,77,000/- AND AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AT RS.6,380/- WAS TREATED AS INCOME FROM OTHER SOURCES. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AN D CONTENDED THAT THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE ILLEGAL AS THE NOTICE U NDER SECTION 148 WAS ISSUED WITHOUT OBTAINING REQUISITE SANCTION UNDER SECTION 150(2) OF THE JCIT . THE CIT(A) NOTED FROM THE ASSESSMENT ORDER THAT THE A.O. HAS DULY OBTAINED THE APPROVAL VIDE LETTER DATED 18.03.2005 AND AFTER OBTAINING APPROVAL THE NOTICE WAS ISSUED TO THE ASSESSEE AND ACCORDINGLY REJECTED THIS GROUND. 5. BEFORE ME THE LD. A.R. ALTHOUGH REITERATED THE S UBMISSIONS MADE BEFORE THE CIT(A) BUT COULD NOT ADDUCE ANY EVIDENCE WHICH MAY PROVE THAT THE A.O. HAS ISSUED THE NOTICE UNDER SECTION 148 WITHOUT GETTING THE SANCTION UNDER SECT ION 150(2) OF THE ACT. 6. THE LD. D.R. RELIED ON THE ORDER OF THE CIT(A). I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION ALONGWITH THE MATERIAL AVAILABLE ON RECO RD. THE CIT(A), AFTER VERIFYING THE ASSESSMENT, HAS GIVEN CATEGORICAL FINDING THAT THE REQUISITE APPROVAL UNDER SECTION 150(2) WAS DULY OBTAINED BY THE A.O. BEFORE ISSUING THE NOTICE UNDER SECTION 148. I, THEREFORE, IN THE ABSENCE OF ANY CONTRARY EVIDENCE BEING FILED BY THE ASSESSEE, DISMISS THE GROUND NO.1 7. GROUNDS NO.2, 3 & 4 RELATE TO THE ADDITION OF RS .2,77,000/-. 3 8. THE LD. A.R. CONTENDED THAT THE ASSESSEE WAS HAV ING THE OPENING CAPITAL OF RS.3,06,400/- AS ON 31.03.1994. FOR THIS, MY ATTENTION WAS DRAWN TOWARDS PAPER BOOK AND IT WAS CONTENDED THAT OUT OF THE SUM WHICH WAS WITH THE ASSESSEE AS OPENING CAPITAL THE ASSESSEE HAS MADE THE DEPOSIT DURING THE YEAR IN HIS BANK ACCOUNT AMOUNTI NG TO RS.2,77,000/-. THUS, THE SOURCE OF THE AMOUNT OF RS.2,77,000/- WAS DULY EXPLAINED. ATTENT ION WAS DRAWN TOWARDS CAPITAL ACCOUNT OF THE ASSESSEE FOR THE YEAR ENDING 31.03.1994 TO 31.0 3.1998 WHICH IS AVAILABLE AT PAGE NOS.7 & 8 OF THE PAPER BOOK. ATTENTION WAS ALSO DRAWN TOWARDS C OPIES OF THE AFFIDAVITS OF THE AGRICULTURISTS REGARDING SALE OF AGRICULTURE PRODUCE OF THE ASSES SEE ALONG WITH LAND TRANSFER DETAILS IN THE EARLIER YEAR WAS ALSO FILED BEFORE THE A.O. THUS, IT WAS CONTENDED THAT THE SUM OF RS.2,77,000/- IS DULY SUPPORTED BY THE SOURCES OF INVESTMENT. AT TENTION WAS DRAWN TOWARDS THE COPY OF THE SUBMISSION MADE BEFORE THE A.O. POINTING OUT ABOUT THE LAND HOLDING AND THE INCOME WHICH IS BEING DERIVED BY THE ASSESSEE AND ALSO THE DEPOSITS WITH THE ASSESSEE HAVING WITH THE CORPORATION BANK, GWALIOR. 2 BIGHA 6 PISWA OF LAND WAS SOLD FO R RS.1,05,000/- DURING THE YEAR 1983 TO 1991 AND THE AMOUNT WAS KEPT IN THE FDRS WITH THE BANK WHICH WERE MATURED DURING THE YEAR 1998-99. THE ASSESSEE IS ASSESSED TO TAX SINCE 199 4-95 AND IS REGULARLY FILING THE INCOME TAX RETURNS. THE ASSESSEE S FAMILY CONSIST OF 4 SONS AND ONE DAUGHTER. HIS THREE SONS WERE ADULT AND LIVING SEPARATELY HAVING INDEPENDENT SOURCE OF INCOME. ONLY TWO CHILDREN AND WIFE WAS PUTTING UP ALONG WITH THE ASSESSEE AND THE ASSESSEE HAS SHOWN DRAWING OF AROUND RS.24,000/- DURING THE YEAR WHICH WAS SUFFICIENT FOR THE FAMILY . EARLIER ALSO THE LANDS WERE SOLD DURING 1987 TO 1989, THE DETAILS OF WHICH ARE AVAILABLE AT PAGE NO.19 OF THE PAPER BOOK. THE CIT(A) EVEN THOUGH ASKED FOR THE REMAND REPORT FROM THE A.O. WH ICH IS AVAILABLE AT PAGES 20 TO 21, THE ASSESSEE HAS GIVEN THE DETAILS OF SOURCES OF RS.2,7 7,000/- WHICH WERE NOT DENIED BY THE A.O. BUT HE SIMPLY STATED THAT COMPLETE ADDRESSES OF THE PER SONS TO WHOM THE LAND WAS SOLD ARE NOT GIVEN. 4 EVEN DURING THE A.Y. 2002-03 THE ASSESSEE HAS CATEG ORICALLY STATED IN THE STATEMENT RECORDED ON 19.11.2004 THAT THE AMOUNT WAS DEPOSITED BY THE ASS ESSEE OUT OF THE RECEIPT FROM THE FARMERS. ADDITIONS WERE MADE ONLY FOR THE SAKE OF MAKING THE ADDITIONS. RELIANCE WAS PLACED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF TAM TAM PEDDA GURUVA REDDY VS. JCIT, 291 ITR 44 (KAR) FOR THE PROPOSITION OF LAW THAT IF THE SOURCE OF INCOME IS SPELT OUT IN AFFIDAVIT OF CREDITOR, THE AMOUNT CANNOT BE REGARDED TO BE UN EXPLAINED ONE. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE PATNA HIGH COURT IN THE CASE OF ADDL. CIT VS. HANUMAN AGARWAL, 151 ITR 150 (PATNA) FOR THE PROPOSITION OF LAW THAT ONCE TH E ASSESSEE HAS DISCHARGED THE INITIAL BURDEN, IT GETS SHIFTED ON THE REVENUE. RELIANCE WAS ALSO PLA CED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. GENESIS COMMET (P) LTD., 163 TA XMAN 482 (DELHI). 9. LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE A.O. 10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. I HAVE ALSO CONSIDERED THE CASE LAW RELIED UPON BY TH E ASSESSEE. WE NOTED THAT THE ADDITION OF RS.2,77,000/- WAS MADE IN THE INCOME OF THE ASSESSE E AS INCOME FROM UNDISCLOSED SOURCES ON THE BASIS OF AMOUNT CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE YEAR. THE ASSESSEE IS A REGULAR ASSESSEE AND IS BEING ASSESSED TO TAX REGUL ARLY. I ALSO NOTED THAT THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND IN PLOTS DURING 1989-91 FOR RS.1, 05,000/-. THE PROCEEDS OF THE PLOT WAS CREDITED IN THE NAME OF VARIOUS PERSONS AS MENTION ED IN THE ORDER OF CIT(A) AND DEPOSITED IN THE BANK (FROM WHOM THE MONEY WAS REALIZED DURING THE Y EAR 1997-98) 0N DIFFERENT DATES AND DEPOSITS WERE MADE IN THE BANK. ON MATURITY/REALIZ ATION OF THESE DEPOSITS, THE ASSESSEE MADE THE DEPOSIT DURING THE YEAR. THE STATEMENT OF THE ASSE SSEE WAS RECORDED ON 19.11.2004 COPY OF 5 WHICH WAS FILED BEFORE US. DURING THE COURSE OF AS SESSMENT PROCEEDINGS FOR THE A.Y. 2002-03 THE ASSESSEE, IN REPLY TO QUESTION NO.10 OF THE STA TEMENT RELATING TO THE CLARIFICATION OF THE NATURE AND SOURCE OF THE BANK DEPOSITS, CLARIFIED THAT THE SE DEPOSITS ATTRIBUTED THE AMOUNT RECEIVED FROM FARMERS.. NAME OF SUCH FARMERS, DATE OF LOAN GIVEN TO FARMERS AND THE DATE OF RECEIPT FROM FARMERS ARE STATED IN THE ANSWER OF THE QUESTIONS. THE ASSESSEE HAS ALSO SUBMITTED AFFIDAVIT. THE ASSESSEE HAS ALSO FILED COPY OF THE CAPITAL ACCOUNT FOR THE PERIOD FROM 31.03.1994 TO 31.03.1998. AS PER THE CAPITAL ACCOUNT ENDED ON 31.03.1998, THE ASSESSEE WAS HAVING CAPITAL BALANCE OF RS.3,20,450/-. THE OPENING CAPITAL HAS NOT BEEN RE JECTED BY THE A.O. THE ASSESSEE HAS ALSO SUBMITTED THE AFFIDAVIT FROM THE VARIOUS FARMERS CO NFIRMING THE EXPLANATION OF THE ASSESSEE. FROM THE AFFIDAVITS, COPIES OF WHICH ARE AVAILABLE AT PAGES 9 TO 16, I NOTED THE ADDRESS OF EACH OF THE DEPONENT IS DULY MENTIONED. EVEN THE ASSESSEE HAS ALSO SUBMITTED THE EVIDENCE FOR THE SALE OF LAND MADE BY HIM. THE A.O. ALTHOUGH REJECTED TH E EXPLANATION OF THE ASSESSEE BUT HE DID NOT BRING ANY EVIDENCE TO THE CONTRARY EXCEPT MENTIONIN G THAT THE ASSESSEE HAS NOT SUBMITTED COMPLETE ADDRESS OF THE PERSONS. THE ASSESSING OFFI CER HAS NOT BEEN POINTED OUT WHETHER HE. HAS SENT ANY SUMMON TO THESE PERSONS AT THE ADDRESSES G IVEN IN THE AFFIDAVIT. THE A.O., IN MY OPINION, HAS MERELY PRESUMED THAT THE ADDRESS GIVEN BY THE ASSESSEE OF THE PERSONS IN THE AFFIDAVIT ARE NOT COMPLETE AND ON THAT BASIS REJECT ED THE EXPLANATION OF THE ASSESSEE WHICH IS NOT PROPER IN THE EYE OF LAW. ONCE THE ASSESSEE HAS SU BMITTED HIS EXPLANATION, IN MY OPINION, THE ONUS GETS SHIFTED ON THE REVENUE TO PROVE THAT THE EXPLANATION OF THE ASSESSEE IS NOT CORRECT. IN THIS CASE, I NOTED THAT THE A.O. EVEN THOUGH COMPLE TED THE ASSESSMENT IN 2006 AND THE AFFIDAVITS OF THE FARMERS WERE FILED BY THE ASSESSEE ON 17.01. 2006 BUT HE DID NOT INVESTIGATE THE MATTER FURTHER. UNDER THESE FACTS AND CIRCUMSTANCES OF TH E CASE, I AM OF THE VIEW THAT NO ADDITION CAN BE MADE FOR THE SUM OF RS.2,77,000/- ON THIS BASIS ITS ELF AND EVEN OTHERWISE ALSO THE CAPITAL OF THE 6 ASSESSEE WAS SUFFICIENT TO EXPLAIN THE SOURCE OF TH E DEPOSITS. I ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION OF RS.2,77,000/- . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ITA NO.53/AGR/2010 12. BOTH THE A.R. AND THE D.R. POINTED OUT THAT GRO UND NO.1 TAKEN BY THE ASSESSEE IN THIS APPEAL RELATES TO THE ILLEGALITY OF THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT IS THE SAME AS IN ITA NO.52/AGR/2010. THE FACTS INVOLVED IN THIS APPEAL ARE ALSO THE SAME AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN ITA NO.52/A GR/2010 THE SAME VIEW MAY BE TAKEN IN THIS APPEAL ALSO. I HAVE ALREADY CONFIRMED THE ORD ER OF THE CIT(A) SO FAR THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT IS CONCERN ED. I ACCORDINGLY RESPECTFULLY FOLLOWING THE ORDER IN ITA NO.52/AGR/2010 HEREINABOVE, DISMISS TH E GROUND NO.1 TAKEN BY THE ASSESSEE IN THIS APPEAL ESPECIALLY WHEN THE FACTS INVOLVED IN BOTH T HE APPEALS ARE SIMILAR. 13. GROUND NO.2 TO 4 IN THIS APPEAL RELATE TO THE A DDITION OF RS.1,30,000/-. 14. THE FACTS RELATING TO THIS GROUND ARE THAT THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE A.Y. 2002-03 NOTED THAT THE ASSE SSEE HAS MADE DEPOSITS OF RS.1,30,000/- IN HIS BANK ACCOUNT, INITIATED PROCEEDINGS UNDER SECTI ON 147 BY RECORDING THE REASONS. THE ASSESSEE SUBMITTED THE EXPLANATION THAT THE ASSESSEE WAS HAV ING THE OPENING CAPITAL AS ON 01.04.2000 AMOUNTING TO RS.4,51,820/-. OUT OF THIS ACCUMULATE D CAPITAL THE AMOUNT OF RS.1,50,300/- HAD 7 BEEN GIVEN TO 6 FARMERS, WHOSE NAMES ARE AVAILABLE IN THE ASSESSMENT ORDER AT PAGE NO.2, FROM WHOM IT RECEIVED BACK THE AMOUNT IN THE FORM OF MUS TARD SEEDS (SARSO) WHICH WAS SOLD BY HIM IN KRISHI UPAJ MANDI OUT OF WHICH THE AMOUNT WAS DEPOS ITED IN THE BANK ACCOUNT. THE A.O. DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO ALSO CONFIRMED THE ORDER OF T HE A.O. 15. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT THE ASSESSEE IN HIS STATEMENT RECORDED ON 19.11.2004 DURING THE COURSE OF PROCEEDINGS FOR THE A.Y. 2002-03 CLARIFIED THAT THE DEPOSITS ATTRIBUTED THE AMOUNT RECEIVED FROM FARMERS. HE HA S GIVEN THE NAME OF SUCH FARMERS, DATE OF GIVING AMOUNTS TO FARMERS AND DATE OF RECEIPT OF AM OUNT FROM FARMERS IN THE FORM OF MUSTARD SEEDS. THE ASSESSEE ALSO GIVEN THE AFFIDAVITS OF T HE FARMERS WHO HAS PURCHASED THE MUSTARD CROP FROM THE ASSESSEE WHICH WAS RECEIVED BY THE ASSESSE E FROM THE VARIOUS FARMERS, FOR THE PAYMENT OF LOAN ADVANCED BY THE ASSESSEE. EVEN COPIES OF T HE SALE BILL WERE ALSO SUBMITTED ALONGWITH THE BOOK NUMBER, BILL NUMBER, NAME OF THE TRADERS. THE SAME INFORMATION WAS ALSO SUBMITTED TO THE A.O. BUT THE A.O. HAS NOT CONSIDERED THESE EVIDENCE S AND MADE THE ADDITION. THE EXPLANATION SUBMITTED BY THE ASSESSEE, IN MY OPINION, IS PLAUSI BLE ONE. THE ASSESSEE SINCE WAS HAVING THE OPENING CAPITAL MIGHT HAVE ADVANCED THE MONEY TO VA RIOUS FARMERS. FARMERS NEED NOT PAY THE AMOUNT IN CASH. THEY EVEN REPAID THE AMOUNT AS PER THE CUSTOM PREVAILING IN THE UPAJ MANDI IN THE FORM OF COMMODITY. THE ASSESSEE HAD POINTED OU T THAT THE MUSTARD SEEDS WERE RECEIVED BY THE ASSESSEE FROM VARIOUS FARMERS WHICH WERE ULTIMA TELY SOLD BY THE ASSESSEE. THE ASSESSEE SUBMITTED EVIDENCE IN THE FORM OF AFFIDAVIT AND COP Y OF SALE BILL WHICH WERE NOT REJECTED BY THE A.O. OR PROVED TO BE NON-GENUINE. THE ADDITION HAS MERELY BEEN MADE NOT RELYING ON THE 8 EXPLANATION OF THE ASSESSEE. THE ASSESSEE HAS GIVE N NAME OF ADDRESSES OF THE FARMERS. THE A.O. COULD HAVE ISSUED, IN MY OPINION, SUMMONS TO THESE FARMERS WHO INSTEAD OF ISSUING SUMMONS PREFERRED TO REJECT THE EXPLANATION OF THE ASSESSEE WITHOUT VERIFYING THE AUTHENTICITY OF THE EXPLANATION. THE EXPLANATION GIVEN BY THE ASSESSEE , IN MY OPINION, IS REASONABLE ONE, ESPECIALLY ON THE BASIS OF THE AFFIDAVIT AND THE COPY OF SALE BILLS PRODUCED BY THE ASSESSEE WHICH ARE AVAILABLE AT PAGES 15 TO 21 OF THE PAPER BOOK. I A CCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITION OF RS.1,30,000/-. THUS, TH IS APPEAL OF THE ASSESSEE ALSO STANDS ALLOWED. 16. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 08.07.201 0). SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 8 TH JULY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY