Shri Ranveer Singh Choudhary, BIKANER V. ITO, BIKANER

ITA 533/JODH/2010

• Counselvise Citation: 53323314 RSA 2010
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: SHAFI MOHD
• Section: 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR (BEFORE SHRI .N.L. KALRA , ACCCOUNTANT MEMBE R) ITA NO.533/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: AKBPS 3997 N SHRI RANVEER SINGH CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER BIKANER (APPELLANT) (RESPONDENT) ITA NO.534/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: AFLPG 4132 M SHRI NIRMAL CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER BIKANER (APPELLANT) (RESPONDENT) ITA NO.535/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: AKGPG 8053 M SMT SUNITA CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER BIKANER (APPELLANT) (RESPONDENT) ITA NO.536/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: AHNPC 2474 Q SMT SNAGEETA CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER\ BIKANER (APPELLANT) (RESPONDENT) 2 ITA NO.537/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: AFZPC 3482 N SHRI VINOD CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER BIKANER (APPELLANT) (RESPONDENT) ITA NO.538/JODH/2010 ASSESSMENT YEAR : 2005-06 PAN: ATQPK 2848 H SHRI PREM KUMAR CHOUDHARY VS. THE ITO C/O SHRI M.P.SHARMA ADVOCATE WARD- 2 (2) OPP. CITY SCHOOL, MODERN MARKET BIKANER\ BIKANER (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHAFI MOHD. DEPARTMENT BY: SHRI MAHESH KUMAR DATE OF HEARING: 02-12-2011 DATE OF PRONOUNCEMENT: 09-12-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEES HAVES FILED APPEALS AGAINST RESPECT IVE ORDERS OF THE LD.CIT(A)-, BIKANER DATED 20-08-2010 FOR THE ASSESSMENT YEAR 2005-06. SINCE GROUNDS OF APPEALS ARE THE SAME FOR ALL THE ASSESSES, THEREFORE, THESE APPEALS ARE BEING DECIDED THROUGH A CONSOLIDATED ORDER. 2.1 FOR READY REFERENCE, I AM REPRODUCING THE GROUN DS OF APPEAL IN THE CASE OF SHRI RANVIR SINGH FOR THE ASSESSMENT YEAR 2005-06. 1. THAT THE ASSESSMENT COMPLETED BY THE ITO IS NOT JUS TIFIED. 2. THAT THE AO IS ERRED N MAKING ADDITION OF OPENING B ALANCE OF CAPITAL ACCOUNT OF RS. 1,30,484/- BECAUSE IT IS BAL ANCE BROUGHT FORWARDED FROM PREVIOUS YEARS. 3 3. THAT THE OBSERVATIONS OF THE AO IS NOT JUSTIFIED BE CAUSE MERELY NOT FILING OF INCOME RETURN, IT CANNOT BE SA ID THAT THE PERSON IS NOT HAVING FUNDS IN HIS HAND. 4. THAT THE LD.CIT(A) IS ALSO ERRED IN SUSTAINING THE ADDITION WITHOUT CONSIDERING THE AFFIDAVITS AND OTHER DOCUME NTS IN CORRECT MANNER. 5. THAT THE ASSESSEE FILED AS AFFIDAVIT ABOUT THE FINA NCIAL CAPACITY TO DEPOSIT, THEREFORE, WITHOUT PROPER CONS IDERATION THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD .CIT(A) IS ILLEGAL AND AGAINST THE LAW. 2.2 THE AO NOTICED THAT THE ASSESSEE MADE INVESTMEN T IN THE FIRM TO THE EXTENT OF RS. 1.00 LAC. DURING THE COURSE OF THE ASSESSMENT OF TH E FIRM, IT WAS NOTICED THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE SOURCE OF DEPOSITS AS C APITAL IN THE FIRM. THE AO ACCORDINGLY RECORDED THE REASONS AND ISSUED NOTICE U/S 148 OF T HE ACT. 2.3 DURING THE COURSE OF ASSESSMENT, THE ASSESSEE W AS ASKED TO EXPLAIN THE SOURCE OF INVESTMENT MADE IN THE FIRM. THE ASSESSEE SUBMITTED THAT HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THE ASSESSEE IS ALSO NOT HAVING A NY BANK ACCOUNT. BEFORE THE AO, THE ASSESSEE FILED THE PROFIT AND LOSS ACCOUNT OF ASSES SMENT YEARS 2003-04, 2004-05 AND 2005-06. THE ASSESSEE ALSO FILED AN AFFIDAVIT BEFOR E THE AO IN WHICH HE STATED THAT HE WAS LOOKING AFTER THE WORK OF SUPERVISION OF THE CONSTR UCTION BEFORE BECOMING THE PARTNER IN THE FIRM. HE WAS EARNING INCOME FROM INTEREST BY AD VANCING THE LOANS TO CERTAIN PERSONS OUT OF HIS SAVINGS. IN THE AFFIDAVIT, HE ALSO STATE D THAT HE HAS DEPOSITED THE SUM OF RS. 1.00 LAC AS CAPITAL AND THE SAME WAS OUT OF HIS SAVINGS OF EARLIER YEARS AND RECEIVED FROM THE PARTIES TO WHOM THE MONEY WERE EARLIER ADVANCED. 2.4 THE AO WAS OF THE OPINION THAT THE PROFIT AND L OSS ACCOUNT AND BALANCE SHEET OF THE ASSESSMENT YEARS 2003-04 AND 2005-06 CANNOT BE ACCEPTED AS CORRECT BECAUSE THE 4 ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT. T HE ASSESSEE HAS ALSO NOT FILED THE INCOME TAX RETURN FOR THE EARLIER YEARS. THE AO ACC ORDINGLY TREATED THE OPENING BALANCE OF RS. 1,30,484/- AS UNDISCLOSED INCOME. 2.5 THE LD.CIT(A) WAS OF THE OPINION THAT ALLEGED C APITAL BUILT UP IN THE EARLIER YEARS CANNOT BE ACCEPTED SINCE THE SAME HAD NOT BEEN SUBJ ECTED TO ANY SCRUTINY AS NO RETURN OF INCOME WAS FILED. . ACCORDING TO THE LD.CIT(A), THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO PROVE THE CONTENTS OF THE AFFIDAVIT AND HENCE, THE ISSUE OF NOT EXAMINING THE ASSESSEE CANNOT BE A GROUND FOR SAYING THAT THE AFFIDAVIT CANNOT BE REJECTED. THE LD.CIT(A) RELIED UPON THE DECISION OF HON'BLE ALLAH ABAD HIGH COURT IN THE CASE OF SHRI KRISHANA VS CIT, 142 ITR 618 IN WHICH IT HAS BEEN H ELD THAT IT IS NEITHER A RULE OF PRUDENCE NOR A RULE OF LAW THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINED UNCONTROVERTED MUST INVARIABLY BE ACCEPTED AS TRUE AND RELIABLE. THE LD.CIT(A) THEREFORE, CONFIRMED THE ADDITION MADE BY THE AO. 2.6 DURING THE COURSE OF PROCEEDINGS BEFORE ME, THE LD. AR DRAW MY ATTENTION TO THE AFFIDAVIT OF THE ASSESSEE. THE ASSESSEE IS AGED 45 YEARS OLD AND HE WAS DOING SUPERVISION DUTY FOR CONSTRUCTION OF THE BUILDING AND WAS EARNI NG INCOME FROM THAT SOURCE. THE LD. AR HAS RELIED ON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF ITO VS DR. TEJGOPAL BHATNAGAR, 20 TW 368. IN THIS CASE, THE TRIBUNAL HE LD THAT WHERE AN AFFIDAVIT IS FILED, THE AUTHORITY MUST CROSS EXAMINE THE DEPONENT ABOUT THE CONTENTS FAILING WHICH ITS CONTENTS WILL BE DEEMED TO HAVE BEEN ACCEPTED. 2.7 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 2.8 I HAVE HEARD BOTH THE PARTIES. THE ASSESSEE HAS SHOWN INCOME FROM PRIVATE CONSTRUCTION JOB TO THE EXTENT OF RS. 25,200/- DURI NG THE YEAR UNDER REFERENCE. IN THE BALANCE SHEET, THE ASSESSEE HAS ALSO SHOWN SUNDRY C REDITORS TO THE EXTENT OF RS. 35,960/- 5 WHILE OPENING BALANCE IS RS. 1,30,484/-. THE ASSESS EE HAS MADE CONTRIBUTION AS CAPITAL IN THE FIRM TO THE EXTENT OF RS. 1.00 LAC. THE AO HAS ACCEPTED THE INCOME FROM PRIVATE CONSTRUCTION JOB DURING THE YEAR UNDER REFERENCE TH ROUGH THE ASSESSEE HAS BECOME PARTNER IN THE FIRM DURING THIS ASSESSMENT YEAR. THE BALANC E SHEET FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOWS SUNDRY CREDITORS. THE JURISDCTI ONAL HIGH COURT IN THE CASE OF CIT VS BHAWANI OIL MILLS (P) LTD. , 239 CTR 445 HAD OBSERV ED THAT VERSION CONTAINED IN THE AFFIDAVIT CANNOT BE TREATED AS OF A LESSER IMPORTAN CE THAN THE STATEMENT GIVEN BY ONE OF THE CREDITORS BEFORE THE AO. THE AO IS ENTITLED TO EVALUATE THE RELIABILITY OF SUCH VERSION ON ITS OWN MERIT. LOOKING TO THE FACT THAT THE AO H AS ACCEPTED THE INCOME DURING THE YEAR AND HAS ALSO ACCEPTED THE DEBTORS AND THEREFORE, TH E ASSESSEES CONTENTIONS IN THE AFFIDAVIT THAT HE WAS HAVING SUCH INCOME IN EARLIER YEARS AND HAS MADE CONTRIBUTION AS CAPITAL IN THE FIRM OUT OF SAVINGS FROM SUCH INCOME WHICH STOO D INVESTED IN THE FORM OF INTEREST BEARING LOANS AND ADVANCES TO CERTAIN PERSONS. WE T HEREFORE, FEEL THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION. NIRMAL CHOUDHARY ASSESSMENT YEAR 2005-06 2.9 SHRI NIRMAL CHOUDHARY IS OF 31 YEARS OLD AS ON THE DATE OF AFFIDAVIT. IT MEANS THAT THE AGE OF THIS ASSESSEE WAS AROUND 25 YEARS. THIS ASSESSEE HAS NOT SHOWN INCOME FROM TUITION JOB WHICH HE HAS SHOWN IN THE ASSESSMENT YE ARS 2003-04 TO 2005-06. THIS ASSESSEE HAS MADE DEPOSIT OF RS. 1.55 LACS AS CAPIT AL CONTRIBUTION IN THE FIRM. THE LOAN AND ADVANCE AS ON 31-3-2003 AND 31-03-2004 WERE TO THE EXTENT OF RS. 1.30 LACS AND RS. 1.40 LACS. THE ASSESSEE HAS SHOWN INTEREST INCOME O F RS. 23,400/- IN THE ASSESSMENT YEAR 2003-04 AND RS. 25,200/- IN ASSESSMENT YEAR 200405. THE INTEREST INCOME IS DISPROPORTIONATE TO THE QUANTUM OF LOAN AND ADVANCE S. LOOKING TO THE FACTS AS AVAILABLE ON RECORD, I FEEL THAT IT WILL BE FAIR AND REASONAB LE TO RESTRICT THE OPENING BALANCE TO RS. 6 1.20 LACS AND THE BALANCE OF RS. 54,850/- WILL HAVE TO BE CONSIDERED AS UNDISCLOSED INCOME. SMT SUNITA CHOUDHARY ASSESSMENT YEAR 2005-05 2.10 SMT. SUNITA CHOUDHARY IS AGED ABOUT 25 YEARS O LD ON THE DATE OF FILLING OF THE AFFIDAVIT. IT MEANS THAT AS ON 31-03-04, SHE WAS OF 24 YEARS OLD. THIS ASSESSEE HAS SHOWN LOAN AND ADVANCES TO THE EXTENT OF RS. 1.90 LACS IN ASSESSMENT YEAR 2003-04 AND RS. 2.10 LACS IN THE ASSESSMENT YEAR 2004-05. THE QUANTUM OF INTEREST SHOWN IS TO THE EXTENT OF RS. 32,100/- AND RS. 35,700/-. THE ASSESSEE HAS ALSO SH OWN INCOME FROM DIARY. HOWEVER, THIS INCOME HAS NOT BEEN SHOWN IN THE ASSESSMENT YEAR 20 05-06. LOOKING TO THE FACT, IT WILL BE FAIR AND REASONABLE TO RESTRICT THE OPENING BALANCE TO THE EXTENT OF RS. 2.00 LACS. THE BALANCE OF RS. 52,180/- IS CONFIRMED AS UNDISCLOSED INCOME. SMT SANGEETA HOUDHARY ASSESSMENT YEAR 2005-06 2.11 THIS ASSESSEE IS AGED ABOUT 31 YEARS AS ON THE DATE OF FILING OF THE AFFIDAVIT. IT MEANS THAT AS ON 31-03-04, SHE WAS OF 26 YEARS. SHE HAS ALSO SHOWN INCOME FROM DIARY FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05. SHE HA S ALSO SHOWN INCOME FROM DIARY IN THE ASSESSMENT YEAR 2005-06. HENCE, THE FACTS IN TH IS CASE ARE SIMILAR TO THE FACTS IN THE CASE OF SHRI RANVEER CHOUDHARY. HENCE, I HOLD THAT THERE WAS NO CASE OF MAKING ADDITION ON ACCOUNT OF OPENING BALANCE SHOWN BY THE ASSESSEE . SHRI VINOD CHOUDHARY ASSESSMENT YEAR 2005-06 2.12 SHRI VINOD CHOUDHARY WAS ABOUT 30 YEARS OLD ON THE DATE WHEN THE AFFIDAVIT WAS GOT NOTORISED AND IN THE ASSESSMENT YEAR 2003-04 AN D 2004-05, THE ASSESSEE HAS SHOWN INCOME FROM SUPERVISION OF CONSTRUCTION JOB. THE LO ANS AND ADVANCES WERE SHOWN TO THE EXTENT OF RS. 1.25 LACS AND RS. 1.60 LACS FOR THE A SSESSMENT YEAR 2003-04 AND 2004-05. THIS ASSESSEE HAS ALSO SHOWN INCOME FROM SUPERVISIO N OF CONSTRUCTION JOB TO THE EXTENT OF 7 RS. 56,420/- DURING THE ASSESSMENT YEAR UNDER CONSI DERATION. HENCE, THE FACTS IN THE CASE ARE SIMILAR TO THE FACTS IN THE CASE OF SHRI RANVEE R CHOUDHARY. HENCE, IT IS NOT A CASE WHERE ANY ADDITION WAS TO BE MADE ON ACCOUNT OF OPE NING BALANCE. SHRI PREM CHOUDHARY ASSESSMENT YEAR 2005-06 2.13 THIS ASSESSEE WAS OF ABOUT 29 YEARS AS ON THE DATE WHEN THE AFFIDAVIT WAS SWORN WHICH MEANS THAT HE WAS OF 24 YEARS AS ON 31-03-04. IN THE PRECEDING ASSESSMENT YEAR, THE ASSESSEE HAS SHOWN INCOME FROM COMMISSION. SUCH INCOME HAS ALSO BEEN SHOWNIN THE ASSESSMENT YEAR UNDER CONSIDERATION . THIS FACT S ARE SIMILAR TO THE FACTS OF SHRI RANVEER CHOUDHARY. HENCE, IT WAS NOT CASE WHERE ANY ADDITION WAS TO BE MADE. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSES BEARI NG NOS 534 & 535/JODH/2010 ARE PARTLY ALLOWED AND THE APPEALS BEARING NOS.533, 536 , 537 & 538/JODH/2010 ARE ALLOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09-1 2-2011 SD/- (N.L. KALRA) ACCOUNTANT MEMBER JAIPUR DATED: 09 /12/2011 JODHPUR MISHRA COPY TO: 1. SHRI RANVEER SINGH CHOUDHARY 2.SHRI NIRMAL CHOUDHARY 3SMT. SUNITA CHOUDHARY 4.SMT. SANGEETA CHOUDHARY 5.SHRI VINOD CHOUDHARY 6.SHRI PREM KUMAR CHOUDHRY 7.THE ITO, WARD- 2 (2), BIKANER 8..THE LD. CIT (A) BY ORDER 9.THE CIT 10.THE D/R 11.THE GUARD FILE (ITA NO.533 TO 538/JODH/10) A.R.. ITAT: JODHPUR 8