RAJESH KUMAR TODWAL, Jaipur V. ITO, Jaipur

ITA 543/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2149 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DHK
• Assessee Lawyers: S R SHARMA; RAJNIKANT JHADA
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 543/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 SHRI RAJESH KUMAR TODWAL, S/O- SHRI BADRI NARAIN TODWAL, SHOP NO. 116, GOPAL JI KA RASTA, JOHRI BAZAR, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 1(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACDPT 4271 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.R. SHARMA & RAJNIKANT JHADA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM RAI (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/03/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/04/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER DATED 11/03/2016 PASSED BY THE LD. CIT(A), ALIGARH AT JAIPUR (CAMP OFFICE) FOR THE A.Y. 2010-11. THE ONLY ISSUE INVOLV ED IN THIS APPEAL IS AGAINST SUSTAINING THE ADDITION OF RS. 18,82,000/- MADE TO THE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNEXPLAINED BANK DEPOSIT. ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 2 2. THE ASSESSEE IS AN INDIVIDUAL DERIVING SHARE FROM FIRMS. HE IS ALSO A PARTNER IN FIRM M/S KAILASH YADAV & COMPANY. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 04/10/2010 DECLARING NIL INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE ADDITION OF RS. 17,80,000/-, WHICH HAS BEEN CO NFIRMED BY THE LD. CIT(A) FOR NOT ACCEPTING THE EXPLANATION PROVIDED BY THE ASSESSEE THAT THE AMOUNT DEPOSITED IN THE BANK WAS RECEIVED FROM M/S K AILASH YADAV & COMPANY, PARTNERSHIP FIRM WHERE THE ASSESSEE WAS A PA RTNER. THE ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE FI RM AND THE LD. CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT, IT APPEARS THAT THE FIRM M/S KAILASH YADAV & COMPANY H AS BEEN CREATED FOR THE PURPOSES OF EXPLAINING THE CASH ENTRIES IN THE BANK ACCOUNT. 3. BEFORE ME, THE LD AR SUBMITTED THAT THE ASSESSEE IS A INDIVIDUAL AND WAS A PARTNER IN M/S M.K. ENTERPRISES AND M/S KAILAS H YADAV & COMPANY. THE ASSESSEE WAS HAVING BANK ACCOUNT WITH ICICI BANK A ND ALSO A SAVINGS BANK ACCOUNT WITH BANK OF BARODA. THE ASSESSEE WAS MAI NTAINING BOOKS OF ACCOUNT FOR HIS FINANCIAL TRANSACTIONS. THE ASSESSE E HAD FILED RETURN OF INCOME DECLARING NIL INCOME DUE TO LOSS IN THE FIRM S. IT WAS SUBMITTED THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT MAINT AINED WITH BANK OF BARODA, JOHARI BAZAR BRANCH, JAIPUR WAS OUT OF THE C ASH RECEIVED FROM M/S ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 3 KAILASH YADAV & COMPANY WHERE THE ASSESSEE IS A PART NER. THE BOOKS OF ACCOUNT MAINTAINED WITH M/S KAILASH YADAV & COMPANY SUPPORT AND SHOWS THE CASH WITHDRAWALS BY THE ASSESSEE. THE ASSESSEE PRO DUCED BOOKS OF ACCOUNT OF THE FIRM BEFORE THE ASSESSING OFFICER, T HE CAPITAL ACCOUNT OF THE PARTNERS AND THE INCOME TAX RETURN FILED BY THE FIR M WAS ALSO PRODUCED. THE ASSESSEE ALSO FILED PARTNERSHIP DEED OF THE FIRM AND ALSO CONFIRMATION FROM THE SAME AND IT IS CONTENDED THAT THE EVIDENCE S SUBMITTED BY THE ASSESSEE ARE NOT CORRECTLY APPRECIATED. HE PLACED R ELIANCE ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF MANGILAL AGARWAL VS ACIT 300 ITR 372 FOR THE PROPOSITION THAT ONCE THE AS SESSEE POINTS OUT DEPOSITOR FROM WHOM HE HAS RECEIVED MONEY WHO HAS OWNE D ADVANCEMENT OF MONEY TO THE ASSESSEE THEN FURTHER E NQUIRY INTO THE SOURCE CANNOT RESULT IN INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) UNLESS THE EXISTENC E OF THE PERSON IN WHOSE NAME CREDIT ENTRY IS FOUND IS NOT PROVED OR HE DISOWNS HAVING MADE SUCH DEPOSIT. IN THE ASSESSEES CASE, M/S KAIL ASH YADAV & COMPANY HAS GIVEN A CONFIRMATION AND ACCEPTED THAT THE MONE Y DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE HAD BEEN ADVANCED BY I T. HE ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF KANHAIYA LAL ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 4 JANGID VS ACIT 217 CTR 354 AND CIT VS RAO RAJA HANUT S INGH (2001)252 ITR 528. 4. ON THE OTHER HAND, THE LD. DR HAS VEHEMENTLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE A SSESSEE IS AN INDIVIDUAL AND PARTNER IN M/S M.K. ENTERPRISES AND M/S KAILASH YADAV & COMPANY. THE SOURCE OF CASH DEPOSITED IN THE BANK AC COUNT IS OUT OF THE CASH WITHDRAWALS FROM M/S KAILASH YADAV & COMPANY AND THE BOOKS OF ACCOUNT OF M/S KAILASH YADAV & COMPANY REFLECTS SUC H ADVANCEMENT IN ITS BOOKS OF ACCOUNT. THE ASSESSEE PRODUCED CASH BOOKS OF M/S KAILASH YADAV & COMPANY ALONGWITH CAPITAL ACCOUNT OF PARTNERS AND PROOF OF FILING OF INCOME TAX RETURN FOR A.Y. 2010-11. THE ASSESSEE ALS O SUBMITTED COPY OF THE PARTNERSHIP DEED OF THE FIRM AND ALSO A CONFIRM ATION. THEREFORE, THE ASSESSEE HAS SUBSTANTIALLY PROVED THE SOURCE OF CAS H DEPOSITED IN THE BANK ACCOUNT. FURTHER THE ASSESSING OFFICER DOUBTED THAT THE PARTNERSHIP DEED WAS NOT REGISTERED, IS ALSO CANNOT BE MADE A BASIS F OR NOT TREATING THE FIRM AS A GENUINE. THE HONBLE RAJASTHAN HIGH COURT IN T HE CASE OF KANHAIALAL JANGID VS. ACIT (SUPRA) HAS HELD AS UNDER:- THE QUESTION NO. 1 RELATES TO DISALLOWANCE ON ACCO UNT OF CASH CREDITS FOUND IN THE BOOKS OF THE ASSESSEES. RS. 16,000 WAS ALLEGED TO H AVE BEEN BORROWED TO HAVE BEEN BY SRI DEVENDRA SANKHLA AND RS. 16,000 WAS ALL EGEDLY BORROWED FROM ONE RAMULAL. ASSESSEE HAS PRODUCED THE CONFIRMATION LET TERS FROM BOTH THE CREDITORS ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 5 AND HAS ALSO PRODUCED SRI DEVENDRA SANKHLA BEFORE T HE AO. SRI DEVENDRA SANKHLA ON BEING PRODUCED BEFORE THE AO, AFFIRMED THAT HE H AD GIVEN IN ADVANCE A SUM OF RS. 16,000 TO THE ASSESSEE. HOWEVER, THE EXPLANATIO N OF THE ASSESSEE ABOUT THE RECEIPT OF RS. 16,000 FROM DEVENDRA SANKHLA WAS REJ ECTED ON THE GROUND THAT ON INQUIRY FROM DEVENDRA SANKHLA THE CREDITOR COULD NO T SATISFACTORILY EXPLAIN SOURCE WHEREFROM WHETHER HE COULD HAVE ADVANCED RS. 16,000 , LOOKING TO HIS INCOME AND FAMILY EXPENDITURES. IN OTHER WORDS, THE CASH CREDI T IN THE NAME OF DEVENDRA SANKHLA WAS REJECTED ON THE GROUND THAT THE ASSESSE E HAS FAILED TO PROVE SOURCE WHEREFROM DEPOSIT OR ADVANCE BY SRI DEVENDRA SANKHL A COULD BE MADE. THIS FINDING HAS BEEN CONSISTENTLY AFFIRMED BY CIT(A) AS WELL AS BY TRIBUNAL. WE ARE OF THE OPINION THAT IN REJECTING THE EXPLANATION OF TH E ASSESSEE ON THE UNDISPUTED FACTS IS FOUNDED ON ERRONEOUS APPLICATION OF LAW IN THE MATTER. WHILE IT WAS THE ASSESSEE'S BURDEN TO FURNISH EXPLANATION RELATING T O SUCH CASH CREDITS, THE ASSESSEE'S BURDEN DOES NOT EXTEND BEYOND PROVING TH E EXISTENCE OF THE CREDITOR AND FURTHER PROVING THAT SUCH CREDITOR OWNS TO HAVE ADVANCED THE AMOUNT CREDITED IN THE ACCOUNT OF ASSESSEE TO HIM. HOWEVER, THE BUR DEN DOES NOT GO BEYOND TO PUT THE ASSESSEE UNDER AN OBLIGATION TO FURTHER PROVE T HAT WHEREFROM THE CREDITOR HAS GOT OR PROCURED THE MONEY TO BE DEPOSITED OR ADVANC ED TO THE ASSESSEE. THE FACT THAT THE EXPLANATION FURNISHED BY THE CREDITOR ABOU T THE SOURCE FROM WHERE HE PROCURED THE MONEY TO BE DEPOSITED OR ADVANCED TO T HE ASSESSEE, IS NOT RELEVANT FOR THE PURPOSES OF REJECTING THE EXPLANATION FURNI SHED BY THE ASSESSEE, AND MAKE ADDITIONS OF SUCH DEPOSITS AS INCOME OF THE ASSESSE E FROM UNDISCLOSED SOURCES BY INVOKING S. 68 OF THE IT ACT, UNLESS IT CAN BE SHOW N BY THE DEPARTMENT THAT THE SOURCE OF SUCH MONEY COMES FROM THE ASSESSEE HIMSEL F OR SUCH SOURCE COULD BE TRACED TO THE ASSESSEE ITSELF. IN THE PRESENT CASE WHILE EXISTENCE OF SRI DEVENDRA SANKHLA THE CREDITOR IS NOT IN DOUBT, AND HE HAS AD MITTED TO HAVE ADVANCED THE LOAN TO THE ASSESSEE. THE FACT THAT THE EXPLANATION FURNISHED BY SRI DEVENDRA SANKHLA ABOUT HIS SOURCE OF SUCH ADVANCEMENT HAS NO T BEEN ACCEPTED BY THE REVENUE AUTHORITY CANNOT LEAD TO ANY PRESUMPTION TH AT THE SOURCE OF SUCH ADVANCEMENT BY SRI DEVENDRA SANKHLA EMANATED FROM T HE ASSESSEE. THEREFORE, ADDITION OF RS. 16,000 IN THE INCOME OF ASSESSEE AS CASH CREDIT IN THE NAME OF SRI DEVENDRA SANKHLA CANNOT BE SUSTAINED. SUCH ADDITION OF INCOME OF ASSESSEE HAS TO BE DELETED FROM THE INCOME OF ASSESSEE. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF MANG ILAL AGARWAL VS ACIT (SUPRA) HAS HELD AS UNDER:- HELD, ALLOWING THE APPEAL, THAT SECTION 69A COULD NOT BE INVOKED MERELY ON THE BASIS THAT A PERSON WAS FOUND IN POSSESSION OF ANY VALUABLE ARTICLE AND IT WAS ONLY ON HIS BEING FURTHER FOUND TO BE THE OWNER OF SUCH MONEY, BULLION, JEWELLERY OR ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 6 OTHER VALUABLE ARTICLES THAT SECTION 69A COULD BE I NVOKED FOR RAISING PRESUMPTION. THIS BASIC LINK WAS MISSING THROUGH THE PROCEEDINGS . THE ASSESSEE HAD EXPLAINED THE TRANSACTIONS THROUGH WHICH THE PRIMARY GOLD AND THE GOLD ORNAMENTS CAME IN HIS POSSESSION AND TO SUPPORT HIS EXPLANATION HE HA D PRODUCED THREE PERSONS WHO HAD BROUGHT THE ORNAMENTS TO HIM AND HAD FURNISHED THEIR AFFIDAVITS ADMITTING SUCH FACT. NO PRESUMPTION OF OWNERSHIP HAD BEEN RAI SED STATUTORILY IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE, NOR WAS THERE ANY WARRANT TO INVOKE SECTION 69A MERELY ON THE BASIS OF THE ASSESSEES P OSSESSION. ON HIS DISCLAIMER THAT SUCH ARTICLES FOUND IN HIS POSSESSION DID NOT BELONG TO HIM, THE BURDEN WAS ON THE REVENUE TO ESTABLISH THE OWNERSHIP OF THE ASSES SEE BEFORE RAISING ANY PRESUMPTION AGAINST HIM. ON THE GROUND THAT THESE T HREE PERSONS FAILED TO PROVE THEIR OWNERSHIP TO THE ORNAMENTS, THE ASSESSING AUT HORITY CONCLUDED THAT THE ORNAMENTS BELONGED TO THE ASSESSEE AND THOSE FINDIN GS WERE AFFIRMED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. MERELY BEC AUSE THE EXPLANATION FURNISHED BY THESE THREE PERSONS ABOUT THE PURPOSE FOR WHICH THE GOLD ORNAMENTS WERE DELIVERED FOR MAKING NEW ORNAMENTS WAS FOUND N OT ACCEPTABLE THAT COULD NOT PROVIDE ANY A NEXUS BETWEEN THE FACTS AND CONCL USION REACHED BY DRAWING AN INFERENCE THAT THE PRIMARY GOLD AND GOLD ORNAMENTS BELONGED TO THE ASSESSEE. THUS, THE VALUE OF GOLD AND THE GOLD ORNAMENTS COUL D NOT BE TAXED IN THE HANDS OF THE ASSESSEE. BY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE HIGH COURTS, I FIND MERIT IN THE CONTENTION OF THE LD. AR, THEREFORE, I DIRECT T O DELETE THE ADDITION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH APRIL, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAJESH KUMAR TODWAL, JAIPUR. ITA 543/JP/2016_ RAJESH KUMAR TODWAL VS ITO 7 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 1(1), JAIPUR.. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 543/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR