Sh. Manohar Lal Kalra, New Delhi V. ITO, Srinagar

ITA 5495/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82099 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 22-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 08-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKER
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Loose papers; Source of fund
• Section: 69C; 133A; 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SMT. DIVA SINGH SMT. DIVA SINGH SMT. DIVA SINGH SMT. DIVA SINGH, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 5495/DEL/2013 5495/DEL/2013 5495/DEL/2013 5495/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004 - -- - 05 0505 05 SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, GOLA BAZAR, GOLA BAZAR, GOLA BAZAR, GOLA BAZAR, SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. PAN : PAN : PAN : PAN : ANBPK9636N. ANBPK9636N. ANBPK9636N. ANBPK9636N. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI TANEJA, ADVOCATE. RESPONDENT BY : SHRI J.P. CHANDRAKER, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-II, DEHRADUN DATED 22 ND AUGUST, 2013 FOR THE AY 2004- 05. 2. GROUND NO.1 & 2 OF THE ASSESSEES APPEAL READ AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF LD.AO IN MAKING AGGREGATE ADDITION OF RS.7,70,000/- AS UNEXPLAINED INCOME OF THE APPELLANT AND THAT WITHOUT APPRECIATING THE SUBMISSIONS/EVIDENCES OF THE ASSESSEE AND THAT TOO IN THE HANDS OF THE APPELLANT AND THAT TOO IN THE YEAR UNDER APPEAL. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF LD.AO IN MAKING AGGREGATE ITA-5495/DEL/2013 2 ADDITION OF RS.6,40,000/- BY TREATING IT AS ALLEGED UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND THAT WITHOUT APPRECIATING THE SUBMISSIONS/EVIDENCES OF T HE ASSESSEE AND THAT TOO IN THE HANDS OF THE APPELLANT AND THAT TOO IN THE YEAR UNDER APPEAL. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM TRADING IN CLOTH ON RETAIL BASIS AT SRINAGAR, GARHW AL. THERE WAS SURVEY UNDER SECTION 133A AT THE ASSESSEES BUSINESS PREMI SES ON 30 TH APRIL, 2003. FOR THE YEAR UNDER CONSIDERATION, I.E., 2004 -05, THE ASSESSEE HAD FILED THE RETURN DECLARING TOTAL INCOME OF `99, 050/-. THE ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 1 43(3) ON 27.10.2005 COMPUTING THE TOTAL INCOME OF `17,56,500 /-, WHICH WAS SET ASIDE BY THE ITAT VIDE ORDER DATED 27.5.2011 IN ITA NO.4158/DEL/2010. IN PURSUANCE TO THE ORDER OF THE ITAT, THE ASSESSIN G OFFICER AGAIN COMPLETED THE ASSESSMENT VIDE ORDER DATED 31 ST JANUARY, 2013 AGAIN DETERMINING THE INCOME AT `17,56,500/-. THE TOTAL ADDITION OF `16,57,445/- WAS MADE ON THE BASIS OF CERTAIN LOOSE PAPERS FOUND AT THE TIME OF SURVEY. ON APPEAL, LEARNED CIT(A) ALLO WED THE RELIEF OF `1,71,000/- AND `51,500/-. THUS, THE ADDITION SUST AINED REMAINED AT `7,70,000/- PLUS `6,40,000/- PLUS `24,945/-. THE A SSESSEE IS IN APPEAL AGAINST THE ADDITION SUSTAINED BY THE LEARNED CIT(A ) VIDE GROUND NOS.1 TO 3 OF ITS APPEAL. THE REVENUE IS NOT IN APPEAL. THE ADDITION OF `7,70,000/- AND `6,40,000/- HAS BEEN MADE ON THE BA SIS OF SAME LOOSE PAPERS, THEREFORE, THEY ARE BEING CONSIDERED TOGETH ER. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. THE LEARNED CO UNSEL FOR THE ASSESSEE HAD ARGUED AT LENGTH AND CANVASSED THAT TH E PAPER DID NOT BELONG TO THE ASSESSEES BUSINESS BUT WAS THE DETAI LS OF THE ITA-5495/DEL/2013 3 STATEMENTS OF ASSETS AND LIABILITIES PREPARED IN EA RLY 2000 FOR THE PURPOSE OF DIVISION OF THE BUSINESS AMONGST THE ASS ESSEE AND HIS BROTHER AND AFTER 2000, BOTH THE BROTHERS ARE LIVIN G AND DOING BUSINESS SEPARATELY. THE ASSESSEE ALSO CONTENDED THAT THE P APER DID NOT BELONG TO HIM AND DID NOT BELONG TO THE ACCOUNTING YEAR RE LEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, IN T HE STATEMENT OF THE BROTHER SHRI G.L. KALRA, HE REFUSED TO OWN THE PAPER AND HE STATED THAT THE PAPER BELONGED TO SHRI MANOHAR LAL KALRA, I.E., THE ASSESSEE AND HE AND SHRI MANOHAR LAL KALRA ARE NOT ON TALKIN G TERMS. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SI DES AND HAVE ALSO GONE THROUGH THE LOOSE PAPER ON THE BASIS OF WHICH THIS ADDITION IS MADE. THE LOOSE PAPER IS PLACED AT PAGE 18A OF THE ASSESSEES PAPER BOOK AND THE SAME IS ANNEXED HEREWITH AS ANNEXURE ANNEXURE ANNEXURE ANNEXURE- -- -A AA A FOR READY REFERENCE. WITHOUT GOING INTO THE YEAR TO WHICH TH E PAPER BELONGS OR THE OWNER OF THE PAPER EVEN PRESUMING THAT THE PAPE R BELONGS TO THE ASSESSEE AS WELL AS BELONGING TO THE YEAR UNDER APP EAL, IN OUR OPINION, NO ADDITION CAN BE MADE ON THE BASIS OF THE ABOVE P APER. WE FIND THAT THE ASSESSING OFFICER MADE THE ADDITION OF `7,70,00 0/- WITH THE FOLLOWING FINDING:- (II) ENTRIES WITH REGARD TO DENDARY, A. DASS, CRED IT, SARVANAND ETC.:- THE NARRATION OF THE ENTRIES IS AS UNDER:- DENDARI 4,50,000 A.DASS 1,00,000 LIABILITY 40,000 CREDITORS 1,00,000 SARVANAND 80,000 -------------- 7,70,000 -------------- ITA-5495/DEL/2013 4 IT HAS BEEN CONTENDED THAT THE WORDS DENDARI AND A.DASS: CANT BE SAID THAT THE AMOUNT BELONGS TO THE ASSESSEE AS NO EVIDENCES OR INVESTMENT/EXPLANATION IS CORROBORATED WITH THE SAID FIGURES AND THAT THESE A RE THE FIGURES OF ASSETS OF GANESH LAL KALRA. IN RESP ECT OTHER ENTRIES ALSO, THE ASSESSEE RE-ITERATED THE SA ME ARGUMENT. CONSIDERING THE FACTS NARRATED IN PRECED ING PARAS AND DENIAL OF SH. GANESH LAL KALRA, THE ABOVE CONTENTION WITH REGARD TO THE ENTRIES AGGREGATING T O RS.7,70,000/- IS REJECTED. UNDER THE FACTS THE NAR RATION OF THE ENTRIES SHOWS THAT THESE ARE LIABILITY ITEMS , PAID FROM THE UN-DISCLOSED SOURCE OF INCOME. HENCE, THE SUMS TOTALING TO RS.7,70,000/- IS ADDED AS UN-EXPLA INED EXPENDITURE U/S 69C OF THE I.T. ACT. (EMPHASIS BY UNDERLINING PROVIDED BY US) 5. SIMILARLY, HE MADE THE ADDITION OF `6,40,000/- W ITH THE FOLLOWING FINDING:- (III) ENTRIES WITH REGARD TO PUGDI :- THE NARRATION OF THE ENTRIES IS AS UNDER:- PUGDI DUKAN KI 40,000 PUGDI 6,40,000 ------------ 6,40,000 ------------ IT HAS BEEN EXPLAINED THAT THE NARRATION OF PUGDI O F RS.6,00,000/- IS ESTIMATED MARKET VALUE OF SHOP OF SH. GANESH LAL KALRA. NOTHING HAS BEEN STATED WITH REG ARD TO THE ENTRY PUGDI DUKAN KI. IT IS VERY SURPRISI NG TO ACCEPT THE CONTENTION THAT THE WORD PAGDI STAND F OR MARKET VALUE. THE WORD PUGDI IS VERY COMMON IN THE BUSINESS COMMUNITY AND IS USED FOR THE AMOUNT GIVEN BY THE PROSPECTIVE TENANT TO TAKE POSSESSION OF THE SHOP FROM THE OWNER. THEREFORE, THE ARGUMENT O F THE ASSESSEE IS NOT ACCEPTABLE. UNDER THE FACTS, T HE SUM AGGREGATING TO RS.6,40,000/- IS NOTHING BUT UN- ITA-5495/DEL/2013 5 EXPLAINED INVESTMENT MADE BY THE ASSESSEE FOR TAKING POSSESSION OF THE SHOP(S). ACCORDINGLY, THE AMOUNT OF RS.6,40,000/- IS ADDED AS UNEXPLAINED INVESTMENT U/ S 69 OF THE I.T. ACT. (EMPHASIS BY UNDERLINING SUPPLIED BY US) 6. FROM A PERUSAL OF THE PAPER AS WELL AS THE FINDI NG OF THE ASSESSING OFFICER, IT IS EVIDENT THAT THE PAPER IS A STATEMENT PREPARED OF THE ASSETS AND LIABILITIES OF A PERSON ON ANY DA TE. THE ASSESSING OFFICER GROUPED CERTAIN ENTRIES WHICH WERE AGGREGAT ING TO `7,70,000/- AND IDENTIFIED THEM AS LIABILITY ITEMS. IT WOULD B E EVIDENT FROM HIS SENTENCE UNDER THE FACTS THE NARRATION OF THE ENTR IES SHOWS THAT THESE ARE LIABILITY ITEMS. THEREAFTER, HE FURTHER OBSER VED THAT THESE LIABILITY ITEMS ARE PAID FROM UNDISCLOSED SOURCES OF INCOME. HENCE, HE ADDED THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 6 8 OF THE INCOME- TAX ACT, 1961. IT SEEMS THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THE FUNDAMENTAL OF ACCOUNTANCY, I.E., A LIABILITY I TEM ARISES BECAUSE OF THE RECEIPT OF CERTAIN MONEY BY THE ASSESSEE. FOR INCURRING THE LIABILITY, THE ASSESSEE IS NOT REQUIRED TO MAKE ANY PAYMENT. THEREFORE, THE ADDITION MADE UNDER SECTION 69C IN RESPECT OF L IABILITY ITEMS IS ONLY BECAUSE OF THE LACK OF BASIC ACCOUNTING. THE OTHER ADDITION MADE BY THE ASSESSING OFFICER IS FOR PAGRI DUKAN KI. MEA NING THEREBY, THE SUM WAS PAID FOR HIRING THE SHOP. HOWEVER, ADMITTEDLY, THE ASSESSEE IS CARRYING ON THE RETAIL CLOTH BUSINESS FROM THE SAME RETAIL SHOP SINCE MANY YEARS. THEREFORE, OBVIOUSLY, THE PAYMENT OF P AGRI OF THE SHOP, IF ANY, CANNOT PERTAIN TO THE YEAR UNDER CONSIDERATION . EVEN OTHERWISE, THE TOTAL LIABILITY FROM THE LOOSE PAPER AS WORKED OUT BY THE ASSESSING OFFICER IS `7,70,000/- AND THE TOTAL ASSETS AS WORK ED OUT BY THE ASSESSING OFFICER FROM THE SAME LOOSE PAPER IS `6,4 0,000/-. THUS, AS PER THE LOOSE PAPER, THERE IS EXCESS OF LIABILITY O VER ASSETS BY ITA-5495/DEL/2013 6 `1,30,000/-. THE QUESTION OF ANY UNEXPLAINED INVES TMENT WOULD ARISE ONLY IF THERE IS EXCESS OF ASSETS OVER LIABILITIES. THEREFORE, IN OUR OPINION, NO ADDITION IS REQUIRED TO BE MADE ON THE BASIS OF THE SAID LOOSE PAPER EITHER AS UNEXPLAINED EXPENDITURE OR UN EXPLAINED INVESTMENT. ACCORDINGLY, THE ADDITIONS OF `7,70,00 0/- AND `6,40,000/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED EXPEND ITURE AND UNEXPLAINED INVESTMENT RESPECTIVELY ARE DELETED. T HUS, GROUND NO.1 & 2 ARE ALLOWED. 7. WITH REGARD TO GROUND NO.3 I.E., THE ADDITION OF `24,945/-, NO ARGUMENT WAS ADVANCED AT THE TIME OF HEARING. WE, THEREFORE, TREAT THIS GROUND AS NOT PRESSED AND ACCORDINGLY REJECT I T. 8. GROUND NOS.4, 5 AND 7 ARE OF GENERAL NATURE AND NEED NO ADJUDICATION. 9. GROUND NO.6 IS AGAINST THE CHARGING OF INTEREST UNDER SECTION 234A AND 234B. THE SAME IS ADMITTED TO BE CONSEQUE NTIAL. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO REC ALCULATE THE INTEREST, IF ANY, IN ACCORDANCE WITH LAW. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2014. SD/- SD/- ( (( ( DIVA SINGH DIVA SINGH DIVA SINGH DIVA SINGH ) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL ) )) ) JUDICIAL MEMB JUDICIAL MEMB JUDICIAL MEMB JUDICIAL MEMB ER ERER ER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 14.11.2014 VK. ITA-5495/DEL/2013 7 COPY FORWARDED TO: - 1. APPELLANT : SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, SHRI MANOHAR LAL KALRA, GOLA BAZAR, SRINAGAR, GARHWAL. GOLA BAZAR, SRINAGAR, GARHWAL. GOLA BAZAR, SRINAGAR, GARHWAL. GOLA BAZAR, SRINAGAR, GARHWAL. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. SRINAGAR, GARHWAL. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR .ANNEXURE-A/