Ajit Singh Malik, Haryana V. ITO, Panipat

ITA 5540/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6549 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 22-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: JASBIR DAHIYA
• Keywords: Capital asset; Business income; Income from undisclosed sources; Capital receipt
• Section: 44AD; 143(3); 2(14); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5540 / DEL/20 1 6 A.Y. : 200 9 - 10 AJIT SINGH MALIK, S/O SH. RAM PHAL MALIK R/O: VPO NANGEL KHERI, PANIPAT 132103 (PAN: AJGPM1615C) VS. ITO, WARD - 1 PANIPAT (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. JASBIR DAHIYA, CA DEPARTMENT BY : SH. V.K. JIWANI, SR. DR. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST TH E IMPUGNED ORDER OF THE LD. CIT(A), KARNAL RELATING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. THE ORDER OF THE AO IS ERRONEOUS ON THE FACTS A ND IN THE LAW. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE OUGHT TO HAVE ACCEPTED THE RETURNED INCOME. 2. THE LD. AO IS NOT JUSTIFIED IN TREATING THE BUSI NESS INCOME FROM SALE / PURCHASE OF BUILDING MATERIAL BY THE APPELLANT, WHICH WAS FILED UNDER SECTION 44(AF) OF INCOME TAX ACT, 1961, ON THE PLEA THAT A DOCUMENTARY EVIDENCES SUBMITTED WAS NOT SUFFICIENT FOR THE ABOVE BUSINESS INCOME. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AS PER 2 THE SAID SECTION, THE ASSESSEE NO WAY TO REQUIRED MAINTAINING THE BOOKS OF ACCOUNTS. SO, HE OUGHT TO HAVE ACCEPTED THE AS SUFFICIENT EVIDENCES HAVE BEEN PRODUCED SUCH AS CASH FLOW STATEMENT, BANK PASS BOOK OF THE ASSESSEE. 3. THE LD. AO IS NOT JUSTIFIED IN TREATING THE AMOUNT RECEIVED FROM SALE OF AGRICULTURE LAND. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE HAS FAILED TO APPRECIATE THE PREVAILING CIRCUMSTANCES IN THE SAID TRANSACTION. 4. THE LD. AO IS NOT JUSTIFIED IN NOT AFFORDING ANO THER OPPORTUNITY TO THE APPELLANT TO PRODUCE A AFFIDAVIT FROM MR. ARJUN KUMAR. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE OUGHT NOT HAVE COMPLETED THE ASSESSMENT HASTILY. 5. ANY OTHER GROUND OR GROUNDS AS MAY BE URGED AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILE D RETURN OF INCOME ON 29.6.2009 DECLARING INCOME AT RS. 1,48,50 0/- AND THE SAME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) ON 19.10.2010. THE REAFTER, THE CASE WAS DULY SELECTED FOR SCRUTINY UNDER CASS AND T HE ASSESSMENT WAS DULY FRAMED U/S. 143(3) OF THE ACT ON 9.11.2011 B Y ACCEPTING THE RETURN INCOME OF THE ASSESSEE AS SUCH. THEREAFTER, THE ASSESSMENT ORDER DATED 9.11.2011 WAS DULY SET ASIDE BY THE THEN COMMISSIONER OF INCOME TAX, KARNAL ON THE GROUND TH AT THE ASSESSEE HAS NOT PRODUCED / SUBMITTED ANY DETAILS / EVIDENCES REGARDING RECEIPT OF EARNEST MONEY AND SALE CONSIDE RATION OF LAND TO CORRELATE THE SAME WITH THE ENTRIES OF CASH DEPOSI T INTO SAVINGS 3 BANK ACCOUNT OF THE ASSESSEE AND THUS FAILED TO EXPL AIN THE SOURCES OF CASH DEPOSITS INTO HIS SAVINGS BANK ACCOUNT. IN T HIS REGARD, RE- ASSESSMENT PROCEEDINGS WERE STARTED VIDE NOTICE U/S. 142(1)/143(2) OF THE ACT DATED 10.9.2014 AND THE PR OCEEDINGS CONTINUED ON DIFFERENT DATES THEREAFTER AND WERE DULY ATTENDED BY THE ASSESSEE HIMSELF AND HIS COUNSEL. IN THIS REGARD S, DETAILED AND SPECIFIC SHOW CAUSE NOTICES WERE DULY ISSUED ON VA RIOUS DATES WHEREBY THE ASSESSEE WAS ASKED SPECIFICALLY TO EXPL AIN SOURCES OF CASH DEPOSITS OF RS. 28,99,300/- WITH SUPPORTING DOC UMENTARY EVIDENCES THEREOF FAILING WHICH THE SAME WOULD BE TR EATED AS HIS INCOME FROM UNDISCLOSED SOURCES AND ADDED BACK AS SUCH, BUT ON THE VARIOUS DATES FIXED FOR HEARING BEFORE THE AO, THE ASSESSE DID NOT COMPLY AND DID NOT SUBMIT ANY EXPLANATION / EVIDE NCES THEREOF WITH REFERENCE TO CASH DEPOSITED OF RS. 28.99 LACS INTO HIS SAVING BANK ACCOUNT. AO OBSERVED THAT SH. ARJUN KUMAR, WHO S TATEMENT WAS RECORDED, HAD DENIED TO SIGNING ANY BIYANA AGRE EMENT AND THERE WAS NO SUBSTANTIAL RELY FILED BY THE ASSESSEE I N RESPONSE TO THE FACTS CONFRONTED TO HIM. ACCORDINGLY, THE AO ADDE D RS. 10 LACS TO THE ASSESSEES INCOME. AO FURTHER OBSERVED WITH RE GARD TO ADDITION OF RS. 17,83,000/- THAT ASSESSEE FAILED TO S UBMIT ANY DOCUMENTARY EVIDENCES TO EXPLAIN THIS AMOUNT AND STATED THAT THERE WAS NO PROPER EXPLANATION REGARDING THIS CREDIT IN TH E BANK ACCOUNT AND IN VIEW OF VARIOUS PRONOUNCEMENTS THE AMOUNT WAS TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE AND ACCORDINGLY, THE ASSESSMENT WAS COMPLETED AT RS. 29,32,300/- U/S. 143( 3) OF THE ACT VIDE ORDER DATED 13.3.2015. 4. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER DATED 13.3.2015, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A ), WHO VIDE 4 HIS IMPUGNED ORDER DATED 16.08.2016 HAS DISMISSED TH E APPEAL OF THE ASSESSEE. 5. DURING THE HEARING, LD. A.R. OF THE ASSESSEE HA S REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND FILED THE FOLLOWING WRITTEN SUBMISSIONS:- SUB: SUBMISSIONS FOR APPEAL NO. 5540/DEL-2016 FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF AJIT SINGH MALIK SLO SH. RAM PHAL MALIK, VPO NANGEL KHERI, DISTT. PANIPAT RESPECTED SIR, RESPECTFULLY SUBMITTED THAT (1) AS REGARDING ADDITION OF RS 10.00 LACS (I.E AMOUNT OF SALE OF RURAL AGRICULTURE LAND) IS EXEMPT UNDER INCOME TAX ACT, AS RURAL AGRICULTURE LAND IS NOT COVERED IN CAPITAL ASSETS AS PER PROVISION OF SECTION 2(14) OF INCOME TAX ACT, 1961 AND IT IS IRRELEVANT THAT BAYANA HAS BEEN MADE IN THE NAME OF ONE PERSON BUT SALE DEED HAS MADE IN THE NAME OF SOME OTHER PERSONS AS SUBJECT MATTER OF SALE IN BOTH THE CASES IS RURAL AGRICULTURE LAND WHICH IS NO T CAPITAL ASSETS ULS 2(14). COPY OF SALE DEED OF RURAL AGRICULTURAL LAND AND GIRDAWARI OF SAID LAND IS BEIN G ATTACHED HEREWITH FOR SUFFICIENT PROOF OF AGRICULTURE OPERATION ON THAT LAND AND AFFIDAVIT FROM ASSESEE'S BROTHER FOR NO BANK ACCOUNT IN THEIR NAME ARE BEING ATTACHED HEREWITH. 5 (2) AS REGARDING ADDITION OF RS 1783800/- SECTION 44AD GIVES A GREAT RELIEF TO THE ASSESSEE IN RESPECT OF MAINTENANCE OF BOOKS OF ACCOUNT. AN ASSESSEE WHO ADOPT THE PROVISION OF SECTION 44AD IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AS PER SECTION 44AA. FURTHER IN RESPECT OF SUCH BUSINESS, THE PROVISIONS OF SECTION 44AB (RELATING TO AUDIT) ARE ALSO NOT APPLICABLE AS ASSESSEE ALSO HAS SALE TA X REGISTRATION FOR THAT BUSINESS SINCE 2005. COPIES OF SALE TAX REGISTRATION CERTIFICATE, SALE TAX RETURN F OR THE CONCERNED FINANCIAL YEAR AND CASH FLOW STATEMENT OF THE BUSINESS ARE BEING ATTACHED HEREWITH- RELEVANT CASE LAWS ARE MENTION BELOW: CASE LAWS: S.NO. ITA NO. BENCH & AY NAME OF PARTY 1 ITA NO. 218/DEL/2015 ITAT - D - BENCH 2011-12 LAKSHYA SETH VS. INCOME TAX OFFICER, WARD 19(3), NEW DELHI 2 ITA NO. 6591 & 6594/DEL/2016 ITAT - DELHI 2012-13 KRISHAN SINGH LAMBA AND SHAKUNTLA LAMBA VS. INCOME TAX OFFICER, BHIWANI 6 CONCLUSION : 3.1 IN VIEW OF THE ABOVE JUDGMENTS THE SETTLED POSIT ION IS AGAIN REITERATED THAT MERE NON PRODUCING ENTRY WISE SUPPORTING DOCUMENTS AMOUNT DEPOSIT (I.E SALE) IN BAN K ACCOUNT WILL BE NOT CONSIDERED AS UNDISCLOSED INCOME BECAUSE RS 148500/- ULS 44AF (I.E. 8.325 % ON RS 1783800/- ) HAS BEEN ALREADY DISCLOSED IN THE INCOME TAX RETURN FOR THE CONCERNED ASSESSMENT YEAR. IN CASE OF LAKSHAY SETH ASSESSEE TURNOVER WAS RS 76.40 LACS (I. E. AUDIT CASE) AND BENEFIT OF SECTION 44AD HAS BEEN GIVE N BY DELHI ITAT. IN MY ASSESSEE CASE TURNOVER WAS ONL Y 17.83 LACS. BECAUSE BOOKS OF ACCOUNTS IS NOT MANDAT ORY FOR ASSESSEE COVERED ULS 44AF, SO WITHOUT BOOKS OF ACCOUNTS IT IS NOT POSSIBLE TO AN ASSESSEE TO MEMORIE S ENTRY WISE CASH FLOW FOR THE FINANCIAL YEAR 2008-09 A ND BAYANA OF SALE AGRICULTURE LAND TO ONE PERSON AND SAL E DEED WAS MADE IN FAVOUR OF OTHER PERSON DO NOT EFFECT SUBJECT MATTER OF SALE, AS IN BOTH CASE PROPERTY WHIC H ARE TRANSFER IS RURAL AGRICULTURE LAND WHICH IS NOT A CAP ITAL ASSETS AS PER SECTION 2(14), SO AMOUNT RS 10.00 LACS RECEIVED BY ASSESSEE ON SALE OF RURAL AGRICULTURAL LAND CAPITAL RECEIPTS AND EXEMPT UNDER INCOME TAX ACT,196 1'. IF A PERSON WHOSE FAVOUR BAYANA HAS BEEN MADE HAS DENIED FOR THE SAME, NATURE OF SUBJECT MATTER OF SAL E (I.E. RURAL AGRICULTURE LAND) HAS NOT BEEN CHANGE, SO THE SALE OF AGRICULTURE LAND IS ALWAYS TAX FREE AND CAN'T BE TA XED AT ALL. 7 IN VIEW OF THE ABOVE SUBMISSIONS, LD. AR OF THE AS SESSEE REQUESTED TO ALLOW THE APPEAL OF THE ASSESSEE BY CANC ELLING THE ORDERS OF THE AUTHORITIES BELOW. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF TH E LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE SUBMISSIONS OF THE ASSESSEES A.R. IN THE PRESENT CASE, THE AO HAS OBSERVED THAT THERE WERE CASH DEPOSITS OF RS. 28.99 LACS IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS ASKE D TO EXPLAIN THE SOURCE OF THESE DEPOSITS. DURING THE ASSESSMENT PRO CEEDINGS, VARIOUS OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE TO PROV IDE EXPLANATION AND SUPPORTING DOCUMENTS TO EXPLAIN THESE DEPOSITS. I F IND THAT FROM PAGES 3 TO 6 THE AO HAS ELABORATED AS TO HOW OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE TO PRODUCE SH. ARJUN KUMAR FROM WHOM THE A SSESSEE HAD CLAIMED TO HAVE RECEIVED RS. 10 LACS AND ON, PAGE 7 & 8 OF THE ASSESSMENT ORDER, THE AO HAS HIGHLIGHTED THAT THE F ACTS CLEARLY INDICATED THAT SH. ARJUN KUMAR, WHOSE STATEMENT WAS RECORDED, HAD DENIED TO SIGNING ANY BIYANA AGREEMENT AND THERE WAS NO SUBST ANTIAL REPLY FILED BY THE ASSESSEE IN RESPONSE TO THE FACTS CONFRONTED TO HIM. ACCORDINGLY, RS. 10 LACS WAS ADDED TO THE ASSESSEE'S INCOME. WIT H REGARD TO THE AMOUNT OF RS. 17,83,800/-, THE ASSESSEE FAILED TO S UBMIT ANY DOCUMENTARY EVIDENCES TO EXPLAIN THIS AMOUNT. FROM PAGE 8 TO 11 OF THE 8 ASSESSMENT ORDER, THE AO HAS STATED THAT THERE WAS NO PROPER EXPLANATION REGARDING CREDIT IN THE BANK ACCOUNT AN D IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS THE AMOUNT WAS TREATED AS U NEXPLAINED INCOME OF THE ASSESSEE. IN VIEW OF ABOVE, I AM OF THE CO NSIDERED OPINION THAT IT IS CLEAR THAT THE AO HAD GIVEN AMPLE OPPORTUNITIES TO THE ASSESSEE TO PROVIDE EXPLANATIONS AND DOCUMENTS FOR EXPLAINING T HE AMOUNTS OF RS. 10 LACS AND RS. 1,7,83,000/-. HOWEVER, THE ASSESSEE CO ULD NOT PROVIDE SUFFICIENT INFORMATION AND EXPLANATIONS BEFORE THE AO. I FURTHER NOTE THAT EVEN DURING THE APPELLATE PROCEEDINGS, THE AR OF TH E ASSESSEE HAD SUBMITTED THAT WITH REGARD TO RS. 10 LACS RECEIVED FROM SH. ARJUN KUMAR, THE SOURCE OF THE AMOUNT WAS BASED ON A SALE DEED IN THE NAME OF SOME OTHER PERSON, ON BEHALF OF SH. ARJUN KUMAR, HENCE, THIS EXPLANATION WAS RIGHTLY REJECTED BY THE LD. CIT(A) AND ADDITION OF RS. 10 LACS WAS SUSTAINED, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, THEREFORE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THIS ISSUE A ND REJECT THE GROUND RAISED BY THE ASSESSEE. 7.1 AS REGARDS ADDITION OF RS. 17,83,000/- IS CONCE RNED, I NOTE THAT DESPITE SO MANY OPPORTUNITIES, THE AR OF THE ASSESS EE COULD NOT SUBSTANTIATE HIS ARGUMENTS THAT THIS AMOUNT RELATED TO BUSINESS INCOME FROM SALE PURCHASE OF BUILDING MATERIAL BY THE ASSE SSEE. IN THE ASSESSMENT ORDER, THE AO HAS ELABORATELY DISCUSSED THE LARGE NO. OF OPPORTUNITIES PROVIDED TO THE ASSESSEE TO PROVIDE S OME DETAILS WHICH COULD INDICATE THAT THIS AMOUNT RELATED TO BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER, EVEN DURING THE APPELLATE PROCEE DINGS, THE AR HAS 9 ONLY ARGUED THAT NO BOOKS OF ACCOUNTS WERE AVAILABL E AND DETAIL COULD NOT BE PROVIDED. IN VIEW OF THESE FACTS, IT IS CLEAR TH AT THERE IS NO PROPER EXPLANATION REGARDING THE DEPOSIT OF RS. 17,83,800/ -. THEREFORE, THIS ADDITION MADE BY THE AO WAS RIGHTLY UPHELD BY THE L D. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHO LD THE SAME AND REJECT THE GROUND RAISED BY THE REVENUE. IT IS AL SO NOTED THAT THE CASE LAWS REFERRED BY THE LD. A.R. OF THE ASSESSEE ARE ON DIFFERENT FACTS, HENCE, NOT APPLICABLE IN THE PRESENT CASE. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND S DISMISSED. ORDER PRONOUNCED ON 14/03/2018. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE14/03/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES