ITO, Meerut V. Shri Saurabh Jain, New Delhi

ITA 5697/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90902 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Keywords: Income from undisclosed sources; Salary income; Additional evidence
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.5697/DEL/2012 (ASSESSMENT YEAR : 2009-10) ITO, WARD 2 (3), VS. SHRI SAURABH JAIN, MEERUT. A 2, SHAMBHU NAGAR, MEERUT. (PAN : AGUPJ2752J) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI B.R.R. KUMAR, SENIOR DR DATE OF HEARING : 08.04.2015 DATE OF PRONOUNCEMENT : .04.2015 O R D E R PER C.M. GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), MEERUT DATED 31.08.2012 IN AP PEAL NO.323/11-12 FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL, AS STATED BY THE ASSESSEE BEFORE CIT (A), READ AS UNDER :- THAT THE APPELLANT WAS EMPLOYED WITH M/S RELIGARE COMMODITIES LTD. UPTO MAY 2008 AND THEREAFTER WITH RELIGARE SEC URITIES LTD. DURING THE YEAR UNDER REFERENCE AND EARNED SALARY I NCOME FROM THE SAID GROUP/COMPANIES. THE APPELLANT FILED RETURN OF INCOME 2 ITA NO.5697/DEL/2012 DECLARING TOTAL INCOME OF RS.1,33,960/- BEING THE I NCOME FROM SALARY AFTER DEDUCTIONS. COPY OF FORM 16 IS ENCLOSE D HEREWITH. THE RETURN OF THE APPELLANT WAS SELECTED FOR SCRUTINY T HROUGH CASS. THE REASON FOR SELECTION WAS ATTRIBUTABLE TO THE CA SH DEPOSITS OF RS.27,12,188/- IN HIS SAVING BANK ACCOUNTS. DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT ATTENDED THE P ROCEEDINGS HIMSELF AND EXPLAINED THAT CASH DEPOSITS IN HIS BAN K ACCOUNTS REPRESENTED THE AMOUNT RECEIVED BY HIM FROM CUSTOME RS OF RELIGARE GROUP FOR THEIR MARGIN MONEY AND THE SAID AMOUNTS WERE DEPOSITED BY THE APPELLANT THROUGH CHEQUES/DRAFTS I N CUSTOMERS ACCOUNT WITH RELIGARE COMMODITIES LTD. AND RELIGARE SECURITIES LTD. THE APPELLANT IN HIS MIND WAS CONVI NCED THAT HIS EXPLANATION HAS SATISFIED THE ID. A.O. REGARDING TH E SOURCES OF THE FUNDS DEPOSITED IN HIS BANK ACCOUNTS. THE ID. A.O. NOT BEING SATISFIED WITH THE EXPLANATION OF THE APPELLANT MAD E THE ADDITION OF THE TOTAL AMOUNT OF CASH DEPOSITED IN APPELLANT'S B ANK ACCOUNTS TOTALING TO RS.27,12,188/- AS UNEXPLAINED CASH CRED IT U/S 68. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), MEERUT WHICH WAS ALLOWED BY PASSING THE IMPUGNED ORDER. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS T RIBUNAL WITH THE SOLE GROUND WHICH READ AS UNDER :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW IN DELETING THE ADDITION OF RS.27,12,188/- MADE BY THE A.O. ON A/C OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF TH E ASSESSEE IGNORING THAT THE ASSESSEE TOTALLY FAILED TO DISCHA RGE THE ONUS CAST UPON IT TO PROVE THE GENUINENESS, CREDITWORTHINESS & IDENTITY OF THE CREDITORS. THE ASSESSEE DID NOT SUBMIT ANY NAME S AND ADDRESS OF THE ALLEGED CUSTOMERS FROM WHOM CASH ALLEGEDLY W AS RECEIVED, ASSESSEE COULD NOT EVEN ESTABLISH IDENTITY OF ALLEG ED CASH CREDITORS EVEN BEFORE COMMISSIONER OF INCOME TAX (APPEALS) IN REMAND PROCEEDINGS AND THUS ALLEGED CREDITS REMAINED TOTAL LY UNPROVED. RELIANCE IS PLACED ON THE RATIO LAID DOWN IN FOLLOW ING CASES :- (I) CIT VS. LA MEDICA (2001) 250 ITR 575 (DELHI) (II) SRI GANESH RICE MILLS VS. CIT (2007) 294 ITR 316 (A LLD.) (III) CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (199) 187 ITR 596 CAL. 3 ITA NO.5697/DEL/2012 (IV) CIT VS. PRECISION FINANCE PVT. LTD. ( CAL.) 208 ITR 465 (V) CIT VS. KORLEY TRADING CO. LTD. (CAI.) 232 ITR 820. (VI) KRISHAN KUMAR JHANB V. ITO AND ANR (PUNJAB & HARYAN A) 17 DTR 249. (VII) M/S SEJAI INTERNATIONAL LTD. VS. CIT, MEERUT (ALL.) APPEAL NO. 306 OF 2010. (VIII) CIT VS. DURGA PRASAD MORE, 82 ITR 540 ( SC) (IX) CIT VS. P. MOHANAKALA, 291 ITR 278 ( SC) (X) CIT VS. SUMATI DAYAL, 214 ITR 801 (SC) (XI) ITO VS. DIZA HOLDINGS PVT. LTD. 255 ITR 573 ( KERLA ) (XII) CIT VS. NOVA PROMOTERS AND FINLEASE PVT. LTD. 18 TA XMANN 217 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND PE RUSED THE MATERIAL PLACED ON RECORD. THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) SUBMITTED THAT THE AO HAS NOT FILED ANY AUTHENTIC DOCUMENTARY EVIDENCE WHICH CAN SUPPORT THE VERSION OF THE ASSESSEE AND SOURCE OF CASH DEPOSITS IN THE BANK AND THE SAME REMAINED EXPLAINED. THE LD. DR POINTED OUT THAT TH E AO FROM THE COPY OF THE BANK STATEMENT NOTED THAT THERE WAS A CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.27,12,188/-. REPLYING TO THE QUERY OF THE AO, THE ASSESSEE EXPLAINED THAT THE CASH HAS BEEN RECEIVED FROM CUSTOMERS AS SECURITY PURPOSE FOR THEIR MARGIN CALL AND WHEN THEY FAILED TO SUBMIT CHEQUE THEN THE ASSESSEE USED THEIR CASH FOR MAKING A DEMAND DRAFT IN FAVOUR OF HIS EMPLOYER, M/S. RELIGARE SECURITIES LTD. AND RELIGARE COMMODIT IES LTD. BUT, IN ABSENCE OF ANY SUPPORTING DOCUMENT, THIS FACT COULD NOT BE EST ABLISHED AND THE SOURCE OF CASH DEPOSIT IN THE BANK WAS NOT PROPERLY EXPLAINED BY THE ASSESSEE. LD. DR ALLEGING THE IMPUGNED ORDER SUBMITTED THAT THE CIT (A) WAS NOT RIGHT IN ALLOWING THE APPEAL OF THE ASSESSEE ONLY ON THE BAS IS OF FINANCIAL STATUS OF THE 4 ITA NO.5697/DEL/2012 ASSESSEE WITHOUT ANY EXPLANATION IN CASH DEPOSITS F OUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD. DR FIRMLY PRAYED THAT THE IM PUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 3.2 IT IS PERTINENT TO NOTE THAT WHEN THE CASE WAS CALLED FOR HEARING NEITHER THE ASSESSEE NOR HIS REPRESENTATIVE APPEARED BEFORE US AND ON CAREFUL PERUSAL OF THE APPEAL FILED AND OTHER RELEVANT RECORD, WE FOUND IT APPROPRIATE TO PROCEED AND DECIDE THE CASE IN ABSENCE OF ASSESSEE AFTER HEARIN G THE LD. DR. 3.3 ON CAREFUL CONSIDERATION OF SUBMISSIONS OF LD. DR AND PERUSAL OF THE RECORD BEFORE US, WE NOTE THAT THE AO MADE ADDITION BY HOLDING THAT IN ABSENCE OF AUTHENTIC DOCUMENTARY EVIDENCE, THE SOURCE OF CA SH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE REMAINED UNEXPLAINED, THERE FORE, HE TREATED THE SAME AS INCOME FROM UNDISCLOSED SOURCES AND MADE AN ADDITIO N U/S 68 OF THE INCOME-TAX ACT, 1961 (FOR SHORT, THE ACT). WE FURTHER NOTE TH AT THE CIT (A), MEERUT ADMITTED AND CONSIDERED THE ADDITIONAL EVIDENCE OF THE ASSESSEE UNDER RULE 46A OF THE INCOME-TAX RULES, 1962 AND AFTER CALLING REM AND REPORT FROM THE AO, REJOINDER OF THE ASSESSEE AND SUPPLEMENTARY REMAND REPORT DATED 28.08.2012 FROM THE AO, THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION :- THE APPELLANT HAS ASSAILED THE ADDITION OF RS.27,1 2,188/- U/S 68. FROM THE FACTS ON RECORD, I HAVE OBSERVED THAT THE APPELLANT HAS DEPOSITED CASH ON VARIOUS DATES IN HIS BANK ACCOUNT S. THE CASH SO DEPOSITED IS TRANSFERRED BY CHEQUES OR THROUGH BANK DRAFTS TO THE VARIOUS CUSTOMERS OF TWO RELIGARE COMPANIES. DETAIL S OF SUCH PERSONS HAVE BEEN FILLED. IN ONE OR TWO CASES CASH HAS BEEN DEPOSITED AND CHEQUE / DRAFT HAS BEEN ISSUE TO V. C . MEERUT 5 ITA NO.5697/DEL/2012 DEVELOPMENT AUTHORITY. THE CASH DEPOSITS WERE USED BY ISSUE OF CHEQUE / DD EITHER ON THE SAME DATE OR WITHIN A DAY OR SO OR THE SAME IS WITHDRAWN IN CASH. I HAVE ALSO TAKEN NOTE T HAT THE APPELLANT IS NOT A MAN OF MEANS AND IS AN EMPLOYEE GETTING GROSS MONTHLY SALARY OF RS.15,000/- OR SO. THE A.O. HAS N OT DOUBTED THE TRANSFER OF FUNDS FROM APPELLANT'S BANK ACCOUNTS TO VARIOUS PARTIES BUT HAS MADE ADDITION FOR THE REASON THAT THE SOURC ES OF CASH DEPOSITS IN HIS BANK ACCOUNT ARE NOT SUBSTANTIATED WITH PROOF. THE A.O. HAS ALSO STATED THAT THE WORTH OF THE APPELLAN T IS NIL. I HAVE ALSO CONSIDERED THE JUDICIAL PRONOUNCEMENT OF THE H ON'BLE S.C IN P.K. NOORJAHAN'S CASE THAT THE PROVISIONS OF SECTIO N 69 ARE NOT MANDATORY. ON THE TOTALITY OF FACTS, I AM OF THE CO NSIDERED VIEW THAT IN VIEW OF FINANCIAL STATUS OF THE APPELLANT, HIS EXPLANATION THAT HE HAS DEPOSITED FUNDS OF VARIOUS PARTIES TO W HOSE CREDITS THE SAME WERE TRANSFERRED SEEMS PLAUSIBLE. NO MATERIAL IS AVAILABLE ON RECORD SO AS TO SUGGEST EARNING OF ANY INCOME BY TH E APPELLANT IN ADDITION OF HIS SALARY INCOME. CONSIDERING THAT THE PROVISIONS OF SECTION 68 ARE SIMILAR TO THOSE OF SECTION 69 AND A LSO CONSIDERING THE FACT THAT NO PRUDENT PERSON WOULD TRANSFER HIS OWN FUNDS TO THE CREDIT OF OTHER PARTIES, APPELLANT'S EXPLANATION DE SERVES TO BE ACCEPTED. WITH THIS OBSERVATION, I DELETE THE ADDIT ION OF RS.27,12,188/-. 3.4 IN VIEW OF THE ABOVE, WE ARE INCLINED TO HOLD T HAT THE CIT (A) RIGHTLY ADMITTED AND CONSIDERED THE ADDITIONAL EVIDENCE FIL ED BY THE ASSESSEE DURING FIRST APPELLATE PROCEEDINGS. THE CIT (A) CALLED RE MAND REPORT FROM THE AO AND ALLOWED AN OPPORTUNITY TO FILE REJOINDER TO THE ASS ESSEE AND AGAIN CALLED SUPPLEMENTARY REMAND REPORT FROM THE AO AND AFTER C ONSIDERING ADDITIONAL EVIDENCE, THE CIT (A) RIGHTLY CONCLUDED THAT IN VIE W OF FINANCIAL STATUS OF THE ASSESSEE, HIS EXPLANATION THAT HE HAS DEPOSITED FUN D OF VARIOUS PARTIES TO WHOSE CREDITS THE SAME WERE TRANSFERRED IS A REASONABLE A ND PLAUSIBLE VIEW AND THE ADDITION MADE BY THE AO U/S 68 OF THE ACT WAS NOT S USTAINABLE. IT IS ALSO PERTINENT TO NOTE THAT THE CIT (A) RIGHTLY HELD THA T NO PRUDENT PERSON WOULD 6 ITA NO.5697/DEL/2012 TRANSFER HIS OWN FUNDS TO THE CREDIT OF OTHER PARTI ES AND, THEREFORE, THE CIT (A) RIGHTLY ACCEPTED THE EXPLANATION OF THE ASSESSEE. WE ARE UNABLE TO SEE ANY AMBIGUITY OR ANY OTHER VALID REASON TO INTERFERE WI TH THE ORDER AND WE UPHOLD THE SAME. ACCORDINGLY, THE SOLE GROUND BEING DE VO ID OF MERITS IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF APRIL, 2015. SD/- SD/- (R.S. SYAL) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 15 TH DAY OF APRIL, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.