ITO, Agra V. Shri Ashok Kumar Lavania, Agra

ITA 599/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6769 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 08-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Keywords: Unexplained cash credit; Principle of natural justice; Capital Gains
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.599/AGR/2008 ASST. YEAR: 2003-04 INCOME-TAX OFFICER 4(1), AGRA. VS. SHRI ASHOK K UMAR LAVANIA, PROP. M/S BAJRANG AUTOMOBILES, SHAHDARA, AGRA. (PAN : AATPL 0984 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA, JR. D.R. RESPONDENT BY : SHRI ANURAG SINHA, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 08.07.2008. 2. GROUND NO.1 RELATES TO THE DELETION OF THE ADDIT ION OF RS.4,18,500/-.MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 3. THE BRIEF FACTS RELATING TO THIS ADDITION ARE TH AT THE A.O. WORKED OUT THE SUM BY ADDING RS.39,235/-, RS.1,05,650/-, RS.2,19,380/- & RS.54,2 35/- FROM THE BANK ACCOUNT OF THE ASSESSEE TREATING IT TO BE THE PROFIT DERIVED FROM THE SHARE TRANSACTIONS CARRIED OUT THROUGH M/S. MKM FINANCE PVT. LTD. WHICH, ACCORDING TO THE A.O., WAS BOGUS ENTRIES RELATING TO LOANS AND SHARE TRANSACTIONS. THE A.O. RELIED ON THE STATEMENTS OF SHRI PREM BATRA, DIRECTOR OF THE COMPANY AND 2 SUB-BROKER SHRI BHARAT YADAVA RECORDED IN THE COURS E OF ENQUIRIES CONDUCTED BY THE DEPARTMENT. IN RESPECT OF RS.39,235/-, THE ASSESSEE POINTED OUT THAT IT WAS RECEIVED AS INCOME DISTRIBUTION FROM UTI. IT WAS POINTED OUT THAT CHEQUE FOR THIS AMOUNT WAS RECEIVED DURING THE PRECEDING YEAR WHICH WAS ENCASHED DURING THE YEAR AND THIS INCOME HAS DULY BEEN SHOWN IN THE A.Y.2002-03. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A), AFTER VERIFYING THE FACTS, DELETED THE ADDITION OF THIS AMOUNT. THE CIT(A) HAS ALSO DELET ED THE OTHER ADDITIONS BY OBSERVING AS UNDER :- I HAVE PERUSED THE ASSESSMENT ORDER, THE WRITTEN S UBMISSIONS MADE BY THE ASSESSEE, MATERIAL ON RECORD AND THE ARGUMENTS OF A.R. THE ADDITION HAS BEEN MADE ON THE ENTRIES AS LONG-TERM CAPITAL GAINS WHER EAS THE A.R. HAS CLAIMED THAT THERE IS NO LONG TERM CAPITAL GAINS IN AS MUCH AS T HERE IS NO PURCHASE AND SALE OF SHARES. THERE ARE TWO CREDITS OF RS.1,05,650/- AND RS.2,19,380/- RELATING TO SHORT-TERM CAPITAL GAINS. THE SHORT TERM CAPITAL G AIN HAD BEEN SHOWN IN THE RETURN OF INCOME AND HAS BEEN ASSESSED AS SUCH. TH ERE IS FORCE IN THE ASSESSEES CONTENTION THAT SINCE THE A.O. WAS PLACING RELIANCE ON THE STATEMENTS OF DIRECTOR OF M/S. MKM AND ITS SUB-BROKER, THEY SHOULD HAVE BE EN PRODUCED FOR CROSS- EXAMINATION BY THE ASSESSEE. SINCE THIS WAS NOT DO NE, THERE WAS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AS PER LAW LAID DOWN BY THE APEX COURT IN DHAKESHWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 (SC). THE TRANSACTIONS IN THE ACCOUNT HAVE ALSO BEEN EXPLAINED. THE FIRST ENTRY OF RS.25000/- ON 14.01.03 IS OF LOAN GIVEN BY THE ASSESSEE. LATER, M/S MKM ADVANCED RS.105650/- ON 21.01.03; RS.2,19,380/- ON 04.02.03. THE ASSESS EE PAID RS.54235/- ON 04.02.03 WHICH WAS AGAIN GIVEN BACK ON 26.03.03. T HE NET RESULT OF THESE TRANSACTIONS WAS THAT THE ASSESSEE WAS INDEBTED TO THE EXTENT OF RS.3,00,030/- ON 31.03.03. ON 08.10.03, THE ASSESSEE REPAID THIS AM OUNT WITH INTEREST I.E. RS.3,13,200/-. THE TWO ITEMS OF RS.1,05,650/- AND RS.2,19,380/- ARE IN RESPECT OF SHORT TERM CAPITAL GAINS WHICH HAS BEEN SHOWN AND A CCEPTED BY THE A.O. ALL THE TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES. TH E EXPLANATION FURNISHED BY THE ASSESSEE IS QUITE PLAUSIBLE. THE A.O. HAS NOT HELD THAT THE EXPLANATION IS FALSE AND NOT BONAFIDE. AFTER CONSIDERING THE ENTIRE MAT ERIAL ON RECORD, I AM SATISFIED THAT THERE WAS NO LONG TERM CAPITAL GAINS INVOLVED. THE ADDITION OF RS.4,18,500/- IS DELETED. 4. LD. D.R. RELIED ON THE ORDER OF THE A.O. WHILE T HE LD. A.R. RELIED ON THE ORDER OF THE CIT(A). 3 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONGWITH THE ORDERS OF THE AUTHORITIES BELOW. WE NOTED THAT THE CIT(A) HAS GI VEN A FINDING OF FACT ACCEPTING THE EXPLANATION OF THE ASSESSEE ON THE BASIS OF THE MAT ERIAL ON RECORD TO BE QUITE PLAUSIBLE. HE ALSO NOTED THAT THE TRANSACTIONS ARE THROUGH ACCOUNT PAY EE CHEQUES. THE ASSESSEE HAS ALSO ASKED THE A.O. FOR THE CROSS EXAMINATION OF THE DIRECTOR OF M /S. MKM FINANCE PVT. LTD AND ITS SUB-BROKER WHICH WAS NOT CARRIED OUT. THIS IS A SETTLED LAW T HAT THE STATEMENT RECORDED AT THE BACK OF THE ASSESSEE CANNOT BE USED AS EVIDENCE AGAINST THE ASS ESSEE UNLESS AND UNTIL THE ASSESSEE IS GIVEN OPPORTUNITY TO CROSS EXAMINE THE PARTIES. ON THIS BASIS ITSELF WE ARE OF THE VIEW THAT THE ADDITION IS LIABLE TO BE DELETED BUT SINCE THE CIT(A) HAS GI VEN A FINDING OF FACT AND NO CONTRARY EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. D.R., WE, T HEREFORE, CONFIRM THE ORDER OF THE CIT(A). THUS, GROUND NO.1 STANDS DISMISSED. 6. GROUND NO.2 RELATES TO THE DELETION OF ADDITION OF RS.4,47,090/- MADE BY THE A.O. UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (THE ACT H EREINAFTER). THIS ADDITION CONSISTS OF THE LOAN TAKEN BY THE ASSESSEE OF RS.1,10,000/- FROM SHRI GO KULESH KAUSHIK, RS.1,90,000/- FROM SMT. SUMAN SHARMA, RS.1,40,000/- FROM SMT. URMILA DEVI A ND ALSO THE INTEREST PAID AMOUNTING TO RS.3,118/- AND RS.3,972/- THEREON. THE ASSESSEE EV EN THOUGH PRODUCED SHRI GOKULESH KAUSHIK AND SMT. SUMAN SHARMA BEFORE THE A.O. BUT THE A.O. WAS NOT SATISFIED WITH THE SOURCE OF THEIR INCOME AS SMT. SUMAN SHARMA STATED THAT ENTIRE AFFA IRS REGARDING TRANSACTIONS, LOANS ETC. IN HER NAME WERE MADE BY HER HUSBAND WHILE SHRI GOKULESH K AUSHIK IS A PUROHIT/PANDA BY PROFESSION. THE A.O. HAS NOTED THAT HE HAS DEPOSITED CASH TO TH E EXTENT OF RS.1,63,000/- BETWEEN SEPTEMBER, 2002 TO MARCH, 2003 AFTER THE LOAN OF RS.1,10,000/- WAS GIVEN BY THE ASSESSEE. SINCE SMT. URMILA DEVI WAS NOT PRODUCED, THEREFORE, ALL THE AD DITIONS WERE MADE AND INTEREST WAS 4 DISALLOWED. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT ALL THE LOANS WERE THOROUGH BANKING CHANNEL AND WERE REPAID BY CHEQUES . ALL THE CREDITORS ARE INCOME TAX ASSESSEES AND THEIR PAN WERE DULY FILED. THUS, IT WAS CONTEND THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. IN THEIR STATEMENTS EACH OF THE CREDITORS CONFIRMED LOAN TRANSACTIONS. SMT. URMILA DEVI COUL D NOT BE PRODUCED. SMT. URMILA DEVI EXECUTED A POWER OF ATTORNEY AUTHORIZING HIM TO MAK E THE STATEMENT. THUS, THE CIT(A), ON THE BASIS OF THE SUBMISSIONS, TOOK THE VIEW THAT THE AS SESSEE HAS DISCHARGED HIS ONUS AND ACCORDINGLY DELETED THE ADDITION. 7. BEFORE US, EVEN THOUGH THE LD. D.R. REFERRED TO THE ASSESSMENT ORDER BUT NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE W HICH MAY PROVE THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS. IT IS AN ADMITTED FACT THAT T HE TRANSACTIONS ARE ENTERED THROUGH THE ACCOUNT PAYEE CHEQUE AND ALL THE CREDITORS ARE INCOME TAX A SSESSES. THEY HAVE DULY CONFIRMED LOAN ADVANCED TO THE ASSESSEE. COPY OF THEIR BANK ACCOU NTS WERE PRODUCED. EVEN THE LOANS WERE ALSO RETURNED TO EACH PARTY. THE ASSESSEE THUS HAS DISC HARGED HIS ONUS. SECTION 68 OF THE ACT, NO DOUBT, LAYS DOWN THE RULE OF LAW THAT WHERE ANY SUM FOUND MADE IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE O FFERED NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF FOR THE EXPLANATION OFFERED BY HIM I S NOT IN THE OPINION OF THE A.O. SATISFACTORY. THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR. THEREFORE, ACCORDING TO SECTION 68 THE FIRST ONUS IS ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CREDIT IN THE BOOKS OF ACCOUNT OF PREVIOUS YEAR . IF THE EXPLANATION OF THE ASSESSEE IS SATISFACTORY THAT ENTRY WILL NOT BE CHARGED AS INCO ME OF THE PREVIOUS YEAR OF THE ASSESSEE. IN CASE THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SATI SFACTORY, THE AMOUNT SHOULD BE TAKEN TO BE 5 INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THE A .O. IS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND ACCORDINGLY ASSESSED ALL THE TH REE CREDITS ENTRIES AS INCOME OF THE ASSESSEE. THE ASSESSEE IN THIS CASE HAS SPECIFICALLY POINTED OUT ALL THE THREE PARTIES AND SUBMITTED THEIR CONFIRMATION COPY OF BANK ACCOUNT AND PAN AND THUS HAS DISCHARGED HIS PRIMARY ONUS LAID UNDER SECTION 68 OF THE ACT. IN OUR OPINION, THE ASSESSE E HAS DULY DISCHARGED HIS BURDEN AND ACCORDINGLY WE DO NOT FIND THAT ANY INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) DELETING THE ADDITION. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) ON THIS GROUND. THUS, GROUND NO.2 STANDS DISMISSED. 8. GROUND NO.3 RELATES TO THE DELETION OF THE ADDIT ION OF RS.6,02,301/- AND RS.19,682/- ON ACCOUNT OF RECEIPTS FROM TRUCKS AND FROM CONTRACT W ORK RESPECTIVELY. THE A.O. ADDED THE AFORESAID SUM SHOWN BY THE ASSESSEE AS BEING RECEIV ED FROM TRUCK DRIVERS WITH THE CONTENTION THAT THE TRUCK DRIVERS HAVE GREAT FAITH IN THE INTE GRITY OF THE ASSESSEE. THEY LEAVE THEIR SURPLUS CASH AND COLLECT IT WHENEVER THEY RETURN. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSIONS MADE BY THE ASSESSEE. SIMPLY BECAUSE THE ASSESSEE COULD NOT DI SCLOSE THE NAMES AND ADDRESS OF THE TRUCK OWNERS, IN THE PECULIAR CIRCUMSTANCES OF THE CASE, IT CANNOT BE PRESUMED THAT THE DEPOSITS ARE NOT GENUINE. THE A. O. COULD HAVE FOUND OUT THE NAMES AND ADDRESSES OF THE OWNERS FROM THE TRANSPOR T AUTHORITIES OF RAJASTHAN IF HE CONSIDERED IT TO BE NECESSARY. THE ASSESSEES A RGUMENT THAT THIS ARRANGEMENT HAD BEEN MADE AS A BUSINESS EXPEDIENCY AND THE MONE Y RECEIVED WAS IN TRUST COULD HAVE BEEN DEMOLISHED HAD THE A.O. BEEN ABLE T O SHOW THAT THE ASSESSEE WAS IN NEED OF FUNDS AND THE MONEY ACTUALLY BELONGED TO THE ASSESSEE WHICH HAD BEEN COVERTLY BROUGHT INTO THE BOOKS OF ACCOUNT. THERE IS FORCE IN THE CONTENTION THAT THIS ARRANGEMENT WAS NOT ONLY FOR FEW DAYS AS POINT ED BY THE A.O. BUT WAS PREVALENT THROUGHOUT THE ACCOUNTING PERIOD JUST ONL Y TO ACCOMMODATE THE REGULAR CUSTOMERS. I AGREE WITH THE ASSESSEE THAT THE CRED ITS IN THE TRUCK ACCOUNT ONLY REPRESENT TRUST MONEY LEFT BY THE TRUCK DRIVERS WIT H THE ASSESSEE FOR SAFETY REASONS 6 WHICH WAS COLLECTED WHENEVER THEY RETURNED. KEEPIN G IN VIEW THE TOTALITY OF FACTS AND BUSINESS CONSIDERATION, THE ADDITION IS DELETED . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE ADDITION HAS BEEN DELETED BY THE CIT(A) AFTER C ONSIDERING THE SUBMISSION OF THE ASSESSEE THAT THE MONEY HAS BEEN DEPOSITED BY THE TRUCK DRIVERS F OR SAFETY REASONS AND THEY COLLECT IT BACK WHENEVER THEY RETURN. THE ASSESSEE HAS DULY NOTED THE TRUCKS NUMBERS AND THE A.O. COULD HAVE FOUND THE NAME AND ADDRESSES OF THE TRUCK DRIVERS F ROM THE TRANSPORT AUTHORITY, IF DEEMED NECESSARY. 10. LD. D.R. SIMPLY RELIED ON THE ORDER OF THE A.O. BUT COULD NOT BRING OUT ANY COGENT MATERIAL OR EVIDENCE WHICH MAY COMPEL US TO TAKE A DIFFERENT VIEW FROM WHAT HAS BEEN TAKEN BY THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF TH E CIT(A). 11. IN THE RESULT, APPEAL FILED BY THE REVENUE STAN DS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010 ). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY