ACIT-I, Kanpur V. Shri Amar Nath Agarwal, Kanpur

ITA 600/LKW/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78574 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-05-2014
• Assessment Year: misc
• Appeal Filed On: 10-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: S K JAIN FCA SHRI SWARAN SINGH
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.600/LKW/2011 ASSESSMENT YEAR:2008 - 09 A.C.I.T. - 1, KANPUR. VS. SHRI AMAR NATH AGARWAL, 33/140, GAYA PRASAD LANE, KANPUR. PAN:AFHPA3684A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI S. K. JAIN, FCA SHRI SWARAN SINGH, FCA DATE OF HEARING 26/05/2014 DATE OF PRONOUNCEMENT 1 3 /06/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - II, KANPUR DATED 08/07/2011 FOR ASSESSMENT YEAR 2008 - 2009. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.87,00,000/ - MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF CASH DEPOSITS IN BANK ACCOUNT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. THE LD COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS NOT CONSIDERED THE VIEW TAKEN BY THE HON'BLE ITAT, DELHI BENCH - C (III MEMBERS) IN THE CASE OF ADDL. CIT, SPECIAL RA NGE, FARIDABAD VS GURSHANT 2 ROTARY COMPRESSORS LTD. (IT APPEAL NO.4044 (DELHI) OF 1999, WHILE DELETING THE ADDITION OF RS.87,00,000/ - MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF CASH DEPOSITS IN BANK ACCOUNT AGAINST CASH SALE OF GOLD. 3. THAT THE ORDER OF THE LD. CIT (A) - II, KANPUR DATED 08.07.2011 NEEDS TO BE QUASHED AND THE ORDER DATED 30.12.2010 PASSED BY THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENT IONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT MERELY IT IS NOT SUFFICIENT THAT THERE WAS CASH SALE BUT IN THE PRESENT CASE, THE ASSESSEE HAS TO ESTABLISH THE CORRECT DATE OF CASH SALE BECAUSE WHAT IS REQUIRED IS THAT O N THE DATE OF CASH DEPOSIT, CASH WAS AVAILABLE WITH THE ASSESSEE. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. ARATI JANA AS REPORTED IN [2013] 216 TAXMAN 109. 4. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THE SOURCE OF CASH DEPOSIT IS GOLD SALE AND IN SUPPORT OF THIS CONTENTION AND IN CASE OF CASH SALE, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN THE NAME AND ADDRESS OF THE CUSTOMERS. RELIANCE WAS PLACED ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF KISHORE JERAM BHAI KHANIYA VS. INCOME TAX OFFICER IN I.T.A. NO.1220/DEL/2011 AND C.O. NO.89/LKW/2011 DATED 13/05/2014. HE SUBMITTED A COPY OF THE DECISION. 5. WE HAVE CONSIDERED THE R IVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT S CITED BY BOTH THE SIDES. FIRST OF ALL , WE EXAMINE THE OBJECTIONS OF THE ASSESSING OFFICER. THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT 3 CASH DEPOSITED IN BANK OF RS.87 LAC REPRESENTED SALE PROCEEDS OF GOLD BECAUSE THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE REGARDING CASH SALE OF GOLD. AS PER THE PROFIT & LOSS ACCOUNT ON PAGE NO. 5, THERE IS ONLY SALE OF 87 LAC AND THE SAME IS ENTIREL Y IN CASH. NOW UNDER THESE FACTS, WE EXAMINE THE APPLICABILITY OF THE JUDGMENTS. FIRST OF ALL , WE EXAMINE THE APPLICABILITY OF DECISION OF THE TRIBUNAL IN THE CASE OF KISHORE JERAM BHAI KHANIYA (SUPRA). IN THAT CASE, IT IS NOTED BY THE TRIBUNAL IN PARA 5 THAT VOLUME OF SUCH CASH SALE WAS AT RS.22.06 LAC IS TO BE SEEN IN THE LIGHT OF THE ASSESSEES TOTAL TURNOVER OF RS.10.29 CRORE. HENCE, IT IS SEEN THAT IN THAT CASE, ONLY ABOUT 2% WAS CASH SALE WHEREAS IN THE PRESENT CASE , 100% IS SA ID TO BE CASH SALE. MOREOVER, IT IS ALSO SEEN THAT IN THAT CASE, SEARCH WAS CARRIED OUT IN THE CASE OF THE ASSESSEE AND ON THE DATE OF SEARCH, CASH WAS FOUND AND A SUM OF RS.54 LAC WAS SEIZED ON 05/10/2005. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF RS.54 LAC, THE ASSESSEE GAVE THE DETAILS OF SEIZED CASH AS RS.23.01 LAC BELONGING TO A PROPRIETORSHIP CONCERN AND THE BALANCE WAS CLAIMED TO BE BELONGING TO RELATIVES OF THE ASSESSEE. REGARDING THE CASH CLAIMED TO BE BELONGING TO THE PROPRIETORSHIP CONCERN, IT WAS EXPLA INED BY THE ASSESSEE AND FOUND BY THE ASSESSING OFFICER THAT OUT OF TOTAL TURNOVER OF RS.10.29 CRORE, THERE WAS CASH SALE OF RS.22,06,672/ - BY WAY OF FOUR CASH MEMOS OF 28 TH AND 29 TH SEPTEMBER, 2005. IN THAT CASE, THE SALE CLAIMED BY THE ASSESSEE WAS NOT DISTURBED BY THE ASSESSING OFFICER. SINCE THE CASH WAS FOUND AT THE TIME OF SEARCH ON 05/10/2005 AND THE CASH SALE WAS CLAIMED TO HAVE BEEN EFFECTED ON 28/09/2005 AND 29/09/2005 AND THE ASSESSING OFFICER HAS ACCEPTED THE SALES AS CLAIMED, IT CANNOT BE SAI D THAT THE CASH FOUND AT THE TIME OF SEARCH IS NOT IN RESPECT OF SUCH CASH SALE. BUT IN THE PRESENT CASE, IT IS SEEN THAT NOT ONLY 100% SALE IS CASH SALE BUT THIS IS ALSO RELEVANT TO SEE AS TO WHETHER EVEN IF THERE IS ACTUAL CASH SALE, THE SAME WAS AFFECT ED PRIOR TO THE DATE OF DEPOSIT OF CASH IN BANK. MOREOVER, IN THE PRESENT CASE, THE 4 ASSESSING OFFICER HAS NOT ACCEPTED THE SALE AND HAS HELD THE SALE I S BOGUS AND DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.7,643/ - . THE ASSESSING OFFICER DISALLOWED THIS CLAIM OF THE EXPENSES. THIS ISSUE WAS ALSO CARRIED IN APPEAL BEFORE THE CIT(A) APART FROM THE ISSUE REGARDING ADDITION OF RS.87 LAC S BEING CASH DEPOSITED. THE CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE REGARDING TH E ADDITION OF RS.87 LAC S BUT REGARDING DISALLOWANCE OF RS.7,643/ - , NO RELIEF WAS ALLOWED BY CIT(A). AGAINST THIS ORDER OF CIT(A) FOR CONFIRMING THE DISALLOWANCE OF RS.7,643/ - , THE ASSESSEE IS NEITHER IN APPEAL BEFORE US NOR ANY CROSS OBJECTION HAS BEEN FI LED. IT MEANS THAT THE ASSESSEE HAS ACCEPTED THE ORDER OF CIT(A) REGARDING CONFIRMING THE DISALLOWANCE OF RS.7,643/ - . IT ALSO MEANS THAT THE ASSESSMENT ORDER HAS BEEN PARTLY ACCEPTED BY CIT(A) AND BY THE ASSESSEE ALSO. HAVING ACCEPTED THE ASSESSMENT ORD ER PARTLY ON THE SAME ASPECT AS TO WHETHER THERE WAS ANY BUSINESS ACTIVITY OR NOT BY WAY OF SALE OF GOLD, CIT(A) WAS NOT JUSTIFIED IN GRANTING RELIEF ON ONE ASPECT. IN THE FACTS OF THE PRESENT CASE, TH IS TRIBUNAL DECISION IS NOT APPLICABLE BECAUSE THE FAC TS ARE DIFFERENT. 5.1 NOW WE EXAMINE THE APPLICABILITY OF JUDGMENT OF HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. ARATI JANA (SUPRA) ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED D.R. OF THE REVENUE. WE FIND THAT THE ISSUE INVOLVED IN THIS CASE IS NOT REGARDING CASH SALE BUT THE ISSUE IS REGARDING THIS ASPECT THAT WHETHER THE ASSESSEES FAILURE TO DISCLOSE RELEVANT EVIDENCE, EVEN PRIMA FACIE WOULD AMOUNT TO NO EXPLANATION AT ALL. HENCE, THE ANALOGY CAN BE DRAWN THAT WHEN THE ASSESSEE IS NOT DISCLOSING ANY RELEVANT EVIDENCE IN SUPPORT OF ITS CONTENTION REGARDING CASH SALE OF GOLD, IT MAY BE CONSIDERED AS NO EXPLANATION AT ALL ON THIS ACC OUNT. IN THE PRESENT CASE, THIS IS NOT ONLY TO BE SEEN THAT WHETHER ANY CASH SALE HAS TAKEN PLACE OR NOT BUT THIS IS ALSO RELEVANT TO SEE AS TO WHETHER EVEN IF A CASH SALE HAS TAKEN PLACE, THE SAME HAS TAKEN PLACE BEFORE DEPOSIT OF CASH 5 IN BANK. IN THE ABSENCE OF ANY DETAILS ABOUT THE ALLEGED BUYER IN CASH, THIS CANNOT BE EXAMINED BY THE ASSESSING OFFICER AND, THEREFORE, IT HAS TO BE ACCEPTED THAT THIS EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE. MOREOVER, THE ASSESSEE AND LEARNED CIT (A) HAVE ACCEPT ED THE DISALLOWANCE OF EXPENSES MADE BY THE A.O. ON THIS BASIS THAT THERE IS NO BUSINESS ACTIVITY AND HAVING ACCEPTED THAT, IT CANNOT BE SAID THAT THERE WAS CASH SALE OF GOLD. 5.2 ONE MORE CONTENTION WAS RAISED BY LEARNED A.R. OF THE ASSESSEE THAT IN FACT , THE AMOUNT OF CASH DEPOSIT IN BANK IS NOT RS.87 LAC S BUT IT IS ONLY RS.43 LAC BECAUSE A SUM OF RS.44 LAC IS DEPOSITED IN BANK ON 27/06/2007 BY WAY OF TRANSFER FROM A DIFFERENT BANK ACCOUNT OF THE ASSESSEE . FOR THIS CONTENTION , HE SUBMITTED THE RELEVANT CASH BOOK FOLIO OF SHRI NATH JI TRADERS FOR 27/06/2007 TO 15/07/2007 WHICH IS AVAILABLE ON PAGE NO. 152 TO 154 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT THE COPY OF BANK STATEMENT OF ICICI BANK IS AVAILABLE ON PAGE NO. 194 TO 197 OF THE PAPER BOOK AND IN THIS ALSO , IT CAN BE SEEN THAT THERE IS CREDIT OF RS.44 LAC BY WAY OF CLEARING ON 28/06/2007. HE ALSO EXPLAINED THAT THIS CREDIT IS OUT OF TRANSFER FROM THE ASSESSEES OWN ACCOUNT WITH HDFC BANK. HE ALSO SUBMITTED THAT THE COPY OF BANK STATEMENT OF HDFC BANK IS AVAILABLE ON PAGE 189 OF THE PAPER BOOK AND IN THIS BANK ALSO , BEFORE THIS WITHDRAWAL OF RS.44 LAC S ON 25/06/2007, THERE IS NO CASH DEPOSIT AND THE CREDIT IS ON ACCOUNT OF ICICI MUTUAL FUND REDEMPTION OF RS.49 LAC. 5.3 ON THIS ASPECT, WE FIND FORCE IN THE SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE THAT THE CASH DEPOSIT ONLY CAN BE ADDED AND NOT THE TRANSFER BY WAY OF CHEQUE FROM A DIFFERENT BANK ACCOUNT OF THE ASSESSEE PARTICULARLY WHEN THERE IS NO CASH DEPOSIT IN THAT B ANK ACCOUNT WITH HDFC BANK . AS PER THE BANK STATEMENT OF ICICI BANK AVAILABLE ON PAGE 194 TO 197 OF THE PAPER BOOK, WE FIND THAT THERE IS DEPOSIT OF RS.4.50 LAC S IN CASH ON 6 27/06/2007 AND THEREAFTER , THERE IS CASH DEPOSIT ON 03/07/2007 OF RS.9 LAC S AND R S.21 LAC S AND AGAIN THERE IS CASH DEPOSIT OF RS.8.50 LAC S ON 04/07/2007. IN THIS MANNER, TOTAL CASH DEPOSIT IS RS.43 LAC S AND THE BALANCE DEPOSIT OUT OF TOTAL DEPOSIT OF RS.87 LAC S IS BY WAY OF TRANSFER FROM A DIFFERENT BANK ACCOUNT OF THE ASSESSEE. HENC E, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.87 LAC IS NOT PROPER AND THE SAME IS UPHELD TO THE EXTENT OF CASH DEPOSIT OF RS.43 LAC S . THE DELETION OF ADDITION OF CIT(A) IS UPHELD TO THE EXTENT OF RS.44 LAC S AND THE ORDER OF CIT(A) IS R EVERSED IN RESPECT OF BALANCE ADDITION OF RS.43 LAC S . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /06/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR