Late Baliram Baswant Mahajan, Aurangabad V. Asstt.CIT(Cen.), Aurangabad, Aurangabad

ITA 621/PUN/2005

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79830 (ITAT-PUNE)
• Duration Of Justice: 9 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-11-2013
• Assessment Year: misc
• Appeal Filed On: 01-03-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Source of fund; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 621/PN/2005 (BLOCK PERIOD 01-04-2005 TO 21-11-2001 ) LATE SHRI BALIRAM BASWANT MAHAJAN, THROUGH LEGAL HEIR SHRI PRASHANT B. MAHAJAN, 30, SHRIKRIPA, JYOTI NAGAR, AURANGABAD. .. APPELLANT PAN NO. AJNPM5303N VS. ACIT, CENTRAL, AURANGABAD .. RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SMT. M.S. VERMA DATE OF HEARING : 20-03-2014 DATE OF PRONOUNCEMENT : 12-05-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-01-2005 OF THE CIT(A)-I, NAGPUR RELATING T O BLOCK PERIOD 01-04-2005 TO 21-11-2001. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A)-I, NAGPUR ERRED WHEN HE UPHELD AN ADDITION OF RS.3,06,485/- TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT, TOWARDS INVESTMENT IN THE TISGAON FARM, DISREGARDING THE GENUINE AGRICULTURAL R ECEIPTS OF THE APPELLANT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH O PERATION U/S.132 OF THE I.T. ACT, 1961 WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 21-11-2001. SIMULTANEOUS SEARCHES WERE ALSO CONDUCTED AT THE PREMISES OF CLOSE RELATIVES OF THE ASSESSEE NAMELY (I) MR. N.H. 2 JALKOTE (2) MR. M.H. ANDURE (3) MR. BALIRAM B. MAHA JAN AND (4) RESIDENTIAL AND BUSINESS PREMISES OF MR. M.B. PATIL , GOVT. CONTRACTOR. VARIOUS INCRIMINATING DOCUMENTS WERE SEIZED FROM TH E SAID PREMISES. IN RESPONSE TO NOTICE U/S.158BC OF THE I.T. ACT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL UNDISCLOSED INCOME OF RS.1,61,306/- WHICH CONSISTS OF ACCRUED INTEREST ON FDRS WHICH WE RE NOT DISCLOSED IN THE REGULAR RETURNS. 3.1 THE ASSESSING OFFICER NOTED THAT DURING THE COU RSE OF SEARCH AT THE PREMISES OF SRI N.H. JALKOTE, A LOOSE PAPER MAR KED PAGE NO.12 IN BUNDLE NO.A-73 WAS SEIZED. ON THIS PAGE DETAILS OF INVESTMENTS MADE IN THE PURCHASE OF LAND AT TISGAON (PADEGAON) WERE WRITTEN. IT WAS STATED BY THE ASSESSEE THAT OUT OF THE TOTAL PU RCHASE CONSIDERATION OF THIS LAND, AN AMOUNT OF RS.3,06,485/- WAS CONTRI BUTED BY HIM. AN AMOUNT OF RS.9,50,000/- WAS CONTRIBUTED BY SHRI M.H .ANDURE AND RS.16,17,943/- WAS BY HIS SON SHRI PRASHANT MAHAJAN . THUS THE TOTAL CONTRIBUTION IN THE TISGAON LAND WORKS OUT TO BE RS .28,74,425/-. THE ASSESSEE FILED A CASH FLOW STATEMENT SUBSTANTIATING HIS CONTRIBUTION OF RS.3,06,485/-. THE A.O. NOTED FROM THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE THAT THIS INVESTMENT OF RS.3,06,485 /- IN RESPECT OF TISGAON LAND WAS NOT SHOWN AS UNDISCLOSED INVESTMEN T. ON VERIFICATION OF THE CASH FLOW STATEMENT, HE FOUND T HAT THE ASSESSEE HAS SHOWN NET AGRICULTURE INCOME OF RS.5,63,674/-. THE AO ALSO OBSERVED THAT THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSE E IS NOT SUPPORTED BY ANY CONTEMPORARY EVIDENCE. THE AO ALSO REJECTED THE CLAIM OF ASSESSEE REGARDING RAISING OF LOANS FROM THE BANKS AGGREGATING TO 3 RS.4,49,612/- DURING THE PERIOD FROM A.Y. 1998-99 T O A.Y. 2002-2003 AGAINST THE SECURITY OF FIXED DEPOSITS IN ABSENCE O F ANY PROOF TO SUBSTANTIATE THE SAME. THUS, THE ASSESSING OFFICER REJECTED THE CASH FLOW STATEMENT FILED BY THE ASSESSEE AND REJECTED T HE CONTENTION OF THE ASSESSEE IN RESPECT OF SOURCE OF INVESTMENT IN TISG AON LAND AND MADE AN ADDITION OF RS.3,06,485/- TO HIS TOTAL INCOME AS HI S UNDISCLOSED INVESTMENT DURING THE BLOCK PERIOD. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CASH FLOW STATEM ENTS SINCE THE ASSESSEE WAS HAVING GENUINE AND DEFINITE SOURCES OF INCOME / FUNDS TO EXPLAIN THE SOURCES OF INFLOWS IN HIS CASH ACCOUNT SUBMITTED BEFORE THE ASSESSING OFFICER. IT WAS ARGUED THAT THE SOURCES OF SHARE IN INVESTMENT OF THE TISGAON LAND WAS FROM HIS PENSION AND AGRICULTURAL INCOME. NECESSARY PROOF IN THE FORM OF 7/12 EXTRAC TS AND DETAILS OF AGRICULTURAL LAND HOLDINGS BY THE ASSESSEE WERE PRO DUCED BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED SOME AGRICULTURAL RECEIPTS AND 7/12 EXTRACTS IN SUPPORT OF HIS ARGUME NTS. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFICER HAS TOTALLY FAILE D IN TREATING AGRICULTURAL INCOME AS NON-GENUINE WITHOUT GIVING A N OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE SUPPORTING EVIDENCE IN THE FORM OF SALE PATTIES, ETC. THE ASSESSING OFFICER HAS ALSO FAILED IN NOT GIVING THE ASSESSEE A REASONABLE OPPORTUNITY TO SUBMIT DETAILS OF LOANS OBTAINED AGAINST FDRS. IT WAS ACCORDINGLY ARGUED THAT THE AD DITION OF RS.3,06,485/- NEEDS TO BE DELETED. 4 5. BASED ON THE SUBMISSIONS ADVANCED BY THE ASSESSE E THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSES SING OFFICER WHO REITERATED THE SAME REASONINGS AS GIVEN IN THE ASSE SSMENT ORDER. IT WAS REPORTED THAT THE CASH FLOW STATEMENT FILED BY THE ASSESSEE CANNOT BE TREATED AS GENUINE IN VIEW OF THE REASONINGS GIV EN IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER FURTHER RE PORTED THAT EXCEPT RELYING ON 7/12 EXTRACTS AND ALLEGED AGRICULTURAL I NCOME THE ASSESSEE HAS NOT SUBSTANTIATED WITH ANY CONTEMPORARY EVIDENC E REGARDING THE AGRICULTURAL INCOME WHICH ACCORDING TO THE ASSESSEE WAS AVAILABLE TO HIM FOR MAKING INVESTMENT IN PURCHASE OF LAND AT TI SGAON. 6. THE ASSESSEE IN HIS REJOINDER TO THE REMAND REPO RT STATED THAT THE SOURCE OF SHARE OF INVESTMENT IN THE ABOVE SAID LAN D WAS FROM THE PENSION AND AGRICULTURAL INCOME. THE ASSESSEE HAD ALREADY FILED THE NECESSARY PROOF IN THE FORM OF 7/12 EXTRACTS AND DE TAILS OF AGRICULTURAL LAND TO SUBSTANTIATE THE AGRICULTURAL LAND. FURTHE R, THE ASSESSEE HAD OBTAINED LOAN AGAINST FDRS AMOUNTING TO RS.4,49,612 /-. NECESSARY DETAILS WERE ALREADY GIVEN. THEREFORE, THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN REJECTING THE CASH FLOW STATEMENT. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFICER HAS NOT GIVEN REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE DETAILS OF LOAN OBTAINED AG AINST FDRS. IT WAS ACCORDINGLY SUBMITTED THAT THE ADDITION SHOULD BE D ELETED. 7. HOWEVER, THE LD.CIT(A) WAS NOT CONVINCED WITH TH E ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MA DE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : 5 3.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT OF THE ASSESSING OFFICER ALONG WITH THE D OCUMENTS PRODUCED BEFORE ME. PERUSAL OF THE RECORD SHOWS THAT THERE WAS A SEIZURE OF ONE LOOSE DOCUMENT MARKED ANNEXURE A-73, P AGE 12 WHICH SHOWED TOTAL INVESTMENT OF RS.28,74,425/- ON PURCHASE O F TISGAON (PADEGAON) LAND WHICH HAS BEEN ACCEPTED AS CORRECT AN D CONSIDERED IN THE BLOCK RETURNS OF THE FOLLOWING PERSONS. 1. SHRI M.H.ANDURE RS.9,50,000/- 2. SHRI P.B. MAHAJAN RS.16,17,943/- 3. SHRI B.B. MAHAJAN RS.3,06,482/- THUS, FROM THE ABOVE IT IS CLEAR THAT THE QUANTUM OF INVESTMENT IN THE AFORESAID PROPERTY HAS NOT BEEN DISPUTED BY THE APPELL ANT AND OTHERS AND, THEREFORE, IT IS THE SOURCE OF SUCH INVESTMENT BY THE APPELLANT THAT NEEDS TO BE EXAMINED. THE APPELLANT HAD PRODUCED THE COPY OF THE CASH FLOW STATEMENT FROM FINANCIAL YEAR 1995-96 TO 20 01-02 DISCLOSING THE SOURCE OF FUNDS AND ITS APPLICATION IN EA CH ACCOUNTING YEAR. THE APPELLANT HAS SHOWN THE INVESTMENT OF RS.3,06 ,482/- TOWARDS THE SAID PROPERTY IN ACCOUNTING YEAR 1998-99. PERUSAL OF THE SAID CASH FLOW STATEMENT SHOWS THAT THE SOURCE OF FUNDS H AVE PRIMARILY HAVE COME FROM AGRICULTURAL INCOME AND LO AN RAISED AGAINST FIXED DEPOSITS. ON VERIFICATION OF THE STATEMENT IT IS FOUND THAT THE APPELLANT HAS SHOWN GROSS AGRICULTURAL RECEIPTS AT RS.7,5 2,600/- AND GROSS EXPENSES OF RS.1,88,926/- DURING THE BLOCK PERIOD AND THEREBY HAS SHOWN NET AGRICULTURAL INCOME OF RS.5,63,674/-. IT WOULD BE INTERESTING TO NOTE THE PATTERN OF RECEIPTS OF AGRIC ULTURAL INCOME IN THE SO CALLED CASH FLOW STATEMENT. IT IS OBSERVED THAT T HE GROSS AGRICULTURAL RECEIPTS OF RS.4,37,746/- HAVE BEEN SHOWN IN THE ACCOUNTING YEAR 1995-96 TO 1997-98 OUT OF THE TOTAL GROSS AGRICULTURAL RECEIPTS OF RS.7,52,600/- DURING THE BLOCK PERIOD OF RS.7,52,600/-. THUS, MORE THAN 50% OF THE GROSS RECEIPTS HAVE BEEN DEC LARED IN THE YEAR IMMEDIATELY PRECEDING THE ACCOUNTING YEAR 1998 -99 IN WHICH INVESTMENT IN THE PROPERTY AT TISGAON (PADEGAON) AT R S.3,06,482/- WAS MADE BY THE APPELLANT. THUS, ONE WOULD SEE SKEWED D ISTRIBUTION OF AGRICULTURAL INCOME SHOWN BY THE APPELLANT IN THE SO CALLED CASH FLOW STATEMENT. IN FACT, IN ONE OF THE ACCOUNTING YE AR 1996-97, THE GROSS AGRICULTURAL RECEIPTS HAS BEEN SHOWN AS HIGH AS RS.2 ,47,825/-. THE OBVIOUS MOTIVE OF SUCH DISCLOSURE OF SUCH HIGH AGRIC ULTURAL INCOME WAS TO MAKE SUFFICIENT CASH BALANCE IN THE ACCO UNTING YEAR 1998-99 SO AS TO EXPLAIN THE INVESTMENT IN THE SAID TI SGAON (PADEGAON) LAND. 3.5 FURTHER, THE APPELLANT HAS NOT BEEN ABLE TO PROD UCE SUFFICIENT EVIDENCE IN SUPPORT OF THE AGRICULTURAL RECEIPTS DECL ARED IN EACH OF THE ACCOUNTING YEARS FALLING IN THE BLOCK PERIOD. THE SO CALLED SALE PATTIES PRODUCED BEFORE ME DID NOT TALLY WITH THE RECEIPTS SH OWN IN THE RESPECTIVE ACCOUNTING YEARS NOR DID IT SUFFICE THE AG RICULTURAL INCOME SHOWN IN THE CASH FLOW STATEMENT. THE APPELLANT HAS CLA IMED THAT IT OWNS APPROXIMATELY 12.5 ACRES OF AGRICULTURAL LAND. HOWEVER, EVIDENCE IN THE FORM OF 7/12 EXTRACTS COULD BE PRODU CED ONLY IN RESPECT OF 6.7 ACRES. FURTHER, THE SO CALLED CASH FLOW STATEMENT ALSO SHOWS TO HAVE RAISED LOANS AGGREGATING TO RS.4,49,612/- DURING THE ACCOUNTING PERIOD 1997-98 TO 2001-02 WHICH AGAIN HA VE NOT BEEN SUBSTANTIATED WITH ANY CORROBORATIVE EVIDENCE BEFORE ME. IN THE LIGHT OF ABOVE OBSERVATIONS, THE VALIDITY AND AUTHENTICITY OF THE SO CALLED CASH FLOW STATEMENT CANNOT BE ACCEPTED ON ACCOUNT OF DISCREPANCIES 6 POINTED OUT ABOVE. THE APPELLANT HAS NOT BEEN ABLE T O ESTABLISH WITH ADEQUATE EVIDENCE THE QUANTUM OF AGRICULTURAL INCOM E AND LOANS RAISED DURING THE BLOCK PERIOD AND, THEREFORE, THE C ORRESPONDING CASH FLOW STATEMENT HAS NO EVIDENTIARY VALUE TO EXPLAIN TH E SOURCE OF INVESTMENT IN THE TISGAON (PADEGAON) LAND. I AM, THER EFORE, TO HOLD THAT THE INVESTMENT OF RS.3,06,485/- IN THE TISGAON (P ADEGAON) LAND BY THE APPELLANT DOES NOT STAND EXPLAINED AND, THEREF ORE, THE SAME DESERVES TO BE TREATED AS UNDISCLOSED INCOME DURING THE BLOCK PERIOD IN QUESTION. ACCORDINGLY THE ACTION OF THE AO IN TRE ATING THE SAME AS UDI OF THE APPELLANT IS HEREBY CONFIRMED. 7.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIN D IN THE INSTANT CASE THE ASSESSING OFFICER MADE ADDITION OF RS.3,06,482/ - BEING THE SHARE OF INVESTMENT OF THE ASSESSEE TOWARDS PURCHASE OF L AND AT TISGAON WITH TWO OTHER PERSONS ON THE GROUND THAT THE ASSES SEE FAILED TO PROVE THE SOURCE OF INVESTMENT. HE REJECTED THE CASH FLO W STATEMENT FILED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE EAR NING OF AGRICULTURAL INCOME AND LOAN AGAINST FIXED DEPOSIT RECEIPTS. WE FIND THE LD.CIT(A) ALSO UPHELD THE ADDITION MADE BY THE ASSE SSING OFFICER IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUBSTANTIA TE THE CASH FLOW STATEMENT FILED BEFORE THE ASSESSING OFFICER EXPLAI NING THE SOURCE OF INVESTMENT. 8.1 WE FIND FROM THE SUBMISSION OF THE ASSESSEE THA T IT OWNS 12.5 ACRES OF AGRICULTURAL LAND AND IT HAS FILED DETAILS IN THE FORM OF 7/12 EXTRACTS AND DETAILS OF AGRICULTURAL LAND TO SUBSTA NTIATE THE AGRICULTURAL LAND HOLDING. FURTHER, IT WAS SUBMITTED THAT THE A SSESSEE HAS ALSO 7 OBTAINED LOAN AGAINST FIXED DEPOSIT RECEIPTS. IT I S ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ADEQUATE O PPORTUNITY WAS NOT GIVEN TO THE ASSESSEE WHO HAS SINCE EXPIRED AND GIV EN AN OPPORTUNITY HE CAN SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTI ON OF THE ASSESSING OFFICER REGARDING THE SOURCE OF INVESTMENT OF RS.3, 06,485/-. WE FIND AS AGAINST HOLDING OF 12.5 ACRES OF LAND THE ASSESS EE HAD PRODUCED DETAILS IN RESPECT OF 6.7 ACRES ONLY AND HAS NOT FI LED THE DETAILS REGARDING LOAN AGGREGATING RS.4,49,612/- RAISED DUR ING THE ACCOUNTING PERIOD 1997-98 TO 2001-02. SINCE IT IS THE SUBMISS ION OF THE LD. COUNSEL FOR THE ASSESSEE THAT GIVEN AN OPPORTUNITY HE CAN FILE THE DETAILS, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RE STORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO G IVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EV IDENCE TO HIS SATISFACTION REGARDING THE SOURCE OF RS.3,06,485/- TOWARDS HIS SHARE OF INVESTMENT IN THE PURCHASE OF LAND AT TISGAON. GRO UND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 12-05-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R .K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 12 TH MAY, 2014 SATISH 8 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NAGPUR 4. THE CIT-I, NAGPUR 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE