SMT. SAVITRI DEVI AGARWAL, PROP M/S, Kishangarh V. ITO, Kishangarh

ITA 628/JPR/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5409 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 14-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Reopening of assessment; Gift; Principle of natural justice; Accommodation entries; Onus to prove
• Section: 147; 131; 148; 6; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 628/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2001-02. SMT. SAVITRI DEVI AGARWAL, PROP. M/S. SAVITRI TEXTILES, AZAD NAGAR, MADANGANJ, KISHANGARH. CUKE VS. THE INCOME TAX OFFICER, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AANPA 8940 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/01/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/02/2016. VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS ASSESSEES APPEAL FILED AGAINST THE ORDER OF THE LD. CIT (A), AJMER DATED 19.04.2011 FOR THE ASSESSMENT YEAR 2001-02 CONTENDI NG THAT LD. CIT (A) HAS GROSSLY ERRED 1) IN CONFIRMING THE ACTION OF THE LD. AO OF COMPLETIN G THE ASSESSMENT U/S 147/144 OF THE INCOME TAX ACT, 1961 WITHOUT APP RECIATING THE FACTS OF THE CASE AND SUBMISSION MADE AND EVIDENCE ADDUCED, THUS THE ORDER PASSED DESERVES TO BE HOLD BAD IN LAW. 2) IN UPHOLDING THE ADDITION /DISALLOWANCE OF (I) RS. 2,00,000/- U/S 68 OF THE INCOME TAX ACT, 1961 O N ACCOUNT OF GIFT RECEIVED BY THE ASSESSEE WITHOUT PR OPERLY 2 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. APPRECIATING THE FACT THAT SOURCES OF THE SAME HAS BEEN DULY EXPLAINED BY THE ASSESSEE, THUS THE CONSEQUENT ADDI TION SUSTAINED BY LD. CIT ()A) DESERVES TO BE DELETED. (II) RS. 4,73,000/- U/S 68 OF THE INCOME TAX ACT, 1961 O N ACCOUNT OF UNSECURED LOAN TAKEN BY THE ASSESSEE WIT HOUT PROPERLY APPRECIATING THE EVIDENCE ADDUCED BEFORE H IM. THUS THE ADDITION OF RS. 4,73,000/- CONFIRMED U/S 6 8 OF INCOME TAX ACT, 1961 DESERVE TO BE DELETED IN TOTO. (III) RS. 1,03,000/- ON ACCOUNT OF SUNDRY CREDITORS WHEN THE ASSESSEE HAS FILED COMPLETE DETAILS & EVIDENCE IN R ESPECT OF TRANSACTION WITH THEM, THUS THE CONSEQUENT ADDITION SUSTAINED BY LD. CIT (A) DESERVES TO BE DELETED. (IV) RS. 75,367/- ON ACCOUNT OF INTEREST PAID BY THE ASS ESSEE WITHOUT PROPERLY APPRECIATING THE FACTS AND GENUINE NESS OF THE CLAIM. (V) RS. 1,000/- ON ALLEGATION OF COMMISSION PAID FOR AR RANGING BOGUS GIFTS WITHOUT PROPERLY APPRECIATING THE FACTS AND GENUINENESS OF THE CLAIM. 2. BRIEF FACTS ARE THAT THE ASSESSEES ORIGINAL RET URN WAS PROCESSED U/S 143(1). THEREAFTER NOTICE WAS ISSUED U/S 148 FOR THE REASON THAT ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES FROM SHRI SUNIL VERMA AND SMT . ANAR DEVI, 712, BABA HARISH CHANDRA MARG, JAIPUR IN THE FORM OF GIFT. 3. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ALONG WITH THE COPY OF THE STATEME NT OF AFFAIRS AND CAPITAL ACCOUNT WHEREIN THE GIFTS OF RS. 2 LACS RECEIVED FROM FOLLO WING FOUR PERSONS OF RS 50,000/- EACH WERE DULY DISCLOSED :- 3 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. SHRI SUNIL VERMA 712, BABA HARISH CHANDRA MARG, JAIPUR. SMT. ANAR DEVI, 712, BABA HARISH CHANDRA MARG, JAIPUR. SMT. USHA DEVI AGRAWAL, G-1/103, KAMAL APARTMENT, BANI PARK, JAIPUR. SMT. SULOCHANA DEVI SINGHANIA, 41, MARUDHAR VIHAR, KHATIPURA MOAD, JAIPUR. SINCE THE VERY FOUNDATION OF ISSUANCE OF THE NOTICE U/S 148 WAS WRONG WHICH PROVES THAT NO SATISFACTION WAS RECORDED BEFORE ISSUING TH E NOTICE U/S 148 AND MERELY ON THE INFORMATION PROVIDED BY SOME OTHER ASSESSING AUTHOR ITY THE CASE OF THE ASSESSEE WAS REOPENED WITHOUT APPLICATION OF MIND. IT IS FURTHER SUBMITTED THAT THE INFORMATION SO GATHERED WAS NOT AT ALL THRASHED TO ARRIVE AT THE C ONCLUSION THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT BEFORE ISSUING THE NOTICE U/S 14 8. 3.1. ON MERIT, IT IS CONTENDED THAT ALL THE GIFTS W ERE DULY SUPPORTED WITH EVIDENCE IN THE FORM OF GIFT DEEDS AND CONFIRMATION FROM THE DO NORS. THE GIFTS IN QUESTION WERE OF SMALL AMOUNT, ALL THE PARTICULARS ABOUT DONORS WERE DULY SUBMITTED WITH THE AO. THE LOWER AUTHORITIES WERE OF THE VIEW THAT THE SOURCE OF DONORS WAS NOT PROPERLY EXPLAINED WHICH WAS BEYOND CONTROL OF THE ASSESSEE IN ASMUCH AS SHE CANNOT ASK THE DONOR TO DEMONSTRATE THAT HE HAD THE CAPACITY TO MAKE SUCH G IFTS. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT OPPORTUNITY OF CROSS EXAMIN ATION WAS NOT GIVEN. 4 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. 4. APROPOS ADDITION OF RS. 1,000/- ON ALLEGATION OF COMMISSION PAID FOR ARRANGING BOGUS GIFTS, IT IS SUBMITTED THAT THE AMOUNT HAS BE EN ADDED AS POSSIBLE COMMISSION WHICH MAY HAVE BEEN PAID TO ONE SHRI KRIPA SHANKAR FOR ARRANGING ACCOMMODATION GIFTS WHICH IS UNJUSTIFIED. 5. APROPOS GROUND NO. 3 IN RESPECT OF LOANS AMOUNTI NG TO RS. 4,73,000/- RECEIVED FROM VARIOUS PERSONS, DURING THE COURSE OF ASSESSME NT PROCEEDINGS, ASSESSEE HAS SUBMITTED THE COPIES OF THE CONFIRMATION GIVEN BY A LL THESE PERSONS CONTAINING THEIR FULL NAME, ADDRESS AND PAN OF FIRST TWO PERSONS SHOWN IN TABLE, BUT LD. AO WITHOUT APPRECIATING THE EVIDENCES FURNISHED HAD MADE THE D ISALLOWANCE. IT IS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E STATEMENTS OF SHRI KAMAL KISHORE AGARWAL WERE RECORDED WHEREIN HE HAS CATEGORICALLY ACCEPTED THE LOAN GIVEN TO THE ASSESSEE AND HAD SUBMITTED THE COPY OF HIS BALANCE SHEET, BANK ACCOUNT ETC BUT THE SAME WERE NOT APPRECIATED AND MERELY FOR THE SOURCE OF SOURCE THE ADDITION WAS MADE. 5.1 FURTHER LD. CIT (A) HAS NOT DOUBTED THE IDENTIT Y OF THE PAYEE ALSO NOT DOUBTED THE LOAN AMOUNT GIVEN BY THE SHRI KAMAL KISHORE AGA RWAL BUT HE DOUBTED THE SOURCE FROM WHICH PAYEE HAS GIVEN THE LOAN. IN THE MATTER IT IS SUBMITTED THAT ASSESSEE HAS NO BURDEN TO PROVE THE SOURCE OF THE SOURCE I.E. FR OM WHERE SHRI KAMAL KISHORE AGARWAL HAS GOT THE AMOUNT FOR GIVING LOAN TO THE A PPELLANT. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRECEDENTS :- 5 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. 1. WHERE THE CREDITORS ARE REGULAR ASSESSEES AND HAVE ALSO FILED THEIR AFFIDAVITS NO ADDITION OF SUCH CASH CREDITS CAN BE MADE UNLESS THERE IS SUFFICIENT MATERIAL TO DISPROVE THE GENUINENESS. CIT VS. HEERALAL CHAGAN LAL, 257 ITR 281 (RAJ.) BALBIR SING TOMAR (DR.) VS. ACIT (RAJ.HC) 20 TW 546 . 2. NO ADDITION OF CASH CREDIT CAN BE MADE SIMPLY ON TH E BASIS OF PRESUMPTION IN THE ABSENCE OF ANY CONTRARY EVIDENCE . SHEON NARAIN MOHARILAL VS. ACIT 24 TW 318 (ITAT, JA IPUR) 3. ESTABLISHING THE IDENTITY OF THE CREDITOR, PROVING T HE GENUINENESS OF THE TRANSACTION AND THE SOURCE OF THE CREDIT APPEARING IN THE BOOKS OF CREDITOR IS SUFFICIENT TO DISCHARGE THE ONUS FOR EXPLAINING THE GENUINENESS OF THE CASH CREDIT. SIDEWAY INVESTMENT PVT. LTD. VS. DCIT, 24 TW 146 (I TAT JAIPUR) 4. WHETHER FILING OF CONFIRMATIONS AND DISCLOSURE OF T HE AMOUNTS OF ADVANCE IN THE INCOME TAX RETURNS BY THE DEPOSITORS CAN BE TREATED AS SUFFICIENT COMPLIANCE OF THE PROVISIONS OF SECTION 68 FOR EXPL AINING THE GENUINENESS OF CASH CREDITS ? HELD YES. PRADEEP KUMAR HIMMATRAMKA VS. ITO 27 TW 393 (ITAT, JAIPUR) 5. SOURCE OF SOURCE SHOULD NOT BE ASKED CIT VS. DAULATRAM RAWATMULL 87 ITR 349 (SC) HEERALAL CHAGAN LAL VS. CIT 257 ITR 281 (RAJ.) ROHINI BUILDERS VS. ACIT, 117 TAXMAN 25 (MAG.)(DELH I-B) 6. APROPOS THE ADDITION OF RS. 1,03,000/- MADE UNDE R SECTION 41(1), IT IS CONTENDED THAT PURCHASES OF GOODS AND TRANSACTIONS WERE DULY SUPPORTED BY THE BILLS ISSUED BY THE RESPECTIVE PARTIES AS SUBMITTED BY THE ASSESSEE BEF ORE LD. AO. IN CASE OF SHRI ATUL KUMAR KHANDELWAL CONFIRMATION WAS ALSO FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLEARLY STATING THE TRANSACT ION ENTERED WITH THE ASSESSEE. 6 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. 6.1. THE LD. AO HAS MADE THE ADDITION MERELY FOR TH E REASON THAT SUMMON ISSUED U/S 131 TO THE PARTIES WERE RETURNED BACK BY THE POSTAL AUTHORITIES. IN THIS REGARD IT IS SUBMITTED THAT THE ASSESSEE HAS FURNISHED EACH POSS IBLE DETAILS IN RESPECT OF TRANSACTION WITH THE ABOVE PARTIES ALONG WITH THEIR COMPLETE AD DRESS AS AVAILABLE IN THE RECORDS OF THE ASSESSEE AND FURTHER ASSESSEE CANNOT COMPEL THE PARTIES TO APPEAR BEFORE THE INCOME TAX AUTHORITIES. FURTHER IN CONFIRMATION / L ETTER FILED BY THE ASSESSEE THE PARTY HAS ACCEPTED THE TRANSACTION WITH THE ASSESSEE THUS THEIR GENUINENESS SHOULD NOT BE DOUBTED. IT IS FURTHER PLEADED THAT THE LIABILITY IN QUESTION STILL CONTINUES IN THE BOOKS OF ACCOUNT. IN THESE CIRCUMSTANCES IT CANNOT BE HELD THAT THE LIABILITY OF THE ASSESSEE HAS CEASED U/S 41(1) ON NOTIONAL BASIS. THEREFORE, THE ADDITION MAY BE DELETED. 7. APROPOS THE AMOUNT OF RS. 75,367/-, THE AO HAS D ISALLOWED THE INTEREST ONLY ON THE REASON THAT INCOME FROM SHARES HAS NOT BEEN SHO WN WHICH WAS CAUSED BY THE FACT THAT THE ASSESSEE HAS ENTERED INTO SHARE TRADING. T HEREFORE, THE INTEREST AMOUNT HAS BEEN DISALLOWED ON ASSUMPTION AND HYPOTHECATION. 7.1. THE LD. D/R HAS SUPPORTED THE ORDERS OF THE LO WER AUTHORITIES. 8. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PROCEEDINGS U/S 147 WERE INITIATED AFTER RECORD ING NECESSARY REASONS AND AFTER OBTAINING APPROVAL FROM THE ADDITIONAL CIT. THE RE ASONS WERE RECORDED ON THE BASIS OF STATEMENT OF SHRI KRIPA SHANKAR WHO ACCEPTED HAVING INDULGED IN THE ACCOMMODATION ENTRY IN RESPECT OF M/S. B.C. PUROHIT & COMPANY BY WAY OF AFFIDAVIT IN WHICH THE NAMES OF SHRI SUNIL VERMA AND SMT. ANAR DEVI FIND MENTION ED. THUS THE INFORMATION RECEIVED BY THE AO WAS BASED ON DEPARTMENT CHANNEL DULY SUPP ORTED BY AFFIDAVIT OF 7 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. INTERMEDIARY. IN VIEW THEREOF, THE GROUND FOR REOPE NING OF ASSESSMENT HAS BEEN RIGHTLY REJECTED. THIS GROUND OF ASSESSEE IS DISMISSED. 9. APROPOS THE GROUNDS ABOUT THE ADDITION ON ACCOUN T OF GIFTS OF RS. 2,00,000/- AND COMMISSION PAID OF RS. 1,000/-, IN MY CONSIDERED VI EW, THE ASSESSEE WAS NOT PROVIDED AN OPPORTUNITY TO CROSS EXAMINE THE STATEMENT OF SH RI KRIPA SHANKAR WHICH IS NOT IN CONFORMITY WITH PRINCIPLES OF NATURAL JUSTICE. IN VIEW THEREOF, GROUNDS RELATING TO ADDITION OF RS. 2,00,000/- AND RS. 1,000/- ARE SET ASIDE. 10. APROPOS GROUND RELATING TO ADDITION OF RS. 4,73 ,000/-, THERE WAS NO REASON FOR REOPENING OF ASSESSMENT IN THIS BEHALF. THE ASSESS EE HAS SUBMITTED CONFIRMATIONS ALONG WITH NAMES, ADDRESS AND PAN NUMBERS OF THE CR EDITORS. IN MY CONSIDERED VIEW THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO EXP LAIN THE CASH CREDITS RELYING ON HONBLE RAJASTHAN HIGH COURT IN THE CASES OF CIT VS . HEERALAL CHAGAN LAL, 257 ITR 281 (RAJ.) AND BALBIR SINGH TOMAR (DR.) VS. ACIT (RAJ.H C) 20 TW 546. THUS THE ADDITION IS DELETED. 11. APROPOS ADDITION OF RS. 1,03,000/- UNDER SECTIO N 41(1), THE LIABILITY IN QUESTION REMAINS OUTSTANDING IN THE BOOKS OF THE ASSESSEE ME RELY BECAUSE THE POSTAL NOTICE CAME BACK UNSERVED. IT CANNOT REACH AN INFERENCE TH AT ASSESSEES LIABILITY HAS SHIFTED IN TERMS OF SECTION 41(1). IN VIEW THEREOF, THE ADDIT ION MADE IS DELETED. 12. APROPOS REMAINING GROUND OF DISALLOWANCE OF INT EREST, IT HAS NOT BEEN DISPUTED THAT ASSESSEE HAS INCOME FROM SHARES AND ALSO TRADI NG OF CLOTHES. THE INTEREST HAS BEEN PAID ON EARLIER LIABILITIES DURING THE COURSE OF BUSINESS. MERELY BECAUSE THERE WAS 8 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO. A LULL IN THE BUSINESS WHICH CANNOT BE ASSUMED THAT THE PAYMENT OF INTEREST IS NOT IN THE COURSE OF BUSINESS. THEREFORE, THE SAME IS ALL OWABLE UNDER SECTION 36. 13. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/201 6. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. SAVITRI DEVI AGARWAL, KISHANGRH . 2. IZR;FKHZ@ THE RESPONDENT- THE ITO KISHANGARH. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.628/JP/2011) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 9 ITA NO. 628/JP/2011 SMT. SAVITRI DEVI AGARWAL VS. ITO.