Sh. Sat Pal Aggarwal, Hoshiarpur V. Dy Commissioner of Income-tax, Hoshiarpur

ITA 64/ASR/2012

• Counselvise Citation: 6420914 RSA 2012
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: V K MALHOTRA
• Keywords: Gift; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 64(ASR)/2012 ASSESSMENT YEAR:2006-07 PAN :AAOPP9437A SH. SAT PAL AGGARWAL, VS. DEPUTY COMMR. OF INCOME -TAX, S/O SH. KHUSHI RAM AGGARWAL, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. V.K. MALHOTRA, ADVOCATE RESPONDENT BY:SH. AMRIK CHAND, DR DATE OF HEARING:03/09/2012 DATE OF PRONOUNCEMENT:05/09/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 16.01.2012 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. AO HAS LEGALLY ERRED IN LAW AND FA CTS IN CONFIRMING ADDITION OF RS.1,41,000/- TREATING LOAN RECEIVED AS INGENUINE. HE HAS FAILED TO APPRECIATE LAW AND FACTS. 2. THAT THE LD. AO HAS ERRED IN LAW AND FACTS IN CO NFIRMING ADDITION OF RS.3,45,793/- ON ACCOUNT OF DIFFERENCE IN STOCK STATEMENT, SUBMISSION WITH BANK TO RAISE THE LOAN. ITA NO.64(AS)/2012 2 3. IN GROUND NO.1, THE BRIEF FACTS AS ARISING FROM THE ORDER OF THE AO, WHICH FOR THE SAKE OF CLARITY ARE REPRODUCED AS UND ER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE WAS REQUIRED TO PRODUCE SH. SANJEEV GUPTA FOR EXAMINATI ON. AN AFFIDAVIT DATED31.10.2008 SWORN BY SH. SANJEEV GUPTA WAS FILE D STATING THAT HE HAD PAID A CHEQUE NO.646036 PNB DATED 22.02.2006 OF RS.1,41,000/- AS LOAN TO SH. SAT PAL GUPTA S/O SH. KHUSHI RAM. IN HIS STATEMENT DATED 27.11.2008 SH. SANJEEV GUPTA STATED THAT HE W AS RUNNING A KARYANA SHOP AT VILLAGE ADAMWAL WITH HIS UNCLE SH. OM PARKASH AND WAS NOT ASSESSED TO INCOME-TAX. IT WAS FURTHER ADDE D THAT THE SUM OF RS.1,41,000/- BELONGED TO HIS FATHER SH. RAMESH PAL WHO WAS THE PARTNER IN M/S. TILAK RAJ RAMESH PAL AND AFTER HIS DEATH THE AMOUNT WAS TRANSFERRED IN HIS NAME. IN THE SAME BREATH IT WAS STATED BY SH. SANJEEV GUPTA THAT THE AMOUNT HAD BEEN ADVANCED TO HIM BY SH. SAT PAL ABOUT 6 YEARS BACK AND THE SAME WAS REPAID THR OUGH ENDORSEMENT CHEQUE. ADMITTEDLY, SH. SANJEEV GUPTA DID NOT MAINT AIN ANY BANK ACCOUNT. THE ASSESSEE ISSUED A CHEQUE NO.646036 DAT ED 22.02.2006 AND DEPOSITED INN HIS ACCOUNT WITH INDIAM BANK WHIC H CREDITED THE MOUNT IN HIS ACCOUNT ON 25.02.2006 AND THE CHEQUE I N FAVOUR OF TILAK RAJ RAMESH PAL WAS DEBITED IN HIS ACCOUNT ON 28.02. 2006 BY THE BANK. THE VERSION OF THE ASSESSEE THAT THE AFORESAI D AMOUNT REPRESENTED LOAN ADVANCED TO HIM BY SH. SANJEEV GUP TA, A MAN OF LIMITED MEANS IS NOT ACCEPTABLE. THE CONTRADICTOR Y STAND TAKEN BY SH. SANJEEV GUPTA EARLIER STATING THE AMOUNT TO BE GIFT AND SUBSEQUENTLY AS A LOAN MAKES THE ENTIRE TRANSACTION UNRELIABLE. NO INTEREST ON THIS AMOUNT HAS BEEN PAID WHEREAS OTHER DEPOSITORS HAVE BEEN PAID INTEREST ON THEIR DEPOSITS. ACCORDINGLY, THE CREDIT OF RS.1,41,000/- IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. TILAK RAJ RAMESH PAL IS HELD TO BE INGENUINE. ACTUALLY, IT IS ASSESSES OWN MONEY WHICH HAS BEEN INTRODUCED IN HIS BOOKS IN THE GARB OF LOAN/GIFT. ACCORDINGLY, AN ADDITION OF RS.1,41,000/- IS MADE T O THE INCOME OF THE ASSESSEE TREATING THE AMOUNT TO BE HIS INCOME F ROM UNDISCLOSED SOURCES. 4. THE LD. CIT(A), CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. ITA NO.64(AS)/2012 3 5. THE LD. COUNSEL FOR THE ASSESSEE ARGUED BEFORE T HE LD. CIT(A) AND BEFORE US THAT THE ASSESSEE WAS REQUIRED TO SHOW SU FFICIENT FUNDS IN HIS CAPITAL ACCOUNT TO RAISE LOAN FROM BANK AND HE REQU ESTED SH. SANJEEV GUPTA TO TRANSFER THE AMOUNT OF RS.1,41,000/- TO HIS CAPI TAL ACCOUNT FROM HIS AMOUNT LYING WITH M/S. TILAK RAJ RAMESH PAL WHICH W AS ACCEPTED BY SH. SANJEEV KUMAR. THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THEREAFTER ADJUSTMENT ENTRY TO THIS EFFECT WAS MADE THROUGH BA NKING CHANNEL IN THE BOOKS OF ACCOUNTS. HE SUBMITTED THAT SH. SAT PAL AG GARWAL, PROP. M/S. TILAK RAJ RAMESH PAL ISSUED A CHEQUE DATED 22.02.2006 TO MR. SANJEEV KUMAR AND THE SAID CHEQUE WAS ENDORSED IN FAVOUR OF THE S AVING BANK ACCOUNT OF SH. SAT PAL AGGARWAL. IT WAS SUBMITTED THAT SH. SAT PAL AGGARWAL ISSUED THIS CHEQUE IN FAVOUR OF M/S. TILAK RAJ RAMESH PAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF ACCOUNT OF SH. SANJEEV GUPTA WITH M/S. TILAK RAJ RAMESH PAL SINCE ASSTT. YEAR 2003-04 AND STATED THAT AN AFFIDAVIT OF SH. SANJEEV KUMAR HAD BEEN SUMITTED AND SH. SANJEEV KUM ARS STATEMENT WAS ALSO RECORDED BY THE AO. IT WAS SUBMITTED THAT SINC E SH. SANJEEV KUMAR WAS HAVING CREDIT OF RS.1,44,365/- SINCE THE ASSTT. YEA R 2003-04, NO NEW CASH WAS INTRODUCED DURING THE YEAR. THE LD. COUNSEL SU BMITTED THAT THOUGH SH. SANJEEV KUMAR GUPTA WAS HAVING LIMITED INCOME, HE S TILL HAD CREDIT OF RS.1,44,365/- IN THE BOOKS OF ACCOUNT. THE LD. COUN SEL FOR THE ASSESSEE ITA NO.64(AS)/2012 4 SUBMITTED THAT THE AMOUNT HAVING COME FROM AN EARLI ER YEAR COULD NOT BE ADDED TO THE ASSESSEES INCOME FOR ASSTT. YEAR 2006 -07. HE RELIED UPON 301 ITR 404 (RAJ) AND ITO VS. BANSI LAL GUPTA 113 TTJ ( ASR) 898. 5.1. THE EXPLANATION OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS SENT TO THE AO FOR COMMENTS. THE AO IN THE COMMENTS STATED THAT A CERTIFICATE OF SH. SANJEEV GUPTA ENCLOSED WITH THE RETURN OF INCOME S HOWED THE AMOUNT AS A GIFT WHEREAS IN THE AFFIDAVIT FILED DURING THE ASSE SSMENT PROCEEDINGS WAS THE AMOUNT WAS SHOWN AS LOAN AND THEREFORE, THE AMOUNT HAS CORRECTLY BEEN ADDED TO THE ASSESSEES TOTAL INCOME. TO THE SAID C OMMENTS OF THE AO, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE T HE MATTER STOOD CLARIFIED, THE ADDITION SHOULD HAVE BEEN DELETED SINCE IT WAS DUE TO THE WRONG NARRATION BY THE ACCOUNTANT, THE AMOUNT HAS BEEN MENTIONED AS A GIFT WHICH IN FACT WAS A LOAN. THE LD. CIT(A) DID NOT ACCEPT THE EXPLA NATION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE A.O. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 7. AFTER HEARING BOTH THE PARTIES AND PERUSAL OF TH E RECORD, WE ARE OF THE VIEW THAT NO NEW CASH HAS BEEN INTRODUCED BY THE AS SESSEE DURING THE YEAR AND NO NEW LOAN, IN FACT, HAS BEEN TAKEN BY THE A SSESSEE. IN FACT, THESE ARE THE FUNDS OF THE ASSESSEE WHICH HAVE BEEN TRANSFERR ED FROM THE ITA NO.64(AS)/2012 5 PROPRIETORSHIP CONCERN TO THE ASSESSEE AS AN INDIVI DUAL THROUGH SH. SANJEEV GUPTA. THEREFORE, IN FACTS AND CIRCUMSTANCES OF THE CASE, THE EXPLANATION SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) IS FOUND TO BE SATISFACTORY AND NO ADDITION ON THIS ACCOUNT CAN BE MADE. THEREF ORE, ADDITION SO MADE BY THE AO IS DIRECTED TO BE DELETED AND ACCORDINGLY TH E ORDER OF THE LD. CIT(A) IS REVERSED. THUS, GROUND NO.1 OF THE ASSESSEE IS A LLOWED. 8. AS REGARDS GROUND NO.2, THE BRIEF FACTS ARE THAT THE ASSESSES BOOKS OF ACCOUNT SHOWED 184613 BAGS OF BARDANA IN THE CLOSIN G STOCK ON 31.03.2006 WHEREAS IN STOCK STATEMENT SUBMITTED BY THE ASSESSE E TO THE P.N.B AT THE END OF THE YEAR THE NUMBER OF BARDANA WAS SHOWED AT 20 8899. THE EXCESS STOCK OF BARDANA SHOWN TO THE BANK WAS, THUS, 24286 AND @ OF RS.14.18 PER BAG WORKED OUT TO RS.3,45,793/-. THE AO ADDED THIS AMOU NT TO THE ASSESSEES TOTAL INCOME. 9. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE STOCK STAT EMENT SUBMITTED TO THE BANK WAS ON ESTIMATED BASIS AND NO PHYSICAL VERIFIC ATION OF THE STOCK WAS CARRIED OUT BY BANK AUTHORITY. IT WAS FURTHER SUBMI TTED THAT CREDIT FACILITY EXTENDED BY THE BANK WAS AGAINST HYPOTHECATION OF S TOCK AND NOT AGAINST THE PLEDGE AND THAT THE AO HAD NOT BROUGHT ANY MATERIA L ON RECORD TO SHOW THAT THE ASSESSEE HAD POSSESSED LARGER QUANTITY OF STOCK , EXCEPT FOR PHOTOCOPY OF ITA NO.64(AS)/2012 6 STOCK STATEMENT FURNISHED TO THE BANK. THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT AN ADDITION TO THE CLOSING STOCK WOU LD ENTAIL INCREASING THE OPENING STOCK OF THE SUBSEQUENT YEAR IN VIEW OF TH E JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF V.K.L. BUILDERS AND CO NTRACTORS (P) LTD. V. CIT (SC) 318 ITR 204. THE LD. COUNSEL FURTHER RELIE D UPON THE FOLLOWING JUDGMENTS IN SUPPORT OF THIS GROUND OF APPEAL: I) C.I.T. VS. SIDHU RICE & GENERAL MILLS (2006) 281 ITR 428 (P&H). II) ITO VS. DEVI DAYAL RICE MILLS (2002) 75 TTJ(ASR ) 24 III) ITO VS. JIWAN SINGH PRITAM SINGH (1994 48 TTJ (ASR) 534 IV) CHHATTAR ESTRACTIOS (P) LTD. VS. ITO (2004) 85 TTJ( ASR)405. 10. THE AO IN HIS COMMENTS SUBMITTED THAT THE EXPL ANATION OF THE ASSESSEE IS NOT ACCEPTABLE AND OBJECTED TO THE ADDI TIONAL EVIDENCE. THE LD. CIT(A) VIDE PARA 10.5 AFTER CONSIDERING THE EXPLANA TION OF THE ASSESSEE IN THE REJOINDER ACCEPTED THE ADDITIONAL EVIDENCE UNDE R RULE 46A(1) OF I.T.RULES, 1962. HOWEVER, THE LD. CIT(A) DID NOT AC CEPT THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE A.O. 11. THE LD. COUNSEL FOR THE ASSESSEE, SH. V.K. MALH ORA, ADVOCATE, RELIED UPON THE EXPLANATION GIVEN BEFORE THE LD. CIT(A) AN D THE LD. DR. ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTH ORITIES BELOW. ITA NO.64(AS)/2012 7 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. CIT(A) HAD RELIED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.CHANDER KA NT IN ITA NO.507 OF 2009 DATED 17.12.2009 WHERE THE ONLY EXPLANATION GI VEN BY THE ASSESSEE IN THAT CASE WAS THE WRONG DATE OF 31.01.1990 INSTEAD OF 16.02.1990, WHICH WAS NOT ACCEPTED BEING NOT SATISFACTORY. THE HONBL E HIGH COURT UPHELD THE DECISION UPHELD BY THE ITAT IN THIS REGARD ON ACCOU NT OF NON-EXPLANATION OF THE SAID VARIATION OF THE STATEMENT PREPARED AND PR ESENTED TO THE BANK FOR OBTAINING HIGHER CREDIT LIMIT AND QUANTITY OF STOCK SHOWN IN THE ACCOUNT.. THE SAID DECISION OF THE HONBLE PUNJAB & HARYANA H IGH COURT IS NOT APPLICABLE IN THE PRESENT CASE SINCE THE ASSESSEE H AS SUBMITTED THE EXPLANATION ALONGWITH RECONCILIATION WHICH, IN FACT , HAS NOT BEEN ACCEPTED IN RIGHT SPIRIT BY THE LD. CIT(A) OR BY THE AO. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT STOCK STATEMENT SUBMITTED TO THE BANK WAS ON ESTIMATED BASIS AND NO PHYSICAL VERIFICATION OF STOCK WAS CARRIED O UT BY THE BANK AUTHORITY. THE CREDIT FACILITY EXTENDED BY THE BANK WAS AGAINS T HYPOTHECATION OF STOCK AND NOT AGAINST THE PLEDGE AND THE AO HAD NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE, IN FACT, POSSESS ED LARGER QUANTITY OF STOCKS EXCEPT FOR THE PHOTOCOPY OF THE STOCK STATEMENT FU RNISHED TO THE BANK. THE EXPLANATION OF THE ASSESSEE IN THE FORM OF RECONCILIATION AND IN THE ABSENCE OF ITA NO.64(AS)/2012 8 ANY PERVERSE FACT BY ANY OF THE AUTHORITIES BELOW IS CORRECT EXPLANATION AND CANNOT BE DOUBTED AND NO ADDITION ON THAT ACCOUNT CAN BE MADE. THEREFORE, THE ADDITION SO MADE IS DIRECTED TO BE DELETED AND THE ORDER OF THE LD. CIT(A) IS REVERSED. THUS, GROUND NO.2 OF THE ASSESSEE IS A LLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.64(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH SEPTEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5TH SEPT., 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SATPAL AGGARWAL, HOSHIARPUR. 2. THE DCIT, HOSHIARPUR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.