Navalkishor Sharma, Osmanabad V. Deputy Commissioner of Income tax, Aurangabad

ITA 642/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5979 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 17-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Salary income; Opportunity of being heard; Principle of natural justice; Source of fund; Additional evidence
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI LALIET KUMAR, JM . / ITA NO.642/PUN/2017 / ASSESSMENT YEAR : 2013-14 NAVALKISHOR SHARMA, D.NO.5/88, MARWADI GALLI, OSMANABAD-411005. PAN : DVFPS9001E ....... / APPELLANT / V/S. DCIT, CENTRAL CIRCLE-1, AURANGABAD. / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 04.02.2020 / DATE OF PRONOUNCEMENT : 10.02.2020 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-12, PUNE DATED 01.12.2016 FOR THE ASSESSMENT YEAR 2013-14. 2. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE IS A GOLDSMITH AND ALSO TRADES IN JEWELLERY. THE ASSESSEE IS CAUGHT WITH CASH IN HAND BY THE TELAGANA POLICE. THE ASSESSEE TRIED TO EXPLAIN THE SOURCES FOR THE SAID CASH. EVENTUALLY, THE ASSESSEE OFFERED A PART OF THE CASH SEIZED FOR TAXATION. THE ASSESSING OFFICER 2 ITA NO.642/PUN/2017 REJECTED THE EVIDENCES FURNISHED BY THE ASSESSEE AND MADE THE ADDITION OF RS.42,21,650/- AGAINST THE RETURNED INCOME OF RS.9,69,990/-. 3. BEFORE THE CIT(A), THE ASSESSEE FURNISHED THE ADDITIONAL EVIDENCES. CONSIDERING THE SAID ADDITIONAL EVIDENCES, THE CIT(A) REJECTED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ABOVE ADDITION WITHOUT CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER. 4. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE NARRATED THE CERTAIN INACCURACIES AND ERRORS IN THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). IN THIS REGARD, LD. COUNSEL FOR THE ASSESSEE FILED THE WRITTEN SUBMISSION, WHICH IS EXTRACTED AS UNDER :- 2. ISSUE INVOLVED - APPELLANT, VIDE VARIOUS GROUNDS OF APPEAL HAS CONTENDED THAT, WHEN CREDITORS HAVE CONFIRMED TO HAVE GIVEN CASH AMOUNTS TO THE APPELLANT, AND WHEN THE EVIDENCES OF CASH BALANCES WITH THE CREDITORS ARE AVAILABLE ON RECORD, SAME OUGHT TO HAVE BEEN CONSIDERED BY I-T AUTHORITIES. APPELLANT SUBMITS THAT THE ISSUES OUGHT TO HAVE BEEN CONSIDERED IN A PRAGMATIC MANNER INSTEAD OF MERE SUSPICION, ETC. 3. FIRST CREDITOR - MRS. SUNITA SHARMA - RS. 12,00,000 - MRS. SUNITA SHARMA (SISTER OF APPELLANT) IS A RETIRED SCHOOL TEACHER. MRS. SUNITA SHARMA CONFIRMED THAT, SHE HAS EXTENDED RS. 12,00,000 TO THE APPELLANT IN CASH (FOR PURCHASE OF FLAT). HER SOURCES OF INCOME WERE SALARY INCOME OR INTEREST / DIVIDEND INCOME. SHE WAS NEVER MAINTAINING BOOKS OF ACCOUNT. A CASH-FLOW STATEMENT WAS PREPARED TO JUSTIFY AVAILABLE SOURCES OF CASH BALANCE. THE SAID CASH-FLOW WAS REJECTED BY THE I-T AUTHORITIES ON THE REASON THAT, - NO BOOKS OF ACCOUNT ARE MAINTAINED OR THAT, - HOUSEHOLD EXPENSES ARE NOT CONSIDERED THEREIN, ETC. FURTHER, SOME OTHER OBJECTIONS WERE ALSO RAISED ON THE ASPECT OF HUMAN PROBABILITY. APPELLANT AND THE SAID CREDITOR SUBMITTED MANY DOCUMENTS TO JUSTIFY THEIR CONTENTIONS. THE OUTRIGHT REJECTION OF ALL THESE EVIDENCES AND THE OUTRIGHT REJECTION OF AFFIRMATIONS ON OATH GIVEN BEFORE THE I-T AUTHORITIES IS 3 ITA NO.642/PUN/2017 INCORRECT. APPELLANT SUBMITS, A REASONABLE VIEW OUGHT TO HAVE BEEN ASSUMED BY THE I-T AUTHORITIES. 4. SECOND CREDITOR - MR. SANDEEP JOSHI - RS. 5,00,000 - MR. SANDEEP JOSHI (SON-IN-LAW OF THE APPELLANT) IS A BUSINESSMAN RUNNING A MEDICAL STORE. MR. SANDEEP JOSHI CONFIRMED THAT, HE EXTENDED RS. 5,00,000 TO THE APPELLANT IN CASH. HIS SOURCES OF INCOME WERE BUSINESS ACTIVITY AS WELL AS INTEREST / DIVIDEND INCOME. IT WAS ALSO SUBMITTED THAT, MR. SANDEEP JOSHI HAD RAISED A LOAN OF RS. 5 LACS, FROM A PATSANSTHA, AND WITHDRAWN THE SAME IN CASH FOR EXTENDING RS. 5 LACS TO THE APPELLANT (FOR PURCHASE OF GOLD). A CASH-FLOW STATEMENT WAS PREPARED TO JUSTIFY AVAILABLE SOURCES OF CASH BALANCE. THE SAID CASH-FLOW WAS REJECTED BY THE I-T AUTHORITIES ON THE REASON THAT, - NO ORIGINAL PASS-BOOK OF THE PATSANSTHA ACCOUNT WAS PRODUCED - LOAN SHOULD HAVE BEEN USED FOR THE SAME PURPOSE FOR WHICH IT WAS RAISED FURTHER, SOME OTHER OBJECTIONS WERE ALSO RAISED ON THE ASPECT OF HUMAN PROBABILITY. APPELLANT AND THE SAID CREDITOR SUBMITTED MANY DOCUMENTS TO JUSTIFY THEIR CONTENTIONS. THE OUTRIGHT REJECTION OF ALL THESE EVIDENCES AND THE OUTRIGHT REJECTION OF AFFIRMATIONS ON OATH GIVEN BEFORE THE I-T AUTHORITIES IS INCORRECT. APPELLANT SUBMITS, A REASONABLE VIEW OUGHT TO HAVE BEEN ASSUMED BY THE I-T AUTHORITIES. 5. THIRD CREDITOR - MR. KAPIL SHARMA - RS. 13,00,000 - MR. KAPIL SHARMA (SON OF APPELLANT) IS INVOLVED IN GOLD TRADING BUSINESS. MR. KAPIL SHARMA CONFIRMED THAT, HE EXTENDED RS. 13,00,000 TO THE APPELLANT IN CASH. AS REGARDS SOURCES OF THE SAME, IT WAS SUBMITTED THAT, MR. KAPIL SHARMA HAD RAISED A LOAN FROM A PATSANSTHA AND THE SAME WAS WITHDRAWN FOR EXTENDING RS. 13 LACS TO THE APPELLANT (FOR PURCHASE OF GOLD). A CASH-FLOW STATEMENT WAS PREPARED TO JUSTIFY AVAILABLE SOURCES OF CASH. THE SAID CASH-FLOW WAS REJECTED BY THE I-T AUTHORITIES ON THE REASON THAT - BOOKS OF ACCOUNT WHICH IS THE BASE FOR CASH-FLOW IS A POST SEARCH EXERCISE - HOUSEHOLD WITHDRAWALS ARE VERY LOW, ETC. FURTHER, SOME OTHER OBJECTIONS WERE ALSO RAISED ON THE ASPECT OF HUMAN PROBABILITY. FURTHER AN OBJECTION WAS RAISED SAYING THAT, NO TRADER WOULD BUY RAW MATERIAL IN CASH EXCEEDING RS. 20,000. AS A MATTER OF FACT, MR. KAPIL SHARMA, SON OF THE APPELLANT WAS ALSO CARRYING ON THE ACTIVITY IN A SIMILAR MANNER AS THAT OF HIS FATHER, I.E. TRADING IN GOLD ORNAMENTS THROUGH CASH. APPELLANT AND THE SAID CREDITOR SUBMITTED MANY DOCUMENTS TO JUSTIFY THEIR CONTENTIONS. THE OUTRIGHT REJECTION OF ALL THESE EVIDENCES AND THE OUTRIGHT REJECTION OF AFFIRMATIONS ON OATH GIVEN BEFORE THE I-T AUTHORITIES IS INCORRECT. APPELLANT SUBMITS, A REASONABLE VIEW OUGHT TO HAVE BEEN ASSUMED BY THE I-T AUTHORITIES. 6. APPELLANT'S OWN CAPITAL - APPELLANT IS A BUSINESSMAN IN OSMANABAD. THOUGH IN THE PAST YEARS RETURNS OF INCOME WERE NOT FILED, APPELLANT CERTAINLY HAS SOME CAPITAL CONSIDERING MANY YEARS ACTIVITIES. APPELLANT HAD ALSO FILED RETURN OF INCOME DISCLOSING INCOME OF RS. 9.7 LACS. FURTHER, AS PER CASH-BOOK, CASH BALANCE OF RS. 12.21 LACS EXISTED ON THE DATE OF SEARCH-SEIZURE AND THE SAME WAS CARRIED BY APPELLANT TO HYDERABAD. HOWEVER, THE CASH-BOOK AND CONTENTIONS AS REGARDS EMERGING CASH BALANCE WERE REJECTED BY THE I-T AUTHORITIES ON THE REASON THAT 4 ITA NO.642/PUN/2017 - BOOKS OF ACCOUNT WHICH IS THE BASE FOR CASH-FLOW IS A POST SEARCH EXERCISE - ALL SALES-PURCHASE OF THE APPELLANT ARE IN CASH FURTHER, SOME OTHER OBJECTIONS WERE ALSO RAISED ON THE ASPECT OF HUMAN PROBABILITY. FURTHER AN OBJECTION WAS RAISED SAYING THAT, NO TRADER WOULD BUY RAW MATERIAL IN CASH EXCEEDING RS. 20,000. AS A MATTER OF FACT, APPELLANT WAS DEALING IN GOLD ORNAMENTS THROUGH CASH TRANSACTIONS ONLY. THE OUTRIGHT REJECTION OF ALL THESE EVIDENCES AND THE OUTRIGHT REJECTION OF AFFIRMATIONS ON OATH GIVEN BEFORE THE I-T AUTHORITIES IS INCORRECT. APPELLANT SUBMITS, A REASONABLE VIEW OUGHT TO HAVE BEEN ASSUMED BY THE I-T AUTHORITIES. 7. ADDITIONAL EVIDENCES - DURING THE FIRST APPELLATE PROCEEDINGS, MANY DOCUMENTS WERE PRODUCED BEFORE THE LEARNED CIT(A), TO SUBSTANTIATE ADEQUACY OF SOURCES OF FUNDS WITH THE CREDITORS AS WELL AS WITH THE APPELLANT. THE SAME WERE NOT SENT FOR A REMAND REPORT SINCE, LEARNED CIT(A) DECIDED TO DEAL WITH THE SAME HIMSELF. HOWEVER, IT IS THE CONTENTION OF THE APPELLANT THAT, ALL THE ADDITIONAL DOCUMENTS / EVIDENCES/ CASH-FLOW STATEMENTS, ETC. HAVE NOT BEEN CONSIDERED IN AN APPROPRIATE MANNER. 8. ALTERNATE CONTENTIONS - APPELLANT HAS ALSO RAISED AN ALTERNATE CONTENTION THAT, EVEN IF OBJECTIONS EXIST REGARDING CREDITORS AND OTHER CONTENTIONS, SOME BENEFIT OF TELESCOPING OUGHT TO BE GRANTED TO THE APPELLANT. THESE ALTERNATE CONTENTIONS ALSO DESERVE TO BE CONSIDERED IN A REASONABLE MANNER. 9. PRESENT SUBMISSION - CONSIDERING VARIOUS EVIDENCES / DOCUMENTS / CASH-FLOW STATEMENTS, ETC.; APPELLANT SUBMITS, THE SAID PAPERS AND CONTENTIONS NEED TO BE CONSIDERED BY I-T AUTHORITIES IN A FAIR AND REASONABLE MANNER, INSTEAD OF A PERSPECTIVE OF SUSPICION. 6. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE ABOVE WRITTEN SUBMISSION FURNISHED BY THE ASSESSEE BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF PRINCIPLES OF NATURAL JUSTICE, THE ASSESSEE SHOULD BE FULLY HEARD AND THE WRITTEN SUBMISSION SHOULD BE FAIRLY CONSIDERED BY THE LOWER AUTHORITIES. ACCORDINGLY, WITHOUT GOING INTO THE MERITS OF THE CASE AND KEEPING ALL THE ISSUES RAISED BY THE ASSESSEE OPEN, WE PROCEED TO REMAND THE ISSUES TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL DECIDE THE ISSUES AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH SET PRINCIPLES OF NATURAL JUSTICE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.642/PUN/2017 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 10 TH DAY OF FEBRUARY, 2020. SD/- SD/- (LALIET KUMAR) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 10 TH FEBRUARY, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-12, PUNE. 4. THE PR. CIT, CENTRAL, NAGPUR. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.