Sh.Simarjit Singh Bains, Ludhiana V. Income Tax Officer, Ludhiana

ITA 668/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7099 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 11-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Accommodation entries; Onus to prove; Set aside
• Section: 143(3); 147; 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 668/CHD/2017 / ASSESSMENT YEAR : 2012-13 SHRI SIMARJIT SINGH BAINS, B-XXI-9757M, NAINS NIWASM ST. NO.5, KOT MANGAL SINGH, LUDHIANA VS. ! THE ITO, WARD 5(4), LUDHIANA ' # ./ PAN NO: AKEPB3751D '$/ APPELLANT &' '$ / RESPONDENT ()*+ /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE, *+ / REVENUE BY : SHRI G.S. PHANI KISHORE, CIT DR , -*) .# /DATE OF HEARING : 11.07.2019 /0 *) .# / DATE OF PRONOUNCEMENT : 24.07.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 27.02.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-2, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. THREE CRORES MADE BY THE ASSESSING ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 2 OFFICER BY INVOKING PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT THEREBY, BY TREATING THE SAME AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AS PER PARA 3.18 OF HIS ORDER. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CT THAT DURING THE COURSE OF HEARING ONUS WHICH WAS CA ST UPON THE ASSESSEE, HAD DULY BEEN DISCHARGED AND THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE COMPANY NAMELY BHUMIPATRA (INDIA) LTD., HAD BEEN PROVED BEFORE THE ASSESSING OFFICER AND, THUS, THE ADDITION WAS NOT JUSTIFIED.. 3. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CT THAT IN THE BALANCE SHEET OF THE PVT. LTD. COMPANY, THE AMOUNT AS GIVEN AS ADVANCE AGAINST THE AGREEMENT HA S DULY BEEN REFLECTED IN THE RETURN OF INCOME FILED B Y THE SAID COMPANY AND WHICH HAVE BEEN IGNORED BY THE WORTHY CIT(A). 4. THAT THE LD. CIT(A) HAS ALSO ERRED IN NOT CONSIDERI NG THAT DURING THE COURSE OF HEARING BEFORE THE ASSESS ING OFFICER, THE SANCTITY OF THE BIANA/LEGAL NOTICE AND ALSO THE COMPROMISE DEED, HAD BEEN FILED AND IGNORE D BY THE AUTHORITIES BELOW. 5. THAT THE ADDITION AS ABOVE HAS BEEN WRONGLY CONFIRMED BY THE LD. CIT(A) AND SUBMISSIONS FILED DURING THE COURSE OF HEARING BEFORE ASSESSMENT PROCEEDINGS AND ALSO BEFORE THE LD. CIT(A) HAS NOT BEEN CONSIDERED PROPERLY. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND TH E GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 3. THE SOLE DISPUTE INVOLVED IN THE PRESENT APPEAL IS REGARDING THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES OF RS. 3 CRORES U/S 68 OF THE ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 3 INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON ACCOUN T OF INCOME FROM UNDISCLOSED SOURCES. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH ERE WERE HUGE DEPOSITS OF RS. 3 CRORES IN THE BANK ACCOUNT OF THE ASSESSEE THROUGH THREE DIFFERENT RTGS TRANSACTIONS OF RS. 1 CRORE EA CH. ON BEING ASKED TO EXPLAIN IN THIS RESPECT, THE ASSESSEE EXPLAINED THAT THE AFORESAID AMOUNT OF RS. 3 CRORES WAS RECEIVED THROUGH BANKIN G CHANNEL (RTGS) FROM M/S BHUMIPUTRA (INDIA ) PVT. LTD. THAT THE SAI D AMOUNT WAS RECEIVED AS EARNEST MONEY AS PER THE AGREEMENT TO SELL OF THE LAND DATED 10.8.2011 ENTERED BY THE ASSESSEE ALONG WITH HIS BROTHERS (CO- OWNERS) WITH THE SAID M/S BHUMIPUTRA (INDIA) PVT. L TD. COPY OF THE SAID AGREEMENT TO SELL WAS ALSO PRODUCED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT THE SA ID AGREEMENT THOUGH EXECUTED ON A STAMP PAPER BUT WAS NOT REGISTERED. T HOUGH THE LAND IN QUESTION WAS OWNED BY THREE BROTHERS / CO-OWNERS WI TH 1/3 RD SHARE EACH, HOWEVER, THE AGREEMENT WAS SIGNED ONLY BY THE ASSES SEE. THOUGH, AS PER THE AGREEMENT, THE TOTAL EARNEST MONEY UP TO 30.8.2 011 TO BE RECEIVED WAS RS. 12 CRORES, BUT ONLY AN AMOUNT OF RS. 7 CROR ES WAS RECEIVED TILL DATE, OUT OF WHICH RS. 3 CRORES WAS DEPOSITED IN T HE ACCOUNT OF THE ASSESSEE AND REMAINING RS. 4 CRORES WAS DEPOSITED I N THE ACCOUNT OF HIS BROTHER SHRI PARAMJIT SINGH BAINS. THOUGH, THE ENTI RE AMOUNT OF THE AGREED SALE CONSIDERATION WAS TO BE RECEIVED BY 31. 12.2012, BUT NO ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 4 FURTHER PAYMENT WAS RECEIVED BY THE ASSESSEE EXCEPT THE AFORESAID AMOUNT OF RS. 7 CRORES. THE ASSESSING OFFICER FURTH ER ASKED THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE P AYER AS WELL AS GENUINENESS OF THE TRANSACTIONS. IN REPLY, THE ASSE SSEE STATED THAT, THOUGH, AS PER THE AGREEMENT TO SELL, THE EARNEST M ONEY TO BE RECEIVED WAS RS. 12 CRORES, HOWEVER, THE PROPOSED PURCHASER M/S BHUMIPUTRA (INDIA) PVT. LTD. DID NOT PAY THE REMAINING AMOUNT EXCEPT THE AFORESAID AMOUNT OF RS. 7 CRORES. THE ASSESSEE PRODUCED CONF IRMATION FROM M/S BHUMIPUTRA (INDIA) PVT. LTD. OF THE AFORESAID TRANS ACTIONS AND THE BALANCE SHEET OF THE SAID COMPANY. HOWEVER, THE ASS ESSING OFFICER HELD THAT THE ASSESSEE HAD FAILED TO PRODUCE THE DIRECTO RS OF THE COMPANY IN PERSON AND FURTHER HELD THAT THE SAID M/S BHUMIPUTR A (INDIA) PVT. LTD. WAS A PAPER COMPANY AND WAS INDULGED IN PROVIDING B OGUS BUSINESS ACCOMMODATION ENTRIES, WHOSE CREDITWORTHINESS WAS N OT VERIFIABLE. HE, ACCORDINGLY HELD THE AMOUNT OF RS. 3 CRORES RECEIVE D BY THE ASSESSEE AS UNEXPLAINED INCOME OF THE ASSESSEE. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). I T WAS EXPLAINED TO THE CIT(A) THAT THERE WAS NO LEGAL REQUIREMENT OF GETTI NG THE SAID AGREEMENT REGISTERED. THE AGREEMENT WAS EXECUTED DU LY ON STAMP PAPER, WHICH WAS ALSO EVEN NOT DISPUTED BY THE OTHER PARTY I.E. M/S BHUMIPUTRA (INDIA) PVT. LTD. THAT THE ASSESSEE HAD DULY FILED BEFORE THE ASSESSING OFFICER THE COPIES OF THE INCOME TAX RETURNS, COPY OF PAN, COPY OF THE ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 5 BALANCE SHEET AND PROFIT & LOSS ACCOUNT, CERTIFICAT E OF INCORPORATION OF M/S BHUMIPUTRA (INDIA) PVT. LTD. EVEN THE ASSESSEE DULY PROVIDED COPIES OF THE BANK ACCOUNT OF THE SAID COMPANY ALON G WITH BALANCE SHEET WHICH CLEARLY DEPICTED SUFFICIENCY OF RESOURCES OF THE COMPANY. FURTHER, TO PROVE THE GENUINENESS OF THE TRANSACTIONS, COPY OF THE AGREEMENT TO SELL AND COPY OF THE DEED FOR THE CANCELLATION OF A GREEMENT DULY SIGNED BY THE DIRECTORS OF THE COMPANY WERE PROVIDED. IT W AS ALSO SUBMITTED THAT THE FINDING OF THE ASSESSING OFFICER THAT THE BUYER COMPANY WAS A PAPER COMPANY WAS WRONG. THAT AT THE TIME WHEN THE INQUIRIES WERE MADE BY THE ASSESSING OFFICER THROUGH INVESTIGATIO N WING, THE NAME OF THE COMPANY WAS CHANGED TO M/S FUTURE CORPORATION L TD. AND THE ADDRESS WAS ALSO CHANGED. HOWEVER, THE INQUIRIES WE RE MADE BY THE INCOME TAX AUTHORITIES AT THE OLD ADDRESS AND IN RE SPECT OF OLD NAME OF THE COMPANY. IT WAS ALSO SUBMITTED THAT THE PAN AND ITR OF THE SAID COMPANY WERE PROVIDED TO THE ASSESSING OFFICER. EVE N, THE CASE OF THE BUYER COMPANY HAD BEEN SELECTED FOR SCRUTINY ASSESS MENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2009-10 AND THE ASSESSMENT ORDER WAS PASSED BY THE INCOME TAX OFFICER ACCEPTING THE RETURNED I NCOME. A COPY OF THE ORDER PASSED U/S 143(3) OF THE ACT IN THE CASE OF T HE BUYER COMPANY FOR ASSESSMENT YEAR 2009-10 WAS ALSO PLACED ON FILE. IT WAS, THEREFORE, SUBMITTED THAT THE ASSESSEE HAD PROVED THE IDENTITY , CREDITWORTHINESS OF THE BUYER AS WELL AS GENUINENESS OF THE TRANSACTION S. IT WAS FURTHER EXPLAINED THAT THE SAID AGREEMENT TO SELL WAS CANCE LLED ON 28.3.2015 DUE ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 6 TO NON-COOPERATION ON THE PART OF THE BUYER. THAT AS PER THE CANCELLED DEED, THE AFORESAID AMOUNT OF RS. 7 CRORES WAS REPA ID / REMITTED BY THE ASSESSEE AT THE INSTRUCTIONS OF THE BUYER COMPANY T O M/S UCHIT CONSTRUCTION PVT. LTD. THE ASSESSEE ALSO PRODUCE D ON THE FILE THE COPY OF THE BANK STATEMENT OF M/S BHUMIPUTRA (INDIA ) PVT. LTD. TO PROVE THE CREDITWORTHINESS OF THE SAID PARTY. FURTHER, TH E AMOUNT WAS REPAID / REMITTED AT THE INSTRUCTIONS OF THE M/S BHUMIPUTRA (INDIA) PVT. LTD. TO M/S UCHIT CONSTRUCTION PVT. LTD., THROUGH BANKING C HANNEL. THE LD. CIT(A), HOWEVER, DID NOT GET SATISFIED BY THE ABOV E EXPLANATION OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAD FAILED TO D ISCHARGE THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CRED ITWORTHINESS OF THE PAYER. HE HELD THAT, IN FACT, THE TRANSACTION WAS JUST A COVER UP BY THE ASSESSEE TO BRING HIS OWN UNACCOUNTED MONEY INTO TH E BOOKS OF ACCOUNT. HE, ACCORDINGLY CONFIRMED THE ADDITION SO MADE BY T HE ASSESSING OFFICER. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER DATED 26.12.2 018 PASSED U/S 143(3) READ WITH SEC. 148 OF THE ACT IN THE CASE OF THE BROTHER OF THE ASSESSEE NAMELY SHRI PARAMJIT SINGH BAINS FOR THE ASSESSMENT YEAR 2012-13, WHO HAD ALSO RECEIVED A SUM OF RS. 4 CRORES IN THE SAME TRANSACTIONS OUT OF THE TOTAL AMOUNT OF RS. 7 CRORES PAID BY M/S M/S BH UMIPUTRA (INDIA) PVT. LTD. THE ASSESSEE IN THE SAID CASE NAMELY SHRI PARAMJIT SINGH BAINS DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 OF ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 7 THE ACT GAVE THE DETAILS OF THE AMOUNT RECEIVED THR OUGH BANKING CHANNELS FROM M/S BHUMIPUTRA (INDIA) PVT. LTD. F URTHER, FROM THE COPY OF THE BANK STATEMENT OF THE M/S BHUMIPUTRA (I NDIA) PVT. LTD WAS PROVIDED TO PROVE THE CREDITWORTHINESS OF THE SAID COMPANY. FURTHER, ALSO THE ASSESSEE PRODUCED THE EVIDENCE OF THE REFU ND / REMITTANCE OF THE AFORESAID AMOUNT OF RS. 7 CRORES BY WAY OF 13 RTGS TO M/S TO M/S UCHIT CONSTRUCTION PVT. LTD. ON THE INSTRUCTIONS OF M/S BHUMIPUTRA (INDIA) PVT. LTD. FURTHER, THE PAN OF M/S BHUMIPUT RA (INDIA) PVT. LTD., CERTIFICATE OF INCORPORATION OF THE SAID COMPANY, F ORM IB WITH ROC IN RESPECT OF CHANGE OF THE NAME OF THE COMPANY AND FO RM INC-22 IN RESPECT OF CHANGE OF ADDRESS OF REGISTERED OFFICE O F THE COMPANY WAS ALSO SUPPLIED. BALANCE SHEET OF THE COMPANY FOR THE YEAR ENDING 31.3.2005 TO 31.3.2012 AND ASSESSMENT ORDER OF THE COMPANY FOR ASSESSMENT YEAR 2009-10 WAS ALSO SUPPLIED. FURTHER, ON AN ENQUIRY FROM M/S BHUMIPUTRA (INDIA) PVT. LTD., DIRECTOR OF THE S AID COMPANY SHRI HEM PARKASH SHARMA APPEARED BEFORE THE ASSESSING OF FICER AND HIS STATEMENT WAS RECORDED WHEREBY HE ADMITTED THE TRAN SACTIONS WITH THE SAID SHRI PARAMJIT SINGH BAINS. AFTER CONSIDERING THE EVIDENCES AS WELL AS STATEMEN T OF THE DIRECTOR OF M/S BHUMIPUTRA (INDIA) PVT. LTD., THE A SSESSING OFFICER HELD THAT THE CREDITWORTHINESS OF THE PAYER AND GENUINEN ESS OF THE TRANSACTION WAS PROVED BEYOND DOUBT. FURTHER, SINCE THE AGREEME NT TO SELL WAS CANCELLED, AMOUNT WAS REFUNDED BY THE ASSESSEE A S WELL AS HIS BROTHER ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 8 AND WAS REMITTED TO M/S UCHIT CONSTRUCTION PVT. LTD . AT THE INSTRUCTIONS OF M/S BHUMIPUTRA (INDIA) PVT. LTD. THE ASSESSING O FFICER, THEREFORE, ACCEPTED THE EXPLANATION OFFERED BY SHRI PARAMJIT S INGH BAINS AND DID NOT MAKE ANY ADDITION. 7. THE LD. COUNSEL HAS SUBMITTED THAT THE ADDITION IN THE CASE OF THE ASSESSEE WAS MADE ONLY BECAUSE OF THE DIRECTOR OF C OMPANY DID NOT APPEAR WHEN CALLED UPON TO VERIFY THE TRANSACTIONS . HOWEVER, DIRECTOR OF THE COMPANY M/S BHUMIPUTRA (INDIA) PVT. LTD. APP EARED BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS IN THE CASE OF HIS BROTHER SHRI PARAMJIT SINGH BAINS RELATING TO THE S AME TRANSACTIONS WHO CONFIRMED THE PAYMENT ALONG WITH EVIDENCES OF THE T RANSACTIONS AS WELL AS CREDITWORTHINESS OF THE PAYER WHICH WAS ACCEPTED BY THE ASSESSING OFFICER IN THE CASE OF SHRI PARAMJIT SINGH BAINS. 8. THE ASSESSEE IN THIS CASE HAD FURNISHED VOLUMINO US EVIDENCE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE BUYE R, GENUINENESS OF THE TRANSACTIONS. FURTHER THAT OUT OF THE TOTAL AMOUNT RECEIVED OF RS. 7 CRORES IN RESPECT OF TRANSACTIONS IN QUESTION, RS. 4 CRORES WAS RECEIVED BY THE BROTHER OF THE ASSESSEE SHRI PARAMJIT SINGH, IN WHOSE CASE THE DIRECTOR OF THE PAYER COMPANY APPEARED AND CONFIRME D THE TRANSACTIONS. THE INCOME TAX RETURN OF THE PAYER COMPANY AND THE BALANCE SHEET OF THE PAYER COMPANY AS WELL AS BANK STATEMENT OF THE PAYE R COMPANY WERE ALSO PROVIDED TO THE ASSESSING OFFICER TO SHOW THE CREDITWORTHINESS OF THE PAYER. ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 9 IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATION O N THE PART OF THE LOWER AUTHORITIES IN DOUBTING THE GENUINENESS OF TH E TRANSACTIONS IN QUESTION. THE ASSESSEE, IN OUR VIEW, HAS SUCCESSFUL LY DISCHARGED THE ONUS CAST UPON IT TO PROVE THE IDENTITY AND CREDITW ORTHINESS OF THE PAYERS AS WELL AS GENUINENESS OF THE TRANSACTIONS W HICH OTHERWISE HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT / ASSESSING OF FICER IN THE CASE OF BROTHER OF THE ASSESSEE IN THE INQUIRIES MADE DURIN G THE ASSESSMENT PROCEEDINGS IN RESPECT OF THE SAME TRANSACTION. IN VIEW OF THIS, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE. THE ADDI TION MADE BY THE LOWER AUTHORITIES IS HEREBY ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.07.2019. SD- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 24.07.2019 .. 2*&)3454) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 2 , / BY ORDER, > / ASSISTANT REGISTRAR ITA NO. 668-C-CHD-2017 SHRI SIMRAJIT SINGH BAINS, LUDHIANA 10