M/s. Ravi Khanna HUF, Abohar V. The Income Tax Officer, Abohar

ITA 669/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0706 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 12-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Income from undisclosed sources
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.669(ASR)/2013 ASSESSMENT YEAR:2003-04 PAN: AAIHR6579R SH. RAVI KHANNA, HUF VS. INCOME TAX OFFICER, ABOHAR. WARD-II(3), ABOHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ANIL PURI, ADVOCATE RESPONDENT BY: SH. S.S. KANWAL, DR DATE OF HEARING: 10/05/2016 DATE OF PRONOUNCEMENT: 02/06/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2003-04, AGAINST THE ORDER, DATED 01.08.2013, PASSED BY THE LD. CIT(A), BATHINDA. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THAT THE LD. CIT(APPEALS) ERRED BOTH IN LAW AS WELL AS IN RESPECT OF THE FACTS OF THE CASE, WHILE PASSING HIS ORDER DATED 01.08.2013, THEREBY DISMISSING THE APPEAL. 2. HE FURTHER ERRED IN CONFIRMING THE ADDITION OF R S.2,75,000/- MADE BY THE AO, AS INCOME FROM UNDISCLOSED SOURCE, AS AGAINST AGRICULTURAL INCOME RECEIVED FROM MR. MAM R AJ. 3. THAT ALL THE COMMENTS PASSED BY THE CIT(APPEALS) , WHILE DISMISSING THE APPEAL AND CONFIRMING THE ABOVE ADDI TION, ARE BASED ON SURMISES AND CONJECTURES ONLY AND CONTRARY TO THE FACTS OF THE CASE. 4. THAT THE LD. CIT(APPEALS) FAILED TO APPRECIATE T HE FACTS OF THE CASE JUDICIOUSLY AND ARBITRARILY CONFIRMED THE ADDI TION OF RS.2,75,000/-. ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 2 2. THE EARLIER ORDER, DATED 26.11.2015 PASSED BY TH E TRIBUNAL IN THIS CASE WAS RECALLED VIDE ORDER DATED 29.02.2016, PASS ED IN MA NO.14(ASR)/2015, OBSERVING THEREIN THAT THE FACT TH AT THE ASSESSEE HAS NOT BEEN AFFORDED ANY OPPORTUNITY TO CROSS EXAMINE SH. MAM RAJ WAS DULY TAKEN NOTE OF BY THE TRIBUNAL IN ITS ORDER DA TED17.11.2009 AND THAT IT WAS, THEREFORE, THAT THE MATTER WAS REMANDED TO THE AO TO REDECIDE THE MATTER AFTER ALLOWING THE REQUISITE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SH. MAM RAJ; THAT SH. MAM RAJ COULD NOT BE CROSS-EXAMINED ON REMAND AS HE HAD EXPIRED AND INADVERTENTLY THIS HA D NOT BEEN TAKEN NOTE OF AND NOT ADJUDICATED IN THE ORDER DATED 26.1 1.2014. IT WAS, THEREFORE, THAT THE ORDER DATED 26.11.2014 WAS REC ALLED. THIS IS HOW THE MATTER IS NOW BEFORE THIS BENCH. 2.1. FURTHER, DUE TO INCREASE IN THE LIMIT OF ASSES SED INCOME UPTO RS.15 LAKHS, THIS MATTER HAS FALLEN FOR ADJUDICATION BEFO RE SMC BENCH. THEREFORE, IT HAS BEEN HEARD BY THE SINGLE BENCH. 3. THE FACTS OF THE CASE ARE THAT THE COMPLETED ASS ESSMENT OF THE ASSESSEE WAS REOPENED ON THE GROUND THAT AS PER TH E STATEMENT OF ONE SH. MAM RAJ, RECORDED ON OATH AND AFFIDAVIT FILED B Y HIM, THE PAYMENTS OF RS.50,000/- + RS.75,000/- + RS.50,000/- IN CASH AND RS.1,00,000/- AS ADVANCE PAYMENT WERE MADE TO THE ASSESSEE ON ACC OUNT OF THEKA OF LAND, WHICH WERE NOT AS PER THE SATISFACTION OF THE AO AND HAD RESULTED IN ESCAPEMENT OF INCOME TO THE EXTENT OF RS.2,75,0 00/-. THE AO ADDED ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 3 THIS AMOUNT, AS THE ASSESSEES INCOME FROM OTHER SO URCES AND NOT AGRICULTURAL INCOME, AS ALLEGED AND TREATED THE SAM E TO BE THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE AGRICULTURAL I NCOME OF RS.3,96,000/- WAS REDUCED TO RS.2,21,000/- AND THE AMOUNT OF RS.2,75,000/- WAS BROUGHT TO TAX FOR RATE PURPOSE. 4. THE TRIBUNAL, VIDE ORDER DATED 17.1`1.2009, IN I TA NO.411(ASR)/2009, RESTORED THE MATTER TO THE FILE O F THE AO WITH THE DIRECTION TO ALLOW TO THE ASSESSEE, REQUISITE OPPOR TUNITY TO CROSS-EXAMINE SH. MAM RAJ. SH. MAM RAJ, HAD, HOWEVER, IN THE MEAN TIME, EXPIRED. THE A.O. MADE VERIFICATION FROM THE ASSESSEES WIFE, A S PER WHOM, SHE DID NOT KNOWN ABOUT THE PAYMENTS TO BE MADE TO SH. RAVI KHANNA, THE ASSESSEE, ON ACCOUNT OF LAND GIVEN ON THEKA BY HIM. THE AO, IN THE FRESH ASSESSMENT ORDER DATED 14.12.2010, HELD THAT THE AS SESSEE COULD NOT ESTABLISH AND EXPLAIN ANYTHING ABOUT THE ADDITION A ND THAT THE ASSESSEE DID NOT HAVE ANY EVIDENCE IN SUPPORT OF HIS CLAIM. ACCORDINGLY, THE AMOUNT OF RS.2,75,000/- WAS AGAIN ADDED AS UNEXPLA INED INCOME OF THE ASSESSEE. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.2,75,000/- AS THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES, AS AGAINST THE AGRICULTURAL INCOME RECEIVE D FROM SH. MAM RAJ. IT HAS BEEN CONTENDED THAT AS PER RECORD BEFORE THE AUTHORITIES BELOW, ONCE SH. MAM RAJ HAD EXPIRED BY THE RELEVANT TIME, AND HIS CROSS ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 4 EXAMINATION WAS RENDERED IMPOSSIBLE, THE CERTIFICAT E ISSUED BY THE NUMBERDAR OF THE VILLAGE REGARDING THE RATES OF TH EKA OUGHT TO HAVE BEEN ACCEPTED BY TAKING COGNIZANCE OF HIS AFFIDAVIT DATED 18.11.2004. 6. ATTENTION HAS BEEN DRAWN, BESIDES, TO APB 15, WH ICH IS A COPY OF PART OF DIARY MAINTAINED BY SH. MAM RAJ WITH REGAR D TO THEKA/LEASE OF THE LAND IN QUESTION. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THIS DIARY SHOWS THE CASH MADE PAYMENT. APB 15A IS A TYPED COPY OF THIS DIARY. 7. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE AMOU NT OF RS.2,75,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE, SINCE SH. MAM RAJ WAS NOT FOUND TO HAVE BEEN A MAN OF MEANS, WHO COULD EXPLAI N THIS PAYMENT TO THE ASSESSEE. IT HAS BEEN CONTENDED THAT MOREOVER, MR. MAM RAJ DENIED THE ALLEGED CASH PAYMENT CLAIMED BY THE ASSESSEE. IT HAS BEEN CONTENDED THAT AS SUCH, THE CAPACITY OF MR. MAM RAJ TO MAKE PAYMENT OF THE AMOUNT IN QUESTION WAS NOT AT ALL PROVED, DUE TO WHICH FACT, THE LD. CIT(A) HAS CORRECTLY CONFIRMED THE ASSESSMENT O RDER. 8. I HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERU SED THE MATERIAL AVAILABLE ON RECORD. IT REMAINS UNDISPUTED THAT THE STATEMENT OF SH. MAM RAJ COULD NOT BE RECORDED BY WAY OF CROSS EXAMI NATION, SINCE HE HAD EXPIRED BY THE TIME THE MATTER WAS REMANDED BY THE TRIBUNAL. THUS, IT IS ON THIS BASIS THAT THE MATTER REQUIRES TO BE DECIDED. ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 5 9. NOW, IN HIS AFFIDAVIT DATED18.11.2004 (APB 6), S H. MAM RAJ CONTENDED THAT HE HAD TAKEN ABOUT 12 ACRES OF AGRIC ULTURAL LAND AND 6 ACRES OF ORCHARD FROM THE ASSESSEE ON LEASE FOR THE ASSESSMENT YEAR 2002-03. HE IS STATED TO HAVE PAID RS. 2 LCS ON VAR IOUS DATES, AS CONTAINED THEREIN, AS ADVANCE FOR THE YEAR UNDER C ONSIDERATION. 10. IN HIS STATEMENT DATED 19.11.2007, RECORDED DUR ING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005 -06 (APB 13 TO 16), SH. MAM RAJ PRODUCED A COPY OF DIARY/ACCOUNT MAINTA INED BY HIS SON, WITH REGARD TO THE LAND OF THE ASSESSEE. THIS ACCOU NT SHOWS CASH PAYMENT TO THE ASSESSEE. VIDE ORDER DATED 23.09.200 9 PASSED U/S 143(3) OF THE ACT, WHILE ACCEPTING THE FACTUM OF RECEIPT O F AGRICULTURAL INCOME BY THE ASSESSEE FROM MR. MAM RAJ, THE AO OBSERVED AS F OLLOWS: AGRICULTURAL INCOME: THE ASSESSEE IS HOLDING AGRIC ULTURAL LAND OF 36 ACRES INCLUDING 7 KILAS ORCHARD (KINNOW) AT VILL AGE GHALLU OUT OF WHICH 12 ACRES OF AGRICULTURAL LAND & 6 KILLAS ORCH ARD GIVEN ON THEKA TO SH. MUM CHAND S/O SH. ARJUN RAM & 18 ACRES LAND TO SH. SURJIT SINGH OF SAME VILLAGE. THE ASSESSEE DECLARED AGRICULTURAL INCOME OF SH. SURJIT SINGH OF SAME VILLAGE. THE ASS ESSEE DECLARED AGRICULTURAL INCOME OF RS.2,91,000/- RECEIVED AS T HEKA OF SAID LAND FROM THESE TWO THEKEDARS, AVERAGE THEKA OF AGRICULT URAL LAND INCLUDING ORCHARD LAND COMES TO RS.8083/- APPROXIM ATELY. IN SUPPORT OF HIS CONTENTION, A CERTIFICATE OF NAMBARD AR VILLAGE GHALLU SH. OMKAR PARIHAR HAS BEEN FILED IN WHICH IT HAS BE EN CERTIFIED THAT THEKA PER YEAR OF LAND OF VILLAGE GHALLU IS AS UND ER: A) NEHRI WITH TUBEWELL RS.8000/- TO RS.12,000/- PE R ACRE B) NEHRI WITHOUT TUBEWELL RS.7000/- TO RS.9000/- P ER ACRE C) ORCHARDS RS.15000/- TO RS.50000/- PER ACRE NAMBARDAR OF VILLAGE IS AN AUTHORITY UNDER PUNJAB S TATE REVENUE ACT & HIS STATEMENT AND ASSESSMENT CAN BE RELIED. T HEREFORE, THAT AVERAGE THEKA DECLARED BY THE ASSESSEE IS APPROXIM ATELY AT PAR WITH CERTIFICATE OF NAMBARDAR. MOREOVER, THE ASSESS EE HAS CHARGED THEKA ON SAME LAND FROM SAME THEKEDARS DURING THE F .Y. 2003-04 ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 6 RELEVANT TO A.Y. 2004-05 AMOUNTING TO RS.3,95,000/- WHICH WAS ACCEPTED BY THE AO WHILE COMPLETING PROCEEDINGS U/S 143(3) FOR THE A.Y. 2004-05 & ULTIMATELY RS.2,95,000/- WAS ACCEPTE D IN APPEAL. IN VIEW OF THE FACT STATED ABOVE, THE AGRICULTURAL INC OME OF RS.29100/- IS ACCEPTED. 11. THEN, STATEMENT DATED 11.10.2005 (APB 20-23) OF SH. MAM RAJ WAS RECORDED BY THE AO UNDER SECTION 131 OF THE ACT DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2004 -05. A PORTION OF THIS IS RELEVANT FOR THE PRESENT PURPOSE AND IT IS AS FOLLOWS: QN. PLEASE STATED THAT HOW YOU MADE PAYMENT OF THE KA AND SOURCE THEREOF. ANS. I USED TO MAKE PAYMENT OF THEKA IN INSTALEMNT S. THE PAYMENTS WERE MADE OUT OF SALE PROCEEDS OF AGRICULT URAL PRODUCE OF MY OWN AS WELL OUT OF LAND TAKEN ON THEK A. QN. DO YOUR MAINTAIN BANK ACCOUNT, IF YES, PLEASE P RODUCE COPY OF BANK ACCOUNT PASSBOOK. ANS. YES, I MAINTAIN SAVING BANK ACCOUNT WITH PNB GHALLU A/C NO.78. THE BANK PASSBOOK IS PRODUCED BEFORE YOU. QN. A PERUSAL OF THE BANK ACCOUNT REVEALS THAT THE PAYMENT OF THEKA HAS NOT BEEN MADE THROUGH BANK. PLEASE EXPLAI N. ANS. SOMETIMES PAYMENT IS BEING MADE IN CASH AND SO METIME BY DEMAND DRAFT AFTER GETTING THE CASH AMOUNT FROM T HE AHARTIA TO WHOM I SOLD MY AGRICULTURAL PRODUCE. QN. PLEASE STATE THE NATURE OF CROPS GROWN BY YOU D URING THE F.YS. 2002-03 & 2003-04 AND WHAT WAS YOUR ESTIMATE D AGRICULTURAL INCOME. ANS. SARSON, WHEAT AND NARMA, SURAJ MUKHI ETC., WER E GROWN IN THAT LAND TAKEN ON THEKA. GENERALLY, I USED TO SELL THE CROPS IN THE VILLAGE ON CASH BASIS AND OUT OF THAT AMOUNT , I USED TO MAKE THE PAYMENT TO THE OWNERS OF THE LAND, SH. RA VI ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 7 KHANNA. I ALSO MADE PAYMENTS TO SH. RAVI KHANNA THR OUGH BANK DRAFTS AS WELL AS THROUGH CASH. . AFTER MAKING ALL EXPENSES, INCLUDING AMOUNT OF THEKA THERE WERE NET SAVING ESTIMATED RS.50,000/- TO RS.60,000/- TO MEET OUT HO USEHOLD EXPENSES. 12. A PERUSAL OF THE ABOVE EVIDENCE SHOWS MR. MAM RAJ TO HAVE NOT ONLY ONCE, BUT IN THE PROCEEDINGS FOR VARIOUS YEARS , ADMITTED, ON OATH, THE PAYMENT IN CASH TO THE ASSESSEE FOR THE YEAR UN DER CONSIDERATION. ALL THIS COGENT EVIDENCE HAS ILLEGALLY BEEN IGNORED BY THE AUTHORITIES BELOW, WHICH HAS RESULTED INTO AN ILLEGAL ADDITION, WHICH IS NOT SUSTAINABLE. IN VIEW OF THIS EVIDENCE, THERE WAS NO ROOM FOR MAKIN G AND SUSTAINING THE ADDITION OF RS.2.75 LAKHS IN THE HANDS OF THE ASSES SEE AS HIS UNDISCLOSED INCOME, WHEREAS IT REPRESENTED AGRICULTURAL INCOME RECEIVED BY THE ASSESSEE FROM SH. MAM RAJ. 13. IN PARTICULAR, TO REITERATE, THE ACCOUNT (APB 1 5) PRODUCED BY SH. MAM RAJ IN HIS STATEMENT DATED 19.11.2007 (SUPRA) S HOWS CASH PAYMENT FOR AGRICULTURAL PURPOSES TOWARDS THEKA OF THE AS SESSEES LAND FOR THE YEAR UNDER CONSIDERATION. THIS ACCOUNT DEPICTS PA YMENT OF RS.10,000/- BALANCE PAID TO THE ASSESSEE, RS.29,000/- ON 11.05. 2001, RS.20,000/-ON 29.12.2001, RS.15,000/- ON 11.02.2002, RS.21,000/-1 5.03.2002 AND RS.2,000/- ON 25.03.2002, AS ADVANCE FOR THE THEK A FOR THE YEAR UNDER CONSIDERATION. NONE OF THESE PAYMENTS HAVE BEEN CA LLED INTO QUESTION. ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 8 14. THE ABOVE APART, A CERTIFICATE DATED 29.11.2010 (APB 55) WAS ISSUED BY THE NAMBARDAR, VILL. GHALLU, TEHSIL FAZIL KA, AS FOLLOWS: THIS IS TO CERTIFY THAT THEKA FOR THE YEAR 2002-03 AT VILLAGE GHALLU, TEHSIL FAZILKA, DISTT. FEROZEPUR WAS AS UND ER: A) NEHRI WITH TUBEWELL @ RS.8,000/- TO RS.12,000/- PER ACRE B) NEHRI WITHOUT TUBEWELL @ RS.7,000/- TO RS.9,000/- P ER ACRE C) ORCHARD @ RS.15,000/- TO RS.50,000/- PER ACRE. THIS IS ALSO TO CERTIFY THAT DUE TO INCREASE IN THE PRICES OF LAND, THEKA OF VILLAGE GHALLU HAS BEEN GOING UP @ RATIO O F 15 TO 20% PER ANNUM. 15. THIS MATERIAL PIECE OF EVIDENCE HAS ALSO ILLEGA LLY BEEN IGNORED BY THE LD. CIT(A), WHILE CONFIRMING THE ADDITION ON TH E BASIS OF SURMISES AND CONJECTURES. 16. ON CONSIDERING ALL THE ABOVE EVIDENCES PLACED O N RECORD, IT IS SEEN THAT THIS EVIDENCE BEFORE THE AUTHORITIES BELOW BY THE ASSESSEE PROVES THE CLAIM OF THE ASSESSEE, THOUGH THE LD. CIT(A) HA S OBSERVED THAT THE CERTIFICATE OF THE NAMBARDAR (SUPRA) SPEAKS ONLY OF THE PREVAILING RATE OF THE THEKA IN THE AREA AND IT DOES NOT SHOW THAT AN Y CASH PAYMENT WAS MADE BY SH. MAM RAJ TO THE ASSESSEE. THIS OBSERVAT ION ITSELF MAKES IT EVIDENT THAT IT WAS A RESULT OF NON-READING OF THE MATERIAL EVIDENCE IN THE SHAPE OF THE AFORE-MENTIONED STATEMENT OF SH. MAM R AJ. IF THIS STATEMENT IS READ IN CONJUNCTION WITH THE CERTIFICATE OF TH E NAMBARDAR, THE FACTUM OF PAYMENT BY SH. MAM RAJ TO THE ASSESSEE GETS ADEQ UATELY EXPLAINED. THIS STATEMENT, TO REITERATE, HAS NOT BEEN CHALLENG ED. ITA NO.669(ASR)/2013 ASSESSMENT YEAR: 2003-04 9 17. THEREFORE, I HOLD THAT THE IMPUGNED ORDER IS A RESULT OF COMPLETE MISREADING AND NON-READING OF THE MATERIAL COGENT E VIDENCE BROUGHT ON RECORD. ACCORDINGLY, THE ADDITION OF RS.2,75 LAKHS IS UNSUSTAINABLE IN LAW. IT IS, ACCORDINGLY, DELETED. 18. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/06/ 2016. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 02/06/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.