M/s Surinder Arjun, Amritsar. V. The Dy. Commissioner of Income-tax, Amritsar.

ITA 67/ASR/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5717 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 03-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA LD
• Assessee Lawyers: PARVEEN JAIN LD

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.67(ASR)/2015 ASSESSMENT YEAR:2005- 06 SH. SURINDER ARJUN C/O S.S.ENTERPRISES 1717 KUCHA CHAJJU MISRA AMRITSAR PAN:AEDPA6739F VS. DY. CIT, CIRCLE-V, AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PARVEEN JAIN (LD. ADV .) RESPONDENT BY: SH. RAJEEV GUBGOTRA (LD. DR) DATE OF HEARING: 07.03.2018 DATE OF PRONOUNCEMENT: 16.03.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 13.11.2014 PASSED BY THE LD. CIT(A), AMRITSAR, U/S 250( 6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE IN CONF IRMING AN ADDITION ITA NO.67/ASR/2015 (A.Y.2005-06) SH. SURINDER ARJUN, AMRITSAR VS. DCIT 2 OF RS.22,00,000/- RAISED AS LOAN FROM SHREE DURGIAN A COMMITTEE, AMRITSAR DESPITE THE FACT THAT THERE WAS AN AGREEME NT SUBJECT TO COUNTERBALANCING OBLIGATION TO REPAY THE SUM, WHICH PREVENTS IT BEING A GAIN FOR INCOME TAX PURPOSES. 2. THE WORTHY COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRM ING AN ADDITION OF RS.22,00,000/- IGNORING THE FACT THAT THE SAID APPE AL IS AN OUTCOME OF A GROUP RIVALRY AND THE APPELLANT HAS BEEN ROPED IN ONLY BECAUSE HE BELONGS TO THE FACTION OPPOSITE TO THE GROUP PRE SENTLY MANNING THE MANAGEMENT. 3. THE QUESTION FOR CONSIDERATION BEFORE THIS HONOURABLE COURT IS THAT WHETHER A GENUINE LOAN TRANSACTION BY WAY OF C HEQUE SUPPORTED WITH AN AGREEMENT TO PAYBACK WITH A PART OF PROFIT EARNED BY THE APPELLANT BE TERMED AS EMBEZZLEMENT MERELY ON THE S TATEMENT OF THE RIVAL GROUP. 4. THE QUESTION FOR CONSIDERATION BEFORE THIS HONOURABLE COURT IS THAT WHETHER A GENUINE HARDSHIP TO THE APPELLANT CA N BE TERMED AS NO INTENTION TO RETURN THE LOAN. 5. THAT THE ADDITIONS MADE BY THE LD. ASSESSIN G OFFICER ARE ARBITRARY, ILLEGAL, ILLOGICAL, UNREASONABLE, AND UN WARRANTED WITH CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE POINT. 3. ALL THE ISSUES ARE CONNECTED WITH EACH OTHER, HENCE, F OR THE SAKE OF CONVENIENCE AND BREVITY ARE TAKEN TOGETHER FOR DISPOSAL SIMULTANEOUSLY. 4. IN THE INSTANT CASE, IT IS ALLEGED THAT THE ASSESSEE HA D SECURED A LOAN OF RS.22,00,000/- ON DATED 26 TH NOV. 2004 BY AN AGREEMENT EXECUTED BETWEEN THE ASSESSEE AND PRESIDENT OF DURGIANA COMMITTEE, AMRITSAR, WHICH WAS ALLEGED TO BE ITA NO.67/ASR/2015 (A.Y.2005-06) SH. SURINDER ARJUN, AMRITSAR VS. DCIT 3 EMBEZZLED FUND. THE ASSESSING OFFICER BY TREATING THE SA ID AMOUNT AS EMBEZZLED FUND, ADDED IT TO THE INCOME OF T HE ASSESSEE, WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A), WHO ALSO UPHELD THE ADDITION OF RS.22,00,000/ - BY TREATING THE LOAN TRANSACTION AS EMBEZZLEMENT OF MONEY . 5. THE ASSESSEE CHALLENGED THE SAID ORDER OF THE LD. CIT(A) BEFORE US. IT IS A MATTER OF RECORD THAT IN THE INSTANT CASE FIR WAS LODGED AGAINST THE ASSESSEE AND THEREAFTER, COMMISSION OF ENQUIRY WAS CONSTITUTED WHO VIDE ORDER DATED 31 ST AUGUST, 2017, RECOMMENDED CANCELLATION OF THE FIR. IT IS ALSO THE CAS E OF THE ASSESSEE THAT THE ASSESSEE HAD SECURED THE LOAN IN ORDER TO PROCURE THE PROPERTY THROUGH AUCTION BY DRT-II, CHAND IGARH BUT DUE TO LEGAL ENTANGLE, THE SAID AMOUNT WAS STUCK UP W ITH THE DRT, AND FINALLY DIRECTED TO BE RELEASED TO THE ASSESSEE BY ORDER DATED 23 RD MAY, 2011, WHICH ON SUBSEQUENTLY RELEASED FROM THE BANK, WAS DEPOSITED IN THE ACCOUNT OF SH. DURGIANA COMM ITTEE THROUGH RTGS NO.YESBR52016100600001889 DATED 06/10/ 2016 (YES BANK, HALL BAZAR ACCOUNT NO.046599000003340) TO TH E ACCOUNT OF SH. DURGIAYANA COMMITTEE (PRESIDENT) [ACCOUN T NO.01010100010637 BANK OF BRODA]. IT WAS FURTHER SUBM ITTED BY THE LD. AR THAT THE CASE OF EMBEZZLEMENT WAS ONLY I NITIATED ON POLITICAL RIVALRY, HOWEVER, IN OUR VIEW THAT IS N OT A MATTER BEFORE US TO GO INTO DETAIL IN VIEW OF THE ENQUIRY CO MMISSION REPORT WHICH IS PART OF THE RECORD, BY WHICH THE CANCEL LATION OF FIR HAS ALREADY BEEN RECOMMENDED. ITA NO.67/ASR/2015 (A.Y.2005-06) SH. SURINDER ARJUN, AMRITSAR VS. DCIT 4 WE ALSO REALIZED THAT IN THE INSTANT CASE, CIVIL SUIT FOR DECLARATION OF THE ALLEGED AGREEMENT BY WHICH THE AM OUNT OF RS.22,00,000/- HAVE BEEN TAKEN BY THE ASSESSEE, WAS ALSO FILED WHICH CAME TO BE COMPROMISED THROUGH MEDIATION CENTER A ND COMPROMISE HAS BEEN DULY RECORDED BY THE LD. CIVIL JUD GE (SENIOR DIVISION, AMRITSAR) VIDE ITS ORDER DATED 29 TH FEB., 2010. BY THE SAID AGREEMENT, THE ASSESSEE HAD AGREED TO REPAY THE LOAN AMOUNT TO THE LOANER AND IN PURSUANCE THEREOF AL READY REPAID THE AMOUNT, THEREFORE, CONSIDERING THE ENQUIRY REPORT AS WELL AS ORDER PASSED IN MEDIATION CENTER, WE ARE OF T HE CONSIDERED VIEW THAT THE AMOUNT OF RS.22,00,000/- WHICH ALLEGED BY THE ASSESSEE TO BE A LOAN AMOUNT, CANNOT BE SUBJECTED TO TAX ON THE PRETEXT THAT THE SAME WAS EMBEZ ZLED FUND AS WELL AS ALSO CONSIDERING THE FACT THAT THE AMOUN T UNDER CONSIDERATION HAS ALREADY BEEN REPAID BY THE ASSESSEE AND WHICH HAS NOT BEEN DISPUTED BY THE DEPARTMENT AND OR OTHER WISE BY THE DURGIANA COMMITTEE, HENCE, WE ARE OF THE CONSIDERE D VIEW THAT THE SAID AMOUNT CANNOT BE CONSIDERED AS INCOME OF TH E ASSESSEE BECAUSE THE SOURCE THEREOF AND ITS GENUINENESS AND IDENTITY OF THE LOANER HAVE ALREADY BEEN ESTABLISHED FROM THE FACTS APPARENT FROM THE RECORDS AND, THEREFORE, THE ADD ITION OF THE SAID AMOUNT IS LIABLE TO BE DELETED, HENCE, THE A DDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) STANDS DELETED. ITA NO.67/ASR/2015 (A.Y.2005-06) SH. SURINDER ARJUN, AMRITSAR VS. DCIT 5 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:16.03.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S SURINDER ARJUN, 1717 KUCHA CHAJJU MISRA, A MRITSAR (2) THE DCIT, CIRCLE-V, AMRITSAR (3) THE CIT(A), AMRITSAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER