RADHA MOHAN MAHESHWARI, Jaipur V. ITO, Jaipur

ITA 704/JPR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82752 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Income from undisclosed sources; Search and seizure; Question of law
• Section: 260A; 132

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 704/JP/2013 ASSTT. YEAR- 2010-11 PAN NO. AARPM 0482 B RADHA MOHAN MAHESHWARI, THE I.T.O., 286, BARKAT NAGAR, TONK ROAD, VRS. WARD 6(2), JAIP UR. JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI P.C. PARWAL. DEPARTMENT BY :- SHRI SUBHASH CHANDRA. DATE OF HEARING : 07/08/2014 DATE OF PRONOUNCEMENT : 28/08/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26/7/2013 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR TH E A.Y. 2010-11. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 1 ,40,60,000/- (RS. 1,20,60,000/- DEPOSITED IN BANK ACCOUNT AND RS . 20,00,000/- UTILIZED FOR PAYMENT OF INCOME TAX) BY NOT ACCEPTIN G THE SOURCE OF SUCH DEPOSIT/PAYMENT AS OUT OF THE REALIZATION MADE FROM THE UNDISCLOSED DEBTORS, WHICH WERE OFFERED FOR TAX AND A SSESSED BY THE DEPARTMENT IN EARLIER YEARS. 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE SAID ADDITION BY HOLDING THAT IN A.Y. 2008-09, CIT(A) DELETED THE SIMILAR ADDITION AS IN THAT YEAR ASSESSEE FURNISHED NAME AND ADDRESS OF PERSONS FROM WHOM AMOUNT IS REALIZED BUT THE SAME IS NOT SUBMITTED IN THE YEAR ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 2 UNDER CONSIDERATION AND THEREFORE FACTS ARE NOT IDE NTICAL WITH THAT OF A.Y. 2008-09 BY IGNORING THAT CIT(A) INCORRECTLY MENTIONED SUCH FACTS IN A.Y. 2008-09 BUT HE DELETED THE ADDIT ION NOT ON ACCOUNT OF SUCH INCORRECT FACT BUT FOR THE REASON T HAT ONCE ASSESSEE HAS PAID THE TAX ON UNACCOUNTED DEBTS, AGA IN TAXING THE SAME ON ITS REALIZATION WOULD AMOUNT TO DOUBLE TAXAT ION BY RELYING ON DECISION OF HONBLE ITAT IN CASE OF MADAN LAL JAIN IN ITA NO. 198/JP/2005 DATED 13/10/2006. HE FURTHER IG NORED THE FINDING OF HONBLE ITAT IN PARA 3.6 OF THE ORDER FOR A.Y. 2008-09 WHERE THE ADDITION DELETED BY CIT(A) WAS CONFIRMED BY HONBLE ITAT BY HOLDING THAT IN RESPECT OF TRANSACTION RECOR DED OUTSIDE THE BOOKS OF ACCOUNTS IT IS NOT POSSIBLE FOR THE AS SESSEE TO PRODUCE CONFIRMATION FROM PARTIES AND ONCE IT IS AC CEPTED THAT THERE WERE DEBTORS FROM WHICH THE AMOUNT CAN BE REALI ZED THAN THE CONTENTION OF ASSESSEE IS TO BE ACCEPTED THAT S UCH AMOUNT HAS BEEN REALIZED FROM THE DEBTORS. 2. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY AN Y OF THE GROUNDS OF APPEAL. 3. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHORT TERM CAPITAL GAIN, INTEREST INCOME AND PROPRIETY FIRM IN THE NAME OF M /S R.A. GEMS. BOTH THE GROUNDS IN APPEAL ARE AGAINST CONFIRMING THE ADDITI ON OF RS. 1,40,60,000/- BY THE LEARNED CIT(A) NOT ACCEPTING THE SOURCE OF SUCH DEPOSIT/PAYMENT AS OUT OF REALIZATION MADE FROM THE UNDISCLOSED DEBTORS. TH E ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS NOTICED BY HIM THAT THE ASSESSEE HAD DEPOSITED RS. 27.90 LACS CASH IN HIS BANK ACCOUNT NO. 732 IN DENA BANK AND RS. 92.70 LACS IN AXIS BAN K ACCOUNT NO. 10010100030503. IT WAS EXPLAINED BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER THAT RS. 5 CRORES WAS SURRENDERED BY HIM DUR ING SEARCH AS UNDISCLOSED ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 3 INCOME IN THE FORM OF UNDISCLOSED CASH AND DEBTORS. OUT OF THESE DEBTORS HE REALIZED RS. 1,40,60,000/- DURING THE YEAR UNDER CO NSIDERATION. OUT OF THIS REALIZATION RS. 1,20,60,000/- WAS DEPOSITED IN CASH IN BANK ACCOUNT AND RS. 20 LACS WAS USED FOR PAYMENT OF OUTSTANDING INCOME TAX DEMAND. THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BE ING HEARD ON UNEXPLAINED CASH DEPOSITED OF RS. 1,20,60,000/- AND UNEXPLAINE D EXPENDITURE INCURRED AT RS. 20,00,000/-. THE ASSESSEE SUBMITTED REPLY VIDE L ETTER DATED 05/3/2013. IT WAS SUBMITTED THAT THERE WAS A DISCLOSURE OF RS. 5 CR ORES DURING THE SEARCH PROCEEDING ON THE BASIS OF DEBTORS NOTED ON APPROVA L SLIP/DOCUMENTS, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. OUT OF THESE D EBTORS, THE ASSESSEE REALIZED RS. 49 LACS IN A.Y. 2008-09. THE LEARNED A SSESSING OFFICER MADE THE ADDITION IN A.Y. 2008-09 ALSO ON ACCOUNT OF NOT FUR NISHING NAME AND ADDRESS OF THE DEBTORS OF RS. 49 LACS, WHICH WAS DELETED BY THE LEARNED CIT(A). THE ORDER OF THE LEARNED CIT(A) FOR DELETION HAS BEEN CO NFIRMED BY THE ITAT. THE DEPARTMENT ALSO FILED AN APPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT, WHICH HAS ALSO NOT ADMITTED AS SUBSTANTIAL QUESTION OF LAW ON THIS ISSUE VIDE ORDER DATED 16/5/2012, BUT IT REFERRED SUB-SECTION (4) OF SECTION 260A OF THE ACT AND HELD THAT THE HONBLE COURT HAS NOT ABSTAIN ED FROM RECORDING REASONS ON ANY OTHER SUBSTANTIAL QUESTIONS OF LAW NOT PERMIT TED BY THE HONBLE COURT. THUS, HE MADE ADDITION OF RS. 1,40,60,000/- ON ACCOU NT OF CASH DEPOSITED IN BANK ACCOUNT AND EXPENDITURE INCURRED FOR PAYMENT O F TAX. ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 4 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASS ESSING OFFICER, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMEN T ORDER AND APPELLANTS WRITTEN SUBMISSION. APPELLANT DEPOSITED CASH IN HIS BANK ACCOUNTS FOR WHICH THE SOURCE WAS EXPLAINED TO BE TH E REALIZATION OF DEBTORS DISCLOSED AS INCOME DURING SEARCH IN EARLIE R YEARS. APPELLANT SUBMITTED THAT SIMILAR ISSUE CAME UP IN ASSESSMENT YEAR 2008-09 IN WHICH AFTER DETAILED EXAMINATION, CIT(A) DELETED ADD ITION WHICH WAS CONFIRMED BY ITAT. DEPARTMENTS REFERENCE APPLICATI ON WAS ALSO REJECTED BY HIGH COURT. ASSESSING OFFICER DID NOT A CCEPT THE APPELLANTS EXPLANATION ON THE GROUND THAT NO DETAILS INCLUDING NAME AND ADDRESS OF THE PARTIES WHO MADE THE PAYMENT IN CASH WAS GIVE N. NO CONFIRMATIONS FROM THESE PARTIES WERE MADE AVAILABL E FOR ANY VERIFICATION BY THE A.O.. IN THE ABSENCE OF ANY DET AILS WITH REGARD TO IDENTITY OF THE PAYER, ASSESSING OFFICER HELD THAT THE CASH DEPOSITED IN THE BANK ACCOUNTS IS UNEXPLAINED. SINCE APPELLANT CLAIMED THAT SAME ISSUE CAME UP IN EARLIER YEAR, THE ORDER OF CIT(A) IN ASSESSMENT YEAR 2008-09 WAS REFER RED TO SEE WHETHER FACTS ARE IDENTICAL. ON PAGE 11 PARA 3.3, FO LLOWING OBSERVATION AS APPELLANTS SUBMISSION IS NOTED BY CIT(A)- HOWEVER, WITH GREAT PERSUASION THE APPELLANT HAS BEE N ABLE TO OBTAIN THE CONFIRMATION BY WAY OF AFFIDAVITS FROM THESE PER SONS. THE CONTENTION OF THE A.O. IS INCORRECT THAT THE COMPLE TE NAME AND ADDRESS OF THE DEBTORS WERE NOT GIVEN. THE AFFIDAVITS CONTAIN ED THESE DETAILS I.E. NAME AND ADDRESS OF THE PERSONS. FURTHER ON PAGE 11 AND 12 IN PARA 3.5 OF THE CIT(A) S ORDER, FOLLOWING FINDING IS ALSO RELEVANT- CONSIDERING THE VERY NATURE OF DEBT WHICH WAS UNACCO UNTED (AND THEREBY HAS BEEN OFFERED FOR TAXES), THE REALIZATIO N FROM THESE DEBT/ADVANCES WOULD NOT STRICTLY CONFIRM TO SATISFAC TION OF ALL THE THREE INGREDIENTS NAMELY- NAME, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTIONS. IN ANY CASE, THE APPELLANT WAS FURNISH ED THE NAME AND ADDRESS OF THE PERSONS FROM WHOM THE MONEY OF RS. 4 9 LACS HAS BEEN REALIZED BACK. EVEN THE AFFIDAVITS FROM THOSE PERSO NS HAVE BEEN ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 5 FURNISHED. THUS IN THE INSTANT CASE NAME, ADDRESS, I DENTITY OF THE PERSON IS ESTABLISHED. FROM THE ABOVE FINDINGS GIVEN BY CIT(A) IN THE APPE AL ORDER FOR ASSESSMENT YEAR 2008-09 IN THE APPELLANTS CASE, IT IS CLEAR THAT CIT(A) GRANTED RELIEF TO THE APPELLANT ON PROVING THE IDEN TITY BY FURNISHING CONFIRMATIONS AND ADDRESS OF THE PARTIES WHO RETURNE D THE DEBT TAKEN IN EARLIER YEAR FROM THE APPELLANT. SINCE THE SOURCE WA S EXPLAINED IN THAT YEAR, THE SAME WAS TREATED AS EXPLAINED. HOWEVER, IN THIS YEAR, APPELLANT HAS NOT SUBMITTED NAME AND ADDRESSES OF T HE PARTIES. THE CONFIRMATION/AFFIDAVIT WAS ALSO NOT FILED AND THEREF ORE EVEN IDENTITY OF THE PAYER IS NOT ESTABLISHED. CONSIDERING THIS IT C ANNOT BE SAID THAT FACTS ARE IDENTICAL THIS YEAR AS COMPARED TO 2008-09. ACC ORDINGLY THE DECISION OF ITAT AND CIT(A) IN THAT YEAR CONSIDERING THE FACT THAT NAME AND ADDRESS AND CONFIRMATIONS WERE FILED, CANNOT BE APPL IED THIS YEAR. SINCE APPELLANT HAS NOT DISCHARGED EVEN PRIMARY ONUS OF G IVING THE NAME AND ADDRESS OF THE PARTIES WHO GAVE CASH WHICH WERE DEPOS ITED IN THE BANK ACCOUNT, IT CANNOT BE SAID THAT APPELLANT HAS EXPLA INED THE NATURE AND SOURCE OF CASH CREDIT. DISCLOSURE OF INCOME IN EARL IER YEARS WILL NOT AUTOMATICALLY ENTITLE APPELLANT TO DEPOSIT CASH IN HIS BANK ACCOUNT IN SUBSEQUENT YEARS. IF APPELLANT IS CLAIMING THAT THE SOURCE OF CASH DEPOSIT IS FROM UNACCOUNTED INCOME DISCLOSED IN EAR LIER YEARS, THE ONUS IS OF THE APPELLANT TO AT LEAST SATISFY THE A.O. BY GIVING NAMES AND ADDRESSES OF THE PARTIES. SINCE APPELLANT HAS NOT D ISCHARGED EVEN THIS MUCH PRIMARY ONUS, I HAVE NO HESITATION IN HOLDING THAT APPELLANT HAS NOT EXPLAINED THE SOURCE OF CASH DEPOSITS AND ACCOR DINGLY THE ADDITION MADE BY THE ASSESSING OFFICER IS JUSTIFIED. THE SAME IS NOT COVERED IN FAVOUR OF APPELLANT IN VIEW OF THE FACTUAL DIFFERENC E MENTIONED EARLIER. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R. FOR THE ASSESSEE CONTENDED THAT THERE WAS A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT DATED 21/6 /2007 ON ASSESSEE. THE APPELLANT SURRENDERED RS. 5 CRORES ON ACCOUNT OF UN DISCLOSED INCOME AND PAID TAX ON IT IN A.YS. 2006-07 TO 2008-09. THE DISCLOSU RE INCLUDES AMOUNT OF RS. 4,33,99,111/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN DEBTORS FOR WHICH ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 6 APPROVAL MEMOS WERE FOUND AND SEIZED. DURING THE YEA R, THE ASSESSEE HAD REALIZED RS. 1,40,60,000/- OUT OF THESE DEBTORS. RS . 1,20,60,000/- WAS DEPOSITED IN THE BANK ACCOUNTS AND RS. 20 LACS CASH PAID TO INCOME TAX ACCOUNT. THE APPELLANT HAD SUBMITTED TABULAR DETAILS OF OUTSTANDING DEBTORS OF RS. 2,92,63,678/- AS ON 31/3/2009 AND AMOUNT OF RS. 1,40,60,000/- REALIZED FROM THEM DURING THE YEAR AND THE BALANCE OF RS. 1, 52,03,678/- OUTSTANDING FROM THEM AS ON 31/3/2010. THIS ISSUE COVERS IN FAV OUR OF THE ASSESSEE IN A.Y. 2008-09, WHICH HAS BEEN CONFIRMED BY THE HONBLE IT AT. THE DEPARTMENT PREFERRED APPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT, WHO HAS NOT FOUND ANY SUBSTANTIAL QUESTION OF LAW VIDE ORDER DATED 16/ 5/2012. THE ASSESSEE ALSO RELIED IN CASE OF MADAN LAL JAIN IN ITA NO. 198/JP/ 2005 DATED 13/10/2006 WHEREIN IDENTICAL ADDITION ON ACCOUNT OF UNDISCLOSED HUNDIS REALIZED, WAS MADE, WHICH SUPPORTS THE CASE OF THE ASSESSEE. HE FU RTHER RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. EXCEL INDUSTRIES LTD. 93 DTR 457 WHEREIN IT WAS HELD THAT WHEN IN SEVER AL ASSESSMENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FA VOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPEC T OF SOME ASSESSMENT YEARS, THE MATTER WAS TAKEN IN APPEAL BEFORE THE HIG H COURT BUT WITHOUT ANY SUCCESS, THAT BEING SO, THE REVENUE CANNOT BE ALLOWE D TO FLIP-FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER THAN SPEND THE TAXPAYERS MONEY IN PURSUING LITIGATION FOR THE SAKE OF IT. THUS HE PRAY ED TO DELETE THE ADDITION CONFIRMED BY THE LEARNED CIT(A). ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 7 6. AT THE OUTSET, THE LEARNED CIT D.R. SUPPORTED THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WHEN THE ASSESSEE HAS SURRENDER ED UNDISCLOSED INCOME IN PRECEDING YEARS AND DURING THE COURSE OF SEARCH, AP PROVAL MEMOS WERE FOUND IN FORM OF DEBTORS, ARE WITH THE DEPARTMENT. THE DEPA RTMENT HAD ACCEPTED DISCLOSURE AND COLLECTED THE TAX ON IT IN VARIOUS Y EARS. IN LATER YEARS, THE ASSESSEE HAD REALIZED DEBTORS IN FORM OF CASH OUT O F UNDISCLOSED DEBTORS AND DEPOSITED IN ITS BANK ACCOUNT AND ALSO USED THE MON EY FOR PAYMENT OF TAX. IT IS OBVIOUS THAT THE REALIZATION OF CASH WAS FROM THE UNDISCLOSED DEBTORS ONLY, WHICH WERE SURRENDERED DURING THE COURSE OF SEARCH. N OW AT THIS STAGE, THE LEARNED ASSESSING OFFICER AS WELL AS THE LEARNED CIT( A) IS SEEKING NAMES AND ADDRESSES OF THE DEBTORS EVEN THESE DETAILS ARE WITH THE DEPARTMENT IN FORM OF SEIZURE OF APPROVAL MEMOS OF DEBTORS. SIMILAR IS SUE HAS BEEN DEALT BY THE ASSESSING OFFICER AS WELL AS CIT(A) IN A.Y. 2008-09 A ND WHICH WENT UP TO HONBLE HIGH COURT AND ISSUE HAS BEEN SETTLED IN FA VOUR OF THE ASSESSEE. EVEN THEN THE LEARNED CIT(A) CONFIRMED THE ADDITION. THERE IS NO PROVISION UNDER THE INCOME TAX LAW THAT A PERSON WOULD PAY TAX AT THE TIME OF DISCLOSURE OF UNDISCLOSED INCOME AND AT THE TIME OF REALIZATION O F UNDISCLOSED INCOME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LEAR NED CIT(A) WAS NOT JUSTIFIED TO CONFIRM THE ORDER OF THE ASSESSING OFF ICER EVEN BEFORE HIM, THE DECISION OF HONBLE RAJASTHAN HIGH COURT HAS BEEN D ELIVERED IN ASSESSEES ITA NO. 704/JP/2013 RADHA MOHAN MAHESHWARI VS. ITO 8 CASE ON IDENTICAL ISSUE. THUS, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/08/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 28 TH AUGUST, 2014 * RANJAN COPY FORWARDED TO :- 1. RADHA MOHAN MAHESHWARI, JAIPUR 2. THE ITO, WARD 6(2), JAIPUR 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 704/JP/2013) BY ORDER, AR ITAT JAIPUR.