ITO-1(3), Agra V. Sh. Girraj Kishore Agarwal, Agra

ITA 73/AGR/2010

• Counselvise Citation: 7320314 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: RAM KUMAR AGARWAL
• Keywords: Unexplained cash credit; Unexplained investment; Deemed to accrue or arise in india
• Section: 131; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.73/AGR/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER 1(3), VS. SHRI GIRRAJ KISHOR E AGARWAL, AGRA. 9, MUKHERJEE MARKET, SUBHASH BAZAR, AGRA (PAN: AAQPA 3293 D). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI RAM KUMAR AGARWAL, C.A. DATE OF HEARING : 22.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 ORDER PER BENCH : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A)-I, AGRA DATED 23.12.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE CIT(APPEALS)-I, AGRA HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 4,45,48,400 MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT , 1961 WITHOUT APPRECIATING THE FACTS MENTIONED IN THE ASSESSMENT ORDER DATED 30.12.2008 AND REMAND REPORT DATED 11.12.2009 THAT ASSESSEE FAILED TO SUBSTANTIATE THE SOURCE OF CASH DEPOSIT IN HIS B ANK ACCOUNT; ITA NO.73/AGR/20101 A.Y. 2006-07 2 2. THAT THE CIT(APPEALS)-I, AGRA HAS ERRED IN LAW A ND ON FACTS OF THE CASE IN REDUCING THE ADDITION OF ` 8,45,986/- (9,80,064 -1,34,078) MADE ON ACCOUNT OF COMMISSION AND DELCREDRE COMMISS ION ON ESTIMATION BASIS WHILE ASSESSEE HAD NOT MAINTAINED THE BOOKS OF ACCOUNTS FOR F.Y. 2005-06 ; 3. THAT THE ORDER OF THE CIT(APPEALS)-1, AGRA IS ER RONEOUS IN LAW AND ON THE FACTS OF THE CASE AND THAT THE ORDER OF THE A.O. BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR ALTER OR MODIFY ANY GROUND DURING THE APPELLATE PROCEEDINGS. 3. AS REGARDS AGROUND NO.1, THE BRIEF FACTS ARE THA T THE A.O. FOUND THE FOLLOWING CASH DEPOSITS IN THE ASSESSEES BANK ACCO UNT :- S.NO. NAME BANK & ACCOUNT NO. CASH DEPOSITED 1. M/S GIRRAJ CORPORATION AXIS BANK ` 1,08,06,500/- PROP. SHRI GIRRAJ KISHORE AGARAL 086010200002745 2. SHRI GIRRAJ KISHORE AGARWAL AXIS BANK ` 1,26,26,900/- 086010100162142 3. SHRI GIRRAJ KISHORE AGARWAL IDBI BANK ` 2,01,75,000/- 000104000079125 4. SHRI GIRRAJ KISHORE AGARWAL INDUSIND BANK ` 9,40,000/- 0064-G-51605-001 TOTAL ` 4,45,48,400/- 4. THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE SOURC E OF THE ABOVE CASH DEPOSITS. THE A.O. ALSO OBSERVED THAT FREQUENT CAS H DEPOSITS AND WITHDRAWALS THROUGH CHEQUES WERE MADE FROM THE ABOVE BANK ACCOU NTS. BEFORE THE A.O., THE ITA NO.73/AGR/20101 A.Y. 2006-07 3 ASSESSEE CLAIMED THAT THE CASH DEPOSITS PERTAINED T O THE COMPANY M/S SHREE GIRRAJ FABRICS PVT. LTD. OF WHICH HE IS A DIRECTOR. THE A .O. ISSUED SUMMONS U/S 131 OF THE ACT TO THE COMPANY TO PRODUCE BOOKS OF ACCOUNT. IN RESPONSE THERETO, THE ASSESSEE FILED A COPY OF AN FIR SHOWING THAT BOOKS OF ACCOUNT OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION WERE LOST DURING TRANS IT. THE ASSESSEE EXPLAINED THAT THE CASH WAS BEING RECEIVED BY HIM FROM VARIOUS TRA DERS/PARTIES ON BEHALF OF THE COMPANY. HOWEVER, THE A.O. REJECTED THE ASSESSEES CLAIM OBSERVING THAT THE ENTIRE AMOUNT IS NOT VERIFIABLE FROM THE AVAILABLE RECORDS. FOR EXAMPLE, IN THE ASSESSEES ACCOUNT NO.16242 IN AXIS BANK, ` 1 LAC WAS DEBITED ON 20.07.2005 BUT THE SAME IS NOT FOUND CREDITED IN THE COMPANYS BAN K ACCOUNT NO.CA-5302. THEREFORE, HOLDING ALL THE DEPOSITS OF ` 4,45,48,400/- AS UNEXPLAINED MONEY, THE A.O. TREATED THE SAME AS THE ASSESSEES DEEMED INCO ME U/S.69A OF THE ACT ON PROTECTIVE BASIS WHILE FORWARDING THE INFORMATION T O THE A.O. HAVING JURISDICTION OVER THE CASE OF THE COMPANY M/S. SHREE GIRRAJ FABR ICS PVT. LTD. TO TAKE NECESSARY ACTION IN THAT CASE. 5. BEFORE THE LD. CIT(A) THE ASSESSEE FILED CERTAIN DOCUMENTS WHICH WAS SENT TO THE A.O. FOR COMMENTS AND THE REMAND REPORT WAS OBT AINED FROM THE A.O. WHICH WAS FURTHER GIVEN TO THE ASSESSEE WHO HAS SUBMITTED THE REJOINDER. AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, REMAND REPORT OF THE A.O. AND THE REJOINDER OF THE ASSESSEE, THE LD. CIT(A) WAS O F THE VIEW THAT THE ADDITION ITA NO.73/AGR/20101 A.Y. 2006-07 4 MADE BY THE A.O. AT ` 4,45,48,400/- ON PROTECTIVE BASIS IS NOT SUSTAINABL E FOR THE REASONS MENTIONED VIDE PARAGRAPH NO.2.8 & 2.9 OF HI S ORDER WHICH ARE REPRODUCED AS UNDER :- 2.8 IN VIEW OF THE FOREGOING, ADDITION OF ` 4,45,48,400/- MADE BY THE A.O. ON PROTECTIVE BASIS IS NOT SUSTAINABLE FOR FOL LOWING REASONS :- A. OUT OF THE TOTAL CASH DEPOSIT OF ` 4,45,48,400/-, ` 2,64,65,000/- STANDS ACCOUNTED FOR BY M/S SHREE GIRRAJ FABRICS PV T. LTD. AND, THEREFORE, THE AMOUNT TO BE CONSIDERED IN THE APPEL LANTS HANDS IS ONLY ` 1,80,83,400/-. B. AFTER CARRYING OUT INDEPENDENT VERIFICATION, THE A.O. HAS CONFIRMED THAT AGAINST THE CASH DEPOSITS, CHEQUES H AVE BEEN ISSUED TO VARIOUS OUTSTATION PARTIES INCLUDING FIRM S, THEREBY ENDORSING THE APPELLANTS CLAIM THAT THE TRANSITION S ARE BEING DONE ON BEHALF OF SMALL TEXTILE TRADERS. 2.9 THUS, THERE IS NO EVIDENCE TO SHOW THAT CASH DE POSITS IN THE APPELLANTS BANK ACCOUNTS REPRESENT UNEXPLAINED CRE DITS LIABLE TO BE TREATED AS HIS DEEMED INCOME. HENCE, THE ADDITION OF ` 4,45,48,400/- MADE ON PROTECTIVE BASIS, IS HEREBY DELETED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE A.O. HAS MADE THE PROTECTIVE ASSESSMENT IN THE HAND S OF THE ASSESSEE, WHEREAS, IT WAS WRITTEN TO THE A.O. OF M/S. SHREE GIRRAJ FABRIC S PVT. LTD. IN WHICH THE ASSESSEE IS ALSO DIRECTOR TO MAKE SUBSTANTIVE ASSESSMENT. N O SUCH SUBSTANTIVE ASSESSMENT HAS BEEN MADE BY THE A.O. OF M/S. SHREE GIRRAJ FABR ICS PVT. LTD. EXCEPT CERTAIN ADDITION ON COMMISSION ACCOUNT HAD BEEN MADE WHICH HAS BEEN DELETED BY THE LD. CIT(A) VIDE HIS ORDER DATED 13.12.2010. THE ORDER OF THE LD. CIT(A) HAS BEEN UPHELD BY US IN ITA NO.58/AGR/11 DATED 17.11.2011. THERE IS NO DISPUTE TO THE ITA NO.73/AGR/20101 A.Y. 2006-07 5 FACT THAT THE ASSESSEE HAD DEPOSITED CASH IN HIS BA NK ACCOUNT WHICH HAS BEEN EXPLAINED TO HAVE BEEN RECEIVED ON BEHALF OF M/S SH RI GIRRAJ FABRICS PVT. LTD. THE AMOUNT SO COLLECTED ON BEHALF OF M/S SHRI GIRRAJ FA BRICS PVT. LTD. IS ` 2,64,65,000/- FOR WHICH THERE IS NO DISPUTE THAT THE AMOUNT HAS B EEN TRANSFERRED TO M/S SHRI GIRRAJ FABRICS PVT. LTD. THROUGH ACCOUNT PAYEE CHEQ UES. NO ADDITIONS HAVE BEEN MADE ON THIS ACCOUNT BY THE A.O. OF M/S. GIRRRAJ FA BRICS PVT. LTD. INSPITE OF THE FACT THAT NOTICE UNDER SECTION 148 OF THE ACT WAS I SSUED FOR WHICH THE ASSESSMENT ESCAPED FOR CASH DEPOSIT OF ` 4,45,48,400/- IN THE BANK ACCOUNT OF SHRI GIRRAJ KISHORE AGARAL. THEREFORE, IT IS EVIDENT THAT THE SALE PROCEEDS HAVE BEEN COLLECTED BY THE ASSESSEE ON BEHALF OF M/S. SHRI GIRRAJ FABRI CS PVT. LTD. CANNOT BE DENIED. EVEN IF THE CHEQUES ISSUED TO M/S. SHRI GIRRAJ FABR ICS PVT. LTD. ARE TREATED TO HAVE BEEN GIVEN ON ACCOUNT OF THE SALES MADE TO THE ASSE SSEE DIRECTOR, THEN CASH DEPOSITS BY THE ASSESSEE DIRECTOR HAS NECESSARILY T O BE TREATED AS SALES MADE BY THE ASSESSEE DIRECTOR ON BEHALF OF M/S SHRI GIRRAJ FABR ICS PVT. LTD. IN ANY CASE, THE CASH DEPOSITED BY THE ASSESSEE DIRECTOR AMOUNTING T O ` 2,64,65,000/- WHICH HAS BEEN TRANSFERRED THROUGH ACCOUNT PAYEE CHEQUE TO M/ S SHRI GIRRAJ FABRICS PVT. LTD. CANNOT BE UNEXPLAINED CASH DEPOSIT AND WE FIND NO I NFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. TO THE EXTENT OF ` 2,64,65,000/-. ITA NO.73/AGR/20101 A.Y. 2006-07 6 7. SIMILARLY, THE ASSESSEE HAS RECEIVED CASH FROM V ARIOUS PARTIES WHICH HAS BEEN DEPOSITED IN HIS BANK ACCOUNT ON VARIOUS DATES AND CHEQUES HAVE BEEN ISSUED TO OUTSTATION PARTIES INCLUDING FIRMS, THEREBY ENDO RSING THAT THE TRANSACTIONS ARE BEING DONE ON BEHALF OF SMALL TEXTILE TRADERS. THE RE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAD ISSUED CHEQUES TO SMALL TEXTILE TR ADERS ON WHOSE BEHALF THE ASSESSEE HAD BEEN ACTING AS COMMISSION AGENT. THE ASSESSEE HAD SUBMITTED CONFIRMATION OF THOSE PARTIES WHICH IS ALSO NOT IN DISPUTE. THEREFORE, IN THE CIRCUMSTANCES AND FACT OF THE CASE, THE A.O. IS NOT JUSTIFIED IN TREATING THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT AND THE LD. CIT(A ) HAS RIGHTLY DELETED THE ADDITION SO MADE. THEREFORE, GROUND NO.1 OF THE RE VENUE IS DISMISSED. 8. AS REGARDS GROUND NO.2, THE A.O. HAS MADE THE AD DITION ON ACCOUNT OF COMMISSION ON ESTIMATE BASIS. THE LD. CIT(A) HOWEV ER ESTIMATED THE COMMISSION AT 1% OF ASSESSEES TURNOVER AND ADDITIONALLY AT TH E RATE OF ` 1/- PER ` 1000/- AS DELCREDRE COMMISSION WHICH HAS BEEN WORKED OUT AT ` 39,967/- WHICH WAS ROUNDED OFF TO ` 40,000/- AND ACCORDINGLY REDUCED THE ADDITION OF ` 9,80,064/- TO ` 1,34,078/-. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THERE IS NO PROOF FOR THE ASSESSEES CLAIM THAT HE HAS RECEIVED THE COMMISSION @ 0.75% T O 1.25% AND THEREFORE, THE ITA NO.73/AGR/20101 A.Y. 2006-07 7 ESTIMATION MADE BY THE LD. CIT(A) APPEARS TO BE REA SONED ONE AND WE FIND NO INFIRMITY IN HIS ORDER. THUS, GROUND NO.2 OF THE R EVENUE IS DISMISSED. 10. GROUND NOS.3 & 4 ARE GENERAL IN NATURE AND THER EFORE, DO NOT REQUIRE ANY ADJUDICATION. 11. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 73/AGR/2010 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 25 TH NOVEMBER, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY