Krishan Kumar, Kurukshetra V. ITO, Kurukshetra

ITA 741/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51473 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SHARMA
• Keywords: Source of fund
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 741/CHD/2011 ASSESSMENT YEAR: 2004-05 SHRI KRISHAN KUMAR, VS. THE ITO, PROP RAM PARKASH KRISHAN KUMAR, WARD-2, KURUKSHETRA KURUKSHETRA PAN NO. ABEPK4858G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOEL RESPONDENT BY : SHRI AJAY SHARMA DATE OF HEARING : 08.09.2011 DATE OF PRONOUNCEMENT: 19.09.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER PASSED BY THE CIT(A), KARNAL DATED 17.3.2011 RELATI NG TO ASSESSMENT YEAR 2004-05 UNDER SECTION 250(6) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACT S IN CONFIRMING THE ADDITION U/S 68 AMOUNTING TO RS. 95,000/- ON ACCOUNT OF DEPOSIT OF SMT. SHARDA RANI WIFE OF ASSESSEE OUT OF TOTAL AMOUNT OF RS. 1,05,00 0/- RECEIVED DURING THE YEAR. 2 2. THAT AUTHORITIES BELOW HAS ERRED IN LAW AND FACT S IN CONFIRMING THE ADDITION OF RS. 1,36,000/- OUT OF LE ASE MONEY RECEIVED AGAINST AGRICULTURAL LAND AMOUNTING TO RS. 1,96,000/-. 3. THE FIRST GROUND OF APPEAL REVOLVES AROUND THE F ACTUM THAT THE ADDITION U/S 68 OF THE ACT AMOUNTING TO RS. 95,000/ - WAS ERRONEOUSLY CONFIRMED BY THE CIT(A). THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THERE WAS A DEPOS IT OF CASH OF RS.12,02,000/- IN STATE BANK OF INDIA ON 8.4.2004 A ND 9.4.2004. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 1,05,000 /- TREATING THE DEPOSITS AS INCOME OF THE ASSESSEE FROM UNDISCLOSE D SOURCES U/S 68 OF THE ACT. THE LD. CIT(A) UPHELD THE ADDITION MADE BY T HE ASSESSING OFFICER TO THE EXTENT OF RS. 95,000/- AND GRANTED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 10,000/-. THE RELEVANT FINDING OF TH E CIT(A) IS CONTAINED IN PARA 1.07, WHICH ARE AS UNDER:- 1.07 IN VIEW OF THE FACTS DISCUSSED ABOVE, IT IS HELD TH AT THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE AVAILABI LITY OF CASH OF RS. 1,05,000/- WITH HIS WIFE WHICH WAS CLAIMED TO BE RECEIVED FROM HER DURING THE YEAR UN DER CONSIDERATION. MAXIMUM BENEFIT CAN BE GIVEN OF SAVINGS OF RS. 10,000/- AND ACCORDINGLY THE ACTION OF THE ASSESSING OFFICER OF HOLDING THE CLAIM OF RECEI PT OF RS. 1,05,000/- FROM HIS WIFE AS UNEXPLAINED, IS CONFIRMED UP TO THE EXTENT OF RS. 95,000/- 4. THE LD. AR FILED WRITTEN SUBMISSIONS EXPLAINING THE SOURCES OF DEPOSIT IN THE BANK. THE RELEVANT PART OF THE SUBM ISSIONS IS REPRODUCED HEREWITH: 3 1.1 ASSESSEE ON 25.02.04 HAS RECEIVED CONTRIBUTION FROM HIS WIFE SMT SHARDA RANI AMOUNTING TO RS.10500 0/-. AO DID NOT ACCEPT THE EXPLANATION ABOUT THE SOURCE OF CONTRIBUTION OF WIFE AMOUNTING TO RS.105000/-. CIT( A) ACCEPTED RS.10,000/- AND CONFIRMED THE BALANCE ADDI TION OF RS.95000/-. 1.2 THE WIFE OF THE ASSESSEE SMT.SHARDA RANI, IS RUNNING AN INDEPENDENT BUSINESS SINCE 1991, WHICH I S CONTINUING TILL DATE. SHE IS RUNNING A BEAUTY PARLO UR, PROVIDING SERVICES AS A BEAUTICIAN AND ALSO RENTING OUT BRIDAL DRESSES AND ARTIFICIAL JEWELLERY TO SOME CUS TOMERS WHO SO INSIST. THE WIFES ABOVESAID BUSINESS ENABLE HER TO MAKE JUST ABOUT ENOUGH MONEY SO AS TO BE ABLE TO ASSIST THE ASSESSEE MONETARILY IN MAKING THEIR HOUS EHOLD ENDS MEET WHILE SAVING A LITTLE BUT FOR THE RAINY D AYS. 1.3 THE WIFE IS MAINTAINING A SAVING BANK ACCOUNT W ITH CENTRAL BANK OF INDIA, LADWA HAVING ACCOUNT NO.1204 1. A PERUSAL OF THE BANK STATEMENT OF THIS BANK ACCOUN T AT PAGE-----WOULD SHOW THAT A SUM OF RS.30000/- ON 11.11.2003 AND A SUM OF RS.43000/- ON 25.11.2003 (TOTALING INR 73000) WERE WITHDRAWN BY THE WIFE OF ASSESSEE. THE WIFE HAD WITHDRAWN THIS SUM OF MONEY AND GIVEN IT TO THE ASSESSEE IN ORDER TO HELP HIM PAY T HE MONEY TO HIS WIDOWED SISTER-IN-LAW AS PER ORDERS OF THE COURT. 1.4 IN ADDITION TO THE ABOVESAID INR 32000/- THE WI FE HAD SOME PETTY SAVINGS THAT HAD ACCUMULATED OVER A PERIOD OF TIME. SHE HAD PUT THIS MONEY AWAY AS HER STRI DHAN. TO BE ABLE TO ASSIST THE ASSESSEE TO MAKE TI MELY PAYMENT AS PER THE ORDERS OF THE COURT THE WIFE GAV E TO THE ASSESSEE THE SAID AMOUNT AN ADDITIONAL SUM OF I NR 105000/-. 1.5 THAT STATEMENT OF SMT.SHARDA RANI WAS RECORDED BY AO AT PAGE 2 OF HER STATEMENT. SHE HAS STATED THAT SHE 4 EARNS AROUND 8-10,000/- PER MONTH FROM HER BEAUTY PARLOUR AND SHE HAS ALSO GIVEN THE NAMES AND DETAIL S OF CUSTOMERS. SHE HAS SPECIFICALLY STATED THAT SHE HAD GIVEN A SUM OF RS. 1,05,000/- TO HER HUSBAND DURING 2003- 04 AFTER WITHDRAWING FROM HER BANK ACCOUNT AND BALANCE OUT OF HER INCOME AND SAVINGS AND EVEN THE SOURCE OF DE POSIT IN BANK ACCOUNT WAS EXPLAINED TO BE OUT OF HERE BUS INESS INCOME. 1.6 CIT(A) HAS ALLOWED CREDIT OF RS.10,000/- AS THE AMOUNT RECEIVED FROM SMT.SHARDA RANI AND CONFIRMED THE BALANCE ADDITION OF RS.95,000/- WHICH IS NOT JUSTIF IED. THE WIFE OF ASSESSEE HAS GIVEN AN AFFIDAVIT (COPY A TTACHED AT P.PAGE 13), STATEMENT WAS RECORDED BY AO (COPY ATTACHED AT P.PAGE 8-12) WHEREIN SOURCES OF ADVANCE WAS EXPLAINED. 1.7 THE OBSERVATIONS OF LD. AO WHILE MAKING ADDITIONS OF RS.105,000/- IS CONTAINED IN PARA 5 & 6. UNDER P ARA 6 AO HAS OBSERVED THAT ASSESSEE HAS NO FUNDS AVAILABL E FOR HOUSEHOLD EXPENSES AND THE SAME MUST HAVE BEEN FROM THE INCOME OF WIFE AND AS SUCH SHE HAS NO FUNDS LEF T FOR ADVANCE AS SUCH ADDITIONS ARE MADE. THE ENTIRE CASE IS ONLY BASED ON PRESUMPTIONS. IN THE CAPITAL ACCOUNT OF ASSESSEE FOR THE YEAR THE INVESTMENTS IN LIC OF RS. 19405/- IS SEPARATELY DEBITED TO THE CAPITAL ACCOUNT AND AS SUCH THE SAME WAS NOT OUT OF HOUSEHOLD WITHDRAWALS. MOREOVER, IF AO THINKS THAT THERE IS ANY UNEXPLAINE D EXPENDITURE TOWARDS HOUSEHOLD THEN HE SHOULD HAVE M ADE ADDITIONS FOR LOW HOUSEHOLD WITHDRAWALS IT IS WELL SETTLED LAW BY WORTHY SUPREME COURT THAT IT IS NOT CORRECT TO IGNORE THE AFFIDAVITS AND MAKE AN AD DITION WITHOUT ANY VERIFICATIONS AS HELD IN THE CASE OF : MEHTA PARIKH & CO. VS. COMMISSIONER OF INCOME TAX 30 ITR 181 (SC) 5 PARA 8 SECOND PARA FOURTH LINE OF THE ORDER NO FUR THER DOCUMENTS OR VOUCHERS IN RELATION TO THOSE ENTRIES WERE CALLED FOR, NOR WAS THE PRESENCE OF THE DEPONENTS O F THE THREE AFFIDAVITS CONSIDERED NECESSARY BY EITHER PAR TY. THE APPELLANTS TOOK IT THAT THE AFFIDAVITS OF THESE PAR TIES WERE ENOUGH AND NEITHER THE AAC, NOR THE ITO, WHO WAS PRESENT AT THE HEARING OF THE APPEAL BEFORE THE AAC , CONSIDERED IT NECESSARY TO CALL FOR THEM IN ORDER T O CROSS- EXAMINE THEM WITH REFERENCE TO THE STATEMENTS MADE BY THEM IN THEIR AFFIDAVITS. UNDER THESE CIRCUMSTANCES , IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE CORREC TNESS OF THE CASH ENTRIES OR THE STATEMENTS MADE BY THOSE DEPONENTS IN THEIR AFFIDAVITS. SUPREME COURT HAS HELD THAT WHEN AFFIDAVITS ARE FIL ED BY ASSESSEE IN SUPPORT OF SOME CLAIM IT IS NOT OPEN TO REVENUE TO CHALLENGE THE CORRECTNESS WITHOUT ANY VERIFICATION. THEREFORE, CONSIDERING THE FACTS OF THE CASE IT IS NOT JUSTIFIED TO MAKE AN ADDITION OF RS.95,000/- OUT OF AMOUNT OF RS.105000/- FROM SMT.SHARDA RANI. 5. THE LD. DR FOR THE REVENUE ON THE OTHER HAND PLA CED RELIANCE ON THE ORDER OF CIT(A) . 6. WE HAVE CAREFULLY PERUSED THE RIVALS SUBMISSION AND FACTS OF THE CASE. THE LD. AR HAS CLEARLY HIGHLIGHTED THE VARIO US SOURCES OF INCOME JUSTIFYING THE SOURCES IN THE IMPUGNED BANK ACCOUNT . HAVING REGARD TO THE SUBMISSIONS FILED BY THE ASSESSEE, WE ARE OF TH E OPINION, THAT THE IMPUGNED DEPOSIT MADE BY THE ASSESSEE STANDS DULY E XPLAINED, THEREFORE, THE ADDITION MADE BY THE LD. CIT(A) IS DELETED. 6 7. IN GROUND NO.2, IT WAS CONTENDED BY THE ASSESSEE THAT THE CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING THE ADDITION O F RS. 1,36,000/-, OUT OF LEASE MONEY RECEIVED AGAINST THE AGRICULTURAL LAND AMOUNTING TO RS.1,96,000/-. THE LD. AR FILED WRITTEN SUBMISSION S ALONG WITH A PHOTOCOPY OF AGREEMENT EVIDENCING THE GRANT OF LEAS E OF THE AGRICULTURAL LAND AND RECEIVED THE LEASE MONEY IN LIEU THEREOF. THE DOCUMENTS FILED BY THE LD. AR CLEARLY EVIDENCE THE RECEIPTS OF THE LEA SE MONEY. THE LD. AR ALSO SUBMITTED THAT THE AGRICULTURAL INCOME IS EXEM PT AND EVEN IF SOME ADDITION IS MADE, NO TAX LIABILITY WOULD FASTENED O N THE ASSESSEE. THE LD. DR PLACED RELIANCE ON THE ORDER OF CIT(A). 8. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, IMPUGNED ASSESSMENT ORDER AND THE APPELLATE ORDER INCLUDING THE WRITTEN SUBMISSION MADE BY THE ASSESSEE. THE ASSESSEE HAS FILED DOCUM ENTARY EVIDENCE DEMONSTRATING THE RECEIPT MONEY WHICH REMAINED UN-R EBUTTED BY THE REVENUE. A CAREFUL PERUSAL OF THE WRITTEN SUBMISSI ONS MADE BY THE ASSESSEE REVEALS THAT THE CONTENTIONS OF THE ASSESS EE STANDS JUSTIFIED. HAVING REGARD TO THE FACT SITUATION OF THE CASE AND TOTALITY OF THE CIRCUMSTANCES, WE FIND MERIT IN THE SUBMISSION MAD E BY THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL IS DECIDED IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19 TH SEPTEMBER, 2011 RKK 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR