Shri Yogesh Shantaram Devargaokar, Nashik V. ITO wd- 1(2) Nashik, Nashik

ITA 815/PUN/2012

• Counselvise Citation: 81524514 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SUNITA RAO
• Assessee Lawyers: A B PATIL
• Keywords: Unexplained cash credit; Source of fund
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.815/PN/2012 (ASSESSMENT YEAR : 2005-06) YOGESH SHANTARAM DEVARGAOKAR, AT POST HARSUL, TAL. TRIMBAKESHWAR, DIST. NASHIK 422 204. PAN : AGMPD8692D . APPELLANT VS. INCOME TAX OFFICER, WARD 1(2), NASHIK. . RESPONDENT ASSESSEE BY : MR. A. B. PATIL DEPARTMENT BY : MRS. SUNITA RAO DATE OF HEARING : 18-06-2014 DATE OF PRONOUNCEMENT : 19-06-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 10.01.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 24.12.2007 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. THE APPELLANT HAS RAISED TWO GROUNDS RELATING TO ADDITIONS SUSTAINED BY THE CIT(A) OF RS.1,00,000/- AND RS.3,37,000/- REPRE SENTING UNEXPLAINED CAPITAL CONTRIBUTION AND UNEXPLAINED CASH CREDITS R ESPECTIVELY. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF WHOLESALE TRADING IN SUG AR, WHO FILED A RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 ON 28.10.2005 DE CLARING TOTAL INCOME OF RS.94,370/-. THE SAID RETURN OF INCOME WAS SUBJECT TO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT, WHEREIN THE TOTAL INCOME WAS DETERMINED AT ITA NO.815/PN/2012 A.Y. 2005-06 RS.6,81,370/- AFTER MAKING ADDITIONS OF RS.2,50,000 /- AND RS.3,37,000/- ON ACCOUNT OF UNEXPLAINED CAPITAL INTRODUCTION AND UNE XPLAINED CASH CREDITS RESPECTIVELY. ON AN APPEAL BY THE ASSESSEE, THE CI T(A) HAS PARTLY REDUCED THE ADDITION WITH RESPECT TO THE UNEXPLAINED CAPITA L INTRODUCTION BY AN AMOUNT OF RS.75,000/- AND HAS RETAINED THE ADDITION ON ACC OUNT OF UNEXPLAINED CASH CREDITS OF RS.3,37,000/-. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. HITHERTO, ASSESSEE WAS NOT BEING ASSESSED TO TAX AND THE ASSESSEE FURNISHED A RETURN OF INCOME FOR THE FIRST TIME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT HAS BEEN EXPLAINED THAT ASSESSEE STARTED THE BUSINESS OF WHOLESALE TRADING IN SUGAR FROM 31 ST MARCH, 2004 AND THAT THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION IS THE FIRST YEAR OF BUSINESS. THE ASSESSING OFFICER NOTED THAT ASSESSE E HAD INTRODUCED CAPITAL IN CASH OF RS.2,50,000/-. ON BEING SHOW-CAUSED TO EXPLAIN THE SOURCES OF SUCH CAPITAL INTRODUCTION, ASSESSEE CLAIMED THAT TH E SAME WAS MET OUT OF HIS PAST SAVINGS AND FROM THE AGRICULTURAL INCOME EARNE D BY HIS HUF. ACCORDINGLY, ASSESSEE EXPLAINED BEFORE THE ASSESSIN G OFFICER THAT RS.1,00,000/- WAS OUT OF HIS PAST SAVINGS WHEN HE W AS DOING PLYING OF JEEP AND RS.1,50,000/- WAS OUT OF SAVINGS FROM AGRICULTU RAL INCOME OF HUF. THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE PRIMARILY ON THE GROUND THAT THERE WAS NO EVIDENCE IN SUPPORT OF THE SAID P LEA. THE CIT(A) NOTED ASSESSEES SUBMISSION THAT IN THE PRIOR PERIOD HE W AS PLYING A MOTOR JEEP WHICH HE HAD PURCHASED BY TAKING A LOAN FROM CO-OPE RATIVE SOCIETY. ASSESSEE ALSO CLAIMED THAT IN THE PRECEDING YEAR HE HAS RECE IVED APPROXIMATELY RS.66,000/- TO RS.70,000/- FROM THIS ACTIVITY. THE CIT(A) NOTED THAT THERE WAS NO EVIDENCE TO SHOW HOW SUCH INCOME WAS EARNED, SO HOWEVER, HE ESTIMATED SAVINGS FROM PLYING OF JEEP AT RS.25,000/- AS AGAIN ST RS.1,00,000/- CONSIDERED BY THE ASSESSEE. ITA NO.815/PN/2012 A.Y. 2005-06 5. BEFORE US, THE LEARNED FOR THE ASSESSEE HAS REIT ERATED THE SUBMISSIONS PUT-FORTH BEFORE THE LOWER AUTHORITIES. SO HOWEVER , IT IS QUITE EVIDENT THAT THERE IS NO MATERIAL BROUGHT ON RECORD TO NEGATE THE OBSE RVATION OF THE CIT(A) THAT THERE WAS NO EVIDENCE TO SHOW HOW THE INCOME FROM P LYING OF JEEP WAS EARNED. CONSIDERING THE FACTUAL MATRIX, WE FIND NO REASONS TO INTERFERE WITH THE ESTIMATE MADE BY THE CIT(A) ON ACCOUNT OF SAVIN GS FROM THE PLYING OF JEEP TO THE EXTENT OF RS.25,000/-. THUS, ON THIS ASPECT ASSESSEE FAILS. 6. THE OTHER ASPECT IS WITH REGARD TO THE CLAIM OF THE ASSESSEE THAT RS.1,50,000/- WAS CONTRIBUTED TOWARDS THE CAPITAL O UT OF AGRICULTURAL INCOME EARNED BY HIS FAMILY. THE CIT(A) HAS NOTED THAT AS SESSEE AND HIS FAMILY MEMBERS OWNED AGRICULTURAL LANDS OF APPROXIMATELY 3 0 HECTARES AND SUCH LANDS ARE IRRIGATED AND RICE CROP IS GROWN THEREON. THE ASSESSEE HAD FURNISHED 7/12 EXTRACTS OF THE LANDS OWNED BY THE F AMILY MEMBERS. BEFORE US, THE LEARNED COUNSEL EXPLAINED THAT THE AGRICULTURAL LANDS WERE PRIMARILY IN THE NAME OF ASSESSEES FATHER AND HIS UNCLE AND THAT TH E SAID SUM WAS RECEIVED FROM HIS FATHER WHICH WAS APPARENTLY OUT OF THE AGR ICULTURAL INCOME EARNED FROM SUCH AGRICULTURAL LANDS. IT HAS ALSO BEEN ASS ERTED THAT THE 7/12 EXTRACTS OF THE LANDS CLEARLY ESTABLISHED THAT AGRICULTURAL OPERATIONS WERE BEING CARRIED OUT, AND THE INCOME FROM AGRICULTURAL OPERATIONS CO ULD NOT BE DOUBTED. THE CIT(A) ACCEPTED THE FACT THAT ASSESSEE AND HIS FAMI LY WERE THE OWING AGRICULTURAL LANDS BUT HE NOTED THAT LOANS HAVE BEE N RAISED AGAINST THE SECURITY OF SUCH AGRICULTURAL LANDS FROM CREDIT CO- OPERATIVE SOCIETY, ETC.. UNDER THESE CIRCUMSTANCES AND IN THE ABSENCE OF ANY EVIDE NCE TO SHOW THE SALE OF AGRICULTURAL PRODUCE, THE CIT(A) DID NOT ACCEPT THE PLEA OF THE ASSESSEE REGARDING SAVINGS OF RS.1,50,000/- CLAIMED OUT OF A GRICULTURAL INCOME OF THE HUF. HOWEVER, HE ESTIMATED SUCH SAVINGS AT RS.50,0 00/-, AND GAVE PARTIAL RELIEF. ITA NO.815/PN/2012 A.Y. 2005-06 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT QUANTUM OF SAVINGS ESTIMATED BY THE CIT(A) WAS QUIT E LOW AND IT WAS SUBMITTED THAT EVIDENCE REGARDING THE 7/12 EXTRACTS AND SALE BILLS SUPPORTING THE AGRICULTURAL INCOME EARNED IN THE PAST YEARS WE RE FURNISHED BEFORE THE LOWER AUTHORITIES, WHICH HAVE BEEN IGNORED. OUR AT TENTION HAS BEEN DRAWN TO A COMMUNICATION DATED 20.12.2007 ADDRESSED TO THE A SSESSING OFFICER, WHICH IS PLACED AT PAGE 98 OF THE PAPER BOOK, TO POINT OU T THAT COPIES OF SALE PATTIES OF AGRICULTURAL PRODUCE FOR THE PERIOD 01.04.2003 T O 31.03.2004 WERE FURNISHED WHICH SHOWED GROSS AGRICULTURAL RECEIPTS OF RS.7,20 ,977/-. ON THAT BASIS, IT IS SOUGHT TO BE MADE OUT THAT THE ASSESSEE HAD DULY EX PLAINED THE SOURCES OF RS.1,50,000/- CLAIMED AS SAVINGS FROM AGRICULTURAL INCOME OF THE ASSESSEES FAMILY CONSISTING OF HIS FATHER AND BROTHERS OF HIS FATHER. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ASSAILED THE ARGUME NTS OF THE ASSESSEE FOR THE REASONS TAKEN BY THE LOWER AUTHORITIES, WHICH W E HAVE ALREADY ADVERTED TO, IN THE EARLIER PARAGRAPHS AND ARE NOT BEING REPEATE D FOR THE SAKE OF BREVITY. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN OUR CONSIDERED OPINION, HAVING REGARD TO THE MATERIAL AVAILABLE ON RECORD IT IS QUITE EVIDENT THAT THE SOURCE OF RS.1,50,000/- CLAIMED TO BE OUT OF THE AGRICULTURAL INCOME OF THE FAMILY IS SATISFACTORILY EXPLAINED. THE ASSESS ING OFFICER AS WELL AS THE CIT(A) HAVE NOT DOUBTED THE EXISTENCE OF ADEQUATE L ANDHOLDINGS AND ALSO THE FACTUM OF CARRYING OUT OF AGRICULTURAL ACTIVITIES. THE ASPECT REGARDING NON- PRODUCTION OF COPIES OF SALE PATTIES EVIDENCING SAL E OF AGRICULTURAL PRODUCE IS ALSO NOT BORNE OUT OF RECORD BECAUSE THE ASSESSEE H AS REFERRED TO A COMMUNICATION DATED 20.12.2007 ADDRESSED TO THE ASS ESSING OFFICER, WHICH SPECIFICALLY REFERS TO SUCH SALE PATTIES FOR PERIOD 01.04.2003 TO 31.03.2004. BE THAT AS IT MAY, IN OUR VIEW, THE ASSESSEE HAS ADEQU ATELY EXPLAINED THE SOURCES OF CAPITAL INTRODUCTION OF RS.1,50,000/- OUT OF AGR ICULTURAL INCOME OF THE FAMILY. WE THEREFORE SET-ASIDE THE ORDER OF THE CIT(A) ON T HIS ASPECT AND DIRECT THE ITA NO.815/PN/2012 A.Y. 2005-06 ASSESSING OFFICER TO DELETE THE ADDITION OF RS.1,50 ,000/- IN ENTIRETY INSTEAD OF RS.50,000/- DELETED BY THE CIT(A). 9. THE ONLY OTHER ADDITION IS WITH REGARD TO UNSECU RED LOANS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM 20 DIFFEREN T PERSONS RANGING FROM RS.10,000/- TO RS.19,000/- EACH, TOTALING TO RS.3,3 7,000/-. IN SUPPORT OF SUCH UNSECURED LOANS, ASSESSEE FILED CONFIRMATION LETTER S ALONG WITH 7/12 EXTRACTS OF THE LANDHOLDINGS OF THE RESPECTIVE CREDITORS. T HE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE NOT ACCEPTED THE EXPLANATION FUR NISHED BY THE ASSESSEE PRIMARILY ON THE GROUND THAT SUCH CREDITORS, BEING AGRICULTURISTS, WERE NOT ASSESSED TO TAX AND FURTHER THAT SUCH CREDITORS HAD AVAILED OF LOANS FROM CO- OPERATIVE SOCIETY AGAINST THE SECURITY OF THEIR AGR ICULTURAL HOLDINGS AND THEREFORE, THEIR CREDITWORTHINESS WAS NOT PROVED. IN OUR CONSIDERED OPINION, ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCES OF IN COME OF THE CREDITORS TO THE HILT. THE REQUIREMENTS OF SECTION 68 OF THE ACT WO ULD BE COMPLIED WITH SO LONG AS THE ASSESSEE IS ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. IN THIS CONTEXT, WHILE ESTABLISHING THE CREDITWORTHINESS OF THE CREDITORS, ASSESSEE HAS EXPLAINED THE SOURCES OF INCOME BEING AGRICULTURAL INCOME. THERE IS NO DISPUTE THAT THE CREDITORS ARE AGRICULTURISTS WHO ARE HOLDING AGRICU LTURAL LANDS AND THEY HAVE CONFIRMED THE LOANS; AND, THEREFORE ONCE THE ASSESS EE HAS DISCHARGE HIS PRIMARY ONUS, IT IS THE DUTY OF THE ASSESSING OFFIC ER THEREOF TO REBUT THE SAME ON THE BASIS OF ANY CREDIBLE EVIDENCE. ON THE CONT RARY, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS MERELY DISBELIEVED THE EX PLANATION FURNISHED BY THE ASSESSEE REGARDING THE SOURCES OF THE INCOME OF THE CREDITORS, WITHOUT ANY CLINCHING EVIDENCE TO THE CONTRARY. THEREFORE, IN OUR CONSIDERED OPINION, HAVING REGARD TO THE ENTIRE CONSPECTUS OF FACTS OF THE CASE, THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS CAST U/S 68 OF THE ACT QUA THE UNSECURED LOANS OF RS.3,37,000/- IN QUESTION. THUS, THE ORDE R OF THE CIT(A) ON THIS ITA NO.815/PN/2012 A.Y. 2005-06 ASPECT IS SET-ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO DELETE THE ADDITION OF RS.3,37,000/-. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 19 TH JUNE, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE