SHRI BIMAL HANSARIA, Jaipur V. ITO, Jaipur

ITA 84/JPR/2012

• Counselvise Citation: 8423114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Principle of natural justice; Accommodation entries; Non compliance
• Section: 69C; 147; 131; 148; 144; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 84/JP/2012 (A.Y. 2003-04) SHRI BIMAL HANSARIA, VS. THE CIT, WARD-4(2), PLOT NO. 103, MARTIN AMBIENCE JAIPUR. CORAL APARTMENT, D-57, AMBA BARI, JAIPUR. PAN NO. AAJPH 2108 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 27/01/2014. DATE OF PRONOUNCEMENT : 11/03/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 17/11/2011 OF LD. CIT (A)-II, JAIPUR. THE FOLLOWIN G GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 19,15,740/- U/S 6 8 ON ACCOUNT OF UNEXPLAINED CASH CREDIT AFTER SUBMITTING THE CONFIR MATIONS AND OTHER EVIDENCES OF ALL THE CREDITORS. 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,02,673/- BY DIS ALLOWING OF INTEREST PAID BY THE ASSESSEE. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 38,315/- U/S 69C ON ACCOUNT OF UNEXPLAINED EXPENSES ON PRESUMPTION BASIS. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN NOT GIVING OPPORTUNITY TO POINT OUT THE MISTAKES OR CORRECT THE MISTAKES IN PAN OF THE CREDITORS AND VERIFYING THE SAME AT THE BACK OF THE ASSESSEE. WITHOUT CONFRONTING TO THE ASSESS EE. 5. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 GROUND NO.5 IS GENERAL IN NATURE AND GROUND NO.3 W AS NOT PRESSED, THEREFORE, THESE GROUNDS DO NOT REQUIRE ANY ADJUDIC ATION ON OUR PART. GROUNDS NO. 1 & 2 ARE CORRELATED. VIDE GROUND NO.4 , THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAD NOT GIVEN OP PORTUNITY TO CORRECT THE MISTAKES IN PAN OF THE CREDITORS. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 27/09/2003 DECLARING AN INCOME OF RS. 1,6 5,119/-. LATER ON, THE PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) WERE INITIATED B Y ISSUING NOTICE UNDER SECTION 148 OF THE ACT. AS THE ASSESSEE FAILED TO SUBMIT HIS RETURN AND ALSO NOT RESPONDED TO THE NOTICES UNDER SECTION 142 (1) OF THE ACT ISSUED TIME TO TIME, THE ASSESSING OFFICER FRAMED THE ASSE SSMENT UNDER SECTION 3 144 OF THE ACT AND HELD THAT THE FOLLOWING CREDITS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE BOGUS:- 4. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 19 ,15,740/- UNDER SECTION 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CAS H CREDIT. HE ALSO ADDED AN AMOUNT OF RS. 2,02,673/- ON ACCOUNT OF DIS ALLOWANCE OF INTEREST ON THE AFORESAID CASH CREDIT. THE ASSESSING OFFICE R ALSO ESTIMATED NAME OF PERSON OPENING BALANCE AS ON 01/01/2002 ALLEGED LOAN RECEIVED DURING THE YEAR UNDER CONSIDERATION INTEREST PAID DURING THE YEAR SHRI SHYAM SUNDER KASAT -- 1,33,500 / - 7,171 / - SHRI GIRRAJ AGARWA -- 1,00,000 / - 1,726 / - SMT. SEEMA KASAT -- 75,000/- 3,625/- AMIT KUMAR SANAN - 82,000 / - 11,205 / - SITA RAM GUPTA - 25,000 / - 2,108 / - ASHOK HANSARIA - 1,00,000/- 38,672/- SHIVANGI HANSARIA 12,500 / - 2,00,000 / - -- SALONI HANSARIA 27,100 / - 3,50,000 / - 51,342/ - NEELAM KASAT -- 1,22,000 / - 13,894 / - PUSHPA JALAN -- 1,00,000/- 8,795/- PUSHPA HOLANI -- 92,500 / - 13,266 / - RAJAT MEDICAL & PROVISION -- 30,000 / - 518 / - RADHA MOHAN GUPTA -- 75,000/- 11,244/- RISHAB MARBLES -- 20,000 / - 345 / - RAM BABU GUPTA -- 1,50,000 / - 20,700 / - M.S. JEWELLERS 3,54,000 / - 50,000 / - 9,267 / - GOVIND RAM -- 1,00,000/- 8,795/- KRISHNA BRIGHT METAL IND. -- 1,10,740 / - 12,000/ - TOTAL 3,93,600 / - 19,15,740 / - 2,02,673 / - 4 UNEXPLAINED EXPENSES AT THE RATE OF 2% ON THE CASH CREDIT AND MADE THE ADDITION OF RS. 38,315/-. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER TREATED TH E DEPOSITS AS UNEXPLAINED EVEN WHEN THE ASSESSEE SUBMITTED THE FO LLOWING DOCUMENTS:- I) CONFIRMATION WERE SUBMITTED IN RESPECT OF ALL T HE DEPOSITS DULY SIGNED BY THE DEPOSITORS EXCEPT IN THE CASH OF SHRI GOVIND RAM. II) THE AMOUNT OF DEPOSITS HAD BEEN RECEIVED BY CHE QUE IN RESPECT OF ALL THE DEPOSITORS. III) ALL THE DEPOSITORS WERE INCOME TAX PAYERS AND THEIR PAN S WERE ALSO FURNISHED TO THE AO. IV) IN THE CASE OF SHRI GOVIND RAM. IT WAS SUBMITTE D HIS SIGNATURE COULD NOT BE OBTAINED ON THE CONFIRMATION BECAUSE HE HAD SHIFTED TO CALCUTTA. HOWEVER, THE FACT THAT THE SUMMONS ISSUE D BY THE AO WERE SERVED ON HIM PROVED THAT SHRI GOVIND RAM EXISTED A ND HE HAD NOT DENIED THE DEPOSIT. THERE MIGHT BE MORE THAN ONE R EASON FOR HIS NON APPEARANCE BEFORE THE AO. HIS NON APPEARANCE COULD NOT BE TREATED AS DENIAL OF THE TRANSACTION WITH THE ASSESSEE. TH E AO DID NOT PURSUE THE MATTER FURTHER WITH HIM NOR IMPOSED ANY PENALTY FOR HIS NON COMPLIANCE WHICH WOULD HAVE MADE HIM APPEAR BEFORE THE AO. IN THE CIRCUMSTANCES THE DEPOSIT IN HIS NAME ALSO COUL D NOT BE TREATED AS UNEXPLAINED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- (I) ARAVALI TRADING CO. VS. ITO (8 DTR 199) (II) KANHIYA LAL JANGID VS. CIT (217 CTR 354) (III) ACIT VS. SWAMI COMPLEX (PURCHASE) LTD. (111 TTJ 531 ) 5 (IV) ASA RAM MUKAN LAL VS. ACIT (64 TTJ 466) (V) PREM LATA SHARMA VS. ITO (ITAT JAIPUR BENCH ITA NO. 8/JP/2009 DATED 24/07/2009) IT WAS FURTHER SUBMITTED THAT IN THE ASSESSMENT OR DER, THE ASSESSING OFFICER HAD REFERRED TO SEARCHES CONDUCTED BY THE D EPARTMENT IN THE CASE OF B.C. PUROHIT GROUP WHEREIN IT WAS FOUND THAT THE GROUP WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES AND ONLY ON ACCO UNT OF THIS INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIGATION WING, THE ACTION UNDER SECTION 148 OF THE ACT WAS T AKEN TREATING THE LOAN IN THE CASE OF SHRI GOVIND RAM COVERED IN THIS CATE GORY. BUT THE ASSESSING OFFICER DID NOT PROVIDE COPY OF THE REPOR T IN THE CASE OF B.C. PUROHIT TO THE ASSESSEE. THEREFORE, THE ACTION OF THE ASSESSING OFFICER WAS AGAINST THE PRINCIPLES OF NATURAL JUSTICE BECAU SE HE HAD RECEIVED INFORMATION AT THE BACK OF THE ASSESSEE WITHOUT PRO VIDING ANY OPPORTUNITY TO THE ASSESSEE. 6 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT IN THIS CASE, INFORMATION W AS RECEIVED FROM THE INVESTIGATION WING, JAIPUR THAT SEARCH OPERATIONS W ERE CONDUCTED AT THE PREMISES OF B.C. PUROHIT & CO. AND IT WAS FOUND THA T THIS GROUP WAS 6 PROVIDING ACCOMMODATION ENTRIES THROUGH VARIOUS ENT ITIES/PERSONS, WHO DID NOT HAVE ANY CAPACITY OR SOURCE OF INCOME TO GI VE GIFTS/LOANS. HOWEVER, CHEQUES WERE ISSUED AFTER DEPOSITING CASH IN THEIR BANK ACCOUNTS AND THE ASSESSEE WAS ALSO ONE OF THE BENEF ICIARIES. THEREFORE, ON RECEIPTS OF INFORMATION FROM ADIT (INV.), JAIPUR , A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 30/03/2010. HE FURTHE R OBSERVED THAT THE INFORMATION ALSO REVEALED THAT ONE SHRI GOVIND RAM WAS CONNECTED WITH THE B.C. PUROHIT GROUP AND THERE WERE HUGE CASH DEP OSITS IN HIS BANK ACCOUNT WITH BANK OF BARODA AND THEREAFTER CHEQUES WERE ISSUED TO THE VARIOUS BENEFICIARIES INCLUDING THE ASSESSEE. IT W AS POINTED OUT THAT THE ASSESSING OFFICER ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO SHRI GOVIND RAM FROM WHOM LOAN OF RS. 1,00,000/- WAS REC EIVED, BUT, HE DID NOT APPEAR BEFORE THE ASSESSING OFFICER AND THE ASS ESSEE DID NOT PRODUCE HIM. IT WAS ALSO POINTED OUT THAT IN THE CASE OF M /S. KRISHNA BRIGHT METAL INDUSTRIES, THE ASSESSEE FAILED TO FILE EVEN THE CO NFIRMATION. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER VIDE ORDER DA TED 08/09/2011 TO MAKE PROPER ENQUIRY AND SUBMIT HIS REPORT. IN COMP LIANCE TO THAT, THE ASSESSING OFFICER VIDE LETTER DATED 25/10/2011 INFO RMED THAT SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED TO THE ALL EGED CREDITORS AND THE GIVEN ADDRESSES. HOWEVER, IN 07 CASES, SUMMONS WER E RETURNED UNSERVED 7 BY THE POSTAL AUTHORITIES AND IN THE CASE OF M/S. M .S. JEWELLERS FROM WHOM UNSECURED LOAN OF RS. 50,000/- WAS RECEIVED, S UMMON WAS RETURNED WITH THE POSTAL REMARK INSUFFICIENT ADDRE SS. IT WAS ALSO POINTED OUT THAT ONE OF THE CREDITORS NAMELY SMT. P USHPA JALAN APPEARED BEFORE THE ASSESSING OFFICER, HOWEVER, SHE COULD NO T EXPLAIN HER SOURCES PROPERLY FOR GIVING LOAN OF RS. 1,00,000/-. THE LD . CIT(A) ALSO POINTED OUT DISCREPANCIES IN THE PANS OF SHRI SALONI HANSAR IA, SHRI SITA RAM GUPTA, RAJAT MEDICAL & PROVISION, SHRI RADHA MOHAN GUPTA AND SHRI GOVIND RAM GUPTA ETC. IN RESPECT OF CERTAIN CREDIT ORS AMOUNTING TO RS. 10,15,740/-, LD. CIT(A) IN PARA 3.4 OF THE IMPU GNED ORDER MENTIONED THAT THOSE WERE ASSESSED TO TAX AND HAD ALSO PANS, THE SAME ONLY SHOWED THAT THE CREDITORS WERE IDENTIFIABLE BUT THE CREDIT WORTHINESS COULD NOT BE PROVED IN THE ABSENCE OF BANK STATEMENT. THE LD. C IT(A) HELD THAT MERELY BY FILING CONFIRMATION OR FURNISHING PAN, IT WAS NOT SUFFICIENT TO DISCHARGE THE BURDEN THAT LIES ON THE ASSESSEE. RE LIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. MANGILAL JAIN VS. ITO 315 ITR 105 (MAD) 2. BANARSI PRASAD VS. CIT 304 ITR 239 (ALL) 3. SHIV RICE & GENERAL MILLS VS. CIT 300 ITR 19 (P & H) 4. ACIT VS. VISHWANATH & CO. 292 ITR 25 (KARNA) 5. RAKESH KALIA VS. CIT 286 ITR 357 (DELHI). 8 LEARNED CIT HELD THAT THE ASSESSEE FAILED TO EXPLA IN THE SOURCE OF UNSECURED LOANS OF RS. 19,15,740/- AND THE SAME WAS LIABLE TO BE ADDED UNDER SECTION 68 OF THE ACT. ACCORDINGLY, THE ADDI TION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. 7 . AS REGARDS DISALLOWANCE OF INTEREST OF RS. 2,02,6 73/-, THE LD. CIT(A) OBSERVED THAT A NATURAL COROLLARY WAS CORRECTLY MAD E BY THE ASSESSING OFFICER AND THERE WAS NO REASON TO INTERFERE WITH T HE FINDINGS OF THE ASSESSING OFFICER. ACCORDINGLY, THE SAID ADDITION WAS ALSO CONFIRMED. NOW, THE ASSESSEE IS IN APPEAL. 8 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSING OFFICER ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO SHRI GOVIND RAM FROM WHOM DEPOSIT OF RS. 1,00,000/- WAS TAKEN BY TH E ASSESSEE. HOWEVER, SHRI GOVIND RAM DESPITE SERVICE OF SUMMONS , DID NOT RESPOND AND IN VIEW OF THIS DEFAULT, ASSESSING OFFICER REAC HED TO THE CONCLUSION THAT SHRI GOVIND RAM HAD NOT GIVEN LOAN TO THE ASSE SSEE AND TREATED ALL THE DEPOSITS OF RS. 19,15,750/- AS UNEXPLAINED. IT WAS SUBMITTED THAT THE ASSESSEE FURNISHED CONFIRMATION IN RESPECT OF THE D EPOSITS AND ALSO PANS 9 OF THE CREDITORS, HOWEVER, SINCE GOVIND RAM HAD SHI FTED TO CALCUTTA, SO CONFIRMATION COULD NOT BE GOT SIGNED BY HIM, BUT, T HE ASSESSEE FURNISHED HIS PAN AND COPY OF HIS ACCOUNT WHICH REVEALED THAT THE AMOUNT HAD BEEN RECEIVED BY CHEQUE. IT WAS STATED THAT THE SUMMONS ISSUED BY THE ASSESSING OFFICER WERE SERVED UPON SHRI GOVIND RAM, WHICH PROVED HIS EXISTENCE AND MERELY ON THIS BASIS THAT HE DID NOT APPEAR BEFORE THE ASSESSING OFFICER, THE DEPOSIT COULD NOT BE TREATED AS UNEXPLAINED. IT WAS STATED THAT THE LD. CIT(A) IN HIS ORDER HAD MEN TIONED THAT THE PAN NO. GIVEN IN RESPECT OF SOME DEPOSITORS WERE NOT CO RRECT. THE SAID MISTAKE WAS A CLERICAL MISTAKE, BUT THE LD. CIT(A) DID NOT PROVIDE ANY OPPORTUNITY TO FURNISH THE CORRECT PANS AND STRAIGH T AWAY HELD THE DEPOSITS AS UNEXPLAINED. LEARNED COUNSEL FOR THE A SSESSEE GAVE THE DETAILS OF THE CREDITORS MENTIONING THEIR ADDRESS, LOAN AMOUNT, PAN NOS., WHICH IS PLACED AT PAGE NOS. 4 TO 68 OF THE ASSESSE ES PAPER BOOK FILED ON 17/04/2013. IT WAS FURTHER STATED THAT THE COPIES OF THE CONFIRMATIONS, ACKNOWLEDGMENT OF RETURN OF INCOME, COPY OF PAN CAR D AND BANK STATEMENTS ETC. WERE FURNISHED TO THE LD. CIT(A), C OPIES OF THE SAME ARE PLACED AT PAGE NOS. 1 TO 67 OF THE ASSESSEES PAPER BOOK FILED ON 20/04/2012. IT WAS FURTHER STATED THAT THE ASSESSE E DISCHARGE ONUS CAST UPON HIM, BUT NEITHER ASSESSING OFFICER NOR THE LD. CIT(A) APPRECIATED 10 THE FACTS IN RIGHT PERSPECTIVE. THEREFORE, THE ADD ITION SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- (I) ARAVALI TRADING CO. VS. ITO 8 DTR 199 (RAJ.) (II) KANHIYA LAL JANGID VS. CIT 217 CTR 354 (RAJ.) (III) ACIT VS. SWAMI COMPLEX (P) LTD. 111 TTJ (JP) 531 (IV) ASA RAM MUKAN LAL VS. ACIT 64 TTJ (DEL.) 466 (V.) PREM LATA SHARMA VS. ITO (ITAT JAIPUR BENCH IT A NO. 8/JP/2009 DATED 24/07/2009) (VI) CIT VS. ORISSA CORPORATION (P) LTD. (1986) 15 9 ITR 78 9 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER FRAM ED THE ASSESSMENT EX-PARTE UNDER SECTION 144 OF THE ACT AND THE LD. CIT(A) CO NFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT T HERE WERE MISTAKES IN THE PANS OF THE DEPOSITORS GIVEN BY THE ASSESSEE. HE ALSO MENTIONED THAT THE ASSESSING OFFICER IN HIS REMAND REPORT INFORMED THAT THE SUMMONS ISSUED TO CERTAIN DEPOSITORS WERE RETURNED ON ACCOU NT OF WRONG ADDRESS 11 OR INCOMPLETE ADDRESS, HOWEVER, THE LD. CIT(A) DID NOT COMMENT ON THE DETAILS FURNISHED BY THE ASSESSEE WHICH ARE PLACED AT PAGE NOS. 1 TO 67 OF THE ASSESSEES PAPER BOOK WHEREIN THE CONFIRMATION, ACKNOWLEDGEMENT OF RETURN OF INCOME, COPY OF PAN CARD AND BANK STATEME NTS ETC. OF THE DEPOSITORS WERE GIVEN. IT THEREFORE, APPEARS THAT THE LD. CIT(A) WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER HAD NOT APPRECIATED THE FACTS IN RIGHT PERSPECTIVE AND ALSO DID NOT PROVIDE OPPORTUNITY TO THE ASSESSEE FOR CORRECTING THE CLERICAL MISTAKES, IF A NY, IN PANS. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS, D EEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE LD. CI T(A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE A ND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. (ORDER PRONOUNCED IN THE COURT ON 11 TH MARCH, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH MARCH, 2014. VR/- 12 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.