Appeal Details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 99591 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 year(s) 10 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-12-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
23-11-2010
Assessment Year
2006-2007
Appeal Filed On
29-01-2010
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 88/JP/2010 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. VIJAY KIRTI RATHORE, AG- 19A, KRISHNA MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABEPR 5930 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 765/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. VIJAY KIRTI RATHORE, AG- 19A, KRISHNA MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABEPR 5930 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI R.C. SHAH (ADV) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26/11/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/12/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. BOTH THE APPEALS ARE FILED BY THE REVENUE ARISE AG AINST THE TWO SEPARATE ORDERS DATED 03/12/2009 AND 12/06/2012 PAS SED BY THE LD 2 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE CIT(A)-II, JAIPUR FOR A.Y. 2006-07. THE EFFECTIVE GR OUNDS OF BOTH THE APPEAL ARE AS UNDER:- GROUNDS OF ITA NO. 88/JP/2010 (I) DELETING THE ADDITION OF RS. 36,31,407/- MADE BY THE A.O. U/S 69C OF THE IT ACT ON ACCOUNT OF SHORTAGE O F CASH WITHOUT APPRECIATING THAT FURNISHING OF SUBSIDI ARY CASH BOOK AND AFFIDAVITS REGARDING CASH DEPOSITS WAS AN AFTERTHOUGHT. (II) DELETED THE ADDITION OF RS. 5,60,135/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF SALARY AND WAGES CLAIM WITHOUT APPRECIATING THE DISCREPANCIES NOTED BY THE A.O. IN RESPECT OF EXPENSES CLAIMED. GROUND OF ITA NO. 765/JP/2012:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN DELETING PENALTY OF RS. 12,27,06 4/- IMPOSED BY THE A.O. U/S 271(1)(C) AND IN HOLDING TH AT UNEXPLAINED CREDITS DOES NOT TANTAMOUNT TO DELIBERA TE INTENTION OF THE ASSESSEE TO FURNISH INACCURATE PAR TICULARS OF INCOME/CONCEALMENT OF INCOME. 2. THE FIRST GROUND OF APPEAL IS AGAINST DELETING TH E ADDITION OF RS. 36,31,407/- MADE BY THE ASSESSING OFFICER U/S 69C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE IS ENGAGED IN THE JOB OF PROVIDING SECURITY PERSONNEL TO THE VARIOUS CONCERNS. DURING THE YEAR IT PROVIDED SERVICES OF SECURITY PERSONNEL TO M/S VODAFONE ESSA R DIGILINK LTD. AND THE WORK IS BEING DONE UNDER THE NAME AND STYLE OF M/S U DAAN SECURITY FORCE. 3 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE THE ASSESSEE FILED RETURN FOR THE YEAR UNDER CONSIDE RATION ON 31/10/2006 AT RS. 3,32,426/-. 2.1 IN THIS CASE THE COORDINATE BENCH HAD PASSED OR DER DATED 24/12/2010 AND THE REVENUES APPEAL WAS ALLOWED. THERE AFTER THE ASSESSEE FILED AN MA. PETITION AGAINST THE ORDER OF THE COOR DINATE BENCH. AFTER CONSIDERING THE ARGUMENTS FROM BOTH SIDES, THIS BEN CH HAS ALLOWED THE ASSESSEES MA NO. 25/JP/2011 FOR A.Y. 2006-07 VIDE ORDER DATED 05 TH JUNE, 2015. THEREAFTER THE CASE WAS REFIXED FOR HEARING AND HEARD IN DETAIL. 2.2 THE LD ASSESSING OFFICER OBSERVED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THERE WAS SHORTAGE OF CASH A S PER CASH BOOK PRODUCED BY THE ASSESSEE, THE DETAILS IN THIS REGAR D IS AS FOLLOWS:- SR. NO. PART ICULARS DATE SIGN AMOUNT IN RS. 01. CASH BALANCE AS ON 30/04/05 ( - ) RS. 20,33,727 02. 31/05/05 ( - ) RS. 13,38,918 03. 30/06/05 ( - ) RS. 13,23,152 04. 31/07/05 ( - ) RS. 18,70,651 05. 31/08/05 ( - ) RS. 22,06,578 06. 30/09/05 ( - ) RS. 24,66,333 07. 31 /10/05 ( - ) RS. 20,60,420 08. 30/11/05 ( - ) RS. 24,31,955 09. 31/12/05 ( - ) RS. 32,62,212 10. 31/01/06 ( - ) RS. 36,31,407 11. 01/02/06 ( - ) RS. 23,81,407 12 31/03/06 (+) RS. 4,912 THE LD ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE ALSO FILED REPLY VIDE LETTER DATED 15/12/2008 AND 4 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE PRODUCED 53 AFFIDAVITS INTIMATING THAT UNSECURED LO ANS WERE RAISED FROM THESE PARTIES DURING THE ACCOUNTING YEAR 2005-06. TH E LD ASSESSING OFFICER HELD THAT ALL THESE STAMP PAPERS ON WHICH AFFIDAVITS PREPARED WERE PURCHASED ON THE SAME DATE I.E. 08/12/2008 AND THAT TOO FROM ONE STAMP VENDOR SHRI MAHAVEER PRASAD BOHRA. NONE OF THESE ST AMP PAPERS HAD THE COMPLETE ADDRESS OF THE PERSON PURCHASING THE STAMP WHICH IS THE NORMAL PRACTICE FOLLOWED EVERYWHERE. ALL THESE HAD SIMILAR LANGUAGE I.E. THE NAME AND FATHERS NAME OF THE DEPONENT, THE DATE OF THE LOAN, THE AMOUNT OF THE LOAN AND THE SAME HAVING BEEN PAID IN CASH, OUT OF SAVINGS, THE DATE OF RETURN AND THE FACTS THAT NO INTEREST HAD BEEN CHAR GED THEREOF. IT HAD ALSO BEEN STATED THAT THE SAME HAD BEEN RETURNED BEFORE THE CLOSE OF THE FINANCIAL YEAR. THE PERSONS SIGNING IN THESE AFFIDAV IT BELONGS TO AREAS AS FAR AS BHILWARA, DAUSA, SIKAR, AJMER BUT ALL THESE HAD B EEN NOTARIZED AND ATTESTED ON A SINGLE DAY AND DATE I.E. 12/12/2008 A ND BY THE SAME NOTARY PUBLIC I.E. BY SMT. MANJU LATA SHARMA, ADVOCATE, BE ARING REGISTRATION NO. 3066. ALL THESE SHOWED THAT THE PRODUCTION OF A SUB SIDIARY CASH BOOK AND SUBSEQUENTLY THE AFFIDAVITS WAS MERELY AN AFTERTHOUG HT TO COVER UP THE SHORTAGE OF CASH AMOUNTING TO RS. 36,31,407/-. THE L D ASSESSING OFFICER FURTHER OBSERVED THAT BY FILING OF THESE AFFIDAVITS THE ASSESSEE WAS MERELY TRYING TO COVER UP THE SHORTAGE OF CASH. NO REASON HAD BEEN GIVEN BY THE 5 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE ASSESSEE FOR THE SHORTAGE OF CASH. THERE WAS NO PLAUS IBLE EXPLANATION AVAILABLE WITH THE ASSESSEE TO JUSTIFY THE INCREASED OUTFLOW AS COMPARED TO THE RECEIPTS OF FUNDS. THE EXPENSES INCURRED WERE FAR IN EXCESS OF THE RECEIPTS OF INCOME. THE ASSESSEE HAD NOT BEEN ABLE T O SUBSTANTIATE THE SOURCE FROM WHICH THE EXPENDITURE HAD BEEN INCURRED. IN VIEW OF THE DEEMING PROVISIONS, THE UNEXPLAINED EXPENDITURE WAS TO BE TREATED AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES FOR THAT FINANCIAL YEAR. THEREFORE, ADDITION OF RS. 36,31,407/- WAS MADE BY TH E ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD DELETED THE ADDITION BY OBSERVING AS UNDER:- 1.3 I HAVE CONSIDERED FACTS OF THE CASE AND ARGUME NTS TAKEN BY SH. DUA ALONGWITH REPORT OF ASSESSING OFFICER QUITE CAREFULLY. THOUGH IT IS A FACT THAT AS PER CASH BOOK PRODUCED B EFORE ASSESSING OFFICER WHICH WAS ALSO IMPOUNDED U/S 131(3 ) OF I.T. ACT THERE WAS NEGATIVE CASH BALANCE ON DIFFERENT DATES BUT WHEN THE SAME WAS CONFRONTED BY THE ASSESSING OFF ICER TO THE APPELLANT THEN A SUBSIDIARY CASH BOOK WAS PRO DUCED IN WHICH THERE WERE ENTRIES FOR LOANS/ DEPOSITS RECEIVED FROM VARIOUS PERSONS ALONGWITH REPAYMENT DETAILS THEREOF. HOWEVER, WITHOUT ASSIGNING ANY REASON THE ASSESSING O FFICER HAS IGNORED THE PRODUCTION OF SAID SUBSIDIARY CASH BOOK FOR NECESSARY VERIFICATION THAT IN FACT THERE WAS NO NEG ATIVE CASH 6 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE BALANCE IF DEPOSITS/LOANS RECEIVED DURING THE YEAR FROM TIME TO TIME FROM VARIOUS PERSONS ARE CONSIDERED. IN THI S RESPECT, VIDE THIS OFFICE LETTER DATED 15/09/2009 THE A.O. WA S DIRECTED TO EXAMINE THE CONTENT OF SAID SUBSIDIARY CASH BOOK AND CIRCUMSTANCES UNDER WHICH IT WAS MAINTAINED TO VERIFY GENUINENESS OF ENTRIES SHOWN THEREIN. HOWEVER, THE A .O. PREFERRED NOT TO OFFER ANY COMMENTS ON THESE DIRECT ORS FOR NECESSARY VERIFICATION IN HIS REPORT DATED 27/11/20 09. HOWEVER, FACT REMAINS THAT EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AS A CONFIRMATION OF DEPOSITS/LOANS SPECIFIED IN THE SUBSIDIARY CASH BOO K THE APPELLANT HAS FURNISHED AFFIDAVITS BEFORE ASSESSING OFFICER. HOWEVER, SINCE, WITHOUT EXAMINING ALL OF THESE PERSON S WHO HAS GIVEN AFFIDAVITS OR AT LEAST FEW PERSONS SHOULD HAVE BEEN EXAMINED IF THE NUMBER WAS MUCH MORE BUT THE ASSESSI NG OFFICER PREFERRED TO REJECT ALL THESE AFFIDAVITS OU T RIGHTLY ON THE GROUND THAT IF APPEARS TO BE AN AFTERTHOUGHT. HOWEVER, THE AFFIDAVITS FURNISHED DURING THE COURSE OF ASSES SMENT PROCEEDINGS CANNOT BE BRUSHED ASIDE OUT RIGHTLY AND THEREFORE, VIDE THIS OFFICE LETTER DATED 24/07/2009 SPECIFIC DIRECTIONS WERE ISSUED TO THE ASSESSING OFFICER TO G IVE OPPORTUNITY TO THE APPELLANT TO PRODUCE THESE PERSO NS AND THEREAFTER, TO EXAMINE THEM FOR VERIFICATION OF CON TENTS OF THE AFFIDAVITS. HOWEVER, IN SPITE OF THESE DIRECTIONS WH EN ASSESSING OFFICER AS PER HIS REPORT DATED 27/08/20 09 DID NOT CALL FOR ANY PERSON TO EXAMINE THE AFFIDAVIT THEN A GAIN FURTHER DIRECTIONS WERE ISSUED FOR THIS PURPOSE VIDE THIS OF FICE LETTER 7 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE DATED 15/09/2009. FINALLY, IN RESPONSE TO THAT THE ASSESSING OFFICER VIDE HIS REPORT DATED 27/12/2009 HAS FORWAR DED THE COPIES OF STATEMENT RECORDED FROM VARIOUS 15 PERSON S. I HAVE EXAMINED ALL THESE STATEMENTS AND IT IS SEEN THAT A LL THE PERSONS HAVE GIVEN THEIR FULL ADDRESSES, THEY WERE H AVING REASONABLE SOURCE OF INCOME AND THEY HAVE CONFIRMED THE FACT OF GIVING LOAN TO THE APPELLANT. ON THIS ISSUE OF CASH CREDIT HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HEERALAL CHAGANLAL 257 ITR 281 HAS HELD THAT WHERE TH E IDENTITY OF THE CREDIT IS ESTABLISHED AND THE CREDI TOR HAS CONFIRMED THE LOAN NO ADDITION CAN BE MADE. HONBLE RAJASTHAN HIGH COURT IN ANOTHER CASE OF KANHIYALAL JANGID VS. ACIT 217 CTR 354 HAS HELD THAT ASSESSEE HAVING FILED CONFIRMATIONS FROM THE CREDITOR AND WHERE THE CREDI TORS AFFIRMED ADVANCEMENT OF THE LOAN, NO ADDITION U/S 6 8 COULD BE MADE ON THE GROUND THAT CREDITOR COULD NOT SATIS FACTORY EXPLAIN THE SOURCE OF LOAN. BURDEN IN SUCH CASE DOE S NOT EXTEND TO PROVE SOURCE OF THE CREDITOR FROM WHERE HE HAS MADE THE ADVANCES TO THE ASSESSEE. HONBLE RAJASTHA N HIGH COURT IN ANOTHER CASE OF LABHCHAND BOHRA VS. ITO 219 CTR 571 HAS HELD THAT IDENTITY OF THE CREDITOR HAVE BEE N ESTABLISHED WHO HAVE CONFIRMED THE CREDIT BY MAKING STATEMENT THEN ASSESSEE IS NOT REQUIRED TO ESTABLIS H THE CAPACITY OF THE LENDER TO ADVANCE THE MONEY. RECENT LY, HONBLE ITAT JAIPUR BENCH IN THE CASE OF RAJKUMAR ME HTA VS. ITO WARD 3, SIKAR IN ITA NO. 935/JP/2008 DATED 29/08 /2008 RELYING UPON RAJASTHAN HIGH COURT JUDGMENT IN THE C ASE OF 8 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE KANHIYALAL JANGID HAS HELD THAT WHILE IT WAS ASSESSEE S BURDEN TO FURNISH EXPLANATION RELATING TO CASH CRED IT BUT BURDEN DOES NOT EXTEND BEYOND PROVING THE EXISTENCE OF THE CREDITOR AND PROVING THAT SUCH CREDITORS OWNS TO HAV E ADVANCED AMOUNT CREDITED IN THE ACCOUNT OF ASSESSEE . HOWEVER, BURDEN DOES NOT GO BEYOND TO PUT ASSESSEE U NDER AN OBLIGATION FURTHER TO PROVE THAT WHERE FROM THE C REDITOR HAS PROCURED THE MONEY TO BE DEPOSITED OR ADVANCED TO THE ASSESSEE. THE FACT THAT EXPLANATION FURNISHED BY TH E CREDITOR ABOUT THIS SOURCE OF SUCH ADVANCE HAS NOT BEEN ACCE PTED BY REVENUE AUTHORITIES CANNOT LEAD TO ANY PRESUMPTION THAT SOURCE OF SUCH ADVANCE BY CREDITOR EMANATED FROM AS SESSEE AND THEREFORE, SUCH ADDITION FOR UNEXPLAINED CASH C REDIT WERE NOT SUSTAINED WHERE THE CONFIRMATIONS WERE FILED. FUR THER, THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF MAHEND RA KUMAR SETHI VS. ITO WARD 5(2) JAIPUR IN ITA NO. 814/JP/2008 DATED 31/3/2009 HAS HELD THAT IN CASH O F CASH CREDIT THE ASSESSEE HAS DISCHARGED HIS OWNS BY FILIN G CONFIRMATION LETTERS AND AFFIDAVIT OF CASH CREDITO RS AND THE OWNS IS SHIFTED TO THE DEPARTMENT TO PROVE THAT DEPO SITS MADE BY THE CREDITOR IS MONEY BELONGING TO ASSESSEE HIMSELF. THEY HAVE REFERRED RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF ARAVALI TRADING CO. VS. ITO 8 DTR 199 IN WHIC H IT WAS HELD THAT ONCE THE EXISTENCE OF THE CREDITOR IS PRO VED AND SUCH PERSONS OWNS THE CREDIT, THE ASSESSEES ONUS ST ANDS DISCHARGED AND ASSESSEE IS NOT REQUIRED TO PROVE TH E SOURCE FROM WHICH THE CREDITOR COULD HAVE ACQUIRED THE MO NEY 9 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE DEPOSITED WITH HIM. WHEN IDENTITY OF THE CASH CREDIT OR IS NOT IN DOUBT AND ASSESSEE HAS FILED CONFIRMATION LETTER WHERE SAID CREDITOR OWNED THE CREDIT AND UNDER THESE CIRCUMSTAN CES THE ADDITION MADE U/S 68 AS UNEXPLAINED CASH CREDIT WERE DELETED. WITH SUCH FACTUAL AND LEGAL ANALYSIS IN MY CONSIDERED VIEW THERE WAS NO SUCH SHORTAGE OF CASH OR SAY NEGATIVE CASH BALANCE ON ANY DAY WHEN DEPOSITS/LOANS FROM VARIOUS PERSONS ARE CONSIDERED AS RECEIVED FROM TIM E TO TIME DURING THE YEAR. WITH THIS DISCUSSION, THE SAID ADD ITION MADE BY A.O. OF RS. 36,31,407/- IS HEREBY DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD ASSESSING OFFICER AND ARGUED THAT THE HONBLE ITAT, HAS CONSIDERED THE ASSESSEES EVIDENCES AT THE TIME OF DECIDING THE APPEAL, WHICH HAS BEEN RECALLED BY THIS BENCH. THEREF ORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD ASSESSING OFFICER. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REI TERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND FURTHER ARGUED THAT TH E LD ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WORKED O UT A NEGATIVE CASH BALANCE ON LAST DAYS OF 11 MONTHS OF THE YEAR BASE D ON THE MAIN CASH BOOK AND KEEPING IN VIEW SECTION 69C, EXPLANATION WAS CALLED FOR. THE ASSESSEE CLARIFIED THAT THERE WAS A SUBSIDIARY CASH BOOK ALSO, WHICH COULD NOT BE PRODUCED EARLIER AND DUE TO WHICH THE AO COU LD WORK OUT NEGATIVE 10 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE BALANCE ON DIFFERENT DATES. THE ASSESSEE ALSO PRODUC ED 53 AFFIDAVITS INTIMATING THAT DURING THE YEAR, THE ASSESSEE HAS T AKEN UNSECURED LOANS FROM VARIOUS PARTIES. HOWEVER, THE LD ASSESSING OFFI CER HAD NOT FOUND THESE EVIDENCES CONVINCING TO HIM. THE CASH BOOK PRODUCED BY THE ASSESSEE IMPOUNDED BY THE ASSESSING OFFICER U/S 131(1)(3) OF THE ACT ON WHICH THE LD ASSESSING OFFICER HAD CALCULATED NEGATIVE CASH B ALANCE. WHEN IT WAS CONFRONTED WITH THE ASSESSEE BY THE ASSESSING OFFICE R, THE ASSESSEE PRODUCED SUBSIDIARY CASH BOOK IN WHICH THERE WAS ENT RIES FOR LOAN/DEPOSITS RECEIVED FROM VARIOUS PERSONS ALONGWITH REPAYMENT DE TAIL THEREOF. THE LD ASSESSING OFFICER IGNORED THE PRODUCTION OF SUBSIDI ARY CASH BOOK AND HAS NOT ASSIGNED ANY REASON FOR IT. THE LD ASSESSING OFF ICER HAD NOT EXAMINED THE CONCERNED PERSON WHO HAD FILED THE AFFIDAVITS. TH E LD ASSESSING OFFICER HAD NOT INVOKED THE PROVISIONS OF SECTION 145 AND H AD NOT REJECTED THE BOOK RESULT. FURTHER BOOKS OF ACCOUNT MAINTAINED IN A REGULAR COURSE CONSTITUTE AN ADMISSIBLE EVIDENCE U/S 34 OF THE IND IA EVIDENCE ACT, 1872 AND THEREFORE, THE LD ASSESSING OFFICER WAS BOUND TO ACCEPT THE INCOME DECLARED THEREIN. THE LD ASSESSING OFFICER HAS FURTH ER DRAWN THE DEFINITION OF BOOKS OF ACCOUNT PROVIDED IN SECTION 2(42)(A) OF THE ACT, WHICH COVERED ALSO SUBSIDIARY CASH BOOK. THE LD ASSESSING OFFICER HAD NOT MADE ANY INQUIRY ON THE FACTS MENTIONED IN THE AFFIDAVITS WHI CH IS BINDING IN NATURE 11 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE ON THE REVENUE TO CONDUCT THE INQUIRY AS HELD BY TH E HON'BLE SUPREME COURT IN THE CASE OF MEHTA PAREEK & CO. VS. CIT (195 6) 30 ITR 181 (SC). HE FURTHER RELIED ON THE DECISION OF HONBLE ITAT JA IPUR BENCH IN THE CASE OF VIJETA CEMENTS P LTD. VS. ITO 25 TW 223 (JP) WH EREIN THE HONBLE BENCH HAS HELD THAT WHEN THE ASSESSEE FURNISHED ANY EVIDENCE, WHICH IS REQUIRED TO BE VERIFIED BY THE ASSESSING OFFICER BE FORE NOT ACCEPTING TRUE. HE FURTHER RELIED ON THE DECISION OF HONBLE NAGPUR HIGH COURT IN THE CASE OF NIRANJANLAL RAMBALLABH VS. CIT 291 ITR 459 WHEREIN SAME VIEW HAS BEEN CONFIRMED BY THE HON'BLE COURT. THE ASSESSEE HA D PROVED THROUGH THESE AFFIDAVITS, WHICH WAS DULY NOTARIZED THE IDENT ITY OF THE CREDITORS AS WELL AS SOURCE OF DEPOSIT MADE BY THEM. THE LD CIT(A) GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER TO VERIFY THE EVIDENCE PRODUCED BY THE ASSESSEE AT THE TIME OF APPELLATE P ROCEEDINGS BUT THE LD ASSESSING OFFICER RECORDED THE STATEMENT OF ONLY 15 PERSONS. THE COPY OF STATEMENT RECORDED BY THE ASSESSING OFFICER WERE SUB MITTED TO THE LD CIT(A) WHEREIN ALL THE CREDITORS HAD ADMITTED CATEGOR ICALLY GIVING LOAN TO THE ASSESSEE. THE LD ASSESSING OFFICER HAD NOT BROUG HT ANY CONTRARY EVIDENCE FOR HOLDING THAT THESE DEPOSITS ARE OWN MON EY OF THE ASSESSEE, WHICH HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT UNDER TH ESE NAMES. THE LD ASSESSING OFFICER MADE ADDITION U/S 69C WHEREIN THE ONLY UNEXPLAINED 12 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE EXPENDITURE CAN BE DISALLOWED. THE LD ASSESSING OFFIC ER HAD NOT POINTED OUT ANY UNRECORDED EXPENSES, PAYMENTS MADE BY THE ASSES SEE FOR RUNNING THE SECURITY AGENCY. THEREFORE, THE LD CIT(A) HAS RIGHTL Y DELETED THE ADDITION AND THE SAME MAY BE UPHELD. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAD EXAMINED THIS ISSUE THOROUGHLY AND HE DIRECTED THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS TO MAKE INQUIRY ON THE EVIDENCES SUBMIT TED BY THE ASSESSEE. THE LD ASSESSING OFFICER IN REMAND PROCEEDING WAS ABL E TO RECORD THE STATEMENT OF 15 PERSONS WHO HAD ADMITTED THE AMOUNT WAS DEPOSITED WITH THE ASSESSEE. THEY FILED AFFIDAVIT OF ALL THE PARTIC ULARS I.E. NAMES, ADDRESSES AND SOURCE OF INCOME HAS BEEN EXPLAINED THROUGH THE SE AFFIDAVITS. IT IS A FACT THAT THESE LOANS WERE IN CASH. THERE WAS NO NEGA TIVE CASH BALANCE ON THE BASIS OF SUBSIDIARY CASH BOOK PRODUCED BY THE A SSESSEE WHEN THE LD ASSESSING OFFICER RAISED THE QUERY ON NEGATIVE CASH BALANCE. THE NUMBER OF AFFIDAVITS I.E. TOTAL 53 AFFIDAVITS WERE SUBMITTE D BY THE ASSESSEE, WHICH SUPPORTS THE ASSESSEES CASE THAT DEPOSITS SHOWN IN THE CASH BOOK WERE GENUINE. THEREFORE, THE ASSESSEE HAS PROVED THE CASH AVAILABLE WITH HER ON GIVEN DATES. THE CASE LAWS RELIED ON BY THE CIT(A) AS WELL AS THE ASSESSEE 13 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE ARE SQUARELY APPLICABLE IN THE CASE OF ASSESSEE. TH EREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A) ON THIS GROUND. 7. THE SECOND GROUND OF APPEAL IS AGAINST DELETING T HE ADDITION OF RS. 5,60,135/- ON ACCOUNT OF DISALLOWANCE OF SALARY AND WAGES. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SH OWN TOTAL RECEIPTS FROM THE BUSINESS OF SECURITY SERVICES AT RS. 1,62,52,62 9/-. AGAINST THESE RECEIPTS, THE ASSESSEE HAD CLAIMED PAYMENT ON ACCOU NT OF WAGES AND SALARY TO THE SECURITY PERSONNEL DEPLOYED FOR THE S ECURITY OF MOBILE TOWERS AT RS. 1,53,53,342/-. THE LD ASSESSING OFFICER CALL ED FOR THE DETAILS OF THE MONTH WISE NUMBER OF TOWERS, NUMBER OF GUARDS AND NUM BER OF GUARDS AS CALCULATED FROM SALARY SHEET AND SUCH CHART WAS REPR ODUCED AT PAGE NO. 4 OF THE ASSESSMENT ORDER AND HELD THAT THOUGH THE N UMBER OF TOWERS HAD REMAINED ALMOST CONSTANT IN FIRST 4 MONTHS BUT NUMB ER OF GUARDS DEPLOYED WERE DROPPED FROM 233 TO 198 IN JULY, 2005. WHEN THE ASSESSEE DEPLOYED LESSER NUMBER OF GUARDS, HOW IT WAS POSSIBLE TO PROVI DE SECURITY TO ALL THE TOWERS. IT IS FURTHER HELD THAT IN THE MONTH OF AUG UST & SEPTEMBER, 2005 NUMBER OF TOWERS AVAILABLE FOR SECURITY BEING 122 AN D 135 WHEREAS NUMBER OF GUARDS WERE 248 AND 238 RESPECTIVELY. THE LD ASSE SSING OFFICER DID NOT FIND THE DEPLOYMENT OF SECURITY GUARDS PROPORTIONAT ELY. HE FURTHER ANALYSED THE SALARY PART AND HELD THAT NUMBER OF GUARDS MIGH T HAVE INCREASED OR 14 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE REMAINED CONSTANT YET THE FLUCTUATION IN PAYMENT O F SALARY WERE NOT IN DIRECT PROPORTION THEREOF. THERE WAS DECREASE IN THE NUMBER OF GUARDS IN JULY FROM JUNE, 2005 BUT THE PAYMENT OF SALARY HAD INCREASED. FURTHERMORE, THERE WAS A VARIATION IN TOTAL DEPLOYME NT OF 40 GUARDS IN SEPTEMBER AND NOVEMBER, 2005 YET THE VARIATION OF S ALARY BILL WAS ONLY RS. 74,000/-. THE SALARY PAYMENT TO A GUARD FOR 12 HOURS DUTY AS PER THE AGREEMENT EXECUTED WITH AIRCEL DIGGILINK INDIA LTD. WAS RS. 4,326/- PER MONTH AS PER THE SALARY SHEETS PRODUCED THE SALARY BEING WAS RS. 3,863/- ONLY. EVEN IF THE SALARY IS TAKEN AT RS. 3,863/- TH E VARIATION SHOULD HAVE BEEN RS. 1,54,520/- BUT THE VARIATION WAS ONLY RS. 7 4,000/-. THE GUARDS ARE DEPLOYED ALL OVER THE STATE OF RAJASTHAN AND SA LARY SHEETS WERE PREPARED IN ONE GO AT THE HEAD OFFICE IN JAIPUR. THE DISBURSEMENTS WERE MADE AT VARIOUS PLACES SPREAD OVER IN RAJASTHAN AND THE SAME WERE MADE IN CASH. AS PER STATEMENT OF MANAGER, ONE SUPERVISO R HAD BEEN DEPUTED ON THE JOB ONLY. HE TRAVELED IN ENTIRE STATE AT VARIOU S SITES AND WITH THE HELP OF AREA SUPERVISOR SALARY HAD BEEN DISBURSED. HOWEVE R, NO TRAVELLING AND CONVEYANCE EXPENSES HAD BEEN CLAIMED BY THE ASSESSE E WITH REGARD TO TRAVEL OF THE LONE SALARY SUPERVISOR. THE SIGNAL LON E SALARY SUPERVISOR ABLE TO DISBURSE SALARY TO ALMOST FOR 400 WORKERS APPROXI MATELY WITHIN 5 TO 6 DAYS AND THAT TOO IN THE ENTIRE STATE OF RAJASTHAN COMPRISING AREAS AS FAR 15 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE AS UDAIPUR, KOTA, BHILWARA, GANGANAGAR, JODHPUR, AJM ER, SIKAR, DAUSA, ALWAR. THE CASH PAYMENT OF SALARY AS PER CASH BOOK WAS RS. 1,03,49,464/- WHEREAS THE SALARY DEBITED IN THE P&L ACCOUNT WAS AT RS. 1,53,63,342/-, THE SALARY PAYABLE FOR THE YEAR HAD BEEN SHOWN AT R S. 46,41,886/-. NO SALARY PAYMENT WAS SHOWN TO HAVE BEEN MADE IN THE MON TH OF FEBRUARY AND MARCH, 2006. IT IS NOT CLEAR AS TO HOW THE GUARD S NUMBERING 500 TO 600 MANAGED THEIR AFFAIRS WHEN THEY ARE GETTING A P ALTRY SALARY OF RS. 4,326/- PER MONTH ONLY. THEREAFTER HOW SALARY WAS DISB URSED TO THE VARIOUS GUARDS WAS ALSO NOT CLEAR TO THE MANAGER, WHOSE STATE MENT WAS ALSO RECORDED. THE ASSESSEE WAS NOT MAINTAINING ANY ATTEND ANCE REGISTER. THE ASSESSEE SELDOM VISIT THE SITES ACTUALLY, HE VERIFI ED THE ATTENDANCE ON TELEPHONE. THERE IS DIFFERENCE BETWEEN SALARY PAID AN D CASH WITHDRAWN OF RS. 3,71,972/-. FURTHER MORE ON PERUSAL OF CHART GI VEN TO THE ASSESSING OFFICER, HE FOUND THAT THERE WAS A VARIATION IN THE NUMBER OF GUARDS AS PER THE INFORMATION PROVIDED ON 27/11/2008 AND THE NUMB ER OF GUARDS AS PER THE SALARY ATTENDANCE SHEETS ON THE BASIS OF WHICH T HE SALARY OF GUARDS HAD BEEN DRAWN UP. THE VARIATION RANGES FROM 10 TO 20 P ER MONTH. A PERUSAL OF THE ABOVE CHART SHOWED TO THE A.O. THAT THERE WAS A VARIATION OF 11, 10, 10, 10, 10, 10, 10, 10, 10, 17, 17 AND 20 GUARDS FO R THE MONTHS OF APRIL, 2005 TO MARCH, 2006. THE TOTAL VARIATION CALCULATED TO 145 AS PER THE SALARY 16 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE SHEETS BY THE ASSESSING OFFICER. THE GROSS SALARY BE ING PAID TO EACH GUARD AS PER SALARY SHEET WAS RS. 3,863/- INCLUDING OVERTI ME ALLOWANCE. THE NUMBER OF GUARDS WHOSE SALARY HAD BEEN DRAWN IN EXCE SS WORK OUT TO 145 GUARDS. THE EXCESS SALARY DRAWN ACCORDINGLY WORKS OUT TO RS. 3,863 X 145 = 5,60,135/-. ACCORDINGLY, HE MADE ADDITION OF RS. 5,60,135/-. 8. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- KEEPING IN VIEW SUCH COUNTER COMMENTS AGAIN A COPY OF THE SAME WAS SENT TO THE ASSESSING OFFICER FOR HIS VERIF ICATION AND REPORT BUT THE ASSESSING OFFICER PREFERRED NOT TO OFFER ANY COMMENTS ON THESE COUNTER COMMENTS MADE BY SH. DUA. I HAVE ALSO EXAMINED THE COPY OF SUCH REVISED CHART AND SALARY SHEETS VIS A VIS BOOKS OF ACCOUNT AS PRODUCE D BEFORE ME AND APPARENTLY THE CLAIM WAS FOUND GENUINE AND RECONCILIABLE. FURTHER, ENTIRE SALARY PAYMENT WAS SU BJECT TO DEDUCTION OF PF AND ESI WHICH WAS ALSO DEDUCTED IN TI ME AND PROPER PF AND ESI NUMBER WERE ALLOTTED BY THE RESPEC TIVE AUTHORITIES. UNDER THESE CIRCUMSTANCES IN MY CONSID ERED VIEW THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWIN G SALARY CLAIM TO THE EXTENT OF RS. 5,60,135/- TREATING THE SAME AS EXCESS SALARY DRAWN IN RESPECT OF 145 GUARDS. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED. 17 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE 9. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND RE QUESTED TO CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER. 10. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS SU BMITTED THAT THE HONBLE ITAT IN ORIGINAL ORDER HAD DECIDED THIS ISSU E AS UNDER:- AT THE OUTSET, IT IS SUBMITTED THAT THE CONCLUSIONS AND INFERENCES DRAWN BY THE AO BASED ON THE CORRECT CHA RT PREPARED BY HIM AND REPRODUCED AT PAGE 4 OF THE A.O ., WAS COMPLETELY INCORRECT AND THEREFORE, A CHART BASED O N THE BALANCE SHEET AND THE BOOKS OF ACCOUNT REGULARLY MAINTAINED, WAS DULY SUBMITTED BEFORE THE A.O. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF HOWEVER, THE A.O. COMPLETELY IGNORED THE SAME. A PERUSAL OF THE SAME SHALL REVEAL THAT THERE IS NO ANOMALY FOUND NOW AS ALLEGED . THEREFORE, NO WEIGHT CAN BE GIVEN TO THE VARIOUS NEG ATIVE INFERENCES DRAWN BY THE A.O. THE LD AR FURTHER ARGUED THAT THERE CANNOT BE ANY LO GICAL PROPORTION OF LINK BETWEEN THE NUMBER OF TOWERS AND NUMBER OF PERSONS EM PLOYED. THE LD ASSESSING OFFICER DID NOT APPRECIATE THAT THE ASSES SEE WAS TO EMPLOY THE GUARDS THROUGHOUT THE PERIOD OF THE CONTRACT IRRESP ECTIVE OF THE NUMBER OF TOWERS OR THE PLACES. EVEN WHERE THE NUMBER OF TOWERS IS LESS HE COULD NOT HAVE TERMINATED THE EMPLOYEE. IT IS A MATTER OF CO MMERCIAL CONTRACT. IF ANY BREACH OF CONTRACT FOUND BETWEEN THE PARTIES, TH ERE IS A REMEDY IN THE 18 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE CONTRACT ITSELF. THE ASSESSEE INCURRED EXPENDITURE O UT OF COMMERCIAL EXPEDIENCY AS A PRUDENT BUSINESS MAN. HE RELIED ON THE DECISION IN THE CASE OF JK WOOLEN MANUFACTURERS 72 ITR 612 (SC). THE LD ASSESSING OFFICER DOUBTED THE PAYMENTS MADE TO THE GUARD ON THE BASIS OF SURMISES AND CONJECTURE. THE BOOKS OF ACCOUNT AUDITED, THERE IS N O ADVERSE REMARK MADE BY THE AUDITOR, THEREFORE, THE LD ASSESSING OFFICER HAD GIVEN FINDING WITHOUT ANY BASIS AND NO ADVERSE MATERIAL WITH HIM. THE GUARD S WERE VERIFIED FROM TIME TO TIME BY M/S AIRCEL DIGILINK PVT. LTD. THERE AFTER PAYMENTS WERE MADE. NOT ONLY THIS BUT ALSO ESI WAS ALSO DEDUCTED F ROM SUCH SALARY PAYMENTS AND DEPOSITED. THERE IS NO BASIS OF CALCULA TING EXCESS NUMBER OF GUARDS I.E. 145 BY THE A.O.. THE LD ASSESSING OFFIC ER HAD NOT GIVEN ANY COMMENT ON REMAND REPORT DURING THE APPELLATE PROCE EDINGS TO THE LD CIT(A), THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEES BOOKS OF ACCOUNT ARE AUDITED. THE SALARIES OF GUARDS WERE PAID BY THE TELE COM COMPANY TO THE ASSESSEE AFTER VERIFICATION. THE WORKING MADE BY THE LD ASSESSING OFFICER ON THE BASIS OF EVIDENCE SUBMITTED BY THE ASSESSEE, THE LD ASSESSING OFFICER HAVE NO JURISDICTION TO INSTRUCT HOW TO COND UCT BUSINESS AND HOW TO DEPLOY THE GUARDS FOR SECURITY OF THE TOWERS. THE NUM BER OF GUARDS 19 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE EMPLOYMENT DEPEND ON THE REQUIREMENT OF SECURITY PE RSONNEL, WHICH CANNOT BE INCREASED OR DECREASED IMMEDIATELY ON INC REASE OR DECREASE OF BUSINESS. IT IS CONTINUOUS PROCESS AND ASSESSEE HAD MADE THESE PAYMENTS TO COMMERCIAL EXPEDIENCY AS A PRUDENT BUSINESS MAN. THE LD CIT(A) HAS ALSO CALLED FOR REPORT DURING THE APPELLATE PROCEED INGS FROM THE ASSESSING OFFICER, WHICH HAS NOT BEEN REPLIED BY HIM. THE ASSES SEE ALSO DEDUCTED ESI, WHICH HAS BEEN PAID TO THE CONCERNED DEPARTMEN T. THEREFORE, IN ABSENCE OF CONTRARY EVIDENCE WITH THE ASSESSING OFFI CER, THE LD CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT(A). 12. REGARDING ANOTHER REVENUES APPEAL BEING ITA NO . 765/JP/2012, THERE IS NO QUANTUM ADDITION REMAINED TO BE CONFIRM ED, THEREFORE THE PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE SUSTAINE D. ACCORDINGLY, THE REVENUES APPEAL IS DISMISSED. 13. IN THE RESULT BOTH OF THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH DECEMBER, 2015 RANJAN* 20 ITA NO. 88/JP/2010 & 765/JP/2012 ACIT VS. VIJAY KIRTI RATHORE VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE, 6 JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SMT. VIJAY KIRTI RATHORE, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.88/JP/2010 & 765/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR
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