ITO, Ludhiana V. Sh. Bir Parkash Malhotra Prop., Ludhiana

ITA 938/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86149 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K MITTAL
• Keywords: Unexplained investment; Business income; Opportunity of being heard
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 938/CHD/2013 ASSESSMENT YEAR: 2009-10 THE ITO, V SHRI BIR PARKASH MALHOTRA, WARD-II(1), PROP. M/S GANPATI TRADERS, LUDHIANA. MOCHPURA BAZAR, LUDHIANA. PAN: ACHPM4534E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGA L RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 02.02.2015 DATE OF PRONOUNCEMENT : 05.02.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-I, LUDHIANA DATED 19.07.2013 FOR ASSES SMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. THAT THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS I N DELETING THE ADDITION OF RS. 20,02,000/- MADE U/S 6 9 OF I. T. ACT, 1961 ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN SAVING BANK ACCOUNT OF THE ASSESSEE IN AXIS BANK, LUDHIANA. 2. THAT THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS O F THE CASE IN DELETING THE ABOVE ADDITION IGNORING THE FACT S THAT THE ASSESSEE WAS SPECIFICALLY GIVEN THE OPPORTUNITY BY A.O . TO PRODUCE SALE/PURCHASE VOUCHERS TO SUBSTANTIATE HIS CLAIM THA T AMOUNT DEPOSITED IN DONOR'S BANK ACCOUNT IS SALE PROCEED BUT THE ASSESSEE FAILED TO PRODUCE THE SAME. THUS, THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THAT THE SOURCE OF DEPOSIT OF RS. 20,02,000/- IN AXIS BANK ACCOUNT IS OUT OF THE SALE PR OCEEDS OF M/S SHIV SHANKER MEGA MART, THE PROPRIETOR/ CONCERN OF THE ASSESSEE. 2 2. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 2 0,02,000/- BY TREATING THE CASH DEPOSITS IN THE BANK ACCOUNT A S UNEXPLAINED. THE ASSESSING OFFICER IN THIS REGARD HAS OBSERVED THAT THE ASSESSEE HAD DEPOSITED AN AMOUNT OF RS. 20 ,02,000/- IN CASH IN HIS SAVING BANK ACCOUNT AND THE SOURCE OF T HE SAME HAD BEEN EXPLAINED BEING ON ACCOUNT OF AMOUNT WITH HIM FROM HIS SOLE PROPRIETOR FIRM M/S SHIV SHANKAR MEGA MART. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER THAT THE AMOUNTS DEPOSITED IN HIS PROPRIETOR FIRM M/S SHIV S HANKAR MEGA MART HAD BEEN ON ACCOUNT OF SALES PROCEEDS WHI CH FORM PART OF THE BOOKS OF ACCOUNT OF M/S SHIV SHANKAR ME GA MART. IT ALSO SUBMITTED THAT THE SAID TURNOVER AND THE RESUL TANT INCOME IS PART OF THE RETURN FILED BY THE ASSESSEE. THE AS SESSING OFFICER AFTER EXAMINING THE ISSUE CAME TO THE CONCLUSION TH AT THE ASSESSEE'S CONTENTION WAS SELF-CONTRADICTORY, AS TH E COPY OF AXIS BANK ACCOUNT IN THE BOOKS OF M/S SHIV SHANKAR MEGA MART REVEALS ZERO BALANCE, WHEREAS BANK STATEMENT OBTAIN ED FROM THE BANK REVEALS BALANCE OF RS.273.75. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE FOLLOWING ENTRIES HAD NO T BEEN RECORDED IN THE SAVING BANK STATEMENT :- 24.12.2008 BY A-ONE MEGA MART PVT. LTD. PAYMENT 519 726.25 BY A-ONE MEGA MART PVT. LTD, PAY MENT 519 273.75 BY CASH CONTRA 75 6000.00 3. THE ASSESSING OFFICER ON THE BASIS OF THESE OBSE RVATIONS CONCLUDED THAT THE TRANSACTIONS AMOUNTING TO RS. 20 ,02,000/- WERE IN THE NATURE OF OTHER THAN BUSINESS AND ADDED THE SAME AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT, 19 61. 3 4. THE ASSESSEE CHALLENGED ADDITION BEFORE LD. CIT( APPEALS) AND IT WAS SUBMITTED THAT THE APPELLANT ASSESSEE IS DOING BUSINESS OF TRADING IN WHOLESALE OF BLANKETS AND SH AWLS. THE LD. ASSESSING OFFICER HAS WRONGLY ADDED CASH DEPOSITED IN SAVING ACCOUNT U/S 69 AS UNEXPLAINED CASH DEPOSIT WHEN SUC H DEPOSIT OF CASH WAS THOROUGHLY EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT ASSESSEE HAD RECEIVED PAYMENTS FROM M/S A ONE MEGA MART PVT. LTD. VIDE TW O CHEQUES OF RS. 10 LACS EACH ON 06.09.2008 AND 08/09/2008 A GAINST THE SALES MADE TO THE SAID COMPANY BY HIS PROPRIETORSHI P CONCERN M/S SHIV SHANKAR MEGA MART AND THESE CHEQUES WERE D EPOSITED IN ITS BANK ACCOUNT (AXIS BANK). THE APPELLANT HA D WITHDRAWN RS. 20 LACS IN CASH FROM AXIS BANK VIDE TWO CHEQUES OF RS. 10 LACS EACH ON 06/09/2008 AND ON 08/09/2008 AND DEPOS ITED THE SAME IN HIS SAVING ACCOUNT ON THE SAME DATES. FROM HIS SAVING ACCOUNT HE ISSUED TWO CHEQUES OF RS. 10 LACS EACH I N FAVOUR OF GANPATI RETAIL, WHICH THE APPELLANT WANTED TO ESTAB LISH SEPARATELY, BUT UNLUCKILY THE BUSINESS IN THE NEWLY ESTABLISHED FIRM COULD NOT TAKE OFF IN THAT FINANCIAL YEAR AS T HE VENDORS WHOSE GOODS WERE TO BE SOLD DELAYED THE SUPPLY OF G OODS AND IN THE MEANTIME THE SEASON GOT OVER. 5. THE LD. ASSESSING OFFICER HAD ADDED BACK THESE T WO CASH DEPOSITS IN THE SAVING ACCOUNT IN THE INCOME OF THE APPELLANT WITHOUT CONSIDERING THE FACT THAT SOURCE OF THESE D EPOSITS HAVE BEEN FULLY EXPLAINED, WHICH IS WITHDRAWAL FROM THE BANK ACCOUNT OF HIS PROPRIETORSHIP CONCERN M/S SHIV SHANKER MEGA MART. WHEN THE SOURCE OF CASH DEPOSIT IN THE SAVING ACCOU NT IS 4 GENUINE AND FULLY EXPLAINED THEN THE QUESTION OF AD DITION U/S 69 DOES NOT ARISE. 6. THE LD. CIT(APPEALS) CONSIDERING THE EXPLANATION OF THE ASSESSEE, DELETED THE SUBSTANTIAL ADDITION AND ALLO WED THE APPEAL OF THE ASSESSEE PARTLY. HIS FINDINGS IN PAR A 4 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 4. I HAVE CONSIDERED THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR ON TH E ISSUE. I HAVE ALSO EXAMINED THE BANK ACCOUNT OF M/S SHIV S HANKAR MEGA MART AS WELL AS ASSESSEE'S SAVING BANK ACCOUNT WITH AXIS BANK OF ACCOUNT NO. 042010100252331. IT IS CLE AR THAT THE ASSESSEE HAD WITHDRAWN AN AMOUNT OF RS, 10 LAC EACH VIDE TWO CHEQUES DATED 6/9/2008 AND 08/09/2008 FROM HIS PROPRIETORSHIP CONCERN M/S SHIV SHANKER MEGA MART B ANK ACCOUNT BY SELF CHEQUES. FURTHER THE SAID AMOUNTS O N THE SAME DATES WAS DEPOSITED IN CASH IN ASSESSEE'S SAVI NG BANK ACCOUNT NO. 042010100252331 WITH AXIS BANK LTD ., LUDHIANA. NOW THE ISSUE IS THAT WHETHER THE AMOUNT DEPOSITED IN THE BANK ACCOUNT M/S SHIV SHANKAR MEGA MART WAS PART OF THE ASSESSEE'S TURNOVER OR NOT. THE PER USAL OF ACCOUNT OF A-ONE MEGA MART (P) LIMITED TO WHOM THE ASSESSEE HAD MADE SALES CLEARLY SHOWS THAT THE SAID AMOUNTS OF RS. 10 LAC EACH HAD BEEN RECEIVED BY M/S SHIV SHANKAR MEGA MART FROM M/S A-ONE MEGA MART (P) LIMI TED BY CHEQUE THOUGH IT BECOMES ABUNDANTLY CLEAR THAT T HE AMOUNTS RECEIVED BY THE ASSESSEE IN M/S SHIV SHANKA R MEGA MART ON ACCOUNT OF BUSINESS TURNOVER WHICH HAS BEEN WITHDRAWN AND PUT INTO HIS SEPARATE BANK ACCOUNT IN CASH FOR ISSUING CHEQUES TO M/S GANPATI RETAIL. THE REAS ONS FOR USING THIS DETOUR HAS BEEN SUBMITTED AS THE INTENTI ON TO ESTABLISH SEPARATE IDENTITY IN BUSINESS WITH M/S GA NPATI RETAIL. THE ENTIRETY OF THE CIRCUMSTANCES MAKE IT C LEAR THAT THE DEPOSIT OF CASH IN ASSESSEE'S BANK ACCOUNT TO T HE TUNE OF RD. 20,02,000/- IS DIRECTLY RELATED TO THE BUSINESS RECEIPTS FROM M/S SHIV SHANKAR MEGA MART ANOTHER PROPRIETOR CONCERNS OF THE APPELLANT. IN THE CIRCUMSTANCES THE SAID AMOUNT CANNOT BE SAID TO THE UNEXPLAINED UNDER ANY CIRCUMSTANCES. THE ADDITION MADE BY THE ASSESSING O FFICER IS THEREFORE DIRECTED TO BE DELETED. IT IS SEEN THA T THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASONS F OR DISCREPANCY WITH REFERENCE TO THE BALANCE AS PER BO OKS OF ACCOUNT TO THE TUNE OF ZERO BALANCE IN M/S SHIV SHA NKAR MEGA MART AND THE COPY OF BANK ACCOUNT OBTAINED BY THE ASSESSING OFFICER. THEREFORE, THE ADDITION TO THE T UNE OF RS.7000/- IS CONFIRMED. IN THE RESULT APPEAL IS PARTLY ALLOWED. 5 7. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. DR R ELIED UPON ORDERS OF THE ASSESSING OFFICER AND SUBMITTED THAT NO BILLS OF SALES HAVE BEEN PRODUCED BEFORE THE AUTHORITIES BEL OW. THEREFORE, ASSESSEE COULD NOT CO-RELATE THE SALES W ITH THE AMOUNT IN QUESTION. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE LEDGER ACCOUNT OF A-ONE MEGA MART P. LTD. IN THE BOOKS OF M/S SHIV SHANKAR MEGA MART, LU DHIANA TO SHOW THAT THE AMOUNT IN QUESTION WAS ON ACCOUNT OF SALE PROCEEDS AND ALSO COPY OF THE BANK ACCOUNT WITH AXI S BANK LTD. AND SUBMITTED THAT LD. CIT(APPEALS) CORRECTLY ALLOW ED APPEAL OF THE ASSESSEE. IN THIS VIEW OF THE MATTER AND CONSI DERING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THE MATTER R EQUIRES RE- CONSIDERATION AT THE LEVEL OF THE ASSESSING OFFICER . THE LD. CIT(APPEALS) NOTED THAT THE ASSESSEE HAS WITHDRAWN THE AMOUNT OF RS. 10 LACS EACH FROM M/S SHIV SHANKAR MEGA MART WHICH WAS DEPOSITED IN THE SAVING BANK ACCOUNT OF THE ASSESSE E WITH AXIS BANK LTD. HOWEVER, NO DETAILS OF THE BANK ACCOUNT MAINTAINED BY M/S SHIV SHANKAR MEGA MART HAS BEEN CONSIDERED AND DISCUSSED IN THE APPELLATE ORDER. COPY OF THE BANK ACCOUNT OF M/S SHIV SHANKAR MEGA MART IS ALSO NOT PRODUCED BEF ORE US FOR INSPECTION AND VERIFICATION. SINCE THE ASSESSEE MA DE A CLAIM THAT CHEQUE OF RS. 10 LACS EACH WERE RECEIVED FROM M/S A-ONE MEGA MART P. LTD. WHICH WERE DEPOSITED IN PROPRIETO RY CONCERN OF THE ASSESSEE WITH THE SAME AXIS BANK HAVING DIFF ERENT NUMBER, THEREFORE, IT WAS NECESSARY TO PRODUCE THE SAID BANK ACCOUNT BEFORE US FOR EXAMINATION. SIMILARLY, THE ASSESSEE CONTENDED BEFORE ASSESSING OFFICER THAT SINCE SALES AND 6 PURCHASE BILLS AND VOUCHERS WERE LOCKED IN THE PREM ISES BY THE BANKER, THEREFORE SAME COULD NOT BE PRODUCED. THE ASSESSMENT YEAR IN QUESTION IS 2009-10 AND MANY YEARS HAVE GON E NOW, THEREFORE ASSESSEE MUST BE IN A POSITION TO PRODUCE THE SALES/PURCHASE BILLS FOR VERIFICATION THAT AMOUNT I N QUESTION IS PART OF THE SALE PROCEEDS. HOWEVER, IT IS ADMITTED FACT THAT SALE/PURCHASE BILLS WERE NEVER PRODUCED BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US. THEREFORE, THESE TWO D OCUMENTS ARE NECESSARY FOR EXAMINATION I.E. BANK ACCOUNT OF THE ASSESSEES PROPRIETORY CONCERN M/S SHIV SHANKAR MEGA MART AS W ELL AS ASSESSEES SALE VOUCHERS AND PRODUCE SUFFICIENT MAT ERIAL TO SHOW THAT THE AMOUNT RECEIVED WAS PART OF THE SALE PROCE EDS. IN THE ABSENCE OF THESE DOCUMENTS ON RECORD, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH FEBRUARY,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH