Shri Murlidhar Sharma, JODHPUR V. ACIT, JODHPUR

ITA 94/JODH/2015

• Counselvise Citation: 9423314 RSA 2015
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THIS CONSOLIDATED
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Corroborative evidences
• Section: 143(3); 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI G.C. GUPTA, H O NBLE VICE PRESIDENT SHRI R.C. SHARMA , HONBLE ACCOUNTANT MEMBER ITA NO S . 9 4 & 9 5 / JODH / 20 1 5 [ ASSESSMENT YEAR S 2008 - 09 & 20 09 - 10 ] SHRI MURLIDHAR SH ARMA VS. THE A.C.I.T HOUSE NO. 221 - 222, CENTRAL CIRCLE - 2 SHYAM NAGAR SCHEME JODHPUR DEV NAGAR, PAL LINK ROAD JODHPUR PAN NO : AOLPS 6649 J ITA NO S . 166 & 167 / JODH /2015 [ASSESSMENT YEAR S 2008 - 09 & 2009 - 10 ] THE A.C.I.T VS. SHRI MURLIDHAR SHARM A CENTRAL CIRCLE 2 HOUSE NO. 221 - 222, JODHPUR SHYAM NAGAR SCHEME DEV NAGAR, PAL LINK ROAD JODHPUR PAN NO : AOLPS 6649 J (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI AMIT KOTHARI DEPARTMENT B Y : SHRI S.L. MOURYA DATE OF H EARING : 0 3 . 0 9 .201 5 DATE OF PRONOUNCEMENT : 04 . 0 9 . 201 5 2 ORDER PER R.C. SHARMA, AM : - TH ESE ARE CROSS APPEAL S FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY AGAINST THE ORDER OF THE CIT(A ) - 1, JAIPUR DATED 17 .0 2 .201 5 FOR A.YS. 2008 - 09 AND 200 9 - 201 0 RE SPECTIVELY IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S 153A OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT, FOR SHORT]. 2. FACTS AND CIRCUMSTANCES IN BOTH THE A.YS ARE SAME AND SINCE THE ISSUES INVOLVED ARE COMMON, WE ARE ADJUDICATI NG UPON THEM BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. FIRST WE TAKE UP ITA NO. 94/JODH/2015. FIRST GROUND PERTAINS TO THE SUSTENANCE OF ADDITION OF RS. 5 LAKHS AS AL LEGED UNEXPLAINED CAPITAL CONTRIBUTION MADE WITH THE FIRM M/S AYUSHI BUILDERS AND DEVELOPERS. THE ADDITION RESULTED IN DOUBLE ADDITION AS THE SAME AMOUNT WAS ALSO ADDED IN THE CASE OF THE FIRM. FACTS, IN BRIEF, ARE THAT SEARCH AND SEIZURE ACTION U/S 132 O F THE ACT WAS CONDUCTED AT THE RESIDENTIAL AND 3 BUSINESS PREMISES OF THE ASSESSEE ON 15.2.2009. WHILE FRAMING ASSESSMENT U/S 153A OF THE ACT, THE AO MADE VARIOUS ADDITIONS OUT OF WHICH ADDITION MADE ON ACCOUNT OF INVESTMENT IN FARM HOUSE WAS DELETED BY THE LD. CIT(A) AFTER RELYING ON THE DECISION OF THE ITAT JODHPUR BENCH IN ASSESSEES OWN CASE IN ITA NOS. 21 TO 215 /JODH/2013 FOR A.YS 2005 - 06, 2006 - 07 AND 2010 - 11 DECIDED ON 24.09.2013. ACTION OF THE LD. CIT(A) IN CONFIRMING RS. 5 LAKHS AS ALLEGED UNEXPLAIN ED CAPITAL CONTRIBUTION WITH M/S AYUSHI BUILDERS AND DEVELOPE R S WAS AGITATED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE RECORD WE FOUND THAT CAPITAL CONTRIBUTION BY THE ASSESSEE TO ITS FIRM M/S AYUSHI BUILDERS AND DEVELOPERS WAS MOSTLY IN THE FORM OF CHEQUES AND PARTLY IN THE FORM OF CASH. OUT OF TOTAL CAPITAL CONTRIBUTION OF RS. 49,41,816/ - , THE LD. CIT(A) HAS NOT ACCEPTED RS. 5 LAKHS. WE FOUND THAT THE COMPLETE SOURCE OF RECEIPT OF CHEQU ES AS WELL AS CASH HAS BEEN EXPLAINED BEFORE THE LOWER AUTHORITIES. ADDITION HAS BEEN MADE BY THE AO U/S 69, 4 ACCORDING TO WHICH ONLY IN RESPECT OF INVESTMENT MADE OUTSIDE THE BOOKS OF ACCOUNT, AN ADDITION CAN BE MADE. FOR THIS PURPOSE, RELIANCE WAS PLACE D ON THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF HARSHILA CHORDIA REPORTED AT 298 ITR 349 [RAJ]. IT WAS THE CONTENTION OF THE LD. A.R. THAT SINCE NO INCRIMINATING DOCUMENT WAS FOUND, THERE WAS NO REASON FOR MAKING ADDITION OF RS. 5 LAK HS IN RESPECT OF CAPITAL CONTRIBUTION TO THE FIRM WHICH WAS DULY EXPLAINED NOT ONLY DURING THE ASSESSMENT PROCEEDINGS BUT ALSO DURING THE APPELLATE PROCEEDINGS. FOR THIS PURPOSE, HE PLACED RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT ON THE CASE OF JAI STEELS INDIA REPORTED AT 259 CTR 281 [RAJ]. IN CROSS APPEAL, THE REVENUE IS AGGRIEVED AGAINST THE DELETION OF THE SAID ADDITION WHEREAS THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE CONFIRMATION OF ADDITION OF RS. 5 LAKHS. 6. AFTER C ONSIDERING THE RIVAL SUBMISSION, WE FOUND THAT AN ADDITION OF RS. 49,41,816/ - WAS MADE BY THE AO ON ACCOUNT OF CAPITAL CONTRIBUTION OUT OF WHICH THE LD. CIT(A) HAS DELETED ADDITION OF RS. 44,41,816/ - AFTER CONSIDERING THE REMAND 5 REPORT. WE FOUND THAT THE A MOUNT OF RS. 5 LAKHS WAS RECEIVED FROM SHRI ANIL MODI. OUT OF AMOUNT RECEIVED FROM SHRI ANIL MODI, THE ASSESSEE HAS CONTRIBUTED TO THE FIRM. AT THE VERY SAME TIME, WE FOUND THAT THE AO HAS ALSO MADE ADDITION ON ACCOUNT OF CASH CREDIT RECEIVED FROM SHRI AN IL MODI WHICH AMOUNT TO DOUBLE ADDITION OF THE SAME AMOUNT. WE HAD VERIFIED THE COPY OF HDFC BANK STATEMENT WHICH INTER ALIA SHOWS RECEIPT OF PLOT ADVANCE FROM SHRI ANIL MODI BY CHEQUE DATED 21.1.2008 OF RS. 5 LAKHS. DOCUMENTARY EVIDENCE HAS BEEN PLACED A T PAGES 41 TO 45 OF THE PAPER BOOK FURNISHED ON RECORD. WE HAD ALSO SCRUTINIZED THE BANK STATEMENT OF HDFC INDICATING THE CREDIT OF THE RELEVANT AMOUNT. THE CONTENTION OF THE LD. A.R. IS FURTHER FORTIFIED BY THE ORDER OF THE ITAT JODHPUR BENCH IN THE CAS E M/S AYUSHI BUILDERS TO SHOW THAT RECEIPT OF ADVANCE FOR A PLOT BOOKING BY CHEQUES WAS A NORMAL FEATURE AND ADDITION MADE IN THIS REGARD HAS BEEN DELETED BY THE TRIBUNAL. THE RELEVANT FINDING HAS BEEN GIVEN BY THE TRIBUNAL AT PAGES 15 AND 16 OF THE ORDER . 6 7. IN VIEW OF THE ABOVE DOCUMENTARY EVIDENCE, WE DO NOT FIND ANY MERIT IN THE LD. CIT(A)S ACTION SUSTAINING ADDITION OF RS. 5 LAKHS. FUNDS WHICH HAVE BEEN EARNED BY PARTNERS IS FOUND TO BE NOT UTILIZED ELSEWHERE AND THEREFORE, CLAIM OF TELESCOPY CANNO T BE DENIED. SINCE ENTIRE SOURCE OF INVESTMENT, CASH FLOW STATEMENT ETC. IS AVAILABLE, THERE CANNOT BE DOUBLE ADDITION. THIS IS SIMPLY AN UTILIZATION OF SUCH INCOME TOWARDS ACQUISITION OF NEW ASSETS AND UNDISCLOSED INCOME WOULD ALWAYS BE REPRESENTED BY S OME CASH, AS IT CANNOT VANISH IN AIR. THE ENTIRE ADDITION THEREFORE, DESERVES TO BE DELETED. WE ORDER TO DELETE THE SAME. 8 . GROUND NO. 3 RELATING TO LEVY OF INTEREST U/S 234A, 234B AND 234C IS CONSEQUENTIAL IN NATURE. 9 . IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS ALLOWED. 10 . THE REVENUE IN ITS APPEAL FOR BOTH THE YEARS HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN FARM HOUSE. THE LD. CIT(A) HAS DELETED THE ADDITION BY FOLLOWING THE ORDER OF THE TRIBUNAL IN 7 THE ASSESSEES FIRM M/S AYUSHI BUILDERS AND DEVELOPERS. RELEVANT OBSERVATION READS AS UNDER: I HAVE DULY CONSIDERED AOS CONTENTION AS MENTIONED IN THE ASSESSMENT ORDER ( PARA 11 PG 6), ASSESSEES SUBMISSION IN FORM OF PAPER - BOOK (PARA 6 PB - PG 13) AND REJOINDER FILED ON 13/1/2015 AND APPELLANTS SUBMISSION, PERUSED THE MATERIALS ON RECORD, DULY CONSIDERED FACTUAL MATRIX OF THE CASE AND ALSO APPLICABLE LEGAL POSITION. I HAVE DULY CONSIDERED ASSESSEES SUBMISSION AND ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE. FOR THE SAKE OF CLARITY, AOS CONTENTION AS APPEARING IN THE ASSESSMENT ORDER IN PARA 11 PG 6 IS REPRODUCED HERE AS UNDER: ... AS STATED ABOVE, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS REGARDING CONSTRUCTION EXPENSES IN THESE PROPERTIES TO THE DVO. FURTHER, IT IS FOUND THAT THE ASSESSEE FOUND INDULGED IN NON - MAINTENANCE OF PROPER BOOKS OF ACCOUNTS. THEREFORE, EXPENSES DECLARED IN BALANCE SHEET ARE ALSO NOT VERIFIABLE AND THE SAM E REMAINED UNEXPLAINED ON THE PART OF THE ASSESSEE AND THE SAME (AS DETAILED BELOW) IS ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE MADE OUT OF UNDISCLOSED INCOME. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE I.T. ACT FOR CONCEALIN G & FURNISHING INACCURATE PARTICULARS OF THE INCOME IS INITIATED SEPARATELY. 8 I N FACT, AO HAS REPRODUCED EXPENSES, DETAILS OF W HICH ARE SHOWN BY FHE ASSESSEE IN HIS BOOKS OF ACCOUNTS. FURTHER, ADDITIONS WERE MADE BY THE AO ON THE FACTS THAT ASSESSEE HAS NOT PRODUCED SUPPORTING EVIDENCES. IT IS NOTED HERE THAT AO HAS NOT DISPUTED THE INVESTMENTS MADE IN THIS REGARD. IT IS SUBMITTED THAT THIS IS ISSUE COVERED BY HONBLE ITAT, JODHPUR BENCHS ORDER IN ITA NO. 213 TO 215/JU/2013 IN PG 8 PARA 5.2 AND PG 11 PARA 12.2 IN ASSESSEES OWN CASE, RELEVANT EXTRACTS OF WHICH ARE REPRODUCED HERE AS UNDER: 5. GROUND NO. 3 OF THIS APPEAL RELATES T O ADDITION OF RS. 3,00,240/ - MADE ON ACCOUNT OF EXPENSES SHOWN IN THE BOOKS OF ACCOUNT/BALANCE SHEET ON ACCOUNT OF HOUSE/FARM HOUSE. 5.1 FACTS OF THIS GROUND ARE THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON CONSTRUCTION IN PROPERTY. THE MATTER HAD BEEN REFERRED TO THE DVO AND THE ASSESSEE HAD NOT FURNISHED ANY DETAILS BEFORE HIM EITHER. THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT SO IT WAS NOT A.Y. EXPENSES SHOWN IN HOUSE, FARM HOUSE IN THE HANDS OF MURALIDHAR SHAMIA EXPENSES SHOWN IN THE HANDS OF M/S AYUSHI BUILDERS TOTAL 2005 - 06 3 , 00,240 0 3 , 00,24 0 2006 - 07 19 , 41,689 0 19 , 41,6 89 2007 - 08 36 , 07,390 0 36 , 07,3 90 2008 - 09 68 , 63,347 47 , 85,894 1 , 16 , 49, 241 2009 - 10 43,37,985 81,37,044 1,24,75, 029 2010 - 11 0 47 , 73,946 47 , 73,9 46 3 , 47 , 47, 535 (ADDITION TO RS. 1,24,75,029/ - ) 9 POSSIBLE TO VERIFY WHETHER THE EXPENDITURE ON CONSTRUCTION WAS MADE FROM THE DECLARED INCOME DURING T HE A.Y. THEREFORE, THE A.O. MADE ADDITION OF RS. 3,00,240/ - ON ACCOUNT OF UNDECLARED EXPENDITURE ON FARM HOUSE. THE LD. CIT(A) UPHELD THE SAME. AGGRIEVED THE ASSESSEE IS IN APPEAL. 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE E NTIRE MATERIAL ON RECORD. THIS ADDITION PERTAINS TO AN INVESTMENT ALREADY SHOWN IN HOUSE/FARM IN HIS FINAL ACCOUNT AND BOOKS OF ACCOUNT PERTAINING TO THIS A.Y. NO INCRIMINATING EVIDENCE WAS FOUND IN THIS REGARD DURING SEARCH IN THE THIRD PARTY. THEREFORE , THIS AMOUNT CANNOT BE TREATED AS UNEXPLAINED INVESTMENT BY ANY MEANS AND BY SIMPLY OBSERVING THAT PROPER BOOKS WERE NOT MAINTAINED. THE INVESTMENT OF RS. 3,00,024/ - REPRESENTS PURCHASE OF LAND ON WHICH HOUSE WAS CONSTRUCTED. THE ASSESSEE HAD SUBMITTED C OPY OF REGISTERED SALE DEED IN SUPPORT OF THE INVESTMENT. THE SAID LAND WAS PURCHASED IN THE JOINT NAME OF THE ASSESSEE AND HIS BROTHER SHRI GAUTAM SHARMA. THE INVESTMENT IS VERIFIABLE FROM THE SALE DEED ALSO. COPIES OF LEDGER FROM BOOKS OF ACCOUNT WHER E THIS INVESTMENT HAS BEEN SHOWN, AND COPY OF CASH BOOK WERE ALSO DULY SUBMITTED. SOURCE OF INVESTMENT IS NOT AT ALL IN DISPUTE AND IN SUCH A SITUATION, THE ADDITION SO MADE IS WHOLLY UNCALLED FOR AND 10 DESERVES TO BE DELETED. ACCORDINGLY, WE ORDER THE DELE TION OF ADDITION AND ALLOW GROUND NO 3 OF THIS APPEAL. 12. GROUND NO. 4 PERTAINS TO ADDITION OF RS. 19,41,689/ - ON ACCOUNT OF EXPENSES SHOWN IN THE BOOKS OF ACCOUNT/BALANCE SHEET ON ACCOUNT OF HOUSE/FARM HOUSE. GROUND NO. 1 OF REVENUES APPEAL IS CONNECT ED WITH THIS GROUND. 12.1 FACTS OF THIS GROUND ARE THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON CONSTRUCTION IN PROPERTY. THE MATTER HAD BEEN REFERRED TO THE DVO AND THE ASSESSEE HAD NOT FURNISHED ANY DETAILS BEFORE HIM EITHER. THE ASSESSEE WAS NOT MAI NTAINING ANY BOOKS OF ACCOUNT SO IT WAS NOT POSSIBLE TO VERIFY WHETHER THE EXPENDITURE ON CONSTRUCTION WAS MADE FROM THE DECLARED INCOME DURING THE A.Y. THEREFORE, THE A.O. MADE ADDITION OF RS. 19,41,689/ - ON ACCOUNT OF UNDECLARED EXPENDITURE ON FARM HOUS E. THE LD. CIT(A) UPHELD THE SAME. AGGRIEVED THE ASSESSEE IS IN APPEAL. 12.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. THIS ADDITION PERTAINS TO AN INVESTMENT ALREADY SHOWN IN HOUSE/FARM IN HIS FINAL AC COUNT AND BOOKS OF ACCOUNT PERTAINING TO THIS A.Y. NO INCRIMINATING EVIDENCE WAS FOUND IN THIS REGARD DURING SEARCH IN THE THIRD PARTY. 11 THEREFORE, THIS AMOUNT CANNOT BE TREATED AS UNEXPLAINED INVESTMENT BY ANY MEANS AND BY SIMPLY OBSERVING THAT PROPER BO OKS WERE NOT MAINTAINED. THE INVESTMENT OF RS. 19,41,689/ - REPRESENTS PURCHASE OF LAND ON WHICH HOUSE WAS CONSTRUCTED. THE ASSESSEE HAD SUBMITTED COPY OF REGISTERED SALE DEED IN SUPPORT OF THE INVESTMENT COPIES OF LEDGER FROM BOOKS OF ACCOUNT WHERE THIS I NVESTMENT HAS BEEN SHOWN, AND COPY OF CASH BOOK WERE ALSO DULY SUBMITTED. SOURCE OF INVESTMENT IS NOT AT ALL IN DISPUTE AND IN SUCH A SITUATION, THE ADDITION SO MADE IS WHOLLY UNCALLED FOR AND DESERVES TO BE DELETED. THE A.O. HAS NOT GIVEN ANY REASON FOR NOT ACCEPTING THIS INVESTMENT SHOWN IN THE REGULAR RECORDS. ACCORDINGLY, WE ORDER THE DELETION OF ADDITION AND ALLOW GROUND NO 4 OF THIS APPEAL. 12.3 DEPARTMENTS GROUND NO. 1 IS NOT RELATED TO THIS A.Y. THEREFORE, THIS GROUND IS DISMISSED IN LIMINE AS THIS GROUND DOES NOT ARISE FROM THE APPELLATE ORDER. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE ORDER OF THE IYTAT [SUPRA] ENTIRE ADDITION OF RS. 12,4,75,029/ - IS HEREBY DELETED. ASSESSEES APPEA L IN GROUND NO. 8 STANDS ALLOWED. 12 11. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE LD. CIT(A) AND FOUND THAT THE ADDITION PERTAINS TO THE INVESTMENT ALREADY SHOWN IN THE FARM HOUSE IN THE FINAL ACCOUNTS AND BOOKS OF ACCOUNTS PERTAINING TO THE A.YS. U NDER CONSIDERATION. NO INCRIMINATING EVIDENCE WAS FOUND IN THIS REGARD DURING THE SEARCH IN THE THIRD PARTY. ACCORDINGLY IT WAS HELD THAT THE AMOUNT CANNOT BE TREATED AS UNEXPLAINED INVESTMENT BY ANY MEANS AND BY SIMPLY OBSERVING THAT PROPER BOOKS WERE N OT MAINTAINED. THE LD. CIT(A) HAS FOLLOWED THE FINDING GIVEN BY THE TRIBUNAL WHIC H IS AS PER MATERIAL ON RECORD AND DO NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY THE GROUND TAKEN BY THE REVENUE IN BOTH THE YEARS UNDER CONSIDERATION WITH REGARD TO INVESTME NT IN FARM HOUSE AMOUNTING TO RS. 16,49,241/ - IN A.Y. 2008 - 09 AND RS. 1,24,75,029/ - IN A.Y. 2009 - 10 HAS NO LEGS TO STAND . EXCEPT FOR THE AMOUNTS, FACTS, REASONS, ARGUMENTS ON THIS ISSUE ARE MUTATIS MUTANDIS SIMILAR TO GROUNDS TAKEN BY THE ASSESSEE IN A.Y. 2009 - 10 AND GROUNDS TAKEN BY THE REVENUE IN BOTH THE CROSS APPEALS IN BOTH THE A.YS. THEREFORE, WITH SIMILAR REASONING, WE DISMISS THE GROUNDS RAISED BY THE REVENUE AND ORDER TO DELETE THE IMPUGNED ADDITION. 13 1 2 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED WHEREAS THE CROSS APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRON OUNCED IN THE COURT ON 04 - 0 9 - 201 5 . SD/ - SD/ - (G.C. GUPTA) ( R.C. SHARMA ) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 04 TH SEPTEMBER , 2015 . VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR