Madan Lal, Barnala V. ITO, W-1, Barnala

ITA 950/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4120 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained investment; Opportunity of being heard; Notional interest; Set aside
• Section: 80C; 148; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT ITA NO.950/CHD/2018 ASSESSMENT YEAR: 2007-08 SH. MADAN LAL VS. THE ITO S/O SH. DURGA DASS, WARD-1, BARNALA HOUSE NO. 1686 GALI NO. 5, SEKHA ROAD, BARNALA PAN NO. AAQPL4610D (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMAN PARTI, ADVOCATE REVENUE BY : SH. MANJIT SINGH, SR. DR DATE OF HEARING : 13/03/2019 DATE OF PRONOUNCEMENT : 13/03/2019 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 16/03/2018 OF LD. CIT(A)-I, LUDHIANA. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION OF RS. 7,55,000/- MADE BY THE ASSESSING OFFICER. 2. A. THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITI ON OF RS 4,00,000/- U/S 69 OF THE INCOME TAX ACT, 1961 MADE BY THE ASSESSIN G OFFICER ALLEGING THAT THE APPELLANT HAD ADVANCED THE SAID SUM TO SMT HARPREET KAUR FROM UNDISCLOSED SOURCES. B. THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING T HE SAID ADDITION SINCE MADE BY THE ASSESSING OFFICER WITHOUT CALLING, EXAMINING , RECORDING THE STATEMENT OF THE ALLEGED BORROWER & HENCE WITHOUT PROVIDING AN O PPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT AS PER LAW. 3. A. THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITI ON OF RS 30,000/- U/S 69 OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUND O F APPELLANT HAVING ADVANCED THE SAID AMOUNT TO SH JANG SINGH. B. THAT THE CIT(A) GROSSLY ERRED IN UPHOLDING THE A DDITION SINCE BASED ON SURMISES & CONJECTURES CONTRARY TO THE STATEMENT OF THE SAID ALLEGED BORROWER. 4. A. THAT THE LD.CIT(A) ERRED IN UPHOLDING THE ADD ITION OF RS 75,000/- U/S 69 OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUN D OF THE APPELLANT HAVING ADVANCED THE SAID AMOUNT TO SH RAM MILAN. B. THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING T HE SAID ADDITION SINCE MADE BY THE ASSESSING OFFICER WITHOUT CALLING, EXAMINING , RECORDING THE STATEMENT OF THE ALLEGED BORROWER & HENCE WITHOUT PROVIDING AN O PPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT AS PER LAW. 5. A. THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITI ON OF RS 1,50,000/- MADE BY THE ASSESSING OFFICER U/S 69 OF THE INCOME TAX ACT, 1961 ALLEGING THAT THE APPELLANT HAD ADVANCED THE SAID SUM TO SMT SUNI TA. 2 B. THAT THE CIT(A) ERRED IN UPHOLDING THE SAID ADDI TION SINCE MADE BY THE ASSESSING OFFICER WITHOUT CALLING, EXAMINING, RECOR DING THE STATEMENT OF THE ALLEGED BORROWER & HENCE WITHOUT PROVIDING AN OPPOR TUNITY OF CROSS EXAMINATION TO THE APPELLANT AS PER LAW. 6. THAT ON FACTS THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS 1,00,000/- MADE BY THE ASSESSING OFFICER U/S 69 OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUND OF THE APPELLANT HAVING ADVANCED THE SAID SU M TO SH JASWANT SINGH. B. THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING T HE SAID ADDITION SINCE MADE BY THE ASSESSING .OFFICER WITHOUT CALLING, EXAMINING, RECORDING THE STATEMENT OF THE ALLEGED BORROWER & HENCE WITHOUT PROVIDING AN OPPOR TUNITY OF CROSS EXAMINATION TO THE APPELLANT AS PER LAW. 7. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN UPH OLDING THE ADDITION OF ASSUMED/NOTIONAL INTEREST OF RS 57,000/- ON ALLEGED UNEXPLAINED INVESTMENTS MADE BY THE APPELLANT U/S 69 OF THE INCOME TAX ACT, 1961. 8. THE ASSESSEE CRAVES LEAVE TO ADD/ALTER ANY OF TH E GROUND OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 3. VIDE GROUND NOS. 2(B), 4(B), 5(B) AND 6(B) THE C ONTENTION OF THE ASSESSEE IS THAT NO OPPORTUNITY WAS GIVEN BY THE ASSESSING OFFI CER WHILE RECORDING THE STATEMENT OF THE ALLEGED BORROWER, TO CROSS EXAMINA TION AS PER THE LAW. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 19/03/2008 DECLARING AN INCOME OF RS. 79,530/- A FTER CLAIMING DEDUCTION UNDER SECTION 80C OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS ACT) AT RS. 52,840/-. THE SAID RETURN WAS PROCESSED AT T HE RETURNED INCOME, LATER ON THE ASSESSING OFFICER ISSUED THE NOTICE UNDER SECTI ON 148 OF THE ACT AFTER RECORDING THE REASONS AND REOPENED THE ASSESSMENT. 5. THE ASSESSING OFFICER ON THE BASIS OF AGREEMENTS OF THE ASSESSEE WITH SMT. HARPREET KAUR W/O SHRI PARAMJIT SINGH VILL. BHANOKE , SMT. SUNITA RANI W/O SHRI KRISHAN LAL, SHRI. JASWANT SINGH S/O SH. HARCHAND SINGH, STATEMENT OF ONE SHRI JANG SINGH WHO REFUSED TO TAKE ANY MONEY FROM THE A SSESSEE, GIVING MONEY ON PRONOTE TO SH. RAM MILAN, THE ASSESSING OFFICER MAD E THE ADDITION OF RS. 7,55,000/- ON ACCOUNT OF THE FOLLOWING INVESTMENT C ONSIDERING THE SAME AS INCOME FROM UNDISCLOSED INCOME: (I) RS. 4,00,000/- TO SMT. HARPREET KAUR W/O SH. PA RAMJEET SINGH ON 14.07.2006. (AGREEMENT) (II) RS. 30,000/- TO SH. JANG SINGH S/O SH. NACHHAT AR SINGH ON 03.07.2006. (PRONOTE) (III) RS. 75,000/- TO SH. RAM MILAN ON DATED 22.05. 2006 (PRONOTE) (IV) RS. 1,50,000/- TO SMT. SURIITA W/O SH. KRISHAN LAI ON DATED 18.10.2006. (AGREEMENT) (V) RS. 1,00,000/- TO SH. JASWANT SINGH S/O SH. HAR CHAND SINGH ON DATED 09.11.2006. (AGREEMENT) TOTAL RS. 7,55,000/- 3 6. THE ASSESSING OFFICER ALSO MADE THE ADDITION OF RS. 57,000/- ON ACCOUNT OF INTEREST INCOME FROM THE FUNDS INVESTED FROM UNDISC LOSED SOURCES AS PER THE FOLLOWING DETAILS: SR. NO. NAME OF THE PARTY DATE OF DEBIT OF LOAN AMOUNT DATE OF CREDIT AMOUNT BALANCE INTEREST @12%P.A. 1 SMT. HARPREET KAUR W/ O SH. PARAMJEET SINGH 14.07.2006 400,000 400,000 34,000 2 SH. JANG SINGH S/O SH. NACHHATAR SINGH 03.07.2006 30,000 30,000 2,700 3 SH. RAM MILAN 22.05.2006 75,000 75,000 7,550 4 SMT. SUNITA W/O SH. KRISHAN LAI 18.10.2006 150,000 150,000 8,250 5 SH. JASWANT SINGH S/O SH. HARCHAND SINGH 09.11.2006 100,000 100,000 4,500 TOTAL 57,000 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICE R BY OBSERVING IN PARA 7 OF THE IMPUGNED ORDER AS UNDER: 7 . THE APPELLANT'S INSISTENCE ON CROSS-EXAMINING ALL T HE PERSONS TO WHOM MONEY HAS BEEN ADVANCED BY WAY OF 'PRONOTES' AND 'IKRARNA MAS', HAVE RIGHTLY BEEN DENIED ON THE GROUND OF DILATORY AND OBFUSCATORY TA CTICS OF THE APPELLANT. THE AUTHENTICITY OF THE ENTRIES CANNOT BE DENIED BY THE PARTIES AS THEY HAVE APPENDED THEIR SIGNATURE IN THE PRESENCE OF WITNESS ES, WHICH ENTRIES HAVE ALSO BEEN COUNTERSIGNED BY THE VASIKA NAVIS. IT IS SEEN THAT ONE OF THE PARTIES, WHO WAS CROSS-EXAMINED, ADMITTED TO HAVING APPENDED HIS SIGNATURE TO THE TRANSACTION, BUT DENIED HAVING RECEIVED ANY MONEY F ROM THE APPELLANT, PERHAPS UNDER SOME DURESS OF PRESSURE. THE APPELLANT'S CLAI M THAT MONEY WAS NEVER ADVANCED IN THE PRESENCE OF VASIKA NAVIS ALSO DOESN T IMPRESS AS IN PRACTICE MONEY STANDS ALREADY PAID AND THE NAVIS AFTER OBTAI NING THE CONFIRMATION FROM THE PARTIES, RECORDS THE SAME, WHICH RECORDING HAS THE IMPRIMATUR OF THE PERSON TAKING THE MONEY AS ALSO OF THE WITNESSES. EVEN IN THE CASE OF REGISTRATION OF IMMOVABLE PROPERTIES BEFORE THE REGISTERING AUTHORI TIES, THE REGISTERING AUTHORITY DOES NOT WITNESS THE EXCHANGE OF MONEY BETWEEN THE BUYER AND THE SELLER. HE ONLY OBTAINS A CONFIRMATION OF THE TRANSACTIONS OF MONEY HAVING BEEN COMPLETED PRIOR TO THE REGISTRATION. IN VIEW OF THE AFORESAID , NO INTERFERENCE IS CALLED FOR IN THE ACTION OF THE AO IN TREATING THE AMOUNT OF RS.7,55, 000/- AS UNEXPLAINED INVESTMENTS WITHIN THE MEANING OF SECTION 69 OF THE ACT. SIMILARLY, NO ADJUSTMENT IS REQUIRED WITH RESPECT TO CALCULATION OF INTEREST @ 12% ON THE AMOUNT OF LOANS GIVEN TO PARTIES BY THE APPELLANT. IT IS ORDERED AC CORDINGLY. 8. NOW THE ASSESSEE IS IN APPEAL. 9. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO O PPORTUNITY TO CROSS EXAMINE THE PERSONS ON THE BASIS OF WHOSE STATEMENT S THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER WAS PROVIDED TO THE ASSESS EE AND THIS FACT HAS ALREADY BEEN ADMITTED BY THE LD.CIT(A) IN PARA 7 OF THE IMP UGNED ORDER. HE ALSO 4 SUBMITTED THAT THE LD. CIT(A) WRONGLY STATED THAT O NE OF THE PARTIES WHO WAS CROSS EXAMINED, DENIED HAVING RECEIVED ANY MONEY PE RHAPS UNDER SOME DURESS OF PRESSURE. IT WAS STATED THAT THERE WAS NO SUCH PRESSURE AND NOTHING WAS BROUGHT ON RECORD THAT THE SAID PARTY RECEIVED ANY MONEY FROM THE ASSESSEE, THEREFORE, THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) WITHOUT PROVIDING THE OPPORTUNITY TO CROSS E XAMINE THE PERSONS ON THE BASIS OF WHOSE STATEMENTS THE ASSESSING OFFICER MAD E THE ADDITION, WAS NOT JUSTIFIED. 10. IN HIS RIVAL SUBMISSIONS, THE LD. SR. DR STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS M ADE IN THE IMPUGNED ORDER. 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT APPEARS THAT OPPORTUNITY TO CROSS EXAMINE THE PERSONS ON THE BASIS OF WHOSE STA TEMENTS THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER, WAS NOT PROVIDED TO THE ASSESSEE, THEREFORE, THIS CASE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFI CER TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IF ANY DOCUMENT OR STATEM ENT IS TO BE USED AGAINST THE ASSESSEE THEN OPPORTUNITY TO CROSS EXAMINE, IS TO BE GIVEN TO THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 13/03/2019.) SD/- (N.K. SAINI) VICE PRESIDENT PLACE: CHANDIGARH DATED : 13/03/2019 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR