Sh. Raman Kumar, Kaithal V. ITO, Kaithal

ITA 968/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8343 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 08-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 968/CHD/2016 ASSESSMENT YEAR: 2011-12 SHRI RAMAN KUMAR, VS THE ITO, PROP. M/S NEW KISAN MACHINERY STORE, WARD-3, AMBALA ROAD, KAITHAL. KAITHAL. PAN: ABFPK4287P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR ,CA RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 06.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS) KARNAL DATED 04.08.2016 F OR ASSESSMENT YEAR 2011-12. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO. 1, ASSESSEE CHALLENGED THE ADDITIO NS OF RS. 4,60,000/-, RS. 4,65,000/- AND RS. 5 LACS RECEI VED BY THE ASSESSEE AS AGAINST SALE OF TRACTORS. THE ASSE SSING OFFICER DISCUSSED THIS ISSUE IN THE ASSESSMENT ORDE R AND NOTED THAT THESE WERE THE CASH ADVANCES RECEIVED TO WARDS PURCHASE OF TRACTORS, WERE NOT EXPLAINED PROPERLY E ITHER BY THE PARTIES OR BY THE ASSESSEE AT THE TIME OF ASSE SSMENT. 2 THE ASSESSING OFFICER HAS ELABORATELY DISCUSSED HOW PARTIES WERE CONFRONTED WITH THE SOURCE OF THESE CA SH DEPOSITS AND AFTER CONSIDERING THE REPLY OF THE ASS ESSEE, CAME TO THE CONCLUSION THAT SINCE THESE AMOUNTS HAD NOT BEEN PROPERLY EXPLAINED, THEREFORE, SAME WERE ADDED AS UNEXPLAINED CREDITS TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTED THAT INITIAL ONUS UPON ASSESSEE HAS NOT BEEN DISCHARGED. 4. THE ASSESSEE CHALLENGED ALL THE THREE ADDITIONS BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ASSESSIN G OFFICER MADE ADDITION OF RS. 4,60,000/- IN RESPECT OF DEPOSIT ON 09.03.2014 BY SHRI SATPAL S/O SHRI PURAN FOR PURCHASE OF TRACTOR OF NEW MODEL, RS. 4,65,000/- WA S DEPOSITED ON 15.03.2011 BY SHRI SULTAN S/O SHRI RAM PAL FOR PURCHASE OF TRACTOR IN APRIL AND SIMILARLY RS. 10 LACS WERE DEPOSITED BY SHRI SATYAWAN S/O SHRI RATIRAM FO R PURCHASE OF TWO TRACTORS. OUT OF IT, SHRI SATYAWAN CHANGED HIS MIND FOR PURCHASE OF ONE TRACTOR ONLY, THUS, AN AMOUNT OF RS. 5 LACS WAS WITHDRAWN BY HIM ON 31.03.2012, THUS FOR THE REMAINING RS. 5 LACS, TRAC TORS WERE DELIVERED ON 06.05.2011. TO WHOM TRACTORS OF NEW MODEL WERE SOLD AS WELL AS TRACTORS WERE RECEIVED F ROM THE COMPANY IN THE MONTH OF APRIL. FURTHER DETAILS WER E SUBMITTED AS TO WHEN TRACTORS HAVE BEEN RECEIVED BY THE COMPANY AND SOLD VIDE SEPARATE BILLS. THE ASSESSIN G OFFICER SUO-MOTU SUMMONED PURCHASERS AND THEIR STATEMENTS WERE RECORDED. SHRI SATPAL, PURCHASER O F THE 3 TRACTOR APPEARED BEFORE AUTHORITIES BELOW AND HIS STATEMENT WAS RECORDED IN WHICH HE HAS EXPLAINED TH AT DEPOSIT WAS MADE FOR PURCHASE OF TRACTOR. THE ASSES SING OFFICER HANDLED THIS PERSON AS HIS WITNESS. SHRI S ATPAL CONFIRMED THAT HE OWNED 14 ACRES OF AGRICULTURAL LA ND IN HIS NAME AND 14 + 14 ACRES IN THE NAME OF HIS UNMAR RIED YOUNGER BROTHERS WHO ARE LIVING WITH HIM. HE HAS CONFIRMED THAT MONEY WAS DEPOSITED FOR PURCHASE OF TRACTOR AND HE PURCHASED THE TRACTOR AFTER A MONTH. COPY OF THE STATEMENT, PURCHASE BILL, REGISTRATION OF TH E TRACTOR WITH THE GOVERNMENT AND PURCHASE BILLS WERE FILED. 4(I) SIMILARLY, STATEMENT OF SHRI SULTAN WAS RECO RDED WHO HAS PURCHASED THE TRACTOR. REGISTRATION OF TRACTOR , COPY OF ACCOUNT AND HIS STATEMENT WERE ALSO FORWARDED FOR P ERUSAL. THIRD PURCHASER OF TRACTOR IS SHRI SATYAWAN WHO HAS FILED HIS AFFIDAVIT CONFIRMING THE DEPOSIT OF MONEY AND P URCHASE OF ONE TRACTOR INSTEAD OF TWO. AFFIDAVIT, PURCHASE BILL, REGISTRATION CERTIFICATE OF TRACTOR WAS FILED. IT WAS EXPLAINED THAT THESE ADVANCES WERE AGAINST PURCHASE OF TRACTORS WHICH ARE NOT CASH CREDITS. THE PURCHASERS ARE NOT RELATED TO THE ASSESSEE. SINCE THESE PARTIES H AVE CONFIRMED DEPOSIT OF THE MONEY WITH THE ASSESSEE FO R PURCHASE OF TRACTOR, THEREFORE, NO ADDITION SHOULD BE MADE. 5. THE LD. CIT(APPEALS) NOTED THAT EVEN THOUGH THE CASH DEPOSITS HAVE BEEN MADE ON THE GROUND THAT TRACTORS WERE TO BE PURCHASED, TRACTORS WERE NOT SUPPLIED TO THES E PERSONS AND SOURCE OF DEPOSITS HAVE NOT BEEN EXPLAI NED. 4 HE, ACCORDINGLY, CONFIRMED THE ADDITION AND DISMISS ED THIS GROUND OF APPEAL OF THE ASSESSEE. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW ADDITIONS ARE WHOLLY UNJUSTIFIED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PURCHASERS SHRI SATPAL AND SHRI SULTAN SINGH WERE PRODUCED BEFORE ASSESSING OFFICER AND THEIR STATEMENTS HAVE BEEN RECORDED IN WHICH THEY H AVE CONFIRMED DEPOSIT OF THE AMOUNT WITH THE ASSESSEE F OR PURCHASE OF TRACTOR WHICH IS SUPPORTED BY PURCHASE BILL, DELIVERY OF THE TRACTOR TO THE ASSESSEE AND REGISTR ATION CERTIFICATE IN THE NAME OF PURCHASER. SIMILAR IS I N THE CASE OF SHRI SULTAN SINGH, WHOSE STATEMENT WAS RECORDED BY ASSESSING OFFICER IN WHICH HE HAS CONFIRMED DEPOSIT OF THE AMOUNT WITH THE ASSESSEE FOR PURCHASE OF TRACTOR WH ICH IS SUPPORTED BY PURCHASE BILL, DELIVERY SLIP AND REGIS TRATION CERTIFICATE. IN THE CASE OF SHRI SATYAWAN, HE HAS FILED HIS AFFIDAVIT CONFIRMING DEPOSIT OF RS. 10 LACS WITH TH E ASSESSEE BUT LATER ON, ONLY ONE TRACTOR WAS PURCHAS ED AND RS. 5 LACS WERE RETURNED. AFFIDAVIT IS SUPPORTED BY PURCHASE BILL, DELIVERY SLIP AND REGISTRATION CERTI FICATE. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT IT IS NOT A CASE OF CASH CREDIT BUT OF A SALE. THE LD. DR, HOWEVER, RELIED UPON ORDERS OF AUTHORITIES BELOW. IT MAY ALSO BE NOTED HERE THAT IN THE CASE OF SHRI SATYAWA N, RS. 10 LACS WERE DEPOSITED OUT OF WHICH, RS. 5 LACS WER E TAKEN BACK BY HIM BECAUSE HE DID NOT PURCHASE SECOND TRAC TOR 5 BUT NO ADVERSE INFERENCE HAS BEEN DRAWN AGAINST THE ASSESSEE IN THIS REGARD. 7. CONSIDERING FACTS OF THE CASE IN THE LIGHT OF TH E ABOVE EVIDENCES AVAILABLE ON RECORD, IT IS CLEAR THAT ALL THE THREE PURCHASERS OF THE TRACTORS MADE DEPOSITS WITH THE A SSESSEE FOR PURCHASE OF TRACTORS WHICH HAVE BEEN ULTIMATELY DELIVERY TO THEM AGAINST THE SALE BILL AND THEIR NA MES HAVE BEEN RECORDED IN THE REGISTRATION CERTIFICATE. THE LD. CIT(APPEALS) WAS, THEREFORE, NOT JUSTIFIED IN HOLDI NG THAT TRACTORS HAVE NOT BEEN SUPPLIED TO THESE PERSONS. THERE IS NO LAW TO PROHIBIT MAKING CASH SALE. IT IS FOR THE BUSINESSMAN TO JUDGE AS TO HOW HE HAS TO MAKE THE S ALES. SINCE TRACTORS HAVE BEEN SOLD AND SUPPORTED BY ALL THE DOCUMENTS AS WELL AS REGISTRATION CERTIFICATES IN T HE NAMES OF PURCHASERS, IT IS DIFFICULT TO BELIEVE THAT THES E WERE THE ORDINARY CASH CREDITS/DEPOSITS WITH THE ASSESSEE. THE AUTHORITIES BELOW WERE, THEREFORE, WHOLLY UNJUSTIFI ED IN MAKING THE ADDITION ON THIS ISSUE. I, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE TH E ADDITIONS OF RS. 4,60,000/-, RS. 4,65,000/- AND RS. 5 LACS. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. ON GROUND NO. 2, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 1,40,000/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE NAME OF SHOPNEAL, DAUGHTER OF THE ASSESSEE. THE ASS ESSING OFFICER CONSIDERED THIS ISSUE IN DETAIL AND ON GOIN G THROUGH THE PASS-BOOK OF THE CREDITOR MS. SHOPNEAL, IT WAS OBSERVED THAT CASH HAD IMMEDIATELY BEEN DEPOSITED I N THE 6 BANK ACCOUNT BEFORE THE AMOUNT WAS ADVANCED TO THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT CRED ITOR HAS NO SOURCE OF INCOME OR CREDIT WORTHINESS TO GIVE LO AN TO THE ASSESSEE, ADDITION WAS ACCORDINGLY MADE AND CONFIRM ED BY THE LD. CIT(APPEALS). 9. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW ADDITION WAS RIGHTLY MADE BY THE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CREDITOR MS . SHOPNEAL IS ASSESSED TO TAX, HOWEVER, HER RETURNED INCOME SHOWS MEAGER INCOME OF RS. 1,89,364/-. COPY OF THE BANK ACCOUNT IS ALSO FILED WHICH SHOWS THAT LOAN WAS ADV ANCED BY HER TO THE ASSESSEE ON 31.03.2011 AND ON THE SAM E DAY, CASH OF RS. 2 LACS HAVE BEEN DEPOSITED IN HER BANK ACCOUNT. PRIOR TO THAT, THERE WAS A CREDIT BALANCE OF RS. 947/- ONLY. EVEN ON EARLIER DAYS, THERE WAS NO SUF FICIENT BANK BALANCE AVAILABLE TO HER TO MAKE ANY DEPOSIT W ITH THE ASSESSEE. THE MEAGER INCOME OF THE CREDITOR AND HA VING NO BANK BALANCE, COUPLED WITH THE FACT THAT ON THE SAME DAY, CASH HAVE BEEN DEPOSITED FOR GIVING OF LOAN TO THE ASSESSEE CREATES SUSPICION IN THE GENUINENESS OF TH E LOAN TO THE ASSESSEE. THUS, THE ASSESSEE FAILED TO PROVE CREDIT WORTHINESS OF CREDITOR AND GENUINENESS OF TRANSACTI ON IN THE MATTER. IN THE SIMILAR CIRCUMSTANCES, ITAT AGR A BENCH IN THE CASE OF SMT. SUMAN GUPTA VS ITO 138 ITD 153 CONFIRMED THE ADDITION ON ACCOUNT OF UNEXPLAINED CA SH CREDIT ON THEIR BEING A CASH DEPOSIT IN THE ACCOUNT OF THE CREDITOR BEFORE GIVING LOAN TO THE ASSESSEE. THE OR DER HAS 7 BEEN CONFIRMED BY HON'BLE ALLAHABAD HIGH COURT IN T HE CASE OF SMT. SUMAN GUPTA VS CIT IN ITA 680/2012 DAT ED 07.08.2012. HON'BLE GUJRAT HIGH COURT IN THE CASE OF BLESSING CONSTRUCTION VS ITO 32 TAXMAN.COM 366 HELD THAT WHERE SIZEABLE AMOUNTS WERE DEPOSITED IN CASH IN ACCOUNT OF DEPOSITORS ONLY BEFORE THEIR WITHDRAWALS THROUGH CHEQUES IN FAVOUR OF ASSESSEE, ADDITION WAS JUSTIFIED. 10. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, I AM OF THE VIEW ASSESSEE FAILED TO ESTAB LISH CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THE ADDITION WAS RIGHTL Y MADE BY THE AUTHORITIES BELOW. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 11. ON GROUND NO. 4, ASSESSEE CHALLENGED ADDITION O F RS. 1,40,000/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE NAME OF SMT. RAMA SHARMA AND RS. 1,40,000/- AS UNEXPLAIN ED CREDIT IN THE NAME OF KUMARI SUJATA. THE LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(APPEALS) DID NO T DECIDE THIS GROUND OF APPEAL OF THE ASSESSEE. IN THIS VIE W OF THE MATTER, THESE ISSUES ARE REMANDED TO THE FILE OF LD . CIT(APPEALS) WITH DIRECTION TO DECIDE THIS GROUND O F APPEAL ON MERITS IN ACCORDANCE WITH LAW. THIS GROUND OF AP PEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. ON GROUND NO. 4, ASSESSEE CHALLENGED THE ADDITI ON OF RS. 50,000/- ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL . THE 8 ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN HOU SEHOLD WITHDRAWALS OF RS. 1,26,971/-. IT WAS ESTIMATED AN D HOUSEHOLD EXPENSES WERE COMPUTED AT RS. 2,50,000/- AND ACCORDINGLY, ADDITION OF RS. 1,23,000/- WAS MADE. THE LD. CIT(APPEALS) RESTRICTED THE ADDITION TO RS. 50,000/ -. 13. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF TH E VIEW NO INTERFERENCE IS CALLED FOR IN THE MATTER. HOUSE HOLD WITHDRAWALS SHOWN BY ASSESSEE IN ASSESSMENT YEAR 20 11- 12 ARE ON VERY LOWER SIDE AND ASSESSEE HAS NOT DISC LOSED COMPLETE DETAILS OF HIS HOUSEHOLD EXPENDITURE. THER EFORE, ESTIMATED ADDITION OF RS. 50,000/- IS WHOLLY JUSTIF IED. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED 10 TH FEBRUARY,2017 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH