Ramesh Kumar Bhagchandka, New Delhi V. ITO, New Delhi

ITA 973/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69619 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 31-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

ITA NO. 973/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 973/DEL/2012 A.Y. : 200 7 - 0 8 RAMESH KUMAR BHAGCAHNDKA, FLAT NO. 5, 2 ND FLOOR, SAGAR APARTMENTS, 6, TILAK MARG, NEW DELHI (PAN: AAGPB5062R) VS. INCOME TAX OFFICER, WARD 31(2), NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. SANTOSH PATHAK, CA DEPARTMENT BY : S MT. VEENA JOSHI, C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, NEW DELHI DATED 30.12.2011 PERTAINING TO ASSESSMENT YEAR 200 7-08. 2. THE GROUNDS RAISED READ AS UNDER:- I) ACTION OF C.I.T.(A) IN CONFIRMING ADDITION OF R S. 31,00,300/- BY HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF THE TRANSACTION, IS UNJUST, ARBITRARY AND AGAINST THE F ACTS AND CIRCUMSTANCES OF CASE. ITA NO. 973/DEL/2012 2 II) ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS. 2,00,000/- ON ACCOUNT OF UNDISCLOSED EXPENSES ON BOOKING OF HOTEL ROOMS AT SIALDHA IS UNJUST, ARBITRARY AND AGAINST THE FACTS AND CIRCUMSTANCES O F THE CASE. 3. APROPOS CONFIRMATION OF ADDITION OF RS. 31,00,300/- IN THIS CASE A SEARCH U/S. 132 OF THE I.T. ACT WAS CONDUCTED AT THE BUSINESS / RESIDENTIAL PREMISES OF THE ASSESSEE ON 24.1.2007. ASSESSEE BELONGS TO M2K GROUP OF CASES. ASSESSMENT WAS FRAMED U/S. 143(3) OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT, LD. AO ASKED THE A SSESSEE TO FURNISH THE CONFIRMATION OF LOAN OR ADVANCE RECEIVED BY HIM DUR ING THE ASSESSMENT YEAR. THE ASSESSEE COULD NOT FURNISH THE CONFIRMATION FRO M MRS. SUNITA BHAGCHANDKA FOR LOAN OF RS. 31,00,300/- PROVIDED BY HER TO THE ASSESSEE DURING THE YEAR. LD. AO NOTED THAT THE CHEQUE NUMBER, NAME AND ADDRESS WAS NOT PROVIDED BY THE ASSESSEE. LD. AO FURTHER OBSERVED THAT A LEDGER AC COUNT WITHOUT THE SIGNATURES OF THE ASSESSEE AND THE LENDER, WITH NO DETAIL, CHEQUE NUMBER WAS FILED. LD. AO OPINED THAT THIS HAS NO RELEVANCE. 3.1 LD. AO FURTHER OBSERVED THAT HE WAS ALSO THE AS SESSING OFFICER OF SMT. SUNITA BHAGCHANDKA AND HE OBSERVED THAT HE HAD VER IFIED THE FACT OF THIS ALLEGED LOAN FROM SUNITA BHAGNCHANKA, BUT HE COULD NOT FIND LOAN OF RS. 31,00,300/- AS APPEARING IN THE BOOKS OF ACCOUN T OF SUNITA BHANCHANDKA. HE OBSERVED THAT NO LOAN WAS APPEARING IN HER BAL ANCE SHEET OR ANY SUCH TRANSACTION WAS NOT ADMITTED BY HER. FROM THIS LD. AO INFERRED THAT THE LOAN TRANSACTION WAS NOT GENUINE AND, THEREFORE, CANNOT BE ACCEPTED. IN THESE CIRCUMSTANCES, HE OBSERVED THAT THERE IS NO OTHER O PTION, BUT TO TREAT THE SAME AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT. ITA NO. 973/DEL/2012 3 4. BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED THAT AS SESSEE HAS SUBMITTED BEFORE THE LD. AO THE BALANCE SHEET AND THE BANK ST ATEMENT. THE BALANCE SHEET OF THE ASSESSEE WAS REFLECTING THIS LOAN AC COUNT IN THE LIABILITY SIDE. THE BANK ACCOUNT NO. 1909 OF THE ASSESSEE WITH VIJAYA B ANK WAS REFLECTING THIS TRANSACTION ON 06.10.2006 SHOWING THE IMPUGNED AMO UNT RECEIVED FROM ACCOUNT PAYEE CHEQUE NO. 91072 THROUGH A TRANSFER F ROM THE SAME BANK. ASSESSEE SUBMITTED THAT HE HAS DISCHARGED HIS ONUS DURING THE ASSESSMENT PROCEEDINGS BY PROVIDING HIS BANK STATEMENT WITH VI JAYA BANK REFLECTING THE TRANSACTION AND ALSO FILED THE COPY OF ACCOUNT OF S MT. SUNITA BHAGCHANDAKA WITH THE REQUEST THAT SINCE SMT. SUNITA BHAGCHANDAK A IS SISTER-IN-LAW AND ASSESSED TO TAX IN SIMILAR PROCEEDINGS BEFORE THE SAME ASSESSING OFFICER, THE TRANSACTION MAY BE VERIFIED AT HIS END. IT WAS FUR THER SUBMITTED THAT LD. AO WAS HAVING ACCESS TO BANK STATEMENTS OF BOTH THE PA RTIES, BOTH WERE ASSESSED BEFORE THE SAME A.O. AT THE SAME TIME UNDER SIMILAR PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT IF THE LD. AO HAD MADE ADDIT ION AFTER VERIFYING THE BALANCE SHEET OF SUNITA BHAGCHANDAKA, IT WAS THE D UTY OF THE ASSESSING OFFICER TO CONFRONT THE ASSESSEE THAT THIS AMOUNT WAS NOT R EFLECTED IN THE BALANCE SHEET OF SUNITA BHAGCHANDAKA, BUT IT WAS NOT DONE . 4.1 IN THIS REGARD, ASSESSEE SOUGHT ADMISSION OF TH E ADDITIONAL EVIDENCES IN THE FORM OF CERTIFICATE FROM VIJAYA BANK, DARYAGANJ , NEW DELHI WHICH CONFIRMED THIS TRANSACTION OF RS. 31,00,300/- BET WEEN THE ASSESSEE AND SMT. SUNITA BHAGCHANDAKA. ASSESSEE ALSO FILED AN AFFIDAV IT OF HIMSELF REITERATING THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. LD. CIT(A) ACCEPTED THE ADDITIONAL EVIDENCES AND SENT THE SAME FOR REMAND R EPORT TO THE ASSESSING OFFICER. THE ASSESSING OFFICER IN THE REMAND REPORT REITERATED HIS FINDING IN THE ASSESSMENT ORDER AND IN THE REJOINDER THE ASSE SSEE ALSO REPEATED THE SUBMISSIONS EARLIER MADE BEFORE THE LD. CIT(A). CO NSIDERING THE ABOVE, LD. ITA NO. 973/DEL/2012 4 CIT(A) OBSERVED THAT THE LD. AO IN THIS CASE HAS NO T DOUBTED THE IDENTITY OR CREDITWORTHINESS OF THE LENDER AS THE LENDER WAS AS SESSED WITH THE SAME AO DURING THE RELEVANT PERIOD. REGARDING THE GENUINENE SS OF THE TRANSACTION, LD. AO RAISED A DOUBT AS HE DID NOT FIND THE IMPUGNED A MOUNT AS LOAN GIVEN IN THE BALANCE SHEET OF THE LENDER. IT WAS SUBMITTED BY T HE ASSESSEES COUNSEL THAT THERE HAS BEEN FAMILY DISPUTE DUE TO WHICH SMT. SUN ITA BHAGCHANDAKA DID NOT ISSUE A SIGNED CONFIRMATION AND ALSO DID NOT SHOW THE IMPUGNED AMOUNT AS LOAN, BUT DID MISAPPROPRIATE THE SAME AND DID SHOW THE SAME AMOUNT AS PAID FOR PURCHASE OF SHARES IN HER BOOKS. AS AN ALTERN ATIVE PLEA, IT WAS SUBMITTED THAT EVEN IF THE IMPUGNED AMOUNT IS TO BE CONSIDER ED BY SMT. SUNITA BHAGCHANDAKA AS PURCHASE OF SHARES OF CERTAIN FAMI LY COMPANIES, THE FACT OF THE IMPUGNED AMOUNT HAVING BEEN RECEIVED THROUGH H ER BANK ACCOUNT CANNOT BE DOUBTED AND NO ADDITION U/S. 68 OF THE I.T. ACT CAN BE MADE. LD. CIT(A) DID NOT FIND THE ABOVE CONTENTION RELIABLE AND HE HEL D THAT IN THIS CASE ASSESSEE DISCHARGED HIS PRIMARILY ONUS BY PROVIDING THE NA ME, ADDRESS AND PAN, BUT THE LD. AO ON VERIFICATION COULD NOT FIND THE TRANS ACTION REFLECTED IN THE LENDERS BALANCE SHEET, THEREFORE, THE ONUS AGAIN S HIFTED BACK TO THE ASSESSEE TO PROVE THE GENUINENESS AS CLAIMED BY HIM. LD. C IT(A) OBSERVED THAT ASSSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE S AID AMOUNT WAS, IN FACT, RECEIVED AS A LOAN AS CLAIMED BY THE ASSESSEE. TH EREFORE, THE LD. CIT(A) HELD THAT ASSESSEE FAILED TO ESTABLISH THE GENUINENESS O F LOAN TRANSACTION AS CLAIMED BY HIM AND SHOWN IN HIS BALANCE SHEET. IN VIEW OF THESE FACTS, LD. CIT(A) HELD THAT HE DID NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE ASSESSING OFFICER ON THIS ACCOUNT AND ADDITION MADE U/S. 68 O F THE I.T. ACT WAS CONFIRMED. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. ITA NO. 973/DEL/2012 5 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE HAS SHOWN THE RECEIPT OF LOAN AMOUNT A MOUNTING TO RS. 31,00,300/- FROM HIS SISTER-IN-LAW VIZ. SUNITA BHAGCHANDKA. ASSESSEE AND SUNITA BHAGCHANDAKA WERE ASSESSED WITH THE SAME ASS ESSING OFFICER. LD. AO VERIFIED THE TRANSACTION FROM THE ACCOUNTS OF SMT. SUNITA BHAGCHANDAKA. IN THE ACCOUNT OF SUNITA BHAGCHANDAKA, ASSESSING OFFIC ER COULD NOT FIND THAT THE SAME AMOUNT WAS REFLECTED AS LOAN TO THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT THERE HAS BEEN FAMILY DISPUTE DUE TO WHICH SUNITA BHAGCHANDAKA DID NOT ISSUE A SIGNED CONFIRMATION AND ALSO DID NO T SHOW THE IMPUGNED AMOUNT AS LOAN, BUT DID MISAPPROPRIATE THE SAME AND DID SHOW THE SAME AMOUNT AS PAID FOR PURCHASE OF SHARES IN HER BOOKS. IT IS ALSO UNDISPUTED IN THIS CASE THAT ASSESSEE HAS SUBMITTED HIS BANK STAT EMENT AND CONFIRMATION FROM THE BANK. IN THIS CONFIRMATION AND BANK STATE MENT, IT WAS DULY EXHIBITED THAT ASSESSEE HAS RECEIVED RS. 31,00,300/- FROM SUN ITA BHAGCHANDAKA. THUS, THERE IS NO DOUBT ABOUT THE IDENTITY AND CREDITWORT HINESS OF THE LENDERS. HOWEVER, REVENUE AUTHORITIES HAVE FOUND THAT SINCE THE AMOUNT WAS NOT REFLECTED AS LOAN IN THE ACCOUNT OF SUNITA BHAGCHAN DAKA, THE SAME SHOULD BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE U/S. 68 OF THE I.T. ACT. WE FIND THAT THE PERSON WHO GAVE THE AMOUNT HAS BEEN IDENTI FIED THE BANK ACCOUNTS WHERE THE AMOUNT IS REFLECTED IS ALSO NOT IN DISPUT E. ONLY ADVERSE FEATURE IS THAT SMT. SUNITA BHAGCHANDAKA HAS NOT CONFIRMED T HE LOAN AND HAS NOT REFLECTED THE AMOUNT AS LOAN IN HER ACCOUNT. BUT H AS SHOWN THE SAME AS THE AMOUNT RECEIVED AS PURCHASE CONSIDERATION FOR SHARE S OF CERTAIN FAMILY COMPANIES. 6.1 WE FURTHER FIND THAT REVENUE AUTHORITIES HAVE N OT BROUGHT ON RECORD AS TO WHY THEY HAVE CONSIDERED THE DISCLOSURE OF THE A MOUNT AS PURCHASE CONSIDERATION IN THE HANDS OF SMT. SUNITA BHAGCHAND AKA AS CORRECT AS AGAINST ITA NO. 973/DEL/2012 6 ASSESSEES CLAIM THAT THE SAME WAS RECEIPT OF LOAN. WE FIND THAT BOTH THE ASSESSEE AND SMT. SUNITA BHANGCHANDAKA WERE ASSESSE D WITH THE SAME ASSESSING OFFICER. HENCE, GIVING A FINDING IN THIS REGARD WAS VERY MUCH POSSIBLE BY THE LD. AO. SINCE THIS ASPECT HAS NOT BEEN ESTAB LISHED. IN OUR CONSIDERED OPINION, MATTER NEEDS TO BE REMITTED TO THE FILE OF THE LD. AO AFRESH. THE AO SHALL EXAMINE THE ISSUE AND GIVE A FINDING ON TRU E NATURE OF THE TRANSACTION AND ACCORDINGLY ADJUDICATE. NEEDLESS TO ADD THAT TH E ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. WE DIRECT AND ORDER ACCORDINGLY. 7. APROPOS ADDITION OF RS. 2,00,000/- ON ACCOUNT OF UNDISCLOSED EXPENSES ON BOOKING OF HOTEL ROOMS IN THIS RESPECT CERTAIN PAPERS WERE FOUND WHICH S HOWED THE DETAILS OF GUESTS WHO ATTENDED THE FAMILY FUNCTION (PRE-MARRIA GE FUNCTION OF THE SON OF ASSESSEE) AT SIALDA, AND FOR THE SAME 50 ROOMS IN THE HOTEL GOT BOOKED. AS PER THE ASSESSEE THE GUESTS THEMSELVES PAID THE CHARGES OF THE HOTEL AND THE ASSESSEE DID NOT BEAR THE EXPENDITURE ON ACCOUNT OF HOTEL CHARGES. ASSESSING OFFICER DID NOT ACCEPT THE ABOVE SUBMISSIONS. HE O BSERVED THAT HOST GENERALLY MAKE THE STAY ARRANGEMENT OF THE GUESTS. NO CONFIRM ATIONS WERE FURNISHED BY THE RESPECTIVE GUESTS, THAT THEY BORE THE HOTEL EXP ENDITURE. IN THESE CIRCUMSTANCES, LD. AO HELD THAT ASSESSEES SUBMISSI ONS CANNOT BE ACCEPTED AND THE AMOUNT WAS TO BE ADDED IN THE HANDS OF THE ASSESSEE TREATING IT AS INCOME FROM UNDISCLOSED SOURCES. SINCE THE RATE A T WHICH THE HOTEL CHARGES WERE PAID BY THE ASSESSEE WERE NOT SUBMITTED THE SA ME WAS ESTIMATED AT RS.2000/- PER ROOM AND ACCORDINGLY, CHARGES FOR 50 ROOMS FOR TWO DAYS WAS WORKED OUT AT RS. 2 LACS AND THE SAME WAS ADDED TO THE ASSESSEES INCOME. 8. UPON ASSESSEES APPEAL LD. CIT(A) NOTED THAT ASS ESSEE HAS NOT DENIED THE FACT THAT THE ROOM WERE BOOKED AND HIS GUESTS S TAYED THEREIN, AS DETAILED ITA NO. 973/DEL/2012 7 IN THE SEIZED MATERIAL. ASSESSEE ONLY DISPUTED TH E PAYMENT AND ARGUED THAT PAYMENT OF ROOM RENT WAS MADE BY THE RESPECTIVE GUE STS THEMSELVES. LD. CIT(A) FOUND THAT THIS VIEW IS NOT ACCEPTABLE, CONS IDERING THE NORMAL TRADITIONS FOLLOWED IN THE SOCIETY. LD. CIT(A) FURTHER OBSER VED THAT AS REGARDS THE AUTHENTICITY AND CORRECTNESS OF THE IMPUGNED SEIZED MATERIAL THE PRESUMPTION AVAILABLE IN SECTION 132(4A)/292C IS ALSO AGAINST T HE ASSESSEE, WHICH HAS NOT BEEN SUCCESSFULLY REBUTTED BY THE ASSESSEE. ACCORD INGLY, LD. CIT(A) AFFIRMED THE ASSESSING OFFICERS ACTION. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED TH E RECORDS. WE FIND THAT IT IS UNDISPUTED THAT ROOMS WERE BOOKED AND ASSESSE ES GUEST STAYED THEREIN. ASSESSEES PLEA THAT GUESTS PAID THEIR ACCOMMODATIO N CHARGES IS NOT SUBSTANTIATED BY ANY EVIDENCE. MOREOVER, THE SAME IS NOT ACCEPTABLE IN THE NORMAL TRADITIONS FOLLOWED IN THE SOCIETY. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AUTHORITIES BELOW ON THIS ISSUE. HENCE, WE AFFIRM THE SAME. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/11/2013. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 22/11/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR ITA NO. 973/DEL/2012 8 COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 973/DEL/2012 9