Sh. Ramesh Mittal, Panchkula V. ACIT, Chandigarh

ITA 997/CHANDI/2014

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6000 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure
• Section: 68; 69; 69C; 153A; 13

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B”, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 997/CHD/2014 नधा रण वष / Assessment Year : 2008-09 Shri Ramesh Mittal, House No. 515, Sector 16, Panchkula बनाम The ACIT, Central Circle II, Chandigarh थायी लेखा सं./PAN NO: AFSPM4366A अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Sh. Neeraj Jain, CA राज व क ओर से/ Revenue by : Sh. Sarabjeet Singh, CIT DR स ु नवाई क तार$ख/Date of Hearing : 15.06.2022 उदघोषणा क तार$ख/Date of Pronouncement : 18.08.2022 आदेश /Order Per Sudhanshu Srivastava, Judicial Member: This appeal is preferred by the assessee against the order dated 08.09.2014 passed by the Ld. Commissioner of Income Tax (Appeals)(Central), Gurgaon [hereinafter referred to as CIT(A)] and pertains to assessment year 2008-09. 2.0 The brief facts of the case are that a search operation u/s 132(1) of the Income Tax Act, 1961 [in short 'the Act'] was carried out at the residential / business premises of the Mittal Group of Cases by the Investigation Wing on 2 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 16.01.2009 and the assessee’s residential preemies i.e. H.No.515, Sector 16, Panchkula was also covered under the same search. Earlier, the assessee had filed his return of income declaring income at Rs. 4,62,300/- and subsequently, in response to the statutory notice dated 06.08.2009 issued u/s 153A of the Act, the assessee again filed the return of income declaring the same income as in the original return of income. 2.1 During the course of assessment proceedings, the case of the Group including the assessee’s case was referred to the Special Auditor in terms of section142(2)A of the Act and the assessee had raised no objection to the referral being made for Special Audit. 2.2 During the course of assessment proceedings, the AO noted that a document having identification mark A-1 (Page 1) had been seized from the assessee’s residence which allegedly contain details of expenses of Rs. 7,00,000/-. The assessee was required to explain the source of expenses recorded in the said document but since the assessee did not furnish any reply to the query 3 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula raised in this regard, either before the Special Auditor or before the AO and had in fact offered to surrender the amount but had not included the same in the return of income, the AO proceeded to treat this amount of Rs. 7,00,000/- as unexplained income u/s 69C of the Act and added the same to the income of the assessee. 2.3 Further, another document i.e. page 3 of the Document A-1 had also been seized from the residence which was a bill dated 05.05.2007 and pertained to purchase of foreign currency amounting to Rs. 88,400/-. The assessee was required to explain the source of funds for purchasing this foreign currency both before the Special Auditor as well as before the AO. The AO further noted that the assessee, during the course of search, had offered to surrender this amount of Rs. 88,400/- to buy peace of mind but since this amount had not been included in the returned income, the amount of Rs. 88,400/- was also treated as unexplained expenditure u/s 69C of the Act and was added to the income of the assessee. 4 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 2.4 Similarly, another document at pages 4 to 12 of the Document A-1, had also been seized from the residential premises of the assessee which was a photocopy of the sale deed dated 29.01.2008 regarding purchase of a certain land at Kharar and this property had allegedly been purchased by the assessee along with one Shri Vipin Kumar Garg. As per this seized document, the total consideration paid for the purchase of property was Rs. 3,31,000/- and the expenditure incurred on account of stamp duty was Rs. 26,500/-. As per the AO, the assessee had been required to explain the source of funds with respect to this transaction also before the Special Auditor and the assessee had offered to surrender the same but it was further noted by the AO that in the statement of affairs filed by the assessee during the course of assessment proceedings, the value of said land at Kharar had been shown at Rs. 5,91,698/-. The AO required the assessee to explain the source of investment of the additional amount of Rs. 2,34,198/- but since the assessee did not file any explanation, the entire amount of 5 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula Rs. 5,91,698/- was treated as unexplained investment u/s 69 of the Act and added to the income of the assessee. 2.5 It was further noted by the AO that as per the bank book of the assessee, the assessee had raised unsecured loans of Rs. 14,92,420/- from one Shri Sukhwinder Singh, which had been credited in his bank account on 21.08.2007 and the assessee was required to file confirmation along with PAN and assessment details of the lender. Although, the assessee filed a confirmation, the confirmation did not contain the PAN or the assessment details leading the AO to form an opinion that the assessee had failed to discharge the onus in respect of the identity as well as the creditworthiness of the lender. Resultantly, amount of Rs. 14,92,420/- was also added to the income of the assessee as unexplained cash credit u/s 68 of the Act. 2.6 Aggrieved, the assessee carried the matter before the Ld. First Appellate Authority challenging the various additions. However, the appeal of the assessee came to be dismissed by the Ld. First Appellate Authority. 6 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 2.7 Now the assessee has approached this Tribunal challenging the upholding of additions by raising the following grounds:- 1. That the issue of notice u/s 153-A(1) and also assessment made u/s 153-A(1)(b) r. w.s. 143(3) of the In come T ax Act, 1961 are bad in law and be quashed. 2. That the Ld. CIT(A) is not justif ied in upholding the ad of Rs. 7,00,000/- on the basis of Document A: 1 Page: 1, treating the same as unexplained expenditure u/s 69C of the Act. 3. That the Ld. CIT(A) is not justif ied in upholding the ad of Rs. 88,400/- on the basis of Document A: 1 page: 3, treating the s ame as unexpl ained expenditure u/s 69C of the Act. 4. That the Ld. CIT(A) is not justif ied in upholding the ad of Rs. 5,91,698/- on the basis of Documen t A: 1 p age: 4-12 treating the same as unexpl ained investmen t u/s 69 of the Act. 5. That the Ld. CIT(A) is not justif ied in upholding the ad of Rs. 14,92,420/- treating unsecured loan as unexpl ained cash credit u/s 68 of the Act. 6. A) Th at wi thout prejudice to above grounds of appeals, Ld. CIT(A) is not jus tif ied in not 7 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula adjus ting the addition / dis allowances ou t of to tal surrendered amount. b) That the appellan t disputes the quan tum of addi tions/ dis allowance. 7. That the appell an t cr aves leave f or any addi tion, deletion or amendment in the grounds of appeal on or bef ore the disposal of the same. 3.0 The Ld. AR drew our attention to copy of the seized Document A-1 (page1) reproduced by the AO at page 3 of the assessment order and submitted that a perusal of this document would show that it is a dumb document in as much as it does not mention any names or dates except for two dates. It was further submitted that this document does not specify whether it pertains to items of receipts or payments. The Ld. AR submitted that in view of this basic lack of clarity, the AO could not have made addition on account of the figures in this seized document as unexplained expenditure. It was submitted that the AO had erroneously assumed that this seized document was a record of expenditure whereas no such conclusion can be drawn by a perusal of this document. It was further submitted that all the figures mentioned in the documents 8 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula were in round figures and it was highly improbable that expenditure would have been incurred only in round figures. It was submitted that, in fact, these figures pertained only to some estimates scribbled by the assessee on a loose paper and to treat them as unexplained expenditure was not justified. The Ld. AR relied on certain judicial precedents in support of the contention that additions based seized dumb document were not proper. 3.1 With respect to ground No.3 regarding the alleged unaccounted purchase bill of foreign exchange, the Ld. AR pointed out that the date of the bill pertaining to purchase of foreign exchange is 05.03.2007 and not 05.05.2007, as has been mentioned by the AO in the assessment order. In this regard, he drew our attention to page 9 in the paper book wherein, a copy of the said bill has been enclosed and it was pointed out that the date is actually 05.03.2007 and not 05.05.2007 and, therefore, this amount did not pertain to the year under consideration and was, therefore, wrongly added to the income of the assessee. In his regard, further evidence was led by referring to page 10A of 9 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula the paper book which contained copy of bank statement of the assessee with Bank of Baroda and it was pointed out that the amount of Rs. 88,703/-including bank charges has been debited by the bank on 03.03.2007 against cheque number 10705 and, therefore, the impugned amount related to earlier assessment year 2007-08. 3.2 With respect to ground No.4 challenging the action of the Ld. CIT(A) in upholding the addition of Rs. 5,91,698/- on the basis of Document A-1 (pages 4 to 12) in respect of purchase of land at Kharar, it was submitted that this property had been purchased by the assessee by making withdrawals from his proprietary concern M/s Mittal Coal Company. He referred to the assessee’s copy of account in the books of M/s Mittal Coal Company reproduced at pages 12 & 13 of the paper book and pointed out that on 29.02.2008, the assessee had made four withdrawals for purchase of land at Kharar being Rs. 1,65,500/-, Rs. 15,065/-, Rs. 3,31,000/- and Rs. 30,130/-, thus, totalling to Rs. 5,41,695/-. It was further pointed out that the statement of affairs of the assessee reproduced at page 33 of the paper book also showed an amount of Rs. 10 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 5,41,695/- against the land at Kharar and the AO had somehow committed a typographical error by mentioning the figure at Rs. 5,91,698/. It was submitted that this amount also had been duly explained. 3.3 With respect to ground No.5 challenging the action of the Ld. CIT(A) in upholding the addition of Rs. 14,92,420/- pertaining to unsecured loans, the Ld. AR submitted that he had filed confirmation of the lender Shri Sukwinder Singh before the AO and had also filed copy of PAN Card, Driving License and Bank Statement before the Ld. CIT(A). It was further submitted that in the remand report of the AO submitted before the Ld. CIT(A), the AO himself in paragraph(d) had stated that the documents were examined and additional evidence filed by the assessee supports his contention. It was also submitted that the AO has further mentioned in the remand report that the bank statement produced by the assessee was a document in public domain and the issue may be decided on merits. It was submitted that, therefore, even when the assessee had demonstrated with evidence, the receipt of unsecured loans, the same was not accepted by the Ld. CIT(A). It was 11 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula also submitted that the bank account of Shri Sukwinder Singh, which had been reproduced before the Ld. CIT(A) also shows that cheque No. 226090 for Rs. 15,00,000/- had been issued and this was corroborated by the deposit slip of Rs. 15,00,000/- pertaining to the bank account of the assessee. It was also submitted that the net amount credited in the assessee’s account was Rs. 14,92,420/- after deduction of bank charges of 7,580/- which also was clearly reflected in the bank statement and, therefore, the addition had been made based only on surmises and conjectures. 4.0 Per Contra, the Ld. Departmental Representative (CIT DR) vehemently supported the orders of the Ld. CIT(A) and submitted that it is to be noted that the assessee had earlier surrendered all these impugned amounts but had later retracted the same by not showing them in the return of income and this was a clear proof of the fact that the assessee had altered or fabricated the records to justify the various anomalies found during the course of search. It was submitted that once the assessee had surrendered these amounts, he should not be permitted to explain and 12 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula justify the various entries. It was also pointed out that apparently, the assessee had not offered any explanation regarding these entries either before the Special Auditor or before the AO and, therefore, the version now being given by the assessee appeared to be more of an afterthought. The Ld. CIT DR submitted that the assessee’s appeal deserved to be dismissed by upholding the order of the Ld. CIT(A). 5.0 We have heard the rival submissions and have also perused the material on record. Ground No.1 being general in nature does not require any separate adjudication. 5.1.0 Ground No.2 challenges the action of the Ld. CIT(A) in upholding the addition of Rs. 7,00,000/- on the basis of Document A-1 (page 1). This document has been reproduced by the AO at para 6 of the impugned order and for a ready reference, we are also reproducing the same herein under:- 13 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 5.1.1 It is the assessee contention before us that although the assessee had agreed to surrender this 14 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula amount earlier in order to buy peace of mind, but since penal action had been initiated against the assessee, the assessee was now challenging the same. It has been submitted by the Ld. AR that this document is a dumb document in as much as the same does not mention any names or even the name of the assessee nor does it mention whether the same pertains to any kind of receipt or to any kind of expenditure. It has also been submitted that this document does not contain any dates and, therefore, the reliance by the AO on this document to add this amount to the income of the assessee as unexplained expenditure u/s 69C of the Act was incorrect. This contention of the Ld. AR appears to be correct in as much as the said document does not contain any name nor does it specify whether it pertains to items of expenditure or items of income. Further, the document only mentions two dates viz 15.12.2017 and 15.01.2008, although, there are almost 10 entries in the said document. In the light of these defects, as rightly pointed out by the Ld. AR, we also see no reason for making the impugned addition as unexplained expenditure in terms of section 69 C of the 15 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula Act. We are of the view that the figures contained in this document do not specify with certainty as to whether they pertain to items of income or to items of expenditure and, this, in our opinion, makes it a dumb document which does not have any evidentiary value. We further note that there is no other supporting material in support of this document which could justify the action of the AO in making this addition of Rs. 7,00,000/-. Accordingly, we discard the view taken by the lower authorities and hold that the impugned addition of Rs. 7,00,000/- is not justified in the eyes of law. We order deletion of the same. 5.2.0 Ground No.3 pertains to challenge to the action of the Ld. CIT(A) in upholding addition of Rs. 88,400/- on the basis of Document A-1 (page 3) pertaining to purchase of foreign exchange and added to the income of the assessee as unexplained expenditure u/s 69C of the Act. In this regard, the Ld. AR has referred to page 9 of the paper book and has pointed out that the actual date of purchase of foreign exchange is 05.03.2007 and not 05.05.2007 as has been stated in the order of assessment. The copy of this page is reproduced herein as under:- 16 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 5.2.1 It is the contention of the Ld. AR that since the assessment year involved is 2008-09, the purchase of foreign exchange on 05.03.2007 is outside the purview of this assessment year. The Ld. AR has corroborated this date with a copy of bank account with Bank of Baroda, which has been reproduced at page 10A of the paper book, wherein, it has been demonstrated that the amount had been debited to the bank account of the assessee on 17 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula 03.03.2007 vide cheque No. 10705. Therefore, we agree with the contention of the Ld. AR and considering the date as appearing in the above reproduced copy of bill, we agree that this dated i.e. 05.03.2007 lies beyond the ambit of the assessment year in the present appeal. We order deletion of this amount. 5.3 Ground No.4 pertains to addition of Rs. 5,91,698/- in respect purchase of land at Kharar and the same is based on seized Document A-1 (pages 4 to 12) of the paper book. In this respect also, the Ld. AR has demonstrated with evidence before us that the purchase value of land has been duly reflected in his Statement of Affairs as on 3.03.2008 and placed at page 33 of the paper book. It has been stated that the amount is Rs. 5,41,695/-which has wrongly been mentioned as Rs. 5,91,698/- by the AO. The Ld. AR has also drawn our attention to the copy of assessee’s account in the books of his propriety concern, M/s Mittal Coal Company and placed at pages 12 and 13 of the paper book to show that on 29.02.2008, the assessee had made four withdrawals for purchase of land at Kharar being Rs. 1,65,500/-, Rs. 15,065/-, Rs. 3,31,000/- and 18 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula Rs. 30,130/-, totalling to Rs. 5,41,695/- which was utilized for the purchase of land at Kharar. Thus, the assessee has suitably explained the source of investment with respect to purchase of land and we see no reason for bringing the same to tax u/s 69C of the Act . Accordingly, we order the deletion of this amount also. 5.4 Coming to ground No. 5, it is seen that this ground is challenging the action of the Ld. CIT(A) in upholding the addition of Rs. 14,92,420/- by treating unsecured loans as unexplained cash credit u/s 68 of the Act. In this regard, it is seen that the assessee had filed copies of PAN, Driving License, Bank Statements etc. both of himself as well as of the lender Shri Sukhwinder Singh before the Ld. CIT(A) and the AO has himself stated in the remand report submitted before the Ld. CIT(A) that the version of the assessee appears correct. However, the Ld. CIT(A) confirmed the amount by doubting the transaction as the bank had deducted bank charges of Rs. 7,580/- while clearing the cheque of Rs. 15 lacs. In our considered view, when the confirmation has been given by the lender and his identity has been proved by Driving License and 19 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula PAN and the entry of Rs. 15,00,000/- is also duly evidenced in the bank statement, the Ld. CIT(A) should not have misdirected himself in disbelieving the explanation of the assessee only for the reason that the bank had deducted bank charges for clearing the cheques. At most, the Ld. CIT(A) could have directed that the fact of the deduction of the bank charges be verified. However, he simply rejected the explanation of the assessee, which in our considered view, cannot be upheld. Therefore, we find no reason to uphold the action of the Ld. CIT(A) in confirming this addition also. We order deletion of the same. 5.5 Ground Nos. 6 and 7 again being general in nature do not require any separate adjudication. 6.0 In the final result the appeal of the assessee stands allowed. Order pronounced on 18.08.2022. Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 18. 08.2022 “आर.के.” 20 997-Chd-2014 (A.Y. 2008-09) – Shri Ramesh Mittal, Panchkula आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार / Assistant Registrar