The ACIT, 1(1), Ujjain V. Shri Shyam Singh Rajora, Neemuch

ITSSA 230/IND/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1002 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANE
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA CAS
• Keywords: Notional interest; Bogus loan
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.(SS).A.NO.230/IND/2013 A.Y.: 2008-09 ACIT, SHRI SHYAM SINGH RAJORA 1(1), NEEMUCH UJJAIN APPELLANT RESPONDENT P.A.N. NO A DFPR0725H APPELLANT BY SHRI RA JEEV VARSHANE, CIT DR RESPONDENT BY SHRI S.N. AGRAWAL AND SHRI PANKAJ MOGRA, CAS DATE OF HEARING : 24 .08.2015 DATE OF PRONOUNCEMENT : 11 .09.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 06.08.2013 FOR THE ASSESSM ENT YEAR 2008-09. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 6 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOANS ADVANCED BY THE ASSESSEE OUT OF HIS CONCEALED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.72,000/- MADE BY THE ASSESSING OFFICER ARISING OUT OF SAID ADVANCE OF RS. 6 LACS REPRESENTING CONCEALED INTEREST INCOME ON UNACCOUNTED ADVANCES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .4 -: 3: - 3 LACS MADE BY THE ASSESSING OFFICER AS ADVANCED AND SOURCED OUT OF THE CONCEALED INCOME EARNED BY THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF THE INTEREST OF RS. 48,000/- ARISING OUT OF ADVANCES OF RS. 4 LACS REPRESENTING CONCEALED INTEREST INCOME ON ADVANCES DIVERTED OUT OF CONCEALED INCOME. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 3,09,700/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED LOANS DIVERTED OUT OF CONCEALED INCOME OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S RUNNING A TAILORING SHOP AT NEEMUCH. HE WAS ALSO HA VING RENTAL INCOME, INCOME FROM AGRICULTURAL ACTIVITY AN D INTEREST INCOME. A SEARCH U/S 132 OF THE INCOME-TAX ACT, 196 1, WAS CONDUCTED AT THE ASSESSEES RESIDENTIAL PREMISES ON -: 4: - 4 30.05.2008, AT NEEMUCH. ORIGINAL RETURN FILED BY TH E ASSESSEE ON 31.07.2008 DECLARING TOTAL INCOME AT RS. 1,94,88 0/-. THEREAFTER NOTICE U/S 153A OF THE ACT WAS ISSUED ON 15.07.2009. RETURN IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT FOR THE ASSESSMENT YEAR 2008-09 WAS FILED O N 25.11.2009 DECLARING TOTAL INCOME AT RS. 1,94,880/- . ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER U/S 153A READ WITH SECTION 143(3) ON 30.12.2010 ASSESSING TO TAL INCOME AT RS. 20,22,150/- ON 30.12.2010. THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD. CIT(A) DISPUTING THE ENTIRE A DDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORD ER PASSED U/S 153A R.W.S. 143(3) WHO HAS ALLOWED THE APPEAL O F THE ASSESSEE VIDE ORDER DATED 1.5.2013. GROUND NOS. 1, 2, 3 & 4: 4. THE AO ADDED AN AMOUNT OF RS. 6,00,000/- AND RS. 4,00,000/- ON ACCOUNT OF ADVANCES GIVEN. WHILE PASSING THE ASSESSMENT ORDER THE LD. A.O. HAS MADE ADDITION OF RS.6,00,000/- TOWARDS ALLEGED UNEXPLAINED AMOUNT ADVANCED TO FOLLOWING PERSONS-: -: 5: - 5 S.NO. NATURE OF TRANSACTION . AMOUNT 01. ADVANCE GIVEN THROUGH SHRI MODI 3,00,000 02. ADVANCE GIVEN TO P RAKASH . PRA MR. PRAKASH 1.00.000 03. CASH IN ACCOUNT [20000+ 150000+30000] 2,00,000 TOTAL 6,00,000 THE LD. A.O. HAS MADE THE SAID ADDITIONS ON THE BAS IS OF NOTING MADE ON PAPER FOUND DURING THE COURSE OF SEA RCH BEING PAGE 11 OF BS-5. XEROX COPIES OF THE BOTH THE PAPER S ARE AVAILABLE ON PAGE 11 TO 13 OF THE PAPER-BOOK. THE DIFFERENT AMOUNT AS FOUND NOTED ON PAGE NO 11 O F BS-5 IS AS UNDER :- 5. S.N NATURE OF AMOUNT AMOUNT 1 DEPOSIT IN ACCOUNT 20,000 2 DEPOSIT IN ACCOUNT 1,50,000 3 MR MODI 1,00,000 4 MRMODI 2,00,000 5 MR PRAKASH JAIN 1,00,000 6 DEPOSIT IN ACCOUNT 30,000 TOTAL 6,00,000 AS REGARDS THE AMOUNT OF RS. 1,00,000/- AND RS. 2,00,000/- TOTALING TO RS 3,00,000/- WERE ADVANCED THROUGH SHRI MODI AND -: 6: - 6 RS 1,00,000/- WAS ADVANCED TO SHRI PRAKASH WERE CONCERNED, IT WAS CLARIFIED BY THE ASSESSEE THAT SAID AMOUNT WAS ADVANCED BY THE HUF OF THE ASSESSEE FROM ITS OWN FUNDS AS TE MPORARY LOANS THROUGH SHRI MODI AND TO SHRI PRAKASH. THUS, THE ASSESSEE HAS DULY ACCEPTED THAT THE SAID AMOUNT REL ATES TO THE AMOUNT ADVANCED BY HIS HUF ON INTEREST THROUGH SHRI MODI AND TO SHRI PRAKASH. THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDING IN HIS STATEMENT IN REPLY TO THE QUESTION NOS 18 TO 22 HAS CATEGORICALLY EXPLAINED T HAT THE SAID AMOUNT WAS ADVANCED BY THE HUF OF THE ASSESSEE THRO UGH ONE SHRI MODI ON INTEREST. THAT HUF OF THE ASSESSEE HAV ING ANCESTRAL HOUSE FROM WHICH REGULAR RENTAL INCOME WA S RECEIVED BY THE ASSESSEE IN ADDITION TO THE INTERES T INCOME. HENCE, SOURCE OF AMOUNT AS ADVANCED BY THE ASSESSEE STANDS EXPLAINED. THAT THESE FACTS WERE BROUGHT INTO THE NOTICE OF THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDING BUT THESE FACTS WERE SIMPLY DISPROVE BY THE ASSESSI NG OFFICER. 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD . CIT(A) DELETED THESE ADDITION BY OBSERVING AS UNDER :- 8 .1.1 THE ASSESSING OFFICER ADDED AN AMOUNT -: 7: - 7 OF RS.6,OO,OOO/- AND RS.4,OO,OOO/- ON ACCOUNT OF ADVANCES GIVEN ON THE BASIS OF PAGE NO.8 AND 11 OF BS- S. ON PERUSAL OF BOTH THESE PAGES IT SEEMS THAT THESE ARE NOT THE DIFFERENT ENTRIES BUT REPETITION OF PAG E NO.8 WITH PAGE NO.11 OF BS-S. THAT PAGE NO.8 IS AN ENVELOPE COVER ON WHICH ADDRESS OF PROPRIETORSHIP CONCERN OF WIFE OF THE APPELLANT WAS MENTIONED. THAT FOR ROUGH CALCULATION CERTAIN FIGURES WERE NOTED ON THIS ENVE LOPE. THESE FIGURES AGAIN NOTED ON THE PAGE NO.11 OF BS-S. THE LD COUNSEL OF THE APPELLANT IS ACCORDINGLY EXPLAINED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION TO THE INCOME OF THE APPELLANT ON T HE BASIS OF THESE TWO PIECE OF PAPER SEPARATELY WHICH RESULT IN DOUBLE ADDITION OF RS.4,OO,OOO/-. THAT ON PERUSAL OF THE SUBMISSION AND GOING THROUGH THE PAPERS AS FOUND AND SEIZED BEING LISTED AS PAGE NO. 8 AND 1 OF BS- 5. THE ADDITION OF RS. 4 LACS MADE ON ACCOUNT OF ADVANCES TO SHRI MODI AND PRAKASH OF RS.3,00,000/- AND RS. 1,00,000/- TOTALING TO RS. 4,00,000/- MADE TO THE INCOME OF THE APPELLANT AND THE -: 8: - 8 SAID AMOUNT HAS ALSO INCLUDED IN THE FIGURE OF RS.6,OO,OOO/-. THUS, RS. 4,00,000/-ADDED TWICE WHICH IS NOT JUSTIFIED. THE ADDITION OF RS. 4,00,000/- AND INTEREST THEREON OF RS.48,OOO/- IS HEREBY DELETED ADDED TWICE. THE A.O. IS HEREBY DIRECTED TO DELETE THE AD DITION OF RS.4,OO,OOO/- MADE TO THE INCOME OF THE APPELLANT. 6. LD. CIT D.R. RELIED ON THE ORDER OF AO. 7. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION TO THE INCOME OF THE ASSESSEE ON THE BASIS OF THESE TWO PIECE OF PAPERS SEPARATELY WHICH RESULT IN TO DOUBLE ADDITION OF RS. 4,00,000/ -. THESE PAPERS CONTAIN NOTING FOR MEMORY OF THE ASSESSEE SO AS TO UNDERSTAND THE UTILIZATION OF ENTIRE FUNDS OF THE F AMILY. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT DURING THE COURSE OF HEARING THE LD. C IT DR COULD NOT BRING ANYTHING CONTRARY TO THE FINDINGS O F THE LD. CIT(A). WE HAVE NO OPTION BUT TO UPHOLD THE ACTION OF THE LD. CIT(A). -: 9: - 9 9. SIMILARLY, IN REGARD TO THE ADDITION OF RS. 6,00,0 00/- AND NOTIONAL INTEREST THEREON OF RS. 72,000/-, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSE E HAD FILED DETAILED REPLY. STATEMENT OF HIS WIFE AND ASS ESSEE WERE RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. IT WAS CATEGORICALLY EXPLAINED THAT ADVANCES WERE GIVE N TO SHRI MODI AND TO SHRI PRAKASH OF RS. 3 LACS AND RS. 1 LA C TOTALING TO RS. 4 LAC , BUT THE SAID AMOUNT WAS NOT GIVEN AS ADVANCE BY THE ASSESSEE BUT BY HIS HUF. THE AO ALSO ADDED A N AMOUNT OF RS. 2 LACS BEING THE AMOUNT DEPOSITED IN BANK AS THE INCOME OF THE ASSESSEE EVEN WHEN THE SAID AMOUN T AS DEPOSITED IN BANK REPRESENT THE AMOUNT OF DESIGNER FEE PAID BY M/S. TANGIBLE TO SMT. RANJEETA RAJORA. M/S. TAN GIBLE IS A PROPRIETORSHIP CONCERN OF SMT. SHEELA RAJORA ENGA GED IN THE BUSINESS OF ARTIFICIAL JEWELLERY. THE SAID AMOU NT WAS DEPOSITED IN THE BANK ACCOUNT THROUGH CASH OF RS 20,000/- AND BALANCE THROUGH CHEQUES OF RS 1 ,80,000/-. THUS, AMOUNT OF DESIGNER FEE DULY ACCEPTED IN THE INCOME TAX ASS ESSMENT OF M/S TANGIBLE PROPRIETORSHIP CONCERN OF SMT SHEELA RAJOR A. -: 10: - 10 THE SAME WAS ALSO FILED BEFORE THE ASSESSING OFFICE R AND ALSO BEFORE THE LD CIT[A]. THUS, THERE IS NO REASON TO D ISBELIEVE ON THE SAID AMOUNT. MORESO, THE SAID AMOUNT RELATES TO THE ASST YEAR 2007-08 AND NOT RELATED TO THE ASST YEAR 2008-09. HENCE, THE ASSESSING OFFICER ON THIS COUNT ALSO NOT JUSTIFIED IN ADDING THE SAID AMOUNT TO THE INCOME OF THE ASSE SSEE. 10. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THESE ADDITIONS BY OBSERVING AS UNDER :- 8.1.2 I HAVE CONSIDERED THE FINDINGS OF THE AO AND THE WRITTEN SUBMISSION OF THE APPELLANT CAREFUL LY. IT IS OBSERVED THAT THE AMOUNT AS ADVANCED TO MR. MODI AN D SHRI PRAKASH BY THE APPELLANT THE SAID AMOUNT WAS NOT ADVANCED BY THE APPELLANT BUT ADVANCED BY HIS HUP. THE PAPERS AS FOUND DURING THE COURSE OF SEARCH INCLUDE D FIGURES RELATED TO ENTIRE FAMILY OF THE APPELLANT W HICH- INCLUDES HIMSELF, HIS WIFE AND HUF OF THE APPELLANT. THE APPELLANT HAS FURTHER CLARIFLED THAT THE AMOUNT AS ADVANCED BY HUF OF THE APPELLANT TO SHRI MODI AND SHRI PRAKA SH DULY CONSIDERED IN THE INCOME TAX RETURN OF THE HUF AND CORRESPONDING AMOUNT OF INTEREST HAS ALSO BEEN OFFE RED FOR -: 11: - 11 TAX. THE ARGUMENT OF THE APPELLANT WITH REGARD TO T HE ADVANCES GIVEN BY THE HUP OF THE APPELLANT AND AMOU NT DEPOSITED IN THE BANK ACCOUNT OF S1111. RANJEETA RA JORA PROVED WITH THE EVIDENCES FURNISHED BY THE APPELLAN T IN SUPPORT OF ITS CONTENTION. THUS, ADDITION OF RS.4,OO,OOO/-- AND RS.2,00,000/- ON ACCOUNT OF ADVANCES AND AMOUNT DEPOSITED IN THE BANK ACCOUNT TOTALING TO RS.6,OO,OOO/- IS HEREBY DELETED. THE INTEREST OF RS.72,000/- NOTIONALLY CALCULATED AND ADDED TO THE INCOME OF THE APPELLANT IS ALSO CONSEQUENTIAL IN NATURE. HENCE, THE SAID AMOUNT OF RS.72,000/- IS HEREBY ALSO DELETED AS APPELLANT HAS ALREADY SHOWN THE INTEREST INCOME IN THE RETURN FILED FOR SHYAM SINGH RAJORA HUF. THESE GROUNDS OF THE APPEAL OF THE APPELLANT ARE AL LOWED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LD. CIT DR COULD NOT BRING ANYTHING CONTRARY T O THE FINDINGS GIVEN BY THE LD. CIT(A). WE HAVE, THEREFOR E, NO OPTION -: 12: - 12 BUT TO UPHOLD THE ACTION OF THE LD. CIT(A). GROUND NOS. 1 TO 4 FAIL. GROUND NO. 5 : 12. GROUND NO. 5 RELATES TO THE ADDITION OF RS. 3,09,7 00/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOU NTED LOANS DIVERTED OUT OF CONCEALED INCOME OF THE ASSES SEE BUT DELETED BY THE LD. CIT(A). 13. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUT-SET CON TENDED THAT WHILE PASSING THE ASSESSMENT ORDER, THE LD. AO HAS MADE ADDITION OF RS. 42,500/-, RS. 2,64,000/- AND RS. 32 00/- TOTALING TO RS. 3,09,700/- IN RESPECT OF ADVANCE GI VEN TO THREE PERSONS, WHICH READ AS UNDER :- S.NO. NAME OF PERSON AMOUNT 01. ADVANCE GIVEN TO REKHA 42,500 02. ADVANCE GIVEN TO KUNDAN 2,64,000 03. ADVANCE GIVEN TO KAMMO 3,200 TOTAL 3,09,700 THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ADDITION OF RS.42,500/- RELATED TO ADVANCE AMOUNT G IVEN TO REKHA WHO WAS THE WORKER OF M/S TANGIBLE (PROPRIETORSHIP -: 13: - 13 CONCERN OF ASSESSEES WIFE SMT SHEELA RAJORA) . THA T SMT SHEELA RAJORA IN HER REPLY TO THE QUESTION NO 57 HA D ALSO CATEGORICALLY EXPLAINED THAT SHE HAD GIVEN THE ABOV E SAID AMOUNT TO SMT REKHA. REGARDING ADDITION OF RS. 2,64,000/- AND RS 3200/- IN RESPECT OF ADVANCES GIVEN TO KUNDAN AND KAMMO ARE CONCERNED , BOTH THESE ARE WORKERS OF M/S TANGIBLE (PROPRIETORSHIP C ONCERN OF ASSESSEE WIFE SMT SHEELA RAJORA). THE ASSESSEE IN R EPLY TO THE QUESTION NO 23 HAS CATEGORICALLY EXPLAINED THESE FA CTS TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDING. THAT IN REPLY TO THE QUESTION NO 36 SMT SHEELA RAJO RA HAS CATEGORICALLY ACCEPTED THAT KAMMO AND KUNDEN BOTH A RE HER EMPLOYEES OF ARTIFICIAL JEWELLERY BUSINESS. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS HAS ALSO EXPLAINED ALL THESE TRANSACTIONS AS BELONGING TO HIS WIFE SMT. SHEELA RAJORA INSPITE OF THAT ADDITION WAS WRO NGLY MADE TO THE INCOME OF THE ASSESSEE. 14. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THIS ADDITION BY OBSERVING AS UNDER :- -: 14: - 14 8.3.2 ON PERUSAL OF THE ASSESSMENT ORDER, CONSIDERING THE WRITTEN SUBMISSION OF THE APPELLANT AND ON PERUSAL OF THE DOCUMENTS ATTACHED WITH THE WRITTEN SUBMISSION, THE CONTENTION OF THE APPELLANT FACTUALLY SEEMS CORRECT. THESE PERSONS WERE ENGAGED BY THE FIRM M/S. TANGIBLE AND NOT BY THE APPELLANT. THE AMOUNT ADVANCED TO THESE PERSONS HAVE ALREADY BEEN CONSIDERED IN THE BOOKS OF M/S. TANGIBLE PROPRIETORY CONCERN OF HIS WIFE SMT. SHEELA RAJORA. THE APPELLANT HAS FILED RELEVANT COPY OF ACCOUNTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS OBSERVED THAT ENTIRE ADVANCES TO THESE PERSONS WERE NOT GIVEN DURING THE YEAR UNDER CONSIDERATION BUT THEY ARE RELATED TO DIFFERENT ASSESSMENT YEARS AND TAKEN INTO ACCOUNT BY THE WIFE OF APPELLANT IN THE BOOKS OF ACCOUNT OF M/S. TANGIBLE. HENCE, THE AO IS NOT JUSTIFIED IN ADDING THE SAID AMOUNT OF RS 42,500/-, RS. 2,64,000/- AND RS. 3200/-, RS. 2,64,000/- AND RS. 3,200/- IN RESPECT OF ADVANCES GIVEN TO REKHA, KUNDAN AND KAMMO TOTALING TO RS. 3,09,700/- IS NOT SUSTAINABLE AND IT IS HEREBY DELETED. 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, -: 15: - 15 WE FIND THAT ALL THE ADDITIONS STAND EXPLAINED. THE LD. CIT DR COULD NOT BRING ANYTHING CONTRARY TO THE FINDINGS O F THE LD. CIT(A). WE, THEREFORE, HAVE NO OPTION BUT TO UPHOLD THE ACTION OF THE LD. CIT(A). GROUND NO. 5 ALSO FAILS. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 11 TH SEPTEMBER, 2015. CPU* 1.10