THE DCIT, 4 (1), V. SHRI CHANDRA KUMAR SATYANAND,

ITSSA 73/IND/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9444 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2010
• Assessment Year: misc
• Appeal Filed On: 31-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P CHAUDHARY
• Assessee Lawyers: TRIBHUVAN SACHDEVA
• Keywords: Unexplained cash credit; Unexplained investment; Document seized; Peak credit; Block assessment

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER IT(SS). 73/IND/06 BLOCK PERIOD 1.4.1996 TO 17.11.2002 DY. COMMR. OF INCOME TAX 4(1) INDORE APPELLANT VS SHRI CHANDRA KUMAR SACHCHANAND INDORE RESPONDENT PAN AMIPK3298C APPELLANT BY SHRI S.P. CHAUDHARY RESPONDENT BY SHRI TRIBHUVAN SACHDEVA O R D E R PER BENCH THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 24 TH MARCH, 2006 OF THE LEARNED COMMISSIONER OF INCOMET AX (APPEALS). 2. WE HAVE HEARD SHRI S.P. CHAUDHARY, LEARNED CIT DR AND SHRI TRIBHUVAN SACHDEVA, LEARNED COUNSEL FOR THE AS SESSEE 2 3. IN GROUND NO. 1 THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN DELETING THE ADDITION OF RS.15,79,600/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 4. THE FACTS, IN BRIEF, ARE THAT THERE WAS A SEARCH AT THE RESIDENCE OF THE ASSESSEE AS WELL AS BUSINESS PREMI SES OF THE ASSESSEE AND OTHER CONNECTED ASSESSEES ON 14.11.200 2. THE ASSESSEE FILED RETURN FOR THE BLOCK PERIOD DECLARIN G UNDISCLOSED INCOME AT RS.20,12,310/-. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT IN TH E BLOCK RETURN, THE ASSESSEE HAD WORKED OUT THE PEAK CREDIT OF RS.7 ,50,000/- WHEREIN A CREDIT FOR OPENING BALANCE OF RS.7,40,000 /- HAD BEEN TAKEN ON THE BASIS OF THE DOCUMENT SEIZED FROM THE BUSINESS PREMISES OF M/S SHAKTI SALES. THE ASSESSING OFFICE R FURTHER FOUND THAT SOME AMOUNTS WERE CLAIMED TO BE BELONGIN G TO OTHER PERSONS AND THE ASSESSEE HAD NOT SHOWN SOME OF THE AMOUNTS OF LOAN GIVEN ON HUNDI TO OTHER PERSONS. THE ASSESSIN G OFFICER REJECTED THE PLEA OF THE ASSESSEE THAT ALL CASH TRA NSACTIONS PERTAINED TO CHANDRA KUMAR AND HAD BEEN DISCLOSED I N HIS BLOCK RETURN FOR THE REASON THAT NO SUCH CLAIM WAS MADE B Y ANY OF THE FAMILY MEMBERS AT THE TIME OF SEARCH. THEREAFTER, THE ASSESSING OFFICER REWORKED OUT THE PEAK CREDIT ON THE BASIS O F VARIOUS SEIZED 3 DOCUMENTS AT RS.15,79,600/- AND ADDED THE SAME TO T HE INCOME OF THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHEREIN THE ASSESSEE MADE DETAILED SUBMISSIONS AS R EGARD TO THE NATURE OF ENTRIES WHICH WERE TO BE INCLUDED/EXCLUDE D IN COMPUTING THE PEAK CREDIT. IT WAS ALSO CONTENDED THAT SOME OF THE TRANSACTIONS BELONGED TO OTHER PERSON, NAMELY, SHRI SATISH KUMAR, WHICH HAD BEEN OFFERED BY HIM IN HIS RETURN AFTER OWNING THE SAME. THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS) ALSO CALLED THE REMAND REPORT FROM THE ASSESSING OF FICER WHO ALSO ACCEPTED THE PLEA OF THE ASSESSEE THAT IN CASE SOME DOCUMENT WAS FOUND TO BE BELONGING TO OTHER(S) AND OWNED TO BE SO BY THAT PERSON THEN THE ADDITION COULD NOT BE MADE IN THE H ANDS OF THE ASSESSEE AGAIN. THE ASSESSING OFFICER ALSO SUBMITT ED THAT HUNDIES WHICH BELONGED TO THE ASSESSEE AND WHICH WE RE DULY SURRENDERED BY HIM, HENCE, THE ASSESSEES CONTENTIO N IN THAT REGARD COULD BE ACCEPTED. 5. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE DETAILS SUBMITTED BY THE ASSESSEE, DELETED THE IMPUGNED ADD ITION AND ALSO DIRECTED THE ASSESSING OFFICER TO WORK OUT THE PEAK CREDIT AFTER TAKING INTO CONSIDERATION THE APPELLATE ORDER S IN THE CASES OF 4 SHRI AMARLAL CHUGH AND SMT. KOMALDEVI CHUGH AND IN THE LIGHT OF THE WORKING SUBMITTED BY THE ASSESSEE. THE RELEVAN T FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ARE AS UNDER :- I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND FIND SUFFICIENT MERIT IN THE CONTENTION OF THE APPE LLANT WHICH IS ALSO ENDORSED BY THE PRESENT INCUMBENT IN THE REMAND REPORT SUBMITTED BY HIM. IT HAS BEEN ADMITT ED ON THE FACTS THAT THE UNEXPLAINED INVESTMENT NEEDS TO BE CONSIDERED IN THE HANDS OF THE APPELLANT WHO WAS DOING HUNDI BUSINESS SINCE LONG IN THE NAMES OF VARIOUS FAMILY MEMBERS. IT IS ALSO EVIDENT THAT TH E AO HAS NOT TAKEN INTO CONSIDERATION THE REPLY SUBMITTE D BY THE APPELLANT REGARDING THE HUNDIES TRANSACTED THRO UGH BANKING CHANNELS. NO REASON HAVE BEEN BROUGHT ON THE RECORD TO REBUT THE CONTENTIONS OF THE APPELLAN T VIDE LETTER REFERRED ABOVE. THE APPELLANT HAS HIMS ELF WORKED OUT THE UNDISCLOSED INVESTMENT IN HUNDI BUSINESS AND THE PEAK CREDIT HAS ALREADY BEEN OFFER ED FOR TAXATION IN THE BLOCK RETURN AND NO FURTHER ADD ITION IS JUSTIFIED ON THE FACTS OF THE CASE. HOWEVER, IT MAY BE MENTIONED HERE THAT IN THE APPELLATE ORDERS REFERRE D ABOVE, THE UNDERSIGNED HAS UPHELD THE ADDITION IN 5 RESPECT OF THE HUNDIES FOUND IN THE NAME OF SMT. KOMAL DEVI WHILE WHOSE ADDED IN THE HANDS OF SRI AMARLAL CHUGH HAVE BEEN HELD TO BE CONSIDERED IN TH E HANDS OF THE APPELLANT. IN SO FAR AS THE WORKING OF THE PEAK CREDIT IS CONCERNED AND MORE SPECIFICALLY THE AMOUNT OF RS. 7,40,000/- STATED TO BE THE OPENING BALANCE CARRIED FORWARD FROM 31.3.1996 AND NOT RELEVANT FOR THE BLO CK PERIOD, I FIND SUFFICIENT MERITS IN THE CONTENTION OF THE APPELLANT. THE CLAIM OF THE APPELLANT THAT THE IMPU GNED SUM WAS ONLY THE OPENING BALANCE BROUGHT FORWARD IS VERIFIABLE FROM THE RELEVANT SEIZED PAPER WHICH HAS ALSO BEEN PERUSED BY ME. AS SUCH, THE AMOUNT BEING BEYOND THE SCOPE OF BLOCK ASSESSMENT OUGHT TO HAVE BEEN EXCLUDED FOR THE PURPOSES OF WORKING OUT THE PEAK CREDIT. LIKEWISE, THE HUNDIES TRANSACTED IN THE NAME OF THE APPELLANT AND HIS SON THROUGH THE BANKING CHANNELS ARE CLEARLY REFLECTED IN THE RESPECTIVE BA NK STATEMENTS FURNISHED BY THE APPELLANT. MOREOVER, TH EY ARE ALSO FULLY DISCLOSED IN THE RETURNS FILED FOR T HE RELEVANT ASSESSMENT YEAR. EVIDENTLY, THE AO HAS NO T 6 TAKEN ANY COGNIZANCE OF THE EXPLANATION WHICH IS STATED TO HAVE BEEN SUBMITTED IN THIS REGARD VIDE L ETTER DATED 17.11.2004 BEFORE HIM. THERE IS ABSOLUTELY N O BASIS FOR NON ACCEPTANCE OF THE SAID EXPLANATION. DURING THE APPEAL PROCEEDINGS ALSO, THE APPELLANT H AS SUBMITTED THE COPIES OF RELEVANT BANK ACCOUNTS WHIC H ARE DISCLOSED TO THE RETURNS FILED REGULARLY IN THE PAST. IN THE LIGHT OF SUCH FACTS AND THE EVIDENCE FURNISH ED BY THE APPELLANT, I DO NOT FIND ANY MERIT IN THE ACTIO N OF THE AO IN CONSIDERING SUCH HUNDIES/THEIR RENEWALS FOR WORKING OUT THE PEAK CREDIT. HE IS DIRECTED TO EXC LUDE SUCH TRANSACTIONS FOR THE SAID WORKING. IN THE LIGHT OF THE ABOVE FACTS AND DIRECTIONS, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING FURTHE R ADDITION OVER AND ABOVE THOSE OFFERED BY THE APPELL ANT IN THE RETURN. HE IS DIRECTED TO WORK OUT THE PEAK CREDIT IN THE LIGHT OF THE APPEAL ORDERS IN THE CASES OF S RI AMARLAL CHUGH AND SMT.KOMAL DEVI CHUGH AND ALSO IN THE LIGHT OF THE WORKING DONE BY THE APPELLANT. THE ADDITION MADE IS, THEREFORE, DELETED SUBJECT TO ABO VE WORKING. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 7 6. THE LEARNED CIT DR NARRATED THE FACTS AND TOOK U S THROUGH THE ASSESSMENT ORDER BESIDES PLACING RELIANCE ON TH E ORDER OF THE ASSESSING OFFICER. 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE ARGUED THE MATTER AT LENGTH AND PLACED STRONG RELIA NCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APP EALS). THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER REFERRED T O THE ORDER OF THE TRIBUNAL IN THE CASE OF DCIT V. SATISH KUMAR CH UGH (BROTHER OF THE ASSESSEE) IN IT(SS) A NO. 74/IND/06 DATED 30 .6.2009 WHEREIN THE TRIBUNAL HELD THAT TRANSACTIONS OF HUND IES WERE TO BE CONSIDERED IN THE CASE OF THE ASSESSEE AND THAT WAS ON THE BASIS OF REMAND REPORT CALLED UPON BY THE LEARNED COMMISS IONER OF INCOMETAX (APPEALS) IN THAT CASE. HE ALSO REFERRED TO THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. KOMAL SINGH CHUGH V. ACIT IN IT(SS)A. NO. 03/IND/06 ORDER DATED 30 TH JUNE, 2009 WHEREIN A SIMILAR VIEW HAD BEEN TAKEN. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT IN COMPUTING THE PEAK CREDIT IN RE SPECT OF INVESTMENT/HUNDI TRANSACTIONS, THE CREDIT OF OPENIN G BALANCE OF RS.7,40,000/- HAS NOT BEEN GIVEN BY THE ASSESSING O FFICER AND NO REASON HAS BEEN ASSIGNED FOR SUCH ACTION. ADMITTEDL Y, THIS 8 AMOUNT PERTAINS TO THE PERIOD PRIOR TO THE BLOCK PE RIOD, HENCE, IT CANNOT BE CONSIDERED FOR ADDITION UNDER THE BLOCK P ERIOD. HOWEVER, SINCE THIS AMOUNT IS AVAILABLE AS OPENING BALANCE, THE CREDIT THEREOF HAS TO BE GIVEN IN COMPUTING THE PEA K CREDIT IN RESPECT OF THESE TRANSACTIONS IN THE YEARS FALLING UNDER THE BLOCK PERIOD. WE ALSO FIND THAT AS REGARD TO THE NATURE OF VARIOUS ENTRIES, THE ASSESSEE EXPLAINED THE SAME IN DETAIL AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALS O DIRECTED THE ASSESSING OFFICER TO REWORK OUT THE QUANTUM OF CREDIT, AFTER GIVING DIRECTIONS IN PRINCIPLE. HENCE, NO FAULT CA N BE FOUND WITH THESE FINDINGS OF THE LEARNED COMMISSIONER OF INCOM ETAX (APPEALS). WE ALSO FIND THAT THE TRIBUNAL IN THE C ASE OF CONNECTED ASSESSED WHERE SIMILAR ADDITIONS WERE ALSO MADE HAS HELD THAT THE AMOUNT OF PEAK CREDIT HAD TO BE ADDED IN THE HA NDS OF THE ASSESSEE WHICH ALSO SUPPORTS THE CLAIM OF THE ASSES SEE. ACCORDINGLY, WE CONFIRM THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THUS, THIS GROUND OF THE R EVENUE IS DISMISSED. 9. IN GROUND NO. 2 THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN DELETING THE ADDITION OF RS.8,50,000/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH. 9 10. THE FACTS, IN BRIEF, ARE THAT DURING THE COURSE OF SEARCH, CAHS WORTH RS.13,37,040/- WAS FOUND OUT OF WHICH THE ASS ESSEE CLAIMED THAT CASH WORTH RS.9,93,000/- BELONGED TO H IM AND THAT WAS SURRENDERED IN THE BLOCK RETURN FILED BY HIM. T HE ASSESSEE IN THE BLOCK RETURN HAD SHOWN THAT A SUM OFRS.8,50,000 /- BEING THE AMOUNT OF LOAN OBTAINED ON HUNDIES WHICH WERE OWNED UP BY THE ASSESSEE, WAS AVAILABLE WITH HIM. HOWEVER, THE ASSE SSING OFFICER REJECTED THIS CLAIM OF THE ASSESSEE BECAUSE THE HUN DIES WERE AVAILABLE WITH HIM AND WHICH COULD HAVE BEEN WITH H IM ONLY AFTER REPAYMENT OF LOAN, HENCE, HE TREATED THE CASH OF RS .8,50,000/- AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04 FALLING IN THE BLOCK PERIOD. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHEREIN IT WAS CONTENDED THAT THIS AMOUNT HAD ALREADY BEEN DISCLOSED AS INCO ME AND IT WAS INCLUDED IN THE SUM OF RS.9,44,256/- DECLARED FOR T HE ASSESSMENT YEAR 2003-04 IN BLOCK RETURN. HENCE, IT WAS DOUBLY TAXED. THE ASSESSEE ALSO PLEADED THAT SINCE THE HUNDIES WERE F OUND IN THE POSSESSION OF THE ASSESSEE, HENCE, AS PER LAW, THE SAME WERE TO BE TREATED AS BELONGING TO THE ASSESSEE. THE LEARNE D COMMISSIONER OF INCOMETAX (APPEALS) HELD THAT SINCE THE ASSESSEE HAD HIMSELF ADMITTED THE OWNERSHIP OF HUND IES, IN 10 QUESTION, AND SURRENDERED THE SAME, HENCE, AVAILABI LITY OF CASH IN HAND WAS CONSEQUENTIAL, PARTICULARLY WHEN NO CONTRA RY MATERIAL HAD BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER OR WAS FOUND IN THE COURSE OF SEARCH. THE LEARNED COMMISS IONER OF INCOMETAX (APPEALS) ALSO HELD THAT THE ACTION OF TH E ASSESSING OFFICER WAS IN THE REALM OF PRESUMPTIONS AND CONJEC TURES ONLY. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE ASSESSMENT ORDER. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS). 13. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT IN THE COMPUTATION OF UNDISCLOSED INCOME THE ASSESSEE HAS OWNED UP THE AMOUNT OF HUNDIES SO FOUN D AND OFFERED THE SAME AS ITS UNDISCLOSED INCOME AND HAS CLAIMED SET OFF OF THE SAME WITH THE CASH FOUND DURING THE COUR SE OF SEARCH. THE ASSESSING OFFICER HAS REJECTED THIS CLAIM OF TH E ASSESSEE WITHOUT APPRECIATING THE FACTS IN PROPER PERSPECTIV E. WE ARE FURTHER OF THE VIEW THAT IT AMOUNTS TO DOUBLE TAXAT ION OF THE INCOME, ONE BY WAY OF UNEXPLAINED HUNDIES AND ANOTH ER BY WAY 11 OF UNEXPLAINED CASH. IN THIS VIEW OF THE MATTER, W E HOLD THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS RIG HTLY DELETED THIS ADDITION. THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MARCH, 2010 SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER 31 ST MARCH, 2010 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR, GUA RD FILE *D/-