Shri Kailash Karnawat, UDAIPUR v. ACIT, UDAIPUR

CO 57/JODH/2009 | 2000-2001
Pronouncement Date: 28-07-2011 | Result: Dismissed

Appeal Details

RSA Number 5723323 RSA 2009
Assessee PAN AEEPK4838P
Bench Jodhpur
Appeal Number CO 57/JODH/2009
Duration Of Justice 1 year(s) 10 month(s) 3 day(s)
Appellant Shri Kailash Karnawat, UDAIPUR
Respondent ACIT, UDAIPUR
Appeal Type Cross Objection
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-07-2011
Date Of Final Hearing 21-07-2011
Next Hearing Date 21-07-2011
Assessment Year 2000-2001
Appeal Filed On 24-09-2009
Judgment Text
ITA NO.336/JU/2009 CO NO.57/JU/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO.336/JU/2009 ASSESSMENT YEAR : 2000-01 ACIT CIRCLE-2 UDAIPUR. VS. SHRI KAILASH KARNAWAT 60-D PANCHWATI UDAIPUR. PAN: AEEPK4838P C.O. NO.57/JU/2009 (IN ITA NO.336/JU/2009) ASSESSMENT YEAR : 2000-01 SHRI KAILASH KARNAWAT 60-D PANCHWATI UDAIPUR. PAN: AEEPK4838P VS. ACIT CIRCLE-2 UDAIPUR ASSESSEE BY : SHRI AMIT KOTHARI AR REVENUE BY : SHRIG.R. KOKANI SR. DR O R D E R PER K.D. RANJAN AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION S BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT (APPEALS) UDAIPUR. THESE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE ARE DISPOSED OF BY THIS COM MON ORDER. 2. THE GROUNDS OF APPEAL RAISED IN REVENUES APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN:- 1. DELETING THE ADDITION OF RS.6 00 000/- MADE BY THE AO U/S 69 OF THE ACT. ITA NO.336/JU/2009 CO NO.57/JU/2009 2 2. DELETING THE DISALLOWANCE OF INTEREST PAYMENT OF RS.39 054/-. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.6 LAC MADE U/S 69 AND DISALLOWANCE OF INTEREST THEREON AT RS.3 9 054/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE AO FROM THE PERUSAL OF LEDGER AC COUNT OF THE ASSESSEE IN THE BOOKS OF M/S JTFSPL NOTED THAT DURING THE FINANCIAL YEAR 199 9-2000 RELEVANT TO ASSESSMENT YEAR 2000-01 THERE WAS A REVERSAL OF ACCOMMODATION ENTRY OF RS.6 LAC I.E. THE ASSESSEE HAD PAID A CHEQUE OF RS. 6 LAC WHICH WAS RECEIVED BACK IN CASH BY THE ASSESSEE. ACCORDING TO ASSESSING OFFICER THIS AMOUNT OF RS.6 LAC WAS RECEI VED BACK IN CASH AND WAS LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE AS HIS UNDISCLOS ED INCOME. THE AO ADDED THE AMOUNT OF RS.6 LAC WHICH WAS PAID TO M/S JTFSPL AND ALSO D ISALLOWED THE INTEREST OF RS.39 054/-. 4. BEFORE CIT (A) THE ASSESSEE CHALLENGED THE REOP ENING OF ASSESSMENT U/S 147 OF THE ACT WHICH HAS BEEN UPHELD BY CIT (A) ON MERITS. IT WAS SUBMITTED THAT THERE WAS A OPENING CREDIT BALANCE OF RS.6 60 800/- PAYABLE TO M/S JTFSPL. TO WIPE OFF THE SAID LIABILITY THE ASSESSEE IN THE MONTH OF JULY 2000 ISSUED A CHEQUE TO THE PARTY CONCERNED. THEREFORE IT WAS SUBMITTED THAT NO FRESH LOAN OR D EPOSIT WAS TAKEN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THEREFORE THE PROVI SIONS OF SECTION 69 OF IT ACT WERE NOT APPLICABLE. LD. CIT (A) CONSIDERED THE FACTS OF TH E CASE AND SUBMISSIONS MADE BY THE ASSESSEE. HE DELETED THE ADDITION BY OBSERVING AS UNDER:- 19. DECISION: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS ION OF THE LD. AR AND FOUND THAT THE AO MADE THE ADDITION OF RS.6 LACS AS UNEXPLAINE D CASH U/S 69 OF THE ACT ON THE GROUND THAT IT WAS THE CASE OF REVERSAL OF ACCO MMODATION ENTRY IN THE GUISE OF LOAN/LIABILITY ACQUIRED IN THE EARLIER YEARS. AFTE R THE SEARCH AND SEIZURE ACTION CONDUCTED BY THE DEPARTMENT AND IN THE POST SEARCH PROCEEDINGS IT HAS BEEN PROVED THAT SHRI GAJENDRA PORWAL AND THE CONCERNS F LOATED BY HIM M/S JTFSPL BEING ONE OF THEM DID NOT DO ANY REAL BUSINESS. THE EVIDENCE GATHERED DURING AND AFTER SEARCH CONCLUSIVELY PROVES THAT SHRI GAJE NDRA PORWAL WAS NOT DOING ANY REAL BUSINESS AND WAS A MAN OF NO MEANS FROM HIS PR OFILE AND THE ACTIVITIES CARRIED OUT BY HIM HIS CREDIT WORTHINESS WAS VERY LIMITED. SUCH AMOUNT WAS PAID TO M/S JTFSPL BY THE ASSESSEE FOR REVERSAL OF AN ACCOMMODA TION ENTRY TAKEN IN EARLIER YEAR AND AS PER THE MODUS OPERANDI OF ENTRY BUSINES S HE RECEIVES THE AMOUNT BACK FROM THE ENTRY PROVIDER WHICH HE MIGHT USE ELSEWHER E AS PER HIS REQUIREMENTS. BUT THE FACT REMAINS THAT THIS MONEY OF RS.6 LACS R ECEIVED ON REVERSAL OF ENTRY WAS LYING OUT OF BOOKS OF THE ASSESSEE. THE LD. AR SUB MITTED THAT FROM THE FACTS IT IS ITA NO.336/JU/2009 CO NO.57/JU/2009 3 CLEAR THAT DURING THE PREVIOUS YEAR RELEVANT TO ASS ESSMENT YEAR UNDER REFERENCE FROM THESE TWO PARTIES NO NEW FRESH LOAN/DEPOSIT O F WHATSOEVER NATURE HAS BEEN TAKEN SO THE QUESTION OF PROVING OF THE TRANSACTIO N IN VIEW OF PROVISIONS OF SECTION 69 OF THE IT ACT IS NOT REQUIRED. ON THE C ONTRARY IT IS A CASE WHERE FROM THE FACTS AS APPEARED IN THE BOOKS OF ACCOUNTS AND CONFIRMED BY SRI GAJENDRA PORWAL IT IS THE ASSESSEE WHO MADE PAYMENT BY WAY OF A/C PAYEE CHEQUE AGAINST THE OLD DUES. HOW ANY PAYMENT MADE THROUGH A/C PAY EE CHEQUE AGAINST THE OLD DUES CAN BE SAID TO BE UNEXPLAINED CASH LYING IN TH E HANDS OF THE ASSESSEE OUT OF BOOKS? AS PER REASONS RECORDED SUBJECTED AMOUNT W AS RS.6 LACS ALLEGED TO BE RECEIVED BACK IN CASH BY THE APPELLANT BUT SINCE AS PER A/C STATEMENT OF M/S JTFSPL IN THE APPELLANTS BOOKS OF ACCOUNTS THE AM OUNT REPAID THROUGH A/C PAYEE CHEQUE TO THESE CONCERNS WAS RS.6 LACS. THE SAME W AS ADDED TO THE TOTAL INCOME OF APPELLANT BY THE AO DESPITE EXPLANATIONS & SUBMI SSIONS THAT NO AMOUNT HAS BEEN RECEIVED BACK IN CASH & THIS AMOUNT OF RS.6 LA CS HAS BEEN UTILIZED BY SRI GAJENDRA PORWAL TO REPAY THE OUTSTANDING LIABILITIE S OF M/S JTFSPL TO OTHER CONCERN. SECTION 69A CLEARLY STATES THAT WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BULLION JEW ELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY BULLION JEWELLERY OR OTHER VALUABL E ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT HE NATURE AND SOURCE OF ACQUISITION OF THE MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE AO SATISFACTORY THE MONEY AND THE VALUE OF THE BULLION JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN THE PRESENT C ASE NO SUCH CASH HAS BEEN FOUND AND CLEARLY THE PROVISIONS OF SECTION 69A ARE NOT A PPLICABLE. THUS IT IS VERY CLEAR FROM THE RELEVANT SECTION THAT FOR APPLICABILITY OF SECTION 69A THE ASSESSEE SHOULD HAVE BEEN FOUND TO BE THE OWNER OF ANY MONEY BULLI ON JEWELLERY OR OTHER VALUABLE ARTICLES. IN THE CASE OF THE APPELLANT T HE AO HAS APPLIED THE PROVISIONS OF SECTION 69A FOR THE REPAYMENT OF LOAN BY ACCOUNT PAYEE CHEQUE AND NOT BY CASH PRESUMING THAT THE APPELLANT MUST HAVE RECEIVED CAS H IN LIEU OF THESE CHEQUES ON THE BASIS OF THE STATEMENT OF SHRI GAJENDER PORWAL RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS U/S 132 OF THE ACT. THE APPELLA NT HAS NOT BEEN FOUND TO BE THE OWNER OF ANY MONEY AT ALL BUT EVEN THOUGH THE AO HA S APPLIED THE SECTION 69A WRONGLY ON PRESUMPTION BASIS. THEREFORE THE ADDIT ION MADE BY THE AO U/S 69A IS DELETED. THE APPEAL IS ALLOWED ON THIS GROUND. 5. BEFORE US LD. SR. DR SUPPORTED THE ORDER OF THE AO WHEREAS THE LD. AR OF THE ASSESSEE SUBMITTED THAT IT IS SIMPLY A CASE OF REPAYMENT OF LOAN OUTSTANDING AS ON THE FIRST DAY OF THE ACCOUNTING YEAR. NO FRESH LOAN WAS TAKEN THEREFORE NO DISALLOWANCE CAN BE MADE U/S 69A OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. U/S 69A THE ADDITION CAN BE MADE IF THE ASSESSEE I S FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLES AND S UCH MONEY BULLION JEWELLERY OR OTHER ITA NO.336/JU/2009 CO NO.57/JU/2009 4 VALUABLE ARTICLE WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME. THE PROVISIONS OF SECTIO N 69A ARE APPLICABLE ONLY IN THE CASES WHERE THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY OF SUCH ASSETS OR OTHER VALUABLES. IN THE CASE OF THE ASSESSEE THE AO HAD APPLIED THE PRO VISIONS OF SECTION 69A FOR REPAYMENT OF LOAN BY AN ACCOUNT PAYEE CHEQUE PRESUMING THAT THE ASSESSEE MUST HAVE RECEIVED CASH IN LIEU OF THE CHEQUE ON THE BASIS OF A STATEMENT O F SHRI GAJENDRA PORWAL RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS U/S 132 OF THE ACT . THE ASSESSEE HAD OUTSTANDING BALANCE AS ON 1.4.1999 AT RS.6 60 800/- AND HAD PAID RS.6 L AC BY WAY OF CHEQUE NO.535120 DATED 5.7.1999. THE ASSESSEE HAD ALSO INCURRED INTEREST LIABILITY OF RS.39 054/-. THUS THE ASSESSEE HAD MADE PAYMENT OF OUTSTANDING LOAN. THE RE IS NO EVIDENCE ON RECORD THAT THE ASSESSEE HAD RECEIVED BACK RS.6 LAC BY WAY OF CASH WHEN CHEQUE OF RS.6 LAC WAS GIVEN TO JTFSPL. MOREOVER THE PROVISIONS OF SECTION 69A CANNOT BE APPLIED TO THE TRANSACTIONS LIKE THIS. IT IS NOT THE CASE OF ASSESSING OFFICER THAT SOURCE OF PAYMENT WAS IN DOUBT. THE ASSESSING OFFICER COULD HAVE INVOKED THE PROVISIONS OF SECTION 68 IN THE YEAR IN WHICH THE ALLEGED LOAN OF RS.6 LAC WAS RECEIVED. THEREFORE IN OUR CONSIDERED OPINION LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.6 LAC. 7. SINCE WE HAVE CONFIRMED THE DELETION OF ADDITION OF RS.6 LAC MADE BY THE AO THE DISALLOWANCE OF RS.39 054/- ON ACCOUNT OF INTEREST ACCRUED ON THE LOAN CANNOT BE MADE. IN VIEW OF THESE FACTS LD. CIT (A) WAS JUSTIFIED IN D ELETING THE ADDITION OF RS.39 054/- ON ACCOUNT OF INTEREST ACCRUED. ACCORDINGLY WE DO NO T FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT (A) DELETING BOTH THE ADDITIONS. 8. IN CROSS OBJECTIONS THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT U/S 147. DURING THE COURSE OF HEARING LD. AR OF THE A SSESSEE DID NOT PRESS THIS GROUND OF CROSS OBJECTIONS. THEREFORE THE GROUND RELATING T O REOPENING OF ASSESSMENT U/S 147 IS DISMISSED AS NOT PRESSED. 9. AS REGARDS THE OTHER GROUNDS OF CROSS OBJECTIONS THESE GROUNDS ARE IN SUPPORT OF ORDER OF THE CIT (A). SINCE WE HAVE UPHELD THE DEC ISION OF CIT (A) ON DELETION OF ITA NO.336/JU/2009 CO NO.57/JU/2009 5 ADDITION OF RS.6 LAC AND RS.39 054/- THE GROUNDS R AISED BY THE ASSESSEE IN CROSS OBJECTIONS BECOME INFRUCTUOUS AND ARE DISMISSED AS SUCH. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.07.2011. SD/- SD/- [RAJPAL YADAV] [K.D. RANJAN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 28 TH JULY 2011 DK COPY FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. DR 6. GUARD FILE ASSTT. REGISTRAR ITAT JODHPUR