ITO, Nainital v. Shri Amandeep Sandhu, Nainital

ITA 1243/DEL/2012 | 2007-2008
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 124320114 RSA 2012
Assessee PAN ADMPS2957N
Bench Delhi
Appeal Number ITA 1243/DEL/2012
Duration Of Justice 1 year(s) 6 month(s) 28 day(s)
Appellant ITO, Nainital
Respondent Shri Amandeep Sandhu, Nainital
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 11-10-2013
Date Of Final Hearing 07-10-2013
Next Hearing Date 07-10-2013
Assessment Year 2007-2008
Appeal Filed On 13-03-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL ACCOUNTANT MEMBER AND SMT. DIVA SINGH JUDICIAL MEMBER I.T.A .NO.-1243/DEL/2012 (ASSESSMENT YEAR-2007-08) ITO VS. SHRI AMANDEEP SANDHU GOLGHAR BARA BAZAR PRINCIPAL SHERWOOD NAINITAL. COLLEGE NAINITAL. PAN: ADMPS2957N (APPELLANT) (RESPONDENT) REVENUE BY:- SMT. ANURADHA MISRA CIT. DR. ASSESSEE BY:- DR. RAKESH GUPTA ADV. & SH. ASHWANI TANEJA ADV. ORDER PER R. S. SYAL AM. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE LD. CIT (A) ON 27.12.2011 IN RELATION TO THE ASSESSMENT YEAR 2007-08. 2 2. FIRST GROUND OF THE APPEAL IS AGAINST THE DELETI ON OF ADDITION OF RS.15 LAC WHICH WAS MADE BY THE AO BY T REATING THE ADVANCE OF RS.15 LAC RECEIVED BY THE ASSESSEE F ROM M/S T.S. MOTORS (I) PVT. LTD. (HEREINAFTER ALSO CALLED `T.S.MOTORS) AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. BRIEF LY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE SHOWED TO H AVE RECEIVED AN ADVANCE OF RS.15 LAC FROM T.S. MOTORS. ON BEING C ALLED UPON TO PROVE THE GENUINENESS OF THE CREDIT THE AS SESSEE SUBMITTED THAT HE RECEIVED THE ABOVE AMOUNT AS AN A DVANCE PURSUANT TO ENTERING INTO AN AGREEMENT WITH M/S T. S . MOTORS (I) PVT. LTD. ON 29.9.2006 FOR AGREEING TO TRANSFER THE PROPERTY LOCATED AT BHANDAAR GOAN DEHRADUN WITH ALL OWNERSH IP RIGHTS ON LAND AND CONSTRUCTION THEREON. IN SUPPORT OF TH IS CONTENTION THE ASSESSEE FILED A COPY OF AGREEMENT WITH T.S. MOTORS A COPY OF LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF T.S. MOTORS EXTRACT OF COPIES OF CASH BOOK OF T. S. MOTORS AND COPY OF BOARD RESOLUTION OF T.S. MOTORS AUTHORIZ ING 3 INVESTMENT IN PROPERTY. THE AO PROCURED THE RELEVAN T BALANCE SHEET OF T.S. MOTORS FROM ACIT RANGE-II LUCKNOW. I T WAS NOTICED FROM SUCH BALANCE SHEET THAT T.S. MOTORS HAD NOT SEPARATELY REFLECTED THE ADVANCE OF RS.15 LAC GIVEN TO THE ASSESSEE. IT WAS ALSO OBSERVED THAT THERE WAS AN IN CREASE UNDER THE SUB-HEAD `SECURITY DEPOSITS FROM RS.2.56 CRORE AT THE END OF THE PRECEDING YEAR TO RS.4.98 CRORE AT THE END O F THE CURRENT FINANCIAL YEAR. IT WAS ALSO SEEN THAT THE TRANSACTI ON OF RS.15 LAC WAS MADE IN CASH IN THREE EQUAL INSTALLMENTS OF RS.5 LAC EACH ON 8.11.2006 5.1.2007 AND 15.3.2007. RECEIPT OF SUCH HUGE AMOUNT IN CASH GAVE A CAUSE OF DOUBT TO THE AO . HE DID NOT ACCEPT THE ASSESSEES VERSION THAT T.S. MOTORS E NTERED INTO AN AGREEMENT AS PER WHICH THE ASSESSEE WAS TO BUILD A HOUSE PROPERTY AND THEREAFTER TRANSFER THE SAME TO IT. IN THIS BACKDROP OF THE FACTS HE MADE ADDITION OF RS.15 LAC U/S 68 OF THE ACT. THE LD. CIT (A) GOT CONVINCED WITH ASSESSEES SUBMI SSIONS AND ORDERED FOR THE DELETION OF ADDITION. 4 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PRINCIPAL QUESTION ON THIS ISSUE IS WHETHER SUCH ADVANCE WAS GENUINELY RECEIVE D OR WAS A CAMOUFLAGE WARRANTING ADDITION U/S 68. PAGE NO. 5 OF THE PAPER BOOK IS A COPY OF EXTRACT OF THE MINUTES OF THE MEET ING OF THE BOARD OF DIRECTORS OF T.S. MOTORS HELD ON 6 TH SEPTEMBER 2006 AUTHORIZING ITS DIRECTOR SHRI ROHIT ARORA TO CONDU CT INQUIRIES IN CONNECTION WITH THE EXECUTION OF SOME PROPERTY I N DEHRADUN. SHRI ROHIT ARORA INFORMED THE BOARD ON 20 TH SEPTEMBER 2006 ABOUT THE FINALIZATION OF THE PROPER TY DEAL WITH THE ASSESSEE. A COPY OF RESOLUTION AUTHORIZING SHRI ROHIT ARORA TO ENTER INTO MOU WITH THE ASSESSEE FOR THE PURCHASE OF THE PROPERTY TO BE DEVELOPED BY THE ASSESSEE ALONG WITH HIS WIFE IS AVAILABLE ON PAGE 6 OF THE PAPER BOOK. THEREAFTER THE ASSESSEE ENTERED INTO AN AGREEMENT WITH T.S. MOTORS ON 29 TH SEPTEMBER 2006. A COPY OF SUCH AGREEMENT IS AVAILABLE ON PAG E 7 ONWARDS OF THE PAPER BOOK. THIS AGREEMENT CATEGORIC ALLY 5 PROVIDES FOR THE PURCHASE OF PROPERTY BY T.S. MOTOR S FROM THE ASSESSEE AND HIS WIFE FOR THE STATED CONSIDERATION. PAGE 19 OF THE PAPER BOOK IS COPY OF ASSESSEES ACCOUNT IN THE BOOKS OF T.S. MOTORS INDICATING CASH PAYMENT OF RS.15 LAC TO THE ASSESSEE IN THREE INSTALLMENTS OF RS.5 LAC EACH. AL L THE ABOVE DISCUSSED DOCUMENTS WERE FILED BY THE ASSESSEE BEFO RE THE AO WHICH HAVE NOT BEEN CONTROVERTED BY THE AO. EXCEPT FOR THE FACT THAT T.S. MOTORS DID NOT SEPARATELY INDICATE A DVANCE OF RS.15 LAC GIVEN TO THE ASSESSEE IN ITS BALANCE SHEE T THE AO HAS NO OTHER TENABLE REASON TO DISPROVE THE GENUINENESS OF THE CREDIT. 4. SECTION 68 PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION O F THE AO SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO TAX AS 6 INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. WE A RE CONFRONTED WITH A SITUATION IN WHICH THE ASSESSEE F ILED INUNDATED EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION. THE AO CHOSE TO IGNORE THE SAME WITHOU T SHOWING HOW IT WAS WRONG AND WAS NEEDLESSLY SWAYED BY THE M ERE FACT THE T.S. MOTORS HAD NOT SEPARATELY DEMONSTRATED THIS SUM IN ITS BALANCE SHEET. THE ASSESSEE CANNOT BE FAULTED IF T .S. MOTORS CLUBBED SUCH ADVANCE OF RS.15 LAC WITH OTHER ADVANC ES INSTEAD OF SHOWING IT SEPARATELY. IT WAS INCUMBENT UPON THE AO TO CONDUCT INQUIRY AND VERIFY THE CORRECTNESS OF THE D OCUMENTS WITH M.S. MOTORS IF HE WAS NOT READY TO ACCEPT THEM AS CORRECT. NOTHING ADVERSE HAS BEEN BROUGHT ON RECO RD IN THIS REGARD. IN THE GIVEN CIRCUMSTANCES WE ARE UNABLE T O FIND ANY FLAW IN THE IMPUGNED ORDER IN DELETING THIS ADDITIO N ON THE BASIS OF THE OVERWHELMING EVIDENCE FILED BY THE ASS ESSEE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION. THI S GROUND IS NOT ALLOWED. 7 5. THE ONLY OTHER ISSUE RAISED THROUGH TWO GROUNDS IS ABOUT THE DELETION OF ADDITION OF RS.81 60 000/- WHICH WA S MADE BY THE AO AS UNEXPLAINED INVESTMENT. THE FACTS APROP OS THIS GROUND ARE THAT ASSESSEE CONSTRUCTED HOUSE PROPERTY AT BHANDAAR GOAN DEHRADUN AND FURNISHED YEAR WISE DET AILS OF CONSTRUCTION WORK / INVESTMENT IN SAID PROPERTY AS UNDER: YEAR AMOUNT 2005-06 RS.7 50 000/- 2006-07 RS.14 50 000/- 2007-08 RS.70 00 000/- 2008-09 RS.30 00 000/- 6. ON THE BASIS OF THE REPORT OF DDI (INV.) DEHRADU N THAT CONSTRUCTION WORK IN THE SAID PROPERTY WAS STARTED IN DECEMBER 2005 AND COMPLETED ONE AND A HALF YEAR LATTER THE AO CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY 80% OF TH E TOTAL INVESTMENT MADE OVER THE YEARS BE NOT CONSIDERED AS HAVING 8 BEEN MADE IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD THE AO ALSO RELIED UPON STATEMENT OF ONE SHRI BHAGAT. T HE ASSESSEE SUBMITTED DETAILS ABOUT THE INVESTMENT AS INDICATED ABOVE AND ARGUED THAT SHRI BHAGAT WAS SIMPLY A CARE -TAKER WHO HAD NO KNOWLEDGE OF THE PERIOD DURING WHICH CON STRUCTION WAS CARRIED OUT. IT WAS FURTHER STATED THAT HIS STA TEMENT COULD NOT BE USED WITHOUT GRANTING AN OPPORTUNITY TO CROS S-EXAMINE. NOT CONVINCED THE AO MADE ADDITION OF RS.81 60 000 /- BY TREATING 80% OF THE TOTAL INVESTMENT REPORTED BY TH E ASSESSEE OVER THE YEARS AS HAVING BEEN MADE DURING THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . THE LD. CIT (A) DELETED THIS ADDITION. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT THE AS SESSEE PROVIDED DURING THE COURSE OF THE FIRST APPELLATE PROCEEDINGS A COPY OF DVOS REPORT DULY ATTESTED BY THE AO INDI CATING 9 YEAR-WISE INVESTMENT DECLARED BY THE ASSESSEE VIS- -VIS AS ESTIMATED BY THE DVO AS UNDER: COST OF CONSTRUCTION SL NO. DATE OF VALUATION/ FINANCIAL YEAR DECLARED BY ASSESSEE (RS.) ESTIMATED BY THIS OFFICE (RS.) 1. 2005-06 7 50 000/- 7 72 061/- 2. 2006-07 14 50 000/- 14 92 651/- 3. 2007-08 70 00 000/- 72 05 900/- 4. 2008-09 30 00 000/- 30 88 242/- TOTAL 1 22 00 000/- 1 25 58 854/- 8. FROM THIS TABLE EXTRACTED FROM THE IMPUGNED ORD ER IT IS PATENT THAT THE DIFFERENCE IN THE COST OF CONSTRUCT ION BETWEEN THE ASSESSEE AND DVO FOR THE CURRENT YEAR STANDS ON LY AT RS.2.05 LAC. SUCH DIFFERENCE CONSTITUTES AND MINUSC ULE 3%. AS AGAINST THE ASSESSEES DECLARED INVESTMENT AT RS.1. 22 CRORE OVER THE PERIOD THE DVO HAS ESTIMATED COST OF CON STRUCTION AT RS.1.25 CRORE. IT IS CRYSTAL CLEAR THAT THE YEAR-WI SE FIGURES AS DECLARED BY THE ASSESSEE AND AS ESTIMATED BY THE DV O ARE 10 ALMOST IN THE SAME VICINITY. THE DIFFERENCE BETWEEN TWO VALUES IS MINIMAL. AFTER ALL ESTIMATE IS AN ESTIMATE AND CANNOT TAKE THE PLACE OF ACTUAL. SUCH A MEAGER DIFFERENCE DOES NOT REQUIRE ANY ADDITION. THE EXERCISE EMBARKED UPON BY THE AO IN TREATING 80% OF THE TOTAL INVESTMENT OVER THE YEARS AS HAVING BEEN MADE IN THE YEAR UNDER CONSIDERATION IS WHIMSI CAL AND CAPRICIOUS DEVOID OF ANY LEGALLY SUSTAINABLE REASON S. WE THEREFORE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 9. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/10/2013. SD/- SD/- ( DIVA SINGH ) (R. S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11/10/2013 *AK VERMA* 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 07-10-2013 PS 2. DRAFT PLACED BEFORE AUTHOR 08-10-2013 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER N/A JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. N/A JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08/10/2013 PS/PS 6. KEPT FOR PRONOUNCEMENT ON 11/10/2013 PS 7. FILE SENT TO THE BENCH CLERK 11/10/2013 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *