Jain Road Carrier, Cuttack v. DCIT, Sambalpur

ITA 340/CTK/2011 | 2008-2009
Pronouncement Date: 09-11-2011

Appeal Details

RSA Number 34022114 RSA 2011
Assessee PAN AAFFJ1541E
Bench Cuttack
Appeal Number ITA 340/CTK/2011
Duration Of Justice 4 month(s) 16 day(s)
Appellant Jain Road Carrier, Cuttack
Respondent DCIT, Sambalpur
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 09-11-2011
Date Of Final Hearing 18-10-2011
Next Hearing Date 18-10-2011
Assessment Year 2008-2009
Appeal Filed On 23-06-2011
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 340/CTK/2011 (ASSESSMENT YEAR 2008 - 09) JAINROAD CARRIER NEAR TOLL GATE NH - 06 P.O.DIST. BARGARH PAN: AAFFJ 1541 E VERSUS D CIT CIRCLE 2(1) SAMBALPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.S.A GRA WALLA/S.N.PADHEE ARS FOR THE RESPONDENT SMT. PARAMITA TRIPATHY DR DATE OF HEARING : 18.10.2011 DATE OF PRONOUNCEMENT : 09.11.2011 ORDER SHRI K .K.GUPTA ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CITA) DT. HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DT.31.3.2011 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2008 - 09 RAISING THE FOLLOWING GROUNDS. 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) SAMBALPUR IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF 51 00 000 MADE BY THE ASSESSIN G OFFICER AS UNDISCLOSED INCOME. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE EARNED ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) OUGHT TO HAVE DULY CONSIDERED THE EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THEM EXPLAINING THE SOURCE OF CASH F OUND DURING THE SEARCH. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LOWER FORUMS ARE NOT JUSTIFIED IN NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE WHICH IS EVIDENCED BY FACTS ON RECORD HOLDING THE SAME AS AFTERTHOUGHT. 4. FOR T HAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPEAL BE ALLOWED ON THE ABOVE GROUNDS OR ANY SUCH OTHER GROUND OR GROUNDS TO BE URGED AT THE TIME OF HEARING OF THE APPEAL . 2. THE UNDISPUTED FACTS RELEVANT TO THE ISSUE ARE THAT THERE WAS A SE ARCH & SEIZURE OPERATION U/S.132 OF THE INCOME - TAX ACT 1961 CONDUCTED IN THE 2 RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THE ASSESSEE AT BARGARH AS WELL AS DHENKANAL ON 30. 8.2007 WHEN THE INVESTIGATION WING FOUND CASH AND SEIZED AS TABULATED BELOW. THE TOTAL SUM OF 51 00 000 SEIZED BY THE INVESTIGATION WING (I.E. 50 00 000 FROM BARGARH AND 1 00 000 FROM DHENKANAL OFFICE) CONSISTS OF (I ) 45 28 000 CONSISTING OF 45 BUNDLES (CONTAINING 1000 DENOMINATION) WITH CIRCULAR STRIPS OF DHENKANAL STATE BA NK OF INDIA FOUND AND SEIZED FROM BEDROOM OF PRAMOD KUIMAR JAM BARGARH. (II) 84 800 OUT OF 2 50 000 FOUND IN THE BED ROOM OF SMT. KANTA DEVI JAM BARGARH. (III) 3 87 200 FOUND IN THE BED ROOM OF ARVMND KUMAR JAM BARGARH. (IV) 1 00 000 SE IZED OUT OF 1 04 950 FOUND IN DHENKANAL OFFICE. AT THE TIME OF ASSESSMENT THE ASSESSEE EXPLAINED THE AVAILABILITY OF CASH IN ITEM (I) THAT THE SAID AMOUNT WAS KEPT OUT OF WITHDRAWALS FROM STATE BANK OF INDIA DHENKANAL PACKED IN BUNDLES WITH CIRCULAR ST RIPS OF DHENKANAL SBI. THAT THE NOTE BUNDLES WERE WITH CIRCULAR STRIP OF SBI DHENKANAL HAS BEEN CONFIRMED BY SMT. SITA DEVI AGRAWAL ONE OF THE WITNESSES AT THE TIME OF PREPARATION OF PANCHANAMA IN COURSE OF SEARCH BY WAY OF AN AFFIDAVIT . A S REGARDS ITEM (II) AND (III) THE AMOUNTS BELONGED TO THE PERSONS RESPECTIVELY FROM WHOSE BED ROOMS THE SAME WERE FOUND. AS REGARDS ITEM (IV) THE SAID 3 AMOUNT WAS KEPT IN THE OFFICE AT DHENKANAL OUT OF THE CASH WITHDRAWN FROM SBI DHENKANAL ON DT.24.8.2007. T HE ASSESSIN G OFFICER DID NOT ACCEPT THE ABOVE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT (I) THE ASSESSEE HAD MADE DISCLOSURE OF 51 LAKHS INCOME U/S.132(4) OF THE INCOME - TAX ACT 1961 (II) THAT THE ASSESSEE HAS COME OUT WITH A NEW STORY AT THE ASSESSMENT STAGE WHICH THE ASSESSING OFFICER STATED AS AN AFTERTHOUGHT (III) THAT THE ASSESSEE HAS STATED THAT THE CASH FOUND WAS OUT OF WITHDRAWALS FROM DHENKANAL SBI FOR THE FIRST TIME AT THE ASSESSMENT STAGE AND (IV) THAT THE ASSESSEE HAS MADE DISCLOSURE AFTER TWO MON THS FROM THE DATE OF SEARCH AND HENCE IT IS NOT BELIEVABLE THAT THE ASSESSEE WAS NOT AWARE OF THESE WITHDRAWALS TILL THAT TIME. ACCORDINGLY HE MADE THE ADDITION OF 51 00 000 AS UNDISCLOSED INCOME. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY REITERATING THE SAME EXPLANATION AS WERE GIVEN BEFORE THE ASSESSING OFFICER. THE LEARNED CIT(A) CO NFIRMED THE SAID ADDITION OF 51 00 000 AS MA DE BY THE ASSESSING OFFICER OBSERVING IN PARAGRAPH 15 OF HIS ORDER AS UNDER 15. A COMBINED READING OF (I) THE PETITION DATED 19.10.2007 BY SHRI PRAMOD KUMAR JAIN PARTNER BEFORE THE ASST.DIT (LNV.) BHUBANESWAR FOLL OWED BY ANOTHER LETTER BY SHRI JAIN TO THE SAME AUTHORITY REGARDING PAYMENT OF TAX ON INCOME/ASSETS DISCLOSED ; (II) THE TIME SPAN OF FIFTY DAYS BETWEEN THE DATE OF SEARCH AND THE DATE OF DISCLOSURE VIS - A - VIS THE TIME SPAN OF TWO YEARS AND TWENTY DAYS BETWEEN THE DATE OF DISCLOSURE AND THE DAT E OF RETRACTION AND (III) CORROBORATING DOCUMENTS SUPPORT THE STAND TAKEN BY THE AO IN TAXING 51 00 000 AS UNDISCLOSED INCOME OF THE ASSESSEE. THUS THE ADDITION OF 51 00 000 MADE BY THE AO AS UNDISCLOSED INCOME OF THE ASSESSEE IS CONFIRMED. 4. AG GRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED AR OF THE ASSESSEE VEHEMENTLY CONTENDED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF 51 00 000 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) IS NOT PROPER AND 4 WITHOUT PROPER APPRECIATION OF THE FACTS OF THE CASE AS WELL AS THE EVIDENCE PRODUCED BEFORE THE DEPARTMENTAL AUTHORITIES. IN RESPECT OF ADDITION OF 45 28 000 FROM BARGARH AND 1 00 000 FROM DHENKANAL THE LEARNED AR OF THE ASSESSEE SUBM ITTED THAT THE SAID AMOUNTS WERE OUT OF CASH OF 50 00 000 WITHDRAWN FROM DHENKANAL SBI ON 24.8.2007 PRIOR TO THE DATE OF SEARCH. THE FACTS OF WITHDRAWAL OF 50 00 000 FROM SBI DHENKANAL IS EV IDENCED BY BANK STATEMENTS (COPIES FURNISHED) AND THE SAME WA S DULY REFLECTED IN THE CASHBOOK (COPY FURNISHED) AND DISCLOSED IN THE ASSET SIDE OF THE BALANCE SHEET AS ON 31.3.2008 (COPY FURNISHED). HE FURTHER CONTENDED THAT BUNDLES OF CURRENCY NOTES FOUND DURING THE COURSE OF SEARCH WERE WITH CIRCULAR STRIPS OF DHEN KANAL SBI AND THE SAME WAS EVIDENCED BY AN AFFIDAVIT (COPY FURNISHED) DULY SWORN BY SMT. SITA DEVI AG RAWAL ONE OF THE WITNESSES AT THE TIME OF PREPARATION OF PANCHANAMA IN COURSE OF THE SEARCH. IN RESPECT OF THE ADDITION OF 4 72 000 THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT BELONGS TO PERSONS NAMELY KANTA DEVI JAIN 84 800 AND SHRI ARVIND JAIN 3 7 200 FROM WHOSE BED ROOMS THE SAID CASH WAS FOUND AND SEIZED. THEY WERE NO WAY RELATED TO THE BUSINESS O F THE ASSESSEE - FIRM. HE FURTHER STATED THAT THEY ARE ALSO SEPARATELY ASSESSED. IN VIEW OF THE ABOVE THE LEARNED AR OF THE ASSESSEE CONTENDED THAT SINCE THE CASH OF 51 00 000 WAS EXPLAINED PROPERLY WITH SUPPORTING EVIDENCE THE ASSESSING OFFICER IS NOT J USTIFIED IN MAKING THE ADDITION OF 51 00 000 AS UNDISCLOSED INCOME. ACCORDINGLY HE SOUGHT FOR DELETION OF THE SAID ADDITION. 6. HE FURTHER CONTENDED THAT ONCE THE IDENTITY OF THE CASH WITHDRAWALS HAD BEEN ACCEPTED FROM THE BANKS WERE FROM THE SOURCE WHI CH HAD BEEN RENDERED FOR TAXATION IN THE NORMAL COURSE OF BUSINESS TRANSACTIONS WERE BELONGING TO THE BUSINESS OF THE ASSESSEE WHEN SUCH HUGE CASH WITHDRAWALS WERE FOR THE PURPOSE OF ASSESSEES BUSINESS. THE AFFIDAVIT THEREFORE ONLY 5 CLARIFY THE ISSUE THAT THE IDENTITY OF THE CASH COULD NOT BE SUBJECTED TO TAXATION AS MONEY BELONGING FOUND AT THE TIME OF SEARCH WHICH THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN AS BELONGING TO THE BUSINESS OF THE ASSESSEE. IT WAS NOBODIES CASE THAT THE NORMAL CASH WITHDRAWALS F ROM THE BANK HAVE TO BE EXPLAINED FOR THE PURPOSE OF TAXATION AS UNDISCLOSED INCOME WHEN THE ASSESSING OFFICER SOUGHT TO TAX THE SAME AS INCOME WHEN THE ASSESSEE IN ORDER TO BUY PEACE PROPOSED TO RENDER CORRESPONDING INCOME IN ORDER TO THE I.T. DEPARTMENT RETAINED THE CASH WHEN REPEATEDLY CLAIMED FOR REFUND AS NOT INCOME FROM UNDISCLOSED SOURCES. THESE FACTS CLEARLY INDICATE THAT THE ASSESSING AUTHORITIES BELOW HAVE ONLY CONTINUED TO FOLLOW THE PATH FOR TAXATION OF THE SAID AMOUNT WHEN THEY WERE ACCEPTING T HE INCOME FOR THE ASSESSMENT YEAR 2007 - 08 BEING THE CA P ITAL INTRODUCED IN THE SHAPE OF SUNDRY CREDITORS OF 1 CRORE WHEN THE DECLARATION BECAME ACCEPTABLE TO THEM INDICATED THAT THE SUNDRY CREDITORS AGAINST THE P URPORTED CASH SEIZED WERE MORE THAN 7 CR ORES. IN OTHER WORDS THE TAXING AUTHORITIES BECAME GREEDY TO THE EXTENT THAT THE CASH SEIZED IS BEING TAXED TWICE JUST FOR THE P URPOSE OF RETAINING THE SAME ONCE AS INCOME FROM UNDISCLOSED SOURCES AND THE SECOND TIME WHEN THE CAPITAL INTRODUCED IN SHAPE O F SUNDRY CREDITORS AMOUNTING TO 1 CRORE HAS BEEN ADJUSTED AGAINST THE SAME FOR THE ASSESSMENT YEAR 2007 - 08. EVEN THE VDIS 1997 PROPOSED THAT THE TAX AMOUNT PAID FOR THE INCOME AND WORTH DISCLOSED CAN BE CONSIDERED AS HAVING BEEN DECLARED AS P ER THE NORMS OF THE ENACTMENT WHEN THE TAX PAID COULD NOT BE SUBJECTED TO SEPARATE TAXATION. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT IT WAS A MERELY STATEMENT UNDER THE PROVISIONS OF SECTION1 32(4) WHICH HAS BEEN TAKEN COGNIZANCE OF BY THE TAXING AUTHORITIES BELOW. IT IS NOT THE CASE OF T HE ASSESSEE THAT HE WAS TO BE TAXED UNDER THE PROVISIONS OFSECTIN68 AS UNEXPLAINED CASH CREDITS WHEN THE FINDINGS OF THE AUTHORITIES BELOW ARE TO TAX 6 THE AMOUNT UNDER THE PROVISIONS OF SECTION 69. HE VEHEMENTLY ARGUED THAT HAVING ACCEPTED THE FACTS FOR TAX ATION U/S.69 AND HAVING IDENTIFIED THE CASH AVAILABILITIES THE AUTHORITIES HAD NO REASON TO DISBELIEVE THE STATEMENT AS RETRACTION OR AN AFTERTHOUGHT AFTER A GAP OF TWO YEARS. ALL THESE FACTS CULMINATES TO THE FINDING THAT THE SUM OF 51 LAKHS TAXED IN T HE ASSESSMENT YEAR 2008 - 09 IS ILLEGAL UNJUSTIFIED IMPROPER AND BEYOND ANY COMPREHENSION AND UPPERMOST CANNOT BE IDENTIFIED AS INCOME FROM UNDISCLOSED SOURCES IN ANY CIRCUMSTANCES. THE SAME MAY BE DIRECTED TO BE DELETED. 7. THE LEARNED DR SUBMITTED THAT THE AUTHORITIES BELOW HAVE CONSIDERED THE STATEMENT U/S.132(4) AS THE GUIDING FACTOR FOR BRINGING TO TAX THE SAID AMOUNT AS THE ASSESSING OFFICER IN HIS ORDER U/S.143(3) NOTED THAT THE ASSESSEE HAS COME OUT WITH A NEW STORY THAT THE AMOUNT SEIZED BELONGED TO THE FIRM AND DIFFERENT FAMILY MEMBERS. SHE FULLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON FACTS INSOFAR AS THE LEARNED CIT(A) AFTER HAVING TAKEN COGNIZANCE TO THE SCHEME OF SEARCH CARRIED OUT AND VERIFYING THE CORROBORATIVE DOCUMENTS CONCLUDED T O SAY THAT THE DATE OF SEARCH AND DATE OF DISCLOSURE WAS TWO YEARS AND 20 DAYS WAS AN EYE WASH. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE AR E INCLINED TO AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. WE PERUSED THE BANK STATEMENTS AND HAVE NOTED THAT THE ASSESSEES BUSINESS TRANSACTIONS INVOLVED WITHDRAWAL OF CASH BEING ENGAGED IN THE BUSINESS OF TRANSPORTATION AND HAVIN G ITS MAIN OFFICE AT BARGARH IT WAS THE DUTY OF THE MANAGEMENT TO MAKE AVAILABLE CASH WHEN THE RECEIPTS ARE ELSEWHERE AND ARE TRANSFERRED BY THE BANK ITSELF ON THEIR ON THE INSTRUCTION OF THE MANAGEMENT . IT SO HAPPENED THAT THE SEARCH TOOK PLACE ON A DATE WHEN THE CASH WITHDRAWALS FROM THE BANK ON THE DATE ITSELF AND A 7 WEEK PRIOR TO THAT WERE SUFFICIENT TO HOLD 51 LAKHS WHICH ALSO INCLUDED PARTLY BELONGING TO THAT OF THE PARTNERS . THE ASSESSEE HAD DECLARED SUFFICIENT PROFIT TO HOLD CASH WITH THE P ARTNERS AS ON THE SEARCH DATE THEREFORE WAS ACCEPTABLE TO THE ASSESSING AUTHORITIES. THE ASSESSEE IN HIS WISDOM TRIED TO EXPLAIN THE CASH BY BANK MARKING BUNDLES WHICH HAS NOT BEEN DISPUTED BY EITHER OF THE AUTHORITIES BELOW. COUPLED WITH THE FACT THAT THE IDENTITY OF THE CASH OF HAVING BEEN WITHDRAWN FROM BANK WAS NOT REFUNDED TO THE ASSESSEE ON ITS APPLICATION WAS ADJUSTED AGAINST TAX DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 WHEN THE SUM OFRS.1 CRORE WAS SURRENDERED AS CAPITAL INTRODUCED I N THE SHAPE OF SUNDRY CREDITORS. THIS INDICATES THAT THE CREDITORS WHICH THE ASSESSEE HELD AS ON 31.3.2008 AMOUNTING TO 1 CRORES WERE TO BE TAXED AGAINST 5 1 LAKHS CASH HELD BY THE ASSESSEE BUT RETAINED BY THE DEPARTMENT . IN OUR CONSIDERED VIEW THEREF ORE WE ARE INCLINED TO HOLD THAT BOTH THE ASSESSING AUTHORITIES THEREFORE DID NOT BELIEVE THE FACTS AND BRUSHED ASIDE THE STATEMENT OF THE ASSESSEE AS AFTERTHOUGHT WHICH IN OUR CONSIDERED VIEW IS UNFAIR AND UNJUST. UNEXPLAINED CASH CREDITS HAVE TO BE EXPL AINED AGAINST ASSETS HELD BY THE ASSESSEE. 1 CRORE INCOME DEFINITELY HAS BEEN EXPLAINED AGAINST 51 LAKHS THEREFORE CANNOT BE TAXED IN THE IMPUGNED ASSESSMENT YEAR. AFTER ALL THE CASH CREDITS ARE HELD AS CASH AND NOT THE BUSINESS TRANSACTIONS CASH WHICH HAS AGAIN BEEN SOUGHT TO BE TAXED BY THE ASSESSING AUTHORITIES BELOW. WE FIND THE LEARNED COUNSELS SUBMISSION FULLY JUSTIFIED TO THE EXTENT THAT HAVING SURRENDERED THE INCOME OF THE EARLIER YEAR IN THE FORM OF CASH CREDITS THERE WAS NO ROOM FOR THE ASSESSING AUTHORITIES TO HOLD IN WHAT FORM TH E SAME CAN BE TAXED IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE CLAIMS THAT THE CASH WAS AVAILABLE FROM THE BUSINESS OF THE ASSESSEE HAS NOT BEEN DEMOLISHED BY THE TAXING AUTHORITIES. NO CORROBORATIVE EVIDENCE AGAINST THE ASSESSEE HAS BEEN BROUGHT N RECO RD 8 INSOFAR AS IT WAS NOT THE CASE OF THE ASSESSEE AS AN AFTERTHOUGHT THAT THE CASH CREDITS COULD BE TAXED ONLY WHEN FOUND UNEXPLAINABLE. THE CIRCUMSTANCES WHICH LED TO THE FINDING OF TAXING THIS AMOUNT THEREFORE CLEARLY INDICATE THE INNOCENCE OF THE PARTNE RS OF THE ASSESSEE WHEN THEY COULD NOT GET THE REFUND OF THE AMOUNT SEIZED BY THE DEPARTMENT IN ORDER TO ADJUST THE TAX OF THE INCOMES SO DECLARED. THIS CULMINATES TO THE FINDING THAT THE CASH SEIZED COULD NOT BE TAXED IN THE IMPUGNED ASSESSMENT YEAR AS UNDISCLOSED CASH BULLION MONEY UNDER THE PROVISIONS OF SECTION 132(4). THEREFORE THE ADDITION OF 51 00 000 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) AS UNDISCLOSED INCOME CANNOT BE SUSTAINED AND HENCE THE SAID ADDITION OF 51 00 000 IS HEREBY DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT M EMBER DATE: 9 TH NOVEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: 2. THE RESPONDENT: 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.