Income Tax Appellate Tribunal - Agra
Babita Jain, Gwalior vs Department Of Income Tax on 5 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL,
AGRA BENCH, AGRA
BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA No. 151/Agra/2011
Asstt. Year : 2008-09
A.C.I.T., Circle 1, vs. Smt. Babita Jain,
Gwalior. Jaina Jewellers, Sarafa Bazar,
Lashkar, Gwalior.
(PAN : AESPJ 2883 A)
C.O. No. 40/Agra/2011
(ITA No. 151/Agra/2011)
Asstt. Year : 2008-09
Smt. Babita Jain, vs. A.C.I.T., Circle 1,
Jaina Jewellers, Sarafa Bazar, Gwalior.
Lashkar, Gwalior.
(Appellant) (Respondent)
Revenue by : Shri Waseem Arshad, Sr. D.R.
Assessee by : Shri V. Bapana, C.A.
Date of hearing : 05.03.2013
Date of pronouncement of order : 08.03.2013
ORDER
Per Bhavnesh Saini, J.M.:
The departmental appeal and the cross objection by the assessee are directed against the order of ld. CIT(A), Gwalior dated 11.02.2011 for the assessment year 2008-09.
2 ITA No. 151 & C.O. No. 40/Agra/2011
2. The brief facts of the case are that survey u/s. 133A, which has been converted into search and seizure operation u/s. 132A, has been carried out at the business and residential premises of the assessee and family members on 20.02.2008. The assessee filed return of income in response to notice declaring income of Rs.3,01,919/- from salary, house property, business & profession and interest. During the course of search operation, assessee's husband Shri Mukesh Kumar Jain has made a disclosure of Rs.1.10 crores on account of variation in stock along with Rs.4,45,175/- and Rs.1,00,000/- for unrecorded business expenses and household expenses respectively along with his brother Shri Sunil Jain, who has also made disclosure of Rs.58,79,843/- as income from undisclosed sources and the same has been reflected from the return filed for the assessment year 2009. The AO framed assessment order dated 24.12.2009 making certain additions against the assessee which were challenged before the ld. CIT(A) and substantial additions have been deleted by the ld. CIT(A). Both the parties are therefore in appeal and the cross objections above, which we deal them separately ground-wise as under :
ITA No. 151/Agra/2011 (Departmental appeal):
3. On ground No. 1, the revenue challenged the deletion of addition of Rs.31,35,000/- on account of unexplained income. As per return, the assessee has declared immovable property at Sarafa Bazar, acquired during the year for 3 ITA No. 151 & C.O. No. 40/Agra/2011 Rs.11,01,000/-. After payment of stamp duty, the same has been shown at Rs.15,70,000/-. The Registrar has, however, valued the property at Rs.47,02,000/-.
Accordingly, the difference of Rs.31,35,000/- has been added to the income of the assessee as undisclosed income in purchase of property. It was submitted before the ld. CIT(A) that the assessee has purchased the property and difference on account of sale value declared by the assessee and stamp valuation adopted by Registration Authority has been added which is not justified. The property belongs to Smt. Sarita Jain, who is a family member and Rs.11,01,000/- was not paid but credited to her account by assessee and the purchase of the property is fully supported by the sale deed. Therefore, the addition is unjustified. The ld. CIT(A) found that the addition is made by the AO merely on presumption that in Real Estate, own money is always paid by the purchasers. The difference in value of property as per sale deed and its market value on the basis of stamp duty was added which is not shown in the books of account. The AO has not brought any evidence on record to prove that the assessee paid the difference of amount. No material was found during the course of search to prove the findings of the AO. Therefore, the addition made on account of alleged own money paid is without any evidence. The ld. CIT(A) relied upon the decision of Delhi High Court in the case of Rajat Sugar Co. Ltd. 130 ITR 421 on the proposition that section 50C would not apply in the hands of the purchase. Therefore, the addition is wholly unjustified. 4 ITA No. 151 & C.O. No. 40/Agra/2011 The ld. CIT(A) also relied upon the order of ITAT Ahmedabad Bench in the case of ITO vs. Venu Proteins Industries (4 ITR (Trib) 602 and decision of Mumbai Bench in the case of Indralok Hotels Pvt. Ltd. 318 ITR 234 (AT), in which it was held that the provisions of section 50C are not applicable in the case of the purchaser. Therefore, the addition cannot be made out of valuation for stamp duty purpose. The addition was accordingly deleted.
4. The ld. DR relied upon the order of the AO. On the other hand, the ld. counsel for the assessee reiterated the submissions made before the authorities below.
5. On Consideration of the rival submissions, we are of the view that the ld. CIT(A) on proper appreciation of facts and law rightly deleted the addition. The ld. CIT(A) rightly relied upon the decisions of ITAT, Ahmedabad Bench and Mumbai Bench in the case of Venu Proteins Industries (supra) and Indralok Hotels Pvt. Ltd. (supra) for the purpose of deleting the addition, in which it was held that the provisions of section 50C would not apply in the case of purchaser of the property. No evidence was found during the course of search or otherwise to prove that the assessee made payment on account of "own money" allegedly paid by the assessee to the seller, rather whatever cheques were given to the seller were not en-cashed 5 ITA No. 151 & C.O. No. 40/Agra/2011 which we would be dealing while considering the cross-objection of the assessee. Therefore, the additions were made by the AO on the presumption without bringing any evidence against the assessee. Therefore, merely because stamp valuation authority has adopted higher value, is no ground to make addition against the assessee. This ground of appeal of the Revenue is accordingly dismissed.
6. On ground No. 2, the revenue challenged the deletion of addition of Rs.27,000/- on account of bogus liabilities. The assessee has shown small investment of Rs.3,50,000/- as against Rs.2,00,000/- shown in the previous year. Thus, an amount of Rs.1,50,000/- is invested during the year, but no confirmation of investment is furnished nor the details were verifiable. The interest earned on these deposits of Rs.1,50,000/- amounted to Rs.27,000/- not shown in the accounts of the assessee was treated as unexplained income of assessee and addition was accordingly made by the AO. It was submitted before the ld. CIT(A) that the assessee did not charge any interest on petty deposits. No interest has arisen or earned, hence, it was not declared. Nothing was found against the assessee to prove search, therefore, the addition is highly unjustified. The ld. CIT(A) accepted the contention of the assessee because merely the assessee invested Rs.1,50,000/- would not lead to the conclusion that the assessee has interest on these deposits. Therefore, the addition was made by the AO merely on notional basis without 6 ITA No. 151 & C.O. No. 40/Agra/2011 supported by any seized material. Thus, there was no basis, whatsoever, to make the addition and accordingly, addition made on account of earning of notional interest was deleted.
7. On consideration of the rival submissions, we are of the view that the addition has been rightly deleted by the ld. CIT(A).The ld. counsel for the assessee referred to the order of ITAT, Agra Bench in the group cases of ACIT vs. Mukesh Kumar Jain and Smt. Babita Jain in ITA No. 262 etc. of 2010 dated 23.03.2012 in which in para 11, similar issue has been decided in favour of the assessee. Para 11 reads as under :
"11. Another addition of Rs.4,21,650/- in case of Shri Mukesh Kumar Jain and Rs.1,01,700/- in case of Smt. Babita Jain which were made by the Assessing Officer on account of interest earned on Hundies mentioned in LPS page 26 & 28 loose paper found at the time of search, the Assessing Officer calculated the amount of interest applying 18% rate of interest on Rs.23,42,500/- on presumption that the assessee has invested the amount mentioned in loose paper LPS page 26 and calculated the interest for all the six years of which calculation comes to Rs.4,21,650/-. The CIT(A) deleted the said additions on the ground that the Assessing Officer did not make any enquiry from any of the persons mentioned in the documents to show that the assessee has earned interest from amounts alleged to have been lent. The CIT(A) relied upon the judgment of Delhi High Court in the case of CIT vs. Jupiter Builders Pvt. Ltd, 287 ITR 287 wherein it has been held that the assessment proceedings under Chapter XIV-B are taken only in respect of undisclosed income which is unearthed as a result of search. The CIT(A) has followed this order for Assessment Year 2002-03 and subsequent Assessment Years 2003-04 to 2007-08. After considering the facts of the case, we do not find any infirmity in the order of CIT(A) as the Assessing Officer made the addition on 7 ITA No. 151 & C.O. No. 40/Agra/2011 presumption basis. Apart from the fact that as per detailed discussion made in paragraph nos.8 to 10 above, we hold that the loose paper found i.e. LPS-26 is not pertaining to the Assessment Year 2002-03. There is no material on record based on which it can be said that the assessee was earning interest on that amount in subsequent year from Assessment Years 2002-03 to 2007-08. Therefore, notional income cannot be taxed in the form of interest. In the light of the above discussion, we confirm the order of CIT(A) on the issue."
He has, therefore, submitted that the issue is covered in favour of the assessee.
8. On consideration of the submissions of the parties in the light of the earlier order of the Tribunal in the case of the same assessee and her husband, we are of the view, the addition has been rightly deleted by the ld. CIT(A). The AO has not brought any evidence on record to prove that any interest accrued or arose or received by the assessee. Therefore, notional income cannot be added for the purpose of taxation. This ground of appeal of the Revenue is accordingly dismissed.
9. On ground No.3, The revenue challenged the deletion of addition of Rs.12,61,440/- on account of unexplained investment in gold. The AO noted that during the course of search, the statement of assessee were recorded and the assessee has stated that she has given 800 grams of gold jewellery to her husband Shri Mukesh Jain. She was directed to explain the version with documentary 8 ITA No. 151 & C.O. No. 40/Agra/2011 evidence. The assessee explained that she held 1678 grams of gold out of which 1168 grams of gold is deposited with Jaina Jewellers and about 150 gms. in PNB Locker at Morar and remaining 350 gms. was in regular use. The AO, however, noted that no documentary evidence with regard to 1168 grams of gold was furnished and even the assessee did not furnish Wealth-tax return for the assessment year 2007-08, for which wealth tax notices were issued. Therefore, addition of Rs.12,61,440/- was accordingly made. It was submitted before the ld. CIT(A) that the jewellery has been declared in Wealth Tax return filed upto the assessment year 2006-07. However, for the year under consideration, no return was filed, as there being no taxable wealth. The assessee proved the possession of jewellery given to Jaina Jewellers, therefore, the addition should not have been made. The ld. CIT(A) considering the submissions of the assessee and the material on record found that the assessee has filed her regular wealth-tax returns from the assessment year 2001-02 to 2006-07 and jewellery have been declared in 1678.23 grams. The assessee has therefore, explained possession and ownership of the jewellery and merely because no return for the assessment year 2007-08 has been filed is no ground to make the addition against the assessee. The ld. CIT(A), accordingly, deleted the addition.
9 ITA No. 151 & C.O. No. 40/Agra/2011
10. On consideration of the rival submissions, we are not inclined to interfere with the order of the ld. CIT(A) in deleting the addition. The ld. CIT(A) on verification of the wealth tax return filed by the assessee for several preceding assessment years 2001-02 to 2006-07, rightly held that the assessee suitably explained the possession of gold jewellery under consideration. Copies of Wealth- tax returns for these years are filed in the paper book at page 7 to 19 which support the contention of the assessee. Thus, the ld. CIT(A) on proper appreciation of the facts and material on record rightly deleted the addition. This ground of appeal of the Revenue is accordingly dismissed.
11. On ground No. 4, the Revenue challenged the deletion of addition of Rs.48,730/- on account of unexplained cash. During the course of search, cash amounting to Rs.48,730/- was found, source of which was not explained. Therefore, the addition was made. It was submitted before the ld. CIT(A) that availability of cash is reflected in the records and as per cash book, cash as on 16.02.2008 is shown at Rs.48,752/-. Therefore, the addition is unjustified. The ld. CIT(A) accepted the explanation of the assessee and deleted the addition.
12. On consideration of the rival submissions, we are not inclined to interfere with the order of the ld. CIT(A). The source of cash found at the time of search is 10 ITA No. 151 & C.O. No. 40/Agra/2011 explained through cash book. No adverse material is produced before us to contradict the findings of the authorities below. This ground is, accordingly, dismissed.
13. On ground No. 5, the Revenue challenged the deletion of addition of Rs.1,93,000/- on account of unexplained household goods. The ld. CIT(A) has noted several household items, source of which was not explained, for which the addition was made by the AO in a sum of Rs.1,93,000/-. The ld. CIT(A) found that aggregate of the addition should be Rs.1,83,500/- only and out of this amount, the ld. CIT(A) found that computer flat screen valued at Rs.30,000/- has been shown by the assessee in his return, which has been accepted by the AO. Addition to the extent of Rs.39,500/- was deleted. The ld. DR accepted that the ground of appeal of the revenue, therefore, should have been confined to Rs.39,500/- only instead of Rs.1,93,000/-.
14. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the Revenue. Whatever items have been shown by the assessee in her returns and accepted by the AO cannot be treated as unexplained household goods. The ld. CIT(A), therefore, to that extent, rightly deleted the addition. This 11 ITA No. 151 & C.O. No. 40/Agra/2011 ground is therefore, dismissed. In the result, the departmental appeal fails and is dismissed.
C.O. No. 40/Agra/2011 (By Assessee):
15. The assessee has raised only one ground in the cross-objection, challenging the addition of Rs.11,01,000/- as bogus liability. While making said addition, the AO has mentioned that in respect of property purchased at Sarafa Bazar from Smt. Sarita Jain, the assessee has made payment on 30.10.2007 vide cheques No. 227585 drawn on PNB, Morar for Rs.6,80,000/-. The cheque was cleared on 02.11.2007 in the name of Vikas Jain. On 30.10.2007, cheques No. 227586 drawn on PNB, Morar for Rs.4,21,000/-. This cheque is not reflected in the bank account statement. Therefore, it was presumed that the same was paid in cash to the seller and the said cheque was destroyed. The AO in view of this found that there is no liability as on the date of balance sheet whereas in the balance sheet as on 31.03.2008, the assessee has shown current liability of Rs.11,01,000/-. Therefore, the same was treated as unexplained liability in the name of Sarita Jain and the same was added. It was submitted before the ld. CIT(A) that the property in question at Sarafa Bazar, belong to other family member, Smt. Sarita Jain, to whom no payment has been made but the property was transferred in the name of assessee by making book entries. Therefore, it was not a bogus liability. The ld. 12 ITA No. 151 & C.O. No. 40/Agra/2011 CIT(A) on consideration of the material on record found that the assessee has declared value of the property for Rs.15,17,000/- as on 31.03.2008 which includes the purchase value of property at Rs.11,01,000/- and stamp duty with registration charges etc. and the same was shown as liability in the balance sheet in the name of Sarita Jain. The ld. CIT(A) found that copy of the agreement dated 30.10.2007 is signed by the purchaser and the seller in the presence of the witnesses through which the seller, Smt. Sarita Jain has received amount of Rs.6,80,000/- vide cheques No. 227585 dated 30.10.2007 and Rs.4,21,000/- vide cheques No. 227586 dated 30.10.2007 drawn on PNB, Morar. However, as per bank book of PNB, it was seen that the assessee has shown receipt of Rs.6,80,000/- from Jaina Jewellers to whom the same amount was paid in the name of Vikas Jain. There is no withdrawal of Rs.4,21,000/- on any date which were stated to be paid to Smt. Sarita Jain. Further, there is no withdrawal through cheques given as sale consideration and no amount is reflected in the bank statement as well as cash book. Therefore, it was found that the liability is bogus for alleged purchase of property and accordingly, the addition was confirmed and this ground of appeal of the assessee was dismissed.
16. The ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the property was purchased from Sarita Jain 13 ITA No. 151 & C.O. No. 40/Agra/2011 situated at Sarafa Bazar for a sum of Rs.11,01,000/-. Two cheques were given to the seller in a sum of Rs.6,80,000/- and Rs.4,21,000/-, but these cheques were not cleared. Therefore same was shown as liability in the balance sheet. Further cheque No. 227586 issued in favour of Smt. Sarita Jain has been cleared from the bank as on 06.02.2009. In addition to this, instead of cheques No. 227586 of Rs.6,80,000/-, a cheques No.758267 for Rs.2,60,000/- has been paid on 30.01.2010 to Smt. Sarita Jain. Therefore a sum of Rs.4,20,000/- remained still payable, which is shown in the balance sheet as on 30.03.2010. Copy of bank account in respect of the clearance of the above amount is filed in the paper book along with the balance sheet as on 31.03.2010. The ld. counsel for the assessee submitted that the issue is same as is considered in ground No. 1 in the departmental appeal. Since the cheques issued for sale consideration remained unpaid, which were partly paid later on which clearly prove that the addition is wholly unwarranted and unjustified. The ld. DR relied upon the orders of the authorities below and submitted that no confirmation from the seller has been filed. Since in the sale deed, payment is stated to be made but not proved. Therefore, the addition was correctly made by the authorities below.
17. We have considered the rival submissions and the material available on record and find that this issue is same as has been considered in ground No. 1 in 14 ITA No. 151 & C.O. No. 40/Agra/2011 the departmental appeal. The assessee purchased property at Sarafa Bazar, from Smt. Sarita Jain, who is stated to be the family member for a sum of Rs.11,01,000/-. The sale considerations were paid through two cheques of Rs.6,80,000/- and Rs.4,21,000/-. According to the assessee both these cheques were not cleared. Therefore, the same were shown as current liability in the balance sheet ending on 31.03.2008. Since the AO did not dispute the purchase of property by the assessee and that the cheques issued for sale consideration were not cleared, therefore, same was correctly shown as liability in the balance sheet of the assessee. Since the purchase of property was not doubted by the AO and no payment is cleared through bank account of the assessee or the cash book of assessee, therefore, the same could not be treated as unexplained liability for the purpose of making addition against the assessee. On ground No. 1 of the departmental appeal, the revenue has taken difference of the sale consideration as compared to the value taken by the Stamp Valuation Authority and made addition of Rs.31,35,000/-, would clearly prove that the AO has accepted the purchase of property by the assessee. Therefore, when no amount is paid towards the sale consideration during the assessment year under appeal, the same was correctly shown as liability in the balance sheet and as such could not be considered as unexplained liability or bogus liability in the name of Smt. Sarita Jain. The assessee has produced sufficient evidence before us, i.e., bank account, and 15 ITA No. 151 & C.O. No. 40/Agra/2011 balance sheet ending on 31.03.2010 of the assessee to prove that part of the sale consideration was cleared in subsequent year and part was still payable to Smt. Sarita Jain. Therefore, the transaction in question has been property explained with current liability of Smt. Sarita Jain. We, therefore, do not find any justification to sustain this addition. We accordingly, set aside the orders of the authorities below and delete the addition of Rs.11,01,000/-. This ground of cross objection is accordingly allowed. In the result, the cross objection of the assessee is allowed.
18. In the result, the departmental appeal is dismissed and the cross objection of the assessee is allowed.
Order pronounced in the open court.
Sd/- Sd/-
(A.L. GEHLOT) (BHAVNESH SAINI)
Accountant Member Judicial Member
*aks/-
Copy of the order forwarded to :
1. Appellant
2. Respondent
3. CIT(A), concerned By order
4. CIT, concerned
5. DR, ITAT, Agra
6. Guard file Sr. Private Secretary
True copy