Income Tax Appellate Tribunal - Amritsar
Harish Garg L/R Darshan Garg, Bathinda vs Assessee on 15 September, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. A.D. JAIN, JUDICIAL MEMBER
AND SH. T. S. KAPOOR, ACCOUNTANT MEMBER
ITA No.369(Asr)/2014
Assessment year:2008-09
PAN : AFNPG8779G
Sh. Harish Garg, vs. Asstt. Commr. of Income Tax,
L/H of Sh. Darshan Singh Circle-1,
C/o Hotel Sagar, G.T.Road, Bathinda.
Bathinda.
(Appellant) (Respondent)
S.A. No.03(Asr)/2016
(Arising out of ITA No.369(Asr)/2014)
Assessment year:2008-09
PAN : AFNPG8779G
Sh. Harish Garg, vs. Asstt. Commr. of Income Tax,
L/H of Sh. Darshan Garg Circle-1,
C/o Hotel Sagar, G.T.Road, Bathinda.
Bathinda.
(Appellant) (Respondent)
Appellant by: Sh.P.N.Arora, Adv.
Respondent by: Sh. S.S. Kanwal, DR
Date of hearing: 13/07/2016
Date of pronouncement: 15/09/2016
2 ITA No.369(Asr)/2016
A.Y. 2008-09
ORDER
PER T.S. KAPOOR, AM:
This is an appeal filed by the assessee against the order of the ld. CIT(A), Bathinda, dated 27.03.2014, relating to assessment year 2008-
09. The assessee has raised as many as sixteen grounds of appeal, wherein the various additions confirmed by the ld. CIT(A) have been challenged.
2. The brief facts as noted in the assessment order are that survey was conducted under section 133A at the business premises of M/s. Hotel Sagar, G.T.Road, Bathinda, on 19.09.2007. During the survey certain incriminating documents were impounded and during assessment proceedings the assessee was confronted with the documents. However, the AO was not satisfied with the submissions and therefore, on the basis of recorded statement of the assessee and on the basis of the documents impounded during survey, he made an addition of Rs.1,60,14,571/- on account of various discrepancies. The major addition out of Rs.1,60,14,571/- consisted of Rs.44 lacs, which the AO had made on account of Ikrarnama for purchase of piece of land measuring 743.88 Sq. yds. @ Rs.15,800/- per sq. yds for Rs.44,00,000/- . The AO held that the assessee had purchased this plot alongwith four other persons from Smt. Manjit Kaur. The second major addition 3 ITA No.369(Asr)/2016 A.Y. 2008-09 consisted of Rs.11.90 lacs, which the AO had made on the basis of the documents in various bundles impounded during the survey. In the bundle, there was evidence of payment having been made to the owner of land Sh.Jagdev Singh by M/s. Jai Jawala Trust, in which Sh. Darshan Garg was the Chairman. The AO held that since M/s. Jai Jawala Trust was not registered entity and was not income tax assessee, therefore, he regarded the trust as a source for the investment of Sh. Darshan Kumar Garg and therefore, made an addition of Rs.11.90 lacs. The addition of Rs.75,00,000/- was made on account of marriage expenses of son of the assessee. This addition was also made on the basis of documents impounded during the survey. Further, addition of Rs.15 lacs was made by the AO on account of alleged income earned by the assessee from property dealings on account of brokerage income and business of cloth. All the additions were contested before the ld. CIT(A). However, the ld. CIT(A) has upheld these additions by holding as under:
i) Addition of Rs.44 lacs 2.2 According to the A/R of the appellant the addition of Rs.44,00,000/- has been made despite the fact the agreement is unsigned and it was not executed as the property is still in the name of the seller Smt. Manjit Kaur. He has further stated that the appellant only paid Rs. 700000/- through two cheques of Rs. 350000/- each and she paid back Rs. 600000/- to the appellant. Thus according to the A/R of the appellant no addition is called for on the basis of this document 2.3 A carelul perusal of the subject agreement proves that it is a speaking document and not a dumb document. The year of transaction, ownership of transaction, nature of transaction and the complete figures proves that it is an agreement to sell the 4 ITA No.369(Asr)/2016 A.Y. 2008-09 property i.e. 743.88 sq.yrd of land @ Rs. 15800/- per sq.yrd amongst Smt. Manjit Kaur and four persons out of one is the appellant himself. The details of the payments have been recorded as Rs. 800000/- on 22.08.2007 (cash), Rs. 700000/- on 27.08.2007 (two cheques), Rs. 900000/- (cash) with no date and Rs. 2000000/- to be received on 30.01.2008 totaling to Rs. 4400000/-. Thus the contention of the A/R of the appellant that it is a dumb document stands rebutted.
2.4 It is settled law that once the appellant admits the notings/contents of the subject documents he is under an obligation to rebut the contents of the document so that no addition can be made on the basis of that document. In the present case the appellant has accepted the fact that Rs. 700000/- was paid by him through payee account cheques of Rs. 350000/- each then the onus is upon him to prove that why the other notings of the payments whether cash or through cheques should not be presumed to have been made.
2.5 Regarding the payment of Rs. 700000/- for which bank account has been furnished in the appellate proceedings it has been stated in the written submissions as under:-
"The relevant bank statements could not be produced as those could not be produced from the relevant bank during the time period of the demand by the AO. In any case, the presumptuous sale or this ground is highly unjustified. The AO should have endeavored to examine the bank record as also to examine the seller Manjit Kaur and the other five co- owners mentioned in the agreement. However, the AO chose to hurriedly frame the assessment without caring that the extent of addition is massive. The relevant bank account, which the appellant has now been procured from the bank is being produced for inspection by the Hon'ble appellate commissioner. It is humbly submitted that every thing aforesaid is not much of use in view of the fact that the agreement in question was unsigned and therefore a waste paper and makes all the additions on this point as illegal"
2.6 The A/R of the appellant has failed to observe the provisions of rule 46A of Income lax Rules, 1952 which provides that no evidence which was not furnished before the AO can be furnished in the appellate proceedings unless it is proved that the same could not be furnished during the course of assessment proceedings on account of the reasons as given in clause (a) to clause (d) of rule 46A(1). There is no attempt by the A/R of the 5 ITA No.369(Asr)/2016 A.Y. 2008-09 appellant to make out a case by proving that why the subject bank account could not be furnished in the assessment proceedings rather he has tried to shift the onus of the AO by stating that the bank record, Manjit Kaur and four parties (including the appellant himself) should have examined by the AO. It is settled law that onus is on the assessee to furnish the evidence to prove what he contends and only then the AO is under an obligation to verify the evidence. In the present case neither during the course of assessment proceedings nor during the appellate proceedings the other three parties who executed the agreement alongwith the appellant have come forward to prove the source payments made as advance neither there is rebuttal by Smt. Manjit kaur that she received Rs. 700000/- only and no other payment as recorded in the agreement was received by her. In the absence of such evidence the AO rightly made addition of Rs. 4400000/- in the hands of the appellant which deserves to be confirmed. There was no request by the appellant either during the course of assessment or appellate proceedings to summon the other three parties and the seller Smt. Manjit kaur to confirm the facts and without such request neither the AO nor the Commissioner of Income Tax (Appeals) is under an obligation to examine the concerned persons as law helps those who are vigilant of their legal right and not those who sleep over their rights. For the sake of clarification, the addition of Rs. 4400000/- being confirmed in totality in the hands of the appellant as the appellant has failed to bring any evidence on record to prove that the other three parties made payments of advance of their own share and in the absence of such evidence the only action which can be taken is to make the addition in the hands of the appellant. Regarding the bank account which has been furnished during the course of appellate proceedings to prove the source of payment of Rs. 700000/- even if the same is admitted as additional evidence is does not held the appellant as the noting on the impounded document says that the payment of Rs. 700000/- was made through payee account cheques of Rs. 350000/- each on 21 .QQ.2^Q1 but in the photocopy of bank account the cheque of Rs. 350000/- each has been debited on 28.08.2007 and 05.10.2007 from the account of Darshan Garg and Rs. 350000/- from the account of Sh. Rajiv Garg and there is nothing in the written submissions to give any clarification on this issue. Further there is no evidence of the payment of Rs. 600000/- received back by the appellant. Thus the same does not help the appellant.
2.7 The fact that Smt. Manjit Kaur still owns the plot and the deal was cancelled has no effect on the addition. The addition has been made by the AO because at one point of time the appellant 6 ITA No.369(Asr)/2016 A.Y. 2008-09 made investment of Rs.440000/- and the source of the same has not been explained by the appellant."
ii) Addition of Rs.11.90 lacs "5.2. According to the A/R of the appellant Jai Jwala Trust, Bathinda is a separate legal entity headed by fifteen trustee and the AO has ignored the evidence furnished during the course of assessment proceedings.
5.3. From the facts as discussed in details by the AO in the assessment order it is apparent that all the documents related to purchase of land by M/s Jai Jawala Trust has been executed by the appellant as the Chairman of Jai Jawala Trust Thu trust is neither registered with any authority not it is an income tax assessee. Thus the appellant has not filed any evidence to prove that M/s Jai Jwala Trust is a separate legal entity and the only way to deal with the unexplained investment in the documents impounded during the course of survey was to make the addition in the hands of Sh. Darshan Garg appellant as the trust has been used only for the namesake. The action of the AO is confirmed and the addition of Rs. 11,90,000/- is upheld. The grounds of appeal no. 9 is dismissed."
iii) Addition of Rs.75 lacs "6.3 As Regards the addition of Rs. 7500000/- made by the AO separately on account of marriage expenses of Sh. Harish Garg, according to the A/R of the appellant the financial outgoing on some of the papers relates to marriage and the addition has been made twice. But no presentable reconciliation of the impounded record has been provided to help the appellate authority to properly adjudicate the issue. Regarding the contention of the A/R of the appellant that the expenses have been incurred by Sh. Harish Garg. As stated earlier no confirmation from Sh. Harish Garg has been filed either during the course of assessment or appellate proceedings.
6.4 Grounds of appeal no. 12 is vague and sketchy. It says that only one side of loose paper (outgoes) and not the other side (receipts) have been taken into consideration but this aspect shall be discussed in detail at the time of hearing.
7 ITA No.369(Asr)/2016
A.Y. 2008-09 6.5 But in the written submissions filed during the course of appellate proceedings no detailed explanation with cross reference to the items has been furnished. In these types of cases the benefit can only be given if the appellant gives a complete analysis of date wise, page wise analysis of the financial implications of the seized record to help the appellate authority to arrive at a logical conclusion which is missing. Moreover at one stage the appellant contended that these are only rough projections which gives a contradictory statement.
6.6. In the result, the addition of Rs.4,84,336/- + Rs.75,00,000/- ( on the marriage expenses of the son Sh. Harish Garg) made by the AO is upheld and the grounds of appeal no. 10, 11 and 12 are dismissed."
iv. Addition of Rs. 15 lacs.
"8.3 The appellant in his statement before the AO recorded on 23.11.2010 that he was doing business of brokerage, real estate and wholesale cloths but books of account has not been produced on the pretext that books were damaged. It has been further stated by him in answer to question no. 3 that he was not earning any income from real estate brokerage and it was not included in his income tax return. The income of the appellant can be estimated from the fact that he incurred substantial expenditure on the marriage of his son and has not kept any record of brokerage deals, the addition made by the AO by making estimate of Rs. 1500000/- is upheld and the grounds of appeal no. 14 is dismissed."
3. Aggrieved, the assessee is in appeal before us.
4. The ld. counsel for the assessee at the outset submitted that the AO himself has held that the share of the assessee was only 1/4th and still he has made the addition of the entire amount in the hands of the assessee, which is not at all justified. Further, he submitted that the alleged piece of land is still existing in the name of Smt. Manjit Kaur, the alleged seller. He submitted that neither Smt. Manjit Kaur was examined 8 ITA No.369(Asr)/2016 A.Y. 2008-09 nor other persons were examined and the entire addition has been made in the hands of the assessee and the ld. CIT(A) has also ignored various submissions in this regard. He submitted that the remand report of the AO dated 27.03.2014 stated that the said property existed in the name of Smt. Manjit Kaur. Therefore, it was prayed that this addition was made on the basis of surmises and conjectures and therefore, needs to be deleted.
4.1. In respect of addition of Rs.11.90 lacs, it was stated that M/s. Jai Jawala Trust was a registered trust under Societies Registration Act, 1860 having independent entity and 15 members and therefore, the addition for the purchase of property by this trust in the hands of the assessee is not at all justified. He submitted that the ld. CIT(A) has wrongly held that the trust was not a separate entity. 4.2. As regards the addition of Rs.75 lcs, on account of alleged marriage expenses of the son of Sh. Darshan Garg, the ld. counsel submitted that all entries noted in the impounded documents were not related to marriage expenses and in this respect our attention was invited to PB 75 to 85. He submitted that the ld. CIT(A) has upheld the addition on the basis that no presentable reconciliation of the impounded documents recorded was submitted.
4.3. As regards the addition of Rs. 15 lacs, the ld. counsel submitted the AO had made ad-hoc addition and the ld. CIT(A) has confirmed the same without recording any finding.
9 ITA No.369(Asr)/2016
A.Y. 2008-09
5. The ld. DR, on the other hand, submitted that the ld. CIT(A) has passed a well reasoned and speaking order after recording all the submissions of the assessee and there is no infirmity in the order of the ld. CIT(A), which should be upheld.
6. We have heard the rival submissions and have perused the material available on record. We find that in respect of addition of Rs.44 lcas, it is a fact that the AO himself has noted that the assessee was holder of 1/4th share of the alleged property. Therefore, addition of the entire alleged consideration cannot be made in the hands of the assessee. Moreover, remand report of the AO states that the property allegedly sold by Smt. Manjit Kaur still exists in the name of Smt. Manjit Kaur. In view of the above facts, we deem it appropriate to remit the matter back to the file of the AO for fresh adjudication on the basis of complete verification from the office of the Sub Registrar.
7. As regards the addition of Rs.11.90 lacs, the ld. counsel has submitted that the Trust was a registered trust and therefore, no separate addition could have been made in the hands of the assessee. We are in agreement with the arguments of the ld. counsel that the ld. CIT(A) should not have confirmed the addition in the hands of the assessee. The ld. CIT(A) has confirmed the addition holding that the trust was not a separate entity. Whereas, the ld. AR has argued that the 10 ITA No.369(Asr)/2016 A.Y. 2008-09 trust was a registered Society. To resolve the issue we consider it appropriate to remit this issue to the file of the Assessing Officer, who will decide the issue afresh on the basis of the documents showing existence of Trust.
8. As regards the addition of Rs.75 lacs on account of marriage expenses, we find from paper book pages 75 to 85, that all the expenses noted in the impounded documents do not relate to marriage expenses as few of the entries are with respect to property deals. Therefore, this addition also needs further verification and fresh adjudication and therefore, this ground is also set aside to the file of the AO for fresh adjudication.
9. As regards the addition of Rs. 15 lacs, we find that the AO has arbitrarily made this addition, which has been confirmed by the ld. CIT(A). Both the authorities below have not made any finding of fact on the basis of which the income has been estimated. Therefore, it requires fresh adjudication and accordingly, the same is remitted back to the file of the AO.
10. The other issues raised by the assessee are small in nature and in view of the re-adjudication of major points of additions, we deem it 11 ITA No.369(Asr)/2016 A.Y. 2008-09 appropriate to remit the rest of the additions also back to the file of the AO for fresh adjudication.
11. Needless to say, the assessee will be provided sufficient opportunity to present his case in fresh proceedings.
12. As regards the Stay Application of the assessee, the same has become infructuous, since we have set aside the order of the ld. CIT(A).
13. In the result, the appeal of the assessee is allowed for statistical purposes and Stay Application is dismissed as infructuous.
Order pronounced in the open court on 15/09/2016.
Sd/- Sd/-
(A.D. JAIN) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
/SKR/
Dated: 15/09/2016
Copy of the order forwarded to:
1. The Assessee:Sh. Harish Garg, Bathinda.
2. The ACIT, Circle-1, Bathinda.
3. The CIT(A), Bathinda
4. The CIT, Bathinda.
5. The SR DR, ITAT, Amritsar.
True copy
By order
Income Tax Appellate Tribunal,
Amritsar Bench: Amritsar.