Income Tax Appellate Tribunal - Agra
Subhash Chand Jain, Jhansi vs Department Of Income Tax on 3 December, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA No.104/Agr/2009
Asst. Year: 2005-06
Income Tax Officer 6(3), Vs. Shri Subhash Chand Jain,
Jhansi. C/o. Subhash Steel Trading Corp.
7, New Road, Jhansi.
(PAN: AAOPJ 2603 A).
(Appellant) (Respondent)
Appellant : Shri Vinod Kumar Jr. D.R.
Respondent : Application rejected
ORDER
PER H.S. SIDHU, J.M. :
The Revenue has filed the present appeal against the order dated 03.12.2008 passed by the CIT(A)-II, Agra on the following grounds :-
"1. That the Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in deleting the addition of ` 16,00,000/- made under section 68 of the I.T. Act, 1961 without appreciating the facts of the case.
2. That the Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in holding that identity, capacity and genuineness of the deposits from Smt. Manju Jain have been forwarded to the Assessing Officer without going through the facts of the case that the assessee failed to prove that the money did not belong to him as the 2 source of credit came from a bank account which was in the joint name of himself and the creditor, namely, his wife Smt. Manju Jain and despite several opportunities given by the Assessing Officer the creditor failed to appear before the Assessing Officer thereby frustrating all efforts made by him to record her statement in order to verify the genuineness of the credit.
3. That the commissioner of Income-tax (Appeals)-II, Agra has erred in law and on the facts in holding that the appellant was not expected to prove the genuineness of the cash deposit made by the depositor in their bank account failing to observe that bank account was jointly owned by the assessee and his wife Smt. Manju Jain and also that cheques worth ` 6,00,000/- were also deposited by the assessee in the joint bank account.
4. That the Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on the facts by accepting additional evidence in the shape of affidavit during the course of appellate proceedings without affording opportunity to the Assessing Officer whereas the assessee was not prevented to submit the confirmation letter and explain nature and source of deposit during such evidence, that is the assessment proceedings; itself.
5. That the order of the Commissioner of Income-tax (Appeals)-II, Agra deserves to be vacated and that of the Assessing Officer's be restored.
6. That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal."
2. The facts relating to the issue in dispute are that the assessee filed his return of income along with audit report on 31.03.2006 which was processed by the Assessing Officer on 05.09.2006. A notice under section 143(2)(ii) of the Income Tax Act, 1961 (hereinafter called 'the Act') dated 05.09.2006 was issued to the assessee for 29.09.2006. In response to the same, the ld. A.R. of the assessee appeared. In the notice, the Assessing Officer asked the assessee to prove 3 the creditworthiness of Smt. Manju Jain from whom the assessee has shown to have received a loan of ` 16,00,000/- as per the audited balance sheet filed by the assessee. In response to the same, the assessee did not appear and the Assessing Officer again issued notice under section 143(2)/142(1) dated 17.08.2007 fixing the date of hearing on 03.10.2007 requiring to comply with the notice under section 142(1) dated 18.10.2006. On 12.10.2007, the assessee attended the proceeding and the Assessing Officer recorded the statement of the assessee. In the statement, the assessee stated that he deals in iron scrap from Railways, that he lives at 7, New Road, Jhansi, that his family consists his wife, two daughters and one son, that family have no big vehicle, that Smt. Manju Jain is his wife, that salary to driver is paid for ` 2,000/- to ` 2,500/-, that no log book of vehicle is maintained. The Assessing Officer adjourned the hearing for 26.10.2007, but the assessee did not appear and the Assessing Officer again issued notice under section 142(1) dated 29.10.2007 which was served upon the assess requiring the assessee to give explanation, information, evidences and books of accounts along with Bank Pass Books and other documentary evidence on 05.11.2007. On 05.11.2007, nobody attended the proceeding. Again the Assessing Officer issued notices at various times, but on 27.11.2007 the ld. A.R. of the assessee appeared and filed reply along with books of accounts and vouchers produced which were checked by the Assessing Officer. The assessee has also filed copy of his balance sheet for the 4 Assessment Years 2003-04 & 2004-05, copy of acknowledgements of Income-tax return in respect of Smt. Manju Jain for the Assessment Years 2001-02 to 2004-05 along with audited copy of Profit & Loss account and Balance Sheet of Smt. Manju Jain, Prop. M/s Digamber Steels, Jhansi for the Assessment Year 2005-06. After examining the same, the Assessing Officer was of the opinion that the Balance Sheet of Smt. Manju Jain does not reflect loan of ` 16,00,000/- to the assessee Shri Subhash Chand Jain.
3. The assessee filed his copy of ledger account and copy of bank statement of joint account no.005420 (Bank of Baroda, Jhansi) of Shri Subhash Chand Jain and Smt. Manju Jain (assessee and his wife). In this bank account, amounts totaling of `16,00,000/- have been found deposited as on 23.10.2004 and there was withdrawal of ` 6,00,000/- on 23.10.2004 and ` 10,00,000/- on 25.10.2004. The assessee has also filed his copy of bank account in his books of accounts which shows receipt of amount for ` 6,00,00/- as on 23.10.2004 and ` 10,00,000/- on 25.10.2004. The Assessing Officer required from the assessee, who produced pass book entry of Smt. Manju Jain, as to from where amounts were deposited before advancing the loan of `16,00,000/- to the assessee. He was also required to furnish individual capital account of Smt. Manju Jain, interest account, purchase account and to explain nil closing stock, but the assessee has not made any compliance to the same as observed 5 by the Assessing Officer in the Assessment Order. On 24.12.2007, the assessee attended and his statement was recorded. In the statement before the Assessing Officer, the assessee stated that it is true that loan of ` 16,00,000/- from Smt. Manju Jain has been shown in the Balance Sheet for the Assessment Year 2005-06 which has been recorded in his books of accounts. The assess also stated that the amount of ` 16,00,000/- were deposited in account no.5420 through cheque in favour of Smt. Manju Jain and after that Smt. Manju Jain advanced him loan of ` 16,00,000/- through two cheques. He further stated that he neither know the sources of deposit of ` 16,00,000/- lacs in the bank account no.5420 and nor books of accounts in which it recorded. He also stated that he had no evidence relating to sources of deposits of ` 16,00,000/- and he had no knowledge about books of account of Smt. Manju Jain. On 24.12.2007, the assessee was again required to make compliance with notice dated 20.12.2007 and also to produce Smt. Manju Jain. In reply, the assessee had submitted confirmation from sundry debtors and copies of account of bank commission, interest, purchase account, but could not furnish evidence of source of ` 16,00,000/- advanced by Smt. Manju Jain except filing copies of acknowledgment of income tax return of Smt. Manju Jain for Assessment Year 2001-02 to 2004-05 along with copy of audit report for 2005-06 in support of proving the creditworthiness of Smt. Manju Jain. After considering the aforesaid evidences produced by the assessee, the Assessing Officer completed the assessment 6 on 26.12.2007 by making additions including the addition in dispute of `16,00,000/- in the net taxable income of the assessee under section 68 of the Act by holding that the assessee has failed to explain the nature and source of deposit of ` 16,00,000/- and the same remained unexplained. The assessee could not even furnish confirmation of loan from Smt. Manju Jain and has not proved the creditworthiness of the creditors and the genuineness of the loan. Hence, amount of ` 16,00,000/- was added in the net taxable income of the assessee shown in the return of income under section 68 of the Act. Aggrieved by the Assessment Order dated 26.12.2007 passed by the Assessing Officer under section 143(3) of the Act, the assessee filed appeal before the ld. First Appellate Authority, who, vide the impugned order dated 03.12.2008, allowed the appeal of the assessee by deleting the addition in dispute by holding that the assessee had discharged the initial burden, which lay on it in terms of section 68 by proving the identity of creditors, by giving their complete addresses, PAN and copies of assessment orders for the past which were readily available with the Assessing Officer and happened to be assessed at the same station. The ld. First Appellate Authority has also held in the impugned order that the assessee had proved the capacity of creditors that the amounts were received through account payee cheque drawn from bank account of creditors and that the assessee was not expected to prove the genuineness of the cash deposit made by the depositors in their bank, though the depositors had also explained it before the Assessing Officer on 7 statement on oath recorded by him, because under the law the assessee can be asked to prove the source of credit in its books but not the source of the source. The ld. First Appellate Authority deleted the addition in dispute by passing the impugned order dated 03.12.2008. Aggrieved by the same, the Revenue has filed the present appeal.
4. At the time of hearing, the ld. D.R. stated that there is delay of 12 days in filing the present appeal and the Department has also filed an application for condonation of the same. For the reasons mentioned in the application, he requested that the delay of 12 days in filing the present appeal may be condoned.
5. The present appeal was fixed for hearing before the Bench various times but it was adjourned for one or the other reasons, but lastly, the appeal was adjourned on the request of the assessee for today i.e. 06.04.2011 and the same was noted by Shri Deependra Mohan, ld. A.R. of the assessee. However, today neither the assessee nor his A.R. appeared to prosecute the matter in dispute, but he filed an application for adjournment on the ground that the Counsel would be out of station on 06.04.2011 as he has to go for Bank audits to Delhi & Aligarh which are very time scheduled, and hence would not be able to present before the Bench. After going through the reason mentioned by the ld. A.R. of the assessee in his application dated 05.04.2011, 8 we are of the considered opinion that the reason mentioned by him in the request for adjournment is not a reasonable one to adjourn the matter. Therefore, we reject the request of the assessee and decided to adjudicate the matter on merit after hearing the ld. D.R.
6. At the time of hearing, the ld. D.R. relied upon the order passed by the Assessing Officer and stated that the assessee has not produced Smt. Manju Jain before the Assessing Officer and has also not filed any confirmation before him. He further stated that the assessee has filed a copy of bank statement of joint account with his wife in which amounts totaling of ` 16,00,000/- have been found deposited on 23.10.2004 and there was a withdrawal of ` 6,00,000/- on 23.10.2004 and `10,00,000/- on 25.10.2004 for which the assessee has failed to explain the source of the source. Therefore, the Assessing Officer has rightly made the addition in dispute, but the same has wrongly been deleted by the ld. First Appellate Authority.
7. We have heard the ld. D.R. and perused the relevant records available with us. As regards to the delay of 12 days in filing the present appeal, the Revenue has filed an application stating that the records of this case were sent from the office of CIT- II, Agra by post and the same was received in the Income Tax Office, Jhansi in the closed cover on 16.02.2009. During the period 16.02.2009 to 21.02.2009, all 9 Officers were engaged in meeting and search proceedings. Therefore, the present appeal could not be filed in time and the Department requested for condonation of the delay of 12 days. After going through the reasons mentioned by the Department in the application for condonation of delay of 12 days, we are of the considered opinion that plausible reasons have been mentioned by the Department in the application for condonation of delay, and we condone the same by allowing the application filed by the Department.
8. As regards to the merit of the case, we found that the ld. First Appellate Authority has deleted the addition in dispute by holding that the Assessing Officer himself has accepted the trading results and has not given any finding as to the applicability of section 145 of the Act or that the assessee was earning any income outside the books of accounts so as to introduce any deposit out of the income earned outside the books. In the present case, it is very clear that identity of Smt. Manju Jain has been proved by the assessee by producing the Assessment Orders of Smt. Manju Jain for the past years which were readily available with the Assessing Officer on the same station. The ld. First Appellate Authority has also held that the assessee has filed confirmation letter of Smt. Manju Jain which is available on record, in which, she has stated, by way of affidavit, that she has advanced Rs.16,00,000/- to Shri Subhash Chand Jain, the assessee. The assessee has also 10 produced PAN of Smt. Manju Jain i.e. AAOPJ 0222 D who is assessed with ITO 6(2), Jhansi. These facts are also supported by confirmation letter and supported by the statement on oath of the depositor recorded by the Assessing Officer. As regards to the genuineness of the deposits, the ld. First Appellate Authority has rightly held that the transaction in dispute has been taken place through banking channel, for which, the assessee has given all necessary particulars for proving the identity of the creditors by giving their complete addresses. Keeping in view of the aforesaid evidences produced by the assessee before the Assessing Officer, which has rightly been appreciated by the ld. First Appellate Authority, we are of the considered opinion that, on the face of these evidences, the assessee has initially discharged the burden by proving the identity of the creditors by giving their complete addresses, PAN and copies of Assessment Orders of the past which were readily available with the Assessing Officer on the same station. The amount in dispute has been received by the assessee through account payee cheques drawn from the Bank account of the creditors. After going through the assessment records as well as the impugned order, we are of the considered opinion that the addition in dispute has been made only on the ground that the assessee has not proved the source of source but there are various judgements on this issue in which the Hon'ble High Court has held that where the amount received by the assessee is by account payee cheque, the assessee had discharged the initial burden by proving the identity of the creditors and there is 11 no need to prove the source of the source. The Hon'ble High Court of Gujarat in the case of Dy. CIT vs. Rohini Builders reported in 256 ITR 360 (Guj.) supported this view. Aggrieved by the judgment of the Hon'ble Gujarat High Court (supra), the Revenue filed Special Leave Petition (SLP) in the Hon'ble Supreme Court of India and the Hon'ble Supreme Court of India has also dismissed the SLP filed by the Revenue which is reported as (2002) 256 ITR (St.) 275 (SC). The ld. First Appellate Authority has also deleted the addition in dispute by following the order of the Hon'ble Gujarat High Court in the case of Dy. CIT vs. Rohini Builders (supra). After going through the orders passed by the Revenue authorities along with the records available with us, we are of the considered opinion that no interference is called for in the well reasoned order passed by the ld. First Appellate Authority. We uphold the same by dismissing the appeal filed by the Revenue.
9. In the result, appeal filed by the Revenue is dismissed.
(Order pronounced in the open Court on 06.04.2011)
Sd/- Sd/-
(P.K. BANSAL) (H.S. SIDHU)
Accountant Member Judicial Member
Place: Agra
Date: 6th April, 2011
PBN/*
12
Copy of the order forwarded to:
1. Appellant
2. Respondent By Order
3. CIT concerned
4. CIT (Appeals) concerned
5. DR, ITAT, Agra Bench, Agra
6. Guard File Assistant Registrar
Income-tax Appellate Tribunal, Agra
True Copy