Income Tax Appellate Tribunal - Chandigarh
Sh. Navdeep Dhingra, Yamunanagar vs Department Of Income Tax on 19 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A' CHANDIGARH
BEFORE Ms.SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No. 691/CHD/2011
Assessment year : 2006-07
ACIT, V Shri Navdeep Dhingra,
Yamuna Nagar. C/o Oscar Remedies Pvt.Ltd.,
Village Baddi Majra,
Yamuna Nagar.
PAN: AAWPD-3237A
&
ITA No. 697/CHD/2011
Assessment year : 2006-07
Shri Navdeep Dhingra, V DCIT,
C/o Oscar Remedies Pvt.Ltd., Yamuna Nagar.
Village Baddi Majra,
Yamuna Nagar.
PAN: AAWPD-3237A
(Appellant) (Respondent)
Appellant by : Shri M.R.Sharma
Respondent : Smt.Jaishree Sharma
Date of Hearing : 19.07.2012
Date of Pronouncement : 31.07.2012
ORDER
PER MEHAR SINGH, AM
These are cross-appeals by the revenue and the assessee respectively, against the order dated 07.03.2011 passed by the ld. CIT(A) Karnal u/s 250(6) of the Income- tax Act,1961 (in short 'the Act'). These appeals are being taken up together for the sake of convenience and brevity. 2
2. In ITA No. 691/Chd/2011, the revenue has raised the following Grounds of Appeal:
"1.Whether on the f acts and in the cir cumstances of the case, the Ld. CIT(A) is right in deleting the addition of Rs. 14.40 Lacs made by the Assessing Officer on account of unexplained accretion in the capital account in respect of which no evidence was ever furnished by the assessee during the course of assessment proceedings despite the same having been requisitioned by the A.O. ?
2. Wh et her on t he fact s and i n t he ci rcums t ances of t he cas e t he Ld.CIT(A) is rght in deleting the addition of Rs. 14.40 Lacs made by the Assessing Officer on account of unexplained accretion in the capital account, by admitting the fresh details & evidences furnished during the course of appellate proceedings which were not furnished before the Assessing Officer during the Assessment Proceedings without recording the reasons for admitting the same ?
3. It is prayed that the order of Ld. CIT(A) be set aside and that of the AO may be restored.
4. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off."
3. In ITA No. 697/Chd/2011, the assessee has raised the following Grounds of Appeal :
"1. The learned commissioner of income tax (Appeals) has erred in confirming the addition of Rs.9.00 lacs on account of credit of Rs.5.00 lacs from M/s Global Med. Surg. (P) Ltd. and Rs.4.00 lacs from M/s Phythochem Healthcare Pharmaceuticals, Panchkula without any basis or facts on record.
2 The learned Commissioner of Income Tax (Appeals) has also erred in law as well as facts in rejecting the request of the appellant for admission of additional evidence.3
3. The learned Commissioner of Income Tax (Appeals) has also erred in confirming the addition of Rs.30.00 lacs on account of additional income u/s 69B without any facts and corroborated evidence on record.
4. The appellant may be allowed to add/amend any of the grounds of appeal at the time of hearing."
4. The revenue ( in ITA 691/Chd/2011) in the grounds of appeal, bearing No. 1 & 2 contended that CIT(A) is right ('not' is missing, being typographical error) in deleting addition of Rs.14,40,000/- made by AO, on account of unexplained accretion in the capital account, as no evidences were furnished. Revenue further contended that fresh evidences were admitted by the CIT(A), without recording reasons.
5. In the course of present appellate proceedings, ld. 'DR' referred to the findings recorded by AO in para 1.05 and 1.06. Ld. 'DR' placed reliance on the assessment order passed by AO.
6. Ld. 'AR', on the contrary, supported the well reasoned and detailed order passed by the CIT(A). Ld. 'AR' referred to page No. 32, 34 & 35 of the Paper Book, which are in the form of copy of accounts of the assessee and M/s Oscar Remedies Pvt. Ltd.
7. We have carefully perused the rival submissions, facts of the case and the relevant record. The addition was made by the AO on account of accretion in the assessee's account with M/s Oscar Remedies, Kala Amb, on the ground that no evidences for such accretion was filed by the assessee. In view of this, the AO invoked the provisions of Section 68 and 4 made impugned addition of Rs.14,40,000/-. The ld. CIT(A), on appreciation of evidences filed by the assessee, deleted the impugned addition. Ld. CIT(A) sought comments of the AO on the written submissions filed by the assessee and subsequently submitted the comments of the AO to the assessee for his comments. Ld. CIT(A) recorded his findings in para 1.05 and 1.06, which are self-explanatory in nature, hence, the same are reproduced hereunder :
"1.05 The issue is considered. There was addition of Rs. 14,40,OOO/- in the account of the appellant with M/s Oscar Remedies Kala Amb. The AO noted in his order that the assessee did not adduce any evidence regarding accretion of Rs. 14,40,OOO/- in his capital account with M/s Oscar Remedies. In the absence of any explanation and supporting evidence, the said addition was held by the AO as unexplained and added to the income of the appellant u/s 68 of the Act which is challenged vide ground no. 1 of appeal.
1.06 In the written submissions, the counsel of the appellant explained the source of credit in the capital account of the appellant maintained with M/s Oscar Remedies, Kala Amb, as is noted from the extracts of the written submissions w.r.t this ground of appeal, reproduced above and enclosed the relevant copies of account from where funds were transferred. The relevant copies of accounts from the books of M/s Oscar Remedies, Oscar Remedies Pvt. Ltd. and of bank account are examined, from which movement of funds are verifiable and hence addition of Rs. 14.40 lakh made by the AO by holding the accretion in the capital account of the appellant maintained with M/s Oscar Remedies, Kala Amb, unexplained, can not be sustained and hence is, hereby, deleted."
8. Findings of the CIT(A) clearly demonstrate that requisite evidences were filed by the assessee in the form of copies of account and the movement of funds. The ld. 5 CIT(A) has examined the copies of account and relevant bank accounts and deleted the addition. In view of this, we do not find any infirmity in the findings of the CIT(A) and, hence, the same are upheld. This ground of appeal of the revenue is dismissed
9. Ground Nos. 3 & 4 are general in nature and need no separate adjudication. Hence, the same are dismissed.
10. In the result, appeal of the revenue is dismissed. ITA No. 697/Chd/2011 (Assessee's appeal)
11. Ground No.1 and 2 are inter-linked and the same are adjudicated together hereinafter. The assessee contended that CI T(A) erred in confirming the addition of Rs.9 lacs, on account of credit of Rs.5,00,000/- from M/s Global Med. Surg. (P) Ltd. and Rs.4.00 lacs from M/s Phythochem Healthcare Pharmaceuticals, Panchkula without any basis or facts on record. Ld. 'AR' referred to page No. 30, 31, 55, 60 and 61 of the Paper Book. Similarly, ld. CI T(A) referred to page 9 of the order of the CIT(A).
12. Ld. 'DR' placed reliance on the order passed by the CIT(A) and referred to para 2.16 and 2.17 of the appellate order.
13. We have carefully perused the rival submissions, facts of the case and the relevant record. The AO, sought explanation of the assessee in respect of accretion of Rs. 21 lacs, in the unsecured loan as per the following details :
1. Global Med Surg, Panchkula Rs. 5,00,000/-
2. Law Medbros Pvt.Ltd. Rs.2,00,000/-6
3. Smt. Charanjit Kaur,Kala Amb Rs.5,00,000/-
4. Shri Subhash Chander Garg Rs.5,00,000/-
Yamunanagar
14. On examination of the submission and explanation filed by the assessee, the AO accepted the unsecsured loan of Rs.5 lacs from Shri Subhash Chander Garg, as explained. However, AO made an addition of Rs.16 lacs in respect of remaining unsecured loans as explained cash credit u/s 68 of the Act. Ld. CIT(A) granted relief in respect of cash credit from Law Medbros, Delhi of Rs.2 lacs and Smt. Charanjeet Kaur of Rs. 5 lacs. Ld. CI T(A) considered the explanation filed by the assessee that loan of Rs.2 lacs from Law Medbros Pvt.Ltd. was taken in the financial year 2004-05 and not in the year under consideration. This plea of the assessee was accepted by the CI T(A). Regarding loan of Rs.5 lacs from Smt.Charanjeet Kaur regarding loan from Shri Jagdeep Singh U/G Smt. Charanjeet Kaur, it was submitted that the draft was received from mother of Shri Jagdeep Singh, the same was wrongly credited in her account, whereas the loan was taken from Shri Jagdeep Singh and the repayment was also made through bank draft in his favour. Appellant further submitted that statement of Shri Jagdeep Singh was also recorded in the course of assessment proceedings by the AO, in which he confirmed the transaction. In view of this, transaction was treated as explained. However, CIT(A) upheld the addition of Rs.9 lacs in view of the findings recorded in para 2.16 and 2.17. 7
15. The relevant findings are reproduced hereunder :
"2.16 From the above it is noted that the letter is undated and even without complete PAN No. A copy of this letter is made part of this order as Annexure'A' From this letter genuineness of this credit can not be said to be established since from this letter, even the identity of the creditor can not be said to be established in view of the fact that the creditor did not even know its PAN number, what to speak of establishing the capacity of the creditor and genuineness of the transaction. It is, therefore, held that the appellant failed to establish the genuineness of this credit and hence addition of Rs.4 Lakh made by the AO is, hereby, confirmed.
2.17 similar is the position in the case of loan of Rs.5 Lakh from M/s Global Medical Surgical Pvt. Ltd. The appellant filed Xerox copy of confirmation of account as appeared in his books. From this, neither the identity of the creditor can be said to be established nor its capacity of advancing the said loan besides the genuineness of the transaction is established. It is, therefore held that the appellant failed to establish the genuineness of this credit also and hence addition made by the AO on this account is also confirmed."
16. We have carefully perused the rival submission, facts of the case and relevant records. We are of the considered opinion that the evidences under Rule 46A, filed by the assessee, deserve to be admitted, with a view to further the cause of justice and, hence, the same are admitted. Further, the submission filed by the appellant that the parties are existing assessee and evidences filed by the appellant are sufficient, to prove the case within the meaning of Section 68 of the Act, are to be looked into by the CI T(A). In view of the above, we are of the opinion that the case be restored to the file of the CI T(A), for fresh adjudication, in the light of fresh evidences and in accordance with the relevant provisions of the Act. The 8 CIT(A) should afford proper and reasonable opportunity to both the parties.
17. In Ground No.3, it was contended that the CI T(A) erred in confirming the addition of Rs.30 lacs on account of additional income u/s 69B of the Act, without any facts and corroborative evidences on record.
18. In the course of present appellate proceedings, ld. 'AR' stated that a survey was conducted on the business premises of M/s Oscar Remedies Pvt. Ltd. on 18.01.2006. The assessee declared additional income of Rs.50 lacs; on account of excess cash, of Rs.25 lacs, unaccounted investment in building of Rs.10 lacs and unaccounted investment in machinery Rs.15 lacs, was declared in the case of M/s Oscar Remedies Pvt.Ltd. by the appellant, being a Director of the company. The appellant further declared additional income of Rs.30 lacs on account of unexplained investment in the construction of building of Oscar Remedies, Kala Amb, of which assessee is a proprietor.
19. Ld. 'AR' referred to page No.39 of the Paper Book which is a self-explanatory surrender letter of dated 19.01.2006 signed by Shri Navdeep Dhingra, declaring Rs.30 lacs, as additional income on the ground of using such income for construction of factory building. It was, further, stated therein that surrender has been made voluntarily subject to no penal action. Ld. 'AR' placed reliance on the decision reported in Kewal Chand Nem Chand Mehta V CIT 67 I TR
804. The case relied upon by the assessee and the ratio laid 9 down therein, is not applicable to the facts of the present case being different and distinguishable viz-a-vis the facts of the case relied upon by the assessee.
20. Ld. 'AR' further placed reliance on the decision in the case of CI T V Radha Developers India Ltd. & another (2010) 329 I TR 1 (Guj). It is a case of search & seizure assessment wherein deduction for expenses was held admissible, in respect of unexplained investment. The facts of the present case and the case law relied upon by the assessee are different and distinguishable and, hence, this decision is not applicable to the present case.
21. Ld. 'AR' further referred to the decision of Fakir Mohd Haji Hasan V CIT 247 ITR 290 (Guj) wherein it has been clearly held that no deduction is allowable in respect of deemed income added u/s 69 to 69C of the Act. This decision was also relied upon by the revenue and we are of the opinion that case of the revenue is covered by the decision and not that of the assessee.
22. Ld. 'DR', on the other hand, placed reliance on the order passed by CIT(A) and placed reliance on the decision in the case of Fakir Mohd Haji Hasan V CI T 247 I TR 290 (Guj).
23. We have carefully perused the rival submissions, facts of the case and found that the assessee has voluntarily made a surrender of the impugned amount, declared as additional income of Rs.30 lacs, used for the purpose of 10 construction of factory as indicated in the letter of surrender, discussed earlier. It is pertinent to mention here that no retraction has been made by the assessee in respect of such surrendered amount, as additional income in the course of survey and operation. However, such surrender amount was not reflected in his return of income, filed on 18/19.01.2006. Ld. CI T(A) has considered the submissions of the appellant and adjudicated the issue by way of speaking and detailed order. Ld. CI T(A) has successfully distinguished numerous case laws cited by the assessee. It is further mentioned that the retraction of the impugned additional surrender made by the assessee has not been corroborated by the assessee by way of cogent and credible evidence. In view of this, any retraction without any corroborative evidence, cannot be accepted, as genuine and bonafide retraction. In view of this, findings of the CI T(A), which are reproduced hereunder, are upheld and this ground of the assessee is dismissed. The relevant findings of the CIT(A) are reproduced hereunder:
"3.04 The issue is considered. The facts in brief are that a survey u/s 133 A(I) of the Act was carried out at the business premises of M/s Oscar Remedies Pvt. Ltd. The appellant, Shri Navdeep Dhingra, who is a Director of the Company besides declaring additional income of Rs.50/- Lakhs on account of unexplained investment in Cash, Plant & Machinery and Building in the case of the Company, declared additional income of Rs.30 Lakh in his case on account of unexplained investment in construction of building of M/s Oscar Remedies- Kala Amb, of which he was the proprietor. Relevant question 19 and 20 and answers thereto fro m the statement of appellant Shri Navdeep Dhingra recorded during survey is reproduced below:11
"Ques.19. It has come to our notice there is some construction is going on at Ka/a Amb in Himacha/ Pradesh.
Ans. Construction is going on at Ka/a Amb. I am instating a unit for manufacturing of medicines at Ka/a Amb (H.P.). Separate books for the unit are being maintained.
Ques. 20 I am showing you a slip pad of Neelgagan in which few entries pertaining to Ka/a Amb Ale appears. Please explain the same.
As per page I to 5 the total of amounts appearing in these pages comes to Rs.30 Lacs. Explain these entries and sources thereof.
Ans. This amount was used by me for construction of building at 0Kala Amb. This is my individual income and the same will be added in my income from my salary and interest for the F.Y. 2005-06. This surrender is made to buy mental peace and is made voluntarily, without any pressure and is subject to no penal action. Separate letter for surrender is being submitted."
3.05 In view of this statement, the appellant filed a letter also to the Addl. CIT Yamuna Nagar, wherein he inter alia, stated as under:
"During the course of survey operation at the premises of Oscar Remedies (P) Ltd. certain documents relating to construction at Kala Amb factory premises have been found. I hereby, offer to surrender a sum of Rs.30,00,000/-
as additional income for Financial Year 2005-06 as my income. The amount was used for construction of factory building. This surrender has been made voluntarily subject to no penal action."
3.06 In view of the categorical admission of the appellant of unexplained investment in the construction of the factory building of his propertiroship concern M/s Oscar Remedies, which was also confirmed in the letter written to the Addl. CIT Yamuna Nagar, plea of the appellant that additional income/surrender was made under coercion/pressure of the survey party, is not tenable. The appellant could not bring on record any evidence in support of this claim specifically in view of the fact that the survey was carried out on 18-19 January 2006 and the return was filed on 31.3.2007 and no such fact was brought in the notice of the department during this period. Had the plea of the appellant been correct, the same would have been brought in the notice of the department immediately 12 after survey. Even in the return of income no indication in this regard was given. This can only be said to be an attempt so that this fact would not come in the notice of the department. The plea of the appellant that most of the investment was made subsequent to the survey is not tenable in view of the fact that books of the accounts of M/s Oscar Remedies were not produced during survey and the same were open to make entries as per his convenience.
3.07 As per amended provisions of law effective from 1.6.02, I.T. authorities conducting survey were specifically empowered to useful for or relevant to any proceedings under the Act. It goes without saying that the information gathered by the authority in the course of survey proceedings will have to be recorded in some form or other. Once such information is so gathered and recorded, even if it is considered that since no oath was administered and it will not be a statement on oath, but would nevertheless be information and material available on record. Further if such information and particulars gathered are corroborated by other materials, documents and evidences, they have to be necessarily utilized in course of proceedings under this Act. Otherwise the very purpose of legislative mandate given in getting such information in course of survey operation would stand defeated or nullified.
3.08 Further reference can also be made to the decision of Hon'ble Supreme Court in the cases of Pooranmal v. director of Inspection 93 ITR 5050 (SC) and Dr. Pratap Singh v. director of enforcement 155 ITR 166 (SC) wherein it has been held that:
"the illegality in the method, manner or initiation of a search does not necessarily mean that anything seized during the search has to be returned. After all, in the course of a search, things or documents are required to be seized and such things and documents when seized may furnish evidence. Illegality of the search does not vitiate the evidence collected during such illegal search. The only requirement is that the Court or the authority, before which such material or evidence seized during the search shown to be illegal is placed, has to be cautious and circumspect in dealing with such evidence or material."
3.09 Thus, in the light of authoritative preposition of law laid down by Hon'ble Supreme court, applying the same to the facts of the case, it has to be held that the information available from such statement i.e. the factual 13 position stated by the Deponent, if found to be broadly corroborated by other available material, can always be used in the income tax proceedings against the Deponent. The assessee/appellant cannot be permitted to raise the plea about the legal validity of such statement. 3.10 Further, it has been judicially held that assessment based on admission of assessee to the effect that particular amount is liable to be included in his total income would be a valid assessment in the case of Ratanchand Bholanath (SS) v. CIT 210 ITR 682 (MP). Further, Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) has held that:
"An admission made by the assessee is a good, relevant and substantial piece of evidence that can be used against him and is, very often, the best evidence that can be available against him."
3.11 The appellant has placed reliance on various judicial decisions to support his contentions but it is settled position of law that decision rendered in a particular case cannot be applied to the facts of another case unless both facts and issues involved in the reported decision vis-a-vis the case of the assessee/appellant are either identical or were close resemblance with each other. There are series of other decisions whether in the factual settings of those cases, it has been held that the retraction made by the assessee to the factual position admitted in the statement recorded u/s!3l(3) and 132(4) etc., cannot be permitted unless he successfully establishes that such admission was wrongly made on facts. Further allegation that such admission was under coercion, intimidation, duress or compulsion cannot be accepted unless the same is established as a fact with cogent and reliable evidences. Reference can be made to the following decisions:
i. Dr. S.C.Gupta v. CIT, 248 ITR 782 (All.) ii. Mahesh B. shah v. ACIT 238 ITR 130 (Ker.) iii. V. Kumhambu & sons v. CIT 219 ITR 235 (Ker) iv. Manmohan Singh Vij v. DCIT 6 SOT 18 (Mum) v. Ramjas Naval v. CIT 131 Taxman 525 (Raj) vi. ACIT v. Jagat Explosives 98 ITD 50 (Jodh.) (third member) vii. Hotel Kiran v. ACIT 82 ITD 453 (Pune) viii. Pranav Construction Co. v. ACIT 61 TTJ (Mum) 145 ix. Ramesh Salve v. ACIT 71 ITD 75 (Mum)s 14 x. Smt. Vasanti Sethi v. ACIT 45 TTJ 503 (Del) xi. Hiralal Maganlal & Co. v. DCIT 96 ITD I 13 (Mum) xii. DCIT v. Bhogilal Moolchand Kandoi 96 ITR 344 (Ahd.) 3.12 Reliance can be made to the very pertinent observation of Hon'ble IT AT,
Jabalpur Bench in the case of ITO v. B.D.Dal & Oil Ind. (1992) 40 ITD 180 (Jp.), as under:
"If at the time of survey an assessee himself concedes that the stocks are short and even comes to an agreement regarding the extent of shortage, unless it can be established that such consents or agreement was given or arrived at under threat, coercion, undue influence, misrepresentation or wrong understanding of facts or law, it would bring all efforts put in survey operations to nought if the assessees are allowed to retract from whatever they had stated or agreed to at the time of survey."
3.13 In view of the factual and legal position discussed above, it is held that the additional income of Rs.30 Lakh declared by the appellant on account of unexplained investment in construction of factory building of M/s Oscar Remedies is to be taken as unexplained investment and accordingly is to be added to the income of the appellant. The case laws relied upon by the appellant are of no help being distinguishable on facts of the case of the appellant as discussed above. The action of the AO is, therefore, confirmed and ground of appeal no. 3 is as such rejected."
24. In the result, appeal filed by the revenue is dismissed and that of the assessee is partly allowed.
Order pronounced in the Open Court on 31 s t
July,2012.
Sd/- Sd/-
(SUSHMA CHOWLA) (MEHAR SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 31 s t July,2012.
'Poonam'
Copy to:
The Appellant, The Respondent, The CI T(A), The CIT,DR Assistant Registrar, I TAT Chandigarh