Income Tax Appellate Tribunal - Jaipur
Rameshwar Lal Kumawat, Jaipur vs Ito, Jaipur on 27 December, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 147/JP/2017
fu/kZkj.k o"kZ@Assessment Years : 2006-07
Rameshwar Lal Kumawat, cuke I.T.O.
5/27, Kesrichand, Choudhary Vs. Ward 2(4),
Nagar, Ajmer Road, Jaipur Jaipur.
(Raj).
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHDPK 8968 K
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri P.C. Parwal (CA)
jktLo dh vksj ls@ Revenue by : Shri A.S. Nehra (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 13/12/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/12/2017
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.:
This is an appeal filed by the assessee against the order dated 19/12/2016 passed by the ld CIT(A)-1, Jaipur for A.Y. 2006-07, wherein the assessee has taken following grounds of appeal:
1. Under the facts and circumstances of the case, CIT(A) has erred by not accepting the ground that proper opportunity of being heard was not provided.
2. Under the facts and circumstances of the case the CIT(A) has erred by confirming the addition of Rs. 82,456/- as income from other sources whereas this is the agricultural income.
2 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
3. Under the facts and circumstances of the case, the CIT(A) has erred by confirming the estimate income from business Rs. 5,00,000/- without any reasonable basis.
4. Under the facts and circumstances of the case, the ld. CIT(A) has erred by confirming addition of Rs. 20,000/- as income earned from petrol pump in spite of fact that no income is earned from the same.
5. Under the facts and circumstances of the case, the CIT(A) has erred by confirming the disallowance of depreciation amounting Rs. 1,67,346/-
6. Under the facts and circumstances of the case, the CIT(A) has erred by confirming the addition of Rs. 3,38,000/- against payment made to purchase the car.
7. Under the facts and circumstances of the case the CIT(A) has erred by making the addition of Rs. 4,76,000/- on account of payment of EMI towards the loan.
8. Under the facts and circumstances of the case, the CIT(A) has erred by confirming the addition of Rs. 1,58,500/- as unexplained cash deposit into bank."
2. Ground No.1 of the appeal is not pressed by the assessee, therefore, the same stands dismissed as not pressed.
3. Ground No. 2 of the assessee's appeal is against confirming the addition of Rs. 82,456/- as income from other sources. The brief facts on this ground is that in the return, assessee has declared agricultural income of Rs.82,456/-. However, the AO treated it as business income for the reason that no documentary evidence as to the cultivation of land and sale of agricultural produce was furnished.
3 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
4. The ld. CIT(A) has upheld the action of the Assessing Officer by holding as under:
"The appellant has not filed any document before the AO in respect of agriculture income of Rs. 82,456/- shown by it in its return of income and consequently, the AO has treated the same as business income. During the appellate proceedings, the appellant has filed a copy of jamabandi as an additional evidence. On a perusal of the said Jamabandi, it was observed that 2.68 Acres of land was owned by the appellant along with two other co-owners and it is not stated therein about the crops grown on the said land during the period under consideration. The appellant failed to file any evidence with respect of the cultivation and the sale of agriculture produce thereof. It is therefore held that the appellant was not able to substantiate its claim of agriculture income and therefore, the same is to be assessed under the head 'income from other sources' and not as business income as treated by the AO."
5. Now the assessee is in appeal before us. While pleading on behalf of the assessee, the ld AR has submitted that assessee owns 16 bigha of agricultural land along with his brothers. On this land agricultural crop is grown which is evident from Khasra Girdawari. There are two wells on the land. In AY 2005-06, agricultural income of Rs.69,750/- and in AY 2007-08, agricultural income of Rs.92,450/- declared by the assessee has been accepted. In these facts, the finding of the lower authorities as 4 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO to the cultivation of land and growing of crops is incorrect. In view of the same, AO be directed to consider amount of Rs.82,456/- as agricultural income and delete the addition made by him by considering the same as business income.
6. On the other hand, the ld DR has supported the orders of the authorities below.
7. We have heard the rival submissions of both the parties and perused the material available on the record. The ld CIT(A) has held that on a perusal of the Jamabandi, it was observed that 2.68 Acres of land was owned by the appellant along with two other co-owners and it is not stated therein about the crops grown on the said land during the period under consideration. It was further held that the appellant failed to file any evidence with respect of the cultivation and the sale of agriculture produce thereof. Per contra, the ld AR has contended that on the agricultural land which is owned by the assessee along with his brothers, agricultural crop is grown which is evident from Khasra Girdawari. We are of the view that the primary onus is on the assessee to demonstrate through verifiable evidence in support of the agriculture income so claimed in the return of income. However, in view of conflicting claims by both the parties and in absence of a specific finding in support of no 5 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO income from the agriculture produce from the land so co-owned by the assessee, we deem it fit to restore the matter to the file of the AO to examine the same afresh in light of evidence so produced by the assesee and where so required, to carry out independent verification. In the result, the ground is allowed for statistical purposes.
8. Ground No. 3 of the assessee's appeal is against confirming the estimate income from business of Rs. 5,00,000/- and ground No. 8 of the appeal is against confirming the addition of Rs. 14,58,500/- as unexplained cash deposit into bank.
9. The brief facts regarding these issues are that AO observed that in the show cause notice dated 03.03.2014, assessee was informed for estimating the business income at Rs.15 lacs but assessee has not responded to it. He therefore, made an addition of Rs.15 lacs as concealed business income. The AO further held that assessee has not produced source of cash deposit of Rs.14,58,500/- in his bank account with SBBJ Sodala and therefore, this amount is also added u/s 69.
10. The Ld. CIT(A) held that assessee admitted receipt from property brokerage business at Rs.15 lacs but after considering the expenses, income is declared at Rs.60,230/- but he has not produced books of account and bills/ vouchers. He therefore, estimated business income at 6 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO Rs.5 lacs and confirmed the addition for same. He further confirmed addition of Rs.14,58,500/- for the reason that assessee failed to explain the source of cash deposit in the bank account. The ld. CIT(A) has dealt these issues by holding as under:
"3.4.2 Determination:
(i) The appellant has shown a business income of Rs. 60,230/- on account of property dealings in its return of income. As the appellant did not produce books of accounts and bills / vouchers before the AO, the AO has issued a show cause notice to the appellant requiring it to explain why the income from business should not be taken at Rs. 15 Lac, to which no compliance was made by the appellant and consequently, the AO has estimated the income from business at Rs 15 Lac.
(ii) Further, the appellant has made cash deposits of Rs. 14,58,5007-
in its saving bank account with S5BJ and during assessment proceedings, the appellant could not explain the source of such cash deposits and consequently, the AO has made addition of Rs. 14,58,500/- to the income of the appellant u/s 69 of the Act.
(iii) During appellate proceedings, it was submitted by the appellant that its total receipts from property brokerage business was to the tune of Rs 15 Lac and he received the brokerage in cash, which was deposited by it in its saving bank account and thus, the estimation of income by the AO on account of business income at Rs 15 Lac was not justified and the cash deposit of Rs. 14,58,5007- stands fully explained.
7 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
(iv) I have duly considered the assessment order, submissions of the appellant and the material placed on record. It was admitted by the appellant that its receipts from property brokerage business was to the tune of Rs. 15 Lac and it was submitted by it that after meeting various expenses, its income from business was to the tune of Rs. 60,230/-. It is matter of fact that the AO has estimated the business income of the appellant without any basis and it was based solely on the basis of assumptions and presumptions. However, it is also a fact that the appellant has not produced its books of accounts and bills/vouchers before the AO. Even during the appellate proceedings, the appellant failed to file the details of such expenses. Therefore, in view of the totality of facts and circumstances of the case, I think it would be appropriate to estimate the business income of the appellant at Rs. 5 Lac. Thus, the appellant would get a relief of Rs 10 Lac on this ground of appeal.
(v) Regarding the cash deposit of Rs. 14,58,500/- in its bank account, the assertion of the appellant that these were made out of the brokerage received from the farmers is without any basis as not even a single documentary evidence was filed by the appellant to support such assertion. It is trite law that onus is upon the appellant to explain the source of cash deposits in its bank account and since in the instant case under consideration, the appellant has failed miserably to explain the source of cash deposit of Rs 14,58,500/- in its saving bank account with SBBJ during the year under consideration, it is held that the AO was justified in making the addition of Rs. 14,58,500/- u/s 69 of the Act and thus the same is hereby sustained. Hence, this ground of appeal is hereby rejected."
8 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
11. Now the assessee is in appeal before us. While pleading on behalf of the assessee, the ld AR has submitted that the Ld. CIT(A) confirmed addition on account of business income at Rs.5 lacs and also on account of cash deposit of Rs.14,58,500/- in the bank account. If addition of Rs.5 lacs is sustained, then the same is a source for cash deposit of Rs.14,58,500/- in the bank account. Hon'ble Supreme Court in case of Anantharam Veerasinghaiah & Co. Vs. CIT 123 ITR 457 held that there can be no escape from the proposition that the secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in his books of account. Therefore, addition to the extent of Rs.5 lacs is a double addition.
12. It was further submitted that so far as addition of Rs.5 lacs confirmed by Ld. CIT(A) as business income is concerned, the same is purely on estimation, whims & fancies and therefore, the addition be directed to be deleted.
13. It was further submitted that so far as addition of Rs.14,58,500/- in the bank account is concerned, source of the same is out of salary income of Rs.90,000/-, cash profits of business Rs.2,27,576/- (60,230/-
9 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO + 1,67,346/-), agricultural income of Rs.82,456/-, opening cash balance and out of withdrawal from the same bank account. All these facts were not verified by the lower authorities and therefore, this issue be set aside to the AO for verification.
14. On the other hand, the ld DR has vehemently supported the orders of the authorities below.
15. We have heard the rival submissions of both the parties and perused the material available on the record. Firstly, regarding estimation of business income at Rs 5 lacs by the ld CIT(A) as against Rs 15 lacs estimated by the AO, we hereby affirm the following findings of the ld CIT(A) which we find just and reasonable given the peculiar facts and circumstances of the instant case wherein the assessee has admitted his receipts from property brokerage business to the tune of Rs. 15 Lac and in absence of books of accounts and other details in support of incurrence of various expenses so claimed, the expenses remain unverifiable:
"(iv) I have duly considered the assessment order, submissions of the appellant and the material placed on record. It was admitted by the appellant that its receipts from property brokerage business was to the tune of Rs. 15 Lac and it was submitted by it that after meeting various expenses, its income from business was to the tune of Rs. 60,230/-. It is 10 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO matter of fact that the AO has estimated the business income of the appellant without any basis and it was based solely on the basis of assumptions and presumptions. However, it is also a fact that the appellant has not produced its books of accounts and bills/vouchers before the AO. Even during the appellate proceedings, the appellant failed to file the details of such expenses. Therefore, in view of the totality of facts and circumstances of the case, I think it would be appropriate to estimate the business income of the appellant at Rs. 5 Lac. Thus, the appellant would get a relief of Rs 10 Lac on this ground of appeal."
15.1 Regarding addition of Rs 14,58,500 in respect of cash deposits in assessee's bank account maintained with SBBJ, the ld AR has submitted that source of the same is out of salary income of Rs.90,000, cash profits of business Rs.2,27,576/-, agricultural income of Rs.82,456/, opening cash balance and out of withdrawal from the same bank account. It was submitted that as these facts were not verified by the lower authorities, the matter may be set aside to the AO for verification. The ld DR didn't raise any objection to the said request. The matter relating to verification of source of cash deposits in the assessee's bank account is accordingly set-aside to the file of the AO to examine the same afresh taking into consideration the contention so raised by the ld AR before us and after providing reasonable opportunity to the assessee.
11 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO 15.2 The assessee shall be eligible to seek set off of intangible additions of Rs 5 lacs as sustained against the additions, if any, as may finally be determined by the AO after due verification of source of cash deposits of Rs 14,58,000 in SBBJ.
15.3 The grounds of appeal are disposed off in light of above directions.
16. Ground No. 4 of the assessee's appeal is against confirming the addition of Rs. 20,000/- as income earned from petrol pump. The AO has observed that assessee has purchased a land for installation of petrol pump on 09.12.2005 on which he incurred expenditure of Rs.20,000/- and therefore, made the addition for same u/s 69 of the Act. The Ld. CIT(A) upheld the addition stating that assessee has not pressed this ground of appeal.
17. Before us, the ld AR has submitted that the assessee purchased the land at Village Sawar, Kekri on which he incurred expenditure of Rs.20,000/- which is duly reflected in statement of affairs as on 31.03.2006. Before the CIT(A), counsel of the assessee has incorrectly not pressed this ground but the fact remains is that this land is duly 12 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO reflected in the statement of affairs and thus, source is fully explained. In view of above, the addition confirmed by Ld. CIT(A) be deleted.
18. We have heard the rival submissions of both the parties and perused the material available on the record. The ld AR has contended that the assessee purchased the land at Village Sawar, Kekri on which he incurred expenditure of Rs.20,000/- which is duly reflected in statement of affairs as on 31.03.2006. Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes.
19. In the ground No. 5 of the appeal, the issue involved is confirming the disallowance of depreciation amounting to Rs. 1,67,346/-. The facts regarding this issue are that the assessee has income from business apart from salary and agricultural income. In the computation of total income it has claimed depreciation of Rs.1,67,346/- (PB 11). The AO disallowed the claim for the reason that assessee has not submitted P&L A/c and the proof of purchase of vehicle on which depreciation is claimed. The Ld. CIT(A) confirmed the disallowance by stating that assessee has not filed the depreciation chart and it appears that he is not serious about this ground of appeal.
13 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
20. While pleading on behalf of the assessee, the ld AR has submitted that before the Ld. CIT(A) it was explained that the assessee has purchased Tavera car for Rs.9,88,000/- for which copy of RC was filed. The vehicle was financed by HDFC bank for which the bank statement is filed. Assessee is engaged in the brokerage business of real estate and the income of Rs.60,230/- from business declared by him is net of depreciation. The depreciation chart is filed along with the return of income. Thus, when evidence of purchase of vehicle is filed and the claim of depreciation is made in the return by filing the depreciation chart, both the lower authorities have erred in disallowing the claim of depreciation for the reasons mentioned by them. In view of above, the claim of depreciation be directed to be deleted.
21. On the other hand, the ld DR has vehemently supported the orders of the authorities below.
22. We have heard the rival submissions of both the parties and perused the material available on the record. The ld AR has contended that necessary details in support of claim of depreciation has already been filed with the lower authorities. Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine 14 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes.
23. The grounds No. 6 of the assessee's appeal is against confirming the addition of Rs. 3,38,000/- against payment made for purchase of the car and ground No. 7 is against making the addition of Rs. 4,76,000/- on account of payment of EMI towards the loan. The facts regarding these issues are that the AO observed that assessee has purchased Tavera car for Rs.9,88,000/- but has not produced the source for same. He therefore, made addition of this amount u/s 69C.
24. The Ld. CIT(A) observed that against purchase of car for Rs.9,88,000/-, assessee has taken loan of Rs.5,50,000/- from HDFC bank but for remaining Rs.3,38,000/-, source is not explained. Further, assessee has paid 10 installments of loan of Rs.46,500/- each, i.e. Rs.4,65,000/- for which source remained unexplained. Further, Rs.5,000/- is estimated on account of bank charges for dishonour of cheques. He therefore, confirmed addition of Rs.8,08,000/- (3,38,000/- + 4,65,000/- + 5,000/-). The ld. CIT(A) has confirmed the order of the Assessing Officer by holding as under:
"3.5.2 Determination:
15 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
(i) During the year under consideration, the appellant purchased a Tavera Car for a consideration of Rs. 9,88,000/- but the appellant has not produced source of such investment and consequently, the AO has made addition of Rs. 9,88,000/- u/s 69C of the Act. During appellate proceedings, it was submitted by the appellant that it has taken a loan of Rs. 5.50 Lac from the HDFC bank and the balance amount of Rs. 3.38 Lac was available with it out of past savings. The appellant has also filed a copy of loan account statement of HDFC bank.
(ii) I have duly considered the submissions of the appellant, assessment order and the material placed on record. The loan account of HDFC bank show EMI payment of Rs. 46,500/- through cheque. However, the appellant has not filed the copy of that bank account in which these cheques were debited. The loan repayment was started in June, 2005 i.e. for 10 months in the year under consideration. Thus, the source of total EMI payment of Rs. 4,65,000/- remained unexplained. The appellant has not provided the complete loan statement and it appears that the bank has charged certain amounts on account of dishonor of cheques issued by the appellant for EMI and the total of such amounts is estimated at Rs. 5,000/-. The source of payment to HDFC bank remained unexplained i.e. amount of Rs. 4,70,000/- is hereby sustained. Further, the appellant could not explain the source of remaining amount of Rs. 3.38 Lac invested by it in the Tavera Car. Therefore, out of the addition of Rs. 9,88,000/- made by the AO u/s 69C of the Act, the addition of Rs. 8,08,000/- (4,70,000 + 3,38,000) is hereby sustained."
16 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
25. While pleading on behalf of the assessee, the ld AR has submitted that against purchase of car, assessee has taken loan of Rs.5,50,000/- from HDFC bank. This is accepted by Ld. CIT(A). Against the loan amount, assessee was to pay EMI of Rs.16,500/- p.m. However, assessee has only paid 8 instalments, i.e. Rs.3,72,000/- as is evident from the HDFC bank statement. Therefore, the amount of Rs.4,65,000/- taken by the CIT(A) is incorrect. The balance amount of Rs.3,38,000/- in respect of purchase of car and the repayment of loan installment of Rs.3,72,000/- is paid by the assessee from his bank account with SBBJ Sodala, Jaipur from where the amount is withdrawn/ transferred to HDFC bank account for payment towards purchase of car/ installments. Further, the car loan from HDFC bank and the value of car is reflected in the statement of affairs as on 31.03.2006 (PB 12). Thus, the source of purchase of car as also the repayment of loan is fully verifiable. Accordingly, the addition confirmed by Ld. CIT(A) be directed to be deleted.
26. On the other hand, the ld DR has vehemently supported the orders of the authorities below.
27. We have heard the rival submissions and perused the material available on the record. It is not in dispute that the assessee has taken 17 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO loan of Rs 5,50,000 from HDFC bank and to this extent, source of funds for purchase of car worth Rs 9,88,000 stands explained. Further, the ld AR has contended that the balance amount of Rs.3,38,000/- in respect of purchase of car and the repayment of bank loan installment of Rs.3,72,000/- is paid by the assessee from his bank account with SBBJ Sodala, Jaipur from where the amount is withdrawn/ transferred to HDFC bank account for payment towards purchase of car/ installments. Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 27/12/2017.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 27th December, 2017
*Ranjan
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Rameshwar Lal Kumawat, Jaipur.
2. izR;FkhZ@ The Respondent- The I.T.O., Ward 2(4), Jaipur
3. vk;dj vk;qDr@ CIT
18 ITA 147/JP/2017_ Rameshwar Lal Kumawat Vs ITO
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 147/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar