Ram Kumar Roller Flour Mills Pvt. Ltd.,, v. Join CIT (OSD),,

ITA 973/DEL/2006 | 1998-1999
Pronouncement Date: 19-02-2010 | Result: Allowed

Appeal Details

RSA Number 97320114 RSA 2006
Bench Delhi
Appeal Number ITA 973/DEL/2006
Duration Of Justice 3 year(s) 10 month(s) 25 day(s)
Appellant Ram Kumar Roller Flour Mills Pvt. Ltd.,,
Respondent Join CIT (OSD),,
Appeal Type Income Tax Appeal
Pronouncement Date 19-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 19-02-2010
Date Of Final Hearing 08-02-2010
Next Hearing Date 08-02-2010
Assessment Year 1998-1999
Appeal Filed On 24-03-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO.973/DEL/2006 ASSESSMENT YEAR : 1998-99 RAM KUMAR ROLLER FLOUR MILLS PVT. LTD. JOINT CIT (OSD) VILLAGE & PO LALPUR TEHSIL KICHHA VS. SPECI AL CIRCLE BREILLY UDHAM SINGH NAGAR (UP). UTTARANCHAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL KAPOOR ADVOCATE. RESPONDENT BY : MS. BANITA DEVI RAOREM SR. DR. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II DEHRADUN DATED 12 TH JANUARY 2006 IN AN APPEAL AGAINST ORDER UNDER SECTION 143(3 ) OF THE INCOME-TAX ACT 1961 (THE ACT) PERTAINING TO THE ASSESSMENT YEAR 19 98-99. 2 2. GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IN THIS APPEAL ARE TAKEN TOGETHER SINCE THE ISSUE INVOLVED IS IDENTICAL. GR OUND NOS. 1 & 2 READ AS UNDER:- 1. THAT THE CIT(A) ERRED IN SUSTAINING THE ADDITIO NS MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT 1961 AMOUNTING RS.5 37 396/- AS UNDER: NAME LOAN ADVANCED TREATED AS OUT OF UNEXPLAINED AGRICULTURAL BY THE A.O. INCOME JAI PRAKASH AGARWAL RS.1 25 000/- RS. 11 205/- O.P. GUPTA RS.2 60 000/- RS.1 34 492/- GAYATRI DEVI RS.2 77 000/- RS.1 05 350/- SHARDA DEVI RS.2 55 000/- RS. 92 205/- NARESH KUMAR RS.2 35 000/- RS. 94 355/- REKHA AGARWAL RS.2 65 000/- RS. 99 789/- TOTALS RS.14 17 000/- RS.5 37 396/- 2. THAT THE CIT(A) FURTHER ERRED IN TREATING THE WH OLE AMOUNT OF ADVANCE BY THE DEPOSITORS AS MENTIONED IN POINT NO. 1 ABOVE AS UNEXPLAINED AND ENHANCING THE ADDITIONS MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT 196 1 BY RS.8 79 604/- - 5 37 000/-). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY RUNS A FLOURMILL. DURING THE YEAR THE ASSESSEE HAD SHOWN SUBSTANTIAL LOANS FROM DIFFERENT PERSONS. THE ASSESSING OFFICER ENQUIRED ABOUT THE SOURCE OF FUNDS IN THE HANDS OF RESPECTIVE INDIVIDUALS WHO ALL WERE EITHER DIRECTORS OR THEIR FAMILY MEMBERS. IT WAS EXPLAINED THAT ALL THE PERSONS HAD TAKEN AGRICULTURAL LAND ON LEASE AND INCOME WAS EARNED OUT OF AGRICULTURAL OPERATION CARRIED OUT ON 3 THE LAND TAKEN ON LEASE. IN SUPPORT OF THE AGRICUL TURAL INCOME MANDI SAMITI RECEIPTS SHOWING SALE PROCEEDS WERE FILED BEFORE TH E ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT CONSIDERING ALL THE FAC TS THE INDIVIDUALS WERE NOT IN A POSITION TO SAVE MORE THAN 50% OF THE SALE PRO CEEDS AND ACCORDINGLY HE TREATED THE PART AMOUNT OF LOANS AS UNEXPLAINED. T HE FIGURES OF ADVANCES SHOWN BY THE ASSESSEE COMPANY AND AMOUNT TREATED AS UNEXPLAINED ARE INDICATED AS UNDER:- S.NO. NAME LOAN ADVANCED OUT OF TREATED AS AGRICULTURAL INCOME UNEXPLAINED I) SHRI JAI PRAKASH AGARWAL RS.1 25 000/- RS. 11 2 05/- II) SHRI O.P. GUPTA RS.2 60 000/- RS.1 34 492/- III) SMT. GAYATRI DEVI RS.2 77 000/- RS.1 05 350/- IV) SMT. SHARDA DEVI RS.2 55 000/- RS. 92 205/- V) SH. NARESH KUMAR RS.2 35 000/- RS. 94 355/- VI) SMT. REKHA AGARWAL RS.2 65 000/- RS. 99 789/- ACCORDINGLY THE ASSESSING OFFICER CONSIDERED THE A BOVE AMOUNTS AS UNEXPLAINED CASH CREDITS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE COMPANY UNDER SECTION 68. THE LEARNED CIT(A) ASKED THE ASSESSING OFFICER TO CONDUCT THE ENQUIRIES ON THE FOLLOWING POINTS:- A) WHETHER THE TRANSACTION OF LEASE OF AGRICULTURAL LA ND SHOWN BY ABOVE INDIVIDUALS WERE GENUINE. 4 B) WHETHER THE PERSONS STATED TO HAVE GIVEN THE AGRICU LTURAL LAND ON LEASE REALLY EXISTED AS PER PARTICULARS AND ADDRESSES IND ICATED IN THE LEASE DEEDS. C) WHETHER ACTUALLY CULTIVATION WAS CARRIED OUT ON THE ALLEGED AGRICULTURAL LAND. D) WHETHER THE BILLS OBTAINED REGARDING SALE OF AGRICU LTURAL PRODUCE FROM KRISHI UTPADAN MANDI SAMITI WERE GENUINE BILLS IN R ESPECT OF SALE OF AGRICULTURAL PRODUCE GROWN ON THE LAND TAKEN ON LEA SE. THE ASSESSING OFFICER IN HIS REPORT SUBMITTED AS UN DER:- MY PARA-WISE REPORT AS DIRECTED IS AS UNDER:- (I) THE LEASE AGREEMENTS ARE FOUND TO BE NON-GENUINE IN VIEW OF DENIAL OF THE LESSER AS DISCUSSED ABOVE. (II) SOME OF THE PERSONS EXIST AS MENTIONED IN THE LEASE AGREEMENT BUT THEY HAVE DENIED TO HAVE GIVEN THEIR LAND ON `BATAI. (III) NO EVIDENCE WAS MADE AVAILABLE TO SHOW THAT THE LES SORS SHOWN IN THE LEASE AGREEMENT CARRIED OUT ANY AGRICU LTURAL OPERATIONS ON THE SAID LAND AND THAT NO AGRICULTURE PRODUCE WAS GROWN BY THEM. (IV) REGARDING COPIES OF BILLS PRODUCED FOR SALE OF PROD UCE FROM KRISHI UTPADAN MANDI SAMITI THE SAME HAVE NO LEGAL AND EVIDENTIAL VALUE. MERE ISSUE OF RECEIPTS DOES NOT ESTABLISH THAT THE PERSON WHO HAS BEEN SHOWN AS SELLER IN THE RECEIPT HAS ACTUALLY CARRIED OUT ANY AGRICULTURAL ACTIVITIES OR HE IS OWNER OF AGRICULTU RE LAND. IN THIS CONNECTION IT MAY BE SUBMITTED THAT PRACTI CE BEING ADOPTED BY THE KRISHI UTPADAN MANDI SAMITI IS THAT 5 A RECEIPT IS ISSUED BY THE PURCHASER ON THE RECEIPT BOOK GIVEN BY THE KRISHI UTPADAN MANDI SAMITI AT THE TIM E OF PURCHASE OF FOOD GRAINS WHERE NAMES AND ADDRESSES O F THE PERSON WHO BRINGS THE PRODUCE IS MENTIONED. TH IS BY ITSELF DOES NOT ESTABLISH THAT THE PERSON WHO BRING S PRODUCE IS MENTIONED. THIS BY ITSELF DOES NOT ESTA BLISH THAT THE PERSON WHO BRINGS PRODUCE HAS REALLY DONE AGRICULTURAL WORK OR HAS CARRIED OUT AGRICULTURAL OPERATIONS. THE BILLS PRODUCED BY THE ASSESSEE HAV E BEEN VERIFIED AND THEY ARE FOUND TO BE GENUINE BUT THIS DOES NOT EXPLAIN THE ASSESSEES CONTENTION AS STATED ABO VE. 4. ON THE BASIS OF REMAND REPORT THE ASSESSEE COMPA NY WAS ISSUED A SHOW CAUSE NOTICE DATED 16.9.2002 WITH REGARD TO TH E PROPOSED ENHANCEMENT. THE ASSESSEE SUBMITTED EXPLANATION VI DE LETTER DATED 23.10.2002 WHICH WAS NOT FOUND SATISFACTORY AND THE LEARNED CIT(A) VIDE PARA 2.6 & 2.7 OF HIS ORDER MADE THE ENHANCEMENT BY RS.8 79 604/- THUS MAKING AN ADDITION OF RS.14 17 000/- INCLUDING THE ADDITION OF RS.5 37 396/- MADE BY THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESS EE SHRI SALIL KAPOOR ADVOCATE THAT ALL THE LOANS HAD BEEN TAKEN THROUGH CROSSED ACCOUNT PAYEE CHEQUES FROM EACH PERSON WHO HAVE SUBMITTED THE CON FIRMATIONS WHICH HAVE BEEN FILED BEFORE BOTH THE AUTHORITIES BELOW. ALL THE PERSONS WHO HAVE ADVANCED LOANS TO THE ASSESSEE ARE REGULARLY ASSESS ED TO TAX IS NOT A MATTER OF DISPUTE. THEY HAVE DECLARED THE SAID LOANS IN T HEIR REGULAR RETURNS OF 6 INCOME. THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE AND AS REGARDS THE CREDITORS/DEPOSITORS SINCE THEY ARE LIV ING AT FAR OFF PLACES THE ASSESSEE HAD TRIED TO PRODUCE THEM. NONE OF THE CR EDITORS/DEPOSITORS HAS DENIED OF GIVING THE LOAN TO THE ASSESSEE. THE LEA RNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELO W. 6. WE ARE CONVINCED WITH THE ARGUMENTS OF SHRI SALI L KAPOOR ADVOCATE THAT ALL THE LOANS IN QUESTION HAVE BEEN TAKEN THRO UGH CROSSED ACCOUNT PAYEE CHEQUES FROM THE PERSONS WHO ARE REGULARLY ASSESSED TO TAX AND HAVE FILED THEIR CONFIRMATIONS WHICH ARE PLACED ON RECORD AND WERE AVAILABLE BEFORE BOTH THE AUTHORITIES BELOW. NONE OF THE DEPOSITORS HAVE DENIED OF HAVING GIVEN THE LOANS AND ALL THE LOANS GIVEN TO THE ASSE SSEE HAVE BEEN DECLARED IN THEIR RETURNS OF INCOME REGULARLY FILED WITH THE DE PARTMENT AND ARE ON RECORD. IF THE CREDITORS HAVE NOT BEEN PRODUCED IT IS THE RESPONSIBILITY OF THE DEPARTMENT TO EXERCISE THE POWERS UNDER SECTION 131 WHICH POWER IS NOT AVAILABLE WITH THE ASSESSEE. AS REGARDS PROVING OF SOURCE OF SOURCE THOUGH IT IS NOT THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THE SOURCE OF SOURCE IN VIEW OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL 87 ITR 349. MOREOVER OUT OF 5 DEPOSITO RS SHRI OM PRAKASH GUPTA HAS ADMITTED OF HAVING GIVEN LOAN ON `BATAI TO THE DEPOSITORS AND AS REGARDS LOCAL ENQUIRIES MADE BY THE INSPECTOR REFER RED IN THE ORDER OF THE 7 LEARNED CIT(A) THEY HAVE NO EVIDENTIARY VALUE IN T HE ABSENCE OF ANY MATERIAL ON RECORD. AS REGARDS THE LOAN FROM SMT. REKHA AGGARWAL IT HAS BEEN CLAIMED BY THE DEPOSITOR THAT THE LAND HAS BEE N TAKEN FROM SHRI GURBACHAN SINGH WHO HAS ALREADY EXPIRED AND NO ENQU IRY WAS POSSIBLE. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CA SE THE ASSESSING OFFICER HAS WRONGLY COME TO THE CONCLUSION THAT ALL THE LEA SE AGREEMENTS HAVE BEEN FOUND TO BE NON-GENUINE EVEN THOUGH 3 PERSONS HAVE BEEN DENIED OF HAVING BEEN GIVEN LAND ON `BATAI TO THE DEPOSITORS. T HE ASSESSING OFFICER HAS NOT CONDUCTED FURTHER ENQUIRIES FROM THE REVENUE RE CORD WHETHER THE STATEMENTS GIVEN BY THE OWNERS OF THE AGRICULTURAL LAND ARE GENUINE/CORRECT OR NOT. THERE IS NOTHING AS SUCH ON RECORD. THERE FORE THE CLAIM OF THE ASSESSEE THAT THE DEPOSITORS HAVE EARNED THEIR INCO ME FROM AGRICULTURAL PRODUCE CANNOT BE HELD TO BE IN-GENUINE OR BOGUS. THOUGH WE ARE OF THE VIEW AS MENTIONED HEREINABOVE THAT PROVING OF SOURC E OF SOURCE IS NOT RESPONSIBILITY OF THE ASSESSEE IN VIEW OF THE JUDGM ENT OF HONBLE SUPREME COURT IN THE CASE OF DAULAT RAM RAWATMULL (SUPRA) AND IN THE ABSENCE OF ANY DIRECT ENQUIRY BY THE ASSESSING OFFICER TO VERI FY THE GENUINENESS OF THE CONFIRMATIONS FILED BY THE DEPOSITORS WE ARE OF TH E VIEW THAT THE LOANS TAKEN BY THE ASSESSEE CANNOT BE TREATED AS IN-GENUINE AND NO ADDITION CAN BE MADE ON THIS ACCOUNT AND THE ENHANCEMENT MADE BY THE LEA RNED CIT(A) ALONG WITH 8 THE ADDITION MADE BY THE ASSESSING OFFICER IS DIREC TED TO BE DELETED. THUS GROUND NOS. 1 & 2 OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY 2010. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH FEBRUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.