C.I.T.BIKANER vs. INDER KUMAR

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ITA/198/2013HC RajasthanRJHC01031084201319 March 2014Author: DINESH MAHESHWARI,BANWARI LAL SHARMA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no substantial question of law to consider. The concurrent findings of the CIT(A) and ITAT were essentially findings of fact, arrived at after due appreciation of material on record. The ITAT was justified in observing that Shri Jessa Ram was neither examined in the presence of the assessee nor allowed to be cross-examined, making his statement inadmissible against the assessee. The ITAT's observation that deposits made by Shri Jessa Ram in his bank account did not prove receipt from the assessee on specific dates was also deemed correct, as a third party's accounting system is not within the assessee's control. The CIT(A) and ITAT deleted the additions after being satisfied that all questioned payments and receipts were fully explained. The matter rested on findings of fact and appreciation of evidence, which were not shown to be perverse. Therefore, the appeal was dismissed.

What were the facts?

The Revenue, C.I.T. Bikaner, appealed against an order of the ITAT, Jodhpur Bench, for Assessment Year 2005-06. The ITAT had affirmed the deletion of additions made by the Assessing Officer (AO) amounting to Rs. 34,00,000/-. These additions were on account of alleged unexplained income, unexplained investment, and unexplained purchase of agricultural land. The AO had made these additions primarily because the assessee, Shri Inder Kumar, an individual deriving income from agricultural activities, could not provide documentary evidence for payments to Shri Jessa Ram and receipts from Shri Ashok Kumar Goyal. The AO noted inconsistencies in Shri Jessa Ram's statement regarding payments received from the assessee. The CIT(A) had deleted the additions, finding Shri Jessa Ram's version unacceptable and noting that the assessee was not allowed to cross-examine him. The CIT(A) also found the AO's approach unjustified regarding the investment in agricultural land in the assessee's son's name.

What were the issues?

1. Whether the ITAT erred in upholding the deletion of additions made by the AO on account of alleged unexplained income and unexplained investment, particularly when the assessee failed to provide documentary evidence for payments to Shri Jessa Ram and receipts from Shri Ashok Kumar Goyal, and where Shri Jessa Ram's statement was relied upon by the AO? Assessee's Contention: The judgment does not record specific contentions made by the assessee before the High Court. However, the ITAT's reasoning, which was upheld, suggests the assessee argued that Shri Jessa Ram's statement was recorded ex-parte, without allowing cross-examination, and therefore inadmissible. The ITAT also noted that payments between 04/06/2004 to 15/01/2005 were not recorded on the backside of the ikrarnama, though accepted by the AO. The sale of land to Shri Ashok Goyal was proved by a registered deed, and deposits by Shri Jessa Ram were not proof of receipt from the assessee on specific dates. Revenue's Contention: The Revenue contended that the AO made additions after considering all relevant facts and evidence, and that proper explanation regarding the source for the purchase of agricultural land was not furnished. The Revenue argued that Shri Jessa Ram's statement was duly supported by a registered document, and the allegation of Shri Ashok Kumar Goyal making payment was not supported by any other document, thus the ITAT erred in affirming the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 148

AI-generated summary — verify with the full judgment below

C.I.T. Bikaner vs Shri Inder Kumar DATE OF ORDER : 19th March 2014 HON’BLE MR. JUSTICE DINESH MAHESHWARI HON’BLE MR. JUSTICE BANWARI LAL SHARMA Mr. K.K. Bissa for the appellant. <><><> By way of this appeal filed under Section 260-A of the Income Tax Act, 1961 [‘the Act’], the Revenue seeks to question the order dated 22.05.2013 as passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur [‘the ITAT’] in ITA No. 507/Jodh/2010 for the Assessment Year 2005-06 whereby, the ITAT has affirmed the order passed by the Commissioner of Income Tax (Appeals), Bikaner [‘the CIT(A)’] dated 26.07.2010 in the assessee’s appeal and has upheld the deletion of the additions made by the Assessing Officer [‘the AO’] on account of alleged unexplained income, unexplained investment, and unexplained purchase of agricultural land. Put in brief, the relevant background aspects of the matter are that the assessee, an individual and deriving income from agricultural activities, filed the return of income on 16.05.2008 in compliance of the notice under Section 148 of the Act, declaring the income of Rs. 5,23,403/- from long term capital gain and from other sources; and also declared agricultural income of Rs. 6 lakhs. The AO proceeded to complete the assessment by the order dated 29.12.2009, making addition of a sum of Rs. 34,00,000/- (10,00,000/- + 20,10,000/-+3,90,000/-), primarily on the ground that the assessee could not file the documentary evidence to prove the source of payment to one Shri Jessa Ram and also failed to furnish the documentary evidence to show the receipt of payment from one Shri Ashok Kumar Goyal. The AO referred to the incongruity and inconsistency in the statement furnished by the said Shri Jessa Ram alleging receipt of payment from the assessee on different dates and of different amounts. However, the CIT(A), after analyzing the material on record and also taking an overall view of the matter, found unacceptable the version of Shri Jessa Ram; and also noticed that no opportunity to cross-examine Shri Jessa Ram was allowed to the assessee- respondent. The CIT(A), after referring to the various facets of the case also found the approach of the AO unjustified and proceeded to delete the additions of Rs.10,00,000/- and Rs.20,10,000/- in the following: “In a nutshell, the AO proceeded to make the impugned addition only on the basis of cash deposits in the bank account of Shri Jessa Ram without allowing the appellant to cross examine him during the assessment proceedings. The appellant had outrightly denied the payments on the dates given by Shri Jessa Ram. The AO has also ignored the vital aspect of the appellant receiving moneys from Shri Ashok Kumar Goyal which were duly disclosed by him in the return of income filed in response to which U/s 148 issued to him. Sales to Shri Ashok Kumar Goyal is also evident from the fact that the appellant could not complete the transaction with Shri Jessa Ram as he had no further funds. The deferment of payment noted on the backside of Ikrarnama dated 15.10.2003 is sufficient testimony to this fact. On overall consideration of the facts, it is held that the AO was not justified in making the impugned additions. The same are, therefore, deleted. “ As regards, the other addition to the tune of Rs. 3,90,000/- on account of investment made in agricultural land in the name of son of the assessee, the CIT(A) found this addition too unjustified while observing as under: “I have considered the facts of the case and the submissions made. For the detailed reasons given in the decision for Ground No.1, it is held that the AO was not justified in making this addition as well. The addition was made only on the basis of statement of Shri Jessa Ram which only sought to justify the deposit of this cash in his bank account cited above. The payment and the source thereof has been explained satisfactorily coming out receipts from Shri Ashok Kumar Goyal and his own agricultural income. This addition, therefore, deserves to be deleted.” In the revenue’s appeal, the ITAT has found the approach of the CIT(A) justified and no case for interference being made out while observing as under: “2.6 Before us same and similar arguments are reiterated. We have found that the notings made on the backside of ikrarnama are in the handwriting of Shri Jessa Ram. Once caught he has tried to explain them away in whatever manner he liked. But, Shri Jessa Ram was neither examined in the presence of this assessee nor he was allowed to be cross-examined by the assessee, so, his statement recorded at assessee’s back has no legal meaning and cannot be relied against the assessee. In such cases, where ex-parte statement is not confronted, it carries no weight. The juri ictional High Court in the group cases of CIT Vs M/s. A.L. Lalpuria Construction Pvt. Ltd. in ITA No. 39/2011 judgment dated 25/02/2013 (copy of which is furnished for our perusal) has taken a similar view. Therefore, the statement of Shri Jessa Ram which was never put to this assessee is of no avail and on the basis of that unrebutted statement no addition can be made. Otherwise also, the backside of the ikrarnama the payments between 04/06/2004 to 15/01/2005 are not recorded although these were made and have been accepted by the A.O. There is no evidence and it is not the case of the revenue that assessee has got any other source of income. A sale of the portion of the land to Shri Ashok Goyal stands proved from the Registered Deed itself. The deposits made by Jessa Ram in his Bank account are not and cannot be taken as a proof of receipt from this assess on that particular date. Shri Jessa Ram may have adjusted the sale proceeds in the manner he liked. In the totality of the facts and circumstances of this case we are convinced that there is no error in the finding of ld. CIT (A). Therefore, we confirm the same. All the payments, including a sum of Rs. 3,90,000/- made on 15/01/2005 for the purchase of agricultural land in the name of his son Shri Sunil Kumar are found explained. In that case the assessee paid Rs. 6.40 lakhs on the date of registration – 4 lakhs before the Sub Registrar and 2.40 lakhs outside. Accordingly, we confirm the entire deletion and cannot allow the appeal of the revenue.

3.

In the result, appeal of the revenue stands dismissed.” It is sought to be contended that the AO made the additions after considering all the relevant facts and evidence adduced before him; and the additions being just and proper, called for no interference, particularly when proper explanation regarding source for purchase of agricultural land was not furnished. It is also submitted that the statement of Shri Jessa Ram, as relied upon, was duly supported by the registered document and the allegation of Shri Ashok Kumar Goyal having made the payment of a sum of Rs. 38,60,000/- being not supported by any other document, the ITAT has erred in affirming the order of CIT(A). After having given thoughtful consideration to the submissions made and having examined the record, we are unable to find any substantial question of law worth consideration in this case. The concurrent findings recorded by the CIT(A) and ITAT are essentially the findings of facts and have obviously been rendered after due appreciation of the material on record, as also on the relevant considerations. The ITAT appears justified in observing that Shri Jessa Ram was neither examined in the presence of the assessee nor was allowed to be cross-examined by the assessee and hence, his statement could not have been relied upon against the assessee. The ITAT has also rightly observed that the deposits made by Shri Jessa Ram in his bank account cannot be taken as proof of the receipt from the assessee-respondent on that particular date. Obviously, the procedure and system of accounting of a third party was not a matter within the control of the assessee-respondent; and merely with reference to the entries made by a third party, conclusion could not have been drawn against the assessee-respondent. The CIT(A) and the ITAT have deleted the additions made by the AO after being satisfied that all the questioned payments and receipts were fully explained. In the ultimate analysis, the matter only relates to the findings of facts and rests on appreciation of evidence. The appellate authorities have recorded such findings of facts concurrently after due and proper appreciation of evidence. Such findings are not shown suffering from any perversity; and no substantial question of law is involved in this appeal.

The appeal fails and is, therefore, dismissed.

(BANWARI LAL SHARMA),J.

(DINESH MAHESHWARI),J.

sudhir

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