Subhash Chand Agarwal , Kota vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 293/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Subhash Chand Agarwal cuke ACIT, 756, Pratap Nagar, Dadabari, Vs. Circle-1, Kota. Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AATPA 6866 D vihykFkhZ@Appellant izR;FkhZ@Respondent

vk;dj vihy la-@ITA No. 418/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

ACIT, cuke Subhash Chand Agarwal Circle-1, Kota. Vs. 756, Pratap Nagar, Dadabari, Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AATPA 6866 D vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri B.V. Maheshwari (C.A.) jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT)

lquokbZ dh rkjh[k@ Date of Hearing : 17/03/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/04/2015

vkns'k@ ORDER

2 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

PER: T.R. MEENA, A.M.

These are the cross appeals one by the assessee and antoher by

the revenue arise against the order dated 29/02/2012 passed by the

learned CIT (A), Kota for A.Y. 2008-09. The effective grounds of both

the appeals are as under:-

Ground in ITA No. 293/JP/2012

"(1) That the Ld. CIT(A) grossly erred in confirming the addition of Rs. 9,00,000/- towards undisclosed investment in House at Vigyan Nagar, Kota.

The house was purchased by Kendriya Academy Vidyalaya Shiksha Samiti, the investment is shown by Samiti hence the addition in this case is wrongly made by Ld. A.O.. The Ld. A.O. made the addition of Rs. 33.00 Lacs and the Ld. CIT(A) deleted the addition of Rs. 24.00 Lacs and balance Rs. 9.00 Lac was sustained."

Ground in ITA No. 418/JP/2012

"On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:-

(i) deleting the addition of Rs. 24 lacs made on account of unexplained deposits in the absence of any authentic cash flow statement given either at the time of assessment or before the ld. CIT(A) and just on the basis of explanation given for the first time before him;

(ii) deleting the addition of Rs. 27 lakhs out of advance given to Shri Mahesh Sharma in the absence of any authentic cash flow statement and accepting the explanation given by the assessee for the first time before him."

3 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

2. The first ground of appeal is against confirming the addition of

Rs. 9 lacs towards undisclosed investment in house at Vigyan Nagar,

Kota. The Assessing Officer observed that a property at 2-Chh-14,15

Vigyan Nagar, Kota was purchased by Sh. Prateek Agarwal and Sh.

Subhash Agarwal for Rs. 48 lacs. However, during the course of survey

U/s 133A of the Act at the business premises of Kendriya Academy

Vidhyalaya Shiksha Samiti, an Ikrarnama dated 18/12/2006 was

impounded. As per this Ikrarnama the said property was purchased by

them for Rs. 66 lacs. This agreement was executed by Sh. Subhash

Chand Agarwal and his son. However, Sh. Shubash Chand Agarwal

stated for that agreement that he and his son purchased the property

only for Rs. 48 lacs only. The ld Assessing Officer held that Mr.

Mahendra Bhutiyani and Smt. Kavita Sharma were sellers, had accepted

in their statements U/s 131 of the Act that they had sold the property at

Rs. 66 lacs. The Ikrarnama dated 18/12/2006 was impounded from the

premises of the assessee, which was executed by Sh. Subhash Chand

Agarwal and his son Sh. Prateek Agarwal. The difference of Rs. 18 lacs,

which was undisclosed investment of both the parties being equal share

holding in said property. The ½ share i.e. Rs. 9 lacs were added in the

income of the assessee as undisclosed investment U/s 69 of the Act. It 4 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

was further held that the said property was purchased for the purpose

of M/s Kendriya Academy Vidhyalaya Shiksha Samiti. It is further

submitted before the Assessing Officer that the payments were made

directly from the said society and the asset has been reflected in the

balance sheet of the society. He also held that it did not explain the

source of investment being made in the said property as the Ikrarnama

was executed by both the persons. Therefore, he made separate

addition of Rs. 24 lacs on protective basis in the hands of assessee.

Thus, total addition was made at Rs. 33 lacs in the income of the

assessee.

3. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the learned CIT(A), who had allowed

the appeal partly by observing as under:

"The assessee's contention that property was purchased by KAVSS is not acceptable for the following reasons:-

(i) If the property could not be purchased in the name of KAVSS then the same cannot be purchased in the name of anybody else, as it violates specific provisions of law i.e. the Benami Transactions Prohibition Act, 1988. As per this Act, assessee being registered owner, he has to be taken as lawful owner of the property.

5 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

(ii) The agreement and registration of property was done in favour of assessee and his son, Shri Prateek Agarwal The assessee's contention that the property was purchased at Rs. 48.00 lakhs is not acceptable for the following reasons:-

(i) An ikrarnama was found from the possession of assessee duly signed by the owners of property wherein the value of property was agreed at Rs. 66.00 lakhs.

(ii) The owners of this property Mahendra Bhutiyani and Kavita Sharma accepted in their statement U/s 131 that the said property was sold for Rs. 66.00 lakhs. In view of the above, addition of Rs. 9.00 lakhs, (50% of Rs. 18.00 lakhs) is confirmed in the hands of the assessee. Regarding balance addition of Rs. 24.00 lakhs, it was seen that this amount was paid by KAVSS and therefore the same is treated as explained. The A.O. is directed to delete this addition. This ground of appeal is therefore partly allowed.

4. Now the both are in appeal before us. The learned A.R. for the

assessee submitted as under:-

This is the addition made in relation to the property situated at 2-chh-14-15, Vigyan Nagar, Kota. In course of survey, it is categorical finding that this property was purchased by Kendriya Academy Vidayalaya Shiksha Samiti to run its school and as per agreement, an amount of Rs. 24.00 lacs was paid 6 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

directly from the books of the school. The school was there in the survey and the agreement was done by the assessee on behalf of the school. In relation to the investment, we have filed various documents, but no importance has been given by the learned A.O. as well as by the learned CIT (Appeals), Kota.

It has been observed by the learned CIT (Appeals), Kota that the agreement was executed by Shri Subhash Chand Agarwal and his son Shri Prateek Agarwal. It is true that in the agreement of Rs. 66.00 lacs; there are no signatures of Shri Subhash Chand Agarwal and Shri Prateek Agarwal. We have categorically submitted that these houses together were purchased for running K.G. school of the Society in Vigyan Nagar, Kota and agreement which is mentioned, has no value since it is one sided agreement. Further in relation to the payment of Rs. 48.00 lacs, we have filed the vouchers, duly signed by all the persons. However, all these things are not material here since the property was purchased by the Society and, therefore, the entire addition, if any, can be made in the Society as the investment is in the Society. In relation to the purchase of house by the Society, we have submitted the relevant documents, but the learned CIT (Appeals) has not accepted this by observing:

(i) If the property cannot be purchased in the name of Kendriye Academy Vidyalaya Shiksha Samiti, the same cannot be purchased in the name of anybody as it 7 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

violates the provisions of "Benami Transactions Act".

This is a wrong observation. In the Income Tax Act, there are so many cases and if the property is purchased by use of funds of assessee, then he is treated as beneficial owner for that property and the Income Tax law treats is as owner. It may be "Benami" or. Further, even if any investment is found in any Society at the time of survey, then the said investment is treated as investment of the society though in the name of the others. As such Benami Transaction Act is not applicable here.

(ii) The agreement is one sided agreement; no registration was done, hence it is wrong to say that the agreement and registration of property was in the name of the assessee or his father. Again he has ignored our contention that the purchase in Rs. 48 lacs by mentioning (i) Ikrarnama was found from the possession of the assessee duly signed by the seller of the property mentioning Rs. 66.00 lacs, but he has ignored to state that the said agreement was one sided agreement left over there and it has not been signed by Shri Subhash Chand Agarwal and Shri Prateek Agarwal. Therefore, it has no value in the eye of law. In relation to the statement recorded of Shri Mahendra Bhutiani and Smt. Kavita Sharma, the statements were recorded in the back of the assessee in the case of Kendriya Academy Vidyalaya Shiksha 8 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

Samiti and no cross examination was allowed with them to the assessee. Even the statement of Shri Mahendra Bhutiani and Smt. Kavita Sharma are different. All these things show that the property was purchased for the purpose of school of the society and hence it has no relation with the assessee.

The payment was perfectly made of Rs. 48.00 lacs by the society and again the society itself sold the same, therefore, the addition made in the case of assessee is totally wrong and baseless and may kindly be deleted'

5. At the outset, the learned D.R. vehemently supported the order

of the learned CIT(A).

6. We have heard the rival contentions of both the parties and

perused the material available on the record. A copy of Ikrarnama

found during the course of survey, which was impounded by the

department. The statement recorded U/s 131 of the Act of Shri

Mahendra Bhutiyani and Smt. Kavita Sharma, who had accepted that

they received Rs. 66 lacs. The assessee did not raise any argument

before the lower authorities to cross examine the deponents even this

difference has not been explained from the books of society. Therefore,

we uphold the order of the ld. CIT(A).

9 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

7. The first ground of revenue's appeal is against deleting the

addition of Rs. 24 lacs made on account of any cash flow statement

given. The ld. Assessing Officer observed that the assessee had

deposited cash in Central bank of India on various dates at Rs. 24 lacs.

The Assessing Officer gave reasonable opportunity of being heard on

this issue, which was replied by the assessee vide order dated

30/12/2010. The assessee claimed that this cash deposit were from

own cash deposit in bank, O/D account on loan account. The reply of

the assessee was not specific and no evidence had been filed before the

Assessing Officer, therefore, he made addition of Rs. 24 lacs U/s 68 of

the Income Tax Act, 1961 (hereinafter referred as the Act).

8. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the learned CIT(A), who had allowed

the appeal by observing that during the period 27/06/2007,

30/08/2008, the assessee had withdrawn Rs. 29,50,000/- from various

bank accounts, thereafter, the assessee withdrew Rs. 13,50,000/-

between 01st September and 05th December, 2007. Thus, assessee

withdrew a sum of Rs. 43.00 lakhs between June, 2007 and December,

2007, out of this, a sum of Rs. 24.00 lakhs was redeposited in the bank

on various dates. In view of the above, the Ld. CIT(A) held that the 10 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

deposits in bank account were considered explained. Accordingly, he

deleted the addition of Rs. 24 lacs.

9. Now the revenue is in appeal before us. The learned D.R.

vehemently supported the order of the Assessing Officer and argued

that the assessee deposited in August, September and December, 2007

at Rs. 24 lacs in Central Bank of India, Kota. The ld. CIT(A) is not

discussed that from which account, these withdrawals were made and

redeposited in the bank account. It is further argued that the ld. CIT(A)

had given credit even withdrawals made in the subsequent year i.e. up

to 13/08/2008 wherein these entries pertained to F.Y. 2007-08.

Therefore, she prayed to confirm the addition.

10. At the outset, the learned A.R. for the assessee supported the

order of the Ld. CIT(A) and reiterated the same arguments made before

the ld CIT(A).

11. We have heard the rival contentions of both the parties and

perused the material available on record. It is not clear from the

assessment order that the Assessing Officer had considered which bank

account number of Central Bank of India of Kota for addition. Similarly,

the ld CIT(A) also has not given particulars of account number, branch,

address, name of the bank from where assessee has withdrawn money 11 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

from O/D/Savings bank account and redeposited in the Central Bank of

India account mentioned by the Assessing Officer, therefore, both the

authorities are not clear, which account used by the assessee and

disclosed in the balance sheet. Further the AR of the assessee's reply is

not specific, simply argument that withdrawal from the OD account but

which OD account, no details of the bank account number, name of the

bank, branch has been given, therefore, this issue is required to be re-

verified. Accordingly, we set aside this ground to the Assessing Officer.

Further the Ld. CIT(A) have no jurisdiction to give the credit of

subsequent year i.e. up to 13/08/2008 which pertained to F.Y. 2008-09

but issue before us pertained to A.Y. 2008-09.

12. The second ground of revenue's appeal is against deleting the

addition of Rs. 27 lakhs out of advance given to Shri Mahesh Sharma.

The ld. Assessing Officer observed that the assessee had advance Rs.

55 lacs to Shri Mahesh Sharma during the year under consideration.

The ld. Assessing Officer gave reasonable opportunity of being heard to

explain the source of Rs. 55 lacs. It is submitted by the assessee that

the source of this advance was Rs. 28 lacs from GE Loan, Rs. 5 lacs

from KAVS, Rs. 10 lacs from own O/D account and Rs. 12 lacs from

savings. The assessee failed to produce any documentary evidence 12 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

before the Assessing Officer. After considering the assessee's reply, he

concluded that source of advance of Rs. 27 lacs has not been explained.

The onus is on the assessee to prove the source of fund with

supporting evidence. Therefore, he made the addition of Rs. 27 lacs.

13. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the ld CIT(A), who had allowed the

appeal by observing as under:-

"It is seen that the entire amount of Rs. 55.00 lakhs was paid by cheque from Central bank of India and State Bank of India OD account. I have verified the details filed by assessee and it was seen that assessee has taken a loan of Rs. 28,19,865/- on 24/07/2007 from G.E. Money and paid Rs. 30.00 lakhs in the month of August to Shri Mahesh Sharma. After considering small deposits, withdrawals and opening balance, there was an overdraft of Rs. 2,09,637/- after payment to Shri Mahesh Sharma. Similarly, assessee has received a sum of Rs. 5.00 lakhs from Central Academy and deposited a sum of Rs. 5.00 lakhs on 13th and 14th August 2007 before making payment of Rs. 15.00 lakhs to Shri Mahesh Sharma which resulted in an over draft of Rs. 13,69,593/-. Thereafter, assessee transferred Rs. 10.00 lakhs from his OD account from SBB&J and deposited Rs. 10.00 lakhs from Central Academy. In the month nof October, assessee received a sum of Rs. 14.00 lakhs from Kavita School and paid Rs. 10.00 lakhs to Shri Mahesh Sharma. In view of the above, in my opinion, the entire amount of 13 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

Rs. 55.00 lakhs paid to Shri Mahesh Sharma is explained. The A.O. is therefore directed to delete the addition of Rs. 27.00 lakhs."

14. Now the revenue in appeal before us. The ld. DR supported the

order of the Assessing Officer. At the outset, the ld. AR for the assessee

vehemently supported the order of the ld. CIT(A) and argued that each

and every entry has been explained before the Assessing Officer as well

as before the ld CIT(A). However, the ld. Assessing Officer had not

satisfied with the explanation submitted by the assessee. The ld CIT(A)

on the same evidence has allowed the appeal in favour of the assessee

by analyzing the loan amount with reference to source of withdrawal on

various banks in various accounts. Therefore, he prayed to confirm the

order of the ld CIT(A).

15. We have heard the rival contentions of both the parties and

perused the material available on the record. The ld CIT(A) has

analysed the credit debit of various bank accounts with specific name

of the bank and type of account and each entry on date wise, which has

not been controverted by the ld. DR. Therefore, we do not find any

reason to intervene in the order of the ld CIT(A). Accordingly, we

uphold the order of the ld CIT(A).

14 ITA 293 & 418/JP/2012_ Subhash Chand Agarwal Vs. ACIT

16. In the result, the assessee's appeal is dismissed and the appeal of

the revenue is partly allowed.

Order pronounced in the open court on 10/04/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 10th April, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Shri Subhash Chand Agarwal, Kota.

2. izR;FkhZ@ The Respondent- ACIT, Circle-1, Kota.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 293 & 418/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar