Vijesh Devi , Jaipur vs Department Of Income Tax

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. 428/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

The ACIT cuke Smt. Vijesh Devi Circle- 2 Vs. 169, Heera Path, Sector-9 Jaipur Mansarovar, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFMPD 9989 G vihykFkhZ@Appellant izR;FkhZ@Respondent C.O. No. 43/JP/2012 (Arising out of vk;dj vihy la-@ITA No. 428/JP/2012) fu/kZkj.k o"kZ@Assessment Year : 2008-09

Smt. Vijesh Devi cuke The DCIT 169, Heera Path, Sector-9 Vs. Circle- 2 Mansarovar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFMPD 9989 G vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by: Smt. Neena Jeph, JCIT fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L.Jain, Advocate & Shri Dev Arora, CA

lquokbZ dh rkjh[k@ Date of Hearing : 30/04/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 17/07/2015

vkns'k@ ORDER PER T.R. Meena, AM

This is an appeal filed by the Revenue against the order of the ld.

CIT(A)-I, Jaipur dated 02-02-2012 for the assessment year 2008-09. The

assessee has filed the cross objection.

2 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi . 2.1 The solitary ground raised by the Revenue is as under:-

''Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in deleting the addition of Rs. 19.00 lacs made by the AO u/s 68 of the I.T. Act, 1961..''

2.2 The assessee has raised following grounds in her cross objection.

''1. On the facts and in the circumstances of the case, the ld. CIT(A) was fully justified in deleting the addition of Rs. 19.00 lacs made by the AO u/s 68 of the Act, 1961.

2. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in confirming addition of Rs. 1,37,527/- on account of social welfare made by the AO.''

3.1 Brief facts of the case are that the assessee is trading in HSD Petrol

Oil & Lubricants etc. The assessee filed her return of income on

29-09-2008 declaring total income of Rs. 9,13,060/- and the case of the

assessee was selected for scrutiny u/s 143(3) of the Act. The AO observed

that the assessee has shown introduction of capital of Rs. 19.00 lacs in the

balance sheet. The AO gave reasonable opportunity to the assessee to

explain the identity, creditworthiness and genuineness of the transactions

in respect of following cash creditors.

3 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi .

S.N. Name of the creditor Amount 1. Shri Ram Niwas Chopra 2,50,000 2. Shri Bharu Ram Ji 2,50,000 3. Shri Rajveer Singh 4,00,000 4. Shri Madan Singh 4,00,000 5. Shri Dharam Pal Singh 2,00,000 6. Shri Brij Pal Singh 1,50,000 7. Shri Harpal Singh 1,50,000 8. Shri Rajesh Singh 1,00,000 Total 19,00,000

The AO observed that all the creditors are having bank account. The

creditors did not have PAN nor copy of the return of income was filed

and the payment was made in cash. Therefore, the criteria u/s 68 of the

Act has not been fulfilled by the assessee. In view of these facts, the AO

made addition of Rs. 19 lacs u/s 68 of the Act in the hands of the

assessee.

3.2 Being aggrieved by the order of the AO, the assessee carried the

matter before the ld. CIT(A) who allowed this ground of the assessee by

observing as under:-

''4.5 I have carefully perused the order of the AO and submissions of the A.R. and I concur with the submissions of the A.R. for the following reasons.

(i) To begin with, out of Rs. 19 lacs deposited in the account of the appellant Rs. 10 lacs were not advances but were gifts from the relatives of the appellant namely her father and her maternal uncles.

(ii) All of them have filed the gift deeds and affidavits regarding having made the gifts to the appellant.

The Jamabandis of their agriculture lands and the certificates 4 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi . of their Sarpanch regarding their land holding and income therefrom have also been filed by way of evidence.

(iii) Finally, all of them appeared before the AO and admitted to having given the gifts to the appellant. The copies of the gift deeds have also been filed. Given this evidence, it is not clear from the order why the AO has treated the gifts as loan. Out of the eight people, five have given gifts totaling to Rs. 10 lacs as follows - one is her father, Captain Madan Lal and the other four are her maternal uncles. Thus they are all blood relations of the appellant. Since they were all agriculturists and not maintaining books of account and not filing income tax returns it cannot be presumed that they did not have the financial capacity to advance the gifts to their daughter/ niece. Moreover, documentary evidence by way of certificates of the sarpanch and the jamabandi of their land holding is proof enough of their financial capacity to give such a gift.

In view of the above discussion, the gifts of the gifts of Rs. 10 lacs received by the appellant by her father and four maternal uncles is held to be genuine.

4.6 Regarding the advance of Rs. 9 lakhs shown to have been received from Shri Rajveer Singh cousin of the appellant (Rs. 4 lacs) and from neighbours shr Ram Niwas Chopra and Shri Bharu Ram Choudhary (Rs. 2,50,000/- each), Shri Ram Niwas Chopra and Shri Bharu Ram Choudhary were produced during the assessment proceedings. Their statements were recorded; they submitted their identity cards, and documents regarding their agriculture lands and jamabandis. I have perused the statements taken during the course of assessment proceedings and find that they have described their source of income; they have admitted to having advanced the amount to the appellant; and have also admitted to having received back the amount subsequently. The above evidence cannot be rejected merely on the grounds that the creditors did not take interest on these loans or signed any written documents while giving these loans. Both of them have admitted that 5 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi . the petrol pump of the appellant was adjacent to their respective farms and they knew here; moreover, Shri Bharu Ram Choudhary was illiterate and given the fact that in the rural areas much of the transactions are undertaken on faith and personal reference rather than written documents the absence of a written document cannot be made to be the basis for rejecting their averments made in their statements recorded on oath. Thus their identify, financial capacity is taken is proved and therefore, the genuineness of the transactions of the temporarily loans of Rs. 2.5 lacs each from Shri Bharu Ram Choudhary and Shri Ram Niwas Chopra is accepted as proved. The loans totaling to Rs. 5 lacs credited in the books of account of the appellant are held to be genuine.

4.7 Shri Rajveer Singh cousin of the appellant could not be produced during the assessment proceedings however, he appeared before the AO during the appellate proceedings to have given the advance of Rs. 4 lacs to the appellant. Jamabandi regarding cultivation of the land; proof , identity and income certificate from the Sarpanch of the area was also furnished. In his statement, he admitted to have recovered part of the loan from the agriculture produce of the land of the appellant which was being managed by him. I do not concur with the observation of the AO in the remand report that the averments made by Shri Rajveer Singh in his statements be rejected on the grounds that he was unable to produce any bills or documents regarding his agriculture income. He is an agriculturists not filing the income tax return and as such was not required to maintain any books of account by any law of the land regarding this agriculture income. Nevertheless he furnished the certificate regarding his income per annum and jamabandi. In view of the statements of Shri Rajveer Singh taken on oath and the documents filed by him, it is held that the identity and financial capacity of Shri Rajveer Singh is proved and the loan transaction of Rs. 4 lacs is genuine.

4.8 Finally, it is observed that the AO in her order has mentioned that the appellant received all the loans in cash and returned them in cash and has initiated penalty 6 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi . proceedings u/s 269SS and Section 269T. The finding of the AO are self contradictory to the extent that on the one hand she has held these credit transactions in the books of account of the appellant as non-genuine u/s 68 and on the other hand she has invoked provisions of Section 269SS whose basic premise is contradictory to Section 68. Section 68 states that where any sum is found credited in the books of assessee and the explanation regarding the nature and source is not found satisfactory by the AO the sum so credited may be charged to income tax. On the other hand Section 269SS is regarding the mode of taking / accepting loans and deposits the fundamental understanding being that the person has accepted a loan or deposit. The fact that proceedings u/s 269SS were initiated by the AO imply that the she accepted the credit transactions in the books of account of the appellant.

In view of the above discussions, the impugned addition of Rs. 19 lacs to the income of the assessee u/s 68 is deleted.''

3.3 Now Revenue is before us and the ld. DR supported the order of

the AO contending that whatever the details furnished by the assessee

before the ld. CIT(A), were not furnished before the AO. Therefore, in

the absence of these three ingredients u/s 68 of the Act i.e. identity of the

creditor, creditworthiness of the creditor and genuineness of the

transactions of the creditor, the AO was right to make addition of Rs.

19.00 lacs u/s 68 of the Act.

3.4 On the other hand, the ld. AR of the assessee submitted that all the

details were furnished before the AO and these were also relied upon 7 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi . before the ld. CIT(A). The ld. CIT(A) allowed this ground in

favour of the assessee by considering the documents as furnished before

the AO.

3.5 We have heard the rival contentions and perused the materials

available on record. It emerges from the records that the assessee has filed

the documents concerning the above cash creditors u/s 68 of the Act

which has rightly been allowed by the ld. CIT(A) by giving the findings

(supra). Thus we find no reason to interfere in the order of the ld. CIT(A)

which is sustained. Hence, the solitary ground of the Revenue is

dismissed.

4.1 As regards ground no 1 of the C.O. of the assessee (supra), we find

that it is supportive to the order of the ld. CIT(A) which does not require

any adjudication by us.

5.1 The ground no. 2 of the C.O. of the assessee is regarding

confirmation of addition of Rs. 1,37,527/- on account of social welfare

expenses.

5.2 Brief facts of the case are that the AO observed that the assessee

has debited the expenses to the tune of Rs. 1,37,527/- under the following

heads.

Mode Nature Amount Cash For Blood donation camp 21,500 Cash Bajrang Navyuvak Mandal 111 8 ITA No. 428/JP/2012

ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi .

Cash Ganpati Yuvak Mandal 1,100 Cash Paid for School Games at parental village 50,000 Cash Paid to Mansarovar Jain Vikas Samiti 1,100 Cash Paid for Late Saheed Bhagwan Singh Varsh Gaath 62,500 Cash Paid for Holi Ddonation and Others 1,216 Total 1,37,527

The AO observed that all the above mentioned payments made by the

assessee comes under the category of donation, hence, it could not be

allowed as expenditure for business purposes. Thus the AO disallowed

the expenditure of Rs. 1,37,527/- and added back to the income of the

assessee.

5.3 Being aggrieved by the order of the AO, the assessee carried the

matter before the ld. CIT(A) who confirmed the addition of Rs. 1,37,527/-

by observing as under:-

''5.2© I have carefully perused the order of the AO and the submissions of the A.R. and do not concur with the submissions of the A.R. because on perusal of the details of the expenditure claimed it is seen that it is in the nature of donations and cannot be allowed as expenditure in P&L account. The I.T. Act, 1961 has taken cognizance of the social responsibilities of business persons and has provided for them u/s 80G. The claim of the donations should have been made by the appellant u/s 80G and cannot be allowed as business expenditure. Therefore, the impugned addition of Rs. 1,37,527/- is confirmed.'' 9 ITA No. 428/JP/2012 ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi .

5.4 The ld. DR relied on the order of the ld. CIT(A).

5.5 On the other hand, the ld. AR of the assessee submitted that the AO

made disallowances without providing any opportunity of being heard to

the assessee. The AO neither asked for any query in this regard nor issued

any show cause notice. During the course of assessment proceedings, the

AO only required the details which were filed before her but she

disallowed the expenditure on the above heads without providing

opportunity of being heard to the assessee. The ld. CIT(A) also confirmed

the addition without calling for the remand report from the AO on this

issue.

5.6 We have heard the rival contentions and perused the materials

available on record. It emerges from the records that ld. CIT(A) should

have called for the remand report from AO on this issue and the assessee

should be given an opportunity of being heard. Therefore this ground of

C.O. of the assessee is restored back to the file of the ld. CIT(A), in the

interest of principles of natural justice, to decide it afresh by providing

reasonable opportunity of being heard to both the parties. Thus Ground

No. 2 of the C.O. of the assessee is allowed for statistical purposes. 10 ITA No. 428/JP/2012

ACIT Circle- 2, Jaipur vs. Smt. Vijesh Devi .

6.0 In the result, the appeal of the Revenue is dismissed and the

C.O. of the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 17/07/2015.

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:- 17 /07/ 2015

*Mishra

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

1. vihykFkhZ@The Appellant- The ACIT/ DCIT Circle- 2, Jaipur

2. izR;FkhZ@ The Respondent-Smt. Vijesh Devi, Jaipur

3. vk;dj vk;qDr¼vihy ) @ CIT(A)

4. vk;dj vk;qDr@ CIT

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

6. xkMZ QkbZy@ Guard File (ITA No.428/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@ Assistant. Registrar