9911796707
TMI Blog2015 (7) TMI 1439X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2009 of Shree Sanatan Dharam Charitable Hospital, Dhuri (Sangrur), the assessee's case was of loss of memory and some altered behavior. AO recorded the statement of the assessee on 23.11.2009 i.e. after few days when the assessee had undergone surgery. Even otherwise also, when there are documentary evidence available on record relating to the transactions, therefore, the CIT (Appeals) was not justified in drawing an adverse inference against the assessee from the statement recorded on 23.11.2009. The assessee has not made any admission, rather he has categorically stated that he does not remember anything about these entries. It was also stated that he has not much knowledge about the matter which could be explained by his counsel in a better way. In our opinion, the authorities below were not justified in relying on the statement of the assessee recorded on 23.11.2009, when he was not mentally fit to explain the matter. There are sufficient documentary evidence on record to explain the deposits credited in assessee's capital account. The amounts in question were received from Shri Shagun Garg through banking channels and Shri Shagun Garg has confirmed the payment of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodity profit was not genuine in the hands of Shri Shagun Garg, the same could have been added in his assessment by reopening of the same, but the same cannot be assessed in the hands of the assessee because Shri Shagun Garg has confirmed the payment of commodity profits to the assessee by way of drafts and has filed the relevant papers. He has also explained the nature of transactions and the payments paid and received by him. He is assessed to Income Tax. Shri Shagun Garg has clarified that he is also proprietor of Manvi Confin Services. Thus, the assessee has discharged onus of proving the nature and source of deposits credited in his capital account. No body has doubted the identity of Shri Shagun Garg. In view of the above, no addition can be made in the hands of the assessee - Decided in favour of assessee. - H.L. KARWA, VICE PRESIDENT For the Appellant : Sudhir Sehgal and Ashok Goyal For the Respondent : S.K. Mittal, DR ORDER H.L. KARWA, VICE PRESIDENT 1. This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-II, Ludhiana dated 25.2.2013 relating to assessment year 2007-08. 2. In this appeal, the assessee raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on 31.10.2007 declaring taxable income of Rs. 1,16,680/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act'). The assessee is engaged in the business of electronic goods. Subsequently, the case was selected for scrutiny and statutory notices under section 143(2) and 142(1) of the Act were issued to the assessee. On a perusal of the capital account of the assessee submitted during the assessment proceedings, deposits of Rs. 6 lacs and Rs. 4,85,734/- were found credited in the said account on 30.6.2006 and 8.7.2006 respectively. As per the Assessing Officer, subsequently, there were two debit entries of Rs. 5,01,315/- and Rs. 4,78,220/- on 9.1.2007 and 24.1.2007. When the Assessing Officer asked the assessee to explain the above entries, the assessee submitted that the credit entries in the capital account were on account of profit earned by him in commodity transactions through M/s. Pashupati Scripts and the debit entries reflected the loss sustained by him in commodity transactions. Further, it was also explained by the assessee that there were some difference between him and M/s. Pashupati Scripts in respect of the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made before the authorities below. He vehemently argued that the authorities below have not correctly appreciated the facts of the present case and the evidence produced by the assessee in support of his case. The learned counsel for the assessee submitted that the transactions with M/s. Pashupati Scripts, Firoz Gandhi Market, Ludhiana are on account of speculative profit and loss in the transactions entered through M/s. Pashupati Scripts. M/s. Pashupati Scripts has done certain transactions of speculative nature on behalf of the assessee and paid sum of Rs. 6 lacs and Rs. 4,85,734/- in that account to the assessee, however, later on M/s. Pashupati Scripts demanded the amount on account of the losses in the speculative transactions entered on behalf of the assessee. There were some differences between the assessee and M/s. Pashupati Scripts in respect of the speculative transactions, which were resulted into profits as well as losses, the account is ultimately settled with them at zero account i.e. the amount received from them in excess of the advance of Rs. 1,09,182/- has been repaid to them. It is stated that Shri Shagun Garg is proprietor of Manvi Confin Services. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment reveals that there is opening credit balance of Rs. 109182/- in the name of Shri Timple Kumar in your books of account. Please explain the nature of this credit balance? Ans. This may be an amount of Rs. 109182/- collected from Shri Timple Kumar of Dhuri as a margin/securities against trading in stocks and commodities. Q. Vide summon dated 28.10.2009 which was served upon you on 6.11.2009. You are asked to produce copies of balance sheet, profit and loss account and copy of your bank statement for the relevant period and copy of cash book for the month of June 2006 and March 2007 but did not you produce these books of account? Ans. As the notice was served to me on 6.11.2009 itself. My accountant who was looking the account of M/s. Pashupati Scripts, has gone to attend his sister's marriage at Paurii Garhwal (Uttarakhand) and will be back only after 25th Mar. 2009. In his absence I am not aware about the documents asked by you and will be able to produce the same after 25th Mar., 2009. 10. From the above statement, it is clear that Shri Shagun Garg was running a business concern, and was engaged in stock and commodity broking business. Shri Shagun Garg has confirmed the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 191054 and Rs. 4,85,734/- by DD No. 191054 from Shri Shagun Garg Prop. M/s. Pashupati Scripts Stock Exchange, Ludhiana on 28.06.2006 and further you have given back amount of Rs. 5,01,315/- and Rs. 4,78,220/- back to Shri Shagun Garg on 09.01.2007 24.01.2007 by DD No. 005245 DD No. 005327, respectively. Please explain the nature of these entries? A. I do not remember anything about these entries. Q. How it is possible that Rs. 10,85,734/- (Rs. 6,00,000/- + Rs. 4,85,734/-) was deposited in your account without your knowledge? A. I have not done any type of other transaction with any party. If the amount has been received and returned back it can be loan only. I have not much knowledge about these matters. My counsel can better explain these things. 12. On the basis of the above statement, the learned CIT (Appeals) came to the conclusion that the assessee did not make any claim in the statement regarding the fact that these deposits were on account of profits received from commodity transactions carried out through M/s. Pashupati Scripts. It is relevant to observe here that the statement of the assessee was recorded on 23.11.2009 when he appeared before the Assessing Officer to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement recorded on 23.11.2009. The assessee has not made any admission, rather he has categorically stated that he does not remember anything about these entries. It was also stated that he has not much knowledge about the matter which could be explained by his counsel in a better way. In my opinion, the authorities below were not justified in relying on the statement of the assessee recorded on 23.11.2009, when he was not mentally fit to explain the matter. There are sufficient documentary evidence on record to explain the deposits credited in assessee's capital account. The amounts in question were received from Shri Shagun Garg through banking channels and Shri Shagun Garg has confirmed the payment of commodity profits to the assessee. There is no dispute that Shri Shagun Garg is assessed to Income Tax. He has also confirmed that he has received back an amount of Rs. 5 lacs on 10.1.2007 by D.D. No. 005245 and an amount of Rs. 4,76,552/- on 25.1.2007 by D.D. No. 005527. These transactions were on account of stock and commodity transactions done by the assessee through M/s. Pashupati Scripts Dhuri. 13. In para 4.5 of the impugned order, the learned CIT (Appeals) has referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts of Rs. 6 lacs and Rs. 4,85,734/- were deposited in assessee's account by way of demand drafts which were prepared from the bank account of M/s. Manavi Confin Services, which belonged to Shri Shagun Garg. He has submitted copy of the income tax return, copy of ITR for the assessment years 2005-06 to 2007-08 with PAN number. He has also submitted bank account wherefrom the demand drafts have been issued. The copy of statement of account from the books of M/s. Pashupati Scripts regarding profit and loss was also produced before the lower authorities. In my considered opinion, there was no justification in making the addition of Rs. 10,85,734/- in the hands of the assessee. It is relevant to observe here that Shri Shagun Garg in his statement recorded on 9.11.2009 has stated that the nature of entries was of profit and loss in commodity transaction done by Shri Timple Kumar during the financial year 2006-07 relevant to assessment year 2007-08. In view of the statement dated 9.11.2009 given by Shri Shagun Garg and also in view of the copy of reply dated 23.12.2009 filed to the Assessing Officer on 24.12.2009 by Shri Shagun Garg in response to the summons issued under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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