Sh. Vijay Kumar Kapoor Prop., Amritsar. V. Income tax Officer, Amritsar.

CO 1/ASR/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7331 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARVEEN JAIN
• Assessee Lawyers: R L CHHANALIA
• Keywords: Unexplained cash credit
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.568(ASR)/2011 ASSESSMENT YEAR:2006-07 PAN:AHKPK3969P SHRI VIJAY KUMAR KAPOOR, VS. THE INCOME TAX OFFICER , PATEL CHOWK, AMRITSAR. WARD 2(2), AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A. NO.606(ASR)/2011 ASSESSMENT YEAR:2006-07 PAN:AHKPK3969P THE INCOME TAX OFFICER, VS. SH. VIJAY KUMAR KAPOOR , WARD 2(2), AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) C.O. NO.1(ASR)/2012 ARISING OUT OF I.T.A. NO.568(ASR)/2011) ASSESSMENT YEAR:2006-07 PAN:AHKPK3969P SHRI VIJAY KUMAR KAPOOR, VS. THE INCOME TAX OFFICER , PATEL CHOWK, AMRITSAR. WARD 2(2), AMRITSAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. R.L. CHHANALIA, DR RESPONDENT BY:SH. PARVEEN JAIN, ADV. DATE OF HEARING :29/05/2012 DATE OF PRONOUNCEMENT:05/06/2012 ORDER PER BENCH: ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 2 THESE CROSS APPEALS ONE BY THE ASSESSEE AND ANO THER BY THE REVENUE ARISE FROM THE ORDER OF THE CIT(A), AMRITSA R, DATED 02.09.2011 FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS A LSO FILED C.O. 2. THE ASSESSEE IN ITS APPEAL IN ITA NO.568(ASR)/20 11 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THIS IS AN APPEAL U/S 253(1)(A) OF THE INCOME T AX ACT, 1961 AGAINST THE ORDER DATED 2 ND SEPT 2011 SERVED UPON THE ASSESSEE ON 07.09.2011 U/S 250(6) OF THE ACT PASSED BY THE L D. CIT(A), AMRITSAR, HEREBY CONFIRMING PART OF THE ADDITION ON THE FOLLOWING GROUNDS. A) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING AN ADDITION OF RS.15,60,000/- BY TREATING THE TRADE CR EDITORS (MENTIONED IN ANNEXURE A) AS UNEXPLAINED CREDITS AS THE APPELLANT HAS NOT PRODUCED THEM BEFORE THE AO DURIN G THE REMAND PROCEEDINGS. B) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING AN ADDITION OF RS.2,57,660/- ON ACCOUNT OF NON-RECEIPT /LATE RECEIPT OF CONFIRMATION LETTERS FROM THE CREDITORS MENTIONED IN ANNEXURE-B ATTACHED TO THE ASSESSMENT ORDER. C) THE LD. CIT(A) ERRED IN INTERPRETING THE REMAND REP ORT FILED BY THE AO AND ONLY ALLOWING THE PART RELIEF. WHEREA S IT WAS THE PREROGATIVE OF THE AO THAT ONLY SELECTED PERSON FROM ANNEXURE A WERE CALLED FOR. 2. THAT THE ADDITION CONFIRMED BY THE LD. CIT(A) ARE ARBITRARY, ILLEGAL, ILLOGICAL AND UNWARRANTED WITHOUT CONSIDER ING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE APPELLANT CRAVES TO LEAVE, ADD OR AMEND GR OUNDS OF APPEAL TILL THE APPEAL REMAINS UNDISPOSED OFF. 3. THE REVENUE IN ITS APPEAL IN ITA NO.606(ASR)/201 1 HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF OF RS.14,27,340 /- OUT OF TOTAL ADDITION MADE AT RS.32,45,500/- ON ACCOUNT OF UNEXPLAINED ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 3 CASH DEPOSITS/LOANS RAISED BY THE ASSESSEE FROM VAR IOUS PERSONS/PARTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE CASH DEPOSIT S/LOANS WORTH RS.14,27,340/- ARE GENUINE ON THE BASIS OF RE MAND REPORT OF THE A.O. IN WHICH THE A.O. HAS NOT DRAWN ANY CON CLUSION ABOUT THE GENUINENESS OF THE CASH DEPOSITS/LOANS OF PERSONS/PARTIES OF WHOSE STATEMENTS WERE EITHER REC ORDED OR CONFIRMED COPIES OF ACCOUNT WERE OBTAINED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT IN ONE OF THE STATEMENTS RECORDED IN THE CASE OF SMT. MEENAKSHI, SHE HAS DEP OSED OF HAVING NO INCOME AND THUS THE ADVANCEMENT OF CASH L OAN OF RS.20,000 BY HER CANNOT BE SAID TO BE GENUINE UNDER ANY CIRCUMSTANCES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE CASH/LOANS O F RS.14,27,340/- AS GENUINE PARTICULARLY WHEN THE NAT URE OF CASH DEPOSITS/LOANS IN ALL THE CASES IS THE SAME, IN AS MUCH AS MOST OF THE PERSONS/LOANS ARE NOT HAVING PANS AND ARE NOT A SSESSED TO TAX. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OF. 4. IN THE C.O. THE ASSESSEE HAS RAISED FOLLOWING GR OUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE RELIEF OF RS.14,27 ,340/- OUT OF THE TOTAL ADDITION MADE AT RS.32,45,500/- AS NO OPP ORTUNITY WAS ALLOWED TO THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE RELIEF AFTER CONSIDE RING THE REMAND REPORT OF THE AO. IT WOULD HAVE MADE NO DIFF ERENCE WHETHER THE AO HAS DRAWN ANY CONCLUSION OR NOT, AS IT WAS FOR THE CIT(A) TO DECIDE WHETHER THE ADDITION DESERVES TO BE DELETED OR NOT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS RIGHTLY CONSIDERED THE STATEMENT OF SMT. MEENAKSHI AS SHE HAS STATED IN ANSWER TO QUESTION NO.7 THAT S HE HAS GIVEN THIS AMOUNT FROM HER FAMILY SAVINGS. ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 4 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE RELIEF BECAUSE HAVIN G NO PAN DOES NOT MEAN THAT TRANSACTIONS ARE NOT GENUINE. 5. THE BRIEF FACTS IN THE CROSS APPEALS OF THE ASSE SSEE AND THE REVENUE ARE THAT THE ASSESSEE IS A PROPRIETORSHIP CONCERN D EALING IN MANUFACTURING, TRADING AND RESALE OF GOLD JEWELLERY, GOLD, SILVER AND BULLION. THE ASSESSEE IS CLAIMED TO HAVE RECEIVED ADVANCES FROM VARIOUS PAR TIES/PERSONS FOR PURCHASE OF GOLD WITH THE INSTRUCTIONS TO PURCHASE GOLD WHENEVER THERE IS FALL IN THE PRICES OF THE GOLD. THE ASSESSEE HAS AL SO RECEIVED ADVANCES FROM VARIOUS PARTIES/JEWELERS TO PURCHASE GOLD AND MAKE JEWELLERY OUT OF THAT. THE ASSESSEE HAD RETURNED THESE PARTIES JEWELLERY MADE OUT OF THIS GOLD PURCHASED BY THE ASSESSEE. THE AMOUNT ADVANCED BY SUCH PARTIE S WAS RETURNED WHEN THE JEWELLERY WAS NOT PURCHASED DURING THE IMPUGNED YEAR ITSELF. THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT. AS PER ANNE XURE A OF THE ORDER, THE AO HAD OBSERVED THAT THE ASSESSEE HAD RECEIVED CASH DEPOSITS FROM VARIOUS PERSONS. AS PER ANNEXURE-B CASH DEPOSITS H AS BEEN RECEIVED FROM VARIOUS PERSONS TO WHOM SALES HAVE BEEN MADE AND BA LANCE HAS BEEN REPAID AS CASH BUT NO ADDRESSES OF THE SAID PERSONS HAVE B EEN MENTIONED IN THE BOOKS OF ACCOUNT. THE TRANSACTIONS BEING FOUND NOT GENUINE, THE AO WORKED OUT THE ACCUMULATED PEAK AMOUNT OF CASH DEPOSITS OF RS.32.45 LAKHS AS ON 03.03.2006 SINCE THERE WAS OUTGOING OF WHOLE OF THI S CASH FROM 03.03.2006 TO 31.03.2006. IT WAS SUBMITTED BY THE ASSESSEE VI DE LETTER DATED 23.12.2008 ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 5 THAT THE ASSESSEE IS READY TO PRODUCE ALL CREDITORS AND THE NAMES MENTIONED IN THE BOOKS ARE TRADE CREDITORS AND THE ASSESSEE HAD RECEIVED THE AMOUNT FOR THE PURCHASE OF GOLD BUT THERE WAS FLUCTUATION IN THE RATES AND CONTINUOUS RISE IN THE PRICES MADE IT IMPOSSIBLE F OR THE PARTY TO PURCHASE. HENCE, THE AMOUNT WAS RETURNED TO THEM. THE ASSESSE E ALSO FILED ADDRESSES OF SOME OF THE PARTIES AND ASKED TO HAND OVER THE B OOKS SO IMPOUNDED SO THAT INFORMATION CALLED FOR MAY BE FILED. THE AO CO MPLETED THE ASSESSMENT ON 24.12.2008 BY OBSERVING THAT THE ASSESSEE WAS RE QUIRED TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE DEPOSITS, W HICH WERE NOT PROVED. ACCORDINGLY, THE PEAK VALUE OF RS.32,45,500/- WAS A DDED TO THE INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDITS AS PER PROVISION OF SECTION 68 OF THE ACT. 6. BEFORE THE LD. CIT(A), IT WAS ARGUED THAT ALL TH E CREDITORS WERE PRODUCED AS PER AOS DIRECTION. THE BOOKS OF ACCOUN T WERE LYING IN THE POSSESSION OF THE AO, WHICH WERE IMPOUNDED. THE AO STARTED RECORDING STATEMENT OF ONE OF THE CREDITORS MS. SANGEETA D/O SH. DES RAJ KHANNA ON 18.12.2008, BUT HER STATEMENT WAS ABRUPTLY LEFT H ALF THE WAY, RATHER ABANDONED TO BE RECORDED WITHOUT ASSIGNING ANY REAS ONS SINCE ALL THE CREDITORS, AS ASKED WERE PRODUCED FOR EXAMINATION B EFORE THE AO. BUT THE AO HAS NOT RECORDED THE STATEMENT WITH THE DIRECTIO N TO PRODUCE ALL OF THEM ON SOME OTHER DATE. THE ASSESSEE FILED COMPLETE AD DRESSES OF THE SAID ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 6 PERSONS. SOME OF THE ADDRESSES WERE REQUESTED TO BE FILED ON THE NEXT DATE OF HEARING AND BOOKS OF ACCOUNT WERE REQUIRED WHICH WE RE IMPOUNDED BY THE AO SO THAT THE INFORMATION CALLED FOR IS FILED. THE ASSESSEE HAD FILED AFFIDAVITS OF THE CREDITORS AND TALBANA UNDER SEC TION 131 WITH A REQUEST TO SUMMON THE CREDITORS, SO AS TO ENSURE AND ENFORCE P RESENCE OF REMAINING CREDITORS. 7. BEFORE THE LD. CIT(A), THE ASSESSEE FILED AN P APER BOOK CONTAINING COPY OF RETURN, AUDIT REPORT, REPLIES FILED BEFORE THE AO AND AFFIDAVITS SO AS TO EXPLAIN THE IMPUGNED CASH CREDITS. THE AO FURNI SHED THE REMAND REPORT DATED 30.11.2008 IN WHICH THE STATEMENTS OF 16 PERS ONS WERE RECORDED FOR WHICH THE COPIES OF THE STATEMENTS WERE SUPPLIED TO THE LD. CIT(A) AND THREE PERSONS OUT OF THE SAID LIST OF 19 PERSONS HA VE EXPIRED OR DEMISED. IN RESPECT OF THE INFORMATION CONCERNING ANNEXURE B, T HE AO HAD STATED THAT 23 PERSONS HAVE FURNISHED THEIR CONFIRMATIONS BUT NONE OF THEM HAVE MENTIONED THEIR PAN, AS PER COPY OF ACCOUNTS SUBMITTED. IT WA S ARGUED BEFORE THE LD. CIT(A) THAT THE AO HAD SUMMONED ONLY 19 PERSONS OUT OF LIST OF ANNEXURE A AND 16 PERSONS HAVE BEEN EXAMINED WHO HAD CONFIR MED OF HAVING GIVEN THE ADVANCES. AS REGARDS 3 PERSONS WHO HAD EXPIRED, THE ASSESSEE HAD SUBMITTED RELEVANT DOCUMENTS TO CONFIRM THE ADVANC ES GIVEN TO THEM. OUT OF ANNEXURE-B, THE AO HAD ASKED FOR THE CONFIRMATIO NS OF 23 PERSONS, WHICH WERE SUPPLIED BY THE SAID PERSONS IS NOT UND ER DISPUTE. THE AO WAS ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 7 REQUESTED TO SUMMON THE CREDITORS UNDER SECTION 13 1 AND HE CHOSE ONLY TO CALL FOR 19 PERSONS OUT OF ANNEXURE-A AND CALLED FO R CONFIRMATION OF 23 PERSONS OUT OF ANNEXURE-B. THE ASSESSEE WAS HAVING COMPLETE ADDRESSES OF ALL THE PERSONS WHO HAD GIVEN ADVANCES TO THE ASSES SEE, AS MENTIONED HEREINABOVE. SINCE DUE TO RISE IN PRICE OF GOLD, TH E GOLD COULD NOT BE PURCHASED AND THE AMOUNT WAS RETURNED TO THE SAID P ERSONS IS A MATTER OF RECORD AS PER BOOKS OF ACCOUNT AND THE AO CHOSE NO T TO CALL FOR THE INFORMATION/CONFIRMATION OR NOT TO EXAMINE THEM. T HEREFORE, THE ASSESSEE HAS DISCHARGED HIS ONUS OF PROVING THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND AS SUCH NO ADDIT ION SHOULD HAVE BEEN CALLED FOR. THE LD. CIT(A) AFTER HEARING BOTH THE PARTIES, PERUSING THE RECORD AND REMAND REPORT EXCLUDED 19 ENTRIES WHICH WERE EXPLAINED INCLUDING 3 PERSONS WHO HAD EXPIRED AND OUT OF AN NEXURE A CONFIRMED THE ADDITION OF RS.15,60,000/- AND RETAINED REST OF THE ADDITION. AS REGARDS ANNEXURE-B, THE LD. CIT(A) OBSERVED THAT 23 ENTRIES STAND EXPLAINED DURING THE REMAND PROCEEDINGS AND ACCORDINGLY SUSTAINED RS .2,57,660/- AND CONFIRMED THE REST OF THE ADDITION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD PROVIDED COMPLETE ADDRESSES OF ALL THE PERSONS FROM WHOM THE ASSESSEE HAD RECEIVED THE ADVANCES. THE EXPLANATION OF THE ASSESSEE THAT ADVA NCE SO RECEIVED WAS FOR ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 8 THE PURPOSE OF PURCHASE OF GOLD JEWELLERY HAVING BE EN PURCHASED FOR FEW OF THE PERSONS HAVE BEEN DEBITED TO THEIR ACCOUNTS AN D REST OF THE PERSONS BECAUSE OF THE PRICE RISE IN THE GOLD, THE GOLD COU LD NOT BE PURCHASED AND THE AMOUNT WAS RETURNED UP TO 31.03.2006. DURING THE REMAND PROCEEDINGS, THE AO CHOSE TO EXAMINE 19 PERSONS OUT OF WHICH 3 PERSO NS HAD EXPIRED FOR WHICH THE RELEVANT DOCUMENTS TO CONFIRM THE ADVANCE WERE SUBMITTED, IS NOT UNDER DISPUTE. AS REGARDS THE REST OF 16 PERSONS, THEY WERE EXAMINED AND HAD CONFIRMED THAT THE SAID ADVANCE WAS GIVEN BY T HE ASSESSEE. THIS IS ALSO NOT UNDER DISPUTE.THE ASSESSEE OUT OF ANNEXURE-B CH OSE TO FILE CONFIRMATIONS OF 23 PERSONS, WHICH WERE FILED IS N OT UNDER DISPUTE. WHEN THE AO WAS IN THE POSSESSION OF COMPLETE ADDRESSES OF EACH EVERY DEPOSITORS, IT WAS THE DUTY OF THE AO TO CALL FOR T HE INFORMATION, CONFIRM OR EXAMINE THEM TO FIND OUT THE IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE TRANSACTION. BUT THE AO CHOSE NOT TO ACT AND US E POWERS VESTED WITH HIM U/S 131 OF THE ACT OR U/S 133 (6) OF THE ACT. IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE ASSESSEE HAD DISCHARGED THE ONU S OF PROVING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S, THERE IS NO REASON OF MAKING ANY ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS, WHICH IN FACT, ARE THE TRADE CREDITORS. THE LD. CIT(A) IS NOT JUST IFIED IN RETAINING THE ADDITION OUT OF ANNEXURE A AND ANNEXURE-B BECAUSE OF THE REASONS ITA NO.568 & 606(ASR)/2011 C.O. 1(ASR)/2012 9 MENTIONED HEREINABOVE. THEREFORE, THE AO IS DIRECTE D TO DELETE ALL THE ADDITIONS OUT OF ANNEXURE-A & ANNEXURE-B SUSTAINED BY THE LD. CIT(A). 9. NOW, WE TAKE UP C.O. NO.1(ASR)/2012 TAKEN BY THE ASSESSEE. AS THE C.O. OF THE ASSESSEE IS SUPPORTIVE TO THE ORDER OF THE LD. CIT(A), THEREFORE, THE SAME IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.568(ASR)/2011 IS ALLOWED AND THE APPEAL OF THE REVENUE IN ITA NO.606 (ASR)/2011 IS DISMISSED. THE C.O. NO.1(ASR)/2012 OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH JUNE, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5TH JUNE, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: 2. THE 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.