Pandit Chaturbhuj Kaushik Education Society, Kaithal V. ACIT, Kurukshetra

CO 1/CHANDI/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7156 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Capital expenditure
• Section: 143(3); 142(1); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1411/CHD/2010 ASSESSMENT YEAR: 2006-07 ACIT, CIRCLE, V PANDIT CHATURBHUJ KAUSHIK KURUKSHETRA, EDUCATION SOCIETY, PUNDRI, KAITHAL. PAN: AAATP-6800H & CO NO.1/CHD/2011 IN ITA 1411/CHD/2010 PANDIT CHATURBHUJ KAUSHIK V ACIT, EDUCATION SOCIETY, KURUKSHETRA. PUNDRI, KAITHAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAISHREE SHARMA RESPONDENT SHRI PERMIL GOEL DATE OF HEARING : 01.05.2012 DATE OF PRONOUNCEMENT : 17.05.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30.09.2010 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SH ORT 'THE ACT'). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.23,99,310/- AND RS.6,59,340/- 2 BY ENTERTAINING FRESH EVIDENCE U/S 46A WITHOUT APPRECIATING PROPERLY THAT THE ASSESSEE HAD BEEN ALLOWED SUFFICIENT OPPORTUNITIES DURING ASSESSMENT PROCEEDINGS AND ON THE FACTS OF THE CASE, ADDITIONAL EVIDENCE FILED WAS NOT ENTERTAINABLE. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. IN CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : L) THE A.O. ERRED IN LAW & FACTS IN FRAMING ASSESSMENT, WITHOUT ISSUING NOTICE U/S 143(2),PARTICULARLY AFTER ASSESSEE FILED RETURN/ LE TTER ON 3/11/09 IN RESPONSE TO NOTICE U/S 148, REQUESTING TO TREAT THE RETURN ORIGINALLY FILED, AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. 2) THE A.O. ERRED IN LAW & FACTS ON MERITS ALSO, REVENUE+CAPITAL EXPESNES ARRIVES AT RS.18069179, WHICH IS MORE THAN 85%OF GROSS RECEIPTS OF RS. 12436294 (& NOT RS:12433494, AS MENTIONED IN ASSESSMENT ORDER) THEREFORE, RS.2300978/- ADDITION MADE ON ACCOUNT OF ALLEGED NET SURPLUS IS NOT BASED ON FACTS. 4. THE REVENUE IN THE SOLE SUBSTANTIVE GROUND OF APPEAL, CHALLENGED THE DELETION OF ADDITIONS OF RS.23,99,310/- AND RS.6,59,340/- BY THE CIT(A), BY ENTERTAINING FRESH EVIDENCE U/S 46A, WITHOUT APPRECIATING PROPERLY THAT THE ASSESSEE HAD BEEN AL LOWED SUFFICIENT OPPORTUNITIES DURING ASSESSMENT PROCEEDI NGS. 5. LD. 'DR', IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, STATED THAT THE CIT(A) HAS NOT FOLLOWE D THE 3 PROCEDURE LAID DOWN UNDER RULE 46A OF THE IT RULES, 1962. LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE AO. 6. LD. 'AR' PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(A). 7. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOCIETY FILED ITS RETURN OF INCOME, CLAIMING EXEMPT ION U/S 10(23C)(VI) OF THE ACT. THE CCIT, PANCHKULA, AS PE R ORDER DATED 30.10.2007 REJECTED THE APPLICATION OF THE ASSESSEE, FILED FOR EXEMPTION U/S 10(23C)(VI) OF TH E ACT. CONSEQUENTLY, THE SURPLUS RECEIPT OF RS.23,00,978/- WAS TREATED AS TAXABLE. THE AO, ISSUED NOTICE U/S 148 O F THE ACT ON 23.7.2008 AFTER RECORDING REASONS, COPY OF W HICH WAS SUPPLIED TO THE ASSESSEE ON 7.8.2008. THE ASSESSMENT PROCEEDINGS COMMENCED BY FIXING CASE FOR 24.09.2008. NONE ATTENDED ON THAT DAY. FRESH OPPORTUNITY WAS ALLOWED FOR 26.10.2009, WHICH WAS SUBSEQUENTLY ADJOURNED TO 3.11.2009 AND ULTIMATELY, ADJOURNED TO 16.11.2009 AT THE REQUEST OF THE COUNS EL OF THE ASSESSEE. ON 16.11.2009, NONE ATTENDED AND THE AO FRAMED THE ASSESSMENT U/S 144 OF THE ACT, FOR THE S AKE OF PROPER APPRECIATION OF THE SAME. 8. BEFORE THE LD. CIT(A), ASSESSEE FILED APPLICATIO N FOR ADMISSION OF ADDITIONAL EVIDENCE AND THE LD. CIT(A) ADMITTED THE SAME. FINDINGS OF THE CIT(A) ARE REPRODUCED HEREUNDER : 1.08 THE REQUEST OF THE APPELLANT TO ENTERTAIN ADDITIONAL EVIDENCE IS CONSIDERED. AS DISCUSSED 4 ABOVE THAT THE AO MADE TWO ADDITIONS, ONE IS ON ACCOUNT OF UNEXPLAINED CREDITS AND THE OTHER ONE IS THE DISALLOWANCE OF INTEREST ON THE GROUND THAT THE SAME PERTAINED TO THE ADVANCES MADE FOR PURCHASE OF CAPITAL GOODS. AT THE OUTSET, THE APPELLANT SUBMITTED THAT THESE ADDITIONS WERE MADE WITHOUT AFFORDING ANY OPPORTUNITY. FURTHER, ENTIRE CREDITS WHICH WERE TAKEN BY THE AO AS WAS INTRODUCED DURING THE YEAR, WERE THE BROUGHT FORWARD CREDITS AND IN SUPPORT OF IT, THE APPELLANT FILED THE FINANCIAL STATEMENTS OF THE LAST YEAR AND THE COPY OF ACCOUNT OF THESE CREDITORS. SIMILARLY, THE AO TOOK THE CAPITAL EXPENDITURE AS ADVANCE MADE FOR PURCHASE OF CAPITAL GOODS THOUGH THE SAME WAS THE EXPENDITURE ACTUALLY INCURRED AND IN SUPPORT OF , THE APPELLANT FILED THE RELEVANT DETAILS, COPY OF ACCOUNTS OF THE SUPPLIERS AND OF THE BILLS OF PURCHASE OF CAPITAL GOODS AS AN ADDITIONAL EVIDENCE. IN VIEW OF THE FACTS THAT ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT AND DISALLOWANCE OF INTEREST MADE BY THE AO WITHOUT AFFORDING ANY OPPORTUNITY TO THE APPELLANT AND THE MATERIAL BROUGHT ON RECORD IS RELEVANT TO DECIDE THESE ISSUES, THE REQUEST OF THE APPELLANT TO ADMIT THESE DOCUMENTS AS ADDITIONAL EVIDENCE IS HEREBY ALLOWED. 2.00 THE FIRST ADDITION HAS BEEN MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT AMOUNTING TO RS. 23,99,310/-. THE AO NOTED IN HIS ORDER THAT THESE CREDITS WERE INTRODUCED 'DURING THE YEAR AND THE ASSESSEE FAILED TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE APPELLANT SUBMITTED THAT THESE CREDITORS HAS BEEN BROUGHT FORWARD FROM THE LAST YEAR AND NONE OF THESE CREDITS WAS INTRODUCED DURING THE YEAR UNDER CONSIDERATION AND HENCE NO ADDITION 5 ON THIS ACCOUNT IS CALLED FOR DURING THE YEAR UNDER CONSIDERATION. IN SUPPORT OF ITS CLAIM, THE APPELLANT FILED THE BALANCE-SHEET ALONGWITH ITS ANNEXURES OF THE LAST YEAR AND COPY OF ACCOUNT OF THESE CREDITORS AND AS SUCH THE PLEA OF THE APPELLANT IS VERIFIABLE. SINCE NONE OF THESE CREDITS WAS INTRODUCED DURING THE YEAR UNDER CONSIDERATION, NO ADDITION ON THIS ACCOUNT CAN BE MADE IN THE YEAR UNDER CONSIDERATION AND HENCE THE ADDITION MADE BY THE AO ON THIS ACCOUNT IS HEREBY DELETED. GROUNDS OF APPEAL NO. 2 IS AS SUCH ALLOWED. 9. A PERUSAL OF THE FINDINGS OF THE CIT(A) CLEARLY REVEAL THAT THE ADDITIONAL EVIDENCE IS ADMITTED BY HIM UND ER RULE 46A OF THE RULES WITHIN THE PARAMETERS PRESCRI BED THEREIN. THE CIT(A) HAS DULY RECORDED THE REASONS BEFORE ADMISSION OF THE NEW EVIDENCE. THEREFORE, WE UPHOL D THE FINDINGS OF THE CIT(A) IN THE MATTER. 10. THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT AMOUNTING TO RS.23,99,310/- ON THE GROUND THAT THE SAME PERTAIN TO THE EARLIER YEARS. DURING THE YEAR UNDER REFERENCE , THESE BALANCES REPRESENTED ACTUALLY FORWARD BALANCES. I N VIEW OF THIS, FINDINGS OF THE CIT(A) DO NOT SUFFER FROM ANY INFIRMITY AND THE SAME ARE UPHELD. 10(A) AS FAR AS THE ADDITION OF RS.6,59,340/- DELET ED BY THE CIT(A), IS CONCERNED, WE ARE OF THE OPINION THAT THE SAME HAS BEEN DELETED ON VALID GROUNDS, AS IS EVIDENT FROM THE FINDINGS OF THE CIT(A), AS REP RODUCED 6 HEREUNDER: 2.01 THE AO FURTHER DISALLOWED CLAIM OF INTEREST O F RS.6,59,340/- ON THE GROUND THAT THE ASSESSEE PAID ADVANCE FOR CAPITAL GOODS AT RS.54,94,500/- AND 1 AS PER P ROVISO TO SECTION 36(1), INTEREST PAID IN RESPECT OF ASSETS N OT PUT TO USE IS TO BE CAPITALIZED. THE APPELLANT IN THE WRITTEN SUBMISSIONS CLAIMED THAT AMOUNT WAS ACTUALLY INCURRED AND THE S AME WAS NOT ADVANCE FOR CAPITAL GOODS AS OBSERVED BY THE AO AND HENCE DISALLOWANCE OF INTEREST MADE BY THE AO IS NO T CALLED FOR. THE APPELLANT ENCLOSED THE RELEVANT DETAILS, C OPY OF ACCOUNTS OF THE SUPPLIERS OF GOODS AND COPY OF BILLS IN SUPPORT OF HIS CLAIM. THE PLEA OF THE APPELLANT IS AS SUCH V ERIFIABLE AND HENCE DISALLOWANCE OF INTEREST MADE BY THE AO IS HE REBY DELETED. GROUND OF APPEAL NO.3 IS AS SUCH ALLOWED. 10(B) IN VIEW OF THE ABOVE DISCUSSIONS, THE FINDING S OF THE CIT(A) ARE UPHELD. 11. GROUND NO. 2 IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. CO 1/CHD/2011 13. IN THE CO, ASSESSEE APPELLANT CONTENDED THAT AO ERRED IN LAW & FACTS IN FRAMING ASSESSMENT, WITHOUT ISSUING NOTICE U/S 143(2),PARTICULARLY AFTER ASSESS EE FILED RETURN/ LETTER ON 3/11/09 IN RESPONSE TO NOTICE U/S 148, REQUESTING TO TREAT THE RETURN ORIGINALLY FILED, AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. LD. 'A R' PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. ACIT & ANR V HOTEL BLUE MOON (S.C) 2. CIT V BALDEV RAJ MEHRA (P&H) 3. KUBER TOBACCO PRODUCTS (P) LTD. V DCIT (ITAT,SB) 4. ASHOK ANAND V CIT (MP HIGH COURT ) 5. CWT V HUF OF SCIDIA (BOMBAY HIGH COURT ) 14. LD. 'DR', ON THE OTHER HAND, VEHEMENTLY CONTEND ED THAT THE NOTICE U/S 143(2) WAS SERVED UPON THE ASSE SSEE, AS IS EVIDENT FROM THE PERUSAL OF THE RELEVANT PART OF THE 7 ASSESSMENT ORDER. THERE WAS A COMPLETE FAILURE ON THE PART OF THE APPELLANT TO RESPOND TO THE NOTICE U/S 148 OF THE ACT, WHEREIN TIME LIMIT WAS PRESCRIBED FOR FILI NG RETURN OF INCOME. THE ASSESSEE DID NOT FILE RETURN OF INCOME AS PER THE PRESCRIBED TIME LIMIT. HOWEVER, IN VIEW OF THE NOTICE ISSUED BY THE AO U/S 143(2), THE RE IS NO LEGAL INFIRMITY IN THE ASSUMPTION OF JURISDICTIO N BY THE AO. 15. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND CASE LAWS. IN THIS CONTEXT, W E DEEM IT FIT TO REFER TO THE RELEVANT PART OF THE ASSESSM ENT ORDER TO MAKE FACTUAL MATRIX OF THE CASE CLEAR IN THE MAT TER. THE AO ISSUED NOTICE U/S 148 OF THE ACT ON 23.7.200 8 AFTER RECORDING REASONS, WHICH WAS DULY SERVED ON T HE ASSESSEE ON 7.8.2008 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME WITHIN THE PRESCRIBED TIME LIMIT MENTIONED IN THE SAID NOTICE. SUBSEQUENTLY, NOTICE S U/S 142(1) AND 143(2) WERE ISSUED ON 10.09.2008 FIXING THE CASE FOR 24.09.2008, AS IS EVIDENT FROM PERUSAL OF THE ASSESSMENT ORDER (AT PAGE 1 PARA 3). IT IS EVIDENT THAT THE NOTICE U/S 148 OF THE ACT WAS SERVED ON THE ASS ESSEE ON 7.8.2008 WHEREAS THE NOTICE U/S 143(3) OF THE AC T WAS ISSUED ON 10.09.2008, AFTER A MONTH, FROM THE DATE OF SERVICE OF THE NOTICE ISSUED U/S 148 OF THE ACT. N EEDLESS TO SAY THAT THERE IS A FAILURE ON THE PART OF THE A SSESSEE, TO FILE RETURN OF INCOME, IN RESPONSE TO SAID NOTIC E. HOWEVER, THE ASSESSEE, ON 3.11.2009 FILED WRITTEN R EPLY, STATING THAT ORIGINAL RETURN FILED EARLIER, MAY BE TREATED 8 AS HAVING BEEN FILED, IN RESPONSE TO SECTION U/S 14 8 OF THE ACT. THE PROCEEDINGS UNDER REFERENCE WERE ATTE NDED TO BY SHRI RAJIV ARORA. A PERUSAL OF THE ASSESSMEN T ORDER, (AT PAGE 1), CLEARLY REVEALS THAT ANOTHER NO TICE U/S 143(2) WAS ISSUED, ON 8.10.2009, FIXING THE CASE FO R 26.10.2009. ON 26.10.2009, SHRI RAJIV ARORA, C.A. ATTENDED AND REQUESTED FOR ADJOURNMENT. IT IS CLEAR FROM PERUSAL OF THE SAID ASSESSMENT ORDER THAT THE PROCEEDINGS WERE ATTENDED TO FROM TIME TO TIME BY S HRI RAJIV ARORA. IN SUCH A FACTUAL MATRIX, IT CANNOT B E SAID THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND SERVED BY THE AO. THE AO HAS ISSUED TWO NOTICES U/ S 143(2) ON 10.09.2008 AND AGAIN ON 8.10.2009. THE A O CANNOT WAIT ENDLESSLY TO MOTIVATE THE ASSESSEE TO F ILE RETURN OF INCOME, IN RESPONSE TO HIS NOTICE ISSUED U/S 148 OF THE ACT WITHIN THE PRESCRIBED TIME LIMIT IN THE SAID NOTICE. SO, THERE IS A CLEAR STATUTORY DEFAUL T ON THE PART OF THE ASSESSEE AND THE ASSESSEE CANNOT BE CONFERRED JUDICIAL BENEDICTION FOR NEGLIGENCE AND D EFAULT. 16. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND CASE LAWS RELIED UPON BY THE ASSESSEE, PERTAINING TO ISSUANCE OF NOTICE U/S 143( 2) OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE CASE LAW S CITED BY THE LD. 'AR' AND FOUND THAT THE SAME SUPPO RT THE CASE OF THE REVENUE AND NOT THAT OF THE ASSESSEE. THERE IS NO STATUTORY DEFAULT ON THE PART OF THE REVENUE AS CONTENDED BY THE LD. 'AR'. ISSUANCE OF NOTICE U/S 143(2) OF THE ACT, IN SUCH A FACT-SITUATION, IS NOT SUBSER VIENT TO 9 THE VOLITION OF THE ASSESSEE. IF THE ASSESSEE, LIKE THE PRESENT ONE, RESPONDS TO THE NOTICE ISSUED U/S 148 OF THE ACT, JUST 7 DAYS BEFORE 31 ST DECEMBER OF THE YEAR, THE DATE ON WHICH THE RELEVANT ASSESSMENT IS GETTING TI ME BARRED, SHOULD THE REVENUE CONTINUE TO WAIT TILL TH E ASSESSEE RESPONDS TO THE NOTICE U/S 148 OF THE ACT, FOR THE PURPOSE OF ISSUE OF NOTICE U/S 143(3) OF THE AC T. THE ANSWER CAN NEVER BE IN AFFIRMATIVE TERMS. THE AO H AS DULY ISSUED THE REQUIRED STATUTORY NOTICE U/S 143(2 ) OF THE ACT, IN THE PRESENT CASE AND, HENCE, THIS GROUN D OF APPEAL RAISED IN C.O. IS DISMISSED. 17. IN GROUND NO.2, RAISED IN THE CO, THE LD. 'AR' IN THE APPELLATE PROCEEDINGS BEFORE US, STATED THAT THIS G ROUND OF APPEAL IS MERELY A STATEMENT OF FACTS. 18. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS IN THE CONTEXT OF THE SAID CO AND FOUND THAT IN THE LI GHT OF THE STATEMENT MADE AT BAR BY THE LD. COUNSEL, FOR T HE ASSESSEE, NO ADJUDICATION IS CONSIDERED ESSENTIAL 19. IN THE RESULT, BOTH, APPEAL OF THE REVENUE AND CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH MAY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH