Assistant Commissioner of Income-Tax, Central Circle-1,(1), BILASPUR(CG) V. E-MUSEKHAN KADER BHAI, BILASPUR(CG)

CO 17/BIL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7067 (ITAT-RAIPUR)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K SHARMA
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 68; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BILASPUR BE NCH BILASPUR BEFORE SHRI SHAILENDRA KUMAR YADAV (J.M) & SHRI R.K.PANDA(A.M) ITA NO. 161/BLPR/2011(A.Y.2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIR. 1(1), MAHIMA COMMERCIAL COMPLEX, VYAPAR VIHAR, BILASPUR (CG) (APPELLANT) VS. M/S. E.MUSEKHAN KADER BHAI BANDUKWALA SADAR BZAR, BILASPUR(CG) PAN:AABFE0769 (RESPONDENT) C.O.NO.17/BLPR/2011 (ARISING OUT OF ITA NO.161/BLPR/2011, A.Y. 2007-08) M/S. E.MUSEKHAN KADER BHAI BANDUKWALA SADAR BZAR, BILASPUR(CG) PAN:AABFE0769 (CROSS OBJECTOR) VS. ASSTT. COMMISSIONER OF INCOME TAX, CIR. 1(1), MAHIMA COMMERCIAL COMPLEX, VYAPAR VIHAR, BILASPUR (CG) (APPELLANT IN APPEAL) REVENUE BY : SHRI M.K.SHARMA ASSESSEE BY : NONE DATE OF HEARING : 08/02 /2012 DATE OF PRONOUNCEMENT : 10/0 2/2012 ORDER PER SHAILENDRA KUAMAR YADAV, J.M, THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF CIT(A), BILASPUR DATED 31/3/2011 FOR THE ASSESSMENT YEAR 2007-8. ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 2 THE ASSESSEE HAS ALSO FILED CROSS OBJECTION 17/BLPR /2011 AGAINST THE SAME ORDER OF THE CIT(A). ITA NO.161/BLPR/2011(A.Y. 2007-08): 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL IN ITS APPEAL: 1(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN AL LOWING RELIEF OF RS. 44,97,678/-- IN SPITE OF THE FACTS ON RECORD S THAT THE AO HAS COMPLETED THE ASSESSMENT U/S. 144 OF THE ACT AS THE ASSESSEE HAD NOT COMPLIED THE QUERIES MADE BY THE A O DURING THE ASSESSMENT PROCEEDINGS AND THE APPEAL HAS BEEN ALLOWED ON THE SUBMISSIONS OF THE ASSESSEE WITHOUT ALLOWING AN OPPORTUNITY TO THE AO. (B) THAT THE FACTS IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 25,000/- WHICH HAS BEEN ADDED BY THE AO FOR WAN T OF BOOKS OF ACCOUNTS AND OTHER SUPPORTING EVIDENCES WI TH REFERENCE TO VARIOUS CLAIMS OF EXPENSES CLAIMED BY THE ASSESSEE. (C) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 7,24,937/- WHICH HAS BEEN ADDED BY THE AO ON AC COUNT OF G.P ON THE SALES SUPPRESSED BY THE ASSESSEE EQUIVAL ENT TO STOCK DEFICIT FOUND AT TIME OF SURVEY. (D) THAT THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 32,97,741/- WHICH HAS BEEN HELD BY THE AO AS FI CTITIOUS CREDITORS LIABILITY SINCE THE ASSESSEE HAS FAILED T O SUBSTANTIATE THE EXISTENCE OF SUCH LIABILITY AND IN SPITE OF TH E FACTS ON RECORDS THAT THE CONFIRMATIONS OF CREDITORS SIGNED BY THE DIRECTOR OF THE ASSESSEE COMPANY AND COMPLETE ADDRE SS AND I.T. ASSESSMENT PARTICULARS OF CREDITORS WERE NOT SUBMITTED BY THE ASSESSEE BEFORE THE AO. ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 3 (E) THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 4,50,000/- WHICH HAS BEEN HELD BY THE AO U/S. 6 8 AS THE ASSESSEE FAILED TO EXPLAIN THE SOURCES OF THE DEPOSITS/INVESTMENTS MADE IN THE PARTNERS CAPITAL A CCOUNT AS ON 31/3/2007. 2. THAT THE LD. CIT(A)S ORDER BEING ERRONEOUS, PER VERSE AND CONTRARY TO THE FACTS ON RECORD, THE SAME MAY BE SE T ASIDE WHILE THAT OF THE AO BE RESTORED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING INSPITE OF SERVICE OF NOTICE SO THE APPEAL IS DEC IDED ON THE BASIS OF THE ARGUMENTS OF LD. D.R AND MATERIAL AVAILABLE ON RECORD. 4. THE FIRST ISSUE IS WITH REGARD TO ESTIMATED LUMP SUM RS. 25,000/- MADE BY AO TO THE DECLARED TRADING RESUL TS. ACCORDING TO THE AO, BOOKS OF ACCOUNTS WERE NOT PRODUCED FOR VERIFICATION AND HENCE THE BOOK RESULTS COULD NOT BE ACCEPTED. IN A BSENCE OF SUCH DETAILS THE AO MADE A LUMPSUM ADDITION OF RS. 25,0 00/-. THE MATTER WAS CARRIED BEFORE CIT(A) AND THE SAME HAS BEEN UPHELD BY CIT(A). LD. D.R SUPPORTED THE ORDER OF AO. AFTER HEARING THE ARGUMENTS OF LD. D.R AND PERUSING THE MATERIAL ON R ECORD WE FIND THAT THE ADDITION IN QUESTION HAS BEEN MADE ON ADHO C BASIS BY THE AO AND THE SAME HAS NOT BEEN SUBSTANTIATED BY ANY COGENT REASONING, THEREFORE, THE SAME HAS RIGHTLY BEEN DEL ETED BY THE CIT(A), WE UPHOLD THE SAME. 5. THE NEXT ISSUE IS WITH REGARD TO ESTIMATED ADDI TION OF RS.7,24,937/- MADE BY THE AO, ON ALLEGED SUPPRESSED SALES . ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 4 ACCORDING TO AO THE QUANTUM OF STOCK FOUND SHORT BY THE SURVEY TEAM WAS THE UNRECORDED SALES AND ON SUCH PRESUMED UNRECORDED SALE, THE AO ESTIMATED THE SUPPRESSED GP @ 16% WHIC H RESULTED IN THE IMPUGNED ADDITION. THE MATTER WAS CARRIED BE FORE THE CIT(A), WHO DELETED THE ADDITION MADE BY THE AO. AT THE AS SESSMENT LEVEL ASSESSEE HAS EXPLAINED THE FACTUAL INFIRMITIES IN THE STOCK OF INVENTORIES PREPARED BY SURVEY TEAM WHICH WAS NOT DEMOLISHED BY AO IN ANY WAY. THERE IS NOTHING ON RECORD TO SUG GEST THAT ASSESSEE IN FACT EARNED MORE RETURNS FROM ABOVE STO CKS. THE AO HAS NOT BROUGHT ANY EVIDENCE TO SUBSTANTIATE THE A BOVE ADDITION, SAME WERE MADE ON WILD ESTIMATIONS AND SUSPICIONS . IN THE EVEN OF ANY DOUBT OR DISAGREEMENT WITH THE STATED FACTS BEFORE TAKING ANY ADVERSE VIEW BY AO SHOULD FORM THE BASIS IN TH E FORM OF EVIDENCE WHICH IS MISSING IN THIS CASE. ESTIMATION S OF ADDITIONS ARE NOT BASED ON EVIDENCE ON RECORD BUT ON PRESUMPTIONS AND CONJECTURES SO ADDITION IN QUESTION ARE JUSTIFIED AND THE SAME HAS RIGHTLY BEEN DELETED BY THE CIT(A). WE UPHOLD THE SAME. 6. THE NEXT ISSUE IS AGAINST DELETION OF ADDITION O F RS. 32,97,741/- MADE BY AO ON ACCOUNT OF BOGUS CREDITOR S LIABILITY. THE AO OBSERVED THAT THE CONFIRMATIONS OBTAINED BY THE ASSESSEE FROM THE SUNDRY CREDITORS AND FILED IN ASSESSMENT P ROCEEDINGS BEFORE HIM, WERE FABRICATED AND HENCE THE LIABILITY SHOWN BY THE ASSESSEE UNDER THE HEAD SUNDRY CREDITORS WAS FOUND BOGUS LIABILITY AND THIS PRESUMPTION OF AO WAS THE BASIS FOR THE ADDITION ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 5 IN QUESTION. THE MATTER WAS CARRIED BEFORE THE CIT (A) WHO GRANTED RELIEF TO THE ASSESSEE , THE SAME HAS BEEN OPPOSED BEFORE US.. 7. WE FIND THAT THE CIT(A) HAS GRANTED RELIEF TO TH E ASSESSEE BY ACCEPTING THE CONTENTIONS RAISED ON BEHALF OF THE A SSESSEE. THE CIT(A) ACCEPTED SUNDRY CREDITORS ACCOUNT BY OBSE RVING THAT THE PROVISIONS OF SECTION 68 WERE NOT ATTRACTED TO THE AMOUNTS REPRESENTING PURCHASES MADE ON CREDIT. THERE IS N OTHING ON RECORD TO SUGGEST THAT THE IMPUGNED SUMS ASSESSED U/S. 68 OF THE ACT WER INCOME EARNED BY THE ASSESSEE DURING THE RELEVANT P REVIOUS YEAR FROM SOURCES UNDISCLOSED THE DEPARTMENT IN THE FORM OF THE PRESUMED UNEXPLAINED CASH CREDIT. WHILE CIT(A) GRA NTING RELIEF TO THE ASSESSEE,AO WAS NOT CONFRONTED TO EVIDENCE PR ODUCE BEFORE HIM FOR GRANTING RELIEF BY WAY OF REMAND REPORT O R OTHERWISE WHICH IS NOT JUSTIFIED. SO IN THE INTEREST OF JUSTICE WE SET ASIDE THE MATTER TO THE CIT(A) FOR DECIDING THE SAME AS PER LAW AND FACT AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE BOTH TH E PARTIES. SINCE WE ARE RESTORING THIS ISSUE ON THE PRELIMINARY GROU ND AS MENTIONED ABOVE WE ARE REFRAINING TO COMMENT ON THE MERIT OF THE ISSUE ON HAND. 8. THE NEXT ISSUE IS WITH REGARD TO ALLOWING RELIEF OF RS. 4,50,000/- ON ACCOUNT OF CREDIT TO PARTNERS CAPITAL ACCOUNTS. ACCORDING TO THE AO THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT IN RESPECT OF THE DEPOSITS IN PARTNERS C APITAL ACCOUNTS AND HENCE, PLACING RELIANCE ON THE DECISION OF THE JURISDICTIONAL ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 6 HIGH COURT OF CHHATTISGARH IN THE CASE OF M/S. RAI SONS ENGINEERS AND CONTRACTORS VS. CIT IN ITA NO.95/2000 DATED 8/7 /2009 THE ADDITION IN QUESTION WAS MADE. THE MATTER WAS CARR IED BEFORE FIRST APPELLATE AUTHORITY WHO OBSERVED THAT THE ASSESSEE HAS FILED PARTNERS CAPITAL ACCOUNTS, AS APPEARING IN THE BOOK S OF THE FIRM AND COPIES OF I.T. RETURNS, REFLECTING THE FACT OF IMPU GNED DEPOSITS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE FURTHER OBSERVED THAT NO FURTHER QUERY WAS RAISED NOR CLAR IFICATIONS WAS SOUGHT FROM THE ASSESSEE IN THIS REGARD. SO CIT( A) OBSERVED THAT ON FACTS AND IN LAW BECAUSE THE CREDITORS HAD ACC EPTED TO HAVE ADVANCED MONEY TO THE ASSESSEE FROM SOURCES DISCLOS ED BY THEM AND SINCE THEY ARE BEING ASSESSED TO TAX, THEIR ID ENTITY AND CREDITWORTHINESS WERE BEYOND SHADOWS OF DOUBT HENC E THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED AND THE SAME WAS DELETED BY CIT(A). WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A), WHICH NEED NO INTERFERENCE ON OUR PART, THEREFORE, WE UPH OLD THE SAME. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. CO NO.17/BLPR/2011: 10. THE CROSS OBJECTION FIELD BY THE ASSESSEE IS SI MPLY IN SUPPORT OF THE ORDER OF CIT(A) ON ALL COUNTS WHICH IS DEALT BY US IN REVENUES APPEAL WHICH WILL TAKE CARE OF THE OBJECTIONS RAI SED ON ACCOUNT OF VARIOUS ADDITIONS. THE CROSS OBJECTION IS DISPOSED OF ACCORDINGLY. ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 7 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED AND THAT OF CROSS OBJECTIONS IS DISPOSED OFF AS INDICAT ED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF FEB. 2012. SD/- SD/- (R.K.PANDA) (SHAI LENDRA KUMAR YADAV)) ACCOUNTANT MEMBER JUDICIA L MEMBER BILASPUR,DATED. 10 TH FEB. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4.THE CIT(A)- CONCERNED 5. THE D.R BIL ASPUR BENCH. (TRUE COPY) BY ORDER SR. PRIVATE SECRETARY, ITAT, BILASPUR BENC H BILASPUR VM. ( ITA NO. 161/BLPR/2011& CO 17/BLPR/11 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 8/2/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9/2/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER