Sh. Deepak Takiar, Ludhiana V. ITO, Ludhiana

ITA 1044/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80924 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1044/CHD/2011 ASSESSMENT YEAR: 2007-08 SHRI DEEPAK TAKIAR, V THE ITO, V(1), 2495/1A, LUDHIANA. STREET NO.3, NEW JANTA NAGAR, LUDHIANA. PAN: AAFPT7788M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMA R RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 09.10.2014 DATE OF PRONOUNCEMENT : 15.10.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS)-II LUDHIANA DATED 03.10.2011 FOR ASSES SMENT YEAR 2007-08. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. 3. ON GROUND NO. 1 & 2, THE ASSESSEE CHALLENGED ADD ITION OF RS. 16,31,389/- UNDER SECTION 41(1) ON ACCOUNT OF R EMISSION OF TRADE LIABILITY AND FOR NOT GIVING SUFFICIENT OPPOR TUNITY AT THE ASSESSMENT STAGE. 2 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSING OFFICER MADE THE ADDITION OF RS. 16,31,389/- ON ACCOUNT OF REMISSION OF TRADING LIABILITY UNDER SECTION 41(1)(A) OF THE INCOME TAX ACT IN RESPECT OF M/S JAI AMBEY ISPAT, MANDI GOBINDGARH , M/S K.S. MACHINE TOOLS (INDIA), LUDHIANA AND M/S MANJEET SAL ES (INDIA) LUDHIANA IN A SUM OF RS. 11,86,040/-, RS. 2,16,200/ - AND RS. 2,29,149/- RESPECTIVELY. THE EXPLANATION OF THE AS SESSEE ON THIS ISSUE ALONGWITH DETAILS WERE CALLED FOR. THE ASSESSEE'S REPLY IS CONSIDERED BY ASSESSING OFFICER IN WHICH I T WAS EXPLAINED THAT THE LIABILITIES WERE BROUGHT FORWARD FROM EARLIER YEARS AND HAVE BEEN SETTLED BY MAKING CASH PAYMENTS TO THESE PARTIES IN THE SUBSEQUENT YEARS. THE ASSESSING OFF ICER CROSS VERIFIED THE CLAIM OF THE ASSESSEE AND LETTERS UNDE R SECTION 133(6) WERE ISSUED TO ALL THESE THREE CREDITORS. I N THE CASES OF M/S JAI AMBEY ISPAT, MANDI GOBINDGARH AND M/S MANJE ET SALES (INDIA) LUDHIANA, THE SAME LETTERS RETURNED UNSERVE D BY THE POSTAL AUTHORITIES WITH THE REMARKS THAT NOT KNOWN AT THE GIVEN ADDRESS AND INCOMPLETE ADDRESS. IN THE CASE OF M/S K.S. MACHINE TOOLS (INDIA), PARTY HAS NEITHER RESPONDED NOR THE LETTER RETURNED. THESE FACTS WERE BROUGHT TO THE N OTICE OF ASSESSEE AND EXPLANATION OF THE ASSESSEE WAS CALLED FOR. THE INSPECTOR WAS ALSO DEPUTED TO VERIFY CLAIM OF THE A SSESSEE. IT WAS REPORTED THAT OWNER OF M/S JAI AMBEY ISPAT HAS EXPIRED AND NAME OF HIS WIFE IS SMT. KUSUM LATA CONTRARY TO SMT. SUDHA RANI AS CLAIMED BY ASSESSEE. WIFE OF THE DEC EASED DENIED RECEIPT OF ANY AMOUNT. IN THE CASE OF M/S K .S.MACHINE TOOLS, THE OWNER DENIED TO HAVE ISSUED ANY SALE BIL L TO THE ASSESSEE. IN THE CASE OF M/S MANJEET SALES (INDIA) , NO SUCH 3 CONCERN WAS FOUND ON SPOT ENQUIRIES. THE ASSESSING OFFICER, AFTER DISCUSSING ALL THE MATERIAL AND CONFRONTING T HE MATERIAL TO THE ASSESSEE CAME TO THE FINDING THAT IT IS A CLEAR CASE OF REMISSION OF TRADE LIABILITY UNDER SECTION 41(1) AN D ACCORDINGLY MADE THE ADDITION. 5. IT WAS PLEADED BEFORE LD. CIT(APPEALS) THAT ASSE SSEE HAD ADMITTED LIABILITY TO PAY. THEREFORE, THE LIABILIT Y HAS NOT CEASED TO EXIST. THE LD. CIT(APPEALS), HOWEVER, DID NOT A CCEPT CONTENTION OF THE ASSESSEE AND DISMISSED THIS GROUN D OF APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 5 OF THE APPE LLATE ORDER ARE REPRODUCED AS UNDER : 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND R EPLY SUBMITTED BY THE COUNSEL OF THE ASSESSEE. THE ASSES SEE DURING THE ASSESSMENT PROCEEDINGS WAS ASKED TO PROVE THE AUTHENTICITY OF THE LIABILITY EXISTING IN THE CASE OF M/S JAI AMBEY ISPAT AMOUNTING TO RS. 1 1 ,86,040/-, M/S K.S MACHINE TOOLS (INDIA) AMOUNTING TO RS.216200/- AND M /S MANJEET SALES (INDIA) AMOUNTING TO RS.2,29,149/-. T HE ASSESSEE HAD CLAIMED TO HAVE REPAID THE SAID LIABILITIE S BY MAKING CASH PAYMENTS. THE ASSESSING OFFICER RECORDED THE STATEMENT OF THE OWNERS OF THE SAID FIRMS AND IT CAM E TO LIGHT THAT EITHER THE LIABILITY ITSELF DID NOT EXIST OR THE ASSESSEE HAS SHOWN THE REPAYMENT BY CASH WHICH HAS BEEN DENIED B Y THE ALLEGED RECIPIENTS. IN CASE OF M/S JAI AMBEY ISPAT, THE WIFE OF THE DECEASED OWNER OF THE SAID FIRM HAS CATEGORI CALLY DENIED RECEIPT OF ANY MONEY. IN FACT COPY 'OF CREDIT OR ACCOUNT, PRODUCED BY ASSESSEE, PURPORTED TO BE COUN TER SIGNED BY WIFE OF DECEASED OWNER OF M/S JAI AMBEY IS PAT WAS ALSO FAKE IN AS MUCH AS SMT SUDHA RANI WHOSE SIGNATURES APPEARS ON COPY OF ACCOUNTS IS NOT WIFE OF OWNER OF M/S JAI AMBEY ISPAT. IN LIGHT OF OTHER GLARING DISCREPANCIES DISCUSSED BY THE ASSESSING OFFICER IN HIS O RDER, IT IS CLEAR THAT ASSESSEE HAS TRIED TO WRITE OFF THE L IABILITY FROM BOOKS BY SHOWING FAKE CASH PAYMENTS TO THE CREDITOR WHICH SHOWS THE INTENTION OF THE TO WRITE OFF THE LIA BILITY. IN THE CASE OF M/S K S MACHINE 'FOOLS, THE OWNER FIRM D ENIED TO HAVE ISSUED ANY BILL AT ALL. IN CASE OF M/S MANJEET SA LES, THERE WAS NO FIRM BY SUCH NAME. AS SUCH IN LIGHT OF VARIOUS FINDINGS GIVEN BY THE ASSESSING OFFICER IN HIS WELL EX PLAINED ASSESSMENT ORDER, IT IS CLEAR THAT ASSESSEE ADOPTED UN FAIR MEANS TO CLAIM THE EXPENSE IN EARLIER YEARS AND THEN WRITE OFF THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS NO T BEEN 4 ABLE TO PROVE AT OF THE SAID LIABILITIES AT ALL AND T HEN THERE REPAYMENT. AS REGARDS APPELLANT'S GROUND THAT THE ASSESSING OFFICER HAS NOT PROVIDED SUFFICIENT OPPORTUNITY TO PR OVE THE AUTHENTICITY OF SUCH LIABILITIES. THIS CONTENTION OF THE APPELLANT IS ALSO HEREBY REJECTED AS THE PERUSAL OF TH E ASSESSMENT ORDER CLEARS THAT SUFFICIENT OPPORTUNITY PROVIDED DURING THE ASSESSMENT PROCEEDINGS TO THE APPELLANT FOR THE SAME BUT THE APPELLANT FAILED TO DISCHARGE HIS ONUS. HENCE GROUND OF APPEAL NO. 3 AND 4 ARE DISMISSED. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT LIABILI TY WAS EXISTING IN THE BALANCE SHEET AS OUTSTANDING AND PA YMENTS HAVE BEEN MADE IN CASH IN NEXT YEAR. THEREFORE, AD DITION IS UNJUSTIFIED. HE HAS RELIED UPON DECISION OF THE DEL HI HIGH COURT IN THE CASE OF CIT V SHRI VARDHMAN OVERSEAS LTD. 34 3 ITR 408 IN WHICH IT WAS HELD THAT LIABILITY SHOWN IN THE AC COUNTS OF THE ASSESSEE COMPANY, AMOUNT NOT ASSESSABLE AS INCOME U NDER SECTION 41(1). HE HAS ALSO RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V GP INTERNATIONAL LTD. 325 ITR 25 IN WHICH IT WAS HELD THAT ASSESSEE HAD CONFIRMED THAT THE LIABILITY WAS STILL OUTSTANDING HENCE, SECTION 41(1) WAS NOT APPLICABLE. HE HAS AL SO RELIED UPON ORDER OF ITAT, DELHI BENCH IN THE CASE OF UTTA M AIR PRODUCTS (P) LTD. V DCIT 99 TTJ 178 IN WHICH IT WAS HELD, LIABILITY TOWARDS UNMOVED CREDITOR HAVING BEEN SHO WN BY THE ASSESSEE IN ITS BALANCE SHEET AND THERE BEING NO MA TERIAL OR EVIDENCE WITH THE REVENUE TO SHOW THAT THE SUPPLIER (CREDITOR) HAD GIVEN UP ITS CLAIM, NO ADDITION WAS CALLED FOR. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 5 7. IN THE BACKGROUND OF THESE FACTS AND SUBMISSIONS OF THE PARTIES, IT IS CLEAR THAT THE ASSESSING OFFICER MAD E VERIFICATION OF THE CLAIM OF ASSESSEE REGARDING GENUINE EXISTING LIABILITY SHOWN IN THE BALANCE SHEET BY THE ASSESSEE AND ISSU ED LETTERS UNDER SECTION 133(6) OF THE INCOME TAX ACT TO THE T HREE PARTIES IN THE CASES OF M/S JAI AMBEY ISPAT AND M/S MANJEET SALES (INDIA). THE POSTAL AUTHORITIES RETURNED THE LETTE RS BUT IN THE CASE OF M/S K.S. MACHINE TOOLS, THE PARTY DID NOT R ESPOND. THE SPOT ENQUIRIES WERE CONDUCTED THROUGH INSPECTOR WHO HAS REPORTED THAT CLAIM OF ASSESSEE WITH REGARD TO M/S JAI AMBEY ISPAT IS BOGUS BECAUSE WIFE OF THE DECEASED IS SOME BODY ELSE AS AGAINST CLAIM MADE BY THE ASSESSEE AND SOME OTHER P ERSON NAMELY SMT.SUDHA RANI SIGNED THE PAPERS SUBMITTED B Y THE ASSESSEE AND IN FACT THE NAME OF WIFE OF THE DECEAS ED OWNER OF M/S JAI AMBEY ISPAT IS SMT. KUSUM LATA. WIFE OF TH E DECEASED ALSO DENIED RECEIPT OF ANY CASH AMOUNT OR ANY LIABI LITY IN THE MATTER. THEREFORE, IT WAS CLEAR THAT ASSESSEE HAS TRIED TO WRITE OFF THE LIABILITY BY SHOWING BOGUS CASH PAYMENTS TO THE CREDITOR. IN THE CASE OF M/S K.S. MACHINE TOOLS, O WNER OF THE SAID FIRM DENIED TO HAVE ISSUED ANY SALE BILL IN FA VOUR OF THE ASSESSEE AND IN THE CASE OF M/S MANJEET SALES (INDI A), NO SUCH CLAIM WAS FOUND TO HAVE EXIST. IT IS, THEREFORE, A CLEAR CASE WHERE ASSESSING OFFICER HAS CONDUCTED PROPER ENQUIR IES INTO THE MATTER AND FOUND THE CLAIM OF ASSESSEE TO BE BO GUS, THEREFORE, THERE IS NO QUESTION OF SHOWING ANY GENU INE LIABILITY IN THE BOOKS OF ACCOUNT TO BE OUTSTANDING AS IS CLA IMED BY THE ASSESSEE. THE ASSESSING OFFICER HAS, THUS, COLLECT ED SUFFICIENT MATERIAL AND EVIDENCES AGAINST THE ASSESSEE TO REJE CT THE CLAIM 6 OF ASSESSEE OF GENUINE LIABILITY AND THE THEORY OF THE PAYMENT IN CASH WAS FOUND TO BE FALSE. NO DETAILS HAVE ALSO B EEN PRODUCED BEFORE US AS TO HOW THE GENUINE BALANCES WERE COMIN G UP FROM THE EARLIER YEARS. SINCE NO GENUINE OUTSTANDING BAL ANCES FOUND TO EXIST IN THE BOOKS OF ACCOUNT OF ASSESSEE, THERE FORE, ADDITION APPEARS TO BE JUSTIFIED. THE DECISIONS CITED BY TH E LD. COUNSEL FOR THE ASSESSEE ARE, THEREFORE, NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. CIT(APPEALS) AL SO NOTED THAT AT THE ASSESSMENT STAGE, PROPER OPPORTUNITIES HAVE BEEN GIVEN TO THE ASSESSEE BUT ASSESSEE HAS FAILED TO REBUT TH E FINDING OF FACT RECORDED BY THE ASSESSING OFFICER. THEREFORE, IT IS NOT A CASE OF DENIAL OF OPPORTUNITY AT ASSESSMENT STAGE. GROUND NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ACCORDINGLY D ISMISSED. 8. ON GROUND NO. 3 ASSESSEE CHALLENGED THE ADDITION OF RS. 2,46,000/- UNDER SECTION 68 OF THE INCOME TAX ACT. THE ASSESSING OFFICER FOUND ASSESSEE HAS SHOWN CASH CRE DITS IN THE NAMES OF 13 PERSONS IN THE BOOKS OF ACCOUNT IN A SU M OF RS. 2,46,000/- IN RESPECT OF DIFFERENT AMOUNTS RANGING FROM RS. 15,000/-, RS. 18,000/-, RS. 19,000/- AND RS. 20,000 /- AND THE DETAILS OF THE SAME ARE NOTED AT PAGE 25 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS DIRECTED TO PRODUCE ALL TH E CREDITORS FOR EXAMINATIONS BEFORE ASSESSING OFFICER AND ASSES SEE WAS ALSO DIRECTED TO FURNISH THEIR COMPLETE ADDRESS, PAN NUM BER AND SOURCE OF INCOME OF THESE PERSONS BUT THE ASSESSEE FAILED TO COMPLY WITH ANY OF THE DIRECTIONS OF THE ASSESSING OFFICER, THEREFORE RS. 2,46,000/- WAS TREATED AS UNEXPLAINED CASH CREDIT AND ADDITION WAS ACCORDINGLY MADE. THE LD. CIT(APP EALS) 7 CONFIRMED THE ADDITION IN THE ABSENCE OF ANY EVIDEN CE TO SUBSTANTIATE THE CLAIM MADE BEFORE HIM. 9. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTI ES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DERS OF THE AUTHORITIES BELOW BECAUSE THE ASSESSEE HAS FAILED T O PROVE IDENTITY OF THE CREDITORS, THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE ALSO FAILED TO PRODUCE ANY OF THE CREDITOR BEFORE ASSESSING OFFICE R FOR EXAMINATION OF CLAIM OF ASSESSEE. IN THE ABSENCE O F ANY EVIDENCE ON RECORD, WE DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS). THIS GROUND OF APPEAL OF ASSESSEE IS DISMISSED. 10. THE GROUND OF APPEAL NO. 4 IS NOT PRESSED BY TH E COUNSEL FOR THE ASSESSEE AND SAME IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH OCTOBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH