DCIT, Sangrur V. M/s Moolji Jewellers, Sangrur

ITA 1072/CHANDI/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57724 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-02-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 11-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Reassessment proceedings
• Section: 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1072/CHD/2008 ASSESSMENT YEAR: 2000-01 DCIT, CIRCLE, V M/S MOOLJI JEWELLERS, SANGRUR. SCO 44, SECTOR 26, CHANDIGARH. PAN: AAFFM-6089N & CO 4/CHD/2009 IN ITA NO. 1072/CHD/2008 M/S MOOLJI JEWELLERS, V DCIT, CIRCLE, SCO 44, SECTOR 26, SANGRUR. CHANDIGARH (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. JAISHREE SHARMA ASSESSEE BY : S/SHRI ASHOK KUMAR GOYAL & SUDHIR SEHGAL DATE OF HEARING : 01.03.2012 DATE OF PRONOUNCEMENT : 20.03.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE AND THE CRO SS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINS T THE ORDER DATED 15.10.2008 PASSED BY THE LD. CIT(A) U/S 250(6 ) OF THE INCOME-TAX ACT,1961 (IN SHORT '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 ALLOWING THE RELIEF OF RS.4,51,200/-OUT OF A TOTAL ADDITION OF RS.5,20,000 /-, MADE ON ACCOUNT OF CREDIT ENTRIES U/S 68 OF THE INCOME T AX ACT, 1961 IGNORING THE SPECIFIC DIRECTIONS OF THE HON'BL E TRIBUNAL 2 TO THE ASSESSEE TO EXPLAIN THE GENUINENESS, IDENTIT Y AND CREDITWORTHINESS OF THE CREDIT ENTRIES APPEARING IN ITS BOOKS OF ACCOUNTS AND THE DIRECTION TO THE AO TO EXAMINE SUFFICIENT NUMBER OF PERSONS, IF NOT ALL, IN ORDER TO ESTABLIS H THAT THESE ENTRIES ARE NOT GENUINE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THE CREDIT ENTRIES APPE ARING IN THE ASSESSEE'S BOOKS OF ACCOUNTS AS GENUINE, ON THE BASIS OF LIQUIDATION OF SUCH CREDIT ENTRIES IN THE SUBSEQUEN T YEARS BY ISSUING SALE BILLS TO THE DEPOSITORS, IGNORING THAT SUCH LIQUIDATION OF CREDIT ENTRIES DOES NOT, IN ANY WAY, PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SUCH CREDITORS, WHICH WERE SINE QUA NON IN VIEW OF THE H ON'BLE ITAT'S DIRECTIONS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING UPON THE NOTARIZED ATTE STED COPIES OF AFFIDAVITS OF 48 PERSONS WITHOUT APPR ECIATING THAT THESE ARE ONLY SELF SERVING DOCUMENT S WHICH DO NOT PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE ALLEGED CREDITORS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN SUPPORTING HIS FINDINGS BY RELY ING UPON THE COMPLETION OF ASSESSMENT IN THE SUBSEQUENT YEARS WITHOUT GOING INTO THE FACTS AND CIRCUMSTANCES LEADING TO T HE SAME. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF OF RS. 73,260/- ON ACCOUNT OF SUNDRY CREDITORS IGNORING THE SPECIFIC D IRECTIONS OF THE HON'BLE TRIBUNAL TO THE AO FOR EXAMINING THE SU NDRY CREDITORS FOR ESTABLISHING GENUINENESS, IDENTITY AN D CREDITWORTHINESS OF THE CREDITORS TO THE SATISFACTI ON OF THE AO, WHICH THE ASSESSEE FAILED TO FACILITATE BY PRODUCING THE SAID CREDITORS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ADDITION TO RS .73,260/- 3 CAN BE MADE U/S 69 AND NOT U/S 68 OF THE INCOME TAX ACT, 1961 WHEN THE ORDER OF THE HON'BLE TRIBUNAL HOLDING IT ASSESSABLE U/S 68 HAD ALREADY ATTAINED FINALITY 7. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OF. . 3. LD. 'DR' REFERRED TO PARA 3.12 OF THE CIT(A) ORDER WHICH CONTAINS FINDINGS OF THE CIT(A). SIMILARLY, LD. 'D R' REFERRED TO PARA 5, 10 AND 11 OF THE ASSESSMENT ORDER. LD. 'AR ' PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(A). LD. 'AR ' PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(A). THE BR IEF AND UNDISPUTED FACTS IN THIS CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF GOL D ORNAMENTS. IN THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO FOUND THAT AN AMOUNT OF RS.5,20,000/- WAS CREDITED ON ACCOUNT OF ADVANCE FROM CUSTOMERS. THE AO RAISED Q UERY AND SOUGHT EXPLANATION OF THE ASSESSEE AS CONTEMPLA TED U/S 68 OF THE ACT. THE AO, HAVING REGARD TO THE DIRECT IONS OF THE TRIBUNAL, REQUESTED THE ASSESSEE TO PRODUCE 15 PERS ONS TO EXAMINE THE SAME, ON THE GENUINENESS OF SUCH CREDIT S. THE ASSESSEE PRODUCED ONE LADY, WHO WAS WIDOW, OUT OF S UCH 15 PERSONS SELECTED BY THE AO. IT WAS CONTENDED BY TH E ASSESSEE THAT OTHER PERSONS, SO SELECTED WERE EXPIR ED AND THE ASSESSEE PRODUCED AFFIDAVITS DULY SWORN BY 5 PE RSONS AND NO DOCUMENTARY EVIDENCE WAS FILED IN RESPECT OF THE REMAINING PERSONS. THE AO ALLOWED ANOTHER OPPORTUN ITY TO PRODUCE THE SO SELECTED PERSONS. HOWEVER, NO SUCH PERSONS 4 WERE PRODUCED BY THE ASSESSEE. THE ASSESSEE FILED AN APPLICATION U/S 44A TO JCIT, SANGRUR, AND THE JCIT DIRECTED THE AO TO EXAMINE THE PERSONS/CREDITORS BY ISSUANCE OF SUMMONS U/S 131 OF THE ACT. SUCH DIRECTIONS OF THE JCIT WERE COMPLIED WITH. THE PERSONS WHO RECEIVED SUMMO NS, FILED CONFIRMATION LETTERS AND NONE APPEARED BEFORE THE AO. THE PERSONS, WHO RECEIVED SUCH SUMMONS, CONFIRMATIO N WAS DISPATCHED FROM OTHER PLACE, WHICH LED TO CREATE SU SPICION IN THE MIND OF THE AO. CONSEQUENTLY, AO DEPUTED THE IN SPECTOR, WITH A VIEW TO MAKING THE ENQUIRIES FROM THE SUBSCR IBERS OF THE KITTY SCHEME. CONSEQUENTLY, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD FAILED TO COMPLY WITH THE DIR ECTIONS OF THE HON'BLE ITAT AND HENCE, AN ADDITION OF RS.5,20, 000/- WAS MADE TO THE INCOME OF THE ASSESSEE. THE FINDIN GS OF THE CIT(A), AS CONTAINED IN PARA 3.12 TO 3.14 OF THE OR DER, ARE REPRODUCED HEREUNDER : 3.12 I HAVE GONE THROUGH THE FACTS OF THE C ASE, ORIGINAL ORDER PASSED BY THE A.O., THE ORDER PASSED BY MY PREDECESSOR IN WHICH HE HAS DELETED THE ENTIRE AD DITION AND THE ORDER OF HON'BLE ITAT, CHANDIGARH. THE HON'BLE I TAT HAS DIRECTED THE A.O. TO LOOK INTO THE MATTER AFRESH BY GIVING APPROPRIATE OPPORTUNITY TO THE ASSESSEE AND HAS ALS O CAST BURDEN UPON THE ASSESSEE TO COOPERATE IN AS SESSMENT PROCEEDINGS. WHILE PASSING AFRESH ORDER THE A. O. HAS ASKED ASSESSEE TO PRODUCE CERTAIN PERSONS AND HAS AL TERNATIVELY ALSO ISSUED SUMMONS TO FEW PERSONS U/S 131. SOME OF THESE PERSONS HAVE ATTENDED BEFORE THE A.O. BUT NUMBER OF SOME PERSONS WERE SMALL WHO CONFIRMED OF HAVING GIVE N THE ADVANCES TO THE ASSESSEE. AS DISCUSSED ABOVE, AN D AS HAS BEEN ARGUED BY THE COUNSEL OF THE APPELLANT AT THE TIME OF REASSESSMENT PROCEEDINGS ASSESSEE HAS FILED DUL Y NOTARIZED ATTESTED COPIES OF AFFIDAVITS OF 48 PERSON S BEFORE THE A.O. THE A.O. HAS NOT CONTROVERTED THE GENUINENESS OF THESE 5 AFFIDAVITS. ONE OF THE FACT WHICH IS ALSO RELEVANT TO MY MIND IS THAT WHILE DECIDING THIS CASE THE GENE RAL PRACTICE IN THIS CASE AS PREVAILING IN THIS KIND OF B USINESS AND THE POSSIBILITY OF PREPONDERANCE OF HUMAN PROBABILITY AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL . AS PER THE FACTS OF T HIS CASE THERE IS CONSIDERABLE TIME GAP OF MORE THAN 8 YEARS AND SUCH KIND OF KITTY SUBSCRIPTION IS ALSO NOT UNCOMMON IN SUCH KIN D OF TRADE. ONE OF THE FACT WHICH STRONGLY GOES IN THE FAVOUR O F THE APPELLANT IS THAT IN SUBSEQUENT YEAR 2001-02 AND 20 02-03 ASSESSMENT HAS BEEN MADE UNDER SCRUTINY AND SUCH DE POSITS HAVE BEEN ACCEPTED GENUINE BY THE DEPARTMENT. THE A RGUMENT OF COUNSEL OF THE APPELLANT THAT EVEN IN SUBSEQUENT YEAR THE GOODS AMOUNTING TO RS. 4,51,2OO/- HAS BEEN SOLD TO VARIOUS CUSTOMERS AGAINST SUCH ADVANCES AND ONLY RS. 68,800 /- HAS BEEN RETURNED BACK TO THESE CUSTOMERS IN CASH. A COPY OF LIST OF SUCH PERSONS WAS ALSO CALLED FROM THE APPELLANT AND HAS BEEN PLACED ON RECORD. THE ASSESSEE HAS ALSO GIVEN CITATION TO ITAT BOMBAY BENCH IN THE CASE OF STRETCHLON (P) LTD. REPORTED I N 11ITD 627 WHICH IS RELEVANT TO THE FACTS OF THIS CASE. 3.13 HENCE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE I HELD THAT : A) THE AMOUNT OF RS. 4,5I,2OO/- WHICH HAS BEEN ADJUSTED IN SUBSEQUENT YEARS AGAINST THE SAL E OF GOODS TO THESE CUSTOMERS IS NOT SUSTAINABLE WHEREAS B) THE BALANCE OF RS. 68,8OO/- WHICH WAS RETURNED IN CASH BY THE APPELLANT AND REGARDING WHICH HE HAS N OT BEEN ABLE TO DISCHARGE HIS ONUS FULLY IS LIABLE TO BE UPHELD. 3.14 SO, THE ASSESSEE GETS RELIEF OF RS. 4 ,51,2OO/-. HENCE, GROUND NO. 2 IS PARTLY ALLOWED. 4. HAVING REGARD TO THE FACT-SITUATION OF THE PRESE NT CASE AND THE FINDINGS OF THE LOWER AUTHORITIES, WE ARE O F THE CONSIDERED OPINION THAT THERE IS NO INFIRMITY IN TH E ORDER OF 6 THE CIT(A) AND HENCE, THE SAME ARE UPHELD AND GROUN D NOS. 1 TO 4 OF THE REVENUES APPEAL ARE DISMISSED. 5. IN GROUND NOS. 5 & 6, REVENUE CONTENDED THAT CIT (A) ERRED IN ALLOWING RELIEF OF RS.73,260/- ON ACCOUNT OF SUNDRY CREDITORS, IGNORING THE SPECIFIC DIRECTIONS OF THE HON'BLE TRIBUNAL. THE FINDINGS OF THE CIT(A) ARE REPRODUCED HEREUNDER : 4.1 HE RELIED UPON DECISION OF COCHIN APPELLATE TRI BUNAL 53 TTJ 293 WHICH HELD THAT 'WHERE IT IS ALLEGED THAT C OST OF PURCHASE WAS PAID BY ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT A ND CREDITS SHOWN IN BOOKS IS NOT GENUINE, ADDITION IF AT ALL C AN BE MADE U/S 69 AND NOT U/S 68 OF I.TACT, 1961. 4.2 FURTHER RELIED UPON C1T VS. MATHURA DASS ASHO K KUMAR 101 TTJ 810 ALLAHABAD. APPELLATE TRIBUNAL HELD T HAT PURCHASE HAVING BEEN ACCEPTED TO BE GENUINE, BALANCE REMAINING OUTSTANDING AT THE END OF THE YEAR AGAINST SUCH PURCHASE CAN'T TREATED AS BOGUS LIABILITY HENCE ADDITION MADE ON THAT BASIS CAN'T BE SUSTAINED. 4.3 GROUND NO. 3 IS ALLOWED. 6. THE FACTS AND FINDINGS OF THE ISSUE IN QUESTION ARE DULY DISCUSSED BY THE CIT(A) IN HIS FINDINGS AND A PERUS AL THEREOF REVEALS NO INFIRMITY THEREIN. CONSEQUENTLY, THE GRO UND NOS. 5 & 6 ARE DISMISSED. 7. GROUND NOS. 7 & 8 ARE GENERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. CO NO. 4/CHD/2009 9. IN CROSS OBJECTIONS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 7 1. THAT THE ORDER OF HON'BLE CIT(A) & LD. ACIT IS AGAINST LAW OF FACTS. 2. THAT THE HON'BLE CIT(A) WAS NOT JUSTIFIED TO SUS TAIN THE ADDITION OF RS.68800/- ON ACCOUNT OF CREDIT ENTRIES AGAINST WHICH THE ASSESSEE HAS ALREADY FILED THE DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION. THE ENTRIES REPRESENTS SUNDRY TRADE CREDITORS AND IS NOT COVERED U/S 68 OF INCOME-TAX ACT,1961. 10. THE ASSESSEE CONTENDED THAT CIT(A) WAS NOT JUST IFIED TO SUSTAIN THE ADDITION OF RS.68800/- ON ACCOUNT OF CR EDIT ENTRIES AGAINST WHICH THE ASSESSEE HAS ALREADY FILE D DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF TH E TRANSACTIONS. 11. HAVING REGARD TO THE FINDINGS GIVEN BY THE AO I N PARA 3.12 TO 3.13 AND OUR FINDINGS IN RESPECT OF GROUND NOS. 1 TO 4 OF REVENUES APPEAL, WE DO NOT FIND ANY MERIT IN THE CONTENTION RAISED BY THE ASSESSEE IN THE CO. HENCE , THE CO FILED BY THE ASSESSEE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH,2012. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 20 TH MARCH,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH