Brahmdeo Mahto, V. I.T.O.,

ITA 108/RAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85449 (ITAT-RANCHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2013
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAM JCITLD
• Assessee Lawyers: SHR R L AGARWAL LD
• Keywords: Unexplained cash credit
• Section: 43B; 133(6)

Judgement Text

1 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 10 8 /RAN/ 13 A.Y . 2009 - 10 SHRI BRAHAMDEO MAHTO VS. I.T.O WARD 2 ( 5 ), HAZARI BAGH PAN: ADAPM8571F ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT : SHR R.L AGARWAL, ADVOCATE, LD.AR FOR THE RESPONDENT : SHRI CHOUDHARY ORAM, JCIT , LD.DR DATE OF HEARING : 0 2 - 12 - 2014 DATE OF PRONOUNCEMENT: 0 2 - 12 - 2014 O R D E R SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29 - 10 - 2013 PASSED BY LD CIT(A), JAMSHEDPUR AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. FOLLOWING ISSUES ARE URGED IN THIS APPEAL: - ( A ) ADDITION OF RS.75,151/ - ON ACCOUNT OF ESTIMATION OF NET PROFIT. ( B ) ADDITION MADE U/S 43B OF THE ACT ( C ) ASSESSMENT OF ADVANCE RECEIPTS OF RS.22,69,930/ - U/S 68 OF THE ACT. AT THE TIME OF HEARING, THE LD A.R DID NOT PRESS THE GROUND RELATING TO THE ADDITION MADE U/S 43B OF THE ACT. ACCORDINGLY, THE GROUNDS RELATING THERETO ARE DISMISSED AS NOT PRESSED. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADIN G IN COAL BY PURCHASING THE SAME UNDER E - AUCTION. HE IS ALSO ENGAGED IN THE BUSINESS OF PLYING OF TRUCK. 2 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS SHOWN ADVANCE RECEIPTS OF RS.24,80,000/ - IN ITS BOOKS OF ACCOUNT , WH ICH WAS CLAIMED TO HAVE RECEIVED FROM HIS CUSTOMERS IN CONNECTION WITH THE ORDERS PLACED BY THEM FOR PURCHASE OF COAL . THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO EIGHT PERSONS, BUT NONE OF THEM COMPLIED WITH THE NOTICES. SUBSEQUENTLY TWO PARTIES APPE ARED AND CONFIRMED THAT THEY HAVE PAID ADVANCE TO THE ASSESSEE. HOWEVER ONE PARTY DENIED THE TRANSACTION. HENCE, B Y GIVING CREDIT OF THE ADVANCES GIVEN BY THE TWO PARTIES WHO HAD CONFIRMED THE PAYMENT, THE AO ASSESSED THE BALANCE AMOUNT OF RS.22,69,930/ - U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN A NET PROFIT OF RS.24,849/ - ONLY ON A TURNOVER OF RS.1.26 CRORES. HENCE THE AO REJECTED THE BOOK RESULTS AND ESTIMATED THE NET PROFIT AT RS.1.00 LAKH. ACCORDINGLY HE ASSESSED THE BALANCE AMOUNT OF RS.75,151/ - (RS.1,00,000/ - ( - ) RS.24,849/ - ) AS INCOME OF THE ASSESSEE. 3. BEFORE LD CIT(A) THE ASSESSEE FURNISHED AFFIDAVITS OBTAINED FROM SOME OF THE PARTIES AND ALSO OFFERED CERTAIN EXPLANATIONS. HENCE THE LD CIT( A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. HOWEVER, IN THE REMAND REPORT, THE AO STATED THAT THE ADDITION OF RS.22,69,930/ - WAS RIGHTLY MADE. HENCE THE LD CIT(A) ALSO CONFIRMED THE ASSESSMENT OF THE ABOVE SAID AMOUNT. THE LD CIT(A) ALSO C ONFIRMED THE ADDITION OF RS.75,151/ - MADE TO THE NET PROFIT DECLARED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE SHALL FIRST TAKE UP THE ISSUE RELATING TO TH E ADDITION MADE TO NET PROFIT. THE LD COUNSEL SUBMITTED THAT THE ASSESSING OFFICER DID NOT FIND ANY FAULT WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. HE SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE HAS BEEN AUDITED AND HENCE THE AO WAS NOT JUST IFIED IN REJECTING THE BOOK RESULTS AND ESTIMATING THE NET PROFIT. HOWEVER, WE NOTICE THAT THE AO HAS 3 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO POINTED OUT THAT THE CASH SALES EFFECTED BY THE ASSESSEE ARE NOT VERIFIABLE. THE SAID OBSERVATIONS MADE BY THE AO COULD NOT BE CONTROVERTED BY THE ASSES SEE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE AO WAS JUSTIFIED IN REJECTING THE BOOK RESULTS. HOWEVER, THE ADDITION OF RS.75,151/ - MADE BY THE AO APPEARS TO BE ON A HIGHER SIDE. HENCE, IN ORDER TO PUT THIS ISSUE AT REST, WE DIRECT THE AO TO MAKE AN A DDITION OF RS.40,000/ - ON THIS ACCOUNT IN THE PLACE OF RS.75,151/ - MADE BY THE AO. THE ORDER OF LD CIT(A) STANDS MODIFIED ACCORDINGLY. 5. WITH REGARD TO THE CASH CREDIT ADDITION OF RS.22,69,930/ - , THE LD A.R SUBMITTED THAT THE ASSESSEE IS PURCHASING COAL UNDER E - AUCTION. HENCE, THE PROSPECTIVE CUSTOMERS OF THE ASSESSEE PLACE ORDERS WITH THE ASSESSEE FOR SUPPLY OF COAL BY MAKING ADVANCE PAYMENTS, SINCE THE ASSESSEE HAS BEEN SELLING THE COAL AT A LOWER MARGIN. SUBSEQUENTLY ALL THE ADVANCES ARE ADJUSTE D AGAINST THE SALE BILL RAISED ON SUPPLY OF COAL. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ALREADY SUPPLIED COAL TO THE PARTIES FROM WHOM THE ADVANCES HAVE BEEN RECEIVED. HE FURTHER SUBMITTED THAT THE ASSESSEE CANNOT BE FOUND FAULT WITH, IF THE CUSTOME RS DO NOT RESPOND TO THE NOTICES ISSUED BY THE AO U/S 133(6) OF THE ACT. 6. WE HEARD LD D.R ALSO AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS RECEIVED ADVANCES FROM 25 PERSONS AND THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 133(6) OF TH E ACT TO EIGHT PERSONS. OUT OF THE EIGHT PERSONS, THREE PERSONS HAVE CONFIRMED THE TRANSACTION AND ONE PERSON HAS DENIED THE TRANSACTION. BASED ON THESE FACTS, THE AO HAS SUSPECTED THE ENTIRE AMOUNT OF ADVANCES RECEIVED BY THE ASSESSEE, WHICH APPEARS TO BE UNFAIR. THE AO SHOULD HAVE GIVEN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PERSON WHO HAS DENIED THE TRANSACTION. NOW, THE LD A.R SUBMITS THAT THE ASSESSEE HAS ALREADY SUPPLIED COAL IN SUBSEQUENT YEAR TO THE PARTIES FROM WHOM ADVANCES WERE REC EIVED. WE NOTICE THAT THE TAX AUTHORITIES HAVE NOT EXAMINED THIS FACT. IN OUR 4 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO VIEW, IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THERE IS NO REQUIREMENT OF MAKING ANY ADDITION TOWARDS ADVANCE RECEIPTS, IF THE ASSESSEE PROVES ABOUT THE SUPPLY OF CO AL TO THE PARTIES FROM WHOM ADVANCE AMOUNT WAS RECEIVED. SINCE THIS FACT REQUIRES VERIFICATION, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR CARRYING OUT NECESSARY EXAMINATION IN THE LIGHT OF DISCUSSION MADE SUPRA. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 0 2 - 12 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 0 2 - 12 - 2014 PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : 2 THE RESPONDENT: 3..THE CI T, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 5 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO 1. DATE OF DICTATION .......... ORDER DRAFTED BY THE MEMBER CONCERN ON 02.12 - 14 ........... IN HIS L APTOP ............ 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER ..... 02 - 12 - 2014........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DA TE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT................................ 02 - 12 - 14 2014................................................... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ............... . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATU RE ON THE ORDER ................................................................................................. 9. DATE OF DESPATCH OF THE ORDER .............................................................. 6 ITA NO.108/RAN/13 SHRI BRAHMDEO MAHTO