ACIT, Aurangabad V. M/S AKASH Construction, Aurangabad

ITA 1120/PUN/2012

• Counselvise Citation: 112024514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Unexplained cash credit; Additional evidence
• Section: 44AD; 147; 68; 148; 6; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1120/PN/2012 (ASSESSMENT YEAR : 2003-04) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AURANGABAD. . APPELLANT VS. M/S AKASH CONSTRUCTION, PLOT NO.3, BANJARA COLONY, AURANGABAD. PAN : ABFPP0880K . RESPONDENT DEPARTMENT BY : SHRI S.P. WALIMBE ASSESSEE BY : SHRI NIKHIL PATHAK DATE OF HEARING : 13-02-2014 DATE OF PRONOUNCEMENT : 28-02-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD DA TED 26.03.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.12.2010 PASSED BY THE ASSESSING OFFICER U/S 144 R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2003-04. 2. IN THIS APPEAL THE ONLY DISPUTE RAISED RELATES T O AN ADDITION OF RS.92,86,767/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF PARTNERS CURRENT ACCOUNT BALANCE APPEARING IN THE BALANCE-SHEET, WHI CH HAS BEEN CONSIDERED AS A FICTITIOUS BALANCE. 3. IN BRIEF, THE FACTS ARE THAT ASSESSEE IS A PARTN ERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACTING. FOR THE ASSESSMENT YEAR 2003-04 IT FILED ITS RETURN OF INCOME ON 31.03.2005 DECLARING TOTAL INCO ME AT RS.4,56,770/-. SUCH RETURN OF INCOME WAS FILED BY ESTIMATING THE TAXABL E INCOME BASED ON ACTUAL ITA NO.1120/PN/2012 A.Y. 2003-04 CONTRACT RECEIPTS RECEIVED FROM PWD BECAUSE THE BOO KS OF ACCOUNT COULD NOT BE MAINTAINED AS THE RECORDS KEPT IN THE COMPUTER W ERE CORRUPTED AND THE ENTIRE DATA GOT DELETED. IN THE ABSENCE OF THE BOO KS OF ACCOUNT, ASSESSEE ESTIMATED THE NET PROFIT IN TERMS OF SECTION 44AD O F THE ACT, AND THE BALANCE- SHEET WAS PREPARED IN CONTINUATION OF THE EARLIER A UDITED BALANCE-SHEET FOR ASSESSMENT YEAR 2002-03 ON THE BASIS OF ESTIMATES A ND WAS ATTACHED TO THE RETURN OF INCOME. 4. SUBSEQUENTLY, ASSESSEE WAS COVERED IN A SEARCH A CTION U/S 132 OF THE ACT ON 19.01.2010 AND ACCORDINGLY A NOTICE U/S 148 OF THE ACT WAS ISSUED FOR REOPENING THE ASSESSMENT FOR THE YEAR UNDER CONSIDE RATION. IN THE SUBSEQUENT ASSESSMENT, THE ASSESSING OFFICER NOTICE D THAT THE SEARCH HAD REVEALED AN UNAUDITED BALANCE-SHEET AS ON 31.03.200 2 WHEREIN PARTNERS CURRENT ACCOUNT BALANCE WAS SHOWN AS RS.92,86,767/- AND ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME. THE ASSESSEE EXPLAIN ED THAT THE SAID AMOUNTS WERE RECEIVED FROM THE PARTNERS IN EARLIER YEARS AN D THAT THE COPY OF THE RETURN OF INCOME FILED FOR THE IMMEDIATELY PRECEDING ASSES SMENT YEAR 2002-03 WAS NOT READILY AVAILABLE AS THERE WAS A LAPSE OF TIME, BEING OLD RECORD. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND TREATED THE SAID SUM OF RS.92,86,767/- AS A FICTITIOUS CRED IT IN THE BALANCE-SHEET AND ACCORDINGLY IT WAS ADDED TO THE RETURNED INCOME. 5. THE CIT(A) HAS SINCE DELETED THE ADDITION, AS AC CORDING TO HIM THE AFORESAID CREDITS WERE NOT INTRODUCED DURING THE YE AR UNDER CONSIDERATION AND THUS THE SAME COULD NOT BE CONSIDERED AS AN UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT. IN COMING TO SUCH CONCLUSION, THE CIT( A) RELIED UPON THE AUDITED BALANCE-SHEET AS ON 31.03.2002 FURNISHED BY THE ASS ESSEE WHICH DULY REFLECTED THE SAID CREDITS. THE SAID BALANCE-SHEET FOR THE PRECEDING ASSESSMENT YEAR WAS ADMITTED BY THE CIT(A) AS AN AD DITIONAL EVIDENCE AFTER ALLOWING THE ASSESSING OFFICER DUE OPPORTUNITY OF B EING HEARD, FOLLOWING THE ITA NO.1120/PN/2012 A.Y. 2003-04 PRESCRIPTION OF RULE 46A OF THE INCOME TAX RULES, 1 962 (IN SHORT THE RULES). AGAINST THE AFORESAID DECISION OF THE CIT(A) DELETI NG THE ADDITION, REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE HAS SUBMITTED THAT THE CIT(A) ERRED IN ACCEPTING AN ADDITIONAL EVIDENC E IN THE SHAPE OF THE AUDITED BALANCE-SHEET AS ON 31.03.2002 WITHOUT APPR ECIATING THAT ASSESSEE WAS NOT PREVENTED FROM ANY SUFFICIENT CAUSE TO PROD UCE SUCH ADDITIONAL EVIDENCE AT THE TIME OF ASSESSMENT PROCEEDINGS. AC CORDINGLY, AS PER THE LEARNED DEPARTMENTAL REPRESENTATIVE, ASSESSEE HAS N OT BEEN ABLE TO ESTABLISH THE SOURCE OF IMPUGNED CREDITS APPEARING IN THE SEIZED BALANCE- SHEET. 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE HAS DEFENDED THE ORDER OF THE CIT(A) AND HAS ALSO F URNISHED A PAPER BOOK CONTAINING INTER-ALIA SUBMISSIONS MADE TO THE CIT(A), REMAND REPORT OF T HE ASSESSING OFFICER SUBMITTED TO THE CIT(A) AS WELL A S THE COPIES OF THE RETURN OF INCOME AND THE AUDITED BALANCE-SHEET FOR THE PRECED ING ASSESSMENT YEAR OF 2002-03, ETC. . ON THE BASIS OF THE AFORESAID MATERIAL, IT IS SOU GHT TO BE CANVASSED THAT FINDINGS OF THE CIT(A) ARE JUSTIFIED AND NO INTERFERENCE IS CALLED FOR. EVEN WITH REGARD TO THE ADMISSION OF ADDITION AL EVIDENCE BY THE CIT(A), LEARNED COUNSEL POINTED OUT THAT THE CIT(A) MADE NO ERROR IN ADMITTING THE SAME INASMUCH AS THERE WAS SUFFICIENT CAUSE FOR THE ASSESSEE NOT FILING THE SAME DURING THE ASSESSMENT PROCEEDINGS. THE INFORM ATION/EVIDENCE RELATED TO A PERIOD WHICH WAS EIGHT YEARS PRIOR TO THE PERI OD WHEN THE SCRUTINY ASSESSMENT WAS TAKING PLACE AND THEREFORE THE ASSES SEE NEEDED SOME TIME TO LOCATE SUCH EVIDENCE. MOREOVER, THE ASSESSMENT PROCEEDINGS WERE CARRIED OUT BY THE ASSESSING OFFICER TOWARDS THE FAG END OF THE STATUTORY LIMITATION AND IN SUCH SHORT PERIOD OF TIME, ASSESSEE WAS NOT ABLE TO TRACE THE REQUISITE MATERIAL, BUT IT HAD BROUGHT TO THE NOTICE OF THE A SSESSING OFFICER THAT THE ITA NO.1120/PN/2012 A.Y. 2003-04 IMPUGNED CREDITS WERE RECEIVED FROM THE PARTNERS IN EARLIER YEARS. IT WAS THEREFORE CONTENDED THAT NO FRESH OR NEW PLEA WAS R AISED BEFORE THE CIT(A), BUT THE AUDITED BALANCE-SHEET FOR THE PRECEDING ASS ESSMENT YEAR WAS FURNISHED IN SUPPORT OF ASSESSEES STAND. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CIT(A) HAS COME TO A FACTUAL FINDING THAT THE CREDIT OF RS.92, 86,767/- APPEARING IN THE BALANCE-SHEET AS PARTNERS CURRENT ACCOUNT REFLECTE D CREDITS OF AN EARLIER PERIOD. AS PER THE CIT(A), THE AFORESAID AMOUNTS W ERE NOT RECEIVED OR CREDITED DURING THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT YEAR UNDER CONSIDERATION. THE SAID FINDING IS BASED ON THE AU DITED BALANCE-SHEET OF THE ASSESSEE AS ON 31.03.2002 I.E. LAST DAY OF THE PREV IOUS YEAR CORRESPONDING TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. IN THIS CONTEXT, WE FIND THAT THE BALANCE-SHEET AS ON 31.03.2002 WAS ANNEXED BY THE A SSESSEE ALONGWITH ITS RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2002-03 WITH THE ASSESSING OFFICER, A COPY OF ITS ACKNOWLEDGEMENT DATED 31.03.2002 IS P LACED AT PAGES 14 TO 15 OF THE PAPER BOOK. THE SAID AUDITED BALANCE-SHEET IS ACCOMPANIED BY THE REQUISITE AUDIT REPORT U/S 44AB OF THE ACT AND IS D ULY SIGNED BY A CHARTERED ACCOUNTANT. BEFORE US, THE FINDING OF THE CIT(A) I S SOUGHT TO BE CHALLENGED BY THE REVENUE NOT ON ITS MERITS BUT ONLY ON THE BASIS THAT THE BALANCE-SHEET AS ON 31.03.2002 RELIED UPON BY THE CIT(A) IS A FRESH PIECE OF EVIDENCE WHICH WAS HITHERTO NOT PLACED BEFORE THE ASSESSING OFFICE R DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9. IN OUR CONSIDERED OPINION, THE APPROACH OF THE R EVENUE IS QUITE FALLACIOUS. OSTENSIBLY, ASSESSEE PRODUCED THE SAID BALANCE-SHEET AS ON 31.03.2002 BEFORE THE CIT(A) IN SUPPORT OF ITS PLEA THAT THE IMPUGNED CREDITS WERE BROUGHT FORWARD FROM PRIOR PERIODS AND WERE NO T INTRODUCED DURING THE YEAR UNDER CONSIDERATION. PERTINENTLY, THE SAID PL EA WAS VERY MUCH BEFORE THE ASSESSING OFFICER ALSO AS IS EVIDENT FROM THE ASSES SMENT ORDER, AND THUS THE ITA NO.1120/PN/2012 A.Y. 2003-04 SAID BALANCE-SHEET CAN ONLY BE SAID TO BE A SUPPORT ING MATERIAL FOR A PLEA ALREADY ON RECORD AND NO FRESH PLEA WAS CANVASSED O N THE BASIS OF SUCH MATERIAL. SECONDLY, IT IS EMERGING FROM RECORD THA T THE SAID BALANCE-SHEET WAS ANNEXED BY THE ASSESSEE WITH THE RETURN OF INCO ME FILED WITH THE DEPARTMENT FOR THE ASSESSMENT YEAR 2002-03 ON 31.10 .2002, AS PER THE ACKNOWLEDGEMENT COPY ON RECORD. THEREFORE, STRICTL Y SPEAKING IT IS NOT A PIECE OF EVIDENCE, WHICH WAS OTIOSE TO THE RECORDS OF THE DEPARTMENT; AND, MERELY BECAUSE THE ASSESSEE COULD NOT READILY TRACE IT AT A CERTAIN POINT OF TIME DURING THE IMPUGNED ASSESSMENT PROCEEDINGS, WOULD NOT IMBI BE IT WITH THE CHARACTER OF A FRESH EVIDENCE. NEVERTHELESS, EVEN IF, IT IS TO BE UNDERSTOOD AS A FRESH EVIDENCE, IN OUR VIEW, THE CIT(A) MADE NO MISTAKE I N ADMITTING IT AND PROCEEDING TO ADJUDICATE THE ISSUE AFTER TAKING THE SAME INTO CONSIDERATION. THE CIT(A) HAS OBSERVED AS UNDER WHILE ADMITTING SU CH ADDITIONAL EVIDENCE :- THE APPELLANT HAS SUBMITTED THAT HIS CASE IS COVER ED BY CLAUSE-(C) OF THE RULE-46A(1) AS IT WAS PREVENTED FROM SUFFICIENT CAUSE FROM FILING THE SAID ADDITIONAL EVIDENCE IN THE FORM OF AUDITED BALANCE SHEET AS THE SAID INFORMATION/EVIDENCE RELATES TO THE PERIOD WHICH IS PRIOR TO 8 YEARS AND HENCE THE SAID BALANCE SHEET COULD NOT BE LOCATED -DURING THE SCRUTINY ASSESSMENT. THIS CONTENTION OF THE APPELLANT IS FOUND TO BE REA SONABLE AND ACCEPTED ALSO IN VIEW OF THE FACT THAT DURING THE ASSESSMENT PROC EEDINGS THE APPELLANT HAS CLAIMED IN THE WRITTEN SUBMISSION FILED THAT THE SA ID LOANS AND ADVANCES RELATES TO THE EARLIER YEARS. THE ADDITIONAL EVIDEN CE FILED BY THE APPELLANT GOES TO THE ROUTE OF THE ISSUE TO BE DECIDED. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, THE ADDITIONAL EVIDENCE FILED BY THE AP PELLANT IS ADMITTED AFTER GIVING REASONABLE OPPORTUNITY TO THE A.O. TO EXAMIN E THE SAID EVIDENCE IN THE REMAND PROCEEDINGS. THE FIRST ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE APPELLANT. 10. THE REASONING ADVANCED BY THE CIT(A) TO ADMIT T HE SAID EVIDENCE IS QUITE FAIR AND REASONABLE AND THE REVENUE HAS NOT S HOWN AS TO HOW THE SAME IS ARBITRARY OR PERVERSE. THEREFORE, WE AFFIRM THE ACTION OF THE CIT(A) IN ADMITTING SUCH ADDITIONAL EVIDENCE AND BASED ON THE SAME, HE HAS CORRECTLY DEDUCED THAT THE IMPUGNED CREDITS HAVE NOT BEEN INT RODUCED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE HE HAS RIGHTLY NEGATED THE ACTION OF THE ASSESSING OFFICER IN TREATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 6 8 OF THE ACT. THE ACTION OF THE CIT(A) IS HEREBY AFFIRMED. THUS, THE REVENU E FAILS ON THIS ASPECT. ITA NO.1120/PN/2012 A.Y. 2003-04 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH FEBRUARY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE