Dy.Commissioner of Income -Tax-VI, Lucknow V. M/s. Yaduvanshi Builders, Lucknow

ITA 117/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100340 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O N PATHAK
• Keywords: Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.117/LKW/2013 ASSESSMENT YEAR:2009-10 DCIT-VI LUCKNOW V. M/S YADUVANSHI BUILDERS B-1/9, SECTOR G, LDA COLONY KANPUR ROAD, LUCKNOW TAN/PAN:AAAFY6481D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. O.N. PATHAK, D.R. RESPONDENT BY: NONE DATE OF HEARING: 29 07 2015 DATE OF PRONOUNCEMENT: 27 08 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.47,30,000/- MADE BY THE A.O. U/S 68 OF THE I.T. ACT, ALTHOUGH ADDITION SHOULD HAVE BEEN MADE U/S 69A BY THE AO INSTEAD OF U/S 68, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE COULD NOT PRODUCE ANY SATISFACTORY EXPLANATION BEFORE THE A.O. IN SUPPORT OF HUGE CASH DEPOSITS IS HIS BANK ACCOUNT WHEREAS ALL HIS RECEIPTS ARE THROUGH CHEQUE AND ARE BACKED BY TDS CERTIFICATES. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.8,50,860/- ON ACCOUNT OF AD HOC DISALLOWANCES. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE PURCHASES WERE MOSTLY IN CASH WITH NO PROPER BILLS. :- 2 -: 2. THIS APPEAL WAS LISTED FOR HEARING ON 29.7.2015, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. ON PERUSAL OF RECORD, IT IS NOTICED THAT THIS APPEAL WAS FILED ON 4.3.2013. THEREAFTER, NOTICES WERE ISSUED AND IN RESPONSE THERETO ON 27.1.2014 SHRI. RITESH MUDGAL, COUNSEL FOR THE ASSESSEE APPEARED AND SOMETIMES SHRI. RAKESH GARG AND SHRI. YOGESH AGARWAL, ADVOCATES APPEARED AND SOUGHT ADJOURNMENT. LATER ON SHRI. YOGESH AGARWAL MOVED AN APPLICATION FOR WITHDRAWAL OF HIS POWER OF ATTORNEY, AS SHRI. YOGESH AGARWAL WAS NOT RECEIVING ANY CO- OPERATION FROM THE ASSESSEE. ACCORDINGLY HE WAS ALLOWED TO WITHDRAW HIS POWER OF ATTORNEY AND NOTICE WAS ISSUED TO THE ASSESSEE. THE NOTICE REMAINED UNSERVED AND THEREAFTER NOTICE WAS ISSUED THROUGH THE DEPARTMENT AND THE REVENUE HAS GOT THE NOTICE SERVED UPON THE ASSESSEE. COPY OF THE ACKNOWLEDGEMENT IS PLACED ON RECORD. SINCE DESPITE SERVICE OF NOTICE OF HEARING UPON THE ASSESSEE NONE APPEARED ON BEHALF OF THE ASSESSEE, THERE WAS NO OPTION BUT TO HEAR THE APPEAL EX-PARTE QUA THE ASSESSEE. ACCORDINGLY, THE REVENUE WAS HEARD. 3. APROPOS GROUND NO.1, IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS.47,30,000/- IN ITS BANK ACCOUNT. SINCE THE ASSESSEE COULD NOT FURNISH THE SOURCE OF DEPOSIT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.47,30,000/- UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 4. THE LD. CIT(A) DELETED THE SAID ADDITION HAVING OBSERVED THAT THE DETAILS OF CASH BOOK WAS PRODUCED BEFORE HIM WHEREFROM IT WAS VERIFIED THAT THE ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE ON THE DATES WHEN THE CASH WAS DEPOSITED. BUT FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT NO SUCH CASH BOOK WAS PRODUCED BEFORE :- 3 -: THE ASSESSING OFFICER. THEREFORE, THE CASH BOOK IN THE FORM OF ADDITIONAL EVIDENCE WAS PRODUCED BEFORE THE LD. CIT(A) WHICH WAS RELIED ON BY HIM WHILE DELETING THE ADDITION. THEREFORE, IT APPEARS THAT IT IS A VIOLATION OF THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. WHERE THE NEW ADDITIONAL EVIDENCE IS FILED BEFORE THE LD. CIT(A), THE LD. CIT(A) OUGHT TO HAVE CALLED REMAND REPORT FROM THE ASSESSING OFFICER. MOREOVER, THIS ADDITIONAL EVIDENCE REQUIRES VERIFICATION. WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE AND DELETED THE ADDITION WITHOUT CONFRONTING IT TO THE ASSESSING OFFICER. THUS, IT IS A VIOLATION OF THE PROVISIONS OF RULE 46A OF THE RULES. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE AFRESH AFTER OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER WITH REGARD TO THE CASH BOOK AND THE DEPOSIT IN THE BANK. 5. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN PURCHASES AMOUNTING TO RS.4,25,43,106/- AND ON VERIFICATION OF LEDGER ACCOUNTS OF PURCHASE, IT WAS NOTICED THAT MORE THAN 50% OF PAYMENTS IN CASH AND BILLS ARE NOT PROPER AND MOSTLY HANDMADE. SINCE PROPER VERIFICATION IS NOT POSSIBLE, THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF 2% OF ABOVE PURCHASES AMOUNTING TO RS.8,50,860/-, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) DELETED THE SAME HAVING OBSERVED THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BILLS AND VOUCHERS. 6. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE LD. D.R. HAS CONTENDED THAT THE ASSESSING OFFICER HAS MADE A CATEGORICAL OBSERVATION IN HIS ORDER THAT 50% OF PAYMENTS WERE MADE IN CASH AND BILLS WERE NOT PROPER AND MOSTLY HANDMADE. THESE OBSERVATIONS OF THE ASSESSING OFFICER ARE SUFFICIENT FOR MAKING DISALLOWANCE OF 2% OF THE TOTAL PURCHASES. THEREFORE, IT CANNOT BE SAID :- 4 -: THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE OF NON-VERIFICATION OF THE ACCOUNTS. 7. HAVING CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF 2% OF THE PURCHASES HAVING OBSERVED THAT 50% OF PAYMENTS WERE MADE IN CASH AND BILLS ARE NOT PROPER. THEREFORE, WE ARE OF THE VIEW THAT DISALLOWANCE MADE BY THE ASSESSING OFFICER IS PROPER AND CANNOT BE DISTURBED ONLY FOR THE SIMPLE REASON THAT HE HAS NOT POINTED OUT ANY SPECIFIC DEFECT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER ON THIS ISSUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST, 2015 JJ:2008 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR