M/s.Shri Vinay K Tiwari, Pune V. ITO, Ward 2(2), Pune

ITA 1226/PUN/2010

• Counselvise Citation: 122624514 RSA 2010
• Duration Of Justice: 4 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 16-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1226/PN/2010 (ASSESSMENT YEAR : 1999-2000) SHRI VINAY K. TIWARI, D023, CHOICE ARCADE, DHOLE PATIL ROAD, PUNE 411001 PAN NO.ABKPT5496L .. APPELLANT VS. ITO, WARD-2(2), PUNE .. RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI PRADEEP KUMAR DATE OF HEARING : 20-04-2015 DATE OF PRONOUNCEMENT : 24-04-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12-07-2010 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 1999-2000. 2. THIS APPEAL WAS EARLIER REPRESENTED BY SHRI ABHA Y AVCHAT, CHARTERED ACCOUNTANT. HOWEVER, VIDE LETTER 08-01-2 015 HE HAS WITHDRAWN HIS POWER OF ATTORNEY. ACCORDINGLY, NOTI CE WAS ISSUED THROUGH RPAD TO THE ASSESSEE FIXING THE HEARING OF THE APPEAL ON 20- 04-2015. ALTHOUGH THE NOTICE WAS DULY SERVED ON TH E ASSESSEE, HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. NO PETITION SEEKING ADJOURNMENT OF THE CA SE WAS FILED, 2 THEREFORE, THIS APPEAL IS BEING DECIDED ON THE BASI S OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPAR TMENTAL REPRESENTATIVE. 3. GROUNDS OF APPEAL NO.1 TO 3 BY THE ASSESSEE RELA TES TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.33 L AKHS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDITORS. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 08-01-2001 DECLAR ING TOTAL LOSS OF RS.8,10,500/-. THE CASE WAS REOPENED BY THE AO U/S .147 BY ISSUE OF NOTICE U/S.148. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS FOR A.YRS. 2000-01, 2001-02 AND 2002-03 THE AO OBSERVED FROM PERUSAL OF THE BALANCE SHEET OF GHAT NURSERY AS ON 31-03-19 99 THAT THERE WERE SUNDRY CREDITORS OF RS.33 LAKHS. THE ASSESSEE WAS THE PROPRIETOR OF SAID GHAT NURSERY. THE ASSESSEE WAS ALLOTTED THE CO NTRACT OF SUPPLYING 2,20,000 SAPLINGS AS PER THE TENDER OF THE FOREST D EPARTMENT @ RS.22.50 EACH. THE ASSESSEE EXPLAINED THAT SINCE H E DID NOT HAVE THE CAPACITY TO FULFIL THIS REQUIREMENT HE WAS LOOKING FOR SUPPLIES OF SAPLINGS FOR WHICH HE LOCATED SHRI RAJNEESH KUMAR. IT WAS ARGUED THAT CREDIT OF RS.33 LAKHS WAS ON ACCOUNT OF PURCHA SE OF SAPLINGS FROM SHRI RAJNEESH KUMAR FOR SUPPLY TO THE FOREST DEPART MENT. THE AO NOTED THAT AGAINST THIS OUTSTANDING LIABILITY OF RS .33 LAKHS PAYMENT WAS MADE IN THE SUBSEQUENT YEARS TO ALL DIFFERENT P ERSONS OTHER THAN SHRI RAJNESSH KUMAR. THE ASSESSEE WAS NOT ABLE TO GET CONFIRMATION FROM SHRI RAJNEESH KUMAR REGARDING ANY SUCH INSTRUC TIONS FOR PAYMENTS TO SUCH PERSONS. THE AO ALSO RECORDED THE STATEMENT OF 3 SHRI RAJNEESH KUMAR WHO NEVER ADMITTED TO HAVE MADE ANY PURCHASE OF SAPLINGS FROM THESE PERSONS TO BE SUPPLIED TO GH AT NURSERY OWNED BY THE ASSESSEE. HE HAD STATED THAT HE WAS STUDYIN G UPTO 1997 AND THEREAFTER WAS WORKING AS AN ASSISTANT CINEMATOGRAP HER AND THIS TRANSACTION OF SUPPLY OF SAPLINGS WAS THE FIRST AND ONLY TRANSACTION WHICH HE HAD CLAIMED TO HAVE MADE. THOUGH HE HAD C LAIMED TO HAVE SUPPLIED THE SAPLINGS HE WAS NOT AWARE OF THE NAMES OF THE PLANTS HE HAD SUPPLIED AND THE NAMES AND ADDRESSES OF THE PAR TIES FROM WHOM HE HAD PURCHASED THE SAPLINGS OR THE MANNER OF TRAN SPORTATION OF THE SAME. IN THE STATEMENT RECORDED BY INVESTIGATION W ING HE NEVER STATED THAT HE HAD INSTRUCTED FOR PAYMENT TO THESE PERSONS. INFACT HE CLARIFIED THAT HE WAS NOT IN TOUCH WITH THE ASSESSE E SINCE APRIL 1999 TILL 13-02-2001. THEREFORE, THERE WAS NO QUESTION OF GIVING ANY SUCH INSTRUCTIONS. THE AO FURTHER NOTED THAT THESE PERS ONS ARE THE PARTIES WITH WHOM THE ASSESSEE WAS CONNECTED WITH HIS OWN L AND TRADING BUSINESS. 5. THE A.O. FURTHER OBSERVED THAT EVEN THE BILL OF RS. 33 LAKHS FOR PURCHASE OF SAPLINGS WAS ONLY IN THE FORM OF A LETT ER GENERATED ON COMPUTER WITHOUT ANY BILL NUMBER. THOUGH THE BILL I S DATED 28-10-98, THE SAME IS RECEIVED BY THE SON OF THE ASSESSEE ON 02-05-2001. ACCORDING TO THE AO SINCE IN HIS STATEMENT SHRI RAJ NEESH KUMAR HAD CONFIRMED THAT HE HAD NOT MET THE ASSESSEE FROM APR IL 1999 TILL 13-02- 2001, THEREFORE, IT BECAME ABUNDANTLY CLEAR THAT TH IS SO CALLED 'BILL' WAS LATER PRINTED BY THE ASSESSEE HIMSELF ON THE COMPUT ER AND CLAIMED IT TO BE A BILL FOR SUPPLY OF SAPLINGS. THE A.O. ALSO POI NTED OUT THAT EVEN 4 THE SIGNATURE ON THE BILL DID NOT TALLY WITH THE SI GNATURE OF SHRI RAJNEESH KUMAR ON THE STATEMENT RECORDED BY THE INV ESTIGATION WING. 6. IT WAS ALSO NOTICED BY THE A.O. THAT THOUGH SHRI RA JNEESH KUMAR DID NOT HAVE ANY INCOME AT THE TIME OF SO CAL LED SUPPLY OF SAPLINGS, STILL IT WAS BEING CLAIMED THAT THE PAYME NT WAS MADE ON HIS INSTRUCTIONS TO OTHER PERSONS IN THE NEXT YEAR AND THE YEAR AFTER THAT. HE WAS HAVING NO INCOME FOR PURCHASE OF SUCH SAPLIN GS AND HE COULD NOT EXPLAIN AS TO FROM WHAT SOURCE HE HAD PURCHASED THE SAPLINGS. IN VIEW OF THE ABOVE, THE AO CONCLUDED THAT THERE WAS NO ACTUAL PURCHASE FROM SHRI RAJNEESH KUMAR NOR ANY PAYMENTS AGAINST THOSE PURCHASES AND THE WHOLE AFFAIR WAS A FICTITIOUS AND BOGUS TRANSACTION. RELYING ON THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF UNION OF INDIA VS. GOSALIA SHIPPING PVT. LTD. REPOR TED IN 113 ITR 307, CIT VS. DURGA PRASAD MORE REPORTED IN 82 ITR 5 40, WORKMEN VS. ASSOCIATED RUBBER INDUSTRY LTD. REPORTED IN 15 7 ITR 77AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F NAYANTARA G. AGGARWAL VS. CIT REPORTED IN 207 ITR 639, THE AO MA DE ADDITION OF RS.33 LAKHS BEING UNEXPLAINED CREDIT SHOWN IN THE B ALANCE SHEET OF THE ASSESSEE. 7. IN APPEAL THE LD.CIT(A) ON THE BASIS OF VARIOUS SUBMISSIONS MADE BEFORE HIM CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE COM MENTS OF THE ASSESSEE TO SUCH REMAND REPORT THE LD.CIT(A) UPHELD THE ADDITION OF RS.33 LAKHS MADE BY THE AO AS UNEXPLAINED CREDIT BY OBSERVING AS UNDER : 5 3.6 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND MATERIAL AVAILABLE ON RECORD. I HAVE ALSO NOTED THE FACTS RECORDED BY THE A.O. IN THE REASONS RECORDED FOR REOPENING OF ASSESSM ENT WHICH HAVE BEEN REPRODUCED IN THE ASSESSMENT ORDER FROM PAGE 2 ONWARDS. THOSE ARE THE FACTS WHICH COULD NOT BE CONTRADICTED W ITH NECESSARY EVIDENCE BY THE APPELLANT. THE ASSESSMENT ORDER IS BASED ON THOSE FACTS AND THE SEQUENCES OF EVENTS CLEARLY REVEAL THAT T HE AMOUNT OF RS. 33 LAKHS WAS A BOGUS TRANSACTION SHOWN IN THE BALANCE-SH EET OF GHAT NURSERY. NEITHER THE APPELLANT HAS PRODUCED THE PROOF FOR ACQUISITION OF THE SAPLINGS NOR ITS SUPPLY TO THE FOREST DEPARTMENT COULD BE PROVED. IT IS A HIGHLY IMPROBABLE STORY THAT THE APPE LLANT WOULD HAVE BEEN AWARDED CONTRACT BY THE FOREST DEPARTMENT, WHER EAS HE WAS NOT HAVING ANY PRODUCTION / PROCUREMENT CAPABILITY OF T HE SAPLINGS TO BE SUPPLIED. FURTHER, HE WAS SCOUTING FOR PERSONS WHO COULD SUPPLY THOSE SAPLINGS AND HE SHORTLISTED SHRI RAJNEESH KUMAR FOR IT; WHEREAS SHRI RAJNEESH KUMAR WAS WORKING AS AN ASSISTANT CINEMATOGRAPHE R AT THAT POINT OF TIME JUST HAVING COMPLETED HIS STUDIES AND HA VING NOTHING TO DO WITH THE AGRICULTURAL ACTIVITIES OR SUPPLYING OF P LANTS ETC. THE DEFICIENCIES IN THE SO-CALLED BILL FOR THESE SUPPLY WHI CH IS ONLY IN THE FORM OF A LETTER PRINTED ON THE COMPUTER APPARENTLY AFTER A MUCH LATER DATE AS ALSO BEEN NARRATED ABOVE, WHICH REMAINED TO B E EXPLAINED BY THE APPELLANT. THE APPELLANT'S CONTENTION IN THE SUBM ISSION THAT SUCH DEFICIENCY DOES NOT MAKE THE INVOICE FOR THE TRANSACT ION A BOGUS ONE IS NOT ACCEPTABLE LEGALLY. MANY OBSERVATIONS MADE IN THE APPELLANT'S SUBMISSION ARE NOT CORRECT LIKE, THE A.O. BEING SATISFIE D REGARDING SUPPLY OF SAPLINGS, OR THAT THE A.O. WAS SATISFIED THAT T HE SAPLINGS WERE ACTUALLY PROCURED FROM MARKET. THERE IS NO SUCH FINDI NG FROM THE ASSESSMENT ORDER, AND IT IS ONLY BY IMAGINATION THAT THI S CONTENTION HAS BEEN MADE IN THE APPELLANT'S SUBMISSION DATED 23.09. 2009. THE STATEMENT OF SHRI RAJNEESH KUMAR RECORDED BEFORE THE INVESTIGATION WING ALSO MAKES MANY THINGS CLEAR, INCLUDING THE ESTABL ISHMENT OF THE FACT THAT THE SUBSEQUENT DOCUMENTS ON WHICH HIS SIGNATUR ES HAVE BEEN SHOWN BY THE APPELLANT WERE NOT CORRECT, AS IT DID NO T MATCH WITH THE SIGNATURE ON THE STATEMENT RECORDED BY THE INVESTIGATI ON WING ON 13.02.2001. THIS ALSO MAKES IT ABUNDANTLY CLEAR THAT ALL THESE DOCUMENTS WERE BOGUS AND FICTITIOUS, JUST CREATED TO H ELP HIM. EVEN THE GLARING DISCREPANCY AND INCONSISTENCY IN APPELLANT 'S STORY AS POINTED OUT IN PARA 3(II) IN A.O'S REPORT DATED 27.1 0.2009 COULD NOT BE EXPLAINED SATISFACTORILY BY THE APPELLANT. CONSIDERING THE FACTUAL MATRIX AND LEGAL POSITION IN THIS REGARD, THE ADDITIO N AMOUNTING TO RS. 33 LAKHS FOR UNEXPLAINED CREDITS IS HEREBY UPHELD AND GROUND NOS. 1 AND 2 ARE, THEREFORE, DISMISSED. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US. 9. WE HAVE CONSIDERED THE ARGUMENTS OF THE LD. DEPA RTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE O N RECORD. WE FIND THE CASE WAS REOPENED BY ISSUING NOTICE U/S.14 8 ON ACCOUNT OF FICTITIOUS CREDITORS FOUND IN THE BALANCE SHEET OF THE ASSESSEE IN HIS 6 PROPRIETARY CONCERN M/S. GHAT NURSERY. THE ASSESSE E COULD NOT PRODUCE ANY PROOF FOR ACQUISITION OF THE SAPLINGS F ROM SHRI RAJNEESH KUMAR AGAINST WHOM THE LIABILITY OF RS.33 LAKHS IS APPEARING. THE STATEMENT RECORDED BY THE INVESTIGATION WING FROM S HRI RAJNEESH KUMAR ALSO GOES AGAINST THE ASSESSEE. THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE THE CIT(A) COULD NOT ESTABLISH TH E GENUINENESS OF THE PURCHASES FROM SHRI RAJNEESH KUMAR WHO WAS WORK ING AS ASSISTANT CINEMATOGRAPHER AT THAT POINT OF TIME. SH RI KUMAR WHO HAVING COMPLETED HIS STUDIES AND HAVING NOTHING TO DO WITH THE AGRICULTURAL ACTIVITIES OR SUPPLY OF PLANTS ETC. WA S SHOWN AS A CREDITOR IN THE BOOKS OF THE ASSESSEE TO THE EXTENT OF RS.33.00 LAKHS. THE VARIOUS OBSERVATIONS MADE BY THE AO AS WELL AS THE CIT(A) REMAIN UNCONTROVERTED. UNDER THESE CIRCUMSTANCES A ND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) ON THIS ISSUE, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS U PHELD AND THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. GROUNDS OF APPEAL NO.4 & 5 BY THE ASSESSEE RELA TE TO THE ORDER OF THE CIT(A) IN UPHOLDING THE AOS ACTION IN TREATI NG THE AGRICULTURAL INCOME OF RS.8,30,960/- DECLARED BY TH E ASSESSEE AS NORMAL INCOME. 11. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD CREDIT ED AN AMOUNT OF RS.8,30,960/- IN THE PROFIT AND LOSS ACCOUNT AS AGR ICULTURAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE COULD NOT SUBSTANTIATE THE AGRICULTURAL ACTIVITY CARRIED OUT BY HIM FOR WHICH THE AO DISALLOWED THE INCOME SHOWN UNDER THE HEAD AGRIC ULTURAL 7 INCOME AT RS.8,33,960/- AND TREATED THE SAME AS NOR MAL INCOME OF THE ASSESSEE. 12. IN APPEAL THE LD.CIT(A) BASED ON THE SUBMISSION S MADE BEFORE HIM CALLED FOR A REMAND REPORT FROM THE AO W HO REITERATED HIS FINDINGS JUSTIFYING THE DENIAL OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE. THE AO FURTHER REPORTED THAT UNDER I DENTICAL CIRCUMSTANCES THE CIT(A) IN ASSESSEES OWN CASE FOR A.YRS. 1998- 1999 AND 1999-2000 VIDE ORDER DATED 06-10-2003 HAS CONFIRMED THE ACTION OF THE AO IN TREATING THE AGRICULTURAL INCOM E AS BUSINESS INCOME. FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.YRS1998-1999 AND 1999-2000 THE CIT(A) UPHELD THE ACTION OF THE A O IN TREATING THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AS BU SINESS INCOME. 13. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 14. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATI VE AND ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE FIN D THE LD.CIT(A) WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE HAS F OLLOWED THE ORDERS OF HIS PREDECESSOR FOR A.YRS. 1998-99 AND 1999-2000 IN ASSESSEES OWN CASE. IN THE EARLIER ORDERS THE PREDECESSOR CI T(A) HAS FOLLOWED THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF POCHA SEEDS VIDE ITA NO.492/PN/1981 FOR A.YR. 1977-78 WHE RE IT HAS BEEN HELD THAT INCOME FROM OPERATION OF A NURSERY I S BUSINESS INCOME. SINCE NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE CIT(A) FOR A.YRS. 1998-99 AND 1999 -2000 IN ASSESSEES OWN CASE WHICH HAS BEEN FOLLOWED BY THE CIT(A) FOR THE 8 IMPUGNED ASSESSMENT YEAR, THEREFORE, WE FIND NO INF IRMITY IN HIS ORDER UPHOLDING THE ACTION OF THE AO TREATING THE A GRICULTURAL INCOME AS BUSINESS INCOME. GROUNDS RAISED BY THE A SSESSEE ARE ACCORDINGLY DISMISSED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 24-04-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PA NDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 24 TH APRIL, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE