Income Tax Officer-4(1), Lucknow V. M/s Deepak Chandra (HUF), Lucknow

ITA 137/LKW/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1786 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER-4(1), LUCKNOW. VS. M/S DEEPAK CHANDRA (HUF)C-186, NIRALA NAGAR, LUCKNOW. PAN:AADHD 7119 J (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- II, LUCKNOW DATED 19/12/2016. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE REPRODUCED BELOW: 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.70,87,073/- MADE ON ACCOUNT OF D IFFERENCE IN OPENING STOCK & CLOSING STOCK IGNORING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM BEFORE TH E ASSESSING OFFICER. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.2,00,000/- ON ACCOUNT OF MISCELLANEO US EXPENSES WITHOUT APPRECIATING THE FACT THAT THE ASS ESSEE WAS UNABLE TO PROVE THE GENUINENESS OF EXPENDITURE. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.60,000/- ON ACCOUNT OF SALARY EXPENS ES MADE APPELLANT BY SMT. PINKI MAHAWAR, D.R. RESPONDENT BY SHRI SAMRAT CHANDRA, C.A. SHRI VATSAL KAKKAR, C.A. DATE OF HEARING 21 / 08 /201 8 DATE OF PRONOUNCEMENT 31/08/2018 I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 2 THROUGH CASH WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF EXPENDITURE. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.1,25,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IGNORING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN ITS SOURCES. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT ASSE SSEE WAS DOING COMMODITY TRADING AND SHARES TRADING WITH M/S ANGEL BROKING SERVICES LTD. THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS ISSUED NOTICE U/S 133(6) OF THE ACT REQUIRING M/S ANGEL BROKING SERVI CES LTD. TO CONFIRM THE COPY OF ACCOUNT WITH THE ASSESSEE AND ON FINDING CE RTAIN DISCREPANCY IN THE STATEMENT, THE ASSESSEE WAS REQUIRED TO EXPLAIN. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN OPENING STOCK AS ON 01/04/2011 AT RS.69,95,875/- AND CLOSING STOCK AS ON 31/03/2012 A T RS.2,85,850/- WHEREAS THE INFORMATION OBTAINED FROM THE ABOVE SAI D BROKER, REVEALED THAT OPENING STOCK AS ON 01/04/2-011 WAS AT RS.55,513.28 AND CLOSING STOCK AS ON 31/03/2012 WAS AT RS.1,39,196.11 AND THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DIFFERENCE OF RS.70, 87,016/- IN OPENING STOCK AND CLOSING STOCK MAY NOT BE TREATED AS INCOME OF T HE ASSESSEE. FINDING NO EXPLANATION FROM THE ASSESSEE THE ASSESSING OFFI CER MADE THE ADDITION. LEARNED A. R. SUBMITTED THAT IN FACT THE ASSESSEE W AS DEALING BOTH IN COMMODITY AND SHARES AND THE BALANCE OF ACCOUNT FOR COMMODITY MARKET WAS COMPARED BY THE ASSESSING OFFICER WITH THE BALA NCE OUTSTANDING IN SHARE TRADING ACCOUNT AND THEREFORE, BEFORE THE LEA RNED CIT(A) FROM THE HEAD OFFICE OF THE BROKING COMPANY A CERTIFICATE TO THIS EFFECT WAS OBTAINED AND LEARNED CIT(A) HAD SENT THE FILE TO THE ASSESSI NG OFFICER FOR REMAND REPORT AND ASSESSING OFFICER WITHOUT COMMENTING ON THE MERITS HELD THAT THE DOCUMENT SHOULD NOT BE ACCEPTED WHEREAS LEARNED CIT(A) FINDING THE DIFFERENCE EXPLAINABLE HAS ALLOWED APPROPRIATE RELI EF TO THE ASSESSEE. I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 3 3. AS REGARDS THE DISALLOWANCE OF AD HOC EXPENDITUR E OF RS.2,00,000/-, LEARNED A. R. SUBMITTED THAT ASSESSEE HAD DEBITED T OTAL EXPENDITURE OF RS.2,34,000/- OUT OF WHICH THE ASSESSING OFFICER HA D DISALLOWED AN AMOUNT OF RS.2,00,000/- WITHOUT POINTING OUT ANY DEFECT OR DISCREPANCY IN THE BOOKS. SIMILARLY LEARNED A. R. SUBMITTED THAT THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS.60,000/- OUT OF TOTAL SALAR Y EXPENSES OF RS.1,20,00/- WHICH IS NOT APPROPRIATE. SIMILARLY, LEARNED A. R. EXPLAINED THAT THE DEPOSIT IN THE BANK ACCOUNT AMOUNTING TO R S.1,25,000/- WAS OUT OF BOOKS OF ACCOUNT AND OUT OF CASH BALANCE AVAILABLE WITH THE ASSESSEE AND FOR WHICH LEARNED CIT(A) HAS MADE A FINDING OF FACT S. 4. LEARNED D. R., ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT REGARDING DIFFEREN CE IN OPENING STOCK AND CLOSING STOCK THE ASSESSEE WAS REQUIRED TO CLARIFY THE SAME ALONGWITH THE DOCUMENTARY EVIDENCE AND ASSESSEE WAS REQUIRED TO S UBMIT HIS REPLY ON 07/11/2014 ON WHICH DATE NOBODY ATTENDED AND ON 09/ 12/2014 THE ASSESSEE APPEARED BUT DID NOT FILE ANY EXPLANATION AND THEREFORE, THE ASSESSING OFFICER HAD MADE THIS ADDITION. BEFORE L EARNED CIT(A) THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF C ONFIRMATION FROM ANGEL COMMODITY BROKING PVT. LTD. IN WHICH ANGEL COMMODIT Y BROKING PVT. LTD. HAD STATED THAT EARLIER REPLY SUBMITTED BY THEM WAS FOR SHARE AND NOT FOR COMMODITIES. THE LEARNED CIT(A) REQUIRED THE ASSES SING OFFICER TO FILE A REMAND REPORT ON THE ADDITIONAL EVIDENCE. THE ASSE SSING OFFICER DURING THE REMAND PROCEEDINGS DID NOT COMMENT UPON THE MERITS OF THE DOCUMENTS BUT HE INSISTED THAT THE ADDITIONAL DOCUMENTS CANNOT BE TREATED AS GENUINE. FOR I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 4 THE SAKE OF CONVENIENCE THE CONTENTS OF THE REMAND REPORT AS REPRODUCED BY LEARNED CIT(A) ARE REPRODUCED BELOW: KINDLY REFER TO YOUR LETTER F.NO.241/26/CIT-(A)-II /LKO./ 2015- 16 DATED 03.09.2015 ON THE SUBJECT CITED ABOVE. 2. IN THIS REGARD, IT IS RELEVANT TO MENTION HERE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE UNDERSIGN ED HAD ISSUED NOTICES U/S 133(6) TO BRANCH OFFICE AS WELL AS REGIONAL OFFICE OF THE M/S ANGEL BROKING LTD. BUT ALL THE NO TICES WERE RETURNED UNSERVED WITH REMARK THAT OFFICE IS CLOSED AT THIS PLACE. AFTER THAT A NOTICE U/S 133(6) WAS ISSUED TO THE CO RPORATE OFFICE OF THE M/S ANGEL BROKING LTD. MUMBAI AND AFTER THAT REPLY WAS SUBMITTED BY M/S ANGEL BROKING AFTER CONSUMING AMPL E TIME FOR THAT. IN VIEW OF ABOVE DISCUSSED FACTS, THE ADDITIONAL EV IDENCE SUBMITTED BY THE ASSESSEE CAN'T BE TREATED AS GENUI NE ONE, ON THE FOLLOWING GROUNDS- (A) SINCE, REPLY U/S 133(6) WAS SUBMITTED BY THE CO RPORATE OFFICE OF THE ANGEL BROKING LTD., MUMBAI, NO DOCUME NTS ISSUED BY ANYONE CAN BE TREATED AS SUPPLEMENTARY REPLY OF THE ORIGINAL REPLY. HENCE, THIS DOCUMENT HAS NO WORTH IN THI S CIRCUMSTANCES AND SHOULD NOT BE CONSIDERED. (B) SECONDLY, LANGUAGE USED BY THE SIGNATORY IN THE FRESH DOCUMENT SUBMITTED BY THE ASSESSEE IS VERY VA GUE IN NATURE, IT READS AS UNDER 'THAT ANGEL BROKING LTD., BY AN OVERSIGHT SUBMITTED THE REQUIRED DETAILS OF SHARE TRADING ACCOUNT INSTEAD O F COMMODITY ACCOUNT BALANCE, WHICH HAS NOW BEEN CONFIRMED VIDE LETTER DATED 26.08.2015 OF ANGEL COMMODITIES BROKING LTD., GIVING THE PARTICULARS AS REQUIRE BY INCOME TAX OFFICER. ON PLAIN READING OF A HOVE SUBMISSION, IT MAY BE CO NCLUDED THAT IF THE REPLY SUBMITTED BY THE CORPORATE OFFICE OF THE M/S ANGEL BROKING LTD. WAS 'OVERSIGHTED' ONE THEN WHY T HIS PAPER SUBMITTED BY THE ASSESSEE MAY BE TREATED AS GENUINE ?' I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 5 IN SUMMATION, THIS DOCUMENT CAN'T BE TREATED AS GEN UINE BECAUSE REASON CITED ABOVE AND SHOULD BE REJECTED. DETAILS GIVEN IN THE ASSESSMENT ORDER ARE AS PER FA CTS AVAILABLE ON RECORDS AND COLLECTED BY THE UNDERSIGNED. 5.1 FROM THE CONTENTS OF THE ABOVE REMAND REPORT, W E FIND THAT THE ASSESSING OFFICER HAS OBJECTED TO THE DOCUMENT OBTA INED BY HIM U/S 133(6) OF THE ACT. NOWHERE IN THE REMAND REPORT THE ASSES SING OFFICER COMMENTED ON THE MERITS OF THE DOCUMENT AND DID NOT CARRY OUT ANY EXERCISE TO RECONCILE THE FIGURE. THE LEARNED CIT(A) AFTER GOI NG THROUGH THE REMAND REPORT AND AFTER UNDERSTANDING THE ENTIRE ISSUE HAS RIGHTLY ALLOWED RELIEF TO THE ASSESSEE AS HE HAS MADE A FINDING OF FACT THAT THE ASSESSING OFFICER HAS COMPARED THE CLOSING VALUE OF GOLD WITH THE CLOSING BALANCE OF SHARES AND SIMILARLY HE HAS HELD THAT THE OPENING VALUE OF SIL VER WAS COMPARED WITH OPENING VALUE OF SHARES. THE ORDER PASSED BY LEARN ED CIT(A) IS COMPREHENSIVE ORDER AND HAS BEEN PASSED AFTER CONFR ONTING THE ASSESSING OFFICER WITH THE ADDITIONAL EVIDENCE AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE SAME AND IN VIEW OF THE ABOVE GROU ND NO. 1 OF THE APPEAL IS DISMISSED. 6. AS REGARDS GROUND NO. 2 REGARDING AD HOC DISALLO WANCE OF RS.2,00,000/-, WE FIND THAT THE ASSESSEE HAD INCURR ED A TOTAL EXPENDITURE OF RS.2,34,000/-. THE LEARNED CIT(A) HAS REPRODUCED T HE ITEMS OF EXPENDITURE IN HIS ORDER AT PAGE 7. THE EXPENSES NOTED BY LEAR NED CIT(A) RELATED TO GENERAL EXPENSES INCLUDING PRINTING & STATIONERY, T ELEPHONE EXPENSES, STAFF WELFARE, TRAVELLING ETC. AND THEREFORE, THE DISALLO WANCE MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.2,00,000/- WA S NOT JUSTIFIED AND LEARNED CIT(A) HAS RIGHTLY DELETED THE SAME BY HOLD ING THAT THE ASSESSING OFFICER HAD NOT CARRIED OUT ANY EXAMINATION TO SHOW THAT THE EXPENSES WERE I.T.A. NO.137/LKW/2017 ASSESSMENT YEAR:2012-13 6 NOT INCURRED FOR THE BUSINESS OF THE ASSESSEE. IN VIEW OF THE ABOVE, GROUND NO. 2 IS ALSO DISMISSED. 7. AS REGARDS GROUND NO. 3 REGARDING DISALLOWANCE O F RS.60,000/- ON ACCOUNT OF SALARY EXPENSES, WE FIND THAT LEARNED CI T(A) HAS RIGHTLY HELD THAT WITHOUT HOLDING THAT EXPENDITURE OF SALARY WAS NOT INCURRED FOR THE PURPOSE OF THE BUSINESS, THE DISALLOWANCE EQUIVALENT TO 50% OF THE EXPENSES WAS NOT JUSTIFIED THEREFORE, GROUND NO. 3 IS ALSO DISMI SSED. 8. AS REGARDS GROUND NO. 4 REGARDING ADDITION OF RS .1,25,000/-, WE FIND THAT LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT THE CASH WAS DEPOSITED BY THE ASSESSEE OUT OF CASH BALANCE AVAILABLE IN TH E BOOKS OF ACCOUNT THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE SAME AND GROUND NO. 4 IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2 018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:31/08/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW