Ashutosh Shukla, New Delhi V. ITO, Ward-44(4), New Delhi

ITA 1386/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4911 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 19-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: AMOL SINHA SHRI ASHVINI KUMAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Set aside
• Section: 271(1)(c); 250; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 1385 & 1386/DEL/2019 ASSESSMENT YEAR: 2013-14 ASHUTOSH SHUKLA RZF-364/3, 1 GALI NO. 10, NEAR DDA PARK, RAJ NAGAR, PART-II, NEW DELHI. PAN NO. BMDPS6698L VS ITO WARD 44(4) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SHRI AMOL SINHA, ADVOCATE SHRI ASHVINI KUMAR, ADVOCATE REVENUE BY SHRI S.L. ANURAGI, SR. DR ORDER THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS OF THE CIT(APPEALS)-15, NEW DELHI RELATING TO AY 2013-14. WHILE ITA NO. 1385/DEL/201 9 IS AGAINST THE QUANTUM ADDITION SUSTAINED BY THE CIT(A), ITA N O. 1386/DEL/2019 RELATES TO CONFIRMATION OF PENALTY LE VIED BY THE AO U/S 271(1)(C) OF THE ACT. FOR THE SAKE OF CONVENIE NCE, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. DATE OF HEARING 06.08.2019 DATE OF PRONOUNCEMENT 14.08.2019 2 ITA NOS . 1385 & 1386/DEL/2019 2. ITA NO. 1385/DEL/2019 : FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 31.03.2015 DECLAR ING TOTAL INCOME OF RS. 1,99,770/-. IN THIS CASE, THE AIR IN FORMATION WAS RECEIVED ACCORDING TO WHICH THE ASSESSEE HAS MADE C ASH DEPOSIT OF RS. 66,90,100/- IN THE SAVINGS BANK ACCOUNT MAINTAI NED WITH HDFC BANK. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE SOURCE OF SUCH CASH DEPOSITED IN THE BANK ACCOUNT. IT WAS EXPLAINED BY THE ASSESSEE THAT HE WAS WORKING WITH RUDRA PHARMACEUTICALS ON C ONSIGNMENT BASIS WHO WERE HAVING WHOLESALE/RETAIL BUSINESS IN THE FIELD OF MEDICINE/PHARMACEUTICALS BUSINESS. SINCE, THE FIRM HAS TROUBLE WITH ITS OVERDRAFT FACILITY AT SYNDICATE BANK, THEY ASKED THE ASSESSEE TO COLLECT THE AMOUNT FROM SUNDRY DEBTORS OF THE FIRM AND DEPOSIT IN HIS SAVING BANK ACCOUNT FROM WHICH C HEQUES WERE ISSUED TO THE SUPPLIERS OF RUDRA PHARMACEUTICALS. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE THE AO ASKED THE A SSESSEE TO FILE CONFIRMATION AND PRODUCE THE PROPRIETOR/PARTNER OF M/S RUDRA PHARMACEUTICALS. SINCE, THE ASSESSEE FAILED TO PRO DUCE THE SAID PARTY SUMMON U/S 131 WAS ISSUED. M/S RUDRA PHARMAC EUTICALS CONFIRMED TO HAVE DEPOSITED CASH OF RS. 41,10,000/- IN THE BANK ACCOUNT OF THE ASSESSEE WHICH THE AO ALLOWED. HOWE VER, THE VARIOUS OTHER PARTIES FROM WHOM THE ASSESSEE HAS RE CEIVED CASH ON BEHALF OF M/S RUDRA PHARMACEUTICALS WERE NOT ACC EPTED BY THE AO IN VIEW OF THEIR DENIAL TO SUCH TRANSACTION OR N ON PRODUCTION OF 3 ITA NOS . 1385 & 1386/DEL/2019 THE SAME PARTIES BEFORE THE AO. THE AO, ACCORDINGL Y, MADE ADDITION OF RS. 25,80,100/- BY OBSERVING AS UNDER: UNDER THESE CIRCUMSTANCES, SINCE M/S RUDRA PHARMACEUTICALS HAS CONFIRMED THE TRANSACTIONS UPTO RS. 41,10,000/-, THE BALANCE AMOUNT OF CASH DEPOSITED A T RS. 25,80,100/- HAS REMAINED UNEXPLAINED ESPECIALLY IN VIEW OF THE FACT THAT M/S BHUTANI TRADERS, M/S ZEENAT CH EMIST AND M/S MAA MANSA TRADERS HAVE DENIED/NOT CONFIRMED ANY TRANSACTIONS WITH THE ASSESSEE. THEREFORE, THE AMOUNT OF RS. 25,80,100/- IS HEREBY ADDED TO THE TO TAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S 68 OF THE I.T. ACT. 3. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE AO BY OBSERVING AS UNDER: DECISION : THE CONTENTION OF THE APPELLANT HAS BEEN CONSIDERED AND THE ORDER OF AO HAS ALSO BEEN PERUSE D. IT IS SEEN THAT THERE WAS AN AIR INFORMATION IN THIS C ASE ABOUT THE TOTAL CASH DEPOSIT OF RS. 66,90,100/- IN THE BANK ACCOUNT OF THE APPELLANT. DURING THE ASSESSMENT ST AGE, AS PER THE EXPLANATION FILED BY THE ASSESSEE, THE AO CONDUCTED DETAILED ENQUIRIES AND ISSUED SUMMONS U/S 131 TO VARIOUS PARTIES. SOME OF THE PARTIES DENIED HAVING DONE THE TRANSACTIONS WITH THE ASSESSEE AND NOTICES TO SOME OF THE PARTIES WERE RETURNED BACK UNSERVED. F ROM THE PARTIES WHO RESPONDED TO THE NOTICES, HOWEVER, THE TRANSACTION AMOUNTING TO RS. 41,10,000/- ONLY WERE CONFIRMED BY THE PARTIES. THE APPELLANT ASSESSEE W AS ALSO GIVEN OPPORTUNITY AT THE ASSESSMENT STAGE TO P RODUCE VARIOUS PARTIES, WHICH HAD FAILED TO CONFIRM THE TRANSACTIONS. HOWEVER, THE ASSESSEE COULD NOT PROD UCE THOSE PARTIES IN SUPPORT OF HIS CONTENTIONS. DURIN G THE REMAND PROCEEDINGS ALSO THE AO HAS SUBMITTED THAT T HE SAME POSITION REMAINS, EVEN AFTER MAKING FURTHER EN QUIRIES FROM THE SAME VERY PARTIES. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE AO APPEARS TO BE REASONABLE AND JUSTIFIED AND THEREFOR E, THE 4 ITA NOS . 1385 & 1386/DEL/2019 ADDITION OF RS. 25,80,100/- MADE BY THE AO IS HEREB Y CONFIRMED. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY THE LD. CIT(A) U/S 250 (6) WAS INCORRECT, BAD IN LAW AND VOID AB INITIO 2. WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDIN G THE ADDITION MADE BY THE AO OF RS. 25,80,100/- U/S 68 O F THE INCOME TAX ACT, 1961 IN THE ABSENCE OF BOOKS OF ACCOUNTS WHEN IT WAS NOT CREDIT ENTRY IN THE ACCOUN T OF THE ASSESSEE. 3. THAT LD. CIT(A) ERRED IN UPHOLDING THE AOS ORDE R ON FACTS AND CIRCUMSTANCES OF THE CASE TO MAKE AN ADDITION OF RS. 25,80,100/- WITHOUT APPRECIATING TH E EXPLANATION AND FACTS SUBMITTED BY THE ASSESSEE FOR THE SOURCE OF CASH DEPOSITED. 4. THAT LD. CIT(A) AS WELL AS ASSESSING OFFICER ERR ED IN LAW AND ON FACTS BY NOT SUMMONING TO THE DEBTORS OF THE ASSESSEE IN REFERENCE TO THE EMPLOYER INSTEAD O F ASSESSEE WHO WERE THE ENTITIES SAID TO BE DEPOSITIN G THE CASH. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY ANY OF THE ABOVE GROUNDS DURING THE PENDENCY O F THE APPEAL. 5. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT SINC E THE NOTICES WERE ISSUED TO THE PARTIES IN THE WRONG ADDRESSES T HE NOTICES COULD NOT BE RECEIVED BY THOSE PARTIES. HE SUBMITT ED THAT GIVEN AN OPPORTUNITY THE ASSESSEE IS IN A POSITION TO PRODUC E THE PARTIES BEFORE THE AO TO SUBSTANTIATE THE CLAIM THAT THE CA SH DEPOSITED BY THE ASSESSEE IN THE SAVING BANK ACCOUNT MAINTAINED WITH HDFC BANK IS IN FACT THE CASH RECEIVED FROM THOSE PARTIE S. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE, THE ASSESSEE SHOUL D BE GIVEN ONE 5 ITA NOS . 1385 & 1386/DEL/2019 FINAL OPPORTUNITY TO SUBSTANTIATE THE SOURCE OF SUC H CASH DEPOSIT IN THE BANK ACCOUNT. 6. THE LD. DR ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE CIT(A). 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). I HAVE ALSO GONE THROUGH THE PAPER BOOK FILED ON BEHALF OF THE ASSES SEE. I FIND THE AO IN THE INSTANT CASE MADE ADDITION OF RS. 25,80,1 00/- ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE SOUR CE OF SUCH CASH DEPOSITS IN THE BANK ACCOUNT AND THE PARTIES F ROM WHOM ASSESSEE HAS SHOWN TO HAVE RECEIVED CASH HAVE DENIE D/NOT CONFIRMED ANY TRANSACTION WITH THE ASSESSEE. I FIN D THE LD. CIT(A) UPHELD THE ACTION OF THE AO, THE REASONS OF WHICH H AVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT GIVEN AN O PPORTUNITY THE ASSESSEE IS IN A POSITION TO PRODUCE THOSE PARTIES BEFORE THE AO TO SUBSTANTIATE THE TRANSACTIONS BY THEM WITH THE ASSE SSEE SO AS TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT. 8. CONSIDERING THE TOTALITY OF THE FACTS OF THE CAS E AND IN THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE TH E ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE FINAL OPPORTUNI TY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE BY PRODUCING THE VARIOUS PARTIES IN QUESTION TO SUBSTANTIATE THE CASH DEPOSIT IN THE BANK ACCOUNT. THE AO SHALL DECIDE THE ISSUE AS PER FACT AND LAW A FTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT 6 ITA NOS . 1385 & 1386/DEL/2019 ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE AR E ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. ITA NO. 1386/DEL/2019 : AFTER HEARING BOTH THE SIDES, I FIND THE AO LEVIED PENALTY OF RS. 6,83,880/- ON ACCOUNT OF ADDITION MADE BY HIM BEING UNVERIFIED CASH DEPOSIT OF RS. 25,80,100/- WHICH HAS BEEN UPHE LD BY THE CIT(A). SINCE, THE QUANTUM ADDITION HAS BEEN RESTO RED TO THE FILE OF THE AO, THEREFORE, THE PENALTY SO LEVIED BY THE AO AND UPHELD BY THE CIT(A) DOES NOT SURVIVE. ACCORDINGLY, THE SAME IS CANCELLED. HOWEVER, THE AO IS AT LIBERTY TO INITIATE FRESH PEN ALTY PROCEEDINGS U/S 271(1)(C) AFTER COMPLETION OF THE ASSESSMENT IN THE SET ASIDE PROCEEDINGS. THE GROUNDS RAISED BY THE ASSESSEE IN THE PENALTY APPEAL, VIDE ITA NO. 1386/DEL/2019 ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, ITA NO. 1385/DEL/2019 IS ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 1386/DEL/2019 IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/08/2019 SD/- (R.K. PANDA) ACCOUNTANT MEMBER DATED: 14/08/2019 *KAVITA ARORA 7 ITA NOS . 1385 & 1386/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 05.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 14.08.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 14.08.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 14.08.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 14.08.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.0 8.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER