ITO, Barnala V. M/s Barnala Wines, Barnala

ITA 14/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9905 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER SHRI GEORGE GEORGE K. JUDICIAL MEMBER ITA NO.14 /CHD/2016 (ASSESSMENT YEAR: 2009-10) THE INCOME TAX OFFICER, VS. M/S BARNALA WINES, WARD-1, BARNALA. BARNALA. PAN NO. AASPA1112D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI DEEPAK AGGARWAL DATE OF HEARING : 23.06.2016 DATE OF PRONOUNCEMENT : 24.06.2016 O R D E R PER GEORGE GEORGE K., J.M . : THIS APPEAL AT THE INSTANCE OF THE REVENU E IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), PATIALA DATED 29.10.2015, PASSED UND ER SECTION 250(6) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT), THE RELEVANT ASSESSMENT YEAR IS 2009-10. 2. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE REA D AS FOLLOWS : 2 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.48,50,000/- MADE ON ACCOUNT OF ADDITION IN PARTNER'S CAPITAL ACCOUNT IN THE NAME OF SHRI DALBIR SINGH. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.48,50,000/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE IDENTITY, CAPACITY OF SHRI DALBIR SINGH AND ALSO FAILED TO PRODUCE SHRI DALBIR SINGH DURING THE COURSE OF ASSESSMENT PROCEEDINGS INSPITE OF REP EATED OPPORTUNITIES. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS FO LLOWS : THE ASSESSEE IS A FIRM CONSTITUTED ON 18.3.2008. FOR THE ASSESSMENT YEAR 2009-10, THE RETURN OF INC OME WAS FILED IN THE STATUS OF A FIRM, DECLARING INCOME OF RS.4,38,620/- THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT VIDE ORDER DATED 16.12.2011. IN THE ASSESSMENT COM PLETED, THE ASSESSING OFFICER TREATED THE ASSESSEE AS AN A OP AND MADE AN ADDITION OF RS.55,03,018/- TO THE RETURNED INCOME. ONE OF THE ADDITIONS MADE BY THE ASSESSING OFFICER WAS UNDER SECTION 68 OF THE ACT, AMOUNTING TO RS.48,50,000/- BEING THE CAPITAL INTRODUCED BY ONE OF THE PARTNERS OF THE AS SESSEE FIRM, SHRI DALBIR SINGH. THE ASSESSING OFFICER NOTED THA T OUT OF RS.48,50,000/-, A SUM OF RS.28 LACS WAS RECEIVED AS CASH AND THE BALANCE THROUGH TRANSFER OR LICENSE FEE PAID. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SHRI DAL BIR SINGH WAS NOT AN INCOME-TAX ASSESSEE AND HIS IDENTITY AND FINANCIAL CAPACITY IS NOT PROVED. FURTHER, THE ASS ESSING 3 OFFICER HELD THAT SHRI DALBIR SINGH WAS NEVER PRO DUCED BEFORE HIM FOR EXAMINATION. FOR THESE REASONS, TH E CAPITAL CONTRIBUTION BY SHRI DALBIR SINGH WAS ADDED UNDER S ECTION 68 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE ASSESSMENT ORDER, THE ASSESSEE APPEALED TO THE FIRST APPELLATE AUTHORITY. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT (APPEALS) THAT THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSE E FIRM SINCE IT WAS CONSTITUTED ONLY IN THE PREVIOUS ASSES SMENT YEAR (CONSTITUTED ON 18.3.2008) AND IT WAS NOT POSSIBLE TO EARN SUCH HUGE UNDISCLOSED INCOME IN SUCH A SHORT SPAN. FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED ON VARIOUS J UDICIAL PRONOUNCEMENTS. FURTHER, IT WAS CONTENDED THAT SHR I DALBIR SINGH, PARTNER HAD MADE CAPITAL CONTRIBUTION IN PRE VIOUS ASSESSMENT YEAR AND NOT IN THE CURRENT ASSESSMENT Y EAR AND FOR THAT REASON ALONE, THE ADDITION OUGHT BE DELETE D. FURTHER, IT WAS CONTENDED THAT SHRI DALBIR SINGH HIMSELF HAD OFFERED TO APPEAR BEFORE THE ASSESSING OFFICER IN HIS LETTER D ATED 31.8.2015. THEREFORE, IT WAS SUBMITTED THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN CONCLUDING THAT THE ID ENTITY OF THE PARTNER IS IN DOUBT. THE CIT (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDINGS OF T HE CIT (APPEALS) READ AS FOLLOWS : 6.6 THE ADMITTED POSITION IN THIS CASE IS THA T THE APPELLANT FIRM WAS CONSTITUTED ON 18.03.2008 DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09 I.E. IN THE 4 IMMEDIATELY PRECEDING ASSESSMENT YEAR. IT IS ALSO N OT DISPUTED THAT THE IMPUGNED AMOUNT OF RS.48,50,000/- WAS INTRODUCED B Y A PARTNER SH. DALBIR SINGH AT THE TIME OF ITS CONSTITUTION AND NOT IN THE ASSESSMENT YEAR 2009-10 WHICH IS UNDER APPEAL. THEREFO RE, ON THAT COUNT ALONE, NO ADVERSE VIEW CAN BE TAKEN IN THE ASSESSMENT YEAR 2009-10. FURTHER, THE RATIOS LAID DOWN BY VARIOUS COURTS IN T HE CASES QUOTED ABOVE ARE ALSO APPLICABLE TO THE FACTS AND CI RCUMSTANCES OF THE APPELLANT. AS NOTED ABOVE, THE FIRM WAS CONSTITU TED ON 18.03.2008. A PARTNER NAMELY SH. DALBIR SINGH INTRODUC ED THE IMPUGNED AMOUNT OF RS.48,50,000/- AS CAPITAL AT THAT VERY POINT OF TIME. BY NO STRETCH OF IMAGINATION THE CAPITAL INTRODUCE D BY THE PARTNER COULD BE DUBBED AS THE INCOME OF THE FIRM. TH E APPELLANT FIRM COULD NOT HAVE EARNED ANY INCOME BEFORE ITS CON STITUTION. THUS, THE ADDITION OF THE IMPUGNED AMOUNT OF RS.48,5 0,000/- IN THE HANDS OF THE APPELLANT FIRM IN THE ASSESSMENT YE AR 2009-10 IS NOT SUSTAINABLE. THE SAME IS THEREFORE, DELETED. 5. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. THE LEARNED D.R. SUBMITTED THAT THE CIT (APPEA LS) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE, SINCE THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND CAPAC ITY OF SHRI DALBIR SINGH IN THE COURSE OF ASSESSMENT PROCEEDING S INSPITE OF REPEATED OPPORTUNITY BEING PROVIDED. THE LEARNE D D.R. CONTENDED THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN/ONUS ON IT FOR PROVING THE CREDITS IN ITS BO OKS OF ACCOUNT AND HENCE, THE ADDITION MADE UNDER SECTION 68 OF THE ACT BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN SUS TAINED BY THE CIT (APPEALS). 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE AU THORITIES 5 BELOW. FURTHER, THE LEARNED COUNSEL FOR THE ASSESS EE STATED THAT THE ASSESSMENT IN THE HANDS OF SHRI DALBIR SIN GH, PARTNER WAS REOPENED UNDER SECTION 148 OF THE ACT. THE LEARNED D.R. FURNISHED A COPY OF THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE LEARNED COUNSEL FOR TH E ASSESSEE DID NOT HAVE ANY GRIEVANCE WITH REGARD TO THE ISSUE BEING REMITTED TO THE ASSESSING OFFICER. IT WAS SUBMITT ED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER CAN EXAMINE THE PARTNER, SHRI DALBIR SINGH. IT WAS FURTHER STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE EVENT SHRI DALBIR SINGH ADMITS TO THE CAPITAL CONTR IBUTION, THE BENCH MAY DIRECT THE ASSESSING OFFICER NOT TO MAKE ADDITION UNDER SECTION 68 OF THE ACT, IN THE HANDS OF THE AS SESSEE FIRM. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A CLAIM OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE NOTICE UNDER SECT ION 148 OF THE ACT, HAS BEEN ISSUED TO SHRI DALBIR SINGH, TO B RING TO TAX HIS CAPITAL CONTRIBUTION, WHICH IS SUBJECT MATTER O F THE ADDITION UNDER SECTION 68 OF THE ACT, IN THE INSTAN T CASE. THE REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTI ON 148 OF THE ACT TO SHRI DALBIR SINGH ARE NOT ON RECORD, THE REFORE, IT IS NOT CLEAR WHETHER NOTICE UNDER SECTION 148 OF THE A CT, HAS BEEN ISSUED TO BRING TO TAX HIS CAPITAL CONTRIBUTIO N TO ASSESSEE FIRM. SINCE NOTICE HAS ALREADY BEEN ISSUE D IN THE CASE OF THE PARTNER FOR THE RELEVANT ASSESSMENT YE AR, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE STATUS OF THE ASSESSMENT IN THE CASE OF THE PARTNER, SHRI DALBIR SINGH. IF 6 THE PARTNER, SHRI DALBIR SINGH HAS ADMITTED TO THE POSITION THAT HE HAD CONTRIBUTED THE CAPITAL TO THE ASSESSEE FIRM AMOUNTING TO RS.48,50,000/-, NECESSARILY THERE CANN OT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE. WITH THESE OBSERVATIONS, WE RESTORE THE MATTER TO THE ASSESSIN G OFFICER TO CONSIDER THE ISSUE AFRESH. IT IS ORDERED ACCORDING LY. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JUNE, 2016 SD/- SD/- (SHAMIM YAHYA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH JUNE, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH