ITO-1(1), BILASPUR(CG) V. SHRI MOHD .ARIF, BILASPUR(CG)

ITA 146/BIL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85402 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B LAHARI
• Assessee Lawyers: SUNIL KUMAR AGRAWAL CA
• Keywords: Peak credit
• Section: 148; 139

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,BENCH -RAIPUR . .. . . .. . , ,, , , ,, , . .. . . .. . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ./ ITA NO. 146 & 147/BLPR/2011 ' ' ' ' # # # # / // / ASSESSMENT YEAR -2005-06 & 2006-07 INCOME TAX OFFICER WARD-1(1), BILASPUR. $' % V/S. MOHD. ARIF, LINK ROAD, BILASPUR. PAN :AFTPM 7736 B ( &' / // / APPELLANT ) ( ()&' / RESPONDENT ) REVENUE BY : SH.B. LAHARI, SR. DR ASSESSEE BY : SH.SUNIL KUMAR AGRAWAL, CA ' * + , - / DATE OF HEARING : 17-12-2014 ./# + , - /DATE OF PRONOUNCEMENT : 31-12-201 4 '% '% '% '% , 1961 1961 1961 1961+ + + + 254 254 254 254( (( (1 11 1) )) ) ,8, ,8, ,8, ,8, 9: 9: 9: 9: ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM - -- - 9< 9< 9< 9<, ,, , ' ' ' ' : CHALLENGING THE COMMON ORDER DT.31.03.2011OF THE CI T(A),BILASPUR, ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEALS: GROUNDS OF APPEAL IN ITA NO. 146/BLPR/11 (A.Y. 2005 -06): 1(A)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS.36,50,006/- WITH WRO NG OBSERVATIONS THAT THE SAID ACCOUNT BELONGS TO PROPRIETARY CONCERN OF MOHD. ARIF AND IN SPITE OF T HE FACTS ON RECORDS THAT THE ASSESSEE HAS NOT FILED HIS REGULAR RETURN OF INCOME RELEVANT FOR A.Y . 2005-06 IN HIS INDIVIDUAL STATUS ALTHOUGH HE WAS LIABLE TO FILE HIS RETURN OF INCOME U/S. 139 OF THE I.T. ACT, 1961 AND THE ASSESSEE HAD FILED HIS RETURN OF INCOME IN COMPLIANCE TO NOTICE U/S. 148. (B). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE ABOVE RELIEF IN SPITE OF THE FACTS ON RECORDS THAT DURING THE ASSESSMENT PROCEEDINGS IN HIS CASE THE ASSESSEE HAS MADE A WRI TTEN SUBMISSION THAT NO BOOKS OF ACCOUNTS ARE BEING MAINTAINED BY HIM. HENCE, THE OBSERVATION OF THE APPELLATE AUTHORITY THAT THE ASSESSEE HAS SHOWN OPENING CASH BALANCE IN HIS FINANCIAL STATEME NT WHICH WAS USED FOR PURCHASE & LATER ON THE RECEIPT OF SALE THERE FROM MADE THE ASSESSEE POSSIB LE TO PLOUGH IN MONEY FOR THE REMAINING PURCHASE, IS NOT POSSIBLE. 2. THAT THE LD.CIT(A)S ORDER BEING ERRONEOUS, PERV ERSE AND CONTRARY TO THE FACTS ON RECORD, THE SAME MAY BE REVERSED WHILE THAT OF THE A.O. BE REST ORED. GROUNDS OF APPEAL IN ITA NO. 147/BLPR/11 (A.Y. 2006 -07): 1(A)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS.17,86,000/- WITH WRO NG OBSERVATIONS THAT THE SAID ACCOUNT BELONGS TO PROPRIETARY CONCERN OF MOHD. ARIF AND IN SPITE OF T HE FACTS ON RECORDS THAT THE ASSESSEE HAS NOT FILED HIS REGULAR RETURN OF INCOME RELEVANT FOR A.Y . 2005-06 IN HIS INDIVIDUAL STATUS ALTHOUGH HE WAS LIABLE TO FILE HIS RETURN OF INCOME U/S. 139 OF THE I.T. ACT, 1961 AND THE ASSESSEE HAD FILED HIS RETURN OF INCOME IN COMPLIANCE TO NOTICE U/S. 148. (B).THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE ABOVE RELIEF IN SPITE OF THE FACTS ON RECORDS THAT DURING THE ASSESSMENT PROCEEDINGS IN HIS CASE THE ASSESSEE HAS MADE A WRI TTEN SUBMISSION THAT NO BOOKS OF ACCOUNTS ARE BEING MAINTAINED BY HIM. HENCE, THE OBSERVATION OF THE APPELLATE AUTHORITY THAT THE ASSESSEE HAS SHOWN OPENING CASH BALANCE IN HIS FINANCIAL STATEME NT WHICH WAS USED FOR PURCHASE & LATER ON THE RECEIPT OF SALE THERE FROM MADE THE ASSESSEE POSSIB LE TO PLOUGH IN MONEY FOR THE REMAINING PURCHASE, IS NOT POSSIBLE. 2. THAT THE LD.CIT(A)S ORDER BEING ERRONEOUS, PERV ERSE AND CONTRARY TO THE FACTS ON RECORD, THE SAME MAY BE REVERSED WHILE THAT OF THE A.O. BE REST ORED. 2 ITA NO. 146 & 147/BLPR/2011- MOHD.ARIF. 2. ASSESSEE,ENGAGED IN THE BUSINESS OF PETROLEUM PRODU CTS, FILED HIS RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION ON13.11.2009 DECLARING TO TAL INCOME OF RS.97,590/- AND 62,510/- RESPE -CTIVELY IN RESPONSE TO NOTICES U/S.148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF WALRAJ SERVICE CENTRE, THE AO NOTICED A BANK ACCOUNT,HAVING THE SAME NAME AS THAT OF THE FIRM HAD LARGE DEPOSITS IN IT.HE MADE EXTENSIVE ENQUIRIES WITH THE CONCERNED BANK AUTHORITIES AND OBTAINED ACCOUNT OPENING FORM.HE FOUND THAT THE ASSESSEE WAS THE PROPRIETOR AND OWNER OF THAT BANK ACCOUNT BUT HE TREATED THE TRANSACTIONS P ERTAINING TO THE ASSESSEES PROPRIETARY BUSINESS AS BEING THAT OF THE FIRM AND ADDED THE PEAK CREDIT S AS PER THE BANK STATEMENT TO THE TOTAL INCOME OF THE FIRM ON SUBSTANTIVE BASIS AND TO PROTECT THE INTEREST OF THE REVENUE SAME WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE,ON PROTECTIVE BASIS.IN RESULTED IN ADDITION OF RS.RS.36,58,006/- AND RS.17,86,000/- RESPECTIVELY,U/S. 69 OF THE ACT, FOR THE AY.S.2005-06 AND 2006-07 RESPECTIVELY. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).IT WAS SUBMITTED BEFORE HIM THAT THE BANK ACC OUNT AND THE TRANSACTIONS MENTION -ED THEREIN WERE NOT RELATED TO THAT CONCERN BUT THE SAME WERE OWNED BY AND RELATED TO THE ASSESSEE,THAT THE ASSESSEE HAD CLAIMED THAT THE SOURCES OF THE TRANSA CTIONS WERE EXPLAINED IN THE RETURNS FILED FOR THE RESPECTIVE YEARS,THAT THE FACTS DISCLOSED THEREIN W ERE UNDISPUTEDLY ACCEPTED BY THE AO.THE FAA ANALYSED THE CASE RECORDS AND HELD THAT THE ASSESSE E WAS IS PROPRIETOR OF WALRAJ SERVICE CENTRE,THAT HE WAS ALSO A PARTNER IN ANOTHER FIRM M /S.WALRAJ SERVICE CENTRE,THAT BOTH THE ENTITIES WERE TRADING IN PETROLEUM PRODUCTS,THAT NOTICES U/S . 148 WERE ISSUED BY THE AO AND ACCORDINGLY THE ASSESSEEFILED RETURNS OF INCOME DISCLOSING THER EIN INCOME FROM THE FIRM AND FROM ITS PROPRIETARY CONCERN,THAT THE COPIES OF COMPUTATION OF TOTAL INCOME REVEALED THE ABOVE FACTS. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBM ISSIONS OF THE ASSESSEE,THE FAA HELD THAT THE NET PROFIT ON THE TRANSACTIONS IN QUESTION HAD ALRE ADY BEEN REFLECTED AND DISCLOSED IN THE RETURNS OF INCOME AND COMPUTATION FILED BY THE ASSESSEE BEFORE THE AO,THAT THE AO HAD ACCEPTED THE NP SHOWN BY THE ASSESSEE ON THE TOTAL TURNOVER,THAT C OPIES OF CAPITAL ACCOUNT AND BALANCE SHEET WERE SUBMITTED BEFORE THE AO,THAT THE FINANCIAL STATEMEN T REFLECTED OPENING CASH IN HAND AND SAME WAS ACCEPTED BY THE AO,THAT THE OPENING CASH BALANCE IN HAND WAS SUFFICIENT TO JUSTIFY AND COVER THE PURCHASES MADE BY THE ASSESSEE,THAT HE USED TO OBTA IN CREDITS IN THE MARKET,THAT ALL THOSE TRANSACTIONS ESTABLISHED THE FINANCIAL WORTH AND GO OD CREDIT OF THE ASSESSEE IN THE MARKET WHICH ALLOWED HIM TO OBTAIN CREDITS IN THE MARKET,THAT TH E ASSESSEE HAD SUFFICIENT CASH AND BANK BALANCES WITH HIM FOR THE PURCHASES TO BE MADE, THAT THOSE F ACTS CLEARLY EXPLAINED THE PEAK DEPOSITS IN HIS BANK ACCOUNT IN QUESTION,THAT WITHOUT PROVING FALSI TY IN THE AFOREMENTIONED FACTS THE AO PRESUMED THAT THE AFOREMENTIONED BANK ACCOUNTS AND DEPOSITS MADE THERE-UNDER WERE NOT RELATED TO THE ASSESSEE BUT TO M/S. WALRAJ SERVICE CENTRE,T HAT THE AOS CONCLUSION IN THIS REGARD WAS WITHOUT EVIDENCE AND UNSUSTAINABLE.FINALLY, HE DELE TED THE ADDITION MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE FOR BOTH THE AY.S.AND GAV E HIM RELIEF OF RS.36,58,006/- FOR THE AY. 2005-06 AND RS.17,86,000/- FOR THE AY. 2006-07. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)ARGUED THAT THE FAA HAD DELETED THE ADDITION, THAT ORDER IN THE CASE OF THE ASSESSEE WAS PASSED T O PROTECT THE INTEREST OF THE REVENUE,THAT THERE WERE EVIDENCES THAT EITHER THE FIRM OR THE ASSESSEE HAD EARNED THE INCOME APPEARING IN THE BANK ACCOUNT.THE AUTHORISED REPRESENTATIVE(AR)CONTENTED THAT ONCE THE ADDITION WAS MADE IN THE HANDS OF THE FIRM THERE WAS NO JUSTIFICATION FOR MA KING ADDITION IN ASSESSEES HANDS,THAT THE ASSESSEE HAD ALREADY DECLARED THE INCOME FROM SALE OF PETRO PRODUCTS IN THE AY.S.UNDER APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.UNDISPUTED FACTS OF THE CASE ARE THAT THE AO HAD RECEIVED INFORMATION ABOUT CD ACCOUNT NO. CD-231OF BANK OF INDIA,VYAPAR VIHAR BRANCH,THAT HE MADE INQUIRY ABOU T IT,THAT SCRUTINY OF THE ACCOUNT REVEALED THE TRANSACTION WORTH RS.30 CR. HAD TAKEN PLACE DURING THE PERIOD ,THAT NOTICES U/S.147 WERE ISSUED TO THE ASSESSEE AS WELL AS TO THE FIRM WHEREIN THE ASS ESSEE WAS ONE OF THE PARTNER,THAT THE AO MADE SUBSTANTIVE ADDITION IN THE HANDS OF THE FIRM,WHERE AS HE MADE PROTECTIVE ASSESSMENT IN THE CASE 3 ITA NO. 146 & 147/BLPR/2011- MOHD.ARIF. OF THE ASSESSEE.THUS,THE DISPUTED AMOUNTS OF RS. 36 .58 LAKHS FOR THE AY. 2005-06 AND RS.17.86 LAKHS FOR THE AY. 2006-07 HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE AND THE FIRM.WHILE DECIDING THE APPEALS OF THE FIRM,(ITA/150-151/BLPR/ 2011)WE HAVE REMITTED THE MATTER BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.AS THE S UBSTANTIVE ADDITION IS IN THE HANDS OF THE FIRM, SO,IT IS NATURAL THAT IT WILL HAVE BEARING ON THE A SSESSMENT OF THE ASSESSEE ALSO. SECONDLY,THE AMOUNT INVOLVED IS THE SAME.WE HAVE FOUND THAT THE FAA NOT CONSIDERED THE REMAND REPORT WHILE DECIDING THE APPEALS OF THE FIRM.SIMILAR IS T HE POSITION OF THE ASSESSMENT OF THE = BEFORE US. IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT,I N THE INTEREST OF JUSTICE,ASSESSMENT OF THE ASSESSEE SHOULD ALSO BE SET ASIDE TO THE FILE OF TH E FAA.HE IS DIRECTED TO DECIDE THE MATTER AFRESH AFTER CONSIDERING THE REMAND REPORT FURNISHED BY TH E AO.WE HAVE DISCUSSED THE ISSUE OF NON CONSIDERATION OF THE REMAND REPORT BY THE FAA WHILE ADJUDICATING THE APPEALS OF THE FIRM.HE SHOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE AND THE AO BEFORE DECIDING THE APPEALS. ITA/147/BLPR/2011-AY.2006-07: FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UN DER CONSIDERATION ARE IDENTICAL TO THE FACTS OF THE EARLIER AY.FOLLOWING OUR ORDER FOR AY.2005-06,W E SET ASIDE THE ORDER OF THE FAA FOR THE YEAR UNDER CONSIDERATION ALSO.HE SHOULD DECIDE THE APPEA L AFRESH,AS PER THE DIRECTIONS ISSUED BY US FOR THE EARLIER YEAR.GROUND NO.1 IS DECIDED IN FAVOUR O F THE AO FOR STATISTICAL PURPOSES. AS A RESULT, APPEALS FILED BY THE AO STAND ALLOWE D FOR STATISTICAL PURPOSES = %,> ' =,- - ? 9 @ A @B+ CDEF %G + , HI. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST ,DECEMBER,2014. 9: + ./# %A 31 J9$ , 2014 / + 8* . SD/- SD/- (H.L.KARWA/ . .. . . .. . ) ( / RAJENDRA) PRESIDENT/ 9< 9< 9< 9< /ACCOUNTANT MEMBER MUMBAI. J9' DATE:31.12.2014 9: 9: 9: 9: + ++ + (,K (,K (,K (,K LK#, LK#, LK#, LK#, / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ $M N , 4. THE CONCERNED CIT / $M N 5. DR ITAT,RAIPUR BENCH/ KO 8 (,' , . . . , 6. GUARD FILE/ 8 P * . ) K, (, //TRUE COPY// 9: ' / BY ORDER, C / H DY./ASST. REGISTRAR , /ITAT, RAIPUR