The ITO, Ward-4(3), Ahmedabad V. M/s. Hariom Organizers Pvt.Ltd., Ahmedabad

ITA 1525/AHD/2011

• Counselvise Citation: 152520514 RSA 2011
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 68

Judgement Text

, , . .. . . .. . , , , , . .. .!' !' !' !' !' !' !' !' , #$ #$ #$ #$ # % # % # % # % IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE SHRI G.C.GUPTA, HONBLE V.P. & SHRI A.MOHAN ALANKAMONY, HONBLE A.M.) . ITA NO. 1525/AHD./2011 : ' &' - 2007-2008 I.T.O., WARD-4(3), AHMEDABAD ( () /APPELLANT) -VS- HARIOM ORGANIZERS PVT. LTD., AHMEDABAD ( *+() /RESPONDENT ) (PAN : AABCH 4974L) () , - # / APPELLANT BY : SHRI VINOD TANWANI, SR.D.R. *+() , - # / RESPONDENT BY : SHRI UMAID SINGH BHATI, A.R. '. , /0$ / DATE OF HEARING : 02/12/2011 1!& , /0$ / DATE OF PRONOUNCEMENT : 10/02/2012 #2 #2 #2 #2 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : 1. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE IMPUGNED ORDER OF THE LD. CIT(A) IN APPEAL NO.CIT(A)-VIII/ITO/WD.4 (3)/769/09-10 DATED 04.03.2011 IN THE CASE OF M/S HARIOM ORGANIZERS PVT . LTD. AHMEDABAD FOR THE ASSESSMENT YEAR 2007-08 PASSED UNDER SECTIO N 250 R.W.S. 143(3) OF THE I.T. ACT. 2. THE SOLITARY GROUND OF THE REVENUE IS THAT THE L D. CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.35,64,450/- MA DE UNDER SECTION 68 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE COMPANY [THE ASSES SEE HENCEFORTH] HAD FURNISHED ITS E-RETURN OF INCOME ON 5.10.2007 D ECLARING A TOTAL INCOME OF RS.3,75,153/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF CASH BALANCE OF ITA NO.1525-AHD-2011 2 RS.48,35,227/- SHOWN IN ITS BALANCE SHEET AS ON 31. 12.2007 (SIC) 31.3.2007 FOR VERIFICATION. ACCORDING TO THE AO, S INCE THERE WAS NO COMPLIANCE TO ORDER SHEET NOTING ON 04.12.2009 AND AGAIN ON 21.12.2009 TO FURNISH THE REQUIRED DETAILS AND TO EXPLAIN THE SOURCE OF CASH AND ALSO NO CASH BOOK WAS FURNISHED DURING THE SAID PROCEEDINGS FOR VERIFICATION, THE AO TREATED THE CASH BROUGHT I N THE BOOKS OF RS.35,64,450/-, FOR THE REASONS RECORDED IN IMPUGNE D ORDER, AS BEING OUT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 4. ON APPEAL, IT WAS EXPLAINED THAT THE ASSESSEE HA D PURCHASED LAND AT LILIKUNG BUNGALOW FOR A SUM OF RS.1108 LAKHS AND WAS REQUIRED TO PAY STAMP DUTY AND REGISTRATION CHARGES IN CASH THAT TH E ASSESSEE WITHDREW CASH IN THE MONTH OF NOVEMBER, 2006 TO MAKE THE PAY MENT OF SUCH CHARGES; THAT THE ASSESSEE HAD ALSO WITHDREW CASH F OR THE ADDITIONAL CHARGES TO COVER ANY ADDITIONAL DUTY CHARGE WHICH R EQUIRED TO BE PAID DURING THE COURSE OF REGISTRATION. IT WAS, FURTHER , EXPLAINED THAT NO ADDITIONAL DUTY/CHARGES WERE REQUIRED TO BE PAID AN D, THEREFORE, THE CASH WAS KEPT ON HAND WHICH WAS SHOWN IN THE BALANCE SHE ET OF THE COMPANY. 4.1. AFTER CONSIDERING THE ASSESSEES SUBMISSION, T HE CIT (A) HAD OBSERVED THUS: 2.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED TO FURNISH THE DETAILS OF CASH BALANCE OF RS. 48,35,227/- SHOWN IN THE BALANCE SHEET AS ON 31/3/2007. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS OPENING BALANCE OF C ASH AS ON 1/4/2006 AMOUNTING TO RS.12,70,777/-. HE ADDED THE DIFFERENCE OF CASH BALANCE AS ON 31/03/07 AND 1/4/2006 (WHICH WORKS OUT TO RS.35,64,450/-) AS UNEXPLAINED CREDIT U/S68 OF T HE ACT. THE LD. AR, ON BEHALF OF THE APPELLANT, STRONGLY OBJECT ED THE ADDITION AND ARGUED THAT THE ASSESSEE COMPANY VIDE ITS LETTE R DATED 19/12/09 SUBMITTED BEFORE THE AO THAT THE IMPUGNED CASH WAS WITHDRAWN FROM THE BANK ACCOUNT OF THE ASSESSEE COM PANY FOR ITA NO.1525-AHD-2011 3 PAYMENT OF STAMP DUTY, REGISTRATION FEES ETC., IN T HE MONTH OF NOVEMBER, 2006. THE BALANCE CASH WAS LYING WITH TH E COMPANY AS ON 31/3/2007. THE ASSESSEE COMPANY HAS NOT CRED ITED ANY AMOUNT AS CASH CREDIT IN ITS BOOKS OF ACCOUNT WHERE SECTION 68 IS APPLICABLE. THE CASH ON HAND REPRESENTS AMOUNT WITH DRAWN FROM THE BANK ACCOUNT FROM THE ASSESSEE COMPANY. THE LD . A R ALSO SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE CASH BOOK WAS PRODUCED BEFORE THE LD. AO TO PROVE T HE ABOVE FACTS. DURING THE APPELLATE PROCEEDINGS ALSO THE L D. A R PRODUCED THE SUMMARY OF THE CASH BOOK OF THE COMPAN Y FOR THE ENTIRE F.Y 2006-07. AS PER THE CASH BOOK, THE OPEN ING BALANCE OF THE CASH AS ON 1/4/06 WAS RS.12,70,777/-. THE C ASH BOOK OF THE APPELLANT COMPANY HAS THE DETAILS OF EXPENSES I NCURRED IN CASH VIS--VIS THE CASH AMOUNT WITHDRAWN FROM THE BANK AS WELL AS DEPOSITED IN THE BANK. THE CLOSING CASH BALANCE AS ON 31/3/07 AS PER THE CASH BOOK OF THE COMPANY IS RS.4 8,35,227/-. THE AO HAS PICKED UP THE CLOSING BALANCE OF THE CAS H BOOK AS ON 31/3/07 AND ADDED THE DIFFERENCE OF CASH BALANCE AS ON 31/3/2007 AND 1/4/2006 TO THE INCOME OF THE ASSESSE E UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. THE PROVISION S OF SECTION 68 CAN BE INVOKED ONLY FOR THE CASH CREDITS FOUND CRED ITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH COULD NOT B E EXPLAINED. THE ADDITION OF THE CLOSING CASH BALANCE AS PER THE CASH BOOK AS ON 31/3/07 IS ABSOLUTELY UNWARRANTED. THE AO HAS N OT DEMONSTRATED IN THE ASSESSMENT ORDER THAT HOW THE C LOSING BALANCE AS PER CASH BOOK FALLS WITHIN PURVIEW OF S ECTION 68 OF THE ACT. ON THE CONTRARY, THE LD. A R FILED THE EN TIRE CASH BOOK OF THE COMPANY FOR THE F.Y 2006-07 AND DEMONSTRATED AS TO HOW THE OPENING BALANCE AS ON 1/4/06 AMOUNTING TO RS.12 ,70,777/- HAS REACHED TO RS.48,35,227/- AS ON 31/3/07. THE A DDITION MADE BY THE AO IS ABSOLUTELY WITHOUT ANY BASE AND W ITHOUT ANY LEGAL FOUNDATION. I FEEL THAT THE AO WAS NOT ABLE TO UNDERSTAND THAT THE DIFFERENCE IN BETWEEN THE CLOSING CASH BAL ANCE AS WELL AS OPENING CASH BALANCE OF THE CASH BOOK IS THE OUT COME OF SEVERAL TRANSACTIONS APPEARING IN THE CASH BOOK DUR ING THE RELEVANT FY. HE HAS NOT FOUND ANY DEFECT IN ANY OF THE ENTRIES APPEARING IN THE CASH BOOK OF THE ASSESSEE FOR THE FY 2006-07. IN VIEW OF THESE FACTS, THE ADDITION MADE BY THE AO ON ACCOUNT OF CLOSING CASH BALANCE OF THE COMPANY AS ON 31/3/2 007 WHICH REPRESENTS THE CLOSING BALANCE OF THE COMPANY AS PE R THE BOOKS OF ACCOUNT CANNOT BE SUSTAINED AND, THEREFORE, DELE TED.. ITA NO.1525-AHD-2011 4 5. AGGRIEVED, THE REVENUE HAS COME UP WITH THE PRES ENT APPEAL. IT WAS CONTENDED THAT THE CIT (A) HAD FAILED TO APPREC IATE THAT THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE OR DETA ILS EVEN THOUGH IT HAS BEEN REMINDED REPEATEDLY BY THE AO TO FURNISH THE R EQUIRED DETAILS AS CALLED FOR. IT WAS, FURTHER, SUBMITTED THAT IN THE ABSENCE OF ANY DETAILS, THE AO, ON THE BASIS OF MATERIALS AVAILABLE ON RECO RD, HAD COME TO A CONCLUSION THAT THE CASH DIFFERENCE BROUGHT IN BOOK AS SHOWN IN THE BALANCE SHEET REMAINED UNEXPLAINED AND, ACCORDINGL Y, TREATED RS.35.64 LAKHS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT WHICH, ACCORDING TO THE LD. D R, REQUIRES TO BE SUSTAINED. 5.1. ON THE OTHER HAND, THE LD. A R SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO EXPLAIN THE CASH BALANCE AS ON 31.3.200 7; THAT THE ASSESSEE VIDE ITS LETTER DT.19.12.2009 HAD REPLIED THAT THE ASSESSEE HAD WITHDRAWN CASH FOR MAKING PAYMENT OF STAMP DUTY AND REGISTRAT ION CHARGES THAT SUCH CASH WAS WITHDRAWN FROM THE ASSESSEES BANK AC COUNT NO.09221010002270 WITH ORIENTAL BANK OF COMMERCE [O BC] AND THE CASH BOOK OF THE ASSESSEE WAS ALSO PRODUCED BEFORE THE AO. IT WAS, FURTHER, SUBMITTED THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE CLARIFICATION WIT H REGARD TO CASH ON HAND AND THE ASSESSEE VIDE ITS REPLY DATED 19.12.20 09 HAD GIVEN THE EXPLANATION ABOUT THE CASH ON HAND WHICH WAS AS UND ER: THE ASSESSEE COMPANY HAD PURCHASED LAND AT LILIKUN G BUNGALOW FOR A SUM OF RS.1108 LACS AND WAS REQUIRED TO PAY STAMP DUTY AND REGISTRATION CHARGES IN CASH. THEREF ORE, THE ASSESSEE COMPANY HAD WITHDRAWN CASH IN THE MONTH OF NOVEMBER, 2006 TO MAKE THE PAYMENT OF SUCH CHARGES. ALSO THE COMPANY HAD WITHDRAWN CASH FOR THE ADDITIONAL CHARG ES TO COVER ANY ADDITIONAL DUTY, CHARGE IT REQUIRED TO BE PAID DURING THE COURSE OF REGISTRATION. HOWEVER, NO ADDITIONAL DUT Y/CHARGES WHERE REQUIRED TO BE PAID AND, THEREFORE, THE ASSES SEE COMPANY ITA NO.1525-AHD-2011 5 HAD KEPT IT AS CASH ON HAND WHICH IS SHOWN IN THE B /SHEET OF THE COMPANY. 5.2. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND ALSO PERUSED THE DOCUMENTARY EVIDENCES PRODUCED BY THE L D. A R DURING THE COURSE OF HEARING IN THE SHAPE OF A PAPER BOOK 5.3 AT THE OUTSET, WE WOULD LIKE TO POINT OUT THAT THOUGH THE LD. A R AFFIRMED BEFORE THIS BENCH AS WELL AS BEFORE THE FI RST APPELLATE AUTHORITY THAT THE ASSESSEE HAD FILED A LETTER ADDRESSED TO T HE AO DT.19.12.2009, HOWEVER, AT THE GLIMPSE OF THE PURPORTED LETTER, IT COULD NOT BE ASCERTAINED AS TO WHETHER IT WAS FILED BEFORE THE A O AT ALL, AS NO ACKNOWLEDGEMENT FOR HAVING FILED BEFORE THE AO ON 1 9.12.2009 WAS FORTH-COMING. THE AO IN HIS IMPUGNED ORDER HAD REP EATEDLY STATED THAT THE ASSESSEES AR WAS SPECIFICALLY ASKED VIDE ORDER SHEET ENTRY DT.04.12.2009 AND AGAIN ON 21.12.2009, PRECISELY, A FTER OF A COUPLE OF DAYS OF ARS ASSERTION THAT THE DETAILS WERE FURNIS HED ON 19.12.2009 [SOURCE: PAGE 1 & 21 OF PB AR]. HAD IT BEEN FURNIS HED ON 19.12.2009 AS PER THE ARS VERSION, THERE WAS NO NECESSITY WHATSO EVER ON THE PART OF THE AO TO INSIST THE LD. A R TO FURNISH THE DETAILS [AS PER ORDER SHEET ENTRY ON 21.12.2009]. THIS CONFUSION, HOWEVER, REMA INS UNRESOLVED. 5.4 TURNING TO THE MAIN ISSUE, THE LD. A R HAD, IN THE STATEMENT OF FACTS BEFORE THE CIT (A) [REFER: P 21 & 22 OF PB] A SSERTED THAT THE CASH WAS WITHDRAWN FROM THE ASSESSEES BANK ACCOUNT NO.0 9221010002270 WITH OBC WHICH HAS, NO DOUBT, BEEN REFLECTED IN THE CASH BOOK OF THE ASSESSEE [SOURCE: P 25 OF PB]. THE MOOT POINT WAS THAT NO BANK STATEMENT OF OBC HAS BEEN FURNISHED EITHER BEFORE T HE CIT (A) OR BEFORE THIS BENCH TO ASCERTAIN THE VERACITY OR OTHERWISE O F THE ASSESSEES CLAIM. THERE WAS ALSO NO TRACE OF ANY PROOF SUCH AS COPY O F THE REGISTERED SALE ITA NO.1525-AHD-2011 6 DEED TO EXHIBIT THAT THE ASSESSEE HAD, IN FACT, ENT ERED INTO OR PURCHASED THE LAND IN LILIKUNG BUNGALOW TO SUSTAIN THE ASSESSEES CLAIM IN THE SAID TRANSACTION. 5.5 IN VIEW OF THE ABOVE FACTS AND THE CIRCUMSTANCE S OF THE ISSUE AND ALSO KEEPING THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY IN VIEW, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE REQUIRES TO BE R EMITTED BACK TO THE FILE OF THE AO WITH SPECIFIC DIRECTIONS, NAMELY: (1) TO VERIFY AS TO WHETHER THE ASSESSEE HAD, INDEE D, WITHDREW THE CASH FROM OBC - WITH REFERENCE TO BANK STATEMENT OF THE ASSESSEES ACCOUNT; & (2) WHETHER THE CASH WAS WITHDRAWN TO MEET THE RESI DUE EXPENSES, SUCH AS REGISTRATION FEE, STAMP DUTY ETC., FOR THE REGISTRATION OF THE LAND IN LILIKUNG BUNGALOW . 5.6 TO FACILITATE THE AO TO CARRY OUT THE ABOVE DI RECTIONS, THE ASSESSEE IS ADVISED, THROUGH ITS LD. A R, TO FURNISH THE FOL LOWING DOCUMENTS: (1) BANK STATEMENT OF THE ASSESSEES ACCOUNT WITH O BC; & (2) COPY OF THE REGISTERED SALE DEED OF THE LAND IN LILIKUNG BUNGALOW, FOR THE REGISTRATION FOR WHICH, THE CASH APPEARS TO HAVE BEEN WITHDRAWN BY THE ASSESSEE. 5.7 IF THE DETAILS AND EVIDENCES WHICH WILL BE FUR NISHED BY THE LD. A.R WILL COMMENSURATE WITH THE ASSERTIONS OF THE LD. A R AS PLACED BEFORE THE APPELLATE AUTHORITIES, THE ASSESSEE IS ENTITLED TO GET THE RELIEF OF RS.35,64, 450/-, OTHERWISE, THE AOS STAND IS SUST AINABLE. IT IS ORDERED ACCORDINGLY. ITA NO.1525-AHD-2011 7 5.8 BEFORE PARTING WITH, WE WOULD LIKE TO RECORD T HAT THIS BENCH HAS ALSO TAKEN COGNIZANCE OF THE AFFIDAVIT OF THE ASSES SEES ACCOUNTANT (REFER: P 27 OF PB AR) WHILE COMING TO THE ABOVE CO NCLUSION. 6. IN THE RESULT, THE REVENUES APPEAL IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. 3 #2 , 1!& 4' ' 10 / 02 /201 2 ! 5 , . 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