Shri Nareshbhai Muljibhai Vyas, Baroda V. The Income tax Officer, Ward-2(2), Baroda

ITA 1594/AHD/2006

• Counselvise Citation: 159420514 RSA 2006
• Duration Of Justice: 5 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 20-06-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Unexplained cash credit; Unexplained expenditure
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. L. GEHL OT, AM) ITA NO.1594/AHD/2006 A. Y.: 2002-03 VYAS NARESHBHAI MULJIBHAI, PLOT NO.3, PARASKUNJ SOCIETY -1, OPP. ANDND PARTY PLOT, B/H UMIYA VIJAY SOCIETY, SATELLITE ROAD, AHMEDABAD 15 VS THE INCOME TAX OFFICER, WARD 2 (2), BARODA BARODA PA NO. AAWPV 6809 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ANIL R. SHAH, AR RESPONDENT BY SHRI S. K. MEENA, SR. DR DATE OF HEARING: 13-10-2011 DATE OF PRONOUNCEMENT: 20-10-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , BARODA DATED 10 TH APRIL, 2006, FOR ASSESSMENT YEAR 2002-03. 2. EARLIER THE APPEAL OF THE ASSESSEE WAS DISMISSED IN DEFAULT VIDE ORDER DATED 06-07-2010. SAME ORDER WAS RECALLE D IN ALLOWING MISC. APPLICATION OF THE ASSESSEE VIDE ORDER DATED 12-08-2011. APPEAL WAS ACCORDINGLY RE-FIXED FOR HEARING. 3. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRE SS GROUNDS NO.1, 2 AND 3. THE SAME ARE ACCORDINGLY DISMISSED. ITA NO.1594/AHD/2006 VYAS NARESHBHAI MULJIBHAI VS THE ITO, WARD 2(2), BA RODA 2 4. ON GROUNDS NO.4 AND 5, THE ASSESSEE CHALLENGED C ONFIRMATION OF ADDITION OF RS.3,87,000/- AND RS.3,30,255/- ON A CCOUNT OF UNEXPLAINED PURCHASES. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO I SSUED LETTERS U/S 133(6) OF THE IT ACT TO THE PARTIES AT THE ADDRESS FURNISHED BY THE ASSESSEE. THE LETTERS WERE RETURNED UN-SERVED TO TH E AO BY THE POSTAL AUTHORITIES STATING THAT THE ADDRESSES WERE INCOMPLETE. ON PARA 4 AND 5 OF THE ASSESSMENT ORDER THE AO ALSO NO TED THAT THE LETTERS ISSUED TO OTHER PARTIES REMAINED UN-COMPLIE D WITH. THE ASSESSEE WAS GIVEN OPPORTUNITY TO PRODUCE THESE PAR TIES OR TO FILE CONFIRMATION BUT THE ASSESSEE DID NOT AVAIL OF THE OPPORTUNITY. ADDITIONS WERE ACCORDINGLY MADE ON ACCOUNT OF UNEXP LAINED PURCHASES. IT WAS SUBMITTED BEFORE THE LEARNED CIT( A) THAT PART PAYMENTS WERE MADE IN CASH AND SOME BY CHEQUES AND GENUINE PAYMENTS HAVE BEEN MADE. THERE IS NOTHING ON RECORD TO PROVE THAT THE AMOUNT OF THE PURCHASES CAME BACK TO THE ASSESS EE. THE LEARNED CIT(A) HOWEVER, CONFIRMED THE ADDITION BECA USE THE ASSESSEE FAILED TO DISCHARGE THE ONUS UPON HIM TO P ROVE GENUINE PURCHASES. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED IF PURCHASES WERE BOGUS, ONLY PROFIT COULD BE ADDED AN D IN SUPPORT OF THE SUBMISSIONS HE RELIED UPON THE DECISIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS PRESIDENT INDUSTRI ES, 258 ITR 654 AND IN THE CASE OF CIT VS SAMIR SYNTHETICS MILLS, 3 26 ITR 410. HE ITA NO.1594/AHD/2006 VYAS NARESHBHAI MULJIBHAI VS THE ITO, WARD 2(2), BA RODA 3 HAS ALSO RELIED UPON THE ORDER OF ITAT AHMEDABAD BE NCH (TM) IN THE CASE OF B & BROTHERS ENGINEERING WORKS VS DCIT, 78 TTJ 876 IN WHICH REVENUE ALLEGED SALES OUTSIDE THE BOOKS OF AC COUNTS. THEREFORE, IT WAS HELD THAT UNACCOUNTED SALES BY IT SELF DO NOT REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. THERE FORE, ADDITION WAS RESTRICTED TO NET PROFIT ONLY. HE HAS ALSO RELI ED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF ITO VS SUN STEE L, 92 TTJ 1126 IN WHICH IT WAS HELD AS UNDER: CONCLUSION: ASSESSEE NOT BEING ABLE TO PROVE THE EXISTENCE OF CERTAIN SUPPLIERS THROUGH MATERIAL SEE MS TO BE PURCHASED, ADDITION ON ACCOUNT OF PURCHASES FROM UNVERIFIABLE SOURCES RESTRICTED TO RS.59,000 A S THE AO HAD NO MATERIAL TO PROVE THAT PAYMENTS OF PURCHASES CAME BACK TO THE ASSESSEE. HE FURTHER SUBMITTED THAT FOR OTHER ADDITIONS OF WH ICH HE HAS NOT PRESSED GROUNDS NO.1, 2 AND 3, FURTHER TELESCOPING BENEFIT MAY BE GIVEN TO THE ASSESSEE. ON THE OTHER HAND, THE LEARN ED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. WITH REGARD TO 5 PARTIES, THE AO NOTED THAT LETTERS ISSUED TO T HEM FOR CONFIRMATION OF THE PURCHASES, LETTERS WERE RETURNED BECAUSE OF INCOMPLETE ADDRESS. NO CONFIRMATION WAS FILED AND EVEN THE PAR TIES HAVE NOT BEEN PRODUCED. SIMILARLY, FOR REMAINING 3 PARTIES T HE LETTERS REMAINED UN-COMPLIED WITH AND THE ASSESSEE DID NOT FILE EVID ENCE IN SUPPORT OF THE CLAIM. NOW THE ASSESSEE CLAIMED THAT ONLY NET PROFIT ADDITION MAY BE MADE AS AGAINST ADDITION MADE ON ACCOUNT OF BOGUS ITA NO.1594/AHD/2006 VYAS NARESHBHAI MULJIBHAI VS THE ITO, WARD 2(2), BA RODA 4 PURCHASES. THE ORDER OF ITAT AHMEDABAD IN THE CASE OF SUN STEEL (SUPRA) HAS BEEN RELIED UPON BUT NO COMPLETE DETAIL S WERE FURNISHED BEFORE THE AO IN ORDER TO PROVE THE CASE OF THE ASS ESSEE WITHIN THE AMBIT OF THE DECISION IN THE CASE OF SUN STEEL (SUP RA). THIS DECISION WAS ALSO NOT CITED BEFORE THE AUTHORITIES BELOW. FU RTHER NO DETAILS HAVE BEEN GIVEN ABOUT THE PROFIT RATE APPLIED BY TH E ASSESSEE IN THE YEAR UNDER CONSIDERATION OR IN THE EARLIER YEARS. N O HISTORY OF THE ASSESSEE IS EXPLAINED TO ESTIMATE REASONABLE PROFIT IN SUCH CIRCUMSTANCES. EVEN SUCH PLEA WAS NOT RAISED BEFORE THE AUTHORITIES BELOW. THE DECISIONS IN THE CASE OF PRESIDENT INDUS TRIES AND SAMIR SYNTHETICS MILLS (SUPRA) AND THE DECISIONS OF THE T RIBUNAL IN THE CASE OF B & BROTHERS ENGINEERING WORKS ARE WITH REGARD T O THE INCOME ESTIMATED ON UNACCOUNTED SALES. THEREFORE, THE SAME CANNOT BE APPLIED TO THE FACTS OF THIS CASE. THEREFORE, THE I SSUE REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. FURTHER, NO TELESCOPING BENEFIT CAN BE GIVEN TO THE ASSESSEE ON THESE ADDITIONS MAD E BY THE AO ON ACCOUNT OF UNEXPLAINED PURCHASES BECAUSE THE ADDITI ONS WHICH ARE NOT PRESSED BY THE ASSESSEE WERE MADE ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE IT ACT WHICH IS ALL TOGETHER D IFFERENT FROM THE ESTIMATION OF PROFIT AS IS ARGUED BY THE LEARNED CO UNSEL FOR THE ASSESSEE AND OTHER ADDITIONS ARE ON ACCOUNT OF DISA LLOWANCE U/S 40A (3) OF THE IT ACT AND UNEXPLAINED EXPENDITURE. NOTH ING IS ARGUED AS TO HOW THE ASSESSEE IS ENTITLED FOR TELESCOPING BENEFI T OUT OF THESE ADDITIONS. IN VIEW OF THE ABOVE DISCUSSIONS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSUE OF U NEXPLAINED PURCHASES TO THE FILE OF THE AO WITH DIRECTION TO R E-DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN THE CA SE OF SUN STEEL ITA NO.1594/AHD/2006 VYAS NARESHBHAI MULJIBHAI VS THE ITO, WARD 2(2), BA RODA 5 (SUPRA). THE AO SHALL GIVE REASONABLE SUFFICIENT OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE COMPLETE DETAILS BEFORE THE AO FOR FINALIZATION OF THE ISSUE . 8. IN THE RESULT, GROUNDS NO.4 AND 5 OF THE APPEAL OF HE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. NO OTHER POINT IS ARGUED OR PRESSED. 10 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. L. GEHLOT) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD