Smt. Anju Banger, Kanpur V. Income Tax Officer, Kanpur

ITA 169/LKW/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1604 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Assessee Lawyers: PRADEEP SETH
• Keywords: Income from undisclosed sources; Onus to prove; Set aside
• Section: 68; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 169/LKW/2016 ASSESSMENT YEAR: 2005 - 06 SMT. ANJU BANGER PROP. M/S SHREE BALAJI SYNTEX C-50, UDYOG KUNJ PANKI INDUSTRIAL ESTATE, SITE V KANPUR V. THE ITO WARD 2 (1) KANPUR T AN /PAN : AAQPB0526J (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI PRADEEP SETH, FCA RESPONDENT BY: SHRI C. K. SINGH, D.R. DATE OF HEARING: 03 0 9 201 9 DATE OF PRONOUNCEMENT: 06 0 9 201 9 O R D E R PER A. D. JAIN, V.P.: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-I, KANPUR, DATED 18/1/2016, FOR ASSESSMENT YEAR 2005-06, TAKING THE FOLLOWING GROUNDS: 1) THAT THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACT IN CONFIRMING DISALLOWANCE OF RS.27,760/- BEING ADHOC/ESTIMATED DISALLOWANCE OF 10% OUT OF VARIOUS EXPENSES UNDER THE HEADS SALES PROMOTION, TRAVELLING EXPENSES, CONVEYANCE EXPENSES, GENERAL EXPENSES, GENERATOR RENT & MAINTENANCE EXPENSES, REPAIRS AND OFFICE EXPENSES 2) THAT THE LEARNED CIT (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACT IN IGNORING THE FACT THAT THE ASSESSEE HAD NOT DISPUTED THE DISALLOWANCE OUT OF TELEPHONE EXPENSES AND THAT THE BILLS AND VOUCHERS IN RESPECT OF THE EXPENSES UNDER THE AFORESAID HEADS WERE AVAILABLE BUT WERE NEVER REQUIRED TO BE PRODUCED. ITA NO.169/LKW/2016 PAGE 2 OF 9 3) THAT THE LEARNED CIT (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN CHANGING ENTIRELY THE BASIS OF ADDITION AND IN CONFIRMING THE ADDITION OF RS.2,85,000/- AS UNDISCLOSED INCOME OUT OF TOTAL ADDITION OF RS.6,58,875/- MADE BY THE A.O. U/S 68 WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. 4) THAT THE LEARNED CIT (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN TOTALLY IGNORING THE ORDER OF HIS PREDECESSOR CALLING FOR A REMAND REPORT ON THE OBJECTIONS RAISED BY THE AUTHORIZED REPRESENTATIVE IN THE WRITTEN SUBMISSIONS FILED BEFORE HIM AND IN NOT APPRECIATING THAT THE SO-CALLED REMAND REPORT DATED 16 05 2014 SUBMITTED BY THE A.0. DID NOT TOUCH UPON THE OBJECTIONS RAISED BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS AND THAT THE COPIES OF STATEMENT RECORDED BY THE A.0. BEHIND THE ASSESSEE'S BACK WERE NEVER FURNISHED TO THE ASSESSEE AND NO OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHO WERE EXAMINED BEHIND ASSESSEE'S BACK WAS PROVIDED TO THE ASSESSEE. 5) THAT THE LEARNED CIT (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN RELYING UPON THE AFORESAID STATEMENTS RECORDED BEHIND THE ASSESSEE'S BACK IN COMING TO THE CONCLUSION THAT THE CONFIRMATIONS FROM THE ABOVE PARTIES DENYING TRANSACTIONS WITH THE ASSESSEE WERE NOT FILED BY THE ASSESSEE. 6) THAT THE LEARNED CIT (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN IGNORING THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF AGRICULTURAL INCOME SHOWN IN THE RETURN AND IN TREATING THE SAME AS UNDISCLOSED INCOME. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A)-I, KANPUR, DATED 18/1/2016; THAT THE TRIBUNAL, VIDE ITS ORDER DATED 23/8/2016 IN ITA NO.169/LKW/2016, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE; THAT AGAINST THIS ORDER DATED 23/8/2016 OF THE TRIBUNAL, THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION, I.E., M.A. NO.91/LKW/2016 WITH A REQUEST TO RECALL THE ORDER OF THE TRIBUNAL DATED 23/8/2016, AS THE TRIBUNAL OMITTED TO DEAL WITH GROUND NOS.4 TO 6 RAISED BY THE ASSESSEE IN HER ITA NO.169/LKW/2016 PAGE 3 OF 9 APPEAL. ACCORDINGLY, THE TRIBUNAL RECALLED ITS ORDER DATED 23/8/2016, VIDE ITS ORDER DATED 28/7/2017 PASSED IN M.A NO.91/LKW/2016, OBSERVING AS UNDER:- 2. THE LD. A.R. OF THE ASSESSEE BEFORE ME BY REFERRING TO THE MISCELLANEOUS APPLICATION CONTENDED THAT THE ASSESSEE HAS TAKEN AS MANY AS SIX EFFECTIVE GROUNDS OF APPEAL, BUT THIS TRIBUNAL HAS DISPOSED OF ONLY GROUND NO.1 & 3. GROUNDS NO.4, 5 AND 6, WHICH GO TO THE ROOT OF GROUND NO.3, HAVE NOT BEEN DISPOSED OF BY THIS TRIBUNAL. DISPOSING OF GROUNDS NO.4, 5 AND 6 WILL HAVE A BEARING ON GROUND NO.3. NOT DISPOSING OF THESE GROUNDS TAKEN BY THE ASSESSEE WILL TANTAMOUNT TO A MISTAKE APPARENT ON RECORD. IN THIS REGARD RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- 1. CIT VS. KESHAV FRUIT MART, 199 ITR 771 2. CIT VS. K.M. SUGAR MILLS LTD., 275 ITR 247. 3. THE LD. D.R. WAS ALSO FAIR ENOUGH TO CONCEDE THE POSITION THAT THESE GROUNDS HAVE NOT BEEN DISPOSED OF BY THIS TRIBUNAL. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF THE TRIBUNAL, I AM OF THE VIEW THAT A MISTAKE HAS CREPT IN THE ORDER OF THE TRIBUNAL, AS THIS TRIBUNAL HAS NOT DISPOSED OF GROUNDS NO.4, 5 AND 6. DISPOSAL OF GROUNDS NO.4, 5 AND 6 WILL HAVE A BEARING, IN OUR OPINION, ON THE FINDING GIVEN IN RESPECT OF GROUND NO.3 AND I, THEREFORE, ALLOW THE MISCELLANEOUS APPLICATION OF THE ASSESSEE AND RECALL THE ORDER OF THIS TRIBUNAL SO FAR IT RELATES TO GROUNDS NO.3, 4, 5 AND 6. 5. IN THE RESULT, MISCELLANEOUS APPLICATION OF ASSESSEE IS ALLOWED. 3. ACCORDINGLY, THE APPEAL WAS AGAIN FIXED FOR HEARING ON 19/4/2018. THE TRIBUNAL, IN THE SECOND ROUND, VIDE ORDER DATED 2/5/2018, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A), AGAINST WHICH THE ASSESSEE AGAIN MOVED AN M.A. NO.44/LKW/2018, STATING THAT THE TRIBUNAL HAS NOT DEALT WITH GROUND NOS. 4 TO 6 OF THE APPEAL ON MERIT, FOR WHICH PURPOSE THE ORDER ITA NO.169/LKW/2016 PAGE 4 OF 9 WAS RECALLED, AND THEREFORE, THERE IS AN APPARENT MISTAKE CREPT IN IN THE ORDER OF THE TRIBUNAL, DATED 2/5/2018. ACCORDINGLY, THE TRIBUNAL RECALLED THE ORDER OF THE TRIBUNAL VIDE ORDER DATED 16/5/2019 DATED 2/5/2018 FOR DISPOSING OF GROUND NOS.4 TO 6 OF THE APPEAL. NOW THE MATTER IS BEFORE US. 4. GROUND NO.3 EFFECTIVELY STATES THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2.85 LAKHS AS UNDISCLOSED INCOME OUT OF TOTAL ADDITION OF RS.6,58,875/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT, WITHOUT CONFRONTING THE ASSESSEE WITH THE EVIDENCE USED AGAINST THE ASSESSEE. 5. HEARD. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT GROUND NOS. 4 TO 7 ARE AN EXPANSION OF THE AFORESAID GROUND NO.3. 6. THE ASSESSEE HAD TAKEN THE FOLLOWING GROUND NO.2 BEFORE THE LD. CIT(A): 2. THAT THE ASSESSING OFFICER HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN ADDING A SUM OF RS.3,06,000/- BEING SALE PROCEEDS OF MANGOES UNDER SECTION 68 OF THE ACT ON THE BASIS OF STATEMENT RECORDED BEHIND ASSESSEES BACK ON COMMISSION UNDER SECTION 131(1)(D) OF THE ACT OF THE ITO, KANNAUJ WITHOUT ALLOWING ANY OPPORTUNITY TO CROSS EXAMINE THE PARTIES. 7. AS IS EVIDENT FROM THE ABOVE GROUND RAISED BEFORE THE LD. CIT(A), THE ASSESSEE WAS AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE ASSESSEE ANY OPPORTUNITY TO CROSS-EXAMINE THE PARTIES. THE LD. CIT(A), WHILE CONFIRMING THE ADDITION TO THE EXTENT OF RS.2.85 LAKHS, HAS HELD AS UNDER: THE MATTER WAS REMANDED TO THE A.O. AND REMAND REPORT WAS RECEIVED WHICH WAS CONFRONTED TO THE ASSESSE. A REPLY HAS BEEN FILED HOWEVER THE ISSUE HAS REMAINED UNREBUTTED BY THE ASSESSEE. ITA NO.169/LKW/2016 PAGE 5 OF 9 THE BASIC FACT IS THAT THE ASSESSE DOES NOT HAVE EVIDENCE OF SALE OF MANGOES THE PARTIES TO WHOM THIS SALE HAS BEEN MADE HAVE DENIED ANY PURCHASE FROM ANJU BANGAR AND IN FACT DENIED EVEN KNOWING HER. THE ASSESSEE RAISED A LARGE NUMBER OF TECHNICAL OBJECTIONS OF THE VALIDITY OF THIS STATEMENT BUT THE BOTTOM LINE REMAINS SHE HAS NOT BEEN ABLE TO FILE CONFIRMATION FROM THE AFORESAID PURCHASERS AS AN EVIDENCE OF HAVING MADE PURCHASES OF MANGOES FROM HER. SIMILAR IS THE SITUATION AS REGARDS SALE OF WHEAT AND PADDY TO ITC (BDB). HERE ALSO SHE HAS NOT BEEN ABLE TO FILE CONFIRMATION FROM THE AFORESAID PURCHASERS AS AN EVIDENCE OF HAVING MADE PURCHASES OF WHEAT AND PADDY FROM HER. THIS SITUATION BECOMES EVEN MORE UNFAVORABLE TO THE ASSESSEE AS THE ENTIRE SALE, PURCHASE, EXPENSES, VOUCHERS, LEASE DEEDS EVERYTHING IS PAID FOR IN CASH AND ARE THROUGH SELF-MADE AND THE ALLEGED LEASE DEED IS ALSO UNREGISTERED. THERE NO CONFIRMATION ON RECORD FROM ANY OF THE PARTIES AS REGARDS THE ACCOUNTS AND IN FACT ALL ACCOUNTS ARE ALSO IN CASH. THE ASSESSEE HAS TAKEN A PLEA THAT AGRICULTURE IS AN ACTIVITY RUN IN CASH, BUT WHAT IS COMING OUT OF THE ENTIRE INVESTIGATION IS THAT THE AGRICULTURE INCOME IS A MERE PAPER CREATION AND WHEN THE ASSESSEE WAS CAUGHT THERE IS A FURTHER CREATION OF MORE PAPER AND MORE VOUCHERS ALL OF WHICH IS UNVERIFIABLE FROM THE SECOND/THIRD PARTIES. THIS MATTER WAS DEBATED AT LENGTH WITH THE LEARNED COUNSEL WHO FINALLY, TOOK THE ARGUMENT THAT IF THE AGRICULTURAL INCOME IS BOGUS THEN ONLY THE INCOME SHOWN IN THE RETURN NEEDS TO BE DISALLOWED, WHEREAS THE ASSESSING OFFICER HAS ADDED THE ENTIRE SALE AMOUNT OF BOTH MANGOES, WHEAT AND PADDY. ITA NO.169/LKW/2016 PAGE 6 OF 9 TO THIS ARGUMENT, I AM IN AGREEMENT. IF IT WAS A PAPER EXERCISE TO CREATE AGRICULTURAL INCOME, THEN ACCOUNTS ARE INFLATED TO SHOW CERTAIN INCOME AND EXPENSES ARE ARTIFICIALLY BOOKED TO CREATE A FIGMENT OF TRUE AGRICULTURAL INCOME. BUT AT THE END OF THE EXERCISE, ONLY THE NET AGRICULTURAL INCOME IS BOGUS. IT IS THIS AMOUNT WHICH IS DISALLOWED. THEREFORE, INSTEAD OF GROSS AGRICULTURAL INCOME OF RS.6,58,875/- AS ADDED BY THE A.O. ONLY RS.2,85,000/- IS TO BE HELD AS BOGUS INCOME AND WRONGLY SHOWN AS AGRICULTURAL INCOME. THE COUNSEL HAS ALSO TAKEN THE PLEA THAT AS THIS INCOME HAS NOT BEEN UTILIZED FOR ANY PURPOSE AND THEREFORE THE DEPARTMENT MAY NOT ACCEPT THE CLAIM OF HAVING EARNED THIS INCOME AND EXCLUDE IT FROM THE TOTAL INCOME. HOWEVER, AS THE INCOME HAS BEEN DISCLOSED IN THE RETURN OF INCOME AND THIS AMOUNT IS STATED TO HAVE BEEN EARNED IN CASH AND THE ASSESSE IS NOTE MAINTAINING ANY BOOKS OF ACCOUNT IT IS NOT POSSIBLE TO ENTERTAIN THIS CLAIM OF EXCLUDING THIS AMOUNT OF RS.2,85,000/- FROM HIS TOTAL INCOME. THIS AMOUNT OF RS.2,85,000/- IS INSTEAD TREATED AS INCOME FROM UNDISCLOSED SOURCES. 8. A PERUSAL OF THE AFORE-REPRODUCED FINDINGS OF THE LD. CIT(A) SHOWS THAT IT WAS THE REMAND REPORT OF THE ASSESSING OFFICER WHICH WAS CONFRONTED TO THE ASSESSEE, WHEREAS THE GRIEVANCE OF THE ASSESSEE BY WAY OF GROUND NO.2 RAISED BEFORE THE LD. CIT(A) WAS THAT THE ADDITION MADE BY THE ASSESSING OFFICER HAD BEEN MADE WITHOUT ALLOWING ANY OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE PARTIES. THE LD. CIT(A), IT IS SEEN, RATHER THAN ANSWERING THIS SPECIFIC QUESTION RAISED BY THE ASSESSEE, HAS ERRED IN MOVING THE BURDEN OF PROOF ON TO THE ASSESSEE, BY OBSERVING THAT SHE WAS NOT ABLE TO FILE CONFIRMATION FROM THE PURCHASERS, AS EVIDENCE OF THEIR HAVING MADE PURCHASES OF MANGOES FROM HER. ITA NO.169/LKW/2016 PAGE 7 OF 9 9. THE REMAND REPORT REFERRED TO BY THE LD. CIT(A) IN THE IMPUGNED ORDER IS PLACED AT APB-106. THE SHORT REMAND REPORT IS REPRODUCED, AS BELOW: 10. A PERUSAL OF THE RELEVANT PORTION OF THIS REMAND REPORT SHOWS THAT APROPOS GROUND NO.2 (SUPRA) RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A), THE ASSESSING OFFICER HAS, IN NO UNCERTAIN TERMS, STATED THAT THE COMMISSION WAS ISSUED BY THE THEN ASSESSING OFFICER TO THE ITO, KANNAUJ FOR MAKING ENQUIRIES REGARDING SALE OF MANGOES OF RS.3.06 ITA NO.169/LKW/2016 PAGE 8 OF 9 LAKHS BY THE ASSESSEE; AND THAT IT WAS ON THE BASIS OF THE ENQUIRY REPORT RECEIVED FROM THE ITO, KANNAUJ, THAT THE ASSESSING OFFICER HAD MADE THE ADDITION, AMOUNTING TO RS.3.06 LAKHS. NOWHERE DOES THE QUESTION OF NON-PROVIDING OF OPPORTUNITY OF REBUTTAL TO THE ASSESSEE BY WAY OF CROSS-EXAMINATION OF THE CONCERNED PARTIES, STAND ANSWERED IN THIS REMAND REPORT. 11. THEREFORE, IT IS PATENT ON RECORD THAT THE LD. CIT(A) HAS FAILED TO DECIDE GROUND NO.2 RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A), I.E., THE ADDITION HAD BEEN MADE WITHOUT ALLOWING ANY OPPORTUNITY OF CROSS- EXAMINATION OF THE CONCERNED PARTIES, TO THE ASSESSEE. 12. IN VIEW OF THE ABOVE, THIS ISSUE, COMPRISING GROUND NOS.3 TO 7 BEFORE US, IS REMITTED TO THE FILE OF THE LD. CIT(A), TO BE DECIDED IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS SPECIFICALLY POINTED OUT THAT GROUNDS NO.2 TO 5 RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) SHALL BE DECIDED IN THE ABOVE MANNER, BY AFFORDING DUE OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE, PREFERABLY WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF THIS ORDER. 13. NOTHING FURTHER SURVIVES FOR ADJUDICATION, NOR WAS ANYTHING ELSE ARGUED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06/09/2019. SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT M EMBER VICE PRESIDENT DATED:06/09/2019 JJ:0309 ITA NO.169/LKW/2016 PAGE 9 OF 9 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR