Kachi Madarsab Adbulkhadar, Hubli V. ITO-Ward-1(3)/(4), Hubli

ITA 1698/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7519 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH JT
• Assessee Lawyers: M D PUKHALE
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1698/BANG/2016 ASSESSMENT YEAR : 2008-09 KACHI MADARSAB ABDULKHADAR, PROP. GOLDEN STEEL TRADERS, YELLAPURONI, PATILGALLI, HUBLI 580 020. PAN: ADKPK 5538Q VS. THE INCOME TAX OFFICER, WARD 1(3), HUBLI. APPELLANT RESPONDENT APPELLANT BY : SHRI M.D. PUKHALE, ADVOCATE RESPONDENT BY : SHRI B.R. RAMESH, JT.CIT(DR) ITAT BENGALURU DATE OF HEARING : 19.09.2017 DATE OF PRONOUNCEMENT : 28.09.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE L'ND HUBLI APPELLATE COMMISSIONER OF INCOME TAX, [CIT(A)] IS OPPOSED TO FACTS AND LAW AND ACCORDINGL Y, LIABLE TO BE SET ASIDE TO ALLOW THE CLAIM/S OF THE APPELLANT. 2. THE L'ND CIT(A) ERRED TO DECIDE AND CONFIRM ADD ITION OF RS. IN THE ASSESSMENT OF THE APPELLANT BY OBSERVING (AT PG 12 OF THE ORDER) THAT APPEAL GROUNDS HAVE NO SUPPORTING DOCUMENTARY EVIDENCE. ITA NO.1698/BANG/2016 PAGE 2 OF 6 3. THE L'ND AO AND THE CIT(A) FAILED TO APPRECIATE THE EVIDENCE ON THE FACT THAT APPELLANT RECEIVED 25 LAK H RUPEES ADVANCE CHEQUE PAYMENTS FROM ONE OF HIS CUSTOMER VI Z., `MOHIT STEEL INDT' IN THE EARLIER YEAR AND SAME IS EVIDENT FROM ENTRIE S IN THE SAID CUSTOMER LEDGER IN ACCOUNT BOOKS OF APPELL ANT AND SAME IS ALSO SUPPORTED BY HIS BANK STATEMENTS (VIZ.,VIJAYA BANK & ICICI BANK) WHICH ARE FILED IN ASSESSMENT PROCEEDINGS [WITH THE HELP OF A LETTER DATED 30/12/10] AND SAME BEING FURNISHED TO THE L'ND CIT(A). 4. THE L'ND AO AND THE CIT(A) OUGHT TO HAVE APPREC IATED THE FACT THAT APPELLANT SUPPLIED GOODS TO SAID CUST OMER `MOHIT STEEL INDT' AGAINST THE ADVANCE PAYMENTS RECEIVED BY APPELLANT IN THE YEAR EARLIER TO CURRENT ASSESSMENT YEAR AND ALS O IN THE SUBSEQUENT ::EAR AS PER ABOVE SAID EVIDENCE. 5. THE L'ND AO AND THE CIT(A) FAILED TO APPRECIATE THE FACT THAT NO MONEY WAS RECEIVED BY APPELLANT FROM THE SA ID CUSTOMER `MOHIT STEEL INDT' DURING THE CURRENT YEAR AND THE TRANSACTIONS BETWEEN APPELLANT AND HIS CUSTOMER `MOHIT STEEL INDT' FOR THE EARLIER YEAR AS WELL AS THE CURRENT AND SUBSEQUENT YEARS WAS EXPLAINED SATISFACTORILY AS AGAINST THE ALLEGED DIF FERENCE. 6. THE L'ND CIT(A) ERRED TO OBSERVE (AT PG 12 OF THE ORDER) THAT APPELLANT FAILED TO EXPLAIN THE DIFFERENCE WIT H MATERIAL EVIDENCE AND DISCHARGE HIS ONUS. L'ND CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT FULLY DISCHARGED HIS ONUS. 7. THE L'ND CIT(A) ALSO ERRED TO STATE THAT CITATI ON [ (A) ITO V RAKESH (1998) TIV (DEL) 674; (B) SHRI VARDHMAN OVERSEAS LTD V ACIT (2008) 24 SOT 393 (C) ITO V BANSI LAL (2008) 113 TTJ (ASR) 898 ] RELIED UPON BY APPELLANT AS NOT RELEVANT. 8. THE L'ND CIT(A) ERRED TO DISMISS THE APPEAL BEC AUSE, HE FAILED TO STATE THE POINTS FOR DETERMINATION AS PER SECTION 250(6) OF THE IT ACT ON THE MATERIAL PROPOSITION OF THE PA RTIES AND DECIDE THE APPEAL WITH REASONS UPON THE POINTS TO BE SO ST ATED. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF APPEAL HEARING, THE APPELLANT PRAYS THAT THE APP EAL BE ALLOWED. ITA NO.1698/BANG/2016 PAGE 3 OF 6 2. THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO ADDITION OF RS.10,56,623 FOUND UNEXPLAINED IN THE BOOKS OF ACCO UNT OF ASSESSEE. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE, A SCRAP DEALER, FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,94,490. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO NOTICED THAT THERE WERE CREDIT BALANCES IN THE BOOK S OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH CONFIR MATION LETTERS FROM THE RESPECTIVE CREDITORS. WITH RESPECT TO MOHIT STEEL INDUSTRIES PVT. LTD. AS ON 31.3.2008, THE ASSESSEE HAS SHOWN A SUM OF RS.15,87 ,025 AS OUTSTANDING BALANCE. THE ASSESSEE WAS ASKED TO FILE CONFIRMATI ON LETTER AND ACCORDINGLY CONFIRMATION LETTER OF MOHIT STEEL INDU STRIES PVT. LTD. WAS FILED WHEREIN OUTSTANDING BALANCE WAS SHOWN AT RS.5,30,40 2. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE OF RS.10,56,623 VIDE LETTER DATED 30.12.2010 IN WHICH THE AO MADE HIS OBSERVATIONS WI TH REGARD TO THE SAID ADDITION. THE ASSESSEE HAS FILED WRITTEN SUBMISSIO N BUT COULD NOT EXPLAIN SATISFACTORILY AS TO WHY THERE IS OUTSTANDING BALAN CE OF RS.15,87,025, WHEREAS IN THE BOOKS OF THE CREDITOR THE OUTSTANDIN G BALANCE WAS ONLY RS.5,30,402. BEING NOT CONVINCED WITH THE EXPLANAT ION, THE AO HAS MADE THE ADDITION OF THE DIFFERENCE AT RS.10,56,623 AS U NEXPLAINED CREDIT. 4. THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(APPEALS), BUT DID NOT FIND FAVOUR WITH HIM. ITA NO.1698/BANG/2016 PAGE 4 OF 6 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US WITH THE SUBMISSION THAT HE HAS ACTUALLY CREDITED THE AMOUNT RECEIVED FROM THE CREDITOR AND IF THE DEBTOR HAS NOT SHOWN THE SAME IN HIS BOOKS OF ACCOU NT, THE ASSESSEE CANNOT BE HELD RESPONSIBLE. 6. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THA T IF THE AMOUNT WAS ACTUALLY RECEIVED BY THE ASSESSEE, THE DEBTOR WOULD HAVE DEBITED THE SAME IN HIS BOOKS OF ACCOUNT. HE HAS ALSO INVITED OUR A TTENTION TO THE STATEMENT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE LD. D R CONTENDED THAT ASSESSEE HAS RECEIVED CONTINUOUSLY A SUM OF RS.25 L AKHS IN AUG. 2006 AND THEREAFTER HE HAS BEEN SUPPLYING THE MATERIAL O F PETTY AMOUNTS. NO PRUDENT MAN WILL GIVE SO MUCH OF ADVANCE TO ANY SUP PLIER. MOREOVER, THE ENTIRE AMOUNT OF RS.25 LAKHS WAS NOT ADJUSTED DURIN G THE THREE FINANCIAL YEARS AND ACCORDING TO THE STATEMENT, THE BALANCE U LTIMATELY REMAINS RS.9,96,258. THE LD. DR FURTHER CONTENDED THAT IN THE LIGHT OF THESE FACTS, THE EXPLANATION OF THE ASSESSEE CANNOT BE ACCEPTED. 7. HAVING CAREFULLY CONSIDERED THE ORDERS OF AUTHOR ITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESS EE HAS SHOWN CREDIT BALANCE IN THE BOOKS OF ACCOUNT OF RS.15,87,025, WH EREAS THE CREDITOR HAS SHOWN THE DEBIT BALANCE OF RS.5,30,402. THE ASSESS EE HAS BEEN ASKED REPEATEDLY TO EXPLAIN THE REASONS FOR THE DIFFERENC E AND TO FILE CONFIRMATION LETTERS. BUT THE ASSESSEE COULD NOT EXPLAIN SATISF ACTORILY, WHEREAS THE REVENUE HAS OBTAINED CONFIRMATION LETTER FROM MOHIT STEEL INDUSTRIES PVT. ITA NO.1698/BANG/2016 PAGE 5 OF 6 LTD., WHO IS THE CREDITOR. ACCORDING TO HIM, THE OUTSTANDING BALANCE WAS RS.5,30,402. SINCE THE ASSESSEE HAS SHOWN CREDIT B ALANCE IN HIS ACCOUNTS, THE ONUS IS UPON HIM TO EXPLAIN BY PLACIN G RELEVANT EVIDENCE THAT IT WAS GENUINE CREDIT BALANCE. IN SUPPORT OF IT, C ONFIRMATION OF THE CREDITOR COULD HAVE BEEN FILED, BUT ASSESSEE COULD NOT DO TH E SAME. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO EXP LAIN THE DISCREPANCIES IN THE CREDIT BALANCE IN HIS ACCOUNTS AND THE DEBIT BA LANCE IN THE ACCOUNT OF THE CREDITOR. THE CIT(APPEALS) HAS EXAMINED THE IS SUE IN DETAIL IN HIS ORDER. FOR THE SAKE OF REFERENCE, WE EXTRACT THE S AME AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE, CONTE NTS OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE ASS ESSEE. TO PUT IN A NUTSHELL, THE AO FOUND THE ASSESSEE'S BOOKS TO REFLECT A LIABILITY OF RS,15,87,025/- IN THE NAME OF ONE OF T HE CREDITORS OF M/S. MOHIT STEEL INDUSTRIES PVT. LTD., AS ON 31/03/ 2008. AS AGAINST THIS, THE LEDGER ACCOUNT EXTRACTS OBTAINED FROM THE SAID MOHIT STEEL PVT. LTD. REVEALED BALANCE OF RS 5,30, 402/-. THE AO PROPOSED TO ASSESS THE DIFFERENTIAL AMOUNT OF RS.10 ,56,623/- AS UNEXPLAINED CREDIT. THIS WAS PROTESTED BY THE ASSES SEE WHO SAID THAT THE DIFFERENCE IS COMING FROM THE PREVIOUS YEA R'S I E. THE DIFFERENCE OCCURRED IN THE OPENING BALANCE ITSELF. THE ASSESSEE SUPPLIED A COPY OF LEDGER ACCOUNT OF THE SAID MOHIT STEEL FOR EARLIER YEARS AND STATED THAT IF THE ADVANCE GIVEN EARLIER YEAR IS ACCOUNTED FOR, THEN THERE WOULD BE NO DIFFERENCE. T HE ASSESSEE FURTHER SUBMITTED THAT IF THE CUSTOMER DOES NOT ACC OUNT FOR SOME TRANSACTIONS, IT CANNOT AMOUNT TO INCOME IN THE HAN DS OF THE ASSESSEE. THE SUBMISSION IS CONSIDERED. THE CASE LA WS RELIED ARE PERUSED. THE ASSESSEE'S CONTENTION THAT THE DIFFERE NCE IN CLOSING BALANCE IS COMING FROM OPENING BALANCE IS NOT SUPPO RTED BY ANY EVIDENCE. IF THE ASSESSEE WAS SURE THAT THE DIFFERE NCE HAS ARISEN IN THE EARLIER YEARS IT WAS FOR THE ASSESSEE TO STRENG THEN HIS VIEW WITH SOME DOCUMENTS LIKE BALANCE SHEET AND ACCOUNT EXTRACT FOR THE EARLIER YEARS. MERE STATEMENT THAT THE DIFFEREN CE IS COMING THE PREVIOUS YEAR WITHOUT DOCUMENTARY EVIDENCE TO SUPPO RT CANNOT AMOUNT TO DISCHARGING OF ONUS. I THEREFORE, HOLD TH AT THE AO HAS ITA NO.1698/BANG/2016 PAGE 6 OF 6 RIGHTLY BROUGHT TO TAX THE DIFFERENTIAL AMOUNT IN T HE SUBJECT ASSESSMENT YEAR AS UNEXPLAINED CREDIT. THE GROUNDS OF APPEAL OF THE ASSESSEE THEREFORE FAIL. 8. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(APPEALS), WE CONFIRM THE SAME. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( A.K. GARODIA ) ( SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH SEPTEMBER, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.