Chouhan Pradip Panachand, Kolhapur V. Income-tax Officer, Kolhapur

ITA 1830/PUN/2005

• Counselvise Citation: 183024514 RSA 2005
• Duration Of Justice: 6 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 15-12-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Unexplained cash credit; Assessment record; Reason to believe
• Section: 131; 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDER KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1830 AND 1831/PN/2005 (ASSTT.YEARS : 2001-02 AND 2002-03) SRI CHOUHAN PRADIP PANACHAND, 1243/69, SHIVAJI UDYAMNAGAR, KOLHAPUR. .. APPELLANT PAN NO. AABPO 1727D VS. ITO WARD 1(1), KOLHAPUR .. RESPONDENT APPELLANT BY : SRI M.K. KULKARNI RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 07-05-2012 DATE OF PRONOUNCEMENT : 31-05-2012 ORDER PER R.K. PANDA, AM THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE COMMON ORDER DATED 17-10-2005 OF THE CIT(A), KOLHAPUR RELA TING TO ASSESSMENT YEAR 2001-02 AND 2002-03 RESPECTIVELY. SINCE IDENTICAL G ROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN BOTH THESE APPEALS, THEREFORE, THES E WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1830/PN/2005 (ASSESSMENT YEAR 2001-02) : 2. IN GROUNDS OF APPEAL NO. 1 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF IRON AND STEEL IN THE NAME OF M/S. P.M. CHOUHAN AS A PROPRIETORY CONCERN. THE ASSESSEE FILED HIS RETURN OF INCOME O N 12-09-2001 DECLARING INCOME OF RS. 90,165/. THE RETURN WAS PROCESSED U/S.143(1 ) ACCEPTING THE INCOME 2 RETURNED. SUBSEQUENTLY A SURVEY U/S.133A WAS CONDU CTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 13-01-2004 AND 14-01-2004. WHIL E EXAMINING THE BOOKS CONSEQUENT TO THE SURVEY, IT WAS NOTICED THAT CREDI T AMOUNT OF RS. 1,30,433 SHOWN BY THE ASSESSEE IN THE NAME OF M/S. HIMALI ENTERPRI SES AS ON 07-12-2000 WAS FOUND TO BE NOT GENUINE. THEREFORE, THE ASSESSMENT PROCEEDINGS WERE RE-OPENED U/S.147 OF THE I.T. ACT AND NOTICE U/S. 148 WAS ISS UED ON 03-07-2004. THE ASSESSEE INTIMATED VIDE LETTER DATED 26-02-2004 THAT THE RET URN FILED ON 19-07-2001 BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S.148. 4. AS MENTIONED IN THE BODY OF THE ASSESSMENT ORDER (PARA 2), A COPY OF THE REASONS RECORDED U/S.147 WAS GIVEN TO ASSESSEE AS P ER HIS REQUEST AND HE WAS REQUESTED TO FURNISH HIS OBJECTIONS IF ANY ON THE S AME. THE ASSESSEE VIDE HIS LETTER DATED 23-12-2004 STATED AS UNDER : I HAVE ALREADY SUBMITTED MY LETTER DATED 06-12-20 04 THAT THE AMOUNT OF RS. 1,30,433/- IS DUE TO THE SAID PARTY W HICH IS BEING PAID IN DUE COURSE. IT IS LEARNT THAT THE SAID PARTY, I .E., HIMALI ENTERPRISES HAS ALREADY CONFIRMED THIS FACT BY YOUR HONOUR BY LETTER, THE SAME PLEASE BE CONSIDERED AND A COPY OF THE STA TEMENT RECORDED OR THE LETTER ISSUED BY THE PARTY MAY PLEASE BE ISS UED TO ME. AS SUCH, THERE CANNOT BE ADDITIONS IN MY CASE, IN VIEW OF THE ABOVE FACT. 5. THE ASSESSEE CHALLENGED THE RE-OPENING PROCEEDIN GS BEFORE THE CIT(A). IT WAS SUBMITTED THAT THE REASONS GIVEN BY THE AO SHOW ED THAT THERE WAS NO CONCRETE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T. THE AO HAD ONLY A SUSPICION TO THAT EFFECT. IT WAS SUBMITTED THAT TH E AO HAS OBSERVED IN THE ORDER THAT THE DELAY IN THE PAYMENT TO THE CREDITOR INDICATED THAT THE CREDIT WAS NOT GENUINE. RELYING ON THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE GANGA SARAN AND SONS (P) LTD. VS. ITO REPORTED IN 130 ITR 01 AN D IN THE CASE OF IOC VS. ITO REPORTED IN 159 ITR 956 IT WAS ARGUED THAT THE BELI EF OF THE AO WAS ARBITRARY AND IRRATIONAL. 3 5.1 HOWEVER, THE LEARNED CIT(A) WAS NOT SATISFIED W ITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE RE-ASSESSMENT PROCEE DINGS INITIATED BY THE AO BY HOLDING AS UNDER : I HAVE CONSIDERED THE SUBMISSIONS. THE RETURNS FI LED BY THE APPELLANT WERE ACCEPTED UNDER SECTION 143(1) OF THE INCOME-TAX ACT . PROCESSING A RETURN UNDER SECTION 143(1) DOES NOT ACTUALLY AMOUNT TO RE GULAR ASSESSMENT. THE RETURN FILED BY THE APPELLANT IS SIMPLY ACCEPTED WI THOUT ANY ADJUSTMENTS. DURING THE SURVEY, IT WAS NOTICED THAT THERE WAS A CREDIT IN THE NAME OF CERTAIN PARTIES IN THE ACCOUNTS, WHICH DID NOT APPE AR TO BE GENUINE. THE ASSESSING OFFICER, THEREFORE, RESORTED TO RE-OPENIN G THIS ASSESSMENT BY ISSUE OF NOTICE UNDER SECTION 148. AT THE STAGE OF ISSUE OF NOTICE, ALL THAT HAS TO BE SEEN IS WHETHER THERE WAS A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND WHETHER THE BELIEF WAS FORMED IN A R ATIONAL MANNER, BASED ON CERTAIN FACTS. IT IS EVIDENT THAT CERTAIN INFORM ATION OR FACTS HAD COME TO THE NOTICE OF THE ASSESSING OFFICER, IN THE COURSE OF SURVEY, WHICH LED TO THE BELIEF OF POSSIBLE ESCAPEMENT OF INCOME. THE ISSUE OF NOTICE UNDER SECTION 148 CANNOT, THEREFORE BE SAID TO BE INVALID OR ILLE GAL. THE ADEQUACY OF THE REASON AS STATED EARLIER IS NOT MATERIAL AT THE STA GE OF ISSUE OF NOTICE. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE RETURN FILED ON 12- 09-2001 WAS PROCESSED U/S. 143(1) AND NO ORDER U/S.143(3) WAS PASSED AS MENTIONED BY THE AO AS WELL AS THE CIT(A). THEREFORE, THERE WAS NO APPLICATION OF MIND BY THE AO. WE FIND THE NOTICE U/S.148 WAS ISSUED ON 03-02-2004 WHICH IS WITHIN A PERIOD O F FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, IN VIEW O F THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. REPORTED IN 291 ITR 50 THE RE-ASSESSMENT PROCEEDING S INITIATED BY THE AO IS LEGALLY VALID. THE VARIOUS DECISIONS CITED BY THE LD. COUN SEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE, WE 4 DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) AND UPHOLD THE SAME. GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 7. IN GROUND OF APPEAL NO. 2 THE ASSESSEE HAS CHALL ENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 1,30,433/- MADE BY AO U/S.68 OF THE I.T. ACT BEING UNEXPLAINED CREDIT SHOWN IN THE NAME OF M /S. HIMALI ENTERPRISES. 8. FACTS OF THE CASE, IN BRIEF, ARE THAT SUMMON U/S .131 WAS ISSUED TO MR. K.A. SHAH, PROPRIETOR OF M/S. HIMALI ENTERPRISES SRI K.A . SHAH TO CONFIRM THE CREDIT OF RS. 1,30,433/- APPEARING IN THE NAME OF THE ABOVE P ARTY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. MR. SHAH, THE PROPRIETOR OF HIMALI E NTERPRISES DID NOT ATTEND THE OFFICE OF THE AO IN RESPONSE TO THE SUMMON. HOWEVE R, A LETTER WAS RECEIVED FROM HIM ON 16-11-2004 WHEREIN HE HAD STATED THAT THE AS SESSEE HAD PURCHASED MATERIAL VIDE BILL NO. 149 ON 07-12-2000 AND THE AMOUNT OF R S. 1,30,433/- REMAINS TO BE PAID. THE AO THEREAFTER SENT A LETTER TO THE ITO W ARD NO. 4(2), THANE ASKING HIM TO CONFIRM THE AMOUNT OF DEBIT BALANCE IN THE BALAN CE SHEET FILED WITH THE RETURN OF INCOME BY HIMALI ENTERPRISES. THE ITO INFORMED THA T ASSESSMENT RECORD FOR ASSESSMENT YEAR 2002-03 WAS NOT AVAILABLE. HOWEVER , ON THE BASIS OF THE PAN PROVIDED, RETURN OF THE ASSESSEE WAS TRACED. THE B ALANCE SHEET ENCLOSED WITH THE RETURN SHOWS THAT THE PROPRIETORY BUSINESS OF SRI K .A. SHAH WENT BY THE NAME OF M/S. KALPANA TRADERS. THERE WAS NO BALANCE SHEET W ITH REGARD TO HIMALI ENTERPRISES FILED ALONG WITH THE RETURN. THE AO TH EREFORE GAVE AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE ABOVE DISCREPANCY. IN ABSENCE OF FILING ANY INFORMATION ABOUT THE PAYMENT TO THE PARTY AND IN ABSENCE OF PR ODUCTION OF THE ABOVE CREDITOR BEFORE THE AO FOR FURTHER VERIFICATION, THE AO CAME TO THE CONCLUSION THAT IT WAS UNUSUAL THAT THE CREDIT REMAINS IN THE BOOKS FOR FO UR YEARS FROM THE YEAR 2000-01. THE SUBMISSION OF THE ASSESSEE THAT THE CREDIT WAS ON ACCOUNT OF PURCHASE OF 5 MATERIAL WHICH WAS CONFIRMED BY THE PARTY AND THERE FORE THE ASSESSEE HAS DISCHARGED THE BURDEN AND THEREFORE NO ADDITION SHO ULD BE MADE WAS REJECTED BY THE AO. THE AO THUS MADE ADDITION OF RS. 1,30,433/ - U/S.68 OF THE I.T. ACT. 9. IN APPEAL, THE LEARNED CIT(A) WAS ALSO NOT CONVI NCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO BY HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS. THE APPELLANT H AS NOT BEEN ABLE TO GIVE A PROPER EXPLANATION OF THE DISCREPANCY FOUND BY TH E ASSESSING OFFICER. A COPY OF RETURN FILED BY SHRI K.A. SHAH FOR ASSESSME NT YEAR 2002-03 CONTAINS THE BALANCE SHEET OF KALPANA TRADERS AS WELL AS THE CAPITAL ACCOUNT OF SHRI K.A. SHAH. THERE IS NO BALANCE SHEET OF HIMALI ENT ERPRISES ATTACHED TO THE RETURN. THE APPELLANT VAGUELY SUBMITTED IN THE COU RSE OF HEARING THAT SRI K.A. SHAH HAD DISCONTINUED THE BUSINESS OF HIMALI E NTERPRISES AND STARTED THE BUSINESS UNDER THE NAME OF KALPANA TRADERS. TH ERE IS NO PROOF OF THIS. MOREOVER, EVEN IF THIS IS TRUE, THE CREDIT OUTSTAND ING TO THE APPELLANT FROM HIMALI ENTERPRISES SHOULD HAVE BEEN TRANSFERRED TO THE BOOKS OF KALPANA TRADERS OR REFLECTED IN THE PERSONAL BALANCE SHEET OR CAPITAL ACCOUNT OF SHRI K.A. SHAH. THE CAPITAL ACCOUNT AND BALANCE SHEET D O NOT CONTAIN ANY REFERENCE TO ANY AMOUNT PAYABLE TO THE APPELLANT. THE CREDIT APPEARING IN THE NAME OF SRI K.A. SHAH IS, THEREFORE, NOT CONFIR MED BY ANY DOCUMENTARY EVIDENCE FURNISHED BY THE CREDITOR. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILE D ON BEHALF OF THE ASSESSEE. WE FIND THE AO MADE ADDITION OF RS. 1,30,433/- BEIN G THE CREDIT BALANCE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE NAM E OF M/S. HIMALI ENTERPRISES AND THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE T O HIS SATISFACTION REGARDING THE GENUINENESS OF SUCH CREDIT. REJECTING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE AO. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE BEFORE THE AO AS WELL AS CIT(A) WE FIND THE ASSESSEE HAD GIVEN THE DETAILS OF BILL NO. 149 DATE D 07-12-2000 TOWARDS THE PURCHASE OF THE MATERIAL. ALTHOUGH THE PROPRIETOR OF M/S. HIMALI ENTERPRISES SRI 6 K.A. SHAH DID NOT ATTEND THE OFFICE OF THE AO IN RE SPONSE TO SUMMON U/S. 131 HOWEVER WE FIND HE HAD FILED A CONFIRMATION LETTER ADDRESSED TO THE AO CONFIRMING THE OUTSTANDING OF RS. 1,30,433/- . MER ELY BECAUSE THE BALANCE SHEET OF SRI K.A. SHAH SHOWS THE BALANCE SHEET IN THE NAME O F KALPANA TRADERS, THE SAME IN OUR OPINION CANNOT BE A GROUND FOR MAKING THE ADDIT ION IN THE HANDS OF THE ASSESSEE ESPECIALLY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE OTHER PARTY HAD CONFIRMED THAT THE ASSESSEE HAS MADE PURCHASE FROM HIM AND THE AMOUNT WAS OUTSTANDING. THERE MAY BE SO MANY REASONS WHY THE OTHER PARTY DID NOT FILE THE BALANCE SHEET OF M/S. HIMALI ENTERPRISES OR AFTER C LOSURE OF THE SAME NOT TRANSFERRED THE AMOUNT TO THE BALANCE SHEET OF THE NEW BUSINESS M/S. KALPANA TRADERS OR DID NOT SHOW THE SAME IN HIS PERSONAL BA LANCE SHEET. ONCE THE ASSESSEE DISCHARGES THE INITIAL BURDEN CAST ON HIM BY GIVING THE DETAILS AND THE OTHER PARTY HAVING CONFIRMED THE OUTSTANDING BALANCE, THE ASSES SEE IN OUR OPINION CANNOT BE HELD RESPONSIBLE FOR LAPSE OR OMISSION ON THE PART OF THE OTHER ASSESSEE. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINIO N THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE DESERVES TO BE DELETED. WE ACCORDINGLY SET-ASIDE T HE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF R S. 1,30,433/-. 11. IN GROUND OF APPEAL NO. 3 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS, 2,05,712/- MADE BY THE AO U/S. 41(1) OF THE I.T. ACT. 12. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF RE-ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE IS SIMPL Y CARRYING FORWARD THE LIABILITY IN THE NAME OF 15 PARTIES AMOUNTING TO RS. 3,40,676 /-. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE ADDED T O THE TOTAL INCOME OF THE 7 ASSESSEE BY TREATING THE CREDITORS AS CESSATION OF LIABILITY U/S. 41(1) OF THE I.T. ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE CASE O F 8 PARTIES THE LIABILITIES WERE CREDITED PRIOR TO 1997 FOR WHICH THE DETAILS COULD NOT BE FURNISHED. IN RESPECT OF 5 PARTIES IT WAS STATED THAT THE AMOUNT HAD BEEN PAID SUBSEQUENTLY. THE REMAINING 2 PARTIES WERE STATED TO BE SISTER CONCERNS. HOWEVER , THE AO WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE WAS OF T HE OPINION THAT THE LIABILITIES, WHICH ARE VERY OLD, HAD ACTUALLY SEIZED TO EXIST. HE, THEREFORE, MADE ADDITION OF THE ENTIRE AMOUNT OF OUTSTANDING TO THE PARTIES U/S . 41(1) OF THE I.T. ACT. 13. BEFORE THE CIT(A) THE ASSESSEE GAVE A BREAK-UP OF THE DETAILS OF THE PARTIES WITH NARRATION THE DETAILS OF WHICH ARE AS UNDER : SL.NO. NAME AMOUNT PARTICULARS 1 M M CHOUHAN STEEL 35,300 AMOUNT STILL PAYABLE 2 ASHIRWAD ENTERPRISES 10,610 AMOUNT STILL PAYABLE, THERE IS BALANCES OUTSTANDING IN SISTER CONCERN RAJESH STEEL HENCE NOT YET PAID 3 NAGPUR IRON TR. 22,400 AMOUNT STILL PAYABLE, THERE IS BALANCES OUTSTANDING IN SISTER CONCERN UNIVERSAL TRS. HENCE NOT YET PAID. 4 RAJARAM STEEL 29,497 THIS AMOUNT IS STILL PAYABLE 5 VIVEK ELECTRONICS 27,500 CONFIRMATION ENCLOSED 6 ANAND INDUSTRIES 82,627 INFACT THIS AMOUNT IS ADVANCE FROM DEBTORS THERE ARE NO PURCHASES FROM THIS PARTY 7 VIVEK ENGG. CO. 4,750 AMOUNT PAID ON 02-03-2004 8 HINDUSTAN STEEL 2,672 AMOUNT STILL PAYABLE 9 PRASHANT INDUSTRIES 54,080 AMOUNT PAID BY CHEQUE (COPY OF BANK STATEMENT ENCLOSED) 10 GEETA INDUSTRIES 1,700 AMOUNT STILL PAYABLE 11 SAMRAT INDUSTRIES 1,651 AMOUNT STILL PAYABLE 12 SAMRAT STEEL FABRICATOR 8,621 CONFIRMATION ENCLOSED 13 PRECICAST 32,590 PAID BY CHEQUE (CONFIRMATION & BANK STATEMENT ENCLOSED) 14 SAKSHI ENTERPRISES 10,634 AMOUNT STILL PAYABLE 15 R.B. GHATAGE & SONS 15,000 PAID BY CHEQUE (BANK STATEMENT ENCLOSED) 14. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE LEARNED CIT(A) DELETED THE ADDITION ON ACCOUNT OF 5 PARTIES AND SU STAINED THE ADDITION MADE BY THE AO ON ACCOUNT OF THE FOLLOWING PARTIES : 8 SL.NO. NAME AMOUNT 1 M M CHOUHAN STEEL 35,300 2 ASHIRWAD ENTERPRISES 10,610 3 NAGPUR IRON TRADING 22,400 4 RAJARAM STEEL 29,497 5 ANAND INDUSTRIES 82,627 6 HINDUSTAN STEEL 2,672 7 GEETA INDUSTRIES 1,700 8 SAMRAT INDUSTRIES 1,651 9 SAMRAT STEEL FABRICATORS 8,621 10 SHAKTI ENTERPRISES 10,634 TOTAL 2,05,712 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 15. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LIABILITY OF THE ASSESSEE DOES NOT SEIZE MERELY BECAUSE THE LIABILIT Y HAS BECOME BARRED BY LIMITATION, IF ANY. HE SUBMITTED THAT DURING THE I MPUGNED ASSESSMENT YEAR THE ASSESSEE HAS NOT RECEIVED ANY BENEFIT REPRESENTING CESSATION/REMISSION OF ANY PART OF THE LIABILITY. HE SUBMITTED THAT NEITHER THE AO NOR THE CIT(A) HAS ANY POSITIVE EVIDENCE TO SHOW THAT THERE IS CESSATION OF LIABILI TY. RELYING ON A COUPLE OF DECISIONS HE SUBMITTED THAT NO ADDITION U/S. 41(1) CAN BE MADE. 15.1 THE LEARNED D.R. ON THE OTHER HAND HEAVILY REL IED ON THE ORDER OF THE CIT(A). 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BY BOTH THE SIDES. FROM THE LIST OF NAMES APPEARING AT PARA NO.13 OF T HE IMPUGNED ORDER WE FIND EXCEPT IN CASE OF NAGPUR IRON TRADING (22,400) AND RAJARAM STEEL (29,497), THE ASSESSEE WAS NOT ABLE TO GIVE ANY EXPLANATION REGAR DING THE NATURE OF LIABILITY AND EXPLAIN AS TO WHY SUCH LIABILITIES HAVE BEEN OUTSTA NDING FOR SUCH A LONG TIME. AS REGARDS THE AMOUNT PAYABLE TO NAGPUR IRON TRADING A ND RAJARAM STEEL IT IS THE 9 SUBMISSION OF THE ASSESSEE THAT THE AMOUNTS ARE PAY ABLE TO THE SISTER CONCERN. HOWEVER, NO EXPLANATION OF THE NATURE OF THE LIABIL ITY AND THE REASON WHY IT WAS NOT PAID WAS GIVEN. 16.1 WE FIND THE HONBLE SUPREME COURT IN THE CASE OF T.V. SUNDARAM IYENGAR AND SONS LTD., REPORTED IN 222 ITR 344 AT PAGE NO. 353 HAS HELD AS UNDER : THE PRINCIPLE LAID DOWN BY ATKINSON J.. APPLIES I N FULL FORCE TO THE FACTS OF THIS CASE. IF A COMMONSENSE VIEW OF THE M ATTER IS TAKEN, THE ASSESSEE, BECAUSE OF THE TRADING OPERATION, HAD BEC OME RICHER BY THE AMOUNT WHICH IT TRANSFERRED TO ITS PROFIT AND LOSS ACCOUNT . THE MONEYS HAD ARISEN OUT OF ORDINARY TRADING TRANSACTIONS. ALTHOUGH THE AMOUNTS RECEIVED ORIGINALLY WERE NOT OF INCOME NATURE, THE AMOUNTS R EMAINED WITH THE ASSESSEE FOR A LONG TIME UNCLAIMED BY THE TRADE PAR TIES. BY LAPSE OF TIME, THE CLAIM OF THE DEPOSIT BECAME TIME BARRED AND THE AMO UNT ATTAINED A TOTALLY DIFFERENT QUALITY. IT BECAME A DEFINITE TRADE SURP LUS. ATKINSON J. POINTED OUT THAT IN TATTERSALLS CASE [1939] 7 ITR 316 (CA) NO TRADING ASSET WAS CREATED. MERE CHANGE OF METHOD OF BOOK-KEEPING HAD TAKEN PLACE. BUT, WHERE A NEW ASSET CAME INTO BEING AUTOMATICALLY BY OPERATION OF LAW, COMMONSENSE DEMANDED THAT THE AMOUNT SHOULD BE ENTE RED IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR AND BE TREATED AS TAXABLE INCOME. IN OTHER WORDS, THE PRINCIPLE APPEARS TO BE THAT IF AN AMOUNT IS RE CEIVED IN THE COURSE OF TRADING TRANSACTION, EVEN THOUGH IT IS NOT TAXABLE IN THE YEAR OF RECEIPT AS BEING OF REVENUE CHARACTER, THE AMOUNT CHANGES ITS CHARACTER WHEN THE AMOUNT BECOMES THE ASSESSEES OWN MONEY BECAUSE OF LIMITATION OR BY ANY OTHER STATUTORY OR CONTRACTUAL RIGHT. WHEN SUCH A THING HAPPENS, COMMONSENSE DEMANDS THAT THE AMOUNT SHOULD BE TREAT ED AS INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THE MONEY WAS RECEIVED BY THE ASSESSEE IN THE COURSE OF CARRYING ON HIS BUSINESS. ALTHOUGH IT WA S TREATED AS DEPOSIT AND WAS OF CAPITAL NATURE AT THE POINT OF TIME IT WAS R ECEIVED, BY EFFLUX OF TIME THE MONEY HAS BECOME THE ASSESSEES OWN MONEY. WHA T REMAINS AFTER ADJUSTMENT OF THE DEPOSITS HAS NOT BEEN CLAIMED BY THE CUSTOMERS. THE CLAIMS OF THE CUSTOMERS HAVE BECOME BARED BY LIMITA TION. THE ASSESSEE ITSELF HAS TREATED THE MONEY AS ITS OWN MONEY AND TAKEN TH E AMOUNT TO ITS PROFIT AND LOSS ACCOUNT. THERE IS NO EXPLANATION FROM THE ASSESSEE WHY THE SURPLUS MONEY WAS TAKEN TO ITS PROFIT AND LOSS ACCOUNT EVEN IF IT WAS SOMEBODY ELSES MONEY. INFACT, AS ATKINSON J. POINTED OUT THAT WHA T THE ASSESSEE DID WAS THE COMMONSENSE WAY OF DEALING WITH THE AMOUNTS. 17. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT CITED (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT(A) CONFIRMING THE 10 ADDITION OF RS. 2,05,712/- OUT OF THE TOTAL ADDITIO N OF RS. 3,40,676/- MADE BY THE AO. GROUND OF APPEAL NO. 3 BY THE ASSESSEE IS ACCO RDINGLY DISMISSED. ITA NO. 1831/PN/2005 (ASSESSMENT YEAR 2002-03) : 18. FIRST GROUND BY THE ASSESSEE RELATES TO THE ORD ER OF THE CIT(A) IN CONFIRMING THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO. 19. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND IS IDENTICAL TO THE FIRST GROUND IN ITA NO. 1830/PN/2005. WE HAVE ALREADY DE CIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESS HAS BEEN DISMISSED. FO LLOWING THE SAME RATIO, THIS GROUND BY THE ASSESSEE IS DISMISSED. 20. IN GROUND OF APPEAL NO. 2 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 1 LAKH MAD E BY AO ON ACCOUNT OF UNEXPLAINED CREDIT SHOWN IN THE NAME OF GREEN AGE A GRO ENGINEERING. 21. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS SHOW N A CREDIT OF RS. 1 LAKH IN THE NAME OF GREEN AGE AGRO ENGINEERING AS ON 26-03-2002 . WITH A VIEW TO CROSS VERIFY THE GENUINENESS OF THIS CREDIT AMOUNT, THE P ROPRIETOR OF M/S. GREEN AGE AGRO ENGINEERING SRI RAMESH DATTATREYA PATIL WAS SU MMONED ON 03-02-2004. VIDE HIS WRITTEN STATEMENT ON 05-02-2001, SRI R.D. PATIL ADMITTED THAT THIS IS NOT A REGULAR PAYMENT AGAINST MATERIAL SUPPLY BUT IS OVER AND ABOVE THE TRADE TRANSACTION. IT WAS ALSO ADMITTED BY THE SAID CRED ITOR THAT IT IS PRACTICALLY DIFFICULT AND NOT POSSIBLE FOR HIM TO PROVE THE SOURCE FOR TH IS PARTICULAR TRANSACTION. THE AO EXTRACTED THE REPLY GIVEN BY THE ABOVE PARTY WHI CH READS AS UNDER : PAYMENT OF M/S. R.K. STEEL TRADERS RS. 1 LAKH ON 2 6-03-2002 AND TO M/S. P.M. CHOUHAN (ON BEHALF OF M/S. ALPHA) RS. 1 LAKH ON 26-03-2002. 11 AS PER THE CASH BOOK EXTRACT FOR THE PERIOD 20-03-2 002 TO 26-03-2002 IT IS CLEAR THAT CASH WAS AVAILABLE AND THE CASH HA S BEEN DEPOSITED IN BANK AMOUNTING TO RS. 1,90,000 AND RS. 10,000 ON 26-03-2 002. THE CASH WAS AVAILABLE IN THE BOOKS OF ACCOUNTS OUT OF CASH GENE RATION DURING THE PERIOD WHICH WAS DEPOSITED IN BANK AND CHEQUE NO. 100398 O N 26-03-2002 AMOUNTING TO RS. 1 LAKH ISSUE TO M/S. P.M. CHOUHAN AND CHEQUE NO.10040 ON 26-03-2002 AMOUNTING TO RS. 1 LAKH ISSUED TO M/S . R.K. STEEL. BUT IT IS PRACTICALLY DIFFICULT AND NOT POSSIBLE FO R ME TO PROVE THE SOURCE OF THIS PARTICULAR TRANSACTION AS CASH WAS G ENERATED DURING THE PERIOD. AS THERE IS NO PARTICULAR AND SPECIFIC SIN GLE TRANSACTION IT IS NOT POSSIBLE TO PROVE THE SOURCE. BUT CONSIDERING THE FACTS & CIRCUMSTANCES OF THE MATTERS AS DISCUSSED DURING THE SUMMONS PROCEED INGS IT IS OUR DUTY TO CO-OPERATE THE DEPARTMENT AND TO BUY PEACE OF MIND IN THIS MATTER. WE HAVE NO OBJECTION TO DECIDE THE MATTER ON THE MERITS, AC COUNTS AND FACTS OF THE CASE AS NECESSARY DEPARTMENTAL VIEW . . . . THIS AMOUNT PAID BY CH.NO. 100398 ON 26-03-2002 AMO UNTING TO RS. 1 LAKH TO M/S. P.M. CHOUHAN AND CH.NO. 10040 ON 26- 03-2002 AMOUNTING TO RS. 1 LAKH TO R.K. STEEL TRADERS IS NOT REGULAR PAYMENT AGAINST MATERIAL SUPPLY BUT IT IS OVER AND ABOVE THE TRADE TRANSACTI ONS BUT THE CHEQUE WAS GIVEN AS REQUESTED BY THE SAID PARTY. 22. FROM THE ABOVE, THE AO NOTED THAT SRI R.D. PATI L IN CLEAR TERMS HAS ADMITTED THAT IT IS NOT POSSIBLE FOR HIM TO PROVE THE SOURCE AND HE HAS NO OBJECTION TO DECIDE THE MATTER ON MERIT. REJECTING THE VARIOUS EXPLANA TION GIVEN BY THE ASSESSEE THE AO CAME TO THE CONCLUSION THAT THE CREDIT AMOUNT OF RS. 1 LAKH (SHOWN IN THE NOTE OF PARA 8) IS UNEXPLAINED ON THE PART OF THE ASSESS EE. INVOKING THE PROVISIONS OF SECTION 68 THE AO MADE ADDITION OF RS. 1 LAKH TO TH E TOTAL INCOME OF THE ASSESSEE. 23. THE ASSESSEE COULD NOT SUCCEED BEFORE THE CIT(A ). RELYING ON HIS OWN DECISION IN THE CASE OF THE BROTHER OF THE ASSESSEE WHERE A SIMILAR TRANSACTION OCCURRED AND CIRCUMSTANCES IN WHICH THE PAYMENT MAD E BY THE PARTY, THE AMOUNT, NAME OF THE PARTY AND BANK ACCOUNT WERE IDENTICAL, THE CIT(A) UPHELD THE ADDITION. THE RELEVANT OBSERVATION OF THE CIT(A) IS AS UNDER : 19. I HAVE CONSIDERED THE SUBMISSIONS. A SIMILAR TRANSACTION OCCURRED IN THE CASE OF THE APPELLANTS BROTHER, SRI RATAN CHOU HAN. THE CIRCUMSTANCES 12 IN WHICH THE SO CALLED PAYMENT WAS MADE BY THE PART Y, THE AMOUNT, NAME OF THE PARTY AND THE BANK ACCOUNT ARE IDENTICAL. THE ADDITION MADE WAS THE SUBJECT MATTER OF APPEAL, WHICH WAS DECIDED BY ME R ECENTLY. THE DECISION ON THE ISSUE IS REPRODUCED BELOW : . . . . . . IF A SUM IS CREDITED IN THE BOOKS, THE APPELLANT IS DUTY BOUND TO ESTABLISH THE IDENTITY OF THE CREDITOR, HIS CRED IT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE LAST TWO CRITER IA WERE NOT FULLY SATISFIED IN THIS CASE. THE SO CALLED CREDITOR HAS SWORN THAT THE CREDIT IS NOT RELATED TO A TRADING OR BUSINESS TRAN SACTION. THE CHEQUE WAS ACCORDINGLY GIVEN BECAUSE IT WAS REQUEST ED BY THE APPELLANT. EXAMINATION OF THE ACCOUNT OF GREEN AGE AGRO ENGINEERS IN THE BOOKS OF THE APPELLANT REVEALS THAT PAYMENT IS RECEIVED AFTER SALE BILLS ARE RAISED. THERE IS USUALLY A DEBIT BA LANCE IS RECEIVED AFTER SALE BILLS ARE RAISED. THERE IS USUALLY A DE BIT BALANCE AS THE CHEQUES RECEIVED ARE SHORT OF THE SALE BILLS RAISED . THE ACCOUNT SHOWS A DEBIT BALANCE CONTINUOUSLY TILL 17-02-02 IN THE RANGE OF RS. 35,000/- TO OVER RS. 1,00,000/-. SUDDENLY, IN MARC H 2002, THE PARTY HAS GIVEN PAYMENT OF RS. 25,000/- LEAVING CREDIT BA LANCE OF RS. 1,72,263/-. THE TRANSACTION IN MARCH 2002 CERTAINL Y APPEAR UNUSUAL. A DEBTOR, WHO MAKES PAYMENT AGAINST BILLS SUDDENLY TURNS A NET CREDITOR BY A SUBSTANTIAL AMOUNT. FURTHER, I T ALSO ADMITS THE MONEY WAS PAID NOT FOR CONSIDERATIONS OF BUSINESS. THE UNUSUAL ELEMENT IS COMPOUNDED BY THE FACT THAT THE BANK ACC OUNT OF THE PARTY SHOWS CASH DEPOSITS OF EQUAL AMOUNT SHORTLY B EFORE THE CHEQUE WAS ISSUED TO THE APPELLANT. THE PARTY EXPR ESSES ITS INABILITY TO EXPLAIN THE CASH DEPOSIT. 24. THE CIRCUMSTANTIAL EVIDENCE AND THE SEQUENCE OF EVENTS SERIOUSLY JEOPARDIZE THE CREDIT WORTHINESS OF THE P ARTY. IT IS ADMITTED ALREADY THAT THE TRANSACTION WAS NOT A GEN UINE BUSINESS TRANSACTION. THE APPELLANT HAS ALSO NOT GIVEN PROP ER EXPLANATION WITH REGARD TO THE CREDIT ENTRY. IN THE EVENT, THE ACTION OF THE ASSESSING OFFICER IN TREATING THE CREDIT AS UNEXPLA INED DESERVED TO BE CONFIRMED. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 24. AFTER HEARING BOTH THE SIDES, WE FIND THE LEARN ED CIT(A) CONFIRMED THE ADDITION MADE BY THE AO BASED ON HIS OWN ORDER IN T HE CASE OF THE BROTHER OF THE ASSESSEE SRI RATAN CHOUHAN. NOTHING WAS BROUGHT TO OUR NOTICE BY EITHER SIDE AS TO WHAT HAS HAPPENED BEFORE THE TRIBUNAL IN THE CAS E OF THE BROTHER OF THE ASSESSEE SRI RATAN CHOUHAN. WE, THEREFORE, DEEM IT FIT AND PROPER TO RESTORE THE MATTER TO 13 THE FILE OF THE AO WITH A DIRECTION TO FIND OUT AS TO WHAT HAS HAPPENED ULTIMATELY TO THE ADDITION MADE BY THE AO IN THE HANDS OF THE BRO THER OF THE ASSESSEE UNDER IDENTICAL CIRCUMSTANCES AND DECIDE THE ISSUE IN THE LIGHT OF THE FINAL OUTCOME IN THE CASE OF BROTHER OF THE ASSESSEE. GROUND RAISED BY T HE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 25. IN THE RESULT, ITA NO. 1830/PN/2005 IS PARTLY A LLOWED AND ITA NO. 1831/PN/2005 IS PARTLY-ALLOWED FOR STATISTICAL PURP OSE. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST MAY 2012. SD/- SD/- (SHAILENDER KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOU NTANT MEMBER PUNE DATED: 31 ST MAY 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), KOLHAPUR 4. CIT CONCERNED 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER PRIVATE SECRETARY ITAT, PUNE BENCH, PUNE