Bibhuti Bhusan Kar, Khurda V. ITO, Bhubaneswar

ITA 194/CTK/2011

• Counselvise Citation: 19422114 RSA 2011
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: P R MOHANTY
• Keywords: Unexplained cash credit; Unexplained investment; Period of limitation
• Section: 68; 69

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 194/CTK/2011 (ASSESSMENT YEAR 2007 - 08) BIBHUTI BHUSAN KAR, 6, SAHEED NAGAR, BHUBANESWAR 751 007 PAN: AIMPK 7406 L VERSUS IN COME - TAX OFFICER, WARD 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.R.MOHANTY, AR FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 15.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER SHRI K.S. S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT. 20.12.2010 FOR THE ASSESSMENT YEAR 2007 - 08 IN CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING IS SUES IN ITS GROUNDS OF APPEAL. 1 . FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER DATED 31.122009 BE HELD TO BE BAD IN LAW, ILLEGAL AND AB NITIO VOID AS THE NOTICE U/S 143(2) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED A S THE ACT) WAS ISSUED PRIOR TO THE PROCESSING THE RETURN U/S 143 (1) OF THE ACT. 2 . FOR THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS: II) IS UNJUSTIFIED IN LAW AND IN FACT IN UPHOLDING THE ORDER OF THE ASSE SSING OFFICER FOR THE ADDITION OF 51,62,622 AS BOGUS AND NON - GENUINE CREDITORS U/S 68 OF THE ACT. 3 . FOR THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS: II) IS UNJUSTIFIED IN LAW BY NOT APPRECIATING THE FACTS THAT THE ASSESSMENT ORDER HAS BEE N SERVED ON THE APPELLANT AFTER 12 DAYS FROM THE PERIOD OF LIMITATION AND FOR THAT MATTER AND IN VIEW OF THE ORDER OF THE OF THE HONBLE INCOME - TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR IN THE CASE OF SHANTILAL GODAWAT V. ASST. COMMISSIONER OF INCOME - TAX [126 TTJ (JD) 135] THE ASSESSMENT ORDER MADE BY THE ITA NO.194/CTK /2011 2 LEARNED ASSESSING OFFICER IS NULLITY IN THE EYE OF LAW AND THEREFORE IS LIABLE TO BE QUASHED AND/OR ANNULLED. 4 . THAT, THE LEARNED CIT (A) HAS ERRED BOTH IN LAW AND IN FACT BY RESTRICTING THE DISALLOWANC E TO RS 10,000/ - UNDER THE HEAD FUEL EXPENSES WHICH SHOULD HAVE BEEN ALLOWED. 5 . FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AUTHORITIES BELOW WERE UNJUSTIFIED IN APPLYING PROVISIONS OF SEC 68 OF THE ACT TO THE SUM OF RS.51 ,62,622/ - AS T HE SAID PROVISIONS OF THE SECTION 68 ARE NOT APPLICABLE IN THIS CASE AND HENCE THE ADDITION IS LIABLE TO BE DELETED. 6 . FOR THAT THE APPELLANT CRAVES LEAVE TO SUBMIT ADDITIONAL GROUNDS AND/OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EITHER AT THE TIME OF HEA RING OF THE APPEAL OR BEFORE. 3. THE FIRST GROUND BEING GENERAL NEEDS NO ADJUDICATION. 4. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS NOT PRESSED GROUNDS NO.2,3 AND 4 AND HENCE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 5. THE ONLY ISSUE THAT REMAINED FOR ADJUDICATION IS THE ISSUE IN GROUND NO.5 BEING ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) U/S.68 OF THE INCOME - TAX ACT,1961 THE AMOUNT OF 51,62,622. 6. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE AT LENGTH DURING THE COURSE OF HEARING. 7. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS PLACED BEFORE THE TRIBUNAL THE XEROX COPIES OF AGREEMENTS ENTERED INTO BY THE ASSESSE E WITH THE LAND OWNERS WHEREIN IT WAS CATEGORICALLY MENTIONED THAT THE AMOUNT OF ADVANCE GIVEN BY THE ASSESSEE AND THE AMOUNT OF TO TAL CONSIDERATION AGREED BY THE PARTIES I.E., THE ASSESSEE AND THE SELLERS REGARDING THE LAND OF THE SELLERS. THE ASSESSEE HA S SHOWN THE PAYMENTS OF ADVANCE ONLY IN ITS ACCOUNTS AND THE BALANCE REMAINED TO BE PAID TO THE LAND OWNERS WAS SHOWN AS LIABILITY AS SUNDRY CREDITORS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER RELYING ON THE CLAUSE 3 IN THE ITA NO.194/CTK /2011 3 SAID A GREEMENT WHICH PRESCRIBED THAT THE AMOUNT IS HEREBY PAID BY THEM TO THE FIRST PAR T Y. BASING ON THIS AVERMEN T , THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS PAID THE FULL AMOUNT BUT HAS SHOWN ONLY AN ADVANCE ONLY IN THE BOOKS OF A CCOUNT. THEREFORE, THE SUNDRY CREDITORS SHOWN BY THE ASSESSEE AS OWNERS OF LAND FOR THE REMAINING BALANCE OF UNPAID SALE CONSIDERATION AS UNEXPLAINED CREDIT AND THEREBY ADDED THE SAME U/S.68 OF THE INCOME - TAX ACT,1961. BUT AT THE SAME TIME, THE ASSESSING O FFICER AS WELL AS THE LEARNED CIT(A) HAVE NOT PROPERLY APPRECIATED THE ISSUE AND MISAPPLIED THE PROVISIONS OF SECTION 68 WHICH ONLY TALKS ABOUT UNEXPLAINED CASH CREDITS AVAILABLE IN THE BOOKS OF ACCOUN T EVEN ASSUMING BUT NOT ADMITTING THE STAND OF THE DEPA RTMENT THAT THE S UNDRY CREDITORS ARE UNEXPLAINED. T HERE IS NO DISPUTE D CREDIT ENTRY IN THE BOOKS OF ACCOUNT ENTERED BY THE ASSESSEE WHICH REMAINED TO BE EXPLAINED TO THE DEPARTMENTAL AUTHORITIES . THEREFORE, THE APPLICATION OF THE PROVISIONS OF SECTION 68 EVEN ACCORDING TO THE REASON GIVEN BY THE DEPARTMENTAL AUTHORITIES IS NOT AT ALL SUSTAINABLE FOR LEGAL SCRUTINY AND REQUIRES TO BE SET ASIDE. THUS CONTENDING HE SOUGHT FOR SETTING ASIDE THE ORDERS MAKING ADDITION BY THE ASSESSING OFFICER AND CONFIRMED BY T HE LEARNED CIT(A) BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF THE DEPARTMENTAL AUTHORITIES CONTENDING INTER ALIA THAT PROVISIONS U/S.68 MAY HAVE BEEN MIS - QUOTED BY THE ASSESSING AUTHORITIES BUT SECTION 69A IS CLEARLY APPLICABLE TO THE ISSUE IN HAND AND HENCE, THE ADDITION MAY BE SUSTAINED UNDER THAT PROVISION. 9. IN REPLY, THE LEARNED AR OF THE ASSESSEE HAS CONTENDED THAT EVEN ASSUM ING BUT NOT ADMITTING SECTION 69 IS APPLICABLE TO THE CASE IN HAND, THE ASSESSE HAS NEVER SHOWN THE ENTIRE LAND AS ITS ASSET IN ITS BOOKS OF ACCOUNT ITA NO.194/CTK /2011 4 BUT TREATED THE UNPAID CONSIDERATION TO THE LAND OWNER AS UNEXPLAINED INVESTMENT. THE CLAUSE OF THE AGREEMENT RELIED ON BY THE DEPARTMENTAL AUTHORITIES ON THE AGREEMENTS IS A FACT OF WRONG DRAFT OF SCRIB E OF THE AGREEMENT BUT NOTHING ELSE. THE FINANCIAL STATEMENTS AS WELL AS THE FORM 3C FILED BY THE ASSESSEE CLEARLY SHOWS THAT THE ADVANCE PAID TO LAND OWNERS IS SHOWN AS PAYMENT IN THE BOOKS OF ACCOUNT AND T HE BALANCE OF CONSIDERATION PAYABLE TO THE LAND OWNERS IS TO BE SHOWN WHEN THE LAND IS ACTUALLY TRANSFERRED ON A SALE - DEED. IT IS HELD AS STOCK - IN - TRADE TO THE EXTENT OF AMOUNT PAID. THIS IS UNDER THE APPROVED ACCOUNTING PROCEDURE OF THE ACCOUNTING PRINCIP LES OF DOUBLE ENTRY BOOK KEEPING. THEREFORE, EVEN ON THAT COUNT ALSO THE STAND OF THE DEPARTMENT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. 9. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AS WELL AS THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, IT IS FOUND THAT THE ISSUE OF UNPAID SALE CONSIDERATION PAYABLE TO THE LAND OWNERS BY THE ASSESSEE IS TO BE SHOWN AS CREDITORS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND THE PAYMENT OF ADVANCE ONLY ARE RECORDED AS PAID IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THIS IS CLEAR FROM THE SUNDRY CREDITORS SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. THEREFORE, THE PROCEDURE FOLLOWED BY THE ASSESSEE IS IN ACCORDANCE WITH THE APPROVED P RINCIPLES OF ACCOUNTING OF DOUBLE ENTRY BOOK KEEPING. HENCE, THERE IS NO CONTRAVENTION OF SECTION 68 AS CONTENDED BY THE LEARNED AR OF THE ASSESSEE. THE ASSESSEE HAS SHOWN THE LAND AS ITS STOCK - IN - TRADE IN ITS BOOKS OF ACCOUNT. THE ONLY THING BASED BY THE LOWER AUTHORITIES IS THE AVERMENT IN THE AGREEMENT AT PAGE 3 TO THE EFFECT THAT THE BALANCE OF SALE CONSIDERATION IS ALSO PAID TO THE FIRST PARTY I.E., LAND OWNERS. BUT THIS AVERMENT WAS CONTRA TO THE SUNDRY CREDITORS AS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AS WELL AS IN THE BALANCE SHEET. THEREFORE, IT ITA NO.194/CTK /2011 5 CANNOT BE SAID THAT THERE IS ANY UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE DEPARTMENTAL AUTHORITIES OF 51,62,622 IS NOT SUSTAINABL E FOR LEGAL SCRUTINY. HENCE, WE DELETE THE SAID ADDITION BY ALLOWING THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RA O) JUDICIAL MEMBER DATE: 23.09.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: BIBHUTI BHUSAN KAR, 6, SAHEED NAGAR, BHUBANESWAR 751 007 2. THE RESPOND ENT: INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.