The Income-tax Officer, Dasuya V. Shri Harjinder Singh, Distt. Hoshiarpur

ITA 205/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0777 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISRA
• Assessee Lawyers: K BHAGAT
• Keywords: Principle of natural justice; Additional evidence
• Section: 143(3); 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.205(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN: ANJPS6713J INCOME TAX OFFICER, VS. SHRI HARJINDER SINGH DASUYA. PROP. M/S. KARTAR TRACTORS, G.T.ROAD, BHANGALA, TEHSIL MUKERIAN, DISTT. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. AMALENDU NATH MISRA, DR RESPONDENT BY: SH. K. BHAGAT, ADVOCATE DATE OF HEARING: 09/05/2016 DATE OF PRONOUNCEMENT: 13 /05/2016 ORDER PER A.D. JAIN, JM THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2010-11 AGAINST THE ORDER DATED 15.01.2014, PASSED BY THE L D. CIT(A), JALANDHAR. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIO N OF RS.24,80,069/- RIGHTLY MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF WORKS HOP AND SHOWROOM BUILDING. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIO N OF RS.9,10,000/- RIGHTLY MADE BY THE A.O. ON ACCOUNT O F UNEXPLAINED CASH PAYMENTS. ITA NO.205(ASR)/2014 A.Y. 2010-11 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS PROPRIETOR OF M/S. KARTAR TRACTORS, A PROPRIETARY CONCERN, WHICH IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF TRACTORS AND THEIR SPARE PARTS. THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME ON 15. 10.2010 DECLARING THEREIN AN INCOME OF RS.4,09,390/- WHICH WAS PROCES SED U/S 143(1) OF THE ACT AT THE SAME INCOME. SUBSEQUENTLY, THE A.O. RECEIVED INFORMATION THAT THE ASSESSEE HAS CONSTRUCTED A WORKSHOP CUM S HOWROOM AND MADE INVESTMENT OF RS.70,00,000/- ON THE CONSTRUCTION. A PART FROM THIS, AS PER INFORMATION RECEIVED, THE ASSESSEE ALSO DEPOSIT ED RS.24,00,000/- IN HIS BANK ACCOUNT WITH SBI. ON ENQUIRY, THE ASSESSE E HAD STATED THAT THE INVESTMENT IN THE CONSTRUCTION OF THE WORKSHOP CUM SHOWROOM WAS ONLY OF RS.15,00,000/- AND THE DEPOSITS IN SBI REPRESENT ED SALE PROCEEDS OF TRACTORS. AS THERE WAS HUGE GAP BETWEEN THE COST OF CONSTRUCTION OF WORKSHOP CUM SHOWROOM AS PER INFORMATION RECEIVED A ND AS PER VERSION OF THE ASSESSEE, THE A.O. WAS NOT SATISFIED WITH TH E EXPLANATION OFFERED BY THE ASSESSEE. HE, THEREFORE, CAME TO THE CONCLUSION THAT EVEN COST OF CONSTRUCTION OF RS.15,00,000/- WAS NOT DISCLOSED I N THE RETURN OF INCOME. HE, THEREFORE, RECORDED THE REASONS AND INI TIATED PROCEEDINGS U/S 147 OF THE ACT TO VERIFY THE GENUINENESS OF THE INVESTMENT MADE BY THE ASSESSEE IN THE CONSTRUCTION OF SHOWROOM BUILDI NG AND SOURCE OF BANK DEPOSITS BY ISSUE OF NOTICE U/S 148 OF THE ACT ON 22.03.2012. IN RESPONSE TO THE NOTICE U/S 148/142(1) OF THE ACT, T HE ASSESSEE HAS STATED THAT THE ORIGINAL RETURN FILED BY HIM ON 15.10.2010 MAY BE TREATED AS ITA NO.205(ASR)/2014 A.Y. 2010-11 3 RETURN FILED IN RESPONSE TO THE SAID NOTICES. THE A SSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER U/S 143(3) READ WITH SECTI ON 147 OF THE ACT DATED 29.01.2013 AT AN ASSESSED INCOME OF RS.42,02, 459/-. WHILE COMPLETING THE ASSESSMENT, THE A.O. MADE, I.E., THE FOLLOWING ADDITIONS TO THE RETURNED INCOME OF THE ASSESSEE: (I) ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF WORKSHOP & SHOWROOM BUILDING RS.24,80,069/- II) ADDITION ON ACCOUNT OF CASH PAYMENTS MADE TO M/S. SHAH TRACTORS RS. 4,60,000/- III) ADDITION ON ACCOUNT OF ADVANCE RECEIVE FROM SH. AJIT SINGH JOHRI RS. 4,50,000/- 3. THE LD. CIT(A), VIDE THE IMPUGNED ORDER, DELETED THE ADDITIONS. 4. APROPOS GROUND NO.1, THE LD. DR HAS CONTENDED TH AT THE ASSESSEE HAD FURNISHED CONSTRUCTION EXPENDITURE ALONGWITH BI LLS AND VOUCHERS AND THAT MOST OF THE BILLS WERE FOUND TO BE BOGUS D URING ENQUIRY BY THE AO; THAT THE FIGURE AS APPEARING IN THE PROFIT & LO SS ACCOUNT, WHICH WAS AUDITED, DID NOT MATCH WITH THE FIGURES SHOWN IN T HE E-FILED RETURN; AND THAT IN VIEW OF THESE FACTS, THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE WERE FOUND NOT TO BE RELIABLE AND THEY WERE REJECTED; THAT THE LD. CIT(A) HAS ERRED IN NOT TAKING INTO ACCOUNT THIS UNDISPUTED POSITION; THAT FURTHER, AS NOTED BY THE LD. CIT(A) IN PARA 5.2 OF THE IMPUGNED ORDER, AS PER THE REMAND REPORT DATED 25.1 1.2013, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED AS PER A OS ORDER SHEET ENTRY DATED 17.01.2013. ITA NO.205(ASR)/2014 A.Y. 2010-11 4 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS RELIED ON THE IMPUGNED ORDER. 6. IN THIS REGARD, IT IS SEEN THAT THE LD. CIT(A) H AS DELETED THE ADDITION BY HOLDING AS FOLLOWS: 5.6 AS REGARDS THE ADDITION OF RS.24,80,069.68 MA DE BY THE AO ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUCTIO N OF WORKSHOP CUM SHOWROOM AS ARRIVED AT BY THE VALUATION OFFICER AND AS DISCLOSED BY THE ASSESSEE, I AM OF THE OPINION THAT THERE IS LOT OF FORCE IN THE WRITTEN ARGUMENTS OF THE APPELLANT THAT NO REFERENC E FOR VALUATION CAN BE MADE TO THE VALUATION CELL IF THE BOOKS OF A CCOUNT MAINTAINED BY THE ASSESSEE ARE NOT REJECTED. IN THE CASE OF TH E ASSESSEE, THE AO MADE REFERENCE TO THE VALUATION CELL WITHOUT REJECT ING THE BOOKS OF ACCOUNT OF THE ASSESSEE. I AM, THEREFORE, OF THE CO NSIDERED OPINION THAT THE REFERENCE FOR VALUATION MADE BY THE AO WIT HOUT REJECTING THE BOOKS OF ACCOUNT IS AGAINST THE SETTLED POSITION OF LAW. I AM FURTHER OF THE OPINION THAT THE LEGAL ISSUE RAISED BY THE A SSESSEE REGARDING MAKING REFERENCE TO THE VALUATION CELL IS COVERED I N HIS FAVOUR BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 513 (SC). THE ISSUE I S ALSO COVERED IN FAVOR OF THE ASSESSEE BY THE RECENT DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT DATED 16.09.2013 IN ITA NO. 52 2 OF 2009 ( O & M ) IN THE CASE OF NIRLEP SINGH VS. CIT-II, JALAN DHAR. THEREFORE, THE ADDITION OF RS.24,80,069.68 MADE BY THE AO IS DIREC TED TO BE DELETED. IN THE RESULT, GROUND OF APPEAL NO.2 IS T AKEN BY THE ASSESSEE IS ALLOWED. 7. THE LD. CIT(A), AS SUCH, RELIED, INTER-ALIA, ON SARGAM CINEMA VS. CIT, 328 ITR 513 (SC), AS PER WHICH, THE AO CAN MA KE REFERENCE TO THE D.V.O. ONLY IF THE BOOKS OF ACCOUNT ARE REJECTED. A S PER AOS REMAND REPORT DATED 25.11.2015 (RELEVANT PORTION AT PAGE 1 6 OF THE IMPUGNED ORDER), THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE R EJECTED VIDE AOS ORDER SHEET ENTRY DATED 17.01.2013. BUT THE QUESTION IS A S TO WHETHER THE BOOKS OF ACCOUNT WERE REJECTED BEFORE REFERENCE WA S MADE BY THE AO TO ITA NO.205(ASR)/2014 A.Y. 2010-11 5 THE DVO. IT IS FOUND NOT TO BE. PARA 2.3 AT PAGE 3 OF THE ASSESSMENT ORDER READS AS FOLLOWS: 2.3 TO VERIFY THE EXACT AND CORRECT COST OF CONSTR UCTION OF THE BUILDING REFERENCE UNDER SECTION 142A OF THE I.T. A CT, 1961 WAS MADE TO THE VALUATION OFFICER, INCOME TAX DEPARTMEN T, JALANDHAR VIDE THIS OFFICE LETTER BEARING NO.3882-83 DATED 16 .11.2012 WITH A REQUEST TO THE ASSESSEE TO EXTEND REQUIRED ASSISTAN CE AND COOPERATION TO THE VALUATION OFFICER. 8. THUS, THE REFERENCE TO THE DVO WAS MADE BY THE A O ON 16.11.2012. IN ACCORDANCE WITH SARGAM CINEMA (SUP RA). FOR THE REFERENCE TO THE DVO, TO BE IN ACCORDANCE WITH LAW , THE BOOKS OF ACCOUNT OF THE ASSESSEE OUGHT TO HAVE BEEN REJECTED BEFORE THIS DATE. HOWEVER, AS SEEN ABOVE, WHEREAS THE REFERENCE WAS MADE ON 16.1 1.2012, THE BOOKS OF ACCOUNT WERE REJECTED ON 17.01.2013, AS PER REMA ND REPORT OF THE AO. SO, THE CASE OF THE DEPARTMENT ITSELF IS THAT THE B OOKS OF ACCOUNT WERE REJECTED AFTER REFERENCE WAS MADE BY THE AO TO THE DVO. 9. HENCE, AS EVIDENT FROM THE RECORD, THE AO DID NO T REJECT THE BOOKS OF THE ASSESSEE BEFORE MAKING REFERENCE TO THE DVO. AS SUCH, THE AOS ACTION OF THE REFERENCE TO THE DVO WITHOUT FIRST R EJECTING THE BOOKS OF ACCOUNT IS ILLEGAL AND AGAINST THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA). 10. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED T HE ADDITION WRONGLY MADE BY THE AO. ACCORDINGLY, GROUND NO. 1 IS REJECT ED. ITA NO.205(ASR)/2014 A.Y. 2010-11 6 11. SO FAR AS REGARDS GROUND NO.2, AS PER THE RECOR D, DURING THE ASSESSMENT PROCEEDINGS, THE INFORMATION SUBMITTED B Y THE ASSESSEE WAS TEST CHECKED. THE ASSESSEE HAD MADE CASH PAYMENTS A MOUNTING TO RS. 20,000 EACH ON DIFFERENT DATES, TOTALING TO RS.4,6 0,000/- TO M/S. SHAH TRACTORS. DHARIWAL, DISTT. GURDASPUR. THE ASSESSEE SUBMITTED THROUGH HIS COUNSEL THAT THE ABOVE PAYMENTS WERE MADE AGAIN ST THE PURCHASE OF A TRACTOR. THE INFORMATION WAS CALLED FOR U/S 133(6 ) OF THE I.T.ACT FROM SHAH TRACTORS VIDE LETTER DATED 13.12.2012. SHAH T RACTORS SUBMITTED ITS REPLY DATED 14.12.2012 THAT HE (SH.JASBIR SINGH PRO P. SHAH TRACTORS) NEVER ENTERED INTO ANY TRANSACTION WITH THE ASSESSE E, NOR HE KNEW ANY PERSON NAMED SH. HARINDER SINGH OF M/S. KARTAR TRAC TORS). FURTHERMORE, INFORMATION U/S 133(6) OF THE ACT WAS CALLED FROM O NE CREDITOR, SH. AJIT SINGH JOHRI OF VILLAGE RANDHAWA COLONY, DERA NAMIN, FROM WHOM, A SUM OF RS.4,50,000/- WAS RECEIVED AS ADVANCE. THE ABOV E CREDITOR CONFIRMED THAT HE HAD PURCHASED A TRACTOR FROM THE ASSESSEE I N THE YEAR 2007 AND HAD MADE PAYMENT OF RS.4,50,000/- AFTER OBTAINING B ANK LOAN, WHEREAS THE ASSESSEE RECORDED HAVING RECEIVED RS.4,50,000 F ROM AJIT SINGH JOHRI IN THE YEAR UNDER CONSIDERATION, WHICH THE CREDITOR DENIED. IN VIEW OF THE ABOVE, THE AO MADE AN ADDITION OF RS.9,10,000/- (RS .4,60,000 + 4,50,000) IN THE TAXABLE INCOME OF THE ASSESSEE. 12. THE LD. CIT(A) DELETED THE ADDITION. 13. THE LD. DR HAS CONTENDED THAT THE AO HAD RIGHT LY MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH PAYMENT; TH AT THE ASSESSEE HAS ITA NO.205(ASR)/2014 A.Y. 2010-11 7 MISERABLY FAILED TO EXPLAIN THE SOURCE; THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE AO, DES PITE THE FACT THAT THE STORY OF THE ASSESSEE HAD DIFFERENT VERSIONS BEFORE THE AO AND THE LD. CIT(A). 14. ON THE OTHER HAND, AGAIN, THE LD. COUNSEL FOR T HE ASSESSEE RELIED ON THE IMPUGNED ORDER. 15. HERE, IT IS SEEN THAT WHILE DELETING THE ADDITI ON, THE LD. CIT(A) HAS OBSERVED AS FOLLOWS: AS THE INFORMATION COLLECTED BY THE AO WAS NOT CON FRONTED TO THE ASSESSEE, THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE ARE ACCEPTED AS THE ASSESSEE WAS NOT HAVING ANY OCCASIO N TO REBUT THE FINDINGS OF THE AO. FURTHER, ON CAREFUL CONSIDERATI ON OF THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE ASSESS EE, REPORT OF THE ASSESSING OFFICER AND COUNTER COMMENTS OF THE ASSES SEE, IT HAS BEEN NOTICED THAT INFORMATION COLLECTED BY THE ASSE SSING OFFICER FOR MAKING THE IMPUGNED ADDITIONS OF RS.4,60,000/- AND RS.4,50,000/- HAS NOT BEEN CONFRONTED TO THE ASSESSEE WHICH IS CE RTAINLY AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THE ADDITIONS MA DE BY THE A.O. CAN BE DELETED ON THIS SCORE ALONE. MOREOVER, THE ASSES SEE HAS FILED DOCUMENTARY EVIDENCE WHICH CLEARLY SHOW THAT THE PA YMENTS MADE TO M/S. SHAH TRACTORS ARE FOR PURCHASES OF TRACTOR S. THE PAYMENT OF RS.4,50,000/- HAS ALSO BEEN CONFIRMED BY THE SON OF SH. AJIT SINGH. THE AO HAS ALSO NOT MADE ANY COMMENT ON THE SUBMI SSIONS OF THE ASSESSEE DATED 24.07.2013 WHICH CLEARLY SHOW THAT H E HAS NOTHING TO SAY WITH REGARD TO THE DOCUMENTARY EVIDENCE FILE D BY THE ASSESSEE. IN THESE FACTS AND IN THE CIRCUMSTANCES O F THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED OPINION THAT THE A .O. IS NOT JUSTIFIED IN MAKING ADDITION OF RS.9,10,000/-. MOREOVER, THE ADDITION HAS BEEN MADE AGAINST PRINCIPLES OF NATURAL JUSTICE. AP ART FROM THIS, THE ASSESSEE HAS DULY EXPLAINED THE PURPOSE TO MAKE PAY MENT OF RS.4,60,000/- TO M/S. SHAH TRACTORS AND ALSO DULY E XPLAINED THE ADVANCE RECEIVED FROM SH. AJIT SINGH. THE ADDITION OF RS.9,10,000/- MADE BY THE AO IS, THEREFORE, DIRECTED TO BE DELETE D. IN THE RESULT, GROUND OF APPEAL NO.3 TAKEN BY THE ASSESSEE IS ALLO WED. 16. THUS, OBVIOUSLY, ONCE THE BASIS OF THE ADDITION WAS NOT CONFRONTED BY THE AO TO THE ASSESSEE AND THE ASSESSEES DOCUME NTARY EVIDENCE HAS ITA NO.205(ASR)/2014 A.Y. 2010-11 8 AMPLY EXPLAINED BOTH THE PAYMENTS MADE BY THE ASSES SEE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION WRONGLY MADE BY THE AO. AS SUCH, THE LD. CIT(A)S ORDER ON THIS SCORE IS ALSO UPHELD. AC CORDINGLY, GROUND NO.2 RAISED BY THE DEPARTMENT IS REJECTED. 17. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. HARJINDER SINGH 2. THE ITO DASUYA 3. THE CIT(A), JLR 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.