Rakesh Kumar, Muktsar V. Income Tax Officer, Muktsar

ITA 225/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9640 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Section: 144

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 I.T.A NO.225(ASR)/2015 ASSESSMENT YEAR: 2008-09 SH. RAKESH KUMAR PROP. M/S SOHAN LAL & SONS, NEW GRAIN MARKET, MUKTSAR. PAN:ABJPK4276E VS. ITO, WARD-II(2), MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA (ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (DR.) DATE OF HEARING: 28.07.2016 DATE OF PRONO UNCEMENT: 01.08.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LEARNED CIT(A), BATHINDA, DATED 31.03. 2016 FOR ASST. YEAR: 2008-09. 2. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT ASS ESSING OFFICER HAD MADE ADDITION ON THE BASIS OF STATEMENTS FROM FARME R WHICH WAS NOT CONFRONTED TO THE ASSESSEE AND THE ASSESSING OFFICE R HAD PASSED THE ORDER U/S 144 OF THE ACT. THE LEARNED AR SUBMITTED THAT THE LEARNED CIT(A) HAS ALSO NOTED THIS FACT IN HIS ORDER AND IN THIS RESPECT INVITED OUR ATTENTION TO PARAS 7 & 8 OF THE ORDER. SIMILARLY, I T WAS SUBMITTED THAT ASSESSING OFFICER HAD MADE AD HOC DISALLOWANCES OUT OF TOTAL EXPENSES WHICH THE LEARNED CIT(A) HAD RESTRICTED TO 10%. ITA NO.225 (ASR)/2015 ASST. YEAR: 2008-09 2 3. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ASSESSEE DID NOT COOPERATE DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE, ASSESSING OFFICER WAS LEFT WITH NO OTHER ALTERNATIV E THAN TO COMPLETE THE ASSESSMENT PROCEEDINGS U/S 144 OF THE ACT. HE FURTH ER SUBMITTED THAT LEARNED CIT(A) HAS GIVEN APPROPRIATE RELIEF TO THE ASSESSEE WHEREVER IT WAS REQUIRED AND THEREFORE, THE ORDER OF LEARNED CI T(A) SHOULD BE UPHELD. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GO NE THOROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LEARNED CIT (A) HAS PASSED THE ORDER AND PARTLY CONFIRMED THE ADDITIONS MADE BY AS SESSING OFFICER BY HOLDING AS UNDER: 7. ON THE BASIS OF THE AFORESAID DIFFERENCE IN THE BALANCE OF THE CREDITORS, THE ASSESSING OFFICER SUGGESTED THAT THE ACCOUNTS O F THE APPELLANT ARE NOT RELIABLE AND HENCE ADDITION OF RS.11,47,148/- BE CO NFIRMED. THE JOINT COMMISSIONER OF INCOME TAX, WHILE FORWARDING THE RE MAND REPORT OF THE ASSESSING OFFICER, HAS ALSO OBSERVED THAT THE APPEL LANT HAS FAILED TO DISCHARGE ITS ONUS AND, THEREFORE,THE ISSUE BE DECI DED ON MERITS, THE APPELLANT IN HIS COUNTER COMMENTS STATES THAT THE A GRICULTURISTS/FARMERS WHO APPEARED BEFORE THE ASSESSING OFFICER WERE THE ONES WHO HAD GATHERED AND STAGED DHARNA AT HIS SHOP AND RESIDENC E AT THE TIME WHEN ASSESSMENT PROCEEDINGS WERE PENDING. BESIDES, IT H AS ALSO BEEN AVERRED THAT THE STATEMENT OF THE SUNDRY CREDITORS HAVE BEE N RECORDED BY THE ASSESSING OFFICER AT THE BACK OF THE APPELLANT AND THE SAME CANNOT BE USED FOR TAKING ADVERSE ACTION AGAINST THE APPELLAN T. AN ALTERNATIVE PLEA WAS TAKEN THAT THE APPELLANT BE GIVEN BENEFIT OF TH E AMOUNT CONFIRMED AS CREDIT BALANCE BY THE SUNDRY CREDITORS. 8. THE MATTER HAS BEEN CONSIDERED. IT IS AN ADMITTE D FACT NOW THAT THE SUNDRY CREDITORS WHO HAVE DEPOSED BEFORE THE ASSESS ING OFFICER REGARDING ITA NO.225 (ASR)/2015 ASST. YEAR: 2008-09 3 THEIR OUTSTANDING BALANCES WITH THE APPELLANT, HAD A LITIGIOUS RELATIONSHIP IN AS MUCH AS THEY HAD DEMONSTRATED AGAINST THE APP ELLANT WHICH RESULTED IN THE APPELLANT TEMPORARILY CLOSING HIS E STABLISHMENT, IT IS ALSO A FACT THAT THE STATEMENT OF THE CREDITORS WAS NOT CO NFRONTED TO THE APPELLANT. IN THE CIRCUMSTANCES, THEREFORE, IT IS HELD THAT TH E BALANCES APPEARING IN THE ACCOUNTS OF THE APPELLANT WHICH GET COVERED BY THE STATEMENT OF THE CREDITORS BE GIVEN THE BENEFIT OF CONFIRMATION. FR OM THE AFORESAID CHART, THE BALANCE IN RESPECT OF NATCHHATER SINGH DOES NOT GET CONFIRMED AND HENCE THE SAME HAS TO BE TREATED AS UNDISCLOSED INC OME OF THE APPELLANT. SO FAR AS THE BALANCES OF SHRI MAKHAN SINGH AND SHR I CHAND SINGH IN THE BOOKS OF THE APPELLANT ARE CONCERNED, THE SAME GETS SUBSUMED BY THE AMOUNT OF BALANCES DEPOSED BY THE SAID FARMERS/ AGRICULTURISTS. NO ADVERSE INFERENCE CAN THUS BE MADE ON ACCOUNT OF TH E FACT THAT AT LEAST THE FACTUM OF CREDIT BAIANCE GET PROVED. IN RESPECT OF SHRI GURPYAR SINGH, THE DIFFERENCE OF THE BALANCE COMES TO RS. 2,15,000/- W HICH AGAIN HAS TO BE TREATED AS UNDISCLOSED INCOME OF THE APPELLANT. THE ASSESSING OFFICER IS, THUS, DIRECTED TO RESTRICT THE ADDITION ON THIS GRO UND TO RS. 9,83.000/- (RS. 7.68,000 PLUS 2,15.000/-) INSTEAD OF RS. 11,47,148/ -. THE APPELLANT THUS GETS A RELIEF OF RS. 1,64,148/-. 9 . THE LAST AND FINAL GROUND OF ADDITION IN THE ASSESS MENT PROCEEDINGS PERTAIN TO DISALLOWANCE OF 20% OF TOTAL EXPENSES OF RS. 7.64,310/-, AMOUNTING TO RS. 1,52,862/-. THE ASSESSING OFFICER NOTED IN HIS ORDER THAT THE EXPENSES REMAINED UNVERIFIED BECAUSE OF NON APP EARANCE OF THE APPELLANT AND HENCE THE DISALLOWANCE OF 20% OF SUCH EXPENSES TO AVOID LEAKAGE OF REVENUE. IN THE REMAND PROCEEDINGS, THE ASSESSING OFFICER JUSTIFIED THE ADDITION AND REQUESTED FOR THE CONFIR MATION OF THE SAME. 10. THE MATTER HAS BEEN CONSIDERED. WHILE IT IS A FACT THAT THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE APPELLANT REMAINE D UNVERIFIED, DISALLOWANCE OF 20% OF THE ENTIRE EXPENSES IS A BIT HARSH. HAD THE APPELLANT APPEARED BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS, ONLY TEST CHECK OF THE EXPENSES COULD HAVE BEEN MADE. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER IS DIRECT ED TO RESTRICT THE ADDITION ITA NO.225 (ASR)/2015 ASST. YEAR: 2008-09 4 ON THIS COUNT TO 10% OF THE EXPENSES CLAIMED. THE A PPELLANT, THUS, GETS A RELIEF OF RS.76,431/-. IT IS ORDERED ACCORDINGLY. WE FIND THAT LEARNED CIT(A) HIMSELF HAS NOTED THAT STATEMENTS RECORDED BY ASSESSING OFFICER WERE NOT CONFRONTED TO THE ASS ESSEE, THEREFORE, WE DEEM TO APPROPRIATE TO REMIT THE ISSUE BACK TO ASSE SSING OFFICER, WHO SHOULD PASS AN APPROPRIATE ORDER AFTER CONFRONTING THE STATEMENTS RECORDED BY HIM TO THE ASSESSEE. THE ISSUE OF AD HO C DISALLOWANCE IS ALSO REMITTED BACK TO ASSESSING OFFICER WHO AFTER EXAMIN ING FROM THE BOOKS OF ACCOUNT WILL ARRIVE AT THE DISALLOWANCE IF ANY. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE IN THE FRESH ASSESSMENT PROCE EDINGS AS HE IS DUTY BOUND TO COOPERATE IN THE ASSESSMENT PROCEEDINGS. 5. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01 .08.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 01.08.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER