The Income-tax Officer, Srinagar V. M/s. Associated Contractors, Srinagar

ITA 253/ASR/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1418 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 69C; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.R. MEENA HONBLE ACCOUNTANT MEMBER I.T.A. NO.253 (ASR)/2013 ASSESSMENT YEAR: 2005-06 PAN: AALFA9282F THE INCOME TAX OFFICER, WARD-3(1), SRINAGAR. VS. M/S ASSOCIATED CONTRACTORS, AIRPORT ROAD, RAWALPORA, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL (DR) RESPONDENT BY: NONE. DATE OF HEARING: 2 7.08.2015 DATE OF PRONOUNCEM ENT: 16.09.2015 ORDER PER A.D. JAIN (JM): THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2 005-06, RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER LD. CIT( A) WAS RIGHT IN DELETING THE ADDITION OF RS.11,50,000/- MADE ON ACCOUNT OF FDRS WHEN THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM OF DISCLOSURE OF SAID FDRS IN THE BALANCE SHEET. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER LD. CIT(A ) WAS RIGHT IN DELETING THE ADDITION OF RS. 11,50,000/- MADE ON ACCOUNT OF FDRS WHEN THE ISSUE IS OF NON-DISCLOSURE OF SAID FDRS IN THE BALANCE SHEET BY ASSESSE WHEREAS THE LD . CIT(A) ASSESSEE HAS HELD THAT THE SOURCE OF INVESTMENT IN THE FDRS HAVE BEEN ESTABLIS HED. 2. ON BEHALF OF THE ASSESSEE, AN APPLICATION FOR A DJOURNMENT HAS BEEN FILED. HOWEVER, FINDING THAT THE APPEAL, INSTITUTED ON 03. 04.2013, HAS BEEN ADJOURNED ON NUMEROUS OCCASIONS, AND HAS BEEN HANGI NG FIRE FOR THE LAST 2. ITA NO.25 3 (ASR)/2013 ASST. YE AR 2005-06 ALMOST TWO YEARS, AND FINDING THAT THE MATTER CAN B E PROCEEDED WITH IN THE ABSENCE OF THE ASSESSEE, THIS APPLICATION IS REJECT ED AND THE APPEAL IS BEING DISPOSED OF ON THE BASIS OF THE MATERIAL ON RECORD AND HAVING CONSIDERED THE ARGUMENTS OF THE LEARNED DR. 3. THE FACTS AS PER THE RECORD ARE THAT THE ORIGINA L ASSESSMENT WAS COMPLETED ON 24.12.2007 UNDER SECTION 144 OF THE I. T. ACT. AMONGST OTHER ADDITIONS, THE AMOUNT OF RS.S12,22,200/-, REPRESENT ING THE VALUE OF FDRS PURCHASED BY THE ASSESSEE DURING THE YEAR, WAS ADDE D BY THE AO, SINCE THIS INVESTMENT HAD NOT BEEN DECLARED IN THE BALANCE SHE ET. THE ASSESSEES CONTENTION THAT THE VALUE OF FDRS WAS SHOWN IN THE BALANCE SHEET UNDER THE HEAD SUNDRY DEBTORS AND ADVANCE, WAS NOT ACCEPTED . THE ADDITION WAS UPHELD BY THE LEARNED CIT(A). VIDE ORDER DATED 11.0 6.2010, THE ITAT ALSO DID NOT DELETE THE ADDITION. HOWEVER, THE MATTER WAS RE MITTED TO THE FILE OF THE A.O, TO BE ADJUDICATE AFRESH, AS THE ASSESSMENT HAD BEEN MADE EX-PARTE UNDER SECTION 144 OF THE I.T. ACT. THE ASSESSEE WAS DIREC TED TO ADDUCE COGENT AND CREDITABLE EVIDENCE TO SUBSTANTIATE ITS CLAIM. 4. IN THE REMAND PROCEEDINGS BEFORE THE A.O, THE AS SESSEE PRODUCED A BANK CERTIFICATE SHOWING THE EXISTENCE OF THE FDRS. IT W AS ARGUED THAT THE CLOSING BALANCE OF THE FDRS FOR THE RELEVANT FINANCIAL YEAR HAD DULY BEEN REFLECTED AS THE OPENING BALANCE FOR THE NEXT ASST. YEAR, I.E., ASST. YEAR 2006-07. IT WAS ARGUED THAT THE EXISTENCE OF THE FDRS IN THE BALANC E SHEET FOR ASST. YEAR 2006- 07 HAD BEEN ACCEPTED IN THE ASSESSMENT FOR ASST. YE AR 2006-07 AND THAT THIS 3. ITA NO.25 3 (ASR)/2013 ASST. YE AR 2005-06 PROVED THAT THE FDRS WERE A PART OF THE SUNDRY DEB TORS AND ADVANCES, FOR ASST. YEAR 2005-06, I.E., THE YEAR UNDER CONSIDERAT ION. THE A.O, HOWEVER, REFUSED TO ACCEPT THIS STAND OF THE ASSESSEE. IT WA S OBSERVED THAT AS PER THE BALANCE SHEET FOR THE SUBSEQUENT YEAR, I.E., ASST Y EAR 2006-07 AN AMOUNT OF RS.44,47,772/- HAD BEEN SHOWN UNDER THE SUNDRY DEB TORS/ADVANCE; THAT THIS WAS PURPORTED AMOUNT WHICH, THE ASSESSEE CLAIM ED, COMPRISED THE OPENING BALANCE OF THE BROUGHT FORWARD VALUE OF THE FDRS FROM THE YEAR UNDER CONSIDERATION, I.E, ASST. YEAR 2005-06; THAT DURING THE ASSESSMENT PROCEEDINGS FOR ASST. YEAR 2006-07, THE ASSESSEE HAD ITSELF FUR NISHED A BREAKUP OF THIS HEAD OF CURRENT ASSETS; THAT AT THE SAME TIME, THE ASSES SEE HAD FURNISHED ANOTHER BREAKUP DURING THE ASSESSMENT PROCEEDINGS FOR ASST. YEAR 2006-07, IN WHICH, AN AMOUNT OF RS.17,10,000/- HAD BEEN SHOWN UNDER TH E HEAD OF SUNDRY DEBTORS/ADVANCES; AND THAT THE COUNSEL HAD STRESSED THAT COGNIZANCE OF THE STATEMENT IN WHICH THE TOTAL AMOUNT OF RS.17,10,000 /- HAD BEEN SHOWN, MAY BE TAKEN; THAT EVEN HE (THE A.O) WAS TAKING COGNIZA NCE OF THE STATEMENTS SHOWING RS. 44,47,772/- AS SUNDRY DEBTORS/ ADVANCES , SINCE THE ASSESSEE HAD SHOWN THE HEAD AS SUNDRY DEBTORS/ADVANCES IN ITS BALANCE SHEET, AND THIS EXCLUDED THE POSSIBILITY OF ANY FDRS AS PART O F THIS HEAD OF ASSETS. THE A.O OBSERVED THAT IN THE BREAKUP OF SUNDRY DEBTORS AND ADVANCES FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS FOR ASST. YEAR 2006-07, THERE WAS NO MENTION OF ANY BROUGHT FORWARD OF FDRS AND T HE ENTIRE AMOUNT OF RS.44,47,722/- CONSISTED OF RECEIVABLES FROM CONTRA CTOR AWARDING AGENCIES AND THEREFORE, THE ARGUMENT THAT THE FDRS OF RS.12,20,2 00/- WERE A PART OF SUNDRY 4. ITA NO.25 3 (ASR)/2013 ASST. YE AR 2005-06 DEBTORS AND ADVANCES, WAS CLEARLY FALSE. THE A.O AL SO OBSERVED THAT BUT FOR THE ARGUMENT, THE ASSESSEE DID NOT SUBMIT ANY OTHER EVI DENCE TO PROVE THE EXISTENCE OF THE FDRS IN ITS BALANCE SHEET FOR ASST . YEAR 2005-06, DESPITE HAVING BEEN PROVIDED SUFFICIENT OPPORTUNITY TO DO S O; AND THAT THEREFORE, THE ENTIRE AMOUNT OF RS.12,22,200/-, REPRESENTING INVES TMENT MADE BY THE ASSESSEE TO PURCHASE FDRS DURING THE FINANCIAL YEAR 2004-05, WAS PROVEN TO BE AN INVESTMENT MADE OUT THE BOOKS, THE SOURCE WHE REOF COULD NOT BE EXPLAINED BY THE ASSESSEE. IN THIS MANNER, THE A.O INVOKED THE PROVISIONS OF SECTION 69C OF THE I.T. ACT AND HELD THE AMOUNT OF RS.12,22,200/- TO REPRESENT UNEXPLAINED INVESTMENT OF THE ASSESSEE. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT (A) DELETED THE ADDITION MADE BY THE A.O, BUT FOR AN AMOUNT OF RS. 72,200/-, REPRESENTING INVESTMENT IN FDRS IN CASH, TO WHICH EXTENT, THE ADDITION WAS CONFIRMED, THEREBY GIVING THE ASSESSEE A RELIEF OF RS.11,50,000/- 6. THE LEARNED DR HAS CONTENDED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.11,50,000/-, DESPITE THE FACT THAT T HE ASSESSEE HAD FAILED TO ESTABLISH ITS CLAIM OF DISCLOSURE OF THE SAID FDRS IN THE BALANCE SHEET, HOLDING THAT THE SOURCE OF THE INVESTMENT HAD BEEN ESTABLIS HED. 7. HAVING CONSIDERED THE MATTER IN THE LIGHT OF THE MATERIAL ON RECORD AND THE ARGUMENT ADDRESSED BY LEARNED DR, WE FIND THAT THERE IS NO DISPUTE TO THE FACT THAT THE SOURCE OF INVESTMENT OF FDRS TO THE T UNE OF RS. 11,50,000/-, AS CONSIDERED BY THE LEARNED CIT(A), REMAINS UNDISPUTE D. RATHER, THE CHALLENGE OF 5. ITA NO.25 3 (ASR)/2013 ASST. YE AR 2005-06 THE DEPARTMENT IS THAT WHEREAS THE ISSUE WAS OF NON DISCLOSURE OF THE BALANCE SHEET, IT IS THE SOURCE OF INVESTMENT WHICH HAS BEE N HELD TO HAVE BEEN ESTABLISHED. IN THIS REGARD, AT THE OUTSET, IT MAY BE STATED THAT THE ADDITION WAS MADE UNDER THE PROVISIONS OF SECTION 69C OF THE I.T . ACT, AS UNEXPLAINED INVESTMENT. NOW, ONCE THE SOURCE OF THE INVESTMENT HAS BEEN EXPLAINED AND ESTABLISHED, THE VERY PROVISIONS OF THE SECTION BEC OME INAPPLICABLE AND ONCE THAT IS SO, FOR THIS REASON ALONE, THE ADDITION MUS T BE DELETED. 8. COMING TO THE MERITS, THE INVESTMENT IN FDRS WAS SHOWN AS FOLLOWS (IMPUGNED ORDER, PAGE 3): SR.NO. FDR NO. DATE OF ISSUE AMOUNT NAME OF ACOUNT 1. 462 29.5.2004 RS.1,50,000/- CD367 2. 463 29.5.2004 RS.1,50,000/- CD367 3. 464 29.5.2004 RS.1,50,000/- CD367 4. 647 01.12.2004 RS.20,300/- CASH 5. 648 01.12.2004 RS.32,000/- CASH 6. 649 01.12.2004 RS.19,900/- CASH 7. 695 24. 12.2004 RS.50,000/- CC105 8. 696 24. 12.2004 RS.50,000/- CC105 TO REITERATE, THIS HAS NOT BEEN DISPUTED. 9. DURING THE YEAR, THE RECEIPTS OF THE ASSESSEE WE RE TO THE TUNE OF RS.3,11,07,660/-. THE ASSESSEE GOT PREPARED THE FDR S TO THE TUNE OF RS.12,22,200/-, OUT OF THE REGULAR BANK ACCOUNT MAI NTAINED BY THE ASSESSEE WITH THE JAMMU & KASHMIR BANK LTD.. THE COPIES OF THE BANK ACCOUNT DEPICTED THIS. THEREFORE, THE FDRS WERE GOT PREPARE D OUT OF THE FUNDS AVAILABLE WITH THE ASSESSEE IN ITS BANK ACCOUNT. IT IS ALSO U NDISPUTED THAT THE FUNDS DEPOSITED IN THE BANK WERE THE ASSESSEES CONTRACT RECEIPTS. THE BANK 6. ITA NO.25 3 (ASR)/2013 ASST. YE AR 2005-06 STATEMENT WERE PLACED BEFORE THE A.O ALSO, BUT THEY WERE NOT CONSIDERED. THE LEARNED CIT(A) HAS DELETED THE ADDITION, AS INDICAT ED, TO THE EXTENT OF RS.11,50,000/-, AFTER DULY TAKING INTO CONSIDERATIO N ALL THE ABOVE FACTS, WHICH REMAIN UNDISPUTED. THEREFORE, IT CANNOT BE SAID THA T THE DELETION ORDER OF THE LEARNED CIT(A) IS ERRONEOUS. THE GRIEVANCE OF THE D EPARTMENT IS FOUND TO BE WITHOUT MERIT AND IS REJECTED AND THE ACTION OF THE LEARNED CIT(A) IS CONFIRMED. 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2015. SD/- SD/- (T. R. MEENA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16.09. 2015 /PK/ PS. COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S ASSOCIATED CONTRACTORS, 2. THE INCOME TAX OFFICER, WARD-3(1), SRINAGAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.