A.C.I.T., Circle-2, Gwalior V. Sh. Mukesh Kumar Jain, Bhind

ITA 254/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0543 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 11 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Opportunity of being heard; Peak credit; Additional evidence; Set aside
• Section: 153A; 69; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 254/AGRA/2012 ASSTT. YEAR : 2006-07 A.C.I.T., CIRCLE-2, VS. SHRI MUKESH KUMAR JAIN , GWALIOR. PROP. M/S. SHIKHA TRADERS, DEV NAGAR COLONY, BHIND. (PAN: AIDPJ 3435 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 27.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 05..07.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 12.03.2012 FOR THE ASSESSMENT YEAR 20 06-07, CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.1,45,1 0,090/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED DEPOSIT. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. ITA NO. 254/AGRA/2012 2 3. THE ASSESSEE IS INDIVIDUAL AND CARRYING ON TRADI NG BUSINESS IN FOOD GRAIN ON WHOLESALE BASIS IN THE NAME OF SHIKHA TRADERS. IN T HIS CASE, SEARCH OPERATION U/S. 132 OF THE IT ACT WAS CONDUCTED ON 12.05.2008. CONS EQUENTLY, NOTICE U/S. 153A WAS ISSUED UPON THE ASSESSEE. THE AO ASKED THE ASSE SSEE TO EXPLAIN NATURE AND SOURCE OF DEPOSIT AND THE DESTINATION OF EACH WITHD RAWAL MENTIONED IN THE BANK ACCOUNT WITH GWALIOR CITIZEN SAKH SAHAKARITA MARYAD IT, GWALIOR, SHOWING DEBIT OF RS.1,45,10,190/- AND CREDIT OF RS.202/- AND RS.1 ,45,13,127/-. IN THE ABSENCE OF ANY EXPLANATION ON THE PART OF THE ASSESSEE AS WELL AS RECONCILIATION WITH THE BOOKS OF ACCOUNT, MAINTAINED BY THE ASSESSEE, RS.1,45,13, 329/- DEPOSITED IN THE ABOVE BANK ACCOUNT OF THE SOCIETY WAS CONSIDERED AS UNEXP LAINED INVESTMENT AND WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ADDITION W AS CHALLENGED BEFORE THE LD. CIT(A) AND IT WAS SUBMITTED THAT THE AO HAS PASSED EXPARTE ORDER WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEES MOTHER EXPIRED IN THE MONTH OF SEPTEMBER, 2010 AND DUE TO OTHER CUSTO MS AND RITUALS, A REQUEST WAS MADE FOR ADJOURNMENT, WHICH WAS TURNED DOWN. THE AS SESSEE APPEARED BEFORE THE AO ON 01.12.2010 ALONG WITH BOOKS OF ACCOUNT AND HI S COUNSEL, BUT THE AO PASSED EXPARTE ORDER. IT WAS SUBMITTED THAT THE ORIGINAL R ETURN WAS FILED ON 30.03.2007 AND THE RETURN U/S. 153A WAS FILED UNDER PROTEST WAS AC CEPTED BY THE AO. HOWEVER, FROM THE ACCOUNT OF THE ASSESSEE APPEARING IN THE B OOKS OF GWALIOR CITIZEN SAKH SAHAKARITA MARYADIT, GWALIOR, ENTIRE DEPOSIT DURING THE YEAR RS.1,45,10,190/- HAS ITA NO. 254/AGRA/2012 3 BEEN ADDED AS UNEXPLAINED. THERE ARE WITHDRAWALS OF RS.1,45,13,329/-. THEREFORE, ADDITION IS UNCALLED FOR. FURTHER, DUE TO DEATH OF MOTHER, BOOKS OF ACCOUNT AND REPLY ALONG WITH DOCUMENTS COULD NOT BE PRODUCED AN D ALL THE DETAILS ARE REFLECTED IN THE BOOKS OF ACCOUNT, WHICH ARE PRODUCED BEFORE THE LD. CIT(A). IT WAS, THEREFORE, SUBMITTED THAT DUE TO GENUINE DIFFICULTY AND IN THE INTEREST OF JUSTICE, THE EVIDENCES MAY BE ADMITTED U/R. 46A OF THE IT RULES. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AS WELL AS REJOINDER FROM THE ASSESSEE AND GONE THROUGH THE RECORD AND DELETED THE SUBSTANTIAL ADDI TION EXCEPT OF RS.3,239/-. FINDINGS OF THE LD. CIT(A) IN PARA 3.2 AND 3.3 ARE REPRODUCED AS UNDER : 3.2. AFTER PERUSAL OF RECORDS AND DISCUSSION, EVID ENCE SUBMITTED BY THE APPELLANT DURING APPEAL HAS BEEN ADMITTED. COPY OF SAME HAS ALSO BEEN FORWARDED TO THE A.O. FOR REMAND REPORT & COMM ENTS AFTER VERIFICATION OF THE SAME, A.O.'S REMAND REPORT DTD. 03.10.2011 HAS BEEN RECEIVED THROUGH HIS JCIT ON 05.10.2011. APPEL LANT'S REJOINDER TO AO'S REMAND REPORT HAS ALSO BEEN RECEIVED ON 05. 03.2012 AND PLACED ON RECORD. THIS GROUND OF APPEAL IS BEING DI SPOSED OFF AFTER CAREFUL CONSIDERATION OF ASSESSMENT ORDER, ASSESSME NT RECORDS, A.O'S REMAND REPORT & REJOINDER OF THE APPELLANT DTD 05.0 3.2012. 3.3 . ON PERUSAL OF COPY OF ACCOUNT OF M/S. SHIKHA TRADERS, OF WHICH THE APPELLANT IS THE PROPRIETOR, IN THE SOCIETY VIS -A-VIS HIS BOOKS OF ACCOUNTS AND CONSIDERING THE PROVISIONS OF SEC. 69 OF THE I.T. ACT UNDER WHICH THE IMPUGNED ADDITION HAS BEEN MADE, IT IS EVIDENT THAT THE BANK, I.E. THE SOCIETY HAS FIRST GIVEN CREDIT O F CHEQUES RECEIVED BY THE APPELLANT & THEREAFTER WITHDRAWAL HAS BEEN MADE . AS PER AUDITED ACCOUNTS OF THE APPELLANT, TOTAL SALES OF RS.2,36,3 1,920/- HAVE BEEN SHOWN DURING THE YEAR AS PER RETURN FILED ON 30.03. 2007 WHICH IS SAME AS RETURN FILED, UNDER PROTEST, IN RESPONSE TO NOTICE U/S 153A. AS AGAINST THIS TURNOVER, TOTAL OF CREDIT ENTRIES FROM SALES/ENTRIES SHOWN ITA NO. 254/AGRA/2012 4 IN THE SAID BANK/SOCIETY ACCOUNT IS ONLY RS.1,45,13 ,127/-. IT IS, THEREFORE, FOUND ACCEPTABLE THAT THE CHEQUES DEPOSI TED IN THIS BANK ACCOUNT ARE ON ACCOUNT OF REALIZATION OF APPELLANT' S SALE PROCEEDS. THE CREDITS IN THIS BANK ACCOUNT ARE ONLY BY WAY OF TRANSFER CHEQUE ENTRIES FOR WHICH EVEN CHEQUE NUMBERS HAVE BEEN GIV EN. NO CASH DEPOSIT IS FOUND ENTERED IN THIS BANK ACCOUNT. A.O. HAS NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL NEITHER DURING ASSESSME NT STAGE WHEN PROCEEDINGS HAVE BEEN COMPLETED U/S. 144 NOR EVEN A T REMAND REPORT STAGE WHEN ALL THE DETAILS HAVE BEEN SENT TO HIM FO R COMMENTS AFTER VERIFICATION OF THE SAME, TO SHOW THAT THESE CREDIT S ARE NOT THE SALE PROCEEDS OF THE APPELLANT HIMSELF AND WHICH ARE DUL Y SHOWN IN HIS RETURN. A.O. HAS REJECTED APPELLANTS EXPLANATION W ITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD NOR ANY INDEPENDENT THIRD PARTY ENQUIRY HAS BEEN MADE EVEN OF A SINGLE PARTY AT ANY STAGE. THE MATERIAL ON RECORD ESTABLISHES NEXUS BETWEEN APPELL ANTS SALES AND CREDIT OF CHEQUES IN THIS BANK ACCOUNT AND A.O. HAS MADE NO ADVERSE REMARK EVEN IN HIS REMAND REPORT FOR THE SAME. ACCO RDINGLY, ENTIRE ADDITION MADE U/S. 69 AS UNEXPLAINED DEPOSITS OF RS .1,45,13,329/- IS NOT FOUND SUSTAINABLE EXCEPT OF RS,3239/-. 4. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER MA TERIAL AND RECONCILIATION BEFORE THE AO, THEREFORE, THE DEPOSITS WITH THE SOCIETY RE MAINED UNEXPLAINED INVESTMENT FOR WHICH ADDITION HAS BEEN RIGHTLY MADE IN THE CAS E OF THE ASSESSEE. HE HAS SUBMITTED THAT THE ASSESSEE HAS RAISED FOLLOWING GR OUND NO. 4 BEFORE THE LD. CIT(A) WHICH PRESCRIBED ABOUT THE CREDIT ENTRY. THE REFORE, SAME SHOULD NOT HAVE BEEN CONSIDERED AS SALES BY THE LD. CIT(A). GROUND NO. 4 OF APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A) IS REPRODUCED AS UNDER : ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE TH E AO GROSSLY ERRED IN LAW & ON FACTS IN TREATING THE ENTIRE CRED IT AMOUNT OF RS.14513127/- AS UNEXPLAINED DEPOSIT IN GWALIOR CIT IZEN SAKH ITA NO. 254/AGRA/2012 5 SAHAKARITA MARYADIT, IGNORING THE FACTS THAT THE EX CESS CREDIT WAS ONLY OF 3239/- THROWING THE MIND THE THEORY OF PEAK CREDIT & TELESCOPING. THE ADDITION MAY BE DELETED. THE LD. DR, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND ORDER OF THE AO MAY BE RESTORED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE ASSESSEE FILED RETURN OF INCOME PRIOR TO THE SEARCH ON 30.03.2007 DISCLOSING ALL THE SAME FACTS IN THE RETURN OF INCOME AND SHOWN THE TOTAL SALES AT RS.2,36,31,9 20/-, WHICH IS ALSO SHOWN IN THE PROFIT AND LOSS ACCOUNT (PB-9). PB-27 IS THE REMAND REPORT DATED 16.11.2011 AND THE DETAILS OF THE DEPOSITS MADE IN THE BANK SUPPOR TED BY BILL NUMBER OF SALES ARE FILED AT PAGE 31 OF THE PAPER BOOK, WHICH MATCH WIT H THE ENTRIES OF THE BANK ACCOUNT WITH GWALIOR CITIZEN SAKH SAHAKARITA MARYAD IT, (PB-44 TO 46). HE HAS SUBMITTED THAT THE LD. CIT(A) ON PROPER APPRECIATIO N OF FACTS RIGHTLY HELD THAT THE CHEQUES DEPOSITED IN THE BANK ACCOUNT ARE ON ACCOUN T OF REALIZATION OF ASSESSEES SALE PROCEEDS. THEREFORE, THE ADDITION IS NOT CALLE D FOR AND EVEN THE AO IN THE REMAND REPORT DID NOT DISPUTE THE CONTENTION OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DE LETING THE ADDITION. THE ASSESSEE ITA NO. 254/AGRA/2012 6 SUBMITTED BEFORE THE LD. CIT(A) THAT ON THE LAST DA TE OF HEARING ON 01.12.2010, THE ASSESSEE APPEARED ALONGWITH THE BOOKS OF ACCOUNT BE FORE THE AO WITH HIS COUNSEL, BUT THE AO DID NOT EXAMINE THE RECORD AND PROCEEDED EXPARTE IN THE MATTER. THE ASSESSEE CLAIMED THAT THE ENTIRE ACCOUNTS DEPOSITED IN THE BANK ACCOUNT ARE THE SALE PROCEEDS OF THE ASSESSEE WHICH ARE REFLECTED IN THE BOOKS OF ACCOUNT. IT WAS PLEADED THAT EARLIER DUE TO DEATH OF HIS MOTHER THE RE WERE NO COMPLIANCE MADE BEFORE THE AO AND ADJOURNMENTS WERE TAKEN. THE LD. CIT(A), THEREFORE, CORRECTLY ADMITTED THE ADDITIONAL EVIDENCES U/R 46A FOR CONSI DERATION. THERE IS NO GROUND OF APPEAL RAISED BY THE REVENUE CHALLENGING THE ADMISS ION OF ADDITIONAL EVIDENCES AT THE APPELLATE STAGE. THE LD. CIT(A) ON THE ADDITION AL EVIDENCES CALLED FOR THE REMAND REPORT FROM THE AO WHICH IS FILED IN THE PAP ER BOOK, IN WHICH THE AO HAS NOT GIVEN ANY ADVERSE COMMENTS ON THE SAME. THE AO MERELY TREATED THE SAME TO BE CREDIT ENTRIES IN THE REMAND REPORT. THEREFORE, THE ONUS WAS PUT ON THE ASSESSEE TO PROVE IDENTITY, CAPACITY AND GENUINENESS OF THE CREDIT IN THE MATTER. THUS, THE AO HAS NOT EXAMINED THE CASE OF THE ASSESSEE IN PRO PER PERSPECTIVE. THE AO HAS NOT BROUGHT ANY ADVERSE MATERIAL AGAINST THE ASSESS EE AT THE ASSESSMENT STAGE AS WELL AS IN THE REMAND PROCEEDINGS. ON THE OTHER HA ND, THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS, WHICH SHOW THAT IN THE BANK ACCO UNT, THERE ARE CREDITS OF CHEQUES RECEIVED BY THE ASSESSEE AND THEREAFTER WIT HDRAWALS HAVE BEEN MADE. AS PER AUDITED ACCOUNTS, THE ASSESSEE HAS SHOWN TOTAL SALES OF RS.2,36,31,920/- WHICH ITA NO. 254/AGRA/2012 7 WERE FILED IN THE RETURN OF INCOME ORIGINALLY AS WE LL AS IN PROTEST IN RESPONSE TO NOTICE U/S. 153A OF THE IT ACT. AS AGAINST THIS TUR NOVER, THE TOTAL CREDIT ENTRIES FROM SALES / ENTRIES SHOWN IN THE BANK ACCOUNT IS S HOWN AT RS.1,45,13,127/-. THE LD. CIT(A), THEREFORE, RIGHTLY ACCEPTED THAT THE CH EQUES DEPOSITED IN THIS BANK ACCOUNT ARE ON ACCOUNT OF REALIZATION OF ASSESSEES SALE PROCEEDS. THE ASSESSEE HAS FILED DETAILS OF BANK DEPOSITS SUPPORTED BY THE SAL E AMOUNT AND BILL NUMBER AT PAGE 31 OF THE PAPER BOOK SHOWING TOTAL AMOUNT DEPOSITED IN THE BANK AT RS.1,45,13,127/- AND THE SALE AMOUNT AT RS.1,50,50, 925/-. THE SAME IS SUPPORTED BY THE NAME OF PARTY, SALE LEDGER ACCOUNT, SALE BIL L AND THE DATE. SAME DETAILS TALLY WITH THE DEPOSITS MADE IN THE BANK ACCOUNT, COPY OF WHICH IS FILED AT PAGE 44 TO 46 OF THE PAPER BOOK. THUS, IT IS CLEAR THAT THE CREDI T IN THE BANK ACCOUNT IS ONLY BY WAY OF CHEQUES TRANSFER ENTRIES, FOR WHICH CHEQUES NUMBERS HAVE BEEN GIVEN. IT WOULD, THEREFORE, SUPPORT THE CASE OF THE ASSESSEE THAT THE CREDIT ENTRIES ARE ON ACCOUNT OF SALE PROCEEDS OF THE ASSESSEE. IN THE AB SENCE OF PROPER INVESTIGATION MADE BY THE AO EVEN AT THE REMAND STAGE AND IN ABSE NCE OF ANY DETAILS AVAILABLE ON RECORD CONTRARY TO THE DOCUMENTS PRODUCED BY THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETIN G THE SUBSTANTIAL ADDITION. MERELY BECAUSE GROUND NO. 4 IS NOT PROPERLY WORDED BEFORE THE LD. CIT(A), BUT THE FACTS AND CIRCUMSTANCES CLEARLY SUGGEST THAT THE AMOUNT I N QUESTION IS NOT UNEXPLAINED DEPOSIT OR INVESTMENT IN THE BANK ACCOUNT OF THE AS SESSEE, WOULD SUPPORT THE ITA NO. 254/AGRA/2012 8 FINDINGS OF THE LD. CIT(A) THAT THE ADDITION HAS BE EN RIGHTLY DELETED IN THE MATTER. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE DO N OT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION. THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY