M/s. Awadh Traders, CHHINDWARA V. Income Tax Officer Ward- 1, CHHINDWARA

ITA 254/JAB/2013

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2304 (ITAT-JABALPUR)
• Duration Of Justice: 8 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Opportunity of being heard; Principle of natural justice; Additional evidence; Onus to prove
• Section: 68; 144; 143(3); 142(1); 274; 143(2); 72; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR (Through web-based video conferencing platform) BEFORE SHRI SANJAY ARORA, HON‟BLE ACCOUNTANT MEMBER & SHRI MANOMOHAN DAS, HON'BLE JUDICIAL MEMBER I.T.A. No. 254/JAB/2013 (Asst. Year : 2007-08) Appellant by : Shri Gagan Tiwari, Advocate Department by : Shri S.K. Halder, Sr. DR Date of hearing : 14/03/2022 Date of pronouncement : 13/05/2022 O R D E R Per Bench: This is an Appeal by the Assessee directed against the dismissal of its‟ appeal agitating the assessment under section 144 of the Income Tax Act, 1961 (“the Act”, hereinafter) dated 08/12/2009 for Assessment Year (AY) 2007-08 by the first appellate authority vide order dated 07/10/2013. 2. The assessee, a partnership firm vending foreign made as well as country liquor in the State of Madhya Pradesh (MP), declared its‟ income for the relevant year on 15/11/2007 at Rs. 3,25,430, which was selected for being subject to the verification procedure under the Act by issue of notice u/s. 143(2) on 26/9/2008. This was followed by notice u/s. 143(2) on 06/04/2009 and notice u/s. 142(1) on 31/07/2009. The assessee sought adjournments on one pretext or the other, Awadh Traders, Awadh Wine Shop, Near Bus Stand, Chhindwara (MP) vs. Income Tax Officer-1, Chhindwara. [PAN: AALFA 3108 J] (Appellant) (Respondent) ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 2 | P a g e eschewing furnishing the information sought. On 18/11/2009, on which date the hearing was attended by Shri Rajesh Sinha, partner, and Shri Satish Sahoo, Accountant, furnishing some information, it was required to produce the books of account along with other supporting documents (i.e., copy of the tax returns and final accounts of the incoming partners, copy of their bank accounts, and details of other income received by them) on 19/11/2009. The assessee failed to respond. The assessment was finally completed u/s.144, i.e., as a best judgement assessment, on 08/12/2009 vide order communicated on 24/12/2009. The assessee appealed there-against, raising several Grounds, including qua lack of opportunity of hearing. Each of these Grounds were repelled by the ld. CIT(A), who confirmed the assessment. Aggrieved, the assessee is in second appeal. 3.1 Before us, the matter was argued vehemently by Shri Tiwari, the ld. counsel for the assessee, again, principally on the aspect of breach of the principles of natural justice inasmuch as proper opportunity of being heard was not allowed by the Assessing Officer (AO). Even as explained to the ld. CIT(A), the assessee had closed shop at Chhindwara, and shifted its‟ office to Nagpur. How could, then, books of account be brought from Nagpur, 150 km. away, and produced in a day? The ld. CIT(A) was, therefore, in error when he did not allow the assessee‟s application before him for admission of additional evidence, made under rule 46A(1)(d) of the Income Tax Rules, 1962 („the Rules‟, hereinafter), i.e., where sufficient opportunity had not been allowed by the assessing authority to the assessee for furnishing the relevant evidence. On the merits of the additions made in assessment, the same are again not valid and, in any case, in excess. There was, with effect from the current year, a change in the constitution of the assessee-firm, with two new partners joining on the retirement of some erstwhile partners, both of whom, i.e., Girija Shankar Mishra and his wife Archana Mishra, have confirmed their capital contributions, which have been added as unexplained u/s. 68 of the Act. Their bank statements, submitted in support, clearly reflect withdrawal of cash, which was utilized toward the impugned deposit/s with the assessee-firm. ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 3 | P a g e How could the same be doubted? That apart, partners have other income as well, as evidenced by their tax returns for the preceding years, copy of which stands also adduced. In fact, the loan of Rs. 27 lakhs to Shri Girija Shankar Mishra (from one, Rajendra Kumar Pannalal) stands confirmed by the Tribunal (Bilaspur Bench) vide its‟ order in his case for AY 2004-05 (in ITA Nos. 228-231/Blpr/2007, dated 18/09/2009/PB-1, pgs. 9-36). There was as such no reason for him not to accept the explanation/s furnished. 3.2 Shri Halder, the ld. senior DR, would, on the other hand, argue that none of the contentions of the assessee, as put-forth, merit acceptance on facts. The ld. CIT(A) has, after appraising the facts of the case, issued definite findings qua each of the various contentions raised, none of which stand met by the assessee in the instant proceedings, i.e., before the Tribunal. 4. We have heard the parties, and perused the material on record. 4.1 Our first, preliminary, observation in the matter is that the case made out by Shri Tiwari, as would be apparent from the arguments advanced before us, delineated hereinabove, is without reference to the impugned order, adverse findings (to the assessee) whereby are neither addressed nor met, including case law relied upon by him. Shri Tiwari was during hearing, accordingly required by the Bench to address the findings by the ld. CIT(A), which are in effect being impugned by him. Our second preliminary objection is that no submissions stand made by or on behalf of the assessee by Sh. Tiwari on Ground Nos. 5, 8 & 9, and his submissions, apart from on non-allowance of opportunity by the AO in framing the impugned assessment and non-admission of additional evidence u/r. 46A, were centred on the two additions (at an aggregate of Rs. 32.30 lacs) u/s. 68, i.e., Gds. 6 & 7. 4.2 We, next, proceed to consider and adjudicate on each of the issues raised by the assessee through its‟ counsel, who chose not to press the otherwise ambiguous ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 4 | P a g e Ground 1. True, one day, as allowed by the AO to the assessee (on 18/11/2009) is no doubt short even if all that the assessee was required to do was to produce the books of account already available. The books are relevant only if the assessee wishes to rely thereon in substantiation of its‟ case, having formed (along with the relevant documents and vouchers) the basis for preparing its‟ return of income for the relevant year (admittedly furnished much earlier), on which it relies, implying the books being prepared and available, as indeed inferable from the audited accounts (PB-1, pgs. 78-94). How much time, then, should it take to produce already prepared and available books of account? The assessee states before us that, though available, the books were at Nagpur, which is at a distance and, therefore, could not be produced at such a short notice. We have, even independent of this information (which, to be fair to him, also would not be known to the AO), expressed that one day‟s period is to be regarded as short. How many days, then, one may ask, would it take for the assessee to bring the books from Nagpur, i.e., allowing the assessee’s plea, instead of one, as (initially) allowed by the AO? To no answer by Shri Tiwari during hearing. Further, the „fact‟ of the books being at Nagpur, seeking time – for that reason, for their production, would be therefore the first response of an, and ought to have been stated upfront by the, assessee, on 18/11/2009 itself – whereat the hearing was attended by a partner and the Accountant. On the contrary, the assessee does not state so. It chooses to remain silent on this even on 19/11/2019 (on which date the compliance was to be made), by which time it would have been able to cross-check about the availability of books of account as well as make an informed estimate of the time required to bring the books to Chhindwara. Why, no statement issued from the assessee even on 01/12/2009, twelve days later, whereat the assessee was called upon to respond, vide show cause dated 30/11/2009, as to why an ex parte assessment be not made and, further, the assessment completed making the proposed additions (specifically stated, and as finally made), including on estimation of income (pgs. 1-2 of the assessment order). The ld. counsel reiterating of being allowed only one day, it ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 5 | P a g e was explained by the Bench that by 01/12/2009 the assessee had already availed of 13 days‟ time to produce the books of account and the relevant vouchers, producing which, even by then, would estopp the AO from proceeding u/s. 144. Further, the one day time allowed to reply to the show-cause notice ought not to be confused with that allowed on 18/11/2009, the latter being to put the assessee to notice of the consequence/s arising out of the assessee‟s non-response to the former. There was no attendance on 01/12/2009, or even thereafter. That is, the non-response by the assessee continued, who, accordingly, did not produce the books of account even by 08/12/2009, when the assessment was made, i.e., 20 days later, or by 24/12/2009, when it was served the assessment order (as till then the assessee may not be aware of the assessment having been already made on 08/12/2009). The assessee did not produce the books, which it, acting with alacrity, as expected, considering that the assessment was getting time barred by 31/12/2009, could within a couple of days. The only unmistakable inference is that the assessee did not produce the books of account deliberately, and the plea – toward which there is no iota of evidence, of the same being at Nagpur or, in any case, that it was not provided time for the same, only a ruse – an afterthought and a la alibi. As in fact transpires on the ld. CIT(A) calling for the remand report from the AO in the matter. The AO, vide his remand report dated 18/10/2012 (PB-1, pgs. 103-104), clarified that he had in fact completed the assessee‟s assessment for AY 2009-10 on 20/12/2011, whereat there was no whisper of non-availability of details on account of closure of business at Chhindwara, effectively nailing the assessee’s lie of its‟ books of account having been, as on 18/11/2009, at Nagpur, which itself warranted a couple or 3-4 days to be brought. These isssues remain unaddressed in the assessee‟s rejoinder dated 19/11/2012 (PB-1, pgs. 105-106), i.e., before the ld. CIT(A), and neither could Shri Tiwari provide any answer thereto during hearing. How could, then, the invocation of s.145(3) as well as s. 144 by the AO be faulted with? Rather, as we shall presently see, these issues stand raised only to obfuscate; the CIT(A), overruling the AO‟s plea per his remand ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 6 | P a g e report for non-admission of additional evidence in the interest of justice, and even as he himself rejects the assessee‟s application of admission of additional evidence on merits, stating it to be a case of complete and deliberate non-production of accounts, citing case law in support, as also relies on Keshav Mills Co. Ltd. vs CIT [1965] 56 ITR 365 (SC), allows the assessee opportunity to adduce the same in the interest of justice, citing u/r. 46A(4). In doing so, it may be appreciated, he effectively converts a sec.144 assessment into a sec. 143(3) assessment, the permissibility of which, not disputed before us, has been therefore not examined. The assessee‟s Ground Nos. 2 to 4 are, thus, without any merit whatsoever. 4.3 No contention was raised by Sh. Tiwari, nor any evidence referred to in respect of the assessee‟s Gd. 5, as was in fact the case before the CIT(A), impelling him to, dismissing the said Gd., confirm the addition for Rs. 57,090, (refer page 27 of the IO), which is in respect of unexplained difference between the opening liability (as on 01/04/2006) and the closing liability (as on 31/03/2006); the former being higher. The same, indicating unexplained assumption of liability, or increase therein to that extent, is accordingly confirmed 4.4 (A) We, next, consider the assessee‟s case on merits of the additions u/s. 68. (Gds. 6 & 7). This is for the reason that though the ld. CIT(A) has not admitted the additional evidence in view of the assessee failing to establish its‟ case u/r. 46A, mandatory in character, he has nevertheless considered the evidence produced u/r. 46A(4), i.e., in exercise of his discretion u/r. 46A(4). It is his this adjudication on merits that stands appealed against before us. We may though clarify that non-production of accounts can be no reason for non-application of section 68; it being an admitted fact that monies in the stated sums stand received and credited by the assessee-firm in its‟ books of account to the account of the two incoming partners during the relevant year, which would also reflect the mode manner and mode of receipt, i.e., by cheque or cash. (B) The findings by the CIT(A), which are impugned before us, are as under:- ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 7 | P a g e „Copy of firm's bank account required to be produced by the assessee under rule 46A(4) of IT rules 1962, through hearing dated 24.07.2013, so that the cause of substantial justice should not suffer. In addition, the assessee was also required to furnish the following: 1. Explanation of cash credit entries in bank account of two new entrants in the firm with evidence. 2. Establish correlation between cash withdrawals of partners and deposit in firms accounts. 3. To establish how ITAT judgment cited by the AO is not applicable and why NP rate declared should be accepted. Through written submission submitted on 23.09.2013 it was submitted that as far as cash deposit by new partner Shri G.S. Mishra was concerned Rs. 27 lacs was deposited initially in cash by G.S. Mishra. As regards Smt. Archna Mishra, where was a cash deposit of Rs. 10.95 lacs and the balance came from bank account. As regards the requirement of correlation of the cash withdrawals of partner and deposit in firm account, no concrete submission at all has been made. Copy of bank account to the firm submitted does not throw any light on the deposits by the partners since there is no correlation of figures. As regards the citing of the judgment of Hon'ble ITAT by AO, the assessee relied on numerous judicial decisions which have been mentioned in detail earlier. However, as commented above, the assessee has not been able to establish that it's own factual situation is closer to those judgments than to the one relied upon by the AO. As regards Rs. 15.50 lacs and 16.80 lacs, it has been clearly conceded that this whole story is about transaction in cash. In spite of rejection of petition under rule 46A (clause unspecified), the undersigned deemed it fit in the interest of justice to provide assessee with opportunity to adduce evidence which was relevant and germane to the issue under question. However, despite this, no cogent evidence was produced. It has been held in the case of Keshav Mills, 56 ITR 365 (SC) by a seven judge bench that "the best evidence is that produced in earlier point of time." This clearly stands violated categorically by the assessee. In addition, all this aspect of transaction being fully in cash further lends strength to the conclusion drawn by the AO. As regards cash transaction and onus of proof u/s. 68, the ratio decidendi of the following judgments is relied upon. (emphasis, ours) Reliance stands placed by him on the following decisions: CIT vs. Shiv Shakti Timbers [1998] 229 ITR 505 (MP); Banarsi Prasad vs. CIT [2008] 304 ITR 239 (All); and CIT vs. Kishorilal Santoshilal [1995] 216 ITR 09 (Raj), ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 8 | P a g e to conclude that the onus cast on the assessee u/s. 68 has not been discharged,, and confirmed the addition on that basis. (C) The additions, without rebutting the clear findings by the first appellate authority, being argued vehemently before us, we proceed by enlisting the features of each of the credits under reference, as under: (i) Shri Girija Shankar (GS): Rs. 16.80 lakhs: The assessee‟s case is that Rs. 10 lakhs cash was available with him as only Rs. 17 lakhs had been re-deposited in his bank account by GS, i.e., after withdrawal of the entire loan of Rs. 27 lakhs availed of by him from one, Shri Pannalal, which loan had found approval of the Tribunal in his own case for AY 2004-05 (ITA Nos. 228-231 of 2007, dated 18/09/2009), which order was referred to during hearing. The source of balance Rs. 6.80 lakhs (i.e., Rs. 16.80 lakhs – Rs. 10 lakhs) is the creditor‟s other income, being income from other sources and agricultural income (PB-1, pgs. 9-36, 37-38, 43-51). To begin with, the ledger account of the depositor in the assessee‟s accounts is not produced, nor indeed the assessee‟s account in his books of account, both called for by the AO, whose requisition thus continues to be not met even before us. The credit (of Rs. 16.80 lakhs) being admitted, this become relevant as the entire receipt is in cash. It is only the ledger account that would reveal the date/s of introduction of cash ascribed to him in the assessee‟s accounts, which become critically relevant as the assessee is required to show the availability of cash with the creditor on those dates, which are themselves unknown, even as the cash deposit is, as stated, in different instalments during the year. The non-production of relevant material makes the assessee‟s case unverifiable. Even as the deposit to the extent of Rs. 1.30 lakhs (out of Rs. 16.80 lakhs) is stated to be by cheque, the claim is, again, unsubstantiated, even before us. The claim of cheque is no exhibited even by the creditors‟ bank statement. The reliance on Tribunal‟s order (supra) is misplaced. The issue is not of the genuineness of the loan of Rs. 27 lacs, but the availability of cash with the creditor at the relevant time, which is completely unsubstantiated, with, as afore-stated, even the relevant dates being not ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 9 | P a g e demonstrated. Rather, per the said order the cash deposit of Rs. 27 lacs in Shikshak Sahakari Bank, Nagpur on 20/06/2003 is confirmed to be out of the cash withdrawal on 20/06/2003 from Union Bank of India, Pandurna Branch. How could, then, the assessee claim availability of Rs. 10 lacs on the basis of cash withdrawal of Rs. 27 lacs from UBI on 20/06/2003? (PB-1, pgs. 108-111). In fact, Sh. Tiwari could not during hearing answer the question by the Bench as to whether the said loan was outstanding as on (unknown) date/s of deposit with the assessee-firm or at the end of the relevant year, i.e., 4 years hence. The plea of interest on the said loan, which was shown as claimed by GS in his tax returns for the preceding years against income from house property (IFHP) (PB-1, pgs.42-55), proving the factum of loan, only needs to be stated to be rejected. The interest on a loan (borrowing) is eligible for being claimed as deduction in computing IFHP only where the said borrowing stands utilized for the acquisition or repairs of a house property. The same would thus be not available for either redeposit in bank (Rs. 17 lakhs) or for capital contribution in the assessee-firm (Rs. 10 lakhs), as being claimed. Further, the interest is deductible only where the borrowing is from a specified bank/financial institution, while the loan under reference is from a private person, and not a housing loan. If anything, this fact rather itself downgrades the creditors‟ capacity, which itself is not shown and, rather, is sought to be established with reference to a borrowing by him. This is as the bank borrowing, interest on which is being claimed in his tax returns, would only have been repaid over time, even otherwise apparent from the decreasing interest claim in the tax returns, so that the borrowing has necessarily declined. This repayment, as it appears (i.e., going by the assessee‟s tax returns claiming deduction for interest on borrowing against IFHP, and which can only be in respect of a housing loan), is apart from the repayment of the loan of Rs. 27 lakhs, which the assessee claims as confirmed by the Tribunal, as there is nothing on record to show and, in fact, even not claimed at any stage, that the said loan continues to obtain. The argument is invalid, both in law and on facts. The creditor ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 10 | P a g e (GS), rather, claims the entire sum withdrawn from UBI, Pandurna Branch, to have been deposited in Shikshak Sahakari Bank, Nagpur, on 20/6/2003. In any case, does it mean that a loan, stated to be interest bearing, stands taken by the assessee without any purpose, i.e., to be held as cash or in bank, which would be defeative of the loan itself? Two, it is not possible and, thus, cannot be a burden cast by law on the Revenue, to prove a negative, i.e., that the amount has not being shown to be utilized somewhere else. In short, rather than the assessee exhibiting the availability of cash, which is claimed for Rs. 10 lacs, the assessee is instead required to show the source of repayment of housing loan, presumably at Rs. 27 lacs, if not Rs. 54 lacs. The burden to prove a credit in its‟ books, which assumes proving it on the parameters of identity and capacity of the creditor, is only on the assessee, which it has abysmally failed to. As would be apparent from the foregoing, it is only the balance-sheet of the creditor as on 31/03/2007, if not for earlier periods as well, i.e., his books of account, that would show his net-worth and, thus, the capacity to advance money to the assessee, including repayment, if any, of the borrowings, with reference to which his capacity is claimed, and the utilization of other income, which is normally received through bank and, in any case, is not shown to be in cash. The addition u/s. 68, buttressed by the ld. CIT(A) by reference to case law, each of which has been gone through and found applicable, not adverted to by the ld. counsel during hearing, has, in view of the foregoing reasons, in our opinion, been rightly confirmed by him. (ii) The facts and circumstances of the second credit of Rs. 15.50 lakhs from, as stated, Smt. Archana Shankar (AS), are largely the same as that of her husband, GS. The only difference that we observe is: (a) the entire amount is admittedly in cash; (b) the source of cash, to the extent of Rs. 4.55 lakhs, is ascribed to cash withdrawals for that amount during f.y. 2005-06. ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 11 | P a g e For principally the same reasons that inform our decision in the case of GS, in our considered opinion, this credit also remains wholly unproved. It is only in case of one-to-one correspondence, as was found by the Tribunal in the case of GS for AY 2004-05 (fy 2003-04), that a cash withdrawal can be accepted as source of cash deposit, which was in that case in a different bank account on the same date, while in the instant case even the dates of those deposits are admittedly unknown, except that they all fall in the relevant previous year. It would be wholly presumptuous to link the cash withdrawal/s some 12 to 24 months ago to the cash deposit/s under reference, and claim proving „source‟ on that basis. We estimate the time difference so as both the dates of cash withdrawal and deposit are not clear from the bank statements filed. That is, the dates on which the cash availability with the creditor is to be shown, are themselves not known, much less demonstrated. In fact, a minimum time lag of 12 + months would obtain if the entire withdrawal is regarded as at the fag end of the year and cash deposit as at the beginning of the relevant year, and which is sufficient to validate our statement. Nobody would withdraw in lakhs (and which is in a specific sum) and, further, a substantial sum, even as the inflation factor would translate it into a much higher sum, i.e., by todays‟ reckoning, without any reason or purpose, while there is no stated basis for the cash availability for the balance of Rs. 10.95 lacs. What further reason, one may ask, could one need for the production of personal accounts by the creditors, called for by the AO, and which remain conspicuous by their absence. 4.4 (A) Gds. 8 & 9 are in respect of the rejection of the assessee‟s book results and estimation of income by the AO, which he does by applying the sale rate of 1.63 to the licence fee, and adopting a profit rate of 2.5% on the turnover so calculated. In doing so, he follows the order by the Tribunal (ITA No. 217/Jbp/2008, dated 05/06/2009) in the case of Pandurna Liquor Traders vs. ITO, wherein Shri Girija Shankar Mishra, who and his wife are the incoming partners in the assessee-firm, was a partner. The findings and the decision by the ld. CIT(A) are as under: ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 12 | P a g e „Regarding ground No.9, the assessee has submitted that the AO was not justified in rejection of books of account. It has already been held that the books of account have never been produced before the AO. Even the petition for additional evidence regarding the same stands rejected. The omnibus ground No.2 which could have justified the argument regarding books of account stands withdrawn.‟ „Regarding ground No.10, which is regarding estimation of sales, the assessee submitted that various case authorities support it‟s case. However, in all the cited cases, namely 263 ITR 679 (MP), 101 ITR 525 (Patna) and 119 ITD 15 (Agra), there was production of books of account in which certain deficiencies were pointed out. In the instant case, it is a case of complete and deliberate non-production of books.‟ (pg. 25) „As regards grounds of appeal no.9 to 11, it has already been pointed out earlier that this is a case of non production books of accounts. The assessee has virtually treated the whole process as same kind of a light hearted joke and has made a mockery of the judicial hierarchy by trying to produce all the books of accounts as additional evidence and virtually relegating the appellate authority to the status of the Assessing Officer. As stated at various places above, the ITAT judgment cited by the AO has merely been taken as a guideline to determine profits of business in absence of books. Hence, the determination of net profit at Rs. 26,45,286/- is held justified. The addition on the basis thereof is hereby confirmed.‟ (pg. 33) That is to say, that no valid reason stood advanced before the ld. CIT(A), with, rather, Gd. 9, challenging the rejection of accounts, not pressed. (B) Before us, Sh. Tiwari would submit that the assessee‟s books of account could not be rejected and, consequently, its‟ business income estimated, as it had not produced those books, so that the question of their rejection – in the absence of defects being pointed out therein by the AO, does not arise. (C) As observed by the Bench during hearing, the only inference arising from the non-production of books of account is that the same are not available for being relied upon as evidence in support of the assessee‟s return, compelling the AO to proceed in the manner provided in law for the said contingency, i.e., by estimating the assessee‟s income in the light of facts and circumstances of the case, including the material that may be gathered by him. The plea is, by any standard, specious. The relevant Ground was also withdrawn/not pressed before the CIT(A) (refer page 25 of the IO). Further, though, no decision was cited toward this before us, ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 13 | P a g e we find the assessee‟s paper book (PB-1, pgs. 162-164) to contain a decision by the Jabalpur Bench of the Tribunal in ITO vs Amarkantak Enterprises (ITA No. 210/Jbp/2006, dated 20/08/2008) on this aspect. The decision is distinguishable as in the facts of that case the books of account were produced before and examined by the AO, who rejected the book results without pointing out any specific defect therein, so that the Tribunal cancelled the recourse to s.144. On quantum, the figure of the licence fee is not in dispute. No contention was in fact raised before us toward the estimate being in excess, which we find as reasonable, yielding a return of 4.08% on investment. We, therefore, find no reason to interfere, and decline to. (D) We may in respect of our adjudication on these additions, also clarify that the estimation of income (on non-acceptance of book results) is no ground for not effecting an addition/s u/s. 68 (refer: Kale Khan Mohammad Hanif vs. CIT [1963] 50 ITR 01 (SC); Devi Prasad Vishwanath Prasad 72 ITR 194 (SC). (E) The assessee‟s case needs to be stated to be rejected. We decide accordingly. In sum 5. The plea of breach of the principles of natural justice in assessment is, to our mind, a non-starter. The issue is not whether the assessee had actually closed its‟ business at Chhindwara, toward which though no evidence stands adduced, and neither was there any indication to that effect in the course of the assessment proceedings for AY 2009-10, i.e., two years hence, but why, if so, did not the assessee state so on 18/11/2009 itself, or even later in the course of assessment proceedings; rather, stopped participating in the proceedings thereafter, compelling the AO invoke s. 144. This would rather be the natural and first response of any assessee stating facts. It is this that led us to state of the plea being only a ruse and an afterthought. The assessee‟s entire case, effectively rebutted by the AO in his report, is a make-believe. Further still, the ld. CIT(A), by allowing the assessee an ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 14 | P a g e opportunity to furnish the additional evidence it wished to rely upon, also seeking specific information, thereby converting a sec.144 – rightly invoked by the AO, and also resisted per his remand report, assessment, into a sec. 143(3) assessment. The reiteration of this argument by the assessee before us (Gd. 2), is itself misleading. This would also decide the assessee‟s grounds qua violation of principles of natural justice. The assessee‟s case on s. 68 is also nothing much to write home about. The main plank of the same is in respect of GS, who had, years ago (in fy 2003-04) withdrawn cash, i.e., Rs. 27 lacs, re-depositing only Rs. 17 lacs, so that Rs. 10 lacs was available. Does it mean that the loan stands assumed for being either re- deposited in bank or held cash – and for years! The matter has been examined from various angles, and with reference to the material on record, to find it as without substance, so that whichever one may look at it, the explanation is unsubstantiated, contradictory and without regard to the normal course of events. The same rather emphasizes the need for and explains the requisition by the AO of the personal accounts of the partners. The only other (presumably cash) income is agricultural income for Rs. 40,000, and which, in absence of other relevant information with regard to withdrawals for personal purposes and personal investments, etc., would be a little consequence in explaining the admitted investment of Rs. 15.50 lacs each for both the partners. Even as much as the date/s of introduction of cash, on which date/s its availability is to be shown, are conspicuous by its absence, and the mention of some dates before the ld. CIT(A) (qua GS/PB-1, pg. 109), is without reference to any basic document and, besides, without exhibiting cash with him on those dates. The least expected for the investment for Rs. 1.30 lacs, stated to by cheque, was the production of the creditor‟s bank statement, which has not been even before us. The entire case is a make-believe, with the assessee‟s claims being thoroughly discredited, both on facts and in law. ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 15 | P a g e We may at this stage, also advert to another aspect of the matter, which though not referred to hearing, we find to have been before the ld. CIT(A), whose order is confirmed both on facts and in law. It is stated that section 68 is not applicable in the case of partners in a partnership firm, and an addition, on a non- satisfactory explanation as to the nature and source of the credit in such a case, could only be made in the individual hands of the partners, more so, as in the instant case, the capital contribution stands confirmed by them (copy not on record). We find this proposition as wholly untenable in law; the premise of section 68 being that the assessee is the beneficiary of the moneys credited in his accounts and, thus, received by it, so that until he is able to establish the nature and source thereof, the receipt is deemed by law to represent his income. In fact, the Hon'ble Courts held so even in the absence of codified law, which stood inserted on the statute book for the first time as section 68 of the Act, i.e., w.e.f. 01/04/1961, and was missing in the preceding, 1922 Act. Further, this explanation as to the nature and source of the sum found credited in the assessee‟s book is to be, as explained by the Hon'ble Courts, on the parameters of the identity and creditworthiness of the creditor and the genuineness of the credit transaction. When a credit is therefore stated to be of a partner (by name), it is the identity aspect that is in effect being stated to be satisfied. Nothing more and nothing less. The identity, as afore-noted, is only one of the parameters on which the credit is to be explained and, therefore, by itself not sufficient to fully explain the nature and source of a credit. Section 68 makes no exception for a partner in a partnership firm or, for that matter, to any particular credit. No such ratio arises or is discernable from the law as illustrated and explained, rather, settled by the Apex court per a series of decisions, to some of which reference is being made herein, which proposition is rather inconsistent with the tenants of the provision, viz. A. Govinda Rajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) Sreelekha Banerjee & Othrs. v. CIT [1963] 49 ITR 112 (SC) ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 16 | P a g e Kalekhan Mohammed Hanif v. CIT [1963] 50 ITR 1(SC) CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) CIT v. Biju Patnaik [1986] 160 ITR 674 (SC) Sumati Dayal v. CIT [1995] 214 ITR 801 (SC) CIT vs. P. Mohanakala & Others [2007] 291 ITR 278 (SC) It needs to be realised that it is only on the credit/receipt being established on all the three parameters that it can be said to be from the partner, representing his capital contribution in the firm, and not otherwise inasmuch as „capital contribution‟ from a partner is itself an explanation toward the nature of the credit, which till then cannot be said to be so, or proved. It is only in the peculiar facts of the case, as where the firm had commenced its‟ business from the relevant year, that the Hon'ble Courts have opined that the credit could be, in view thereof, assessed as unexplained investment by a partner. The said argument, as apparent, would be equally applicable for any other creditor as well, and, principally irrelevant, as the basis or premise of the addition in the hands of the assessee is for the reason of he being admittedly the recipient and the beneficiary of the sums under reference. In the facts of the instant case, even the genuineness of the credits is very doubtful as there is apparently no reason, nor any stands put forward at any stage, for the cash introduction by the partners, who could have introduced capital in the firms‟ books through the banking channel, and more so, particularly considering the cash availability with them is not shown. Further, there is no justification for holding cash by them for months, if not years, together. That the source thereof is stated to be a loan further adds to its un-creditibility inasmuch as nobody would, normally speaking, take loan only to be held in bank or as cash-in- hand. Partners, being businessmen rather, understand the time value or the opportunity cost of money much more than non-businessmen, while, the said conduct defeats the very purpose of loan/borrowing, said to be interest bearing. The affidavit by the partners (not on record), would only operate as a confirmation from them and, thus, only proves their identity, while, as afore-discussed, both the ITA No. 254/JAB/2013 (AY: 2007-08) Awadh Traders vs. ITO 17 | P a g e capacity and the genuineness are highly suspect and, therefore, rightly doubted and found as not satisfactorily explained by the Revenue. Rather, the partner/s, being a related person, an assessee ought to be able even the personal details, normally not accessible for other creditors, in support of it‟s claims. The legal position stands examined in Jagmohan Ram Chandra v. CIT [2005] 274 ITR 405 (All), also referring to its previous decisions in the matter, as well as in Kishorilal Santoshilal (supra), both relied upon by the ld. CIT(A), in considerable detail. The decision by the jurisdictional High Court in Metachem Industries v. CIT [2000] 245 ITR 160 (MP), is not in any manner supportive of the assessee‟s claims, rather, making it clear, and unless the credit is established, be it from a partner or from another, it would attract s. 68. We decide accordingly. 6. In the result, appeal filed by the assesse is dismissed. Order pronounced in open Court on May 13, 2022 Sd/- sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: 13/05/2022 vr/- Copy to: 1. The Appellant – M/s. Awadh Traders, Awadh Wine Shop, Near Bus Stand, Chhindwara (MP 2. The Revenue – I TO-1, Chhindwara. 3. The CI T-1, Jabalpur. 4. The CI T( A)-1, Jabalpur 5. The D.R., ITAT, Jabalpur. 6. Guard File By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Jabalpur.