M/S B.M.GUPTA & SONS, ALLAHABAD V. DEPUTY COMMISSIONER OF INCOME TAX RANGE-1, ALLAHABAD

ITA 26/ALLD/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0677 (ITAT-ALLAHABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 03-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 64; 68

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH SMC ALLAHABAD [THROUGH VIRTUAL COURT] BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 26 /ALLD/20 20 ASSESSMENT YEAR: 20 05 - 06 M/S. B. M. GUPTA & SONS (HUF) 64 BALRAMPUR HOUSE, ALLAHABAD - 211002. V. DCIT RANGE - 1 INCOME TAX OFFICE, 38 M. G. MARG, CIVIL LINES, ALLAHABAD, UTTAR PRADESH - 211001. TAN/PAN: AACHB2800B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASIT HAJELA, CA RESPONDENT BY: SHRI A.K. SINGH , CIT ( SR. DR) DATE OF HEARING: 12 . 0 7 .202 1 DATE OF PRONOUNCEMENT: 15 . 07 . 202 1 O R D E R PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26 . 0 9 .201 9 OF LD. CIT( A ) , ALLAHABAD FOR THE A . Y . 20 05 - 06 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: IN THE CASE OF M/S B.M. GUPTA & SONS (HUF), 64 BALRAMPUR HOUSE, ALLAHABAD - 211002 AGAINST THE ORDER DATED 26.09.2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ALLAHABAD FOR THE ASSESSMENT YEAR 2005 - 06. 01. BECAUSE THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING RS. 77,167/ - BEING THE DISALLOWANCE OF INTEREST PAID ON DEPOSITS AND RS. 95,000/ - BEING THE ADDITION OF SECURITY DEPOSIT TREATED AS CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX A CT, 1961 MADE BY THE ASSESSING OFFICER WITHOUT FOLLOWING THE DIRECTIONS GIVEN BY THE HON'BLE ITAT WHILE RESTORING THE MATTER TO THE ASSESSING OFFICER. 02. BECAUSE THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF INTEREST OF RS. 77,167/ - MADE BY TH E A.O. WITHOUT ANY SPECIFIC FINDING ABOUT THE GENUINENESS ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 2 OF CREDITS ON WHICH INTEREST WAS PAID BY MERELY OBSERVING THAT THE ISSUE WAS STILL PENDING BEFORE THE HIGHER AUTHORITIES. THE INTEREST PAYMENTS WERE AGAINST GENUINE DEPOSITS. 03. BECAUSE THE LD. CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF INTEREST OF RS. 77,1677/ - DESPITE DETAILED SUBMISSIONS INCLUDING LIST OF DEPOSITORS, COPY OF AFFIDAVITS AND OTHER RELEVANT DOCUMENTS IN SUPPORT OF THE IDENTITY, CREDITWORTHINESS AND GENUINENESS HAVING BEEN FU RNISHED BEFORE THE A.O. 04. BECAUSE COPIES OF ORDERS OF HON'BLE ITAT FOR A.Y. 1992 - 93 TO A.Y. 1998 - 99 ALONGWITH OTHER RELEVANT PAPERS AND DOCUMENTS RELATING TO 'SET ASIDE 1 OF THE ADDITIONS OF DEPOSITS WHICH WERE TREATED AS CASH CREDITS AND IN RESPECT OF WHICH THE INTEREST PAYMENTS HAD BEEN MADE, WERE SUBMITTED BEFORE THE LD. C1T(A). 05. BECAUSE THE LD. CIT(A) HAS ERRED WHILE CONFIRMING THE ADDITION OF RS. 95.000/ - BEING THE SECURITY DEPOSIT IN THE NAME OF RAJ BAHADUR TREATED AS UNDISCLOSED DEPOSIT UNDER SECTION 68 OF THE IT ACT, 1961 BY NOT APPRECIATING THAT IS WAS AN OLD OUTSTANDING BALANCE PERTAINING TO AY 1996 - 97. 06. BECAUSE THE SECURITY DEPOSIT WAS ONLY A BOOK ADJUSTMEN T AND DID NOT RESULT FROM ANY TRANSACTION OCCURRING DURING THE ASSESSMENT YEAR UNDER APPEAL. 07. BECAUSE ALL DETAILS PERTAINING TO THE SECURITY DEPOSIT HAD BEEN MADE AVAILABLE BEFORE THE ASSESSING OFFICER HENCE NO ADDITION UNDER SECTION 68 COULD HAVE BEEN MADE. 08 BECAUSE THE ORDER PASSED APPEALED AGAINST IS CONTRARY TO LAW, FACTS AND PRINCIPLES OF NATURAL JUSTICE. 2 . FROM THE GROUNDS OF APPEAL OF THE ASSESSEE TWO ISSUE S ARISE REGARDING DISALLOWANCE OF INTEREST OF RS. 77,167/ - ON THE DEPOSIT SHOWN BY THE AS SESSEE WHICH WERE TREATED BY ASSESSING OFFICER IN THE YEARS 1992 TO 1998 AS UNEXPLAINED CASH CREDIT AND MADE THE ADDITION U/S 68 OF THE I. T. ACT, 1961. THE SECOND ISSUE IS REGARDING ADDITION OF RS.95,000/ - ON ACCOUNT OF SECURITY DEPOSIT FROM ONE SHRI RAJ BAHADUR WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE BY TREATING THE SAME AS UNEXPLAINED DEPOSIT. ON THE FIRST ISSUE REGARDING DISALLOWANCE OF INTER EST OF RS.77,167/ - T HE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST ON THE BASIS OF EARLIER ADDITION MADE BY ASSESSING OFFICER U/S 68 OF THE I. T. ACT, 1961. HOWEVER, THE SAID ISSUE HAS NOT ATTAINED ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 3 FINALITY AS THIS TRIBUNAL FOR THE A.Y. 1992 - 93 TO 1998 - 99 HAS SET ASIDE THE ISSUE OF DISALLOWANCE OF INTEREST AS WELL AS UNEXPLAINED CASH CREDIT TO THE RECORD OF THE CIT(A) VIDE TWO SEPARATE ORDERS DATED 07.10.2005 AND 13.06.2006 RESPECTIVELY. THE LD. AR HAS SUBMITTED THAT THE DESPITE THE EXPIRY OF THE MORE THAN 15 YEARS THE CIT(A) HAS NOT ADJUDICATED THESE MATTERS FOR THE A.Y.1992 - 93 TO 1998 - 99 TILL DATE. HE HAS FURTHER SUBMITTED THAT ONCE THE MATTER WAS SET ASIDE AND THE CIT(A) HAS FAILED TO ADJUDICATE THE SAME AS PER THE DIRECT ION OF THIS TRIBUNAL NO DISALLOWANCE OF INTEREST IS CALLED FOR AND THE ADDITION NOT JUSTIFIED. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THOUGH THE ISSUE WAS SET ASIDE BY THIS TRIBUNAL TO THE RECORD OF THE CIT(A) HOWEVER, THE ASSESSEE IS NOT CO - OPERATING WITH THE PROCEEDING BEFORE THE CIT(A) FOR RECONSTRUCTION OF THE RECORD. THE LD. DR HAS POINTED OUT THAT THE RECORD OF THE CIT(A) IS NOT TRACEABLE AND THEREFORE THE ASSISTANCE OF THE ASSESSEE IS REQUIRED FOR RECONSTRUCTION OF FILE FOR THE AY 1992 - 93 TO 1998 - 99 SO THAT THE MATTERS SET ASIDE BY THIS TRIBUNAL COULD BE ADJUDICATED. 3. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD I T IS NOTED THAT THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST OF RS.77,167/ - IN RESPECT OF T HE DEPOSIT SHOWN BY ASSESSEE ON THE GROUND THAT THOSE DEPOSITS WERE TREATED AS UNEXPLAINED CASH CREDIT FOR THE A.Y. 1992 - 93 TO 1998 - 99. THE ADDITION MADE BY ASSESSING OFFICER U/S 68 OF THE ACT AND THE CONSEQUENTIAL DISALLOWANCE OF INTEREST IN THE APPEAL FOR THE A.Y.1992 - 93 TO 1998 - 99 IN TWO SET OF APPEALS WERE ADJUDICATE BY THIS TRIBUNAL VIDE ORDER DATED 07.10.2005 FOR THE A.Y.1992 - 93 AND ANOTHER SET OF APPEAL FOR THE A.Y. 1994 - 95 TO 1998 - 99 VIDE ORDER DATED 13.06.2006. THE TRIBUNAL SET ASIDE THE ISSUE OF AD DITION MADE BY ASSESSING OFFICER U/S 68 OF THE ACT AS WELL AS THE CONSEQUENTIAL ISSUE OF DISALLOWANCE OF INTEREST FOR ALL THOSE ASSESSMENT YEAR TO THE RECORD OF THE CIT(A) FOR FRESH ADJ UDICATION. THE RELEVANT FINDING BY THIS TRIBUNAL FOR A.Y.1994 - 95 IN ITA . NO.147 /ALLD/2001 IS AS UNDER: - MAIN ISSUE INVOLVED IN THIS APPEAL IS ADDITION MADE BY THE ASSESSING OFFICER IN THE NAMES OF SMT URMILA BHATNAGAR, DIJ VIJAY SINGH, SMT. LATA JAIN, SMT. SUMAN ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 4 JAIN, SMT. KIRAN JAIN, SHRI ATUL KUMAR, SMT. RAJRANI, SMT. POONAM GUPTA, SHRI RAMESH CHANDRA GUPTA AND SOBHITH RASTOGI AND INTEREST CONFIRMED BY LEARNED C.I.T. - (A), THE A.O. MA DE ADDITION UNDER SECTION 68 IN RESPECT OF 15 PERSONS BUT LEARNED CIT. (A) ALLOWED IN FAVOUR OF ASSESSES IN RESPECT OF LAST 5 ITEMS AS PER LIST HIS ORDER ON PAGE 1 AND 2. THE ASSESSES IS IN APPEAL IN RESPECT OF 10 ITEMS OF CREDITS NOT ACCEPTED BY THE A.O. THE FACTS ARE THAT ASSESSES IS AN HUF AND DERIVES INCOME FROM BUSINESS OF FINANCING. IT ACCEPTED DEPOSITS FROM VARIOUS PARTIES AND PAID IN TEREST THEREON. THE A.O. SUMMONED THESE 10 PERSONS BUT THEY NEITHER APPEARED NOR WERE PRODUCED 'BY THE ASSESSEE. THE LEARNED C.I.T. (A) WAS OF THE VIEW THAT THE ASSESSES WAS LEGALLY OBLIGED TO PRODUCE THESE PERSONS BEFORE THE A.O. FOR EXAMINATION. EVEN THO UGH DOCUMENTARY EVIDENCES WERE SUBMITTED BEFORE THE A.O. ABOUT DEPOSITS MADE BY THESE PERSONS BUT THERE WAS NO EVIDENCE FOR FINANCIAL CAPACITY OF THE ALLEGED DEPOSITORS. THE STAND OF THE ASSESSEE WAS THAT HE HAS FILED CONFIRMATORY LETTERS RESPECT OF ALL TH E DEPOSITORS. BUT THE SAME WAS NOT ACCEPTED BY THE LEARNED A.O. LEARNED C.I.T. (A) ALSO DID NOT ACCEPT THE CONFIRMATORY LETTERS ON THE GROUND THAT THE CREDIT WORTHINESS OF THE DEPOSITORS HAS NOT 'BEEN ESTABLISHED. BEFORE AS LEARNED A.R. FOR THE ASSESSEE SU BMITTED THAT THE ASSESSEE IS DOING, THE BUSINESS OF FINANCING, IT IS ACCEPTING DEPOSIT FROM THE PUBLIC AND ONLY ACCEPTING CHEQUES FROM THE - DEPOSITORS. PAYMENT OF INTEREST IS ALSO R; BY CHEQUES. THIS MONEY HAS ALSO BEEN RETURNED IN MOST OF THE CASES CHEQUES . IF ONE ISSUE OF THE SUMMONS BY THE A.O., THE DEPOSITORS DO NOT TURN UP BEFORE HIM THEN HE OUGHT TO HAVE ENFORCED THE COMPLIANCE OF SUMMONS - LEARNED A.R. SUBMITTED A LIST OF DEPOSITORS WHICH, SHOWS THAT MONEY RECEIVED BY CHEQUE AND ALSO RETURNED BY CHEQUE . LEARNED DR. ON THE OTHER HAND SUBMITTED THAT ASSESSES HAS NOT BEEN ABLE TO GIVE THE CORRECT ADDRESSES OF THE DEPOSITORS AND 'HENCE IT HAS NOT BEEN POSSIBLE TO ENFORCE THE COMPLIANCE OF SUMMONS. IN REJOINDER THE LEARNED A.R. SUBMITTED THAT HE IS READY TO GIVE CORRECT ADDRESSES OF THE DEPOSITORS SAD ALSO READY TO DEPOSIT DIET MONEY IN RESPECT OF THESE DEPOSITORS SO THAT A.O. CAN ENFORCE COMPLIANCE OF SUMMONS. ON, HIS PART HE WILL COOPERATE WITH THE A.O, TO PRODUCE THE DEPOSITORS. 'WE HAVE CONSIDERED THE RIV AL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE EXAMINED THE LIST 'WE FIND BHATNAGAR MONEY WAS RETUNED BY CHEQUE O - N ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 5 31.01.1996 SIMILARLY IN RESPECT OF DIG. VIJAY SINGH MONEY WAS RETURNED BY D. D. ON 10.09.1996, IN RESPECT OF LATA JAIN MONEY W AS RETURNED BY CHEQUE ON 16.08.1997, IN RESPECT OF SUMAN KUMARI JAIN MONEY WAS RETURNED 'BY CHEQUE ON 30.03.1996 PARTLY AND BALANCE ON 03.08.1999 AGAIN, BY CHEQUE, HI EASE OF KIRAN JAIN MONEY WAS RETURNED ON. 25.07.1997, IN CASE OF RAJRANI GUPTA MONEY WAS REFUNDED ON 18.11.1993, IN CASE OF POONAM GUPTA MONEY WAS REFUNDED ON 09.07.1994, IN CASE OF ATUL KUMAR MONEY WAS REFUNDED ON 03.08.1999, IN CASE OF RUMESH CHANDRA GUPTA MONEY WAS REFUNDED ON 24.10.199S BY CHEQUES. THIS IS THE POSITION IN RESPECT OF OILIER DEPOSITORS LIKE SOBHIT RASTOGI. THUS THE POSITION IS THAT MONEY WAS REFUNDED O THE DEPOSITORS BY CHEQUES AND THEREFORE IDENTITY OF THE DEPOSITORS IS PRIMS FACIE ESTABLISHED. BUT SO FAR CREAK WORTHINESS OF THE DEPOSITORS IS .CONCERNED WE ACCEPT THE PROPOS AL OF LEARNED A.R. THAT HE WILL PROVIDE COMPLETE SAD LATEST ADDRESS SO THAT SUMMONS CAN PROPERLY BE SERVED AND C IT. (A.) IS M A POSITION TO ENFORCE COMPLIANCE THEREOF. THE LEARNED A.R. MAY PREFER - TO DEPOSIT DIET MONEY SO THAT PROVISIONS OF RULE 12 ORDER 1 6 OF CIVIL PROCEDURE CODE ARE - COMPLIED WITH. THE ASSESSES WILL ALSO COOPERATE WITH DIE C.LT (A) AND PRODUCE FEE DEPOSITORS FOR HIS INTERROGATION - THEREFORE WE RESTORE THE MATTER TO THE FILE OF THE C.LT (A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE C.I.T (A) WILL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS A RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3. IDENTICAL ISSUE INVOLVED IN THE OTHER ASSESSMENT YEAR WERE ALSO SET ASIDE. THE SAID ISSUE OF ADDITION U /S 68 OF THE ACT WAS REMANDED BY THIS TRIBUNAL TO THE RECORD OF THE CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE THE DISALLOWANCE OF INTEREST IS CONSEQUENTIAL TO THE ISSUE OF AD DITION MADE U/S 68 OF THE I. T. ACT, 1961, THEREFORE, THE SAME CANNOT BE DECIDED PRIOR TO THE OUTCOME OF THE ISSUE OF ADDITION MADE U/S 68 OF THE I. T. ACT, 1961 IN THE EARLIER ASSESSMENT YEAR S . ACCORDINGLY , THIS ISSUE OF DISALLOWANCE OF INTEREST IS SET ASIDE TO THE RECORD OF THE CIT(A) FOR DECIDING THE SAME AFRESH IN VIEW OF THE OUTCOME OF THE ISSUE OF ADDITION MADE U/S 68 OF THE I. T. ACT, 1961 INVOLVED IN THE A.Y.1992 - 93 TO 1998 - 99 WHICH IS STILL PENDING ADJUDICATION DEPOSIT BEFORE THE CIT(A). THE CIT( A) SHALL TO ADJUDICATE THE ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 6 MATTER WITHIN A PERIOD OF 90 DAY S FROM THE RECEIPT OF THIS ORDER OF THE TRIBUNAL A FTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. AS REGARDS THE SECOND ISSUE REGARDING ADDITION MADE U/S 68 OF THE I. T. ACT, 1961, THE ASSESSEE HAS CONTENDED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT THIS SECURITY DEPOSIT OF RS.95,000/ - IS NOT TAKEN DURING THE YEAR UNDER CONSIDERATI ON BUT IT IS AN OLD DEPOSIT RECEIVED BY ASSESSEE RELATES TO THE FINANCIAL YEAR 1995 - 96. AFTER HEARING, THE LD. AR AS WELL AS DR AND PERUSAL OF OR DERS OF THE AUTHORITIES BELOW I T IS NOTED THAT NEITHER ASSESSING OFFICER NOR THE CIT(A) HAS TRIED TO VERIFY THI S FACT WHETHER SECURITY DEPOSIT OF RS.95,000/ - SHOWN FROM ONE SHRI RAJ BAHADUR IS ACTUAL PERTAINS TO THE FINANCIAL YEAR 1995 - 96 OR NOT. IF THE SAID DEPOSIT IS OLD ONE AND THERE IS NO FRESH DEPOSIT DURING THE YEAR UNDER CONSIDERATION THEN THIS ISSUE DOES NO T ARISE FOR THE YEAR UNDER CONSIDERATION. SI NCE THE AUTHORITIES BELOW HAVE NOT VERIFIED THIS FACT AND THE IDENTICAL ISSUE IS PENDING ADJUDICATION BEFORE THE CIT(A) FOR THE A.Y. 1992 - 93 TO 1998 - 99 THEREFORE, THIS ISSUE IS ALSO SET ASIDE TO THE RECORD OF THE CIT( A) OF FRESH ADJUDICATION AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND CONDUCTING A PROPER ENQUIRY REGARDING THE FACT WHETHER IT PERTAINS TO THE FINANCIAL YEAR 1995 - 96 OR NOT. THE CIT(A) IS DIRECTED TO ADJUDICATE THE MATTER WITHIN THE PERIOD OF 90 DAYS FROM RECEIPT OF THIS ORDER. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED ON 15 /07 /2021 AT ALLAHABAD IN THE OPEN COURT THROUGH VIDEO CONFERENCING) SD/ - [ VIJAY PAL RAO ] JUDICIAL MEMBER DATED : 15 / 0 7 /202 1 VIJAY PAL SINGH (SR. PS) ITA NO. 26 /ALLD/20 20 M/S. B. M. GUPTA & SONS 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) , ALLAHABAD 4. CIT 5. DR //TRUE COPY// BY ORDER ASSISTANT REGISTRAR