Shashi Bhushan Prasad Singh, Latehar V. ACIT, Investigation Circle, Ranchi

ITA 262/RAN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7201 (ITAT-RANCHI)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 1995-1996
• Appeal Filed On: 01-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund; Set aside
• Section: 143(3)

Judgement Text

1 ITA Nos. 262 & 263/Ran/2018 Shashi Bhushan Prasad Singh, AY 1995-96 & 1996-97 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, “VIRTUAL HEARING” AT KOLKATA (सम ) ी ए.ट .वक , या यक सद य) [Before Shri A. T. Varkey, JM] I.T.A. Nos. 262 & 263/RAN/2018 Assessment Years: 1995-96 & 1996-97 Shashi Bhushan Prasad Singh (PAN: ALDPS6327E) Vs. Assistant Commissioner of Income- tax, Investigation Circle – Ranchi. Appellant Respondent Date of Hearing 0911.2021 Date of Pronouncement 30.11.2021 For the Appellant Shri M. K. Chaudhury, Advocate For the Respondent Shri Narsingh Kumar Kholkho, Sr. DR ORDER Both these appeals have been preferred by the assessee against the separate orders of Ld. CIT(A), Ranchi dated 15.05.2018 for Assessment Years 1995-96 and 1996-97. Since grounds are common (except variance in amount) and facts are identical, I dispose of both these appeals by this consolidated order for the sake of convenience. 2. At the outset, the Learned counsel for the assessee Shri M. K. Chaudhury, Advocate submitted that the AO has made the addition merely based on the FIR No. 16/96 dated 04.02.1996 by the Dy. Commissioner, Ranchi alleging that the payments received by the assessee from the Animal Husbandry Department of the State of Jharkhand was without making any supplies and made an addition of Rs.33,53,793/- for AY 1995-96 and Rs.35,48,041/- for AY 1996-97. According to the assessee, during the original assessment his plea that he had made the supplies through the brokers and kept with him only 20% to meet his administrative expenses as margin of profit has not been considered. However, according to him, the AO erred in making the entire addition. According to the Ld. Counsel, later the investigation was taken over by CBI and after framing charge sheet, the 2 ITA Nos. 262 & 263/Ran/2018 Shashi Bhushan Prasad Singh, AY 1995-96 & 1996-97 CBI Court after trial has convicted the assessee. However, according to him, the CBI Special Court has accepted the assessee’s claim that certain supplies were infact made by the assessee to the Animal Husbandry Department so that much part of supply of goods was genuine; and according to him, since the latter developments which took place in this case has a bearing on the addition made by the AO and therefore, the same need to be taken into consideration by the AO/CIT(A), so he pleaded that the matter may be de novo restored to the file of AO for fresh assessment. 3. Per contra, the Ld. DR Shri Narsingh Kumar Kholkho vehemently opposed the plea of the assessee and contended that the Ld. CIT(A) has taken cognizance of all the developments and has passed the impugned order which does not require any reconsideration. In his rejoinder, the Ld. Counsel for the assessee contended that the Ld. CIT(A) has not even called for the remand report and has passed the impugned order without taking into consideration the latter developments, inter alia, order passed by the CBI Court, therefore, he pleads that the matter may be restored back to the AO for de novo assessment. 4. Heard rival submissions and gone through the facts and circumstances of the case. It is noted that for AY 1995-96 the assessee has filed return of income on 04.09.1995 reflecting income of Rs.95,000/- and for AY 1996-97 has filed return of income on 30.09.1996 showing income of Rs.2,00,590/-. Later it came to the notice of AO that an FIR was lodged No. 16/96 which has filed on 04.02.1996 by the Dy. Commissioner, Ranchi alleging that the assessee had received payments from Animal Husbandry Department without making any supplies (fake bills). The assessee contended before the AO that he had made the supplies through brokers and kept with him only 20% to meet his administrative expenses as the margin of profit. However, the AO did not accept the contention of the assessee and made the entire addition of Rs.33,53,793/- for AY 1995-96 and Rs.35,48,041/- for AY 1996-97 as “income from fake supplies made to the Animal Husbandry Department”. According to the Ld. AR, the FIR case No. 16/96 was later 3 ITA Nos. 262 & 263/Ran/2018 Shashi Bhushan Prasad Singh, AY 1995-96 & 1996-97 transferred to CBI for investigation and it was registered as RC 32A/96 in CBI, Special Court, Ranchi and related to allegation of fake supplies for a period from May 1995 to December, 1995 i.e. for AY 1996-97 which was in respect of supplies to GM, Hotwa, Ranchi. Further, according to Ld. AR, this bogus transaction (RC 32A/96) is not supposed to be that of AY 1995-96 has erroneously considered for addition by the AO for AY 1995- 96. Moreover, according to Ld. AR, the AO has not considered another case (PS case FIR No. 48/96 for the period October, 1991 to July 11, 1995 (5 years) relating to BAHO, Jamshedpur which has been registered as CBI RC case No. 52A/96 a part of transaction relates to the AY 1995-96). According to Ld. AR, this particular fact was also not even considered by the AO while making the assessment for AY 1995-96 and these new facts have been brought to my notice during this hearing of the appeal. It has been brought to my notice that after the CBI has taken over the investigation the CBI, Special Court after framing of charge sheet has found the assessee guilty and convicted him. However, according to Ld. AR, the CBI has accepted certain supplies made by assessee to Animal Husbandry department was to be genuine and consequently no charges were framed against the assessee and, therefore, the effect would be that these further developments would bring down the additions made by the AO by simply relying on the FIR No. 16/96 filed on 04.02.1996. In the facts and circumstances discussed supra, it is noted that assessee has made out a case that the assessment framed originally on 07.04.1997 u/s. 143(3) of the Income-tax Act, (hereinafter referred to as the “Act”) was without giving proper opportunity to assessee and also without considering the relevant materials before it. Therefore, relying on the decision of the Hon’ble Supreme Court in Tin Box Company vs. CIT reported in (2001) 249 ITR 216 (SC), I set aside the impugned order of the Ld. CIT(A) and direct the AO to take into consideration further developments as noted supra and other developments if any in assessee’s case which has a bearing on the assessment of income of the assessee, and it will be done de novo assessment for both years i.e. AYs 1995-96 and 1996-97. 4 ITA Nos. 262 & 263/Ran/2018 Shashi Bhushan Prasad Singh, AY 1995-96 & 1996-97 5. And while framing the assessment, the AO should keep it mind the decision of the Hon’ble Supreme Court in ITO Vs. Ch. Atchaiah 218 ITR 239 (SC) wherein Hon’ble Supreme Court has held as under: “Under the present Act (1961 Act) the ITO has no option like the one he had under the 1922 Act. He can and he must tax the right person and the right person alone. By ‘right person’ means the person who is liable to be taxed, according to law, with respect to a particular income. The expression “wrong person” is obviously used as the opposite of the expression “right person”. Merely because a wrong person is taxed with respect to a particular income, the AO has not precluded from taxing the right person with respect to that income”. From a reading of the aforesaid decision of the Hon’ble Supreme Court it can be noted that the Apex Court has laid down that the AO should tax the right person, right year, right income. The assessee’s contention needs to be considered in the light of the judgment of the CBI Special Court in respect of the charges on which conviction has been made against the assessee in respect of receiving payments without making supplies from the Animal Husbandry Department. It has to be kept in mind by the AO that FIR is only a first information about a cognizable offence and only empowers the investigating officer to investigate about the allegation and later on file charge/offence report u/s. 173 of the Cr. P.C. Merely on the basis of an FIR, no addition could have been sustained, therefore, the AO should carefully go through the conviction order rendered by the CBI, Special Court in RC 32A/96 in CBI Special court, Ranchi related to period May 1995 to December, 1995 (AY 1996-97) as well as the PS case FIR No. 48/96 which even though is for the period running from October, 1991 to July 11, 1995 (five years) which was registered as CBI RC case No. 52A/96, the AO should carefully look into the conviction order passed by the CBI, Special Court in respect of the payments received by the assessee from Animal Husbandry Department pertaining to AY 1995-96 only on the strength of fake bills without supply of goods. With the aforesaid observation, I dispose of this appeal and needless to say that AO need to look into other relevant material/development in the cases referred supra and other cases if any while framing the assessment for the years under appeal before me. 6. The only other issue in the appeals are relating to the addition made on substantive basis in the hands of the assessee in respect of the income disclosed by two unmarried 5 ITA Nos. 262 & 263/Ran/2018 Shashi Bhushan Prasad Singh, AY 1995-96 & 1996-97 daughters of the assessee Smt. Ajita Kumar and Smt. Madhu Kumari in respect of the FD deposited in SBI account on 09.01.1995 of Rs.1,50,000/- each which was added in AY 1995-96 and its interest income has been added in AY 1996-97 to the tune of Rs.18,000/- each in the hands of the assessee. According to the Ld. AR, from their own source of funds the unmarried daughter with their specialized skills had earned the same, so no substantive addition ought to have been made in the hands of the assessee. Since I am remanding the assessment afresh for both the assessment years, these issues are also set aside back to the file of AO for de novo assessment. And while doing so, the AO should keep in mind the ratio of the decision of the Hon’ble Supreme Court in the case of Ch. Atchaiah (supra) that the AO should assess in the hands of the right person, the right income, in the right year. Therefore, with the aforesaid observation, both the appeals of the assessee are allowed for statistical purposes. 7. In the result, both the appeals of assessee are allowed for statistical purposes. Order is pronounced in the open court on 30 th November, 2021 Sd/- Dated: 30.11.2021 (Aby. T. Varkey) Judicial Member JD(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Shri Shashi Bhushan Prasad Singh, S/o Sri Rajendra Prasad singh, Main road, P.O & P.S. Latehar, Jharkhand 2 Respondent – ACIT, Investigation Circle - Ranchi 3. 4. 5. CIT(A), Ranchi CIT- DR, ITAT, Ranchi /True Copy, By order, Senior Pvt. Secy.