M/s. Rakesh Enterprises, Jalandhar V. The Income-tax Officer, Jalandhar

ITA 287/ASR/2012

• Counselvise Citation: 28720914 RSA 2012
• Duration Of Justice: 44 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: R D SHARMA
• Keywords: Onus to prove
• Section: 143(3); 142(1); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 PAN: AADFR6221P M/S RAKESH ENTERPRISES, VS. INCOME TAX OFFICER, G.T. ROAD, OPPOSITE NEW GRAIN WARD I(3), JALANDHA R MARKET, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.D. SHARMA, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING: 14.03.2014 DATE OF PRONOUNCEMENT: 09.04.2014 ORDER PER BENCH 1) THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 28.05.2012 PASSED BY LEARNED CIT(A), JA LANDHAR, FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS: I. LEARNED CIT(A), JALANDHAR IS NOT JUSTIFIED IN LAW I N CONFIRMING INVOKING OF PROVISIONS OF SECTION 68 OF THE INCOME- TAX, 1961 FOR MAKING AN ADDITION OF RS. 300000/- ON EXTRANEOUS & IRRELEVANT CONSIDERATIONS AND HAS FAILED TO APPRECIATE THE FAC TS AND CIRCUMSTANCES OF THE CASE. II. LEARNED CIT(A), JALANDHAR IS NOT JUSTIFIED IN CONFI RMING AN ADDITION OF RS. 300000/- ON IRRELEVANT AND EXTRANEO US CONSIDERATIONS & HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) THE ASSESSEE FILED ITS RETURN OF INCOME ON 14.11 .2007 DECLARING INCOME OF RS. 13,030/- WHICH WAS PROCESSED BY THE A SSESSING OFFICER 2 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 UNDER SECTION 143(1) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT). LATER ON, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT ON 26.09.200 8, WHICH WAS SERVED ON 30.09.2008. THE DETAILED QUESTIONNAIRES ALONG WI TH NOTICES U/S 143(2) AND 142(1) OF THE ACT WAS ISSUED ON 19.01.2009. IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEA RED AND FURNISHED INFORMATION CALLED FOR. BOOKS OF ACCOUNTS WERE PROD UCED ALONG WITH BILLS/VOUCHERS, WHICH WERE EXAMINED ON TEST CHECK B ASIS. THE ASSESSEE IS A PARTNERSHIP-FIRM AND DOING BUSINESS OF TRADING OF LEATHER CHEMICALS. IN ITS RETURN OF INCOME, THE ASSESSEE HAS SHOWN INCOME UNDER THE HEADS INCOME FROM BUSINESS/PROFESSION. 3) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED COPY OF ACCOUNT OF M/S BAWA SHOES LIMITED, 410-412, INDUSTRIAL COMPLEX, GOINDWAL SAHIB, AS PER WHICH THERE WAS OPE NING DEBIT BALANCE OF RS. 19,65,560/- AND DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE HAS CREDITED THE ACCOUNT WITH CASH RECEIPTS OF RS. 20,000/-, EACH ON DIFFERENT DATES STARTING FROM 01.11.2006 TO 15.03.2 007, TOTALING TO RS. 3,00,000/-. VIDE ORDER SHEET ENTRY DATED 09.11.2009 , THE ASSESSEE WAS ASKED TO FILE CERTIFIED COPY OF THE SAID ACCOUNT FR OM SAID PARTY. AT THE SAME TIME, LETTER UNDER SECTION 133(6) WAS ISSUED T O M/S BAWA SHOES 3 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 LIMITED, AT THE ADDRESS SUPPLIED BY THE ASSESSEE, T O FURNISH CERTIFIED COPY OF ACCOUNT OF THE ASSESSEE, IN ITS BOOKS OF ACCOUNT S. THE SAID LETTER WAS RECEIVED BACK UNDELIVERED WITH POSTAL REMARKS AS F ACTORY CLOSED. RETURN. ON 16.11.2009, COUNSEL OF THE ASSESSEE ATT ENDED AND STATED THAT CONFIRMED COPY OF ACCOUNT COULD NOT BE PROCURED FRO M M/S BAWA SHOES LIMITED AS THE SAID PARTY HAD DISCONTINUED ITS BUSI NESS. IN VIEW OF THE FACTS THAT THE ASSESSEE HAD CREDITED HIS BOOKS OF A CCOUNTS WITH CASH RECEIPT OF RS. 3,00,000/-, FOR WHICH CONFIRMATION F ROM THE SAME PARTY HAD NOT BEEN FILED, THE ASSESSEE WAS ASKED TO EXPLAIN A S TO WHY THE CASH RECEIVED BE NOT TREATED AS UNEXPLAINED CASH INTRODU CED IN THE BOOKS OF ACCOUNTS. IN RESPONSE TO THE SAME, THE ASSESSEE FIL ED ITS REPLY ON 23.11.2009, WHICH IS REPRODUCED IN PARA NO. 3.2 (PA GE NOS. 2 & 3) OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1) OF THE ACT. THE AFORESAID REPLY OF THE ASSESSEE WAS CONSIDERED AND REJECTED B Y THE ASSESSING OFFICER, AS MENTIONED IN PARA NO. 3.3 (PAGE NOS. 3 TO 5) OF THE ASSESSMENT ORDER. FOR THE SAKE OF CONVENIENCE, THE SAME ARE RE PRODUCED AS UNDER: 3.2 THE ASSESSEE FURNISHED REPLY ON 23.11.2009, WH ICH IS BEING REPRODUCED AS UNDER:- THAT M/S BAWA SHOES LTD., SIRI GOINDWAL SAHIB IS A CUSTOMER AND LAST KNOWN ADDRESS OF THE STATED COMPANY IS 410-412, IND USTRIAL COMPLEX, SIRI GOINDWAL SAHIB, DISTT. AMRITSAR & THAT PRESENTLY TH E STATED COMPANY IS REPORTEDLY NOT CARRYING ON ANY BUSINESS ACTIVITIES. DURING THE PREVIOUS YEAR UNDER REFERENCE I.E. 31.03.2007, THE STATED COMPANY HAS PAID A SUM OF RS. 4 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 300000/- ON DIFFERENT DATES (AS PER COPY OF ACCOUNT FURNISHED) BETWEEN IN CASH AGAINST A SUM OF RS. 1965560/80 DUE FROM THE S AID COMPANY AS ON 01/04/2006 ON ACCOUNT OF SALES MADE TO THE SAID COM PANY FROM TIME TO TIME. EVEN AFTER CREDIT OF THE STATED SUM OF RS. 30 0000/-, THE BALANCE IN ACCOUNT REMAINS DEBIT AMOUNTING TO RS. 1665560/80 A ND DOES NOT RESULT IN ANY CREDIT IN ACCOUNT. SO, IT IS NOT AT ALL A CREDI T WHICH REQUIRES ANY EXPLANATION U/S 68 OF THE I.T. ACT, 1961 AS THE AMO UNT HAS NOT RESULTED IN ANY CREDIT ULTIMATELY BUT THE AMOUNT IS A RECOVERY ON ACCOUNT OF DEBT OUTSTANDING AGAINST SALES MADE TO THE STATED COMPAN Y FROM TIME TO TIME AND OVER THE YEARS & THUS, PAYMENTS BY THE COMPANY IN ACCOUNT DO NOT REPRESENT ANY LOAN OR BORROWINGS BY THE ASSESSEE AN D IDENTITY OF THE COMPANY IS NOT IN ANY DOUBT AND FACTS OF SOURCE I.E . COMPANY AND OUTSTANDING SALES PROCEEDS, TOO ARE ON RECORD. IT I S FURTHER SUBMITTED THAT AMOUNT IN QUESTION HAS ALREADY BEEN SHOWN AS INCOME AT THE TIME OF SALES BY DEBITING THE SAID COMPANY AND CREDITING THE SALE S AND YOUR GOODSELFS PROPOSED ACTION WOULD RESULT IN TAXATION OF THE SAM E AMOUNT TWICE I.E. FIRST AT THE TIME OF SALES AND THEN AGAIN BY YOUR GOODSEL FS PROPOSED ACTION. SO, THE FACTS AND CIRCUMSTANCES ARE SELF-EXPLANATORY AN D CORROBORATE THE TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNTS IN N ORMAL COURSE. THAT STATED PAYMENT HAVE, IN FACT, BEEN MADE BY THE COMPANY UNDER AN ARRANGEMENT WITH THE SAID COMPANY/MANAGEMENT OF THE COMPANY IN AUGUST, 2005 IN LIEU OF WITHDRAWAL OF CASE FILES UN DER S. 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 FOR DISHONOR OF CH EQUE NO. 727373 DT. 25/12/2003 FOR 310000/-. THIS CHEQUE WAS ISSUED BY THE COMPANY UNDER A PAYMENT PLAN AGREED TO BY THEN DIRECTOR OF THE COMP ANY SHRI SHARNPAL JANEJA IN MAY, 2003. THE STATED CHEQUE WAS NOT PRES ENTED DUE TO REQUESTS MADE BY THE MANAGEMENT ON VARIOUS OCCASIONS CITING VARIOUS EXCUSES FROM TIME TO TIME. ULTIMATELY, AS THE VALIDITY OF THE ST ATED CHEQUE WAS EXPIRING, THE ASSESSEE DECIDED TO PRESENT THE CHEQUE FOR PAYM ENT TO THE BANKERS OF THE SAID COMPANY PUNJAB & SIND BANK ON 21/06/2005 W HICH WAS RETURNED UNPAID DUE TO INSUFFICIENT BALANCE IN ACCOUNT ON 22 /06/2005. ANYWAY, SUIT WAS FILED UNDER S. 138 OF THE NEGOTIABLE INSTRUMENT S ACT, 1881 ON 31/08/2004. DURING THE COURSE OF THE PROCEEDINGS, N ON-BAILABLE WARRANTS WERE ISSUED AGAINST THE DIRECTORS OF THE COMPANY AN D ON INTERVENTION OF MANY PROMINENT PERSONS OF THE TRADE AND PROMINENT PERSONS OF THE CITY, THE ASSESSEE AGREED TO WITHDRAW THE CASE IN AUGUST, 200 5 AND THE DIRECTORS UNDERTOOK TO MAKE THE PAYMENT OF RS. 310000/- ON TH E SURETIES OF THE PERSONS OF THE TRADE ETC. HOWEVER, THE PAYMENTS WER E MADE DURING THE PERIOD FROM 01/04/2006 TO 15/03/2007 IN CASH DULY E NTERED IN THE BOOKS OF ACCOUNTS. SINCE, THE COMPANY HAS REPORTEDLY DISCONT INUED THE BUSINESS AT THE LAST KNOWN ADDRESS AND SINCE THE DIRECTORS TOO ARE NOT AVAILABLE AT THE LAST KNOW ADDRESSERS, THE EVENTUALITY WHICH IS BEYO ND THE CONTROL OF THE 5 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 ASSESSEE, LAST KNOWN ADDRESS OF THE COMPANY HAS BEE N FURNISHED TO YOUR GOODSELF FOR NEEDFUL. WE ARE ENCLOSING THE FOLLOWING FOR YOUR GOODSELFS PERUSAL AND NEEDFUL: 1. COPY OF THE PLAINT WITH FACTS & COPY OF PROCEED INGS FOR NON-BAILABLE WARRANTS AS WELL AS STATEMENT FOR NOT PROCEEDINGS W ITH THE FACTS.1 TO 4 2. COPY OF PROPOSED PLAN OF PAYMENTS FROM SHARANPA L JANEJA 5 FINALLY, IT IS, ONCE AGAIN, SUBMITTED THAT FACTS AN D CIRCUMSTANCES OF THE CASE ARE SELF EXPLANATORY AND CORROBORATE THE TRANSACTIO N RECORDED IN THE BOOKS OF ACCOUNTS. IT IS FURTHER SUBMITTED THAT THE PROVI SIONS OF S. 68 OF THE IT ACT, 1961, TOO ARE NOT APPLICABLE TO THE CASE AS TH E RECEIPTS IN ACCOUNT ARE NOT CREDITS AS CONTEMPLATED IN THE STATED SECTION A S THESE ARE NEITHER LOANS NOR DEPOSITS & SO, IT IS PRAYED THAT THE A JUDICIOU S VIEW BE TAKEN OF THE CASE AND THAT THE PROPOSED ACTION BE DROPPED. 3.3 I HAVE CONSIDERED THE REPLY OF THE ASSESSEE AN D THE SAME IS NOT FOUND TO BE ACCEPTABLE DUE TO FOLLOWING FACTS:- THE ASSESSEE HAS SHOWN RECEIPT OF CASH FROM M/S BAW A SHOES LIMITED, WHICH HAS BEEN CREDITED IN ITS BOOKS OF AC COUNTS, AS CASH RECEIPTS OF RS. 20,000/- EACH ON VARIOUS DATES. THE ASSESSEE HAS NOT BEEN ABLE TO FILE ANY CONFIRMATION FROM THE SAID PA RTY, IN SUPPORT OF SAID CASH RECEIPTS. THERE IS NO WEIGHT IN PLEA OF THE ASSESSEE THAT ULT IMATELY THERE REMAINED DEBIT BALANCE IN THE SAID ACCOUNTS AND THE REFORE, CASH RECEIPTS IS NOT A CREDIT REQUIRING ANY EXPLANATION AS THE ASSESSEE HAS CREDITED CASH OF RS. 3,00,000/- IN ITS BOOKS OF ACCOUNTS. BY CREDITING THE SAME IN ACCOUNTS OF A FIRM, WHERE THE RE IS HUGE DEBIT BALANCE, THE NATURE OF CREDIT ENTRIES DOES NOT CHAN GE. THE CREDIT OF CASH IN BOOKS OF ACCOUNT OF THE ASSESSEE ARE CREDIT S, THE SOURCE OF WHICH HAS TO BE EXPLAINED BY THE ASSESSEE . THE PLEA OF DOUBT TAXATION, ON ACCOUNT OF FACT THAT SALES TO M/S BAWA SHOES LIMITED HAD BEEN DECLARED IN AN EARLIER YEAR, IS NOT RELEVANT IN THE CASE AS THE ASSESSEE HAS NOT BE EN ABLE TO LEAD ANY EVIDENCE TO SHOW THAT CASH CREDITED IN THE ACCO UNT WAS ACTUALLY RECEIVED FROM M/S BAWA SHOE LIMITED. THE ASSESSEE HAS FILED COPY OF COMPLAINT FILED, UND ER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, AGAINST M/S BAWA SHOES LIMITED AND ITS DIRECTORS. A PERUSAL OF THE SAME SH OWS THAT THE SAID COMPLAINT WAS FILED ON 31.08.2004 AND ULTIMATE LY WITHDRAWN ON 19.08.2005. FURTHER, THE ASSESSEE HAS STATED THA T THE DIRECTORS 6 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 OF SAID COMPANY UNDERTOOK TO MAKE PAYMENT IN LIEU O F CHEQUE OF RS. 3,10,000/- DISHONOURED AND THE ASSESSEE AGREED TO WITHDRAW THE CASE AND THAT PAYMENTS WERE MADE DURING THE PER IOD FROM 01.11.2006 TO 15.03.2007. THE DATE OF THE WITHDRAWA L OF COMPLAINT FILED ITS RAISES A DOUBT OVER THE EXPLANATION GIVEN BY THE ASSESSEE. IT IS NOT BELIEVABLE THAT THE ASSESSEE WOULD HAVE A GREED TO WITHDRAW THE CASE ON 19.08.2005, WITHOUT RECEIVING ANY AMOUNT IN LIEU THEREOF, WHEN AS ON 01.04.2005, IT HAD DEBIT B ALANCE TO THE TUNE OF RS. 19,65,560/-, RECEIVED NO PAYMENT DURING THE FINANCIAL YEAR 2005-06, AND HAD FILED A CASE UNDER NEGOTIABLE INSTRUMENTS ACT. THE ASSESSEE HAS CREDITED ITS ACCOUNT WITH CAS H OF RS. 3,00,000/- STARTING FROM 01.11.2006, I.E. AFTER A L APSE OF PERIOD OF MORE THAN FOURTEEN MONTHS FROM WITHDRAWING THE CASE . THIS LEADS TO SHOW THAT THE ASSESSEE HAS TRIED TO LINK THE INC IDENT OF FILING OF ABOVE REFERRED CASE, DURING AN EARLIER YEAR, WITH T HE CREDITS OF CASH IN BOOKS OF ACCOUNT, IN THE CURRENT YEAR. THE ASSESSEE HAS STATED THAT AGREEMENT WAS MADE WIT H DIRECTORS OF SAID COMPANY ON INTERVENTION OF MANY PROMINENT PERS ONS OF THE TRADE AND CITY. HOWEVER, THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN SUPPORT OF SAID AGREEMENT . IN ORDER TO VERIFY THE GENUINENESS OF CREDITS IN BO OKS OF ACCOUNT OF THE ASSESSEE, LETTER WAS ISSUED TO M/S BAWA SHOES L IMITED, AT THE ADDRESS SUPPLIED BY ASSESSEE. HOWEVER, THE SAID LET TER WAS ALSO RECEIVED BACK UNDELIVERED. THEREFORE, THE GENUINENE SS OF CREDITS MADE IN BOOKS OF ACCOUNTS OF ASSESSEE COULD NOT BE VERIFIED. THE PLEA OF THE ASSESSEE THAT THE CREDITS WERE NEIT HER LOAN NOR DEPOSIT IS ALSO NOT ACCEPTABLE AS THE SECTION 68 OF THE ACT PROVIDES FOR THE TERM ANY SUM . THEREFORE, ANY SUM CREDITED IN THE BOOKS OF ACCOUNTS, FOR WHICH EVIDENCE IS NOT FILED BY THE ASSESSEE, ARE TO BE CONSIDERED IN THE HANDS OF ASSESSEE. RELI ANCE IS PLACED ON THE JUDGMENT IN THE CASE OF DAVINDER SINGH V/S ASSS TT. CIT (2006) 101 TTJ 505 (ASR). THE ASSESSEE HAS NOT DISCHARGED THE ONUS TO EXPLAIN THE SAID CREDITS IN ITS BOOKS OF ACCOUNTS. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS HOLDING THAT ONUS TO PROVE THE CREDITS IN BOOKS OF ACCOUNTS OF ASSESSEE LIES ON TH E ASSESSEE:- I. SREELEKHA BANERJEE V/S CIT(1963) 49 ITR 112(SC). II. ASSTT. CIT V/S KUMAR ICE (1998) 64 ITD 93 (PATNA) T M III. ATHULKUMAR S. MEHRA V/S ITO (1998) 32 TTJ 255 (BOM) 7 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 IT IS NECESSARY FOR THE ASSESSEE TO PROVE GENUINE NESS OF THE TRANSACTION, WHICH THE ASSESSEE HAS FAILED TO DO. IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE ASSESSEE HAS NOT BEEN ABLE TO LEAD ANY EVIDENCE IN SUPPORT O F CASH RECEIPTS CREDITS IN ITS BOOKS OF ACCOUNTS, AT RS. 3,00,000/- AND EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND TO BE SATISFAC TORY. THEREFORE, THE CREDITS OF RS. 3,00,000/- IN BOOKS OF ACCOUNTS OF ASSESSEE ARE HELD TO BE MADE FROM UNDISCLOSED SOURCES AND TREATE D AS INCOME OF THE ASSESSEE, FOR THE YEAR UNDER CONSIDERATION, UND ER SECTION 68 OF THE ACT. ACCORDINGLY, AN ADDITION OF RS. 3,00,000/- IS MADE TO THE RETURNED INCOME OF THE ASSESSEE. THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF ITS INCOME TO THE TUNE OF RS. 3,00,000/-. THEREFORE, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE BEING INITIATED SEPARATELY. 4) AGGRIEVED WITH THE AFORESAID FINDINGS GIVEN BY T HE ASSESSING OFFICER IN HIS ORDER DATED 23.11.2009 PASSED UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNE D FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 28.05.2012 UPHELD THE FINDINGS OF THE ASSESSING OFFICER. NOW, ASSESSEE BEING AGGRI EVED WITH THE IMPUGNED ORDER, FILED THE PRESENT APPEAL. 5) AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ADDITION IN DISPUTE HAS WRONGLY BEEN MADE BY THE REVENUE AUTHORITY WITHOUT ANY BASIS AND CONTRARY TO THE EVI DENCE FILED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES. HE FURTHER STATED THAT THE REVENUE AUTHORITY HAS NOT CONSIDERED THE CIRCUMSTANTIAL EVI DENCE AS WELL AS THE SETTLEMENT BETWEEN THE ASSESSEE AND M/S BABA SHOES LTD. ON THE PAYMENT 8 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 OF RS. 3,00,000/-, CREDITED IN THE ASSESSEES BOOKS OF ACCOUNT DURING THE RELEVANT FINANCIAL YEAR THAT WAS RECEIVED FROM M/S BABA SHOES LTD. LASTLY, HE REQUESTED THAT THE ADDITION IN DISPUTE M AY BE DELETED BY CANCELLING THE IMPUGNED ORDER. 6) ON THE CONTRARY, LEARNED DR RELIED UPON THE ORDE R PASSED BY LEARNED FIRST APPELLATE AUTHORITY. 7) I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THE ISSUE IN DISPUTE AND I AM OF THE VIEW THAT T HE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE CASH RE CEIVED, AMOUNTING TO RS. 3,00,000/-, FROM M/S BAWA SHOES LTD. BE NOT TRE ATED AS THE ASSESSEES OWN UNEXPLAINED CASH INTRODUCED IN THE BOOKS OF ACC OUNT. THE ASSESSEE IN ITS REPLY DATED 23.11.2009 STATED THAT THE ASSES SEE HAS FURNISHED THE LAST KNOWN ADDRESS OF M/S BAWA SHOES LTD. I.E. 410-412, INDUSTRIAL COMPLEX, SIRI GOINDWAL SAHIB, DISTT. AMRITSAR TO THE ASSESSI NG OFFICER, BUT LATER ON, IT WAS FOUND THAT M/S BAWA SHOES LTD. WAS NOT C ARRYING ON ANY BUSINESS ACTIVITIES. DURING THE PREVIOUS YEAR UNDER REFERENCE I.E. 31.03.2007, THE SAID COMPANY HAS PAID A SUM OF RS. 3,00,000/- ON DIFFERENT DATES (AS PER COPY OF ACCOUNT FURNISHED) BETWEEN IN CASH AGAINST A SUM OF RS. 1965560/80 DUE FROM THE SAID COMPANY A S ON 01/04/2006 9 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 ON ACCOUNT OF SALES MADE TO THE SAID COMPANY FROM T IME TO TIME. EVEN AFTER CREDIT OF THE STATED SUM OF RS. 3,00,000/-, T HE BALANCE IN ACCOUNT REMAINS DEBIT AMOUNTING TO RS. 1665560/80 AND DOES NOT RESULT IN ANY CREDIT IN ACCOUNT. IN THE REPLY, THE ASSESSEE ALSO STATED THAT IDENTITY OF THE COMPANY IS NOT DOUBTED AND THE SOURCE OF THE COMPAN Y AND OUTSTANDING SALES PROCEEDS, TOO ARE ON RECORD. IT IS FURTHER SU BMITTED THAT AMOUNT IN QUESTION HAS ALREADY BEEN SHOWN AS INCOME AT THE TI ME OF SALES BY DEBITING THE SAID COMPANY AND CREDITING THE SALES W HICH ARE SELF- EXPLANATORY AND CORROBORATE THE TRANSACTIONS RECORD ED IN THE BOOKS OF ACCOUNTS IN NORMAL COURSE. IN THE REPLY, THE ASSES SEE ALSO STATED THAT THE CASE FILED BY THE ASSESSEE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 FOR DISHONOR OF CHEQUE NO. 72 7373 DT. 25/12/2003 FOR 3,10,000/-. THIS CHEQUE WAS ISSUED BY THE COMPA NY UNDER A PAYMENT PLAN AGREED TO BY THE THEN DIRECTOR OF THE COMPANY SHRI SHARNPAL JANEJA IN MAY, 2003. THE CHEQUE WAS NOT PRESENTED DUE TO R EQUESTS MADE BY THE MANAGEMENT ON VARIOUS OCCASIONS CITING VARIOUS EXCU SES FROM TIME TO TIME. ULTIMATELY, AS THE VALIDITY OF THE STATED CHE QUE WAS EXPIRING, THE ASSESSEE DECIDED TO PRESENT THE CHEQUE FOR PAYMENT TO THE BANKERS OF THE SAID COMPANY IN PUNJAB & SIND BANK ON 21/06/2005 WH ICH WAS RETURNED UNPAID DUE TO INSUFFICIENT BALANCE IN ACCOUNT ON 22 /06/2005. A COMPLAINT 10 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 SUIT WAS FILED UNDER S. 138 OF THE NEGOTIABLE INSTR UMENTS ACT, 1881 ON 31/08/2004. DURING THE COURSE OF THE PROCEEDINGS, N ON-BAILABLE WARRANTS WERE ISSUED AGAINST THE DIRECTORS OF THE COMPANY AN D ON THE INTERVENTION OF MANY PROMINENT PERSONS OF THE TRADE AND PROMINEN T PERSONS OF THE CITY, THE ASSESSEE AGREED TO WITHDRAW THE CASE AND THE DIRECTORS UNDERTOOK TO MAKE THE PAYMENT OF RS. 3,10,000/- ON THE SURETIES OF THE PERSONS OF THE TRADE ETC. HOWEVER, THE PAYMENTS WER E MADE DURING THE PERIOD FROM 01/04/2006 TO 15/03/2007 IN CASH DULY E NTERED IN THE BOOKS OF ACCOUNTS. I AM OF THE VIEW THAT THE ASSESSEE HAS GIVEN PLAUSIBLE EXPLANATION ON THE CASH CREDIT OF RS. 3,00,000/- IN ITS BOOKS OF ACCOUNT AND ALSO FILED EVIDENCE SUPPORTING ITS EXPLANATION WHICH WAS NOT PROPERLY APPRECIATED BY THE REVENUE AUTHORITY WHILE MAKING T HE ADDITION IN DISPUTE. IT IS ADMITTED FACT THAT M/S BAWA SHOES LT D. HAD DISCONTINUED THE BUSINESS AND ON THE INTERVENTION OF SOME PROMIN ENT PERSONS OF THE CITY, THE ASSESSEE AGREED TO WITHDRAW THE COMPLAINT SUIT FILED AGAINST M/S BAWA SHOES LTD. UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 AGAINST THE PAYMENT OF RS. 3,10,000/-. 8) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE AS WELL AS THE EVIDENCE PRODUCED BY THE ASSESSEE BE FORE THE REVENUE AUTHORITIES AS WELL AS BEFORE ME, I AM OF THE VIEW THAT THE REVENUE HAS 11 I.T.A. NO. 287(ASR)/2012 ASSESSMENT YEAR: 2007-08 MADE THE ADDITION IN DISPUTE MERELY ON PRESUMPTION AND ASSUMPTION WITHOUT PRODUCING ANY ADVERSE MATERIAL ON RECORD AG AINST THE AVERMENT MADE BY THE ASSESSEE. THEREFORE, THE ADDITION IN DI SPUTE IS NOT SUSTAINABLE IN THE EYE OF LAW AND THE SAME IS DELETED BY ACCEPT ING THE APPEAL FILED BY THE ASSESSEE. 9) IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH APRIL, 2014 SD/./- (H.S. SIDHU) JUDICIAL MEMBER DATED: 9 TH APRIL, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S RAKESH ENTERPRISES, G.T. ROAD, OP POSITE NEW GRAIN MARKET, JALANDHAR 2. ITO, WARD I(3), JALANDHAR 3. THE ACIT, 4. THE CIT(A), 5. THE CIT, 6. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.