ITO, Faridabad V. M/s. Shree Balaji Rice Mills, Hodal

ITA 3017/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58445 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: DR RAKESH GUPA AV
• Keywords: Additional evidence; Non compliance; Onus to prove
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 3017/DEL/2010 ASSTT. YR. 2005-06 INCOME-TAX OFFICER, VS. M/S SHREE BALAJI RICE MI LLS, WARD-1(5), FARIDABAD. PUNHANA ROAD, HODAL. PAN/GIR NO. _____ (APPELLANT) ( RESPONDENT ) APPELLANT BY : SMT. ANUSHA KHURANA DR RESPONDENT BY : DR. RAKESH GUPA AV. & SH. TARUN K UMAR ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 30-4-2010 RELATING TO A.Y. 2005-06. FOLLOWING GROUNDS ARE R AISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED ON FACTS AND LAW IN DELETING THE ADDITION OF RS. 4,24,164/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW YIE LD OF RICE PRODUCTION BY ONE LINE OBSERVATION THAT IN VIEW OF THE LD. A.RS SUBMISSIONS AND IN VIEW OF ADDITIONAL DOCUMENTARY E VIDENCE SUBMITTED, THE ADDITION AHS NO LEGS TO STAND WITHO UT SHOWING AS TO HOW THE ASSESSEE WAS JUSTIFIED IN DECLARING 62.94% YIELD AS AGAINST YIELD OF 65% AS ADOPTED BY THE ASSESSING OFFICER AN D AS COMPARED TO OTHER ASSESSEE LIKE GANPAT RICE & GEN. MILLS IN THE AREA WHICH WERE SHOWING PERCENTAGE OF YIELD RANGING FROM 65% TO 67% AND MORE SO WHEN THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 144 IN VIEW OF TOTAL NON COMPLIANCE OF NOTICES AND FAILING TO FURN ISHING THE NECESSARY DETAILS DESPITE NUMBER OF OPPORTUNITIES PROVIDED TO THE ASSESSEE I.E. ON 8-5-2007, 3-7-2007, 5-11-2007, 16-11-2007, 21-11-20 07, 5-12-2007 AND FINALLY ON 12-12-2007. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED ON FACTS AND LAW IN DELETING THE ADDITION OF RS. RS. 5,30,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOANS U/S 68 OF THE INCOME TAX ACT, 1961 ESPECIALLY WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITOR OF RS. 5,30,0 00/- DESPITE AS MANY AS NINE OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED ON FACTS AND LAW IN ADMITTING THE ADDITI ONAL EVIDENCE UNDER RULE 46A DISREGARDING THE ASSESSING OFFICERS COMME NTS AND THE CONDUCT AND SEQUENCE OF EVENTS IN AS MANY AS SEVEN OPPORTUNITIES DEMONSTRATES THAT THE ASSESSEE WAS NOT GENUINELY PR EVENTED BY SUFFICIENT CAUSES TO PRODUCE THE REQUIRED EVIDENCES BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND HENCE THEIR PRODUCTION UNDER RULE 46A. 2. BRIEF FACTS ARE ASSESSEE FIRM IS ENGAGED IN T HE BUSINESS OF RUNNING RICE MILL, MANUFACTURING RICE FROM PADDY. THIS IS F IRST YEAR OF ASSESSEES BUSINESS. ASSESSEE FILED ITS RETURN DECLARING NIL I NCOME. AO FRAMED ASSESSMENT U/S 144 OF THE I.T. ACT, BY MAKING FOLLO WING TWO ADDITIONS: (1) ASSESSEE HAS REFLECTED YIELD OF 62.94% OF RICE FROM PADDY. ACCORDING TO AO IT WAS LOW. HE ADOPTED 65% YIELD TO BE REASON ABLE WHICH WORKED OUT TO AN ADDITION OF RS. 4,42,164/-. (2) ASSESSEE HAD SHOWN UNSECURED LOANS OF RS. 5,30,000/ - FROM ONE SHRI RAM PARSAD PROP. M/S RAM PARSAD RAWAT TRADING CO. A CCORDING TO AO, NOTICES WERE ISSUED ON THE PARTNER SHRI SANJEEV BANSAL TO FILE CONFIRMATION OF THIS UNSECURED LOAN. DUE TO NON-COM PLIANCE, THIS ADDITION WAS ALSO MADE. 3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WHER E IT WAS PLEADED THAT AT THE TIME OF ASSESSMENT, THERE WERE SERIOUS DISPU TES AMONG THE PARTNERS AND THE OTHER PARTNER SHRI SANJEEV BANSAL DID NOT R ESPOND TO NOTICES WHICH UNFORTUNATELY LED TO NON-COMPLIANCE. APPLICATION 46 A WAS MADE FOR ADMISSION OF ADDITIONAL EVIDENCE. CIT(A) ADMITTED T HE ADDITIONAL EVIDENCED BY FOLLOWING OBSERVATIONS: 4. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. AR AND PERUSED THE COMMENTS OF THE AO. I OBSERVE THAT HE CONTENTIONS OF THE LD. AR ARE FAIRLY TENABLE BECAUS E OF THE DISPUTE AMONGST THE PARTNERS, AND IT IS A VALID AND SUFFICIENT CAUSE FOR NOT MEETING THE REQUISITIONS OF THE AO AN D THUS THE INSTANT CASE FULLY FALLS UNDER CLAUSE (B) OF RULE 4 6A(1). THE CLOSURE OF THE BUSINESS AND ALSO THE DISPUTE WITH T HE SECOND PARTNER I.E. SHRI SANJEEV BANSAL ARE ALSO THE SUFFI CIENT REASONS WHICH CONSTRAINED THE APPELLANT IN NOT PRODUCING TH ESE DOCUMENTS BEFORE THE AO. THUS THE ASSESSEES CASE A LSO IS COVERED UNDER CLAUSE (C) OF RULE 46A(1). IN VIEW OF SUCH DISCUSSION, THEREFORE, I PERMIT THE ADDITIONAL EVID ENCES SUBMITTED AT THE APPELLATE STAG E UNDER THE SITUATI ONS MENTIONED IN CLAUSE (B) & (C) OF RULE 46A(1) FOR PROPER DISPO SAL OF THE ISSUES INVOLVED. 4. CIT(A) THEREAFTER CALLED A REMAND REPORT FROM AO WHICH WAS FILED VIDE REPLY DATED 27-4-2010. ASSESSEE FILED PROPER E XPLANATION IN RESPECT OF YIELD AND DEMONSTRATED THAT ITS YIELD WAS COMPARABL E AS THE AVERAGE YIELD OF RICE IN THE VICINITY WAS AROUND 62.9%, WHICH WAS FA IRLY COMPARABLE TO ASSESSEES YIELD. CIT(A) DELETED THIS ADDITION BY F OLLOWING OBSERVATION: 10. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. AR AND PERUSED THE ORDER OF ASSESSMENT. THE LD. AR AHS SUBMITTED ADDITIONAL EVIDENCES IN SUPPORT OF YIELD AND TRADIN G RESULTS DECLARED BY THE ASSESSEE WHICH HAS BEEN ADMITTED AS ABOVE. THE AO HAS NOT BEEN ABLE TO FIND ANYTHING ADVERSE AGAIN ST THE ASSESSEE AFTER THE EXAMINATION OF ADDITIONAL EVIDEN CE U/R 46A(3). IN VIEW OF THE LD. ARS SUBMISSIONS AND IN VIEW OF THE DOCUMENTARY EVIDENCES SUBMITTED IN SUPPORT OF THE T RADING RESULTS DECLARED BY THE APPELLANT FIRM, THE TRADING ADDITION OF RS. 4,24,164/- HAS NO LEGS TO STAND UPON AND HENCE DESERVES TO BE DELETED. 5. IN RESPECT OF CASH CREDIT, ASSESSEE CONTENDED TH AT IT WAS A FRESH CREDIT. SHRI RAM PARSAD RAWAT WAS A TRADE CREDITOR AND THE AMOUNT REPRESENTED TRADE CREDIT ON ACCOUNT OF SUPPLY OF PADDY. A PROPE R CONFIRMATION WAS FILED WITH PERMANENT A/C NO. OF SHRI RAWAT. CIT(A) WAS CO NVINCED WITH THE EXPLANATION OF THE ASSESSEE AND DELETED THE ADDITIO N BY FOLLOWING OBSERVATIONS: 13. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. AR AND PERUSED THE IMPUGNED ASSESSMENT ORDER. THE LD. AR HAS SUBMITTED THE ADDITIONAL EVIDENCE IN SUPPORT OF THE GENU8INENESS OF THE CREDIT FROM SH. RAM PRASAD WHIC H HAVE BEEN DULY ADMITTED AS ABOVE AND ALSO EXAMINED BY TH E AO. THE AO HAS NOT BEEN ABLE TO MAKE OUT ANY SUFFICIENT CAS E AGAINST THE ASSESSEE FROM THE ADDITIONAL DOCUMENTS SUBMITTE D IN SUPPORT OF SUCH CLAIM. KEEPING IN VIEW THE NECESSAR Y CONFIRMATIONS FILED NOW, THE CREDITWORTHINESS OF TH E CREDITORS HAVING BEEN ESTABLISHED, AND THERE BEING THE GENUIN ENESS OF THE TRANSACTION, ALL THE THREE FUNDAMENTAL INGREDIENTS OF A GENUINE CREDIT AS REQUIRED UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 STAND SATISFIED AND HENCE THER E REMAINS NO ROOM FOR THE ADDITION OF RS. 5,30,000/- UNDER TH AT SECTION. HENCE IT STANDS DELETED. 6. AGGRIEVED, REVENUE IS BEFORE US AND HAS RAISED T HE ISSUE OF ADDITIONAL EVIDENCE IN GROUND NO. 3. IN OUR CONSIDERED VIEW TH ERE COULD NOT BE ANY DISPUTE ABOUT THE FACT THAT NOTICES WERE NOT COMPLI ED BECAUSE OF THE ONGOING DISPUTE BETWEEN THE PARTNERS. AO HAS ADMITTED THAT NOTICES WERE SERVED ON ONE MR. SANJEEV BANSAL, WHO WAS ON NOT GOOD TERMS W ITH OTHER PARTNER AND THIS RESULTED INTO NON-COMPLIANCE AND CONSEQUENT EX PARTE ASSESSMENT. 7. IN OUR VIEW, CIT(A) HAS RIGHTLY EXERCISED HIS PO WER OF ADMISSION OF ADDITIONAL EVIDENCE AND RECORDED PROPER REASONS TH ERE FOR, HOLDING THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FIL ING THEM BEFORE THE AO. IN VIEW THEREOF, WE SEE NO INFIRMITY IN THE ORDER O F CIT(A) IN ADMITTING ADDITIONAL EVIDENCE. GROUND NO. 3 OF REVENUES APPE AL IS DISMISSED. 8. APROPOS GROUND NO. 1 I.E. THE ADDITION ON ACCOUN T OF LOW YIELD OF RICE, ASSESSEE HAS DEMONSTRATED FROM THE COMPARABLE FIGUR ES THAT THE AVERAGE YIELD OF RICE IN THE VICINITY WAS AROUND 62.9%, COM PARED BY THESE PARAMETERS, ASSESSEES YIELD CANNOT BE CALLED DISPR OPORTIONATE. BOOKS OF ACCOUNT ARE PROPERLY MAINTAINED, DULY AUDITED AND F ILED ALONG WITH THE RETURN. IN THESE CIRCUMSTANCES, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) DELETING THE ADDITION ON THIS COUNT. ACCORDINGLY, G ROUND NO. 1 IS DISMISSED. 9. APROPOS GROUND NO. 2, THE CASH CREDIT HAS BEEN APPROPRIATELY EXPLAINED BY THE ASSESSEE. IN FIRST PLACE IT WAS NO T A FRESH CASH CREDIT AND WAS A TRADE CREDIT ON ACCOUNT OF ATTRIBUTABLE OUTST ANDING BALANCE FOR SUPPLY OF PADDY. BESIDES, RAM PRASAD RAWAT HAS CONFIRMED T HE BALANCE BY FILING PROPER CONFIRMATION ALONG WITH PERMANENT A/C NO. IN VIEW OF THESE FACTS ON RECORD, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) ON THIS COUNT ALSO. THUS, WE UPHOLD THE ORDER OF CIT(A) IN TOTALITY. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06-01-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06-01-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR