Asstt.Commissioner of Income Tax ,Circle-4, Nagpur V. Shri Nandlal B Maloo, Nagpur

ITA 311/NAG/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9653 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 13-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Cost of acquisition; Reassessment proceedings
• Section: 143(3); 153A; 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 311/NAG./2012 ( ASSESSMENT YEAR : 200405 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE4, NAGPUR APPELLANT V/S SHRI NANDLAL B. MALOO 101, JAI BHAWANI SOCIETY WARDHAMAN NAGAR C.A. ROAD, NAGPUR 440 018 PAN ACGPM0658N .... RESPONDENT CROSS OBJECTION NO.16/NAG./2012 (ARISING OUT OF ITA NO. 311/NAG./2012 ) ( ASSESSMENT YEAR : 200405 ) SHRI NANDLAL B. MALOO 101, JAI BHAWANI SOCIETY WARDHAMAN NAGAR C.A. ROAD, NAGPUR 440 018 PAN ACGPM0658N CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE4, NAGPUR .... RESPONDENT (ORIGINAL APPELLANT) ASSESSEE BY : SHRI ABHAY AGRAWAL REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 21.06.2017 DATE OF ORDER 30.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION BY THE ASSESSEE ARE AGAINST THE IMPUGNED ORDER DATED 7 TH APRIL 2012, PASSED 2 SHRI NANDLAL B. MALOO BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, RE LEVANT TO ASSESSMENT YEAR 200405. ITA NO.311/NAG./2012 REVENUES APPEAL THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED BE LOW: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF ` 2,04,47,427 MADE BY THE ASSESSING OFFICER ON ACCOUN T OF TRANSPORT CHARGES AND LOADING / UNLOADING CHARGES. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF ` 1,90,60,770 MADE BY THE ASSESSING OFFICER ON ACCOUN T OF INTEREST INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FI LED RETURN OF INCOME ON 18 TH OCTOBER 2005 DECLARING TOTAL INCOME OF ` 38,38,890. ASSESSMENT HAS BEEN COMPLETED ON 30 TH MARCH 2006 ASSESSING TOTAL INCOME AT ` 38,58,890. NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 12 TH MAY 2008. THE ASSESSING OFFICER HAS REOPENED THE A SSESSMENT ON THE GROUND THAT INVESTMENT IN SHARES OF IFSL AMO UNTING TO ` 2,75,000, WAS MADE IN CASH AND THE PURPORTED SOURCE OF SUCH INVESTMENT NAMELY WITHDRAWAL FROM M/S NANDLAL ENTER PRISES, WAS NOT VERIFIABLE WITH REFERENCE TO THE BOOKS OF ACCOUNT O F M/S NANDLAL ENTERPRISES. THE ASSESSING OFFICER HAS, THEREFORE, ARRIVED AT THE CONCLUSION THAT INCOME HAS ESCAPED AND PROCEEDED TO REASSESS THE INCOME. IN THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING 3 SHRI NANDLAL B. MALOO OFFICER HAS ADDED BACK AN AMOUNT OF ` 2,75,000, BEING INVESTMENT BY WAY OF CASH IN THE SHARES OF IFSL ON THE GROUND THA T THE ASSESSEE DOES NOT HAVE DETAILS OF SHAREHOLDING WITH DATE OF ACQUISITION AND COST OF ACQUISITION. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS FURNISHED TWO DIFFERENT CASH FLOW STATEMENTS VIDE L ETTERS DATED 4 TH SEPTEMBER 2009 AND 9 TH NOVEMBER 2009. THE ASSESSING OFFICER HAS FURTHER STATED THAT ASSESSEE DOES NOT MAINTAIN BOOK S OF ACCOUNT AND THE SOURCE OF INVESTMENT IN THE SHARES OF IFSL ARE NOT VERIFIABLE. THE ASSESSING OFFICER HAS FURTHER ADDED BACK AN AMOUNT RECEIVED FROM M/S. NANDLAL ENTERPRISES OF ` 1,51,42,000 BEING TRANSPORT CHARGES AND ` 53,05,427 TOWARDS LOADING AND UNLOADING CHARGES. A CCORDING TO ASSESSEE, THE ASSESSEE DID NOT RENDER ANY SERVICES TO M/S. NANDLAL ENTERPRISES AND DID NOT HAVE ANY LORRY RECEIPTS AND OTHER VOUCHERS FOR EXPENSES SAID TO HAVE BEEN INCURRED. THE ASSESSING OFFICER HAS ALSO FURTHER ADDED BACK AN AMOUNT OF ` 1,90,60,770 BEING INTEREST STATED TO BE RECEIVED FROM M/S NANDLAL ENTERPRISES LTD. AS PER THE TDS CERTIFICATE. ISSUE NO.1 3. UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DEL ETION OF ADDITION OF AN AMOUNT OF ` 2,04,47,427, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TRANSPORT CHARGES AND LOADING AND UNL OADING CHARGES. 4 SHRI NANDLAL B. MALOO BEFORE GOING FURTHER, IT IS NECESSARY TO ADVERT THE FINDING OF THE LEARNED COMMISSIONER (APPEALS) ON RECORD: 8. I HAVE CAREFULLY CONSIDERED THE ISSUE BEFORE ME. AS REGARDS THE EXAMINING OF ISSUE OF PAYMENT RECEIVED FROM M/S . NANDLAL ENTERPRISES, ONCE THE ASSESSMENT IS REOPENED U/S 14 7, IT IS APPARENT THAT THE ENTIRE ASSESSMENT IS AVAILABLE FO R CONSIDERATION AFRESH. IN THE CASE OF CIT V/S INDIAN RARE EARTHS L TD., REPORTED IN 181 ITR 82 (BOM.), IT HAS BEEN HELD THAT ONCE VALID PROCEEDING U/S 147 ARE STARTED THE ITO HAS NOT ONLY THE JURISD ICTION BUT ALSO THE DUTY TO COMPLETE THE ASSESSMENT DENOVO AND WHAT IS TRUE OF ASSM IS ALSO RULE OF REASSESSMENT BECAUSE REASSESSM ENT IS NOTHING BUT A FRESH ASSESSMENT. 8.1 AS REGARDS THE ISSUE WHETHER THE ADDITION IS JU STIFIED IT IS NECESSARY TO RECAPITULATE THE FACTS OF THE CASE. TH E INCOME SHOWN BY THE ASSESSEE AFTER SEARCH WAS SUBJECT MATTER MAD E U/S 153A FROM 1998-99 TO 2003-04 AND REGULAR ASSESSMENT FOR AY 2004- 05. THE ASSESSMENT FOR AY 2004-05 OF NANDLAL ENTERP RISES WAS SUBJECT TO 263 BY CIT AND AFTER EXAMINING ALL THE P OINTS THE CIT (CENTRAL) DIRECTED THE AO TO EXAMINE THE ACCOUNT OF RAMAKRISHNA TRANSPORT AS APPEARING IN THE BOOKS OF NANDLAL ENTE RPRISES WHICH WAS SHOWING A CREDIT BALANCE OF ` 22,93,417/- AMONG VARIOUS OTHER POINTS. AFTER THE MATTER WAS REMITTED TO THE AO, THE AO PASSED AN ORDER HOLDING THAT RAM KRISHNA TRANSPORT IS A BOGUS CREDITOR AND ADDED THAT AMOUNT IN THE HANDS OF M/S NANDLAL ENTERPRISES. THE AO ALSO HELD THAT SINCE HE HAD NOT ONLY AUTHORITY TO EXAMINE THE CREDIT OF RS.22, 93,417/- BUT ALSO HELD THAT THE ENTIRE PAYMENT TO RAMAKRISHNA TRANSPORT TO THE EXTE NT OF RS. 1,51,42,000/- WAS NOT GENUINE. HOWEVER IN APPEAL TH E CIT(A) REVERSED HIS FINDING AS HIS ADDITIONS AND RESTORED THE ORDER OF AO. THUS THIS MATTER OF PAYMENT TO RAMAKRISHNA TRANSPOR T HAS REACHED FINALITY. THE GENUINENESS OF THE PAYMENTS O F NANDALAL ENTERPRISES IS THEREFORE NO LONGER IN QUESTION AND FINAL AS FAR AS AO IS CONCERNED. AO HAS HOWEVER RESORTED TO AN ILLO GICAL AND CONTRADICTORY STAND IN THE HANDS OF THE RECIPIENT T O HOLD THAT THE PAYMENTS ARE BOGUS WITHOUT SUPPORTING HIS CASE THAT THE PAYMENTS ARE NOT GENUINE. FURTHER NO SPECIFIC EVIDE NCE IN THIS REGARD HAS EMERGED CONSEQUENT TO SURVEY CONDUCTED O N 03-09- 2009. FURTHER THE PAYMENTS MADE ARE THROUGH CHEQUES . DETAILS OF TRUCKS THROUGH WHICH THE COAL IS TRANSPORTED HAVE B EEN KEPT. PAYMENT TO TRUCK OPERATORS ARE LESS THAN RS. 20,000 /-. ON MERITS I FIND THAT AO HAS NOT MADE OUT A CASE FOR ADDING B ACK THE ENTIRE AMOUNT OF RECEIPTS RECEIVED OF RS.2,04,47,427/- AS TRANSPORTATION CHARGES AND LOADING AND UNLOADING CHARGES. THIS GRO UND IS THEREFORE ALLOWED. 5 SHRI NANDLAL B. MALOO 4. ON APPRAISAL OF THE ABOVE MENTIONED ORDER, IT CAME INTO THE NOTICE THAT THE ASSESSMENT OF M/S. NANDLAL ENTERPRI SES, AND M/S. RAMAKRISHNA TRANSPORT, HAS BEEN COMPLETED. THE TRAN SACTION WAS INTERLINKED AMONGST THEM. THE AMOUNT PAYABLE BY M/ S. RAMAKRISHNA TRANSPORT, WAS NOT HELD TO BE JUSTIFIABLE. THERE WA S A CREDIT AGAINST M/S. NANDLAL ENTERPRISES, TO THE TUNE OF ` 22,93,417 AND THE PAYMENT TO THE TUNE OF ` 1,51,42,000. THE ASSESSING OFFICER HELD THAT THE S AID AMOUNT IS NOT GENUINE AND ADDED THE SAME TO THE INC OME OF THE ASSESSEE. THEREAFTER, THE MATTER OF M/S. RAMA TRANS PORT, WAS FINALIZED AND THE PAYMENT WAS FOUND TO BE GENUINE. THE SAME W AS NOT REQUIRED TO BE ADDED WITH THE TOTAL INCOME OF THE ASSESSEE. MOREOVER, THERE WAS NO EVIDENCE ON RECORD WITH REGARD TO THE NONGE NUINE CLAIM OF THE ASSESSEE. THE PAYMENT TO THE TRUCK OPERATOR WAS BELOW TO THE TUNE OF ` 20,000. THE PAYMENT WAS THROUGH BANKING CHANNEL. D ETAILS OF TRUCK WERE KEPT. NO DOUBT, IN THE SAID CIRCUMSTA NCES, THE LEARNED COMMISSIONER (APPEALS) HAS DELETED THE SAID ADDITIO N. NO JUSTIFIABLE FACTS HAVE BEEN PLACED ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) IS N OT JUSTIFIED. IN VIEW OF THE AFORESAID, WE ARE OF THE VIEW THAT THE LEARN ED COMMISSIONER (APPEALS) HAS PASSED THE ORDER JUDICIOUSLY AND CORR ECTLY WHICH IS NOT REQUIRED TO BE INTERFERED WITH AT THIS APPELLATE ST AGE. ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE REVENUE. 6 SHRI NANDLAL B. MALOO ISSUE NO.2 5. UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DEL ETION OF ADDITION OF ` 1,90,60,770, WHICH WAS ADDED BY THE ASSESSING OFFI CER ON ACCOUNT OF INTEREST RECEIVED FROM M/S. NANDLAL E NTERPRISES. THE LEARNED COMMISSIONER (APPEALS) HAS ARRIVED AT THIS CONCLUSION THAT THE SAID AMOUNT WAS NOT THE INTEREST RECEIVED BY THE AS SESSEE. BEFORE COMING FURTHER, IT IS NECESSARY TO ADVERT THE FINDI NG OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE FOR THE SAKE O F CONVENIENCE. 9. GROUND NO. 5:- 9.1 THIS GROUND IS REGARDING THE ACTION OF THE AO IN ADDING BACK AN AMOUN OF RS. 1,90,60,7701- STATING THAT THIS AMO UNT IS INTEREST RECEIVED FROM MLS NANDLA ENTERPRISES LTD. ON THE BA SIS OF THE NARRATION AND THE TDS CERTIFICATE THAT THE AMOUNT R ECEIVED AS INTEREST. IN SUBMISSION BEFORE ME APPELLANT HAS STA TED THAT THESE AMOUNTS WERE RECEIVED AS TRANSPORTATION CHARGES AND HAVE BEEN CONSIDERED IN THIS ORIGINAL ORDER OF THE AO DT. 30- 03-2006. APPELLANT HAS STATED THAT MENTIONING THE ENTIRE AMO UNT AS INTEREST WAS AN ERROR. THE AO HAS HELD THAT THE AMOUNT IS IN TERES WITHOUT REFERRING THE MATTER TO THE COMPANY OR EXAM INING THE CONCERNED RECORDS. I IS STATED THAT CAPITAL REQUIRE D TO BE INVESTED TO EARN INTEREST @ 15% WOULD BE RS.12.70 CRORES WHI CH ITSELF WAS AN ABSURD PROPOSITION AS THE TOTAL ASSET OF APPELLA NT IS ONLY RS. 1.13 CRORE. IN THE REMAND REPORT AD HAS STATED AS F OLLOWS:- 'ON MERITS, THE ASSESSEE ARGUED THAT THE ASSESSEE R ECEIVED PAYMENT TO THE EXTENT OF RS.1,90,60,770/- AS TRANSP ORT CHARGES WHICH WAS CONSIDERED IN THE ORIGINAL ORDER DATED 30 .3.2006. IN THIS CONNECTION, IT IS AGAIN SUBMITTED THAT THE AO DID NOT LOOK INTO ANY ISSUE OTHER THAN SEIZED MATERIAL/DOCUMENTS / DECLARATION. MAY I REQUEST THE ASSESSEE TO SUBMIT THE COPIES OF THE SUBMISSION WHICH HE FILED BEFORE THE AA AT THE TIME OF ASSESSM ENT PROCEEDINGS WHEREIN HE DECLARED THE GROSS RECEIPT FROM TRANSPOR T BUSINESS ETC? IT IS TOTALLY, INCORRECT TO SAY THAT THE ISSUE WAS ALREADY EXAMINED BY THE AO WHILE PASSING THE ORDER DATED 30.3.2006. 7 SHRI NANDLAL B. MALOO IF THE ASSESSEE HAD RECEIVED THE AMOUNT FROM M/S NA NDLAL ENTERPRISES LTD AS TRANSPORT CHARGES, AGAIN THE ASS ESSEE WAS REQUIRED TO EXPLAIN AS WHAT SERVICES HE RENDERED AN D THE CORRESPONDING EVIDENCES FOR THE SAME. NEEDLESS TO M ENTION THAT DURING THE COURSE OF SURVEY U/S 133A, NO EVIDENCE O F RENDERING THE SERVICES WERE FOUND. UNDER SUCH CIRCUMSTANCES ALSO THE WHOLE OF SUCH AMOUNT WOULD BE TAXABLE IN THE ASSESSEE'S HAND . HE FURTHER ARGUED THAT THEN AO DID NOT GIVE CREDIT TO THE AMOUNT AS TRANSPORT CHARGES. HE FURTHER CONTENTED THAT THE PRESENT AO TREATED THE SAME AS INTEREST AND ADDED THE WHOLE AM OUNT WITHOUT REFERRING TO THE COMPANY OR THE WHOLE RECORDS OF EA RLIER YEARS AND WITHOUT CONSIDERING THE PROFIT AND LOSS E/C OF M/S RAMKRISHNA TRANSPORT. IN THIS CONNECTION IT IS SUBMITTED THAT I HAVE VERI FIED THE WHOLE RECORDS AND EVEN OF EARLIER YEAR, THE ASSESSEE NEVE R SUBMITTED PROFIT AND LOSS E/C SHOWING THE GROSS TRANSPORT REC EIPTS RECEIVED BY THE ASSESSEE. THEREFORE THE ASSESSEE'S CONTENTION I S TOTALLY INCORRECT. THE ASSESSEE MAY PLEASE BE REQUESTED TO BRING ON RECORD WHEN HE SUBMITTED THE PROFIT AND LOSS E/C SHOWING G ROSS RECEIPT EITHER WITH THE RETURN OF INCOME OR DURING THE COUR SE OF ASSESSMENT / REASSESSMENT PROCEEDINGS. THE ASSESSEE FURTHER CONTENTED THAT THE AMOUNT IN Q UESTION IS NOT INTEREST. HE ARGUED THAT THERE WAS NO CORRESPONDING CAPITAL APPEARING IN THE BALANCE SHEET OF THE ASSESSEE. IN THE CONNECTION, IT IS SUBMITTED THAT THE ASSESSE E STILL DID NOT EXPLAIN UNDER WHAT CIRCUMSTANCES AND FOR WHAT PURPO SE HE RECEIVED THE AMOUNT FROM M/S NANDLAL ENTERPRISES LT D. THE FACT WHICH CAN NOT BE IGNORED THAT THE TDS CERTIFICATE W AS ISSUED BY M/S NANDLAL ENTERPRISES LTD. FURTHER M/S NANDLAL EN TERPRISES LTD FILED LETTER DATED NIL WHICH IS PART OF THE ORDER C ONFIRMING THE CORRECTNESS OF THE TDS CERTIFICATE. M/S. NANDLAL EN TERPRISES LTD. ALSO FILED COPY OF CHALLAN VIDE WHICH PAYMENT WAS A LSO MADE. UNDER THESE CIRCUMSTANCES, HOW THE ASSESSEE'S CONTE NTION THAT IT DID NOT RECEIVE THE PAYMENT FROM M/S NANDLAL ENTERP RISES LTD CAN NOT BE ACCEPTED? THE ASSESSEE ALSO ARGUED THAT THE ADDITIONS WERE NO T WARRANTED WHEN IT WAS SHOWN IN BANK ACCOUNT AS TRANSPORT CHAR GES AND TAXES WERE ALREADY DEDUCTED. IN THE CONNECTION, IT IS SUBMITTED THAT THE ASSESSE E FAILED TO IDENTIFY THE CORRESPONDING ENTRIES IN HIS BANK ACCO UNT. THE ASSESSEE DID NOT EXPLAIN IN WHICH BANK ACCOUNT THE AMOUNT OF RS 1,90,60,770/- RECEIVED FROM M/S NANDLAL ENTERPRISES LTD WAS DEPOSITED. FURTHER THE BANK ACCOUNT DOSE NOT SHOWN THAT THE 8 SHRI NANDLAL B. MALOO AMOUNT RECEIVED WAS WHETHER TRANSPORT CHARGES OR OT HER WISE. BANK ACCOUNT ONLY SHOWS THE AMOUNT RECEIVED IN CHEQ UE / CASH. THE DEPOSITS IN THE BANK ACCOUNT IS ONLY INDICATION OF AMOUNT RECEIVED BY THE ASSESSEE AND IT IS NOT CERTIFICATE OF NATURE OF PAYMENT RECEIVED BY THE ASSESSEE. ' IN REPLY TO REMAND REPORT APPELLANT HAS STATED AS F OLLOWS:- 'IT WAS INDICATED BY THE COMPANY THAT THE NOMENCLAT URE OF THE NATURE OF PAYMENT AS INTEREST INSTEAD OF TRANSPORT CHARGES. B UT THE THEN A. O. ACCEPTED THE SAME CONDONING THE WRONG LABEL GIVEN T O THE PAYMENT AND CREDIT WAS ALSO GIVEN FOR THE AMOUN T OF TDS DEDUCTED OF RS. 419337/-. THOUGH TDS WAS DEDUCTIBLE IN THE CASE OF INTEREST AT 20% PLUS SURCHARGE, TLIE RATE APPLIED W AS ONLY 2.2% OF THE TOTAL PAYMENT. THE TRANSPORT CHARGES SHOWN I N THE BOOK IS ` 19060770 WHICH IS THE AMOUNT SHOWN IN THE TDS CERTI FICATE. AS MENTIONED IN THE ORIGINAL SUBMISSION OF THE ASS THA T IF IT IS ASSUMED TO BE INTEREST THEN THE INVESTMENT SHOULD BE ` 12.70 CRORE AND SUCH AMOUNT IS NEITHER APPEARING IN THE B/5 OF THE ASSESSEE NOR IN THE B/S OF THE NANDLAL ENTERPRISES LTD. THAT MEANS TURNOVER OR INVESTMENT IS NOT THERE IN THE CASE OF NANDLAL ENTE RPRISES LTD. THERE WAS NO ENTRY OF INTEREST PAID AT RS 19060770/ - IN THE P/L A/C. THEREFORE THAT COULD NOT HAVE TAKEN THE SAME A S INTEREST AS THE FACT WAS VERIFIABLE FROM THE RECORDS OF THAT CO WHICH WAS ALSO IN THE A.O 'S JURISDICTION. FOR THE AY 2006-07 IN THE CASE OF NANDLAL ENTERPRISES LTD. THE PRESENT A.O. DISALLOWE D IN RESPECT OF TRANSPORT CHARGES PAID TO THE PRESENT ASSESSEE TO T HE EXTENT OF RS.526173/- FOR THE REASONS THAT THERE WAS NO COMPLIANCE WITH THE TAX DEDUCTION AND WAS THUS DISA LLOWED U/S 40(A)(IA). THERE THE A.D. TREATED THE PAYMENTS AS T RANSPORT CHARGES ONLY. THAT ORDER WAS PASSED ON 30.12.2008. ALL THESE INFORMATIONS WERE AVAILABLE WITH HIM AT THE TIME OF PASSING THIS ORDER DT 22.12.09 AGAINST THE PRESENT ASSESSEE. YET HE TREATED THE AMOUNT AS INTEREST AS IF HE WAS UNAWARE OF THESE FACTS AND TREATED AS INTEREST ON THE PLEA OF ASSESSEE NOT RESPONDING. THERE WAS THEREFORE NO REASON TO HOLD IT AS INTEREST EVEN IN SPITE OF OVER WHELMING EVIDENCE WITH HIM THAT IT WAS TRANSPORT RE CEIPTS. IN FACT CONCLUSIVE PRESUMPTION CAN BE MADE AGAINST THE A. O. THAT HE WAS WELL AWARE OF THE NATURE OF THE PAYMENT YET HE MADE AN ADDITION WITHOUT ANY JUSTIFICATION APART FROM THE FACT THAT THE A.O. IS ENCROACHING ON AN ITEM OF INCOME ALREADY CONSIDERED IN THE ORDER U/S 143 (3), THE A.O. WAS ALSO FULLY AWARE OF THE NATURE OF PAYMENT AS TRANSPORT RECEIPT AND NOT INTEREST AND THE ADDIT ION ON THAT ACCOUNT AS INTEREST WAS UNCALLED FOR ESPECIALLY IN VIEW OF THE FACT THAT HE HAD NOT DOUBTED THE PAYMENTS AS BOGUS AS IN THE CASE OF NANDLAL ENTERPRISES.' 10. I HAVE CAREFULLY CONSIDERED THE ISSUE BEFORE ME . IT IS ESSENTIAL 9 SHRI NANDLAL B. MALOO AND NECESSARY THAT THE AD SHOULD HAVE CONDUCTED SOM E CREDIBLE VERIFICATION WHETHER NANDLAL MALOO IS A CREDITOR IN THE BOOKS OF MLS NANDLAL ENTERPRISES LTD. BEFORE COMING TO THE CONCL USION THAT THE AMOUNT OF RS.1,90,60,770/- HAS BEEN RECEIVED AS INT EREST. IN APPELLATE PROCEEDINGS BEFORE ME APPELLANT HAS POINT ED OUT THAT THE NOMENCLATURE OF INTEREST WAS MISTAKE. THIS SHOULD H AVE BEEN VERIFIED BY THE AO, INSTEAD AO HAS CHOSEN TO REITER ATE THE FINDINGS IN THE ASSESSMENT ORDER WITHOUT EXERCISING DUE DILI GENCE AND RESPONSIBILITY IN THE MATTER. AS POINTED OUT BY APP ELLANT IN THE ASSESSMENT ORDER OF MLS NANDLAL ENTERPRISES LTD. FO R 2006-07 AN ADDITION U/S 40(A)(IA) HAS BEEN MADE ON PAYMENT TO SHRI NANDLAL MALOO TREATING THE AMOUNT AS TRANSPORT CHARGES. THE APPELLANT IS REGULARLY PROVIDING COAL TRANSPORTATION SERVICES TO SISTER CONCERNS AND IS IN THE BUSINESS FOR THE PAST DECADE. THESE F ACTS ARE VERIFIABLE FROM THE RECORDS. FURTHER IT IS CLEAR TH AT THIS PAYMENT WAS SUBJECT TO TAX DEDUCTION AT SOURCE @ 2.2% INDIC ATING THIS IT IS A PAYMENT TO ULS 194C. A CERTIFICATE U/S 194C WAS A LSO ISSUED IN FORM NO. 16A. IT IS APPARENT THAT IN THE CERTIFICAT E INTEREST HAS BEEN ERRONEOUSLY MENTIONED. FURTHER WHEN THE AO MADE THE ASSESSMENT ULS 143(3) ON 30-03-2006 HE TREATED THE SAME PAYMEN T NOT AS INTEREST BUT ACCEPTED THE PAYMENT AS PAYMENT FOR TR ANSPORT OF COAL. NO FRESH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE A.O. THIS ORDER MADE ULS 143(3) ON 30-03-2006 WAS AFTER THE SEARCH AT THE PREMISES OF THE ASSESSEE. THE AO HAS ALSO GIVEN CREDIT TO THE TDS DEDUCTED AT RS.4,19,337/-. AO'S ACTION IS NOT T ENABLE. THIS GROUND IS THEREFORE ALLOWED. 6. ON A PERUSAL OF THE ABOVE SAID FINDING, IT CAME INT O THE NOTICE THAT THE ASSESSING OFFICER HAS WRONGLY UNDERSTOOD T HE AMOUNT TO THE TUNE OF ` 1,90,60,770 AS INTEREST RECEIVED FROM M/S. NANDLAL ENTERPRISES LTD. IN FACT, THE SAID AMOUNT WAS THE R ECEIPT WHICH WAS SUBJECT TO TAX DEDUCTED AT SOURCE @ 2.2% UNDER SECT ION 194C. A CERTIFICATE UNDER SECTION 194C WAS ALSO ISSUED IN F ORM NO.16A. THE ASSESSING OFFICER HAS ARRIVED AT THIS CONCLUSION AB OUT THE RECEIPT OF THE INTEREST WITHOUT GOING THROUGH THE RECORD. THE ASSE SSMENT OF M/S NANDLAL ENTERPRISES LTD. HAS BEEN CONCLUDED ON 30 TH MARCH 2006 WHEREIN THE SAID AMOUNT HAS BEEN ACCEPTED AS PAYMEN T TOWARDS THE 10 SHRI NANDLAL B. MALOO TRANSPORT OF COAL. IN THIS REGARD, THE ASSESSMENT O RDER LIES AT PAGE12 AND 13 OF THE PAPER BOOK. THE PAYMENT WAS ALSO NOT DOUBTED IN THE CASE OF M/S. NANDLAL ENTERPRISES LTD., FOR THE ASSE SSMENT YEAR 2006 07. IN THIS REGARD, THE COPY OF ORDER OF THE LEARNE D COMMISSIONER (APPEALS) HAS BEEN PLACED ON RECORD AT PAGE9 TO 11 OF THE PAPER BOOK. THE RECEIPT HAS WRONGLY SHOWN AS INTEREST. AT THIS STAGE, THE FACTS ARE NOT DISTINGUISHABLE AT ALL. IN VIEW OF TH E SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER (A PPEALS) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRED TO BE INTERFERED. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. IN THE RESULT, REVENUES APPEAL IS ORDERED TO BE DI SMISSED. C.O. NO.16/NAG./2012 ASSESSEES CROSS OBJECTION 8. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED GR OUNDS IN THE FOLLOWING CROSS OBJECTION: 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE RE OPENING OF ASSESSMENT WAS VALID; 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF ` 2.75,000/; AND 3. THE LEARNED CIT(A) ERRED IN DISALLOWING THE PAYM ENT OF COMMISSION OF ` 5,05,835. ISSUE NO.1 9. UNDER THIS ISSUE, THE ASSESSEE HAS CHALLENGED THE RE OPENING OF ASSESSMENT UNDER SECTION 147 / 148 OF THE ACT. THE REOPENING WAS 11 SHRI NANDLAL B. MALOO MADE ON THE BASIS OF LETTER DATED 3 RD FEBRUARY 2007 FILED BY THE LEARNED COUNSEL FOR ASSESSEE IN WHICH HE STATED THA T THE ASSESSEE PURCHASED THE SHARES OF ` 2.75 LAKH FROM THE WITHDRAWAL MADE FROM M/S. NANDLAL ENTERPRISES LTD. AFTER EXAMINATION OF THE ACCOUNTS OF M/S. NANDLAL ENTERPRISES LTD., THE ASSESSING OFFICER NOW HERE FOUND THE WITHDRAWAL OF THE SAID AMOUNT, HENCE, THE NOTICE WA S ISSUED. THE CONTENTION OF THE ASSESSEE IS THAT THE FACTS NARRAT ED IN THE LETTER DATED 3 RD FEBRUARY 2007, WAS NOT CORRECT IN VIEW OF THE LETT ER DATED 12 TH SEPTEMBER 2007. IT IS ALSO MENTIONED THAT THE ASSES SEE PURCHASED THE SAID SHARES FROM HIS OWN FUNDS. IN THE INSTANT CASE , THE NOTICE UNDER SECTION 148 HAS ALREADY BEEN ISSUED TO THE ASSESSEE BY VIRTUE OF NOTICE DATED 12 TH MAY 2008. AT THIS STAGE, THE ASSESSING OFFICER WAS HAVING THE MATERIAL BEFORE HIM WHICH IS THE LETTER DATED 3 RD FEBRUARY 2007, IN WHICH THE ASSESSEE HAS ADMITTED THE FACT THAT THE A SSESSEE PURCHASED THE SHARES OF ` 2.75 LAKH FROM THE WITHDRAWAL OF THE AMOUNT FROM M /S. NANDLAL TRANSPORT LTD. IT IS A REASONABLE APPREHENS ION IN CONNECTION WITH THE INCOME ESCAPING ASSESSMENT. IT CANNOT BE S AID THAT THE ASSESSING OFFICER WAS NOT HAVING ANY TANGIBLE MATER IAL WITH HIM FOR INVOKING THE PROVISIONS OF SECTION 148 OF THE ACT. IT IS ALSO NOT A REVIEW OF THE ORDER. IT IS ALSO NOT PASSED ON THE OPINION OF THE DIFFERENT ASSESSING OFFICERS. THE ASSESSEE HAS PLACED RELIANC E ON THE DECISION OF THE HONBLE SUPREME COURT IN CIT V/S KELVINATOR INDIA LTD. (2010) 320 ITR 561 (SC), THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IN ASIAN 12 SHRI NANDLAL B. MALOO PAINTS LTD. V/S DCIT, [2009] 308 ITR 195 (BOM.) AND 234 TAXMAN 432 . BUT THE FACTUAL POSITION OF THE PRESENT CASE IS QUIT E DIFFERENT FROM THE LAW SETTLED IN THE ABOVE SAID AUTHORITIES. THEREFOR E, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSIN G OFFICER HAS RIGHTLY ISSUED THE NOTICE UNDER SECTION 148 OF THE ACT, HENCE, THE CROSS OBJECTION ON THIS GROUND OF THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED. ISSUE NO.1 IS ALLOWED IN FAVOUR OF THE R EVENUE. ISSUE NO.2 10. THIS ISSUE IS IN CONNECTION WITH THE CONFIRMATION O F ADDITION OF ` 2.75 LAKH. INITIALLY, THE MATTER WAS TAKEN UP UNDER SECTION 148 ON ACCOUNT OF ISSUANCE OF NOTICE DATED 12 TH MAY 2008. THE ASSESSEE HAS EXPLAINED BY VIRTUE OF 3 RD FEBRUARY 2007, THAT THE ASSESSEE PURCHASED THE SHARES FROM IFSL LTD. OF AN AMOUNT OF ` 2.75 LAKH AFTER THE WITHDRAWAL OF THE SAID AMOUNT FROM M/S. NANDLAL TRA NSPORT LTD. ON VERIFICATION, NO WITHDRAWAL WAS FOUND. THEREAFTER, THE ASSESSEE FILED ANOTHER LETTER IN WHICH HE EXPLAINED THAT THE ASSES SEE DID NOT WITHDRAW THE SAID AMOUNT FROM M/S. NANDLAL TRANSPOR T LTD., HOWEVER, THE SAID SHARES WERE PURCHASED FROM CASH AVAILABLE TO HIM. THE ASSESSEE WAS NOT CLEAR ABOUT THE RECEIPT OF THE AMO UNT WHICH WAS INVESTED FOR THE PURCHASE OF SHARES OF IFSL LTD. TO UNDERSTAND THE MATTER CAREFULLY IT IS NECESSARY TO ADVERT THE FIND INGS OF THE LEARNED COMMISSIONER (APPEALS) ON RECORD. 13 SHRI NANDLAL B. MALOO 6. I HAVE CAREFULLY CONSIDERED THE ISSUE BEFORE ME. TH E MAIN REASON FOR THE ADDITION OF AN AMOUNT RS. 2,75,000/- IS THAT THE AMOUNT WAS NOT AVAILABLE AS WITHDRAWAL IN THE BOOKS OF M/S NANDLAL ENTERPRISES. HOWEVER EVEN DURING THE COURSE OF REASSESSMENT PROCEEDINGS APPELLANT HAS NOT SATISFAC TORILY EXPLAINED THE SOURCE OF INVESTMENT. AS POINTED OUT BY AD NO BOOKS OF ACCOUNTS ARE MAINTAINED. THERE ARE NO DETA ILS OF THE SHARES WITH THE DATE OF ACQUISITION AND COST OF ACQ UISITION. THERE ARE NO DETAILS EVEN OF SHARE HOLDING AS ON 31-03-20 03 AND 31- 03-2004. APPELLANT HAS FURNISHED A CASH FLOW STATEM ENT SHOWING TWO DIFFERENT AMOUNTS INVESTED IN SHARES NAMELY RS. 5,90,000/- AND RS. 4,76,000/- VIDE CASH FLOW STATEMENTS DT. 04 -09-2009 AND 09-11-2009 RESPECTIVELY. APPELLANT HAS ALSO AGR EED THAT THE ALLEGED CASH FLOW STATEMENTS ARE APPROXIMATIONS. IN SUBMISSION BEFORE ME APPELLANT HAS CLAIMED ALTERNATELY THAT SI NCE AMOUNT OF RS. 6 LAKHS HAS BEEN DECLARED TOWARDS POSSIBLE D ISCREPANCIES AND AMOUNT OF RS. 3,15,000/- IS AVAILABLE AS OTHER INCOME PURCHASE OF SHARES OF RS. 2,75,000/- SHOULD BE TREA TED AS OUT OF INCOME DECLARED OF RS. 9,55,000/-. HOWEVER IN THE A BSENCE OF ANY SPECIFIC DETAILS FURNISHED EVEN AT THE TIME OF APPELLATE STAGE THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. THE LACK OF TRANSPARENCY AND THE CONTRADICTORY VERSIONS REGARDI NG SOURCE OF INVESTMENT VITIATES THE CASE OF THE APPELLANT. AD W AS THEREFORE JUSTIFIED IN ADDING BACK RS.2,75,000/- AS UNEXPLAIN ED INVESTMENT. THIS GROUND IS THEREFORE DISMISSED. 11. THE ASSESSEE IS TAKING THE DIFFERENT PLEA WITH REGA RD TO THE AVAILABILITY OF CASH WITH HIM. THE ASSESSEE MOVED A LETTER DATED 3 RD FEBRUARY 2007 IN WHICH HE EXPLAINED THAT HE PURCHAS ED THE SHARES OF IFSL LTD. AFTER THE WITHDRAWAL OF ` 2.75 LAKH FROM M/S. NANDLAL TRANSPORT LTD. THEREFORE, THE ASSESSEE FILED ANOTHE R LETTER IN WHICH HE STATED THAT HE HAS PURCHASED THE SHARES OF IFSL FRO M CASH WHICH WAS AVAILABLE WITH HIM. NOW AT THE TIME OF ARGUMENT BEF ORE US, THE ASSESSEE IS TAKING DIFFERENT PLEA I.E., THE ASSESSE E HAS SHOWN THE TOTAL INVESTMENT TO THE TUNE OF ` 56,65,000 IN HIS BALANCE SHEET FOR THE YEAR ENDING 31 ST MARCH 2004. IT IS PLEADED THAT THE SAID AMOUNT HAS 14 SHRI NANDLAL B. MALOO BEEN INVESTED FROM THE FUNDS AVAILABLE TO HIM. THE CONTENTION OF THE ASSESSEE IS NOT SUPPORTED BY THE COGENT EVIDENCE ON RECORD. THE VERSION OF THE ASSESSEE IS CONTRADICTORY. IT IS INC UMBENT UPON THE ASSESSEE TO PROVE THE SOURCE OF INVESTMENT IN ACCOR DANCE WITH LAW WHICH HE HAS FAILED TO DO SO. NO MATERIAL OF ANY KI ND HAS BEEN PLACED BEFORE US TO WHICH IT CAN BE ASSUMED THAT THE ASSES SEE HAS FURNISHED THE EXPLANATION IN CONNECTION WITH THIS AMOUNT CLEA RLY. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FIN DING OF THE LEARNED COMMISSIONER (APPEALS) IS QUITE CORRECT WHICH IS NO T REQUIRED TO BE INTERFERED WITH THE SAME AT THIS APPELLATE STAGE. A CCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE. ISSUE NO.3 12. UNDER THIS ISSUE, THE ASSESSEE CHALLENGED THE DISALL OWANCE OF COMMISSION TO THE TUNE OF ` 5,05,835. IT IS NOT IN DISPUTE THAT THE SAID ADDITION WAS NOT MADE BY THE ASSESSING OFFICER. THE LEARNED COMMISSIONER (APPEALS) RAISED THE SAID ADDITION BEI NG COMMISSION. NO DOUBT, NO NOTICE OF ANY KIND WAS GIVEN BEFORE THE A DDITION OF THE SAID AMOUNT. IN THE INTEREST OF JUSTICE, IT IS NOT JUSTI FIABLE TO ADD ANY AMOUNT WITHOUT GIVING ANY OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE IN ACCORDANCE WITH LAW. IN VIEW OF THE FACTS AND CI RCUMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE IS REQUIRED TO BE EXAMI NED AFRESH BY THE ASSESSING OFFICER AFTER GIVING REASONABLE OPPORTUNI TY OF BEING HEARD TO 15 SHRI NANDLAL B. MALOO THE ASSESSEE. THEREFORE, WE SET ASIDE THE FINDING O F THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AND RESTORE TH E MATTER TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 13. IN THE RESULT, ASSESSEES CROSS OBJECTION IS PARTLY ALLOWED. 14. TO SUM UP, REVENUES APPEAL IS DISMISSED AND ASSESS EES CROSS OBJECTION IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: 30.06.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR