THE ACIT-2(1), Ujjain V. Shri Sanjay Bagdi, Ujjain

ITA 327/IND/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2448 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: S S DESH
• Keywords: Unexplained cash credit; Capital asset; Opportunity of being heard; Onus to prove; Revised return
• Section: 143(3); 142(1); 68; 145; 139

Judgement Text

SANJAY BAGDI ITA NO.327IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.327/IND/2017 ASSESSMENT YEAR 2012-13 REVENUE BY S HRI K.G. GOYAL , SR.DR ASSESSEE BY S/ SHRI S.S. DESHPANDE & BHAVESH NETKAR,CAS DATE OF HEARING 01.11 . 2018 DATE OF PRONOUNCEMENT 14 .1 1 .2018 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2012-13 AND IS DIREC TED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)( IN SHORT LD.CIT(A)], UJJAIN DATED 06.02.2017 WHICH IS ARIS ING OUT OF THE ORDER U/S 143(3) R.W.S. 144 OF THE INCOME TAX ACT 1 961(IN SHORT THE ACT) DATED 9.02.2015 FRAMED BY ACIT-2(1), UJJAIN. ASSISTANT COMMISSIONER OF INCOME TAX 2(1), UJJAIN VS. SHRI SANJAY BAGDI, 173 ALAKHDHAM NAGAR, UJJAIN ( APPELLANT ) (RESPONDENT ) PAN NO. AHCPB6349L SANJAY BAGDI ITA NO.327IND/2017 2 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS O F CIVIL CONSTRUCTION. INCOME AT RS.31,34,530/- DECLARED IN THE RETURN OF INCOME SUBMITTED ON 28.09.2012. THE CASE WAS PROCE SSED U/S 143(1)(A) OF THE ACT DATED 18.6.13. THEREAFTER CASE SELECTED FOR SCRUTINY ASSESSMENT, FOLLOWED BY ISSUANCE OF NOTICE S U/S 143(2) AND 142(1) OF THE ACT. ON THE INITIAL DATE OF HEAR ING, WRITTEN SUBMISSIONS WERE FILED ALONG WITH THE FINANCIAL STA TEMENTS AND THEREAFTER NONE APPEARED ON THE DATE OF HEARING. LE ARNED ASSESSING OFFICER (IN SHORT LD.A.O) HAD NO OPTION EXCEPT TO FRAME EX-PARTE ASSESSMENT. LD.A.O MADE ADDITION ON UNEXPLAINED SU NDRY CREDITORS AT RS.60,42,964/- AS THE ASSESSEE FAILED TO SUBMIT THE CONFIRMATION AND OTHER DETAILS. ADDITION FOR UNEXPL AINED UNSECURED LOAN OF RS.9,48,000/- FROM M/S. AMT CONSTRUCTION AN D SHRI SHEIKH ALLABAKASH WAS ALSO MADE FOR LACK OF SUPPORTING DOC UMENTS. ALSO THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS AN D OTHER RELEVANT DETAILS LD.A.O REJECTED THE BOOK RESULTS U/S 145 OF THE ACT AND ESTIMATED INCOME @10% OF THE TOTAL TURNOVER OF RS.7 ,29,45,673/- THEREBY MAKING ADDITION ON ACCOUNT OF NET PROFIT AT RS.39,10,039/- AFTER GIVING SET OFF OF PROFIT SHOWN BY THE ASSESSE E. INCOME ASSESSED SANJAY BAGDI ITA NO.327IND/2017 3 AT RS.1,40,35,533/-. 3. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD.CI T(A) RAISING THREE GROUNDS FOR ALLEGED THREE ADDITIONS. HOWEVER LD.CIT(A) TOOK A VIEW THAT WHEN THE BOOK RESULTS HAVE BEEN REJECTED AND PROFIT HAVE BEEN ESTIMATED THEN NO FURTHER ADDITION SHOULD HAVE BEEN MADE. LD.CIT(A) FURTHER ADOPTED 8% OF NET PROFIT RATE AS AGAINST 10% ADOPTED BY THE LD.A.O AND PARTLY ALLOWED ASSESSEES APPEAL OBSERVING AS FOLLOWS; GROUND NO.1, 2, 3:- THROUGH THESE GROUNDS OF APPEA L THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.60,42,964/~ ON ACCOUN T OF UNEXPLAINED CREDITORS, RS.9,48,000/- ON ACCOUNT OF UNSECURED LO AN AND RS.39,10,039/- ON ACCOUNT OF ESTIMATION OF NET PROFIT. IN THE CASE OF SHRI GHANSHYARN SHARMA, UJJAIN VS. ITO-I (1), UJJAIN, THE HON'BLE I T A T, INDORE WHILE DECIDING THE ITA NO.686/IND/20 15 DATED 02.02.2016, IT HAS BEEN HELD THAT ONCE THE INCOME HAS BEEN ESTIMATED BY REJECTIN G THE BOOKS OF ACCOUNTS NO FURTHER ADDITION CAN BE MADE. THE AO HA S REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT U/S. 145 OF THE 1. T. A CT AND ESTIMATED THE NET PROFIT @ ! 0%. IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIES THAT ONCE THE BOOKS OF ACCOUNT HAVE BEEN REJECTED, THE AO IS' NOT EMPOWERED TO MAKE ANY FURTHER ADDITION. IT IS ALSO TO BE MENTIONED TH AT APPELLANT IS CARRYING OUT CIVIL CONSTRUCTION WORK. IN SOME CASES THE APPE LLANT IS TAKING DIRECT CONTRACT AND IN SOME CASES THE APPELLANT IS TAKING SUB-CONTRACT FROM OTHER CONTRACTORS. IN THE APPELLANT'S OWN CASE, THE SAME AO HAS ADOPTED 8% NET PROFIT ON DIRECT CONTRACT RECEIPTS AND 4% NET PROFI T ON SUB-CONTRACT RECEIPTS PERTAINING TO A. Y. 2011-12 AND 201 0-1L. BOTH THE ABOVE ASSESSMENTS SANJAY BAGDI ITA NO.327IND/2017 4 HAVE BEEN COMPLETED U/S 143(3) OF THE I.T. ACT. IT WILL BE APPROPRIATE TO ADOPT SIMILAR NET PROFIT IN THIS YEAR ALSO IN ORDER TO MEET THE END OF THE JUSTICE. DURING THIS YEAR THE APPELLANT IS IN RECE IPTS AND RS.6,04,82,012/- AS CONTRACT RECEIPTS. 1. PROFIT @ 4% ON SUB CONTRACT RECEIPTS OF RS.1,24,63,661/- - RS.4,98,546/- 2. PROFIT @ 8% ON OTHER CONTRACT RECEIPTS OF RS.6,04,82,012/- - RS.48,38,561/- TOTAL RS.53,37,107/- THE APPELLANT HIMSELF HAS SHOWN THE INCOME AT RS.31 ,34,530/-. THEREFORE, THE ADDITION TO THE EXTENT OF RS.22,02,5 77/- (RS.53,37,107 RS.31,34,530) IS CONFIRMED. THE APPELLANT WILL GET THE RELIEF OF RS.86,98,426/-. THEREFORE, THE APPEAL OF THESE GRO UNDS IS PARTLY ALLOWED. 4. NOW REVENUE IS IN APPEAL BEFORE THE TRIBUNAL RAI SING FOLLOWING GROUNDS OF APPEAL; 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.60,42,964/ - ON ACCOUNT OF UNEXPLAINED CREDITOR HOLDING THAT ONCE NET PROFITS IS ESTIMATED NO ADDITION CAN BE MADE, WITHOUT APPRECIATING THE FACT THAT IDE NTITY OF CREDITORS AND GENUINENESS AND RATHER OF SAID TRANSACTIONS WAS NOT EXPLAINED & ROVED BY ASSESSEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,48,000/- ON ACCOUNT OF UNSECURED LOAN HOLDING THAT ONCE NET PROFIT IS ESTIMATED NO A DDITIONS CAN BE MADE, WITHOUT APPRECIATING THE FACT THAT UNSECURED LOAN D O NOT FORM PART OF TURNOVER ON WHICH NET PROFIT RATE HAS BEEN APPLIED AND THEY ARE PART OF SANJAY BAGDI ITA NO.327IND/2017 5 BALANCE SHEET. THE MATTER IS COVERED UNDER THE EXCEPTION AS MENTIO NED IN PARA 8(C) OF CIRCULAR 21/2015. 5. AT THE OUTSET LD. DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT REJECTION OF BOOK RESULTS AND ASSUMING NET PROFIT I S ONLY CONFINED TO THE TREATMENT OF TRADING AND PROFIT & LOSS ACCOUNT. IT HOWEVER CANNOT BE APPLIED FOR THE ITEMS OF BALANCE SHEET. IN THIS CASE ALLEGED UNEXPLAINED CREDITOR AS WELL AS UNSECURED L OANS THERE IS NO CONNECTION OF THESE TWO ITEMS WITH THE BUSINESS TUR NOVER AND THE EXPENDITURE INCURRED DURING THE YEAR. HE FURTHER S UBMITTED THAT LD.CIT(A) HAS NOT GIVEN ANY FINDING OF FACT RELATIN G TO THE ALLEGED ADDITION FOR UNEXPLAINED CREDITORS AND UNEXPLAINED UNSECURED LOANS AT RS.60,42,964/- AND RS.9,48,000/- RESPECTIV ELY AND THE SAME SHOULD HAVE BEEN EXAMINED IN THE LIGHT OF NECE SSARY DOCUMENTS WHICH SHOULD HAVE BEEN PLACED BY THE ASSE SSEE FOR NECESSARY VERIFICATION. 6. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUPPORTI NG THE ORDERS OF LD.CIT(A) RAISED NO OBJECTION TO THE PLEA OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE ISSUE IS RAISED ON MERITS M AY BE SET ASIDE TO THE FILE OF LD.CIT(A) FOR NECESSARY ADJUDICATION. SANJAY BAGDI ITA NO.327IND/2017 6 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. REVENUE IS AGGRIEVED WITH THE DE LETION OF ADDITION OF RS.60,42,964/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS AND DELETION OF ADDITION OF RS.9,48,000/- ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN RAISED AT GROUND NO.1 & 2. WITHOUT REITERATING THE FACTS IN DETAIL AS THE SAME HAVE BEEN DISCUSSED EAR LIER, WE FIND THAT THE ASSESSEE DID NOT COOPERATE DURING THE ASSESSMEN T PROCEEDINGS WHICH LEADG TO FRAMING OF EX-PARTE ASSESSMENT ORDER . BOOKS RESULTS WERE REJECTED AND NET PROFIT ESTIMATED AT 10%. ADD ITION WAS ALSO MADE FOR UNEXPLAINED SUNDRY CREDITORS AT RS.60,42,9 64/- AND UNEXPLAINED UNSECURED LOAN AT RS.9,48,000/- AS THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THESE WERE NOT PROVED BY THE ASSESSEE. 8. WHEN THE MATTER CAME UP BEFORE LD.CIT(A) HE TOOK THE VIEW THAT WHEN THE BOOK RESULTS HAVE BEEN REJECTED AND P ROFITS HAVE BEEN ESTIMATED, NO OTHER ADDITION SHOULD HAVE BEEN MADE AND HE ALSO GAVE RELIEF TO THE ASSESSEE BY ESTIMATING PROF IT AT 8% AS AGAINST 10% MADE BY THE LD.A.O. SANJAY BAGDI ITA NO.327IND/2017 7 9. FOR BETTER UNDERSTANDING OF THE ISSUE BEFORE US, WE WOULDLIKE TO MENTION BELOW THE PROVISIONS OF SECTION 145 OF T HE ACT. SECTION: 145. (1) INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR 'INCOME FROM OTHER SOURC ES' SHALL, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), BE COMPUTED IN A CCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY E MPLOYED BY THE ASSESSEE. (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE FROM TIME TO TIME INCOME COMPUTATION AND DISCLOSURE STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS O F INCOME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WH ERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) HAS NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, OR INCOME HAS NOT BEEN COMPUTED IN AC CORDANCE WITH THE STANDARDS NOTIFIED UNDER SUB-SECTION (2), THE ASSES SING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. 10. FROM THE PERUSAL OF THE ABOVE PROVISIONS AND MO ST SPECIFICALLY SUB SECTION 3 OF SECTION 145 OF THE ACT IT EMANATES THAT THE ASSESSING OFFICER MAY MAKE BEST JUDGMENT ASSESSMENT IN THE MANNER PROVIDED IN SUB SECTION 144 OF THE ACT IN CA SE HE IS NOT SATISFIED ABOUT THE FOLLOWING; (A) CORRECTNESS OF COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE; SANJAY BAGDI ITA NO.327IND/2017 8 (B) WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB SECTION 145(1) OF THE ACT HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE; (C) INCOME HAS NOT BEEN COMPUTED IN ACCORDANCE WITH THE SUB STANDARDS NOTIFIED UNDER SUB-SECTION 145(2) OF THE ACT. 11. WE FIND THAT IN THE INSTANT APPEAL LD.A.O REJEC TED THE BOOK RESULTS AND COMPUTED THE NET PROFIT BY APPLYING THE NET PROFIT RATE OF 10% ON THE TOTAL TURNOVER OF RS.7,2945,673/- OBS ERVING AS FOLLOWS; 4. AS PER THE AUDIT REPORT SUBMITTED BY THE ASSE SSEE (COL NO.32), THE ASSESSEE HAS SHOWN CONTRACT RECEIPTS AMOUNTING TO R S.7,29,45,673/- AND SHOWN NET PROFIT OF RS.3384528/-, WHICH COMES O UT TO 4.64%. THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS AND OTHER RELEVANT DETAILS OF EXPENSES ALONG WITH BILLS/VOUCHERS. HOW EVER, IN SPITE OF PROVIDING SUFFICIENT OPPORTUNITY OF BEING HEARD, TH E ASSESSEE FAILED TO SUBMIT EVEN A SINGLE BILL/VOUCHER RELATED TO THE EX PENSES CLAIMED IN P&L ACCOUNT. THE ASSESSEE WAS GIVEN A SHOW CAUSE AS TO WHY BOOK RESULTS SHOULD NOT BE REJECTED U/S 145 OF THE ACT AND NET PROFIT SHOULD NOT BE APPLIED @10% OF THE ACT. ASSESSEE DID NOT MAKE ANY SUBMISSION REGARDING THE SHOW CAUSE UNDER SECTION 144 OF THE ACT. AS THE ASSESSEE FAILED T O SUBMIT THE SUPPORTING BILLS/VOUCHERS OF EXPENSES CLAIMED AND BOOKS OF ACC OUNTS, BOOK RESULTS ARE REJECTED U/S 145 OF THE ACT AND NET @10% WHIC H COMES OUT TO RS.72,94,567/-. THE ASSESSEE HAS SHOWN NET PROFIT AMOUNTING TO RS.33,84,528/-. THEREFORE DIFFERENCE OF S.39,10,03 9/- (72,94,567 SANJAY BAGDI ITA NO.327IND/2017 9 3384528) IS HEREBY ADDED BACK TO THE TOTAL INCOME O F THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE BEING INITIATED SEPARATELY ON THIS ISSUE. ADDITION RS.39,10,039/ - 12. NOW PERUSAL OF THE FINDING OF LD.A.O VIS--VIS SECTION 145(3) OF THE ACT REFERRED ABOVE WE FIND THAT THE LD. ASSESSI NG OFFICER IN THE INSTANT CASE IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. THE REASON FOR SU CH NON SATISFACTION WAS THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE LD.A.O. IT IS NOT THE CASE THA T THE BOOKS WERE PRODUCED WITH THE DOCUMENTS AND THE LD.A.O HAD EXAM INED THEM AND NOTICED SOME INCORRECTNESS AND INCOMPLETENESS. RATHER HE HAD NO OPPORTUNITY TO LAY HIS HANDS ON THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. HE ONLY POSESSED THE A UDITED FINANCIAL STATEMENTS BUT AS THE FIGURES MENTIONED IN THE AUDI TED FINANCIAL STATEMENTS COULD NOT BE VERIFIED WITH THE BOOKS OF ACCOUNTS HE HAD TO FRAME A BEST ASSESSMENT BY FOLLOWING THE PROVIS IONS OF SECTION 144 OF THE ACT WHICH READS AS FOLLOWS:- 144. (1) IF ANY PERSON ( A ) FAILS TO MAKE THE RETURN REQUIRED UNDER SUB-SECT ION (1) OF SECTION 139 AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDE R SUB-SECTION (4) OR SUB-SECTION (5) OF THAT SECTION, OR SANJAY BAGDI ITA NO.327IND/2017 10 ( B ) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE I SSUED UNDER SUB-SECTION (1) OF SECTION 142 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SU B- SECTION (2A) OF THAT SECTION, OR ( C ) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL T HE TERMS OF A NOTICE ISSUED UNDER SUB-SECTION (2) OF SECTION 143 , THE ASSESSING OFFICER, AFTER TAKING INTO ACCOUNT AL L RELEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED, SHALL, AFTER GI VING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSMENT OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM P AYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESSMENT : PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY THE ASSESS ING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SHOW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY THE ASSESSM ENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT : PROVIDED FURTHER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORT UNITY IN A CASE WHERE A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER THIS SEC TION. (2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1 987 (4 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ASSESSMENT FO R THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988, OR ANY EA RLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISI ONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVISIONS AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE RELEVANT ASSESSMENT YEAR. 13. SUB-SECTION 1 OF SECTION 144 GIVES POWER TO THE ASSESSING OFFICER TO FRAME THE BEST JUDGMENT OF ASSESSMENT AF TER TAKING INTO ACCOUNT ALL THE RELEVANT MATERIAL WHICH HE HAD GATH ERED AFTER GIVING OPPORTUNITY TO THE ASSESSEE IN ORDER TO COMPUTE IN COME OR LOSS. IN SANJAY BAGDI ITA NO.327IND/2017 11 THE CASE OF THE ASSESSEE THE PROFIT AND LOSS ACCOUN T SHOWS TURNOVER OF RS.7,29,45,673/-. LD.A.O APPLIED THE NET PROFIT RATE OF 10% AS AGAINST 4.64% SHOWN BY THE ASSESSEE UNDER HIS POWER S UNDER SECTION 144 OF THE ACT. AS FAR AS THE AUDITED BALA NCE SHEET IS CONCERNED LD.A.O TOOK UP TWO FIGURES RELATING TO SU NDRY CREDITORS AND UNSECURED LOANS WHICH HE DEEMED NECESSARY TO BE EXAMINED ABOUT THEIR IDENTITY, GENUINENESS AND CREDITWORTHIN ESS IN TERMS OF PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSEE DID NOT PROVIDE ANY DETAIL WHICH PAVED THE WAY TO THE IMPUGNED ADDI TION. THEREFORE AFTER EXAMINING THE DETAILS AND PERUSAL O F PROVISIONS OF SECTION 144 AND 145 OF THE ACT AS WELL AS THE FACTS OF THE INSTANT APPEAL, WE CONCLUDE THAT IF THE ASSESSING OFFICER I S NOT PROVIDED THE BOOKS OF ACCOUNTS AND HE/SHE COMES ACROSS THE BALAN CE SHEET AND THE PROFIT AND LOSS ACCOUNT AND IF CASE HE/SHE DECI DES TO REJECT THE BOOK RESULTS THEN IT IS WITHIN THE POWERS OF THE PR OVISIONS OF SECTION 144 OF THE ACT TO COMPUTE THE INCOME BASED ON THE T URN OVER SHOWN IN THE AUDITED PROFIT AND LOSS AND ACCOUNT AND SIMU LTANEOUSLY LD.A.O CAN ALSO MAKE ADDITIONS WITH REGARD TO THE P ARTICULARS PROVIDED IN THE BALANCE SHEET. CERTAINLY THERE SHO ULD NOT BE AN OVERLAP OF THE ADDITION. SANJAY BAGDI ITA NO.327IND/2017 12 14. WE THEREFORE FIND FORCE IN THE CONTENTION OF LD . DEPARTMENTAL REPRESENTATIVE THAT THE UNEXPLAINED SUNDRY CREDITOR S AND UNEXPLAINED UNSECURED LOANS ARE NOT THE PART OF PRO FIT AND LOSS ACCOUNT. BY REJECTING BOOK RESULTS, PROFITS HAVE B EEN ESTIMATED ON THE BASIS OF TURNOVER. BUT THE UNEXPLAINED SUNDRY CREDITORS AND UNEXPLAINED UNSECURED LOANS, WHICH ARE BASICALLY CR EDITED IN THE BOOKS OF ACCOUNTS NEEDS TO BE EXPLAINED BY THE ASSE SSEE ELSE HE MAY HAVE TO FACE PROVISIONS OF SECTION 68 OF THE I. T ACT WHICH RELATES TO UNEXPLAINED CASH CREDITORS. UNSECURED L OANS NEED NOT NECESSARY BE USED ONLY FOR THE PURPOSE OF PURCHASE AS ONE CANNOT DENY THE POSSIBILITY THAT THE UNSECURED LOANS CAN B E USED FOR PURCHASE OF OTHER ASSETS, MAKING INVESTMENT OR LOAN S AND ADVANCES BUT IF THE IMPUGNED CREDIT COMES INTO THE BOOKS OF ACCOUNTS THEN IT NEEDS TO BE EXPLAINED ABOUT THEIR IDENTITY, GENUINE NESS AND CREDITWORTHINESS. SIMILAR IS THE FACT OF SUNDRY CR EDITORS WHICH ARE FOR PURCHASE OF GOODS OR CAPITAL ASSETS OR SERVICES . THE ONUS TO PROVE THEIR GENUINENESS COMPLETELY LIES ON THE ASSE SSEE. IN THE INSTANT CASE DURING THE ASSESSMENT PROCEEDINGS ASSE SSEE DID NOT COOPERATE WITH THE ASSESSING AUTHORITY AND ALL THE QUERIES OF THE LD.A.O REMAIN UNANSWERED. LD.CIT(A) DID NOT ADJUDI CATE THESE TWO SANJAY BAGDI ITA NO.327IND/2017 13 ISSUES OF UNEXPLAINED SUNDRY CREDITORS AND UNEXPLAI NED UNSECURED LOANS BY GROSSLY TAKING A VIEW THAT THE PROFITS ARE ESTIMATED AS SUCH NO OTHER ADDITION IS CALLED FOR. 15. IN VIEW OF OUR ABOVE DISCUSSION AND IN THE GIV EN FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THA T THE ISSUES OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE S UNDRY CREDITORS AT RS.60,42,964/- AND UNEXPLAINED UNSECURED LOAN O F RS.9,48,000/- (RS.6,48,000/- FROM M/S. AMIT CONSTRU CTION AND RS.3,00,000/- FROM SHRI SHEIKH ALLABAKSH) NEEDS TO BE SET ASIDE TO THE FILE OF LD.CIT(A) FOR AFRESH ADJUDICATION AND I F NECESSARY A REMAND REPORT MAY BE CALLED FROM THE ASSESSING OFFI CER FOR VERIFYING THE FACTS AND THEREAFTER LD.CIT(A) SHOULD DECIDE AS TO WHETHER THE ALLEGED AMOUNT OF SUNDRY CREDITORS AND UNSECURED LO ANS ARE TO BE TREATED AS UNEXPLAINED OR EXPLAINED AND DECIDE ACCO RDINGLY. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEIN G HEARD SHOULD BE PROVIDED TO THE ASSESSEE. 16. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. SANJAY BAGDI ITA NO.327IND/2017 14 THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.20 18. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 14 NOVEMBER, 2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE