ITO, CHURU V. M/s. Ramjibhai & Company, CHURU

ITA 332/JODH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48025 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Assessment record; Set aside
• Section: 68; 2

Judgement Text

ITA NO.332/JU/2009 CO NO.54/JU/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND AND AND AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.332/JU/2009 ASSESSMENT YEAR : 2001-02 THE INCOME TAX OFFICER, WARD-1, CHURU. VS. M/S RAMJIBHAI COMPANY , NEAR PANCHMUKHI BALAJI, CHURU. PAN: AAHFR2703G C.O. NO.54/JU/2009 (IN ITA NO.332/JU/2009) ASSESSMENT YEAR : 2001-02 M/S RAMJIBHAI COMPANY, NEAR PANCHMUKHI BALAJI, CHURU. PAN: AAHFR2703G VS. THE INCOME TAX OFFICER, WARD-1, CHURU ASSESSEE BY : SHR I SURESH OJHA, AR REVENUE BY : SHRI G.R. KOKANI , DR O R D E R O R D E R O R D E R O R D E R PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT (APPEALS)-III, JAIPUR. THESE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE ARE DISPOSED OF BY THIS COMMON ORDER. 2. IN REVENUES APPEAL THE FOLLOWING GROUNDS OF APPEA L HAVE BEEN TAKEN:- 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN DELETIN G THE ITA NO.332/JU/2009 CO NO.54/JU/2009 2 ADDITION U/S 68 OF THE IT ACT ON ACCOUNT OF LOANS OF RS .2,3 5,000/ - AND DEPOSITS OF RS.6,33,470/- THROUGH SQUARED UP ACCO UNTS IGNORING THE FACT THAT THE ASSESSEE HAD NOT DISCHARGED I TS ONUS OF PROVING THE IDENTITY OF THE CREDITOR/DEPOSITORS AND GENU INENESS AND CREDIT-WORTHINESS OF THE TRANSACTION. 2. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE DETAILS NOTED IN THE LOOSE SHEET BY THE A.O. RELATED TO THE ASSESSEE AND WERE NOT DISPUTED BY THE ASS ESSEE AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS BEFORE THE THEN A.O. 3. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT ORIGINA L ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143 (3) OF THE ACT ON 30 TH MARCH, 2004 ON A TOTAL INCOME OF ` 12,76,743/-. THE MATTER TRAVELLED UPTO THE LEVEL OF ITAT AND THE ITAT, JODHPUR BENCH SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER IN RESPECT OF ADDITION OF ` 9,84,970/- MADE U/S 68 OF TH E ACT ON THE FOLLOWING POINTS:- (I) CASH DEPOSITS AMOUNTING TO ` 1,16,500/- (` 36,500/- + ` 80,000/-) MADE BY THE ASSESSEE IN THE BOOKS OF ACCOUNT IN APRIL, 2 000; (II) UNEXPLAINED LOANS AMOUNTING TO ` 2,35,000/-; AND (III) UNEXPLAINED DEPOSITS THROUGH SQUARED UP ACCOUNTS OF ` 6,33,470/-. 4. DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDINGS ON TH E ISSUES REFERRED TO ABOVE, THE ASSESSEE WAS ASKED TO PRODUCE BOOK S OF ACCOUNT AND OTHER RELEVANT DOCUMENTS. ON PERUSAL OF JOURNAL-CUM- CASH BOOK AND LEDGER, THE ASSESSING OFFICER FOUND THAT ONLY TWO ENTRIES I.E., OF ` 36,500/- AND ` 80,000/- WERE APPEARING IN THE CASH BOOK/JOURNAL. N O OTHER ENTRIES AS REFERRED TO BY THE THEN AO WERE FOUND. THE AO FURT HER NOTED THAT HE CAME ACROSS A LOOSE SHEET IN WHICH CERTAIN NOTINGS WERE MADE BY THE THEN AO IN WHICH SOME ENTRIES WERE NOTED. AS PER THE NOTINGS, AN AMOUNT OF ` 6,33,470/- WAS NOTED AS ON 27 TH AUGUST, 2000 IN RESPECT OF 8 ENTRIES AND ON ITA NO.332/JU/2009 CO NO.54/JU/2009 3 31 ST AUGUST, 2008 AN AMOUNT OF ` 2,35,000/- WAS NOTED I N RESPECT OF FOUR ENTRIES. THE AO FURTHER NOTED THAT THESE NOTINGS WERE MADE BY THE THEN AO AT THE TIME OF ORIGINAL ASSESSMENT FROM THE EVIDENCES A VAILABLE WITH HIM AT THAT TIME. NO SUCH ENTRIES OF ABOVE NATURE OR OTHER ENTRIES APPEARED IN THE ANNEXURE ANNEXED TO THE BOOKS OF ACCOUNT PRODUCED B Y THE ASSESSEE. THE AO BROUGHT TO THE NOTICE OF THE ASSESSEE THAT IN THE B OOKS OF ACCOUNT PRODUCED BEFORE HIM NO ENTRY OF SUCH AMOUNT APPEARED IN THE MONTH OF AUGUST. THEREFORE, HE EXPRESSED HIS INTENTION THAT HE WAS NOT GOING TO TREAT THE BOOKS OF ACCOUNT PRODUCED AS JENUINE AND WAS GOI NG TO REJECT THE SAME. SINCE THE ABOVE NOTED AMOUNTS WERE NOT APPEARING IN THE BOOKS OF ACCOUNT, THE ONUS WAS ON THE ASSESSEE TO PROVE THE SOURCE OF THESE D EPOSITS AS HIS PREDECESSOR PREPARED THE ABOVE NOTINGS ON THE BASIS OF H IS FINDING AT THAT TIME. 5. IN RESPONSE TO A QUERY MADE BY THE ASSESSING OFFICER, IT WAS SUBMITTED BY THE ASSESSEE THAT THE TRIBUNAL HAS GIVEN CERTAIN DIRE CTIONS AND THE ISSUE WAS TO BE EXAMINED AS PER THE DIRECTIONS OF THE TRIBUN AL. IT WAS ALSO SUBMITTED THAT THE AMOUNTS MENTIONED IN THE LETTER AL LEGED TO BE THE CREDITORS DID NOT RELATE TO HIM. THE ASSESSEE WAS NOT A WARE OF SUCH FIGURES OR LOANS OR CREDITORS CLASSIFIED BY THE AO OR BY HIS PRE DECESSOR. THEREFORE, NO ADDITION COULD BE MADE. THE ASSESSEE FURTHER SUBMIT TED THAT THE BOOKS OF ACCOUNT WERE AUDITED BY A CHARTERED ACCOUNTANT A ND THE RETURN OF INCOME WAS PREPARED ON THE BASIS OF SUCH BOOKS OF ACCOUNT. THE ORIGINAL BALANCE SHEET AND PROFIT & LOSS ACCOUNT WERE DULY CERTIFIED BY THE CHARTERED ACCOUNTANT AND HAD BEEN FILED ALONG WITH THE RETURN OF INCOME. AS REGARDS THE NOTINGS MADE BY EARLIER AO, THE LEARNED AR OF TH E ASSESSEE SUBMITTED THAT THE SAID SHEET WAS NOT A DOCUMENT WHICH COULD BE PRODUCED TO BE GENUINE OR PART OF THE RECORD. IT HAS NOWHERE BEEN REFERRED TO IN ASSESSMENT ORDER AND EVEN BEFORE THE CIT (A). IT WAS, THEREFOR E, SUBMITTED THAT THE SHEET REFERRED BY THE AO WAS NOT A GENUINE DOCUMENT W HICH WAS PROVIDED ITA NO.332/JU/2009 CO NO.54/JU/2009 4 FOR THE FIRST TIME TO THE ASSESSEE AND THE SAME COULD NOT BE MADE A TOOL TO TAX THE ASSESSEE. AS REGARDS THE GENUINENESS OF BOOKS OF AC COUNT, IT WAS SUBMITTED THAT THE CONTENTION RAISED BY THE AO WAS HIG HLY ARBITRARY AND HAD NO BASIS WHATSOEVER THAT BOOKS PRODUCED BEFORE HIM WER E PREPARED AFTERWARDS. IT WAS ALSO SUBMITTED THAT THESE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE JOINT COMMISSIONER OF INCOME-TAX, JHUNJHUNU WHICH WERE DULY EXAMINED BY HIM. IT WAS ALSO SUBMITTED THAT THE BOOKS OF ACCOUNT WERE ALSO PRODUCED ON 25 TH FEBRUARY, 2004. THE AO, HOWEVER, REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT SUBMITTED ANY COGENT REASONS FOR NON-PRODUCTION OF CRE DITORS AND GENUINENESS OF BOOKS OF ACCOUNT. HE RELIED ON THE ANN EXURE PREPARED BY HIS PREDECESSOR AND ALL THE ENTRIES THEREIN WERE BASED AT T HE TIME OF ORIGINAL ASSESSMENT. THOSE NOTINGS WERE LYING IN THE ASSESSMENT FILE. THE ASSESSEE WAS GIVEN OPPORTUNITY, BUT, FROM THE BOOKS OF ACCOUNT ONLY TWO ENTRIES WERE VERIFIABLE. THERE WAS NO MENTION OF REMAINING FIGUR ES. THE AO, THEREFORE, ADDED THE AMOUNT OF ` 2,35,000/- AND ` 6,33,470/-. AS REGARDS THE CASH DEPOSITS OF ` 1,16,500/-, THE SAME WAS TREATED BY THE A O AS GENUINE. 6. BEFORE CIT (A), IT WAS SUBMITTED BY THE ASSESSEE THAT HE WAS MAINTAINING REGULAR BOOKS OF ACCOUNT WHICH WERE DULY AUDITED BY A CHARTERED ACCOUNTANT AND THE RETURN OF INCOME WAS FI LED ON THE BASIS OF SUCH BOOKS OF ACCOUNT. IT WAS ALSO SUBMITTED THAT THE AO HA D MADE THE IMPUGNED ADDITION OF ` 8,68,470/- ON THE BASIS OF SOME ENTRIES F OUND NOTED ON A LOOSE SHEET BY THE THEN AO WHICH WAS FOUND LYING IN THE ASSE SSMENT RECORDS BY THE PRESENT AO. IT WAS ALSO SUBMITTED THAT THE SAID EN TRIES WERE NOT PERTAINING TO THE ASSESSEE AND, THEREFORE, THE SAME WERE NOT FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS ALSO ARGUED THAT THERE WAS NO DISPUTE REGARDING THE FACT THAT NEITHER THE AFORESAID LOOSE SHEET BELONGED TO THE ASSESSEE NOR THE NOTINGS THEREON WERE MADE BY THE ASSE SSEE AND, FURTHER, THE AO HAD NOT BROUGHT ANY MATERIAL OR EVI DENCE ON RECORD TO PROVE ITA NO.332/JU/2009 CO NO.54/JU/2009 5 THAT THE ENTRIES NOTED BY THE THEN AO ON THAT LOOSE SHEET WERE IN ANY WAY RELATED TO THE ASSESSEE. THEREFORE, IT WAS SUBMITTED THA T THE AO HAD NOT MADE ADDITION BASED ON THE FACTS OF THE CASE. 7. LEARNED CIT (A), AFTER CONSIDERING THE SUBMISSIONS MADE AND ON APPRECIATION OF FACTS OF THE CASE HELD THAT THE AO HA D MADE THE ADDITION OF ` 8,68,470/- ONLY ON THE BASIS OF A LOOSE SHEET OF PAPER ON WHICH THE THEN AO MADE NOTINGS OF CERTAIN AMOUNTS WHICH WAS FOUND LYING IN THE ASSESSMENT RECORD PERTAINING TO ORIGINAL ASSESSMENT. ON PERUSAL OF THE SAID SHEET OF PAPER, IT WAS SEEN THAT THE THEN AO HAD NOTED SEVERAL FIGURES WHICH INCLUDED FIGURE OF LOAN TAKEN AT ` 2,35,000/- AND SQUARED UP LOANS OF ` 6,33,470/-. FURTHER, IT WAS NOT KNOWN ON WHAT BASIS THE THEN AO HAD NOTED THOSE FIGURES ON THAT SHEET OF PAPER. THE LD. CIT (A) FURTHER NOT ED THAT THE SAID LOOSE SHEET WAS NEITHER BELONGED TO THE ASSESSEE NOR THE NOTINGS THER EON WERE MADE BY THE ASSESSEE. THEREFORE, MERELY ON THE BASIS OF SUCH ROU GH NOTINGS ON LOOSE SHEET OF PAPER MADE BY THE THEN AO, IT COULD NOT BE SAID THAT THE ASSESSEE HAD TAKEN THE ALLEGED LOANS AMOUNTING TO ` 2,35,000/ - AND DEPOSITS THROUGH SQUARED UP ACCOUNTS AMOUNTING TO ` 6,33,470/-. THE L D. CIT (A) FURTHER NOTED THAT FROM THE AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME ON 31 ST OCTOBER, 2001 THE ASSESSEE HAD NEITHER ANY OUTSTANDING LOANS AGAINST HIM NOR HAS PAID ANY INT EREST FOR ANY LOAN FROM ANY PARTY. HENCE, HE CAME TO THE CONCLUSION TH AT THE ADDITION MADE BY THE AO U/S 68 OF THE ACT WAS NOT SUSTAINABLE. LD. CIT (A) ACCORDINGLY DELETED THE ADDITION. 8. BEFORE US, LEARNED SR. DR SUPPORTED THE ORDER OF THE AO. ON THE OTHER HAND, LD. AR OF THE ASSESSEE SUBMITTED THAT NO ADDITION CAN BE MADE ON THE BASIS OF LOOSE SHEET PREPARED BY THE EARLIER AO WHICH D OES NOT BELONG TO THE ASSESSEE AT ALL. HE, THEREFORE, SUBMITTED THAT LD. CIT (A) IS JUSTIFIED IN DELETING THE ADDITION. ITA NO.332/JU/2009 CO NO.54/JU/2009 6 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE BO OKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED BY A CHARTERED ACCOUNTANT U/S 44AB OF THE ACT. THE AO ON THE BASIS OF BOOKS OF ACCOUNT PRODUCED HAS RECORD ED A FINDING OF FACT THAT IN THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM TWO ENTRIES OF ` 1,16,500/- WERE FOUND RECORDED. THE ASSESSING OFFICER HAS DELETED THIS ADDITION AS THE SAME IS VERIFIABLE FROM BOOKS OF ACCOUNT. THE OTHER T WO ADDITIONS OF ` 2,35,000/- AND ` 6,33,470/- ARE MADE ON THE BASIS OF NOTINGS ON A SHEET OF PAPER ON WHICH THE EARLIER AO HAD MADE CERTAIN NOTI NGS. WE HAVE GONE THROUGH THE ENTRIES MADE BY THE THEN ASSESSING OFFICER. THE ENTRIES PERTAIN TO LINE OF INVESTIGATION TO BE MADE. FROM THE NOTIN GS ON PAPER, THE SOURCE OF ENTRIES CANNOT BE MADE OUT. THE THEN ASSESSING OFFICER HAD ALSO NOT GIVEN ANY REFERENCE TO SUCH ENTRIES. IN THE PRESENT ASSESSMENT O RDER THE AO HAD SIMPLY RELIED ON THE NOTINGS OF THE THEN ASSESSING OFFICE R WITHOUT BRINGING ANY MATERIAL ON RECORD. IN THE ABSENCE OF ANY SUCH M ATERIAL NO ADDITION ON THE BASIS OF ROUGH NOTINGS MADE BY THE THEN AO CAN BE MADE IN THE HANDS OF THE ASSESSEE. THEREFORE, IN OUR CONSIDERED OPINION, LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` 2,35,000/- AND ` 6,33 ,470/. WE ACCORDINGLY UPHOLD THE ORDER OF CIT (A). 10. AS REGARDS THE CROSS OBJECTIONS, THE GROUNDS TAKEN BY THE ASSESSEE ARE AS FOLLOWS:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY DELETED THE ADDITION MADE U/S 68 OF INCOME TAX ACT, AMOUNTING TO ` 2,35,000/- AND ` 6,35,470/- BECAUSE THE ASSESSEE SUCCESSFULLY D ISCHARGED THE BURDEN. 2. THAT THE ADDITION IN THE CASH CREDIT SQUARED-UP A/C AMO UNTING TO ` 6,33,470/- IS WRONGLY MADE BY THE INCOME TAX OFFICER . 3. THAT THE ADDITION MADE BY THE ITO IS ON THE BASIS OF LOO SE SHEETS WHICH WERE DUMP AND DEAF DOCUMENT FOR WHICH THE ASSES SEE WAS DENYING SINCE ITS BEGINNING IS ILLEGAL AND AGAINST TH E LAW. ITA NO.332/JU/2009 CO NO.54/JU/2009 7 4. THAT THE ADDITION U/S 68 MADE BY THE ITO IS NOT IN ACCOR DANCE WITH THE LAW. 11. IT CAN BE SEEN THAT THE GROUNDS TAKEN BY THE ASSESSEE IN CROSS OBJECTIONS ARE IN SUPPORT OF THE ORDER OF THE CIT (A) . SINCE WE HAVE CONFIRMED THE ORDER OF THE CIT (A) DELETING THE ADD ITION, THE GROUNDS RAISED IN THE CROSS OBJECTIONS BY THE ASSESSEE BECOME INFRUCTUOU S AND ARE DISMISSED AS SUCH. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND T HE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2011. SD/- SD/- [RAJPAL YADAV] [K.D. RAN JAN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 22 ND JULY, 2011 DK COPY FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT 3. INCOME-TAX OFFICER, 4. CIT 5. DR 6. GUARD FILE ASSTT. REGISTRAR ITAT, JODHPUR