Shri Dinesh Sharma S/o Late Shri Hiralal Sharma, Dewas V. The ACIT 1(1), Ujjain

ITA 335/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4854 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: KULDEEP PATHAK
• Keywords: Opportunity of being heard
• Section: 133(6); 68

Judgement Text

DINESH SHARMA ITA NO. 335/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 335/IND/2013 A.Y.2009-10 DINESH SHARMA S/O LATE HIRALAL SHARMA DEWAS ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(1) UJJAIN ::: RESPONDENT APPELLANT BY SHRI KULDEEP PATHAK RESPONDENT BY SHRI R.R. MEENA DATE OF HEARING 5.11.2015 DATE OF PRONOUNCEMENT 8 .12.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), UJJAIN DATED 26.2.2013. DINESH SHARMA ITA NO. 335/IND/2013 2 2. THE SUM AND SUBSTANCE OF THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NO T JUSTIFIED IN HOLDING THE ADDITION OF INCOME OF RS.91 ,256/- TOWARDS SALARY AND TRAVELLING EXPENSES IN THE INCOME OF THE ASSESSEE AND ADDITION OF RS.1,73,90,568/- TO THE INCOM E OF THE ASSESSEE AS INCOME U/S 68 OF THE ACT WITHOUT AFFOR DING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DIRECTOR IN TWO COMPANIES, VIZ. THE NEW TECH ABRASIVES LTD. AND S.K.F.B. SPARK LTD., MUMBAI. THE ASSESSEE HAS ALSO TWO BUSINESS ENTITIES IN THE NAME OF M/S SHREE KRISHNA FOOD AND BEVERAGES, DEWAS AND M/S SHREE RAM STEEL CO. (ENGAGED IN TRADING IN STEEL AND IRON PRODUCTS). IN THE PROPRIETORSHIP CONCERN M/S SHREE RAM STEEL CO. THERE WERE SUNDRY CREDITORS. THE ASSESSIN G OFFICER CALLED INFORMATION U/S 133(6) OF THE ACT FROM SUNDRY CREDITORS LIKE M/S ALLIANZ STEEL LIMITED, M/S CHAMUND A DINESH SHARMA ITA NO. 335/IND/2013 3 IRON & STEEL PVT. LTD. SIDDHI IRON & STEEL PVT. LTD . THESE NOTICES U/S 133(6) OF THE ACT WERE RECEIVED BACK UNS ERVED. THE ASSESSING OFFICER ASKED TO PRODUCE THE DIRECTOR OF THESE CREDITOR COMPANIES BUT THE ASSESSEE SHOWED INABI LITY TO PRODUCE THEM. THE ASSESSING OFFICER MADE THE ADDIT ION OF RS.1,73,90,568/- BY INVOKING PROVISIONS OF SECTI ON 41(1) OF THE ACT. THE LEARNED CIT(A) HELD THAT THESE CREDIT OR COMPANIES HAVE SHOWN HUGE SALES AND PURCHASES DEBITING NOMINAL EXPENSES ON ACCOUNT OF BANK CHARGES, SALARY, ETC. , BUT NO EXPENSES OF TRANSPORTATION, ETC. WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THESE COMPANIES. THESE COMPANIES HAVE SHOWN SALES OF CRORES OF RUPEES WITHOUT DEBITING ANY EXPENSES TO PROVE THAT THE GOODS WERE ACT UALLY PURCHASED AND SOLD. IT WAS ALSO OBSERVED THAT THESE WERE PAPER COMPANIES PROVIDING ENTRIES. THE ASSESSEE COMPAN Y FAILED TO PRODUCE DIRECTORS OF THESE COMPANIES EVEN I N THE APPELLATE PROCEEDINGS. NO RESPONSIBLE PERSON WAS FOUND AT DINESH SHARMA ITA NO. 335/IND/2013 4 THE ADDRESSES GIVEN BY THE ASSESSEE. SHE ALSO CONCLU DED THAT THESE BALANCES WERE NOT OLD OUTSTANDING BALANCES. THEREFORE, THE PROVISIONS OF SECTION 41(1) ARE NOT AP PLICABLE BUT THESE ARE BOGUS CREDITORS WHICH ARE REQUIRED TO BE ADDED BY APPLYING SECTION 68 OF THE ACT SINCE THE IDE NTITY, CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION COULD NOT BE PROVED. THE ADDITION WAS SUSTAINED U/S 68 OF THE AC T. 4. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS BUT ONE OF THE GROUNDS IS THAT BEFORE INVOKING PROVISIONS OF SECTION 68 OF THE ACT BY THE LEARNED CIT(A), NO OPPORTUNITY OF ANY KIND WAS GIVEN TO THE ASSESSEE AS TO WHY THE ADDITION MADE U/S 41(1) OF THE ACT BY THE ASSESSING OFFICER BE TREATED AS INCOME U/S 68 OF THE ACT. ON ENQUIRY BY THE BENCH FROM THE LEARNED DR AS T O WHETHER ANY OPPORTUNITY WAS PROVIDED IN TERMS OF SECT ION 251(2) OF THE ACT, THE ANSWER WAS NEGATIVE. CONSIDERIN G ALL THESE FACTUAL ASPECTS AND THE PROVISIONS OF THE ACT, W E HOLD DINESH SHARMA ITA NO. 335/IND/2013 5 THAT THE ASSESSEE DESERVES AN OPPORTUNITY OF BEING HE ARD WHEN THE ADDITION IS SUSTAINED BY INVOKING A DIFFERENT PROVISION OF THE ACT. THERE IS A CHANGE IN THE SECTIO N UNDER WHICH THE ADDITION IS SUSTAINED. WE, THEREFORE, IN TH E INTEREST OF JUSTICE AND EQUITY RESTORE THE ISSUE TO T HE FILE OF THE LEARNED CIT(A) TO DECIDE THE SAME DE NOVO AFTER PROVIDING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 8TH DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 8 TH DECEMBER, 2015 DN/- DINESH SHARMA ITA NO. 335/IND/2013 6