SHRI KHANCHAND D. DODEJA, Akola V. I.T.O. Ward -1, Akola

ITA 335/NAG/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1186 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Assessee Lawyers: C J THAKAR
• Keywords: Business income; Set aside
• Section: 142(1); 133A; 201; 143(2); 148; 144; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 335 /NAG /201 7 / ASSESSMENT YEAR : 20 05 - 06 SHRI KHANCHAND G. DODEJA, C/O. GOVINDMAL PARPIYAMAL, APMC YARD, AKOLA 444001 PAN : ABHPD7198L ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 1, AKOLA / RESPONDENT ASSESSEE BY : S HRI C.J. THAKAR REVENUE BY : SHRI R.K. BARAL / DATE OF HEARING : 25 - 03 - 2019 / DATE OF PRONOUNCEMENT : 24 - 0 5 - 201 9 2 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE IS ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, NAGPUR DATED 04 - 07 - 2017 FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A COMMISSION AGENT A ND IS ENGAGED IN TRADING OF ONIONS AT APMC MARKET YARD, AKOLA. A SURVEY ACTION U/S. 133A O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 07 - 01 - 2011. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. IT WAS FURTHER FOUND THAT THERE WERE CASH CREDITS AMOUNTING TO RS.50,92,282/ - IN C URRENT B ANK A CCOUNT NO. 73 OF ASSESSEE AT THE AKOT ROAD BRANCH OF AKOLA JANTA COMMERCIAL CO - OP. BANK. NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 19 - 07 - 2011 WHICH WAS DULY SERVED ON THE SAME DAY. THE ASSESSEE DID NOT COMPLY WITH THE SAID NOTICE. THEREAFTER, SEVERAL NOTICES WERE ISSUED U/S . 142(1) AND 143(2) OF THE ACT. DESPITE SERVICE OF SAID NOTICES THE ASSESSEE DID NOT BOTHER TO APPEAR BEFORE THE ASSESSING OFFICER. THUS, THE ASSESSING OFFICER WAS CONSTRAINED TO COMPLETE THE 3 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 ASSESSMENT U/S. 144 OF THE ACT. THE ASSESSING OFFICER VIDE AS SESSMENT ORDER DATED 21 - 03 - 2013 PASSED U/S. 144 R.W.S. 147 OF THE ACT MADE ADDITION OF RS.50,92,282/ - U/S. 68 OF THE ACT . AGAINST THE SAID ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) . HOWEVER, THE COMMISSI ONER OF INCOME TAX (APPEALS) WAS NOT CONVINCED WITH THE CONTENTION S OF THE ASSESSEE AND CONFIRMED THE FINDINGS OF ASSESSING OFFICER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AND HAS RAISED FOLLOWING GROUNDS IN APPEAL : 1] ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND MATERIAL ON RECORD AND TAKING A REASONABLE AND PRACTICAL VIEW THEREOF THE LEARNED C.I.T.(A) SHOULD HAVE DELETED THE ADDITION OF RS.50,92,280/ - BEING DEPOSITS IN BANK ACCOUNT ON VARIOUS DATES WHICH WERE OUT OF RECEIPT OF A MOUNTS FROM TRADE DEBTORS AS PER DETAILS ALREADY FILED ON RECORD. 2] LEARNED C.I.T.(A) ERRED IN OBSERVING THAT THE SO CALLED LEDGED ACCOUNT OF TRADE DEBTORS GIVING DAILY RECEIPTS FROM SAID DEBTORS IS FOUND TO BE SELF SERVING DOCUMENT. THERE WAS NO MATERIAL TO REBUT THE SAME. ON THE OTHER HAND THE SAME WAS DULY SUPPORTED BY EVIDENCE AND MATERIAL ON RECORD AND WAS FULLY VERIFIABLE. 3] LEARNED C. I. T.(A) FAILED TO SEE THAT THE TOTAL DEPOSITS OF RS.50,92,280 / - IN BUSINESS BANK ACCOUNT OF THE FIRM WAS OVER AN ENTIRE PERIOD OF THE YEAR IN SMALL AND ODD FIGURES SUPPORTED BY RECEIPT NUMBERS, AND HENCE THERE WAS NO BASIS FOR TREATING THE ENTIRE GROSS DEPOSITS OVER A YEAR AS UNEXPLAINED AND TREATING THE SAID ENTIRE GR OSS RECEIPT AS UNDISCLOSED INCOME OF THE ASSESSEE. AT BEST SOME INCOME COULD HAVE BEEN ESTIMATED. 4] DURING ASSESSMENT YEAR 2005 - 06 (F.Y.2004 - 05) THE BUSINESS WAS CARRIED ON BY THE PARTNERSHIP FIRM STYLED AS 'M/S. GOVINDMAL 4 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 PARPIYAMAL' AND NOT BY KHA NCHAND GOVINDLAL DODEJA WHO WAS MERELY A PARTNER OF SAID PARTNERSHIP FIRM. HENCE IN ABSENCE OF NOTICE U/S.148 ON THE SAID PARTNERSHIP FIRM THE IMPUGNED ASSESSMENT OF THE PRESENT ASSESSEE IS WITHOUT JURISDICTION AND LIABLE TO BE CANCELLED ON THAT GROUND ALSO. 5] ASSESSEE CRAVES LEAVE TO URGE ADDITIONAL GROUNDS AT THE TIME OF HEARING AS MAY BE NECESSARY. 3. SHRI C.J. THAKAR A PPEARING ON BEHALF OF THE ASSESSEE MADE TWO FOLD SUBMISSIONS. THE LD. AR CONTENDED THAT THE ASSESSMENT PROCEEDINGS ARE LIABLE TO BE SET ASIDE ON THE LEGAL GROUND THAT THE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT OF PARTNERSHIP FIRM DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2005 - 06 , WHEREAS , THE ADDITIONS HAVE BEEN MADE IN THE HANDS OF INDIVIDUAL ASSESSEE. THERE WAS A PARTNERSHIP FIRM IN THE NAME AND STYLE OF M/S. GOVINDMAL PARPIYAMAL CONSISTING OF FIVE PARTNERS. THE ASSESSEE WAS ONE OF THE PARTNERS. THE SAID PARTNERSHIP FIRM WAS DISSOLVED IN THE FINANCIAL YEAR 2004 - 05 I.E. RELEVANT TO THE ASSESSMENT YEAR 2005 - 06. THEREAFTER, THE FIRM M/S. GOVINDMAL PARPIYAMAL BECAME THE PROPRIETARY CONCERN OF THE ASSESSEE. THE NOTICE U/S. 148 AND THE SUBSEQUENT NOTICE S U/S. 142 (1) AND 143(2) WERE ISSUED IN THE NAME OF ASSESSEE AND NOT THE PARTNERSHIP FIRM. SINCE, THE NOTICES WERE ISSUED IN THE NAME OF INDIVIDUAL THE PROCEEDINGS U/S. 148 ARE ITSELF BAD IN LAW AND NOT SUSTAINABLE. 5 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 3.1 ON MERITS OF ADDITION , THE LD. AR SUBMITTED THAT THE ASSESSEE IS A CO MMISSION AGENT AND IS TRADING IN ONIONS AND POTATOES. THE ASSESSEE IS A CONDUIT BETWEEN FARMER (SELLER) AND THE PURCHASE DEALER. AFTER THE DEAL I S FINALIZED BETWEEN THE FARMER AND PURCHASER , THE ASSESSEE IMMEDIATELY PAYS THE PRICES OF PRODUCE TO THE FARM ERS AFTER DEDUCTING THE COMMISSION AND BATOV . THEREAFTER, THE ASSESSEE RAISES BILLS AGAINST PURCHASER DEALER. AFTER THE RECEIPT OF PAYMENT FROM THE DEALER , THE ASSESSEE ISSUE RECEIPT AGAINST THE PAYMENT RECEIVED. THE ASSESSEE RECEIVE PAYMENTS FROM T HE DEALERS EITHER IN CHEQUE OR CASH. THE AMOUNTS ARE CREDITED TO THE CURRENT BANK ACCOUNT OF ASSESSEE. THE AMOUNTS CREDITED IN THE BANK ACCOUNT OF ASSESSEE FROM TIME TO TIME DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AGGREGATING TO RS .50,92,280/ - ARE THUS , THE AMOUNTS RECEIVED FROM DEALERS ON ACCOUNT OF SALE PROCEEDS. THE ADDITIONS MADE BY AUTHORITIES BELOW U/S. 68 ON ACCOUNT OF CASH CREDITS IN THE BANK ACCOUNT OF ASSESSEE ARE THE RECOVERIES FROM DEBTORS OF EARLIER YEARS. THE LD. AR FAIRLY ADMITTED THAT THOUGH THE ASSESSEE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT , H OWEVER, THE ASSESSEE HAS FURNISHED THE DETAILS OF PERSONS FROM WHOM CASH AMOUNTS WERE RECEIVED AND RECEIPTS WERE ISSUED AGAINST THE PAYMENTS RECEIVED. THE LD. AR FURTHE R CONTENDED THAT THE ASSESSEE CHARGES COMMISSION @ 6% ON SUCH SALES AND 1% BATOV FOR CASH PAYMENTS MADE TO THE FARMERS. THUS, THE TOTAL COMMISSION RECEIVED ON SALE OF ONIONS IS 7%. 6 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 THE LD. AR SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN MAKING ADDITION OF ENTIRE AMOUNT CREDITED IN THE BANK ACCOUNT OF ASSESSEE. AT THE MOST THE ADDITION OF PROFIT SEGMENT C OULD HAVE BEEN MADE BY THE AUTHORITIES BELOW. THE LD. AR IN SUPPORT OF HI S CONTENTIONS PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . CIT VS. BALCHAND AJIT KUMAR, 263 ITR 610 (MP); II . CIT VS. PRESIDENT INDUSTRIES, 258 ITR 654 (GUJ.); III . G.N. MOHAN RAJU VS. I.T.O., 217 ITR 4 (GAUHATI); IV . PRABHUDAS JAGJIWANDAS VS. I.T.O., 55 ITR 1 (GUJ.). 4. ON THE OTHER HAND SHRI R.K. BARAL REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE ASSESSEE DID NOT CO - OPERATE WITH ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND FAILED TO COMPLY WITH THE NOTICES U/S. 148 OF THE ACT. THE ASSESSEE HAS NEITHER MAINTAINED BOOKS OF ACCOUNT NO R HAS FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR . THE ASSESSEE IN PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) HAD MADE SIMILAR SUBMISSIONS AND HAD RE FERRED TO THE DETAILS AT PAGES 12 TO 86 OF THE PAPER BOOK. THE LD. DR SUBMITTED THAT A PERUSAL OF LIST OF THE SAID PAGES WOULD REVEAL THAT THERE ARE SOME NAMES MENTIONED AGAINST RECEIPT NUMBERS . HOWEVER, THE ASSESSEE HAS NOT FILED RECEIPTS EITHER BEFORE THE AUTHORITIES 7 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 BELOW OR EVEN BEFORE THE TRIBUNAL. THE LISTS FURNISHED BY THE ASSESSEE ARE MERELY SELF SERVING DOCUMENTS AND HENCE, NO SANCTITY CAN BE ATTACHED TO IT. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE AMOUNTS CREDITED TO THE BANK ACCOUNTS A RE FROM DEBTORS OF EARLIER YEARS. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE LEGAL GROUND , AS WELL AS , ON MERITS. FIRST WE DEAL WITH THE LEGAL GROUND OF ASSESSEE RAISED IN GROUND NO. 4 OF THE APPEAL. 6. THE LEGAL CONTENTION OF ASSESSEE IS THAT THE NOTICES U/S. 148 AND 143(2) HAVE BEEN SERVED TO THE ASSESSEE INDIVIDUAL , WHEREAS , THE AMOUNTS WERE CREDITED IN THE BANK ACCOUNT OF PARTNERSHIP FIRM IN WHICH THE ASSESSEE WAS ONE OF THE PARTNERS. IT IS ASSESSEE S OWN ADMISSION THAT THE ASSESSEE HAS TAKEN OVER THE BUSINESS OF PARTNERSHIP FIRM AFTER IT S DISSOLUTION IN THE YEAR 2004 - 05. SINCE, THE PARTNERSHIP FIRM WAS CONVERTED IN THE SOLE PROPRIETARY FIRM AND THE PARTNERSHIP FIRM WAS NOT IN EXISTENCE ON THE DATE OF SURVEY , THE AUTHORITIES BELOW H AVE RIGHTLY ISSUED NOTICE U/S. 148 AND SUBSEQUENT NOTICE S U/S. 143(2) AND 142(1) ON THE ASSESSEE. IT IS A WELL SETTLED LAW THAT NO ASSESSMENT CAN BE MADE IN THE NAME OF NON - EXISTING 8 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF AUTHORITIES BELO W IN SERVING NOTICE U/S. 148 AND MAKING ASSESSMENT IN THE NAME OF ASSESSEE WHO HAD TAKEN OVER THE BUSINESS OF PARTNERSHIP FIRM. THE ASSESSEE IS A SUCCESSOR OF PARTNERSHIP FIRM. WE DO NOT FIND MERIT IN THE SUBMISSIONS OF LD. AR OF ASSESSEE ON LEGAL ISSUE. CONSEQUENTLY, THE GROUND NO. 4 RAISED IN THE APPEAL IS DISMISSED BEING DEVOID OF ANY MERIT. 7. THE GROUND NOS. 1 TO 3 OF THE APPEAL ARE WITH RESPECT TO THE MERITS OF ADDITION. THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNTS CREDITED IN THE BANK AC COUNT FROM TIME TO TIME AGGREGATING TO RS.50,92,282/ - ARE THE RECOVERIES FROM DEBTORS OF EARLIER YEARS. THE LD. AR OF ASSESSEE HAS DRAWN OUR ATTENTION TO THE LIST OF SUCH DEBTORS AT PAGES 12 TO 86 OF THE PAPER BOOK. THE CONTENTION OF LD. AR IS THAT THESE ARE LISTS OF DEBTORS WHO HAD DEPOSITED THE AMOUNT FOR THE PURCHASES MADE IN THE EARLIER YEARS . A GAINST THE NAME OF EACH DEBTOR IS THE RECEIPT NUMBERS ISSUED AFTER THE PAYMENT IS RECEIVED. WE OBSERVE THAT SIMILAR LIS T WAS FURNISHED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE SAME WAS REJECTED ON THE GROUND THAT IT IS A SELF SERVING DOCUMENT. EVEN BEFORE US THE ASSESSEE HAS FAILED TO FURNISH ANY OTHER DOCUMENT APART FOR THE LIST OF ALLEGED DEBTORS. THE AS SESSEE HAS NOT TAKEN ANY PAINS TO FURNISH EVEN A SINGLE RECEIPT ALLEGED TO HAVE BEEN ISSUED AFTER THE AMOUNT IS RECEIVED FROM THE DEBTORS. THE ADDITION WAS 9 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 MADE BY THE AUTHORITIES BELOW PRIMARILY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SOURCE OF AMOUNT DEPOSITED IN THE BANK ACCOUNT FROM TIME TO TIME . IT WAS INCUMBENT UPON THE ASSESSEE TO MAINTAIN PROPER BOOKS OF ACCOUNT. IF THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT, HE CANNOT BE ALLOWED TO TAKE ADVANTAGE OF HIS OWN WRONG . O NUS HEAVILY LIES ON ASSESSEE TO SHOW THAT AMOUNTS CREDITED IN THE BANK ACCOUNT WERE OUT OF BUSINESS RECEIPTS. IN THE PRESENT CASE WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO SHOW NEXUS BETWEEN THE CASH CREDITS IN THE BANK ACCOUNT AND ALLEGED DEBTORS CL AIMED BY THE ASSESSEE. THE ASSESSEE HAS FAILED TO FURNISH EVEN A SINGLE DOCUMENT BEFORE THE AUTHORITIES BELOW OR EVEN BEFORE US TO SUBSTANTIATE THAT THE AMOUNT CREDITED IN THE BANK FROM TIME TO TIME IS WITH RESPECT TO RECOVERIES FROM DEBTORS OF EARLIER YE ARS. THE ASSESSEE HAS MISERABLY FAILED TO SHOW EXISTENCE OF DEBTORS . EXCEPT FROM BALD ASSERTIONS AND SELF MADE LIST OF ALLEGED DEBTORS (AT PAGES 12 TO 86 OF THE PAPER BOOK) THE ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENTARY EVIDENCE. THE SAID LIST ONLY BEARS THE NAME OF SOME PERSONS AND THE RECEIPT NUMBERS. THERE IS NO ADDRESS/PAN OF THE PERSONS. THE ASSESSEE HAS NEITHER FILED ANY CONFIRMATIONS NOR HAS BOTHERED TO PRODUCE ANY OF THE ALLEGED DEBTORS BEFORE THE AUTHORITIES BELOW. IN T HE BACKDROPS OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITION. ACCORDINGLY, GROUND NOS. 1 TO 3 OF 10 ITA NO . 335/NAG/2017, A.Y. 2005 - 06 THE APPEAL ARE DISMISSED AND THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE UPHELD. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON FRIDAY, THE 24 TH DAY OF MA Y, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / NAGPUR ; / DATED : 24 TH MA Y, 2019. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1, NAGPUR 4. THE PR. CIT - I, NAGPUR 5. , , , / DR, ITAT, NAGPUR BENCH, NAGPUR . 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, NAGPUR