Shri babuji Ujamji Thakor, Mehsana V. The Income tax Officer,Ward-4, Mehsana

ITA 3421/AHD/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1950 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 16-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANAN
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence; TDS
• Section: 40(a)(ia); 194C; 143(1); 250; 143(2); 191; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND A.N.PAHUJA SHRI BABUJI UJAMJI THAKOR, PROP. GAYATRI CONSTRUCTION CO., VADNAGAR, TAL. VISNAGAR, MEHSANA. V/S . INCOME-TAX OFFICER, WARD-4, MEHSANA. PAN :ABUPT 4949Q (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S. N. DIVATIA, AR REVENUE BY:- SHRI M. MATHIVANAN, DR O R D E R A.N. PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 31.07.2008 OF THE LD. CIT(A)-GANDHINAGAR, RAISES THE FOLLOWI NG GROUNDS :- 1.1 THE ORDER PASSED U/S 250 OF THE ACT ON 31.7.200 8 FOR ASSESSMENT YEAR 2005-06 BY CIT(A) GNR PARTLY UPHOLDING THE ADDITION /DISALLOWANCES MADE BY ASSESSING OFFICER IS WHOLLY ILLEGAL, UNLAWF UL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND/ OR ON FACTS IN UPHOLDING THE FOLLOWING ADDITIONS/DISALLOWANCES MADE BY THE A O: A) DISALLOWANCE U/S 40(A)(IA) RS.20,90,148/- B) SUNDRY CREDITORS FOR GOODS (S.R.PATEL) RS.9 6,500/- C) UNEXPLAINED CASH DEPOSITS IN BANK RS.1,99,8 00/- 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED THE AFORESAID DISALLOWANCE/AD DITIONS. 3.1 THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) WERE APPLICABLE TO THE PAYMENTS MADE TO THE SUB-CONTRACTORS U/S 194C OF THE ACT. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT TILL THE AMENDMENT MADE BY FINANCE ACT, 2008 W.E.F. 1.4.2008, INDIVIDUAL CONTRACTOR WAS NOT REQUIRED TO MAKE ANY TDS AS SUBCONTRACTOR U/S 194C(2) OF THE ACT SO THAT THE DI SALLOWANCE MADE U/S 40(A)(IA) OF RS.20,90,148/- IS WHOLLY UNJUSTIFIED. ITA NO.3421/AHD/2008 ASST. YEAR:2005-06 ITA NO.3421/AHD/2008 2 4.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE OUTSTANDING LIABILITY OF RS.96,500/- TO SHRI S.R.PATEL TOWARDS THE PURCHASE OF GRID (KAPCHI) WAS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE PROVISIONS OF SE CTION 68 WERE NOT APPLICABLE TO THE SUNDRY CREDITORS FOR GOODS AND EX PENSES. 5.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN REJECTIN G THE CASH BOOK PRODUCED BY THE APPELLANT IN SUPPORT OF THE EXPLANA TION FOR CASH DEPOSITS MADE IN THE BANK ACCOUNT. THE LD. CIT(A) H AS FAILED TO APPRECIATE THAT THE APPELLANT WAS PREVENTED BY SUFF ICIENT CAUSE FROM PRODUCED THE CASH BOOK BEFORE ASSESSING OFFICER AND HENCE A REASONABLE OPPORTUNITY OUGHT TO HAVE BEEN ALLOWED T O HIM FOR PRODUCING THE SAME BEFORE ASSESSING OFFICER OR THE REMAND REPORT OUGHT TO HAVE BEEN CALLED FOR FROM AO. 2. GROUND NOS. 1.1 & 2.2 BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . 3. ADVERTING NOW TO GROUND NOS. 2.1(A) AND 3.1 RELATING TO DISALLOWANCE OF RS.20,90,148/-, FACTS, IN BRIEF, AS PER RELEVANT O RDERS ARE THAT THE RETURN DECLARING INCOME OF RS.1,27,501/- ALONG WITH PRESC RIBED AUDIT REPORT, FILED ON 31.10.2005 BY THE ASSESSEE, AN INDIVIDUAL CARRYING ON BUSINESS AS CONTRACTOR FOR CIVIL CONSTRUCTION WORK, AFTER BEING PROCESSED ON 6.1.2006 U/S 143(1) OF THE INCOME-TAX ACT,1961[HEREINAFTER REFER RED TO AS THE ACT], WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 7.8.2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER[AO IN SHORT] NOTICED THE ASSESSEE FAILED TO DEDUCT AND PAY TAX U/S 194C IN RESPECT OF PAYMENTS OF RS.20,90,148/- UNDER SUB-CONTRACT GI VEN TO SHRI RAMESHKUMAR B. THAKOR[RS.12,13,862] AND KAMAJI U. T HAKOR[RS.8,76,286]. DESPITE SHOWCAUSE NOTICE DATED 14.11.2007, THE ASSE SSEE DID NOT REPLY AS WHY THE TAX WAS NOT DEDUCTED AT SOURCE. ACCORDINGLY , THE AO DISALLOWED THE AFORESAID AMOUNT U/S 40(A)(IA) OF THE ACT. 4. ON APPEAL, THE ASSESSEE ADMITTED THAT TDS HAS B EEN DEPOSITED LATE AND THAT PROVISIONS OF SEC. 40(A)(IA) OF THE ACT WE RE HARSH AND ULTRAVIRES. THE ASSESSEE ALSO REFERRED TO A WRIT PETITION FILED BEF ORE THE HONBLE GUJRAT HIGH COURT. AFTER CONSIDERING THESE SUBMISSIONS, THE LD . CIT(A) UPHELD THE DISALLOWANCE IN THE FOLLOWING TERMS :- ITA NO.3421/AHD/2008 3 2.3 THE MATTER HAS BEEN CONSIDERED. AS FAR AS CHAL LENGING THE CONSTITUTIONAL VALIDITY OF SECTION 40(A)(IA) IS CON CERNED, OBVIOUSLY THESE ARE BEYOND THE JURISDICTION OF A CIT(A). SIMILARLY, THE ARGUMENT OF HARDSHIP CONSEQUENT TO IMPLEMENTATION OF SECTION 40(A)(IA) A RE ALSO NOT A MATTER WHICH CAN BE TAKEN AS A MATERIAL CONDITION IN DECIDING TH E APPEAL AT THIS LEVEL. THE PROVISIONS OF SECTION 40(A)(IA) ARE VERY CLEAR. IN FACT, THE PROVISIONS HAVING GOT FURTHER RELAXED IN VIEW OF THE AMENDMENT IN THE SEC TION BROUGHT OUT BY FINANCE ACT 2008. IT IS NOT THE CLAIM OF THE AUTHORISED REP RESENTATIVE THAT IT IS COVERED BY THE AMENDED PROVISION, WHICH MEANS THE APPELLANT HAD NOT DEPOSITED THE TAX BEFORE FILING OF THE RETURN OF INCOME, AS AMEND ED PROVISIONS STIPULATED. 2.4 THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, IT IS CLEAR THAT THE ASSESSEE IS CAUGHT WITHIN THE AMBIT OF THE PROV ISIONS OF SECTION 40(A)(IA). HENCE THE ADDITION OF RS.20,90,148/- IS CONFIRMED. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSE SSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LOWER AUTHORITIES AND REFER RING TO THE PROVISIONS OF SEC. 191 OF THE ACT AND DECISIONS OF THE APEX COURT IN HINDUSTAN COCA-COLA BEVERAGES (P) LTD. VS. CIT,293 ITR 226(SC),K.P.VERG HESE VS. ITO,131 ITR 597(SC),CIT VS. JH GHOTLA,156 ITR 323(SC),PERIAKARA M TEA TEA AND PRODUCE CO. LTD. VS. CIT,208 ITR 649 (SC) CONTENDED THAT ONCE THE DEDUCTEE HAS PAID THE TAX , NO TAX COULD BE RECOVER ED FROM THE DEDUCTOR . WHILE CARRYING US THROUGH THE OBJECTS BEHIND INTROD UCTION OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT, THE LD. AR CONTENDED THAT INS TEAD OF LITERAL INTERPRETATION, PURPOSIVE INTERPRETATION SHOULD BE FOLLOWED. ON THE OTHER HAND ,THE LD. DR SUPPORTED THE FINDINGS OF LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS REFERRED TO. HOWEVER, WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSIONS OF THE LD. AR AND IN OUR VIEW, THE ARGUMENT IS THOROUGHLY MISCONCEIVED. SEC. 4 OF THE ACT PROVIDES THAT INCOM E-TAX SHALL BE CHARGED IN ACCORDANCE WITH THE PROVISIONS ENACTED BY THE LEGIS LATURE ON THE INCOME OF THE RELEVANT YEAR . HOWEVER, THE AMOUNT WHICH IS NO T TO BE INCLUDED IN TOTAL INCOME OR IS LIABLE TO BE DEDUCTED THEREFROM HAS BE EN PROVIDED IN DETAIL IN VARIOUS PROVISIONS OF THE ACT. IT IS ONLY SUCH AMOU NT, DEDUCTION WHEREOF IS PERMISSIBLE UNDER THE ACT, HAS TO BE EXCLUDED WHILE COMPUTING TOTAL INCOME ITA NO.3421/AHD/2008 4 CHARGEABLE TO TAX UNDER THE ACT. SECTION 40 PROVIDE S FOR CERTAIN AMOUNTS, WHICH ARE NOT DEDUCTIBLE IN COMPUTING THE INCOME CH ARGEABLE UNDER THE ACT. SEC 40(A)(IA) REFERS TO CERTAIN SUM PAYABLE TO A C ONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK, IS LIABLE TO BE DEDUCTED FRO M COMPUTATION OF THE TOTAL INCOME STRICTLY IN ACCORDANCE WITH THE PROVISIONS O F THE ACT AND NOT OTHERWISE. THOUGH IN THE GROUND NO. 3.1 OF THE APPEAL, THE ASS ESSEE HAS STATED THAT INDIVIDUAL CONTRACTOR WAS NOT REQUIRED TO MAKE ANY TDS AS SUB-CONTRACTOR U/S 194C(2) OF THE ACT, BEFORE US NO SUBMISSIONS WERE M ADE ON THIS ASPECT NOR IT WAS DISPUTED THAT ON THE PAYMENTS MADE BY THE ASSES SEE, WHICH ARE IN DISPUTE IN THE PRESENT CASE, HE WAS LIABLE TO DEDUC T TAX AT SOURCE BY VIRTUE OF S. 194C OF THE ACT ,FAILING WHICH S. 40(A)(IA) PROV IDES THAT SUCH PAYMENT SHALL NOT BE ALLOWED TO BE DEDUCTED FROM COMPUTATION OF T OTAL INCOME AND SHALL BE TREATED TO BE THE INCOME OF THE ASSESSEE. EVEN OTHE RWISE SINCE THE GROSS RECEIPTS OF THE ASSESSEE EXCEEDED THE MONETARY LIMI TS PRESCRIBED IN SECTION 44AB OF THE ACT, PROVISO TO SEC. SEC. 194C(2) STIPU LATED THE REQUIREMENT OF DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. ONC E A DEDUCTION OF A PARTICULAR AMOUNT IS NOT ALLOWABLE UNDER THE ACT, I T IS LIABLE TO BE TAXED AND MERELY BECAUSE SOME OTHER PERSON MAY ALSO BE LIABLE TO TAX AFTER RECEIVING THE SAID AMOUNT IN ONE OR THE OTHER MANNER, IT CANN OT BE SAID THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION AND CANNOT BE TA XED. WE ARE NOT SHOWN OF ANY AUTHORITY PROVIDING THAT SUCH TAXATION IS NOT P ERMISSIBLE IN LAW AND IS BAD EVEN OTHERWISE. SEC 40(A)(IA) SPECIFICALLY REFERS T O CERTAIN PAYMENTS ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B OF THE ACT . THE PROVISIONS OF SEC. 191 OF THE ACT REFERRED TO BY THE LD. AR DO NO T FALL UNDER CHAPTER XVIIB OF THE ACT. CONSEQUENTLY , RELIANCE ON PROVISIONS OF S EC. 191 OF THE ACT OR ON THE OBSERVATIONS OF THE COURTS IN THE DECISIONS RENDER ED IN RELATION TO THE SAID PROVISIONS IN DIFFERENT CONTECXTS, CAN NOT BE STRAI GHT AWAY MADE WHILE INTERPRETING PROVISIONS OF SEC. 40(A)(IA) OF THE AC T. WE ARE OF THE VIEW THAT THERE IS NO AMBIGUITY IN THE LANGUAGE OF PROVISION S OF SEC. 40(A)(IA) OF THE ACT AND THERE IS NO NEED TO CALL IN AID OTHER PROVIS IONS OF THE ACT OR DECISIONS OF THE COURTS FOR INTERPRETATION. IN DETERMINING THE PURPOSE OF A STATUTORY PROVISION, WE ARE TO HAVE REGARD TO THE CONTEXT F OR THE RELEVANT PROVISION. THE LANGUAGE OF PROVISIONS OF SEC. 40(A)(IA) IS PLAIN A ND SIMPLE. THE OBSERVATIONS ITA NO.3421/AHD/2008 5 OF THE COURTS RENDERED IN DIFFERENT CONTEXTS AND FA CTS CANT BE APPLIED WITHOUT ESTABLISHING THAT THE FACTS IN THE CASE UNDER CONSI DERATION ARE SIMILAR . THE OBSERVATIONS MADE BY THE HONBLE APEX COURT IN THEI R DECISIONS RELIED UPON BY THE LD. AR WERE NOT IN RELATION TO INTERPRETATIO N OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT AND HAD BEEN MADE IN CERTAIN O THER SITUATIONS. IN THIS CONTEXT , WE MAY REFER TO THE FOLLOWING OBSERVATION S BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN EN GINEERING WORKS PVT. LTD., 198 ITR 257 : IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OU T A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTE XT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE ' LAW ' DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIO NS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION OF THIS COURT TAKES ITS COLOUR FR OM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYIN G THE DECISION TO A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN TH E TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS COURT AND NOT TO PICK OUT WORD S OR SENTENCES FROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTION S UNDER CONSIDERATION BY THIS COURT, TO SUPPORT THEIR REASONINGS. IN MADHAV RAO JIVAJI RAO SCINDIA BAHADUR V. UNION OF INDIA [1971] 3 SCR 9; AIR 1971 SC 530, THIS COURT CAUTIONED (AT PAGE 578 OF AIR 1971 SC). 6.1 HONBLE SUPREME COURT CAUTIONED EVEN IN TH EIR RECENT DECISION DATED 6.3.2009 IN THE CASE OF STATE OF AP VS. M.RA DHA KRISHNA MURTHY,[CRIMINAL APPEAL NO. 386 OF 2002] IN THE FO LLOWING TERMS: 6. COURTS SHOULD NOT PLACE RELIANCE ON DECI SIONS WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SIT UATION OF THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURTS ARE NEIT HER TO BE READ AS EUCLID'S THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CON TEXT IN WHICH THEY APPEAR TO HAVE BEEN STATED. JUDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STATUTES. TO INTERPRET WORDS, PHRASES AND PROVISIONS OF A STA TUTE, IT MAY BECOME NECESSARY FOR JUDGES TO EMBARK INTO LENGTHY DISCUSS IONS BUT THE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRE T STATUTES, THEY DO NOT INTERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUT ES; THEIR WORDS ARE NOT TO BE INTERPRETED AS STATUTES . 8. CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES. DIS POSAL OF CASES BY BLINDLY PLACING RELIANCE ON A DECISION IS NOT PROPER. 9. THE FOLLOWING WORDS OF LORD DENNING IN THE MA TTER OF APPLYING PRECEDENTS HAVE BECOME LOCUS CLASSICUS: ITA NO.3421/AHD/2008 6 'EACH CASE DEPENDS ON ITS OWN FACTS AND A CLOSE SIMILARITY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH BECAUSE EVEN A SING LE SIGNIFICANT DETAIL MAY ALTER THE ENTIRE ASPECT, IN DECIDING SU CH CASES, ONE SHOULD AVOID THE TEMPTATION TO DECIDE CASES (AS SAID BY CORDOZO ) BY MATCHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECI DE THEREFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE IS NOT AT ALL DECISIVE.' *** *** *** 'PRECEDENT SHOULD BE FOLLOWED ONLY SO FAR AS IT MARKS THE PATH OF JUSTICE, BUT YOU MUST CUT THE DEAD WOOD AND TRIM OFF THE SIDE B RANCHES ELSE YOU WILL FIND YOURSELF LOST IN THICKETS AND BRANCHES. MY PLEA I S TO KEEP THE PATH TO JUSTICE CLEAR OF OBSTRUCTIONS WHICH COULD IMPEDE IT.' 6.2 IN THE LIGHT OF AFORESAID OBSERVATIONS OF THE HONB LE APEX COURT, WE ARE OF THE VIEW THAT RELIANCE ON THE VARIOUS DECISIONS BY THE LD. AR ,RENDERED ON A DIFFERENT SET OF FACTS AND DIVORCED FROM THE CONTEX T OF PROVISIONS OF SEC. 40(A)(IA), IS TOTALLY MISPLACED. EVEN OTHERWISE HO NBLE PUNJAB & HARYANA HIGH COURT IN THEIR DECISION IN RAKESH KUMAR & CO. VS. UNION OF INDIA,178 TAXMAN 481 HELD THAT PROVISIONS OF SEC. 40(A)(IA) A RE NOT HARSH AND DISCRIMINATORY. ADMITTEDLY, THE ASSESSEE HAS MADE P AYMENT ON ACCOUNT OF TDS ON THE AFORESAID AMOUNT ONLY ON 12.12.2007 AND THUS, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION OF THE AFORESAID AMOUNTS IN TERMS OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT IN THE YEAR UNDER CONSIDE RATION. 6.3 IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. CIT(A).THEREFORE GROUND NOS. 2.1(A ) AND 3.1 OF THE APPEAL ARE DISMISSED. 7. GROUND NOS. 2.1(B) & 4.1 RELATE TO ADDITION OF R S.96,500/- ON ACCOUNT OF OUTSTANDING LIABILITY PAYABLE TO SHRI SR PATEL W HILE GROUND NOS. 2.1(C) & 5.1 RELATE TO ADDITION OF RS. 1,99,800/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITED IN THE BANK. . THE AO FOUND THAT AN AMOUNT OF RS.96 ,500/- WAS SHOWN AS UNSECURED LOAN IN THE NAME OF SHRI SR PATEL.SINCE T HE ASSESSEE DID NOT FURNISH THE ADDRESS OR PAN OF SHRI PATEL NOR ESTABL ISHED IDENTITY/CREDITWORTHINESS OR GENUINENESS OF TRANSAC TION WITH HIM, DESPITE SHOWCAUSE NOTICE DATED 14.11.2007, THE AO ADDED T HE AMOUNT U/S 68 OF THE ACT. BESIDES, THE AO ALSO ADDED UNEXPLAINED CASH O F RS. 2,99,700 DEPOSITED ITA NO.3421/AHD/2008 7 BY THE ASSESSEE IN HIS BANK ACCOUNT ON 10.12.2004,1 1.12.2004 & 21.2.2005 SINCE THE LATTER DID NOT EXPLAIN THE SOURCE OF DEP OSIT OF CASH DESPITE SHOWCAUSE NOTICE DATED 14.11.2007 8. ON APPEAL, THE ASSESSEE SUBMITTED THAT IT HAD P URCHASED GRIT (KAPACHI) FROM SHRI S.R. PATEL FOR WHICH TWO BILLS WERE CREDITED FOR AN AMOUNT OF RS.1,17,300/- AND RS.2,29,500/-. DURING THE YEAR , AN AMOUNT OF RS.1,33,000/- WAS PAID AGAINST SUCH LIABILITY AND B ALANCE RS.96,000/- WAS SHOWN AS OUTSTANDING LIABILITY. THE CONCERNED PART Y IS ALSO ASSESSED TO TAX. IT BEING A TRADING LIABILITY, PROVISIONS OF SECTION 68 ARE NOT APPLICABLE, THE ASSESSEE ARGUED. AS REGARDS CASH DEPOSITED IN THE B ANK, THE ASSESSEE EXPLAINED THAT CASH IN HAND WAS AVAILABLE IN BOOKS AND ENCLOSED COPIES OF RELEVANT PAGES OF CASH BOOK. HOWEVER, THE LD. CIT(A ) UPHELD THE ADDITION OF RS. 96,500/- ON THE GROUND THAT THE ASSESSEE DID NO T DISCHARGE HIS ONUS AT THE RELEVANT POINT OF TIME, DESPITE OPPORTUNITY GIV EN BY THE AO. AS REGARDS CASH DEPOSITED IN THE BANK, THE LD. CIT(A) DELETED THE ADDITION IN RESPECT OF CASH OF RS. 99,900/- DEPOSITED ON 21.2.2005. FOR TH E REMAINING TWO ENTRIES OF RS. 99,900/- EACH, THE LD. CIT(A) UPHELD THE ADDITI ON IN THE FOLLOWING TERMS: 5.4 THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. T HE FACT THAT THE APPELLANT DID NOT PRODUCE THE CASH BOOK BEFORE THE ASSESSING OFFICER DURING THE COURSE OF HEARING IS GOING TO HAVE MATERIAL BEA RING ON THE SUBJECT. IF THE CASH BOOK HAS NOT BEEN PRODUCED DURING THE COURSE O F HEARING, THERE IS NO WAY THE APPELLANT CAN EXPLAIN THE ENTRIES BY MERE R EFERENCE TO SUCH A CASH BOOK BECAUSE IN SUCH A SITUATION, THE CASH BOOK NOW INTENDED TO BE PRODUCED CANNOT BE LABELED AS A CONTEMPORANEOUS DOCUMENT. TH IS IS FURTHER COMPOUNDED BY THE FACT THAT THE APPELLANT HAS NOT M ADE SUCH A CLAIM OF TRANSFER OF FUNDS, APART FROM NOT PRODUCING THE CAS H BOOK, BEFORE THE ASSESSING OFFICER. OBVIOUSLY, THE APPELLANT IS REQU IRED TO SUPPORT ITS BASIC CONTENTION WITH OTHER MATERIAL, IN VIEW OF SUCH PEC ULIAR CIRCUMSTANCES, TO VINDICATE ITS STAND. IN THE FACE OF THIS RATIONALE, AMONG THE THREE ENTRIES, ONLY ONE ENTRY DATED 21/2/2005 CAN GET DIRECTLY CORRELAT ED WITH THE CASH WITHDRAWN FROM THE BANK AND THEREFORE THE SAME CAN BE ACCEPTE D. AS FAR AS THE OTHER TWO ENTRIES ARE CONCERNED, THE ENTIRE RELIANCE IS O N THE CASH IN HAND, WHICH CANNOT BE ACCEPTED IN VIEW OF THE CIRCUMSTANCES AS LISTED EARLIER. 5.4.1 THEREFORE, TO SUM UP, THE ADDITION OF RS.99,9 00/- PERTAINING TO 21/2/2005 IS DELETED WHILE THE REST OF THE ADDITION OF RS.1,99,800/- IS CONFIRMED. ITA NO.3421/AHD/2008 8 9. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFO RESAID FINDINGS OF THE LD. CIT(A). THE LD. AR WHILE CARRYING US THROUGH THE IMPUGNED ORDERS CONTENDED THAT THE ASSESSEE HAS DISCHARGED THE BURDEN BEFORE THE LD. CIT(A) BY FILING A CONFIRMATION OF SHRI S PATEL, A COPY OF WHICH IS PL ACED ON PAGE 23 OF THE PAPER BOOK. SINCE SHRI SR PATEL IS ASSESSED TO TAX, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION. AS REGARDS CAS H DEPOSITED IN THE BANK , THE LD. AR WHILE REITERATING THEIR SUBMISSIONS BEFORE T HE LD. CIT(A) PLEADED THAT MATTER MAY BE RESTORED TO THE FILE OF NECESSARY VER IFICATION SINCE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH E CASH BOOK BEFORE THE AO. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIN DINGS OF THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS EVIDENT FROM THE ASSESSMENT ORDER, DESPITE SH OWCAUSE NOTICE DATED 14.11.2007, THE ASSESSEE DID NOT FURNISH ANY EVIDEN CE EITHER IN RESPECT OF DEPOSIT OF RS. 96,500/- IN THE NAME OF SHRI SR PATE L OR IN RESPECT OF CASH DEPOSITED IN THE BANK ON THE THREE DATES MENTIONED ABOVE. THUS, THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF AF ORESAID AMOUNT OF RS. 96,500/- AND CASH DEPOSITED IN THE BANK, RESULTING IN ADDITION U/S 68/69 OF THE ACT. BEFORE THE LD. CIT(A), THE ASSESSEE FILED CON FIRMATION OF SHRI SR PATEL [PAGE 23 OF PAPER BOOK] AND CONTENDED THAT CASH WAS DEPOSITED IN THE BANK OUT OF CASH IN HAND AVAILABLE IN THE BOOKS. HOWEV ER, THE LD. CIT(A) REFUSED TO TAKE COGNIZANCE OF THE AFORESAID CONFIRMATION OF SHRI SR PATEL ON THE GROUND THAT THE AO HAD ALLOWED SUFFICIENT OPPORTUNI TY TO THE ASSESSEE AND THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS PLAC ED UPON HIM. AS REGARDS CASH DEPOSITED IN THE BANK, THE LD. CIT(A) DID NOT RECORD HIS SPECIFIC FINDINGS AS TO WHETHER OR NOT CASH WAS AVAILABLE IN THE BOOK S AND UPHELD THE ADDITION OF RS. 1,99.800 WHILE ACCEPTING THE PLEA OF THE ASS ESSEE ONE ENTRY DATED 21.2.2005 WAS DIRECTLY CO-RELATED WITH THE CASH WIT HDRAWN FROM THE BANK.. THERE IS NOTHING IN THE IMPUGNED ORDER AS TO WHETHE R OR NOT THE LD. CIT(A) VERIFIED THE CONTENTIONS OF THE ASSESSEE MADE BEFOR E HIM NOR ALLOWED ANY OPPORTUNITY TO THE AO. UNDISPUTEDLY THE DOCUMENTS SUBMITTED BEFORE THE LD. CIT(A) WERE NEVER PLACED BEFORE THE AO. THUS, THE A SSESSEE PLACED ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A). THE POWE R OF THE CIT(A) IN TERMS OF RULE 46A TO ADMIT FRESH EVIDENCE, ENTAILS AN ELEME NT OF DISCRETION WHICH IS ITA NO.3421/AHD/2008 9 REQUIRED TO BE EXERCISED IN A JUDICIOUS MANNER. THE POWERS OF THE CIT(A) TO ADMIT ADDITIONAL EVIDENCE ARE NOT ONLY IN SITUATION S WHERE THE EVIDENCE COULD NOT BE PRODUCED BEFORE LOWER AUTHORITIES OWING TO L ACK OF ADEQUATE OPPORTUNITY BUT ALSO IN SITUATIONS WHERE THE FRESH EVIDENCE WOULD ENABLE THE CIT(A) TO DISPOSE OF THE APPEAL OR FOR ANY OTHER S UBSTANTIAL CAUSE. OF COURSE, THE POWER IS TO BE EXERCISED JUDICIOUSLY AND FOR R EASONS TO BE RECORDED. IN THE INSTANT CASE, THERE IS NOTHING TO SUGGEST AS T O WHETHER OR NOT THE ASSESSEE MADE ANY REQUEST FOR ADMISSION OF ADDITIO NAL EVIDENCE NOR THE LD. CIT(A) HAVE ADVERTED TO THAT ASPECT. WE ARE OF THE VIEW THAT IF T HE SAID FRESH EVIDENCE PRODUCED BEFORE THE LD. CIT(A) SEEKS TO C LEAR THE OBSCURITY THEREBY LEADING TO CORRECT APPRECIATION OF FACTS , THE ADM ISSION OF THE SAME IS VERY MUCH WITHIN THE REALM OF THE EXPRESSION 'FOR ANY OT HER SUBSTANTIAL CAUSE' MENTIONED IN RULE 46A OF THE I.T.RULES,1962. 9.1 IN VIEW OF THE FOREGOING, ESPECIALLY WHEN, THE RE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT AFORESAID ADDITIONAL EVIDENCE /DOCUMENTS FILED BEFORE THE LEARNED CIT(A) HAVE BEEN ADMITTED BY THE LD. CIT( A) NOR THE LD. CIT(A) RECORDED HIS REASONS ON THAT ASPECT, IN THE INTERES T OF JUSTICE AND FAIR PLAY, WE VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE T HE MATTER TO HIS FILE WITH THE DIRECTIONS TO FOLLOW THE MANDATE IN TERMS OF RULE 46A OF THE IT RULES, 1962 AND THEREAFTER, DISPOSE OF THE ISSUE OF ADDITIONS OF RS. 96,500/- & RS. 1,99,800/- IN ACCORDANCE WITH LAW AND AFTER ALLOW ING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. WITH THESE DIRECTIONS, GROUND NO S.2.1(B) & (C) 4.1 & 5.1 RAISED IN THE APPEAL ARE DISPOSED OF AS INDICATED HEREINBEFORE 10. IN THE RESULT, APPEAL IS PARTLY ALLOWED FO R STATISTICAL PURPOSES ORRDER PRONOUNCED IN OPEN COURT ON 31 /12 /2009 SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 31/12 /2009 ITA NO.3421/AHD/2008 10 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. INCOME-TAX OFFICER, WARD-4, MEHSANA. 3. THE CIT(APPEALS)- GANDHINAGAR 4. THE CIT CONCERNED. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD