M/s. Jain Enterprise, Dibrugarh V. Income Tax Officer, Ward-1(4), Dibrugarh

ITA 353/GTY/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9463 (ITAT-GUWAHATI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 11-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHRAJYOTI BHATTACHARYA
• Assessee Lawyers: R K CHOUDHRY
• Keywords: Unexplained cash credit; Set aside
• Section: 133(6); 201; 13; 22; 147; 68

Judgement Text

ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI BENCH: GUWAHATI VIRTUAL HEARING AT KOLKATA [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 353/GAU/2018 ASSESSMENT YEAR: 2012-13 M/S JAIN ENTERPRISES (PAN: AABFJ 4678 C ) VS. ITO, WARD-1(4), DIBRUGARH APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 22.12.2020 DATE OF PRONOUNCEMENT 06.01.2021 FOR THE APPELLANT SHRI R. K. CHOUDHRY, A.R FOR THE RESPONDENT SHRI SUBHRAJYOTI BHATTACHARYA, D .R ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)- DIBRUGARH DATED 16.10.2018 FOR A.Y. 2012-13 2. THE RELEVANT GROUNDS OF APPEAL RAISED BY THE AS SESSEE ARE AS UNDER: 1. FOR THAT THE CLAIM FOR DELETION OF ADDITION AMOU NTING TO RS. 9,07,239/- SHOWN AS ADVANCE AGAINST SALE RECEIVED FROM ONE SHRI HRIDAYA NANDA KONWAR, CHOWKIDINGHEE DIBRUGARH, FY 2011-12 WAS RIGHTLY CONTESTED BEFORE THE LD. CIT(A) IN COURSE OF APPEAL HEARING AND SHOULD HAVE BEEN FAVOURABLY CONS IDERED BY HIM. 2. FOR THAT THE CONFIRMATION OF ADDITION OF RS. 9,0 7,239/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT DULY SHOWN AS ADVANCE AGAINST SAL E RECEIVED FROM SHRI HRIDAYANANDA KONWAR, CHOWKIDINGHEE, DIBRUGARH IS BA D IN LAW AS WELL AS IN FACTS AND NEEDS DELETION IN FULL. 3. THE SOLE ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 9,07,239/- U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 4. BRIEF FACTS AS NOTED BY THE AO IS THAT HE NOTICE D CERTAIN SUMS AS OUTSTANDING LIABILITY OF THE ASSESSEE FIRM AS ON 31.03.2012, SO HE ASKED THE LD. AR TO FURNISH THE ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 2 | P A GE PARTY-WISE DETAILS OF THE LIABILITY AND AFTER RECEI VING THE SAME, IN-ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTION BETWEEN THEM, THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO SOME OF THE CREDITORS AND THE AO ACKNOWLEDGE S THAT HE ALSO CROSS-CHECKED THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACCORDING TO AO, THE LIABILITY SHOWN BY THE ASSESSEE FIRM AGAINST SHRI HRIDAYANANDA KONWAR, CHOWKIDINGHE E, DIBRUGARH (HEREINAFTER REFERRED TO H KONWAR) WAS TO THE TUNE OF RS. 9,07 ,239/- AS ON 31.03.2012. SO, WHEN HE EXAMINED THE VERACITY OF THIS CLAIM OF ASSESSEE BY ISSUING NOTICE U/S 133(6) OF THE ACT, THE SAID PARTY (H KONWAR) INFORMED THE AO THAT THERE WAS NO LIABILITY IN EXISTENCE IN THE YEAR END AND IT WAS NIL AS ON 31 .03.2012. THIS ADVERSE FACT WAS BROUGHT TO THE NOTICE OF THE LD. A.R OF THE ASSESSE E BY THE AO AND CERTAIN CORRESPONDENCES BETWEEN HIM AND SHRI HRIDAYANANDA K ONWAR HAS BEEN RE-PRODUCED IN THE ASSESSMENT ORDER. THE AO NOTES THAT SHRI HRI DAYANANDA KONWAR SUBMITTED AS UNDER : WITH REFERENCE TO YOUR QUERY IN CONNECTION OF SCRU TINY PROCEEDING OF M/S JAIN ENTERPRISES, H. S. ROAD, DIBRUGARH, PAN- AABFJ4678C FOR THE ASSE SSMENT YEAR 2012-13, I SUBMIT AS FOLLOWS: 1. DURING THE FINANCIAL YEAR 2009-10 PAYMENT AMOUNTING TO RS. 3,00,000/- WAS GIVEN TO M/S JAIN ENTERPRISES AGAINST FULL PAYMENT OF THE BI LLS FOR MY PURCHASES OF CEMENT FORM THEM DURING THE SAID YEAR ITSELF. NO ADVANCE PAYME NT WAS GIVEN BY ME NOR WAS ANY AMOUNT PAYABLE DUE TO THEM. MY ACCOUNT BALANCE WITH M/S JAIN ENTERPRISES AT THE CLOSE OF THE FINANCIAL YEAR 2009-10 WAS NIL. 2. DURING THE FINANCIAL YEAR 2010-11 TOTAL PAYMENT TO RS. 23,71,863/- WAS GIVEN TO M/S JAIN ENTERPRISES AGAINST FULL PAYMENT OF THE BILLS FOR M Y PURCHASES OF CEMENT FROM THEM DURING THE SAID YEAR ITSELF. NO ADVANCE PAYMENT WAS MADE B Y ME NOR WAS ANY AMOUNT PAYABLE DUE TO ME. MY ACCOUNT BALANCE WITH M/S JAIN ENTERPR ISES AT THE CLOSE OF THE FINANCIAL YEAR 2011-12 WAS NIL. 3. DURING THE FINANCIAL YEAR 2011-12 AS INFORMED TO YO U EARLIER ALSO VIDE MY REPLY DATED 28.10.2014, THERE WAS NO TRANSACTION WITH M/S JAIN ENTERPRISES. THERE WAS NO OUTSTANDING RECEIVABLE FROM THEM NOR WAS ANY AMOUNT PAYABLE DUE TO THEM. MY ACCOUNT BALANCE WITH M/S JAIN ENTERPRISES AT THE CLOSE OF T HE FINANCIAL YEAR 2011-12 WAS NIL. ACCORDING TO AO THE AFORESAID SUBMISSION OF M/S JA IN ENTERPRISES WAS CONFRONTED WITH THE ASSESSEE ON 08.12.2014 AND HE WAS ASKED TO EXPLAIN THE DIFFERENCE OF LIABILITY OF RS. 9,07,239/- SHOWN AS ON 31.03.2012 FOR AY 201 2-13. HOWEVER, AO NOTES THAT SINCE THERE WAS NO SATISFACTORY REPLY FROM ASSESSEE , THE AO MADE AN ADDITION OF RS. 9,07,239/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND PASSED THE ASSESSMENT ORDER DATED 20.03.2015. ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 3 | P A GE 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(A) WHO WAS PLEASED TO DISMISS THE SAME BY HOLDING AS UNDER: 6. GROUND NO. 3: THE GROUND IS AGAINST ADDITION OF RS. 9,07,239/-. 6.1. ASSESSEE SHOWED LIABILITY OF RS. 9,07,239/- P AYABLE TO H. KONWAR, DIBRUGARH. THE AO WROTE LETTER U/S 133(6) TO THE SA ID PERSON ASKING HIM TO CONFIRM DETAILS OF TRANSACTIONS WITH ASSESSEE. SHRI KONWAR REPLIED THAT THERE WERE TRANSACTIONS BETWEEN HIM AND ASSESSEE IN FYS 2 009-10 AND 2010-11. HE PAID SUMS OF RS. 3,00,000/- AND RS. 23,71,853/- IN THE RESPECTIVE YEARS FOR FULL PAYMENT OF BILLS RAISED IN HIS CASE. NO ADVANCE WAS GIVEN BY HIM TO ASSESSEE AND THAT THERE WAS NO TRANSACTION IN FY 2011-12 WHI CH IS RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE A/R WAS SH OWN COPY OF LETTER RECEIVED FROM H. KONWAR. ACCORDING TO THE AO, NO EX PLANATION WAS OFFERED BY THE ASSESSEE. HE THEREFORE, TREATED THE SUM OF UNEX PLAINED CASH CREDIT U/S 68 OF THE ACT. 6.2. IN APPEAL, THE A/R STRONGLY CONTESTED THE DEC ISION TAKEN BY THE AO. HE FILED A RECONCILIATION STATEMENT OF ACCOUNTS WITH S HRI H. KONWAR. ON EXAMINATION OF THE SAID RECONCILIATION, IT IS SEEN THAT SOME BILLS WERE RAISED BY CEMENT HOUSE, A PARTNERSHIP FIRM DISTINCT FROM ASSE SSEE. SOME PAYMENTS WERE ALSO MENTIONED TO HAVE BEEN RECEIVED BY CEMENT HOUS E. IT IS NOT UNDERSTOOD HOW THE ACCOUNTS OF CEMENT HOUSE AND JAIN ENTEREPIS E GOT MIXED UP WHEN THEY WERE SEPARATE PERSONS AND LIABLE TO TAXATION SEPARA TELY. A/R DID NOT PRODUCE COPIES OF ACCOUNT OF THE TWO FIRMS EVIDENCING TRANS ACTIONS BETWEEN THE TWO FIRMS AND SHRI H. KONWAR. IT IS NOT UNDERSTOOD HOW THE BILLS RAISED BY CEMENT HOUSE GOT PAID INTO ACCOUNT OF ASSESSEE. IT IS ALSO NOT EXPLAINED AS TO HOW ADVANCE WAS GIVEN BY CUSTOMERS FOR PURCHASES OF CEM ENT. NORMALLY, PURCHASERS WILL TAKE THE GOODS ON CREDIT. ASSESSEE ALSO GAVE C OPIES OF CERTIFICATES FROM PUNJAB NATIONAL BANK IN WHICH IT WAS STATED THAT CE RTAIN CHEQUES DRAWN ON UCO BANK AND SBI WERE CREDITED INTO BANK CACCOUNT O F ASSESSEE. THE A.R CLAIMED THAT THE CHEQUES WERE RECEIVED FROM H. KONW AR AS ADVANCES. BUT HE IS UNABLE TO GIVE PROOF THAT THE CHEQUES WERE ACTUALLY RECEIVED FROM MR. H. KONWAR. 6.3 THE PARTY WHO WAS STATED TO HAVE GIVEN THE ADV ANCE HAD DENIED HAVING GIVEN ANY SUCH ADVANCES TO ASSESSEE. IF ASSESSEE HA D BEEN IN REGULAR BUSINESS TRANSACTION WITH THE SAID PARTY, IT WOULD NOT BE DI FFICULT FOR IT TO GET POSITIVE CONFIRMATION FROM THE PARTY. RECONCILIATION SUBMITT ED BY ASSESSEE CANNOT BE RELIED UPON. CERTIFICATES FROM BANK ALSO DO NOT GIV E ANY PROOF THAT CHEQUES WERE ACTUALLY RECEIVED FROM H. KONWAR. IN VIEW OF A BOVE DISCUSSION, ADDITION OF RS. 9,07,239/- IS CONFIRMED. 6. AGGRIEVED THE ASSESSEE IS BEFORE ME AND RAISED T HIS ISSUE ONLY. 7. THE LD. A.R OF THE ASSESSEE SHRI R. K. CHOWDHRY ASSAILING THE IMPUGNED ACTION OF THE LD CIT(A) DREW MY ATTENTION TO PAGE 4 OF HIS WRITTEN SUBMISSION IN WHICH THE ACCOUNTING DETAILS CONCERNING THE COPIES OF ACCOUNT OF SHRI H. KONWAR WITH THE ASSESSEE IN TWO CONCERNS (SISTER CONCERN) FOR THE PERIOD FROM 01.04.2009 TO 31.03.2012 ARE CAPTURED AS GIVEN BELOW: 8. IN ORDER TO SUPPORT THE ABOVE LEDGER ACCOUNT OF ASSESSEE (M/S. JAIN ENTERPRISE), THE ASSESSEE HAS F URNISHED THE FOLLOWING DETAILS FOR READY REFERENCE. ITA NO. CONCERNS I.E. M/S JAIN ENTERPRISES AND M/S CEMENT HOUSE (SISTER CONCERN) FOR THE PERIOD FROM 01.04.2009 TO 31.03.2012 ARE CAPTURED AS GIVEN IN ORDER TO SUPPORT THE ABOVE LEDGER ACCOUNT OF SHRI H. KONWAR IN THE BOOKS OF ASSESSEE (M/S. JAIN ENTERPRISE), THE ASSESSEE HAS F URNISHED THE FOLLOWING DETAILS FOR ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 4 | P A GE I.E. M/S JAIN ENTERPRISES AND M/S CEMENT HOUSE (SISTER CONCERN) FOR THE PERIOD FROM 01.04.2009 TO 31.03.2012 ARE CAPTURED AS GIVEN SHRI H. KONWAR IN THE BOOKS OF ASSESSEE (M/S. JAIN ENTERPRISE), THE ASSESSEE HAS F URNISHED THE FOLLOWING DETAILS FOR ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 5 | P A GE 9. THE LD. A.R SUBMITTED THAT FROM A PERUSAL OF AFO RESAID DETAILS IT WOULD BE CLEAR THAT AS AGAINST THE SUM OF RS. 1,49,672/- PAYABLE T O CUSTOMER, THE EVEN AMOUNT WAS RECEIVABLE FROM M/S CEMENT HOUSE AND IN EFFECT RESU LTING IN NIL BALANCE IN THE CUSTOMERS ACCOUNT IN ASSESSEES BOOK DURING THE AC COUNT CLOSER AS ON 31.03.2013. THE LD. A.R DREW MY ATTENTION TO PAGE 6 OF HIS WRIT TEN SUBMISSION WHEREIN THE ASSESSEE HAD GIVEN DETAILS OF ACCOUNTING ENTRIES EF FECTED FROM SHRI HRIDAYANANDA KONWAR IN THE RECORDS OF M/S CEMENT HOUSE (SISTER C ONCERN) FROM 01.04.2009 TO 31.03.2013 WHICH IS AS UNDER: 10. THEREAFTER HE DREW MY ATTENTION TO THE DETAILS OF P AYMENT MADE BY SHRI HRIDAYANANDA KONWAR WHICH HAS BEEN BROUGHT OUT TO P AGE 7 OF W.S. WHICH IS AS UNDER: 11. ACCORDING TO LD. A.R APART FROM THE EFFECTIVE ENTRI ES PASSED IN ACCOUNTS THERE IN-HOUSE TRANSF ER ENTRIES WERE ALSO PASSED WITH THE SISTER CONCERN M/S JAIN ENTERPRISE IN THE ABOVE LEDGER ACCOUNT OF HOUSE AS GIVEN BELOW: ITA NO. THEREAFTER HE DREW MY ATTENTION TO THE DETAILS OF P AYMENT MADE BY SHRI HRIDAYANANDA KONWAR WHICH HAS BEEN BROUGHT OUT TO P AGE 7 OF W.S. WHICH IS AS ACCORDING TO LD. A.R APART FROM THE EFFECTIVE ENTRI ES PASSED IN ACCOUNTS THERE ER ENTRIES WERE ALSO PASSED WITH THE SISTER CONCERN M/S JAIN ENTERPRISE IN THE ABOVE LEDGER ACCOUNT OF SHRI HRIDAYANANDA KONWAR IN REGARDS OF M/S CEMENT ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 6 | P A GE THEREAFTER HE DREW MY ATTENTION TO THE DETAILS OF P AYMENT MADE BY SHRI HRIDAYANANDA KONWAR WHICH HAS BEEN BROUGHT OUT TO P AGE 7 OF W.S. WHICH IS AS ACCORDING TO LD. A.R APART FROM THE EFFECTIVE ENTRI ES PASSED IN ACCOUNTS THERE ER ENTRIES WERE ALSO PASSED WITH THE SISTER CONCERN M/S JAIN ENTERPRISE IN REGARDS OF M/S CEMENT ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 7 | P A GE 12. ACCORDING TO LD. A.R FROM THE ABOVE DETAILS IT WOULD APPEAR THAT AS AGAINST THE SUM OF RS. 1,49,672/- RECEIVABLE FROM CUSTOMER EVE N AMOUNT WAS PAYABLE TO JAIN ENTERPRISE WHICH IN EFFECT RESULTED IN NIL BALANCE IN THE CUSTOMERS ACCOUNT IN ASSESSEES BOOKS AS ON 31.03.2013.THUS, ACCORDING T O LD. A.R. THIS INDICATES THAT BALANCE IN THE NAME OF SHRI HRIDAYANANDA KONWAR A S ON 31.03.2013 WERE NIL. 13. MOREOVER, THE LD. A.R. DREW MY ATTENTION TO PAG E 4 OF AO WHEREIN THE AO HAS REPRODUCED THE LETTER / REPLY GIVEN BY SHRI HRIDA YANANDA KONWAR PURSUANT TO AOS NOTICE U/S 133(6) OF THE ACT WHICH WAS THE BASIS FR OM THE AO TO MAKE ADDITION OF RS. 9,07,239/- WHEREIN IT HAS BEEN STATED BY SHRI HRI DAYANANDA KONWAR THAT THE SUM OF RS. 26,71,863/- (RS. 3,00,000/- + RS. 23,71,863/-) WAS PAID BY HIM. HOWEVER, IT WAS POINTED OUT TO THE AO THAT IT WAS NOT RS.26,71,863/ - BUT IT WAS AN AMOUNT OF RS. 29,12,838/- I.E. (RS. 2,40,975/- + RS. 3,00,000/- + RS. 1,59,863/- + RS. 22,12,000/-) WHICH WAS PAID BY SHRI HRIDAYANANDA KONWAR AS PER THE CERTIFICATE ISSUED BY HIM AS ON 28.08.2019 WHICH IS PLACED AT PAGE 9 OF PB. 14. THE LD. A.R. DREW MY ATTENTION TO THE LETTER / REPLY BY SHRI HRIDAYANANDA KONWAR WHICH IS REPRODUCED AT PAGE 4 OF ASSESSMENT ORDER WHEREIN SHRI HRIDAYANANDA KONWAR HAS CONFIRMED THAT DURING FY 20 10-11 NIL BALANCE IN THE LEDGER ACCOUNT OF M/S JAIN ENTERPRISE AS PER HIS RE CORDS AND THAT NO ADVANCE OF THE ASSESSEE, A BALANCE AMOUNT OF RS. 9,07,239/- WAS AP PEARING AS ADVANCE RECEIVED FROM HIM AS ON 31.03.2011 WHICH CONTINUED UPTO 31.03.20 12 WHICH FACT THE ASSESSEE HAS BEEN CONSTANTLY MAINTAINED. 15. THE LD. A.R. EXPLAINED THAT THERE WERE TWO TYPE S OF CEMENT SALES EFFECTED BY IT WHILE DEALING WITH SHRI HRIDAYANANDA KONWAR. THEY ARE I) LOCAL SALE AND II) TRANSIT SALE. GIVING DETAILS OF LOCAL SALE EFFECTED BY THE ASSESSEE HE DREW MY ATTENTION TO PAGE 8 IS AS UNDER: 16. ACCORDING TO LD. AR, THE ABOVE TRANSIT SALE OF CEME NT WAS EFFECTED BY ENDORSEMENT OF RAILWAY RECEIPT NO. 262000390 DATED 04.12.2010 JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR. 17. THEREAFTER THE LD. A.R DREW MY ATTENTION TO THE ABO VE TRANSIT SALE OF CEMENT (WHEN CEMENT WAS IN TRANSIT AND DID NOT REACH ITS D ESTINATION) WAS EFFECTED BY ENDORSEMENT OF R AILWAY RECEIPT NO. 262000390 DATED 04.12.2010 LOADE D FROM JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR . ACCORDING TO LD. A.R., THE DIFFERENCE BETWEEN TWO SALES ARE THAT IN THE CASE OF LOCAL SALE FROM DIBRUGARH SITE LOCAL VAT / @12.5% CONVERTED INTO MONETARY VALUE OF RS. 73,186.00 (RS. 26,775.00+RS.46,410.50) AGAINST LOCAL SALE OF RS. 5,58,036.50 (RS. 2,14,200.00+RS. 3,43,836.50). 18. A CCORDING TO LD. AR ON GOING THROUGH THE DETAILS OF TRANSIT HEREIN ABOVE IT WILL BE NOTICED THAT NO LOCAL VAT W AS CHARGED ON TRANSIT SALE EFFECTED TO SRI H KONWAR AND RESULTANTLY HE HAD BEEN BENEFIT ED BY RS.2,87,812.44( @ 13.5%) ON SALE OF CEMENT FOR RS. 21,31,944.00. 19. ACCORDING TO LD. AR, THIS CENTRAL SALES TAX ACT, 1956 AND THE ASSAM VALUE ADD ED TAX ACT, 20. ACCORDING TO LD. AR, T KONWAR AGAINST CEMENT SALE EFFECTED TO HIM CONCERN OF M/S JAIN ENTERPRISE. THE DETAILS OF SAID SALES ARE AS UNDER: ITA NO. ACCORDING TO LD. AR, THE ABOVE TRANSIT SALE OF CEME NT WAS EFFECTED BY ENDORSEMENT OF RAILWAY RECEIPT NO. 262000390 DATED 04.12.2010 JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR. THEREAFTER THE LD. A.R DREW MY ATTENTION TO THE ABO VE TRANSIT SALE OF CEMENT (WHEN CEMENT WAS IN TRANSIT AND DID NOT REACH ITS D ESTINATION) WAS EFFECTED BY AILWAY RECEIPT NO. 262000390 DATED 04.12.2010 LOADE D FROM JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR . ACCORDING TO LD. A.R., THE DIFFERENCE BETWEEN TWO SALES ARE THAT IN THE CASE OF LOCAL SALE FROM LOCAL VAT / @12.5% /13.5% WAS CHARGED ON THE PURCHASER WHICH CONVERTED INTO MONETARY VALUE OF RS. 73,186.00 (RS. 26,775.00+RS.46,410.50) AGAINST LOCAL SALE OF RS. 5,58,036.50 (RS. 2,14,200.00+RS. 3,43,836.50). CCORDING TO LD. AR ON GOING THROUGH THE DETAILS OF TRANSIT HEREIN ABOVE IT WILL BE NOTICED THAT NO LOCAL VAT W AS CHARGED ON TRANSIT SALE EFFECTED TO SRI H KONWAR AND RESULTANTLY HE HAD BEEN BENEFIT ED BY RS.2,87,812.44( @ 13.5%) ON SALE OF CEMENT FOR RS. 21,31,944.00. ACCORDING TO LD. AR, THIS PRACTICE WAS FOLLOWED UNDER THE THEN PREVAILING CENTRAL SALES TAX ACT, 1956 AND THE ASSAM VALUE ADD ED TAX ACT, 2003. ACCORDING TO LD. AR, T HE SAME BENEFIT OF TRANSIT SALE WAS ALSO AVAILED BY SRI H KONWAR AGAINST CEMENT SALE EFFECTED TO HIM FROM M/S. CEMENT HOUSE THE SISTER CONCERN OF M/S JAIN ENTERPRISE. THE DETAILS OF SAID SALES ARE AS UNDER: ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 8 | P A GE ACCORDING TO LD. AR, THE ABOVE TRANSIT SALE OF CEME NT WAS EFFECTED BY ENDORSEMENT OF RAILWAY RECEIPT NO. 262000390 DATED 04.12.2010 LOADED FROM JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR. THEREAFTER THE LD. A.R DREW MY ATTENTION TO THE ABO VE TRANSIT SALE OF CEMENT (WHEN CEMENT WAS IN TRANSIT AND DID NOT REACH ITS D ESTINATION) WAS EFFECTED BY AILWAY RECEIPT NO. 262000390 DATED 04.12.2010 LOADE D FROM JHINKPANI TO NEW TINSUKIA IN FAVOUR OF SHRI HRIDA YANANDA KONWAR . ACCORDING TO LD. A.R., THE DIFFERENCE BETWEEN TWO SALES ARE THAT IN THE CASE OF LOCAL SALE FROM /13.5% WAS CHARGED ON THE PURCHASER WHICH CONVERTED INTO MONETARY VALUE OF RS. 73,186.00 (RS. 26,775.00+RS.46,410.50) AGAINST CCORDING TO LD. AR ON GOING THROUGH THE DETAILS OF TRANSIT SALE APPEARING HEREIN ABOVE IT WILL BE NOTICED THAT NO LOCAL VAT W AS CHARGED ON TRANSIT SALE EFFECTED TO SRI H KONWAR AND RESULTANTLY HE HAD BEEN BENEFIT ED BY RS.2,87,812.44( @ 13.5%) WAS FOLLOWED UNDER THE THEN PREVAILING 2003. HE SAME BENEFIT OF TRANSIT SALE WAS ALSO AVAILED BY SRI H CEMENT HOUSE THE SISTER CONCERN OF M/S JAIN ENTERPRISE. THE DETAILS OF SAID SALES ARE AS UNDER: - ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 9 | P A GE BILL NO. DATE BILL AMOUNT LOCAL VAT TOTA L SALE VALUE PAPER BOOK PAGE NO. 002 23.04.2010 10,35,180.00 NIL 10,35,180.00 40 008 29.09.2011 21,09,240.00 NIL 21,09,240.00 41&44 NOTE: (1) CEMENT AGAINST BILL NO. 002 WAS SOLD IN T RANSIT BY ENDORSEMENT OF RAILWAY RECEIPT (IN FAVOUR OF H. KONWAR) NO. 262000558 DTD. 18.04.2010 LOADED FROM YERRAGUNTLA P.O. CUDDAPAH ( A.P) TO TINSUKIA TOWN. (2) CEMENT AGAINST BILL NO. 008 WAS SOLD IN TRANSIT BY ENDORSEMENT OF RAILWAY RECEIPT (IN FAVOUR OF H. KONWAR) NO. 262001141,1142 DTD. 25.09.2011 LOADE D FROM SITARAMPUR ( A.P) TO NEW TINSUKIA. 21. THUS ACCORDING TO LD. AR, ON GOING THROUGH THE DETAILS OF TRANSIT SALE APPEARING HEREIN ABOVE IT WILL BE NOTICED THAT NO L OCAL VAT WAS CHARGED BY M/S. CEMENT HOUSE AS WELL ON THE TRANSIT SALE EFFECTED T O SRI H KONWAR AND RESULTANTLY HE HAD BEEN BENEFITED BY RS.4,24,496.70 [@ 13.5%] ON S ALE OF CEMENT FOR RS. 31,44,420.00. 22. FROM ABOVE DETAILS, ACCORDING TO LD. AR IT CAN BE CONCLUDED THAT BY CEMENT SALE IN TRANSIT BY THE ASSESSEE THROUGH ITS CONCERN M/S. JAIN ENTERPRISE AND M/S. CEMENT HOUSE TOGETHER, THE CUSTOMER SRI H KONWAR WA S FINANCIALLY BENEFITED BY LEGALLY AVOIDING LOCAL VAT TO THE TUNE OF RS. 7,12. 309.14 (RS.2,87,812.44+RS. 4,24,496.70) AS AGAINST EFFECTIVE SALE OF RS.52,76, 364 (RS.21,31,944+ RS.31,44,420). 23. IT WAS FURTHER BROUGHT TO MY NOTICE THAT THE A SSESSEE AND ITS SISTER CONCERN M/S CEMENT HOUSE HAD RATHER MONOPOLY IN DIBRUGARH IN SE LLING CEMENT WHILE IN TRANSIT. EXPLAINING FURTHER THE LD. A.R. STATED THAT WHEN LO CAL TAX BENEFIT WAS AVAILABLE TO CUSTOMER FOR SUBSTANTIAL AMOUNT, IT IS BUT NATURAL ON THE PART OF THE ASSESSEE TO SEEK ADVANCE FROM CUSTOMERS AND THEY OBLIGED BY DOING SO . AND SHRI HRIDAYANANDA KONWAR HAS GIVEN ADVANCE TO BOTH THE ASSESSEE AND I TS SISTER CONCERN M/S CEMENT HOUSE. IN THE LIGHT OF AFORESAID SUBMISSION, THE AS SESSEE REFERRING TO THE LEDGER ACCOUNT OF SHRI HRIDAYANANDA KONWAR IN THE BOOKS OF THE ASSESSEE FOR THE PERIOD FROM 06.01.2010 TO 31.03.2012 FROM WHERE IT HAS BEE N CONTENDED THAT SHRI HRIDAYANANDA KONWAR HAD GIVEN A SUM OF RS. 9,07,239 /- AS ADVANCE AS DETAILED BELOW: 24. THEREFORE, ACCORDING TO LD. A.R THIS AMOUNT SHOULD NOT HAVE BEEN ADDED IN THE ACCOUNTS OF ASSESSEE U/S 68 OF THE ACT. ACCORDING T O LD. A.R FROM THE AFORESAID SUBMISSIONS MADE BY THE ASSESSEE THE FOLLOWING (1) WHY THE AMOUNTS WERE TRANSFERRED FROM / TRANSFE RRED TO RECORDS OF THE ASSESSEE AS FAR AS THE TRANSACTION WITH SRI H KONWAR ARE CON CERNED AND (2) WHETHER SRI H KONWAR PAID SUFFICIENT AMOUNT IN THE RECORDS OF HOUSE BEFORE RS. 9,02,500 COULD HAVE BEEN TRANSFERR ED FROM THE ACCOUNT OF SRI H KONWAR MAINTAINED BY THE A SUFFICIENT BALANCE WITH THE 5,35,180.00 TO M/S CEMENT HOUSE D 25. CONTINUING FURTHER, HOUSE, THE YEAR END BALANCE OF NIL BY TRANSFERRING THE SAME TO OR FROM, AS THE CASE MA Y BE, M/S JAIN ENTERPRISE TO KEEP TRACK OVER AMOUNT PAYABLE OR RECEIVABLE TO/FRO M SRI H KONWAR DURING THE FOUR YEAR PERIOD FROM 01.04.2009 TO 31.03.2013. THIS FAC T VERIFIED BY THE AO LOOKING AT THE LEDGER ACCOUNT OF SRI H KONWAR BOOK. 26. ACCORDING TO LD. AR DATE D 12.02.2010 FROM M/S CEMENT HOUSE TO M/S JAIN ENTE RPRISE IS CONCERNED, THE ITA NO. THEREFORE, ACCORDING TO LD. A.R THIS AMOUNT SHOULD NOT HAVE BEEN ADDED IN THE ACCOUNTS OF ASSESSEE U/S 68 OF THE ACT. ACCORDING T O LD. A.R FROM THE AFORESAID SUBMISSIONS MADE BY THE ASSESSEE THE FOLLOWING THREE QUESTIONS AR ISES (1) WHY THE AMOUNTS WERE TRANSFERRED FROM / TRANSFE RRED TO M/S. CEMENT HOUSE IN THE AS FAR AS THE TRANSACTION WITH SRI H KONWAR ARE CON CERNED AND (2) WHETHER SRI H KONWAR PAID SUFFICIENT AMOUNT IN THE RECORDS OF HOUSE BEFORE RS. 9,02,500 COULD HAVE BEEN TRANSFERR ED FROM M/S. THE ACCOUNT OF SRI H KONWAR MAINTAINED BY THE A SSESSEE AND (3) WHETHER THERE WAS SUFFICIENT BALANCE WITH THE ASSESSEE IN THE ACCOUNT OF SRI H KONWAR TO TRANSFER RS. 5,35,180.00 TO M/S CEMENT HOUSE D ATED. 28.02.2011. CONTINUING FURTHER, THE LD. AR SUBMITS THAT IN THE RECORDS OF M/S CEMENT THE YEAR END BALANCE OF EACH YEAR IN THE ACCOUNT OF SRI H KONWAR WAS KEPT A T BY TRANSFERRING THE SAME TO OR FROM, AS THE CASE MA Y BE, M/S JAIN ENTERPRISE TO KEEP TRACK OVER AMOUNT PAYABLE OR RECEIVABLE TO/FRO M SRI H KONWAR DURING THE FOUR YEAR PERIOD FROM 01.04.2009 TO 31.03.2013. THIS FAC T , ACCORDING TO LD. AR LOOKING AT THE LEDGER ACCOUNT OF SRI H KONWAR PLACED IN THE PAPER ACCORDING TO LD. AR , AS FAR AS BALANCE TRANSFER AMOUNTING TO RS. 9,02, 500.00 D 12.02.2010 FROM M/S CEMENT HOUSE TO M/S JAIN ENTE RPRISE IS CONCERNED, THE ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 10 | P A GE THEREFORE, ACCORDING TO LD. A.R THIS AMOUNT SHOULD NOT HAVE BEEN ADDED IN THE ACCOUNTS OF ASSESSEE U/S 68 OF THE ACT. ACCORDING T O LD. A.R FROM THE AFORESAID ISES AS UNDER: CEMENT HOUSE IN THE AS FAR AS THE TRANSACTION WITH SRI H KONWAR ARE CON CERNED AND (2) WHETHER SRI H KONWAR PAID SUFFICIENT AMOUNT IN THE RECORDS OF M/S. CEMENT CEMENT HOUSE TO AND (3) WHETHER THERE WAS IN THE ACCOUNT OF SRI H KONWAR TO TRANSFER RS. SUBMITS THAT IN THE RECORDS OF M/S CEMENT EACH YEAR IN THE ACCOUNT OF SRI H KONWAR WAS KEPT A T BY TRANSFERRING THE SAME TO OR FROM, AS THE CASE MA Y BE, M/S JAIN ENTERPRISE TO KEEP TRACK OVER AMOUNT PAYABLE OR RECEIVABLE TO/FRO M SRI H KONWAR DURING THE FOUR , ACCORDING TO LD. AR MAY BE PLACED IN THE PAPER , AS FAR AS BALANCE TRANSFER AMOUNTING TO RS. 9,02, 500.00 D 12.02.2010 FROM M/S CEMENT HOUSE TO M/S JAIN ENTE RPRISE IS CONCERNED, THE SAME WAS TRA NSFERRED OUT OF RS. 10,00,000.00 ( RECEIVED FROM SRI H KONWAR THROUGH CHEQUE ON D YEAR END BALANCE IN THE ACCOUNT OF SRI H KONWAR WIT H M/S CEMENT HOUSE BECAME NIL AS ON 31.03.2010. 27. THE LD. AR W HILE REFERRING TO THE BALANCE TRANSFER OF RS. 5,35, 180.00 FROM M/S JAIN ENTERPRISE TO M/S. CEMENT HOUSE D BALANCE OF RS. 14,42,419.00 WAS AVAILABLE WITH THE A KONWAR DATED 08 .12.2010 OUT OF WHICH RS. 5,35,180.00 WAS TRANSFERR ED TO CEMENT HOUSE AS PER DETAILED WORKING FOR FY 2010 ENTERPRISE) FURNISHED HEREIN BELOW: 28. THUS, ACCORDING TO LD. AR, T KONWAR WAS SQUARED UP BY TRANSFERRING RS.5,16,992.0 0 (CREDIT BALANCE) FROM HIS ACCOUNT WITH M/S JAIN ENTERPRISE ON 01.04.2012 AND ULTIMATELY THE BALANCE IN SRI H KONW ARS ACCOUNT WITH BOTH THE ASSESSEE AS WELL AS 29. THUS, ACCORDING TO LD. AR, F DISCERNED : ITA NO. NSFERRED OUT OF RS. 10,00,000.00 ( REFER PAGE NO. 22 OF THE PAPER BOOK RECEIVED FROM SRI H KONWAR THROUGH CHEQUE ON D ATE D 30.10.2009. CONSEQUENTLY, THE YEAR END BALANCE IN THE ACCOUNT OF SRI H KONWAR WIT H M/S CEMENT HOUSE BECAME HILE REFERRING TO THE BALANCE TRANSFER OF RS. 5,35, 180.00 FROM M/S CEMENT HOUSE D ATE D 28.02.2011 SUBMITTED THAT A CREDIT BALANCE OF RS. 14,42,419.00 WAS AVAILABLE WITH THE A SSESSEE IN THE ACCOUNT OF SRI H .12.2010 OUT OF WHICH RS. 5,35,180.00 WAS TRANSFERR ED TO CEMENT HOUSE AS PER DETAILED WORKING FOR FY 2010 - 11 (IN THE RECORDS OF M/S JAIN ENTERPRISE) FURNISHED HEREIN BELOW: - THUS, ACCORDING TO LD. AR, T HE DEBIT BALANCE OF RS. 5,16,992.00 RECEIVABLE FROM SRI H KONWAR WAS SQUARED UP BY TRANSFERRING RS.5,16,992.0 0 (CREDIT BALANCE) FROM HIS ACCOUNT 01.04.2012 AND ULTIMATELY THE BALANCE IN SRI H KONW ARS ACCOUNT AS WELL AS M/S. CEMENT HOUSE BE CAME NIL AS ON 31.03.2013. THUS, ACCORDING TO LD. AR, F ROM ABOVE DISCUSSED FACTS THE FOLLOWING FACTS CAN BE ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 11 | P A GE PAGE NO. 22 OF THE PAPER BOOK ) D 30.10.2009. CONSEQUENTLY, THE YEAR END BALANCE IN THE ACCOUNT OF SRI H KONWAR WIT H M/S CEMENT HOUSE BECAME HILE REFERRING TO THE BALANCE TRANSFER OF RS. 5,35, 180.00 FROM M/S D 28.02.2011 SUBMITTED THAT A CREDIT IN THE ACCOUNT OF SRI H .12.2010 OUT OF WHICH RS. 5,35,180.00 WAS TRANSFERR ED TO M/S. 11 (IN THE RECORDS OF M/S JAIN RECEIVABLE FROM SRI H KONWAR WAS SQUARED UP BY TRANSFERRING RS.5,16,992.0 0 (CREDIT BALANCE) FROM HIS ACCOUNT 01.04.2012 AND ULTIMATELY THE BALANCE IN SRI H KONW ARS ACCOUNT CAME NIL AS ON 31.03.2013. THE FOLLOWING FACTS CAN BE (1) IN THE RECORDS OF THE ASSESSEE 9,07,239.00 WAS REFLECTED AS ADVANCE RECEI (2) THAT AGAINST ABOVE AMOUNT OF RS. 9,07,239.00 CE MENT WAS SUPPLIED BY THE A H KONWAR FOR AN AMOUNT OF RS. 3,90,247.00 VIDE BILL NO. BG/JRT/R/12 24.02.2013 (REFER PAGE NO. 17 OF THE PAPER BOOK) RESULTING I H KONWAR RS. 5,16,992.00 AND (3) T HE SAID SUM OF RS. 5,16,992.00 WAS TRANSFERRED IN T HE ACCOUNT OF SRI H KONWAR MAINTAINED WITH M/S CEMENT HOUSE WHICH WAS APPROPRI ATED AGAINST AMOUNT RECEIVABLE FROM HIM FOR SUPPLY OF CEMENT BY THEM AS DETAILED BELOW: 30. FROM THE AFORESAID FACTS, THE LD. AR CONCLUDED HIS SUBMISSION BY STATING AGAINST CREDIT BALANCE OF RS.9,07,239.00 AS ON 31.0 3.2012 IN THE NAME OF SRI H KONWAR AS PER RECORDS OF M/S. JAIN ENTERPRISE WHICH WAS TREATED AS UNEXPLAINED CA SH CREDIT BY AO IN COURSE OF ASSESSMENT PROCEEDINGS WAS SUPPLIED BY THE A SSESSEE AS ON SECONDLY BAL ANCE AMOUNT OF RS. 5,16,992 WAS TRANSFERRED FROM TH E A RECORDS OF M/S. CEMENT HOUSE IN THE NAME OF SRI H KONWAR AND, APPROPRIATED AGAINST CEMENT SUPPLIED BY THEM TO SRI H KONWAR VIDE BILL NO. CH/CST/R/11 12/008 DATED 29.09.2011 FOR RS.21,09,240.00. AND 9,07,239.00, ALLEGED TO BE TREATED AS UNEXPLAINED C ASH CREDIT IN COURSE OF ASSESSMENT PROCEEDING OF THE ASSESSEE FOR AY 2012 KONWAR BOTH BY M/S. JAIN ENTERPRISE AND POSSIBLE HAD THERE BEEN BOGUS CASH CREDIT AS TREATE D BY THE RECORDS OF THE ASSESSEE. IN VIEW OF ABOVE, 9,07,239.00 U/S 68 OF THE ACT TREATING THE SAID AMOUNT AS BOGUS UNEXPLAINED CASH CREDIT IN ITA NO. ASSESSEE I.E M/S JAIN ENTERPRISE AS ON 31.03.2012 A REFLECTED AS ADVANCE RECEI VED FROM SRI H KONWAR (2) THAT AGAINST ABOVE AMOUNT OF RS. 9,07,239.00 CE MENT WAS SUPPLIED BY THE A H KONWAR FOR AN AMOUNT OF RS. 3,90,247.00 VIDE BILL NO. BG/JRT/R/12 PAGE NO. 17 OF THE PAPER BOOK) RESULTING I N BALANCE AMOUNT PAYABLE TO SRI H KONWAR RS. 5,16,992.00 AND HE SAID SUM OF RS. 5,16,992.00 WAS TRANSFERRED IN T HE ACCOUNT OF SRI H KONWAR MAINTAINED WITH M/S CEMENT HOUSE WHICH WAS APPROPRI ATED AGAINST AMOUNT RECEIVABLE FROM BY THEM AS DETAILED BELOW: - FROM THE AFORESAID FACTS, THE LD. AR CONCLUDED HIS SUBMISSION BY STATING AGAINST CREDIT BALANCE OF RS.9,07,239.00 AS ON 31.0 3.2012 IN THE NAME OF SRI H KONWAR AS PER JAIN ENTERPRISE WHICH WAS TREATED AS UNEXPLAINED CA SH CREDIT BY AO IN COURSE OF ASSESSMENT PROCEEDINGS IT CAN BE SEEN THAT FIRSTLY CEMENT WORTH RS. 3,90,247.00 SSESSEE AS ON 24.02.2013 VIDE BILL NO. BG/JRT/R/12 ANCE AMOUNT OF RS. 5,16,992 WAS TRANSFERRED FROM TH E A SSESSEES CEMENT HOUSE IN THE NAME OF SRI H KONWAR AND, APPROPRIATED AGAINST CEMENT SUPPLIED BY THEM TO SRI H KONWAR VIDE BILL NO. CH/CST/R/11 29.09.2011 FOR RS.21,09,240.00. AND THUS, IT MEANS THAT AGAINST DEPOSIT OF RS. 9,07,239.00, ALLEGED TO BE TREATED AS UNEXPLAINED C ASH CREDIT IN COURSE OF ASSESSMENT FOR AY 2012 - 13, CEMENT FOR EVEN AMOUNT WAS SOLD TO SRI H JAIN ENTERPRISE AND M/S. CEMENT HOUSE WHICH WONT HAVE BEEN POSSIBLE HAD THERE BEEN BOGUS CASH CREDIT AS TREATE D BY THE AO OF RS.9,07,239.00 IN THE IN VIEW OF ABOVE, THE LD. AR PLEADS THAT THE ADDITION OF RS. U/S 68 OF THE ACT TREATING THE SAID AMOUNT AS BOGUS UNEXPLAINED CASH CREDIT IN ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 12 | P A GE I.E M/S JAIN ENTERPRISE AS ON 31.03.2012 A SUM OF RS. (2) THAT AGAINST ABOVE AMOUNT OF RS. 9,07,239.00 CE MENT WAS SUPPLIED BY THE A SSESSEE TO SRI H KONWAR FOR AN AMOUNT OF RS. 3,90,247.00 VIDE BILL NO. BG/JRT/R/12 -13/038 DATED N BALANCE AMOUNT PAYABLE TO SRI HE SAID SUM OF RS. 5,16,992.00 WAS TRANSFERRED IN T HE ACCOUNT OF SRI H KONWAR MAINTAINED WITH M/S CEMENT HOUSE WHICH WAS APPROPRI ATED AGAINST AMOUNT RECEIVABLE FROM FROM THE AFORESAID FACTS, THE LD. AR CONCLUDED HIS SUBMISSION BY STATING THAT AS AGAINST CREDIT BALANCE OF RS.9,07,239.00 AS ON 31.0 3.2012 IN THE NAME OF SRI H KONWAR AS PER JAIN ENTERPRISE WHICH WAS TREATED AS UNEXPLAINED CA SH CREDIT BY AO IN CEMENT WORTH RS. 3,90,247.00 24.02.2013 VIDE BILL NO. BG/JRT/R/12 -13/038 AND SSESSEES RECORDS TO THE CEMENT HOUSE IN THE NAME OF SRI H KONWAR AND, INTER ALIA, PARTLY APPROPRIATED AGAINST CEMENT SUPPLIED BY THEM TO SRI H KONWAR VIDE BILL NO. CH/CST/R/11 - IT MEANS THAT AGAINST DEPOSIT OF RS. 9,07,239.00, ALLEGED TO BE TREATED AS UNEXPLAINED C ASH CREDIT IN COURSE OF ASSESSMENT 13, CEMENT FOR EVEN AMOUNT WAS SOLD TO SRI H CEMENT HOUSE WHICH WONT HAVE BEEN OF RS.9,07,239.00 IN THE THE ADDITION OF RS. U/S 68 OF THE ACT TREATING THE SAID AMOUNT AS BOGUS UNEXPLAINED CASH CREDIT IN ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 13 | P A GE THE ORDER OF ASSESSMENT PASSED BY THE AO AND FURTHE R CONFIRMED BY THE LD. CIT(APPEALS) MAY BE DELETED. 31. THEREFORE HE REFERRED TO THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF SREELEKHA BANERJEE VS. CIT WHEREIN IT HAS HELD AS U NDER: SECTION 147 OF INCOME TAX ACT, 1961 [CORRESPONDING TO SECTION 34 OF THE INDIAN INCOME TAX ACT, 1922] INCOME ESCAPING ASSESSMENT- GENERAL- A SSESSMENT YEAR 1946-47- WHETHER IF THERE IS ENTRY IN ACCOUNT BOOKS OF ASSESSEE WHICH S HOWS RECEIPT OF SOME ON CONVERSION OF HIGH DENOMINATION NOTES TENDERED FOR CONVERSION BY ASSES SEE HIMSELF, IT IS NECESSARY FOR ASSESSEE IF ASKED, WHAT SOURCE OF THAT MONEY IS AND TO PROVE TH AT IT DOES NOT BEAR NATURE OF INCOME- HELD, YES- WHETHER WHERE ASSESSEE CONTENDED THAT HIGH DEN OMINATION NOTES REPRESENTED NOT CASH BALANCE BUT SOME OTHER MONEY AND HE FAILED TO EXPLA IN SOURCE OF SAID MONEY, DEPARTMENT WAS JUSTIFIED IN TREATING VALUE OF SAID HIGH DENOMINATI ON NOTES AS INCOME OF ASSESSEE FROM UNDISCLOSED SOURCES HELD, YES. OBSERVATION- IN THE INSTANT CASE, HIGH DENOMINATION NOTES IN POSSESSION OF THE ASSESSEE DID NOT REPRESENT HIS EXPLAINABLE CASH BALANCE BUT WAS SOME OTHER MONEY FOR WHICH NO JUSTIFIABLE SOURCE WAS PUT FORWARD AND THEREFORE, THE AMOUNT WA S ADDED AS INCOME FROM UNDISCLOSED SOURCE. INFERENCE- IN OUR CASE, NEITHER ANY UNJUSTIFIABLE E NTRY WAS PASSED IN THE ACCOUNT OF SHRI HRIDAYANANDA KONWAR NOR ANY CASH WAS EVER FORTHCOMI NG CALLING FOR FURTHER EXPLANATION / SUPPORTING DETAILS. 32. THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF BASANTIPUR TEA CO. PVT. LTD. VS. CIT WHEREIN IT WAS HELD AS UNDER: THE FINDINGS OF THE TRIBUNAL ARE THAT THE SUM OF RS. 1,50,000/- CREDITED IN THE BOOKS OF THE COMPANY ON THE FIRST DAY OF ITS INCORPORATION REPRE SENTED THE ASSESSEES INCOME FROM OTHER SOURCES AND NOT FROM BUSINESS. THAT THIS SUM OF RS. 1,50,000/- WAS INCLUDIBLE AS INCOME WAS NOT DISPUTED. THE TRIBUNAL HAS STATED THAT IT WOULD NOT BE UNREASONABLE TO INFER FROM THE FACT OF THE CASE THAT THE AMOUNT CREDITED ON THE FIRST D AY OF THE ACCOUNTING YEAR OF THE ASSESSEE COMPANY WAS A CREDIT ITEM. IF IT WAS AN INCOME FROM BUSINESS SOURCE EVEN ON THE FIRST DAY OF THE INCORPORATION, IT WAS FOR THE ASSESSEE TO EXPLA IN HOW HE EARNED THAT INCOME. IN THE ABSENCE OF SUCH EVIDENCE OR EXPLANATION, THE TRIBUN AL WAS RIGHT IN TREATING THE INCOME AS FROM OTHER SOURCES. OBSERVATION- IN THE PRESENT CASE, THE ASSESSEE COMP ANY CREDITED A SUM OF RS. 1,50,000/- ON THE FIRST DAY OF ITS EXISTENCE ON INCORPORATION. TH E COMPANY WAS CALLED UPON TO SUPPORT THE RECEIPT AS INCOME FROM BUSINESS WHICH IT COULD NOT SUBSTANTIATE AND, THEREFORE, THE AO TREATED THE SAME AS INCOME FROM OTHER SOURCES. INFERENCE- ON THE BASIS OF OUR RECORDS AND LEDGER A CCOUNT OF SHRI HRIDAYANANDA KONWAR NO CASH TRANSACTION WAS EVER EFFECTED IN COURSE OF TRA NSACTIONS OCCURRING DURING 09.04.2009 TO 24.02.2013. 33. PER CONTRA, THE LD. D.R FOR THE DEPARTMENT VEH EMENTLY OPPOSED THE AFORESAID SUBMISSION OF THE LD. A.R AND SUBMITTED THAT BEFORE THE AO THE ASSESSEE FAILED TO ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 14 | P A GE GIVE ANY SATISFACTORY EXPLANATION WHEN HE WAS CONFR ONTED WITH THE REPLY OF SHRI HRIDAYANANDA KONWAR DENYING ANY LIABILITY / ADVANCE WHICH AS CLAIMED BY THE ASSESSEE. THE LD. DR BROUGHT TO MY NOTICE THAT THE REPLY OF SHRI HRIDAYANANDA KONWAR PURSUANT TO SECTION 133(6) NOTICE ISSUED BY THE AO HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER ITSELF WHICH COULD NOT BE SATI SFACTORILY EXPLAINED BEFORE THE AO SO HE HAD MADE THE ADDITION OF RS. 9,07,239/-. ACC ORDING TO LD. DR, ON APPEAL BEFORE THE LD. CIT(A) ALSO THE ASSESSEE MISERABLY FAILED T O PROVE THAT THERE WAS A LIABILITY SUBSISTING OF RS. 9,07,239 AS ON 31.03.2012 WITH SH RI HRIDAYANANDA KONWAR. ACCORDING TO LD. D.R, NOW AT THE SECOND APPEAL STAG E THE ASSESSEE HAS COME OUT WITH ENTIRELY NEW STORY WHEREIN HE HAS BROUGHT OUT TWO K INDS OF SALES I.E. LOCAL SALE AND TRANSIT SALE AND THEREFORE HE IS TRYING TO BRING A NEW ENTITY M/S CEMENT HOUSE INTO THE PICTURE AND CLAIMS THAT IT WAS A SISTER CONCERN OF ASSESSEE ETC. ACCORDING TO LD. D.R THIS IS AN AFTERTHOUGHT AND SHOULD NOT BE ADMITTED AT THIS STAGE. THEREFORE, ACCORDING TO LD. D.R., THE ACTION OF THE LD. CIT(A) SHOULD BE CO NFIRMED. 34. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE FACTS NARRATED ABOVE ARE NOT REPEATED TO AVOID REPETITION AND FOR THE SA KE OF BREVITY. THE AO WHILE GOING THOUGH THE BALANCE SHEET OF THE ASSESSEE AS ON 31.0 3.2012 TOOK NOTE THAT THE ASSESSEE HAD SHOWN LIABILITY OF RS. 9,07,239/- FROM SHRI H RIDAYANANDA KONWAR. WHEN THE AO TRIED TO CROSS-CHECK THE GENUINENESS OF THE CLAIM, SHRI HRIDAYANANDA KONWAR DENIED HAVING ANY LIABILITY SUBSISTING WITH THE ASSESSEE A S ON 31.03.2012. THIS ADVERSE FACT WAS CONFRONTED BY THE AO WITH THE ASSESSEE, AND THE AO NOTES THAT THE ASSESSEE HAD NOT GIVEN ANY EXPLANATION SO HE MADE ADDITION WHICH ACTION OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT(A). NOW BEFORE ME, THE LD. A.R OF THE ASSESSEE HAS TRIED TO JUSTIFY THE LIABILITY WHICH IS SHOWN IN ITS BALANCE SHEET AS ON 31.03.2012 AGAINST SHRI HRIDAYANANDA KONWAR BY BRINGING IN CERTAIN TRANSACT IONS OF SHRI H. KONWAR WITH THE ASSESSEE. FOR THE ENDS OF JUSTICE, THE ENTIRE SUBMI SSION OF LD. AR ALONG WITH THE BOOKS OF BOTH THE CONCERNS [ M/S JAIN ENTERPRISES & M/S CEMENT HOUSE ] NEEDS TO BE VERIFIED AFRESH AS WELL AS CROSS CHECKED WITH THAT OF SHRI H. KONWAR TO FIND OUT THE TRUTH IN THE CONTENTION MADE BEFORE THIS TRIBUNAL. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, I SET ASIDE THE IMPUGNED ORDER OF LD . CIT(A) AND REMIT THIS ISSUE BACK ITA NO. 353/GAU/2018 M/S JAIN ENTERPRISES A.Y. 2012-13 15 | P A GE TO THE FILE OF AO WITH A DIRECTION TO VERIFY THE CO RRECTNESS OF THE AFORESAID SUBMISSION. AND THE ASSESSEE IS DIRECTED TO FULLY COOPERATE WIT H THE AO AND SUBMIT ALL THE BOOKS/DOCUMENTS IN RESPECT OF ITS CLAIM ALONG WITH MATERIAL TO SUBSTANTIATE THE TRANSACTION BETWEEN BOTH M/S. JAIN ENTERPRISES AND ITS SISTER CONCERN M/S CEMENT HOUSE WITH SHRI HRIDAYANANDA KONWAR AND RECONCIL E THE FIGURE OF RS. 9,07,239/- SHOWN AS LIABILITY TO SHRI HRIDAYANANDA KONWAR AS ON 31.03.2012 WHICH IS SUPPOSED TO HAVE BEEN SQUARED UP AS ON 31.03.2013 (AY 2013-1 4) AND THE AO TO VERIFY THE CLAIM AND IF IT IS FOUND TO BE CORRECT AND IS LEGAL LY VALID THEN, NO ADDITION IS REQUIRED TO BE MADE. THE AO AFTER HEARING THE ASSESSEE TO ADJUD ICATE THIS ISSUE DE-NOVO AS PER THE DIRECTION GIVEN SUPRA AND IN ACCORDANCE TO LAW. 35. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2021. SD/- ( A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED: 6TH JANUARY, 2021. SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- M/S JAIN ENTERPRISES, MARWARI PATTY, H. S. ROAD, DIBRUGARH- 786001. 2. RESPONDENT- ITO, WARD-1(4), DIBRUGARH 3. THE CIT(A)- GUWAHATI 4. CIT- , GUWAHATI 5. DR, GAUHATI BENCH, GUWAHATI TRUE COPY BY ORDER SR. PRIVATE SECRETARY ITAT, KOLKATA BENCHES, KOLKATA