ITO, Nabha V. M/s Somsons Colonizers P. Ltd., Nabha

ITA 361/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6191 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Unexplained cash credit; Principle of natural justice; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 361/CHD/2013 (ASSESSMENT YEAR : 2006-07) THE INCOME TAX OFFICER, VS M/S SOMSONS COLONI ZERS P.LTD., NABHA. CIRCULAR ROAD, NABHA. PAN : AAFCS1058L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 26.06.2014 DATE OF PRONOUNCEMENT : 11.07.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) PATIALA DATED 31.01.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF T HE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL : IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25200,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT, EVEN WHEN 7 OF THE 16 PARTIES TO WHOM SUMMONS WERE ISSUED, NEITHER CAME FORWARD FOR CROSS EXAMINATION NOR FILED ANY AFFIDAVIT AND THUS, THE O NUS OF PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS HAD NOT BEEN DISCHARGED BY THE ASSESSE E TO THE SATISFACTION OF THE ASSESSING OFFICER. 3. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF ADDITION OF RS. 25,20,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CRE DITS. 2 4. THE BRIEF FACTS OF THE CASE ARE THAT IN THE ORIG INAL ASSESSMENT PROCEEDINGS, ADDITION WAS MADE ON ACCOUNT OF CASH C REDITS IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF 16 PERSONS WHOS E STATEMENTS WERE RECORDED DURING THE ASSESSMENT PROCEEDINGS IN WHICH THEY DENIED TO HAVE GIVEN ANY ADVANCE TO THE ASSESSEE COMPANY. IT MAY BE BROUGHT ON RECORD THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPING AND HAD CLAIMED THAT IT HAD RECEIVED THE SAID PAYMENT FROM THE SAID 16 PERSONS AGAINST BOOKING OF DIFFERENT PR OPERTIES. HOWEVER, DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE SAI D PARTIES DENIED TO HAVE MADE THE SAID ADVANCES TO THE ASSESSEE. THE I SSUE OF THE ADDITION IN THE CASE OF THE ASSESSEE TRAVELED TO THE TRIBUNA L AND VIDE ORDER IN ITA NO.1264/CHD/2009 DATED 09.09.2010 THE PLEA OF T HE ASSESSEE THAT IT WAS NOT ALLOWED CROSS-EXAMINATION OF THE SAID PE RSONS BEFORE MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE WA S ACCEPTED BY THE TRIBUNAL AND THE MATTER WAS RESTORED BACK TO THE FI LE OF ASSESSING OFFICER WITH DIRECTIONS. IN THE SECOND ROUND OF PR OCEEDINGS, SUMMONS WERE AGAIN ISSUED TO DIFFERENT PARTIES AND OUT OF 1 6 PARTIES, THREE OF THE PARTIES APPEARED BEFORE ASSESSING OFFICER AND C ONFIRMED TO HAVE GIVEN THE ADVANCES. FURTHER, ONE PERSON SHRI RAKES H MEHTA STATED THAT THE ADVANCES WERE GIVEN IN THE EARLIER YEARS AND DI D NOT RELATE TO THE YEAR UNDER CONSIDERATION. FURTHER 5 PERSONS OUT OF THE 15 PERSONS FURNISHED AFFIDAVITS IN WHICH THEY ADMITTED TO HAVE GIVEN THE ADVANCES. THE BALANCE 7 PERSONS DID NOT RESPOND TO THE SUMMONS ISSUED TO THEM. THE EXPLANATION OF THE ASSESSEE WI TH REGARD TO THE REMAINING PARTIES WAS THAT ADVANCES WERE RECEIVED F ROM THE SAID PARTIES AGAINST WHICH RECEIPTS WERE ALSO ISSUED. F URTHER, IT WAS CLAIMED BY THE ASSESSEE THAT THE SAID PROPERTIES HA VE BEEN REGISTERED IN THE NAME OF THE SAID PARTIES. THE ASSESSING OFF ICER WAS OF THE VIEW THAT IN THE ABSENCE OF ANY FURTHER EVIDENCE BEING F ILED, THE BALANCE 3 SUM OF RS. 25,20,000/- IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE, WHICH WAS CONFIRMED BY COMMISSIONER OF IN COME TAX (APPEALS) ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 5. BEFORE COMMISSIONER OF INCOME TAX (APPEALS), THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT HAD GIVEN CO RRECTED ADDRESSES ALONGWITH THE PHONE NUMBERS OF THE PARTIES AND ALSO FURNISHED THE SALE DEEDS EXECUTED. IN SUCH CIRCUMSTANCES THE STATEMEN T RECORDED IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS IN THE ABSENC E OF THE ASSESSEE COULD NOT BE ADOPTED FOR MAKING THE SAID ADDITION. IN RESPECT OF THE BALANCE SEVEN PARTIES, THE ASSESSEE FURNISHED THE R EGISTRATION DEEDS AND IT WAS POINTED OUT THAT AMOUNT AS PER THE SALE DEED AS WELL AS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSE SSEE COMPANY TALLIED. IN ALL THE REGISTRATION DEEDS, IT WAS CLE ARLY MENTIONED THAT THE AMOUNT WAS RECEIVED IN ADVANCE. THE COMMISSIONER O F INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE VARIOUS DOCUMENTS SUBMITTED BY THE ASSESSEE AND IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAD NOT REJECTED THE SUBMISSIONS OF THE ASSESSEE. 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS). 7. SHRI J.S.NAGAR APPEARED FOR THE REVENUE AND SHRI ASHWANI KUMAR APPEARED FOR THE ASSESSEE AND PUT FORWARD THE IR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE BEFORE US WHERE THE A SSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF PROPERTY AND SALE THEREOF, CERTAIN ADVANCES WERE RECEIVED BY THE ASSESSEE FROM DIFFERE NT PARTIES. IN THE FIRST ROUND OF PROCEEDINGS, THE ASSESSING OFFICER H AD RECORDED THE STATEMENT OF SEVERAL PARTIES AND 16 OF THEM HAD DEN IED TO HAVE PAID 4 THE SAID ADVANCES TO THE ASSESSEE. ADDITION WAS MA DE IN THE HANDS OF THE ASSESSEE, WHICH WAS CONFIRMED BY COMMISSIONER O F INCOME TAX (APPEALS), AGAINST WHICH ASSESSEE FILED APPEAL BEF ORE THE TRIBUNAL AND THE CONTENTION OF THE ASSESSEE BEFORE THE TRIBU NAL WAS THAT THE SAID STATEMENTS OF THE PERSONS WERE RECORDED AT THE BACK OF THE ASSESSEE AND EVEN CROSS-EXAMINATION OF THE SAID WIT NESSES WERE NOT ALLOWED TO THE ASSESSEE. CONSEQUENTLY, THE ADDITIO N MADE IN THE HANDS OF THE ASSESSEE WAS INVALID. THE TRIBUNAL VIDE ORD ER DATED 09.09.2010 HAD REMANDED THE ISSUE BACK TO THE FILE OF ASSESSIN G OFFICER WITH DIRECTIONS TO ALLOW THE ASSESSEE TO CROSS-EXAMINE T HE WITNESSES AND ALSO TO CARRY OUT FURTHER VERIFICATION IN THE CASE. IN THE SECOND ROUND OF PROCEEDINGS, OUT OF 16 PARTIES, THE ADVANCES REC EIVED FROM 9 PARTIES WERE ACCEPTED AS THEY EITHER APPEARED BEFORE THE AS SESSING OFFICER OR FILED CONFIRMATIONS IN THIS RESPECT. THE BALANCE 7 PERSONS TABULATED AT PAGE 5 OF THE ASSESSMENT ORDER FROM WHOM ADVANCES T OTALING RS. 25,20,000/- WERE RECEIVED DID NOT FILE EVIDENCE NOR ANY CONFIRMATIONS WERE FILED BY THE SAID PARTIES. IN THE ABSENCE OF THE SAME, THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED A ND MADE AN ADDITION OF RS. 25,20,000/-. BEFORE THE COMMISSION ER OF INCOME TAX (APPEALS), THE ASSESSEE EXPLAINED THAT THE REGISTRA TION DEEDS WERE FILED IN ALL THE CASES BEFORE THE ASSESSING OFFICER AND THE AMOUNT AS PER THE SALE DEED AS WELL AS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE TALLIED. FURTHER, IN ALL T HE REGISTRATION DEEDS, THE AMOUNT RECEIVED IN ADVANCE WAS CLEARLY MENTIONE D. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICE R HIMSELF HAD ACCEPTED ADVANCES FROM 5 OTHER PARTIES ON THE BASIS OF FIVE REGISTRATION DEEDS AS PER PARA 1 AT PAGE 6 OF THE A SSESSMENT ORDER. HOWEVER, THE ASSESSING OFFICER HAD NOT ACCEPTED THE EVIDENCE FILED BY THE ASSESSEE IN RESPECT OF THE BALANCE 7 PARTIES. THE COMMISSIONER OF 5 INCOME TAX (APPEALS) ASKED THE ASSESSING OFFICER TO GIVE HIS COMMENTS ON THIS POINT. THE ASSESSING OFFICER IN R EPLY VIDE LETTER NO. 78 DATED 07.01.2013 SUBMITTED THAT THE PERUSAL OF THE ASSESSMENT RECORD/COPY OF THE REGISTRATION DEEDS IN RESPECT OF THE PERSONS REVEALED THAT THE REGISTRATION OF THE PROPERTY HAD BEEN DONE IN THEIR RESPECTIVE NAMES. THE COMMISSIONER OF INCOME TAX ( APPEALS) VIDE PARA 4.8 OBSERVED AS UNDER : 4.8 I HAVE GONE THROUGH THE SUBMISSIONS MADE. FI RSTLY, IT IS SEEN THAT IN RESPECT OF THE 30 PARTIES AGAINST WHICH THE ADDITION OFRS.85,45,OOO/-WAS MADE, THE A.O. ACCEPTED THE EVI DENCES IN THE FORM OF REGISTRATION DEED OF LAND AND/OR AFFIDAVITS . NO ADDITION WAS MADE IN THE SUBSEQUENT ASSESSMENT. IN RESPECT OF THE /PARTIES OUT OF 16 PARTIES AGAINST WHOM THE ADDITION OF RS.25,2O,OO O/- IS NOW MADE, IT IS NOTED THAT THE A.O. COULD NOT OFFER CROSS-EXA MINATION OF THE PARTIES TO THE APPELLANT. AS ALREADY NOTED BY HON' BLE ITAT THE ONUS IN THIS REGARD WAS ON THE ASSESSING OFFICER TO MAKE AVAILABLE TO THE ASSESSEE ALL THE RELEVANT MATERIAL AND THE CONCERNE D PARTIES FOR CROSS- EXAMINATION AND REBUTTED BY THE ASSESSEE. THIS I S EVIDENTLY NOT 'DONE. THEREFORE, THE EVIDENCE IS NOT WORTHY OF CRE DENCE. ON THE OTHER HAND, THE APPELLANT HAS DULY SUBMITTED ALL DO CUMENTS INCLUDING THE BOOKS OF ACCOUNTS AS WELL AS THE REGISTRATION D EEDS AS CONTENDING IN THE SUBMISSION BY THE APPELLANT. THE A.O. DID N'T REBUT THIS SUBMISSION AND ADMITTED THAT THE REGISTRATION DEEDS REVEAL THAT REGISTRATION OF PROPERTY HAS BEEN DONE IN THEIR RES PECTIVE NAMES. THUS, IN MY OPINION, THE APPELLANT HAS SUBMITTED OF DOCUMENTS REQUIRED WHILE THE A.O. COULD NOT DISCHARGE HIS ONU S TO PRODUCE THE PARTIES FOR CROSS-EXAMINATION DESPITE THE DIRECTION OF HON'BLE ITAT IN THIS REGARDS. THE A.O. HAS HIMSELF ACCEPTED THE RE GISTRATION DEEDS AS ENOUGH EVIDENCE IN RESPECT OF OTHER PARTIES. THE A PPELLANT HAS REFERRED TO THE CASE OF CIT VS. GANI SILK PALACE 171 ITR 373 WHICH IS APPLICABLE TO THE PRESENT CASE AS THE CIRC UMSTANCES ARE SIMILAR. IN THIS CONNECTION, THE APPELLANT SUBMITTE D THAT 'IN THIS CASE, THE APPELLATE AUTHORITY HAD GIVEN A SPECIFIC DIRECTION TO THE ITO TO EXAMINE THE BANKERS BEFORE MAKING USE OF THEIR STATEMENTS. WITHOUT COMPLYING WITH THAT DIRECTION, THE ITO CANNOT MAKE A REASSESSMENT ON THE SAME BASIS AS IT WAS DONE ON THE PRIOR OCCASION. THE TRIBUNAL HAS POINTED OUT THAT T HE ORDER OF REASSESSMENT IS ONLY A VERBATIM REPRODUCTION OF THE ORIGINAL ORDER OF ASSESSMENT, WORD OF WORD, EXCEPT FOR THE PREAMBLE P ORTION. THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THERE IS N O EVIDENCE TO SHOW THAT THE CREDIT ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE FALSE. THE CONCLUSION OF THE TRIBUNAL IS BASED ON THE FACT S AND CIRCUMSTANCES OF THE CASE. THAT CONCLUSION CANNOT BE SAID TO BE U NREASONABLE OR PERVERSE. REALLY, A QUESTION OF FACT HAS BEEN ANSWE RED BY THE TRIBUNAL ON THE BASIS OF EVIDENCE AVAILABLE ON RECORD. FURTHER RELIANCE IS PLACED ON THE FOLLOWING JUDGEME NTS: 1. AN ACT IN VIOLATION OF THE PRINCIPLES OF NATURAL JU STICE IS VOID OR OF NO VALUE [STATE VS. DR. (MR.) BINAPANI DEI (1967) 2 SC R 625]. 6 2. IN DUNLOP INDIA LTD. VS. ASSTT. COMMISSIONER OF SAL ES TAX (1989) 175 ITR 622 (KER), IT HAS BEEN HELD THAT BREACH OF RULE S OF NATURAL JUSTICE IS PLACED AT PAR WITH TOTAL LACK OF JURISDICTION. 3. THE KERALA HIGH COURT IN PONKUNNAM TRADERS VS. ADDL . ITO (1972) 83 ITR 508 (KER), HAS HELD THAT FAILURE TO CONFORM TO THE PRINCIPLES OF NATURAL JUSTICE WOULD MADE A JUDICIAL A QUASI-JUDIC IAL ORDER VOID, AND SUCH AN ORDER CANNOT BE VALIDATED BY THE' APPELLATE OR REVISIONAL ORDERS. THUS, THE FACTS OF THE CASE SHOWS THAT THE APPELLAN T HAS DULY SUBMITTED THE DOCUMENTS INCLUDING REGISTRATION DEED S. THERE IS NO DISPUTE REGARDING SALE CONSIDERATION AND THE ISSUE IS ONLY REGARDING TIMING OF THE ADVANCE. THE A.O. HAS TAKEN SOME STAT EMENTS BUT DESPITE DIRECTION, HE COULD NOT PRODUCE THE PARTIES FOR CRO SS-EXAMINATION. KEEPING INTO VIEW, THE FACTS OF THE CASE AND RELYIN G ON THE DECISION OF HON'BLE COURT IN THE CASE OF GANI SILK PALACE AND OTHER CASES CITED (SUPRA). THIS ADDITION IS HEREBY DELETE D. 9. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRCU MSTANCES, WHERE THE ASSESSEE HAD FURNISHED THE NECESSARY INFORMATIO N AVAILABLE WITH IT BEFORE THE ASSESSING OFFICER AND THEREAFTER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) EVIDENCING RECEIPT OF ADVAN CE PAYMENTS FROM THE 7 RESPECTIVE PARTIES WHICH WERE REFLECTED IN TH E REGISTRATION DEEDS ENTERED INTO BETWEEN THE ASSESSEE AND THE SAID PART IES, WHICH IN-TURN RECORDED THE SAID ADVANCE PAYMENT, WE FIND NO MERIT IN THE PLEA OF THE REVENUE IN THIS REGARD. UPHOLDING THE ORDER OF COM MISSIONER OF INCOME TAX (APPEALS), WE DISMISS GROUND OF APPEAL R AISED BY THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH JULY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.