Ashwani Kumar Jain, Meerut V. ACIT, Meerut

ITA 3733/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4171 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SURJAN MOHANTY
• Assessee Lawyers: ASHWANI KUMAR JAIN HIMSE LF
• Keywords: Principle of natural justice; Non compliance
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 3733/DEL/10 ASSTT. YEAR : 2007-08 ASHWANI KUMAR JAIN, 82/, RAILWAY ROAD, MEERUT PAN : AAMPJ7368L VS. ACIT, CIRCLE 1, MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY: ASHWANI KUMAR JAIN, ASSESSEE HIMSE LF RESPONDENT BY: MRS. SURJAN MOHANTY, SR.DR ORDER PER RAJPAL YADAV : JM THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 20 TH JULY, 2010 PASSED FOR ASSTT. YEAR 2007-08. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE DESCRIPTIVE AND ARGU MENTATIVE IN NATURE. ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 2 IN BRIEF, THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 41,61,305/- WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 68 OF THE INCOME TAX ACT 1961. 2. IN RESPONSE TO THE NOTICE OF HEARING, ASSESSEE A PPEARED IN PERSON AND ADVANCED HIS ARGUMENTS. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE IS PROPRIETOR OF M/S. MEERUT EXIM AND M/S. R.J. EXIM ENGAGED IN TRADING AND GENERAL ORDER SUPPLIERS. HE IS ALSO A DIRECTOR IN VARIOUS COMPANIES. HE HAS FILED HIS RETURN OF INCOME ON 3 RD NOVEMBER, 2007 DECLARING AN INCOME OF ` 16,983/-. ON SCRUTINY OF THE ACCOUNTS, AO FOUND THAT ASSESSEE HAS RAISED FR ESH LOANS DURING THE YEAR UNDER CONSIDERATION. IN A BRIEF FINDING, HE WO RKED OUT SUCH LOANS AT ` 48,49,476/-. ACCORDING TO HIM, ASSESSEE FAILED TO FULFILL THE CONDITIONS PROPOUNDED BY SECTION 68 OF THE INCOME TAX ACT FOR EXPLAINING THE FRESH LOANS RAISED BY HIM. THE ASSTT. ORDER IS RUNNING IN TO JUST ONE AND A HALF PAGE. WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE BR IEF FINDING RECORDED BY THE AO WHILE MAKING THE ADDITIONS WHICH READ AS UNDER :- DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RAISED FRESH LOANS FROM SMT. HARBIR KAUR NARULA OF RS. 1,71,505/ -, SMT. SIMRAN SETHI OF RS. 1,67,500/-, SHRI HARBANS LAL THEKEDAR OF RS. 30 ,00,000/-, MS. SANDHIYA JAIN OF RS. 3,59,300/- AND M/S. R.J. EXIM OF RS. 11 ,51,171/-. THE ASSESSEE WAS ASKED TO ESTABLISH THE IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF TRANSACTION OF THE FRESH UNSECURED LOAN CREDITORS, VIDE QUESTIONNAIRE U/S 142(1) DATED 24.07.2009 AND FURTHER VIDE ORDERSHEET ENTRY DATED 11.12.2009. IN REPLY, THE ASSESSEE HAS SUBMITTED ONLY A CHART S HOWING OPENING BALANCE, ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 3 CREDIT DURING THE YEAR AND BALANCE. THEREFORE, FOLL OWING THE PRINCIPLES OF NATURAL JUSTICE, THE ASSESSEE WAS PROVIDED ANOTHER OPPORTUNITY TO FILE CONFIRMATIONS OF LENDERS, AND SUPPORTING DOCUMENTS LIKE ITRS AND BANK STATEMENTS OF THE LENDERS. SHOW CAUSE WAS ALSO GIVE N THAT IN ABSENCE OF THE SUPPORTING DOCUMENTS, THE FRESH CREDITS SHALL BE TR EATED AS UNEXPLAINED AND ADDED TO INCOME OF ASSESSEE, VIDE ORDERSHEET ENTRIE S DATED 11.12.2009 AND 16.12.2009. DATE OF COMPLIANCE WAS FIXED FOR 18.12. 2009. HOWEVER, ON THE DATE FIXED FOR COMPLIANCE, NEITHER THE ASSESSEE NOR HIS AUTHORIZED PERSON ATTENDED. NO APPLICATION FOR ADJOURNMENT WAS ALSO FILED BY THE ASSESSEE. FROM THE NON COMPLIANCE TO THE SHOW CAUSE GIVEN ON 2 DATES, IT IS CLEAR THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER WITH REGARD TO FRESH CREDITS IN ITS BOOKS OF A/CS. THE PROVISIONS OF S.68 GET AT TRACTED IN THE CASE. AS THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS O F ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION, TH ESE CREDITS REMAIN UNEXPLAINED IN THE BOOKS OF A/CS OF THE ASSESSEE. I N ABSENCE OF ANY SUPPORTING DOCUMENTS TO ESTABLISH THE 3 CONDITIONS, I TREAT THESE SUMS, IN TOTAL RS. 48,49,476/- AS UNEXPLAINED AND ADD IT TO THE IN COME OF THE ASSESSEE U/S 68. -ADDITION OF RS. 48,49,476/- 3. DISSATISFIED WITH THE ADDITIONS, ASSESSEE CARRIE D THE MATTER IN APPEAL. IN THE STATEMENT OF FACTS, HE HAS PLEADED T HAT LD. AO HAS ERRED IN RECORDING THE FINDING THAT ASSESSEE FAILED TO AT TEND THE HEARING. HE SUBMITTED THAT EITHER THE ASSESSEE OR HIS AUTHORIZE D REPRESENTATIVE HAS ALWAYS ATTENDED VARIOUS DATES AND SUBMITTED THE REQ UISITE DETAILS. ASSESSEE POINTED OUT BEFORE THE LD. CIT(A) THAT HE HAS FILED CONFIRMATION FROM THE CREDITORS ALONGWITH THEIR PER MANENT ACCOUNT NUMBER IN ORDER TO EXPLAIN THE SOURCE OF MONEY IN T HE HANDS OF THE CREDITORS. ASSESSEE HAS FILED COPIES OF THE SALE DE ED EXHIBITING THE SALE OF PROPERTIES BY THE CREDITORS. ASSESSEE HAS FILED AFFIDAVIT AND OTHER LEDGER ACCOUNTS IN RESPECT OF THE CREDITORS. LD. FI RST APPELLATE AUTHORITY ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 4 HAS CALLED FOR A REMAND REPORT FROM THE AO AND REPR ODUCED THE REMAND REPORT IN PARAGRAPH NO. 5.4 ON PAGES 5 AND 6 OF THE IMPUGNED ORDER. ACCORDING THE AO, IN THE REMAND PROCEEDING, ASSESSE E FAILED TO PRODUCE THE CREDITORS BEFORE HIM. LD. CIT(A) HAS CONSIDERED THE AMOUNTS TAKEN BY THE ASSESSEE FROM EACH CREDITOR AND PARTLY CONFI RMED THE ADDITION. HE HAS DELETED SUM OF ` 1,151,171/- ADDED BY THE AO IN RESPECT OF M/S. R.J. EXIM. THIS CONCERN IS THE SOLE PROPRIETORSHIP OF THE ASSESSEE AND ASSESSEE HAS SUBMITTED THE REQUISITE DETAILS. 4. ASSESSEE WHILE IMPUGNING THE ORDER OF LD. CIT(A) CONTENDED THAT ASSESSEE HAS SUBMITTED ALL REQUISITE EVIDENCE BEFOR E THE AO AS WELL AS BEFORE THE LD. CIT(A). THE MAJOR CREDITOR IS SHRI H ARBANS LAL THEKEDAR FROM WHOM ASSESSEE HAS TAKEN ` 30 LACS. THE AO HAD ISSUED A SUMMON TO THIS PERSON ON 15.6.2010 DIRECTING HIM TO APPEAR BEFORE HIM ON 21 ST JUNE, 2010. SHRI HARBANS LAL RESPONDED TO THE AO AND SUBMITTED THAT HE IS OUT OF STATION ON THAT DATE AN D IT WILL NOT BE POSSIBLE FOR HIM TO ATTEND THE PROCEEDING ON 21.6.2010. HE P ROPOSED A DATE OF 25.6.2010. ACCORDING TO THE AO ON 25 TH JUNE, 2010, HE DID NOT APPEAR. THE ASSESSEE POINTED OUT THAT AO DID NOT GRANT SUFF ICIENT OPPORTUNITY HE SUBMITTED THE REPORT ON 16 TH JULY, 2010. THE IDENTITY OF SHRI HARBANS LAL HAS BEEN PROVED. IN ORDER TO PROVE THE SOURCE OF MO NEY, IT WAS ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 5 SUBMITTED BY THE ASSESSEE THAT SHRI HARBANS LAL HAS SOLD LAND AND OTHER PROPERTIES. THE ONLY LAPSE ON THE PART OF THE ASSES SEE THAT HE COULD NOT PRODUCE SHRI HARBANS LAL BEFORE THE AO. THE AO ALSO DID NOT TRIED TO PROCURE HIS PRESENCE BY EXERCISING HIS POWERS AVAIL ABLE IN THE INCOME TAX ACT. HE PREYED THAT IN CASE ONE MORE OPPORTUNIT Y IS TO BE GIVEN, HE WILL PRODUCE ALL THE CREDITORS BEFORE THE AO. LD. D R ON THE OTHER HAND OPPOSED THE PRAYER OF ASSESSEE. SHE POINTED OUT THA T SUFFICIENT OPPORTUNITY HAD BEEN GIVEN TO THE ASSESSEE BUT HE D ID NOT PROVE THE LOANS RAISED BY HIM. SHE RELIED UPON THE ORDERS OF REVENUE AUTHORITIES BELOW. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. FROM THE FINDING OF AO (EXTRA CTED SUPRA), IT REVEALS THAT AO HAS STARTED THE INVESTIGATION BY ISSUANCE O F A NOTICE ON 24 TH JULY, 2009. BUT WHAT SOURCE OF INFORMATION HE HAS CALLED FOR AND FOR WHICH DATE HE HAS CALLED FOR ARE NOT DISCERNABLE. THE NEX T DATE MENTIONED BY THE AO IS THE ORDER SHEET ENTRY ON 11.12.2009. THE ASSESSEE HAS SUBMITTED THE PERMANENT ACCOUNT NUMBER OF ALL THE C REDITORS AND OTHER DETAILS. IT APPEARS THAT AO DID NOT BOTHER TO LOOK INTO THESE DETAILS AND DID NOT EXERCISE HIS POWER FOR PROCURING THE PRESEN CE OF THE CREDITORS. FROM THE REMAND REPORT AVAILABLE ON PAGE 5 & 6 OF THE LD. CITS ORDER, ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 6 IT IS AGAIN DISCERNABLE THAT INSTEAD OF CONDUCTING THE PROPER INQUIRY FOR ASCERTAINING THE TRUE FACT, AO APPEARS TO BE INTER ESTED IN CONFIRMING THE ADDITION BY TREATING IT AS UNEXPLAINED. TO SOME EXT ENT, ASSESSEE IS ALSO APPEARS TO BE NEGLIGENT PERSON, WHEN AO HAS MADE TH E ADDITION AND HE CHALLENGED IT BEFORE LD. CIT(A), HE SHOULD HAVE SUB MITTED ALL THE DETAILS DURING THE REMAND PROCEEDING. HE SHOULD HAVE PRODUC ED ALL THE CREDITORS BEFORE THE AO. HE HAS SUBMITTED THE DETAI LS TO SOME EXTENT BUT THE TRUE AFFAIRS OF THE CREDITORS COULD BE EXAMINED ONLY WHEN THEY ARE PRODUCED BEFORE THE AO. THE SIMPLE REASON FOR THIS IS THAT THE MAIN CREDITOR IS SHRI HARBANS LAL FROM WHOM ASSESSEE HAS TAKEN THE LOAN IN CASH, APPEARS TO BE AN AGRICULTURISTS. HIS AFFAIRS CAN BE ASCERTAINED IF HE APPEARED BEFORE THE AO. TAKING INTO CONSIDERATION A LL THESE FACTS, WE ARE OF THE OPINION THAT COMPLETE FACTS ARE NOT AVAI LABLE ON THE RECORD. THE ASSESSEE HAS SUBMITTED DURING THE COURSE OF HEA RING THAT HE UNDERTAKES TO PRODUCE ALL THE CREDITORS BEFORE THE AO. ON DUE CONSIDERATION OF HIS UNDERTAKING AND THE OTHER MATE RIAL AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT ENDS OF JUSTICE WOULD MEET IF WE SET ASIDE THIS ISSUE TO THE FILE OF AO FOR REINVESTIGAT ION. IT IS NEEDLESS TO SAY THAT OUR OBSERVATION WILL NOT IMPAIR OR INJURE THE CASE OF AO. THEY WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE / EXPLANATION OF THE ASSESSEE. WE DIRECT THE ASSESSEE TO PRODUCE ALL THE CREDITORS BE FORE THE AO. ASSESSEE ITA NO. 3733/DEL/10 ASSTT. YEAR 2007-08 7 SHALL NOT TAKE MORE THAN TWO OPPORTUNITIES FOR PROD UCING THE CREDITORS. THE AO MAY ISSUE SUMMONS TO THOSE CREDITORS FOR HEL PING THE ASSESSEE TO PRODUCE THEM BEFORE HIM. WITH THE ABOVE OBSERVAT ION, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 25.4.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES