ITO, Meerut V. Mr. Shadab, Meerut

ITA 3878/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9943 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: VINOD KUMAR GOYAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER ITA NO. 3878 /DEL/2013 ASSESSMENT YEAR : 2009 - 1 0 IT O , WARD - 2(3),MEERUT (APPELLANT) VS MR.SHADAB, PROP.M/S AI - ARHAN TRADERS, 61, SARAI ZEENA, MEERUT PAN - BMXPS4219P (RESPONDENT ) APPELLANT BY SH.B.R.R.KUMAR, SR. DR RESPONDENT BY SH. VI NOD KUMAR G OYAL , ADV. O R D E R PER DIVA SINGH, JUDICIAL MEMBER BY T HE PRESENT APPEAL FILED BY THE REVENUE THE CORRECTNESS OF THE ORDER DATED28.03.2013 O F CIT(A), MEERUT PERTAINING TO 200 9 - 1 0 ASSESSMENT YEAR IS ASSAILED ON THE FOLLOWING GROUNDS: - I. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS. 48,80,000/ - MADE U/S 68 OF THE IT ACT 1961 ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDITS SUBJECT TO VERIFICATION OF THE PAN, ASSESSMENT STATUS OF THE CREDITORS FROM THE CONCERNED A.OS, IGNORING THAT THE SAME WERE UNEXPLAINED CASH CREDITS WHICH ARE LIABLE TO BE ADDED U/S 68 OF THE IT ACT 1961 AS THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS WITH RESPECT TO THE AMOUNTS ALLEGEDLY TRANSFERRED IN THE ASSESSEE'S BANK ACCOUNT. ONUS TO PROVE SUCH CREDITWORTHINESS WAS ENTIRELY UPON THE ASSESSEE WHICH TOTALLY REMAINED UNDIS CHARGED. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: (I) BASANTIPUR TEA CO.(P) LTD. VS. CIT 180 ITR 261 (CAL.) (II) 'KRISHAN KUMAR JHANB VS. ITO AND ANR ( PUNJAB & HARYANA) 17 DTR 249' (III) MLS SEJAI INTERNATIONAL LTD. VS. CIT, MEERUT (ALL.) APPEAL NO 306 OF 201. (IV) CIT VS DURGA PRASAD MORE, 82 ITR 540(SC) (V) CIT VS. P. MOHNAKALA, 291 ITR 278(SC) (VI) CIT VAS. SUMATI DAYAL,214, ITR 801 (SC) DATE OF HEARING 2 5 .03.2015 DATE OF PRONOUNCEMENT 10 .0 4 .2015 ITA NO. 3878 /DEL/20 13 2 (VII) ITO VS. DIZA HOLDINGS (P) LTD. 2 55 ITR 573 (KERLA) (VIII) CIT VS. KORLAY TRADING CO. LTD. (CAL.) 232 ITR 820. 2. WHETHER IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN ADMITTING THE ADDITIONAL EVIDENCES WHILE DELETING THE ADD ITION MADE BY THE A.O. U/S 68 OF THE IT ACT 1961 IN VIOLATION OF THE PRINCIPLES LAID DOWN AS PER RULE 46A OF IT RULES, 1962 AS NONE OF THE CONDITIONS OF SUB CLAUSES (A),(B), (C) & (D) OF CLAUSE 1 OF THE RULE WAS SATISFIED. 3. THAT THE APPELLANT CRAVES LE AVE TO ADD, MODIFY AND/ OR DELETE ANY GROUND(S) OF APPEAL. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE TRADING IN RAW MEAT IN THE YEAR UNDER CONSIDERATION HAD SHOWN TRADING SALES OF RS.22,50,000/ - AND COMMISSION SALES OF RS.60,40,000/ - ON WHICH COMMISSION @1% HAD BEEN DECLARED . THE A O NOTED THAT IN THE BANK ACCOUNT OF THE ASSESSEE, THERE WERE CASH DEPOSITS OF RS.1,49,57,200/ - AND TRANSFER ENTRIES AGGREGATING TO RS.1,25,97,000/ - FROM 6 PARTIES. IT WAS EXPLAINED THAT THE CASH DEPOSIT REPRESENT SALE PROCEEDS. IT HAS STATED THAT SUBSEQUENTLY, THE ASSESSEE WITHDREW CASH THROUGH ATM/SELF - CHEQUES FO R PURCHASE OF ANIMALS/RAW MEAT. IF DEAL DID NOT MATURE, THE BALANCE CASH WAS ONCE AGAIN DEPOSITED IN THE BANK ACCOUNT. T HE AO DID NOT ACCEPT THIS EXPLANATION ON THE GROUND THAT THE DEPOSIT S I N CASH W ERE NOT COMMENSURATE WITH THE TURNOVER OF THE ASSESSEE. THE AO ACCEPTED THE EXPLANATION OF THE ASSESSEE WITH REGARD TO TRANSFER ENTRIES FROM TWO PARTIES NAMELY NIZAMUDDIN AND FARDEEN. AS REGARDS THE TRANSFER ENTRY FROM GOLD STAR, THE AO DID NOT ACCEPT THE E XPLANATION THAT THIS WAS A SALES MADE ON COMMISSION. ON THE CASH DEPOSIT OF RS.1,49,57,200/ - AND THE TRANSFER ENTRIES IN RESPECT OF THE ABOVE MENTIONED 3 PARTIES, THE AO ESTIMATED 1% AS PROFIT RATE AND MADE AN ADDITION OF RS.2,26,740/ - AS THE INCOME FROM TRADING ACTIVITY AS AGAINST 1,58,800/ - DECLARED BY THE ASSESSEE. FURTHER, HE ALSO TREATED TWO TRANSFER ENTRIES, ONE FROM ZARINA AND THE OTHER FROM UNKNOWN PARTY AS UNEXPLAINED/BENAMI RECEIPT AND MADE AN ADDITION OF RS.48,80,000/ - . 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE EXPLAINED THAT ENTRIES RELATING TO ZARINA WERE RELATED TO THE TRANSFER FROM HER BANK ACCOUNT AND ACTUALLY REPRESENTED THE RECEIPT OF THE ASSESSEE S BUSINESS AND THE UNKNOWN PARTIES IT WAS EXPLAINED RELATED TRANSFER MA DE BY THE STAR GOLDLINE CO. A ND ITA NO. 3878 /DEL/20 13 3 MUKDASH MEAT PACKER WHO HAD TRANSFERRED THE BANK ACCOUNT. CERTIFICATES FROM THE BANK TO THE EFFECT WERE PRODUCED BY THE TWO PARTIES, CERTIFICATES WERE ALSO PRODUCED OF MUK D ASH MEAT PACKER, NEW DELHI CONFIRMING THE PAYMENTS. THE FACTS THAT THEY WERE ASSESSED TO TAX AT BULANDSHAHAR AND NEW DELHI WAS ALSO ARGUED. IT WAS ALSO PLEADED THAT THE ESTIMATE OF 1% TURN OVER ON THE BASIS OF TRANSFER ENTRIES AND CASH DEPOSITS OUGHT TO HAVE BEEN ALLOWED AGAINST THE ESTIMATE INCOME. THE CIT(A) REQUIRED THE AO TO FILE A REMAND REPORT WHICH WAS FILED WHEREIN IT WAS SUBMITTED THAT THE ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED. CONSIDERING THE ARGUMENTS THE CIT(A) ADMITTED THE FRESH EVIDENCE UNDER SUB - RULE 4 OF RULE 46A REQUIRING THE AO TO MAKE NECESSARY QUERIES AND EXAMINE THE ISSUES AND IN CASE THE INCOME OF VERIFICATION WAS POSITIVE , I T WAS DIRECTED THAT THE ADDITION OF RS. 29 LACS AND RS.9,80,000/ - SHOULD B E DELETED. SIMULTANEOUSLY HE WAS ALSO DIRECTED TO TAKE 1% O F THE AFORESAID SUM AN D TREAT THE INCOME OF THE ASSESSEE OVER AND ABOVE OF THE RS.2,26,740/ - ESTIMATED BY THE AO AND IN CASE THE RESULT OF THE VERIFICATION IS FOUND TO BE NEGATIVE THEN THE ADDITION OF RS.29 LACS AND RS.9,80,000/ - WAS DIRECTED TO BE SUSTAINED. 4. AGGRIEVED BY T HIS THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. SR. DR RELYING UPON THE ASSESSMENT ORDER COULD NOT POINT OUT ANY INFIRMITY IN THE IMPUGNED ORDER NO SPECIFIC INACCURACY IN THE DIRECTIONS GIVEN WAS ALSO POINTED OUT ON QUERY . THE LD.AR ON THE OTH ER HAND PLACED RELIANCE UPON THE IMPUGNED ORDER . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION THEREOF WE FIND THAT IN THE ABSENCE OF ANY SPECIFIC ARGUMENTS OR REASONING BROUGHT TO OUR NOTICE BY THE REVENUE, WE FIND NO INFIRMITY IN THE DIRECTIONS GI VEN. THE ADMISSION OF ADDITIONAL EVIDENCES IT IS SEEN HAS NOT BEEN DONE UNDER SUB - RULE (1) OF RULE 46A WHICH MANDATES THAT THE SPECIFIC REASON FOR ADMITTING THE ADDITIONAL EVIDENCE ADDRESSING WHETHER IT IS EXERCISED CONSIDERING THE CIRCUMSTANCES SET OUT I N CLAUSE S (A), (B), (C) & (D) REQUIRING T HAT IT B E C ONFRONT ED TO THE AO. IN THE FACTS OF THE PRESENT CASE ALTHOUGH THE CIT(A) HAS CONFRONTED THE EVIDENCE TO THE AO HOWEVER ON NOTING HIS OBJECTION TO ITS ADMISSION , H E HAS ADMITTED THE EVIDENCE UNDER SUB RU LE ( 4 ) OF RULE 46A AND THEREAFTER AGAIN DIRECTED THE A O TO CARRY O UT NECESSARY VERIFICATION AND DECIDE THE ISSUE AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IT IS SEEN THAT SECTION 251 (1 )(A) OF THE ACT EMPOWERS THE COMMISSIONER ITA NO. 3878 /DEL/20 13 4 (APPEAL S) WHILE DISPOSING THE APPEAL TO EITHER CONFIRM ; REDUCE ; ANNUL ; OR MODIFY THE ASSESSMENT HOWEVER THE POWER TO SET ASIDE HAS BEEN OMITTED BY THE FINANCE ACT, 2001 W.E.F 01.06.2001. IN VIEW OF THE SAME IN THE ABSENCE OF ANY INFIRMITY IN THE DIRECTION OF THE CIT(A) POINTED OUT BY THE REVENUE, WE SUBSTITUTE THE SAME BY OUR DIRECTION REQUIRING THE AO TO CARRY OUT THE NECESSARY VERIFICATION AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AS THE OUTCOME OF THE DECISION IS NOT VARIED ONLY THE DIRECTION GIVEN BY THE LD. CIT(A) IS SUBSTITUTED BY OUR SIMILAR DIRECTION. 6 . IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL , 2015. SD/ - SD/ - (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 10 TH APRIL , 2015 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI