Santosh Kumar Jha, Patna V. DCIT, Patna

ITA 39/PAT/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93637 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KR MISHRA J R S C
• Assessee Lawyers: D V PATHY; ABHI SARKAR
• Keywords: Business income; Cost of acquisition; Competent authority
• Section: 37(1)

Judgement Text

, PATNA IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA . . , , BEFORE SHRI A.D. JAIN (JM) AND SHRI SANJAY ARORA (AM) ./ I.T.A. NO.3 6 /P AT/2014 ( / ASSESSMENT YEARS: 2005 - 06) DY. CIT CENTRAL CIRCLE - 2, PATNA. / VS. SANTOSH KUMAR JHA, PATNA ./ ./ PAN/GIR NO. :AGZPK5672K ( REVENUE ) .. ( ASSESSEE ) ./ I.T.A. NO .39 /PAT/2014 ( / ASSESSMENT YEARS: 2005 - 06) SANTOSH KUMAR JHA, PATNA / VS. DY. CIT CENTRAL CIRCLE - 2, PATNA. ./ ./ PAN/GIR NO. :AGZPK5672K ( ASSESSEE ) .. ( REVENUE ) / APPELLANT BY : SHRI D. V. PATHY & SHR I ABHI SARKAR , ADV. / RESPONDENT BY : S HRI. SUMAN KR. MISHRA, J R.S.C. / DATE OF HEARING : 2 1/4/2015 / DATE OF PRONOUNCEMENT : 21 /7 /2015 / O R D E R PER SANJAY AR ORA, AM: 2 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA TH E S E ARE CROSS A PPEAL S, I.E., BY THE A SSESSEE AND THE REVENUE, DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - I , PATNA (CIT(A) FOR SHORT) DATED 29/1/2014 , PARTLY ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.14 4 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2005 - 06 VIDE ORDER DATED 31/12/2007. 2. THE PRINCIPAL CONTROVERSY ARISING IN THE INSTANT CASE IS THE E X IGIBILITY TO TAX IN LAW, I.E., IN THE ASSESSEES HANDS, OF TH E WHOLE OR PART OF THE SUM OF ` 19,09,69,912/ - FOUND CREDITED IN THE BANK ACCOUNT IN THE NAME OF ONE , SANJ EE V KUMAR, PROPRIETOR, M/S. BABA SATYA S AI ENTERPRISES (BSS I ), WHICH ADMITTEDLY INCLUDES RS. 17,80,00,000/ - RELEASED TOWARDS BIHAR FLOOD RELIEF OPERATIO NS OF 2004. THE B ACKGROUND FACTS 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS THE PROPRIETOR OF TWO CONCERNS M/S. P U NAM PRINTING WORKS AND M/S. HINDUSTAN BUSINESS SYSTEM S , WHICH ARE STATE D LY IN THE BUSINESS OF SUPPLY OF MATER IAL S TO THE BIHAR GOVERNMENT IN ITS VARIOUS D EPARTMENTS. DURING THE YEAR 2004 VARIOUS AREA S OF THE S TATE OF BIHAR , COVERING SIX DISTRICTS , WERE FLOODED, NECESSITATING UNDERTAKING OF FLOOD RELIEF WORK ON AN EMERGENT BASIS BY THE STATE GOVERNMENT IN CONJUNCT ION WITH THE CENTRAL GOVERNMENT . TENDERS WERE APPARENTLY INVITED AND RECEIVED, WHICH WERE AWA RD ED TO BIHAR STATE SMALL SCALE INDUSTRIES CORPORATION LIMITED, INDRA BHAVAN, PATNA ( BSSICL OR THE CORPORATION HEREINAFTER), A STATE GOVERNMENT U NDERTAKING, ON , AS IT APPEARS, 08.07.2004. SUPPLIES, IT IS STATED, WERE STA R TED IMMEDIATELY THEREAFTER ON 09.07.2004, THROUGH AND BY THE DISTRICT MAGISTRATE (DM), PATNA, DESIGNATED AS THE NODAL OFFICER , WITH THE MINISTRY OF HO M E AFFAIRS, GOVERNMENT OF INDIA (GOI) , ACTIN G AS THE NODAL AGENCY THE F LOOD R ELIEF WORK ALSO REQUIR ING PROCUREMENT OF MATERIALS FROM AND ASSISTANCE OF OTHER S TATES , BESI D ES SERVICE S OF THE ARM ED FORCES . THE STATE GOVERNMENT OVERSAW THE RELIEF WORK THROUGH THE DISASTER M AN AGEMENT DEPARTMENT (DMD) , WITH THE COMMISSIONER, PATNA AS ITS SECRETARY , WORKING UNDER THE DIRECT SUPERVISION OF THE CHIEF SECRETARY, BIHAR. FUNDS WERE 3 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA RELEASED AND RELIEF MATERIAL SUPPLIED BOTH BY AIR AND ROAD TRANSP ORT, AS IS APPARENT FROM THE STATUS REPORT S RELEASED BY THE JT. S ECRETARY , CENTRAL RELIEF COMMISSIONER, MINISTRY OF H O M E AFFAIRS, GOI , FROM TIME TO TIME, BEGINNING 12.07.2004 (ASSESSEES PAPER - BOOK (APB) PGS. 28 - 80). HOWEVER, AFTER ABOUT A MONTH, A FRAUD CAME TO LIGHT. FUNDS TO THE EXTENT OF RS. 17.80 CRORES (CRS.) , RELE ASED BY THE STATE GOVERNMENT FROM 12.07.2004 TO 06.08.2004, HAD BEEN SIPHONED OFF BY DRAWING AND DEPOSITING CHEQUES IN FAVOUR OF BSS I , A FAKE (PROPRIETARY) CONCERN OF ONE, SANJIV KUMAR, A DUMMY (FICTITIOUS) NAME , IN BANK A CCOUNT N O. 9266 (LAST FOUR DIGITS) WITH IDBI BANK LTD., KASHI PLACE, F R AS E R ROAD, P ATNA. THE ACCOUNT OPENING FORM AS WELL AS THE CHEQUES O N THIS ACCOUNT W ERE DRAWN BY THE ASSESSEE, AS ESTABLISHED THROUGH THE FORENSIC REPORT/ANALYSIS BY THE HAND WRITING EXPER T S , BESIDES BEING CONFIRMED BY TH E STATEMENT ON OATH BY THE THEN BRANCH MANAGER, SHRI SANJEEV KUMAR JHA, WHO AFFIRM ED THE ASSESSEE TO BE OPERATING THE SAID BANK ACCOUNT (REFER PARA 5, PG.26 OF THE ASSESSMENT ORDER / REFERENCE TO THE PAGES OF THE ASSESSMENT ORDER AS THAT PLACED IN THE ASSESS EES APPEAL FILE FOLDER ). FUNDS WERE TRANSFERRED FROM THIS ACCOUNT TO SEVERAL OTHER ACCOUNTS OF THE ASSESSEE ; HIS PROPRIETARY CONCERNS, INCLUDING M/S. SANTOSH PRINTING PRESS ; AND HIS OTHER FAMILY MEMBERS AND ASSOCIATES, AGGREGATING TO RS. 167 8 .45 LACS (REFE R T ABLE AT PGS. 23 TO 24 OF THE ASSESSMENT ORDER). FIR WAS LODGED AGAINST THE DM, PATNA (DR. GAUTAM GOSWAMI , SINCE DECEASED ), THE COMPUTER OPERATOR (RELIEF CELL), SHRI AMITABH ARUN , AND OTHERS, BESIDES THE ASSESSEE, WHO WAS ALSO FOUND BY THE STATE VIGILANC E DEPARTMENT TO HAVE INVESTED HEAVILY IN MOVABLE AND IMMOVABLE PROPERTIES IN THE NAME OF SELF AND FAMILY MEMBERS, AR RESTED A ND ALSO PLACED UNDER JUDICIAL CUSTODY. THE ASSESSEE FILED A WRIT PETITION WITH THE HONBLE JURISDICTIONAL H IGH C OURT (IN CWJC NO. 1 197 4 OF 2007), SEEKING DIRECTION FOR SETTLEMENT OF H IS DUES IN - AS - MUCH AS HE CLAIM ED TO HAVE SUPPLIED GOODS MUCH IN EXCESS OF THE AMOUNT RECEIVED ( RS. 17.80 CRS.) . THE HONBLE HIGH COURT, OBSERVING CONTRADICTORY CLAIMS BY THE PETITIONER AND THE RESPONDENT /S (I.E., THE ST ATE OF BIHAR AND BSSICL AND OTHERS) FELT THAT CRIMINAL PROCEEDINGS SHOULD BE DELINKED FROM THE CIVIL LIABILITY DISPUTES/ISSUES AND, ACCORDINGLY, 4 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA VIDE ORDER DATED 28.07.2008 DIRECTED FORMATION OF AN ENQUIRY COMMITTEE , CONSTITUTED BY THE O FFICE R S OF THE CONCERNED DEPARTMENTS, INCLUDING THE VIGILANCE DEPARTMENT, TO EXAMINE THE ISSUE WITH REFERENCE TO ALL THE AVAILABLE MATERIALS AND SETTL E THE CIVIL LIABILITY ASPECT OF THE PETITIONER - ASSESSEE, PROPRIETOR, SANTOSH PRINTING PRESS, WITHIN A PERIOD OF SIX MONTHS , AFTER HEARING ALL THE PARTIES, INCLUDING THE C ORPORATION. THIS, IT OPINED, WAS ALSO RELEVANT FROM THE STAND POINT OF FAIR CONDUCT OF THE GOVERNMENT BUSINESS AND, BESIDES, NOT DOING SO WOULD UNDERMINE ARTICLE 14 OF THE CONSTITUTION OF INDIA (AP B PGS. 110 - 115). THIS WAS CHALLENGED IN L E T TERS P ATENT A PPEAL (LPA NO. 15 OF 2009) , DISMISSED IN LIMINE BY THE DIVISION B E NCH OF THE H ONBLE H IGH C OURT ON 23.01.2009 (APB PGS. 135 - 136); I T S EARLIER ORDER BEI NG BY A SINGLE JUDGE BENCH . A C OMMITTEE WAS, ACCOR DINGLY, FORMED, WHICH AFTER EXAMINING THE CONTRARY CLAIMS, ESTIMATED THE VALUATION OF THE RELIEF MATERIAL SUPPLIED IN THE FLOOD RELIEF OPERATIONS AT RS. 6, 02,39,811/ - , SO THAT THE BALANCE AMOUNT, I.E., RS. 11.78 CRS. , W AS DUE FROM THE ASSESSEE, VIDE ITS RE PORT DATED 22.06.2009 (APB PGS. 140 - 160). THE AS SESSEE AGAIN PETITIONED TO THE H ONBLE H IGH C OURT , CHALLENG ING THE CORRECTNESS OF THE SAID DETERMINATION BY THE ENQUI R Y COMMITTEE (IN MJC NO. 467 OF 2009). THE HONBLE HIGH COURT , ACTING AGAIN THROUGH A S INGL E J UDGE BENCH , DISPOSED THE SAME ON 29.07.2009 , STATING TH AT A CHALLENGE TO THE CORRECTNESS OF THE REPORT W AS OUTSIDE THE PURVIEW OF THE WRIT JURISDICTION, AND THAT THE PETITIONER COULD SO CHALLENGE ONLY IN APPROPRIATE PROCEEDINGS, WHICH HE, IF SO ADVISED , WAS AT LIBERTY TO PURSUE (APB PGS. 162 - 164). THE PETITIONER FILED ANOTHER WRIT (CWJC NO. 3332 OF 2010) SEEKING, IN VIEW OF THE INFIRMITIES STATED, QUASHING OF THE ENQUIRY REPORT DATED 22.06.2009 (SUPRA). THE SAME WAS, HOWEVER, DISMISSED BY THE SINGLE JUD GE BENCH OF THE HONBLE COURT VIDE ORDER DATED 13.03.2012 (APB PGS. 179 - 189 A). THE ASSESSEE APPEALED (LPA NO. 594 OF 2012) AGAINST THE SAID ORDER , CONCEDING TO THE ISSUE OF THE C IVIL L IABILITY AS INVOLVING DISPUTED QUESTION S OF FACT , AGAINST WHICH A WRIT DOES NOT LIE. THE SAME BEING NOT OBJECTED TO BY THE RESPONDENT S , THE HONBLE COURT , ACC EDING TO THE PETITIONER S PRAYER, ALLOWED HIM LE A V E TO WITHDRAW THE WRIT PETITION (I.E., IN CWJC NO. 3332 OF 290) VIDE ORDER DATED 24.09.2013 (APB PGS.190 - 191). 5 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA 4. WE HA VE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 4.1 WE MAY, TO BEGIN WITH, DELINEATE THE RESPECTIVE CASE S OF THE PARTIES QUA THE PRINCIPAL ISSUE, WHICH IS THE SUBJECT MATTER OF THE C ROSS APPEAL S . THE ASSESSEE STATES THAT THE REVENUE IN TAXING T HE ENTIRE AMOUNT OF RS.17.80 CRS. HAS OMITTED TO TAKE NOTE OF THE ADMITTED FACT THAT S UPPLIES HAD BEEN MADE. THERE WERE IN FACT THREE ESTIMATES OF THE VALUES OF THE SUPPLIES MADE, I.E., BY THE ENQUIRY COMMITTEE FORMED AT THE INSTANCE OF THE HONBLE HIGH CO URT (RS.6.02 CRS.); THAT BY THE COMMITTEE FORMED BY THE SUCCESSOR DM, PATNA TO ESTIMATE THE VALUE OF THE SUPPLIES MADE (AT RS.7,70,37,490/ - ) ; AND RS.7,34,17,863/ - , AS REPORTED BY THE VIGILANCE DEPARTMENT OF THE STAT E GOVERNMENT (APB PGS. 86 - 88) ; THE FORMER CONSIDERING THE FIGURES O F THE SUPPLIES PER THE SITUATION REPORTS (SITREPS) FILED BY THE NODAL AGENCY, THE MINISTRY OF HOME AFFAIRS , GOI , FROM TIME TO TIME . THERE IS, ACCORDINGLY, NO QUESTION OF IT BEING NOT ALLOWED CREDIT IN RESPECT THEREOF, NOTWITHSTAND ING THAT NO BILLS/VOUCHERS ARE AVAILABLE WITH THE ASSESSEE TO SUBSTANTIATE THE SAME. WHO ELSE, IF NOT THE ASSESSEE , HAD MADE THE SUPPLIES ? IN FACT, DEPOSIT IN THE IDBI BANK ACCOUNT STANDS WITHDRAWN TO THE EXTENT OF ` 162.52 LACS (A NN. D TO THE W RITTEN S UBMI SSIONS, AND WHICH IS ONLY TOWARD THE PROCUREMENT OF SUPPLIES ) . THE APPELLANT IS IN FACT NOT REQUIRED TO MAINTAIN ANY SUCH DOCUMENTS IN VIEW OF SECTION 50(B) OF THE DISASTER MANAGEMENT ACT, 2005 (DMA), WHICH CLEARLY STATES THAT THE C ERTIFICATE OF UTILIZATIO N OF THE PROVISIONS OR MATERIALS BY THE CONTROLLING OFFICER OF THE NATIONAL ADMINISTRATION (OR STATE ADMINISTRATION OR DISTRICT ADMINISTRATION) SHALL BE DEEMED TO BE A VALID DOCUMENT OR VOUCHER FOR THE PURPOSE OF ACCOUNTING OF SUCH PROVISIONS OR MATERIALS. THAT IS, THE LAW ITSELF COMES TO THE RESCUE OF THE ASSESSEE, SPECIFICALLY PROVIDING FOR, IN VIEW OF THE EMERGENT BASIS UNDER WHICH SUPPLIES ARE MADE, THE C ERTIFICATE ISSUED BY THE COMPETENT AUTHORITY TO BE CONCLUSIVE THEREOF, I.E., THE EXTENT OR THE QUANT UM OF THE SUPPLIES MADE, WHERE MADE, AS IN THE INSTANT CASE, UNDER THE CONDITION OF A DISASTER. WH EN, HOWEVER, QUESTIONED BY THE B ENCH THAT, EVEN GRANTING ALLOWANCE OF CREDIT QUA THE SUPPLIES MADE, THE PROFIT THEREON WOULD STAND TO BE ASSESSED AS INCOME, A ND WHICH COULD ONLY BE AFTER DETERMINING THE COST OF THE SUPPLIES , WHICH WOULD NECESSARILY HAVE TO BE DEDUCTED FROM 6 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA THE VALUE OF THE SUPPLIES MADE, THE LD. AR, THE ASSESSEES COUNSEL, AGREED, STATING THAT THE SAME COULD BE REASONABLY ESTIMATED. ALSO, EVEN AS OBSERVED BY THE BENCH DURING HEARING , THE ENTIRE BALANCE AMOUNT WOULD STAND TO BE ASSESSED AS INCOME IN - AS - MUCH AS THE ASSESSEE HAS RECEIVED THE SAME. THE ASSESSEE, RATHER, CLAIMS THE SUPPLIES TO BE AN AMOUNT IN EXCESS OF THE SUM RECEIVED, I.E., AT ` 309 7.09 LACS, EXCLUSIVE OF INTEREST, SO THAT HE IN FACT STANDS TO RECEI V E ` 1317.09 LACS ON PRINCIPAL ACCOUNT, BESIDES INTEREST, FURNISHING THE COPY OF THE PLANT (IN T ITLE SUIT NO. 5743 OF 2014 IN THE CO URT OF FIRST S UBORDINATE JUDGE, PATNA ) , WHICH IS CLAIMED TO HAVE BEEN ADMITTED (VIDE CERTIFICATE DATED 15.04.2015 BY THE ADVOC A TE, SHRI SHAKTI KIRAN/APB PG. 192). THE REVENUES CASE, ON THE OTHER HAND, IS THAT THOUGH THE SUPPLIES HAD UNDOUBTEDLY BE EN MADE, THAT THEY HAVE BEEN BY THE ASSESSEE CAN NOT BE A MATTER OF PRESUMPTION. THE ASSESSEE HAD NOT LED AN IOTA OF EVIDENCE TOWARD HAVING SUPPLIED THE RELIEF MATERIAL. SECTION 50 OF THE DISASTER MANAGEMENT ACT, 2005 DOES NOT OVERRIDE THE PROVISIONS OF THE ACT, WHICH WOULD THEREFORE HOLD, I.E., AS FAR AS THE ASSESSMEN T OF INCOME IS CONCERNED. THEN , AGAIN, ON WHAT BASIS DOES THE ASSESSEE JUSTIFY THE TRANSFER OF NEARLY THE WHOLE OF THE AMOUNT RECEIVED TO THE ACCOUNTS OF SELF ; PROPRIETARY CONCERNS ; AND FAMILY MEMBERS ? WITH REGARD TO THE QUESTION OF THE QUANTUM OF THE SUPP LIES MADE BY THE ASSESSEE, I.E., ASSUMING SO, IT IS THE REPORT BY THE ENQUIRY COMMITTEE, BEING CONSTITUTED UNDER THE AEGIS AND ON THE DIRECTION OF THE HONBLE COURT, BEING ALSO THE LATEST OF THE THREE ESTIMATES, WHICH MUST BE ACCORDED PRECEDENCE, EVEN AS T HE PROFIT ELEMENT IN THE SUPPLIES MADE WOULD HAVE TO BE BROUGHT TO TAX. THE ISSUE, AS WE DISCERN , THAT ARISES FOR OUR ADJUDICATION IS AS TO WHETHER THE ASSESSEE, WHO ADMITS TO HAV E RECEIVED THE S UM ` 1 7.80 CRS. R ELEASED BY THE STATE GOVERNMENT TOWARD AND O N ACCOUNT OF FLOOD RELIEF MATERIAL DURING THE RELEVANT YEAR , H AS SUPPLIED SUCH MATERIAL, HE BEING NEITHER ISSUED ANY PURCHASE ORDER BY DMD NOR AWARDED ANY CONTRACT FOR THE SAME. THE SECOND QUESTION, IN CASE THE ANSWER TO THE FIRST IS IN THE AFFIRMATIVE, IS THE EXTENT OF THE SUPPLIES MADE BY HIM, I.E., IN VIEW OF THE CONTRARY CLAIMS WITH REGARD TO THE SUPPLIES MADE. 7 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA 4.2 WE MAY, BEFORE WE BEGIN TO OUR ANALYSIS IN THE MATTER, CLARIFY ON THE LEGAL POSITION QUA THE CIVIL LIABILITY, IF ANY, OF THE ASSESSEE OR, A S THE CASE MAY BE, THE STATE GOVERNMENT OR THE C ORPORATION; THE MATTER HAVING TRAVELLED TO AND BE E N EXAMINED BY THE HONBLE HIGH COURT PER THE VARIOUS PETITIONS AND APPEALS FILED BY THE ASSESSEE AND THE STATE GOVERNMENT (ACTING THROUGH ITS PRINCIPAL SECRET ARY), AS A CHIEF RESPONDENT, BESIDES OTHERS (REFER PARA 3 O F THIS ORDER). THIS IS AS THE ISSUE OF THE ASSESSEES TAX LIABILITY IS INEXTRICABLY RELATED TO THE QUESTION OF IT HAVING SUPPLIED GOODS , TO WHATEVER EXTENT, IN THE FLOOD RELIEF OPERATIONS OF 20 0 4. THE SA ID MATTER , AS CLARIFIED BY THE HONBLE HIGH COURT IN LPA NO. 594 OF 2012 DATED 24.09.2013, INVOLVES DISPUTED QUESTIONS OF FACT. IN FACT, THIS IS ALSO PRECISELY WHAT INFORMS ITS EARLIER ORDER IN C WJC NO. 11974/2007 DATED 28.07.2008, WHICH THEREFORE PR O M P TED IT TO SAY THAT THE CRIMINAL PROCEEDINGS SHOULD BE DELINKED FROM THE QUESTIONS OF CIVIL LIABILITY , SO THAT THE REGARDLESS OF WHETHER THERE HAS BEEN COMMISSION OF ANY CRIMINAL OFFENCE OR NOT, THE ASSESSEE IS ENTITLED TO HIS DUES FROM THE STATE GOVERNM ENT AGAINST THE GOODS SUPPLIED. THIS WOULD ALSO BE EQUITABLE ; IN FAIRNESS TO THE SITUATION ; AS WELL AS IN ACCORD WITH THE LAW. THE H ONBLE C OURT ALSO CLARIFIED TO WRIT NOT BEING THE APPROPRIATE LEGAL RE COURSE FOR THE PURPOSE, ACCELERATING THE PROCESS OF RE SOLUTION OF THE DISPUTE BY DIRECTING FORMATION OF AN ENQUIRY COMMITTEE, WHICH WOULD BEAR REPRESENTATION OF ALL THE CONCERNED D EPARTMENTS , AND SETTLE THE MATTER (OF CIVIL LIABILITY ) AFTER CONSIDERING ALL THE RELEVANT MATERIAL AN D HEARING THE CONCERNED PARTI ES . THE ASSESSEE DISPUTING ITS FINDING S IN APPEAL, THE HONBLE HIGH COURT AGAIN CLARIFIED TO THAT NOT BEING THE PROPER COURSE , SO THAT THE CIVIL DISPUTE WOULD HAVE TO BE RESOLVED THROUGH APPROPRIATE LEGAL PROCEEDINGS. ON ITS WRIT JURISDICTION BEING FURTHER INVO KED IN THE MATTER BY THE ASSESSEE, IT FINALLY ENDORSE D THE SAME VIEW, SO THAT THE MATTER SHALL HAVE TO BE DECIDED THROUGH AND BY FOLLOWING THE REGULAR JUDICIAL PROCESS. THE SAID PROCESS IS PENDING BEFORE A COURT OF LAW. 4.3 WE HAVE ALREADY OBSERVED THE QUESTION OF THE TAX LIABILITY AS BEING INTRINSICALLY RELATED TO THE QUESTION OF THE ASSESSEES CIVIL LIABILITY, IF ANY, WHO CLAIMS TO HAVE SUPPLIED 8 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA THE GOODS FOR VALUE FAR IN EXCESS OF THE AMOUNT RECEIVED ( ` 17.80 CRS.). THE QUESTION, AS SOUGHT TO BE EX EMPLIFIED BY THE HONBLE COURT, IS AS UNDER (IN CWJC 11974/2007) : PETITIONERS CLAIM HAVING BEEN SUPPLIED 100 BAGS OF RELIEF MATERIAL, THE CORPORATION BILLS FOR 90, THE DISASTER MANAGEMENT ACKNOWLEDGES RECEIVING 80, THE VIGILANCE WHICH SEIZES ALL PAPERS OPINES THAT ONLY 50 WERE SUPPLIED AND THE GOVERNMENT OF INDIA, WHICH WAS MONITORING THE RELIEF WORK DAY TO DAY REPORTS RECEIVING 70 BAGS. TRUE, THE REVENUE QUESTIONS THE VERY ASSUMPTION OF THE ASSESSEE HAVING SUPPLIE D ANY GOODS IN - AS - MUCH AS HE HAD NO LO CUS STAND I IN THE MATTER; THERE BEING NO PR I VITY OF CONTRACT BETWEEN HIM AND EITHER THE STATE GOVERNMENT OR THE CORPORATION. THIS QUESTION, THOUGH VALID, GETS SUBSUMED IN THE MATTER BEFORE THE TRIAL COURT IN - AS - MUCH AS THE FILING OF THE TITLE SUIT BY THE A SSESSEE - PLAINTIFF I S PREM IS ED ON HIS HAVING SUPPLIED THE GOODS. FOR ALL WE KN OW , THE STATE GOVERNMENT OR THE C ORPORATION MAY HAVE, IN TANDEM WITH THE CRIMINAL PROCEEDINGS, ALSO FILED SUIT FOR RECOVERY. THE ASSESSEE, HOWEVER, ON THIS ISSUE BEING RAISED , WOUL D HAVE TO ESTABLISH H IS LOCUS STAND I IN THE MATTER, WHICH CANNOT BE PRESUMED, BEFORE THE QUESTION OF DETERMINATION OF THE CIVIL LIABILITY COULD BE PROCEEDED WITH BY THE TRIAL COURT. THE SAME RAISES SEVERAL QUESTIONS, ALL OF FACT, VIZ. W HAT IS THE BASIS OR THE AUTHORIZATION FOR THE ASSESSEE TO HAVE MADE THE SUPPLIES ? FURTHER, EVEN GRANTING SO, AS WHERE HE HAS, ON THE BASIS OF AN UNDERSTANDING WITH THE C ORPORATION, WHICH WAS TO SUPPLY THE RELIEF MATERIAL, MADE SUPPLIES ON ITS BEHALF, HE WOULD ONLY RAISE BILLS ON THE C ORPORATION, WHICH ALONE WOULD RAISE BILLS ON THE S TATE GOVERNMENT , I.E., THERE IS NO QUESTION OR OCCASION OF ANY DIRECT PAYMENT TO THE ASSESSEE . FURTHER, IT IS THE C ORPORATION IN WHOSE FAVOUR THE CERTIFICATE U/S.50 (B) OF THE DISASTER MANAGEMENT AC T WOULD STAND TO BE ISSUED. IN ANY CASE, WHERE IS THE QUESTION OF THE DIVERSION OF FUNDS IN A CL ANDESTINE MANNER, WHICH IS ESTABLISHED? ARE THE OFFICIALS OF THE CORPORATION , AS IT APPEARS TO BE, ALSO INVOLVE D IN THIS? F URTHER, AGAIN , IS THE SUM OF ` 17.80 C RS. , T HE ENTIRE SUM RELEASED , OR SOME OTHER FUNDS HAVE GONE TO THE COFFERS OF THE C ORPORATION AS WELL ? ALSO , H AS IT MADE ANY SUPPLIES INDEPENDENT OF THAT CLAIMED TO HAVE BEEN BY THE ASSESSEE (ON ITS BEHALF), AS , WHERE NOT, IT GIVES CREDENCE TO THE ASSESSEE S CASE OF HAVING SUPPLIED 9 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA THE ENTIRE GOODS WHICH WERE TO BE SUPPLIED BY THE C ORPORATION, WHILE POINTING TO ITS OFFICIALS BEING ALSO INVOLVED IN THE DIVERSION OF FUNDS, TO WHICH THE SCAM IS THUS REDUCED TO , WITH THE ASSESSEE AS ITS KINGPIN ? IN ANY CASE, WH ERE IS THE QUESTION OF, OR THE OCCASION TO, TRANSFER FUNDS TO THE ACCOUNTS OF SELF AND FAMILY MEMBERS? NO NEXUS WHATSOEVER BETWEEN THE ASSESSEE AND THE SUPPLY OF THE RELIEF MATERIAL HAS BEEN SHOWN AT ANY STAGE . IF, ON THE OTHER HAND, THE ASSESSEES LOCUS S TANDI IN THE MATTER IS NOT QUESTIONED, SO THAT DEFENSE ADMITS TO THE ASSESSEE HAVING SUPPLIED THE RELIEF MATERIAL S DELIVERED IN THE F LOOD R ELIEF O PERATION S OF 2004, THERE IS NO BASIS OR SCOPE FOR THE REVENUE TO RAISE THIS ASPECT OF THE MATTER, AND THE ONLY ISSUE THAT WOULD SURVIVE IS THE EXTENT OF THE SUPPLIES MADE BY HIM. THE QUESTION AS TO WHETHER IT WAS THE ASSESSEE WHO HAD SUPPLIED THE GOODS, WAS NEVER BEFORE AND, THUS, NOT CONSIDERED BY EITHER THE HONBLE HIGH COURT OR THE ENQUIRY COMMITTEE, WHICH PROC EEDED ON THE BASIS THAT IT IS THE ASSESSEE, HAVING DIVERTED THE FUNDS, WHO HAD SUPPLIED THE GOODS. THE QUESTION SHALL REQUIRE BEING ANSWERED, EITHER WAY, IN THE LEGAL PROCEEDINGS FOR DETERMINING THE ISSUE QUA CIVIL LIABILITY. ACCORDINGLY, IN OUR CONSIDERED VIEW, THIS ASPECT OF THE MATTER, WHICH IS PERTINENT AND, IN FACT, REPRESENTS THE FIRST ISSUE THAT REQUIRES ADJUDICATION , WHICH COULD THOUGH ONLY BE ON THE BASIS OF THE MATERIAL /EVIDENCES LED BY EITHER SIDE, IS AT LARGE AND OPEN AT THIS STAGE BEFORE THE TR IAL COURT. NEEDLESS TO ADD, SO IS THE QUESTION OF THE VOLUME OF THE SUPPLIES MADE; THE ASSESSEE ALLEGING SEVERAL DEFICIENCIES IN THE REPORT BY THE ENQUIRY COMMITTEE, WHICH RELATE TO DIFFERENCES IN THE QUANTITIES OF VARIOUS ITEM SUPPLIED VIZ . POLYTHENE S HEE TS, CHURA, COMMON SALT, J A GGERY, CANDLE STICKS, ETC., AS ALSO NON - INCLUSION OF THE F OOD PACKETS (REFER PLAINT IN TITLE SUIT NO. 5743/2014 FILED ON 17.12.2014/COPY ON RECORD) . IN THIS REGARD, THE OBSERVATIONS BY THE HONBLE HIGH COURT (IN CWJC 3332/2010 DAT ED 13.03.2010), I.E., QUA THE ASSESSEE S CLAIMS AND CONDUCT, ARE , IN OUR VIEW, VERY RELEVANT. 4.4 THE DISPUTED QUESTION OF FACT LEADING TO THE DETERMINATION OF THE ASSESSEES TAX LIABILITY WOULD THUS HAVE TO AWAIT THE RESOLUTION OF THE CORRESPONDING CIVI L LIABILITY QUA THE SUPPLIES UNDER REFERENCE. HOW COULD THE SAID ISSUE BE DECIDED INDEPENDENT OF THE RESOLUTION OF THE DISPUTE INVOLVING THE FACTUM OF THE SUPPLIES, IF ANY, MADE , INCLUDING TO 10 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA ITS EXTENT ? NO DOUBT, THE TAX ASSESSMENT , WHICH ARE SEPARATE , QU A SI JUDICIAL PROCEEDINGS, AND FURTHER SUBJECT TO TIME LIMITATION, HAS TO BE FRAMED. THE SAME WOULD, ACCORDINGLY, ONLY BE ON THE BASIS OF THE MATERIAL ON RECORD. THAT THE ASSESSEE IS THE MAN WHO OPENED AND OPERATED THE BANK ACCOUNT (NO.9266 (LAST FOUR DIGIT S) WITH IDBI BANK LTD.) IN WHICH THE FUNDS RELEASED BY THE STATE GOVERNMENT FOR FLOOD RELIEF SUPPLIES (FOR ` 17.80 CRS.) STOOD DEPOSITED, IS WELL ESTABLISHED AND, IN FACT, NOT DENIED THE ASSESSEE , ON THE CONTRARY, CLAIMING TO HAVE SUPPLIED RELIEF MATERIAL AGAINST THE SAID SUM, STATED TO BE AN ADVANCE , AT ` 30.97 CRS ., AND ON THAT BASIS CLAIMING THE BALANCE ` 1317.09 LACS , BESIDES INTEREST FOR THE DELAY IN PAYMENT, WHICH THOUGH IS NOT ADMITTED BY THE STATE GOVERNMENT AND OTHER PARTIES IMP L E A DED IN THE TITLE S UIT AS DEFEND ANTS . DECISION 5.1 IN OUR VIEW, THEREFORE , I.E., IN VIEW OF OUR FINDINGS AT PARA 4, THE ONLY FACT THAT STANDS ESTABLISHED IS OF THE ASSESSEE HAVING RECEIVED ` 17.80 CRS. I N AN UNAUTHORIZED, ILLEGAL MANNER. THE SAME FORMS PART OF HIS RECEIPT , LIABLE TO BE TAXED AS HIS BUSINESS INCOME U/S.28 IN - AS - MUCH AS HE IS IN THE BUSINESS OF SUPPLY OF MATERIALS TO THE STATE GOVERNMENT (IN ITS VARIOUS D EPARTMENTS) , AND THE SUMS UNDER REFERENCE, ALBEIT IN AN ILLEGAL MANNER, WHICH THOUGH ARE EQUALLY TAXABLE, HAVE BEEN APP ROPRI ATED ONLY TOWARD THE SAME. THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE SUPPLY OF GOODS BY HIM , WHICH ASPECT OF THE MATTER WHICH WE HAVE FOUND AS AT LARGE. NO DOUBT, THE A.O. , WHOSE FINDINGS ARE NOT BINDING ON THE TRIAL COURT, AS INDE ED IS THE POSITION QUA THE FINDINGS BY THE LAT T ER, IS UNDER THE ACT COMPETENT TO DECIDE THE ISSUE, WHICH COULD ONLY BE ON THE BASIS OF THE MATERIAL ON RECORD. T HE ASSESSEE, AS AFORE - STATED, HAS NOT LED ANY EVIDENCE TOWARD THE SAME. WE HAVE ALREADY FOUND HI S PLEA RAISED WITH REFERENCE TO SECTION 50(B) (OF THE DMA, 2005) AS NOT T ENABLE OR VA LID. WE ARE, WHEN WE HOLD SO, CONSCIOUS THAT THE ASSESSEE COULD WELL BE HELD BY THE TRIAL COURT TO HAVE SUPPLIED THE GOODS, TO WHATEVER EXTENT AND, FURTHER , THAT THE DECIS ION OF THE TRIAL COURT MAY AGAIN NOT BE ACCEPTED BY EITHER SIDE, AND SUBJECT TO APPEAL. WE ARE ALSO C ONSCIOUS THAT THE FINDINGS OF THE TRIAL COURT, AS OBSERVED EARLIER, ARE NOT BINDING ON THE ASSESSING AUTHORITY 11 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA UNDER THE ACT. THE SAME, HOWEVER, HAVE PER SUASIVE VALUE, WITH WE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, CONSIDER AS EQUITABLE FOR BEING ADOPTED IN DECIDING ON THE ASSESSEES TAX LIABILITY. WHERE AND TO THE EXTENT THE SUPPLIES ARE FOUND BY THE TRIAL COURT TO HAVE BEEN MADE BY THE ASSESSEE, HE SHALL BE ALLOWED CREDIT IN ITS RESPECT IN COMPUTING HIS INCOME FOR THE YEAR IN - AS - MUCH AS TO THAT EXTENT THE RECEIPT ( AT A TOTAL OF ` 17.80 CRS.) REPRESENTS HIS SALES. WITH REGARD TO THE FINDINGS OF THE TRIAL COURT BEING NOT FINAL OR CONCLUSIVE, A N Y MODIFI CATION THEREIN, IN APPEAL OR OTHERWISE , WOULD REQUIRE BEING ADOPTED BY THE REVENUE, WHICH SHALL BE OBLIGED TO REVISE THE ASSESSEES INCOME FOR THE YEAR ACCORDINGLY. WE INSIST ON REVISION/MODIFICATION OF THE ASSESSEES INCOME FOR THE CURRENT YEAR IN - AS - MUCH AS WHAT IS BEING DECIDED IS ONLY AS TO WHAT PART OF THE RECEIPT OF ` 17.80 CRS. REPRESENTS HIS SALES FOR THAT YEAR. 5.2 THE NEXT QUESTION, WHICH F OLLOW S AS A COROLLARY, IS THE ALLOWANCE OF THE COST OF THE GOODS SOLD. NO MATERIAL OR EVIDENCE IN ITS RESPEC T HAS AGAIN BEEN ADDUCED, EVEN AS , CLEARLY, IT IS ONLY THE PROFIT (TRADING) THAT CAN BE CONSIDERED AS INCOME AGAINST SALES. THE ASSESSEES OTHER TWO CONCERNS, I.E., M/S. P U NAM PRINTING WORKS AND M/S. HINDUSTAN BUSINESS SYSTEMS, ARE ALSO IN THE SAME BUSINES S . T HE PROFIT DISCLOSED BY T HEM HAS BEEN ACCEPTED BY THE REVENUE AS SUCH. WE, ACCORDINGLY, CONSIDER IT PROPER TO ADOPT THE SAME RATIO OF GROSS (TRADING) PROFIT AS DISCLOSED ON THE SUPPLIES MADE TO THE STATE GOVERNMENT BY THE TWO CONCERNS FOR THE RELEVANT Y EAR, FOR THE ASSESSEES THIRD CONCERN, I.E., M/S. SANTOSH PRINTING PRESS, I.E., QUA THE SUPPLIES MADE UNDER THE FLOOD RELIEF OPERATIONS OF 2004 AS WELL. THE BALANCE AMOUNT OF RECEIPT ( ` 17.80 CRS. SALES) WOULD CONTINUE TO BE TAXABLE IN FULL. 5.3 THE MATT ER, HOWEVER, DOES NOT END HERE. IT IS WELL OPEN TO BE CONTENDED BY THE ASSESSEE THAT THE AMOUNT RECEIVED IN EXCESS OF THE SALES, I.E., THE VALUE OF THE GOODS SUPPLIED, CANNOT FORM PART OF HIS INCOME IN - AS - MUCH AS IT IS NOT RECEIVED BY HIM IN HIS OWN RIGHT. THE ARGUMENT IS VALID. THE QUESTION , THOUGH, WOULD ARISE ONLY WHERE THE AMOUNT RECEIVED IS DETERMINED TO BE IN EXCESS. THE ASSESSEE, WHO, HOWEVER, DISPUTE S THE 12 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA SAME, CANNOT BE ALLOWED TO TAKE THIS PLEA AT THIS STAGE, CLAIM AS HE DOES TO HAVE RECEIVED THE ENTIRE AMOUNT IN HIS OWN RIGHT, AGAINST THE SUPPLIES MADE. IF AND WHEN THE QUESTION ARISES, WE CONSIDER THAT THE ASSESSEE IS ENTITLED TO RELIEF IN ITS RESPECT ONLY UPON AND SUBJECT OF PAYMENT OF SUCH EXCESS, ALBEIT FOR THE CURRENT YEAR ONLY. IN SO DECIDING , WE DRAW SUPPORT FROM THE ORDER BY THE T RIBUNAL IN RAM PUNJWANI VS. ITO (IN ITA NO. 1493/MUM/2011 DATED 09 .04.2014 /COPY ON RECORD). IN THE FACTS OF THAT CASE, THE ASSESSEE WAS FOUND TO HAVE PL AYED FRAUD ON THE GOVERNMENT OF INDIA BY CLAIMING EXPORTS, WHILE NO GOODS WERE ACTUALLY EXPORTED, AND THE FOREIGN EXCHANGE REMITTED TO INDIA THROUGH THE HAWALA CHANNEL, ONLY TO CLAIM THE EXPORT BENEFIT OF DUTY DRAW BACK (DDB) FROM THE GOI. THE TRIBUNAL , ON FINDING THAT NO EXPORTS HAD BEEN MADE, OP IN ED THAT THE MONEY RE CEIVED BY WAY OF DDB WOULD NO LONGER QUALIFY , OR COULD NO LONGER BE REGARDED , AS DDB, BUT ONLY AS A PART OF THE BUSINESS RECEIPT /INCOME . HOWEVER, AT THE SAME TIME, IN - AS - MUCH AS THE AMOUNT BECOMES REFUNDABLE TO GOI, THE ASSESSEE WOULD, UPON PAYMENT, BE ENT ITLED TO HIS INCOME FOR THE RELEVANT YEAR BEING REDUCED TO THAT EXTENT, RELYING ON THE DECISIONS IN THE CASE OF CHOWRINGHEE SALES BUREAU (P.) LTD. VS. CIT [1973] 87 ITR 542 ( SC), SINCLAIR MURRAY & CO. PVT. LTD. VS. CIT [1974] 97 ITR 615 (SC) AND SHREE DIGV IJAY CEMENT MILLS LTD. VS. U OI [2002] 259 ITR 705 (SC) . NO DOUBT, IT CLARIFIED , THAT THE HONBLE APEX COURT HAD IN THESE CASES HELD FOR DEDUCTION OF SALES TAX, INCOME - TAX ON WHICH THE RECEIPT WAS IN DISPUTE, WOULD ARISE FOR THE YEAR OF ITS PAYMENT (TO THE STATE GOVERNMENT), WHERE HELD AS LIABLE IN THE PROCEEDINGS MOVED BY THE A PPELLANTS CHALLENGING THE IR LIABILITY IN ITS RESPECT ; THE FACTS OF THE CASE BEFORE IT WARRANTED A CORRESPONDING REVISION, THOUGH ON PAYMENT, FOR THE YEAR OF RECEIPT; ITS RELEVANT FIND INGS BEING AS UNDER: 3.5 WE ARE CONSCIOUS OF THE FACT THAT THE DDB CLAIM, IF HELD TO BE BOGUS, WOULD STAND TO BE REFUNDED BY THE ASSESSEE TO THE GOVERNMENT, IN WHICH CASE ONE COULD ARGUE THAT NO INCOME ON ACCOUNT OF DDB WOULD AT ALL ARISE FOR BEING T AXED. AS SUCH, EVEN IF THE ASSESSEE FAILED IN THE PROCEEDINGS BEFORE THE DRI, IT WOULD BE OF NO CONSEQUENCE IN THE INSTANT PROCEEDINGS. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE ARGUMENT, BEING NOT WITHOUT FORCE. THE SAME, HOWEVER, SHALL NOT SUCCEED. IN CHOWRINGHEE SALES BUREAU (P.) LTD. VS. CIT [1973] 87 ITR 542 (SC), 13 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA THE ASSESSEE - AUCTIONEER CLAIMED THAT THE SALES - TAX COLLECTED FROM BUYERS WAS NOT ITS INCOME. THE SAME WAS, HOWEVER, NOT PAID TO THE STATE EXCHEQUER, TAKING THE STAND THAT THE ASSESSEE WAS NOT A DEALER UNDER THE RELEVANT ACT. THE AMOUNT WAS ALSO NOT REFUNDED TO THE PARTIES FROM WHOM IT HAD BEEN COLLECTED. THE SAME, THOUGH REFLECTED UNDER SALES TAX COLLECTION ACCOUNT, I.E., AS A LIABILITY, WAS HELD AS THE ASSESSEES TRADING RECEIPT AND , ACCORDINGLY, TAXABLE IN ITS HANDS. ON A PLEA THAT SAME WOULD BECOME REFUNDABLE TO THE GOVERNMENT - THE MATTER BEING IN DISPUTE, BEING TAKEN BEFORE THE APEX COURT, IT HELD THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION AS AND WHEN IT PAYS TO THE S TATE GOVERNMENT. IN SINCLAIR MURRAY & CO. PVT. LTD. VS. CIT [1974] 97 ITR 615 (SC), A SIMILAR PLEA WAS ASSUMED, STATING THAT NO BENEFICIAL INTEREST IN THE SALES - TAX COLLECTED HAD BEEN ACQUIRED BY THE ASSESSEE. APPLYING ITS DECISION IN CHOWRINGHEE SALES BU REAU (P.) LTD. (SUPRA), THE APEX COURT HELD THAT THE TAX COLLECTED CONSTITUTED THE ASSESSEES INCOME. HOWEVER, IF AND WHEN THE APPELLANT PAID THE AMOUNT COLLECTED TO THE STATE GOVERNMENT OR REFUNDED ANY PART THEREOF TO THE PURCHASER, IT WOULD BE ENTITLED T O CLAIM DEDUCTION FOR THE SUM SO PAID OR REFUNDED. THE PRINCIPLE OF UNJUST ENRICHMENT, AS EXPLAINED BY THE APEX COURT IN THE CASE OF SHREE DIGVIJAY CEMENT MILLS LTD VS. UNION OF INDIA [2002] 259 ITR 705 (SC), WOULD IN OUR VIEW ALSO OPERATE TO PREVENT THE A SSESSEE FROM CLAIMING DEDUCTION OR REDUCTION IN RESPECT OF THE CLAIM WITHOUT PAYING THE SAME IN - AS - MUCH AS DDB IS ONLY A RECOMPENSE FOR THE TAX/DUTY ALREADY PAID . THE LD. CIT(A) HAS, PERHAPS WITH THIS IN MIND, HELD, IN VIEW OF THE PENDENCY OF THE PROCEEDIN GS, THE ASSESSEE AS ENTITLED TO APPROPRIATE RELIEF FOR THE CURRENT YEAR ITSELF IF THE ASSESSEE IS EXONERATED BY THE DRI. WHILE UPHOLDING THE SAME IN VIEW OF THE FOREGOING DECISIONS, WE FURTHER STATE THAT THE ASSESSEE WOULD BE ENTITLED TO REDUCTION IN ITS I NCOME, AGAIN FOR THE CURRENT YEAR ITSELF, I.E., WHERE AND TO THE EXTENT HE IS NOT EXONERATED, ON PAYMENT TO THE GOVERNMENT EXCHEQUER. WE ARE CONSCIOUS , WHEN WE SAY SO, THAT IN TERMS OF DECISIONS RELIED UPON, AND IN FACT, EVEN OTHERWISE, THE CREDIT OR DEDU CTION FOR THE AMOUNT PAID/REFUNDED WOULD ONLY ARISE FOR THE YEAR OF PAYMENT AND NOT THAT FOR THE YEAR TO WHICH THE CLAIM FOR DDB RELATES TO OR GETS RECEIVED IN. THIS IS UNDERSTANDABLE, AND IS ONLY CORRECT LY SO, AS THE TAX OF A SUM AS INCOME ONLY IMPLIES IT S BEING RECEIVED IN THIS OWN RIGHT. A DEDUCTION, CONSEQUENTLY, COULD ONLY BE FOR THE YEAR IN WHICH THE LIABILITY IN ITS RESPECT ARISES, PRIOR TO WHICH IT CANNOT BE SAID TO BE A LIABILITY, OR ONLY CONTINGENTLY SO. HOWEVER, THE ONLY QUESTION TO BE DECIDED I S WHETHER THE ASSESSEE HAD INDEED MADE THE EXPORTS OF GARMENTS TO RUSSIA, I.E., AS CLAIMED, IF SO, WHAT IS RECEIVED FROM THE GOVERNMENT IS DUTY DRAWBACK, ELSE NOT, SO THAT THE SAME BECOMES REFUNDABLE. ACCORDINGLY, THE 14 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA CONSEQUENCE OF DENIAL OF DEDUCTION U/S .80 - HHC AND THE AMOUNT BEING REFUNDABLE ARISE SIMULTANEOUSLY ONLY FOR THE CURRENT YEAR. AGAIN, THE AMOUNT, THOUGH REFUNDABLE, MAY NOT ACTUALLY BE REFUNDED; THE ASSESSEE BEING A MAN OF NO (LITTLE) MEANS AND APPEARS ONLY TO BE A FRONT MAN FOR OTHERS. THIS WO ULD EXPLAIN OUR DECISION IN CONFERRING THE BENEFIT OF TAX BEING NOT CHARGEABLE O N THE AMOUNT BEING REFUNDED AND, FURTHER, FOR THE CURRENT YEAR ITSELF, AS HAS BEEN BY THE L D. CIT(A) ALSO, AND WHOSE ORDER WE OTHERWISE CONFIRM. WE DECIDE ACCORDINGLY. 5.4 FI NALLY, WE MAY CONSIDER ANOTHER ASPECT THAT ARISES FOR OUR CONSIDERATION, I.E., WHERE THE ASSESSEE IS FOUND TO HAVE SUPPLIED THE GOODS IN EXCESS OF THE AMOUNT RECEIVED ( ` 17.80 CRS.) , I.E., A S CLAIMED BY HIM. SURELY, ONLY THE PROFIT ELEMENT, ASCERTAIN ED IN THE MANNER DELINEATED ABOVE, WOULD STAND TO BE CONSIDERED AS HIS INCOME AND, ACCORDINGLY, SUBJECT TO TAX. THE ASSESSEE, HOWEVER, WOULD IN THAT CASE BE REQUIRED TO EXPLAIN, AND FOR THE FIRST TIME, THE SOURCE OF THE PURCHASE COST OF THE GOODS AGAINS T THE BAL ANCE SALE OF ` 1317.09 LACS, I.E., ASSUMING ACCEPTANCE OF HIS CLAIM OF THE SALE OF GOODS AT ` 3097.09 LACS. THIS MATTER, WHICH SHALL ARISE ONLY IN THE SAID EVENT, WOULD REQUIRE BEING CONSIDERED AND ADJUDICATED UPON BY THE A.O. IN TAX ASSESSMENT FOR THE CURRE NT YEAR IN - AS - MUCH AS IT ARISES QUA AGAINST THE SUPPLIES MADE AND PR OCURED BY THE ASSESSEE ONLY DURING THE CURRENT YEAR, ALBEIT FOR THE FIRST TIME , I.E., ONLY UPON A CORRESPONDING FINDING BY THE TRIAL COURT. 5.5 WE MAY BEFORE PARTING WITH THE MATTER, ALS O CLARIFY THAT WE ARE C ONSCIOUS THAT WE HAVE ALL ALONG DISCUSSED THE RECEIPT OF ` 17.80 CRS. D EPOSITED IN THE ASSESSEES BANK ACCOUNT (I.E., DE FACTO) WITH IDBI BANK, PATNA, WHILE THE TOTAL AMOUNT OF DEPOSIT IN THE SAID BANK ACCOUNT DURING THE YEAR IS AT ` 1 9,09,69,912/ - , AND WHICH HAS BEEN BROUGHT TO TAX BY THE REVENUE . IN THIS REGARD, THE LD. CIT(A) HAS OBSERVED THE SA ID DEPOSIT / S TO BE PRIOR TO 12.07.2004, SO THAT THEY DO NOT ARISE OUT OF TH E SCAM FUNDS. THIS IS ONLY UNDERSTANDABLE. THE ONLY DIFFERENCE, HO WEVER, THAT THIS WOULD MAKE IS THAT TO THE EXTENT OF ` 17.80 CRS., THE SOURCE IS EXPLAINED, WHILE THE NATURE IS YET TO BE DETERMINED, FOR THE BALANCE AMOUNT, THE ASSESSEE IS OBLIGED TO EXPLAIN BOTH THE NATURE AND SOURCE THEREOF. NO RELIEF, THEREFORE, SIMPLY ON THE BASIS OF THE AMOUNT BEING RECEIVED PRIOR TO 12.07.2004 WOULD BY ITSELF ARISE, FOR WHICH THE MATTER, BEING NOT SPECIFICALLY ARGUED BEFORE US, SHALL 15 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA TRAVEL TO THE FILE OF AO FOR ADJUDICATION AFRESH ON MERITS, AFTER ALLOWING THE ASSESSEE AN OPPORTUNIT Y TO EXPLAIN THE SAME. WE DECIDE ACCORDINGLY (I.E., VIDE PARAS 5.1 TO 5.5) . 5.6 WE MAY, AT THIS STAGE, ALSO CLARIFY ABOUT THE INAPPLICABILITY OF THE DECISION IN THE CASE OF INDRAPRASTHA AGENCIES VS. CIT [2004] 266 ITR 320 (JH.), RELIED UPON BY THE REVENU E, IN THE FACTS OF THE PRESENT CASE. THE MATTER, AS SHALL BE APPARENT FROM THE FOREGOING, IS, FIRSTLY, PURELY FACTUAL; WE HAVING FOUND FOR MOST PART THE ISSUES ARISING TO BE FACTUALLY INDETERMINATE, WHILE DECIDING THE ISSUES INVOLVED IN PRINCIPLE FOR THE P URPOSES OF THE ASSESSEES ASSESSMENT UNDER THE ACT . IN THE FACTS OF THAT CASE, IN CONTRADISTINCTI ON TO THE PRESENT CASE WHERE DISPUTED QUESTIONS OF FACT ARE INVOLVED, AND ARE THE SUBJECT MATTER OF A LEGAL DISPUTE BEFORE THE CIVIL COURT, THE DEDUCTION UNDER DISPUTE WAS TOWARDS THE BRIBES CLAIMED TO HAVE BEEN PAID BY THE APPELLANT TO THE OFFICIALS OF DIFFERENT AUTHORITIES, WHO WERE ALLEGED TO BE INVOLVED IN THE SCAM UNDER REFERENCE. IT IS IN VIEW OF THIS UNSUBSTANTIATED CLAIM BY THE ASSESSEE THAT THE HONBLE HIGH COURT REJECTED ITS CLAIM. NO SUCH CLAIM ARISES IN THE FACTS OF THE PRESENT CASE, WITH THE ASSESSEE, ON THE CONTRARY, CLAIMING TO HAVE SUPPLIED GOODS F AR IN EXCESS OF THE AMOUNT RECEIVED FROM THE STATE GOVERNMENT. IN FACT, BRIBES, EVEN WHERE SUBSTANTIA TED, WOULD NOT STAND TO BE ALLOWED AS BUSINESS DEDUCTION IN VIEW OF EXPLANATION TO S. 37(1) OF THE ACT, INSERTED BY FINANCE (NO. 2) ACT, 1998 W.R.E.F. 01.04.1962. THE RELIANCE BY THE REVENUE ON THE SAID DECISION IS THUS CLEARLY MISPLACED. WE ARE C ONSCIO US THAT WHILE D IRECTING AND DECIDING IN THE MANN ER WE HAVE, WE MAY APPEAR TO HAVE TRAVELLED OUTSIDE OUR PURVIEW, I.E., AS PER THE GROUNDS RAISED. THE SAME IS NOT CORRECT IN - AS - MUCH AS APPELLATE PROCEEDINGS ARE ONLY AN EXTEN S ION OF THE A SSESSMENT P ROCEEDING S , AND THE T RIBUNAL , AS AN APPELLATE AND FINAL FACT FINDING AUTHORITY , IS FULLY COMPETENT TO FRAME THE ISSUES ARISING ; THE WHOLE PREMISES AND THE PURPORT BEING TO DETERMINE THE ASSESSEES CORRECT TAX LIABILITY FOR THE RELEVANT YEAR; THE TAX PROCEEDINGS NOT BEING IN THE NATURE OF A LIS . THOUGH THE CASE LAW IN THE MATTER IS LEGION , WHILE THE APPELLATE TRIBUNAL RULES IN THE MATTER INSTRUCTIVE ( R ULE 11), WE MAY YET , FOR READY REFERENCE , ADVERT TO, INTER ALIA , THE DECISIONS IN THE CASE OF KAPURCHAND SHRIMAL V. C IT 16 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA [1981] 13 1 ITR 451 (SC) AND AHMEDABAD ELECTRICITY CO. LTD. V. CIT [1993] 199 ITR 351 (BOM)(FB). THE ONLY LIMI TA TION WOULD BE THAT THE PARTIES ARE GIVEN AN OPPORTUNITY TO PRESENT THEIR CASE IN THE MATTER . O N ALL THE ASPECTS WHICH WE HAVE DISCUSSED, THE I SSUES WERE RAISED AND THE RELEVANT QUERIES MADE AND ADDRESSED DURING THE HEARING, WITH IN FACT SOME OF TH E PAGES OF THE ASSESSEES PAPER - BOOK ADVERTED TO, AS WELL AS COPY OF THE TITLE SUIT FURNISHED , BY THE LD. AR ONLY AT THE INSTANCE OF THE BENCH. THIS D ECIDES THE ASSESSEES APPEAL (ITA NO. 39/PAT/2014) . REVENUES A PPEAL (IN ITA NO. 3 6 /PAT/2014) 6. THE REVENUE , PER AN OM NIBUS GROUND, CHALLENGE S, AT ONE GO , THE ENTIRE ADDITIONS DEL E TED BY THE LD. CIT(A), WHICH WE MAY DELINEATE, AS UNDER, ALONG WITH OUR VI EW THEREOF: A) CASH DEPOSITS MADE IN THE BANK ACCOUNT S OF THE ASSESSEE; HIS PROPRIET A RY CONCERN S; AND OTHER FAMILY MEMBERS; AND B) OTHER DEPOSITS IN THE ACCOUNT S OF THE AFORE - MENTIONED PERSONS , AS WELL AS INVESTMENT MADE BY THEM . C) (SEE PARA 7 (INFRA)). OUR DECIS ION 7. THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE ON THE GROUND THAT THE CASH IS AVAILABLE FROM THAT WITHDRAWN , SO THAT IT WAS AVAILABLE WITH HIM FOR BEING DEPOSITED . THE ASSESSEE THUS TACITLY ADMITS TO IT BEING THE SAME (SCAM) FUNDS THAT HAVE GONE TO THE ACCOUNT OF HIS OTHER CONCERNS AND FAMILY MEMBERS. NO DATE - WISE CASH FLOW STATEMENT STANDS , HOWEVER, PREPARED, NOR WAS ONE , D E SP I TE BEING SPECIFICALLY CALLED FOR DURING HEARING, FURNISHED. IN FACT, AS AFORE - MENTIONED (PARA 3 OF THIS ORDER) ` 1678.45 L ACS STANDS TRANSFERRED TO THE ASSESSEES OTHER ACCOUNTS. THE LD. CIT(A) ALLOWING RELIEF ON THE BASIS OF A BALD PLEA , IS, THEREFORE, UNACCEPTABLE. APART FROM THE AMOUNT TRANSFERRED AFORE - REFERRED ( ` 1678.45 LACS ), THERE HAS BEEN A HEAVY INVESTMENT IN THE MOV ABLE (INCLUDING CARS ) AND IMMOVABLE PROPERTIES , MADE IN THE NAME OF SELF AND FAMILY MEMBERS. WHY, THE ASSESSEE 17 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA HIMSELF CLAIMS THE CASH WITHDRAWALS (AT ` 162.52 LACS) TO HAVE BEEN UTILIZED TOWARD PURCHASE OF GOODS SUPPLIED (REFER PARA 4.1 OF THIS ORDER). UNL ESS AND UNTIL , THEREFORE, A CONSOLIDATED CHART, BEARING THE TRANSFER OF FUNDS FROM AND TO THE ASSESSEES SISTER CONCERNS, TAKING ALL THE RELEVANT BANK ACCOUNTS TOGETHER, IS DRAWN , TAKING INTO ACCOUNT THE DEPLOYMENT OF FUNDS FOR ALL PURPOSES, INCLUDING THE IMMOVABLE PROPERTY (WHICH STANDS PURCHASED IN THE MONEY BY TENDERING B ANK DD S ) ; HOUSEHOLD WITHDRAWALS, ETC. IS PREPARED, IN OUR VIEW, THIS ISSUE CANNOT BE DECIDED. WE, THEREFORE, VACATING THE FINDINGS OF THE LD. CIT(A) , RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR THE PURPOSE, WHO SHALL DECIDE THE SAME , TAKING CONSOLIDATED AND CONSIDERED VIEW IN THE MATTER , ALLOWING THE ASSESSEE AN OPPORTUNITY TO PRESENT ITS CASE . WE DECIDE ACCORDINGLY. C) DIFFERENCE IN THE VALUE OF THE IMMOVABLE PROPERTIES : WE ARE I N AGREEMENT WITH THE LD. CIT(A) THAT NO ADDITION , MERELY ON THE BASIS OF THE VALUATION AS MADE BY THE DISTRICT VALUATION OFFICER (DVO) OVER THE CONSIDERATION AS SHOWN IN THE REGISTERED DEED, WHICH IS AT PAR OR ABOVE THE STAMP VALUATION, COULD BE MADE. WE, ACCORDINGLY, UPHOLD HIS DELETION AS MADE VIDE PARA 13 OF HIS ORDER. WE DECIDE ACCORDINGLY. 8. IN THE RESULT, BOTH THE ASSESSEES AND THE REVENUES APPEAL ARE ALLOWED ON THE AFORE - SAID TERMS. ORDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD O F THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( A. D. JAIN ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER DATED : 21.07.2015 . . ./ ROSHANI , SR. PS 18 ITA NOS. 36 & 39/PAT/2014 (A.Y. 2005 - 06) SANTOSH KUMAR JHA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, PATNA 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , ITAT, PATNA