The Income-tax Oficer, Amritsar. V. Sh. Ujjal Singh Sethi, Amritsar.

ITA 399/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63621 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-12-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.399(ASR)/2012 ASSESSMENT YEAR:2009-2010 PAN :ABRPS8552J INCOME TAX OFFICER, VS. SHRI UJJAL SINGH SETHI, WARD 1(2), AMRITSAR. C/O M/S. SETHI RADIOS, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:SH. P.N.ARORA, ADV. DATE OF HEARING: 26/12/2012 DATE OF PRONOUNCEMENT:28/12/2012 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE LD. CIT(A), AMRITSAR DATED 17.08.2012 FOR THE ASSESSMENT YEAR 2 009-2010. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.I. U/S 69 AS ASSESSEE COULD NOT EXPLAIN THE NATURE OF AMOUNT RECEIVED. ITA NO.399(ASR)/2012 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN TAKING AFFIDAVIT ON ACCOUNT OF SALES OF PLOT. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS .1103475 U/S 41(10 OF THE INCOME TAX ACT, 1961 AS ASSESSEE ITSEL F GIVE IN HIS WRITING TO ADD BACK THE SAME, HE HAS NOT EXPLANATIO N ON THIS ACCOUNT. PLEASE TREAT IT AS INCOME FOR THE YEAR 200 8-09. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE SALES TAX RETUR NS AS EXPLANATION. WHAT IS THE MODE OF PAYMENT HAS NOT BE EN EXPLAINED/VERIFIED. 5. THE ORDER OF LD. CIT(A) MAY BE SET ASIDE AND THE ORDER OF THE A.O. MAY BE RESTORED BACK. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY O R MORE GROUNDS OF APPEAL. 2. THE BRIEF FACTS ARE THAT THE AO MADE TWO MAJOR A DDITIONS I.E. OF RS.11,00,000/- U/S 69 WHICH IS ALLEGED TO BE RECEIV ED FROM SMT. VIMAL KAPOOR W/O LATE SH. JAGDISH LAL KAPOOR, 6, MALL ROA D, AMRITSAR [PAN:ATPK2011N) VIDE TWO CHEQUES NO.340193 & 340196 DT. 02.07.2008 AND 22.08.2008 OF CORPORATION BANK WORTH RS.5 LAKHS AND RS. 6 LAKHS RESPECTIVELY WHICH WERE FOUND CREDITED IN THE ASSES SEE BANK ACCOUNT NO.12220 WITH P&SB, CIVIL LINES, AMRITSAR, VIDE BAN K ENTRIES DATED 4.7.08 AND 26.08.2008 RESPECTIVELY REPRESENTING ADVANCE PA YMENT/EARNEST MONEY FOR THE PROPOSED PURCHASE OF ASSESSEES PROPERTY NA MELY 435A, GREEN AVENUE, AMRITSAR WHICH REMAINED UNMATERIALISED, INS PITE OF ASSESSEES ITA NO.399(ASR)/2012 3 CONTENTION THE SAME WAS REPAID AND SQUARED UP BY RE PAYING THE SAME IN TWO CASH INSTALMENTS OF RS.NINE LAKHS AND RS.TWO LAKHS DATED 10.11.08 AND 22.11.08 RESPECTIVELY AND THAT OF RS.11,03,575/- U/ S 41(1) OF THE I.T. ACT, 1961 TOWARDS CESSATION OF LIABILITY IN THE FORM OF STATIC SUNDRY CREDITOR IN THE NAME OF M/S. HEMKUNT RADIO, HALL BAZAR, AMRITSAR, A S A PARTNERSHIP CONCERN NEITHER SURRENDERED ITS PAN;AAFH5467J FOR S URRENDERED ITS SALES TAX NO./TIN NO.00380110436 (ALTHOUGH THE PARTY CLOS ED DOWN ITS BUSINESS AND ITS WHEREABOUTS WERE NOT TRACEABLE) BUT THE ACC OUNT IS STATED TO HAVE BEEN FINALLY SQUARED UP WHICH WAS PENDING DUE TO DI SPUTE/CONFLICT GOING ON AND REMAINED UNSETTLED/UNRESOLVED UPTIL 31.03.2010 BETWEEN BOTH THE PARTIES ON ACCOUNT OF SUPPLY OF INFERIOR QUALITY OF GOODS. IT HAS ALL ALONG BEEN THE ASSESSEES CONTENTION THAT THE LIABILITY REMAINED I NTACT AND ALIVE, AS NEITHER THE CREDITOR WAIVED THE RECOVERY NOR THERE IS ANY C ONTRACTUAL AGREEMENT BETWEEN THE PARTIES TO WRITE OFF OR WAIVE THE LIABI LITY FULLY OR PARTLY. IT IS PLEADED THAT THE ASSESSEE REMAINED AWEFULLY BUSY IN ATTENDING TO HIS AILING WIFE SUFFERING FROM SEVERE CANCER AND UNDER HOSPITA L TREATMENT AT NEW DELHI AND THUS COULD NOT PAY THE ATTENTION TOWARDS HIS TA XATION MATTERS AND CONCENTRATE IN ADDUCING THE REQUISITE CONFIRMATIONS AND DOCUMENTARY EVIDENCE IN SUPPORT AND TO STRENGTHEN HIS CONTENTIO NS. ITA NO.399(ASR)/2012 4 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED WR ITTEN SUBMISSIONS AND CERTAIN ADDITIONAL EVIDENCES. THE LD. CIT(A) FORWAR DED THE SAME TO THE AO FOR SUBMITTING THE REMAND REPORT. THE AO SUBMITTED REMAND REPORT AND AFTER TAKING REJOINDER FROM THE ASSESSEE ACCEPTED T HE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE. 4. THE D. CIT(A) VIDE HIS ORDER IN PARA 9 & 10 DELE TED THE ADDITIONS MADE BY THE AO BY ACCEPTING THE EXPLANATION OF THE ASSESSEE. WITH REGARD TO THE DELETION OF ADDITION OF RS. 11 LACS, THE LD. CI T(A) OBSERVED THAT ADVANCE AGAINST THE SALE OF PROPERTY SITUATED AT 435-A, GRE EN AVENUE, AMRITSAR, WAS RECEIVED BY THE ASSESSEE BY WAY OF TWO CHEQUES OF RS. 5 LACS AND RS. 6 LACS MENTIONED AT PAGE 12 OF HIS ORDER, WHICH WAS REFUND ED BACK DURING THE SAME FINANCIAL YEAR ON 10.11.2008 & 12.11.2008 AS RS.9 L ACS AND RS. 2 LACS RESPECTIVELY. SINCE THE AGREEMENT BETWEEN THE PROP OSED BUYER OF THE ASSESSEE COULD NOT BE MATERIALIZED FOR ONE OR THE OTHER REASON, THE AMOUNT WAS RECEIVED BY CHEQUE AND WAS PAID THROUGH CHEQUE WHICH DEPICTED IN SAVING BANK A/C NO. 12220 OF PUNJAB & SIND BANK, CI VIL LINES BRANCH, AMRITSAR . IT WAS ALSO OBSERVED THAT DUE TO THE TRE ATMENT OF CANCER OF HIS WIFE AT NEW DELHI, THE ASSESSEE COULD NOT EXPLAIN T HE EXACT NATURE OF THE ENTRIES AT THE TIME OF QUESTIONING BY THE AO ON 22. 12.2011 AND THE ASSESSEE WAS NOT HAVING SUFFICIENT TIME DUE TO TIME BARRING ASSESSMENT. AT THE MOST, ITA NO.399(ASR)/2012 5 THE AO COULD HAVE INVOKED THE PROVISION OF SECTION 68 OF THE ACT WHICH IS A REMEDY WHICH CAN BE CURED UNDER SECTION 292BB OF TH E INCOME TAX ACT, 1961. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE A.O. TO DELETE THE ADDITION OF RS. 11 LACS. 5. AS REGARDS THE DELETION OF ADDITION OF RS.11,03, 475/- MADE BY THE A.O. BY INVOKING THE PROVISION OF SECTION 41(1) OF THE I.T. ACT, 1961, AS THE CESSATION OF LIABILITY. IT WAS OBSERVED THAT THERE WAS CONFLICT BETWEEN THE ASSESSEE AND M/S. HEMUNT RADIOS, WHICH CONFLICT WAS FINALLY SETTLED DURING THE IMPUGNED YEAR AND THE AMOUNT WAS CLEARED DURING THE IMPUGNED YEAR. THE LD. CIT(A) OBSERVED THAT THE PROVISION OF SECTI ON 41(1) ARE NOT APPLICABLE AS MENTIONED AT PAGES 14 & 15 OF HIS ORD ER AND ACCORDINGLY DIRECTED THE A.O. TO DELETE THE ADDITION SO MADE BY THE A.O. 6. THE LD. DR, MR. TARSEM LAL, ARGUED THAT THE LD. CIT(A) SHOULD HAVE NOT ADMITTED THE ADDITIONAL EVIDENCE INSPITE OF THE FACT THAT THE AO DID NOT COMMENT UPON THE ADDITIONAL EVIDENCE. IN CASE, THE ADDITIONAL EVIDENCE HAS BEEN ACCEPTED, THE AO IN HIS CONCURRENT JURISDICTIO N SHOULD HAVE VERIFIED THE GENUINENESS OF THE ADDITIONAL EVIDENCE WHICH HAS NO T BEEN DONE BY THE LD. CIT(A). THE LD. DR, MR. TARSEM LAL ARGUED THAT SUCH AN ADDITIONAL EVIDENCE IS A COOKED UP EVIDENCE, HAWALA ENTRY AND SELF SERVING DOCUMENT AND THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE ITA NO.399(ASR)/2012 6 CASE OF DURGA PRASAD MORE REPORTED IN 82 ITR 530, T HE ADDITIONAL EVIDENCE ACCEPTED BY THE LD. CIT(A) SHOULD BE REJECTED AND A PPEAL OF THE REVENUE SHOULD BE ALLOWED. 7. AS REGARDS THE COPY OF ACCOUNTS OF M/S. HEMKUNT RADIOS, HE ARGUED THAT THE ASSESSEE HAS NOT PAID THE AMOUNT DURING TH E YEAR BUT HAS ISSUED BILL. THIS IS ALSO A COOKED UP STORY AND THEREFORE, THE O RDER OF THE LD. CIT(A) SHOULD NOT BE ACCEPTED AND PRAYED TO REVERSE THE OR DER OF THE LD. CIT(A). 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE, MR. P.N. ARORA ARGUED THAT THE ASSESSEE HAD SUBMITTED ADDITIONAL E VIDENCE WHICH IN FACT COULD NOT BE SUBMITTED DURING THE ASSESSMENT PROCE EDINGS SINCE THE ASSESSEE WAS ASKED TO SUBMIT THE EXPLANATION ONLY ON 22.12.2 011 AT THE FAG END OF THE ASSESSMENT BEING GETTING TIME BARRED ON 31.12.2011. THE ASSESSMENT ULTIMATELY WAS COMPLETED BY THE AO ON 27.12.2011 AN D IS A MATTER OF RECORD. IN SUCH A SHORT SPAN, THE ASSESSEE WAS PREV ENTED BY SUFFICIENT CAUSE AND COULD NOT SUBMIT THE PROPER EXPLANATION BEFORE THE AO DUE TO CANCER TREATMENT OF HIS WIFE. THIS IS A MATTER OF RECORD A ND EVEN COULD NOT BE DENIED BY ANY OF THE AUTHORITIES BELOW. THEREFORE, THE LD. CIT(A) HAS RIGHTLY ACCEPTED THE ADDITIONAL EVIDENCE. 9. ON MERIT, THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA ARGUED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH SMT . VIMAL KAPOOR FOR SALE ITA NO.399(ASR)/2012 7 OF PROPERTY OF 435, GREEN AVENUE, AMRITSAR AND RECE IVED THE PAYMENT ON 02.07.2008 & 22.08.2008 AMOUNTING TO RS. 5 LACS AND RS. 6 LACS WHICH IS A MATTER OF RECORD AS PER SAVING BANK A/C NO.12220 OF PUNJAB & SIND BANK, CIVIL LINES, AMRITSAR BELONGING TO THE ASSESSEE. T HE DEAL COULD NOT BE MATERIALIZED AND ACCORDINGLY, THE ASSESSEE REFUNDED THE SAME IN THE SAME FINANCIAL YEAR ON 10.11.2008 & 12.11.2008 AMOUNTING TO RS. 9 LACS AND RS. 2 LACS WHICH IS ALSO A MATTER OF RECORD THROUGH ACC OUNT PAYEE CHEQUES. THE CONFIRMATION AND COPY OF ACCOUNT WERE PLACED ON REC ORD BEFORE THE LD. CIT(A) AND THE AO IN THE REMAND PROCEEDINGS. THE AO HAS NOT COMMENTED ANY ADVERSE ON THE SAME AND THE SAME HAS TO BE TREA TED AS ACCEPTED BY THE AO AND THEREFORE THE ARGUMENT OF THE LD. DR THAT TH E LD. CIT(A) SHOULD HAVE VERIFIED THE GENUINENESS OF THE ADDITIONAL EVIDENCE IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE AS SESSEE IF HAVING PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTION AND THEREFORE, NO ADDITION U/S 68 OR 69 OF THE ACT CAN BE MADE. THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. 10. AS REGARDS THE DELETION OF ADDITION OF RS.11,03 ,475/- BY INVOKING THE PROVISION OF SECTION 41(1) OF THE ACT, THE LD. COUN SEL FOR THE ASSESSEE, MR. P.N. ARORA, INVITED OUR ATTENTION TO PAPER BOOK PA GES 4 TO 7 WHICH WERE SUBMITTED BEFORE THE LD. CIT(A) AS AN ADDITIONAL EV IDENCE AND TO THE AO FOR ITA NO.399(ASR)/2012 8 THE REMAND REPORT WHERE THE OUTSTANDING BALANCE OF M/S. HEMKUNT RADIOS WAS SETTLED. AFTER SETTLING EARLIER CONFLICT BY SEN DING GOODS TO M/S. HEMKUNT RADIOS AND PROPER BILLS WERE ISSUED IS A MATTER OF RECORD. THERE IS NO ADVERSE REPORT OF THE AO IN THE REMAND PROCEEDINGS WITH REG ARD TO THE SAID EXPLANATION OF THE ASSESSEE. THEREFORE, THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS ADDUCED THE ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A). IT IS A MATTER OF R ECORD THAT THE ASSESSEE WAS ASKED TO SUBMIT THE EXPLANATION WITH REGARD TO BOTH THE PROPOSITION OF THE ADDITIONS MADE BY THE AO ON 22.12.2011 AND THE ASSE SSMENT WAS COMPLETED ON 27.12.2011. IT HAS ALSO BEEN PLACED ON RECORD THAT THE ASSESSEE WAS LOOKING AFTER HIS WIFE WHO WAS SUFFERING FROM CANCE R AND THE AO HAS NOT BROUGHT ANY ADVERSE REMARKS IN THE ASSESSMENT PROCE EDINGS. THE AO HAS NOT GIVEN ANY ADVERSE REMARKS ON THE ADDITIONAL EVIDENC E ADDUCED BY THE ASSESSEE AND THEREFORE, NO ADVERSE VIEW CAN BE TAKE N ON THE SAME. THEREFORE, THE LD. CIT(A) HAS RIGHTLY ACCEPTED THE ADDITIONAL EVIDENCE ADDUCED BY THE ASSESSEE. 11.1. AS REGARDS THE VERIFICATION OF THE GENUINENES S OF THE ADDITIONAL EVIDENCE BY THE LD. CIT(A), IN THE ABSENCE OF ANY ADVERSE REMARKS OR ITA NO.399(ASR)/2012 9 FINDING OF THE AO IN THE REMAND PROCEEDINGS OR EXPL ANATION OF THE ASSESSEE CANNOT BE DOUBTED FOR THE REASON THAT THE ASSESSEE HAD RECEIVED RS. 11 LACS THROUGH A/C PAYEE CHEQUES WHICH WERE CREDITED IN TH E BANK A/C NO.12220 OF PUNJAB & SIND BANK, CIVIL LINES, AMRITSAR BELONG ING TO THE ASSESSEE, WHICH IN FACT, RETURNED THROUGH A/C PAYEE CHEQUES O N 10.11.2008 & 12.11.2008 FOR AN AMOUNT OF RS. 9 LACS AND RS. 2 LA CS RESPECTIVELY. THEREFORE, THE PURPOSE OF RECEIVING THE MONEY AND R ETURNING THE MONEY AS CLAIMED BY THE ASSESSEE THAT THERE WAS AN AGREEMENT OF SALE OF PROPERTY WHICH COULD NOT BE MATERIALIZED FOR ONE REASON OR T HE OTHER HAS TO BE ACCEPTED IN THE ABSENCE OF ANY ADVERSE FACTS BROUGH T ON RECORD BY THE AO IN THE REMAND PROCEEDINGS. 11.2. AS REGARDS THE ADDITION OF RS.11,03,475/-, TH E ASSESSEE HAD SUBMITTED COPY OF ACCOUNTS OF THE EARLIER YEARS AND OF THE LA TER YEARS. M/S. HEMKUNT RADIOS HAS NEVER CLAIMED THE SAME AS BAD DEBTS AND THE ASSESSEE WAS SHOWING AS AN EXISTING LIABILITY WHICH WAS SATISFIE D DURING THE YEAR. THE PROPER EXPLANATION COULD NOT BE GIVEN DURING THE AS SESSMENT PROCEEDINGS AS MENTIONED HEREINABOVE NOR ADVERSE REMARKS ARE ON RE CORD BY THE A.O. IN THE REMAND PROCEEDINGS WITH REGARD TO SETTLEMENT OF DUE S BY SUPPLYING OF GOODS BY THE ASSESSEE DURING THE IMPUGNED YEAR TO M/S. HE MKUNT RADIOS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE AO WAS NOT ITA NO.399(ASR)/2012 10 JUSTIFIED IN MAKING ANY ADDITION ON BOTH ACCOUNTS. THE LD. CIT(A) HAS, THEREFORE, RIGHTLY DELETED BOTH THE ADDITIONS. WE FIND NO INFIRMITY IN HIS ORDER. THUS, ALL THE GROUNDS OF THE REVENUE ARE DIS MISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.399(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DECEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH DECEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. UJJAL SINGH SETHI, AMRITSAR. 2. THE ITO WARD 1(2), AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR.S 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.