Sh. Sanjeev Kumar, Ropar V. ITO, Ropar

ITA 40/CHANDI/2013

• Counselvise Citation: 4021514 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SHARMA
• Keywords: Additional evidence
• Section: 68; 145; 40A(3); 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA,ACCOUNTANT MEMBER ITA NO. 40/CHD/2013 ASSESSMENT YEAR: 2009-10 SHRI SANJEEV KUMAR VS THE ITO, HOUSE NO. 298, WARD 2(4), WARD NO. 2, ROPAR. MORINDA, ROPAR PAN: ALCPK4563D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 24.08.2015 DATE OF PRONOUNCEMENT : 27.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 29.10.20 12 FOR ASSESSMENT YEAR 2009-10. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME OF RS. 3,01,620/-. THE CASE WAS 2 SELECTED FOR SCRUTINY. THE ASSESSING OFFICER ISSUE D DETAILED QUESTIONNAIRE ON DIFFERENT DATES. THE ASSE SSEE FILED REPLY BEFORE ASSESSING OFFICER BUT ASSESSEE D ID NOT FILE ANY REPLY IN RESPONSE TO QUESTIONNAIRE ISSUED ON 21.12.2011. SINCE THE ASSESSEE DID NOT FILE ANY REQUISITE DETAILS BEFORE ASSESSING OFFICER, THEREFO RE, ASSESSING OFFICER DID NOT LEFT WITH ANY OPTION EXCE PT TO COMPLETE THE ASSESSMENT ON MERITS. THE SAME IS THE POSITION BEFORE LD. CIT(APPEALS) BECAUSE THE ASSESS EE DID NOT ATTEND THE APPELLATE PROCEEDINGS BEFORE LD. CIT(APPEALS). THE ADJOURNMENTS WERE SOUGHT AND DESPITE GIVING ADJOURNMENT, NOBODY APPEARED ON THE DATE FIXED FOR HEARING BEFORE LD. CIT(APPEALS) AND EVEN NO WRITTEN SUBMISSIONS HAVE BEEN FILED. THE LD. CIT(APPEALS), THEREFORE, DECIDED THE APPEAL OF THE ASSESSEE VIRTUALLY EX-PARTE. IN THE BACKGROUND OF THESE FACTS, WE PROCEED TO DECIDE THE GROUNDS OF APPEAL R AISED BY THE ASSESSEE IN THE PRESENT APPEAL. 3. GROUND NO. 1 IS GENERAL AND NEED NO ADJUDICATION . 4. ON GROUND NO. 2, ASSESSEE CHALLENGED THE ORDER O F LD. CIT(APPEALS) IN REJECTING THE BOOKS OF ACCOUNT AND APPLYING PROFIT RATE OF 1.5% AND THEREBY SUSTAINING THE ADDITION OF RS. 20,70,539/-. THE BRIEF FACTS OF TH E ISSUE ARE THAT ASSESSEE HAD SHOWN INCOME FROM TRADING OF IRON AND STEEL AND HAD DECLARED GP RATE OF 0.56%. AS PE R ASSESSMENT ORDER, THE ASSESSEE HAD NOT FURNISHED OPENING AND CLOSING STOCK INVENTORIES IN QUANTITY A S 3 WELL AS IN VALUE, HAD NOT PRODUCED STOCK REGISTER A ND HAD NOT GIVEN ANY COMPARATIVE CASE WHERE GP RATE DECLARED WAS 0.56%. ACCORDING TO THE ASSESSING OFF ICER, IF REBATE AND DISCOUNT IS REDUCED, THEN GP WORKS OU T TO 0.29% WHICH WAS QUITE LOW. THE ASSESSING OFFICER, THEREFORE, INVOKED THE PROVISIONS OF SECTION 145 OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT. THE ASSESSI NG OFFICER APPLIED GP RATE OF 2% RESULTING INTO ADDITI ON OF RS. 29,27,768/-. NO SUBMISSIONS HAVE BEEN MADE BEFORE LD. CIT(APPEALS) TO CHALLENGE THE ABOVE ADDI TION MADE BY THE ASSESSING OFFICER. THE LD. CIT(APPEALS ) FINDING NO CHALLENGE TO THE ADDITION BEFORE HIM, CONFIRMED THE ADDITION IN PRINCIPLE, HOWEVER, CONSI DERED THE APPLICATION OF GP RATE OF 2% TO BE ON HIGHER SI DE AND REDUCED THE SAME TO 1.5% AND GRANTED ABOVE RELI EF OF RS. 8,57,221/-. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN EARLIER YEARS 2007-08 AND 2008-09, ASSESSEE HAS DECLARED GP RATE OF 0.10% AND 0.0029% AND IN SUBSEQUENT ASSESSMENT YEAR 2010-11, THE GP RATE WAS DECLARED AS 0.059%. HE HAS, THEREFORE, SUBMITTED T HAT ADDITION MAY BE DELETED. 6. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE ASSESSEE DID NOT PRODUCE SUFFICIENT MATERIAL BEFORE THE AUTHORIT IES BELOW AND NO SUBMISSIONS HAVE BEEN MADE, THEREFORE, APPEAL OF THE ASSESSEE MAY BE DISMISSED. 4 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THIS GROUND. THE ASSESSING OFFICER FOUND THE GP RATE OF THE ASSESSEE TO BE LOW. NO COMPARATIVE CASE WAS FILED. THE ASSESSEE DID NOT FILE COMPLETE DETAILS BEFORE ASSES SING OFFICER RELATING TO TRADING ACCOUNTS OF THE EARLIER YEARS. NO OPENING STOCK INVENTORY AND CLOSING STOCK INVENT ORY IN QUANTITY AS WELL AS IN VALUE WAS FURNISHED. THE ASSESSEE DID NOT PRODUCE ANY STOCK REGISTER. THE ASSESSING OFFICER CONSIDERED THAT EVEN IF REBATE AN D DISCOUNT IS REDUCED, THEN GP WOULD WORK OUT TO 0.29 %. FURTHER, THE LAST QUESTIONNAIRE ISSUED BY THE ASSES SING OFFICER WAS NOT RESPONDED TO BY THE ASSESSEE, THERE FORE, IT IS CLEAR FROM THE FINDINGS OF THE AUTHORITIES BE LOW THAT ASSESSEE DID NOT COOPERATE IN FINALIZATION OF THE ASSESSMENT AND NO COMPLETE DETAILS WERE FURNISHED. THEREFORE, ASSESSING OFFICER WAS JUSTIFIED IN REJEC TING THE BOOK RESULTS. SINCE COMPLETE DETAILS HAVE NOT BEEN FURNISHED EVEN BEFORE US, THEREFORE, HISTORY OF THE ASSESSEE COULD NOT BE CONSIDERED FAVOURABLY BECAUSE FOR THE YEAR UNDER ASSESSMENT AS WELL AS FOR EARLIER YE ARS, NO DETAILS HAVE BEEN PRODUCED BEFORE US IN SUPPORT OF THE CLAIM MADE BY THE ASSESSEE. CONSIDERING THE CONDUCT OF THE ASSESSEE, IN NOT FILING COMPLETE DET AILS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. THE ADDITION IS THERE FORE, CONFIRMED AND THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5 8. ON GROUND NO. 3, ASSESSEE CHALLENGED THE DISALLOWANCE OF RS. 94,235/- OUT OF EXPENSES. SIMI LARLY ON GROUND NO. 6, ASSESSEE CHALLENGED THE ADDITION O F RS.34,95,000/- MADE UNDER SECTION 40A(3) OF THE INC OME TAX ACT. SINCE THESE ISSUES ARE IDENTICAL, THEREFO RE, WE DECIDE THE SAME TOGETHER. THE ASSESSEE HAD CLAIMED VARIOUS EXPENSES LIKE TELEPHONE EXPENSES, TRAVELING EXPENSES, INSURANCE, OFFICE EXPENSES AND FREIGHT AN D CARTAGE IN A SUM OF RS. 4,71,177/-. SINCE THE ASSE SSEE DID NOT FURNISH VOUCHERS AND COMPLETE DETAILS, THEREFORE, ASSESSING OFFICER DISALLOWED 20% OUT OF THESE EXPENSES AND MADE ADDITION OF RS. 94,235/-. THE LD . CIT(APPEALS) ALSO NOTED THAT THE ELEMENT OF PERSONA L USE OUT OF TELEPHONE EXPENSES CANNOT BE RULED OUT. SIN CE THE ASSESSEE DID NOT FILE COMPLETE DETAILS, THEREFO RE, ADDITION WAS CONFIRMED. 8(I) AS REGARDS ADDITION OF RS. 34,95,000/- UNDER SECTION 40A(3) OF THE ACT, THE ASSESSING OFFICER NO TICED THAT ASSESSEE HAS MADE CASH PAYMENTS IN VIOLATION O F THE PROVISIONS OF SECTION 40A(3) OF THE ACT TOTALIN G TO RS. 34,95,000/- IN CASH. THE ASSESSING OFFICER NOT ED THE NAMES OF THESE PARTIES TO BE M/S GAHLOT & SONS, LUDHIANA RS. 3,00,000/-, M/S SHAKTI TRADING CO., HOSHIARPUR RS. 2,95,000/- AND M/S S.M. STEEL TRADER S (INDIA), MANDI GOBINDGARH IN A SUM OF RS.15 LACS AN D RS. 14 LACS. THE ASSESSING OFFICER NOTED THAT DESP ITE GIVING SPECIFIC OPPORTUNITY TO EXPLAIN THE PAYMENTS 6 MADE IN CASH, ASSESSEE DID NOT FILE ANY REPLY THERE FORE, ADDITION OF RS. 34,95,000/- WAS MADE UNDER SECTION 40A(3) OF THE INCOME TAX ACT. THE LD. CIT(APPEALS) ALSO NOTED THAT SINCE NO EVIDENCE HAS BEEN PRODUCED BEFO RE HIM AND NO SUBMISSIONS HAVE BEEN MADE, THEREFORE, ADDITION WAS CONFIRMED. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITION ON ACCOUNT OF DISALLOWING OF 20% EXPENSES OUT OF VARIOUS EXPENSES IS UNJUSTIFIED AND SIMILARLY, T HE ADDITION UNDER SECTION 40A(3) OF THE ACT IS WHOLLY UNJUSTIFIED BECAUSE THE ASSESSEE HAS NOT MADE ANY C ASH PAYMENT TO THESE THREE PARTIES. HE HAS REFERRED TO PB-62 WHICH IS COPY OF ACCOUNT OF M/S GAHLOT & SONS TO SH OW THAT THIS PARTY MADE PAYMENT TO ASSESSEE IN A SUM O F RS. 3 LACS. SIMILARLY, HE HAS SUBMITTED THAT M/S S HAKTI TRADING CO. HOSHIARPUR MADE PAYMENT TO THE ASSESSEE IN A SUM OF RS. 2,95,000/- WHICH IS CLEAR FROM COPY OF ACCOUNT OF THIS PARTY (PB-63) AND FURTHER SUBMITTED THAT IN THE CASE OF M/S S.M. STEEL TRADERS, THE AMOUNT I S PAID BY ASSESSEE THROUGH RTGS ISSUED BY HIS BANKER WHICH IS ALSO CLEAR FROM THE COPY OF ACCOUNT OF THI S PARTY (PB-69). THE LD. DR, HOWEVER, SUBMITTED THAT SINCE THESE EVIDENCES WERE NOT FILED BEFORE AUTHORI TIES BELOW, THEREFORE, THESE MAY NOT BE TAKEN INTO CONSIDERATION. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. WITH REGARD TO REJECTION OF TH E 7 BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT AND APPLYING GP RATE FOR ESTIMATING THE PROFIT IN THE C ASE OF THE ASSESSEE, WE HAVE CONFIRMED THE ORDERS OF AUTHORITIES BELOW AND DISMISSED GROUND NO. 2 OF APP EAL OF THE ASSESSEE. THEREFORE, IT STANDS ESTABLISHED THAT BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE AND HAVE BEEN REJECTED AND INCOME IS ESTIMATED BY APPLY ING HIGHER GP RATE. THE HON'BLE ALLAHABAD HIGH COURT I N THE CASE OF CIT V BANWARI LAL BANSHIDHAR 229 ITR 22 9 HELD AS UNDER : HELD, AFFIRMING THE DECISION OF THE TRIBUNAL, THAT NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD(J) OF THE INCOME-TAX RULES, 1962, AS NO DEDUCTION WAS ALLOWED TO AND CLAIMED BY THE ASSESSEE. WHEN THE GROSS PROFIT RATE WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR THE ASSESSING OFFICER TO MAKE SCRUTINY OF THE AMOUNT INCURRED ON THE PURCHASES MADE BY THE ASSESSEE. 11. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE JUDGEMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN TH E CASE OF BANWARI LAL BANSHIDHAR (SUPRA) EVEN IF ASSE SSEE HAS FILED SOME ADDITIONAL EVIDENCE WHICH MAY NOT BE TAKEN INTO CONSIDERATION AT THIS STAGE, HOWEVER IT IS CLEAR THAT ONCE GP RATE IS APPLIED, NO FURTHER DISALLOWANCE COULD BE MADE OUT OF VARIOUS EXPENSES AS WELL AS UNDER SECTION 40A(3) OF THE INCOME TAX ACT. WE, ACCORDINGLY, FOLLOWING THE DECISION IN THE CASE OF 8 BANWARI LAL BANSHIDHAR (SUPRA) SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 94,235/- AND RS. 34,95,000/-. THE GROUND NOS. 3 & 6 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 12. ON GROUND NO.4, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 25,00,000/- ON ACCOUNT OF CASH CREDIT UNDER SECTION 68 OF THE ACT. THE BRIEF FACTS ARE THAT AS SESSEE HAD SHOWN UNSECURED LOAN OF RS. 25 LACS IN THE NAME OF SHRI ASHOK BANSAL. THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO FURNISH CONFIRMATION ALONGWITH PAN OF S HRI ASHOK BANSAL AND PROOF OF HIS FILING INCOME TAX RET URN. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE REGARDING SOURCE OF CREDIT IN THE HANDS OF SHRI ASHOK BANSAL AND ALSO TO EXPLAIN WHET HER HE IS ASSESSED TO TAX. THE ASSESSEE DID NOT FURNIS H ANY EVIDENCE REGARDING SOURCE OF THE DEPOSIT OF THIS AM OUNT. THEREFORE, ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT. SINCE NO SUBMISS IONS HAVE BEEN MADE BEFORE LD. CIT(APPEALS), THEREFORE, ADDITION WAS CONFIRMED AND THIS GROUND OF APPEAL OF THE ASSESSEE WAS DISMISSED. 13. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE HAS SHOW N HIS INABILITY TO PRODUCE ANY EVIDENCE REGARDING SOURCE OF DEPOSIT OF RS. 25 LACS BY SHRI ASHOK BANSAL WITH TH E ASSESSEE. IT IS WELL SETTLED LAW THAT FOR EXPLAINI NG THE 9 CASH CREDIT UNDER SECTION 68 OF THE ACT, BURDEN IS UPON ASSESSEE TO PROVE IDENTIFY OF THE CREDITOR, HIS CRE DIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IN TH E MATTER. SINCE THE ASSESSEE HAS FAILED TO FURNISH A NY EVIDENCE ON SOURCE OF THE DEPOSIT AND CREDIT WORTHI NESS OF THE CREDITOR, THEREFORE, ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THE CREDITOR AND GENUINENE SS OF THE TRANSACTION IN THE MATTER. NO SUBMISSIONS WERE MADE BEFORE LD. CIT(APPEALS) AND EVEN NO EVIDENCE H AVE BEEN PRODUCED BEFORE US TO EXPLAIN THE ABOVE ISSUE, THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDERS O F THE AUTHORITIES BELOW IN MAKING AND CONFIRMING THE ADDITION. THIS GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGLY, DISMISSED. 14. ON GROUND NO. 5, ASSESSEE CHALLENGED THE ADDITI ON OF RS. 24,000/- OUT OF DEDUCTION CLAIMED UNDER SECT ION 80C OF THE ACT BEING THE AMOUNT OF TUITION FEES PAI D BY THE ASSESSEE FOR SCHOOL GOING CHILDREN. THE ASSESS EE DID NOT FURNISH ANY EVIDENCE REGARDING PAYMENT OF THE TUITION FEE THEREFORE, ADDITION WAS MADE. NO EVIDE NCE WAS FURNISHED BEFORE LD. CIT(APPEALS). THEREFORE, ADDITION WAS CONFIRMED. EVEN BEFORE US, NO EVIDENC E OF PAYMENT OF TUITION FEES HAS BEEN FILED. THE LD. CO UNSEL FOR THE ASSESSEE HAS SHOWN INABILITY TO PRODU CE ANY 10 EVIDENCE IN THIS REGARD. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 15. NO OTHER POINT IS ARGUED OR PRESSED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST,2015. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH