ITO, Gwalior V. Shri Jairam Pachouri, Gwalior

ITA 411/AGR/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2535 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 06-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 44AD; 143(3); 142(1); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 411/AGRA/2008 ASSTT. YEAR : 2004-05 INCOME-TAX OFFICER, VS. SHRI JAIRAM PACHAURI, WARD 2(1), GWALIOR. GENDEWALI SADAK, LASHKAR, GWALIOR. (PAN AMXPP 7369 N) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : SHRI RAJENDRA SHARMA, ADVOCATE ORDER PER H.S. SIDHU, J.M. : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT A GAINST THE ORDER DATED 31.03.2008 OF LEARNED CIT(A), GWALIOR. THE EFFECTIV E GROUNDS RAISED IN THIS APPEAL BY REVENUE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDIT ION OF RS.11,10,406/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNEXPLAINED CASH CREDIT MERELY HOLDING THAT SECTION 68 DOES NOT APPLY TO THE CASE OF THE ASSESSEE BECAUSE MERELY ME NTIONING SECTION 68 IN PLACE OF SECTION 69 DOES NOT VITIATE THE ASSESSMENT IN VIEW OF SECTION 292B OF THE INCOME TAX ACT. IT I S ONLY A TYPOGRAPHICAL MISTAKE THAT SECTION 68 HAS BEEN TYPE D OUT IN PLACE OF SECTION 69. THERE ARE NUMBER OF JUDICIAL PRONOUNCEMENTS INCLUDING THE SUPREME COURT WHEREIN IT HAS BEEN HELD THAT MERELY MENTIONING WRONG SECTION IN T HE ASSESSMENT ORDER SHALL NOT INVALIDATE THE ADDITION/ ORDER. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) HAS ERRED IN NOT ALLOWING THE ASSESSIN G OFFICER A REASONABLE OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH RULES 46A(3) OF THE INCOME TAX RULES, 1962 BEFORE ADMITTI NG THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS UNDER SUB-RULE (1) OF RULE 46A OF THE INCOME TAX RULES, 1962. 2. THE BRIEF FACTS RELATING TO THE ISSUES IN DISPUT E ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,55, 460/- ON 07.01.2005. THE ASSESSING OFFICER SELECTED THE CASE OF THE ASSESSEE FOR SCRUTINY AND ISSUED NOTICE U/S. 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) ON 31.05.2006, WHICH WAS SERVED ON THE ASSESSEE ON 05. 06.2006. THEREAFTER A NOTICE U/S. 142(1) OF THE ACT WAS ISSUED ON 19.07.2006, WH ICH WAS SERVED ON THE ASSESSEE ON 22.07.2006. DUE TO CHANGE OF INCOME-TAX OFFICER 2(1), GWALIOR, AGAIN A NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 21.09.2006 WHI CH WAS SERVED ON THE ASSESSEE ON 25.09.2006. IN RESPONSE TO THIS NOTICE, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME. 3. THE ASSESSEE IS A CIVIL CONTRACTOR AND HAS SHOWN HIS INCOME AT RS.1,55,460/- FROM THE CONTRACT RECEIPTS OF RS.19,43,290/- BY APP LYING THE PROVISIONS OF SECTION 44AD OF THE ACT. ON VERIFICATION BY THE ASSESSING O FFICER FROM THE CHART OF THE CONTRACTUAL PAYMENTS ISSUED BY THE MUNICIPAL CORPOR ATION, GWALIOR, HE NOTICED THAT THE AMOUNT OF RS.19,43,290/- WAS PAID TO THE A SSESSEE ON DIFFERENT DATES AFTER 3 DEDUCTING INCOME-TAX AMOUNTING TO RS.50,842/- AND S ALES-TAX AMOUNTING TO RS.47,347/-, I.E., RS.19,43,290/- IS NOT THE GROSS CONTRACT RECEIPT AS SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND ACTUALLY IT IS A NET CONTRACT RECEIPT. THE ASSESSING OFFICER VERIFIED THESE FACTS BY COMPARING THE PAYMENTS SHOWN BY THE MUNICIPAL CORPORATION WITH THE CREDITS APPEARING IN THE BANK ACCOUNT AND FINALLY CONCLUDED THAT THE AMOUNT OF RS.19,43,290/- SHOWN B Y THE ASSESSEE AS GROSS CONTRACT RECEIPT FOR THE PURPOSE OF SECTION 44AD IS ACTUALLY NET RECEIPT, I.E., CONTRACT AMOUNT AFTER DEDUCTION OF INCOME-TAX AND C OMMERCIAL TAX AND WORKED OUT THE TAXABLE INCOME AT RS.1,63,318/- AS AGAINST RS.1,55,460/- SHOWN BY THE ASSESSEE AND, THUS, THE AMOUNT OF RS.7,858/- ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. 4. THE ASSESSING OFFICER ALSO VERIFIED TWO BANK ACC OUNTS OF THE ASSESSEE, I.E., ONE WITH INDIAN OVERSEAS BANK, GWALIOR AND OTHER WI TH GWALIOR DATIA KSHETRIYA GRAMIN BANK, SHANKARPUR AND NOTICED THAT THE CREDIT ENTRY IN THE BANK ACCOUNT DOES NOT MATCH WITH THE CONTRACT RECEIPTS. THE ASSE SSING OFFICER REQUESTED TO THE ASSESSEE VIDE ENTRY DATED 11.12.2006 TO EXPLAIN THE CREDITS APPEARING IN TWO BANK ACCOUNTS. THE ASSESSEE FILED HIS WRITTEN SUBMISSION S ON 18.12.2006 EXPLAINING SOME OF THE ENTRIES. THE ASSESSING OFFICER ADJOURNE D THE MATTER FOR 22.12.2006, BUT NONE ATTENDED ON 22.12.2006 NOR ANY WRITTEN REPLY W AS RECEIVED FROM THE ASSESSEE. THE ASSESSING OFFICER EXPLAINED THE UNEXPLAINED CRE DIT ENTRIES AMOUNTING TO 4 RS.11,10,406/- IN THE BANK ACCOUNT AT PAGE NO. 2 & 3 OF THE ASSESSMENT ORDER AND HELD THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANA TION IN RESPECT OF THESE CREDITS AMOUNTING TO RS.11,10,406/-. IN ABSENCE OF THE SAME , THE CREDITS OF RS.11,10,406/- AS APPEARING IN THE BANK ACCOUNTS OF THE ASSESSEE A RE TREATED AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT AND HE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE VIDE HIS ORDER DATED 26.12.2006 PASSED U/S. 143(3) OF THE INCOME-TAX ACT. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY WHO VIDE ORDER DA TED 31.03.2008 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION IN DISPUTE. NOW, THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED O RDER DATED 31.03.2008 RAISING MAINLY TWO GROUNDS, I.E., ONE CHALLENGING THE DELET ION OF ADDITION AMOUNTING TO RS.11,10,406/- AND OTHER CHALLENGING THE IMPUGNED O RDER BY STATING THAT THE CIT(A) HAS ERRED IN NOT ALLOWING THE ASSESSING OFFI CER A REASONABLE OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH RULE 46A(3) OF THE I NCOME-TAX RULES, 1962 (HEREINAFTER CALLED THE IT RULES) BEFORE ADMITTIN G THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DURING THE COURSE OF APPEL LATE PROCEEDINGS UNDER SUB-RULE (1) OF RULE 46A OF THE IT RULES. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SHRI A. K. SHARMA, FIRSTLY, ARGUED THE LEGAL ISSUE RAISED IN GROUND NO. 2 REGARDING VI OLATION OF RULE 46A(3) OF THE IT RULES BY NOT ALLOWING THE ASSESSING OFFICER REASONA BLE OPPORTUNITY OF BEING HEARD 5 BEFORE ADMITTING ADDITIONAL EVIDENCE PRODUCED BY TH E ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. HE ALSO DREW OUR ATTENTION T OWARDS PAGE NO. 5 OF THE IMPUGNED ORDER TO SUPPORT HIS ARGUMENT AND STATED T HAT THE ASSESSEE HAS PRODUCED COPY OF ACCOUNT OF THE INDIAN OVERSEAS BANK, GWALIO R, AS AN ADDITIONAL EVIDENCE BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, WHO A DMITTED THE SAME WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER, WHICH IS CONT RARY TO THE RULE 46A(3) OF THE IT RULES. 7. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E STRONGLY OBJECTED THE ARGUMENTS ADVANCED BY THE LD. DR AND ALSO DREW OUR ATTENTION TOWARDS PAGE 5 OF THE IMPUGNED ORDER AND STATED THAT THE COPY OF ACCO UNT OF INDIAN OVERSEAS BANK IS A PART AND PARCEL OF THE RECORDS AND THE ASSESSEE H AS NOT FILED ANY FRESH EVIDENCE BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. HE RE QUESTED THAT THE ISSUE RAISED BY THE REVENUE IN GROUND NO. 2 MAY BE DISMISSED BEING DEVO ID OF ANY MERIT. 8. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE INVO LVED IN GROUND NO. 2 AND PERUSED THE IMPUGNED ORDER. WE ARE OF THE CONSIDERE D OPINION THAT THE COPY OF ACCOUNT OF INDIAN OVERSEAS BANK, GWALIOR, THE OPENI NG CREDIT BALANCE AS ON 01.04.2003 IS A PART AND PARCEL OF THE RECORD AND I S NOT ANY ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LEARNED FIRST APPE LLATE AUTHORITY. THEREFORE, THERE IS NO ANY QUESTION TO ALLOW ANY OPPORTUNITY TO THE ASS ESSING OFFICER OF BEING HEARD IN ACCORDANCE WITH RULE 46A(3) OF THE IT RULES WHEN TH E ASSESSEE HAS NOT FILED ANY 6 ADDITIONAL EVIDENCE BEFORE THE LEARNED FIRST APPELL ATE AUTHORITY. THEREFORE, THE ISSUE INVOLVED IN GROUND NO. 2 IS DECIDED AGAINST T HE REVENUE AND IS, ACCORDINGLY, DISMISSED. 9. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 1 RE GARDING THE DELETION OF ADDITION AMOUNTING TO RS.11,10,406/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT, THE LE ARNED DR RELIED UPON THE GROUND OF APPEAL. 10. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE STATED THAT THE ISSUE INVOLVED IN GROUND NO. 1 IS SQUARELY COVERED BY THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSH IDHAR, (1998) 229 ITR 229, WHEREIN THE HONBLE HIGH COURT HELD THAT ONCE NET P ROFIT RATE IS APPLIED, NO FURTHER ADDITION SHOULD BE MADE IN RESPECT OF PURCHASES. HE FURTHER STATED THAT THE JUDGMENT PASSED BY HONBLE ALLAHABAD HIGH COURT HAS BEEN FOLLOWED BY THE INCOME-TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH IN T HE CASE OF GUPTA CONSTRUCTION CO. VS. ACIT (2004) 84 TTJ (ALL.) 46. HE, THEREFORE, REQUESTED THAT THE ISSUE RAISED BY THE DEPARTMENT IN GROUND NO. 1 MAY BE DISMISSED. 11. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RELEVANT RECORD, ESPECIALLY THE JUDGMENT OF HONBLE ALLAHABAD HIGH C OURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR (SUPRA), WHICH HAS RESPECTFU LLY BEEN FOLLOWED BY THE ITAT, ALLAHABAD BENCH IN THE CASE OF GUPTA CONSTRUC TION CO. VS. ACIT (SUPRA). 7 WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN DISPUTE IS CLEARLY COVERED IN FAVOUR OF THE ASSESSEE. THEREFORE, RESPECTFULLY FOL LOWING THE DECISION OF HONBLE ALLAHABAD HIGH COURT, WE ARE DECIDING THE ISSUE RAI SED BY THE REVENUE IN GROUND NO. 1 AGAINST THE DEPARTMENT BY DISMISSING THE SAME . AS REGARD TO THE APPLICATION OF PROVISION OF SECTION 292 OF THE ACT, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT THE PROVISION OF SECTION 292 OF THE ACT DOES NOT APPLY IN THE PRESENT CASE. THER EFORE, THIS PLEA OF THE REVENUE IS REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2011. SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH JANUARY, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY