Dy. Commissioner of Income Tax-II, Kanpur V. Shri Pawan Kumar Agarwal, Kanpur

ITA 413/LKW/2012

• Counselvise Citation: 41323714 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of cross examination; Assessment record

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.413/LKW/2012 ASSESSMENT YEAR:2008 - 09 SHRI PAWAN KUMAR AGARWAL, M/S TIRUPATI WOOD PRODUCTS, 51/47, NAYAGANJ, KANPUR . PAN:AAMPK5838E VS DY.C.I.T. - II, KANPUR . (RESPONDENT) (APPELLANT) C.O.NO. 70 /LKW/201 2 (IN ITA NO.413/LKW/2012) ASSESSMENT YEAR:2008 - 09 DY.C.I.T. - II, KANPUR . VS SHRI PAWAN KUMAR AGARWAL, M/S TIRUPATI WOOD PRODUCTS, 51/47, NAYAGANJ, KANPUR . PAN:AAMPK5838E (RESPONDENT) (APPELLANT) SHRI P. K. DEY, D. R. REVENUE BY SHRI ASHISH JAISWAL, ADVOCATE ASSESSEE BY 16/01/2015 DATE OF HEARING 26 /02/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 19/04/2012 FOR ASSESSMENT YEAR 2008 - 09. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER: 2 1. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) - II , KANPUR , HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,13,40,000/ - ON ACCOUNT OF UNDISCLOSED INCOME U/S 69A, WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN TH E COURSE OF ASSESSMENT PROCEEDINGS. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR , HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE ASSESSEE WAS A SUPPLIER OF CATECHU TO RMD GUTKHA GROUP AND THAT SOHAN RAJ MEHTA WAS THE C & F AGENT OF THIS GROUP AND THAT THIS FACT ITSELF RAISED THE PRESUMPTION THAT THE NAME P A WAN AGARWAL, APPEARING IN THE CHITS SEIZED FROM SOHAN RAJ MEHTA, WHICH HAD BEEN SIGNED BY SHRI PRAKASH DHARIWAL, OWNER OF M/S RMD GUTKHA, REFERRED TO THE ASSESSEE AND NOT TO SOME 'OTHER' PAWAN AGARWAL. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR , HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE AMOUNT OF RS.1,13,40,000 / - , WRITTEN IN THE CHITS, WAS DECODED BY SH. SOHAN RAJ MEHTA AND THAT IF TALLIE D WITH THE AMOUNTS NOTED IN THE MONTHLY SUMMARIES. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR , HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE CHITS, DULY SIGNED BY SH. PRAKASH DHARIWAL, OWNER OF M/S. RMD GUTKHA, CONTAINED INST RUCTIONS TO SH. SOHAN RAJ MEHTA, C & F AGENT OF M/S RMD GUTKHA, TO HAND OVER CASH AMOUNTING TO RS.1,13,40,000/ - TO THE ASSESSEE. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR , HAS ERRED IN LAW AND ON FACTS IN THAT, WHILE ACCEPTING THE ASSESSE E'S CONTENTION THAT THE A O HAD NOT PROVIDED STATEMENT OF SHRI SOHAN RAJ MEHTA, NOR ALLOWED HIS CROSS - EXAMINATION AND THAT FURTHER INQUIRY IN THE CASE SHOULD HAVE BEEN CARRIED OUT BY THE AO, HE HAS NEITHER REMANDED THE MATTER TO AO FOR FURTHER INQUIRY NOR MADE SUCH INQUIRY HIMSELF, BUT HAS STRAIGHTAWAY DELETED THE ADDITION MADE BY THE AO. 6. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR DATED 19.04.2012 NEEDS TO BE 3 QUASHED AND THE ORDER U/S 147/143(3) DATED 31.12.2011, PASSED BY THE ASSESSING OFFICER, TO BE RESTORED. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE AS UNDER: 1. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR WAS CORRECT BOTH ON LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.1,13,40,000.00 MADE ON ACCOUNT OF UNDISCLOSED INCOME WHICH ACTION OF DELETION WAS TAKEN AFTER APPRECIATING THE FACTS; EVIDENCE ON RECORDS AS WELL AS IN ACCORDANCE WITH PROVISIONS OF LAW. 2. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR WAS V ERY MUCH CORRECT IN HOLDING THAT THERE WAS NO EVIDENCE THAT MR. PAWAN AGARWAL, AS ALLEGEDLY MENTION IN THE CHITS, IS ASSESSEE ONLY. 3. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR WAS CORRECT IN HOLDING THAT IN ABSENCE OF CASE MADE OUT BY THE DEPARTMENT THAT THE TRANSACTION IN CHITS BELONG TO ASSESSEE, ADDITION COULD NOT BE UPHELD AND IN HOLDING THAT THE ACTION OF LD. ASSESSING OFFICER OF MAKING ADDITION WAS ALSO WITHOUT ALLOWING ANY OPPORTUNITY TO CROSS EXAMINE ANY PERSON OR EVEN VERIFYING THE FACTS FROM ANY PERSON IN ABSENCE OF SPECIFIC REQUEST MADE BY THE ASSESSEE.. 4. THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE, APPELLATE ORDER IN THE PRESENT CASE DESERVES TO BE UPHELD. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHE REAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A) WITH REGARD TO THE APPEAL OF THE REVENUE AND IN RESPECT OF THE C.O. OF THE ASSESSEE, HE REITERATED THE SUBMISSIONS BEFORE CIT (A). IN ADDITION TO THIS, IT WAS THE MAIN SUBMISSION THA T THE ENTIRE PROCEEDINGS ARE INITIATED AND COMPLETED BY THE DEPARTMENT ON THE BASIS OF A SEIZED PAPER, WHICH WAS FOUND IN COURSE OF SEARCH CONDUCTED IN BANGALORE IN THE CASE OF SHRI SO B HAN RAJ MEHTA, AGENT OF RMD BRAND OF GUTKHA. IN SUCH SEIZED MATERIAL, IT WAS 4 FOUND THAT A NAME PAWAN KUMAR AGARWAL IS MENTIONED AND AGAINST TH IS NAME, AN AMOUNT OF RS.113.40 LAC HAS BEEN MENTIONED IN RESPECT OF TRANSACTIONS DURING SEPTEMBER, 2006 TO FEBRU ARY 2008. HE SUBMITTED THAT NOTHING MORE WAS INDICATED IN THE SEIZED PAPER ON THE BASIS OF WHICH, IT CAN BE CONCLUDED THAT THE NAME MENTIONED IN THE SEIZED PAPER IS THAT OF THE ASSESSEE. HE ALSO SUBMITTED THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE RE VENUE TO ESTABLISH THAT THE NAME MENTIONED IN THE SEIZED PAPER IS THAT OF THE ASSESSEE. EVEN THE STATEMENT OF THE PERSON FROM WHOSE POSSESSION , THE PAPER WAS FOUND, HAS NOT BEEN BROUGHT ON RECORD SHOWING THAT HE HAS STATED THAT THE NAME MENTIONED IN THE S EIZED PAPER IS THAT OF THE PRESENT ASSESSEE. HE ALSO SUBMITTED THAT IN COURSE OF LAST HEARING I.E. ON 10/12/2014, LAST OPPORTUNITY WAS GRANTED BY THE TRIBUNAL TO THE REVENUE FOR PRODUCING THE ASSESSMENT RECORD AND THE FOLDER OF THE RELEVANT EVIDENCE ON TH E NEXT DATE OF HEARING. THE EVIDENCE REQUIRED BY THE TRIBUNAL WAS THIS WHICH IS SAID TO HAVE BEEN RECEIVED BY THE ASSESSING OFFICER OF THE ASSESSEE FROM M/S DHARIWAL INDUSTRIES LTD. BASED ON WHICH THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. HE SU BMITTED THAT EVEN ON THE PRESENT DATE, NO SUCH DOCUMENT OR EVIDENCE HAS BEEN PRODUCED BEFORE THE TRIBUNAL AND THEREFORE, ADVERSE INFERENCE SHOULD BE DRAWN AGAINST THE REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE IN DISPUTE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 7 & 7.1 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 7. THAT VIDE GROUNDS NO. 3 TO 7, ASSESSEE HAS CHALLENGED THE ADDITIONS OF RS.1,13,40,000/ - MADE ON ACCOUNT OF ALLEGED UND ISCLOSED INCOME. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. I HAVE ALSO GONE THROUGH THE ORDER OF THE A.O. IT WAS CONTENDED BY THE LEARNED AR BEFORE ME THAT MERE JOTTINGS AND NOTINGS SHOULD NOT BE THE BASIS FOR MAKING ANY ADDITION IN THE RETURNED INCOME, MORE PARTICULARLY WHEN A.O HAS NOT ALLOWED THE OPPORTUNITY OF CROSS EXAMINATION OF MR. SHOBHAN RAJ MEHTA. 5 THE MATERIAL PROVIDED/GATHERED BY THE DEPARTMENT HAS ALSO BEEN PRODUCED BEFORE ME. IN THIS PAPER, IT IS S EEN THAT NAME OF ASSESSEE IS APPEARING. IT WAS VEHEMENTLY ARGUED BEFORE ME THAT HOW THE DEPARTMENT COMES INTO CONCLUSION THAT NAME PAWAN AGARWAL AS APPEARING IN THE SEIZED MATERIAL IS APPELLANT. THE NAME OF APPELLANT IS VERY COMMON AND IT IS POSSIBLE TO BE SOME OTHER PAWAN AGARWAL INSTEAD OF APPELLANT. THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. ON EXAMINATION OF THE ASSESSMENT RECORD IT IS SEEN THAT THE APPELLANT CATEGORICALLY DENIED HAVING ANY FINANCIAL OR BUSINESS TRANSACTION WITH SH. SHOBHAN RAJ ME HTA. A REQUEST WAS ALSO MADE TO PROVIDE COMPLETE STATEMENTS ON THE BASIS OF WHICH ADDITION WAS BEING CONTEMPLATED BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER DID NOT PROVIDE THE COPIES OF THOSE STATEMENTS. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER DID NOT THROW ANY LIGHT ON ANY INQUIRY/ INVESTIGATION CARRIED OUT BY HIM THAT COULD JUSTIFY THE ADDITIONS MADE BY HIM. THAT ASSESSEE HAS VEHEMENTLY STATED THAT THE DEPARTMENT HAS NOT PROVED THAT THE IDENTITY OF SHRI PAWAN AGAR WA L WITH THE ASSESSEE AND NO SLIP, LETTER, DOCUMENT ETC. SHOWING ANY RELATIONSHIP OF ASSESSEE WITH SHRI SHOBHAN RAJ MEHTA WERE NOT FOUND FROM THE POSSESSION OF SHRI SHOBHAN RAJ METHA. THE A.O HAS REQUIRED ASSESSEE'S COPY OF ACCOUNTS IN THE BOOKS OF M/S. D HARIWAL INDUSTRIES, PUNE AND THIS WAS FOUND VERIFIED FROM THE ASSESSEE'S BOOKS OF A/C. IT IS CLEAR THA T THE ASSESSEE HAS BUSINESS RELATIONSHIP WITH M/S. DHARIWAL INDUSTRIES, PUNE AND NOT WITH THE SHOBHAN RAJ MEHTA. THEREFORE, IT IS CLEAR THAT THE ADDITION MADE BY THE ASSESSING OFFICER PURELY B ASE D ON GUESS WORK WITHOUT ANY EVIDENCE, THEREFORE THIS ADDITION DESERVES TO BE DELETED. 7.1 FROM THE FACTS ENUMERATED ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER FAILED TO ESTABLISH ANY CASE AGAINST THE APPELLANT. FURTHER INQUIRY/ INVESTIGATION WAS REQUIRED TO BE CARRIED OUT ON THE INFORMATION PASSED BY THE ADIT(INV.) - III , KANPUR BUT EVIDENCES ARE NOT COLLECTED OR PLACED. COPIES OF THE STATEMENTS, ON THE BASIS OF WHICH ADDITIONS HAS BEEN MADE, WERE NOT P ROVIDED NOR WAS THE OPPORTUNITY O F CROSS - EX AMINATION GIVEN TO THE APPELLANT. THE ASSESSING OFFICER MERELY SUMMARIZED THE SALIENT FEATURES OF THE REPORT OF THE ADIT (INV.) - III, KANPUR AND THEREAFTER SUMMARILY REJECTED THE REPLY OF THE APPELLANT AS NOT SATIS FACTORY. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDS THAT NEITHER THE SAID SHRI SHOBHAN RAJ MEHTA WAS ALLOWED TO BE CROSS - EXAMINED NOR 6 A COPY OF HIS STATEMENT WAS GIVEN DESPITE SEVERAL REQUESTS. THE AO'S CONTENTION TO THE EFFECT THAT THE CONTENTS OF THE STATEMENT WERE MADE KNOWN TO THE ASSESSEE, IS NOT A COMPLIANCE OF MANDATORY REQUIREMENT TO PROVIDE THE ASSESSEE INCRIMINATING MATERIAL TO DEFEND ITS OWN CASE AND THEREFORE IT CAN CATEGORICALLY BE HELD THAT: ( I ) STATEMENT OF SHRI SHOBHAN RAJ MEHTA WAS NOT GIVEN TO THE ASSESSEE. ( II ) BEYOND THE BELIEF OF PRESUMPTION ON THE INFORMATION SUPPLIED BY THE ADIT(INV.) - III, KANPUR, FURTHER EVIDENCES ARE NOT FOUN D TO CORROBORATE THE ADDITIONS. ( III ) C ROSS - EXAMINATION OF SHRI SHOBHAN RAJ MEHTA WAS NOT ALLOWED. ( IV ) THE ASSESSEE FIRM HAD STRONGLY DENIED HAVING ANY FINANCIAL AND BUSINESS TRANSACTIONS WITH MR. SHOBHAN RAJ MEHTA . IN VIEW OF THESE FACTUAL EXIGENCIES, IT IS HELD THAT THE ADDITION MADE BY THE AO, WITHOUT ANY CORROBORATIVE EVIDENCE, WAS UNJUSTIFIED AND ACCORDINGLY DELETED. ACCORDINGLY, GROUND NO . 3 TO 7 RAISED BY APPELLANT ARE ALLOWED. 5.1 FROM THE ABOVE P ARA FROM THE ORDER OF CIT(A), WE FIND THAT A CATEGORICAL FINDING HAS BEEN GIVEN BY HIM THAT STATEMENT OF SHRI SHOBHAN RAJ MEHTA WAS NOT GIVEN TO THE ASSESSEE AND B EYOND THE BELIEF OF PRESUMPTION ON THE INFORMATION SUPPLIED BY THE ADIT(INV.) - III, KANPUR, FURTHER EVIDENCES ARE NOT FOUND TO CORROBORATE THE ADDITIONS. HE HAS ALSO GIVEN A FINDING THAT CROSS - EXAMINATION OF SHRI SHOBHAN RAJ MEHTA WAS NOT ALLOWED AND THE ASSESSEE FIRM HAD STRONGLY DENIED HAVING ANY FINANCIAL AND BUSINESS TRANSACTIONS WITH MR. SHOBHAN RAJ MEHTA. THESE FINDINGS OF CIT(A) COUL D NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND MOREOVER, THE NAME OF THE ASSESSEE I.E. PAWAN KUMAR AGARWAL IS VERY COMMON NAME AND MERELY BECAUSE THIS NAME IS MENTIONED IN A SEIZED PAPER FOUND DURING THE COURSE OF SEARCH AT BANGALORE AT THE PREMI SES OF SHRI SHOBHAN RAJ MEHTA, WITH WHOM THE ASSESSEE WAS NOT HAVING ANY DIRECT TRANSACTION, IT CANNOT BE SAID THAT THE SAID PAWAN KUMAR AGARWAL, OF WHOM THE NAME WAS MENTIONED 7 IN THE SEIZED PAPER IS THE ASSESSEE. WITHOUT ESTABLISHING THIS ASPECT THAT THE NAME MENTIONED IN THE SEIZED PAPER IS THAT OF THE ASSESSEE, NO ADDITION CAN BE MADE IN THE HANDS OF THE PRESENT ASSESSEE ON THE BASIS OF SUCH SEIZED PAPER. CONSIDERING THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 /02/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR