Shishu Pal Singh Yadav, Etawah V. A.C.I.T, Circle-5, Firozabad

ITA 437/AGR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0383 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N BANSAL; S K CHATURVEDI
• Keywords: Unexplained investment; Additional evidence; Reasonable cause
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.437/AGR/2011 ASSESSMENT YEAR: 2005-06 SHRI SHISHU PAL SINGH YADAV VS. ASSTT. COMMISSIONE R OF INCOME TAX, C-65, AVAS VIKAS COLONY, CIRCLE-5, FIROZABAD. ETAWAH. (PAN : AAGPY 4688 J). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. CHATURVEDI, C.A. & SHRI S.N. BANSAL, ADVOCATE RESPONDENTS BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 18.02.2013 DATE OF PRONOUNCEMENT : 22.02.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.08.2011 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 2005-06. 2. THE ASSESSEE HAS RAISED AS MANY AS 6 GROUNDS OF APPEAL. THE FIRST GROUND PERTAINS TO REJECTION OF ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A). THE SECOND GROUND IS IN RESPECT OF SUSTAINING ADDITION OF RS.3 ,00,000/- ON ACCOUNT OF LICENCE 2 ITA NO.437/AGR/2011 A.Y. 2005-06 FEES AND RS.56,302/- ON ACCOUNT OF LEAKAGE IN LIQUO R DEPOT AGENT ACCOUNT. THE THIRD GROUND PERTAINS TO ADDITION OF RS.64,59,441/- IN RESPECT OF INVESTMENT ON VARIOUS ACCOUNTS. THE FIFTH GROUND IS IN RESPECT O F CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234D OF THE ACT. GROUNDS NO.4 & 6 ARE GENERAL IN NATURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS DERIVING INCOME FROM CONTRACT OF EXCAVATION OF PITS AND TRENCHES FOR LAY ING OF UNDERGROUND CABLES OF BSNL, INCOME FROM DEPOT AND INCOME FROM PETROL PUMP . THE ASSESSEE HAS NEITHER APPEARED BEFORE THE A.O. NOR THE BOOKS OF A CCOUNT WERE PRODUCED. 4. THE A.O. MADE THE ADDITION OF RS.3,86,302/- FROM BUSINESS OF DEPOT AGENT. THE ASSESSEE WAS APPOINTED BY DAURALA SUGAR WORKS A S ITS DEPOT AGENT FOR COUNTRY LIQUOR DEPOT OF ETAWAH DISTRICT. THE A.O. AFTER EX AMINING TERMS AND CONDITIONS AND AFTER CONSIDERING PROFIT & LOSS ACCOUNT, IT WAS NOTICED THAT THE ASSESSEE DEBITED RS.3,00,000/- ON ACCOUNT OF LICENCE FEES. THE A.O. NOTICED THAT THE CONDITION OF AGREEMENT IS CLEAR THAT THE LICENCE FE E WAS PAYABLE DIRECTLY BY THE COMPANY. THERE IS NOTHING ON RECORD TO SUGGEST THA T THE ASSESSEE HAD TO PAY THE LICENCE FEE AND HAS NOT GOT IT REIMBURSED. THE EXP ENDITURE CLAIM ON ACCOUNT OF LICENCE FEE IS TOTALLY BOGUS IN VIEW OF CONDITIONS OF THE AGREEMENT. THEREFORE, THE A.O. DISALLOWED RS.3,00,000/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA NO.437/AGR/2011 A.Y. 2005-06 THE A.O. HAS MADE ADDITION OF RS.56,302/- ON ACCOUN T OF LEAKAGE WHICH WAS DEBITED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT. THE A.O. NOTICED THAT THE EXPENDITURE WAS BOGUS. THE ASSESSEE WAS ENTITLED F OR REIMBURSEMENT ON ACCOUNT OF BREAKAGE/LEAKAGE AS PER THE CONDITIONS OF THE AG REEMENT. 5. THE A.O. ALSO MADE ADDITION OF RS.64,59,441/- ON UNEXPLAINED INVESTMENTS AS UNDER :- (PAGE NOS.6 & 7) UNEXPLAINED INVESTMENTS : THE ASSESSEE HAS INTRODUCED FRESH CAPITAL OF RS.22,07,199/- IN THE NEWLY SETUP BUSINE SS OF PETROL PUMP. AND FRESH CAPITAL OF RS.24,56,986/- HAS BEEN INTROD UCED IN THE BUSINESS OF TELECOM CONTRACTOR. IN ADDITION TO ABO VE THE ASSESSEE HAS ALSO INVESTED RS.11,45,030/- IN PURCHASE OF LAND AT PARADE CHHABANI, ETAWAH. INVESTMENT IN PURCHASE OF TATA SAFARI CAR OF RS.6,50,226/- WAS ALSO MADE. THE ASSESSEE WAS REQUIRED VIDE NOTI CE U/S.142(1) DATED 31.07.2007 (PARA-2, 3 4 & 5) TO EXPLAIN SOURC E OF CAPITAL INTRODUCED AND INVESTMENT IN PURCHASE OF LAND AND C AR. THE ASSESSEE DID NOT HOWEVER, FURNISH ANY EXPLANATION AS REGARDS SOURCE. HE WAS ACCORDINGLY ISSUED A SHOW CAUSE NOTICE AS TO WHY TH E CAPITAL INTRODUCED AND INVESTMENT IN PURCHASE OF LAND AND C AR BE NOT ADDED TO HIS INCOME. NO EXPLANATION HAS HOWEVER, BEEN OF FERED IN RESPONSE TO SHOW CAUSE NOTICE ALSO. IN SUCH CIRCUMSTANCES, I AM LEFT WITH NO ALTERNATIVE BUT TO ADD THE CAPITAL INTRODUCED AND I NVESTMENT IN PURCHASE OF LAND AND CAR IN ABSENCE OF ANY EXPLANAT ION AS REGARDS SOURCE. THE FOLLOWING AMOUNTS ARE THEREFORE ADDED TO THE INCOME OF THE ASSESSEE. CAPITAL INTRODUCED XPRESS SERVICES RS.22.07,199/- CAPITAL INTRODUCED IN TELECOM CONTRACT BUSINESS RS. 24,56,986/- INVESTMENT IN PURCHASE OF LAND RS.11,45,030/- INVESTMENT IN PURCHASE OF CAR RS. 6,50,226/- TOTAL RS.64,59,441/- 4 ITA NO.437/AGR/2011 A.Y. 2005-06 6. THE CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL AND THE ASSESSEE HAS CHALLENGED ONLY ADDITION OF RS.64,59,441/- AND RS.3 ,56,302/-. 7. THE CIT(A) PARTLY CONFIRMED THE ORDER OF A.O. CO NFIRMING ADDITION TO THE EXTENT OF RS.3,56,302/- AND DELETING RS.30,000/- ON ACCOUNT OF SALARY. THE FINDING OF CIT(A) READS AS UNDER :- (PARA NO.6.2, PAGE 9). 6.2 I HAVE ANALYSED THE MATTER AND I AM OF THE OPI NION THAT AS FAR AS PAYMENT OF LICENSE FEE IS CONSIDERED AS R IGHTLY POINTED OUT BY THE AO AS PER THE AGREEMENT WITH THE PRINCIPAL I.E. M/S DAURALA SUGAR WORKS IT WAS NOT THE LIABILITY OF THE ASSESSE E AND EVEN IF THE PAYMENT WAS MADE BY THE ASSESSEE THE SAME WAS REIMB URSABLE AS PER THE TERMS OF THE AGREEMENT. THEREFORE, I AM OF THE OPINION THAT DISALLOWANCE OF RS.3 LACS HAS BEEN RIGHTLY MADE BY THE AO AND THE SAME IS CONFIRMED. SAME IS THE CASE WITH THE LOSS CLAIMED ON ACCOUNT OF LEAKAGE WHICH WAS REIMBURSABLE AS PER THE AGREEM ENT, THEREFORE, THE DISALLOWANCE OF RS.56302/- MADE BY THE AO IS CO NFIRMED. HOWEVER, WITH REGARD TO DISALLOWANCE OF RS.30,000/- MADE BY THE AO OUT OF SALARY EXPENSES THE AO HAS DISALLOWED THE SA ME BY MAKING CERTAIN OBSERVATION AND WITHOUT BRINGING ANY MATERI AL ON RECORD THAT PART OF THE SALARY WAS BOGUS AND ACTUALLY NOT INCUR RED OR NOT RELATED TO BUSINESS, THEREFORE, THE DISALLOWANCE OF RS.30,0 00/- MADE BY THE AO IS DELETED. 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. GROUND NO.1 IS IN RESPECT OF ADMISSION OF ADDITIONA L EVIDENCE. THE DISPUTED AMOUNT IN THE GROUND IS RS.64,59,441/-. THE ASSESS EE FILED APPLICATION UNDER RULE 46A OF THE INCOME TAX RULES BEFORE THE CIT(A). THE SAME IS REPRODUCED AS UNDER:- 5 ITA NO.437/AGR/2011 A.Y. 2005-06 THE ABOVE APPEAL CAME UP FOR HEARING BEFORE YOUR H ONOUR ON 16.09.2010. 2. THE ABOVE CASE WAS REPRESENTED BEFORE THE LD. A. O. BY SHRI AVNISH KUMAR MISHRA, ADVOCATE OF AGRA. SHRI MISHRA AT THE RELEVANT TIME WAS NOT KEEPING GOOD HEALTH AND IN FACT, EVEN THESE VERY DAYS HE IN BED DUE TO SOME AILMENTS. BESIDES, HE HAD TO CO LLECT VARIOUS EVIDENCES FROM DIFFERENT SOURCES. DUE TO THESE REA SONS, HE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING SOME O THER EVIDENCES RELEVANT FOR THE PURPOSE OF THE ASSESSMENT AND THE GROUNDS OF APPEAL. 3. IN THE ABOVE CIRCUMSTANCES, I, NOW REQUEST YOUR HONOUR TO ADMIT THE FOLLOWING ADDITIONAL EVIDENCE/S THAT ALRE ADY WAS IN EXISTENCE DURING THE TIME OF ASSESSMENT PROCEEDINGS , IN TERMS OF RULE 46A(1)(A)(C) OF INCOME TAX RULES, 1962 :- 1) DOCUMENTS APPEARING AT PAGES 8 TO 14 RELATING TO TAKING A LOAN FOR THE PURCHASE OF THE CAR; 2) LIST, CONFIRMATIONS AND OTHER DOCUMENTS RELATING TO KEEPING OF VARIOUS AMOUNTS AS DHAROHAR/AMANAT BY VARIOUS PARTI ES WITH THE APPELLANT ASSESSEE, SHISHU PAL SINGH YADAV. 3) SOME OTHER DOCUMENTS RELATING TO ASSESSEE AS ORD ERS, COPIES OF PROFIT & LOSS ACCOUNTS AND BALANCE SHEETS ETC. 4. I ALSO REQUEST YOUR HONOUR TO EXERCISE YOUR POWE R UNDER SUB- RULE (4) OF RULE 46A ALSO. 9. THE CIT(A) REJECTED THE APPLICATION THOUGH HE NO TED THAT THESE ARE THE RELEVANT EVIDENCE FOR DECIDING THE ISSUES. THE REL EVANT FINDING OF CIT(A) IS AS UNDER :- (PAGE NO.5) I WOULD LIKE TO POINT OUT HERE THAT MERE FACT THAT THE EVIDENCE SOUGHT TO BE PRODUCED IS VITAL AND IMPORTANT DOES N OT PROVIDE SUBSTANTIAL CAUSE TO ALLOW ITS ADMISSION AT THE APP ELLATE STAGE. FROM 6 ITA NO.437/AGR/2011 A.Y. 2005-06 THE FACTS OF THE CASE IT IS CLEAR THAT THE APPELLAN T IS NOT IN THE HABIT OF COMING WITH CLEAN HANDS BEFORE THE AO, AND, THEREFO RE, EVEN, IF THE EVIDENCE SOUGHT TO BE INTRODUCED NOW IS RELEVANT FO R DECIDING THE APPEAL, BUT HAVING REGARDS TO THE FACTS OF THE CASE I REFUSE TO ADMIT THE ADDITIONAL EVIDENCE AS SOUGHT TO BE INTRODUCED BY THE APPELLANT. 10. IN THIS REGARD, IDENTICAL MATTER CAME UP BEFORE THE I.T.A.T. AGRA BENCH IN ASSESSEES OWN CASE FOR A.Y. 2006-07 IN ITA NO.328/ AGR/2012 VIDE EVEN DATED ORDER WHEREIN THE I.T.A.T. HAS DECIDED THE ISSUE AS UNDER:- 9. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BIMAL KUMAR ANANT KUMAR VS. CIT (SUPRA) WHILE DEALI NG THE ISSUE PERTAINING TO ADMISSION OF ADDITIONAL EVIDENCE HELD THAT APPLICATION MUST BE MADE FOR SUBMISSION OF ADDITIONAL EVIDENCE WITH REASONS. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE FURNISHE D COPY OF CAPITAL ACCOUNT SHOWING ALL DETAILS OF RECEIPTS, PAYMENTS A ND CAPITAL ACCOUNTS. OPENING AND CLOSING BALANCE WAS ALSO THE RE. THE ASSESSEE ACCEPTED HIS MISTAKE FOR NOT APPEARING BEFORE THE R EVENUE AUTHORITIES AND GIVEN UNDERTAKING THAT HE WILL APPEAR BEFORE TH E REVENUE AUTHORITIES. THE A.O. MADE THE ENTIRE ADDITION OF THE AMOUNT OF CAPITAL ACCOUNT INTRODUCED DURING THE YEAR WITHOUT CONSIDERING THE APPARENT THINGS THAT THERE WAS OPENING BALANCE. IN THE LIGHT OF UNDERTAKING GIVEN BY THE ASSESSEE AND IN THE LIGHT OF NATURE OF ADDITIONAL EVIDENCE, DETAILS OF CAPITAL ACCOUNT AND OTHERS AND THE REASONS GIVEN IN THE UNDERTAKING, WE ARE OF THE VIE W THAT IN THE INTEREST OF JUSTICE, THE ADDITIONAL EVIDENCES ARE A DMITTED SINCE THESE EVIDENCES ARE SUBJECT TO VERIFICATION. THE REVENUE AUTHORITIES DID NOT GET OPPORTUNITY FOR GOING THROUGH THE SAME. WE, TH EREFORE, SEND BACK THE MATTER RELATING TO UNEXPLAINED INVESTMENT BEING FRESH CAPITAL INTRODUCTION OF RS.28,25,865/- TO THE FILE OF THE A .O. WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH CONSIDERING THE ADDITION AL EVIDENCE AND BOOKS OF ACCOUNT AND OTHER MATERIALS AFTER PROVIDIN G OPPORTUNITY OF HEARING TO THE ASSESSEE. THE JUDGEMENTS CITED BY T HE LD. DEPARTMENTAL REPRESENTATIVE IN THIS REGARD WILL NOT HELP THE REV ENUE AS IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAS GIVEN REASONS AND ALSO GIVEN 7 ITA NO.437/AGR/2011 A.Y. 2005-06 UNDERTAKING. IT IS RELEVANT TO MENTION THAT IF THE ASSESSEE FAILS TO APPEAR BEFORE THE A.O. WITHOUT REASONABLE CAUSE, TH E A.O. IS AT LIBERTY TO REPEAT THE ADDITION. 11. SINCE THE FACTS ARE IDENTICAL, FOLLOWING THE SA ID DISCUSSION IN ASSESSEES OWN CASE IN ITA NO.328/AGR/2012 FOR A.Y. 2006-07, WE AD MIT THE ADDITIONAL EVIDENCE AND SENDING BACK THE MATTER RELATING TO ADDITION OF RS.64,59,441/- TO THE FILE OF A.O. WITH IDENTICAL DIRECTIONS. 12. THE ANOTHER EFFECTIVE GROUND IS IN RESPECT OF A DDITION OF RS.3,56,302/- SUSTAINED BY THE CIT(A). THE A.O. FOUND THAT IN PR OFIT AND LOSS ACCOUNT FOR THE BUSINESS OF DEPOT AGENTS (LICENCE CL2) THE ASSESSEE CLAIMED RS.3.00 LAKHS LICENCE FEE AND RS.56,302/- LEAKAGE EXPENSES. AFTE R EXAMINING TERMS AND CONDITIONS OF AGREEMENTS, THE A.O. AND CIT(A) BOTH FOUND THAT THESE EXPENDITURES WERE NOT INCURRED FOR THE PURPOSE OF THE BUSINESS O F ASSESSEE AS THESE ARE TO BE REIMBURSED. THE ASSESSEE FAILED TO ESTABLISH THAT THERE WERE EXPENDITURES INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND WER E NOT REIMBURSED. IN ABSENCE OF MATERIAL, THE FINDING OF CIT(A) CAN NOT BE REVERSED . SINCE NO CONTRARY MATERIAL TO THE FINDING OF CIT(A) ARE FILED BEFORE US, UNDER TH E CIRCUMSTANCES, ORDER OF THE CIT(A) IS CONFIRMED. 8 ITA NO.437/AGR/2011 A.Y. 2005-06 13. GROUND IN RESPECT OF CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234D OF THE ACT IS MANDATORY AND CONSEQUENTIAL. THE A.O . IS DIRECTED ACCORDINGLY. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY