M/s Rama Eductional Welfare Society, Aligarh V. Addl. CIT, Aligarh

ITA 455/AGR/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2440 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Onus to prove
• Section: 234B; 10B; 37

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. 455/AGRA/2009 ASSTT. YEAR : 2005-06 M/S. RAMA EDUCATIONAL WELFARE SOCIETY, VS. ADDL. C.TI.T., RANGE-1, SHAKTI NAGAR, ALIGARH. ALIGHARH. (PAN AAATR 8995 B) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI RAKESH AGARWAL, C.A. FOR RESPONDENT : SHRI VINOD KUMAR, JR. D.R. ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(A) BY TAKING FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. BECAUSE THE PURCHASE OF BRICKS OF RS.11,68,000 ARE ON CREDIT AND THE PAYMENT BEING MADE BY ACCOUNT PAYEE CHEQUES IN THE SUCCEEDING YEAR AGAINST WHICH ALL EVIDENCES WERE PRODUCED BEFORE TH E A.O., THERE IS NO JUSTIFICATION TO ADD RS.11,68,000 IN THE INCOME. 2. BECAUSE UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE THE INCOME SHOULD HAVE BEEN ASSESSED AT NIL AS SHOWN IN THE RE TURN. 3. BECAUSE INTEREST U/S. 234B AND 234C IS WRONGLY AND ILLEGALLY CHARGED IN NOTICE OF DEMAND WITHOUT THERE BEING ANY MENTION OF THE SAME IN THE ASSESSMENT ORDER. 2. GROUND NO. 1 RELATES TO THE ADDITION OF RS.11,68 ,000/-. THE ASSESSEE CLAIMED THE APPLICATION OF THE SAID AMOUNT DURING THE YEAR BY W AY OF PURCHASE OF THE BRICKS FOR THE CONSTRUCTION OF THE BUILDING. THE ASSESSEE SUBMITTE D BEFORE THE ASSESSING OFFICER THE MINUTES BOOK OF DIFFERENT DATES. FROM THE MINUTES BOOK DAT ED 17.01.2005, IT WAS NOTICED THAT SHRI SUKHDEV GARG, THE PRESIDENT OF SOCIETY HAS ARRANGED THE BRICKS AND RODI FOR CONSTRUCTION AND AS 2 PER MINUTES BOOK DATED 30.03.2005, THANKS WAS GIVEN TO THE PRESIDENT FOR MANAGING THE BRICKS FOR THE CONSTRUCTION AND HE WAS ASKED TO TAKE THE P AYMENT ON RECEIPT OF BANK LOAN. THE ASSESSEE FURNISHED THE COPY OF THE CASE MEMOS FOR THE PURCHA SE OF BRICKS ISSUED BY BHISHMA GRAMODYOG SANSTHAN IN FAVOUR OF THE SOCIETY. ON THE BASIS OF THE CASH MEMOS, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS PURCHASED THE BRI CKS IN CASH AND IF CASH HAD BEEN PAID BY THE PRESIDENT, NO CORRESPONDING DONATION FROM THE PRESI DENT OF THE SOCIETY WAS SHOWN. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER TREATED THE SUM OF RS.11,68,000/- TO BE THE INCOME OF THE ASSESSEE. 3. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT T HE BRICKS WERE PURCHASED ON CREDIT AND THE PAYMENT OF RS.11,68,000/- WAS GIVEN TO THE SELL ER, M/S. BHISHMA GRAMODYOG SANSTHAN THROUGH CHEQUE WHEN THE LOAN WAS SANCTIONED BY THE BANK. THEREFORE, THERE WAS NO QUESTION OF RECEIVING UNEXPLAINED DONATION BY THE SOCIETY. WHEN THE APPELLATE AUTHORITY ASKED THE LEARNED AR WHY HE HAS NOT PRODUCED THE PARTNER OR PROPRIETO R OF M/S. BHISHMA GRAMODYOG SANSTHAN TO CLARIFY THE POSITION WHETHER THE BILLS WERE ISSUE O R THE CASH MEMOS WERE ISSUED, THE AR COULD NOT PRODUCE THEM. HE ALSO FAILED EVEN TO FILE CONFIRMAT ION OR AFFIDAVIT OF THE SELLER IN SUPPORT OF HIS CONTENTION. THE CIT(A) DID NOT AGREE WITH THE CONT ENTION OF THE ASSESSEE AND AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE, CONFIRMED THE ADDITI ON BY HOLDING AS UNDER :- THUS, THE CONTENTION OF THE ASSESSEE THAT THERE W AS NO CASH PAYMENT AND THE PAYMENT WAS MADE THROUGH CHEQUE REMAINS TO BE E STABLISHED. EVEN DURING APPELLATE PROCEEDINGS, THE LEARNED AR HAS NOT BEEN ABLE TO FURNISH ANY EVIDENCE/DETAILS TO CONTROVERT THE FINDINGS OF THE AO ON THIS SCORE. THOUGH THERE CANNOT BE TWO PAYMENTS FOR ONE TRANSAC TION BUT ONE POSSIBILITY WOULD BE THAT SHRI SUKHDEV GARG HAS MAD E THE PAYMENT FOR THE BRICKS AS HAS BEEN INTERACTED IN THE MINUTE BOOKS, MENTION ED IN THE PRECEDING PARA OF THIS ORDER. HOWEVER, HAD THIS BEEN TRUE, SHRI SUKHD EV GARG WOULD HAVE CONFIRMED THE SAME. SINCE SHRI SUKHDEV GARG HAS NOT CONFIRMED THE SAME, THE AO HAD NO OPTION BUT TO TREAT THIS CASH PAYMENT IN THE HANDS OF THE APPELLANT. AS REGARDS THE 3 CHEQUE PAYMENT, SINCE THERE CANNOT BE TWO PAYMENTS FOR ONE TRANSACTION, THE PROBABILITY IS THAT THE SECOND PAYMENT MADE THROUGH CHEQUE FOR THE SAID TRANSACTION MUST HAVE BEEN RETURNED BY ;THE SELLER TO THE APPELLANT IN CASH. IT IS ALSO RELEVANT TO NOTE THAT INSPITE OF SPECIFIC REQU IREMENT TO PRODUCE THE SELLER M/S. BHISHMA GRAMODYOG SANSTHAN FOR EXAMINATION, THE ASS ESSEE FAILED TO PRODUCE THE SELLER ON THE GROUND THAT HE CANNOT BE PRODUCED. TH IS FURTHER SUPPORTS THE ASSUMPTION OF THE A.O. DURING APPELLATE PROCEEDINGS THE LEARNED AR HAS PLA CED RELIANCE ON DECISION OF HON'BLE ALLAHABAD HIGH COURT REPORTED I N 49 ITR 561 WHEREIN IT HAS BEEN HELD 'NO INFERENCE CAN BE DRAWN AGAINST AN ASS ESSEE MERELY BECAUSE THE ASSESSEE HAD TAKEN A DASTI SUMMONS FOR PRODUCTION O F A WITNESS AND HAD NOT PRODUCED HIM. IT IS THE DUTY (~F THE INCOME TAX OFFI CER TO ENFORCE THE ATTENDANCE OF THE WITNESS IF HIS EVIDENCE IS MATERIAL, IN EXER CISE OF HIS POWERS U/S 37 (L) OF THE INCOME TAX ACT, READ WITH ORDER XVI, RULE 10 OF THE CIVIL PROCEDURE CODE.' HOWEVER, THIS CASE LAW RELIED UPON BY THE LEARNED A R DO NOT HELP THE APPELLANTS CASE BECAUSE DURING ASSESSMENT PROCEEDINGS THE ASSE SSEE FURNISHED CASH MEMOS IN SUPPORT OF THE PURCHASES MADE, WHICH SHOWS THAT THE PAYMENTS ARE MADE IN CASH AND SUBSEQUENTLY MADE A CLAIM THAT THE PAYMENT WAS MADE THROUGH CHEQUE AND NOT IN CASH. THUS THE ONUS TO PROVE ITS CLAIM L IES ON THE ASSESSEE AND NOT ON THE AO. THE COPIES OF CASH MEMOS HAVE BEEN FURNISHED DURING THE APPELLATE PROCEEDING ALSO AND A PERUSAL OF THE SAME CLEARLY C ONFIRMS THE SAME TO BE CASH MEMOS. IT IS ALSO RELEVANT TO NOTE THAT THE PARTY W HICH HAS ISSUED THE CASH MEMO IN RESPECT OF THE IMPUGNED PURCHASE HAS NOT BEEN PR ODUCED BY THE APPELLANT EITHER AT ASSESSMENT STAGE OR AT APPELLATE STAGE AP PARENTLY BECAUSE THE EVIDENCE IS CLINCHING. THE ONLY ARGUMENT WHICH THE LEARNED A R CAN TAKE IS REGARDING SUBSEQUENT CHEQUE TRANSACTION. HOWEVER, MERE CHEQUE TRANSACTION DOES NOT NEGATE THE CASH MEMO UNTIL AND UNLESS THERE ARE COR ROBORATIVE EVIDENCE TO ESTABLISH THAT THE CASH MEMOS REPRESENT CREDIT PURC HASE. IN ABSENCE OF SUCH EVIDENCE, THE CHEQUE TRANSACTION COULD BE A POST-FA CTO ARRANGEMENT EMANATING FROM AFTER THOUGHT. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT TH E AO HAS RIGHTLY ADDED BACK THE SUM OF RS.11,68,000/- TO THE ASSESSEES TOTAL INCOM E AND BROUGHT THE SAME TO TAX. THE ACTION OF THE AO ON THIS SCORE IS ACCORDINGLY C ONFIRMED. 4. THE LEARNED AR BEFORE US REITERATED THE SUBMISSI ONS MADE BEFORE THE CIT(A) AND HAS DRAWN OUR ATTENTION TOWARDS THE COPY OF THE MINUTES BOOK AS WELL AS THE SUBMISSIONS BEFORE THE ASSESSING OFFICER, COPY OF THE LEDGER ACCOUNT OF BH ISHMA GRAMODYOG SANSTHAN IN THE BOOKS OF ASSESSEE. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 4 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDERS OF THE AUTHORITIES BELOW. WE H AVE ALSO GONE THROUGH THE COPIES OF THE MINUTES BOOK AS WELL AS PAPERS AND DOCUMENTS RELIED ON BY THE LEARNED AR. THIS IS UNCONTROVERTED FACT THAT THE BRICKS WERE PURCHASED AGAINST THE CASH MEMOS ISSUED BY M/S. BHISHMA GRAMODYOG SANSTHAN IN FAVOUR OF SOCIETY. TH E CASH MEMO PRE-SUPPOSES THAT THE SELLER HAS RECEIVED THE CASH AGAINST THE SALE FROM THE PUR CHASER. THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE ASSESSEE HAS NOT PAID THE CASH BUT HAS BOU GHT THE BRICKS ON CREDIT. THE ASSESSEE HAS NOT PRODUCED THE SUPPLIER OF THE BRICKS BEFORE THE ASSE SSING OFFICER. EVEN THE ASSESSEE HAS NOT PRODUCED ANY CONFIRMATION OR THE ASSESSEES ACCOUNT IN THE BOOKS OF SUPPLIERS OF THE BRICKS. THIS IS SETTLED LAW THAT APPARENT IS REAL. THE ONUS TO P ROVE IS ON THE PERSON WHO ALLEGES THAT APPARENT IS NOT REAL, AS LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWQTMULL, 87 ITR 349(SC). EVEN BEFORE US ALSO, NO SUCH EVIDENCE WAS FILED BY THE ASSESSEE TO PROVE THAT BHISHMA GRAMODYOG SANSTHAN WAS NOT PAID CASH BY THE ASSESSEE AT THE TIME OF PURCHASE OF THE BRICKS AND THE BRICKS WERE PURCHASE D ON CREDIT BASIS. FROM THE COPY OF THE MINUTES BOOK, THE COPIES OF WHICH ARE FORMING PART OF THE ASSESSMENT ORDER ALSO, IT IS APPARENT THAT THE PRESIDENT OF THE SOCIETY HAS ARRANGED FOR THE BRICKS FOR CONSTRUCTION AND HE WILL TAKE THE PAYMENT WHEN LOAN WILL BE RECEIVED FROM THE BANK. T HIS ITSELF PROVES THAT THE PRESIDENT OF THE SOCIETY HAD MADE THE PAYMENT FOR THE BRICKS ON BEHA LF OF THE SOCIETY AND THE SOCIETY MIGHT HAVE RECEIVED DONATIONS FROM THE PRESIDENT. WHEN THE BEN CH ASKED THE LEARNED AR TO PRODUCE THE AUDITORS REPORT IN FORM 10B ALONGWITH ACCOUNTING P OLICY, WHICH FORMED THE PART OF THE BALANCE SHEET, HE PRODUCED PHOTOCOPY OF THE AUDIT REPORT WI THOUT CERTIFYING IT TO BE TRUE. THE BALANCE SHEET NOWHERE STATES THAT THE NOTES ON ACCOUNT WILL FORM THE PART OF THE AUDITED BALANCE SHEET. THE NOTES ON ACCOUNTS MUST FORM PART OF THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. 5 UNDER THESE FACTS, IT COULD NOT BE PROVED BY THE AS SESSEE WHAT SYSTEM OF ACCOUNTING IS BEING FOLLOWED BY ASSESSEE CONSISTENTLY. UNDER THESE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDE R OF THE CIT(A). THE CIT(A) HAS RIGHTLY UPHELD THE ORDER OF THE ASSESSING OFFICER. THE ORDER OF TH E CIT(A) IS EXHAUSTIVE AND HAS DEALT WITH ALL THE POINTS INVOLVED. IN OUR OPINION, NO INTERFERENC E IS CALLED FOR IN THE ORDER OF CIT(A) AND HE HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSE SSING OFFICER. THUS, GROUND NO. 1 STRANDS DISMISSED. 6. GROUND NO. 2 IS CONSEQUENTIAL TO GROUND NO. 1 AN D IS MERELY ACADEMIC. WE HAVE ALREADY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, THIS GROUND BECOMES INFRUCTUOUS AND STANDS DISMISSED AS SUCH. 7. GROUND NO. 3 IS ALSO CONSEQUENTIAL, WHICH RELATE S TO CHARGING OF INTEREST U/S. 234B AND 234C. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO COMPUTE THE INTEREST AFTER GIVING EFFECT OF THIS ORDER. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.03.20 11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 TH MARCH, 2011 *AKS/- 6 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