ITO, New Delhi V. Sh Satish Chand Jain, (HUF), Delhi

ITA 4618/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5554 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: INDERJI T SINGH
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.4618/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD 30(2), NEW DELHI. VS. SHRI SATISH CHAND JAIN (HUF), M/S USV EXPORTS, 2/20, ANSARI ROAD, DARYA GANJ, NEW DELHI. PAN : AAAHS1036E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI INDERJIT SINGH, SR. DR REVENUE BY : NONE ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER CIT (A) DATED 8 TH OCTOBER, 2009 FOR ASSESSMENT YEAR 2006-07. GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.29,81,836/ - MADE BY THE AO U/S 41(1) OF THE IT ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.27,06,211/ - MADE BY THE AO ON ACCOUNT OF CASH IN HAND. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. ITA NO.4618/DEL/2009 2 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWE VER, NONE WAS PRESENT AT THE TIME OF HEARING, HENCE, WE PROCEEDED TO DECIDE THIS APPEAL AFTER HEARING LD. DR ON MERITS. 3. IN ORDER TO BRING CLARITY ON FACTS, THE OBSERVAT IONS OF THE AO WHILE MAKING THE TWO IMPUGNED ADDITIONS WHICH HAVE BEEN DELETED BY CIT (A) ARE REPRODUCED BELOW:- THE BALANCE-SHEET OF THE ASSESSEE SHOWS SUNDRY CR EDITORS OF RS.29,81,336/-. THE ASSESSEE WAS ASKED TO FILE CONFIRMATION IN RESPECT OF SUNDRY CREDITORS AMOUNTING TO RS.29,81,3 36/- AND COMPLETE ADDRESS OF SUNDRY CREDITORS. IN SPITE OF REPEATED REQUESTS, THE DETAILS CALLED FOR, HAVE NOT BEEN FIL ED. EVEN THE ADDRESSES OF THE CREDITORS HAVE NOT BEEN FILED. IN ABSENCE OF THE SAME ONUS LIES ON THE ASSESSEE TO PROVE THE GENUIN ENESS OF TRANSACTION AND IDENTITY OF THE CREDITOR. SINCE TH E ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS, THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CREDITORS. PENALTY PROCEEDINGS U/S 271(1)(C) ARE BEING INITIATED SEPARATELY (ADDITION OF RS.29,81,336/-) THE BALANCE SHEET OF THE ASSESSEE ALSO SHOWS CASH IN HAND AMOUNTING TO RS.27,06,211/-. THE ASSESSEE WAS ASKE D TO EXPLAIN THE SOURCE OF CASH IN HAND OF RS.27,06,211/-. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASONS FOR KEEPING SO MUCH CASH WITH HIM, KEEPING IN VIEW THAT NO BUSINESS WAS CARRIED O UT DURING THE YEAR. SINCE THE ABOVE AMOUNT STANDS UNEXPLAINED, T HE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) ARE BEING INITIATED SEPARATELY. (ADDITION OF RS.27,06,211) 4. POINTING TO THE OBSERVATIONS OF THE AO, IT WAS P LEADED BY LD. DR THAT SINCE THE ASSESSEE DID NOT COOPERATE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO WAS RIGHT IN MAKING THE ADDITIO N AND THE CIT (A) HAS WRONGLY DELETED THE ADDITION. 5. IT WAS SEEN THAT IN THE GROUNDS OF APPEAL FILED BEFORE CIT (A) IT WAS CLEARLY STATED BY THE ASSESSEE THAT COMPLETE DETAILS IN RES PECT OF CREDITORS WERE FILED BEFORE THE AO AND IT WAS EXPLAINED TO HIM THAT THES E BALANCES STANDING UNDER THE HEAD SUNDRY CREDITORS WERE BROUGHT FORWARD FR OM THE EARLIER YEARS AND LD. ITA NO.4618/DEL/2009 3 AO HAS INVOKED THE PROVISIONS OF SECTION 41 WITHOUT SPECIFYING ANY BASIS AND WITHOUT RECORDING A FINDING REGARDING REMISSION OR CESSATION OF ANY DEBT. IT IS ALSO SUBMITTED IN THE GROUNDS OF APPEAL THAT ADDITI ON HAS BEEN MADE ON ACCOUNT OF UNEXPLAINED CREDITORS IN THE BODY OF THE ORDER A ND WHILE COMPUTING THE INCOME THE AO HAS MENTIONED SECTION 41 (1) OF THE ACT. 6. IN RESPECT OF OTHER ADDITION ON ACCOUNT OF UNEXP LAINED CASH, IT WAS SUBMITTED THAT THE ENTIRE CASH WAS BROUGHT FORWARD FROM EARLIER YEAR AND IS ALSO DULY VERIFIABLE FROM THE BOOKS MAINTAINED BY THE AS SESSEE IN THE REGULAR COURSE AND, THUS, THERE WAS NO BASIS FOR MAKING THE ADDIT ION. 7. ON THESE SUBMISSION OF THE ASSESSEE THE CIT (A) HAS RECORDED A FINDING IN RESPECT OF BROUGHT FORWARD SUNDRY CREDITORS THAT THERE IS NO MATERIAL ON RECORD BROUGHT BY THE AO TO ESTABLISH THAT THE ASSESSEE HA S IN ANY WAY OBTAINED ANY CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSASION. 8. IN RESPECT OF OTHER ADDITION, THE CIT (A) HAS OB SERVED THAT NO BUSINESS WHATSOEVER WAS CARRIED OUT BY THE ASSESSEE AND DURI NG THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION AS CASH IN HAND WAS VERIFIABLE FROM THE RE GULAR BOOKS OF ACCOUNT WHICH WERE PRODUCED BEFORE THE AO WITH CASH IN HAND AMOUN TING TO RS.28,43,351/- ALSO APPEARING IN THE BALANCE SHEET AS ON 31 ST MARCH, 2004 AND 31 ST MARCH, 2005. 9. THOUGH IT HAS BEEN THE CONTENTION OF LD. DR THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT, BUT FROM THE FINDINGS GIV EN BY LD. CIT (A) IN PARA 4.1 IT IS CLEAR THAT THE ASSESSEE HAD PRODUCED THE BOOK S OF ACCOUNT. THERE IS NOTHING IN THE ASSESSMENT ORDER TO STATE THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT, HENCE, THE CONTENTION OF LD. DR THAT THE A SSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT IS NOT APPARENT FROM RECORD, HENCE , THE SAME IS REJECTED. ITA NO.4618/DEL/2009 4 10. SO AS IT CONCERNS THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS IN THE BODY OF ASSESSMENT ORDER, THE AO HAS TREATED THEM A S UNEXPLAINED CREDITS. SINCE UNDISPUTEDLY THESE AMOUNTS ARE BROUGHT FORWAR D FROM EARLIER YEARS AND THERE IS NO FRESH CREDIT DURING THE YEAR, ADDITION COULD NOT BE MADE ON ACCOUNT OF APPLICATION OF SECTION 68 OF THE IT ACT FOR THE YEA R UNDER CONSIDERATION. SO FAR AS IT RELATES TO APPLICABILITY OF SECTION 41 (1), THE BALANCES ARE STILL OUTSTANDING IN THE BALANCE SHEET OF THE ASSESSEE WHICH ARE BROUGHT FOR WARD. IN THE ABSENCE OF ANY INSTANCE BROUGHT ON RECORD BY THE REVENUE TO SHOW T HAT IN FACT THESE LIABILITIES HAD ATTAINED THE CESSATION OR THESE LIABILITIES WE RE REMITTED, SECTION 41(1) COULD NOT BE APPLIED. HERE ALSO THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) AND THE ADDITION HAS RIGHTLY BEEN DELETED. 11. NOW, COMING TO THE SECOND ADDITION ON ACCOUNT O F UNEXPLAINED CASH IN HAND, SINCE THE FACTS THAT BOOKS OF ACCOUNT WERE PR ODUCED CANNOT BE DISPUTED AND THE RELEVANT CASH IN HAND WAS FORMING PART OF C ASH BOOK WHICH WAS PRODUCED BEFORE THE AO AND THERE BEING NO INSTANCE OF SHOWING ANY UNEXPLAINED AMOUNT CREDITED IN THE CASH BOOK, SUCH ADDITION ALSO COULD NOT BE SUSTAINED. THE ONLY REASON MENTIONED BY THE AO IN THIS REGARD IS THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASON FO R KEEPING SO MUCH CASH WITH HIM. IN OUR OPINION, SUCH CANNOT BE THE ONLY REASO N FOR MAKING SUCH TYPE OF ADDITION. THEREFORE, THE CIT (A) IS RIGHT IN DELET ING THIS ADDITION AS WELL AND, THEREFORE, WE DECLINE TO INTERFERE IN THE DECISION GIVEN BY THE CIT (A) ON THIS ACCOUNT. 12. IN VIEW OF ABOVE DISCUSSION, THE APPEAL FILED B Y THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.20 10. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED,12.02.2010. ITA NO.4618/DEL/2009 5 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES