M/s Rishikesh Industries, Cuttack V. ACIT, Cuttack

ITA 527/CTK/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2669 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-06-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 31-10-2012
• Court: TRIBUNAL
• Department Lawyers: N K DEB
• Assessee Lawyers: S K JENA; B K MOHANTY
• Keywords: Unexplained cash credit; Depreciation; Assessment record
• Section: 143(3); 131; 68; 144

Judgement Text

1 ITA NO. 526-528/CTK/2012 & SP NO.37/CTK/2012 RISHIKESH INDUSTRIES, AY 1999-2000 IN THE INCOME TAX APPELLATE TRIBUNAL: CUTTACK BENCH : CUTTTACK (BEFORE SHRI K. K. GUPTA, AM & SHRI GEORGE MATHAN, JM) ITA NOS. 526 TO 528/CTK/2012 ASSESSMENT YEAR: 1999-2000 RISHIKESH INDUSTRIES VS. ASSISTANT COMMISSIO NER OF INCOME-TAX, (PAN:AAGFR3185H) CIRCLE-1(1), CUTTACK. (APPELLANT) (RESPONDENT) & S.P. NO. 37/CTK/2012 IN ITA NOS. 526 TO 528/CTK/2012 ASSESSMENT YEAR: 1999-2000 RISHIKESH INDUSTRIES VS. ASSISTANT COMMISSIO NER OF INCOME-TAX, (PAN:AAGFR3185H) CIRCLE-1(1), CUTTACK. (APPELLANT) (RESPONDENT) DATE OF HEARING: 4TH JUNE, 2013 DATE OF PRONOUNCEMENT: 4TH JUNE, 2013 APPELLANT BY: S/SHRI B. K. MOHANTY & S. K. JENA RESPONDENT BY: SHRI N. K. DEB, SR. DR ORDER PER BENCH: ITA NO. 526/CTK/2012 IS AN APPEAL FILED BY ASSESSE E AGAINST THE ORDER OF LD. CIT(A), CUTTACK IN APPEAL NO. 0187/2010-11 DATED 31 .08.2012 FOR AY 1999-2000. IN ASSESSEES APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: A. THAT THE IMPUGNED ASSESSMENT ORDER HAS BEEN PA SSED BY THE LD. AO WITHOUT FOLLOWING THE HONBLE ITATS DIRECTIONS IN ITA NO. 504/CTK/2004 IN ITS TRUE LETTER AND SPIRIT BY NOT PROVIDING PROPER OPPORTUNITY TO T HE APPELLANT. EVEN THE LD. AO HAS PASSED THE IMPUGNED ASSESSMENT ORDER EX PARTE U/S. 144 OF THE ACT, NO SERIOUS ATTEMPTS WAS MADE BY THE LD. AO TO VERIFY THE ADVAN CES RECEIVED BY THE APPELLANT FROM VARIOUS PARTIES, WHEREIN ALL SUCH MATERIALS WE RE AVAILABLE BEFORE HIM IN THE ASSESSMENT RECORDS. THE FIRST APPEAL OF THE APPELL ANT HAS ALSO BEEN DISPOSED OF WITHOUT ANY ADJUDICATION BY THE LD. CIT(A) AS AN AP PELLATE AUTHORITY, WHO SIMPLY DECIDED THE ISSUES BY CONFIRMING THE SAID EX PARTE ASSESSMENT ORDER AND THE ADDITIONS MADE THEREIN. THEREFORE THE ORDERS OF THE AUTHORIT IES BELOW ARE BAD AND UNSUSTAINABLE IN LAW, LIABLE TO BE QUASHED/SET ASID E ON THIS GROUND ONLY. 2 ITA NO. 526-528/CTK/2012 & SP NO.37/CTK/2012 RISHIKESH INDUSTRIES, AY 1999-2000 B. THAT THE AO WITHOUT ANY VALID REASONS HAS ADDED THE SOURCE OF CAPITAL WITH THE PARTNER AMOUNTING TO RS.34,000/-, DEPRECIATION ON A SSETS AMOUNTING TO RS.11,481/- AND ADVANCE RECEIVED FROM THE CUSTOMERS AMOUNTING T O RS.11,65,552/- BY INVOKING SECTION 68 OF THE ACT, WITHOUT VERIFYING THE FACTS, MATERIALS AVAILABLE WITH HIM WHICH ARE CAPABLE OF BEING VERIFIED, BY COMPLETELY IGNORI NG THIS HONBLE BENCHS DIRECTIONS. THE LD. CIT(A) IS ALSO EQUALLY ERRED I N CONFIRMING SUCH UNVERIFIED EX PARTE ADDITIONS. THEREFORE THE SAID ADDITIONS ARE NOT SUSTAINABLE AND LIABLE TO BE DELETED. ITA NOS. 527&528/CTK/2012 ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF LD. CIT(A), CUTTACK IN APPEAL NOS. 0155 & 0154/2010-11 DATED 31.08.2012 FOR AY 1999-2000 AGAINST THE CONFIRMATION OF LEVY OF PE NALTIES UNDER SECTIONS 271(1)(B) AND 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RESPECTIVELY. S. P. NO. 37/CTK/2012 IS A STAY PETITION FILED BY ASSESSEE IN RESPECT OF THE ABOVE THREE APPEALS. 2. S/SHRI B. K. MOHANTY & S. K. JENA APPEARED ON BE HALF OF THE ASSESSEE AND SHRI N. K. DEB, SR. DR APPEARED ON BEHALF OF REVENUE. 3. IT WAS THE SUBMISSION BY THE LD. AR THAT THE ASS ESSEE IS IN THE BUSINESS OF MANUFACTURE AND SALE OF BISCUITS. IT WAS THE SUBMI SSION THAT THE ASSESSEE HAD RECEIVED DEPOSITS FROM VARIOUS SHOP OWNERS NUMBERING 75 TO W HOM THE ASSESSEE HAD BEEN SELLING THE BISCUITS. IT WAS THE SUBMISSION THAT ORIGINALL Y, THE ASSESSMENT HAD BEEN COMPLETED U/S. 143(3), WHEREIN THE AO HAD TREATED THE DEPOSITS AS UNEXPLAINED CASH CREDITS. AGAINST THE SAID ASSESSMENT THE ASSESSEE HAD FILED AN APPEAL TO THE CIT(A) AND SUBSEQUENTLY TO THE TRIBUNAL. IT WAS THE SUBMISSION THAT THE TRIBUNAL HAD SET ASIDE THE ASSESSMENT PASSED U/S. 143(3) OF THE ACT VIDE ITS ORDER IN ITA NO.504/CTK/ 2004 DATED 27.07.2005. IT WAS THE SUBMISSION THAT SUBSEQUENTLY THE ASSESSEE HAD RECEI VED THE ASSESSMENT ORDER PASSED U/S. 144 OF THE ACT IN CONSEQUENCE TO THE SET ASIDE ASSE SSMENT SOME TIME IN DECEMBER, 2011 EVEN THOUGH THE ASSESSMENT HAD BEEN DONE IN NOVEMBE R, 2006. IT WAS THE SUBMISSION THAT THE SET ASIDE ASSESSMENT HAD BEEN COMPLETED BY THE AO U/S. 144 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD NOT COOPERATED OR RESPONDED T O THE NOTICES ISSUED. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE HAD IN THE COURSE OF T HE REMAND PROCEEDING IN RESPECT OF THE ORIGINAL ASSESSMENT GIVEN THE DETAILS OF THE NAMES AND ADDRESSES OF ALL THE 75 PERSONS WHO WERE THE CUSTOMERS OF THE ASSESSEE FROM WHOM THE AS SESSEE HAD TAKEN DEPOSITS. IT WAS THE 3 ITA NO. 526-528/CTK/2012 & SP NO.37/CTK/2012 RISHIKESH INDUSTRIES, AY 1999-2000 SUBMISSION THAT IN THE SET ASIDE ASSESSMENT, THE AO REJECTED THE STATEMENT RECORDED FROM 9 OF THE SAID CUSTOMERS, WHO HAD CONFIRMED THE TRANSA CTIONS WITH THE ASSESSEE WITHOUT GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY. IT WAS THE SUBMISSION THAT THE SAID CUSTOMERS, WHO HAD APPEARED BEFORE THE AO AND TO WHOM THE AO H AD ISSUED NOTICES U/S. 131 OF THE ACT HAD CONFIRMED THE TRANSACTIONS WITH THE ASSESSE E. IT WAS THE SUBMISSION THAT THE AO DISBELIEVED THE TRANSACTIONS BY SAYING THAT THE CUS TOMERS WERE ILLITERATE AND PETTY CUSTOMERS. IT WAS THE SUBMISSION THAT THE ASSESSEE IS A SMALL SCALE MANUFACTURER OF BISCUITS AND THE ASSESSEE CANNOT COMPETE WITH THE LARGE SCAL E MANUFACTURERS, THEREFORE, OBVIOUSLY, THE ASSESSEE WOULD BE DEALING WITH ONLY THE SMALL T YPE SHOP KEEPERS. IT WAS THE SUBMISSION THAT EVEN THOUGH THE AO SAYS THAT HE HAS ISSUED NOTICES AND NONE OF THEM HAD BEEN SERVED ON THE ASSESSEE. IT WAS, HOWEVER, AGRE ED BY THE LD. AR THAT THE ASSESSEE WOULD COOPERATE AND PROVIDE ALL THE DETAILS TO THE AO IF ANOTHER OPPORTUNITY WAS GRANTED. IT WAS FURTHER SUBMISSION THAT ON THE ALLEGED NON-C OOPERATION BY THE ASSESSEE THE AO HAD LEVIED PENALTY U/S. 271(1)(B)AND 271(1)(C) OF THE A CT AS A CONSEQUENCE TO THE DISALLOWANCE MADE BY HIM OF THE DEPOSITS TAKEN BY THE ASSESSEE F ROM THE SAID 75 CUSTOMERS BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT. IT WAS THE SU BMISSION THAT THE PENALTIES AS LEVIED MAY BE CANCELLED. 4. IN REPLY, THE CIT(DR) SUBMITTED THAT SUBSTANTIAL NUMBER OF OPPORTUNITIES HAD BEEN GRANTED TO THE ASSESSEE. IT WAS THE SUBMISSION THA T THE ASSESSEE HAD NOT COOPERATED IN THE SET ASIDE PROCEEDINGS. IT WAS ALSO THE SUBMISSION THAT THE STATEMENTS RECORDED FROM THE 9 PERSONS CLEARLY SHOWED THAT THE 9 PERSONS WERE WITH OUT MEANS. IT WAS THE SUBMISSION THAT THE ORDER OF THE AO TREATING THE DEPOSITS RECEIVED BY THE ASSESSEE FROM 75 PERSONS WAS LIABLE TO BE UPHELD AS UNEXPLAINED CASH CREDITS. I T WAS FURTHER SUBMISSION BY THE LD. DR THAT THERE WAS NO CORROBORATIVE EVIDENCE PRODUCED T O SUBSTANTIATE THE CLAIM OF ADVANCE. IT WAS FURTHER SUBMITTED THAT HE HAD NO OBJECTION IF T HE ISSUE IS RESTORED TO THE FILE OF AO SUBJECT TO THE SPECIFIC CONDITION THAT THE ASSESSEE SHALL COOPERATE IN THE SET ASIDE ASSESSMENT AND THE FIRST DATE OF HEARING BE FIXED B Y THE BENCH BEFORE THE AO. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMIT TEDLY, IN THE COURSE OF REMAND PROCEEDINGS BEFORE THE LD. CIT(A), THE AO HAS ISSUE D NOTICES U/S. 131 OF THE ACT TO 9 4 ITA NO. 526-528/CTK/2012 & SP NO.37/CTK/2012 RISHIKESH INDUSTRIES, AY 1999-2000 PERSONS FROM WHOM THE ASSESSEE HAS RECEIVED THE DEP OSITS. ADMITTEDLY, THESE 9 PERSONS HAVE RESPONDED AND HAVE ALSO CONFIRMED THE TRANSACT IONS WITH THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. IF THE AO WAS NOT SATISFIED WITH THE SOURCE IN THE HANDS OF THE 9 PERSONS, THE AO WAS AT LIBERTY TO HA VE INITIATED PROCEEDINGS AGAINST THOSE 9 PERSONS. WHEN THE DEPOSITORS HAVE CATEGORICALLY AD MITTED TO HAVE GIVEN MONEY AND THAT TOO IN THE ABSENCE OF THE ASSESSEE MORE SO, WHEN TH E STATEMENT HAS BEEN RECORDED BEHIND THE BACK OF THE ASSESSEE SUCH AN EVIDENCE CANNOT BE DISLODGED BY CLAIMING THAT THE DEPOSITORS DID NOT HAVE THE SOURCE. IN THESE CIRCU MSTANCES, THE ADDITION OF THE DEPOSITS IN RESPECT OF 9 PERSONS, WHO HAD APPEARED BEFORE THE A O WOULD NO MORE BE LIABLE TO BE TREATED AS UNEXPLAINED CASH CREDIT, CONSEQUENTLY TH E SAME STANDS DELETED. IN RESPECT OF THE BALANCE 66 PERSONS FROM WHOM THE ASSESSEE HAD RECEI VED THE DEPOSITS WHO HAD NOT BEEN EXAMINED BY THE AO, THIS ISSUE IS RESTORED TO THE F ILE OF THE AO IN RESPECT OF THE BALANCE 66 PERSONS ONLY WITH THE LIBERTY TO THE AO TO EXAMINE THE SAME IN ACCORDANCE WITH LAW. IF THE AO DESIRES TO INVOKE HIS POWERS U/S. 131 OF THE ACT LIBERTY SHALL BE AVAILABLE TO HIM. THE ASSESSEE SHALL COOPERATE IN PROVIDING ALL THE NECES SARY DETAILS TO THE AO TO ASSIST HIM IN COMPLETING THE SET ASIDE ASSESSMENT AT THE EARLIEST . THE ASSESSEE SHALL APPEAR BEFORE THE AO TO TAKE NECESSARY INSTRUCTIONS FROM THE AO ON 08 .08.2013 AS HAS ALSO BEEN ACCEPTED BY THE LD. AR AND DR BEFORE THE BENCH. UNDER THESE CI RCUMSTANCES, THIS ISSUE IS RESTORED TO THE FILE OF THE AO FOR READJUDICATION AFTER GRANTIN G THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CASE. 6. IN RESPECT OF THE LEVY OF PENALTY U/S.271(1)(B) AND 271(1)(C) OF THE ACT, AS THE ASSESSMENT HAS BEEN SET ASIDE AND THE ISSUES HAD BE EN RESTORED TO THE FILE OF THE AO FOR READJUDICATION, THE PENALTIES LEVIED U/S. 271(1)(B) AND 271(1)(C) OF THE ACT STAND CANCELLED. LIBERTY SHALL BE AVAILABLE TO THE AO TO INITIATED P ROCEEDINGS IN ACCORDANCE WITH LAW IN THE SET ASIDE ASSESSMENT. 7. THE S.P. NO. 37/CTK/2012 HAS BEEN WITHDRAWN AND CONSEQUENTLY, THE SAME IS DISMISSED AS NOT PRESSED. 5 ITA NO. 526-528/CTK/2012 & SP NO.37/CTK/2012 RISHIKESH INDUSTRIES, AY 1999-2000 8. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 526/CTK/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NOS. 527 & 528/CTK/201 2 ARE ALLOWED. STAY PETITION OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. 9. ORDER IS PRONOUNCED AND DICTATED IN THE OPEN COU RT. SD/- SD/- (K.K.GUPTA) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 4TH JUNE, 2013 (JD) SR. P.S COPY FORWARDED TO :- 1. APPELLANT M/S. RISHIKESH INDUSTRIES, C/O SHRI NAR AYAN CHANDRA SAHOO, GOTIROUT PATNA,CUTTACK, PIN-754100. 2. RESPONDENT- ACIT, CIRCLE-1`(1), CUTTACK, 3. CIT(A), CUTTACK. 4. CIT, CUTTACK. 5. DR, ITAT, CUTTACK TRUE COPY BY ORDER SR. PVT. SECY. ITAT, CUTTACK