ITO, Sawai Madhopur V. SHRI KAILASH CHAND METHI, Gangapur City

ITA 532/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87514 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Keywords: Unexplained cash credit; Opportunity of being heard; Opportunity of cross examination; Source of fund
• Section: 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 532/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 THE I.T.O. WARD 2, SAWAI MADHOPUR CUKE VS. SHRI KAILASH CHAND METHI, PROP- M/S REWADMAL KAILASH CHAND, NAI MANDI, GANGAPUR CITY, SAWAI MADHOPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ACKPM 6965 C VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : MRS. NEENA JEPH. FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI SIDDARTH RANKA LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/11/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/01/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 28/03/2012 PASSED BY THE LEARNED CIT(A)- KOTA FOR A .Y. 2005-06. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE ADDIT ION OF RS. 34,74,538/- ON ACCOUNT OF UNEXPLAINED CASH CREDITORS WITHOUT GOI NG INTO THE EXAMINATION OF THE CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF TRANSACTIONS. ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 2 2. IN THIS CASE, THE ITAT, JAIPUR B BENCH IN ITA N O. 590/JP/2009 ORDER DATED 20/1/2008 HAD SET ASIDE THE ISSUE BY GI VING THE FOLLOWING DIRECTIONS: THERE IS NO DISPUTE TO THE FACT THE FARMERS/CREDITO RS EXAMINED ARE GENUINE PERSONS AND GOODS HAVE BEEN SOLD BY THE M TO THE ASSESSEE. AS REGARDS THE QUANTUM AND THE AFFIDAVITS THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY OF BEING HE ARD AND THE CROSS EXAMINATION OF THE SAID FARMERS/CREDITORS. IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND IN THE INTE REST OF JUSTICE THE MATTER IS RESTORED TO THE FILE OF THE A.O. TO E XAMINE THE ISSUE DENOVO BUT BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE A.O. IS DIRECTED TO ACT ACCORDINGLY. THE LEARNED ASSESSING OFFICER AS PER DIRECTION OF TH IS BENCH HAD ISSUED NOTICE TO THE ASSESSEE AND ALSO ASKED TO PRODUCE 14 FARMERS FOR VERIFICATION. THE APPELLANT SOUGHT VARIOUS ADJOURNME NTS ON VARIOUS GROUNDS. THE DETAILS OF OPPORTUNITY BEING ALLOWED BY THE ASSESSING OFFICER HAVE BEEN MENTIONED ON PAGE NOS. 2 AND 3 OF ASSESSMENT ORDER. ON 17/09/2010, THE ASSESSEE PRODUCED FOUR FA RMERS FOR VERIFICATION. THE STATEMENT OF FOUR FARMERS NAMELY S HRI BABU LAL MEENA, SHRI RAMJI LAL MEENA, SHRI RAMSWAROOP MEENA AND SHRI DHARMSINGH MEENA WERE RECORDED U/S 131 OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). THE EMINENT PORTION OF THE STATEMENT HAS B EEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE NOS. 3 TO 9 OF THE AS SESSMENT ORDER. IT ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 3 HAD BEEN CONFIRMED BY THE FARMERS BEFORE THE ASSESS EE THAT THEY HAVE GIVEN STATEMENT BEFORE THE INSPECTOR. THE LEARNED AS SESSING OFFICER CONCLUDED THAT 24 PERSONS CANNOT PRODUCE NON-JUDICI AL STAMP PAPER ON SAME DAY AND ALSO CANNOT BE NOTARIZED ON SUBSEQUENT DATE. SHRI BABU LAL MEENA, VILLAGE- SEVA HAD IDENTIFIED 14 CREDITOR S BUT HE COULD NOT EXPRESS HIS IDENTITY ON PURCHASE OF STAMP ON 15/2/2 007. HE FURTHER HELD THAT THESE FOUR FARMERS PRODUCED BY THE APPELL ANT WERE CONFIDENTIAL PERSON OF THE APPELLANT. THE LEARNED AS SESSING OFFICER CROSS VERIFIED IN THE STATEMENT OF SHRI BABU LAL MEENA WIT H REFERENCE TO SHRI REWARMAL KAILASHCHAND WHERE HE HAD ALSO NOT ADMITTED EXACT SALE MADE TO IN THE FINANCIAL YEAR 2004-05. HE FURTHER A SSUMED THAT REMAINING FARMERS WERE NOT PRODUCED BECAUSE OF THEY WERE AGAINST THE APPELLANT. HE ALSO RELIED ON THE FINDINGS GIVEN BY THE LEARNED CIT(A), KOTA ON DIFFERENCE IN THE SIGNATURES ON VARIOUS PAP ERS OF THE FARMERS. HE ALSO NOTICED VARIOUS DISCREPANCIES IN THE SUBMIS SIONS MADE BY THE ASSESSEE AND FINALLY ADDED BACK THE OUTSTANDING CRE DITORS AT RS. 34,74,538/- IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 4 I HAVE GONE THROUGH THE A.OS REPORT, ASSESSEES S UBMISSION, CASE RECORDS AND THE FOLLOWING OBSERVATIONS/CONCLUSI ONS ARE WORTH MENTIONING:- I) NON-PRODUCTION OF 8 PERSONS CANNOT BE TAKEN AGAINST ASSESSEE AS DESPITE MY DIRECTIONS, NO SUMMONS U/S 1 31 WERE ISSUED BY THE A.O. II) I HAVE GONE THROUGH THE STATEMENTS RECORDED BY A.O. AND THEIR CROSS EXAMINATION BY ASSESSEE. IT WAS SEEN TH AT ALL OF THEM AGREED THAT THEY HAVE SOLD CROPS TO THE ASSESS EE ON CREDIT. III) DUE TO LAPSE OF TIME, IT WAS QUITE NATURAL THAT THES E PERSONS COULD NOT GIVE EXACT DETAILS. IV) THE STATEMENT RECORDED BY INSPECTOR CANNOT BE RELIED ON AS INSPECTOR HAS NO POWER TO RECORD STATEMENT UNDER INCOME TAX ACT. SECONDLY, THE STATEMENTS WERE IN THE HAND WRITING OF ONE PERSON AND SIGNATURES OF FARMER CREDITORS WERE OBTAINED ON THESE STATEMENTS. V) ALL OF THEM AGREED THAT THE SIGNATURE ON THE AFFIDA VIT WERE THEIRS AND THERE IS NO EVIDENCE ON RECORD TO SUGGES T OTHERWISE. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE VIEW THA T NO ADVERSE INFERENCE CAN BE DRAWN FROM THE STATEMENTS RECORDED BY THE A.O.. THE A.O. IS THEREFORE DIRECTED TO DELETE ADDIT ION OF RS. 34,91,538/- 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D SR. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND AR GUED THAT EVEN IN ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 5 SECOND ROUND OF ASSESSMENT, THE APPELLANT COULD NOT PRODUCE ALL THE FARMERS FOR VERIFICATION BEFORE THE ASSESSING OFFIC ER, THEREFORE, HE WAS JUSTIFIED TO ADD BACK OUTSTANDING CREDITORS IN THE INCOME OF THE ASSESSEE. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THE LIST OF OUTSTANDING CREDITORS. FURTHER HE ARGUED THAT IN THE SET-ASIDE PROCEEDINGS THE LEARNED ASSESSING OFFICER DIRECTED THE ASSESSEE RESPONDENT TO BRING THE 14 CASH-CREDITORS WHOSE STAT EMENTS WERE EARLIER RECORDED BY THE INSPECTOR. WITH MUCH DIFFIC ULTY THE ASSESSEE WAS ABLE TO BRING 4 OUT OF 14 CREDITORS/FARMERS FOR REC ORDING OF STATEMENTS. IN THE STATEMENTS RECORDED ALL 4 ACCEPTED THAT THEY HAD SOLD THEIR CROP TO THE ASSESSEE AND THAT THEY HAD LEFT THE SALE CON SIDERATION WITH THE ASSESSEE AND HAVE COLLECTED THE CONSIDERATION AFTER A PERIOD OF 1-2 MONTHS. HOWEVER, THE LEARNED ASSESSING OFFICER DISBE LIEVED THE VERSION OF THE FARMERS/CREDITORS AND AGAIN REPEATED THE ADD ITIONS. NOT A SINGLE WORD HAS BEEN SPELT IN THE ASSESSMENT ORDER IN THE S ET-ASIDE PROCEEDINGS WITH REGARDS TO GENUINENESS OR CREDITWORT HINESS OF THE FARMERS/CREDITORS. IN THE FIRST APPEAL PROCEEDINGS BEFORE THE LEARNED CIT (A), THE LEARNED CIT (A) GAVE INSTRUCTIONS TO THE LEARNED ASSESSING OFFICER U/S 250(4) TO ISSUE FRESH SUMMONS U/S. 131, TAKE STATEMENTS AND PROVIDE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. HE ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 6 INSTRUCTED THE LEARNED ASSESSING OFFICER TO CHOOSE ANY 20% OF THE 115 CREDITORS ON RANDOM SAMPLING BASIS AS IS DEEMED CON VENIENT BY THE LEARNED ASSESSING OFFICER. THE LEARNED ASSESSING OFF ICER DID NOT ISSUE SUMMONS BUT INSTRUCTED THE ASSESSEE RESPONDENT TO B RING THE FARMERS/CREDITORS AS SELECTED BY HIM. ON THE BASIS OF INSTRUCTIONS ISSUED BY THE LEARNED CIT (A), 20% OF 115 CREDITORS /FARME RS CAME TO 23. HE ALSO FURNISHED DETAILS OF LAND HOLDING. THUS, HE ARG UED THAT THE LEARNED ASSESSING OFFICER HAS SIMPLY STATED THAT THE AGRICU LTURISTS APPEARED TO BE TUTORED. HE SUBMITTED THAT AT ONE SIDE, LEARNED ASSESSING OFFICER REFUSES TO ISSUE SUMMONS U/S. 131 DIRECTLY TO THE F ARMERS/CREDITORS TO BE VERIFIED AND SIMPLY INSTRUCTS THE ASSESSEE TO BR ING THE FARMERS/CREDITORS AND PUTS THE ONUS UPON THE ASSESS EE AND AT THE SAME TIME DOUBTS THE STATEMENT BEING GIVEN BY THE FARMER S/CREDITORS. THIS IS HIGHLY ARBITRARY AND IMPROPER. IN THE SET ASIDE PRO CEEDINGS OUT OF 23 FARMERS SELECTED FOR VERIFICATION, 11 FARMERS/CREDI TORS WERE EXAMINED BY LEARNED ASSESSING OFFICER AND WERE ALSO CROSS EXAMIN ED BY ASSESSEE RESPONDENT. ONE HAD DIED, ONE HAD BRAIN HEMORRHAGE, ONE HAD PARALYSIS, FOUR COULDN'T COME DUE TO HARVEST SEASON AND FOUR WERE ALREADY EXAMINED IN THE SET-ASIDE PROCEEDINGS. ALL THE FARMERS WHO CAME-UP HAVE ACCEPTED THAT THEY ARE HAVING LONG TER M DEALING WITH THE ASSESSEE RESPONDENT AND THAT THEY USED TO COLLECT T HEIR SALE ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 7 CONSIDERATION AFTER 1-2 MONTHS. NOT EVEN A SINGLE F ARMER HAS DENIED THAT NO AMOUNT WAS DUE TO BE RECEIVABLE FROM ASSESSE E IN THE FINANCIAL YEAR 2004-2005. THE ASSESSEE HAS ALREADY SUBMITTED THE DETAILS OF THE FARMERS / CREDITORS THUS THEIR IDENTITY STOOD PROVE D. HON'BLE ITAT HAS ITSELF HELD THAT THE FARMERS / CREDITORS ARE GENUIN E PERSONS AND HAVE SOLD GOODS TO THE ASSESSEE. THUS THEIR GENUINENESS ALSO STANDS PROVED. SINCE THEY HAVE BEEN REGULARLY SELLING AGRICULTURAL PRODUCE TO THE ASSESSEE RESPONDENT FOR THE PAST MORE THAN 5-7 YEAR S AND THEY ALSO HAVE OTHER SOURCES OF INCOME THEIR CREDIT-WORTHINESS ALSO STANDS PROVED. THUS THE IDENTITY, GENUINENESS AND CREDITWORT HINESS HAVE BEEN PROVED BY THE ASSESSEE. HE FURTHER RELIED UPON ON T HE FOLLOWING CASE LAWS:- (I) ANIS AHMED AND SONS VS. CIT(A) (2008) 297 ITR 44 1 (SC). (II) CIT VS. KAMDHENU VYAPAR CO. LTD. (2003) 263 IT R 692. (III) MADAN LAL VS. ITO (2006) 99 TTJ 538 (JODH). THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LEA RNED CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE WARD INSPECTOR I N ORIGINAL PROCEEDING HAD RECORDED THE STATEMENT OF 14 FARMERS . IN SET ASIDE PROCEEDINGS, THE ASSESSEE WAS ABLE TO BRING FOUR FAR MERS OUT OF 14 CREDITORS/FARMERS FOR RECORDING THE STATEMENT. AS T HE SUBSTANTIAL TIME ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 8 HAS ELAPSED AND THERE IS NO POWER WITH THE ASSESSEE T O FORCE THEM TO APPEAR BEFORE THE ASSESSING OFFICER FOR VERIFICATIO N BUT THE STATEMENT OF 4 FARMERS SHOWED THAT THEY HAD ACCEPTED TO SELL THEI R CROPS TO THE ASSESSEE AND THEY HAD LEFT THE SALE CONSIDERATION WI TH THE ASSESSEE AND HAD COLLECTED THE CONSIDERATION AFTER A PERIOD OF 1 TO 2 MONTHS. THE FARMERS ARE ILLITERATE PERSONS AND DO NOT UNDERSTAN D THE INCOME TAX LEGAL PROCEEDINGS. THE APPELLANT HAD FURNISHED THE D ETAILED LIST BEFORE THE ASSESSING OFFICER WITH AMOUNT AND SOME AFFIDAVIT S DURING THE ASSESSMENT PROCEEDINGS. IN REMAND REPORT PROCEEDING S, THE LEARNED ASSESSING OFFICER HAD NOT DOUBTED THE GENUINENESS A ND CREDITWORTHINESS OF THE FARMERS. THE LEARNED ASSESSIN G OFFICER SHOULD HAVE ISSUED THE 131 SUMMONS TO ALL THE FARMERS FOR APPEARANCE BEFORE HIM. IN SET ASIDE PROCEEDINGS, OUT OF 23 FARMERS SE LECTED FOR VERIFICATION. 11 FARMERS WERE EXAMINED BY THE LEARNE D ASSESSING OFFICER AND WERE ALSO CROSS EXAMINED BY THE ASSESSEE/RESPOND ENT. ONE HAD DIED, ONE HAD BRAIN HEMORRHAGE, ONE HAD PARALYSIS, FOUR COULDN'T COME DUE TO HARVEST SEASON AND FOUR WERE ALREADY EXAMINED IN THE SET-ASIDE PROCEEDINGS. ALL THE FARMERS WHO CAME-UP HAD ACCEPT ED THAT THEY ARE HAVING LONG TERM DEALING WITH THE ASSESSEE/RESPONDEN T AND THAT THEY USED TO COLLECT THEIR SALE CONSIDERATION AFTER 1-2 MONTHS, WHICH IS GENERAL PRACTICE IN THE LINE OF FARMING AND SELLING IN THE MANDIS. THE ITA 532/JP/2012_ ITO VS KAILASH CHAND METHI 9 APPELLANT ALSO FURNISHED THE DETAILS OF LAND HOLDIN GS OF ALL THE FARMERS, WHICH SHOWS THAT THEY BELONGED TO FARMING COMMUNITY. THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE SQUARELY APPLICABLE ON THE CASE OF THE ASSESSEE, THEREFORE, WE UPHOLD THE ORDER OF THE LEAR NED CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED 16 TH JANUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD2, SAWAI MADHOPUR. 2. IZR;FKHZ @ THE RESPONDENT- SHRI KAILASH CHAND METHI, GANGAPUR C ITY 3. VK;DJ VK;QDRVIHY @ THE CIT(A), KOTA 4. VK;DJ VK;QDR @ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 532/JP/2012). VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR