Sh. Bhola Ram, Barnala V. JCIT, Sangrur

ITA 555/CHANDI/2011

• Counselvise Citation: 55521514 RSA 2011
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Deemed to accrue or arise in india
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 555/CHD/2011 ASSESSMENT YEAR: 2007-08 SHRI BHOLA RAM V JCIT, SANGRUR RANGE, S/O SHRI INDER SAIN, SANGRUR. SHOP NO.2, HANDIAYA BAZAR, BARNALA. PAN: ADRPR-7493R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SMT.JAISHREE SHARMA DATE OF HEARING : 22.11.2011 DATE OF PRONOUNCEMENT : 08.12.201 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 14.03.2011 PASSED BY THE LD. CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A) PATIALA HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,25,000/- AND RS.1 LAC BY HOLDING THEM AS CASH CREDIT. 2. THAT THE SAID AMOUNT WAS NEVER RECEIVED BY THE APPELLANT AND NOR CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE, SINCE THE DRAFTS WERE IN THE NAME OF THE PUNJAB AGRO FOODGRAINS CORPN. LTD., CHANDIGARH AND THE ASSESSEE ACTED ONLY AS A BROKER AND SUCH DRAFTS WERE CREDITED TO THE ACCOUNT OF PUNJAB AGRO FOODGRAINS CORPN. LTD. 2 3. THAT THE ASSESSEE HAD ONLY PASSED THE TRANSFER ENTRY IN HIS BOOKS OF ACCOUNT BY CREDITING THE AMOUNT IN THE NAME OF M/S JAGROOP MAL & SONS AND M/S AGGARWAL TRADING CO. AND DEBITING THE SAME IN THE NAME OF M/S A.B.INDUSTRIES, WHO IS AUTHORIZED AGENT OF FCI FOR LIFTING OF DAMAGED FOODGRAIN ITEMS AND THUS, IT IS NOT A CASE OF CASH CREDIT AT ALL AN D CONDITIONS OF SECTION 68 ARE NOT ATTRACTED AT ALL. 4. THAT THE CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS.2,25,734/- ON ACCOUNT OF ALLEGED UNEXPLAINED EXPENDITURE. 5. THAT THE ADDITION HAS BEEN MADE AGAINST THE FACT S AND CIRCUMSTANCES OF THE CASE AND NOT PROPERLY CONSIDERING THE REPLIES OF THE ASSESSEE 6. NOTWITHSTANDING THE ABOVESAID GROUND OF APPEAL, THE CIT(A) HAS FAILED TO CONSIDER THAT THE ASSESSEE HAD SUFFICIENT CASH AVAILABLE IN THE BOOKS OF ACCOUNTS AND, AS SUCH, NO ADDITION SHOULD HAVE BEEN CONFIRMED BY THE CIT(A). 7. THAT THE APPELLANT CARVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 3. GROUND NOS. 1 TO 3 PERTAINS TO THE ADDITIONS MAD E BY THE AO AT RS.3.25 LACS AND RS. ONE LAC U/S 68 OF THE AC T. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF T HE CASE AND THE RELEVANT PAGES OF THE PAPER BOOK REFERRED TO. THE LD. 'AR' REFERRED TO PAGE 6 TO 7 OF THE PAPER BOOK AND CONTE NDED THAT DRAFTS IN QUESTION WERE NOT IN THE NAME OF THE PART Y. THE PARTY IS JUST A FACILITATOR, ON BEHALF OF THE GOVERNMENT AGENCIES. 4. THE LD. 'DR', ON THE OTHER HAND, CONTENDED THAT GROUND NOS. 1 TO 3 PERTAIN TO UNSECURED LOANS SHOWN IN ASS ESSEE'S BOOKS OF ACCOUNT AND THE EXPLANATION FILED BY THE A SSESSEE IS A 3 MERE CONCOCTED VERSION AND CANNOT TAKE THE PLACE OF COGENT AND CREDIBLE EVIDENCES. IN VIEW OF THIS, FINDING OF THE CIT(A) MAY BE UPHELD. 5. IN THE COURSE OF ASSESSMENT PROCEEDINGS UNDER RE FERENCE, THE AO FOUND THAT THE ASSESSEE FIRM ACTED AS A BROK ER FOR ANOTHER PARTY NAMELY M/S A.B.INDUSTRIES, BARNALA WH O WAS THE AUTHORIZED DEALER FOR TRADING IN DAMAGED WHEAT FOR M/S MARKFED AND M/S PUNJAB AGRO. THE ASSESSEE RECEIVED DRAFTS FROM M/S AGGARWAL TRADING COMPANY, BARNALA AND M/S JAGROOP MAL & SONS, BARNALA FAVOURING M/S MARKFED. M/S A.B.INDUSTRIES, THE ONLY AUTHORIZED REGISTERED DEAL ER FOR THE PURCHASE OF DAMAGED WHEAT DEPOSITED THE SAID DRAFTS ON BEHALF OF THOSE TWO FIRMS WITH M/S MARKFED. THE ASSESSEE DEBITED THE ACCOUNT OF M/S A.B.INDUSTRIES AND CREDITED THE AMOU NT IN THE NAME OF M/S AGGARWAL TRADING COMPANY AND M/S JAGROO P MAL & SONS IN ITS BOOKS OF ACCOUNT. THE AO GAVE A FIND ING THAT THERE WERE DISCREPANCIES IN THE ACCOUNTS OF BOTH TH ESE CONCERNS SHOWN AS UNSECURED LOANS. THE DETAILS OF SUCH ACCO UNTS ARE MENTIONED AT PAGE 2, 3 & 4 OF THE ASSESSMENT ORDER. THE DIFFERENCE IN THE ACCOUNT OF BOTH THE CONCERNS AND THAT OF THE ASSESSEE FIRM AMOUNTED TO RS.3,25,000/- IN THE CASE OF M/S JAGROOP MAL & SONS AND RS.1 LAC IN THE CASE OF M/S AGGARWAL TRADING CO. THE AO HELD SUCH AMOUNT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 6. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED TH AT THE DRAFT OF RS.3,25,000/- AND RS.1,00,000/-SHOWN BY M/ S JAGROOP 4 MAL & SONS AND M/S AGGARWAL TRADING CO. RESPECTIVEL Y HAVE BEEN TREATED WRONGLY AS INCOME OF THE ASSESSEE WITH OUT MAKING PROPER ENQUIRY REGARDING THE SOURCE AND ROUTING OF THE DRAFTS. THE SAID FIRMS WERE EXISTING INCOME TAX ASSESSEES W ITH PANS. THE COPY OF ACCOUNT WAS ALSO SUPPLIED BY THE SAID F IRMS WHEREBY IT WAS ADMITTED THAT THE DRAFTS WERE ISSUED ON BEHALF OF M/S AB INDUSTRIES. IT WAS CONTENDED THAT THE AS SESSEE FIRM MERELY CREDITED THE AMOUNT OF THE SAID DRAFTS IN TH EIR BOOKS OF ACCOUNT FAVOURING M/S MARKFED AND PUNJAB AGRO. IT W AS ALSO STRESSED THAT THESE DRAFTS WERE ISSUED IN FAVOUR OF M/S MARKFED AND THERE HAD BEEN NO TRANSFER OF MONEY EITHER THRO UGH CASH OR CHEQUE IN THE NAME OF THE FIRM. THE ASSESSEE PLACE D RELIANCE ON THE DECISION OF CIT V KERALA TRANSPORT CO. (1995 ) 124 TAXATION (COCHIN)(TRIB) AND M/S SHIRISH S.MANIAR V ITO, MUMBAI (ITA NO.602 OF 2008 (MUM). 7. THE LD. CIT(A), ON APPRECIATION OF THE REMAND RE PORT NO.4068 DATED 9.2.2011 STATED THAT THERE WAS NO REA SON FOR THE ASSESSEE NOT TO DISCLOSE THE DRAFTS OF RS.3.25 LAC S AND RS.1 LAC IN ITS ACCOUNTS WHEN THE SAME WERE ISSUED BY THE SA ID TWO FIRMS. IT WAS FURTHER CLEARLY MENTIONED THAT THE AS SESSEE HAS NOT BEEN ABLE TO FILE ANY EVIDENCE OR CONFIRMATION FROM THESE TWO PARTIES. IN THE LIGHT OF THE ABOVE FACTUAL MA TRIX, LD. CIT(A) UPHELD THE ADDITION MADE BY THE AO AS PER PARA 5. 4 WHICH IS REPRODUCED HEREUNDER : 5.4 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF BOTH THE AO IN HIS REMAND REPORT AND CONTENTIONS OF THE COUNSEL, IT IS SEEN THAT THE APPELLANT HAS NOT BEEN ABLE TO JUSTIFY AS TO WHY TH E SAID 5 TWO ENTRIES HAVE NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT. THE AO IS JUSTIFIED IN MAKING THE IMPUGNED ADDITION. THE ADDITION MADE IS, THEREFORE UPHELD. 8. A BARE PERUSAL OF THE FINDINGS OF THE AO AS ALSO THE FINDINGS OF THE CIT(A) CLEARLY REVEALS THAT THE ASS ESSEE HAS FAILED TO ADDUCE COGENT, CREDIBLE AND CORROBORATIVE EVIDENCE TO THE DISCREPANCIES NOTICED BY THE AO. THE ASSESSEE FURTHER FAILED TO ADDUCE EVIDENCE OR ANY OTHER RELEVANT MAT ERIAL BEFORE THE CIT(A) FOR THE PURPOSE OF PRIMA-FACIE DISCHARGI NG THE ONUS CAST ON HIM, IN THE MATTER. IN THE LIGHT OF THE TE XT OF PROVISIONS OF SECTION 68 AND A NUMBER OF DECISIONS, ON THE ISS UE, IN QUESTION, OF VARIOUS HIGH COURTS AND SUPREME COURT, IT IS INCUMBENT UPON THE ASSESSEE, TO FILE EXPLANATION AB OUT THE NATURE AND SOURCE OF ANY SUM FOUND CREDITED IN HIS BOOKS OF ACCOUNT. IN THE PRESENT CASE, ASSESSEE HAS FAILED TO FILE SUCH EXPLANATION AND, HENCE, THE FINDINGS OF THE CIT(A), CANNOT BE INTERFERED WITH. THE FINDINGS OF THE CIT(A) ARE UP HELD. 9. IN GROUND NO.4, THE ASSESSEE CONTENDED CONFIRMAT ION OF THE ADDITION OF RS.2,25,734/- ON ACCOUNT OF ALLEGED EXPENDITURE. THE LD. AR REFERRED TO PARA 4 OF THE ASSESSMENT ORDER AND CONTENDED THAT THERE WAS SUFFICIENT CASH AVAILABLE AND THE SAID ADDITION CANNOT BE MADE. LD. DR PLA CED RELIANCE ON THE ORDER OF THE LOWER AUTHORITIES. A PERUSAL O F THE FINDINGS OF THE AO, IN PARA 4 OF THE ASSESSMENT ORDER REVEAL THAT THE PAYMENTS WERE MADE TO M/S BHAGWAN DASS & SONS AND M /S MAA SARASWATI RICE MILLS, IN THE MONTH OF DECEMBER, 2006 AND JAN.,2007 AND AUG.,2006 AND SEPT.,2006 RESPECTIVELY BY THE ASSESSEE, OUTSIDE THE BOOKS OF ACCOUNT. CONSEQUENT LY, THE 6 PAYMENT OF RS.1,15,200/- MADE TO M/S BHAGWAN DASS & SONS, PARTNER AND RS.1,10,534/- MADE TO M/S MAA SARASWATI RICE MILLS, BARNALA WAS TREATED AS UNEXPLAINED EXPENDITU RE AND DEEMED INCOME OF THE ASSESSEE. LD. CIT(A) UPHELD T HE FINDINGS. THE FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREU NDER: 6.1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O NOTICED THAT THE APPELLANT FIRM HAD MADE CERTAIN PURCHASES DURING DEC.2006 AND JAN.2007 (DETAILS ON PAGE 7 OF ASSESSMENT ORDER) FOR WHICH PAYMENTS WERE SHOWN HAVING BEEN MADE TO M/S BHAGWAN DASS &SONS, BARNALA. SIMILARLY, ON A PERUSAL OF THE ACCOUNT OF M/S MAA SARASWATI RICE MILLS, PAYMENTS WERE SHOWN TO HA VE BEEN MADE BY THE APPELLANT FIRM AGAINST PURCHASES I N THE MONTHS OF AUG 2006 AND SEPT.2006. THE AO HELD THAT AN AMOUNT OF RS.1,15,200/- MADE TO M/S BHAGWAN DASS & SONS, BARNALA AND RS.1,10,534/- MADE TO M/S MAA SARASWATI RICE MILLS, BARNALA WAS THE UNEXPLAINED EXPENDITURE OF THE APPELLANT AND THEREFORE NEEDED T O BE ADDED TO THE INCOME OF THE APPELLANT. 6.2 BEFORE ME, THE COUNSEL FOR THE APPELLANT HAS ST ATED THAT BOTH THE CONCERNS M/S BHAGWAN DASS & SONS AND M/S MAA SARASWATI RICE MILLS HAD CREDITED THE AMOUN T EARLIER THAN THE ACTUAL PAYMENT MADE. THE APPELLAN T CONCERN HAD MADE PAYMENT TO THE ABOVESAID PARTIES A S PER DATES MENTIONED IN THE ASSESSMENT ORDER BUT THE PARTIES HAD WRONGLY CREDITED THE AMOUNT IN THEIR BO OKS OF ACCOUNT ON SOME EARLIER DATE. HE STATES THAT THE AM OUNTS WERE DULY ENTERED IN THE BOOKS OF ACCOUNT AND THERE WAS SUFFICIENT CASH BALANCE AVAILABLE. HE STATED THAT IT IS A WELL SETTLED PROPOSITION THAT ADDITION SHOULD BE M ADE IN THE CASE OF THE PARTY WHO HAD CREDITED THE AMOUNTS. 6.3 THE AO, IN HIS REMAND REPORT NO.4068 DATED 9.2.2011 HAS STATED THAT APPELLANTS CONTENTION THA T THE AMOUNTS HAD BEEN CREDITED IN THE BOOKS OF M/S BHAGW AN DASS & SONS AND M/S MAA SARASWATI RICE MILLS THEREF ORE 7 ONUS LAY UPON THEM TO PROVE THE CREDITS, IS NOT ACCEPTABLE. THE APPELLANT HAD BEEN MAKING CASH PAYMENTS TO THE SAID PARTIES AND THEREFORE, REQUIRE D TO GIVE PROPER EXPLANATION FOR THE SAME. THE IMPUGNED ADDITION HAD RIGHTLY BEEN MADE. 10. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS AND FOUND THAT THE ASSESSEE HAS FAILED TO RECONCILE THE DISCREPANCIES POINTED OUT BY THE AO IN THE MATT ER. FURTHER, IT IS INCUMBENT UPON THE ASSESSEE TO JUSTI FY PAYMENTS MADE TO VARIOUS PARTIES WITH A VIEW TO ESTABLISH IT S CASE. THE ASSESSEE HAS FAILED EVEN PRIMA-FACIE TO ADDUCE COGE NT, CREDIBLE AND CORROBORATIVE EVIDENCE. IN THE LIGHT OF SUCH F ACTUAL MATRIX OF THE CASE, WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, THE SAME ARE UPHELD. 11. GROUND NOS. 5, 6 & 7 ARE GENERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. 12. IN THE RESULT, APPEAL IS THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DEC.,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH