ITO, Dehradun V. Sh Surjit Singh & Sons (HUF), Dehradun

ITA 5698/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7008 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: TARUN K
• Keywords: Business income; Opportunity of being heard
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.5698/DEL/2012 ASSESSMENT YEAR : 2009-10 ITO, VS. SURJIT SINGH & SONS (HUF), WARD 2 (3), 46, SAHARANPUR ROAD, DEHRADUN. DEHRADUN. PAN : AADHS5325P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARUN K, ADVOCATE REVENUE BY : SHRI N.K. BANSAL, SR. DR DATE OF HEARING : 19.09.2016 DATE OF ORDER : 03-10-2016 ORDER PER H.S. SIDHU, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT FOR ASSESSMENT YEAR 2009-10 AGAINST THE ORDER DATED 26. 12.2011 PASSED BY THE CIT (A)-I, DEHRADUN. THE ONLY GROUND RAISED IS THAT THE LD. CIT(A) IS NOT EMPOWERED TO SET ASIDE T HE ASSESSMENT PASSED BY THE ASSESSING OFFICER AFTER 01 .06.2001. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FURNISHED RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 5,01,0 99/- 2 AGAINST GROSS RECEIPT OF RS. 39,50,000/- IN CONTRAC T WORK. THE ASSESSING OFFICER NOTED THAT THE TOTAL OF THE CREDI T SIDE IN THE ASSESSEES BANK ACCOUNT WAS OF RS. 1,94,18,100/-. THE ASSESSING OFFICER WAS OF THE OPINION THAT THIS REPR ESENTED THE ASSESSEES GROSS TURNOVER OF BUSINESS AND IT SHOULD HAVE MAINTAINED REGULAR BOOKS OF ACCOUNT AND GOT THEM AU DITED. HE REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE CASH DEPOSIT. THE ASSESSEE EXPLAINED THAT THE CASH DEPOS ITS WERE MADE OUT OF THE VARIOUS CASH WITHDRAWALS WHICH WERE MADE FROM TIME TO TIME, AS AVAILABLE WITH THE ASSESSEE I N THE FORM OF CASH IN HAND. REJECTING THIS EXPLANATION OF THE ASS ESSEE, THE ASSESSING OFFICER TREATED THE ENTIRE CASH DEPOSITS OF RS. 33,60,000/- AS UNEXPLAINED. BY VIRTUE OF THE IMPUG NED ORDER, THE LD. CIT (A) PARTLY ALLOWED THE ASSESSEES APPEA L, OBSERVING AS FOLLOWS:- 1.3 THE SUBMISSION HAS BEEN CONSIDERED. UNLESS THE A.O. IS ABLE TO SHOW THAT THE CASH WITHDRAWN BY THE ASSESSEE FROM ITS BANK ACCOUNT OR RECEIVED BY IT FR OM ANY OTHER VERIFIABLE SOURCE WAS SPENT BY IT ELSEWHERE, THE ASSESSEES CONTENTION THAT IT WAS AVAILABLE WITH IT AS CASH AT HAND CANNOT BE REJECTED. THE ASSESSEES CONTENTI ON THAT, CONSIDERING ITS TURNOVER, IT WAS ENTITLED TO 3 PRESUMPTIVE DETERMINATION OF ITS INCOME U/S 44AD AN D 44AE OF THE IT ACT, HAS NOT BEEN CONTROVERTED OR FO UND AS FALSE BY THE A.O. THEREFORE, NO ADVERSE INFERENCE S HOULD BE DRAWN IF THE ASSESSEE DID NOT MAINTAIN REGULAR B OOKS OF ACCOUNT. 1.4 IN SUCH CASES, ACCRETION TO ASSETS IN COURSE OF THE PREVIOUS YEAR IS A GOOD GUIDE TO ESTIMATE THE ASSES SEES INCOME. THE ASSESSEE HAS FURNISHED ITS STATEMENT OF AFFAIRS AS ON 31.03.2008 AS WELL AS 31.03.2009, SHO WING THAT THE ACCRETION TO ITS CAPITAL ACCOUNT AND ASSET S DURING THE PREVIOUS YEAR WAS EXPLAINABLE WITH REFER ENCE TO THE INCOME SHOWN BY IT IN THE RETURN OF INCOME. THIS SUGGESTS PRIMA FACIE THAT THE A.OS ALLEGATION OF T HE CASH DEPOSIT IN THE BANK ACCOUNTS AND THE FIRM BEING UNEXPLAINED IS NOT SUSTAINABLE. NEVERTHELESS, IN OR DER TO SATISFY HIMSELF, HE MAY EXAMINE THE DETAILS SUBMITT ED BY THE ASSESSEE AND CAUSE SUCH INQUIRY AS HE DEEMS FIT IN THIS REGARD. IF HE IS ABLE TO REACH ANY POSITIVE FI NDING ABOUT CASH WITHDRAWN FROM THE BANK GOING ELSEWHERE OR FOR ANY OTHER REASON, THE CASH AVAILABLE ON A PARTI CULAR DATE BEING LESS THAN THE CASH DEPOSITED IN THE ACCO UNT ON THAT DAY, HE WILL BE ENTITLED TO HOLD SUCH DEPOSIT AS 4 UNEXPLAINED AND ADDITION TO THAT EXTENT WILL BE SUSTAINED. 1.5 WITH THIS END IN VIEW, THE ASSESSEE IS DIRECTED TO PRODUCE ITS CASH STATEMENT AND EXPLAIN THE AVAILABI LITY OF CASH AS THE SOURCE OF THE DEPOSIT IN QUESTION. THE A.O. IS ENTITLED TO CAUSE SUCH INQUIRY AS HE THINKS FIT TO VERIFY THE CORRECTNESS OF THE SAME. HE WOULD BE ENTITLED TO HOLD A CASH DEPOSIT OR PART THEREOF AS UNEXPLAINED IF HE IS ABLE TO ESTABLISH THAT: I) THE CASH SHOWN AS RECEIVED BY THE ASSESSEE HAD NO EXPLAINED SOURCE, OR II) THE CASH WITHDRAWN FROM BANK OR RECEIVED BY THE ASSESSEE FROM ANY OTHER VERIFIABLE SOURCE WHICH IS CLAIMED TO BE AVAILABLE AS A SOURCE OF SUBSEQUENT C ASH DEPOSIT WAS ACTUALLY SPENT BY THE ASSESSEE AND WAS NOT AVAILABLE FOR THE DEPOSIT, OR III) THE CASH APPLIED (BY WAY OF IMPUGNED DEPOSIT OR OTHERWISE) ON ANY OCCASION EXCEEDED THE CASH AVAILA BLE ON THAT DATE. IT IS CLARIFIED THAT THE FINDING IS BASED ON THE PR EMISE THAT, CONSIDERING ITS TURNOVER, THE ASSESSEE WAS ENTITLED TO PRESUMPTIVE DETERMINATION OF ITS INCOME. IF, IN COU RSE OF HIS 5 EXAMINATION, THE A.O. IS ABLE TO GIVE A POSITIVE FI NDING THAT THE ASSESSEES TURNOVER EXCEEDED WHAT IS CLAIMED BY IT OR THAT THE ASSESSEE HAS CAPITALIZED PROFIT IN EXCESS OF WHAT HAS BEEN OFFERED TO TAX BY IT, HE WILL BE ENTITLED TO DENY THE BENEFIT OF PRESUMPTIVE DETERMINATION OF INCOME AND/ OR ASSESSEE THE EXCESS INCOME THUS CAPITALIZED BY IT. 3. AGGRIEVED WITH THE AFORESAID FINDING OF THE LD. CIT(A), THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE TRIBUNAL . THE TRIBUNAL VIDE ORDER DATED 18.1.2013 HAS ADJUDICATED THE ISSUE VIDE PARA NO. 5 TO 10 AS UNDER:- 5. BEFORE US, THE LD. DR HAS CONTENDED THAT THE LD. CIT (A) HAS ERRED IN SETTING ASIDE THE ASSESSMENT AND RESTORING IT TO THE ASSESSING OFFICER, SINCE AFT ER 01.06.2001, THE CIT (A) IS NOT EMPOWERED TO DO SO. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS STRONGLY SUPPORTED THE IMPUGNED ORDER, CONTENDING THAT THE LD. CIT (A) HAS, IN FACT, ACCEP TED THE CONTENTION OF THE ASSESSEE AND HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER; THAT THE LD. CIT (A) HAS, IN FACT, ENABLED THE ASSESSING OFFICER TO MAKE SUCH INQUIRY AS HE DEEMS FIT TO VERIFY THE CAS H 6 STATEMENT TO BE PRODUCED BY THE ASSESSEE; AND THAT AS SUCH, THERE BEING NO MERIT THEREIN, THE APPEAL F ILED BY THE DEPARTMENT BE DISMISSED. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. WE FIND THAT INDEED, THE LD. CI T (A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND IT IS NOT A CASE OF SETTING ASIDE THE ASSESSMENT AND REMITTING THE MATTER TO THE ASSESSING OFFICER. IT IS SEEN THAT THE DIRECTIONS GI VEN BY THE LD. CIT (A) WERE NOT REQUIRED TO BE GIVEN AN D THE SAME ARE LIABLE TO BE EXPUNGED. 8. IN VIEW OF THE ABOVE, THE DIRECTION GIVEN BY THE LD. CIT (A) IS EXPUNGED. THERE IS NO OTHER GRIEVANCE RAISED BEFORE US BY THE DEPARTMENT AGAINST THE ORDE R UNDER APPEAL. 9. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER PASSED BY THE LD. CIT (A). HOWEVER, THE DIRECTION GIVEN BY THE LD. CIT (A) IS EXPUNGED. 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. 7 4. AGAINST THE TRIBUNALS ORDER DATED 18.1.2013, TH E REVENUE FILED AN APPEAL BEING INCOME TAX APPEAL NO. 17 OF 2013 BEFORE THE HONBLE HIGH COURT OF UTTARAKHAND A T NAINITAL AND THE HONBLE HIGH COURT OF UTTARAKHAND AT NAINI TAL VIDE ITS ORDER DATED 25.10.2013, HAS SET ASIDE THE ORDER OF THE TRIBUNAL BY OBSERVING AS UNDER:- THE MATTER IS REMITTED BACK TO THE TRIBUNAL FOR TH E PURPOSE OF DETERMINATION, WHETHER, IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 251 OF THE INCOME T AX ACT, 1961, THE APPELLATE AUTHORITY HAD THE POWER OF REMANDING THE MATTER FOR REASSESSMENT OF THE INCREASE / ADDITION, AS WAS APPEALED AGAINST THE ORDER OF THE ASSESSING OFFICER? 5. PURSUANT TO THE ORDER DATED 25.10.2013, AS AFOR ESAID OF THE HONBLE HIGH COURT OF UTTARAKHAND AT NAINITAL, THE REVENUES APPEAL CAME UP FOR HEARING BEFORE US. 6. LD. DR RELIED UPON THE ORDER OF THE AO AND ON TH E OTHER HAND LD. COUNSEL OF THE ASSESSEE HAS STATED THAT LD . CIT(A) ORDER MAY BE UPHELD AND APPEAL OF THE REVENUE MAY B E DISMISSED. 8 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL AND THE HONBLE HIGH COURT OF UTTARAKHAND, AS AFORESAID. FOR THE SAKE OF CLARIT Y, WE ARE REPRODUCING THE PROVISIONS OF SECTION 251(1)(A) AS UNDER:- POWERS OF THE COMMISSIONER OF (APPEALS) 251. (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 8. A PERUSAL OF CIT(A)'S ORDER REVEALS THAT ON ONE HAND THE LD. CIT(A) HAS HELD THAT BY FURNISHING STATEMENTS OF AFFAIRS, THE ASSESSEE HAD BEEN ABLE TO EXPLAIN THE ACCRETIO N TO ITS CAPITAL ACCOUNT AND ASSETS WITH REFERENCE TO THE I NCOME SHOWN BY IT IN THE RETURN OF INCOME AND THEREFORE THE AO'S ALLEGATION OF UNEXPLAINED CASH DEPOSIT WAS NOT SUS TAINABLE. HOWEVER, INSTEAD OF COMING TO A DEFINITE CONCLUSION IN THE LIGHT OF HIS FINDING, HE RESTORED THE MATTER TO THE FILE OF AO TO EXAMINE THE MATTER WITH CERTAIN CONDITIONS. 9 9. WE HAVE GONE THROUGH THE ORDER PASSED BY THE LD. CIT(A) ALONGWITH THE PROVISIONS OF SECTION 251(1)(A) OF TH E I.T. ACT, 1961 AS REPRODUCED ABOVE AND WE ARE OF THE CONSIDE RED VIEW THAT LD. CIT(A) HAVE NO POWERS TO SET ASIDE THE MAT TER TO THE AO WHICH HE HAS DONE IN THE IMPUGNED ORDER. WE FI ND THAT LD. CIT(A) HAS SET ASIDE THE ISSUE IN DISPUTE TO TH E AO, IS CONTRARY TO THE PROVISIONS OF LAW AND NOT SUSTAINAB LE IN THE EYES OF LAW AND, THEREFORE, WE CANCEL THE IMPUGNED ORDER WITH THE DIRECTIONS TO THE LD. CIT(A) TO DECIDE THE ISSUE IN DISPUTE ON MERITS, AS PER LAW, AFTER GIVING ADEQUAT E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE STA NDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2016. SD/- SD/- (O.P. KANT) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 03/10/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR