M/S. New Basant Automobiles Company, Kanpur V. Income Tax Officer- 3(3), Kanpur

ITA 597/LKW/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2348 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 23-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K SINIGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 597/LKW/2018 ASSESSMENT YEAR: 2013 - 14 M/S NEW BASANT AUTOMOBILES CO. A - 1, BLOCK C, BARRA 8 KANPUR V. INCOME TAX OFFICER 3(3) KANPUR T AN /PAN : AAJFN6881G (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI C. K. SINIGH, D.R. DATE OF HEARING: 05 03 2019 DATE OF PRONOUNCEMENT: 08 0 3 2019 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE LD. CIT(A) DATED 18/6/2018 FOR ASSESSMENT YEAR 2013 - 14. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE REPRODUCED BELOW: - 01. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS.8,56,179/ - AS UNEXPLAINE D CREDIT AMOUNT IN THE ACCOUNT OF SHRI S.S. CHANDEL, PARTNER U/S.68 OF THE INCOME TAX ACT, 1961 WHICH ADDITION IS BAD IN LAW AND BE DELETED. 02. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND FAILED TO APPRECIATE THAT THE AMOUNT OF RS.8,56,179/ - BEING CREDIT ED TO THE ACCOUNT OF THE PARTNER, THE SAME CANNOT BE TREATED AS UNEXPLAINED INCOME IN THE HANDS OF THE PARTNERSHIP FIRM, FOR THE PARTNER BEING ASSESSED TO TAX SEPARATELY, THE CREDIT APPEARING IN THE NAME OF THE PARTNER IN THE BOOKS OF THE FIRM STANDS EXPLA INED. THE ADDITION BE DELETED. 03. BECAUSE THERE BEING NO CASH TRANSACTION OR ACTUAL DEPOSIT OF ANY AMOUNT AND THE AMOUNT OF RS.8,56,179/ - BEING ON ACCOUNT OF ITA NO.597/LKW/2018 PAGE 2 OF 4 ADJUSTMENT ENTRIES, THE SAME CANNOT BE TREATED AS UNEXPLAINED, THE SAME BE DELETED. 04. BEC AUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS.8,56,179/ - IS CONTRARY TO FACTS UNJUSTIFIED, UNWARRANTED AND BE DELETED. 2 . THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDER ARE THAT SHRI S.S. CHANDEL WAS INTRODUCED AS A PARTNER I N THE ASSESSEE FIRM. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , ON EXAMINATION OF PARTNERS CAPITAL ACCOUNT , OBSERVED THAT THE ACCOUNT OF SHRI S.S. CHANDEL WAS CREDITED WITH AN AMOUNT OF RS. 9 ,56,179.15 ON ACCOUNT OF PURCHASE OF OLD ASSETS OF THE FIRM, PAYMENT TO CREDITORS AND PURCHASE OF NEW ASSETS AND THROUGH INTRODUCTION OF CAPITAL. THE ASSESSEE WAS ASKED TO EXPLAIN SUCH TRANSACTION S . IN RESPONSE , ASSESSEE FURNISHED A COPY OF BANK ACCOUNT OF SHRI S. S. CHANDEL THROUGH WHICH RS.1 LAKH WAS PAID FROM THE FIRM BU T DID NOT FILE ANY OTHER EVIDENCE WITH RESPECT TO OTHER CREDITS AND, THEREFORE, THE ASSESSING OFFICER ALLOWED RELIEF ONLY TO THE EXTENT OF RS.1 LAKH AND MADE ADDITION TO THE EXTENT OF RS.8,56,179.15. 3 . ON APPEAL BEFORE THE LD. CIT(A), I T WAS SUBMITTED THAT THE CREDIT REPRESENTED TRANSFER ENTRIES OF ASSETS OF PARTNERSHIP CONCERN WHICH BELONG TO SHRI S. S. CHANDEL AND SHRI S. S. CHANDEL HAD MADE PAYMENTS ON BEHALF OF THE PARTNERSHIP FIRM. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE ARGUM ENTS OF THE ASSESSEE AND UPHELD THE ADDITION. 4 . BEFORE US, THE LD. A.R. OF THE ASSESSEE ARGUED THAT SHRI S. S. CHANDEL WAS WORKING AS A SOLE PROPRIETOR IN A FIRM AND ON THE FORMATION OF PARTNERSHIP FIRM , ALL THE ASSETS OF THE PROPRIETORSHIP FIRM WERE TRANSFE RRED TO THE NEW FIRM AND, THEREFORE, THE ASSETS WERE DEBITED AND CAPITAL ACCOUNT OF SHRI S. S. CHANDEL WAS CREDITED. HE FURTHER SUBMITTED THAT RS.4 LAKHS FOUND TO HAVE BEEN CREDITED IN THE ACCOUNT OF SHRI S. S. CHANDEL WAS ON ACCOUNT OF FUNDS TRANSFERRED BY HIM ON 11/4/2012 FROM ITA NO.597/LKW/2018 PAGE 3 OF 4 HIS BANK ACCOUNT WITH HDFC BANK AND IN THIS RESPECT FILED A COPY OF BANK ACCOUNT WHERE SUCH AMOUNT OF RS.4 LAKHS WAS DEBITED TO THE ACCOUNT OF SHRI S. S. CHANDEL ON 11/4/2012. AS REGARDS OTHER CREDITS, THE LD. A.R. OF THE ASSESSEE INVITED OUR ATTENTION TO PAPER BOOK PAGE 10, WHICH IS THE COPY OF LEDGER ACCOUNT OF SHRI S. S. CHANDEL IN THE BOOKS OF THE ASSESSEE, WHERE ENTRIES WITH RESPECT TO CREDIT ON ACCOUNT OF VARIOUS ASSETS WERE RECORDED . IT WA S PRAYED BY THE LD. A.R. OF THE ASS ESSEE THAT THE LD. AUTHORITIES BELOW HAVE NOT APPRECIATED THE ENTIRE FACTS AND STATED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIFY THESE FACTS. 5 . THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6 . I HAVE HEARD THE RIVAL P ARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. I FIND THAT DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER OBSERVED FOLLOWING CREDITS IN THE CAPITAL ACCOUNT OF SHRI S. S. CHANDEL: - SL NO. PARTICULARS AMOUNT 1 PURCHA SE OF OLD ASSETS OF THE FIRM RS. 4,30,763.15 2 PURCHASE OF NEW ASSETS RS. 25,416/ - 3 PAYMENT TO CREDITORS RS. 4,00,000/ - 4 INTRODUCED VIA CHEQUE RS. 1,00,000/ - 7 . OUT OF THESE CREDITS, RS.1 LAKH WAS ACCEPTED AND FOR R EST OF THE AMOUNTS, ADDITIONS WERE MADE AND SUSTAINED BY THE LD. CIT(A). AS REGARDS ENTRY OF RS.4 LAKHS, THE LD. A.R. OF THE ASSESSEE HAS FILED A COPY OF BANK ACCOUNT OF SHRI. S. S. CHANDEL WITH HDFC BANK WH ICH SHOWS THAT ITA NO.597/LKW/2018 PAGE 4 OF 4 THE AMOUNT HAS BEEN DEBITED TO HI S ACCOUNT. THE LD. A.R. OF THE ASSESSEE HAS EXPLAINED THAT ENTRY OF RS.4 LAKHS REPRESENTED THIS AMOUNT OF RS.4 LAKHS , WHICH WAS INTRODUCED BY DEBIT TO THE ACCOUNT OF SHRI. S. S. CHANDEL AND, THEREFORE, ADDITION WAS NOT SUSTAINABLE. AS REGARDS ENTRIES OF PURCHASE OF OLD ASSETS AMOUNTING TO RS.4,30,763.15, THE LD. A.R. OF THE ASSESSEE HAS DEMONSTRATED THAT THE ENTRY REL ATED TO PURCHASE OF OLD ASSETS AND NEW ASSETS OF THE FIRM WHICH WERE VERIFIABLE FROM THE RECORDS AND IN THIS RESPECT HAS FILED COPY OF LEDGE R ACCOUNT WHERE THE BREAKUP OF THIS AMOUNT IS MENTIONED. ALL THESE FACTS REQUIRE FACTUAL VERIFICATION, THEREFORE, I DEEM IT APPROPRIATE TO REMIT THE ENTIRE ISSUE TO THE OFFICE OF THE ASSESSING OFFICER WHO, AFTER GIVING OPPORTUNITY TO THE ASSESSEE , SHOULD RE - ADJUDICATE THE ISSUE. NEEDLESS TO SAY THAT ASSESSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF HEARING. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 / 0 3 / 201 9 . SD/ - [ T.S. KAPOO R ] ACCOUNTANT MEMBER DATED: 8 TH MARCH , 201 9 JJ: 0603 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR