M/s Independent Engineers, Chandigarh V. ITO, Chandigarh

ITA 602/CHANDI/2006

• Counselvise Citation: 60221514 RSA 2006
• Duration Of Justice: 5 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 28-07-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Question of law; Retraction; Revised return
• Section: 6

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. 602/CHD/2006 ASSESSMENT YEAR :1996-97 PAN:AAASI3871P M/S. INDEPENDENT ENGINEERS, VS. INCOME-TAX OFFICER , SCO 269, SECTOR 32-D, WARD 4(3), CHANDIGARH. CHANDIGARH. (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE DEPARTMENT BY: SMT. JAISHREE SHARMA, DR DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT:17.11.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE LD. CIT(A), CHANDIGARH, DATED29.05.2006, PA SSED UNDER SECTION 250(6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO IN SHORT THE ACT), FOR THE ASSESSMENT YEAR 1996-97. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ASSESSING OFFICER HAS ERRED BOTH ON F ACTS AND ON LAW. 2. THAT THE ASSESSING OFFICER HAS ERRED IN TREATING TH E DIFFERENCE IN BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FILED WIT H THE RETURN OF 2 INCOME AND RECASTED BOOKS OF ACCOUNTS AMOUNTING TO RS. 1,64,786/-. 3. THAT THE ASSESSING OFFICER HAS ERRED IN TREATING TH E DIFFERENCE IN SOFTWARE DEVELOPMENT CHARGES AMOUNTING TO RS.17,500 /- AS AN INCOME AGAINST THE FACTS OF THE CASE. 4. THAT THE APPELLANT MAY TAKE UP ANY OTHER GROUND AT THE TIME OF HEARING WITH YOUR HONOURS PERMISSION. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, NEITHER THE ASSESSEE NOR HIS REPRESENTATIVE ATTENDED DESPITE DUE SERVICE OF NOTICE. EARLIER, THE ORDER OF THE TRIBUNAL DATED 26.2.2007, PASSED EX-PARTE FOR W ANT OF PROSECUTION, WAS RECALLED VIDE ORDER DATED 15 TH JULY,2011 AND FIXED FOR HEARING ON 15.11.2011. 4. THE LD. DR, CONTENDED THAT THE ADDITION OF R S.1,64,786/-, HAS BEEN MADE ON ACCOUNT OF DISCREPANCIES FOUND IN THE RECA STED BOOKS OF ACCOUNT. HE PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHO RITIES IN RESPECT OF BOTH THE GROUNDS OF APPEAL. 5. IN VIEW OF NON-ATTENDANCE BY THE LD. COUNSEL FOR THE ASSESSEE, AS INDICATED ABOVE, THE ISSUES RAISE IN THE GROUNDS OF APPEAL ARE DECIDED ON MERIT ON THE BASIS OF AVAILABLE RECORD. 6. WE HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE AND THE RELEVANT MATERIAL PLACED ON THE FILE. THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF TRADING IN COMPUTER HARDWARE/SOFTWARE, PERIPHERALS AND STATIONERY ETC. IT HAD FILED ITS RETURN ON 30/08/1996 DECLARING AN INC OME OF RS.11,510/-. THE RETURN WAS ACCOMPANIED BY THE TRADING, PROFIT & LOS S ACCOUNT AND THE BALANCE SHEET. THE ASSESSEE FIRM SUBMITTED BEFORE T HE AO THAT THE ACCOUNTS WHICH HAD BEEN FURNISHED ALONG WITH THE RETURN OF I NCOME WERE NOT IN 3 COMPLETE AGREEMENT WITH THE BALANCES AS PER THE BOO KS OF ACCOUNT. THE ASSERTION OF THE ASSESSEE THAT PART TIME ACCOUNTANT ( WHO HAD ALLEGEDLY FAILED TOE ENSURE THAT THE ACCOUNTS FILED WITH THE DEPARTM ENT WERE IN ACCORDANCE WITH THE BOOKS) HAD RUN AWAY WITH THE BOOKS OF ACCO UNTS, REMAINED INEXPLICABLE WITH COGENT EXPLANATION BEFORE THE A.O . AND THE CIT(A). IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D RE-CASTED ACCOUNTS BEFORE THE ASSESSING OFFICER AND PRODUCED THE CASH BOOK AND LEDGER WHICH HAD ALLEGEDLY BEEN RE-WRITTEN FROM THE VOUCHERS AND DETAILS AVAILABLE WITH THE FIRM. A NUMBER OF DIFFERENCES BETWEEN THE TRADI NG ACCOUNT AND BALANCE SHEET WHICH HAS ORIGINALLY BEEN FILED WITH THE RETU RN OF INCOME AND THE TRADING ACCOUNT/BALANCE SHEET WERE NOW FILED BEFOR E THE ASSESSING OFFICER WITH THE SO CALLED RE-CASTED ACCOUNT. CERTAIN DIFFE RENCES NOTICED WERE AS FOLLOWS: PARTICULARS ORIGINAL RE-CASTED PARTICULARS ORIGINAL RE-CASTED OPENING STOCK 95,173.00 1,80,984.33 SALES 73,600.00 73,600.00 PURCHASES 2,64,269.50 2,50,270.00 SOFTWARE DEVELOPMENT 1,40,000.00 1,57,500 GROSS PROFIT 1,60,684.00 1,60,684.00 CLOSING STOCK 3,06,526.50 3,60,838.33 5,20,126.50 5,91,938.33 5,20,126.50 5,91,938.33 LIABILITIES SIDE OF THE BALANCE SHEET PARTICULARS ORIGINAL RE-CASTED DIFFERENCE PARTNERS CAPITAL ACCOUNT 2,27,958.82 2,20,483.29 (-) 7,475 4 SUNDRY CREDITORS: L & T LTD. 2,56,841.51 3,60,718.91 (+)1,03,877 ADVANCE FROM CUSTOMERS: CHANDIGARH SCIENCE SERVICES INDEPENDENT BUSINESS MACHINES (P) LTD.. CHD. M.D. VIDYALYA 3,20,000.00 3,78,573.75 35,855.00 4,45,000.00 1,385.50 26,855.00 (+) 1,25,000 (-) 3,77,188 (-) 9,000 NET DIFFERENC E 1,64,786 6.1. THE ASSESSING OFFICER OBSERVED THAT VERACITY A ND AUTHENTICITY OF THE RE-CASTED ACCOUNTS FILED FOR THE FIRST TIME, IN THE COURSE OF ASSESSMENT PROCEEDINGS COULD NOT BE VERIFIED AND WERE NOT RELI ABLE. THE A.O. RECORDED A FINDING THAT THE ASSESSEE HAD FAILED TO RECONCILE T HE DIFFERENCES ON ACCOUNT OF SOFTWARE DEVELOPMENT CHARGES AS WELL AS DIFFERENCES IN THE BALANCE-SHEET, FOR WHICH THE CONFIRMATIONS FROM THE CONCERNED PARTIES HAD BEEN OBTAINED BY THE A.O. AND PLACED ON RECORD. ACCORDINGLY, THE IMP UGNED DIFFERENCES OF RS.17,500/- ( ON ACCOUNT OF SOFTWARE DEVELOPMENT CH ARGES) AND RS.1,64,786/- (BEING THE CUMULATIVE DIFFERENCE IN T HE BALANCE SHEET) WERE ADDED TO THE ASSESSEE FIRMS INCOME. AGGRIEVED BY T HE FINDINGS OF THE A.O., THE APPEAL WAS FILED BEFORE THE LD. CIT(A). THE LD. CIT(A), AFTER APPRECIATION OF THE SUBMISSIONS FILED BEFORE HIM BY THE ASSESSEE AS WELL AS BY THE ASSESSING OFFICER UPHELD THE ADDITION. THE R ELEVANT FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREUNDER: 6. I HAVE CAREFULLY CONSIDERED THE RIVAL POSITIONS AND FACTS ON RECORD. NOW IT IS QUITE POSSIBLE AND NATURAL, THAT IN SUBMITTING A RETURN AND DISCLOSING THE FULL PARTICULARS OF INCOM E IN THE RETURN, SOME BONA FIDE OMISSION OR WRONG STATEMENT MAY HAVE OCCURRED IN TH E RETURN FILED BY A TAXPAYER. IN ORDER TO OBVIATE THI S POSSIBILITY, THE 5 LEGISLATURE HAS MADE PROVISIONS OF THE ACT ENABLING AN ASSESSEE TO FURNISH A REVISED RETURN WITHIN THE STIPULATED PERI OD. THE NATURAL CONSEQUENCE OF A REVISED RETURN IS, THAT THE EARLIE R RETURN WOULD BE EFFACED OR OBLITERATED FOR ALL PURPOSES UNDER THE A CT. BUT TO SOME UNDER THOSE PROVISIONS, THE OMISSION OR WRONG STATE MENT THAT MIGHT HAVE OCCURRED MUST, (I) BE BONA FIDE AND, (II) MUST HAVE BEEN DISCOVERED BY THE ASSESSEE HIMSELF. HOWEVER, IF TH E OMISSION OR WRONG STATEMENT IS DISCOVERED BY THE DEPARTMENT AS A RESULT OF ENQUIRY AND THEREAFTER A REVISED RETURN IS FURNISHED MAKING AMENDS, THAT WILL NOT AMOUNT TO A REVISED RETURN AS CONTEMPLATED BY T HE ACT. 7. IN THE PRESENT MATTER, THE ENTIRE STORY ABOUT TH E PART-TIME ACCOUNTANTS ALLEGED CONDUCT AND THE RE-CASTED BOOK S OF ACCOUNT WAS PUT UP BY THE APPELLANT ONLY AFTER THE RETURN WAS T AKEN UP FOR SCRUTINY AND A QUESTIONNAIRE HAD BEEN ISSUED TO THE FIRM BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO CALLED FOR CONF IRMATIONS FROM THE PARTIES AND HE FOUND THAT THE BALANCES AFFIRMED BY THEM WERE AT VARIANCE WITH THE APPELLANTS VERSION AND THE DIFFE RENCES WERE NOT RECONCILED. NOW, IT HAS TO BE REMEMBERED THAT AN AD MISSION MADE BY AN ASSESSEE IN THE RETURN OF INCOME IS THE BEST EVI DENCE THAT THE DEPARTMENT CAN RELY UPON, AND IS DECISIVE OF THE MA TTER. THIS PRINCIPLE IS TRITE AND ONE CAN ADVERT WITH ADVANTAGE TO THE D ECISIONS IN NARAYAN BHAGWANTRAO GOSAVI BALAJIWALE V. GOPAL VINAYAK GOSA VI, AIR 1960 SC 100; RAMJI DAYAWALA AND SONS (P) LTD. V. INVEST IMPORT, AIR 1981 SC 2085, 2093; STERLING MACHINE TOOLS VS. CIT, (1980) 122 ITR 926 (ALL); ISHWARI DEEN MEWALAL VS. CIT (1988) 169 ITR 584 (MP) AND DHARAMDAS AGGARWAL VS. CIT(1988) 172 ITR 244 (M P). AN ADMISSION, IF CLEARLY AND UNEQUIVOCALLY MADE, IS TH E BEST SUBTATIVE EVIDENCE AGAINST THE PARTY MAKING IT, SHIFTING THE ONUS ON TO THE MAKER ON THE PRINCIPLE THAT WHAT A PARTY HIMSELF ADMITS TO BE TRUE MAY REASONABLY BE PRESUMED TO BE SO AND UNTIL THE PRESU MPTION WAS REBUTTED, THE FACT ADMITTED MUST BE TAKEN TO BE EST ABLISHED (THIRU JOHN VS. RETURNING OFFICER AIR 1977 SC 1724). IT I S WELL KNOWN THAT AN ADMISSION OR CONCESSION TAKES AWAY A VERY VALUAB LE RIGHT FROM THE PARTY MAKING THE ADMISSION. IT BINDS THE PERSONS MA KING THE ADMISSION IN SO FAR AS THE FACTS ARE CONCERNED, THO UGH PERHAPS NOT IN SO FAR AS IT RELATES TO A QUESTION OF LAW [BANARSI DAS VS. KANSHI RAM AIR 1963 SC 1165]. 6 8. I AM, OF COURSE, VERY MUCH AWARE THAT RETRACTIO N FROM AN ADMISSION IS PERMISSIBLE IN LAW. HOWEVER, IT IS WEL L KNOWN THAT IN SUCH CASES OF RETRACTION, A VERY HEAVY BURDEN LIES UPON THE PERSON WHO MADE THE ADMISSION TO SHOW BY INDEPENDENT EVIDENCE THAT HE WAS EARLIER INCORRECT. AND THAT BURDEN, TO MY MIND, CAN NEVER BE LIGHTLY DISCHARGED BY THE MERE FURNISHING OF SELF SERVING RE-CASTED ACCOUNTS ( QUITE NATURALLY WITH THEIR SO-CALLED SUPPORTING DOC UMENTS) AS IS SOUGHT TO BE DONE IN THE PRESENT MATTER. THE APPELLANT HAS FURNISHED NO EVIDENCE TO SHOW THAT THE FIRM CAME TO KNOW ABOUT THE ALLEGED MISCHIEF PLAYED BY THE SO-CALLED PART-TIME ACCOUNTA NT ONLY AFTER THE RETURN WAS TAKEN UP FOR SCRUTINY AND A QUESTIONNAIR E WAS ISSUED IN THE MATTER. IT IS TRITE THAT THE ASSESSEE CANNOT BE AL LOWED TO RESILE FROM THE EARLIER ADMISSION ON A MERE STATEMENT [MAHESH B. SH AH VS. ACIT (1999) 238 ITR 130 (KER.)]. IN MY CONSIDERED OPINIO N, THE VIEW TAKEN BY THE LD. A.O. DESERVES OF NO INTERFERENCE AT MY HANDS. THE IMPUGNED ADDITIONS OF RS.17,500/- AND RS.1,64,786/- ARE SUSTAINED. 6.2. THE ASSESSEE-FIRM FAILED TO FILE COGENT AND CR EDIBLE EVIDENCES IN SUPPORT OF ITS RETURN OF INCOME AND PARTICULARLY TO SUPPORT THE ISSUE OF DIFFERENCES/DISCREPANCIES FOUND BY THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS FILED TRADING ACCOUN T AND THE BALANCE SHEET ALONG WITH THE IMPUGNED RETURN OF INCOME. SUBSEQUEN TLY, THE ASSESSEE RE- CASTED THE TRADING AND BALANCE SHEET FILED BY THE A SSESSEE ON THE PLEA OF NON AVAILABILITY OF THE BOOKS OF ACCOUNT. THE A.O. MADE ENQUIRIES IN THE COURSE OF ASSESSMENT PROCEEDINGS AND CALLED FOR CONFIRMATI ON FROM THE PARTIES AND FOUND THAT THE BALANCES CONFIRMED BY THEM WERE AT V ARIANCE WITH THE ASSESSEES VERSION AND SUCH DIFFERENCE REMAINS UNRE CONCILED. THE RETURN OF INCOME FILED BY THE ASSESSEE SUPPORTED BY TRADING A CCOUNT AND BALANCE SHEET AND THE ONUS IS SQUARELY LIES ON THE ASSESSEE TO SU PPORT THE TRANSACTION RECORDED IN SUCH DOCUMENT. THE ASSESSEE HAS FAILED TO FILE PLAUSIBLE AND COGENT EXPLANATION FOR SUCH DIFFERENCES. THE ASSESS EE HAS NOT EVEN FILED ANY EVIDENCE AS CONTEMPLATED UNDER SECTION 143(2) OF TH E ACT, IN SUPPORT OF HIS 7 RETURN OF INCOME. CONSEQUENTLY, IN THE ABSENCE OF A NY EVIDENCE, FILED BY THE ASSESSEE TO REBUT THE FINDINGS OF THE LD. CIT(A), W E DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, THE FINDINGS OF THE LD. CIT(A) IN RESPECT OF BOTH THE G ROUNDS OF APPEAL ARE UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH NOVEMB ER, 2011 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH NOVEMBER, 2011 /SKR/ COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR, INCOME-TAX DEPARTMENT, CHANDIGARH.