Sh. Sanjeev Kumar Sharma, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 608/ASR/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3262 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-02-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Additional evidence; Onus to prove; Set aside; Audi alteram partem
• Section: 143(3); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 608/ASR/2015 AS SESSMENT YEAR: 2011-12 SANJEEV KUMAR SHARMA, R/O H.NO.11, BHALLA COLONY, CHHEHARTA, AMRITSAR. [PAN:AMHPS 5792E] VS. INCOME TAX OFFICER, WARD-4(4), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PADAM BAHL (C.A) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 26.02.2019 DATE OF PRONOUNCEMENT: 28.02.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 08.09.2015, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING HIS ASSE SSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR THE ASSES SMENT YEAR (AY) 2011-12 VIDE ORDER DATED 05.02.2014. 2.1 THE ASSESSEES PRINCIPAL GRIEVANCE IN THIS CASE , AS PROJECTED BY HIS LD. COUNSEL, SH. BAHL, DURING HEARING, IS THE NON-CONSI DERATION OF THE ASSESSEES REPLY DATED 26.8.2015 (PB PGS. 16-17) FURNISHED BEFORE TH E LD. CIT(A), I.E. UPON BEING CONFRONTED WITH THE REMAND REPORT DATED 01.12.2014 CALLED FOR BY THE FIRST APPELLANT AUTHORITY FROM THE ASSESSING OFFICER (AO) UPON ADMITTING ADDITIONAL ITA NO. 608/ASR/2015 (AY 2011-12) SANJ EEV KUMAR SHARMA V. ITO 2 EVIDENCES LED BY THE ASSESSEE BEFORE HIM ALONG WITH THE REPLY DATED 21.10.2014 (PB PGS. 5-9) THE SAME MATERIALLY ALTER THE EXPLANA TION FURNISHED IN THE ASSESSMENT PROCEEDINGS, I.E., QUA THE SOURCES OF CASH DEPOSIT OF RS.39.35 LACS BY TH E ASSESSEE DURING THE YEAR IN HIS SAVING BANK ACCOUNT WITH PNB , KOT KHALSA, AMRITSAR, AS WOULD BE EVIDENT FROM THE STATED SOURCES IN THE ASS ESSMENT AND THE APPELLATE PROCEEDINGS, AS UNDER: (AMOUNT I N RS.) SR. NO. PARTICULARS AO CIT(A) (A) PAST SAVINGS (SELF) 2,60,000 2,60,000 (B) SALE OF PLOT 6,15,000 6,15,000 (C) PAST SAVINGS (FATHER) 14,11,000 ---- (D) PAST SAVINGS (MOTHER) 10,95,537 6,00,000 (E) CURRENT INCOME (UP TO 31.11.2010) NIL 1,90,000 (F) SALE ON OLD VEHICLES NIL 6,25,000 (G) ADVANCE RECEIVED FROM CUSTOMERS NIL 4,85,000 (H) CASH WITHDRAWAL FROM THE BANK WHICH DEPOSITED 11,55,000 11,55,000 45,36,537 39,30,000 TAKING THE BENCH THROUGH THE ASSESSEES LETTERS DAT ED 21.10.2014 & 26.8.2015; THE REMAND REPORT DATED 01.12.2014 (PB PGS. 10-15); AND THE IMPUGNED ORDER, SH. BAHL WOULD SEEK TO EXHIBIT THE SAID NON-CONSIDERATION, B EING PRESSED PER GD. 8 OF THE APPEAL. IN FACT, IN SOME RESPECTS (I.E., PART OF TH E EXPLANATION), THE AO HAD MISLED HIMSELF BY CONSIDERING THE EARLIER EXPLANATION ADVA NCED BY THE ASSESSEE, I.E., DURING THE ASSESSMENT PROCEEDINGS, VIZ. THE AMOUNT ASCRIBED TO PAST SAVINGS OF THE FATHER (RS.14.11 LACS) AND MOTHER (RS.10.96 LACS), WHILE IT IS ONLY THE LATTER AND AT RS.6 LACS ONLY, AS AGAINST RS.25.07 LACS, THAT THE ASSESSEE IS REQUIRED TO SHOW. IN FACT, THE SOURCE OF THE CASH GENERATED IN THE HANDS OF THE FATHER STATED TO BE SINCE ACCEPTED IN HIS CASE, AND MOTHER, IS THE SAME AS TH AT OF THE ASSESSEE, I.E., SALE OF OLD ITA NO. 608/ASR/2015 (AY 2011-12) SANJ EEV KUMAR SHARMA V. ITO 3 THREE-WHEELERS IN-AS-MUCH AS THE FAMILY, ENGAGED IN THE SAID BUSINESS, DECIDED TO WIND-UP THE SAME (SOME TIME IN DECEMBER, 2010) AND UNDERTAKE FINANCE BUSINESS. THE ADDITION QUA ADVANCE FROM CUSTOMERS (RS.4.85 LACS) IN FACT REPR ESENTS RECEIPT OF THIS BUSINESS; THE MONEY, AS EXPLAINED, BEING CO LLECTED FROM THE CUSTOMERS AS MARGIN MONEY (OF THE VEHICLES PURCHASED BY THEM) WH ICH, AFTER DEPOSIT IN HIS BANK ACCOUNT, IS TRANSMITTED BY THE ASSESSE PER DEMAND D RAFT TO THE VEHICLE SUPPLIER, M/S. SHIV MOTORS. THE TRANSACTIONS ARE, APART FROM BEING CONFIRMED BY THE CUSTOMERS, EVIDENCED BY PURCHASE BILLS (FROM THE VEHICLES SUPP LIER) AS WELL AS BANK LOAN TO THE CUSTOMERS. THIS (I.E., ADVANCE FROM CUSTOMERS), IN FACT, HE WOULD CONTINUE, IS THE ONLY PART OF THE ASSESSEES REPLY DATED 26.8.2015, WHICH STANDS CONSIDERED BY THE FIRST APPELLATE AUTHORITY, I.E., ON MERITS. THE SAM E IS NOT ACCEPTED AS THE VEHICLES, EVEN AS ON 19.11.2014, CONTINUED TO BE REGISTERED I N THE NAME OF THE ASSESSEE. THE REGISTRATION OF THE VEHICLES IN THE ASSESSEES NAME IS ADMITTED; HE IN FACT HIMSELF FURNISHING THE RCS OF THE VEHICLES SOLD (PB PGS. 36 -71), BUT ALL THE SAME QUESTIONS THE INFERENCE DRAWN BY THE REVENUE AUTHORITIES THER E-FROM, I.E., OF THE ASSESSEES EXPLANATION BEING FALSE, EVEN AS THE ASSESSEE HAD O FFERED TO PRODUCE THE BUYERS OF THE VEHICLES (VIDE LETTER DATED 26.8.2015). THE NON -REGISTRATION, WHICH IS ADMITTED, AS EXPLAINED, IS ON ACCOUNT OF THE POLICY OF THE ST ATE GOVERNMENT NOT TO REGISTER (AFRESH) OLD VEHICLES. THE MODELS OF THE VEHICLES S OLD (LISTED AT PB PAGE 18), AS EVIDENT FROM THE SALE LETTERS (PB PAGES 19-36), ARE OLD. THE MONEY SO COLLECTED HAS BEEN CHANNELIZED BY THE ASSESSEE INTO THE NEW (FINA NCE) BUSINESS. THE ASSESEE OUGHT TO HAVE BEEN CONFRONTED BY THE LD. CIT(A) ON THESE ASPECTS, I.E. ON WHICH HE FOUND THE ASSESSEES EXPLANATION DEFICIENT, PRIOR T O FINALIZING HIS ORDER. ON BEING ASKED AS TO WHY DID NOT THE ASSESSEE, THEN, DISCLOS E THE HIRE INCOME (FROM VEHICLES), WHICH FACT HAD CLEARLY WEIGHED WITH THE REVENUE AUTHORITIES IN NOT ACCEPTING THE ASSESSEES EXPLANATION, HE COULD NOT FURNISH ANY SATISFACTORY ANSWER, WHILE ADMITTING IT TO BE A FACT THAT INCOME FROM HI RE OF THREE- WHEELERS OR RUNNING ITA NO. 608/ASR/2015 (AY 2011-12) SANJ EEV KUMAR SHARMA V. ITO 4 THEM ON HIRE, HAS NOT BEEN DISCLOSED, AT LEAST FOR THE CURRENT YEAR. THE MATTER, HE CONCLUDED, BE RESTORED BACK TO THE FILE OF THE FIRS T APPELLATE AUTHORITY FOR ALLOWING OPPORTUNITY TO THE ASSESSEE TO STATE HIS CASE QUA THE SEVERAL ADJUSTMENTS MADE TO THE RETURNED INCOME, IN APPEAL ON MERITS BEFORE HIM . 2.2 THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON TH E OTHER HAND, ARGUED THAT THE ASSESSEES ENTIRE EXPLANATION, AS FURNISHED IN THE APPELLATE PROCEEDINGS, IS AN AFTER-THOUGHT, BEING IN FACT MATERIALLY DIFFERENT F ROM THAT FURNISHED IN THE ASSESSMENT PROCEEDINGS. THE SAME NEEDS TO BE REJECT ED AT THE THRESHOLD. 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE PRINCIPLE FLAW, AS OBSERVED IN THE IMPUGNED OR DER, IS THE NON-GRANT OF OPPORTUNITY TO THE ASSESSEE BY THE LD. CIT(A) TO ST ATE HIS CASE BEFORE HIM. THE LD. CIT(A), AFTER ADMITTING THE ADDITIONAL EVIDENCES AD DUCED BY THE ASSESSEE BEFORE HIM, RIGHTLY CALLED FOR THE REMAND REPORT FROM THE AO IN TERMS OF RULE 46A(3) OF THE INCOME TAX RULES, 1962. THE SAID REPORT WAS, AG AIN, RIGHTLY CONFRONTED TO THE ASSESSEE. HOWEVER, THE ASSESSEES REPLY THERETO OUG HT TO HAVE BEEN CONSIDERED BY THE LD. CIT(A), NON-CONSIDERATION OF WHICH IS PATEN T IN FINALIZING HIS ORDER. HOW, FOR EXAMPLE, THE COPIES OF THE PURCHASE BILLS AS WE LL AS EVIDENCE REGARDING PAYMENTS TO SHIV MOTORS, BE DISREGARDED. RATHER, TH IS SHOULD GIVE RISE TO THE QUESTION IF THE ASSESSEE HAD DISCLOSED THE RELEVANT (COMMISSION) INCOME ON THE SAID TRANSACTIONS, INCLUDING THE MODE OF RECEIPT TH EREOF INASMUCH AS THE ENTIRE AMOUNT RECEIVED (FROM THE CUSTOMER), I.E., WITHOUT DEDUCTING HIS REMUNERATION, IS, AS STATED, TRANSMITTED TO THE SUPPLIER. THE TRANSAC TIONS BEING CORROBORATIVE, WOULD ITSELF PROVE THEMSELVES. THEN, AGAIN, WHAT PURPOSE THE CAPITAL ACCOUNT OF THE MOTHER AND FATHER, WHICH FORM PART OF BOTH, THE REM AND REPORT AS WELL AS THE IMPUGNED ORDER, ONE WONDERS, SERVES; THE MONEY ASCR IBED TO THEM BEING STATED TO BE RAISED, SIMILARLY, THROUGH SALE OF OLD VEHICLES IN THEIR NAMES. THE FACT OF THE ITA NO. 608/ASR/2015 (AY 2011-12) SANJ EEV KUMAR SHARMA V. ITO 5 RCS BEING IN THE NAME OF THE ASSESEE BEING ADMITTED , HOW COULD THAT BY ITSELF LEAD THE MATTER BEING CONCLUDED AGAINST THE ASSESSEE, I. E., WITHOUT REQUIRING HIM TO ESTABLISH THE SAME, I.E., THE SALE OF THE VEHICLES. THEN, THE CASH AVAILABILITY WHICH THOUGH CANNOT BE PRESUMED ONLY ON THE BASIS OF INCO ME HAVING ARISEN, AS APPARENTLY THE ASSESSEE DOES BY APPLYING A PRO-RATA FORMULA, STANDS CONFUSED BY THE LD. CIT(A) WITH THE DEBIT TO THE ASSESSEES CAP ITAL ACCOUNT (RS. 60,000/-), IN REJECTING THE ASSESSEES EXPLANATION FOR RS. 1.90 L ACS. CLEARLY, A CLARIFICATION IN THE MATTER WAS IN ORDER, EVEN THOUGH, WITHOUT DOUBT, TH E HOUSEHOLD WITHDRAWALS (RS.5000/- P.M.) WOULD STAND TO BE TAKEN INTO ACCOU NT IN DETERMINING THE CASH AVAILABILITY. IT IS ONLY THIS, IT MAY BE APPRECIATE D, THAT WOULD COMPLETE THE PROCESSES OF GRANT OF HEARING TO THE ASSESSEE, OBSE RVING THE PRINCIPLE OF AUDI ALTERAM PARTEM . IT IS WITHOUT DOUBT UPON THE ADJUDICATING AUTHORI TY TO ACCEPT OR NOT ACCEPT THE APPELLANTS CASE, STATING, IN EITHER CAS E, THE REASON/S THEREFOR. THIS IN FACT ASSUMES ALL THE MORE SIGNIFICANCE AS THE REMAND REP ORT BY THE AO WAS FINALIZED WITHOUT CONSIDERING THE ASSESEES OBJECTIONS. THE A O, IN THE REMAND PROCEEDINGS, IS NOT BARRED FROM SEEKING THE ASSESSEES EXPLANATI ON TOWARD HIS CASE AS WELL AS QUA THE MATERIAL GATHERED BY HIM (AO) IN REBUTTAL. DOI NG SO WOULD, RATHER, ONLY MAKE THE PROCESS MORE ROBUST, AND THE AOS FINDINGS MORE SOUND AND CONSIDERED, ALSO REDUCING, AS AN INCIDENT, THE SCOPE OF LITIGAT ION, AND WHICH IS VERY DESIRABLE INDEED. HERE IT MAY ALSO BE NOTED THAT HEARING IS A ITERATIVE PROCESS; AN EXPLANATION LEADING TO A FURTHER EXPLANATION, TO EXPLAIN THE QU ERY ARISING FROM THE CONSIDERATION OR VERIFICATION OF THE FORMER, AND SO ON. FOR EXAMP LE, NON-DISCLOSURE OF THE HIRE INCOME, QUA WHICH ADVERSE INFERENCE HAS BEEN DRAWN BY THE REVE NUE WITHOUT REQUIRING THE ASSESSEE TO STATE THE REASON/S THEREF OR. THEN, AGAIN, A PARTICULAR EXPLANATION (OR PART THEREOF) MAY BE REQUIRED TO BE FURTHER SUBSTANTIATED OR, AS CASE MAY BE, VERIFIED AND/OR REBUTTED. WRITTEN SUBMISSIO NS ARE, IN THAT SENSE, A POOR SURROGATE FOR HEARING, EVEN AS THERE IS NON-CONSIDE RATION OF THE ASSESSEES WRITTEN ITA NO. 608/ASR/2015 (AY 2011-12) SANJ EEV KUMAR SHARMA V. ITO 6 SUBMISSIONS DATED 26.8.2015 IN SOME RESPECTS. IN FA CT, WHY SHOULD THE ASSESSEE, IT IS WONDERED, RESPOND SO LATE; THE REMAND REPORT HAV ING BEEN RELEASED AS FAR BACK AS ON 01/12/2014. BUT, THEN, SURELY, THAT IS NO REASON NOT TO GRANT PROPER OPPORTUNITY TO THE ASSESSEE, WHO IS TO BE ALLOWED, THOUGH, ONLY REASONABLE TIME TO REPLY. THE LD. DR STATING OF THE ASSESSEES CASE BEING AN AFTER-THOUGHT IS WHOLLY INCONSISTENT WITH THE REVENUES WHICH HAS ADMITTE D THE ADDITIONAL EVIDENCES, CASE. FURTHER, IT FAILS TO CONSIDER THAT THE BURDEN TO PROVE HIS RETURN, AND THE CLAIMS PREFERRED THEREBY, IS ONLY ON THE ASSESSEE. THE CAS H DEPOSITS IN HIS BANK ACCOUNT, WHICH IS THE SUBJECT MATTER OF THE INSTANT APPEAL, FOR INSTANCE, ARE REQUIRED TO BE SATISFACTORILY EXPLAINED AS TO NATURE AND SOURCE U/ S. 69A BY THE ASSESSEE. IT IS ONLY CONSIDERED PROPER UNDER THE CIRCUMSTANCE S THAT THE MATTER BE RESTORED AND SET ASIDE TO THE FILE OF THE AO TO CON SIDER THE ASSESSEES CASE IN ALL RESPECTS AND DECIDE AFRESH PER A SPEAKING ORDER. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN CO URT ON FEBRUARY 28, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 28.02.2019 /PK/PS COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SANJEEV KUMAR SHARMA, R/O H.NO.11, B HALLA COLONY, CHHEHARTA, AMRITSAR. (2) THE RESPONDENT: INCOME TAX OFFICER, WARD-4( 4), AMRITSAR (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER