Mukand Cold Storage, Yamunanagar V. ITO, Yamunanagar

ITA 608/CHANDI/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5078 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 01-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UMESH CHANDRA
• Assessee Lawyers: S K MUKHI
• Keywords: Source of fund
• Section: 143(3); 208; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES (A) BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA 608 & 609/CHD/2009 A.Y. : 2003-04 & 2004-05 MUKAND COLD STORAGE, V I.T.O., WARD-4, YAMUNA NAGAR. YAMUNA NAGAR. PAN : AABFM-9928Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY: SHRI UMESH CHANDRA ORDER PER G.S.PANNU, AM BOTH THESE APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE ARISING FROM THE RESPECTIVE ORDERS OF THE CIT(APPEA LS) DATED 13.03.2009 FOR THE ASSESSMENT YEARS 2003-04 AND 200 4-05. IN BOTH THE APPEALS, THE ISSUE IS COMMON AND THEREFORE , WE FIND IT EXPEDIENT TO PASS A COMMON ORDER FOR THE SAKE OF BR EVITY AND CONVENIENCE. THE DISPUTE RELATES TO ACCRETION OF R S.11,00,000/- AND RS.10,43,000/- IN THE CAPITAL ACCOUNT OF THE PA RTNERS FOR THE TWO ASSESSMENT YEARS OF 2003-04 AND 2004-05 WHICH H AVE BEEN CONSIDERED UNEXPLAINED. 2. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN BOTH THE YEARS, WE MAY REFER TO THE DISCUSSION IN THE ORDERS OF THE INCOME TAX AUTHORITIES FOR THE ASSESSMENT YEAR 2003-04 TO FACILITATE APPRECIATION OF FACTS. THE ASSESSEE IS A PARTNERSH IP FIRM 2 ENGAGED IN RUNNING A COLD STORAGE. ON GOING THROUG H THE CAPITAL ACCOUNTS OF THE PARTNERS, THE ASSESSING OFFICER NOT ED THAT ADDITIONS AMOUNTING TO RS.11,00,000/- WERE CREDITED IN THE CAPITAL ACCOUNT OF FOUR PARTNERS NAMELY SHRI P.P.SI NGH RS.1,50,000/-, SHRI PARAMJIT SINGH RS.1,50,000/-, SHRI BALBIR SINGH RS.6,50,000/- AND SMT.JASMEET KAUR RS.1,5 0,000/-. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURN ISH INFORMATION AND DOCUMENTARY EVIDENCE IN SUPPORT OF THE SOURCE OF ADDITION OF RS.11,00,000/- IN THE CAPITAL ACCOUNT O F THE FOUR PARTNERS. CONSIDERING THE REPLY OF THE ASSESSEE, T HE ASSESSING OFFICER HELD THAT THE FIRM HAD INTRODUCED ITS UNACC OUNTED INCOME IN THE NAMES OF THE PARTNERS AND THEREFORE, A SUM O F RS.11,00,000/- WAS ADDED AS UNEXPLAINED INCOME IN T HE HANDS OF THE FIRM. THE SAID ADDITION WAS MADE IN THE ASSESS MENT FINALIZED U/S 143(3) OF THE ACT ON 30.12.2005. THE ADDITIONS WERE CARRIED IN APPEAL BEFORE THE CIT(APPEALS) WHO SUSTAINED THE ADDITION. THE MATTER WAS REMANDED BACK BY THE TRIBUNAL TO THE FILE OF THE CIT(APPEALS) TO BE DECIDED AFRESH. IN ACCORDANCE W ITH SUCH DIRECTIONS, THE IMPUGNED ORDER HAS BEEN PASSED BY T HE CIT(APPEALS) DATED 13.03.2009 WHEREBY THE ADDITION HAS BEEN SUSTAINED AGAIN. 3. IN THIS BACKGROUND, WE HAVE PERUSED THE IMPUGNED ORDER OF THE CIT(APPEALS). THE CIT(APPEALS) HAS EXTENSIVELY DEALT WITH THE SUBMISSIONS OF THE ASSESSEE. THE CIT(APPEALS) H AS NOTED THAT ALL THE IMPUGNED ADDITIONS IN THE CAPITAL ACCO UNT OF THE PARTNERS ARE IN CASH. THE ASSESSEE EXPLAINED THAT THE ADDITIONS IN THE CAPITAL ACCOUNT OF THE PARTNERS ARE OUT OF A MOUNTS WITHDRAWN BY THE PARTNERS FROM THE ASSESSEE FIRM DU RING THE PAST FINANCIAL YEARS. THE CIT(APPEALS) HAS NOTICED THAT BEFORE THE 3 ASSESSING OFFICER AND ALSO BEFORE HIM, THE ASSESSEE HAD FILED ONLY PHOTO COPIES OF THE CAPITAL ACCOUNT OF THE PAR TNERS FOR THOSE YEARS BUT THE ORIGINAL RECORDS I.E. THE BOOKS OF AC COUNT WERE NOT PRODUCED INSPITE OF BEING SPECIFICALLY REQUIRED TO DO SO. THE CIT(APPEALS) HAS NOTICED THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION AS TO WHETHER THE AMOUNT WITHDRAWN REMA INED IDLE WITH THE PARTNERS FOR 6 TO 7 YEARS TO BE DEPOSITED BACK AS CAPITAL IN THE IMPUGNED YEARS. THE CIT(APPEALS) HAS FURTHER NOTICED THE FINDINGS OF THE ASSESSING OFFICER THAT THE PARTNERS , AT NO STAGE OF THE PROCEEDINGS HAVE EVER CONFIRMED THE INTRODUCTIO N OF CASH BY THEM DURING THE YEAR UNDER CONSIDERATION. IN THIS M ANNER, THE CIT(APPEALS) HAS UPHELD THE INFERENCE OF THE ASSESS ING OFFICER THAT THE FIRM HAS FAILED TO PROVE GENUINENESS OF TH E TRANSACTIONS. IT HAS BEEN NOTICED THAT THE PARTNERS HAVE NO INDIV IDUAL SOURCES OF INCOME EXCEPT THE SHARE FROM THE FIRMS IN WHICH THEY ARE PARTNERS AND AMOUNTS EARNED THEREFROM ARE DULY CRED ITED TO THE RESPECTIVE ACCOUNTS MAINTAINED WITH THE SAID FIRMS. THE CIT(APPEALS) HAS FURTHER NOTICED THAT THE PARTNERS HAD NEVER WITHDRAWN CASH FROM ANY OF THESE FIRMS. WITH REGAR D TO THE DIRECTIONS OF THE TRIBUNAL TO ALLOW FURTHER OPPORTU NITY TO THE ASSESSEE, THE CIT(APPEALS) HAS HELD AS UNDER IN PAR AS 5 & 6 OF THE IMPUGNED ORDER : 5. IN ACCORDANCE WITH THE DIRECTIONS OF THE HON'BL E ITAT, THE APPELLANT WAS PROVIDED FURTHER OPPORTUNIT Y TO ADDUCE EVIDENCE IN SUPPORT OF ITS CASE. ON 04.11.2008, SHRI S.K.MUKHI, LEARNED AR FOR THE APPELLANT FILED WRITTEN SUBMISSIONS REITERATING THA T THE ADDITION TO CAPITAL IS OUT OF WITHDRAWALS MADE BY THE PARTNERS FROM M/S MUKAND COLD STORAGE IN ASSESSMENT YEAR 1996-97 TO 1999-2000. COPY OF LEDGER ACCOUNT WAS ALSO FILED IN SUPPORT OF THE CLA IM. THE LEARNED AR WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT IN SUPPORT OF THE WITHDRAWALS, CASH FLOW STATEMENT FOR THE INTERVENING PERIOD BETWEEN 1996- 97 TO 2003-04 TO PROVE THAT THE AMOUNT HAS NOT BEEN 4 UTILIZED DURING THIS PERIOD AND ALSO TO PRODUCE PARTNERS. THE MATTER WAS ADJOURNED TO 04.12.2008. ON THIS DATE, SHRI RAJIV SHARMA ATTENDED AND REQUESTED FOR ADJOURNMENT WHICH WAS ALLOWED AND THE HEARING WAS FIXED ON 15.12.2008. ON 15.12.2008, SHRI S.K.MUKHI ATTENDED BUT RELEVANT INFORMATION WAS NOT PRODUCED. THE LEDGER FROM WHICH COPY OF ACCOUNTS HAVE BEEN FILED AND THE BOOKS OF ACCOUNT ARE NOT SUPPORTED BY BILLS/VOUCHER. HE WAS INFORMED THAT THE ENTRIES IN THE BOOKS OF ACCOUNT CANNOT BE ACCEPTED AS CORRECT UNLESS THERE ARE SUPPORTING VOUCHERS/BILLS FROM WHICH THE ENTRIES HAVE BEEN MADE. HE WAS ALSO ASKED TO FILE CASH FLOW STATEMENT AS ADVISED EARLIER AND THE MATTER WA S ADJOURNED TO 16.01.2008 AND THEREAFTER 17.02.2009 AND 02.03.2009. ON 02.03.2009 AGAIN SHRI S.K.MUKHI, LEARNED AR OF THE APPELLANT ATTENDED BUT WITHOUT REQUISITE INFORMATION AND THE MATTER WAS ADJOURNED TO 12.03.2009. ON THIS DATE AGAIN A REQUEST FOR ADJOURNMENTS WAS RECEIVED. THE REQUEST IS DECLINED AS ALREADY SUFFICIENT OPPORTUNITIES HAV E BEEN PROVIDED TO THE APPELLANT. 6. AS MENTIONED IN MY EARLIER ORDER, 16 HEARINGS WERE GIVEN TO THE ASSESSEE BY THE A.O. BEFORE FINALIZATION OF ASSESSMENT. THEREAFTER, MATTER WAS REMANDED IN APPEAL AND SEVERAL OPPORTUNITIES WERE AGAIN PROVIDED TO THE APPELLANT. DURING THE HEARIN G OF APPEAL EARLIER, 6 HEARINGS WERE GIVEN BY ME. NOW, AFTER THE MATTER HAS BEEN RESTORED BACK IN APPEAL, THE APPELLANT HAS BEEN PROVIDED FURTHER OPPORTUNITIES ON 7 OCCASIONS AS MENTIONED IN THE PRECEDING PARA BUT EVEN THE BASIC INFORMATION REGARDING EVIDENCE IN SUPPORT OF WITHDRAWALS MADE, CASH FLOW STATEMENT AND THE BOOKS OF ACCOUNT HAVE NOT BEEN PRODUCED. THE APPELLANT WAS ASKED TO PRODUCE THE PARTNERS SO THAT ACTUAL POSITION CAN BE ASCERTAINED AND EVEN THAT HAS NOT BEEN DONE. IN TH E LIGHT OF THESE FACTS, I AM OF THE CONSIDERED OPINIO N THAT THE ADDITION OF RS.11 LACS IN THE CAPITAL ACCO UNT OF THE PARTNERS REMAINS UNEXPLAINED AND THE ADDITIO N IS CONFIRMED. AGAINST THE AFORESAID BACKGROUND, WE HAVE HEARD THE SUBMISSIONS BY THE RIVAL COUNSELS. AT THE OUTSET, THE FIRST AND THE FOREMOST SUBMISSION MADE BY THE APPELLANT IS THAT T HE AMOUNTS INTRODUCED BY THE PARTNERS AS CAPITAL CANNOT BE ASS ESSED IN THE HANDS OF THE ASSESSEE FIRM IN VIEW OF THE JUDGEMENT OF THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T V METACHEM INDUSTRIES, 245 ITR 160 AND ALSO THE JUDGEMENT OF THE 5 HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V RAMESHWAR DASS SURESH PAL CHEEKA, 208 CTR 459 AND C IT V METAL & METALS OF INDIA, 208 CTR 457. 4. WE HAVE EXAMINED THE AFORESAID PLEA SET UP BY TH E APPELLANT. IN PRINCIPLE, WE ARE IN AGREEMENT WITH THE PLEA OF THE ASSESSEE THAT WHERE A PARTNER ADMITS TO HAVE MADE D EPOSITS WITH THE FIRM, THEN AS FAR AS THE FIRM IS CONCERNED, EVE N IF THE SOURCE OF THE PARTNER IS HELD TO BE UNEXPLAINED, SUCH AMOU NT CANNOT BE SUBJECTED TO TAX IN THE HANDS OF THE ASSESSEE FIRM. SO HOWEVER, IN THE PRESENT CASE, THE FACTS STAND ON A DIFFERENT FOOTING. FIRSTLY, THE PROPOSITION ADVANCED BY THE APPELLANT IS BASED ON A PREMISE THAT THE PARTNERS CONCERNED HAVE CONFIRMED THE INTRODUCTION OF CASH BY THEM. IN THE PRESENT CASE, THE FINDING OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS TH AT THE PARTNERS, AT NO STAGE OF THE PROCEEDINGS HAVE EVER CONFIRMED THE INTRODUCTION OF CASH BY THEM AND EVEN BEFORE THE CI T(APPEALS), AS IS EVIDENT FROM THE EXTRACT REPRODUCED ABOVE, TH E ASSESSEE DID NOT PRODUCE ANY CONFIRMATION FROM THE CONCERNED PARTNERS. IN FACT, THE CIT(APPEALS) ALLOWED OPPORTUNITY TO TH E ASSESSEE TO PRODUCE THE PARTNERS SO THAT ACTUAL POSITION COULD BE ASCERTAINED. HOWEVER, THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE EXERCISE CARRIED OUT BY THE CIT(APPEALS). WE HAVE ALSO NOTED THE OBSERVATION OF THE CIT(APPEALS) THAT MORE THAN ENOUGH OPPORTUNITIES WERE ALLOWED TO THE ASSESSEE TO PRODU CE REQUISITE EVIDENCE, WHICH HAS NOT BEEN DONE. HAVING REGARD TO THE FACT SITUATION NOTED BY THE CIT(APPEALS), WE ARE SATISFI ED THAT ENOUGH OPPORTUNITIES WERE PROVIDED BY THE CIT(APPEALS). TH EREFORE, IN OUR VIEW, THE PROPOSITION CANVASSED BY THE ASSESSEE CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. 6 5. IN THE JUDGEMENT OF M/S METAL & METALS INDIA (SU PRA), THE PARTNER OF THE FIRM HAD CLAIMED TO HAVE DEPOSITED T HE MONEY WITH THE FIRM, WHICH WAS TREATED AS UNEXPLAINED BY THE A SSESSING OFFICER. THE HON'BLE HIGH COURT NOTED THAT THE FIR M GAVE EXPLANATION ABOUT THE SOURCE OF MONEY, NAMELY ITS P ARTNER, AND THE SAID PARTNER HAD ADMITTED HAVING DEPOSITED MONE Y WITH THE FIRM. UNDER THESE CIRCUMSTANCES, IT WAS HELD THAT NO ADDITION IS PERMISSIBLE IN THE HANDS OF THE ASSESSEE FIRM. CLE ARLY, THE FACTUAL MATRIX IN THE PRESENT CASE IS TO THE CONTRA RY. HEREIN, THE CONCERNED PARTNERS HAVE NOT MADE ANY CONFIRMATION O F HAVING MADE CASH DEPOSITS WITH THE ASSESSEE FIRM AND THERE IS NO NEGATION OF SUCH A FINDING BY THE ASSESSEE. TO THE SIMILAR EFFECT IS THE FACT POSITION IN THE CASES OF RAMESH DASS SU RESH PAL CHEEKA (SUPRA) AND METACHEM INDUSTRIES (SUPRA) RELIED UPON BY THE APPELLANT. THE SAID CASES ARE DISTINGUISHABLE ON FACTS AND THEREFORE, THE SAME DO NOT HELP THE CASE OF THE ASS ESSEE. 6. IN SO FAR AS THE EXPLANATION FURNISHED BY THE AS SESSEE IS CONCERNED, IT IS NOTICED THAT BEFORE THE TRIBUNAL, NO FRESH MATERIAL OR EVIDENCE HAS BEEN FILED. IT IS EVIDENT THAT THE ONLY PLEA RAISED IS THAT THE CASH DEPOSITS BY THE PARTNE RS HAVE BEEN MADE OUT OF WITHDRAWALS MADE BY THEM FROM THE ASSES SEE FIRM IN EARLIER YEARS FROM ASSESSMENT YEAR 1996-97 TO 1999- 2000. THIS EXPLANATION HAS NOT BEEN ACCEPTED BY THE LOWER AUTH ORITIES, PRIMARILY ON THE GROUND THAT THE BOOKS OF ACCOUNT O F THE RELEVANT PERIOD HAVE NOT BEEN PRODUCED AND EVEN THE CONCERNE D PARTNERS WERE NOT PRODUCED, INSPITE OF SUFFICIENT OPPORTUNIT IES ALLOWED BY THE CIT(APPEALS). IT IS EVIDENT FROM PARAS 5 & 6 O F THE ORDER OF THE CIT(APPEALS) THAT NO MATERIAL HAS BEEN FURNISHE D TO THE SATISFACTION OF THE INCOME TAX AUTHORITIES TO EXPLA IN THE SOURCE OF 7 FUNDS IN THE HANDS OF THE ASSESSEE FIRM. UNDER THE SE CIRCUMSTANCES, WE ARE INCLINED TO AFFIRM THE ORDER OF THE CIT(APPEALS) UPHOLDING THE ADDITION OF RS.11,00,000 /- AS UNEXPLAINED INCOME OF THE ASSESSEE FIRM IN TERMS OF SECTION 68 OF THE ACT. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IS DISMISSED. 7. SINCE THE FACTS AND CIRCUMSTANCES IN THE ASSESSM ENT YEAR 2004-05 ARE IDENTICAL, OUR DECISION FOR ASSESSMENT YEAR 2003-04 APPLIES MUTATIS MUTANDIS IN THE OTHER APPEAL ALSO. 8. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE,2010. SD/[ SD/- (SUSHMA CHOWLA) ( G.S.PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 ST JUNE, 2010. POONAM COPY TO : THE APPELLANT/THE RESPONDENT/THE CIT (A)/ THE CIT/THE DR.