Sh. Rajpal Singh, Mandi V. ITO, Mandi

ITA 631/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7497 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Rejection of books of accounts
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH SMD, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.631/CHD/2017 (ASSESSMENT YEAR : 2009-10) SHRI RAJPAL SINGH, VS. THE INCOME TAX OFFICER, MANDI. WARD MANDI. PAN: ANDPS3266J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH, ADV. RESPONDENT BY : SHRI MANJIT SINGH, SR. DR DATE OF HEARING : 25.06.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S), PALAMPUR DATED 27.1.2017 RELATING TO ASSESSMENT YEA R 2009-10. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW IN UPHOLDING THE ASSESSING OFFICER 'S ACTION OF NOT CONSIDERING THE RECORDS PRESENTED BEFO RE HIM, AND ESTIMATING SALES PROCEEDS TO THE TUNE OF RS.50,00,000/-, APPLYING NP RATIO OF 22.5% WITHOUT ANY BASIS AND MAKING AN ADDITION OF RS.827440/-, WHICH IS ARBITRARY AND UNJUSTIFIED . 2. THAT THE LD. COMMISSIONER OF INCOME TAX( APPE ALS) HAS FURTHER ERRED IN UPHOLDING THE OFFICER'S CONTENTIO N AS FOLLOWS. - RS 751000/- AND RS 14,00,000/- ADDITION ON ACCOUNT OF UNSECURED LOAN WITHOUT CONSIDERING THE EVIDENCE PLACED BEFORE HIM, WHICH IS ARBITRARY AND UNJUSTIFIED AND NEED TO BE SET ASIDE. ITA NO.631/CHD/2017 A.Y. 2009-10 2 3. THAT ALL THE REASONS MENTIONED IN THE ORDER TO MAKE ADDITIONS ARE BASED ONLY ON SUSPICION, CONJECTURE S AND SURMISES AND THE SAME HAVE BEEN UPHOLD BY THE LD. CIT( APPEAL) WITHOUT ANY INDEPENDENT APPLICATIO N OF MIND. 4. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS FURTHER ERRED IN UPHOLDING THE CHARGING OF INTEREST UNDER SECTION 234- B AND C OF THE ACT AND OTHER PENALTIES WHICH MAY NOT BE CHARGEABLE IN THE FACTS OF THE CASE. 5 . THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO L AW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 6. THE APPELLANT CRAVES THE LEAVE TO AMEND/ADD ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. GROUND NO.1 WAS NOT PRESSED BEFORE US. IN THIS REGARD THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE SYNOPSIS OF ITS SUBMISSIONS PLACED BEFORE US WHEREI N IT WAS CATEGORICALLY STATED THAT THE ASSESSEE PRAYED NOT T O PRESS THE FIRST GROUND OF APPEAL REGARDING THE ARBITRARY ESTIMATION OF INCOME BY THE ASSESSING OFFICER FOR THE FOLLOWIN G REASONS: I) THE UNAVAILABILITY OF THE OLD ACCOUNTANT IN TH E ABSENCE OF WHOM GETTING HOLD OF THE OLD ACCOUNTS AND RECORDS WAS NOT POSSIBLE. (FOR YOUR INFORMATION , THE ASSESSE HAD FILED INCOME TAX RETURNS UNDER SECTION 44AD WHERE THE ASSESSE WAS NOT REQUIRED TO MAINTAIN REGULAR BOOKS OF ACCOUNT.) II) DUE TO BAD HEALTH OF THE ASSESSE HE CANNOT PUT IN THE DESIRED EFFORTS TO ARRANGE THE REQUIRED INFORMATION AND DOCUMENTS TO SUPPORT THE FIRST GROUND OF APPEAL. IN VIEW OF THE ABOVE, GROUND NO.1 RAISED BY THE ASSESSEE IS BEING DISMISSED AS NOT PRESSED. 4. GROUND NOS.2 AND 3, IT WAS SUBMITTED, RELATE TO THE COMMON ISSUE OF ADDITION MADE ON ACCOUNT OF UNSECUR ED LOANS REMAINING UN-PROVED AMOUNTING TO RS.7,51,000 AND RS.14 LACS. DRAWING OUR ATTENTION TO THE FACTS OF THE CASE, ITA NO.631/CHD/2017 A.Y. 2009-10 3 AS ENUMERATED IN PARA 5.1 OF THE CIT(APPEALS) ORDER , THE LD. COUNSEL FOR ASSESSEE STATED THAT THE SAID SUMS WERE CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE IN HDF C BANK ON 4.2.2009 (RS.14 LACS) AND IN PNB BANK ON 21.1.20 09 (RS.7,51,000/-). THE LD. COUNSEL FOR ASSESSEE STATE D THAT BEFORE THE ASSESSING OFFICER IT HAD BEEN CONTENDE D THAT THE SAME HAD BEEN RECEIVED FROM HIS SON-IN-LAW SH.G URSEV SINGH AND HIS FRIEND SH.MAHAVEER SINGH RESPECTIVELY , BUT THE ASSESSING OFFICER MADE THE ADDITION OF THE SAM E FOR THE REASON THAT THEY HAD REMAINED UNEXPLAINED BY THE AS SESSEE AND THE SAME WAS UPHELD BY THE CIT(APPEALS) ALSO. T HE LD. COUNSEL FOR ASSESSEE IN THIS REGARD STATED THAT ADE QUATE EVIDENCES TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE DONORS HAD BEEN FILED BEFOR E THE LOWER AUTHORITIES IN DISCHARGE OF THE ONUS OF THE A SSESSEE TO EXPLAIN THE AFORESAID CREDITS IN THE BANK ACCOUNT. THE LD. COUNSEL FOR ASSESSEE STATED THAT THE AFFIDAVITS OF BOTH THE DONORS HAD BEEN FILED AND DREW OUR ATTENTION TO THE SAME PLACED AT PAPER BOOK PAGE NOS.8 AND 9. THE LD. COUN SEL FOR ASSESSEE ALSO STATED THAT COPY OF THE BANK STATEMEN T OF THE DONORS SHRI MAHAVEER SINGH FOR RS.7,51,000/- AND SH RI GURSEV SINGH FOR RS.14 LACS HAD ALSO BEEN FILED. IT WAS ALSO POINTED OUT THAT THE ADDRESS AND PAN NUMBERS OF THE SAID PERSONS HAD ALSO BEEN FILED. THE LD. COUNSEL FOR AS SESSEE STATED THAT THE LD.CIT(APPEALS) WITHOUT APPRECIATIN G THE EVIDENCES FILED BEFORE HER DISMISSED THE GROUND RAI SED BY THE ASSESSEE BY RECORDING INCORRECT FINDINGS THAT T HE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS EXPLANATION ITA NO.631/CHD/2017 A.Y. 2009-10 4 REGARDING THE NATURE AND SOURCE OF THE CREDITS IN T HE BANK ACCOUNT. THE LD. COUNSEL FOR ASSESSEE PRAYED BEFORE US THAT THE MATTER BE RESTORED BACK TO THE CIT(APPEALS) TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE EVI DENCES FILED BY THE ASSESSEE. 5. THE LD. DR, ON THE OTHER HAND, STATED THAT A FAI R VIEW MAY BE TAKEN ON THE ISSUE AND RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO GON E THROUGH THE ORDER OF THE CIT(APPEALS) ON THE ISSUE AT PARA 5.3 AS UNDER: 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE AN D THE WRITTEN SUBMISSIONS OF THE APPELLANT. THE CREDIT ENTRIES OF R S.14, 00,000/- AND RS.7, 51,000/- WERE FOUND MADE IN THE BANK ACCOUNT OF THE ASSESSEE WITH HDFC BANK AND PNB RESPECTIVELY ON 04.02.2009 AND 21.01.2009. THESE ENTRIES WERE NOT INCLUDED IN THE RECEIPTS FROM BUSINESS STAT ED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUN TS IN THE REGULAR COURSE OF BUSINESS OR IN THE REGULAR COURSE O F THE YEAR. THE AQ HAS NOT ANY WHERE REJECTED THE BOOKS OF ACCO UNTS AS SUCH U/S 145(3). THE ONLY BOOKS OF ACCOUNTS EXISTING IN THE CASE OF THE ASSESSEE IS HIS BANK ACCOUNT STATEMENTS . THE SAID CREDITS ARE FOUND MADE IN THE BANK A/C OF THE A SSESSEE. THE CONTENTION OF THE ASSESSEE THAT ONCE THE AO HAD REJECTED THE BOOKS OF ACCOUNTS, NO FURTHER ADDITION COULD BE M ADE U/S 68 OF THE ACT ON THE BASIS OF THE SAME BOOKS OF ACC OUNTS IS, THEREFORE, NOT TENABLE. THE ASSESSEE FAILED TO SUBSTANTIATE HIS EXPLANATION -R EGARDING THE NATURE AND SOURCE OF THE CREDITS IN HIS BANK AC COUNT AND DISCHARGE THE ONUS CAST UPON HIM TO EXPLAIN THE THREE INGREDIENTS OF IDENTITY AND CREDIT WORTHINESS OF TH E CREDITORS AND THE GENUINENESS OF TRANSACTIONS. THE AO WAS THU S JUSTIFIED TO MAKE AN ADDITION OF RS.21,50,000/- TO THE RETURNED IN COME OF THE ASSESSEE. MOREOVER, THE ADDITION MADE ON A/C OF ESTIMATE OF NET PROFIT IS RS.11,25,000/- ONLY WHILE THE UNEXPLA INED CASH CREDITS ARE RS. 21.50.000/-. THE ADDITION OF RS.21, 50,000/- IS UPHELD. ITA NO.631/CHD/2017 A.Y. 2009-10 5 ON GOING THROUGH THE SAME, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT THE LD.CIT(APPEALS) HAS ADJUDICATED THE ISSUE OF UNEXPL AINED CASH CREDITS WITHOUT DEALING WITH THE EVIDENCES FIL ED BY THE ASSESSEE. WE, THEREFORE, CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE CIT(APPEALS) TO ADJUDICATE THE SAME AFRESH AFTER CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE AND THEREAFTER PASS A SPEAKING ORDER. IT MAY BE AD DED THAT THE ASSESSEE BE GRANTED DUE OPPORTUNITY OF HEARING IN THIS REGARD. IN VIEW OF THE ABOVE, GROUND OF APPEAL NOS.2 AND 3 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.4 IS CONSEQUENTIAL AND NEEDS NO ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH JULY, 2018 *RATI* COPY TO: S 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH ITA NO.631/CHD/2017 A.Y. 2009-10 6