Shri Arvind Kumar Chaudhary, Basti V. ACIT Circle, GONDA

ITA 645/LKW/2011

• Counselvise Citation: 64523714 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2014
• Assessment Year: misc
• Appeal Filed On: 24-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P K KAPOOR
• Keywords: Unexplained cash credit; Unexplained investment; Reason to believe
• Section: 40A(3); 142(1); 147; 68; 148; 6; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.645/LKW/2011 ASSESSMENT YEAR:2005 - 06 SHRI ARVIND KUMAR CHAUDHARY, CHAUDHARY HOSTEL, GANDHI NAGAR, BASTI. PAN:ABUPC0166F VS. A.C.I.T., CIRCLE, GONDIA. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI P. K. KAPOOR, C.A. RESPONDENT BY SHRI AMIT NIGAM, D.R. DATE OF HEARING 21/07/2014 DATE OF PRONOUNCEMENT 0 5 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 25/07/2011 FOR THE ASSESSMENT YEAR 2005 - 2006. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE THE ASSESSING OFFICER ERRED IN LAW AS WELL AS IN FACTS IN INITIATING THE PROCEEDINGS U/S 147 AND ISSUE OF NOTICE U/S 148 OF THE I.T. ACT 1961 ON WHICH THE ASSESSMENT ORDER U/S 144/147 OF THE I.T. ACT 1961 IS BASED AS THERE WAS NO CONFIRMATION OF LOAN OF RS.10,00,000/ - FROM SRI SATYA PRAKASH JAISWAL PROP. M/S AKASH TRADING CO. AND THE LEARNED ASSESSING OFFICER WAS ALSO NOT IN POSSESSION OF INFORMATION REGARDING THE PURCHASE OF NEW TRUCK. THE ASSESSMENT ORDER AS FRAMED BY AO AND CONFIRMED BY LEARNED CIT(A) - II, LUCKNOW DESERVES TO BE CANCELLED. 2 2. BECAUSE WITHOUT PREJUDICE TO THE ABOVE FACT AND LEGAL STATUS OF THE ASSESSMENT PROCEEDINGS THIS MAY BE STATED THAT THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) - II, LUCKNOW HAS NOT CONSIDERED THIS FACT THAT THE APPELLANT HAS NEVER GIVEN ANY LOAN TO SRI SATYA PRAKASH JAISWAL PROP. M/S AKASH TRADING CO. AND IT HAS ALSO NOT BEEN CONSIDERED THAT THE SAME AMOUNT OF RS.10,00,000/ - HAS ALREADY BEEN ADDED TO THE INCOME OF SATYA PRAKASH JAISWAL BY THE INCOME TAX OFFICER, BASTI BEING UNDISCLO SED INCOME. IT IS ALSO STATED THAT THE APPELLANT ASSESSEE GAVE RS.8,00,000/ - TO M/S AKASH TRADING CO. THROUGH HIS CC A/C BY ACCOUNT PAYEE CHEQUE AND RS.2,00,000/ - THROUGH CASH FOR THE PURCHASE OF CEMENT AND BUILDING MATERIAL AS SRI SATYA PRAKASH JAISWAL WA S DEALING IN THE TRADING OF BUILDING MATERIAL. THE ADDITION IS BASELESS AND UNLAWFUL ALSO. 3. BECAUSE THE ASSESSING OFFICER AS WELL LEARNED CIT(A) - II AGAIN ERRED IN LAW AS WELL AS IN FACTS IN ADDING A SUM OF RS.10,00,000/ - BEING COST OF NEW TRUCK NO. UP51 /T/0511 PURHCASED FROM M/S MOTOR AND GENERAL SALES LTD. THE ACTUAL COST OF THE TRUCK WAS AT RS.9,55,555/ - AND AMOUNT OF INSURANCE WAS AT RS.29,945/ - OUT OF TOTAL INVESTMENT A SUM OF RS.6,40,000/ - WAS TAKEN LOAN FROM TATA MOTORS LTD., BEZZOLA COMPLEX, 1 ST F LOOR, CHAMBEUR, MUMBAI AND REMAINING MONEY WAS ALSO TAKEN FROM CC A/C AND CASH AVAILABLE WITH THE ASSESSEE. 4. BECAUSE WITHOUT PREJUDICE TO THE SOURCE OF INVESTMENT AS EXPLAINED ABOVE MAY BE STATED THAT ALLEGED UNEXPLAINED INVESTMENT IF ANY IS COVERED FRO M THE ADDITION AS ALREADY MADE IN ORIGINAL ASSESSMENT ORDER. 5. BECAUSE THE APPELLANT ASSESSEE HAS NOT BEEN PROVIDED PROPER OPPORTUNITY AND HAS NOT BEEN CALLED BY THE AO REGARDING THE CONFIRMATION OF ALLEGED LOAN GIVEN TO SATYA PRAKASH JAISWAL AND ALSO TO EXPLAIN THE SOURCE OF INVESTMENT AS MADE TOWARDS THE PURCHASE OF NEW TRUCK. 6. BECAUSE THE ASSESSMENT ORDER PASSED BY THE AO AND CONFIRMED BY LEARNED CIT(A) - II, LUCKNOW DESERVES TO BE SET ASIDE TO ASSESSING OFFICER FOR FRESH FINDINGS AFTER CONSIDERING TH E FACTS WHICH HAS BEEN BROUGHT TO THE 3 NOTICE OF LEARNED CIT(A) - II, LUCKNOW DURING THE COURSE OF APPELLATE PROCEEDINGS. 7. BECAUSE THE APPELLANT ASSESSEE RESERVES HIS RIGHT TO ADD, DELETE OR ALTER THE GROUNDS OF THE APPEAL WITH THE PERMISSION OF THE CHAIR BEFORE THE HEARING OF THE APPEAL OR AT THE TIME OF HEARING OF THE APPEAL. 8. BECAUSE THE ASSESSMENT ORDER FRAMED BY THE AO AND CONFIRMED BY CIT(A) - II, LUCKNOW IS UNJUST, UNREASONABLE AND ALSO BAD IN LAW. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT NO OPPORTUNITY WAS PROVIDED BY THE ASSESSING OFFICER BEFORE COMP LET ING THE ASSESSMENT U/S 144 OF THE ACT AND THEREFORE, THE ASSESSMENT U/S 144 IS NOT VALID. HE ALSO SUBMITTED THAT THERE WAS NO MATERIAL FOR REOPENING AND THEREFORE, REOPENING IS NOT VALID. HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) COMMISSIONER OF INCOME - TAX VS AGGARWAL ENGG. CO. [2008] 302 ITR 246 (P&H) ( II ) RAJ MOHAN SAHA VS COMMISSIONER OF INCOME - TAX [1964] 52 ITR 231 (A SS) ( III ) BALIAH (K.) VS COMMISSIONER OF INCOME - TAX [1965] 56 ITR 182 (MYS) ( IV ) COMMISSIONER OF INCOME - TAX VS [1998] 229 ITR 229 (ALL) 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL S UBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. REGARDING THE FIRST CONTENTION OF THE ASSESSEE THAT NO OPPORTUNITY WAS PROVIDED BY THE ASSES SING OFFICER AND THEREFORE, THE ASSESSMENT PROCEEDINGS COMPLETED BY THE ASSESSING OFFICER ARE NOT VALID, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA 2 OF THE ASSESSMENT ORDER THAT NOTICE U/S 142(1) DATED 19/08/2009 HAS BEEN ISSUED TO THE ASSE SSEE FIXING THE CASE ON 09/09/2009. 4 HE HAS FURTHER NOTED THAT ON THIS DATE , ADVOCATE APPEARED AND REQUESTED FOR ADJOURNMENT. HE WAS ASKED TO FURNISH VAKALATNAMA AND THE SOURCE OF INVESTMENT OF LOAN OF RS.10 LAC GIVEN TO SHRI SATYA PRAKASH JAISWAL ALONG WITH THE DOCUMENTARY EVIDENCE AND SHOW CAUSE WHY THE AMOUNT MAY NOT BE TREATED AS UNDISCLOSED INVESTMENT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE CASE WAS ADJOURNED TO 30/09/2009. THEREAFTER, ON THIS DATE I.E. 30/08/2009 , SHRI H. RAHMAN APPEARE D AND REQUESTED FOR FURTHER ADJOURNMENT TO 04/11/2009. ON THIS DATE I.E. 04/11/2009, SRAM HUSSAIN, S/O SHRI H. RAHMAN, ADVOCATE APPEARED AND FILED WRITTEN REPLY WHICH WAS PLACED ON RECORD. THE ASSESSING OFFICER ALSO NOTED THAT IN THE REPLY , THE ASSESSE E HAS MENTIONED THAT HE HAS NOT GIVEN ANY LOAN TO SHRI SATYA PRAKASH JAISWAL IN ASSESSMENT YEAR 2004 - 05. THE CASE WAS ADJOURNED TO 18/11/2009 BUT ON THIS DATE , NEITHER ANYBODY APPEARED NOR ANY APPLICATION FOR ADJOURNMENT WAS RECEIVED. THEREAFTER, THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT U/S 144 OF THE ACT. FROM THESE FACTS , IT COMES OUT THAT SUFFICIENT OPPORTUNITY WAS PROVIDED BY THE ASSESSING OFFICER BUT THE SAME WERE NOT AVAILED BY THE ASSESSEE AND HENCE, THE ASSESSMENT PROCEEDINGS COMPLETED BY T HE ASSESSING OFFICER IS VERY MUCH VALID. 5.1 THE SECOND CONTENTION OF THE LEARNED A.R. OF THE ASSESSEE WAS THAT THERE IS NO MATERIAL BEFORE THE ASSESSING OFFICER FOR REOPENING. IN THIS REGARD, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER THAT AN INFORMATION WAS RECEIVED FROM INCOME TAX OFFICER, BASTI THAT THE ASSESSEE HAS GIVEN LOAN OF RS.10 LAC TO SHRI SATYA PRAKASH JAISWA L DURING THE ASSESSMENT YEAR 2004 - 05, WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT FILED WITH THE RETURN OF INCOME AND ON THIS BASIS , THE ASSESSING OFFICER HAS STATED THAT HE HAS REASON TO BELIEVE THAT THE ASSESSEE HAS GIVEN LOAN TO SHRI SATYA PRAKASH JAISWAL OUT OF UNDISCLOSED INCOME W HICH ESCAPED THE ASSESSMENT AND THEREFORE, HE ISSUED NOTICE U/S 148 OF TH E ACT. FROM THESE FACTS, IT COMES OUT THAT THE REOPENING WAS VALID BECAUSE THE ASSESSING OFFICER 5 HA D REASON TO BELIEVE REGARDING ESCAPEMENT OF INCOME AND WE DO NOT FIND ANY FORCE IN THIS CONTENTION OF THE ASSESSEE. 5.2 IN ADDITION TO RAISING THESE TWO C ONTENTIONS REGARDING OPPORTUNITY U/S 144 AND VALIDITY OF REOPENING U/S 147 OF THE ACT, NO ARGUMENT WAS RAISED BY THE ASSESSEE REGARDING ANY MISTAKE IN THE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY CIT(A). HE SIMPLY PLACE D RELIANCE ON SERVER JUDICIAL PRONOUNCEMENTS. NOW WE EXAMINE THE APPLICABILITY OF THESE JUDGMENTS. 5.3 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT O F HON'BLE PUNJAB & HARYANA RENDERED IN THE CASE OF AGGARWAL ENGG. CO. (SUPRA). IN THIS CASE , IT WAS HELD THAT ONCE NET PROFIT RATE WAS APPLIED, NO FURTHER ADDITION WAS CALLED FOR ON ACCOUNT OF UNACCOUNTED PURCHASE IN THE FACTS AND CIRCUMSTANCES OF THAT CASE. IN OUR CONSIDERED OPINION, THIS JUDGMENT IS NOT RENDERING ANY HELP TO THE ASSESSEE BECAUSE IN THE PRESENT CASE, NO ADDITION HAS BEEN MADE ON THE BASIS OF ANY ENTRY IN THE REJECT ED BOOKS OF ACCOUNT. IN FACT THESE TWO ENTRIES OF PURCHASE OF TRUCK RS.10 LAC AND LOAN GIVEN TO SHRI SATYA PRAKASH JAISAL WERE NOT APPEARING IN THE BOO KS OF ACCOUNT OF THE ASSESSEE AS HAS BEEN NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. NEITHER BEFORE THE CIT(A) NOR BEFORE US, IT HAS BEEN SHOWN BY THE ASSESSEE THAT THESE TWO INVESTMENTS WERE APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. SINCE THESE INVESTMENTS ARE NOT APPEARING IN THE BOOKS OF ACCOUNT, REJECTION OF BOOKS OF ACCOUNT DOES NOT MAKE ANY DIFFERENCE ALTHOUGH IN SOME CASES , IT HAS BEEN HELD BY HON'BLE ALLAHABAD HIGH COURT THAT EVEN AFTER REJECTION OF BOOKS OF ACCOUNT ADDITION CAN BE MADE U/S 68 IN RESPECT OF UNEXPLAINED CASH CREDIT BUT IN THE PRESENT CASE, THESE INVESTMENTS ARE NOT APPEARING IN THE BOOKS AND THEREFORE, THIS JUDGMENT IS NOT OF ANY HELP TO THE ASSESSEE. 6 5.4 THE SECOND JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF BANWARI LAL BANSHIDHAR (SUPRA). THIS JUDGMENT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE BECAUSE IN THAT CASE , THE ISSU E INVOLVED AND DECISION WAS THAT WHEN THE INCOME HAS BEEN ASSESSED AT A GROSS PROFIT RATE AFTER REJECTING THE BOOKS U/S 14 5(3 ), NO DISALLOWANCE CAN BE MADE SEPARATELY U/S 40A(3) OF THE ACT. IT IS SEEN THAT IN THAT CASE , GROSS PROFIT RATE WAS APPLIED BY RE JECTING THE BOOKS OF ACCOUNT AND ON THE BASIS OF ENTRIES IN THE SAME BOOKS, DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF CASH PAYMENT IN EXCESS OF PRESCRIBED LIMIT. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT BECAUSE THE INVESTMENT OF RS. 20 LAC S FOR WHICH ADDITION WAS MADE, WERE NOT APPEARING IN THE BOOK S . 5.5 THE THIRD JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE MYSORE HIGH COURT RENDERED IN THE CASE OF BALIAH (K.) (SUPRA). IN THAT CASE , IT WAS HELD BY HON'BLE HIGH COURT THAT IF AN ASSESSING AUTHORITY WANTS TO MAKE A BEST JUDGMENT ASSESSMENT ON THE BASIS OF A COMPARABLE CASE, THAT CASE HAS TO BE PUT TO THE ASSESSEE AND THE ASSESSEE BE GIVEN AN OPPORTUNITY TO GIVE HIS EXPLANATION REGARDING THE SAME. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT MADE ANY ASSESSMENT ON THE BASIS OF COMPARABLE CASE, WHICH HAS NOT BEEN PUT TO THE ASSESSEE FOR HIS EXPLANATION. IN THE PRESENT CASE , TWO ADDITIO NS WERE MADE REGA RDING TWO INV ESTMENTS COMING TO THE KNOWLEDGE OF THE ASSESSING OFFICER WHICH WERE NOT APPEARING IN THE BOOKS OF ACCOUNT AND NO SATISFACTORY EXPLANATION WAS FURNISHED AND HENCE, THIS JUDGMENT IS NOT RENDERING ANY HELP TO THE ASSESSEE. 5.6 THE LAST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE ASSAM HIGH COURT RENDERED IN THE CASE OF RAJ MOHAN SAHA (SUPRA). IN THAT CASE , IT WAS HELD BY HON'BLE HIGH COURT THAT ACCOUNT 7 BOOKS NOT SHOWING AMOUNTS REMITTED, THE TRIBUN AL WAS UNABLE TO PROVE ASSESSEES INVOLVEMENTS IN UNDISCLOSED BUSINESS AS THERE WAS NO MATERIAL, AND THEREFORE, THE ADDITION IS NOT VALID. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS BROUGHT MATERIAL ON RE CORD AS PER WHICH THE TRUCK WAS PURCHASED BY THE ASSESSEE AS WELL AS RS.10 LAC WAS GIVEN BY THE ASSESSEE TO SHRI SATYA PRAKAS H JAISWAL AND THESE FACTS WERE VERY MUCH CONFRONTED TO THE ASSESSEE AND THE ASSESSEE COULD NOT GIVE ANY EXPLANATION AND COULD NOT R EBUT THIS ALLEGATION REGARDING THESE INVESTMENTS BY THE ASSESSEE. HENCE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 6. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY H ELP TO THE ASSESSEE AND THE ASSESSEE COULD NOT GIVE ANY EXPLANATION REGARDING THESE INVESTMENTS FOR WHICH ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT THESE ADDITIONS ARE NOT DISCLOSED. HENCE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 /0 9 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR