SHRI RADHEY SHYAM KHANDELWAL, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX-4, JAIPUR

ITA 713/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3587 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DR DHK
• Section: 143(3); 201

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 713/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2012-13 SHRI RADHEY SHYAM KHANDELWAL C-184, ROAD NO. 9C, VKI AREA JAIPUR CUKE VS. THE ACIT CIRCLE - 4 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADRPK 7193 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MUKESH KHANDELWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI J.C. KULHARI, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 4/04/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 25/04/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 03-03-2017 FOR THE ASSESSMENT YEAR 20 12-13 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE , THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE FACTS IN CONFIRMING THE TRADING ADDITION OF RS. 30,06,609/- MADE BY AO BY APPLYING A G.P. RATE OF 5% AS AGAINST DECLARED RATE OF 3.24% IN CASE OF DAL MANUFACTURING BUSINESS OF THE APPELL ANT. ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE , THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE FACTS IN CONFIRMING THE TRADING ADDITION OF RS. 7,45,247/- MADE BY AO B Y APPLYING A G.P. RATE OF 10% AS AGAINST DECLARED RAT E OF 6.43% IN CASE OF GEMSTONE BUSINESS OF THE APPELLANT. 3. THAT THE LD. CIT(A) HAS ERRED SERIOUSLY IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS. 18,93,10 0/- MADE BY AO U/S 41(1) OF THE I.T. ACT, 1961. 2.1 APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STA TEMENT OF FACTS, GROUND OF APPEAL AND WRITTEN SUBMISSION CARE FULLY. IT IS SENT THAT IN THE CASE OF AMBIKA GEMS, THE G.P. RATE HAD COME DOWN TO 3.24% FROM 11.25% DECLARED IN THE IMMEDIATELY PRECEDING A SSESSMENT YEAR AND IN THE CASE OF KOHINOOR GEMS, THE N.P. RATE HAS COME DOWN TO 6.43% FROM THE N.P. RATE OF 14.41% DECLARED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE AO AFTER DISCUSSING THE DEFECTS NOTICED BY HIM IN THE BOOKS OF THE APPELLANT HAD ES TIMATED THE GP @ 5% ON THE DECLARED TURNOVER IN THE CASE OF SHRI AMB IKA INDUSTRIES AND ALSO ESTIMATED THE N.P. RATE OF KOHINOOR GEMS @ 10% ON THE DECLARED TURNOVER. ACCORDINGLY, THE ADDITION OF RS. 30,06,60 9/- (RS. 85,53,099 RS. 55,46,490) WAS MADE TO PROFIT DECLARED IN THE C ASE OF AMBIKA INDUSTRIES AND ADDITION OF RS. 7,45,247/-(RS.20,87, 660 RS. 13,42,413) WAS MADE IN THE CASE OF KOHINOOR GEMS. I N VIEW OF THE FACTS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 145(3). HENCE THE REJECTION OF BOOK RESULTS OF SHRI AMBIKA INDUSTRIES AND KOHINOOR GEMS U/S 145(3) IS HELD TO BE VALID AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. THE ESTIMATI ON OF PROFIT MADE BY THE AO, TAKING INTO ACCOUNT ALL THE FACTS OF THE CASE, IN MY VIEW IS ALSO REASONABLE. HENCE, THE ADDITIONS OF RS. 30,06, 609/- AND RS. 7,45,247/- MADE BY THE AO ARE HEREBY CONFIRMED. 2.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED FOR DELETION OF TRADING ADDITIONS OF RS. 30,06,609/- AN D RS. 7,45,247/- ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 3 RESPECTIVELY CONFIRMED BY THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE PLEADED AND ALSO FILED THE FOLLOWING WRIT TEN SUBMISSION. FOR GROUND NO. 1 WRITTEN SUBMISSION 1. APPLICATION OF PROVISIONS OF SECTION 145(3) THE LD. AO HAS MADE VARIOUS OBSERVATIONS (SUMMARY OF THE SAME IS AT APB 10) WHICH WERE REPLIED BY THE APPELLANT BEFORE THE LD. CIT (A) (APB 11-12) IN DETAILS BUT SAME WERE NOT PROPERLY APPRECIATED BY THE LD. CIT (A). IN TH E ORDER THE LD. AO ALLEGED THAT APPELLANT DID NOT MAINTAIN STOCK REGISTER WHIC H FACT WAS BEYOND THE REAL POSITION. THE APPELLANT HAD PRODUCED THE STOCK RECO RDS BEFORE THE LD. AO ON 29/01/2015 (SUBMISSIONS GIVEN TO THE LD. AO ARE AT APB 1-3, RELEVANT PAGE 2 & 3). THE APPELLANT HAS ENCLOSED QUANTITATIVE DETAI LS OF GOODS TRADED/RAW MATERIAL (APB 6) AND THE SAME IS A PART OF AUDIT RE PORT AND WAS SUBMITTED ALONGWITH RETURN FILED. THIS SHOWS THE CAUSAL APPRO ACH OF THE LD. AO WHEREIN HE IS IGNORING A VITAL FACT OF MAINTENANCE OF STOCK RECORDS. DAL COMES UNDER ESSENTIAL COMMODITY AND HENCE COMES IN THE PURVIEW OF ESSENTIAL COMMODITIES ACT AND TRADER/ MANUFACRTURER DEALING THEREIN HAS TO MAINTAIN COMPLETE STOCK RECORDS. 2. THE LD. AO HAS COMPARED THE GP RATE OF THE ASSES SEE WITH ONE SHRI JUGAL KISHORE DANGAYACH, WITHOUT EVEN ESTABLIS HING THAT THE APPELLANT AND SAID SHRI JUGAL KISHORE DANGAYACH ARE COMPARABL ES I.E. WHETHER THEY ARE HAVING SAME INFRASTRUCTURE, TECHNOLOGY, MARKETING S ET UP, SAME KNOWLEDGE LEVEL, COMPETENCE OF PERSONNEL EMPLOYED ETC. THERE CAN NOT BE COMPARISION BETWEEN A STREET KIRANA SHOP WITH A RELIANCE ENTEPR ISE. THEREFORE THE COMPARISION USED BY THE LD. AO CAN NOT BE RELIED. 3. THE APPELLANT HAS MAINTAINED AND PRODUCED ALL RE QUISITE RECORDS FOR DEDUCING CORRECT PROFIT. THE LD. AO HAS ONLY ST ATED THAT THE APPELLANT HAD ACCEPTED ABOUT FEW VOUCHERS WITHOUT PROPER SUPPORTI NG. YOUR HONOUR, THE APPELLANT HAS FAIRLY ADMITTED DURING ASSESSMENT PRO CEEDINGS THAT IN A BUSINESS SET UP VOUCHER FOR EACH AND EVERY PAISA CAN NOT BE OBTAINED SUCH AS FOR TEA/REFRESHMENT EXPENSES, PETTY REPAIRING WORK OF M ACHINES, VARIOUS TYPES OF MISCELLANEOUS EXPENSES ETC. IN SUCH CIRCUMSTANCES NO ADVERSE INFERENCE IS LIABLE TO BE DRAWN. SO FAR AS TRADING ACCOUNT OF TH E ASSESSEE (APB 4) ARE CONCERNED ALL THE INGREDIENTS ARE PROPERLY VERIFIAB LE AND HENCE RESIDUAL AMOUNT HAS BEEN OFFERED AS GROSS PROFIT WHICH THE L D. AO HAS DISTURBED WITHOUT ANY BASIS. 4. IT HAS BEEN HELD BY THE HON`BLE RAJASTHAN HIGH C OURT IN THE CASE OF GOTAN LIME KHANIJ UDYOG (2002) 256 ITR 243 THAT REJECTION OF ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 4 BOOKS OF ACCOUNT MAY NOT NECESSARILY LEAD TO ANY AD DITION. IN THIS CASE THE HON`BLE ITAT EGVEN AFTER SUSTAINING APPLICATION OF PROVISIONS OF SECTION 145(1) DELETED THE TRADING ADDITION BY STATING THAT NO BASIS WAS GIVEN BY THE LD.CIT (A) FOR SUSTAINING TRADING ADDITION. 5. IN THE CASE OF CIT V/S DR A.P. BAHAL (2010) 322 ITR 71 (RAJ.) IT WAS HELD BY THE JURISDICTIONAL HIGH COURT THAT S ECTION 144/145 ONLY PROVIDES A MANNER OF COMPUTATION OF INCOME BUT IT DOES NOT D EAL WITH ADDITION OR DELETION FROM INCOME AND HENCE MERE REJECTION OF AC COUNTS OR SOME DEFICIENCIES IN THE BOOKS OF ACCOUNT WOULD NOT MEAN THAT IT MUST NECESSARILY LEAD TO ADDITIONS TO RETURNED INCOME. 6. IN THE CASE OF CIT V/S GUPTA K.N. CONSTRUCTION CO. (2015) 371 ITR 325 HON`BLE JURISDICTIONAL COURT HAS HELD THAT WHILE A PPLYING PROVISIONS OF 145(3) ONE HAS TO CONSIDER PAST HISTORY OF THE A SSESSEE OR TRADING RESULTS MUST BE COMPARED WITH ANOTHER SIMILAR ASSESSEE. IN THE INSTANT CASE THE GP RATE DECLARED REGISTERED DECLINE AS COMPARED TO LAS T YEAR BUT THIS WAS EXPLAINED ON ACCOUNT OF HEAVY JUMP IN THE TURNOVER. FURTHER T HE RECORDS MAINTAINED BY THE ASSESSEE ARE SUFFICIENT TO EXPLAIN ALL INGREDIE NTS OF TRADING ACCOUNT AND HENCE NO ADDITION CAN BE MADE. FURTHER AS MENTIONED HEREINABOVE THE LD. AO COMPARED THE CASE OF THE ASSESSEE WITH ONE SHRI JUG AL KISHORE DANGAYACH WITHOUT ANY BASIS AND SUCH COMPARISION IS ABSOLUTEL Y WITHOUT ANY BASIS AND IS LIABLE TO BE QUASHED. 7. IN THE ASSESSMENT OF THE ASSESSEE FOR THE AY 201 4-15 FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 (COPY OF THE ORDER AT APB 19-21). IN THIS CASE ON A TURNOVER OF RS. 10.41 CRORES THE APP ELLANT HAS DECLARED A GP RATE OF 2.44%. THE LD. AO IN THIS CASE HAS MADE AN ADDIT ION OF RS. 6,80,767 ON ACCOUNT OF SOME VARIATION IN STOCK VALUATION AND EV EN AFTER ADDING THE SAID AMOUNT THE ASSESSED GP COMES TO 3.09% WHICH IS LOW ER THAN GP OF 3.24% DECLARED FOR THIS CONCERNED YEAR. THEREFORE THE ADD ITION MADE BY THE LD. AO MAY KINDLY BE DELETED. 8. IN THE CASE OF CF. KRISHNALAL & CO. V/S STATE OF KERALA (2001) 123 STC 124 IT WAS HELD BY THE HON`BLE KERALA HIGH COURT THAT IN CASE OF REJECTION OF ACCOUNTS THERE SHOULD EXIST CORRELATIO N BETWEEN THE ADDITION MADE AND THE DEFECTS DETECTED. IN THIS CASE NO SUCH CORR ELATION EXISTS AND HENCE SUCH VAST ADDITION DESERVES TO BE QUASHED. IT IS THEREFORE SINCERELY REQUESTED THAT THE TRADIN G ADDITION MADE IN CASE OF DAL MANUFACTURING ACTIVITY MAY KINDLY BE DELETED . ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 5 FOR GROUND NO. 2 WRITTEN SUBMISSION FACTS OF THE CASE: THE APPELLANT INDIVIDUAL HAS BEE N ENGAGED INTO THE BUSINESS OF TRADING OF PRECIOUS AND SEMI PRECIOUS G EMSTONES UNDER THE NAME AND STYLE OF M/S. KOHINOOR GEMS. DURING THE YEAR AS SESSMENT PROCEEDING THE AO OBSERVED FOLLOWING GP HISTORY OF THE APPELLANT. A.Y. TURNOVER GROSS PROFIT NET PROFIT GP % NP % 2010-11 1,28,00,796 3,92,433 23,036 3.06 0.18 2011-12 1,35,93,371 19,58,197 1,81,436 14.41 1.33 2012-13 2,08,76,600 13,42,413 1,22,250 6.43 0.59 TO MADE FOR MAKING THIS ADDITION RELIED ON THE FIND INGS GIVEN BY HIM IN CASE OF DAL MANUFACTURING BUSINESS (PAGE 6-7 OF THE ASSESSMENT ORDER) AND APPLIED A GP RATE OF 10% IN PLACE OF 6.43% RESULTIN G INTO A TRADING ADDITION OF RS. 7,45,247. FIRST APPEAL, THE LD. CIT(A) FOR SUSTAINING THIS AD DITION MADE SIMILAR OBSERVATIONS AS MADE FOR DAL MANUFACTURING BUSINESS . IN FACT, HE HAS DEALT WITH BOTH THE TRADING ADDITION IN ONLY ONE PARA ( P ARA 6.3 AT PAGE 9 OF APPEAL ORDER) 1. FOR APPLYING A GP RATE IN CASE OF DAL MANUFACTUR ING ACTIVITY THE LD. AO MADE EFFORTS TO COMPARE THE CASE OF THE ASSESSEE WITH ONE SHRI JUGAL KISHORE DANGAYACH WHEREAS FOR THIS BUSINESS HE HAS NOT TRIED TO MAKE ANY COMPARISION. EVEN FOR THIS BUSINESS ALSO THE APPELL ANT MAINTAINED COMPLETE STOCK RECORDS GIST OF WHICH IS AT APB 23). 2. A LOOK AT THE FINDING OF THE LD. AO AND THE LD. CIT (A) FOR THIS ADDITION WOULD SHOW THAT NONE OF THEM HAVE ANY PERFECT BASIS FOR APPLYING A GP RATE OF 10% AND SUCH ADDITION HAS BEEN MADE MERELY ON ESTIM ATION. WHY 10% RATE HAS BEEN APPLIED WHY NOT 11% OR 9%. THIS SHOWS THAT THE ADDITION HAS BEEN MADE AS PER HIS WHIMS AND FANCIES. THE APPELLANT HA S MAINTAINED ALL REQUISITE BOOKS AND RECORDS AND HAD PRODUCED ALL SUCH AND THE RE IS BASIS WITH THE APPELLANT TO ESTABLISH INGREDIENT OF EACH AND EVERY AMOUNT MENTIONED IN TRADING ACCOUNT AND HENCE THE RESIDUAL FIGURE OF GP HAS TO BE ACCEPTED. 3. THE APPELLANT RELIES ON OTHER SUBMISSIONS MADE F OR GROUND NO.1 IN THIS REGARD INCLUDING THE CASE LAWS. IT IS THEREFORE SINCERELY REQUESTED THAT THE ADDITI ON MAY KINDLY BE DELETED AND OBLIGE. ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 6 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LOWER AUTHORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS THE GROUND NO. 1, T HE MAIN CONTENTION OF THE LD.AR OF THE ASSESSEE IS THAT THE AO HAS COMPA RED THE G.P. RATE OF THE ASSESSEE WITH ONE SHRI JUGAL KISHORE DANGAYACH WITH OUT COMPARING THE INFRASTRUCTURE, TECHNOLOGY, MARKETING SETUP, COMPE TENCE OF PERSONNEL EMPLOYED ETC. AS REGARDS THE GROUND NO. 2, THE LD.A R CONTENTION IS THAT THE AO HAS MADE THE COMPARISON WITH THE DAL MANUFAC TURING BUSINESS AND APPLIED A G.P. RATE OF 10% IN PLACE OF 6.43% RE SULTING INTO A TRADING ADDITION OF RS. 7,45,247/-. THE COMPARISON OF THE A O SHOULD BE IN ACCORDANCE WITH THE SIMILAR TRADE OF BUSINESS. AFTE R CONSIDERING THE VARIOUS FACTS AND LEGAL ISSUES, THE GROUND NO. 1 AN D GROUND NO. 2 OF THE ASSESSEE NEED A RELOOK AT THE LEVEL OF AO. HENCE BO TH THE ISSUES ARE RESTORED BACK TO THE FILE OF THE AO TO DECIDE THEM AFRESH. THE AO IS DIRECTED TO PROVIDE ADEQUATE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THUS GROUND NO. 1 AND 2 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 7 3.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 7.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STA TEMENT OF FACTS, GROUNDS OF APPEAL, WRITTEN SUBMISSION, REMAN D REPORT AND REJOINDER CAREFULLY. IT IS SEEN FROM THE VARIOUS REMAND REPO RTS OF THE AO THAT THE APPELLANT IN SPITE OF HAVING BEEN GIVEN MORE THAN O NE OPPORTUNITY FAILED TO PRODUCE SMT.ANITA AGARWAL FOR EXAMINATION. THOUGH H E HIMSELF STATED THAT HE WOULD ENSURE THE PRESENCE OF SMT. ANITA AGARWAL BEF ORE THE AO, IF ANY SUCH INSTRUCTIONS WERE ISSUED BY THE CIT (APPEAL) TO TH E AO. THE AO AGAIN AND AGAIN GAVE THE OPPORTUNITY TO THE APPELLANT TO PROD UCE SMT. ANITA AGARWAL BUT ON SOME PRETEXTS OR ANOTHER, THE APPELLANT DID NOT PRODUCE SMT. ANITA AGARWAL BEFORE THE AO IN SPITE OF MORE THAN SUFFICIENT OPPO RTUNITY HAVING BEEN GRANTED BY THE AO, THEREFORE, THE GENUINENESS OF THE CONFIR MATORY LETTER OF SMT. ANITA AGARWAL FILED DURING THE COURSE OF APPELLATE PROCEE DINGS CANNOT BE ACCEPTED. THE CLAIM OF THE APPELLANT THAT PAYMENT OF RS. 18,9 3,100/- WERE MADE TO M/S. ANITA EXPORTS ON 10-02-2017 IS ALSO NOT ACCEPTABLE UNLESS SMT. ANITA AGARWAL CONFIRMS BEFORE THE AO THAT SHE HAD RECEIVED THE PA YMENT. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY MADE TH E ADDITION OF RS. 18,93,100/- U/S 41(1) IN RESPECT OF THE LIABILITY A PPEARING IN THE NAME OF M/S. ANITA EXPORT. ACCORDINGLY, THE ADDITION OF RS. 18, 93,100/- MADE BY THE AO IS HERE BY CONFIRMED. 3.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION OF RS. 18,93,100/-U/S 41(1) OF THE ACT CONFIRMED BY THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE PLEADED AND FILED THE FOLLOWING WRITTEN SUBMISSION 1. THE APPELLANT HAS SUBMITTED FOLLOWING DOCUMENTS IN SUPPORT OF ABOVE CLAIM :- (I) CONFIRMATION OF THE SAID PARTY ACKNOWLEDGING DE BT OF RS 1893100 (APB 40). (II) PROOF OF SUBMISSION OF CONFIRMATION TO THE LD. AO DIRECTLY BY THE CREDITOR VIDE LETTER DATED 06/01/2017 (APB 39) ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 8 2. THE APPELLANT HAS PAID THIS BALANCE AMOUNT TO M/ S. ANIKTA EXPORTS THROUGH NEFT ON 10/02/2017 AND SAID FACT HA S BEEN CONFIRMED BY THE SAID PARTY THROUGH AFFIDAVIT DATED 18/02/2017 (APB 36-37). 3. THE BANK STATEMENT OF THE APPELLANT AS WELL AS T HAT OF ABOVE NAMED PARTY ARE ENCLOSED AT APB 33-35) EVIDENCING M OVEMENT OF THE SAID SUM FROM THE ACCOUNT OF THE ASSESSEE TO THE ACCOUNT OF CREDITOR 4. THEREFORE THERE MUST NOT BE ANY DOUBT ABOUT PEND ENCY OF SAID AMOUNT OF RS 18,93,100 AS AT 31.03.2012. EVEN THE S AID CREDITOR ON HER OWN HAD SUBMITTED A CONFIRMATION TO THE LD. AO DURING R EMAND PROCEEDINGS. THIS SHOWS THAT SHE HAD FEAR IN HER MIND TO APPEAR BEFOR E LD. AO BUT WITH THE DOCUMENTS SHE HAD CONFIRMED THE SAID OUTSTANDING. AT NO STAGE SUCH FOILED DOCUMENTS WERE EVER DOUBTED BY THE LD. AO OR THE LD . CIT (A) AND BOTH OF THEM HAD CONCENTRATED ONLY ON THE FAILURE OF THE AP PELLANT TO PRODUCE THE CREDITOR. 5. IN A RECENT DECISION OF THE HON`BLE KARNATAKA HC IN THE CASE OF PCIT (CENTRAL), BANGALURU V./S RAMGOPAL MINERALS (2 46 TAXMAN 267) IT HAS BEEN HELD THAT MERE NON APPEARANCE OF THE CREDITOR CAN NOT BE TAKEN TO REACH ON THE CONCLUSION THAT LIABILITY HAD CEASED TO EXIS T. THE BURDEN IS ON REVENUE TO ESTABLISH SUCH CESSATION. THEREFORE IN THE PRESENT CASE ALSO MERE NON APPEARANCE OF THE CREDITOR ALONE MAY NOT BE MADE TH E BASIS OF ADDITION U/S 41(1) 6. THE HON`BLE DELHI HIGH COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX DELHI-II VS JAIN EXPORTS PVT. LTD (89 DTR 265) HELD THAT IN SUCH CASE WHERE THE DEPARTMENT WISHES TO TAX CERTAIN LIABILITIES APPEARING IN THE BALANCE SHEET U/S 41(1 ) ON THE LOGIC THAT SAME ARE BEING SHOWN AS OUTSTANDING SINCE LAST MANY YEARS, S UCH ACTION IS NOT CORRECT. THE ISSUE OF GENUINENESS OF SUCH CREDIT ENTRY CAN A RISE ONLY IN THE YEAR IN WHICH SUCH LIABILITY WAS CREATED. THE DEPARTMENT HA VING ACCEPTED THE BALANCE OUTSTANDING OVER SEVERAL YEARS IT WAS NOT OPEN FOR THE CIT (APPEALS) TO CONFIRM THE ADDITION OF THE AMOUNT OF 1,53,48,850/- ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE SUFFICIENT EVIDENCE TO P ROVE THE GENUINENESS OF THE TRANSACTIONS WHICH WERE UNDERTAKEN IN THE YEAR 1984 - 85.' 7. THE HON1BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT V/S SITA DEVI JUNEJA (325 ITR 593) HELD THAT IT IS THE CONCEDED POSITION THAT IN THE ASSESSEE'S BALANCE SHEET, THE IMPUGNED LIABI LITIES HAVE BEEN SHOWN, WHICH ARE PAYABLE TO THE SUNDRY CREDITORS. SUCH LIA BILITIES, SHOWN IN THE BALANCE SHEET, INDICATE THE ACKNOWLEDGMENT OF THE D EBTS PAYABLE BY THE ASSESSEE. MERELY BECAUSE SUCH LIABILITY IS OUTSTAND ING FOR THE LAST SIX YEARS, IT CANNOT BE PRESUMED THAT THE SAID LIABILITIES HAVE C EASED TO EXIST. IT IS ALSO ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 9 CONCEDED POSITION THAT THERE IS NO BILATERAL ACT OF THE ASSESSEE AND THE CREDITORS, WHICH INDICATES THAT THE SAID LIABILITIE S HAVE CEASED TO EXIST. IN ABSENCE OF ANY BILATERAL ACT, THE SAID LIABILITIES COULD NOT HAVE BEEN TREATED TO HAVE CEASED. IN VIEW OF THESE FACTS, THE CIT(A) AS WELL AS THE TRIBUNAL HAVE RIGHTLY COME TO THE CONCLUSION THAT THE AO HAS WRON GLY INVOKED THE EXPLN. 1 OF S. 41(1) AND MADE THE ADDITION ON THE BASIS OF PRES UMPTION, CONJECTURES AND SURMISES. IT IS THEREFORE SINCERELY REQUESTED THAT THE INVOCA TION OF PROVISIONS OF SECTION 41(1) OF THE INCOME TAX ACT, 1961 WHEREIN T HE MAIN THRUST OF THE LD. AO AS WELL AS LD. CIT (A) HAS BEEN ABOUT NON APPEAR ANCE OF THE CREDITOR, MAY PLEASE BE DELETED. THE APPELLANT ALSO TRIED A LOT T O ENFORCE THE SAID CREDITOR TO APPEAR BEFORE THE LD. AO BUT SHE DECLINED TO APPEAR . THE APPELLANT IS NOT HAVING POWERS TO ENSURE APPEARANCE. ALTHOUGH HE COU LD NOT PRODUCE THE CREDITOR BUT WITH ALL THESE DOCUMENTS HE COULD DEFI NITELY PROVE THAT THE LIABILITY WAS GENUINE AND HENCE THE ADDITION MADE B Y THE LD. AO MAY KINDLY BE DELETED. 3.3 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE HAD PURCHASED THE GOODS FROM M/S. ANITA EXPORTS DURING THE YEAR 2009-10. THE SAME WAS EXPORTED TO THE OTHER PARTY IN WHICH QUALITY OF THE GOODS WAS NOT FOUND UPTO THE MARK. THEREFORE, THE ASSESSE E CEASED THE PAYMENT OF M/S. ANITA EXPORTS. THUS THE AMOUNT WAS APPEARIN G IN THE BOOKS OF THE ASSESSEE AS OUTSTANDING. THE ASSESSEE COULD NOT PR ODUCE THE PROPRIETOR OF M/S. ANITA EXPORTS BEFORE THE AO FOR EXAMINATION FO R WHICH THE AO MADE THE ADDITION OF RS. 18,93,100/- U/S 41(1) IN T HE HANDS OF THE ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 10 ASSESSEE. IN FIRST APPEAL, THE LD. CIT(A) HAS CONFI RMED THE ACTION OF THE AO. AS PER RECORDS THE PURCHASES WERE MADE DURING T HE YEAR 2009-10. THERE IS NO EVIDENCE ON RECORD TO ESTABLISH THE CLA IM OF THE ASSESSEE THAT THE QUALITY OF THE GOODS WERE NOT UPTO THE MARK. H ENCE, PAYMENT WAS NOT MADE. THERE IS NO EVIDENCE ON RECORD WHICH ESTABLIS HES THAT THE ASSESSEE HAS NOT RECEIVED THE PAYMENT FROM PERSON TO WHOM EX PORTS OF THESE GOODS WERE MADE. THE ASSESSEE HAS ALSO NOT PRODUCE D SMT. ANITA AGARWAL, PROP. M/S. ANITA EXPORT BEFORE THE AO, TO ESTABLISH THE GENUINENESS OF THIS LIABILITY. THE ADDITION WAS MA DE IN THE ASSESSMENT YEAR 2012-13. THE ASSESSMENT U/S 143(3) OF THE ACT WAS MADE ON 23-02-2015. NOW THE ASSESSEE CLAIMS THAT AMOUNT HAS BEEN REPAID BACK IN THE MONTH OF FEB. 2017. NO EVIDENCE HAS BEEN SUBMIT TED AS TO HOW THE MATTER GOT SETTLED WITH REGARD TO THE QUALITY OF TH E GOODS WHICH HAS BEEN MADE THE GROUND BY THE ASSESSEE FOR NOT MAKING THE PAYMENT. THUS THE FACTS ON RECORD SUGGEST THAT THIS PAYMENT IS AN AFT ERTHOUGHT OF THE ASSESSEE TO ESTABLISH THE GENUINENESS OF CLAIM. IN VIEW OF THESE FACTS, WE FIND NO MERIT IN SUCH SUBMISSION OF THE ASSESSEE. HENCE, WE CONCUR WITH THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE GROU ND NO. 3 OF THE ASSESSEE ITA NO.713/JP/2017 SHRI RADHEY SHYAM KHANDELWAL VS ACIT, CIRCLE 4, JAIPUR 11 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 -04-2018. SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 /04/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RADHEY SHYAM KHANDELWAL, JAIPU R 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT,CIRCLE 4,JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.713 /JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR