Sri Mahendra Singh Chauhan, Durgapur V. ITO, WD-1(2), KOLKATA, Durgapur

ITA 732/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1812 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDIN J
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.732/KOL/2016 ASSESSMENT YEAR:2009-10 SRI MAHENDRA SIGH CHAUHAN, PROP. OF ASHIRBAD ENTERPRISE & VAIBHAV ENTERPRISE, A-14, ISPAT PALLY, DURGAPUR-713212 [ PAN NO.ADMPC 1094 K ] / V/S . ITO, WARD-1(2), AAYKAR BHAWAN, AAYKAR BITHI, CITY CENTRE, DURGAPUR- 713216 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI MANISH TIWARI, FCA /BY RESPONDENT MD. GHYAS UDDIN, JCIT-DR /DATE OF HEARING 24-03-2017 /DATE OF PRONOUNCEMENT 03-05-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-DURGAPUR DATED 18.01.2016. ASS ESSMENT WAS FRAMED BY ITO WARD-1(2), DURGAPUR U/S 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 29.12.2011 FOR A SSESSMENT YEAR 2009-10. SHRI MANISH TIWARI, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND MD. GHYAS UDDIN, LD. DEPARTMENTAL REPRESENTATIV E REPRESENTED ON BEHALF OF REVENUE. ITA NO.732/KOL/2016 A.Y. 2009-10 SH. MAHENDRA SINGH CHAUHAN VS. ITO WD-1(2), DGP PAGE 2 2. THE EFFECTIVE INTER-CONNECTED ISSUE RAISED BY AS SESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING O FFICER BY SUSTAINING THE DISALLOWANCE MADE BY THE AO FOR 966,535/- AND 7,64,549/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE, AN INDIV IDUAL, IS A LABOUR CONTRACTOR. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSE RVED THAT THERE IS NEGATIVE CASH BALANCE IN THE CASH BOOK OF ASSESSEE ON TWO DIFFERE NT OCCASIONS. FIRSTLY, THE NEGATIVE CASH BALANCE OF 9,66,535/- DATED 10.06.2008 AND SECONDLY ON 31.03.2 009 FOR 7,64,549/-. THE AO OBSERVED THE AFORESAID NEGATIVE CASH BALANCE FROM THE CASH BOOK OF THE RELEVANT PERIOD WHICH IS RECORDED ON PAGES 2 AND 3 IN HIS ORDER. ON QUESTION BY THE AO ABOUT THE NEGATIVE CASH BALANCE, THE ASSESSE E SUBMITTED FRESH CASH BOOK AND CLARIFIED THAT SUCH NEGATIVE CASH BALANCE AROSE ON ACCOUNT OF PUTTING WRONG DATE IN THE BOOKS OF ACCOUNT. HOWEVER, AO DISREGARDED THE C LAIM OF ASSESSEE BY OBSERVING THAT THE DATE IN THE CORRESPONDING LEDGER FOR WAGE AND CONSUMABLES EXPENSE HAS NOT BEEN CHANGED. ACCORDINGLY, THE AO TREATED THE NEGAT IVE CASH BALANCE OF 9,66,535/- AND 7,64,549/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF TH E ACT WHICH WAS ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT THE PROVISION OF S ECTION 68 OF THE ACT IS NOT APPLICABLE TO THE INSTANT CASE. IT IS BECAUSE THE N EGATIVE BALANCE HAS ARISEN ON ACCOUNT OF EXPENDITURE AND NOT ON ACCOUNT OF ANY AMOUNT FOU ND CREDITED IN THE BOOKS. THE ASSESSEE ALSO SUBMITTED THAT IT WAS ENGAGED TO SUPP LY LABOURERS TO M/S JOY BALAJI INDUSTRIES LTD., AND SPS STEEL LTD. ALL THE TRANSAC TIONS ARE MATCHING WITH THE PARTY LEDGER ISSUED BY THE PRINCIPAL EMPLOYER. HOWEVER, L D. CIT(A) DISREGARDED THE SUBMISSION OF ASSESSEE AND CONFIRMED THE ORDER OF A O BY OBSERVING AS UNDER:- 6. I HAVE GONE THROUGH THE FINDINGS OF THE AO GIVE N IN THE ASSESSMENT ORDER AS WELL AS I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLANT. IN THIS CASE THE APPELLANT HAS NOT CONFRONTED THE FINDING OF THE AO RATHER HE HAS STRENGTHENED THE FINDING OF AO BY SAYING THAT THE APPELLANT WAS MISLEAD BY THE PEOPLE AND THE BUSINESS WAS CONTRACTUALLY NATURE AND CONSIDERI NG THE NATURE OF BUSINESS EMERGENCE INVOLVED AND THE FRESH OF FINANCIAL PRICE S BY WHICH APPELLANT ITA NO.732/KOL/2016 A.Y. 2009-10 SH. MAHENDRA SINGH CHAUHAN VS. ITO WD-1(2), DGP PAGE 3 SUFFERING. THE CASE MAY BE SET ASIDE AND THE ASSESS MENT MAY BE ANNULLED AS THE AO HAS FRAMED THE ORDER AND DECIDE THE PROCEEDING O N THE BASIS AS MISLEADING BOOKS OF ACCOUNTS. THE ABOVE MENTIONED STATEMENT OF THE APPELLANT IS T HE EVIDENCE THAT HE HAS NO PLAUSIBLE EXPLANATION REGARDING CASH CREDIT MADE IN THE BOOKS OF ACCOUNTS AND AGRICULTURAL INCOME SHOWN BY THE APPELLANTS IN THE RETURN. IT IS PERTAINING TO MENTION HERE THAT THE APPELLANT HAD NEVER TRIED TO PROVE ITS CLAIM AS STATED ABOVE BY SUBMITTING OF CORRECT BOOKS OF ACCOUNT AS HE CLAIMED. THE APPELLANT HAS MERELY PRAYED FOR ESTIMATING THE PROFIT AT PRES UMPTIVE RATE. WHEREAS HE HAS FAILED TO PROVE HIS CONTENTION AND ALSO FAIL TO CONTROVERT THE FINDINGS OF THE AO. CONSIDERING THE FACTS OF THE CASE AND ELABORATE DISCUSSION MADE IN THE ASSESSMENT ORDER OF THE AO THE CONTENTION OF THE AP PELLANT ARE TREATED AS BUSINESS WITHOUT ANY EVIDENCE AND FAILS. HENCE, THE ADDITION MADE BY THE AO IS HEREBY CONFIRMED. THE APPEAL FILED BY THE APPELLANT IS HEREBY DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT ON THE ACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN DISMISSING ASSESSEES APPEAL AND CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE ADDITION OF RS.9, 66,535/- TOWARDS UNEXPLAINED CASH CREDIT U/S. 68 OF INCOME TAX ACT, 1961 WITHOUT A SPEAKING ORDER ON MERIT OF APPELLANTS CONTENTIONS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN UPHOLDING THE ADDITION OF RS.7,6 4,549/- TOWARDS UNEXPLAINED CASH CREDIT U/S 68 OF INCOME TAX ACT, 1961 WITHOUT A SPEAKING ORDER ON THE MERIT OF THE APPELLANTS CONTENTIONS. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, ADDUCE AND AMEND ANY GROUND OR GROUNDS ON OR AT THE TIME OF HEARING OF THE APPEAL. 5. LD. AR FOR THE ASSESSEE BEFORE US SUBMITTED THAT BOOKS OF ACCOUNT WAS DULY AUDITED AND THERE WAS NO DEFECT FOUND IN SUCH AUDIT ED ACCOUNT AND NEGATIVE CASH BALANCE AROSE ONLY ON ACCOUNT OF WRONG DATE ENTERE D MADE BY THE ACCOUNTANT. LD. AR ALSO SUBMITTED THAT NO DEFECT HAS BEEN POINTED O UT IN THE SUPPORTING DOCUMENTS EXCEPT THE DATE BY THE AUTHORITIES BELOW. ON THE OTHER HAND, LD. DR SUBMITTED THAT IN THE LED GER OF LABOUR AND CONSUMABLE AN ENTRY OF 10,24,500/- WAS MADE ON 06.06.2008 VIDE VOUCHER NO. 61 AND ALTERATION OF VOUCHER NO. CLEARLY SHOWED THAT THERE WAS NEGATIVE CASH BALANCE. AS PER THE LD. DR THERE CAN BE ERROR IN THE DATE AND NOT IN THE VOUCH ER NO. THE ENTRY IN THE CASH BOOK ITA NO.732/KOL/2016 A.Y. 2009-10 SH. MAHENDRA SINGH CHAUHAN VS. ITO WD-1(2), DGP PAGE 4 WAS MODIFIED BUT NOT IN THE LEDGER OF LABOUR AND CO NSUMABLES. THUS IT WAS SUBMITTED BY THE LD. DR THAT THE PLEA OF THE ASSESSEE THAT TH E ACCOUNTANT HAS MADE A MISTAKE IN DATA ENTRY CANNOT BE RELIED UPON. IN THIS CONNECTIO N, THE LD. DR RELIED IN THE JUDGMENT OF HON'BLE KERALA HIGH COURT IN THE CASE OF RIVER VIEW BAR & SILVER RESTAURANT VS. CIT (2011) 15 TAXMANN.COM 84(KEL) AND HE VEHEMENTLY REL IED ON THE ORDER OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIALS ON RECORD; INCLU DING THE JUDICIAL PRONOUNCEMENT CITED AND PLACED RELIANCE UPON. THE ISSUE IN THE IN STANT CASE RELATES TO THE NEGATIVE CASH BALANCE SHOWN BY ASSESSEE IN HIS CASH BOOK WHI CH WAS TREATED AS UNEXPLAINED CASH CREDIT BY THE AUTHORITIES BELOW. INDEED, IN TH E ORIGINAL CASH BOOK, THE ASSESSEE HAS SHOWN NEGATIVE CASH BALANCE BUT IN THE SUBSEQUE NT CASH BOOK SUBMITTED BY ASSESSEE WHERE NO NEGATIVE BALANCE WAS REPORTED AS WELL AS NO DEFECT WAS POINTED OUT BY THE AUTHORITIES BELOW. IN OUR CONSIDERED VIEW, S IMPLY, THE ASSESSEE ENTERED WRONG DATE IN HIS BOOKS OF ACCOUNT CANNOT BE THE BASIS OF MAKING SUCH ADDITION U/S. 68 OF THE ACT ON ACCOUNT OF NEGATIVE CASH BALANCE. IN THE CAS E BEFORE US, THE AO DID NOT EXERCISE HIS POWER BY ISSUING A NOTICE TO THE RESPE CTIVE PARTY U/S. 133(6) OF THE ACT VIS--VIS TO ASCERTAIN THE ACTUAL DATE OF PAYMENT M ADE BY THOSE PARTIES. WE FIND THAT AO WAS EMPOWERED U/S. 131 OF THE ACT AS WELL AS FOR CONDUCTING NECESSARY INSPECTION TO FIND OUT THE ACTUAL FACTS OF THE CASE WHICH HE F AILED TO DO SO. IN VIEW OF ABOVE, IN OUR CONSIDERED VIEW, THE NEGATIVE BALANCE CANNOT FO RM THE BASIS OF ADDITION U/S. 68 OF THE ACT. THE CASE LAW CITED BY LD. DR IN THE CASE O F RIVER VIEW BAR & SILVER RESTAURANT (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE THE ASS ESSEE FAILED TO PRODUCE ANY EVIDENCE. IN THE INSTANT CASE BEFORE US, THE ASSESS EE HAS MADE SUBMISSION BEFORE LD. CIT(A) THAT IT IS ENGAGED BY THE TWO PARTIES FOR SU PPLYING LABOURS AND IT HAS RECEIVED PAYMENTS FROM THE PARTIES WHICH ARE MATCHING WITH T HE LEDGER OF THE PARTIES. BESIDES THE ABOVE, IT IS ALSO PERTINENT TO NOTE THA T THE ASSESSING OFFICER HAS MADE THE ADDITION U/S 68 OF THE ACT. A CAREFUL PERUSAL O F THE PROVISION DIVULGES THAT IN ORDER TO INVOKE THIS PROVISION, IT IS SINE QUA NON THAT THERE SHOULD CREDIT ENTRIES WHICH ARE RECORDED IN THE BOOKS OF ACCOUNT. THE FACTUM OF THE ASSESSEE HAVING INCURRED EXPENSES WHICH ARE RECORDED IN THE BOOKS AND THERE IS NO CRE DIT ENTRY FOUND IN THE BOOKS WHICH ITA NO.732/KOL/2016 A.Y. 2009-10 SH. MAHENDRA SINGH CHAUHAN VS. ITO WD-1(2), DGP PAGE 5 REMAIN UNEXPLAINED. ADVERTING TO THE FACTS OF THE I NSTANT CASE, IT IS FOUND THAT THERE WAS NO CREDIT ENTRY FOUND IN THE BOOKS WHICH REMAIN ED UNEXPLAINED. THUS, IN VIEW OF THE ABOVE, WE ARE INCLINED TO REVERSE THE ORDER OF AUTHORITIES BELOW AND DIRECT THE AO TO DELETE THE SAME. HENCE, THIS GROUND OF ASSESSEE S APPEAL IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03/05/2017 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - 03/05/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI MAHENDRA SINGH CHAUHAN, PROP OF ASHI RBAD ENTERPRISE & VAIBHAB E NTERPRISE, A-14, ISPAT PALLY, DURGAPUR-713212 2. /RESPONDENT-ITO, WARD-1(2), AAYKA BHAWAN, AAYKAR BI THI, CITY CENTRE DURGAPUR-71 3216 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ / '#,