Bawa Brothers, Shahabad V. ITO, Kurukshetra

ITA 744/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51470 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMCCHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 744/CHD/2011 ASSESSMENT YEAR:2007-08 BAWA BROTHERS, V ITO, WARD-2, SHOP NO.41, KURUKSHETRA. NEW GRAIN MARKET, SHAHABAD (MARKANDA). PAN NO. AAFFB-6794H (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY : SHRI N.K.SAINI DATE OF HEARING : 13.09.2011 DATE OF PRONOUNCEMENT : 19.09.2011 ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A), DATED 16.03.2011 RELATING TO ASSESSMENT YEAR 2007-0 8 AGAINST THE ORDER PASSED UNDER SECTION 250(6) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED ON LAW AND FACTS BY CONFIRMING THE ADDITION OF RS.2,00,000/- RECEIVED A S LOAN FROM SHRI SURINDER SINGH DESPITE FURNISHING OF REQU ISITE INFORMATION AND DOCUMENTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED ON LAW AND FACTS BY CONFIRMING THE ADDITION OF RS.68081/- OF DISALLOWAN CE OF INTEREST U/S 36(1)(III) ON ADVANCES GIVEN TO FARMER S WHICH ARE IRRECOVERABLE IN NATURE. 2 3. DESPITE SERVICE OF NOTICE, NONE ATTENDED ON BEHA LF OF THE ASSESSEE AND THE APPEAL IS DECIDED AFTER HEARING LD. DR FOR THE REVENUE. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED A SUM OF R S.2,00,000/- THROUGH CHEQUE FROM ONE SHRI SURINDER SINGH. THE COPY OF TH E BANK ACCOUNT OF SHRI SURINDER SINGH REVEALED THAT A SUM OF RS.2 LAC S WAS DEPOSITED IN CASH ON 24.11.2006 AND THE SAME AMOUNT WAS TRANSFER RED TO THE ASSESSEE ON THE SAME DATE. THERE WAS A BALANCE OF RS.11,980 /- TO MAXIMUM OF RS.27,545/- IN THE BANK ACCOUNT OF THE ASSESSEE. AS PER THE AO, THE PERSON ADVANCING LOAN HAD NO MEANS AND AS SHRI SURI NDER SINGH WAS NOT PRODUCED FOR EXAMINATION, THE AO HELD THAT THE IDEN TITY, CREDIT- WORTHINESS AND GENUINENESS OF THE TRANSACTION COULD NOT BE ESTABLISHED. HENCE THE ADDITION OF RS.2,00,000/-. 5. BEFORE THE CIT(A), THE ASSESSEE MOVED AN APPLICA TION UNDER RULE 46A OF THE I.T.RULES IN WHICH IT WAS CONTENDED THAT THE INFORMATION REGARDING CAPACITY OF THE CREDITOR HAD BEEN SUBMITT ED BY THE ASSESSEE TO HIS COUNSEL BUT FOR THE REASONS BEST KNOWN TO HIM, THE SAID INFORMATION WAS NOT FORWARDED TO THE AO. THE PLEA OF THE ASSES SEE, THEREFORE WAS THAT AS THE DOCUMENTS WERE ALREADY HANDED OVER TO T HE COUNSEL, NON- COMPLIANCE WAS WITHOUT ANY INTENT ON THE PART OF TH E ASSESSEE. IN SUPPORT OF ITS CLAIM, THE ASSESSEE FURNISHED UNDER MENTIONE D DOCUMENTS TO PROVE THE SOURCE OF RS.2 LACS AVAILABLE WITH SHRI SURINDE R SINGH : 1) STATEMENT OF ACCOUNT OF SHRI SURINDER SINGH (KUM AR) IN THE BOOKS OF M/S ISHAM SINGH & SONS,10, NGM, SHAHABAD ( M) FROM WHERE HE HAS WITHDRAWN A SUM OF RS.2,00,000/-. 2) COPY OF THE FARD JAMABANDI OF SHRI SURINDER SING H (KUMAR) AND HIS FAMILY. , 3) AFFIDAVIT OF SHRI SURINDER SINGH (KUMAR) 3 6. THE APPLICATION MOVED UNDER RULE 46A OF THE I.T. RULES IS INCORPORATED IN PARA 2.02 AT PAGES 3 & 4 OF THE APP ELLATE ORDER. THE SAID DOCUMENTS WERE FORWARDED TO THE AO BY THE CIT(A) AN D THE COMMENTS OF THE AO ARE REPRODUCED UNDER PARA 2.03 AT PAGES 4 TO 6 OF THE APPELLATE ORDER. THE OBJECTION OF THE AO WAS THAT THE SAID S HRI SURINDER SINGH HAD RECEIVED A LOAN FROM THIRD PARTY AND THEREAFTER ADV ANCED THE SAME TO THE ASSESSEE AS LOAN, WHICH AS PER THE AO, NO PRUDENT P ERSON WOULD DO. THE CIT(A) REJECTED THE APPLICATION OF THE ASSESSEE AS THE AO HAD OBJECTED TO THE ADMISSION OF THE DOCUMENTS BEING FILED AS ADDIT IONAL EVIDENCE ON THE GROUND THAT NONE OF THE CONDITIONS SPECIFIED UNDER RULE 46A FOR ADMISSION OF ADDITIONAL EVIDENCE WERE FULFILLED. T HE CIT(A) FURTHER HELD THAT THE ASSESSEE IN THE PRESENT CASE HAD FAILED TO PRODUCE THE CREDITOR AND HENCE THE IDENTITY OF THE CREDITOR COULD NOT BE SAID TO BE ESTABLISHED. IT WAS FURTHER HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE CAPACITY/SOURCE OF THE CREDITOR IN MAKING THE SAID ADVANCES. CONSEQUENTLY, THE ORDER OF THE AO WAS UPHELD BY THE CIT(A). 7. ON THE PERUSAL OF THE RECORD AND THE ORDERS OF T HE AUTHORITIES BELOW, THE ISSUE TO BE ADDRESSED IN THE PRESENT APP EAL IS AGAINST THE ADDITION OF RS.2 LACS UNDER SECTION 68 OF THE INCOM E-TAX ACT. THE ASSESSEE HAD RAISED LOAN OF RS.2 LACS FROM ONE SHRI SURINDER SINGH WHOSE CONFIRMATION WAS FILED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS ALONGWITH THE COPY OF HIS BANK ACCOUNT FROM WHICH T HE SAID SUM OF RS.2 LACS WAS ADVANCED BY THE CREDITOR. IN THE SAID BANK ACCOUNT, THERE WAS A CASH DEPOSIT OF RS.2 LACS PRIOR TO THE ISSUE OF CHE QUE TO THE ASSESSEE. THE CONTENTION OF THE ASSESSEE WAS THAT THE SAID SHRI S URINDER SINGH HAD WITHDRAWN RS.2 LACS FROM THE BOOKS OF SHRI ISHAM SI NGH & SONS, SHAHABAD AND DEPOSITED IN HIS BANK ACCOUNT AND FURT HER ADVANCED THE SAME TO THE ASSESSEE. IN SUPPORT OF ITS CLAIM, THE ASSESSEE HAD FILED THE 4 ADDITIONAL DOCUMENTS BEFORE THE CIT(A) AS ENUMERATE D BY US IN PARA HEREIN ABOVE. THE SAID DOCUMENTS, ADMITTEDLY WERE N OT FILED BEFORE THE AO, THOUGH THE CLAIM OF THE ASSESSEE IS THAT THE SA ID DOCUMENTS WERE ADVANCED TO HIS COUNSEL DURING THE ASSESSMENT PROCE EDINGS WHO IN-TURN HAD NOT FURNISHED THE SAME BEFORE THE AO. 8. THE CIT(A), WHILE DISPOSING HIS APPELLATE JURISD ICTION, IS EMPOWERED TO ENTERTAIN ADDITIONAL EVIDENCE, WHICH I S NOT FURNISHED BEFORE THE AO SUBJECT TO FULFILLMENT OF THE CONDITI ONS LAID DOWN IN RULE 46A OF THE I.T.RULES. THE SAID RULE PROVIDES THAT WHERE THE ASSESSEE WAS PREVENTED BY A SUFFICIENT CAUSE IN NOT PRODUCING TH E EVIDENCE BEFORE THE AO, SUCH EVIDENCE CAN BE PRODUCED BEFORE THE CIT(A) AND SUBJECT TO SATISFACTION OF THE CIT(A) THAT THE ASSESSEE WAS PR EVENTED BY A SUFFICIENT CAUSE IN NOT PRODUCING THE DOCUMENTS BEFORE THE AO, THE SAME MAY BE ADMITTED FOR ADJUDICATION, SUBJECT TO THE SAID DOCU MENTS BEING CONFRONTED TO THE AO. IN THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE, THERE IS MERIT IN THE CLAIM OF THE ASSESSEE THAT IT WAS PREV ENTED BY SUFFICIENT CAUSE IN NOT PRODUCING THE SAID DOCUMENTS BEFORE TH E AO. ADMITTING THE SAID DOCUMENTS ON RECORD, HOWEVER, IN THE INTEREST OF JUSTICE I DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE CIT(A) TO ADJUDICATE UPON THE ISSUE ON MERITS. HOWEVER, I AM CONSTRAINED TO OBSE RVE THAT THE IDENTITY OF THE PERSON DOES NOT STAND PROVED ONLY WHERE THE CREDITOR IS PRODUCED. MERELY BECAUSE A CREDITOR IS NOT PRODUCED DURING TH E PROCEEDINGS DOES NOT ESTABLISH THAT THE IDENTITY OF SUCH PERSON IS N OT PROVED. IN VIEW THEREOF, I REMIT THE ISSUE BACK TO THE FILE OF CIT( A) TO ADJUDICATE UPON THE MERITS OF THE EVIDENCE FURNISHED BY THE ASSESSE E AND DECIDE THE ISSUE OF IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF T HE TRANSACTION OF ADVANCEMENT OF LOAN OF RS.2 LACS TO THE ASSESSEE. THUS, GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 5 9. THE ISSUE IN GROUND NO. 2 IS IN CONNECTION WITH THE NON-CHARGING OF INTEREST FROM ADVANCES MADE TO THE FARMERS. THE CLAIM OF THE ASSESSEE IS THAT IT HAD NOT RECEIVED THE PRINCIPAL AMOUNT AN D AS SUCH, THERE WAS NO QUESTION OF CHARGING INTEREST FROM SUCH FARMERS. I FIND THAT THE CIT(A) HAS NOT ADDRESSED THE SAID ISSUE IN THE LIGHT OF TH E SUBMISSIONS MADE BY THE ASSESSEE. IN THE INTEREST OF JUSTICE, THE ISSUE IS REMITTED BACK TO THE FILE OF THE CIT(A) TO DECIDE THE SAME AFTER AFFORDI NG A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO. 2 RAISED BY THE ASSESSEE IS, THUS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER, 2011. SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 19 TH SEPTEMBER,2011 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH