Sh. Rakesh Sharma, Kathua V. The Income Tax Officer, Kathua

ITA 766/ASR/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1454 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 234B; 147; 68; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) (CAMP: AT JAMMU) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.766(ASR)/2014 ASSESSMENT YEAR:2006-07 PAN: ADDPS0 360H SH. RAKESH SHARMA, PROP. VS. INCOME TAX OFFICER, M/S. SHARMA TRANSPORT COMMISSION KATHUA (J&K). AGENT, LAKHANPUR, KATHUA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADVOCATE RESPONDENT BY:SH. K.V.K. SINGH, DR DATE OF HEARING: 01/12/2015 DATE OF PRONOUNCEMENT: 10/12/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07, AGAINST THE ORDER DATED 10.10.2014, PASSED BY THE L D. CIT(A), JAMMU. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. THAT THE ASSESSMENT ORDER, AS WELL AS THE ORDE R OF THE LD. CIT(A) ARE BOTH AGAINST THE FACTS OF THE CASE & UN TENABLE IN LAW. 2. THAT THE RE-OPENING OF THE CASE U/S 148 IS ILLEG AL, INVALID AND LIABLE TO BE CANCELLED. 3. THAT THE AO HAS NOT ALLOWED ANY REASONABLE OPPOR TUNITY OF BEING HEARD BEFORE MAKING AN ADDITION OF RS.4,70,00 0/- ON ACCOUNT OF SO-CALLED UNEXPLAINED CASH CREDITS U/S 6 8 OF THE INCOME TAX ACT, 1961. 4. THAT SIMILARLY, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE SAME AND HAS NOT APPRECIATED THAT THE AO HAS NO T ALLOWED ANY REASONABLE OPPORTUNITY OF BEING HEARD A ND AS SUCH THE ORDER IS BAD IN LAW AND THE ADDITION OF RS.4,70,000/- MAY BE DELETED. ITA NO. 766(ASR)/2014 2 5. THAT NECESSARY EXPLANATIONS WERE MADE BEFORE THE AUTHORITIES BELOW, BUT THEY HAVE NOT APPRECIATED TH E SAME. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE ADDITION OF RS.4,70,000/- IS UNCALLED FOR & UNWARRANTED UNDER THE CIRCUMSTANCES OF THE CASE AND THEY HAVE NOT APPRECI ATED THAT PROPER AND FULL EXPLANATION WAS GIVEN AND THAT HAS NOT BEEN APPRECIATED. 6. THAT THE PROVISION OF SECTION 68 IS NOT APPLICA BLE AND AUTHORITY BELOW DID NOT APPRECIATE THAT ALL THE WIT HDRAWALS WERE DULY MADE FROM BOOKS OF ACCOUNT AND WHICH WERE DULY APPEARING IN THE BOOKS OF ACCOUNT AND AS SUCH NO AD DITION CALLED FOR. 7. THAT NECESSARY AFFIDAVITS WERE DULY FILED AND TH E AO SHOULD HAVE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEAR D BEFORE REJECTING THE CONTENTS OF THE AFFIDAVIT. SIMILARLY, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.4,70,000/-. NECESSARY EXPLANATIONS WERE DULY FIL ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AS SUCH TH E ADDITION OF RS.4,70,000/- MAY BE DELETED. ALTERNATIVELY, THE ADDITION MADE IS VERY HIGH & EX CESSIVE. 8. AGAIN, THE AO HAS GROSSLY ERRED IN CHARGING INTE REST U/S 234A, 234B & 234C OF THE ACT. THE INTERESTS CHARGED UNDER THESE SECTIONS OF THE ACT, ARE NOT AT ALL CALLED FO R AND THE ORDER THEREBY CHARGING INTEREST UNDER THESE SECTION S OF THE ACT, IS BAD IN LAW AS NO REASONABLE AND PROPER OPPO RTUNITY OF BEING HEARD WAS ALLOWED BEFORE CHARGING THE INTERES T. ALTERNATIVELY, THE INTEREST CHARGED U/S 234A, 234B & 234C OF THE ACT, IS VERY HIGH & EXCESSIVE. 2. GROUND NO.1 IS GENERAL. 3. THE LD. COUNSEL FOR THE ASSESSEE STATES AT THE B AR THAT HE DOES NOT WISH TO PRESS GROUND NO.2 4. APROPOS GROUND NOS. 3 TO 8, THE BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS AN AGENT AUTHORIZED BY THE J & K TO LL AND COMMERCIAL TAX ACTS AND ENGAGED FOR ASSISTING THE IMPORTER/EXP ORTER DEALERS TO GET THEIR VEHICLES CLEARED AT CHECK POSTS LAKHANPUR ( J&K). HE HAS BEEN PROVIDING SERVICES SINCE 1990. THE MAIN JOB ACTIVIT Y OF THE ASSESSEE IS TO ITA NO. 766(ASR)/2014 3 DEPOSIT TOLL AT CHECK POST LAKHANPUR AND ALSO TO PA Y SECURITY AND PENALTY. ENTRY TAX ETC., IF PAYABLE BY THE IMPORTER /EXPORTER OF THE GOODS IN THE STATE OF J & K DURING TRANSIT. BEING AN AUTH ORIZED AGENT, HE IS KEEPING TRUST MONEY OF VARIOUS DEALER TO MEET OUT T HE SAID REQUIREMENTS AT CHECK POST LAKHANPUR. DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAD MADE CONTRIBUTION OF CAPITAL AS PARTN ER IN M/S. AAR KAY FILLING STATION, KATHUA OF RS.12,51,000/-. THE AO C ALLED FOR THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE CONTR IBUTION MADE TOWARDS CAPITAL AND NOT BEING SATISFIED WITH THE EXPLANATIO N OF THE ASSESSEE IN THE CASE OF M/S. AAR KAY FILLING STATION, AS PARTNER, H IS INDIVIDUAL CASE WAS REOPENED U/S 147 OF THE ACT. DURING THE COURSE OF R E-ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH EVID ENCE OF RS.6,45,000/- REGARDING THE SOURCE OF CAPITAL CONTR IBUTION FROM 1.4.2005 TO 23.07.2005. IN RESPONSE, THE ASSESSEE HAD FURNIS HED PROOF OF UNSECURED LOANS FROM HIS RELATIVES OF RS.2,25,000/- AND FOR REST OF RS.4,70,000/- THE ASSESSEE PRODUCED COPIES OF ACCOU NTS OF THE FOLLOWI9NG DEALERS FROM WHOM CASH WAS RECEIVED FOR THE PAYMENT S OF THEIR TOLL ETC., AS TRUST MONEY AT THE CHECK POST LAKHANPUR: I) M/S. S.R. ENTERPRISES, JAMMU II) M/S. SUBIDHA ENGINEERS, JAMMU. III) M/S. KHORANA CONSTRUCTION COMPANY IV) M/S. SURESH KUMAR, JAMMU. THE ASSESSEE FURNISHED AFFIDAVITS ALONGWITH RELEVAN T PROOFS DURING ASSESSMENT PROCEEDINGS, BUT THESE WERE REJECTED SUM MARILY BY THE AO, AS THE ADDRESSES WERE INCOMPLETE AND NOT VERIFIABLE . THE AO OBSERVED THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE DO NOT SUGGEST THAT THE ASSESSEE HAS OBTAINED LOANS/ADVANCES, WHICH HAVE BE EN SHOWN AS CAPITAL CONTRIBUTION. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH CORROBORATORY DOCUMENTARY EVID ENCE EXCEPT AFFIDAVITS FROM CERTAIN PERSONS WITH INCOMPLETE ADD RESSES TO JUSTIFY THE ITA NO. 766(ASR)/2014 4 SOURCE OF CAPITAL CONTRIBUTION. ACCORDINGLY, THE AO TREATED RS.4,70,000/- AS UNEXPLAINED CREDIT AND ADDED TO THE INCOME OF TH E ASSESSEE. 5. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION SO MADE BY THE AO. 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AO EITHER SHOULD HAVE ACCEPTED THE AFFIDAVITS OR HE SHOULD HA VE GIVEN AN OPPORTUNITY TO THE ASSESSEE BEFORE REJECTING THE AF FIDAVITS. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF MEHTA PAREKH & COMPANY VS. C IT, 30 ITR 181. THE LD. COUNSEL FURTHER SUBMITTED THAT THE CASH FLO W STATEMENT FILED BEFORE THE AO (PLACED AT APB-11) HAS NOT BEEN CONTR OVERTED BY THE AUTHORITIES BELOW. ACCORDINGLY, HE SUBMITTED THAT T HE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION AND PRAYED THA T THE SAME BE DELETED. HE FURTHER SUBMITTED THAT THE PAST AS WELL AS THE S UBSEQUENT HISTORY OF THIS CASE IS THAT OF ACCEPTANCE. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF MATERIAL PLACED ON RECORD, I CONCUR WITH THE SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO EITHER SHOULD HAVE ACCEPTED TH E AFFIDAVITS OR SHOULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE CONCERNED PERSONS BEFORE REJECTING THE AFFIDAVITS. HE SHOULD DO SO NOW. RELIANCE PLACED ON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF MEHTA PAREKH & COMPANY VS. CIT (SUPRA), ALSO SUPP ORTS THE CASE OF THE ASSESSEE. IT IS SEEN THAT THE AO HAS ALSO NOT TAKEN INTO CONSIDERATION THE CASH FLOW STATEMENT FURNISHED BY THE ASSESSEE. ACCO RDINGLY, I REMIT THE ISSUE IN QUESTION TO THE FILE OF THE A.O. TO BE DEC IDED AFRESH IN VIEW OF THE ABOVE DIRECTIONS, AFTER AFFORDING ADEQUATE AND REAS ONABLE OPPORTUNITY OF ITA NO. 766(ASR)/2014 5 HEARING TO THE ASSESSEE. HENCE, THE APPEAL IS TREAT ED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH DE CEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 10/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAKESH SHARMA, KATHUA. 2. THE ITO, KATHUA. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.