I.T.O., V. M/s Chandamama,

ITA 83/PAT/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1059 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH RASTOGI
• Assessee Lawyers: RISHI RAJ SINHA SR S C
• Keywords: Unexplained investment; Business income; Loose papers; Onus to prove
• Section: 142(1); 133A; 68

Judgement Text

, PATNA IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA . . , , BEFORE SHRI A.D. JAIN (JM) AND SHRI SANJAY ARORA (AM) ./ I.T. A. NO. 83 /P AT/201 2 ( / ASSESSMENT YEARS: 200 8 - 0 9 ) ITO WARD - VAISHALI, HAJIPUR / VS. CHANDAMAMA MARAI ROAD, RAJENDRA CHOWK, HAJIPUR, VAISHALI - 844 101 ./ ./ PAN/GIR NO. :AASSC2878R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH RASTOGI , ADV. / RESPONDENT BY : S HRI. RISHI RAJ SINHA , S R.S.C. / DATE OF HEARING : 2 1 /4/2015 / DATE OF PRON OUNCEMENT : 06/ 7 /2015 / O R D E R PER SANJAY ARORA, AM: THIS IS AN A PPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMI SSIONER OF INCOME TAX (APPEALS) , PATNA (CIT(A) FOR SHORT) DATED 21.03.2012 , PARTLY ALLOWING THE A SSESSEES APPEA L CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 VIDE ORDER DATED 29.12.2010 . 2. THE APPEAL RAISES THREE GROUNDS, AS UNDER: (I) IN THE FACT AND CIRCUMSTANCES OF THE CAS E TH E CIT(A) HAS GROSSLY ERRED I N DELETING ADDITION OF RS.25,91,871/ - MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE MADE FOR EXCESS PURCHASE SHOWN BY THE ASSESSEE I N 2 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA COMPARISON TO PURCHASE REFLECTED IN PROFIT & LOSS ACCOUNT ENTERED IN THE C.P.U. FOUND AND IMPOUN D ED DURING THE COURSE OF SURVEY U /S 133A OF THE INCOME - TAX ACT, 1961. (II) IN THE FACT AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS GROSSLY ERRED IN DELET ING ADDITION OF RS.4,00,000/ - MADE BY THE A.O. U/S 68 OF THE INCOME - TAX ACT ON ACCOUNT OF UNEXPLA INED CASH CREDIT ONLY ON THE BASIS OF AFFIDAVIT AND CONFIRMATION OF ACCOUNT SUBMITTED BY ASSESSEE FROM THE PERSONS ADVANCING LOAN ON 29.12.2010 DENYING THE A. O . THE OPPORTUNITY FROM TESTING THESE LOANS FOR IT S GENUINENESS AND CREDITWORTHINESS AS THE CASE WAS TO BE BARRED BY LIMITATION OF TIME ON 31.12.201 0 . ( III ) IN THE FACT AND CIRCUMSTANCES OF THE CASE THE CI T(A) HAS GROSSLY ERRED IN DELETING ADDITION OF RS.1,14,936/ - MADE BY THE A.O. ON ACCOUNT OF NON VERIFIED TRANSACTION RECORDED IN THE DOCUMENTS IN VENTORIZED DURING THE COURSE OF SURVEY. 3. THE FACTS IN RELATION TO THE FIRST GROUND ARE THAT THE ASSESSEE, A FIRM IN THE BUSINESS OF RETAIL OF READYMADE GARMENTS, WAS SUBJECT TO SURVEY U/S. 133A OF THE ACT ON 03.03.2008 , WHEREAT THE CPU OF ITS COMPUTER SYSTEM, BILLS AND INVOICES, ETC . WERE IMPOUNDED. A PHYSICAL INVENTORY OF STOCK - IN - TRADE WAS TAKEN AND VALUED AT RS.80,69,629/ - . THE PRINT OUT OF THE P ROFIT & L OSS (P&L) A CCOUNT FOR THE PERIOD 01.04.2007 TO 28.02.2008, I.E., AS PER THE BOOKS OF ACCOUNT MAIN TAINED ON THE COMPUTER SYSTEM, REFLECTED PURCHASES AT RS.77,73,568/ - . THE P & L A/C FOR THE PERIOD 01.04.2007 TO 03.03.2008, AS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, HOWEVER, SHOWED PURCHASES AT RS.1,05,27,313/ - . THE PURCHASES FOR THE PERIOD 29.02.2 008 TO 03.03.2008, AS PER THIS STATEMENT, WERE AT RS.1,61,874/ - , SO THAT THE PURCHASES DURING THE YEAR UP TO 28.02.2008 WERE AT RS.1,03,6 5,439/ - (I.E., RS.1,05,27,313 - RS.1,61,874), AS AGAINST AT RS.77.74 LACS PER THE IMPOUNDED DISK. THERE WAS, THUS, A DI FFERENCE OF RS.25,91,871/ - (RS.1,03,65,439 RS. 77,73,568 ) , WHICH THE ASSESSEE WAS ASKED TO EXPLAIN. THE ASSESSEE, IN RESPONSE, PLEADED FOR NOT TAKING COGNIZANCE OF THE DATA ON ITS COMPUTER SYSTEM IN - AS - MUCH AS IT WAS OLD DATA AND DID NOT REPRESENT ITS REG ULAR BOOKS OF ACCOUNT. NO T SATISFIED, THE ASSESSING OFFICER (A.O.) EFFECTED A DISALLOWANCE FOR THE EXCESS PURCHASES AS PER THE FINAL ACCOUNTS FURNISHED DURING THE ASSESSMENT PROCEEDINGS, BEING IN AGREEMENT WITH THAT ON THE BASIS OF WHICH THE ASSESSEE HAD R ETURNED ITS BUSINESS INCOME FOR THE RELEVANT YEAR. IN APPEAL, 3 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA BESIDES REITERATING ITS SAID ARGUMENT, THE ASSESSEE SUBMITTED THAT THE PURCHASE INVOICE S WERE ALSO FOUND DURING THE COURSE OF SURVEY, AND WHICH WERE IMPOUNDED. THE SAME WERE DULY TALLIED WITH TH E BOOKS OF ACCOUNT BY THE A.O., AND NOTHING ADVERSE FO UND BY HIM. THE A.O. HAD SELECTIVELY PICKED UP ONLY THE PURCHASE FIGURE FROM THE P & L A/C FOUND DURING SEARCH, IGNORING THE REST OF IT. THE PROFIT AND LOSS STATEMENT BEING RELIED UPON BY THE A.O. DID N OT BEAR ANY OPENING AND CLOSING STOCK, AND THE SALE VALUE REFLECTED THEREIN WAS AT RS.27,40,390/ - (PB PG. 174) , AS AGAINST THE DISCLOSED SALE OF RS.99,32,334/ - (FOR THE YEAR). IN FACT, THE SAID STATEMENT REVEALS A LOSS OF RS.49,98,960/ - , WHILE THE AUDITED ANNUAL ACCOUNTS DISCLOSE A NET PROFIT OF RS.2,90,824/ - (PB PG. 15). IF RELIANCE IS TO BE PLACED ON A DOCUMENT, IT SHOULD BE ON THE WHOLE AND NOT A PART OF IT. IN THE VIEW OF THE LD. CIT(A), THE DATA ON THE COMPUTER SYSTEM WAS, THUS, INCOMPLETE DATA, BEARI NG FULLY NEITHER PURCHASES NOR SALES, SO THAT THE SAME WAS ONLY A SUBSET OF THE FIGURES AS APPEARING IN THE ASSESSEES FINAL ACCOUNTS. BESIDES, THE FIGURE OF THE PURCHASES AND SALES WERE MUCH MORE THAN THAT REFLECTED IN THE BOOKS FOUND IN SURVEY . ONLY AN O PPOSITE SITUATION COULD HAVE LED TO THE INFERENCE OF THE ASSESSEE NOT DISCLOSING ITS BUSINESS TO THAT EXTENT. WHAT THE A.O. HAD, IN EFFECT, DISALLOWED WAS PART OF THE ASSESSEES DISCLOSED PURCHASES. THERE WAS, ACCORDINGLY, NO BASIS TO TREAT A PART OF THE P URCHASES CLAIMED FOR THE YEAR AS UNEXPLAINED. THE DISALLOWANCE BEING DELETED THUS, THE REVENUE IS IN APPEAL. 4. LIKE SUBMISSIONS WERE RAISED BEFORE US; EACH SIDE RELYING ON THE ORDER OF THE AUTHORITY BELOW AS FAVORABLE TO IT. 5. WE HAVE HEARD THE PARTIES , AND PERUSED THE MATERIAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE LD. CIT(A) HAS NOT ISSUED ANY FINDING AS TO WHETHER THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE DIFFERENCE IN THE PURCHASES (UP TO 28.02.2008) AS PER THE ASSESSEES BOOK S OF ACCOUNT (FINAL ACCOUNTS) AND THAT PER THE IMPOUNDED BOOKS (ON THE COMPUTER SYSTEM). THE LAT T ER (DATA ON THE HARD DISK) DOES NOT REPRESENT OLD DATA, OF WHICH NO COGNIZANCE OUGHT TO BE TAKEN , AS CONTENDED BY THE ASSESSEE BEFORE THE A.O., WHO RIGHTLY REJ ECTED THE EXPLANATION. THE SAME IS CERTAINLY NOT A DUMB DOCUMENT. THE ASSESSEE IS ALSO NOT MAINTAINING TWO SETS OF BOOKS, I.E., ONE ON THE 4 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA SYSTEM AND THE OTHER OF F IT, FOR IT TO URGE FOR IGNORING THE FORMER. SUCH A CASE WOULD, RATHER, PROVIDE A CAUSE OF AC TION IN TERMS OF ASCERTAINING THE NATURE AND TRUTH OF THE TRANSACTIONS ON THE SYSTEM. WE SAY SO DESPITE THE PRINT OUTS OF THOSE ACCOUNTS (PB PGS. 167 TO 177 ) STATE THE TITLE AS CHANDAMAMA 2 , AS NEITHER THE ASSESSEE CONTEND S SO NOR IS IT THE REVENUES CA SE, I.E., OF THE SAID BOOK S AS NOT REPRESENTING THE REGULAR TRANSACTIONS OR OF IT AS BEING THE ASSESSEES RECORD OF UNACCOUNTED BUSINESS. WE ARE , RESULTANTLY, IN AGREEMENT WITH THE LD. CIT(A) WHEN HE STATE S OF THE DATA/BOOKS OF ACCOUNT FOUND ON SURVEY AS B EING INCOMPLETE. HE INFERRED , ON THAT BASIS, THE SAME TO BE A SUBSET OF ASSESSEES REGULAR BOOKS OF ACCOUNT. SO, HOWEVER, WHAT IS THEREFORE TO SHOW THAT THE ADDITIONAL PURCHASES (UPTO 28.02.2008) , BOOKED SUBSEQUENTLY, OSTENSIBLY TO COMPLETE THE DATA, REPRE SENT GENUINE PURCHASES? AND WHICH REPRESENTS THE FUNDAMENTAL FLAW IN HIS ARGUMENT. THE DIFFERENCE BETWEEN THE TWO SETS , WE ARE M INDFUL , COULD WELL BE ON ACCOUNT OF PURCHASES, THOUGH TRANSACTED PRIOR TO THE DATE OF THE SURVEY, GOODS IN RESPECT OF WHICH HAD BEEN RECEIVED, BUT NOT IN ENTERED OR FED IN THE SYSTEM BY THAT DATE (03.03.2008). ALL THAT THEREFORE WAS REQUIRED O F THE ASSESSEE WA S TO RECONCILE THE TWO FIGURES OF PURCHASES UP TO 28.02.2008, I.E., AS PER THE TWO DOCUMENTS, ONE FOUND DURING SURVEY AND TH E OTHER DISCLOSED PER THE RETURN, ON THE BASIS OF SUCH PURCHASES PER THE IMPOUNDED DOCUMENTS , VALIDATING BOTH THE DOCUMENTS. THE ASSESSEE DOES NOT LEAD ANY EVIDENCE IN THIS REGARD, CONTENDING, ON THE CONTRARY, FOR IGNORING THE BOOKS OF ACCOUNT FOUND, WHICH THE LD. CIT(A) RIGHTLY HOLDS AS FORMING PART OF THE ASSESSEES REGULAR BOOKS OF ACCOUNT, ALBEIT INCOMPLETE (AT THE RELEVANT TIME) - WHICH ONLY INDICATES THEIR STATUS AT A PARTICULAR POINT IN TIME. THE ASSESSEE HAS ALSO NOT CONTENDED OF HAVING NOT RECEIVED THE INVOICES IN RESPECT OF SOME PURCHASES, WHICH COULD AGAIN BE URGED ONLY ON THE BASIS OF SOME MATERIALS INDICATING RECEIPT OF GOODS WITHOUT, CORRESPONDINGLY, THE PURCHASE BILL FOR THE SAME, WHICH FOLLOWED SUBSEQUENTLY , BEARING REFERENCE TO SUCH RECEIPT OF GOODS. FURTHER, THOUGH THE ASSESSEE CONT E N D S OF HAVING TALLIED THE IMPUGNED DIFFERENCE ON THE BASIS OF THE IMPOUNDED PURCHASE BILLS, THE A.O. CLEARLY STATES THE ASSESSEE TO HAV E FAIL ED TO ESTABLISH (EXPLAIN) THE DIFFERENCE (REFER PARA 5 OF THE ASSESSME NT ORDER). THERE IS IN FACT NO EXPLANATION AS TO WHY PURCHASE AND SALE BILLS IN SUCH LARGE NUMBERS REMAIN ED 5 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA TO BE ENTERED IN TO THE SYSTEM, WHICH REPRESENTS ONLY A MECHANISM FOR RECORDING TRANSACTIONS AND, ACCORDINGLY, MAINTAINING THE ACCOUNTS. THE LD. CIT (A) OUGHT TO HAVE, IN THIS VIEW OF THE MATTER, UNDERTAKEN THE REQUISITE EXERCISE, GIVING A FINDING ONE WAY OR THE OTHER, BUT HE ISSUES NO SUCH FINDING IN THE MATTER. THE ASSESSEE , ON HIS PART, OUGHT TO HAVE SO DONE, PROVING ITS CASE. THE ISSUE ARISING, AS WE DISCERN, IS NOT OF THE ADDITIONAL PURCHASES AS BEING NOT GENUINE THE REVENUE NOT UNDERTAK I N G ANY EXERCISE OF IDENTIFYING THOSE PURCHASES AND FOLLOWING UP WITH THE CONCERNED PARTIES, BUT IF THERE ARE INDEED EXCESS PURCHASES, I.E., WHICH WERE NOT FO UND DURING SURVEY , WHETHER FED IN THE BOOKS MAINTAINED ON THE COMPUTER, WHICH WERE APPARENTLY INCOMPLETE, OR NOT. A ND , THUS , NOT FORM ING PART OF THE ASSESSEES REGULAR BOOKS OF ACCOUNT. IN WHICH CASE THE S AM E WOULD WITHOUT DOUBT REPRESENT UN - GENUINE PURCHA SES. THE ISSUE , THUS, ESSENTIALLY IS ONE OF DISCHARGE OF ONUS ON THE ASSESSEE. THE RECONCILIATION OF THE PURCHASES , AS FINALLY CLAIMED , WITH THE IMPOUNDED BILLS , HAVING NOT BEEN UNDERTAKEN , OR SHOWN TO HAVE BEEN, WHAT THE ASSESSEE WAS IN THE ALTERNATIVE RE QUIRED TO SHOW WAS THAT THE TRADING RESULTS ON THE BASIS OF THE ASSESSEES REGULAR BOOKS OF ACCOUNT UP TO 03.03.2008, THE DATE OF SURVEY, ARE CONSISTENT WITH THE TRADING RESULTS AS FINALLY DISCLOSED, SO THAT THERE IS NOTHING INCRIMINATING ABOUT THE MATERIA LS FOUND IN SURVEY ; T HE SAME LEADING TO NO ADVERSE INFERENCE. THOUGH NOT EXACTLY A SUBSTITUTE FOR THE F ORMER , IS YET SUFFICIENTLY ON COURSE, I.E., IN THE ALTERNATIVE THE PROOF OF THE PUDDING, AFTER ALL, LIE S IN ITS EATING. A TRADING ACCOUNT FOR ONE PART OF THE YEAR, I.E., EITHER THE PERIOD FROM 01.04.2007 TO 03.03.2008 , OR THAT FOLLOWING IT, OR IN FACT BOTH, COULD BE PREPARED TO SEE IF THE RESULTS PER THE TWO ARE IN AGREEMENT, OR WITH THAT FOR THE ENTIRE YEAR (DISCLOS ING A GROSS PROFIT AT 13 .60 % / PB PGS . 10 & 15) , VALIDATING EACH OTHER. WE, AS SHALL BE APPARENT FROM THE FIGURES B E L OW, ARE CONSTRAINED FOR WANT OF THE SALE FIGURE UP TO (OR AFTER) THE SURVEY DATE , OR ELSE WOULD HAVE ISSUED A FINDING OURSELVES, ALL THE FIGURES FLOWING FROM THE ASSESSEES ACC O UNTS THEMSELVES (REFER PB PGS. 15 , 174): 6 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA PERIOD 1 (01.04.2007 TO 03.03.2008) (DEBIT RS.) (CREDIT RS.) TO OPENING STOCK (A1) 28,90,380 BY SALES (KNOWN) (C1) X TO PURCHASE (B1) 1,05,27,313 BY CLOSING STOCK (D1) 80,69,629 TO GROSS PROFIT (%) (BALANC ING FIGURE) Y = (E1 - A1 - B1) TOTAL E1 TOTAL (E1= C1 + D1) E1 PERIOD 2 (04.03.2008 TO 31.03.2008) (DEBIT RS.) (CREDIT RS.) TO OPENING STOCK (A2) 80,69,629 BY SALES (KNOWN) (C2) (99,32,334 - X) TO PURCHASE (B2) 9,54,886 BY CLOSING STOCK (D2 ) 57,91,119 TO GROSS PROFIT (%) (F2) (13,50,873 - Y) TOTAL A2 + B2 + F2 TOTAL E2= C2 + D2 IT IS ONLY A SIGNIFICANT VARIATION BETWEEN TRADING RESULTS FOR THE TWO PERIOD S , I.E., FOUND ON THE BASIS OF THE SURVEY, OR WITH THAT FOR THE ENTIRE PERIOD, THA T SHALL LEAD TO THE ASSESSEE BEING CALLED UPON TO EXPLAIN THE SAME AND, THUS, PROVE THE PURCHASES AS CLAIMED. THIS IS PRECISELY WHAT THE ASSESSEE OUGHT TO HAVE D O NE, PROVING ITS CASE INDIRECTLY/ ALTERNATIVELY , AS THE RECORD FOUND IS STATED TO MERELY REPRES ENT INCOMPLETE DATA AND, BESIDES , BEING UNABLE TO RECONCILE THE DIFFERENCE IN THE PURCHASE ACCOUNT WITH THE IMPOUNDED BILLS. THIS IS, AGAIN, WHAT THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE CAUSE D , PROVING OR VALIDATING HIS INFERENCE OF THE PURCHASE AS REF LECTED BEING A SUBSET OF THAT DISCLOSED SUBSEQUENTLY. THOUGH THE REVENUE HAS DISALLOWED PURCHASES, WHAT IT IN EFFECT HAS IS TO CONSIDER THE ASSESSEES TRADING RESULTS AS DEFLATED TO THAT EXTENT. AS SHALL BE APPARENT, NO DEFINITE FINDING, ONE WAY OR THE O THER, CAN BE ISSUED IN THE ABSENCE OF THE SALE S FIGURE UP TO 03.03.2008 . A ND, TWO, IN THE EVENT OF THE TWO TRADING RESULTS BEING NOT IN AGREEMENT, THE ABSENCE OF THE ASSESSEES EXPLANATION, IF ANY, TOWARD THE SAME, SO AS TO BE CONSIDERED FOR BEING SATISFAC TORY, COGEN T , ETC. ON MERITS , OR NOT SO. WE, ACCORDINGLY, RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO ALLOW THE ASSESSEE AN OPPORTUNITY TO EXPLAIN THE DIFFERENCE, WITH REFERENCE TO ITS ACCOUNTS, BETWEEN THE GROSS PROFIT OBTAINING UP TO THE DATE OF SURVEY, COVERING A PERIOD OF LITTLE OVER 11 MONTHS OF THE YEAR, WITH THAT DISCLOSED FOR THE ENTIRE YEAR AND , THUS, HAVING NOT DEFLATED 7 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA THE LAT T ER TO ANY EXTENT. HE SHOU LD DECIDE IN ACCORDANCE WITH LAW, AFTER EXAMINING THE ASSESSEES EXPLANATION/S, IF AN Y, BY ISSUING DEFINITE FINDING/S OF FACT. WE MAY NOT BE CONSTRUE D OF HAVING ISSUED ANY FINDING ON THE CASE. BEFORE PARTING, WE MAY , LEST ANY DOUBT IS RAISED WITH REGARD TO OUR COMPETENCE TO ISSUE SUCH A DIRECTION, WHICH IS CONSISTENT WITH OUR DETERMINATI ON OF THE ISSUE ARISING, AS DISCERNED BY US, ADVERT TO THE DECISION S, INTER ALIA , IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT [1981] 131 ITR 451 (SC) AND AHMEDABAD ELECTRICITY CO. LTD. VS. CIT [1993] 199 ITR 351 (BOM) (FB); THE LA T TER ITSELF BEING BASED ON A SERIES OF DECISIONS BY THE APEX COURT. WE DECIDE ACCORDINGLY. 6. THE FACTS IN RELATION TO THE SECOND GROUND ARE THAT THE ASSESSEE WAS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOUND TO HAVE AVAILED CASH LOANS AGGREGATING TO RS.4 LACS FROM VARIOUS P ERSONS, IN THE SUM OF RS.19,000/ - EACH, DURING THE YEAR. THE ASSESSEE FILED CONFIRMATIONS (OF THE LEDGER ACCOUNTS OF THE CREDITORS AS APPEARING IN ITS BOOKS OF ACCOUNT) AN D AFFIDAVIT S THERE - FROM IN SUPPORT. COPIES OF THEIR DRIVING LICENSE S AND PAN CARD S WE RE SUBMITTED AS PROOF OF IDENTIFICATION. REPAYMENTS HAD BEEN MADE TO THEM IN DECEMBER, 2010 VIDE ACCOUNT PAYEE CHEQUES. THE A.O. DID NOT FIND THE SAID EXPLANATION, TOGETHER WITH THE ACCOMPANYING MATERIALS, AS SATISF YING THE MANDATE OF SECTION 68. IN VIEW O F THE LD. CIT(A), HOWEVER, THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS THAT LA Y ON IT, SO THAT IT NOW STANDS SHIFTED TO THE REVENUE. T HE ADDITIONS BEING DELETED THUS, THE REVENUE IS IN APPEAL. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RE CORD. WITHOUT DOUBT, EVEN AS CLARIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN ADDL. CIT VS. HANUMAN AGARWAL [ 1985 ] 151 ITR 150 (PAT) AND ADDL. CIT VS. BAHRI BROS. (P.) LTD. [ 1985 ] 154 ITR 244 (PAT), WHERE THE ASSESSEE HAS DISCHARGED THE INITIAL ONU S ON IT, I.E., TOWARD FURNISHING A SATISFACTORY EXPLANATION IN RESPECT OF THE NATURE AND SOURCE OF CREDIT IN ITS BOOKS, ESTABLISHING THE IDENTITY AND CAPACITY OF THE CREDITOR AND THE GENUINENESS OF THE CREDIT TRANSACTION, THE SAME SHIFTS TO THE REVENUE. T H E LAW IN THE MATTER IS TRITE , CLARIFYING THE PRINCIPLES, AND FOR WHICH ONE MAY REFER TO THE ABUNDANT CASE LAW BY THE HONBLE APEX COURT ON THE SUBJECT, AS FOR EXAMPLE IN : A. GOVINDA RAJULU 8 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA MUDALIAR V. CIT (1958) 34 ITR 807 (SC) ; SREELEKHA BANERJEE & OTHRS. V. CIT (1963) 49 ITR 112 (SC) ; KALEKHAN MOHAMMED HANIF V. CIT ( 1 963) 50 ITR 1(SC) ; CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) ; CIT V. BIJU PATNAIK (1986) 160 ITR 674 (SC) ; S UMATI DAYAL V. CIT (1995) 214 ITR 801 (SC) , WHICH STANDS REITERATED PER ITS R ECENT DECISIONS , AS IN CIT VS. P. MOHANAKALA & OTHERS , 291 ITR 278 (SC) AND VIJAY KUMAR TALWAR V. CIT [2011] 330 ITR 1 (SC). THE QUESTION, THEREFORE, BOILS DOWN TO WHETHER THE ASSESSEE HAS MET OR DISCHARGED THE BURDEN OF PROOF ON IT BY LEADING SATISFACTORY EXPLANATION/EVIDENCE. IN OUR CLEAR VIEW, THE ASSESSEE HAS ONLY ESTABLISHED THE IDENTITY OF THE CREDITORS BY FURNISHING THEIR PAN CARD/S /DRIVING LICENSE /S , AS WELL AS CONFIRMATIONS THERE - FROM , I.E., EVEN IGNORING OR OVERLOOKING THE FACT THAT EVEN THESE WE RE AT THE FAG E ND OF THE ASS ESSMENT PROCEEDINGS (29.12.2010 - THE DATE OF THE ASSESSMENT ORDER), SO THAT NO VERIFICATION BY THE A .O. COULD BE UNDERTAKEN (REFER G D. # 2). NO MATERIAL TOWARD THE CAPACITY OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACTION S, STATED TO BE LOANS, HAS BEEN FURNISHED. RATHER, BY OWN ADMISSION, THE CREDITORS INCOME /S IS BELOW OR ONLY MARGINAL LY ABO VE THE MAXIMUM AMOUNT NOT CHARGE ABLE TO TAX. THEY ARE STATED TO BE ENGAGED IN AGRICULTURE , THOUGH NO EVIDENCE TOWARD THE SAME HAS BE EN FURNISHED. ON THE CONTRARY , WE FIND IT TO BE NOT SO AS QUITE A FEW CREDITORS , VIZ. RAM SAKAL PD. CHAUDHARY (PB PG. 11), VIDYA NAND CHAUDHARY (PB PG. 75), SANJEEV KUMAR (PB PG. 105) AND MIRTANJAY KUMAR (PB PG. 133), S TATE THEIR SOURCE OF INCOME AS FROM B USINESS . THE TAX RETURNS OF THOS E WHOSE INCOME IS TAXABLE HAS ALSO NOT BEEN FURNISHED AND NEITHER HAVE BEEN BANK ACCOUNTS OF ANY OF THE CREDITORS. IF THEY HAD BANK ACCOUNT S , AS INFERABLE FROM THE ASSESSEE REPAYING BY ACCOUNT PAYEE CHEQUE S IN DECEMBER , 20 10 , SOON AFTER THE RECEIPT OF NOTICES U/S. 143(2) AND 142(1) FOR THE CURRENT YEAR, WHY WERE THEY NOT RECEIVED T HROUGH THE BANKING CHANNEL AS WELL, EVIDENCING BOTH THE QUANTUM AND TIME OF RECEIPT. THE BANK ACCOUNTS WOULD ALSO EXHIBIT IF THE LOAN TO THE ASSESS EE IS FROM THE SAVINGS BUILT UP OVER TIME THE ACCOMPANYING AFFIDAVITS STATING TO BE SO, WITH THE CREDITORS LOW INCOME BRACKET, AS WELL AS ALSO SHOW AS TO HOW THE MONEY STANDS UTILIZED ON ITS RECEIPT B ACK . THIS BECOMES ALL THE MORE RELEVANT AS, AS ALSO AF ORE - STATED , THE AFFIDAVIT S STATE OF 9 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA THE MONEY BEING ADVANCED OUT OF SAVING S . T HIS IS IN FACT EVEN OTHERWISE APPARENT FROM THE FACT THAT THE LOANS ARE RECEIVED IN THE EARLIER PART OF THE RELEVANT YEAR (JUNE/JULY, 2007), AND FOR WHICH REASON IT IS IN FACT TH E INCOME OF THE PRECEDING YEAR/S, I.E., F . Y . 2006 - 07 , OR PRIOR THERETO, THAT WOULD BE RELEVANT. VALU E IS A FUNCTION OF UTILITY, AND GIVEN THEIR ECONOMIC STATUS, THE AMOUNT, THOUGH LOW IN ABSOLUTE TERMS, WOULD HAVE HIGH UTILITY, HOLDING CONSIDERABLE VALUE , FOR THEIR OWNERS , SO THAT THEY WOULD BE RISK AVERSE . HE WOULD NOT PART WITH IT WITHOUT SURETY, WHILE IN THE INSTANT CASE, AS APPARENT FROM THE COPY OF THE LEDGER ACCOUNTS, EVEN THE RECEIPTS, MUCH LESS DULY NUMBERED, STAMPED AND SIGNED, SO THAT THE SAME MAY CONSTITUTE ADMISSIBLE EVIDENCE, H A VE NOT BEEN FURNISHED TO THE CREDITORS . THAT IS , THERE IS NOTHING TO EVIDENCE THE RECEIPT OF THE AMOUNT NOR OF IT BEING INTEREST BEARING, MUCH LESS THE EXACT INTEREST RATE OR OTHER TERMS OF PAYMENT. THE SAME BELIES NORMAL HUMAN CONDUCT, I.E., AS EXPECTED O N CONSIDERATIONS OF RISK AND RETURN; RATHER, IS CONCOMITANT OF NORMAL CONDUCT OF BUSINESS . WHY, THE ASSESSEES ACCOUNTS DO NOT EVEN AS MUCH AS PROVIDE FOR INTEREST ON THE SAID LOANS FOR THE RELEVANT YEAR, AS EVIDENT FROM THE COPY OF THE LEDGER ACCOUNTS FOR THE RELEVANT YEAR FILED IN THE PAPER - BOOK AS WELL AS INFERABLE FROM THE FACT THAT THERE HAS BEEN NO DISALLOWANCE THEREOF CONSEQUENT TO THE ADDITION U/S. 68 . DID THE MONIES FORM PART OF THE CREDITORS SAVING WHICH, GIV EN THEIR LOW INCOME LEVELS, IS ITSELF DOUBTFUL, HEL D IN THE FORM OF BANK FDRS, LENT TO THE ASSESSEE IN BARGAIN FOR A HIGH RETURN/YIELD ? HAS THE CREDITOR/S LEN T IN THE PAST TO ANY OTHER BUSINESS ON LONG TERM OR SHORT TERM BASIS? THE ASSESSEE I S STATED TO BE A REPUTED LOCAL BUSINESSMAN, TO WHOM PEOPLE LEND. T HIS IS IN FACT INCONSISTENT IN - AS - MUCH AS THE ASSESSEE, IN THAT CASE, COULD APPROACH ANY BANK OR EVEN A PRIVATE LEND E R OF SOME REPUTE , BOTH OF WHICH ABOUND , AND WOULD BE ONLY T O O INCLINED TO LEND TO A BOR ROWER WITH GOOD CREDENTIALS . T HE ASSESSEE, ON THE OTHER HAND, PICKS UP FEW PERSONS , NEW IN THEIR RESPECTIVE CAR EE RS , AND BAR E LY ABLE TO SURVIVE, I.E., GIVEN THE HIGH COST OF LEAVING. THE ASSESSEE IN FACT HAS A LINE OF CREDIT FROM ITS REGULAR BANK, BEING, A S IT APPEARS, CANARA BANK, HAJIPUR , WITH WHOM THE P A R TNER S AND THEIR FAMILY MEMBERS HAVE FDRS. THE CAPACITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS ARE NOT PROVED BY AFFIDAVITS. QUESTIONS OF FACT, INVOCATION OF S. 68 BEING 10 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA ESSENTIALLY A MATTER OF FACTUAL FINDING, NEED TO BE PROVED ON THE BASIS OF MATERIALS AND NOT ON THE BASIS OF AFFIDAVITS AND COUNTER - AFFIDAVITS (REFER: MAHENDRA KUMAR AGGARWALA V. ITO , 103 ITR 688 (PATNA) ; ITO V. S.B. SINGHAR SINGH & SONS (1976) 105 ITR 570 (SC)). THE SAME I S GENERALLY TENDERED AT THE INSTANCE OF THE RELEVANT AUTHORITY BEFORE WHOM IT IS FURNISHED AND TOWARD SOMETHING WHICH ORDINARILY CANNOT BE IS BORNE OUT BY RECORD. THE A.O. HAS NOT CALLED FOR THE SAME NOR DO WE FIND ANYTHING ON RECORD THAT COULD NOT BE EXHI BITED THROUGH DIRECT OR SU PPLEMENTARY EVIDENCE, EXCEPT , PERHAPS, THE PERSONAL RELATIONSHIP WHICH IS STATED TO BE OF FRIENDSHIP / RELATIVE , WITHOUT SPECIFYING THE NATURE OF THE RELATIONSHIP. THE SAME IS, HOWEVER, RENDERED OF LITTLE CONSEQUENCE IN VIEW OF THE NATURE OF THE TRANSACTION BEING COMMERCIAL; THE LOAN/S BEING INTEREST BEARING ONE. AGAIN, EVEN THE AFFIDAVIT /S DOES NOT SPECIFY THE RELATIONSHIP VIZ. ITS TENURE, NATURE , ETC., WHICH MAY MANIFEST IN TERMS OF PAST TRANSACTION S , FINANCIAL OR OTHERWISE. THE AS SESSEE HAS CLEARLY NOT DISCHARGED THE ON U S ON IT U/S. 68 TOWARD SATISFACTORILY PROVING THE CREDIT. RATHER, ON THE CONTRARY, IT IS APPARENT THAT THE ASSESSEES BOOKS OF ACCOUNT WERE NOT COMPLETE, AS FOUND DURING SURVEY, A FINDING AS TO WHICH HAS BE EN GIVEN BY THE FIRST APPELLATE AUTHORITY AND CONFIRMED BY US, HOLDING THAT THE SAME WOULD NOT BY ITSELF LEAD TO THE CONCLUSION OF THE SAME BEING CORRECT. SALES , AND EVEN PURCHASES, HAVE NOT BEEN FULLY RECORDED. CASH IN HAND AS ON 28.02.2008, AS PER THE IMPUGNED BO OKS, IS AT ( - ) RS. 52,60,066 (PB PGS. 167, 177, ALSO REFER PARA 5) . FURTHERMORE, THE IMPUGNED CASH CREDITS, STATED TO BE UNSECURED LOANS, DO NOT APPEAR IN THESE ACCOUNTS, COMPLETELY DISCREDITING THE ASSESSEES CLAIM IN ITS RE GARD . IF CASH WAS REQUIRED FOR B USINESS PURPOSE S , WHY WAS THE SAME NOT RECORDED IN THE BOOKS? IT IS ONE THING FOR JOURNAL ENTRIES BEING NOT RECORDED , AND QUITE ANOTHER FOR CASH, ADMITTEDLY REQUIRED AND RECEIVED, BEING NOT ENTERED IN THE BOOKS OF ACCOUNT . JU X T A PO SE THIS WITH THE FACT OF N ON PROVISION OF INTEREST AND ABSENCE OF ANY MATERIAL EVIDENCING ITS RECEIPTS, I.E., FOUND NEITHER ON SURVEY NOR ADDUCED AT ANY TIME , EMPHASIZED EARLIER, AND THE PICTURE IS COMPLETE THAT THE CASH ENTRIES REGARDING THE RECEIPT WERE THEMSELVES AN AFTERTHOUG HT. THE CREDITS STAND, RATHER, DISPROVED. WE, ACCORDINGLY, HAVE NO HESITATION IN CONFIRMING THE ADDITION U/S. 68 QUA THE IMPUGNED CREDITS AS BEING UNPROVED/UNEXPLAINED. WE DECIDE ACCORDINGLY. 11 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA 8. THE THIRD AND THE FINAL GROUND OF APPEAL CONCERNS THE ADDITI ON IN THE SUM OF RS.1,14,936/ - . CERTAIN DOCUMENTS/LOOSE SHEETS WERE FOUND, INVENTORIES AND IMPOUNDED DURING SURVEY, PLACING IDENTIFICATIO N MARKS ON THEM AS AKS - 1 TO AKS - 27. THE ASSESSEE WAS REQUIRED TO RECONCILE THE TRANSACTIONS IN THE SAID DOCUMENTS WITH ITS BOOKS OF ACCOUNT. THE ENTRIES NOT FOUND WERE AGGREGATED, AND A SSESSED AS INCOME BY TREATING THE SAME AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. IN APPEAL, IT WAS ARGUED THAT TH E S E W ERE MERELY ROUGH NOTING / S , NEITHER IN THE NATURE OF EXPENSE / S WHICH W OULD REQUIRE BEING DEBITED IN THE ACCOUNTS NOR IN THE NATURE OF PERSONAL WITHDRAWALS . MERE NOTING / S ON LOOSE PAPERS C OULD NOT BE TREATED AS INCOME. THE ADDITION WAS DELETED ON THAT BASIS. 9. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE LOOSE SHE E TS/DOCUMENTS ARE NOT ON RECORD. IF, AS STATED, THESE ARE DUMB DOCUMENTS, NOT REPRESENTING ACTUAL TRANSACTIONS, AS CONTENDED BY THE ASSESSEE, NO CASE FOR ADDITION IS MADE OUT. THOUGH THE ONUS TO EXHIBIT SO IS ON THE ASSESSEE ; IT CLAIMING THE S AME TO BE DUMB DOCUMENTS, THE REVENUE, IN OUR VIEW, HAS NOT DISCHARGED THE PRIMARY ONUS TO SHOW THAT THE SAME REPRESENTED INFORMATION FROM WHICH A REASONABLE INFERENCE AS TO THEIR REPRESENTING TRANSACTIONS COULD BE DRAWN. AS AFORE - STATED, AS MUCH AS EVEN THE RELEVANT DOCUMENTS ARE NOT ON RECORD. THE ASSESSEE, ON ITS PART, HAS EXPLAINED THE TRANSACTIONS ON MOST OF THE SHEETS. NO ADDITION, UNDER THE CIRCUMSTANCES, IS CALLED FOR, AND WE DECLINE INTERFERENCE. WE DECIDE ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( A. D. JAIN ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER DATED : 06.07.2015 . . ./ ROSHANI , SR. PS 12 I TA NO.83/PAT/2012 (A.Y. 2008 - 09) ITO VS. CHANDAMAMA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPON DENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, PATNA 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , ITAT, PATNA