I.T.O., Ward-1, Aligarh V. Ram Prakash, Aligarh

ITA 84/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0512 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 2 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Opportunity of being heard; Set aside
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 84/AGRA/2012 ASSTT. YEAR : 2008-09 INCOME-TAX OFFICER, VS. RAM PRAKASH, WARD-1, ALIGARH. PROP. M/S. BAJAJ MEDICAL AGEN CY, PHAPHALA STREET, ALIGARH. (PAN : AGEPP 7701 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 29.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 29.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 20.12.2011 FOR THE ASSESSMENT YEAR 2008-09, CHALLENGING THE DELETION OF ADDITION OF RS.29,78,926/- ON ACCOUNT O F UNEXPLAINED CASH CREDIT U/S. 68 OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME AT RS.78,588/- IN THE STATUS OF INDIVIDUAL. THE CASE W AS SELECTED FOR SCRUTINY ASSESSMENT. SEVERAL STATUTORY NOTICES WERE ISSUED T O THE ASSESSEE FOR COMPLIANCE ITA NO. 84/AGRA/2012 2 BUT NONE OF THE QUERIES OF THE AO HAVE BEEN COMPLIE D WITH. THEREFORE, THE AO PROPOSED TO PASS EXPARTE ASSESSMENT ORDER U/S. 144 OF THE IT ACT. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS. 29,78,926/- IN THE BALANCE SHEET, FOR WHICH NO DETAILS HAVE BEEN FURNISHED IN THE ABS ENCE OF ANY CONFIRMATION. IN THE ABSENCE OF ANY MATERIAL ON RECORD, THE ADDITION WAS MADE OF RS.29,78,926/- U/S. 68 OF THE IT ACT. THE ASSESSEE SIMILARLY DID NOT APPEA R BEFORE THE LD. CIT(A) DESPITE GIVING SEVERAL OPPORTUNITIES, THEREFORE, THE APPEAL OF THE ASSESSEE WAS ALSO DECIDED EXPARTE. THE LD. CIT(A) WITH REGARD TO THE ISSUE OF LOW G.P., MAINTAINED PART ADDITION BY ENHANCING THE GROSS PROFIT. THE LD. CIT (A) FOUND THAT IN THE PRECEDING ASSESSMENT YEAR, SUNDRY CREDITORS WERE OF RS.22,94, 376/-. THEREFORE, THERE IS A ACCRETION TO SUNDRY CREDITORS IN A SUM OF RS.6,84,5 50/-. THE LD. CIT(A) FURTHER NOTED THAT SINCE HIGHER G.P. RATE IS ADOPTED, THERE FORE, IT WOULD COVER THE BALANCES IN RESPECT OF CREDITORS WHICH ARE ARISING ON ACCOUN T OF PURCHASE AND G.P. ADDITION IS SUFFICIENT TO COVER UP THIS CASE AND ACCORDINGLY , DELETED THE ADDITION OF RS.29,78,926/-. 3. THE REVENUE IS IN APPEAL FOR DELETION OF ABOVE A DDITION. THE LD. DR SUBMITTED THAT BOTH THE ADDITIONS ON ACCOUNT OF G.P . AND SUNDRY CREDITORS ARE SEPARATE ISSUES. THEREFORE, THE ADDITION COULD NOT BE DELETED ON THAT ACCOUNT AND FURTHER THE ASSESSEE DID NOT FURNISH ANY DETAILS EI THER BEFORE THE AO OR BEFORE THE ITA NO. 84/AGRA/2012 3 LD. CIT(A). THEREFORE, THE LD. CIT(A) WITHOUT CONSI DERING THE ISSUE IN DETAIL AND WITHOUT GIVING ANY REASONS FOR DECISION, SHOULD NOT HAVE DELETED THE ADDITION. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE ORDER OF THE LD. CIT(A) AND REFERRED TO THE BALANCE SHEET OF THE EAR LIER YEAR AND ASSESSMENT YEAR UNDER APPEAL AND ALSO GIVEN A COMPARATIVE TABLE AT PAGE 1 OF THE PAPER BOOK TO SHOW THAT SUBSTANTIAL BALANCES WERE COMING FROM THE EARLIER YEARS, WHICH WERE ENHANCED APPROXIMATELY BY RS.6,00,000/-. THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE ADDITION BY SETTING OFF THE SAME FROM T HE ADDITION OF G.P. ON THE PRINCIPLE OF TELESCOPING. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT SUBSCRIBE TO THE VIEW OF LD. CIT(A) IN DELETING THE ADDITION. HONBLE SUP REME COURT IN THE CASE OF CIT VS. DEVI PRASAD VISHWANATH PRASAD, 72 ITR 194 (SC) HELD THERE IS NOTHING IN LAW WHICH PREVENTS THE INCOME- TAX OFFICER IN AN APPROPRIATE CASE IN TAXING BOTH THE CASH CRED IT, THE NATURE AND SOURCE OF WHICH IS NOT SATISFACTORILY EXPLAINED, AN D THE BUSINESS INCOME ESTIMATED BY HIM UNDER SECTION 13 OF THE IND IAN INCOME-TAX ACT, 1922, AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE AS UNRELIABLE. THE ABOVE DECISION HAS BEEN FOLLOWED BY HONBLE M.P . HIGH COURT IN THE CASE OF CIT VS. DALURAM PANNALAL MODI, 129 ITR 398, IN WHIC H IT WAS HELD AS UNDER : HELD, THAT IN THE INSTANT CASE THE ASSESSEE HAD TO SHOW B Y ADDUCING SATISFACTORY EVIDENCE, THAT THE CASH CREDI TS WERE REFERABLE TO ITA NO. 84/AGRA/2012 4 THE UNDISCLOSED INCOME OF THE KNOWN OR DISCLOSED SO URCE, NAMELY, THE BUSINESS, INCOME FROM WHICH HAD ALREADY BEEN ESTIMA TED. THE ITO HELD THAT THE CASH CREDITS REPRESENTED INCOME FROM UNDISCLOSED SOURCES. THIS FINDING WAS NOT SET ASIDE EITHER BY T HE AAC OR BY THE TRIBUNAL. THE TRIBUNAL SEEMED TO ASSUME THAT ONCE T HE BUSINESS INCOME WAS ESTIMATED, THE UNEXPLAINED CASH CREDITS WOULD BE COVERED BY THE INCOME SO ESTIMATED. THIS ASSUMPTION WAS NOT WARRANTED BY LAW. WITHOUT SETTING ASIDE THE FINDING OF THE ITO T HAT THE CASH CREDITS REPRESENTED INCOME FROM UNDISCLOSED SOURCES, THE TR IBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS.15,300/- WHICH WAS ADDED AS INCOME FROM UNDISCLOSED SOURCES WAS COVERED BY THE INTANGIBLE ADDITIONS MADE IN THE INCOME OF THE ASSESSEE. 4.1 CONSIDERING THE ABOVE DECISIONS, IT IS CLEAR TH AT EVEN IF INCOME IS ESTIMATED BY APPLYING HIGHER PROFIT RATE, THE AO COULD MAKE A DDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS SEPARATELY. FURTHER, THE P ROFIT RATE IS CONNECTED WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE. HOWEVER, UNEXP LAINED CASH CREDITS PERTAINED TO THE DEEMED ADDITION U/S. 68 ON ACCOUNT OF SUNDRY CR EDITORS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE. BOTH THE ADDITIONS A RE, THEREFORE, SEPARATE AND HAVE NO CONNECTION WHATSOEVER. THE LD. CIT(A), THEREFORE , FAILED TO TAKE NOTE OF THE RELEVANT PROVISION OF LAW WHILE DELETING THE ADDITI ON OR GIVING SET OFF OF UNEXPLAINED CREDITORS OUT OF HIGHER G.P. ADDITION M ADE IN THIS CASE. IT IS ALSO ADMITTED FACT THAT THE ASSESSEE DID NOT PRODUCE ANY DETAILS OR EVIDENCE BEFORE THE AO OR BEFORE LD. CIT(A) TO EXPLAIN THE SUNDRY CREDI TORS. EVEN IF SUBSTANTIAL AMOUNTS ARE COMING UP FROM THE PRECEDING ASSESSMENT YEARS, BUT NO ACCOUNTS OF THE PARTIES WERE PRODUCED BEFORE THE AUTHORITIES BE LOW AS WELL AS BEFORE US IN THE ITA NO. 84/AGRA/2012 5 PAPER BOOK. IT, THEREFORE, REQUIRES INVESTIGATION A ND VERIFICATION WITH REGARD TO THE OLD BALANCES APPEARING IN THE CASE OF SUNDRY CREDIT ORS IN THE ASSESSMENT YEAR UNDER APPEAL WHICH MAY BE COMING UP FROM THE EARLIER YEAR S. FURTHER, THE LD. CIT(A) DID NOT PASS ANY REASONED ORDER AS REQUIRED U/S. 250(6) OF THE IT ACT, THEREFORE, IN OUR OPINION, IT WOULD NOT BE PROPER FOR THE LD. CIT(A) TO DELETE THE ADDITION WITHOUT GIVING FINDING OF FACT IN RESPECT OF EACH CREDITOR. WE, THEREFORE, ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTO RE THIS ISSUE TO THE FILE OF AO WITH DIRECTION TO ASSESSEE TO PRODUCE COPY OF ACCOU NTS OF THE SUNDRY CREDITORS AND BALANCE SHEET OF THE YEAR UNDER CONSIDERATION AND E ARLIER YEARS FOR VERIFICATION BY THE AO. THE AO MAY ALSO ASK THE ASSESSEE TO FURNISH FURTHER EVIDENCES TO HIS SATISFACTION IN ORDER TO INVESTIGATE THE ISSUE IN A CCORDANCE WITH LAW. THE AO SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR ST ATISTICAL PURPOSES. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2013. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- ITA NO. 84/AGRA/2012 6 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY