M/s Beant Rice Mills, Ludhiana V. ITO, Khanna

ITA 898/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9106 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Unexplained cash credit
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 898/CHD/2016 ASSESSMENT YEAR: 2008-09 M/S BEANT RICE MILLS, VS THE ITO, VILLAGE JARG,TEH-PAYAL, WARD 1, KHANNA. KHANNA, DISTT.- LUDHIANA. PAN: AAIFB0548C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGA RWAL RESPONDENT BY : SHRI S.K. MITTAL,DR DATE OF HEARING : 15.09.2016 DATE OF PRONOUNCEMENT : 16.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 LUDHIANA DATED 09.05.20 16 FOR ASSESSMENT YEAR 2008-09. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. 3. GROUND NO. 1 IS GENERAL AND NEEDS NO ADJUDICATIO N. 4. ON GROUND NOS. 2 AND 3, ASSESSEE CHALLENGED THE ADDITION OF RS. 4 LACS UNDER SECTION 68 OF THE INCO ME TAX ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT FROM MS. PARNEET KAUR. THE ASSESSEE SUBMITTED COPY OF BANK ACCOUNT OF LUDHIANA COOPERATIVE BANK FROM WHICH DD HAS BEEN IS SUED IN FAVOUR OF THE ASSESSEE FIRM, THE SOURCE OF THIS CASH HAS BEEN STATED TO BE AGRICULTURE INCOME. IN ORDER TO 2 SUBSTANTIATE THE SOURCE OF AGRICULTURE INCOME, COPY OF FARD IN RESPECT OF LAND HOLDING IN THE NAME OF CREDITOR MS. PARNEET KAUR HAS BEEN FURNISHED, TOTAL JOINT LAND H OLDING AS PER FARD IS 20 ACRES AND SHARE OF THE CREDITOR COME S TO 3.50 ACRES APPROXIMATELY. NO J-FORM REGARDING SALE OF P RODUCE AND SOURCE OF CASH DEPOSIT IN THE BANK HAS BEEN SUB MITTED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, OBSERVED THAT MERE PRODUCTION OF FARD DOES NOT INDICATE THAT SHE HAS SOURCE OF INCOME TO ADVANCE LOAN OF RS. 4 LACS TO T HE ASSESSEE. THE ASSESSEE DESPITE ASKING BY THE ASSES SING OFFICER, DID NOT PRODUCE FORM-J TO PROVE SALE OF AG RICULTURE PRODUCE THEREFORE, ONUS UPON THE ASSESSEE TO PROVE CREDIT WORTHINESS OF THE CREDITOR WAS NOT PROVED. THE ASSE SSING OFFICER, THEREFORE, MADE ADDITION OF RS. 4 LACS CON SIDERING THE SAME AS INVESTMENT FROM UNDISCLOSED SOURCES UND ER SECTION 68 OF THE INCOME TAX ACT. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND SUBMISSIONS ARE REPRODUCED IN THE IMPUGNED ORDER IN WHICH ASSESSEE REITERATED THE SAM E SUBMISSIONS AND ALSO SUBMITTED THAT ASSESSEE PROVED THE CREDIT WORTHINESS OF THE CREDITOR BY FILING HER CON FIRMED COPY OF THE ACCOUNT, BANK STATEMENT AND COPY OF THE FARD OF LAND HOLDING OF THE CREDITOR. IT WAS ALSO SUBMITTE D THAT BANK ACCOUNT OF THE CREDITOR SHOWS BANK BALANCE OF RS. 1,50,200/- ON 28.03.2007 WHICH WAS TRANSFER ENTRY F ROM HUSBAND OF THE CREDITOR AND THEREAFTER, THERE ARE C ASH DEPOSITS ON 15.09.2007 IN A SUM OF RS. 1,58,000/- A ND RS. 3 90,000/- (TOTAL RS. 2,48,000/-. OUT OF THE SAME, C REDITOR HAS GIVEN LOAN OF RS. 4 LACS TO THE ASSESSEE. IT W AS ALSO SUBMITTED THAT CREDITORS FAMILY MEMBERS SMT. PRITA M KAUR, MOTHER-IN-LAW, SHRI BHUPINDER SINGH, BROTHER-IN-LAW AND SHRI RAJINDER SINGH, HUSBAND OF THE CREDITOR HAVE WITHDRAWN RS. 2 LACS, RS. 30,000/- AND RS. 18,000/- ON 15.09.2007 FROM THEIR BANK ACCOUNTS WHICH WAS THE S OURCE OF DEPOSIT IN THE BANK ACCOUNT OF THE CREDITOR. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE, BECAUSE ASSESSEE COULD NOT PRODUCE THE EV IDENCE OF CREDIT WORTHINESS OF THE CREDITOR AND GENUINENES S OF THE TRANSACTION IN THE MATTER AND CONFIRMED THE ADDITIO N. 6. AFTER HEARING RIVAL CONTENTIONS, I AM NOT INCLIN ED TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. IT IS WELL SETTLED PRINCIPLE OF LAW THAT FOR PROVING THE INGRE DIENTS OF SECTION 68 OF THE ACT, BURDEN WOULD BE UPON ASSESSE E TO PROVE IDENTITY OF THE CREDITOR, HIS CREDIT WORTHINE SS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSEE CLAIMED CREDIT OF RS. 4 LACS FROM MRS. PARNEET KAUR AND SUBMITTED FERD OF LAND HOLDING OF THE CREDITOR BUT NO J- FORM REGARDING SALE OF AGRICULTURE PRODUCE AND SOUR CE OF CASH DEPOSITED IN HER BANK ACCOUNT WERE SUBMITTED B EFORE ASSESSING OFFICER. THE ASSESSEE, THEREFORE, FAILED TO PROVE CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO BANK STATEMENT OF THE CREDITOR (PB -12). COPY IS ALSO REPRODUCED IN THE IMPUGNED ORDER WHICH SHOWS 4 THAT THE CREDITOR HAS ADVANCED RS. 4 LACS TO THE AS SESSEE FIRM ON 15.09.2007 AND ON THE SAME DAY, THE CREDITO R HAS DEPOSITED CASH OF RS. 1,58,000/- AND RS. 90,000/- T WICE ON THE SAME DAY I.E. 15.09.2007 IN ORDER TO GIVE LOAN TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE REFERRE D TO BANK STATEMENT AND CERTIFICATES OF SMT. PRITAM KAUR, SHR I BHUPINDER SINGH AND SHRI RAJINDER SINGH TO SHOW THA T FAMILY MEMBERS OF THE CREDITOR HAVE WITHDRAWN RS. 2 LACS, RS. 30,000/- AND RS. 18,000/- FROM THEIR BANK ACCOU NTS ON 15.09.2007. THESE AMOUNTS DID NOT TALLY WITH THE A MOUNT DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR AND E VEN NO CONFIRMATIONS OR CERTIFICATES FROM THESE RELATIVES OF THE CREDITOR WERE FILED BEFORE THE AUTHORITIES BELOW. THEREFORE, IN THE ABSENCE OF ANY CO-RELATION BETWEEN WITHDRAWA LS MADE BY FAMILY MEMBERS OF THE CREDITOR AND DEPOSIT OF CA SH IN THE BANK ACCOUNT OF THE CREDITOR, ASSESSEE FAILED TO PR OVE THE SOURCE OF THE DEPOSIT OF CASH IN THE BANK ACCOUNT O F THE CREDITOR. 6(I) THE ITAT AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS ITO 138 ITD 153 CONSIDERED THE IDENTICAL ISSUE I N WHICH BEFORE ISSUING THE CHEQUES TO THE ASSESSEE, EQUAL A MOUNT OF CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE CRED ITORS, THE TRIBUNAL DID NOT ACCEPT IT TO BE A GENUINE CRED IT AND CONFIRMED THE ADDITION. THE ORDER OF THE TRIBUNAL H AS BEEN CONFIRMED BY HON'BLE ALLAHABAD HIGH COURT BY DISMIS SING THE APPEAL OF THE ASSESSEE IN IT APPEAL NO. 680/201 2 DATED 07.08.2012. HON'BLE GUJRAT HIGH COURT IN THE CASE OF 5 BLESSING CONSTRUCTION VS ITO 32 TAXMAN.COM 366 HELD , WHERE SIZEABLE AMOUNTS WERE DEPOSITED IN CASH IN AC COUNT OF DEPOSITORS ONLY BEFORE THEIR WITHDRAWAL THROUGH CHE QUES IN FAVOUR OF THE ASSESSEE, ADDITION WAS JUSTIFIED. 7. CONSIDERING ABOVE FACTS AND THE FACT THAT THERE WAS A MEAGER BANK BALANCE IN THE ACCOUNT OF THE CREDITOR PRIOR TO GIVING LOAN TO THE ASSESSEE, WOULD CLEARLY INDICATE THAT THE CREDITOR MS. PARNEET KAUR WAS NOT HAVING CREDIT WOR THINESS TO GIVE ANY LOAN TO THE ASSESSEE. THE ASSESSEE ALS O FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION IN THE MAT TER. I, THEREFORE, DO NOT INTERFERE WITH THE ORDERS OF AUTH ORITIES BELOW IN CONFIRMING THE ADDITION UNDER SECTION 68 O F THE INCOME TAX ACT. GROUND NOS. 2 AND 3 OF APPEAL OF T HE ASSESSEE ARE ACCORDINGLY, DISMISSED. 8. ON GROUND NO. 4, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 1,50,000/-. BRIEFLY THE FACTS OF THE CASE ARE THAT EARLIER REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 07.12.2010. THE CIT EXERCI SED JURISDICTION UNDER SECTION 263 OF THE ACT BECAUSE A SSESSING OFFICER HAS FAILED TO CONDUCT PROPER INQUIRY/VERIFICATION/INVESTIGATION ON SEVERAL ISSUE S INCLUDING VALUATION OF CLOSING STOCK. THE ASSESSIN G OFFICER, THEREFORE, TAKEN UP THE MATTER WITH REGARD TO VALUA TION OF THE STOCK AND NOTED THE SALE RATE AND CLOSING RATE IN PARA 5 OF THE ASSESSMENT ORDER AND FOUND THAT SALE RATE OF DIFFERENT ITEMS ARE LESS. THE EXPLANATION OF THE ASSESSEE WA S CALLED FOR IN WHICH ASSESSEE EXPLAINED THAT SALES HAVE BEE N MADE 6 ON MARKET RATE PREVAILING AT THAT TIME AND SALE PRO CEEDS HAVE BEEN RECEIVED THROUGH CHEQUE FROM THE BUYERS W HICH HAVE BEEN ENTERED INTO BOOKS OF ACCOUNT AND ACCOUNT S HAVE BEEN AUDITED. THE ASSESSEE FURTHER EXPLAINED THAT SALES ARE SUBJECT TO VAT RETURNS AND SALES HAVE BEEN REPORTED TO THE VAT AUTHORITIES AND THERE IS NO EVIDENCE ON RECORD TO PROVE ANY AMOUNTS RECEIVED OVER AND ABOVE WHAT IS MENTION ED AS SALE CONSIDERATION. THE ASSESSING OFFICER, CONSIDE RING REPLY OF THE ASSESSEE AND ORDER OF ITAT CHANDIGARH BENCH IN WHICH ASSESSEE OFFERED FOR ADDITION OF RS. 1,50,000 /-, MADE ADDITION OF RS. 1,50,000/- ONLY. 9. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS), HOWEVER, ADDITION HAS BEEN CONFIRMED. 10. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF TH E VIEW ADDITION IS WHOLLY UNJUSTIFIED. THE LD. COUNSEL FO R THE ASSESSEE POINTED OUT THAT THE ASSESSEE DID NOT CHAL LENGE THE ORDER UNDER SECTION 263 OF THE ACT. THE CIT, LUDHI ANA HAS DIRECTED THE ASSESSING OFFICER TO MAKE ENQUIRIES/VERIFICATION/INVESTIGATION ON VALUATION O F THE CLOSING STOCK. HOWEVER, THE ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF ENHANCEMENT IN THE VALUATION OF THE SALE ON WHICH THERE WAS NO DIRECTION ISSUED UNDER S ECTION 263 OF THE ACT. I AGREE WITH THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS NO DIRECTION ISSUED UNDER SECTION 263 WITH REGARD TO SUBSTITUTE OF SALE PRICE . SINCE, THE ASSESSEE HAS MADE SALES WHICH WERE SUBJECT TO V AT RETURNS AND NO EVIDENCE HAVE BEEN FOUND AGAINST ASS ESSEE 7 OF MAKING ANY UNDER-VALUATION OF SALES, IT APPEARS TO BE ADHOC ADDITION AND WITHOUT ANY JUSTIFICATION. THE ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION ON THIS ISSUE BECAUSE THE CIT HAS DIRECTED TO VERIFY THE VALUATION OF THE CLOSING STOCK BUT THE ASSESSING OFFICER MADE ADDITION ON AC COUNT OF SUBSTITUTION OF SALE PRICE SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. 11. IN THIS VIEW OF THE MATTER, I SET ASIDE THE ORD ERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 1, 50,000/-. GROUND NO. 4 OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. OTHER GROUNDS ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 16 TH SEPTEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD