Suresh Mutha, V. Income Tax Officer,

ITA 901/DEL/2005

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7113 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-02-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 143(3); 131; 68

Judgement Text

ITA NO.901/DEL/2005 1 IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI C.L. SETHI, JUDICIAL MEMBER ITA NO.901/DEL/2005 ASSTT. YEAR: 2001-02 MR. SURESH MUTHA, VS INCO ME TAX OFFICER, B-5/64, AZAD APARTMENTS, WARD 2 4(2), NEW DELHI. HAUZ KHAS, NEW DELHI. (PAN NO. AHQPM5894D) (APPELLANT) (RE SPONDENT) APPELLANT BY: SHRI RAJ KUMAR GUPTA RESPONDENT BY: SHRI SALIL MISHRA , SR. DR O R D E R PER C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 27.9.2004 PASSED BY THE LD. CIT(A) IN THE MATTER OF ASSESSMENT MADE BY THE AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSTT. YEAR 2001-02. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS WITH REG ARD TO THE ADDITION OF RS.48,74,882/- MADE BY THE A.O. U/S 68 OF THE ACT O N ACCOUNT OF UNEXPLAINED CREDIT STANDING IN THE NAME OF ONE M/S TELEREX COMMUNICATION INDIA (P) LTD. (TCIL FOR SHORT). ITA NO.901/DEL/2005 2 3. THE ASSESSEE IS AN INDIVIDUAL. HE DERIVES INCOM E FROM BUSINESS AND PROFESSION. THE ASSESSEE RUNS A BUSINESS CONCERN U NDER THE NAME AND STYLE OF M/S MUTHA BROS. WHICH DEALS IN TRADING OF TELEPH ONE INSTRUMENTS. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOM E OF RS.79,336 ON 16.10.2001. THE CASE WAS TAKEN UP FOR SCRUTINY TO MAKE ASSESSMENT U/S 143(3) OF THE ACT. NOTICES U/S 143(2) WERE DULY IS SUED AND SERVED UPON THE ASSESSEE, IN RESPONSE TO WHICH, THE ASSESSEES AUTH ORIZED REPRESENTATIVE HAD APPEARED BEFORE THE AO AND SUBMITTED REQUISITE DETA ILS FROM TIME TO TIME. THE BOOKS OF ACCOUNT, WITH BILLS AND SUPPORTING VOU CHERS, WERE DULY PRODUCED, WHICH WERE EXAMINED ON TEST CHECK BASIS. 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD SHOWN A SUM OF RS.61,10,935/-, BEI NG THE AMOUNT PAYABLE TO M/S TCIL. THE ASSESSEE WAS ASKED TO FURNISH CO NFIRMATION LETTERS FROM M/S TCIL AND, ACCORDINGLY, ASSESSEE FURNISHED ONE C ONFIRMATION ACCOUNT OF M/S TCIL, WITH A COPY OF ACCOUNT OF M/S TCIL IN THE BOOKS OF ASSESSEES PROPRIETARY CONCERN M/S MUTHA BROS. IN ORDER TO VE RIFY THE CORRECTNESS OF THE CONFIRMATION LETTER ALLEGEDLY ISSUED BY M/S TCI L AND TO VERIFY THE GENUINENESS OF THE TRANSACTION, THE AO ISSUED SUMMO NS U/S 131 TO THE DIRECTOR, M/S TCIL, WITH SPECIFIC DIRECTION TO PROD UCE BOOKS OF ACCOUNT OF FINANCIAL YEARS 1999-2000 AND 2000-01, ALONG WITH T HE TRANSACTIONS MADE ITA NO.901/DEL/2005 3 WITH M/S MUTHA BROS. IN RESPONSE TO THE SAID SUMMO NS, ONE SHRI RAJEN MATTA, DIRECTOR, M/S TCIL, SUBMITTED A LETTER DATED 10.3.2004 THAT THEY HAD NO ACCOUNT WITH M/S MUTHA BROS. IN THEIR BOOKS OF A CCOUNT FOR THE YEAR 1999-2000, I.E. IMMEDIATE PRECEDING YEAR TO THE YEA R UNDER CONSIDERATION. THE COPY OF ACCOUNT, ALLEGEDLY CONFIRMED BY M/S TCI L WHICH WAS FURNISHED BY THE ASSESSEE BEFORE THE AO, WAS SHOWN TO MR. RAJ EN MATTA, DIRECTOR, M/S TCIL, TO CLARIFY AS TO WHETHER THE SAME WAS SIGNED AND CONFIRMED BY HIM OR BY ANY AUTHORIZED PERSONS, IN RESPONSE TO WHICH, HE CATEGORICALLY DENIED HAVING GIVEN ANY CONFIRMATION, EITHER BY HIM OR BY ANY EMPLOYEE. THE COPY OF ACCOUNT OF M/S MUTHA BROS. IN THE BOOKS OF M/S T CIL SUBMITTED BY M/S TCIL DID NOT REFLECT ANY OPENING BALANCE AS SO CLAI MED BY THE ASSESSEE, AND IT WAS FURTHER STATED BY M/S TCIL THAT THEY HAD NO DEALINGS WITH M/S MUTHA BROS. IN THE FINANCIAL YEAR 1999-2000. THIS INFORM ATION COLLECTED BY THE AO WAS CONFRONTED TO THE ASSESSEES AUTHORIZED REPRESE NTATIVE WHO VIDE LETTER DATED 2.2.2004 SUBMITTED THAT THE ASSESSEE WAS EARL IER PROPRIETOR OF ONE FIRM M/S MANGALAM TELESALES WHICH WAS LATER MERGED WITH M/S MUTHA BROS. AND IN THE BOOKS OF M/S MANGALAM TELESALES, AN AMOUNT O F RS.14,12,407 WAS APPEARING AS OUTSTANDING PAYABLE TO M/S TCIL WHICH HAS BEEN TRANSFERRED TO THE ACCOUNT OF M/S MUTHA BROS. THE AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT DURING THE IMMEDIAT E PRECEDING YEAR ENDED ITA NO.901/DEL/2005 4 ON MARCH 31, 2000, M/S MUTHA BROS. PURCHASED TELEPH ONE INSTRUMENTS WORTH RS.39,06,085/- FROM M/S TCIL BUT THE INVOICES WERE WRONGLY ISSUED IN THE NAME OF M/S UJALA SPARES & ACCESSORIES LTD. IN THI S WAY, THE ASSESSEE HAS TRIED TO EXPLAIN THE AMOUNT OF RS.53,18,492/- (RS.1 4,12,407 + RS.39,06,085) SHOWN IN THE BOOKS AS OPENING BALANCE PAYABLE TO M/ S TCIL. HOWEVER, THE ASSESSEE FAILED TO JUSTIFY AND PROVE HIS STAND EITH ER BY PRODUCING THE DIRECTOR OF TCIL FOR FURTHER EXAMINATION OR BY PRODUCING THE COPY OF ACCOUNTS OF EARLIER YEARS OF M/S MANGALAM TELESALES AS WELL AS OF M/S UJALA SPARES & ACCESSORIES LTD. AGAINST THE CREDIT BALANCE OF RS. 61,10.935 SHOWN BY THE ASSESSEE IN THE NAME OF M/S TCIL, M/S TCIL HAD SHOW N THE DEBIT BALANCE AGAINST THE ASSESSEE FIRM M/S MUTHA BROS. ONLY TO T HE EXTENT OF RS. 12,36,053 IN THE YEAR UNDER CONSIDERATION. THEREFO RE, THE DIFFERENCE CREDIT LIABILITY OF RS.48,74,882 SHOWN BY THE ASSESSEE IN THE NAME OF M/S TCIL HAS BEEN TREATED AS UNEXPLAINED LIABILITY AND WAS ADDED TO THE ASSESSEES TOTAL INCOME BY THE AO. 5. ON APPEAL, THE LD. CIT(A) CONFIRMED THE AOS ACT ION AFTER CONSIDERING THE ASSESSEES SUBMISSION, THE AOS ORDER AND THE V ARIOUS DOCUMENTS AVAILABLE ON RECORD. IT WAS STATED BY THE LD. CIT( A) THAT ASSESSEE HAS FAILED TO PRODUCE OR FURNISH ANY EVIDENCE IN SUPPORT OF TH E FACT THAT THE CREDIT LIABILITY OF RS.14,12,407 WAS OUTSTANDING IN THE B OOKS OF M/S MANGALAM ITA NO.901/DEL/2005 5 TELESALES IN THE IMMEDIATE PRECEDING ASSESSMENT YEA R AND THAT GOODS WORTH RS.39,06,085 WERE PURCHASED FROM M/S TCIL BUT THE I NVOICES WERE ISSUED IN THE NAME OF ANOTHER CONCERN BY THE NAME OF M/S UJAL A SPARES LTD. IN THE ABSENCE OF EVIDENCE FILED BY THE ASSESSEE IN SUPPOR T OF HIS CASE, THE LD. CIT(A) HAS CONFIRMED THE AOS ACTION BY HOLDING THA T THE EXCESS LIABILITY OF RS.48,74,882 SHOWN BY THE ASSESSEE IN THE NAME OF M /S TCIL WAS NOTHING BUT REPRESENTED ASSESSEES INCOME FROM UNDISCLOSED SOURCES. 6. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 7. DURING THE COURSE OF HEARING OF THE APPEAL, LD. COUNSEL FOR THE ASSESSEE WAS INVITED TO PRODUCE THE CONFIRMATION LE TTER FROM M/S UJALA TO THE EFFECT THAT THE GOODS WORTH RS.39,06,085 WERE ACTUA LLY PURCHASED BY THE ASSESSEE IN THE IMMEDIATE PRECEDING FINANCIAL YEAR 1999-2000 BUT INVOICES WERE WRONGLY ISSUED IN THE NAME OF M/S UJALA. THE ASSESSEE WAS ALSO ASKED TO FILE DETAILS ABOUT THE PAYMENT OF AFORESAID LIAB ILITY OF RS. 39,06,085 INCURRED DURING THE FINANCIAL YEAR 1999-2000 BY FIL ING THE CONFIRMATION LETTER FROM M/S TCIL TO PROVE AND ESTABLISH THAT M/S TCIL HAD ACTUALLY SUPPLIED THE GOODS TO M/S UJALA AND HAD SHOWN THE LIABILITY IN THE NAME OF THAT FIRM AND RECEIVED THE PAYMENT SUBSEQUENTLY. THE ASSESSE E WAS ALSO ASKED TO PRODUCE THE EVIDENCE ABOUT THE OPENING LIABILITY OF RS.14,12,407 CLAIMED TO ITA NO.901/DEL/2005 6 BE OUTSTANDING IN THE BOOKS OF M/S MANGALAM TELESAL ES, ANOTHER CONCERN OF THE ASSESSEE, PAYABLE TO M/S TCIL. IN REPLY TO THA T, THE ASSESSEE HAS POINTED OUT THE COPY OF THE LEDGER ACCOUNT AS MAINTAINED BY THE ASSESSEE IN THE NAME OF M/S MUTHA BROS. BUT WITHOUT ANY SUPPORTING EVIDE NCE. IT WAS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT IF ONE MORE OP PORTUNITY IS GIVEN TO THE ASSESSEE, THE ASSESSEE SHALL BE ABLE TO PRODUCE THE NECESSARY EVIDENCE IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE THAT LIA BILITY OF RS.53,18,492 WAS BEING CARRIED FORWARD FROM EARLIER YEARS IN THE MAN NER AS EXPLAINED BY THE ASSESSEE. 8. LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE GONE THROUGH THE STATEMENT OF ACCOUNT OF M/S MUTHA BROS. AS APPEARING IN THE BOOKS OF M/S TCIL WHERE IT HAS BEEN SHOWN THAT M/S TCIL HAS SOLD GOODS WORTH RS.23,36,905 DURING THE F INANCIAL YEAR 2000-01 TO M/S MUTHA BROS. ON PERUSAL OF LEDGER ACCOUNTS O F M/S TCIL AS APPEARING IN THE BOOKS OF M/S MUTHA BROS., WE FIND THAT M/S MUTHA BROS. HAS ALSO SHOWN IDENTICAL PURCHASES OF RS.23,36,905 FROM M/S TCIL IN THE FINANCIAL YEAR 2000-01. THEREFORE, THE TRANSACTION S OF PURCHASE AND SALES MADE DURING THE YEAR ARE TALLIED IN BOTH THE ACCOUN TS SUBMITTED BY M/S TCIL AS WELL AS M/S MUTHA BROS. IN THE BOOKS OF M/S TCI L, THE LIABILITY OF ITA NO.901/DEL/2005 7 RS.23,36,905 HAS BEEN REDUCED TO RS.12,36,053 BY TR ANSFERRING A CREDIT ENTRY OF RS.1100851/- FROM ONE M/S UNIWORLD TELECOM LIMIT ED. NO CONFIRMATION OR ANY DETAILS FROM M/S UNIWORLD TELECOM LTD. HAS B EEN PRODUCED BEFORE US TO SHOW AS TO WHY THE AMOUNT OF RS.1100851/- HAS BE EN TRANSFERRED FROM THEIR ACCOUNT TO THE NAME OF MUTHA BROS. IN THE BOO KS OF M/S TCIL, THOUGH NO SUCH ENTRY IS MADE IN THE ACCOUNT OF M/S MUTHA B ROS. THIS ASPECT NEEDS TO BE EXAMINED. FURTHER, IN THE BOOKS OF ACCOUNT O F M/S MUTHA BROS., THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.15,44,462 TO T HE ACCOUNT OF M/S TCIL BY TRANSFERRING THE AMOUNT TO THE ACCOUNT OF M/S UJ ALA SPARES ON 30.11.2000. IN SUPPORT OF THIS, NO CONFIRMATION LE TTER HAS BEEN FILED BY THE ASSESSEE. THIS ASPECT ALSO NEEDS TO BE EXAMINED. IT IS ALSO NOT UNDERSTOOD AS TO WHY THE PURCHASES MADE TO THE EXTENT OF RS. 39,0 6,085, IN RESPECT OF WHICH INVOICES WERE CLAIMED TO HAVE BEEN ISSUED IN THE NAME OF M/S UJALA DURING FINANCIAL YEAR 1999-2000, WERE SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AND WHY THE AMOUNT WAS LYING OUTSTANDING FOR SUCH A LONG PERIOD TILL 31.3.2001. NO EXPLANATION HAS BEEN GIVEN BY T HE ASSESSEE. FURTHER, THE ASSESSEE HAS CREATED A TRADING LIABILITY OF RS.14,1 2,407 BEING TRANSFERRED FROM HIS OWN CONCERN IN THE NAME OF M/S MANGALAM TE LESALES, BEING THE AMOUNT CLAIMED TO HAVE BEEN PAYABLE BY M/S MANGALAM TO TCIL, AND HAS ALSO CREATED TRADING LIABILITY OF RS.39,06,085 ON A CCOUNT OF GOODS ALLEGEDLY ITA NO.901/DEL/2005 8 PURCHASED FROM TCIL THOUGH THE INVOICES WERE STATED TO BE ISSUED IN THE NAME OF M/S UJALA, AND IF DURING THE CURRENT YEAR, IT IS FOUND THAT NO SUCH LIABILITY IS PAYABLE BY THE ASSESSEE TO TCIL AS ON 31.3.2001, THE SAME MAY BE TREATED TO BE THE INCOME OF THE ASSESSEE AS TRAD ING LIABILITY NO MORE PAYABLE. IN THIS VIEW, THE MATTER NEEDS FRESH INVE STIGATION AND INQUIRY AT THE STAGE OF THE AO, IN THE COURSE OF WHICH IT SHALL BE THE BOUNDEN DUTY OF THE ASSESSEE TO FURNISH THE DETAILS THEREOF, IN ORDER T O DISCHARGE THE ASSESSEES LIABILITY, THAT THE LIABILITY SHOWN BY THE ASSESSEE IN THE NAME OF M/S TCIL IS GENUINE AND EXISTING AS ON 31.3.2001. THE AO SHALL PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE TO DISCHARGE HIS BURDEN TO EXPLAIN THE CREDIT STANDING IN THE NAME OF TCIL. WE ORDER ACCORDINGLY . 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER, 2011. SD/- SD/- ( G.D. AGRAWAL ) ( C.L. SETHI ) VICE PRESIDENT JUDICIAL MEMBER DT. 19TH DECEMBER, 2011 GS ITA NO.901/DEL/2005 9 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DY. REGISTRAR