Progressive Petroleum Co. Ltd., Jalgaon V. Deputy Commissioner of Income-tax,

ITA 939/PUN/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8565 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2018
• Assessment Year: 2003-2004
• Appeal Filed On: 08-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R G NAHAR
• Keywords: Unexplained cash credit; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.939/PUN/2014 / ASSESSMENT YEAR : 2003-04 PROGRESSIVE PETROLEUM CO. LTD., 33, HOUSING SOCIETY, PIPPRALA ROAD, OPP. LOKMAT KARYALAY, JALGAON 425 001 PAN : AAACP9696C ....... / APPELLANT / V/S. DCIT, CIRCLE-2(3), PUNE / RESPONDENT ASSESSEE BY : SHRI R.G. NAHAR REVENUE BY : SHRI RAJEEV KUMAR / DATE OF HEARING : 16-10-2018 / DATE OF PRONOUNCEMENT : 31-12-2018 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 28-01-2014 FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY, THE FACTS OF THE CASE AS EMANATING FROM RECORD S ARE ; THE ASSESSEE IS ENGAGED IN TRADING AND IMPORT OF PETROLEUM PR ODUCTS. THE ASSESSEE WAS INVOLVED IN ALLEGED ADULTERATION OF PETROLEUM P RODUCTS, HENCE, A SPECIAL INVESTIGATION WAS CARRIED OUT BY VARIOU S AGENCIES 2 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., INCLUDING CBI, SPECIAL INVESTIGATION TEAM (SIT), SALES TAX DEPA RTMENT, CENTRAL EXCISE DEPARTMENT, ETC. THE INFORMATION WAS RECE IVED BY THE INCOME-TAX DEPARTMENT FROM CBI AUTHORITIES THAT THERE WERE CERTAIN CASH DEPOSITS IN BANK ACCOUNTS OF ASSESSEE WITH ICICI B ANK, NARIMAN POINT, MUMBAI AND AKOLA URBAN COOPERATIVE BANK LTD., KALBAD EVI BRANCH, MUMBAI. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 19-11-2003 DECLARING TOTAL INCOME OF RS.34,54,188/-. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENT ARY EVIDENCE EXPLAINING CASH DEPOSITS TO THE TUNE OF RS.6,63,11,790/- IN T HE BANK ACCOUNTS. THE ASSESSEE INTER ALIA MADE ADDITION OF THE AFO RESAID AMOUNT AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED BY THE ADDITIONS MADE IN ASSESSMENT ORDER DATED 18- 03-2014 PASSED U/S.143(3), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ACCEPTED THE APPEAL OF ASSESSEE AND D ELETED SOME OF THE ADDITIONS. HOWEVER, THE ADDITION OF RS.6.63 CRORES ON ACCOUNT OF UNEXPLAINED CASH CREDIT WAS CONFIRMED BY THE FIRST APPELLAT E AUTHORITY. NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE SAID ADDITION VIDE GROUND NO.1 AND THE SAME READS AS UNDER : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE C ASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT ADDI TIONS MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS.6.63 CRORES TRE ATING THE SAME AS UNEXPLAINED CASH CREDIT WITHOUT PROPERLY APPRECIATI NG THE FACTS PREVAILING IN THE CASE AND WITHOUT PROPERLY CONSIDE RING THE SUBMISSION MADE BY THE APPELLANT AS WELL AS THE REMAND REPORT CALLED BY THE CIT FROM THE ASSESSING OFFICER. THE ADDITIONS SO MADE BE DELETED BEING UNCALLED FOR. JUST AND PROPER RELIEF BE GRANTED ON THIS SCORE. 3 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., 4. SHRI R.G. NAHAR APPEARING ON BEHALF OF THE ASSESSEE SU BMITTED AT THE OUTSET THAT HE IS NOT PRESSING GROUND NO.2 RAISE D IN THE APPEAL. GROUND NO.3 IS GENERAL IN NATURE. THE SOLITARY ISSUE FOR ADJUDIC ATION BEFORE THE TRIBUNAL IS WITH RESPECT TO ADDITION OF RS.6.63 C RORES ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 4.1 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN SALE OF KEROSENE OIL AND NAPTA IN RETAIL. THE BO OKS OF ASSESSEE WERE SEIZED BY THE SALES TAX DEPARTMENT FOR IN VESTIGATION BY VARIOUS AGENCIES, THEREFORE, THE ASSESSEE COULD NOT PRODU CE RELEVANT EVIDENCE REGARDING DEPOSIT OF CASH IN THE BANK ACCOUNTS. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT RS.6.63 CRORES DEPOSITED IN THE BANK ACCOUNTS REPRESENT SALE OF PRODUCTS DULY S UPPORTED BY CASH MEMOS AND HAS ALREADY BEEN OFFERED TO TAX. THE ASSESSI NG OFFICER WRONGLY MADE ADDITION OF THE AFORESAID AMOUNT AS UNEXPLA INED CASH CREDITS WITHOUT APPRECIATING THE FACT THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ASSESSEE COULD NOT PRODUCE THE BOOKS, VOUCHERS AND VARIOUS OTHER SUPPORTING DOCUMENTS DUE TO THE REASON BEYOND THE CONTROL OF ASSESSEE, SINCE THEY WERE SEIZED B Y THE SALES TAX AUTHORITIES. THE ASSESSEE HAD RAISED THIS PLEA BEFORE FIRS T APPELLATE AUTHORITY AND HAD SPECIFICALLY STATED THAT THESE AMOUNTS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT AND THE BOOKS OF ASSES SEE ARE DULY AUDITED. THE BANK ACCOUNTS ARE ALSO RECONCILED. HOWEVE R, DUE TO THE SEIZURE OF BOOKS, THE ASSESSEE COULD NOT SUBSTANTIATE TH E AMOUNTS DEPOSITED IN THE BANKS. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT IN PAPER BOOK NO.2, THE ASSESSEE HAS FILED : 4 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., (1) SUMMARY OF CASH SALES DURING THE F.Y. 2001-02 RELATING TO A.Y. 2002-03 (PAGE 23 OF THE PAPER BOOK); (2) BANK STATEMENT OF AKOLA URBAN COOPERATIVE BANK LTD. FOR THE PERIOD RELEVANT TO A.Y. 2002-03 (PAGE NOS. 24 TO 58 O F THE PAPER BOOK); (3) SALES SUMMARY FOR THE F.Y. 2002-03, I.E. RELEVANT TO A.Y. 2003-04 (PAGES 59 TO 62 PAPER BOOK); (4) STATEMENT UNDER BOMBAY SALES TAX ACT, 1959 (PAGES 81 TO 84 OF THE PAPER BOOK); (5) ASSESSMENT ORDER UNDER BOMBAY SALES TAX ACT, FOR TH E PERIOD 01-04-2002 TO 31-03-2003 (PAGES 85 TO 89 OF THE PAPER BOOK). THE LD. AUTHORIZED REPRESENTATIVE POINTED THAT THE ABOV E DOCUMENTS ARE FRESH DOCUMENTS AND WERE NOT PRODUCED BEFORE THE AUTHORITIES BELOW AS THEY WERE SEIZED BY THE SALES TAX A UTHORITIES. THE DOCUMENTS ARE ESSENTIAL TO EXPLAIN THE DEPOSITS MADE IN BANK ACCOUNTS. 4.2 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT REMA ND REPORT WAS SOUGHT BY THE CIT(A) FROM THE ASSESSING OFFICER. THE R EMAND REPORT IS AT PAGE 34 OF THE PAPER BOOK NO.1 IN REMAND REPORT PARA NO.4, THE ASSESSING OFFICER HAS OBSERVED THAT PRIMA-FACIE T HIS AMOUNTS ARE DEPOSITS OUT OF CASH SALES SHOWN BY THE AS SESSEE. THUS, THE ASSESSING OFFICER ALSO ADMITS THAT THE DEPOSITS IN BANK ACCOUNTS ARE ON ACCOUNT OF CASH SALES. THE LD. AUTHORIZED REPRES ENTATIVE FURTHER SUBMITTED THAT, IN THE PAST, SIMILAR TRANSACTIONS O F CASH SALES WERE MADE BY THE ASSESSEE AND THE SAME WERE ACCEPTE D BY THE 5 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., DEPARTMENT. IN EARLIER YEARS, THE DEPARTMENT NEVER RA ISED ANY DOUBT ON CASH SALES OF KEROSENE TO THE RETAILERS. 5. ON THE OTHER HAND, SHRI RAJEEV KUMAR REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF CIT(A) IN CO NFIRMING THE ADDITION. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS INDU LGED IN ADULTERATION OF PETROLEUM PRODUCTS. DURING SCRUTINY ASSES SMENT PROCEEDINGS, INSPITE OF SEVERAL OPPORTUNITIES, ASSESSEE FAILED TO SHOW ANY DOCUMENT SUBSTANTIATING DEPOSITS OF RS.6.63 CRORES IN THE BANK ACCOUNTS FROM CASH SALES OF KEROSENE OIL. EVEN IN THE PR OCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE COULD NOT E XPLAIN CASH DEPOSITS IN THE BANK ACCOUNTS WITH COGENT EVIDENCES. TH E LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSED FURNISHIN G OF FRESH DOCUMENTS BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED DOCUMENTS FILED BY THE ASSESSEE FOR THE FIRST T IME BEFORE THE TRIBUNAL AT SR.NO.3,4,5,7, & 8 IN INDEX OF THE PAPER BOOK NO .2. THE DEPARTMENT HAS NOT DISPUTED THAT BOOKS OF THE ASSESSE E AND VARIOUS OTHER DOCUMENTS WERE SEIZED FOR THE PURPOSE OF INVESTIGA TION BY VARIOUS INVESTIGATING AGENCIES VIZ., CBI, SIT, STATE SALES TAX DEPARTMENT, ETC. IN THE ABSENCE OF BOOKS OF ACCOUNT AND VARIOUS O THER DOCUMENTS, ASSESSEE COULD NOT SUBSTANTIATE/EXPLAIN CASH DEPOSITS IN THE BANK ACCOUNTS. SINCE BOOKS AND DOCUMENTS OF THE A SSESSEE WERE SEIZED BY INVESTIGATING AGENCIES IT WAS BEYOND THE CONTRO L AS ASSESSEE TO PRODUCE THE SAME BEFORE INCOME TAX AUTHORITIES. TAK ING INTO CONSIDERATION ENTIRETY OF FACTS, WE ARE OF THE CONSIDERED O PINION THAT A 6 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., FAIR OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO EXPLA IN CASH DEPOSITS. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL IN SUPPORT OF HIS CONTENTIONS EXPLAINING THE CASH DEPOSITS IN THE BANK ACCOUNTS AND DECIDE THE ISSUE DENOVO, IN ACCORDANCE WITH LAW AND PRINCIPLES OF NATURAL JUSTICE. A CCORDINGLY, GROUND OF APPEAL NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE LD. AUTHORIZED REPRESENTATIVE HAS STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO.2. THE GROUND NO.2 OF THE APPE AL IS THEREFORE, DISMISSED AS NOT PRESSED. 8. THE GROUND NO.3 IS GENERAL IN NATURE AND HENCE, REQUIR ES NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF DECEMBER, 2018. SD/- SD/- (D. KARUNAKARA RAO) (VIKAS AWASTHY) ACCOUNTANT MEMBER JU DICIAL MEMBER / PUNE; / DATED : 31 ST DECEMBER, 2018 SATISH 7 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)-II, PUNE 4. / THE CIT CENTRAL, PUNE 5. , , ' , / DR, ITAT, A BENCH, PUNE. 6. % / GUARD FILE. // // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY, , / ITAT, PUNE 8 ITA NO. 939/PUN/2014 PROGRESSIVE PETROLEUM CO. LTD., DATE 1. DRAFT DICTATED ON 28-12-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 31-12-18 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER.