M/s Geekay Traders, Shimla V. ACIT, Shimla

ITSSA 15/CHANDI/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9186 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-02-2010
• Assessment Year: misc
• Appeal Filed On: 25-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P KHUTAN
• Assessee Lawyers: V K GULATI
• Keywords: Business income; Search and seizure; Block assessment; Condonation of delay
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER IT(SS)A NO. 15/CHD/2009 BLOCK PERIOD 1.4.1986 TO 6.3.1997 M/S GEEKAY TRADERS, VS. ACIT, CIRCLE, SHIMLA SHIMLA PAN NO. AACFG4074A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K.GULATI RESPONDENT BY: SHRI S.P. KHUTAN ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A), SHIMLA DATED 20.12.2007 RELATING TO BLOCK PERIOD 1.4.1986 TO 6.3.1997 AGAINST THE ORDER PASSED UNDER SECTION 158 BC / 254 OF THE I.T. ACT. 2. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDON ATION OF DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ORDER OF CIT(A) IS DATED 20.12.2007 WHEREAS THE PRESENT APPEAL HAS BEEN FILE D BY THE ASSESSEE ON 25.5.2009. THE REASONS FOR DELAY IN FURNISHING THE PRESENT APPEAL AS GIVEN IN THE APPLICATION FOR CONDONATION OF DELAY ARE AS UNDER:- APPEAL IN THE CASE OF SUBJECT CITED FIRM WAS FIXED FOR HEARING ON 12.7.2006 AND WAS ARGUED BEFORE THE CIT(A), SHIM LA CAMP AT 2 SOLAN H.P. BUT TILL DATE ORDER OF CIT(A) WERE NOT R ECEIVED BY THE APPELLANT. ON 17.3.2009 SHOW CAUSE NOTICE FOR AFFORDING OPPORT UNITY OF BEING HEARD PRIOR TO LEVY OF PENALTY UNDER SECTION 158BFA(2) OF I.T. ACT, 1961 WAS RECEIVED FROM ASSESSING OFFICER , CIRCLE, SHIMLA FIXING THE DATE OF HEARING FOR 20 TH MARCH, 2009. WHILE ATTENDING THE PROCEEDINGS BEFORE ASSESSING OF FICER, IT WAS SUBMITTED THAT THOUGH THE APPEAL WAS HEARD BY CIT(A ) BUT ORDERS HAVE NOT BEEN RECEIVED TILL DATE. (COPY OF L ETTER ENCLOSED). SUBSEQUENTLY, A LETTER WAS WRITTEN TO CIT(A) SHIMLA AT SOLAN ASKING OF THE SERVICE OF THE ORDERS SO PASSED BY HE R IN THE ABOVE CASE THROUGH THE COUNSEL. ON 2 ND MAY, 2009, COUNSEL RECEIVED THE COMMUNICATION FROM CIT(A) THAT AS PER OFFICE RECORDS THE APPEAL CASE IN RESPECT O F THE ABOVE APPELLANT HAS BEEN DISPOSED OFF VIDE THIS OFFICE ORDER DATED 20.12.2007 AND COPY OF THE ORDER DATED 20.12.2007 HAS BEEN SENT TO APPELLANT ON THE ADDRESS AS APPEARS BELOW VIDE THIS OFFICE LETTER NO . 715 DATED 3.1.2008. THE ORDER SENT BY POST ALSO HA S NOT BEEN RECEIVED BACK UNSERVED TO THIS OFFICE. THEREAFTER ON 7.5.2009, AFTER DEPOSITING THE COPYIN G FEE, APPLICATION FOR SUPPLY OF COPY OF ORDER WERE SUBMIT TED WITH ASSESSING OFFICER , SHIMLA AND AFTER PERSONALLY PUR SUING THE MATTER, CERTIFIED COPY WAS OBTAINED ON 12.5.2009 AN D THE APPEAL BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH, CHANDIGARH IS BEING FILED. AFFIDAVIT FROM THE PARTNER DETAILING THE AFORESAID FACTS ALONG WITH COPIES OF ABOVE MENTIONED LETTERS / CORRESPOND ENCE ARE ENCLOSED. THESE MAY KINDLY BE PLACED BEFORE THE HO N'BLE 3 APPELLATE TRIBUNAL FOR CONDONATION OF DELAY, IF ANY , IN SUBMISSION OF APPEAL. 3. THE PARTNER OF THE ASSESSEE FIRM MR KANWALJIT SI NGH HAS FURNISHED AN AFFIDAVIT DATED 22.5.2009 AFFIRMING THAT THE PRE MISES OF THE ASSESSEE FIRM, WHICH HAD GONE DEFUNCT, WERE UNDER HIS OCCUPA TION BUT NO INTIMATION OF THE ORDER SENT VIDE LETTER NO. 715 DA TED 3.1.2008 WAS RECEIVED. IT IS FURTHER CONFIRMED THAT THE ORDER O F THE CIT(A) WAS RECEIVED AFTER APPLYING TO THE ASSESSING OFFICER O N 12.5.2009 AND THE APPEAL WAS FILED BEFORE THE TRIBUNAL THEREAFTER. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE WAS PREVENTED BY A SUFFICIENT CAUSE FROM NOT FURNISHING THE APPEAL IN TIME BEFORE THE TRIBUNAL AND THE DELAY IN FURNISHING THE PRESENT APPEAL IS HEREBY CONDONED. 4. THE BRIEF FACTS OF THE CASE WAS SEARCH AND SEIZU RE OPERATION WERE CARRIED OUT AT THE BUSINESS PREMISES ON 6.3.1997. DURING THE COURSE OF SEARCH CASH OF RS. 3,74,400/- WAS FOUND. THE EXPLA NATION OF THE ASSESSEE WAS THAT THE SAID CASH BELONGED TO M/S PARTAP SINGH & COMPANY (IN SHORT PSC) IN WHICH SHRI PARTAP SINGH, FATHER OF ONE OF T HE PARTNERS OF THE ASSESSEE FIRM WAS PARTNER. AN AFFIDAVIT OF SHRI PA RTAP SINGH WAS FILED UNDER WHICH IT WAS DECLARED THAT ON 5.3.1997, M/S P SC HAD SENT RS. 3,10,000/- FOR DEPOSIT IN ITS BANK ACCOUNT. IT WAS FURTHER AFFIRMED THAT THE SAID CASH BELONGED TO M/S PSC. THE SAID AFFIDAVIT IS VERIFIED ON 6 TH DAY OF NOVEMBER, 1998. THE ASSESSEE FAILED TO PRODUCE THE CASH BOOK OF M/S PSC BEFORE THE ASSESSING OFFICER IN ORDER TO VERIFY THE AVAILABILITY OF CASH WITH THE SAID FIRM. THE ASSESSING OFFICER F URTHER NOTED THAT DURING SEARCH AND SEIZURE OPERATIONS AT THE PREMISES OF M/ S PSC, NO CASH BOOK 4 WAS FOUND. THE ASSESSING OFFICER REJECTING THE EX PLANATION OF THE ASSESSEE TREATED THE CASH OF RS. 3,23,080/- AS UNEX PLAINED UNDER SECTION 69 OF THE ACT. THE CIT(A) IN THE FIRST ROUND OF A PPEAL WAS OF THE VIEW THAT A SUM OF RS. 2 LACS COULD HAVE BEEN RECEIVED F ROM M/SPSC AND ANOTHER SUM OF RS. 3,080/- COULD BE AVAILABLE WITH THE ASSESSEE FROM HIS PAST SAVINGS. ACCORDINGLY, ADDITION OF RS. 1,20,0 00/- WAS UPHELD BY CIT(A). BOTH THE ASSESSEE AND THE REVENUE FILED A PPEALS BEFORE THE TRIBUNAL BEING IT(SS)A NOS. 11 & 16/CHANDI/2000 REL ATING TO THE BLOCK PERIOD. THE TRIBUNAL VIDE ORDER DATED 23.9.2004 VIDE PARA NO. 2.6 REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OF FICER WITH DIRECTIONS. 5. IN THE SECOND ROUND OF PROCEEDINGS BEFORE THE AS SESSING OFFICER, IT WAS NOTED BY ASSESSING OFFICER THAT THE LAST WRITT EN PAGE (BOTH RECEIPTS AND PAYMENTS SIDE) WAS 6.12.1996 OF M/S PSC, WHICH SHOWED NEITHER ANY CASH IN HAND ON THE SAID DATE NOR ANY RECEIPTS BUT ONLY PAYMENTS OF RS. 36,000/-. THE ASSESSING OFFICER BROUGHT IT TO THE NOTICE OF THE ASSESSEE THAT THE BOOKS OF ACCOUNT OF M/S PSC AS ON 6.3.1997 WERE INCOMPLETE AND IT WAS NOT POSSIBLE TO FIGURE OUT THE CASH IN HAND AS ON 6.3.1997. THE ASSESSEE WAS ASKED TO EXPLAIN THE AVAILABILITY OF C ASH IN HAND WITH M/S PSC. VIDE REPLY DATED 16.2.2006, THE ASSESSEE PLAC ED RELIANCE ON THE AFFIDAVIT FILED BY LATE SHRI PARTAP SINGH, IN WHICH HE HAD OWNED UP THE CASH AVAILABILITY OF RS. 3,10,000/- WITH M/S PSC. A REFERENCE WAS MADE TO THE DAILY SALES STATEMENTS AND THE ASSESSED INCOME OF THE FIRM FOR THE CORRESPONDING PERIOD, WHICH WAS ESTIMATED AT ANNUAL TURN OVER OF RS. 30 CRORES. THE CONTENTION OF THE ASSESSEE WAS THAT TH E DAILY SALES OF M/S PSC WORKED TO RS. 7,50,000/- PER DAY. THE ASSESSING OF FICER VIDE LETTER DATED 17.2.2006, AGAIN CONFRONTED THE ASSESSEE WITH THE A BOVE SAID FACTS OF NON COMPLETION OF BOOKS OF ACCOUNT OF M/S PSC AND NON C ONFIRMATION OF THE 5 AVAILABILITY OF CASH IN HAND AS ON 6.3.1997. THE A SSESSING OFFICER ALSO REFERRED TO THE BLOCK ASSESSMENT ORDER COMPLETED IN THE CASE OF M/S PSC WHERE THE ASSESSMENT WAS COMPLETED AFTER REJECTING THE BOOKS OF ACCOUNT AS THE SAME WERE FOUND TO BE INCOMPLETE. FURTHER, REFERENCE WAS MADE TO THE DAILY STATEMENTS SEIZED AT THE TIME OF SEARCH I N THE CASE OF M/S PSC WHEREIN THE TOTAL SALES FOR THE PERIOD 1.3.1997 TO 4.3.1997 WERE RS. 6,58,498/-, OUT OF WHICH THE VENDS DID NOT DEPOSIT RS. 2,40,100/- AND CASH OF RS. 2 LACS WAS DEPOSITED IN INDIAN BANK, SH IMLA ON 1.3.1997. FURTHER THE ASSESSING OFFICER CONFRONTED THE ASSESS EE WITH THE PARTICULARS OF CASH DEPOSITED WITH P.D. ACCOUNT OF CIT AND ADJ USTED AGAINST THE OUTSTANDING DEMAND OF THE BLOCK PERIOD. THE ASSESS ING OFFICER AT PAGES 2 & 3 OF THE ASSESSMENT ORDER IN PARA 4 HAS REPRODUCE D THE CONTENTS OF THE LETTER DATED 17.2.2006, ISSUED TO THE ASSESSEE. I N RESPONSE THE ASSESSEE VIDE LETTER DATED 23.2.2006, REITERATED THE EAR LIER SUBMISSIONS MADE IN RESPECT OF THE TOTAL SALES AND THE AVAILABILITY OF CASH IN THE HANDS OF M/S PSC. THE ASSESSING OFFICER VIDE PARA 6 OBSERVED T HAT AS PER THE DIRECTIONS OF THE TRIBUNAL, THE CASH IN HAND IN THE CASE OF M/S PSC HAD TO BE DETERMINED WITH REFERENCE TO THE CASH BOOK AND O THER DOCUMENTS OF M/S PSC, WHICH ARE NOT VERIFIABLE HENCE THE ADDITION OF RS. 3,10,000/- WAS MADE BY THE ASSESSING OFFICER BEING UNDISCLOSED INC OME OF THE ASSESSEE. FURTHER ADDITION OF RS. 10,000/- WAS MADE. BEFORE THE CIT(A), THE SUBMISSION OF THE ASSESSEE WAS THAT THERE WAS NO JU STIFICATION TO VERIFY THE CASH IN HAND FROM CASH BOOK / SALES STATEMENTS AS T HE MAIN PARTNER OF M/S PSC HAD CONFIRMED THAT CASH OF RS. 3,10,000/- BELON GS TO M/S PSC. IT IS FURTHER CONTENDED THAT IT IS NOT MATERIAL WHETHER T HE SAME WAS RECORDED IN THE BOOKS OF ACCOUNT OR NOT. THE CIT(A) REJECTING THE CLAIM OF THE ASSESSEE UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER HOLING MERE SUBMISSION OF AFFIDAVIT IS NOT SATISFACTORY EVIDENC E TO PROVE THE 6 AVAILABILITY OF CASH IN THE ABSENCE OF PRODUCTION O F CASH BOOK AND / OR OTHER DOCUMENTS OF M/S PSC. THE ASSESSEE IS IN APP EAL AGAINST THE SAID ADDITION OF RS. 3,10,000/- AND RS. 10,000/- ON ACCO UNT OF CASH FOUND DURING SEARCH. 6. SHRI V.K.GULATI APPEARED FOR THE ASSESSEE AND SH RI SHRI S.P. KHUTAN APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONT ENTIONS. 7. THE LEARNED AR FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE FACT THAT THERE WERE TWO CONCERNS AT THE SAME ADDRESS AND FUR THER THE PARTNERS OF THE ASSESSEE FIRM WERE ALSO ENGAGED IN WINE BUSINES S UNDER THE NAME OF STYLE OF M/S PSC,. THE CASH WAS FOUND IN THE ALMIR AH AT THE PREMISES OF THE ASSESSEE. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE ASSESSEE HAD ADMITTED THAT THE SAID CASH OF RS. 3,1 0,000/- REPRESENTS COLLECTION FROM WINE SHOP. THE LEARNED AR FURTHER PLACED RELIANCE ON THE AFFIDAVIT OF MR. PARTAP SINGH. THE LEARNED DR PLAC ED RELIANCE ON THE ORDER OF ASSESSING OFFICER AND CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE PRESENT APPEAL BEFORE US IS THE SECOND ROUND OF PR OCEEDINGS. IN THE FIRST ROUND OF APPEAL, THE TRIBUNAL VIDE ORDER DATED 23.9 .2004, HAD HELD AS UNDER:- 2.6 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDERS OF THE TAX AUTHORITIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AS ALSO THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THE ASSESSING OFFICER IN THIS CASE MADE THE ADDITION OF RS. 3.10 LAC RECE IVED BY THE ASSESSEE FROM PSC AND RS. 13,080 OUT OF PAS T SAVINGS. WE FIND THAT CIT(A) WHILE GRANTING RELIEF 7 ACCEPTED THE CONTENTION OF THE ASSESSEE IN PART, WH EREAS THE ASSESSEE HAD EXPLAINED THAT CASH BALANCE AVAILA BLE WITH PSC WAS RANGING BETWEEN RS. 4 TO RS. 5 LAC PER DAY. SINCE PSC WAS SISTER-CONCERN OF THE ASSESSEE-F IRM SUCH TRANSACTION COULD NOT BE RULED OUT. WE HAVE A LSO NOTED THE FACT THAT THE MAIN PARTNER SHRI PARTAP SI NGH FILED AN AFFIDAVIT IN SUPPORT OF SUCH TRANSACTION. HOWEVER, WE HAVE ALSO CONSIDERED THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN REGARD TO AVAILABILITY OF CASH WITH PSC ON 5.3.98. WE, THERE FORE, ARE OF THE OPINION, THAT THE MATTER SHOULD BE RESTO RED BACK TO THE FILE OF THE ASSESSING OFFICER, WHO WILL EXAMINE THE CASH BOOK AND OTHER DOCUMENTS OF PSC IN REGARD TO THE AVAILABILITY OF CASH WITH PSC AND ACCORDINGLY DECIDE THE ISSUE. NEEDLESS TO SAY, THE ASSESSEE MUST BE GIVEN SUFFICIENT OPPORTUNITY OF BE ING HEARD WHILE EXAMINING AND VERIFYING THE ABOVE ISSUE . 9. THE AFFIDAVIT FILED BY SHRI PARTAP SINGH WAS TAK EN NOTE OF BY THE TRIBUNAL AND THEREAFTER THE MATTER WAS REMITTED BAC K TO THE ASSESSING OFFICER AS THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE JUSTIFYING THE AVAILABILITY OF CASH WITH M/S PSC ON THE AFORESAID DATES. THE ASSESSING OFFICER WAS DIRECTED TO EXAMINE THE CASH BOOK AND O THER DOCUMENTS OF M/S PSC WITH REGARD TO THE AVAILABILITY OF CASH AND TO DECIDE THE ISSUE THEREAFTER. WE FIND THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVING THE AVAILABITY OF CASH OF RS. 3,10,000/- WI TH M/S PSC AS THE BOOKS OF ACCOUNT SEIZED DURING THE SEARCH OPERATION FROM THE PREMISES OF M/S PSC WERE FOUND TO BE INCOMPLETE. THE DAILY STA TEMENT OF SALE FOR THE PERIOD 1.3.2007 TO 4.3.2007 ALSO REFLECTED TOTAL SA LES OF RS. 658498/- OUT OF WHICH CASH OF RS. 2 LACS WAS DEPOSITED IN BANK O N 1.3.1997 AND THE VENDS DID NOT DEPOSIT RS. 2,40,100/-. SOME AMOUNT WAS ALSO NOT DEPOSITS BY THE VENDS ON ACCOUNT OF MISC. EXPENSES. IN THE PROCEEDINGS REMANDED 8 BACK TO THE ASSESSING OFFICER, THE ASSESSEE WAS DIR ECTED TO PRODUCE THE CASH BOOK OF M/S PSC TO ESTABLISH THE AVAILABILITY OF CASH IN THE HANDS OF THE SAID CONCERN AND / OR TO PRODUCE ANY OTHER DOCU MENT TO PROVE ITS CASE OF AVAILABILITY OF CASH. THE ASSESSEE HAVING FAILE D TO DISCHARGE ITS ONUS IN THIS REGARD AND IN VIEW OF THE NON-COMPLIANCE TO TH E DIRECTIONS OF THE TRIBUNAL IN FIRST ROUND OF APPEAL, WE ARE IN CONFOR MITY WITH THE ORDER OF CIT(A) IN UPHOLDING THE ADDITION OF RS. 3,10,000/-. THE ADDITION OF RS. 10,000/- IS ALSO UPHELD. THE GROUND OF APPEAL RAI SED BY THE ASSESSEE IS DISMISSED. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD JULY, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 9 IT(SS) NOS. 11 & 15/CHANDI/2000 DATED 23.9.2004