M/s Enrich Engineering Works (P) Ltd., Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

MA 47/LKW/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3291 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER M.A. NO.47/LKW/2014 [ARISING OUT OF ITA NO.670/LKW/2013] ASSESSMENT YEAR:2008-09 M/S ENRICH ENGINEERING WORKS (P) LTD. KANPUR V. ACIT CENTRAL CIRCLE II KANPUR PAN:AAACE3337M (APPLICANT) (RESPONDENT) APPLICANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. R. K. RAM, D.R. DATE OF HEARING: 12 06 2015 DATE OF PRONOUNCEMENT: 24 07 2015 O R D E R PER SUNIL KUMAR YADAV: THROUGH THIS MISCELLANEOUS APPLICATION, THE ASSESSEE HAS SOUGHT RECTIFICATION IN THE ORDER OF THE TRIBUNAL DATED 12.5.2014 IN I.T.A. NO. 670/LKW/2013 WITH THE SUBMISSION THAT THE TRIBUNAL HAS NOT APPRECIATED THE FINDINGS OF THE LD. CIT(A) AND HAS TAKEN A VIEW THAT THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE ISSUE IN DETAIL IN ACCORDANCE WITH LAW AND CONSEQUENTLY SET ASIDE THE MATTER TO THE LD. CIT(A) FOR RE-ADJUDICATION OF THE ISSUE. THEREFORE, AN ERROR IS CREPT IN THE ORDER OF THE TRIBUNAL WHICH CALLS FOR RECTIFICATION. 2. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE LD. CIT(A) HAS ADJUDICATED THE ISSUE OF CREDIT BALANCE FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF M/S ROOOP SHAN TEXTILES PVT. LTD. IN THE LIGHT OF THE RELEVANT EVIDENCE PRODUCED BEFORE HIM AND ALSO AFTER :- 2 -: CALLING COMMENTS FROM THE ASSESSING OFFICER. THEREFORE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTORING THE MATTER BACK TO THE LD. CIT(A) HAVING OBSERVED THAT THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE ISSUE. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO POINTED OUT A TYPOGRAPHICAL ERROR IN LINE 8 FROM TOP IN PARA 9 OF THE ORDER OF THE TRIBUNAL, WITH THE SUBMISSION THAT THE WORD ASSESSEE SHOULD BE REPLACED BY THE WORD CREDITOR TO GIVE A CORRECT MEANING OF THE SENTENCE, AS IN THAT SENTENCE THE TRIBUNAL HAS MENTIONED THAT THE CONFIRMATION OF THE CREDIT BALANCE OBTAINED DIRECTLY FROM THE ASSESSEE WHEREAS IT SHOULD BE CREDITOR TO GIVE A CORRECT MEANING. ACCORDINGLY THE WORD ASSESSEE MAY BE REPLACED BY THE WORD CREDITOR. 4. THE LD. D.R. DID NOT DISPUTE THE TYPOGRAPHICAL ERROR IN PARA 9 OF THE ORDER OF THE TRIBUNAL, BUT SO FAR AS THE ALLEGED ERROR WITH RESPECT TO THE MERIT OF THE CASE IS CONCERNED, THE LD. D.R. HAS CONTENDED THAT THE ASSESSEE HAS PICKED UP ONE PARAGRAPH OF THE ORDER OF THE TRIBUNAL INSTEAD OF LOOKING TO THE ENTIRE ORDER OF THE TRIBUNAL. IN THE ENTIRE ORDER OF THE TRIBUNAL, THE TRIBUNAL HAS GIVEN THE REASON AS TO WHY IT HAS COME TO THE CONCLUSION THAT THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE ISSUE IN DETAIL IN ACCORDANCE WITH LAW. IT WAS FURTHER CONTENDED THAT IN PARA 7 OF THE ORDER, THE TRIBUNAL HAS CATEGORICALLY OBSERVED THAT THE STATEMENT RECEIVED FROM M/S ROOP SHAN TEXTILES PVT. LTD. AND M/S J.D. INTERNATIONAL WERE NOT CONFRONTED TO THE ASSESSING OFFICER AND NOTHING WAS PLACED ON BEHALF OF THE ASSESSEE TO ESTABLISH THAT THE SAID EVIDENCE COLLECTED BY THE LD. CIT(A) WERE EVER CONFRONTED TO THE ASSESSING OFFICER. HAVING EXAMINED THE ISSUE IN DISPUTE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS, THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE ISSUE IN DETAIL IN ACCORDANCE WITH LAW. THE TRIBUNAL ACCORDINGLY RESTORED THE MATTER TO THE LD. CIT(A) FOR RE-ADJUDICATION OF THE ISSUE IN THE LIGHT OF EVIDENCE COLLECTED BY THE LD. CIT(A). :- 3 -: 5. HAVING CAREFULLY PERUSED THE ORDER OF THE TRIBUNAL VIS--VIS THE MISCELLANEOUS APPLICATION, WE FIND THAT THE ASSESSEE IN PARAGRAPH 1 OF THE MISCELLANEOUS APPLICATION HAS MADE A REFERENCE OF PARAGRAPH 10 OF THE ORDER OF THE TRIBUNAL. THE ASSESSEE HAS NOT MADE ANY REFERENCE WITH RESPECT TO OTHER PARAGRAPHS OF THE ORDER OF THE TRIBUNAL IN WHICH THE TRIBUNAL HAS MADE DISCUSSION OF THE ENTIRE ISSUE IN DETAIL. THE TRIBUNAL HAS CATEGORICALLY RECORDED IN ITS ORDER THAT THE STATEMENT RECEIVED FROM M/S ROOP SHAN TEXTILES PVT. LTD. AND M/S J.D. INTERNATIONAL WERE NOT CONFRONTED TO THE ASSESSING OFFICER AND MOREOVER, NO EVIDENCE WAS PLACED BEFORE THE TRIBUNAL TO ESTABLISH THAT THE EVIDENCE COLLECTED BY THE LD. CIT(A) DURING THE COURSE OF HEARING WAS EVER CONFRONTED TO THE ASSESSING OFFICER. THE TRIBUNAL HAS ALSO GIVEN A CATEGORICAL FINDING THAT THE LD. CIT(A), BESIDES AN INVESTIGATOR, IS ALSO FIRST APPELLATE AUTHORITY AND BEFORE HIM THE REVENUE IS ALSO A PARTY. WHATEVER EVIDENCE IS COLLECTED BY THE LD. CIT(A) AT THE BACK OF THE ASSESSING OFFICER SHOULD BE CONFRONTED TO THE ASSESSING OFFICER AND AFTER OBTAINING COMMENTS FROM THE ASSESSING OFFICER, THE ISSUE SHOULD BE ADJUDICATED. FOR THE SAKE OF REFERENCE, WE EXTRACT PARAGRAPHS 7 TO 10 OF THE ORDER OF THE TRIBUNAL AS UNDER:- 7. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED ON RECORD, WE FIND THAT UNDISPUTEDLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A CREDIT BALANCE OF RS.2.95 CRORES IN THE NAME OF M/S ROOP SHAN TEXTILE PVT. LTD. WAS FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PLACE THE RELEVANT EVIDENCE TO PROVE THE CREDIT BALANCE APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF M/S ROOP SHAN TEXTILE PVT. LTD. THE ASSESSING OFFICER ISSUED NOTICES TO M/S ROOP SHAN TEXTILE PVT. LTD. BUT NO RESPONSE WAS RECEIVED AND ON ENQUIRY IT WAS ALSO NOTICED THAT SUCH COMPANY WAS NOT IN EXISTENCE AT THE ADDRESS FURNISHED BY :- 4 -: THE ASSESSEE. SINCE THE ASSESSEE COULD NOT DISCHARGE ITS ONUS WHICH LAY ON IT, THE ASSESSING OFFICER HAS TREATED THIS CREDIT BALANCE AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND MADE ADDITION OF THE SAME. AFTER COMPLETION OF THE ASSESSMENT, CONFIRMATION FROM M/S ROOP SHAN TEXTILE PVT. LTD. WAS RECEIVED IN THE OFFICE OF THE ASSESSING OFFICER THROUGH FAX, BUT IT COULD NOT BE EXAMINED BY THE ASSESSING OFFICER AS THE ASSESSMENT WAS COMPLETED. THE SAID CONFIRMATION WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE LD. CIT(A) CALLED COMMENTS/REMAND REPORT FROM THE ASSESSING OFFICER. DURING THE PENDENCY OF THE APPEAL, THE LD. CIT(A) HAS ALSO CALLED STATEMENT OF ACCOUNT AND COPY OF INCOME-TAX RETURN FROM M/S J.D. INTERNATIONAL AND M/S ROOP SHAN TEXTILE PVT. LTD. VIDE LETTER DATED 10.5.2013 AND IN RESPONSE THERETO STATEMENTS WERE FILED BY M/S ROOP SHAN TEXTILE PVT. LTD. AND M/S J.D. INTERNATIONAL VIDE THEIR LETTER DATED 24.5.2013. BUT THESE STATEMENTS RECEIVED BY THE LD. CIT(A) WERE NOT CONFRONTED TO THE ASSESSING OFFICER, AS THE LD. CIT(A) HAS PASSED THE ORDER ON 6.6.2013. DURING THE COURSE OF HEARING OF THE APPEAL BEFORE US, NOTHING IS PLACED ON BEHALF OF THE ASSESSEE TO ESTABLISH THAT THE EVIDENCE COLLECTED BY THE LD. CIT(A) DURING THE COURSE OF HEARING WAS CONFRONTED TO THE ASSESSING OFFICER. NO DOUBT, THE LD. CIT(A) IS ARMED WITH CO- TERMINUS POWER OF THAT OF THE ASSESSING OFFICER BUT BESIDES AN INVESTIGATOR, HE IS ALSO A FIRST APPELLATE AUTHORITY AND BEFORE HIM REVENUE IS ALSO ONE OF THE PARTY. WHATEVER EVIDENCE IS COLLECTED BY THE LD. CIT(A) AT THE BACK OF THE ASSESSING OFFICER, SHOULD BE CONFRONTED TO THE ASSESSING OFFICER AND SHOULD OBTAIN HIS COMMENTS AND THEREAFTER ISSUE CAN BE ADJUDICATED IN THE LIGHT OF THE ADDITIONAL EVIDENCE COLLECTED AND COMMENTS OF THE ASSESSING OFFICER. UNDER SECTION 68 OF THE ACT, THE ASSESSEE IS REQUIRED TO PROVE THREE BASIC INGREDIENTS I.E. (1) IDENTITY OF THE CREDITOR; (2) CREDITWORTHINESS OF THE CREDITOR AND (3) GENUINENESS OF THE TRANSACTION. BY PLACING CONFIRMATION OF :- 5 -: THE DEBIT BALANCE IN THE ACCOUNTS OF THE CREDITOR, ASSESSEE CAN ONLY ESTABLISH THE GENUINENESS OF THE TRANSACTION, BUT FROM THIS CONFIRMATION, CREDITWORTHINESS AND IDENTITY OF THE CREDITOR CANNOT BE PROVED; WHEREAS THE ASSESSEE IS REQUIRED TO PROVE ALL THE THREE INGREDIENTS INDEPENDENTLY BY PLACING RELEVANT EVIDENCE. IN THE INSTANT CASE, THE LD. CIT(A) HIMSELF HAS COLLECTED EVIDENCE I.E. STATEMENT OF ACCOUNT AND RETURN OF INCOME BUT THE SAID EVIDENCES WERE NOT CONFRONTED TO THE ASSESSING OFFICER, AS IT WAS RECEIVED THROUGH LETTER DATED 24.5.2013 AND THE LD. CIT(A) HAS PASSED THE ORDER ON 6.6.2013. THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE ADDITIONAL EVIDENCE COLLECTED BY THE LD. CIT(A) WAS DULY CONFRONTED TO THE ASSESSING OFFICER, BUT NOTHING IS PLACED ON RECORD. 8. WE HAVE ALSO PERUSED THE JUDGMENTS RELIED UPON BY THE ASSESSEE IN THE CASES OF ANIL RICE MILLS VS. CIT [2006] 282 ITR 236 (ALL); CIT VS. KORLAY TRADING CO. LTD. [1998] 232 ITR 820; INCOME TAX OFFICER VS. DIZA HOLDINGS (P) LTD. [2002] 255 ITR 573 AND SAJAN DASS AND SONS VS. CIT [2003] 264 ITR 435. IN ALL THESE CASES, IT HAS BEEN HELD BY VARIOUS HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT THAT IN THE CASE OF CASH CREDIT THE ASSESSEE HAS TO PROVE THREE THINGS (1) IDENTITY OF THE CREDITOR; (2) CAPACITY OF SUCH CREDITOR TO ADVANCE MONEY AND (3) GENUINENESS OF THE TRANSACTION. IF ALL THESE ARE PROVED, THE BURDEN SHIFTS TO THE REVENUE TO PROVE THAT THE AMOUNT BELONGS TO THE ASSESSEE. 9. IN THE INSTANT CASE, ONLY CONFIRMATION OF CREDIT BALANCE WAS FILED BUT FROM THE SAID CONFIRMATION, CREDITWORTHINESS AND IDENTITY OF THE CREDITOR ARE NOT PROVED. BEFORE THE ASSESSING OFFICER, A PLEA WAS TAKEN THAT THE ASSESSEE HAS RECEIVED THE AMOUNT IN ORDER TO MAKE PURCHASES OF ASSETS OF M/S RAJENDRA STEELS LTD. (IN LIQUIDATION) FROM THE OFFICIAL LIQUIDATOR. BUT THIS ASPECT WAS NOT EXAMINED BY THE LD. CIT(A). HE HAS OUT RIGHTLY ACCEPTED THE CLAIM OF THE ASSESSEE ON THE BASIS OF CONFIRMATION :- 6 -: OF THE CREDIT BALANCE OBTAINED DIRECTLY FROM THE ASSESSEE DURING THE COURSE OF APPELLANT PROCEEDINGS. ALL THESE INSTANCES SUGGEST THAT THE LD. CIT(A) HAS HURRIEDLY ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT MAKING NECESSARY VERIFICATION OF THE RECEIPT OF AMOUNT OF RS.2.95 CRORES FROM M/S ROOP SHAN TEXTILE PVT. LTD. IT WAS STATED BEFORE THE ASSESSING OFFICER THAT OUT OF RS.2.95 CRORES RS.1 CRORE WAS RECEIVED FROM M/S J.D. INTERNATIONAL AND IT WAS WRONGLY ENTERED IN THE NAME OF M/S ROOP SHAN TEXTILE PVT. LTD., WHICH WAS LATER ON REVERSED BY MAKING NECESSARY ENTRY IN THE NEXT FINANCIAL YEAR. BUT THIS ASPECT WAS ALSO NOT EXAMINED BY THE LD. CIT(A) IN HIS ORDER. 10. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS NOT PROPERLY EXAMINED THE ISSUE IN DETAIL IN ACCORDANCE WITH LAW AND HAS ACCEPTED THE CLAIM OF THE ASSESSEE SIMPLY ON THE BASIS OF CONFIRMATION OF THE DEBIT BALANCE IN THE ACCOUNT OF THE CREDITOR. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE ASPECTS RAISED BEFORE THE ASSESSING OFFICER. IF NEED BE, THE LD. CIT(A) MAY EXAMINE THE CREDITOR HIMSELF OR THROUGH THE ASSESSING OFFICER IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTION AND OTHER ASPECTS. NEEDLESS TO MENTION HERE THAT THE LD. CIT(A) SHOULD AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE ADJUDICATING THE ISSUE AND WOULD DECIDE THE APPEAL WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF RECEIPT OF THE ORDER OF THE TRIBUNAL, AS THE MATTER RELATES TO THE ASSESSMENT YEAR 2008-09. 11. IN THE LIGHT OF THE DETAILED DISCUSSION IN PARAGRAPHS 7 TO 10 OF THE ORDER OF THE TRIBUNAL, WE ARE OF THE VIEW THAT THE ENTIRE ISSUE WAS THOROUGHLY EXAMINED AND DISCUSSED BY THE TRIBUNAL AND THE CONTENTIONS OF THE ASSESSEE ARE NOT SUSTAINABLE. WE ARE, THEREFORE, OF THE VIEW THAT THERE :- 7 -: IS NO ERROR APPARENT IN THE ORDER OF THE TRIBUNAL AND WE ACCORDINGLY REJECT THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IN THIS REGARD. 12. SO FAR AS TYPOGRAPHICAL ERROR IN LINE 8 OF PARAGRAPH 9 IS CONCERNED, WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE AND WE ACCORDINGLY REPLACE THE WORD ASSESSEE BY THE WORD CREDITOR. ACCORDINGLY, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS DISPOSED OF. 13. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:24 TH JULY, 2015 JJ:0907 COPY FORWARDED TO: 1. APPLICANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR