RAJENDRA MOHANLAL AGRAWAL,JALNA V. INCOME TAX OFFICER, WARD-1, JALNA, JALNA

ITA 514/PUN/2024

AI Insights

The case involves Rajendra Mohanlal Agrawal, the proprietor of Mohan Agencies, who appealed against the order of the CIT(A) confirming an addition of Rs.42,14,940 under section 68 of the Income Tax Act, 1961. This addition was initially made by the Assessing Officer following a survey that uncovered excess stock and unrecorded cash. The assessee claimed the cash was collected from customers and was robbed, but failed to satisfactorily substantiate this during the assessment proceedings. The CIT(A) upheld the addition, rejecting the assessee's explanations and evidence. The Tribunal, however, found procedural lapses in the handling of evidence and the opportunity for cross-examination, leading to the restoration of the matter to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471179 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Kishanchand Chelaram vs CIT, Andaman Timber Industries vs. CCE
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI; ADDL
• Assessee Lawyers: NIKHIL PATHAK
• Keywords: Opportunity of being heard; Onus to prove
• Section: 142(1); 143(2); 68; 131; 133(6); 13; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.514/PUN/2024 Assessment year : 2017-18 Rajendra Mohanlal Agrawal Mohan Agencies, Shop No.K-342, New Market Yard, Ring Road, Jalna – 431203 Vs. ITO, Ward-1, Jalna PAN: AHFPA9389J (Appellant) (Respondent) Assessee by : Shri Nikhil Pathak Department by : Shri Arvind Desai, Addl CIT-DR Date of hearing : 28-01-2025 Date of pronouncement : 29-01-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 19.01.2024 of the Ld. CIT(A), Pune-11 relating to assessment year 2017-18. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) in confirming the addition of Rs.42,14,940/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). 3. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of trading of Bidi, Cigarattes, Pan masala, etc. under the name and style of „M/s. Mohan Agencies‟. A survey u/s 133A of the Act was 2 ITA No.514/PUN/2024 conducted at the business premises of the assessee on 19.08.2016. During the course of survey action excess stock valued at Rs.21,49,000/- was found. Further, cash totaling to Rs.9,76,000/- was also found at the time of survey which was more than the cash as per books of account by an amount of Rs.9,51,000/-. The assessee disclosed the amount of excess stock of Rs.21,49,000/- and excess cash of Rs.9,51,000/- for taxation as additional income over and above the regular income for the year under consideration during the course of his statement recorded on oath u/s 131 of the Act. The assessee filed his return of income electronically on 29.10.2017 declaring taxable income at Rs.48,761/-. He also has credited income of Rs.32,10,000/- to the Profit and Loss Account taking into account the additional income offered during the course of survey action. The return was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and the statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the assessee filed the requisite details from time to time. 4. During the course of assessment proceedings the Assessing Officer noted from the return of income that the assessee has claimed expenses of Rs.47 lakhs under the head „Loss from theft‟. On being questioned by the Assessing Officer it was submitted that his son had collected cash of Rs.42,14,940/- from the various customers situated in nearby towns / villages on 01.07.2016. Further, his son was in possession of cash of Rs.4,85,060/- out of regular cash in hand available with the assessee as on date. It was submitted that while his son was travelling back to 3 ITA No.514/PUN/2024 Jalna after cash collection with such total cash of Rs.47,00,000/- and during such travel, he was robbed of such cash of Rs.47,00,000/-. The assessee submitted the copy of FIR and copy of report of the police department. The Assessing Officer observed from the various details filed by the assessee that the assessee has submitted the names of 16 persons from whom the assessee has collected the cash on account of sales on the day of robbery i.e. 01.07.2016. He asked the assessee to provide complete details such as name, PAN number, current communication address and confirmation of persons from whom such cash has been received along with the copy of bills issued to them. In response to the same, the assessee submitted the addresses of 13 persons out of total 16 persons. The assessee also submitted that the confirmation of these parties could not be obtained due to „Bandh‟ called by political parties. 5. The Assessing Officer thereafter issued notice u/s 133(6) of the Act to these 13 persons, in response to which these persons have denied to have made any such huge payments against purchase of beedi / cigarettes as claimed by the assessee. The Assessing Officer, therefore, held that the contention of the assessee that the said credited to the cash book of the assessee is out of cash received from his debtors is nothing but a failed attempt to explain the cash robbed. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.42,14,940/- u/s 68 r.w.s. 115BBE of the Act. While doing so, he relied on various decisions. 4 ITA No.514/PUN/2024 6. In appeal, the Ld. CIT(A) upheld the action of the Assessing Officer by observing as under: “8. I have considered the facts of the case and the submissions made by the appellant. The issue under dispute is genuineness of cash of Rs.42,14,940/- credited in the books of the appellant on 01/07/2016. The appellant has claimed that the said cash was collected by his son from the debtors to whom sales were made by him. After making verifications, the assessing officer held that the said cash was not collected from the so-called debtors and held the Said cash credit as unexplained and made addition u/s, 68 of the Act. 9.1 The first contention of the appellant is that the provisions of section 68 cannot be applied to the sales credited in the P&L account. The said contention cannot be accepted because there is no such restriction in section 68 of the Act. As per section 68, any sum found credited in the books of a taxpayer, for which he offers no explanation about the nature and source thereof or the explanation offered by him, in the opinion of the Assessing Officer, is not satisfactory, may be charged to income-tax as the income of the taxpayer of that year. Thus, for invoking the provisions of section 68 of the Act, following conditions should be fulfilled:- i) A sum should be credited in the books of the assessee in the financial year immediately preceding the assessment year. ii) Either the assessee unable to furnish explanation about the nature and source of the credit entry or the A.O. is in the opinion that the explanation offered by him is not satisfactory. 9.2 In the present case, cash of Rs. 42,14,940/- was credited in the books of accounts on 01/07/2016 and the explanation filed by the appellant was found not satisfactory by the assessing officer, because for 3 persons, no addresses were provided by the appellant. The remaining 13 persons denied of paying such cash to the appellant when notices u/s 133(6) of the Act were issued. Thus, the explanation filed by the appellant was found not satisfactory. In view of these facts, the appellant's contention that the provisions of section 68 are not applicable to sales credited in the books of accounts, is rejected. 10. Next contention raised by the appellant is that he is under no obligation to provide confirmations of debtors from whom cash was collected. This, contention of the appellant is not acceptable because the primary burden to prove the genuineness of credits in the books of accounts, is on the assessee especially when he is claiming that the cash was collected from its debtors to whom sales were made on earlier occasions. Considering that the assessee is claiming that cash of more than Rs.40,00,000/- was collected on a single day and as high as Rs.9,07,110/- from a single person, the appellant is expected to discharge his primary-burden. It is further seen that there are many-persons from whom cash more than Rs. 2,00,000/- is claimed to have been collected on 01/07/2016. Thus, this contention of the appellant is rejected. 5 ITA No.514/PUN/2024 11. The appellant has further contended that no opportunity of cross-examination was provided by the assessing officer. In this connection, it is important to note that the assessing officer requested the appellant to file confirmations from these persons but no such confirmation was filed by the appellant. Instead, the appellant requested the assessing officer, to directly issue notices to these persons. Accordingly, on the request of the appellant, the assessing officer issued notices u/s 133(6) of the Act to the persons for which addresses were provided and all of them denied to have made cash payments as claimed by the appellant. Thereafter, the assessing officer issued a show cause notice to the appellant asking it to explain as to why an addition of Rs. 42,14,940/- should not be made u/s 68 of the Act but in response, no confirmation from any of these 16 persons was filed by the appellant. The facts of the case thus suggest that the so-called debtors were the witnesses of the appellant and it is a well settled legal position that no one can request the cross examination of its own witnesses. In such situation, the issue of cross-examination does not arise in the present case. 12. The appellant has further contended that the assessing officer has not doubted the correctness of his books of accounts. This contention is factually incorrect because as per findings of survey, the appellant was not recording all his sale transactions in the books of accounts and admitted that for the year under consideration, sales to the tune of Rs. 6,50,00,000/- were not recorded in the books. He also declared additional income on such undisclosed sales. Further, the assessing officer did not accept such additional income and made further additions by estimating the profit on these undisclosed sales. This discussion clearly demonstrates that the books of accounts of the appellant do not reflect his true business affairs. Hence, this contention of the appellant does not have any merits. 13. The appellant has relied on various case-laws. It is a well settled legal position that any decision/judgement by a judicial body is given in the context of facts of a particular case and unless the facts are similar, the said decision cannot be applied to any other case. It is seen that the facts of the case-laws relied on by the appellant are distinguishable from the facts of present case. Therefore, the case- laws relied upon by the appellant-will not be applicable to the present case. 14. Considering the totality of facts of the case, I am of the opinion that the appellant has failed to satisfactorily explain the source of cash amounting to Rs.2,14,940/- credited in his books of accounts on 1/07/2016. Accordingly, the addition of Rs. 42,14,940/- made by the assessing officer is upheld. The ground no.1 raised by the appellant is DISMISSED.” 7. The Ld. Counsel for the assessee at the outset filed certain evidences in the shape of affidavits from the various parties and submitted that these are additional evidences which go to the root of the matter for deciding the issue. He submitted 6 ITA No.514/PUN/2024 that despite being asked by the assessee during the course of assessment proceedings the Assessing Officer never supplied the copies of statements of the various parties from whom he has obtained such statements and which is the basis for making huge addition. In this regard, he relied on the following decisions: i) Kishanchand Chelaram vs CIT, (1980) 125 ITR 713 ii) Andaman Timber Industries vs. CCE 281 CTR 214 (SC) 8. He submitted that given an opportunity, the assessee is in a position to substantiate his case by producing the evidence to the satisfaction of the Assessing Officer regarding the genuineness of such cash received from the various parties which was robbed. He further submitted that there is no dispute to the fact that theft has taken place and the copy of the FIR and complaint to the police is also on record with the department. He accordingly submitted that the matter may be restored to the file of the Assessing Officer for giving an opportunity to the assessee to substantiate his case. 9. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that despite number of opportunities given by the Assessing Officer, the assessee could not satisfactorily substantiate the source of cash of Rs.42,14,940/- supposed to have been robbed from the son of the assessee. Even before the Ld. CIT(A) also, he failed miserably to substantiate the source of such cash. He accordingly submitted that the order of the Ld. CIT(A) being a reasoned one should be upheld and the grounds raised by the assessee be dismissed. 7 ITA No.514/PUN/2024 10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.42,14,940/- u/s 68 r.w.s. 115BBE of the Act on the ground that the assessee failed to substantiate the source of cash of Rs.42,14,940/- credited to the books of account which has been claimed as collection from the various customers situated at nearby towns / villages on 01.07.2016 and which was robbed from his son along with personal cash of Rs.4,85,060/-, both totaling to Rs.47 lakhs which was claimed as expenses under the head “Loss from theft”. We find the Ld. CIT(A) sustained the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the Assessing Officer has not provided the copies of statements recorded from the various persons who have denied to have given any such cash to the assessee which is the basis for addition made by the Assessing Officer. Further, no opportunity of cross-examination was given. Since the Ld. Counsel for the assessee has now filed the affidavits from certain parties in shape of additional evidences and submitted that the affidavits of the remaining parties also can be filed before the Assessing Officer, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing requisite details to his satisfaction and decide the issue as per fact and law after giving due opportunity of being heard to 8 ITA No.514/PUN/2024 the assessee. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29th January, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 29th January, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, „B‟ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 9 ITA No.514/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 28.01.2025 Sr. PS/PS 2 Draft placed before author 29.01.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "