TMI Blog2020 (4) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... 999, is hereby set aside. - Decided in favour of assessee. - CIVIL APPEAL NO. 6110 OF 2009 - - - Dated:- 24-4-2020 - A. M. Khanwilkar And Dinesh Maheshwari, JJ. For the Petitioner : Mr. P. V. Yogeswaran, AOR For the Respondent : Mrs. Anil Katiyar, AOR JUDGMENT A. M. Khanwilkar, J. 1. This appeal takes exception to the final judgment and order dated 21.8.2008 passed by the High Court of Judicature for Rajasthan at Jodhpur (for short, the High Court ) in Income Tax Appeal No. 69 of 2006, whereby the appellant s appeal was dismissed and the order of Income Tax Appellate Tribunal, Jodhpur Bench (for short, the ITAT ) came to be upheld. 2. In short, the appellant/assessee was served with a notice under Section 143(2) of the Income Tax Act, 1961 (for short, 1961 Act ) by the Assessing Officer (for short, Officer ) for the assessment year 1998-1999, pursuant to which an assessment order was passed on 30.11.2000. This appeal involves limited challenge to certain addition made under the heads Trading Account and Credits in the assessment order. The Officer, inter alia, while relying on the Balance Sheet and the books of account, took note of the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion, the CIT(A) upheld the assessment order. 4. The appellant/assessee then preferred further appeal to the ITAT. Having noted the issues and objections raised by the Department and the appellant/assessee, the ITAT partly allowed the appeal vide order dated 4.11.2004. However, the order relating to the second addition (under consideration in the present civil appeal) regarding credits of ₹ 2,26,000/( Rupees two lakhs twenty six thousand only) came to be upheld. 5. The appellant/assessee then filed an appeal before the High Court under Section 260A of the 1961 Act. The appeal was admitted on 27.4.2006 on the following substantial question of law: Whether claim to purchase of goods by the assessee could be dealt with under Section 68 of the Income Tax as a cash credit, by placing burden upon the assessee to explain that the purchase price does not represent his income from the disclosed sources? The principal argument of the appellant/assessee was that once the books of account have been rejected and an assessment order has been passed, the same books of account cannot be then relied upon by the Officer to impose consequent addition(s). 6. The High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in view of addition of ₹ 10,000/having been made in trading account, cannot be accepted, as books of accounts has been rejected for the purpose of assessing the gross profit, as the gross profit shown in the books has not been accepted, on the ground, that the assessee had not maintained day to day stock registers, nor has produced or maintained other necessary vouchers, but then, if those books of accounts did disclose certain other assets, which are wrongly shown to be liabilities, and for acquisition of which the assessee did not show the source, it cannot be said that the Assessing Officer was not entitled to use the books of accounts for this purpose. (emphasis supplied) 7. The appellant/assessee in the present civil appeal has reiterated the argument that the Officer, having made the addition under Section 144 of the 1961 Act being best judgment assessment , had invoked powers under sub-Section (3) of Section 145. For, assessment under Section 144 is done only if the books are rejected. In that case, the same books cannot be relied upon to impose subsequent additions, as has been done in this case under Section 68 of the 1961 Act. The appellant/assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also urge that while imposing the first addition, the assessment order does not reject the books of accounts, but only that part which pertained to assessing the gross profit, as the assessee had not maintained day to day stock registers, nor had produced or maintained other necessary vouchers while determining the gross profits. Additionally, the respondent would also urge that the amount mentioned under Credits in the Balance Sheet is incorrect and qualifies as Cash Credits under Section 68 of the 1961 Act, as stated in the assessment order. Indisputably, the Officer gave several opportunities to the appellant/assessee to prove the authenticity of the entries in question. As a matter of fact, summon notices were issued to the named fifteen creditors, but no evidence/explanation was forthcoming. The finding of fact so recorded by the Officer is unexceptionable. The respondent thus contends that the finding relating to the cash credits, does not give rise to any substantial question of law. 10. Before we proceed to analyze the rival submissions, we need to advert to I.A. No. 57442/2011 for permission to bring on record subsequent events. By this application, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer recorded statements of 12 unregistered dealers out of 13. In the report dated 22.12.2010, he mentioned that statements of above 12 persons were recorded on 15/16.12.2010 and in respect of identify, the unregistered filed photo copies of their Voter Identity Cards and all of them have admitted that they have sold marble on credit basis to Sh. Bashir Ahmed Sisodia, the appellant, during the Financial Year 9798 and received payments after two or three years. However, he observed that none of them have produced any evidence in support of their statement since all are petty unregistered dealers of marble and doing small business and therefore, no books of account were maintained. Some of them have stated that they were maintaining small dairies in the relevant period of time but they could not preserve old dairies. Some of them have stated that they have put their signature on the vouchers on the date of transactions. It is therefore, observed that the Assessing Officer has neither doubted their identity nor any adverse comments in respect of purchase of marble slabs in the Financial Year relevant at AY 9899 has given in the remand report. xxx xxx xxx 19. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 19981999 as below; Assessment 143. (1) (a) Where a return has been made under section 139, or in response to a notice under sub-Section (1) of section 142, (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-Section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee: Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely: (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 186 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-Section (4) of section 245D, passed subsequent to the filing of the return referred to in clause (a), there is any variation in his share in the income or loss of the association or body, as the case may be, or in the manner of inclusion of his share in the returned income, then, (i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to the assessee: Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such adjustments were made or any such order was passed. (1A) (a) Where as a result of the adjustments made under the first proviso to clause (a) of sub-Section (1), (i) the income declared by any person in the return is increased; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimation already sent for any income-tax, additional income-tax or interest shall be amended on the basis of the said revised return and where any amount payable by way of income-tax, additional income-tax or interest specified in the said intimation has already been paid by the assessee then, if any such amendment has the effect of (a) enhancing the amount already paid, the intimation amended under this clause shall be sent to the assessee specifying the excess amount payable by him and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; (b) reducing the amount already paid, the excess amount paid shall be refunded to the assessee; (ii) the amount of the refund already granted shall be enhanced or reduced on the basis of the said revised return and where the amount of refund already granted is- (a) enhanced, only the excess amount of refund due to the assessee shall be paid to him; (b) reduced, the excess amount so refunded shall be deemed to be the tax payable by the assessee and an intimation shall be sent to the assessee specifying the amount so payable, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year. Explanation. An intimation sent to the assessee under sub-Section (1) or sub-Section (1B) shall be deemed to be an order for the purposes of sections 246 and 264. Best judgment assessment. 144. (1) If any person- (a) fails to make the return required under sub-Section (1) of section 139 and has not made a return or a revised return under sub-Section (4) or sub-Section (5) of that section, or (b) fails to comply with all the terms of a notice issued under sub-Section (1) of section 142 or fails to comply with a direction issued under sub-Section (2A) of that section, or (c) having made a return, fails to comply with all the terms of a notice issued under sub-Section (2) of section 143, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being given sufficient opportunity, failed to prove the correctness and genuineness of his claim in respect of purchases of marbles from unregistered dealers to the extent of ₹ 2,26,000/( Rupees two lakhs twenty six thousand only). Resultantly, the said transactions were assumed as bogus entries (standing to the credit of named dealers who were nonexistent creditors of the assessee). 14. However, it has now come on record that the appellant/assessee in penalty proceedings offered explanation and caused to produce affidavits and record statements of the concerned unregistered dealers and establish their credentials. That explanation has been accepted by the CIT(A) vide order dated 13.1.2011. In paragraph 17 of the said decision reproduced hitherto, it has been noted that the Officer recorded statements of 12 unregistered dealers out of 13 and their identity was also duly established. After analysing the evidence so produced by the appellant/assessee, the appellate authority [(CIT(A)] noted that the Officer had neither doubted the identity of those dealers nor any adverse comments were offered in reference to their version regarding sale of marble slabs by them to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned unregistered dealers in penalty proceedings. That evidence fully supports the claim of the appellant/assessee. The appellate authority vide order dated 13.1.2011, had not only accepted the explanation offered by the appellant/assessee but also recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the appellant/assessee for the assessment year 19981999. That now being the indisputable position, it must necessarily follow that the addition of amount of ₹ 2,26,000/( Rupees two lakhs twenty six thousand only) cannot be justified, much less, maintained. 16. Accordingly, this appeal ought to succeed on this count alone and it would be unnecessary for us to dilate on other questions/contentions urged by the parties as referred to in the earlier part of this judgment. 17. Accordingly, this appeal is allowed. The addition of ₹ 2,26,000/( Rupees two lakhs twenty six thousand only) by the Officer under Section 68 of the 1961 Act, towards cash credit amount shown against the names of concerned unregistered dealers for the assessment year 1998-1999, is hereby set aside. The rest of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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