Sh Jaswinder Pal Singh, Hoshiarpur v. The Asstt .Commissioner of .Income-tax, Hoshiarpur

ITA 111/ASR/2011 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 11120914 RSA 2011
Assessee PAN ACQPS0104B
Bench Amritsar
Appeal Number ITA 111/ASR/2011
Duration Of Justice 11 month(s) 23 day(s)
Appellant Sh Jaswinder Pal Singh, Hoshiarpur
Respondent The Asstt .Commissioner of .Income-tax, Hoshiarpur
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 30-03-2012
Date Of Final Hearing 27-03-2012
Next Hearing Date 27-03-2012
Assessment Year 2006-2007
Appeal Filed On 06-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU JUDICIAL MEMBER AND SH. B.P.JAIN ACCOUNTANT MEMBER I.T.A. NO.111(ASR)/2011 ASSESSMENT YEAR:2006-06 PAN: ACQPS0104B SH. JASWINDER PAL SINGH VS. ASSTT. COMMR. OF INCO ME-TAX HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN ADV. RESPONDENT BY:SH. TARSEM LAL DR DATE OF HEARING :29/03/2012 DATE OF PRONOUNCEMENT:30/03/2012 ORDER PER BENCH; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT(A) DATED 14.01.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. CIT(A)S FINDINGS UPHOLDING REFERE NCE U/S 142(2A AS VALID SO AS TO REJECT THE ASSESSEES GROUND TH AT IMPUGNED ASSESSMENT WAS BARRED BY TIME ARE GROSSLY ILL-CON CEIVED AND UNFOUNDED. THE ASSESSEE PLEA THAT THE ORDER WAS TIM E BARRED DESERVES TO BE UPHELD. ITA NO.111(ASR)/2011 2 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING TWO CASH CREDITS OF RS.10 00 000/- AND RS.25 00 000/- AS UNEXPLAINED WHEN RECEIVED BY AC COUNT PAYEE CHEQUES FROM SH. GAJINDER SINGH AND SH. GURPREET SI NGH RESPECTIVELY. 3. THAT WHEN BOTH THE CREDITORS PERSONALLY APPEARED AND OWNED UP THEIR RESPECTIVE CREDITS NOT ONLY BEFORE THE AO OF THIS ASSESSEE BUT ALSO BEFORE THEIR OWN AO AT LUDHIANA ON A SUBSEQUEN T REFERENCE MADE BY AO AT HOSHIARPUR. STILL CONFIRMING THE ADDITION BY CIT(A) IS WHOLLY ILLEGALLY AND ARBITRARY. 4. THE ADDITION BY WAY OF DISALLOWANCE OUT OF INTER EST PAID HAS BEEN WRONGLY UPHELD TO THE EXTENT OF LOAN OF RS.30 LACS PAID TO MRS. KEERTI JASWINDER SINGH. 5. THAT THE ORDER UNDER APPEAL TO THE EXTENT DISPU TED IS WHOLLY AGAINST LAW AND FACTS OF THE CASE. 3. AS REGARDS GROUND NO.1 OF THE ASSESSEE THE LD. COUNSEL FOR THE ASSESSEE MR. J.S.BHASIN ADVOCATE ARGUED THAT THE R ETURN OF INCOME WAS FILED ON 28.03.2007 AND THE ASSESSMENT WAS COMPLETED ON 3 1.12.2008. THE ASSESSEE IS NOT HAVING ANY BUSINESS FOR WHICH THE A SSESSEE MAY BE REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT OR GET THE ACCOUNT S AUDITED UNDER SECTION 44AB OF THE ACT. THE PROVISIONS OF SECTION 44AA & 4 4AB OF THE ACT ARE NOT APPLICABLE ON THE ASSESSEE. THE ASSESSEE IS A P ARTNER IN QUITE A FEW FIRMS MENTIONED AT PAGE 1 OF THE AOS ORDER. 3.1. SECONDLY THE LD. COUNSEL FOR THE ASSESSEE ARG UED THAT THE VERY PROVISIONS OF SECTION 142(2A) OF THE ACT CAME INTO PLAY HAVING REGARD TO ITA NO.111(ASR)/2011 3 THE NATURE AND COMPLEXITY OF THE ACCOUNTS WHEN THE SAME IS IN THE INTERESTS OF REVENUE. THE LD. COUNSEL FOR THE ASSESSEE MR. J .S. BHASIN ARGUED HEAVILY THAT THE MAINTENANCE OF ACCOUNTS UNDER SECTION 44AA REFERS TO THE MAINTENANCE OF BOOKS OF ACCOUNT AS IS CLEARLY MENT IONED IN THE SECTION ITSELF. IT WAS ARGUED THAT THE SHOW CAUSE NOTICE WA S ISSUED TO THE ASSESSEE ON 23.12.2008 FOR WHICH THE ASSESSEE HAD SUBMITTED A R EPLY ON 26.12.2008 AND THE CIT CONVEYED THE APPROVAL TO THE AO FOR CARRYIN G OUT SPECIAL AUDIT ON 30.12.2008 AND THE ASSESSMENT WAS TIME BARRED ON 31 .12.2008 WHEREAS THE ASSESSMENT WAS COMPLETED ON 28.08.2009 AND SPECIAL AUDIT WAS APPROVED ONLY TO GAIN THE TIME FOR COMPLETING THE ASSESSMENT WHICH WAS BEING TIME BARRED ONLY AFTER ONE DAY OF THE APPROVAL. 3.2. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BAJRANG TEXTILES (2007) 294 ITR 561 (RAJ) IN WHICH THE HONBLE RAJASTHAN HIGH COURT HAS HELD SPECIAL AUDIT AS ILLEGAL AND CONSEQUENTLY THE ASSESSMENT OR DER WAS HELD TO BE BARRED BY TIME WHERE THE SPECIAL AUDIT WAS DIRECTED TO BE CONDUCTED A DAY BEFORE THE EXPIRY OF PERIOD OF COMPLETING THE BLOCK ASSESS MENT. ITA NO.111(ASR)/2011 4 4. THE LD. DR SH. TARSEM LAL ON THE OTHER HAND A RGUED THAT THE ASSESSEE WAS GIVEN NOTICE ON 23.12.2008 AND THE AO WAS HAVING SUFFICIENT TIME TO COMPLETE ASSESSMENT UPTO 31.12.2008. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 23.12.2008 BUT THE CIT CONVEYED HIS APP ROVAL TO THE AO FOR CARRYING OUT THE SPECIAL AUDIT ONLY ON 30.12.2008 A ND THE ASSESSMENT WAS BEING TIME BARRED ON 31.12.2008. THEREFORE THERE I S NO VALID REASON FOR GIVING THE APPROVAL BY THE CIT FOR CARRYING OUT THE SPECIAL AUDIT ONE DAY PRIOR TO THE ASSESSMENT BEING TIME BARRED. MOREOVER NEITHER OF THE PARTY HAS PLACED ON RECORD ANY AUDIT REPORT UNDER SECTION 142 (2A) OF THE ACT. WHEN ASKED FROM THE LD. DR BY THIS BENCH IF ANY SPECIAL AUDIT HAS BEEN ORDERED THEN THERE SHOULD BE SOME AUDIT REPORT OF THE ACCOU NTS WHICH IS NOT PLACED ON RECORD. THE LD. DR COULD NOT SUBSTANTIATE OR GIV E COGENT REASONING ON THE ISSUE. THE ASSESSEE AS ARGUED BY THE LD. COUNS EL IS NOT SUPPOSED TO MAINTAIN BOOKS OF ACCOUNT U/S 44AA OF THE ACT. THER EFORE HE IS NOT REQUIRED TO GET THE ACCOUNTS AUDITED. AS OBSERVED HEREINABOV E THE PROVISION OF SECTION 142(2A) OF THE ACT FOR REFERENCE TO SPECIAL AUDIT ARE NOT ENACTED FOR THE PURPOSE TO EXTEND THE PERIOD FOR COMPLETING ASS ESSMENT WHICH IS NOT ITA NO.111(ASR)/2011 5 PERMISSIBLE UNDER LAW. THEREFORE ASSESSMENT FRAMED BY THE AO IN THIS REGARD IS TIME BARRED SINCE THE SPECIAL AUDIT HAS B EEN APPROVED ONLY A DAY BEFORE THE EXPIRY OF THE PERIOD COMPLETING THE ASSE SSMENT. OUR VIEWS FIND SUPPORT FROM THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BAJRANG TEXTILES (SUPRA). THEREFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSMENT FRAMED BY THE AO IS TIME BARRED AND BAD IN LAW AND IS QUASHED. THUS GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 6. AS REGARDS GROUND NOS. 2 & 3 THE BRIEF FACTS AR E THAT THE ASSESSEE HAS RAISED LOANS OF RS.10 00 000/- AND RS.25 00 000/- F ROM SH. GAJINDER SINGH AND GURPREET SINGH RESPECTIVELY. THE SAID AMOUNT WA S RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. THE CREDITORS ARE REGULARLY ASSESSED TO TAX. THEY WERE EXAMINED BY THE AO AND DURING EXAMINATION THE CREDITORS COULD NOT PRODUCE BOOKS OF ACCOUNT SINCE THE COMPUTERIZED DAT A IN C.P.U(HARD DISC ) HAD BEEN DAMAGED DUE TO RAIN AND THE DATA WAS BEYON D RETRIEVAL AND AFFIDAVIT TO THAT EXTENT WAS FILED BEFORE THE A.O. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND ACCORDINGL Y MADE THE ADDITION OF THE SAID CASH CREDITS TO THE INCOME OF THE ASSESSEE . 6.1. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O . ITA NO.111(ASR)/2011 6 6.2. THE LD. COUNSEL FOR THE ASSESSEE MR. J.S. BHA SIN ARGUED THAT THE ACIT HOSHIARPUR PASSED ON AFFIDAVITS AND STATEMEN TS OF THE SAID CREDITORS TO THE ITO OF THE CREDITORS AT LUDHIANA HAVING JURI SDICTION OVER THEIR CASES FOR VERIFICATION OF THE SAME. THEREUPON THE ITO OF THE CREDITORS ISSUED ENQUIRY LETTERS ON 14.05.2010 TO BOTH THE CREDITORS WHERE THEIR STATEMENTS HAD BEEN RECORDED ON 2.7.2010. THE STATEMENTS OF TH E SAID CREDITORS WERE PLACED ON RECORD WHERE THEY HAD CONFIRMED OF HAVING GIVEN THE SAID LOANS OUT OF THE CASH IN HAND AVAILABLE WITH THEM IN THE BUSINESS. IT WAS FURTHER ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO OF THE CREDITORS HAD EXAMINED THE CREDITORS AND THE ACTION REPORT WAS SU BMITTED BY THE AO OF THE CREDITORS TO THE AO OF THE ASSESSEE WHICH IS AVAIL ABLE AT PAGES 31 TO 36 OF THE PAPER BOOK. THE SAME WAS PRAYED TO BE TAKEN AS ADDITIONAL EVIDENCE. 6.3. THE LD. DR ON THE OTHER HAND DID NOT OPPOSE FOR ADMISSION OF ADDITIONAL EVIDENCE AND ARGUED THAT THE CASH HAS BE EN DEPOSITED IN THE ACCOUNTS OF THE CREDITORS AND THEREFORE THE EXPLA NATION OF THE ASSESSEE CANNOT BE ACCEPTED. THE LD. DR ON THE OTHER HAND AR GUED THAT THE SAID CASE MAY BE REMANDED TO THE FILE OF THE CIT(A) FOR VERIF ICATION OF THE AFFIDAVITS AND THE ADDITIONAL EVIDENCE. ITA NO.111(ASR)/2011 7 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD RECEIVED THE LOANS FROM TWO CREDITORS THROUGH ACCOUNT PAYEE CHEQUES. THE SA ID CREDITORS ARE REGULARLY ASSESSED TO TAX. THE CREDITORS HAD GIVEN THE AFFIDAVITS AND HAS CONFIRMED DURING THE STATEMENT RECORDED BY THE AO O F HAVING GIVEN LOAN TO THE ASSESSEE. THE AFFIDAVITS SUBMITTED BEFORE THE L D. CIT(A) AND THE STATEMENTS RECORDED ON 02.07.2010 BY THE AO OF THE CREDITORS WERE SENT TO THE AO FOR SPECIFIC COMMENTS BUT NO COMMENTS WERE G IVEN BY THE AO. LATER ON THE AO OF THE CREDITORS HAD SUBMITTED ACT ION TAKEN REPORT OF HAVING GIVEN THE LOANS BY THE CREDITORS TO THE ASSESSEE IS ALSO ON RECORD WHICH IS CORROBORATED WITH THE EXPLANATION GIVEN BY THE ASSE SSEE BEFORE THE AO AND BEFORE THE LD. CIT(A). THEREFORE WE FIND NO FORCE IN THE ARGUMENTS OF THE LD. DR SH. TARSEM LAL IN SENDING THE CASE BACK TO THE AUTHORITIES BELOW WHEN ALL THE FACTS HAD BEEN VERIFIED BY THE LD. CIT (A) AND DOCUMENTS WERE SENT TO THE AO FOR COMMENTS AND THE AO CHOSE NOT TO GIVE ANY COMMENTS. THE ACTION TAKEN REPORT IS ALSO ON RECORD FOR GENUI NENESS OF THE LOANS GIVEN BY THE CREDITORS TO THE ASSESSEE. THERE IS NO ADVER SE MATERIAL ON RECORD TO PROVE THAT SUCH ACTION TAKEN REPORT IS FALSE. THERE FORE IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THAT THE ASSESSEE HAS D ISCHARGED HIS ONUS OF PROVING THE IDENTITY CREDITWORTHINESS AND GENUINEN ESS OF THE CREDITS TAKEN ITA NO.111(ASR)/2011 8 FROM SH. GAJINDER SINGH AND SH. GURPREET SINGH. THE AO IS NOT JUSTIFIED IN MAKING ADDITION AND ACCORDINGLY THE ORDER OF THE LD . CIT(A) IS REVERSED. THUS GROUND NOS. 2 & 3 OF THE ASSESSEE ARE ALLOWED. 8. GROUND NO.4 HAS NOT BEEN PRESSED THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 9. GROUND NO.5 IS GENERAL IN NATURE THEREFORE DOE S NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IN IT A NO.111(ASR)/2011 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH MARCH 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30TH MARCH 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:SH. JASWINDER PAL SINGH HOSHIARPUR. 2. THE ACIT HOSHIARPU. 3. THE CIT(A) JLR. 4. THE CIT JLR 5. THE SR DR ITAT ASR. TRUE COPY BY ORDER