ACIT,Circle-1, Firozabad v. M/s Kay Cee Glass Works, Firozabad

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.4248/DEL./1995 ASST. YEAR: 1991-92 A.C.I.T. CIRCLE-1 VS. M/S. KAYCEE GLASS WOR KS FIROZABAD. 40 DURGA NAGAR FIROZABAD. (PAN : NOT MENTIONED) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R. SAHU JR. D.R. RESPONDENT BY: NONE ORDER PER P.K. BANSAL A.M.: IN THIS CASE THE DIFFERENCE AROSE BETWEEN THE MEMBE RS OF THE DIVISION BENCH HEARING THIS APPEAL. THEREFORE THE MATTER WAS REFERRED TO THE OPINION OF THE LD. THIRD MEMBER. THE LD. THIRD MEMBER HAS AGREED WITH THE VIEW OF THE LD. JUDICIAL MEMBER THAT THE ISSUE IS TO BE RESTORED BY SETTING ASIDE THE ORDER OF THE CIT(A). 2. IN THE RESULT APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 13.04.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 13 TH APRIL 2010. 2 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY 3 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER (AS THIRD MEMBER) ITA NO.4248/DEL./1995 ASST. YEAR: 1991-92 A.C.I.T. CIRCLE-1 VS. M/S. KAYCEE GLASS WOR KS FIROZABAD. 40 DURGA NAGAR FIROZABAD. (PAN : NOT MENTIONED) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPAK TIWARI SR. D.R. RESPONDENT BY: SHRI K.C. AGARWAL ADVOCATE ORDER HONBLE PRESIDENT UNDER SECTION 255(4) OF THE INCOM E-TAX ACT 1961 (THE ACT HEREINAFTER) HAS NOMINATED ME TO DECIDE THE FOLLOWI NG QUESTIONS ARISING DUE TO THE DIFFERENCE IN OPINION BETWEEN THE LD. ACCOUNTANT MEMBER AND THE L D. JUDICIAL MEMBER :- (I) ON THE FACTS CIRCUMSTANCES AND FINDINGS AND ALSO THAT THE AMOUNT OF RS.8 64 670/- NOT FOUND RECORDED IN THE BOOKS OF AC COUNT OF THE ASSESSEE WHETHER THE DECISION OF THE ASSESSING OFFICER IN NOT TREATI NG THE EXPLANATION SATISFACTORY AND MAKING THE ADDITION AS UNEXPLAINED INVESTMENT U /S. 69 OF THE ACT IS TO BE RESTORED BY SETTING ASIDE THE ORDER OF LD. CIT (APP EALS) ? (II) WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE IS THERE ANY JUSTIFICATION IN SETTING ASIDE THE ORDER OF LD. CIT (APPEALS) AND RESTORING THE ISSUE OF ADDITION OF RS.8 64 670./- TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION AFRESH IN ACCORDANCE WITH LAW ? 2. THE REVENUE HAS FILED THE APPEAL AGAINST THE ORD ER OF CIT(A) BY TAKING THE GROUND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.8 64 670/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE DRAFTS AS THE ASSESSEE HAS FAILED TO FURNISH/PRODUCE EVIDENCE FOR HAVING FINANCIAL CAPACITY FOR MAKING S UCH A HUGE INVESTMENT IN THE PURCHASE OF 4 DRAFTS. IT WAS ALSO STATED IN THE GROUNDS THAT THE CIT(A) HAS IGNORED THE ARGUMENTS OF THE A.O. AND DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE BY GIVING CREDENCE TO THE ASSESSEES VERSION WITHOUT PROPER CONSIDERATION AND APPRECIATION OF TH E MATERIAL FACTS ALREADY PLACED ON RECORD. WHEN THE APPEAL WAS HEARD THE LD. JUDICIAL MEMBER HAS ALLOWED THE APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES BY RESTORING THE ISSUE BACK TO THE FILE OF THE A.O. WHILE THE LD. ACCOUNTANT MEMBER WAS OF THE VIEW THAT IT WILL NOT SERVE ANY P URPOSE RESTORING THE ISSUE BACK TO THE FILE OF THE A.O. AND HE SET ASIDE THE ORDER OF THE CIT(A) A ND RESTORED THE ORDER OF THE A.O. THE REASONS GIVEN BY THE LD. J.M. FOR RESTORING THE ISSUE TO TH E FILE OF THE A.O. ARE GIVEN UNDER PARA NOS.11 & 12. THE CIT(A) HAS DELETED THE ADDITION ON THE BAS IS OF THE DECISION RELIED BY THE ASSESSEE IN THE CASE OF M/S. WEST GLASS WORKS PROP. BEHARI LAL SHA RMA AND M/S. PRAKASH GLASS INDUSTRIES FIROZOABAD. IN THE DECISION OF WEST GLASS WORKS T HE CIT(A) HAD EXAMINED THE INVESTMENT MADE BY SHRI HARBANS PRASAD KUNWARON THE PURCHASE O F COAL WHILE THE A.O. OF THE ASSESSEE HAS ACCEPTED THE FINANCIAL CAPACITY AND INVESTMENT IN T HE ASSESSMENT OF M/S. PRAKASH GLASS INDUSTRIES FIROZABAD OF SHRI HARBANS PRASAD KUNWAR . SHRI HRBANS PRASAD KUNWAR HAD MADE INVESTMENT OF RS.8 64 670/- IN THE CASE OF THE ASSE SSEE. THE LD. J.M. WAS OF THE VIEW THAT NO EVIDENCE OR FACTS HAS BEEN DISCUSSED IN THE ORDER O F THE LD. CIT(A) ON THE ASPECT WHETHER THE GOODS WERE FINALLY RECEIVED BY THE ASSESSEE IF SO ON WHICH DATE AND WHETHER THE ASSESSEE PAID BACK THE CONCERNED ARRANGER FINANCING THE MONEY FO R THE RECEIPT OF THE GOODS ISSUED ON WHICH THE ASSESSEE WAS REQUIRED TO ADDRESS THE BENCH. HE WAS ALSO OF THE OPINION THAT NOTHING HAS BEEN PLACED BY THE PARTIES BEFORE THE BENCH TO SHOW THAT THE VIEW TAKEN BY THE CIT(A) IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD ON IDENTICAL FACTS AND CIRCUMSTANCES WAS UPHELD BY THE TRIBUNAL OR NOT. THEREFORE LD. J.M. CONSIDERED IT APPROPRIATE TO RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. TO TAKE INTO CONSIDERATION THE FATE OF THE ORDER PASSED BY THE CIT(A) IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD AND ALSO TO CONSID ER THE ISSUE OF FINALITY WHICH MAY HAVE 5 BEEN ARRIVED AT IN THE ASSESSMENT ORDER PASSED IN T HE CASE OF SHRI HARBANS PRASAD KUNWAR BY I.T.O. RANCHI. 3. THE LD. ACCOUNTANT MEMBER WAS OF THE OPINION THA T THE ASSESSEE HAD BEEN GIVING INCREDIBLE EXPLANATIONS AND CHANGING ITS STAND FROM TIME TO TIME. THE ASSESSEE HAS GIVEN AUTHORITY TO ONE SHRI NIRMAL KUMAR SHARMA TO LIFT T HE COAL. SUBSEQUENT THERETO THE ASSESSEE EXPLAINED THAT PERMIT WAS GIVEN BY HIM TO ONE SHRI RAMESH CHAND JAIN TO LIFT THE COAL ON COMMISSION BASIS AND THEREAFTER THE ASSESSEE HAS PR ODUCED AN AGREEMENT WITH SHRI HARBANS KUMAR KUNWAR WHO WAS INTRODUCED FOR EXPLAINING THE INVESTMENT. THE A.O. HAS NOT FOUND THE EXPLANATION OF THE ASSESSEE TO BE SATISFACTORY AND HE HAS FOUND THAT SHRI HARBANS PRASAD KUNWAR WAS MERELY A NAME LENDER AND THE AGREEMENT HAS BEEN MADE AFTER THOUGHT. THE A.O. HAS RECORDED THE FINDING OF THE FACTS. THE ASSESSEE HA S NOT CHALLENGED THE SAME. THIS FINDING HAS ATTAINED FINALITY AND THUS THERE WAS NO NEED OF SEN DING THE ISSUE BACK TO THE FILE OF THE A.O. AFTER A LAPSE OF 17 YEARS. THE REASONING OF THE LD. A.M. ARE GIVEN IN PARA NOS.7 & 8. 4. ALTHOUGH BOTH THE LD. MEMBERS HAVE STATED THE FA CTS RELATING TO THE CASE AT THE COST OF REPETITION I WOULD LIKE TO REPRODUCE THE FACTS OF THE CASE. AN ACTION UNDER SECTION 132(1) OF THE ACT WAS TAKEN IN THE OFFICE PREMISES OF CHIEF GENER AL MANAGER DESPATCH/CO-ORDINATION CENTRAL COAL FIELD RANCHI ON 30.07.1990. DURING THE COURS E OF SEARCH IT WAS FOUND THAT THE ASSESSEE HAS DEPOSITED A BANK DAFT FOR A SUM OF RS.8 64 670/ - BEARING NUMBER 464306 DATED 24.05.1990 IN CONNECTION WITH THE SUPPLY OF COAL OF 1408 M.T. ON ROAD PERMIT. THE COAL APPLICATION DATED 24.05.1990 WAS FILED IN THE OFFICE OF THE CCL RANC HI UNDER THE SIGNATURE OF PARTNER SHRI PREM CHAND AGARWAL ALONGWITH THE AFORESAID DRAFT OF RS.8 64 760/-. ONE SHRI NIRMAL KUMAR SHARMA WAS AUTHORISED TO ACT ON BEHALF OF THE ASSESSEE. H E WAS NEITHER THE EMPLOYEE NOR CLAIMED TO BE 6 KNOWN TO THE ASSESSEE. AN AFFIDAVIT BY SHRI AGARWA L ON 30.05.1990 ALSO ACCOMPANIED THE SAID APPLICATION DECLARING THEREIN THAT THE COAL TO BE O BTAINED WILL BE USED BY THE UNITS OF THE ASSESSEE AND THE SAME SHALL NOT BE SOLD OFF OR TRANSFERRED T O ANY OTHER PERSON. WHEN THE A.O. ASKED FOR THE SOURCE OF THE INVESTMENT OF RS.8 64 670/- TO TH E ASSESSEE THE ASSESSEE HAS VIDE HIS LETTER DATED 22.09.1992 SUBMITTED AS UNDER :- WITH REFERENCE TO THE ABOVE YEARS ASSESSMENT PROC EEDINGS AND QUERY RAISED BY YOUR HONOUR FOR PROVING THE SOURCE OF DEP OSIT OF RS.8 64 670/- WITH C.C.L. RANCHI THE ASSESSEE BEGS TO SUBMIT AS UNDER :- THAT IN THE PROCEEDINGS U/R.112A DONE BY THE PREDEC ESSOR ASSESSING OFFICER ASSESSEE HAD ALREADY SUBMITTED COMPLETE EV IDENCE ALONGWITH WRITTEN REPLIES DATED 15/10/90. THAT STATEMENT ON OATH OF SRI PREM CHAND AGARWAL PA RTNER WAS RECORDED ON 27/6/1990 AND 15/11/1990. THAT ON 15/11/1990 ASSESSEE HAS ALSO SUBMITTED AN A FFIDAVIT SHOWN BY SRI HARBANS PRASAD KANWAR (COAL LIFTING AGENT) AND COPY OF AGREEMENT EXECUTED ON 16/05/1990 BETWEEN THE ASSESSEE FIRM AND SRI HARBAN S PRASAD KANWAR WHO HAD DEPOSITED THE MONEY WITH THE C.C.L. RANCHI. THE ST ATEMENT ON OATH WAS ALSO RECORDED BY THE LEARNED INCOME TAX OFFICER SRI RAM PRASAD ON 15/11/1990. AT THAT TIME IT WAS SPECIFICALLY STATED BY SRI HARBANS PRASAD KANWAR THAT THE MONEY WAS DEPOSITED BY HIM THROUGH BANK DRAFT. HE HAD PR ODUCED HIS BOOKS OF ACCOUNTS WHICH WERE EXAMINED BY THE ASSESSING OFFICER IN THE PROCEEDINGS U/R.112A. SRI HARBANS PRASAD KANWAR HAD DEPOSITED DRAFTS NOT ONLY ON BEHALF OF ASSESSEE FIRM BUT ALSO FOR OTHER CONCERNS OF FIROZABAD. SRI HARB ANS PRASAD KANWAR FOR PURCHASING DRAFT FOR ASSESSEE FIRM HE HAD SURRENDE RED THREE BANK DRAFTS OF THE VALUE OF RS.880950/- TO THE BANK & THEREAFTER DRAFT OF RS.864760/- HAD BEEN TAKEN FROM THE BANK. THAT SRI RAMESH CHAND WAS THE EMPLOYEE OF SRI HARBA NS KANWAR COAL LIFTING AGENT WHO HAD VISITED AT OUR FACTORY BEFORE THE AGREEMENT EXECUTED RESULTING THAT NAME OF SRI RAMESH CHAND WAS TOLD BE FORE THE INSPECTORS OF DDI WING AGRA BY SRI PREM CHAND ON 27/6/1990 DURING TH E COURSE OF ENQUIRY WERE CONDUCTED. THAT FOLLOWING FACTS SHOULD HAVE BEEN CONSIDERED WH ICH WERE NOT CONSIDERED ON THE PROCEEDINGS U/S.112A. (A) THE DRAFT WAS PURCHASED BY SRI HARBANS PRASAD KANWA R OUT OF THE FUNDS DULY RECORDED IN HIS REGULARLY MAINTAINED BOO KS. 7 (B) HE APPEARED BEFORE THE INCOME TAX OFFICER FIRO ZABAD AND HAS CONFIRMED THAT HE MADE THE INVESTMENT. (C) HE IS A REGULAR INCOME TAX PAYEE AND HIS IDENTI TY IS ESTABLISHED. (D) THAT THE PHOTOSTAT COPY OF BALANCE SHEET EXHIBI TING CASH BALANCE OF 34/35 LACS FOR THE YEAR ENDING 31/3/90 HAS ALSO BEEN DULY FILED BEFORE THE INCOME TAX OFFICER FIROZABAD DURING THE PROCEEDINGS U/S.132(5 ). THE BALANCE SHEET WAS ALSO SUBMITTED ALONGWITH THE RETURN OF INCOME FOR 1 990-91 ASSESSMENT YEAR SUBMITTED ON 12/10/90 VIDE RECEIPT NO.3133 BEFORE T HE INCOME TAX OFFICER RANCHI. (E) THAT SRI HARBANS PRASAD KANWAR MADE THE INVESTMENTS AS ON COAL LIFTING AGENT AND FINANCER UNDER A DULY EXECUTED AG REEMENT FOR LIFTING COAL WEIGHTING 1408 M.TON. 7. COPY OF PETITION U/S.132(11) BEFORE LEARNED CIT AGRA WHICH IS PENDING IS ALSO SUBMITTED HEREWITH. 8. THAT IN THE ORDER PASSED U/S.132(5) EVIDENCES AN D WRITTEN EXPLANATIONS GIVEN BY THE ASSESSEE FIRM HAVE NOT BEEN CONSIDERE D AT ALL AND ARBITRARILY ADVERSE INFERENCE HAD BEEN DRAWN. 9. THAT WE ARE SUBMITTING HEREWITH THE COPIES OF TH E REPLIES AND PHOTOSTAT COPY OF STATEMENT RECORDS WHICH MAY PLEASE BE ACCEP TED AND CONSIDER THE SAME IN THE REGULAR ASSESSMENT PROCEEDINGS. 5. THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION OF RS.8 64 670/- IN THE HANDS OF THE ASSESSEE. THE AS SESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER :- (13) BEFORE ME IT HAS BEEN STATED THAT THE IDENTI TY OF SHRI HARBANS PD. KUNWAR WAS ESTABLISHED. IT WAS ALSO STATED THAT IN ANOTHE R CASE SIMILAR INVESTMENT IN THE BANK DAFT BY THE SAID SHRI HARBANS PD. KUNWAR WAS A CCEPTED IN APPEAL BEFORE ME IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD VID E ORDER DATED 12/10/1994 IN A.NO.CIT(A)/105/CIRCLE-I/FZD/93-94. (14) WHILE DECIDING THE APPEAL OF M/S. WEST GLASS W ORKS PROP: BEHARI LAL SHARMA FOR ASSESSMENT YEAR 1991-92 I HAD EXAMINED THE INVESTMENT MADE BY THE SAID SHRI HARBANS PRASAD KUNWAR OF RANCHI WITH THAT AND THE ASSESSEE FIRM WITH REFERENCE TO THE ASSESSMENT PARTICULARS GIVEN BY TH E ASSESSING OFFICER OF SAID SHRI KUNWAR AT RANCHI. 8 (14.1) IN THE COURSE OF APPELLATE PROCEEDINGS A LE TTER FROM SAID SHRI HARBANS PRASAD KUNWAR ALONGWITH SEVERAL ENCLOSURES WAS RECE IVED AND THE LEARNED COUNSEL OF THE APPELLANT WAS APPRISED OF THESE PAPE RS AND THEY DID NOT CHALLENGE THEIR GENUINENESS OR VALIDITY. THESE PAPERS INCLUD E ASSESSMENT ORDER OF SHRI HARBANS PRASAD KUNWAR WHICH WAS PASSED BY THE ITO WARD-I RANCHI FOR THE ASSESSMENT YEAR 1991-92. IT ALSO ENCLOSED A COPY O F THE BALANCE-SHEET FOR THE YEAR ENDED 31.3.1991 WHICH HAS BEEN CERTIFIED BY TH E SAID ITO AS TRUE. AS PER THIS BALANCE-SHEET INVESTMENT OF RS.7 41 555 IN TH E NAME OF M/S. WEST GLASS WORKS FIROZABAD IS INDICATED. APART FROM THIS IN VESTMENT INVESTMENTS IN THE NAME OF M/S. KAYCEE GLASS WORKS AND PRAKASH INDUSTR IES FIROZABAD AMOUNTING TO RS.8 64 670 AND RS.7 09 620 RESPECTIVELY ARE ALS O REFLECTED. THE PAPERS ALSO INCLUDE A LETTER OF THE ITO RANCHI TO THE A.O. TO THE EFFECT THAT THE AFORESAID 3 DEPOSITS BY SHRI HARBANS PRASAD KUNWAR WAS VERIFIED AND FOUND CORRECT DURING ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT. IT HAS CATEGORICALLY BEEN STATED BY THE ITO THAT: EXAMINATION OF ASSESSMENT RECORDS OF SHRI HARBANS PRASAD KUNWAR REVEALS THAT INVESTMENT MADE BY HIM WITH M/S. KAYCE E GLASS WORKS M/S. WEST GLASS WORKS AND PRAKASH GLASS INDUSTRIES BESID ES OTHER HAVE DULY BEEN EXAMINED AND VERIFIED IN THE ASSESSMENT PROCEE DINGS. (14.2) EVIDENCES WERE ALSO PRODUCED IN REGARD TO TH E ASSESSMENT OF M/S. RADHU COMMERCIAL PRIVATE LIMITED WHEREIN IT WAS MENTIONED BY THE ASSESSING OFFICER AT CALCUTTA THAT THERE WAS TRANSACTION WITH SHRI HARBA NS PRASAD KUNWAR IN ASSESSMENT YEAR 1990-91. (15) IN VIEW OF THE AFORESAID FACTS AND MY APPELLA TE ORDER IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD THERE IS NO JUSTIFICATI ON FOR HOLDING THAT SHRI HARBANS PRASAD KUNWAR HAD NOT MADE INVESTMENT OF RS .8 64 670. THE MATTER HAS BEEN VERIFIED AND CONFIRMED BY HIS ASSESSING OF FICER THE EVIDENCES PRODUCED ARE IN ORDER. THE ASSESSING OFFICER OF THE APPELLA NT HAS ALSO ACCEPTED HIS FINANCIAL CAPACITY AND INVESTMENT IN THE ASSESSMENT OF M/S. PRAKASH GLASS INDUSTRIES FIROZABAD. AS SUCH THE ADDITION MADE BY THE A.O. IS DELETED. 6. THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE ADDITION SHOULD HAVE BEEN DELETED AND THE ORDER OF THE CIT(A) SHOULD HAVE BEEN CONFIR MED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE ASSESSEE HAS DULY DISCHARGED HIS ONUS A S LAID DOWN U/S 69 OF THE INCOME TAX ACT BUT SINCE THE LD. J.M. HAS RESTORED THE ISSUE TO THE FI LE OF THE A.O. THE ORDER OF THE LD. J.M. SHOULD BE ACCEPTED. THE ASSESSEE HAS NOT TWISTED HIS STATEME NT DT. 27.06.1990. SHRI PREM CHAND AGARWAL ON 27.06.1990 DURING THE COURSE OF ENQUIRY CONDUCTE D BY THE INSPECTORS OF DDI WING AGRA POINTED OUT THE NAME OF SHRI RAMESH CHAND JAIN FOR WHICH MY ATTENTION WAS DRAWN TO PAGE 9 NOS.66 & 67 OF THE PAPER BOOK AS SHRI RAMESH CHAND JAIN HAS COME TO THE ASSESSEE AS AN EMPLOYEE OF HARBANS PRASAD KUNWAR COAL LIFTING AGE NT AND VISITED THE FACTORY. THE AGREEMENT HAS BEEN ENTERED INTO BY THE OTHER PARTNER SHRI BEN GALIMAL GOEL WITH HARBANS PRASAD KUNWAR. MY ATTENTION WAS DRAWN TO PAGE NOS.75 & 76. IT WAS POINTED OUT THAT WHOLE INVESTMENT WAS MADE BY SHRI HARBANS PRASAD KUNWAR. THE AUTHORITY HAS BEEN GIVEN BY THE ASSESSEE ON THE INSTRUCTION OF SHRI HARBANS PRASAD KUNWAR TO ONE SH RI NIRMAL KUMAR SHARMA FOR LIFTING THE COAL. SHRI RAMESH CHAND JAIN BEING THE STAFF OF HA RBANS PRASAD KUNWAR WAS SENT TO THE FACTORY OF THE ASSESEE PRIOR TO THE ENTERING INTO THE AGREE MENT WITH HARBANS PRASAD KUNWAR ASKING THE ASSSESSEE TO COME ON A PARTICULAR DATE FOR ENTERING INTO AGREEMENT. AS PER THE AGREEMENT THE COPY OF WHICH IS ON THE PAPER BOOK THE MONEY HAS T O BE DEPOSITED WITH CENTRAL COAL FIELD LIMITED RANCHI BY SHRI HARBANS PRASAD KUNWAR AND H E HAS TO BE PAID BY THE ASSESSEE ALONGWITH FINANCE AND LIFTING COMMISSION @ 30/- PER TON. MY ATTENTION WAS DRAWN TOWARDS CLAUSE NOS.1 2 3 & 4 OF THE AGREEMENT. IT WAS ALSO POINTED OUT TH AT AFFIDAVIT OF SHRI HARBANS PRASAD KUNWAR DATED 28.08.1990 WAS DULY SUBMITTED BEFORE THE AO I N WHICH SHRI HARBANS PRASAD KUNWAR HAS GIVEN HIS G.I.R. NO COPY OF INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1990-91 ALONG WITH COPY OF LEDGER ACCOUNT AND THE BANK ACCOUNT SHOWING THE SOURCE OF THE DRAFT OF RS.8 64 670/- MADE BY SHRI HARBANS PRASAD KUNWAR. FOR THIS MY A TTENTION WAS DRAWN TO PAGE 77 78 & 79 OF THE PAPER BOOK. IT WAS POINTED OUT THAT THE DRAFTS WERE MADE FROM STATE BANK OF INDIA. AT THE SAME TIME THE DRAFT OF M/S. WEST GLASS WORKS FIROZ ABAD WAS ALSO MADE. SOURCE OF WHICH WAS DULY ACCEPTED BY THE CIT(A) IN THE CASE OF M/S. WES T GLASS WORKS. IT IS NOT THE QUESTION OF TWISTING OR CHANGING ANY STATEMENT AND NEITHER THE A.O. NOR THE LD. A.M. COULD CORRECTLY APPRECIATE THE FACTS OF THE CASE. ON THE DIRECTION OF THE TRIBUNAL HE SUBMITTED FRESH COPY OF THE AGREEMENT AS WELL AS THE LETTER DATED 30.04.1990 BY WHICH SHRI HARNBAS PRASAD KUNWAR HAS ASKED THE ASSESSEE ABOUT THE VISIT OF SHRI RAMESH C HAND JAIN AT THEIR FACTORY REGARDING LIFTING OF 10 COAL. SINCE SHRI RAMESH CHAND JAIN HAS COME TO THE FACTORY THEREFORE SHRI PREM CHAND AGARWAL HAD STATED THE NAME OF SHRI RAMESH CHAND JA IN DURING THE COURSE OF ENQUIRY CONDUCTED ON 27.06.1990. WHEN THE STATEMENT OF SHRI HARBANS PRASAD KUNWAR WAS RECORDED UNDER SECTION 131 COPY OF WHICH IS AVAILABLE AT PAGE NOS.68 & 69 OF THE PAPER BOOK HE HAS DULY CONFIRMED THAT HE GOT THE DRAFT MADE FROM STATE BANK OF INDIA KUJU BRANCH AND PAID THE COMMISSION ON BEHALF OF THE ASSESSEE FOR THE PURCHASE OF COAL. H E HAS ALSO CONFIRMED THAT HE WAS TO BE PAID THE COMMISSION @ RS.30/-. IT WAS POINTED OUT THAT NO G OODS HAVE BEEN DELIVERED TO THE ASSESSEE. THE DRAFT HAS DULY BEEN IMPOUNDED BY THE DEPARTMENT AND IN THE POSSESSION OF THE DEPARTMENT. REFERRING TO PAGE NOS.72 & 73 IT WAS POINTED OUT TH AT STATEMENT OF SHRI PREM CHAND AGARWAL WAS RECORDED BY THE A.O. IN THIS STATEMENT RECORDE D ON 15.11.1990 SHRI PREM CHAND AGARWAL HAS CLEARLY STATED THAT THE ASSESSEE HAS GIVEN THE AUTHORITY TO THE PERSON WHOSE NAME WAS TOLD TO HIM BY SHRI HARBANS PRASAD KUNWAR. HE COULD NOT EXP LAIN ABOUT THE AGREEMENT WHICH HAS BEEN ENTERED INTO BY THE OTHER PARTNER SHRI BENGALIMAL G OEL AND IN THE BEGINNING DELIVERY ORDER WAS HANDED OVER TO SHRI RAMESH CHAND JAIN AND THEREFORE HIS NAME WAS STATED BY SHRI PREM CHAND AGARWAL. IT WAS POINTED OUT THAT THE SOURCE OF INV ESTMENT MADE BY SHRI HARBANS PRASAD KUNWAR IS DULY PROVED AND THERE IS NO CHANGE IN THE STATEM ENT OF THE ASSESSEE. THE AGREEMENT ENTERED INTO CANNOT BE REGARDED TO BE THE ONE MADE AFTER TH OUGHT. THE FACTS ARE APPARENTLY CLEAR. THE A.O. HAS NOT PROVED THAT THE AGREEMENT ENTERED INTO IS A BOGUS ONE. THE ONUS IS ON THE REVENUE TO PROVE THAT THE APPARENT IS NOT REAL AND FOR THIS ATTENTION WAS DRAWN TOWARDS THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC). RELIANCE WAS ALSO PLACED ON THE DECISION OF THE ALL AHABAD HIGH COURT IN THE CASE OF SMT. THAKURI DEVI VS. C.W.T. 139 ITR 271 (ALLD.). HE P OINTED OUT THAT ON THE QUERY FROM BENCH THAT THIS IS A FACT THAT DURING THE COURSE OF HEARING BE FORE THE TRIBUNAL THE ASSESSEE COULD NOT EXPLAIN WHAT HAPPENED IN THE CASE OF M/S. WEST GLASS INDUST RIES BEFORE THE TRIBUNAL. THUS RELIANCE 11 WAS PLACED ON THE DECISION OF THE LD. J.M. AND THER E IS JUSTIFICATION IN RESTORING THE ISSUE TO THE FILE OF THE A.O. 7. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. A.M. 8. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S ALONGWITH ORDERS OF THE TAX AUTHORITIES BELOW AND ALSO THE PAPER BOOK AS REFERRED TO BEFORE ME. I HAVE ALSO GONE THROUGH THE CASE LAWS AS RELIED BEFORE ME. IT IS SETTLED LAW IN VIEW OF T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAWAT MULL DWARKA DASS 87 ITR 349 THAT APPARENT IS REAL. ONUS IS ON THE PERSON WHO ALLEGES APPARENT IS NOT REAL. IN MY OPINION IT IS APPAREN T FROM THE EVIDENCE THAT THE SUM OF RS.8 64 670/- BY WAY OF BANK DRAFT WAS DEPOSITED BY SHRI HARBANS PRASAD KUNWAR WITH THE CENTRAL COAL FIELD LIMITED RANCHI ON BEHALF OF THE ASSESSEE IN PURSUANCE OF THE AGREEMENT DATED 16.05.1990 ENTERED INTO BETWEEN THE ASSESSEE AND SH RI HARBANS PRASAD KUNWAR. AS PER CLAUSE NO.1 OF THE SAID AGREEMENT SHRI HARBANS PRASAD KUN WAR HAS TO DEPOSIT A SUM OF RS.8 64 670/- IN THE NAME OF THE ASSESSEE WITH THE CENTRAL COAL F IELDS LIMITED IN PURSUANCE OF THE RELEASE ORDER FOR THE SUPPLY OF COAL. AS PER CLAUSE NO.2 THE ASSESSEE WAS BOUND TO GET THE DELIVERY ORDER/RELEASE ORDER FROM CENTRAL COAL FIELD LIMITED RANCHI AND AFTER RECEIPT OF THE SAID ORDER HE WAS BOUND TO ISSUE A LETTER OF AUTHORITY DULY AD DRESSED TO THE COLLIERY CONCERNED AUTHORIZING SHRI HARBANS PRASAD KUNWAR TO TAKE DELIVERY OF THE COAL. AS PER CLAUSE NO.3 THE SECOND PARTY I.E. HAR BANS PRASAD KUNWAR AFTER TAKING DELIVERY OF THE STEM COAL WAS BOUND TO LOAD THE SAME INTO TRUCKS AND GET IT TRANSPORTED TO THE ASSESSEE. AS PER CAUSE NO.4 SHRI HARBANS PRASAD KUNWAR HAS TO SUBMIT BILL FOR THE VALUE OF THE COAL TRANSPORTED ALONGWITH FINANCE AND LIFTING COMMISSION @ RS.30/- PER TON BESIDES OTHER INCIDENT AL EXPENSES TO THE ASSESSEE. AS PER CLAUSE NO.5 THE ASSESSEE WAS BOUND TO MAKE THE PAYMENT O F BILL SUBMITTED BY SHRI HARBANS PRASAD 12 KUNWAR WITHIN 7 DAYS FROM THE DATE OF THE BILL. TH IS AGREEMENT HAS BEEN ENTERED INTO ON BEHALF OF THE ASSESSEE BY ITS PARTNER SHRI BANGALI MAL GOE L WHICH IS APPARENT FROM THE COPY OF THE AGREEMENT ALREADY ON THE FILE. SHRI HARBANS PRASAD KUNWAR HAS SUBMITTED AN AFFIDAVIT ALONGWITH PAN STATING THEREIN THAT HE HAD INVESTED THE SUM OF RS.8 64 670/- THROUGH DEMAND DRAFT FROM SBI DATED 24.05.1990 IN FAVOUR OF CENTRAL COAL FIEL DS LIMITED. COPY OF HIS INCOME TAX RETURN ALONGWITH HIS CAPITAL ACCOUNT AND SOURCES OF THE MO NEY WERE DULY FILED BY THE ASSESSEE. THE AFFIDAVIT HAS NOT BEEN REJECTED BY THE A.O. EVEN N O CROSS EXAMINATION OF SHRI HARBANS PRASAD KUNWAR WAS CARRIED OUT. AT THE SAME TIME AS IS AP PARENT FROM PAGE NO.79 OF THE PAPER BOOK SHRI HARBANS PRASAD KUNWAR HAS ISSUED A BANK DAFT F OR SIMILAR TRANSACTION ON ACCOUNT OF M/S. WEST GLASS WORKS FIROZABAD IN WHOSE CASE THE CIT(A ) HAS DELETED SIMILAR ADDITION. SHRI HARBANS PRASAD KUNWAR HAS SENT SHRI RAMESH CHAND JA IN TO THE FACTORY OF THE ASSESSEE FOR LIFTING THE STEAM COAL ALONGWITH LETTER DATED 30.04 .1990 IN WHICH HE HAS CLEARLY STATED THAT HE IS SENDING HIS STAFF SHRI RAMESH CHAND JAIN TO THE FAC TORY REGARDING LIFTING OF THE STEAM COAL AND ASKED THE ASSESSEE FIRM TO COME FOR MAKING THE AGRE EMENT ON 16.05.1990. THUS THE QUESTION THAT SHRI RAMESH CHAND JAIN WAS A DIFFERENT PERSON AND IS NOT RELATED WITH SHRI HARBANS PRASAD KUNWAR DOES NOT ARISE. IN MY VIEW THERE IS NO CON TRADICTION IN THE STATEMENT OF SHRI PREM CHAND AGARWAL AS WAS RECORDED ON 27.06.1990 AND THA T WAS RECORDED SUBSEQUENTLY. EVEN THE ASSESSEE HAS STATED THIS FACT VIDE HIS LETTER DATED 22.09.1992 BEFORE THE A.O. HAD THIS LETTER BEEN DULY CONSIDERED THE A.O. WOULD HAVE COME TO KNOW T HAT SHRI RAMESH CHAND JAIN WAS THE STAFF OF SHRI HARBANS PRASAD KUNWAR AND WAS NOT A DIFFERE NT PERSON. IN THIS LETTER THE ASSESSEE HAS CLEARLY EXPLAINED THAT SHRI RAMESH CHAND JAIN WAS A N EMPLOYEE OF SHRI HARBANS PRASAD KUNWAR COAL LIFTING AGENT WHO HAD VISITED THEIR F ACTORY BEFORE THE AGREEMENT EXECUTED RESULTING THE NAME OF SHRI RAMESH CHAND JAIN WAS TOLD BEFORE THE INSPECTORS OF DDI WING AGRA BY SHRI PREM CHAND AGAWAL ON 27.06.1990 DURING THE COURSE O F ENQUIRIES WERE CONDUCTED. IT APPEARS 13 THAT THIS LETTER ESCAPED THE ATTENTION OF THE A.O. AND AN ADVERSE VIEW HAS BEEN TAKEN AGAINST THE ASSESSEE. AS IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD ON IDENTICAL FACTS AND CIRCUMSTANCES THE ADDITION WAS DELETED BY THE CIT( A) AND ALSO THE A.O. HIMSELF HAS ACCEPTED THE FINANCIAL CAPACITY AND CREDIT WORTHINESS OF SH RI HARBANS PRASAD KUNWAR FOR THE INVESTMENT MADE BY HIM IN THE CASE OF M/S. PRAKASH GLASS INDUS TRIES FIROZABAD. IN MY OPINION IT IS NECESSARY TO BE BROUGHT ON RECORD WHAT HAPPENED ULT IMATELY IN THE CASE OF M/S. WEST GLASS WORKS FIROZABAD IN WHOSE CASE ALSO SHRI HARBANS PR ASAD KUNWAR HAS ENTERED INTO SIMILAR TRANSACTION. WHETHER THE ORDER OF THE CIT(A) WAS U PHELD BY THE TRIBUNAL OR NOT. SIMILARLY WHAT HAPPENED TO THE GOODS WHETHER THEY HAD BEEN FINALL Y RECEIVED BY THE ASSESSEE OR THE ASSESSEE HAD PAID BACK THE AMOUNT TO SHRI HARBANS PRASAD KUN WAR OR NOT ARE THE FACTS WHICH HAVE NOT BEEN EXAMINED BY THE A.O AND EVEN NOT BROUGHT ON RE CORD. I THEREFORE AGREE WITH THE VIEW TAKEN BY THE LD. JUDICIAL MEMBER AND ALSO OF THE V IEW THAT IT IS A FIT CASE WHERE THE ISSUE IS TO BE RESTORED TO THE FILE OF THE A.O. FOR TAKING INTO CO NSIDERATION THE FATE OF THE ORDER PASSED BY THE CIT(A) IN THE CASE OF M/S. WEST GLASS WORKS FIROZA BAD AND ALSO TO CONSIDER THE ISSUE OF THE FINALITY WHICH MAY HAVE BEEN ARRIVED AT IN THE ASSE SSMENT ORDER PASSED IN THE CASE OF SHRI HARBANS PRASAD KUNWAR BY I.T.O. RANCHI. I ACCORD INGLY ANSWER THE QUESTION REFERRED TO ME AS UNDER :- I) I DO AGREE WITH THE DECISION OF THE LD. J.M. THA T THE ISSUE IS TO BE RESTORED BY SETTING ASIDE THE ORDER OF THE CIT(A). II) IN MY OPINION THERE IS JUSTIFICATION IN SETTIN G ASIDE THE ORDER OF THE CIT(A) AND RESTORING THE ISSUE OF ADDITION OF RS.8 64 670/- TO THE FILE OF THE A.O. AS ADDITION HAS BEEN DELETED ON THE BASIS OF THE ORDER PASSED BY THE CIT (A) IN THE CASE OF M/S. WEST GLASS 14 WORKS FIROZABAD AND WHAT HAPPENED TO THE SAME CASE IN THE TRIBUNAL HAS TO BE BROUGHT ON RECORD AS THE FACTS INVOLVED IN BOTH THE CASES A RE SIMILAR AND SHRI HARBANS PRASAD KUNWAR HAS ENTERED INTO SIMILAR TYPE OF AGREEMENT I N THAT CASE. 9. THE MATTER WILL NOW GO BEFORE THE REGULAR BENCH FOR DECIDING THE APPEAL IN ACCORDANCE WITH THE MAJORITY OPINION. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 20 TH JANUARY 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIS TANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY