The ITO 4 (1), v. Shri Arun Mittal,

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NOS.461 & 462/IND/2008 ASSESSMENT YEARS 2003-04 & 2004-05 ITO-4(1) INDORE APPELLANT VS ARUN MITTAL PROP. MALWA TYRE HOUSE 12 CHHOTI GWAL TOLI INDORE (PAN ACAPM 7267 P) RESPONDENT DEPARTMENT BY : SMT. APARNA KARAN SR. DR ASSESSEE BY : WRITTEN SUBMISSION O R D E R PER BENCH THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)II INDORE DATED 14.8.2008 RELATING TO THE ASSESSMENT Y EARS 2003-04 & 2004-05 ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAIN ED LIABILITIES OF RS.30 05 209/- & 36 24 374/- RESPECTIVELY AND FAIL ED TO GIVE ANY 2 EXPLANATION FOR EXCESS LIABILITY ON ACCOUNT OF CC L OAN OF CANARA BANK BEFORE THE ASSESSING OFFICER. 2. DURING HEARING WE HAVE HEARD SMT. APARNA KARAN LD. SR. DR WHO STRONGLY SUPPORTED THE ASSESSMENT ORDER BY CONTENTI NG THAT THE NECESSARY DETAILS DURING ASSESSMENT PROCEEDINGS W ERE NOT FILED BY THE ASSESSEE THEREFORE THE IMPUGNED ADDITIONS WER E RIGHTLY MADE ON ACCOUNT OF UNEXPLAINED LIABILITIES OF THE RESPECTIV E AMOUNTS. WE HAVE ALSO PERUSED THE WRITTEN SUBMISSIONS FILED BY THE A SSESSEE BEFORE THE LD. FIRST APPELLATE AUTHORITY. 3. BRIEF FACTS ARE THAT THE ASSESSEE WAS A DEALER O F PRODUCT OF CEAT AND MRF TYRES ETC. IT WAS OBSERVED BY THE LD. ASSES SING OFFICER THAT THE ASSESSEE SHOWED CREDIT BALANCE AT RS.1 95 75 53 4/- IN CC LOAN ACCOUNT MAINTAINED WITH CANARA BANK WHEREAS IN ITS BALANCE-SHEET THE SAME WAS RS.41 75 217/-. ON ASKING BY THE ASSES SING OFFICER FOR RECONCILE THE DIFFERENCE BETWEEN THESE TWO FIGURES THE ASSESSEE FURNISHED A LIST OF CHEQUES AMOUNTING TO RS.1 13 90 968/- WHICH WERE ISSUED DURING THE YEAR BUT WERE NOT PRESENTED TILL 31.3.2003. AS PER THE REVENUE THE DIFFERENCE OF RS.36 09 349/- COULD NOT BE RECONCILED THEREFORE IT WAS ADDED TO THE INCOME OF THE ASSESS EE AS BOGUS BANK LIABILITY WHICH WAS CHALLENGED BEFORE THE LD. CIT( A). DURING APPEAL PROCEEDINGS THE LD. CIT(A) VIDE LETTER DATED 30.3. 2007 ISSUED NOTICE OF 3 ENHANCEMENT U/S 251(2) OF THE ACT WHICH WAS CHALLE NGED BY THE ASSESSEE VIDE LETTER DATED 16.8.2007. THE ASSESSEE ALSO FILED BANK RECONCILIATION STATEMENT FOR FY 2002-03 AS UNDER: PARTICULARS AMO UNT BAL. AS PER BANK BOOK - 19175534 CHEQUES ISSUED BUT NOT PRESENTED FOR PAYMENT 11995108 OLD BALANCE DIFFERENCE 3005208.8 TOTAL - 4175217 BAL. AS PER BANK STATEMENT - 4175217 DIFF. 0 THE LD. CIT(A) SENT THE AFORESAID RECONCILIATION A LONG WITH THE LETTER OF THE ASSESSEE FOR THE COMMENTS OF THE LD. ASSESSING OFFICER WHO VIDE LETTER DATED 20.8.2007 FILED HIS COMMENTS WHICH ARE AVAILABLE IN PARA 2.4 (PAGE 5) ONWARDS IN THE IMPUG NED ORDER. THE ASSESSING OFFICER ALSO ENCLOSED THE CHART CONTAININ G DETAILS OF CHEQUES ISSUED AND DEBITED IN THE BANK STATEMENT AND IN THE ACCOUNTS OF THE PARTIES. THE COMMENTS OF THE ASSESSING OFFICER WERE PROVIDED TO THE ASSESSEE VIDE LETTER DATED 22.8.2007. IN REPLY THE ASSESSEE FURNISHED DETAILED SUBMISSION/COMMENTS BEFORE THE LD. CIT(A) ON 13.9.2007 ALONG WITH THE DETAILED CHART CONTAINING THE DETAIL S OF CHEQUES ISSUED AND THE POSITION THEREOF AS PER HIS BOOKS OF ACCOUN TS AND BANK STATEMENT AND FURTHER CLARIFYING THE DISCREPANCIES POINTED OUT BY THE LD. ASSESSING OFFICER ALONG WITH COPY OF BANK STATE MENT. THE ASSESSEE 4 ALSO FILED BANK RECONCILIATION STATEMENT OF FY 2001 -02. SUCH WRITTEN SUBMISSION AND THE CHART SUBMITTED BY THE ASSESSEE WERE FURTHER PROVIDED TO THE ASSESSING OFFICER WHO ALSO COMMENTE D VIDE LETTER DATED 5.10.2007. THE EXTRACT OF BOTH THESE LETTERS ARE AVAILABLE AT PAGE 7 8 AND PARA 2.6 ONWARDS WHICH ARE NOT BEING REPEATED BEING MATTER OF RECORD. THE OBSERVATION AND FINDING OF TH E LD. CIT(A) ARE REPRODUCED HEREUNDER: 2.10 THE ISSUE IS CONSIDERED. THE ADDITION OF RS.36 09 349/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED LIABILITIES IN THE BANK ACCOUNT AS HAS BEEN DISCUSSED ABOVE. SINCE THE APPELLANT FURNISHED THE INCOMPLETE DETAILS OF CHEQUES ISSUED BUT NOT PRESENTED NOTICE OF ENHANCEMENT WAS ISSUED TO ENHANCE THE INCOME OF RS.1 14 11 968/-. THE APPELLANT FURNISHED THE BANK RECONCILIATION STATEMENT CLAIMING THEREIN OLD BALANCE DIFFERENCE OF RS.30 05 208/- VIDE HIS LETTER DATED 16.8.07. THE ASSESSING OFFICER POINTED OUT SOME DISCREPANCIES IN RESPONSE TO WHICH THE APPELLANT FURNISHED THE COMPLETE CHART OF THE CHEQUES ISSUED BUT NOT PRESENTED CLARIFYING THE DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN HIS REMAND REPORT. THE APPELLANT ALSO FILED THE BANK RECONCILIATION STATEMENT OF THE FY 2001-02 TO IMPRESS UPON HIS POINT OF BROUGHT FORWARD DIFFERENCE OF RS.30 05 209/-. THE SAME WAS PROVIDED TO THE ASSESSING OFFICER AND HE WAS REQUESTED TO GIVE HIS SPECIFIC COMMENTS WITH REFERENCE TO THE DIFFERENCE IN BANK RECONCILIATION STATEMENT CLAIMED TO BE BROUGHT FORWARD FROM THE EARLIER YEARS AND OF THE ADDITION REQUIRED TO BE MADE AFTER VERIFYING THE CHART SUBMITTED BY THE APPELLANT. THE ASSESSING OFFICER 5 FURNISHED HIS COMMENTS VIDE LETTER DATED 6.2.08 WHICH HAS BEEN REPRODUCED ABOVE. ON PERUSAL OF THE SAME IT IS NOTED THAT THEY ARE OF GENERAL NATURE WITHOUT POINTING OUT THE DETAILS OF UNEXPLAINED LIABILITIES AND THE ADDITIONS WHICH ARE REQUIRED TO BE MADE. THE ASSESSING OFFICER IN HIS LETTER DATED 6.2.08 OBSERVED THAT IT SEEMS THAT THE AUDITORS ISSUED THEIR REPORT U/S 44AB OF THE ACT WITHOUT ACTUALLY VERIFYING THE BOOKS. IT IS DIFFICULT TO APPRECIATE THAT HOW THIS FACT IS RELEVANT TO DECIDE THE ISSUE UNDER CONSIDERATION. THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF UNEXPLAINED LIABILITIES ON THE BASIS OF DIFFERENCE BETWEEN THE BANK ACCOUNT AS PER BOOKS AND AS PER BANK STATEMENTS. THE APPELLANT CLARIFIED THE DIFFERENCE AND MATTER WAS REMANDED TO THE ASSESSING OFFICER TO VERIFY THE CLARIFICATION FUNCTIONED BY THE APPELLANT. FURTHER THE ASSESSING OFFICER SUBMITTED THAT THE TYRE COMPANIES TO WHOM CHEQUES WERE CLAIMED TO BE ISSUED DENIED THE RECEIPT THEREOF. THE ASSESSING OFFICER HOWEVER NEITHER FURNISHED THE DETAILS OF SUCH CHEQUES NOR THE COPY OF THE LETTERS OF THE TYRE COMPANIES VIDE WHICH THEY DENIED THE RECEIPT. THE ASSESSING OFFICER ALSO POINTED OUT THAT THE CHEQUES OF S.NO.366059 TO 366200 ARE NOT FOUND IN THE LEDGER OF THE ASSESSEE. IT IS HOWEVER OBSERVED THAT IN THE CHART CLARIFYING THE DISCREPANCY POINTED OUT IN THE REMAND REPORT SUBMITTED ALONG WITH THE LETTER FILED ON 13.9.07 THE APPELLANT HAS GIVEN THE DETAILS OF THESE CHEQUES ALSO ALONG WITH THE AMOUNT DATE OF CLEARING AND THE PARTIES NAME. THE APPELLANT ALSO FILED THE BANK RECONCILIATION STATEMENT OF THE A.Y. 2000-01 VIDE HIS LETTER FILED IN THIS OFFICE ON 11.2.08. THE SAME READS AS UNDER: IN CONTINUATION TO THE EXPLANATION AND SUBMISSIONS MADE EARLIER IN RESPECT OF THE UNEXPLAINED BANK RECONCILIATION 6 OF THE BALANCES AS PER BOOKS OF ACCOUNTS AND AS PER BALANCE SHOWN BY THE BANK (CC LOAN A/C WITH CANARA BANK). IT IS SUBMITTED THAT AS PER BANK RECONCILIATION STATEMENTS PREPARED FROM THE ACCOUNTING YEAR 2000-01 I.E. A.Y. 2001-02 IT WILL REVEAL THAT THE UNRECONCILED BALANCE OF RS.30 05 209/- IS CARRIED FORWARD FROM THE ACCOUNTING YEAR 1999-2000 I.E. A.Y. 2000-01 AND FOR THE ACCOUNTING YEAR 2001-02 TO 2003-05 THE DIFFERENCE IS OF THE MINOR AMOUNT AS STATED BELOW: A/C YEAR A.Y. UNRECORDED DIFFERENCE 1999 - 00 2000 - 01 (AS PER STATEMENT) 2000 - 01 2001 - 02 OP. BAL. DIFF. 30 05 269 2001 - 02 2002 - 03 378.68 2002 - 03 2003 - 04 00 2003 - 04 2004 - 05 00 HERE IT DESERVES TO STATE THAT THE DIFFERENCE SO ARRIVED AT FOR THE A.Y. 2000-01 IS ALSO CARRIED FORWARD/PERTAINED TO EARLIER YEARS IN THE CASE OF FIRM M/S. MALWA TYRE HOUSE INDORE WHEREIN THE ASSESSEE WAS A PARTNER AND TAKEN OVER THE BUSINESS AS ON 1.4.1998 AS PROPRIETOR. IN VIEW OF THE AFORESAID FACTS IT IS SUBMITTED THAT FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2003-04 AND 2004-05. THERE ARE NO UNRECONCILED BALANCES AS THERE WHICH REQUIRE ANY ADDITION. UNDER THE FACTS AND IN THE CIRCUMSTANCES THE UNRECONCILED DIFFERENCE CAN BE TAKEN INTO ACCOUNT FOR THE A.Y. 2000-01 AND NOT SUBSEQUENT YEARS. FOR YOUR HONOURS KIND PERUSAL AND CONSIDERATION ACCORDINGLY YEAR WISE STATEMENT OF RECONCILIATION OF BALANCES ARE ENCLOSED HEREWITH. 7 HOPE THAT YOUR HONOUR WILL BE KIND ENOUGH TO APPRECIATE THAT THERE IS NOT VALID NEED FOR THE ADDITION HENCE THE ADDITION SO WRONGLY MADE BY THE LEARNED ASSESSING OFFICER NEEDS TO BE DELETED. 2.11 THE ASSESSING OFFICER FURTHER SUBMITTED THAT SOME CHEQUES ISSUED BY THE ASSESSEE HAS NOT BEEN PRESENTED TO THE BANK AND HENCE HELD THE SAME AS BOGUS LIABILITY. AGAIN THE ASSESSING OFFICER HAS NOT GIVEN THE DETAILS OF SUCH CHEQUES. IN VIEW OF THESE FACTS IT IS NOTED THAT THE REPLY OF THE ASSESSING OFFICER IS VAGUE AND GENERAL IN NATURE AND DOES NOT ADDRESS THE ISSUE INVOLVED. IF THE ASSESSMENT ORDER IMPUGNED ORDER AND FACTS & CONCLUSIONS CONTAINED THEREIN ARE ANALYSED BY KEEPING THEM IN J UXTA-POSITION WITH THE ARGUMENTS ADVANCED WE HAVE FOUND THAT THE ASSE SSEE FURNISHED THE COMPLETE DETAILS OF ISSUED CHEQUES BUT NOT PRES ENTED THEN IT CAN BE SAID THAT THE ASSESSEE FURNISHED THE BANK RECONC ILIATION STATEMENT FOR THE RELEVANT FY EXPLAINING THE CLAIMED BROUGHT FORWARD DIFFERENCE OF THE IMPUGNED AMOUNTS. THERE IS UNCONTROVERTED FI NDING IN THE IMPUGNED ORDER THAT INSPITE OF VARIOUS OPPORTUNITIE S PROVIDED TO THE LD. ASSESSING OFFICER HE COULD NOT EXPLAIN/POINT O UT AS TO HOW THERE WAS UNEXPLAINED LIABILITIES. ADMITTEDLY THE ASSESS EE FILED THE DETAILS OF CHEQUES AMOUNTING TO RS.2 05 38 586/- WHICH COUL D NOT BE PRESENTED. THE ALLEGED BANK RECONCILIATION STATEMEN T WAS FILED BY THE ASSESSEE VIDE LETTER DATED 11.2.2008. IDENTICALLY SUCH DETAILS WERE FURNISHED FOR ASSESSMENT YEAR 2004-05 ALSO. EVEN OT HERWISE IN 8 RESPONSE TO CERTAIN DISCREPANCIES POINTED OUT BY TH E ASSESSING OFFICER THE NECESSARY DETAILS AND CLARIFICATION OF SUCH DIS CREPANCIES AS TO WHY CERTAIN CHEQUES THOUGH ISSUED COULD NOT BE PRESEN TED WERE ALSO CLARIFIED BY THE ASSESSEE. THE IMPUGNED DIFFERENCE FOR FY 2001-02 WAS ALSO CLARIFIED BY THE ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT THE LD. CIT(A) ARRIVED AT A PARTICULAR CONCLUSION AFTER CONFRONTING THE RESPECTIVE EXPLANATION/CLARIFICATION/SUBMISSIONS ET C. FURNISHED ON BEHALF OF THE ASSESSEE AS WELL AS COMMENTS ON BEHAL F OF THE ASSESSING OFFICER. THE IMPUGNED ADDITIONS WERE MERELY MADE ON THE SUSPICION THAT THERE WAS UNEXPLAINED LIABILITY ON THE BASIS O F DIFFERENCE BETWEEN BANK ACCOUNT AS PER BOOKS AND PER BANK STATEMENT. T HE POINTS OF DIFFERENCE WERE DULY CLARIFIED BY THE ASSESSEE WHI CH WERE ALSO CONFRONTED TO THE ASSESSING OFFICER TO VERIFY THE C LARIFICATION SO SUBMITTED BY THE ASSESSEE. EVEN VIDE LETTER/CLARIFI CATION DATED 13.9.2007 THE ASSESSEE FURTHER CLARIFIED THE DISCR EPANCIES POINTED OUT IN THE REMAND REPORT BY FURNISHING THE DETAILS OF C HEQUES ALONG WITH AMOUNT DATE OF CLEARING AND THE NAMES OF THE RESPE CTIVE PARTIES ALONG WITH THE BANK RECONCILIATION STATEMENT OF THE RESPE CTIVE ASSESSMENT YEARS. IN VIEW OF THESE FACTS WE HAVE NOT FOUND AN Y INFIRMITY IN THE IMPUGNED ORDER AS THE LD. CIT(A) HAS DISPOSED OF TH E MATTER IN A VERY 9 JUDICIOUS AND CONVINCING MANNER THEREFORE BOTH TH ESE APPEALS OF THE REVENUE ARE HAVING NO MERIT CONSEQUENTLY DISMISSE D. RESULTANTLY BOTH THESE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.4.2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20.4.2010 {VYAS} COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE