Suresh kumar T. Jain, Bangalore v. ITO, Bangalore

ITA 667/BANG/2009 | 2005-2006
Pronouncement Date: 08-01-2010 | Result: Dismissed

Appeal Details

RSA Number 66721114 RSA 2009
Bench Bangalore
Appeal Number ITA 667/BANG/2009
Duration Of Justice 6 month(s) 8 day(s)
Appellant Suresh kumar T. Jain, Bangalore
Respondent ITO, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-01-2010
Date Of Final Hearing 16-12-2009
Next Hearing Date 16-12-2009
Assessment Year 2005-2006
Appeal Filed On 30-06-2009
Judgment Text
PAGE 1 OF 15 ITA NO.667/B/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K J.M. AND SHRI A MOHAN ALANKAMONY A.M ITA NO.667/BANG/09 (ASST. YE AR 2005-06) SHRI SURESH KUMAR T JAIN PROP. M/S NINZA ELECTRONICS 115/5 LEELA GOPAL COMPLEX PR LANE SP ROAD BANGALORE-560 002. - APPELLANT VS THE INCOME TAX OFFICER WARD-2(1) BANGALORE. - RESPONDENT APPELLANT BY : SH RI GANESH RAO RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER GEORGE GEORGE K : THIS APPEAL OF THE ASSESSEE AN IN DIVIDUAL IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-I BANGALORE FO R THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE A RETAIL TRADER IN ELECTRONIC G OODS HAS RAISED FOUR GROUNDS. THE GROUND NO.1 IS OF GENERAL IN NATURE WHICH IN OUR VIEW DOESNT SURVIVE FOR ADJUDICATION. IN THE GROUNDS THE SUBSTANCES OF THE ISSUES ARE THAT PAGE 2 OF 15 ITA NO.667/B/2009 2 THE AUTHORITIES BELOW ERRED IN MAKING ADDITI ON OF (I) RS.50.09 LAKHS BEING OLD BROUGHT FORWARD TRADE CRE DITS RELATING TO EARLIER ASSESSMENT YEARS; (II) RS.14.99 LAKHS BEING CURRENT YEARS TRADE CREDITS U/S 68 OF THE ACT; & (III) THE INTEREST CHARGED U/S 234B OF THE ACT SHOULD BE RESTRICTED TO THE LEVY MADE IN 143(1) OF THE ACT. THE FACTS OF THE CASE IN BRIEF ARE THAT FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE HAD FURNISHED HIS ROI ON 31.3.06 ADMITTING A TOTAL INCOME OF RS.6.06 LAKHS WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY THE BUSINESS PREMI SE OF THE ASSESSEE WAS SUBJECTED TO AN ACTION U/S 133A OF THE ACT ON 12.3.07. CONSEQUENT TO SURVEY THE ASSESSEE WAS CALLED UPON TO FURNISH A ROI BY ISSUANCE OF A NOTICE U/S 148 OF THE ACT. IN COM PLIANCE THE VIDE HIS COMMUNICATION DT: 30.8.07 INFORMED THAT THE ROI ALREADY FURNISHED BE CONSIDERED AS RETURN FILED IN RESPONSE TO THE SAID NOTICE. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE ASSESSEE WAS REQUIRED TO FURNISH CONFIRMATION LETTERS OF SUN DRY CREDITORS AND ALSO CERTAIN DETAILS. AFTER DUE CONSIDERATION OF T HE ASSESSEES CONTENTIONS SOME OF THE CONFIRMATION LETTERS OF TH E CREDITORS FURNISHED ETC. THE AO FOR THE EXHAUSTIVE REASONS GIVEN IN THE IMPUGNED ASSESSMENT ORDER HAD CONCLUDED THE ASSESS MENT BY MAKING ADDITIONS TO THE TUNE OF RS.6508910/- AS UNDER: (I) BROUGHT FORWARD CREDITORS BALANCES RS.500919 9 TREATED AS CESSATION OF TRADIN G LIABILITY U/S 41(1)OF THE ACT PAGE 3 OF 15 ITA NO.667/B/2009 3 (II) CURRENT CREDITORS U/S 68 OF THE AC T RS.1499711 DISENCHANTED WITH THE STAND OF THE AO THE ASSESSEE HAD APPROACHED THE LD. CIT(A) FOR RELIEF. DULY CONSIDER ING THE FORCEFUL CONTENTIONS OF THE ASSESSEE THE LD. CIT(A) HAD IN DEED DELIBERATED THE ISSUES IN AN EXTENSIVELY AND COMPREHENSIVE MANNE R WITH ILLUSTRATION OF THE BROUGHT FORWARD CREDIT BALANCES AND CURRENT CREDITS ETC. IN TABULAR COLUMNS IN THE IMPUGNED ORD ER UNDER DISPUTE OBSERVED THUS 3.5.THE APPELLANT HAS SOUGHT TO ARGUE THAT A LARGE PART OF THE AMOUNT ADDED BY THE AO RELATED TO CREDIT BAL ANCES BROUGHT FORWARD FROM EARLIER YEARS AND THEREFORE TH E SAME COULD NOT BE ADDED IN THE YEAR UNDER CONSIDERATION. THE APPELLANT HAS ALSO ARGUED (ALTHOUGH NOT VERY VEHEME NTLY I MIGHT ADD) THAT THERE WAS NO REMISSION OR CESSATION OF LIABILITY AS REQUIRED U/S 41(1) AND THEREFORE THE AO WAS NO T JUSTIFIED IN ADDING THESE AMOUNTS. THESE DOES NOT I MIGHT A DD SEEM TO BE ANY DISPUTE ABOUT THE OTHER REQUIREMENT OF S.41( 1) NAMELY THAT THE AMOUNTS IN QUESTION SHOULD HAVE BEEN ALLOW ED AS AN ALLOWANCE OR DEDUCTION TO THE APPELLANT. 3.6. I AM UNABLE TO AGREE WITH THE APPELLANTS ARGUMENT THAT SINCE A LARGE CHUNK OF WHAT THE AO AD DED WERE BROUGHT FORWARD BALANCES; THESE COULD NOT BE ADDED IN THE YEAR UNDER CONSIDERATION. THE FACT IS THAT THE APP ELLANT HAS PROVIDED A BALANCE SHEET DRAWN UP BASED ON ITS BOOK S OF ACCOUNT IN WHICH CERTAIN AMOUNTS ARE BEING CLAIMED AS LIABILITIES DUE TO DIFFERENT PARTIES AS AT THE END OF THE ACCOUNTING YEAR IN QUESTION. IT IS FOR THE APPELLA NT TO ESTABLISH THE GENUINENESS OF THESE LIABILITIES BY L EADING NECESSARY EVIDENCE WHEN ASKED TO DO SO BY THE REVEN UE AUTHORITIES. THE MERE FACT OF LIABILITIES BEING RE FLECTED AGAINST CERTAIN NAMES IN THE APPELLANTS OWN BOOKS OF ACCOUNT CAN HARDLY BE ACCEPTED AS EVIDENCE. THE AO ON HIS (SIC) HER PART HAS CARRIED OUT NECESSARY ENQUIRIES AND FOUND THAT PAGE 4 OF 15 ITA NO.667/B/2009 4 EITHER THE PARTIES DID NOT EXIST OR THAT THE LIABIL ITIES BEING CLAIMED BY THE APPELLANT WERE IN EXCESS OF THOSE BE ING CONFIRMED BY THE PARTIES. THE ONUS IN SUCH CIRCUMS TANCES IS THEREFORE CLEARLY CAST ON THE APPELLANT TO ESTABLIS H ITS CLAIM. IN MY VIEW THE APPELLANT HAS CLEARLY FAILED TO DIS CHARGE SUCH ONUS. THE AO HAVING ESTABLISHED THAT SUCH LIABILI TIES DID NOT EXIST AT THE END OF THE ACCOUNTING YEAR IN QUESTION WAS WELL WITHIN HIS (SIC) HER RIGHTS TO ADD THE AMOUNTS IN Q UESTION AS LIABILITIES THAT HAD CEASED TO EXIST.. 3.7. AS FAR AS CURRENT CREDITORS ARE CONCERNED THE APPELLANT HAS MERELY ARGUED THAT THERE WAS NO REMISSION OR CE SSATION OF LIABILITY IN THOSE CASES EITHER. UNFORTUNATELY MER ELY STATING IT AS SUCH DOES NOT MAKE IT SO. THE APPELLANT DOES NO T SEEM TO HAVE LED ANY EVIDENCE TO BACK UP THIS CLAIM EITHER. MOREOVER AT THE APPELLATE STAGE THE APPELLANT ALSO CONTENDE D THAT THE PROVISIONS OF S.68 WERE APPLICABLE ONLY IN RESPECT OF LOAN CREDITORS AND NOT TRADE CREDITORS AND THE AO HAD ERRONEOUSLY RESORTED TO THE PROVISIONS OF S.68 IN R ESPECT OF THESE. I AM UNABLE TO AGREE WITH THIS ARGUMENT OF THE APPELLANT EITHER. WHILE NO DOUBT THE HEADING OF TH E SECTION IS CASH CREDITS THE LANGUAGE OF THE SECTION IS UNAM BIGUOUS IN THAT IT REFERS TO ANY SUM FOUND CREDITED IN THE BO OKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR IN RESPE CT OF WHICH THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATUR E AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY. WHE N THE SECTION ITSELF DOES NOT MAKE ANY DISTINCTION REGARD ING THE NATURE OF THE SUM CREDITED I AM OF THE CONSIDERED OPINION THAT IT IS IMMATERIAL WHETHER THE SUM CREDITED IS W ITH REFERENCE TO LOANS OR SUPPLIES. THE APPELLANTS AR GUMENT IN RESPECT OF CURRENT CREDITORS IS THEREFORE NOT ACCEP TABLE EITHER. 3. AGGRIEVED THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL BEFORE US. THE LD. A R REITERATED M ORE OR LESS WHAT HAS BEEN URGED BEFORE THE LOWER AUTHORITIES. TO DRIVE PAGE 5 OF 15 ITA NO.667/B/2009 5 HOME HIS POINT HE HAS PLACED STRONG RELIANCE ON TH E FOLLOWING CASE LAWS: (I) PUNJAB DISTILLING INDUSTRIES LTD. V. CIT (1959) 35 ITR 519 (SC) (II) CIT GUJARAT 1 V RASHMI TRADING 103 ITR 312 (GUJ) (III) B. V.ASWATHIAH AND BROTHER V. CIT 198 ITR 108 (KAR) (IV) CIT V. MANOHAR BANDHU 148 ITR 108 (BOM) (V) BIJLI COTTON MILLS PVT. LTD. V. CIT LUCKNOW 81 ITR 400 (ALL) & (VI) CIT WEST BENGAL 1 V. SANDERSON AND MORGAN 75 ITR 4 33 (CAL) 4. ON THE OTHER HAND THE LD. D R WAS VERY EMPHATI C IN HER RESOLVES THAT THE AO HAD ANALYZED THE ISSUES IN DEPT H PERUSED THE CONFIRMATION LETTERS PERUSED/OBTAINED AND CAME TO T HE CONCLUSION THAT THE BROUGHT FORWARD SUNDRY CREDITORS TO THE TU NE OF RS.50.09 LAKHS AND THE CURRENT YEARS CREDITORS TO THE EXTENT OF RS.14.99 LAKHS WERE NOT GENUINE FOR THE REASONS SET-OUT IN H ER IMPUGNED ORDER. LIKEWISE THE LD.CIT(A)S TOO HAD DISCUSSED THE ISSUES IN A COMPREHENSIVE MANNER AND ARRIVED AT THE WELL REASON ED CONCLUSION THAT THE AO WAS JUSTIFIED IN BRINGING TO TAX THE B ROUGHT-FORWARD CREDITORS BALANCES AND CURRENT CREDITORS BALANCE. IT WAS THEREFORE PLEADED THAT THE STAND OF THE AUTHORITIES BELOW BE SUSTAINED IN TOTO. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE RELEVANT RECORDS. AS COULD BE SEEN FRO M THE ASSESSMENT ORDER THAT DURING THE COURSE OF PROCEEDI NGS BEFORE THE AO THE ASSESSEE HAD FURNISHED A LIST CREDITORS WI TH NAMES AND PAGE 6 OF 15 ITA NO.667/B/2009 6 ADDRESSES OF 39 CASES AND PERHAPS IN TEN CASES THE RE WERE NO ADDRESSES. IN COMPLIANCE TO THE AOS COMMUNICATION 23 CREDITORS HAVE FURNISHED THE DETAILS. ON SCRUTINY OF CONFIRMA TION LETTERS THE AO FOUND THAT THE 23 SUNDRY CREDITORS HAVE CONFIRMED THE OUTSTANDING BALANCES ONLY TO THE EXTENT OF RS.24579/ - AS AGAINST RS.3557868/- CLAIMED BY THE ASSESSEE. THE DISCREPAN CY AS PER THE DETAILS SO ARRIVED AT RS.3533289/- [ 3557868 2457 9]. WITH REMAINING 26 CREDITORS 4 CREDITORS HAVE CONFIRMED THE CREDIT BALANCES AT RS.NIL AND THE 22 ALLEGED CREDITORS SO ME OF THEM HAVE NOT COMPLIED WITH THE QUERIES AND IN RESPECT OF 12 ALLEGED CREDITORS THE NOTICES SENT WERE RETURNED BY THE POSTAL AUTHORI TIES WITH REMARKS INSUFFICIENT ADDRESS NO SUCH PERSON ET C. THESE AMOUNTS WERE WORKED OUT TO RS.2975621/-. THUS THE ASSESSE E WAS REQUIRED TO FURNISH AS TO WHY THE SAID DISCREPANCIES AND THOS E WHO HAVE NOT CONFIRMED THEIR CREDIT BALANCES TO THE TUNE OF RS.6 508910/- (3533289+ 2975621) SHOULD NOT BE ADDED BACK TO HIS INCOME? THE ASSESSEE CAME UP WITH A REPLY THAT (A) TO QUALIFY FOR INCLUSION OR ADDITION OF ANY INCOME INVESTMENTS OR CREDIT SUCH INCOME INVESTMENT OR CREDIT SHOULD AC CRUE OR ARISE DURING THE PERIOD FROM 1.4.04 TO 31.3.05 (B) ALTHOUGH THE BUSINESS INCOME WAS CONSIDERED U/S 28 CERTAIN SPECIAL ITEM OF INCOME OR INVESTMENT OR CREDIT WERE BROUGHT TO TAX UNDER SPECIFIED SECTION OF THE ACT. IT WAS NOT CLEAR AS T O UNDER WHICH HEAD THE IMPUGNED AMOUNT WOULD BE BROUGHT TO TAX; (C) THE SUNDRY CREDITORS WERE ONLY TRADE CREDITORS AN D NOT CASH CREDITORS. TRADE CREDITORS REPRESENT PERSONS WH O HAVE SUPPLIED PAGE 7 OF 15 ITA NO.667/B/2009 7 GOODS AND TO WHOM THE ASSESSEE HAD NOT PAID PURCHAS E CONSIDERATION AT THE END OF THE RELEVANT ASSESSMENT YEARS; (D) IF AT ALL THE SAID AMOUNT IS TO BE ASSESSED IT SHOU LD BE ASSESSED U/S 68 OF THE ACT; & (E) BY APPLYING THE PROVISIONS OF S.68 THE SO CALLED CREDIT SHOULD PERTAIN TO THAT PREVIOUS YEAR I.E. PREVIOUS YEAR ENDED ON 31.3.05 AND HENCE ANY CREDIT PERTAINING TO ANY OTHER PRE VIOUS YEAR CANNOT BE CHARGED TO TAX FOR THE PREVIOUS YEAR ENDED ON 31 .3.06 (SIC) 31.3.05 I.E. AY 2005-06. 6. BRUSHING ASIDE THE ASSESSEES OBJECTION THE AO WENT AHEAD TO BRING THE ENTIRE ALLEGED SUNDRY CREDITS AMO UNTING TO RS.6508910/- U/S 41(1) AS WELL AS U/S 68 OF THE ACT . 7. ON HER PART THE LD.CIT(A) HAD INDEED ANALYZ ED THE ISSUES AS EXTRACTED HER FINDINGS IN THE FORE-GOING PARAGRAPHS AND FLOORED THE ASSESSEES CONTENTIONS WITH FACTS AND F IGURES (IN TABULAR COLUMNS). THE BONE OF THE CONTENTION OF THE ASSES SEE WAS THAT A SIZEABLE AMOUNTS ADDED BY THE AO RELATED TO CREDIT B ALANCES BROUGHT FORWARD FROM THE EARLIER YEARS AND THEREFOR E THE SAME COULD NOT BE ADDED IN THE YEAR UNDER CONSIDERATION. FURTHER ARGUMENT OF THE ASSESSEE WAS THAT THERE WAS NO REMI SSION OR CESSATION OF LIABILITY AS REQUIRED U/S 41(1) AND TH US THE AO WAS NOT JUSTIFIED IN ADDING THESE AMOUNTS. AS RIGHTLY HIGHL IGHTED BY THE LD.CIT(A) THE ASSESSEE HAD PROVIDED A BALANCE SHEE T DRAWN UP BASED ON HIS BOOKS OF ACCOUNT IN WHICH CERTAIN AMOU NTS WERE BEING CLAIMED AS LIABILITIES DUE TO DIFFERENT PARTIES AS AT THE END OF THE PAGE 8 OF 15 ITA NO.667/B/2009 8 ACCOUNTING YEAR UNDER DISPUTE. THE ASSESSEE HAD IN FACT FAILED TO ESTABLISH THE GENUINENESS OF THESE LIABILITIES BY CI TING CREDIBLE EVIDENCE. SIMPLY THE LIABILITIES BEING REFLECTED AG AINST CERTAIN NAMES IN HIS BOOKS OF ACCOUNT WOULD NOT VOUCH THE GENUINE NESS OF SUCH LIABILITIES. ON THE OTHER HAND THE AO WENT TO THE ROOT OF THE ISSUE MADE INQUIRIES [CALLING FOR CONFIRMATION LETTERS FR OM THE ALLEGED CREDITORS AND FOUND THE DISCREPANCIES AS POINTED OU T SUPRA] AND BROUGHT ON RECORD TO SHOW THAT THE BROUGHT FORWARD ALLEGED SUNDRY CREDITORS AND CURRENT YEARS CREDITORS WERE NOT GENU INE. THE ASSESSEE HAS NEVER TRIED TO RECONCILE THE DIFFERENC E OF BROUGHT FORWARD BALANCES NOR PRODUCED ANY BILLS OF PURCHASE ETC. FOR VERIFICATION INSPITE OF BEING PROVIDED WITH AMPLE T IME TO RECONCILE. THE ASSESSEE CHOSE TO STAY INDIFFERENT AFTER COLLECT ING THE SWORN STATEMENTS AND ALSO THE CONFIRMATION OBTAINED BY THE DEPARTMENT FROM CREDIT PARTIES. THIS CLEARLY PROVES THAT THE A SSESSEE HAS NO EXPLANATION TO PROVE THAT CREDITORS IN HIS ACCOUNTS ARE GENUINE. TO PUT IT DIFFERENTLY THE ASSESSEE HAD FAILED TO DISCH ARGE HIS ONUS CAST ON HIM TO SUBSTANTIATE THE CLAIM WHEREAS THE AO HAD BROUGHT ON RECORD WITH DOCUMENTARY EVIDENCE THAT SUCH LIABILITI ES DID NOT EXIST AT THE END OF THE ACCOUNTING YEAR UNDER DISPUTE AND RIGHTLY ADDED THE SAID LIABILITIES WHICH HAD CEASED TO EXIT. 8. WITH RESPECTS WE HAVE PERUSED THE CASE LAWS ON WHICH THE ASSESSEE HAS RELIED ON AS UNDER: PAGE 9 OF 15 ITA NO.667/B/2009 9 (I) PUNJAB DISTILLING INDUSTRIES LTD. V. CIT (1959) 35 ITR 519 (SC ) THE ISSUE BEFORE THE HIGHEST JUDICIARY OF THE LAND W AS THAT WHETHER THE COLLECTIONS BY THE ASSESSEE COMPANY DESCRIBED I N ITS ACCOUNTS AS 'EMPTY BOTTLE RETURN SECURITY DEPOSITS' WERE INCOME ASSESSABLE UNDER SECTION 10 OF THE INCOME-TAX ACT? FOR WHICH THE F INDING OF THE HONBLE COURT WAS YES FOR THE REASON THAT THE AMOUNTS PAI D TO THE APPELLANT AND DESCRIBED AS 'EMPTY BOTTLES RETURN SECURITY DEPOSIT ' WERE TRADING RECEIPTS AND THEREFORE INCOME OF THE APPELLANT ASSE SSABLE TO TAX. IN ESSENCE THE FINDING IS RELEVANT ONLY AS TO THE APP LICABILITY OF S.41(1). IN THAT CASE THE REFUND OF A SECURITY DEPOSIT WILL NO T ATTRACT THIS SUB-SECTION UNLESS IT IS IN THE NATURE OF A TRADING LIABILITY. WITH DUE RESPECTS WE WOULD LIKE TO POINT OUT THAT IN THE INSTANT CASE THE ASSESSEE HAD NOT ESTABLISHED THAT IT WAS NOT A TRADING LIABILITY AND THUS THE RULING OF THE HONBLE APEX COURT IS DISTINGUISHABLE . (II) CIT V. RASAHMI TRADING 103 ITR 312 (GUJ) THE ISSUE BEFORE THE HONBLE COURT IN BRIEF WAS T HAT IN 1962 THE HC DECIDED THAT SALES TAX WAS NOT PAYABLE ON HESSIAN. ASSESSEE WAS GIVEN REFUND IN 1965 OF THE SALES TAX PAID IN EARLIER YEA RS. IN WHICH YEAR DOES THE REFUND BECOME TAXABLE? THE EXPRESSION OBTAINE D WHETHER THE CASH OR IN ANY OTHER MANNER IN S.41 CLEARLY REFERS TO T HE ACTUAL RECEIVING OF THE AMOUNT. IT MUST BE OBTAINING OF THE ACTUAL CASH WH ICH IS CONTEMPLATED BY THE LEGISLATURE WHEN IT USED THESE WORDS. THEREFOR E THE TRIBUNALS DECISION THAT THE MENTIONED DATE WAS THAT WHEN THE HC PRONOUNCED ITS DECISION IS INCORRECT. THE AMOUNT WAS ASSESSABLE I N THE AY IN WHICH IT WAS RECEIVED. 9 WE HAVE DULY PERUSED THE FINDING OF THE HONBLE GUJARAT HIGH COURT WHICH HAS NO APPLICABILITY TO THE ISSUE ON HAND. PAGE 10 OF 15 ITA NO.667/B/2009 10 (III) B.V.ASWATHIAH AND BROTHER V. CIT 198 ITR 108 (KAR) THE ISSUE BEFORE THE HONBLE COURT WAS WHETHER CENTRAL EXCISE DUTY REFUND IS TAXABLE IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT? YES. (IV) CIT V. MANOHAR BANDHU - 148 ITR 108 (BOM) IN FACT THE VERDICT OF THE BOMBAY HIGH COURT WAS IN FAVOUR OF TH E REVENUE; (V) BIJILI COTTON MILLS PVT. LTD. V. CIT LUCKNOW 81 ITR 400 (ALL) THE ISSUE BEFORE THE HONBLE COURT WAS CHANGE IN METHOD OF DISTRIBUTION OF YARN. (VI) . CIT WEST BENGAL V. SANDERSONS AND MORGAN 75 ITR 433 (CAL) THE ISSUE BEFORE THE HONBLE HIGH COURT WAS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A SUM R EPRESENTING UNCLAIMED BALANCES IN THE ACCOUNT OF THE CLIENTS AN D CREDITED TO THE P & L ACCOUNT OF THE ASSESSEE FIRM WERE REVENUE RECEIPTS AND AS SUCH LIABLE TO TAX UNDER INCOME-TAX ACT 1922? 9. HOWEVER IN THE PRESENT CASE THE ASSESSEE HAD NOT ESTABLISHED WITH DOCUMENTARY EVIDENCE THAT THE SUMS REPRESENTING UNCLAIMED BALANCES IN THE ACCOUNTS OF THE CLIENTS. IN FACT THE REVENUE HAD ESTABLISHED THAT CREDITS WERE NOT GENUI NE AND THUS THIS FINDING OF THE HONBLE COURT DOESNT COME TO THE RE SCUE OF THE ASSESSEE. PAGE 11 OF 15 ITA NO.667/B/2009 11 10. ON THE CONTRARY THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF M/S SOUTHERN INDIA PLYWOOD COMPANY V ASST . CIT BANGALORE IN ITA NO.180/02 (JUDGEMENT DT.16.11.2007 ) WHILE CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF L AW - WHETHER THE AUTHORITIES WERE JUSTIFIED IN MAKING AN ADDITION OF RS.13 03 008/- AS UNPROVED CREDITORS WHEN THE SAME HAD BEEN ACCEPTED FOR THE PREVIOUS YEAR? HELD THUS AT PARA 10 OF ITS JUDGEMENT - SO FAR AS THE LAST QUESTION OF LAW IS CONCERNED WE ARE OF THE OPINION THAT THE A.O. HAS A RIGHT TO INQUIRE ABOUT THE CORRECTNESS OF THE ENTRY SHOWN BY THE ASSESSEE. EVEN IF THE AO HAD ACCEPTED THE CREDIT ENTRIES SHOWN BY THE ASSESSEE FOR THE PREVIOUS ASSESSING YEARS THERE IS NO PROHIBITION FOR THE ASSESSING OFFICER TO CALL UPON THE ASSESSEE TO PROVE THE EXISTENCE OF SUCH CREDITS AND TO CONFIRM WHETHER THE CREDIT SHOWN IN THE ENTRIES ARE REALLY IN EXISTENCE OR NOT. WHEN THE A.O. HAS FOUND THAT SUCH ENTRIES ARE INCORRECT WHEN AN OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO PROVE SUCH ENTRIES WHEN THE ASSESSEE HAS FAILED TO PROVE THE SAME INSPITE OF GIVING AN OPPORTUNITY FOR THE AO WE ARE OF THE OPINION THAT ALL AUTHORITIES WERE JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS.13 03 008/- AS AN UNPROVED CREDIT. IN THE CIRCUMSTANCES WE HAVE TO ANSWER THE QUESTION NO.3 AGAINST THE ASSESSEE. PAGE 12 OF 15 ITA NO.667/B/2009 12 11. IN THE INSTANT CASE WE ARE OF THE FIRM VIEW AS STATED EARLIER ASSESSEE HAD AT NO POINT OF TIME EVEN TRIE D TO RECONCILE THE DIFFERENCE IN BROUGHT FORWARD BALANCES OR PRODUCED ANY PURCHASE BILLS ETC. DESPITE THE NUMBER OF OPPORTUNITIES GIV EN AND THE AMPLE TIME PROVIDED TO DO SO. ON THE CONTRARY DESPITE HA VING OBTAINED THE SWORN STATEMENTS RECODED BY THE AO AS WELL AS THE CO NFIRMATION OBTAINED BY THE DEPARTMENT ITSELF FROM THE CREDITORS THE ASSESSEE CHOSE TO REMAIN INDIFFERENT AND MADE NO EFFORT TO R EBUT THE EVIDENCE COLLECTED BY THE DEPARTMENT. 12. THE ASSESSEES OTHER CONTENTION IS THAT THE AU THORITIES HAVE ERRED IN MAKING ADDITION OF RS.14.99 LAKHS BEI NG CURRENT YEARS TRADE CREDITS U/S 68 OF THE ACT AS THE SAID SECTIO N APPLIES TO CASH CREDITS ONLY. 13. LET US HAVE A GLIMPSE OF WHAT SECTION 68 SAYS? 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND T HE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 14. AS RIGHTLY REMARKED BY THE LD.CIT (A) THE LANG UAGE IN THE SECTION IS UNEQUIVOCALLY MAKES IT CLEAR THAT ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR PAGE 13 OF 15 ITA NO.667/B/2009 13 THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR . SINCE THE ASSESSEE HAD FAILED TO FURNISH CONVINCING AND DOCUMENTARY EXP LANATION WITH REGARD TO THE NATURE AND SOURCE THEREOF AND ON THE OTHER HAND THE AO HAD BROUGHT ON RECORD WITH UNFLINCHING DOCUMENT ARY PROOF BY WAY OF CONFIRMATION OBTAINED FROM THE ALLEGED SUNDRY CREDITORS THAT THE BROUGHT FORWARD SUNDRY CREDITORS AND CURRENT YEAR CREDITORS (CREDITS) WERE NOT GENUINE. 15. IN AN OVER ALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DISCUSSED IN THE FORE -GOING PARAGRAPHS WE ARE OF THE UNANIMOUS VIEW THAT THERE WAS NO INFIRMITY IN THE FINDINGS OF THE LOWER AUTHORITIES WHICH REQU IRE OUR INTERFERENCE AT THIS STAGE. IT IS ORDERED ACCORDIN GLY. 16. THE OTHER GRIEVANCE OF THE ASSESSEE IS THAT IN TEREST LEVIED U/S 234B SHOULD BE RESTRICTED TO THE LEVY MAD E IN THE INTIMATION U/S 143(1) IS WITHOUT MUCH FORCE. BY VIR TUE OF AMENDMENT TO ACT BY FINANCE ACT 2001 WITH RETROSPECTIVE EFFE CT FROM 1.4.1989 IT BEYOND DOUBT INTEREST U/S 234B IS TO BE LEVIED ON THE ASSESSED INCOME AND NOT ON THE RETURNED INCOME. IN THIS CONTEXT WE ARE SUPPORTED BY JUDGEMENT OF HONBLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF RAJ KUMAR SINGAL V UNION OF IN DIA AND OTHERS 255 ITR 561 AND OF HONBLE KERALA HIGH COURT IN THE CASE OF SEAPEARL ENTERPRISES V DCIT 294 ITR 374. ASSESSEE S RELIANCE ON PAGE 14 OF 15 ITA NO.667/B/2009 14 THE DECISION OF MUMBAI BENCH IN THE CASE OF DATAMAT ICS LTD. V ACIT IN 299 ITR (AT) 286 IS ALSO MISPLACED SINCE IN THAT CASE THERE WAS CATEGORICAL FINDING BY THE TRIBUNAL THAT THE ASSESS EE HAS PAID EXCESS ADVANCE TAX AND TDS WHICH RESULTED IN REFUND AND N O INTEREST WAS LEVIED U/S 234B WHEN ORDER U/S 143(1) WAS PASSED. THE TRIBUNAL FURTHER HELD IN THE CASE OF REASSESSMENT U/S 147 I NTEREST U/S 234B IS IMPOSABLE ONLY ON THE AMOUNT ON WHICH INTEREST WA S PAYABLE U/S 234B IS INCREASED. THE TRIBUNAL HELD SINCE THERE IS EXCESS PAYMENT OF TDS AND ADVANCE TAX; NO INTEREST U/S 234B(3) COU LD BE IMPOSED. IN THE INSTANT CASE IT IS CLEAR FROM THE RECORDS T HAT THERE WAS A LEVY OF INTEREST U/S 234B IN THE INTIMATION PASSED U /S 143(1) AND HENCE FACTS IN CASE RELIED ON THE ASSESSEE STANDS ON A DIFFERENT FOOTING AND DOES NOT HAVE APPLICATION TO THE INSTAN T CASE. 17. FOR THE ABOVE SAID REASONS WE ARE OF THE VIEW THAT THE ORDER OF THE AUTHORITIES BELOW IS CORRECT AND IS IN ACCORDANCE WITH LAW AND DOES NOT WARRANT ANY INTERFERENCE. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 8TH JANUARY 20 10. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE DATED :08/1/2010 PAGE 15 OF 15 ITA NO.667/B/2009 15 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF ITAT NEW DELHI. MSP/5.1 BY ORDER ASST. REGISTRAR ITAT BANGALORE.