Ita/65/2014 Of Rishi Sagar v. Commissioner Of Income Tax, Ludhiana And Another

ITA No. 65 of 2014}1] IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Income Tax Appeal No. 65 of 2014 (O&M)Date of decision: 28.3.2016 Shri Rishi Sagar .. Appellant V.Commissioner of Income Tax, Ludhiana and another .. Respondents CORAM:HON'BLE MR. JUSTICE RAJESH BINDALHON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: |Mr. Alok Mittal, Advocate for the appellant. Mr. Zora Singh Klar, Advocate for the respondents. Rajesh BindalJ. The assessee is in appeal under Section 260A of the IncomeTax Act, 1961 (for short, ‘the Act’) against the order 23.5.2013, passed bythe Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (forShort, ‘the Tribunal’) for the assessment year 2009-10 in ITA No,10/Chd/2013, raising the following substantial questions of law: F&,)Whether in the facts and circumstances of the present case, the action of the Ld. Authorities below in ignoringthe provisions of Section 250(4) of the Act is legallyunsustainable in the eyes of law ?the provisions of Section 250(4) of the Act is legallyunsustainable in the eyes of law ? &,,)Whether in facts and circumstances of the case, the Id.Authorities below ought to have either taken intoconsideration the additional evidence upon receiving theremand report from the AO or got an enquiry qua thepayment being made from the cash credit account of theassessee aS no income has accrued to the assessee whichAuthorities below ought to have either taken intoconsideration the additional evidence upon receiving theremand report from the AO or got an enquiry qua thepayment being made from the cash credit account of theassessee aS no income has accrued to the assessee which ITA No. 65 of 2014A could be chargeable to tax under the Act ? &,,,)Whether in the facts and circumstances of the case, theactions of the authorities necessitate that the matter bereconsidered by the Id. Authorities below to find theveracity of the averments of the assessee ?actions of the authorities necessitate that the matter bereconsidered by the Id. Authorities below to find theveracity of the averments of the assessee ? &,7)Whether in facts and circumstances of the case, theaction of the authorities below, the impugned orders arelegally sustainable in the eyes of law as the ld.Authorities below failed to exercise the discretionjudiciously 2”action of the authorities below, the impugned orders arelegally sustainable in the eyes of law as the ld.Authorities below failed to exercise the discretionjudiciously 2” Learned counsel for the assessee submitted that no doubt at thetime of assessment, the assessee could not furnish the requisite details andthe audited accounts on account of fault of the Chartered Accountant,however, at the time of hearing of the appeal betore the Commissioner ofIncome Tax (Appeals)-I], Ludhiana [for short, 'CIT (A)'], balance sheet wasfurnished. It was from the material produced at that stage that it wasclarified that certain amounts, which were shown in the credit of thecreditors accounts had, in tact, been cleared. The transactions were throughbank accounts. Additions were made stating that to be unexplained income.Once the amounts had been paid through bank transactions and there wasno dispute about that, additional evidence produced by the assessee beforethe CIT (A) should have been considered. The authorities having failed toappreciate the same in violation of the provisions of Section 215(4) of theAct, this being a substantial question of law, the order passed by theTribunal deserves to be set aside| On the other hand, learned counsel for the Revenue submittedthat on account of large scale discrepancies found in the books of accountsproduced by the assessee at the time of assessment and on his failure toanswer the queries raised, his books of accounts were rejected and theassessment was framed under Section 143 (3) of the Act. The discrepanciesin the entries in creditors’ accounts have not been disputed by the assessee.Even at the appellate stage, though the assessee filed fresh provisionalbalance sheet trying to explain the entries, which were found to be ITA No. 65 of 2014}3] manipulated with earlier balance sheet filed, but even that was not anaudited balance sheet. The assessee is trying to claim isolated reliefexplaining one transaction. In the absence of audited balance sheet andexplanation for other discrepancies found in the books of accounts, whichare large in number, such a claim by the assessee cannot be accepted. Thereis no error in the order passed by the authorities below. No substantialquestion of law arises. The appeal deserves to be dismissed. Heard learned counsel for the parties and perused the paper book| The assessee in the present case filed e-return declaring hisincome at<a2,43,980/-. The case was selected for scrutiny. Notice wasserved upon the assessee. A questionnaire was sent. Despite repeatednotices seeking information, the assessee failed to comply with the same andfurnish requisite information. On certain dates, even none appeared for theassessee. The assessee had furnished the names and addresses of thepersons, who had been shown to be sundry creditors as on 31.3.2009. On30.12.2011, during the course of assessment proceedings, the assesseesubmitted documents of confirmation of credit 1n the accounts of creditors.He did not produce any books of accounts, vouchers etc. The books ofaccounts, hence, were rejected and the assessment was made invoking theprovisions of Section 143 (3) of the Act. Besides other discrepancies andanomalies found in the books of accounts in the list of creditors, theassessee had shown a credit amounting toan6,99,982/- in the account ofDewan Steel Industries. It was found that in his books of accounts, thebalance was zero. Similar was the position in the account of Regent SteelIndustries, another creditor, where credit balance of<a30,00,000/- wasshown, which was also found to be nil in the books of accounts of thecreditor. This is despite the fact that the appellant had produced balanceconfirmation certificates. Substantial difference was found on thepercentage of gross profit rates, as compared to the previous year. Certainexpenses claimed without there being any supporting vouchers weredisallowed. The taxable income was assessed at =a44,12,374/- as against=2,43,980/-, declared by the assessee. ITA No. 65 of 2014|4] In appeal before the CIT (A), prayer was made for permittingthe assessee to lead additional evidence in terms of Rule 406A of the IncomTax Rules, 1961, however, finding that none of the ingredients enumeratedin the aforesaid Rule for permitting the assessee to lead additional evidencebeing available, the same was declined. The order passed by the AssessingOfficer was confirmed. Even before the Tribunal, the assessee met the samefate. The observations made by the Tribunal in the order pertaining toconduct of the assessee are extracted below: ITA No. 65 of 2014|4] In appeal before the CIT (A), prayer was made for permittingthe assessee to lead additional evidence in terms of Rule 406A of the IncomTax Rules, 1961, however, finding that none of the ingredients enumeratedin the aforesaid Rule for permitting the assessee to lead additional evidencebeing available, the same was declined. The order passed by the AssessingOfficer was confirmed. Even before the Tribunal, the assessee met the samefate. The observations made by the Tribunal in the order pertaining toconduct of the assessee are extracted below: “17. In order to avail the benefit of Rule 46A of the IT Rulesin relation to admission of additional evidence, the assessee isto show as to how its case of admission of additional evidenceis covered by the conditions provided under sub-rule (1) to rule40A of the IT Rules. As referred to by us in the paras hereinabove, it is not a case of the application of clause (a) underwhich such evidence could be admitted by way of additionalevidence where the AQ had refused to admit the evidence. Thecase of the assessee was that as the entries of the cash creditlimit and its application were not available with it during thecourse of assessment proceedings, the same was now beingproduced by way of additional evidence, does not meritadmission as the assessee has failed to establish thereasonableness of the evidence not being available during thecourse of assessment proceedings. oe xx Xxx” In our opinion, no substantial question of law arises in thepresent appeal. The conduct of the assessee and the books of accountsproduced by him did not inspire confidence and were rightly rejected by theAssessing Officer. Even at the appellate stage, he produced additionalevidence in the form of unaudited provisional balance sheet and tried totake benefit of merely two entries which, in his books of account and thebalance sheet earlier produced, he had shown differently. It cannot be saidto be a mere error, rather, it was a deliberate attempt to defraud the revenue,The relief, which the assessee is claiming at this stage explaining two ITA No. 65 of 2014}>] transactions pertaining to the creditors, cannot be examined in isolation inthe absence of other entries in the books of accounts, which could not beexplained by him at the time of assessment as the queries raised by theAssessing Officer were not responded to and complete books of accountswere not produced. For the reasons mentioned above, we do not find that anysubstantial question of law arises in the present appeal. The same is,accordingly, dismissed. (Rajesh Bindal)Judge 28327016 5 (Harinder Singh Sidhu)Judge| (Refer to Reporter)