C.I.T. vs. ABDUL AZIZ

^S? -^3RT=pT. ri^!^li-; ^;-!^i^7 -^_»§/;z^ 20,; [^q,^ ; W Wi sn^iaTqN? -^T-if-? TT"j~r' "s rr'"" .'.i'rTs^" -^-3?f»qSTT; D.B. HON'BLE SHRI DHIRENDRA MISHRA, & HIRENl .N. crt^ HON'BLE SHRI R.N. CrtANDRAKAR. JJ I.T.A.No.21 Of 2000 Appellant The Corr^missioner of Income Tax, Raipur Verslus Shri Abdul Aziz C/o M/s Rafiq Brothers Surajpur) District-Sarguja. Respondent '?' Present: i Shri S. Rajeshwara Ra<j), learned counsel for the appellant. None for the respondent, though served and represented. ORAL ORDER (8th July,! 2009) Per Dhirendra Mishra, 1 The appeal preferred by the appellant/revenue under Section 260-A of the Income Tax Act, 1961 (for brevity "the Act") has been admitted by this Court on the following substantial question of law; ^]

\'' .'.^ '!.' -3^d ^i|4|]~j--|, ®r1|,4'" •o 'o,' (•!iqT:pm "Whether in the facts and icircumstances of the case, the Tribunal was j legally justified in setting aside the ord^r passed by the Commissioner, Income Jax mainly on the ground that some evidenee in support of the application ofthe assesseejwas available on the record without appreciafjing that the said evidence was not pressed |nto service before or was not considered by thje Assessing Officer while passing the order of ^ssessment?" 02. From perusal of the rejcords, it appears that the respondent/assessee filed his re|:urn for the assessment year 1990-91 and had introduced l.various cash credit in his account. Not satisfied with thejexplanation of the assessee regarding creditworthiness of flve creditors, an amount of Rs.96,000/- was added to the to|:al income of the assessee as unexplained cash credit, and penjalty proceeding under Section 271(l)(c) of the Act was directed to be initiated separately. Records of the assessee were examined by the Commissioner, Income Tax and it was noticed that the order of assessment passed on 31st March, 1995 undpr Section 143(3)/l47 of the Act was erroneous insofar as it was prejudicial to the interests of the revenue. Accordingly, show-cause notice under Section 263 of the Act was issued to the assessee mentioning therein that genuineness of the cash creditsshown in the balance sheet amounting to Rs.5,11,000/- in the name of 27 persons are left to be verified.

^ KsSE'i.,. ^ •^^. i ^ I J -yS!-^^^^ riTi!-4l'^ ^Ss. si%^?=K--':^•' -fla /'*» . -, ^uu s^i ~<ei f'?n^ ssil an^I S^l?? 1 r^FTFT :TT;"1 ^' T? 'T'?' ^- s^S .¥T^; 03. In response to the abdve show-cause notice, the assessee filed his detailed reply and submitted that the assessee produced majority of the cash credits before the Assessing Officer (AO), who, afl:er due verification, was not satisfied about the genuinenes^ of the cash credits in the names of five creditors. How^ver, credits in the name of remaining 27 creditors were tr^ated as genuine, though not specifically mentioned in the a^sessment order. Since the ! assessee did not maintain bool^s of accounts, provisions of Section 68 of the Act were not 'applicable to the case of the assessee. j 04. The assessee challenged tl^e finding of the AO by way of j appeal before the Commissioner, Income Tax (Appeals) {in i short "CIT(A)">, who deleted cdrtain additions made by the i AO. Since the order of the AO ^ets merged with the order of j the CIT(A), the order dated 21st March, 1995 is not in 1 existence and therefore, order,| which is not in existence, cannot be held to be erroneous a|nd prejudicial to the interests ofthe revenue. 05. The Commissioner rejecting all the contentions advanced on behalfofthe assessee, held that: — :. ^.' v ''-••—-•i

*.,—— ,-v fk? -S^ -SIpOT^TT;. -^TTTTr^^ ••.i-i-'F1 20- sn^i-^t'naN; | a-insn^rsw TSTOK -Wi' »~'W 4 ^'vi^]", ~r5TR?T*" "'^ T'S ?.1 4r sf?rq wvi (0 (ii) The assessee hgd filed balance sheet along with his return (jn 31st March, 1990, he had again filed a bal^nce sheet along with written reply on 10.3.1S195, thus, the assessee had been maintaining regularly books of accounts, however, the sanjie were not produced before the AO. Repelling the oth^r argument that the order is not in existence |and therefore, provisions of Section 263 of tHie Act cannot be invoked, it was held that frojn bare perusal of Clause (c) of sub-section (1)| of Section 263 of the Act, it would be evid^nt that powers of the Commissioner unjder Section 263 extend to whole of the ass^ssment order, except those points which havejbeen considered and decided by the appellate authority. Since the AO has not added cash ci^edits in the names of alleged 27 creditors aggregating to Rs.5,11,000/-, the CIT(A) had no occasion to consider and decide this issue and therefore, he was competent to initiate action under Section 263 of the Act in respect of those matter;

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3-Ta -/.[T^ii'-^'q', ^al'^il^, .•^^•'l^L| TT^; (T^I^*?' ^i ^~.{ i^^i^ ^i '^.iv^ s ^^'nww-i 'sw « ^smrq ~| T who reached the conclusior) that non-verification of genuineness of the entries in tlfte names of 27 creditors, is prejudicial to the interests ofthejrevenue. 11. So far as the other grouijid that the order of the AO merges with the order of CIT(A) passed in appeal by the assessee and therefore, there wbs no order of assessment in existence, which could be tr^ated to be erroneous and prejudicial to the interests of th^ revenue, is concerned, even j the Tribunal has not given adver^e finding against the order of the Commissioner. Even otherwi^e, the reasoning assigned by the Commissioner in this regard jis well founded and based on j the statutory provisions. 1 12. On the basis of aforesaid discussions, we are of the j opinion that the Commissior^er has rightly held that i acceptance of the entries in theinames of 27 creditors by the AO only on the basis of their |statements recorded by the Inspector without making any further enquiry for verification of the same, is erroneous and prejudicial to the interests of the revenue. Therefore, the order of the Tribunal setting aside the well reasoned order of the Commissioner, cannot be upheld. — ^1*' o •;•—•

^S? --.I.Ui^)^. aTll+i']; -.ir-'!^-^' ;oo ly} 3^1 WV (•^f^.y •^iIW'flffff 3^W ^ ^rji^^^ •^i^1^- T? r^"3* '?T'?!?$" ^ •3TR"-? :fiTT^' 13. In the result, the appe^l succeeds. Impugned order dated 15th October, 1999 of the|rribunal setting aside the well reasoned order the Commissioi^er is held to be illegally not justified, the same is, accordirjigly, quashed and the order dated 25 March, 1997 of the Commissioner, Income Tax is hereby restored. Sd/- DhirendraMishra Judge Sd/- R.N. Chandrakar Judge judge