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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SMT DIVA SINGH
The present appeal has been filed by the assessee assailing the correctness of the order dated 17.8.2017 of CIT(A) 17 New Delhi pertaining to 2009-10 asstt. year on the following grounds :-
1. “ That the addition of Rs. 35,15,000/- made by AO and as sustained by CIT(A) is arbitrary, unjust and bad in law.
2. That in the absence of complete and thorough examination of Ravinder Singh Kohli- sole beneficiary of the alleged amount of Rs. 35,15,000/- under section 131 by the AO, the addition of such amount in the hands of appellant is arbitrary, unjust and very excessive.
3. That without prejudice to ground Nos. 1 and 2 above AO ought to have made the addition only to the extent of commission that may be earned by appellant in respect of the amount alleged to have been deposited in Bank and transferred by cheque/bank draft to account of Ravinder Singh Kohli Proprietor Janta Rubber Works.
4. The above grounds are independent and without prejudice to one another.
2. Ld. AR Miss Lalita Krishnamurti invited attention to page 15 and 16 of the impugned order read along with pages 140 to 142 and 143 to 162 of the Paper Book to highlight that in the set aside proceedings, the AO who had been directed to summon Shri Ravinder Singh Kohli having failed to do so, was directed by the CIT(A) to summon and question him. The assessee has consistently argued that Shri R.S.Kohli has indulged in misusing the bank accounts of the assessee, who was a petty trader owning no assets. Referring to the record, it was submitted, Mr. Ravinder Singh Kohli was summoned, his statement was recorded; he sought time to further substantiate his statement on being confronted with discrepancies, however, thereafter he failed to appear. It was her submission that AO has noted these facts in the remand report; copy of the first statement of Shri Ravinder Singh Kohli it was submitted is at 182 to 183 his address is given
ITA-6109/Del/2017 Page 2 of 4 as D 11 / 15 Model Town II New Delhi 09, his PAN is mentioned AANPK4420D; he is a proprietor of M/s. Janta Rubber Works, 330 Punja Shrif Kashmere Gate, Delhi 66. Inviting further attention to the subsequent recording. Copy at specific page 148 (146 to 149), it was read out that Shri R.S.Kohli finally claimed that he is not aware and will place full facts on record later on. In the said background it was her submission that all along the assessee is stating that the assessee has been a small trader and Shri Ravinder Singh Kohli is an established automotive part dealer who persuaded the assessee to open an account in the very same branch and hand over blank signed cheques to him and the amounts were deposited and withdrawn from the bank account of the assessee without his knowledge by Shri Kohli as the assessee remained ignorant and trusting the big trader. Inviting attention to the past history of the assessee, it was submitted that the assessee is deriving income from trading in small motor parts. His submission, has been elaborated in para 3 at page 3 of the impugned order by the CIT(A). It was submitted that it had been argued that assessee was a petty trader living in rented house operating from a shop also on rent and also owned no immovable property and was a person with meager means and humble background that in May, 2008 the assesses met Shri Ravinder Singh Kohli. For ready reference, the relevant extract from page 3 para 4 and 5 of the impugned order is reproduced hereunder :- “4. From the returns it will be seen that the appellant was a petty trader in this business. He lived in a rented house and operated his business from a shop which was also on rent. He did not own any immovable property nor does he have any investment. Appellant was from a humble background with meager means.
His business initially (Assessment year 2003-04 to Assessment Year 2008-09) involved purchase and sale of automobile parts by taking purchase order from the motor market located in West Delhi (retail market) procuring the supplies of such automobile parts from the motor market of Kashmiri Gate (whole sale market) and delivering the same at West Delhi against such orders. But in April/May 2008 appellant met Shri Ravinder Singh Kohli in Kashmiri Gate, who was dealing in automobile rubber parts. In the same way, appellant would purchase automobile rubber parts from him initially for small amounts and sell them in West Delhi. After a few months, Shri Ravinder Singh Kohli suggested to the appellant that he could purchase automobile rubber parts on credit for bigger amounts if he left his signed cheque book with him as a security against credit purchases made by the appellant, which is a common practice in the commercial world. As the bank account of the appellant never had any big amounts (as would be seen from the bank statements filed herewith for several years) he thought that there was no risk by giving signed blank cheques of Kotak Mahindra Bank and HDFC Bank to Sh. Ravinder Singh Kohli for improving his own business.”
Reverting to the past history of the issue, it was submitted the issue was remanded for reconsidering denovo as proper facts were not addressed by the Revenue as everything possible to substantiate its case had been ITA-6109/Del/2017 Page 3 of 4 done by the assessee. However, the said exercise was still not done by the AO. The CIT(A) consequently directed the AO to issue summons to Shri Ravinder Singh Kohli. At his behest, summons had been issued. Shri Kohli initially denied knowledge and thereafter on being confronted with his signature verifying the signatures of the assessee in the account opening records with the Bank, he pleaded for time. The CIT(A) while passing the order without caring to address the inconsistent and incorrect stand of Shri Ravinder Singh Kohli confirmed the additions blaming that the confirmatory evidence to be filed by the assessee was not filed. In the facts of the present case it was her submission that consistently the assessee has said that the bank account has been misused by the Shri Ravinder Singh Kohli his PAN card was available, why is the Department hesitant in examining the record of Shri Kohli. It was her submission that since his deposition was crucial to the Department’s case and he is the witness of the department and has sought time to place correct facts on record, how can the assessee be put in a position to justify its claim. It was his submission that if the department wants to believe Shri R.S.Kohli then they must address the discrepancies. The assessee, it was her submission, has been incorrectly burdened. Accordingly it was prayed that the addition may be deleted.
Ld. Sr. DR Shri S.L. Anuragi though conceding that the PAN details of Shri Ravinder Singh Kohli were available stated that he did initially deny knowing the assessee and did seek time to address how immediately funds after depositing in assessee’s bank account were transferred to his account and thereafter has failed to appear. The fact that in the Bank records, his signature appeared identifying the assessee was also not disputed. In these circumstances it was his submission that the matter may be remanded. However addition at this stage may not be deleted.
5. I have heard the submissions and perused the material available on record. I find that in the peculiar facts and circumstances of the present case, remand had been directed by the ITAT for the specific purpose of addressing the full and correct facts. It is seen that admittedly the remand did not serve its purpose as in the second round of the proceedings before the AO, no effort was made to examine Shri R.S.Kohli. Admittedly the CIT(A) directed the AO in the remand proceedings at the appellate stage to summon Shri Ravinder Singh Kohli u/s 131. Admittedly Shri Ravinder Singh Kohli for the very first time did appear and though initially flatly
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