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Department by : Shri S. S. Rana, CIT [DR]; Date of Hearing : 02.07.2018; Date of Pronouncement : 05.07.2018. O R D E R. PER PRASHANT MAHARISHI, A.M. : This appeal is filed by the Income Tax Officer, Ward : 2, Roorkee (hereinafter referred to learned AO) against the order of Commissioner
2 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar. of Income Tax (Appeals), Dehradun [learned CIT (Appeals)] dated 27.01.2015, for assessment year 2010-11. The Revenue has raised the following grounds of Appeal :-
“ !. That the Ld. CIT (Appeals) has erred in law and on facts in deleting the addition of Rs.5.76.000/- without examining the creditworthiness of loaner and genuineness of transaction and ignoring the fact that none of the loaner appeared despite issue of summons before the Assessing Officer.
2. The ld. CIT (Appeals) has erred in law and mi facts in deleting the addition of Rs.20,69,782/- ignoring the facts that Sec. 40A(3) of the I. T. Act 1961 and Rule 6DD of IT Rules, 1962 do not allow cash payment exceeding Rs.20,000/- in case of the payee insists for cash payment and not opening a bank account in the tow n w here branch of bank is available.
3. That ld. CIT (Appeals) has erred in law and on facts in allowing the appeal of the assesses' by accepting the additional evidences without confronting the AO or seeking remand report in violation of rule 46A of IT Rules, 1962.
4. The ld. CIT (Appeals) has erred in law and on facts in deleting the addition of Rs.46,11,840/- merely on the basis of wrong quoting of section by AO ignoring the facts that his power is coterminous with that of the AO and can direct Assessing Officer to quote correct section and can sustain the addition.
5. The order of the learned CIT (Appeal), by set-aside and that of Assessing Officer by restored. ”
3 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar.
2. Ground No. 1 is regarding deletion of the addition of Rs.5.76 lakhs by the learned CIT (Appeals) of loans. The brief facts shows that assessee is an Individual carrying on business of trading of country liquor. He filed his return of income on 30.10.2010 for Rs.1,47,508/-. The assessment under section 143(3) of the Act was passed on 5.03.2013 at Rs.76,60,440/-. The first ground of appeal was against the addition of Rs.5,76,000/- being loans raised by the assessee and squared up during the year itself. From 12 persons assessee has borrowed Rs.19,500/- and from 15 persons Rs.19,000/- and from one person Rs.18,500/-. The assessee submitted the confirmation of those parties. The summons were issued by the Income Tax Officer and none attended and, therefore, addition was made.
The learned CIT (Appeals) deleted the addition holding that the assessee has filed the confirmation along with proof of identity and some proof of income such as I. T. Returns, Khatunis, Kissan Bahi, Sale deeds PAN cards etc. He further held that the Assessing Officer did not verify all these evidences and merely relied upon non- attendance of the summons.
4 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar.
The learned Departmental Representative relied upon the orders of the learned Assessing Officer. He submitted that the learned CIT (Appeals) has not examined the creditworthiness and the genuineness of the transactions.
5. Despite notice none appeared on behalf of the assessee and, therefore, this appeal is decided on the basis of the merits of the case as per information available on record.
The learned CIT (Appeals) has examined with respect to 28 parties loss of Rs.5,76,000/- holding that assessee has submitted certified copies of the confirmations along with some proof of identity and proof of income such as voter I. D. Cards, Income Tax returns, Khasra, Khatunis, Kisan Bahi, Sale deed etc. In view of this it is apparent that assessee has proved the identity and looking at the smallness of the amounts and creditworthiness. With respect to the genuineness of the parties assessee has submitted the complete details. However, the learned Assessing Officer did not verify the information submitted, but merely the cause of non-attendance of summons the additions were made. As assessee has given adequate details about the identity and creditworthiness of the transaction of cash loan
5 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar. accepted from the parties and squared up during the year and as adequate sources have been explained by the assessee, we do not find any infirmity in the order of the learned CIT (Appeals) in deleting the above addition.
The second ground is with respect to the disallowance under section 40A(3) of the Act of Rs.20,74,929/-. The assessee purchased liquor from M/s. India Glycols Ltd., wherein assessee was found to have purchased the liquor worth Rs.20,74,929/-. As the sale proceeds were received in cash, the amount was also deposited in cash, but payments are below Rs.20,000/- per day. However, the learned AO disallowed the above amount under section 40A(3) of the Act. The learned CIT (Appeals) deleted the addition for the reason that the cash payment has been made at the request of buyer. It was also noted by him that ld. AO has not given any instance that payment has exceeded Rs.20,000/- in violation of section 40A(3) of the Act.
The learned Departmental Representative relied upon the order of the Assessing Officer.
We have carefully considered the rival contentions and find that the distillery is obtained from the whole-seller and MRP of the 6 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar.
country liquor is fixed by the Excise Commissioner. However, in the present case, the learned Assessing Officer could not point out any instance where the payment for the purchase is more than Rs.20,000/- on any day. In view of this we are of the opinion that as no instances were pointed out by the learned Assessing Officer of payment exceeding Rs.20,000/-, provisions of section 40A(3) of the Act does not apply.
In the result, ground No. 2 of the appeal of the learned Assessing Officer is dismissed.
Ground No. 3 is with respect to the admission of additional evidence by the learned CIT (Appeals) without confronting the Assessing Officer and, therefore, it is in violation of Rule 46A of Income Tax Rules, 1962.
The learned Departmental Representative could not show that any additional evidences have been admitted by the learned CIT (Appeals) violating provisions of Rule 46A of the Income Tax Rules. Hence, the ground No. 3 of the appeal is dismissed.
7 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar.
The ground No. 4 of the appeal is with respect to the deletion of addition of Rs.46,11,840/- by the learned CIT (Appeals). During the course of assessment proceedings, it was noted that the assessee had paid Excise Duty of Rs.45,81,420/- and license fees of Rs.5,80,000/-. The learned Assessing Officer noted that assessee has booked sales in cash immediately before the date of payment. Therefore, he made an addition of Rs.46,11,840/- holding that the source of the payment is unexplained investment. The learned CIT (Appeals) deleted the addition stating that the assessee had disclosed the sales and from the sales, he has made the payment. Therefore, there cannot be any addition on that account.
The learned Departmental Representative relied upon the order of the Assessing Officer.
We have carefully considered the issue. In the present case, all the payments of Excise Duty have been made by the assessee from his cash book and where cash sales have been recorded. When cash sales have been offered as income, the payment of Excise Duty is this application as expenditure. In view of this, we do not find
8 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar. any infirmity in the order of the learned CIT (Appeals) as no payment of Excise Duty was found not recorded in the books of accounts.
In the result, ground No. 4 of the appeal is dismissed.
C. O. No. 8 (Del) of 2016 (Assessment year : 2010-11)
Now we come to the cross objection filed by the assessee, raising the following grounds of Appeal :-
“ 1. That the learned CIT (Appeals) erred to accept the service of notice U/s 143 (2) issued on 23/09/11 whereas the assessee was served the Notice under section 143(2) on 04/10/11 and Dept. was informed while appearing in response to Notice U/s 142 (1) that the case is time barred.
That the learned CIT (Appeals) seems to have not noticed that the notice was served on 04/10/11 and hence the assessment was liable to be quashed and void-ab-initio.
3. That there should be consistency in approach and learned CIT (Appeals) in appeal No. 126 CIT (A)/D.Dun/13-14 dated 20/03/15 in case of Reena Verma of Lhaksar where notice was also served on 04/10/11 and in appeal held it time barred void ab initio.
4. That the learned CIT (Appeals) upheld the addition of Rs.219160/- on account of Capital investment of Rs. 260000/- on the very 1st day
9 ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar. of this business whereas these were the savings of the last years business and ought to have been allowed.
That all other deletions are based on settled Law and facts of the case. ”
17.1 In the cross objection the assessee has challenged the issue of notice as well as the addition of Rs.2,19,160/-.
The above addition has been confirmed by the learned CIT (Appeals) for the reason that assessee has introduced capital of Rs.2,60,000/-. Further no opening cash balance was also reflected in the cash book. Only cash balance of Rs.40,840/- was shown and, therefore, the learned Assessing Officer made the addition of Rs.2,19,160/-, which was challenged before the learned CIT (Appeals), who confirmed the same.
The learned Departmental Representative relied upon the orders of the learned Assessing Officer and CIT (Appeals).
We have carefully considered the contentions raised in those orders. Apparently assessee introduced capital of Rs.2,60,000/-.
However, the source of the fund could be explained only up to ITA.2000(D)/2015 & CO 8(D)/16 Shri Sukkhan Singh, Haridwar. 10 Rs.40,840/- and, therefore, the addition was made. We do not find any infirmity in the order of the learned CIT (Appeals) in confirming the addition to Rs.2,19,160/-.
In the result, cross objection filed by the assessee is dismissed.
In the result, the appeal of the Revenue and the cross objection of the assessee are dismissed.
The order is pronounced in the Open Court on : 05th July, 2018.