TaxTMI 
TaxTMI 
1999 (5) TMI 63
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....r, M/s Bhagwan Singh, M/s A.S. Yadav and M/s R.C. Bhatta & Co. AO further noted that assessee has shown certain amounts outstanding in respect of those four parties as on 31st March, 1994, which is as under: Name of party Amount outstanding (Rs.) M/s D.N. Carrier 16,18,337 M/s A.S. Yadav 6,33,304 M/s Balwan Singh 3,66,479 M/s R.C. Bhatta & Co. 19,10,940 ....
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....by the assessee. The addresses of the creditor was furnished by the assessee were not traceable to locate the above suppliers of the raw materials. The bank authorities were not able to give out the details of the introducers of these 4 concerns to verify the payment of account payee cheque issued by the assessee. He also noted that assessee had failed to bring out evidence that material supplied by these suppliers was actually summoned as assessee submitted that it was not possible for him to maintain the stock registers for building material like sand, badarpur, etc. He also noted that identity of the creditors remained to be established. Nothing had come on record that these suppliers who have entered into different transactions involving lakhs of money were income-tax assessees and accordingly he disallowed all the amount of these four concerns which were found outstanding at the end of financial year and addition of Rs. 45,29,060 was made and assessee, feeling aggrieved from the finding of AO, came in appeal before the CIT(A). 3. It appears that written submissions were filed on behalf of assessee from time to time along with six paper books containing the relevant material....
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....onsidered the submissions of the appellant including the written submissions and the facts and circumstances of the case. The main thrust of the assessee's argument is that it has not been confronted with the evidence gathered by the AO and there is non-compliance of the mandatory provisions of ss. 142(3) and 131 of the IT Act. The AO had made the assessment without proper application of mind and without keeping in view the relevant law. The AO has not taken into consideration certain relevant facts such as the past and subsequent history/conduct of the assessee. At the same time, the genuineness of the parties/transactions is questionable, in view of the facts noted by the AO. Sec. 68 talks of "any sum" and, therefore, the plea of the assessee that it has no application in the instant case is found unacceptable. The AO, on the other hand, is of the view that his predecessor has committed an error inasmuch as the entire purchases of Rs. 86,90,058 claimed to have been made from the four parties should have been disallowed and added to the total income instead of taking into account only the outstanding liabilities to the tune of Rs. 45,29,060 which was actually the addition made to ....
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.... 6. The other plea of the learned counsel for the assessee was that it has been contended before CIT(A) that AO was not justified in making the addition without rejecting the accounts and reliance was placed at 129 Taxman 127 (sic), Dhansiram Agarwalla vs. CIT (1996) 130 CTR (Gau) 559 : (1996) 217 ITR 4 shall be against rules of consistency as laid down at ITO vs. Amar Singh Jain (1992) 43 TTJ (Jp) 11 and by Hon'ble Rajasthan High Court in the case CIT vs. Maharaja Shree Umaid Mills (1991) 96 CTR (Raj) 72 : (1991) 192 ITR 565 (Raj). 7. The learned counsel point out further that it was contended before CIT(A) that AO was expected to examine each and every transaction and then addition can be made if there was no genuineness in respect of particular transaction. CIT(A) failed to take into consideration the decision to that effect delivered by Tribunal, Delhi Bench in the case of Racmann Springs (P) Ltd. vs. Dy. CIT (1996) 52 TTJ (Del) 660 : (1995) 55 ITD 159 (Del) in which Hon'ble Supreme Court decision reported at 26 STC 354 and Delhi High Court decision 72 STC 334 was relied upon in which it was specifically laid down that omnibus addition cannot be made. It was also pleaded b....
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....CIT vs. Daulat Ram Rawat Mull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC), 91 ITR 200 (sic), (1995) 55 ITD 159. 10. It was also the plea before CIT(A) and not considered by him that AO had flouted the principle of natural justice and reliance was placed on decision of Hon'ble Supreme Court reported at AIR 1963 SC 5, AIR 1976 SC 1900, AIR 1983 Del 338, Colonisers vs. Asstt. CIT (1993) 45 TTJ (Hyd) (SB) 114: (1992) 41 ITD 57 (Hyd) (SB), 92 ELT 472 (SC) but CIT(A) did not consider the same. Not only this, learned counsel submitted that judgment cited before CIT(A) have not considered the binding judgment of jurisdictional High Court as well as of apex Court and such an order cannot be allowed to sustain as laid down in the case reported at 1980 ELT 693, 123 Taxation 56 (All), Wadi Holdings Ltd. vs. ITO (1988) 32 TTJ (Ahd) 437, 55 ITD 396 (sic). 11. In the end, the learned counsel submitted that instead of deciding the issue on merit, CIT(A) remanded the case back to the file of AO while it was his duty to decide it on merit. Different High Courts and Hon'ble Supreme Court have deprecated such an action of the appellate authorities in adopting easier method and reliance was placed....
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....py of the same is appearing at pp. 143 to 147. 12. Learned counsel also submitted that AO wrongly observed that no evidence in respect of transportation of material purchased was filed while the same is appearing at pp. 186-231 of the paper book. Summary of account of suppliers appeared at pp. 246-247. Not only this, the assessee gave out theoretical consumption of material purchased not only in the year under consideration but in earlier and subsequent years and copy thereof is appearing at pp. 414 to 415. Comparison of various facts for material consumed was also filed. Photographs of shops of D.N. Carrier and A.S. Yadav were filed which are appearing at pp. 437-441 with copy of visiting card of A.S. Yadav at p. 142. All evidence which could have been filed available with the assessee was filed before CIT(A) but nothing has been considered, otherwise there was no justification for authorities below to make the addition or to confirm the same. 13. It was also the case of the assessee that new documents were also filed before CIT(A) but at the instance of CIT(A) that application was not pressed as CIT(A) was satisfied with the case of the assessee and now that evidence is als....
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....ter back. The other plea was that some new evidence was filed before CIT(A) and in such circumstances, CIT(A) was justified in restoring the matter to AO. Even arguments of learned counsel are justifying the remand order of CIT(A) as assessee himself pleaded that there was violation of principles of natural justice because AO did not confront the material evidence collected at the back of assessee and AO flouted the provisions of 142(3) as well as did not summon the suppliers and bank managers under s. 131. If these were the facts, CIT(A) was justified in sending the matter so that assessee could have opportunity to rebut the evidence and to summon the concerned persons. Plea of the learned Departmental Representative is that assessee should not feel prejudiced from the action of CIT(A) as remand order is beneficial to assessee as well as the Revenue. In case, all the suppliers are bona fide suppliers, that fact will come on record and there will be no addition, otherwise addition can be made. He has placed reliance on decision H.S. Imam vs. CIT (1987) 67 CTR (AP) 197 : (1988) 171 ITR 214 (AP), Intercraft India vs. CIT (1985) 154 ITR 662 (Del), Bipan Lal Kuthalia vs. CIT (1957) 32 ....
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....y assessee were outstanding, creating an enforceable liability against the assessee and thus, assessee cannot be put to double loss as those parties could have claimed their dues and at the same time, assessee was to pay tax on those liabilities. AO has also not looked into each transaction and concluded as to which of the transaction was bogus. On these basis, he submitted that order of authorities below be quashed. 17. We have considered the rival submissions and perused the record carefully and also gone through the material to which our attention was drawn during the course of argument as well as carefully gone through the extract of case law submitted by learned counsel for the assessee. 18. Admitted facts are that assessee is a contractor, made purchases to the extent of Rs. 4.70 cores during the year under consideration out of which purchases worth Rs. 4.25 cores have been accepted by the AO, leaving a balance of Rs. 45,29,060 and that amount relates to outstanding amounts of M/s D.N. Carrier, M/s A.S. Yadav, M/s Balwan Singh and M/s R.C. Bhatta & Co. AO asked the assessee to produce the proprietors of 4 persons but the proprietors could not be located by AO. However, ....
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.... plea of the assessee is about the plea of consistency. Several case laws have been cited and CIT(A) was under obligation to give effect to those citations if they applied to the facts of the case of assessee squarely. It was also pleaded by the assessee that addition without rejecting accounts cannot be made in this case. AO had not disturbed the balance sheet nor rejected the accounts and what will be the legal consequence thereof is a point for determination for which assessee had placed reliance on different case laws but again that has not been done by CIT(A). The other plea coupled with factual position as to whether addition were warranted in the facts and circumstances of the case without bringing any other material on record by AO for which more than 100 cases were cited by the learned counsel but CIT(A) has also not decided that controversy. Other important aspect of the matter was whether AO was justified in passing the assessment order without following the principle of natural justice and that is the first plank of attack by the learned counsel and for that he had cited several case laws and argued that such an order passed without following the principle of natural ju....