TaxTMI 
TaxTMI 
2012 (5) TMI 442
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.... to M/s Jindal Electro Castings Pvt. Ltd. Revenue's appeals: A.Y. 2000-01 "02. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in restricting the addition u/s 69C of the Act to Rs. 24,50,500/- as against Rs. 86,87,000/- made by the AO being the unexplained cash payments. 2.1. The Ld. CIT(A) has ignored the findings recorded by the AO and the fact that the assessee did not discharge the onus of proving the genuineness of the cash payments made either during the assessment or during the re-assessment proceedings." A.Y. 2001-02 "02. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) has erred in restricting the addition u/s 69C of the Act to Rs. 20,51,356/- as against Rs. 2,42,71,186/- made by the AO being the unexplained cash payments. 2.1. The Ld. CIT(A) has ignored the findings recorded by the AO and the fact that the assessee did not discharge the onus of proving the genuineness of the cash payments made either during the assessment or during the re-assessment proceedings." 2. It is pleaded that the common major issue involved in both the years is in respe....
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....t re-opening of assessment in fresh proceedings. These agreed propositions are accepted and matters are accordingly set aside, restored back to the file of AO." 3.3. Consequent to above ITAT order, AO proceeded to reframe the issues and instead of confining his order to the quantum which was the subject matter of assessee's appeal before the ITAT, repeated the entire original additions of Rs. 86,87,000/- and Rs. 42,71,1986/- again for A.Y. 2000-01 and 20001-02 in these reframed orders. 3.4. Aggrieved thereon, assessee preferred first appeals before the CIT(A), where following was contended: "In the appeal effect order, the AO has wrongly gone by the gross figures of Rs. 86,87,000/- and Rs. 2,42,71,186/- in assessment years 2000-01 and 2001-02 respectively. The AO little realized that a major component of this amount in the sum of Rs. 62,37,000/- and Rs. 2,22,19,840/- in assessment years 2000-01 and 2001-02 respectively had already been deleted by the CIT(A) in the first round of proceedings and that the Revenue had accepted that order. Such had become final. In that view of the matter, the AO could not re-assume jurisdiction with regard to the correctness or....
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....merits, it is submitted that he concerned party M/s Jindal Electro Casting Pvt. Ltd. confirmed that it had sold MS Ingots to the appellant during the calendar year 2000. It further confirmed that payment for such material from the appellant had been received by it through account payee cheques, which were duly deposited in its current account maintained with the Oriental Bank of Commerce Samalkha (Haryana). The Director of the said company went on to confirm that on the basis of an authority granted by them to an employee of the appellant, cash withdrawals were made from that account which finds mention in the 'Kachhi Rokar' maintained by the Director. The amount was shown to the credit of the appellant in the Kachhi Rokar. This was confirmed by Sri P.R. Jindal on behalf of M/s Jindal Electro-Casting Pvt. Ltd. vide letter dated 12.10.2001. Further vide letter dated 04- 11-2010 Sri P.R. Jindal informed that personal appearance could not be made by Sri Pradeep jindal at the relevant time for he was down with viral fever and had been advised rest by the Doctors. Sri P.R. Jindal nevertheless submitted a copy of the bank statement with the Oriental Bank of Commerce Samalkha (Haryana) of....
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....he directions of the Tribunal to afford to give an opportunity to cross examination Sri Pradeep Jindal. Be that as it may, the statement of Sri Pradeep jindal in this regard was exculpatory vis a vis of your appellant. That being the case even in the absence of a formal cross examination, the factum of your appellant having paid through banking channels for the purchases made by it, stood established incontrovertibly. Further, the factum of withdrawal in cash from the same bank account and their entry in the Kachhi Rokar of Sri P.R. Jindal also stood confirmed and was beyond denial or repudiation of the AO. There was no evidence to indicate that any cash deposit in the Kachhi rokar was made otherwise than through the withdrawals from the account of the Oriental Bank of Commerce, Samalkha of The M/s Jindal Electro-Casting Pvt. Ltd. The Kachhi Rokar was owned by Sri P.R. Jindal. Even legally there was a presumption in this regard in favour of Sri P.R. Jindal. The onus in terms of the presumption of Sri P.R. Jindal had also been discharged by him. At any rate the addition, if any, was relevant to Sri P.R. Jindal and his group and not to the appellant under any circumstance. In this ba....
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....n of the decision of the Tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement. This was also reiterated in the decision in the case of Jeewanlal (1929) Ltd. v. Addl. CIT (1977) 108 ITR 407 (Cal) and the decision in the case of Premchand Sitanath Roy v. Addl. CIT (1977) 109 ITR 751 (Cal). The Allahabad High Court and the jurisdictional High Court of Delhi reiterated the same principle in the case of J.K. Synthetics Ltd. v. Addl. CIT (1976) 105 ITR 344 (All) and CIT v. Eurasia Publishing House (P) Ltd. (1998) 232 ITR 381 (Delhi). 5.1. From the discussion made above, it can be safely concluded that as the order of the CIT(A) granting relief of Rs. 62,37,000/- and Rs. 2,22,19,840/- to the assessee in assessment years 2000-01 and 2001-02 respectively was not challenged by the Department by way of preferring appeal before ITAT, the Assessing Officer had no jurisdiction, in the facts and circumstances of this case, to pass any order on this aspect of the matter. This was precisely because of the fact the original assessment order dated 29-03-2006 ....
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.... with the decision of my predecessor-in-office on the issues cited above confirming the additions of Rs. 24,50,500/- and Rs. 20,51,536/- in assessment years 2000-01 and 2001-02 respectively. Aggrieved, both the parties are in appeal before us. 4. At the out set learned counsel for the assessee reiterated the facts of the case and adverted to ITAT's order, setting aside. It is contended that AO was directed to reframe orders on the directions given by ITAT. Having passed the original assessment orders, AO had become functus officio and his new jurisdiction and power was limited to what was set aside by the ITAT. In ITAT order it is clearly mentioned that the matter is set aside to the file of AO to decide the same afresh, which simply means that the issue as appealed by the assessee is set aside. Further, the order of AO stood merged in the order of CIT(A), which in turn also merged in the order of ITAT. What remained before AO was only the additions as appealed against by assessee before ITAT. There is no infirmity in the order of CIT(A) who relied on the Hon'ble Supreme Court judgment on the case of CIT V. Amritlal Bhogilal and Co. (supra). The department has undis....
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....th power to reframe the assessment of entire issue whereas assessee contends that ITAT set aside the matter only to the extent what was challenged by assessee and AO cannot assume jurisdiction beyond that. In our view CIT(A) has dealt with the issue in extenso and rightly relied on various case laws including Hon'ble Supreme Court judgment in the case of CIT vs. Amritlal Bhogilal and Co. (1958) 34 ITR 130 (SC). What was set aside by the ITAT was the addition to the extent of Rs. 24,50,500/- for A.Y. 2000-01 and Rs 20,51,536/- for A.Y. 2001-02. The AO thus was vested with the jurisdiction to this extent and not beyond that. Though Revenue has not raised specific ground in this matter, in the interest of substantial justice, we are inclined to accept the plea that ground as raised will include this aspect. Consequently, we proceed to decide the same. 7.1. In our considered opinion, AO should not have traveled beyond the directions of ITAT, which are clear and unambiguous to reframe the addition to the extent of assessee's appeal only. Department has already taken a decision by accepting the part deletion made by CIT(A) in first round. AO has merely repeated his predecessor's order. ....
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....to JECPL. Shri Pradeep Jindal, MD further confirmed that it was the practice of the employees of the assessee to withdraw the cash from this account from time to time as per the convenience of JECPL. The department is misconstruing the words - "practice of employees" and "as per their convenience", which in fact mean the convenience of JECPL. The department, in order to confirm the addition is relying on interpretation of these words as meaning to the convenience of the assessee. 8.2. Ld. Counsel contends that account in question i.e. Oriental Bank of Commerce, Samalkha, is owned by JECPL, which is confirmed by its Managing Director, with a further confirmation that the assessee made payments through a/c payee cheques only which were deposited in this account. By no stretch of imagination, this bank a/c and corresponding Kachhi Rokar maintained by JECPL it can be held to be assessee's account or its unaccounted purchase. It is matter of record that assessee has no authority over this bank a/c and does not have the power to operate this bank a/c. In this eventuality, the cash withdrawals in question can not come back to assessee. These withdrawals are by JECPL only from its ....
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....ial, identified as Annexure - A1, A6 and A12 was found and seized. From the annexures, the Ld. Deputy Commissioner of Income Tax, extracted an arbitrarily concluded the alleged cash payments, purportedly made by the appellant, to the supplier, M/s Jindal Electro Casting Private Limited, were out of unexplained sources. It is borne out from the record that the appellant had continuously made purchases of raw material, from the above supplier during the year and made the payments thereon in settlement of the suppliers made, through the crossed cheques drawn on its bank. These cheques were deposited in bank account number 10548 with OBC Samalkha, belong to Jindal Electro Casting Private Limited, where the operation of the bank account was exclusively with Mr. Pradeep Jindal, the Managing Director of the company. A certificate to this effect from Oriental Bank of Commerce, is enclosed. 2. The cash withdrawals out of the said bank account, maintained by M/s Jindal Electro Casting Private Limited, (Jindals) were received by Shri Pradeep Jindal, the director of the said company, either through the employees of M/s Jindal or at times, some employee of the appellant. However, the Ld....
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....atement of Mr. Pradeep Jindal, and concluded that the alleged payment from appellant were out of undisclosed sources, which entailed the addition of the impugned amount. This conclusion had been arrived at without confronting the alleged statement so recorded, to the appellant. There is no valid material to establish that appellant had ever such payments to M/s Jindal Electro Casting Private Limited. The learned DCIT should not have placed reliance on the un-confronted statement received, at the back of the appellant, for making the impugned addition. The appellant, was never confronted nor allowed any opportunity to cross-examine Shri Pradeep Jindal. It is the settled principle of law that the DCIT should not have utilized the testimony of the other person recorded at the back of the appellant, without giving appellant an opportunity to cross-examine him. It is submitted that such testimony is an unreliable testimony and that in any case, it could not have been used against the appellant, without confronting the same for his cross examination. If the learned DCIT desired to use the material against the appellant, the appellant must be informed of the evidence gathered against it a....
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.... at Rs. 86,87,000/- in assessment year 2000-01 and of Rs. 2,42,71,186/- in assessment year 2001-02 but no dates for the respective payments have at all been indicated to the respective payments have at all been indicated to explain the source. In absence of the dates, it shall not be possible to clarify the nature and sources. The addition made is otherwise wholly unjustified because even if presuming but not admitting that the appellant did incur some expenditure, against the alleged supplies received, the equivalent debit in the profit and loss account will neutralize each other and no addition could be upheld, even in this ground. Yet another important factor for your consideration is that no corresponding document, material or evidence has been indicated to corroborate the allegations leveled against the appellant. The Ld. Deputy Commissioner of Income Tax, while making the impugned addition, ha at all indicated no such reference or reliance. 8.6. Ld. Counsel contends that in the fresh proceedings assessee insisted for cross examination of Shri Pradeep Jindal. Instead a reply of Shri Pradeep Jindal dated 12-10-2010 was furnished which reads the same position: "(....
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....ied by him and unfortunately, this responsibility is being fastened on the assessee in an arbitrary manner. The Kachhi Rokar is written by JECPL and maintained by it. The assessee has no control or involvement in maintaining this Kachhi Rokar. In these circumstances, the responsibility to explain the Kachhi Rokar lies with the JECPL and not the assessee. It is pleaded that the addition is wholly unjustified and grossly misconceived. 9. Ld. DR, on the other hand, contends that the premises of Shri Pradeep Jindal, MD of JECPL group were searched. The Kachhi Rokar was found there. According to the department the case of the revenue is that transaction between JECPL and assessee were actually on cash basis. However, they were given a facade of bank account and the statement of Shri Pradeep Jindal which refers to "their employees", reflects the assessee and not Shri Pradeep Jindal. Therefore, the addition has been rightly retained by CIT(A). 10. We have heard rival contentions and gone through the entire material available on record. Following facts clearly emerge from the record: (1) Kachhi Rokar was found during the course of search of JECPL. The handwriting th....