TaxTMI 
TaxTMI 
2022 (5) TMI 775
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....pretext or the other, eschewing furnishing the information sought. On 18/11/2009, on which date the hearing was attended by Shri Rajesh Sinha, partner, and Shri Satish Sahoo, Accountant, furnishing some information, it was required to produce the books of account along with other supporting documents (i.e., copy of the tax returns and final accounts of the incoming partners, copy of their bank accounts, and details of other income received by them) on 19/11/2009. The assessee failed to respond. The assessment was finally completed u/s.144, i.e., as a best judgement assessment, on 08/12/2009 vide order communicated on 24/12/2009. The assessee appealed there-against, raising several Grounds, including qua lack of opportunity of hearing. Each of these Grounds were repelled by the ld. CIT(A), who confirmed the assessment. Aggrieved, the assessee is in second appeal. 3.1 Before us, the matter was argued vehemently by Shri Tiwari, the ld. counsel for the assessee, again, principally on the aspect of breach of the principles of natural justice inasmuch as proper opportunity of being heard was not allowed by the Assessing Officer (AO). Even as explained to the ld. CIT(A), the assessee h....
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.... case law relied upon by him. Shri Tiwari was during hearing, accordingly required by the Bench to address the findings by the ld. CIT(A), which are in effect being impugned by him. Our second preliminary objection is that no submissions stand made by or on behalf of the assessee by Sh. Tiwari on Ground Nos. 5, 8 & 9, and his submissions, apart from on non-allowance of opportunity by the AO in framing the impugned assessment and non-admission of additional evidence u/r. 46A, were centred on the two additions (at an aggregate of Rs. 32.30 lacs) u/s. 68, i.e., Gds. 6 & 7. 4.2 We, next, proceed to consider and adjudicate on each of the issues raised by the assessee through its" counsel, who chose not to press the otherwise ambiguous Ground 1. True, one day, as allowed by the AO to the assessee (on 18/11/2009) is no doubt short even if all that the assessee was required to do was to produce the books of account already available. The books are relevant only if the assessee wishes to rely thereon in substantiation of its" case, having formed (along with the relevant documents and vouchers) the basis for preparing its" return of income for the relevant year (admittedly furnished much ....
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.... 01/12/2009, or even thereafter. That is, the non-response by the assessee continued, who, accordingly, did not produce the books of account even by 08/12/2009, when the assessment was made, i.e., 20 days later, or by 24/12/2009, when it was served the assessment order (as till then the assessee may not be aware of the assessment having been already made on 08/12/2009). The assessee did not produce the books, which it, acting with alacrity, as expected, considering that the assessment was getting time barred by 31/12/2009, could within a couple of days. The only unmistakable inference is that the assessee did not produce the books of account deliberately, and the plea - toward which there is no iota of evidence, of the same being at Nagpur or, in any case, that it was not provided time for the same, only a ruse - an afterthought and a la alibi. As in fact transpires on the ld. CIT(A) calling for the remand report from the AO in the matter. The AO, vide his remand report dated 18/10/2012 (PB-1, pgs. 103-104), clarified that he had in fact completed the assessee"s assessment for AY 2009-10 on 20/12/2011, whereat there was no whisper of non-availability of details on account of closur....
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....roduction of accounts can be no reason for non-application of section 68; it being an admitted fact that monies in the stated sums stand received and credited by the assessee-firm in its" books of account to the account of the two incoming partners during the relevant year, which would also reflect the mode manner and mode of receipt, i.e., by cheque or cash. (B) The findings by the CIT(A), which are impugned before us, are as under:- "Copy of firm's bank account required to be produced by the assessee under rule 46A(4) of IT rules 1962, through hearing dated 24.07.2013, so that the cause of substantial justice should not suffer. In addition, the assessee was also required to furnish the following: 1. Explanation of cash credit entries in bank account of two new entrants in the firm with evidence. 2. Establish correlation between cash withdrawals of partners and deposit in firms accounts. 3. To establish how ITAT judgment cited by the AO is not applicable and why NP rate declared should be accepted. Through written submission submitted on 23.09.2013 it was submitted that as far as cash deposit by new partner Shri G.S. Mishra was concerned ....
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....essee"s case is that Rs. 10 lakhs cash was available with him as only Rs. 17 lakhs had been re-deposited in his bank account by GS, i.e., after withdrawal of the entire loan of Rs. 27 lakhs availed of by him from one, Shri Pannalal, which loan had found approval of the Tribunal in his own case for AY 2004-05 (ITA Nos. 228-231 of 2007, dated 18/09/2009), which order was referred to during hearing. The source of balance Rs. 6.80 lakhs (i.e., Rs. 16.80 lakhs - Rs. 10 lakhs) is the creditor"s other income, being income from other sources and agricultural income (PB-1, pgs. 9-36, 37-38, 43-51). To begin with, the ledger account of the depositor in the assessee"s accounts is not produced, nor indeed the assessee"s account in his books of account, both called for by the AO, whose requisition thus continues to be not met even before us. The credit (of Rs. 16.80 lakhs) being admitted, this become relevant as the entire receipt is in cash. It is only the ledger account that would reveal the date/s of introduction of cash ascribed to him in the assessee"s accounts, which become critically relevant as the assessee is required to show the availability of cash with the creditor on those dates....
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.... been repaid over time, even otherwise apparent from the decreasing interest claim in the tax returns, so that the borrowing has necessarily declined. This repayment, as it appears (i.e., going by the assessee"s tax returns claiming deduction for interest on borrowing against IFHP, and which can only be in respect of a housing loan), is apart from the repayment of the loan of Rs. 27 lakhs, which the assessee claims as confirmed by the Tribunal, as there is nothing on record to show and, in fact, even not claimed at any stage, that the said loan continues to obtain. The argument is invalid, both in law and on facts. The creditor (GS), rather, claims the entire sum withdrawn from UBI, Pandurna Branch, to have been deposited in Shikshak Sahakari Bank, Nagpur, on 20/6/2003. In any case, does it mean that a loan, stated to be interest bearing, stands taken by the assessee without any purpose, i.e., to be held as cash or in bank, which would be defeative of the loan itself? Two, it is not possible and, thus, cannot be a burden cast by law on the Revenue, to prove a negative, i.e., that the amount has not being shown to be utilized somewhere else. In short, rather than the assessee exhibi....
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....es on which the cash availability with the creditor is to be shown, are themselves not known, much less demonstrated. In fact, a minimum time lag of 12 + months would obtain if the entire withdrawal is regarded as at the fag end of the year and cash deposit as at the beginning of the relevant year, and which is sufficient to validate our statement. Nobody would withdraw in lakhs (and which is in a specific sum) and, further, a substantial sum, even as the inflation factor would translate it into a much higher sum, i.e., by todays" reckoning, without any reason or purpose, while there is no stated basis for the cash availability for the balance of Rs. 10.95 lacs. What further reason, one may ask, could one need for the production of personal accounts by the creditors, called for by the AO, and which remain conspicuous by their absence. 4.4 (A) Gds. 8 & 9 are in respect of the rejection of the assessee"s book results and estimation of income by the AO, which he does by applying the sale rate of 1.63 to the licence fee, and adopting a profit rate of 2.5% on the turnover so calculated. In doing so, he follows the order by the Tribunal (ITA No. 217/Jbp/2008, dated 05/06/2009) in the ....
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....e not available for being relied upon as evidence in support of the assessee"s return, compelling the AO to proceed in the manner provided in law for the said contingency, i.e., by estimating the assessee"s income in the light of facts and circumstances of the case, including the material that may be gathered by him. The plea is, by any standard, specious. The relevant Ground was also withdrawn/not pressed before the CIT(A) (refer page 25 of the IO). Further, though, no decision was cited toward this before us, we find the assessee"s paper book (PB-1, pgs. 162-164) to contain a decision by the Jabalpur Bench of the Tribunal in ITO vs Amarkantak Enterprises (ITA No. 210/Jbp/2006, dated 20/08/2008) on this aspect. The decision is distinguishable as in the facts of that case the books of account were produced before and examined by the AO, who rejected the book results without pointing out any specific defect therein, so that the Tribunal cancelled the recourse to s.144. On quantum, the figure of the licence fee is not in dispute. No contention was in fact raised before us toward the estimate being in excess, which we find as reasonable, yielding a return of 4.08% on investment. We....
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....out regard to the normal course of events. The same rather emphasizes the need for and explains the requisition by the AO of the personal accounts of the partners. The only other (presumably cash) income is agricultural income for Rs. 40,000, and which, in absence of other relevant information with regard to withdrawals for personal purposes and personal investments, etc., would be a little consequence in explaining the admitted investment of Rs. 15.50 lacs each for both the partners. Even as much as the date/s of introduction of cash, on which date/s its availability is to be shown, are conspicuous by its absence, and the mention of some dates before the ld. CIT(A) (qua GS/PB-1, pg. 109), is without reference to any basic document and, besides, without exhibiting cash with him on those dates. The least expected for the investment for Rs. 1.30 lacs, stated to by cheque, was the production of the creditor"s bank statement, which has not been even before us. The entire case is a make-believe, with the assessee"s claims being thoroughly discredited, both on facts and in law. We may at this stage, also advert to another aspect of the matter, which though not referred to hearing, we ....
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....anakala & Others [2007] 291 ITR 278 (SC) It needs to be realised that it is only on the credit/receipt being established on all the three parameters that it can be said to be from the partner, representing his capital contribution in the firm, and not otherwise inasmuch as "capital contribution" from a partner is itself an explanation toward the nature of the credit, which till then cannot be said to be so, or proved. It is only in the peculiar facts of the case, as where the firm had commenced its" business from the relevant year, that the Hon'ble Courts have opined that the credit could be, in view thereof, assessed as unexplained investment by a partner. The said argument, as apparent, would be equally applicable for any other creditor as well, and, principally irrelevant, as the basis or premise of the addition in the hands of the assessee is for the reason of he being admittedly the recipient and the beneficiary of the sums under reference. In the facts of the instant case, even the genuineness of the credits is very doubtful as there is apparently no reason, nor any stands put forward at any stage, for the cash introduction by the partners, who could have introduced ca....