2015 (3) TMI 749 - AT - Income Tax

Rectification of mistake - Tribunal has not considered the correspondence exchanged between the assessee and the Assessing Officer with regard to the purchase of goods for a sum of ₹ 17,989,142/- from M/s J.S. Jain Agro Industries Pvt. Ltd. (Shamily Party) in a proper manner and has confirmed the additions on account of unexplained investment - Held that - . From the orders of the lower authorities, we find that after collecting the evidence from JSJAI, the Assessing Officer has immediately confronted the same to the assessee. Thereafter the ld. counsel for the assessee asked the Assessing Officer to afford an opportunity to cross-examine the responsible Director of JSJAI but he has not made any effort to obtain the confirmations from JSJAI or to ask him as to why he has shown sales in its name in its books of account. We also find force in the observations of the ld. CIT(A) that if JSJAI has done mischief with the assessee or has committed any fraud by showing wrong sales in its name, there could have been some criminal complaint or FIR against JSJAI. But nothing has been done by the assessee against JSJAI. Even till final hearing of the appeal before the Tribunal, the ld. counsel for the assessee could not place any evidence on record as to how and when he has recovered the outstanding debit balance of ₹ 17,98,142.70 from JSJAI nor did he claim it to be as bad debt if he failed to recover it for any reason. All these facts support the case of the Revenue that the assessee has made purchases as declared in the books of JSJAI out of its books of account and made sale thereof and earned profit. Since the assessee has been showing debit balance in the name of JSJAI in its books of account and no purchase was shown in its account, the purchases made by it as per statement of JSJAI is outside the books of account, in which the investment made is to be considered as unexplained investment for which addition is called for. Since the Tribunal has examined all the facts in the light of the orders of the lower authorities and the rival submissions and adjudicated the issue after taking into account all minor details and the assessee sought re-appreciation of facts through its Miscellaneous Application, which is not permissible under the law, we find no error apparent in the order of the Tribunal and we accordingly reject the Miscellaneous Application of the assessee. - Decided against assessee.

Issues Involved:
1. Non-consideration of factual and legal arguments by the Tribunal.
2. Opportunity to cross-examine the third party.
3. Non-applicability of Section 69B of the Income Tax Act.
4. Shifting of onus upon the assessee.
5. Scope of Section 254(2) of the Income Tax Act.

Detailed Analysis:

Non-consideration of factual and legal arguments by the Tribunal:
The assessee contended that the Tribunal did not consider certain factual and legal arguments raised during the appeal hearing, leading to an error in its order. Specifically, the Tribunal allegedly failed to properly consider the correspondence between the assessee and the Assessing Officer regarding the purchase of goods worth Rs. 17,989,142 from M/s J.S. Jain Agro Industries Pvt. Ltd. (JSJAI). The Tribunal confirmed the additions on account of unexplained investment without adequately addressing these arguments.

Opportunity to cross-examine the third party:
The assessee argued that it was not given the opportunity to cross-examine JSJAI, despite specifically requesting this from the Assessing Officer. The Tribunal did not take this into account while confirming the additions. The Tribunal noted that the Assessing Officer had asked JSJAI to furnish a copy of the account, which showed a debit balance of Rs. 899.30 lakhs. These facts were confronted to the assessee, who replied but was not allowed to cross-examine JSJAI. The Tribunal found that the assessee did not provide sufficient evidence to explain why the amount was not recovered from JSJAI.

Non-applicability of Section 69B of the Income Tax Act:
The assessee raised the plea of non-maintainability of the addition due to the non-applicability of Section 69B of the Income Tax Act. This argument was supported by material information already on record, but the Tribunal did not consider this specific plea while deciding the issue. The Tribunal concluded that since the assessee showed a debit balance in the name of JSJAI in its books of account and no purchase was shown, the purchases made as per JSJAI's statement were outside the books of account, constituting unexplained investment.

Shifting of onus upon the assessee:
The assessee argued that the Tribunal wrongly shifted the onus upon it by upholding the first appellate authority's finding that the assessee had not furnished any confirmation letter to support its denial of making purchases from JSJAI. The Tribunal noted that the assessee did not file any confirmation from JSJAI regarding the debit balance shown in its books. The Tribunal found that the assessee did not make any effort to recover the outstanding amount from JSJAI or lodge any complaint against JSJAI for allegedly showing wrong sales in its name.

Scope of Section 254(2) of the Income Tax Act:
The Tribunal examined the scope of Section 254(2) of the Income Tax Act, which allows for rectification of mistakes apparent from the record. The Tribunal emphasized that it could only rectify mistakes that are arithmetical, clerical, or apparent from the record. It cannot review its own order under the guise of rectification. The Tribunal cited various judicial precedents, including the Supreme Court and High Courts, to support this interpretation. The Tribunal concluded that the assessee's application sought re-appreciation of facts, which is not permissible under Section 254(2). Therefore, the Tribunal found no error apparent in its order and dismissed the Miscellaneous Application.

Conclusion:
The Tribunal meticulously examined all relevant facts, arguments, and legal provisions before concluding that there was no error apparent in its order. The assessee's application for rectification was dismissed as it sought a re-appreciation of facts rather than pointing out any apparent mistake. The Tribunal's decision was based on a thorough analysis of the evidence and legal principles, confirming the additions made by the Assessing Officer and the first appellate authority.

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