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TMI Blog2012 (5) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... or of assessee. - ITA Nos. 1869 and 1870/Del/2011, ITA Nos. 1879 and 1880/Del/2011 - - - Dated:- 31-10-2011 - R.P. Tolani, K.D. Ranjan, JJ. S. Krishnan, Adv., for the Appellant Jayant Mishra for the Respondent ORDER Bench: These are cross appeals for A.Y. 2000-01 and 2001-02. All these appeals were heard together and are being disposed of by a consolidated order for the sake of convenience. 2. Respective grounds are as under: Assessee's appeals: A.Y. 2000-01 "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 24,50,500/- made u/s 69C of the Act on the allegation that cash payments have been made to M/s Jindal Electro Castings Pvt. Ltd. 2001-02: On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 20,51,356/- made u/s 69C of the Act on the allegation that cash payments have been made 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned AR and learned DR are heard, who agreed for following propositions: (i) The ground about re-opening of assessment will not be pressed by the assessee. (ii) In view of Hon'ble Delhi High Court judgment in the case of CIT vs. SMC Stockbrokers Ltd., the matter will be set aside and restored back to the file of AO inasmuch as the statement of Shri Pradeep Jindal was neither shown to assessee nor it was made available for cross examination. His statement constitutes the major basis for additions made during eh course of re-assessment. 3. We have heard the rival contentions and perused the material on record. In view of the agreed propositions, we set aside the matter back to the file of AO to decide the same afresh. AO will provide the copies of the statement of Shri Pradeep Jindal and if desired by the assessee, afford an opportunity to cross-examine him and thereafter to make fresh assessment after giving assessee an opportunity of being heard. The assessee will not raise the issue about 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y being the amounts retained by the CIT(A) out of the total addition of Rs. 86,87,000/- and Rs. 2,42,71,186/- as originally made by the AO. The Revenue having accepted the deletion of the addition to the extent of Rs. 62,37,000/- and Rs. 2,22,19,840/- in assessment years 2000-01 and 2001-02 respectively and the assessee only having agitated against the additions of Rs. S24,50,500/- and Rs. 20,51,356/- in assessment years 2000-01 and 2001-02 respectively before the Tribunal, the sole issue left for consideration of the AO was the merits of the addition of Rs. 24,50,500/- and Rs. 20,51,356/- in assessment years 2000- 01 and 2001-02 respectively alone. The AO misled himself to return to the gross addition of Rs. 86,87,000/- and Rs. 2,42,71,186/- in assessment years 2000-01 and 2001-02 respectively in respect to which he had no authority or jurisdiction. The addition of Rs. 62,37,000/- and Rs. 2,22,19,840/- must, therefore, be quashed in limini. With regard to the sum as added on 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its account in the Oriental Bank of Commerce, Samalkha. In this way, there was just no blemish or error in respect of the reported transactions vis a vis your appellant. Sri P.R. Jindal, Director of the company supplying the material to the appellant had further confirmed that under this authority monies were withdrawn from the Oriental Bank of Commerce, Samalkha. In this way, there is a direct linkage and connectivity between the deposit of the sale consideration in the Oriental Bank of Commerce, Samalkha and withdrawal from that account in cash and its entry in the Kachhi Rokar. The transaction, thus was proved to the hilt right from its origin to its ultimate conclusion. There was nothing left unexplained with regard to any aspect of these transactions. The AO erred in misunderstanding, the transaction as an act of sale by appellant through M/s Jindal Electro-Casting Pvt. Ltd. In fact the appellant herein was the purchaser. The AO also erred in not abiding by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 263 of the Act. This principle was enunciated by the Supreme Court in the case of CIT v. Amritlal Bhogilal and Co. (1958) 34 ITR 130 (SC). In the case of Amritlal Bhogilal and Co. (supra), the question was: "Where the appeal preferred by an assessee against his assessment had been decided by the Appellate Assistant Commissioner, does the order of registration along with the subsequent order of assessment merge in the appellate order." The Supreme Court held that there can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation 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 reit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asting Pvt. Ltd. works out at Rs. 24,50,500/- in the assessment year assessment years 2000-01 and Rs. 20,51,346/- in the assessment year 2001-02. Same are considered as unexplained expenditure from undisclosed sources of income under section 69C of the Income-tax Act. Accordingly, the appellant will get a relief of Rs. 62,37,000/- in the assessment year 2000-01 and Rs. 20,51,346/- in the assessment year 2001- 02. 5.3. It is clear from the perusal of the reframed assessment orders that not a single new fact has been brought about either by the Assessing Officer or by the appellant while reframing the assessments on 25-11-2010 for the purpose of giving effect to the order of the Hon'ble ITAT; rather the reframed assessment orders are simply the repetition of the assessment orders which were passed under section 147/143(3) of the act on 29-03-2006. As the facts and circumstances of the case remained unchanged, I find myself in agreement 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Parties cannot pick and choose particular words or phrase to defeat the entire meaning of the order. What was set aside was the matter raised by the assessee in appeal before ITAT. What is allowed by the order is allowing assessee's appeal statistically on the grounds raised. Consequently, use of word setting aside of the matter to decide the same afresh and allow the assessee's appeal unambiguously means that what was sent back to AO was to the extent of order appealed against before ITAT by assessee's ground as raised. 7. We have heard rival contentions and gone through the entire material available on record. Relevant portion of ITAT order is extracted above. It clearly emerges that in first round revenue did not challenge the CIT(A)'s order and assessee was before ITAT was only the assessee's grievance against the part relief. In this situation, the ld. DR pleads that ITAT order vests the AO with 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. in the name of Jai Bharat Steel Rolling Mills in our Kachhi Rokar. (iv) Total cash which was received from JRM Steel Pvt. Ltd during the Calendar year 2000 and was entered in our Kachi Roakar in the name of Jai Bharat Steel Rolling Mills/Uttam Jindal (Associate of JRM Steel Pvt. Ltd.) was Rs. 3,00,47,686/- and out of which Rs. 2,11,56,000/- was on account of amount withdrawn from our current account, Samalakha and received from time to time through the employees of above said company. Details of Rs. 3,00,47,686/- and Rs. 2,11,56,000/- are attached separately." 8.1. It is pleaded that Managing Director of JECPL has confirmed that the assessee paid the purchase amounts through a/c payee cheques, which were deposited in JECPL a/c in Oriental Bank of Commerce, Samalkha. It is pertinent to mention that the bank account in question does not belong to the assessee but the same belongs 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 conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k account from time to time. With these apparent facts, the addition cannot be imagined in the hands of the assessee. In the worst scenario even if it is assumed that the cash was withdrawn by assessee in that case also sec. 69C will not be applicable as the withdrawals do not amount to assessee's expenditure. 8.5. Ld. Counsel further adverted to the order of CIT(A) in original proceedings which records the submissions of the assessee before him. The relevant observations are as under: "1. The allegation has been stated to be the result of the seized material, found from the residence of Shri Pradeep Jindal, Managing Director and Mr. Chander Bhan Sharma, Accountant of M/s Jindal Electro Casting Private Limited, (hereinafter referred to 'company') during the search proceedings conducted on them, by virtue of the execution of a search warrant on 30-11-2000. The material, 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 sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in nature, still considering this to be additional evidence, it is requested to be admitted under rule 46A of the Income Tax Rules, as the appellant was prevented by sufficient cause in producing such affidavit during the assessment proceedings. No addition in fact should have been made in the assessment. 3. Without prejudice to the foregoing, on merits it is submitted that the addition of Rs. 86,87,000/- in assessment year 2000-01 and Rs. 2,42,71,186/- in assessment year 2001-02 being the alleged unexplained cash payments from alleged undisclosed sources, is without any valid basis or substantiated material. Neither any material nor any evidence has been confronted to the appellant, on the basis of which the aforesaid allegations were made. 4. In regard to the alleged payments from the appellant, the Ld. DCIT has drawn adverse inference on alleged statement 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized for remitting to Jindals. This fact is also borne out from the statement recorded, on oath, of Mr. Pradeep Jindal, the Managing Director of the receiving company, wherein he had categorically stated the factual state of affairs, including the withdrawals from the bank account of M/s Jindal Electro Casting Private Limited and receipt of the same either through the employees of Jindals or some personnel of JRM Steel Private Limited. .... 16. Without prejudice, it is submitted though in the order of reassessment the month wise payments reckoning from January 2000 to March 2000 have been indicated but the Ld. Deputy Commissioner of Income Tax, had failed to detail the date wise cash payments, allegedly made by the appellant to M/s Jindal Electro Casting Private Limited. The aggregated quantum of the alleged cash payments, though calculated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination of Shri Pradeep Jindal, instead of producing him a letter dated 12-10-2010 was produced. Thus, in fact ITAT directions of allowing the cross-examination also remain uncomplied with. Even if this statement of Mr. Jindal is correctly considered, it reflects following: (1) Assessee used to make a/c payee cheque payment to JECPL which was deposited in JECPL a/c with Oriental Bank of Commerce, Samalkha. (2) It was the practice to withdraw the cash from this account from time to time for giving to JRM Steel Pvt. Ltd. and then assessee used to send the cash in instalments to JECPL as per their convenience. 8.8. In that eventuality also, there is no allegation that amount more than the expenditure debited by assessee is incurred. This is a statement of Pradeep Jindal and confusion, if any, is to be clarified 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 pleade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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