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TMI Blog2022 (5) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... , both the capacity and the genuineness are highly suspect and, therefore, rightly doubted and found as not satisfactorily explained by the Revenue. Rather, the partner/s, being a related person, an assessee ought to be able even the personal details, normally not accessible for other creditors, in support of it s claims. The legal position stands examined in Jagmohan Ram Chandra [ 2004 (8) TMI 46 - ALLAHABAD HIGH COURT] also referring to its previous decisions in the matter, as well as in Kishorilal Santoshilal [ 1995 (2) TMI 14 - RAJASTHAN HIGH COURT] , both relied upon by the ld. CIT(A), in considerable detail. The decision by the jurisdictional High Court in Metachem Industries [ 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] is not in any manner supportive of the assessee s claims, rather, making it clear, and unless the credit is established, be it from a partner or from another, it would attract s. 68. Appeal of assessee dismissed. - I.T.A. No. 254/JAB/2013 - - - Dated:- 13-5-2022 - Shri Sanjay Arora, Hon ble Accountant Member And Shri Manomohan Das, Hon'ble Judicial Member For the Appellant : Shri Gagan Tiwari, Advocate For the Department : Shri S.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient opportunity had not been allowed by the assessing authority to the assessee for furnishing the relevant evidence. On the merits of the additions made in assessment, the same are again not valid and, in any case, in excess. There was, with effect from the current year, a change in the constitution of the assessee-firm, with two new partners joining on the retirement of some erstwhile partners, both of whom, i.e., Girija Shankar Mishra and his wife Archana Mishra, have confirmed their capital contributions, which have been added as unexplained u/s. 68 of the Act. Their bank statements, submitted in support, clearly reflect withdrawal of cash, which was utilized toward the impugned deposit/s with the assessee-firm. How could the same be doubted? That apart, partners have other income as well, as evidenced by their tax returns for the preceding years, copy of which stands also adduced. In fact, the loan of Rs. 27 lakhs to Shri Girija Shankar Mishra (from one, Rajendra Kumar Pannalal) stands confirmed by the Tribunal (Bilaspur Bench) vide its order in his case for AY 2004-05 (in ITA Nos. 228-231/Blpr/2007, dated 18/09/2009/PB-1, pgs. 9-36). There was as such no reason for him not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short notice. We have, even independent of this information (which, to be fair to him, also would not be known to the AO), expressed that one day s period is to be regarded as short. How many days, then, one may ask, would it take for the assessee to bring the books from Nagpur, i.e., allowing the assessee s plea, instead of one, as (initially) allowed by the AO? To no answer by Shri Tiwari during hearing. Further, the fact of the books being at Nagpur, seeking time for that reason, for their production, would be therefore the first response of an, and ought to have been stated upfront by the, assessee, on 18/11/2009 itself whereat the hearing was attended by a partner and the Accountant. On the contrary, the assessee does not state so. It chooses to remain silent on this even on 19/11/2019 (on which date the compliance was to be made), by which time it would have been able to cross-check about the availability of books of account as well as make an informed estimate of the time required to bring the books to Chhindwara. Why, no statement issued from the assessee even on 01/12/2009, twelve days later, whereat the assessee was called upon to respond, vide show cause dated 30/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. How could, then, the invocation of s.145(3) as well as s. 144 by the AO be faulted with? Rather, as we shall presently see, these issues stand raised only to obfuscate; the CIT(A), overruling the AO s plea per his remand report for non-admission of additional evidence in the interest of justice, and even as he himself rejects the assessee s application of admission of additional evidence on merits, stating it to be a case of complete and deliberate non-production of accounts, citing case law in support, as also relies on Keshav Mills Co. Ltd. vs CIT [1965] 56 ITR 365 (SC), allows the assessee opportunity to adduce the same in the interest of justice, citing u/r. 46A(4). In doing so, it may be appreciated, he effectively converts a sec.144 assessment into a sec. 143(3) assessment, the permissibility of which, not disputed before us, has been therefore not examined. The assessee s Ground Nos. 2 to 4 are, thus, without any merit whatsoever. 4.3 No contention was raised by Sh. Tiwari, nor any evidence referred to in respect of the assessee s Gd. 5, as was in fact the case before the CIT(A), impelling him to, dismissing the said Gd., confirm the addition for Rs. 57,090, (refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deposits by the partners since there is no correlation of figures. As regards the citing of the judgment of Hon'ble ITAT by AO, the assessee relied on numerous judicial decisions which have been mentioned in detail earlier. However, as commented above, the assessee has not been able to establish that it's own factual situation is closer to those judgments than to the one relied upon by the AO. As regards Rs. 15.50 lacs and 16.80 lacs, it has been clearly conceded that this whole story is about transaction in cash. In spite of rejection of petition under rule 46A (clause unspecified), the undersigned deemed it fit in the interest of justice to provide assessee with opportunity to adduce evidence which was relevant and germane to the issue under question. However, despite this, no cogent evidence was produced. It has been held in the case of Keshav Mills, 56 ITR 365 (SC) by a seven judge bench that the best evidence is that produced in earlier point of time. This clearly stands violated categorically by the assessee. In addition, all this aspect of transaction being fully in cash further lends strength to the conclusion drawn by the AO. As regards cash transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on Tribunal s order (supra) is misplaced. The issue is not of the genuineness of the loan of Rs. 27 lacs, but the availability of cash with the creditor at the relevant time, which is completely unsubstantiated, with, as afore-stated, even the relevant dates being not demonstrated. Rather, per the said order the cash deposit of Rs. 27 lacs in Shikshak Sahakari Bank, Nagpur on 20/06/2003 is confirmed to be out of the cash withdrawal on 20/06/2003 from Union Bank of India, Pandurna Branch. How could, then, the assessee claim availability of Rs. 10 lacs on the basis of cash withdrawal of Rs. 27 lacs from UBI on 20/06/2003? (PB-1, pgs. 108-111). In fact, Sh. Tiwari could not during hearing answer the question by the Bench as to whether the said loan was outstanding as on (unknown) date/s of deposit with the assessee-firm or at the end of the relevant year, i.e., 4 years hence. The plea of interest on the said loan, which was shown as claimed by GS in his tax returns for the preceding years against income from house property (IFHP) (PB-1, pgs.42-55), proving the factum of loan, only needs to be stated to be rejected. The interest on a loan (borrowing) is eligible for being claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly the balance-sheet of the creditor as on 31/03/2007, if not for earlier periods as well, i.e., his books of account, that would show his net-worth and, thus, the capacity to advance money to the assessee, including repayment, if any, of the borrowings, with reference to which his capacity is claimed, and the utilization of other income, which is normally received through bank and, in any case, is not shown to be in cash. The addition u/s. 68, buttressed by the ld. CIT(A) by reference to case law, each of which has been gone through and found applicable, not adverted to by the ld. counsel during hearing, has, in view of the foregoing reasons, in our opinion, been rightly confirmed by him. (ii) The facts and circumstances of the second credit of Rs. 15.50 lakhs from, as stated, Smt. Archana Shankar (AS), are largely the same as that of her husband, GS. The only difference that we observe is: (a) the entire amount is admittedly in cash; (b) the source of cash, to the extent of Rs. 4.55 lakhs, is ascribed to cash withdrawals for that amount during f.y. 2005-06. For principally the same reasons that inform our decision in the case of GS, in our considered opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition for additional evidence regarding the same stands rejected. The omnibus ground No.2 which could have justified the argument regarding books of account stands withdrawn. Regarding ground No.10, which is regarding estimation of sales, the assessee submitted that various case authorities support it s case. However, in all the cited cases, namely 263 ITR 679 (MP), 101 ITR 525 (Patna) and 119 ITD 15 (Agra), there was production of books of account in which certain deficiencies were pointed out. In the instant case, it is a case of complete and deliberate non-production of books. (pg. 25) As regards grounds of appeal no.9 to 11, it has already been pointed out earlier that this is a case of non production books of accounts. The assessee has virtually treated the whole process as same kind of a light hearted joke and has made a mockery of the judicial hierarchy by trying to produce all the books of accounts as additional evidence and virtually relegating the appellate authority to the status of the Assessing Officer. As stated at various places above, the ITAT judgment cited by the AO has merely been taken as a guideline to determine profits of business in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly. In sum 5. The plea of breach of the principles of natural justice in assessment is, to our mind, a non-starter. The issue is not whether the assessee had actually closed its business at Chhindwara, toward which though no evidence stands adduced, and neither was there any indication to that effect in the course of the assessment proceedings for AY 2009-10, i.e., two years hence, but why, if so, did not the assessee state so on 18/11/2009 itself, or even later in the course of assessment proceedings; rather, stopped participating in the proceedings thereafter, compelling the AO invoke s. 144. This would rather be the natural and first response of any assessee stating facts. It is this that led us to state of the plea being only a ruse and an afterthought. The assessee s entire case, effectively rebutted by the AO in his report, is a make-believe. Further still, the ld. CIT(A), by allowing the assessee an opportunity to furnish the additional evidence it wished to rely upon, also seeking specific information, thereby converting a sec.144 rightly invoked by the AO, and also resisted per his remand report, assessment, into a sec. 143(3) assessment. The reiterati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them (copy not on record). We find this proposition as wholly untenable in law; the premise of section 68 being that the assessee is the beneficiary of the moneys credited in his accounts and, thus, received by it, so that until he is able to establish the nature and source thereof, the receipt is deemed by law to represent his income. In fact, the Hon'ble Courts held so even in the absence of codified law, which stood inserted on the statute book for the first time as section 68 of the Act, i.e., w.e.f. 01/04/1961, and was missing in the preceding, 1922 Act. Further, this explanation as to the nature and source of the sum found credited in the assessee s book is to be, as explained by the Hon'ble Courts, on the parameters of the identity and creditworthiness of the creditor and the genuineness of the credit transaction. When a credit is therefore stated to be of a partner (by name), it is the identity aspect that is in effect being stated to be satisfied. Nothing more and nothing less. The identity, as afore-noted, is only one of the parameters on which the credit is to be explained and, therefore, by itself not sufficient to fully explain the nature and source of a cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en rather, understand the time value or the opportunity cost of money much more than non-businessmen, while, the said conduct defeats the very purpose of loan/borrowing, said to be interest bearing. The affidavit by the partners (not on record), would only operate as a confirmation from them and, thus, only proves their identity, while, as afore-discussed, both the capacity and the genuineness are highly suspect and, therefore, rightly doubted and found as not satisfactorily explained by the Revenue. Rather, the partner/s, being a related person, an assessee ought to be able even the personal details, normally not accessible for other creditors, in support of it s claims. The legal position stands examined in Jagmohan Ram Chandra v. CIT [2005] 274 ITR 405 (All), also referring to its previous decisions in the matter, as well as in Kishorilal Santoshilal (supra), both relied upon by the ld. CIT(A), in considerable detail. The decision by the jurisdictional High Court in Metachem Industries v. CIT [2000] 245 ITR 160 (MP), is not in any manner supportive of the assessee s claims, rather, making it clear, and unless the credit is established, be it from a partner or from another, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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