Income Tax Appellate Tribunal - Bangalore
Abdul Gaffar, Mysore vs Assessee on 20 February, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER
AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
M.P. No.99/Bang/2009
(Arising out of ITA No.1277/Bang/2008)
Assessment year : 1999-2000
Sri Abdul Gaffar,
M/s. Modern Trading Corporation,
No.5, APMC Yard,
Bandipalya,
Mysore. : APPELLANT
Vs.
The Income Tax Officer,
Ward 1(3),
Bangalore. : RESPONDENT
Appellant by : Sri S. Venkatesan
Respondent by : Smt. Jacinta Zimik Vashai
ORDER
Per A. Mohan Alankamony, Accountant Member
This Misc. petition of the assessee is in consequence of the order of this Bench in ITA NO.1277/Bang/2008 dated: 20/2/2009 for the assessment year 1999-00.
2. The essence of the grievance of the assessee in his Misc. Petition, in brief, is that the hearing of the appeal in ITA No.1277/08 was fixed for 12.2.09 and the Ld. A R vide his letter dated: 11.2.2009 sought for an M.P. No.99/Bang/09 Page 2 of 11 adjournment. However, it was submitted, the said appeal was disposed off with neither conceding to the request for adjournment nor affording an opportunity of being heard. Thus, the assessee has come up with the present Misc. Petition with a pleading to offer an opportunity to put-forth his views and to pass an order, accordingly.
3. In the preliminary hearing, after due consideration of rival submissions, the Misc. Petition was admitted for regular hearing.
4. The back-ground of the issue, briefly, is that the assessee was a dealer in rice. For the AY under dispute, the AO had originally made an addition of Rs.5.04 lakhs u/s 68 of the Act on the ground that the assessee had failed to produce the creditors for verification. On appeal, the CIT(A) had sustained the addition. On a further appeal, the Hon'ble Tribunal vide its order in ITA No.2079/04 dt: 15.9.06 conceded to the assessee's plea if an opportunity was given, the trade creditors could be produced before the AO and, accordingly, remitted back the issue on the file of AO for fresh consideration.
5. In the reassessment proceedings, the assessee had produced only two trade creditors and after due examination of the said traders, the AO was of the opinion that both of them have failed to prove the genuineness of transactions as well their worthiness and that even after affording sufficient opportunities, the assessee had perhaps pleaded his inability to produce the other alleged trade creditors as promised and, thus, the AO retained the addition of Rs.5.04 lakhs as made in the original assessment order.
M.P. No.99/Bang/09Page 3 of 11 5.1. On appeal, the Ld. CIT(A) was rather magnanimous in his approach and, accordingly, deleted the addition to the extent of Rs.1.26 lakhs, however, sustained the addition at Rs.3.78 lakhs as per the detailed reasons set-out in his impugned order.
6. Aggrieved, the assessee approached the Tribunal for relief. The Hon'ble Tribunal, after due consideration of the Ld. A.R's request for adjournment of hearing, went ahead to decide the issue on merits on the basis of materials available on records on a sole reasoning that earlier on a specific request of the assessee, the Hon'ble Tribunal had restored the issue on the file of the AO and since the assessee had already been afforded sufficient opportunity and also the issue in question was deliberated upon before the Tribunal in an earlier occasion and, thus, no usual purpose would be served in extending for further opportunity. The Hon'ble Tribunal in its order dated: 20.2.2009, after giving due weight-age to the written submission of the assessee as well as the argument of the Ld. DR who was present during the hearing, had observed thus -
"3.6..............Unfortunately, the assessee has now come up with a theory that he could not able to produce the remaining trade creditors as they were not available etc. The assessee cannot shy away from his responsibility of proving the genuineness of such credits. As rightly pointed out by the Ld. AO, the onus of proving the genuineness of such credits lies solely with the assessee who in this case has miserably failed to discharge his liability of proving the genuineness of trade creditors. In a situation like this, we have been left with no other alternative except to confirm the finding of the Ld. CIT (A)."M.P. No.99/Bang/09 Page 4 of 11
7. During the course of present hearing, the Ld. AR had vehemently argued that no sufficient and proper opportunity was extended to the assessee; that due to unavoidable circumstances, the AR could not present himself to put-forth his point of view at the time of hearing scheduled for 12.2.2009; that the Hon'ble Tribunal would have, in the interest of natural justice, acceded to a short adjournment as sought for, in stead, decided the issue whereby depriving the assessee to have his say on the issue. To drive home his point, the Ld. A R had placed a strong reliance on the following case laws:
(i) S.Hastimal v. CIT, Madras (1963) XLIX ITR 273 (Mad);
(ii) CIT v. Pancham Dass Jain (2006) 205 CTR (All) 444;
(iii) CIT v. Smt.Sita Devi Juneja (2010) 187 Taxman 96 (Punj. & Har.)
(iv) CIT v. Jaipur Jewellers (Exports) (2010) 187 Taxman 169 (Del) 7.1. On her part, the Ld. D R came up with a spirited argument that the assessee had been given sufficient opportunities to have his say, in stead of grabbing of those opportunities, he has been dragging on the issue with one pretext or another and, thus, he should have no grievance to put it across a plea that he has been deprived of providing of an opportunity of being heard. As a matter of fact, the Ld. D R submitted, the Hon'ble Tribunal was pleased, not once, but, twice to take a lenient view, by affording reasonable opportunity to prove the genuineness of the transaction as well as the credit worthiness of the alleged trade creditors.
In stead of clearing the air of suspicion, the assessee has been dillydallying with the issue on one pretext or the other. It was, therefore, pleaded that the earlier order of the Hon'ble Tribunal requires no interference and, thus, M.P. No.99/Bang/09 Page 5 of 11 the Misc. Petition deserves to be rejected. Reliance was placed on the following case laws:
(i) V.I.S.P (P) Ltd. v. CIT & Anr. (2004) 265 ITR 202 (MP);
(ii) Uplaksh Metal Industries v. CIT (2009) 177 Taxman 298 (P&H);
&
(iii) CIT & Anr. v. Mcdowell and company Ltd. (2009) 310 ITR 215 (Kar)
8. We have duly considered the rival submissions, perused the relevant records and the judicial pronouncements of various Hon'ble Courts on which either party have placed their self-reliance.
8.1. At the out-set we would like to point out that on a specific submission of the Ld A R, the Hon'ble Tribunal, in its original decision dated: 15.9.2006 (in ITA No.2079/B/04) had observed that -
"6. At the time of hearing the matter before the Tribunal, Mr.Nulvi, AR submitted that if an opportunity is given, the trade creditors can be produced before the AO. The assessee had signed the order sheet without knowing the consequences. The assessee also furnished a letter where it has been stated that in case one opportunity is allowed, the trade creditors can be produced before the AO. In the interest of justice, we accept the request made by the assessee and restore the matter to the AO for fresh consideration....."
8.1.1. Consequent to the direction of the Hon'ble Tribunal, the assessee had produced only two trade creditors whose credit worthiness and the genuineness of the transactions have been summarily rejected by the AO for the reasons set-out in her impugned order. In the remaining alleged trade creditors, as per the assessment order, in spite of sufficient opportunities provided by the AO, the assessee came up with a letter M.P. No.99/Bang/09 Page 6 of 11 stating that he was not in a position to produce them as some of them are not traceable, some have let the place and two of them are very old and are suffering from chronicle diseases...."[source: P 3 of Asst. order dt.28.12.07].
8.1.2. On appeal, the assessee pleaded before the Ld. CIT (A) that
-
"[On page 3] 2)................The appellant is not able produce other trade creditors because of so many reasons. Since it was eight years old matter either they are not available or they are not remembering transaction and reluctant to come to the IT office. Only on the ground of not production trade creditors, it con'be (sic) (cannot be) assumed as non-genuine'.
8.1.3. After due consideration of the assessee's contention, the Ld. CIT (A) observed thus -
"(On page 4) As regards the balance creditors, it is noted that it was the appellant who had requested for opportunity before the ITAT to produce the trade creditors and it was for this reason only that the issue was restored afresh to the AO. The decision cited by the AR will not apply as the appellant has not given the present whereabouts of these creditors and is himself admitting that many of them are not available or not remembering the transaction. The failure of the appellant now to produce the trade creditors can only lead to an adverse inference that these credits are not genuine......"
8.1.4. The sequence of events as brought out in the fore-going paragraphs explicitly prove beyond any iota of doubt that the assessee has been given ample opportunities to come up clean, however, the assessee, has been - to put it gently - pampered with a theory that he has been given no sufficient opportunity to prove the genuineness of his trade creditors. M.P. No.99/Bang/09 Page 7 of 11 8.1.5. Let us now analyze the legal pronouncements on which either party having been banking on.
Case laws on which the assessee has been hankering on his stance:
(i) S.Hastimal v. CIT, Madras - XLIX ITR 273: The issue in brief that the assessee explained that he had borrowed money from V at Bikaner and obtained the money by a bank draft in his favour on the Punjab National Bank, cashed the draft and deposited in the same bank and on the strength of the deposit receipt had borrowed from the bank and paid it to be firm. This explanation was supported by documentary evidence but was rejected by the Tribunal on the ground that the draft had been sent by G and not V and that it had not been possible to contact either G or V to ascertain whether G was V's agent as alleged by the assessee.
The Hon'ble Court held that the assessee had been able to point out a source for the sum and his explanation could not be rejected by the mere disability of the department to find out whether G was V's agent.
With regards, we would like to point out that in the above case the explanation was supported by documentary evidence which was rejected by the Tribunal whereas in the case on hand, the assessee had neither produced any documentary evidence nor the alleged trade creditors to prove his mettle. Thus, the assessee cannot take sanctuary on the above case law to go scot-free.
(ii) CIT v. Pancham Dass Jain (2006) 205 CTR (All) 444: The Hon'ble High Court of Allahabad had ruled that the provisions of s.68 are not attracted to amounts representing purchases made on credit. The Tribunal has recorded a categorical finding of fact based on appreciation of materials and evidence on record that the AO has accepted the purchases, sales as also the trading M.P. No.99/Bang/09 Page 8 of 11 result disclosed by the assessee. It has also recorded a finding that the two amounts in question represented the purchases made by the assessee on credit.
The issue before the Hon'ble Court was entirely on the different footing which, in our considered view, has no relevance to the facts of the case on hand.
(iii) In the case of CIT v. Smt.Sita Devi Juneja referred the subject matter before the Hon'ble H.C. of P & H was that the AO had made the addition on account of outstanding sundry credit balances while holding that the liability in respect of these creditors had ceased to exist and had become liable to the treated as deemed income under Expln. I to s.41(1) of the Act, whereas the issue on hand is entirely on different track, and, hence, the above case law cannot, in our firm view, come to the rescue of the assessee.
(iv) Similarly, the issue before the Hon'ble High Court of Delhi in the case of CIT V. Jaipur Jewellers (Exports) referred supra was remission or cessation of trading liability u/s 41(1) of the Act. What is rather intriguing our mind is how the above referred case will be of any help to the facts of the issue on hand? 8.1.6. The following case laws on which the Revenue had pondered with in its favour:
(i) the Hon'ble High Court in the case of V.I.S.P (P) Ltd. v. CIT & Anr.
(2004) 265 ITR 202, has ruled that since the AO found the whole transaction of alleged purchase by the assessee to be bogus and the entry made in the trade account as a liability was only a paper entry, the contention that s. 68 can be invoked only when the books of account of the assessee show cash entry and not otherwise cannot be accepted. If the liability shown in an account is found to be bogus and M.P. No.99/Bang/09 Page 9 of 11 there is no plausible and reasonable explanation of the assessee, the amount can certainly be added towards the income of the assessee.
(ii) Similarly, in the case of Uplaksh Metal Industries v. CIT (2009) 177 Taxman 298, the Hon'ble P&H High Court was very emphatic in its perception in ruling that the assessee being unable to give the addresses of the alleged trade creditors could not be accepted as genuine and thus once the entry of liability was not accepted, treating the amount as income of the assessee was consequential.
(iii) Chiefly, the Hon'ble jurisdictional High Court in the case of CIT & Anr. v. Mcdowell and company Ltd. (2009) 310 ITR 215 has outlined the scope of the powers of the Tribunal that (i) it can rectify any mistake apparent from the record, (ii) the Tribunal has, however, no power to recall and review its earlier order under section 254(2) of the Act.
8.1.7. Taking cue from the facts of the case, rival submissions and also the judicial pronouncements as analyzed in the fore-going paragraphs, we are of the unanimous view that the Misc. Petition deserves to be dismissed for the following reasons:
(i) Sufficient and reasonable opportunities were provided to the assessee facilitating him to produce the alleged trade creditors before the AO as vouched by the Ld. A R when the issue was before the Hon'ble Tribunal in ITA No.2079/04;
(ii) During the course of reassessment proceedings u/s 143(3) rws 254 of the Act, the AO had given more than two opportunities to produce the creditors for examination. In stead, the assessee excused himself to do so;M.P. No.99/Bang/09 Page 10 of 11
(iii) During the appellate proceedings, the assessee pleaded in the statement of facts that -
The appellant is not able produce other trade creditors because of so many reasons. Since it was eight years old matter either they are not available or they are not remembering transaction and reluctant to come to the IT office. on the ground of not production trade creditors, it con'be (sic) (cannot be) assumed as non- genuine'.
(iv) When the appeal was scheduled for hearing on 12.2.2009 before the Hon'ble Tribunal, the Ld. A.R's office on 11.2.09 came up with an adjournment letter. However, the Tribunal, on perusal of the back records, came to a conclusion that since the assessee was afforded with sufficient opportunities and that the issue had already been presented and deliberated upon earlier, decided to proceed with the hearing on the basis of materials available on record.
(v) Even during the course of Misc. petition proceedings, no tangible submissions were made to justify the assessee's claim that he has been deprived of opportunity and so on so forth;
(vi) Reliance placed on the case laws as discussed supra cannot in anyway come to the rescue of the assessee;
(vii) The Hon'ble Tribunal, after due consideration of the materials available on record, dismissed the assessee's appeal which doesn't suffer from any infirmity or a mistake crept in which requires rectification;
(viii) As per the ruling of the Hon'ble jurisdictional High Court cited supra, the Tribunal has not been vested with the powers u/s 254(2) of the Act to recall and review its earlier order.
9. In the result, the Misc. Petition of the assessee is dismissed. M.P. No.99/Bang/09 Page 11 of 11
Pronounced in the open court on this 31st day March, 2010.
Sd/- Sd/-
( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY )
Judicial Member Accountant Member
Bangalore,
Dated, the 31st March, 2010.
Ds/-
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file (1+1)
By order
Assistant Registrar
ITAT, Bangalore.