Basir Ahmed Sisodiya vs The Income Tax Officer

Held: 1.1 In I.A.No. 57442/2011 permission has been sought to bring on record subsequent events. By this application, the appellant/assessee has placed on record an order passed by the CIT(A) dated 13.1.2011, which considered the challenge to the order passed by the Income Tax Officer u/s. 271(1)(c) dated 17.11.2006 qua the appellant for the self-same assessment year 1998-1999. The Income-Tax Officer had passed the said order as a consequence of the conclusion reached in the assessment order which had by then become final upto the stage of ITAT vide order dated 27.4.2006- to the effect that the stated purchases by the appellant from unregistered dealers were bogus entries effected by the appellant. Resultantly, the penalty proceedings u/s. 271 were initiated by the Officer. That order, however, has now been set aside by the appellate authority [CIT(A)] in the appeal preferred by the appellant, vide order dated 13.1.2011.[Para 10][589-E-H][590-A-C]

1.2 The appellant/assessee despite being given sufficient opportunity, failed to prove the correctness and genuineness of his claim in respect of purchases of marbles from unregistered dealers to the extent of Rs. 2,26,000/- (Rupees two lakhs twentysix thousand only). Resultantly, the said transactions were assumed as bogus entries (standing to the credit of named dealers who were non-existent creditors of the assessee). However, it has now come on record that the appellant/assessee in penalty proceedings offered explanation and caused to produce affidavits and record statements of the concerned unregistered dealers and establish their credentials. That explanation has been accepted by the CIT(A) vide Order dated 13.1.2011. In paragraph

17 of the said decision reproduced hitherto, it has been noted that the Officer recorded statements of 12 unregistered dealers out of 13 and their identity was also duly established. After analyzing the evidence so produced by the appellant/assessee, the appellate authority [(CIT(A)] noted that the Officer had neither doubted the identity of those dealers nor any adverse comments were offered in reference to their version regarding sale of marble slabs by them to the appellant/assessee in the financial year relevant to assessment year 1998-1999 and receipt of payments after two to three years. Further, there was no denial of purchase of marbles worth Rs. 4,78,900/- (Rupees four lakhs seventy-eight thousand nine hundred only) by the assessee and sale thereof worth Rs. 3,57,463/-(Rupees three lakhs fifty seven thousand four hundred sixty three only) with closing stock of Rs.2,92,490/- (Rupees two lakhs ninety two thousand four hundred ninety only), as disclosed in the trading account for the year ended on 31.3.1998. The appellate authority thus found that without purchases of marbles, there could be no sale and disclosure of closing stock in the trading account. The materials on record would clearly suggest that the concerned unregistered dealers had sold marble slabs on credit to the appellant/assessee, as claimed. The appellate authority concluded that there was neither any concealment of income nor furnishing of inaccurate particulars of income by the assessee. These observations are made by the competent forum (appellate authority) in penalty proceedings u/s. 271 of the 1961 Act in favour of the assessee. However, what needs to be noted is that the stated penalty proceedings were the outcome of the assessment order in question concerning assessment year 1998-1999. Indeed, at the time of assessment, the appellant/assessee had failed to produce any explanation or evidence in support of the entries regarding purchases made from unregistered dealers. In the penalty proceedings, however, the appellant/ assessee produced affidavits of 13 unregistered dealers out of whom 12 were examined by the Officer. The Officer recorded their statements and did not find any infirmity therein including about their credentials. The dealers stood by the assertion made by the appellant about the purchases on credit from them; and which explanation has been accepted by the appellate authority in paragraphs 17 and 19 of the order dated 13.1.2011. The appellate authority vide Order dated 13.1.2011, had not only accepted the explanation offered by the appellant but also recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the appellant for the assessment year 1998-1999. The addition of Rs.2,26,000/- by the officer u/s 68 of the 1961 Act, towards cash credit amount shown against the names of concerned unregistered dealers for the assessment year 19981999 is set aside. The rest of the assessment Order dated 30.11.2000 as modified by the CIT(A) vide Order dated 9.1.2003, shall remain undisturbed. [Paras 13, 14, 15-17][599-E-H; 600-A-H; 601-A-D]

Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income-Tax, Hyderabad and Andhra (1959) 37 ITR

369 (AP) ; Commissioner of Income Tax v. Aggarwal Engg. Co. (Jal.) (2006) 206 CTR (P&H) 648 ;

Commissioner of Income Tax v. G.K. Contractors (2009)

19 DTR (Raj) 305 – referred to.