High Court Of Allahabad
Technical Glass Industries vs. CIT
Section 69
Asst. Year 1991-92
R.K. Agrawal & Rajes Kumar, JJ.
IT Appeal No. 44 of 2003
9th September, 2005
Counsel Appeared
S.K. Garg & Siddharth Pathak, for the Assessee : A.N. Mahajan & Shambhu Chopra, for the Revenue
JUDGMENT
Rajes Kumar, J. :
This appeal under s. 260A of the IT Act (‘the Act’), is directed against the order of Tribunal, dt. 7th Nov., 2002 for the asst. yr. 1991-92.
2. The aforesaid appeal has been admitted by this Court vide order dt. 21st April, 2003 on the following questions of law :
“(ii) Whether, on the facts and circumstances of the case, the Tribunal was legally correct in holding that the assessee was the owner of the demand drafts of the aggregate value of Rs. 12,79,433 and addition for the same had rightly been made in its hand, by invoking the provisions of s. 69/69A of the Act ?
(iv) Whether in the absence of any material having been brought on record to show that it was the assessee who made investment in the said demand drafts of the value aggregating Rs. 12,79,433 (Rs. 7,36,921 + Rs. 5,42,512), the Tribunal was legally correct in holding that the provisions of s. 69 were applicable and in further taking a view that source of investment in such demand drafts remained unexplained, so as to attract additions for the same in its hands ?”
3. The brief facts of the case are as follows : The dealer/assessee (hereinafter referred to as the ‘assessee’) was carrying on the business of manufacture and sales of glassware. For the manufacturing of glassware, the assessee required coal as a fuel for the operation of its furnaces.
4. Two searches under s. 132(1) were conducted at the office premises of Chief General Manager, Central Coal Field Ltd., Ranchi (hereinafter referred to as “CCL”). The first search was conducted on 30th July, 1990 and as per Panchnama of that date, seizure of cash of Rs. 5,42,512 was made and it was found that the assessee had submitted coal application dt. 31st May, 1990 in the office of the Chief General Manager, CCL, Ranchi, vide its letter dt. 31st May, 1990 under the signature of partner, Shri Laxmi Kant Bansal. With this letter, recommendation of Eastern Coal Field Limited, Calcutta, vide their letter dt. 23rd Feb., 1990 for 1254 MT of coal, one sales-tax Form “C” No. 23M 697177, an affidavit of Shri L.K. Bansal, dt. 25th May, 1990 and 12 drafts of Rs. 5,42,512 were deposited. No quantity of coal was lifted upto the date of search. In second search dt. 14th Dec., 1991, seizure of Rs. 4,15,489 was made and it was found that the assessee had obtained road release order vide CCL dt. 18th June, 1990 for 1200 MT of coal after depositing draft of Rs. 7,36,921 on 19th May, 1990. Against the allotted coal of 900 MT from Religarh Colliery, 525.04 MT of coal valued at Rs. 3,21,432 had already been lifted before the search and balance coal was not lifted. Thus, deemed seizure of Rs. 4,15,489 was made representing the value of unlifted coal of 674.96 MT. Thus, the assessee was required to explain the source of investment in three drafts. The statement of Sri L.K. Bansal was recorded on 24th Dec., 1993. The assessee had submitted that no investment in the 12 drafts totalling to Rs. 5,42,512 seized vide Panchnama dt. 30th July, 1990 was made by the assessee. The assessee also stated that he did not know who had made the investment. However, the assessee submitted that the investment in the second draft of Rs. 7,36,921, dt. 19th May, 1990 was made by M/s Sweta Coal Sales Corporation, 37 Dakspatti, Calcutta. The affidavit of Sri Krishan Kumar Thakkar, partner of the firm and photocopy of agreement with this party had been filed by the assessee. Regarding draft of Rs. 7,36,921, the assessee submitted that the investment of Rs. 7,36,921 was made by M/s Sweta Coal Sales Corporation as per written agreement with them on 15th May, 1990, copy of which was also filed. The AO noted that the original agreement was not being produced. This agreement was not registered. The AO further mentioned that the assessee was required to produce the partner of M/s Sweta Coal Sales Corporation for cross-examination both during the proceedings under s. 132(5) as well as during current assessment proceedings. However, he failed to produce this party. On the request of the assessee, direct summons were also issued by the AO to Shri Krishan Kumar Thakkar. However, he failed to attend. The AO also issued summons directly which were received back unserved with the remark ‘addressee not known at the given address’. Therefore, direct enquiry was also sent to ITO, Calcutta, in the case of M/s Arkay Glass Works, sister-concern of assessee. ITO, Calcutta, reported that M/s Sweta Coal Sales Corporation to whom summons were issued, did not produce books of account. The facts of Shri Krishan Kumar Thakkar being unknown at given address and failed to attend before the AO was made known to the assessee. The AO mentioned, the assessee, however, still failed to produce him. Despite further opportunity, he was not produced. Thus, he observed that it would clear that there was no such person as M/s Sweta Coal Sales Corporation or as Shri Thakkar. If the investment was really made by that party, there was absolutely no reason why they were failed to produce books of account before him or before the AO to prove source. Therefore, the AO held that the agreement of the assessee with M/s Sweta Coal Sales Corporation was bogus. He further mentioned that M/s Sweta Coal Sales Corporation did not figure anywhere in the records of CCL, Ranchi, as agent of the assessee. All the papers filed at CCL were under the signature of Shri L.K. Bansal. Upto the date of search 525.04 MT of coal had been lifted by Shri Arjun Thakkar on the basis of authority letter given by Shri L.K. Bansal. From these facts and other circumstances, discussed in detail in the assessment order, the AO concluded that the Calcutta party had been introduced in the scheme of things after enquiry had started under s. 132(5) of the Act. Thus, the AO treated the investment of Rs. 7,36,921 as unexplained and made the addition under s. 69 of the Act.
5. Regarding the next investment of Rs. 5,42,512, the AO found that draft for this amount were deposited with CCL along with other papers under the signatures of Shri L.K. Bansal, partner including his affidavit. In his statement recorded on 24th Nov., 1993, Shri Bansal denied his signatures on the coal allotment application, on the application authorizing Shri Anil Kumar Thakkar and Shri Arjun Thakkar to lift the coal and the application appointing Shri Vishnu Bahadur as agent in the coal application. It was stated by Shri Bansal that all these signatures had been forged by M/s Sweta Coal Sales Corporation. Form No. C filed with coal application was forged as the STO confirmed that no such form had been issued. The AO also found that three drafts had been purchased by Shri Surendra Bahadur Singh and the remaining by Shri Girish Narain Singh. The AO made enquiry through Asstt. CIT, Hazaribagh, who reported that none of these papers were available at the given address. From these facts as discussed in detail in the assessment order, the AO inferred that the investment of Rs. 5,42,512 had been made by the assessee and as such, he made the addition under s. 69 of the Act.
6. On appeal, the assessee contended that the investment of Rs. 7,36,921 had been really made by M/s Sweta Coal Sales Corporation as per agreement. The assessee further submitted that the original agreement was with the Calcutta party but both the copies had been certified by Notary. It was further submitted that M/s Sweta Coal Sales Corporation was as existing person on whom summons were served. Regarding lifting of 1200 MT of coal by Shri Arjun Thakur, it was submitted that he was an employee of M/s Sweta Coal Sales Corporation. It was also submitted that the coal lifted by him in June, 1990, was not immediately sent to use due to panic amongst the agents due to income-tax raids but was actually sent in January and February, 1992 when it was recorded in books. It was stated that during the intervening period coal remained with the agent in his godown. It was further stated that the blank letter papers with signatures were supplied to M/s Sweta Coal Sales Corporation who authorized Shri Arjun Thakur and others to deal with the lifting of coal. Regarding drafts of Rs. 5,42,512, the assessee reiterated the same contentions as were raised before the AO. He stressed that he did not apply for any road permit to the Director of Industries, Kanpur. He submitted that the affidavit and other papers filed before CCL were forged inasmuch as the affidavit was sworn at Ranchi but the partner Shri L.K. Bansal never went to Ranchi. The firm did not know anything about Shri Anil Kumar Thakkar, Shri Arjun Thakur, Shri D.K. Murti who were allegedly authorized to lift the coal. The firm did not know anything about Shri Surendra Bahadur Singh or Shri Girish Narain Singh who actually purchased the drafts. Thus, it was claimed that the addition of Rs. 7,36,921 and Rs. 5,42,512 was unjustified. The CIT(A) after having considered the submissions made by the assessee has held thus : “I have considered the facts of the case as contained in the assessment order and the arguments made orally and in the written submissions filed on 9th Feb., 1995. The appellant’s claim is that the investment of Rs.7,36,921 had been made by SSC on behalf of the appellant. As the appellant’s claim is that the said investment was made by a third party, was the obligation of the appellant to produce the said person with necessary evidence. In the present case, summons was issued on the request of the assessee but SSC did not appear. SSC even did not appear before ITO, Calcutta, with the relevant books of account. Even after this, the appellant did not take any action to produce the party for cross-examination by the AO. The appellant’s obligation to establish the genuineness of transaction does not end with getting a summon issued. The AO has stated that ITO, Calcutta, reported that SSC was not available on the given address. The AO found that some coal had been lifted by Arjun Thakur who had been authorized by Shri Bansal, partner to lift coal. It is now claimed that as he was an employee of SSC, but no evidence has been brought on record to establish his identity. The AO had also found that in the papers filed with CCL, name of SSC does not appear as an authorized agent of the appellant. No submissions have been made before me to rebut this observation of the AO. In these circumstances, I agree with the AO that the investment of Rs. 7,36,921 has been (made) by the appellant from undisclosed sources. The addition is confirmed.” “I am also not impressed with the contention that in respect of drafts for Rs. 5,42,512, the signatures of Shri Bansal, partner, had been forged by somebody on various applications, papers including affidavits filed with the Director of Industries, Kanpur, and CCL. The legal presumption is that apparent is real unless proved otherwise. The appellant has not filed any evidence or expert opinion in support of its claim. It also did not request the AO to obtain expert opinion. The affidavit is sworn before the Notary and the identity of the persons swearing the affidavit is certified by some responsible person. The story of forged signatures does not carry any conviction with me. On the facts as contained in the assessment order, the AO was justified in reaching the conclusion that the investment of Rs. 5,42,512 had been made out of unexplained funds. The addition is confirmed.”
7. Against the order of CIT(A), appellant filed appeal before the Tribunal. Tribunal confirmed the aforesaid two additions. Tribunal held as follows : “We have heard the parties and perused the records of the case. The claim of the assessee is that the investment of Rs. 7,36,921 has been made by M/s Sweta Coal Sales Corporation on behalf of the assessee and the assessee has not made any investment in the purchase of the said draft. It is seen that the AO has made enquiries to find out the correct factual position with regard to the investment in the purchase of the said draft. The AO issued summons to M/s Sweta Coal Sales Corporation, however, M/s Sweta Coal Sales Corporation did not appear which fact was brought to the notice of the assessee. Since the assessee has claimed that the investment has been made by M/s Sweta Coal Sales Corporation and not by them, the primary onus was on the assessee to discharge the same. However, the same has not been discharged. It is also on record that the assessee had received 525.04 MT coal lifted through M/s Sweta Coal Sales Corporation in January and February,1992, and the same has been recorded in the books of the assessee. The contention of the assessee that the assessee has not made any payment in respect of the said receipt of coal has not been substantiated, besides the same is against the terms of the agreement entered into between the assessee and the said concern. With regard to the draft of Rs. 5,42,512 all the documents seized during the search and seizure would show that the investment was made by the assessee. The legal presumption is that apparent is real unless proved otherwise. However, the assessee has not brought any material before the AO to rebut the said legal presumption. Further, it is seen that the additional evidence filed on behalf of the Revenue Department being the affidavit of Shri K.K. Sharma, Jt. CIT, enclosing therewith the copies of the letters dt. 31st July, 1995, 13th Sept., 1995 and 20th Nov., 1995 goes to the roots of the case. It has clearly been admitted by the assessee that the said money is a part of the asset of the firm and belonged to the firm and the seized amount of Rs. 9,59,000 should be utilized for adjustment of the outstanding tax liability of the assessee-firm for asst. yr. 1991-92. Thus, the assessee’s own admission clearly established that the investment in the draft of Rs. 7,36,921 and Rs. 5,42,512 has been made by the assesseefirm and has not been made by any outside party. The contention of the learned counsel that the said letters have been issued by erstwhile partner after his retirement does not make any difference as the admission by the said party has been made in respect of the asst. yr. 1991-92 when he was very much partner of the assessee-firm. In the facts and circumstances of the case, we hold that the impugned investments in the drafts have been made by the assessee-firm. Therefore, the lower authority was justified to make the impugned additions.”
8. We have heard Shri S.K. Garg, learned counsel for the appellant and Shri Shambhu Chopra, learned standing counsel appearing on behalf of the Revenue.
9. Learned counsel for the appellant submitted that the Tribunal has erred in confirming the addition of Rs. 12,79,433 under s. 69A of the Act. He submitted that the draft of Rs. 5,42,512 was not got prepared by the appellant and the entire documents relating thereto were not submitted by the appellant and signatures of appellant in all the documents were forged, therefore, draft for Rs. 5,42,512 should not be treated as relating to the appellant. With regard to the addition of Rs. 7,36,921, the submissions made before the authorities below have been reiterated and it has been submitted that merely because M/s Sweta Coal Sales Corporation could not be produced or could not appear in pursuance of the said notice under s. 131 of the Act, amount deposited by them, could not be disbelieved in view of the affidavit filed by them, in which they have admitted to have prepared the draft for Rs. 7,36,921. Learned standing counsel submitted that the Tribunal has considered each and every aspect of the matter and has not accepted the plea of the appellant. Finding of the Tribunal is the finding of fact based on material on record and requires no interference.
10. We have given our anxious consideration to the submissions made by the learned counsel for the parties and perused the order of Tribunal and the authorities below. We are of the view that there is no error in the order of Tribunal. It is a settled principle of law that the parties who makes claim, burden lies upon such parties to prove and substantiate its claim. In the present case, admittedly the draft for Rs. 7,36,921 was filed along with the application before the CCL for supply of 900 MT coal and out of order placed, supply of 525.04 MT coal had been lifted by Shri Arjun Thakur on the basis of authority letter given by Shri S.K. Bansal which has not been disputed by the appellant. Appellant has also not disputed the order placed by it for supply of 900 MT coal and deposit of draft for Rs. 7,36,921. Thus, the presumption is that the investment in preparation of draft was made by the appellant unless contrary is proved. With regard to investment in the draft, it has been submitted that it was made by M/s Sweta Coal Sales Corporation. An affidavit of Shri Krishan Kumar Thakkar, partner of M/s Sweta Coal Sales Corporation was also filed. When the assessing authority wanted to verify the genuineness of the affidavit and the averment made therein asked the appellant to produce the partner of M/s Sweta Coal Sales Corporation, but he failed to do so. Assessing authority issued a summon under s. 131 of the Act, but no one appeared in pursuance thereof. Thus, the appellant failed to prove the genuineness of the affidavit and the averment made therein of Shri Krishan Kumar Thakkar. No doubt, the affidavit is a piece of evidence but the genuineness of the affidavit and the averment made therein has to be proved which the appellant had failed to prove, inasmuch as, the appellant could not produce Shri Krishan Kumar Thakkar, who had given an affidavit. In the circumstances, the affidavit was found inadmissible and has rightly been rejected. Admittedly, drafts were deposited along with the application moved by the appellant, therefore, presumption was that the investment in preparation of the draft was made by the appellant. With regard to draft for Rs. 5,42,512, appellant had failed to prove that they were not prepared by it. In the circumstances, we do not find any error in the order of Tribunal. In the result, the appeal is accordingly dismissed.
[Citation : 281 ITR 61]
