M/s. Orson Chemicals, SILVASSA V. The Income tax Officer,Vapi Ward-2, Vapi

CO 186/AHD/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0290 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Document seized; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 1749 /AHD/20 1 1 A. Y. 200 8 - 0 9 ITO, VAPI WARD - 2, VAPI. VS M/S ORSON CHEMICALS SURVEY NO.46/1, PLOT NO.13, DAMAN GANGA INDUSTRIAL ESTATE, ATHAL, SILVASSA. PAN: AABFO 0401G (APPELLANT) (RESPONDENT) CO NO.186/AHD/2011 A.Y.200 8 - 09 M/S ORSON CHEMICALS SURVEY NO.46/1, PLOT NO.13, DAMAN GANGA INDUSTRIAL ESTATE, ATHAL, SILVASSA. PAN: AABFO 0401G VS ITO, VAPI WARD - 2, VAPI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , D.R. ASSESSEE(S) BY : NONE / DATE OF HEARING : 10 / 0 2 /201 5 / DATE OF PRONOUNCEMENT : 13 / 0 2 /201 5 / O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THE REVENUE IS IN APPEAL AND THE ASSESSEE IS IN CROSS OBJECTION ARISING FROM THE ORDER OF LEARNED CIT(A), VALSAD , DATED 31.03.2011. ITA NO. 1749 /AHD/201 1 & CO NO.186/AHD/2011 M/S. ORSON CHEMICALS FOR A.Y. 200 8 - 0 9 - 2 - 2. IT IS WORTH TO MENTION THAT IN THE PAST THIS APPEAL WAS FIXED FOR HEARING BUT NO ONE HAS APPEARED FROM THE SIDE OF THE RESPONDENT - ASSESSEE. MOREOVER, WE HAVE ALSO FOUND THAT THE REVENUE DEPARTMENT HAS INTIMATED VIDE A LETTER DATED 02.02.2015 THAT THE NOTICE OF HEARING WAS SERVED ON THE ASSESSEE BUT EVEN THEN THE MATTER REMA I N UNREPRESENTED. 3. CONSIDERING THE PAST CONDUCT OF THE RESPONDENT - ASSESSEE, WE HAD NO OPTION BUT TO PROCEED EX - PARTE QU A THE ASSESSEE AFTER HEARING LEARNED DR. 4. GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW: 1. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.33,00,000/ - MADE ON ACCOUNT OF CAPITAL INTRODUCTION. 5. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT PASSED U/S.143(3) DATED 31.12.201 0 WERE THAT THE ASSESSEE - FIRM IS IN THE BUSINESS OF MANUFACTURING OF UNSATURATED POLYSTER RESIN. IT WAS NOTED BY THE AO THAT THERE WAS INTRODUCTION OF CAPITAL IN THE ACCOUNTS OF THE PARTNERS. THE ASSESSEE HAS INFORMED THAT IN THE CASE OF ONE MEENA DEVI GOE NKA AS WELL AS OF ANOTHER PARTNER, NAMELY, SHRI NARAYAN PRASAD GOENKA THE CAPITAL WAS INTRODUCED . T HE ASSESSEE HAS FURNISHED THE LEDGER ACCOUNT. HOWEVER, IT WAS ALSO INFORMED THAT THE BOOKS OF ACCOUNT AND THE COMPUTER SYSTEM HAD BEEN SEIZED BY THE SALES TA X DEPARTMENT, THANE. THE AO S OBJECTION WAS THAT IF THE ASSESSEE CAN PRODUCE THE EVIDENCE IN RESPECT OF ONE PARTNER THEN WHAT PREVENT ED THE ASSESSEE TO PRODUCE THE DETAILS OF THE OTHER PARTNER. HE HAS CONCLUDED THAT THE ASSESSEE WAS NOT HAVING PROOF OF SOU RCE OF FUND IN RESPECT OF INTRODUCTION OF CAPITAL OF ITA NO. 1749 /AHD/201 1 & CO NO.186/AHD/2011 M/S. ORSON CHEMICALS FOR A.Y. 200 8 - 0 9 - 3 - RS.33 LAC IN THE NAME OF THE PARTNER, SHRI NARAYAN PRASAD GOENKA. ACCORDINGLY, THE ADDITION WAS MADE WHICH WAS CHALLENGED. 6. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CI T(A) HAS HELD THAT SRI NARAYAN PRASAD GOENKA WAS ASSESSED TO TAX AND THE SOURCE OF FUND WAS THE SALE OF FLAT AT MUMBAI. THE IMPUGNED ADDITION WAS DELETED IN THE FOLLOWING MANNER: I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT. WHILE COMPLETING THE ASSESSMENT THE AO NOTICED THAT THE PARTNERS CAPITAL A/C HAVE INCREASED BY RS.33.00 LAKHS. THE AO CALLED FOR THE EXPLANATION WITH REGARDS TO THE INCREASE IN THE CAPITAL A/C AND THE SOURCE OF SUCH FUND BROUGHT INTO THE FIRM. THE APPELLANT SUBMITTED BEFORE THE AO THAT THE AMOUNT WAS BROUGHT BY THE PARTNERS OF THE FIRM AND FURNISHED DETAILS OF BANK A/C. HOWEVER, THE AR COULD NOT SUBMIT BANK A/C. OF ANOTHER PARTNER DUE TO THE SEIZURE OF DOCUMENTS BY THE SALES TAX DEPT. THE AO WAS NOT CONVINCED WITH THE EXPLANATION FURNISHED BY THE AR AND MADE ADDITION OF RS.33.00 LAKHS IN THE HANDS OF THE FIRM. BEFORE ME THE APPELLANT REITERATED THE SUBMISSIONS MADE BEFORE THE AO THE AR ALSO NARRATED THE CIRCUMSTANCES UNDER WHICH THE FURTHER DETAILS ABOUT ONE OF THE PARTNERS COULD NOT BE SUBMITTED AT THE TIME OF ASSESSMENT. THE AR ALSO SUBMITTED BEFORE ME COPY OF THE BANK A/C OF SHRI NARAYAN PRASAD GOENKA WITH BANK OF BARODA, WHEREIN THE AMOUNTS GIVEN TO THE FIRM IS RECORDED. THE AR EXPLAINED THAT SHRI NARAYANDAS GOENKA IS FILING ROI WITH OFFICE OF ITO 8(2), MUMBAI. HE IS HOLDING PAN - AHGFPG4415P. FURTHER IT WAS BROUGHT TO MY NOTICE THAT THE A MOUNT PAID TO THE FIRM BY SHRI NARAYAN PRASAD GOENKA WAS OUT OF THE SALES PROCEEDS FROM THE SALE OF FLA T AT MUMBAI AND THE SAID AMOUNT WAS CREDITED IN THE BANK A/C. O N DA T ED. 20.12.2007. EVEN IF THE PARTNERS FAILED TO SATISFY AO THEIR SOURCE OF FUND, THE AMOUNT CANNOT BE ADDED IN THE HANDS OF THE FIRM AND AT BEST THE AMOUNT CAN BE ADDED IN THE HANDS OF THE PARTNERS. I HAVE CONSIDERED THE FACTUAL MATRIX OF THE CASE. THE APPELLANT ABLE TO DEMONSTRATE THAT THE MONEY TO THE FIRM HAS COME FROM THE ACCOUNT OF THE PARTNERS AND THE SAME CANNOT BE ADDED IN THE HANDS OF THE FIRM. THIS VIEW IS SUPPORTED BY THE DECISION S OF THE HON'BLE SC IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. 216 CTR (SC) 195 AND THE RECENT DECISION OF ITAT, AHD , IN THE CASE OF ITO VS. VIKASH POLYMERS PVT. LTD. , ITA NO. 2728/AHD/20O7 DATED 8.10.2010. IN VIEW OF THE ABOVE, I AM INCLINED TO GRAN T RELIEF AND ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE AD D ITION MADE IN THIS GROUND. THE APPEAL IN THIS GROUND IS ALLOWED. ITA NO. 1749 /AHD/201 1 & CO NO.186/AHD/2011 M/S. ORSON CHEMICALS FOR A.Y. 200 8 - 0 9 - 4 - 7. AFTER HEARING LEARNED DR WHO HAS SUPPORTED THE ACTION OF THE AO , WE HEREBY HOLD THAT IN A SITUATION WHEN THE SAID PARTNER WA S INDEPENDENTLY ASSESS ED THE TAX AND HE HAS EXPLAINED THE SOURCE OF FUND THEN THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD NO REASON TO FURNISH ALL THOSE DETAILS , THEREFORE LIABLE TO BE TAXED. WE ARE OF THE VIEW THAT IN THE CASE OF A FIRM WHEN T HE PARTNERS HAVE INTRODUCED CAPITAL AND THEY ARE INDEPENDENTLY ASSESS ED TO TAX THEN NO ACTION IS REQUIRED IN THE HANDS OF THE FIRM. WE, THEREFORE, UPHOLD THE VIEW TAKEN BY LEARNED CIT(A). GROUND RAISED BY THE REVENUE IS HEREBY DISMISSED. 8. THE CROSS OBJECT ION FILED BY THE ASSESSEE REMAIN ED UNREPRESENTED AND HEREBY DISMISS BECAUSE THE ASSESSEE APPEARS TO BE NOT SERIOUS IN CONTESTING THE GROUNDS RAISED IN THE CROSS OBJECTION. MOREOVER, AFTER PERUSING THE GROUNDS OF CROSS OBJECTION , WE HAVE NOTED THAT THE CROS S OBJECTOR HAS NOT RAISED ANY GRIEVANCE AGAINST THE ORDER OF LEARNED CIT(A) BUT HE HAS RAISED THE GROUNDS AGAINST THE VIEW TAKEN BY ITO. SINCE, THE ORDER OF THE ITO/AO HAD ALREADY BEEN MERGED WITH THE ORDER OF LEARNED CIT(A); THEREFORE, THE OBJECTION/GROUN D RAISED IN THIS CO ARE NOT MAINTAINABLE IN THE EYES OF LAW; HENCE DISMISS. 9. IN THE RESULT, APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. SD/ - SD/ - (ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13 / 0 2 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 1749 /AHD/201 1 & CO NO.186/AHD/2011 M/S. ORSON CHEMICALS FOR A.Y. 200 8 - 0 9 - 5 - 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD