Shri Phiroz I.Patel, Bharuch V. The Income tax Officer,Ward-2, Bharuch

CO 72/AHD/2008

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4540 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-05-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 08-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Unexplained cash credit; Source of fund
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI A.N. PAHUJA, A.M.) I.T.A. NO. 481/AHD./2008 ASSESSMENT YEAR : 2001-2002 INCOME TAX OFFICER, WARD-2, BHARUCH -VS.- SHRI PHIROZ I. PATEL, BHARUCH (PAN : AEQPP 8154C) (APPELLANT) ( RESPONDENT) & C.O. NO. 72/AHD/2008 (ARISING OUT OF ITA NO. 481/AHD/2008) ASSESSMENT YEAR : 2001-2002 SHRI PHIROZ I. PATEL, BHARUCH -VS .- INCOME TAX OFFICER, WARD-2, BHARUCH (CROSS OBJECTOR) (RESPONDENT) -AND- I.T.A. NO. 678/AHD/2008 ASSESSMENT YEAR : 2001-2002 SHRI PHIROZ I. PATEL, BHARUCH -VS. - INCOME TAX OFFICER, WARD-2, BHARUCH (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MEHUL K. PATEL DEPARTMENT BY : SMT. NEETA SHAH, SR. D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE CROSS APPEALS AND CROSS OBJECTION BY THE ASS ESSEE IS AGAINST THE ORDER DATED 30.11.2007 OF LEARNED COMMISSIONER OF INCOME TAX(AP PEALS)-VI, BARODA FOR THE ASSESSMENT YEAR 2001-02. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APP EAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING THE ADDITION OF RS.9,45,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 196 1 ON ACCOUNT OF UNEXPLAINED CASH CREDIT. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THI S GROUND OF APPEAL ARE THAT ON VERIFICATION OF CAPITAL ACCOUNT ENCLOSED WITH THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.9,45,000/- IN CAPITAL ACCOUNT ON VARIOUS DATES DURING THE YEAR AS UNDER :- 2 ITA NO. 481-CO-72 & ITA 678/AHD/2008 BY VALIKA ENTERPRISE RS.94,500/- BY BANK 20.10.2000 RS.50,000/- BY BANK 20.10.2000 RS.50,000/- BY BANK 24.10.2000 RS.1,00,000/- BY BANK 18.12.2000 RS.50,000/- BY BANK 20.12.2000 RS.50,000/- BY BANK 12.01.2001 RS.75,000/- BY BANK 23.03.2001 RS.6,00,000/- RS.9,45,000/- 3. IN RESPECT OF AFORESAID DEPOSITS, BEFORE THE ASS ESSING OFFICER THE ASSESSEE CONTENDED THAT THE SOURCE OF AFORESAID DEPOSITS FOUND CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE WERE BANK TRANSFERS FROM M/S. VALIKA ENTERPRISES AND THE SOUR CE OF FUND OF RS.9,45,000/- IS CLEARLY RELATABLE TO THE RECEIPTS IN THE HANDS OF M/S. VALIKA ENTERPR ISES, BHARUCH. COPY OF ACCOUNTS OF THE ASSESSEE IN THE PARTNERSHIP FIRM M/S. VALIKA ENTERP RISES WAS ALSO PLACED ON RECORD. THE ASSESSING OFFICER TREATED THE AFORESAID CREDIT OF R S.9,45,000/- IN THE CAPITAL ACCOUNT AS UNEXPLAINED INCOME UNDER SECTION 68 OF THE INCOME T AX ACT, 1961. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) DELETED THE ADDITION OF RS.9,45,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF T HE INCOME TAX ACT, 1961. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) IS CONTAINED IN PARA 5.3 ON PAGE 9 OF THE IMPUGNED ORDER, WHICH IS REPRODUCED HEREUNDE R :- 5.3. I HAVE CAREFULLY CONSIDERED THE ARGUMENT OF T HE APPELLANT AND ALSO EXAMINED THE ASSESSMENT ORDER OF M/S. VALIKA ENTERP RISES FOR AY 2001-02. IT IS A FACT THAT M/S. VALIKA ENTERPRISES RECEIVED ADV ANCES OF RS.9,55,460/- IN THE RELEVANT FY FROM VARIOUS PERSONS AND DURING THE SCRUTINY ASSESSMENT OF M/S. VALIKA ENTERPRISES FOR AY 2001-02, THE A.O. EX AMINED THE VARIOUS CASH AMOUNTS RECEIVED FROM DIFFERENT PERSONS AND AFTER E XAMINATION OF THOSE EVIDENCES THE A.O. MADE ADDITION OF RS.1,40,000/- A S UNEXPLAINED CASH CREDIT U/S. 68 IN THE CASE OF M/S. VALIKA ENTERPRIS ES. IN OTHER WORDS, THE BALANCE AMOUNT OF RS.8,15,495/- RECEIVED DURING THE YEAR BY M/S. VALIKA ENTERPRISE WAS FOUND TO BE GENUINE. IT IS ALSO NOT DISPUTED THAT VARIOUS AMOUNTS FOUND CREDITED IN THE CAPITAL ACCOUNT OF TH E APPELLANT WERE BANK TRANSFERS FROM M/S. VALIKA ENTERPRISES. IN OTHER WO RDS, THE SOURCE OF FUND OF RS.9,45,000/- IS CLEARLY RELATABLE TO THE RECEIPTS IN THE HANDS OF M/S. VALIKA ENTERPRISES. IN MY HUMBLE VIEW, THEREFORE, IN THE C ASE OF SHRI FIROZ PATEL ALL THE THREE CONDITIONS U/S. 68, I.E. IDENTITY, GENUIN ENESS AND CREDITWORTHINESS 3 ITA NO. 481-CO-72 & ITA 678/AHD/2008 ARE SATISFIED. THE ADDITION OF RS.9,45,000/- U/S. 6 8 IS THUS DIRECTED TO BE DELETED. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SMT. NEETA SHAH, SR. D.R. APPEARED AND RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER CONTENDED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) DELETED THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT WAS MADE BECAUSE THE ASSESSEE COULD NOT PROVE HIS GENUINENESS WITH E VIDENCES AND AUTHENTICATED BOOKS OF ACCOUNTS OF THE CREDITOR. SHE FURTHER POINTED OUT THAT FROM THE BALANCE-SHEET OF THE FIRM NAMELY M/S. VALIKA ENTERPRISES, IT CAN BE SEEN THAT AROUND 60% OF THE SOURCE OF FUNDS HAS BEEN WITHDRAWN BY THE ASSESSEE, WHO IS THE MAIN PARTNER IN THE FIRM M /S. VALIKA ENTERPRISES. THE LD. D.R. FURTHER POINTED OUT THAT IT IS NOT CLEAR AS TO WHY THE BALA NCE OF THE ASSESSEE WHETHER DEBIT OR CREDIT IN THE BOOKS OF M/S. VALIKA ENTERPRISES DOES NOT APPEAR IN HIS BALANCE SHEET AND THE AMOUNTS ARE DIRECTLY CREDITED TO THE ASSESSEES CAPITAL ACCOUNT . FINALLY SHE POINTED OUT THAT BEFORE THE WITHDRAWALS BY THE ASSESSEE FROM M/S. VALIKA ENTERR ISES BANK ACCOUNT, CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT. NO DAY-TO-DAY CASH BOOK IS MAI NTAINED AND APPARENTLY THESE AMOUNTS ARE SOUGHT TO BE EXPLAINED BY ADVANCES AGAINST SHOPS WH ICH ARE NOT ESTABLISHED TO BE GENUINE. THEREFORE, THE ADDITION OF RS.9,45,000/- MADE BY TH E ASSESSING OFFICER UNDER SECTION 68 BE RESTORED. 5. ON THE OTHER HAND, SHRI MEHUL K. PATEL APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS). 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT M/S. VALIKA ENT ERPRISES RECEIVED ADVANCES OF RS.9,55,460/- IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER APPEAL FROM VARIOUS PERSONS. IN THE SCRUTINY ASSESSMENT OF M/S. VALIKA ENTERPRISES FOR ASSESSMENT YEAR 2001-02, THE ASSESSING OFFICER HAS EXAMINED THE VARIOUS CASH AMOUNTS RECEI VED FROM DIFFERENT PERSONS AND AFTER EXAMINATION OF THOSE EVIDENCES, THE ASSESSING OFFIC ER MADE THE ADDITION OF RS.1,40,000/- AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 IN THE CAS E OF M/S. VALIKA ENTERPRISES. THUS REMAINING CASH DEPOSITS DULY STAND EXPLAINED. IN OTHER WORDS, THE BALANCE OF RS.8,15,460/- RECEIVED DURING THE YEAR BY M/S. VALIKA ENTERPRISES WAS FOUND TO BE GENUINE. IN OUR OPINION, THIS FACT ALONE INDICATES THAT THE ADDITION WAS MADE BY THE ASSESSI NG OFFICER UNDER SECTION 68 ON DOUBTS AND 4 ITA NO. 481-CO-72 & ITA 678/AHD/2008 SUSPICION AND THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) AFTER APPRECIATING THE ENTIRE FACTS, RIGHTLY DELETED THE ADDITION. BY CONSIDERING THE TOTALITY OF THE FACTS, WE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS). RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. 7. THE CROSS OBJECTION FILED BY THE ASSESSEE IS MER ELY IN SUPPORT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). IN VIEW OF OUR DECISION IN REVENUES APPEAL BEING ITA NO. 481/AHD/2008, THE GROUNDS RAISED BY THE ASSESSE E HAVE BECOME INFRUCTUOUS AND ARE DISMISSED. 8. WE NOW TAKE UP THE ASSESSEES APPEAL BEING ITA N O. 678/AHD/2008 FOR THE ASSESSMENT YEAR 2001-02. VARIOUS GROUNDS RAISED BY THE ASSESSE E IN HIS APPEAL ARE AS UNDER :- (1) THE LD. CIT(A.) HAS GROSSLY ERRED AND IS NOT JU STIFIED IN DISMISSING THE PRELIMINARY ISSUE RAISED REGARDING THE VALIDITY OF THE DEMAND NOTICE. (2) THE LD. CIT(A.) HAS GROSSLY ERRED AND IS NOT JU STIFIED IN DISMISSING THE LEGAL ISSUE RAISED REGARDING VALIDITY OF THE ASSESS MENT ORDER BASED ON INVALID DIRECTIONS OF THE LD. JOINT COMMISSIONER OF INCOME TAX. (3) THE LD. CIT(A.) GROSSLY ERRED AND IS NOT JUSTIF IED IN CONFIRMING THE ADDITION OF RS.6,762/- AND RS.3,589/- MADE BY THE L D. A.O. AS PER THE ASSESSMENT ORDER. 9. AT THE TIME OF HEARING, THE LD. COUNSEL OF THE A SSESSEE POINTED OUT THAT HE DOES NOT WANT TO PRESS GROUNDS NO. 1 & 2 OF THIS APPEAL. IN VIEW OF THIS, GROUNDS NO. 1 & 2 OF ASSESSEES APPEAL ARE DISMISSED BEING NOT PRESSED. 10. WITH REGARD TO DISALLOWANCE OF RS.6,762/- AND R S.3,589/- ON ACCOUNT OF MOBILE TELEPHONE EXPENSES AND PETROL AND DIESEL EXPENSES RESPECTIVEL Y, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT ENTIRE EXPENSES WERE LAID OUT WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF BUSINESS, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER BE DELET ED. 11. ON THE OTHER HAND, THE LD. D.R. POINTED OUT THA T USER OF PERSONAL ELEMENT, IN RESPECT OF BOTH THE EXPENSES CANNOT BE RULED OUT. THEREFORE, T HE ADDITION WAS RIGHTLY MADE BY THE ASSESSING 5 ITA NO. 481-CO-72 & ITA 678/AHD/2008 OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. 12. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US. AFTER CAREFULLY GOING THROUGH THE REASONING GIVEN BY THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), WE ARE CONVINC ED THAT THE ASSESSING OFFICER RIGHTLY MADE THE ADDITION OF RS. 6,762/- AND RS.3,589/- ON ACCOUNT OF MOBILE TELEPHONE EXPENSES AND PETROL AND DIESEL EXPENSES RESPECTIVELY AS FAIR AND REASONABLE AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE SAME. WE, THEREFO RE, DECLINE TO INTERFERE. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE, CROSS OBJECTION OF THE ASSESSEE AS WELL AS THE APPEAL OF THE ASSESSEE ALL ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.05.201 0 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 05 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.