The ITO, Ward-6(1), Surat V. M/s. Balmukund Sugar, Surat

ITA 1005/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76825 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDEY
• Keywords: Source of fund; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVED I, A.M.) I.T. A. NO. 1005/AHD/2011 (ASSESSMENT YEAR: 2006-07) THE I.T.O, WARD-6(1), SURAT V/S M/S. BALMUKUND SUGAR, AT & POST, SADGDAVAN, TAL. NIZAR, SURAT. (APPELLANT) (RESPONDENT) PAN: AAEFB 4901B APPELLANT BY : SHRI A.K. PANDEY, SR. D.R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 03-06-201 4 DATE OF PRONOUNCEMENT : 13 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-IV, SURAT DATED 28.12.2010 FOR A.Y. 2006-07. 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED BY ASSESSEE. WE T HEREFORE PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL ON RECOR D EX PARTE QUA THE ASSESSEE. ITA NO 1005/ AHD/2011 . A.Y. 2006- 07 2 3. ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE ACTI VITY OF MANUFACTURING AND SELLING OF SUGAR. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 06-07 ON 31.12.2006 DECLARING TOTAL LOSS OF RS. 19,136/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) VIDE ORDER DATED 26.12.2008 AND THE TOTAL IN COME WAS DETERMINED AT RS. 13,97,800/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 28.12 .2010 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY TH E ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED T HE FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,0000/- OUT OF TH E ADDITION OF RS. 12,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CAPITAL INTRODUCED BY THE PARTNERS OF T HE FIRM. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PER USING THE ACCOUNTS OF THE ASSESSEE, A.O NOTICED THAT THERE WAS AN ADDITIO N TO THE EXTENT OF RS. 22 LACS TO THE PARTNERS CAPITAL ACCOUNT. ( THE DETA ILS OF WHICH ARE LISTED AT PAGE 3 OF THE ASSESSMENT ORDER). THE ASSESSEE WAS ASKED TO PROVE THE IDENTITY, CAPACITY OF THE PERSON AND THE GENUINENES S OF THE TRANSACTIONS. ASSESSEE SUBMITTED THE EXPLANATION BUT THE SAME WAS NOT FOUND SATISFACTORY BY THE A.O. A.O THEREFORE HELD THAT TH E AMOUNT CREDITED IN THE BOOKS OF FIRM, IN THE PARTNERS CAPITAL ACCOUNT TO BE NOT SATISFACTORILY EXPLAINED AND THEREFORE CONSIDERED IT TO BE UNDISCL OSED INCOME OF THE FIRM AND ADDITION WAS MADE BY TREATING THE ADDITION TO THE CAPITAL ACCOUNT OF THE PARTNERS TO BE UNEXPLAINED. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT R ECEIVED FROM A.O. GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE BY HOLDI NG AS UNDER:- ITA NO 1005/ AHD/2011 . A.Y. 2006- 07 3 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMIS SIONS OF THE APPELLANT, REMAND REPORT AND THE EVIDENCES. AS REGARDS CAPITAL INTRODUCTION BY SHRI KIRITBHAI CHANDULAL SHAH IS CONCERNED, THE APPELLANT HAS BEEN ABLE TO EXPLAIN THE SOURCE WHICH WAS FROM M/S. CHANDULAL THANARSI AND CO. THIS INTRODUCTION HAS BEEN THROUGH CHEQUE AND EXTRACTS F ROM M/S. CHANDULAL THANARSI AND CO WAS ALSO PRODUCED. THE SOURCE OF CAPITAL INTRODUCTION TO THI S EXENT IS TO BE HELD AS EXPLAINED. AS REGARDS, SHR I BIPINBHIA H. AGHERA, THE ONLY REASON GIVEN BY THE A .O. IS THAT BANK STATEMENT WAS NOT PRODUCED. IT IS SEEN THAT PRODUCTION OF BANK STATEMENT WAS IRRELEVA NT AS CAPITAL INTRODUCTION WAS IN CASH, AND THE SOURCE - SALE OF TEMPO AND AGRICULTURAL INCOME - WH ICH WERE ALSO IN CASH. THE APPELLANT HAD SUBMITTED THE SALE AGREEMENT, R.C. BOOK AND EXTRACTS OF AGRIC ULTURAL HOLDING. IN MY OPINION, THE SOURCE OF CAPIT AL INTRODUCED BY SHRI BIPINBHIA H. AGHERA IS EXPLAINED . AS REGARDS, SHRI JITENDRABHAI HANSLIA AND SHRI KISHORBHAI A. HANSALIA, THE REASON GIVEN BY THE A.O IS THAT THEY HAD NOT FILED I.T. RETURNS AND NO BAN K STATEMENTS HAVE BEEN PRODUCED. AGAIN AT THE COST OF REPETITION, IT MAY BE STATED THAT BANK STATEMENT WAS NOT RELEVANT AS INTRODUCTION OF CAPITAL HAS BEE N IN CASH. THE APPELLANT HAD EXPLAINED WITH DOCUMENTARY EVIDENCES THE SOURCE OF INTRODUCTION OF CAPITAL WHICH HAS NOT BEEN DISPROVED BY THE A.O. CAPITAL INTRODUCED BY THESE PERSONS IS THEREFORE HE LD AS EXPLAINED. AS REGARDS, SHRI HITESHBHAI D, PATEL THE A.O. HAS ACCEPTED THAT COPY OF I.T. RETUR NS AND BANK STATEMENT HAD BEEN PROVIDED. HE DOES NOT MENTION ANY DISCREPANCY IN THIS REGARD EXCEPT T HAT THIS PARTNER RECEIVED MONTHLY SALARY OF RS.9,000/- AND THEREFORE CREDITWORTHINESS IS NOT ES TABLISHED. AS AGAINST THIS, THE APPELLANT HAS GIVEN THE DETAILS OF SOURCE OF FUND INTRODUCED AS CAPITAL ALONG WITH EVIDENCES - LOAN FROM 3 PERSONS IN RESPECT OF WHICH CONFIRMATIONS AND BANK STATEMENTS WERE PRODUCED, AND PAST SAVINGS WHICH INCLUDED LIC MATURITY PROCEEDS AND FDRS MATURITY. THE OBJECT ION OF THE A.O. FOR ADMITTING ADDITIONAL EVIDENCES IN THE FORM OF RETURN OF INCOME AND BANK STATEMENT OF SHRI JAGDISH VASANIA DURING APPEAL ONLY BECAUSE HE WAS THE A.R. DURING ASSESSMENT PROC EEDINGS IS NOT TENABLE. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE TIME AVAILABLE TO THEM FOR P RODUCING EVIDENCES WERE LIMITED. FURTHER THE EVIDENCES PRODUCED DURING THE APPEAL INCLUDING BANK STATEMENT HAVE NOT BEEN CONTROVERTED BY THE A.O. THE SOURCE OF FUNDS CANNOT BE HELD AS UNEXPLAI NED ONLY BECAUSE THE NAME AS APPEARING IN THE BALANCE SHEET OF SHRI HITESHBHAI D.' PATEL SHOWS LO AN FROM SHRI JAGDISH VASANIA (INDL.) WHEREAS IT HAS BEEN ACTUALLY GIVEN BY SHRI JAGDISH VASANIA & CO., FIRM. THE BANK STATEMENT SHOWS THAT THE FUNDS CAME FROM SHRI JAGDISH VASANIA & CO., A FACT NOT DI SPROVED BY THE A.O. AND THEREFORE IT CANNOT BE CONSIDERED AS UNEXPLAINED IN THE HANDS OF THE ASSES SEE FIRM. THE SOURCES OF CAPITAL INTRODUCTION BY SHRI HITESHBHAI D. PATEL IS HELD AS EXPLAINED IN VI EW OF THE EVIDENCES PRODUCED. AS REGARDS, SHRI MAGANLAL JHAVIYA, IT IS SEEN THAT HE HAS INTRODUCED AN AMOUNT OF RS.2,00,000/- AS CAPITAL INTO THE FIR M. THE ONLY EVIDENCES PRODUCED IN SUPPORT OF THIS CLAI M IS THAT SLIRI MAGANLAL JHAVIYA IS AN AGRICULTURIS T HOLDING 3 ACRES OF LAND. NO OTHER SOURCES OF INCOME ON FUND HAS BEEN SHOWN AS AVAILABLE TO HIM FOR INTRODUCTION. IN MY OPINION 3 ACRES OF LAND, HOWEVE R, FERTILE WILL NOT BE ABLE TO GENERATE INCOME LEAV E ALONE ANY SAVINGS SO AS TO ENABLE THIS PERSON TO IN TRODUCE CAPITAL OF RS.2,00,000/-. THEREFORE, IN MY OPINION, SOURCE OF FUND INTRODUCED BY THIS PARTNER IS NOT EXPLAINED, AND ADDITION MADE U/S.68 OF THE A CT IS THEREFORE UPHELD TO THIS EXTENT. THE ADDITION U/ S.68 OF THE ACT TREATING CAPITAL INTRODUCTION AS UNEXPLAINED IS THEREFORE SUSTAINED TO THE EXTENT OF RS.2,00,000/- ONLY. THE APPELLANT GETS RELIEF OF R S. 10,00,000/-. THIS GROUND IS PARTLY ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R. RELIED ON THE ORDER OF A.O. 7. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AND THE REMAND REPORT RECEIVED FROM A.O, BY REASONED AND DE TAILED ORDER ITA NO 1005/ AHD/2011 . A.Y. 2006- 07 4 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. BEFORE US, REVENUE COULD NOT CONTROVERT THE FINDINGS OF CIT(A) BY BRINGING ANY C ONTRARY MATERIAL ON RECORD. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 06 - 2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD 1.DATE OF DICTATION 03 - 06 -2014