The ITO, Ward-4(3), Ahmedabad V. Hiral Pharma Ltd., Ahmedabad

ITA 103/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9426 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-12-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANITA HARDASANI
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.103/AHD/2012 ASST. YEAR: 1997-98 INCOME-TAX OFFICER, WARD 4(3), AHMEDABAD. VS. HIRAL PHARMA LTD., F/4, VISHAL COMMERCIAL CENTRE, NR. DINESH HALL, OFF ASHRAM ROAD, AHMEDABAD. APPELLANT RESPONDENT PAN AAACH 2878N APPELLANT BY MRS. ANITA HARDASANI, SR.DR RESPONDENT BY SHRI ANIL KSHATRIYA, AR DATE OF HEARING: 16/12/2015 DATE OF PRONOUNCEMENT: 02/03/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) VIII, AHMEDABAD, DATED 24.10.2011. ASSESSME NT WAS FRAMED U/S 143(3) READ WITH SECTION 254 OF THE I.T. ACT., 1961 (IN SHORT THE ACT) ON 30.12.2010 FOR ASST. YEAR 1997-98 BY IT O, WD-4(3), AHMEDABAD. THE FOLLOWING GROUNDS HAVE BEEN RAISED B Y THE REVENUE :- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION MADE ON ACCOUNT OF CASH CREDIT IN THE NAME OF M/S. PAPPILLION EXPORT LTD., WITHOUT APPRECIATING FACT THAT THE A.O. HAS E STABLISHED THAT THE ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 2 UNEXPLAINED CASH CREDIT APPEARING IN BOOKS OF ASSES SEE IS NOT GENUINE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE REST ORED TO THE ABOVE EXTENT 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A LIMITED COMPANY WHICH HAS FILED ITS R ETURN OF INCOME FOR ASST. YEAR 1997-98 ON 30.11.1997 DECLARING TOTAL LO SS OF RS.6,23,260/- AND ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT ON 29.3.2000 DETERMINING TAXABLE INCOME AT RS.54,61,74 0/- AFTER MAKING ADDITION OF RS.60,85,000/- AS UNEXPLAINED CASH CRED IT RECEIVED FROM M/S PAPPILLION EXPORTS LTD. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CIT( A) BUT IT DID NOT BRING ANY RELIEF TO THE ASSESSEE. LD . CIT(A) UPHELD THE ADDITION VIDE HIS ORDER DATED 21.3.2001. THEREAFTER THE ASSESSEE WENT IN APPEAL BEFORE THE T RIBUNAL WHEREIN THE ISSUE WAS EXAMINED AND THE CO-ORDINATE BENCH SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICE R FOR VERIFICATION OF BANK ACCOUNT OF M/S P APPILLION EXPORTS LTD. MAINTAINED WITH SHRI SARVODAYA CO-OP. BANK LTD., VI DE ITS ORDER DATED 29.1.2010. ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 3 4. ACCORDINGLY NOTICE WAS ISSUED ON 26.5.2010 TO TH E ASSESSEE ASKING VARIOUS INFORMATION BUT ON ENQUIRY, THE ASSESSING OFFICER FOUND THAT THE BANK IS IN LIQUIDA TION SINCE 15 TH APRIL, 1999 AND NO FURTHER INFORMATION WAS AVAILAB LE THROUGH THE LIQUIDATOR AND ACCORDINGLY HE ADDED BAC K RS.60,85,000/- TO THE TOTAL INCOME OF ASSESSEE AND FRAMED ASSESSMENT ORDER U/S 143(3) R.W.S 254 OF THE ACT AS SESSING TOTAL INCOME AT RS.54,61,740/-. 6. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AGAINST THE ORDER OF LD. ASSESSING OFFICER AND LD. CIT(A) ALLOWED THE APPEAL OF ASSESSEE DELETING THE ADDITIO N MADE BY ASSESSING OFFICER BY OBSERVING AS UNDER :- 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY T HE APPELLANT'S COUNSEL AND HAVE PERUSED ALL THE FACTS BROUGHT ON T HE RECORD BEFORE THE AO AS WELL AS JUDICIAL DECISIONS REFERRED BY THE APPELLAN T'S COUNSEL. IT IS NOTICED THAT IN THE SECOND ROUND OF ASSESSMENT PROCEEDINGS, IN CONS EQUENT TO THE ORDERS DATED 29.1.2010 PASSED BY THE HON'BLE ITAT, AHMEDABAD 'D' BENCH, THE ISSUE WAS SET ASIDE WITH THE SPECIFIC FINDING AND DIRECTIONS, VIZ . (A) THAT THE STATEMENT OF SHRI K.B. SASIDHARAN RECORDED BY THE ITO, ERODE AND HIS REPORT WOULD NOT BE RELEVANT IN THE MATTER IN ISSUE AS WELL AS CANNOT BE READ IN EVIDENCE AGAINST THE APPELLANT BECAUSE APPELLANT WAS NEVER ALLOWED ANY CROSS-EXAMI NATION AT THE ASSESSMENT STAGE, THEREFORE, THIS STATEMENT OF SHRI SASIDHARAN AND ITO'S REPORT TO BE EXCLUDED FROM CONSIDERATION AND (B) TO RE-DECIDE TH E ISSUE BY VERIFYING THE BANK ACCOUNT OF M/S. PAPPILION EXPORT LTD. MAINTAINED WI TH SHRI SARVODAYA CO- OPERATIVE BANK LTD., AHMEDABAD WITH REFERENCE TO TH E CERTIFICATE ISSUED BY THEM ON THE MATTER. IN NUTSHELL, THE AO WAS UNDER JUDICI AL OBLIGATION TO STRICTLY FOLLOW THE OBSERVATION RECORDED BY THE HIGHEST FACT FINDIN G AUTHORITY, I.E. HON'BLE ITAT. REFERRING TO PARA 17 OF THE HON'BLE TRIBUNAL'S ORDE R DATED 29.1.2010, IT WAS CONCLUDED BY THE ITAT THAT THE APPELLANT HAD BEEN P RIMA-FACIE ABLE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS IN ISSUING THE CH EQUE IN QUESTION IN FAVOUR OF THE APPELLANT COMPANY. ACCORDING TO THE ABOVE FINDINGS, THE IDENTITY, CREDITWORTHINESS ALREADY STOOD ACCEPTED BY THE ORDE R OF HON'BLE TRIBUNAL ITSELF. ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 4 7. WITH REGARD TO THE SECOND LIMB OF THE DIRECTION S OF THE HON'BLE TRIBUNAL IN VERIFYING THE BANK ACCOUNTS OF THE CREDITOR WITH TH E REFERRED BANK, FACTS EMERGING FROM THE RECORDS OF THE CASE ARE: THE ISSUE, ESSENT IALLY HAD BEEN CONFINED TO THE LIMITED DIRECTION TO CROSS VERIFY THE TRANSACTION. IT IS OBSERVED THAT THE NATURE OF CREDIT IN REAL TERMS WAS ONLY A REPAYMENT/RETURN OF LOAN OF RS.73,50,000/- ADVANCED BY THE APPELLANT COMPANY AND ITS ASSOCIATE D CONCERNS EARLIER AND THE APPELLANT HAS SUBMITTED THE CONTRA ENTRY OF THE ASS OCIATED CONCERNS FOR ADVANCEMENT OF MONEY TO THE SISTER CONCERN OF PAPPI LON EXPORT LTD. FOR SQUARING UP THIS ADVANCES. THESE CONTRA ENTRIES CONTAIN PAN AND WARD CIRCLE WHERE THEY ARE ASSESSED. THE A.Q. HAS NEVER DOUBTED THIS FACTU AL ASPECT OF THE MATTER AS NO COMMENT IS OFFERED ON THIS COUNT. THIS FURTHER STRE NGTHENS THE APPELLANT'S CONTENTION THAT IT WAS A RE-PAYMENT OF MONEY ADVANC ED EARLIER BY THOSE CONCERNS. THOUGH THE SAID PAYMENT DID CONSTITUTE A LOAN OF THE SAID AMOUNT IN SO FAR AS THE BOOK OF ACCOUNTS OF THE APPELLANT COMPAN Y WAS CONCERNED. EVEN IF THE SAID AMOUNT OF RS.60,85,000/- WAS CONSIDERED AS A L OAN, THE APPELLANT COMPANY HAD DISCHARGED ITS ONUS OF PROVING THE IDENTITY OF THE PARTY, THE GENUINENESS OF THE CREDIT ENTRY THROUGH BANKING CHANNEL AND SOURCE OF SOURCE. SINCE ALL THE INGREDIENTS AS REQUIRED BY LAW APPEAR FULLY SATISFI ED, THE EXPLANATION SUBMITTED ON RECORD DOES NOT SUFFER FROM ANY APPARENT OR FACT UAL ERROR, SO FAR AS THE AMBIT OF SECTION 68 IS CONCERNED, WHICH HAS BEEN CRUX OF THE FINDING OF THE HON'BLE TRIBUNAL ONLY. 8. FURTHER, DURING THE COURSE OF APPELLATE PRO CEEDINGS, THE APPELLANT'S COUNSEL HAS PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONO UNCEMENTS OF HON'BLE COURTS: (I) DOULAT RAM RAWATMAL [1973] 89 ITR 349 (SC) (II) PRECISION FINANCE LTD. [1994] 208 ITR 465 (CAL.) (III) ORIENTAL WIRE IND. (P) LTD. [1981] 131 ITR 688 (CAL .) IT IS OBSERVED THAT THE ASSESSING OFFICER, INSTEAD OF TAKING PROPER RECOURSE IN ACCORDANCE WITH LAW, HAS ONCE AGAIN MADE ADDITION B Y TREATING THE ADVANCE THROUGH BANKING CHANNEL AS UNEXPLAINED BANK DEPOSIT . AS NOTED IN THE FOREGOING PARAGRAPHS OF THIS ORDER, THE APPELLANT HAS CATEGOR ICALLY ESTABLISHED IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTIONS AND C APACITY OF THE CREDITOR. APPELLANT'S COUNSEL HAS POINTED OUT THAT RECENTLY, HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MICRO MELT (P) LTD., REPORTED IN [ 2010] 327 ITR 70 (GUJ) HE/D AS UNDER :- THAT THE NENESS OF THE TRANSACTION AND THE IDENTITY OF THE DEPOSITO RS HAD BEEN ESTABLISHED AND NOTHING HAD BEEN BROUGHT ON RECORD TO CONTRADICT THE FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) AS NOTE D BY THE TRIBUNAL. THIS WAS A PURE QUESTION OF FACT. THE DELETION OF THE ADDITI ON MADE U/S. 68 OF THE I.T. ACT, 1961 WAS JUSTIFIED.' 9 IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE VIEW T HAT IDENTITY AND GENUINENESS OF THE PARTY AND ALSO CREDITWORTHINESS HAS BEEN PROVED AND THE ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 5 TRANSACTIONS ARE THROUGH BANKING CHANNEL. THE AO HA S OVERLOOKED VITAL FACTS WITHOUT BRINGING ANY RELEVANT, COGENT AND POSITIVE MATERIAL ON RECORD. THUS, ALTHOUGH THE GENUINENESS OF THE TRANSACTIONS AND TH E IDENTITY OF THE CREDITOR HAS BEEN FULLY ESTABLISHED AND NOTHING HAS BEEN BROUGHT ON RECORD TO CONTRADICT THE FINDINGS OF THE FACT NOTED BY THE HON'BLE TRIBUNAL AS WELL. THE ASSESSMENT ORDER PASSED BY THE AO IN THE COURSE OF SECOND ROUND, REV EALS THAT THE AO HAS BEEN GUIDED PRIMARILY BY THE VIEW TAKEN BY HIS PREDECESS OR, AND HAD MADE ADDITION IN QUITE REPETITIVE MANNER WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. I AM ALSO INCLINED TO ACCEPT THE ALTERNATIVE CONTENTION OF TH E APPELLANT THAT IF ONE GOES BY THE FINAL ACCOUNTS FURNISHED BY THE LIQUIDATOR OF S ARVODAYA CO-OPERATIVE BANK LTD. THEN ACCORDING TO IT THE SAID ENTRY IS A NULLI TY THOUGH IT IS DULY REFLECTED IN THE BANK STATEMENT OF BOTH THE PARTIES WHICH IS OBTAINE D BY THE A.O. FROM THE LIQUIDATOR LEAVING NO SCOPE OF INVOKING SECTION 68 OF THE ACT. THE AO IS, THEREFORE, DIRECTED TO DELETE THE ADDITION OF RS. 60,85,0007- MADE ON ACCOUNT OF CASH CREDIT IN THE NAME OF THE AFORESAID CREDITOR. 10. SINCE ALL OTHER GROUNDS OF APPEALS I.E. GROUND NO. 1 TO 6 ARE CONNECTED TO THIS EFFECTIVE GROUND NO.7 AND I HAVE ALREADY DECID ED THE SAME AS AFORESAID, THEY ARE NOT BEING ADJUDICATED SEPARATELY. 11. IN THE RESULT, THE APPEAL IS ALLOWED. 7. AGGRIEVED, THE REVENUE IS NOW IN APPEAL BEFORE T HE TRIBUNAL. 8. THE LD. DR RELIED ON THE ORDER OF ASSESSING OFFI CER. 9. WHEREAS LD. AR OF THE ASSESSEE SUBMITTED THAT DU RING THE ASST. YEAR 1997-98 LOAN WAS TAKEN BY ASSESSEE FROM M/S PA PPILION EXPORT LTD. THROUGH A/C PAYEE CHEQUE. ALL DETAILS SUPPORTI NG THE GENUINENESS AND CREDITWORTHINESS OF M/S PAPPILION E XPORT LTD. HAVE BEEN REGULARLY FILED BEFORE THE LOWER AUTHORITIES A ND HON. TRIBUNAL HAS CATEGORICALLY MENTIONED IN ITS ORDER TO BE SATI SFIED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF LOAN TRANSACTION OF RS.60,85,000/- RECEIVED FROM M/S PAPPILION EXPORT L TD. THROUGH BANK ACCOUNT HELD WITH SHREE SARVODAYA CO-OP. BANK LTD. LD. AR FURTHER SUBMITTED THAT LETTER OF SHREE SARVODAYA CO-OP. BAN K LTD. WAS FILED ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 6 BEFORE THE LOWER AUTHORITIES TO PROVE THAT THE ACCO UNT OF M/S PAPPILION EXPORT LTD. AND HIRAL PHARMA LTD. WERE BEING MAINTA INED WITH THEIR BANK AND ALSO SUBMITTED THAT COPIES OF BANK STATEME NTS WERE DULY FILED SHOWING THE TRANSACTIONS OF LOAN GIVEN BY M/S PAPPILION EXPORT LTD. THROUGH CHEQUE NO.133279 AND THE SAME BEING CR EDITED IN THE BANK ACCOUNT OF THE ASSESSEE I.E. M/S HIRAL PHARMA LTD. ON 1 ST JANUARY, 1997 AND THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE BEFORE US IS TO EXAMINE W HETHER ASSESSEE HAS ACTUALLY RECEIVED LOAN OF RS.60,85,000/- FROM M /S PAPPILION EXPORT LTD. THROUGH ITS BANK ACCOUNT HELD WITH SARB ODAYA CO-OP. BANK LTD. AND THE SAME BEING RECEIVED IN THE BANK A CCOUNT OF ASSESSEE HELD WITH SARBODAYA CO-OP. BANK LTD. 11. WE FIND THAT THE ISSUE ABOUT GENUINENESS AND CR EDITWORTHINESS OF THE UNSECURED LOAN TAKEN FROM M/S PAPPILION EXPO RT LTD. HAVE BEEN DULY ADJUDICATED BY THE CO-ORDINATE BENCH VIDE THEIR ORDER DATED 29 TH JANUARY, 2010 IN ITA NO.1255/AHD/2001 AND THE RELE VANT PORTION OF THE DECISION IS REPRODUCED BELOW FOR READY REFER ENCE :- 16. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER NOTED TH AT ASSESSEE HAS OBTAINED UNSECURED LOAN OF RS.60,85,000/- IN THE AS SESSMENT YEAR IN QUESTION FROM M/S. PAPPILON EXPORTS LTD.,TIRUPUR, T AMILNADU. ASSESSEE WAS ASKED TO FILE COMPLETE DETAILS ALONGWITH CONFIR MATION FROM THE ABOVE PARTY. COMMISSION WAS ALSO ISSUED TO I.T.O. ERODE, (TAMILNADU) TO MAKE THE INQUIRY FROM THE CONCERN PARTY REGARDING GIVING OF THE LOAN. ONE OF THE DIRECTOR OF THIS CONCERN SHRI K. B. SASIDHARAN WAS EXAMINED IN WHICH HE HAS DENIED GIVING OF ANY CHEQUE OF THE AMOUNT IN QU ESTION TO THE ASSESSEE ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 7 COMPANY. ANY TRANSACTION WITH THE ASSESSEE WAS ALSO DENIED. NO BOOKS OF ACCOUNTS ARE MAINTAINED. THE SAID STATEMENT OF SHRI K. B. SASIDHARAN WAS NEVER PUT TO THE ASSESSEE FOR THE PURPOSE OF ALLOWI NG ANY CROSS EXAMINATION ON BEHALF OF THE ASSESSEE. WE MAY ALSO NOTE THAT HIS STATEMENT WOULD ALSO NOT BE RELEVANT BECAUSE IN HIS STATEMENT HE HAS STATED THAT HE HAS NO IDEA ABOUT THE CHEQUE ISSUED ON BEHALF OF THEIR COMPANY FROM SARVODAYA CO. OP. BANK LTD. AHMEDABAD. HE HAS NOT DISPUTED THE CONFIRMATION LETTER FILED BY SHRI BHAG WANDAS PREMCHANDANI. IN SUCH CIRCUMSTANCES, THE VERIFICATION OF THE BANK ACCOUNT AT AHMEDABAD SHOULD HAVE BEEN MADE EITHER BY I.T.O. ERODE OR BY ASSESSING OFFICER HIMSELF AT AHMEDABAD. THE ASSESSEE ADMITTEDLY FILED CONFIRMATION LETTER SIGNED BY SHRI BHAGWANDAS PREMCHANDANI ONE OF THE D IRECTOR/AUTHORISED SIGNATORY OF M/S. PAPPILON EXPORTS LTD. FROM WHOM A MOUNT WAS RECEIVED IN WHICH HE HAS ADMITTED TO HAVE GIVEN THE AMOUNT IN Q UESTION TO THE ASSESSEE COMPANY. COPY OF THE BANK CERTIFICATE IS A LSO FILED, WHICH IS REPRODUCED IN THE IMPUGNED ORDER AND COPY OF THE SA ME IS ALSO FILED AT PB- 12. THE SAID BANK CERTIFICATE IS ISSUED BY SHRI SAR VODAYA CO.OP. BANK LTD. TO SHRI BHAGWANDAS PREMCHANDANI DIRECTOR OF M/S. PA PPILON EXPORTS LTD. AND COPY OF THE SAME WAS ALSO GIVEN TO THE ASSESSEE IN WHICH BANK HAS CERTIFIED THAT CHEQUE NO.133279 DATED 01.01.1997 OF RS.60,85,000/- HAS BEEN ISSUED IN FAVOUR OF M/S.HIRALAL PHARMA LTD. I. E. THE ASSESSEES COMPANY. IT WAS ALSO CERTIFIED THAT M/S. PAPPILON E XPORTS LTD. MAINTAINED BANK ACCOUNT WITH THIS BANK AND HAS BEEN GRANTED TE MPORARY OVERDRAFT FACILITY. THE CONFIRMATION FILED BY THE ASSESSEE CO MPANY HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER, SIMILARLY LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) DID NOT EXAMINE THE BANK CERTI FICATE OR DIRECTED THE ASSESSING OFFICER TO FILE THE REMAND REPORT. THE AS SESSING OFFICER ALSO DID NOT EXAMINE SHRI BHAGWANDAS PREMCHANDANI IN ORDER T O ELICIT THE TRUTH. THE AFORESAID BANK ACCOUNT OF M/S. PAPPILON EXPORT LTD. IS MAINTAINED AT AHMEDABAD BRANCH AND THE ASSESSING OFFICER ALSO HAV E ITS OFFICE AT AHMEDABAD, DESPITE THAT FACT, THE ASSESSING OFFICER DID NOT VERIFY THE FACTS AT AHMEDABAD AND CHOSE TO GET THE ISSUE EXAMINED AT TAMILNADU THROUGH THE I.T.O. ERODE. THE I.T.O. ERODE ALSO DID NOT EXA MINE SHRI BHAGWANDAS PREMCHANDANI AND THE BANK ACCOUNT AT AHMEDABAD DESP ITE SUFFICIENT MATERIAL AVAILABLE BEFORE HIM ALSO. FURTHER REPORT OF I.T.O. ERODE, WAS CONFRONTED TO THE ASSESSEE VIDE LETTER DATED 21.03. 2000 BY THE ASSESSING OFFICER AND THE ASSESSEE VIDE LETTER DATED 27.03.20 00 (PB-11) AGAIN EXPLAINED BEFORE HIM THAT M/S. PAPPILON EXPORTS LTD . HAD ADVANCED A SUM OF RS.60,85,000/- THROUGH THE ABOVE CHEQUE NO. OF S ARVODAYA CO.OP. BANK LTD. AND AGAIN REQUESTED THE ASSESSING OFFICER TO I SSUE NOTICE TO THE BANKER AND GET THE STATEMENT OF ACCOUNT OF M/S. PAP PILON EXPORTS LTD. AND VERIFY THE FACTS. IT WAS ALSO SUBMITTED THAT ASSESS EE HAS ALREADY FILED BANK ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 8 STATEMENT AND COPY OF THE BANK SLIP, THEREFORE, IT IS THE RESPONSIBILITY OF THE DEPARTMENT TO VERIFY THE CORRECTNESS OF THE EVIDENC E FROM AVAILABLE SOURCES. THE ASSESSEE THEREFORE REQUESTED TO SUMMON THE BANK FOR GETTING THE MATTER VERIFIED. THE ASSESSING OFFICER DID NOT ACT UPON ON THE REQUEST OF THE ASSESSEE AND DID NOT SUMMON THE BANK ER TO VERIFY THE ABOVE FACTS AND ALSO DID NOT ALLOW ANY CROSS EXAMIN ATION TO THE STATEMENT OF SHRI K.B. SASIDHARAN AND PASSED THE ASSESSMENT O RDER WITHIN 2 DAYS ON 29.03.2000. THE CROSS EXAMINATION OF SHRI K. B. SAS IDHARAN ON BEHALF OF THE ASSESSEE, EXAMINATION OF SHRI BHAGWANDAS PREMCH ANDANI AND BANK ACCOUNT ON THE REQUEST OF THE ASSESSEE WAS NECESSAR Y TO BRING THE TRUTH ON RECORD. THE ASSESSING OFFICER HOWEVER, INSTEAD O F TAKING ANY PROPER RECOURSE IN ACCORDANCE WITH LAW MADE THE ADDITION B Y TREATING THE ADVANCE THROUGH BANKING CHANNEL AS UNEXPLAINED BANK DEPOSIT . HONBLE M. P. HIGH COURT IN THE CASE OF CIT VS. RAMESHCHANDRA SHUKLA [ MAIT NO.71/2003 DECIDED ON 1.04.2005] REPORTED IN 10 ITJ 286 HELD A S UNDER:- IT IS NOW WELL SETTLED THAT WHERE THE ASSESSEE REQ UESTS THE ASSESSING OFFICER TO ISSUE SUMMONS, TO ENFORCE ATTENDANCE OF THE CREDITO RS TO ESTABLISH THE GENUINENESS AND CAPACITY OF THE CREDITORS, IT IS DU TY OF THE ASSESSING OFFICER TO ENFORCE ATTENDANCE OF CREDITORS BY ISSUING SUMMONS. IF THE ASSESSING OFFICER DOES NOT CHOOSE TO ISSUE SUMMONS AND EXAMINE THE CR EDITORS, HE CANNOT SUBSEQUENTLY TREAT THE LOANS STANDING IN THE NAME O F SUCH CREDITORS AS NON- GENUINE, NOR ADD THE AMOUNT THEREOF TO THE ASSESSEE S INCOME VIDE THE DECISION OF THE ALLAHABAD HIGH COURT IN (1963 49 ITR 561 NAT HU RAM PREMCHAND VS. COMMISSIONER OF INCOME TAX U.P. AND DECISION OF THI S COURT IN 1971 TAX LR 355- R.S. SETH GOPIKISAN AGRAWAL VS.ASSISTANT COMMI SSIONER OF S.T. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMC SHARE BROKERS LTD. 288 ITR 345 HELD THERE IS NO DOUBT THAT THE STATEM ENT OF MANOJ AGARWAL HAD EVIDENTIARY VALUE BUT WEIGHT COULD NOT BE GIVEN TO IT IN PROCEEDINGS AGAINST THE ASSESSEE WITHOUT IT BEING TESTED UNDER CROSS EXAMINATION. IN THE ABSENCE OF THE STATEMENT BEING TESTED, IT CANNO T BE SAID THAT IT SHOULD BE BELIEVED COMPLETELY TO THE PREJUDICE OF THE ASSE SSEE. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR THAT THE STATEMENT OF SHRI K. B. SASIDHARAN RECORDED BY I.T.O. ERODE AND HIS REPO RT WOULD NOT BE RELEVANT TO THE MATTER IN ISSUE AS WELL AS CANNOT B E READ IN EVIDENCE AGAINST THE ASSESSEE BECAUSE ASSESSEE WAS NEVER ALL OWED ANY CROSS EXAMINATION TO SUCH STATEMENT AT THE ASSESSMENT STA GE. WE THEREFORE, EXCLUDE THE STATEMENT OF SHRI K. B. SASIDHARAN AND REPORT OF I.T.O. ERODE FROM CONSIDERATION IN THE PRESENT APPEAL. 17. THE ASSESSEE IN THE WRITTEN SUBMISSION FILED BE FORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (PB-17) EXPLAI NED THAT THE ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 9 ASSESSEE COMPANY AND ITS SISTER COMPANIES GAVE LOAN S AND ADVANCES TO SUPREME MONEY MANAGEMENT LIMITED CONTROLLED BY ITS CHAIRMAN AND DIRECTOR SHRI BHAGWANDAS PREMCHANDANI. DESPITE SEVE RAL EFFORTS BY THE ASSESSEE, THE AMOUNT WAS NOT REPAID BY SHRI BHAGWAN DAS PREMCHANDANI AND NO EFFORT WAS MADE BY HIM TO HELP THE ASSESSEE. THE ASSESSEE THEREFORE, PRESSURISED THE BHAGWANDAS PREMCHANDANI FOR REPAYMENT OF THE AMOUNT AND ULTIMATELY SHRI BHAGWANDAS PREMCHAND ANI DIRECTOR OF M/S. PAPPILON EXPORTS LTD. ISSUED CHEQUE OF RS. 60, 85,000/- IN FAVOUR OF THE ASSESSEE AFTER OBTAINING OVERDRAFT FACILITY FRO M SARVODAYA CO. OP. BANK LTD. THE ABOVE SUBMISSIONS OF THE ASSESSEE HAV E NOT BEEN PROPERLY APPRECIATED BY THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS). THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DID NO T APPRECIATE THAT ASSESSEE WAS CONCERNED WITH THE REPAYMENT OF THE AM OUNT IN QUESTION WHICH WAS GIVEN TO THE GROUP CONCERN THROUGH SHRI B HAGWANDAS PREMCHANDANI. IF ANOTHER ACCOUNT IS MAINTAINED BY S HIR BHAGWANDAS PREMCHANDANI ON BEHALF OF M/S. PAPPILON EXPORTS LTD . WITH SARVODAYA CO. OP. BANK LTD. AHMEDABAD, AS CHAIRMAN/DIRECTOR AND H E HAS ISSUED CHEQUE IN QUESTION IN FAVOUR OF ASSESSEE COMPANY FO R SETTLEMENT OF THE DUES, WHERE IS A FAULT OF ASSESSEE. THE ASSESSEE IN THE BEST INTEREST OF THE BUSINESS ACTIVITY OF ITS COMPANY WAS REQUIRED TO RE CEIVE BACK THE MONEY. SIMILARLY, IF M/S. PAPPILON EXPORTS LTD. DID NOT MA INTAINED ANY BOOKS OF ACCOUNT AT THE TIME OF ISSUE OF THE CHEQUE IN FAVOU R OF THE ASSESSEE, HOW ASSESSEE COULD BE BLAMED BECAUSE ASSESSEE HAS NO CO NTROL OVER THE INTERNAL AFFAIRS OF M/S. PAPPILON EXPORT LTD. AND T WO OF ITS DIRECTORS. THE ASSESSEE HAS EXPLAINED THE IDENTITY OF M/S. PAPPILO N EXPORTS LTD. AND COMPLETE ADDRESS IS ALSO GIVEN BEFORE ASSESSING OFF ICER. THE ITO ERODE ALSO EXAMINED ONE OF THE DIRECTOR OF M/S. PAPPILON EXPORTS LTD. AND CONFIRMED THE IDENTITY AND EXISTENCE OF M/S. PAPPIL ON EXPORTS LTD. AT TAMILNADU. SHRI BHAGWANDAS PREMCHANDANI BEING ONE O F THE DIRECTOR OF M/S. PAPPILON EXPORTS LTD. ISSUED CHEQUE IN FAVOUR OF THE ASSESSEE COMPANY OUT OF ITS BANK ACCOUNT WITH SARVODAYA CO. OP. BANK LTD. AHMEDABAD. AS NOTED ABOVE, THE ASSESSING OFFICER DI D NOT EXAMINE SHRI BHAGWANDAS PREMCHANDANI AND THE BANK ACCOUNT OF M/S . PAPPILON EXPORTS LTD. WITH SARVODAYA CO. OP. BANK LTD. AT AH MEDABAD. THE DETAILS FILED FOR THE BANK ACCOUNT HAD NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THE BANK CERTIFICATE FILED ON RECORD AND REPRODUCED IN THE IMPUGNED ORDER PROVED THAT M/S. PAPPILON EXPORTS LTD. MAINTAINED B ANK ACCOUNT WITH SARVODAYA CO. OP. BANK LTD. AHMEDABAD THROUGH ITS D IRECTOR SHRI BHAGWANDAS PREMCHANDANI. IT IS ALSO NOT DISPUTED TH AT SHRI BHAGWANDAS PREMCHANDANI WAS ALSO ONE OF THE DIRECTOR AND CHAIR MAN OF THE CREDITOR COMPANY. THE TRANSACTION IN QUESTION IS THEREFORE, NOT DISPUTED. THE SOURCE OF ISSUE OF THE CHEQUE IS EXPLAINED TO BE OV ERDRAFT FACILITY GRANTED TO M/S. PAPPILON EXPORTS LTD. BY THE SARVODAYA CO. OP. BANK LTD. THUS, THE ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 10 ASSESSEE HAS BEEN PRIMA FACIE ABLE TO PROVE THE CRE DITWORTHINESS OF THE CREDITOR IN ISSUING THE CHEQUE IN QUESTION IN FAVOU R OF THE ASSESSEE COMPANY. 18. HOWEVER, WE MAY ALSO NOTE HERE THAT THE ASSESSE E DESPITE MAKING A REQUEST TO THE ASSESSING OFFICER TO SUMMON THE BANK ER FOR VERIFICATION OF THE BANK ACCOUNT OF M/S. PAPPILON EXPORTS LTD. WITH SARVODAYA CO.OP. BANK LTD. AHMEDABAD VIDE LETTER DATED 27.03.2000 (P B-11), DID NOT FILE THE BANK CERTIFICATE BEFORE THE ASSESSING OFFICER. THIS FACT IS ALSO RECORDED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER AT PAGE 6, PARA-4, IN WHICH THE SUBMISSION OF THE ASSE SSEE IS RECORDED THAT THE SAID BANK CERTIFICATE COULD NOT BE FURNISHED BE FORE THE ASSESSING OFFICER BEFORE ORDER WAS PASSED. THEREFORE, FOR THE ENDS OF JUSTICE, IT WOULD BE RELEVANT TO RESTORE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER TO MAKE VERIFICATION OF THE BANK ACCOUNT AND BANK CERT IFICATE ISSUED BY SARVODAYA CO. OP. BANK LTD. AHMEDABAD BECAUSE THE A SSESSING OFFICER DID NOT HAVE OCCASION TO EXAMINE SUCH BANK CERTIFIC ATE. 19. CONSIDERING THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER TO RE-DECIDE THE ISSUE BY VERIFYING THE BANK ACCOUN T OF M/S. PAPPILON EXPORTS LTD. MAINTAINED WITH SHRI SARVODAYA CO. OP. BANK LTD. AHMEDABAD AND THE CERTIFICATE ISSUED BY THEM ON THE MATTER IN ISSUE AS IS REPRODUCED IN THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS PAGE 7 OF THIS ORDER. THE ASSE SSING OFFICER SHALL RE- DECIDE THE ISSUE AS PER OBSERVATION GIVEN IN THIS O RDER BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WITHIN THE PERIOD OF 6 MONTHS FROM THE RECEIPT OF THE ORDER. 20. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. FROM GOING THROUGH THE ABOVE DECISION OF THE CO -ORDINATE BENCH, WE FIND THAT THERE IS NO DOUBT ABOUT THE IDE NTITY, GENUINENESS AND CREDITWORTHINESS OF LOAN TAKEN FROM M/S PAPPILL ION EXPORTS LTD. OF RS.60,85,000/-.. FROM GOING THROUGH THE PAPER BOOK AT PAGES 83 TO 85 WHEREIN BANK STATEMENT OF SARVODAYA CO-OP. BANK LTD. IN THE NAME OF M/S PAPPILLION EXPORTS LTD. A/C NO.4479 AS WELL AS BANK STATEMENT OF M/S HIRAL PHARMA LTD. ARE PLACED, WE O BSERVE THAT IN ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 11 JANUARY, 1997 A CHEQUE NO.133279 HAS BEEN ISSUED BY M/S PAPPILLION EXPORTS LTD. AND ON THE VERY SAME DAY TH IS AMOUNT HAS BEEN TRANSFERRED TO THE ACCOUNT OF ASSESSEE AND THE ENTRY OF THE SAME IS REFLECTED IN THE BANK STATEMENT OF ASSESSEE . THIS CLEARLY SHOWS THAT THERE WAS BANK TRANSACTION THROUGH CHEQU E NO.133279 FOR RS.60,85,000/- BETWEEN M/S PAPPILLION EXPORTS LTD. AND THE ASSESSEE. 13. FURTHER AS REGARDS NON-AVAILABILITY OF OTHER DE TAILS FROM SARVODAYA CO-OP. BANK LTD. DUE TO IT BEING IN LIQUI DATION WE FIND THAT RECORDS HAVE BEEN PLACED BY ASSESSEE SHOWING EXTRAC T OF FINANCIAL STATEMENT OF SARVODAYA CO-OP. BANK LTD. WHICH IS HA VING A SCHEDULE OF A/C WHEREIN NAME OF M/S PAPPILLION EXPORTS LTD. IS APPEARING WHICH SHOWS THAT M/S PAPPILLION EXPORTS LTD. WAS HAVING I TS BANKING TRANSACTIONS THROUGH SARVODAYA CO-OP. BANK LTD. 14. IN VIEW OF OUR ABOVE DISCUSSION WE ARE OF THE V IEW THAT THERE OCCURRED A BANK TRANSACTION BETWEEN THE ASSESSEE AN D M/S PAPPILLION EXPORTS LTD. AND ASSESSEE HAS DULY RECEI VED LOAN OF RS.60,85,000/- FROM M/S PAPPILLION EXPORTS LTD. THR OUGH BANK TRANSFER. THEREFORE, LD. CIT(A) HAS MADE NO ERROR I N DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. WE UPHOLD T HE ORDER OF LD. CIT(A). THE GROUND RAISED BY THE ASSESSING OFFICER IS DISMISSED. 15. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. ITA NO. 103/AHD/2012 ASST. YEAR 1997-98 12 16. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 2 /03/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION:15/02/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 24/02/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 2/3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: