The ITO, Ward-8(3), Ahmedabad V. Shree Shakti Cotton Pvt. Ltd., Ahmedabad

ITA 104/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9089 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 10-01-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J M TRIVEDI
• Keywords: Unexplained investment; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 03/09/09 DRAFTED ON: 08 /09/09 ITA NO.104/AHD/2006 ASSESSMENT YEAR : 2002-03 THE ITO WARD-8(3) AHMEDABAD VS. SHREE SHAKTI COTTON PVT.LTD. B.NO.132, VILLAGE : SOKLI TAL: VIRAMGAM AHMEDABAD PAN/GIR NO. : AACCS 0932 P (APPELLANT) .. (RESPONDENT) AND CO NO.45/AHD/2006 ( OUT OF ITA NO.104/AHD/2006 ) SHREE SHAKTI COTTON PVT.LTD. VS. THE ITO, WARD- 8(3) AHMEDABAD AHMEDABAD (CROSS OBJECTOR) (RESPO NDENT) ASSESSEE BY : SHRI J.M. TRIVEDI, CA REVENUE BY : SHRI MAHESHKUMAR SR.DR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-XIV, AHMEDABAD DATED 17/10/2005 PASSED FOR ASSESSMENT YEAR 2002-03. THE ASSESSEE HAS FILED CROSS OBJECTIONS. THE GROUNDS RAISED BY THE RESPECTIVE PARTIES ARE AS UNDER:- (A) IN REVENUES APPEAL, ITA NO.104/AHD/2006 FOR A .Y. 2002-03 ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 2 - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO DELETE THE DISALLOWANCE/ADDITIONS PERTAINING TO SUPPRESSION OF GROSS PROFIT AND UNEXPLAINED INVESTMENT OF RS.10,74 ,052/- AND RS.21,87,262/- RESPECTIVELY. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, 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 LD.CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED TO THE ABOVE EXTENT. (B) IN ASSESSEES CROSS OBJECTION NO.45/AHD/2006 F OR A.Y. 2002-03 1. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING - A) DISALLOWANCE OF RS.50,000/- OUT OF KHARAJ AT AND OTHER EXP. B) OUT OF ELECTRIC EXP. RS.77,664/-. 2. THAT THE LEARNED CIT(A) ERRED IN TREATING CHARG ING INT. U/S.234B AS CONSEQUENTIAL AS AGAINST THE DENIAL OF LIABILITY U/S.234B MADE BY CROSS OBJECTOR. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY A CTION U/S.133A OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 31/01/2002 AT TH E BUSINESS PREMISES OF M/S.JALARAM INDUSTRIES. IN THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE-FIRM WAS ENGAGED IN THE PURCHASE OF KAPAS, COTTON SEEDS AND SALES OF COTTON AND COTTON SEEDS, COTTON SEED OIL, CATTLE FEED. ETC. DURING THE COURSE OF SURVEY, STATEMENT OF SHRI THAK ERSHIBHAI VADILAL ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 3 - THAKKAR WAS RECORDED. IN RESPONSE TO QUESTION NO.2 , IT WAS STATED BY HIM THAT REGISTER X-54 BELONGED TO M/S.SHRI SHAKTI COT TON PVT.LTD. ON THE BASIS OF STATEMENT OF SHRI THAKARSHIBHAI VADILAL T HAKKAR, THE ASSESSING OFFICER TRANSFERRED THE REGISTER MARKED AS X-54 TO THE ASSESSING OFFICER OF M/S.SHRI SHAKTI COTTON PVT.LTD. THE ASSESSING OFFI CER WORKED OUT A FIGURE OF UNACCOUNTED PURCHASES AND SALES TO THE EX TENT OF RS.32,62,314/-. IT WAS SUBMITTED THAT ADDITION ON THE BASIS OF THI RD PARTY EVIDENCE CANNOT BE MADE IN THE HANDS OF THE ASSESSEE WITHOUT CONFR ONTING TO THE ASSESSEE THE PERSON WHO HAS DEPOSED AGAINST HIM. HOWEVER, T HE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE CONTENTION AND PROCEEDED T O MAKE ASSESSMENT. ON THE BASIS OF REGISTER X-54, THE ASSESSING OFFICE R WORKED OUT FOR THE ASSESSMENT YEAR 2002-03 INVESTMENT IN THE FORM OF PURCHASES AT RS.1,63,28,918/- AND GROSS PROFIT THEREON AT 5.76% AMOUNTING TO RS.10,74,052/-. IN ADDITION, HE ALSO WORKED OUT TOTAL PURCHASES OF VARIOUS COMMODITIES AT RS.1,86,46,737/- ON WHICH HE WORKED OUT UNDISCLOSED INVESTMENT AT RS.21,81,262/-. THUS, H E MADE ADDITION IN RESPECT OF UNDISCLOSED INVESTMENT AND GROSS PROFIT AS ABOVE. ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 4 - 4. THE LEARNED CIT(APPEALS) DELETED BOTH THE ADDITI ON ON THE BASIS OF ORDER OF THE LEARNED CIT(APPEALS) FOR ASSESSMENT Y EAR 2001-02, WHEREIN ALSO SIMILAR ADDITIONS SO PROPOSED WERE DETELED. 5. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE DEPARTMENT MOVED TO THE TRIBUNAL AGAINST THE ORDER OF THE LEARNED CIT(APPEALS) FOR ASSESSMENT YEAR 2001 -02 THE ITAT AHMEDABAD BENCH A FOR THAT ASSESSMENT YEAR 2001-0 2 (IN ITA NO.528/AHD/2005) IN ASSESSEES OWN CASE VIDE ITS OR DER DATED 30/01/2009 UPHELD THE ORDER OF THE LEARNED CIT(APPEALS). 6. ON THE OTHER HAND, THE LD.DR HAS RELIED ON THE O RDER OF THE ASSESSING OFFICER. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE TR IBUNAL AS REFERRED TO ABOVE (IN ASSESSEES OWN CASE). THE TRIBUNAL HAD O BSERVED, VIDE PARAGRAPH NO.5, AS UNDER:- 5.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. ACCORDING TO THE A.O, A SURVEY WAS CONDUCTED IN THE BUSINESS PRE MISES OF M/S. JALARAM INDUSTRIES, WHEREIN AMONGST OTHERS TWO BOOK S MARKED AS ANNEXURE X-54 AND X-58 WERE FOUND. SHRI THAKERSIBHA I, PARTNER OF ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 5 - M/S. JALARAM INDUSTRIES, IN HIS STATEMENT MADE DURI NG THE COURSE OF SURVEY STATED THAT THESE BOOKS BELONGED TO ASSESSEE I.E., THE ASSESSEE IN THE PRESENT CASE. ON THE BASIS OF THE STATEMENT, TH E A.O HAS TAKEN THE SAID BOOKS AS BELONGING TO THE ASSESSEE AND, THEREB Y, DETERMINED THE UNDISCLOSED INVESTMENT OF RS.13,82,305/- MADE BY TH E ASSESSEE IN PURCHASE OF COTTON AND SUPPRESSED PROFIT EARNED ON UNDISCLOSED SALES AMOUNTING TO RS.9,83,996/- AND ADDED BOTH TO THE IN COME OF THE ASSESSEE. THE LD. CIT(A), ON APPEAL BY THE ASSESSEE , OBSERVED THAT THERE WAS NO MATERIAL APART FROM THE STATEMENT OF A THIRD PERSON NAMED SHRI THAKERSIBHAI, TO SHOW THAT THE BOOKS MARKED AS ANNEXURE X-54 BELONGED TO THE ASSESSEE COMPANY. AS NO OPPORTUNITY TO CROSS EXAMINE SHRI THAKERSIBHAI WAS ALLOWED TO THE ASSESSEE, HIS STATEMENT CANNOT BE READ AGAINST THE ASSESSEE AS AN EVIDENCE. THEREFORE , IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE REVENUE TO SH OW THAT THE BOOK MARKED ANNEXURE X-54 BELONGED TO THE ASSESSEE, THE LD. CIT(A) HELD THAT ADDITION ON THE BASIS OF THESE BOOKS CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AND, THEREFORE, DELETED THE ADDITIO N OF RS.9,83,996/- AND RS.13,82,305/-. WE FIND THAT THE ASSESSEE HAS DENIE D THE OWNERSHIP OF THE BOOKS MARKED AS ANNEXURE X-54 AND X-58 BEFORE T HE A.O ALSO. THE A.O HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY STATEMENT OF THE SEL LERS OF KAPAS, ETC., TO SHOW THAT THE BOOKS DID NOT BELONGED TO THE ASSESSE E. THE A.O ALSO OBSERVED THAT NO OTHER PERSON HAS COME FORWARD FOR CLAIMING AS THE SAID BOOKS AS BELONGING TO HIM AND, THEREFORE, HE R EJECTED THE SUBMISSIONS OF THE ASSESSEE. IN OUR CONSIDERED VIEW , THE ABOVE APPROACH OF THE A.O CANNOT BE ACCEPTED. WHEN IT WAS THE CASE OF THE REVENUE THAT THE SAID BOOKS BELONGED TO THE ASSESSE E, THE ONUS WAS ON ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 6 - THE REVENUE TO BRING RELEVANT MATERIAL IN THIS REGA RD ON RECORD. WE FULLY AGREE WITH THE FINDING OF THE LD. CIT(A) THAT A STATEMENT MADE BY A THIRD PARTY BEHIND THE BACK OF THE ASSESSEE CANNO T BE READ AGAINST THE ASSESSEE AS AN EVIDENCE UNLESS THE ASSESSEE IS ALLO WED AN OPPORTUNITY TO CROSS EXAMINE THE MAKER OF THE STATEMENT. IT COU LD NOT BE APPRECIATED HOW THE A.O FOUND THAT THE STATEMENT OF SHRI THAKERSIBHAI WAS SACROSANCT AND HOW AND WHY THE STATEMENT MADE B Y THE ASSESSEE IS UNRELIABLE OR UNACCEPTABLE. THE MERE REASON FOR ACC EPTING THE STATEMENT OF SHRI THAKERSIBHAI, THE PARTNER OF M/S. JALARAM INDUSTRIES WAS THAT THE ASSESSEE COMPANY HAD A BUSINESS RELATI ONS WITH M/S. JALARAM INDUSTRIES AND BROTHER OF ONE OF THE DIRECT ORS OF THE ASSESSEE COMPANY WAS A PARTNER IN M/S. JALARAM INDUSTRIES AN D FURTHER THE NATURE OF THE BUSINESS OF THE ASSESSEE COMPANY WAS OF THE SAME WHICH WAS CONTAINED IN THE ENTRIES MADE IN THE SAID BOOKS . IN OUR CONSIDERED OPINION, FROM THE ABOVE FACT, IT CANNOT BE CONCLUDE D THAT THE SAID BOOKS FOUND IN THE PREMISES OF A THIRD PARTY ACTUALLY BEL ONGED TO THE ASSESSEE. THE REVENUE HAS BROUGHT NO MATERIAL BEFORE US TO SH OW THAT THE SAID BOOKS ACTUALLY BELONGED TO THE ASSESSEE. IN THE ABS ENCE OF ANY SUCH MATERIAL, IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITIONS OF RS.9,83,996/- AND RS.1 3,82,305/- WHICH WERE MADE SOLELY ON THE BASIS OF THE SAID BOOKS WHE N THE ASSESSEE COMPANY HAS CATEGORICALLY DENIED AS BELONGING TO IT . WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) AND REJECT THE APPEAL OF THE REVENUE. ITA NO.104/AHD/2006 & CO NO.45/AHD/2006 (BY ASSESSEE) ITO VS. SHREE SHAKTI COTTON PVT.LTD. ASST.YEAR 2002-03 - 7 - 8. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE UPHOLD THE ORDER OF THE LEARNED CIT(APPEALS) AND DI SMISS THE APPEAL FILED BY THE REVENUE. 9. THE CROSS OBJECTION FILED BY THE ASSESSEE IS NOT PRESSED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE A ND, HENCE, THE SAME IS DISMISSED. 10. AS A RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D. C.AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11 / 09 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS) -XIV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD