The ITO, Ward-3(2)(3), Ahmedabad V. M/s. Maruti Foods Industries, Ahmedabad

ITA 1080/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6591 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.1080/AHD/2016 ( / ASSESSMENT YEAR : 2011-12) THE INCOME TAX OFFICER WARD-3(2)(3) AHMEDABAD / VS. MARUTI FOODS INDUSTRIES C/O. ASHITBHAI P.AMIN C-101, KUSHAN RESIDENCY, CIS HOSPITAL ROAD OPP. SAPTAK BUNGALOWS AHMEDABAD-380 063 ./ ./ PAN/GIR NO. : AAMFM 0366 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI |VINOD TANWANI, SR. DR / RESPONDENT BY : -NONE- / DATE OF HEARING 17/01/2019 !'# / DATE OF PRONOUNCEMENT 22/01/2019 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE REVENUE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-3, AHMEDABAD [CIT(A) IN SHORT] DATED 29/02/2016 PASSED FOR ASSESSMENT YEAR (AY) 2011-12. ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 2 - 2. THE REVENUE HAS TAKEN THREE GROUNDS OF APPEAL, B UT OUT OF THEM ONLY GROUND NO.1 IS THE SUBSTANTIAL GROUND WHEREIN REVENUE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.3,01,40,000/- WHICH WAS ADDED BY THE ASSESSING OFFICER (AO) WITH THE AID OF SECTION 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRE D TO AS 'THE ACT') ON ACCOUNT OF UNEXPLAINED CREDITS IN PARTNERS CAPITAL ACCOUNT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF RICE FROM PADDY. IT W AS FILED ITS E-RETURN ON 06/10/2011 DECLARING TOTAL INCOME AT RS.25,37,4 94/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE U/S.143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY, IT REVEALED TO THE ASSESSING OFFICER THAT THREE PARTNERS HAVE RAISED C APITAL OF RS.3,01,40,000/- IN THEIR CAPITAL ACCOUNTS. THE DE TAILS ARE AS UNDER: SL.NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. SHRI ASHIT P. AMIN 87,50,000/- 2. SHRI NILESH P.AMIN 1,06,90,000/- 3. SHRI PRAVINBHAI G.AMIN 1,07,00,000/- 3. THE LD.AO HAS DIRECTED THE ASSESSEE TO EXPLAIN THE TRANSACTION AND SOURCE OF THE AMOUNT IN CREDITS. THE ASSESSEE HAS SUBMITTED CONFIRMATION FROM THE PARTNERS, THEIR PANS AND OTHER DETAILS FRO M WHERE THIS AMOUNT HAS COME TO THE ASSESSEE. THE LD.AO WAS NOT SATISF IED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND HE ADDED THE ABOVE AMOUNTS ON ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 3 - PROTECTIVE BASIS. THE LD.AO HAS OBSERVED THAT SUBS TANTIVE ADDITIONS WILL BE MADE IN THE HANDS OF THE PARTNERS. 4. DISSATISFIED WITH THE FINDING, THE ASSESSEE CARR IED THE MATTER BEFORE THE CIT(A). THE LD.FIRST APPELLATE AUTHORITY HAS D ELETED THE ADDITION BY OBSERVING AS UNDER: 7.2. DECISION : I HAVE EXAMINED THE FACTS CONTAINED IN ASSESSME NT ORDER AND SUBMISSION BY THE APPELLANT THROUGH STATE MENT OF FACTS ON RECORD. THE ONUS HAS BEEN DISCHARGED BY THE APPELL ANT. THE CONFIRMATIONS HAVE BEEN FILED GIVING PAN NO. OF THE CREDITORS. THE CREDITWORTHINESS OF THE CREDITOR(S) CANNOT BE DECID ED BY THE AO OF THE APPELLANT. IN FACT, THE AO OF APPELLANT CAN GET T HE MATTER INVESTIGATED THROUGH THE AO OF THE CREDITORS. THE AO OF APPEL LANT CANNOT BECOME AO OF THE CREDITORS. EXPLANATION ABOUT SOURCE OF SOURCE OR ORIGINS OF ORIGIN CANNOT BE ASKED FROM THE APPELLANT WHILE MAKING INQUIRY UNDER SECTION 68. IT IS NOT THE CASE OF AO THAT TH E IMPUGNED AMOUNT IS APPELLANTS OWN MONEY GENERATED OUT OF BOOKS OF ACC OUNT AND THE SAME IS BROUGHT IN THROUGH BOGUS CREDITOR. THE AO HAS T O PLACE ON RECORD THE EVIDENCES SO COLLECTED. RELIANCE IS PLACED ON THE RATIO LAID DOWN IN THE CASE OF DCIT V. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ.): MERE IDENTIFICATION OF THE SOURCE OF THE CREDITORS EVEN WITHOUT EVIDENCE AS TO THE NATURE OF THE INCOME COULD JUSTI FY ACCEPTANCE, WHERE THE ASSESSEE HAS GIVEN THE GIR NUMBER / PAN O F THE CREDITOR AND ALSO SHOWS THAT THE AMOUNTS WERE RECEI VED BY ACCOUNT PAYEE CHEQUES. IT WAS FURTHER HELD THAT IT IS NOT NECESSARY, THAT THERE SHOULD BE AN EXPLANATION AS T O THE SOURCE OF THE MONEY ON THE PART OF THE CREDITORS IN EVERY CAS E. RELIANCE IS ALSO PLACED ON ANOTHER CASE I.E. CIT VS . DHARAMDEV FINANCE PVT.LTD. 43 TAXMANN.395 (GUJ.) WHEREIN IT IS HELD, ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 4 - NO ADDITION ON ACCOUNT OF CASH CREDITS COULD BE MA DE, WHERE ASSESSEE HAD GIVEN PAN OF CREDITORS, THEIR CONFIRMA TIONS AND THEIR BANK STATEMENTS WHICH ESTABLISHED THEIR CREDI TABILITY THE APPELLANT HAS DISCHARGED ITS ONUS BY SUBMITTING PARTICULARS INCLUDING NAMES/PAN/COPY OF RETURN OF INCOME ETC. I HAVE GONE THROUGH VARIOUS JUDGMENTS ON THIS ISSUE. I AM OF T HE FIRM VIEW THAT ADDITION IN APPELLANTS CASE CANNOT BE SUSTAINED. CREDITS ARE IN THE MOUNT OF PARTNERS FROM FARMERS AND IF THAT IS DECID ED TO BE UNEXPLAINED THEN PARTNERS ACCOUNT IS UNEXPLAINED WHEREIN ADDIT ION CAN BE MADE. APPELLANT IS SEPARATE ASSESSEE HAS TO BE KEPT IN MI ND. IN VIEW OF FACTS OF THE CASE AND THE RATIO LAID DOW N BY HONBLE GUJARAT HIGH COURT IN THE CASES (SUPRA), THE ADDITION MADE BY THE AO OF RS.3,01,40,000/- U/S.68 OF THE I.T. ACT, 1961 IS HE REBY DELETED. THE GROUND NO.3 IS ALLOWED. 5. THIS APPEAL WAS EARLIER HEARD ON 14/02/2018. HO WEVER, IT WAS REFIXED FOR CLARIFICATION AND THE BENCH HAS OBSERVE D THAT STATUS OF SUBSTANTIAL ADDITION, WHETHER MADE IN THE HANDS OF PARTNERS OR NOT IS NOT AVAILABLE ON THE RECORD, THEREFORE IT WAS REFIXED F OR HEARING. 6. THE LD.DR BEFORE US SUBMITTED THAT NO SUBSTANTIA L ADDITION HAS BEEN MADE AS INFORMED BY THE INCOME TAX OFFICER. NO SCRUTINY ASSESSMENT HAS BEEN MADE IN THE HANDS OF THREE PART NERS. THUS, THERE IS NO SUBSTANTIVE ADDITION. ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 5 - 7. IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS PRESENT ON BEHALF OF THE ASSESSEE. WITH THE ASSISTANCE OF LD.DR, WE HAV E GONE THROUGH THE RECORD CAREFULLY. SINCE ADDITION IN THE PRESENT CA SE WAS MADE ON PROTECTIVE BASIS AND ON SUBSTANTIVE BASIS, IT WAS R EQUIRED TO BE MADE IN THE HAND OF PARTNERS BUT AS INFORMED BY THE LD.SR.D R ON THE BASIS OF THE LETTER OF ITO, WARD-3(2)(3), AHMEDABAD DATED 29/06/ 2018, NO ADDITION ON SUBSTANTIVE BASIS WAS MADE IN THE HANDS OF PARTN ERS. THEREFORE, THE PROTECTIVE BASIS IS NOT SUSTAINABLE. THE SAID LETT ER OF ITO READS AS UNDER: OFFICE OF THE INCOME TAX OFFICER WARD 3(2)(3) OM NO A/503, 5 FLOOR,PRATYAKSHKAR BHAVAN, PANJRAPO LE, AMBAWADI, AHMEDABAD-380015 TELEPHONE: [phone] DATE: 29/06/2018 NO. ITO/WD-3(2)(3)/ITAT-REPORTS/2018-19 TO, OFFICE OF THE SENIOR DEPARTMENTAL REPRESENTATIVE D BENCH, (ITAT)-4(1), 2 ND FLOOR, NEPTUNE TOWERS, NR. NEHRU BRIDGE ASHRAM ROAD, AHMEDABAD-380009 SIR, SUB: - CALLING FOR WRITTEN SUBMISSION IN TH E CASE OF M/S MARUTI FOOD INDUSTRIES, ITA NO. 1080/AND/2016 F OR A.Y. 2011-12-REG:- REF: - YOUR OFFICE LETTER NO.SR.DR/ITA T-4(L)/MARUTI/'D' BENCH/2018-19 DATED 04/06/2018-19 ------ PLEASE REFER TO THE ABOVE - 2. THE ASSESSMENT PROCEEDINGS IN THE CASE OF M/S MARUTI FOODS INDUSTRIES WAS COMPLETED 21/03/2014. AN ADDITION OF RS. 3,01,40,00 0/- WAS MADE IN THE CASE OF M/S ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 6 - MARUTI FOODS INDUSTRIES ON ACCOUNT OF UNEXPLAINED CREDITS IN PARTNER'S CAPITAL ACCOUNTS ALONG WITH OTHER ADDITIONS. THIS ADDITION WAS MADE ON PROTECTIVE BASIS. NOW AS PER YOUR ABOVE REFERRED LETTER MI KIND OFFICE DESIRES TO KNOW THE STATUS OF ADDITIONS IN THE HAND OF PARTNERS. THE CAPITAL WAS INTRODUCED BY FOLLOWING PARTNERS AS FOLLOWS- 1. SHRI ASIT P.AMIN RS. 87,50,000/- 2. SHRI NILESH P. AMIN RS. 1,06, 90,000/- 3. SHRI PRAVINBHAI G. AMIN RS. 1,07,00,0 00/- FROM THE VERIFICATION OF RECORDS IT WAS FOUND THAT SHRI ASIT P AMIN IS ASSESSED WITH INCOME TAX OFFICER WARD- 3(2)(1) AHMEDABAD. IN FORMATION WAS CALLED FOR FROM HIM VIDE LETTER DATED 12/06/2018 REGARDING THE ADDITION OF ABOVE CAPITAL INTRODUCED BY SHRI ASIT P AMIN IN MARUTI FOODS INDUSTRIES ON THE SUBST ANTIVE BASIS IN THE CASE OF ASIT P AMIN. INCOME TAX OFFICER WARD- 3(2)(1) AHMEDABAD VI DE LETTER DATED 18/06/2018 HAS INFORMED THIS OFFICE THAT THERE IS NO SCRUTINY ASSE SSMENT PASSED IN THE CASE OF SHRI ASIT P AMIN FOR A.Y. 2011-12. SIMILARLY NO SCRUTINY ASSESSMENT WAS PASSED FOR A.Y . 2011-12 IN THE CASE OF SHRI PRAVINBHAI G AMIN AS INFORMED BY ITO WARD-3(2)(4) A HMEDABAD. SHRI NILESH P AMIN IS ASSESSED WITH THIS OFFICE AND FROM THE VERIFICATION OF 1TD AND CASE RECORDS AVAILABLE WITH THIS OFFICE, IT WAS NOTICED THAT THERE IS NO SCRUTINY ASSESSMENT PASSED FOR A.Y. 2011-12 IN HIS CASE. THEREFORE, IT IS SUBMITTED THAT NO SUBSTANTIVE ADDI TION IN THE CASE OF PARTNERS WERE MADE FOR A.Y. 2011-12. TANKING YOU YOURS FAITHFULLY SD/- SANJAY KUMAR YADAV INCOME -TAX OFFICER WARD 3(2)(3) AHMEDABAD COPY FOR INFORMATION ADDL.CIT RANGE 3(2) AHMEDABAD. INCOME -TAX OFFICER WARD 3(2)(3) AHMEDABAD ITA NO.1080 /AH D/2016 ITO VS. MARUTI FOODS INDUSTRIES ASST.YEAR 2011-12 - 7 - 7.1. THE LD.CIT(A) HAS RIGHTLY DELETED THIS ADDITI ON. WE DO NOT FIND ANY MERIT IN THIS REVENUES APPEAL. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 22 ND JANUARY-2019 AT AHMEDABAD. SD/- SD/- ( WASEEM AHMED ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 01 /2019 &.., .(../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-3, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 19.1.2019(DICTATION-PAD 9- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..19.1.2019 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.22.1.2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.1.2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER