The ITO, Ward-5(4), Surat V. M/s. Ronak Motors, Surat

ITA 1083/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85577 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Unexplained cash credit; Source of fund
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NO. 1083/AHD/2011 (ASSESSMENT YEAR: 2006-07) INCOME-TAX OFFICER, WARD-5(4), ROOM NO.316, AAYAKAR BHAVAN, MAJURA GATE, SURAT. APPELLANT VS. M/S. RONAK MOTORS, DEVDARASHAN COMPLEX, OPP. DADA BAGWAN MANDIR, N.H.NO.8, KAMREJ, SURAT RESPONDENT PAN: AAHFR3900K / BY REVENUE :SHRI V. K. SINGH, SR. D.R. / BY ASSESSEE : SHRI HARDIK VORA, A.R. /DATE OF HEARING :12.01.2015 !' /DATE OF PRONOUNCEMENT :29.01.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, SURAT, DAT ED 21.12.2010 FOR A.Y. 2006-07 ON THE FOLLOWING GROUND S: I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 2 [1]. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A), SURAT HAS ERRED IN DELETING THE ADDITION OF RS.18,90,653/- MADE ON ACCOUNT OF UNEXPLAINED CREDIT U/S.68. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A), SURAT HAS ERRED IN DELETING THE ADDITION OF RS.1,14,777/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD T HE ORDER OF THE ASSESSING OFFICER. 2. THE MAIN COMPONENT OF ADDITION IS RS.13,08,000/- AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT. ASSES SING OFFICER WHILE MAKING ADDITION MENTIONED THAT ASSESSEE DID N OT FURNISH ANY INFORMATION REGARDING THE FOLLOWING UNSECURED L OANS: I) SHRI HIRENKUMAR S. SHAH RS.1,00,000/- II) RONAK MOTOR RE-POWERING RS.9,08,000/- III) SHRI CHANDRESHKUMAR B. SHAH RS.3,00,000/- ASSESSING OFFICER STATED THAT IN COMPLIANCE TO SHOW CAUSE NOTICE WAS MADE, NO INFORMATION ON CONFIRMATION RE GARDING THESE LOAN ACCOUNTS WERE FURNISHED. HE, THEREFORE, CONSIDERED THAT UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT ADDE D TO THE INCOME OF ASSESSEE. 2.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED, WHO AFTER CALLING FOR REMAND REPORT CIT(A) HAS GRANTED RELIEF TO ASSESSEE . SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE. ON OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A). I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 3 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT IN APPEAL, CIT(A) OBSERVED THA T ASSESSMENT ORDER WAS PASSED IN HURRY AND WITHOUT DUE CONSIDERA TION OF FACTS WHICH IS EVIDENT FROM THE ADDITION OF RS. 1 L AC IN CASE OF HIRENKUMAR SHAH, WHEN THE PERSON IS CLAIMED TO HAVE GIVEN LOAN OF RS.50,000/- ONLY. REGARDING ADDITION ON AC COUNT OF LOAN FROM RONAK MOTOR RE-POWERING RS.9,08,000/- WAS DELETED IN VIEW OF REMAND REPORT. AS REGARDS C.B. SHAH, AS SESSING OFFICER HAS ACCEPTED CREDITWORTHINESS OF CREDITOR. CONFIRMATIONS HAVE BEEN PROVIDED AS ALSO HIS INCOME -TAX ACKNOWLEDGMENT. THERE IS NOTHING ADVERSE ON RECORD BY ASSESSING OFFICER TO SUGGEST THAT TRANSACTION WAS N OT GENUINE. THEREFORE THIS ADDITION OF C.B. SHAH WAS ALSO DELET ED BY CIT(A). AS REGARDS HIRENKUMAR S. SHAH IS CONCERNED THOUGH CONFIRMATION HAS BEEN GIVEN AND PAN MENTIONED, THE CONFIRMATION ITSELF DOES NOT INSPIRE CONFIDENCE. PA N ON CONFIRMATION IS MENTIONED AS APPLIED, THEN ONE PAN HAS BEEN WRITTEN AND SCRATCHED OUT AND ANOTHER PAN WRITTEN. THE TRANSACTION OF LOAN IS PROCEEDED BY DEPOSIT OF CASH AND THE SOURCE OF SAID CASH HAS NOT BEEN EXPLAINED. THIS TRANSACTION OF LOAN DOES NOT SEEM TO BE JUSTIFIED. UNDER THE F ACTS AND CIRCUMSTANCES, CASH CREDIT IN THE NAME OF HIRENKUMA R S. SHAH WAS HELD TO BE UNEXPLAINED. HOWEVER, ASSESSING OFFI CER HAS BY MISTAKE CONSIDERED THIS AMOUNT TO BE RS.1,00,000/- WHEN IT WAS ONLY RS.50,000/- AND ALONG WITH INTEREST THE TO TAL OUTSTANDING AGAINST HIS NAME IS RS.54,981/-. THEREF ORE, ADDITION WAS CONFIRMED TO THE EXTENT OF RS.54,981/- . ASSESSEE I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 4 GOT RELIEF OF RS.12,53,019/- FOR ABOVE CASH CREDIT. THIS REASONED FINDING OF CIT(A) WHEREBY HE HAS GRANTED R ELIEF TO ASSESSEE AFTER CONSIDERING REMAND REPORT NEED NO IN TERFERENCE FROM OUR SIDE, WE UPHOLD THE SAME. 3. NEXT ADDITION OF RS.2,94,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. WHILE MAKING THE SAID ADDITION ASSESSING OFFICER HAS MENTIONED AS UNDER: FURTHER, AS PER SHOW CAUSE THAT THE LOAN AMOUNT OF RS.1,50,000/- THROUGH CHEQUES FROM BHARATBHAI K. SH A (HUF) WHO HAS DEPOSITED AND AN AMOUNT OF RS.98,000/ - ON 28.03.2006 AND CHEQUE GIVEN AND THE SAME WAY SHRI SHAILESH A. SAVAN HAS GIVE A LOAN AMOUNT OF RS. 2,0 0,000/- BY DEPOSITED CASH FOR RS.1,96,000/- ON VARIOUS DATE S IN HIS ACCOUNTS AND ISSUED CHEQUE. THE ASSESSEE HAS NOT GIVEN REPLY TO THE SHOW CAUSE NOTICE. HENCE, THE AMOUNT O F RS.98,000/-.AND RS.1,96,000/- (TOTAL RS.294000) ARE ALSO TREATED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE IT ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE IT ACT IS INITIA TED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME AND BY CALLING REMAN D REPORT, CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. SAME HA S BEEN OPPOSED ON BEHALF OF REVENUE. ON OTHER HAND, LEARN ED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A). 3.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT CIT(A) IN APPEAL OBSERVED THAT EVIDENCES HAVE BEEN PROVIDED TO ASSESSING OFFICER DURING ASSE SSMENT PROCEEDING WHO INSTEAD OF CARRYING FURTHER INVESTIG ATION INTO I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 5 THE SOURCE OF FUNDS WITH THE LENDERS, ISSUED SHOW C AUSE ON THE BASIS OF DOUBTS AND SUSPICION. EVEN DURING COURSE O F REMAND PROCEEDINGS, ASSESSING OFFICER DID NO INVESTIGATION S, WHICH IS NOT JUSTIFIED. BOTH THE LENDERS ARE INCOME TAX ASS ESSEE AND CONFIRMATIONS WERE GIVEN. SOURCE OF FUNDS WITH CRE DITORS WERE ALSO PROVIDED TO ASSESSING OFFICER. ASSESSING OFF ICER INSTEAD OF TAKING ACTION, MADE ADDITION FOR THE REASON THAT CA SH WAS DEPOSITED BEFORE THE LOAN TRANSACTIONS. THE DEPOSIT OF CASH PROCEEDING TRANSACTIONS CAN GIVE RISE TO DOUBT AND BE A STARTING POINT FOR INVESTIGATION BUT CANNOT BE THE BASIS OF CONCLUSION DISREGARDING OTHER EVIDENCES. NOTHING AD VERSE HAS BEEN BROUGHT ON RECORD BY ASSESSING OFFICER WITH RE GARD TO EVIDENCE PRODUCED BY ASSESSEE ON THIS POINT. IN AN Y MANNER, SINCE CREDITORS WERE ASSESSED TO TAX, CONFIRMATION WERE FILED, TDS DEDUCTED ON INTEREST CREDIT AND LOAN WERE REFLE CTING IN THEIR ACCOUNTS, NO ADDITION COULD BE MADE IN THE HA NDS OF ASSESSEE U/S. 68. ACCORDINGLY, CIT(A) JUSTIFIED IN DELETING ADDITION OF RS.2,94,000/- TO THE INCOME OF ASSESSEE . SAME IS UPHELD. 3.3 COMING TO THE DISALLOWANCE OF INTEREST OF RS.1, 14,777/-. AS PER ASSESSING OFFICER, ASSESSEE HAD DEBITED INTE REST EXPENSES WHICH WAS PROVIDED AT 12% BUT HAD NOT CHAR GED INTEREST ON LOAN GIVEN TO M/S. ROYAL AGENCIES, GOET ZE INDIA LTD., PERFECT CIRCLES LTD., SHRIRAM AUTOMOTIVE P.LT D. AND SHRIRAM I'ISTON & RING P. LTD. HE THEREFORE DISALLO WED INTEREST TO THE EXTENT IT COULD BE RELATED TO THE AMOUNTS OU TSTANDING IN I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 6 THE NAMES OF THESE PERSONS CALCULATING INTEREST TO BE DISALLOWED @ 12%. 3.3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CALLED FOR REMAND REPORT AND CO NSIDERING THE SAME CIT(A) OBSERVED THAT EVIDENCE SHOWS THAT I NTEREST HAD BEEN CHARGED BY ASSESSEE ON ADVANCES GIVEN TO M/S. ROYAL AGENCIES AND FACT THAT ADVANCES TO OTHER CONCERNS W ERE BUSINESS ADVANCES, DISALLOWANCE OF INTEREST WAS NOT WARRANTED. ACCORDINGLY, SAME WAS RIGHTLY DELETED. WE UPHOLD T HE SAME. 4. NEXT ADDITION IS WITH REGARDS TO ADDITION OF RS. 3,43,634/- AS UNEXPLAINED INCOME ON THE BASIS OF INTEREST NON RECEIPT OF REPLY FROM PARTIES U/S. 133(6) OF THE ACT. IT WAS EXPLAINED BY ASSESSEE THAT THESE WERE REGULAR BUSINESS PARTIES. WHILE MAKING THE ADDITION, ASSESSING OFFICER MENTIONED TH AT NOTICES WERE ISSUED U/S. 133(6) OF THE ACT BUT EITHER THEY COULD NOT BE SERVED OR NO REPLY WAS RECEIVED IN FOLLOWING CASES :- 1. VICTOR CASKET 2. HARESH MOTORS 3. SHRI RAM AUTOMOTIVE 4. SUROD ENGINEERING 5. PUTCHRAJ AUTO SERVICES HE THEREFORE TREATED THE OUTSTANDING BALANCES AS UN EXPLAINED AND ADDED THEM TO THE INCOME OF ASSESSEE. 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE INTER ALIA STATED THAT ASSESSEE HAD REGULAR BUSINES S DEALINGS I.T.A. NO. 1083/AHD/2011 FOR A.Y. 06-07 (ITO VS. M/S. RONAK MOTORS) PAGE 7 WITH THESE PERSONS. ASSESSEE SUBMITTED LEDGER COPI ES IN HIS BOOKS AS ALSO CONFIRMATIONS FROM THE SAID PARTIES T O ESTABLISH THAT TRANSACTIONS AND OUTSTANDING BALANCES WERE GEN UINE. SAME WERE FORWARDED TO ASSESSING OFFICER FOR HIS CO MMENTS AFTER VERIFICATION OF GENUINENESS. IT WAS STATED BY ASSESSING OFFICER IN REMAND REPORT THAT CONTENTIONS PUT FOR B Y AUTHORIZED REPRESENTATIVE IS CORRECT AND MATTER BE DECIDED ON MERITS. IN VIEW OF COMMENTS OF ASSESSING OFFICER AND FACT THAT NECESSARY CONFIRMATIONS WERE SUBMITTED ON BEHALF OF ASSESSEE, WHICH WAS IN CONFORMITY WITH THE OUTSTANDING BALANCES IN THE BOOKS. CIT(A) WAS JUSTIFIED IN DELETING ADDITION. WE UPHO LD THE SAME. 5. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF JANUARY, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;