Mascot Life Science Pvt.Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 1098/AHD/2012

• Counselvise Citation: 109820514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: MUKUND BAKSHI
• Keywords: Unexplained cash credit
• Section: 131; 68

Judgement Text

, , , , SMC, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, SMC BENCH . .. . . .. . , ! ! ! ! BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT ITA NO.1098/AHD/2012 [ASSTT.YEAR : 2007-2008] MASCOT LIFE SCIENCE P. LTD. 24-A, FIRST FLOOR, MADHUKUNJ SOCIETY VASANA ROAD, VADODARA 395 015. PAN : AAECM 6035 E /VS. THE ACIT, CIR.4 BARODA. ( (( (#$ #$ #$ #$ / APPELLANT) ( (( (%&#$ %&#$ %&#$ %&#$ / RESPONDENT) '() * + !/ ASSESSEE BY : SHRI MUKUND BAKSHI -. * + !/ REVENUE BY : SHRI D.K. MISHRA, SR.DR ./ * )01/ DATE OF HEARING : 19 TH DECEMBER, 2013 234 * )01/ DATE OF PRONOUNCEMENT : 03-02-2014 !5 / O R D E R THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, BAROD A DATED 07.02.2012. 2. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ACTION O F THE AO IN MAKING AN ADDITION OF RS.3,77,000/- IN RESPECT OF T HE FOLLOWING PARTIES TREATING THE SAME AS UNEXPLAINED CASH CREDI TS. A) SHRI VIKAS KHARE RS.1,77,000/- B) SHRI DEVENDRA NATH AGRAWAL RS.2,00,000/- ITA NO.1098/AHD/2012 THE IMPUGNED DISALLOWANCE BEING MADE IN COMPLETE DI SREGARD OF THE AVAILABLE MATERIAL EVIDENCES AND EXPLANATION IS PRAYED TO BE DELETED. 2. FURTHER TO THE ABOVE, THE LD.CIT(A) TRAVELED OUT SIDE THE SCOPE OF HIS JURISDICTION IN GIVING DIRECTIONS TO M AKE ADDITION IN RESPECT OF OPENING BALANCE IN THE CASE OF VIKAS KHA RE IN THE A.Y.2006-07. THE IMPUGNED DIRECTION BEING MADE IN COMPLETE DISREGARD OF THE AVAILABLE MATERIAL EVIDENCES AND E XPLANATION IS PRAYED TO BE DELETED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT REGARDING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT PERT AINING TO SHRI VIKAS KHARE OF ` 1,77,000, IT CONSISTS OF TWO ITEMS I.E. ` 70,000/- AND OPENING BALANCE OF ` 1,07,000/-. REGARDING ENTRY OF ` 70,000/-, HE SUBMITTED THAT THE MANAGEMENT HAS CHANGED AND NEW MANAGEMENT HAS T AKEN OVER THE ASSESSEE-COMPANY AND THE CREDITOR WAS NOT COOPERATI VE WITH THE ASSESSEE. HE SUBMITTED THAT THE AO SHOULD HAVE ISSUED SUMMONS UNDER SECTION 131 AND RECORDED HIS STATEMENT. REGARDING THE OTHER AD DITION OF ` 1,07,000/- OF SHRI VIKAS KHARE, HE SUBMITTED THAT THE SAME IS AN OPENING BALANCE FOR THE RELEVANT FINANCIAL YEAR 2006-07, AND THEREFORE, THE CIT(A) HAS PATENTLY ERRED IN ISSUING DIRECTION TO THE AO TO AD D THE ENTIRE OPENING BALANCE OF ` 1,07,000/- IN THE EARLIER ASSESSMENT YEAR 2006-07 W HICH WAS NOT UNDER APPEAL WITH HIM. THE LEARNED DR SUBMITT ED THAT THE ONUS WAS ON THE ASSESSEE TO ESTABLISH IDENTITY AND CREDIT-WO RTHINESS OF THE DEPOSITORS AND ALSO GENUINENESS OF THE TRANSACTION. HE SUBMITTED THAT SINCE NO EVIDENCE WAS FILED, THE ADDITION WAS RIGHT LY MADE BY THE AO. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. I HAVE CONSIDERED RIVAL SUBMISSIONS REGARDING TH E ISSUE OF ADDITION RELATING TO CREDIT ENTRY IN THE ACCOUNT OF SHRI VIK AS KHARE. I FIND THAT THE AMOUNT OF ` 1,07,000/- BEING THE OPENING BALANCE FOR THE RELEVA NT FINANCIAL YEAR 2006-2007 IN THE ACCOUNT BOOKS OF TH E ASSESSEE, IN THE ITA NO.1098/AHD/2012 NAME OF SHRI VIKAS KHARE, NO ADDITION COULD BE MADE FOR THE RELEVANT ASSESSMENT YEAR 2007-08. I FIND THAT IN EARLIER YE AR THE ISSUE WAS NOT BEFORE THE CIT(A), AND THEREFORE, THE DIRECTION OF THE CIT(A) TO ADD AFTER VERIFICATION OF THE ENTIRE OPENING BALANCE OF ` 1,07,000/- UNDER SECTION 68 IN THE EARLIER ASSESSMENT YEAR 2006-07, IS WITHOUT JURISDICTION. IT IS FOR THE AO TO TAKE APPROPRIATE ACTION AS PER LAW FOR TH E EARLIER OR SUCCEEDING YEARS AND APPELLATE AUTHORITY COULD NOT ISSUE DIREC TION TO ADD CERTAIN INCOME IN THE EARLIER YEAR, WHICH IS NOT SUBJECT MA TTER OF APPEAL BEFORE HIM. IN THIS VIEW OF THE MATTER, THE DIRECTION OF THE CIT(A) REGARDING THE AMOUNT OF ` 1,07,000/- ARE DELETED AND THE ISSUE OF ADDITION OF ` 1,07,000/- IS DECIDED IN FAVOUR OF THE ASSESSEE, AND THE GROUN D OF THE APPEAL OF THE ASSESSEE TO THAT EXTENT IS PARTLY ALLOWED. HOWEVER, I FIND THAT THE ASSESSEE COULD NOT DISCHA RGE ITS BASIC ONUS WITH REGARD TO OTHER AMOUNT OF ` 70,000/- IN THE ACCOUNT OF SHRI VIKAS KHARE AND THE GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED BY THE ASSESSEE. ACCORDINGLY, THE ADDITION OF ` 70,000/- OUT OF ` 1,77,000/- CONFIRMED BY THE CIT(A), IS SUSTAINED AND THE GROUN D OF APPEAL RELATING TO SHRI VIKAS KHARE IS ACCORDINGLY PARTLY ALLOWED. 4. OTHER ISSUE IS WITH REGARD TO THE ADDITION OF ` 2,00,000/- OF SHRI DEVENDRA NATH AGRAWAL, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE A SPECIFIC REQUEST TO IS SUE NOTICE UNDER SECTION 131 OF THE ACT, AS THE CREDITOR RELATES TO THE GROU P OF EARLIER MANAGEMENT, AND THE MANAGEMENT HAS CHANGED. HOWEVER, THE AO HA S NOT ISSUED SUMMONS UNDER SECTION 131 TO SHRI DEVENDRA NATH AGR AWAL AND NO FURTHER INQUIRY IS MADE. THE LEARNED DR ADMITTED T HAT NO NOTICE UNDER SECTION 131 IS ISSUED. HOWEVER, HE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE IDENTITY AND CREDIT-WORTHINESS OF THE DEPOSITOR AND ITA NO.1098/AHD/2012 GENUINENESS OF THE TRANSACTION, WHICH THE ASSESSEE HAS FAILED TO DISCHARGE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 5. I HAVE CONSIDERED RIVAL SUBMISSIONS REGARDING TH E ADDITION OF ` 2,00,000/- OF SHRI DEVENDRA NATH AGRAWAL. I FIND T HAT THE ASSESSEE HAS MADE A REQUEST FOR ISSUE OF SUMMONS UNDER SECTION 1 31 OF THE ACT AND THE SAME WERE NOT ISSUED BY THE AO. THE ASSESSEE HAS C LAIMED THAT SHRI DEVENDRA NATH AGRAWAL RELATES TO GROUP OF EARLIER M ANAGEMENT AND NOT RELATED TO THE PRESENT MANAGEMENT. I FIND THAT IN THE CIRCUMSTANCES FURTHER INQUIRY SHOULD HAVE BEEN MADE BY ISSUE OF C OMMISSION/NOTICE UNDER SECTION 131 OF THE ACT. NO SUCH EXERCISE WAS UNDERTAKEN BY THE AO. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE REGARDING THE ADDITION OF ` 2,00,000/- PERTAINING TO SHRI DEVENDRA NATH AGRAWAL TO THE FILE OF AO WITH DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING DUE OPPORTUNITY OF HEARING TO TH E ASSESSEE, AND SHOULD ALSO MAKE FURTHER INQUIRIES IN THE MATTER AND ISSUE SUMMONS UNDER SECTION 131 TO THE SAID CREDITOR. THE ASSESSEE SHA LL BE AT LIBERTY TO FILE ANY EVIDENCE IN SUPPORT OF ITS CASE BEFORE THE AO. I DI RECT ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- ( . .. . . .. . /G.C. GUPTA) /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD