The ITO, Ward-5(1), Ahmedabad V. M/s. Navratna Organisers & Developers Pvt. Ltd., Ahmedabad

ITA 1114/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9100 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-06-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 11-04-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 133(6); 131; 68

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 : 01/09/09 DRAFTED ON: 07 /09/09 ITA NO.1114/AHD/2005 ASSESSMENT YEAR : 1997-98 THE ITO WARD-5(1) AHMEDABAD VS. M/S.NAVRATNA ORGANISERS & DEVELOPMENTS P LTD. BASEMENT ASHOKWADI APT PANCHWATI, ELLISBRIDGE AHMEDABAD PAN/GIR NO. : 31-124-CX-7099 (APPELLANT) .. (RESPONDENT) AND CO NO.149/AHD/2005 [ OUT OF 1114/AHD/2005 ] M/S.NAVRATNA ORGANISERS & VS. THE ITO DEVELOPMENTS P LTD., AHD. WARD-5(1),AHMEDABAD ( CROSS OBJECTOR ) ( RESPONDENT ) ASSESSEE BY : SHRI DEEPAK SONI, AR REVENUE BY : SHRI S.S. PANWAR, CIT-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)-XI, AHMEDABAD DATED 03/01/2005 PASSED FOR ASSESSMENT YEAR 1997-98. THE ASSESSEE HAS FILED CROSS OBJECTIONS. THE GROUNDS RAISED BY THE RESPECTIVE PARTIES ARE AS UNDER:- ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 2 - (A) IN REVENUES APPEAL, ITA NO.1114/AHD/2005 FOR A.Y. 1997-98 1. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.9,76,322/- BEING DIFFERENCE OF ESTIMATED DEVELOP MENT FEES @ 2% OF BOOKING RECEIPTS AND THE RECEIPTS SHOWN BY THE A SSESSEE. 2. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD HAS FURTHER ERRED IN LAW AND ON FACTS IN HOLDING TH AT A CASE FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T WAS NOT MADE OUT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XI , AHMEDABAD HAS ALSO ERRED IN LAW AND ON FACTS IN RESTRICTING T HE DISALLOWANCE OF INTEREST FROM RS.5,49,000/- TO RS.27,472/-. 4. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD HAS ALSO ERRED IN LAW AND ON FACTS IN RES TRICTING THE INTEREST AND GRANTING RELIEF OF RS.5,27,528/- WITHO UT GIVING A FINDING THAT THE ASSESSEE HAD INTEREST FREE BORROWINGS FROM WHICH THE ASSESSEE HAD ADVANCED THE AMOUNT FROM ITS OWN FUNDS . 5. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD HAS FURTHER ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.40,74,165/- MADE U/S.68 OF THE I.T.A CT. 6. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD HAS ALSO ERRED IN LAW IN NOT APPRECIATING THE FACT THAT IN CASE OF DEPOSITS IN THE NAME OF AMP INVESTMENT A ND VICTORIA CAPITAL VENTURES, THE ASSESSEE HAD NOT DISCHARGED I TS PRIMARY ONUS OF FURNISHING CONFIRMATION AND IN THE CASE OF OTHER THREE CREDITORS, THE CONFIRMATIONS FURNISHED WERE DEFECTIVE AND INCO MPLETE. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD O UGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 8. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (A) MAY BE SET ASIDE AND THAT OF THE ASS ESSING OFFICER BE RESTORED. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 3 - (B) IN ASSESSEES CROSS OBJECTION NO.149/AHD/2005 F OR A.Y. 1997-98 THE ASSESSEE BEING DISSATISFIED WITH THE ORDER PASS ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) PRESENTS THE C ROSS OBJECTIONS AS UNDER: 1.0 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.27,472/-. THE ASSESSEE SUBM ITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE DELETED THE DISALLOWANCE. 2.0 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER OT COMPUTE THE DEMAN D AS PER THE LAW. INTEREST CHARGED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN DELETED AND/OR REDUCED. THE ASSESSEE PRAYS FOR LEAVE TO ADD, ALTER, AMEND A ND/OR WITHDRAW ALL OR ANY OF THE CROSS OBJECTIONS BEFORE THE FINAL HEARING OF THE APPEAL. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF ORGANIZING AND DEVELOPING HOUSING PROJE CTS. 4. GROUND NO.1 :- THIS YEAR THE ASSESSEE HAD SHOWN DEVELOPMENT F EES RECEIPT OF RS.14,40,358/- AS AGAINST OF RS.12,50,00 0/- LAST YEAR. THE DETAILS OF THE RECEIPT OF PROJECT FEES WAS SUBMITTED BY THE ASSESSEE AS UNDER:- NAME OF PROJECT A.Y. 97-98 A.Y. 96-97 1. KARMA & KAUSHAMBI PROJECT RS.4,68,000/- RS.15,50,000/- 2.KANISHKA PROJECT RS.12,122/- RS. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 4 - 3. KAIVANNA PROJECT RS.52,600/- RS.1,50,000/- 4. KALHAR PROJECT RS.8,25,600/- RS. 5. KADAM PROJECT RS.82,036/- RS.5,00,000/- 5. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSE E HAS CHARGED DEVELOPMENT FEES ON A COMPLETELY ARBITRARY BASIS. HE EXAMINED THE DEVELOPMENT AGREEMENT AND NOTED THAT DEVELOPMENT FE ES IS LINKED TO ANY QUANTIFIABLE PARAMETER FOR THE SERVICE RENDERED. T HE DEVELOPMENT AGREEMENT WAS SILENT ON THIS ISSUE. IN OTHER WORD S, IT WAS CHARGED ON ADHOC BASIS. FOR EXAMPLE, HE REFERRED TO THE KAIVA NNA PROJECT FOR WHICH FEES WAS CHARGED BY THE ASSESSEE AS UNDER:- SL.NO(S) PARTICULARS AMOUNT (RS) 1. FOR SUPERVISING THE WORK OF CONSTRUCTION RS.30,000/- 2. FOR HOLDING DISCUSSION WITH AIRPORT AUTHORITY RS.2,500/- 3. FOR HOLDING DISCUSSION WITH ARCHITECTS RS.15,000/- 4. FOR HOLDING DISCUSSION FOR PERSONS WHO CAME FOR BOOKING RS.5,000/- 5. OTHER MATTERS RS.100/- TOTAL RS.52,600/- 6. THERE WAS NO JUSTIFICATION FOUND FOR CHARGING TH E ABOVE FEES. THE ASSESSING OFFICER ACCORDINGLY INVOKED THE PROVISIO NS OF SECTION 145(3) OF THE I.T. ACT, 1961 AND ESTIMATED THE DEVELOPMENT FE ES AT 2% OF BOOK ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 5 - AMOUNT OF RS.12,08,34,010/-. IT WAS WORKED OUT AT RS.24,16,680/- RESULTING IN AN ADDITION OF RS.9,76,322/-. 7. THE LEARNED CIT(APPEALS) DELETED THE ADDITION BY HOLDING THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON R ECORD TO PROVE THAT THE ASSESSEE HAS CHARGED MORE FEES THAN WHAT HAS BEEN S HOWN IN THE BOOKS. NO DEFECT IN THE BOOKS OF ACCOUNT HAS BEEN POINTED OUT. THE ASSESSING OFFICER HAS ARBITRARILY FIXED THE DEVELOPMENT FEES AT 2% FOR WHICH THERE IS NO BASIS. THE ASSESSEE IS FOLLOWING MERCANTILE S YSTEM OF ACCOUNTING, THEREFORE, THERE IS NO CASE FOR MAKING ADDITION. H E ACCORDINGLY DELETED THE ADDITION BY OBSERVING AS UNDER:- 5.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND S UBMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY THE A.R. AND THE OBSERVATI ONS OF THE ASSESSING OFFICER IN THE ASSESSMENT. THE ASSESSING OFFICER WHILE MAKING THE ADDITION HAS NOT BROUGHT ON RECORDS ANY MATERIAL EVIDENCE TO PROVE THAT THE APPELLANT HAS CHARGED/RE CEIVED MORE FEE THAN WHAT HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT. NO DEFECTS IN THE BOOKS OF ACCOUNT HAVE BEEN POINTED OUT. THE A. O. HAS NO INFORMATION OR DOCUMENTARY EVIDENCE TO PROVE THAT T HE CLIENTS OF THE APPELLANT COMPANY HAD PAID DEVELOPMENT FEE OVER AND ABOVE WHAT HAS BEEN CREDITED IN BOOKS OF ACCOUNT. THE ASSESSI NG OFFICER HAS ARBITRARILY TAKEN DEVELOPMENT CHARGES AT 2%. IT I S TO BE STATED THAT THE ADDITION MADE BY THE AO OF NOTIONAL INCOME AS THERE IS NO BASIS GIVEN BY THE A.O. FOR APPLYING RATE OF 2%, THE APPE LLANT HAD NEITHER RECEIVED NOR ACCRUED THE SAME INCOME DURING THE YEA R UNDER CONSIDERATION. IT IS SEEN THAT THE APPELLANT IS FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN THE SAID SYSTEM THE TAX CAN BE LEVIED ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 6 - ONLY IF THE INCOME HAS ACCRUED TO THE APPELLANT BUT , THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT A REAL INCOME WHICH HAS ACCRUED TO THE ASSESSMENT PROCEEDINGS COMPANY. THE REFORE, I DO NOT AGREE WITH THE FINDINGS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTHER, THE BOOKS OF ACCOUNT O F THE APPELLANT ARE AUDITED BY TAX AUDITORS AND THE ASSESSING OFFIC ER HAS NOT FOUND OUT ANY IRREGULARITY. IN THESE CIRCUMSTANCES, THE RE IS NO JUSTIFICATION FOR THE ADDITION MADE BY THE ASSESSIN G OFFICER. THE ADDITION MADE BY THE AO OF RS.9,76,322/-, IS THEREF ORE, DELETED. 8. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT FOUND ANY DEFECT IN THE BOOKS, THERE IS NO EVIDENCE THAT THE ASSESSEE HAS RECEIVED MONEY, OVER AND ABOVE, WHAT IS RECORDED IN THE BOOKS. THERE IS NO BASIS O F FIXING THE FEES AT 2%. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF AC COUNTING AND NO CASE IS MADE OUT TO REJECT THE BOOKS. HE RELIED ON THE D ECISION IN FOLLOWING CASES:- SL.NO(S) IN THE CASE OF. REPORTED IN (1) CIT VS. SHOORJI VALLABHDAS AND CO. (1962) 46 ITR 144 (2) CIT VS. BIRLA GWALIOR (P) LTD. (1972) 89 ITR 2 66 (3) POONA ELECTRIC SUPPLY CO. LTD. VS. CIT (1965) 57 ITR 521 (4) R.B. JODHA MAL KUTHIALA VS. CIT (1971) 82 ITR 5 70 (5) CIT VS. U.P. STATE INDUSTRIAL DEVELOPMENT CORPN. 225 ITR 703 (SC) (6) GUJARAT ELECTRICITY BOARD VS. CIT 226 ITR 746 9. AGAINST THIS, LD.DR RELIED ON THE ORDER OF THE A SSESSING OFFICER. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 7 - 10. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE I S NO CASE FOR INTERFERING WITH THE ORDER OF THE LEARNED CIT(APPEALS). FOR TH E REASONS MENTIONED BY THE LEARNED CIT(APPEALS) IN HIS ORDER, WE CONFIRM H IS ORDER. THIS GROUND OF THE REVENUE IS, THEREFORE, REJECTED. 11. GROUND NO.2 OF REVENUES APPEAL RELATES TO REJE CTION OF BOOKS OF ACCOUNT WHICH IS RELATED TO GROUND NO.1(SUPRA). 12. WE HAVE HEARD THE PARTIES. NO CASE IS MADE O UT TO REJECT THE BOOKS, NO DEFECT IS FOUND AND, HENCE, THERE IS NO REASON TO REJECT THE BOOKS OF THE ASSESSEE. THEREFORE, THIS GROUND OF REVENUE S APPEAL IS ALSO REJECTED. 13. GROUND NO.3 OF REVENUES APPEAL RELATES TO REDU CTION IN DISALLOWANCE OF INTEREST FROM RS.5,49,000/- TO RS.2 7,472/-. 14. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.2,70,03,132/-. AGAINST THIS, THE ASSESSEE HAS MADE ADVANCES OF RS. 2,68,29,316/-. IT HAS RECEIVED INTEREST OF RS.5,58,542/-, WHEREAS INTERES T PAID IS RS.8,33,266/-. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 8 - FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE ASS ESSING OFFICER NOTED THAT THE ASSESSEE IS PAYING INTEREST ON PRINCIPAL AMOUNT OF RS.1,93,50,000/-, WHEREAS IT IS RECEIVING INTEREST ON PRINCIPAL AMOUN T OF RS.1,63,00,000/-. THUS, THE ASSESSEE HAS NOT CHARGED INTEREST ON RS.3 0,50,000/-. HE ACCORDINGLY CALCULATED INTEREST AT A RATE OF 8% ON RS.30,50,000/- AND DISALLOWED RS.5,49,000/- FROM THE INTEREST PAYMENT. 15. THE LEARNED CIT(APPEALS) EXAMINED THE ISSUE AND FOUND THAT OUT OF DEFICIT OF INTEREST PAYMENT AMOUNTING TO RS.2,74,72 4/-, IT HAS TRANSFERRED A SUM OF RS.2,47,253/- TO THE PROJECT COST WHICH WAS RECOVERABLE. THUS, ONLY A SUM OF RS.27,472/- WAS FOUND DISALLOWABLE. THEREFORE, HE DELETED THE REST. 16. WE HAVE HEARD BOTH THE PARTIES. IN OUR CONSID ERED VIEW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LEARNED C IT(APPEALS). THE DETAILS REGARDING INTEREST-FREE FUNDS AND INTEREST- FREE ADVANCES ARE NOT HIGH-LIGHTED, THEREFORE, IT IS NOT POSSIBLE TO SAY THAT INTEREST-FREE FUNDS WERE AVAILABLE FOR DIVERTING TO INTEREST-FREE ADVANCES. THE LEARNED CIT(APPEALS) HAS ALLOWED THE NECESSARY RELIEF BECAU SE CERTAIN AMOUNT OF INTEREST IS CHARGED TO PROJECT COST WHICH IS RECOVE RABLE. ACCORDINGLY, HIS ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 9 - ORDER IS WELL REASONED AND JUSTIFIED. THEREFORE, THIS GROUND OF THE REVENUE IS ALSO REJECTED. 17. GROUND NO.4 IN REVENUES APPEAL RELATES TO GRO UND NO.3 AND, THEREFORE, IT DOES NOT REQUIRE ANY SEPARATE ADJUDIC ATION. IT IS ACCORDINGLY REJECTED. 18. GROUND NOS.5 & 6 OF REVENUES APPEAL RELATE TO ADDITION U/S.68 OF THE I.T. ACT, 1961 AMOUNTING TO RS.40,74,165/-. 19. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN NEW DEPOSITS FROM FOLLOWING TWO PARTIES:- NAME OF THE PARTY AMOUNT (RS.) AMP INVESTMENT 10,00,000 VICTORIA CAPITAL VENTURES LTD. 25,00,000 35,00,000 20. IN ADDITION TO ABOVE, THE FOLLOWING DEPOSITS WE RE ALSO FOUND:- NAME OF THE PARTY AMOUNT (RS.) AS ON 31-3-97 YOGESH ANUBHAI SHAH (HUF) 1,83,790 PAYAL YOGESHKUMAR SHAH 91,717 NILAY YOGESHKUMAR SHAH 2,98,658 5,74,165 ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 10 - 21. WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSE E TO FILE CONFIRMATORY LETTERS, THE ASSESSEE FILED CONFIRMATI ON ON ITS OWN LETTER-HEAD AND NOT ON THE LETTER-HEAD OF THE PARTIES CONCERNED . THE LANGUAGE OF THE CONFIRMATORY LETTERS WAS UNIFORM. THE BASIC INFOR MATION LIKE COMPLETE NAMES AND ADDRESSES OF THE DEPOSITORS WERE NOT PRO VIDED. EVEN PANS WERE ALSO NOT MENTIONED. ACCORDINGLY, THE ASSESSIN G OFFICER INFERRED THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE C REDITS ARE NOT PROVED. HE ACCORDINGLY MADE THE ADDITION. 22. THE LEARNED CIT(APPEALS) NOTED THAT THE ASSESSE E HAS PLACED ON RECORD OF THE ASSESSING OFFICER, THE NAMES OF THE P ARTIES, COMPLETE ADDRESSES, STATEMENT OF ACCOUNTS, ETC. HE ACCORDIN GLY DELETED THE ADDITION BY OBSERVING AS UNDER:- 8.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO GONE THROUGH THE DETAILS FILED BEFORE ME BY THE A.R. AND THE OBSERVA TIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ISS UE WAS RESTORED BACK TO THE FILE OF THE UNDERSIGNED BY HON'BLE ITAT , AHMEDABAD VIDE ITS ORDER, REFERRED TO ABOVE, FOR DECIDING THE APPEAL A FRESH IN ACCORDANCE WITH LAW AND AFTER GIVING OPPORTUNITY OF BEING HEARD. THE OPPORTUNITY WAS GIVEN TO THE APPELLANT AND THE I.T.O. HAVING JURISDICTION AND THE ISSUE WAS DISCUSSED. ENQUIRES WERE MADE BY THIS OFFICE FROM COMPUTER SECTION OF THE DEPARTMENT AND IT IS ASCERTAINED THAT THE PARTIES, NAMELY, (1) AMP INV ESTMENTS, 502, PANCHKUVA, AHMEDABAD IS ASSESSED TO TAX WITH THE I NCOME-TAX OFFICER, ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 11 - WARD-3(2), AHMEDABAD AT PANO. AABFA7464P AND (2) VI CTORIA CAPITAL VENTURES LTD., 1ST FLOOR, BHARAT HOUSE, 104, MUMBAI SAMACHAR MARG, FORT , MUMBAI-23 IS ASSESSED TO TAX WITH DC/ACIT CI RCLE-2(3)-L(NEW), MUMBAI AT PANO. AACV3287D. THESE FACTS WERE ALSO BR OUGHT TO THE NOTICE OF SHRI K. V. M. KUTTY, INCOME-TAX OFFICER, WARD-5(1), AHMEDABAD, WHO IS HAVING JURISDICTION AT PRESENT OV ER THE APPELLANT COMPANY. THE ADDRESSES OF THESE PARTIES ARE THE SAM E AS GIVEN BY THE ASSESSEE BEFORE THE A.O. DURING THE ASSESSMENT PROC EEDINGS. WITH REGARD TO THE DEPOSIT OF RS.5,74,165/- RECEIVED BY THE APP ELLANT FROM SHRI YOGESH ANUBHAI SHAH AND OTHERS, IT IS SEEN THAT THE APPELLANT HAS DISCHARGED ITS ONUS BY GIVING DETAILS L IKE CONFIRMATIONS OF ACCOUNTS, ADDRESSES OF THE PARTIES FROM WHOM THE APPELLANT H AS RECEIVED THE DEPOSIT. 8,2.1 IT IS ALSO SEEN THAT THE AMOUNT OF RS.10,0 0,000/- RECEIVED BY THE APPELLANT FROM AMP INVESTMENTS IS NOT DEPOSIT/LOAN BUT THE SAME PERTAINED TO BOOKING AMOUNT AND THE SAME WAS REPAID BY THE APPELLANT BY ACCOUNT PAYEE CHEQUE ON 03-04-1997 AS IT SEEN FROM THE COPY OF ACCOUNT FILED BY THE APPELLANT. IT IS SEEN THAT THE APPELLA NT HAS DISCHARGED ITS ONUS BY GIVING DETAILS LIKE CONFIRMATION OF ACCOUNT, ADD RESS OF THE PARTY, DETAILS OF PAYMENTS, PANO AND THE PRESENT JURISDICT ION OF THE ASSESSING OFFICER BY WHOM THE ABOVE PARTY IS ASSESSED TO TAX. WITH REGARD TO THE AMOUNT OF RS.25,00,000/- RECEIVED BY THE APPELLANT FROM VICTROYA CAPITAL VENTURES LTD., IT IS SEEN THAT THE APPELLANT HAS D ISCHARGED ITS ONUS BY GIVING DETAILS LIKE CONFIRMATION OF ACCOUNT, ADDR ESS OF THE PARTY, PANO AND THE PRESENT JURISDICTION OF THE ASSESSING OFFIC ER BY WHOM THE ABOVE PARTY IS ASSESSED TO TAX. 8.2.2 IT IS TO BE STATED THAT ACCORDING TO SECTION 68 OF THE I. T. ACT, 1961 WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF A N ASSESSES MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN THE PRESENT CASE, IT IS FOUND THAT THE APPELLANT HA S DISCHARGED ITS ONUS BY GIVING DETAILS LIKE CONFIRMATIONS OF ACCOUNTS, AD DRESSES OF THE PARTIES FROM WHOM THE APPELLANT HAS RECEIVED MONEY AS LOAN/ DEPOSIT/BOOKING AMOUNT AND IN THE TWO CASES P.ANS. THE ASSESSING O FFICER COULD HAVE CARRIED OUT DETAILED INQUIRIES WITH REGARD TO THE PARTIES CONCERNED, WHICH HE HAS NOT DONE. FURTHER, I FIND THAT THE ASS ESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE FOR SUCH AD DITION BY REBUTTING THE ASSESSEE'S CONTENTIONS. IN THE CASE OF DEPUTY C IT VS. ROHINI BUILDERS REPORTED IN 256 IT.R 360, THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT ONCE THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS BY PROVING THE IDENTITY ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 12 - OF CREDITORS BY GIVING THEIR COMPLETE ADDRESS, G IR/PANOS AND THE COPIES OF ASSESSMENT ORDER WHEREVER READILY AVAILA BLE AND AMOUNTS HAVE BEEN RECEIVED BY CHEQUES, THE ADDITION IS NOT JUSTI FIED. FURTHER IN THE CASE OF ORISA CORPORATION REPORTED IN 159 ITR 79, THE HO N'BLE SUPREME COURT HAS HELD THAT WHEN THE ASSESSEE FURNISHED NAMES AN D ADDRESS OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN S HIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN O RDER TO SUSTAIN THE ADDITION, THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON-COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER U/S.131, BY THE ALLEGED CRE DITORS WILL NOT BE SUFFICIENT TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THE INSTANT CASE THE APPELLANT HAD DISCHARGED HIS ONUS BY GIVING NAMES, ADDRESSES, AND BY FILING RELEVANT DETAILS AND TWO O F THEM ARE ASSESSED TO TAX REGULARLY. IT IS SEEN FROM THE RECORD THAT THE ASSESSING OFFICER HAS NOT TAKEN ANY POSITIVE ACTIONS BY EXERCISING HIS JUDICI AL POWERS TO VERIFY THE SAID TRANSACTIONS MADE BY THE 'ACCOUNT PAYEE' CHE QUES EITHER THROUGH TRACING THE FLOW OF FUNDS WITH THE BANK OR DIRECTLY FROM THE PAYEE UNDER SECTION 133(6) OR BY RECOURSE TO SECTION 131 OF THE I. T. ACT.. FURTHER, I AM OF THE VIEW THAT WHEN THE OUT OF THE ABOVE PERSO NS TWO ARE ASSESSED TO TAX, WHO HAVE DEPOSITED AMOU NTS OF RS..25,00,000/- AND RS.10,00,000/- AND CONFIRMATIONS, ADDRESSES, DE TAILS OF PAYMENTS/REPAYMENTS HAVE BEEN COMPLETELY GIVEN BY T HE APPELLANT, THE GENUINENESS OF THE TRANSACTIONS SHOULD NOT BE DOUBT ED UNLESS ON EXAMINATION IT IS FOUND UNTRUE. HAVING CONSIDER ED THE FACTS OF THE CASE CAREFULLY, SUBMISSIONS OF THE AUTHORISED REPRESENTA TIVE OF THE APPELLANT, OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER AND ALSO CONSIDERING THE DECISIONS, REFERRED TO ABOVE, THE A DDITION MADE BY THE ASSESSING OFFICER OFFICE IS UNCALLED FOR AND NOT JU STIFIABLE. THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.40,74,165/- IS , THEREFORE, DELETED. 23. AGAINST THIS, LD.DR SUBMITTED THAT IS NOT CORRE CT TO SAY THAT NECESSARY DETAILS OF THE DEPOSITORS WERE FILED BEF ORE THE ASSESSING OFFICER. THERE IS NO CONFORMITY LETTERS ON THE LETTER-HEAD(S ) OF THE CONCERNED PARTIES. THEREFORE, IT IS NOT POSSIBLE TO SAY THAT THOSE PARTIES HAVE ADVANCED THE MONEY TO THE ASSESSEE. THE ASSESSEE HAS NOT DI SCHARGED THE PRIMARY ONUS LAY ON HIM U/S.68 OF THE I.T. ACT, 1961. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 13 - 24. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRE SENTATIVE OF THE ASSESSEE DREW OUR ATTENTION TO PAGE NO.62 OF ITS PA PER-BOOK WHICH IS AN ACCOUNT OF AMP INVESTMENT ON THE LETTER-HAD OF THE ASSESSEE. IT SHOWED THE ADDRESS OF AMP INVESTMENT AS 502, PANCHKUVA, AHMED ABAD-2 AND PAN AABFA7464 P. THEN, AT PAGE NO.63 OF THE PAPER-BOO K, THERE WAS INFORMATION ABOUT VICTORIA CAPITAL VENTURES LTD. I T GAVE THE ADDRESS AS BHARAT HOUSE, 1 ST FLOOR, 104, BOMBAY SAMACHAR MARG, BOMBAY-23 AND ALSO SOME NUMBERS, SUCH AS, AAA CV 3287-D/D.C.CIR (I)/1. THIS IS ALSO A COPY OF ACCOUNT OF VICTORIA CAPITAL VENTURES LTD. ON THE LETTER-HEAD OF NAVRATNA ORGANISERS & DEVELOPERS PVT.LTD. AT PA GE NO.68 OF THE PAPER-BOOK, IS THE COPY OF ACCOUNT OF YOGESH ANUBH AI SHAH (HUF) WHICH SHOWS THE ADDRESS OF THE PARTY AS 88, LAVANYA SOCIE TY VASNA, AHMEDABAD-7. THIS IS ALSO ON THE LETTER-HEAD OF T HE ASSESSEE. PAGE NOS.72 & 73 OF THE PAPER-BOOK SHOW ACCOUNT OF PAYA L YOGESH SHAH ON THE LETTER-HEAD OF THE ASSESSEE AND ALSO ADDRESS OF THAT PARTY. AT PAGE NO.77 OF THE PAPER-BOOK SHOWS THE ACCOUNT OF NILAY YOGESH SHAH ON THE LETTER-HEAD OF THE ASSESSEE WITH THE ADDRESS OF THE PARTY. THE COPIES OF ACCOUNT SHOW THAT MONEY WAS TRANSFERRED THROUGH CHE QUE, I.E. THOUGH BANKING CHANNELS. IT IS NOT A CASE WHERE NO DATA I S AVAILABLE FOR VERIFICATION. THE ASSERTION OF THE LEARNED AUTHORI SED REPRESENTATIVE OF ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 14 - THE ASSESSEE IS THAT THESE DOCUMENTS WERE SUBMITTED TO THE ASSESSING OFFICER. IN ANY CASE, WE RESTORE THE MATTER TO TH E FILE OF ASSESSING OFFICER. THE ASSESSEE WILL SUBMIT THESE DOCUMENTS B EFORE THE ASSESSING OFFICER WITH COMPLETE DETAILS OF THE CREDITORS, NAM E OF THE BANK THROUGH WHICH MONEY WAS TRANSFERRED TO THE ASSESSEE AND PA ID BACK BY THE ASSESSEE. THE ASSESSEE WILL FURNISH THESE INFORMATI ON SO AS TO ENABLE THE ASSESSING OFFICER TO CARRY OUT INDEPENDENT INVESTIG ATION. INITIALLY, DOCUMENTS FOR ESTABLISHING IDENTITY OF THE CREDITO RS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WILL BE SUBMITT ED BY THE ASSESSEE FOR FURTHER VERIFICATION BY THE ASSESSING OFFICER. 25. AS A RESULT, THE APPEAL OF THE REVENUE IS TREAT ED AS PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. ASSESSEES CROSS OBJECTION NO.149/AHD/2005 (OUT OF ITA NO.1114/AHD/2005) FOR ASSESSMENT YEAR 1997-98. 26. THE CROSS OBJECTION FILED BY THE ASSESSEE RELAT ES TO CONFIRMING THE ADDITION OF RS.27,472/-. IN REVENUES APPEAL(SUPRA ), WE HAVE CONFIRMED THE ORDER OF THE LEARNED CIT(APPEALS). FOLLOWING THE SAME REASONING, WE DISMISS THE GROUND OF THE CROSS OBJECTION. ITA NO.1114/AHD/2005(BY REVENUE) AND CO NO.149/AHD/2005 (BY ASSESSEE) M/S.NAVRATNA ORGANISERS & DEVELOPERS P LTD. ASST.YEAR -1997-98 - 15 - 27. AS A RESULT, THE APPEAL OF THE REVENUE IS TREATED A S PARTLY ALLOWED FOR STATISTICAL PURPOSES, WHEREAS THE CROSS OBJECTION FILED BY THE ASSESSEE IS 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)-XI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD