The ACIT, Gandhidham Circle, GANDHIDHAM V. M/s Krishna Clearing Agency, GANDHIDHAM

ITA 1187/RJT/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56745 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-09-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 27-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MK SINGH
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI D.K. TYAGI (JM) AND SHRI A.L. GEHLOT (A M) I.T.A. NO.1187/RJT/2010 (ASSESSMENT YEAR 1996-97) ACIT, GANDHIDHAM CIRCLE VS M/S KRISHNA CLEARING A GENCY GANDHIDHAM 53, TRANSPORT NAGAR GANDHIDHAM-KUTCH PAN : AACFK5195Q (APPELLANT) (RESPONDENT) DATE OF HEARING : 29-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011 APPELLANT BY : NONE RESPONDENT BY: SHRI MK SINGH O R D E R PER BENCH THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, RAJKOT DATED 30-06-2010 PERTAINING TO ASSESSMENT YE AR 1996-97. 2. THE FOLLOWING GROUNDS ARE TO BE REPRODUCED: 1) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ENTIRE ADDITION OF RS.20,34,401/- MADE ON ACCOU NT OF DISALLOWANCE U/S 68 OF THE ACT. 2) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN H OLDING THAT SHRI ANUPCHAND MORABIA HAD PAID THE TAXES ETC IN RE SPECT OF THE ADDITIONAL INCOME ADMITTED BEFORE THE SETTLEMEN T COMMISSION A THE FACTS ON RECORD REVEAL THAT SHRI M ORABIA HAD NOT MADE FULL PAYMENT OF TAX ON THE AMOUNT ADMI TTED BEFORE THE SETTLEMENT COMMISSION AND THUS, THE DECI SION OF THE LD.,CIT(A) IN DELETING THE ADDITION OF RS.20,34 ,401/- IS BAD IN LAW AND THEREFORE, NEEDS TO BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER NEEDS TO BE UPHELD. ITA NO.1187/RJT/2010 2 3) THE LD,.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL SUBJECT TO ASSESSING OFFICERS VERIFICATION, AND WHETHER SUCH DIRECTIONS TANTAMOUNT TO SETTING ASIDE THE ASSESSMENT ORDE3R WHICH IS BEYOND THE JURISDICTION OF CIT(A) AS PROVIDED U/S 251(1)(A) OF THE INCOME-TAX ACT. 3. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. THE REFORE, WE HEARD THE LD.DR AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT . 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CLEARING, FORWARDING, SHIPPING AND TRAN SPORTATION AS CUSTOM HOUSE AGENT. IN EARLIER ROUND OF LITIGATION OF APPEAL FI LED BY THE DEPARTMENT, THE ITAT IN ITA NO.1373/RJT/2005 VIDE ORDER DATED 14-08-2008 HA D RESTORED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATI ON OF PAYMENT OF TAXES ON INCOME OFFERED BY SHRI ANUPCHAND MORABIA BEFORE THE SETTLE MENT COMMISSION. THE SETTLEMENT COMMISSION PASSED AN ORDER U/S 245D(4) I N THE CASE OF SHRI ANUPCHAND MORABIA ON 03-01-2008 ACCEPTING THE INCOM E OFFERED BY HIM. THESE FACTS ARE NOTED DOWN BY THE CIT(A) ON PAGE 2 OF HIS ORDER, AS HAS BEEN RECORDED BY THE ASSESSING OFFICER. IN THE DE NOVO ASSESSMEN T, THE ASSESSING OFFICER REPEATED THE ADDITION OF CASH CREDIT AND DISALLOWAN CE OF INTEREST THEREON ON THE GROUND THAT SHRI ANUPCHAND MORABIA DID NOT PAY TAX DUE PURSUANCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED U/S 245D(4) OF THE ACT. THE CIT(A), AFTER NOTING DOWN THE ASSESSEES CONTENTION HELD AS FOLLO WS: THE FACTS OF THE ISSUE IN QUESTION WERE THOROUGH LY CONSIDERED ALONG WITH A.OS OBSERVATIONS AND APPELL ANTS SUBMISSIONS. THE ITAT, RAJKOT, WHEN PASSED THE ORD ER, CLEARLY ITA NO.1187/RJT/2010 3 STATED THAT THE IMPUGNED LOANS (CASH CREDITS) COULD NOT BE CONSIDERED AS INCOME OF THE APPELLANT. THE ISSUE W AS SENT BACK TO A.O. WITH A VIVID DIRECTION TO HIM TO VERIFY WHETHE R SHRI MORABIA PAID THE TAX BEFORE SETTLEMENT COMMISSION OR NOT. IF TH E TAX WAS PAID, ITAT REMARKED THAT THE ISSUE WOULD STAND CONCLUDED IN APPELLANTS FAVOUR. (CA) THE APPELLANTS AVERMENTS, AS REPRODUCED IN TH E PRECEDING PARA, HAVE MERITS. I FEEL THAT IN DE NOVO PROCEEDI NGS, THE A.O. TRAVELED BEYOND HIS AUTHORITY AND DIRECTION GIVEN B Y ITAT. I PERUSED THE ORDER OF SETTLEMENT COMMISSION PASSED I N THE CASE OF SHRI ANUPCHAND MORABIA U/S 245D(4) DATED 3-1-12008. IN THE SAID ORDER, THE PARA 2.3 SAY THAT THE CIT(DR) STATED AT THE BAR ON 17-1- 2007 THAT THE TAXES ETC, WERE PAID WAS NOTED AND WA S ACTED UPON. FURTHER THE PARA 11.10 OF THE SAID ORD3ER CLEARLY I NDICATED THAT THE COMMISSION ACCEPTED THE INCOME DISCLOSED BY SHRI MO RABIA WHICH WOULD COVER THE IMPUGNED SUMS OF CASH CREDITS GIVEN AS UNSECURED LOANS TO THE APPELLANTS IN THE NAMES OF S HRI PRAMOD R CHHEDA AND SHRI VINOD R CHHEDA. IN THESE CIRCUMSTA NCES, I DO NOT SEE ANY REASON FOR UPHOLDING THE ADDITIONS MADE BY THE A.O. CONSEQUENTLY, THE INTEREST DISALLOWANCES ON THE CAS H CREDITS DESERVED TO BE DELETED. I HAVE TAKEN THE SAME VIEW IN THE CASES OF SMT. PUSHPA M GUPTA (A.Y. 1996-97);M SHRI RAMESH N GUPTA (A.Y. 1998-99); SMT. RANJANA S GUPTA (A.YS. 1996-97 & 97-98); AND SHRI SURESH N GUPTA (A.YS 1996-97 & 97-98) BY M Y COMMON ORDER DTD 30.6.2010 IN APPEAL NOS.CIT(A)-II/-126 TO 0130 & 0132/09-10. (CB) HOWEVER, THE A.O. BEFORE GIVING EFFECT TO THIS APPELLATE ORDER, WILL CALL FOR RELEVANT EVIDENCES FROM THE AP PELLANT TO FIND OUT WHETHER SHRI MORABIA PAID THE TAXES ON THE IMPUGNED AMOUNTS ADMITTED BEFORE THE SETTLEMENT COMMISSION AND KEEP THE DOCUMENTARY EVIDENCES ON THE FILE. THE A.O. MAY REF USE THE RELIEF GRANTED BY ME, IF THE APPELLANT FAILS TO MEET MY DI RECTIONS, AS STATED. IT IS ALSO TO BE STATED THAT THE APPEALS F ILED BY SHRI ANUPCHAND MORABIA BEFORE ME FOR THE A.YS 1996-97, 1 997-98, AND 1998-99 AGAINST THE ACTION OF THE A.O. IN ADJUSTING THE TAX PAID ON RETURNED INCOME AND ON ADDITIONAL INCOME OFFERED BE FORE THE SETTLEMENT COMMISSION AGAINST INTEREST LIABILITY U/ S 234A, 234B & 234C WERE ALREADY DISMISSED BY MY APPELLATE ORDERS IN APPEAL NOS.CIT(A)-II/0009, 0010 & 0011/08-09, DATED 24-12- 2008. (CC) THE APPELLANTS PLEA THAT ASSUMING FOR A MOMEN T, SHRI ANUPCHAND MORABIA DID NOT PAY THE TAXES, NO ADVERSE INFERENCE AND ACTION COULD BE TAKEN AGAINST THEM IS NOT AT AL L ACCEPTABLE. THE APPEAL IS ALLOWABLE ONLY ON THE CONDITION THAT SHRI MORABIA PAID ITA NO.1187/RJT/2010 4 TAXES, AS EVIDENCED BY THE ORDER OF THE SETTLEMENT COMMISSION U/S 245D(4) DTD.3/1/2008. THE APPELLANT IS TRYING TO W RIGGLE OUT OF SITUATION BY PUTTING FORTH THIS KIND OF REQUEST. E ITHER ONE OF THE PERSONS EITHER SHRI ANUPCHAND MORABIA, OR THE APP ELLANT SHOULD PAY THE TAXES ON THE UNDISCLOSED INCOME SURFACED IN THE FORM OF CASH CREDITS. MERE DISCLOSURE WITHOUT PAYMENT OF T AXES BY SHRI ANUPCHAND MORABIA (FOR ARGUMENT SAKE) WILL NOT ABSO LVE THE APPELLANT FROM ITS RESPONSIBILITY OF MEETING THE TA X LIABILITY. 5. WE HAVE HEARD THE LD.REPRESENTATIVES OF THE PART IES, RECORD PERUSED. THE CASE OF THE ASSESSING OFFICER IS THAT SHRI ANUPCHAN D MORABIA, WHO OWNED UP THE IMPUGNED CASH CREDITS IN HIS HANDS IN A PETITION FI LED BEFORE THE SETTLEMENT COMMISSION HAS NOT HONOURED THE ORDER U/S 2345D(4) DATED 03-01-2008 AS HE HAS NOT PAID THE TAXES ON THE INCOMES ADMITTED BY H IM. HOWEVER, WE FIND THAT THE CIT(A), AFTER CONSIDERING THE ASSESSEES SUBMIS SIONS HAS RIGHTLY DELETED THE ADDITION SUBJECT TO VERIFICATION BY THE ASSESSING O FFICER. WHILE DOING SO, THE CIT(A) HAS RELIED UPON HIS ORDER IN THE CASES OF SM T. PUSHPA M GUPTA; SHRI RAMESH N GUPTA, SMT. RANJANA S GUPTA AND SHRI SURES H N GUPTA. WE, ARE HOWEVER AWARE THAT THE ITAT UNDER SIMILAR SET OF FA CTS AND CIRCUMSTANCESIN THE CASE OF SHRI DEEPAK M AGARWAL HAS UPHELD THE SIMILA ORDER OF CIT(A) BY FOLLOWING THE ORDER OF THE AHMEDABAD BENCH SMC IN THE CASE OF SHIV SHANKAR CO IN ITA NO.1394/AHD/2004 ORDER DATED 28-02-2005. IN THE CASE OF SHRI DEEPAK M AGARWAL (SUPRA), THE TRIBUNAL HELD AS FOLL OWS: 7. THE LD.A.R. RELIED ON THE DECISION OF ITAT AHME DABAD IN ITA NO.1394/AHD/2004 IN THE CASE OF SHIV SHANKAR & CO W HEREIN THE HONBLE TRIBUNAL HAS VIDE PARA 3 RECORDED AS UNDER: 3, I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE ME. THE ITA NO.1187/RJT/2010 5 ASSESSEE HAS CLAIMED TO HAVE RECEIVED THE SUM OF RS.3,00,000/- FROM SHRI PK PATEL ON 18 TH MAY 1996. IT IS THE CASE OF THE REVENUE THAT SHRI P.K. PATEL IS ONLY A NAME LENDER AND HIS BANK ACCOUNT IS BEEN USED BY OTHERS FOR CONVERTING BLACK MONEY INTO WHITE. SHRI P.K. PATEL ALSO IN HIS STATEMENT RECORDED U/S 133(1) ON 28-3-1999 ADMI TTED THAT HE HAS NOT GIVEN ANY MONEY TO ANYBODY BUT SOME OTHER PERSONS HAVE ADVANCED THE MONEY IN HIS NAME. NOW S HRI ANUPCHAND MANGALJI MORABIA IN HIS POSITION BEFORE T HE SETTLEMENT COMMISSION DATED 9-8-1999 HAS ADMITTED T HAT THE DEPOSIT IN THE BANK ACCOUNT OF SHRI P.K. PATEL IS OUT OF HIS UNDISCLOSED INCOME. HE HAS OFFERED THE SUM OF RS.1,79,00,000/- AS ADDITIONAL INCOME FOR A.Y. 1996 -97. THE SETTLEMENT COMMISSION HAS BEEN ADMITTED VIDE ITS OR DER DATED 8-5-2000 U/S 245D(1). SHRI ANUPCHAND MANGALJ I MORABIA HAS ALREADY PAID THE TAX TO THE TUNE OF RS.91,01,747/- ON THE ADDITIONAL INCOME DISCLOSED B EFORE THE SETTLEMENT COMMISSION. WHILE WORKING OUT THE UNDIS CLOSED INCOME FOR A.Y. 1996-97 THE SUM OF RS.3 LACS ADVANC ED BY SHRI P.K. PATEL TO THE ASSESSEE HAS BEEN CONSIDERED WHICH IS EVIDENT FROM THE DETAILS GIVEN AS ANNEXURE TO TH E SETTLEMENT PETITION COPY OF WHICH IS AT PAGE 67 OF THE ASSESSES PAPER BOOK. IN VIEW OF ABOVE FACTS, SO F AR AS THE ASSESSEE IS CONCERNED, THE SUM OF RS.3,00,000/- IS ALONE TAKEN BY THE ASSESSEE AND THOUGH THE MONEY IS GIVEN IN THE NAME OF SHRI P.K. PTEL BUT IT WAS IN FACT BELONGING TO SHRI ANUPCHAND MANGALJI MORABIA BUT IT WAS A LOAN IN THE HANDS F THE ASSESSEE AND THEREFORE ONCE THE SOURCE OF LOAN IN THE HANDS OF SHRI ANUPCHAND MANGALJI MORABIA HAD BEEN ADMITTED TO BE OUT OF U8NDISCLOSED INCOME IN HIS HA NDS, THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. IN THE VIEW OF THE ABOVE, I DO NO T FVIND ANY JUSTIFICATION FOR UPHOLDING THE ADDITION OF RS.3,00 ,000/- IN THE HANDS OF THE ASSESSEE. THE SAME IS DELETED ALONG W ITH THE INTEREST THEREON AMOUNTING TO RS.1,926/-. 8. WE FIND THAT THE FACTS OF THE CASE BEFORE THE IT AT AHMEDABAD ARE IDENTICAL. RESPECTFULLY FOLLOWING TH E ITAT AHMEDABADS ORDER WE HOLD THAT ON THE FACTS OF THE CASE, THE ASSESSEE HAVING ESTABLISHED THREE REQUISITES FOR EX PLAINING CASH CREDITS, NO ADDITION U/S 68 IS JUSTIFIED. THE CONT ENTIONS OF SETTLEMENT PETITION ELABORATELY CORROBORATE THE SUB MISSIONS IN SUPPORT OF CASH CREDIT. WE HAVE IN A SEPARATE APPE AL FO MR. ITA NO.1187/RJT/2010 6 MORABIA GIVEN A FINDING BASED ON THE PROCEEDINGS BE FORE THE HONBLE SETTLEMENT COMMISSION THAT HE HAS FULLY COM PLIED WITH HIS OBLIGATION TO PAY TAX & INTEREST. UNDER THE CIRCUM STANCES, ADDITION IS STRAIGHT AWAY DIRECTED TO BE DELETED. 6. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE EAR LIER ORDER OF THE ITAT, IN THE CASE OF SHRI DEEPAK M AGARWAL CITED SUPRA, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) IS CONFIRMED. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON SD/- SD/- (D.K.TYAGI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : PK/- ORDER PRONOUNCED ON 21-11-2011 SD/- SD/- JM AM COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-1I, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT