Shri Harsukhbhai Bhikhabhai Gajera, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 121/AHD/2009

• Counselvise Citation: 12120514 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y C SURTI
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Unexplained cash credit
• Section: 44AD; 143(3)

Judgement Text

ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD. (BEFORE SHRI BHAVNESH SAINI AND SHRI A. MOHAN ALA NKAMONY) I.T.A. NO. 121/AHD/2009 (ASSESSMENT YEAR 2005-06) SHRI HARSUKHBHAI BHIKHABHAI GAJERA C/O. H.B. BUILDERS, G-6 MANGALDEEP, OPP. MASONIC HALL, SAMPATRAO COLONY, VADODARA0390 007 (APPELLANT) VS. INCOME TAX OFFICER, WARD 2(2) AAYAKAR BHAVAN, NR. RACE COURSE CIRCLE, BARODA. (RESPONDENT) PAN: ACOPP 2880P APPELLANT BY : SHRI GAURAV NAHATA RESPONDENT BY : SHRI Y.C.SURTI. DATE OF HEARING : 15-9-2011 DATE OF PRONOUNCEMENT : 27-9-2011 ( (( ( )/ )/)/ )/ ORDER PER: SHRI A. MOHAN ALANKAMONY,A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT (A)- II, BARODA IN APPEAL NO.CAB/II-231/07-08 DATED 20-1 0-2008 FOR THE ASSESSMENT YEAR 2005-06 PASSED U/S. 250 R.W.S.143 ( 3) OF THE ACT. ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 2 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN HIS APPEA L WHEREIN GROUND 1 AND 6 ARE GENERAL IN NATURE AND DO NOT FOR SURVIVE ADJUDICATION. FROM THE OTHER GROUNDS THE ONLY ISSUE WHICH EMERGES IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. A.O WHEREIN AN ADDITION OF RS.2,50,000/- WAS MADE U/S 68 OF THE I. T. ACT TOWARDS INTRODUCTI ON OF CAPITAL DURING THE PREVIOUS YEAR ENDED 31-3-2005. 3. THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 31-10- 2005 DECLARING TOTAL INCOME AT RS. 6,29,710/-. SUBS EQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 7-12-2007. THE MAIN SOURCE OF THE ASSESSEES INCOM E WERE FROM SHARE OF PROFITS FROM PARTNERSHIP FIRMS, HOUSE PROPERTY AND INCOME FROM OTHER SOURCE. ON VERIFICATION OF THE ACCOUNTS OF THE FIR M M/S. H.B.G. BUILDERS WHEREIN THE ASSESSEE IS A PARTNER IT WAS REVEALED T HAT THE ASSESSEE HAD INTRODUCED FRESH CAPITAL INTO THE FIRM DURING THE P REVIOUS YEAR ENDED 31-3- 2005 FOR AN AMOUNT OF RS.2,50,000/-. ON BEING QUER YING BY THE LD. A.O. THE ASSESSEE VIDE HIS LETTER DATED 30-11-2007 REPLIED T HAT (A) THE FIRM M/S. H.B.G. BUILDERS, BARODA HAS FILED ITS RETURN OF IN COME FOR THE ASSESSMENT YEAR 2004-05 TO 2005-06 BY INVOKING SECTION 44AD OF THE I.T. ACT. (B) SINCE THE ASSESSEE HAD PAID TAX IN ACCORDANCE WITH SECTION 44AB OF THE ACT, THE ASSESSEE WAS NOT COMPULSORILY REQUIRED TO MAINT AIN REGULAR BOOKS OF ACCOUNTS. HOWEVER, THE FIRM HAD MAINTAINED SCROLL B OOKS FOR ITS CONVENIENCE. THE CORRECT DATE OF ADDITION OF RS. 2 ,50,000/- AS CAPITAL IN THE BOOKS OF ACCOUNTS OF M/S. HBG BUILDERS WAS ON 31-3- 2005 SIC 31-5-2005 AS REFLECTED IN THE APPELLANTS PERSONAL BOOKS OF ACCO UNT AND NOT ON 1-7-2004. THE LD. AO AFTER EXAMINING THE FACTS CAME TO A CONC LUSION THAT THE ARGUMENT OF THE APPELLANT IS UNTENABLE AND WITHOUT SUBSTANCE. THERE WAS ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 3 NOTHING ON RECORD TO SHOW WITH COGENT EVIDENCE THAT THE INTRODUCTION OF CAPITAL WAS ON 31-5-2005 INSTEAD OF 1-7-2004 THEREF ORE, THE LD. AO REJECTED THE CONTENTION OF THE APPELLANT AND TREATED THE AMO UNT OF RS. 2,50,000/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT FOR THE A SSESSMENT YEAR 2005-06 AND ACCORDINGLY MADE THE ADDITION AND INITIATED THE PENALTY PROCEEDINGS. 4. LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE L D. AO BY HOLDING THAT THE APPELLANT HAD INTRODUCED THE AMOUNT OF RS. 2,50,000/- ON 1-7-2004 SINCE IT WAS ACCORDINGLY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM. HE FURTHER OBSERVED THAT IT WAS A WELL ESTABLISHED PRI NCIPLE THAT INTRODUCTION OF CAPITAL IN A FIRM WILL BE VERIFIED AND AUTHENTICATE D IN THE HANDS OF THE PARTNER AND NOT OF THE FIRM. 5. BEFORE US, AT THE TIME OF THE HEARING THE LD. AR PRODUCED HIS WRITTEN SUBMISSION DATED 3-5-2011 WHEREIN IT WAS STATED THA T THE CORRECT DATE OF ADDITION TO CAPITAL IN THE FIRM M/S. HBG BUILDERS W AS ON 31-3-2005 SIC 31- 5-2005 AS REFLECTED IN THE ASSESSEES PERSONAL BOOK S OF ACCOUNTS AND NOT ON 1-7-2004 AS NOTED BY THE LD. AO. IT WAS STATED THA T THE APPELLANT HAD PROVED THE SOURCE OF INCOME FOR THE CAPITAL INTRODUCED AS ON 31-5-2005. THE APPELLANT HAD FURTHER STATED THAT THE RETURN OF THE PARTNERSHIP FIRM FOR THE ASSESSMENT YEAR 2005-06 WAS FILED U/S.44AD OF THE A CT AND THEREFORE, REGULAR BOOKS OF ACCOUNTS WAS NOT REQUIRED TO BE MA INTAINED BY THE FIRM AND THIS BEING THE ASSESSMENT OF THE APPELLANTS CASE B OOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT SHALL BE PRIMARILY CONS IDERED. THE ASSESSEE FURTHER RELIED ON THE DECISION IN THE CASE OF SMT. SHANTADEVI VS. CIT (1988) 171 ITR 532 (P&H) AND ANANDRAO RAITANI VS. CIT (199 7) 223 ITR 544 (GAU). ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND THE CASE LAWS REFERRED BY THE LD. AR. IT IS APPARENT FROM THE LD. AOS ORDER THAT ON HIS VERIFICATION OF THE ACCOUNTS OF THE FIRM M/S. HBG BUILDERS IN WHICH THE ASSESSEE IS A PARTNER IT WAS NOTICED THAT THE ASSESSEE HAS INTRODUCED FRESH CAPITAL OF RS.2,50,000/- ON 0 1-07-2004. WHEN QUERIED BY THE LD. AO THE ASSESSEE HAS NOT COME OUT WITH AN Y COGENT EVIDENCE TO PROVE THAT THE CASH INTRODUCED IN THE FIRM AS THE A SSESSEES CAPITAL HAD BONAFIDE SOURCE. THE ASSESSEE HAD ALSO NOT COME OU T BEFORE THE LD. CIT (A) WITH ANY SUFFICIENT EXPLANATION TO EXPLAIN THE SOUR CE OF RS.2,50,000/- INTRODUCED BY HIM AS CAPITAL IN THE FIRM. EVEN BEF ORE US AT THIS STAGE THE ASSESSEE HAD NOT JUSTIFIED THE SOURCE OF RS. 2,50,0 00/-. THE ASSESSEE HAS BEEN GIVEN SUFFICIENT OPPORTUNITIES BY THE REVENUE ON BO TH THE OCCASIONS TO EXPLAIN HIS SOURCE OF INCOME FOR THE CAPITAL INTROD UCED IN THE FIRM. HOWEVER, THE ASSESSEE FAILED TO PRODUCE SUFFICIENT EVIDENCE TO PROVE HIS STAND. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT T HE ADDITION MADE BY THE LD. AO IS JUSTIFIABLE U/S. 69 OF THE ACT THOUGH WRO NGLY STATED U/S. 68 OF THE ACT BECAUSE THE ASSESSEE HAS NOT COME FORTH WITH AN Y VALID EXPLANATION TO PROVE THE SOURCE OF INVESTMENT OF RS.2,50,000/- TO BE BONAFIDE. THE DECISION OF THE HON. ALLAHABAD HIGH COURT IN THE CASE DR.V.S .CHAUHAN AND ANOTHER PRAKASH HOSPITALS P. LTD, V/S. DIT(INV) AND OTHERS REPORTED IN 336 ITR 533 HAVE CLEARLY LAID DOWN THE PRINCIPLE THAT OMISSION TO REFER TO THE PROVISION OF LAW WHICH IS THE SOURCE OF POWER OR MENTIONING A WRONG PROVISION WILL NOT BY ITSELF RENDER AN ORDER INVALID OR ILLEGAL IF THE AUTHORITY HAD THE POWER UNDER AN APPROPRIATE PROVISION OF LAW . WE HAVE ALSO TAKEN NOTE OF THE DECISION RENDERED IN THE CASE M/S. MEERA TRADERS VS . ITO WARD-1 IN ITA NO.2938/AHD/2006 OF THE AHMEDABAD BENCH. IN THIS CA SE, THE AO NOTED THAT SHRI ASHOK BHOGILAL MEHTA AND SHRI MUKESHBHAI N, MODI HAD ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 5 INTRODUCED RS.3,50,000/-AND RS.57,000/- RESPECTIVEL Y AS CAPITAL INTO THE PARTNERSHIP FIRM. THE SOURCE WAS EXPLAINED TO BE GI FTS RECEIVED BY EACH OF THE PARTNERS AS DETAILED IN THE ASSESSMENT ORDER. T HE AO WAS NOT SATISFIED WITH THE SOURCE AND, THEREFORE, HE MADE THE ADDITIO N IN THE HANDS OF THE FIRM PROTECTIVELY. WHEN THE MATTER WENT BEFORE THE CIT ( A), THE CIT (A) ALSO CONFIRMED THE ADDITION. HOWEVER, THE TRIBUNAL DELET ED THE ADDITION IN THE HANDS OF THE FIRM HOLDING THAT ONCE THE PARTNERS H AVE OWNED THAT THE MONEYS DEPOSITED IN THEIR ACCOUNTS ARE THEIR OWN TH EN THE INCOME TAX OFFICER IS ENTITLED TO PROCEED AGAINST THE PARTNERS AND ASSESS THE SAME IN THEIR HANDS IF THEIR EXPLANATION IS NOT FOUND SATISFACTOR Y. THE TRIBUNAL HAD FOLLOWED THE DECISION OF THE HONBLE GUJARAT HIGH C OURT IN THE CASE OF CIT VS. PANKAJ DYESTUFF INDUSTRIES IN INCOME TAX REFERE NCE NO.241 OF 1993 VIDE ORDER DATED 6-7-2005 IN ARRIVING AT THIS CONCL USION. WITH THE ABOVE DISCUSSIONS AND INFERENCE WE HEREBY CONFIRM THE ORD ER OF THE LD. CIT (A). 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON - - 2011. SD/- SD/- (BHAVNESH SAINI) (A . MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.121/ AHD/2009 ASSESSMENT YEAR 2005-06 6 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ ASSTT. REGISTRAR ITAT, AHMEDABAD . 1.DATE OF DICTATION 15 - 9 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 20/9/ 2011 MEMBER.OTHER MEMBER . 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 20 - 9 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27 - 9 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 27 -9 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27- 9 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER ..