Satyadev Construction Co., V. The Income tax Officer, Ward-3(3),

ITA 1315/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1831 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-12-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 22-04-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Unexplained cash credit; Business income; Depreciation; Additional evidence
• Section: 143(1); 143(2); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM , AND A.N. PAHUJA, A.M. ITA NO.1315/AHD/2004 ASST. YEAR:2000-01 M/S SATYADEV CONSTRUCTION CO., 24, SUNRISE SHOPPING CENTRE, DRIVE-IN-ROAD, THALTEJ, AHMEDABAD- 380052. V/S . INCOME-TAX OFFICER, WARD 3(3), PETLAD. PAN :AAGFS8114D (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- MS. URVASHI SHODHAN, AR REVENUE BY:- MS. NEETA SHAH, DR O R D E R A.N. PAHUJA :THIS IS A RECALLED MATTER VIDE ORDER DATED 5/12/2 008 IN M.A.NO.130/AHD/2008 ARISING OUT OF ITA NO.1315AHD/2 004. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS AGAINST AN ORDER DATED 16.3.2004 OF THE LD. CIT(A)-II,BARODA,IN THEIR APPEAL :- 01. THE LD. CIT(A)-II, HAS ERRED BY DISALLOWING OF TOTAL CASH EXPENDITURE OF RS.1,41,181/- UNDER THE DIFFERENCE HEADS EXPENDI TURE AS EXPLAINED IN RELIEF CLAIMED STATEMENT OF FIRST PARA . FURTHER PLEASE NOTE THAT THE SAID CASH EXPENDITURES ARE SUPPORTED BY THE VOUCHERS WITH RECIPIENT SIGNATURE AND PAYMENT MADE IN CASH B ELOW RS.20,000/- FOR EACH TRANSACTION AND IT IS MADE UND ER BUSINESS EXPEDIENCY AND AS PER THE NEED FOR BUSINESS PURPOSE ONLY. AND THEREFORE SUCH ADDITION BE DELETED FROM THE ADDITIO N OF THE BUSINESS INCOME. 02. THE LD. CIT(A)-II HAS ALSO ERRED BY MAKING ADDI TION OF RS.75,000/- RECEIVED UNDER THE SALE OF PROPERTY BANAKHAT DATED 12.08.1999 OF THE FIRM FOR WHICH LEGAL AGREEMENT BEING SALE BANAK HAT WAS MADE AND PAYER OF THE AMOUNT HAS CONFIRMED IN THE AGREEM ENT AND ALSO IN SEPARATE LETTER OF CONFIRMATION AND HE HAS ALSO PRODUCED ANOTHER PERSON CONFIRMATION LETTER FROM WHOM HE MANAGED TO RAISE MONEY FOR PAYMENT OF SUCH AMOUNT EVEN THOUGH THE ADDITION WAS MADE IGNORING THE PROOF OF PAYMENT AND CONFIRMATION LETT ERS AND LEGAL ITA NO.1315/AHD/2004 2 DOCUMENTS. THIS IS THE PAYMENT MADE AGAINST PURCHAS E OF ASSETS IN CASH AND THEREFORE, SEC.40A(3) IS NOT APPLICABLE FOR CASH PAYMENT. 03. THE LD. CIT(A)-II, BARODA HAS ALSO ERRED BY NOT CONSIDERING THE ASSESSEES FACTS FOR DISALLOWING 1/5 TH PERSONAL USE IN THE RESPECT OF CAR LOAN INTEREST, VEHICLE EXPENSES, DEPRECIATION, MOBILE EXPENSES ETC. THE FACT WAS THAT IN THE FIRM THERE IS ONLY ON E MALE PARTNER SHRI P.B. PATEL AND HE DIED ON 15.9.1999 AND REQUEST WAS MADE BY THE ASSESSEE THAT 1/5 TH DISALLOWANCE OF THE SAID EXPENSES BE RESTRICTED UP TO THE EXPENDITURE INCURRED FOR THE PERIOD 15.9. 1999 BECAUSE AFTER THE DEATH OF SHRI P.B. PATEL BUSINESS HANDLED BY MANAGERIAL STAFF ONLY AND AFTER THE DEATH OF THE PARTNER EXPEN SES INCURRED BE CONSIDERED AS INCURRED BY THE STAFF ONLY AND NOT BY THE PARTNERS. THE SAME FACT BE CONSIDERED AND PROPORTIONATE EXPEN DITURE OF ADDITION AFTER 15.9.1999 BE DELETED FROM THE FIRMS INCOME. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.69,540/- FILED ON 30.10.2000 BY THE ASSESSEE, CARRYING ON THE BUSINESS OF ROAD CONSTRUCTION FOR THE AHMEDABAD MUNICIPAL CO RPORATION ON CONTRACT BASIS, AFTER BEING PROCESSED U/S 143(1) OF THE INCO ME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 30.10.2001. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOT ICE THAT THE ASSESSEE HAD DECLARED LOSS OF RS.23,610/- FROM THE CONTRACT REC EIPTS OF RS.86,49,200/- AND OTHER RECEIPTS OF RS.6,84,000/- BY WAY OF DUMPER RE NT (CREDITED UNDER THE HEAD LABOUR CHARGES), MACHINERY RENT OF RS.5,60,000 /- AND BANK INTEREST OF RS.1,73,544/-. TO A QUERY BY THE AO, THE ASSESSEE, VIDE THEIR LETTER DATED 10.12.2002 SUBMITTED THAT THE STOCK REGISTER WAS NO T MAINTAINED AND IT WAS NOT POSSIBLE TO GIVE QUANTITATIVE DETAILS OF MATERI AL CONSUMED. EVEN THE PARTYWISE DETAILS OF PURCHASES, WAGES, CARTAGE, DI ESEL EXPENSES, SALARY, KITCHEN EXPENSES, DUMPER REPAIRS, ERECTION CHARGES AND TRANSPORTATION CHARGES WERE NOT SUBMITTED. VIDE LETTER DATED 2.3.2 003, THE ASSESSEE SUBMITTED THAT PARTY-WISE DETAILS OF PURCHASE OF KA PACHI, GRIT, METAL, ASPHALT, MIXED MATERIAL, WAGES, CARTAGE, DIESEL OIL WAS NOT PRACTICABLE BUT QUANTITY- WISE PURCHASE OF ALL THESE ITEMS WAS GIVEN WHILE DI ESEL OIL WAS PURCHASED THROUGH CASH MEMOS. IT WAS FURTHER SUBMITTED THAT K ITCHEN EXPENSES AND DUMPER REPAIRS WERE MOSTLY INCURRED IN CASH AND, TH EREFORE, PARTY-WISE DETAILS OF THESE EXPENSES WERE NOT AVAILABLE. THE ASSESSEE, HOWEVER, FURNISHED THE ITA NO.1315/AHD/2004 3 ADDRESS OF M/S GIRIRAJ TRANSPORT IN CONNECTION WITH CARTAGE EXPENSES AND OF M/S GIRIRAJ TRADING COMPANY IN CONNECTION WITH THE PURCHASE OF KAPACHI/GRIT. LATER, THE ASSESSEE FILED BEFORE THE ASSESSING OFFI CER CERTAIN DETAILS BESIDES PHOTOCOPIES OF WAGES REGISTER CONTAINING THE SIGNAT URE OF LABOURS AND MONTH- WISE DETAILS OF SALARY CONTAINING THE NAMES AND SIG NATURES OF THE EMPLOYEES. THE PHOTOCOPIES OF 5 BILLS OF M/S G.H. VIJAPURA & C O. FOR THE PURCHASE OF MIX MATERIALS WERE ALSO FILED. THE AO, HOWEVER, OBSERVE D THAT SOME OF THE DETAILS FILED DID NOT MAKE ANY SENSE AND MOST OF THE EXPENS ES WERE UNSUPPORTED BY DOCUMENTARY EVIDENCES. ACCORDINGLY, THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT ON THE GROUND THAT IN THE ABSENCE OF STOCK REGISTER, IT WAS NOT POSSIBLE TO VERIFY THE CONSUMPTION OF MATER IAL WHILE THE EXPENSES SUCH AS THOSE ON DIESEL AND OIL, WAGES, CARTAGE WER E NOT VERIFIABLE AND KITCHEN EXPENSES, STAFF WELFARE EXPENSES, DUMPER RE PAIRS, TRANSPORTATION CHARGES, COMPUTER EXPENSES AND VEHICLE EXPENSES WER E INCURRED IN CASH. HE ALSO MENTIONED THAT THE ASSESSEES COUNSEL HAD AGRE ED FOR DISALLOWANCE OF RS.41,000/- OUT OF THE KITCHEN EXPENSES, WHICH PROV ED THAT THESE EXPENSES WERE UNVERIFIABLE. AFTER REJECTING THE BOOK RESULTS , THE AO COMPUTED NET PROFIT @ 8% OF THE GROSS RECEIPTS OF RS.8,04,262/- ON ACCO UNT OF CONTRACT BUSINESS, DUMPER AND MACHINING RENT AS ALSO BANK INTEREST AS AGAINST LOSS OF RS.23,610/-. 3. ON APPEAL, THE ASSESSEE SUBMITTED WRITTEN SUBMIS SIONS, GIVING DETAILS FURNISHED BEFORE THE AO. THESE WRITTEN SUBMISSIONS WERE FORWARDED TO THE AO. IN HIS REMAND REPORT DATED 29.12.2003 AND SUPP LEMENTARY REPORT DATED 22.1.2004, THE AO DID NOT OFFER ANY COMMENTS WHATSO EVER ON THE ISSUES RAISED IN THIS GROUND AND CONFINED HIMSELF TO THE E XPLANATION REGARDING CREDITS IN THE PARTNERS ACCOUNT AND CASH CREDIT OF RS.75,0 00/-. THE LD. CIT(A) CALLED FOR COMPLETE VOUCHERS OF EXPENSES MENTIONED BY ASS ESSING OFFICER ALONG WITH PAYMENT DETAILS AND WHILE CONCLUDING THAT PRO VISIONS OF SEC. 145(3) OF THE ACT ARE NOT ATTRACTED IN THIS CASE, UPHELD THE DISALLOWANCE OUT OF WAGES- RS. 6,210/-,CARTAGE-RS.15,390/-,SALARY-RS.6.700/-KI TCHEN EXPENSES-RS.41.000 (OFFERED BY THE ASSESSEE ITSELF),DUMPER REPAIRS-RS. 17,308/-COMPUTER- RS.53,255/-,VEHICLE-RS.1,318/- & MATERIAL PURCHASE- RS.17,495/- ON THE GROUND THAT THESE EXPENSES WERE UNVERIFIABLE, IN T HE ABSENCE OF RELEVANT ITA NO.1315/AHD/2004 4 VOUCHERS. ACCORDINGLY, THE LD. CIT(A) UPHELD A TOTA L DISALLOWANCE OF RS.1,41,181/- IN FOLLOWING TERMS :- HAVING REGARD TO THESE FACTS , PARTICULARLY THE ES CALATION FACTOR, THE INCURRING OF LOSS DURING THE YEAR HAS TO BE TAKEN AS GENERALL Y EXPLAINED. HOWEVER, SINCE A PART OF THE EXPENSES ARE NOT VERIFIABLE, DISALLOW ANCE HAS TO BE MADE BY ESTIMATE. HAVING REGARD TO THE DISCUSSION IN PARA 3 SUPRA, EXPENSES OF RS.1,41,181/- (6,210 + 15,390 + 6,700 + 41,000 + 17 ,308 + 53,255 + 1,318 + 17,495) OUT OF WAGES, CARTAGE, SALARY, KITCHEN EXPE NSES, DUMPER AND MACHINERY REPAIRS, COMPUTER EXPENSES, VEHICLE EXPEN SES AND PURCHASE OF MATERIAL DESERVE TO BE DISALLOWED OTHER THAN THE EX PENSES OF RS.1,60,890/- ON PURCHASE OF METAL. THE APPELLANT HAS TO OBTAIN D UPLICATE BILL OF M/S PARAG TRANSPORT FOR THE PURCHASE OF METAL AS THE ORIGINAL BILL IS STATED TO HAVE BEEN LOST. THE ASSESSING OFFICER WILL VERIFY GENUINENESS OF THIS BILL AND THE PAYMENTS CLAIMED THROUGH CHEQUES AND ALLOW THIS EXP ENDITURE, OTHERWISE NOT. THE EXPENDITURE TO THE EXTENT OF RS.1,41,181/- WILL BE DISALLOWED IN ANY CASE. 4. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BE FORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH THE IMPUGNED ORDERS, REIT ERATED THEIR SUBMISSIONS BEFORE THE LOWER AUTHORITIES. SHE RELIED ON PAGE NO . 5 OF THE PAPER BOOK ,WHICH CONTAINS A COPY OF ACCOUNT OF THE SOURCE, REFLECTING CERTAIN TRANSACTIONS. ADMITTEDLY, THE SAID DOCUMENT WAS NEV ER PLACED BEFORE THE LOWER AUTHORITIES NOR ANY REQUEST HAS BEEN MADE BEF ORE US FOR ADMISSION OF ADDITIONAL EVIDENCE. ON THE OTHER HAND, THE LD. DE PARTMENTAL REPRESENTATIVE WHILE POINTING OUT THAT THE ASSESSEE HAS NOT PLACED ANY MATERIAL/VOUCHERS BEFORE THE ITAT SUGGESTING INTERFERENCE WITH THE FI NDINGS OF THE LD. CIT(A) IN UPHOLDING THE DISALLOWANCE TO THE EXTENT OF RS. 1,4 1,181/-,SUPPORTED THE IMPUGNED ORDER . THE LD. DR VEHEMENTLY ARGUED THAT ADMITTEDLY PAGE NO.5 OF THE PAPER BOOK WAS NEVER PLACED BEFORE THE LOWER AU THORITIES NOR ANY REQUEST HAS BEEN MADE FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE ITAT. IN THESE CIRCUMSTANCES, NO COGNIZANCE CAN BE TAKEN OF THE SA ID DOCUMENT. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE ITAT, VIDE THEIR ORDER DATED 12.6.2008 IN ITA NO.1932/AHD./2004 DISMISSED THE APPEAL OF THE REVE NUE AGAINST FINDINGS OF THE LD. CIT(A) THAT PROVISIONS OF SEC. 145(3) OF T HE ACT ARE NOT ATTRACTED IN THIS CASE AND WHEN EACH AND EVERY ITEM IS CONSIDERED BY THE CIT(A) FOR MAKING THE DISALLOWANCE AND ADDING THE SAME TO THE INCOME OF THE ASSESSEE, THERE IS ITA NO.1315/AHD/2004 5 NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) , WHICH IS IN ACCORDANCE WITH LAW. IN THE APPEAL UNDER CONSIDERATION, THOUGH THE LD. AR VEHEMENTLY ARGUED AGAINST THE AFORESAID DISALLOWANCE UPHELD BY THE L D. CIT(A), NOT AN IOTA OF EVIDENCE WAS REFERRED TO BEFORE US , WHICH COULD EN ABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. THE LD. CIT(A) IN THE IMPUGNED ORDER CONCLUDED THAT THE EXPENDITURE TO THE EXTENT UPHELD BY HIM IS UNVERIFI ABLE, INTER ALIA, FOR WANT OF RELEVANT VOUCHERS. EVEN THE DOCUMENT PLACED AT PAGE NO. 5 OF THE PAPER BOOK WAS NEVER PLACED BEFORE THE LOWER AUTHORITIES NOR A NY REQUEST HAS BEEN MADE BEFORE US FOR ADMISSION OF ADDITIONAL EVIDENCE. IN THESE CIRCUMSTANCES, NO COGNIZANCE CAN BE TAKEN OF THE SAID DOCUMENT. IN V IEW OF THE FOREGOING, ESPECIALLY WHEN NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE, WARRANTING INTERFERENCE WITH THE FINDINGS OF THE LD. CIT(A), W E HAVE NO HESITATION IN UPHOLDING HIS FINDINGS. THEREFORE, GROUND NO.1 IN T HE APPEAL IS DISMISSED. 6. GROUND NO.2 PERTAINS TO ADDITION OF RS.75,000/- ON ACCOUNT OF CASH CREDIT IN THE NAME OF ONE SHRI VIJAYBHAI TRIVEDI. S INCE DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE NEITHER FURNISHED CONFI RMATION NOR EXPLAINED THE SOURCE OF THE FRESH DEPOSIT OF RS. 75,000/-, THE A O ADDED THE AMOUNT U/S 68 OF THE ACT. ON APPEAL. THE ASSESSEE SUBMITTED CONF IRMATION OF THE SAID PARTY, WHEREIN IT WAS STATED THAT THE AMOUNT WAS PAID AS A DVANCE AGAINST THE PURCHASE OF THE ASSESSEES PROPERTY AT VILLAGE THAL ATEJ, DIST. AHMEDABAD SHOWN AS SUNSET BUNGLOW IN THE BALANCE SHEET. AS MENTIONED IN THE IMPUGNED ORDER, A COPY OF A SALE AGREEMENT (IN GUJA RATI) DATED 12.8.1999 ON STAMP PAPER OF RS.20/- WAS FILED WHERE UNDER THE PR OPERTY IS PROPOSED TO BE SOLD FOR RS.7,50,000/- AND ADVANCE OF RS.75,000/- I S STATED TO HAVE BEEN RECEIVED. THIS BEING ADDITIONAL EVIDENCE, THE LD. C IT(A) FORWARDED THE SAME TO THE ASSESSING OFFICER FOR HIS EXAMINATION. IN HI S REMAND REPORT DATED 29.12.2003, THE ASSESSING OFFICER REPORTED THAT SUM MONS ISSUED U/S 131 OF THE ACT TO SHRI VIJAYBHAI TRIVEDI, WERE NOT RESPOND ED. INSTEAD, HIS REPRESENTATIVE ATTENDED AND GAVE IN WRITING THAT TH IS AMOUNT OF RS.75,000/- WAS RECEIVED BY SHRI VIJAYBHAI TRIVEDI AS ADVANCE F ROM ONE SHRI SUBHASHBHAI RANGAWALA ON 12.8.1999 TOWARDS THE PROP OSED SALE OF (AGRICULTURAL) LAND AT VILLAGE VARSODA (KHEDA DIST. ). THEREUPON, SUMMONS WERE ISSUED TO SHRI RANGAWALA, WHO ALSO DID NOT RES POND. DURING THE COURSE ITA NO.1315/AHD/2004 6 OF APPELLATE PROCEEDINGS, A CONFIRMATION OF SHRI SU BHASHBHAI S. RANGAWALA DATED 16.11.2003 WAS FILED. HE HAS STATED THAT THE ADVANCE OF RS.75,000/- WAS PAID TO SHRI VIJAYBHAI J. TRIVEDI OUT OF HIS SA VINGS. SHRI RANGAWALA HAS INDICATED HIS PAN AS 31-042-PZ-1342. BUT NO FURTHER DETAILS COULD BE FURNISHED. THE ASSESSING OFFICER WITH WHOM SHRI RAN GAWALA IS ASSESSED TO TAX WAS NOT SPECIFIED. IN NUTSHELL, THE CREDITWORT HINESS OF SHRI RANGAWALA OR GENUINENESS OF THE TRANSACTIONS WAS NOT ESTABLISHE D. ACCORDINGLY, THE LD. CIT(A) OBSERVED THAT THERE IS NO PLAUSIBLE REASON W HY HE DID NOT RESPOND TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER WHILE T HE PROPERTY OF THE ASSESSEE IN QUESTION I.E. SUNSET BUNGLOW IS NOT SOL D TILL DATE NOR THE AGREEMENT TO SELL THIS PROPERTY WAS REGISTERED. IN THESE CIRCUMSTANCES, THE LD. CIT(A) CONCLUDED THAT THE GENUINENESS OF ITS CONTEN TS CANNOT BE VERIFIED WHILE THE MONEY IS CLAIMED TO HAVE BEEN RECEIVED IN CASH. THERE IS NOTHING TO INDICATE ANY SOURCE OF INCOME OF THE CREDITOR. HE I N TURN CLAIMS TO HAVE RECEIVED CASH ADVANCE OF EQUIVALENT AMOUNT FROM ANO THER PERSON AGAINST PROPOSED SALE OF HIS AGRICULTURAL LAND WITHOUT PROD UCING ANY SUPPORTING DOCUMENT FOR OWNERSHIP OR SALE AGREEMENT IN RESPECT OF THE SAID LAND. ONLY THE CONFIRMATION OF SHRI RANGAWALA HAS BEEN FILED. THE CREDITWORTHINESS OF SHRI RANGAWALA IS ALSO NOT PROVED NOR EVEN THE GENU INENESS OF THE TRANSACTION FOR SALE OF LAND. IN SUCH CIRCUMSTANCES , THE LD. CIT(A) OBSERVED THAT THE SOURCE OF SOURCE CAN BE ENQUIRED INTO U/S 68 OF THE ACT AS SETTLED IN THE SUPREME COURT DECISION IN THE CASE OF CIT VS. B IJU PATNAIK 160 ITR 674 (SUPREME COURT). ACCORDINGLY, THE LD. CIT(A) UPHELD THE SAID ADDITION. 7. THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE L D. AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFOR E THE AUTHORITIES BELOW RELIED UPON THE DECISIONS IN THE CASE OF CIT V. ORI SSA CORPORATION P. LTD. [1986]159 ITR 78, CIT V. ROHINI BUILDERS [2002]256 ITR 360(GUJ) &CIT VS. PRAGATI CO-OPERATIVE BANK LTD., 278 ITR 170(GUJ) AN D HAS ALSO SUBMITTED WRITTEN SUBMISSIONS. ON THE OTHER HAND THE LD. DEPA RTMENTAL REPRESENTATIVE WHILE CARRYING US THROUGH THE ORDERS OF LOWER AUTH ORITIES AND REMAND REPORT OF THE AO PLEADED THAT NEITHER CREDITWORTHINESS OF THE ALLEGED CREDITOR NOR GENUINENESS OF VARIOUS DOCUMENTS SUBMITTED BEFORE T HE LD. CIT(A) HAD BEEN ESTABLISHED. WHILE RELYING UPON THE DECISIONS IN TH E CASE OF POWER PETRO ITA NO.1315/AHD/2004 7 PRODUCTS LTD. VS. ACIT,301 ITR 228(MAD.) AND INDUS VALLEY PROMOTERS LTD. VS. CIT,305 ITR 202(DEL.), THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOT H THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. WE FIND THAT DESPITE SUFFICIENT OPPORTUNITY GIVEN, THE ASSESSEE DID NOT FILE ANY CONFIRMATION BEFORE THE AO NOR ESTABLISHED IDENTITY, CREDITWORTH INESS OF THE ALLEGED CREDITOR OR EVEN THE GENUINENESS OF THE TRANSACTION. IT WAS ONLY BEFORE THE LD. CIT(A) THAT THE ASSESSEE FOR THE FIRST TIME SUBMITTED A CO NFIRMATION OF THE ALLEGED CREDITOR, SHRI VIJAYBHAI TRIVEDI, WHEREIN IT WAS S TATED THAT THE AMOUNT WAS PAID AS ADVANCE AGAINST THE PURCHASE OF THE ASSESSE ES PROPERTY AT VILLAGE THALATEJ, DIST. AHMEDABAD SHOWN AS SUNSET BUNGLOW IN THE BALANCE SHEET. IN PURSUANCE TO DIRECTIONS OF THE LD. CIT(A), EVEN WHEN SUMMONS WERE ISSUED U/S 131 OF THE ACT TO SHRI VIJAYBHAI TRIVED I, HE DID NOT RESPOND. INSTEAD, HIS REPRESENTATIVE SUBMITTED THAT THIS AMO UNT OF RS.75,000/- WAS RECEIVED BY SHRI VIJAYBHAI TRIVEDI AS ADVANCE FROM ONE SHRI SUBHASHBHAI RANGAWALA ON 12.8.1999 TOWARDS THE PROPOSED SALE OF (AGRICULTURAL) LAND AT VILLAGE VARSODA (KHEDA DIST.). DESPITE OPPORTUNITY GIVEN BY THE AO EITHER DURING THE ASSESSMENT PROCEEDINGS OR EVEN DURING TH E REMAND PROCEEDINGS, CREDITWORTHINESS OF THE ALLEGED CREDITOR SHRI VIJAY BHAI TRIVEDI WAS NOT PROVED NOR THE EXPLANATION OF HAVING RECEIVED THE AMOUNT FROM SHRI SUBHASHBHAI RANGAWALA WAS SUBSTANTIATED IN ANY MANNER. SINCE T HE CREDITWORTHINESS OF THE ALLEGED CREDITOR OR EVEN THE GENUINENESS OF THE TRANSACTION HAD NOT BEEN ESTABLISHED WHILE THE LD. CIT(A) FOUND THE PROPERTY OF THE ASSESSEE IN QUESTION I.E. SUNSET BUNGLOW HAD NOT BEEN SOLD AND THE AMOUNT HAD BEEN RECEIVED IN CASH, THE LD. CIT(A) CONCLUDED THAT TH E GENUINENESS OF THE TRANSACTIONS HAD NOT BEEN ESTABLISHED. THERE IS NO MATERIAL BEFORE US TO CONTROVERT THESE FINDINGS OF THE LD. CIT(A). THOUGH THE LD. AR IN HER WRITTEN SUBMISSIONS REFERRED TO AN ORDER OF THE LD. CIT(A) AGAINST PENALTY ORDER, WE ARE OF THE OPINION THAT THIS IS NOT OF ANY RELEVANC E ,ESPECIALLY WHEN THE ASSESSEE DID NOT DISCHARGE THE INITIAL ONUS OF ESTA BLISHING IDENTITY AND CREDITWORTHINESS OF THE ALLEGED CREDITOR NOR EVEN T HE GENUINENESS OF THE TRANSACTIONS. IT IS WELL-SETTLED THAT THE ASSESSEE MUST DISCHARGE THE BURDEN OF PROVING THE IDENTITY OF THE CREDITOR AND ALSO TO GI VE THE SOURCE OF THE DEPOSIT. ITA NO.1315/AHD/2004 8 IN OTHER WORDS, THE CREDITWORTHINESS OF THE DEPOSIT OR MUST BE ESTABLISHED TO THE SATISFACTION OF THE ASSESSING OFFICER. WHERE TH ERE IS AN UNEXPLAINED CASH CREDIT, IT IS OPEN TO THE ASSESSING OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE ASSESSIN G OFFICER TO SHOW THAT INCOME IN QUESTION COMES FROM ANY PARTICULAR SOURCE . THE FACTS OF THIS CASE CLEARLY SHOW THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS OF THE SAID CREDITOR WITH RESPECT TO THE CASH CREDIT IN QUESTION AND THE PERSONS INVOLVED DID NOT RESPOND TO THE SU MMONS. THE ASSESSEE RECEIVED THE PAYMENT IN CASH. IN THESE CIRCUMSTANC ES, ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW I N THE MATTER, WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. C IT(A). HERE WE MAY REFER TO A DECISION OF THE HONBLE PATNA HIGH COURT IN THE CAS E OF SAROGI CREDIT CORPORATION V. CIT [1976] 103 ITR 344 , WHEREIN IT WAS OBSERVED IN THE FOLLOWING WORDS: '... IF A CREDIT ENTRY STANDS IN THE NAME OF THE AS SESSEE HIMSELF, THE BURDEN IS UNDOUBTEDLY ON HIM TO PROVE SATISFACTORILY THE NATU RE AND SOURCE OF THAT ENTRY AND TO SHOW THAT IT DOES NOT CONSTITUTE A PART OF H IS INCOME LIABLE TO TAX. IF THE CREDIT ENTRY STANDS IN THE NAMES OF THE ASSESSEE'S WIFE AND CHILDREN, OR IN THE NAME OF ANY OTHER NEAR RELATION, OR AN EMPLOYEE OF THE ASSESSEE, THE BURDEN LIES ON THE ASSESSEE, THOUGH THE ENTRY IS NOT IN HI S OWN NAME, TO EXPLAIN SATISFACTORILY THE NATURE AND SOURCE OF THAT ENTRY. BUT, IF THE ENTRY STANDS NOT IN THE NAME OF ANY SUCH PERSON HAVING A CLOSE RELATION OR CONNECTION WITH THE ASSESSEE, BUT IN THE NAME OF AN INDEPENDENT PARTY, THE BURDEN WILL STILL LIE UPON HIM TO ESTABLISH THE IDENTITY OF THAT PARTY AN D TO SATISFY THE INCOME-TAX OFFICER THAT THE ENTRY IS REAL AND NOT FICTITIOUS. ONCE THE IDENTITY OF THE THIRD PARTY IS ESTABLISHED BEFORE THE INCOME-TAX OFFICER AND OTHER SUCH EVIDENCE ARE PRIMA FACIE PLACED BEFORE HIM POINTING TO THE F ACT THAT THE ENTRY IS NOT FICTITIOUS, THE INITIAL BURDEN LYING ON THE ASSESSE E CAN BE SAID TO HAVE BEEN DULY DISCHARGED BY HIM... 8.1 IN THE CASE UNDER CONSIDERATION, THE ASSESS EE DID NOT SUBMIT AN IOTA OF EVIDENCE ESTABLISHING IDENTITY AND CREDITWORTHINESS OF THE AFORESAID CREDITOR NOR EVEN GENUINENESS OF THE TRANSACTION, BEFORE THE AO. EVEN WHEN A CONFIRMATION WAS FILED BEFORE THE LD. CIT(A), THE A LLEGED CREDITOR WAS NOT PRODUCED NOR HE RESPONDED TO THE SUMMONS ISSUED BY THE AO. THE PROPERTY AGAINST WHICH THE ADVANCE IS STATED TO HAVE BEEN RE CEIVED WAS YET TO BE SOLD AND NO EVIDENCE WAS PLACED BEFORE THE AO OR THE LD. CIT(A) REGARDING THE GENUINENESS OF RECEIPT OF THE AMOUNT FROM SHRI SUBH ASHBHAI RANGAWALA. IN ITA NO.1315/AHD/2004 9 THESE CIRCUMSTANCES, THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE ARE NOT OF ANY ASSISTANCE SINCE THE LD. AR DID NOT DEMO NSTRATE AS TO HOW THESE DECISIONS ARE APPLICABLE TO THE FACTS OF THE CASE U NDER CONSIDERATION, ESPECIALLY WHEN THE ASSESSEE DID NOT SUBMIT ANY CO NFIRMATION BEFORE THE AO AND THUS, FAILED TO DISCHARGE THE INITIAL ONUS PLAC ED UPON THEM. EVEN BEFORE THE LD. CIT(A) WHEN THE ASSESSEE SUBMITTED A CONFIR MATION OF THE ALLEGED CREDITOR, THE SAID PERSON WAS NOT PRODUCED BEFORE T HE AO OR THE LD. CIT(A) WHILE THE SUMMONS ISSUED TO HIM WERE NOT EVEN RESPO NDED. MERE FLING OF A CONFIRMATION WOULD NOT SUFFICE. THE INITIAL ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR T O THE SATISFACTION OF THE AO APART FROM THE GENUINENESS OF THE TRANSACTIONS. ON THE OTHER HAND, THE WELL ESTABLISHED PRINCIPLES LAID DOWN IN THE DECISIONS R ELIED UPON BY THE LD. DR SUPPORT THE CASE OF THE REVENUE. SINCE THE ASSESSEE MISERABLY FAILED TO ESTABLISH ANY OF THE THREE INGREDIENTS BEFORE THE A O AND LD. CIT(A), WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THI S ISSUE AND UPHOLD THE SAME. THUS, GROUND NO.2 IS DISMISSED. 9. GROUND NO.3 RELATES TO DISALLOWANCE OF 1/5 TH EXPENSES ON ACCOUNT OF INTEREST ON CAR LOAN, VEHICLE EXPENSES, DEPRECIATIO N BESIDES 25% OF THE EXPENDITURE TOWARDS USE OF MOBILE PHONE. THERE IS N O DISCUSSION ON THIS ASPECT IN THE ASSESSMENT ORDER. THE LD. CIT(A) WHI LE OBSERVING THAT THE USE OF CAR BY THE KARTA OR OTHER MEMBERS OF THE HUF PAR TNERS HAVING NOT BEEN DENIED, 1/5 TH OF INTEREST ON CAR LOAN, 1/5 TH OF VEHICLE EXPENSES OF RS.39,197/- AND 1/5 TH OF DEPRECIATION ON CAR WILL BE DISALLOWED. THE LD. CIT(A) FURTHER NOTICED THAT TELEPHONE EXPENSES OF RS.75,605/- INCL UDE MOBILE TELEPHONE CHARGES OF RS.20,860/-. OUT OF MOBILE TELEPHONE CHA RGES, 25% WERE DISALLOWED FOR PERSONAL USE. 10. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSE SSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LD. CIT(A) SUBMITTED THAT I NTEREST ON CAR LOAN CAN NOT BE DISALLOWED IN VIEW OF DECISION DATED 20.7.2007 O F THE ITAT IN ITA NO. ITA NO.1315/AHD/2004 10 1920/AHD./2001 IN THE CASE OF M/S PATEL CHIMANLAL V RAJLAL. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF CIT(A). 11. AFTER HEARING THE PARTIES AND CONSIDERING THE FACTS OF THE CASE, WE FIND THAT THE RESTRICTION OF THE DISALLOWANCE ON ACCOUNT OF MOBILE TELEPHONE EXPENSES UPHELD BY THE LEARNED CIT(A) IS REASONABLE AND NO INTERFERENCE IS WARRANTED. SINCE PERSONAL USE OF VEHICLE BY THE HUF PARTNERS AND THEIR FAMILY MEMBERS HAS NOT BEEN DENIED NOR IT WAS CLAIMED THAT THE PARTNERS OR THEIR FAMILY MEMBERS HAD THEIR INDEPENDENT VEHICLES FOR PERSONAL USE, IN OUR OPINION DISALLOWANCE OF 1/5 TH OF THE AFORESAID EXPENSES ON ACCOUNT OF VEHICLE MAINTENANCE AND DEPRECIATION THERE ON , IN THE LIG HT OF PROVISIONS OF SEC. 38(2) OF THE ACT, IS REASONABLE . HOWEVER, DISALLOW ANCE OF 1/5 TH INTEREST ON CAR LOAN IS DELETED, IN VIEW OF DECISION DATED 20.7.200 7 OF THE ITAT IN ITA NO. 1920/AHD./2001 IN THE CASE OF M/S PATEL CHIMANLAL V RAJLAL THEREFORE, GROUND NO. 3 OF THE APPEAL IS ALLOWED TO THIS EXTENT. 12. IN THE RESULT, APPEAL IS PARTLY ALLOWED. SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED :18/12 /2009 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. INCOME-TAX OFFICER, WARD 3(3), PETLAD. 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 ORDER PRONOUNCED IN OPEN COURT ON 18 /12 /2009