Shri Vallamjibhai R Patel, HUF, RAJKOT-GUJARAT V. The Income Tax Officer, Ward 5(3), Morbi

ITA 1325/RJT/2010

• Counselvise Citation: 132524914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 10-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: RK DOSHI
• Keywords: Unexplained cash credit; Principle of natural justice

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO. 1325/RJT/2010. / ASSESSMENT YEAR 2003-04 SHRI VALLAMJIBHAI R. PATEL, HUF V. INCOME TAX OFF ICER PANKAJ NEW ADARSH SOCIETY WARD-5 (3) SANALA ROAD, MORBI MORBI PAN:AAGHP2483L DATE OF HEARING : 20-04-2012. DATE OF PRONOUNCEMENT : 30-04-2012. REVENUE BY:: S HRI M. K. SINGH, D.R ASSESSEE BY: SHRI R. K. DOSHI, C.A. . / / / / ORDER . .. . . . . . / D. K. SRIVASTAVA: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 11-10-201 0, ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND CONTRARY TO THE FACTS OF THE CASE . 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE L OAN AMOUNT OF RS.6,00,000/- TAKEN BY THE APPELLANT FROM TWO DEPOS ITORS VIZ. SHRI PRAFULBHAI KARAMSHIBHAI PATEL RS.3,00,000/- AN D FROM PARESHBHAI PRAFULBHAI PATEL RS.3,00,000/- EACH AS U NEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 3. THE ORDER OF THE LEARNED CIT(A) IS ILLEGAL, UNJU STIFIED AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT CR AVES LEAVE TO ADD, AMEND, ALTER, VARY OR WITHDRAW ALL OR ANY OF T HE GROUNDS ON OR BEFORE THE HEARING OF APPEAL. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY DURING THE COURS E OF WHICH TWO LOANS OF RS.3,00,000/- EACH WERE FOUND RECORDED IN THE NAME OF SHRI PRAFULBHAI KARAMSHIBHAI PATEL AND SHRI PARESHBHAI PRAFULBHAI PATEL IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE YEAR UNDER APPEAL. THE ASSESSI NG OFFICER HAS TREATED THE AFORESAID TWO LOANS AS UNEXPLAINED CASH CREDIT, WIT H THE FOLLOWING OBSERVATIONS:- (1) SHRI KESUBHAI KARAMSHIBHAI PATEL, BANGAVADI- R S.3 LAKH. ITA 1325/2010 2 ASSESSEE HAS ACCEPTED LOAN OF RS.3 LAKH FROM SHRI P RAFULBHAI KARAMSHIBHAI PATEL DURING THE FINANCIAL YEAR RELEVA NT TO AY 2003-04. ASSESSEE VIDE THIS OFFICE LETTER DATED 23/02/2006 W AS ASKED TO PRODUCE CONTRA ACCOUNTS OF THE DEPOSITOR. HOWEVER, ASSESSEE HAS P RODUCED ONLY THE COPY OF BANK PASS BOOK. THEREAFTER, ASSESSEE HAS PRODUCED THE DEPOSITOR FOR VERIFICATION. THE STATEMENT OF THE DEPOSITOR HAS BE EN RECORDED. ON GOING THROUGH THE BANK PASS BOOK, IT IS SEEN THAT THE DEP OSITOR HAD DEPOSITED RS.3 LAKH IN CASH IN HIS DENA BANK SAVING BANK ACCOUNT N O.15929 ON 07-10-2002 AND ON THE VERY SAME DAY GIVEN LOAN TO THE ASSESSEE BY ISSUING CHEQUE NO.547820 DATED 07/20/2002. FURTHER ON GOING THROU GH THE STATEMENT OF THE DEPOSITOR RECORDED U/S.131 OF THE ACT, IT IS SEEN T HAT THE DEPOSITOR WAS A PARTNER IN THE FIRM M/S. OMEGA GLAZE TILES AND HIS CAPITAL WITH THE SAID FIRM IS OF RS.1450500/- AND ALSO PARTNER IN THE FIRM SONAM CERAMICS AND HIS CAPITAL WITH THE SAID FIRM IS RS.33142/-. FURTHER IN HIS ST ATEMENT THE DEPOSITOR HAS STATED THAT HE HAD AGRICULTURAL INCOME. MOREOVER, D EPOSITOR SATED THAT HE IS ASSESSED TO TAX WITH THE ITO, RAJKOT, WARD 5(4), MO RBI AND P.A.NUMBER IS AJEPPOO7111 AND LOAN IS GIVEN FROM HIS SAVING OF AG RICULTURAL INCOME. ON GOING THROUGH THE ACKNOWLEDGEMENT OF RETURN OF INCO ME OF DEPOSITOR FOR AY 2003/04 WHICH IS PRODUCED BY THE ASSESSEE IT IS SEE N THAT THE DEPOSITOR HAD NOT SHOWN ANY AGRICULTURAL INCOME IN HIS RETURN OF INCOME. AS THE DEPOSITOR HAS NOT SHOWN ANY AGRICULTURAL INCOME IN HIS RETURN OF INCOME FOR AY 2003-04 AND RS.3 LAKH DEPOSITED IN CASH ON 07/10/2002 AND O N VERY SAME DAY GIVEN BY ISSUING CHEQUE ON 07-10-2002, THE LOAN GIVEN BY THE ASSESSEE IS NOT GENUINE. (2) SHRI PARESH PRAFULBHAI PATEL, BANGAVADI RRS.3 LAKH ASSESSEE HAS ACCEPTED LOAN OF RS.3 LAKH FROM SHRIPA RESH PRAFULBHAI PATEL DURING THE FINANCIAL YEAR RELEVANT TO AY 2003 -04. ASSESSEE VIDE THIS OFFICE LETTER DATED 23/02/2006 WAS ASKED TO PRODUCE CONTRA ACCOUNTS OF THE DEPOSITOR. HOWEVER, ASSESSEE HAS PRODUCED ONLY THE COPY OF BANK PASS BOOK. THEREAFTER, ASSESSEE HAS PRODUCED THE DEPOSI TOR FOR VERIFICATION. THE STATEMENT OF THE DEPOSITOR HAS BEEN RECORDED. ON G OING THROUGH THE BANK PASS BOOK, IT IS SEEN THAT THE DEPOSITOR HAD DEPOSI TED RS.3 LAKH IN CASH IN HIS DENA BANK SAVING BANK ACCOUNT NO.15931 ON 09-10-200 2 AND ON THE VERY SAME DAY GIVEN LOAN TO THE ASSESSEE BY ISSUING CHEQ UE NO.547785 DATED 09/20/2002. FURTHER ON GOING THROUGH THE STATEMENT OF THE DEPOSITOR RECORDED U/S.131 OF THE ACT, IT IS SEEN THAT THE DEPOSITOR W AS A PARTNER IN THE FIRM M/S. OMEGA GLAZE TILES AND HIS CAPITAL WITH THE SAID FIR M IS OF RS.540000/- AND ALSO PARTNER IN THE FIRM SONAM CERAMICS AND HIS CAP ITAL WITH THE SAID FIRM IS RS.33642/-. MOREOVER, DEPOSITOR SATED THAT HE IS AS SESSED TO TAX WITH THE ITO, RAJKOT, WARD 5(4), MORBI AND P.A.NUMBER IS AEPHD629 8A AND LOAN IS GIVEN BY TAKING LOANS FROM RELATIVES AND DEPOSITORS IN HI S BANK ACCOUNT ON 90/10/2002, THE LOAN GIVEN BY THE ASSESSEE IS NOT G ENUINE. ITA 1325/2010 3 3. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ACTI ON OF THE AO WITH THE FOLLOWING OBSERVATIONS:- 4.3 I HAVE CAREFULLY GONE THROUGH THE SUBMISSION O F THE AR OF THE APPELLANT AND THE DECISION OF THE ASSESSING OFFICER IN THE AS SESSMENT ORDER. NO DOUBT THE AR OF THE APPELLANT HAS VERY WELL ARGUED TO SHO W THE GENUINNITY OF THE TRANSACTION. BUT THERE SEEMS TO BE LOOPHOLES IN THE SUBMISSION AS WELL AS IN THE ARGUMENT BY THE AR OF THE APPELLANT. THE FIRST THING IS THAT THE AR OF THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE REASON A S TO WHY THE FIRST DEPOSITOR NAMED SHRI PRAFULBHAAI K. PATEL HAS NOT SHOWN HIS A GRO INCOME IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04. NO DOUB T THE INCOME MAY BE JOINTLY EARNED AND EXEMPTED BUT THERE LAYS ONUS TO SHOW IT ON THE RETURN OF INCOME. JUST BY SAYING THAT THE LOAN IS GIVEN OUT O F AGRO INCOME CANNOT SATIATE THE ENABILITY OF THE TRANSACTION. ANY ONE CAN SAY T HAT THE LOAN IS GIVEN OUT OF AGRO INCOME. ONUS LIES ON THE DEPOSITOR TO SUBMIT T HE REQUIRED PROOF IN RESPECT OF AGRO ACTIVITY UNDERTAKEN LIKE 7/12, 8A ETC. AND ANOTHER DEPOSITOR JUST MENTIONED IN THE STATEMENT THAT HE DERIVED THE AMOU NT FROM HIS RELATIVE WHICH AGAIN DOES NOT PROVE THE CREDIT WORTHINESS OF THE D EPOSITOR. THE AR OF THE APPELLANT CLAIMS THAT DEPOSITOR IS A MAN OF RESOURC ES. HOWEVER THE SAME HAS NOT BEEN PROVED. MERELY BY SAYING THAT THE LOAN AMO UNT IS GIVEN FROM THE AGRICULTURAL INCOME OR THE AMOUNT HAS GIVEN FROM LO AN TAKEN FROM ANOTHER RELATIVE IS JUST A TECHNIQUE OF PASSING ON THE BUCK . ALL OF SUDDEN THE FLUSHING OF AMOUNT INTO THE DEPOSITORS BANK ACCOUNT AND GIVING THE LOAN AMOUNT ON THE SAME DAY ITSELF IS SMELLING FOUL. THEREFORE FROM TH E ABOVE FACTS IT IS HEREBY CONCLUDED THERE HAS BEEN DELIBERATED ATTEMPT ON THE PART OF THE APPELLANT TO DIVERT THE UNACCOUNTED CASH. SO LOOKING TO THE FACT S OF THE CASE THE ACTION TAKEN BY THE ASSESSING OFFICER IN ADDING THE LOAN A MOUNT TO THE TOTAL INCOME OF THE ASSESSEE AS UNACCOUNTED CASH CREDIT U/S.68 O F THE ACT IS CORRECT AND IS HEREBY ORDERED TO BE RETAINED. THIS GROUND OF APPEA L IS DISMISSED. 4. AGGRIEVED BY THE ORDER PASSED BY THE CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IT WAS SUBMITTED THAT BOTH T HE AMOUNTS WERE RECEIVED THROUGH BANKING CHANNELS AND THAT BOTH THE CASH CREDITORS H AD CONFIRMED TO HAVE GIVEN THE LOANS TO THE ASSESSEE. HE CLAIMED THAT BOTH THE CAS H CREDITORS HAD AGRICULTURAL INCOME AND WERE ALSO ASSESSED TO TAX. IT WAS FURTHE R SUBMITTED THAT THE ASSESSING OFFICER HAS RECORDED STATEMENT OF BOTH THE CREDITOR S DURING WHICH THEY CONFIRMED TO HAVE GIVEN THE IMPUGNED LOANS TO THE ASSESSEE. HE C ONTENDED THAT BOTH THE CASH CREDITORS WERE GENUINE AND THEREFORE THE IMPUGNED A DDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) SHOULD BE DELETED. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE HAS ALSO FILED A BRIEF SYNOPSIS IN WHICH HE HAS REFERRED TO CERTAIN DECISI ONS IN SUPPORT OF HIS CASE, E.G., CIT ITA 1325/2010 4 V. ORISSA CORPORATION (P) LTD. 159 ITR 78 (SC), CIT V. ROHINI BUILDERS 256 ITR 360 (GUJ.), METACHEM 245 ITR 360 (MP) AND OTHER DECISI ONS. 6. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDERS PASSED BY THE AO AND CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. PERUSAL OF THE COPY OF BANK ACCOUNT OF BOTH THE CRE DITORS AS FILED BY THE ASSESSEE BEFORE US SHOWS THAT MATCHING AMOUNTS WERE FIRST DE POSITED IN CASH IN THE BANK ACCOUNT OF THE CREDITORS AND THEREAFTER CHEQUES WER E ISSUED BY THE CREDITORS IN FAVOUR OF ASSESSEE. THERE IS NO OTHER CASH DEPOSIT OF SIM ILAR AMOUNT IN THE BANK ACCOUNT OF BOTH THE CREDITORS. SECONDLY, THE ASSESSEE DID NOT FILE ANY EVIDENCE TO ESTABLISH THAT IT HAD ACTUALLY CARRIED OUT AGRICULTURAL OPERATIONS OR GENERATED INCOME FROM AGRICULTURE. FACTS BROUGHT ON RECORD AND THE FINDIN GS RECORDED BY THE A.O./C.I.T.(A) HAVE NOT BEEN REBUTTED BY THE ASSESSEE. IN OUR VIEW , BOTH THE AUTHORITIES HAVE CORRECTLY APPRECIATED THE FACTUAL AND LEGAL ASPECTS OF THE CASE. WE THEREFORE ENDORSE THE FINDINGS OF THE CIT(A). 8. THE ISSUE AS TO WHETHER A PARTICULAR CASH CREDIT IS GENUINE OR NOT IS ESSENTIALLY A QUESTION OF FACT. ON FACTS, WE ARE SATISFIED WIT H THE ANALYSIS DONE BY THE AO AND THE CIT(A) IN THIS BEHALF. RELIANCE PLACED BY THE ASSESSEE ON CERTAIN JUDGMENTS WOULD NOT CONTROVERT A SHAM TRANSACTION INTO A GENU INE TRANSACTION. 9. IN VIEW OF THE FOREGOING, THE APPEAL FILED BY TH E ASSESSEE IS DISMISSED. ) + 30-04-2012 . ) THIS ORDER PRONOUNCED IN OPEN COURT ON 30 -04-2012. SD/- SD/- ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ DATE 30-04-2012. /RAJKOT ) )) ) 12 12 12 12 32 32 32 32 / COPY OF ORDER FORWARDED TO:- 1. 6 / APPELLANT-SHRI VALLAMJIBHAI R. PATEL, HUF, MORBI . 2. 186 / RESPONDENT-THE INCOME-TAX OFFICER, WARD-5(3), MO RBI.. 3. ; / CONCERNED CIT-III, RAJKOT.. 4. ;- / CIT (A)-IV, RAJKOT.. 5. 2 1, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR/ , / ITAT, RAJKOT