Shri Kiritsinh Vakhatsinh Gohil(HUF), Bhavnagar V. The Income tax Officer(OSD),Range-1, Bhavnagar

ITA 1340/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7743 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-06-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 24-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure
• Section: 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC- BENCH,AHMEDABAD. BEFORE :SHRI P.K.BANSAL, ACCOUNTANT MEMBER ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) KIRITSINH VAKHATSINH GOHIL (HUF) KESAR BAUG, STREET NO. 4, NIRMALNAGAR, BHAVNAGAR. THE INCOME TAX OFFICER (OSD) RANGE-1, BHAVNAGAR. (ASSESSEE) VERSUS (RESPONDENT) PAN: AADHK7532E FOR THE ASSESSEE: SMT. URVASHI SHODHAN, AR FOR THE RESPONDENT SHRI JAYANT JHAVERI, SR. DR ITA NO. 1341/AHD/2009 (ASSESSMENT YEAR 2004-05) RAMJIBHAI GANESHBHAI VTHANI, AT DATRETIYA, TAL: VALLABHIPUR, DISTRICT: BHAVNAGAR THE INCOME TAX OFFICER (OSD) RANGE-1, BHAVNAGAR. (ASSESSEE) VERSUS (RESPONDENT) PAN: ABIPV 0687 R FOR THE ASSESSEE: SMT. URVASHI SHODHAN, AR FOR THE RESPONDENT SHRI JAYANT JHAVERI, SR. DR ORDER PER SHRI P.K. BANSAL (ACCOUNTANT MEMBER): THESE TWO APPEALS BY TWO DIFFERENT ASSESSEES HAVE BEEN AGAINST TWO SEPARATE ORDERS OF THE CIT(A) DATED 10-09-2004 AND 11-11-2008 BY TAKING THE FOLLOWING E FFECTIVE GROUNDS OF APPEALS. 2 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) IN THE CASA OF KIRITSINH VAKHATSINH GOHIL (HUF) : 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XX , AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ADDITION OF RS. 1, 25,008/- BEING THE AGRICULTURAL PRODUCE SALE PROCEEDS. THE ADDITION M AY KINDLY BE DELETED. 3.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ADDITION OF RS. 60,000/- MADE ON ACCOUNT OF LOW HOU SEHOLD WITHDRAWAL. THE ADDITION MAY KINDLY BE DELETED. IN THE CASE OF RAMJIBHAI G VITHANI : 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XX , AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ADDITION OF RS.1,90,881/- MADE ON ACCOUNT OF SALE OF KADAB TO SHRI DEVRAJBHAI SHAMJIBHAI. THE ADDITION MAY KINDLY BE DELETED. 3.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ADDITION OF RS.57,000/- MADE ON ACCOUNT OF INAD EQUATE WITHDRAWALS FOR HOUSEHOLD PURPOSE. THE ADDITION MA Y KINDLY BE DELETED. 2 BOTH THE PARTIES AGREED THAT THE ISSUES AND FACT S INVOLVED IN BOTH THESE APPEALS ARE SIMILAR. WE ARE, THEREFORE, CONSI DERING THE FACTS IN THE CASE OF SHRI KIRITSINH VAKHATSINH GOHIL (HUF) FOR DISPOSING OF THESE APPEALS. 3. THE GROUND NO. 1 RELATE TO THE NON ACCEPTING THE AGRICULTURAL INCOME AMOUNTING TO RS.1,25,008/- AND MAKING THE ADDITIONS UNDER SECTION 68 OF THE ACT. THE FACTS RELATE TO THIS ADDITION ARE THAT TH E ASSESSEE SUBMITTED THE RETURN SHOWING AN AGRICULTURAL INCOME OF RS. 7,69,666/- AL ONG WITH THE OTHER INCOME. 3 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) THE ASSESSING OFFICER AFTER MAKING THE INQUIRY FROM M/S. BHAGYODAY GINNING FACTORY, TOOK THE VIEW THAT THE CLAIM OF SALE OF AG RICULTURAL PRODUCE TO THIS FACTORY IS BOGUS AND TREATED THE SAME AS AN UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), T HE CIT(A) SUSTAINED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDE R: PARA 2.5: I HAVE CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE ASSESSING OFFICER AND THE SUBMISSIONS FILED BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND ALSO CONSIDERED THE CASE LAW RELIED UPON BY HIM. IT IS SEEN THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 1,25,008/- ON THE BASIS OF ENQUIRY MADE FROM PURCHA SER AND AS PER STATEMENT OF PARTNER OF SO CALLED PURCHA SER FIRM M/S. BHAGYODAY GINNING FACTORY, DHASA, RECORDED ON OATH ON 01-12-2006. THE ASSESSEE WAS CONFRONTED WI TH THE RESULT OF ENQUIRY AND COPY OF STATEMENT WAS ALS O PROVIDED TO THE ASSESSEE BY THE ASSESSING OFFICER. BUT FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ASS ESSEE COULD NOT CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER ARE HEREBY UPHELD AND THE ADDITION MADE IN CONFIRME D. 4 THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN MAKING THE INQUIRY FROM THE PART NER OF BHAGYODAY GINNING FACTORY TO WHOM THE ASSESSEE SOLD AGRICULTURAL PROD UCE VIDE BILL NO. 268 DATED 24-02-2004 WHO DENIED THAT THE FIRM HAS PURCHASED THE AGRICULTURE PRODUCE FROM THE ASSESSEE. THE ASSESSEE WAS NOT ALLOWED CROSS-EXAMINATION OF THE TRANSFER BEFORE MAKING AN ADVERSE INFERENCE. NO EV IDENCE OF THE FIRM WERE PRODUCED TO PROVE THAT THE GINNING FACTORY REMAINED CLOSED ON 09-08-2002. THE GOODS ARE BOUGHT BY THE BROKERS/AG ENTS WHO ARE VISITING THE VILLAGES FOR THE PURCHASE OF THE AGRICULTURE PRODUC E. THE ASSESSEE HAS SHOWN THE AGRICULTURE INCOME IN THE EARLIER YEAR ALSO WHI CH WAS DULY ACCEPTED DURING 4 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) THE ASSESSMENT YEAR 2001-02, 2002-03 AND 2003-04. D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE, THE ADDITION CANNOT BE MADE UNDER SECTION 68 OF THE INCOME TAX ACT. IT IS NOT NECESSARY TO THE EFFE CT THAT THERE WAS CLOSURE OF BUSINESS. IT IS NOT NECESSARY FOR PURCHASER OF COT TON THAT HE SHOULD HAVE A GINNING FACTORY ALSO. ANYBODY CAN PURCHASE THE COT TON AS A TRADER ALSO. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: ANIS AHMED & SONS V. CIT KANPUR 297 ITR 441(SC), SANCHITA MARINE PRODUCT (P) LTD. V. DCIT 15 SOT 280 ITATF BENCH (MUM). THE ASSESSING OFFICER IN MAKING THE ADDITION TOTALL Y DISREGARDED THE FACTS ON RECORD CONSISTING OF DETAILS AS TO HOLDING OF AGRIC ULTURAL LAND. THE ABSTRACT OF 7/12 & 8A ATTACHED AT PAGE 5 TO 6, ALSO SHOW THE HO LDING OF LAND ADMEASURING 18.19 ACRES AND THE PRODUCTION OF COTTON. IN ADDIT ION TO THE REVENUE DOCUMENTS, THE ASSESSEE ALSO PRODUCED THE EVIDENCE TO THE EFFECT THAT FOR THE CULTIVATION OF THE CROP OF COTTON, HE PURCHASED SEE DS OF COTTON FROM MADHAV AGRO AGENCY BHAVNAGAR ALONG WITH MATCHING INSECTICI DE KNOWN AS KASTURI 18 VIDE BILL DATED 5.04.2003 FOR RS. 1500/- ATTACHED A T PAGE 7. THE SAID COTTON WEIGHING 6,140/- KGS. WAS DELIVERED THROUGH PANTHRA J TRANSPORT CO. VIDE LORRY RECEIPT NOS. 68 AND 69 (COPIES ATTACHED AT PAGE 8 T O 9) IN TRUCK NO. GJ 13 X- 7149 & GJ 4 V-2454. ALL THESE POSITIVE EVIDENCES P ROVE BEYOND DOUBT THAT THE ASSESSEE REGULARLY PRODUCES COTTON FROM HIS AGRICUL TURAL LAND. ALL THESE ASPECTS ARE IGNORED BY THE ASSESSING OFFICER AND MERELY REL IED ON THE STATEMENT OF THE PARTNER OF ERSTWHILE FIRM OF M/S. BHAGYODAY GINNING FACTORY AND DISALLOWED THE ABOVE AGRICULTURAL PRODUCTION AND TREATED IT AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE RECORD FURTHER SHOW THAT THE ASSESSING OFFICER VIDE ORDER U/S. 143(3) DATED 29.12.2005 FOR A.Y. 2003-04 ACCEPTED AGRICULTURAL I NCOME TO THE TUNE OF RS. 3,99,540/- WHICH INCLUDE SALE OF COTTON OF RS. 1,85 ,300/-. SIMILARLY THE AGRICULTURE INCOME FOR ASSESSMENT YEARS 2001-02 AND 2002-03 OF RS. 2,90,300/- 5 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) AND RS. 2,99,300/- RESPECTIVELY WERE ALSO ACCEPTED, WHICH INCLUDE SALE OF COTTON OF RS. 91,753/- & RS. 80,100/- RESPECTIVELY. 5. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE ASSESSING OFFICER AND VEHEMENTLY CONTENDED THAT THE ONUS IS O N THE ASSESSEE TO PROVE THAT THE ASSESSEE HAS EARNED THE AGRICULTURE INCOME. 6. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS A LONG WITH THE ORDER OF THE AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE IS HOLDING THE AGRICULTURE LAND TO THE TUNE OF 18.19 ACRE WHICH IS NOT DENIED BY THE REVENUE. THE AGRICULTURE INCOME HAS BEEN SHOWN BY THE ASSESSEE I N THE EARLIER ASSESSMENT YEARS 2001-02 TO 2003-04 WHICH IS DULY BEEN ACCEPTE D BY THE REVENUE. NO ASSESSMENT HAS BEEN RE-OPENED. THE ASSESSING OFFIC ER HAS TREATED SALE OF THE COTTON CROP TO BE BOGUS ON THE BASIS OF THE STATEME NT OF PARTNER OF THE BHAGYODAY GINNING FACTORY TO WHOM THE ASSESSEE HAS SOLD THE AGRICULTURE PRODUCE VIDE BILL NO. 268 DATED 24-02-2004. THE PA RTNER WAS NOT PUT TO THE ASSESSEE FOR CROSS EXAMINATION EXCEPT THE INQUIRY F ROM THE PARTNER, NO OTHER EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT T HE SAID BILL IS BOGUS AND CONSEQUENTLY THE ASSESSEE HAS NOT EARNED THE AGRICU LTURE INCOME OF RS. 1,25,008/-. IN OUR OPINION THE ONUS IS ON THE PERS ON WHO ALLEGES THAT THE TRANSACTION IS BOGUS. THE ASSESSING OFFICER HAS NO T BROUGHT THE NECESSARY EVIDENCE ON RECORD AND HAS NOT GIVEN THE OPPORTUNIT Y TO THE ASSESSEE TO CROSS EXAMINE THE PARTNER OF BHAGYODAY GINNING FACTORY. THE TRANSACTION CANNOT BE REGARDED TO BE BOGUS ON THE BASIS OF THE INQUIRY CO NDUCTED AT THE BACK OF THE ASSESSEE. WE, THEREFORE DELETE THE ADDITION OF RS. 1,25,008/- MADE UNDER SECTION 68 AND DIRECT THE ASSESSING OFFICER TO TREA T THE SAID RECEIPT AS A PART OF THE RECEIPT FROM AGRICULTURE PRODUCE. THUS, THE GR OUND NO. 1 IS ALLOWED. 6. GROUND NO. 2 RELATES TO THE ADDITION MADE ON ACC OUNT OF LOW HOUSEHOLD WITHDRAWAL AMOUNTING TO RS. 60,000/- THE LD. AR VEH EMENTLY CONTENDED THAT THE ASSESSING OFFICER MADE LUMP SUM ADDITION OF RS. 60,000/- ON ACCOUNT 6 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) ALLEGED LAW HOUSEHOLD WITHDRAWALS IGNORING THE FACT S THAT THE ASSESSEE IS AN AGRICULTURIST HAVING LARGE SCALE AGRICULTURE PRODUC E INCLUDING VEGETABLES, GROUNDNUTS ETC. AND AS SUCH SOME PART OF THE HOUSEH OLD EXPENSES IS MET FROM THE AGRICULTURE PRODUCES. FURTHER THE SON OF THE A SSESSEE SHRI PRADIPSINH KIRITSINH GOHIL WHO STAYS WITH HIM AND HAS ALSO SHO WN RS. 60,000/- TOWARDS WITHDRAWAL OF HOUSEHOLD EXPENSES. HE IS ASSESSED T O TAX VIDE PAN NO. AFHPG6948P AT BHAVNAGAR. AS SUCH THE TOTAL WITHDR AWALS FOR HOUSEHOLD EXPENSES IS RS. 1,20,000/- WHICH IS REASONABLE IN T HE PLACE LIKE BHAVNAGAR. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: (I) HON'BLE ITAT, AHMEDABAD HAS IN THE CASE OF PRAD IP C. PATEL VS. DY. CIT, 58 TTJ (AHD) 409, HELD THAT; IN ORDER TO INVOKE THE PROVISIONS OF S. 69C, THE AO HAS TO ESTABLISH THE CONDITION PRECEDENT AS TO THE EXISTEN CE OF EXPENDITURE OR UNDERSTATEMENT OF THAT EXPENDITURE B Y EVIDENCE AND/OR MATERIAL ON RECORD TO JUSTIFY THE ADDITION. IF THE AO CANNOT, OR FAILS TO PROVE THE EXISTENCE OF MATERIAL INDICATING THE UNEXPLAINED EXPENDITURE OR UNDERSTATEMENT OF EXPEND ITURE, THE ASSESSEE CANNOT BE TAXED. MERE IPSE DIXIT OF THE A O ABOUT THE PERSONAL EXPENDITURE IS NOT ENOUGH TO SUSTAIN AN AD DITION AND THERE MUST BE MATERIAL TO SUPPORT THE ADDITION. (II) HON'BLE ITAT, AHMEDABAD HAS, IN THE CASE OF SHRI. N AGINBHAI C. PATEL VS. ACIT, CC-2, BARODA HELD THAT: IN OUR CONSIDERED VIEW, THE OBSERVATION OF THE ASS ESSING OFFICER, NO DOUBT CREATES A SUSPICION, BUT SUSPICIO N ALONE IS NOT SUFFICIENT IN MAKING THE ADDITION TO THE INCOME OF THE ASSESSEE. THE AO SHOULD HAVE INVESTIGATED THE MATTER FURTHER AND SHOULD HAVE BROUGHT ON RECORD CLINCHING EVIDENCE TO SHOW T HAT THE DRAWINGS SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENS E WAS NOT SUFFICIENT TO MEET THE HOUSEHOLD EXPENSES. IN ABSE NCE OF ANY SUCH EVIDENCE, IN OUR CONSIDERED OPINION, THE ADDIT IONS MADE CANNOT BE SUSTAINED IN LAW. 7. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 8. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THE ADDITION OF RS. 60,000/- HAS BEEN MADE BY OBSERVING 7 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) THAT THE ASSESSEE HAS NOT SHOWN WITHDRAWAL FOR A HO USE HOLD EXPENSES. THEREFORE, CONSIDERING THE SIZE OF THE FAMILY AND S TANDARD OF LEAVING, THE ASSESSING OFFICER MADE THE ADDITION FOR HOUSE HOLD EXPENSES, ON ESTIMATE BASIS WITHOUT POINT OUT THE SPECIFIC SIZE OF THE FAMILY A ND THE VARIOUS EXPENSES INCURRED BY THE ASSESSEE. THIS IS A FACT FROM RECO RD THAT THE SON OF THE KARTA, WHO STAYS WITH THE KARTA, HAS ALSO SHOWN THE WITHDR AWAL AT RS. 60,000/-. IN OUR OPINION UNDER SECTION 69C, NO ADDITION CAN BE M ADE UNTIL AND UNLESS THE ASSESSING OFFICER FIRST DISCHARGES HIS ONUS AND PRO VE THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE, ONCE THE ASSESSING OFFICE R DISCHARGES THE ONUS, THE ONUS GETS SHIFTED ON THE ASSESSEE TO OFFER AN EXPLA NATION ABOUT THE SOURCE OF SUCH EXPENDITURE AS IS APPARENT FROM THE ASSESSING OFFICER, THE ASSESSING OFFICER HAS NOT DISCHARGED THE ONUS AS IS EXPECTED FROM HIM AND LAID DOWN UNDER SECTION 69C. UNDER THESE CIRCUMSTANCES WE DI D NOT HAVE ANY OTHER ALTERNATE EXCEPT TO DELETE THE ADDITION. THUS, GRO UND NO. 2 IS ALLOWED. 9 BOTH THE PARTIES AGREED THAT THE FACTS AND ISSUE S INVOLVED IN THE CASE OF SHRI RAMJIBHAI GANESHBHAI VITHANI IN ITA NO .1341/AHD/2009 ARE SIMILAR AND THEREFORE, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT SIMILAR VIEW MAY BE TAKEN IN THIS CASE ALSO. THEREF ORE, SINCE THE FACTS AND ISSUES INVOLVED IN THE CASE OF SHRI RAMJIBHAI GANES HBHAI VITHANI [ITA NO.1341/AHD/2009 ARE SIMILAR TO THOSE AS IN THE CAS E OF KIRITSINH VAKHATSINH GOHIL (HUF), FOR THE REASONS STATED ABOVE, GROUND N OS.1 AND 2 IN ITA NO.1341/AHD/2009 ARE ALLOWED. 10 IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 24-07 -2009. SD/- (P K BANSAL) ACCOUNTANT MEMBER PLACE: AHMEDABAD DATE:24/07/2009 8 ITA NO. 1340/AHD/2009 (ASSESSMENT YEAR 2004-05) ANKIT* COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. THE DR, AHMEDABAD 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, DEPUTY REGISTRAR.