The ACIT,B.K. Circle, Palanpur V. M/s. Akash Diamond, Banaskantha

ITA 1369/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9123 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIEN
• Keywords: Unexplained cash credit
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JM & SHRI MANISH BORA D, AM. ITA NO.1369/AHD/2014 ASST. YEAR: 2007-08 ACIT, B.K. CIRCLE, PALANPUR. VS. M/S AKASH DIAMOND, NR. JAIN BOARDING, JK BUILDING, AT DEESA, TAL.DEESA, DIST. BANASKANTHA (NG) APPELLANT RESPONDENT PAN AAEFA 3793L APPELLANT BY SHRI JAMES KURIEN, DR RESPONDENT BY SHRI DILIP SHAH, AR DATE OF HEARING: 20//2/2017 DATE OF PRONOUNCEMENT: 22/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2007-08 IS D IRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A)-XX, AHMEDABAD, DATED 13.02.2014 VIDE ORDER NO.CIT(A)-XX /102/12-13 ARISING OUT OF ORDER U/S 143(3) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) FRAMED ON 28.12.2012 BY ACIT, B.K. CIRCLE, PALANPUR. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,2 5,38,9497- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U7S.68 OF THE AC T WHEN THERE ARE NO ACCOUNTING ENTRIES OF THE TRANSACTIONS IN ASSESSEE' S BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION. ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 2 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. 3). IT IS THEREFORE, PRAYED THAT THE ORDER OF TH E LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD MAY BE SET-ASIDE AND THAT O F THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DIAMOND LABOUR WORK. IT FILED ITS RETURN OF INCOME FOR ASST. YEAR 2007-08 ON 30.10.2007 DECLARI NG TOTAL INCOME OF RS.14,27,650/-. THE ASSESSEE HAS TWO UNITS ONE AT DEESA AND THE OTHER AT SURAT. ASSESSMENT U/S 143(3) OF THE AC T WAS COMPLETED ON 30.12.2009 AT AN ASSESSED INCOME OF RS.15,23,800 /-. SUBSEQUENTLY IT WAS OBSERVED THAT THERE WAS AN UNEX PLAINED CREDIT OF RS.3,32,85,443/- TO SURAT UNIT AND IN VIEW THEREOF NOTICE U/S 148 OF THE ACT WAS ISSUED ON 14.3.2012 AND DULY SERVED UPO N THE ASSESSEE. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, LD. AUTHORISED REPRESENTATIVE ATTENDED AND FILED VARIOUS DETAILS A ND FINANCIAL STATEMENTS OF BOTH THE UNITS SITUATED AT DEESA AND SURAT. ASSESSEE IN ITS EXPLANATION VIDE LETTER DATED 29.08.2012 SUB MITTED AS UNDER :- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED HIS EXPLANATION VIDE HIS LETTER DATED 29.08.2012. THE SAME IS REPRO DUCE HERE UNDER : 1. THAT THE ASSESSEE IS IN THE BUSINESS OF JOB OF CUTTING AND POLISHING DIAMONDS AND HIS ITS HEAD OFFICE AT DEESA AND BRANCH AT SURA T. 2. THAT FOR THE SMOOTH ACCOUNTING AND ROUTINE PURPOSE THE BOOKS OF ACCOUNT ARE SEPARATELY MAINTAINED OF HEAD OFFICE AND BRANCH AND SINCE THE BOOKS OF ACCOUNTS OF THE SAME ASSESSEE ARE SEPARATELY MAINTAINED FOR THE INTERNAL SMOOTH ACCOUNTING THE INTERNAL TRANSFER AS WELL AS INTERNAL TRANSACTIONS OF THE HEAD OFFICE AND BRANCH HAVE THEIR CONTRA ACCOUNTS I.E.MIRROR ACCOUNTS IN BOTH T HE BOOKS HAVE BEEN MAINTAINED. IT IS TO BE SUBMITTED THAT IF CONSO9LIDATED ACCOUNTS W OULD HA E BEEN MAINTAINED THEN THE CONTRA ACCOUNTS OF THE BRANCH AND HEAD OFFICE GETS SQUARED UP BY EACH OTHER AND THEIR WOULD BE NIL ACCOUNTS. ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 3 THAT IN YOUR HONOURS NOTICE THE WORKING OF THE DIFF ERENCE HAS BEEN MADE; HOWEVER, THE SAME SUFFER FROM CERTAIN MISTAKE AND ALSO LACKS BEING MADE ON WRONG FOOTING AND WITHOUT HAVING THE PROPER KNOWLEDGE AND PRINCIPLES OF ACCOUNTING. THE BRIEF RECONCILIATION OF THE BRANCH AND THE HEAD OFFICE FO R EASY REFERENCE TO YOUR AS UNDER:- (A)DR. BALANCE IN DEESA AKASH DIAMOND AKASH 3, 32, 85,443 DIAMOND (GRATUITY) 39, 09,029 3, 71, 94,472 CR. BALANCE IN DEESA (MISTAKENLY NOT CONSIDERED BY YOUR HONOUR IN THE NOTICE) AKASH DIAMOND 3, 13, 27,192 NET DR BALANCE AS PER H.O 58, 67,280 (B) CR. BALANCE IN SURAT AKASH DIMOMDDEESA 38 , 70,080 AKASH DIMOND DEESA (MISTAKENLY NOT CONSIDERED BY YOUR HONOUR IN THE NOTICE) 10,75,344 AKASH DIAMOND (PF) 7, 85,443 57, 30,867 DIFFERENCE 1, 36,413 THE SAID DIFFERENCE IS DUE TO THE REASON THAT IN TH E DEESA HEAD OFFICE CERTAIN ENTRIES HAVE BEEN PASSED FOR THE PAYMENT MADE ON SURAT BRAN CH AND FOR WHICH CORRESPONDING CONTRA ENTRIES IN THE BOOKS OF BRANCH OFFICE HAVE NOT BEEN PASSED. HOWEVER, IN THE IMMEDIATELY SUBSEQUENT YEAR ON KNOW ING OF THE SAME THE CORRESPONDING ENTRIES HAVE BEEN PASSED. FURTHER IN YOUR HONOURS NOTICE THE CREDIT ENTRY OF RS.3,13,27,1921- IN HEAD OFFICE AND CREDIT ENTRY OF RS. 10,75,344/- IN DEESA BRANCH ARE NOT CONSIDERED DUE TO WHICH SUCH FALSE DIFFERENCE HAS BEEN WORKED OUT, IF THE S AME ARE CONSIDERED THEN THEIR WOULD BE A DIFFERENCE OFRS.1,36,413/- ONLY AND NOT RS. 3,25,00,000/- + RS. 38,949/- TOTALING TO RS.3,25,38,949/- AS WORKED OUT BY YOUR HONOUR. UNDER THE CIRCUMSTANCES, THERE IS NIL DIFFERENCE BE TWEEN THE CONTRA BALANCE IN THE BALANCE SHEETS OF HEAD AND SURAT BRANCH. 4) THAT WITHOUT PREJUDICE TO THE ABOVE FACTS THE ASSESSES WITH REGARDS TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 68 WOULD LIKE TO SUBMIT AS UNDER:- A. THAT THE PROVISIONS OF SECTION 68 ARE ATTR ACTED ONLY WHEN THERE IS ANY SUM CREDITED IN THE BOOKS OF THE ASSESSES AND THE ASSES SES OFFICE NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D IS NOT, IN THE OPINION OF THE ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 4 ASSESSING OFFICER SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSES. B) THUS, THE PROVISIONS OF SECTION 68 ARE APPLI CABLE IN CASE THE ASSESSES HAS CREDIT ENTRY IN ITS BOOK OF ACCOUNTS, HOWEVER IN THE CASE OF THE ASSESSES, SINCE THE BOOKS THE HEAD OFFICE AND THE BRANCH BEING OF SAME ENTITY, TH E QUESTION OF CREDIT ENTRY IN THE HEAD OFFICE OR THE BRANCH OFFICE AND COMPARING THE SAME WITH THE DEBIT ENTRY OF HEAD OFFICE OR BRANCH OFFICE DOSE NOT EXIST AS THE SAME ARE IN THE SAME BOOK OF A SINGLE ASSESSES AND ACCORDINGLY THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. 3) FURTHER, THE PROVISIONS OF SECTION 68 ARE ATTRA CTED ONLY WHEN THERE IS ANY SUM CREDITED IN THE BOOKS OF THE ASSESSES AND THE A SSESSES OFFICE NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED IS NOT , IN THE OPINION OF THE ASSESSING OFFICER SATIS FACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE A SSESSES. HOWEVER, AS PER YOUR HONOUR'S NOTICE IN THE BOOK OF THE ASSESSES AT DEESA HEAD OFFICE THERE IS DEBIT ENTRY OF RS.3,32,85,443/- CORRESPONDINGLY THE RE IS CREDIT ENTRY OF RS.7,85,443/- IN SURAT BRANCH AND THERE BY THERE IS DIFFERENT OF RS.3,25,00000/- HOWEVER THE SAME DIFFERENT IS ASSESSES DEBIT IN DEE SA HADE OFFICE AND THE BASIC REQUIREMENT OF THE PROVISIONS OF SECTION 68 THAT TH ERE IS ANY SUM CREDITED IS NOT FULFILLED SO THE PROVISIONS OF SECTION 68 ARE A LSO NOT APPLICABLE. SECONDLY, AS PER YOUR HONOUR'S NOTICE IN THE BOOKS OF THE ASS ESSES AT DEESA HEAD OFFICE THERE IS DEBIT ENTRY OF RS.39,09,029/- AND CORRESPO NDINGLY THERE IS CREDIT ENTRY OF RS.38,70,080/- IN SURAT BRANCH AND THEREBY THERE IS DIFFERENCE OF RS.38,949/- HOWEVER SAME DIFFERENT IS ALSO EXCESS D EBIT IN DEESA HEAD OFFICE AND THE BASIC REQUIREMENT OF PROVISIONS OF SECTION 68 THAT THERE IS ANY SUM CREDITED IS NOT FUELLED SO THE PROVISION OF SECTION 68 ARE ALSO NOT APPLICABLE ACCORDINGLY ON FACTS OF THE CASE ALSO THE PROVIS ION OF SECTION 68 ARE NOT APPLICABLE AS THERE IS ASSESSES DEBIT ENTRY IN THE BOOK OF DEESA HEAD OFFICE BY RS, 3,25,38,9491- 3. EXPLANATION OF THE ASSESSEE DID NOT CONVINCE LD. ASSESSING OFFICER AND AFTER MAKING ADDITION OF RS.3,25,38,949 /- U/S 68 OF THE ACT INCOME WAS ASSESSED AT RS.3,40,62,750/-. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX(A) AND SUCCEEDED AS LD. COMMISSIONER OF INCOME TAX(A) OBSERVED THAT THE ALLEGED BASIS OF ADDITION OF RS.3,25,38,949/- U/S 68 OF THE ACT WAS MERELY ON ACCOUNT OF DIFFERENCE BETWEEN THE BALANCE OF HEAD O FFICE AND SURAT AND IT RELATED TO THE SAME ASSESSEE AND ONLY THE TR ANSACTION BETWEEN ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 5 HEAD OFFICE IN THE ALLEGED DIFFERENCE WAS VERIFIABL E FROM THE BOOKS OF ACCOUNT. 4. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 5. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD. ASSESSING OFFICER. 6. ON THE OTHER HAND LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM HAVING HEAD OFFI CE AT DEESA AND BRANCH AT SURAT. HEAD OFFICE AND BRANCH MAINTAIN TH EIR ACCOUNTS SEPARATELY FOR THEIR CONVENIENCE. HEAD OFFICE AT DE ESA MAINTAINS THREE ACCOUNTS OF SURAT BRANCH. THE NAME OF ACCOUNT S AND RESPECTIVE BALANCES AS AT 31/03/2017 ARE AS UNDER. SR. NAME OF ACCOUNT BALANCE AS AT 31/ 03/2007 (AMOUNT RS.) 1. AKASH DIAMOND SURAT (PF) A/C 33285443.00 DR. 2. AKASH DIAMOND (GRATUITY-SURAT) 3909029.00 DR. 3. AKASH DIAMONDS SURAT 31327192.40 CR. CUMULATIVE BALANCE OF SURAT BRANCH 5867279.60 D R. ALSO SURAT BRANCH MAINTAIN VICE VERSA THREE ACCOUNT S .THE NAME OF ACCOUNTS AND RESPECTIVE BALANCES AS AT 31/03/2017 A RE AS UNDER. SR. NAME OF ACCOUNT BALANCE AS AT 31/03/2007 (AMOUNT RS.) 1. AKASH DIAMOND DEESA (GRATUITY) 3870080,00 CR. 2. AKASH DIAMOND DEESA 10753 44.60 CR. 3. AKASH DIAMONDS (PF) 7 85443.00 CR. CUMULATIVE BALANCE OF DEESA H.O. 5730867.60 CR. ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 6 THE ASSESSING OFFICER HAS TOUCHED ONLY TWO ACCOUNTS OUT OF ABOVE THREE ACCOUNTS AND WRONGLY MADE ADDITION OF RS. 325 00000/- (PF ACCOUNTS DIFFERENCE) AND 38949/- {GRATUITY ACCOUNT DIFFERENCE) TOTALING RS. 32538949. FREQUENTLY IT HAPPENED THAT, HO HAS MADE CERTAIN EN TRIES IN ONE ACCOUNT (OUT OF THREE ABOVE) WHEREAS THE BRANCH HAD MAKE THE SAME ENTRIES IN OTHER ACCOUNT (OUT OF THREE ABOVE). ULTI MATELY ALL THE THREE ACCOUNTS ARE ONE AND SAME. SO, WE COULD CONCLUDE TH E CORRECT BALANCE OF BRANCH AND HO ONLY IF WE CONSIDER THE CU MULATIVE BALANCE OF ALL THE THREE ACCOUNTS MAINTAINED BY THEM. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. SOLITARY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS AGAINST LD. COMMISSIONER OF INCOME TAX(A)S ORDER D ELETING ADDITION MADE BY LD. ASSESSING OFFICER U/S 68 OF THE ACT AT RS.3,25,38,949/-. WE OBSERVE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DIAMOND LABOUR WORK AND OPERATING ITS B USINESS UNDER TWO UNITS ONE AT DEESA AND THE OTHER AT SURAT AND S EPARATE BALANCE SHEET AND PROFIT & LOSS A/C FOR EACH UNIT ARE MAINT AINED. IN THE CASE OF ASSESSEE PROCEEDINGS U/S 143(3) OF THE ACT WERE COMPLETED ON 30.12.2009 AND INCOME WAS ASSESSED AT RS.15,23,800/ - AS AGAINST RETURNED INCOME OF ASSESSEE AT RS.14,27,650/-. THER EAFTER IT WAS NOTICED BY THE LD. ASSESSING OFFICER THAT THERE WAS UNEXPLAINED CREDIT IN ACCOUNT OF THE ASSESSEE AT RS.3,25,38,949/- IN S URAT UNIT. SO NOTICE U/S 148 OF THE ACT WAS ISSUED AND REASSESSME NT PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED. DURING THE COURS E OF REASSESSMENT ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 7 PROCEEDINGS ASSESSEE SUBMITTED THAT FOR THE PURPOSE OF SMOOTH ACCOUNTING AND PROPER INTERNAL CONTROL SEPARATE BOO KS OF ACCOUNTS ARE MAINTAINED FOR HEAD OFFICE AND BRANCH OFFICE AN D FOR THE INTERNAL TRANSACTIONS OF THE HEAD OFFICE AND BRANCH OFFICE C ONTRA ACCOUNT IS MAINTAINED IN THE BOOKS WHICH ARE RATHER MIRROR ACC OUNT IN THE BOOKS. IT WAS ALSO SUBMITTED THAT IF BOTH THE ACCOUNTS ARE CONSOLIDATED THEN THE CONTRA ACCOUNT OF THE BRANCH AND THE HEAD OFFIC E WILL GET SQUARED UP AND THERE WILL BE NIL BALANCE. ASSESSEE WITH THE HELP OF STATEMENT SHOWING PROOF AND RECONCILIATION OF BRANCH AND HEAD OFFICE ACCOUNT MENTIONED THAT LD. ASSESSING OFFICER HAS NOT CONSID ERED THE BALANCE IN DEESA AKASH DIAMOND AT RS.31227192/- AND CREDIT BALANCE IN SURAT AKASH DIAMOND AT RS.1075344/- AS A RESULT OF WHICH THE DIFFERENCE IN HEAD OFFICE AND BRANCH OFFICE ACCOUNT HAS CROPPED UP AT RS.3,25,38,949/- WHICH HAS WRONGLY BEEN OBSERVED BY LD. ASSESSING OFFICER. WE FIND IT PERTINENT TO REPRODUCE BELOW TH E RECONCILIATION STATEMENT FILED BY THE ASSESSEE BEFORE THE LOWER AU THORITIES :- THAT IN YOUR HONOURS NOTICE THE WORKING OF THE DIFF ERENCE HAS BEEN MADE; HOWEVER, THE SAME SUFFER FROM CERTAIN MISTAKE AND ALSO LACKS BEING MADE ON WRONG FOOTING AND WITHOUT HAVING THE PROPER KNOWLEDGE AND PRINCIPLES OF ACCOUNTING. THE BRIEF RECONCILIATION OF THE BRANCH AND THE HEAD OFFICE FO R EASY REFERENCE TO YOUR AS UNDER:- (A)DR. BALANCE IN DEESA AKASH DIAMOND 3, 32, 85,443 AKASH DIAMOND (GRATUITY) 39, 09 ,029 3, 71, 94,472 CR. BALANCE IN DEESA (MISTAKENLY NOT CONSIDERED BY YOUR HONOUR IN THE NOTICE) AKASH DIAMOND 3, 13, 27,192 NET DR BALANCE AS PER H.O 58, 67,280 (B) CR. BALANCE IN SURAT ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 8 AKASH DIMOMDDEESA 38 , 70,080 AKASH DIMOND DEESA (MISTAKENLY NOT CONSIDERED BY YOUR HONOUR IN THE NOTICE) 10,75,344 AKASH DIAMOND (PF) 7, 85,443 57, 30,867 DIFFERENCE 1, 36,413 THE SAID DIFFERENCE IS DUE TO THE REASON THAT IN TH E DEESA HEAD OFFICE CERTAIN ENTRIES HAVE BEEN PASSED FOR THE PAYMENT MADE ON SURAT BRAN CH AND FOR WHICH CORRESPONDING CONTRA ENTRIES IN THE BOOKS OF BRANCH OFFICE HAVE NOT BEEN PASSED. HOWEVER, IN THE IMMEDIATELY SUBSEQUENT YEAR ON KNOW ING OF THE SAME THE CORRESPONDING ENTRIES HAVE BEEN PASSED. FURTHER IN YOUR HONOURS NOTICE THE CREDIT ENTRY OF RS.3,13,27,1921- IN HEAD OFFICE AND CREDIT ENTRY OF RS. 10,75,344/- IN DEESA BRANCH ARE NOT CONSIDERED DUE TO WHICH SUCH FALSE DIFFERENCE HAS BEEN WORKED OUT, IF THE S AME ARE CONSIDERED THEN THEIR WOULD BE A DIFFERENCE OFRS.1,36,413/- ONLY AND NOT RS. 3,25,00,000/- + RS. 38,949/- TOTALING TO RS.3,25,38,949/- AS WORKED OUT BY YOUR HONOUR. 8. FURTHER WE ALSO OBSERVE THAT ASSESSEE HAS ST RONGLY OBJECTED THE VIEW OF LD. ASSESSING OFFICER INVOKING THE PROVISIO NS OF SECTION 68 OF THE ACT FOR THE ALLEGED VARIATION BETWEEN THE HEAD OFFICE AND BRANCH OFFICE BALANCES COMPLETELY IGNORING THE FACT THAT T HE SAME BELONG TO THE SAME ASSESSEE AND THE BOOKS OF ACCOUNTS WERE ON LY FOR HEAD OFFICE AND BRANCH OFFICE WHICH HAVE BEEN SEPARATELY MAINTAINED FOR BUSINESS CONVENIENCE AND PROPER INTERNAL CONTROL. A SSESSEES SUBMISSION SHOWING THE FACTS OF THE CASE AND NON-AP PLICATION OF PROVISIONS OF SECTION 68 OF THE ACT READS AS FOLLOW S :- 4. (B) THUS, THE PROVISIONS OF SECTION 68 ARE A PPLICABLE IN CASE THE ASSESSES HAS CREDIT ENTRY IN ITS BOOK OF ACCOUNTS, HOWEVER IN TH E CASE OF THE ASSESSES, SINCE THE BOOKS THE HEAD OFFICE AND THE BRANCH BEING OF SAME ENTITY, THE QUESTION OF CREDIT ENTRY IN THE HEAD OFFICE OR THE BRANCH OFFICE AND COMPARI NG THE SAME WITH THE DEBIT ENTRY OF HEAD OFFICE OR BRANCH OFFICE DOSE NOT EXIST AS THE SAME ARE IN THE SAME BOOK OF A SINGLE ASSESSES AND ACCORDINGLY THE PROVISIONS OF S ECTION 68 ARE NOT APPLICABLE. ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 9 3) FURTHER, THE PROVISIONS OF SECTION 68 ARE ATTRA CTED ONLY WHEN THERE IS ANY SUM CREDITED IN THE BOOKS OF THE ASSESSES AND THE A SSESSES OFFICE NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED IS NOT , IN THE OPINION OF THE ASSESSING OFFICER SATIS FACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE A SSESSES. HOWEVER, AS PER YOUR HONOUR'S NOTICE IN THE BOOK OF THE ASSESSES AT DEESA HEAD OFFICE THERE IS DEBIT ENTRY OF RS.3,32,85,443/- CORRESPONDINGLY THE RE IS CREDIT ENTRY OF RS.7,85,443/- IN SURAT BRANCH AND THERE BY THERE IS DIFFERENT OF RS.3,25,00000/- HOWEVER THE SAME DIFFERENT IS ASSESSES DEBIT IN DEE SA HADE OFFICE AND THE BASIC REQUIREMENT OF THE PROVISIONS OF SECTION 68 THAT TH ERE IS ANY SUM CREDITED IS NOT FULFILLED SO THE PROVISIONS OF SECTION 68 ARE A LSO NOT APPLICABLE. SECONDLY, AS PER YOUR HONOUR'S NOTICE IN THE BOOKS OF THE ASS ESSES AT DEESA HEAD OFFICE THERE IS DEBIT ENTRY OF RS.39,09,029/- AND CORRESPO NDINGLY THERE IS CREDIT ENTRY OF RS.38,70,080/- IN SURAT BRANCH AND THEREBY THERE IS DIFFERENCE OF RS.38,949/- HOWEVER SAME DIFFERENT IS ALSO EXCESS D EBIT IN DEESA HEAD OFFICE AND THE BASIC REQUIREMENT OF PROVISIONS OF SECTION 68 THAT THERE IS ANY SUM CREDITED IS NOT FUELLED SO THE PROVISION OF SECTION 68 ARE ALSO NOT APPLICABLE ACCORDINGLY ON FACTS OF THE CASE ALSO THE PROVIS ION OF SECTION 68 ARE NOT APPLICABLE AS THERE IS ASSESSES DEBIT ENTRY IN THE BOOK OF DEESA HEAD OFFICE BY RS, 3,25,38,9491- 9. WE FURTHER OBSERVE THAT WHEN THE ASSESSEE CAM E UP BEFORE LD. COMMISSIONER OF INCOME TAX(A) AND ALL NECESSARY DET AILS FROM BOOKS OF HEAD OFFICE OF DEESA AND SURAT BRANCH WERE PLACE D BEFORE LD. COMMISSIONER OF INCOME TAX(A), WHO AFTER ADJUDICATI NG THE FACTS DELETED THE IMPUGNED ADDITION OF RS.3,25,38,949/- B Y MAKING FOLLOWING OBSERVATIONS :- 4.5. I'HAVE CONSIDERED THE FACTS OF THE CASE AND S UBMISSION MADE BY THE APPELLANT. IN THIS CASE, THE A.O. HAS MADE THE ADDITION OF RS.3,25,38,949/- AS UNEXPLAINED CASH CREDITS U/S.68 OF THE I.T. ACT. THE APPELLANT HAS TWO UNITS ONE IS HEAD QUARTER AT DEES A AND ANOTHER BRANCH OFFICE AT SURAT. AS PER THE A.O., IN THE BOO KS OF THE DEESA UNIT, THERE WERE THE DEBIT BALANCES IN THE LEDGER ACCOUNT OF SURAT BRANCH (PF A/C.) FOR RS.3,32,85,443/- AND IN OTHER ACCOUNT (GRATUITY) AT RS.39,09,029/- TOTALING TO RS.3,71,94,472/-. LIKEWI SE, IN THE BOOKS OF SURAT BRANCH IN THE LEDGER ACCOUNT OF DEESA HEAD OF FICE (GRATUITY) ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 10 CREDIT BALANCES AT RS.38,70,080/- AND IN (PF A/C.) RS.7,85,443/- WERE SHOWN. THE AO NOTICED THE DIFFERENCES IN THE BALANC E WERE NOT IN TALLY WITH EACH UNIT TO ANOTHER UNIT AND ACCORDINGLY THE AO HAS MADE THE ADDITION OF RS.3,25,00,000/- (RS.3,32,85,443/-(-) R S.7,85,443/- AND RS.38,949/- BEING THE DIFFERENCE OF THE AMOUNT OF R S.39,09,0297- (-) RS.3 8,70,0807-. SO THE TOTAL ADDITION OF RS.3,25,3 8,949/- (RS.3,25,00,000/- + RS.38,949/-) WAS MADE. 4.6. IN THE ASSESSMENT PROCEEDINGS ALSO THE APPELLA NT HAS GIVEN THE RECONCILIATION OF THE DIFFERENCE VIDE ITS LETTER DT D. 29.8.2012 FOR THE AFORESAID DIFFERENCE WHICH IS REPRODUCED IN THE ASS ESSMENT ORDER ALSO. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT IN THE RECONCILIATION THE CREDIT BALANCE IN THE LEDGER ACCOUNT OF SURAT BRANC H IN THE BOOKS OF ACCOUNT OF THE DEESA HEAD OFFICE AT RS.3,13,27,192/ - HAS NOT BEEN CONSIDERED BY THE A.O. AND IN THE SAME MANNER IN TH E BOOKS OF THE SURAT BRANCH THE CREDIT BALANCE OF RS.10,75,344/- I N THE LEDGER ACCOUNT OF DEESA HEAD OFFICE HAS NOT BEEN CONSIDERED WHILE ARRIVING AT THE DIFFERENCE. SO THE APPELLANT CONSIDERING THE ABOVE TWO FIGURES MADE THE RECONCILIATION AND WORKED OUT THE DIFFERENCE OF RS. 1,36,413/- AND THE REASON OF SUCH DIFFERENCE EXPLAINED WAS THAT IN THE DEESA HEAD OFFICE CERTAIN ENTRIES HAVE BEEN PASSED FOR THE PAYMENT MA DE FOR SURAT BRANCH BUT THOSE CORRESPONDING CONTRA ENTRIES HAVE NOT BEEN PASSED IN THE BOOKS OF THE SURAT BRANCH OFFICE. HOWEVER, IMME DIATELY IN THE SUBSEQUENT YEAR KNOWING THE SAME SUCH CORRESPONDING ENTRIES WERE PASSED. . : 4.7. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSION WITHOUT ASSIGNING ANY REASONS. NEITHER HE GAVE ANY ADVERSE REMARKS FO R THE CREDIT BALANCE IN DEESA BOOKS OF ACCOUNT AT RS.3,13,27,192 /- AND NOR IN RESPECT OF CREDIT BALANCE IN THE BOOKS OF SURAT AT RS. 10,75,344/-. IF THESE ENTRIES ARE FOUND CORRECT THEN THE DIFFERENCE ONLY CONIES TO RS.1,36,413/- WHICH HAS ALSO BEEN RECORDED IN THE S UBSEQUENT YEAR'S LEDGER ACCOUNT. FURTHER, THE APPELLANT ALSO CHALLEN GED THE INVOKING OF THE PROVISIONS OF SECTION 68 WHICH ARE NOT APPLICAB LE IN THE INSTANT CASE BECAUSE BOTH THE UNITS ARE ALTHOUGH MAINTAININ G THE BOOKS OF ACCOUNTS SEPARATELY BUT COMPILING THEIR BOOKS OF AC COUNTS TOGETHER AND FILING A SINGLE RETURN OF INCOME. SO THEY ARE ONE O NLY AND NO SEPARATE ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 11 ENTITIES. SO THE DIFFERENCE IN ONE ENTITY CANNOT BE REGARDED AS THE UNEXPLAINED CASH CREDITS AS THE BORROWER AND THE LE NDER ARE SAME I.E. ASSESSEE HIMSELF. THE QUESTION OF ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS ALSO DOESN'T ARISE . 4.8. DURING THE APPELLATE PROCEEDINGS, THE APPELLAN T MADE THE WRITTEN SUBMISSIONS VIDE ITS LETTER ALONG WITH RECONCILIATI ON AND THE SAME WAS ALSO FORWARDED TO THE A.O. VIDE THIS OFFICE LETTER DTD. 11.9.2013 FOR HIS REMARKS AFTER DUE VERIFICATION OF THE BOOKS OF ACCO UNTS. IN RESPONSE TO THE SAME THE AO HAS SUBMITTED THE REMAND REPORT VIDE LE TTER DTD. 14.10.2013. THE OBSERVATIONS OF THE A.O. ARE AS UNDER:- '5. DURING THE COURSE OF REMAND REPORT, THE ASSESSEE VI DE THIS OFFICE LETTER NO.ACIT/BKC/PLN/REMAND REPORT/AD/2013-14 DTD . 24.09.2013 WAS REQUESTED TO ATTEND THE OFFICE ALONG WITH THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS/RECORDS IN SUPPORT OF HIS CLAIM IN APPEAL. THE ASSESSEE VIDE HIS EXPLANATION DTD. NIL HAS FURNISHED THE DETAILS AND RECONCILIATION STATEMENT BETWEEN THE DE ESA HO AND SWAT BRANCH OFFICE REGARDING THE ADDITION MADE BY T HE AO OFRS.3,25,38,949/- ON ACCOUNT OF UNEXPLAINED CASH C REDIT AS FURNISHED BEFORE THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS AS WELL AS APPEAL PROCEEDINGS BEFORE YO UR HONOUR AND AS MENTIONED IN PARA 3 ABOVE. 6. THE ABOVE DETAILS WERE PRODUCED BY THE ASSESSEE DURING THE COURSE OF REMAND PROCEEDINGS AND THE EXPLANATION OF THE ASSESSEE IS CAREFULLY CONSIDERED, BUT THE SAME IS NOT ACCEPT ABLE. THE ASSESSEE HAS PRODUCED THE RECONCILED STATEMENT WHIC H IS ALSO NOT SATISFACTORY AS THERE IS STILL DIFFERENCE OF RS. 1, 36,413/-. IF THE BOOKS OF THE ACCOUNTS ARE TALLIED WITH HO AND BRANCH OFFI CE, THEN THERE IS NO QUESTION FOR ANY DIFFERENCE TO ARISE AFTER RECON CILIATION. DURING THE COURSE OF ASSESSMENT PROCEEDING AS WELL AS DURI NG THE REMAND PROCEEDINGS, THE ASSESSEE HAD NOT FILED ANY FRESH D OCUMENT/DETAILS. IN ABSENCE OF ANY SATISFACTORY DETAILS/ EVIDENCE/ P ROOF, THE ADDITION MADE BY THE AO IS FOUND CORRECT AND REQUESTED TO BE UPHELD. ' A COPY OF THE REMAND REPORT WAS PROVIDED TO THE APP ELLANT TO GIVE REJOINDER UPON THE OBSERVATIONS OF THE A.O. THE APP ELLANT DURING THE ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 12 COURSE OF HEARING ON 6.12.2013 HAS REITERATED ITS S UBMISSION AND SAID THAT THE SUBMISSIONS EARLIER FILED MAY BE CONSIDERED FOR DECIDING THE ISSUE. 4.9. AS DISCUSSED ABOVE, THE CREDIT BALANCE IN THE BOOKS OF THE SURAT BRANCH IN THE ACCOUNT OF THE DEESA HEAD OFFICE OR V ICE VERSA CANNOT BE TREATED AS UNEXPLAINED CASH CREDITS U/S.68 OF THE I .T. ACT. AS THE ASSESSEE IS ONE BUT THE TRANSACTIONS ARE BETWEEN ONE BRANCH TO HEAD OFFICE WHEREIN THERE REMAINS NO NEED TO VERIFY THE THREE INGREDIEN TS AS THOSE ARE ALL INTERNAL TRANSACTIONS. NO ADVERSE COMMENTS HAVE BEE N MADE BY THE A.O EITHER IN ASSESSMENT ORDER OR IN REMAND REPORT. MOR EOVER, IN THE ASSESSMENT PROCEEDINGS AND IN THE APPELLATE PROCEED INGS THE APPELLANT HAS CONTENDED THAT WHILE WORKING OUT THE DIFFERENCE THE A.O. HAS NOT CONSIDERED THE AMOUNT OF RS.3,13,27,192/- BEING CRE DIT BALANCE OF SURAT BRANCH IN DEESA & HEAD OFFICE BOOKS OF ACCOUNTS AND ALSO CREDIT BALANCE OF RS. 10,75,344/- IN SURAT BRANCH'S BOOKS OF ACCOUNTS IN THE LEDGER ACCOUNTS OF DEESA HEAD OFFICE. THE SAME WERE VERIFIABLE FOR WHICH IN THE REMAND PROCEEDINGS ALSO THE A.O. WAS A SKED TO VERIFY FROM THE BOOKS OF ACCOUNTS BUT IN THE REMAND REPORT HE H AS SIMPLY HIGHLIGHTED THE DIFFERENCE OF RS.1,36,412/- WHICH WAS WORKED OU T BY THE APPELLANT ITSELF IN THE ASSESSMENT PROCEEDINGS OF WHICH REASO NS WERE ALSO GIVEN. BUT NO ADVERSE COMMENTS ON THE AFORESAID TWO AMOUNTS I. E. RS.3,13,27,192/- AND RS. 10,75,344/- HAS BEEN MADE. SO, IN ABSENCE O F ANY ADVERSE VIEW OVER THE AFORESAID TWO AMOUNTS REMAINED TO BE CONSI DERED BY THE A.O. WHILE ARRIVING AT THE DIFFERENCE, NO IS CALLED FOR AS THE APPELLANT FROM ASSESSMENT PROCEEDINGS ONWARDS IS EMPHASIZING THAT THESE TWO AMOUNTS WERE TO BE CONSIDERED WHILE WORKING OUT THE DIFFERE NCES BUT THE REASONS FOR NON INCLUSIONS OF TWO AMOUNTS HAVE NOT BEEN GIV EN BY THE A.O. NEITHER IN THE ASSESSMENT ORDER AND NOR IN HIS REMAND PROCE EDINGS. SO THE AO'S ACTION FOR MAKING THE ADDITIONS IS DELETED SUBJECT TO VERIFICATION BY THE A.O. ONCE AGAIN AND THE GROUND OF THE APPELLANT IS ALLOWED. 10. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE, SUBMISSIONS MADE BY ASSESSEE BEFORE LOWER AUTHORITI ES, SPEAKING ORDER OF LD. COMMISSIONER OF INCOME TAX(A) ADJUDICA TING THE FACTS AT LENGTH, FIND THAT THE GENESIS OF THIS ADDITION AROS E DUE TO THE NON- RECONCILIATION OF BALANCE BETWEEN HEAD OFFICE AND B RANCH OFFICE WHICH ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 13 ARE RUN BY SAME ASSESSEE AND WE ALSO FIND THAT ASSE SSEE HAS PROVED BEYOND DOUBT THAT ACTUALLY THERE WAS NO DIFF ERENCE IN THE ACCOUNTS BALANCE OF HEAD OFFICE AND BRANCH OFFICE A ND THE ISSUES AROSE MAINLY BECAUSE LD. ASSESSING OFFICER HAS NOT CONSIDERED THE AMOUNT OF RS. 3,13,27,192/- BEING CREDIT BALANCE OF SURAT BRANCH AND DEESA HEAD OFFICE BOOKS AND ALSO NOT CONSIDERING TH E CREDIT BALANCE OF RS.10,75,344/- IN SURAT BRANCH OFFICE BOOKED IN THE LEDGER ACCOUNT OF DEESA HEAD OFFICE. FURTHER THERE WAS NO ADVERSE COMMENT IN THE REMAND REPORT ON THE AFORESAID TWO FIGURES. WE ARE INCLINED TO BELIEVE THAT NO ADDITION WAS CALLED FOR DURING THE RE-ASSES SMENT PROCEEDINGS AND, THEREFORE, NO INTERFERENCE IS CALLED FOR IN TH E ORDER OF LD. COMMISSIONER OF INCOME TAX(A). WE UPHOLD THE SAME. ACCORDINGLY, THIS GROUND OF THE APPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017 SD/- SD/- (MAHAVIR PRASAD) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 22/02/2017 MAHATA/- ITA NO. 1369/AHD/2014 ASST. YEAR 2007-08 14 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 20/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 22/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 23/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: