Appeal Details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 60354 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
11 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-05-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
07-05-2012
Assessment Year
2007-2008
Appeal Filed On
12-05-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 1377/AHD/2011 & C.O. NO. 132/AHD/2011 ASSESSMENT YEAR :2007-08 ITO WARD-5(3), AHMEDABAD M/S. RICHA PARTICLE BOARD PVT. LTD., AHMEDABAD V S . VS . M/S. RICHA PARTICLE BOARD PVT. LTD., AHMEDABAD ITO WARD-5(3), AHMEDABAD PAN NO. AA BCR1738A (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI VINOD TANWANI, SR.D.R. /BY ASSESSEE SHRI CHIRAG R. SHAH, A.R. /DATE OF HEARING 10.05.2012 /DATE OF PRONOUNCEMENT 10.05.2012 O R D E R PER : D.K.TYAGI, JUDICIAL MEMBER THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER OF LD. CIT (A)-XI, AHM EDABAD, DATED 09.03.2011 FOR ASSESSMENT YEAR 2007-08. 2. FIRST WE WILL TAKE UP THE REVENUES APPEAL. ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 2 3. THE REVENUE IS AGGRIEVED BY THE ORDER OF LD. CIT (A) IN DELETING THE ADDITION OF RS. 13,13,500/- MADE UNDER SECTION 68 O F THE ACT BEING EXCESS SHARE APPLICATION/ALLOTMENT MONEY. THE ASSESSING O FFICER WHILE MAKING THE ADDITION OF RS. 13,13,500/- HAS OBSERVED AS UNDER:- SHARE HOLDERS FUND FROM THE VERIFICATION OF BALANCE SHEET IT IS FOUND THAT DURING THE YEAR ASSESSEE HAS RECEIVED SHARE APPLICATION FUND OF RS. 11081000/- FROM THE PARTIES AS DETAILED IN SCHEDULE '2' ATTACHED LO THE BALANCE SHEET. THE ASSESSEE WAS REQUIRED TO FURNISH THE EVIDENCES PROVING SHARE APPLICATION MONEY FROM VARIOUS PARTIES DETAILED IN SCHEDULE '2'. TO MAJOR SHARE APPLICANTS, NOTICE U/S.133(6) WERE ALSO ISSUED AND DETAILS WERE GATHERED & PLACED ON RECORD. THE ASSESSEE HAS FILED DETAILS OF SHARE APPLICANTS WITH ACCOUNTS, COPIES OF BANK STAT EMENTS, COPIES OF IT RETURN FILED ETC. FROM THE ANALYSIS OF EVIDENCES FI LED BY THE ASSESSEE IT WAS FOUND FROM THE VERIFICATION OF BANK STATEMENT O F SHARE APPLICANTS THAT IN MANY CASES BEFORE ISSUE OF CHEQUES TO THE A SSESSEE COMPANY THERE WAS DEPOSIT OF CASH IN THE ACCOUNT OF THESE A PPLICANTS AND THEREFORE THE ASSESSEE WAS SPECIFICALLY CALLED UPON TO FURNISH DOCUMENTARY EVIDENCE FOR DEPOSIT OF CASH BY THE SHA RE APPLICANTS. THE ASSESSEE BY SUBMISSION DATED 01-12-2009 AT SR. NO. 18 HAS REPLIED THAT THE SHARE APPLICANTS ARE INCOME TAX PAYERS AND THE CASH DEPOSITED IN THEIR RESPECTIVE BANK ACCOUNT ARE FROM THE CASH BALANCES IN HAND AND SOURCE OF INCOME AS PER THERE RESPECTIVE RETURNS OF INCOME. EXCEPT THIS GENERAL STATEMENT THE ASSESSEE HAS NOT FURNISHED AN Y COGENT EVIDENCE OR SUPPORTING PROOF FROM THE SHARE APPLICANTS IN RE SPECT OF CASH DEPOSIT IN THERE ACCOUNTS. IT BEING A PRIVATE LIMITED COMPA NY AND CONSIDERING THE HUGE SHARE APPLICATION MONEY RECEIVED AND CONSI DERING THE PRINCIPLE OF HUMAN PROBABILITY IT WAS THOUGHT PROPE R TO CALL FOR CONCRETE DETAILS OF SHARE APPLICANTS FOR THE INVESTMENT WHEN THE COMPANY IS YET TO START ITS OPERATION AND THE MOTIVE OF INVESTMENT IN THE COMPANY WHEN (HERE IS NO APPARENT GUARANTY OF RETURN OF BY WAY O F DIVIDEND AND MORE PARTICULARLY THE ASSESSEE IS A PRIVATE LIMITED COMP ANY. FURTHER UNUSUAL FORTRESS FACTS FOUND ARE THAT THE AUTHORIZED CAPITA L OF THE ASSESSEE COMPANY IS ONLY RS.1 LAC AND THE SAME IS ISSUED AND SUBSCRIBED IN F.Y. 05-06 ITSELF. EVEN THOUGH THERE IS NO AUTHORIZ ED CAPITAL IN EXCESS OF RS.1 LAC THE ASSESSEE HAS COLLECTED SHARE APPLICATI ON FUND OF. RS.110810QO/- WHICH SOUNDS ILLOGICAL. FURTHER IN RE SPONSE TO LETTER U/S.133(6) TO GOENKA BUSINESS & FINANCE LTD., CALCU TTA, FOR INVESTMENT OF RS.5 LAC, PNC CAPITAL TRUST LTD, CALCUTTA FOR IN VESTMENT OF RS.5 LAC, GLOBE STOCKS & SECURITIES LTD, CALCUTTA FOR INVESTM ENT OF RS.10 LAC AND EMRALD COMMERCIAL LTD, CALCUTTA FOR INVESTMENT OF R S.10 LAC IT IS SEEN ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 3 FROM THE AUDITED BALANCE SHEET OF THE. RESPECTIVE C OMPANIES, THAT THESE COMPANIES HAVE SHOWN THE INVESTMENT AS HOLDING SHAR ES TO THAT EXTENT AND THEY HAVE NOT SHOWN TO THIS MONEY AS SHARE APPL ICATION MONEY IN THERE AUDITED BALANCE SHEET. WHEN, IN THEIR AUDITED BALAN CE SHEET, SEPARATE HEAD OF ADVANCES FOR SHARE APPLICATION IS MADE. FURTHER THE COMPANY HAS INCREASED ITS AUTHORIZED CAPITAL BY RES OLUTION PASSED ON 06-02-08 WHERE AS THE SHARE APPLICATION MONEY HAS C OLLECTED EVEN THOUGH THE COMPANY WAS NOT HAVING ANY AUTHORIZED CA PITAL FOR COLLECTION OF SHARE APPLICATION MONEY AND THEREFORE THE SHARE CAPITAL MONEY RAISES DOUBT AND SUSPICION. THE ONUS IS ON THE ASSE SSEE TO PROVE THE GENUINENESS OF TRANSACTIONS AND CREDIT WORTHINESS O F THE DEPOSITORS MORE PARTICULARLY WHEN THEY ARE NOT GOING TO GET AN Y INCOME FROM THE SAID INVESTMENT. THE ACCOUNTS OF THE DEPOSITORS IN WHOSE BANK ACCOUNT CASH IS FOUND DEPOSITED BEFORE ISSUE OF CHEQUES AS DETAILED AND DISCUSSED HERE UNDER AND THE EXPLANATION OF THE ASS ESSEE FOR CASH DEPOSIT BY THE DEPOSITORS IS NOT FOUND SATISFACTORY AND THEREFORE, FOR SUCH CASH DEPOSITS, ADDITION TO BE MADE U/S.68 OF T HE I.T. ACT AS DETAILED BELOW:- NAME OF SHARE APPLICANT AMOUNT BANK NAME REMARKS GHANSHYAMBHAI M. PATEL 100000 UCO BANK, NO. 010435 NO.BEFORE ISSUE OF CHEQUE ASSESSEE HAS DEPOSITED CASH OF RS.45000/- ON 14-11-06. RS.55000/- ON 15-11-06, THEREFORE SOURCE OF THESE CASH DEPOSIT IS NOT PROVED AND THE OPENING BALANCE IN THE BANK STATEMENT ON 16-05- 06 WAS ONLY RS.6433/- SO THE CAPACITY OF DEPOSITORS IS ALSO NOT PROVED THEREFORE RS.100000/- CASH DEPOSIT OF IS NOT PROVED AND THEREFORE THE SAME IS TREATED AS INCOME U/S.68 OF THE ASSESSEE HARESH V. PATEL 265000 AHMEDABAD MERCANTILE COOP. BANK LTD. NO.3365 BEFORE ISSUE OF CHEQUE IN THE MONTH OF DECEMBER 2006, THE ASSESSEE HAS DEPOSITED CASH OF RS.36.OOQ/-ON 0212.2006, RS.7000/- ON 04.12.2006. RS25,000/- ON 05.12.2006, RS.20,000/- ON ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 4 HARSHAD R. PATEL 200000 UCO BANK, NO. 010432 07.12.2006, RS.3500/- ON 11.12.2006. RS.10000/- ON 15.12.2006 AND RS. 12000/- ON 20.12.2006. NO DOCUMENTARY PROOF HAS BEEN FILED FOR SOURCE OF CASH DEPOSIT. THEREFORE, THE AMOUNT OF RS.1,13,500/- IS TREATED AS UNPROVED AND ADDED AS INCOME U/S,68 OF THE ACT. BEFORE ISSUE OF CHEQUE ASSESSES HAS DEPOSITED CASH OF RS.45000/- ON 30-10-06. RS.40000/- ON 14-11-06, RS.20000/- ON 15-11-06. FURTHER CASH DEPOSIT OF RS.45000/- ON 22-02-07 SOURCE OF THESE CASH DEPOSITS ARE NOT PROVED AND THE OPENING BALANCE IN THE BANK STATEMENT ON 16-05-06 WAS ONLY RS.4920/- SO THE CAPACITY OF DEPOSITORS IS ALSO NOT PROVED THEREFORE OUT OF RS.2 LAC DEPOSIT CASH DEPOSIT OF RS.150000/- IS NOT PROVED AND THEREFORE THE SAME IS TREATED AS INCOME U/S.68 OF THE ASSESSEE. KARSHANBHAI M. PATEL 50000 THE ASSESSEE HAS NOT FURNISHED ANY STATEMENT OF ACCOUNT AND CONFIRMATION. BY SIMPLY MAKING STATEMENT THAT HE IS HAVING AGRICULTURAL INCOME SOURCE IS NOT ESTABLISHED AND THEREFORE THE AMOUNT OF RS.50000/- IS TREATED AS UNEXPLAINED AND. ADDED U/S.68 AS INCOME OF THE ASSESSEE. MANILAL K PATEL 200000 A'BAD DIST. CO. OP. BEFORE ISSUE OF CHEQUE IN THE MONTH OF MARCH THE ASSESSEE ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 5 SURESH A. PATEL 50000 BANK, NO. 6373 HAS DEPOSITED CASH OF RS.30000/- ON 23-03-07, RS.40000/- ON 26-03-07. RS.45000/- ON 27-03-07 AND RS.45000/- ON 29-03-07 NO DOCUMENTARY PROOF HAS BEEN FILED FOR SOURCE OF CASH DEPOSIT. 1'HEREFORE THE AMOUNT OF RS.160000/- IS TREATED AS UNPROVED AND ADDED AS INCOME U/S.68 OF THE ASSESSEE. THE ASSESSEE HAS RECEIVED CHEQUE OF RS.50000/- ON 02- 02-07 BUT HE HAS NOT FILED ANY DOCUMENTARY PROOF FOR SOURCE OF RS 50000/- AND THEREFORE IT IS TREATED AS UNEXPLAINED DEPOSIT AND ADDED U/S.68 AS INCOME UMESH R. PATEL 147000 UCO BANK, NO.010430 ON THE 14-11-06 THERE IS CASH DEPOSIT OF RS.45000A BEFORE ISSUE OF CHEQUE OF RS.47000/- AND FURTHER CASH DEPOSITED OF RS.25000/- ON 22-02-07 BEFORE ISSUE OF CHEQUE OF RS.100000/-. IT IS ALSO NOTICED THAT THE ASSESSEE WAS GETTING INTEREST ON DEPOSIT OF RS.60000/- WITH OMKAR WOOD PACKING WHICH HE HAS WITHDRAWN AND DEPOSITED AS SHARE APPLICATION MONEY WHICH IS UNUSUAL AND AGAIN HUMAN BEHAVIOR. AS SOURCE FOR CASH DEPOSIT OF RS.45000/- AND RS.25000/- IS NOT PROVED. THEREFORE, AMOUNT OF RS.70000/- IS TREATED AS INCOME U/S.68 OF THE ASSESSEE. VELJIBHAI M. PATEL 1554000 ICICI BANK PARTY HAS DEPOSITED RS.3 LAC ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 6 BY CHEQUES ON 02-03-07, RS.2 LAC BY CHEQUE ON 16- 03-07 AND 1 LAC ON 23-03-07 FOR THIS AMOUNT OF RS.600000/- ASSESSEE HAS NOT FILED ANY PROOF AND THEREFORE IT IS TREATED AS UN PROVED CASH CREDIT AND AMOUNT IS ADDED U/S.68 OF THE ACT VINOD M. PATEL 100000 KALUPUR CO. OP. BANK, NO. 154 ON THE 31-01-07 THERE IS CASH DEPOSIT OF RS.200QO/- BEFORE ISSUE OF CHEQUE OF RS.100000/-. IT IS ALSO NOTICED THAT THE ASSESSEE WAS GETTING INTEREST ON DEPOSIT OF RS.80000/- WITH OMKAR WOOD INDUSTRIES WHICH HE HAS WITHDRAWN AND DEPOSITED AS SHARE APPLICATION MONEY WHICH IS UNUSUAL AND AGAINST HUMAN BEHAVIOR. AS SOURCE FOR CASH DEPOSIT OF RS.20QOO/- IS NOT PROVED THERE FOR AMOUNT OF RS.200007- IS TREATED AS INCOME U/S.68 OF THE ASSESSEE. TOTAL UNEXPLAINED CASH CREDIT ARRIVED AT RS.13,13,5 00/- THEREFORE THE AMOUNT OF RS.13,13,500/-, AS DISCUSSE D AND DETAILED ABOVE, IS TREATED AS UNPROVED CASH CREDIT AND THE S AME IS ADDED AS UNEXPLAINED INCOME OF THE ASSESSEE U/S.68 OF THE I. T. ACT. PENALTY PROCEEDING U/S.271(1)(C) OF THE ACT ARE INITIATED S EPARATELY FOR CONCEALMENT PARTICULARS OF INCOME. 4. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED AS UNDER:- 6.1 THE ASSESSING OFFICER ON PAGE NO.7 OF HIS ASS ESSMENT ORDER HAS MENTIONED THAT TOTAL SHARE APPLICATION MO NEY AMOUNTING TO RS. 1,10,81,000/-WAS COLLECTED BY THE APPELLANT COM PANY FROM VARIOUS PARTY. THE AUTHORIZED CAPITAL OF COMPANY WAS RS.1, 00,000/- WHICH WAS ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 7 INCREASE ON 06/02/2008 BY PASSING THE BOARD RESOLUT ION. FURTHER IN CERTAIN PARTIES, IT WAS OBSERVED THAT CASH WAS DEPO SITED AND CHEQUES WERE ISSUED TO THE APPELLANT CO. ULTIMATELY, IT WAS CONCLUDED BY ASSESSING OFFICER THAT IN CERTAIN CASES THE CAPACIT Y OF SHARE APPLICANTS TO MAKE THE INVESTMENT REMAINS UNPROVED AND SO RS.1 3,13,500/- OUT OF THE TOTAL SHARE APPLICATION MONEY WAS ADDED TO THE INCOME OF APPELLANT. AGAINST THE ABOVE STAND OF ASSESSING OFFICER THE AP PELLANT WOULD LIKE TO SUBMIT THAT THE IDENTITY OF THE SHARE APPLICANTS HA VE BEEN ESTABLISHED AND ACCEPTED. AS FAR AS THE CREDIT WORTHINESS IS CO NCERNED EVEN IF IT IS FOUND BOGUS, THE ADDITION CAN BE MADE IN THE HANDS OF SHARE APPLICANTS AND NOT THE CO. THIS POSITION OF LAW HAS BEEN ENDOR SED BY SUPREME COURT RECENTLY IN THE CASE OF LOVELY EXPORT 319 ITR 5 (ST). 6.2 IT IS ALSO WORTHWHILE TO MENTION THAT THAT A H ARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE IT ACT WILL BE THAT THOUGH APART FROM THE ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSES MUST ESTABLISH THE GENUINENE SS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF HIS CREDITOR THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSA CTIONS AS WELL AS THE CREDITWORTHINESS OF CREDITORS MUST REMAINED CON FINED TO THE TRANSACTIONS WHICH HAVE TAKEN PLACE BETWEEN THE ASS ESSEE AND THE CREDITOR. WHAT FOLLOWS AS A COROLLARY IS THAT IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIO NS BETWEEN HIS CREDITOR AND SUB CREDITORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB CREDITOR HAD THE CREDITWORTHINESS TO A DVANCE THE CASH CREDIT TO THE CREDIT TO THE CREDITOR FROM WHOM THE CASH CR EDIT HAS BEEN EVENTUALLY RECEIVED BY THE ASSESSEE. IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CRE DITOR OR OF THE GENUINENESS OF THE TRANSACTION TOOK PLACE BETWEEN T HE CREDITOR AND SUB CREDITOR AND/ OR CREDITWORTHINESS OF THE SUB CREDIT ORS, SINCE, THESE ASPECT MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF T HE ASSESSES IN THE CASE OF NEMI CHAND KOTHARI VS CIT [2004] 136 TAXMAN 213 (GAU). 6.3 THE ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASIS THAT IN CERTAIN CASES THE SHAREHOLDERS HAS DEPOSITED CASH B EFORE ISSUING THE CHEQUE TO THE APPELLANT COMPANY FOR SHARE APPLICATI ON AND IN CERTAIN CASES THE CREDIT WORTHINESS OF THE SHARE APPLICANTS HAD NOT BEEN PROVED. THE DETAILED CHART OF SUCH PARTIES HAS BEEN GIVEN ON PAGE NO 8 TO 10 OF THE ASSESSMENT ORDER. 6.4 AGAINST THE ABOVE NOTICE OF THE ASSESSING OFFI CER THE APPELLANT WOULD LIKE TO SUBMIT THAT NOW AS STATED BEFORE IT I S A SETTLED PRINCIPLE THAT THE COMPANY IS LIABLE TO PROVE ONLY THE IDENTI TY OF THE SHAREHOLDERS AND IF THE GENUINENESS OF THE CREDIT NOT PROVED TO THE SATISFACTION OF THE ASSESSING OFFICER THEN THE ADDITION CAN BE MADE IN THE HANDS OF THE SHAREHOLDER AND NOT THE COMPANY. IN CASE BEFOREHAND THE ASSESSING ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 8 OFFICER HAS NOT DOUBTED THE IDENTITY OF THE SHAREHO LDERS, AS FAR AS THE DOCUMENTS TO PROVE THE GENUINENESS OF THE CREDIT AR E CONCERNED THE SAME IS ENCLOSED HEREWITH. SR NO. NAME OF SHARE APPLICANTS AMOUNT(RS) ENCLOSURE 1. GHANSHYAMBHAI M PATEL 1,00,000 1. INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3.COPY OF BANK PASS BOOK 2. HARESH V PATEL 2,65,000 1. INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3, COPY OF BANK PASS BOOK 3. HARSHAD R PATEL 2,00,000 1 . INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3. COPY OF BANK PASS BOOK 4. KARSHANBHAI M PATEL 50,000 1. ACCOUNT CONFIRMATION 2. 7-12 NAMUNO AGRICULTURE LAND 5. MANILAL K PATEL 2,00,000 1 . INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3. COPY OF BANK PASS BOOK 6. SURESH A PATEL 50,000 1 . INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 7. UMESH R PATEL 1,47,000 1. INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3. COPY OF BANK PASS BOOK 8. VELJIBHAI M PATEL 15,54,000 1. INCOME TAX RETURN . 2. ACCOUNT CONFIRMATION ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 9 3. COPY OF BANK PASS BOOK 9. VINOD M PATEL 1,00,000 1. INCOME TAX RETURN 2. ACCOUNT CONFIRMATION 3. COPY OF BANK PASS BOOK CONSIDERING THE ABOVE FACTUAL POSITION OF LAW AND E VIDENCE ENCLOSED THE ADDITION OF RS. 13,13,500/- MADE BY THE ASSESSI NG OFFICER DESERVES TO BE DELETED. AND ALSO RELIED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. OASIS HOSPITALITIES PVT. LTD . 5. AFTER TAKING INTO CONSIDERATION THE ABOVE SUBMIS SION OF THE ASSESSEE LD. CIT(A) DELETED THIS ADDITION. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORDS, WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACTS THAT THE AMOUNT S IN DISPUTE WERE RECEIVED BY THE ASSESSEE COMPANY TOWARDS SHARE APPLICATION M ONEY AND NOT BY WAY OF LOANS. DURING THE ASSESSMENT PROCEEDING, THE ASSES SEE FILED DETAILS OF SHARE APPLICANTS WITH ACCOUNTS COPIES OF BANK STATEMENT A ND COPIES OF INCOME TAX RETURN FILED BY THOSE SHARE APPLICANTS. THUS, THE ASSESSEE HAD PRODUCED SUBSTANTIAL EVIDENCE TO ESTABLISH THE IDENTITY, CRE DITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE SHARE APPLICATION. THE ASSE SSING OFFICER WITHOUT MAKING ANY INQUIRY AND WITHOUT BRINGING ANY MATERIA L ON RECORD TO CONTROVERT THE CONFIRMATION AND SUPPORTING EVIDENCE FILED BY THE ASSESSEE HAS TREATED THIS AMOUNT OF RS. 13,13,500/- AS UNPROVED CASH CRE DIT. WE FURTHER FIND THAT HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P.) LTD. [2008] 216 CTR (SC) 195, THE SUPREME COURT HAS HELD THAT SHARE APPLICATION ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 10 MONEY CANNOT BE TREATED AS UNEXPLAINED IN THE HANDS OF COMPANY. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORBITAL COM MUNICATION (P) LTD. [2010] 327 ITR 560 HAS HELD THAT WHERE THE ASSESSEE HAD PR ODUCED SUBSTANTIAL EVIDENCE TO ESTABLISH THE IDENTITY AND CREDIT WORTH INESS OF CREDITOR AND GENUINENESS OF THE SHARE APPLICATION WAS ALSO MANIF EST FROM THE RECORDS, NON PRODUCTION OF CREDITOR WOULD NOT NEGATE THE EVIDENT IARY VALUE OF THE REST OF THE MATERIAL AND HENCE TRIBUNAL WAS JUSTIFIED IN DISMIS SING THE APPEAL OF REVENUE. SINCE, THE FACTS OF THE PRESENT CASE ARE SIMILAR, W E FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS DELETED THE ADDITION OF RS. 1 3,13,500/- AND THE SAME IS HEREBY UPHELD. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . 8. NOW, WE TAKE UP THE C.O. FILED BY THE ASSESSEE. 9. THE ASSESSEE HAS TAKEN FOLLOWING TWO GROUNDS IN C.O.:- 1. THE FIRST APPELLATE AUTHORITY MAY HAVE DELETED THE ADDITION OF RS. 1,35,000/- ON ACCOUNT OF UNACCOUNTED PAYMENT TO S.A. PLYWOOD INDUSTRIES. 2. THE FIRST APPELLATE AUTHORITY MAY HAVE DELETED T HE DISALLOWANCE OF TRAVELING EXPENSES OF RS. 1,98,517/ - MADE BY THE ASSESSING OFFICER. 10. THE FIRST GROUND RELATES TO THE ADDITION OF RS. RS. 13,13,500/-. THE ASSESSING OFFICER WHILE MAKING THE ADDITION HAS OBS ERVED AS UNDER:- 4. ADDITION FROM THE ACCOUNT OF S.A. PLY WOOD INDU STRIES BY NOTICE CUM SHOW-CAUSE NOTICE DATED 19-08-2009 TH E ASSESSEE WAS ASKED TO FURNISH CONTRA ACCOUNT FROM THE BOOKS OF S.A. PLY WOOD INDUSTRIES AND EXPLAIN THE JOURNAL ENTRY OF DECOTIL ES INDUSTRIES AND SHIV TIMBERS. THE ASSESSEE VIDE SUBMISSION DATED 11-11-2009 HAS S UBMITTED THAT THESE ARE SISTER CONCERNS TO EACH OTHER AND JOURNAL ENTRY HAS BEEN PASSED AS PER INSTRUCTION OF PARTIES TO SETTLE THE ACCOUNT. IT HAS ALSO FILED ACCOUNT BY WAY OF CONFIRMATION OF JOURNAL ENT RIES. THE EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND SATISFACTORY BEC AUSE IT HAS NOT FILED ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 11 ANY PROOF FOR SO CALLED INSTRUCTION OF THE PARTIES TO SETTLE THE ACCOUNTS OR ANY PROOF THAT THEY ARE SISTER CONCERNS AND THE ACC OUNTS BY THE ASSESSEE ARE DISCUSSED AS UNDER:- 4.1 S.A. PLY WOOD INDUSTRIES AS PER SUBMISSION TO NOTICE DATED 26-11-2008 THE AS SESSEE HAS FILED ACCOUNT OF ABOVE PARTY FROM WHOM RS.744974/- HAS BEEN CREDITED AS PURCHASE DURING THE YEAR AND FURTHER ON 31-03-20 07 ITS ACCOUNTS HAS BEEN CREDITED BY JOURNAL ENTRY OF RS.536372/- BY DE BITING THE ACCOUNT OF DECOTILES INDUSTRIES AND SIMILARLY RS.68613/- HAS B EEN CREDITED ON 31- 03-2007 IN THE ACCOUNT OF SA PLYWOOD INDUSTRIES, BY JOURNAL, ENTRY AND DEBITING THE ACCOUNT OF SHIV TIMBERS. AS PER THIS A CCOUNT OF THE PARTY, FILED WITH THIS SUBMISSION, THERE IS NO DEBIT IN IT S ACCOUNT AND THE CLOSING CREDIT BALANCE HAS BEEN SHOWN AT RS, 1349959/-. 4.2. AS PER SUBMISSION DATED 01-12-2009 THE ASSESS EE HAS FILED ANOTHER ACCOUNT OF THIS PARTY SHOWING VARIOUS PAYME NTS AND JOURNAL ENTRIES AND BALANCE IN THE ACCOUNT IS NIL. THE ASSE SSEE HAS ALSO FILED ACCOUNT SIGNED BY AUTHORIZED SIGNATORY FOR S.A. PLY WOOD INDUSTRIES WHEREIN THE FOLLOWING ENTRIES APPEAR. 31-05-2006 'BEING THE AMT. TRANSFERRED 5363 72/- 31-05-2006 'BEING THE AMT. ADJUSTED 68613/- 4.3. THERE IS NO DETAIL IN THIS CONTRA ACCOUNT AS TO WHOM THIS AMOUNT HAS BEEN TRANSFERRED AND ADJUSTED. FURTHER IN THIS CONTRA ACCOUNT, ENTRIES ARE APPEARING ON 31-05-2006 AND IN THE ACCO UNT OF ASSESSEE IT IS APPEARING ON 31-03-2007 AND IN THE ABSENCE OF AN Y DETAILS OF THE PARTIES FOR ADJUSTMENTS IN THE CONTRA ACCOUNT FILED , THE SAME IS NOT ACCEPTED. FURTHER ON 14-09-2006 IN THE CONTRA ACCOU NT THE PARTY IS SHOWING RECEIPTS OF RS.75000/- BY BANK AND RECEIPT OF RS.60000/- ON 19-09-2006 BY BANK CREDITING THE ACCOUNT OF ASSESSE E COMPANY. NO SUCH CORRESPONDING PAYMENTS ARE APPEARING IN THE AC COUNT OF S.A. PLY WOOD INDUSTRIES FURNISHED BY THE ASSESSEE AND THERE FORE THE AMOUNT OF RS.75000/- ON 14-09-2006 AND RS.60000/- ON 19-09-20 06 APPEARING IN THE CONTRA ACCOUNT ARE NOT REFLECTED IN THE ACCOUNT FURNISHED BY THE ASSESSEE, THE SAME IS TREATED AS UNACCOUNTED PAYMEN T AND THE SAME IS ADDED AS UNACCOUNTED INCOME OF THE ASSESSEE AND THE ADDITION FOR THESE TWO PAYMENTS WILL BE RS.135000/-. PENALTY PRO CEEDING U/S.271(1)(C)OF THE ACT ARE INITIATED SEPARATELY FO R FURNISHING INACCURATE PARTICULARS / CONCEALMENT OF INCOME. (ADDITION-RS. 1,35,000/-) 11. IN APPEAL, THIS ADDITION MADE BY ASSESSING OFFI CER WAS CONFIRMED BY LD. CIT(A). 12. FURTHER AGGRIEVED, NOW, THE ASSESSEE, IN APPEAL , BEFORE US. ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 12 13. DURING THE APPELLATE PROCEEDING, THE ASSESSEE P RAYED FOR ADMITTING ADDITIONAL EVIDENCE AND IN THIS RESPECT MADE FOLLOW ING SUBMISSIONS:- 1.1 WITH REFERENCE TO ABOVE REGARDING OUR FIRST GROUND IN CROSS OBJECTION OF RS. 1,35,000/- BEING PAYMENT MADE TO S A PLYWOOD TREATED AS UNACCOUNTED IT IS SUBMITTED THAT ACTUALLY ONE OF OUR PARTY NAMELY LUCKY PLYWOOD HAD MADE DIRECT PAYMENT TO SA PLYWOOD ON OUR BEHALF. IN OUR BOOK THE JOURNAL ENTRY WAS PASSED BY DEBITIN G SA PLYWOOD AND CREDITING LUCKY PLYWOOD. HOWEVER IN BOOKS OF SA PLY WOOD THEY HAD CREDITED OUR ACCOUNT BY SHOWING THE CHEQUE ENTRY RE CEIVED FROM LUCKY PLYWOOD WHICH WAS CONSIDERED BY ASSESSING OFFICER A S UNACCOUNTED PAYMENT AS SAME WAS NOT FOUND IN OUR BOOKS. NOW AT THAT POINT OF TIME WE COULD NOT FURNISH THE COPY OF OUR ACCOUNT FROM T HE BOOKS OF LUCKY PLYWOOD SO AS TO TALLY THE CHEQUE AMOUNT AND CHEQUE NUMBER IN SUPPORT OF OUR PLEA THAT PAYMENT HAS BEEN MADE NOT BY US BUT BY LUCKY PLYWOOD ON OUR BEHALF. THIS PIECE OF EVIDENCE ALSO COULD NOT BE SUBMITTED BEFORE FIRST APPELLANT AUTHORITY. THE SAM E IS NOW ATTACHED HEREWITH AS ADDITIONAL EVIDENCE BEFORE YOUR HONOR O N PAGE NO 71 OF PAPER BOOK WHICH MAY KINDLY BE ACCEPTED. 1.2 FURTHER AS FAR AS THE REASON FOR NON PROVIDI NG COPY OF ACCOUNT OF LUCKY PLYWOOD TO THE LOWER AUTHORITIES IT IS SUBMIT TED THAT WE HAD REQUESTED TO THE SAID PARTY MANY A TIMES BUT DUE TO REASON KNOWN TO THEM, THE COPY WAS NOT PROVIDED. FINALLY AFTER MANY REQUEST WHEN THE APPEAL WAS FILED BEFORE TRIBUNAL THEY PROVIDED US T HE COPY OF ACCOUNT WHICH IS ENCLOSED ON PAGE 71 OF PAPER BOOK. AS THIS IS THE IMPORTANT PIECE OF EVIDENCE AND HAVE MAJOR EFFECT ON DECIDING ISSUE INVOLVED RELATING TO RS. 1,35,000/- ADDITION THE SAME MAY KI NDLY BE ACCEPTED. 14. AFTER HEARING BOTH THE PARTIES, THIS ADDITIONAL EVIDENCE WAS ADMITTED . HOWEVER, THIS EVIDENCE REQUIRES VERIFICATION AT THE END OF ASSESSING OFFICER. THEREFORE, THE MATTER IS RESTORED TO THE FILE OF A. O. FOR PASSING A FRESH ORDER AFTER TAKING INTO CONSIDERATION THIS FRESH EVIDENCE AND PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. THUS, THE FIRST GROUND OF ASSESSEES C.O. IS AL LOWED FOR STATISTICAL PURPOSE. ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 13 16. THE SECOND GROUND RELATES TO DISALLOWANCE OF TR AVELING EXPENSES OF RS. 1,98,517/-. THE ASSESSING OFFICER, DURING THE ASSES SMENT PROCEEDING OBSERVED THAT FOREIGN TRAVEL EXPENSES INCURRED BY T HE ASSESSEE, WERE NOT FOR THE PURPOSE OF ITS BUSINESS AS NO DETAILS WERE FILE D, TO PROVE THAT FOREIGN TRAVEL WAS RELATED TO THE BUSINESS PURPOSE OF THE ASSESSEE . LD. CIT(A) CONFIRMED THIS ACTION OF ASSESSING OFFICER AS BEFORE HIM ALSO NO SUCH DETAILS WERE FILED. SAME BEING THE POSITION BEFORE US, AS NO DETAILS IN SUPPORTS OF HIS CONTENTION THAT FOREIGN TRAVEL WAS MADE BY THE ASSESSEE FOR HI S BUSINESS PURPOSE WERE FILED, WE FEEL NO NEED TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THUS, THIS GROUND OF THE ASSESSEES C.O. IS DISMISSED. 17. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D AND THE ASSESSEES C.O. IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , ITA NO. 1377/AHD/2011&C.O.132/AHD/2011 A.Y.2007-08 PAGE 14 :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 17.05.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 24.05.2012 4) DATE OF CORRECTION 24.05.2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 25.05.2012 7) ORDER UPLOADED ON 25.05.2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 25.05.2012
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