M/s. Eshyasi Pharma Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(1)(2), Vadodara

ITA 1474/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0680 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

SMC-ITA NO. 1474/AHD/2016 ESHYASI PHARMA LTD VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT ] ITA NO. 1474/AHD/2016 ASSESSMENT YEAR : 2012-13 ESHYASI PHARMA LTD ............APPEL LANT 7-B, 31, 32, 33, KRISHNA INDUSTRIAL ESTATE, OPP. BIDC, GORWA, VADODARA-390016 [PAN: AADCT 0137 D] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 1(1)(2), VADODARA APPEARANCES BY: ANIL R. SHAH & KINJAL SHAH FOR THE APPELLANT JAYANT JHAVERI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 27.02.2019 DATE OF PRONOUNCING THE ORDER : 24.05.2019 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST LEARNED CIT(A)S ORDER DATED 29 TH APRIL 2016 IN THE MATTER OF ASSESSMENT UNDER SECTI ON 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012- 13. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1 THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN INVOKING SEC. 68 OF THE ACT AND THEREBY CONFIRMING ADDITION OF RS.21,60,000 /- ADDED BY THE ASSESSING OFFICER AS UNSECURED LOAN FROM MAHESH N. SHAH (HUF) 2. IT IS SUBMITTED BY YOUR APPELLANT THAT THE DEP OSITOR FROM WHOM LOAN IS TAKEN WAS DULY IDENTIFIED, HIS CREDITWORTHINESS WAS PROVED, HE IS ASSESSED TO TAX AND TRANSACTION BEING GENUINE, THE ADDITION OUG HT TO HAVE BEEN DELETED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING DRUGS AND DOING RELATED JOB WORK. DURING THE COURSE OF SCRUTINY AS SESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED RS.21,60,000 /- FROM MAHESH N. SHAH HUF. THESE AMOUNTS WERE PAID BY EVA ENTERPRISES, ON BEHA LF OF MAHESH N SHAH HUF, THROUGH BANKING CHANNELS. THE EVA ENTERPRISES WAS SOLE PROPRIETORSHIP OF BP SHAH TILL 09.05.2010, IT WAS CONVERTED INTO A PARTNERSHI P BY INDUCTION OF MAHESH N SHAH (HUF) AND NISHA M SHAH, AND EVENTUALLY TAKEN OVER B Y THE ASSESSEE COMPANY. THE SMC-ITA NO. 1474/AHD/2016 ESHYASI PHARMA LTD VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 2 OF 3 ASSESSING OFFICER NOTED THAT EVA ENTERPRISES DID NO T FILE INCOME TAX RETURNS, THAT MAHESH N SHAH HUF WAS SHOWING NIL INCOME AND THAT T HE DATE OF EVA ENTERPRISES BEING TAKEN OVER BY THE ASSESSEE COMPANY IS NOT CLE AR. ON THESE FACTS, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.21,60,00 0/- AS UNEXPLAINED CREDIT AND ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED, AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ACTION O F THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 4.3.1. A PERUSAL OF THE EXPLANATION FILED AND THE DETAILS AND DOCUMENTS SUBMITTED BY THE APPELLANT SHOWS THAT THE CONCERN M /S. EVA ENTERPRISES HAS BEEN CLAIMED TO BE INITIALLY A PROPRIETORSHIP CONCE RN OF MR. BHAILALBHAI P SHAH. IT WAS CONVERTED INTO A PARTNERSHIP FIRM IN W HICH MAHESH N SHAH (HUF) ALSO BECAME A PARTNER. A COPY OF THE DEED OF PARTNE RSHIP HAS BEEN SUBMITTED AS A PART OF THE PAPER BOOK. A PERUSAL OF THIS PART NERSHIP DEED SHOWS THAT IT HAS BEEN EXECUTED ON 10TH DAY OF MAY, 2010 AND HAS BEEN REGISTERED ON 14.05.2010. IT CLEARLY STATES THAT THE PARTNERSHIP SHALL BE DEEMED TO HAVE BEEN COMMENCED ON 10.05.2010. IT FURTHER STATES THA T THE BANKING ACCOUNT OR ACCOUNTS SHALL BE OPENED WITH THE BANK OR BANKS. NO W A PERUSAL OF THE BANK STATEMENT OF BANK ACCOUNT OF SHRI MAHESH N SHAH (HU F) WITH ICICI BANK SHOWS THAT IT HAS TRANSFERRED RS.21.6 LAKHS THROUGH RTGS TO M/S. EVA ENTERPRISES ON 07.05.2010. THUS, AS ON THIS DATE M /S. EVA ENTERPRISES WAS NOT A PARTNERSHIP FIRM AND IT WAS STILL A PROPRIETO RSHIP FIRM OF MR.BHAILALBHAI P SHAH. HOW THIS AMOUNT BECAME CAPITAL OF SHRI MAHESH N SHAH (HUF) IN THE FIRM M/S. EVA ENTERPRISES HAS NOWHERE BEEN EXPLAINE D. THE AO HAS ALSO NOTED IN PARA 6.3.3 OF HIS ORDER THAT IN THE PARTNE RSHIP DEED NO MENTION OF THE CAPITAL INTRODUCED BY SHRI MAHESH N SHAH IS THERE. 4.3.2. OTHER RELATED FACTS ARE THAT THE ALLEGED FIR M M/S. EVA ENTERPRISES HAS ADMITTEDLY NOT MAINTAINED ANY BOOKS OF ACCOUNT AND HAS NOT FILED ANY RETURN OF INCOME TILL DATE. THE APPELLANT ALSO CLAIMED THA T THIS FIRM WAS TAKEN OVER BY THE APPELLANT COMPANY BUT AS NOTED BY THE AO ALSO, NO EVIDENCE IN THIS REGARD HAS BEEN SUBMITTED. THUS, THE APPELLANT HAS FAILED TO ESTABLISH THAT THE AMOUNT TRANSFERRED BY SHRI MAHESH N SHAH (HUF) ON 0 7.05.2010 WAS CREDITED AS CAPITAL ACCOUNT IN THE FIRM M/S. EVA EN TERPRISES. IN THE ABSENCE OF SUCH LINK BEING ESTABLISHED BY THE APPELLANT, THE A MOUNT TRANSFERRED FROM M/S. EVA ENTERPRISES TO THE APPELLANT COMPANY CANNOT BE HELD TO BE ON ACCOUNT OF PAYMENT BY THIS FIRM TO THE APPELLANT ON BEHALF OF SHRI MAHESH N SHAH (HUF) AS CLAIMED BY THE APPELLANT. MOREOVER, THE APPELLAN T HAS NOT SUBMITTED ANY EXPLANATION REGARDING THE IMMEDIATE SOURCE OF THE M ONEY OUT OF WHICH THE FIRM HAD PAID THIS AMOUNT TO THE APPELLANT COMPANY. AS ALREADY NOTED ABOVE, THIS FIRM IS NOT SHOWING ANY INCOME AND HAS NOT EVE N FILED RETURN OF INCOME II ANY OF THE YEAR. THUS, THE CAPACITY OF THIS FIRM TO MAKE PAYMENT MADE TO THE APPELLANT COMPANY HAS NOT BEEN ESTABLISHED. 4.3.3. THUS, THE APPELLANT HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE PARTY WHICH IS THE IMMEDIATE SOURCE OF THIS AMOUNT OF RS.2 1.6 LAKHS. UNDER SUCH CIRCUMSTANCES, THE AO'S ACTION OF ADDING THIS AMOUN T AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE APPELLANT IS CORRECT AND IS ACCORDINGLY UPHELD. SMC-ITA NO. 1474/AHD/2016 ESHYASI PHARMA LTD VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 3 OF 3 4. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. I FIND THAT THE EXISTENCE OF EVA ENTERPRISES IS NOT IN DOUBT. THE MONIES RECEIVED TO THE CREDIT OF MAHESH N SHAH HUF ARE REC EIVED FROM THE SAID FIRM. THE SOURCE OF SOURCE IS THUS PROVED. THE BONAFIDES OF MAHESH N SHAH HUF ARE NOT IN DOUBT EITHER. THE RETURNED INCOME OF MAHESH N SHAH HUF BEING NIL AND THE NON FILING OF RETURNS BY EVA ENTERPRISES ARE NOT REALLY RELEVANT FOR THE PURPOSES OF EXAMINING BONAFIDES OF THIS TRANSACTION, BUT THE AU THORITIES BELOW HAVE BEEN SWAYED BY THESE CONSIDERATIONS. IN MY CONSIDERED VIEW, THE UNDISPUTED FACTS OF THE CASE AND MATERIAL ON RECORD CLEARLY ESTABLISH EXISTENCE AND MEANS OF THE LENDER, AS ALSO BONAFIDES OF THE TRANSACTION. I, THEREFORE, DELETE THE IMPUGNED ADDITION OF RS.21,60,000/-. THE ASSESSEE GETS THE RELIEF ACCOR DINGLY. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON THE 24 TH MAY, 2019. SD/- PRAMOD KUMAR (VICE PRES IDENT) AHMEDABAD, THE 24 TH DAY OF MAY, 2019 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .....ORDER PREPARED AS PER 4 PAGES MANUSCRIPTS OF HONBLE VP- ATTACHED.....24.05.2019..... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .... 24.05.2019..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .... 24.05.2019...... . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 24.05.2019... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ............ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER: ......