M/s. Apex Construction, Kheda V. The Asstt. Commissioner of Income Tax, Kheda Circle, Nadiad

ITA 1496/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5663 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• 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: SUNIT TALATI
• Keywords: Question of law
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 1496/AHD/2016 (ASSESSMENT YEAR: 2012-13) APEX CONSTRUCTION 8/B, TRIVENI PARK SOCIETY OPP. BUS STEAND KAPADWANJ DIST. KHEDA-387620 V/S ASSTT. COMMISSIONER OF INCOME TAX, KHEDA CIRCLE, NADIAD (APPELLANT) (RESPONDENT) PAN: AAEFA 1295P APPELLANT BY : SHRI SUNIT TALATI, AR RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 12 -11-201 8 DATE OF PRONOUNCEMENT : 29 -11-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-2, VADODARA DATED 18.04.2016 PERTAINING TO A.Y. 2012-1 3 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1496 /AHD/2016 . A.Y. 2012-13 2 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION U/S 68 OF THE ACT OF UNSECURED LOAN OF RS. 10,75,000/- OF FOUR DIFFERENT ACCOUNTS AS UNDISCLOSED INCOME. IT IS SUBMITTED THAT ALL THE DO CUMENTS AND EXPLANATION REQUIRED TO JUSTIFY IDENTITY, CREDITWORTHINESS AND GENUINENESS OF ALL THE DEPOSITORS WERE SUBMITTED BEFORE THE LD. A.O. AS WELL AS BEFOR E THE LD. CIT(A). IT IS SUBMITTED THAT THE LOWER AUTHORITIES HAVE FAILED IN APPRECIAT ING THE COMPLETE DETAILS FILED BEFORE THEM CLEARLY JUSTIFYING THE CONTENTION OF TH E APPELLANT. THUS THE DISALLOWANCE MADE BY A.O. AND CONFIRMED BY LD. CIT( A) INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT OF RS. 10,75,000/- IN CASE OF YOUR APPELLANT IS TOTALLY INCORRECT , ILLEGAL AND UNJUSTIFIABLE. THEREFORE IM PUGNED DISALLOWANCE MADE BY LD. A.O. AND CONFIRMED BY LD. CIT(A) OF RS. 10,75,0 00/- BE DELETED. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GO VERNMENT APPROVED CONTRACTOR AND IS ENGAGED IN CONTRACT BUSINESS OF ROAD CONSTRU CTION ACTIVITIES. ASSESSMENT U/S 143 (3) WAS DONE DETERMINING TOTAL INCOME AT RS . 37,99,550/- AFTER MAKING ADDITION U/S 68 OF THE ACT OF UNSECURED LOAN OF RS. 10,75,000/-. 3. IN ORDER TO COMPLETE ITS BUSINESS ACTIVITIES, THE F IRM HAS TAKEN UNSECURED LOAN IN F.Y. 2011-12 OF 26 PERSONS AS PER TAX AUDIT REPORT INCLUDING THE FOLLOWING DEPOSITORS, WHICH ARE CONSIDERED BY THE A.O. : 4. BEFORE THE A.O., ASSESSEE STATED THAT HE HAS TAKEN LOAN FOR BUSINESS ACTIVITIES AND HE HAS SUBMITTED ALL THE DOCUMENTS SUPPORTING (I) THE IDENTITY OF THE CREDITOR (II) THE CAPACITY OF THE CREDITOR TO ADVANCE MONEY, AND (III) THE GENUINENESS OF THE TRANSACTION. 5. BUT LOWER AUTHORITIES WERE NOT AGREED WITH THE CONT ENTION OF THE ASSESSEE. 6. NOW APPELLANT IS BEFORE US. ITA NO. 1496 /AHD/2016 . A.Y. 2012-13 3 7. IN SUPPORT OF ITS CONTENTION, ALL THE FOUR PERSONS WHO ADVANCED THE LOAN APPEARED BEFORE THE LOWER AUTHORITIES AND SUBMITTED DETAIL PERTAINING TO THEIR INCOME WHICH THEY EARNED FROM SELLING OF AGRICULTUR AL PRODUCE AND SUBMITTED LAND HOLDING DETAILS AND AGRICULTURAL PRODUCE SALES BILL. 8. THE ASSESSEE RECEIVED THE AMOUNT THROUGH ACCOUNT PA YEE CHEQUE AND FILED CONFIRMATION OF LOAN DULY CONFIRMED BY THE CREDITOR S. THE AMOUNT RECEIVED BY THE ASSESSEE. THE ASSESSEE HAS PAID INTEREST TO THE SE CREDITORS AND CREDITED IN THEIR RESPECTIVE ACCOUNT. THE CREDIT INTRODUCED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IN SUPPORT OF ITS CONTENTION, ASSESSEE SUBMITTED COMPLETE INFORMATION SUCH AS COMPLETE ADDRESS, PAN NUMBER, B ANK ACCOUNT ETC. AND ALSO GIVEN THE DETAILS OF THE CHEQUE. 9. AND IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED SE VERAL JUDGMENTS INCLUDING DCIT VS. ROHINI BUILDERS [2003] 127 TAXMANN.COM 523 (GUJ.) WHEREIN IT IS HELD: SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED ITS - ASSESSING OFFICER MADE ADDITION OF RS. 12,85,000 AS UNEXPLAINED CASH CREDI TS IN RESPECT OF LOANS TAKEN BY ASSESSEE FROM 21 PARTIES - ASSESSEE HAD DISCHARG ED INITIAL ONUS BY PROVIDING IDENTITY OF ALL CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT NUMBERS AND COPIES OF ASS ESSMENT ORDERS WHEREVER READILY AVAILABLE - ASSESSEE HAD ALSO PROV ED CAPACITY OF CREDITORS BY SHOWING THAT AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF CREDITORS - REPAYMENT OF LOANS AND INTEREST THEREON WAS ALSO MADE BY ACCOUNT PAYEE CHEQUES BY ASSESSEE AND TAX A LSO HAD BEEN DEDUCTED AT SOURCE ON INTEREST PAYMENTS AND REMITTED - WHETHER ASSESSEE WAS NOT EXPECTED TO PROVE GENUINENESS OF CASH DEPOSITED IN BANK ACCOUNTS OF CREDITORS, BECAUSE UNDER LAW, ASSESSEE CAN BE ASKED TO PROVE S OURCE OF CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT SOURCE OF SOURCE - HELD, YES - W HETHER MERELY BECAUSE SUMMONS ISSUED TO SOME OF CREDITORS COULD NOT BE SE RVED OR THEY FAILED TO ITA NO. 1496 /AHD/2016 . A.Y. 2012-13 4 APPEAR BEFORE ASSESSING OFFICER, COULD NOT BE GROUN D TO TREAT THOSE CREDITS AS NON-GENUINE - HELD, YES - WHETHER CONSIDERING TOTAL ITY OF FACTS AND CIRCUMSTANCES OF CASE, ESPECIALLY FACT THAT ASSESSI NG OFFICER HAD NOT DISALLOWED INTEREST CLAIMED/PAID IN RELATION TO THOSE CREDITS IN ASSESSMENT YEAR UNDER CONSIDERATION OR EVEN IN SUBSEQUENT ASSESSMENT YEAR S, AND TAX AT SOURCE HAD BEEN DEDUCTED OUT OF INTEREST PAID/CREDITED TO CRED ITORS, TRIBUNAL WAS JUSTIFIED IN DELETING ADDITION MADE - HELD, YES - WHETHER AS THERE WAS NO SUBSTANCE IN APPEAL AND NO SUBSTANTIAL QUESTION OF LAW AROSE, AP PEAL WAS LIABLE TO BE DISMISSED. 10. THEN ALSO CITED A CASE OF JURISDICTIONAL HIGH COUR T IN THE MATTER OF CIT VS. RANCHHOD JIVABHAI NAKHAVA WH[2012] 21 TAXMANN.COM 1 59 (GUJ.) WHEREIN IT IS HELD: SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED ITS - ASSESSMENT YEAR 2006- 07 -WHETHER ONCE ASSESSEE HAS ESTABLISHED THAT HE H AS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM LENDERS WHO ARE ALL INCO ME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, INITIAL BURDEN UNDER SECTI ON 68 IS DISCHARGED AND THEN, IT IS ASSESSING OFFICER'S DUTY TO ASCERTAIN F ROM ASSESSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY H AVE SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAVE FURTHER SHOWN THAT THOSE A MOUNT OF MONEY HAD BEEN LENT TO ASSESSEE - HELD, YES - WHETHER IF ASSE SSING OFFICERS OF THOSE CREDITORS ARE SATISFIED WITH EXPLANATION GIVEN BY C REDITORS AS REGARDS THOSE TRANSACTIONS, ASSESSING OFFICER IN QUESTION HAS NO JUSTIFICATION TO DISBELIVE TRANSACTIONS REFLECTED IN ACCOUNT OF CREDITORS - HE LD, YES - WHETHER IF BEFORE VERIFYING SUCH FACT FROM ASSESSING OFFICER OF LENDE RS OF ASSESSEE, ASSESSING OFFICER DECIDES TO EXAMINE LENDERS AND ASKS ASSESSE E TO FURTHER PROVE GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS, I T WOULD BE AGAINST PRINCIPLES LAID DOWN UNDER SECTION 68 - HELD, YES [ IN FAVOUR OF ASSESSEE] 11. ON THE OTHER HAND, LD. D.R. CITED A JUDGMENT OF JUR ISDICTIONAL HIGH COURT IN THE MATTER OF BLESSING CONSTRUCTION VS. ITO WHEREIN IT HAS BEEN HELD: SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED ITS [BURDEN OF PROOF] - ASSESSMENT YEAR 2005-06 - IN CASE OF ALL DEPOSITORS , THEIR BANK ACCOUNTS ITA NO. 1496 /AHD/2016 . A.Y. 2012-13 5 CONTAINED MEAGER BALANCE - SIZEABLE AMOUNT OF RS. 1 LAKH OR ABOVE WERE DEPOSITED IN CASH IN ACCOUNTS OF DEPOSITORS AND IMM EDIATELY ENTIRE AMOUNTS WERE WITHDRAWN THROUGH ISSUANCE OF CHEQUES IN FAVOU R OF ASSESSEE - FURTHER, DEPOSITORS, CAPACITY TO RAISE SUCH CASH AMOUNT WAS ALSO NOT ESTABLISHED - WHETHER THIS WAS A CASE WHERE REVENUE MADE ADDITION ON ASSESSEE FAILING TO ESTABLISH SOURCE OF SOURCE AND, THEREFORE, ADDITION WAS JUSTIFIED - HELD, YES [PARA 7] [IN FAVOUR OF REVENUE] 12. BUT SAME IS NOT APPLICABLE TO THE FACTS AND CIRCUMS TANCES OF THE CASE, THEREFORE, WE ARE RELUCTANT TO RELY THE SAME. 13. AS ASSESSEE HAS SUBMITTED ALL THE DETAILS PERTAININ G TO AMOUNT OF RS. 10,70,000/- AND RESPECTFULLY FOLLOWING THE AFORESAI D JUDGMENT, WE DELETE THE ADDITION MADE BY THE LOWER AUTHORITIES. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 11- 2018 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 29 /11/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD