GUMAN FURNITURE & SERVICES P LTD., Jaipur V. ACIT, Jaipur

ITA 158/JPR/2011

• Counselvise Citation: 15823114 RSA 2011
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Bonafide belief; Additional evidence
• Section: 153A; 131; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.158/ JP/2011 ASSESSMENT YEAR 2005-06 PAN: AABCG 7610 G M/S. GUMAN FURNITURE & SERVICE (P) LTD. VS. THE A CIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.319/ JP/2011 ASSESSMENT YEAR 2005-06 PAN: AABCG 7610 G THE ACIT VS. M/S. GUMAN FURNITURE & SERVICE (P) LTD CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI K.L. MOOLCHANDANI DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 09-08-2011 DATE OF PRONOUNCEMENT:02-09-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEA LS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 28-01-2011 FOR THE ASSESSMENT YEAR 2005-06. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN ESTIMATING THE G.P.RATE OF 8% ON ELECTRONIC AND OTH ER ITEMS AND CONFIRMING THE ADDITION OF RS. 8,39,124/- 2.2 THE REVENUE IN GROUND NO. 1 IS AGGRIEVED AGAIN ST RELIEF OF RS. 20,28,465/- OUT OF TRADING ADDITION OF RS. 28,77,49 0/- MADE BY THE AO. 2.3 THE FACTS ARE SIMILAR TO THE FATS IN THE PRECED ING YEAR. THE TURNOVER DURING THE YEAR IS TO THE EXTENT OF RS. 2,89,54,072 /-. THE OTHER INCOME IS RS. 8,99,983 /-. THE OVERALL PROFIT IS 4.66% AS COMPARED TO 4.46%. W E HAVE NOTICE THAT THE INCOME DURING THE YEAR IN PERCENTAG EWISE IS LESS AS COMPARED TO THE PRECEDING YEAR. DURING THE YEAR UNDER REFERE NCE, THERE ARE NO RECEIPTS IN RESPECT OF FURNITURE JOB WORK. IN THE IMMEDIATEL Y PRECEDING YEAR, SUCH RECEIPTS WERE TO THE EXTENT OF RS. 5,73,860/-. THE COMMISSION INCOME DURING THE YEAR IS RS. 7,40,157/- AS COMPARED TO RS. 10,72 ,605/- IN THE IMMEDIATELY PRECEDING YEAR. THE ORIGINAL RETURN FOR THE ASSESSM ENT YEAR 2005-06 WAS FILED ON 31-10-05. THIS RETURN CONTAINS TAX AUDIT R EPORT. IN THE TAX AUDIT REPORT, IT HAS BEEN MENTIONED THAT THE ASSESSEE IS MAINTAINING THE BOOKS OF ACCOUNT AND ALSO IS HAVING PURCHASES AND SALES VOUC HERS.. IT IS TRUE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153 A, THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND VOUCHERS. ACCORDI NGLY, THE AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT. WE HAD ALREADY NOTICED THAT AT THE 3 TIME OF SEARCH, STOCK WAS FOUND LESS AS COMPARED TO THE STOCK AS PER BOOKS OF ACCOUNT. IN CASE THERE WAS AN ABNORMAL SUPPRESSI ON OF GROSS PROFIT, THEN THERE WOULD HAVE BEEN SURPLUS STOCK. THERE IS AN IN CREASE N THE TURNOVER AS COMPARED TO PRECEDING YEAR. THE GROSS PROFIT IS BET TER. SINCE THE TRADING RESULTS ARE NOT AT ALL COMPLETELY VERIFIABLE, THERE FORE, WE HOLD THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE TRADING ADDITI ON TO RS. 50,000/- AS PER LAST YEAR. HENCE GROUND NO. 1 OF THE ASSESSEE IS PARTLY ALLOWED WHILE GROUND NO. 1 OF THE REVENUE IS DISMISSED. 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 3.2 THE ASSESSEE HAS FILED THE ORIGINAL RETURN IN W HICH INCOME OF RS. 72,194/- WAS DECLARED. THE RETURN FILED IN RESPONSE TO NOT ICE U/S 153A OF THE ACT, THE ASSESSEE SHOWED THE INCOME OF RS. 78,8 49/-. SINCE THE ADDITIONAL INCOME HAS BEEN DISCLOSED, THEREFORE, TH E AO WAS JUSTIFIED IN MAKING REGULAR ASSESSMENT U/S 153A OF THE ACT HENCE , THE GROUND NO.2 OF THE ASSESSEE IS DISMISSED. 4.1 THE SECOND GROUND OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 11,02.200/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARE CAPITAL. 4 4.2 THE AO IN HIS ORDER OBSERVED THAT THERE HAS BEE N TOTAL NON- COOPERATION BY THE ASSESSEE AND THEREFORE, HE WAS L EFT WITH NO ALTERNATIVE BUT TO HOLD A SUM OF RS. 11,02,200/- INTRODUCED BY THE ASSESSEE AS SHARE CAPITAL BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT . 4.3 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE A DDITIONAL EVIDENCES. THE REASONS FOR FILING THE ADDITIONAL EVIDENCES ARE THE SAME AS MENTIONED BY THE LD. CIT(A) IN HIS ORDER IN PRECEDING YEAR. SUCH ADD ITIONAL EVIDENCES WERE ACCEPTED BY THE LD. CIT(A). BEFORE THE LD. CIT(A), FOLLOWING SUBMISSIONS WERE MADE. C) SHARE APPLICATION MONEY OF RS. 11,02,200/- WAS DEPOSITED/TRANSFERRED BY FOLLOWING SHARE-HOLDERS:- 1. SHRI AJAY KUMAR. 2,12,200/- 2. SHRI AMARCHAND MALAKAR. 5,00,000/- 3. RATANLAL KANHIYALAL/SANTOSH GUPTA. 40,000/- 4. SHRI SURESH DANGAYACH. 1,00,000/- 5. SHRI SUSHIL JHALANI. 17,000/- 6. SHRI TIKAM KHANDELWAL. 2,33,000/- TOTAL. 11,02,200/- THE DETAILS AND EXPLANATION OF EACH PARTY ARE AS UN DER:- . 1. SHRI AJAY KUMAR.2,12,200/- DETAILS OF SOURCE OF DEPOSIT DATE AMOUNT NATURE OF ENTRY EXPLANATION. 31-03- 2005 2,12,000/- JOURNAL ENTRY THIS A JOURNAL ENTRY MADE IN HIS ACCOUNT AFTER TRANSFER OF RS. 2,12,200/- IN SHARE APPLICATION ACCOUNT. THE DETAILS ARE AS UNDER:- 5 OP. BALANCE AS ON 1.4.2004 2,10,000/- AMOUNT RECEIVED BY CHEQUE ON 21/4/2004 BY MASTER CARD 35,000/- AMOUNT PAID BY CHEQUE ON 24-4-2005. 32,800/- AMOUNT TRANSFERRED BY JOURNAL ENTRY PASSED ON 31.3.2005. 2,12,200/-. THE AMOUNT OF RS. 6,00,000/- HAS ALREADY BEEN ADDED IN A.Y. 2003-04. THUS THERE IS A DOUBLE ADDITION IN THIS ACCOUNT. COPY OF LEDGER AND BANK STATEMENT(PNB) IS ENCLOSED PB 44 TO 49 2. SHRI AMARCHAND MALAKAR RS. 5,00,000/- DETAILS OF SOURCE OF DEPOSIT DATE AMOUNT NATURE OF ENTRY EXPLANATION. 31-3-2005 5,00,000/- JOURNAL ENTRY THIS IS A JOURNAL ENTRY. RS. 5,00,000/- HAS ALREADY BEEN ADDED IN THE A.Y. 2004-05 AS UNEXPLAINED CASH CREDIT. AGAIN THIS YEAR THE AMOUNT HAS BEEN ADDED BACK IN THIS YEAR ALSO. THUS THERE IS A DOUBLE ADDITION. THE DETAILS OF RS. 5,00,000/- HAS ALREADY BEEN FURNISHED DURING THE SUBMISSION FOR THE A.Y. 2004-05. COPY OF LEDGER 31-3-2004 AND 31-03-2005 ALONG WITH BANK STATEMENT ENCLOSED HEREWITH PB 50 TO 54 3. SHRI RATANLAL KANHIYALAL SONI/SANTOSH GUPTA (LOA N) RS. 40,000/- DETAILS OF SOURCE OF DEPOSIT DATE AMOUNT NATURE OF ENTRY EXPLANATION. 31-3-2005 40,000/- JOURNAL ENTRY THIS IS A JOURNAL ENTRY. RS.40,000/- WHICH HAS ALREADY BEEN ADDED IN THE A.Y. 2004-05 AS UNEXPLAINED CASH CREDIT. AGAIN THIS YEAR THE AMOUNT HAS BEEN DISALLOWED AND ADDED BACK 6 IN THIS YEAR ALSO. THUS THERE IS A DOUBLE ADDITION. THE DETAILS OF RS.40,000/- HAS ALREADY BEEN FURNISHED DURING THE SUBMISSION FOR THE A.Y. 2004-05. COPY OF LEDGER 31-3- 2003 AND 31-03-2005 ALONG WITH BANK STATEMENT OF ALLAHABAD BANK IS ENCLOSED HEREWITH AS PB PAGE 55 TO 58 4. SHRI SURESH DANGAYACH RS. 1,00,000/- DETAILS OF SOURCE OF DEPOSIT DATE AMOUNT NATURE OF ENTRY EXPLANATION. 31-3-2005 1,00,000/- JOURNAL ENTRY THIS IS A JOURNAL ENTRY. RS.1,00,000/- WHICH HAS ALREADY BEEN ADDED IN THE A.Y. 2004-05 AS UNEXPLAINED CASH CREDIT. AGAIN THIS YEAR THE AMOUNT HAS BEEN DISALLOWED AND ADDED BACK IN THIS YEAR ALSO. THUS THERE IS A DOUBLE ADDITION. THE DETAILS OF RS.1,00,000/- HAS ALREADY BEEN FURNISHED DURING THE SUBMISSION FOR THE A.Y. 2004-05. COPY OF LEDGER 31-3- 2004 AND 31-03-2005 ALONG WITH BANK STATEMENT OF CENTURION BANK IS ENCLOSED PB PAGE 59 TO 63 5. SUSHIL KUMAR JHALANI RS. 17,000/- TRANSFER ENTRY OUT OF THE OPENING BALANCE. THE LD AO ALREADY ADDED RS. 37000/- ON ACCOUNT OF C ASH CREDIT IN THE ACCOUNT IN THE AY 2003-04. OUT OF THE OPENIN G BALANCE, THE ASSESSEE TRANSFERRED RS. 17000/- TO SHARE APPLI CATION A/C, FOR WHICH AGAIN ADDITION WAS MADE WITHOUT APPLYING HIS MIND. THE COPY OF LEDGER ACCOUNT AND SHARE APPLICATION AC COUNT OF SHRI SUSHIL JHALANI IN THE BOOKS OF ASSESSEE IS AT PB PAGE 64 TO 67 D) THUS, IN THE CASE OF PERSONS MENTIONED AT S. NO. 1 TO 5 NO FUNDS WAS RECEIVED BY ASSESSEE DURING THE YEAR WHIL E ONLY TRANSFERRED ENTRIES ARE MADE FROM THEIR LOAN ACCOUN T OUT OF THE 7 OPENING BALANCE THIS CAN BE VERIFIED FROM CHART OF UNSECURED LOAN SHOWING OPENING BALANCES, ADDITIONS, REPAYMENT AND TRANSFER TO SHARE APPLICATION ACCOUNTS ARE PLACED I N P.B. (PAGE NO. 30) FILED IN YOUR OFFICE. FURTHER SHARE APPLICA TION ACCOUNT IN THE NAME OF VARIOUS PERSONS IS PLACED ALSO PLACED I N P.B (PAGE NO. 31 TO 36) FILED IN YOUR OFFICE. E) SHRI TIKAM KHANDELWAL RS. 2,33,000:- THE SHARE APPLICATION MONEY OF RS. 2,33,000/- WAS TRANSFERRED FROM THE ACCOUNT OF SHRI TIKAM KHANDELW AL. CONFIRMATION AGAINST THE FUNDS INTRODUCED IN THE CO MPANY FILED AS ADDITIONAL EVIDENCE UNDER RULE 46A (P.B. PAGE NO . 37) I N YOUR OFFICE. THE CASE OF THIS PERSON WAS ALSO UNDER ASSESSMENT PROCEEDING WITH THE SAME AO AND THE DETAIL OF INVES TMENT SUBMITTED IN THE CASE OF THIS PERSON AND VERIFIABLE FROM THE BALANCE SHEET OF THIS PERSON, THEREFORE THE AR OF T HE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE CONFIRMATION OF THIS PERSON IS NOT REQUIRED TO SUBMIT SEPARATELY. F) SINCE FROM THE ABOVE DETAILS IT IS PROVED THA T DURING THE YEAR THE FRESH SHARE APPLICATION MONEY WAS RECEIVED FROM SHRI TIKAM KHANDELWAL ONLY; WHOSE ASSESSMENT WAS ALSO CO MPLETED BY THE SAME AO, THEREFORE THIS IS NOT A CASE TO TRE AT THESE TRANSACTIONS AS NON GENUINE AND NO ADDITION DESERVE S TO BE MADE IN THE HANDS OF THE COMPANY. G) IN THE ABOVE CASES THE IDENTITY OF THE PERSONS A RE PROVED. EVEN IN THE CASE OF SHARE APPLICATION MONEY IN THE NAME OF BENAMI OF SHRI SHANKER KHANDELWAL, IT SHOULD BE TAK EN THAT THE INVESTMENT WAS MADE BY SHRI SHANKER KHANDELWAL. IT CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPA NY. RELIANCE PLACED ON :- (1)COMMISSIONER OF INCOME TAX VS. STELLER INVESTMEN T LTD. (2001) 251 ITR 263 (SC) WHEREIN IT HAS BEEN HELD TH AT EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF A SSESSEE- COMPANY WERE NOT GENUINE, THE AMOUNT COULD NOT BE R EGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. 8 (2)COMMISSIONER OF INCOME TAX VS. DOWN TOWN HOSPITA L (P) LTD. (2004) 267 ITR 439 (GAU) HELD THAT NO ADDITI ON UNDER S. 68 IS PERMISSIBLE WHERE THE SHAREHOLDERS ARE IDENTI FIED AND IT IS ESTABLISHED THAT THEY HAD INVESTED THE MONIES IN TH E PURCHASE OF THE SHARE - CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) FOLLOWED (3)JAYA SECURITIES LTD. VS. COMMISSIONER OF INCOME TAX (2008) 166 TAXMAN 7 (ALL) HELD THAT NO ADDITION UN DER S. 68 CAN BE MADE IN THE HANDS OF COMPANY LIMITED BY SHAR ES IN RESPECT OF INVESTMENT IN SHARE CAPITAL OF THE COMPA NY - CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 : ( 2001) 251 ITR 263 (SC) FOLLOWED IN VIEW OF THE ABOVE SUBMISSION, THE HUMBLE ASSESS EE PRAYS YOUR HONOR KINDLY TO DELETE THE ADDITION OF R S. 11,02,200/- MADE BY THE LD. AO AND PRAY JUSTICE. 4.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S DELETED THE ADDITION AFTER OBSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE LD AR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DU RING THE COURSE OF APPEAL HEARING, SH. SHAILESH KUMAR ACIT C C-1, JAIPUR PRESENT AND ONE SET OF SUBMISSION ALONGWITH OTHER DOCUMENTS WAS GIVEN TO HIM. THE A.R. HAS EXPLAINED THE ENTRIES AND THE DOCUMENTS TO THE UNDERSIGNED AND AL SO TO THE A.O. DURING THE APPEAL HEARING. THE CONTENTION OF THE LD AR THAT THE ASSESSEE HAS N OT RECEIVED ANY MONEY DURING THE YEAR UNDER CONSIDERAT ION FROM THE PERSONS MENTIONED AT S. NO. 1 TO 5 EXCEPT RS. 2 200/- FROM SHRI AJAY KUMAR IS FOUND CORRECT. I FIND THAT IN TH E CASE OF SHRI AJAY KUMAR, THERE WAS OPENING BALANCE AS ON 1.4.200 4 OF RS. 2,10,000/-. THE ASSESSEE RECEIVED PAYMENT OF RS. 35 000/- FROM CREDIT CARD AND OUT OF WHICH RS. 32800/- WAS REPAID TO HIM. 9 THE AO MADE THE ADDITION OF RS. 6,00,000/- IN AY 20 03-2004 FOR THIS ACCOUNT TREATING IT AS UNEXPLAINED CASH CR EDIT AND OUT OF THAT RS. 2,10,000/- WERE COMING TO THIS YEAR AS OPE NING BALANCE. IN THE CASE OF SHRI AMARCHAND MALAKAR, THERE WAS OP ENING BALANCE OF RS. 5,00,000/- IN THIS ACCOUNT, WHICH IS COMING FROM AY 2004-05, WHEREIN THE AO TREATED THIS ACCOUNT AS UNEXPLAINED CASH CREDIT AND MADE THE ADDITION OF RS . 5,00,000/- IN AY 2004-05. SIMILAR POSITION IS FOR THE ACCOUNT OF SHRI RATAN LAL KNAHIYALAL SONI RS. 40,000/-,SHRI SURESH DANGAYACH. THE ACCOUNT OF SHRI RATAN LAL KNAHIYALAL SONI IS COMING FROM AY 2003-04 AND THE ACCOUNT OF SHRI SURE SH DANGAYACH IS COMING FROM AY 2004-05 AS OPENING BALA NCE FOR AY 2005-06. THE SHARE APPLICATION ACCOUNT IN THE NA ME OF SHRI SUSHIL JHALANI IS ALSO COMING FROM AY 2003-04 AS OP ENING BALANCE OF AY 2005-06. THE ASSESSEE CREDITED RS. 37 000/- IN THE NAME OF SHRI SUSHIL JHALANI IN AY 2003-04 FOR W HICH THE AO MADE THE ADDITION OF RS. 37000/- IN AY 2003-04 T REATING THE SAME AS UNEXPLAINED CASH CREDIT. IN AY 2004-05, AN AMOUNT OF RS. 20000/- WAS WITHDRAWN FROM THIS ACCOUNT RESU LTING THE CLOSING BALANCE OF RS. 17000/- IN THIS ACCOUNT AS O N 31.03.2004, WHICH WAS TRANSFERRED TO SHARE APPLICATION ACCOUNT DURING THE YEAR BY JOURNAL ENTRY. AS REGARD, SHRI TIKAM KHANDE LWAL, THE SAME AO HAS ASSESSED THE INCOME OF SHRI TIKAM KHAND ELWAL U/S 153A AND THE INVESTMENT HAS BEEN DISCLOSED IN T HE BALANCE SHEET FILED BEFORE THE AO IN HIS ASSESSMENT PROCEED INGS AND THE A.O. HAS NOT MADE ANY ADVERSE FINDINGS IN THIS REGA RD IN HIS ASSESSMENT. THE A.O. HAS ALSO SEEN AND CHECKED THES E DETAILS AND FACTS DURING THE APPEAL HEARING AND ON BEING AS KED BY THE UNDERSIGNED TO COMMENT, HE STATED THAT HE HAS NO OB JECTION FOR DELETION OF ADDITION ON MERITS EXCEPT LEGAL OBJECTI ON OF ADMISSION OF ADDITIONAL EVIDENCES. THE ISSUE REGARD ING ADMISSION OF THE ADDITIONAL EVIDENCES HAD BEEN DECI DED BY THE UNDERSIGNED AND THESE HAVE BEEN ALLOWED TO BE ADMIT TED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTA NCES, THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY TOTA LING TO RS. 11,02,200/- IS HEREBY DELETED. 4.5 THE LD. CIT(A) HAS CLEARLY MENTIONED THAT NO AM OUNT HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION EXCEPT RS. 2,200/- FROM SHRI 10 AJAY KUMAR. THUS IN RESPECT OF 05 CASH CREDITS, THE AMOUNT HAS NOT BEEN RECEIVED DURING THE YEAR AND HENCE THERE WAS NO CAS E OF MAKING ADDITION. A SUM OF RS. 2.30 LACS WAS RECEIVED FROM SHRI TIKAM K HANDELWAL, ONE OF THE MEMBER BELONGING TO SHANKAR LAL KHANDELWAL GROUP. T HE CASH FLOW STATEMENT OF SHRI TIKAM KHANDELWAL HAS BEEN FILED I N THE COURSE OF PROCEEDINGS AND IT IS NOT HELD AS UNTRUE THOUGH CON SIDERED AS NON-VERIFIABLE . MOREOVER ASSESSMENT U/S 153A HAS BEEN MADE IN THE C ASE OF TIKAM KHANDLWAL ALSO. 4.6 WE HAVE HEARD BOTH THE PARTIES. LOOKING TO THE FACTS ON RECORD, WE FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 11,02,200/- AFTER ADMITTING THE ADDITIONAL EVIDENCE S. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 5.1 THE THIRD GROUND OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE LUMPSUM ADDITION OF RS. 10.00 LACS U/S 68 OF THE ACT BY ADMITTING THE ADDITIONAL EVIDENCES. 5.2 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE C ONFIRMATIONS OF NEW CASH CREDITORS. THE DETAILS FILED BEFORE THE LD. CI T(A) ARE AS UNDER:- B) FURTHER DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE CONFIRMATIONS OF NEW CASH CREDITORS WERE FILED AND THE SAME IS VERIFIABLE FROM LETTER OF AR PLACED AT PAGE 26 OF P APER BOOK, THEREFORE THE CONTENTION OF THE AO THAT THE ASSESSE E NOT FILED DETAIL IN RESPECT OF CASH CREDITORS IS WRONG AND BA SELESS. 11 C) THE DETAIL OF NEW UNSECURED LOANS TAKEN DURING T HE YEAR IS GIVEN IN PB PAGE 30. WE HAVE SUBMITTED THE FOLLO WING DOCUMENTS IN RESPECT OF CASH CREDITORS BEFORE YOUR HONOUR: - 1. SHRI AJAY KUMAR GUPTA RS. 35000/- AFFIDAVIT AG AINST FRESH ADDITION IN HER ACCOUNT FILED AS ADDITIONAL E VIDENCE U/R 46A IN YOUR OFFICE P.B (PAGE NO. 38) THE PAYMENT WAS RECEIVED FROM MASTER CARD. 2 SHANKAR KHANDELWAL RS. 8,20,000/-. CONFIRMATION AGAINST FRESH ADDITION IN IS ACCOUNT FILED AS ADDIT IONAL EVIDENCE U/R 46A IN YOUR OFFICE P.B. (PAGE NO. 41). SHRI SHA NKER KHANDELWAL IS ASSESSEE OF THE SAME AO AND ASSESSMEN T WAS MADE U/S 153A BY THE SAME AO. THE INVESTMENT OF SHR I SHANKER KHANDELWAL IN THE COMPANY AS LOAN HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT OF SHRI SHANKER KHANDEL WAL. 3. SHREE TIRUPATI ENTERPRISES PROP SHRI RAVINDRA KU MAR SHARMA RS. 50000/-. THE AFFIDAVIT AND CONFIRMATION AGAINST FRESH ADDITION IN HIS ACCOUNT FILED AS ADDITIONAL E VIDENCE U/S 46A IN YOUR OFFICE P.B. (PAGE NO. 39-40). THE COPY OF BANK STATEMENT WAS FILED IN AY 2004-05 AT PB PAGE 73/II 4. M/S. S.R. TOURS & TRAVELS RS. 66000/- CONFIRMATI ON AGAINST FRESH ADDITION HIS ACCOUNT FILED AS ADDITIO NAL EVIDENCE U/R 46A OF I.T. RULES P.B (PAGE NO. 42) SHRI MOHAN LAL KHANDELWAL IS PROPRIETOR OF THIS FIR M AND IS ASSESSEE OF THE SAME AO AND ASSESSMENT WAS MADE U/S 153A BY THE SAME AO. THE INVESTMENT OF SHRI MOHAN LAL KHAND ELWAL IN THE COMPANY AS LOAN HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT OF SHRI MOHAN LAL KHANDELWAL. 5. SMT. GUMAN KHANDELWAL RS. 61000/- CONFIRMATION AGAINST FRESH ADDITION IN HER ACCOUNT FILED AS ADDI TIONAL EVIDENCE U/R 46A IN YOUR OFFICE P.B (PAGE NO. 43) 12 SMT GUMAN KHANDELWAL IS ASSESSEE OF THE SAME AO AND ASSESSMENT WAS MADE U/S 153A BY THE SAME AO. THE INVESTMENT OF SMT GUMAN KHANDELWAL IN THE COMPANY A S LOAN HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT OF SM T GUMAN KHANDELWAL. D) EACH AND EVERY UNEXPLAINED CASH CREDIT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THE INTENTION OF PARLIAMENT IN ENACTING SECTION 6 8 WAS NOT TO TREAT EVERY UNEXPLAINED CASH CREDIT AS I NCOME OF THE ASSESSEE. IN THE CORRESPONDING CLAUSE IN THE BILL, WHICH WAS INTRODUCED IN PARLIAMENT, THE WORD SHALL HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON RECOMMENDATION OF THE SELECT COMMITTEE, THE WORD S HALL WAS SUBSTITUTED BY THE WORD MAY. THIS CLEARLY INDICAT ES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTION 68. THE REFORE, THE GENUINE LOAN EVEN IF UNEXPLAINED SHOULD NOT BE CONS IDERED AS INCOME OF THE ASSESSEE AND THE SAME SHOULD NOT BE T REATED AS ASSESSEES INCOME. RELIANCE IS PLACED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME TAX VS SMT. P. K. NOORJAHAN 237 ITR 570 (SC) E) THE ASSESSEE FURTHER RELIES ON THE FOLLOWING D ECISIONS:- (I) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) THE ASSESSEE HAD GIVEN NAME AND ADDRESSES OF THE CASH CREDITORS, WHO WERE INCOME TAX ASSESSEE. REVEN UE APART FROM ISSUING SUMMON U/S 131 NOTICES TO CREDITORS, D ID NOT PURSUE THE MATTER FURTHER- IT DID NOT EXAMINE CREDI TWORTHINESS OF THE CREDITORS- ASSESSEE COULD NOT, UNDER THE CIRCUM STANCES DO ANYTHING FURTHER. HELD, THAT THE ADDITIONS WERE RIG HTLY DELETED. (II) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008) 8 DTR (RAJ) 199. ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS, THE ASSESSEES ONUS S TANDS 13 DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROV E THE SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MO NEY DEPOSITED WITH HIM. HELD, THAT MERELY BECAUSE THE D EPOSITORS EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCE PTABLE TO THE AO, IT CANNOT BE PRESUMED THAT THE DEPOSITS MAD E BY THE CREDITORS ARE MONEY BELONGING TO THE ASSESSEE ITSEL F. IN VIEW OF THE ABOVE SUBMISSION, THE HUMBLE ASSESSEE PRAYS YOUR HONOR KINDLY TO DELETE THE ADDI TION OF RS. 10,00,000/- MADE BY THE LD. AO AND PRAY JUSTICE. 5.3 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE DELETED THE ADDITION OF RS. 10.00 LACS AFTER OBSERV ING AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSION OF LD AR A ND MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ASSES SEE HAS RECEIVED FRESH DEPOSITS DURING THE YEAR UNDER CONSI DERATION FROM THE FOLLOWING PERSONS:- (I) SHRI AJAY KUMAR GUPTA RS. 35000/- (II) SHRI SHANKER KHANDELWAL RS. 820000/- (III) M/S SHRI TIRUPATI ENTERPRISES RS. 50000/- (IV) M/S SR TOURS AND TRAVELS RS. 66000 (V) SMT GUMAN KHANDELWAL RS. 61000 ------------ TOTAL RS. 10,32,000/- ========= IN THE CASE OF SHRI AJAY GUPTA AS I DISCUSSED IN TH E GROUND NO 1, THAT THERE WAS AN OPENING BALANCE OF R S. 210000/- IN THIS ACCOUNT. THE ASSESSEE RECEIVED A SUM OF RS. 35000/- BY CREDIT CARD OUT OF WHICH RS. 32800/- WAS REPAID AND THE NET CREDIT BALANCE OF RS. 212200/- WAS TRANSFERRED IN S HARE APPLICATION ACCOUNT. THE AO HAS MADE AN ADDITION OF RS. 35000/- RECEIVED BY THE ASSESSEE THROUGH CREDIT CAR D. THE PAYMENT OF RS. 35000/- TO THE ASSESSEE IS SUPPORTED BY AFFIDAVIT FILED BY SHRI AJAY KUMAR GUPTA (PB PAGE 20 AY 2003- 04). AS 14 REGARD RECEIPT OF RS.50000/- FROM M/S TIRUPATI ENTE RPRISES (PROP SHRI RAVINDRA KUMAR SHARMA), THE AMOUNT IS VE RIFIABLE FROM THE BANK STATEMENT FILED BY THE ASSESSEE AT PB PAGE 73 (AY 2004-05). THE ASSESSEE HAS FILED AFFIDAVIT AND CONFIRMATION LETTER IN SUPPORT OF THE GENUINENESS O F THIS CASH CREDITOR. FURTHER THE ASSESSEE HAS FILED COPY OF IT R ACKNOWLEDGMENT OF THIS PERSON AT PB PAGE 74 (AY 200 4-05). AS REGARD THE RECEIPTS OF MONEY FROM SHRI SHANKER K HANDELWAL RS. 8,20,000/-. SMT GUMAN KHANDEWAL RS. 61000/- AND M/S SR TOURS AND TRAVELS (PROP SHRI MOHAN LAL KHANDELWAL) RS. 66000/- THE SAME AO HAS ASSESSED THE INCOME OF THES E PERSONS U/S 153A AND THE INVESTMENT HAS BEEN DISCLOSED IN T HE BALANCE SHEET FILED BEFORE THE AO IN THEIR ASSESSMENT PROCE EDINGS AND THE A.O. HAS NOT MADE ANY ADVERSE FINDINGS IN THIS REGARD IN THEIR ASSESSMENT. THE A.O. HAS ALSO SEEN AND CHECKE D THESE DETAILS AND FACTS DURING THE APPEAL HEARING AND ON BEING ASKED BY THE UNDERSIGNED TO COMMENT, HE STATED THAT HE HA S NO OBJECTION FOR DELETION OF ADDITION ON MERITS EXCEPT LEGAL OBJECTION OF ADMISSION OF ADDITIONAL EVIDENCES. THE ISSUE REGARDING ADMISSION OF THE ADDITIONAL EVIDENCES HAD BEEN DECIDED BY THE UNDERSIGNED AND THESE HAVE BEEN ALLO WED TO BE ADMITTED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT OF RS. 10,00,000/- MADE BY THE AO ON LUMP SU M BASIS IS HEREBY DELETED. 5.4 WE HAVE HEARD BOTH THE PARTIES. WE HAVE PERUSED THE FINDINGS OF THE LD. CIT(A). FROM THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS SATISFIED THE REQUIREMENT OF SECTION 68 AND THEREFORE, NO ADDITIO N IS WARRANTED. WE FEEL THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE ADDITION OF RS. 10.00 LACS DELETED BY THE LD. CIT(A ) IS IN ORDER. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. 15 6.1 THE FOURTH GROUND OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN DIRECTING THE AO TO GIVE SET OFF OF THE TRADING ADD ITION AGAINST THE ADDITION SUSTAINED FOR UNEXPLAINED SHARE CAPITAL. 6.2 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS DELETED THE ADDITION ON ACCOUNT OF SHARE CAPITAL AND THEREFORE, THE DIRECTION, IF ANY, GIVEN BY THE LD. CIT(A) IS ONLY ACADEMIC HENCE, THIS GROU ND OF APPEAL OF THE REVENUE IS DISMISSED AS THE SAME IS NOT ARISING FRO M THE FINDING GIVEN BY THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 02 /09/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. GUMAN FURNITURE & SERVICES (P) LTD. , JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.158/JP /11) A.R, ITAT, JAIPUR 16 17 18