The ACIT, Circle-6, Surat V. M/s. Dharti Enterprises, Surat

ITA 1609/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1074 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SETH
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 133A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1609/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) ACIT CIRCLE-6 SURAT / VS. M/S.DHARTI ENTERPRISES SAI DARSHAN SOCIETY DINDOLI ROAD GODADARA, SURAT $ ./ ./ PAN/GIR NO. : AAFFD 5851 P ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $'* / APPELLANT BY : SHRI SANJAY KUMAR, SR.DR ()$'+* / RESPONDENT BY : SHRI SAPNESH SETH, AR ,+ / DATE OF HEARING 24/06/2016 -./+ / DATE OF PRONOUNCEMENT 18/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT, DATE D 14/02/2011 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO.1609/AHD /2011 ACIT VS. M/S.DHARTI ENTERPRISES ASST.YEAR 2008-09 - 2 - 2.1. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION. IT ELECTRONICALLY FILED ITS RETURN OF INCOME FOR AY 2008- 09 ON 30.09.2008 DECLARING TOTAL INCOME OF RS.1,84, 39,360/-. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS 'THE ACT') WAS CONDUCTED AT THE CONSTRUCTION PREMISES OF THE ASSESSEE ON 27.2.2008 AND THE STATEMENT OF SHRI KANJIBHAI PATEL , THE PARTNER WAS RECORDED WHEREIN HE DISCLOSED A SUM OF RS 1,85,00,0 00 AS UNACCOUNTED INCOME FOR THE RELEVANT FINANCIAL YEAR IN RESPECT O F EXCESS CASH AND UNACCOUNTED FINANCIAL TRANSACTIONS. 2.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER (AO IN SHORT) NOTICED THAT CAPITAL OF RS 48 LACS IN CASH WAS INTRODUCED AS CAPITAL BY THE 3 PARTNERS OF THE FIRM AND THEREFORE THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CAPITAL INTRODUCTION AND P ROVE THE GENUINENESS OF THE TRANSACTION TO WHICH IT WAS SUBMITTED THAT DURI NG THE COURSE OF SURVEY ASSESSEE HAD DISCLOSED RS 1.85 CRORES AS THE INCOME OF THE FIRM AND TILL THE DATE OF SURVEY RS.81,40,000/- WAS WITHDRAWN BY THE PARTNERS AND THE SAID CASH WAS LYING WITH THE PARTNERS AND THE SAME WAS INTRODUCED AS CAPITAL BY THE RESPECTIVE PARTNERS. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO IN VIEW OF THE FACT THAT THERE WAS NO DETAILS, INFORMATION OR EXPLANATION AS REGARDS THE DATE OF WITHDRAWAL OF SUMS BY THE PARTNERS, THERE WAS NO NEXUS BETWEEN TH E SUMS WITHDRAWN BY THE PARTNERS FROM THE UNACCOUNTED MONEYS WITHDRAWN AND SUM DEPOSITED ITA NO.1609/AHD /2011 ACIT VS. M/S.DHARTI ENTERPRISES ASST.YEAR 2008-09 - 3 - SUBSEQUENTLY BY THEM. HE WAS FURTHER OF THE VIEW TH AT THE CLAIM OF ASSESSEE OF KEEPING HUGE CASH AT THE RESIDENCE OF D IRECTORS WAS ILLOGICAL AND THAT NO EVIDENCE IN THE FORM OF CASH BOOK OF TH E SOURCE EVIDENCING THE WITHDRAWAL OF CASH WAS FURNISHED. HE ACCORDINGL Y REJECTED THE SUBMISSIONS OF THE ASSESSEE AND TREATED THE SUM OF RS. 48 LACS, BEING THE CAPITAL CONTRIBUTION AS UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S 68 OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 14.2.2011 (IN AP PEAL NO.CAS- IV/144/10-11) ALLOWED THE APPEAL OF THE ASSESSEE B Y HOLDING AS UNDER:- 4. I HAVE GONE THROUGH THE FACTS OF THE CASE. THE APPELLANT HAD DISCLOSED ADDITIONAL INCOME OF RS.1,85,00,000/- AND ALSO EXPLAINED THE APPLICATION OF THE SAID INCOME IN THE STATEMENT REC ORDED DURING THE COURSE OF SURVEY. THE APPELLANT HAS DULY OFFERED T HIS ADDITIONAL INCOME AND PAID TAX ON IT. IT WOULD NOT BE PROPER TO ACCE PT ONLY THAT PART OF THE STATEMENT WHICH IS BENEFICIAL TO THE REVENUE AND RE JECT THE PART RELATING TO APPLICATION OF THE SAID INCOME. THE CASH WITHDR AWALS BY THE PARTNERS FROM THE UNACCOUNTED ADDITIONAL INCOME HAVE TO BE A CCEPTED. THE SOURCE OF THE INTRODUCTION OF CAPITAL IS THEREFORE AVAILABLE WITH THE PARTNER. THE CONTENTION OF THE A.O. THAT SUCH HUGE CASH SHOULD HAVE BEEN KEPT IN BANK / LOCKERS AND NOT AT HOME IS IRRE LEVANT AS IT DOES NOT MAKE ANY DIFFERENCE IF THE MONEY WAS BROUGHT FROM H OME AND INTRODUCED AS CAPITAL OR OUT OF BANK LOCKER. SO LO NG AS THE TAX HAS BEEN PAID ON THE ADDITIONAL INCOME THE SOURCE IS EXPLAIN ED AND THEREFORE THE REINTRODUCTION AS CAPITAL CANNOT BE HELD AS UNEXPLA INED. PROPER ENTRIES HAVE BEEN PASSED IN THE BOOKS TO REFLECT THE ADDITI ONAL INCOME EARNED, CREDIT OF THE SAME TO CAPITAL ACCOUNTS, DISTRIBUTIO N OF THE PARTNERS WITHDRAWALS OF RS.81,40,000/- IN THE PROFIT SHARING RATIO AND INTRODUCTION AS CAPITAL. THE VIEW OF THE A.O. THAT THERE IS NO NEXUS BETWEEN THE WITHDRAWAL AND THE AMOUNT BROUGHT BACK AS CAPITAL IS BASED PURELY ON SURMISES. IT IS HELD THAT THE CAPI TAL INTRODUCED BY THE THREE PARTNERS AGGREGATING TO RS.48,00,000/- WAS EX PLAINED. THE ADDITION MADE IS DELETED. THIS GROUND IS ALLOWED. ITA NO.1609/AHD /2011 ACIT VS. M/S.DHARTI ENTERPRISES ASST.YEAR 2008-09 - 4 - 2.3. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E HONBLE CIT(A) HAS ERRED IN DELETING THE ENTIRE ADDITION MADE ON A CCOUNT OF REJECTION OF FALL IN GP RATE/UNEXPLAINED CREDITS OF RS.48,00,00 0/-. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2.4. BEFORE US, LD.SR. DR TOOK US THROUGH THE FIN DINGS AND OBSERVATIONS OF AO AND SUPPORTED THE ORDER OF AO. ON THE OTHER H AND, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND CIT(A ) AND SUPPORTED THE ORDER OF CIT(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RES PECT TO ADDITION MADE U/S.68 OF THE ACT IN RESPECT OF THE CASH INTRODUCE D AS CAPITAL BY THE PARTNERS OF THE FIRM. WE FIND THAT LD CIT(A) WHILE DELETING THE ADDITION HAS GIVEN A FINDING THAT ASSESSEE HAS PAID TAX ON T HE ADDITIONAL INCOME DISCLOSED BY THE TIME OF SURVEY, ASSESSEE HAD EXPLA INED THE APPLICATION OF THE INCOME IN THE STATEMENT RECORDED AT THE TIME OF SURVEY. HE HAS FURTHER GIVEN A FINDING THAT PROPER ENTRIES HAVE BEEN PASSE D IN THE BOOKS TO REFLECT THE ADDITIONAL INCOME EARNED, CREDIT OF THE SAME TO THE CAPITAL ACCOUNTS, DISTRIBUTION AMONGST THE PARTNERS, THE WI THDRAWALS OF RS.81,40,000/- IN THEIR RESPECTIVE PROFIT SHARING R ATIO AND INTRODUCTION OF ITA NO.1609/AHD /2011 ACIT VS. M/S.DHARTI ENTERPRISES ASST.YEAR 2008-09 - 5 - CAPITAL. HE HAS FURTHER GIVEN A FINDING THAT THE OB SERVATION OF THE AO THAT THERE IS NO NEXUS BETWEEN THE WITHDRAWAL OF THE AMO UNT AND THE AMOUNTS BROUGHT BACK AS CAPITAL IS PURELY ON SURMISES. BEFO RE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE AFO RESAID FINDINGS OF LD.CIT(A). IN VIEW OF THESE FACTS, WE FIND NO REASO N TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/07/2016 SD/- SD/- .. () () ( R.P. TOLANI ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 07 /2016 3..,.../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-IV, SURAT 5. 89:(56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=, / GUARD FILE. / BY ORDER, )8( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD