Income Tax Oficer Ward -1(2), RAIPUR (CG) V. M/s Riza Enterprises, RAIPUR (CG)

ITA 161/BIL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2290 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Keywords: Unexplained cash credit; Source of fund

Judgement Text

1 ITA NO. 161/BLPR/2012 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.161/BLPR/2012 ASSESSMENT YEAR : 2006 - 07. THE INCOME - TAX OFFICER, M/S RIZA ENTERPRISES, WARD - 1(2), RAIPUR. VS. RAIPUR. PAN AAFFR4107G RESPONDENT. APPELLANT. APPELLANT BY : SHRI S.K. MEENA. RESPONDENT BY : SHRI SUNIL KUMAR AGRAWAL. DATE OF HEARING : 16 - 10 - 2015. DATE OF PRONOUNCEMENT : 30 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS), RAIPUR DATED 22 - 06 - 2012 AND PERTAINS TO ASSESSMENT YEAR 200 6 - 07. THE ISSUE RAISED BY THE REVENUE IS THAT WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.14,00,000/ - MADE BY THE AO ON ACCOUNT OF CREDITS IN THE PARTNERS CAPITAL TREATING THE SAME AS UNEXPLAINED C ASH CREDIT IN THE CASE OF THE FIRM. 2. THIS GROUND OF APPEAL IS DIRECTED AGAINST THE ADDITION OF RS.14,00,000/ - MADE ON ACCOUNT OF CREDITS IN THE PARTNERS CAPITAL. THE AO OBSERVED THAT THE PERUSAL OF THE BALANCE SHEET AS ON 31 - 03 - 2005 SHOWS THAT ONLY NOMIN AL CASH BALANCE WAS AVAILABLE AND THE SOURCE OF THE ASSESSEE FAILED TO SUBSTANTIATE THE 2 ITA NO. 161/BLPR/2012 NATURE AND SOURCE OF DEPOSITS. THEREFORE, HE HAS TREATED THE SAME AS UNEXPLAINED CASH CREDIT IN THE CASE OF THE FIRM AND ADDED TO THE TOTAL INCOME. 3. UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) DELETED THE ADDITION HOLDING AS UNDER : I HAVE GONE THROUGH THE OBSERVATION OF THE AO AND SUBMISSION OF THE APPELLANT. THE AO HAS MADE THE ADDITION ON THE BASIS OF CASH BALANCE APPEARING IN THE BALANCE SHEET ON THE LAST DATE OF THE RELEVANT ACCOUNTING YEAR. ALL THE PARTNERS ARE INCOME TAX ASSESSES. THEY ARE HAVING INDEPENDENT SOURCE OF INCOME AND ASSESSED TO TAX. THEY HAVE OWNED THE DEPOSITS AND ALSO FILED CONFIRMATION OF ACCOUNTS WHICH ESTABLISHED THE FACT THAT THE PARTNERS HAVE MADE THE DEPOSITS OUT OF THEIR SOURCES OF INCOME. UNDER SUCH CIRCUMSTANCES, IF ANY ACTION IS REQUIRED TO BE TAKEN, IT SHOULD BE TAKEN IN THE CASE OF THE PARTNERS AND NOT IN THE CASE OF THE FIRM. THIS ISSUE IS COVERED BY THE DECISION OF HONB LE THE THEN JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. METACHEM INDUSTRIES (2000) 161 CTR (MP) 444, WHERE THE HONBLE HIGH COURT HAS HELD THAT ONCE IT IS ESTABLISHED THAT THE AMOUNT WAS INVESTED BY A PARTICULAR PERSON WHETHER A PARTNER OR ANYBODY ELS E, THE RESPONSIBILITY OF THE ASSESSEE FIRM IS OVER AND ITS BURDEN IS DISCHARGED. IT IS OPEN TO THE AO TO UNDERTAKE FURTHER INVESTIGATION AGAINST THE PARTNER OR CREDITOR AND THE CREDIT CANNOT BE TREATED AS INCOME OF THE FIRM. IN THIS VIEW OF THE MATTER, THE ADDITION MADE BY THE AO IS DELETED. 4. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ADDITION HAS BEEN MADE IN THE HANDS OF THE FIRM FOR THE CAPITAL INTRODUCED BY THE PARTNERS IN THEIR CAPITAL ACCOUNT. ALL THE PARTNERS ARE INCOME - TAX ASSESSES AND HAVE THEIR INDEPENDENT SOURCE OF INCOME AND ASSESSED TO INCOME - TAX. THEY HAVE ACCEPTED THE DEPOSITS AND FILED CONFIRMATION THEREOF. 6. IN THESE CIRCUMSTANCES, WE AGREE WITH TH E LEARNED CIT(APPEALS) THAT RESPONSIBILITY OF THE ASSESSEE FIRM IS OVER AND IT HAS DISCHARGED ITS BURDEN. SO THE ADDITION IS NOT SUSTAINABLE IN THE HANDS OF THE FIRM. HENCE WE AFFIRM THE ORDER OF LEARNED CIT(APPEALS). 3 ITA NO. 161/BLPR/2012 7. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. DATED: 30 TH NOV.., 2015. COPY FORWARDED TO : 1. M/S RIZA ENTERPRISES, STATION ROAD, NAHARPARA, RAIPUR. 2. I.T.O. , WARD - 1(2), RAIPUR. 3. C.I.T., RAIPUR. 4. CIT(APPEALS), RAIPUR. 5. D.R., ITAT, RAIPUR. 6. GUARD FILE TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE .