The ACIT, Vapi Circle, Vapi V. M/s. Hotel Sea View Pvt. Ltd., Nani Daman

ITA 1615/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8673 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Additional evidence; Corroborative evidences
• Section: 143(3); 68; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO. 1615/AHD/2013 ( / ASSESSMENT YEAR : 2007-08) ASSTT. COMMISSIONER OF INCOME TAX VAPI CIRCLE, VAPI # VS. M/S. HOTEL SEA VIEW PVT. LTD. (HOTEL CIDADE DE DAMAN) 13/3A, SARVODAYA SOCIETY, TEEN BATTI, NANI DAMAN $ # % & # PAN/GIR NO. : AAACH 8791 G ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI MUDIT NAGPAL, SR. D.R. ($'*) / RESPONDENT BY : SHRI TUSHAR P. HEMANI, A.R. + ,*-. / DATE OF HEARING 13/06/2017 /012*-. / DATE OF PRONOUNCEMENT 22/08/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD, DATED 2 8/03/2013, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 14 7 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR (AY) 2007- 08, ON THE FOLLOWING GROUNDS: ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 2 - I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.20,16,336/- MADE BY AO ON ACCOUNT OF SUNDRY CRED ITORS. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.69,79,362/- MADE BY AO ON ACCOUNT OF VARIOUS EXP ENSES BEING 25% OF THE TOTAL EXPENSES. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A), HAS ERRED IN DELETING THE ADDITION OF RS.16,75,000/- ,MADE BY AO ON ACCOUNT OF UNSECURED LOANS. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.1,05,84,968/- MADE BY AO ON ACCOUNT OF CASH DEPO SITS. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE RETURN OF INCOME FOR THE A.Y.2007 -08 WAS E-FILED ON 30/11/2007 BY THE ASSESSEE SHOWING TOTAL INCOME AT RS.64,70,146/- UNDER REGULAR PROVISIONS AND BOOK PROFIT OF RS.78,9 7,895/- U/S.115JB OF I.T. ACT. THE PROCEEDINGS U/S.147 WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM ITO, WARD-2(2), THANE AND THE ASSESSMENT WAS FINALIZED U/S.144 R.W.S. 147 OF THE I.T. ACT IN THE ABSENCE OF CO- OPERATION FROM THE ASSESSEE, ON 23/12/2011 DETERMIN ING THE TOTAL INCOME AT RS.2,82,92,562/- UNDER REGULAR PROVISIONS OF THE ACT AFTER MAKING ADDITIONS OF RS.25,73,528/-, RS.69,88,920/-, RS. 16 ,75,000/- AND ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 3 - RS.1,05,84,968/- ON ACCOUNT OF SUNDRY CREDITORS, DI SALLOWANCE OF VARIOUS EXPENSES, UNSECURED LOANS AND CASH DEPOSITS RESPECT IVELY. 2.2 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNN ING OF HOTEL. THE ITO, WARD-2(2), THANE HAD INFORMED THAT SHRI MIHIR SAMEER SRAKAR, AN EMPLOYEE OF M/S. HOTEL SEA VIEW PVT. LIMITED, DAMAN HAS DEPOSITED RS.1,00,78,826/- AND RS.5,06,142/- IN TWO SAVINGS B ANK ACCOUNT RESPECTIVELY. THE EMPLOYEE TOLD THAT THE ABOVE SAID AMOUNT PERTAINS TO THE HOTEL SEA VIEW. THEREFORE, PROCEEDINGS U/S.147 WERE INITIATED AFTER RECORDING THE REASONS FOR DOING SO AND NOTICE U/S.1 48 WAS ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE HAD BEEN GIVEN MORE THAN SUFFICIENT OP PORTUNITY TO EXPLAIN ITS CASE BUT THE ASSESSEE FAILED TO AVAIL THEM. THE ASSESSEE DID NOT REPLY TO ANY LETTERS OR STATUTORY NOTICES ISSUED BY THE DEPA RTMENT HENCE, THE ASSESSEE HAD FAILED TO DISCHARGE HIS STATUTORY OBLI GATION. THE ASSESSEE HAD NOT PRODUCED ANY DETAILS DURING THE ASSESSMENT PROC EEDINGS, THEREFORE, THE ASSESSMENT PROCEEDINGS WERE FINALIZED U/S.144 R .W.S. 147 OF THE ACT. THE AO MADE ADDITION OF RS.25,73,528/- ON ACCOUNT O F SUNDRY CREDITORS. THE AO MADE DISALLOWANCE OF AN AMOUNT OF RS.69,88,9 20/- (25% OF RS.2,79,55,681/-) AND ADDED TO THE TOTAL INCOME ON ACCOUNT OF VARIOUS EXPENSES. THE AO HELD CASH CREDIT OF RS.16,75,000/- FOR UNSECURED LOANS TO BE NON GENUINE CASH CREDITS AND ADDED TO THE TOT AL INCOME. THE AO ADDED RS.1,05,84,968/- TO THE TOTAL INCOME ON ACCOU NT OF CASH CREDITS AS ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 4 - PER THE LETTER OF ITO, WARD-2(2), THANE AND THE ASS ESSEE HAD NOT PROVED THE GENUINENESS OF SOURCE OF CASH DEPOSITS. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED FIRST APPEAL BEFORE THE CIT(A) VALSAD. IN THE INTEREST OF JUSTICE AND FAIRNESS, A REMAND REPORT WAS CALLED FOR BY THE CIT(A) SO THAT THE ASSESSEE HAS FULL OPPORTUNITIES TO SUBMIT ITS POINT OF VIEW ON THE GR OUNDS TAKEN IN THE APPEAL. ACCORDINGLY, THE AO AFFORDED ADEQUATE OPPOR TUNITIES TO THE ASSESSEE AND SUBMITTED A REMAND REPORT BEFORE HONB LE CIT(A), WHO IN TURN DELETED THE ADDITION OF RS.1,05,84,968/- MADE ON ACCOUNT OF CASH DEPOSITS, THE ADDITION OF RS.16,75,000/- ON ACCOUNT OF UNSECURED LOANS, THE ADDITION OF RS.69,79,362/- AND CONFIRMED ONLY R S.9,558/- ON ACCOUNT OF VARIOUS EXPENSES. THE CIT(A) ALSO DELETED THE AD DITION OF RS.20,16,336/- OUT OF RS.25,73,528/- MADE ON ACCOUN T OF SUNDRY CREDITORS. THE CIT(A) PARTLY ALLOWED THE APPEAL THE APPEAL OF THE ASSESSEE. 4. WE HAVE HEARD BOTH THE PARTIES. LEARNED DR RELY ON AO AND LEARNED AR DRAWN OUR ATTENTION TOWARDS THE FOLLOWIN G. SO FAR DELETING ADDITION RS.20,16,336/- MADE IN RES PECT OF SUNDRY CREDITORS ARE CONCERNED SAME HAS BEEN MENTIONED IN PAGE NO.3 & 4 OF ASST. ORDER, PARA 6 TO 6.2 AND CIT(A) HAS DEALT IN THIS MATTER AT PAGE NO.3 TO 10 AND PARA 6 TO 6.2. AO, WHILE FRAMING ASSESSMENT U/S.144 R.W.S ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 5 - 147 OF THE ACT, MADE ADDITION OF RS.25,73,528/- IN RES PECT OF SUNDRY CREDITORS FOR WANT OF REQUISITE DETAILS. SINCE ASSESSEE PLACED ADDITIONAL EVIDENCES BEFORE CIT(A), A REMAND REPORT WAS CALLED FOR AND AFTER CONSIDERING SUCH REMAND REPORT AS WELL AS ASSESSEE'S SUBMISSIONS, LEARNED CIT(A) CONF IRMED ADDITION OF RS.5,57,192/- AND DELETED BALANCE ADDITION OF RS.20 ,16,336/- (I.E. RS.25,73,528 - RS.5,57,192) AGAINST WHICH DEPARTMEN T IS IN APPEAL. AT THIS STAGE, IT IS CLARIFIED THAT AO HAD FURNISHE D TWO REMAND REPORTS VIZ. INTERIM REMAND REPORT DATED 08/02/2013 AND SAME IS PART OF PAGES. 19-23 OF PAPER BOOK AND FINAL REMAND REPORT DATED 12/03/2013 AND SAME IS PART OF PAPER BOOK AT PAGES. 29-34. REJ OINDER TO SUCH REMAND REPORTS ARE PLACED AT PGS.24-28 OF PAPER BOO K AND PGS.35-46 OF PAPER BOOK RESPECTIVELY. AT THE REMAND STAGE, AO CARRIED OUT THREE TYPES OF INVESTIGATION AS FOLLOWS SAME ARE PART OF PAGES.29-34 @ 30-32 OF PAP ER BOOK: FIRSTLY, AO ISSUED SUMMONS TO FOUR MAJOR CREDITORS; SECONDLY, HE PROBED INTO OUTSTANDING SUM OF RS.5,57 ,192/- IN THE NAME OF SMT. DHANIBEN KALANBHAI TANDEL, PROP. DAMAN FISH CENTRE. THIRDLY, HE ISSUED LETTERS U/S.133(6) TO 54 PERSONS IN WHOSE CASE AMOUNT OUTSTANDING WAS RS. 1000/- OR MORE. AS REGARDS FOUR MAJOR CREDITORS, AO HAD RESERVATIONS ONLY W.R.T. OUTSTANDING AMOUNT OF RS.1,99,182/- IN THE NAME OF YOGENDRAKUMAR ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 6 - GOPICHAND, PROP, OF AGARWAL KIRANA STORES'' SAME IS MENTIONED AT PAGES. 29-34 @ 31 OF PAPER BOOK. AO ALSO STATED THAT YOGENDRA KUMARS BALANCE IN ASS ESSEE'S BOOKS IS RS.1,99,182/- WHEREAS, AS PER STATEMENT OF YOGENDRA KUMAR, ASSESSEES BALANCE IN HIS BOOKS WAS APPROXIMATELY RS.1,50,000/ - TO RS.1,60,000/-. THUS, THERE WAS A DISCREPANCY IN THE AMOUNT WHICH C ALLS FOR THE IMPUGNED ADDITION. LEARNED AR STATED THAT AO FAILED TO APPRECIATE THE FOLLOWING IMPORTANT POINTS: YOGENDRAKUMAR APPEARED BEFORE AO AND ADMITTED THE F ACTUM OF TRANSACTIONS WITH THE ASSESSEE WHICH ESTABLISHED HI S IDENTITY. HE ACCEPTED THAT APPROXIMATE BALANCE OF ASSESSEE IN HIS BOOKS AS AT RS.1,99,182/- AS APPEARING IN ASSESSEES BOOKS I N HIS NAME. ONCE THE CONCERNED PERSON ADMITS THAT THERE IS BALA NCE IN THE NAME OF ASSESSEE IN HIS BOOKS OF ACCOUNTS, NO ADDITION CAN BE MADE IN RESPECT OF SUM OUTSTANDING IN THE NAME OF SUCH PERSON IN ASSES SEES BOOKS. AS REGARDS MINOR DISCREPANCY IN THE AMOUNT, STATEME NT OF YOGENDRAKUMAR WAS BEING RECORDED IN THE YEAR 2013 A ND HE WAS BEING ASKED ABOUT BALANCE AS AT 31/03/2017 I.E. ALMOST 5 YEARS OLD BALANCE. IT IS QUITE OBVIOUS THAT A PERSON MAY NOT BE ABLE TO REME MBER THE EXACT AMOUNT STANDING IN ASSESSEES NAME. HOWEVER, RANGE GIVEN BY HIM IS NEAR TO ACTUAL AMOUNT. ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 7 - SO IN OUR CONSIDERED OPINION CIT(A) HAS RIGHTLY DEL ETED ADDITION IN RESPECT OF AMOUNT OUTSTANDING IN THE NAME OF YOG ENDRAKUMAR GOPICHAND. AS REGARDS OUTSTANDING SUM OF RS.5,57,192/- IN THE NAME OF SMT. DHANIBEN KALANBHAI TANDEL, PROP. DAMAN FISH CENTRE, CIT(A) HAS CONFIRMED THE SAID ADDITION AND THE ASSESSEE IS NOT IN APPEAL AND SAME IS MENTIONED AT PAGE NO.9 OF CIT(A)S ORDER. AS REGARDS LETTER U/S.133(6) ISSUED TO 54 PERSONS I N WHOSE CASE AMOUNT OUTSTANDING WAS RS.1000/- OR MORE, ALL THE C ONCERNED PERSONS COMPLIED WITH LETTERS BY ISSUED AO EXCEPT FOUR CRED ITORS AGGREGATING TO RS.26,350/- SAME IS AT PAGE NO.29 TO 34 @ 32 OF PAP ER BOOK. AO FAILED TO APPRECIATE THAT ALL THE OTHER CREDITOR S HAD DULY COMPLIED WITH HIS NOTICE AND ONLY FOUR CREDITORS FA ILED TO REVERT TO AO. AGGREGATE BALANCE OF RS.26,350/- APPEARING IN THE NAME OF SUCH CREDITORS IS MEAGER (APPROX. 1.02%) AS COMPARED TO TOTAL CREDITORS OF RS.25,73,528/- LEARNED AR FURTHER STATED THAT THE ASSESSEE IS IN T HE HOTEL BUSINESS AND IT QUITE POSSIBLE THAT SOME OF THE CREDITORS, N OT MAJOR ONES, MAY DEFAULT IN REPLYING TO AO'S NOTICE U/S.133(6). HOWE VER, CONSIDERING THE FACTS IN TOTO, ESPECIALLY THE FACT THAT MAJOR CREDITORS HAVE POSI TIVELY REPLIED TO AO, NO ADDITION IS CALLED FOR. ACCORDING LY, CIT(A) HAS RIGHTLY DELETED ADDITION. ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 8 - LEARNED AR CITED A JUDGMENT 'CIT VS. BHOGILAL RAMJIBHAI ATARA - (2014) 43 TAXMANN.COM 55 (GUJARAT)' IN WHICH, IT IS A SETTLED LAW THAT, EVEN IF GENUINENESS OF CREDITORS IS UNDER SERIOUS DOUBT, NO ADDITION CAN BE MADE U/S 41(1). 4.2 SO FAR DELETING ADDITION OF RS.69,79,362/- MADE ON ACCOUNT OF VARIOUS EXPENSES BEING 25% OF TOTAL EXPENSES ARE CO NCERNED IN ASST. ORDER SAME IS AT PAGE NO.4 & 5, PARA 7 TO 7.2 AND C IT HAS DEALT THE MATTER AT PAGE NO.10 & 11, PARA 7. AO MADE ADDITIO N OF RS.69,88,920/- BEING 25% OF TOTAL EXPENSES OF RS.2,79,55,681/- FOR WANT OF SUPPORTING EVIDENCES. AT THE REMAND STAGE, ASSESSEE PLACED ADDITIONAL EVI DENCES IN SUPPORT OF SUCH EXPENSES. AFTER PERUSAL OF THE SAME , AO STATED IN THE REMAND REPORT THAT EVIDENCES IN RESPECT OF EXPENSES AGGREGATING TO RS.9,558/- ARE NOT ON RECORD AND HENCE, THE SAME MA Y BE CONFIRMED AT PAGES NO.29 TO 34 @32 TO 33 OF PAPER BOOK. HENCE, CIT(A) CONFIRMED ADDITION OF RS.9,558/- AND DELETED RS.69,79,362/- (RS.69,88,920 - RS.9,558). IT IS ALSO SUBMITTED BY THE LEARNED AR THAT ASSESSE E HAD PLACED ON RECORD SUFFICIENT EVIDENCES IN SUPPORT OF SUCH EXPE NSES AND VERIFYING THE SAME, AO CONCLUDED THAT EXPENSES AGGREGATING TO RS. 9,558/- ONLY HAVE NOT BEEN SUPPORTED BY ANY EVIDENCE. TO THAT EXTENT, ADDITION HAS ALREADY BEEN CONFIRMED BY CIT(A) AND ASSESSEE IS NOT IN APP EAL. ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 9 - ONCE AO HIMSELF IS ADMITS IN THE REMAND REPORT THAT EXPENSES AGGREGATING TO RS.69,79,362/- ARE BACKED BY DOCUMEN TARY EVIDENCES AND CHOOSES NOT TO COMMENT ON THE SAME, IT IS NOT PROPE R FAR THE DEPARTMENT TO CHALLENGE SUCH ISSUE IN APPEAL. ASSESSEES BOOKS OF ACCOUNTS ARE ALSO DULY AUDITED AND SAME IN AT PAGES 47 TO 70 OF PAPER BOOK. SO IN OUR CONSIDERED OPINION, IN THE LIGHT OF THE A BOVE CIT(A) HAS RIGHTLY DELETED IMPUGNED ADDITION. 4.3 DELETING ADDITION OF RS.16,75,000/- MADE ON ACC OUNT OF UNSECURED LOANS ARE CONCERNED. SAME IS MENTIONED IN AO AT PAG E NO.5 & 6, PARA 8 TO 8.2 AND CIT HAS DEALT THIS MATTER AT PAGE NO. 11 TO 13, PARA 7 TO 7.3. AO MADE ADDITION OF RS.16,75,000/- IN RESPECT OF UN SECURED LOANS RECEIVED FROM C.M. KOTAK FOR WANT OF REQUISITE DETA ILS. AT REMAND STAGE, ASSESSEE HAD PLACED ON RECORD CONF IRMATION OF C.M. KOTAK AS IS EVIDENT FROM REMAND REPORT AT PGS. 29 TO 34 @ 33 OF PAPER BOOK. HOWEVER, AO SIMPLY STATED THAT IT IS ME RELY A SELF-MADE DECLARATION FROM SHRI C.M. KOTAK AND HENCE, ASSESSE E HAS FAILED TO PROVE ITS CLAIM OF OUTSTANDING LIABILITY. AO HAS NOT POIN TED OUT AS TO WHAT FURTHER DETAILS WAS EXPECTING SO AS TO PROVE GENUIN ENESS OF SUCH UNSECURED LOANS OTHER THAN SELF-MADE VOUCHER. FURTH ER, SUCH CONFIRMATION IS NOT A SELF-MADE VOUCHER AT ASSESSEE 'S END. IT IS 'THIRD- PARTY EVIDENCE' AND IS VERY WELL CREDIBLE IN THE EY E OF LAW. LEARNED AR ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 10 - FURTHER STATED FOLLOWING ARE SOME OF THE OTHER VITA L ASPECTS W.R.T. UNSECURED LOANS OBTAINED FROM SHRI C.M. KOTAK SAME IS AT PAGE 13, PARA 7.3 OF CIT(A)'S ORDER: SHRI C.M. KOTAK GAVE LOAN TO THE ASSESSEE COMPANY B Y CHEQUE FROM BANK OF MAHARASHTRA AND PUNJAB LTD., NOW MERGE D WITH PUNJAB NATIONAL BANK; ASSESSEE IS REGULARLY PAYING INTEREST ON SUCH LOAN; SHRI C.M. KOTAK HAS BEEN SHOWING SUCH INTEREST INCO ME IN HIS RETURN OF INCOME FILED BEFORE THE AUTHORITIES; SINCE A.Y.06-07, DEPARTMENT HAS BEEN ALLOWING INTE REST EXPENDITURE CLAIMED BY THE ASSESSEE; THUS, THERE REMAINS NO DOUBT AS TO SUCH UNSECURED L OAN BEING NOT GENUINE. IN CASE AO HAD ANY DOUBT IN CONNECTION WIT H SUCH UNSECURED LOAN, IT WAS OPEN FOR HIM TO CARRY OUT FURTHER INQU IRIES WITH SHRI C.M. KOTAK. HOWEVER, AO CHOSE NOT TO DO ANYTHING OF SUCH SORT. IN SUCH A SCENARIO, AO COULD NOT HAVE ADDED THE IMPUGNED SUM IN ASSESSEE'S HANDS. SECTION 68 DOESN'T REQUIRE AN ASSESSEE TO PROVE SOU RCE OF THE SOURCE OF DEPOSITS. HENCE, NO ADDITION IS CALLED FOR U/S.68. RELIANCE IS PLACED ON: DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ.) MURLIDHAR LAHORIMAL VS. CIT 280 ITR 512 (GUJ.) CIT VS. PRAGATI CO. OP. BANK LTD. 278 ITR 170 (GUJ. ) CIT VS. ORISSA CORPORATION PVT. LTD. 159 ITR 78 (SC ) ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 11 - IN OUR CONSIDERED OPINION, IN LIGHT OF THE ABOVE, C IT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION. 4.4 SO FAR DELETING ADDITION OF RS.1,05,84,968/- MA DE ON ACCOUNT OF CASH DEPOSITS ARE CONCERNED AND SAME IS MENTION IN AO AT PAGE NO.6 & 7, PARA 9 & 9.1 AND LEARNED CIT DEALT THE MATTER AT PAGE NO.13 TO 19, PARA 8 TO 8.3.2. AO FOUND THAT CASH AGGREGATING TO RS.1,05,84,968/- WAS DEPOSITED IN TWO BANK ACCOUNTS HELD WITH ICICI BANK , MUMBAI IN THE NAME OF MIHIR SAMEER SARKAR, AN EMPLOYEE OF THE ASS ESSEE. AO WAS OF THE VIEW THAT ASSESSEE HAD DIVERTED ITS UNACCOUNTED INCOME THROUGH ITS EMPLOYEE AND HENCE, AO MADE ADDITION OF RS.1,05,84, 968/- AS ASSESSEE'S OWN INCOME. AT THE REMAND STAGE, AO ISSUED SUMMONS TO MIHIR SAR KAR U/S.131 AND RECORDED HIS STATEMENT ON OATH WHEREIN, MIHIR S ARKAR STATED AS FOLLOWS AT PGS.29 TO 34 @ 33 TO 34 OF PAPER BOOK: HE WAS WORKING AS MARKETING MANAGER OF THE ASSESSEE AT MUMBAI; BECAUSE OF LACK OF ADDRESS PROOF OF MUMBAI, BANK AC COUNT COULD NOT BE OPENED IN THE NAME OF THE ASSESSEE COMPANY A T MUMBAI AND HENCE, AN ACCOUNT WAS OPENED IN HIS NAME AND MAJOR DAY-TO-DAY FINANCIAL TRANSACTIONS OF THE ASSESSEE COMPANY WERE CARRIED OUT THROUGH THE SAID BANK ACCOUNT; FINANCIAL TRANSACTIONS DONE THROUGH THE SAID ACCOUN T AGGREGATED TO RS.62,36,670/- AND NOT RS. 1,05,84,968/-. BIFURCATI ON OF CASH AND ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 12 - CHEQUE AGGREGATING TO RS.62,36,670/- (I.E. CASH RS. 19,48,390/- AND CHEQUE RS.42,88,280/-) DEPOSITED IN SUCH ACCOUNTS W AS SUBMITTED; AO BRUSHED ASIDE THE AFORESAID STATEMENT BY MERELY STATING THAT ASSESSEE IS A PRIVATE COMPANY ENGAGED IN THE BUSINE SS OF HOSPITALITY BUSINESS AND HENCE, IT IS NOT POSSIBLE THAT IT COUL D NOT OPEN BANK ACCOUNT AT MUMBAI DUE TO LACK OF ADDRESS PROOF. AO FAILED TO APPRECIATE THE FOLLOWING VITAL ASPECTS IN THE ASSESSEE'S CASE AT PARA 8.3.2, PGS.18 & 19 OF CIT(A)'S ORDER: ASSESSEE WAS UNABLE TO OPEN A BANK ACCOUNT IN ITS O WN NAME FOR WANT OF ADDRESS PROOF IN THE FIRST YEAR OF BUSINESS AT MUMBAI AND HENCE, PERSONAL BANK ACCOUNT OF MIHIR SARKAR, MARKE TING MANAGER OF THE ASSESSEE, WAS USED FOR THE BUSINESS TRANSACT IONS. AMOUNT RECORDED IN THE BANK ACCOUNTS OF MIHIR SARKA R HAS BEEN USED FOR ASSESSEE'S BUSINESS PURPOSE AND SALES HAVE BEEN RECORDED IN ASSESSEE'S BOOKS OF ACCOUNTS; THERE IS NOTHING ON RECORD TO SUGGEST THAT THE AMOU NT DEPOSITED IN BANK ACCOUNT OF MIHIR SARKAR HAS NOT BEEN REFLECTED IN ASSESSEE'S REGULAR BOOKS OF ACCOUNTS; AO HAS NOT REBUTTED THE FACT THAT AMOUNT DEPOSITED IN SUCH BANK ACCOUNTS AGGREGATED TO RS.62,36,670/- AND NOT RS. 1 ,05,84,968/-; AO OF MIHIR SARKAR HAS ALSO GIVEN SUCH FINDINGS WHI LE FRAMING ASSESSMENT U/S.143(3) IN THE CASE OF MIHIR SARKAR; ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 13 - IN LIGHT OF THE ABOVE, AMOUNT DEPOSITED IN BANK ACC OUNT OF MIHIR SARKAR HAS BEEN DULY REFLECTED IN ASSESSEE'S BOOKS OF ACCOUNTS AND HENCE, THE SAID AMOUNT, BY NO STRETCH OF IMAGINATION, CAN BE TREATED AS UNACCOUNTED. IT WAS MERELY ON ACCOUNT OF CIRCUMSTAN CES BEYOND ASSESSEE'S CONTROL; ASSESSEE CHOSE TO USE PERSONAL BANK ACCOUNT OF MIHIR SARKAR FOR ITS BUSINESS. HOWEVER, ONCE SUCH DEPOSIT S FORM PART OF SALES OF THE ASSESSEE AND PROFIT ARISING THEREON HAS BEEN OF FERED TO TAX, THERE IS NO POINT IN TAXING PART OF SUCH SALES AGAIN BY TREATIN G THE SAME AS UNACCOUNTED. IN LIGHT OF THE ABOVE, CIT(A) HAS RIGH TLY DELETED THE IMPUGNED ADDITION. 5. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22/08/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/08/2017 PRITI YADAV, SR.PS ITA NO.1615/AHD /201 3 ACIT VS. HOTEL SEA VIEW PVT. LTD. ASST.YEAR 2007-08 - 14 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-VALSAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 18/08/2017 (DICTATION-PAD PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/08/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER