SMT GHATGE SADHANA MADHAVRAO, V. I T O WARD 1, ICHALKARANJI, Ichalkaranji

ITA 166/PUN/2010

• Counselvise Citation: 16624514 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 166/PN/2010 (ASSTT. YEAR : 2005-06 ) SMT. GHATAGE SADHANA MADHAVRAO ... APPELLANT PROP. M/S GAJANAN MILK PRODUCTS 18 TH LANE, BHAGYAVIJETA BUILDING JAYSINGPUR, DIST. KOLHAPUR PAN : AEGPG1470E V. INCOME - TAX OFFICER RESPONDENT WARD 1, ICHALKARANJI APPELLANT BY : SHRI. M.K. KULKARNI RESPONDENT BY : SHRI. S.K. AMBASTHA DATE OF HEARING :19/1/12 DATE OF PRONOUNCEMENT : -3-12 ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N SEVERAL GROUNDS INVOLVING THE SOLE ISSUE AS TO WHETHER LD C IT(A) WAS JUSTIFIED IN UPHOLDING ADDITIONS OF RS. 6,82,000/- AND RS. 10,49 ,000/- MADE U/S. 68 OF THE ACT. 2. THE RELEVANT FACTS ARE THAT DURING THE YEAR, THE ASSESSEE HAD TAKEN LOAN OF RS. 17,31,000/- FROM 42 PERSONS. ON BEING ASKED BY THE A.O, THE ASSESSEE PRODUCED 23 CREDITORS BEFORE HIM FOR V ERIFICATION AND REMAINING 19 PERSONS WERE NEITHER PRODUCED NOR ANY DETAILS WERE FILED. THE AMOUNT PERTAINING TO THOSE 19 PERSONS IN RELATI ON TO WHOM NO DETAILS WERE FURNISHED WAS RS. 6,82,000/-. IN RESPECT OF OTHER 23 PERSONS, THE AMOUNT WORKED OUT WAS RS. 10,49,000/-. THE A.O. D OUBTED THE CREDIT WORTHINESS OF THOSE CREDITORS PRODUCED BEFORE HIM AND ACCORDINGLY, HE MADE THE ADDITION OF RS. 10,49,000/- U/S. 68 OF THE ACT PERTAINING TO ITA . NO.166//PN/2010 SMT. GHATAGE SADHANA MADHAVRAO A.Y. 2005-06 PAGE OF 5 2 THOSE 23 PERSONS AND SINCE THE ASSESSEE FAILED TO PRODUCE REMAINING 19 CREDITORS NOR ANY DETAILS RELATING TO THEM WERE FI LED, THE A.O MADE ADDITION OF RS. 6,82,000/- PERTAINING TO THOSE 19 C REDITORS U/S. 68 OF THE ACT. THE LD CIT(A) HAS UPHELD THESE ADDITIONS AGAI NST WHICH, ASSESSEE IS IN APPEAL. 3. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS NOT SUPPOSED TO ESTABLISH THE SOURCE OF THE SOURCES OF THE CREDITOR S, HENCE THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 10,49,000/- U/S. 68 OF THE ACT PERTAINING TO 23 CREDITORS WHO HAD AP PEARED BEFORE THE A.O AND HAD CONFIRMED THE CLAIMED LOAN BY THEM TO THE ASSESSEE. HE SUBMITTED FURTHER THAT ABOUT 19 CREDITORS, THE ASSE SSEE HAD REQUESTED THE A.O TO ISSUE SUMMONS U/S. 131 OF THE ACT TO ENSURE PRESENCE OF THOSE PERSONS BEFORE THE A.O AS THE ASSESSEE WAS HAVING N O CONTROL OVER THOSE PERSONS, BUT THE A.O DID NOT BOTHER TO SUMMON THEM. UNDER THESE CIRCUMSTANCES, THE BURDEN WAS SHIFTED TO THE A.O FR OM THE ASSESSEE TO DISLODGE THE CLAIMED CREDITS FROM THOSE CREDITORS. THE LD. A.R. PLACED RELIANCE ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF KANHAIALAL JANGID VS. ACIT (2008) 8 DTR (RAJ.) 38 4. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE AUTHORITIES BELOW. HE POINTED OUT THAT THE CREDIT ORS WHO APPEARED BEFORE THE A.O WERE EMPLOYEES OF SHRI BHAGWANRAO GH ATAGE I.E. FATHER- IN-LAW OF ASSESSEE, WHO IS ALSO FOUNDER OF SEVERAL ENTITIES WHEREIN 18 OUT OF 23 PERSONS PRODUCED WERE WORKING ON MEAGER SALAR Y. THE ASSESSEE COULD NOT PRODUCE THE REMAINING 19 CREDITORS NOR TH EIR DETAILS WERE FURNISHED. ITA . NO.166//PN/2010 SMT. GHATAGE SADHANA MADHAVRAO A.Y. 2005-06 PAGE OF 5 3 5. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT TO ESTABLISH A CLAIMED CREDIT, THE CLAIMANT HAS TO PROVE IDENTITY, AND CR EDIT WORTHINESS OF THE CREDITOR AND THIRDLY THE GENUINENESS OF THE TRANS ACTION. IN CASE OF 23 CREDITORS PRODUCED BEFORE THE A.O, WE AFTER HAVING GONE THROUGH THE ASSESSMENT ORDER FIND THAT THE A.O HAS DEALT WITH EACH OF THE 23 CREDITORS TO EXAMINE THEIR CREDIT WORTHINESS. OUT OF THE 23 CREDITORS, 18 PERSONS ARE WORKING IN DATTA NAGARI PATH SANSTHA, 1 PERSON IS MUNIM OF SHRI. BHAGAWANRAO GHATAGE. SHRI BHAGWANRAO GHATAGE IS FATHER-IN-LAW OF ASSESSEE AND IS THE FOUNDER OF GURUDATTA SUGAR F ACTORY, M/S. GAJANANA MILK PRODUCTS, DATTA NAGARI PATH SANSTHA ETC., THE SE PERSONS WERE NOT HAVING ANY LAND HOLDING AND WERE WORKING ON A MEAGE R SALARY OF RS. 80,000/-, MAXIMUM PER ANNUM. THE A.O HAS DISCUSSE D CASE OF EACH OF THE 23 CREDITORS. HE HAS DISCUSSED INCOME PER AN NUM OF THESE PERSONS, THEIR FAMILY STATUS ETC., HAVING GONE THROUGH THE ASSESSMENT ORDER IN THIS REGARD, WE FULLY CONCUR WITH THE OBSERVATION O F THE AUTHORITIES BELOW THAT CREDIT WORTHINESS OF THESE PERSONS ARE NOT SUF FICIENT TO SHARE THE CLAIMED AMOUNT AS A LOAN TO THE ASSESSEE. SINCE TH E ASSESSEE HAS FAILED TO ESTABLISH CREDIT WORTHINESS OF THESE CREDITORS BEYOND DOUBT, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE A UTHORITIES BELOW TO JUSTIFY THE ADDITION OF RS. 10,49,000/- MADE U/S. 68 OF THE ACT. 6. SO FAR AS THE CREDIT OF RS. 6,82,000/- CLAIMED T O HAVE BEEN TAKEN FROM 19 CREDITORS IS CONCERNED, THE A.O HAS MADE AD DITION OF THE AMOUNT U/S. 68 OF THE ACT ON THE BASIS THAT ASSESSEE NEIT HER PRODUCED THESE PERSONS FOR VERIFICATION BEFORE HIM NOR ANY DETAILS WERE FILED. THE A.O HAD ACCORDINGLY MADE ADDITION. THE LD CIT(A) HAS U PHELD THE SAME DENYING THE CONTENTION OF THE ASSESSEE THAT DESPITE REQUEST MADE BEFORE THE A.O FOR SUMMONING THOSE 19 PERSONS U/S. 131 O F THE ACT BY HIM TO ESTABLISH THE CLAIM OF THE ASSESSEE, THE A.O DID NO T BOTHER TO SUMMON ITA . NO.166//PN/2010 SMT. GHATAGE SADHANA MADHAVRAO A.Y. 2005-06 PAGE OF 5 4 HIM. THE LD CIT(A) HAS NOT ACCEPTED THIS CONTENTI ON WITH THIS OBSERVATION THAT THERE WAS NO EVIDENCE IN THE ASS ESSMENT ORDER THAT ASSESSEE HAD MADE SUCH REQUEST TO THE A.O TO ISSUE SUMMONS TO THESE CREDITORS. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE H AS NOT BEEN ABLE TO PRODUCE EVIDENCE THAT SHE HAD REQUESTED THE A.O TO SUMMON THESE 19 PERSONS U/S. 131 OF THE ACT TO VERIFY THE CLAIMED CREDIT FROM THEM. WE THUS DO NOT FIND REASON TO INTERFERE WITH THE FIND ING OF THE AUTHORITIES BELOW IN THIS REGARD. SO FAR AS THE DECISION OF H ONBLE RAJASTHAN HIGH COURT IN THE CASE OF KANHAIALAL JANGID VS. ACIT (S UPRA) IS CONCERNED, IT IS NOT HELPFUL TO THE ASSESSEE AS IN THAT CASE, DIFFER ENT FACTS ARE THERE. IN THAT CASE, THE CREDITOR COULD NOT SATISFACTORILY E XPLAIN THE SOURCE OF THE LOAN. THE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT BURDEN ON THE ASSESSEE DOES NOT EXTEND TO PROVE THE SOURCES OF C REDITOR FROM WHERE HE MADE THE ADVANCE TO THE ASSESSEE. IN THE PRESENT C ASE BEFORE US, THE CREDIT WORTHINESS OF THE 23 CREDITORS WHO APPEARED BEFORE A.O WAS DOUBTFUL AS THEY WERE HAVING VERY MEAGER EARNING AND THEY HAD TO MAINTAIN THEIR FAMILY ALSO. THUS, THEIR CREDIT WO RTHINESS WAS NOT ESTABLISHED BEYOND DOUBT TO SPARE THE AMOUNT FOR THE CLAIMED CREDIT TO THE ASSESSEE. BESIDES, THE ASSESSEE IS REQUIRED N OT ONLY ESTABLISH IDENTITY OF THE CREDITOR, BUT IS ALSO REQUIRED TO ESTABLISH CREDIT WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACT ION TO AVOID ADDITION U/S. 68 OF THE ACT. SINCE THE ASSESSEE FAILED TO E STABLISH ALL THESE REQUIREMENTS RELATING TO THE CREDITORS IN THE PRESE NT CASE, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE RIGHTLY MADE ADDITIONS IN QUESTION U/S. 68 OF THE ACT. THE SAME IS UPHELD. THE ISSUE RAISED IN THE GROUNDS IS THEREFORE DECIDED AGAINST THE ASSESSEE AND IN RE SULT, THE GROUNDS 1 TO 6 RAISING THE ISSUE ARE REJECTED. GROUND NO. 7 REGA RDING VALIDITY OF THE ASSESSMENT AS BARRED BY LIMITATION DUE TO NON-SERVI CE OF THE SAME ON OR ITA . NO.166//PN/2010 SMT. GHATAGE SADHANA MADHAVRAO A.Y. 2005-06 PAGE OF 5 5 BEFORE 31 ST DECEMBER 2007 HAS NOT BEEN PRESSED. THE SAME IS R EJECTED AS SUCH. 7. IN RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16TH MARCH 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 16TH MARCH, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I/II, KOLHAPUR/CIT (CENTRAL), PUNE 4. THE CIT(A)- , KOLHAPUR 5. THE D.R. A BENCH, PUNE 6. GUARD FILE /-TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE