The ITO, Ward-8(2), Surat V. Shri Girishkumar Shantilal Sheth(HUF), Surat

ITA 1803/AHD/2012

• Counselvise Citation: 180320514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 29-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1803/AHD/2012 ( / ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER WARD-8(2) SURAT / VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) B-58, PARAS SOCIETY KATARGAM ROAD SURAT % & ./ ./ PAN/GIR NO. : AAGHS 0718 B ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %( + / APPELLANT BY : SHRI RAKESH JHA, SR.DR )*%( , + / RESPONDENT BY : -NONE- -. , /& / DATE OF HEARING 29/09/2015 0123 , /& / DATE OF PRONOUNCEMENT 15/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT [CIT(A) IN SHORT] DATED 15/05/2012 PERTAINING TO ASSESSMENT YEAR (AY) 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 14,73,953/-, IN ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 2 - RESPECT OF COMMISSION, ESTIMATE THE PROFIT @0.50% O F THE TOTAL TURNOVER AND ADDITION O FRS.28,84,000/- WAS MADE IN RESPECT OF UNEXPLAINED CASH CREDIT U/S.68. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE APPELLATE ORDER O F THE LD.CIT(A) MAY BE CANCELLED AND THE ORDER OF THE A.O. MAY BE U PHELD. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 26/12/2011. WHILE FRAMING THE ASSESSMENT ORD ER, THE ASSESSING OFFICER (AO IN SHORT) REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE COMMISSION RECEIPTS @ 0.5% OF THE TOTAL TURNOVER OF RS.29,47,90,697/- AND ALSO MADE ADDITION OF UNEXPLAINED CASH CREDIT O F RS.28,84,000/-. HENCE, THE AO COMPUTED THE TOTAL INCOME OF RS.43,57 ,950/- AS AGAINST THE TOTAL INCOME DECLARED AT RS.2,87,641/-. THE AS SESSEE AGGRIEVED BY THIS ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE P ARTLY ALLOWED THE APPEAL, WHEREBY THE LD.CIT(A) REDUCED THE ESTIMATIO N OF COMMISSION RECEIPTS AT 2.5% AND DELETED THE ADDITION OF RS.28, 84,000/-. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS NOW I N APPEAL BEFORE US. 3. GROUND NO.1 CONSISTS OF TWO ISSUES; NAMELY ADDIT ION MADE ON ACCOUNT OF COMMISSION RECEIPTS AND ADDITION MADE ON ACCOUNT OF DEPOSITS MADE IN THE BANK ACCOUNT. ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 3 - 3.1. NONE APPEARED ON BEHALF OF THE RESPONDENT ASSE SSEE DESPITE SERVICE OF NOTICE OF HEARING. THEREFORE, THE APPEA L WAS TAKE UP FOR HEARING IN THE ABSENCE OF ASSESSEE. 3.2. IN RESPECT OF THE DELETION OF COMMISSION RE CEIPTS, THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT TH E LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 4. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE LD.CIT(A) HAS REDUCED THE ADDITION BY OBSERVING AS UNDER:- 4.3. I HAVE CONSIDERED THE CONTENTS OF THE ASSESSM ENT ORDER AS WELL AS SUBMISSION OF THE AR. BOTH, THE APPELLANTS AS WELL AS THE AO FINALLY SUBMITTED THAT NO ACTUAL BUSINESS WAS DO NE AND THE ASSESSEE WAS SIMPLY PROVIDING ACCOMMODATION BILLS. THE APPELLANT, IN THE ASSESSMENT PROCEEDINGS, WHILE REC ORDING STATEMENT U/S.131 OF THE ACT HAD STATED THAT HE USE D TO EARN 0.25% COMMISSION. I, THEREFORE, ESTIMATE 0.25% COMMISSIO N AFTER TAKING INTO ACCOUNT HIS STATEMENT AND HENCE THE NET COMMIS SION, WHICH SHOULD BE TAXED, IS ESTIMATED FOR RS.7,36,976/- AS AGAINST ESTIMATED INCOME OF RS.14,73,953/- AND, THEREFORE, THE APPELLANT GETS RELIEF OF RS.7,36,976/-. THE ESTIMATE OF 0.25% IS OVER AND ABOVE THE NET PRO FIT SHOWN BY THE APPELLANT SO AS TO BRING TO TAX THE ACTUAL COMM ISSION INCOME EARNED BY THE ASSESSEE FROM PROVIDING SUCH ACCOMMOD ATION ENTRIES. ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 4 - SIMILAR ISSUE HAD BEEN DECIDED BY THIS OFFICE VIDE ORDER CAS- IV/110/2008-09 IN THE CASE OF DINESH C.JAIN. IN TH E ERSTWHILE CASE, THE APPELLANT HAD BEEN GIVING ACCOMMODATION E NTRIES AND MY PREDECESSOR HAD DECIDED THAT THE INCOME BE COMPUTED AT 0.25% OF SUCH ACCOMMODATION ENTRIES. 4.1. WE FIND THAT THE LD.CIT(A) HAS BASED HIS DECIS ION ON THE BASIS THAT SIMILAR ISSUE HAD BEEN DECIDED BY THE LD.CIT(A) IN THE CASE OF DINESH JAIN, WHEREIN THE COMMISSION ON ACCOMMODATION ENTRY IS COMPUTED AT 0.25% BY HIS PREDECESSOR. SINCE THE REVENUE HAS NO T PLACED ANY MATERIAL SUGGESTING THAT THIS DECISION WAS CHALLENG ED BEFORE THE TRIBUNAL, THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS ISSU E OF REVENUES APPEAL IS REJECTED. 4.2 APROPOS TO ISSUE REGARDING DELETION OF ADDITION OF RS.28,84,000/- MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF TH E ACT, THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN D ELETING THE ADDITION MERELY ON THE BASIS THAT THE AO HAS ESTIMATED THE C OMMISSION RECEIPTS. HE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OF FICER. 5. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE AO HAS OBSERVED THAT NO DETAILS HAS BEEN FILED IN RESPONSE TO THE SHOW-CAUSE NOTICE DATED 09/12/2007, WHEREIN THE EXP LANATION WAS SOUGHT ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 5 - IN RESPECT OF THE DEPOSITS MADE INTO THE BANK ACCOU NT WITH DENA BANK AT RAMPURA BRANCH, SURAT. THE AO HAS OBSERVED AS UNDE R:- IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE, THE AS SESSEE HAS NOT SUBMITTED ANY SUPPORTING/DOCUMENTARY EVIDENCES REGA RDING THE CASH DEPOSITED AND CHEQUES DEPOSITED IN THE BANK. THE ASSESSEE HAS ALSO NOT SUBMITTED ANY SUPPORTING DOCUMENT TO P ROVE THE SOURCE OF CASH/CHEQUES DEPOSIT AND GENUINENESS OF T HE SAID TRANSACTION. THE ASSESSEE HAS NOT SUBMITTED ANY ID ENTITY OF THE PERSON AND GENUINENESS OF THE TRANSACTION. THOUGH THE ASSESSEE WAS REQUESTED TO PROVE THE CREDITWORTHINESS OF THE VARIOUS PARTIES, YET HE H NOT DONE SO FAR THE REASONS BEST KNOWN BY HIM. SR.NO. DATE AMOUNT 1. 03.05.2008 3,04,000/- 2. 26.07.2008 2,50,000/- 3. 09.08.2008 3,000/- 4. 13.09.2009 4,000/- 5. 26.11.2008 3500 6. 16.12.2008 89,000/- 7. 16.12.2008 11,000/- 8. 16.12.2008 5,000/- 9. 23.01.2009 3,500/- 10. 24.02.2009 4,000/- 11. 20.03.2009 3,000/- TOTAL 12,80,000/- APART FROM THE ABOVE CASH DEPOSITED IN THE BANK, TH E ASSESSEE HAS ALSO DEPOSITED VARIOUS CHEQUES IN THE BANK, DETAILS OF WHICH ARE AS UNDER: ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 6 - SR.NO. DATE NAME OF THE PERSON AMOUNT 1. 16.10.2008 SHRI JAMANBHAI C.SAKARIA 6,00,000/- 2. 22.10.2008 SHRI JAMANBHAI C.SAKARIA 8,00,000/- 3. 18.12.2008 SHRI JIVANBHAI V.PATEL 2,00,000/- 4. 10.01.2009 SHRI JIVANBHAI V.PATEL 4,000 TOTAL 16,04,000/- I) AS PER THE BANK ACCOUNT IT IS NOTICED THAT THE ASS ESSEE HAS DEPOSITED A CHEQUE RECEIVED FROM JAMNBHAI C.SAKARIA ON 16.10.2008 OF RS.6,00,000/-. THIS FACT WAS ALSO VE RIFIED FROM THE BANK STATEMENT OF JAMANBHAI C.SAKARIA AND THIS ENTRY IS FOUND IN HIS BANK ACCOUNT. THE ASSESSEE I N HIS BANK BOOK SHOWN AS CASH DEPOSITED WHICH IS NOT CORRECT. II) AS PER BANK ACCOUNT OF DENA BANK, IT IS NOTICED TH AT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.8,00,000/- ON 22.10.2008 BY CHEQUES FROM JAMANBHAI C.SAKARIA AND RS.2,00,000/- BY CHEQUE FROM JIVANBHAI V. PATEL ON 18.12.2008. THIS FACT IS ALSO VERIFIED FROM THE BA NK STATEMENT OF THE ABOVE BOTH PARTIES AND THE BOTH EN TRIES ARE FOUND IN THEIR BANK ACCOUNT. BUT THE ASSESSEE HAS SHOWN THESE AMOUNT IN HIS BANK BOOK, RECEIVED FROM M/S.DH AVAL EXPORT. COPY OF LEDGER ACCOUNT OBTAINED FROM M/S.D HAVAL EXPORT AND IT IS NOTICED THAT DHAVAL EXPORT HAD NOT MADE ANY PAYMENT TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSEES SUBMISSIO N IS NOT FOUND CORRECT. III) AS PER THE BANK ACCOUNT OF DENA BANK IT IS FOUND TH AT THE ASSESSEE HAS RECEIVED CHEQUE OF RS.4,000/- ON 10.01 .2009 FROM SHRI JIVANBHAI V.PATEL. THE ASSESSEE HAD NOT SUBMITTED ANY REPLY IN THIS REGARDS. THUS, THE ASSESSEE FAILED TO PROVE THE SOURCE OF CA SH DEPOSIT OF RS.12,80,000/- AS WELL AS THE CHEQUES DEPOSIT OF RS.16,04,000/-, TOTALLING TO RS.28,84,000/-. AS SU CH THE ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 7 - PROVISION OF SECTION 68 OF THE I.T.ACT IS CLEARLY A TTRACTED IN THIS CASE. THE PROVISIONS OF SECTION 68 STIPULATES THAT SECTION 68 OF THE I T ACT STIPULATES THAT WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAIN ED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANAT ION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSES SING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME TAX, AS THE INCOME OF THE ASSESSEE OF THAT P REVIOUS YEAR. 5.1. HOWEVER, THE LD.CIT(A) DELETED THIS ADDITION O N THE BASIS THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME OF THE ASSESSEE AT 0.52% OF THE TOTAL TURNOVER. THEREFO RE, ONCE THE BOOKS OF ACCOUNT IS REJECTED AND THE INCOME OF THE ASSESSEE IS ESTIMATED U/S.68 OF THE ACT, IT CANNOT BE MADE SEPARATELY OF THE DEPOSI TS MADE IN THE BANK ACCOUNT WHICH IS PART AND PARCEL OF THE BOOKS OF AC COUNT. WE DO NOT AGREE WITH THIS VIEW OF THE LD.CIT(A) AND NO FINDIN G IS GIVEN WHETHER SUCH DEPOSITS RELATE TO THE COMMISSION RECEIVED BY THE ASSESSEE. IN THE ABSENCE OF SUCH SPECIFIC FINDING, IT CANNOT BE PRES UMED THAT THE DEPOSITS AS MADE WERE, IN FACT, THE COMMISSION RECEIVED BY T HE ASSESSEE. THEREFORE, THE DECISION OF THE LD.CIT(A) ON THIS IS SUE IS HEREBY SET ASIDE AND THE ADDITION MADE BY THE AO OF RS.28,24,000/- I S HEREBY UPHELD AND THIS ISSUE RAISED BY THE REVENUE IS ALLOWED. THUS, GROUND NO.1 OF REVENUES APPEAL IS PARTLY ALLOWED. ITA NO.1803/AHD /2012 ITO VS. M/S.GIRISHKUMAR SHANTILAL SHETH (HUF) ASST.YEAR 2009-10 - 8 - 6. GROUND NOS.2 & 3 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 15 TH DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 15/ 10 /2015 6/..-, .-../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-V, SURAT 5. ;< )-89 , / 893 , 7 / DR, ITAT, AHMEDABAD 6. <= >. / GUARD FILE. ! / BY ORDER, *; ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD