DCIT, SPECIAL RANGE 1, Kolhapur V. SHREEN CAPACITORS PVT. LTD, Shreepur

ITA 185/PUN/1998

• Counselvise Citation: 18524514 RSA 1998
• Duration Of Justice: 13 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-06-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 16-03-1998
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Keywords: Source of fund; Deemed to accrue or arise in india
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 185/PN/1998 : A.Y. 1994-95 DY. CIT SR-1 KOLHAPUR APPELLANT VS. SHREEM CAPACITORS PVT. LTD. JAYSINGHPUR, DIST. KOLHAPUR PAN NOT ON RECORD RESPONDENT APPELLANT BY: SHRI SANJAY SINGH RESPONDENT BY: SHRI KISHOR PHADKE ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) KOLHAPUR DATED 15-1-1998 FOR A. Y. 1994-95 ON THE GROUND THAT THE CIT(A) ERRED IN DELE TING THE ADDITION OF RS. 30.00 LAKHS MADE ON ACCOUNT OF DEEM ED INCOME BROUGHT TO TAX U/S 68 OF THE ACT. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISCOVERED THAT THE ASSESSEE HAD ADMITTEDLY OBTAINED UNSECURED DEPOSITS OF RS. 30.00 LAKHS FROM FOUR PARTIES FOR LIMITED PERIODS. THE ASSESSE E CLAIMED PAGE 2 OF 5 ITA NO. 185/PN/1998 SHREERAM CAPACITORS A.Y. 1994-95 THAT THE SAID DEPOSITS HAD BEEN ARRANGED IN TIMES O F ACUTE FINANCIAL CRISES AND THE AMOUNTS HAVE BEEN RETURNED EVENTUALLY. THE ASSESSEE PRODUCED CONFIRMATION LETT ERS OBTAINED FROM ALLEGED CREDITORS. THE ASSESSING OFF ICER HELD THAT THE SAID CREDITORS WERE NOT RELIABLE AND THE C APACITY OF THOSE CREDITORS WAS IN DOUBT. IN THE CIRCUMSTANCES THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT DUE TO ASSESSEES INABILITY TO ADDUCE NECESSARY EVIDENCE T HE VERY IDENTITY OF THE CREDITORS WAS DOUBTFUL. THE ASSESS ING OFFICER THEREFORE, BROUGHT THE SAID CREDITS TO TAX IN ASSESSEES HANDS AS ITS DEEMED INCOME U/S 68 OF THE ACT. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, THE ASSESSEE FILED WRITTEN SUBMISSIONS D ATED 2- 12-1997 EXPLAINING THE IDENTITY AND GENUINENESS OF THE CREDIT WORTHINESS OF THE ALLEGED CREDITORS. THE ASS ESSEE HAD ALSO FILED A COPY OF AFFIDAVIT OF FINANCE BROKER WH ICH COULD NOT BE SUBMITTED BEFORE THE ASSESSING OFFICER AT TH E ASSESSMENT STAGE ON ACCOUNT OF THE FACT THAT THE ASSESSMENT PROCEEDINGS WERE IN PROGRESS AND THAT TH E AFFIANT MET WITH AN ACCIDENT. IN THE SAID AFFIDAVI T THE DEPONENT DEPOSED THAT THE ASSESSEE HAD APPROACHED H IM PAGE 3 OF 5 ITA NO. 185/PN/1998 SHREERAM CAPACITORS A.Y. 1994-95 FOR FINANCE FROM THE BANK AND THAT BESIDES ARRANGIN G FINANCE FROM THE BANK, HE HAD ALSO ARRANGED FOR THE ASSESSEE FURTHER FINANCE OF RS. 30.00 LAKHS THROUGH FRIENDS AND RELATIVES. IT WAS ALSO STATED IN THE SAID AFF IDAVIT THAT ALL THE LOAN AMOUNTS TOGETHER WITH INTEREST THEREON HAVE BEEN REPAID BY THE ASSESSEE. THE CIT(A) FORWARDED T HE COPY OF AFFIDAVIT TO THE ASSESSING OFFICER FOR HIS COMME NTS AND OBSERVATIONS, WHO NOT ONLY OBTAINED SEPARATE CONFI RMATION OF THE CONTENTS OF THE AFFIDAVIT FROM THE DEPONENT BUT HE HAS ALSO SUMMONED COPIES OF RELEVANT BANK RECORDS A ND HAS EXAMINED THE MATTER IN GREAT DEPTH. ON THESE F ACTS, THE CIT(A) DELETED THE IMPUGNED ADDITION BY OBSERVI NG AS UNDER: ANY INFERENCE FROM THE MATERIAL BROUGHT OUT ABOVE HAS ALSO TO TAKE INTO ACCOUNT THE CIRCUMSTANCES MENTIONED IN PARAGRAPH 6 ABOVE. HAVING APPLIED MY MIND TO THE ENTIRE GAMUT OF FACTS AND CIRCUMSTANCES , I AM OF THE OPINION THAT IN SO FAR AS THE IMPUGNED FO UR CREDITS OF THE AGGREGATE VALUE OF RS. 30 LAKHS ARE CONCERNED SHRI G.L. SHAH IS NOT JUST AN ARRANGER OF FINANCE. HE IS THE REAL FINANCIER. IN ANY CASE, T HERE IS INCONTROVERTIBLE EVIDENCE TO SHOW BEYOND ANY DOUBT THAT THE UNSECURED LOANS OF RS. 30 LAKHS, AS APPEAR ING THE APPELLANTS BOOKS, CAME TO THE APPELLANT THROUG H SHRI G.L. SHAH, WHO HAS ALSO CONFIRMED THIS FACT IN AN AFFIDAVIT. THEREFORE, IT IS EVIDENT THAT THE ONUS CAST ON HE APPELLANT HAS BEEN DISCHARGED ADEQUATELY AND THE NATURE AND SOURCE OF FUNDS FOR THE SAID CREDITS HAS TO BE TREATED AS HAVING BEEN EXPLAINED SATISFACTORILY. IN THE CIRCUMSTANCES, THE ADDITION OF RS. 30 LAKHS MAD E PAGE 4 OF 5 ITA NO. 185/PN/1998 SHREERAM CAPACITORS A.Y. 1994-95 BY THE A.O IN THE COMMUTATION OF THE APPELLANTS INCOME IS HEREBY DELETED. THE APPELLANT IS ENTITLE D TO A QUANTUM RELIEF OF A LIKE AMOUNT ON THIS SCORE. 4. WE DO NOT FIND ANY INFIRMITY IN DELETING THE IMP UGNED ADDITION BY THE CIT(A) FOR THE WELL REASONED FINDIN GS GIVEN BY HIM. WE FIND THAT IDENTITY OF CREDITORS, THEIR C REDIT WORTHINESS AND TRANSACTIONS HAS BEEN ESTABLISHED ON BEHALF OF THE ASSESSEE. SO UNDER THE CIRCUMSTANCES , THE ORDER OF THE CIT(A) NEEDS NO INTERFERENCE AT OUR HA NDS. THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE 2011 SD/- (G.S. PANNU) ACCOUNTANT MEMBER SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 15 TH JUNE 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A) KOLHAPUR 4. THE CIT KOLHAPUR 4. THE D.R, A BENCH, PUNE 6. GUARD FILE PAGE 5 OF 5 ITA NO. 185/PN/1998 SHREERAM CAPACITORS A.Y. 1994-95 BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE