M/s. Shreeji Pharma Industries, Vapi V. The Income tax Officer,Ward-3, Vapi

ITA 1851/AHD/2011

• Counselvise Citation: 185120514 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA S NO . 185 1 /AHD/ 2011 A. Y .200 6 - 0 7 M/S. SHREEJI PHARMA INDUSTRIES, SHED NO.CIB 3226 GIDC ESTATE, CHEMICAL ZONE, SA RIGAM (GUJARAT) PAN: ABCFS 9160Q VS ITO, WARD 3 , VAPI . (APPELLANT) (RESPONDENT) REVENUE BY : S HRI DINESH SINGH, SR. D.R. , ASSESSEE(S) BY : SHRI TUSHAR P. HEMANI, A.R. / DATE OF HEARING : 10 / 06 /201 5 / DATE OF PRONOUNCEMENT: 12 / 0 6 /201 5 / O R D E R PER SHRI S.S. GODARA , JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR A.Y. 200 6 - 0 7 , ARISE S FROM ORD ER OF CIT(A) - VALSAD DATED 25 . 02 .20 11 PASSED I N CASE NO . CIT(A) - VLS/245/2008 - 09 UPHOLDING ADDITION OF UNEXPLAINED CASH CREDITS AMOUNTING TO RS. 13,69,200/ - U/S. 68 MADE IN THE COURSE OF A REGULAR ASSESSMENT FRAMED UNDER SECTION 143(3 ) OF THE INCOME TAX ACT I N SHORT THE ACT . 2. THE ASSESSEE FIRM MANUFACTURES DETERGENT POWDER AND SOAP. IT FILED ITS RETURN ON 13.3.2007 ADMITTING NIL INCOME. THE ASSESSING OFFICER NOTICED CAPITAL INTRODUCED BY ITS THREE PARTNERS, NAMELY, ITA NO. 1851 /AHD/20 1 1 M/S. SHREEJI PHARMA INDUSTRIES FOR A.Y. 200 6 - 0 7 - 2 - S/SHRI P.A. JOSHI, M.K. PATEL AND B.N, P ATEL OF RS.6,37,200/ - , RS.4,79,000/ - AND RS.2,53,000/ - TOTALING TO RS.13,69,200/ - IN ITS BALANCE SHEET . THERE IS NO DISPUTE THAT ALL THE THREE PARTNERS CONFIRMED TO HAVE INTRODUCED THE SAID CAPITAL IN ASSESSEE - FIRM. THE ASSESSING OFFICER EXAMINED THE IR CAS ES INDIVIDUAL LY . HE INTER ALIA OBSERVED THAT SHRI JOSHI HAD TOTAL INCOME OF ONLY RS.98,463/ - IN THE IMPUGNED ASSESSMENT YEAR. AND ALSO THA T THE TOTAL DEPOSITS IN HIS BANK ACCOUNT WITHDRAWN LATER ON WERE OF RS.5,49,351/ - . THEREFORE, HE OPINED THAT THE SAME WERE TRANSFERRED TO ASSESSEE S CAPITAL ACCOUNT WAS NOT VERIFIED. THE ASSESSING OFFICER WOULD ALSO HOLD THAT ONLY A SUM OF RS.1 LAC HAD BEEN INTRODUCED BY CHEQUE WHICH REMAINED UNEXPLAINED. SIMILARLY, THE ASSESSING OFFICER FOUND THAT SHRI M.K. PATEL HAD NOT BEEN ASSESSED TO TAX. THE SAID PARTNER FILED ITS BALANCE SHEET HAVING BALANCE OF RS.60,200/ - ONLY . THE ASSESSEE SUBMITTED THAT SHRI PATEL DREW SALARIES FROM SOME OTHER ENTITIES AND ALSO HAD AGRICULTURAL INCOME. THE ASSESSING OFFICER CONCLUDED THAT THE SAI D PARTNER S CAPITAL ACCOUNT DID NOT CONTAIN OF ANY AGRICULTURAL LAND OR INCOME. COMING TO SHRI B.M. PATEL, THE ASSESSING OFFICER NOTICED THAT HE HAD SERVED AS A MANAGER IN VARIOUS ENTITIES FROM 1982 TO THE YEAR 2004 IN LIEU OF MONTHLY SALARY. THE ASSESSEE HAD CLAIMED ITS PARTNER TO HAVE BEEN EARNING AGRICULTURAL INCOME. THE ASSESSING OFFICER DOUBTED CREDITWORTHINESS OF THE PLEA AND HELD THAT NO LAND RECORD OR SUCH INCOME HAD BEEN FORTHCOMING IN THE CAPITAL ACCOUNT OF THE SAID PARTNER. HE TREATED THE ENTIRE CAPITAL INTR ODUCED OF RS.13,69,200/ - AS UNEXPLAINED CASH CREDITS U/S.68 OF THE ACT AND ITA NO. 1851 /AHD/20 1 1 M/S. SHREEJI PHARMA INDUSTRIES FOR A.Y. 200 6 - 0 7 - 3 - MADE THE CONSEQUENTIAL ADDITION IN ASSESSMENT ORDER DATED 19.12.2008. 3. THE ASSESSEE PREFERRED AN APPEAL. IT PLACED ON RECORD COPY OF THE RETURNS FILED BY ALL THREE PARTNERS, THEI R PROFITS AND LOSS ACCOUNT S , BALANCE SHEET S, COPY OF ACCOUNTS WITH THE FIRM, BANK ACCOUNTS AND DETAILS OF AGRICULTURAL HOLDINGS IN CASE OF LATTER TWO PARTNERS. HOWEVER, THE CIT(A) HAS REJECTED THE ASSESSEE S GROUNDS BY UPHOLDING THE ASSESSING OFFICER S ACT ION DOUBTING CREDITWORTHINESS OF THE ASSESSEE S CLAIM THAT THE IMPUGNED CAPITAL INTRODUCED OF RS.13,69,200/ - CAME FROM ITS PARTNERS. THIS LEAVES THE ASSESSEE AGGRIEVED. 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE CASE FILE. THE ASSESSEE REITERATES ITS STA ND ADOPTED BEFORE THE LOWER AUTHORITIES THAT ITS THREE PARTNERS HAVE INTRODUCED THE CAPITAL SUBJECT MATTER OF THE IMPUGNED ADDITION. THE REVENUE SUPPORTS THE CIT(A) ORDER UNDER CHALLENGE. THERE IS NOT DISPUTE THAT ALL THE THREE PARTNERS HAVE CONFIRMED TO H AVE INTRODUCED THE CAPITAL IN QUESTION IN THE ASSESSEE S BALANCE SHEET. WE FIND IN THESE CIRCUMSTANCES THAT THE HON BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT - V VS. PATEL & COMPANY IN TAX APPEAL 878 OF 2010 DECIDED ON 25.7.2011 HOLDS THAT WHEN PARTNERS O F A FIRM CONFIRM TO HAVE INTRODUCED CAPITAL OR LOAN THEREIN, THE VERY AMOUNT CANNOT BE ADDED IN THE FIRM S HAND S . THE REVENUE FAILS TO POINT OUT ANY DISTINGUISHING FEATURES OR CASE LAW TO THE CONTRARY. WE FOLLOW THE DECISION OF HON BLE JURISDICTIONAL ITA NO. 1851 /AHD/20 1 1 M/S. SHREEJI PHARMA INDUSTRIES FOR A.Y. 200 6 - 0 7 - 4 - HIGH C OURT IN IDENTICAL FACTS AND DELETE THE IMPUGNED ADDITION. HOWEVER, IT SHALL BE OPEN TO THE REVENUE TO CONSIDER THE VERY ADDITION IN THE PARTNERS HAND S AS PER LAW. THE ASSESSEE S SOLE SUBSTANTIVE GROUND SUCCEEDS. 5. THE ASSESSEE S APPEAL IS ALLOWED. ORD ER PRONOUNCED IN THE COURT ON THIS DAY, THE 12 TH JUNE , 201 5 AT AHMEDABAD. SD/ - SD/ - ( G.D. AGRAWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 12 / 0 6 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD