Shri Sushil Kumar Kejariwal, Surat V. The Income tax Officer,OSD_I, Surat

ITA 1857/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9124 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: RAMESH MAL
• Keywords: Unexplained cash credit
• Section: 143(1); 143(2); 68

Judgement Text

N THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BENC HES D BENCH: AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND A N PAHUJA, AM) ITA NO. 1857/AHD/2009 A. Y.:2005-06 SHRI SUSHIL KUMAR KEJARIWAL, 1067, AMBAJI MARKET, RING ROAD, SURAT [PAN: AIMPK 9701A] VS THE INCOME TAX OFFICER (OSD)-I, SURAT APPELLANT RESPONDENT REVENUE BY SHRI C. K. MISHRA, DR ASSESSEE BY SHRI RAMESH MALPANI,AR ORDER A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER D ATED 16-2-2009 OF THE LEARNED CIT(A)-II, SURAT, RAISES V ARIOUS GROUNDS RELATING TO ADDITION OF AN AMOUNT OF RS.13,06,466/- U/S 68 OF T HE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT]: 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1,00,770/- FILED ON 31-10-2005 BY THE ASSESSEE, TRADING IN ART SILK CLOTH, AFTER BEING PROCESSED U/S 143(1) OF THE ACT, WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 20-10-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD O BTAINED UNSECURED LOANS FROM THE FOLLOWING FIVE PERSONS: SR .NO. NAME OF THE DEPOSITOR AMOUNT OF DEPOSIT CONFIRM ATION ACK. OF RETURN OF INCOME BANK STATEMENT 1 NAVDEEP GARODIA 70000 YES YES YES. CASH DEPOSITED 2 PRASHANT KEJRIWAL 73000 YES NO YES. CASH DEPOSITED 3 RAMSAHAY MUNDA 75296 YES YES YES. CASH DEPOSITED 4 SUSHIL GARODIA 100000 YES YES YES. CASH DEPOSITED 5 ARAHANA FABRICS 988170 YES YES YES. BUT IN THE NAME OF SUSHILADEVI KEJRIWAL AND AS PER HER RETURN OF INCOME ITA NO. 1857/AHD/2009 SUSHIL KUMAR KEJERIWAL 2 SHE WAS PROP. OF M/S. ARCHANA TEXTILE. NOT ARCHANA FABRICS. TO A QUERY BY THE AO, SEEKING EVIDENCE RELATING TO THE CREDITWORTHINESS OF THE AFORESAID CREDITORS AND GENUINENESS OF THE TRANSACT IONS, THOUGH THE ASSESSEE FILED THEIR COPIES OF BANK STATEMENTS AND ACKNOWLE DGEMENT OF THEIR IT RETURNS, THEY DID NOT EXPLAIN SOURCE OF CASH DEPOSITED IN TH E BANK ACCOUNT OF THE CREDITORS BEFORE ADVANCING LOANS TO THE ASSESSEE. ACCORDINGLY , THE AO ASKED THE ASSESSEE TO PRODUCE THE AFORESAID CREDITORS FOR EXA MINATION. EVEN IN RESPONSE TO A SHOWCAUSE NOTICE ,ASKING THE ASSESSEE TO ESTAB LISH CREDITWORTHINESS OF THE SAID CREDITORS, NO SATISFACTORY EXPLANATION WAS FU RNISHED WHILE THE AO NOTICED THAT ONE OF THE ALLEGED DEPOSITOR SHRI PRASHANT KEJ ARIWAL WAS A MINOR AND THE REMAINING FOUR HAD RETURNED VERY NOMINAL INCOME AN D INCURRED NOMINAL HOUSE HOLD EXPENSES AS DETAILED IN PARA 4.3 OF THE ASSESS MENT ORDER. IN THE LIGHT OF THESE FACTS , THE AO CONCLUDED THAT GENUINENESS OF UNSECURED LOANS WAS NOT ESTABLISHED BY THE ASSESSEE IN TERMS OF PROVISIONS OF SEC. 68 OF THE ACT. INTER ALIA, SINCE THE ASSESSEE FAILED TO PRODUCE ANY OF T HE CREDITORS , THE AO ADDED THE ENTIRE AMOUNT OF RS.13,06,466/- ,RELYING UPON THE D ECISIONS IN THE CASE OF KALEKHAN MOHMED HANIF VS CIT, 50 ITR 1 (SC), SHREEL EKHA BANERJEE VS CIT 49 ITR 112 (SC), SHANKAR INDUSTRIES VS CIT 114 ITR 689 , CIT VS PRECISION FINANCE PVT. LTD. 111 ITR 951 (CAL), CIT VS DEVI PRASAD VIS HWANATH PRASAD 72 ITR 194 (SC), CIT VS KOLAY TRADING CO. LTD. (1998) 232 ITR 820 (CAL) AND NANAKCHAND LAXMANDAS VS CIT 140 ITR 151 (ALLD.) 3. ON APPEAL, THE ASSESSEE CONTENDED THAT SMT. SUSH ILADEVI KEJRIWAL WAS THE PROPRIETOR OF M/S ARCHANA FABRICS FROM WHOM AN AMOUNT OF RS.9,88,170/- WAS RECEIVED AND SHE HAD BEEN FILING HER RETURNS S INCE AY 1987-88.WHILE ENCLOSING COPY OF HER CAPITAL ACCOUNT, PROFIT & LOS S ACCOUNT AND BALANCE SHEET THE ASSESSEE CONTENDED THAT SIMPLY BECAUSE IN THE C ONFIRMATION, NAME OF THE PROPRIETOR WAS SHOWN AS M/S ARCHANA TEXTILE INSTEAD OF ARCHANA FABRICS, THE AO DISCARDED THE EVIDENCE AND ADDED THE AMOUNT. AS REG ARDS LOAN OF RS.75,296/- ITA NO. 1857/AHD/2009 SUSHIL KUMAR KEJERIWAL 3 FROM RAMSAHAY MUNDA, THE ASSESSEE SUBMITTED THAT OP ENING BALANCE IN HIS ACCOUNT WAS RS.3,54,198 AND SHRI MUNDA HAD BEEN FIL ING RETURNS SINCE AY 1990- 91. WHILE SUBMITTING COPY OF HIS ACCOUNT, THE ASSES SEE ARGUED THAT THERE WAS NO JUSTIFICATION IN TREATING THE AMOUNT RECEIVED FROM SHRI MUNDA AS UNEXPLAINED CASH CREDIT. WITH REGARD TO LOAN RECEIVED FROM SHRI SUSHIL GARODAIA, THE ASSESSEE FILED COPY OF HIS BANK STATEMENT, ACKNOWLE DGEMENT OF IT RETURN AND SUBMITTED THAT LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQ UE. SIMILAR EVIDENCE WAS FILED IN RESPECT OF LOAN TAKEN FROM SHRI NAVDEEP GA RODIA AND PRASHANT KEJERIWAL. IN THE LIGHT OF THESE SUBMISSIONS, THE LEARNED CIT( A) UPHELD THE ADDITION HOLDING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS . I FIND THAT IN APPELLATE PROCEEDINGS THE AR HAS NOT ADDED ANYTHING TO WHAT HAD BEEN STATED BEFORE THE AO OR EVEN THE EVID ENCE PRODUCED. THIS MEANS THAT THE FINDINGS AND CONCLUSI ON OF THE AO HAVE NOT REALLY BEEN REBUTTED IN APPEAL, NOR HAS AN Y FURTHER EVIDENCE BEEN BROUGHT ON RECORD TO DISPUTE THE ADDI TION. ALL SUCH DOCUMENTARY EVIDENCES WHICH HAVE NOW BEEN FILED HAD BEEN CONSIDERED AT LENGTH BY THE AO. I HAVE GONE THROUGH THE DOCUMENTS FILED. IT IS QUITE APPARENT THAT THE LOAN S HAD BEEN SHOWN FROM EITHER CLOSE RELATIVES OR EMPLOYEES SUCH AS SH RI RAMSAHAY MUNDA. INTERESTINGLY, THE AR HAS NOT FURNISHED COPI ES OF THE BANK STATEMENTS WHERE THE AO HAD FOUND CASH DEPOSITED IM MEDIATELY PRIOR TO THE ISSUING OF CHEQUES TO THE ASSESSEE. NO EXPLANATION HAS BEEN FURNISHED REGARDING SUCH DEPOSITS. NONE HAD BE EN FURNISHED BEFORE THE AO EITHER. IT HAS BEEN CLAIMED THAT SHRI PRASHANT KEJRIWAL, ONE OF THE DEPOSITORS, WAS MINOR. HIS LED GER ACCOUNT SHOWS AN OPENING BALANCE OF RS.24,000, CREDITS OF R S.23,000, RS.20,000 AND RS.30,000 DURING THE YEAR. ONE OF THE DEBITS DATED 26-02-2005 OF RS. 4,565 IS ON ACCOUNT OF SALARY EX PENSES, WHICH MEANS THAT SHRI PRASHANT KEJRIWAL WAS AN EMPLOYEE D RAWING A SALARY OF RS.4,565 PER MONTH OR WHATEVER. IT HAS BE EN VEHEMENTLY ARGUED THAT SMT. SUSHILADEVI KEJRIWAL FROM WHOM LOA NS TOTALING RS.9,88,170 WAS ALLEGEDLY TAKEN DURING THE YEAR, WA S THE PROPRIETOR OF M/S. ARCHANA FABRICS AND THE AO HAD SIMPLY DISAL LOWED THE ASSESSEES CLAIM SINCE THE NAME TYPED WAS M/S. ARC HANA TEXTILES WHICH WAS A MISTAKE. THIS CLAIM IS OBVIOUSLY BOGUS SINCE THE ACKNOWLEDGMENT OF RETURN OF INCOME FILED FOR THE AY 2005-06 SHOWS SMT. KEJRIWAL TO BE THE PROPRIETOR OF M/S. AR CHANA TEXTILES. THIS RETURN OF INCOME WAS FILED WITH THE ITO WD 5(4 ). A COPY OF THE ACKNOWLEDGMENT OF RETURN OF INCOME FOR THE AY 1997- 98 ALSO ITA NO. 1857/AHD/2009 SUSHIL KUMAR KEJERIWAL 4 SHOWS HER TO BE THE PROPRIETOR OF M/S. ARCHANA TEXT ILES. THAT RETURN WAS FILED WITH WARD 2(7), SURAT. IT IS ON THIS GROU ND THAT THE AO REJECTED HER CONFIRMATION. THE AR HAS ARGUED THAT I T WAS BECAUSE OF A PRINTING MISTAKE. THE ACKNOWLEDGMENT OF THE RE TURNS FILED FOR THE SAID TO YEAR HOWEVER PROVE THE ARS CONTENTION TO BE COMPLETELY WRONG AND MISLEADING. THE AO THEREFORE H AD JUSTIFIABLY REJECTED THE ASSESSEES CLAIM. AS REGARDS THE OTHER DEPOSITS, SINCE THEIR CREDITWORTHINESS IS STILL NOT ESTABLISHED, AL L THE LOANS SHOWN AGAINST THEIR NAMES ARE TO BE TREATED AS UNEXPLAINE D IN TERMS OF THE PROVISIONS OF SECTION 68 OF THE IT ACT. GIVEN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF THE SUM OF RS.13,06,466, BEING UNEXPLAINED CASH CREDITS, IS CONFIRMED UNDER THE PROVISIONS OF SECTION 68 OF THE IT ACT. 4. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE ASS ESSEE REITERATED THEIR CONTENTIONS BEFORE THE LEARNED CIT(A) WHILE THE LEA RNED DR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). WHILE INVITING OUR ATTENTION TO PAGE 6,7 AND 8 OF THE PAPER BOOK, THE LEARNED AR PLEADED THAT THE LEA RNED CIT(A) HAS NOT EXAMINED THE FACTS IN PROPER PERSPECTIVE. EVEN THE MONEY RECEIVED FROM SISTER CONCERN M/S. ARCHANA FABRICS WAS TREATED AS UNEXPLA INED CASH CREDIT. TO A QUERY BY THE BENCH AS TO HOW THE ASSESSEE SUBSTANTI ATED CREDITWORTHINESS OF SHRI PRASHANT KEJRIWAL, THE LEARNED AR ON BEHALF O F THE ASSESSEE EXPLAINED THAT SAVINGS MADE IN HIS NAME BY HIS FATHER RESULTED IN DEPOSIT OF RS.73,000/- .HOWEVER, THE LD. AR DID NOT ADDUCE ANY REASONS AS TO WHY THE AFORESAID CREDITORS WERE NOT PRODUCED BEFORE THE AO DESPITE H IS SPECIFIC DIRECTIONS. TO FURTHER QUERY BY THE BENCH, THE LD. AR SUBMITTED TH AT MATTER MAY BE RESTORED TO THE FILE OF THE AO IN ORDER TO ENABLE HIM TO ESTAB LISH THE CREDITWORTHINESS OF THE CREDITORS. THE LD. DR DID NOT RAISE ANY OBJECTION T O THESE SUBMISSIONS OF THE LD. AR. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THOUGH THE LEARNED AR ON BEHALF OF THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT AN AMOUNT OF RS.9,88,170/- WAS BROUGHT IN BY SMT. SUSHILADEVI KEJARIWAL, PROPRIETOR OF M/S ARCHANA FA BRICS, IN THE CONFIRMATION NAME OF M/S ARCHANA TEXTILE WAS MENTIONED. THE LD. CIT(A) DID NOT ACCEPT THE ITA NO. 1857/AHD/2009 SUSHIL KUMAR KEJERIWAL 5 CONTENTIONS OF THE ASSESSEE, SINCE IN THE ACKNOWLED GMENT OF RETURNS FOR THE AY 1987-88 & 1990-91 SMT. SUSHILADEVI KEJRIWAL WAS SHO WN AS PROPRIETOR OF ARCHANA TEXTILE. THE LD. AR CONTENDED BEFORE US THA T THE SAID AMOUNT HAD BEEN BROUGHT IN FROM THE BANK ACCOUNT OF M/S. ARCHANA FA BRICS AND SAVINGS BANK ACCOUNT OF SMT. SUSHILADEVI KEJARIWAL AND THE LD. C IT(A) DID NOT APPEAR TO HAVE EXAMINED THESE BANK ACCOUNTS BEFORE RECORDING HIS FINDINGS. WE FIND THAT THE LD. CIT(A), INTER ALIA, OBSERVED THAT THE AR HAS NOT F URNISHED COPIES OF BANK STATEMENTS WHEREIN THE AO HAD FOUND THAT CASH WAS D EPOSITED IMMEDIATELY PRIOR TO ISSUING OF CHEQUES TO THE ASSESSEE AND NO EXPLAN ATION HAD BEEN FURNISHED REGARDING SUCH DEPOSITS. WE FIND THAT AMOUNT FROM T HE AFORESAID UNSECURED CREDITORS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT M AKE A NON-GENUINE TRANSACTION GENUINE[CIT VS. PRECISION FINANCE PVT. LTD.,208 ITR 465(CAL.).EVEN FILING OF INCOME-TAX PARTICULARS WHERE A CREDITOR I S ASSESSED ,MAY NOT BE SUFFICIENT AS HELD IN CIT VS. KORLAY TRADING CO. LTD.,232 ITR 820(CAL.). WE FIND FROM THE PAPER BOOK FILED BEFORE US THAT COPIES OF BANK STAT EMENTS OF M/S ARCHNA FABRICS, SMT. SUSHILA DEVI KEJARIWAL,SHRI SUSHIL GARODIA,SHR I NAVDEEP GARODIA AND SHRI PRASHANT KEJARIWAL ARE STATED TO HAVE BEEN FILED BE FORE THE AO AND THE LD. CIT(A). THE LD. CIT(A) UPHELD THE FINDINGS OF THE A O BECAUSE THE ASSESSEE DID NOT ESTABLISH THEIR CREDITWORTHINESS BEFORE THE AO NOR PRODUCED THEM DESPITE DIRECTIONS OF THE AO AND EVEN COPIES OF BANK STATEM ENTS OF THE DEPOSITORS WERE NOT FILED BEFORE HIM. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE AO AND THE LE ARNED CIT(A) HAVE NOT CONSIDERED THE MATERIAL ON RECORD IN PROPER PERSPEC TIVE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. IN THESE CIRCUMSTANCES, CO NSIDERING THE CONTENTIONS OF THE LD. AR ON BEHALF OF THE ASSESSEE AND IN THE I NTEREST OF JUSTICE, WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF L D. CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO WITH THE DIRECTIONS TO ALLOW A FI NAL OPPORTUNITY TO THE ASSESSEE TO ESTABLISH CREDITWORTHINESS OF THE AFORESAID ANOTHER OPPORTUNITY AND THEREAFTER, READJUDICATE THE MATTER IN THE LIGHT OF VARIOUS J UDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF DCIT VS. ROHINI ITA NO. 1857/AHD/2009 SUSHIL KUMAR KEJERIWAL 6 BUILDERS, 256 ITR 360(GUJ). WITH THESE DIRECTIONS, GROUNDS NOS. 1 TO 4 IN THE APPEAL ARE DISPOSED OF. 8. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND NO.5, THEREFORE, THIS GROUND IS DISMISSED. 9. IN THE RESULT, APPEAL IS ALLOWED, BUT FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH SEPTEMB ER,2009 SD/- SD/- (H. L. KARWA) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 11TH SEPTEMBER,2009 LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. THE INCOME TAX OFFICER (OSD)-I, SURAT 3. CIT(A)-II,SURAT 4. THE CIT CONCERNED 5. THE D.R. ITAT, AHMEDABAD, 6. GUARD FILE BY ORDER DR / AR, ITAT, AHMEDABAD