The ITO, Ward-7(1), Ahmedabad V. M/s. Vardhman Pipes & Steels, Ahmedabad

ITA 1896/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6117 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SURYAVANSHI SRDR
• Assessee Lawyers: M K PATEL
• Keywords: Gift; Onus to prove
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI D.K.TYAGI, HONBLE JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, HONBLE ACCOUNTANT MEMBER ITA NO.1896/AHD/2009 ASSESSMENT YEAR:2003-04 DATE OF HEARING:15.6.11 DRAFTED:60711 INCOME TAX OFFICER, WARD-7(1), 2 ND FLOOR, NAVJIVAN TRUST BUILDINGS, NR. NAVJIVAN POST OFFICE, AHMEDABAD-14 V/S . M/S. VARDHMN PIPES & STEELS, 401, NR. MAHAN TRACTORS, B/H. NILKANTH WEIGH BRIDGE, SARKEJ BAVLA ROAD, AHMEDABAD PAN NO.AADFV5472E (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI G.S. SURYAVANSHI,SR-DR RESPONDENT BY:- SHRI M.K. PATEL, AR O R D E R PER D.K.TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME- TAX (APPEALS)-XI, AHMEDABAD DATED 19-03-2009 FOR TH E ASSESSMENT YEAR 2003-04. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 11. THE LD. COMMISSIONER OF INCOME TAX(A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS I DELETING THE ADDITION OF RS.1 4,36,337/- U/S.68 OF THE ACT. ITA NO.1896/AHD/2009 A.Y. 2003-04 ITO WD-7(1), ABD V. M/S. VARDHMAN PIPES 7 STE ELS PAGE 2 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER FOUND THAT ASSESSEE RECEIVED DEPO SITS FROM NINE DEPOSITORS, DETAILS OF WHICH ARE AS UNDER:- NAME AMOUNT (RS) (I) SEJAL SHAILESH SHAH 20,349 (II) HETAL SAURIN SHAH 16,520 (III) REKHABEN S SHAH 7,63,085 (IV) MADHUBEN S SHAH 2,19,396 (V) MINOR AMAN M SHAH 28,600 (VI) SONAL P PATEL 26,332 (VII) HETAL LLESH SHAH` 1,87,772 (VIII) MINOR YASH LLESH SHAH 77,887 (IX) MINOR SHERY TUSHAR SHAH 98,396 ACCORDING TO ASSESSING OFFICER, THE CREDITWORTHINES S OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS AS ENVISAGES U/S.68 OF THE INCOME-TAX ACT, 1961 HAVE NOT BEEN PROVED BY THE ASSESSEE. THEREFOR E AFTER DISCUSSING THE ISSUE AT LENGTH IN THE ASSESSMENT ORDER AO MADE THE ADDITION OF RS.14,36,337/- U/S.68 OF THE ACT TO THE INCOME DECL ARED BY THE ASSESSEE. 4. BEFORE LD. CIT(APPEALS) FOLLOWING WRITTEN SUBMIS SIONS WAS FIELD OBJECTING TO THE AO'S ACTION ON BEHALF OF THE ASSES SEE:- THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING PIPES AND THE YEAR UNDER APPEAL I.E. A.Y. 2003-04 IS THE FIRST YEAR OF BUSIN ESS. THE MAIN ADDITION CHALLENGED IN APPEAL IS OF RS.14,36,337/- PERTAINS TO DEPOSITS OF VARIOUS PERSONS AS MENTIONED ON PAGE 8 OF THE ORDER UNDER APPEAL. PARTY-WISE DETAIL S IN THE FORM OF COPIES OF ACCOUNT, BANK STATEMENTS, ACCOUNTS, ACKNOWLEDGEMENT OF RETUR NS, ETC. ARE BEING FILED HEREWITH IN A SEPARATE PAPER BOOK. IT IS RESPECTFUL LY SUBMITTED THAT ALL THE AMOUNTS IN QUESTION HAVE BEEN RECEIVED BY ACCOUNT PAYEE CROSSE D CHEQUES THROUGH BANKING CHANNELS, INTEREST IS ALSO PAID ON THE SAID DEPOSIT S AND WHEREVER THE PROVISIONS OF TAX DEDUCTION AT SOURCE ARE APPLICABLE, IT IS DEDUC TED AT APPLICABLE RATES. AS CAN BE SEEN FROM THE DETAILS FILED IN THE PAPER BOOK, ALL THE DEPOSITORS WERE ORIGINALLY HOLDING DEPOSITS SINCE MANY YEARS IN A FIRM CALLED AHMEDABAD SANITARY STORES AND AFTER INCORPORATION OF THE ASSESSEE FIRM, THE DEPOS ITORS HAVE RECEIVED THE AMOUNTS BY ACCOUNT PAYEE CHEQUE FROM THE AFORESAID FIRM OF AHM EDABAD SANITARY STORES OUT OF THE AMOUNTS LYING TO THEIR CREDIT AND OUT OF THE SA ID SUMS RECEIVED, DEPOSITS ARE GIVEN TO THE ASSESSEE FIRM BY ACCOUNT PAYEE CHEQUES . HENCE, ESSENTIALLY IT IS A CASE ITA NO.1896/AHD/2009 A.Y. 2003-04 ITO WD-7(1), ABD V. M/S. VARDHMAN PIPES 7 STE ELS PAGE 3 OF TRANSFER OF DEPOSITS FROM AHMEDABAD SANITARY STO RES TO ASSESSEE FIRM. THE CONFIRMATIONS OF ALL PARTIES ARE ALSO BEING FILED S EPARATELY. THE CONFORMATIONS OF ALL THE PARTIES ARE ALSO BEING FILED SEPARATELY. 2. THE PARTY WISE DETAILS ARE GIVEN AS UNDER:- (I) SEJAL SHAILESH SHAH RS.20349/- THE DETAILS OF THIS DEPOSITOR ARE APPEARED ON PAGE 3, PARA 5.1 OF THE ORDER UNDER APPEAL. IN FACT THE FIRST ENTRY DATED 27.08.2002 OF RS.3,000/- DOES NOT PERTAIN TO THIS DEPOSITOR BUT IT ACTUALLY PERTAINS TO HETAL SAURIN SHAH AND IN FACT THE ENTRY OF EVEN DATE OF RS.14,000/- SHOWN IN THE CASE OF HETAL SAUR IN SHAH ACTUALLY PERTAINS TO SEJAL SHAILESH SHAH. THEREFORE, THE CORRECT AMOUNT SHOULD BE RS.30,000/- (RS.14,000 + RS.16,000) PLUS INTEREST OF RS.1,349/-. THE SAID DE POSITOR HAS GIVEN THE ABOVE DEPOSIT OUT OF WITHDRAWALS MADE FROM AHMEDABAD SANI TARY STORES AND ALSO OUT OF MATURITY AMOUNT RECEIVED FROM INVESTMENT IN IDBI BO ND. THIS FACT IS EVIDENCED FROM THE COPY OF ACCOUNT APPEARING ON PAGE 4 AND 5 OF PA PER BOOK FROM WHERE IT WILL BE SEEN THAT RS.2,14,230/- HAS BEEN PAID BY AHMEDABAD SANITARY STORES TO SEJAL SHAILESH SHAH WHICH IS ALSO REFLECTED IN HER BANK P ASS-BOOKS AS CAN BE NOTICED FROM THE COPY OF PASS-BOOK AT PAGE 2 OF PAPER BOOK AND L IKEWISE THE AMOUNT OF RS.24,000/- IS RECEIVED ON MATURITY OF IDBI BOND. A S CAN BE SEEN FROM PAGE 2 OF PAPER BOOK I.E. BANK PASS-BOOKS, SHE HAS DEPOSITED THE AMOUNTS IN QUESTION WITH THE ASSESSEE-FIRM OUT OF THE ABOVE TWO AMOUNTS RECE IVED BY HER BY ACCOUNT PAYEE CHEQUE AND THROUGH BANKING CHANNELS. SHE HAS ALSO F ILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR IN QUESTION I.E. A.Y. 2003-04 W HICH IS PLACED ON PAGE 6 AND 7 OF PAPER BOOK. (II) HETAL SAURIN SHAH RS.16,520/- AS STATED IN THE FIRST CASE ABOVE, THE CORRECT AMOU NT IS ONLY RS.3,000/- AND THE SAID AMOUNT WAS DEPOSITED BY HER OUT OF WITHDRAWAL FROM AHMEDABAD SANITARY STORES. AS CAN BE SEEN FROM HER COPY OF ACCOUNT WITH AHMEDABAD SANITARY STORES ON PAGE 13 OF PAPER BOOK, SHE HAS RECEIVED RS.1,48,832/- WHICH IS DULY CREDITED IN HER BANK ACCOUNT AS CAN BE SEEN FROM PAGE 9 OF PAPER BOOK. O UT OF THE SUM SO RECEIVED, SHE HAS DEPOSITED RS.3,000/- WITH THE ASSESSEE FIRM. SH E HAS ALSO FILED HER RETURN OF INCOME FOR THE A.Y. 2003-04 WHICH IS ON PAGE 10 AND 11 OF THE PAPER BOOK. (III) REKHABEN S SHAH RS.7,63,085/- THE SAID DEPOSITOR IS MOTHER OF SAURIN SHAH, A PART NER OF THE ASSESSEE FIRM. SHE HAS DEPOSITED THE AMOUNT OUT OF MONEY RECEIVED FROM AHM EDABAD SANITARY STORES, PIPE TRADERS AND TUBE SUPPLIERS. HER COPY OF ACCOUNT IN ASSESSEES BOOK IS ON PAGE 14 OF PAPER BOOK ALONG WITH HER INCOME AND EXPENDITURE ACCOUNT AND BALANCE SHEET ON PAGE 15 TO 17 OF THE PAPER BOOK AND THE ACKNOWLEDGE MENT OF RETURN OF INCOME FILED AND STATEMENT OF INCOME ON PAGE 18 AND 19 OF PAPER BOOK. HER BANK STATEMENT IS ON PAGE 2- AND 21 OF THE PAPER BOOK AND HER ACCOUNT FR OM AHMEDABAD SANITARY STORES, PIPE TRADERS AND TUBE SUPPLIERS IS FROM 22 TO 26 OF THE PAPER BOOK. AS CAN BE SEEN FROM THE ABOVE DETAILS, SHE HAS RECEIVED RS.5,48,09 9/- (PAGE 23 OF PAPER BOOK) FROM AHMEDABAD SANITARY STORES ON 11.04.2002 AND OUT OF THE SAID AMOUNT SHE HAS DEPOSITED RS.5,50,000/- WITH THE ASSESSEE FIRM (PAG E 20 OF PAPER BOOK). LIKEWISE, SHE HAS RECEIVED RS.1,75,000/- FROM PIPE TRADERS (P AGE 25 OF PAPER BOOK) ON 26.06.2002 OUT OF WHICH SHE HAS DEPOSITED RS.1 LAKH WITH THE ASSESSEE FIRM (PAGE 20 OF PAPER BOOK. LIKEWISE SHE HAS RECEIVED RS.15,0 00/- FROM TUBE SUPPLIERS ON 23.09.2002 OUT OF WHICH SHE HAS DEPOSITED RS.14,800 /- WITH THE ASSESSEE FIRM (PAGE 20 OF PAPER BOOK). HENCE, IT CAN BE SEEN THAT ALL T HE ABOVE AMOUNTS ARE RECEIVED THROUGH BANKING CHANNELS AND SHE HAS ALSO FIELD HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. ITA NO.1896/AHD/2009 A.Y. 2003-04 ITO WD-7(1), ABD V. M/S. VARDHMAN PIPES 7 STE ELS PAGE 4 (IV) MADHUBEN S SHAH RS.2,19,396/- SHE HAS DEPOSITED THE SAID AMOUNT BY RECEIVING RS.2 ,73,264/- FROM AHMEDABAD SANITARY STORES (PAGE 28 OF THE PAPER BOOK) AND SHE HAS DEPOSITED RS.2,00,000/- WITH THE ASSESSEE FIRM (RS.70,000 ON 04.09.2002 AND RS.1,30,000/- ON 23.09.2002). HENCE, THE AMOUNTS ARE RECEIVED BY ACCOUNT PAYEE CH EQUE THROUGH BANKING CHANNELS. (V) MINOR AMAN M SHAH RS.28,600/- THE ABOVE SAID DEPOSITOR IS SON OF ONE OF THE PARTN ERS OF THE FIRM AND HAS DEPOSITED THE AMOUNT OUT OF GIFT RECEIVED FROM GRANDMOTHER MR S. SHANTABEN J PATEL, MRS. SHANTABEN J PATEL HAS GIVEN A CHEQUE OF RS.25,000/- FROM HER BANK ACCOUNT (PAGE 31 OF PAPER BOOK) DIRECTLY TO THE ASSESSEE FIRM ON BEHALF OF MINOR AMAN M SHAH AS CAN BE SEEN FROM HIS COPY OF ACCOUNT WITH ASSESSEE S FIRM (PAGE 29 OF PAPER BOOK). (VI) SONAL P PATEL RS.26,332/- SHE HAS DEPOSITED RS.25,000/- BY CHEQUE FROM HER BA NK ACCOUNT (PAGE 36 OF PAPER BOOK) (VII) HETAL LLESH SHAH RS.1,87,772/- SHE HAS DEPOSITED TDHE AMOUNT IN QUESTION BY ACCOUN T PAYEE CHEQUE FROM HER BANK ACCOUNT AS CAN BE SEEN FROM HER BANK SATEMENTD ON P AGE 37 OF PAER BOOK. FROM THE COPY OF BANK STATEMENT IT CAN BE SEEN AT OUT OF FUN DS AVAILABLE WITH HER SHE HAS GIVEN A GIFT OF RS.60,00/- TO MINOR YASH AND AT THE SAME TIME ALSO DEPOSITED RS.60,000/- WITH THE ASSESSEE FIRM ON 23.07.2002. T HEREAFTER, SHE HAS DEPOSITED RS.1 LAKH WITH THE ASSESSEE FIRM ON 03.08.2002 WHIC H IS MAINLY FROM THE FUNDS AVAILABLE WITH HER ON MATURITY OF FIXED DEPOSIT REC EIPT OF RS.1,34,964/- ON 23.07.2002 AS EVIDENT FROM THE BANK STATEMENT ON PAGE 37 OF TH E PAPER BOOK. FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS SHE WAS SUMMONED B Y THE LEARNED ASSESSING OFFICER AND HER STATEMENT UNDER SECTION 131 OF THE INCOME-TAX ACT,1961 WAS ALSO RECORDED WHEREIN SHE HAS CONFIRMED THE ABOVE DEPOSI T AND HAD ALSO PRODUCED HER BANK STATEMENT. (VIII) MINOR YASH LLESH SHAH RS.77,887/- HE IS SON OF ONE OF THE PARTNERS OF THE FIRM AND HE HAS DEPOSITED RS.60,000/ WITH THE ASSESSEE FIRM ON 22.07.2002 (PAGE 38 OF PAPER BOOK) OUT OF GIFT RECEIVED FROM HIS MOTHER SMT. HETAL LLESH SHAH AS CAN BE SEEN FROM HE R BANK STATEMENT ON PAGE 37 OF PAPER BOOK. THE CHEQUE NO.059996 FOR RS.60,000/- GI VEN BY HER IS DIRECTLY DEPOSITED WITH THE ASSESSEE FIRM AS CAN BE SEEN FROM PAGE 38 OF PAPER BOOK. (IX) MINOR SHREY TUSHAR SHAH RS.98,396/- THE DEPOSITOR IS SON OF ONE OF THE PARTNER OF THE F IRM SHRI TUSHAR SHAH AN HE HAS DEPOSITED THE AMOUNT IN QUESTION THROUGH ACCOUNT PA YEE CHEQUE OUT OF GIFT RECEIVED FROM GRANDFATHER. 3. FROM THE ABOVE SUBMISSIONS IT CAN BE SEEN THAT A LL THE DEPOSITS ARE RECEIVED BY ACCOUNT PAYEE CHEQUE AND NECESSARY CONFIRMATIONS, B ANK STATEMENTS, ACKNOWLEDGEMENT OF RETURN FILED (WHEREVER DEPOSITOR IS ASSESSED), ETC. ARE DULY FILED WHICH WILL ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE DEPOSITS IN QUESTION. THE LEARNED ASSESSING OFFICER HAS MAINLY MADE THE DISALLOWANCE BY DISBELIEVING THE SOURCE OF SOURCE AND QUESTIONING THE AVAILABILITY OF CREDIT BALANCE IN THE DEPOSITORS BANK ACCOUNT. IT IS RESPECTFULLY SU BMITTED THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE AND IN LIGHT OF THE FACT STATED ABOVE AND THE EVIDENCE PLACED ON RECORD, IT IS HUMBLY PRAYED THAT THE ADDITION MADE MAY KINDLY BE DELETED. ITA NO.1896/AHD/2009 A.Y. 2003-04 ITO WD-7(1), ABD V. M/S. VARDHMAN PIPES 7 STE ELS PAGE 5 4. THE ASSESSEE BEGS TO RELY OR THE FOLLOWING CASE LAW IN SUPPORT OF THE ABOVE SUBMISSION. I) 159 ITR 78 (SC) ORISSA CORPORATION. II) 256 ITR 360 (GUJ) ROHINI BUILDERS III) 278 ITR 170 (GUJ) PRAGATI CO. OPERATIVE BANK IV) 289 ITR 512 (GUJ) MURLIDHAR LAHORIMAL V) 264 ITR 254 (GAUH) NEMICHANDKOTHARI 5. IN LIGHT OF ABOVE SUBMISSIONS IT IS HUMBLY PRAYE D THAT THE ADDITION MADE MAY KINDLY BE DELETED AND THE APPEAL F THE ASSESSEE BE ALLOWED AS PRAYED FOR AND OBLIGE. TAKING INTO CONSIDERATION OF THIS SUBMISSIONS OF AS SESSEE LD. CIT(APPEALS) DELETED THIS ADDITION BY OBSERVING AS UNDER:- AS IT COULD BE SEEN FROM THE DETAILS PRODUCED BEFO RE ME BY THE A.R THAT THE APPELLANT HAD RECEIVED THE ABOVE DEPOSITS THROUGH BANKING CHANNEL. THE APPELLANT HAD ALSO FILED NECESSARY CON FIRMATIONS, BANK STATEMENTS, ACKNOWLEDGEMENT OF RETURNS (WHEREVER DE POSITORS ARE ASSESSED). THEREFORE, IT CAN BE SAID THAT THE APPEL LANT HAS ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE DEPOSITS IN QUESTION. THE EVIDENCE/PROOF AS PRODUCED BEFORE ME BY THE A.R ALSO SHOWS THAT THE APPELLANT HAS DULY DISCHARGED THE BU RDEN CAST UPON IT AS ENVISAGED UNDER SECTION 68 OF THE I.T. ACT, 1961. 3.1.2 THEREFORE, HAVING CONSIDERED THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISIONS, REFERRED AS ABOV E, WHICH ARE RELIED UPON BY THE A.R OF THE APPEAL, I AM OF THE VIEW THA T THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION UNDER S ECTION 68 OF THE I.T. ACT, 1961. THEREFORE, I AM INCLINED TO DIRECT THE ASSESS ING OFFICER TO DELETE THE ADDITION MADE BY HIM AT RS.14,36,337/-. THUS, T HIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THIS ORDER NOW THE REVENUE IS IN AP PEAL BEFORE US. 6. AT THE TIME OF HEARING LD. DR RELIED ON THE ORDE R OF ASSESSING OFFICER WHILE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF LD. CIT(APPEALS). 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT ASSESSEE HAS FILE D CONFIRMATION FROM THE DEPOSITORS, BANK STATEMENTS AND ACKNOWLEDGEMENT OF RETURN IN RESPECT OF ITA NO.1896/AHD/2009 A.Y. 2003-04 ITO WD-7(1), ABD V. M/S. VARDHMAN PIPES 7 STE ELS PAGE 6 DEPOSITORS WHO WERE INCOME-TAX ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAD RECEIVED THESE DEPOSITS THROUGH BANKIN G CHANNELS ONLY. THUS, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE DEPOSITORS HAS BEEN ESTABLISHED BY THE ASSESSEE. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT ASSESSEE HAS DULY DISCHARGED THE BURDEN OF PROOF CA ST UPON THE ASSESSEE AS ENVISAGED U/S.68 OF THE I.T ACT AND THEREFORE LD. C IT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY ASSESSING OFFICER U/S. 68 OF THE I.T. ACT. THE ORDER PASSED BY HIM IS HEREBY UPHELD. THIS GROUND O F REVENUES APPEAL IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08 /07/2011 SD/- SD/- (D.C.AGRAWAL) (D.K. TYA GI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 08/07/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD