Rghupati Tex Creation Pvt.Ltd., Surat V. The Income tax Officer.Ward-4(2), Surat

ITA 1959/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4405 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BENCH, AHMEDABAD .., ! '# '# '# '# $ %&, ! BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER #./ I.T.A. NO.1959/AHD/2010 ( ( ')( ( ')( ( ')( ( ')( / / / / ASSESSMENT YEAR : 2007-08) M/S.RAGHUPATI TEX CREATION PVT.LTD. 501, ROHIT A/C.MARKET RING ROAD, SURAT` / VS. THE INCOME TAX OFFICER WARD-4(2), SURAT !* #./+, #./ PAN/GIR NO. : AADCR 3616 H ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI RASESH SHAH, A.R. ./*- 1 0 / RESPONDENT BY : SHRI K.C. MATHEWS, SR.DR $'2 1 & / / / / DATE OF HEARING : 19/11/2013 34) 1 & / DATE OF PRONOUNCEMENT : 28/11/2013 5 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT (CIT(A) FOR SHORT) DATED 08/03/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONF IRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.15,0 0,000/- BY TREATING THIRD PARTIES FIXED DEPOSIT IN BANK AS SECURITY IN RESPECT OF LOAN AVAILED BY ASSESSEE COMPANY AS UNEXPLAINED INVESTMENT. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONF IRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.20,1 57/- ON ACCOUNT OF CAPITALIZATION OF INTEREST EXPENSE ON BANK LOAN AVA ILED FOR PURCHASE OF MACHINERY. 3. IT IS THEREFORE PRAYED THAT ABOVE ADDITION/TREATMEN T MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(APPEALS) MAY PLEASE BE DELETED. ITA NO.1959/AHD /2010 M/S.RAGHUPATI TEX CREATION PVT.LTD. VS. ITO ASST.YEAR 2007-08 - 2 - 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 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) O F THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 29/12/2009 PERTAINING TO AY 2007-08. WHILE FRAMING THE ASSES SMENT, THE AO MADE ADDITION OF RS.15 LACS ON ACCOUNT OF THE SECURITY G IVEN BY FIVE PARTIES; NAMELY, SHRI RAKESH RAMESHCHANDRA SHETH, SMT.SANGEETA RAMES H SHETH, SHRI BRIJMOHAN LAKSHMINARYAN SHETH, SHRI GAURANG RAKESH SHETH & SHRI OMKARNATH PANDEY. HE ALSO MADE ADDITION OF RS.20,1 57/- ON ACCOUNT OF CAPITALIZATION OF INTEREST. AGAINST THIS, THE ASSE SSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, DISMISSED THE APPEAL. 3. GROUND NO.1 IS AGAINST THE CONFIRMATION OF ADDIT ION OF RS.15 LACS BY TREATING THIRD PARTIES FIXED DEPOSIT IN BANK AS SEC URITY IN RESPECT OF LOAN AVAILED BY ASSESSEE-COMPANY AS UNEXPLAINED INVESTMENT. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE. HE SUBMITTED THAT THE LD.CIT (A) HAS NOT CONSIDERED THE FACTS AS WELL AS THE JUDGEMENTS. HE SUBMITTED THAT BEFORE THE LD.CIT(A) AS WELL AS THE AO DETAILED SUBMISSIONS WERE MADE AND B OTH THE AUTHORITIES FAILED TO APPRECIATE THE FACT THAT THIS WAS THE FIRST YEAR OF THE BUSINESS OF ASSESSEE- COMPANY AND THE REVENUE HAS NOT PLACED ANYTHING ON RECORD SUGGESTING THAT THE ASSESSEE-COMPANY WAS CARRIED OUT ANY ACTIVITY T HEREBY EARNING THE INCOME. HE ALSO SUBMITTED THAT THE ASSESSEE HAS SUBMITTED T HE PANS, INCOME-TAX RETURNS OF THE PERSONS WHO HAD GIVEN THE SECURITY I N THE FORM OF ITS DEPOSITS. THEREFORE, THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS. HE SUBMITTED THAT THE AO HAS MADE ADDITION MERELY ON THE GROUND THAT THE DEPOSITORS WERE NOT ITA NO.1959/AHD /2010 M/S.RAGHUPATI TEX CREATION PVT.LTD. VS. ITO ASST.YEAR 2007-08 - 3 - PRODUCED. HE SUBMITTED THAT THE LD.CIT(A) HAS FAIL ED TO CONSIDER THE DECISION AS RELIED UPON BEFORE HIM. HE DREW OUR ATTENTION TOWARDS STATEMENT OF FACTS FURNISHED BEFORE THE LD.CIT(A), WHEREIN HE PLACED R ELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS. 1. CIT VS. BHARAT ENGG.&CONSTRUCTION CO. 83 ITR 1 87 (SC) 2. CIT VS. SMT.P.K.NOORJAHAN 237 ITR 570 (SC) 3. MITESH ROLLING MILLS PVT.LTD. VS. CIT 258 ITR 278 (GUJ.) 4. INDIA RICE MILLS VS. CIT 218 ITR 508 (ALL.) 3.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT IT WAS THE DUTY OF THE ASSESSEE T O FURNISH THE RELEVANT EVIDENCE IN SUPPORT OF ITS CLAIM. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS GROUND VIDE HIS ORDER DA TED 03/03/2010, BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FACT OF THE MATTER IS THAT THE A.O. HAS DISCUSSED AT LENGTH IN HIS ORDER THE INADE QUACY OF EVIDENCE, EXPLANATION AND INFORMATION FURNISHED BY THE AR OF THE ASSESSEE/APPELLANT WHICH FORCED THE A.O. TO ASSUME LEADING TO ADDITION . INSPITE OF THAT, EVEN DURING THE APPELLATE PROCEEDINGS THE A.R. HAS NOT F ILED ANY WRITTEN SUBMISSION NOR HAS MADE ANY ORAL ARGUMENTS. THE ONLY BRIEF DE FENCE IS LAID OUT IS ONE AND HALF PAGE STATEMENT OF FACTS. DETAILS LIKE DAT E OF INCORPORATION, OPENING OF BANK ACCOUNT, DATES OF RECEIPTS OF LOAN OR REPAY MENT, IF ANY, SHARING HOLDING PATTERN, COPY OF RETURN FILED TO ROC NOTH ING HAS BEEN FURNISHED. NOT EVEN A SHRED OF PAPER PRODUCED BEFORE ME TO ASC ERTAIN GENUINENESS OF THE CLAIMS MADE BY THE A.R./APPELLANT. SAME IS THE STO RY OF DEFENCE ON OTHER GRIEVANCE. I FIND MYSELF TOTALLY HANDICAPPED TO IN TERFERE IN THE MATTER ONLY ON ACCOUNT OF ABSENCE ANY CREDIBLE EVIDENCE REGARDING VARIOUS CONTENTIONS. EVEN BASIC FACTS ARE NOT MADE AVAILABLE TO ME BY TH E APPELLANT. 4.1. THE LD.CIT(A) HAS REJECTED THE GROUND ON THE B ASIS THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS LIKE DATE OF INCORPORATIO N, OPENING OF BANK ACCOUNT, DATES OF RECEIPTS OF LOAN OR REPAYMENT, IF ANY, SHA RE HOLDING PATTERN AND COPY OF RETURN FILED TO ROC AND NOT EVEN A SHRED OF PAPE R PRODUCED TO ASCERTAIN THE ITA NO.1959/AHD /2010 M/S.RAGHUPATI TEX CREATION PVT.LTD. VS. ITO ASST.YEAR 2007-08 - 4 - GENUINENESS OF THE CLAIMS MADE BY THE A.R. OF THE A PPELLANT. SAME IS THE STORY OF DEFENCE ON OTHER GRIEVANCE. THEREFORE, LD.CIT(A ) WAS TOTALLY HANDICAPPED TO INTERFERE IN THE MATTER ONLY ON ACCOUNT ABSENCE ANY CREDIBLE EVIDENCE REGARDING VARIOUS CONTENTIONS. WE FIND THAT THE AO HAS RECORDED HIS FINDING THAT THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING PR OOF IN SUPPORT OF ITS CLAIM EXCEPT FURNISHING THE COPIES OF INCOME-TAX RETURNS ALONG WITH COMPUTATION AND BALANCE-SHEET OF THE DEPOSITORS. THEREFORE, THE I NCOME-TAX RETURNS AS WELL THE COMPUTATION WERE BEFORE BOTH THE AUTHORITIES. TH E LD.CIT(A) DECIDED THIS ISSUE ON THE BASIS THAT NO DETAILS HAVE BEEN FURNIS HED IN RESPECT OF INCORPORATION OF THE ASSESSEE-COMPANY AND THE RETUR N FILED BEFORE THE REGISTRAR OF COMPANY. IN OUR CONSIDERED VIEW, THE ORDER OF T HE LD.CIT(A) ON THIS ISSUE IS NOT A SPEAKING ORDER AS HE HAS NOT CONSIDERED TH E JUDICIAL PRONOUNCEMENTS AS WELL AS THE EVIDENCE PRODUCED BY THE ASSESSEE IN TH E FORM OF INCOME-TAX RETURNS OF THE DEPOSITORS. THEREFORE, THIS ISSUE I S REMITTED BACK TO THE FILE OF LD.CIT(A) TO DECIDE IT AFRESH, AFTER PROVIDING REAS ONABLE OPPORTUNITIES OF BEING HEARD TO BOTH THE PARTIES. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 5. GROUND NO.2 IS AGAINST THE ADDITION OF RS.20,157 /- ON ACCOUNT OF CAPITALIZATION OF INTEREST EXPENSE ON BANK LOAN AVA ILED FOR PURCHASE OF MACHINERY. THE LD.COUNSEL FOR THE ASSESSEE SUBMIT TED THAT A DETAILED SUBMISSION WAS MADE BEFORE THE LD.CIT(A), BUT LD.CI T(A) HAS NOT DECIDED THIS ISSUE. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDING ON THI S ISSUE. HE HAS MERELY RECORDED THE SUBMISSIONS MADE BY THE ASSESSEE. UND ER THESE CIRCUMSTANCES, ITA NO.1959/AHD /2010 M/S.RAGHUPATI TEX CREATION PVT.LTD. VS. ITO ASST.YEAR 2007-08 - 5 - THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF LD. CIT(A) FOR DECISION AFRESH. THE LD.CIT(A) IS DIRECTED TO PASS A SPEAKING ORDER ON T HIS GROUND AS WELL. HENCE, THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSE S. 7. GROUND NOS.3 & 4 ARE GENERAL IN NATURE REQUIRE N O INDEPENDENT ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ($ %&) ! ! ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/11/2013 8.., '.../ T.C. NAIR, SR. PS 5 1 .&9 :9)& 5 1 .&9 :9)& 5 1 .&9 :9)& 5 1 .&9 :9)&/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. ## & $; / CONCERNED CIT 4. $;() / THE CIT(A)-IV, SURAT 5. 9'%< .& , , / DR, ITAT, AHMEDABAD 6. <( =2 / GUARD FILE. 5$ 5$ 5$ 5$ / BY ORDER, /9& .& //TRUE COPY// > >> >/ // / #+ #+ #+ #+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 25.11.13(DICTATION-PAD 11-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.11.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BE FORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.28.11.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.11.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER