Asst. Commissioner of Income Tax, Circle-2, Belgaum V. Sri. Murgesh R. Nirani & Others (AOP), Belgaum

ITA 196/PAN/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9492 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 23-12-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 19-06-2014
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI LD
• Assessee Lawyers: ASHOK A KULKARNI LD
• Keywords: Unexplained cash credit; Peak credit
• Section: 68; 69; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ,PANAJI BENCH, PANAJI [BEFORE SHRI P. K. BANSAL, AM & SHRI D.T GARASIA, JM ] I.T . A NO . 196/PNJ/2014 A.Y 2001 - 02 ACIT, C ENTRAL C IR - 2, BELGAUM VS. SRI MUR U GESH R.NIRAN I (INDL) ( APPELLANT ) ( RESPONDENT ) I.T.A NO S. 197 TO 200/PNJ/2014 A.Y 2001 - 02 TO 2004 - 05 ACIT, CENTRAL CIR - 2, BELGAUM VS. SRI MURUGESH R.NIRAN I & OTHER (AOP) ( APPELLANT ) ( RES PONDENT ) FOR THE APPELLANT: SHRI ASHA DESAI, LD.DR FOR THE RESPONDENT: SHRI ASHOK A KULKARNI, ADVOCATE, LD.AR DATE OF HEARING: 08 - 01 - 2015 DATE OF PRONOUNCEMENT: 08 - 01 - 2015 / ORDER PER SHRI D.T GARASIA, J M : ALL THESE APPEALS HAVE BEEN FILED BY THE DEPARTMENT AGAINST THE COMMON ORDER OF THE LD. CIT (A) , BANGALORE DATED 28 TH MARCH 2014 FOR THE ASSESSMENT YEARS 2001 - 02 TO 2004 - 05. 2. THE ABOVE APPEALS PERTAIN TO ONE ASSESSEE, THEREFORE, THESE ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FOLLOWING GROUNDS ARE RAISED BY THE DEPARTMENT IN ITA NOS. 196,197,198,199 & 200/PNJ/2014 FOR THE ASSESSMENT YEARS 2001 - 02 TO 2004 - 05: - ITA NO. 196 /PNJ/2014 A.Y 2001 - 02 1. THE LD. CIT(A) HAS E RRED IN GIVING RELIEF OF RS.37,68,375/ - ON ACCOUNT OF UNACCOUNTED CASH CREDITS WHICH THE ASSESSING OFFICER HAD ADDED UNDER SECTION 68 AS UNEXPLAINED CASH CREDITS AS PER THE ORDER UNDER SECTION. 153A. FURTHER, THE ASSESSING OFFICER HAS RECTIFIED THE ORDER UNDER SECTION.154, TREATING THE UNEXPLAINED CASH CREDITS UNDER SECTION. 69 OF THE I.T ACT, 1961. 2 ITA NO S. 196 TO 200/PNJ/2014 - JM SRI MURUGESH R.NIRANI(IND L) . & ORS AOP 2. THE LD.CIT(A) HAS ERRED IN GIVING THE IMPUGNED RELIEF AFTER RELYING ON HER JUDGMENT IN ITA NOS. TR.41/42/43/44/ACIT, CC PANAJI/CIT(A) - VI/BNG /013 - 2014 FOR THE A.Y 2001 - 02 TO 2004 - 05 IN THE CASE OF M/S. NIRANI SUGARS LTD, MUDHOL AND SRI MURUGESH R NIRANI & OTHERS (AOP), MUDHOL, WHICH ARE NOT ACCEPTABLE AND WHICH ARE SEPARATELY BEING CONTESTED. 3. THE APPELLANT CRAVE LEAVE TO TAKE FURT HER ADDITIONAL GROUND IN COURSE OF HEARING OF THE CASE. ITA NOS. 197, 198, 199& 200/PNJ/2014 A.YS 2001 - 02, 02 - 03, 03 - 04 & 04 - 05 1. THE LD.CIT(A) HAS ERRED IN GIVING RELIEF OF RS.1,09,97,469/ - , RS.2,19,98,835/ - , RS.1,48,89,692 / - AND RS.5,91,05,139 / - ON ACCOUNT OF UNDISCLOSED SALES WHICH THE ASSESSING OFFICER HAD ADDED AS ACCOUNTED SALES ON PROTECTIVE BASE. 2. THE LD.CIT(A) HAS ERRED IN GIVING THE IMPUGNED RELIEF WITHOUT APPRECIATING THE FACT THAT THE HON'BLE I.T.A.T. HAD REMANDED THE ISSU E REGARDING THE VALIDITY OF PROVISIONS OF SECTION UNDER SECTION. 153C OF THE I.T ACT TO THE ASSESSEES CASE, WHEREAS, THE LD.CIT(A) CONSIDERED THE ISSUE REGARDING THE EXISTENCE OF THE A.O.P, WHICH WAS ALREADY ESTABLISHED BY THE LD.CIT(A) , PANAJI IN HIS ORDER NO.ITA 2251 TO 228/PNJ/2008 - 09 DATED 27.11.2009. 3. THE APPELLANT CRAVE LEAVE TO TAKE FURTHER ADDITIONAL GROUND IN COURSE OF HEARING OF THE CASE. 4. SHORT FACTS OF THE CASE ARE THAT A SEARCH U /S 132 OF THE ACT WAS CONDU CTED IN THE NIRANI SUGAR LTD OF WHICH THE ASSESSEE HIMSELF WAS THE CHAIRMAN ON 28 - 01 - 2004 . DURING THE COURSE OF SEARCH DUPLICATE SET OF ACCOUNT BOOKS AND SUPPORTING LOOSE SHEETS WERE FOUND AND SEIZED IN WHICH UNACCOUNTED SALES WERE RECORDED. IT WAS FOU ND THAT UNACCOUNTED SALE PROCEEDS HAVE BEEN CREDITED IN THE LEDGER ACCOUNT OF SHRI M.R NIRANI, SHRI S.V BAHETI AND SHRI BHAGWAN M.JAJU. CERTAIN CASH PAYMENTS FOR PURCHASE OF SUGARCANE WERE ALSO FOUND TO BE MADE T HROUGH THE EMPLOYEES OF THE COMPANY. SINC E THE ABOVE SAID PERSONS HAVE JOINTLY EARNED THE INCOME, THEREFORE, THEY WERE TREATED AS AOP . THE AO HAS SCRUTINIZED THE SEIZED BOOKS. HE HAS ALSO VERIFIED THE REGULAR BOOKS AS WELL AS UNACCOUNTED TRANSACTION. THE UNACCOUNTED TRANSACTIONS ARE TRANSFERRED TO DIFFERENT SET OF DAY BOOKS MARKED AS A/ NP /8 12,23,25 & 26 . LATER, T HE UNACCOUNTED TRANSACTIONS ARE SYSTEMATICALLY POSTED IN LEDGERS MARKED AS A/N/2,3,19,20 & 28. ALL THE DAILY ROUGH ACCOUNTS STATEMENTS, TRANSACTIONS IN BE NAMI BANK ACCOUNTS , ADDITI ONAL SUGARCANE WEIGHTMENT SLIPS, GATE PASSES ETC. FOUND AND SEIZED FROM RESIDENCE AND GUEST - HOUSE. SHRI NAROTTAM PAREKH, CASHIER CUM ACCOUNTANT OF THE COMPANY IN HIS STATEMENT HAS STATED THAT ALL THESE ENTRIES HAVE BEEN MADE WITH THE CONSENT AND KNOWLEDGE 3 ITA NO S. 196 TO 200/PNJ/2014 - JM SRI MURUGESH R.NIRANI(IND L) . & ORS AOP OF SHRI MURALIDHAR JAJU, VICE - CHAIRMAN OF M/S. NIRANI SUGARS LTD. AS PER LEDGER ACCOUNTS APPEARING IN THE NO.2 BOOKS, THE PEAK CREDITS IN THE NAMES OF THE MEMBERS ARE AS UNDER: - SHRI M.R NIRANI RS.37,68,375 (OB) FOR THE A.Y 2001 - 02 AND RS. 12,65,620/ - FOR THE A.Y 2002 - 03 SHRI S.V BAHETI (PER CASH LOAN) RS.8,34,642/ - (OB) FOR THE A.Y 2003 - 04 AND RS. 68,89,066/ - FOR THE A.Y 2004 - 05 SHRI BHAGWAN M.JAJU RS.72,29,094/ - (OB) F OR THE A.Y 2001 - 02 5. THE AO HAS VERIFIED THE BOOKS. HE HAS ISSUED SHOW - CAUSE. IN RESPONSE TO SHOW - CAUSE ISSUED, THE ASSESSEE CONTENDED THAT AOP DOES NOT EXIST . BUT THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. HE HAS VERIFIED THE BOOKS AND RELIE D UPON THE STATEMENTS OF SHRI NAROTTAM PAREKH, CASHIER - CUM - ACCOUNTANT OF THE COMPANY . THE AO HAS HELD THAT THE ASSESSEE HAS EARNED UNDISCLOSED INCOME OF RS.1 , 09 , 97 , 469, RS.2 , 19 ,9 8 ,8 35, R S.1 , 48 , 89 , 692 AND RS.5,91,05 , 139 IN THE ASSESSMENT YEARS 2001 - 02, 02 - 03, 03 - 04 AND 04 - 05 RESPECTIVELY. 6. MATTER CARRIED TO LD. CIT(A) AND CIT(A) HAS DISPOSED OF THE APPEALS BY HIS COMMON ORDER BY OBSERVING AS UNDER: - 6. AFTER GOING THROUGH THE ENTIRE ORDERS AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSING OFFICE R, I FIND THAT NO CLEAR EVIDENC ES OF EXISTENCE OF AOP HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER. NO COMMON BANK ACCOUNT IS BROUGHT ON RECORD. FROM THE BILLS AND PERMITS SEIZED., IT IS APPARENT THAT UNACCOUNTED SALES WERE CARRIED OUT ON BEHALF OF THE COMPANY ITSELF. NO EVIDENCE TO SUGGEST THAT THESE 3 PERSONS WERE OPERATING THE BENAMI BANK ACCOUNTS HAS BEEN BROUGHT ON RECORD. AS IS EVIDENT FROM SEIZED BOOKS FOR A.Y 2002 - 03, CREDITS IN N A MES OF A NUMBER OF PERSONS (OTHER THAN THESE 3 PERSONS) IN THE LEDGER ACCOUNTS SEIZED WAS NOTICED. NO EVIDENCE TO LINK THE SAID PERSONS TO THE 3 MEMBERS OF THE AOP AS PROPOSED BY THE ASSESSING OFFICER HAVE BEEN BROUGHT ON RECORD. NO CLEAR EVIDENCE TO SUGGEST THAT THE BOOKS SEIZED BELONG TO THE SAID AOP HAVE BEEN BROUGHT ON RECORD. UNDER SUCH CIRCUMSTANCES, AND IN ABSENCE OF SUBSTANTIAL EVIDENCE WITH REGARD TO EXISTENCE OF AOP AND AS ALSO HELD BY ME IN MY ORDERS OF EVEN DATE IN ITA NOS. TR.41/42/43/44/ACIT,CC PANAJI/CIT(A) - VI/BNG/2013 - 2014 IN THE CASE OF M/S. NIRANI SUGARS LTD FOR A.YS 2001 - 02 TO 2004 - 05, THE ASSESSMENT IN RESPECT OF UNACCOUNTED PROFITS, EVIDENCED FROM THE SEARCH IN THE CASE OF THE COMPANY M /S. NIRANI SUGARS LTD HAS BEEN UPHELD IN THE HANDS OF THE COMPANY, M/S. NIRANI SUGARS L TD. THE ASSESSMEN T IN HANDS OF THE APPELLANT AOP AS PROPOSED BY THE ASSESSING OFFICER, CANNOT BE UPHELD AND THE SAME IS THEREFORE DELETED AS NECESSARY ADDITION HAS BEEN UPHELD IN THE HANDS OF THE COMPANY M/S. NIRANI SUGARS LTD, IN MY ORDER REFERRED TO ABOVE. 7. THE DEPAR TMENT IS IN APPEAL AGAINST THE DECISION OF THE LD.CIT(A). 4 ITA NO S. 196 TO 200/PNJ/2014 - JM SRI MURUGESH R.NIRANI(IND L) . & ORS AOP 8 . WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. W E FIND THAT THE AO WAS OF THE VIEW THAT AOP CONSISTING OF S/SHRI M.R NIRANI, S.V BAHETI AND BHAGWAN M.JAJU . AOPS WERE INDIVIDUALLY ASSESS ED TO TAX IN THE PREVIOUS YEAR ON 28 - 0 - 2004. THEREFORE, A SEARCH U /S 132 OF THE ACT WAS CONDUCTED IN THE PREMISES OF M/S. NIRANI SUGARS LTD AND HIS DIRECTOR AND CONNECTED PERSONS . D URING T HE COURSE OF SEARCH DUPLICATE SETS OF ACCOUNT BOOKS AND SUPPORTIN G LOOSE SHEETS WERE FOUND AND SEIZED. IN THE PROCEEDINGS FOLLOWED THE SEARCH , IT WAS NOTICED THAT CERTAIN UNACCOUNTED SALE PROCEEDS OF SUGAR HAVE BEEN CREDITED IN THE LEDGER ACCOUNTS OF S/SH M.R NIRANI, S.V BAHETI AND BHAGWAN M .JAJU . THE AO HAS VERIFIED ALL THE BOOKS OF ACCOUNT AND AFTER VERIFYING THE BOOKS OF ACCOUNT THE INCOME WAS ASSESSED AS AOP IN THE HANDS OF THE AOP . THE LD.CIT(A) HAS HELD THAT THERE WAS NO EVIDENCE OF EXISTENCE OF AOP . THERE WAS NO EVIDENCE ON RECORD BROUGHT BY THE AO . THE LD.CIT( A) FURTHER HELD THAT NO COMMON BANK ACCOUNT WAS BROUGHT ON RECORD. THE LD.CIT(A) HELD THAT UNACCOUNTED SALES WERE CARRIED OUT ON BEHALF OF THE COMPANY . THE LD.CIT(A) HELD THAT IN THE C A SE OF M/S. NIRANI SUGARS LTD THE UNACCOUNTED PROFIT HAS ALREADY BEEN ORDERED TO TAX AND THE ASSESSEE COMPANY IS NOT IN APPEAL. THEREFORE, WE ARE OF THE VIEW THAT THE LD.CIT(A) IS JUSTIFIED IN HIS ACTION THAT NO ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF AOP . UNACCOUNTED PROFIT/INCOME HAS ALREADY BEEN TAXED IN THE HAN DS OF THE COMPANY. THEREFORE, WE CONFIRM THE ACTION OF THE LD.CIT(A) . 9. IN THE RESULT, APPEAL S OF THE DEPARTMENT ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 - 01 - 2015 SD/ - SD/ - ( P. K. BANSAL ) ( D.T GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08 - 01 - 2015 **PRADIP (SR.P.S.) 5 ITA NO S. 196 TO 200/PNJ/2014 - JM SRI MURUGESH R.NIRANI(IND L) . & ORS AOP COPY OF TH E ORDER FORWARDED TO: 1. A PPELLANT 2 RESPONDENT 3. THE CIT(A) CONCERNED 4. 5. THE CIT CONCERNED THE D . R 6. GUARD FILE TRUE COPY, BY ORDER, ASSTT. REGISTRAR .