Texraj Reality Pvt.Ltd., Ahmedabad V. The ACIT.,Circle-8, Ahmedabad

ITA 20/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80402 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 131; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.20/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) TEXRAJ REALITY PVT.LTD. 16, FOURTH FLOOR AGRAWAL MALL OPP.BHAGWAT VIDYAPITH SG HIGWAY AHMEDABAD-380 060 / VS. THE ASST.CIT CIR-8 AHMEDABAD ' ./ ./ PAN/GIR NO. : AACCT 6305 L ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI G.C. PIPARA, A.R. &''%)( / RESPONDENT BY : SHRI SUBHASH BAINS,CIT-DR ) / DATE OF HEARING 11/09/2014 +,-.) / DATE OF PRONOUNCEMENT 15/10/2014 / 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)-XIV, AHMEDAB AD (CIT(A) IN SHORT) DATED 21/10/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1.1 THE ORDER PASSED U/S.250 ON 21/10/2011 FOR A.Y. 200 8-09 BY CIT(A)-XVI, ABAD UPHOLDING THE ADDITIONS OF RS.5,37 ,21,000 AND DISALLOWANCE OF RS.68,05,325 MADE BY AO IS WHOLLY I LLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 2 - 2.1. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT ADMITTING THE ADDITIONAL EVIDENCE PRODUCED BY THE A PPELLANT WITH REGARD TO THE IMPUGNED ADDITIONS, THOUGH THE CONDIT IONS U/R. 46A WERE DULY SATISFIED. BOTH THE LOWER AUTHORITIES H AVE FAILED TO APPRECIATE FULLY AND PROPERLY THE SUBMISSIONS MADE AND CAUSE ADVANCED BY THE APPELLANT FOR FAILURE TO PRODUCE TH E SAID EVIDENCE BEFORE AO. 3.1. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE DEPOSITS AGGREGATING TO RS.5,37 ,21,000 FROM THREE PARTIES WERE UNEXPLAINED. 3.2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE DEPOSITS AGGREGATING TO RS.5,37,21,000 FROM THREE PARTIES WERE UNEXPLAIN ED. 4.1. THE LD.CIT(A) HAS ERRED IN UPHOLDING THAT THE APPELLANT HAD NOT COMMENCED THE BUSINESS ACTIVITY DURING THE YEAR SO THAT THE EXPENDITURE OF RS.68,05,325 WAS NOT ADMISSIBLE. 4.2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE APP ELLANT HAD NOT COMMENCED THE BUSINESS ACTIVITY DURING THE YEAR SO THAT THE EXPENDITURE OF RS.68,05,325 WAS NOT ADMISSIBLE. 5.1. BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSLY ERR ED IN RELYING UPON THE STATEMENTS OF THE DIRECTORS AND ACCEPTANCE LETT ER FOR THE PURPOSES OF UPHOLDING THE IMPUGNED ADDITION AND DIS ALLOWANCE MADE BY AO. THE APPELLANT DOES NOT ADMIT THE CONCL USIONS DRAWN BY AO AND UPHELD BY THE CIT(A) WITH REGARD TO THE IMPUGNED ADDITION AND DISALLOWANCE IN SO FAR AS THE SAME ARE CONTRARY TO THE EVIDENCE ON RECORD AND PREJUDICIAL TO THE INTEREST OF THE APPELLANT. IT IS, THEREFORE, PRAYED THAT THE ADDITIONS DISALLO WANCE UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 2. BRIEFLY STATED FACTS ARE THAT A SURVEY PROCEED INGS U/S.133A OF THE INCOME TAX ACT, 1961 ((HEREINAFTER REFERRED TO AS THE ACT) WAS CONDUCTED UPON THE ASSESSEE AT ITS REGISTERED OFFIC E PREMISES. DURING THE ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 3 - COURSE OF SURVEY PROCEEDINGS, A STATEMENT ON OATH U /S.131 OF THE ACT OF SHRI DEVEN RAMESHBHAI PATEL SON OF SHRI RAMESHBHAI PATEL, DIRECTOR OF THE COMPANY AND SHRI VISHNUBHAI PATEL, DIRECTOR OF THE COMPANY WAS RECORDED. BOTH THE DIRECTORS SUBMITTED ON OATH THA T ALTHOUGH THE CONFIRMATIONS WERE NOT READILY AVAILABLE WITH THEM BUT THEY WOULD BE ABLE TO FURNISH THE CONFIRMATIONS OF ALL PERSONS EX CEPT OF M/S.JUPITER BUSINESS LTD. OF RS.3,45,00,000/- AND OF M/S.SUDARS HAN ENTERPRISE OF RS.1,90,65,000/-. THE AO MADE ADDITION OF RS.5,37, 21,000/- U/S.68 OF THE ACT AND DISALLOWED THE EXPENDITURE AMOUNTING TO RS.68,05,325/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. 3. GROUND NO.1.1 OF THE ASSESSEES APPEAL IS GENERA L IN NATURE REQUIRES NO INDEPENDENT ADJUDICATION. 4. GROUND NO.2.1 IS AGAINST THE DENIAL OF ADDITIONA L EVIDENCES. APROPOS TO GROUND NO.2.1, THE LD.COUNSEL FOR THE AS SESSEE HAD MADE WRITTEN SUBMISSIONS AND REITERATED THE STATEMENT OF FACTS. 4.1. ON THE CONTRARY, THE LD.CIT-DR SHRI SUBHASH BA INS SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) . HE SUBMITTED THAT FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS EVIDENT THAT THE DIRECTORS OF THE COMPANY HAVE ADMITTED THE FACT THA T THE LOANS OF RS.3,45,00,000/- AND RS.1,90,65,000/- WERE MERELY ENTRIES FROM M/S.JUPITER BUSINESS LTD. AND M/S.SUDARSHAN ENTERPR ISE. HE SUBMITTED THAT THE STATEMENTS WERE TAKEN ON OATH, THEREFORE S UBSEQUENTLY THE ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 4 - ADDITIONAL EVIDENCES ARE AFTERTHOUGHT AND IT CANNOT BE RELIED UPON WHICH HAS RIGHTLY DONE BY THE AUTHORITIES BELOW. 4.2. IN REJOINDER, THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT DURING THE COURSE OF HEARING THE APPEAL BEFORE THE LD.CIT(A), THE CONFIRMATIONS OF TWO PARTIES, I.E. M/S.JUPITER BUS INESS LTD. AND M/S.SUDARSHAN ENTERPRISE WERE SUBMITTED ALONG WITH THE WRITTEN SUBMISSIONS IN SUPPORT OF ADDITIONAL EVIDENCE UNDER RULE 46A. HE DREW OUR ATTENTION TOWARDS PAGE NOS.32 TO 44 OF THE PAPE R-BOOK. HE SUBMITTED THAT THE LD.CIT(A) SENT THESE ADDITIONAL EVIDENCES TO THE AO FOR HIS COMMENT. THE AO IN ITS REPORT DATED 16/08/2011, COP Y OF WHICH WAS PROVIDED TO THE ASSESSEE AND THE ASSESSEE HAS MADE SUBMISSION DATED 07/09/2011 ON THE REMAND REPORT SUBMITTED BY THE AO . HE SUBMITTED THAT THE LD.CIT(A) HAS OBSERVED THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES AS THERE WAS A TIME OF MORE THAN ONE MONTH BETWEEN THE DATE OF SURVEY AND THE PASSING OF ORDER BY THE A.O. THE APPELLANT DID NOT FURNISH THE CONFIRMATION NOR DID HE SEEK ANY TIME F ROM THE AO ON THIS ACCOUNT AND, ACCORDINGLY, ADDITIONAL EVIDENCES SUBM ITTED BY THE APPELLANT WERE NOT CONSIDERED. HE SUBMITTED THAT O UT OF 39 CREDITORS, 36 CONFIRMATIONS WERE OBTAINED. HE SUBMITTED THAT S INCE NO SUFFICIENT OPPORTUNITIES WAS GRANTED DURING THE COURSE OF ASSE SSMENT PROCEEDING TO ENABLE THE APPELLANT TO PRODUCE THESE CONFIRMATIONS ON THE FILE OF THE AO, THE APPELLANTS CASE FALLS UNDER CLAUSE (B) AND (C) OF SUB-RULE (1) OF RULE 46A. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF P RABHAVATI SHAH VS. CIT (231 ITR 1) AND JUDGEMENT OF THE HONBLE GUJARA T HIGH COURT RENDERED IN THE CASE OF CIT VS. DHARMDEV FINANCE (P ) LTD. (2014) 43 ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 5 - TAXMANN.COM 395. HE ALSO RELIED ON THE DECISION OF ITAT NEW DELHI BENCH B RENDERED IN THE CASE OF DHANNA RAM GARG V S. ITO (2014) 15 TAXMANN.COM 104 (DELHI), DECISION OF ITAT MUMBAI BE NCH RENDERED IN THE CASE OF SHAHRUKH KHAN VS. DY.CIT (2007) 13 SOT 61 (MUM.) AND JUDGEMENT OF HONBLE SUPREME COURT RENDERED IN THE CASE OF TEKRAM VS. CIT REPORTED AT 357 ITR 133. 5. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE JUDGEMENTS/DECISIONS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE ON TH IS ISSUE AS GIVEN IN WRITTEN SUBMISSIONS WERE AS UNDER:- 1. SEQUENCE OF EVENTS : 13/03/2007 COMPANY WAS INCORPORATED 31/03/2007 FIRST YEAR OF THE COMPANY ENDED 31/03/2008 SECOND YEAR OF THE COMPANY ENDED 15/07/2008 AUDITED BALANCE SHEET FOR A.Y. 2008-09 ( PAGE NO.3 TO 16 OF THE PAPER BOOK) 03/12/2008 RETURN OF INCOME FOR A.Y. 2008-09 FILED (PAGE NO.1 TO 2 OF THE PAPER BOOK) 20/08/2009 NOTICE U/S.143(2) ISSUED 24/11/2010 SURVEY U/S.133A 24/11/2010 STATEMENT OF THE DIRECTOR RECORDED U/S.1 31 DURING THE COURSE OF SURVEY (PAGE NO.21 TO 29 OF THE PAPER BOOK) 30/12/2010 36 CONFIRMATION WERE SUBMITTED TO THE A. O. OUT OF THE TOTAL 39 PARTIES (PARA NO.4 OF THE ASSESSMENT ORDE4R) 30/12/2010 ASSESSMENT COMPLETED U/S.143(3) WITH THE ADDITION OF RS.5,37,21,000/- FOR THE 3 DEPOSITORS WHOSE CONFIRMATION COULD NOT BE FURNISHED. ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 6 - 2. DURING THE COURSE OF APPEAL BEFORE THE CIT(A), T HE CONFIRMATION OF THE 2 PARTIES VIZ. JUPITER BUSINESS LTD. AND SUDARSHAN E NTERPRISE WERE SUBMITTED ALONG WITH WRITTEN SUBMISSION IN SUPPORT OF PRODUCI NG ADDITIONAL EVIDENCE UNDER RULE 46A (PLACED ON PAGE NO.32 TO 44 OF THE P APER BOOK). 3. THE CIT(A) HAVING ADMITTED THE ADDITIONAL EVIDE NCE, SENT THE SAME TO THE A.O. FOR HIS COMMENTS VIDE LETTER DATED 25/07/2011 OF THE CIT(A). 4. A.O. SUBMITTED REPORT VIDE LETTER DATED 16/08/ 2011 (PLACED ON PAGE NO.45 TO 50 OF THE PAPER BOOK). 5. COPY OF THE REMAND REPORT WAS PROVIDED TO THE A PPELLANT AND APPELLANT HAS MADE THE SUBMISSION DATED 7/9/2011 ON THE REMAN D REPORT SUBMITTED BY THE A.O. [THE SAID SUBMISSION IS REPRODUCED ON PAG E NOS.12 TO 17 OF THE ORDER OF THE CIT(A)]. 6. CIT(A) HAS OBSERVED ON PAGE NO.18 OF THE ORD ER THAT THE A.O. GAVE SUFFICIENT OPPORTUNITIES. THERE WAS A TIME OF MORE THAN ONE MONTH BETWEEN THE DATE OF SURVEY AND THE PASSIN G OF ORDER BY THE A.O. THE APPELLANT DID NOT FURNISH THE CONFIRMATI ON NOR DID HE SEEK ANY TIME FROM THE AO ON THIS ACCOUNT. AND ACCORDINGLY, ADDITIONAL EVIDENCE SUBMITTED BY T HE APPELLANT WERE NOT CONSIDERED. 7. IT IS RESPECTFULLY SUBMITTED THAT DURING THE PE RIOD OF ONE MONTH (APPROX.) BE3TWEEN THE DATE OF SURVEY AND ASSESSMENT ORDER, 3 6 CONFIRMATIONS COULD BE OBTAINED OUT OF THE 39, AND SINCE THERE WAS LARGE N UMBER OF CONFIRMATIONS TO BE OBTAINED, THOSE TWO CONFIRMATIONS COULD BE OBTAI NED BY THE APPELLANT AFTER THE ASSESSMENT, AND SINCE NO SUFFICIENT OPPORTUNITY WAS GRANTED DURING THE COURSE OF ASSESSMENT PROCEEDING TO ENABLE THE APPEL LANT TO PRODUCE THESE CONFIRMATIONS ON THE FILE OF THE A.O., THE APPELLAN TS CASE FALLS UNDER CLAUSE (B) AND (C) OF SUB-RULE (1) OF RULE 46A. 8. LEGAL POSITION: (I) BOMBAY HIGH COURT, IN THE CASE OF PRABHAVATI SHAH VS. CIT, 231 ITR 1, (RELIED UPON IN THE SUBMISSION BEFORE THE CI T(A) AND RELEVANT FINDING IS ON PAGE NO.39 TO 40 OF THE PAPER BOOK). ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 7 - (II) GUJARAT HIGH COURT, IN THE CASE OF CIT VS. DHA RAMDEV FINANCE (P) LTD., (2014) 43 TAXMAN.COM 395 (PAGE NO.51 TO 5 4). (III) ITAT, NEW DELHI BENCH B IN THE CASE OF D HANNA RAM GARG VS. ITO (2014) 15 TAXMANN.COM 104 (DELHI) (PAGE NO.55 T O 57). (IV) ITAT, MUMBAI BENCH, IN THE CASE OF SHAHRUKH KH AN VS. DY.CIT (2007) 13 SOT 61 (MUM.) (PAGE NO.58 TO 61). (V) SUPREME COURT, 357 ITR 133, IN THE CASE OF TEKR AM VS. CIT WHERE DOCUMENTS WERE OF SOME RELEVANCE AND SHOULD BE LOOKED INTO BY HIGH COURT. 5.1. WE FIND THAT THE LD.CIT(A) HAS NOT ADMITTED TH E ADDITIONAL EVIDENCES AND THE LD.CIT(A) HAS HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE REPORT SUBMITTED BY THE A.O. IT IS NOTED THAT DURI NG THE COURSE OF SURVEY, AN STATEMENT OF THE DIRECTORS WERE RECORDED U/S.131 OF THE I.T. ACT. THEY WERE ASKED VARIOUS QUESTIONS DURING THE STATEMENTS AND WERE ALSO ASKED CONFIRMATION ABOUT VARIOUS DEPOSITORS FO UND NOTED IN THE DOCUMENTS. THE DIRECTOR SHRI DEVENBHAI PATEL IN REPLY TO QUESTION NO.17 HAD SPECIFICALLY MENTIONED THAT HE IS NOT IN A POSITION TO GIVE THE CONFIRMATION IN RESPECT OF THE DEPOSITS OF SUDARSHA N ENTERPRISE AND M/S.JUPITER BUSINESS LIMITED. IT WAS FURTHER ACCEP TED BY HIM THAT THESE DEPOSITS WERE NOT GENUINE AND IT WAS THEIR MONEY WH ICH HAS BEEN BROUGHT AS DEPOSIT. HE STATED THAT REST OF THE DEP OSITORS WERE GENUINE AND HE WILL FURNISH CONFIRMATION IN RESPECT OF THOS E DEPOSITS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT SUBMITTED THE CONFIRMATIONS IN RESPECT OF MANY DEPOSITORS, BUT DI D NOT SUBMIT CONFIRMATION IN RESPECT OF M/S.JUPITER BUSINESS LTD AND M/S.SUDARSHAN ENTERPRISE. THE A.O. GAVE SUFFICIENT OPPORTUNITIES . THERE WAS A TIME OF MORE THAN ONE MONTH BETWEEN THE DATE OF SURVEY AND THE PASSING OF ORDER BY THE A.O. THE APPELLANT DID NOT FURNISH TH E CONFIRMATION NOR DID HE SEEK ANY TIME FROM THE AO ON THIS ACCOUNT. ACCORDINGLY IN VIEW OF THE ABOVE FACTS AND CIRCUMST ANCES, I AM OF THE OPINION THAT THERE WAS NO SUFFICIENT CAUSE WITH THE APPELLANT FOR NOT PRODUCING THE EVIDENCE WHICH HE IS NOW PRODUCING DU RING THE COURSE OF ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 8 - APPELLANT PROCEEDINGS. FURTHER, THE A.O. HAS NOT R EFUSED TO ADMIT ANY EVIDENCE THAT THE APPELLANT SOUGHT TO PRODUCE BEFOR E HIM. THEREFORE, THE ADDITIONAL EVIDENCE SUBMITTED BY THE APPELLANT IS NOT ADMITTED. 5.2. FROM THE AFORESAID DECISION, IT IS EVIDENT THA T IN THE OPINION OF LD.CIT(A), THE ASSESSEE WAS GIVEN SUFFICIENT OPPORT UNITY TO PRODUCE EVIDENCES IN SUPPORT OF ITS CLAIM THAT THE TRANSACT IONS WERE GENUINE. THE LD.CIT(A) ALSO RELIED UPON THE STATEMENT OF THE DIR ECTORS RECORDED UNDER SECTION 131 OF THE ACT, WHEREIN THE DIRECTORS HAVE ADMITTED THAT THE TRANSACTIONS IN QUESTION ARE NOT GENUINE. THE CASE OF THE ASSESSEE IS THAT THE STATEMENTS RECORDED U/S.131 OF THE ACT CANNOT B E TREATED AS MATERIAL EVIDENCES AND NO ADDITION CAN BE MADE IN VIEW OF TH E VARIOUS JUDICIAL PRONOUNCEMENTS AS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. 5.3. THERE IS NO DISPUTE SO FAR AS STATEMENTS OF TH E DIRECTORS ARE CONCERNED, WHICH WERE RECORDED U/S.131 OF THE ACT. WE FIND THAT AT PAGE NOS.21 TO 29 ARE THE STATEMENTS RECORDED ON OATH UN DER SECTION 131 OF THE ACT, WHEREIN THE DIRECTORS HAVE STATED IN REPLY TO QUESTION NO.14 ABOUT THE LOAN TAKEN BY THE ASSESSEE DURING THE F.Y. 2007 -08. FURTHER, IN REPLY TO QUESTION NO.15, IT IS STATED BY THE DIRECTORS TH AT THE CONFIRMATION OF LOAN FROM M/S.JUPITER BUSINESS LTD. AND M/S. SUDARS HAN ENTERPRISES CANNOT BE FURNISHED AS THESE TRANSACTIONS ARE MEREL Y BOOK ENTRIES BY WHICH THE UNACCOUNTED MONEY OF THE ASSESSEE-COMPANY IS ROUTED. ACCORDINGLY, THE DIRECTORS SURRENDERED AN AMOUNT OF RS.5,35,65,000/- AND OFFERED THE SAME AS UNEXPLAINED CASH CREDIT FOR THE AY 2008-09. THUS, UNDISPUTEDLY, IN THE STATEMENTS OF DIRECTORS HAVE STATED THAT ABOUT TWO TRANSACTIONS ARE NOT GENUINE. THERE IS NO RETR ACTION OF SUCH STATEMENT ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 9 - IS ON RECORD. THE AO PROCEEDED TO MAKE ADDITION IN RESPECT OF TWO TRANSACTIONS APART FROM THE ADDITION MADE IN THE CA SE OF M/S.HARIOM INDUSTRIES. SUBSEQUENTLY, BEFORE THE LD.CIT(A), TH E ASSESSEE MADE AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES. THE APPLICATION SO FILED WAS SENT TO THE AO FOR HIS COMMENTS. THE AO OBJECTED TO ADMIT THE ADDITIONAL EVIDENCES AND THE LD.CIT(A) ACCEPTIN G THE OBJECTION OF THE AO, DECLINED TO ADMIT THE ADDITIONAL EVIDENCES. 5.4. BEFORE THE LD.CIT(A), THE ASSESSEE HAD RELIED ON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF PRABHAVATI SHAH VS. CIT (231 ITR 1). BEFORE THE LD.CIT(A), THE AS SESSEE FILED CONFIRMATION DATED 10/05/2011 AND 02/05/2011 RESPEC TIVELY FROM M/S.JUPITOR BUSINESS LTD. AND M/S.SUDARSHAN ENTERPR ISE, WHICH ARE ENCLOSED AT PAGE NO2.43 & 44 OF THE PAPER-BOOK, WHE REIN BOTH THE PARTIES HAVE CONFIRMED THE CREDIT OF RS.3,45,00,000 /- AND RS.2,10,00,000/- RESPECTIVELY IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE- COMPANY. THE OBJECTION OF THE AUTHORITIES BELOW FO R NOT ADMITTING THE ADDITIONAL EVIDENCES WAS THAT THE DIRECTORS OF THE COMPANY HAVE ADMITTED ENTRY STATEMENT RECORDED ON OATH U/S.131 O F THE ACT THAT THE TRANSACTIONS ARE NOT GENUINE. THE LD.COUNSEL FOR T HE ASSESSEE RELIED UPON THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT REN DERED IN THE CASE OF CIT VS. DHARAMDEV FINANCE (P.) LTD. REPORTED AT (20 14) 43 TAXMANN.COM 395 (GUJARAT). THE FACTS OF THE CASE A RE DIFFERENT FROM THE FACTS OF THE PRESENT CASE, THEREFORE THIS JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT DOES NOT HELP TO THE ASSESSEE. THE LD.C OUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE IT AT DELHI BENCH B ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 10 - RENDERED IN THE CASE OF DHANNA RAM GARG VS. ITO REP ORTED AT (2011) 15 TAXMANN.COM 104 (DELHI), WHERE THE ISSUE BEFORE THE TRIBUNAL WAS WHETHER THE ADMISSIBILITY OF ADDITIONAL EVIDENCES I S TO BE DECIDED AT FIRST STAGE AVAILABLE UNDER SUB-RULE (1) OF RULE 46A AND FOR SAID PURPOSE COMMISSIONER (APPEALS) NEED NOT CALL FOR A REMAND R EPORT FROM ASSESSING OFFICER. IN THE CASE IN HAND, UNDISPUTED LY, THE LD.CIT(A) HAD SOUGHT COMMENTS FROM THE AO IN RESPECT OF THE ADMIS SIBILITY OF EVIDENCE. IN THE DECISION OF HONBLE ITAT MUMBAI BENCH I RENDERED IN THE CASE OF SHAHRUKH KHAN VS. DY.CIT REPORTED A T (2007) 13 SOT 61 (MUM.), WHEREIN THE COORDINATE BENCH OF THIS TRIBUN AL HAS HELD THAT WHETHER AFTER CALLING OF REMAND REPORT ON MERIT AS CONTEMPLATED IN SU- RULE(3) OF RULE 46A, COMMISSIONER (APPEALS) WAS PRE CLUDED WITH HIS DISCRETION FOR REFUSING TO ADMIT ADDITIONAL EVIDDNC E. THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF HONBL E GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. SAAKEEN ALLOYS (P.) LTD. REPORTED AT (2014) 46 TAXMANN.COM 42 (GUJ.). SINCE THE DECISIO N HAS BEEN RENDERED IN RELATION TO THE EXCISE LAW, THE SAME DOES NOT HE LP TO THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE HAS ALSO RELIED ON THE DECISION OF THE HONBLE ITAT MUMBAI BENCH F RENDERED IN THE CASE OF UNITE X PRODUCTS LTD. VS. ITO REPORTED AT (2008) 22 SOT 429 (MUM.), WHEREIN T HE TRIBUNAL HAS HELD THAT WHETHER SECTION 133A(3)(III) AUTHORIZES A UTHORITY TO RECORD STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDINGS UNDER ACT; HOWEVER, OFFICER IS NOT AUTH ORIZED TO RECORD STATEMENT ON OATH AND HENCE, STATEMENT TAKEN DURING COURSE OF SURVEY HAS NOT EVIDENTIARY VALUE; IT IS SIMPLY AN INFORMATION WHICH CAN BE USED FOR ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 11 - CORROBORATION PURPOSE FOR DECIDING ANY ISSUE IN FAV OUR OR AGAINST, ASSESSEE. 5.5. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) OUGHT TO HAVE EX AMINED WHETHER THESE CONFIRMATIONS ARE FABRICATED OR GENUINE. IN VIEW OF THE FACTS THAT THE DIRECTORS OF THE ASSESSEE-COMPANY CATEGORICALLY STATED THAT THESE TRANSACTIONS ARE NOT GENUINE. IF THE TRANSACTIONS ARE GENUINE AND IT IS PROVED SO, IN THAT EVENTUALITY SUCH AMOUNT CANNOT B E TAXED AND IN CASE, IF IT IS PROVED THAT THE CONFIRMATIONS ARE FABRICATED OR NOT GENUINE, OTHERWISE CREATED TO MAKE NON-GENUINE TRANSACTION A S GENUINE TRANSACTION, IN THAT EVENTUALITY THE CRIMINAL LIABI LITY WOULD BE ATTRACTED UNDER THE VARIOUS PROVISIONS OF THE ACT. IT IS SE TTLED LEGAL POSITION OF LAW THAT IF ANY CREDIT ENTRIES REFLECTED INTO THE ACCOU NT OF THE ASSESSEE THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE C REDITORS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITO RS. IN THE INSTANT CASE, OUT OF THESE THREE INGREDIENTS, THE ASSESSEE HAS ES TABLISHED THE IDENTITY OF THE CREDITORS BY FURNISHING THE PANS AND CONFIRMATI ON FROM SUCH CREDITORS ALTHOUGH AT THE STAGE OF CIT(A). HOWEVER , THE OTHER TWO INGREDIENTS ARE REQUIRED TO BE ESTABLISHED BY THE A SSESSEE. THEREFORE, TO MEET THE ENDS OF JUSTICE, WE HEREBY SET ASIDE THE O RDER OF THE LD.CIT(A) AND THIS ISSUE IS REMITTED BACK TO THE FILE OF THE AO FOR DECISION AFRESH IN ACCORDANCE WITH LAW. IT IS CLARIFIED THAT THE AO W OULD BE AT LIBERTY TO MAKE NECESSARY ENQUIRIES IN RESPECT OF THE GENUINEN ESS OF THE TRANSACTIONS AND ALSO AUTHENTICITY OF THE EVIDENCE AS FILED BY THE ASSESSEE ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 12 - IN THE FORM OF CONFIRMATION LETTERS AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 6. GROUND NOS.2.1, 3.1 AND 3.2 ARE INTER-RELATED. SINCE WE HAVE ALLOWED GROUND NO.2.1 OF THE ASSESSEES APPEAL FOR STATISTICAL PURPOSES, GROUND NOS.3.1 & 3.2 ARE ALSO RESTORED BACK TO THE FILE OF AO FOR DECISION AFRESH. 7. APROPOS TO GROUND NOS.4.1 & 4.2, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN C ONFIRMING THE DISALLOWANCE OF EXPENDITURE. HE SUBMITTED THAT IN SUPPORT OF THE CONTENTION THAT THE BUSINESS OF ASSESSEE HAD ALREA DY COMMENCED, THE RELIANCE WAS PLACED ON THE FOLLOWING JUDGEMENTS:- (I) CIT VS. SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD . [91 ITR 170 (GUJ.]. (II) PREM CONDUCTORS PVT.LTD. VS. CIT [108 ITR 654 (GUJ. )] (III) SARABHAI MANAGEMENT CORPORATION LTD. VS. CIT [102 I TR 25 (GUJ.)]. (IV) CIT VS. SARABHI MANAGEMENT CORPORATION LTD. [192 IT R 151 (SC)]. 7.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT NON-CONSIDERATION OF THE CASE-LAWS IS NOT JUSTIFIED AND HAS RESULTED INT O GROSS MISCARRIAGE OF JUSTICE. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 13 - 8. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL THE JUDGEMENTS RELIED UPON BY THE LD.COUNSEL FOR THE AS SESSEE. WE FIND THAT AO HAS DECIDED THIS ISSUE BY OBSERVING AS UNDER:- 5. FROM A PERUSAL OF THE P&L A/C. OF THE ASSESSEE IT WAS NOTICED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.68053 25/- AS EXPENDITURE. THE ASSESSEE HAD NOT COMMENCED ANY CO MMERCIAL OR BUSINESS ACTIVITY DURING THE YEAR. THEREFORE THE E NTIRE EXPENDITURE WAS LIABLE TO BE DISALLOWED. THE ASSESSEE FILED A LETTER DATED NIL ACCEPTING A DISALLOWANCE OF RS.1780026/- FOR THE YE AR. HOWEVER, THE CORRECT FIGURE OF DISALLOWANCE IS RS.6805325/-. AS PER SETTLED LEGAL POSITION IN THIS REGARD EXPENSES INCURRED PRI OR TO THE COMMENCEMENT OF BUSINESS ARE NOT ALLOWABLE EXPENDIT URES UNDER THE ACT. THEREFORE THIS ENTIRE EXPENDITURE OF RS.6 805325/- IS DISALLOWED. 8.1. THE LD.CIT(A) HAS CONFIRMED THE ADDITION BY OB SERVING AS UNDER:- 3.3. DECISION : I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS GIVEN BY THE APPELLANT. IT IS NOTED THAT THE APPEL LANT HAS ACCEPTED THE DISALLOWANCE THAT WAS PROPOSED BY THE AO AT THE ASSESSMENT STAGE. THE A.O. HAS TAKEN THE CORRECT FIGURE OF DI SALLOWANCE AT RS.68,05,325/- IN PLACE OF RS.17,80,026/- MENTIONED BY THE APPELLANT IN THE ACCEPTANCE LETTER. THE PLEA OF TH E APPELLANT NOW THAT THE EXPENDITURE IS ADMISSIBLE AS THE DEVELOPME NT WORK IS A CONTINUOUS PROCESS CANNOT BE ACCEPTED IN VIEW OF TH E LETTER OF ACCEPTANCE SUBMITTED BY APPELLANT AT ASSESSMENT STA GE. THE APPELLANT HAS NOT MENTIONED ANY CLARIFICATION REGAR DING THE LETTER. THE ACTION OF THE A.O. IN DISALLOWING THE EXPENSES TREATING THEM AS EXPENSES PRIOR TO THE COMMENCEMENT OF BUSINESS IS U PHELD AND THE GROUND OF APPEAL IS DISMISSED. 8.2. ADMITTEDLY, BEFORE THE LD.CIT(A) VARIOUS JUDGE MENTS WERE RELIED UPON BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. THERE IS NO WHISPER AS ITA NO.20/AHD/2 012 TEXRAJ REALITY PVT.LTD. VS.ACIT ASST.YEAR 2008-09 - 14 - TO HOW THESE JUDGEMENTS ARE NOT APPLICABLE ON THE F ACTS OF THE PRESENT CASE. TO MEET THE ENDS OF JUSTICE, THE ORDER OF LD .CIT(A) IS SET ASIDE ON THIS ISSUE AND MATTER IS RESTORED TO THE FILE OF AO FOR DECISION AFRESH. THE AO WOULD PASS A SPEAKING ORDER AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF THE JUDGEMENTS RELIED UPON BY THE ASSESSEE. 9. GROUND NO.5.1 IS GENERAL IN NATURE REQUIRES NO I NDEPENDENT ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 10/2014 2..,.../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XIV, AHMEDABAD 5. 78& 45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;< / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD