M/s. Mona Tex, Surat V. The Income tax Officer,(OSD)-III, Surat

ITA 2044/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94481 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: R N VEPARI
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO. 2044/AHD/2011 / ASSESSMENT YEAR: 2006-07 M/S. MONA TEX, R-14, BOMBAY MARKET, UMARWADA, SURAT PAN: AAEFM 0626 L VS. THE INCOME-TAX OFFICER OSD-III, RANGE-2, SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI R.N. VEPARI, AR REVENUE BY : SHRI DINESH SINGH, SR DR / DATE OF HEARING : 14/09/2015 / DATE OF PRONOUNCEMENT: 29/09/2015 / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, SU RAT DATED 15.06.2011 FOR ASSESSMENT YEAR 2006-07. 2. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UN DER:- 1. VALIDITY OF THE ORDER:- THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS BAD AS HE HAS NOT TAKEN INTO CONSIDERATION SUBMISSI ON DATED 24.06.2010. 3. THIS GROUND WAS NOT PRESSED BY THE LEARNED COUNS EL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US; ACCORDIN GLY, THE SAME IS REJECTED AS NOT PRESSED. ITA NO. 2044/AHD/2011 M/S. MONA TEX VS. ITO AY 2006-07 2 3. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UN DER:- (II) ADDITION OF UNSECURED LOANS RS.29,80,000/- (1)THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) H AS ERRED IN SUSTAINING ADDITION OF RS.29,80,000/- IN RESPECT O F ELEVEN DEPOSITORS WHEN THE APPELLANT HAD FURNISHED NECESSA RY EVIDENCES REGARDING IDENTITY AND CREDIT WORTHINESS OF THE DEPOSITORS. IN THE BACKGROUND OF THE ABOVE EVIDENC ES, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE DELETED THE ADDITION. (2) THE SUSTAINABILITY OF THIS ADDITION SHOULD HAVE ALSO BEEN DECIDED ON THE BASIS OF THE INQUIRY OFFICERS REPORT THAT G OES TO THE ROOT OF THE CASE, ON REMAND OF THE MATTER BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE CIT(A) SUSTAINED THE ADDITION U/S 68 FOR CASH CREDIT IN THE ACCOUNT OF 11 PARTIES AMOUNTING TO RS.29,80,000 /-. ALL THE CREDITORS ARE ASSESSED TO INCOME-TAX AND THEIR CONFIRMATIONS WERE PRODUCED BEFORE THE LOWER AUTHORITIES. HOWEVER, THE ADDITIO NS HAVE BEEN SUSTAINED MAINLY ON THE GROUND THAT THE CASH MONEY WAS DEPOSITED IN THE BANK ACCOUNT OF THE CREDITORS IMMEDIATELY BEFOR E THE ISSUE OF CHEQUE TO THE ASSESSEE. SUCH CASH DEPOSIT WAS MADE BY THE EMPLOYEE OF THE ASSESSEE AS PER DIRECTION OF THE PARTNER OF THE ASSESSEE-FIRM. SUCH EMPLOYEE OF THE ASSESSEE STATED BEFORE THE ASSESSIN G OFFICER THAT HE DEPOSITED THE CASH AFTER COLLECTING THE SAME FROM T HE CREDITORS. THE CREDITORS DID NOT APPEAR BEFORE THE ASSESSING OFFIC ER DESPITE THE ISSUANCE OF NOTICE U/S 131. THE ASSESSEE WAS ASKED TO PRODUCE THEM, BUT THE ASSESSEE ALSO DID NOT PRODUCE THEM. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL CONTENDED THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE A PEX COURT IN THE ITA NO. 2044/AHD/2011 M/S. MONA TEX VS. ITO AY 2006-07 3 CASE OF CIT VS. ORISSA CORPORATION (P) LTD, REPORTE D IN (1986) 159 ITR 0078, WHEREIN ALSO ALL THE CREDITORS ARE ASSESSED T O INCOME-TAX AND THEIR CONFIRMATIONS WERE PRODUCED BEFORE THE ASSESS ING OFFICER. IT WAS CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENT ATIVE THAT THE FACTS IN THE ASSESSEES CASE IS DIFFERENT THAN THE FACTS BEFORE THE HONBLE APEX COURT IN THE CASE OF ORISSA CORPORATION (P) LT D (SUPRA). IN THE CASE OF THE ASSESSEE, THE CASH IS DEPOSITED IN THE BANK ACCOUNT OF THE CREDITORS BY THE ACCOUNTANT OF THE ASSESSEE. IT WA S ALSO ADMITTED BY HIM THAT SUCH CASH WAS DEPOSITED AT THE INSTRUCTION OF THE PARTNER OF THE ASSESSEE-FIRM. IN THE ABOVE CIRCUMSTANCES, IT WAS ESSENTIAL TO ASCERTAIN WHETHER THE CASH DEPOSITED BY THE ACCOUNT ANT OF THE ASSESSEE IN THE ACCOUNTS OF THE CREDITOR WAS GIVEN BY THE CR EDITOR OR BY THE ASSESSEE. IN VIEW OF THESE PECULIAR FACTS, RECORDI NG OF THE STATEMENT OF THE CREDITOR WAS ESSENTIAL. 5. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, WE AGREE WITH THE CONTENTION OF THE LEAR NED DEPARTMENTAL REPRESENTATIVE THAT IN VIEW OF THE PECULIAR FACTS O F THE ASSESSEES CASE THE DECISION OF HONBLE APEX COURT IN THE CASE OF O RISSA CORPORATION (P) LTD (SUPRA) MAY NOT BE APPLICABLE AND RECORDING OF THE STATEMENT OF THE CREDITOR IS ESSENTIAL SO AS TO ASCERTAIN WHO SE MONEY WAS ACTUALLY DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR, WHET HER IT WAS UNACCOUNTED CASH OF THE ASSESSEE OR IT WAS THE CASH IN HAND OF THE CREDITOR. THEREFORE, WE SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSE SSING OFFICER. WE DIRECT THE ASSESSEE TO PRODUCE ALL THE 11 CREDITORS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL RECORD THEIR S TATEMENTS AND WILL ITA NO. 2044/AHD/2011 M/S. MONA TEX VS. ITO AY 2006-07 4 ALSO CONSIDER THE EXPLANATION/EVIDENCES AS MAY BE F URNISHED BY THEM AND THEREAFTER READJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. 6. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UN DER:- (III) ENHANCEMENT OF ADDITION THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN ENHANCING THE ADDITION BY DISALLOWING THE INTEREST PAID TO THE ELEVEN DEPOSITORS FOR THE YEAR UNDER CONSIDERATION ON THE DEPOSITS RECEIVED FROM THEM IN THE YEAR UNDER APPEAL AND WHI CH WAS RIGHTLY ALLOWED BY THE ASSESSING OFFICER WITHOUT IS SUING NOTICE FOR ENHANCEMENT. 7. WHILE ADJUDICATING GROUND NO.2, WE HAVE ALREADY SET ASIDE THE ISSUE OF ADDITION OF CASH CREDIT. ALLOWANCE/DISAL LOWANCE OF INTEREST WOULD BE CONSEQUENTIAL TO THE ACCEPTANCE OR OTHERWI SE OF THE CASH CREDIT. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS POINT ALSO AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO BE RE-ADJUDICATED ALONG WITH THE ISSUE O F ADDITION FOR CASH CREDIT. 8. GROUND NO.4 OF THE ASSESSEES APPEAL IS AGAINST THE 20% DISALLOWANCE OUT OF TELEPHONE EXPENDITURE. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. ASSESSEE IS A PARTNERSHIP FIRM. THE PE RSONAL USE OF TELEPHONE BY THE PARTNERS CANNOT BE RULED OUT. HOW EVER, WE DEEM IT PROPER TO REDUCE THE DISALLOWANCE TO (ONE SIXTH) AS AGAINST 20% MADE BY THE ASSESSING OFFICER. ITA NO. 2044/AHD/2011 M/S. MONA TEX VS. ITO AY 2006-07 5 10. GROUND NO.5 IS AGAINST THE CHARGING OF INTEREST U/S 234B/C/D. THIS IS ADMITTED TO BE CONSEQUENTIAL. WE, THEREFOR E, DIRECT THE ASSESSING OFFICER TO RE-WORK OUT THE INTEREST IN AC CORDANCE WITH LAW, IF ANY, AFTER THE RE-DETERMINATION OF THE INCOME AS PE R OUR ORDER. 11. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 29/09/2015 BIJU T., PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. '# $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. '() # , # , ' / D R, ITAT, AHMEDABAD 6. ). / / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD