Bharat Lalchand Shah, Surat V. The Dy. Commissioner of Income Tax, Central Circle-3, Surat

ITA 2058/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9831 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 68

Judgement Text

BHARAT LALCHAND SHAH V. DCIT-3(1)SURAT /I.T.A. NO.2058 /AHD/2016/A.Y.12-13 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.2058/AHD/2016: ASSESSMENT YEAR: 2012-13 SHRI BHARAT LAL CH A ND SHAH, PROP. M/S. VIJAY EXPORTS S-543, JJ AC MARKET RING ROAD SURAT PAN: AFSPS 3703B VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 1(3) SURAT APPELLANT RESPONDENT ASSESSEE BY SHRI RASESH SHAH, CA REVENUE BY MS. ANUPAMA SINGLA, SR. D.R. DATE OF HEARING 30.04.2019 DATE OF PRONOUNCEMENT 02.05.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (IN SHORT THE CIT (A)) DATED 2.06.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. 2. REVISED GROUND NO. 1 RELATES TO CONFIRMING ADDITION OF RS. 15 LAKHS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 3. SUCCINCT FACTS ARE THAT THE AO HAS RECEIVED AN INFORMATION THAT THE ASSESSEE HAS RAISED UNSECURED LOAN OF RS. 15 LACS FROM KIOSKI DEALERS PVT. LTD. BASED IN KOLKATA, WHICH ACCORDING TO INVESTIGATION CARRIED OUT BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 2(1)(1) SURAT IS NOT GENUINE ONE BEING A PARENT COMPANY PROVIDING ACCOMMODATION ENTRIES OF WHICH SUBSTANTIVE ADDITION HAS BEEN MADE IN THE HANDS OF M/S. VEEKAY PRINTS PVT. LTD. WHERE THE ASSESSEE IS A DIRECTOR. THEREFORE, THE AO HAS MADE PROTECTIVE ADDITION IN THE CASE OF THE ASSESSEE. BHARAT LALCHAND SHAH V. DCIT-3(1)SURAT /I.T.A. NO.2058 /AHD/2016/A.Y.12-13 PAGE 2 OF 4 4. BEING DISSATISFIED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). IT WAS SUBMITTED THAT THE AO HAS ALREADY MADE ADDITION IN THE CASE OF M/S. VEEKAY PRINTS PVT. LTD. (VPPL), THAT COMPANY IN WHICH THE ASSESSEE IS DIRECTOR, HENCE, THIS AMOUNTS TO DOUBLE ADDITION. HOWEVER, CIT (A) CONFIRMED THE ADDITION ON THE GROUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. VPPL, THE ASSESSEE WAS DIRECTED TO PRODUCE THE DIRECTOR OF M/S. KIOSKI DEALS PVT. LTD. (KDPL) BUT THE ASSESSEE HAS FAILED TO PRODUCE HIS , THEREFORE, GENUINENESS OF CASH CREDIT IS NOT ESTABLISHED. FURTHER THE SUBSTANTIVE ADDITION MADE IN THE CASE OF M/S. VPPL HAS BEEN DELETED BY HIM HENCE, PROTECTIVE IS BEING CONFIRMED AS THE ASSESSEE HAS NOT DISCHARGED THE ONUS CAST UPON HIM. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT M/S. KDPL IS GENUINE COMPANY FOR WHICH ELECTRICITY AND WATER CHARGES BILLS FROM KOLKATA MUNICIPAL CORPORATION ARE FILED AT PAPER BOOK PAGE NO. 1-2. FURTHER MUNICIPAL TAX RECEIPT FROM KOLKATA MUNICIPAL CORPORATION IS ALSO PRODUCE AT PAPER BOOK PAGE NO. 3-4 . THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED LATEST MASTER DATA (PB-5) OF THE COMPANY. IT WAS FURTHER SUBMITTED THAT M/S. KDPL IS ASSESSED TO TAX AND FILED ITS RETURN OF INCOME OF WHICH ACKNOWLEDGEMENT HAS BEEN PLACED AT THIS STAGE, PAPER BOOK PAGE NO. 4 FOR THE ASSESSMENT YEAR 2012-13. SIMILARLY DIRECTORS REPORT AND BANK STATEMENT REFLECTING PAYMENT OF LOAN WAS ALSO FILED (PB-35). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF LEDGER ACCOUNT OF M/S. KDPL SHOWING REPAYMENT OF LOAN DURING PERIOD FROM 01.04.2014 TO 31.03.2015 WITH INTEREST (PB-36) . THUS, IT WAS CONTENDED THAT THE M/S. KDPL IS GENUINE COMPANY. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE AO HAS NOT APPLIED HIS MIND NOR MADE ANY ENQUIRY DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE AND ONLY RELIED ON THE INVESTIGATION CARRIED OUT BY BHARAT LALCHAND SHAH V. DCIT-3(1)SURAT /I.T.A. NO.2058 /AHD/2016/A.Y.12-13 PAGE 3 OF 4 THE AO OF M/S. VPPL. THEREFORE, THE ADDITION IS MADE WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD, HENCE, ADDITION SO MADE DESERVED TO BE DELETED IN THE LIGHT OF RATIO OF DECISION LAID DOWN BY THE HON`BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. COMMISSIONER OF CENTRAL EXCISE KOLKATA-II [2015] 13 STD 805 (SC) ( CIVIL APPEAL NO. 4228 OF 2006) DATED SEPTEMBER, 2, 2015. (SC) . THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF CIT V. RANCHHOD JIVABHAI NAKHAVA [2012] 81 CCH 193 GUJ-HC / 21 TAXMANN.COM 159 (GUJARAT) [2012] 208 TAXMAN 35 (GUJARAT) AND KISHANCHAND CHELLARAM V. CIT [1980] 125 ITR 713 (SC) [1980] 4 TAXMAN 29 (SC) AND CONTENDED THAT ADDITION SUSTAINED BY THE LD. CIT (A) NEEDS TO BE DELETED. 6. PER CONTRA, THE LD. SR. D.R. SUBMITTED RELYING ON THE ORDER OF LD. CIT (A) STATED THAT THAT WATER CHARGES BILL AND MUNICIPAL TAX RECEIPT ARE DATED 27.12.2018 HENCE, THESE CANNOT BE TREATED AS PROOF OF EXISTENCE OF THE KDPL DURING THE ASSESSMENT YEAR 2012-13. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ADDITION HAS BEEN MADE BY THE AO SIMPLY FOLLOWING THE FINDINGS GIVEN BY THE AO IN THE CASE OF M/S. VPPL AND NO CROSS-EXAMINATION OF THE SAME WAS ALLOWED TO THE ASSESSEE NOR THE ASSESSEE WAS ASKED TO FURNISH ANY DETAILS. FURTHER, THE ASSESSEE HAS FURNISHED PROOF OF RETURN OF INCOME ACKNOWLEDGEMENT, ADDRESS WITH MUNICIPAL TAX RECEIPTS AND WATER CHARGES, COPY OF AUDITED ACCOUNTS OF M/S. KDPL. THE ASSESSEE HAS REPAID THE LOAN AMOUNT WITH INTEREST THEREON IN NEXT FINANCIAL YEAR OF COPY OF LEDGER ACCOUNT IS PLACED IN PAPER BOOK. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE FACTS THAT NO CROSS EXAMINATION WAS ALLOWED BY THE AO, THE ADDITION IS NOT SUSTAINABLE INTO JUDGEMENT OF HON`BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. COMMISSIONER OF CENTRAL EXCISE KOLKATA-II [2015] 13 STD 805 (SC) ( CIVIL APPEAL NO. 4228 OF 2006) (PB-83)DATED BHARAT LALCHAND SHAH V. DCIT-3(1)SURAT /I.T.A. NO.2058 /AHD/2016/A.Y.12-13 PAGE 4 OF 4 SEPTEMBER, 2, 2015. (SC) HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE WITNESSES BY ADJUDICATING AUTHORITY THOUGH STATEMENTS OF THOSE WITNESSES WERE MADE BASIS OF IMPUGNED ORDER, AMOUNTED TO SERIOUS FLAW WHICH MAKES IMPUGNED ORDER NULLITY AS IT AMOUNTED TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE ADDITION OF RS. 15 LAKH MADE BY THE AO IS THEREFORE, DELETED. THIS GROUND OF APPEAL IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 02.05.2019. SD/- (H. S. SIDHU) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 2 ND MAY,2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT