Jhankar Shroffin Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 2060/AHD/2012

• Counselvise Citation: 206020514 RSA 2012
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-07-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 12-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K VOHRA
• Assessee Lawyers: J P SHAH
• Section: 143(3); 133A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO.2060/AHD/2012 A. Y.: 2001-02 JHNKAR SHROFFIN PVT. LTD., 5/1334-B, HARIPURA, KALJUG STREET, BHAWANIWAD, SURAT 395 003 P. A. NO. AAACJ 6022G VS THE INCOME TAX OFFICER, WARD 1 (3), AAYAKAR BHAVAN, OPP. NEW CIVIL HOSPITAL, MAJURA GATE, SURAT 395 001 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. P. SHAH, AR RESPONDENT BY SHRI R. K. VOHRA, CIT DR DATE OF HEARING: 12-07-2013 DATE OF PRONOUNCEMENT: 14-08-2013 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL OF THE ASSESSEE IS PREFERRED AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A)-I, SURAT IN APPEAL NO. CAS-I/240/2011-12 DATED 27-06-2012, FOR THE ASS ESSMENT YEAR 2001- 02, PASSED U/S 250 READ WITH SECTION 143(3) AND 254 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS WHEREIN GRO UNDS NO. 2, 3 AND 4 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJU DICATION. THE SURVIVING GROUND NO.1 IS REPRODUCED HEREIN UNDER:- 1 THE HONORABLE COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.8,41, 079/- ON ACCOUNT OF ALLEGED UNEXPLAINED CASH U/S. 69 OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR 2001-02 ON 30- ITA NO.2060/AHD/2012 (AY 2001-02) JHNKAR SHROFFIN PVT. LTD. VS ITO, W-1 (3), SURAT 2 10-2001 DECLARING TOTAL INCOME AT NIL. THE LEARNED AO COMPLETED THE ASSESSMENT U/D 143 (3) OF THE ACT VIDE ORDER DATED 17-03-2004 WHEREIN AN ADDITION OF RS.8,85,000/- WAS MADE ON ACCOUNT OF U NEXPLAINED CASH U/S 69 OF THE ACT FOUND DURING SURVEY IN ADDITION TO CE RTAIN OTHER ADDITIONS. WHILE THE MATTER CREPT IN BEFORE THE LEARNED CIT(A) , THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. ON APPEAL BE FORE THE TRIBUNAL, THE TRIBUNAL VIDE ORDER DATED 14-05-2010 IN ITA NO.2830 /AHD/2004, CONFIRMED THE ADDITION OF RS.43,922/- OUT OF RS.8,85,000/- AN D SET ASIDE THE BALANCE ADDITION OF RS.8,41,079/- (RS.8,85,000 - RS.43,922) TO THE FILE OF THE LEARNED AO FOR FRESH ADJUDICATION WITH THE FOLLOWIN G OBSERVATION IN PARA 4 OF THE SAID ORDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DISCOUNTING OF DRAFTS/CH EQUES ON COMMISSION BASIS. A SURVEY UNDER SECTION 133A OF TH E ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 17.10.200. DURING THE COURSE OF SURVEY EXCESS CASH OF RS.8,85,001/- WAS F OUND WHICH WAS ADDED BY THE LEARNED ASSESSING OFFICER UNDER SE CTION 69 OF THE ACT TREATING AS UNEXPLAINED MONEY OF THE ASSESSEE. THE ABOVE ADDITION WAS ALSO CONFIRMED BY THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS). WE FIND THAT THE ASSESSEE AL ALONG DURING THE COURSE OF THE SURVEY, DURING THE ASSESSMENT PROCEED INGS, BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND BE FORE US ALSO CONSISTENTLY EXPLAINED THAT OUT OF RS.8,85,001/-, R S.841079/- WAS THE AMOUNT PAYABLE BY THE ASSESSEE TO THREE PERSONS AGAINST CHEQUES DISCOUNTING WHICH WAS THOUGH SHOWN AS PAYME NT IN HIS CASH BOOK AS THE MONEY WAS TAKEN OUT OF CASH BOX BU T IT WAS NOT ACTUALLY HANDED OVER. WE FIND THAT THE LOWER AUTHOR ITIES HAVE NOT DISPUTED THE CONTENTION OF THE ASSESSEE TO THE EFFE CT THAT ON THE DATE OF THE SURVEY PAYMENTS OF RS.8,41,079/- TO THREE DI FFERENT PERSONS WERE ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSE E. HOWEVER, THE LEARNED ASSESSING OFFICER HAS NOT ACCEPTED THE EXPL ANATION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE HIS EXPLANATION BY FILING CONFIRMATIONS FROM THE SAID P ARTIES. THE LEARNED ASSESSING OFFICER ALSO OPINED THAT IDENTITI ES OF SAID THREE PARTIES WERE NOT ESTABLISHED BEFORE HIM AND THE SAI D THREE PARTIES WERE NOT PRODUCED BEFORE HIM FOR HIS EXAMINATION. O N THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED OUT THAT THE ASSESSEE VIDE ITS LETTER DATED 26-02-2004 (PAGES ITA NO.2060/AHD/2012 (AY 2001-02) JHNKAR SHROFFIN PVT. LTD. VS ITO, W-1 (3), SURAT 3 63-64 OF THE PAPER BOOK) FILED BEFORE THE LEARNED A SSESSING OFFICER HAS REQUIRED THE LEARNED ASSESSING OFFICER TO VERIF Y THE FACT OF DEPOSIT OF CHEQUES FROM THE BANK DIRECTLY AS THE BA NK WAS NOT GIVING COPY OF CHEQUES TO THE ASSESSEE AND HAS NO LEGAL AU THORITY TO COMPEL THE BANK TO GIVE COPY OF CHEQUES OR DRAFT AN D ALSO REQUESTED THE LEARNED ASSESSING OFFICER TO EXERCISE POWERS AV AILABLE WITH HIM UNDER THE ACT TO VERIFY THE STATEMENT OF THE ASSESS EE. HE ALSO POINTED OUT THAT IN SPITE OF THIS REQUEST BY THE AS SESSEE, THE LEARNED ASSESSING OFFICER HAS NOT EXERCISED ANY POWER AVAIL ABLE WITH HIM TO VERIFY THE GENUINENESS OR OTHERWISE OF THE EXPLANAT ION OF THE ASSESSEE AND REJECTED THE EXPLANATION OF THE ASSESS EE BY MERELY TAKING THE BENEFIT OF THE SITUATION WHERE THE ASSES SEE WAS NOT IN A POSITION TO LEAD THE EVIDENCES TO SUBSTANTIATE HIS EXPLANATION AS THE EVIDENCES WERE NOT IN THE POSSESSION OF THE ASSESSE E. IN RESPECT OF BALANCE AMOUNT OF RS.43,922/- WHICH WAS FOUND EXCES S DURING THE COURSE OF THE SURVEY, THE LEARNED AUTHORIZED REPRES ENTATIVE OF THE ASSESSEE ADMITTED THAT ADDITION TO THAT EXTENT WAS JUSTIFIED. IN THE ABOVE FACTS AND CIRCUMSTANCES, IN OUR CONSIDERED VI EW, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE ADDITI ON BY REJECTING THE EXPLANATION OF THE ASSESSEE WITHOUT MAKING ANY ATTE MPT TO VERIFY THE GENUINENESS OF THE EXPLANATION EITHER FROM THE BANK OR FROM THE THREE PARTIES DIRECTLY. IN OUR CONSIDERED OPINION, POWER UNDER SECTION 133(6) AND 131 ARE MADE AVAILABLE BY THE ACT WITH T HE INCOME TAX AUTHORITIES WITH A VIEW THAT THE SAME SHALL BE EXER CISED BY THEM TO RENDER JUSTICE WHEN THE SITUATION SO WARRANTS. THER EFORE, IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN CONFIRMING THE ADDITION WITHOUT EXERCISING THOSE PO WERS. THEREFORE, IT SHALL BE JUST AND FAIR AND IN THE INTEREST OF JU STICE TO SET ASIDE THE ADDITION OF RS.8,41,079/- BACK TO THE FILE OF THE L EARNED ASSESSING OFFICER FOR PROPER VERIFICATION OF THE EXPLANATION OF THE ASSESSEE BY EXERCISING THE POWER AVAILABLE UNDER THE ACT WITH H IM AND THEREAFTER PASSING THE ORDER AFRESH IN ACCORDANCE WITH THE LAW AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. WE ORDER ACCORDINGLY. IN RESPECT OF BALANCE AMOUNT OF RS.43,922/-, THE ORDERS OF THE LOWER AUTHORITIES ARE CONFIRMED. THUS , THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 3.1 DURING THE SET ASIDE PROCEEDINGS, THE ASSESSEE SUBMITTED EXPLANATIONS ALONG WITH RELEVANT EVIDENCES BEFORE T HE LEARNED AO WITH REGARD TO CASH OF RS.8,41,079/- FOUND DURING THE CO URSE OF SURVEY PROCEEDINGS. THE LEARNED AO REJECTED THE EXPLANATIO NS OF THE ASSESSEE AND AGAIN MADE ADDITION OF RS.8,41,079/-. ON THE EA RLIER OCCASION, THE ITA NO.2060/AHD/2012 (AY 2001-02) JHNKAR SHROFFIN PVT. LTD. VS ITO, W-1 (3), SURAT 4 TRIBUNAL HAD SET ASIDE THE MATTER BEFORE THE LEARNE D AO TO EXAMINE THE BANK AND THE CONCERN THREE PARTIES BY USING HIS POW ER U/S 133(6) AND 131 OF THE ACT IN ORDER TO ASCERTAIN THE EXPLANATIONS G IVEN BY THE ASSESSEE. HOWEVER, THE LEARNED AO ONLY EXAMINED THE THREE PAR TIES AND NOT THE BANK IN ARRIVING AT HIS DECISION. 4. THE LEARNED CIT(A) WHILE CONFIRMING THE ADDITION MADE BY THE LEARNED AO VIDE HIS ORDER DATED 27-06-2012 HAS GIVE N HIS CLEAR FINDING WHICH READS AS UNDER:- 7.3 IT IS TRUE THAT THE HONBLE ITAT WHILE SETTING ASIDE THE ASSESSMENT ORDER, OBSERVED THAT THE ASSESSING OFFIC ER SHOULD HAVE EXAMINED THE FACTS OF THE DEPOSIT OF CHEQUES RECEIV ED AGAINST WHICH CASH WAS ISSUED FROM THE BANKS DIRECTLY. HOWEVER, T HE FINAL DIRECTIONS OF THE HONBLE ITAT WERE TO EXAMINE THE ISSUE AFRESH AFTER MAKING NECESSARY ENQUIRIES BY EXERCISING POWERS AVA ILABLE WITH HIM (A.O.). BY UTILIZING SUCH POWERS, THE ASSESSING OFF ICER ISSUED NOTICE U/S 133(6) OF THE IT ACT TO THREE PARTIES RATHER TH AN BANK. SINCE IT WAS NOT A SPECIFIC DIRECTION OF THE HONBLE ITAT TO MAKE ENQUIRIES ONLY FROM BANK, THE ACTION OF THE ASSESSING OFFICER CANNOT BE TREATED AS AN SIC A VIOLATION OF THE DIRECTION OF THE HONB LE ITAT. 7.4 MOREOVER, ENQUIRIES WITH THE BANK WILL ONLY CON FIRM WHETHER THE THREE CHEQUES AGAINST WHICH CASH WAS GI VEN WERE DEPOSITED IN BANKS ACCOUNT OR NOT. THE ASSESSING OFFI CER IS NOT DISPUTING THIS FACT. IN FACT, THE ASSESSING OFFICER HAS ACCEPTED THE CASH BOOK OF THE APPELLANT IN WHICH, THREE IS A N ENTRY OF CASH GIVEN AGAINST THOSE CHEQUES DEPOSITS. THE ADDI TION HAS NOT BEEN MADE ON THE GROUND THAT APPELLANT DID NOT RE CEIVE CHEQUES OF ABOVE AMOUNTS. THE FACT IS THAT AS PER T HE APPELLANTS BOOKS OF ACCOUNTS, THE APPELLANT RECEIV ED THESE CHEQUES AND ISSUED CASH AGAINST THE SAME. THEREFORE, IT CANNOT BE ACCEPTED THAT THE CASH WAS STILL LYING WIT H THE APPELLANT. THE APPELLANT HAS ALSO NOT BEEN ABLE TO PROVIDE ANY ACKNOWLEDGEMENT OR RECEIPT SHOWING WHEN AND FROM WHO M THE CHEQUES WERE RECEIVED, AND BY WHOM AND WHEN THE PAYM ENTS WERE MADE. ITA NO.2060/AHD/2012 (AY 2001-02) JHNKAR SHROFFIN PVT. LTD. VS ITO, W-1 (3), SURAT 5 7.5 IN THE BUSINESS OF CHEQUES DISCOUNTING, A PERSO N/PARTY MAY COME WITH A CHEQUES WHICH MAY BE IN THE NAME OF THI RD PARTY AS WELL AS THE MONEY AFTER CHEQUES DISCOUNTING IS GIVE N TO THAT PERSON AND CHEQUES IS DEPOSITED IN THE BANK ACCOUNT. THE W HOLE DISPUTE HERE RESTS WHETHER THE CASH LYING AT APPELLANTS PR EMISES IS BELONGING TO THOSE THREE PERSONS OR NOT. THE APPELL ANT FAILED TO ESTABLISH THE SAME BOTH AT THE ORIGINAL ASSESSMENT PROCEEDING AS WELL AS AT THE SET ASIDE PROCEEDING. THEREFORE, THI S GROUND OF APPEAL IS DECIDED AGAINST THE APPELLANT. 5. BEFORE US, THE LEARNED AR REITERATED THE SUBMIS SIONS MADE BEFORE THE AUTHORITIES WHILE AS THE LEARNED DR RELIED ON T HE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, GONE THROUG H THE ORDERS OF THE AUTHORITIES BELOW AND CAREFULLY CONSIDERED THE MATE RIALS AVAILABLE ON RECORD. THE CRUX OF THE ISSUE WAS THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CHEQUE DISCOUNTING. DURING THE COURSE O F SURVEY, AN AMOUNT OF RS.8,41,079/- WAS FOUND IN EXCESS WITH THE ASSESSEE COMPANY. THE EXPLANATIONS OFFERED BY THE ASSESSEE WERE THAT THE AMOUNT BELONGED TO THE THREE PARTIES WHO HAD DISCOUNTED THEIR CHEQUES WITH THE ASSESSEE AND THOUGH, IN THE CASH BOOK OF THE ASSESSEE THE AMOUNT WAS SHOWN AS PAID TO THE THREE PARTIES; IT WAS YET TO BE PAID TO THEM . THE TRIBUNAL ON THE EARLIER OCCASION HAD DIRECTED THE LEARNED AO TO VER IFY THIS FACT FROM THE BANK AND THE THREE PARTIES IN ORDER TO ASCERTAIN TH E AUTHENTICITY OF THE EXPLANATIONS OFFERED BY THE ASSESSEE BY USING HIS P OWERS U/S 133(6) AND 131 OF THE ACT. IT IS OBVIOUS, THAT ONLY BY EXAMINI NG THE BANK AND THE CONCERN THREE PARTIES, THE EXPLANATIONS OFFERED BY THE ASSESSEE COULD BE VERIFIED. HOWEVER, IN SPITE OF SUCH DIRECTIONS GIVE N BY THE TRIBUNAL, THE LEARNED AO PREFERRED TO EXAMINE ONLY THE THREE PART IES AND NOT THE BANK AND HELD THE ISSUE AGAINST THE ASSESSEE. DESPAIRED BY SUCH ACTION OF THE LEARNED AO, THE ASSESSEE APPROACHED THE LEARNED CIT (A) FOR RELIEF. HOWEVER, THE LEARNED CIT(A) BRUSHED ASIDE THE DIREC TIONS OF THE TRIBUNAL ITA NO.2060/AHD/2012 (AY 2001-02) JHNKAR SHROFFIN PVT. LTD. VS ITO, W-1 (3), SURAT 6 AND CONFIRMED THE ORDER OF THE LEARNED AO. CONSIDER ING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE REVENUE HAD NOT FOLLOWED THE ORDERS OF THE TRIBUNAL IN ITS TRUE SPIRIT. THE TRIB UNAL HAD CATEGORICALLY DIRECTED THE LEARNED AO TO VERIFY THE FACTS DIRECTL Y FROM ALL THE CONCERN PARTEIS. HOWEVER, THE REVENUE HAS FAILED TO DO SO. IN THESE CIRCUMSTANCES, WE DO NOT CONSIDER IT APPROPRIATE TO SUSTAIN THE AD DITION OF RS.841,079/- MADE ON THE ASSESSEE. THEREFORE, WE HEREBY DELETE T HE ADDITION OF RS.8,41,079/- MADE BY THE LEARNED AO WHICH WAS FURT HER SUSTAINED BY THE LEARNED CIT(A). 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 14-08-2013 SD/- SD/- (D.K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA LAKSHMIKANTA DEKA/ DEKA/ DEKA/ DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASSTT. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 12-07-13/ 02-08-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15-07-2013/02-08-13 OTHER MEMBER : 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DISPATCH OF THE ORDER: