The ITO, Ward-6(4), Surat V. Shri Pravinchandra P.Doshi,HUF, Surat

ITA 2062/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5601 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Source of fund; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABA D CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 2062/AHD./2008 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER, WARD-6(3), SURAT -VS.- SH RI PRAVINCHANDRA P. DOSHI (HUF), SURAT (PAN : AACHP 3888 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI LAXMI, SR. D.R. RESPONDENT BY : SHRI SAPNESH SHETH O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 05.03.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT FOR T HE ASSESSMENT YEAR 2004-05. 2. GROUND NO. 1 OF THIS APPEAL IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A.)-IV, SURAT HAS ERRED IN DELETING THE ADDITIO N OF RS.8,46,831/- MADE BY THE A.O. ON ACCOUNT OF DIFFERENCE IN CONTRA CT ACCOUNT WITH RUSHIN EXPORT AND LABOUR. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THE AFORESAID GROUND OF APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAD DONE JOB WORK FOR ONE RUSHIN EXPORT. THE ASSESSEE HAS SHOWN THE OUTSTANDING BALANCE OF RUSHIN EXPORT AT RS.14,5 5,565/- IN HIS BALANCE-SHEET. THE ASSESSEE HAS RAISED THE BILL FOR RS.6,10,260/- AND AFTER CON SIDERING THE OPENING BALANCE OF RS.8,46,831/-, THE CLOSING BALANCE AS PER BOOKS OF RUSHIN EXPORT W AS RS.6,08,734/-. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.8,46,831/- BEING THE DI FFERENCE BETWEEN THE TWO BALANCES. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) DELETED THE SAID ADDITION BY ACCEPTING THE EXPLANATION OF THE A SSESSEE THAT TWO SEPARATE ACCOUNTS FOR LABOUR CHARGES AND SALES WERE MAINTAINED IN THE RESPECTIV E BOOKS OF ACCOUNTS OF THE TWO PARTIES. THE TOTAL OUTSTANDING BALANCE IN LABOUR ACCOUNT IN THE ASSESSEES BOOKS WAS RS.14,55,565/- WHEREAS THE SAME AS PER THE BOOKS OF RUSHIN EXPORT WAS RS.6 ,08,734/-. SIMILARLY, OUTSTANDING BALANCES IN SALES ACCOUNTS AS PER THE ASSESSEES BOOKS WAS RS.9 ,88,850/- AND THE BOOKS OF RUSHIN EXPORTS, IT WAS RS.18,35,681/-, WHICH MEANT THAT THERE WAS NO D IFFERENCE IN THE AGGREGATE AMOUNT 2 ITA NO. 2062/AHD/2008 OUTSTANDING AT THE END OF THE YEAR AND IT WAS ONLY DUE TO PAYMENTS MADE BY THE PARTY WAS RECORDED BY THE ASSESSEE IN ITS SALES ACCOUNTS WHIL E THE SAME WAS RECORDED BY RUSHIN EXPORTS IN THEIR LABOUR ACCOUNT. 4. AT THE TIME OF HEARING BEFORE US, SMT. JYOTI LAX MI, SR. D.R. APPEARING ON BEHALF OF THE REVENUE POINTED OUT THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER SPECIFICALLY ASKED THE ASSESSEE ITSELF TO EXPLAIN T HE DIFFERENCE OF RS.8,46,831/- SHOWN AS OUTSTANDING BALANCE OF RS.14,55,565/- AS AGAINST CL OSING BALANCE SHOWN BY RUSHIN EXPORTS OF RS.6,10,260/-, BUT THE ASSESSEE HAD NOT FURNISHED A NY EXPLANATION. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), EXPLANATION WA S FURNISHED AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE SA ME WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSEE. THEREFORE, THE ADDITION OF RS.8,46,83 1/- MADE BY THE ASSESSING OFFICER BE RESTORED. 5. ON THE OTHER HAND, SHRI SAPNESH SHETH, LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BEFORE THE ASSE SSING OFFICER, THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION. FOR THE FIRST TIME, EXPLANATION WAS FU RNISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ADMITTED THE SAME WITHOUT AFFORDING OPPORTUNITY TO THE ASSESSEE AS REQUIRED UNDER RULE 46A OF THE INCOME TAX RULES, 1962. WE, THEREFORE, SET ASIDE THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND RESTORE THIS MATTER BACK TO THE FI LE OF ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHALL FURNISH THE EXPLANATION BEFORE T HE ASSESSING OFFICER, WHO WILL EXAMINE THE SAME AND RE-ADJUDICATE THE ADDITION OF RS.8,46,831/ - AFRESH IN ACCORDANCE WITH LAW. 7. GROUND NO. 2 RAISED BY THE REVENUE READS AS UNDE R :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, SUR AT HAS ERRED IN DELETING THE ADDITION OF RS.12,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH CREDIT U/S. 68 OF THE ACT. 8. THE FACTS RELATING TO CONTROVERSY INVOLVED IN TH IS GROUND OF APPEAL ARE THAT ON VERIFICATION OF THE BALANCE-SHEET, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD ACCEPTED THE LOAN FROM SMT. PRITI VIKRAM VORA AMOUNTING TO RS.12,00,000/-. THE ASSESSING OFFICER ASKED THE ASSESSEE 3 ITA NO. 2062/AHD/2008 TO FURNISH CONFIRMATION WITH CONTRA ACCOUNT COPY IN RESPECT OF THE LOAN OF RS.12,00,000/-OBTAINED FROM SMT. PRITI VIKRAM VORA. THE ASSESSING OFFICER IN THE ABSENCE OF CONFIRMATION, PAN, THE IDENTITY OF THE DEPOSIT, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTION, TREATED THE AMOUNT OF LOAN OF RS.12,00,000/- AS CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), IT WAS CONTENDED THAT CONFIRMATION AND ACKNOWLEDGMENT OF SMT. PRITI VIKRAM VORA WAS VERIFIED WITH THE BANK STATEMENT FURNISHED BY THE ASSESSEE, NO ADVERSE INF ERENCE ON THIS ACCOUNT WAS CALLED FOR AND THE CREDIT BEING GENUINE, THE ADDITION ON THIS GROUND S HOULD BE DELETED. 10. AFTER CONSIDERING THIS ARGUMENT, IN THE IMPUGNE D ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION ON THE GRO UND THAT THE ASSESSING OFFICER DID NOT ALLOW THE SUFFICIENT OPPORTUNITY TO FILE CONFIRMATION OF THE SAID PARTY AND THE COPY OF THE ACKNOWLEDGMENT OF INCOME TAX RETURN. HE ACCORDINGLY ADMITTED FRESH EVIDENCE. IN VIEW OF RULE 46A OF THE INCOME TAX RULES, THE LEARNED COMMISSION ER OF INCOME TAX(APPEALS) FORWARDED THE FRESH EVIDENCE TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER VIDE HIS REPORT DATED 24.02.2008 HAS STATED THAT THE LOAN RE CEIVED FROM SMT. PRITI VIKRAM VORA WAS VERIFIED AND THE TRANSACTION APPEARED TO BE GENUINE . THE SOURCE OF FUNDS RECEIVED BY SMT. PRITI VIKRAM VORA ALSO SEEMS TO BE THROUGH BANK BUT THE S OURCE OF SOURCE WAS NOT PRODUCED BY THE ASSESSEE. AFTER CONSIDERING THE REMAND REPORT, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.12,00,000/- OBSERVING THAT CONFIRMATION AND ACKNOWLEDGMENT OF SMT. PRITI VIKRAM VORA IS VERIFIA BLE WITH THE BANK STATEMENT FURNISHED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF LEARNED COM MISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL ON THIS GROUND BEFORE THE TRIB UNAL. 11. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. POINTED OUT THAT ON RECEIPT OF CONFIRMATION, ETC., THE ASSESSING OFFICER WAS REQUIRED TO CONDUCT ENQUIRY UNDER SECTION 68 OF THE ACT. IN THIS CASE, NEITHER ASSESSING OFFICER NOR LEARNED COMMISS IONER OF INCOME TAX(APPEALS) CONDUCTED THE NECESSARY ENQUIRY. THEREFORE, THE ORDER OF LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) ON THIS ISSUE BE SET ASIDE AND THE MATTER BE RESTOR ED BACK TO THE FILE OF ASSESSING OFFICER FOR MAKING NECESSARY ENQUIRY UNDER SECTION 68 OF THE IN COME TAX ACT. 4 ITA NO. 2062/AHD/2008 12. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE POINTED OUT THAT POWER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CO-TERMINUS WITH THAT OF ASSESSING OFFICER. IN THIS CASE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) CALLED THE REMAND REPORT, CARRIED OUT THE NECESSARY VERIFICATION AND DELETED THE ADDITION . THEREFORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 13. RIVAL SUBMISSIONS WERE CONSIDERED. UNDER SECTIO N 68 OF THE INCOME TAX ACT, SATISFACTION OF ASSESSING OFFICER IS REQUIRED. ADMITTEDLY, IN TH IS CASE NO CONFIRMATION WAS FILED BEFORE THE ASSESSING OFFICER. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IT WAS CLAIMED THAT THE AMOUNT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE FROM SMT. PRITI VIKRAM VORA, WHO IS ASSESSED TO TAX IN MUMBAI. SINCE NO CONFIRMATION WAS FILED BEFORE THE ASSESSING OFFICER AND NO ENQUIRY WAS CONDUCTED BY HIM AS REQUIRED UNDER S ECTION 68 OF THE INCOME TAX ACT, 1961,WE, THEREFORE, SET ASIDE THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF ASSESSI NG OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD FILE THE CONFIRMATION AND ALL OTHER DOCUMENT S, ASSESSING OFFICER MAY VERIFY THE SAME AND RE-ADJUDICATE THE ADDITION OF RS.12,00,000/- KEEPIN G IN VIEW THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ROHINI BUILDERS REPORTED IN 256 ITR 360 (GUJ.). 14. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE REVENUE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 23.07.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23/ 07 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.