Sanjayraj Petroleum & Hotel, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(4), RAJKOT-GUJARAT

ITA 209/RJT/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0163 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2016
• Assessment Year: 1997-1998
• Appeal Filed On: 24-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E-COURT AT AHMEDABAD) [CORAM: SHRI N.K. BILLAIYA, AM & SHRI MAHAVIR PRASA D, JM] ITA NO. 209 / RAJ /20 1 4 ASSESSMENT YEAR :1997-98 M/S SANJAYRAJ PETROLEUM & HOTEL, SANJAYRAJ ESTATE, RAJKOT V/S . THE INCOME TAX OFFICER, WARD-1(4), RAJKOT PAN NO. AAKFS 7458 N (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI M.J. RANPURA , CA / BY REVENUE SHRI D.R. CHHATRE , SR. D.R. /DATE OF HEARING 08 . 08 .201 6 /DATE OF PRONOUNCEMENT 16. 0 8 .20 1 6 O R D E R PER :MAHAVIR PRASAD, JM THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-II, RAJKOT, DATED 16.01.2014 FOR THE ASSESSMENT YEAR 199 7-98. 2. THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, RAJKOT [HER EINAFTER REFERRED PAGE 2 ITA 2 09/RAJ/2014 TO AS THE CIT(A) ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING ADDITION OF RS.1,94,500/- MADE U/S 68 OF THE ACT BEING AMOUNT R ECEIVED FROM FOLLOWING PERSONS: THE ADDITION MAY KINDLY BE DELET ED. 1. S.L. RAJYAGURU HUF RS.69,500/- 2. LABHUBEN THAKER RS.1,00,000/- 3. MANJULABEN JOSHI RS.25,000 TOTAL RS.1,94,5,00/- 3. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFF ICER HAS TAKEN GROSS RECEIPT AT RS.50,00,000/- AS AGAINST THE GROS S RECEIPT SHOWN BY THE ASSESSEE AT RS.38,53,476/- AND HAS TAXED THE NE T PROFIT @ 12.5% OF RS.50.00 LAKH AND THE INCOME WAS ASSESSED AT RS.6,2 5,000/- ON THIS ACCOUNT. THEREAFTER, IN APPELLATE PROCEEDINGS, TRIB UNAL HAS DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE TOTAL SALES AT RS .42.00 LAKH AND THE NET PROFIT RATE OF 11% AS HELD BY THE CIT(A) HAS BEEN C ONFIRMED. HENCE, THE TRIBUNAL HAS SET ASIDE THE ORDER OF CIT(A) REGARDIN G THE ADDITION OF RS.6,40,395/- MADE U/S 68 OF THE ACT AND RESTORED T HE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIO N TO DECIDE THE ISSUE AFRESH AFTER GIVING PROPER OPPORTUNITY TO THE ASSES SEE AND THE DEPOSITORS FOR PRODUCTION OF RELEVANT INFORMATION A ND DOCUMENTS. THE ASSESSEE HAS CREDITS THE FOLLOWING AMOUNT TO THE PE RSONS, NAMELY, SMT. J.S. RAJYAGURU RS.4,45,895/-, S.L. RAJYAGURU HUF RS.6 9,500/-, LABHUBEN THAKER RS.1,00,000/- AND MANJULABENJOSHI RS.25,000/-. ACCORDINGLY, ALL THESE CASH CREDITS COMES TO RS.6,4 0,395/-. THE NOTICES U/S 143(2) AND 142(1) OF THE ACT WAS SERVED BUT NOB ODY ATTENDED THE SAID PROCEEDINGS AND THEREAFTER AGAIN OPPORTUNITY W AS GIVEN TO THE ASSESSEE FIXING THE HEARING ON 24.11.2006 BUT AGAIN NOBODY HAS PAGE 3 ITA 2 09/RAJ/2014 ATTENDED THE HEARING. WITH THE AFORESAID FINDING AN D THE DIRECTION OF THE TRIBUNAL, THE ASSESSING OFFICER HAS FINALIZED THE A SSESSMENT AND NON- COMPLIANCE OF THE DIRECTION OF THE ASSESSING OFFICE R HAD NO OPTION TO ASSESS THE INCOME OF THE ASSESSEE U/S 144 OF THE AC T. THEREFORE, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2 ,02,450/- AND UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AT RS.6, 40,400/-. THE TOTAL INCOME WAS ASSESSED AT RS.8,42,850/-. 4. AGAINST THE SAID ORDER, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT(A) WHO HAS GIVEN PARTS RELIEF. LD. CIT(A) S ORDER WE NOTED THAT THE MATTER WAS VERY OLD AND THE ASSESSEE HAD SHIFTE D RECORDS FROM ONE PLACE TO NEW PLACE, THE SAME WAS NOT READILY AVAILA BLE THEREFORE HE COULD NOT FURNISH THE RELEVANT DETAILS BEFORE HIM. HOWEVER, AFTER VERIFICATION FROM OLD RECORDS, THE ASSESSEE COULD A BLE TO FIND OUT THE EVIDENCES WHICH ARE EXPLAINED AS UNDER: S.NO. NAME OF THE DEPOSITOR AMOUNT REMARKS 1 SMT. J. S. RAJYAGURU 4,45,895/- BOTH THE ORIGINAL ASSESSMENTS I.E. THAT OF THE APPELLANT AND THE DEPOSITOR WERE FINALISED ON 31.03.2000. COPY OF THE ROI, ASSESSMENT ORDER AND CONTRA / CONFIRMATION ARE ATTACHED AT PAGE? TO 15'). THE ASSESSMENT IN HER CASE REACHED FINALITY VIDE CIT(A)'S ORDER DATED 01.10.J34 IN APPEAL NO.CIT(A)- 1/RJT/23V01-02 (COPY ATTACHED AT PAGE 16 TO 17) PAGE 4 ITA 2 09/RAJ/2014 2. S. L. RAJYAGURU HUF 69,500/- THE AMOUNT IN QUESTION IS JUST A BOOK TRANSFER ENTRY. INDRANIL S. RAJGURU HUF HAD TRANSFERRED THE SAID AMOUNT TO THE ACCOUNT OF S.L. RAJGURU HUF. COPJY OF ACCOUNT IN THE BOOKS OF THE APPELLANT AND CONTRA ENTRY FROM THE BOOKS OF SHRI INDRANIL RAJGURU HUF ARE ATTACHED AT PAGE 18 TO 19). 3. LABHUBEN THAKER 1,00,000/- THE TRANSACTION IS THROUGH BANKING CHANNEL. CONFIRMATION FROM THE DEPOSITOR IS ATTACHED AT PAGE ;0 SHE IS ASSESSED TO TAX BY THE SAME ITO. 4. MANJULABEN JOSHI 25,000/- THE TRANSACTION IS THROUGH BANKING CHANNEL. CONFIRMATION FROM THE DEPOSITOR IS ATTACHED AT PAGE II. SHE IS ASSESSED TO TAX BY ITO WD. 2(4) RAJKOT. 5. THE CIT(A) HAS RELIED UPON THE FOLLOWING JUDGMENT S: (I) HON.BLE ITAT, CALCUTTA IN THE CASE OF ACIT VS. GOVIND RAM AGRAWAL (2001) 76 ITD 120(CAL-TRIB)(TM) (II) HON'BLE GAUHATI HIGH COURT HAS, IN THE CASE OF IT VS. SHREE GOPAL & CO. 204 ITR 285 (III) HON'BLE ITAT, AHMEDABAD BENCH B HAS, IN TH E CASE OF ROHINI BUILDERS VS. DCIT (2001) 117 TAXMAN 25 (AHD) (MAG) PAGE 5 ITA 2 09/RAJ/2014 (IV) HON'BLE HIGH COURT OF RAJASTHAN HAS IN THE C ASE OF LABH CHAND BOHRA VS. INCOME TAX OFFICER, 8 DTR (RAJ) 44, HELD AS UNDER:- 'IDENTITY OF THE CREDITORS HAVING BEEN ESTABLISHED WHO HAVE CONFIRMED THE CREDITS BY MAKING STATEMENTS ON OATH AND THE AMOUNTS HAVING BEEN ADVANCED BY ACCOUNT PAYEE CHEQUES, IMPUGNED ADDITION IN RESPECT OF THE ENTRIES IN THE NAMES OF SAID CREDITORS CANNOT BE SUSTAINED; ASSESSEE IS NOT REQUIRED TO ESTABLISH THE CAPACITY OF THE LENDER TO ADVANCE MONEY'. 6. LD. CIT(A) IN HIS ORDER MENTIONED THAT SMT. J.S. RAJYAGURU AN ADDITION OF RS.4,45,895/- WAS MADE U/S 144 R.W.S. 2 54 OF THE ACT BECAUSE NO DETAILS WERE SUBMITTED BY THE ASSESSEE. CERTAIN DETAILS WERE FILED BY THE ASSESSEE DURING THE COURSE OF APPELLAT E PROCEEDINGS WERE SENT TO THE ASSESSING OFFICER FOR OBTAINING HIS COM MENTS BY WAY OF REMAND REPORT DATED 18/1/2013, THE A..O. HAS COMMEN TED THAT THE ASSESSEE HAD FAILED TO AVAIL THE OPPORTUNITIES GIVE N AT THE TIME OF ASSESSMENT PROCEEDINGS ALSO, FOR THE YEAR 1997-98, FROM A RETURN OF INCOME AND THE INCOME PROFILE, IT CANNOT BE SAID TH AT CREDITWORTHINESS OF SMT. I. S. RAJYAGURU IS PROVED AND THE ADDITION THUS SHOULD BE SUSTAINED. THE ASSESSEE HAS CONTENDED THAT IN CASE OF SMT. RAJYAGURU, SHE WAS ASSESSED TO TAX SINCE MANY YEARS. THE RETUR N OF INCOME FOR A.Y. 1997-98 WAS FILED ON 30/11/1998. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) AND VARIATIONS MADE TO INCOME WERE DELETED BY THE CIT(A), VIDE HIS ORDER DT. 1/10/2004. 7. WE NOTED THAT RS.4,45,895/- WAS REFLECTED IN THE ASSESSMENT OF SMT. J.S. RAJYAGURU IN HER CASE REACHED FINALITY VID E CIT(A) ORDER DT. PAGE 6 ITA 2 09/RAJ/2014 1.10.2004 IN APPEAL NO.1/RJT/231/01-02. SO FAR AN AM OUNT OF RS.69,500/- IS CONCERNED, HUF HAD TRANSFERRED THE S AID AMOUNT TO THE ACCOUNT OF S.L. RAJGURU HUF. COPY OF THE BOOKS OF AC COUNT OF THE ASSESSEE AND CONTRA ENTRY FROM THE BOOKS OF SHRI IN DRANIL RAJGURU ARE ATTACHED WITH THE PAPER BOOK PAGES 18 TO 19. REGARD ING DEPOSITOR SHRI LABHUBEN THAKER AN AMOUNT OF RS.1.00 LAKH, THE TRA NSACTION WAS THROUGH BANKING CHANNEL. CONFIRMATION FROM THE DEPO SITOR WAS ATTACHED AT PAGE 20 AND SHE WAS ASSESSED TO TAX AND AMOUNT O F RS.25,000/- WITH REGARD TO MANJULABEN JOSHI THE TRANSACTION WAS THROU GH BANKING CHANNEL. CONFIRMATION FROM THE DEPOSITOR WAS ATTACH ED AT PAGE 21 OF THE PAPER BOOK. SHE WAS TAXED BY ITO, WARD-2 (4). D ETAILED PAPER BOOK SUBMITTED BEFORE US BY THE LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE. THE JUDGMENT OF THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA REPORTED IN 21 TA XMANN.COM 159 (GUJ) HAS HELD THAT THE DELETION MADE BY THE ASSESSI NG OFFICER, BASED ON ERRONEOUS APPROACH BY WRONGLY SHIFTING THE BURDE N AGAIN UPON THE ASSESSEE WITHOUT VERIFYING THE INCOME TAX RETURN OF THE CREDITORS. THE POSITION, HOWEVER, WOULD HAVE BEEN DIFFERENT IF THO SE CREDITORS WERE NOT INCOME TAX ASSESSEE OR IF THEY HAD NOT DISCLOSED TH OSE TRANSACTIONS IN THEIR INCOME TAX RETURNS OF IF SUCH RETURNS WERE NO T ACCEPTED BY THEIR ASSESSING OFFICER. 8. IN VIEW OF THE AFORESAID FACTS, WE ALLOW THE APP EAL OF THE ASSESSEE AS ASSESSEE HAS GIVEN ALL DETAILS PERTAINING TO TRA NSACTION AND THEREAFTER IT WAS THE DUTY OF THE ASSESSING OFFICER TO VERIFY DETAILS SUBMITTED BY THE ASSESSEE BUT ASSESSING OFFICER FAILED TO VERIFY THE SAME. ACCORDINGLY, WE PAGE 7 ITA 2 09/RAJ/2014 SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE APP EAL OF THE ASSESSEE WITH THE AFORESAID DIRECTION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16.08.2016 SD/- SD/- (N.K. BILLAIYA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY AKS / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&' (('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+, / GUARD FILE. BY ORDER/ , / STRENGTHEN PREPARATION & DELIVERY OF ORDE RS IN THE ITAT 1) DATE OF TAKING DICTATION 08 . 08.2016 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 09 . 0 8 .201 6 4) DATE OF CORRECTION 10.08.2016 5) DATE OF FURTHER CORR ECTION 12.08.2016 PAGE 8 ITA 2 09/RAJ/2014 6) DATE OF INITIAL SIGN BY MEMBERS 16.08.2016 7) ORDER UPLOADED ON 18.08.2016 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 16.08.2016