The ITO, Ward-2(1), Surat V. Shri Jimmy S. Patalwala, Surat

ITA 215/AHD/2010

• Counselvise Citation: 21520514 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained cash credit; Onus to prove
• Section: 133(6); 68

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH , , , , , , , , !' !' !' !', , , , #$ #$ #$ #$ # % # % # % # % BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.215/AHD/2010 [ASSTT.YEAR : 2006-2007] THE ITO, WARD-2(12) SURAT. /VS. SHRI JIMMY S. PATALWALA 218/B, ROAD NO.6E UDHNA UDHYOGNAGAR UDHNA, SURAT. PAN : AABCP 9769 L ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - #/ REVENUE BY : SHRI B.L. YADAV / , - #/ ASSESSEE BY : MS.URVASHI SHODHAN 0 , '$/ DATE OF HEARING : 5 TH JUNE, 2012 123 , '$/ DATE OF PRONOUNCEMENT : 22-6-2012 #4 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-II, SURAT DATED 27.10.2009 FOR THE A.Y.2006-2007. ITA NO.215/AHD/2010 -2- 2. THE GROUND NO.1 OF THE REVENUES APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE BY THE AO OF RS.7,68,900/- UNDER SECTION 68 OF THE ACT . 3. THE LEARNED DR, AT THE OUTSET SUBMITTED THAT THE AMOUNT OF RS.7,68,900 MENTIONED IN THIS GROUND IS A MISTAKE AND IS TO BE CORRECTLY READ AS RS.6,56,400 AS THE LEARNED CIT( A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS.1,12,500/- AND THE GROUND MAY BE READ ACCORDINGLY. AT THE REQUEST OF THE LEARNED DR, WE MODIFY THE GROUND ACCORDINGLY. 4. COMING TO THE MERIT OF THE GROUND, THE LEARNED D R SUBMITTED THAT THE AO MADE ADDITION OF RS.7,68,900/- ON ACCOU NT OF UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT AS THE ASS ESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION WITH REGARD TO CREDIT WORTHINESS OF ALL THE CREDITORS FROM WHOM THE ASSESSEE HAS BOR ROWED TOTAL LOAN OF RS.14,12,802/- IN THE NAMES OF VARIOUS 37 CREDITORS . THE LEARNED CIT(A) DELETED THE ADDITION, EXCEPT IN THE CASE OF ADDITION TO THE EXTENT OF RS.1,12,500/- ON THE GROUND THAT THE ASS ESSEE HAS FURNISHED CONFIRMATORY LETTERS OF ALL THE CREDITORS TOGETHER WITH THEIR BANK STATEMENTS AND PAN AND HENCE ESTABLISHED THEIR IDEN TITY AND CREDITWORTHINESS. THE LEARNED DR SUBMITTED THAT CI T(A) HAS NOT APPRECIATED THAT THESE CREDITORS WERE OF VERY SMALL MEANS AND HAVE NO ESTABLISHED BUSINESS OR REGULAR SOURCE OF INCOME. IT IS SUBMITTED THAT MERE FILING OF PROOF OF HAVING FILED IT RETURN, THE GENUINENESS AND CREDITWORTHINESS OF THE PARTIES CANNOT BE PROVED. AS PER VARIOUS DECISIONS OF THE COURTS, ONUS TO PROVE THE TRANSACT ION UNDER SECTION 68 IS ON THE ASSESSEE AND NOT ON THE DEPARTMENT. IT I S THEREFORE SUBMITTED THAT THE LEARNED CIT(A) WAS NOT RIGHT IN DELETING T HE ADDITION MADE BY ITA NO.215/AHD/2010 -3- THE AO UNDER SECTION 68, WHICH SHOULD BE REVERSED A ND THAT OF THE ORDER OF THE AO MAY BE REVERSED. THE LEARNED DR AL SO REFERRED TO VARIOUS RELEVANT PARAGRAPHS OF THE ASSESSMENT ORDER TO SUPPORT THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR THE A SSESSEE ON THE OTHER HAND RELIED ON THE ORDER OF THE LEARNED CIT(A ). SHE SUBMITTED THAT THE ASSESSEE HAS FURNISHED CONFIRMATORY LETTER S OF ALL THE CREDITORS TOGETHER WITH THEIR BANK STATEMENTS AND THEIR PAN. THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF TH E CREDITORS AS THERE WERE EVIDENCES OF CREDIT WORTHINESS OF ALL THE CRED ITORS IN THE FORM OF THEIR BANK STATEMENTS. THE LOAN TRANSACTIONS WERE BY ACCOUNT PAYEE CHEQUES. IT IS SUBMITTED THAT SIMPLY BECAUSE THE D EPOSITORS HAVE NOT REPLIED TO THE NOTICES UNDER SECTION 133(6) OF THE ACT, THE SAME SHOULD NOT BE ADVERSELY INTERPRETED AGAINST THE ASSESSEES CLAIM. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE, WHOSE ORDER MAY BE UPHELD. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE DETAILS FILED BEFORE US IN THE PAPER BOOK AS ALSO EVIDENT FROM THE ORDER OF THE CIT(A), THE ASSESSEE HAS FURNISHED RELEVANT DETAILS WITH REGARD TO IDENTITY, GENUINENESS AND CREDIT-WORTHINESS OF THE PARTIES/DE POSITORS. THESE DOCUMENTS ARE MAINLY PAN CARDS, CONFIRMATION LETTER S, BANK STATEMENTS OF THE DEPOSITORS. THE LEARNED CIT(A) H AS NOTED THAT THERE WAS EVIDENCE OF IDENTITY, THERE WAS EVIDENCE OF CRE DITWORTHINESS OF THE CREDITORS IN THE FORM OF BANK STATEMENTS, AND T HE LOANS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES WHICH ESTABLISHED THE GENUINENESS OF THE TRANSACTIONS AND THERE WAS SUFFICIENT BALANC E AVAILABLE IN THE BANK ACCOUNTS OF ALL SUCH DEPOSITORS. WE FIND THA T THE AO ASKED THE ASSESSEE TO FURNISH THE OCCUPATION OF THE DEPOSITOR S AND THE SOURCE OF ITA NO.215/AHD/2010 -4- SOURCE, WHICH IN OUR OPINION ARE NOT NECESSARY TO E STABLISH THE GENUINENESS OF THE TRANSACTION. THE LEARNED CIT(A) HAS ALSO NOTED IN HIS IMPUGNED ORDER THAT IN SOME CASES, WHERE NOTICE UNDER SECTION 133(6) OF THE ACT WERE SERVED AND SOME OF THE DEPOS ITORS HAD NOT FILED THEIR REPLY, IN SUCH CASES, THE LEARNED CIT(A) HELD THAT THERE COULD HAVE BEEN SEVERAL REASONS FOR SUCH DEPOSITORS TO HA VE NOT RESPONDED TO THE NOTICE ISSUED BY THE AO AND THAT THE AO SHOU LD HAVE PROCEEDED TO THE NEXT STAGE OF INQUIRY BY PHYSICAL VERIFICATI ON OF THE ADDRESSES, AND THEN BY SENDING NOTICES U/S.131 OF THE ACT, AND THEREFORE, FAILURE ON THE PART OF THE AO NOT DO SO, THE SAME COULD NOT BE VIEWED ADVERSELY AGAINST THE ASSESSEE. THIS OBSERVATION OF THE LEARNED CIT(A) HAS NOT DISPUTED BY THE LEARNED DR BEFORE US . THEREFORE, IN OUR OPINION, THE LEARNED CIT(A) RIGHTLY IN DELETING THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE ACT, WHICH WE UPH OLD AND THIS GROUND OF THE REVENUE IS DISMISSED. 6. THE SECOND GROUND OF THE REVENUES APPEAL READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALL OWANCE OF RS.17,075/- MADE BY THE AO OUT OF INSURANCE COMMISS ION PAYMENT. 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). THE LEARNED CIT(A ) HAS FOUND THE EXPENSES TO BE GENUINE AND THAT NO PERSONAL ELEMENT WAS INVOLVED IN IT. IT IS BEYOND ONES COMPREHENSION THAT INCOME O R PROFIT OR THE COMMISSION FOR THAT MATTER, CAN BE EARNED WITHOUT A NY EXPENSES. FOR EARNING SOME INCOME IN THE FORM OF COMMISSION ETC. ONE HAS TO INCUR EXPENSES, WHICH IS NATURAL. THEREFORE, FOR EARNING A COMMISSION INCOME OF RS.2,20,381/-, THE CLAIM EXPENSES AT THE RATE 15.5% IS ITA NO.215/AHD/2010 -5- JUSTIFIED AND THE LEARNED CIT(A) RIGHTLY HELD SO. THEREFORE, HIS ORDER ON THIS ISSUE WARRANTS NO INTERFERENCE FROM OUR SID E, WHICH IS ACCORDINGLY UPHELD, THIS GROUND OF THE REVENUE IS D ISMISSED. 8. THE GROUND NO.3 OF THE REVENUES APPEAL READS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALL OWANCE OF RS.5,825/- MADE BY THE AO OUT OF OFFICE EXPENSES, C ONVEYANCE EXPENSES AND STAFF WELFARE EXPENSES. 9. HAVING HEARD BOTH THE PARTIES AND PERUSED THE OR DERS OF THE AO AND THE CIT(A), WE FIND THAT THE ABOVE EXPENSES HAV E BEEN INCURRED BY THE ASSESSEE TO MEET THE OFFICE EXPENSES, CONVEY ANCE EXPENSES AND STAFF WELFARE EXPENSES INCLUDING EXPENSES ON TEA, C OFFEE, SNACKS ETC. LOOKING TO THE PETTINESS OR SMALLNESS OF THE AMOUNT , AND THAT, SUCH EXPENSES DO INCUR IN DAY-TO-DAY RUNNING OF THE BUSI NESS, DELETION OF ADDITION BY THE ASSESSEE, CANNOT BE SAID TO BE INCO RRECT OR NOT GENUINE. WE THEREFORE CONFIRM THE DELETION ADDITION MADE BY THE CIT(A) ON THIS ISSUE AND DISMISS THIS GROUND OF THE REVENUE. 10. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( / MUKUL KR. SHRAWAT) ( /JUDICIAL MEMBER ( !' !' !' !' / ANIL CHATURVEDI) #$ #$ #$ #$ /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER