The ITO, Ward-2(1), Surat V. Smt. Darshnaben Bharatkumar Jariwala, Surat

ITA 2164/AHD/2009

• Counselvise Citation: 216420514 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESHCHANDRA SHARMA
• Assessee Lawyers: SAPNESH SETH
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2164/AHD/2009 ASSESSMENT YEAR :2005-06 ITO, WARD-2(1), SURAT V/S . SMT. DARSHNABEN BHARATKUMAR JARIWALA PAN NO. AAUPJ2804Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI DINESH CHANDRA SHARMA, SR. D.R. /BY RESPONDENT SHRI SAPNESH SETH, A.R. /DATE OF HEARING 17 .0 5 .2012 /DATE OF PRONOUNCEMENT 31.05.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS REVENUES APPEAL ARISES OUT OF ORDER OF CI T(A)-II, SURAT, ORDER DATED 12.03.2009 FOR ASSESSMENT YEAR 2005-06. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED A) IN DELETING THE ADDITION MADE BY THE A.O. OF RS. 10,06,665/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. ITA NO. 2164/AHD/2009 A.Y.2005-06 PAGE 2 B) IN DELETING THE ADDITION MADE BY THE A.O. OF RS.1,08,374/- ON ACCOUNT OF DISALLOWANCE MADE @ 20% OUT OF THE EXPENSES CLAIMED IN THE TRADING AND P & L A/ C. 2. THE FIRST GROUND OF APPEAL 1 (A) IS AGAINST THE DELETION OF RS. 10,06,665/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE I.T.ACT. THE LD. A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN SUNDRY CR EDITORS AGGREGATING OF RS. 10,06,665/- IN BALANCE SHEET FOR A.Y. 2005-06. HE ASKED FROM THE ASSESSEE TO FILE THE CONFIRMATION OF THESE CASH CRE DITORS BUT THE SAME WERE NOT FILED BY THE ASSESSEE. THEREFORE, THE LD. A.O . MADE AN ADDITION OF RS. 10,06,665/- BECAUSE OF CREDITORS TREATED BOGUS. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE FILED FIRST APPEAL BEFORE LD. CIT(A)-II, SURAT AND WHO HAS ADJUDICATED THIS ISSUE ON PAGE 5 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER:- I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. AL ONGWITH THE FIRST WRITTEN SUBMISSION DTD. 12.12.2008, THE ARS HAVE FU RNISHED A COPY OF THE ASSESSEES BANK ACCOUNT WITH THE SURAT PEOPLES CO-OPERATIVE BANK LTD, AND COPIES OF LEDGER ACCOUNTS OF THE CREDITORS . SPECIFIC PAYMENTS MADE TO THE CREDITORS HAVE BEEN HIGHLIGHTED AND TAL LIED WITH THEIR LEDGER ACCOUNTS. THESE HAD BEEN FORWARDED TO THE AO FOR H IS COMMENTS, AND OBSERVATIONS, AS MENTIONED EARLIER IN THIS ORDER. IT IS ALSO TRUE, AND THIS HAS BEEN POINTED OUT BY THE ARS THAT IN HIS REMAND REPORT, THE AO HAS NOT FURNISHED ANY COMMENT REGARDING SUCH EVIDENCE F URNISHED BY THE ARS. I AM OF THE VIEW THAT WHEN COMPLETE EVIDENCE HAVE BEEN FURNISHED REGARDING THE PAYMENTS MADE TO THE CREDIT ORS IN SUBSEQUENT YEARS, THERE CANT BE ANY REASON TO TREAT SUCH CRED ITORS AS EITHER BEING NOT GENUINE OR NOT IN EXISTENCE. WHAT MUST BE APPR ECIATED IS THAT, IN ASSESSMENT PROCEEDINGS, THE AO HAD NO OTHER OPTION BUT TO TREAT THE CREDITORS AS UNEXPLAINED SINCE NO EVIDENCE OR DETAI L HAD BEEN FURNISHED ITA NO. 2164/AHD/2009 A.Y.2005-06 PAGE 3 BEFORE HIM. CONSIDERING ALL SUCH FACTS AND CIRCUMS TANCES OF THE CASE, I DIRECT THE AO TO DELETE THE ADDITION OF THE SUM OF RS.10,06,665. 4. NOW THE REVENUE IS IN SECOND APPEAL BEFORE US. LD. D.R. OBJECTED THE DELETION MADE BY THE LD. CIT(A) ON THE GROUND THAT NO PROPER OPPORTUNITY HAS BEEN GIVEN BY HIM. LEARNED COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND CONTENDED THAT THE LD. CIT(A) HA S CONSIDERED ALL THE EVIDENCES IN SUPPORT OF HIS CLAIM. 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND ARGUMENT OF BOTH SIDES. THE APPELLANT HAS FILED THE CONFIRMATI ON BEFORE THE LD. CIT(A) WHO HAD FORWARDED THE CONFIRMATION FOR THE COMMENT OF T HE A.O. BUT HE DID NOT FURNISH ANY COMMENT ON EVIDENCE FURNISHED BY THE AS SESSEE. WE ALSO FEEL THAT THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL AFTER CONSIDERING THE EVIDENCE IN FAVOUR OF THE ASSESSEE. THUS, APPEAL O F REVENUE ON THIS GROUND IS DISMISSED. 6. THE SECOND GROUND OF APPEAL IN GROUND NO. 1 (B) IS AGAINST THE DISALLOWANCE OF THE EXPENSES OF RS. 1,08,374/-. TH E A.O. OBSERVED IN ASSESSMENT ORDER AT PAGE NOS. 3 TO 5 THAT THE ASSES SEE HAD DEBITED TOTAL EXPENSES IN P&L ACCOUNT AT RS. 4,01,760/- AND RS. 2 ,19,272/- UNDER VARIOUS HEADS. HE GAVE REASONABLE OPPORTUNITY TO THE ASSES SEE FOR JUSTIFYING THE EXPENSES WITH EVIDENCES. THE APPELLANT FILED SOME OF THE EVIDENCES BUT COULD NOT FILE EVIDENCES OF SOME OF THE EXPENSES. THEREFORE, HE DISALLOWED RS. 1,08,374/- BEING 20% OF TOTAL EXPENSES AND ADDE D BACK IN THE INCOME OF THE ASSESSEE. ITA NO. 2164/AHD/2009 A.Y.2005-06 PAGE 4 7. BEING AGGRIEVED BY THE ORDER OF A.O., THE ASSESS EE FILED FIRST APPEAL BEFORE THE LD. CIT(A) WHO HAD DELETED THE ADDITION BY GIVING THE FOLLOWING OBSERVATION ON PAGE 6 & 7:- I HAVE CAREFULLY CONSIDERED THE MATTER. GIVEN THE FACTS BROUGHT OUT BY THE ARS WHERE IT HAS BEEN SHOWN THAT EVEN THOUGH TH E EXPENSES CLAIMED IN THE TRADING ACCOUNT HAD GONE DOWN BY 5.5 % AS COMPARED TO THE PRECEDING YEAR, THE GROSS PROFIT RATIO HAD INCR EASED BY 1.69% ON A TURNOVER WHICH HAD ALSO INCREASED. GIVEN SUCH FACT S, IF ANY ADHOC DISALLOWANCE AT A FIXED PERCENTAGE OUT OF BOTH THE TRADING AND P&L ACCOUNTS IS ALLOWED TO BE SUSTAINED, IT WOULD RESUL T IN GROSS MISCARRIAGE OF JUSTICE. I WOULD THEREFORE DIRECT THE AO TO DEL ETE THE ADDITION OF THE SUM OF RS. 1,08,374. 8. NOW THE REVENUE IS IN SECOND APPEAL BEFORE US. THE LD. D.R. OPPOSED THE DELETION MADE BY THE LD. CIT(A) WHEREAS ANOTHER SIDE, LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED TO CONFIRM THE DELETION OF LD. CIT(A). THE APPELLANT HAD PRODUCED WHATEVER EVIDENCE AVAILABLE WITH HIM BEFORE THE A.O. BUT CERTAIN EXPENSES LIKE TRANSPORTATION EXPENSES, MISCELLANEOUS EXPENSES, DISCOUNT ETC. CANNOT BE MADE AVAILABLE FROM THE SE COND PARTIES. FURTHER, IT APPEARS FROM THE RECORD THAT THE ASSESSEES BOOKS A CCOUNTS WERE DESTROYED IN THE FLOOD WHICH TOOK PLACE ON AUGUST 2006 IN SUR AT CITY. THE ASSESSMENT WAS COMPLETED ON 29.11.2007 FOR A.Y. 2005-06 AFTER A LAPSE OF MORE THAN TWO YEARS. THUS, THE LD. CIT(A) RIGHTLY DELETED THE AD DITION. WE CONFIRM THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ITA NO. 2164/AHD/2009 A.Y.2005-06 PAGE 5 ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( D.K.TYAGI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBE R TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 29.05.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 30.05.2012 4) DATE OF CORRECTION 30.05.2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 31.05.2012 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON