DCIT, CHITTORGARH V. M/s. Dhan Laxmi Soya Pvt. Ltd., NIMBAHERA

ITA 218/JODH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9467 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-02-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 08-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; TDS; Set aside
• Section: 143(3); 143(2); 263; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI V.D. RAO, JUDICIAL MEMBER ITA NO. 218/JU/2010 ASSTT. YEAR :1996-97 D.C.I.T., CIRCLE, VS. M/S. DHAN LAXMI SOYA PVT. LTD., CHITTORGARH. NIMBAHERA. GIR NO. D-3/CIRCLE/COR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AVADHESH KUMAR, D.R. RESPONDENT BY : SHRI AMIT KOTHARI, A.R. O R D E R PER S.V. MEHROTRA, A.M : THIS APPEAL BY THE DEPARTMENT ARISES OUT OF THE OR DER DATED 05.01.2010 OF LEARNED CIT(A), UDAIPUR. THE ONLY GROUND RAISED IN APPEAL R EADS AS UNDER : ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.29,46,302/- MADE U/S. 68 OF THE I.T. ACT WITHOUT APPRECIATING THE ME RIT OF THE CASE IN ITS LEGAL PROSPECTS. 2. THE BRIEF FACTS APROPOS THE ISSUE ARE THAT THE A SSESSMENT U/S. 143(3)/250/254 WAS COMPLETED ON 24.03.2006 AT A LOSS OF RS.27,34,316/- . LATER ON, ORDER U/S. 263 WAS PASSED AND ASSESSMENT WAS SET ASIDE. IN COMPLIANCE TO THE DIRECTION OF THE LEARNED CIT, THE ASSESSING OFFICER ISSUED NOTICE U/S. 143(2) ALONGWI TH DETAILED QUERY, IN RESPONSE TO WHICH THE ASSESSEES AUTHORIZED REPRESENTATIVE ATTE NDED FROM TIME TO TIME. THE ASSESSEE RAISED NEW LOANS OF RS.27,10,100/- AND CLAIMED INTE REST OF RS.2,36,202/-. THE ASSESSEE WAS REQUIRED TO FURNISH THE EVIDENCE REGARDING CRED ITWORTHINESS OF THE CREDITORS AND 2 EVIDENCE REGARDING GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE FURNISHED COPY OF CONFIRMATION AND COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME OF CREDITORS. HOWEVER, THE ASSESSEE FAILED TO PRODUCE CASH CREDITORS IN SP ITE OF OPPORTUNITIES. THEREFORE, THE ASSESSING OFFICER MADE AN ADDITION OF RS.29,46,302/ - (RS.27,10,100 + RS.2,36,202/-) TREATING THE SAME AS UNEXPLAINED CASH CREDITS U/S. 68. 3. THE LEARNED CIT(A) ALLOWED THE ASSESSEES APPEAL INTER ALIA OBSERVING AS UNDER : BECAUSE THERE IS NO DISPUTE THAT THE APPELLANT HAS OBTAINED THE CREDITS FROM VARIOUS PARTIES EITHER THROUGH ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. IT IS ALSO UNDISPUTED THAT ALL THE CR EDITORS HAVE CONFIRMED THE ADVANCE/LOAN GIVEN TO THE APPELLANT. THEY HAVE ALSO GIVEN THE PAN/GIR NUMBER, NAME AND DESIGNATION OF THE A.O., C OPY OF PROFIT AND LOSS ACCOUNT, COPY OF BALANCE SHEET, WARD WHERE THE Y ARE BEING ASSESSED THIS CLEARLY INDICATE THAT THE APPELLANT HAS FILLY DISCHARGED HIS ONUS IN RESPECT OF THE CREDITORS BY GIVING SUFFICIENT DETAI LS ABOUT THE CREDITORS. THERE IS ALSO NO DISPUTE THAT THE APPELLANT HAS DED UCTED TDS WHEREVER APPLICABLE ON INTEREST PAYMENT MADE TO THE CREDITOR S. ON GOING THROUGH THE ASSESSMENT UNDER APPEAL IT AP PEARS THAT THE A.O. HAS NOT MADE ANY EFFORTS TO ESTABLISH THAT THE CREDITORS CLAIMED BY THE APPELLANT AS GENUINE, ARE ACTUALLY BOGUS AND THE AP PELLANT HAS INTRODUCED HIS UNEXPLAINED MONEY IN THE FORM OF CASH CREDITS I N THE NAME OF DIFFERENT PERSONS, BY BRINGING ANY MATERIAL EVIDENCE ON RECOR D. THERE IS ALSO NO DISPUTE THAT EVEN AFTER THE REPEATED REQUEST OF THE APPELLANT, THE A.O. HAS NOT MADE ANY EFFORTS TO EXAMINE THE CREDITORS EITHE R BY ISSUE OF SUMMONS OR COMMISSION. THIS ACTION OF THE A.O. CLEARLY INDI CATES THAT THE A.O. IS FULLY SATISFIED ABOUT THE GENUINENESS OF THE CREDIT ORS, BUT HE MADE THE ADDITION ON ACCOUNT OF THE CASH CREDITORS ONLY FOR THE SAKE OF COMPLYING WITH THE DIRECTIONS CONTAINED IN THE ORDER UNDER SE CTION 263 OF THE ACT. 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND HAVE PERUSED THE RECORD OF THE CASE. BEFORE WE COME TO ANY CONCLUSION, IT IS N ECESSARY TO FIRST CONSIDER THE HISTORY OF THIS ADDITION. IN THIS CASE, THE ORIGINAL ASSESSMEN T WAS COMPLETED U/S. 143(3) DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.67,47,302/- AS AGAINST RETURNED LOSS OF RS.27,79,316/-. AGGRIEVED WITH THIS, THE ASSESSEE F ILED APPEAL BEFORE THE LEARNED CIT(A), 3 UDAIPUR AND THE LEARNED CIT(A), UDAIPUR VIDE HIS O RDER DATED 26.08.1999 IN APPEAL NO. 88/IT/99-2000 DELETED THE ADDITION AND CONSEQUENTLY , FINAL INCOME OF THE ASSESSEE HAD BEEN DETERMINED AT LOSS OF RS.27,34,316/- AS UNDER : 1. ADDITION UNDER SECTION 68. (A) RS.52,00,000 (B) RS.34,66,308 (C) RS.03,04,045 RS.8970,353 (I). OUT OF TRADING RS.04,98,596 (II) OUT OF TELEPHONE & TRAVELLING EXPENSES RS.00,1 2,669 TOTAL RS.94,81,618 BALANCE RS. 74,174 LESS DEPRECIATION AS PER ASSTT. ORDER. RS. 28,10, 490 NET LOSS RS.27,34,316 AGGRIEVED BY THIS ORDER THE DEPARTMENT PREFERRED AP PEAL BEFORE THE ITAT AND THE TRIBUNAL VIDE ITS ORDER DATED 31.01.2005 IN ITA NO. 526/JDPR/1999 SET ASIDE THE ADDITION OF RS.37,70,353/- MADE ON ACCOUNT OF UNEXPLAINED CR EDIT U/S. 68 OF THE ACT TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WHILE SETTING ASIDE THE ISSUE, IT WAS CLEARLY MENTIONED THAT THE AO WAS NOT ENTITLED TO M AKE ADDITION U/S. 68 ON ACCOUNT OF BROUGHT FORWARD BALANCES AMOUNTING TO RS.8,97,600/- . THEREFORE, THE CASH CREDITS WHICH WERE TO BE CONSIDERED AFRESH BEFORE THE ASSESSING O FFICER WERE RS. 25,68,708/- IN THE NAMES OF 26 PERSONS AND INTEREST ALLEGED TO HAVE BE EN PAID ON SUCH CREDITS. IN CONSEQUENCE TO THE TRIBUNALS DIRECTION, THE AO IN HIS ORDER U/S. 143(3)/250/254 DATED 24.03.2006 OBSERVED AS UNDER : I HAVE DEEPLY GONE THROUGH THE REPLY FILED BY THE ASSESSEE ON THE ISSUE OF CASH CREDITS UNDER SECTION 68 AND THE MATE RIAL FILED BY THE ASSESSEE IN THIS REGARD WHICH IS PLACED ON FILE AND HAVE OBSERVED AS UNDER : 4 1. ALL THE CREDITORS ARE ASSESSED TO INCOME-TAX 2. COMPLETE DETAILS OF PAN/GIR NUMBER, DESIGNATION OF ALL AO ALONGWITH COMPLETE ADDRESS OF THE CREDITORS HAVE BEEN FILED, WHICH IS PLACED ON RECORD. 3. THE ASSESSEE HAS DEDUCTED TDS FROM THE INTEREST PAY MENT MADE TO THE CREDITORS. 4. ALL THE CREDITS HAVE BEEN OBTAINED THROUGH ACCOUNT PAYEE CHEQUE OR DRAFT. 5. REPAYMENTS OF SOME OF THE CREDITS HAVE BEEN MADE TH ROUGH ACCOUNT PAYEE CHEQUE/DD IN SUCCEEDING YEARS. IN VIEW OF THE ABOVE FACTS AND DETAILS PLACED ON FI LE, THE CREDITWORTHINESS AND IDENTITY OF ALL THE CREDITORS STAND PROVED, THE REFORE, NO INTERFERENCE IS CALLED FOR IN THIS REGARD. HOWEVER, LATER ON, THE ASSESSMENT ORDER SO PASSED B Y THE ASSESSING OFFICER WAS SET ASIDE BY THE CIT, UDAIPUR U/S. 263 ON THE GROUND OF SAME BEING ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE WITH THE DIRECTION TO DECI DE THE ISSUE AFRESH. THUS, THE LEARNED CIT PASSED THE ORDER U/S. 263 WHEN THE ISSUE HAD BE EN EXAMINED AT VARIOUS LEVELS. HOWEVER, ON MERIT, WE FIND THAT IN THE PRESENT PROC EEDINGS, EVEN AFTER INVOKING JURISDICTION U/S. 263, THE ASSESSMENT HAS BEEN COMP LETED BY MAKING THE ADDITIONS FOR THE IMPUGNED AMOUNT ONLY ON THE GROUND THE CREDITORS CO ULD NOT BE PRODUCED. THE LEARNED COUNSEL POINTED THAT THE CREDITORS RESIDE 2000 KILO METERS AWAY AND, THEREFORE, THEY HAD SUBMITTED ALL THE REQUISITE DETAILS AND THEIR NECES SARY VERIFICATIONS COULD BE CARRIED OUT IF THE ASSESSING OFFICER HAD ISSUED COMMISSION TO THE CONCERNED ASSESSING OFFICERS FOR EXAMINATION OF THE CREDITORS. WE FIND CONSIDERABLE FORCE IN THIS SUBMISSION, PARTICULARLY WHEN ALL THE CREDITORS WERE INCOME-TAX ASSESSEES AN D THE ASSESSEE HAD FURNISHED NAMES AND DESIGNATIONS OF THE CONCERNED ASSESSING OFFICER S. IT IS WELL SETTLED LAW THAT MERE NON-PRODUCTION OF CREDITORS CANNOT LEAD TO THE CONC LUSION REGARDING NON-GENUINENESS OF THE CREDITS. THE ENTIRE EVIDENCE HAS TO BE CONSIDER ED BEFORE ARRIVING AT ANY CONCLUSION. IN THE PRESENT CASE, THE ASSESSEE HAD FILED NAMES AND ADDRESSES OF THE CREDITORS, PAN/GIR 5 NUMBERS, COPY OF INCOME-TAX RETURNS, BALANCE SHEETS , PROFIT & LOSS ACCOUNT ETC., WHICH CLEARLY INDICATE THAT THE ASSESSEE HAS FULLY DISCHA RGED ITS ONUS BY FURNISHING ALL THE REQUISITE DETAILS OF THE CREDITORS. UNDER SUCH CIRC UMSTANCES, MERE NON-PRODUCTION OF THE CREDITORS WAS OF NO CONSEQUENCE, PARTICULARLY WHEN THE ASSESSEE HAD FURNISHED ALL THE REQUISITE DETAILS ABOUT THE CREDITORS AND THE ASSES SING OFFICER COULD ISSUE NECESSARY SUMMONS IF HE HAD ANY DOUBT ON THE CREDITORS. WE, T HEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.02.11 . SD/- SD/- (V.D. RAO) (S.V. MEHROTRA) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED : 9 TH FEBRUARY, 2011 *AKS/- COPY FORWARDED TO:- 1. APPELLANT, 2. RESPONDENT, 3. INCOME-TAX OFFICER, 4. CIT, 5. D/R 6. GUARD FILE