The ITO, S.K.Ward-3, Himatnagar V. M/s. Mehta Finance, Dist.Sabarkantha

ITA 2296/AHD/2005

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57044 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 27-10-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA SRDR
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained cash credit; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.2296 & 2215/AHD/2005 ASSESSMENT YEAR:2002-03 I.T.O. S.K. WARD-3, HIMATNGAR, 3 RD FLOOR, AMBALAL COMPLEX, B/H. MEHTA PETROL PUMP, HIMATNAGAR M/S. MEHTA FINANCE NAVA BAZAR, HMATNAGAR, DIST. S.K. PAN NO.AACFM5349L / V/S . / V/S . M/S MEHTA FINANCE, JUNA BAZAR, HIMATNAGAR INCOME TAX OFFICER, SK WARD-3, HIMATNAGAR, DIST. S.K. / APPELLANT .. / RESPONDENT BY ASSESSEE SHRI S.N.DIVETIA, AR BY RESPONDENT SHRI RAJ MEHRA, SR-DR / DATE OF HEARING 16-01-2012 / DATE OF PRONOUNCEMENT 20-01-2012 ! ! ! ! / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THESE CROSS-APPEALS OF THE REVENUE AND THE ASSESSEE ARISE FROM THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I X, AHMEDABAD DATED 29- 08-2005 FOR THE ASSESSMENT YEAR 2002-03. THE REVEN UE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL ITA NO.2296/AHD/2005 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIVING RELIEF OF RS.2,91,000/- OUT OF TOTAL ADDITION OF RS.16,20,498 /- MADE U/S. 68 OF THE INCOME-TAX ACT. ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 2 2.THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN G IVING RELIEF OF RS.85,751/- OUT OF TOTAL ADDITION OF RS.2,21,780/.- MADE BY DISALLOWING INTEREST PAYMENTS TO NON GENUINE CASH CREDITORS. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.21,03,002/- MADE U/S. 69B OF THE INCOME-TAX A CT. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,00,000/- MADE BY ESTIMATING THE COMMISSION INCOME U/S. 145 OF THE INCOME-TAX ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- ITA NO.2215/AHD/2005. (1) THE ORDER PASSED BY THE HONBLE C.I.T.(A)-IX, AHMEDABAD ON 29.08.2005 CONFIRMING THE ADDITION OF NON-GENUINE D EPOSIT AMOUNTING TO RS.13,29,498/- AS NON-GENUINE CASH CREDIT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. (2) THE ORDER PASSED BY THE HONBLE C.I.T.(A)-IX, A HMEDABAD ON 29.08.2005 CONFIRMING THE ADDITION OF INTEREST ON A BOVE REFERRED DEPOSITS AMOUNTING TO RS.1,36,029/- AS NON-GENUINE CASH CREDIT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. (3). THE HONBLE C.I.T.(A) HAS GROSSLY ERRED IN CON FIRMING THE IMPUGNED ADDITIONS MADE BY THE A.O WITHOUT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS/EVIDENCE PRODUCED BEFORE HIM AS WELL A S ADMITTING THE FRESH EVIDENCE IN SPITE OF INSUFFICIENT OPPORTUNITY ALLOWED BY THE A.O. THUS, THE IMPUGNED ORDER IS PASSED IN GROSS VIOLATI ON OF THE PRINCIPLES OF NATURAL JUSTICE. (4) THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, TH E HONBLE C.I.T.(A) OUGHT NOT TO HAVE CONFIRMED THE ABOVE SAID ADDITION S. (5) THE APPELLANT DOES NOT ADMIT THE OBSERVATIONS M ADE AND CONCLUSION REACHED BY BOTH THE LOWER AUTHORITIES WHICH ARE CON TRARY TO THE EVIDENCE ON RECORD. 2. THE BRIEF FACTS IN GROUND NO.1 AND 2 OF THE REVE NUE AND GROUND NO. 1 TO 4 OF THE ASSESSEE ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF FINANCING. DURING THE YEAR THE ASSESSEE INTRODUCED RS.25,00,498/- AS CASH ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 3 CREDITS. THE ASSESSEE FILED THE CONFIRMATIONS FOR S OME OF THE DEPOSITORS ONLY. THE ASSESSEE COULD NOT FILE SUFFICIENT DETAILS FOR REST OF THE DEPOSITORS AND IT WAS SUBMITTED THAT NUMBER OF PARTIES IS QUITE LARGE . THE ASSESSING OFFICER ACCORDINGLY TREATED THE CASH CREDITS AMOUNTING TO R S.16,28,498/- AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE . 3. BEFORE THE LD. CIT(A) THE ASSESSEE FILED A CHART INDICATING DETAILS I.E. DATE OF PAYMENT, SOME ADDRESSES OF THE DEPOSITORS A ND MADE A REQUEST THAT AO MAY BE ASKED TO CONDUCT THE INQUIRIES BECAUSE AS SESSEE WAS NOT IN A POSITION TO CONTRACT THESE PARTIES. THE AO SENT THE ENTIRE PAPERS ALONG WITH SUBMISSIONS TO THE AO WHO SUBMITTED THE REPORT VIDE LETTER DATED 27-06-2005. 4. IN THE REMAND REPORT, THE AO SUBMITTED THAT THER E WERE 79 CASH CREDITORS OUT OF WHICH NAME OF ONE CASH CREDITOR WA S NOT MENTIONED AND SUMMONS U/S.131 TO 78 PERSONS WERE ISSUED THROUGH R EGISTERED A/D. SUMMONS ON 49 PERSONS REMAINED UNSERVED, SUMMONS ON 14 PERSONS WERE SERVED BUT NOT ATTENDED. ONLY TWO PERSONS ATTENDED ON WHOM SUMMONS WERE SERVED. THERE ARE 13 PERSONS ON WHOM SUMMONS WERE I SSUED BUT SUMMONS WERE NOT RECEIVED BACK AND ALSO NONE-ATTENDED BEFOR E THE ASSESSING OFFICER. THE AR IN THE COUNTER REPLY SUBMITTED THAT SUMMONS WERE SERVED ON 15 PERSONS AND ON OTHER PERSONS EITHER SUMMONS WERE NO T SERVED FOR WANT OF INCOMPLETE ADDRESSES OR THE PERSONS NOT LIVING THER E ETC. THE DETAILS ARE AVAILABLE AT THE PAGES 6 AND 7 OF THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 5. THE LD. CIT(A) ON APPRECIATING THE FACTS WITH RE SPECT TO THE REMAND REPORT AND COUNTER REPLY OF THE ASSESSEE VIDE PARA- 5.3 OF HIS ORDER WAS OF THE VIEW THAT IT BECOMES RELEVANT FOR THAT MOST OF THE REPAYMENTS WERE MADE EITHER DURING THE PERIODS WHEN THE ASSESSMENT PROCE EDINGS WERE GOING ON OR THEREAFTER. IN SUCH CIRCUMSTANCES, IT WAS EXPECTED OF THE ASSESSEE TO AT LEAST HAVE THE CORRECT ADDRESS AT THE TIME OF REPAYING TH E AMOUNTS, ESPECIALLY WHEN ASSESSEE HAD NOT FILED ANY CONFIRMATION IN RESPECT OF THESE DEPOSITS. THUS, ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 4 MAJORITY OF THE ADDITION IS LIABLE TO BE CONFIRMED EXCEPT WHERE SUMMONS WERE SERVED OR WHERE SUMMONS WERE NOT RECEIVED AS UNSERV ED. THE TOTAL OF SUCH DEPOSITS WORKS OUT TO RS.2.91 LAKH AND INTEREST THE REON WORKS OUT TO RS.85,751/-. THUS, OUT OF THESE TWO ADDITIONS THE A SSESSEE WAS GIVEN A RELIEF OF RS.2.91 LAKH IN RESPECT OF UNEXPLAINED CREDITS A ND RS.85,751/- IN RESPECT OF INTEREST THEREON AND BALANCE ADDITION WAS CONFIRMED . 6. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE FACTS OF THE CASE ON RECORD. IN THE PRESENT CASE, THE ASSESSEE HAS PROVI DED TO THE LD. CIT(A) THE DATE OF PAYMENT BY THE PARTIES TO THE ASSESSEE AND THE ADDRESSES OF THE PARTIES AND MADE A REQUEST TO CONDUCT THE INQUIRIES BY THE ASSESSING OFFICER AND THE SAME WAS DONE. THE ASSESSEE WAS GIVEN AN OP PORTUNITY TO COMMENT UPON THE REMAND REPORT WHICH WAS AVAILED BY THE ASS ESSEE AND THE SAME WAS TAKEN INTO CONSIDERATION BY THE LD. CIT(A). THE ARG UMENT MADE BY LD. COUNSEL OF THE ASSESSEE THAT THE ASSESSEE HAD NOT B EEN PROVIDED OPPORTUNITY TO CONTRACT THE CREDITORS OR TO MAKE FURTHER EFFORT S CANNOT BE ACCEPTED SINCE THE AO HAD ISSUED SUMMONS ONLY AT THE ADDRESSES PRO VIDED BY THE ASSESSEE. THE ASSESSEE HAS NOT MADE ANY EFFORT THEREAFTER IN THE REMAND PROCEEDINGS OR THE PROCEEDINGS BEFORE THE LD. CIT(A) AND EVEN B EFORE US. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE CONCUR WITH THE VIEW OF LD. CIT(A) WHOSE FINDINGS APPEARS TO BE REASONED ONE WHO HAS A CCEPTED THE CASH CREDITORS ON WHOM SUMMONS WERE SERVED OR WHERE SUMM ONS WERE SENT BUT THE SAME WERE NOT RECEIVED AS UNSERVED. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). THUS, GROUND NO.1 AND 2 OF THE REVENUE AND GROUND NO.1 TO 4 OF THE ASSESSEE ARE DISMISSED. 7. AS REGARDS GROUND NO.3 OF THE REVENUE, THE ASSES SING OFFICER MADE THE ADDITION U/S 69B OF THE ACT IN RESPECT OF M/S. PREM TRADING CO., M/S IMAM TRADING CO. AND M/S. N.H. PARMAR. THE FACTS ARE THA T THE ASSESSEE IS ENGAGED IN THE CHEQUE DISCOUNTING BUSINESS. IN REGA RDS TO THE DISCOUNTING ENTRIES THE ASSESSEE IN ITS CASH BOOK HAS CLAIMED T HE RECEIPT OF CHEQUES FROM ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 5 VARIOUS PARTIES FOR DISCOUNTING THE CHEQUES BY GIVI NG CASH TO SUCH PARTIES WHO HAD COME FOR GETTING THEIR CHEQUES IS DISCOUNTED, A FTER WITHDRAWING CASH FROM BANK AGAINST THE CHEQUE PRODUCED FOR DISCOUNTING WE RE CLEARED IN THE ASSESSEES BANK ACCOUNT. HOWEVER, THE LOCAL INQUIRY RESULTED IN TO DETECTION OF FACTS CONTRADICTORY TO THE ASSESSEES BOOKS OF ACCO UNT. THE ASSESSEE USED TO GIVE AWAY CASH ON THE DAY THE CHEQUES WERE PRODUCED FOR DISCOUNTING AND THOSE POST DATED CHEQUES WERE PRESENTED TO THE BANK FOR CLEARING ON THE DATE AS MENTIONED ON THE CHEQUES. THEREFORE THE PLEA OF THE ASSESSEE THAT CASH GIVEN TO PARTIES AGAINST DISCOUNTING OF CHEQUES WER E OUT OF CASH WITHDRAWAL FROM THE BANKS AGAINST THE CLEARING OF SUCH CHEQUS ARE NEITHER TRUE NOR CORRECT, HENCE THE SAME WAS NOT ACCEPTABLE. ENQUIRI ES WERE CARRIED OUT WITH THE FOLLOWING PARTIES WHO HAS BEEN SHOWN IN THE BOO KS OF ACCOUNT OF THE ASSESSEE AS DISCOUNTING PARTIES:- 1. M/S. PREM TRADING CO. OLD MARKET YARD, HIMATNAG AR 2. M/S IMAM TRADING CO. OLD MARKET YARD, HIMATNAGA R 3. M/S N.H.PARMAR,MEDATIYA, HIMATNAGAR 4. M/S J.K. SALES CORPORATION, HIMATNAGAR, 5. M/S. J.K. TRANSPORT THE STATEMENT OF THE ABOVE PERSONS WERE RECORDED U/ S.131 OF THE ACT AND ASSESSEE WAS GIVEN OPPORTUNITY TO CROSS-EXAMINE THE SE PERSONS IF THE ASSESSEE IS DISAGREEING WITH THE FACT STATED BY THE BELOW MENTIONED PERSONS. 1. BHUPENDRA M. PATEL, P/A HOLDER OF M/S. PREM TRAD ING CO. 2. JAIKIRHUSSAIN J IMAM, P/A HOLDER OF M/S. IMAM TR ADING CO. 3. MOHMED HUSSAIN V. MEMON, PROP OF M/S. J.K. TRANS PORT 4. JAKIRBHAI VALIBHAI MEMON, PROP OF M/S. J.K. SALE S CORPN. 5. SHRI NATVARLAL HIRABHAI PARMAR, PROP OF M/S. N.H .PARMAR SINCE THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY TO CROSS-EXAMINE, IT WAS ACCORDINGLY SHOW CAUSED AND LETTER DATED 11-04-2004 WAS ISSUED AND SERVED ON 12-10-2004. FURTHER, VIDE ORDER SHEET DATED 03-1 1-2004 THE ASSESSEE WAS SHOW CAUSED REGARDING THE ADDITIONS TO BE MADE U/S. 69A OF THE IT ACT. THE ASSESSEE SUBMITTED THE REPLY WHICH WAS NOT FOUND SA TISFACTORY AND THE ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 6 ASSESSING OFFICER ACCORDINGLY MADE THE ADDITION U/S 69B OF THE ACT AND TREATED THE SAME AS UNEXPLAINED MONEY NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT BY CALCULATING THE PEAK ON THE BASIS OF THE ACTUAL PAYMENT WHEN THE ASSESSEE WAS NOT HAVING ADEQUATE CASH BALANCE BUT A FTER 2-3 DAYS THE WHOLE CASH IS INTRODUCED IN THE CASH BOOK BY WAY OF WITHD RAWAL FROM BANK AGAINST THE CHEQUE CLEARED BY THE BANK. 8. LD. CIT(A) DELETED THE ADDITION AFTER APPRECIATI NG THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE TRANSACTION HAD BEEN RECOR DED ON THE NEXT WORKING DAY WHEN THE PAYMENT WAS MADE ON EARLIER WORKING DA Y AFTER THE BUSINESS HOURS. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE ASSESSEE HAD SUBMITTED THE EXPLANATION WHICH IS RIGHTLY ACCEPTED BY LD. CI T(A) SINCE THE ASSESSEE HAD GIVEN THE CASH AFTER THE BUSINESS HOURS OR ON S ATURDAY AND ACCORDINGLY THE TRANSACTIONS HAVE BEEN ENTERED ON THE NEXT WORK ING DAY. THE EXPLANATION HAS BEEN SUBSTANTIATED FROM VARIOUS DOCUMENTS SUBMI TTED BY THE ASSESSEE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY ASSESSING OFFICER. THU S, GROUND NO.3 OF REVENUE IS DISMISSED. 10. AS REGARDS GROUND NO.4 OF THE REVENUE THE BRIEF FACTS ARE THAT THE ASSESSEE HAD SHOWN THE CASH PAYMENT TO VARIOUS PART IES AGAINST CHEQUE DISCOUNTING. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS NOT POSSIBLE FOR HIM TO DEDUCE ACCURATE INCOME AND THEREFORE ON SHOW -CAUSE GIVEN TO THE ASSESSEE HE REJECTED THE BOOKS OF ACCOUNT U/S 145(3 ) OF THE ACT. IN ADDITION TO THE SPECIFIC ADDITION MADE AND TO MEET THE ENDS OF JUSTICE THE AO MADE PRESUMPTION THAT THE ASSESSEE HAD UNDERSTATED COMMI SSION INCOME OF SUCH TRANSACTION AND ACCORDINGLY ESTIMATED THE INCOME OF RS.5 LAKH OVER AND ABOVE ITA NO.2296 & 2215AHD/2005 A.Y. 2002-03 ITO WD-3 HMT V. M/S MEHTA FINANCE PAGE 7 THE COMMISSION DECLARED BY THE ASSESSEE. THE LD. CI T(A) VIDE PARA-8.2 OF HIS ORDER BY ACCEPTING THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITION. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS THE SPECIFIC ADDITIONS HAVE ALREADY BEEN DELETED BY LD. CIT(A) AND WE DISMISSED THE REVENUES APPEAL WITH RESPECT TO REVE NUES GROUNDS ON THOSE SPECIFIC ADDITIONS, THEREFORE NO FURTHER ADDITION O N ACCOUNT OF COMMISSION IS CALLED FOR. IN THE CIRCUMSTANCES AND FACTS OF THE C ASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN THIS REGARD. THUS, GROUN D NO.4 OF REVENUE IS DISMISSED. 12. AS REGARDS GROUND NO.5 AND 6 OF THE REVENUE AND GROUND NO.5 AND 6 OF THE ASSESSEE SAME ARE GENERAL IN NATURE AND THER EFORE DO NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO.2215/AHD/2005 AND REVENUES APPEAL IN ITA NO.2296/AHD/2005 BOTH ARE DISMISSED. ' ! #$% 20 / 01 /201 2 ) * + , THIS ORDER PRONOUNCED IN OPEN COURT ON 20 /01/ 201 2. SD/- SD/- ( MUKUL KUMAR SHRAWAT ) ( B.P. JAIN ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) #$%- 20/01/2012 . , DKP* ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 08+ ///4, /4, . / DR, ITAT, AHMEDABAD 6. +;< =' / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ >/. $? /4,. ,