The ITO, Ward-3, Vapi V. Smt. Savita Harishankar Singh, SILVASSA

ITA 2412/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60447 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 17-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N L AGARWAL
• Keywords: Unexplained investment; Principle of natural justice
• Section: 144; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) ITA NO.2412/AHD/2009 A. Y.: 2005-06 THE INCOME TAX OFFICER, VAPI WARD-3, VAPI, INCOME TAX |OFFICE, 2 ND FLOOR, SHIVAM COMMERCIAL COMPLEX, N. H. NO.8, NEAR GALAXY HOTEL, VAPIT VS SMT. SAVITA HARISHANKAR SINGH, 206, PARAS PALACE, VAPI SILVASA ROAD, SILVASA PAN ABBPS 2470 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. MADHUSUDAN, SR. DR RESPONDENT BY SHRI S. N. L. AGARWAL, AR DATE OF HEARING: 16-05-2012 DATE OF PRONOUNCEMENT: 25-05-2012 O R D E R PER A. MOHAN ALANKAMONY: THE REVENUE HAVE PREFERRED THIS APPEAL AGGRIEVED BY THE ORDER OF THE LEARNED C IT(A) IN APPEAL NO. CAS-I(V)/9/08-09 DATED 03-06-2009 FOR ASSESSMEN T YEAR 2005- 06. 2. THE GROUNDS RAISED BY THE REVENUE ARE LISTED HEREIN BELOW FOR ADJUDICATION:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RS.2,09,475/- BEING 50 % OF ADDITION MADE U/S. 37 OF RS.418950/-. ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE OF RS.278118/- BEIGN THE DIFFERENCE IN FIGURES OF SUND RY CREDITORS AND SUNDRY DEBTORS AND ADDED U/S. 68 R. W . S 41(1). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE OF RS.35,33,110/- U/S 69 R. W. S. 69A & 69B BEING UNEXPLAINED INVESTMENT AND LOANS AND ADVANCES. 3. THE ASSESSEE AN INDIVIDUAL FILED HER RETURN OF I NCOME ON 31-10- 2005 DECLARING TOTAL INCOME OF RS.15,00,000/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLE TED U/S 144 OF THE IT ACT ON 28-12-2007 WHEREIN VARIOUS ADDITIONS WERE MADE. 4. GROUND NO.1 DELETING ADDITION OF RS. 2,09,475/ - OUT OF TOTAL ADDITION OF RS.4,18,950/-. THE LEARNED AO MADE ADDI TION OF RS.4,18,950/- SINCE THE ASSESSEE HAD NOT PRODUCED A NY DETAILS OF THE EXPENDITURE INCURRED FOR THE CONDUCT OF BUSINESS SU CH AS TELEPHONE EXPENSES, TRAVELING EXPENSES ETC. FURTHER, THE ASS ESSEE HAD NOT CO- OPERATED DURING THE ASSESSMENT PROCEEDINGS BY SHOWI NG HER PERSONAL APPEARANCE OR BY REPRESENTING THE CASE WIT H APPROPRIATE REPRESENTATIVE. SINCE THE ONUS WAS ON THE ASSESSEE TO PROVE THAT THE EXPENDITURE INCURRED WAS OF REVENUE IN NATURE, WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AN D FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION, WHICH THE ASSE SSEE FAILED TO PROVE, THE LEARNED AO DISALLOWED THE ENTIRE EXPENDI TURE OF RS.4,18,950/-. ON APPEAL, BEFORE THE LEARNED CIT(A) , 50% OF THE ADDITION WAS SUSTAINED AND RELIEF WAS GRANTED FOR R S.2,09,475/-. THE LEARNED CIT(A) OBSERVED THAT THOUGH THE APPELLANT H AD NOT GIVEN ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 3 DETAILS OF EXPENDITURE OR ATTENDED THE APPELLATE PR OCEEDINGS ON THE VARIOUS DATES OF SUMMONS ISSUED BY THE REVENUE, K EEPING IN VIEW OF NATURAL JUSTICE 50% OF THE EXPENDITURE CLAIMED BY T HE APPELLANT WAS ALLOWED, SINCE SOME EXPENDITURE WOULD DEFINITELY HA VE BEEN INCURRED BY THE APPELLANT IN THE BUSINESS. 5. THE LEARNED DR STOUTLY ARGUED THAT THE ENTIRE AD DITION OF RS.4,18,950/- MAY BE SUSTAINED BECAUSE THE ASSESSEE DID NOT PRODUCE ANY DETAILS OF THE EXPENDITURE AND DID NOT DISCHARGE HER DUTY TO PROVE SUCH EXPENDITURE IS GENUINE AND ALLOWABLE AS PROVIDED UNDER THE ACT. ON THE OTHER HAND, THE LEARNED AR RE LIED ON THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS PLACED BEFORE US CAREFULLY. IN BUSINESS, TO EARN PR OFIT, NECESSARILY ONE HAS TO INCUR EXPENDITURE. IN THE GIVEN CASE, THE AS SESSEE DID NOT FURNISH THE DETAILS OF THE EXPENDITURE CLAIMED BY H ER. KEEPING IN VIEW OF THE GENERAL BUSINESS CONDITIONS, THE LEARNED CIT (A) HAD GRACEFULLY DELETED 50% OF THE ADDITION MADE BY THE LEARNED AO ON THE PREMISES THAT IN BUSINESS THE APPELLANT WOULD HAVE TO INCUR SOME EXPENSES. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SUBSCRIBE TO THE VIEW OF THE LEARNED CIT(A) AND HER EBY CONFIRM HIS ORDER. THUS, GROUND NO.1 OF THE APPEAL OF THE REVEN UE IS DISMISSED. 7. GROUND NO.2 ADDITION MADE FOR RS.2,78,118/- BE ING DIFFERENCE IN FIGURES OF SUNDRY CREDITORS AND SUNDRY DEBTORS. THE LEARNED AO HAD MADE ADDITION OF RS.2,78,118/- U/S 68 OF THE AC T BEING DIFFERENCE BETWEEN SUNDRY CREDITORS OF RS.12,10,340/- AND SUND RY DEBTORS OF ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 4 RS.9,32,222/-. THE LEARNED AO MADE SUCH ADDITION SI NCE THE ASSESSEE DID NOT PRODUCE ANY DETAILS PERTAINING TO THE SUNDRY CREDITORS AND SUNDRY DEBTORS. THE LEARNED CIT(A) DE LETED THE ADDITION BY STATING THAT WITHOUT BRINGING ANY MATERIAL ON RE CORD ADDITION CANNOT BE MADE. 8. THE LEARNED DR FORCEFULLY SUBMITTED THAT THE LEA RNED AO HAD JUDICIOUSLY MADE THE ADDITION ONLY FOR THE DIFFEREN CE OF SUNDRY CREDITORS OVER SUNDRY DEBTORS SINCE THERE WAS AN EX CESS OF RS.2,78,118/- FOR WHICH SOURCES HAVE TO BE EXPLAINE D. IT WAS, THEREFORE, PRAYED THAT THE ADDITION MADE BY THE LEA RNED AO MAY BE SUSTAINED. THE LEARNED AR RELIED ON THE ORDER OF TH E LEARNED CIT(A). 9. HAVING HEARD BOTH THE SUBMISSIONS AND PERUSING T HE RECORDS, WE ARE OF THE HUMBLE VIEW THAT THE LEARNED AO HAD J UDICIOUSLY MADE AN ADDITION OF RS.2,78,118/- SINCE THERE WAS EXCES S CREDIT ON COMPARING SUNDRY CREDITORS WITH SUNDRY DEBTORS, THE SOURCE OF WHICH REQUIRES TO BE PROVED. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAILS OF THE SUNDRY CREDITORS OR TH E SUNDRY DEBTORS. IN SUCH CIRCUMSTANCES, THE LEARNED AO COULD HAVE TAXED THE ASSESSEE MUCH MORE AGGRESSIVELY. FURTHER, WE DO NOT FIND ANY MERIT IN THE OBSERVATIONS OF THE LEARNED CIT(A) SINCE HE SIMPLY HELD WITHOUT STATING ANY REASON THAT ADDITION CANNOT BE MADE WIT HOUT BRINGING ANY MATERIALS ON RECORD WHEN THE FACT REMAINS THAT NO M ATERIALS WAS BROUGHT ON RECORD BY THE ASSESSEE FOR CONSIDERATION . THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT THE SUNDRY CREDITORS AND SUNDRY DEBTORS ARE GENUINE. IN THE PRESENT CASE, THE LEARN ED AO WAS LENIENT ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 5 ENOUGH TO TAX ONLY THE EXCESS CREDIT OVER THE DEBTO RS FOR WANT OF PROOF OF SOURCE. WE THEREFORE CONFIRM THE ORDER OF THE LEARNED AO. THUS THIS GROUND OF THE REVENUE IS ALLOWED. 10. GROUND NO.3 ADDITION OF RS.35,33,110/- MADE U /S 69 READ WITH SECTION 69A AND 69B OF THE IT ACT BEING UNEXPL AINED INVESTMENT AND LOANS AND ADVANCES. DURING THE COURSE OF ASSESS MENT PROCEEDINGS IT WAS OBSERVED BY THE LEARNED AO THAT THE ASSESSEE HAD EXTENDED ADVANCES OF RS.34,66,600/- AND MADE IN VESTMENTS OF RS.66,510/-, BUT THE ASSESSEE DID NOT FURNISH ANY E XPLANATION FOR THE GENUINENESS OF THE TRANSACTIONS WITH COGENT EVIDENC E FOR THE SOURCES OF SUCH INVESTMENTS. FURTHER, THE ASSESSEE HAD NOT COOPERATED DURING THE ASSESSMENT PROCEEDINGS WITH PROPER REPRE SENTATION. THEREFORE, THE LEARNED AO MADE ADDITION OF THE ENTI RE AMOUNT OF RS.35,33,110/-. THE LEARNED CIT(A) DELETED THE ADDI TION IN ONE STROKE BY STATING THAT THE ADDITION HAS BEEN MADE WITHOUT ANY BASIS AND THAT ALL THE LOANS AND ADVANCES APPEARING IN THE BALANCE SHEET CANNOT BE ADDED U/S 69 OF THE ACT. 11. THE LEARNED DR VEHEMENTLY ARGUED THAT THE LEARN ED CIT(A) HAS GROSSLY ERRED BY SIMPLY BRUSHING ASIDE THE FINDING OF THE LEARNED AO AND WITHOUT GIVING PROPER REASONS HAS DELETED THE A DDITION MADE BY THE LEARNED AO. HE FURTHER ARGUED BY STATING THAT T HE LEARNED AO HAD CATEGORICALLY MADE A FINDING THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAILS WITH RESPECT TO THE SOURCES OF HER INVESTME NT OR LOANS AND ADVANCES. IT WAS, THEREFORE PRAYED THAT THE ORDER O F THE LEARNED AO ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 6 MAY BE SUSTAINED. THE LEARNED AR RELIED ON THE ORDE R OF THE LEARNED CIT(A). 12. AFTER HEARING BOTH THE SIDES AND EXAMINING THE MATERIALS BEFORE US, WE FIND NO MERIT IN THE OBSERVATIONS OF THE LEA RNED CIT(A). THE ASSESSEE HAS NOT DISCHARGED HER ONUS BY PRODUCING S UFFICIENT INFORMATION AND DETAILS TO ESTABLISH HER BONA FIDE SOURCES FOR MAKING SUCH INVESTMENTS AND GRANTING SUCH LOANS AND ADVANC ES. SINCE, NO INFORMATION WAS COMING FORTHWITH FROM THE ASSESSEE, THE LEARNED AO HAD NO OTHER OPTION BUT TO BRING THE ENTIRE LOANS A ND ADVANCES AND INVESTMENTS UNDER THE NET OF TAX. HOWEVER, KEEPING IN VIEW OF THE HIGH VALUE OF TRANSACTIONS AMOUNTING TO RS.35,33,11 0/- AND THE BACKGROUND OF THE ASSESSEE, WE ARE OF THE CONSIDERE D VIEW THAT THE ASSESSEE SHOULD BE GRANTED WITH ONE MORE OPPORTUNIT Y TO ESTABLISH HER CLAIM. THEREFORE, IN THE INTEREST OF JUSTICE, W E HEREBY REMIT BACK THE ISSUE TO THE FILE OF THE LEARNED AO FOR DENOVA CONSIDERATION. GROUND NO.3 OF THE APPEAL IS ACCORDINGLY DISPOSED O FF. THE ASSESSEE IS HEREBY DIRECTED TO CO-OPERATE BEFORE THE REVENUE IN ITS PROCEEDINGS. THE ASSESSEE IS ALSO AT LIBERTY TO PRO DUCE ANY EVIDENCE TO SUBSTANTIATE HER CLAIM WITH RESPECT TO GROUND NO .1 AND 2 OF THE APPEAL AND IN THAT EVENT WITHOUT BEING PREJUDICED B Y OUR DECISION IN THE GROUND NO.1 & 2 THE LEARNED AO SHALL CONSIDER T HE SAME AND PASS APPROPRIATE ORDER AS PER MERIT AND LAW. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25-05-2012 ITA NO.2412/AHD/2009(AY:2005-06) ITO, VAPI VS SMT. SAVITA HARISHANKAR SINGH 7 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 16-05-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 17-05-2012 OTHER MEMBER: 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE T HE DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P. S./ P.S. : 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: