The ITO, Vapi Ward-4, Nani Daman V. M/s. Varsha Paper Products, Nani Daman

ITA 2414/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0301 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: K N BHATT
• Keywords: Onus to prove
• Section: 43B; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 2414/AHD./2009 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, VAPI WARD-4, DAMAN -VS.- M/S. VARSHA PAPER PRODUCTS, NANI DAMAN (P.A. NO. AACFY 4320 J) (APPELLANT) (R ESPONDENT) APPELLANT BY : SMT. NEETA SHA H RESPONDENT BY : SHRI K.N. BHATT O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 22.05.2009 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VALSAD FOR THE ASSESSMENT YEAR 2006-2007. 2. THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER : - (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN AL LOWING THE DEDUCTION OF SALES TAX RS.8,208/- U/S. 43B OF THE ACT AS THE EXTENSION FOR FILING RETURN OF INCOME WAS APPLICABLE TO THE ASSESSEE OF GUJARAT ONLY, THERE IS NOT MENTIONED THAT EXTENSION FOR FILING RETURN OF INCOM E FOR THE ASSESSEE OF DAMAN. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN AL LOWING THE CAPITAL INTRODUCED BY THE PARTNERS AS THE CREDIT WORTHINESS AND GENUINENESS OF CASH INTRODUCTION IS NOT PROVED BY THE ASSESSEE. 3. AT THE TIME OF HEARING ON BEHALF OF THE REVENUE, SMT. NEETA SHAH APPEARED AND CONTENDED THAT DUE DATE FOR FILING THE RETURN OF IN COME WAS EXTENDED FOR GUJARAT ONLY. SINCE THE ASSESSEE IS IN DAMAN, THEREFORE, DUE DATE FOR FILIN G THE RETURN WAS 31.10.2006. THEREFORE, THE DISALLOWANCE OF SALES TAX OF RS.8,208/- UNDER SECTI ON 43B WAS RIGHTLY MADE BY THE A.O. BECAUSE THIS PAYMENT WAS MADE ON 29.12.2006. THE LD. COUNSE L OF THE ASSESSEE SUBMITTED THAT HE HAS NO OBJECTION IF THIS DISALLOWANCE IS RESTORED IN THE A SSESSMENT YEAR UNDER APPEAL AND DIRECTION BE GIVEN TO A.O. TO ALLOW THE SAME IN THE NEXT YEAR WH EN IT IS PAID. 2 4. WE FOUND CONSIDERABLE FORCE IN THE SUBMISSION MA DE BY THE LD. DEPARTMENTAL REPRESENTATIVE. THE DUE DATE FOR FILING RETURN OF I NCOME WAS EXTENDED ONLY FOR GUJARAT. THEREFORE, DISALLOWANCE OF RS.8,208/- UNDER SECTION 43B WAS RIGHTLY MADE BY THE A.O. THIS ADDITION IS ACCORDINGLY RESTORED WITH THE DIRECTION THAT THE A.O. WILL ALLOW THE SAME IN THE ASSESSMENT YEAR 2007-08 AFTER VERIFYING THE DATE OF PAYMENT FROM THE RELEVANT CHALLAN. 5. IN RESPECT OF GROUND NO. 2, THE LD. D.R. POINTED OUT THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.8,66,290/- MADE ON ACCOUNT OF CAPITAL INTRODUCED BY PARTNERS HOLDING T HAT IDENTITY OF EACH PARTNER IS DULY ESTABLISHED AND PARTNERS HAVE REFLECTED THE CAPITAL INVESTMENT IN THEIR PERSONAL INCOME-TAX RECORDS AND, THEREFORE, THE SAME IS VERIFIABLE. THE DECISION OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT ACCEPTABLE BECAUSE OF THE FOLLO WING REASONS :- I) SHRI MANOI N DESAI: HE HAS INTRODUCED CAPITAL OF RS.3,30,000/- IN CASH ON DIFFERENT DAYS AND IN SUPPORT OF EVIDENCES, THE ASSESSEE HAS FURNISHED COPY OF RE TURN OF INCOME, CAPITAL ACCOUNT, BALANCE SHEET, PROOF OF HOLDING OF LAND BY THREE FAMILY MEM BERS AND BILLS OF AGRICULTURAL PRODUCE SOLD AND PROOF OF CASH RECEIVED. ON MAKING TOTAL OF CASH RECEIVED, IT IS FOUND THAT CASH OF RS.9,21,105/- WAS RECEIVED AND THE SAME IS TO BE DI STRIBUTED AMONG THREE FAMILY MEMBERS AS THE LAND IS IN THE NAME OF THREE MEMBERS. EACH PART NER HAS TO SHARE THE TOTAL AGRICULTURAL PRODUCE CONSIDERATION AND IN THIS WAY MR. MANOJ N D ESAI HAS SHARE OF RS.3,07,035/- FROM THE SALE CONSIDERATION. IT IS TO MENTION THAT SHRI MANOJ N DESAI HAS INTRODUCED CASH OF RS.3,30,000/-. THE ASSESSEE HAS NOT FURNISHED PROOF OF BALANCE CASH OF RS.22,965/- (RS.3,30,000 - RS.3,07,035) INTRODUCED BY THE PARTN ER. THEREFORE RS.22,965/- HAS BEEN TREATED AS UNEXPLAINED U/S. 68 OF THE I.T. ACT. II) SMT. JASMINE M DESAI: SHE HAS INTRODUCED CAPITAL OF RS.5,04,525/- IN CASH EXCEPT RS.1,90,000/-. IN SUPPORT OF CASH INTRODUCTION THE ASSESSEE HAS SUBMITTED BAN K STATEMENT, COPY OF RETURN OF INCOME AND BALANCE SHEET. MRS. JASMINE HAS INTRODUCED RS.1 ,90,000/- BY BANK. THE SOURCE OF CAPITAL OF RS.1,90,000/- WAS ACCEPTED AS EXPLAINED AND BALA NCE CAPITAL OF RS.3,14,525/- CONCERNED, IT IS MENTIONED THAT THE PARTNER HAS FILED RETURN O F INCOME DECLARING INCOME OF RS.94,537/- FROM TUITION FEE. IT IS MENTIONED THAT SUBMITTING A COPY OF BALANCE SHEET DOES NOT PROVE THE SOURCE OF CASH INTRODUCTION. THE ASSESSEE HAS NOT P ROVED THE SOURCE OF CASH BY SUBMITTING DOCUMENTARY EVIDENCES, THEREFORE IT IS HELD THAT CR EDIT WORTHINESS AND GENUINENESS OF CASH INTRODUCTION HAS BEEN NOT PROVED AND CAPITAL OF RS. 3,14,525/- WAS TREATED AS UNEXPLAINED. III) SMT NITIN OZA: SHE HAS INTRODUCED CAPITAL OF RS.3,58,800/- IN CASH AND OUT OF THIS, SHE HAS INTRODUCED CAPITAL OF RS.1,85,000/- BY BANK BUT NO COPY OF BANK STATEMENT HAS BEEN SUBMITTED FROM WHICH RS.1,85,000/- WAS TRANSFERRED. FURTHER REMAINING CAPITAL OF RS.1,73,800/- IS INTRODUCED BY CASH. IN SUPPORT OF CASH INTRODUCTION THE ASSESSEE HAS SUBMITTED A COPY OF RETURN OF INCOME ONLY, IT IS WO RTHWHILE TO MENTION THAT SUBMITTING A COPY OF RETURN OF INCOME DOES NOT PROVE THE SOURCE OF CASH INTRODUCTION. THE ASSESSEE HAS 3 NOT PROVED THE SOURCE OF CASH BY SUBMITTING DOCUMEN TARY EVIDENCES, IT IS HELD THAT CREDIT WORTHINESS AND GENUINENESS OF CASH INTRODUCTION IS NOT PROVED BY THE ASSESSEE. THEREFORE, TOTAL CAPITAL INTRODUCED OF RS.3,58,800/- IS TREATE D AS UNEXPLAINED U/S. 68 OF THE I.T. ACT. IV) SMT ALPA NITIN OZA: SHE HAS INTRODUCED CAPITAL OF RS.1,70,000/- IN CASH AND OUT OF THIS, SHE HAS INTRODUCED CAPITAL OF RS.20,000/- IN CASH AND BALAN CE AMOUNT OF CAPITAL BY BANK BUT NO COPY OF BANK STATEMENT HAS BEEN SUBMITTED FROM WHICH RS. 1,50,000/- WAS TRANSFERRED. FURTHER REMAINING CAPITAL OF RS.20,000/- IS INTRODUCED BY C ASH. IN SUPPORT OF CASH INTRODUCTION THE ASSESSEE HAS SUBMITTED A COPY OF RETURN OF INCOME O NLY. IT IS ALSO MENTION THAT SUBMITTING A COPY OF RETURN OF INCOME DOES NOT PROVE THE SOURCE OF CASH INTRODUCTION. THE ASSESSEE HAS NOT PROVED THE SOURCE OF CASH BY SUBMITTING DOCUMEN TARY EVIDENCES, IT IS HELD THAT CREDIT WORTHINESS AND GENUINENESS OF CASH INTRODUCTION IS NOT PROVED. THEREFORE, TOTAL CAPITAL INTRODUCED OF RS.1,70,000/- IS TREATED AS UNEXPLAIN ED U/S. 68 OF THE I.T. ACT. THE LD. D.R. POINTED OUT THAT THE ADDITION OF RS.8 ,66,290/- WAS RIGHTLY MADE BY THE A.O. UNDER SECTION 68. THEREFORE, THE SAID ADDITION BE R ESTORED. 6. ON THE OTHER HAND, SHRI K.N. BHATT APPEARING ON BEHALF OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT THE ASSESSEE-FIRM HAS RECEIVED CAPIT AL CONTRIBUTION FROM FOUR PARTNERS. THE DETAILS OF AMOUNT INTRODUCED BY THE PARTNERS AND AMOUNT TRE ATED AS UNEXPLAINED UNDER SECTION 68 ARE AS UNDER :- SR. NO. NAME OF THE PARTNER AMOUNT INTRODUCED (RS.) AMOUNT ADDED BACK (RS.) 1. SHRI MANOJ M. DESAI 3,30,000/- 22,965/- 2. SMT. JASMIN M. DESAI 5,04,525/- 3,14,525/- 3. SHRI NITIN OZA 3,58,800/- 3,58,800/- 4. SMT. ALPA NITIN OZA 1,70,000/- 1,70,000/- TOTAL 13,63,325/- 8,66,290/- THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED T HAT THE ASSESSEE-FIRM RECEIVED THE AMOUNT FROM THE PARTNERS THROUGH ACCOUNT PAYEE CHEQUES AND THE ONUS TO PROVE THE ISSUE OF SOURCE OF SOURCE IS NOT ON THE ASSESSEE. THE LD. COUNSEL OF THE ASSESSE E SUBMITTED THAT ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL, THEN RESPONSIBILITY OF THE ASSESSEE-FIRM IS OVER. THE AS SESSEE-FIRM CANNOT BE ASKED THAT PERSON WHO MAKES INVESTMENT WHETHER THE MONEY INVESTED IS PROP ERLY TAXED OR NOT. THE FIRM GIVES A 4 SATISFACTORY EXPLANATION AND PRODUCED A PERSON, WHO HAS DEPOSITED THE AMOUNT, THEN BURDEN OF THE FIRM IS DISCHARGED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE FIRM FOR THE PURPOSE OF INCOME-TAX. IN SUPPORT OF T HIS PROPOSITION, RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS.- METACHEM INDUSTRIES REPORTED IN (2000) 245 ITR 160 (SC). HE ACCORDINGLY SUBMITTED T HAT THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 7. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW, THE ASSESSEE HAS BR OUGHT ON RECORD THAT CAPITAL WAS INTRODUCED BY THE PARTNERS. THE IDENTITY OF THE PARTNERS WAS D ULY ESTABLISHED. APART FROM THIS, THE PARTNERS HAVE REFLECTED THE CAPITAL INVESTMENT IN THEIR PERS ONAL INCOME-TAX RECORDS, WHICH IS VERIFIABLE. ON THIS FACT, THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF METACHEM INDUSTRIES (SUPRA) IS SQUARELY APPLICABLE AND IN OUR OPINION, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING T HE ADDITION OF RS.8,66,290/-. WE, THEREFORE, DECLINE TO INTERFERE. THIS GROUND OF APPEAL IS REJE CTED. 8. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS P ARTLY ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 16.10.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 / 10 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) M/S. VARSHA PAPER PRODUCTS, PLOT NO. 23, PREMIUM ES TATE, KACHIGAM, NANI DAMAN, (2) ITO, VAPI, WARD-4, DAMAN 3) CIT(A)- ,VALSAD, (4) CIT- ,VALSAD, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.