The ACIT, Mehsana Circle, Mehsana V. M/s. Natraj Construction Co., Mehsana

ITA 2425/AHD/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5316 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Business income; Income from undisclosed sources; Corroborative evidences; Accommodation entries; TDS
• Section: 143(3); 133(6); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, MEHSANA CIRCLE, MEHSANA (APPELLANT) VS M/S. NATRAJ CONSTRUCTION CO. 2 ND FLOOR, ROYEL HOUSE, RADH AN PURA ROAD, MEHSANA - 384002 PAN: AABFN4852E (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: SHRI S.N. DIVETIA, A.R. DATE OF HEARING : 12 - 10 - 2 018 DATE OF PRONOUNCEMENT : 24 - 10 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A. Y. 2009 - 10 , ARI SES FROM ORDER OF THE CIT(A) , GANDHINAGAR, AHMEDABAD DATED 22 - 05 - 2 015 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVE NUE HAS RAISED FOLLOWING SUBSTANTIVE GROUND OF APPEAL: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION MADE ON ACCOUNT OF BOGUS UNSECURED LOAN AS CASH CREDIT U/S. 68 OF THE I.T. ACT OF RS. 1,07,00,000/ - 3. THE RETURN OF INCOME DECLARING INCOME OF RS. 2 , 00 , 71 ,070 / - WA S FILED ON 27 TH SEP, 2009. SUBSEQUENTLY, ASSESSMENT U/S. 143(3) OF THE ACT WAS PASSED ON 30 TH DECEMBER, 2009 AND INCOME WAS ASSESSED AT RS. 2 , 05 , 71 , 070/ - . I T A NO . 2425 / A HD/20 15 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 2425 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ACIT VS. NATRAJ CONSTRUCTION CO. 2 THERE AFTER , ORDER U/S. 263 OF THE WAS PASSED ON 29 TH MARCH, 2014 BY THE CIT(A), GANDHINAGAR HOLDING THAT ORIGINAL ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER HA D NOT EXAMINED THE CREDITWORTHINESS OF UNSECURED LOAN OF RS. 7 LACS RECEIVED FROM SHRI PURSOTT AM G ANGAR AM PATEL AND UNSECURED LOAN OF RS. 1 CRORE OBTAINED FROM SHRI JAYNATIBH A I PATEL. ON VERIFICATION OF THE DETAILS FURNISHED BY THE ASSSESSEE AND THE INFORMATION OBTAINED U/S. 133(6) OF THE ACT FROM THE CREDITORS , T HE ASSESSING OFFICER OBS ERVED THAT ASSESSEE HAS OBTAINED UNSECURED LOAN OF RS. 1 CRORE F ROM JAYANT I BHAI R. PATEL WHO WAS HAVING BUSINESS INCOME OF ONLY RS. 1 , 61 , 74 1 / - DURING THE YEAR UNDER CONSIDERATION HOWEVER , JAYANTIBHAI R. PATEL HAS ALSO RECEIVED INCOME FROM LONG TERM CA PITAL GAIN OF AMOUNT OF RS. 8 , 06 , 16 , 873/ - ON WHICH TDS OF RS. 3 , 09 , 29 , 250/ - WAS DEDUCTED. THE ASSESSING OFFICER HAS ALSO STATED THAT AS PER BANK STATEMENT OF THE LENDER ON 24 TH FEB, 2009 AN AMOUNT OF RS. 50 LACS WAS TRANSFERRED INTO THE BANK A/C AND ON THE VERY NEXT DATE OF 25 TH FEB, 2009, THE AMOUNT WAS GIVEN TO THE ASSESSEE WITHOUT CHARGING ANY INTEREST . THE ASSESSING OFFICER OBSERVED THAT ONLY TRANSFER ENTRIES WERE MADE AS APPEARING IN THE BANK ACCOUNT AND CONCLUDED THAT A SSESSSEE FIRM WAS TRYING TO INTRODUCE ITS UNACCOUNTED MONEY THROUGH SHRI JAYANTIBHAI PATEL . T HEREFORE, THE AMOUNT OF RS. 1 CRORE WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED UNACCOUNTED MONEY. 3.1 REGARDING UNSECURED LOAN OF RS . 7 LACS RECEIVED FROM SHRI PUR SOTTA MBHAI PATEL. THE ASSESSING OFFICER STATED THAT THE BANK ACCOUNT OF THE LEN DER SHOWED A M EAGER DEPOSIT OF RS . 3 , 886/ - ON 9 TH JUNE, 2008 THEN ALL OF A SUDDEN, THERE WAS A CREDIT OF RS. 4,60,000/ - AND RS. 6,50 , 000/ - ON FIRST JULY , 2008 AND ON THE NEXT DAY AN AMOUNT OF 11 LACS WAS PROVIDED AS LOAN TO SOME OTHER PERSON. THEREAFTER, ON 9 TH JULY 2008 THERE WAS AGAIN CREDIT ENTRY OF RS. 9 LACS AS DEPOSI T IN BANK ACCOUNT AND ON THE NEXT DATE ON 10 TH JULY, 2008 THE IMPUGNED LOAN OF RS. 7 LACS WAS GIVEN TO THE ASSESSEE. THEREFORE T HE ASSESSING OFFICER OBSERVED THAT I.T.A NO. 2425 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ACIT VS. NATRAJ CONSTRUCTION CO. 3 TRANSACTION WITH THE DEPOSITORS WERE NOT GENUINE AND IT WAS THE MONEY OF THE ASSESSEE WHICH WAS ROUTED THROUGH BANK ACCOUNT OF LENDERS AS ACCOMMODATION ENTRIES. THER EFORE, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 7 LACS BY TREATING THE SAME A S UNACCOUNTED TRANSACTION. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE FINDI NG OF THE CIT(A) IS REPRODUCED AS UNDER: THE AO HAS STATED THAT THE GENTRIES OF AFORESAID DEPOSITS WERE ONLY ACCOMMODATION ENTRIES THROUGH WHICH APPELLANT HAS BROUGHT BACK ITS UNACCOUNTED MONEY INTO BANK ACCOUNTS. HOWEVER THE AO HAS NOT BROUGHT ON RECORD ANY COGENT EVIDENCE WHICH PROVES THE FACT THAT SUCH DEPOSITS ARE UNACCOUNTED INCOME OF THE APPELLANT. IN ABSENCE OF ANY SUCH EVIDENCE IT CANNOT BE PRESUMED THAT THE TRANSACTION ENTERED BY APPELLANT ARE NON - GENUINE AND UNEXPLAINED. ANOTHER REASON FOR DOUBT ING THE GENUINENESS OF THE DEPOSITS RECEIVED FROM SHRI PURSHOTTAM GANGARAM PATEL AS STATED BY AO IS DISCREPANCY NOTICED IN THE AMOUNT OF INTEREST EXPENDITURE BOOKED BY APPELLANT AND CONSEQUENT INCOME OFFERED BY THE DEPOSITOR. ON PERUSAL OF RELEVANT DETAILS , I FIND MERIT IN THE ARGUMENT OF APPELLANT THAT THE AO HAS WRONGLY COMPARED DATA OF PRECEDING YEAR IN CASE OF SHRI PURSHOTTAM GANGARAM PATEL WITH DATA OF CURRENT YEAR IN CASE OF APPELLANT WHICH HAS LED TO SUCH DISCREPANCY. IT IS OBSERVED THAT INTEREST PAI D BY APPELLANT TO SHRI PURSHOTTAM GANGARAM PATEL IS / - RS.67,082/ - DURING THE YEAR UNDER CONSIDERATION. CONSEQUENTLY INTEREST INCOME OFFERED BY SHRI PURSHOTTAM GANGARAM PATEL IS RS.67,082/ - (AFTER DUE DEDUCTION OF TAX AT SOURCE) WHICH IS IN PARITY WITH INTE REST EXPENDITURE DEBITED BY THE APPELLANT. HENCE THE OBSERVATION OF AO WITH RESPECT TO DISCREPANCY IN INTEREST INCOME AND CONSEQUENT INTEREST EXPENDITURE IS INCORRECT. IN VIEW OF ABOVE, IT IS CLEAR THAT DEPOSITS MADE ARE THROUGH BANKING CHANNEL AND IS SUPP ORTED BY THE CONFIRMATIONS DULY EXECUTED BY THE DEPOSITORS WHO ARE ASSESSED TO TAX AND WHO HAVE GIVEN THE DEPOSITS BY WAY OF CHEQUE FROM THEIR BANK ACCOUNT. EVEN THERE IS NO DISPUTE REGARDING DETAILS GIVEN BY APPELLANT TO PROVE GENUINENESS OF TRANSACTION O R CAPACITY OF DEPOSITORS. HENCE THE ONUS CASTED BY SECTION 68 HAS DULY BEEN DISCHARGED BY THE APPELLANT AND HE CANNOT BE CALLED UPON TO FURNISH SOURCE OF SOURCE OF ANY DEPOSIT. THUS TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE AO HAS ERRED IN MAKING THE ADDITION OF RS. 1,00,00,000/ - AND RS.7,00,000/ - WHICH IS DIRECTED TO BE DELETED AND THE RELATED GROUNDS OF APPEAL ARE ALLOWED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, T HE LD. DEPARTMENTAL REPRESENTATIVE HAS FURNISHED PAPER BOOK CONTAINING COP IES OF DOCUMENTS / INFORMATION SUBMITTED BEFORE T HE ASSESSING OFFICER AND CIT(A) , C O PY OF BANK STATEMENT AND INFORMATION OBTAINED U/S. 133(6) OF THE ACT ETC. DURING THE C O URSE I.T.A NO. 2425 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ACIT VS. NATRAJ CONSTRUCTION CO. 4 OF A PPELLATE PROCEEDINGS BEFORE US THE LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO REFERRED THE DECISION (2018) 97 TAXMNAN. COM 395 (SC) PAVAN KUMAR . M. SAGHVI VS . ITO DATED MAY 01, 2018 AND ITA NO. 2447/AHD/2016 PAVANK UMA R. M. SANGH V I VS . I TO DATED MAY 17, 2017. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A) AND HE HAS ALSO PLACED RELIANCE ON THE DECISION OF (2012) 21 TAXMAN.COM 159 (GUJ) CIT VS. RANCHHOD JIV A BHAI NAKHAVA DATED 20 MARCH, 2012. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. REGARDING ADDITION OF R S. 1 CRORE PERTAINING TO UNSECURED LOAN OB TAINED FRO M JAYANTILAL RAMDAS PATEL. IT IS NOTICED THAT RETURN O F INCOME OF THE DEPOSITORS WAS SUBMITTED WHEREIN TAXABLE INC OME OF R S. 8 , 07 , 88 , 951/ - WAS OFFERED FOR TAXATION ON WHICH TAXES OF RS . 1 , 82 , 70 , 285/ - WAS PAID. WE OBSERVE THAT IT DEMONSTRATES THE CREDITWORTHINESS OF THE DEPOSITORS THAT HE WAS HAVING SUFFICIENT TAXABLE INCOME AS AGAINST THE LOAN OF RS. 1 CRORE GRANTED TO T H E ASSESSEE. IT IS FURTHER NOTICED THAT ASSESSEE HAS FURNISHED THE RELEVANT INFORMATION ABOUT THE LENDER I.E. ADDRESS, PAN , LOAN CONFIRMATION LETTER , BANK STATEMENT AND COPY OF RETURN OF INCOME OF SHRI JAYANTILAL R. PATEL. THE LENDER HAS ALSO SUPPLIED THE INFORMATION IN RESPONSE TO NOTICE ISSUED U/S. 133(6) OF THE ACT I.E COPY OF PAN CARD, COPY OF RETURN OF INCOME, SOURCE OF DEPOSIT, COPY OF BANK STATEMENT AND COPY OF LEDGER ACCOUNT ALONG WITH CONFIRMATION. THE ENTIRE DEPOSIT HAS BEEN RECEIVE D BY THE ASSESSEE THROUGH ACCOUNT PA YEE CHEQUE. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES WE OBSERVE THAT ASSESSING OFFICER HAS NOT CONTRADICTED AND DISPROVED THE CLAIM OF THE ASSESSEE WITH FINDINGS BASED ON SUPPORTING EVIDENCES TO DEMONSTRATE TH AT ASSESSEE HAS INTRODUCED HIS OWN UNACCOUNTED MONEY THROUGH THE DEPOSITORS. THE ASSESSING OFFICER HAS ALSO NOT CARRIED OUT ANY INVESTIGATION TO SUBSTANTIATE HIS DECISION THAT THE LOAN TRANSACTIONS WERE NOT GENUINE. THE ASSESSING OFFICER HAS MADE SEL F ANALYSIS OF THE INFORMATION IN THE BANK STATEMENT AND RETURN OF INCOME ON ASSUMPTION BASIS FOR TREATING THE ABOVE LOAN TRANSACTIONS AS NOT GENUINE. THE LD. DEPARTMENTAL I.T.A NO. 2425 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ACIT VS. NATRAJ CONSTRUCTION CO. 5 REPRESENTATIVE HAS PLACED RELIANCE IN THE CASE OF PAVAN K UMA R. M. SAN GHVI. WE HAVE PERUSED THE REFERRED DECISION OF SMC BENCH OF THE ITAT VI D E ITA NO. 2447/AHD/2016 . IT IS NOTICED THAT THE FACTS OF T HE CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE ABOVE REFERRED CASE. IN THE ABOVE REFERRED CASE , THE ASSESSING OFFICER HAS CO ME TO KNOW THROUGH REPORTS RECEIVED FROM THE DIRECTORATE OF INCOME TAX INVESTIGATION THAT TWO LENDERS M/S. NATASHA ENTERPRISE S AND MOHIT INTERNATIONAL WERE PAR T O F GROUP OF SHELL ENTERPRISE S MANAGED BY ONE PRAVEEN KR. JAIN USED A VEHICLE FOR PURPOSE OF BOGU S LOAN TRANSACTION. THE STATEMENT OF THE PERSON W HO WAS MANAGING THESE SHELL COMPANIES MR. PRAVIN KR. JAIN WAS RECORD ED IN WHICH HE HA D ADMITTED THAT LOAN TRANSACTIONS MADE THROUGH ABOVE REFERRED TWO SHELL COMPANIES WERE NOT GENUINE. DURING THE SEARCH OPE RATION, STATEMENT S OF CONNECTED PERSONS WERE RECORDED AND THE PARTIES COULD NOT PROVE THE GENUINENESS OF THE TRANSACTIONS. IT WAS PROVED THAT THE LOANS W ERE OBTAINED FROM SHELL COMPANIES. THOSE SHELL COMPANIES WERE OPERATING WITHOUT ANY SIGNIFICANT TRAD ING, MANUFACTURING OR SERVICE ACTIVITY AND THOSE BUSINESS ENTITIES W ERE USED JUST TO PROVIDE ACCOMMODATION ENTRY TO THE ASSSESSEE. HOWEVER IN THE CASE OF THE ASSESSEE , THE ASSESSING OFFICER HAS NOT MADE ANY SUCH CONCRETE INVESTIGAT ION/ EXAMIN ATION AS C ARRIED OUT IN THE CASE OF THE PAVANK UMA R.M. SANGHVI TO SUBSTANTIATE WITH RELEVANT MATERIAL THAT THE LOAN TRANSACTION OF THE ASSESSEE WERE NOT GENUINE. IT IS CLEAR FROM THE ABOVE FACTS THAT THE ASSESSING OFFICER HAS SIMPLY ON THE BASIS OF SELF ANALYSIS CONCLUDED THAT LOAN TRANSACTIONS WERE NOT GENUINE. AFTER CONSIDERING THE ABOVE FACTS AND THE FINDING OF LD. CIT(A) WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE . THEREFORE, THE APPEAL O F THE REVENUE, IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 24 - 10 - 201 8 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A NO. 2425 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ACIT VS. NATRAJ CONSTRUCTION CO. 6 AHMEDABAD : DATED 24 /10 /201 8 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,