Shri Patil Anil Arvind., Pune V. ITO, Pune

ITA 2470/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76302 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S WALIMBE
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S. PANNU, ACCOUNTANT MEMBER. ITA.NO.2470/PN/2012 (ASSESSMENT YEAR 2007-08) PATIL ANIL ARVIND, PROP. SUNIL STAMPING & ASSEMBLIES, J-244, K-BLOCK, MIDC, BHOSARI, PUNE 411026 PAN NO.AODPP7533A .. APPELLANT VS. ITO, WARD-8(3), AKURDI, PUNE .. RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI P.S. WALIMBE DATE OF HEARING : 20-03-2014 DATE OF PRONOUNCEMENT : 21-03-2014 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE ON FOLL OWING GROUNDS : 1. THE LD.CIT(A)-V ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION OF RS.24,70,636/- MADE BY THE A O REPRESENTING CREDITS TO THE CAPITAL ACCOUNT OF THE APPELLANT, AS TAXABLE CASH CREDITS U/S.68 OF THE AC T. 2. THE LD.CIT(A)-V ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION OF RS.10,81,103/- MADE BY THE A O REPRESENTING OUTSTANDING BALANCES OF CREDITORS AS TAXABLE CASH CREDITS U/S.68 OF THE ACT. 2. THE ASSESSEE IS A PROPRIETARY CONCERN CALLED SUN IL STAMPING AND ASSEMBLIES DEALING IN BUSINESS OF MANUFACTURING AND JOB WORK OF AUTO PARTS AND SHEET METAL. THE FIRST ISSUE IS WITH REGARD TO ADDITION OF RS.24 ,70,636/- ON 2 ACCOUNT OF UNEXPLAINED CAPITAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT BUSINESS OF ASSESSEE HAS STARTED ON 19-05-2006. TH ERE WAS CREDIT OF RS.26,87,359/- IN THE CAPITAL. ON FURTHE R VERIFICATION THE ASSESSING OFFICER FOUND THAT THERE WERE CASH DEPOSITS OF RS.1,60,000/- FROM 15-04-2006 TO 19-06- 2006 IN CAPITAL ACCOUNT. FURTHER, THERE WAS CREDIT OF RS.2 0,53,899/- IN THE NAME OF M/S. SUNIL ENTERPRISES WHICH IS A PR OPRIETARY CONCERN OF THE FATHER OF THE ASSESSEE, SHRI ARVIND NARSAI PATIL. THE ASSESSING OFFICER ASKED FOR DETAILS OF THIS CRE DIT IN THE CAPITAL ACCOUNT. 3. AS REGARDS THE DEPOSIT OF RS.1,60,000/- IT WAS E XPLAINED THAT SAME HAS BEEN DEPOSITED OUT OF THE PAST SAVING S. IN RESPECT OF THE CREDIT ENTRY OF RS.20,53,899/- ASSES SEE SUBMITTED THAT IT WAS ON ACCOUNT OF TRANSFER OF MAC HINERY FROM SUNIL ENTERPRISES AMOUNTING TO RS.20,53,899/- FOR THIS PROPOSITION, THE ASSESSEE FILED A COPY OF THE MOU D ATED 25- 08-2006, SIGNED BETWEEN THE ASSESSEE AND HIS FATHER WHEREIN IT WAS MENTIONED THAT MACHINERY WAS TRANSFERRED TO ASSESSEE FOR A CONSIDERATION OF RS.20,53,899/- AND ON THAT V AT OF RS.2,57,737/- WAS ALSO PAID BY FATHER OF THE ASSESS EE. THEREAFTER, ASSESSEE RELIED ON CLAUSE (4) OF MOU AS PER WHICH FATHER HAS DECIDED TO TRANSFER THE AMOUNT DUE FROM ASSESSEE AS CAPITAL CONTRIBUTION OF THE ASSESSEE AND HAS REL INQUISHED HIS RIGHT ON THE SAME VALUE AND PARTY NO.2 I.E. AS SESSEE WAS ENTITLED TO USE THE SAME MACHINERY. TAKING ASSISTA NT FROM THE CLAUSE, ASSESSEE CLAIMED THAT THIS WAS A GIFT F ROM HIS FATHER. SINCE CLAIM OF ASSESSEE REGARDING GIFT REQU IRED VERIFICATION OF VARIOUS ENTRIES IN ASSESSEES BOOKS AS WELL AS FATHERS BOOKS OF ACCOUNTS, THE ISSUE WAS REMANDED U/S.250(4) OF THE I.T. ACT ON 08-04-2011 BY THE CON CERNED CIT(A) FROM CONCERNED ASSESSING OFFICER. IN RESPON SE TO THE SAME ASSESSEE MADE VARIOUS CONTENTIONS IN RESPONSE TO THE 3 REMAND REPORT. THE CIT(A) HAVING CONSIDERED THE SA ME OBSERVED THAT AS FAR AS CLAIM OF GIFT IS CONCERNED THE AMOUNT IN QUESTION HAS BEEN CLAIMED TO BE SALE PROCEEDS OF MACHINERY TRANSFERRED VIA MOU WHICH WAS RELINQUISHE D IN FAVOUR OF THE ASSESSEE BY SAME MOU. THE ASSESSING OFFICER HAS STATED THAT THIS ARRANGEMENT IS INTERNAL ARRANG EMENT BETWEEN ASSESSEE AND HIS FATHER. COMING TO THE MER IT OF THE ISSUE, IT WAS FOUND FROM THE COPY OF ACCOUNTS OF AS SESSEE, I.E. M/S. SUNIL STAMPING AND ASSEMBLIES IN THE BOOKS OF M/S. SUNIL ENTERPRISES FOR THE PERIOD 1-4-2006 TO 31-03- 2007 THAT AMOUNT OF RS.2,57,621/- WAS PAYABLE BY M/S. SUNIL ENTERPRISES TO ASSESSEE. IN THIS LEDGER ACCOUNT, TH ERE WAS A DEBIT OF RS.23,10,636/- (RS.20,53,899/- MACHINERY + RS.2,57,737/- VAT) ON ACCOUNT OF TRANSFER OF MACHIN ERY. THEREFORE, FROM BALANCE SHEET AS ON 31-03-2007, IT WAS OBSERVED THAT AMOUNT OF RS.2,57,621/- HAS BEEN SHOW N AS OUTSTANDING AS ON 31-03-2007. THIS BEING SO, THE C LAIM OF RELINQUISHING OF THE AMOUNT RECEIVABLE FROM ASSESSE E AMOUNTING TO RS.20,53,899/- ON ACCOUNT OF MOU WAS N OT SUPPORTED BY NECESSARY ENTRIES IN BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM AS AMOUNT OF RS.2,57,621/- WAS STILL SHOWN AS OUTSTANDING FROM ASSESSEE. THEREFORE, THE ASSESSEE S CONTENTION THAT CAPITAL CONTRIBUTION OF RS.20,53,89 9/- WAS ON ACCOUNT OF RELINQUISHMENT OF THE AMOUNT PAYABLE TO HIS FATHER ON ACCOUNT OF TRANSFER OF MACHINERY WAS NOT PROVED AND THEREFORE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER ON THE ISSUE. THIS REASONED FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. ASSESSING OFFICER HAS ALSO ADDED RS.2,57,737/- P AID AS VAT. ASSESSEE CLAIMED THAT SAME HAS BEEN PAID BY H IS FATHER BUT IT IS NOT SUPPORTED BY NECESSARY ENTRIES IN BOO KS OF ACCOUNTS EITHER BY HIS FATHER OR ASSESSEE. THEREFO RE, ASSESSING OFFICERS ACTION OF ADDING RS.2,57,737/- ON ACCOUNT 4 OF VAT PAYMENT WAS ALSO RIGHTLY UPHELD BY CIT(A) AS SOURCE OF PAYMENT WAS NOT EXPLAINED. AGAIN, THIS REASONED FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UP HOLD THE SAME. 4.1 REGARDING ADDITION OF RS.1,60,000/- ON ACCOUNT OF CASH DEPOSIT ACTION OF ASSESSING OFFICER WAS ALSO UPHELD BY CIT(A) AS ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE SAME. AGAIN, THIS REASONED FINDING OF CIT(A) ALSO NEEDS NO INTER FERENCE FROM OUR SIDE BECAUSE ASSESSEE COULD NOT SUBSTANTIA TED ITS STAND BY COGENT REASONING. ACCORDINGLY, CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS.24,70,636/-. WE UP HOLD THE SAME. 5. NEXT ISSUE IS WITH REGARDS TO SUSTENANCE OF ADDI TION OF RS.10,81,103/- OUT OF 22,72,852/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITORS. IN APPEAL THE CIT(A) RESTRICTED THE SAME TO RS.10,81,103/-. SAME HAS BE EN OPPOSED BEFORE US. IT WAS FOUND FROM THE CONFIRMAT ION FILED BY M/S. JADHAV STEELS WHICH WAS MADE AS ANNEXURE-3 OF THE ASSESSMENT ORDER THAT ASSESSEES AMOUNT HAS BEEN CR EDITED BY FOLLOWING AMOUNTS : 17-08-2006 : RS.3,51,000/- 25-08-2006 : RS.3,49,649/- 19-102006 : RS.2,83,336/- ----------------- RS.9,83,785/- DUE TO THESE PAYMENTS AS WELL AS CERTAIN OTHER PAYM ENTS, NIL BALANCE HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT OF S HRI JADHAV STEELS. IT WAS CLARIFIED ON BEHALF OF ASSES SEE ALONG WITH EVIDENCE FILED THAT ABOVE 3 PAYMENTS WERE MADE BY SUNIL ENTERPRISES PROPRIETARY CONCERN OF ASSESSEES FATHER. HOWEVER, SAME WERE WRONGLY CREDITED IN ASSESSEES N AME. THIS BEING SO, SOURCE OF RS.9,88,012/- STOOD EXPLAI NED. 5 HOWEVER, BALANCE AMOUNT OF RS.1,14,768/- (RS.11,02, 780/- RS.9,88,012/-) REMAINED UNEXPLAINED. THEREFORE, ADD ITION OF RS.11,02,780/- WAS RESTRICTED BY CIT(A) TO RS.1,14, 768/- WHICH IS NOT SUBJECT MATTER BEFORE US. 5.1 AS FAR AS ADDITION OF RS.11,70,072/- REPRESENTI NG VARIOUS CREDITORS IS CONCERNED IT WAS OBSERVED THAT ASSESSEE HAS REFUSED TO GIVE CONFIRMATION ON THE GROUND THAT IT IS DIFFICULT TO GET BALANCE CONFIRMATION OF EVERY PART Y. IT WAS FURTHER SUBMITTED THAT COPY OF THE LEDGER ACCOUNTS OF THESE PARTIES WERE SUBMITTED AND SAME COULD BE VERIFIED W ITH RESPECT TO LEDGER ACCOUNTS AS WELL AS BANK STATEMEN TS ETC. IT WAS FURTHER SUBMITTED THAT ALL THE CREDITORS WERE B ONAFIDE AND GENUINE, THEREFORE, THERE WAS NO REASON TO INVO KE PROVISIONS OF SECTION 68 OF THE ACT WHICH WAS NOT A CCEPTED BY CIT(A). 5.2 AS FAR AS ISSUE OF SUNDRY CREDITORS IS CONCERNE D, IT IS SEEN THAT MOST OF THE PARTIES HAVE SHOWN SMALL BALA NCE. HOWEVER, IN CASE OF SHREYANSH TOOLS & COMPONENTS I T IS SEEN THAT AMOUNT OF RS.9,66,335/- HAS BEEN SHOWN A S OUTSTANDING. THIS AMOUNT COULD NOT BE CONSIDERED A S SMALL AMOUNT BY ANY STRETCH OF IMAGINATION AND ASSESSEE W AS DUTY BOUND TO FILE CONFIRMATION IN RESPECT OF AT LEAST T HIS PARTY WHICH HE HAS NOT DONE. THEREFORE, CIT(A) CONFIRMED THE ADDITION OF RS.9,66,335/-. ACCORDINGLY, HE SUSTAIN ED THE ADDITION TO THE TOTAL TUNE OF RS.10,81,103/- (RS.1, 14,768/- _ RS.9,66,335/-). 5.3 BEFORE US THE LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT WITH REGARDS TO SUSTAINING OF RS.9,66,335/- TH E LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT COPY OF LE DGER ACCOUNT OF THESE PARTIES. THE ASSESSEE SUBMITTED A ND SAME COULD BE VERIFIED WITH RESPECT TO THE LEDGER ACCOUN TS AS WELL 6 AS BANK STATEMENTS. ACCORDING TO LD. AUTHORISED REPRESENTATIVE ALL THESE CREDITORS WERE BONAFIDE AN D GENUINE. 6. IN VIEW OF ABOVE, WE RESTORE THIS ISSUE TO THE F ILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SA ME AS PER FACT AND LAW. ACCORDINGLY, THE ISSUE OF SUSTENANCE OF ADDITION OF RS.9,66,335/- IS ALLOWED FOR STATISTICAL PURPOSE S AS SAME HAS BEEN RESTORED TO THE ASSESSING OFFICER AS INDIC ATED ABOVE. 7. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 21-03-2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADA V) ACCOUNTANT MEMBER JUDICIAL MEMBER SATISH/GCVSR PUNE, DATED 21 ST MARCH 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUN E