The ACIT.Central Circle-2, Surat V. Shri ChhaganBhai R.Rakhodia, Surat

ITA 2544/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80583 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value
• Section: 69C; 50C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA. NOS. 2544/AHD/2010 & 3120/AHD/2009 (ASSESSMENT YEARS:2007-08 & 2006-07) A.C.I.T., CIRCLE 2, ROOM NO.110, 1 ST FLOOR, AYAKAR BHAVAN, MAJURAGATE, SURAT APPELLANT VS. SHRI CHHAGANBHAI R RAKHOLIA PLOT NO.619, ROAD NO.6, OPP. FIRE STATION, SACHIN, SURAT RESPONDENT PAN: ABVPR4740G / BY REVENUE :SHRI ROOP CHAND, SR. D.R. / BY ASSESSEE : SHRI M. K. PATEL, A.R. /DATE OF HEARING :22.12.2014 !' /DATE OF PRONOUNCEMENT :31.12.2014 ORDER I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 2 PER SHAILENDRA KUMAR YADAV, J.M: THESE APPEALS OF REVENUE ARE ARISING OUT FORM THE O RDERS OF CIT(A)-II, SURAT, DATED 18.05.2010 FOR THE ASSES SMENT YEAR 2007-08 AND 24.08.2009 FOR A.Y. 2006-07. SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. IN I.T.A. NO. 3120/AHD/2009 FOR A.Y. 2006-07, RE VENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON ACCOUNT OF SUPPRESSION OF SALES OF RS.1,08,99,40 5/- 2) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITIO N MADE BY THE AO OF RS, 78,000 ON ACCOUNT OF UNDERSTATED AGRICULTURAL EXPENSES TO RS.13,714. 3) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S. 69B OF RS.2,87,570/-. 2.1 IN ITA NO. 2544/AHD/2010 FOR A.Y. 2007-08, REVE NUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO IN RESPECT OF ADDITION U/S 68 OF RS.4,85,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT . INSPITE OF THE ASSESSEE FAILING TO DISCHARGE THE ON US CAST ON HIM TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 3 [2] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO IN RESPECT OF ADDITION OF RS.2,88,43,616/ - MADE ON ACCOUNT OF SUPPRESSION OF SALES INSPITE OF MATERIAL EVIDENCE BROUGHT ON RECORD TO PROVE THE UNACCOUNTED PRODUCTION OF THE ASSESSEE. 3. ASSESSEE IS ENGAGED IN BUSINESS OF SIZING AND PR OCESSING OF YARN. FIRST ISSUE IN REVENUES APPEAL FOR A.Y. 2 006-07 IS WITH REGARDS TO ADDITION OF RS.1,08,99,405/-ON ACCO UNT OF SUPPRESSION OF SALES OF SAME. THE GP RATIO SHOWN D URING THE YEAR WAS 3.66% ON A TURN OVER OF RS.6.32 CRORES, A S AGAINST GP RATIO OF 3.06% ON A TURNOVER OF RS.8.66 CRORES IN THE IMMEDIATELY PRECEDING YEAR. FROM THE DETAILS FURNI SHED BY ASSESSEE, THE ASSESSING OFFICER COMPARED THE MONTHL Y CONSUMPTION OF ELECTRICITY IN TERMS OF UNITS W ITH MONTHWISE PRODUCTION OF SIZED YARN. THE DATA HAS BEEN SHOWN I N A CHART IN PARA-4, PAGE-3 OF THE ASSESSMENT ORDER. FROM THI S CHART, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD ACHIEVED PRODUCTION OF 4.73 KGS PER UNIT OF ELECTRICITY IN M ONTH OF JULY, 4.12 KG IN MAY AND 4.04 KG IN APRIL AND SO ON AND S O FORTH. HOWEVER, IN THE MONTH OF FEBRUARY, THE PRODUCTION W AS ONLY 2.79 KG PER UNIT. THE CONSUMPTION OF ELECTRICITY WA S 9200 UNITS AS AGAINST 15080 UNITS IN JULY, WHEN THE HIGH EST PRODUCTION WAS ACHIEVED. ACCORDING TO ASSESSING OF FICER, ASSESSEE WAS UNABLE TO JUSTIFY SUCH VARIATION I.E. THE PRODUCTION PER UNIT IN DIFFERENT MONTHS. ACCORDING TO ASSESSING OFFICER, THE PRODUCTION CYCLE MOVES T HROUGH A NORMAL ROUTINE WITHOUT ANY HINDRANCE AND UNAVOIDABL E I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 4 CIRCUMSTANCES. ASSESSEE DID NOT MAINTAIN A DAILY ST OCK REGISTER, AND THEREFORE, AVERAGE RATIOS COULD NOT B E RELIABLE. DAILY DATA ON CONSUMPTION AND PRODUCTION WAS NOT AV AILABLE. THE VARIATION OF 1.94 KG PER UNIT REFLECTED DISCRE PANCIES IN THE FIGURE OF PRODUCTION SHOWN BY ASSESSEE WHICH MEANT THAT BOOK RESULTS WERE NOT RELIABLE. ACCORDING TO ASSESS ING OFFICER, ASSESSEE HAD MANIPULATED THE RECORDS TO REDUCE SALE S AND CONSEQUENTLY TO LOWER THE GP. ASSESSING OFFICER, T HEREFORE, REJECTED THE BOOK RESULTS U/S 145(3) OF THE ACT. H AVING DONE SO, ASSESSING OFFICER OBSERVED THAT SINCE IN T HE MONTH OF JULY, ASSESSEE HAD ACHIEVED PRODUCTION OF 71 ,294.75 KGS AND HAD CONSUMED 15,080 UNITS OF ELECTRICITY, D URING THE OTHER MONTHS ALSO PRODUCTION AND CONSUMPTION OUGHT TO HAVE BEEN SOMEWHAT SIMILAR. AT BEST, THE VARIATION AT M AXIMUM COULD NOT EXCEED 20-30%. SHE THUS REDUCED 30% OF PRODUCTION OF SIZED YARN AND ARRIVED AT THE FIGURE OF 94,017.119 KGS AND, APPLYING THE AVERAGE SELLING PR ICE OF RS 115.93 PER KG, WORKED OUT THE SUP PRESSION OF SALES AT RS. 1,08,99,405/- WHICH WAS ADDED TO TH E ASSESSEE'S TOTAL INCOME. 3.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS DETAILS WERE FILED BY WAY OF WRITTE N SUBMISSION, INTER ALIA PASSING BOOKS RESULT AND ADD ITION ON ACCOUNT OF SUPPRESSED SALES. CIT(A) FOUND THE ORDE R OF ASSESSING OFFICER ARBITRARY. HER BASIC PREMISES OF COMPARING I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 5 PRODUCTION RATIOS BETWEEN DIFFERENT MONTHS WAS FOUN D LOGICALLY INACCURATE AND FAULTY BY CIT(A). FOR EXAMPLE, ASSE SSING OFFICER HERSELF RECORDED IN CHART ON PAGE-3 AND ALS O OBSERVED IN SUBSEQUENT PARAS THAT IN THE MONTH OF JULY, THE PRO DUCTION WAS 71,294.75 KGS AGAINST THE CONSUMPTION OF ELECTRICIT Y OF 15,080 UNITS AND THAT, THE PRODUCTION PER UNIT OF E LECTRICITY WAS 4.73 KGS. IN THE MONTH OF FEBRUARY, THE CONSUM PTION OF ELECTRICITY WAS 9200 UNITS AND THE PRODUCTION OF 25 649.27 KGS RESULTING IN PER UNIT PRODUCTION OF 2.79 KGS. IT W AS NOT UNUSUAL. AS SUCH, PRODUCTION IN THE MONTH OF FEBRU ARY WAS LESSER AS COMPARED TO THE MONTH OF JULY AND SO WAS THE CONSUMPTION OF ELECTRICITY. ASSESSING OFFICER FAILE D TO APPRECIATE THE VERY BASIC THAT PRODUCTION COULD NOT BE CONSISTENT IN ALL MONTHS. IN PRINCIPLE, ASSESSING OFFICER ACCEPTED THE VARIATION TO REACH THE CONCLUSION THAT MONTHLY VARIATION COULD NOT BE IN EXCESS OF 20-30%, HER ACT ION OF REDUCING THE TOTAL PRODUCTION FIGURE BY 30% TO ARRI VE AT SUPPRESSED SALES IS DEVOID OF LOGIC. IN VIEW OF T HIS, CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY ASSESSIN G OFFICER AFTER REJECTING THE BOOKS ACCOUNT. THIS REASONED F ACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE. SAME IS U PHELD. 4. NEXT ISSUE IS WITH REGARDS TO ADDITION ON ACCOUN T OF AGRICULTURAL EXPENSES. ASSESSING OFFICER MADE ADDI TION OF RS.78,000/- BEING UNACCOUNTED EXPENSES INCURRED ON AGRICULTURAL ACTIVITY. ASSESSING OFFICER NOTED THA T ASSESSEE HAD I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 6 CLAIMED NET AGRICULTURAL INCOME OF RS.3,17,329/-. RELEVANT DOCUMENTS IN SUPPORT OF OWNERSHIP OF LAND AS ALSO C OPIES OF SALE BILLS OF AGRICULTURAL PRODUCE WERE FURNISHED A LONG WITH THE INCOME AND EXPENDITURE ACCOUNT. ASSESSING OFFICE N OTED THAT ASSESSEE HAD SHOWN EXPENSES OF RS.77,000/-, WHICH W AS ONLY 19.54% OF THE TOTAL AGRICULTURAL RECEIPT. ASSESSIN G OFFICER ESTIMATED AGRICULTURAL EXPENSES AT 40% AND ADDED TH E DIFFERENCE OF RS.78,000/- TO ASSESSEES TOTAL INCOM E UNDER THE PROVISIONS OF SECTION 69C OF THE ACT. IN APPEAL, S AME WAS DELETED. SAME HAS BEEN OPPOSED ON BEHALF OF REVENU E, ON OTHER HAND LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 4.1 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT TOTAL EXPENSES INCLUSIVE OF EX PENSES OF RS. 8,50,305/- INCURRED BY ASSESSEE AND HIS BROTHERS WE RE WORKED OUT TO RS. 11,32,229/- RESULTING IN NET AGRICULTURA L INCOME IN THE HANDS OF LAND OWNERS OF RS.19,03,972/-. THE TOT AL EXPENDITURE OF RS. 11,32,229/- REPRESENTED 37.29% O F GROSS AGRICULTURAL RECEIPT OF RS.30,26,200/-. CIT(A) FOL LOWING ITAT DECISION IN CASE OF SHRI DHIRUBHAI L NAROLA IN ITA NO. 2190 & 2922/AHD/2004-05 DATED 17.09.2004 HELD THAT REASONA BLE EXPENSES INCURRED ON ANY AGRICULTURAL ACTIVITY WOUL D CONSTITUTE 40% OF TOTAL AGRICULTURAL RECEIPT. IN CASE OF ASSE SSEE, THE PERCENTAGE WAS 37.29 WHICH MEANT THAT THERE WAS S TILL A GAP OF 2.71%. I.E. ASSESSEE HAD UNDERSTATED THE EXPE NDITURE TO I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 7 THE EXTENT OF RS 82,281/-. ASSESSEE'S L/6 TH SHARE WORKED OUT TO RS. 13,714/-. ACCORDINGLY, ADDITION WAS LIMITED T O THAT EXTENT. THIS REASONED FACTUAL FINDING IN LIGHT OF SHRI DHIR UBHAI L NAROLA (SUPRA), NEEDS NO INTERFERENCE FROM OUR SIDE . WE UPHOLD THE SAME. 5. NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS. 2, 87,570/- UNDER THE PROVISIONS OF SECTION 69B OF THE ACT. AS SESSING OFFICER NOTED THAT THE ASSESSEE HAD PURCHASED BUNG LOWS NO. 6 & 6A AT DARSHAN HOUSING SOCIETY. HE NOTICED THAT AG REEMENT REFLECTED THE SALE PRICE AT RS 4,51,000/- WHEREAS, THE STAMP VALUATION AUTHORITY (SVA) HAD VALUED THE PROPERTY A T RS 7,38,570/- THERE BEING A DIFFERENCE OF RS 2,87,570/ -. ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE UNDERVALUATION OF THE SAID PROPERTY TO THE EXTENT O F RS 2,87,570/- SHOULD NOT BE TREATED AS UNEXPLAINED INV ESTMENT IN THE HANDS OF THE ASSESSEE. IN RESPONSE TO SAME, THE STAND OF ASSESSEE HAS BEEN THAT THERE WAS NO GROUND TO APPLY THE PROVISIONS OF SECTION 69B OF THE ACT, MORE SO WHEN THE AMOUNTS EXPENDED HAD BEEN DULY RECORDED IN THE BOOK S OF ACCOUNT. ASSESSING OFFICER REJECTED THE ASSESSEE'S CONTENTION ON THE GROUND THAT VALUATION OF SVA CONSTITUTED SUF FICIENT MATERIAL EVIDENCE ON RECORD LEADING TO THE REASONAB LE INFERENCE THAT ASSESSEE HAD INVESTED MORE AMOUNTS IN EXCESS O F WHAT HAD BEEN SHOWN IN BOOKS OF ACCOUNT. ACCORDING TO ASSESSING OFFICER, SVA ADOPTS A SCIENTIFIC METHOD AND DUE PRO CEDURE TO VALUE PROPERTIES. SO, HE ADDED A SUM OF RS.2,82,75 0/- TO THE I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 8 ASSESSEES TOTAL INCOME BEING UNEXPLAINED INVESTMEN T IN SAID PROPERTY. 5.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY AND HAVING CONSIDERED THE SAME, CIT(A) HAS DELETED THE ADDITION IN QUESTION. SAME HAS BEEN OPPOSED BEFORE US INTER AL IA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETIN G THE ADDITION IN QUESTION. ON OTHER HAND, LD. AUTHORIZED REPRESE NTATIVE SUPPORTED THE ORDER OF CIT(A). 5.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT CIT(A) FOLLOWING THE DECISION OF BHARAT N PATEL VS. ACIT, CIRCLE-3, FOR AY 2005-06, DATED 29- 08-2008, IN ITA NO. 1749/AHD/2008, WHEREIN IDENTICAL ADDITION W AS CONFIRMED BY CIT(A), WAS DELETED BY ITAT BY OBSERVI NG AS UNDER: '10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF LAW AS WELL AS DECISION(S) OF HON'BLE SUPREME COURT AND VA RIOUS BENCHES RELIED UPON BY THE PARTIES, WE ARE OF THE O PINION THAT THE CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION BY DRAWING THE ANALOGICAL PROVISIONS OF SE CTION 50C OF THE ACT. THE CIT(APPEALS) CONFIRMED THE ADDITION BY OBSERVING THAT IF THIS PROPOSITION IS TO BE ACCEPTE D, THEN THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT WILL B ECOME INOPERABLE. HE FURTHER HELD THAT SECTION 50C OF THE ACT IS APPLICABLE TO THE SELLER AND PROVIDES THAT THE VALU ATION MADE BY THE STAMP VALUATION AUTHORITY IS TO BE DEEM ED AS THE CONSIDERATION RECEIVED BY THE SELLER. HAVING SA ID SO, THE CIT (APPEALS) FURTHER HELD THAT 'THE CONVERSE WILL ALSO HAVE I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 9 TO BE ACCEPTED AS TRUE, I.E., THE VALUATION OF THE STAMP VALUATION AUTHORITY WILL HAVE TO BE DEEMED AS THE CONSIDERATION PAID BY THE PURCHASER OF THE PROPERTY AS WELL. 10.1 WE ARE UNABLE TO AGREE WITH THE AFORESAID ANAL OGY DRAWN BY THE CIT (APPEALS.) BECAUSE HAD THE LEGISLA TURE INTENDED SO, IT COULD HAVE EASILY SPECIFIED SUCH A PROPOSITION IN THE PROVISION ITSELF. 11. IN VIEW OF THE SETTLED PROPOSITION OF LAW THAT THE APPELLATE AUTHORITY HAS NO RIGHT EITHER TO ADD OR T O DELETE ANY WORD FROM THE PROVISOS OF LAW UNLESS AND UNTIL THE SAME ARE FOUND TO BE HAVING SOME AMBIGUITY, WE ARE UNABL E TO SUSTAIN THE STAND OF THE CIT(APPEALS), THERE BEING NO AMBIGUITY IN THE SECTION 50C OF THE ACT, WE ARE OF THE OPINION THAT THESE PROVISIONS ARE NOT APPLICABLE TO THE PURCHASER. FOLLOWING THE DECISION OF BHARAT N. PATEL (SUPRA), CIT(A) DELETED THE ADDITION IN QUESTION. THIS REASONED FACTUAL FI NDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME BECAUSE THE SAID PROVISION OF SECTION 50C OF T HE ACT WAS NOT APPLICABLE AT RELEVANT POINT OF TIME AND PROVID ES THAT VALUATION MADE BY STAMP VALUATION AUTHORITY IS TO B E DEEMED AS CONSIDERATION RECEIVED BY SELLER. ACCORDINGLY, ORDER OF CIT(A) ON THE ISSUE IS UPHOLD. 6. IN THE RESULT, REVENUES APPEAL FOR A.Y.06-07 IS DISMISSED. 7. NOW WE TAKE ITA NO. 2544/AHD/2009 FOR A.Y. 2007- 08. 7.1 FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.4 ,85,000/- MADE UNDER THE PROVISION OF SECTION 68. DURING ASS ESSMENT PROCEEDING, ASSESSING OFFICER RAISED QUERIES ABOUT DEPOSITS I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 10 SHOWN FROM NINE PERSONS, THE DETAILS OF WHICH HAVE BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARA-5.1, PA GES 3-4 OF THE ASSESSMENT ORDER. ASSESSEE FURNISHED CERTAIN D ETAILS. ASSESSING OFFICER MADE DISALLOWANCE WITH REGARDS TO DEPOSIT, BEING NOT SATISFIED AND HE TREATED CASH DEPOSITS MA DE IN RESPECTIVE BANK ACCOUNTS CREDITORS TOTALING RS 4,8 5,000/- AS UNEXPLAINED CASH CREDITS, AND ADDED THE SAME TO ASSESSEE'S TOTAL INCOME, WHICH WAS DELETED BY CT(A ). U/S 68 OF THE IT ACT. 7.2 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF RE VENUE INTER ALIA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION IN QUESTION. ACCORDINGLY, ORDER OF CI T(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE O RDER OF CIT(A). 7.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ASSESSING OFFICER IS LISTED OU T NINE CREDITORS YET, HE LEFT OUT THREE OF THEM IN HIS FIN AL ANALYSIS AND FOCUSED ONLY ON THE REMAINING SIX FOR REASONS KNOWN TO HIM. WHILE DOING SO, HE DID NOT RECORD ANY REASON OR OBS ERVATION. HE LEFT OUT SHRI ARJUN MARFATIA, SHREE CHAKRADHAR SYNT HETICS AND SHRI GORDHAN K RADADIA, IN RESPECT OF WHOM NO DETAI L WAS FURNISHED, AS RECORDED BY HIM IN THE CHART ON PAGES 3-4 OF THE ASSESSMENT ORDER. HE ONLY FOCUSED ON THOSE CREDITOR S IN I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 11 RESPECT OF WHOM COMPLETE DETAILS, BANK PASS BOOKS, AND BANK STATEMENTS HAD BEEN FURNISHED, AND WHERE HE FOUND T HAT CASH HAS BEEN DEPOSITED BEFORE GIVING LOANS TO ASSESSEE. CIT(A) HAVING GONE THROUGH THESE BANK ACCOUNTS FOUND THAT THERE WERE REGULAR TRANSACTIONS BOTH IN CASH AND IN CHEQU ES IN ALL THESE ACCOUNTS. FOR EXAMPLE, IN CASE OF MAHARLAL J IVARAJBHAI GAJIPARA IN WHOSE NAME DEPOSIT/LOAN OF RS 2,04,866/ - WAS SHOWN HIS BANK ACCOUNT SHOWS SEVERAL TRANSACTIONS B OTH IN CHEQUES AND CASH. ON 29-12-2006, THERE WAS A CHEQU E DEPOSIT OF RS 3,50,000 BUT ASSESSING OFFICER PICKED UP SUBSEQUENT CASH DEPOSIT OF RS 47,500/- EACH ON 05-0 1-2007 AND 09-01-2007 TO ADD UP TOTAL SUM OF RS 95,000/- I N THE HANDS OF ASSESSEE. IN CASE OF ARVINDBHAI DEVERAJBH AI WHO HAD GIVEN A LOAN OF RS 2,75,000 TO ASSESSEE ON 22-04-20 06 BY CHEQUE, THERE WERE CHEQUES DEPOSITS IN HIS A CCOUNT ON 02-02-2006 OF RS 1,44,000/- AND ON 28-02-2006 OF R S 41,000/-. THERE WERE CASH DEPOSITS ON 08-03-2006 OF RS 50,000/- AND ON 23-03-2006 OF RS 40,000/-. ASSESSI NG OFFICER ONLY PICKED UP CASH DEPOSITS OF RS 90,000/- TO MAKE ADDITION U/S 68 OF THE IT ACT, ALTOGETHER IGNORING THE EARLI ER DEPOSITS AS DISCUSSED ABOVE. IN CASES OF ALL CREDITORS, THEI R BANK ACCOUNTS REVEALED REGULAR AND FREQUENT TRANSACTIONS BOTH IN CHEQUES AND IN CASH. THERE IS NOTHING ON RECORD TO SUGGEST THAT ACCOUNTS WERE OPENED FOR THE PURPOSE OF DEPOSI TING CASH AND ISSUING CHEQUES TO ASSESSEE. IT WAS NOT AS IF THESE ACCOUNTS HAD MEAGER BALANCES AND CASH WAS DEPOSITED ONLY TO MAKE FUNDS AVAILABLE TO GIVE LOANS TO THE ASSESSEE. IN THIS I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 12 SITUATION, CASH DEPOSITED IN BANK ACCOUNTS OF CREDI TORS COULD NOT BE A GROUND TO TREAT THE LOANS FROM THE SAID SI X CREDITORS AS UNEXPLAINED. THE TOTAL LOANS/DEPOSITS SHOWN IN BOO KS OF ASSESSEE IN THE NAMES OF THESE SIX DEPOSITORS WAS R S 13,50,866/- BUT ASSESSING OFFICER ADDED ONLY CASH D EPOSITS TOTALLING RS 4,85,000/- AS APPEARING IN THE BANK AC COUNTS OF THE CREDITORS, IN THE HANDS OF ASSESSEE, UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. NORMALLY ADDITION IS MADE TO THE EXTENT OF LOAN SHOWN BY ASSESSEE IN HIS BOOKS A ND NOT CASH DEPOSITS IN THE BANK ACCOUNTS OF CREDITORS. THE CA SH DEPOSITS IN CREDITORS ACCOUNTS COULD BE TREATED AS UNEXPLAI NED IN THE HANDS OF THOSE CREDITORS BUT NOT IN THE HANDS OF A SSESSEE. ASSESSEE HAD FURNISHED ALL RELEVANT DETAILS INCLUDI NG CONFIRMATION LETTERS SHOWING COMPLETE ADDRESSES OF THE CREDITORS. INSTEAD OF CONDUCTING ANY INQUIRY OF HIS OWN BY ISSUING SUMMONS ETC, ASSESSING OFFICER SIMPLY CHOSE TO ADD THE CASH DEPOSITS IN THE BANK ACCOUNT OF CREDITORS IN THE HANDS OF THE ASSESSEE. HE COMPLETELY IGNORED THE FACT TH AT LOANS HAD BEEN REPAID DURING THE YEAR BY CHEQUES AND THIS WAS EVIDENCED BY BANK STATEMENTS/PASS BOOKS OF THE CREDITORS. IN OTHER WORDS, THEY NO LONGER APPEARED AS OUTSTANDING UNEXP LAINED IN THE HANDS OF ASSESSEE. IN SUCH CIRCUMSTANCES, ADDI TIONS WERE NOT JUSTIFIED AND THEY WERE RIGHTLY DELETED BY CIT( A). WE UPHOLD THE SAME. 8. NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS.2,8 8,43,616/- ON ACCOUNT OF ESTIMATED SUPPRESSED SALES. SIMILAR ISSUE AROSE I.T.A. NOS. 2544/AHD/10 & 3120/AHD/09 FOR A.Y. 07-0 8 & 06-07 (ACIT VS. SHRI CHHAGANBHAI R RAKHOLIA) PAGE 13 IN A.Y. 2006-07 IN PARA 3 OF THIS ORDER, WHEREIN CI T(A) HAS DELETED ADDITION MADE BY ASSESSING OFFICER AND WE H AVE CONFIRMED THE ORDER OF DELETION OF SIMILAR ADDITION AS DISCUSSED THEREIN. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION OF RS.2,88,43,616/- MADE BY AS SESSING OFFICER ON ACCOUNT OF SUPPRESSION OF SALES. SAME I S UPHELD. 9. AS A RESULT, BOTH APPEALS FILED BY REVENUE ARE D ISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF DECEMBER, 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;