Jay Ambe Finance, Borsad V. The Income tax Officer,Ward-3(4), Petlad

ITA 260/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80353 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 01-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: B T THAKKAR
• Keywords: Gift; Additional evidence
• Section: 142(1); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 260 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2005 - 06) JAY AMBE FINANCE B/41,, SILVER POINT,, JAKLI TALAV,, BORSAD, GUJARAT, 388540 V/S THE I.T.O, WARD - 3 (4), PETLAD. (APPELLANT) (RESP ONDENT) PAN: AAEFY 6224B APPELLANT BY : SHRI B.T. THAKKAR, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R . ( )/ ORDER DATE OF HEARING : 31 - 07 - 2014 DATE OF PRONOUNCEMENT : 12 - 0 9 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSES SEE IS AGAINST THE ORDER OF LD CIT(A) - IV, BARODA DATED 26.11.2010 FOR A.Y. 2005 - 06. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE MAI NLY ENGAGED IN THE BUSINESS OF SHROFF , FINANCE AND C HEQUE DISCOUNTING. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 05 - 06 ON 31.08.2005 DECLARING TOTAL INCOME OF RS. 4,070/ - . THE CASE WAS SELECTED FOR SCRUTINY. A.O HAS NOTED THAT NOTIC E S U/S. 143(2) AND 142(1) WERE ISSUED ON VARIOUS DATES BUT ASSESSEE FAILED TO FURNISH THE REQUIRED DETAILS. ACCORDINGLY ASSESSMENT WAS FRAMED U/S. 144 OF THE ACT ON 4.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 61,79,285/ - . AGGRIEVED BY THE ORDER OF A. O, ITA NO 260/AHD/2011 . A.Y. 2005 - 06 2 ASSESSEE CARRIED THE MATTER BEFORE LD CIT(A) . LD. CIT((A) VIDE ORDER DATED 26.10.2010 GRANTED PARTIAL RELIEF TO THE ASSESSE E. AGGRIEVED BY THE ORDER OF LD CIT(A) , AS S ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND: - 1. THE ADDITION OF RS. 12,18,936/ - UPHELD U/S. 68 OF THE I.T. ACT BEING BAD IN LAW MAY PLEASE BE DELETED NOW. 4. ON PERUSING THE BALANCE SHEET FILED BY THE ASSESSEE, A.O NOTICED THAT DURING THE YEAR CAPITAL WAS INTRODUCED BY THE PARTNERS AND THE ASSESSEE HAD ALSO RECEIVE D DEPOSITS. THE AGGREGATE BALANCE OF WHICH WAS RS. 57,17,115/ - . A.O WAS OF THE VIEW THAT IN THE ABSENCE OF V ERIFICATION REGARDING IDENTITY CR EDITWOR THINESS AND GENUINENESS THE AMOUNT OF CAPITA L INTRODUCE D BY PARTNERS AND DEPOSITS ACCEPTED FROM THE DEPOSITO RS AGGREGATING TO RS. 57,17,115/ - WAS CONSIDERED AS U N EXPLAINED AND THEREFORE ADDED TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD CIT(A) . LD CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDIN G AS UNDER: - 4. I HAV E CONSIDERED FACTS OF THE CASE, ASSESSING OFFICER'S REPORT AND APPELLANT'S SUBMISSIONS. SINCE ASSESSING OFFICER DID NOT PROVIDE SPECIFIC OPPORTUNITY OR ISSUE SHOW CASE NOTICE BEFORE ADDING THE ENTIRE BALANCE AND DISALLOWING ENTIRE EXPENSES CLAIMED IN THE PR OFIT AND LOSS ACCOUNT, ADDITIONAL EVIDENCES FILED BY THE APPELLANT WERE ADMITTED UNDER RULE 46A IN THE INTEREST OF NATURE JUSTICE. AS FAR AS ADDITION ON ACCOUNT OF CLOS ING BALANCE OF PARTNERS' CAPITAL IS CONCERNED, SINCE PARTNERS CONFIRMED CONTRIBUTION OF C APITAL BY THEM, THE SAME CANNOT BE A DDED IN THE HANDS OF FIRM AS HEL D BY ITAT, AHMEDABAD IN THE CASE OF PATEL RAJESHKUMR KANTILAL (1999) 64 TTJ (AHD) 460, GUJARAT HIGH COURT IN THE CASE OF PANKAJ DYE STUFF INDUSTRIES AND ALSO IN VIEW OF DECISIONS, 218 ITR 508, 16TTJ 257, 104 TTJ 292 AND 42 ITD 450, ADDITIO N AS UNDER IN RESPECT OF CAPITAL CONTRIBUTION BY PARTNERS IS THER EFORE, DELETED: SHRI ASHOKBHAI BHIKHABHAI PATEL RS. 2,67,717/ - SHRI BHAILALBHAI BHIKHABHAI PATEL RS. 2,65,517/ - MANUBHAI BHIKHABHAI PATEL RS. 1,84,467/ - SHRI JASHBHAI BHIKHABHAI PATEL RS. 4,30,717/ - TOTAL RS. 11,48,418/ - IN THE ASSESSMENT ORDER, BREAKUP OF AMOUNT OF RS,57,17,115/ - ADDED U/S.68 IS NOT RECORDED. ASSESSING OFFICER MAY THEREFORE VERIFY CORRECTNESS OF FIGURE S OF INDIVIDUAL CASES BEFORE DELETING THE ADD ITION AS ABOVE OF RS.11,48,418/ IN RESPECT OF PARTNERS' CAPITAL. FURTHER, ASSESSING OFFICER MAY, IF REQUIRED MAKE VERIFICATION OF SOURCE OF CAPITAL IN THE HANDS OF PARTNERS AND TAKE NECESSARY ACTION IN THEIR CAS ES. 4.1 APPELLANT'S CONTENTION REGARDING ASSESSED INCOME AS PER COMPARABLE CASES HAS NO RELEVANCE SO FAR AS ADDITIONS U/S.68 ARE CONCERNED. IN RESPECT OF DEPOSITS FROM 74 PERSONS, CONFIRMATIONS OF DEPOSITORS WERE FILED IN ALL CASES. DEPOSITS BELOW RS.20,000 / - ARE SMALL RANGING BETWEEN R.S.800/ - TO RS.5,000/ - , ETC. ASSESSING OFFICER HAS ACCEPTED GENUINENESS OF SUCH DEPOSITS. FILING OF CONFIRMATIONS IS CONSIDERED TO BE SUFFICIENT FOR SUCH SMALL DEPOSITS IN CASE OF APPELLANT; WHO IS A SHROFF AND ADDITION IN RES PECT OF SUCH DEPOSITS IS TO BE DELETED, 4.2 REGARDING REMAINING 40 DEPOSITORS, WHICH WERE VERIFIED BY THE ASSESSING OFFICER BY CALLING THE PARTIES,, EXAMINING THEIR SOURCE ETC, ASSESSING OFFICER FOUND 24 DEPOSITORS TO BE LACKING CREDITWORTHINESS. IN THIS ITA NO 260/AHD/2011 . A.Y. 2005 - 06 3 RE GARD, APPELLANT'S CONTENTION THAT ASSESSING OFFICER HAS NOT GIVEN REASONS AS TO WHY EXPLANATION FURNISHED WAS NOT FOUND SATISFACTORY, IS NOT ACCEPTABIE. ASSESSING OFFICER HAS VERIFIED 40 DEPOSITORS AND HAS ACCEPTED THOSE DEPOSITS TO BE GENUINE, WHERE EVIDE NCE IN SUPPORT OF CREDITWORTHINESS COULD BE FILED. FOR INSTANCE, IN CASES, WHERE BANK STATEMENT, SALARY SLIP OR PROOF OF OWNERSHIP OF AGRICULTURAL LAND IN OWN NAME WAS FILED, ASSESSING OFFICER HAS ACCEPTED THE DEPOSITS EVEN THOUGH PERSONS WERE NOT ASSESSED TO TAX. IN CASE OF 24 DEPOSITORS NOT FOUND TO BE CREDITWORTHY, SUFFICIENT EVIDENCE TO SUPPORT CREDITWO RTHINESS COULD NOT BE FILED. AL L THESE PERSONS ARE NOT ASSESSED TO TAX, MERE FILING OF CONFIRMATIONS CAN NOT BE CONSIDERED ENOUGH AND ONUS WAS ON THE APP ELLANT TO ESTABLISH CREDITWORTHINESS OF THE DEPOSITORS, IN VIEW OF THIS, ADDITION IN RESPECT OF DEPOSITS FROM 24 PERSONS AS PER ASSESSING OFFICER'S REPORT IS TO BE CONFIRMED. THE AMOUNTS IN RESPECT OF THESE 24 PARTIES AS PER APPELLANT'S SUBMISSIONS ARE AS UNDER: SR.NO. NAME OF THE DEPOSITORS AMOUNT (RS.) 1. GAURANG ASHOKBHAI PATEL 39,900/ - 2. PAVAN ASHOKBHAI PATEL 44,900/ - 3. BELABEN ASHOKBHAI PATEL 37,130/ - 4, SUHAG KAMLESHKUMAR PATEL 89,300 / - 5. MEENABEN BHIKHABHAI PATEL 94,450/ - 6. RAJESHBHAI MANIBHAI PATEL 54,850/ - 7. NANDINIBEN RAJESHBHAI PATEL 54,450/~ 8. MANISHBHAI JASHBHAI PATEL 35,500/ - 9. DARNINIBEN JASHBHAI PATEL 24,150/ - 10. NIYATIBEN JASHBHAI PATEL 24, 085/ - 11. MEENABEN JASHBHAI PATEL 73,700/ - 1 2 . SAVITABEN MANIBHAI PATEL 68,500/ - 13. RAMESHBHAI MANIBHAI PATEL 25,441/ - 14. PRATIKKUMAR MANUBHAI PATEL 1,07,985/ - 15. MOHABATSINH B. JADAV 33,200/ - 1 6 . SANGEETABEN PRAVLNBHAI PATEL 1,03,800/ - 17. SAROJBEN KANTIBHAI PATEL 37,000/ - 18. MEENABEN BHIKHABHAI PATEL 59,500/ - 19. CHANDNIBEN PRAKASHBHAI PATE L 40,325 / - 20 KOMAL PRAKASHBHAI PATEL 51 ,050/ - 21 NEEL PRAKASHBHAI PATEL 40,820/ - 22. VAIBHAVIBEN ARVINDBHAI PATEL 26,300/ - 23. PARTH ARVINDBHAI PATEL 26,300 / - ITA NO 260/AHD/2011 . A.Y. 2005 - 06 4 24. LATABEN ARVINDBHAI PATEL 26,300/ - TOTAL 12,18,936/ - ABOVE AMOUNTS ARE INCLUSIVE OF INTERE ST, WHICH IS TO BE DISALLOWED IN RESPECT OF DEPOSITS ADDED U/S.68. ADDITION OF RS.12,18,936/ - IS CONFIRMED OUT OF ADDITION IN RESPECT OF DEP OS ITS OTHER THAN PARTNERS' CAPITAL AND BALANCE IS DELETED. 4.3 REGARDING DISALLOWANCE OF EXPENSES OF RS. 4,58,100 / - , ACTION OF ASSESSING OFFICER IN DISALLOWING ENTIRE EXPENSES CANNOT BE UPHELD, SINCE NO BUSINESS CAN RUN WITHOUT INCURRING EXPENSE. THE EXPEN SES WERE INCURRED ON SALARY, RENT, INTEREST, OFFICE EXPENSES, PETROL, TELEPHONE, POSTAGE, STATIONERY, LIGHT BILL AND PROFESSIONAL TAX. DISALLOWANCE OF R,S, 15,000/ - OUT OF OFFICE EXPENSES (RS.46,018/ - ), STATIONERY EXPENSES (RS.19,297), PETROL EXPENSES (RS. 5,545/ - ) AND TELEPHONE EXPENSES (RS.4,949/ - ) ON ACCOUNT OF PERSONAL AND NON BUSINESS PURPOSES USE IS DIRECTED TO BE MADE AND THE BALANCE DISALLOWANCE IS CANCELLED. 5. AGGRIEVED BY THE ORDER OF LD CIT(A) , ASSESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD A.R REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). HE FURTHER SUBMITTED THAT DEPOSITS WERE RECEIVED FROM 74 PERSONS AND THE CONFIRMATIONS WERE FILED BY THE ASSESSEE IN ALL THE CASES. WITH RESPECT TO 24 DEPOSITORS LISTED AT PAGE 8 OF CIT(A) S ORDER , THE DISALLOWANCE WHICH HAS BEEN CONFIRMED BY LD CIT(A) , IT IS SUBMITTED THAT ASSESSEE HA D SUBMITTED THE CONFIRMATIONS , PROOF OF IDENTITY IN THE FORM OF ELECTION CARD/PAN CARD AND HAS THUS PROVED THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS AND THE DE POSITORS AND HAS THUS DISCH A R GED THE ONUS CAST UPON THE ASSESSEE . HE POINTED TO THE RELEVANT PAGES OF PAPER BOOK . H E THEREFORE SUBMITTED THAT THE A DDITION BE DELETED. LD D.R. ON THE OTHER HAND POINTED TO THE FINDING OF LD CIT(A) WHERE IT HAS BEEN HELD THAT 24 DEPOSITORS WERE NOT FOUND TO BE CREDITWORTHY AND IN THE ABSENCE OF PROVING SUFFICIENT CREDITWORTHINESS , CIT(A) HAS RIGHTLY DISALLOWED THE AMOUNT. HE THUS SUPPORTED THE ORDER OF LD CIT(A) . 7. WE HAVE HEARD THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL O N RECORD. FROM THE ORDER OF LD CIT(A), WE FIND THAT THE DISALLOWANCE OF AGGREGATE AMOUNT OF RS. 12,18,936/ - RECEIVED FROM 24 PARTIES LISTED AT PAGE 8 OF HIS ORDER WAS CONFIRMED . ON PERUSAL OF THE LIST IT IS SEEN THAT THERE ARE MANY PARTIES WHERE THE AMOUN T OF DEPOSITS ARE LESS THAN 85,000 / - . ON TEST CHECKING THE DETAILS OF OTHER MAJOR DEPOSITORS FILED BEFORE US, IT IS SEEN THAT IN CASE OF 4 PARTIES THE DEPOSIT ITA NO 260/AHD/2011 . A.Y. 2005 - 06 5 RECEIVED BY THE ASSESSEE WERE IN EXCESS OF RS. 85,000/ - . IN THOSE CASES, W E HAVE NOTED AS UNDER : - (A) IN CASE OF SUHAG KAMLESHKUMAR PATEL LISTED AT SERIAL NO. 4 IT IS SEEN THAT HE HAS STATED TO HAVE EARNED SUBSTANTIAL INCOME FROM THE AGRICULTURE ACTIVITY OF HIS FAMILY OUT OF WHICH HE HAD DEPOSITED 84,500/ - WITH THE ASSESSEE . IN THE STATEMENT RECORDE D U/S. 131 ON 7.01.2009 HE HAS STATED TO BE HAVING LAND OF 12 VEGA AND THE INCOME FROM WHICH IS RS. 3.5 TO RS. 4 LACS. HOWEVER NO BANK ACCOUNT HAS BEEN PLACED ON RECORD. CONSIDERING THAT THE DEPOSITOR IS STAYING IN JOINT FAMILY AND BEING NOT ASSESSED TO TAX AND IN THE ABSENCE OF THE BANK ACCOUNT TO PROVE THE CREDITWORTHINESS, WE FIND NO INFIRMITY IN THE ORDER OF LD CIT(A) IN DISALLOWING THE AMOUNT. (B) IN CASE OF MEENABEN BHIKHABHAI PATEL LISTED AT SERIAL NO. 5 SHE HAS STATED TO BE HAVING AGRICULTURAL LAN D AND FROM WHICH THE ANNUAL INCOME IS BETWEEN RS. 1.5 TO RS. 2 LACS. SHE HAS FURTHER STATED IN THE STATEMENT ON OATH THAT HER HUSBAND HAS IRON SHOPS AND THE DEPOSITS HAVE STATED TO HAVE BEEN MADE FROM PAST SAV INGS AND THE GIFTS RECEIVED ON DIFFERENT OCCASI ONS. SHE HAS FUR T HER STATED THAT SHE IS NOT ASSESSED TO TAX AND ALSO NOT HAVING PAN NUMBER. IN THE PAPER BOOK AT PAGE 64 THE COPY OF THE FIRS T PAGE SHOWING THE NAME OF THE DEPOSITOR IN THE PASS BOOK IS PLACED BUT THE DETAILS OF THE TRANSACTIONS HAVE NOT BE EN PLACED. CONSIDERING THE TOTALITY OF FACTS MORE SO OF THE DEPOSITS OF RS. 89,500 BEING MADE OUT OF ANNUAL INCOME OF APPROXIMATELY RS. 2 LACS WE ARE OF THE VIEW THAT THE ONUS HAS NOT BEEN FULLY DISCHARGED AND THEREFORE WE FIND NO INFIRMITY IN THE OR DER OF CIT(A) AND THUS CONFIRM THE DISALLOWANCE MADE IN CASE OF THIS DEPOSITOR . (C) IN CASE OF PRATIKKUMAR M ANUBHAI PATEL THE BALANCE OUTSTANDING IS OF RS. 1,07,985/ - . IN THE STATEMENT RECORDED U/S. 131 HE HAS STATED TO HAVE DEPOSITED THE AMOUNT FROM THE DEPOSI TS OF RS. 1,13,985/ - WITHDRAWN FROM SATYAM FINANCE WHICH WERE PLACED BY HIM . THE DEPOSITOR HAS NOT GIVEN THE DETAILS OF HIS PASS BOOK SHOWING THE AFORESAID RECEIPT. HE HAS FURTHER STATED TO BE WORKING WITH THE ASSESSEE AND NOT FILING HIS RETURNS OF INCOME. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW THAT THE ONUS HAS NOT BEEN FULLY DISCHARGED AND THEREFORE WE FIND NO INFIRMITY IN THE ORD ER OF CIT(A). AND THUS CONFIRM THE DISALLOWANCE MADE IN CASE OF THIS DEPOSITOR . (D) IN THE CASE OF SANGEETABEN PRAVI NBHAI PATEL , THE AMOUNT ITA NO 260/AHD/2011 . A.Y. 2005 - 06 6 OUTSTANDING IS SHOWN AS RS. 1,03,800/ - . THE DEPOSITORS IN THE STATEMENT RECORDED U/S. 131 HAS STATED TO HAVE DEPOSITED RS. 1 LAC WITH THE ASSESSEE THE SOURCE OF WHICH WAS STATED TO BE RECEIVED FROM HER BROTHER - IN - LAW WHO IS STATED T O BE NRI IN BELGIUM. HOWEVER NO ACCOUNT STATEMENT OF THE BANK ACCO UNT HAS BEEN PLACED ON RECORD NOR ANY DATE OF RECEIPT OF AMOUNT FROM BROTHER IN LAW HAS BEEN SHOWN. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW THAT THE ONUS HAS NOT BEEN FULLY DISCHA RGED AND THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF LD.CIT(A) AND THUS CONFIRM THE DISALLOWANCE MADE IN CASE OF THIS DEPOSITOR . WITH RESPECT TO THE OTHER PARTIES , CONSIDERING THAT THE AMOUNTS ARE SMALL AND SINCE THOSE DEPOSITORS HAVE CONFIRMED OF GIVIN G THE DEPOSITS TO THE ASSESSEE AND IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY REVENUE , WE FIND THAT NO ADDITIONS BE MADE IN THOSE CASES. IN THE RESULT, WE DIRECT THAT THE ADDITION BE CONFIRMED TO THE EXTENT OF RS. 3,95,535/ - AND DELETE THE BALANCE ADDITION. 8. IN THE RESULT, THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12 - 09 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD