Shri Vireshbhai Daulatbhai Patel, Surat V. The Income tax Officer,Ward-5(2), Surat

ITA 2733/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80289 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI
• Keywords: Reopening of assessment; Wrong claim; Reassessment proceedings
• Section: 143(3); 68; 148; 6; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER VIRESHBHAI DAULATBHAI PATEL, AKSHAR TOWNSHIP. PUNA KUMBHARIA ROAD, B/H INTERCITY TOWNSHIP, DUMBHAL, SURAT PAN: ADIPP5249H (APPELLANT) VS THE INCOME TAX OFFICER, WARD-5(2), SURAT (RESPONDENT) THE INCOME TAX OFFICER, WARD-5(2), SURAT (APPELLANT) VS VIRESHBHAI DAULATBHAI PATEL, AKSHAR TOWNSHIP. PUNA KUMBHARIA ROAD, B/H INTERCITY TOWNSHIP, DUMBHAL SURAT PAN: ADIPP5249H (RESPONDENT) ASSESSEE BY: SRI R.N. VEPARI, A.R. REVENUE BY: SRI NIMESH YADAV, SR. D.R. DATE OF HEARING : 07-08-2014 DATE OF PRONOUNCEMENT : 27-08-20 14 ITA NO. 2733/AHD/2010 ASSESSMENT YEAR 2007-08 ITA NO. 2797/AHD/2010 ASSESSMENT YEAR 2007-08 I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 2 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND RE VENUE RESPECTIVELY AGAINST THE ORDER OF LD. CIT(A)-IV SUR AT DATED 14-07-2010 FOR A.Y. 2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED AS CONS TRUCTIONS/ DEVELOPERS IN THE PROPERTY UNITS IN THE NAME AND ST YLE OF M/S AKSHAR ENTERPRISE AND M/S AKSHAR CORPORATION AND HAS ALSO EARNED BOOKING COMMISSION IN THE NAME OF M/S. AKSHARJYOT ORGANIZER DURING THE YEAR. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2007-0 8 ON 28-03-2008 DECLARING LOSS OF RS. 18,610/-. THE CASE WAS SELEC TED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE O RDER DATED 31/12/2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 2,09,26, 030/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 14-10-2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE AS WELL AS THE ASSSESSEE ARE NOW IN APPEAL BEFORE US. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO. 2797/A HD2010 4. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN DELETING TH E ADDITION OF RS. 1,87,18,267/- MADE ON ACCOUNT OF UNACCOUNTED MO NEY SHOWN AS BOOKING DEPOSIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN DELETING THE ADD ITION OF RS. 2,32,474/- MADE ON ACCOUNT OF DISALLOWANCE OF BOGUS LIABILITY IN RESPECT OF SUNDRY CREDITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN DELETING THE ADD ITION OF RS. 3,10,000/- MADE ON ACCOUNT OF DISALLOWANCE OF BOGUS LIABILITY IN RESPECT OF UNSECURED LOAN. FIRST GROUND IS WITH RESPECT TO DELETION OF ADDITIO N OF RS. 1,87,18,267/-. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT IN THE PROPRIETARY CONCERNS NAMELY AKSHAR CORPORATION AND AKSHAR ENTERPRISE, ASSESSEE HAS SHOWN BOOKING DEPOSITS O F RS. 95,16,443 & RS. 96,62,169 RESPECTIVELY AGGREGATING TO RS. 1,87 ,18,267/-. ASSESSEE WAS ASKED TO FURNISH THE ADDRESSES OF PERSONS, THEI R NAMES AND THEIR CONFIRMATIONS. AO NOTED THAT ASSESSEE HAD SUBMITTE D INCOMPLETE DETAILS AND IT DID NOT CONTAIN THE PROPER ADDRESSES. ON PE RUSING THE LIST SUBMITTED BY THE ASSESSEE, AO NOTICED THAT IN RESPECT OF MANY FLAT NUMBERS, THE NAME OF PERSONS TO WHOM THE POSSESSION WAS GIVEN WE RE DIFFERENT FROM THE NAME OF PERSONS IN WHOSE NAME THE ASSESSEE HAS SHOWN TO HAVE RECEIVED BOOKING DEPOSITS AND WHICH WAS STILL OUTST ANDING. FURTHER ON THE INQUIRY MADE THROUGH THE INSPECTOR, THE AO NOTICED THAT ASSESSEE WAS SHOWING THE PERSONS WHO HAD GIVEN BOOKING DEPOSITS AND WERE STILL OUTSTANDING FOR THE FLAT NUMBERS SHOWN AGAINST THEI R NAMES BUT ON THE OTHER HAND, IT WAS NOTICED THAT POSSESSION HAS ALRE ADY BEEN GIVEN TO OTHER I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 4 PERSONS YEARS BACK AND THE OWNERS/TENANTS WERE RESI DING IN THOSE FLATS FOR A NUMBER OF YEARS. AO ALSO NOTICED THAT IN THE LIS T OF BOOKING DEPOSITS IN BOTH THE CONCERNS, ASSESSEE HAD SHOWN BOOKING AMOUN TS UNDER THE HEAD SUSPENSE ACCOUNT WHICH WAS RS. 55,000/- AND RS. 2,5 3,695/- IN THE CASE OF AKSHAR ENTERPRISE AND AKSHAR CORPORATION RESPECT IVELY. AO THEREFORE CONCLUDED THAT THE NAMES AGAINST WHOM THE AMOUNTS W ERE SHOWN AS BOOKING DEPOSITS WERE NOT GENUINE AND IT WAS SHOWN BY THE ASESSEE IN MISCELLANEOUS NAMES AND THE ASSESSEE IS NOT IN A PO SITION TO PROVE THAT THE BOOKING DEPOSITS OUTSTANDING IN THE NAMES OF THE PERSON WHOSE NAMES ARE USED BY THE ASSESSEE. HE THEREFORE CONCL UDED THAT THE BOOKING DEPOSITS WAS NOTHING BUT THE UNACCOUNTED MO NEY OF THE ASSSESSEE AND THEREFORE HELD THE AGGREGATE AMOUNT A T RS. 1,91,78,267/- SHOWN AS BOOKING DEPOSITS IN THE TWO PROPRIETARY CONCERNS AS UNACCOUNTED MONEY AND ADDED IT TO THE INCOME. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE GR ANTED PARTIAL RELIEF BY HOLDING AS UNDER:- ON GOING THROUGH THE ABOVE TABLE, IT IS SEEN THAT THE APPELLANT HAS COMPLETELY FAILED TO PROVIDE PROPER AND COMPLETE AD DRESS OF THE ABOVE CUSTOMERS FROM WHOM BOOKING ADVANCES HAVE BEEN RECE IVED DURING THE YEAR UNDER CONSIDERATION SINCE, THE NAME OF THE SOC IETY AND THE MARKET IS NOT PRECEDED BY THE HOUSE NO. OR THE SHOP NO. IN MO ST OF THE CASES. FURTHER, IN CASE OF SAME PERSONS ALSO 2 SEPARATE AD DRESSEES HAVE BEEN GIVEN WHICH ARE ALSO INCOMPLETE. THE PROVISIONS OF SECTION 68 OF THE ACT CAST AN ONUS ON THE ASSESSES TO PROVE THE IDENTITY OF THE PERSON FROM WHOM AN AMOUNT IS RECEIVED, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SAID PERSON. IN THE INSTANT CASE, THE APPELLANT HAS COMPLETELY FAILED TO DISCHARGE THE ONUS CAST UPON H IM U/S. 68 BY NOT EVEN ABLE TO ESTABLISH THE IDENTITY LEAVE ASIDE THE GEN UINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITO R SINCE, NO PAN, CONFIRMATION, BANK STATEMENT, I.T. DETAILS, PROOF O F SALE, ETC., HAVE BEEN SUBMITTED AND ACCORDINGLY, THE ADDITION TO THE EXTE NT OF RS. 4,60,540 AS GIVEN IN THE ABOVE TABLE, IS HEREBY SUSTAINED BEING THE AMOUNT RECEIVED IN THE YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CR EDITS U/S. 68 OF THE ACT. I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 5 AS REGARDS THE BALANCE AMOUNT OF ADDITION OF RS. 1, 87,18,067 (I.E. RS. 1,91,78,607 - RS. 4,60,540) THE APPELLANT HAS SUBMI TTED THAT THE SAID BOOKING ADVANCES WERE RECEIVED IN THE EARL IER YEARS AND NOT IN THE YEAR UNDER CONSIDERATION AND ACCORDINGLY, THE ADDITION FOR THE SAME CANNOT BE MADE DURING THE YEAR UNDER CONSIDE RATION. HOWEVER, IT IS A FACT ON RECORD THAT THE APPELLANT HAS NOT AT A LL DISCHARGED THE ONUS CAST UPON HIM U/S. 68 OF THE ACT, IN RESPECT OF THE SE BOOKING ADVANCES ALSO. FURTHER, FROM THE DETAILS SUBMITTED BY THE AR IT IS ALSO SEEN THAT ADDRESSES OF SEVERAL CUSTOMERS ARE INCOMPLETE, IMPR OPER AND IN SOME CASES ARE NOT AT ALL FURNISHED. THEREFORE, THE SAME ALSO REMAINS TOTALLY UNPROVED AND THE APPELLANT'S SIMPLY CANNOT DENY TO DISCHARGE THE ONUS CAST UPON HIM U/S. 68 OF THE ACT BY PLEADING THAT T HE RECORDS ARE DESTROYED IN FLOODS OR THAT THE SAME HA VE BEEN SEIZED DURING THE EARLIER ARCH ACTION. HOWEVER, I AM OF THE OPINION THAT THE ADDITIONS IN RESPECT OF THESE BALANCE BOOKING ADVANCES IS ALSO REQUIRED TO BE MAD E IN THE YEAR IN WHICH THE SAME ARE RECEIVED, AS THE APPELLANT HAS F AILED TO DISCHARGE THE ONUS U/S. 68 OF THE ACT. ACCORDINGLY, I HEREBY DIRE CT THE AO TO GRANT ONE MORE OPPORTUNITY TO THE APPELLANT TO JUSTIFY THE AF ORESAID BOOKING ADVANCES, CALL FOR THE DETAILS AS MENTIONED IN LETT ER NO. SRT/CAS- IV/135VP/2009-10 DATED 24-6-2010, VERIFY THE BOOK ING ADVANCES RECEIVED IN THE RELEVANT YEAR, ASK THE AP PELLANT TO PRODUCE THE SAID CUSTOMERS FOR EXAMINATION BEFORE THE AO AND IF THE APPELLANT FAILS TO FURNISH THE REQUISITE DETAILS, EVIDENCES, SATISFACTORY EXPLANATIONS AND PRODUCE THE RESPECTIV E CUSTOMERS BEFORE THE AO FOR EXAMINATION AND THEREBY FAILS TO PROVE THE I DENTITY OF THE CUSTOMERS, THE GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE CUSTOMERS AS PROVIDED FOR U/S. 68 OF THE ACT , THE AO IS FURTHER DIRECTED TO MAKE ADDITION U/S. 68 IN RESPECT OF THE SAID BOOKING ADVANCES IN THE YEAR OF THEIR RECEIPT. IN THIS REGARD, ATTENTION IS DRAWN ON THE PROVISION S OF SECTION 150(1) OF THE ACT, WHICH PROVIDES AS UNDER. 'NOTWITHSTANDING ANYTHING CONTAINED IN SECTION149, THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT AN Y TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT O R RE- COMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHO RITY IN ANY PROCEEDING UNDER THIS ACT BY WAY OF APPEAL, REFERE NCE OR REVISION. THUS, ON GOING THROUGH THE PROVISIONS OF SECTION 15 0(1) OF THE ACT, IT IS CLEAR THAT THE TIME LIMIT FOR ISSUING OF NOTI CE OF RE-ASSESSMENT U/S. 148 AS PROVIDED FOR IN SECTION 149 OF THE ACT, WOULD NO T EXPIRE IN VIEW OF THE I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 6 PROVISIONS OF SECTION 150(1) OF THE ACT AND ACCORDI NGLY, THE AO CAN RE- OPEN THE ASSESSMENT OF EARLIER YEARS AT ANY TIME, I N ORDER TO GIVE EFFECT TO THE FINDING OR DIRECTION CONTAINED IN AN ORDER PASS ED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY OF APPEAL AND HENCE, EVEN IN THE PRESENT CASE, THE AO WOULD BE ABLE TO RE-OPEN THE A SSESSMENT OF THE APPELLANT OR THE RESPECTIVE PARTNERSHIP FIRMS, OF T HE EARLIER YEARS, TO TAX THE BOOKING ADVANCES IN THE YEAR OF THEIR RECEIPT, AS PER THE DIRECTIONS GIVEN HEREIN BEFORE, IN VIEW OF THE PROVISIONS OF SECTION I50(1) OF THE ACT. AS A RESULT THE ADDITION FOR BOOKING ADVANCE FROM CUSTOMERS TO THE EXTENT OF RS. 4,60,540 IS SUSTAINED IN THE CURRENT YEAR AND THE BALANCE ADDITION MADE IN THE CURRENT YEAR IS DELETED SUBJECT TO THE ABOVE DIRECTIONS AND ACCORDINGLY, THE GROUND OF APPEAL NO. (I) STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US, LD. DR TOOK US THROUGH VARIO US FINDINGS OF AO AND THEREAFTER SUBMITTED THAT THE ENTIRE BOOKING ADVANC E HAS BEEN RECEIVED BY THE ASSESSEE IN CASH, HAS NOT SUBMITTED ANY EVIDENC E LIKE CONFIRMATION, ADDRESSES ETC. HE FURTHER SUBMITTED THAT THE ASSES SEE WAS GRANTED VARIOUS OPPORTUNITIES BY THE AO TO SUBMIT THE DETAI LS BUT ASSSESSEE HAD FAILED TO SUBMIT THE DETAILS IN SPITE OF VARIOUS OP PORTUNITIES AND THEREFORE THE AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION. LD. AR ON THE OTHER HAND SUBMITTED THAT ASSESSEE HAS SUBMITTED LIST OF PERSO NS FROM WHOM THE AMOUNT WAS RECEIVED. HE FURTHER SUBMITTED IN MANY OF THE CASES THE AMOUNTS WERE RECEIVED IN EARLIER YEARS AND HAVE BEE N CARRIED FORWARD IN THE YEAR UNDER CONSIDERATION. HE FURTHER REITERATE D THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND SUPPORTED HIS ORDER. 7. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS GIVEN A CATEGORICAL FINDING THAT ASSESSEE HAS RECEIVED RS. 1,80,540/- IN AKSHAR CORPORATION A ND RS. 2,80,000/- IN AKSHAR ENTERPRISE AGGREGATING TO RS. 4,60,540/- (LI STED AT PAGE 46) DURING I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 7 THE YEAR. HE HAS FURTHER GIVEN A FINDING THAT ASSE SSEE HAS FAILED TO PROVIDE PROPER AND COMPLETE ADDRESSES OF THE CUSTOMERS FROM WHOM BOOKING ADVANCES HAS BEEN RECEIVED DURING THE YEAR UNDER CO NSIDERATION AND THEREBY ASSESSEE HAS COMPLETELY FAILED TO DISCHARGE THE ONUS CAST UPON IT AND HAS NOT ESTABLISHED THE IDENTITY, THE GENUINENE SS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITORS. WITH RE SPECT TO THE BALANCE AMOUNT OF RS. 1,87,18,607/- CONSIDERING THE FACT TH AT THE AMOUNT WAS RECEIVED IN EARLIER YEARS AND THE ASSESEE HAD NOT D ISCHARGED THE ONUS PROVING THE IDENTITY, GENUINENESS OF THE TRANSACTIO N AND CREDITWORTHINESS OF THE CREDITORS HELD THAT THE SAME CAN BE TAXED IN TH E YEAR OF RECEIPT. SINCE THESE AMOUNTS WERE STATED TO HAVE BEEN RECEIVED IN EARLIER YEARS, HE DIRECTED THE AO TO VERIFY THE BOOKING ADVANCE RECEI VED IN THE RELEVANT YEAR AND IF THE ASSESSEE FAILS TO FURNISH THE REQUISITE DETAILS/EVIDENCES AND SATISFACTORY EXPLANATION AND THEREBY TO PROVE THE I DENTITY OF CREDITORS AND CREDITWORTHINESS OF THE TRANSACTION, THE AO WAS DIR ECTED TO MAKE ADDITION IN THE YEAR OF RECEIPT. BEFORE US, NEITHER LD. AR N OR LD. DR HAVE PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS O F LD. CIT(A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH TH E ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. SECOND GROUND IS WITH RESPECT TO DELETION OF RS. 2, 32,474/- ON ACCOUNT OF BOGUS LIABILITY IN RESPECT OF SUNDRY CRE DITORS. 8. AO NOTICED THAT ASSESSEE HAD SHOWN IN THE BALANC E SHEET SUNDRY CREDITORS AND UNSECURED LOANS. IN RESPECT OF PARTI ES LISTED AT PAGE 19 OF THE ORDER, AO ASKED THE ASSESSEE TO PROVE THE GENUI NENESS, CAPACITY AND CREDITWORTHINESS IN THE CASE OF UNSECURED LOANS AND IN RESPECT OF CREDITORS. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE TRANSACTION AS WELL AS THE LIABILITY. AO ISSUED NOTICE U/S. 133(6 ) TO THE THREE CREDITORS I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 8 NAMELY, PATEL HARDWARE (RS. 56276), DHAVAL STEEL (R S. 72,239/-) AND MAHALAXMI SUPPLIERS (RS. 103959/-). AO NOTED THAT THE NOTICES WERE RETURNED BACK BY THE POSTAL AUTHORITIES AS THE ADDR ESSES WERE EITHER INCORRECT OR INCOMPLETE. HE ALSO NOTED THAT ASSESSE E EXPRESSED ITS INABILITY TO PRODUCE THE BILL ETC AND FURTHER NO DOCUMENTARY EVIDENCE WAS SUBMITTED BY THE ASSESSEE TO PROVE THE GENUINENESS OF LIABILI TY AS WELL AS TRANSACTIONS. HE THEREFORE HELD THAT THE SUNDRY CR EDITORS AGGREGATING TO RS. 2,32,474/- WERE NOT EXPENSES AND THEREFORE ADDE D THE SAME TO THE TOTAL INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESS EE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE DURING THE YEAR BY HOLDING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. ON VERIFICATION OF TH E LEDGER ACCOUNTS OF THE AFORESAID CREDITORS, IT IS OBSERVED THAT THE CREDIT ORS VIZ. MAHALAXMI PIPE SUPPLIERS AND DHAVAL STEEL ARE OUTSTANDING SINCE 1- 4-2004 WHEREAS, IN THE CASE OF PATEL HARDWARE THE APPELLANT HAD MADE P URCHASES IN THE A.Y. 2006-07 AND A.Y. 2007-08. IN THIS REGARD, I AM OF T HE OPINION THAT ADDITION FOR REMISSION OR CESSATION OF A TRADING LIABILITY U /S, 41(1) OF THE ACT COULD NOT BE MADE UNLESS THE CREDITOR CONFIRMS THAT HE HA D WAIVED OFF THE DUES RECEIVABLE FROM THE ASSESSEE AND MOREOVER, SUCH ADD ITION COULD BE MADE ONLY IN THE YEAR IN WHICH THE CREDITOR WAIVES OFF T HE SAID DEBT. ACCORDINGLY, IN THE PRESENT CASE, THE AO WAS NOT JUSTIFIED IN MA KING THE ADDITION OF RS. 2,32,474 IN RESPECT OF THE AFORESAID CREDITORS. HOWEVER, THE PROVISIONS OF THE ACT CAST AN ONUS ON THE APPELLANT TO PROVE THE GENUINENESS OF THE EXPENDITURE OR CREDITS SHOWN IN THE BOOKS OF ACCOUNTS AND IN THE PRESENT CASE, THE APPELLANT BY NOT PROVIDING PROPER ADDRESS OF THE SAID CREDITORS HAS COMPLETELY FAILED TO DISCHARGE THE ONUS CAST UPON HIM TO JUSTIFY THE AFORESAID CREDITORS. F URTHER, FROM THE LEDGER ACCOUNTS IT IS ALSO SEEN THAT CASH HAS BEEN PAID TO THESE CREDITORS ON SOME INSTANCES AND HENCE, IT IS CLEARLY EVIDENT THA T THE APPELLANT IS TRYING TO DEFEND BOGUS CLAIM OF EXPENSES BY SUBMITTING THA T THE WHEREABOUTS OF THE PERSONS FROM WHOM HE HAD MADE PURCHASES WERE NO T KNOWN TO HIM AND ACCORDINGLY, PROPER ADDITIONS OR DISALLOWANCES ARE REQUIRED TO BE MADE IN THE RESPECTIVE YEARS, AS PER THE PROVISIONS OF THE ACT. IN VIEW OF THE SAME, I HEREBY DIRECT THE AO TO GRAN T THE APPELLANT A FURTHER OPPORTUNITY TO PROVE THE GENUINENESS OF THE PURCHASES MADE BY I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 9 HIM FROM THE AFORESAID CREDITORS, CALL FOR THE YEAR -WISE DETAILS OF PURCHASES MADE FROM THESE PERSONS, THE DETAIL OF PAYMENTS MAD E TO THEM, AS ALSO THE CONFIRMATIONS WITH PROPER ADDRESS AND PAN OF TH E SAID CREDITORS AS ON DATE AND CONDUCT NECESSARY INQUIRIES IN THIS REGARD AND IF THE APPELLANT FAILS TO FURNISH SATISFACTORY DETAILS, EVIDENCES AN D EXPLANATIONS, THE AO IS FURTHER DIRECTED TO DISALLOW THE PURCHASES MADE FRO M THESE CREDITORS IN THE YEAR IN WHICH THE SAID PURCHASE ARE MADE. IN THIS REGARD, THE AO WOULD BE ABLE TO RE-OPEN THE ASSESSMENT OF THE APPELLANT OR THE RESPECTIVE PARTNERSHIP FIRMS, OF THE EARLIER YEARS, TO DISALLO W THE PURCHASES IN THE PERSPECTIVE YEARS, IN VIEW OF THE PROVISIONS OF SEC TION 105(1) OF THE ACT AS DISCUSSED HEREIN BEFORE. AS A RESULT GROUND OF APP EAL NO. (II) STANDS ALLOWED FOR STATISTICAL PURPOSE. 9. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US LD. DR TOOK US TO THE FINDING S OF AO AND SUPPORTED HIS ORDER. LD. AR ON THE ORDER HAND RELIED ON THE ORDER OF LD. CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HAS NOTED THAT THE CREDITORS NAMELY, MAHAL AXMI PIPE SUPPLIERS, DHAVAL STEEL, WERE OUTSTANDING SINCE 01-0-2004 AND IN CASE OF PATEL HARDWARE, ASSESSEE HAD MADE PURCHASES IN A.Y. 2006- 07 AND 2007-08. HE HAS FURTHER HELD THAT THE ADDITION U/S. 41(1) CA N ONLY MADE WHEN THE CREDITOR CONFIRMS THE WAIVING FOR ALL DUES RECEIVAB LE AND IN THE YEAR IN WHICH THE CREDITOR WAIVES OF THE DEBTS. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL TO DEMONSTRATE THAT THE CREDIT ORS WAIVED OFF THE AMOUNTS DUE TO HIM NOR HAVE THEY BROUGHT ANY MATERI AL TO CONTROVERT THE FINDINGS OF LD. CIT(A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND O F REVENUE IS DISMISSED. GROUND NO. 3 WITH RESPECT TO DELETION ON ACCOUNT OF BOGUS LIABILITY IN RESPECT UNSECURED LOAN. I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 10 11. AO NOTICED THAT THE ASSESSEE HAD SHOWN RECEIPT OF UNSECURED LOANS FROM NARAYANBHAI PATEL (RS. 6,38,225/-) AND GHANSHY AMBHAI PATEL (RS. 9,48,225/-) AGGREGATING TO RS. 15,86,450/- IN HIS P ROPRIETARY CONCERN, AKSHAR CORPORATION. ASSESSEE WAS ASKED TO PROVE THE GENUINENESS, CAPACITY AND CREDITWORTHINESS OF THE LENDERS WHICH AO NOTED THAT THE ASESSEE DID NOT PROVE. HE ALSO NOTED THAT NO CONFI RMATION FROM THE LENDERS WERE SUBMITTED BUT ASSESSEE ONLY SUBMITTED THE COPIES OF THE LEDGER ETC. AO ALSO NOTED THAT ASSESSEE SUBMITTED THAT BOTH THE LENDERS WERE ITS EX-PARTNERS AND THEIR PRESENT ADDRESSES WE RE NOT AVAILABLE WITH THE ASSSESSEE. AO THEREFORE CONCLUDED THAT ASSESSE E HAS NOT BEEN ABLE TO PROVE THE GENUINE OF TRANSACTIONS AND THE EXISTE NCE OF THE LIABILITIES AND ACCORDINGLY TREATED THE AGGREGATE AMOUNT OF RS. 15, 86,450/- AS INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF ASSESSEE HELD AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. AS PER THE PROVISIONS OF SECTION 68 OF THE ACT, AN ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE PERSON FROM WHOM AMOUNTS ARE RECEIVED OR IN WHOSE NAME AMOUNTS ARE C REDITED, THE GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTH INESS OF SUCH PERSON. IN THE PRESENT CASE, THE APPELLANT HAS NOT BEEN ABL E TO FURNISH THE ADDRESS OR THE WHEREABOUTS OF THE AFORESAID PERSONS CLAIMED TO BE HIS EX-PARTNERS. FURTHER, THE APPELLANT HAS ALSO NOT FURNISHED ANY E VIDENCE LIKE PARTNERSHIP DEED, AUDIT REPORTS OF THE EARLIER YEARS, PARTNERSH IP DISSOLUTION DEED, ETC., TO PROVE THAT THE SAID PERSONS WERE HIS EX-PARTNERS AND HOW THEIR BALANCES WERE BROUGHT FORWARD IN HIS BOOKS OF ACCOU NTS. FURTHERMORE, THE APPELLANT HAS ALSO FAILED TO FURNISH ANY DOCUMENTAR Y EVIDENCE TO PROVE HOW THE AMOUNTS CREDITED IN THESE ACCOUNTS, CLAIMED TO BE SHARE OF PROFIT OF THE RESPECTIVE PARTNERS FOR THE EARLIER YEARS WA S WORKED OUT. THEREFORE, IT IS PROVED THAT THE APPELLANT HAS FAILED TO DISCH ARGE THE ONUS CAST UPON HIM U/S. 68 OF THE ACT, TO JUSTIFY THE CREDITS APPE ARING IN THE NAME OF THESE PERSONS AND ACCORDINGLY, I AM OF THE OPINION THAT T HE AO IS JUSTIFIED IN MAKING ADDITION FOR THE SAME. HOWEVER, AS PER THE P ROVISIONS OF SECTION 68 OF THE ACT ADDITION COULD BE MADE ONLY IN RESPEC T OF AMOUNTS CREDITED OR RECEIVED DURING THE YEAR UNDER CONSIDERATION AND IN THE PRESENT CASE, THE AMOUNT CREDITED IN THE YEAR UNDER CONSIDERATION WORKS OUT TO RS. 12,76,450 AS MENTIONED IN THE TABLE GIVEN HEREIN BE FORE WHEREAS, THE AO I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 11 HAS MADE ADDITION OF RS. 15,56,450 WHICH IS THE CLO SING BALANCE AS AT THE YEAR END. ACCORDINGLY, THE ADDITION AS MADE BY THE AO IS SUSTAINED TO THE EXTENT OF RS. 12,76,450 BEING THE AMOUNT CREDITED D URING THE YEAR UNDER CONSIDERATION. AS REGARDS THE BALANCE AMOUNT, IT IS SEEN THAT AN AMOUNT OF RS. 4,00,000/- IS THE OPENING BALANCE APPEARING IN THE NAME OF SHRI GHYANSHYAMBHAI K. PATEL AN D THE ADDITION FOR THE SAME COULD BE MADE IN THE YEAR IN WHICH THE SAID AM OUNT WAS RECEIVED OR CREDITED IN THE BOOKS OF ACCOUNTS OF THE APPELLA NT. ACCORDINGLY, I HEREBY DIRECT THE AO TO CALL FOR THE DETAIL OF THE RESPECT IVE PARTNERSHIP FIRMS IN WHICH THE SAID AMOUNT IS REFLECTED, THE DETAILS AND EVIDENCES RELATING TO THE PARTNERSHIP FIRMS, CALL FOR THE YEAR-WISE DETAI LS OF AMOUNTS RECEIVED FROM THE SAID PERSONS, VERIFY THEIR SOURCE AND ASK THE APPELLANT TO PRODUCE THE SAID PERSONS FOR EXAMINATION BEFORE THE AO AND IF THE APPELLANT FAILS, TO FURNISH NECESSARY DETAIL, EVIDENCES OR SATISFACT ORY EXPLANATIONS, THE AO IS FURTHER DIRECTED TO MAKE ADDITION U/S. 68 OF THE ACT, IN RESPECT OF THE AMOUNTS RECEIVED OR CREDITED IN THE NAME OF THE PER SONS IN THE YEAR IN WHICH THE SAID AMOUNTS ARE RECEIVED OR CREDITED. I N THIS REGARD, THE AO WOULD BE ABLE TO RE-OPEN THE ASSESSMENT OF TH E APPELLANT OR THE RESPECTIVE PARTNERSHIP FIRMS, OF THE EARLIER YEARS, TO DISALLOW PURCHASES IN THE RESPECTIVE YEARS, IN VIEW OF THE PROVISIONS OF SECTION 150(1) OF THE ACT AS DISCUSSED HEREIN BEFORE. AS A RESULT GROUND OF A PPEAL NO. (III) STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 12. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. BEFORE US, LD. DR SUPPORTED THE ORDER O F AO AND ON THE OTHER HAND LD. AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE AMOUNTS REPRESENTED SHARE OF PROFITS OF EARLIER YEARS. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED THAT THAT ASSESSEE SHO WN THE LIABILITY OF UNSECURED LOANS AGGREGATING RS. 15,86,450/- WHICH H AS BEEN STATED TO BE FROM EX-PARTNERS. LD. CIT(A) HAS GIVEN A FINDING T HAT THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH THE ADDRESSES OR WHEREABOUTS O F THE PERSONS CLAIMED TO BE EX-PARTNERS NOR HAS FURNISHED ANY PROOF LIKE PARTNERSHIP DEED, AUDIT REPORT OF EARLIER YEARS TO PROVE THAT THE SAID PERS ONS WERE HIS EX-PARTNERS. I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 12 HE HAS FURTHER NOTED THAT ASSESSEE HAS FAILED TO PR OVE THAT THE AMOUNTS CREDITED IN THEIR ACCOUNTS WERE SHARE OF PROFITS FO R EARLIER YEARS. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY EITHER PAR TIES TO CONTROVERT THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO REASO N TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO. 2733/AH D/2010 15. THE EFFECTIVE GROUNDS RAISED READS AS UNDER:- ADDITION U/S. 68 OF THE ACT:- (1) THE LD. CIT(A) ERRED IN MAKING ADDITION OF RS. 4,60,540/- BEING BOOKING ADVANCES RECEIVED FORM THE PROSPECTIV E BUYERS AS UNDER:- AKSHAR CORPORATION RS. 1,80,540/- AKSHAR ENTERPRISE RS. 2,80,000/- (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE ADDITION IS REQUIRED TO BE DELETED. (II) ISSUE OF DIRECTION FOR REOPENING:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND AS PER LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN I SSUING DIRECTIONS FOR REOPENING ASSESSMENTS IN RESPECT OF BOOKING ADVANCES U/S. 150(1) OF THE ACT, IGNORING THE IMPAC T OF SUB- SECTION (2) OF SECTION 150 OF THE ACT. (III) REOPENING DIRECTIONS FOR CREDITORS OF GOODS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS P ER LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN I SSUING DIRECTIONS UNDER SUB-SECTION (1) OF SECTION 150 IN RESPECT OF I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 13 OUTSTANDING CREDITORS IGNORING THE PROVISIONS OF SU B-SECTION (2) OF SECTION 150. (IV) ADDITION U/S. 68 IN CASE OF RETIRED PARTNERS:- (1) THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 12,73,450/- IN RESPECT OF CREDITS IN THE ACCOUNTS OF SHRI NARAN BHAI BHIKHABHAI PATEL AND SHRI GHANSHYAMBHAI PATEL IN RE SPECT OF TRANSFER OF ACCUMULATED AMOUNT OF SHARE OF PROFITS. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) FURTHER ERRED IN DIRECTING REOPENING U/S. 150(1) OF THE ACT, IN RESPECT OF A SUM OF RS. 4,00,000/- B EING OPENING BALANCE OF SHRI GHANSHYMBHAI PATEL. FIRST GROUND IS WITH RESPECT TO ADDITION OF RS. 4,6 0,540/- MADE U/S. 68. 16. BEFORE US BOTH THE PARTIES SUBMITTED THAT THIS GROUND IS CONNECTED WITH GROUND NO. 1 RAISED IN REVENUES APPEAL. 17. SINCE GROUND NO. 1 RAISED IN REVENUES APPEAL H EREINABOVE HAS BEEN DISMISSED BY US, WE THEREFORE FOR THE SAME REA SONS GIVEN THEREIN ALSO DISMISS THIS GROUND OF ASSESSEE. THUS GROUND NO. 1 IS DISMISSED. GROUND NO. 2. IS WITH RESPECT TO ISSUING DIRECTIONS FOR REOPENING OF ASSESSMENT BY LD. CIT(A) . 18. BEFORE US AR SUBMITTED THAT LD. CIT(A) WHILE AD JUDICATING THE ISSUE WITH RESPECT TO BOOKING ADVANCE, CREDITORS FOR GOOD S AND IN RESPECT OF ADDITION IN CASE OF RETIRED PARTNERS SUBMITTED THAT LD. CIT(A) HAS DIRECTED THE AO TO DISALLOW THE AMOUNTS RECEIVED IN RESPECTI VE YEARS. HE THEREFORE SUBMITTED THAT LD. CIT(A) HAS IGNORED THE IMPACT OF SUB-SECTION 2 OF SECTION 150 OF THE ACT WHILE ISSUING DIRECTIONS FOR RE-OPEN ING ASSESSMENT U/S. I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 14 150(1) OF THE ACT. HE THEREFORE SUBMITTED THAT LD. CIT(A) HAS ERRED AND THEREFORE THE DIRECTIONS ISSUED BY THE LD. CIT(A) B E QUASHED. LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT(A). 19. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD. CIT(A) HAS D IRECTED THE AO TO RE- EXAMINE ADDITION IN RESPECT OF BOOKING ADVANCE, CRE DITORS FOR GOODS AND IN RESPECT OF BALANCE OUTSTANDING IN THE NAME OF EX-PA RTNER PERTAINING TO THE BALANCES BROUGHT FORWARD FOR EARLIER YEARS AND IN T HE CASE THE ASSESSEE IS NOT ABLE TO DISCHARGE THE ONUS THEN MAKE THE ADDITI ON IN THE RESPECTIVE YEARS OF ITS RECEIPTS. BEFORE US NO MATERIAL HAS BE EN PLACED TO DEMONSTRATE THAT PURSUANT TO THE DIRECTIONS OF LD. CIT(A), THE AO HAS INITIATED REASSESSMENT PROCEEDINGS. WE ARE THEREFO RE OF THE VIEW THAT THE CHALLENGE OF RE-OPENING IS PRE-MATURE AND THE ASSES SEE MAY TAKE DUE LEGAL RECOURSE IF SO ADVISED IN APPROPRIATE PROCEED INGS. WE THEREFORE DISMISS THIS GROUND OF ASSESSEE. GROUND NO. 4.1 IS WITH RESPECT TO CONFIRMING ADDITI ON OF RS. 12,73,450/- IN RESPECT OF RETIRED PARTNERS . 20. BEFORE US BOTH THE PARTIES SUBMITTED THAT THIS GROUND IS CONNECTED WITH GROUND NO. 3 RAISED IN REVENUES APPEAL. 21. SINCE GROUND NO. 3 RAISED IN REVENUES APPEAL H EREINABOVE HAS BEEN DISMISSED BY US, WE THEREFORE FOR THE SAME REA SONS GIVEN THEREIN ALSO DISMISS THIS GROUND OF ASSESSEE. THUS GROUND NO. 4 IS DISMISSED 22. THUS THE APPEAL OF ASSESSEE IS DISMISSED. I.T.A NOS. 2733 & 2797/AHD/2010 A.Y. 2007-08 PAGE NO VIRESHBHAI DAULATBHAI PATEL VS. ITO 15 23. IN THE RESULT, THE APPEAL OF REVENUE AND ASSESS EE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 27/08/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,