THE ACIT, 1(2), Indore V. M/S. SSP ENTERPRISES PVT. LTD., Indore

ITA 278/IND/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5613 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: C H PADLIA
• Keywords: Business income
• Section: 68; 11

Judgement Text

ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 278/IND/2014 ASSESSMENT YEAR: 2006-07 ACIT 1(2) INDORE :: APPELLANT VS M/S S.S.P. ENTERPRISES PVT. LTD. INDORE ./ PAN: AAJCS 2648N :: RESPONDENT CO NO.29/IND/2014 ARISING OUT OF ITA NO. 278/IND/2014 M/S S.S.P. ENTERPRISES PVT. LTD. INDORE :: OBJECTOR VS ACIT 1(2) INDORE :: RESPONDENT I.T.A. NO. 320/IND/2014 ASSESSMENT YEAR: 2006-07 M/S S.S.P. ENTERPRISES PVT. LTD. INDORE :: APPELLANT VS ACIT 1(2) INDORE :: RESPONDENT ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 2 REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI C.H. PADLIA ! ' #$ DATE OF HEARING 8.11.2016 %&'( #$ DATE OF PRONOUNCEMENT 21.11.2016 * O R D E R PER SHRI D.T. GARASIA, JM SINCE COMMON GROUNDS ARE INVOLVED IN THESE APPEALS AND THE CROSS OBJECTION, THEREFORE, THESE ARE BEING D ISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENI ENCE. ITA NO. 278/IND.2014 CO NO. 29/IND/2014 2. THE ONLY GROUND OF APPEAL TAKEN BY THE REVENUE IS GROUND NO. (I) WHICH READS AS UNDER :- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.35.05 LAKH MADE BY THE A.O. U/S 68 OF THE ACT BY HOLDING THAT THE CASH DEPOSITS WERE OUT OF SALE PROCEEDS WHICH WERE REFLECTING IN THE SALES ACCOUNT BECAUSE NO SUCH EXPLANATION WAS OFFERED BEFORE THE A.O. DURING THE COURSE OF SCRUTINY PROCEEDINGS. ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM TRADING AND CONSIGNMENT BUSINESS OF PLASTIC GRANULES AND PP WOVEN FABRICS. THE ASSESSEE IS CARRYING ON BUSINESS AND RAISED ADDITIONAL SHARE CAPITAL FROM SOURCES AMOUNTING TO RS. 40 LACS WHICH THE ASSES SEE HAS RECEIVED AS SHARE APPLICATION MONEY BY PAYEE CHEQUE. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS NOT SATISFIED IDENTITY OF THE SHARE HOLDER S. HE, THEREFORE, MADE THE ADDITION U/S 68 OF THE ACT. 4. 4. ON APPEAL, THE ASSESSEE CARRIED THE MATTER IN APPEAL AND THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS. 35.05 LACS WHICH WAS ADDED IN THE HANDS OF THE ASSESSEE U/S 68 OF THE ACT BY OBSERVING AS UNDER :- 7. THE FIRST GROUND OF APPEAL IS AGAINST ADDITION O F RS.35.05 LACS, WHICH WAS ADDED BY A.O. IN HANDS OF APPELLANT U/S 68 OF THE INCOME TAX ACT, FOR THE AMO UNT OF CASH DEPOSITS SEEN BY A.O. IN CITI BANK ACCOUNT OF ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 4 THE APPELLANT. THE APPELLANT EXPLAINED THAT SUCH CA SH DEPOSITS OF RS. 35.05 LACS IN THE BANK ARE OUT OF C ASH SALES OF RS. 44,93 LACS WHICH ARE DULY REFLECTED AS A PART OF TOTAL SALES OF RS.85,11,415/-. SINCE THE AM OUNT IS ALREADY REFLECTED IN SALES ACCOUNT BY APPELLANT IN THE PROFIT AND LOSS ACCOUNT, THE SAME CANNOT BE ADDED O NCE AGAIN U/S 68 OF THE INCOME TAX ACT. HENCE, THE ADDI TION OF RS. 35.05 LACS MADE U/S 68 OF THE INCOME TAX ACT IS DELETED. GROUND NO. 1 AND 2 OF APPEAL ARE ALLOWED. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. AFTER CAREFUL PERUSAL OF RECORD WE FIND THAT T HE ASSESSEE HAS MADE CASH SALES AND THE COLLECTION FROM THE PARTIES HAS BEEN DEPOSITED IN THE BANK. THE ENTIRE DEP OSIT TO THE BANK ACCOUNT HAS BEEN RECORDED IN THE BOOKS OF THE ASSESSEE AND THE BOOKS WERE PRODUCED BEFORE THE ASSES SING OFFICER. THE TOTAL SALES OF THE ASSESSEE WERE OF RS. 8511415/-. OUT OF THE TOTAL SALES, THE ASSESSEE HAS CASH ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 5 SALES OF RS.449338/-. THE ENTIRE CASH DEPOSIT IS EITH ER FROM SALE PROCEEDS OR FROM THE COLLECTION AGAINST THE BOOK DEBT. WE FIND THAT AS PER SECTION 68 OF THE ACT SUM SHOULD BE CREDITED IN THE BOOKS BUT THE ASSESSEE HAS CREDITED T HE SALE PROCEEDS IN ITS BOOKS OF ACCOUNTS WHICH HAS BEEN ACCEP TED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOWHERE FOUND THE DEFECT IN THE BOOKS OF ACCOUNTS, THEREFORE, WHEN THE ASSESSEE HAS CREDIT SALE PROCEEDS IN CASH IN THE BOOKS OF ACCOUNTS AND THE SAME IS DEPOSITED IN BANK, NO ADDITION CAN BE MADE U/S 68 OF THE ACT. WE ALSO GET SUPPORT FROM THE JUDGMENT IN THE CASE OF CIT VS . BHAICHAND H. GANDHJI; 141 ITR 67 AND SUNDARLAL JAIN VS. CIT; 117 ITR 316. THEREFORE, THE LEARNED CIT(A) IS J USTIFIED IN HIS ACTION. THIS GROUND OF THE REVENUE IS DISMISS ED. 6. THE NEXT GROUND IS AGAINST THE ADDITION OF RS. 40 LACS WHICH WAS RESTRICTED BY THE LEARNED CIT(A) TO RS . 28 LACS. AGAINST THIS DELETION OF ADDITION OF RS. 12 LACS THE ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 6 DEPARTMENT IS IN APPEAL AND THE ASSESSEE IS IN CROSS OBJECTION IN SUPPORT OF DELETION OF ADDITION OF RS. 12 LACS. 7. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RECEIVED THE AMOUNT OF SHARE APPLICATION MONEY FROM 10 COMPANIES BASED AT CALCUTTA BEING RS. 4 LACS RECEIVED FRO M EACH COMPANY BECAUSE THESE COMPANIES ARE AT SAME PLACE AND ONLY SOME ARE HAVING ADDRESSES. THE ASSESSEE FILED COPY OF SHARE APPLICATION MONEY AND THE COPIES OF CHEQUE S ISSUED. THE ASSESSING OFFICER OBSERVED THAT ONLY THR EE CHEQUES WERE DEPOSITED FROM SHARE APPLICANTS WHILE THE ASSESSEE HAS CLAIMED THAT THERE WERE 10 APPLICANTS. BESIDES THIS, THE CHEQUE WAS DEPOSITED ON THE SAME DAY . THEREFORE, THE ASSESSING OFFICER HAS TO VERIFY THE GENUINENESS OF THE TRANSACTION AND THE ASSESSEE WAS ASKED TO SUBMIT THE ACCOUNTS OF THE SHARE APPLICANTS TO PROVE THAT THERE WAS NO CASH PAYMENT. IN RESPECT OF THREE PARTIES, M/S R.K. SKYLINE CONSTRUCTION LIMITED, M/S ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 7 RENOVISION COMMERCE P. LTD. AND AMARJYOTI VYAPAR LIMITED, NO CASH DEPOSIT WAS FOUND. IN RESPECT OF S EVEN PARTIES, THE ASSESSING OFFICER DID NOT BELIEVE THE EXPLANATION OF THE ASSESSEE. THE MATTER TRAVELLED TO TH E LEARNED CIT(A) AND THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS. 12 LACS BY OBSERVING AS UNDER :- 11. AS A RESULT WHILE SHARE APPLICATION MONEY OFRS. 12 LAKHS OF THREE PARTIES NAMED ABOVE WHOSE BANK ACCOUNT WERE FURNISHED BY APPELLANT ARE TREATED AS GENUINE AND SUCH ADDITION OF RS. 12 LAKHS IS DELETE D, THE BALANCE OF SHARE APPLICATION MONEY OF RS.28 LAK HS FROM REST OF 7 PARTIES IS TREATED AS UNEXPLAINED AN D ADDITION OF SUCH AMOUNT IS CONFIRMED U/S 68 OF INCO ME TAX ACT. AS A RESULT THIS GROUND NO. 3 OF APPEAL IS PARTLY ALLOWED. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 8 WE FIND THAT IN CASE OF THREE PARTIES THE LEARNED CIT(A ) WAS OF THE VIEW THAT THREE PARTIES, VIZ. M/S R.K. SKYLINE CONSTRUCTION LTD., M/S RENOVISION COMMECE P. LTD AND AMARJYOTI VYAPAR LTD. NO CASH WAS DEPOSITED AND THE LEARNED CIT(A) HAS VERIFIED THE BANK ACCOUNTS OF THESE PARTIES AND HE HAS TREATED IT AS GENUINE AND THE ADDITION OF RS. 12 LACS WAS DELETED. THEREFORE, OUR INTERFERENCE IS NOT CALLED FOR. 9. IN THE CROSS OBJECTION, THE ASSESSEE HAS SIMPLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 10. IN VIEW OF OUR ABOVE DISCUSSION, THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 11. IN ITA NO. 320/IND/2014 THE ASSESSEE HAS TAKEN GROUND NO. 1 THAT THE LEARNED CIT(A) WAS NOT JUSTIFIE D IN RETAINING THE ADDITION TO RS. 28 LACS OUT OF THE ADDIT ION OF RS. 40,000/- U/S 68 OF THE ACT. ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 9 12. IN VIEW OF OUR DISCUSSION IN THE FOREGOING PARAGRAPH WHILE DEALING WITH THE DEPARTMENTAL APPEAL, THIS GROUND OF THE ASSESSEE IS DISMISSED. 13. THE NEXT GROUND RELATES TO CONFIRMATION OF ADDITION OF RS. 16,39,960/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 14. THE ASSESSING OFFICER ADDED THE AMOUNT OF RS.16,39,960/- U/S 68 OF THE ACT FOR THE UNSECURED LOAN TAKEN BY THE APPELLANT FROM M/S SHREE SHYAM POLYERS. T HE ASSESSING OFFICER HAS ADDED THIS AMOUNT BECAUSE THIS DEPOSITOR HAS SHOWN MEAGRE INCOME IN HIS RETURN, NO INTEREST IS PROVIDED AND APPELLANT HAS FAILED TO PROVE IDENTITY AND CREDITWORTHINESS OF THIS DEPOSITOR. 15. FELT AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE AND THE LEARNED CIT(A) OBSERVED AS UNDER :- 12. GROUND NO. 4 OF APPEAL IS AGAINST ADDITION OF RS.16,39,960/- U/S 68 OF THE INCOME TAX ACT FOR THE ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 10 UNSECURED LOAN TAKEN BY APPELLANT FROM M/S SHREE SHYAM POLYMERS. THE ASSESSING OFFICER HAS ADDED THI S AMOUNT BECAUSE THIS DEPOSITOR HAS SHOWN MEAGRE INCOME IN HIS RETURN, NO INTEREST IS PROVIDED AND APPELLANT HAS FAILED TO PROVE IDENTITY AND CREDITWORTHINESS OF THIS DEPOSITOR. IT IS A FACT TH AT THIS DEPOSITOR WHO IS A DIRECTOR IN APPELLANT COMPANY HA S SHOWN INCOME OF ONLY RS.1,49,301/- IN ITS RETURN AN D CAPITAL IS ONLY RS. 9,27,309/- AND IN THESE CIRCUMSTANCES CREDITWORTHINESS OF DEPOSITOR IS NOT PROVED FOR GIVING A CREDIT OF RS. 16,39,960/-. BESI DES THIS HUGE CASH DEPOSITS WERE SEEN IN BANK ACCOUNT O F M/S SHREE SHYAM POLYERS IN CITI BANK ACCOUNT NO.0- 000449-547 BEFORE MAKING CHEQUE PAYMENTS TO APPELLANT WHICH RAISES SERIOUS DOUBTS ON THE GENUINENESS OF THESE TRANSACTIONS. AS A RESULT, ADD ITION ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 11 U/S 68 OF THE INCOME TAX ACT OF RS. 16,39,960/- IS HEREBY CONFIRMED. GROUND NO. 4 OF APPEAL IS DISMISS ED. 16. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT IT IS A FACT THAT THIS DEPOSITOR WHO IS A DIRECTOR IN APPELLANT COMPANY HAS SHOWN INCOME OF ONLY RS.1,49,301/- IN ITS RETURN AND CAPITAL IS ONLY RS. 9,27,309/- AND IN THESE CIRCUMSTANCES CREDITWORTHINESS OF DEPOSITOR IS NOT P ROVED FOR GIVING A CREDIT OF RS. 16,39,960/-. WE FURTHER FIND THAT HUGE CASH DEPOSIT WAS SEEN IN THE BANK ACCOUNT BEFORE MAKING THE PAYMENT. THEREFORE, THIS TRANSACTION WAS DOUBTFUL. HON'BLE GUJARAT HIGH COURT IN THE CASE OF U MESH KRISHNANI VS. ITO; (2013) 35 TAXMANN.COM 598 HAS CATEGORICALLY HELD AS UNDER :- 19. AS IS VERY ELOQUENT FROM THE RECORD ITSELF, SUBSTANTIAL AMOUNT OF CASH WAS DEPOSITED IN THE BAN K ACCOUNTS OF ALL THE CREDITORS SHORTLY PRIOR TO ISSU ANCE OF CHEQUES AND INSUFFICIENCY OF THE FUND WITH THE CRED ITORS WHEN COULD BE EASILY ESTABLISHED FROM THE OVERALL F ACTS AND CIRCUMSTANCES OF THE CASE AND WHEN IT IS FURTHE R FOUND AS A M ATTER OF FACT THAT THE ASSESSEE HAD NO JUSTIFICATION FOR BORROWINGS SUCH AMOUNTS AT HIGH R ATE OF ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 12 INTEREST, EVEN WITHOUT DISTURBING THE WELL ESTABLIS HED PRINCIPLE OF NOT INSISTING ON THE ASSESSEE PROVING SOURCE OF THE SOURCE, ON THE ROBUST FACTS OF THE REVENUE AUTHORITIES HAVE RIGHTLY NOT CONCLUDED IN FAVOUR OF THE ASSESSEE. ALL ISSUES ARE ESSENTIALLY IN THE REALM O F APPRECIATION OF FACTS. WE, THEREFORE, FIND NO FLAW IN THE ORDER OF THE LEA RNED CIT(A) AND UPHOLD THE SAME. 17. GROUND NOS.3 AND 4 ARE GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 18. IN THE RESULT, THE APPEALS OF THE REVENUE AND THE ASSESSEE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 21 ST NOVEMBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER )'* / DATED : 21 ST NOVEM BER, 2016. ITA 278/IND/2014 ETC. M/S SSP ENTERPRISES PVT. LTD. 13 DN/