M/s. Gajanan Developers, Ahmedabad V. The Dy.CIT.,(OSD)Circle-9, Ahmedabad

ITA 2863/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62987 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJASR
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Unexplained expenditure; Business expenditure; Loose papers; Deemed to accrue or arise in india
• Section: 69C; 133A; 194C; 68

Judgement Text

IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 2863/AHD/2009 (ASST. YEA R: 2006-07) M/S.GAJANAN DEVELOPERS C/O. KAMLESHBHAI RANCHHODBHAI PATEL 37 SWAMI AKHAND ANAND SOCIETY, GATE NO.4, K.K.NAGAR, GHATLODIA, AHMEDABAD. (APPELLANT) VS. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-9, PRATYAKSHA KAR BHAVAN, NR.PANJARA POLE, AMBAWADI,AHMEDABAD. (RESPONDENT) PAN: AAGFG2725C APPELLANT BY : MR.M.J.SHAH RESPONDENT BY : MR. O.P. BHATEJA,SR. D . R . ( )/ ORDER DATE OF HEARING : 18 - 7 -2012 DATE OF PRONOUNCEMENT : 5-10-2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT (A)- XV, AHMEDABAD DATED 12-8-2009 FOR THE ASSESSMENT YE AR 2006-07. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 2 2. THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL AND THE SAME ARE DEALT WITH NUMERICALLY WHILE DECIDING THE APPEAL. 3. SINCE GROUND NO.1 AND 1.2 ARE INTERCONNECTED BOT H ARE CONSIDERED AND DISPOSED OFF TOGETHER FOR THE SAKE OF CONVENIEN CE. 4. THE ASSESSEE IS A FIRM ENGAGED IN THE CIVIL CONS TRUCTION ACTIVITY. ASSESSEE FILED RETURN OF INCOME ON 28-12-2006 DECLA RING TOTAL INCOME OF RS.15,14,410/-. A SURVEY ACTION U/S. 133A WAS CARRI ED OUT ON 30 TH SEPTEMBER/1 ST OCTOBER,2008 AT THE BUSINESS PREMISES. DURING THE COURSE OF SURVEY INCRIMINATING DOCUMENTS IN THE FORM OF LO OSE PAPERS, CHITS ETC., WERE FOUND AND IMPOUNDED. THE STATEMENT OF SHRI RAJ ANBHAI PATEL WAS RECORDED ON 10-10-2008. 5. ON GOING THROUGH ANNEXURE A-17, IMPOUNDED DURING THE COURSE OF SURVEY, THE A.O. NOTICED THAT THERE WERE CERTAIN NO TINGS ABOUT CERTAIN PAYMENTS (THE DETAILS LISTED ON PAGE 3 TO 6 OF THE ASSESSMENT ORDER) WHICH AGGREGATED TO RS.1,32,57,366/-.THE A.O. WAS OF THE VIEW THAT IT REPRESENTED THE CASH PAYMENTS WITH DATE OF PAYMENT TO THE PARTNERS OF THE FIRM TOWARDS THE EXPENSES. THE ASSESSEE IN REPLY TO THE QUERY OF THE A.O. SUBMITTED THAT THE ENTRY DID NOT BELONG TO THE FIRM OR THE PARTNERS & THE PAPER IS UNSIGNED. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE FOR THE REASON THAT AGAINST ALL THE TRAN SACTIONS/FIGURES NOTED IN LOOSE PAPERS, THE PARTNERS NAME WAS MENTIONED, THE PAPERS WERE IMPOUNDED FROM THE PREMISES OF THE FIRM AND THE ASS ESSEE COULD NOT SUBSTANTIATE BY FURNISHING NECESSARY DETAILS OF THE PERSONS TO WHOM, IT IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 3 BELONGED. THE A.O. THUS TREATED RS.1,32,57,366/- AS UNEXPLAINED EXPENDITURE U/S. 69C AND ADDED IT TO THE ASSESSEES INCOME. AGGRIEVED BY THE ACTION OF A.O., THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) UPHELD THE ADDITION BY HOLDING AS UNDER: 5. DURING THE COURSE OF APPELLATE PROCEEDINGS VIDE WRITTEN SUBMISSIONS THE EXPLANATION GIVEN BEFORE THE A.O. W AS REPEATED. FURTHER IT WAS STATED THAT U/S.69C ANY EXPENDITURE THE SOURCE OF WHICH IS NOT EXPLAINED SATISFACTORILY CAN BE ADDED ONLY IF IT IS FOUND RECORDED IN BOOKS OF ACCOUNTS BUT THE LOOSE PAPERS WERE NOT BOOKS OF ACCOUNTS. IT WAS ARGUED THAT THE PAPERS WERE NOT SI GNED BY ANY OF THE PARTNERS AND THAT THE PRESUMPTION THAT THE EXPENDIT URE WAS INCURRED IS NOT SUPPORTED BY ANY OTHER EVIDENCE BY THE A.O. IT WAS STATED THAT LOOSE PAPERS DO NOT INDICATE THE CORRECTNESS OF NOT INGS. 6. AFTER GOING THROUGH RIVAL SUBMISSIONS I AM OF TH E VIEW THAT THERE IS SUFFICIENT FORCE IN THE ARGUMENT OF THE A.O. THA T IN THE IMPOUNDED PAPERS NAMES OF PARTNERS HAVE BEEN MENTIONED AGAIN AND AGAIN AND THE DETAILS ARE ABOUT CERTAIN EXPENDITURE WITH AMOU NTS AND DATES . VERY LOGICAL INFERENCE IS THAT THIS EXPENDITURE REL ATED TO BUSINESS EXPENDITURE ONLY BECAUSE PAPERS WERE IMPOUNDED FROM THE BUSINESS PREMISES OF THE FIRM. THE RECORDING OF PAYMENTS/EXP ENDITURE IS SO ACCURATE THAT IT MENTIONS DATES TOTAL AMOUNT OF EXP ENDITURE, HOW MUCH PAYMENT MADE TO WHICH PARTNER AND THE NET EXPE NSE THEREAFTER. DURING COURSE OF APPELLATE PROCEEDINGS NOTHING WAS EXPLAINED BUT FOR STATING THAT NO ADDITION CAN BE M ADE. I HAVE NO ALTERNATIVE BUT TO CONFIRM THE ADDITION MADE BY THE A.O. U/S. 69C OF UNEXPLAINED EXPENDITURE OF RS.1,32,57,366/- FOUND R ECORDED ON ACCOUNT OF PAPER IMPOUNDED FROM THE BUSINESS PREMIS ES OF THE FIRM BECAUSE THE PAPERS MENTION CLEAR CUT DATES, AMOUNTS , THE NARRATION OF EXPENDITURE AND THE NAMES OF PARTNERS INDIFFEREN T COLUMNS. AND FOR THIS NO EXPLANATION HAS BEEN OFFERED BY THE APPELLA NT AT ANY STAGE. 6. AGGRIEVED BY THE ACTION OF CIT (A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 4 7. BEFORE US THE LD. A. R. SUBMITTED THAT THE ASS ESSEE IS A PARTNERSHIP FIRM CONSTITUTED ON 16-5-2005 AND COMMENCED THE BUS INESS W.E.F. 16-5- 2005 AND THEREFORE THE BUSINESS WORKING PERIOD WAS FOR 9.5 MONTHS. IN THE LOOSE PAPERS IMPOUNDED THERE WERE CERTAIN ENTRIES P ERTAINING TO DATE PRIOR TO 16.5.2005.SINCE THE FIRM WAS CONSTITUTED ON 16-5 -2005 THERE COULD NOT BE ANY EXPENSES/RECEIPTS OF THE FIRM PRIOR TO THE D ATE OF ITS CONSTITUTION. THE LD. A.R. PLACED ON RECORD AT PAGE 37 TO 43 OF THE P APER BOOK THE COPY OF THE PARTNERSHIP DEED. THE LD. A.R. THEREFORE URGED THAT THE NOTINGS IN THE LOOSE PAPER DOES NOT BELONG TO THE ASSESSEE. THE LD . A.R. FURTHER SUBMITTED THAT THE LOOSE PAPERS CONTAINS 5 COLUMNS. 1 ST COLUMN INDICATE THE DATE, 2 ND COLUMN INDICATE EXPENSES, 3 RD COLUMN INDICATES UNCHINNA + PAYMENT FOR EXPENSES, 4 TH COLUMN INDICATES NET EXPENSES AND 5 TH COLUMN INDICATES THE FIGURES IN BRACKET AND NAME. THE A.O. HAS DRAWN THE CONCLUSION FROM THESE LOOSE PAPERS THAT IT GIVES DA TEWISE FIGURE OF TOTAL EXPENSES, MONEY BORROWED, PAYMENT THEREOF AND NET E XPENSES OF FAMILY WHEREAS THE LAST COLUMN IS CASH BORROWED, CASH REPA ID AND CASH PAID TOWARDS EXPENSES. HE PLACED ON RECORD AT PAGES 32A TO 35 COPIES OF THE LOOSE SHEETS IMPOUNDED. HE SUBMITTED THAT THE A.O. HAS TREATED THE GROSS AMOUNT OF RS.1,32,57,366/- AS EXPENDITURE AND ADDED TO THE INCOME OF THE ASSESSEE. HE SUBMITTED THAT AT THE MOST THE TOTAL O F PAID FOR EXPENSES AGGREGATING TO RS.14,69,500/- SHOULD HAVE BEEN ADDE D TO THE INCOME INSTEAD OF RS.1,32,57,366/-. WITHOUT PREJUDICE, THE LD. A.R. SUBMITTED THAT THE A.O. HAS ERRED IN NOT GIVING TELESCOPIC EFFECT FOR THE PURPOSE OF CALCULATING THE ALLEGED INCOME. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 5 8. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT TH E EXPLANATION THAT THE 4THCOLUMN INDICATES NET EXPENSES (I, E. DIFFERE NCE OF TOTAL EXPENSE MINUS PAID FOR EXPENSES) IS NOT CORRECT. HE POINTE D OUT VARIOUS INSTANCES WHERE THE NET EXPENSE SHOWN IN COLUMN 4 IS AFTER AD JUSTING THE AMOUNT PAID TO PARTNERS. HE THUS RELIED ON THE ORDER OF TH E A.O. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL POSITION IS THAT BASED ON THE L OOSE PAPER IMPOUNDED DURING THE COURSE OF SURVEY, THE A.O. HAD TREATED T HE TOTAL EXPENDITURE OF RS.1,32,57,366/- AS UNEXPLAINED AND MADE ADDITION U /S.69C. ON THE BASIS OF THE LOOSE SHEETS IMPOUNDED THE FACT THAT IT REPR ESENTS EXPENDITURE IS NOT IN DOUBT. FROM THE SHEET IT WAS SEEN THAT IN THE RE MARKS COLUMN THERE WERE NOTINGS WHICH INDICATE THAT IN CERTAIN OCCASIONS TH E AMOUNTS WERE RETURNED/REPAID. ON THE BASIS OF QUERY FROM THE BEN CH, THE LD. A.R. AGREED TO VERIFY THE FIGURES AND AFTER VERIFICATION RECALC ULATED THE FIGURES AFTER CONSIDERING THE AMOUNTS REPAID/RETURNED TO THE PART NERS AND THE NET FIGURE OF EXPENSES WORKED OUT TO RS.31,46,500/-.THIS FIGUR E WAS ALSO CHECKED AND CONFIRMED BY THE REVENUE. THE LD. A.R. SUBMITTE D THAT INSTEAD OF ADDITION OF RS.1,32,56,366/- MADE BY THE A.O., THE ADDITION COULD BE MADE OF RS.31,46,500/-. IN VIEW OF THESE FACTS, WE ARE O F THE VIEW THAT THE ADDITION MADE BY THE A.O. BE RESTRICTED TO RS.31,46 ,500/- INSTEAD OF RS.1,32,57,366/- MADE BY HIM. WE THEREFORE DIRECT A CCORDINGLY. IN THE RESULT THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWE D. 10. GROUND NO.2 RELATES TO THE ADDITION OF RS.25,20 ,000/- U/S.68 OF THE ACT. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 6 11. ON GOING THROUGH THE LOOSE PAPERS IMPOUNDED DUR ING THE COURSE OF SURVEY, THE A.O. NOTICED NOTINGS WERE MADE ON THE S TATIONERY OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO CLARIFY THE NO TINGS TO WHICH THE ASSESSEE SUBMITTED THAT IT HAD NOTHING TO DO WITH T HE ASSESSEE FIRM. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE TO TH E A.O. FOR THE REASON THAT THE LOOSE PAPERS WERE FOUND AND IMPOUNDED FROM THE PREMISES OF THE FIRM AND THEREFORE IT WAS PRESUMED THAT IT BELONGED TO THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT THE ENTRIES REPRESE NTED SOME ROUGH WORKING OF THE ACCOUNTANT WHICH HAD NOTHING TO DO W ITH THE FIRM OR PARTNERS WAS ALSO NOT ACCEPTABLE TO THE A.O. FOR THE REASON THAT IF THE NOTINGS PERTAINED TO SOME OTHER PERSON THE ASSESSEE SHOULD HAVE FURNISHED THE COMPLETE DETAILS OF SUCH OTHER PERSON. IN THE ABSEN CE OF SATISFACTORY EXPLANATION, THE A.O. WAS OF THE VIEW THAT THE FIGU RES RELATED TO FINANCIAL TRANSACTIONS FOR THE REASON THAT IT WAS PUNCTUATED BY COMMAS AND THERE WAS DATE AGAINST EACH ENTRY. HE THEREFORE AGGREGATE D THE FIGURES AND AFTER EXCLUDING THE FIRST ENTRY OF RS.3 LAC AND RS.12 LAC S, SINCE IT DID NOT PERTAIN TO THE FINANCIAL YEAR UNDER CONSIDERATION, CONSIDER ED THE BALANCE SUM OF RS.34,20,000/- AS UNEXPLAINED CREDIT IN THE HANDS O F THE ASSESSEE AND ADDED IT U/S. 68 OF THE ACT. AGGRIEVED BY THE ADDI TION MADE BY THE A.O. THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). 12. THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE CIT (A) WERE NOT ACCEPTED BY CIT (A) AS ACCORDING TO HIM THE SUBMISS IONS MADE BY THE ACCOUNTANT BEFORE A.O. THAT THE PAGE WAS ONLY AN ES TIMATE DRAWN BY HIM AND DID NOT RELATE TO THE ASSESSEE WAS CONSIDERED T O BE AN AFTERTHOUGHT. BUT SINCE THERE WAS TOTALING MISTAKE (THE CORRECT F IGURE WAS RS.25,20,000/- IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 7 INSTEAD OF RS.34,20,000/-) HE UPHELD THE ADDITION O F RS.25,20,000/- BUT TELESCOPED IT AGAINST THE ADDITION OF RS. 1,32,57,3 66/- U/S. 69C. AGGRIEVED BY THE ACTION OF THE CIT (A), THE ASSESSEE IS NOW I N APPEAL BEFORE US. 13. BEFORE US, THE LD. A.R. SUBMITTED THAT THE PAPE R ON WHICH CERTAIN FIGURES WERE JOTTED DOWN DOES NOT BELONG TO THE FIR M OR TO ANY PARTNERS. THE ACCOUNTANT OF THE ASSESSEE HAS SUBMITTED THAT THOUG H THE NOTINGS ARE IN THE HANDWRITING OF THE ACCOUNTANT BUT IT DOES NOT P ERTAIN TO THE FIRM. THE ACCOUNTANT HAD FURTHER SUBMITTED THAT THE FIGURES M ENTIONED IN THE LOOSE PAPER WERE NEITHER PAID NOR RECEIVED BY THE FIRM. T HE AFORESAID SUBMISSIONS WERE MADE BY THE ACCOUNTANT BEFORE THE A.O. BY LETTER DATED 24-12-2008.HE PLACED ON RECORD AT PAGE 73 TO 75 OF THE PAPER BOOK AND ITS ENGLISH TRANSLATION AT PAGE 76 TO 77 OF THE PAPER B OOK. HE ALSO PLACED ON RECORD THE COPY OF THE IMPOUNDED PAPER AT PAGE 35A OF THE PAPER BOOK. THE LD. A.R. SUBMITTED THAT THE JOTTINGS OF FIGURES AND DATE WITHOUT ANY SIGNATURE ARE NO EVIDENCE ON RECORD. THE LOOSE PAPE R DOES NOT INDICATE ANY RECEIPT, PAYMENT OR EXPENSE AND THEREFORE IT CA NNOT BE CONSIDERED TO BE DEEMED INCOME. IT WAS FURTHER SUBMITTED THAT PRO VISIONS OF SECTION 68 BECOMES APPLICABLE ONLY IF ANY SUM IS FOUND CREDITE D IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR. IN THE P RESENT CASE SINCE THE SUM HAS NOT BEEN FOUND IN THE BOOKS OF THE ASSESSEE THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. IT WAS FURTHER SUBMI TTED THAT THE AUDITORS HAVE NOT QUALIFIED THEIR REPORT TO THAT EFFECT. IT WAS FURTHER SUBMITTED THAT UNLESS AND UNTIL THE CONTENTS OF THE DOCUMENT ARE P ROVED AGAINST A PERSON, THE POSSESSION OF THE DOCUMENT OR HANDWRITING OF TH AT PERSON ON SUCH DOCUMENT BY ITSELF CANNOT PROVE THE CONTENTS OF THE DOCUMENT. THE LD. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 8 A.R. RELIED ON THE DECISION OF TRIBUNAL IN THE CASE OF (2008) 5 DTR (JAB.) (TRIB.)202, CIT VS. BHAICHAND GANDHI (1983) 141 ITR 67 (MUM.), S.P. GOYAL VS. DCIT (2002) 82 ITD 85 (MUM.) (TM), 293 IT R 42 (DEL) 14. THE LD. D.R. ON THE OTHER HAND RELIED ON THE OR DER OF A.O. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT DURI NG THE COURSE OF SURVEY U/S. 133A LOOSE PAPERS WERE FOUND AND IMPOUNDED. IN ONE OF THE LOOSE PAPERS THAT WAS FOUND IN THE BUSINESS PREMISES OF T HE ASSESSEE THE A.O. NOTICED THAT IT HAD CERTAIN NOTINGS ON IT AND THE S AME WAS ON THE LETTER HEAD OF THE ASSESSEE. THE ACCOUNTANT OF THE ASSESSEE SUB MITTED DURING THE ASSESSMENT PROCEEDINGS THAT THE NOTINGS DID NOT BEL ONG TO THE ASSESSEE OR ITS PARTNERS AND THE FIGURES MENTIONED IN THE LOOSE PAPERS WERE NEITHER PAID NOR RECEIVED BY THE FIRM. THE NOTINGS OF THE S HEET DOES NOT HAVE ANY DATE NOR DOES IT HAVE SIGNATURE OF ANY PERSON. THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE NO TINGS ON THE LOOSE SHEET REPRESENTS THE AMOUNT RECEIVED/SPENT BY THE ASSESSE E. THERE IS NO EVIDENCE FOUND BY THE REVENUE IN THE FORM OF EXTRA CASH, JEWELLERY OR INVESTMENT OUTSIDE THE BOOKS. IN SUCH A CASE THE EX PLANATION OFFERED BY THE ASSESSEE CANNOT BE REJECTED. 16. IN THE CASE OF S. P. GOYAL (SUPRA) THE CO-ORDIN ATE BENCH OF THE TRIBUNAL HAS HELD THAT THE LOOSE PAPER IN ITSELF HA S GOT NO INTRINSIC VALUE. WHEN IT IS A MERE ENTRY ON A LOOSE SHEET OF PAPER A ND IF THE ASSESSEE CLAIMS THAT IT WAS ONLY A PLANNING, NOT SUPPORTED B Y ACTUAL CASH, THEN THERE IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 9 HAS TO BE CIRCUMSTANTIAL EVIDENCE TO SUPPORT THAT T HIS ENTRY REALLY REPRESENT CASH. 17. IN THE CASE OF ACIT VS. SATYAPAL WASSAN (SUPRA) THE CO-ORDINATE BENCH HAS HELD THAT A CHARGE ON THE BASIS OF DOCUME NT CAN BE LEVIED ONLY WHEN THE DOCUMENT IS A SPEAKING ONE. THE DOCUMENT S HOULD SPEAK EITHER OUT OF ITSELF OR IN THE COMPANY OF OTHER MATERIAL F OUND ON INVESTIGATION AND/OR IN THE SEARCH. THE SPEAKING FROM THE DOCUMEN T SHOULD BE LOUD, CLEAR AND UNAMBIGUOUS. IF IT IS NOT SO, THEN DOCUME NT IS ONLY A DUMB DOCUMENT. NO CHARGE CAN BE LEVIED ON THE BASIS OF A DUMB DOCUMENT. 18. IN THE CASE OF CIT VS. S.M. AGGARWAL (SUPRA) TH E HONBLE HIGH COURT HAS HELD THAT THE ONLY PERSON COMPETENT TO GIVE EVI DENCE ON THE TRUTHFULNESS OF THE CONTENTS OF THE DOCUMENT IS THE WRITER THEREOF. SO, UNLESS AND UNTIL THE CONTENTS OF THE DOCUMENTS ARE PROVED AGAINST A PERSON, THE POSSESSION OF THE DOCUMENT OR HANDWRITI NG OF THAT PERSON, ON SUCH DOCUMENT BY ITSELF CANNOT PROVE THE CONTENTS O F THE DOCUMENT. 19. VIEWED IN THE LIGHT OF THE FACTS AND THE VARIOU S DECISIONS CITED ABOVE, WE ARE OF THE VIEW THAT THE REVENUE HAS NOT BEEN AB LE TO PROVE THAT THE NOTINGS IN THE LOOSE SHEET BELONG TO THE ASSESSEE. THE LOOSE SHEET BEING UNDATED, UNSIGNED, WITHOUT THE NAME NATURE OF TRANS ACTION THUS CANNOT BE CONSIDERED FOR THE BASIS OF MAKING ADDITION. IN VIE W OF THESE FACTS, WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE ON THE BAS IS OF LOOSE SHEETS. WE THUS DIRECT THE DELETION OF THE ADDITION MADE. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 10 20. GROUND NO.3 RELATES TO THE ADDITION OF RS.5,70, 000/- AS UNEXPLAINED CREDIT U/S. 68. 21. DURING THE COURSE OF ASSESSMENT THE A.O. OBSERV ED THAT ASSESSEE HAD RECEIVED AGGREGATE UNSECURED LOAN OF RS.5,70,00 0/- FROM SIX PERSONS. ON VERIFICATION OF THE LOAN CONFIRMATION AND BANK S TATEMENT OF THE LENDERS, THE A.O. NOTICED THAT THE LENDERS HAVE DEPOSITED CA SH IN THEIR RESPECTIVE BANK ACCOUNTS A DAY OR TWO BEFORE AND ISSUED THE CH EQUE TO THE ASSESSEE AS UNSECURED LOANS. THE A.O. ALSO OBSERVED THAT NO INTEREST WAS PAID TO THE LENDERS. HE THEREFORE HELD THE LOANS TO BE NON GENUINE AND ADDED IT AS UNEXPLAINED CREDIT U/S. 68. AGGRIEVED BY THE ADDITI ON MADE BY A.O., THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). 22. CIT (A) WAS OF THE VIEW THAT ASSESSEE HAD NOT E XPLAINED SATISFACTORILY WHY JUST A DAY OR TWO BEFORE ISSUING OF CHEQUES, CA SH WAS DEPOSITED BY THE LENDERS AND THEREFORE THE ASSESSEE DID NOT DISCHARG E THE ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS. THE ASSESSEE ALSO DID NOT PRODUCE THE LENDERS BEFORE TH E A.O. OR CIT (A).HE ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE A.O. BUT HOWEVER TELESCOPED AGAINST THE ADDITION OF RS.1,32,57,366/- MADE U/S.69C.AGGRIEVED BY THE ACTION OF CIT (A), THE ASS ESSEE IS NOW IN APPEAL BEFORE US. 23. BEFORE US, THE LD. A.R. SUBMITTED THAT THE ASSE SSEE HAD PRODUCED THE COPIES OF CONFIRMATION OF ACCOUNT OF THE LENDER S, COPY OF THEIR PASS IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 11 BOOK, COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURNS IN CASE OF INCOME TAX PAYERS, COPY OF 7/12 UTARA, COPY OF PAN CARD ET C., BEFORE THE A.O. HE PLACED ON RECORD THE COPY OF THE COVERING LETTER AD DRESSED TO A.O. EVIDENCING THE SUBMISSION OF AFORESAID DOCUMENTS AT PAGE NO.18 TO 20 OF THE PAPER BOOK. THUS IT WAS SUBMITTED THAT THE ASSE SSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. THE ASSESSEE RELIED ON THE DECISION IN THE CASE OF ROHI NI BUILDERS 256 ITR 360 (GUJ.), 220 CTR 622 (RAJ.), 217 CTR 354 (RAJ.) AND 177 TAXMAN 331 (DEL.).THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF A.O. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAS OBTAINED AGGREGATE LOAN OF RS.5,70,000/- FROM SIX PARTIES. T HE ASSESSEE HAD SUBMITTED THE COPIES OF CONFIRMATION OF ACCOUNT OF THE LENDERS, COPY OF THEIR PASS BOOK, COPY OF ACKNOWLEDGEMENT OF INCOME TAX RE TURNS IN CASE OF INCOME TAX PAYERS, COPY OF 7/12 UTARA, COPY OF PAN CARD ETC. BEFORE THE A.O. AND HAS THUS DISCHARGED THE INITIAL ONUS CAST U/S. 68. THE REVENUE HAS NOT PLACED ON RECORD ANY MATERIAL TO CONTROVERT THE SUBMISSIONS MADE BY THE ASSESSEE. 25. IN THE CASE OF 220 CTR 622 (RAJ.) HONBLE RAJAS THAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO. VS. ITO HAS CONCLUD ED AS UNDER: ASSESSING OFFICER IS NOT PERMITTED TO EXAMINE THE SOURCE OF THE SOURCE ONCE THE ASSESSEE IS ABLE TO ESTABLISH THAT THE TRANSACTION WITH HIS CREDITOR IS GENUINE AND THE IDENTITY AND C REDITWORTHINESS OF THE CREDITOR HAVE BEEN ESTABLISHED. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 12 26. IN THE CASE OF CIT VS. DIAMONDS PRODUCTS LTD.,1 77 TAXMAN 331 (DEL.), THE HONBLE HIGH COURT HAS HELD THAT A.O. I S NOT PERMITTED TO EXAMINE THE SOURCE OF THE SOURCE ONCE THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THE TRANSACTION WITH HIS CREDITORS I S GENUINE AND THAT THE CREDITORS IDENTIFIES AND CREDITWORTHINESS HAVE BEEN ESTABLISHED. 27. CONSIDERING THE FACTS IN THE PRESENT CASE IN TH E BACKDROP OF THE AFORESAID DECISIONS OF HIGH COURTS IT CAN BE SAID T HAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT. THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE LENDERS HAVE ACQUIRED THE MON EY DEPOSITED WITH THE ASSESSEE. THE REVENUE HAS NOT ESTABLISHED THAT THE SOURCE OF LENDERS DEPOSITS FLEW FROM THE ASSESSEE. THUS IN VIEW OF TH E TOTALITY OF THE FACTS AND IN VIEW OF THE AFORESAID DECISIONS OF HIGH COURT, W E ARE OF THE VIEW THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. GROUND NO.4 RELATES TO THE ADDITION OF RS.11,70,762 /- MADE U/S. 40(A)(IA) 28. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT ASSESSEE HAD MADE PAYMENTS TO VARIOUS PARTIES (DETA ILS LISTED ON PAGE 12 OF ASSESSMENT ORDER) AGGREGATING TO RS.11,70,762/- AND ON WHICH THE ASSESSEE HAD NOT DEDUCTED TDS U/S. 194C.THE A.O. WA S OF THE VIEW THAT PROVISIONS OF SECTION 194C ARE ATTRACTED IN THE ASS ESSEES CASE. SINCE THE ASSESSEE HAD NOT DEDUCTED TDS U/S. 194C, THE PROVIS IONS OF SEC. 40(A)(IA) WAS ALSO ATTRACTED. HE ACCORDINGLY, DISALLOWED RS.1 1,70,762/- U/S. 40(A)(IA). AGGRIEVED BY THE ACTION OF A.O., THE ASS ESSEE CARRIED THE MATTER IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 13 BEFORE CIT (A). CIT (A) CONFIRMED THE ACTION OF THE A.O. AGGRIEVED BY THE ACTION OF CIT (A), THE ASSESSEE IS NOW IN APPEAL BE FORE US. 29. BEFORE US, THE LD. A.R. SUBMITTED THAT ASSESSEE HAD MADE ALL THE PAYMENTS BEFORE THE YEAR END AND THERE WAS NO AMOUN T WHICH WAS PAYABLE AS AT THE END OF THE YEAR. RELYING ON THE S PECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS, THE LD . A.R. SUBMITTED THAT NO DISALLOWANCE WAS CALLED FOR. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE ORDER OF THE A.O. 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE DETAILS OF PAYMENT LISTED BY THE A .O. IN THE ASSESSMENT ORDER, IT IS SEEN THAT THE A.O. FURNISHED A CHART S HOWING INTERALIA, THE NAMES OF PARTY, AMOUNT PAID AND DATE OF PAYMENT/CREDIT. S INCE THE INFORMATION WITH RESPECT TO DATE OF PAYMENT AND CREDIT IS CLUBB ED TOGETHER, IT IS NOT KNOWN WHETHER THE AMOUNT REPRESENTS THE AMOUNT PAID OR AMOUNT CREDITED. FURTHER, IF THE AMOUNT IS CREDITED, THEN WHAT IS TH E AMOUNT OUTSTANDING AS ON THE BALANCE SHEET DATE. WE THEREFORE, FEEL THAT THIS ASPECT NEEDS VERIFICATION AND ACCORDINGLY REMIT THE MATTER TO TH E FILE OF A.O. FOR VERIFICATION AND WITH A DIRECTION TO VERIFY THE PAY MENTS AND ALLOW THE DEDUCTION CONSIDERING THE DECISION OF SPL. BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS WHEREIN IT HAS BEEN HELD AS UNDER:- THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DI SALLOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YE AR, WITHOUT DEDUCTION OF TDS. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 14 THUS THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. GROUND NO.5 RELATES TO CHARGING OF INTEREST U/S 234 A. 31. THE ASSESSMENT ORDER REVEALS THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28-12-2006. THE DUE DATE OF FILING OF RET URN IN THE CASE OF ASSESSEE WAS 31-10-2006. CENTRAL BOARD OF DIRECT TA XES VIDE ORDER ISSUED U/S.119 DATED 13-10-2006 EXTENDED THE DATE OF FILIN G OF RETURN FOR THE ASSESSEES IN THE STATE OF GUJARAT TO 31 ST DECEMBER, 2006. SINCE THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 28-12-20 06 WHICH IS WITHIN THE EXTENDED DUE DATE OF FILING OF RETURN, WE ARE OF TH E VIEW THAT ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S. 234A. WE ACCORDINGL Y DIRECT THE A.O. TO DELETE THE INTEREST CHARGED U/S.234A. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 32. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED ORDER PRONOUNCED IN OPEN COURT ON 5-10- 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. IT A. NO .2863AHD/2009 ASST YEA R 2006- 07. . 15 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) XV, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 22 - 8 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 1,6,12,14,28 / 9 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER