Jagdamba Ginning Factory, Ahmedabad V. The Income Tax Officer, Ward-1, Patan

ITA 2876/AHD/2015

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0233 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-08-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Opportunity of being heard; Corroborative evidences; Reassessment proceedings; Set aside
• Section: 68; 143(3); 133A; 13

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH ‘C’ BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND MS.MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ ITA No.2876/Ahd/2015 नधा रण वष /Asstt. Year: 2008-09 Jagdamba Ginning Factory Kukarna Road, Harij Dist. Patan,Gujarat PAN : AABFJ 2283 M Vs. ACIT, Cent.Cir.1(1) Ahmedabad. अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri M.K. Patel, Adv. Revenue by : Shri Kamlesh Makwana, CIT-DR स ु नवाई क तार ख/Date of Hearing : 10/08/2023 घोषणा क तार ख /Date of Pronouncement: 02/11/2023 आदेश/O R D E R PER Ms.MADHUMITA ROY, JUDICIAL MEMEBR: Present appeal at the instance of the assessee is directed against appellate order dated 30.7.2015 passed by the Ld. Commissioner of Income- tax (Appeals), Gandhinagar(Appeal No. CIT(A)/GNR/172/2014-15) arising out of order dated 25.8.2014 passed by the Ld. Assessing Officer under ITA No.2876/Ahd/2015 2 section 143(3) r.w.s. 254 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2008-09 with the following grounds: 1. The Id. CIT (A) erred on facts in sustaining the addition made by the ld.AO on account of Cash Credit of Rs.2,72,045/- and Rs.8,63,174/- = (Rs.11.35 lacs), on remand of the case; which being contrary to evidences on record and the clear direction of Hon’ble ITAT. 2. The Id. CIT (A) erred on facts in sustaining the addition made by the Id.AO on account of Cash Credits totaling of Rs.11.35 lacs; by not accepting the alternate plea in regard to telescoping, hence entire addition on this count deserve to be deleted.” 2. At the outset, it is brought to our notice that the Registry has noted that the appeal of the assessee has been filed before the Tribunal late by 2 days, and therefore, the same is time barred to that extent. After hearing both the sides, we find delay being very small to the extent of just 2 days only, in the interest of justice, we condone the delay and proceed to adjudicate the appeal on merit. 3. This is second round of litigation before the Tribunal. In the first round, the ITAT vide order in ITA No.317/Ahd/2013 dated 12.4.2013 partly allowed the appeal of the assessee. In other words, the ITAT had partly allowed ground no.1 with regard to alleged bogus purchases. However, the Tribunal set aside the issue raised in ground no.2 regarding unexplained cash deposits in the bank accounts to the file of the AO with direction to decide the same afresh in the light of documents available on record and/or that may be produced by the assessee during the set aside proceedings. 4. In the set aside proceedings under section 143(3) r.w.s. 254 of the Act, the ld.AO vide order dated 25.8.2014, made an addition of Rs.2,72,045/- ITA No.2876/Ahd/2015 3 under section 68 of the Act on account of unexplained cash credit and Rs.8,63,174/- under section 68 on account of unsecured loan under section 68 of the Act in the absence of proper explanation and necessary supporting evidences to prove the genuineness of the transaction. This addition was challenged before the Ld. CIT(A), who also confirmed the finding of the AO, and upheld the addition made by the AO. The assessee is now again before the Tribunal in the second round on this issue. 5. As the facts emerge out from the record are that the assessee is engaged in the business of ginning and pressing of cotton. The assessee was subjected to survey action under section 133A of the Act consequent upon search and survey action carried out at the premises of edible oil mills group of Patan District and agents/brokers of Mehsana and Sabarkantha on 1.9.2008. In the set aside proceedings, the AO noticed that the assessee had shown cash credit of Rs.2,50,000/- on 31.10.2007 and Rs.22,045/- on 21.2.2008 in his cash book. The assessee claimed the same as withdrawal from Harij Nagrik Bank of Rs.2,50,000/- and Rs.22,045/- from Mehsana Urban Bank. However, on verification of the bank statement, it was revealed to the AO that no such cash was seen as withdrawn, and the AO noticed the assessee had no bank account with Mehsana Urban Bank. The ld.AO show caused the assessee as to why these two amounts should not be added to income of the assessee as unexplained. However, the assessee continued to maintain its stand that the same represented withdrawal from the assessee’s bank account with Harij Nag. Sah. Bank and from Mehsana Urban Co. Bank. The AO found, the claim of the assessee was without any documentary evidences as no such cash withdrawal could be seen in the bank account of the firm maintained by the assessee. The AO further noted that ITA No.2876/Ahd/2015 4 though no cash withdrawal was made by the assessee, but cash of Rs.2,50,000/- was deposited vide cheque number 978906 of the assessee in the said bank account; that from the verification of the bank account of Harij Nagrik Bank, it is found that the said amount vide cheque no.978906 on the same date was shown as clearing in the name of Dena Bank, which clearly indicated that the said amount was transferred to the Dena Bank and not cash withdrawal. Therefore, the impugned transaction clearly proved that the assessee has introduced unaccounted money out of books of the firm. The ld.AO accordingly made an aggregate addition of Rs.2,50,000/- and Rs.22,045/- treating it as unexplained cash credited and added to the income of the assessee. 6. Further, during the reassessment proceedings and verification of cash book, the AO noticed that the assessee had received cash below Rs.20,000/- from twenty-eight persons. The assessee was asked to explain the source of cash credited in the cash book and furnished confirmation with supporting documentary evidences to prove identity, credit-worthiness of the persons and genuineness of the transaction. The assessee had submitted confirmations only from 15 persons out of 28. The assessee was show caused as to why the amount received from remaining 13 creditors should not be treated as unexplained and added to the total income of the assessee. He noticed, the details of 13 creditors in his impugned at page no.5. It was explained by the assessee that out of the 13 creditors, loan aggregating to Rs.2,14,000/- taken from four persons, these persons had expired and therefore addresses and confirmation could not be provided. This contention of the assessee was not acceptable to the AO on the ground that neither the assessee could furnish death certificate of impugned creditors nor could ITA No.2876/Ahd/2015 5 obtain affidavit from the legal heirs to substantiate the claim of the assessee. Similar is the position with regard to other creditors where the assessee either could not reply or could file any confirmation in support of his claim. 7. As regards claim cash credit to the tune of Rs.6,49,174/-, which the ld.AO noticed while verifying the record, the assessee was asked to prove the source of the said credit. The assessee stated that the same represented sales to one Kamdhenu Oil Mills; that the party issued a cheque bearing no.0402082 of Kadi Nagrik Bank, which the assessee got discounted from one Shroff Jagdishbhai Vishnbhai Patel. The explanation of the assessee, however, was not acceptable to the AO. The AO doubted the same because, no commission was charged by the said Shroff while discounting the bill; that no address or any confirmation from the Shroff to the alleged transaction was filed. The AO thus observed that primary onus upon the assessee to prove the genuineness of the cash credit transaction with documentary evidences, which the assessee failed to do so. Therefore, he held that the cash found in books of the assessee nothing but unaccounted cash introduced belonged to the assessee. He accordingly made an addition of Rs.2,14,000/- plus Rs.6,49,174/-, aggregating to Rs.8,63,174/- to the total income of the assessee, and treated the same as unexplained cash credit. 8. Aggrieved by the action of the AO in making addition of Rs.2,72,045/- on account of unexplained cash credit under section 68 and Rs.8,63,174/- on account unsecured loan, the assessee went in further appeal before the Ld.CIT(A). The Ld.CIT(A) also found the claim of the assessee to be unsustainable in the absence of documentary evidences as found by the AO, and he accordingly upheld order of the AO on this issue. Assessee, therefore, is in further appeal before the Tribunal. ITA No.2876/Ahd/2015 6 9. Before us, the Ld. Counsel for the assessee reiterated his submissions as were made before the authorities below. The assessee has also filed a paper book containing copy of ledger account of Shroff Jagdishbhai and Kamdhenu Oil Mill with sales invoice and sales register to demonstrate that the sales made to this party was genuine and required to be allowed. On the other hand, the Ld.DR supported orders of the Revenue authorities. 10. We have considered rival submissions; gone through the orders of revenue authorities below. We also gone through the copy of details filed by the assessee. The Revenue authority has made the impugned additions of Rs.2,72,045/- and Rs.8,63,174/- on account of unexplained cash credit in the absence of satisfactory documentary evidence. 11. As far as addition of Rs.2,72,045/- is concerned, this represented cash credit of Rs.2,50,000/- and Rs.22,045/- found in the books of the assessee. The assessee tried to explain the same as cash withdrawal from the bank accounts viz. Hariji Nagrik Bank and Mehsana Urban Bank. However, on verification, the AO found no such cash was withdrawn, and in fact the AO has found that the assessee was not having any account with Mehsana Urban, and therefore, in the absence of proof to substantiate the claim of the assessee the addition of Rs.2,72,045/- was made. Even before us also, the assessee was unable to substantiate the same, and therefore, we do not find any merit in this claim of the assessee, the addition of which, we confirm, and uphold order of the Revenue on this issue. ITA No.2876/Ahd/2015 7 12. So far addition of Rs.8,63,174/- the same represented unexplained cash credit entries found in the books of accounts of the assessee representing cash received from 28 persons. Out of which, an amount of Rs.2,14,000/- was claimed to be received from the creditors who are either claimed to be expired or no information about them could be obtained. Since the assessee failed to prove the identity, genuineness, and credit- worthiness of the creditors, the AO made addition of Rs.2,14,000/-. The ld.CIT(A) also confirmed the action of the AO on this issue. As per section 68 of the Act, in case the assessee did not offer explanation to the satisfaction of the AO as to the nature and source of credit of any amount found credited in the books of the assessee, and the identity, credit-worthiness of the creditor and genuineness of the transaction, the amount so found credited in the books, shall be treated to be the income of the assessee under section 68 of the Act. Before us, to contradict this concurrent finding of the Revenue authorities, the assessee has not placed any justifiable reasons much less supporting evidences to establish its claim. Therefore, we do not find any merit in the claim of the assessee, and find the Revenue authorities looking to the facts and circumstances of the case, have justified in making the impugned addition, which we uphold. 13. As regards balance addition of Rs.6,49,174/- is concerned, the basis for the AO to make this addition is based on the fact that the cheque received by the assessee from its sale was discounted with one Shroff Jagdish Vishnubhai Patel, and the cash was received. However, the AO doubted this transaction on the ground that no commission was charged to the assessee on discounting of its cheque, and as per the normal practice, Shroffs in the prevailing market do charge commission between 1% to 2% of the cheque ITA No.2876/Ahd/2015 8 amount, and since there was no charging of commission by the Shroff on the impugned cheque discounting, the AO construed that there was no bill discounting, and cash entries reflected in the books of the assessee was nothing but unaccounted cash of the assessee. 14. Before us, the Ld. Counsel for the assessee drew our attention from page no.6 to 17 of the PB, where at page no.6 is ledger of Shroff Jagidhsbhai Vishnubhai, which showed cash receipt from the said Shroff against the cheque discounting. Page No.7 & 8 is the account statement showing sales made to Kamdhenu Oil Mill dated 13.2.2008 for Rs.6,49,174/-. The sales register from 1.4.2007 to 31.3.2008 was given at page no.9 to 17 representing sales made to various parties for the above. This list contained the name of Kamdhenu Oil Mills for the sales made to them by the assessee at Rs.6,49,174/-. All these details contained in the paper book did show that the assessee did make sales to Kamdhenu Oil Mills for Rs.6,49,174/-, and the cheque issued for the sales to the assessee was discounted with Shroff Jagdishbhai Vishnubhai. 15. However, no details of the Shroff was given by the assessee. Thus, taking into consideration the entire aspect of the matter, we would like to give another opportunity to the assessee to submit the details, if any, in regard to the Shroff as mentioned hereinabove which is also required to be considered by the Ld. AO, having regard to the sales register from 01.04.2007 to 31.03.2008 annexed to the paper book as mentioned in the foregoing paragraphs and other details being the statement of accounts showing sales made to Kamdhenu Oil Mills. The issue is, therefore, set aside to the file of the Ld. AO to adjudicate afresh upon considering the evidence ITA No.2876/Ahd/2015 9 to be adduced by the assessee as indicated hereiabove, particularly, the details of the Shroff and to pass orders strictly in accordance with law. The Ld. AO is also at liberty to grant further opportunity of being heard to the assessee, if so required. 16. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 02 nd November, 2023 at Ahmedabad. Sd/- Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER (MADHUMITA ROY) JUDICIAL MEMBER True Copy Ahmedabad; Dated 02/11/2023 आदेश क 'त(ल)प अ*े)षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु ,त / Concerned CIT 4. आयकर आय ु ,त(अपील) / The CIT(A) 5. )वभागीय 'त'न ध, आयकर अपील य अ धकरण / DR, ITAT, 6. गाड0 फाईल / Guard file. आदेशान ु सार / BY ORDER, उप/सहायक पंजीकार (Dys./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad