The ITO,Vapi Ward-1, Vapi V. M/s. Haveli Entertainments Pvt.Ltd., SILVASSA

ITA 2887/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67946 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: H V VORA
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD BEFORE SHRI N. S. SAINI , ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 2887/AHD/2012 ASSESSMENT YEAR :2009-2010 INCOME-TAX OFFICER, VAPI, WARD-1, VAPI. V/S . M/S. HAVELI ENTERTAINMENTS PVT. LTD., HAVELI, SWAMINARAYAN MARG, SILVASSA-396230. PAN NO. A A ACH5968B (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI K. C. MATHEWS, SR. D.R. /BY RESPONDENT SHRI H. V. VORA, A.R. /DATE OF HEARING 18.11.2013 /DATE OF PRONOUNCEMENT 22.11.2013 O R D E R PER : SHRI N. S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-II, AHMEDABAD, DATED 19.10.2012. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINE D CASH CREDITS IN THE BOOKS OF ACCOUNT OF RS.18,67,512/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN RS. 71,74,677/- AS OUTSTANDI NG CREDIT IN THE NAME OF SHROFF CONSTRUCTION CO. PVT. LTD., SURAT. A NOTICE U/S. 133(6) OF THE INCOME TAX ACT WAS ISSUED TO M/S. SHROFF CONSTRUCTION CO. PVT. LTD. FOR CONFIRMATION OF AMOUNT CREDITED IN THEIR ACCOUNT. M/S. SHROFF C ONSTRUCTION CO. PVT. LTD. ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 2 CONFIRMED THE SALES OF RS.53,07,165/- AND THE ASSES SEE WAS SHOWN AS A DEBTOR. ON RECEIPT OF THIS CONFIRMATION FROM SHROF F CONSTRUCTION CO. PVT. LTD., THE ASSESSEE WAS REQUESTED TO RECONCILE THE DIFFERE NCE OF RS.18,67,512/- WITH EVIDENCE, COGENT AND VERIFIABLE PROOF. THE ASSESSE E SUBMITTED THAT IT HAS MAINTAINED TWO DIFFERENT ACCOUNTS ONE FOR CONTRACTO R ACCOUNT AND ANOTHER FOR RETENTION ACCOUNT (CONTRACTOR) AND THE MONEY WHICH WAS RETAINED BY THE ASSESSEE, WAS CREDITED TO THE RETENTION (CONTRACTOR ) ACCOUNT. THE AMOUNT OF RS.52,97,931/- WAS PAYABLE TO SHROFF CONSTRUCTION C O. PVT. LTD. AGAINST THE CONTRACT WORK UNDERTAKEN BY THEM AFTER CREDITING TH E AMOUNT OF RS.18,76,746/- IN THE LEDGER ACCOUNT OF RETENTION M ONEY ACCOUNT IN THE SHROFF CONSTRUCTION CO. PVT. LTD. THE ASSESSING OFFICER A DDED RS.18,67,512/- U/S.68 OF THE IT ACT AS UNEXPLAINED CREDIT IN THE A CCOUNT OF SHROFF CONSTRUCTION CO. PVT. LTD. IN THE ABSENCE OF CONFIRMATION/CLARIF ICATION RECEIVED FROM SHROFF CONSTRUCTION CO. PVT. LTD. 4. ON APPEAL BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE WAS A PRIVATE LTD. COMPANY WHICH WAS FORMED WITH AN OBJ ECT OF CARRYING THE BUSINESS OF RUNNING MALL AND MULTIPLEX THEATRE. TH E ASSESSEE HAD GIVEN CONTRACT TO SHROFF CONSTRUCTION PVT. LTD. TO CARRY OUT THE CONSTRUCTION WORK RELATED TO SAID MALL AND MULTIPLEX THEATRE. IN CON NECTION WITH ON GOING CONSTRUCTION WORK CARRIED OUT BY SHROFF CONSTRUCTIO N PVT. LTD., THE ASSESSEE USED TO RETAIN PARTIAL AMOUNT FROM THE PAYMENT MADE TO SHROFF CONSTRUCTION PVT. LTD. AND TILL 31.03.2009, THE ASSESSEE RETAINE D TOTAL AMOUNT OF RS.18,76,746/- AND THE SAME WAS TRANSFERRED TO SEPA RATE ACCOUNT IN THE NAME OF RETENTION MONEY (SHROFF CONSTRUCTION P. LTD .). AS ON 31.03.2009, ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 3 NET AMOUNT OF RS.52,97,930.96 WAS PAYABLE BY THE AS SESSEE TO THE SAID SHROFF CONSTRUCTION P. LTD. AND RS.18,76,746/- WAS PAYABLE TOWARDS RETENTION MONEY ACCOUNT. AS ON 31.03.2009, TOTAL SUM OF RS.7 1,74,677/- WAS PAYABLE BY THE ASSESSEE TO SHROFF CONSTRUCTION PVT. LTD. AN D THESE DETAILS WERE SUBMITTED TO THE ASSESSING OFFICER AT THE TIME OF A SSESSMENT PROCEEDING ALONGWITH THE COPY OF THE LEDGER OF RETENTION MONEY ACCOUNT AND COPY OF LEDGER OF REGULAR TRANSACTION IN THE NAME OF SHROFF CONSTRUCTION P. LTD. THE ASSESSEE ALSO FURNISHED THE SAME COPY OF THE LEDGER OF RETENTION MONEY ACCOUNT AND COPY OF LEDGER OF REGULAR CONTRACT WORK IN THE NAME OF SHROFF CONSTRUCTION PVT. LTD. BEFORE THE LD. CIT(A). THE ASSESSEE ALSO FILED COPY OF LETTER AWARDING CONTRACT OF CONSTRUCTION OF MALL AN D MULTIPLEX THEATRE TO SHROFF CONSTRUCTION PVT. LTD., SURAT WHEREIN AS PER PARAS 10, 11 & 13, IT WAS MENTIONED THAT 5% OF CERTIFIED AMOUNT OF WORK DONE WILL BE DEDUCTED FROM EACH PAYMENT TO THE CONTRACTOR AND HELD AS RETENTIO N AMOUNT. ON THE ARCHITECTS CERTIFYING THE COMPLETION OF WORK, THE CONTRACTOR SHALL BE PAID 50% OF THE RETENTION AMOUNT ALONGWITH THE FINAL CERTIFI CATE OF PAYMENT AND THE REMAINING 50% SHALL BE RETAINED UNTIL THE DEFECT L IABILITY PERIOD IS OVER AFTER THE COMPLETION CERTIFICATE WAS ISSUED BY THE ARCHIT ECT. THUS, THE ASSESSEE ON THE BASIS OF ABOVE SUBMISSION REQUESTED TO CIT(A) T O DELETE THE ADDITION OF RS.18,67,512/- MADE U/S.68 OF THE IT ACT. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING AS UNDER: 4.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE REASONS FOR MAKING THE ADDITION U/S.68 OF THE I .T. ACT. ON ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 4 PERUSAL OF THE LETTER FOR AWARDING CONTRACT FOR CON STRUCTION OF HAVELI- CINERIUM MALL ENTERTAINMENT CENTRE TO M/S. SHROFF CONSTRUCTION P. LTD., AND THE TERMS AND CONDITIONS THEREIN, IT IS C LEAR THAT M/S. SHROFF CONSTRUCTION P. LTD. HAS CARRIED OUT THE CONTRACT W ORK FOR CONSTRUCTION OF MALL AND MULTIPLEX THEATRE. THE CON TRACT BILLS FOR CERTIFIED WORK HAS BEEN CREDITED IN THE ACCOUNT OF SHROFF CONSTRUCTION P.LTD. FROM 28 TH APRIL,2008 TO 20 TH OCTOBER,2008 FOR TOTAL AMOUNT OF RS.1,54,27,837/- AND AGAINST THESE BILLS, THE TOTAL RETENTION MONEY OF RS.7,36,600/-HAS BEEN CREDITED T O THE RETENTION MONEY ACCOUNT OF M/S.SHROFF CONSTRUCTION P.LTD. FRO M 2 ND APRIL.2008 TO 14 TH OCTOBER,2008. AS ON 1 ST APRIL,2008, THE OPENING BALANCE OF RETENTION MONEY ACCOUNT IS RS.11,66,581.30. IN THE COPY OF THE LEDGER ACCOUNT OF CONTRACTOR M/S.SHROFF CONSTRUCTIO N P.LTD., THE PAYMENT OF DIFFERENT AMOUNTS HAS BEEN MADE THROUGH CHEQUES. IN THE COPY OF THE CONFIRMATION ACCOUNT, THE P.A.NO. O F M/S.SHROFF CONSTRUCTION P.LTD. IS ALSO MENTIONED. AS PER THE L ETTER OF THE APPELLANT CO. TO M/S.SHROFF CONSTRUCTION P.LTD., IT IS CLEAR THAT THE APPELLANT WAS ENTITLED TO DEDUCT 5% OF THE CERTIFIE D AMOUNT OF WORK DONE ON EACH BILL AND THE SAME WAS PAYABLE ON COMPL ETION OF THE WORK DULY CERTIFIED BY THE ARCHITECT. IT IS APPAREN T FROM THE LEDGER ACCOUNT THAT THE RETENTION MONEY WAS DEDUCTED FROM THE TERMINAL BILLS RAISED FOR THE CERTIFIED WORK ON DIFFERENT DA TES. SO IT IS VERY MUCH CLEAR THAT THE AMOUNT IN RETENTION ACCOUNT WAS TRAN SFERRED FROM THE MAIN CONTRACT ACCOUNT AND WAS PAYABLE TO M/S.SHROFF CONSTRUCTION P.LTD. ON COMPLETION OF THE CONTRACT WORK. THE OPEN ING BALANCE OF RS.11,66,581.30 WAS NOT CREDITED DURING THE YEAR UN DER CONSIDERATION BUT IT PERTAINED TO THE IMMEDIATELY P RECEDING YEAR. THIS AMOUNT IN ANY WAY CANNOT BE TREATED FOR ADDITI ON IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE THE ADDITION OF THIS AMOUNT O F RS.11,67,581.30. FOR THE REMAINING AMOUNT, NO CASH OR CHEQUE AMOUNT WAS ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 5 DEPOSITED IN THE ACCOUNT OF M/S.SHROFF CONSTRUCTION P.LTD. BUT WAS CREDITED FROM THE MAIN CONTRACTOR'S ACCOUNT FROM TH E BILL OF CERTIFIED WORK. THE ASSESSING OFFICER HAS NOT RAISED ANY QUES TION ON GENUINENESS OF CERTIFIED WORK BILLS AND CREDITED BI LL AMOUNT IN CONTRACTOR'S ACCOUNT. THE RETENTION MONEY AMOUNT AR OUND 5% IS RETAINED AND TRANSFERRED FROM THESE BILLS SO THE SO URCE OF CREDIT IN THE RETENTION ACCOUNT IS AUTOMATICALLY EXPLAINED FR OM THE CONTRACTOR'S MAIN ACCOUNT ONCE THE AMOUNT EITHER IN CASH OR CHEQ UE IS NOT FOUND CREDITED IN THE ACCOUNT, THE SAME CANNOT BE COVERED IN THE UNEXPLAINED CASH CREDIT AS PER THE PROVISIONS OF SE CTION 68 OF THE L.T.ACT. THE ASSESSING OFFICER HAS NOT CROSS VERIFI ED WITH THE CONTRACTOR ON EXPLANATION FILED BY THE APPELLANT TH AT THE AMOUNT CREDITED IN THE SEPARATE RETENTION ACCOUNT WAS DEDU CTED AND RETAINED FROM THE CONTRACTORS MAIN ACCOUNT FROM TH E CERTIFIED BILL AMOUNTS. UNDER THESE FACTS AND THE CIRCUMSTANCES, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE THE ADD ITION OF RS.18,67,512/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE ACCOUNT OF M/S. SHROFF CONSTRUCTION P. LTD. AND THE ADDITION M ADE BY THE ASSESSING OFFICER IS ACCORDINGLY DELETED. 6. LD. SR. D.R. FULLY JUSTIFIED THE ORDER OF THE AS SESSING OFFICER. 7. ON THE OTHER HAND, LD. A.R. OF THE ASSESSEE FULL Y JUSTIFIED THE ACTION OF THE CIT(A). HE SUBMITTED THAT THE CIT(A) HAS OBSER VED THAT RS.11,66.581.30 OUT OF TOTAL SUM OF RS.18,76,746/- WAS THE OPENING BALANCE BROUGHT FORWARD FROM THE EARLIER YEAR. THUS, THE CIT(A) HAS RIGHTL Y DELETED THE ADDITION OF THIS AMOUNT AS THE SAID AMOUNT WAS NOT CREDITED IN THE B OOKS OF ACCOUNT OF THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION AND THIS FACT HAS NOT DISPUTED BY THE LD. SR. D.R. AS REGARDS THE BA LANCE AMOUNT, THE A.R. OF ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 6 THE ASSESSEE SUBMITTED THAT THE SAID SUM WAS NOT AC TUAL CASH RECEIVED BY THE ASSESSEE. IT WAS A JOURNAL ENTRY PASSED IN THE BOO KS OF ACCOUNT BY THE ASSESSEE FOR DEBITING SHROFF CONSTRUCTION PVT. LTD. AND CREDITING RETENTION MONEY (SHROFF CONSTRUCTION PVT. LTD.) AND THEREFORE , NO ADDITION CAN BE MADE U/S. 68 OF THE ACT. FOR THIS, HE PLACED RELIANCE O N THE DECISION OF AHMADABAD BENCH OF THE TRIBUNAL IN THE CASE OF AMIT RAJNIKANT JOSHI VS. ITO IN ITA NO.3469/AHD/2010, ORDER DATED 05.07.2013 WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN CAS E OF CIT VS. PANCHAM DASS JAIN, 205 CTR 444, HELD THAT PROVISIONS OF SECTION 68 ARE NOT ATTRACTE D TO AMOUNTS REPRESENTING PURCHASE MADE ON CREDIT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS AWARDED CONTRACT FOR CONSTRUCTION OF ITS MALL AND MULTIPLEX THEATERE TO M/S. SHROFF C ONSTRUCTION CO. P. LTD. THE ASSESSEE HAS SHOWN LIABILITY OF RS.71,74,677/- TO M /S. SHROFF CONSTRUCTION CO. P. LTD. IN ITS BALANCE SHEET AS AT 31.03.2009. THE A.O. IN EXERCISE OF HIS POWER U/S.133(6) OF THE ACT REQUISITIONED COPY OF A SSESSEES LEDGER FROM THE BOOKS OF ACCOUNT OF SHROFF CONSTRUCTION CO. P. LTD. ON PERUSAL OF THE LEDGER ACCOUNT FURNISHED BY SHROFF CONSTRUCTION CO. P. LTD ., THE A.O. OBSERVED THAT THE BALANCE SHOWN THEREIN WAS RS.53,07,165/-. THER EAFTER, THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR THE SAME. T HE ASSESSEE EXPLAINED TO THE A.O. THAT DIFFERENCE OF RS.18,76,746/- WAS ON A CCOUNT OF RETENTION MONEY DEDUCTED BY THE ASSESSEE IN TERMS OF CONSTRUCTION A GREEMENT ENTERED INTO WITH SHROFF CONSTRUCTION CO. P. LTD. AND DIFFERENCE OF RS.9,234/- WAS ON ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 7 ACCOUNT OF TDS DIFFERENCE. THE A.O. THEREAFTER REJ ECTED THIS EXPLANATION OF THE ASSESSEE FOR THE REASON THAT IN THE OPINION OF THE A.O. THE BURDEN WAS ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE DIFFEREN CE AND ACCORDING TO THE A.O., THE ASSESSEE HAS NOT DISCHARGED THAT BURDEN. CONS EQUENTLY, THE A.O. ADDED RS.18,67,512/- TO THE INCOME OF THE ASSESSEE. ON A PPEAL CIT(A) DELETED THE ABOVE ADDITION FOR THE REASONS QUOTED ABOVE IN THIS ORDER. 9. WE FIND THAT LD. SR. D.R. COULD NOT POINT OUT AN Y SPECIFIC MISTAKE INT HE ORDER OF THE LD. CIT(A). WE FIND AT PAGE NOS. 1 & 2 OF THE PAPER BOOK FILED BY THE ASSESSEE COPY OF LEDGER ACCOUNT OF SHROFF CONST RUCTION CO. P. LTD. AS APPEARING IN ASSESSEES BOOKS OF ACCOUNT ARE PLACED . IT SHOWS THAT ASSESSEE MAINTAINS TWO LEDGER OF SHROFF CONSTRUCTION CO. P. LTD. FIRST LEDGER CONTAINS ON THE CREDIT SIDE OF IT 95% OF THE VALUE OF WORK D ONE BY SHROFF CONSTRUCTION CO. P. LTD. AND IN THE DEBIT SIDE APPEARS PAYMENT M ADE TO SHROFF CONSTRUCTION CO. P. LTD. AND TDS DEDUCTED BY THE AS SESSEE AND THE BALANCE THEREAFTER WAS ARRIVED AT RS.52,97,931/-. FURTHER, THE SECOND LEDGER ACCOUNT OF SHROFF CONSTRUCTION CO. P. LTD. IS IN RESPECT OF RETENTION MONEY AND THAT LEDGER SHOWS OPENING BALANCE OF RS.11,40,146.11 AND THEREIN 5% OF THE AMOUNT OF WORK DONE DURING THE YEAR WAS CREDITED AN D THUS THE CLOSING BALANCE WAS ARRIVED AT RS.18,76,745.79. WE FIND TH AT THE REVENUE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT ANY PAYME NT WAS MADE BY THE ASSESSEE TO THE SAID SHROFF CONSTRUCTION CO. P. LTD ., WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. FURTHER, NO MATERIAL HAS ALSO BEEN BROUGHT ON RECORD BY THE A.O. TO SHOW THAT ANY CRED IT MADE BY THE ASSESSEE IN THE LEDGER ACCOUNT OF SHROFF CONSTRUCTION CO. P. LTD. WAS NOT SUPPORTED BY ITA NO. 2887/AHD/12 A.Y. 2009-10 PAGE 8 THE BILLS OR VOUCHERS OF SHROFF CONSTRUCTION CO. P. LTD. IN THE ABOVE FACTS AND CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE ADDITION WAS MADE BY THE A.O. ON A WRONG FOOTING WHICH CANNOT BE SUSTAINED. THE A.O . FAILED TO PROPERLY APPRECIATE THE SUBMISSION OF THE ASSESSEE IN RESPEC T OF RETENTION MONEY WHICH WAS SUPPORTED BY CLAUSE NOS. 10, 11 & 13 OF T HE AGREEMENT AS QUOTED BY THE LD. CIT(A). THE APPROACH OF THE A.O. THAT T HE COPY OF THE LEDGER ACCOUNT FURNISHED BY SHROFF CONSTRUCTION CO. P. LTD . WAS SACROSANCT AND DIFFERENCE IS TO BE ADDED TO THE INCOME OF THE ASSE SSEE ALSO CANNOT BE APPRECIATED. THUS, THE ADDITION MADE BY THE A.O. I S ALSO UNSUSTAINABLE AND THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. HENCE, THE SAME IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 22 ND OF NOVEMBER, 2013, AT AHMADABAD. SD/- SD/- ( KUL BHARAT ) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;