The ACIT,GNR Circle, Gandhinagar V. M/s. C.K. Industries, Gandhinagar

ITA 29/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2096 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-04-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 144

Judgement Text

CO NO.90 AND ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD B BENCH, AHMEDABAD [CORAM: SHRI PRAMOD KUMAR AM AND SHRI KUL BHARAT JM ] I.T.A. NO. 29/AHD/2013 [ASSESSMENT YEAR: 2005-06] ASSISTANT COMMISSIONER OF INCOME TAX GANDHINAGAR CIRCLE, GANDHINAGAR ..APPELLANT VS. C K INDUSTRIES PLOT NO 264 A, VILLAGE ZAK TEL DEHGAM, DIST : GANDHINANGAR 382305 [PAN : AABFC9254H] RESPONDENT CO NO. 90/AHD/2013 ARISING OUT OF ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 C K INDUSTRIES PLOT NO 264 A, VILLAGE ZAK TEL DEHGAM, DIST : GANDHINANGAR 382305 [PAN : AABFC9254H] ..CROSS OBJECTOR VS. ASSISTANT COMMISSIONER OF INCOME TAX GANDHINAGAR CIRCLE, GANDHINAGAR ...RESPON DENT APPEARANCES : Y P VERMA, FOR THE APPELLANT NONE, FOR THE RESPONDENT DATE OF HEARING : APRIL 30, 2013 DATE OF PRONOUNCEMENT : MAY 10, 2013 ORDER PER PRAMOD KUMAR: 1. THIS APPEAL BY THE ASSESSING OFFICER AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE CIT(A)S O RDER DATED 19 TH OCTOBER 2012 IN THE MATTER OF ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2005-06. AS THIS SET OF APPEAL AND THE CROSS CO NO.90 AND ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 PAGE 2 OF 5 OBJECTIONS WERE HEARD TOGETHER AND PERTAIN TO THE S AME ASSESSEE, THESE ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER. 2. WE WILL FIRST TAKE UP THE APPEAL FILED BY THE ASSES SING OFFICER. THE SHORT GRIEVANCE RAISED IN THE APPEAL IS THAT, THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS 15,00,000 MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 68 IN RESPECT OF THE INCREASE IN CAPITAL CREDITED IN THE BOOKS OF ACCOUN TS. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL F ACTS NEED TO BE TAKEN NOT OF. DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ONE OF THE PARTNERS IN THE FIRM HAS INTRODUCED ADDITIONAL CAPITAL OF RS 15,00,000 DURIN G THE SAME YEAR, AND, AS THERE WAS NO EXPLANATION IN RESPECT OF THE SOURC E OF THE SAME, THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE FIRM AS UNEXPLAINED CREDIT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A) WHO DELETED THE SAID ADDITION AND OBSERVED AS FOLLO WS: .........THE APPELLANT HAS BEEN ASSESSED IN THE STA TUS OF THE FIRM. IF THAT BE THE CASE, OBVIOUSLY DEPARTMENT THINKS THAT THE PARTNERS OF THE FIRM ARE WELL IDENTIFIED AND THE FIRM IS INV OLVED IN A GENUINE BUSINESS. FURTHER COROLLARY OF THIS WOULD B E THAT IN SUCH SITUATION, THE DEPOSITOR STOOD IDENTIFIED AND TRANS ACTION STOOD ESTABLISHED. THEREFORE THE FIRM COULD NOT HAVE BEEN ASKED TO PROVED THE SOURCE OF DEPOSIT AND CREDITWORTHINESS O F DEPOSITOR IN THE PARTNERS ACCOUNT. THE DEPARTMENT WAS WELL ENTIT LED, IF IT SO WANTED, TO ENQUIRE THE SOURCE OF DEPOSITS IN THE HA NDS OF THE INDIVIDUAL PARTNER CONCERNED BY THE ONUS WAS NOT ON THE FIRMS. CO NO.90 AND ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 PAGE 3 OF 5 4. AGGRIEVED BY THE RELIEF SO GRANTED BY THE CIT(A) , THE ASSESSING OFFICER IS IN APPEAL BEFORE US. 5. HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE, HAVING PERUSED THE MATERIAL ON RECORD, AND HAVING CONSIDER ED FACTS OF THIS CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION, WE ARE N OT INCLINED TO DISTURB VERB WELL REASONED CONCLUSIONS ARRIVED AT BY THE LE ARNED CIT(A)/ WHILE THERE IS NO DECISION IN FAVOUR OF THE REVENUE FROM HONBLE JURISDICTIONAL HIGH COURT HAS BEEN BROUGHT TO OUR NOTICE, A LARGE NUMBER OF JUDICIAL PRECEDENTS HAVE BEEN BROUGHT TO OUR NOTICE. I N VIE W OF JUDGMENTS OF VARIOUS HONBLE HIGH COURTS, SUCH AS CIT VS JAISWAL MOTOR FINANCE 141 ITR 217, AND CIT VS RAMESHWAR DASS SURESJ PAL CHEKK 163 TAXMANN 270, UNLESS THERE IS ANYTHING TO DEMONSTRATE THAT THE MO NIES CREDITED TO PARTNERS CAPITAL ACCOUNTS WERE PROFITS OF THE FIRM AND AS LONG AS THE PARTNERS HAVE CONFIRMED THAT THE MONEY IS GIVEN BY THEM TO THE FIRM, NO ADDITION UNDER SECTION 68 CAN BE MADE IN THE HANDS OF THE FIRM IN RESPECT OF CREDITS TO THE PARTNER CAPITAL ACCOUNTS IN THE F IRM. NO DOUBT, A CONTRARY VIEW IS ALSO TAKEN BY ANOTHER HONBLE COURT IN THE CASE OF CIT VS KISHORILAL SATOSHILAL 216 ITR 9, BUT THEN THERE ARE CONFLICTING DECISIONS OF HONBLE NON JURISDICTIONAL HIGH COURTS AND WHEN THE RE ARE NO BINDING PRECEDENTS FROM HONBLE JURISDICTIONAL HIGH COURT, THE NON JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE IS FOLLOWED. I N THE CASE OF TEJ INTERNATIONAL PVT LTD VS DCIT (69TTJ 650) THIS VIEW WAS TAKEN BY THE DELHI BENCHES OF THE TRIBUNAL, AND IN A RATHER RECE NT DECISION OF ACIT VS AURANGABAD HOLIDAY RESORTS PVT LTD (118 ITD 1), THE SAME VIEW WAS REITERATED. THERE IS NO DISPUTE THAT WHAT HAVE BEEN TREATED AS UNEXPLAINED CREDITS ARE CREDITS TO THE PARTNERS CA PITAL ACCOUNTS, AND, THEREFORE, THE CONCLUSIONS ARRIVED AT BY THE CIT(A) DO SEEM TO BE VERY APPROPRIATE AND JUSTIFIED. WE APPROVE THE SAME AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, APPEAL OF THE ASSESSING OFFICER IS DISMISSED. CO NO.90 AND ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 PAGE 4 OF 5 6. COMING TO THE CROSS OBJECTION FILED BY THE ASSES SEE, WE FIND THAT IT ONLY DEALS WITH ASSESSEES PRAYER FOR RE-ADJUDICATI ON ON LEARNED CIT(A)S DECISION TO DECLINE TO ADMIT THE ADDITION EVIDENCE IN RESPECT OF ADDITION FOR RS 31,01,002 IN RESPECT OF SUNDRY CREDITORS. 7. THE CO IS TIME BARRED BY ONE DAY BUT THE ASSESSE E HAS MOVE A PETITION SEEKING CONDONATION OF THIS DELAY. HAVING PERUSED THE SAID PETITION, AND HAVING HEARD LEARNED DEPARTMENTAL REP RESENTATIVE, WE ARE INCLINED TO CONDONE THE DELAY. ACCORDINGLY, DELAY C ONDONED. WE TAKE UP THE MATTER ON MERITS. 8. SO FAR AS THIS ISSUE IS CONCERNED, THE BASIC PLE A OF THE ASSESSEE IS THAT SUBSTANTIAL PART OF THIS ADDITION PERTAINS TO THE BALANCE OF THE PREVIOUS YEAR WHICH HAS SIMPLY BEEN BRUSHED ASIDE B Y OBSERVING THAT, IN THE NORMAL PROCEEDINGS, THE APPELLANT WAS REQUI RED TO PROVE ALL THE PURCHASES AND EXPENSES TO BE GENUINE. IN THE ABSENC E OF THIS (VERIFICATION), I DO NOT THINK THAT THE ADDITION OF ONLY THE FINAL CREDIT BALANCES AT THE END OF THE YEAR IS UNJUSTIFIED. TH E ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 9. HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE, HAVING PERUSED THE MATERIAL ON RECORD AND HAVING CONSIDERE D FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION, WE ARE UNABLE TO SEE ANY MERITS IN THE APPROACH ADOPTED BY THE CIT(A). CONFIRMATION OF OUTSTANDING BALANCES IN CREDITORS ACCOUNT, WHICH WAS DONE ON TH E GROUND THAT CONFIRMATIONS ARE NOT PRODUCED, CANNOT BE JUSTIFIED ON SUCH IRRELEVANT GROUNDS AS WHAT COULD HAVE HAPPENED IF PURCHASES WE RE TO BE VERIFIED IN ENTIRETY. IN OUR CONSIDERED VIEW, THE CIT(A) OUGHT TO EXAMINE THE MATTER ON MERITS OF THE ADDITIONS, ADMIT AND VERIFY THE DE TAILS AND CONFIRMATIONS FILED BY THE ASSESSEE AND CONFIRM ADDITION TO THE E XTENT THE ADDITIONS HAVE LEGAL MERITS. IN THIS VIEW OF THE MATTER, AND FOR THE ABOVE LIMITED CO NO.90 AND ITA NO.29/AHD/2013 ASSESSMENT YEAR: 2005-06 PAGE 5 OF 5 PURPOSES, WE REMIT THE MATTER TO THE FILE OF THE CI T(A) FOR FRESH ADJUDICATION. WHILE DOING SUCH FRESH ADJUDICATION, THE CIT(A) WILL GIVE YET ANOTHER OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO. 10. IN THE RESULT, THE CO IS ALLOWED FOR STATISTICA L PURPOSES IN THE TERMS INDICATED ABOVE. 11. TO SUM UP, THE APPEAL OF THE ASSESSING OFFICER IS DISMISSED, AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN C OURT TODAY ON 10 TH DAY OF MAY, 2013. SD/- SD/- KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER ) AHMEDABAD: 10TH DAY OF MAY, 2013 TRUE COPY COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISIONER , AHMEDABAD 4. DEPARTMENTAL REPRESENTATIVE, BENCH, AHMEDABAD 5. GUARD FILE BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD