Shri Mehilal Shivjor Yadav, Anand V. The Income tax Officer,Ward-2, Anand

ITA 2981/AHD/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9858 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 06-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: B T THAKKAR
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.2981/AHD/2009 A.Y.: 2006-07 SHRI MEHILAL SHIVJOR YADAV, PROP. OF SHIV POLYMERS, 1801/6, GUIDC ESTATE, VITHAL UDYOGNAGAR 388121 VS THE INCOME TAX OFFICER, WARD 2, ANAND S. P. COMPLEX, MAYFAIR ROAD, OLD C. K. HALL, ANAND PA NO. AAGPY 9320 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. T. THAKKAR, AR RESPONDENT BY SHRI R. K. DHANESTA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV, BARODA DATED 21 ST AUGUST, 2009 FOR ASSESSMENT YEAR 2006-07. THIS APPEAL WAS E ARLIER DISMISSED IN DEFAULT WHICH IS RESTORED BY ALLOWING MISC. APPLICA TION OF THE ASSESSEE. THE APPEAL WAS, THEREFORE, RE-FIX FOR HEARING. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND T HE MATERIALS AVAILABLE ON RECORD. 3. GROUND NO.1 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN FACT BY CONFIRM ING THE ADDITION U/S 68, OF RS.1,50,000/- AND NOT CONSIDERI NG THE ADDITIONAL DOCUMENTS PRESENTED IN THE PROCEEDIN GS. IT MAY BE MENTIONED THAT THE LEARNED CIT (A) HAS NO T CONSIDERED THE CLINCHING EVIDENCES PRODUCED BEFORE HIM. ITA NO.2981/AHD/2009 SHRI MEHILAL SHIVJOR YADAV VS ITO W 2, ANAND 2 4. THE AO FOUND THAT THE ASSESSEE HAD OBTAINED LOAN FROM SHRI TARKESH PATEL IN A SUM OF RS.1,50,000/- THE ASSESSE E COULD NOT FILED ANY EVIDENCE IN REGARD TO THE SOURCE OF THE CREDIT, GEN UINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR W HO HAD GIVEN LOANS. IN THE ABSENCE OF PROPER EVIDENCE AND DETAILS, IT WAS TREATED AS UNEXPLAINED CREDIT AND ADDITION U/S 68 OF THE IT ACT WAS ACCORD INGLY MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT CONFIRMATI ON ALONG WITH COPY OF PAN AND BANK STATEMENT OF SHRI TARKESH PATEL WAS FI LED. IT WAS ADMITTED BY AR THAT NO CONFIRMATION WAS FILED BEFORE THE AO. IT WA S, THEREFORE, ADMITTED FACT BEFORE THE LEARNED CIT(A) THAT LOAN CONFIRMATI ON WAS NOT FILED BEFORE THE AO. THEREFORE, THE ASSESSEE DID NOT DISCHARGED PRELIMINARY ONUS REGARDING GENUINENESS OF THE CREDIT TAKEN FROM SHRI TARKESH PATEL. EVEN THE CONFIRMATION WAS NOT FILED AT THE APPELLATE STA GE. ADDITIONAL EVIDENCES IN THE FORM OF COPY OF PAN AND BANK ACCOU NT WERE FILED WHICH WERE HOWEVER, NOT ADMITTED BY THE LEARNED CIT(A) BE CAUSE THE ASSESSEES CASE WAS NOT COVERED IN ANY OF THE CLAUSES OF RULE 46 A OF THE IT RULES. THE ADDITION WAS ACCORDINGLY CONFIRMED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE CONFIRMATION OF ACCOUNT BEFORE US AND SUBMITTED THAT THE ASSESSE E HAS DISCHARGED INITIAL ONUS TO PROVE GENUINENESS OF THE CREDIT. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. IT IS ADMITTED FACT THAT THE ASSESSEE DID NOT FILE CONFIRMATION OF THE LOAN EITHER BEFORE THE AO OR BE FORE THE LEARNED CIT(A). SOME ADDITIONAL EVIDENCES WERE FILED BEFORE THE LEA RNED CIT(A) TO PROVE SOURCES OF INCOME OF THE CREDITOR SHRI TARKESH PATE L BUT THE SAME WERE NOT ADMITTED BEING CONDITIONS OF RULE 46A OF THE IT RULES HAVE NOT BEEN COMPLIED WITH. SINCE THE ASSESSEE CLAIMED GENUINENE SS OF THE CREDIT, THEREFORE, ONUS WAS UPON THE ASSESSEE TO PROVE IDEN TITY OF THE CREDITOR, ITA NO.2981/AHD/2009 SHRI MEHILAL SHIVJOR YADAV VS ITO W 2, ANAND 3 CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTION. THE AO NOTED THAT SEVERAL STATUTORY NOTICES HAVE NOT BE EN COMPLIED WITH BY THE ASSESSEE. IN THE ABSENCE OF ANY DETAILS OR CONF IRMATION OF ANY LOAN, AUTHORITIES BELOW RIGHTLY MADE THE ADDITION AGAINST THE ASSESSEE. THE ASSESSEE COULD FILE ADDITIONAL EVIDENCES BEFORE THE LEARNED CIT(A) PROVIDED THE CONDITIONS OF RULE 46A OF THE IT RULES HAVE BEEN SATISFIED. IN THIS CASE, NONE OF THE CONDITIONS OF RULE 46A OF THE IT RULES HAS BEEN COMPLIED WITH AND NO ARGUMENT HAS BEEN MADE BEFORE US IN THIS REGARD. THEREFORE, WE DO NOT FIND IT TO BE A FIT CASE FOR I NTERFERENCE. WE ACCORDINGLY, CONFIRM THE ORDERS OF THE AUTHORITIES BELOW AND REJECT GROUND NO. L OF THE APPEAL OF THE ASSESSEE. 7. GROUNDS NO.2 AND 3 OF THE APPEAL OF THE ASSESSEE READ AS UNDER: 2. THE LEARNED CIT(A) HAS ERRED IN LAW & FACT BY ENHAN CING THE ADDITION OF RS.1,17,720/- MADE BY THE A. O. TO RS.2,40,000/- ON THE GROUND OF WAGES CONSIDERED BOG US OR INFLATED. 3. .FURTHER THE ABOVE ENHANCEMENT (MENTIONED IN POINT 2) IN ADDITION IS ON THE BASIS OF FRESH GROUNDS AND WITHO UT ISSUING ANY SHOW-CAUSE NOTICE TO ENHANCE THE ADDITI ON. 8. ON VERIFICATION OF THE WAGE REGISTER IN THE CASE OF SHIV POLYMERS, THE AO FOUND THAT MAJOR PART OF THE ENTRIES FOR EAC H MONTH WERE MADE ON A SINGLE DAY WITH THE SAME PEN ON THE SAME DATE. TH E ASSESSEE COULD NOT GIVE COMPLETE DETAILS OF THE PERSONS I.E. THEIR ADD RESSES, WHO WERE EMPLOYED AS DAILY WAGERS. THE AO, THEREFORE, HELD T HAT EXPENSES OF WAGES AMOUNTING TO RS.3,92,400/- WAS INFLATED AND DISALLO WED 30% OUT OF THE SAME AND MADE ADDITION OF RS.1,17,720/-. IT WAS SUB MITTED BEFORE THE LEARNED CIT(A) THAT OBSERVATION OF THE AO THAT MAJ OR PART OF THE ENTRIES FOR EACH MONTH WAS MADE WITH SAME PEN AND EVEN THE SIGNATURES WERE WITH THE SAME PEN WAS CORRECT. HOWEVER, IT WAS CONT ENDED THAT THIS WAS NOT A CONCLUSIVE PROOF THAT ALL ENTRIES WERE MADE O N THE SAME DATE SINCE THE SAME PEN WAS USED. THE SAME PEN WAS USED BY THE DAILY WAGERS TO ITA NO.2981/AHD/2009 SHRI MEHILAL SHIVJOR YADAV VS ITO W 2, ANAND 4 SIGN THE REGISTER. THE ASSESSEE PRODUCED THE DAILY WAGE REGISTER ALONG WITH THE PEN ATTACHED TO IT WITH A STRING. REGARDIN G ADDRESSES OF THE DAILY WAGER, THE ASSESSEE SUBMITTED THAT IT WAS RUNNING A BUSINESS OF SMALL/MEDIUM SCALE AND DID NOT HAVE SYSTEM TO RECOR D ALL REQUIRED DETAILS OF DAILY WAGERS. THE DAILY WAGERS HAVE NO P ERMANENT ADDRESSES/HOUSES. MOREOVER, THE AO HAD NOT ISSUED A NY SHOW CASE NOTICE IN THIS REGARD. THE LEARNED CIT(A) CONFIRMED THE FINDING OF THE AO AND NOTED THAT ADDITION HAS BEEN RIGHTLY MADE. THE LEARNED CIT(A) ALSO CONSIDERING THE DISCREPANCY IN THE SIGNATURES AS WE RE SHOWN TO THE ASSESSEES REPRESENTATIVE NOTED THAT OUT OF 14 WORK ERS, SIGNATURES IN CASE OF 8 WORKERS DO NOT TALLY FROM MONTH TO MONTH INDIC ATING THE WAGE REGISTER TO BE BOGUS OR INCORRECT. THE LEARNED CIT( A), THEREFORE, NOTED THAT IN THE ABSENCE OF COMPLETE DETAILS GIVEN BY THE ASS ESSEE TOTAL WAGES PAYMENT TO 8 WORKERS IN THE MONTH OF APRIL WAS RS.2 0,050/-. THE ADDITION WAS, THEREFORE, TO BE ENHANCED TO RS.2,40, 000/-. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO SHOW CAUSE NOTICE HAS BEEN GIVEN TO THE ASSESSEE TO ENHA NCE THE DISALLOWANCE. HE HAS FILED COPY OF THE WAGE REGISTER IN SUPPORT O F HIS CONTENTION THAT PROPER PAYMENT HAS BEEN MADE. ON THE OTHER HAND, TH E LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LEARNED CIT(A) HAS SHOWN DISCREPANCY IN SIGNATURES TO THE ASSESSEES COUNSEL AT THE APPELLATE SAGE WHICH WOULD AMOUNT TO GIVING SHOW CAUSE NOTICE TO THE ASSESSEE FOR ENHANCEMENT. 10. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ENHANCING T HE DISALLOWANCE. ACCORDING TO SECTION 251 (2) OF THE IT ACT, THE COM MISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR PENALTY OR REDUC E THE AMOUNT OF REFUND UNLESS THE ASSESSEE HAS HAD A REASONABLE OPP ORTUNITY OF SHOWING A CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. IN T HIS CASE, THE LEARNED ITA NO.2981/AHD/2009 SHRI MEHILAL SHIVJOR YADAV VS ITO W 2, ANAND 5 CIT(A) HAS NOT MENTIONED ANYTHING IN THE APPELLATE ORDER IF ANY SHOW CAUSE WAS ISSUED TO THE ASSESSEE ON ENHANCING THE D ISALLOWANCE ON THIS ISSUE. THE LEARNED DR HAS NOT PRODUCED ANY MATERIAL BEFORE US IF ANY SHOW CAUSE WAS ISSUED TO THE ASSESSEE FOR ENHANCING THE ADDITION. THEREFORE, PROVISIONS OF LAW HAVE BEEN VIOLATED AS NOTED ABOVE. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LEARNED CIT (A) IN ENHANCING THE ADDITION OF DISALLOWANCE OF RS.1,17,720/- TO RS.2,4 0,000/-. GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWE D. 10.1 AS REGARDS ADDITION MADE BY THE AO IN A SUM OF RS.1,17,720/-, THE LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS BEEN ABL E TO EXPLAIN SATISFACTORILY THE REASONS FOR SIGNATURES AND NOTIN G IN THE DAILY WAGE REGISTER BY SAME PEN. THERE IS NO DEPARTMENTAL APPE AL AGAINST SUCH FINDINGS OF THE LEARNED CIT(A). HOWEVER, IT REMAINED THE FACT THAT SIGNATURES OF SOME OF THE WORKERS DO NOT TALLY FROM MONTH TO MONTH AND TH AT NO COMPLETE DETAILS AND ADDRESS OF THE PERSONS TO WHOM WAGES HA VE BEEN PAID HAVE BEEN FILED. COPY OF THE WAGE REGISTER IS FILED BEFO RE US IN WHICH ALSO THE COMPLETE ADDRESSES OF THE WORKERS HAVE NOT BEEN GIV EN. IT WOULD, THEREFORE, PROVE THAT IN THE ABSENCE OF PROPER DETA ILS AND EVIDENCES, THE AO HAS RIGHTLY NOTED THAT THE ASSESSEE HAS INFLATED THE EXPENSES OF WAGES TO REDUCE THE INCOME. HOWEVER, CONSIDERING TH E INCOME DECLARED BY THE ASSESSEE FROM A SMALL BUSINESS IN A SUM OF R S.1,98,383/- IN THE RETURN OF INCOME, WE ARE OF THE VIEW THAT ADDITION IS STILL ON EXCESSIVE SIDE. WE ACCORDINGLY, RESTRICT THE ADDITION ON THIS ISSUE TO RS.50,000/- ONLY AS AGAINST ADDITION MADE BY THE AO IN A SUM OF RS.1,17,720/-. AS A RESULT, GROUND NO.2 OF THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. 11. IN THE RESULT, GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND GROUND NO.3 OF THE APPEAL OF THE ASSESS EE IS ALLOWED. 12. THERE IS NO OTHER ISSUE INVOLVED IN THIS APPEAL . ITA NO.2981/AHD/2009 SHRI MEHILAL SHIVJOR YADAV VS ITO W 2, ANAND 6 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-10-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01-10--2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD