Smt. Kajalben Arunbhai Satani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(2), RAJKOT-GUJARAT

ITA 303/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0153 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH: RAJKOT . .. . . . . . . .. . . . . . # # # # BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTA VA AM ITA NO. 302/RJT/2011 / ASSESSMENT YEAR 2006-07 SMT. USHABEN RAJESHBHAI SATANI V. ITO PROP. OF M/S. SHREENATH RING PROCESS WARD-1(2) RAJKOT RAJKOT PAN : AYAPS 7754F ITA NO. 303/RJT/2011 / ASSESSMENT YEAR 2006-07 SMT. KAJALBEN ARUNBHAI SATANI V. ITO PROP. OF M/S. VEERA BEARINGS WARD-1(2) RAJKOT RAJKOT PAN : AYAPS 7751A DATE OF HEARING: 15.10.2012 DATE OF PRONOUNCEMENT: 30.10.2012 FOR THE ASSESSEE: D M RINDANI, FCA FOR THE REVENUE: AVINASH KUMAR DR / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: APPEAL BEARING ITA NO. 302/RJT/2011 HAS BEEN FILED BY SMT. USHABEN RAJESHBHAI SATANI AGAINS T THE ORDER PASSED BY THE CIT(A) ON 08-04-2011 WHILE THE OTHER APPEAL BEARING ITA NO.030/RAJT/2011 HAS BEEN FILED BY SMT. KAJALBEN A. SATANI AGAINST THE O RDER PASSED BY THE CIT(A) ON THE SAME DATE, I.E., 08-04-2011. BOTH THE APPEALS RELAT E TO ASSESSMENT YEAR 2006-07. FACTUAL MATRIX OF THE CASE AND THE GROUNDS OF APPEA L TAKEN BY BOTH THE ASSESSEES ARE ALMOST IDENTICAL. THEY ARE THEREFORE BEING DIS POSED OF BY A CONSOLIDATED ORDER. 2. IN ITA NO.302/RJT/2011, THE ASSESSEE HAS TAKEN T HE FOLLOWING GROUND OF APPEAL:- LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE ADDITION OF RS.4,33,000/- U/S.68 OF THE ACT. THE SA ME MAY PLEASE BE CANCELLED TO MEET THE ENDS OF JUSTICE. 3. IN ITA NO.303/RJT/2011 THE ASSESSEE HAS TAKEN TH E FOLLOWING GROUND OF APPEAL:- LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE ADDITION OF RS.5,14,100/- U/S.68 OF THE ACT. THE SA ME MAY PLEASE BE CANCELLED TO MEET THE ENDS OF JUSTICE. 2 ITA 302 & 303/RJT/2011 4. AT THE TIME OF HEARING, THE LD. AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE APPEAL OF SMT. USHABEN RAJESHBHA I SATANI ITA NO.302/RJT/2011 MAY BE TAKEN AS A LEAD CASE AND THE DECISION TAKEN THEREIN SHOULD BE FOLLOWED AND APPLIED MUTATIS MUTANDIS TO DISPOSE OF THE OTHER AP PEAL BEARING ITA NO.303/RJT/2011. IN THIS VIEW OF THE MATTER, THE AP PEAL FILED BY SMT. USHABEN RAJESHBHAI SATANI IS TAKEN UP AS A LEAD CASE AND TH E DECISION TAKEN IN THAT CASE WOULD APPLY TO THE OTHER CASE, I.E., APPEAL FILED B Y SMT. KAJALBEN A. SATANI ALSO. 5. SMT. USHABEN RAJESHBHAI SATANI IS AN INDIVIDUAL. SHE CLAIMS TO BE ENGAGED IN THE BUSINESS OF PROCESSING RINGS FOR BEARINGS AS A PROPRIETOR IN THE NAME OF M/S. SHRINATH RING PROCESS. SHE FILED HER RETURN OF INCO ME FOR THE YEAR UNDER APPEAL RETURNING TOTAL INCOME AT RS.1,49,660/- ON 31-12-20 06. AFTER PROCESSING, THE RETURN WAS TAKEN UP FOR SCRUTINY DURING WHICH IT WAS FOUND THAT THE ASSESSEE HAD CREDITED A SUM OF RS.4,33,000/- IN HER CASH BOOK MAINTAINED FOR THE YEAR UNDER APPEAL. ON BEING CALLED UPON TO EXPLAIN THE NATURE AND SOURCE OF CASH CREDIT FOUND RECORDED IN HER BOOKS, THE ASSESSEE EXPLAINED THAT SHE HAD GIVE N LOANS AND ADVANCES AMOUNTING TO RS.4,33,000/- TO VARIOUS PERSONS IN TH E IMMEDIATELY PRECEDING YEAR WHICH WERE REPAID BY THEM IN THE YEAR UNDER APPEAL AND CONSEQUENTLY THE AMOUNT SO RECEIVED FROM THEM WAS RECORDED IN THE CASH BOOK . THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION. HE THEREFORE TR EATED THE IMPUGNED SUM AMOUNTING TO RS.4,33,000/- AS UNEXPLAINED U/S.68 OF THE INCOME-TAX ACT AND ACCORDINGLY BROUGHT THE SAME TO THE CHARGE OF INCOM E TAX IN THE YEAR UNDER APPEAL, WITH THE FOLLOWING REASONS:- 3.1 I HAVE CONSIDERED THE SUBMISSION OF THE ASSESS EE CAREFULLY WHICH IS NOT FOUND TO BE SATISFACTORY IN RESPECT OF CASH CRE DIT AGGREGATING TO RS.433000/- FOUND TO BE CREDITED IN THE PREVIOUS YE AR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ACCEPTANCE FOR THE REASONS DISCUSSED HEREUNDER: ON PERUSAL OF THE COPY OF THE BALANCE SHEET FOR A.Y . 2005-06, IT IS SEEN THAT THE ASSESSEE HAS SHOWN RS.433000/- AS RECEIVABLE UN DER THE HEAD LOAN AND DEPOSIT. THE ASSESSEE HAS NOT MENTIONED THE NA MES TO WHOM THE ADVANCE/LOAN GIVEN ONLY SHOWN AS RECEIVABLE UNDER T HE HEAD LOAN AND DEPOSIT. THE ASSESSEE HAS NOT SUBMITTED LEDGE ACCO UNTS OF THE PERSONS TO WHOM LOANS WERE ADVANCED IN AY 2005-06, NOR SHE SUB MITTED ANY PROOF I.E. COPY OF CASH BOOK STATING THE NAME, ADDRESS, DATE ON WHICH ADVANCE MADE TO ESTABLISH THAT THE LOANS WERE ACTUALLY ADVANCED TO THE PARTICULAR PERSONS(S). SIMPLY FILING COPY OF BALANCE SHEET MER ELY STATING THEREIN AMOUNT AND NAME OF THE HEAD UNDER WHICH IT WAS ACCOUNTED F OR, DOES NOT ESTABLISH THAT THE ASSESSEE HAD ACTUALLY ADVANCE CERTAIN AMOU NTS TO CERTAIN PERSONS. THE ASSESSEE HAD ADOPTED A MERCANTILE SYSTEM OF ACC OUNTING AND AS PER SYSTEM OF ACCOUNTING, WHENEVER ANY AMOUNT IS ADVANC ED TO CERTAIN PERSONS, 3 ITA 302 & 303/RJT/2011 A LEDGE ACCOUNT OF THAT PERSON IS OPENED AND COMPLE TE DETAILS VIZ. AMOUNT, DATE ON AMOUNT IS ADVANCED, MODE OF PAYMENT, NAME A ND ADDRESS OF THE PERSON ETC. ARE RECORDED. THE ASSESSEE HAD NOT FUR NISHED ALONG WITH THE RETURN OF INCOME FOR AY 2005-06 COPIES OF LEDGE ACC OUNTS OF THE PERSONS TO WHOM LOANS ARE ADVANCED NOR SUBMITTED ANY DETAILS V IZ. AMOUNT, DATE ON AMOUNT IS ADVANCE, MODE OF PAYMENT, NAME AND ADDRES S OF THE PERSON ETC. 3.2 NOW THE ASSESSEE HAS COME UP WITH THE DETAILS O F LOANS ADVANCE IN FY 2005-06 WHICH IS ALSO FILED ONLY AFTER CALLING F OR THEM. THE EVIDENCES FILED BY THE ASSESSEE ARE NOTHING BUT THE DETAILS PREPARE D AFTER THOUGHT AND THEY ARE NOT VERIFIABLE FROM THE BOOKS OF THE ASSESSEE. THE EVIDENCES SUBMITTED BY THE ASSESSEE ARE NOTHING MORE THAN PIECEMEAL OF PAPERS AND THEY CAN NOT BE REGARDED AS COGENT EVIDENCES AND LIABLE TO B E REJECTED. 3.3 THE FACTS ARE THAT THE ASSESSEE IS ENGAGED IN T HE FRAUDULENT ACTIVITIES OF INTRODUCING HER UNACCOUNTED MONEY INTO BUSINESS, WHENEVER IT IS NEEDED, IN THE GUISE OF LOANS AND DEPOSIT. ACTUALLY, ASSES SEE MERELY DEBITED THE ACCOUNT OF LOAN AND DEPOSIT AND DELIBERATELY DID NO T MAINTAIN INDIVIDUAL LEDGE OF EACH LOAN/DEPOSIT NOR MAINTAINED COMPLETED DETAI LS OF THE PERSONS TO WHOM LOAN IS ADVANCED SO THAT WHENEVER MONEY IS NEE DED, THE LOAN AND DEPOSIT ACCOUNT CAN BE CREDITED. 3.4 IN LIGHT OF THE ABOVE DISCUSSION, IT IS CLEAR T HAT THE ASSESSEE COMPLETELY FAILED TO DISCHARGE THE ONUS LYING ON HE R TO SUBSTANTIATE THE CASH FOUND TO BE CREDITED IN HER BOOKS OF ACCOUNTS FOR T HE CURRENT YEAR. IT IS HELD IN THE CASE OF BHARAT PVT. LTD. VS. CIT (1978) III ITR 951 (CAL.) CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD. (1991) 187, ITR 596, 599 (CD.) THAT MERE FILING OF CONFIRMATION LETTERS DOES NOT DISCHA RGE THE ONUS THAT LIES ON THE ASSESSEE. IN MY OPINION, THE EXPLANATION AND EVIDEN CES FILED BY THE ASSESSEE TO SUBSTANTIATE THE CASH CREDIT ARE PREPAR ED AFTER THOUGHT AND I THEREFORE REJECTED THEM ALL. IT WOULD NOT BE OUT O F PLACE TO REFER THE DECISION SUPREME COURT IN THE CASE OF SREELEKHA BENARJEA & O THERS (49 ITR 112) AND SURESH DAYAL (214 ITR 801) WHEREIN IT WAS HELD THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR IT MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE FOR ANY PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE THEREOF IN THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFA CTORY. AND AS SUCH, NOT HAVING BEEN SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF CASH CREDIT FOUND IN HER BOOKS OF ACCOUNTS, I PR OPOSE TO ADD RS.433000/- TO HER TOTAL INCOME AS UNEXPLAINED CASH CREDIT AS P ER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961. 6. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE IMP UGNED ADDITION MADE BY THE AO, WITH THE FOLLOWING OBSERVATIONS:- 4 ITA 302 & 303/RJT/2011 6.0 I HAVE THOROUGHLY AND CAREFULLY CONSIDERED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, FACTS OF THE CASE AND EVIDENCES FURNISHED BY THE APPELLANT. I AGREE WITH THE AO THAT THE TRANSAC TIONS CLAIMED BY THE ASSESSEE ARE TOTALLY UNBELIEVABLE AND FAIL THE TEST OF HUMAN PROBABILITIES TOTALLY. THE FOLLOWING UNBELIEVABLE FACTS AND CIRCU MSTANCES ARE CLAIMED BY THE APPELLANT:- A. 27 DIFFERENT RELATIVES AND FRIENDS FROM PATEL CO MMUNITY WERE NEEDING MONEY AT ALMOST THE SAME TIME. B. THEY ALL TOOK LOANS OF LESS THAN RS.20,000/- EAC H AND WERE IN A POSITION TO RETURN THE AMOUNT ON DEMAND. C. THE ASSESSEE WHO HAD BANK ACCOUNTS AND WAS EARNI NG INTEREST CHOSE TO FIND SO MANY DIFFERENT PEOPLE IN NEED OF M ONEY, ALTHOUGH SHE WAS NOT GOING TO EARN INTEREST. D. SIMILAR TRANSACTIONS ARE CLAIMED IN THE CASE OF CLOSE RELATIVE OF THE ASSESSEE I.E. SMT. KAJALBEN ARUNBHAI SATANI. SHE AL SO FOUND SO MANY PEOPLE IN NEED OF MONEY FROM THE SAME SET OF C LOSE RELATIVES. E. IN THE BOOKS OF ACCOUNTS A COMMON ACCOUNT IS MAD E FOR ALL THE SO CALLED ADVANCES AND THE AMOUNTS ARE CREDITED TO THE COMMON ACCOUNT WITHOUT EVEN SPECIFYING THE NAME OF THE PER SON FROM WHOM IT IS CLAIMED TO HAVE BEEN RECEIVED BACK. F. IT CANNOT BE ATTRIBUTED TO BE A MISTAKE OF AN AC COUNTANT, BECAUSE NO ACCOUNTS CAN BE KEPT WITHOUT KNOWING TO WHOM ADV ANCES HAS BEEN MADE IN THE FIRST INSTANCE. HOW CAN A PERSON OR ACCOUNTANT KNOW FROM WHOM THE LOAN IS TO BE COLLECTED BACK, IF EVEN IN THE JOINT ACCOUNT OF ALL ADVANCES THE NAME OF DEBTORS I S EVEN NOT MENTIONED. THE WHOLE STORY IS CONCOCTED, AND FAILS TEST OF HUM AN PROBABILITIES AS GIVEN BY THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DEAYAL 214 ITR 801 AND SHREELEKHA BENARJEE 49 ITR 112. LIKE IN THE CASE O F SHREELEKHA BENARJEE, THE SOURCE OF CREDIT THIS YEAR CAN NOT BE BELIEVED TO BE CASH RECEIVED BACK FROM SO MANY DIFFERENT PERSONS AS CLAIMED. THE EXP LANATION OF CREDIT THIS YEAR OF RS.4,33,000/- IS UNBELIEVABLE AND THEREFORE THE ADDITION AS MADE BY THE AO U/S.68 IS JUSTIFIED FULLY AND IS CONFIRMED. 7. AGGRIEVED BY THE ORDER PASSED BY THE CIT (A), TH E ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 5 ITA 302 & 303/RJT/2011 8. IN SUPPORT OF APPEAL, A PAPER-BOOK CONTAINING 60 PAGES HAS BEEN FILED BEFORE US. RELYING HEAVILY UPON THE COPY OF BALANCE SHEET AND ACCOUNTS FOR THE YEAR ENDED 31-03-2005, THE LD. AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE LOANS AND ADVANCES GIVEN BY THE ASSESSEE IN THE IMM EDIATELY PRECEDING YEAR WERE DULY RECORDED BY HER IN HER BOOKS OF ACCOUNT AND TH EREFORE THE CLAIM OF THE ASSESSEE THAT LOANS AND ADVANCES WERE GIVEN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WAS GENUINE. HE ALSO INVITED OUR AT TENTION TO COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 AND SUBMITTED THAT THE ASSESSEE HAD FILED HER INCOME TAX RETURN A LSO FOR THE IMMEDIATELY PRECEDING YEAR WHICH SHOWS THAT HER CLAIM WAS GENUINE. HE ALS O INVITED OUR ATTENTION TO LIST OF DEPOSITORS WITH THE ADDRESSES PLACED AT PP 12-14 OF THE PAPER-BOOK AND SUBMITTED THAT THE ASSESSEE HAD FURNISHED COMPLETE DETAILS WI TH REGARD TO THE AMOUNTS GIVEN BY HER AS LOANS AND ADVANCES. HE ALSO REFERRED TO T HE COPIES OF CONFIRMATIONS OF DEPOSITORS PLACE AT PP 15-42 OF THE PAPER-BOOK AND SUBMITTED THAT THE DEPOSITORS HAD ALSO CONFIRMED THE GENUINENESS OF LOAN GIVEN BY THE ASSESSEE TO THEM. ON THE STRENGTH OF THE AFORESAID DOCUMENTS, THE LD. AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE CLAIMED THAT THE ASSESSEE HAD GIVEN COGENT MATERIALS TO ESTABLISH THAT LOANS AND ADVANCES WERE GIVEN BY HER TO VARIOUS PER SONS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AND THEREFORE THE IMPUGNE D CASH CREDITS RECORDED IN HER CASH BOOK REPRESENTED THE AMOUNTS RECEIVED BY H ER FROM THE DEPOSITORS ON REPAYMENT. ACCORDING TO HIM, THE ASSESSEE HAS COMPL ETELY DISCHARGED HER BURDEN TO EXPLAIN THE NATURE AND SOURCE OF CASH CREDITS AN D THEREFORE BOTH THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE. 9. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDERS PASSED BY THE AO AND THE CIT (A). 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THE MATERIALS PLACED ON RECORD. THE ASSESSEE CLAIMS TO HAVE FIRST GIVEN THE IMPUGNED SUM AS LOANS AND ADVANCES TO VARIOUS DEBTORS IN THE IMMEDI ATELY PRECEDING ASSESSMENT YEAR. IN SUPPORT OF HER CLAIM, SHE HAS FILED CONFIR MATIONS. ALL THE CONFIRMATIONS ARE IDENTICALLY WORDED. THE AMOUNT OF LOAN REPORTEDLY G IVEN BY THE ASSESSEE IS IN CASH AND NONE OF THEM EXCEEDS RS.20,000/- FOR THE REASON THAT THE LOANS EXCEEDING RS.20,000/- COULD NOT HAVE BEEN GIVEN IN CASH. THER EFORE, THE AMOUNTS OF LOAN WERE KEPT BELOW RS.20,000/-. THE LOAN TRANSACTIONS HAVE NOT BEEN ROUTED THROUGH BANKING CHANNELS. PERUSAL OF CONFIRMATION LETTERS P URPORTEDLY SIGNED BY DEBTORS SHOWS THAT ALL THE 27 DEBTORS WERE RELATIVES AND FR IENDS FROM ONLY ONE COMMUNITY AND THAT ALL OF THEM CLAIMED TO HAVE RECEIVED THE M ONEY FROM THE ASSESSEE ALMOST AT THE SAME TIME. AS OBSERVED BY THE CIT (A), A COM MON ACCOUNT WAS MADE FOR ALL THE SO CALLED ADVANCES AND THE AMOUNTS WERE CREDITE D TO THE COMMON ACCOUNT IN THE BOOKS WITHOUT SPECIFYING THE NAME OF THE PERSON FROM WHOM THEY WERE RECEIVED BACK. THE MATERIALS BROUGHT ON RECORD DO NO INSPIRE CONFIDENCE IN THE CLAIM OF THE 6 ITA 302 & 303/RJT/2011 ASSESSEE THAT THE IMPUGNED SUMS REPRESENTED REPAYME NT OF LOANS AND ADVANCES GIVEN TO THE DEBTORS IN THE IMMEDIATELY PRECEDING Y EAR AS GENUINE. IN OUR VIEW, THE LD. CIT(A) HAS GIVEN COGENT REASONS FOR CONFIRMING THE ORDER PASSED BY THE AO. IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE CI T(A) IS ENDORSED. RESULTANTLY, THE APPEAL FILED BY SMT. USHABEN RAJESHBHAI SATANI IS D ISMISSED. 11. FOLLOWING THE ORDER PASSED IN THE CASE OF SMT. USHABEN RAJESHBHAI SATANI, THE APPEAL FILED BY SMT. KAJALBEN ARUNBHAI SATANI I S ALSO DISMISSED. ( * 30.10.2012 ( ORDER PRONOUNCED ON 30.10-2012 SD/- SD/- ( . . / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /RAJKOT: 30-10-2012 NVA/- ( (( ( -. -. -. -. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1.2 / APPELLANT- SMT. USHABEN RAJESHBHAI SATANI, RAJKO T 2 -42 / RESPONDENT- THE INCOME-TAX OFFICER, WD.-1(2), RA JKOT 3. 8 / CONCERNED CIT- 4. 8- / CIT (A), GANDHINAGAR 5. . -, , / DR, ITAT, RAJKOT 6. / GUARD FILE / BY ORDER TRUE COPY. SENIOR PRIVATE SECRETARY, ITAT , RAJKOT