M/s. Ramesh Industries, Baroda V. The Income tax Officer, Ward-2, Godhra

ITA 3090/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0594 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2009
• Assessment Year: 1992-1993
• Appeal Filed On: 16-07-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITI SAMANT SENIOR
• Assessee Lawyers: SAURABH ACHARYA
• Section: 143(3); 68; 145; 148; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' [CAMP AT BARODA] (BEFORE S/SHRI P K BANSAL AND D T GARASIA) ITA NO.3090/AHD/2007 (ASSESSMENT YEAR:- 1992-93) M/S RAMESH INDUSTRIES, 1936, GIDC HALOL, PANCHMAHAL V/S THE INCOME-TAX OFFICER, WARD-2, GODHRA [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI SAURABH ACHARYA, AR RESPONDENT BY:- SMT. SMITI SAMANT, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 02-04- 2007 FOR ASSESSMENT YEAR (AY) 1992-93 BY WHICH THE CIT(A) HAS CONFIRMED THE ADDITION OF RS.8,33,000/- MADE BY THE ASSESSING OFFICER (AO) U/S 68 OF THE INCOME-TAX ACT , 1961 [THE ACT FOR SHORT]. 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SUBMITTED THE RETURN ON 18-07-2004 DECLARING TOTAL INCOME OF RS.37,791/-. ACTION U/S 148 WAS TAKEN TO REGULAR TH E RETURN AND ACCORDINGLY ASSESSMENT WAS COMPLETED REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE ON INCOME OF RS.10,55,800/- MAKING THE ADDITION IN THE GROSS PROFIT AMOUNTING TO RS.1,84,8 29/- AND ALSO FOR CASH CREDITS U/S 68 AMOUNTING TO RS.8,30,000/-. THE CIT(A) 2 VIDE HIS ORDER DATED 26-04-1996 DELETED BOTH THE AD DITIONS. WHEN THE MATTER WENT BEFORE THE TRIBUNAL, THE TRIBUNAL R EDUCED THE ESTIMATED GROSS PROFIT FROM 24% TO 21% IN RESPECT O F CASH CREDITS. THE TRIBUNAL RESTORED THE MATTER TO THE AO WITH THE FOLLOWING DIRECTIONS: WE HAVE HEARD THE LD. REPRESENTATIVE OF THE PARTIE S. WE FIND THAT THE CIT(A) HAS ADMITTED FRESH EVIDENCE AND MATERIAL WHI CH WERE NOT BEFORE THE AO; WITHOUT PROVIDING OPPORTUNITY OF HEA RING TO THE AO. UNDER THE CIRCUMSTANCES AND IN VIEW OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN CASE OF CIT V VALIMOHMED AHMEDBHAI 13 4 ITR 214 (GUJ) WE SEND BACK THIS ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME IN AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY THE AO AGAIN COMPLETED THE ASSESSMENT B Y MAKING THE ADDITION OF RS.8,33,000/- U/S 68 OF THE ACT. TH E ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED T HE ADDITION AS PER THE OBSERVATIONS GIVEN UNDER PARAS 17 TO 22 OF HIS ORDER. THE ASSESSEE HAS COME IN APPEAL BEFORE US. 3 THE LEARNED AR BEFORE US VEHEMENTLY CONTENDED TH AT THE ASSESSEE HAS GIVEN THE NAMES AND ADDRESSES OF E ACH OF THE DEPOSITORS ALONG WITH THEIR AGE, NUMBER OF FAMILY M EMBERS, LAND HOLDING IN ACRES, THEIR INCOME OTHER THAN AGRICULTU RAL INCOME, AS WELL AS AGRICULTURAL INCOME, QUANTUM OF SAVINGS. OU R ATTENTION WAS DRAWN TOWARDS PAGE 19 OF THE PAPER BOOK. IT WAS ALSO POINTED OUT THAT SIX PERSONS ARE THE CLOSE RELATIVE S AND RELATED TO THE SAME FAMILY GROUP FROM WHOM THE ASSESSEE HAS RE CEIVED THE DEPOSITS FOR RS.20,000/-, RS.30,000/-, RS.35,000/-, RS.15,000/-, RS.17,000/- AND RS.18,000/-. THE ASSESSEE HAS DULY SUBMITTED THE 3 AFFIDAVITS IN THE SECOND ROUND OF APPEAL IN RESPECT OF EACH OF THE DEPOSITORS BEFORE THE AO. NONE OF THE DEPOSITORS WA S CALLED FOR CROSS EXAMINATION AND THE AFFIDAVITS WERE NOT ACCEP TED BY THE AO. THUS, IT WAS CONTENDED THAT THE ASSESSEE HAS PR OVED IDENTITY AS WELL AS THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. ON A QUERY FROM THE BENCH, THE LEARNED AR WAS FAIR ENOUGH THAT OUT OF 20 CASH CRED ITORS ONLY TWO CREDITORS APPEARING AT SR. NOS.16 AND 17, VIZ., VASANTIBEN P JAIN AND CHANDRIKABEN G JAIN WERE HAVING PA NUMBERS BUT IT WAS ALSO POINTED OUT THAT NEMICHAND S JAIN, JYOTIBE N N JAIN AND SUMITRABEN J SHAH ARE ALSO INCOME-TAX ASSESSEES. TH US, IT WAS CONTENDED THAT NO ADDITION SHOULD BE MADE. FURTHER, AS AN ALTERNATIVE CONTENTION, IT WAS SUBMITTED THAT THERE WAS TRADING ADDITION IN AYS 1991-92 AND 1992-93 TO THE EXTENT O F RS.1,81,974/- AND RS.1,84,829/-. THE ASSESSEE SHOUL D BE ALLOWED TELESCOPING FOR THE ADDITIONS AGAINST THE ADDITION OF CASH CREDITS. THE LEARNED DR, ON THE OTHER HAND, VEHEMENTLY CONTE NDED THAT THE ORDER OF THE AO SHOULD BE SUSTAINED. THE ONUS I S ON THE ASSESSEE TO PROVE THE IDENTITY, CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTIONS. ALL THE PAYMENTS HAVE BEEN REC EIVED IN CASH FROM VARIOUS PARTIES. THEY ARE NOT REGULAR ASSESSEE S EXCEPT IN THE CASES OF TWO CREDITORS. THE ASSESSEE HAS NOT DISCHA RGED HIS ONUS TO THE SATISFACTION OF THE AO. THEREFORE, THE ADDIT ION SHOULD BE SUSTAINED. 4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE O RDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT IN THIS CASE THE O RIGINAL 4 ASSESSMENT HAS BEEN COMPLETED U/S 143(3) BY REJECTI NG THE BOOKS OF ACCOUNT U/S 145 OF THE ACT AND MAKING THE ADDITI ON OF RS.1,84,829/-. ONCE THE ASSESSMENT HAS BEEN COMPLET ED BY ESTIMATING THE INCOME OF THE ASSESSEE, THERE CANNOT BE ANY SEPARATE ADDITION AS THE EXISTENCE OF BOOKS OF ACCO UNT CANNOT BE ACCEPTED FOR THE PURPOSE OF INVOKING OTHER PROVISIO NS OF THE ACT. IN FACT NO ADDITION COULD HAVE BEEN MADE U/S 68 OF THE ACT BUT SINCE THE ISSUE RELATING TO THE ADDITION U/S 68 HAS TRAVELED TO THE TRIBUNAL IN EARLIER ROUND OF LITIGATION AND THE TRI BUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE O PPORTUNITY TO THE ASSESSEE, AND THE CIT(A) HAS ADMITTED THE FACTS AND EVIDENCE / MATERIAL WHICH WERE NOT BEFORE THE AO. THE ASSESS EE HAS ALSO NOT TAKEN ANY PLEA BEFORE THE TRIBUNAL IN THE FIRST ROUND OF APPEAL. WE, THEREFORE, CANNOT DELETE WHOLE OF THE A DDITION MADE U/S 68 OF THE ACT, AS THIS PLEA WAS NOT BEFORE US. 5 NOW COMING TO THE MERIT OF THE CASE, WE FIND FOR CE IN THE SUBMISSIONS OF THE LEARNED AR THAT HE SHOULD BE GRANTED TELESCOPING FOR THE GP ADDITION SUSTAINED IN THE CA SE OF THE ASSESSEE. THE LEARNED AR CLAIMED THAT DURING AY 199 2-93 THE ADDITION TO THE EXTENT OF RS.1,81,974/- WAS SUSTAIN ED WHILE WE NOTED IN THE AY 1992-93 THE GP ADDITION WAS MADE BY THE AO TO THE EXTENT OF RS.1,84,829/- AT THE RATE OF 24% WHIL E THE TRIBUNAL HAS REDUCED IT TO 21% OF THE RECEIPT OF THE ASSESSE E. THE QUANTUM OF THE ADDITION SUSTAINED IS NOT BEFORE US. WE DIRE CT THE AO TO REDUCE THE ADDITION SUSTAINED BY US U/S 68 OF THE A CT OUT OF THE AMOUNT OF RS.8,33,000/- BY THE AMOUNT FOR WHICH THE ADDITION 5 HAS BEEN SUSTAINED BY THE TRIBUNAL FOR AYS 1991-92 AND 1992-93 IN RESPECT OF GROSS PROFIT. 6 SECTION 68 LAYS DOWN RULE OF EVIDENCE. THE ONUS IS ON THE ASSESSEE TO PROVE THE CASH CREDITS, IDENTITY AN D CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUIN ENESS OF THE TRANSACTIONS. IN THIS CASE WE NOTED THAT THE ASSESS EE HAS RECEIVED THE DEPOSITS IN CASH FROM 20 PARTIES APPEARING AT P AGE 19 OF THE PAPER BOOK OUT OF WHICH ONLY 6 PARTIES VIZ., PARIMA L V SHAH, VASANTIBEN P JAIN, CHANDRIKABEN G JAIN, NEMICHAND S JAIN, JYOTIBEN N JAIN AND SUMITRABEN J SHAH ARE THE PERSO NS WHO ARE INCOME-TAX ASSESSEES. THEIR IDENTITY, IN OUT OPINIO N, CANNOT BE DOUBTED. THE ASSESSEE HAS GIVEN THE INCOME IN RESPE CT OF EACH OF THE PARTIES FROM WHOM THE DEPOSITS HAVE BEEN RECEIV ED, THEIR HOUSEHOLD EXPENSES. EXCEPT THESE PARTIES, THE PARTI ES AT SR. NOS. 1 TO 14 ARE NON-INCOME TAX PAYEES AND IN EACH CASE, THE MAIN SOURCE OF INCOME IS THE AGRICULTURAL INCOME. ANNUA L SAVING IN THE CASE OF MANAJI B PRAJAPATI IS RS.10,000/- WHILE HE ADVANCED RS.20,000/-. IN THE CASE OF VARDHASINGH D PRAJAPSTI THE SAVING IS RS.16,000/- WHILE HE ADVANCED RS.20,000/-. IN THE C ASE OF HIRABHAI D PRAJAPATI THE SAVING IS RS.24,000/- WHIL E HE ADVANCED RS.20,000/-. IN THE CASE OF SOMAJI D PRAJAPATI, THE SAVING IS RS.8,000/- TO RS.10,000/- WHILE HE ADVANCED RS.20,0 00/-. IN THE CASE OF VIRJI P ZALA THE SAVING IS RS.5000/- TO RS. 7000/- WHILE HE ADVANCED RS.25,000/-. IN THE CASE OF VARDHASINGH A ZALA, THE AMOUNT OF SAVING IS NOT MENTIONED BY THE ASSESSEE. SIMILARLY IN THE CASE OF KAJI S ZALA, WHO ADVANCED RS.25,000/-, THE AMOUNT OF SAVING IS NOT MENTIONED. IN THE CASE OF KESARSINGH P ZALA, THE 6 AMOUNT ADVANCED IS RS.1,00,000/- WHILE SAVING IS RS .80,000/-TO RS.90,000/-. IN THE CASE OF JIVAJI M PRAJAPATI THE AMOUNT ADVANCED IS RS.31,000/- WHILE SAVING IS RS.20,000/- . IN THE CASE OF RUPAJI M PRAJAPATI THE AMOUNT ADVANCED IS RS.77, 000/- WHILE SAVING IS RS.35,000/-. IN THE CASE OF AAYADANJI M P RAJAPATI NO SAVING WAS POINTED OUT. IN THE CASE OF MESHRU A PRA JAPATI THE AMOUNT ADVANCED IS RS.35,000/- AND THE SAVING IS RS .28,000/-. IN THE CASE OF VIRJI V PRAJAPATI THE AMOUNT ADVANCED I S RS.1,00,000/- WHILE SAVING IS RS.80,000/-. IN THE C ASE OF KALAJI A ZALA THE AMOUNT ADVANCED IS RS.1,00,000/- AND THE S AVING IS NOT MENTIONED. IN OUR OPINION, THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN RESPECT OF THE FOLLOWING PARTIES AND TO THE EXTENT THE DEPOSIT IS MORE THAN SAVING, WE CONFIRM THE ADDITIO N DETAILED AS UNDER:- SR NO. NAME OF DEPOSITOR AMOUNT OF DEPOSIT (RS.) SAVINGS (RS.) ADDITION CONFIRMED 1 MANAJI B PRAJAPATI 20,000 10,000 10,000 2 VARDHASINGH D PRAJAPATI 20,000 16,000 TO 17000 4,000 3 HIRABHAI D PRAJAPATI 20,000 24,000 - 4 SOMAJI D PRAJAPATI 20,000 8000 TO 10000 12,000 5 VIRJI P ZALA 25,000 5000 TO 7000 20000 6 VARDHASINGH A ZALA 1,00,000 1,00,000 7 KANJI S ZALA 25,000 25,000 8 KESARSINGH P ZALA 1,00,000 80,000 20,000 7 9 JIVAJI M PRAJAPATI 31,000 20,000 11,000 10 RUPAJI M PRAJAPATI 77,000 35,000 42,000 11 AAYADANJI M PRAJAPATI 25,000 25,000 12 MESHRU A PRAJAPATI 35,000 28,000 7,000 13 VIRJI V PRAJAPATI 1,00,000 80,000 20,000 14 KALAJI A ZALA 1,00,000 1,00,000 TOTAL 3,78,000 15 PARIMAL V SHAH 20,000 20,000 16 VASANTIBEN P JAIN 30,000 15,000 17 CHANRIKABEN G JAIN 35,000 17,000 18 NEMICHAND S JAIN 18,000 18,000 19 JYOTIBEN N JAIN 17,000 20 SUMITRABEN J SHAH 18,000 OUT OF THE DEPOSITS RECEIVED FROM CLOSE RELATIVES AS CONTENDED BY THE LEARNED AR, VIZ. PARIMAL V SHAH RS.20,000/ -, VASANTIBEN P JAIN RS.30,000/-, CHANDRIKABEN G JAI N RS.35,000/-, NEMICHAND S JAIN RS.15,000/-, JYOTIB EN N JAIN RS.17,000/- AND SUMITRABEN J SHAH RS.18,000/-, WE NOTED THAT IT IS ONLY VASANTIBEN P JAIN AND CHANDRIKABEN G JAI N ARE THE PERSONS WHO ARE HOLDING PA NUMBERS, THEREFORE, THE ADDITIONS MADE IN RESPECT OF THESE TWO PERSONS AMOUNTING TO R S.30,000/- AND RS.35,000/- STAND DELETED. SO FAR AS OTHER PERS ONS ARE CONCERNED, WE ARE OF THE OPINION THAT IN THE CASE O F THE CLOSE 8 RELATIVES, THE BURDEN ON THE ASSESSEE IS MUCH. WE A CCORDINGLY CONFIRM THE ADDITIONS IN RESPECT OF PARIMAL V SHAH RS.20,000/-, NEMICHAND S JAIN RS.15,000/-, JYOTIBEN N JAIN R S.17,000/- AND SUMITRABEN J SHAH RS.18,000/-. THUS, THE ADD ITION OF RS.3,78,000/- + RS.70,000/- TOTALING RS.4,48,000/- IS CONFIRMED SUBJECT TO OUR DIRECTIONS IN THE EARLIER PARAGRAPH THAT THIS SHOULD BE REDUCED BY THE ADDITION SUSTAINED FOR THE AYS 19 91-92 AND 1992-93 AT THE RATE OF 21% OF THE GROSS RECEIPTS IN THE GROSS PROFIT. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 03-11-2 009 SD/- SD/- (D T GARASIA) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 03-11-2009 COPY OF THE ORDER FORWARDED TO : 1. M/S RAMESH INDUSTRIES, 1936, GIDC HALOL, PANCHMA HAL 2. THE ITO, WARD-2, GODHRA 3. CIT CONCERNED 4. CIT(A)-VI, BARODA 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA