The DCIT, Circle-6, Surat V. M/s. Swastik Stone Quarry, Tapi

ITA 3232/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5324 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Loose papers; Source of fund
• Section: 69C; 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3232/AHD/2011 (ASSESSMENT YEAR: 2008-09) THE D.C.I. T CIRCLE-6, SURAT V/S M/S SWASTIK STONE QUARRY VILL-KUMKUVA, SONGADH FORT, TAPI (APPELLANT) (RESPONDENT) PAN: AAMFS 3478E APPELLANT BY : SHRI J.P. JHANGID SR. D.R . RESPONDENT BY : SHRI DIVYAKANT PARIKH ( )/ ORDER DATE OF HEARING : 09-01-2014 DATE OF PRONOUNCEMENT : 07 -02-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A)-IV, SURAT DATED 17.08.2011 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILD ING AND CONSTRUCTION ACTIVITIES. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 03.03.2008 AND THE STAT EMENT OF SHRI HARISHBHAI THAKURBHAI MISTRY, BROTHER OF THE PARTNE R OF THE ASSESSEE ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 2 WAS RECORDED. SHRI HARISHBHAI THAKURBHAI MISTRY AS WELL AS THE PARTNER SHRI SHIVJIBHAI PATEL VOLUNTARILY DISCLOSED INCOME OF RS. 31 LACS AS UNACCOUNTED INCOME OF THE RELEVANT FINANCIAL YEAR. ASSESSEE THEREAFTER ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 SHOWING TOTAL INCOME OF RS. 31,57,130/-. THE CASE WAS SELECTED F OR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 143( 3) VIDE ORDER DATED 30.11.2010 AND THE TOTAL INCOME WAS DETERMINED AT R S. 76,27,360/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 17.08.2011 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A ) REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED CRE DITS OF RS. 23,99,365/- MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED EXP ENDITURE U/S. 69C OF THE ACT OF RS. 20,22,861/- MADE BY THE ASSESSING OFFICER. GROUND NO. 1 IS WITH RESPECT TO UNEXPLAINED CREDIT OF RS. 23,99,365/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED THAT CAPITAL OF RS. 22,16,365/- HAS BEEN INTRODUCED IN THE FIRM. TH E ASSESSEE WAS ASKED TO FURNISH EVIDENCE IN RESPECT OF SOURCE AND GENUIN ENESS OF THE TRANSACTION. FROM THE DETAILS, A.O. NOTICED THAT SH RI SHIVJIBHAI PATEL HAD INTRODUCED A SUM OF RS. 6,86,000/- IN CASH AND THRO UGH D.D. MADE CASH DEPOSITS IN BANK. ASSESSEE SUBMITTED THAT CASH WAS RECEIVED BY SHIVJIBHAI PATEL FROM SHREE SURYA PACKAGING, A PART NERSHIP FIRM AS WITHDRAWALS. ON THE EXAMINATION OF THE LEDGER ACCOU NT OF SHIVJIBHAI ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 3 PATEL IN SHREE SURYA PACKAGING. A.O. NOTICED THAT S UFFICIENT CAPITAL BALANCE WAS NOT AVAILABLE IN THE NAME OF SHIVJIBHAI PATEL FOR WITHDRAWAL. HE ALSO NOTICED THAT THE WITHDRAWAL HAS LED TO A DE BIT BALANCE OF THE PARTNER IN HIS CAPITAL ACCOUNT IN THE BOOKS OF SHRE E SURYA PACKAGING. HE FURTHER NOTED THAT THE CASH BOOK OF SURYA PACKAGING WAS NOT FURNISHED FOR EXAMINATION. HE THEREFORE CONCLUDED THAT THE SOURC E OF CAPITAL IN THE HANDS OF THE FIRM REMAINED UNEXPLAINED AS THE CREDI TWORTHINESS OF THE PARTNER HAS NOT BEEN PROVED SATISFACTORILY. A.O. AL SO NOTICED FROM THE NOTE BOOK FOUND FROM THE SITE PREMISES DURING THE S URVEY PROCEEDINGS THAT SHIVJIBHAI PATEL HAD MADE CAPITAL CONTRIBUTION AGGREGATING TO RS. 50,000/- IN JANUARY 2008 WHICH WERE NOT REFLECTED I N THE BOOKS OF ACCOUNTS PRODUCED BEFORE HIM. HE FURTHER NOTICED TH AT A CLAIM WAS MADE REGARDING CIRCULATION OF WITHDRAWAL OF RS. 2,25,000 /- ON 23.01.2008 FOR SUBSEQUENT CAPITAL INTRODUCTION. FROM THE ANNEXURE BF-12 ON TOTALING THE CASH AND CAPITAL MOVEMENTS OF THE RELEVANT WEEK , HE NOTED THAT THERE WAS NO SUCH WITHDRAWAL OF RS. 2,25,000/-. HE FURTHE R NOTED THAT THE CIRCUMSTANTIAL EVIDENCE PROVES THAT SUCH HUGE CASH CANNOT BE HANDLED ON WITHDRAWAL DURING THE PERIOD FROM 23.01.2008 TO 28. 03.2008. HE ACCORDINGLY CONSIDERED THE EXPLANATION REGARDING TH E SOURCE OF CAPITAL OF RS. 6,86,000/- AS NOT BEEN SATISFACTORILY EXPLAINED . HE ACCORDINGLY DISMISSED THE SUBMISSIONS MADE BY THE ASSESSEE. 5. WITH RESPECT TO PARESH R. PATEL, A.O. NOTICED THAT CAPITAL CONTRIBUTION OF RS. 1 LAC WAS MADE THE SOURCE OF WHICH WERE CLAIMED TO HAVE BEEN CASH RECEIVED FROM SURYA PACKAGING WHICH WAS STATED TO H AVE BEEN DEPOSITED IN THE BANK ACCOUNT OF PARESH SHAH BY CASH AND D.D WAS TAKEN IMMEDIATELY. A.O. ALSO NOTICED THAT THE CASH BOOK O F SURYA PACKAGING ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 4 WAS NOT FURNISHED FOR THE EXAMINATION. HE ACCORDING LY CONSIDERED THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION TO BE NOT SATISFACTORILY EXPLAINED. 6. WITH RESPECT TO CAPITAL CONTRIBUTION BY SHRI RAJES HBHAI PATEL, A.O. NOTICED THAT CAPITAL CONTRIBUTION WAS MADE BY SHRI RAJESHBHAI PATEL OF RS. ONE LAC. HE NOTICED THAT THE TOTAL INCOME OF SH RI RAJESHBHAI PATEL WAS NEARLY RS. 61,456/- OUT OF WHICH HE HAD MADE PAYMEN TS FOR POLICIES OF LIC AND MEDICLAIM THEREBY EXHAUSTING THE CAPABILIT Y OF ANY FURTHER INVESTMENT. HE THUS CONCLUDED THAT THE CREDITWORTHI NESS OF SHRI RAJESHBHAI PATEL TO BE DOUBTFUL. 7. IN THE CASE OF RAMNIKBHAI PATEL, A.O. NOTICED THAT RS. 2,25,000/- WAS DEPOSITED IN CASH AS CAPITAL CONTRIBUTION. THE CAPI TAL ACCOUNT OF SHRI RAMNIKBHAI PATEL DID NOT REFLECTED THE WITHDRAWALS OF CASH WHICH WAS SHOWN AS CREDITED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE AS CAPITAL CONTRIBUTION. FURTHER NO CASH BOOK WAS FURNISHED B Y PATEL WAS FURNISHED BEFORE A.O. A.O. THEREFORE CONCLUDED THAT THE CAPIT AL CONTRIBUTION OF SHRI RAMNIKBHAI PATEL DID NOT EXPLAIN THE SOURCE OF CRED ITWORTHINESS. 8. WITH RESPECT TO KANTIBHAI PATEL, A.O. NOTICED THAT A SUM OF RS. 2,23,000/- WAS NOTICED AS CAPITAL CONTRIBUTION IN CASH BUT THE CAPITAL ACCOUNT BY KANTIBHAI PATEL DID NOT REFLECT THE WITHDRAWALS OF CASH. HE ACCORDINGLY CONSIDERED THE INVESTMENT MADE IN CASH TO BE UNEXPL AINED. 9. WITH RESPECT TO HITESH T. MISTRY, A.O. NOTICED THAT A SUM OF RS. 5,42,365/- WAS INTRODUCED AS HIS CAPITAL, THE SOURC E OF WHICH WAS STATED ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 5 TO BE FROM HIS PERSONAL ACCOUNT. BEFORE A.O. IT WAS SUBMITTED THAT HE HAD RECEIVED REMITTANCE FROM OUTSIDE INDIA WHICH WAS NO T TAXABLE. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E TO THE A.O. 10. HE THUS CONSIDERED THE SUBMISSION OF THE ASSESSEE T HAT THE SOURCE OF NEW CAPITAL UPON WITHDRAWALS MADE BY THE PARTNERS FROM THEIR AVAILABLE FUNDS AND BALANCE OF WITHDRAWALS MADE BY THEM TO BE NOT S ATISFACTORILY EXPLAINED AND ACCORDINGLY MADE AN ADDITION OF RS. 2 3,99,365/- AS INCOME EARNED FROM UNEXPLAINED SOURCE. AGGRIEVED BY THE OR DER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) A FTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE DELETED THE ADDITI ON ON ACCOUNT OF CAPITAL CONTRIBUTION OF VARIOUS PARTNERS BY HOLDING AS UNDER:- 11. IN THE CASE OF SHIVJIBHAI PATEL, CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- (III) I HAVE GONE THROUGH THE FACTS OF THE CASE. A S FAR AS SOURCE OF RS. 4,00,000/- IS CONCERNED, THE APPELLANT HAS BEEN ABLE TO EXPLAIN THIS BY WAY OF E VIDENCE OF WITHDRAWAL FROM THE FIRM M/S. SHREE SURYA PACKAGING AND THE FACT OF NEGATIVE CAPITAL BA LANCE IN NOT WAY TAKES AWAY FROM THE SOURCE OF FUND BEING EXPLAINED. THE NON PRODUCTION OF CASH B OOK OF M/S. SHREE SURYA PACKAGING IS NOT RELEVANT AS THE TRANSACTIONS WERE SHOWN TO BE RECORDED IN TH E CAPITAL ACCOUNT OF PARTNERS WITH THE SAID FIRM AN D IN THE BALANCE SHEET OF THE PARTNER. IN ANY CASE, T HE ASSESSEE WAS NOT REQUIRED TO SHOW THE SOURCE OF SOURCE. THE EXPLANATION AS REGARDS WITHDRAWAL FROM AND REINTRODUCTION AS CAPITAL IN THE ASSESSEE FIRM IS REQUIRED TO BE ACCEPTED AS THE CONCLUSION OF THE A.O. IS BASED ONLY ON DOUBT AND NOT ANY EVIDENCE WHICH WOULD SHOW THAT THE FUND WITHDRAWN WAS USED F OR ANOTHER PURPOSE AND NOT AVAILABLE FOR REINTRODUCTION. THE TIME GAP BETWEEN WITHDRAWAL AND REINTRODUCTION IS NOT SO LARGE AS TO LEND ANY CREDENCE TO THE CONCLUSION OF THE A.O. THE INTRODUC TION OF CAPITAL TO THE EXTENT OF RS.6,86,000/- IS THEREFORE HELD TO BE EXPLAINED AS TO ITS SOURCE AND NATURE AND THE ADDITION MADE TO THIS EXTENT IS DELETED. AS REGARDS KATCHA RECORDINGS IN ANNEXURE ' BF12', IT IS TO BE HELD THAT THESE WERE UNEXPLAINED AND THEREFORE RIGHTLY CONSIDERED AS INCOME OF THE A PPELLANT U/S. 68. HOWEVER, IT IS ALSO TO BE HELD TH AT THE APPELLANT IS ENTITLED TO BENEFIT OF SET OFF OF THIS INCOME AGAINST DISCLOSURE MADE IN SURVEY. THE REASON GIVEN BY THE A.O. THAT SUCH SET OFF IS NOT P ERMITTED AS INCOME DISCLOSED IN SURVEY WAS REVENUE AND ADDITION MADE U/S. 68 IS CAPITAL IS NOT CORRECT AS ONCE ADDITION IS MADE U/S.68 IT BECOMES INCOME OF THE APPELLANT AND THE CRITERIA OF CAPITAL/REVENU E LOOSES ITS RELEVANCE. IF ADDITION U/S. 68 RETAINE D ITS CAPITAL NATURE, THEN IT CANNOT BE BROUGHT TO TAX AS INCOMES OF CAPITAL NATURE OTHER THAN THOSE MENTIONED IN 'CAPITAL GAINS' ARE NOT SUBJECT TO TAX . NO SEPARATE ADDITION WAS THEREFORE REQUIRED TO BE MADE. THE ADDITION OF RS.6,86,000/- + RS. 50,000/- IS THEREFORE DELETED. 12. IN THE CASE OF PARESHBHAI PATEL, THE ADDITION WAS D ELETED BY HOLDING AS UNDER:- ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 6 2 (I) THIS PARTNER HAS INTRODUCED RS. 1,00,000/- AN D THIS WAS RECORDED IN HIS CAPITAL ACCOUNT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT FIRM. IT WAS EXP LAINED TO THE A.O. THAT THE PARTNER HAD DEPOSIT WIT H M/S. SHREE SURYA PACKAGING WHICH WAS TAKEN BACK VID E CHEQUE NO. 950407 AND DEPOSITED IN HIS PERSONAL BANK ACCOUNT. THE AMOUNT WAS SUBSEQUENTLY WITHDRAWN AND DRAFT PURCHASED IN CASH ON THE SAME DATE AND DEPOSITED INTO THE APPELLANTS BANK A CCOUNT. DETAILS LIKE BANK STATEMENT, BALANCE SHEET AND RETURN OF THE PARTNER WERE SUBMITTED TO THE A.O . IT IS SEEN THAT THE A.O. HELD THIS AMOUNT AS UNEXPLAINED BECAUSE CASH BOOK OF M/S. SHREE SURYA P ACKAGING WAS NOT PRODUCED. DURING THE COURSE OF APPEAL PROCEEDINGS SAME ARGUMENTS AS IN ASSESSME NT WERE TAKEN. IT WAS ALSO SUBMITTED THAT THE APPELLANT IS NOT REQUIRED TO PROVE THE SOURCE OF SO URCE AND THAT NON PRODUCTION OF CASH BOOK OF THIRD PARTY CANNOT BE HELD AGAINST THE APPELLANT. FROM TH E FACTS OF THE CASE AND THE ASSESSMENT ORDER IT IS CLEAR THAT THE CONCLUSION OF THE A.O. IS BASED ONLY ON DOUBTS. HE HAS NOT BROUGHT ANYTHING ON RECORD T O SHOW THAT THE EXPLANATION WAS NOT CORRECT. THE ASSE SSEE HAS PRODUCED ALL RELEVANT DETAILS TO PROVE HIS CLAIM. HE CANNOT BE HELD RESPONSIBLE FOR PRODUCTION OF BOOKS OF THIRD PARTY. THE ADDITION MADE IS WITHOUT ANY BASIS AND THEREFORE DELETED. 13. IN THE CASE OF RAJESHBHAI PATEL, CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- III) I HAVE GONE THROUGH THE FACTS OF THE CASE. THE APPELLANT FIRM HAS SHOWN THE SOURCE OF FUNDS INTRODUCED BY THE PARTNER. THE CONCLUSION OF THE A. O. THAT THE PARTNER DID NOT HAVE THE CAPACITY TO INVEST WAS BASED ON INCOME EARNED BY HIM. THIS IS N OT CORRECT AS THE SOURCE OF FUND CAN BE OUT OF INCOME FOR THE YEAR AS WELL AS INVESTMENTS MADE IN THE PAST OR LOANS OBTAINED FROM LEGITIMATE SOURCES. IF THE A.O. HAD ANY RESERVATION ABOUT THE SOURCE OF FUNDS WITH THE PARTNER, HE SHOULD HAVE INVESTIGATE D RATHER THAN CONSIDER IT AS UNEXPLAINED WITHOUT BRIN GING ANYTHING ON RECORD. THE EXTENT OF CAPITAL INTRODUCED AND RECORDED IN THE BOOKS IS HELD AS EXP LAINED. EVEN IF IT IS HELD THAT CAPITAL NOT RECORDE D IN THE BOOKS BUT ONLY IN ANNEXURE-BF12 WAS UNEXPLAI NED, THE ASSESSEE HAS TO BE ALLOWED BENEFIT OF TELESCOPING WITH ADDITIONAL INCOME DECLARED. THEREF ORE, IN MY OPINION NO ADDITION WAS REQUIRED. THE ADDITION MADE ON ACCOUNT OF CAPITAL INTRODUCED BY S HRI RAJESH PATEL IS DELETED. 14. IN THE CASE OF RAMNIKBHAI PATEL, THE ADDITION WAS D ELETED BY CIT(A) BY HOLDING AS UNDER:- (III) I HAVE GONE THROUGH THE FACTS OF THE CASE. TH E SOURCE OF FUND AVAILABLE WITH THE PARTNER WAS CAS H BALANCE AVAILABLE WITH HIM AND THIS WAS REFLECTED I N THE BALANCE SHEET. THE SAME IS NOT REQUIRED TO BE REFLECTED IN THE PERSONAL CAPITAL ACCOUNT OF THE PA RTNER. ONLY THE ASSET SIDE OF THE BALANCE SHEET WOU LD CHANGE, IF CASH IS CONTRIBUTED TOWARDS CAPITAL - TH E CASH BALANCE WOULD REDUCE AND EQUAL AMOUNT WOULD APPEAR AS CAPITAL WITH THE APPELLANT FIRM. TH E BASIS FOR NOT ACCEPTING THE EXPLANATION IS DUE TO NON-APPRECIATION OF ACCOUNTING ENTRIES BY THE A.O. SINCE THE CAPITAL WAS INTRODUCED OUT OF CASH ON HAND AND THIS IS REFLECTED IN THE BALANCE SHEETS, T HE AMOUNT IS HELD AS EXPLAINED. THE ADDITION MADE I S DELETED. 15. IN THE CASE OF KANTIBHAI PATEL, THE ADDITION WAS DE LETED BY HOLDING AS UNDER:- 5.(I) (I) THIS PARTNER HAS INTRODUCED CAPITAL OF RS .2,23,000/- WHICH IS RECORDED IN THE BOOKS OF THE APPELLANT FIRM. THE A.O. ALSO OBSERVED THAT A SUM O F RS.25,000/- WAS SHOWN AS INTRODUCED BY THE PARTNER ON 25.01.2008 IN ANNEXURE-BF12 BUT NOT IN T HE CAPITAL ACCOUNT. IT WAS CLAIMED BEFORE THE A.O. ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 7 THAT RS. 2,23,000/- WAS INTRODUCED OUT OF CASH ON H AND AVAILABLE WITH THE PARTNER. THIS WAS NOT ACCEPTED BY THE A.O. ONLY FOR THE REASON THAT THERE WAS NO CASH WITHDRAWAL REFLECTED IN THE PERSONAL CAPITAL ACCOUNT OF THE PARTNER. DURING THE COURSE O F APPEAL PROCEEDINGS AND ALSO IN ASSESSMENT, IT WAS EXPLAINED THAT SUCH ENTRY WOULD NOT APPEAR IN THE P ERSONAL CAPITAL ACCOUNT BUT WILL BE REFLECTED ON TH E ASSET SIDE ONLY. COPIES OF BALANCE SHEET, ETC. WERE PROVIDED TO THE A.O. THE CONCLUSION OF THE A.O. CANNOT BE UPHELD AS IT IS BASED ONLY ON NON APPRECI ATION OF ACCOUNTING ENTRIES. TO THIS EXTENT ADDITIO N IS REQUIRED TO BE DELETED. AS REGARDS, THE SUM OF R S. 25,000/- REFLECTED ONLY IN ANNEXURE-BF12 AND NOT IN REGULAR BOOKS OF THE APPELLANT, THE PLEA OF THE APPELLANT THAT IT SHOULD BE ALLOWED TELESCOPING BENEFITS WITH ADDITIONAL INCOME DISCLOSED IN SURVEY IS REQUIRED TO BE UPHELD FOR REASONS MENTIONED EARLIER IN THIS ORDER. NO SEPARATE ADDITION FOR RS. 25,000/- WAS REQUIRED TO BE MADE. THE ADDITION MADE IS THEREFORE DELETED. 16. IN THE CASE OF HITESH MISTRY, THE ADDITION WAS DELE TED BY CIT(A) BY HOLDING AS UNDER:- 6.(II) I HAVE GONE THROUGH THE FACTS OF THE CASE. T HE PARTNER HAD SUFFICIENT CASH BALANCE AND THE SOUR CE OF THIS CASH HAS BEEN EXPLAINED TO BE OUT OF REMITT ANCES RECEIVED FROM ABROAD. THE A.O. HAS BASED HIS CONCLUSION REGARDING CREDITWORTHINESS OF THE PARTNE R ON HIS TAXABLE INCOME. HE HAS NOT CONSIDERED THE FACT THAT THE PARTNER HAD OTHER SOURCES OF FUND AVA ILABLE TO HIM. IN CASE THE A.O. WAS NOT SATISFIED W ITH THE AVAILABILITY OF FUNDS WITH THE PARTNER, THE ADD ITION IF ANY ON ACCOUNT OF UNEXPLAINED CASH CREDITS WAS TO BE MADE IN THE HANDS OF THE PARTNER AND NOT THE APPELLANT FIRM AS IT IS NOT REQUIRED TO ESTABLI SH THE SOURCE OF SOURCE. EVEN OTHERWISE, IT IS SEEN TH AT AN AMOUNT OF RS.55,000/- WAS WITHDRAWN ON 21.01.2008 FROM ICICI BANK AND RS. 3,00,000/- WAS D EPOSITED ON THE SAME DAY IN THE OTHER BANK ACCOUNT OF THE APPELLANT I.E. STATE BANK OF INDIA F ROM WHICH DD OF RS. 3,00,000/- WAS PURCHASED ON SAME DATE AND THEREFORE THE SOURCE OF THE DD AS BEI NG WITHDRAWALS FROM ICICI BANK HAS TO BE ACCEPTED. THE APPELLANT HAS SHOWN WITHDRAWALS OF SU FFICIENT AMOUNT FROM ICICI BANK TO EXPLAIN INTRODUCTION OF REMAINING AMOUNT IN CASH. THEREFORE THE AMOUNTS RECORDED IN THE BOOK AS CAPITAL INTRODUCED IS REQUIRED TO BE DELETED. AS HAS BEEN H ELD EARLIER IN THE ORDER, BENEFIT OF TELESCOPING OF ADDITIONAL INCOME DISCLOSED IN SURVEY HAS TO BE ALL OWED IN RESPECT OF AMOUNT RECORDED IN ANNEXURE- BF12. THEREFORE, THE ADDITION MADE BY HOLDING THE C APITAL INTRODUCED BY THIS PARTNER - BOTH RECORDED IN THE BOOKS AND ONLY IN ANNEXURE-BF12 IS DELETED. 17. IN THE CASE OF DINESHBHAI PATEL, THE ADDITION WAS D ELETED BY HOLDING AS UNDER:- 7.(I) THE A.O. OBSERVED THAT AN AMOUNT OF RS. 30,00 0/- WAS SHOWN IN ANNEXURE-BF12 AS HAVING BEEN CONTRIBUTED BY ONE SHRI DINESHBHAI ON 02.02.2008. I T WAS SUBMITTED BY THE APPELLANT THAT THERE WAS ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 8 NOBODY BY THE NAME OF DINESHBHAI AND THAT THE TEMPO RARY PERSON RECORDING THESE ROUGH NOTINGS MAY HAVE WRITTEN DINESHBHAI INSTEAD OF SHIVAJIBHAI G. P ATEL WHO HAD CONTRIBUTED RS.30,000/- ON 2.2.2008, WHICH WAS DULY RECORDED IN THE BOOKS AND THE SOURCE OF WHICH HAD BEEN EXPLAINED. THE A.O. DID NOT ACCEPT THIS EXPLANATION AND ADDED THE AMOUNT OF RS. 30,000/- AS UNEXPLAINED CREDIT. BEFORE ME, SIMILAR ARGUMENTS WERE TAKEN. IN THE ALTERNATE, IT WAS ALSO SUGGESTED THAT CREDIT OF DISCLOSURE SHOULD BE GIVE N AGAINST THIS INCOME. HAVING GONE THROUGH THE FACTS OF THE CASE, IT APPEARS THAT THE EXPLANATION GIVEN BY THE APPELLANT MAY BE CORRECT GIVEN THAT THE DATE, A MOUNT AND MODE OF CONTRIBUTION TALLIES WITH THE RECORDED ENTRY. EVEN OTHERWISE, THE APPELLANT IS EN TITLED TO THE BENEFIT OF TELESCOPING WITH ADDITIONA L INCOME DECLARED AND THEREFORE THIS ADDITION IS DELE TED. IN EFFECT, THE ADDITION MADE ON ACCOUNT OF CAPITAL INTRODUCED - RECORDED IN THE BOOKS OF ACCOUNT AND THOSE RECORDED ONLY IN ANNEXURE-BF12 IS DELETED. 18. CIT(A) THUS DELETED THE ADDITION MADE BY A.O. AGGRI EVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 19. BEFORE US, THE LD. D.R. TOOK US THROUGH THE VARIOUS FINDINGS OF A.O. AND STRONGLY SUPPORTED HIS ORDER. HE FURTHER SUBMITTED THAT THE CASH BOOK OF SURYA PACKAGING WAS NOT PRODUCE BEFORE THE A.O. FOR VERIFICATION. HE THEREFORE SUBMITTED THAT CONSIDERING THE FACTUAL AS PECT NOTED BY THE A.O., THE ADDITIONS MADE BY THE A.O. NEEDS TO BE UPHELD. HE THUS STRONGLY SUPPORTED THE ORDER OF A.O. THE LD. A.R. ON THE OTH ER HAND SUBMITTED THAT THE ASSESSEE HAD SATISFACTORILY EXPLAINED THE NATUR E AND SOURCE OF CAPITAL INTRODUCED BY THE PARTNER AND HAD ALSO PROVED EVEN THE SOURCE OF SOURCE. IT WAS FURTHER SUBMITTED THAT ALL THE PARTNERS ARE ASSESSED TO TAX AND THE ASSESSEE PLACED ON RECORD, THE COPY OF THE I.T. RET URNS, PERSONAL BALANCE SHEETS. FROM THE COMPUTATION OF THE INCOME OF THE VARIOUS PARTNERS PLACED ON RECORD, THE LD. A.R. POINTED OUT THAT THE INTEREST ON CAPITAL RECEIVED FROM THE FIRM HAS BEEN SHOWN BY THE ASSESS EE AS INCOME AND THE SAME HAS ALSO BEEN ALLOWED AND THE INCOME ON CA PITAL HAS ALSO BEEN ALLOWED AS EXPENDITURE BY THE REVENUE. HE ALSO PLAC ED RELIANCE ON THE ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 9 DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT V S. RANCHHOD GIVABHAI NAKHABA (2012) 208 TAXMAN. 35 (GUJ.). HE THUS SUPPO RTED THE ORDER OF CIT(A). 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) AFTER CONSIDERING THE SUBMISSIO NS AND THE FACTS IN THE CASE OF EACH PARTNERS BY A REASONED ORDER HAS D ELETED THE ADDITIONS MADE BY A.O. BEFORE US, THE REVENUE COULD NOT CONT ROVERT THE FINDINGS OF CIT(A) NOR HAS BROUGHT ANY MATERIAL ON RECORD IN ITS SUPPORT. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDE R OF CIT(A). THUS THIS GROUND OF REVENUE IS DISMISSED. GROUND NO. 2 IS WITH RESPECT TO ADDITION OF RS. 20, 22,861/- UNDER SECTION 69C OF THE ACT. 21. DURING THE COURSE OF SURVEY OPERATION AT THE SITE P REMISES OF THE ASSESSEE, A NOTE BOOK WAS FOUND. FROM THE DETAILS CONTAINED IN THE NOTE BOOK. A.O. NOTICED THAT IT CONTAINS THE END RESULT OF WEEKS PERFORMANCE. THE EXPENDITURE INCURRED ON ACCOUNT OF LABOUR, LABO UR SUB-CONTRACTOR, TRAILOR/TRACTOR CARTING AS INCURRED DURING THE RELE VANT WEEKS WAS FOUND IN THE DOCUMENT. THE ASSESSEE WAS ASKED TO EXPLAIN AND ACCOUNT FOR THE EXPENSES/INCOME THAT AROSE FROM THE TRANSACTIONS ME NTIONED THEREIN AS WELL AS TO FURNISH EVIDENCE IN SUPPORT OF CLAIM OF THE EXPENSES. A.O. WAS OF THE VIEW THAT THE PAYMENTS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. HE THEREFORE R EJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE TOTAL EXPENDITURE ON THE BASIS OF AVERAGE OF EXPENSES OF THE 6 WEEKS FOUND DURING THE SURVEY AND EXTRAPOLATED IT FOR ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 10 52 WEEKS OF THE YEAR. HE ACCORDINGLY ARRIVED AT THE FIGURE OF UNEXPLAINED EXPENDITURE OF RS. 31,69,565/- AND AFTER GIVING CRE DIT FOR THE EXPENSES WHICH WERE ACCOUNTED FOR, MADE AN ADDITION OF RS. 2 0,22,861/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS MA DE BY THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 4.1 DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED BY THE APPE LLANT'S A.R. THAT THE EXPENSES AS APPEARING IN ANNEXURE-BF12 EXACTLY TALLIED DATEW ISE FOR FIVE WEEKS OUT OF SIX AND ONLY FOR THE WEEK ENDING 22.12.2007 THE EXPENSES DID NOT MATCH DATEWI SE BUT TALLIED WITH NEIGHBOURING DATES IN THE REGULAR BOOKS OF ACCOUNTS. IT WAS SUBMITTED THAT TH E ESTIMATION MADE BY THE A.O. FOR THE WHOLE YEAR WAS WITHOUT ANY BASE. IT WAS FURTHER SUBMITTED THAT THE TOTAL TURNOVER RECEIPT OF THE APPELLANT WAS ON LY RS. 34,00,000/- (APPROX.)IN THE YEAR AND THIS HAS N OT BEEN SHOWN TO BE INCORRECT. AS AGAINST THIS RECEIPT THE APPELLANT HAD SHOWN DIRECT EXPENDITURE OF APPROXIMATELY RS. 21,00,000/- WHICH WAS REASONABLE. IT WAS ALSO SUBMITTED THAT THEIR GP IN THE CURRENT YEAR WAS BETTER THAN IN THE PRECEDING YEAR. IT WAS ARGUED THAT ONLY REAL INCOME SHOULD BE TAXED AS HELD BY THE HON'BLE SUPREME COURT AND THEREFORE THERE WAS NO REASON FOR DETERMINING INCOM E U/S. 69C WHEN THE EXPENSES WERE ACTUALLY RECORDED. IT WAS ALSO ARGUED THAT EVEN IN PRINCIPLE THE EXPENSES FOUND, WHICH RELATED ONLY TO SIX WEEK S AND THAT TOO IN A PERIOD OF TWO MONTHS, CANNOT BE A VERAGED OVER THE WHOLE YEAR AS PRODUCTION IS NOT AT THE SAME LEVELS THROUGHOUT THE YEAR AND DEPENDS ON SEVERAL FACTORS. IN THE ALTERNATE, IT WAS ALSO ARGUED THAT THE DISCLOSURE MADE DURING SURVEY WAS S UFFICIENT TO COVER SUCH INCOME. 4.2 I HAVE GONE THROUGH THE FACTS OF THE CASE. FRO M A COMPARISON OF THE DETAILS OF EXPENSES RECORDED IN THE BOOKS AND THOSE MENTIONED IN THE LOOSE PAPER S, IT IS SEEN THAT THE EXPENSES ARE RECORDED IN THE BOOKS. ONLY IN RESPECT OF WEEK ENDING 22.12.2007, S OME OF THE EXPENSES WERE SHOWN AS RECORDED ON NEIGHBOURING DATES, I.E. NOT FALLING WITHIN THE WEE K. THIS CAN BE ON ACCOUNT OF SOME ENTRIES GETTING RECORDED ON WRONG DATES WHEN TRANSFERRED IN THE REG ULAR BOOKS. IT COULD ALSO BE THAT THE RECORDING IN THE REGULAR BOOKS WAS CORRECT AND IN THE ANNEXURE W AS WRONGLY RECORDED- DATE OF RECEIPT OF BILL ETC. INSTEAD OF ACTUAL INCURRING OF THE EXPENSE. IN ANY CASE, MISMATCH IN DATA FOR ONE WEEK CANNOT BE EXTRAPOLATED FOR THE YEAR WHEN RECORDING ON OTHER D ATE MATCH. EVEN OTHERWISE, THE ADDITIONAL INCOME OF RS. 31,00,000/- DISCLOSED WOULD BE SUFFICIENT T O COVER THE ADDITION OF RS. 20,22,861/-. THE ADDITI ON MADE IS THEREFORE DELETED. 22. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. SUBMITTED THAT THE TOT AL TURNOVER FOR THE ASSESSEE THAT THE YEAR UNDER CONSIDERATION WAS 34,0 1,237/-. HE FURTHER ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 11 SUBMITTED THAT THE ASSESSEE IN THE STATEMENT RECORD ED DURING THE COURSE OF SURVEY HAD ADMITTED TO THE INCOME OF RS. 31 LACS AND THE TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN WAS RS. 31,5 7,130/-. IF THE UNEXPLAINED EXPENDITURE MADE UNDER SECTION 69C IS R EMOVED FROM THE INCOME, MEAGER TAXABLE INCOME REMAINS IN THE HANDS OF ASSESSEE. HE FURTHER SUBMITTED THAT THE A.O. WHILE MAKING THE AD DITION HAS GIVEN THE CREDIT FOR THE EXPENSES DEBITED IN THE PROFIT AND L OSS ACCOUNT. HE THEREFORE SUBMITTED THAT IN THE ABSENCE OF ANY SATI SFACTORY EXPLANATION, THE A.O. WAS FULLY JUSTIFIED IN MAKING THE ADDITION . 23. THE LD. A.R. ON THE OTHER HAND SUBMITTED THE DETAIL S OF EXPENSES CREDITED IN THE BOOKS OF ACCOUNTS FOR EACH DATE AND PLACED I T ON RECORD AT PAGE 79 TO 81 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT EXCEPT FOR THE ENTRY OF 22.12.2007 ALL THE ENTRIES HAVE BEEN DEBITED IN THE BOOKS OF ACCOUNTS. HE FURTHER SUBMITTED THAT CITS FINDING HAS NOT BEEN C HALLENGED BY REVENUE. HE FURTHER SUBMITTED THAT CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HAS DELETED THE ADDITION. HE THUS SUPPORTED THE ORDER OF CIT(A). 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT O N THE COMPARISON OF DETAILS OF EXPENSES RECORDED IN THE BOOKS AND THOSE MENTIONED IN THE LOOSE PAPERS, IT IS SEEN THAT THE EXPENSES WERE REC ORDED IN THE BOOKS EXCEPT FROM SOME MINOR DISCREPANCIES FOR WEEK ENDIN G 22.12.2007. HE HAS FURTHER HELD THAT MISMATCH OF DATA FOR ONE WEEK CANNOT BE EXTRAPOLATED FOR THE YEAR. BEFORE US, THE LD. D.R. COULD NOT CONTROVERT THE FINDINGS OF CIT(A) NOR HAS BROUGHT ANY MATERIAL ON RECORD IN ITS SUPPORT. ITA NO 3232/ AHD/2011 . A.Y. 2008- 09 12 WE THEREFORE FIND NO REASON TO INTERFERE WITH THE O RDER OF CIT(A). THUS THIS GROUND OF REVENUE IS DISMISSED. 25. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 02 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD