M/S. RATHI SYNTHETICS & SILK MILLS, BHAWANIMANDI, JAIPUR V. INCOME TAX OFFICER, JHALAWAR

ITA 330/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5127 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANMOHAN KANDPAL ACIT DHK
• Keywords: Additional evidence
• Section: 69C; 143(3); 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 330/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 M/S RATHI SYNTHETICS & SILK MILLS, RATHI HOUSE, PRESS ROAD, BHAWANI MANDI, RAJASTHAN. C UKE VS. I.T.O., JHALAWAR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAFFR 8485 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKS J LS @ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI MANMOHAN KANDPAL (ACIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/11/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18/02/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A), KOTA DATED 20/11/2017 FOR THE A.Y. 2013-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR THE ADDITION OF RS. 25.00 LACS MADE ON ACCOUNT OF UNDISCLOSED INCOME. 3. DURING THE COURSE OF HEARING, THE LD AR OF THE ASSESSEE HAS TAKEN ADDITIONAL GROUND WHICH READS AS UNDER: ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 2 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY ACCEPTING THE SAID ADDITIONAL EVIDENCES. 4. IT WAS ARGUED BY THE LD AR THAT THE ABOVE GROUND IS A LEGAL GROUND, A RELEVANT FACTS ARE AVAILABLE ON RECORD AND NO NEW FACTS ARE REQUIRED TO BE EVALUATED NOR IS ANY FURTHER ENQUIRY NEEDED. THE PROVISIONS OF LAW ARE TO BE APPLIED ON THE FACTS ALREADY AVAILABLE ON RECORD. 5. FROM THE RECORD, I FOUND THAT ALL THE FACTS RELATING TO THE ADDITIONAL GROUND SO RAISED BY THE ASSESSEE IS AVAILABLE ON RECORD, THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC (1998) 229 ITR 383 (SC), I ACCEPT THE ADDITIONAL GROUND FOR ADJUDICATION. 6. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM FILED RETURN OF INCOME DECLARING INCOME OF RS. 3,29,200/- ON 01/10/2013. THE ASSESSEE DERIVES INCOME FROM MANUFACTURING INDUSTRIES OF TEXTILES AND HANDLOOMS. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 22/03/2016 OF ITO WARD, JHALAWAR, COMPUTING TOTAL INCOME OF THE ASSESSEE, AFTER ADDITION RS. 25.00 LACS. ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 3 7. FROM THE RECORD, I FOUND THAT DURING THE RELEVANT PREVIOUS YEAR, ASSESSEE FIRM RETURNED A SUM OF RS. 25,00,000 TO SMT. KANTA HURKAT OUT OF HER OPENING CREDIT BALANCE OF RS.25,00,000/- IN HER UNSECURED LOAN ACCOUNT. SMT. KANTA HURKAT GAVE A LOAN OF RS.19,00,000 TO SH. KRISHNA KUMAR RATHI, PARTNER OF THE FIRM AND RS.6,00,000 TO ANOTHER PARTNER, SH. RAJKUMAR RATHI. BOTH THE PARTNERS, OUT OF THE SAID LOAN RECEIVED FROM SMT. KANTA HURKAT, INTRODUCED FURTHER CAPITAL IN THE FIRM. SH. KRISHNA KUMAR RATHI RS.19,00,000 AND SH. RAJKUMAR RATHI RS. 6,00,000. ENTIRE CAPITAL, SO INTRODUCED, WAS THROUGH ACCOUNT PAYEE CHEQUES, DETAILS OF WHICH ARE APPEARING AT AO PG-7. BANK STATEMENT OF PARTNER, SH. KRISHNA KUMAR RATHI IS AT PB 11-12 AND BANK STATEMENT OF SH. RAJKUMAR RATHI IS AT PB 16-17. CAPITAL ACCOUNT OF SH. KRISHNA KUMAR RATHI IN THE BOOKS OF THE FIRM IS AT PB 13-15 AND SIMILARLY, CAPITAL ACCOUNT OF SH. RAJKUMAR RATHI IN THE BOOKS OF FIRM IS AT PB 18-19. SMT. KANTA HURKAT, HOWEVER, HAD EXPIRED ON 22-10-2010. DEATH CERTIFICATE WAS ALSO FILED BEFORE THE A.O. THE BANK ACCOUNT OF SMT. KANTA HURKAT, THROUGH WHICH REPAYMENT OF HER LOAN BY THE FIRM AND SUBSEQUENT LOANS BY HER TO THE PARTNERS TOOK PLACE WAS MAINTAINED JOINTLY BY SMT. KANTA HURKAT AND HER HUSBAND SH. MANAKCHAND HURKAT. THE SAID EVIDENCE OF JOINT BANK ACCOUNT WAS BEFORE THE LOWER AUTHORITIES. ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 4 8. THE AO HAS ADDED A SUM OF RS.25,00,000 HOLDING THAT THE ASSESSEE FIRM CANNOT RETURN THE LOAN TO A DEAD PERSON AND A DEAD PERSON CANNOT GIVE LOAN TO THE PARTNERS. LD. CIT(A) CONFIRMED THE ORDER OF THE AO., AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 9. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ENTIRE TRAIL OF TRANSACTIONS WITH SMT. KANTA HURKAT HAS BEEN THROUGH ACCOUNT PAYEE CHEQUES. ALL BANK STATEMENTS ARE ON RECORD. THE BANK ACCOUNTS WERE OPERATED JOINTLY AND HUSBAND OF SMT. KANTA HURKAT CONTINUED TO OPERATE THE BANK ACCOUNT EVEN AFTER THE DEATH OF HIS WIFE. JUST BECAUSE HUSBAND OF LATE SMT. KANTA HURKAT DID NOT INFORM THE FACT OF THE DEATH TO BANKERS, THE TRANSACTIONS CANNOT BE HELD TO BE NON-GENUINE. OTHERWISE ALSO, REPAYMENT OF OPENING OUTSTANDING LOAN CANNOT GIVE RISE TO ANY TAXABLE EVENT IN THE HANDS OF THE FIRM AS THE SAME IS DULY RECORDED IN THE BOOKS OF ACCOUNTS AND NONE OF THE SECTIONS I.E., SEC. 69, 69A, 69B, 69C GET ATTRACTED. 10. SIMILARLY, IN THE CASE OF CAPITAL INTRODUCED BY THE PARTNERS WHEN THE SAME IS DULY CONFIRMED BY THE PARTNERS AND TRANSACTIONS HAVING BEEN THROUGH ACCOUNT PAYEE CHEQUES AND THE SOURCE OF SOURCES ALSO ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 5 HAVING BEEN EXPLAINED BY THE PARTNERS, PROVISIONS OF SEC. 68 CANNOT BE INVOKED. 11. BEFORE THE LD. CIT(A), THE ASSESSEE HAS JUST FILED A CLARIFICATION LETTER FROM MANAK CHAND HURKAT REGARDING REPAYMENT OF UNSECURED LOANS OF SMT. KANTA HURKAT AND ACCEPTANCE OF UNSECURED LOANS FROM THE PARTNERS OF THE FIRM AMOUNTING TO RS. 25.00 LACS. HOWEVER, THESE DETAILS COULD NOT BE FILED BY THE ASSESSEE BEFORE THE A.O. ON 17/03/2016. SINCE SMT. KANTA HURKAT WAS DIED EARLIER AND THE REPAYMENT WAS MADE TO HER LEGAL HEIR SHRI MANAK CHAND HURKAT THROUGH BANK ACCOUNT OPERATED JOINTLY BY LATE KANTA HURKAT AND SHRI MANAK CHAND HURKAT AND AS SUCH IT WAS OPERATED BY SHRI MANAK CHAND HURKAT AFTER DEATH OF SMT. KANTA HURKAT. THE LD. CIT(A) SHOULD HAVE ACCEPTED THIS CLARIFICATION BUT HE DID NOT APPRECIATE THE SAME AND JUST CONFIRMED THE ORDER OF THE A.O. I FOUND THAT AS THE CASE WAS TIME BARRING AND THE ASSESSEE COULD NOT OBTAIN CONFIRMATION OF SUCH TRANSACTIONS FROM THE LEGAL HEIR OF LATE KANTA HURKAT, THE CASE WAS FINALISED BY THE A.O. ON 22/03/2016 U/S 143(3) OF THE ACT. AS THE CONFIRMATION HAS BEEN OBTAINED LATER ON AND ESSENTIAL EVIDENCE TO DECIDE THE CASE, THE SAME WAS FILED BEFORE THE LD. CIT(A) BUT HE DECLINED TO ENTERTAIN THE SAME WITHOUT ANY COGENT REASON. I DO NOT FIND ANY MERIT IN THE ACTION OF THE LD. CIT(A) FOR ACCEPTING THE ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 6 CLARIFICATION REGARDING CHAIN OF DOCUMENTS WHICH THE ASSESSEE COULD NOT FILE BEFORE THE A.O. 12. I HAVE GONE THROUGH ALL THE CHAIN OF TRANSACTIONS WHICH WERE THROUGH ACCOUNT PAYEE CHEQUES. ALL THE BANK STATEMENTS ARE ON RECORD. THE BANK ACCOUNT OF LATE KANTA HURKAT WAS OPERATED JOINTLY BY THE HUSBAND OF LATE KANTA HURKAT AND BY LATE KANTA HURKAT. SHRI MANAK CHAND HURKAT CONTINUED TO OPERATE THE BANK ACCOUNT EVEN AFTER DEATH OF HIS WIFE. MERELY BECAUSE, HUSBAND OF LATE KANTA HURKAT DID NOT INFORM THE DEATH OF HER WIFE TO THE BANKERS, THE ENTIRE TRANSACTION OF RETURN OF LOAN BY ASSESSEE FIRM TO KANTA HURKAT AND ISSUE OF CHEQUE BY HUSBAND OF KANTA HURKAT WHO WAS JOINT SIGNATORY IN THE BANK ACCOUNT CANNOT BE HELD TO BE NON-GENUINE. ACCORDINGLY, I DO NOT FIND ANY MERIT IN THE ACTION OF THE A.O. FOR MAKING ADDITION U/S 68 OF THE ACT. FOR THIS PURPOSE, RELIANCE IS PLACED ON JUDGMENT OF HON'BLE HIGH COURT OF JAMMU AND KASHMIR IN THE CASE OF M/S KOHINOOR ENTERPRISES ITA NO. 01/2014 [CLC 9-27] AND OF ITAT MUMBAI BENCH IN THE CASE OF M/S KARTHIK CONSTRUCTION CO. ITA NO. 2292/MUM/2016 [CLC 28-34]. 13. RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) HON'BLE SUPREME COURT IN THE CASE OF VAISHNODEVI REFOILS & SOLVEX [2018] 96 TAXMANN.COM 469 (SC) ITA 330/JP/2018 M/S RATHI SYNTHETICS & SILD MILLS VS ITO 7 (II) HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF VAISHNODEVI REFOILS & SOLVEX [2018] 89 TAXMANN.COM 80 (GUJARAT) (III) HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAILASH CHAND AGARWAL [2017] 88 TAXMANN.COM 540 (RAJASTHAN). 14. IN VIEW OF THE ABOVE, THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) IS DELETED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2020. SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18 TH FEBRUARY, 2020. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S RATHI SYNTHETICS & SILK MILLS, BHAWANI MANDI. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O.,JHALAWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 330/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR