The ITO, Ward-9(3), Surat V. M/s. Radiant Embroderies, Surat

ITA 3428/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9102 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 16-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: J P SHAH
• Keywords: Gift; Salary income; Source of fund; Onus to prove; Set aside
• Section: 143(1); 143(2); 208; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BEN CHES D BENCH: AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND A N PAHUJA, AM) ITA NO. 3428/AHD/2008 A. Y.:2005-06 THE INCOME TAX OFFICER, WARD -9(3), ROOM NO.420, AAYAKAR BHAVAN,MAJURA GATE, SURAT VS M/S. RADIANT EMBROIDERIES, 99/100, R. K. INDUSTRIES, VARACHHA ROAD, SURAT [PAN: AADFR 9616 A] APPELLANT RESPONDENT REVENUE BY SHRI C. K. MISHRA, DR ASSESSEE BY SHRI J. P. SHAH, AR ORDER A N PAHUJA: THIS APPEAL BY THE REVENUE DIRECTED AGAINST AN ORDER DATED 14/07/2008 OF THE LEARNED CIT(A)-V, SUR AT, RAISES THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED, IN DELETING THE ADDI TION OF RS.11,05,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDI T MADE BY THE A O, WITHOUT APPRECIATING THE FACTS OF THE C ASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED, IN DELETING THE ADDITION OF RS.2,20,000/- MADE ON ACCOUNT OF UNEXPLAINED CAPITA L INTRODUCTION WITHOUT APPRECIATING THE FACTS OF THE CASE . IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME FILED ON 15-10-2005 BY THE ASSESSEE, ENGAGED IN THE BUSINESS OF EMBROIDERY ON JOB WORK, AFTER BEING PROCESSED U/S 143(1) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SELECTED F OR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 05-06-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD A CCEPTED THE FOLLOWING DEPOSITS IN CASH: ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 2 SR. NO. NAME OF DEPOSITOR AMOUNT OF LOAN ACCEPTED MODE OF DEPOSIT IN BANK BEFORE ISSUING CHEQUES 1. HITESHBHAI DESAI 1,30,000 CASH 2. RAMESHBHAI BHUVA 1,50,000 CASH 3. CHANDRIKABEN 25,000 CASH 4. GUNVANTRAI RANABHAI 25,000 CASH 5. NILESHBHAI BHUVA 2,75,000 CASH 6. PRAMILABEN 1,00,000 CASH 7. NILESHBHAI M. PATEL 2,00,000 CASH 8. MANISHBHAI* 1,00,000 CASH NO PAN 9. M. K. PATEL* 1,00,000 CASH TOTAL 11,05.000 * SL. NO. 8 & 9 ARE SAME PERSON TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT A FORESAID DEPOSITORS DERIVED INCOME FROM SALARY, BROKERAGE AND AGRICULTURE ETC. THE ASSESSEE ALSO FURNISHED COPIES OF BANK STATEMENT OF SOME OF THE DEPOSITORS. ON PERUSAL OF BANK STATEMENTS OF SHRI HITESHBHAI DESAI AND SHRI RAMES HBHAI BHUVA, THE AO POINTED OUT THAT THESE DID NOT REFLECT ANY WITHDRAW AL TO ADVANCE LOAN TO THE ASSESSEE WHILE BANK STATEMENTS OF SMT. CHANDRIKABEN , SHRI GUNVANTRAI RANABHAI AND SHRI NILESH BHUVA REFLECTED CASH DEPO SITS BEFORE ISSUE OF CHEQUES IN FAVOUR OF THE ASSESSEE. FOR THE REMAININ G DEPOSITORS, THE ASSESSEE DID NOT PRODUCE ANY BANK STATEMENT. DESPITE FURTHER OPPORTUNITY GRANTED VIDE ORDERSHEET ENTRY DATED 15.11.2007, THE ASSESSEE DID NOT PRODUCE THE AFORESAID DEPOSITORS BEFORE THE AO FOR ASCERTAINING THE GENUI NENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE DEPOSITORS. ACCORDINGLY , RELYING UPON THE DECISIONS IN THE CASE OF JALAN TIMBERS VS CIT (1997) 223 ITR 11 (GAU), SHANKER INDUSTRIES VS CIT (1978) 114 ITR 689 (CAL), ORIENTAL WIRE INDU STRIES PVT. LTD. VS CIT (1981) 131 ITR 688(CAL), CIT VS PRECISION FINANCE PVT. LTD ., (1994) 208 ITR 465(CAL) AND NIZAM WOOL AGENCY VS. CIT (1992) 193 ITR 318 (A LL.) ,THE AO CONCLUDED THAT THE ASSESSEE HAS FAILED TO ESTABLISH IDENTITY AND CREDITWORTHINESS OF THE AFORESAID DEPOSITORS NOR PROVED THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, THE AO ADDED THE ENTIRE AMOUNT OF RS.11.05 LACS[ M ENTIONED RS. 10.15 LACS IN THE ASSESSMENT ORDER] U/S 68 OF THE ACT. ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 3 3. ON APPEAL, THE ASSESSEE EXPLAINED THAT SHRI MANI SHBHAI & SHRI M.K.PATEL WERE THE SAME PERSON WHILE THE AMOUNT WAS RECEIVED FROM THE AFORESAID DEPOSITORS THROUGH CHEQUE AND NOT IN CASH. THE AMOU NT OF WITHDRAWAL BY CHEQUES IS MENTIONED IN THE RESPECTIVE BANK ACCOUNT OF SHRI HITESHBHAI DESAI AND SHRI RAMESHBHAI BHUVA WHILE THE BANK STATEMENTS OF ALL THE DEPOSITORS HAD BEEN FURNISHED BEFORE THE AO. THE ASSESSEE ARGUED T HAT THEY HAD SUBMITTED CONFIRMATION OF THE AFORESAID DEPOSITORS ALONG WITH THEIR COMPLETE ADDRESS AND PAN BESIDES COPIES OF THEIR BANK STATEMENT AND ACK NOWLEDGEMENT OF IT RETURNS ALONG WITH CAPITAL ACCOUNT AND BALANCE SHEET. MOST OF THE DEPOSITORS WERE IMMEDIATE RELATIVES, HAVING ACTIVE POLITICAL AFFIL IATIONS AND THEREFORE, COULD NOT BE PRODUCED BEFORE THE AO, DUE TO ELECTION FOR GUJARAT ASSEMBLY IN NOVEMBER 2007. IN THE LIGHT OF THE THESE SUBMISSIONS, THE LE ARNED CIT(A) DELETED THE ADDITION, HOLDING THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS IN RESPECT OF THE AFORESAID DEPOSITORS. IT WAS FURTHER OBSERVE D THAT THE SOURCE OF SOURCE CAN BE EXAMINED ONLY IN THE HANDS OF INDIVIDUAL DEPOSIT ORS AND NOT IN THE HANDS OF THE ASSESSEE AND THE AO COULD HAVE FORWARDED HIS FI NDINGS/OBSERVATIONS OR MATERIAL TO THE AO, ASSESSING THE DEPOSITORS. THE A SSESSEE HAVING DISCHARGED THE ONUS PLACED ON HIM, NO ADDITION CAN BE MADE, TH E LEARNED CIT(A) CONCLUDED. 4. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORESA ID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPPORTED THE FINDIN GS OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE RELIED UPON TH E ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY AND CREDITWORTHINESS O F THE AFORESAID EIGHT DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS AND THUS, HAD DISCHARGED THE ONUS PLACED ON HIM. SINCE THE AMOUNT HAVE BEEN RECE IVED THROUGH CHEQUES FROM THE AFORESAID EIGHT DEPOSITORS, WHO ARE STATED TO BE HAVING PAN AND FILING THEIR RETURNS FOR A CONSIDERABLE NUMBER OF YEARS WH ILE THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL, CONTROVERTING THESE FINDINGS OF FACTS RECORDED BY ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 4 THE LD. CIT(A), WE ARE NOT INCLINED TO INTERFERE WI TH THE FINDINGS OF THE LD. CIT(A). HERE WE MAY REFER TO A DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS, 256 ITR 360(GUJ), WHEREIN IT WAS HELD :- THE ASSESSEE WAS A FIRM ENGAGED IN THE BUSINESS OF DEALINGS IN LAND. DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES AND D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVING FULL ADDRES SES, GIR NUMBERS / PERMANENT ACCOUNT NUMBERS, ETC, OF ALL TH E DEPOSITORS. THE ASSESSING OFFICER HOWEVER ISSUED SU MMONS TO SOME OF THE CREDITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. AFTER CONSIDERING THE EVIDENCE, THE ASSESSING OFFIC ER MADE AN ADDITION OF RS.12,85,000/- TO THE RETURNED INCOME O F THE ASSESSEE. THIS WAS CONFIRMED BY THE COMMISSIONER OF INCOME- TAX (APPEALS). ON FURTHER APPEAL TO THE TRIBUNAL TH E TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE INCO ME-TAX ACT, 1961, WAS CLEAR, THAT THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEX PLAINED CASH CREDIT MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE LEGISLATIV E MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCO ME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED INN THE BOOKS AS INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMAN ENT ACCOUNT NUMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUN TS WERE RECEIVED BY THE ASSESSEE BY ACCOUNTS OF THE CREDITO RS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDIT ORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROV E THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT N OT THE SOURCE OF THE SOURCE. THUS TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AND, IN PARTIC ULAR THE FACT THAT THE ASSESSING OFFICER HAD NOT DISALLOWED THE I NTEREST CLAIMED / PAID IN RELATION TO THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR EVEN IN THE SUBSEQUENT YEARS, AND TAX HAD BEEN DEDUCED AT SOURCE OUT OF HE INTERE ST PAID / ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 5 CREDITED TO THE CREDITORS, THE TRIBUNAL HELD THAT T HE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN MAKI NG THE ADDITION OF RS.12,85,000. ON APPEAL TO THE HIGH COU RT: HELD, THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE NARRATED BY THE TRIBUNAL AND THE LAW EXPLAINED BY I T, THE APPEAL WAS LIABLE TO BE DISMISSED. [THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THIS JUDGMENT : SEE [2002] 254 ITR (ST.) 275-ED.] 6. IN THE LIGHT OF AFORESAID DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT AND THE UNDISPUTED FINDINGS OF THE LD. CIT(APPEALS ) THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF TH E CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF THE AFORESAID DEPOSI TORS , ESPECIALLY WHEN NO MATERIAL HAS BEEN PLACED BEFORE US FOR TAKING A DIF FERENT VIEW IN THE MATTER, WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A).THEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISSED. 7. GROUND NO.2 IN THE APPEAL RELATES TO ADDITION OF RS. 2,20,000/- ON ACCOUNT OF UNEXPLAINED CAPITAL BROUGHT IN BY THE PARTNERS. THE AO NOTICED THAT THE PARTNERS HAD BROUGHT IN FOLLOWING AMOUNT IN CASH O N VARIOUS DATES AS UNDER: SR. NO. NAME OF THE PARTNER AMOUNT DATE 1. SAILESHBHAI G. DESAI 25,000 18.04.2004 2 GOBARDHANBHAI L. PATEL (HUF) 30,000 27.05.2004 3 JANAKBHAI P. TALAVIA 25,000 18.04.2004 4 KIRTIBHAI G. PATEL 25,000 19.04.2004 5 MINIABEN R. BHUVA 30,000 27.05.2004 6 PARULBEN H. DESAI 30,000 28.05.2004 7 PARESH B. DESAI 25,000 19.04.2004 8 BATUKBHAI N. DESAI (HUF) 30,000 28.05.2004 TOTAL 2,20,000 ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 6 TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT T HE AFORESAID PERSONS HAVE BROUGHT IN THE AMOUNT FROM THEIR AGRICULTURAL INCOM E OR GIFT OR CASH LOANS. SINCE THE ASSESSEE DID NOT SUBMIT THE NAME AND ADDRESS OF THE DONORS OR GIFT DEED WHILE NO EVIDENCE WAS SUBMITTED REGARDING SALE OF A GRICULTURE PRODUCE OR EVEN 7/12 OR 8A ABSTRACTS ETC. NOR ESTABLISHED THE IDENT ITY OR CREDITWORTHINESS OF THE AFORESAID PERSONS AND GENUINENESS OF THE TRANSACTIO NS, THE AO ADDED THE ENTIRE AMOUNT OF RS.2,20,000/- U/S 68 OF THE ACT. 8. ON APPEAL, THE ASSESSEE CONTENDED THAT THEY HAD SUBMITTED COPIES OF PARTNERS CAPITAL ACCOUNT,COPIES OF BANK PASS BOOKS , CASH BOOKS AND ACKNOWLEDGMENT OF IT RETURNS BEFORE THE AO VIDE LET TERS DATED 1.10.2007 & 7.11.2007.SINCE ALL THE PARTNERS WERE ASSESSED TO T AX FOR THE LAST SEVEN YEARS, THE AO WAS NOT JUSTIFIED IN ADDING THE CAPITAL BROU GHT IN BY THE PARTNERS U/S 68 OF THE ACT. IN THE LIGHT OF THESE SUBMISSIONS, THE LEA RNED CIT(A) DELETED THE ADDITION HOLDING THAT THE DEPOSITORS HAVE CONFIRMED THE DEPO SIT OF MONEY IN THE FIRM. IF THE CLAIMED CASH DEPOSITS, ENABLING THE ISSUANCE OF CHE QUES WERE FOUND UNEXPLAINED, APPROPRIATE ACTION CAN BE TAKEN BY THE RESPECTIVE ASSESSING OFFICERS IN PARTNERS INDIVIDUAL CASES., THE LEARNE D CIT(A) OBSERVED. 9. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPPORTED THE FINDIN GS OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE RELIED UPON TH E ORDER OF THE LD. CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS EVIDENT FROM THE FACTS NARRATED BEFORE US, TH E AFORESAID AMOUNT OF CAPITAL CONTRIBUTION WAS BROUGHT IN BY THE EIGHT PARTNERS OUT OF THEIR INCOME EARNED FROM AGRICULTURE OR GIFT OR CASH LOANS . ALL THE EIGHT PARTNERS PARTNERS ARE STATED TO BE ASSESSED TO TAX FOR THE LAST SEVEN YEARS AND THEIR PAN AND COPIES OF ACKNOWLEDGEMENT OF RETURNS ARE STATED TO HAVE BEEN FURNISHED BY THE ASSESSEE. AFTER CONSIDERING THE MATERIAL ON RECORD, THE LD. C IT(A) CONCLUDED THAT THERE IS NO JUSTIFICATION TO MAKE ADDITION IN THE HANDS OF F IRM WHEN PARTNERS HAVE ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 7 CONFIRMED, HAVING BROUGHT THE CAPITAL IN THE ASSESS EE FIRM WITH PROPER EVIDENCES. THE REVENUE HAVE NOT REFERRED US TO ANY MATERIAL CO NTROVERTING THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A). AS REGARDS ONUS FOR THE AMOUNTS FOUND CREDITED IN THE BOOKS OF THE FIRM, THE HONBLE RAJASTHAN HIG H COURT IN CIT V KISHORILAL SANTHOSHILAL, 216 ITR 9(RAJ) HELD THAT THE BURDEN O F PROOF IN RESPECT OF CASH CREDITS FOUND IN THE PARTNERS' ACCOUNTS IN THE BOOK S OF THE FIRM WAS ON THE FIRM ITSELF. REFERRING TO THE DECISIONS IN 34 ITR 807(S C) , 102 ITR 779(PAT) , 36 ITR 481(AP) AND 29 ITR 942(AP) , THE HONBLE HIGH COURT HELD THAT (A) THERE WAS NO DISTINCTION BETWEEN THE CASH CREDIT ENTRIES EXISTIN G IN THE BOOKS OF THE FIRM WHETHER IT WAS OF A PARTNER OR OF A THIRD PARTY ; ( B) THE BURDEN OF PROOF REGARDING THE IDENTITY, CAPACITY AND GENUINENESS OF TRANSACTI ONS WAS ON THE FIRM ; (C) IF THE CASH CREDITS WERE NOT SATISFACTORILY EXPLAINED, THE ASSESSING OFFICER WAS JUSTIFIED TO TREAT IT AS INCOME OF THE FIRM FROM UNDISCLOSED SOURCES ; (D) THE FIRM HAD TO ESTABLISH THAT THE AMOUNT WAS ACTUALLY GIVEN BY THE LENDER ; (E) THE GENUINENESS AND REGULARITY IN THE MAINTENANCE OF ACCOUNTS HAD T O BE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER AND (F) IF THE EXPLANATION WAS NOT SUPPORTED BY ANY DOCUMENTARY OR OTHER EVIDENCE, THEN THE DEEMING FIC TION CREATED BY SECTION 68 OF THE ACT COULD BE INVOKED. IN THE CASE OF P. V. RA GHAVA REDDI V. CIT [1956] 29 ITR 942 , IT WAS OBSERVED BY THE HONBLE ANDHRA PRADESH HIG H COURT THAT THE BURDEN OF PROOF IS NOT DEPENDENT UPON THE FACT OF A CREDIT ENTRY IN THE NAME OF THE ASSESSEE OR IN THE NAME OF A THIRD PARTY. IN EITHER CASE, THE BURDEN LIES UPON THE ASSESSEE TO EXPLAIN THE CREDIT ENTRY, THOUGH THE ON US MIGHT SHIFT TO THE INCOME- TAX OFFICER UNDER CERTAIN CIRCUMSTANCES. OTHERWISE A CLEVER ASSESSEE CAN ALWAYS THROW THE BURDEN OF PROOF ON THE INCOME-TAX AUTHORI TIES BY MAKING A CREDIT ENTRY IN THE NAME OF A THIRD PARTY EITHER REAL OR PSEUDON YMOUS. THE SAME HIGH COURT IN M. M. A. K. MOHINDEEN THAMBY AND CO. V. CIT [1959] 36 ITR 481 , RELYING ON THE AFORESAID DECISION CAME TO THE CONCLUSION THAT THER E IS NO DISTINCTION BETWEEN THE ENTRIES IN THE NAMES OF THE PARTNERS AND THOSE IN T HE NAMES OF THE THIRD PARTIES, AND THE NATURE OF THE ENTRY IS NOT DISTINGUISHABLE. IN THE ABSENCE OF A SATISFACTORY EXPLANATION, IT IS OPEN TO THE DEPARTMENT TO INFER THAT THESE MONIES ALSO BELONG TO THE ASSESSEE AND REPRESENT SUPPRESSED INCOME. ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 8 10.1 . IN HARDWARMAL ONKARMAL V. CIT [1976] 102 ITR 779 , IT WAS OBSERVED BY THE HONBLE PATNA HIGH COURT THAT IF CASH CREDITS A RE FOUND IN THE ACCOUNT BOOKS OF A PARTNERSHIP FIRM IN THE NAMES OF THE PARTNERS, THE CREDITS ARE SURELY IN THE NAMES OF PERSONS WHO CONSTITUTE THE FIRM ITSELF. IN SUCH A CASE, THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THAT THE PARTNERS HAD ACT UALLY DEPOSITED THE MONEY AND THAT THE ENTRIES WERE NOT FICTITIOUS. 10.2 IN VIEW OF THE FOREGOING, IT IS CLEAR THAT UNTIL AND UNLESS THE PARTNERS OF A FIRM ARE ABLE TO CATEGORICALLY ESTABLISH THE SOUR CES OF THE CASH CREDITS INTRODUCED IN THEIR NAMES IN THE BOOKS OF THE FIRM AND THE MANNER IN WHICH SUCH CASH HAD BEEN EARNED BY THEM, THE QUESTION OF SHIFTING OF THE BURDEN ON TO THE DEPARTMENT CANNOT ARISE . HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS,256 ITR 360(GUJ) HELD THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AUTO MATICALLY RESULTS IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, THE LD. CIT(A) FOUND THAT THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS LAID DOWN UPON THE FIRM AND HAD FURNISHED AN EXPLANATION THAT THE AMOUNT WAS BROUGHT IN BY THE R ESPECTIVE PARTNERS. THE IDENTITY OF THE PARTNERS AND THE EVIDENCE REGARDING SOURCES OF INCOME HAS BEEN PLACED BEFORE THE LOWER AUTHORITIES. ALL THE PARTNERS ARE STATED TO BE ASSESSED TO TAX ON THEIR INDEPENDENT INCOME AND HAV E ADMITTED THE AMOUNT OF MONEY BROUGHT IN BY THEM. THERE IS NOTHING TO SU GGEST THAT THE AFORESAID AMOUNTS BROUGHT IN BY THE PARTNERS WERE ACTUALLY TH E INCOME OF THE FIRM . WHEN THE ASSESSEE HAS EXPLAINED THE AMOUNTS AS CAPI TAL CONTRIBUTIONS BY THE PARTNERS, THE AO IS NOT JUSTIFIED IN HOLDING TH AT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE. IN CASE THE ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE SOURCE, HE SHOULD HAVE CONSIDERED THE SAME I N THE HANDS OF THE PARTNERS ONLY AND NOT IN THE CASE OF THE FIRM. THIS VIEW OF OURS IS SUPPORTED BY THE DECISIONS OF THE HONBLE ALLAHABAD HIGH COUR T IN THE CASES REPORTED IN CIT V. JAISWAL MOTOR FINANCE [1983] 141 ITR 706 AND SURENDRA MAHAN SETH V. CIT [1996] 221 ITR 239 . ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 9 10.3 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS PANKAJ DYESTUFF INDUSTRIES IN IT REFERENCE NO. 241 OF 1993 DATED 6- 7-2005 WHILE DECIDING A SIMILAR ISSUE CONCLUDED AS UNDER: 13. APPLYING THE AFORESAID PRINCIPLES TO THE FAC TS OF THE PRESENT CASE, IT IS APPARENT THAT THE ASSESSEE HAD FURNISHE D THE DETAILS WHICH WOULD DISCHARGE THE ONUS WHICH LAY ON THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT THE PARTNERS OF THE ASSESSEE FIRM ARE FICTITIOUS. THE INCOME TAX OFFICER HAS NOT DISPUTED THAT THE CREDIT S IN THE ACCOUNTS OF THE PARTNERS WERE NOT DEPOSITED FROM THE PARTNERS. MORE OVER, IT IS AN ADMITTED POSITION THAT THIS WAS THE SECOND YEAR OF THE FIRM, AND THAT IT WAS RUNNING IN LOSS. IT IS TRUE THAT THE INCOME TAX OFFICER DID NOT ACCEPT THE EXPLANATION GIVEN ON BEHALF OF THE ASSESSEE IN RESPECT OF THE N EW DEPOSITS OR CASH CREDITS IN THE ACCOUNTS OF THE PARTNERS. THE MERE N ON-ACCEPTANCE OF THAT EXPLANATION DOES NOT, HOWEVER, PROVIDE MATERIAL FOR FINDING THAT THE SAID SUM REPRESENTED INCOME OF THE ASSESSEE FIRM. AS HEL D BY THE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X, ALLAHABAD V. JAISWAL MOTOR FINANCE,141 ITR 706(ALL), IN THE ABSE NCE OF ANY MATERIAL TO INDICATE THAT THERE WERE PROFITS OF THE FIRM, THE A MOUNT CREDITED TO THE PARTNERS ACCOUNT COULD NOT BE ASSESSED IN THE HAND S OF THE FIRM. ONCE THE PARTNERS HAVE OWNED THAT THE MONIES DEPOSITED IN TH EIR ACCOUNTS AS ARE THEIR OWN, THE INCOME TAX OFFICER IS ENTITLED TO AN D MAY PROCEED AGAINST THE PARTNERS AND ASSESS THE SAME IN THEIR HANDS, IF THEIR EXPLANATION IS NOT FOUND SATISFACTORY. 14. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, BOTH THE DEPUTY CIT(APPEALS) AND THE TRIBUNAL HAVE FOUND THA T THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS WHICH WAS ON IT BY OFFE RING EXPLANATION, WHICH HAS NOT BEEN FOUND TO BE INCORRECT OR FALSE I N ANY MANNER. THE INTEREST OF THE REVENUE IS ALSO SAFEGUARDED AS THE INCOME TAX OFFICER HAS BEEN GIVEN THE LIBERTY TO CONSIDER THE SAID CREDITS IN THE HANDS OF THE PARTNERS IF HE IS NOT SATISFIED WITH THE SOURCES OF INVESTMENT OF CASH CREDITS IN THE ACCOUNTS OF THE PARTNERS. 15. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE TO F IND THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM ANY INFIRMITY WHICH WOULD REQ UIRE INTERFERENCE AT THE HANDS OF THIS COURT. ACCORDINGLY, IT IS HELD THAT T HE TRIBUNAL WAS RIGHT IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.87,250/ - BEING DEPOSITS IN THE ACCOUNTS OF THE PARTNERS. THE QUESTION REFERRED TO THIS COURT IS, ACCORDINGLY, ANSWERED IN THE AFFIRMATIVE I. E. IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA NO. 3428/AHD/2008 M/S. RADIANT EMBROIDERIES 10 11. IN THE LIGHT OF AFORESAID DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT AND UNDISPUTED FINDINGS OF THE LEARNED CIT(A), WE HAVE NO HESITATION IN UPHOLDING HIS FINDINGS .THEREFORE, GROUND NO.2 IN T HE APPEAL IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH SEPTEMBE R,2009 SD/- SD/- (H. L. KARWA) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 11TH SEPTEMBER,2009 LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. THE INCOME TAX OFFICER,WARD -9(3), ROOM NO.420, AAYAKAR BHAVAN, MAJURA GATE,SURAT 3. CIT(A)-V,SURAT 4. THE CIT CONCERNED 5. THE D.R. ITAT, AHMEDABAD, 6. GUARD FILE BY ORDER DR / AR, ITAT, AHMEDABAD