Shri Devendrasingh Delsingh Bhagtana, Ahmedabad V. The Income tax Officer,Ward-9(4), Ahmedabad

ITA 35/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76856 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Court: TRIBUNAL
• Department Lawyers: RAJNNISH K VOHRA
• Assessee Lawyers: CHHAJED
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india; Corroborative evidences
• Section: 133(6); 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 35/AHD/2011 ASSESSMENT YEAR 2007-08 SHRI DEVENDRASINGH DELSINGH BHAGTANA LOVELY TANKER SERVICES, OPP. ASARWA RAILWAY COLONY NO. 2, ASARWA, AHMEDABAD. PAN: ADSPB2867P VS INCOME TAX OFFICER, WARD-9(4), AHMEDABAD. )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI RAJNNISH K. VOHRA, SR. DR ASSESSEE(S) BY : SHRI M.S. CHHAJED, AR $'. / 0'/ // / DATE OF HEARING : 05/06/2014 123 / 0' / DATE OF PRONOUNCEMENT : 20/06/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD DATED 26.11.2010. 2. GROUND NO. 1 OF THE APPEAL IS GENERAL IN NATURE . HENCE, THE SAME REQUIRES NO SEPARATE ADJUDICATION BY US. ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 2 - 3. GROUND NO. 2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS 31,82,258/- U/S. 41(1) OF T HE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITO RS FOR RS 31,82,258/- IN THE BALANCE SHEET. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE CONFIRMATION AND ID PROOF OF THE CREDITORS. THE AS SESSEE COULD NOT PRODUCE THE SAME. THEREFORE, THE ASSESSING OFFICER ISSUED LETTER U/S. 133(6) OF THE I.T. ACT TO THE CREDITORS SHOWN BY THE ASSESSEE TO VERIFY THE GENUINENESS OF THE ASSESSEES CLAIM AT THE ADDRESSES GIVEN BY THE ASSESSEE. HOWEVER, EXCEPT IN ONE CASE OF AMAN ROAD LINES, ALL OTHER LE TTERS WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. THEREFORE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT SATISFACTORILY DISCHARGED ITS ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF THE CREDITORS BY GIVING TH EIR IDENTITY, GENUINENESS OF TRANSACTIONS AND OUTSTANDING BALANCE. THEREFORE , THE ASSESSING OFFICER HELD THAT IT IS PRESUMED THAT EITHER THE ASSESSEE H AS PAID THE LIABILITY OUT OF UNDISCLOSED INCOME OR THERE WAS REMISSION OR CESSAT ION OF CREDIT LIABILITY AND MADE ADDITION OF RS 31,82,258/- TO THE INCOME OF TH E ASSESSEE. 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR T HE VERY SAME REASON. 6. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE R ELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA (2014) 43 TAXMANN.COM 55 (GUJ.) AND ARGUED THAT THE HONBLE HIGH COURT HAS HELD THAT EVEN WHERE THE DEB T ITSELF WAS FOUND TO BE NON-GENUINE FROM THE VERY INCEPTION, AT LEAST IN TE RMS OF SECTION 41(1) OF THE ACT, THERE IS NO CURE FOR IT AND WHERE THERE WA S NO REMISSION OR CESSATION OF LIABILITY DURING THE YEAR UNDER CONSID ERATION, NO ADDITION COULD BE MADE TO THE INCOME OF THE ASSESSEE. ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 3 - 7. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER ON VERIFICATION OF THE BALANCE SH EET OF THE ASSESSEE FILED WITH THE RETURN OF INCOME FOUND THAT THE ASSESSEE H AS SHOWN SUNDRY CREDITORS FOR RS 31,82,258/-. IN ORDER TO VERIFY T HE SAME, THE ASSESSING OFFICER ISSUED LETTERS U/S. 133(6) OF THE ACT. BUT EXCEPT IN THE CASE OF AMAN ROAD LINES, ALL OTHER LETTERS WERE RETURNED BACK BY THE POSTAL AUTHORITIES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S NOT FILED CONFIRMATION AND ID PROOFS OR PAN OF THE CREDITORS AND THEREFORE , BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT, HE MADE ADD ITION OF RS 31,82,258/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF CESSATION OR REMISSION OF LIABILITY WHICH WAS CONFIRMED IN APPEAL BY THE COMMISSIONER O F INCOME TAX (APPEALS). 9. WE FIND FROM THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) THAT THE CREDITORS IN QUESTION WERE OLD C REDITORS AND THEY WERE ALSO APPEARING AS CREDITORS OF THE ASSESSEE DURING EARLIER ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2006-07. THE ABOVE FACT IS NO T IN DISPUTE. THUS, THE CREDITORS IN QUESTION WERE NOT FRESH CREDIT IN THE BOOKS OF THE YEAR UNDER CONSIDERATION. FURTHER, NO MATERIAL WAS BROUGHT BE FORE US TO SHOW THAT THESE CREDITORS WERE PAID THE AMOUNT DURING THE YEA R UNDER QUESTION OR REMISSION OF LIABILITY TOOK PLACE DURING THE YEAR U NDER QUESTION AND NOT IN EARLIER YEARS. 10. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS RELIED BEFORE US ON THE DECISION OF THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF BHOGILAL RAMJIBHAI ATARA (SUPRA) WHEREIN THE HONBLE HIGH CO URT HELD THAT, ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 4 - THERE WAS NOTHING ON RECORD TO SUGGEST THERE WAS R EMISSION OR CESSATION OF LIABILITY THAT TOO DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 WHICH WAS THE YEAR UNDE R CONSIDERATION. IT IS UNDOUBTEDLY A CURIOUS CASE. EV EN THE LIABILITY ITSELF SEEMS UNDER SERIOUS DOUBT. THE ASSESSING OFF ICER UNDERTOOK THE EXERCISE TO VERIFY THE RECORDS OF THE SO CALLED CREDITORS. MANY OF THEM WERE NOT FOUND AT ALL IN TH E GIVEN ADDRESS. SOME OF THEM STATED THAT THEY HAD NO DEALI NG WITH THE ASSESSEE. IN ONE OR TWO CASES, THE RESPONSE WAS THA T THEY HAD NO DEALING WITH THE ASSESSEE NOR DID THEY KNOW HIM. OF COURSE, THESE INQUIRIES WERE MADE EX PARTE AND IN THAT VIEW OF THE MATTER, THE ASSESSEE WOULD BE ALLOWED TO CONTEST SU CH FINDINGS. NEVERTHELESS, EVEN IF SUCH FACTS WERE ESTABLISHED T HROUGH BI- PARTE INQUIRIES, THE LIABILITY AS IT STANDS PERHAPS HOLDS THAT THERE WAS NO CESSATION OR REMISSION OF LIABILITY AND THAT THEREFORE, THE AMOUNT IN QUESTION CANNOT BE ADDED BACK AS A DEEMED INCOME UNDER SECTION 4 (C) OF THE ACT. THIS IS ONE OF THE STRANGE CASES WHERE EVEN IF THE DEBT ITSELF IS FOUND TO BE NON-GE NUINE FROM THE VERY INCEPTION, AT LEAST IN TERMS OF SECTION 41(1) OF THE ACT THERE IS NO CURE FOR IT. WE FIND THAT THE ABOVE QUOTED DECISION OF THE HONB LE HIGH COURT SQUARELY APPLIES TO THE FACTS OF THE ASSESSEES CASE. THERE FORE, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDERS OF LOWER AUTHORIT IES AND DELETE THE ADDITION OF RS 31,82,258/- MADE U/S. 41(1) OF THE A CT ON ACCOUNT OF CESSATION OR REMISSION OF LIABILITY. THUS, THIS GR OUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 11. GROUND NO. 3 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS 13,51,347/- ON ACCOUNT OF U NPAID EXPENSES. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CL AIMED FOLLOWING UNPAID EXPENSES: ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 5 - 1. UNPAID VEHICLE EXPENSES 10,37,097/- 2. UNPAID DIESEL EXPENSES 1,21,250/- 3. UNPAID SALARY 1,48,000/- 4. UNPAID TYRE & TUBE EXPENSES 45,000/- TOTAL 13,51,347/- DURING THE COURSE OF ASSESSMENT, THE ASSESSEE WAS R EQUESTED TO FURNISH SUPPORTING EVIDENCE IN THIS REGARD. THE ASSESSEE C OULD NOT PRODUCE THE BILLS AND VOUCHERS FOR THE SAME. THEREFORE, SHOW CAUSE N OTICE WAS ISSUED TO THE ASSESSEE AS TO WHY ADDITION OF RS 13,51,347/- SHOUL D NOT BE MADE TREATING THE SAME AS BOGUS EXPENSES. THE ASSESSEE COULD NOT PRODUCE SUPPORTING EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER AND THEREFORE, THE ASSESSING OFFICER HELD THAT RS 13,51,347/- WAS ADDED TO THE I NCOME OF THE ASSESSEE AS BOGUS EXPENSES. 13. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) CONFIRMED THE SAID ADDITION FOR THE VERY SAME REASO NS. 14. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HIS ARGUMENTS WERE THE SAME AS MADE IN GROUND NO. 1 OF THE APPEAL AND THAT HE PLACED RELIANCE ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF BHOGILAL RAMJIBHAI ATARA (SUPRA). 15. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND FROM THE BALANCE SHEET OF T HE ASSESSEE THAT THE ASSESSEE HAS SHOWN UNPAID EXPENSES AGGREGATING TO R S 13,51,347/-. THE ASSESSEE COULD NOT PRODUCE EVIDENCES IN SUPPORT OF THE EXPENSES AND THEREFORE, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS 13,51,347/- AS BOGUS EXPENSES CLAIMED BY THE ASSESSEE AND ADDED TH E SAME TO THE INCOME ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 6 - OF THE ASSESSEE WHICH WAS CONFIRMED IN APPEAL BY TH E COMMISSIONER OF INCOME TAX (APPEALS). THE AUTHORIZED REPRESENTATIV E OF THE ASSESSEE HAS RELIED ON THE ORDER OF THE HONBLE GUJARAT HIGH COU RT IN THE CASE OF BHOGILAL RAMJIBHAI ATARA (SUPRA). WE FIND THAT THE ASSESSEE HAS NOT PRODUCED THE EVIDENCES FOR WHICH THE ASSESSEE HAS SHOWN THE AMOU NT OF EXPENSES OF RS 13,51,347/- AS OUTSTANDING PAYABLE AS AT THE END O F THE YEAR. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT THE OUTSTANDING AMOUN T IN THE CASE INCLUDES OR REPRESENTS OPENING BALANCE BROUGHT FORWARD FROM THE EARLIER YEARS. THUS, IT IS OBSERVED THAT THE LIABILITY CLAIMED RELATES TO T HE YEAR UNDER CONSIDERATION. FURTHER, IT IS ALSO OBSERVED THAT THE ADDITION WAS MADE BY THE LOWER AUTHORITIES ON ACCOUNT OF EXPENSES OF WHICH GENUINE NESS COULD NOT BE ESTABLISHED BY THE ASSESSEE. IN THE ABOVE CIRCUMST ANCES, THE DECISION RELIED UPON BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE WHICH RELATES TO SECTION 41(1) OF THE ACT IS FOUND TO BE NOT OF ANY HELP TO THE ASSESSEE. FURTHER, AS NO MATERIAL TO ESTABLISH THE GENUINENES S OF THE ABOVE EXPENDITURE AND GENUINENESS OF ITS LIABILITY DURING THE YEAR COULD BE BROUGHT BEFORE US BY THE ASSESSEE, WE FIND NO GOOD REASON T O INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17. GROUND NO. 4 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER FOR RS 4,64,592/- U/S. 68 BY TREA TING THE LOAN AS UNEXPLAINED CASH CREDIT. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SH OWN LOAN OF RS 4,64,592/- FROM SIX PARTIES AS UNDER: ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 7 - SR.NO. FROM WHOM LOAN TAKEN AMOUNT IN RS. 1 AMAN ROAD LINES 2,75,392/- 2 BHUPENDRASINGH DELALSINGH BHAKTANA 38,300/- 3 JITENDRASINGH DELALSINGH BHAKTANA 38,700/- 4 LAXMANBHAI A GADEGI 38,000/- 5 MEHBOOBBHAI MALAK 36,700/- 6 RAJUBHAI SONI 37,500/- TOTAL 4,64,592/- HE OBSERVED FROM THE LEDGER ACCOUNT FURNISHED BY TH E ASSESSEE THAT THE LOANS WERE RECEIVED IN CASH. SUBSEQUENTLY, THE ASS ESSEE FURNISHED LEDGER ACCOUNT WHICH SHOWS THAT THE LOANS WERE RECEIVED BY CHEQUE. THEREFORE, HE REQUIRED THE ASSESSEE TO FILE CONFIRMATION, BANK ST ATEMENT WITH PAN OF THE LOAN CREDITORS WHICH THE ASSESSEE COULD NOT PRODUCE . THEREFORE, THE ASSESSING OFFICER ADDED THE AMOUNT OF RS 4,64,592/- AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. THE COMMISSIO NER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFF ICER. THE ASSESSEE FILED BEFORE US STATEMENT OF UNSECURED LOAN AND SUBMITTED THAT OUT OF RS 4,64,592/-, RS 3,82,228/- WAS THE OPENING BROUGHT F ORWARD BALANCE AND THE AMOUNT OF LOAN TAKEN DURING THE YEAR WAS RS 95,000/ - ONLY. THEREFORE, IT WAS THE SUBMISSION THAT NO ADDITION FOR THE OPENING BROUGHT FORWARD BALANCE OF RS 3,82,228/- COULD BE MADE U/S. 68 OF THE ACT A S IT WAS NOT THE CASH CREDIT RECEIVED DURING THE YEAR BY THE ASSESSEE. W E FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSEE ALSO CONTENDED B EFORE THE ASSESSING OFFICER VIDE HIS LETTER THAT OPENING BALANCE OF THE LOAN CREDITORS SHOULD NOT BE ADDED AS INCOME OF THE YEAR UNDER CONSIDERATION. HOWEVER, THE PLEA OF THE ASSESSEE WAS NOT DEALT WITH BY THE ASSESSING OF FICER BEFORE MAKING ENTIRE ADDITION OF THE LOAN OF RS 4,64,592/-. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO HAD NOT ADJUDICATED UPON THIS PL EA OF THE ASSESSEE BY PASSING A SPEAKING ORDER. IN OUR CONSIDERED OPINIO N, NO ADDITION COULD BE MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT FOR OPENING BALANCE BROUGHT FORWARD DURING THE YEAR UNDER CONSI DERATION BECAUSE THE SAME WAS NOT A FRESH CREDIT ENTRY OF THE YEAR UNDER CONSIDERATION. THE DEPARTMENTAL REPRESENTATIVE HAS ALSO NOT CONTROVERT ED THE SUBMISSION OF ITA NO. 35/AHD/2011 SHRI DEVENDRASINGH D. BHATGANA, AHMEDABAD. FOR A.Y. 2007-08 - 8 - THE ASSESSEE THAT OUT OF THE UNSECURED LOANS AS AT 31 ST MARCH, 2007 OF RS 4,64,592/-, RS 3,82,228/- WAS THE OPENING BROUGHT F ORWARD BALANCE. IN RESPECT OF BALANCE RS 95,000/-, NO SPECIFIC SUBMISS ION WAS MADE BEFORE US WHICH REPRESENTS THE FRESH CREDIT BY THE ASSESSEE I N THE BOOKS OF ACCOUNT OF THE YEAR UNDER CONSIDERATION. THEREFORE, WE DELETE THE ADDITION TO THE EXTENT OF RS 3,82,228/- BEING BALANCE BROUGHT FORWA RD FROM EARLIER YEARS AND CONFIRM ADDITION OF RS 95,000/- BEING UNSUBSTAN TIATED CREDIT OF THE YEAR UNDER CONSIDERATION. THUS, THIS GROUND OF APPEAL O F THE ASSESSEE IS PARTLY ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 20 TH OF JUNE, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ /06/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. ,-)* / THE RESPONDENT. 3. ## 7 / CONCERNED CIT 4. 7() / THE CIT(A)-III, AHMEDABAD 5. 5': ,$ , , / DR, ITAT, AHMEDABAD 6. ;< =. / GUARD FILE. &4$ &4$ &4$ &4$ / BY ORDER, / // / # # # # ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD