Shri Kirti Premraj Jain, Baroda V. The Jtcit (Asstt) Sr-2, Baroda

ITA 3630/AHD/2002

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9164 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-09-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 02-12-2002
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C
• Keywords: Unexplained cash credit; Business income; Depreciation; Capital Gains
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND P.K. BANSAL, ACCOUNTANT MEMBER) ITA NO.3630/AHD/2002 [ASSTT.YEAR : 1996-1997] SHRI KIRIT PREMRAJ JAIN 1, SAMARPAN SOCIETY VASNA ROAD, BARODA. VS. JCIT (ASSTT)SPL. RANGE-2, BARODA. ASSESSEE BY : SHRI TUSHAR HEMANI REVENUE BY : SHRI M.C.PANDIT O R D E R PER R.V.EASWAR, VICE-PRESIDENT : THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 1996-97 AND ARISES O UT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE INCOME TAX ACT ON 3 1-12-1998. THE ASSESSEE IS AN INDIVIDUAL DERIVING SALARY, PROPERTY INCOME, INCOME FROM OTHER SOURCES AND INCOME FROM THE BUSINESS RUN IN THE NAME OF M/S .SIDVIM MEDICAMENTS. 2. IN THE RETURN THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF THE FOLLOWING EXPENSES IN COMPUTING THE BUSINESS INCOME: A) SELLING AND DISTRIBUTION OF EXPENSES : RS.10,790 /- B) ADMINISTRATIVE EXPENSES : RS.41,985/- C) INTEREST PAID : RS.13,00,892/- D) DEPRECIATION : RS.793/- THE AO OBSERVED THAT THERE WAS NO SALES SHOWN IN TH E PROFIT AND LOSS ACCOUNT AND THE ONLY REALIZATION WAS RS.1,21,943/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. HE CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS FOR THE AFORESAID EXPENDITURE. THE ASSESSEE DID NOT COMPLY WITH THE SAME. ACCORDINGLY, THE EXPENDITURE WAS DISALLOWED. THE D ISALLOWANCE WAS CONFIRMED BY THE CIT(A) FOR THE SAME REASON. BEFO RE US THE LEARNED COUNSEL PAGE - 2 ITA NO.3630/AHD/2002 -2- FOR THE ASSESSEE SOUGHT TO CONTEND THAT THE DISALLO WANCE WAS MADE ON THE GROUND THAT THE ASSESSEES BUSINESS WAS CLOSED WHER EAS IT WAS ONLY UNDER A TEMPORARY LULL AND THEREFORE THE DISALLOWANCE WAS E RRONEOUS. ON A PERUSAL OF THE FACTS AND THE ORDERS OF THE INCOME TAX AUTHORIT IES, WE FIND THAT THE QUESTION WHETHER THE BUSINESS WAS CLOSED OR WAS ONLY UNDER A TEMPORARY LULL IS IRRELEVANT SINCE THE DISALLOWANCE WAS MADE ONLY ON THE GROUND THAT THE ASSESSEE FAILED TO ADDUCE ANY DETAILS OR EVIDENCE IN SUPPORT OF THE VARIOUS ITEMS OF EXPENDITURE. EVEN BEFORE US THE ASSESSEE COULD NOT ADDUCE ANY DETAILS OR EVIDENCE IN SUPPORT OF THE CLAIM FOR EXPENDITURE. ACCORDINGLY THE ACTION OF THE INCOME TAX AUTHORITIES IS CONFIRMED AND THE FIRST G ROUND OF THE ASSESSEE IS DISMISSED. 3. THE SECOND GROUND IS DIRECTED AGAINST THE AMOUNT S ADDED UNDER SECTION 68 OF THE ACT. IN RESPECT OF THE AMOUNT OF RS.1,95 ,399/- RECEIVED FROM SANJAY DHUMAL, THE LEARNED COUNSEL FOR THE ASSESSEE FRANKL Y STATED THAT HE WOULD NOT PRESS FOR THE SAME. ACCORDINGLY, WE CONFIRM THIS A DDITION. 4. AS REGARDS THE AMOUNT OF RS.4,04,184/- SAID TO H AVE BEEN RECEIVED FROM ONE ARVIND NOPANI, THE ASSESSEE HAS SOUGHT TO MAKE OUT A CASE THAT THE AMOUNT WAS ACTUALLY RECEIVED FROM SMT.DEVIYANI NOPANI, WIF E OF ARVIND NOPANI TO WHOM THE ASSESSEE SOLD A PROPERTY. WHEN THIS CLAIM WAS MADE FOR THE FIRST TIME BEFORE THE CIT(A), HE COLLECTED INFORMATION FR OM THE CHARTERED ACCOUNTANT OF NOPANI WHO HAS STATED THAT NOPANI HAS ADVANCED RS.3,00,000/- TO ONE MS.GEETA BHAGAT BUT NO AMOUNTS WERE ADVANCED TO THE ASSESSEE DURING THE RELEVANT ACCOUNTING YEAR. THE BALANCE SHEET AN D RETURN OF INCOME OF NOPANI WERE FILED BEFORE THE CIT(A) AND THEY DID NO T SHOW ANY AMOUNT ADVANCED TO THE ASSESSEE. AS REGARDS THE ASSESSEE S CONTENTION THAT NO INQUIRY WAS MADE WITH THE WIFE OF NOPANI, THE CIT(A) STATED THAT THE DEPOSIT IS NOT IN HER NAME AND THEREFORE NO INQUIRY WAS CALLED UPON. ACCORDING TO THE CIT(A) THE ASSESSEES CLAIM CANNOT BE ACCEPTED IN THE ABSE NCE OF ANY CONFIRMATION FROM NOPANI THAT MONIES WERE PAID BY HIM TO THE ASS ESSEE FOR THE SALE OF THE PAGE - 3 ITA NO.3630/AHD/2002 -3- PROPERTY WHICH WAS REGISTERED IN THE NAME OF NOPANI S WIFE. HE THEREFORE CONFIRMED THE ADDITION OF RS.4,04,184/-. 5. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. AN AFFIDAVIT DATED 5-10- 2007 SWORN TO BY ARVIND NOPANI HAS BEEN COMPILED IN THE PAPER BOOK AT PAGES 9 TO 11. THIS AFFIDAVIT MERELY SAYS THAT THE ASSES SEE SOLD LANDS TO A COMPANY BY NAME M/S.DAN CEMENT TRADING PVT. LTD. AND TO DEVIYA NI NOPANI, WIFE OF ARVIND NOPANI AND THAT THE SALE PRICE WAS RS.2,33,3 85/- AND RS.2,15,308/- RESPECTIVELY. NOPANI FURTHER STATES THAT HE IS AWA RE OF THE TRANSACTIONS BECAUSE HE HAD NEGOTIATED THEM WITH THE ASSESSEE. HE FURTH ER STATES THAT HE HAS NOT PURCHASED THE LAND AND THAT THE LAND WAS PURCHASED BY THE COMPANY AND HIS WIFE FOR A TOTAL CONSIDERATION OF RS.4,04,184/-. W E ARE UNABLE TO SEE HOW THIS AFFIDAVIT CAN ADVANCE THE ASSESSEES CASE. THE ASS ESSEE HAS CREDITED THE AMOUNT OF RS.4,04,184/- TO THE ACCOUNT OF ARVIND NO PANI. NOPANI SAYS THAT HE HAS NOT ADVANCED ANY MONIES TO THE ASSESSEE. THERE AFTER, THE ASSESSEE SEEKS TO EXPLAIN THE CREDIT BEFORE THE CIT(A) THAT IT IS IN RESPECT OF LAND SOLD BY HIM TO THE WIFE OF NOPANI. THERE IS NO MENTION OF ANY LAN D SOLD TO DAN CEMENT TRADING PVT. LTD. BEFORE THE CIT(A). NOPANI SWEARS IN THE AFFIDAVIT THAT THE ASSESSEE HAS SOLD LANDS TO THE COMPANY AND HIS WIFE . THE AGGREGATE CONSIDERATION COMES TO RS.4,48,693/-. THIS DOES NO T TALLY WITH THE AMOUNT OF RS.4,04,184/- WHICH IS THE AMOUNT CREDITED IN THE A CCOUNT OF NOPANI. FURTHER, EVEN THE AMOUNTS SHOWN TO HAVE BEEN PAID TO THE ASS ESSEE FOR THE SALE OF THE LANDS UPTO 31-3-1996, AS PER THE SALE DEEDS, DO NOT TALLY WITH THE AMOUNT CREDITED IN THE ACCOUNT OF NOPANI. IN THESE CIRCUM STANCES, THERE IS NOTHING TO SHOW THAT THE AMOUNT OF RS.4,04,184/- REPRESENTS SA LE PROCEEDS OF THE LANDS, WRONGLY CREDITED TO THE ACCOUNT OF NOPANI. ACCORDI NGLY, THE ADDITION IS CONFIRMED AND THE GROUND IS DISMISSED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED FOR A DIRECTION THAT SINCE THE AMOUNT OF RS.4,04,184/- HAS BEEN SHOWN IN THE ASSES SMENT YEAR 1997-98 AS SALE PROCEEDS OF THE LAND AND CAPITAL GAINS HAVE BE EN OFFERED AND ASSESSED ON PAGE - 4 ITA NO.3630/AHD/2002 -4- THAT BASIS, THERE WILL BE DOUBLE TAXATION AND THERE FORE DIRECTION SHOULD BE GIVEN IN RESPECT OF THE SUBSEQUENT ASSESSMENT YEAR. WE D O NOT SEE HOW SUCH A DIRECTION CAN BE GIVEN IN RESPECT OF A YEAR WHICH I S NOT BEFORE US. OUR JURISDICTION EXTENDS ONLY TO THE ASSESSMENT YEAR WH ICH IS BEFORE US. THE ORDER OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN PERFECT E QUIPMENTS VS. DCIT, 85 ITD 50 WAS CITED. ON A PERUSAL OF THE SAME, WE FIN D THAT IN THAT CASE A FINDING OR DIRECTION RELATING TO ANOTHER YEAR WAS NECESSARY FOR THE DISPOSAL OF THE APPEAL BEFORE THE TRIBUNAL. THEREFORE THE SAME WAS GIVEN. HOWEVER, THE POSITION BEFORE US IS DIFFERENT. WE ARE DEALING WI TH THE ASSESSMENT YEAR 1997- 98 AND THE DISPUTE BEFORE US IS WHETHER THE ADDITIO N OF RS.4,04,184/- AS UNEXPLAINED CREDIT UNDER SECTION 68 IS JUSTIFIED. IN ORDER TO RESOLVE THE DISPUTE IT IS NOT NECESSARY FOR US TO GIVE ANY FINDING OR D IRECTION THAT THIS AMOUNT PERTAINS TO THE ASSESSMENT YEAR 1997-98 AND CANNOT BE THEREFORE ASSESSED IN THE YEAR UNDER APPEAL. THAT THIS AMOUNT IS THE SAME AS HAS BEEN ASSESSED IN THE ASSESSMENT YEAR 1997-98 IS A MATTER FOR INVESTIGATI ON AND IS ALSO NOT A FINDING THAT IS NECESSARY FOR DECIDING WHETHER THE ADDITION OF THE CREDIT UNDER SECTION 68 IN THE YEAR UNDER APPEAL IS JUSTIFIED OR NOT. W E ACCORDINGLY DECLINE TO ISSUE ANY DIRECTION AS PRAYED FOR THE ASSESSEE. THE ASSE SSEE MAY IF SO ADVISED PURSUE THE REMEDIES, IF ANY, AVAILABLE TO HIM UNDER LAW IN RESPECT OF THE ASSESSMENT YEAR 1997-98. 7. IN THE RESULT THE APPEAL IS DISMISSED WITH NO OR DER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT 4 TH OF SEPTEMBER, 2009. SD/- SD/- (P.K. BANSAL) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 04-09-2009 PAGE - 5 ITA NO.3630/AHD/2002 -5- COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD