Abhishek Tractor House, Surat V. The Income tax Officer,Ward-5(1), Surat

ITA 3795/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5699 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 26-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 3795/AHD./2008 ASSESSMENT YEAR : 2005-2006 ABHISHEK TRACTOR HOUSE, SURAT -VS.- INCOME TAX OFFICER, WARD-5(1), SURAT (PAN : AAEFA 8430 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RASESH SHAH RESPONDENT BY : SMT. JYOTI LAXMI, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 06.10.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-III, SURAT FOR THE ASSESSMENT YEAR 2005-06. 2. GROUND NO. 1 OF THIS APPEAL IS AGAINST CONFIRMIN G THE ACTION OF ASSESSING OFFICER IN MAKING THE ADDITION OF RS.10,00,000/-ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 3. THE FACTS RELATING TO CONTROVERSY INVOLVED IN TH IS GROUND OF APPEAL ARE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAD RAISED NEW UNSECURED LOANS FROM MANJULABEN (RS.1,75,000/-), SHRI MAHESH SHAH (RS.3,25,000/-) AND SHRI RAKESH SHAH(RS.5,00,000/-). THE ASSESSING OFFICER FOUND TH AT ALL THREE PERSONS HAD DEPOSITED CASH IN THEIR BANK ACCOUNTS ON THE SAME OF ISSUING THE CHEQ UE FOR ADVANCING LOAN TO THE ASSESSEE. THE AVERAGE BANK BALANCE IN THEIR ACCOUNTS WAS RS.2,000 /- OR LESS. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE REGARDING SOURCE OF THE DEPOSIT O F CASH IN RESPONSE TO WHICH, THE ASSESSEE STATED THAT SHRI MAHESH SHAH WAS AN AGRICULTURIST A ND HAD REGULAR AGRICULTURAL INCOME OF RS.8 LACS TO RS.10 LACS PER YEAR. DURING THE ASSESSMENT YEAR 2005-06, HE EARNED AGRICULTURAL INCOME OF RS.2,99,110/- FROM SUGARCANE CULTIVATION AND RS.4,9 9,517/- FROM BANANA CULTIVATION. THERE WAS NO BANK ACCOUNT IN HIS VILLAGE SO HE WOULD KEEP SUR PLUS CASH AT TIME. IT WAS ALSO STATED THAT THE DEPOSITOR RECEIVED RS.3,41,312/- FROM ONE MAHAVIR F RUIT CENTRE FOR SALE OF BANANA AND ALSO WITHDREW CASH FROM BANK OF RS.1,01,500/- FOR THE PE RIOD 1.4.2004 TO 19.6.2004. 2 ITA NO. 3795/AHD/2008 3.1. IN THE CASE OF SHRI RAKESH SHAH, IT WAS EXPLAI NED THAT HE WAS ALSO AN AGRICULTURIST HAVING A REGULAR INCOME OF RS.4 LACS TO RS.5 LACS PER YEAR AND KEEPS HIS SURPLUS CASH AT HAND SINCE THE BANK WAS SITUATED IN A FAR AWAY PLACE. IN RESPECT O F SMT. MANJULABEN, BEFORE THE ASSESSING OFFICER IT WAS STATED THAT SHE IS ALSO AN AGRICULTU RIST HAVING REGULAR INCOME OF RS.3 LACS TO RS.4 LACS PER YEAR. 4. THE ASSESSING OFFICER ANALYZED THE DETAILS FURNI SHED BY THE ASSESSEE AND TO VERIFY THE CLAIM ISSUED SUMMONS UNDER SECTION 131 OF THE ACT T O THE PROPRIETOR OF MAHAVIR FRUIT CENTRE BUT THE SAME WAS NOT RESPONDED TO. THE ASSESSING OFFICE R TOOK THE VIEW THAT ALTHOUGH THE IDENTITY OF SHRI MAHESH SHAH WAS ESTABLISHED BUT THE SOURCE OF CASH DEPOSIT EXPLAINED BY THE ASSESSEE IN HIS CASE WAS WITHOUT ANY SUPPORTING EVIDENCE. THE ASSES SING OFFICER HELD THAT THE CASH WITHDRAWALS MADE BY SHRI MAHESHBHAI WAS FOR SOME OTHER PURPOSE BUT WAS SHOWN FOR THE PURPOSE OF LOAN. FURTHER, THE WITHDRAWALS WERE ON DIFFERENT DATES FR OM 13.4.2004 TO 26.5.2004 THEN THERE WAS NO JUSTIFICATION OF DEPOSITING THE SAME AGAIN FOR GIVI NG LOAN. THE ASSESSING OFFICER ALSO OBSERVED THAT CASH RECEIVED AGAINST BANANA SALE WAS AGAIN A COOKED UP STORY SINCE THE ASSESSEE WAS RESIDING IN BHARUCH DISTRICT AND IT WOULD NOT BE EC ONOMICALLY VIABLE TO MAKE SALE IN SURAT WHICH WAS FAR AWAY AND THIS WAS EVIDENT FROM THE FACT THA T SUMMONS ISSUED ON MAHAVIR FRUIT CENTRE WAS NOT COMPLIED. FURTHER, THE ASSESSEE DID NOT PRO DUCE THE PERSON FOR VERIFICATION. THE ASSESSING OFFICER ALSO POINTED OUT THAT IN CASE OF SHRI JAYANTILAL HARSORA, PARTNER OF THE ASSESSEE- FIRM, IT WAS SEEN DURING THE COURSE OF HIS ASSESSME NT THAT SHRI MAHESH SHAH HAD GIVEN LOAN OF RS. 4 LACS TO HIM. IN THAT CASE, THE LOAN WAS HELD TO BE BOGUS. THEREFORE, THE TRANSACTION OF THE ASSESSEE WITH SHRI MAHESH SHAH WAS NOT GENUINE, SIN CE SHRI MAHESH SHAH WAS HABITUATED TO ISSUE CHEQUES FOR LOAN BY RECEIVING CASH FROM DIFFE RENT PERSONS. IN THE CASE OF SHRI RAKESH SHAH, THE ASSESSING OFFICER OBSERVED THAT SOURCE OF DEPOS IT OF CASH OF RS.6,00,050/- IN HIS BANK ACCOUNT FOR ISSUE OF CHEQUE FOR LOAN WAS NOT ESTABL ISHED. SIMILARLY IN THE CASE OF SMT. MANJULABEN SHAH, THE SOURCE OF DEPOSIT IN THE BANK WAS ALSO NOT ESTABLISHED AND, THEREFORE, HE TREATED THE ENTIRE AMOUNT OF LOANS AS UNEXPLAINED C ASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 5. ON APPEAL, BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) THE ASSESSEE FILED AFFIDAVITS OF THE DEPOSITORS, THEIR IDENTITY PROOF, AGRICULTURAL LAND RECORD AND EVIDENCE OF AGRICULTURAL INCOME. BEFORE THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), IT WAS 3 ITA NO. 3795/AHD/2008 SUBMITTED THAT SHRI MAHESH SHAH HAD SOLD BANANA TO MAHAVIR FRUIT CENTRE, SURAT AND IF THE SAID PARTY DID NOT ATTEND IN RESPONSE TO SUMMONS, ADVERS E VIEW CANNOT BE TAKEN IN THE CASE OF ASSESSEE. WITH REGARD TO OBSERVATION OF ASSESSING O FFICER THAT THE BANANA WAS SOLD FAR AWAY FROM THE VILLAGE WAS ALSO NOT CORRECT BECAUSE IN CASE OF SALE OF AGRICULTURAL DUES, THE PURCHASER WOULD COME TO THE VILLAGE. IT WAS FURTHER SUBMITTED THAT THE LOAN WAS ALSO REPAID THROUGH ACCOUNT PAYEE CHEQUE IN THE SUBSEQUENT YEAR. IN THE CASE OF SHRI RAKESH SHAH AND SMT. MANJULABEN SHAH, THE LOANS HAD BEEN REPAID THROUGH ACCOUNT PAYEE CHEQUE. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAD DRAWN ADVERSE INFERENCE ON THE GROUND T HAT NEXUS BETWEEN AGRICULTURAL INCOME EARNED BY DEPOSITORS AND ITS DEPOSIT IN THE BANK AC COUNT WAS NOT ESTABLISHED. IN CASE THE SOURCE OF SOURCE CANNOT BE PROVED, NO ADDITION CAN BE MADE IN THE CASE OF ASSESSEE. 6. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTI ON OF ASSESSING OFFICER FOR THE DETAILED REASONS GIVEN IN PAGE 3, WHICH READS AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS AND FIND THAT TH E ENTIRE DEPOSITS RECEIVED BY THE APPELLANT IS CLAIMED TO BE FROM AGRICULTURIST. ALTH OUGH, THERE IS VERY LITTLE DOUBT ABOUT THE CREDITWORTHINESS OF THESE THREE PARTIES, THE GENUIN ENESS OF TRANSACTIONS IS DOUBTFUL. IT HAS BEEN STALED THAT CASH WAS DEPOSITED IN THE BANK ACC OUNT OF THE DEPOSITORS ON THE SOME DAY WHEN THE CHEQUE OF DEPOSIT WAS ISSUED. THE SOUR CE OF THE CASH DEPOSITS IS STATED TO BE SALE PRICE OF BANANA PRODUCED BY THE SAID AGRICULTU RIST TO MAHAVIR FRUIT CENTRE, SURAT. THIS APPEARS TO BE A MADE UP STORY SINCE THE TRANSA CTION HAS NOT BEEN CONFIRMED BY MAHAVIR FRUIT CENTRE. I AM ALSO INCLINED TO AGREE W ITH THE AO THAT THERE APPEARS TO BE NO PLAUSIBLE REASON AS TO WHY BANANA CULTIVATED IN BHARUCH WOULD BE SOLD IN A DISTANT PLACE LIKE SURAT WHEN READY MARKET FOR THE SAME WOU LD BE AVAILABLE IN BHARUCH ALSO. FURTHER, IT IS SEEN THAT IN ALL THREE CASES OF DEPO SITORS, BANK ACCOUNTS ARE BEING MAINTAINED BUT THE AVERAGE BANK BALANCE IS LESS THA N RS,2,000/- IN EACH CASE, EXCEPT ON THE DAY WHEN THE CHEQUE WAS ISSUED AFTER DEPOSITING CASH. IT IS AGAIN A CONTRADICTION THAT ON ONE KIND THE APPELLANT STALES THAT THEIR BANKS W ERE ABOUT 10 KMS. AWAY FROM THEIR VILLAGES AND THAT IS WHY THEY WOULD KEEP CASH FROM THE AGRICULTURAL INCOME AT THEIR RESIDENCES. IF THAT WAS THE CASE, THERE WAS NO JUST IFICATION IN HAVING A BANK ACCOUNT AT ALL. IT IS ALSO IMPORTANT TO NOTE THAT IN THE CASE OF SHRI MAHESHBHAI SHAH A SUM OF RS.1,01,500/- STATED TO BE PART OF THE CASH DEPOSIT IN THE BANK ACCOUNT HAS BEEN CLAIMED TO HAVE BEEN WITHDRAWN FROM BHARUCH DIST. BANK ON D IFFERENT DATES FROM 13.04.2004 TO 26.05.2004 AND AFTER A LAPSE OF ONE MONTH, IT WAS D EPOSITED AGAIN TOR GIVING LOAN TO THE APPELLANT. THE WITHDRAWALS DURING THESE DATES WOULD BE USED FOR SOME OTHER PURPOSES AND DEPOSIT OF CASH OUT OF THESE WITHDRAWALS IS ONL Y AN AFTERTHOUGHT. IT IS ALSO IMPORTANT TO NOTE THAT SHRI MAHESHBHAI HAS GIVEN LOANS OF RS. 4 LACS TO ONE OF THE PARTNERS OF THE APPELLANT WHICH WAS HELD TO BE BOGUS. IN THE INSTAN T CASE ALSO A COOKED UP STORY OF MAKING SALES TO MAHAVIR FRUIT CENTRE HAS BEEN PRESE NTED. AGAIN IN THE CASE OF SHRI RAKESHBHAI SHAH, THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT HAS NOT BEEN SATISFACTORILY EXPLAINED. IF HE WAS HAVING BANK ACC OUNT, THERE WAS NO JUSTIFICATION IN HAVING MORE THAN RS.6 LACS IN CASH AT HAND WHICH WA S DEPOSITED IN THE FRANK ACCOUNT ON 4 ITA NO. 3795/AHD/2008 THE DAY OF THE TRANSACTION. AGAIN IN THE CASE OF SM T. MAJULABEN SHAH THE SOURCE OF DEPOSIT IN CASH OF RS.2,75,600/- IN HER BANK ACCOUN T ON THE SAME DAY IS NOT PROVED SINCE DEPOSITING SUCH A SUM WHICH IS NOT IN ROUND FIGURES RAISES DOUBTS ABOUT THE GENUINENESS. THIS IS ALMOST THE EXACT AMOUNT INCLUDING THE DRAFT CHARGES LEVIED BY THE BANK ON THE DRAFT GOT MADE FOR GIVING LOANS TO THE APPELLANT AN D ITS SISTER CONCERN. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT THE ENTI RE EXERCISE OF DEPOSITING CASH IN THE BANK ACCOUNTS OF THESE THREE SO CALLED CREDITORS, T HE SOURCE OF WHICH IS HIGHLY DOUBTFUL, HAS BEEN DONE BY THE APPELLANT ITSELF AND IT IS THE UNEXPLAINED CASH AVAILABLE WITH THE APPELLANT WHICH HAS BEEN DEPOSITED IN THE THREE BAN K ACCOUNTS OF THE AGRICULTURIST AND THE STORIES COOKED UP TO EXPLAIN THE SOURCE THEREOF . I AM ALSO NOT INCLINED TO AGREE WITH THE APPELLANT THAT THE SOURCE OF SOURCE COULD NOT B E QUESTIONED. IN THE INSTANT CASE IT IS THE VERY SOURCE OF THE DEPOSITS WHICH IS UNEXPLAINE D AND THE ENTIRE TRANSACTION IS SHAM TRANSACTION. THE AO THEREFORE HAS RIGHTLY TREATED T HE SAID DEPOSITS AS UNEXPLAINED CASH DEPOSITS U/S 68 OF THE IT ACT AND ADDITION ON THIS ACCOUNT IS THEREFORE CONFIRMED. 7. AT THE TIME OF HEARING BEFORE US, SHRI RASESH SH AH, LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE FILED A PAPER BOOK CONTAINING 52 PAGES, WH ICH, INTER ALIA, INCLUDES AFFIDAVIT OF THE LENDER, CONFIRMATION OF THE LENDER, IDENTITY OF THE LENDER. IT WAS SUBMITTED THAT ENTIRE ADDITION HAS BEEN MADE ON DOUBTS AND SUSPICION. IT WAS FURTHER S UBMITTED THAT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE H AS FILED THE AFFIDAVIT. THE LOANS WERE RETURNED TO ALL THE THREE LENDERS THROUGH ACCOUNT P AYEE CHEQUES, THEREFORE, THE ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX ACT BE DELETED. 8. ON THE OTHER HAND, SMT. JYOTI LAXMI, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 9. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS WELL SETTLED LAW THAT IT IS NOT THE DU TY OF THE ASSESSEE TO PROVE THE SOURCE OF SOURCE. I T IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS NOT EXAMINED ALL THE THREE CREDITORS. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IT WAS CLAIMED THAT THE AMOUNTS OF LOANS WERE REFUNDED TO ALL THE THREE LENDERS THROUGH A/C. PAYE E CHEQUE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER IGNORED T HIS VITAL CONTENTION OF THE ASSESSEE. BOTH THE DEPARTMENTAL AUTHORITIES BELOW DOUBTED THE GENU INENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS BECAUSE NONE OF T HE CREDITORS ARE ASSESSED TO TAX. THEREFORE, IN OUR OPINION, IT WILL MEET THE END OF JUSTICE IF THE IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD PRODUCE ALL THE CREDITORS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL MAKE NECESSARY ENQUIRY AS REQUIRED UNDER SECTION 68 OF THE 5 ITA NO. 3795/AHD/2008 INCOME TAX ACT, 1961 AND IF SATISFIED ABOUT THE GEN UINENESS AND CREDITWORTHINESS OF THE CREDITORS IN ADDITION TO VERIFICATION OF CLAIM ABOU T RETURN OF MONEY BY ACCOUNT PAYEE CHEQUE, HE WILL DELETE THE ADDITION. TO SUM UP, THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER, WHO WILL RE-ADJUDICATE THE ADDITION OF RS.10,00,000 /- AFRESH UNDER SECTION 68 OF THE INCOME TAX ACT KEEPING IN VIEW OF OUR DIRECTION CONTAINED HERE INABOVE. 10. THE ONLY GROUND OF APPEAL IS AGAINST PARTLY CON FIRMING THE DISALLOWANCE OF RS.5,000/- OUT OF TOTAL DISALLOWANCE OF RS.9,970/- MADE BY THE ASS ESSING OFFICER OUT OF VARIOUS EXPENSES VIZ. MISCELLANEOUS, COMPUTER REPAIRING, STATIONERY AND V EHICLE EXPENSES. 11. WE HAVE HEARD BOTH THE SIDES. THE ASSESSING OFF ICER MADE A DISALLOWANCE OF RS.9,970/- AND ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) RESTRICTED THE DISALLOWANCE TO RS.5,000/-. ADMITTEDLY, COMPLETE VOUCHERS WERE NOT AVAILABLE FOR VERIFICATION. THEREFORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) IS FAIR AND REASONABLE. WE, THEREFORE, INCLINE TO UPHOLD THE ORDER OF LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). RESULTANTLY, THIS GROUND IS APPEAL IS REJECTED. 12. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 02.07.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02 / 07 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.