M/s. Vision Builders, Ahmedabad V. The Dy.CIT.,(OSD),Circle-9, Ahmedabad

ITA 3829/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8935 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-08-2009
• Assessment Year: misc
• Appeal Filed On: 25-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: S N DIVETIA
• Section: 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND A.N. PAHUJA, ACCOUNTANT MEMBER) ITA NO.3829/AHD/2008 [ASSTT.YEAR : 1985-86] M/S.VISION BUILDERS 18, NEW ALKAPURI SOCIETY GULBAI TEKRA, AHMEDABAD. PAN : ADIPM 8687 Q VS. DCIT (OSD) CIR.9, AHMEDABAD. ITA NO.3830/AHD/2008 [ASSTT.YEAR : 1986-87] M/S.VISION BUILDERS 18, NEW ALKAPURI SOCIETY GULBAI TEKRA, AHMEDABAD. PAN : ADIPM 8687 Q VS. DCIT (OSD) CIR.9, AHMEDABAD. ASSESSEE BY : SHRI S.N.DIVETIA REVENUE BY : SMT.NEETA SHAH O R D E R PER R.V.EASWAR, VICE-PRESIDENT : THESE TWO APPEALS ARE BY THE ASSESSEE WHICH IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. THEY RELATE TO THE AYS 1985-86 & 1986 -87. 2. IN THE APPEAL FOR THE AY 1985-86 THE ONLY ADDITI ON DISPUTED IS THAT OF RS.3,00,000 MADE U/S.68 OF THE IT ACT. IN THE FIRST ASSESSMENT MADE ON 29-12- 1995 THE ASSESSING OFFICER MADE THE AFORESAID ADDIT ION AND THE MATTER WAS CARRIED TO THE TRIBUNAL WHICH BY ORDER DATED 24-11- 2006 SENT BACK THE SAME TO THE ASSESSING OFFICER FOR CONSIDERING THE EVIDENCE AND TAKING A FRESH DECISION. IN THE FRESH ASSESSMENT MADE PURSUANT TO THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER CALLED FOR THE EVIDENCE AND SINCE THE PARTNER SHRI N.R. TOLANI, IN WHOSE CAPITAL ACCOUNT THE CREDIT WAS SHO WN, HAD EXPIRED IN THE MEANTIME, HIS WIDOW FILED AN AFFIDAVIT TO THE EFFEC T THAT SHE HAD ADVANCED THE PAGE - 2 ITA NO.3829 AND 3830/AHD/2008 -2- AMOUNT OF RS.3 LAKHS TO HER HUSBAND OUT OF THE SALE PROCEEDS OF THE FLAT IN MUMBAI. THE AFFIDAVIT WAS NOT CONSIDERED SUFFICIENT TO ESTABLISH THE THREE INGREDIENTS OF THE CREDIT, VIZ., THE IDENTITY OF TH E CREDITOR, HIS FINANCIAL CAPACITY AND THE GENUINENESS OF THE TRANSACTION AND THE IMPU GNED ADDITION WAS MADE. THE SAME HAVING BEEN CONFIRMED BY THE CIT(A), THE A SSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. THE FIRST SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE CREDIT IS IN THE CAPITAL ACCOUNT OF THE PARTNER AND ACCORDING TO THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN CIT VERSUS PANKAJ DYESTUFF INDUSTRIES IN IT REFERENCE NO.241/1993 THE FIRM IS NOT ANSWERA BLE FOR THE SAME. IT IS NOT DISPUTED BY THE DEPARTMENTAL AUTHORITIES THAT THE C REDIT OF RS.3,00,000 IS APPEARING IN THE CAPITAL ACCOUNT OF NIHALCHAND R. T OLANI AS HIS CAPITAL CONTRIBUTION. THIS IS BORNE OUT BY PARAGRAPH 6 OF T HE ASSESSMENT ORDER. A SUM OF RS.2,50,000 WAS FOUND CREDITED ON 8-12-1984 AND ANOTHER SUM OF RS.50,000 WAS FOUND CREDITED ON 18-12-1984. THE CIT(A) HAS RE JECTED THE EVIDENCE ON THE GROUND THAT ONLY PHOTOCOPIES OF THE AFFIDAVIT A ND THE OWNERSHIP AGREEMENT TO SHOW THAT THE WIFE OF THE PARTNER WAS THE OWNER OF THE FLAT MENTIONED THEREIN WERE FILED, AND NOT THE ORIGINALS. IN OUR VIEW IT I S NOT NECESSARY TO EXAMINE THE EVIDENCE WHEN ADMITTEDLY THE CREDITS APPEAR AS CAPI TAL CONTRIBUTION MADE BY THE PARTNER IN THE CAPITAL ACCOUNT. IN SUCH A SITUA TION, THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT APPLIES. IT IS OPEN TO T HE INCOME-TAX AUTHORITIES TO CONSIDER THE QUESTION WHETHER AN ADDITION IS REQUIR ED TO BE MADE IN THE HANDS OF THE PARTNER CONCERNED, BUT THE FIRM IS NOT ANSWE RABLE AND NO ADDITION CAN BE MADE IN ITS CASE U/S.68. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DELETE THE ADDITION AND ALLOW THE APPEAL FOR THE AY 1985-86. 4. THE APPEAL FOR THE AY 1986-87 IS DIRECTED AGAINS T THE ADDITION OF RS.13,00,000 U/S.68 OF THE ACT. THE ASSESSEE RECEIV ED TWO DEPOSITS DURING THE RELEVANT PREVIOUS YEAR: (I) RS.3,00,000 FROM M/S. T HAKSONS INTERNATIONAL AND PAGE - 3 ITA NO.3829 AND 3830/AHD/2008 -3- (II) RS.10,00,000 FROM M/S. RUKMA KISHAN & SONS. SI NCE NO CONFIRMATION OR PAN NUMBERS OF THE CREDITORS WERE FURNISHED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE CREDITS WERE ADDED. THE ADDITION W AS CONFIRMED BY THE CIT(A) BUT WHEN THE MATTER REACHED THE TRIBUNAL, TH E SAME WAS RESTORED TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION IN THE LI GHT OF THE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE. IN THE FRESH ASSESSMENT PRO CEEDINGS, THE ASSESSEE SUBMITTED THAT THE AMOUNTS WERE RECEIVED BY CHEQUES AND NOT CASH AND ALSO PRODUCED CONFIRMATION FROM BOTH THE CREDITORS. IT W AS EXPLAINED THAT THAKSONS INTERNATIONAL IS A CONCERN OWNED BY JAIKISHAN T. LA KHANI, A PARTNER OF THE ASSESSEE-FIRM AND THAT THE LOAN FROM RUKMA MISHAN & SONS WAS OBTAINED AGAINST SECURITY OF THE MORTGAGE OF IMMOVABLE PROPE RTY BELONGING TO VISION BUILDERS PVT LTD. AND THAT THE SAME HAS BEEN REGIST ERED WITH THE ROC BY FILING THE PRESCRIBED FORM NO.8 FOR CREATING A CHARGE ON T HE ASSETS OF THE COMPANY. THE RELEVANT PAPERS WERE ALSO FURNISHED TO THE ASSE SSING OFFICER. IT WAS ALSO POINTED OUT THAT THE CREDITORS WERE BOTH ASSESSED T O TAX. 5. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT PRODUCE ANY FRESH CONFIRMATION FROM THAKSONS INTERNATIONAL AND WHAT WAS PRODUCED WAS DATED 25-2-1993. HE ALSO NOTED THAT THE PRESENT ADD RESS OF THE SAID FIRM WAS NOT GIVEN AND THAT THE EARLIER CONFIRMATION ONLY CONTAI NED THE OLD GIR NO. OF THE SAID FIRM AND THEREFORE IT IS DIFFICULT TO VERIFY T HE VERACITY OF THE CLAIM OF THE ASSESSEE. HENCE THE ASSESSING OFFICER ADDED THE AMO UNT OF RS.3,00,000. 6. AS REGARDS THE CREDIT OF RS.10,00,000 IN THE NAM E OF RUKMA KISHAN & SONS, THE ASSESSING OFFICER OBSERVED THAT THE STATE MENT OF ACCOUNT WAS SIGNED BY THE ACCOUNTANT AND WAS NOT DATED. SIMILARLY, HE NOTED THAT THE PAN NUMBER GIVEN WAS THE OLD NUMBER MAKING IT DIFFICULT FOR VE RIFICATION. THE CONFIRMATION LETTER ALSO WAS REJECTED ON THE GROUND THAT IT APPE ARED TO BE OLD. THUS THE AMOUNT WAS ADDED U/S.68. PAGE - 4 ITA NO.3829 AND 3830/AHD/2008 -4- 7. THE CIT(A) CONFIRMED THE ADDITIONS ON SUBSTANTIA LLY THE SAME REASONS AS THOSE GIVEN BY THE ASSESSING OFFICER AND HENCE T HE PRESENT APPEAL. 8. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR AT TENTION TO THE STATEMENT GIVEN BY J.T. LAKHANI (PAGE 18 OF THE PAPER BOOK) I N WHICH HE HAS STATED THAT THAKSONS INTERNATIONAL HAD FILED RETURNS UP TO AUGU ST 1984. OUR ATTENTION WAS ALSO INVITED TO PAGE 20 WHICH IS THE CONFIRMATION O F THAKSONS INTERNATIONAL. THE ORIGINAL CONFIRMATION IS ON 25-2-1993 BUT IT HA S BEEN RECONFIRMED ON 21-7- 08. IT SHOWS THAT THREE AMOUNTS OF RS.1,00,000 EACH HAVE BEEN GIVEN TO THE ASSESSEE BY CHEQUES ON 14-12-85, 16-12-85 AND 30-9- 85. THE PAPER BOOK, AT PAGE 30, ALSO CONTAINS THE LEDGER ACCOUNT OF THE AS SESSEE IN THE BOOKS OF RUKMA KISHIN & SONS, SHOWING THE DEBIT OF RS.10,00,000 IN THE ASSESSEES ACCOUNT. THE PAPER BOOK ALSO CONTAINS THE PARTICULARS FURNIS HED TO THE ROC UNDER THE COMPANIES ACT BY VISION BUILDERS (PVT) LTD NOTIFYIN G HIM REGARDING THE CHARGE CREATED BY WAY OF EQUITABLE MORTGAGE ON 19-2 -1985 FOR THE LOAN OF RS.10 LAKHS. IT IS CONTENDED THAT THE CREDIT OF RS. 2 LAKHS IN THE NAME OF RUKMA KISHIN & SONS HAS BEEN ACCEPTED AS GENUINE IN THE A Y 1987-88. OUR ATTENTION WAS DRAWN TO THE FOLLOWING JUDGMENTS: A) PRAGATI CO-OPERATIVE BANK (278 ITR 170) (GUJ) B) DAHOD SAHAKARI KHARID VECHAND SANGH LTD. VS. CIT, 2 82 ITR 321) (GUJ) C) NEMI CHAND KOTHARI VS. CIT, 264 ITR 254) (GAU.) D) CIT VS. ORISSA CORPORATION PVT. LTD., (159 ITR 78) (SC) ON THE OTHER HAND, THE LEARNED SR. DR SUBMITTED WIT H REFERENCE TO PAGE 20 OF THE PAPER BOOK THAT NO CONNECTION HAS BEEN ESTABLIS HED BETWEEN J.T. LAKHANI AND THAKSONS INTERNATIONAL. HE ALSO CONTENDED THAT THE INTIMATION GIVEN TO THE ROC IS BY A PRIVATE LIMITED COMPANY AND NOT BY THE ASSESSEE AND IT IS NOT CLEAR HOW THE ASSESSEE-FIRM IS INVOLVED IN THE SAME. ACCO RDING TO THE LEARNED DR, THE ASSESSEE HAS FAILED TO PROVE THE SOURCE OF THE CREDITS AND HAS NOT SUBMITTED PAGE - 5 ITA NO.3829 AND 3830/AHD/2008 -5- ANY EVIDENCE IN THE FRESH PROCEEDINGS, EXCEPT REITE RATING AND RENEWING THE EVIDENCE ALREADY ADDUCED IN THE EARLIER PROCEEDINGS WHICH WERE NOT CONSIDERED SUFFICIENT IN THE EARLIER PROCEEDINGS. STRONG RELIA NCE WAS PLACED ON THE JUDGMENT OF THE DELHI HIGH COURT IN INDUS VALLEY PR OMOTERS LTD. V CIT (2008) 305 ITR 202. 9. ON A CAREFUL CONSIDERATION OF THE FACTS AND THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE CREDIT OF RS.3,00,000 IN THE N AME OF THAKSONS INTERNATIONAL MAY BE ACCEPTED AS GENUINE. THE LINK BETWEEN THE PA RTNER OF THE ASSESSEE-FIRM J.T. LAKHANI AND THAKSONS INTERNATIONAL IS ESTABLIS HED BY THE STATEMENT OF LAKHANI THAT HE IS A 90% PARTNER IN THAKSONS INTERN ATIONAL. THAKSONS INTERNATIONAL HAD FILED A CONFIRMATION DATED 25-2-1 993 BUT THE SAME WAS RECONFIRMED ON 21-7-08 AND THIS CONFIRMATION GIVES ALL THE DETAILS OF THE CREDITS (PAGE 20 OF THE PAPER BOOK). THE LETTER-HEAD IN WHI CH IT IS GIVEN SHOWS THE ADDRESS AND THERE IS NO MATERIAL TO SHOW THAT IT HA S CHANGED. THAT ADDRESS COULD HAVE BEEN VERIFIED BY THE ASSESSING OFFICER AND IT WOULD HAVE PERHAPS BEEN POSSIBLE FOR HIM TO DOUBT THE VERACITY OF THE CONFI RMATION IF HE HAD RECEIVED NO RESPONSE FROM THE CREDITOR. IN THIS VIEW OF THE MAT TER, WE FIND NO STRONG REASONS TO SUSTAIN THE ADDITION WHICH IS HEREBY DELETED. 10. AS REGARDS THE CREDIT OF RS.10,00,000 STANDING IN THE NAME OF RUKMA KISHIN & SONS, THE POSITION IS LIKE THIS. BEFORE TH E ASSESSING OFFICER THE ASSESSEE HAD STATED THAT IT IS LOAN RECEIVED AGAINS T SECURITY OF THE IMMOVABLE PROPERTY BELONGING TO A COMPANY BY NAME VISION BUIL DERS PVT. LTD. PAGE 33 OF THE PAPER BOOK IS A LETTER FROM THE DEPARTMENT OF C OMPANY AFFAIRS TO THE ABOVE COMPANY IN CONNECTION WITH THE FORM NO.8 FILED BY I T WITH THE ROC. IN THIS LETTER, THE COMPANY HAS BEEN ASKED TO GIVE FULL PAR TICULARS OF THE MORTGAGE, DETAILS OF THE PROPERTY ETC. IN RESPONSE THERETO, T HE COMPANY HAD SUBMITTED A REVISED FORM UNDER COVER OF LETTER FILED WITH THE R OC, AHMEDABAD ON 13-5- 1986 (PAGE 34). THE ENCLOSURES TO THIS FORM (PAGE 3 5 ONWARDS) SHOW THE FULL PAGE - 6 ITA NO.3829 AND 3830/AHD/2008 -6- PARTICULARS RELATING TO THE CHARGE. IT IS SEEN THAT THE EQUITABLE MORTGAGE IS BY WAY OF DEPOSIT OF TITLE DEEDS RELATING TO A PLOT AT ELLISBRIDGE, AHMEDABAD, MADE BY THE COMPANY WITH M/S. RUMA KASHIN & SONS, SOLE P ROPRIETARY CONCERN OF KISHANCHAND MOOTOMAL JESWANI HUF. IN PARAGRAPH 4 OF THE REVISED FORM (PAGE 36) IT HAS BEEN AVERRED THAT THE CONSIDERATIO N FOR THE MORTGAGE IS THE ADVANCE OF RS.10,00,000 BY THE ABOVE HUF (I.E., RUM A KSHIN & SONS, IN EFFECT) WITH INTEREST, TO M/S. VISION BUILDERS. THE REVISED FORM IS DATED 18-2- 1985 AND IS SIGNED BY A DIRECTOR OF VISION BUILDERS PVT LTD. THE MEMORANDUM CREATING THE CHARGE IS AT PAGE 37 OF THE PAPER BOOK AND IT SHOWS THAT THE ASSESSEE FIRM IS DEVELOPING THE WHOLE OF THE PLOT A T ELLISBRIDGE REFERRED TO ABOVE UNDER A SCHEME KNOWN AS SUMATHINATH COMPLEX A ND THAT THE FUNDS ARE NEEDED FOR THE SAID PROJECT, THAT THE COMPANY REQUE STED RUMA KISHIN & SONS TO LEND THE MONEY TO THE ASSESSEE-FIRM ON THE STRENGTH OF THE EQUITABLE MORTGAGE AND THAT WAS HOW THE MONIES WERE ADVANCED TO THE AS SESSEE-FIRM BY THE SAID RUMA KISHIN & SONS. THE MONIES ADVANCED THUS STAND ESTABLISHED BY THE REVISED FORM SUBMITTED TO THE ROC BY THE PRIVATE LI MITED COMPANY ON BEING DIRECTED TO DO SO WITH FULL PARTICULARS. THE LETTER AT PAGE 34 OF THE PAPER BOOK BEARS THE ACKNOWLEDGMENT OF THE ROC, AHMEDABAD ON 1 3-5-1986 AND THIS LETTER HAS BEEN FOUND BY THE CIT(A) IN THE ASSESSME NT RECORD. THE ADVANCE OF RS.10,00,000 MADE BY RUMA KISHIN & SONS TO THE ASSE SSEE-FIRM THUS APPEARS TO BE FACTUALLY CORRECT. WE ACCORDINGLY ACCEPT THE SAME AND DELETE THE ADDITION. 11. IN THE RESULT, THE ADDITIONS ARE DELETED AND TH E APPEAL IS ALLOWED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT 25 TH SEPTEMBER, 2009. SD/- SD/- (A.N. PAHUJA) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 25-09-2009 PAGE - 7 ITA NO.3829 AND 3830/AHD/2008 -7- COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD