Shri Prakashchandra I.Gajjar, Surat V. The Income tax Officer,Ward-3(1), Surat

ITA 388/AHD/2013

• Counselvise Citation: 38820514 RSA 2013
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Rectification of order
• Section: 143(3); 68; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T. R. MEENA, ACCOUNTANT MEMBER ITA NO. 388/AHD/2013 A.YS. 2008-09 SHRI PRAKASHCHANDRA I. GAJJAR, 16/124, KHATODARA COLONY, UDHNA DARWAJA, GHB, SURAT. PAN: AAWPG 3727G VS THE INCOME TAX OFFICER, WARD-3(1), SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.L. KUREEL, SR.D.R. ASSESSEE(S) BY : SHRI M. K. PATEL, A.R. DATE OF HEARING : 03/10/ 2013 DATE OF PRONOUNCEMENT : 11/10/2013 O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M AN ORDER OF LEARNED CIT(A)-IV, SURAT, DATED 12.12.2012 AND THE GROUNDS RAISED ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING THE ADDITION OF RS.85,000/- BEING UNSECURED LOAN ACCEPTED DURING THE YEAR FROM HEMANGI V. GAJJAR BY TREATING IT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961. THE ASSESSING OF FICER HAS NOT MADE ADDITION OF ABOVE AMOUNT IN THE ORDER U/S. 143(3) DATED 07.1 0.2010 BUT HE ERRED IN MAKING ABOVE ADDITION WHILE PASSING ORDER GIVING EF FECT TO ORDER OF CIT(A)-II, SURAT DT. 14.03.2011 AND GROSSLY ERRED IN REJECTING RECTIFICATION APPLICATION FILED BY ASSESSEE IN THIS REGARD. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF ASSESSING OFFICER IN MAKING THE ADDITION OF RS.2,400/- ON INTEREST EXPEN SES. ITA NO.388/AHD/20 13 PRAKASH CHANDRA I. GAJJAR V/S. ITO SURAT 2008-09 - 2 - 2. FROM THE SIDE OF THE APPELLANT, LEARNED AR, MR. MEHUL SHAH APPEARED AND HAS DRAWN OUR ATTENTION UPON THE FOLLO WING ORDERS: (A) ASSESSMENT ORDER U/S. 143(3) DATED 7.10.2010 FO R A.Y. 2008- 09, WHEREIN AN ADDITION OF RS.9,18,975/- WAS AS UNE XPLAINED CASH CREDIT U/S.68 OF IT ACT. (B) ORDER OF CIT(A)-II, SURAT, DATED 14.02.2011 WHE REIN THE ADDITION OF RS.9,18,975/- AND CONSEQUENTIAL INTERES T OF RS.13,997/- TOTALING RS.9,32,972/- WAS DELETED. 3. AN ORDER DATED 14.3.2011 GIVING EFFECT TO THE OR DER OF LEARNED CIT- II, SURAT IS REFERRED. IN THIS ORDER, THE AO HAS AD DED AS SUM OF RS.85,000/- AS UNEXPLAINED CASH CREDIT AND CONSEQUE NTIAL INTEREST THEREUPON. A RECTIFICATION ORDER U/S. 154, DATED 20 TH OF MAY, 2011, RELEVANT PARAGRAPHS ARE REPRODUCED BELOW: ON VERIFICATION OF CASE RECORDS IT WAS FOUND THAT IN THE BODY OF ASSESSMENT ORDER THE THEN AO HAS DISCUSSED IN DETAILS THIS ISS UE AND IN ABSENCE OF COMPLETE DETAILS BEING SUBMITTED BY THE ASSESSEE HE LD THAT THE ASSESSEE HAS INTRODUCED HIS UNACCOUNTED INCOME BEING THE NAME OF THIS DEPOSITOR I.E. HIMANGI VIPUL GAJJAR AND MADE ADDITION OF RS.87,400 /- IN THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE FAILED TO PROVE TH E GENUINENESS OF CASH CREDIT, INTEREST EXPENSES CLAIMED ON IT WAS ALSO DISALLOWED AND ADDED TO ASSESSEES TOTAL INCOME. BUT WHILE DETERMINING THE TOTAL INCOM E, THE AMOUNT OF RS.85,000/- AS ABOVE REMAINED TO BE INCLUDED. 4. AGAINST THIS ORDER, THE IMPUGNED ORDER OF LEARNE D CIT(A) HAS BEEN PASSED (SUPRA) DATED 12.12.2012, WHEREIN IT WAS CON CLUDED AS UNDER: AGAINST THIS RECTIFICATION ORDER THE APPELLANT HAS FILED THIS APPEAL. THE CONTENTION OF THE APPELLANT THAT THE LOAN AMOUNT OF RS.85,000/- APPEARING IN THE NAME OF HEMANGI V. GAJJAR WAS NOT A SUBJECT MAT TER OF APPEAL BEFORE CIT(A) AS NO ADDITION WAS MADE WHILE PASSING THE OR DER U/S 143(3) OF THE IT ACT IS NOT CORRECT. FROM PAGE-8 OF THE ASSESSMENT O RDER IT IS EVIDENT THAT THE AO HAS SPECIFICALLY GIVEN THE REASONS FOR HOLDING T HE UNSECURED LOAN TAKEN FROM HEMANGI VIPULKUMAR GAJJAR OF RS.85,000/- AND I NTEREST THEREON OF RS.2400/- AS THE APPELLANTS UNACCOUNTED INCOME. TH E CIT(A) HAS CONFIRMED THIS ADDITION AS THE APPELLANT HAD FAILED TO FILE C OPY OF BALANCE SHEET, BANK STATEMENT AND THE RETURN OF INCOME FILED BY HER IN SUPPORT OF HIS CLAIM. DURING THE COURSE OF APPELLANT PROCEEDINGS ALSO THE APPELL ANT HAD NOT FURNISHED ANY DETAILS REGARDING THE LOAN AMOUNT FROM THE ABOVE PE RSONS. ACCORDINGLY THE ITA NO.388/AHD/20 13 PRAKASH CHANDRA I. GAJJAR V/S. ITO SURAT 2008-09 - 3 - CIT(A) HAS CONFIRMED THIS APPEAL. AS THIS ADDITION HAS BEEN CONFIRMED BY THE CIT(A) THE RECTIFICATION APPLICATION OF THE APPELLA NT U/S.154 OF THE ACT WAS CORRECTLY REJECTED BY THE AO AS THERE WAS NO MISTAK E APPARENT FROM RECORD. RATHER THERE WAS CLEAR-CUT FINDING OF THE AO AND TH E CIT(A) ON THIS ISSUE. THE CIT(A) HAD ONLY RECTIFIED THE MISTAKE OF THE AO AS ALTHOUGH THE AO HAD HELD THE UNSECURED LOAN TO BE UNEXPLAINED CASH CREDIT U/ S. 68 OF THE IT ACT IN THE BODY OF THE ORDER BUT IN THE COMPUTATION OF TOTAL I NCOME HE HAD FAILED TO ADD THE AMOUNT. THE CIT(A) HAD GIVEN A CLEAR-CUT FINDIN G AS TO WHY HE WAS CONFIRMING THIS ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE SUBJECT MATTER IN APPEAL IS BEYOND THE PURVIEW OF SECTION 1 54 OF THE IT ACT. 5. THE MAIN CONTENTION OF THE LEARNED AR IS THAT AS PER THE FIRST ASSESSMENT ORDER PASSED U/S. 143(3), DATED 07.10.20 10, THE AO HAS REPRODUCED A LIST OF THE CASH CREDITORS TOTALING RS .3,93,975/-. THE AO HAS ALSO REPRODUCED THE NAMES OF OTHER CASH CREDITORS A S APPEARED IN THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREIN THE AMOUNT IN RESPECT OF FOUR CASH CREDITORS TOTALING RS.5,25,000/- WAS CALLED FOR EXPLANATION. AS PER TH E CALCULATION OF THE TOTAL INCOME, THE AMOUNT OF RS.9,18,975/- THUS REPR ESENTED RS.5,25,000/- AND RS.3,93,975/-, HOWEVER, THE NAME OF HIMANGI V. GAJJAR DID NOT APPEAR IN THE SAID LIST WHICH MEANS THAT AS PER THE INITIAL ASSESSMENT ORDER THERE WAS NO ADDITION IN RESPECT OF DEPOSIT IN THE NAME OF HIMANGI V. GAJJAR. ALTHOUGH, THERE WAS A DISCUSSION IN THE ASS ESSMENT ORDER AS WELL AS IN THE ORDER OF LEARNED CIT(A) BUT NO ADDITION W AS MADE WHICH TANTAMOUNT TO THE ACCEPTANCE OF THE EVIDENCES FILED BY THE ASSESSEE. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE CONFIRMATION F ILED BY THE ASSESSEE. FURTHER, OUR ATTENTION HAS BEEN DRAWN ON THE ASSESS MENT RECORD OF THE SAID DEPOSITOR IN THE FORM OF ACKNOWLEDGEMENT INCOM E TAX RETURN AND THE COMPUTATION OF TOTAL INCOME DISCLOSED BY THE AS SESSEE. ITA NO.388/AHD/20 13 PRAKASH CHANDRA I. GAJJAR V/S. ITO SURAT 2008-09 - 4 - 6. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE FAC TS AS EMERGED FROM THE ORDERS FILED BEFORE US, WE ARE NOT ADDRESSING T HE CONTROVERSY WHETHER THE AO HAD RIGHTLY ADDED THIS AMOUNT WHILE GIVING T HE APPEAL EFFECT ESPECIALLY WHEN IT WAS NOT THE SUBJECT MATTER OF AP PEAL BEFORE LEARNED CIT(A) IN THE FIRST ROUND OF APPEAL DUE TO THE BASI C REASON THAT THE IMPUGNED AMOUNT OF RS.85,000/- WAS NOT THE SUBJECT MATTER OF ADDITION AS PER THE FIRST ASSESSMENT ORDER. WE ARE ADDRESSIN G OURSELVES ONLY IN THE ISSUE WHETHER THIS AMOUNT CAN BE TAXED U/S.68 OF IT ACT, ESPECIALLY WHEN THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF. WE HAVE NOTED THAT A S PER PARAGRAPH 4.4(E), THE AO HAS NOTED THAT A CONFIRMATION WAS FI LED BY THE ASSESSEE. A COPY OF THE CONFIRMATION IS NOW PLACED BEFORE US TH ROUGH WHICH WE HAVE NOTED THAT AMOUNT IN QUESTION WAS RECEIVED BY THE A SSESSEE THROUGH BANKING CHANNEL. THERE WAS AN OPENING BALANCE IN TH E ACCOUNT OF THE SAID CREDITOR AND FURTHER AN AMOUNT OF RS.85,000/- WAS C REDITED THROUGH CHEQUE ON 08.12.2007. THERE WAS ANOTHER DEPOSIT AS WELL BUT THAT WAS NOT DOUBTED BY THE AO. WE HAVE NOTED THAT THE ACCOUNT O F HIMANGI V. GAJJAR WAS SQUARED UP DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS MENTIONED THE REPAYMENT OF LOAN WHICH WAS MADE THRO UGH ACCOUNT PAYEE CHEQUES. FINALLY, THE CLOSING BALANCE WAS RS. NIL I N THE ACCOUNT OF THE SAID DEPOSITOR. OUR ATTENTION HAS ALSO BEEN DRAWN O N THE ACKNOWLEDGMENT SLIP AND THE STATEMENT OF INCOME OF THE SAID DEPOSI TOR TO ESTABLISH THE IDENTITY AND THE CREDITWORTHINESS OF THE SAID DEPOS ITOR. IN THE LIGHT OF THESE EVIDENCES WHICH WERE BEFORE THE AO, WE HEREBY HOLD THAT THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS AS REQUIRE D U/S. 68 OF THE IT ACT. AGAINST THOSE EVIDENCES, THERE WAS NO CONTRARY MATERIAL IN POSSESSION OF THE REVENUE DEPARTMENT. WE ARE OF THE VIEW THAT FOR THIS ITA NO.388/AHD/20 13 PRAKASH CHANDRA I. GAJJAR V/S. ITO SURAT 2008-09 - 5 - TRIFLE AMOUNT OF RS.85,000/- AN UNCALLED FOR CONTRO VERSY WAS RAISED WHICH WAS NOT PRUDENT EXERCISE ON THE PART OF THE R EVENUE. WE, THEREFORE, DIRECT TO DELETE THE ADDITION. RESULTANT LY, THIS GROUND OF THE ASSESSEE IS HEREBY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWA T) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/10/2013 PRABHAT KR. KESARWANI, SR.P.S. TRUE COPY COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A)-III, AHMEDABAD 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, (DY./ASSTT.REGISTRAR) ITAT, AHMEDABAD