The ITO, Ward-5(4), Surat V. Shri SureshKumar Madanlal Goyal, Surat

ITA 4102/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9009 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 22-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: D P BHAMGARA
• Keywords: Unexplained cash credit; Set aside
• Section: 143(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BEN CHES D BENCH: AHMEDABAD (BEFORE S/SHRI R.V. EASWAR, VP AND A N PAHUJA, AM) ITA NO. 4102/AHD/2008 A Y: 2005-06 THE INCOME TAX OFFICER, WARD-5 (4) ,ROOM NO.316, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI SURESH KUMAR MADANLAL GOYAL, PROP. MADANLAL GOYAL & SONS, 207, SHRIJI YARN CHAMBER, ZAMPABAZAR, SURAT, [PAN: AFNPG 3501 Q] APPELLANT RESPONDENT CO NO. 14/AHD/2009 (IN ITA NO.4102/AHD/2008) SHRI SURESH KUMAR MADANLAL GOYAL, PROP. MADANLAL GOYAL & SONS, 207, SHRIJI YARN CHAMBER, ZAMPABAZAR, SURAT, VS THE INCOME TAX OFFICER, WARD 5 (4) , ROOM NO.316, AAYAKAR BHAVAN, MAJURA GATE, SURAT CROSS OBJECTOR RESPONDENT ASSESSEE BY MISS D. P. BHAMGARA, AR REVENUE BY SHRI C. K. MISHRA, DR ORDER A N PAHUJA: THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION[ CO] BY THE ASSESSEE AGAINST AN ORDER DATED 16-10-2008 O F THE LEARNED CIT(A)-III, SURAT, RAISE THE FOLLOWING GROUNDS: ITA NO.4102/AHD/2008[ REVENUE ] [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETIN G THE ADDITION OF RS.10,97,575/- MADE BY THE ASSESSING OF FICER ON THE GROUND OF UNSECURED LOANS TREATED AS UNEXPLAINE D CASH CREDITS U/S 68. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A)-III, SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. ITA NO.4102/AHD/2008 CO NO.14/AHD/2009 SHRI SURESH KUMAR MADANLAL GOYAL 2 [3] IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A)-III, SURAT MAY BE SET-ASIDE AND THAT OF THE AO BE RESTOR ED. C.O.NO.14/AHD/2009[ASSESSEE] 1. THAT THE ORDER OF THE LEARNED CIT(A)-III, SURAT DELETING THE ADDITION OF RS. 10,98,575/- AS UNSECURED LOANS UNDE R SEC. 68 OF THE ACT BE UPHELD AND THAT OF THE OFFICER BE SET AS IDE. 2. THAT THE LEARNED CIT(A) HAS RIGHTLY STATED THAT A LOAN OF RS.7,53,656/- FROM OMKAR TEXTILES BEING AN OLD LO AN THERE WAS NO MERIT IN TREATING THE AMOUNT AS UNEXPLAINED CASH CREDIT. 3. THAT THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.3,43,919/- AS LOAN FROM M.R. SILK MILLS. 4. THAT THE OFFICER GROSSLY ERRED IN TREATING BOTH THE ABOVE LOANS AS UNEXPLAINED CASH CREDITS AND IN MAKING ADDITION OF THE SAME. 5. THE APPELLANT IN SUPPORT OF HIS CLAIM HAD FURNIS HED COPIES OF ACCOUNT, BANK STATEMENTS, BALANCE SHEET ETC. OF BOT H THE CONCERNS BEFORE THE LEARNED CIT(A), SURAT. 6. THAT THE APPELLANT HAD ALSO BROUGHT TO THE NOTIC E OF THE OFFICER THAT BOTH THE FIRMS HAVE BEEN DISSOLVED AND NO BUSI NESS TRANSACTION WAS CARRIED OUT. 7. THAT THE OFFICER WRONGLY DOUBTED THE GENUINENESS OF THE LOAN FROM M.R. SILK MILLS MERELY ON THE GROUND OF NON FILING OF RETURN OF INCOME FOR THE LAST MANY YEARS. 8. THAT THE LEARNED CIT(A) WAS SATISFIED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS AN D HAS RIGHTLY DELETED THE ADDITION OF CASH CREDIT TREATED AS UNEXPLAINED UNDER SEC. 68 OF THE I. TAX ACT. 9. THAT IT IS THE PRAYER OF THE APPELLANT THAT THE ORDER OF THE LEARNED CIT(A) BE RESTORED AND THAT OF THE OFFICER BE SET ASIDE. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR SUBSTITUTE ANY OTHER GROUND UPTO THE STAGE OF HEARI NG OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.89,130 FILED ON 31-10-2005 BY THE ASSESSEE, ENGA GED IN TRADING OF YARN AND ITA NO.4102/AHD/2008 CO NO.14/AHD/2009 SHRI SURESH KUMAR MADANLAL GOYAL 3 FABRICS, AFTER BEING PROCESSED U/S 143(1) OF THE IN COME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY W ITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 13-10-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE HAD TAKEN UNSECURED LOANS OF RS. 10,97,575/- FROM THE FOLLOWI NG TWO PARTIES: 1. M/S M. R.SILK MILLS RS. 3,43,919/- 2. M/S OMKAR TEXTILES RS. 7,53,656/- THE AO ASKED THE ASSESSEE TO FURNISH COPY OF CONTRA ACCOUNTS ALONG WITH THEIR CONFIRMATION SUCH AS PAN, COPY OF PROFIT & LOSS AND BALANCE SHEET, ACKNOWLEDGEMENT OF IT RETURN ETC. HOWEVER, THE ASSE SSEE SUBMITTED ONLY A COPY OF THE BANK STATEMENT; OTHER DETAILS SOUGHT BY THE AO WERE NOT FURNISHED. ACCORDINGLY, THE AO ISSUED A SHOW CAUSE NOTICE DATE D 29-11-2007, REQUESTING THE ASSESSEE TO FURNISH COMPLETE DETAILS, ESTABLISH ING THE IDENTITY AND CREDITWORTHINESS OF THE AFORESAID CREDITORS AS ALSO GENUINENESS OF THE TRANSACTIONS ALONG WITH THEIR COPY OF ACKNOWLEDGEME NT OF THEIR IT RETURN FOR THE YEAR UNDER CONSIDERATION BESIDES THEIR CONFIRMATION IN RESPONSE, THE ASSESSEE SUBMITTED ON 06-12-2007 THAT DUE TO DISPUTE AMONGST THE PARTNERS, BOTH THE AFORESAID FIRMS WERE DISSOLVED WHILE THE LOAN WAS T AKEN LONG BACK AND NO RETURN WAS FILED BY THEM NOR M/S. OMKAR TEXTILES MAINTAINE D ANY BANK ACCOUNT. AS REGARDS M/S M. R. SILK MILLS, THE ASSESSEE SUBMITTE D THAT THE TRANSACTIONS WERE PROVED AS EVIDENT FROM THEIR BANK STATEMENT WHILE COPY OF ACKNOWLEDGMENT OF THEIR RETURN WAS NOT AVAILABLE, RETURN HAVING NOT B EEN FILED. HOWEVER, THE AO REJECTED THESE CONTENTIONS OF THE ASSESSEE AND RELY ING UPON THE DECISIONS IN THE CASE OF PRECISION FINANCE PVT. LTD. VS CIT (1994) 2 08 ITR 465 (CAL.), JALAN TIMBER VS. CIT (1997) 223 ITR 11 (GAU.) AND RUPCHAN D MANOJKUMAR VS CIT (1999) 253 ITR 461 ADDED THE AFORESAID AMOUNT OF RS. 10,97,575/- U/S 68 OF THE ACT. 3. ON APPEAL, THE ASSESSEE REITERATED THEIR CONTENT IONS BEFORE THE AO AND SUBMITTED COPIES OF THEIR ACCOUNTS, BANK STATEMENTS , PAN AND BALANCE SHEET OF THE TWO CONCERNS AND PLEADED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT ITA NO.4102/AHD/2008 CO NO.14/AHD/2009 SHRI SURESH KUMAR MADANLAL GOYAL 4 CAUSE FOR NOT SUBMITTING THE SAID DETAILS DURING TH E ASSESSMENT PROCEEDINGS. SINCE THESE DETAILS WERE NOT FURNISHED BEFORE THE A O, THE LEARNED CIT(A) FORWARDED THE SAME TO THE AO FOR A REMAND REPORT. THE AO IN HIS REPORT DATED 7-8-2008 SUBMITTED THAT M/S. OMKAR SYNTHETICS DID N OT FILE RETURN FOR MANY YEARS, BUSINESS HAVING BEEN CLOSED DOWN. AS THE INTIMATION OF DISCONTINUATION OF BUSINESS WAS NOT COMMUNICATED AS PROVIDED U/S 176(3 ) OF THE ACT , THE AO SUBMITTED THAT ACCUMULATION OF FUNDS FOR GIVING LOA NS WAS NOT ESTABLISHED. LIKEWISE M/S M. R. SILK MILLS ALSO DID NOT GIVE INT IMATION OF DISCONTINUATION OF THEIR BUSINESS AND THEIR ACCUMULATION OF FUNDS FOR GIVING LOANS WAS ALSO NOT ESTABLISHED. IN THE LIGHT OF THESE SUBMISSIONS OF T HE ASSESSEE AND REMAND REPORT OF THE AO, THE LEARNED CIT(A) DELETED THE ADDITION, HOLDING AS UNDER: I HAVE GONE THROUGH THE DETAILS AND DOCUMENTS FIL ED BEFORE ME ON WHICH THE AO WAS REQUIRED TO FURNISH HIS REMA ND REPORT. IT IS SEEN THAT THE LOAN OF RS.753656/- FROM OMKAR TEXTIL ES IS AN OLD LOAN AND NO NEW ADDITION TO THE BROUGHT FORWARD AMO UNT WAS THERE IN THE YEAR UNDER CONSIDERATION. THEREFORE, THERE I S ABSOLUTELY NO MERIT IN TREATING THE AMOUNT AS UNEXPLAINED CASH CR EDITS FOR THE YEAR UNDER APPEAL. THE AO HAS DOUBTED THE GENUINENE SS OF LOAN FROM M.R. SILK MILLS ONLY ON THE GROUND THAT RETURN OF INCOME WAS NOT FILED BY IT FOR THE LAST SO MANY YEARS BUT IT I S ALSO SEEN THAT AS PER THE BANK STATEMENT OF THE FIRM FOR THE PERIOD 1 .06.2004 TO 30.6.2004, THERE ARE VARIOUS DEPOSITS BY REALIZATIO N OF CHEQUES THROUGH CLEARING AND THE LOAN HAS BEEN ADVANCED TO THE APPELLANT BY ACCUMULATION OF FUNDS IN THE SAID BANK ACCOUNTS. THEREFORE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANS ACTIONS STANDS ESTABLISHED. IN VIEW OF THIS, THE ENTIRE ADDITION O F CASH CREDITS BEING TREATED AS UNEXPLAINED U/S 68 OF THE IT ACT IS NOT SUSTAINABLE AND IS DIRECTED TO BE DELETED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPPORTED THE FI NDINGS OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE IN THEIR WRITT EN SUBMISSIONS PLEADED THAT THE ASSESSEE WAS PARTNER IN BOTH THE AFORESAID CONC ERNS M/S. M. R. SILK MILLS AND M/S. OMKAR TEXTILES. DUE TO LOSSES, THESE FIRMS WERE DISSOLVED. M/S. M. R. SILK MILLS GAVE LOANS BY WAY OF CHEQUE WHILE OMKAR TEXTILES ADVANCED MONEY ITA NO.4102/AHD/2008 CO NO.14/AHD/2009 SHRI SURESH KUMAR MADANLAL GOYAL 5 LONG BACK AND IN FACT IT WAS BROUGHT FORWARD LOAN. WHILE RELYING UPON THE FINDINGS OF THE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT THERE WAS NO GROUND FOR MAKING ANY ADDITION. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASS ESSEE. UNDISPUTEDLY, LOAN OF RS. 7,53,656/- FROM M/S. OMKAR TEXTILES WAS OLD LOA N AND THE AMOUNT HAD BEEN BROUGHT FORWARD FROM THE EARLIER YEARS. AS REGARDS M. R. SILK MILLS, THE LEARNED CIT(A) ON PERUSAL OF THE BANK STATEMENT OF THE SAID FIRM FOR THE PERIOD 1.06.2004 TO 30.6.2004 FOUND THAT THERE WERE VARIOUS DEPOSITS THROUGH REALIZATION OF CHEQUES AND LOAN HAS BEEN ADVANCED TO THE ASSESSEE FROM THE ACCUMULATED AMOUNT IN THE SAID BANK ACCOUNT. ACCORDINGLY, THE L EARNED CIT(A) CONCLUDED THAT IDENTITY AND CREDITWORTHINESS OF THE SAID CREDITOR AS ALSO GENUINENESS OF THE TRANSACTIONS STANDS ESTABLISHED BY THE ASSESSEE. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL FOR TAKING A DIFFERENT VIEW IN THE MATTER, WE HAVE NO HESITATI ON IN UPHOLDING THE FINDINGS OF THE LD. CIT(A).THEREFORE, GROUND NO.1 IN THE APPEA L OF THE REVENUE IS DISMISSED. 6. GROUND NOS.2 AND 3 IN THE APPEAL OF THE REVENUE, BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION WH ILE GROUNDS RAISED IN THE CO MERELY SUPPORT THE FINDINGS OF THE LEARNED CIT(A). IN VIEW OF OUR AFORESAID FINDINGS IN THE APPEAL OF THE REVENUE, ALL THESE GR OUNDS ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEAL AND THE CO THERE TO, ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH SEPTEMBE R,2009 SD/- SD/- (R. V. EASWAR) (A.N. PAHUJA) VICE PRESIDENT ACCOUNTANT MEMBER DATE: 18TH SEPTEMBER,2009 LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. THE INCOME TAX OFFICER, WARD- 5 (4) , ROOM NO.31 6,AAYAKAR BHAVAN, ITA NO.4102/AHD/2008 CO NO.14/AHD/2009 SHRI SURESH KUMAR MADANLAL GOYAL 6 MAJURA GATE, SURAT 3. CIT(A)-III,SURAT 4. THE CIT CONCERNED 5. THE D.R. ITAT, AHMEDABAD, 6. GUARD FILE BY ORDER DR / AR, ITAT, AHMEDABAD