Shri Brijmohan D.Somani, Surat V. The Income tax Officer,Ward-2(3), Surat

ITA 4137/AHD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57191 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA KUMAR; B L YADAV DRS
• Keywords: Unexplained cash credit; Bogus loan
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A. NO. 4137/ AHD/2008 (ASSESSMENT YEAR 2005-06) SHRI BRIJMOHAN D SOMANI, PROP. M/S. MANJUSHREE SYNTHETICS, SAHARA DARWAJA, SURAT VS. ITO, WARD 2(3), SURAT PAN/GIR NO. : ACIPS 3455M (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI HARDIK VORA, AR RESPONDENT BY: SHRI RAVINDRA KUMAR & SHRI B L YADAV, DRS DATE OF HEARING: 13.02.2012 DATE OF PRONOUNCEMENT: 17.02.2012 O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JM:- THIS IS THE APPEAL AT THE BEHESTS OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LD. CIT(A)-II, SURAT DAT ED 14.10.2008 FOR THE ASSESSMENT YEAR 2005-06. 2. GROUND NO.1 IS AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN SUSTAINING THE ADDITION TO RS. 31,25,766/- U/S 68 O F THE I.T ACT, 1961, BEING UNEXPLAINED CASH CREDITS OUT OF TOTAL R S.53,05,827/- MADE BY ASSESSING OFFICER. 3. THE BRIEF FACTS OF THE CASE AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S143(3) DATED 31.12.2007 WERE THAT THE I.T.A.NO. /AHD/200 2 ASSESSEE IS IN INDIVIDUAL CAPACITY IS IN THE BUSINE SS OF COMMISSION OF ART SILK FINISHED CLOTH. IT HAS ALSO BEEN NOTED BY THE A.O. VIDE PARA 2 THAT THE TOTAL TURNOVER WAS AT RS.1,29,76,088/- OVER WHICH, THE GP WAS DISCLOSED AT RS.2,57,817/- FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD TAKEN LOAN FROM VARIOUS PARTIES AMOUNTING TO RS.53,05,827 /-. CERTAIN QUERIES HAVE BEEN RAISED AND MOST OF THE CASH CREDITORS WER E PRODUCED BEFORE THE A.O. PARTIES PRODUCED WERE ASSESSEES WIFE, SMT. R AJIV DEV B SOMANI, YOUNGER SON SHRI NEERAJ B. SOMANI, ELDER SON MR. PA NKAJ B SOMANI AND DAUGHTER MS. RENU BE. SOMANI. THE A.O. HAS ASKED T HE ASSESSEE TO PRODUCE REST OF THE PARTIES ON THE SAME LINE FOR PE RSONAL EXAMINATION. HOWEVER, AS PER THE A.O., THOSE WERE NOT PRODUCED. THE A.O. WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND HENCE, THE ENTIRE AMOUNT WAS TAXED U/S 68 OF THE INCOME TAX ACT, 1961 . BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE 1 ST APPELLATE AUTHORITY. 4. BEFORE LD. CIT(A), IT WAS EXPLAINED THAT HE LOAN S/DEPOSITS WERE TAKEN FROM 34 PERSONS. THE DETAILS AND THE IDENTIT Y OF THOSE PERSONS WERE VERY MUCH PLACED BEFORE THE A.O. THE ASSESSEE HAS PRODUCED HIS FAMILY MEMBERS BUT COULD NOT BE ABLE TO CONTACT IMMEDIATEL Y THE REST OF THE PARTIES. IT WAS ALSO STATED BEFORE THE LD. CIT(A) THAT HE ENTIRE ADDITION WAS MADE U/S 68 IN A VARY CASUAL MANNER. THE ACTUA L AMOUNT OF UNSECURED LOAN WAS AT RS.80,97,662/- AND THE ADDITI ON DURING THE YEAR IN THOSE ACCOUNTS WAS VERY NOMINAL AS PER THE FOLLOWIN G RECONCILIATION:- OPENING BALANCE AS ON 01.04.2004 77,88,901/- ADD: ADDITION DURING THE YEAR 6,17,211/- ADD: INTEREST CREDITED 6,04,956/- 12,22,167/- TOTAL 90,11,068/- LESS: TDS 57,554/- REPAYMENT OF LOAN 8,55,852/- 9,13,406/- 80,97,662/- I.T.A.NO. /AHD/200 3 5. IT WAS ALSO EXPLAINED THAT THE BALANCES WERE FRO M EARLIER YEARS AND THEREFORE, SHOULD NOT BE TREATED FOR THE RELEVANT P REVIOUS YEAR FOR AN ADDITION U/S 68 OF THE INCOME TAX ACT, 1961. HOWEV ER, THE LD. CIT(A) WAS NOT CONVINCED BUT GRANTED PART RELIEF ON THE GR OUND THAT THE A.O. HAD WRONGLY TREATED THE OPENING BALANCE OUTSTANDING IN THE NAME OF FAMILY MEMBERS TOTALING RS.20,99,586/- AS UNEXPLAINED CASH CREDIT FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO LD. CIT(A), IT W AS CLEARLY ERRONEOUS ON THE PART OF THE A.O. SINCE THE SAID AMOUNT HAS R EPRESENTED ONLY THE OPENING BALANCE IN THEIR RESPECTIVE ACCOUNT. REST OF THE BALANCE AMOUNT OF RS.31,25,766/- WAS SUSTAINED. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. FRO THE SIDE OF THE ASSESSEE, A BIFURCATION OF T HE ADDITION U/S 68 IN DISPUTE IS PLACED ON RECORD. THE BIFURCATION CAN B E SUMMARIZED AS UNDER: (A) ACCOUNT IN WHICH NO AMOUNT RECEIVED DURING THE YEAR 4,39,507/ (B) ACCOUNT IN WHICH ACKNOWLEDGEMENT AND CONFIRMATI ON OF I T RETURN ARE ON RECORD 2,89,557/ (OUT OF TOTAL AMOUNT 1,72,411/- CLAIMED TO BE NEW LOAN) (C) ACCOUNT IN WHICH STATEMENTS HAVE BEEN RECORDED (COPY OF THE STATEMENT NOT GIVEN TO THE ASSESSEE) 24,10,471/- TOTAL 31,39,536/ 7. THE LD. A.R. HAS PLEADED THAT THERE WAS A LIST O F 26 PARTIES WHERE NO AMOUNT WAS RECEIVED DURING THE YEAR AND ONLY OLD LOANS WERE REFLECTED IN THE BOOKS OF ACCOUNT ON WHICH SIMPLE INTEREST AS CREDITED. HE HAS PLEADED THAT RS.4,39,507/- DESERVES TO BE DELETED. 8. FROM THE SIDE OF THE REVENUE, THE LD. D.R. HAS I NFORMED THAT LD. CIT(A) HAS ALREADY GRANTED RELIEF IN RESPECT OF ACC OUNT WHERE ONLY OLD I.T.A.NO. /AHD/200 4 BUSINESS WAS CARRIED OVER. THEREFORE, THERE SHOULD NOT BE ANY FURTHER RELIEF TO BE GRANTED TO THE ASSESSEE. 9. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, THE ISSUE IS PURELY AN APPRECIATION OF THE FACTS AND EVIDENCES PLACED O N RECORD. SO FAR AS THE LIST OF 26 PERSONS REPRESENTING AN ADDITION OF RS.4 ,39,507/- IS CONCERNED, WE ARE OF THE VIEW THAT SINCE ONLY OLD LOANS WERE C ARRIED OVER IN THE BOOKS FOR THE YEAR UNDER CONSIDERATION AND THE INTE REST HAS ONLY BEEN CREDITED, THEREFORE, THEE WAS NO OCCASION TO TAX TH E IMPUGNED AMOUNT BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961. RATHER, THE LD. CIT(A) HAS ALREADY TAKEN THE SAME V IEW WHILE GRANTING PART RELIEF TO THE ASSESSEE. THE SAME LOGIC IS TO BE APPLIED IN RESPECT OF THESE 26 PERSONS, THEREFORE, ACCORDINGLY, RELIEF IS TO BE GRANTED. IN RESPECT OF FIVE PARTIES WHERE ACKNOWLEDGEMENT OF I T RETURNS HAVE ALREADY BEEN PLACED ON RECORD THEREIN, IT WAS EXPEC TED FROM THE REVENUE DEPARTMENT TO ENQUIRE ABOUT THOSE DEPOSITORS. THI S INQUIRY HAS NOT BEEN MADE AND ALMOST IN AN AD HOC MANNER, THE ADDITION W AS MADE. RATHER WE HAVE BEEN INFORMED THAT ONLY AN AMOUNT OF RS.1,72,4 11/- WAS NEW ADDITION IN THOSE FIVE ACCOUNTS AND REST OF THE ACC OUNTS WERE OLD OPENING BALANCE. SINCE THE REVENUE AUTHORITIES HAVE NOT E XAMINED THAT ACKNOWLEDGEMENT AND THE BANK STATEMENTS THROUGH WHI CH THE ASSESSEE HAS PROVED THE SOURCE OF DEPOSITS, THEREFORE, WE DE EM IT PROPER TO RESTORE THIS PART OF THE ADDITION BACK TO THE STAGE OF THE A.O. TO DECIDE DE NOVO AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. NOW, WE ARE LEFT WITH THREE PARTIES IN RESPECT OF WHICH THE ASSESSEES EXPLANATION CAN BE SUMMARIZED IN THE FOLLOWING MANNER: I.T.A.NO. /AHD/200 5 NAME OF PARTIES AMOUNT EXPLANATION NEW L OAN CHITRALEKHA SOMANI 42,132 LOAN OF RS.30,000/- TAKEN 30,000/- AND INTEREST OF RS.12,132/- CREDITED MANJUSHREE CORPN 22,79,555 MAXIMUM AMT. OUTSTANDING 4,66,800/ DURING THE YEAR WAS RS.19,10,918/- WITHOUT CREDIT OF INTEREST DEDUCTING OPENING BALANCE OF RS.4,44,118/- EFFECT TO CREDIT IN ACCOUNT COMES TO RS.4,66,800/-. INTEREST OF RS.91,755/- WAS CREDITED. PANKAJ B SOMANI 88,784 LOAN OF RS.48,000/- TAKEN AN D 48,000/- INTEREST OF RS.40,784/- CREDITED TOTAL 24,10,471/- 5,44,800/ GRAND TOTAL 31,39,536/- 10. IN RESPECT OF THESE THREE PARTIES, WE HAVE BEEN INFORMED THAT THE A.O. HAS RECORDED THE STATEMENTS BUT THE COPIES OF THE STATEMENT WERE NOT GIVEN TO THE ASSESSEE. IF AN EVIDENCE IS BEGIN USE D OR A WITNESS IS EXAMINED AT THE BACK OF THE ASSESSEE, IT IS OBLIGAT ORY ON THE PART OF THE A.O. TO GIVE A COPY OF THE STATEMENT TO THE ASSESS EE FOR PROPER REBUTTAL AS PER LAW. SINCE THE A.O. HAS NOT FOLLOWED THIS LAID DOWN PRINCIPLE HENCE, WE CAN HOLD THAT THE ADDITION WAS UNFAIR AND AGAINS T THE NATURAL LAW OF JUSTICE. WE HAVE BEEN INFORMED THAT OTHERWISE ALSO IN THE ACCOUNT OF M/S. MANJUSHREE CORPORATION, THERE WAS SEVERAL DEBI T AND CREDIT ENTRIES AND THE NET EFFECT WOULD BE ONLY RS.4,66,800/-. AS AGAINST THIS, THE A.O. HAD MADE ENTIRE ADDITION OF RS.22,79,555/-. WE HER EBY RESTORE THIS PART OF THE GRIEVANCE BACK TO THE A.O. THAT HE SHOULD EX AMINE THE CORRECT POSITION OF ACCOUNT OF M/S. MANJUSHREE CORPORATION AND, THEREAFTER, ALLOW NECESSARY RELIEF. WITH THESE OBSERVATIONS, SINCE P ART OF THE GROUND HAS BEEN RESTORED BACK FOR DE NOVO ADJUDICATION AS PER LAW, NEEDLESS TO DIRECT AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO. /AHD/200 6 11. GROUND NO.2 IS AS UNDER: 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFF ICER IN DISALLOWING RS. 2,55,379/- BEING INTEREST PAID ON A LLEGED BOGUS LOANS/DEPOSITS. 12. THROUGH THIS GROUND, THE ONLY GRIEVANCE IS DISA LLOWANCE OF INTEREST ON THE LOANS WHICH WERE DISALLOWED AS DISCUSSED IN GROUND NO.1 HEREINABOVE. MEANING THEREBY, THIS GROUND IS CONS EQUENTIAL IN NATURE AND WILL BE DECIDED ALONG WITH GERUND NO.1. 13. GROUND NO.3 IS AS UNDER: 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFF ICER IN DISALLOWING RS. 12,788/- AT THE RATE OF 20% OUT OF TELEPHONE EXPENSES, SHOP AND BASA EXPENSES. 14. THIS GROUND IS NOT SERIOUSLY CONTESTED BEFORE U S HENCE, THE ADDITION IS CONFIRMED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (A. MOHAN ALANKAMONY) (MUKUL KUMAR SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. /AHD/200 7 1. DATE OF DICTATION 13/2 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15/2.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 17/2 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.17/2 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17/2/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .