M/s. Laxmi Imaging & Medical Research Centre, JODHPUR V. ACIT, JODHPUR

ITA 426/JODH/2009

• Counselvise Citation: 42623314 RSA 2009
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 08-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: N R MERTIA
• Keywords: Unexplained cash credit
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 426/JU/2009 ASSESSMENT YEAR: 1994-95 M/S LAXMI IMAGING & MEDICAL RESEARCH VS. THE ACIT, CIRCLE-1 CENTRE, JODHPUR JODHPUR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.R. MERTIA RESPONDENT BY : SHRI G.R.KOKANI DATE OF HEARING : 16-07-2012 DATE OF PRONOUNCEMENT : 16-07-2012 ORDER PER N.K.SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 20-04-2009 OF CIT(A), JODHPUR. FOLLOWING GROUNDS HAVE BEEN RA ISED IN THIS APPEAL. 1. THAT THE IMPUGNED ASSESSMENT ORDER MADE BY THE LD ASSESSING OFFICER DATED 17.12.2008 IS BAD IN LAW AN D IS BAD IN FACTS, IN VIEW OF THE UNLAWFUL AND INVALID JURISDICTION ACQUIRED U/S 147/148 OF THE ACT AT THE INITIAL STAGE OF THE PROCEEDINGS. SINCE NO VALID AND LAWFU L JURISDICTION WAS AT ALL ACQUIRED, THEREFORE, ALL CONSEQUENTIAL AND RESULTANTS ACTION ARE WITHOUT JURISDICTION, BARRED BY LIMITATION, BAD IN LAW AND BAD IN FACTS. THE IMPUGNED ORDERS DESERVE TO BE QUASHED AN D CANCELLED. 2 2. WITHOUT PREJUDICE TO THE LEGAL GROUNDS NO.1 ABOVE, AND IN THE ALTERNATIVE AND AS ABUNDANT AND PRECAUTIONARY MEASURE, THE LD ASSESSING OFFICER AS WELL AS THE LD . CIT(A) HAS ERRED IN LAW AND IN FACTS IN (I) MAKING AND SUSTAINING THE ADDITION OF RS. 8,00,000/ - IN THE NAME OF SHRI C.P. MATUR AND RS. 4,30,000/- I N THE NAME OF SHRI L.C. MATHUR, INVOKING SECTION 68 O F THE ACT, BEING ADMITTED INVESTMENTS OF CAPITAL BY T HE PARTNERS OF THE FIRM. (II) MAKING AND SUSTAINING ADDITION OF RS. 1,00,000/- IN THE NAME OF DR. S.C. SONI, U/S 68 OF THE ACT, BEING A DEPOSIT IN FIRM MADE BY HIM. (III) SUSTAINING THE LEVY OF VARIOUS INTERESTS BY STATING AND REFERRING AS MANDATORY AND COMPENSATORY NATURE THEREOF, IGNORING THE FACTS THAT SUCH ISSUE WAS DULY SETTLED IN THE APPELLANTS CASE BY THE ITA T FOR ASSESSMENT YEAR 1995-96 IN ITA NO. 247 THEREFORE, HAVING BEEN ACCEPTED THE SAID DECISION, THE LEVY OF INTEREST WAS WRONG. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE THE GROUNDS HEREIN ABOVE TAKEN ON OR BEFORE THE HEA RING. 4. THE APPELLANT, THEREFORE, MOST RESPECTFULLY PRAYS T HAT ITS APPEAL MAY KINDLY BE ALLOWED. 2. GROUND NOS. 3 & 4 ARE GENERAL IN NATURE SO DO NO T REQUIRE ANY COMMENTS ON OUR PART WHILE GROUND NO.1, WHICH IS A LEGAL GROUND RELATING TO VALIDITY OF THE JURISDICTION OF THE ASSESSING OF FICER U/S 147/148 OF THE I.T. ACT WAS NOT PRESSED, THEREFORE, NO FINDING IS GIVEN ON THIS GROUND. 3 3. VIDE GROUND NO.2(I), THE GRIEVANCE OF THE ASSESS EE RELATES TO SUSTENANCE OF ADDITION OF RS. 8,00,000/- AND RS. 4, 30,000/- IN THE NAME OF SHRI C.P. MATHUR AND SHRI L.C. MATHUR RESPECTIVELY . 4. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION BY OBSERVING THA T NECESSARY EVIDENCE REGARDING SOURCE OF INVESTMENT BY CASH INTRODUCED I N THE FIRM HAD NOT BEEN FURNISHED, THEREFORE, THE SAME IS TREATED AS U NDISCLOSED INCOME OF THE ASSESSEE FIRM U/S 68 OF THE INCOME-TAX ACT, 1961 [H EREINAFTER REFERRED TO AS THE ACT IN SHORT]. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING TH AT THE SOLE EXPLANATION OF THE CREDITORS REGARDING THE SOURCE, BEING THE SA VINGS HAD NOT BEEN ESTABLISHED ON THE BASIS OF ANY MATERIAL EVIDENCE B UT HEAVILY RELIANCE HAD BEEN PLACED UPON THE PRESUMPTIONS AND TRADITIONS PR EVAILING IN THE SOCIETY. HE ALSO OBSERVED THAT MERELY FILING OF CO NFIRMATORY LETTER FROM THE CREDITOR WITHOUT FURTHER ESTABLISHING THE AVAIL ABILITY OF FUNDS AT THE TIME THE SUM WAS ADVANCED TO THE ASSESSEE DID NOT E STABLISH THE CAPACITY OF THE CREDITOR OR GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRME D BY THE LD. CIT(A). NOW, THE ASSESSEE IS IN APPEAL. 4 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS WAS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE AND THAT THE A SSESSEE WAS IN THE PROCESS OF SETTING UP OF MRI SCANNING MACHINE IN AS SOCIATION OF SONI HOSPITAL IN JAIPUR AND DID NOT START ITS BUSINESS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE REQUIRED THE FUNDS WHICH WERE CON TRIBUTED BY THE PARTNERS, THEREFORE, THE ADDITION SHOULD NOT HAVE B EEN MADE IN THE HANDS OF THE ASSESSEE. RELIANCE WAS PLACED ON THE FOLLOW ING CASE LAWS. I) CIT BIKANER V M/S KEWAL KRISHAN & PARTNERS, SRI GANGANAGAR (52 INCOME TAX CASES DIGEST, VOL.9 PART 3) II) CIT VS. BHARAT ENGINEERING AND CONSTRUCTION COMPANY (1972) 83 ITR 187 (SC) 7. IN HIS RIVAL SUBMISSIONS, THE LD DR STRONGLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE PARTNERS SHRI C.P. MATHUR AND SHRI L.C. MATHUR CONTRIBUTED RS. 8 LACS AND RS. 4,30,000 /- RESPECTIVELY AS THEIR CAPITAL AND THE ASSESSING OFFICER MADE THE ADDITION BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. ON A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT BIKANER V M/S KEWAL KRISHAN & PARTNERS, SRI GANGANAGAR (SUPRA) HE LD AS UNDER:- IT WAS FOR THE PARTNERS TO EXPLAIN THE SOURCE OF DEPOSITS AND IF THEY FAILED TO DISCHARGE THE ONUS THEN, SUCH DEPOSITS 5 COULD BE ADDED IN THE HANDS OF THE PARTNERS ONLY AN D NOT IN THE HANDS OF ASSESSEE FIRM. IN ANY CASE, SUCH CAPIT AL CONTRIBUTIONS ENTERED INTO THE BOOKS OF THE ACCOUNT S OF THE ASSESSEE FIRM PRIOR TO THE COMMENCEMENT OF THE BUSI NESS CANNOT BE TREATED TO BE THE INCOME OF THE ASSESSEE FIRM. IN CONSIDERED OPINION OF THIS COURT, SUCH UNEXPLAINED CREDITS MAY BE ADDED TO THE INCOME OF THE PARTNERS CONCERNE D IN TERMS OF SECTION 69 AND NOT U/S 68 OF THE ACT OF 19 61. 9. IN THE PRESENT CASE ALSO, SINCE THE AMOUNT DEPOS ITED WAS FROM THE PARTNERS, THEREFORE, BY KEEPING IN VIEW THE RATIO L AID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRE D TO CASE, AT THE MOST THE IMPUGNED AMOUNT COULD HAVE BEEN ADDED IN THE HA NDS OF THE PARTNERS, IF THEY FAILED TO DISCHARGE THE ONUS BUT NOT IN THE HANDS OF THE ASSESSEE FIRM. MOREOVER, THE CONTRIBUTION OF THE CAPITAL BY THE PARTNERS WAS PRIOR TO THE COMMENCEMENT OF THE BUSINESS, SO IT COULD NO T HAVE BEEN TREATED AS INCOME OF THE ASSESSEE. IN THAT VIEW OF THE MATTER , WE DELETE THE ADDITION AMOUNTING TO RS. 12,30,000/- (RS.8,00,000/- + RS. 4 ,30,000/-) MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT( A). 10. VIDE GROUND NO.2 (II), THE GRIEVANCE OF THE ASS ESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS. 1 LAC MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF DEPOSIT IN THE NAME OF DR. S.C. SONI. 11. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE T HAT DURING THE YEAR UNDER CONSIDERATION, DR. S.C. SONI HAD GIVEN LOAN O F RS. 1 LAC BY CHEQUE 6 TO THE ASSESSEE ON 30.10.1993. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS AS UNDER:- THE CONFIRMATION COULD NOT BE RECEIVED FROM DR. S. C. SONI DUE TO SOME DISPUTE HOWEVER NOW WE ARE ENCLOSING TH E FOLLOWING WHICH IS SELF-EXPLANATORY . 1. BANK CERTIFICATE FROM CANARA BANK REGARDING DEPOSIT OF CHEQUE NO. 143089 OF RS. 100000/- DRAWN FROM BANK O F BARODA, M.I. ROAD, JAIPUR ON 3.11.93 DEPOSITED IN F IRMS ACCOUNT. 2. COPY OF THE ABOVE REFERRED CHEQUE OF RS. 100000/- S HOWING THAT THE SAME WAS ISSUED BY SONI HOSPITAL IN FAVOUR OF FIRM, WITH ABOVE FACTS IT IS CLEAR BEYOND DOUBT THAT THE AMOUNT WAS RECEIVED FROM DR. S.C. SONI OF SONI HOSPITAL ONLY A ND THE SAME CANNOT BE ADDED IN OUR INCOME. SONI HOSPITAL IS FAMOUS HOSPITAL IN JAIPUR. 12. THE ASSESSING OFFICER AFTER CONSIDERING THE ABO VE EXPLANATION OBSERVED THAT THE ASSESSEE HAD FILED NECESSARY DOCU MENTARY EVIDENCE IN THE FORM OF BANK CERTIFICATE DATED 26.3.2002 FROM T HE CANARA BANK REGARDING DEPOSIT OF CHEQUE GIVEN TO THE ASSESSEE B Y DR. S.C. SONI BUT THE ASSESSEE HAD NOT FILED ANY CONFIRMATION OR ANY EVID ENCE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF DR. S.C. SONI. ACCORDINGLY, AN ADDITION OF RS. 1 LAC WAS MADE U/S 68 OF THE INCOME TAX ACT. 13. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT( A) WHO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE COPY OF THE CHEQUE AND THE CERTIFICATE FROM THE CANARA BANK ME RELY INDICATED THAT THE 7 TRANSACTIONS HAD TAKEN PLACE THROUGH BANKING CHANNE L, EVEN THE BASIC INGREDIENTS TO SATISFACTORY EXPLAIN THE SOURCES OF THE CREDIT NAMELY IDENTITY OF THE CREDITOR, THEIR CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTION REMAINED TO SET ESTABLISHED. NOW THE A SSESSEE IS IN APPEAL. 14. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND LD. DR SUPPORTED T HE ORDER OF THE AUTHORITIES BELOW. 15. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND MATERIAL AVAILABLE ON RECORD IT APPEARS THAT THE ASSESSEE CO ULD NOT PROCURE CONFIRMATION FROM DR. S.C. SONI DUE TO SOME DISPUTE S, AT THE SAME TIME, NO EFFORTS WERE MADE BY THE ASSESSING OFFICER TO CO LLECT THE SAME DIRECTLY FROM THE CREDITOR. THE OTHER EVIDENCES PRODUCED BY THE ASSESSEE IN THE SHAPE OF CERTIFICATE FROM CANARA BANK HAD NOT BEEN DISPUTED. THEREFORE, WE DEEM IT APPROPRIATE TO REMAND THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND IF THE ADDRESS OF THE CREDITOR IS CORRE CT AND THE ASSESSEE IS NOT ABLE TO PROCURE THE CONFIRMATION DUE TO SOME DISPUT E WITH THE CREDITOR, THE ASSESSING OFFICER MAY COLLECT THE SAME DIRECTLY BY ISSUING THE SUMMON OR ANY OTHER MODE, AND IF THE IDENTITY IS PROVED, THE CREDITOR IS HAVING CREDITWORTHINESS AND TRANSACTIONS ARE GENUINE, THAN NO ADDITION IS TO BE MADE. ACCORDINGLY, THE ISSUE RELATED TO THE ADDITI ON OF RS. 1 LAC ON ACCOUNT OF DEPOSIT FROM DR. S.C. SONI IS RESTORED T O THE ASSESSING OFFICER 8 FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY TO THE ASSESSEE. 16. IN THE RESULT, APPEAL IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16-07-2012). SD/- SD/- (R.K.GUPTA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 16 TH JULY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR