M/s. Prolife Pharma, Baroda V. The Income tax Officer,Ward-5(2), Baroda

ITA 432/AHD/2010

• Counselvise Citation: 43220514 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 432/AHD/2010 ASSESSMENT YEAR :2006-07 M/S. PROLIFE PHARMA IQUARA, NEAR MADHWANI CLASS, SIYAPURA, RAOPURA, VADODARA. V/S . THE INCOME TAX OFFICER, WARD 5(2), VADODARA. PAN NO. A A HFP2195E (APPELLANT) .. (RESPONDENT) BY APPELLANT NONE /BY RESPONDENT SHRI T. SANKAR, SR. D.R. /DATE OF HEARING 19.06.2013 /DATE OF PRONOUNCEMENT 08.08.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-V, BARODA, DATED 25.11.200 9 FOR ASSESSMENT YEAR 2006-07. THE EFFECTIVE GROUND OF APPEAL IS AS UNDE R: THAT THE LEARNED A.O. HAS ERRED IN LAW AND ON FA CT IN TREATING THE LOANS OF RS.26,40,000/- RECEIVED FROM VARIOUS PARTI ES AS MENTIONED BELOW AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCO ME TAX ACT AND THE LD COMMISSIONER OF INCOME TAX (APPEALS) V, VADO DARA IN CONFIRMING THE SAME. SR. NO. NAME AMOUNT(RS.) 1 DR. YUSUF I. SURTI 8,90,000/- 2 ABRAR ABDUL SHAIKH 5,00,000/- 3 BANKIM R. PANDYA 8,75,000/ - ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 2 4 R. M. PATEL 3,75,000/- TOTAL 26,40,000/- 2. THE A.O. OBSERVED THAT ASSESSEE HAS UNSECURED LO AN OF RS.38,39,397/- AS ON 31.03.2006. AS PER ANNEXURE 3, THE APPELLANT HAD TAKEN LOAN DURING THE FINANCIAL YEAR RS.50,75,000/-. LD. A.O. ASKED TO FILE THE CONFIRMATION OF ALL THE CASH CREDITORS BUT THE ASSESSEE HAD FAILED TO P ROVE THE IDENTITY OF THE DEPOSITORS, GENUINENESS OF THE TRANSACTIONS AND CRE DITWORTHINESS OF THE DEPOSITORS. THUS, HE MADE ADDITION OF RS. 47,25,00 0/- U/S. 68 OF THE IT ACT. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO HAD ALLOWED THE APPEAL PARTLY BY SEEKING REMAND REPORT FROM THE A.O . AND OBSERVED THAT ACTUAL CASH CREDITS AS ON 31.03.2006 WERE RS.45,75, 000/- AS THE CASH CREDIT OF RS. 5 LAKHS IN THE NAMES OF M/S. MANIBHAI & BROS . WAS MENTIONED TWICE BY THE AO IN THE TABLE AT SR. NO. 6 & 12 OF PARA 4.1 OF THE ASSESSMENT ORDER. OUT OF THESE, THE CASH CREDIT OF RS.3,50,000/- WERE FOUND TO BE GENUINE BY THE A.O. THUS, THE CONTESTED ADDITION U/S. 68 IS OF RS .42,25,000/-. FURTHER, DEPOSITS OF RS.7,75,000/- PERTAINING TO SHRI MANISH PARIKH, SHRI YUSUF ADAM PATEL AND M/S. SHANKARLAL THAKKAR WERE FOUND TO BE EXPLAINED BY THE AO IN THE REMAND REPORT. AS REGARDS, CASH CREDITS OF RS. 8,75,000/- RELATING TO BANKIM R PANDYA AND RS.3,75,000/- OF SHRI R. M. PAT EL, NO DETAILS COULD BE FURNISHED TO ESTABLISH THE CASH CREDITS. IN RELAT ION TO DR. YUSUF SURTI, THE SOURCE OF RS.8.9 LAKHS COULD NOT BE EXPLAINED. FUR THER, IN REGARD TO SHRI ABRAR SHAIKH THE ARGUMENT OF THE APPELLANT IS NOT A CCEPTED AS DESPITE SUFFICIENT TIME, THE IDENTITY OF THE DEPOSITOR REMA INED UNESTABLISHED. IN REGARD ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 3 TO MOHMAD HANIF, THE CONTENTION OF THE APPELLANT IS ACCEPTED AND THE SOURCE OF DEPOSIT OF RS. 2 LAKHS STANDS EXPLAINED. SIMILA RLY, IN REGARD TO MANIBHAI & BROS., THE SOURCE OF RS. 5 LAKHS STANDS EXPLAINED. IN VIEW OF THE ABOVE, OUT OF TOTAL CASH CREDITS OF RS.42,25,000/- RECEIVED DURIN G THE YEAR, THE DEPOSITS OF RS.15.85 LAKHS HAVE BEEN SATISFACTORILY EXPLAINED A ND THE BALANCE OF RS.26,40,000/- HAD REMAINED UNEXPLAINED. ACCORDING LY, LD. CIT(A) HAD CONFIRMED THE ADDITION OF RS.26,40,000/-. 4. NOW THE ASSESSEE IS BEFORE US. THE ASSESSEE FIL ED WRITTEN REPLY, WHICH IS REPRODUCED AS UNDER: THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS TRADING & DEALING AS PHARMACEUTICAL DISTRIBUTOR WITH MARS R EMEDIES PRIVATE LIMITED. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT F IRM HAS SHOWN UNSECURED LOANS FROM VARIOUS DEPOSITORS AMOUNTING T O RS.50,75,000/- FOR WHICH THE APPELLANT HAS SUBMITTE D CONFIRMATION OF ACCOUNTS, PAN CARDS, BANK STATEMENT ETC. OUT OF WHI CH RS.3,50,000/- WAS TREATED AS EXPLAINED BY THE ID A. O & BALANCE OF RS. 47,25,000/- WERE TREATED AS UNEXPLAINED BY THE ID. A.O. AGAINST THE ORDER PASSED BY THE ID A.O, THE APPELLA NT HAS PREFERRED FIRST APPEAL. THE COMMISSIONER OF INCOME TAX (APPEA LS)-V, VADODARA VIDE HIS ORDER DATED 25.11.2009 GIVEN RELI EF TO THE TUNE OF RS. 20,85,000/- AND REMAINING DEPOSITS AMOUNTING TO RS. 26,40,000/- TREATED AS UNEXPLAINED AS IDENTITY OF T HE CREDITORS WERE NOT ESTABLISHED. ADDITIONAL EVIDENCES: ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 4 YOUR HONOUR IS REQUESTED TO KINDLY CONSIDER THE FOL LOWING DETAILS/ DOCUMENTS /CONFIRMATIONS WHICH ARE ADDITIONAL EVIDE NCES TOWARDS ADDITION MADE OF RS.26,40,000/-. SR. NO. NAME AMOUNT RECEIVE D DURING THE YEAR (RS.) EVIDENCE S PRODUCED BEFORE A.O. ADDITIONAL EVIDENCES BEFORE CIT ADDITIONA L EVIDENCE S BEFORE ITAT 1 DR. YUSUF L. SURTI 8,90,000 CONFIRMAT- ION OF ACCOUNT CONFIRMATI- ON, COPY OF PASSPORT, BANK 2 ABRAR ABDUL SHAIKH SHAFIQ AHMED SHAIKH 5,00,000 CONFIRMATION, BANK STATEMENT, COPY OF PASSPORT BANK STATEMENT (ANNEXURE -1) 3 BANKIM R. PANDYA 8,75,000 7 R. M. PATEL 3,75,000 CONFIRMATI ON OF ACCOUNT CONFIRMATION IN FACT LOAN FROM SHAFIQ SHAIKH IS ORIGINALLY MAN AGED BY ABRAR SHAIKH. THEREFORE, THE NAME IS THROUGH OVERSIGHT ME NTIONED IN BALANCE SHEET AS ABRAR SHAIKH. SHAFIQ SHAIKH STAYS IN AUSTRALIA AND THEREFORE CHEQ UE ISSUED FROM HIS NRE A/C. THE ABOVE EVIDENCES COULD NOT BE PRODUCED BEFORE TH E HON.BLE CIT (APPEALS)-V, VADODARA IN THE UNDERMENTIONED CIRCUMS TANCES- SINCE THE DEPOSITORS WERE LOCATED OUT OF STATION AN D MAJORITY ARE FROM OUT OF INDIA. MOREOVER THE BUSINESS HAS BEEN D ISCONTINUED DUE TO HEAVY LOSSES AND DUE TO TIME BOUND OF ASSESSMENT PROCEEDINGS, THE CONFIRMATIONS AND NECESSARY EVIDENCES COULD NOT BE OBTAINED DURING THE ASSESSMENT PROCEEDING. ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 5 THE ABOVE EVIDENCES MAY PLEASE BE CONSIDERED AS PER RULE 29 OF THE IT RULES IN THE INTEREST OF JUSTICE. THE ABOVE EVIDENCES COULD NOT BE SUBMITTED BEFORE T HE LEARNED ASSESSING OFFICER AS WELL AS BEFORE CIT DUE TO THE REASONS BEYOND THE CONTROL OF THE APPELLANT AS STATED HEREINABOVE BUT THE SAME BEING VERY VITAL FOR PROPERLY DECIDING THE INCOME O F THE APPELLANT, YOUR HONOUR IS REQUESTED TO KINDLY CONSIDER THE SAM E. UNDER THE CIRCUMSTANCES, YOUR HONOUR IS URGED TO KI NDLY CONSIDER THE ABOVE AND PASS APPROPRIATE ORDER IN THE INTERES T OF JUSTICE. LEGAL PRONOUNCEMENTS : THE HON'BLE GUJARAT HIGH COURT IN CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS ROHINI BUILDERS ( 256 ITR 36O) DELETED THE ADDITIONS MADE WHERE THE ASSESEE HAS SU BMITTED ADDRESS OF THE CREDITORS, CONFIRMATION AND GIR/PAN. IT IS HELD BY VARIOUS COURTS THAT WHERE LENDER IS A SSESSED TO TAX, AND CONFIRMATION HAS BEEN FURNISHED ADDITION U/S. 6 8 CAN NOT BE MADE. CASE LAWS: 1) CIT VS. ORISSA CORPORATION (P) LTD. (159 ITR 78) 2) (GUJ.) METACHEM 245 ITR 360 (MPHC) 3) NEM CHAND KOTHARI 264 ITR 254 (GAU). 4) LABH CHAND BOHRA VS INCOME TAX OFFICER (2008) 2 19 CTR 571 (RAJ) THEREFORE, ADDITION MADE IS PATENTLY WRONG AND NOT IN ACCORDANCE WITH LAW. IT IS THEREFORE, PRAYED THAT THE SAID AD DITION REQUIRES TO BE DELETED. 4(I). AT THE OUTSET, LD. SR. D.R. ALSO FILED WRITTE N REPLY AND ARGUED THAT AS PER PARA 4.2 OF THE A.OS ORDER, THE APPELLANT HAD NOT PROVED THE IDENTITY OF ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 6 DEPOSITORS, GENUINENESS OF THE TRANSACTIONS AND CRE DITWORTHINESS OF THE DEPOSITORS. AS PER PAGE 2 OF THE WRITTEN REPLY, TH E ASSESSEE HAS SOUGHT TO SUBMIT THE ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENT OF SHRI SHAFIQ SHAIKH AND IT WAS SUBMITTED THAT THE ADDITIONAL EVI DENCE BE REJECTED ON ACCOUNT OF FOLLOWING REASONS: I. IT IS NOT IN PROPER FORMAT II. IT IS NOT CERTIFIED III. THE BANK STATEMENT IS DATED 07.04.2009 WHILE T HE ORDER OF THE CIT(A) WAS PASSED ON 25.11.2009. THUS, THERE IS NO VALID REASON WHY THE ADDITIONAL EVIDENCE WAS NOT FURNISHED BEFORE THE CIT(A), AS IT IS EVIDENT FROM THE ORDER OF THE CIT(A) THAT HE HAD ADMITTED CERTAIN ADDITION AL EVIDENCE AND REMAND REPORT WAS ALSO SOUGHT FROM THE A.O. VIDE LETTER DA TED 18.11.2009. HE FURTHER RELIED IN CASE OF NB SURTI FAMILY TRUST, 288 ITR 253, WHEREIN THE HONBLE COURT HAS UPHELD THE DECISION OF TRIBUNAL TO REJECT THE ASSESSEES REQUEST FOR FILING ADDITIONAL EVIDENCES FOR THE FIRST TIME. SI MILARLY, IN THE CASE OF FAIRDEAL FILAMENTS LTD., 302 ITR 173, THE HONBLE GUJARAT HIGH COURT HAS HELD THAT WHERE BOTH COMMISSIONER (APPEALS) AND TRIBUNAL FOUN D THAT SUFFICIENT OPPORTUNITIES HAD BEEN GRANTED BY ASSESSING OFFICER TO ASSESSEE REGARDING PRODUCTION OF EVIDENCES BUT ASSESSEE DID NOT FILE S AME, THEY WERE JUSTIFIED IN REJECTING PLEA OF ASSESSEE FOR ADMISSION OF ADDITIO NAL EVIDENCE. HE FURTHER ARGUED THAT IN CASE OF DR. YUSUF I. SURTI, HE FURNI SHED CONFIRMATION WITH ONE BANK ACCOUNT WHERE FROM RS. 1.1. LAKHS WAS RECEIVED BY THE APPELLANT. THE SECOND BANK ACCOUNT CONFIRMATION WAS NOT FILED BEFO RE THE CIT(A) AND IN ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 7 BALANCE SHEET, THE CASH CREDITOR DISCLOSED AT RS. 1 0 LAKHS BUT IN APPELLATE PROCEEDING, IT HAS BEEN SHOWN AT RS. 6 LAKHS. THE CIT(A) CONFIRMED THE ADDITION TO THE TUNE OF RS.8.9 LAKHS. IN CASE OF A BRAR ABDUL SHAIKH, NO EVIDENCES WERE FURNISHED BEFORE THE CIT(A) FOR LOAN OF RS.5 LAKHS. NOW CONFIRMATION FURNISHED IN THE NAME OF SHRI ABRAR AB DUL SHAIKH OF RS. 5 LAKHS. NOW ASSESSEE IS CLAIMING BEFORE THE ITAT THAT THIS LOAN WAS MANAGED BY SHRI SHAFIQ AHMED SHAIKH, BUT NOTHING HAD BEEN FURN ISHED IN SUPPORT OF HIS CLAIM. IN REGARDING TO BANKIM R. PANDYA, EVEN NO C ONFIRMATION HAS BEEN SUBMITTED BEFORE THE ITAT. IN CASE OF R. M. PATEL FOR RS.3,75,000/-, HE FILED ONLY CONFIRMATION BUT NO EVIDENCE OF RETURN, COPY O F BANK ACCOUNT AND PAN NO. HE FURTHER ARGUED THAT THE CASE LAW CITED BY THE APPELLANT I.E. COMMISSIONER OF INCOME TAX VS ROHINI BUILDERS (SUPR A), IS NOT APPLICABLE TO THE FACTS OF THE CASE AND RELIED UPON IN CASE OF LALCHAND B VASVANI (ITA NO. 1490/AHD/2007 AND 1922/AHD/2007 FOR A.Y. 2003-04, WHERE HONBLE AHMEDABAD BENCH HAD DISTINGUISHED THE CASE OF ROHIN I BUILDERS. IT IS SUBMITTED THAT FUND RECEIVED THROUGH BANK CHANNELS DO NOT INDICATE GENUINENESS. IN THE CASE OF CIT VS. SARAVANA CONSTRUCTIONS P LTD., 208 TAXMAN 188 (MAG.) (BANGALORE), DATE OF ORDER 14.03.2012 , CIT VS. MOHANAKALA, 161 TAXMAN 169, 291 ITR 278, THE HONBLE APEX COURT HAD HELD AS UNDER: MAY BE THE MONEY CAME BY WAY OF BANK CHEQUES AND PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS O F NO CONSEQUENCE ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 8 HE FURTHER RELIED UPON CASE OF CIT VS. PRECISION FINANCE P LTD. (CALCUTTA HC), 208 ITR 465 & CIT VS. N.R.PORTFOLIO P LTD. (2013) 2 14 TAXMAN 408 (DELHI HC). THE APPELLANT HAD NOT SUBMITTED DETAILS OF TERMS OF CASH CREDIT, RATE OF INTEREST, AGREEMENT, FREQUENCY OF PAYMENT OF INTERE ST, REPAYMENT OF PRINCIPAL, SECURITY AND COLLATERAL, OTHER TERMS AND CONDITIONS . THUS, THE APPELLANT HAD NOT EVEN DISCHARGED THE PRIMARY ONUS LAID ON HIM AN D REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SUFFICIENT OPPORTUNITY HAD BEEN GIVEN BY THE LD. A.O. AT THE TIME OF ASSESSMENT, WHICH WAS REPLIED VIDE LETTER DATED 24.05.2008 WITHOUT ANY DOCUMENTARY EVIDENCE BEFORE THE A.O. THE LAST SHOW CAUSE WAS GIVEN BY THE A.O. ON 14.11.2008 WHICH WAS REPLIED ON 24.12.2008. THE ASSESSEE FAILED TO FILE ANY CONFIRMATION BEFORE THE A.O. THE APPELLA NT FILED THE APPEAL BEFORE THE CIT(A). THE APPELLANT FILED ADDITIONAL EVIDENC E BEFORE THE CIT(A) AND IT WAS CLAIMED THAT MOST OF CASH CREDITORS WERE LOCATE D OUTSIDE INDIA. THE LD. CIT(A) BY ACCEPTING THE ADDITIONAL EVIDENCE HAD SOU GHT REMAND REPORT ON ADDITIONAL EVIDENCE, WHICH WERE PARTLY ACCEPTED BY THE A.O. AND CIT(A) HAD CONSIDERED THE EVIDENCE AND CONFIRMED THE ADDITION OF RS.26,40,000/-. NOW THE APPELLANT HAD CHANGED HIS STAND IN CASE OF SHAF IQ SHAIKH AND CLAIMED THAT THIS WAS LOAN GIVEN BY ABRAR ABDUL SHAIKH AND NAME OF SHRI SHAFIQ SHAIKH HAD MENTIONED IN THE BALANCE SHEET DUE TO OV ERSIGHT. THE DEPOSITORS WERE LOCATED OUTSIDE INDIA. IT DOESNT HAVE ANY BE ARING ON THE FINDING OF THE CIT(A) AS LD. A.O. PASSED ORDER ON 30.12.2008 WHERE AS CIT(A) PASSED ORDER ITA NO. 432/AHD/10 A.Y. 06-07 PAGE 9 ON 25.11.2009 MORE THAN TEN MONTHS TIME HAD BEEN TA KEN BY THE APPELLANT. EVEN, HE COULD NOT COLLECT THE CONFIRMATION FROM TH E LENDERS CANNOT BE ACCEPTED. THE ASSESSEE PLACED RELIANCE IN CASE OF COMMISSIONER OF INCOME TAX VS ROHINI BUILDERS (SUPRA), IS SQUARELY NOT APPLICABLE AND CO-ORDINATE AHMEDABAD BENCHS DECISION IN CASE OF LALCHAND B VASVANI (SUPRA), IS SQUARELY APPLICABLE. FURTHER, WHATEVER EVIDENCE FIL ED BY THE APPELLANT BEFORE US HAD NOT CERTIFIED BY MR. SHAFIQ SHAIKH. THE REM AINING LOAN IN THE NAME OF DR. YUSUF I. SURTI, BANKIM R. PANDYA AND R. M. PATE L CLAIMED NO CONFIRMATION HAD BEEN FILED BEFORE US. THUS, WE UPHOLD THE ORDE R OF THE CIT(A). 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 08.08.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;