Om Finance, Himatnagar V. The Income tax Officer,S.K. Ward-3, Himatnagar

ITA 476/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0148 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Peak credit; TDS
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL, V.P.(AZ) & HON BLE SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 476/AHD./2008 ASSESSMENT YEAR : 2005-2006 M/S. OM FINANCE, HIMATNAGAR -VS.- INCOME TA X OFFICER, S.K. WARD-3, HIMATNAGAR (PAN : AAAFO 2653 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI ANIL KUMAR, SR. D .R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 06.11.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-X, AHMEDABAD FO R THE ASSESSMENT YEAR 2005-06. 2. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE P OINTED OUT THAT THERE IS A DELAY OF 19 DAYS I.E. FROM 20.01.2008 TO 08.02.2008 IN FILING THIS A PPEAL DUE TO SUDDEN ILLNESS OF THE MANAGING PARTNER, WHO IS WELL-CONVERSANT WITH THE BUSINESS, FINANCIAL AND LEGAL AFFAIRS OF THE PARTNERSHIP FIRM AND PRAYED TO CONDONE THE DELAY. FOR THIS, REL IANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF GANGA S AHAI RAM SWARUP & ANOTHER VS.- INCOME TAX APPELLATE TRIBUNAL & OTHERS REPORTED IN 271 ITR 512 (ALLAHABAD). RELIANCE WAS ALSO PLACED ON THE JUDGMENT (PRONOUNCED ON 09.10.2006) OF THE H ON'BLE SUPREME COURT IN CIVIL APPEAL NO. 2395 OF 2008 IN THE CASE OF IMPROVEMENT TRUST VS.- UJAGAR SINGH, WHEREIN IT WAS HELD THAT UNLESS MALAFIDES ARE WRIT LARGE, DELAY SHOULD BE CO NDONED AND MATTER SHOULD BE DISPOSED ON MERITS AND NOT ON TECHNICALITIES. IN VIEW OF THIS, DELAY OF 19 DAYS IS CONDONED AND THE APPEAL OF THE ASSESSEE IS ADMITTED. 3. GROUND NO. 1 OF THIS APPEAL IS AGAINST CONFIRMIN G THE ADDITION OF RS.5,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOM E TAX ACT, 1961. 2 ITA NO. 476/AHD/2008 4. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THIS GROUND OF APPEAL ARE THAT ON VERIFICATION OF ASSESSEES CASH BOOK, THE ASSESSING OFFICER NOTICED THAT ON 23.12.2004, THE ASSESSEE HAS INTRODUCED RS.5,00,000/- IN CASH. NO N AME AGAINST THIS ENTRY WAS MENTIONED. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE SOURCE AND NAME OF THE PERSON FROM WHOM SUCH CASH OF RS.5,00,000/- WAS RECEIVED. IN SUPPORT OF THIS, THE ASSESSEE PRODUCED CASH CHEQUE TRANSFER SLIP. HOWEVER, ON THE SAID SLIP, NO NAME W AS MENTIONED. A COPY OF THE SAID SLIP IS MADE PART OF THE ASSESSMENT ORDER. BEFORE THE ASSESSING OFFICER, THE ASSESSEE FILED CONFIRMATION OF ONE PARTY NAMELY INTERNATIONAL STEEL CORPORATION, AHMED ABAD. FROM THE SAID CONFIRMATION, THE ASSESSING OFFICER FOUND THAT THE SAID PARTY WAS NOT ASSESSED TO TAX AND THE ADDRESS GIVEN ON THE SAID CONFIRMATION WAS NOT COMPLETE OR SPECIFIC SO T HAT THE SAID PARTY CAN BE TRACED. SUBSEQUENTLY, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTY. THE SAID PARTY WAS NOT PRODUCED. FOR THIS REASON, THE ASSESSING OFFICER TREATED THE CASH CREDIT OF RS.5,00,000/- NON-GENUINE AND MADE THE ADDITION OF RS.5,00,000/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 5. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ADDITION. BEING AGGRIEVED, THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI S.N. DIVETIA, LD. COUNSEL APPEARED AND HE ASSURED US TO PRODUCE THAT PARTY BE FORE THE ASSESSING OFFICER. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT IN CASE, THE AS SESSEE FAILED TO PRODUCE THE SAID PARTY FOR EXAMINATION BY THE ASSESSING OFFICER, IN THAT EVENT , THE ASSESSING OFFICER IS AT LIBERTY TO MAKE THE ADDITION. 7. ON THE OTHER HAND, SHRI ANIL KUMAR, LD. SR. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY OBJECTED TO THIS PRAYER OF THE ASSESSEE ON THE GROUND THAT ENOUGH OPPORTUNITY WAS GIVEN BY THE ASSESSING OFFICER, THEREFORE, THERE IS NO NECESSITY FOR GIVING ONE MORE OPPORTUNITY. 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT APPEARS THAT VIDE ORDER-SHEET DATED 29.03 .2007, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE SAID CASH CREDITOR. THEREAF TER HE FRAMED THE ASSESSMENT ON 31.03.2007. THIS CLEARLY INDICATES THAT ENOUGH TIME WAS NOT GIV EN TO THE ASSESSEE. IN VIEW OF THIS, WE SET 3 ITA NO. 476/AHD/2008 ASIDE THE ORDER OF LEARNED COMMISSIONER OF INCOME T AX(APPEALS) AND DIRECT THE ASSESSEE TO PRODUCE THE SAID PARTY FROM WHOM HE RECEIVED RS.5,0 0,000/- ON 23.12.2004. THE ASSESSING OFFICER SHALL ALSO FURNISH THE NATURE OF CREDIT WHE THER IT WAS A LOAN. IN CASE, IT WAS A LOAN, WHETHER IT WAS ON INTEREST OR WITHOUT INTEREST, WHE N THE SAID LOAN WAS REFUNDED TO THE SAID PARTY AND HOW INTEREST WAS PAID, I.E. WHETHER TDS WAS DED UCTED AT SOURCE OR NOT. TO SUM UP, AFTER EXAMINING THE CASH CREDITOR AND CONDUCTING OTHER EN QUIRY AS THE ASSESSING OFFICER MAY DEEMS FIT UNDER SECTION 68 AND RE-ADJUDICATE THE ADDITION OF RS.5,00,000/- AFRESH IN ACCORDANCE WITH LAW. 9. THE ONLY OTHER GROUND OF APPEAL IS CONFIRMING TH E ADDITION OF RS.4,00,000/- MADE ON ACCOUNT OF PEAK CREDIT. 9.1. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER MADE THIS ADDITION OBSERVING AS UNDER :- I HAVE GONE THROUGH THE SUBMISSION OF THE ASSESSEE CAREFULLY. THE ASSESSEE IN ITS OWN HAS AGREED THAT THERE ARE SHORT FALL IN CAS H ON CERTAIN DATES. THE ASSESSES HAS WORKED OUT THE PEAK BALANCE OF SUCH NE GATIVE CASH AT RS, 2,44,130/- ON 01/01/2005 (AS PER ANNEXURE - B OF AS SESSEE'S SUBMISSION).. HOWEVER ON GOING THROUGH THE SAME ANNEXURE IT IS SE EN THAT THE ASSESSEE HAS NOT CONSIDERED THE SHORTFALL IN CASH I.E. NEGATIVE DOSING CASH BALANCE OF A PARTICULAR DAY AS OPENING CASH BALANCE FOR THE NEXT DAY. INSTEAD THE ASSESSEE HAS CONSIDERED THE ORIGINAL OPENING CASH BALANCE FO R THE NEXT DAY INSTEAD OF CONSIDERING NEGATIVE CLOSING CASH BALANCE OF THE PR EVIOUS DAY AS RECASTED. THUS THE ASSESSEE HAS NOT RECASTED HIS ENTIRE CASH BOOK, THE ASSESSEE HAS JUST WORKED OUT THE CASH BALANCE ONLY FOR THOSE DAYS WHICH WERE MENTIONED IN THE SHOW CAUSE NOTICE TO BE MORE SPECIFIC ON 03/11/2004 THE ASSESSEE DEPOSITED RS. 1,00,000/- AND THE ASSESSEE WAS HAVING BALANCE AVAI LABLE AT RS 73,876/-. THUS THE ASSESSEE HAS WORKED OUT NEGATIVE CASH BALANCE O F RS. (-) 26.124/-, HOWEVER THE ASSESSEE HAS NOT CONSIDERED THE SAID NEGATIVE D OSING CASH BALANCE AS OPENING CASH BALANCE FOR 04/11/2004. INSTEAD THE AS SESSEE HAS CONSIDERED THE POSITIVE ORIGINAL OPENING CASH BALANCE FOR FURTHE R CALCULATION. THEREFORE THE ASSESSEE'S PLEA THAT NEGATIVE PEAK BALANCE AFTER CO NSIDERING THE CLOSING BALANCES SHOULD BE CONSIDERED FOR ADDITION IS NOT C ORRECT. HOWEVER IT IS FACT THAT, THOUGH THE ASSESSEE WAS NOT HAVING CASH, THE ASSESSEE HAD DEPOSITED CASH IN BANK. WHICH WERE RECORDED IN THE CASH BOOK IN LE TTER DAYS. HENCE THE PEAK OF SUCH CASH DEPOSITS AS CONSIDERED AS UNACCOUNTED CAS H INTRODUCTION WHICH WORKS OUT TO RS. 4,00,000/- IS ADDED TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE I.T. ACT. PENALTY U/S. 27L(1)(C) OF THE I. T. ACT IS INI TIATED FOR THE CONCEALMENT OF INCOME SEPARATELY. 10. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE SAID ADDITION OBSERVING AS UNDER :- 4 ITA NO. 476/AHD/2008 I HAVE GONE THROUGH THE SUBMISSION OF THE ASSESSEE CAREFULLY. THE ASSESSEE IN ITS OWN HAS AGREED THAT THERE ARE SHORT FALL IN CASH ON CERTAIN DATES. THE ASSESSEE HAS WORKED OUT THE PEAK BALANCE OF SUCH NEGATIVE CA SH AT RS,2,44,130/- ON 01/01/2005 (AS PER ANNEXURE-B OF ASSESSEE'S SUBMISS ION). HOWEVER ON GOING THROUGH THE SAME ANNEXURE IT IS SEEN THAT THE ASSES SEE HAS NOT CONSIDERED THE SHORTFALL IN CASH I,E, NEGATIVE CLOSING CASH BALANC E OF A PARTICULAR DAY AS OPENING CASH BALANCE TOR THE NEXT DAY. INSTEAD THE ASSESSEE HAS CONSIDERED THE ORIGINAL OPENING CASH BALANCE FOR THE NEXT DAY INSTEAD OF CO NSIDERING NEGATIVE CLOSING CASH BALANCE OF THE- PREVIOUS DAY AS RECASTED. THUS [HE ASSESSEE HAS NOT RECASTED HIS ENTIRE CASH BOOK. THE ASSESSEE HAS JUST WORKED OUT THE CASH BALANCE ONLY TOR THOSE DAYS WHICH WERE MENTIONED IN THE SHOW CAUSE NOTICE. TO BE MORE SPECIFIC ON 3.11.2004 THE ASSESSEE DEPOSITED RS.1,00,000/- AND THE ASSESSEE WAS HAVING BALANCE AVAILABLE AT RS.73,876/-, THUS THE ASSESSEE HAS WOR KED OUT NEGATIVE CASH BALANCE OF RS.(-)26,124/-. HOWEVER, THE ASSESSEE HAS NOT CONSI DERED THE SAID NEGATIVE CLOSING CASH BALANCE AS OPENING CASH BALANCE FOR 3.112004. INSTEAD THE ASSESSEE HAS CONSIDERED THE POSITIVE ORIGINAL OPENING CASH BALAN CE FOR FURTHER CALCULATION. THEREFORE, THE ASSESSORS PLEA THAT NEGATIVE PEAK BA LANCE AFTER CONSIDERING THE CLOSING; BALANCE SHOULD BE CONSIDERED FOR ADDITION HAD DEPOSITED CASH IN BANK. WHICH WERE RECORDED IN THE CASH BOOK IN LATER DAYS. HENCE THE PEAK OF SUCH CASH DEPOSITS IS CONSIDERED AS UNACCOUNTED CASH INTRODUC TION, WHICH WORKS OUT TO RS.4,00,000/- IS ADDED TO THE INCOME OF THE ASSESSE S. 6. AGAIN ON THIS ISSUE, IT HAS ONLY BE MENTIONED TH AT THE ASSESSING OFFICER HAS NOT PROPERLY RECONCILED THE CASH BALANCE AND THE SA ME HAS TO BE PROPERLY RECALCULATED BUT DESPITE SEVERAL OPPORTUNITIES NO C ALCULATION IN THIS REGARD HAS BEEN FILED. THEREFORE, THE ADDITION MADE BY THE ASSESSIN G OFFICER IS CONFIRMED. AGGRIEVED WITH THE ABOVE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 11. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE S HRI S.N. DIVETIA, LD. COUNSEL APPEARED AND REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT CORRECT WORKING OF PEAK CREDIT IS RS.2,44,130/- ON 01.01.2005 (AS PER ANNEXURE B OF ASSESSEES SUBMI SSION). THE ASSESSING OFFICER ERRED IN CALCULATING THE PEAK CREDIT AT RS.4,00,000/-. THE L D. COUNSEL OF THE ASSESSEE SUBMITTED THAT ENOUGH CASH WAS AVAILABLE IN THE CASH BOOK ON THE V ARIOUS DATES. AS AGAINST THIS, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT CONSIDERED THE NEGATIVE CASH BALANCE. AFTER TAKING INTO CONSIDERATION THE SAME, THE UNACCOUNTED INTRODUCTIO N OF CASH WORKED OUT AT RS.4,00,000/-. THEREFORE, THE VIEW TAKEN BY BOTH THE DEPARTMENTAL AUTHORITIES BELOW BE UPHELD. 12. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME 5 ITA NO. 476/AHD/2008 TAX(APPEALS) HAS GIVEN DETAILED DISCUSSION ON THE S UBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. ADMITTEDLY, ON 03.11.2004, THE ASSESSEE D EPOSITED RS.1,00,000/- AND THE ASSESSEE WAS HAVING BALANCE AVAILABLE AT RS.73,876/-. THUS THE A SSESSEE HAS WORKED OUT NEGATIVE CASH BALANCE OF RS.(-)26,124/-. HOWEVER, IT HAS NOT CONSIDERED T HE SAID NEGATIVE CLOSING BALANCE AS OPENING CASH BALANCE FOR 03.11.2004. INSTEAD THE ASSESSEE H AS CONSIDERED THE POSITIVE ORIGINAL OPENING CASH BALANCE FOR FURTHER CALCULATIONS. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE CONVINCED THAT THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) HAS GIVEN COGENT REASON FOR CONFIRMING WORKING OF PEAK CREDIT AT RS.4,00,00 0/- WORKED BY THE ASSESSING OFFICER. WE, THEREFORE, DECLINE TO INTERFERE. RESULTANTLY, THIS GROUND OF APPEAL IS REJECTED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.08.20 10 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 18 / 08 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT CONCERNED, (4) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.