The ITO, Ward-4(1), Ahmedabad V. M/s. Gallops Infrastructure Ltd.,, Ahmedabad

ITA 516/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76854 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-06-2014
• Assessment Year: 1995-1996
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT ME MBER THE INCOME-TAX OFFICER, WARD-4(1), AHMEDABAD (APPELLANT) VS GALLOPS INFRASTRUCTURE LTD, 10 TH FLOOR ASTRON TECH FUN REPUBLIC, S.G. HIGHWAY, AHMEDABAD PAN: AAACX0143J (RESPONDENT) REVENUE BY: SRI J.P. JHANGID, SR.D.R. ASSESSEE BY: SRI M.K. PATEL, A.R. DATE OF HEARING : 11-06-2014 DATE OF PRONOUNCEMENT : 20-06-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-XI, AHMEDABAD DATED 20-12-2010 DELETING THE ADDITION OF RS. 13,00,000/- BY AO U/S. 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINE D CASH CREDITS. ITA NO.516/AHD/2011 ASSESSMENT YEAR 1995-96 I.T.A NO. 516/AHD/2011 A.Y. 1995-96 PAGE NO ITO VS. GALLOPS INFRASTRUCTURE LTD 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ORIGINAL AS SESSMENT IN THIS CASE WAS FINALIZED ON 25-03-1998 DETERMINING THE ASSESSE ES TOTAL INCOME AT RS. 24,44,987/- WHEREIN THE AO MADE ADDITIONS (I) O F RS. 12,52,000/- ON ACCOUNT OF NET PROFIT TAKEN @ 10% AFTER REJECTION O F BOOKS OF ACCOUNTS (II) RS. 13,00,000/- ON ACCOUNT OF CASH CREDIT. 3. IN APPEAL LD. CIT(A) DIRECTED THE AO TO ADOPT NE T PROFIT @ 8% INSTEAD OF 10% AND DELETED THE ADDITION OF RS. 13,0 0,000/- BEING UNEXPLAINED CASH CREDIT. 4. ON FURTHER APPEAL THE HONBLE ITAT UPHELD THE OR DER OF LD. CIT(A) WITH REGARD TO THE ADDITION ON ACCOUNT OF ADOPTING THE NET PROFIT @ 8% INSTEAD OF 10% ADOPTED BY THE AO. WITH REGARD TO T HE ISSUE OF ADDITION OF RS. 13,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CRED IT THE MATTER WAS RESTORED BACK TO THE FILE OF AO BY OBSERVING AS UND ER:- '7. THE LEARNED DR SUBMITTED THAT THE EVIDENCE AS P RODUCED BEFORE THE CIT(A) WAS NOT BROUGHT ON RECORD BY THE ASSESSEE DU RING THE ASSESSMENT PROCEEDINGS AND ADDITIONAL EVIDENCE HAS BEEN FILED BEFORE THE CIT[A). ON THE BASIS OF WHICH THE CLT(A) HAS DELETED THE ADDIT ION. THE LEARNED AR OF THE ASSESSEE DID NOT DISPUTE THE BOVE FACTS. CONSID ERING THE ABOVE UNDISPUTED FACTS, IN OUR OPINION, THE ACTION OF THE CIT(A) IN ACCEPTING AND ACTING UPON THE ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER IS CONTRARY TO RULE 46A OF THE IN COME-TAX RULES, 1961 AND THEREFORE, HIS ORDER CANNOT BE SUSTAINED. WE, T HEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE F ILE OF THE ASSESSING OFFICER FOR RE-DECIDING THE ISSUE TAKING INTO CONSI DERATION THE ADDITIONAL EVIDENCE PRODUCED BEFORE THE CIT(A) FOR THE FIRST T IME. WE DIRECT ACCORDINGLY. IN PURSUANCE OF THE ABOVE AO PROCEEDED TO FINALIZE THE ASSESSMENT U/S. 143(3) R.W.S. 254 OF THE ACT. WHILE DOING SO, THE AO REPEATED THE ADDITION BY OBSERVING AS UNDER:- I.T.A NO. 516/AHD/2011 A.Y. 1995-96 PAGE NO ITO VS. GALLOPS INFRASTRUCTURE LTD 3 7. CONSIDERING THE FACTS AND AMPLE OPPORTUNITIES O F BEING HEARD PROVIDED TO THE ASSESSEE, THE CLAIM OF CASH CREDIT OF RS. 13 ,00,000/- IS NOT ACCEPTED EVEN AFTER GOING THROUGH THE VARIOUS SUBMI SSIONS MADE, ON THE 1) THE STATEMENT OF SHRI SHAILESH PTEL, NRI WAS REC ORDED BY THE THEN AO AT THE TIME OF ASSESSMENT PROCEEDINGS U/S. 143(3 ) OF THE I. T. ACT IN WHICH IT WAS STATED BY SHRI SHAILESH PATEL THAT SHA RES OF THE COMPANY WERE PARTLY PURCHASED OUT OF MONEY WITHDRAWN FROM B ONK ACCOUNT IN DUBAI. HE WOULD PRODUCE RELEVANT EVIDENCES TO ESTAB LISH THE SCALE OF HIS BUSINESS AND HIS BANK PASS BOOK FROM WHICH MONEY HA D BEEN WITHDRAWN TO PURCHASE THE GOLD IN DUBAI. TILL THE FINALIZATIO N OF THE ASSESSMENT, NO EVIDENCE WHATSOEVER WERE FURNISHED BY SHRI SHAILESH PATEL. MOREOVER, NO SUCH EVIDENCE WAS PRODUCED BEFORE THE ID. CIT(A) AT THE TIME OF APPELLATE PROCEEDINGS AND AT THIS STAGE ALSO, I.E. SET-ASIDE ASSESSMENT PROCEEDINGS AND AS SUCH THE ASSESSSEE FILED TO PROVE THE CREDIT WORTHINESS OF SHRI SHAILESH PATEL. FURTHER, IT WAS NOTICED BY THE THEN AO THAT RETURN OF INCOME WAS FILED BY SHRI SHAILESH PATEL AFTER HIS S TATEMENT WAS RECORDED IN THE OFFICE. FROM THIS FACT, IT CAN BE ESTABLISHE D THAT THE ASSESSEE HAS TRIED TO PROVE THE GENUINENESS/CREDITWORTHINESS OF CASH CREDIT ONLY ALTER DETECTION OF THE SAME. 2) ON VERIFICATION OF COPY OF BILL OF SALE OF GOLD AND SILVER SOLD TO AMBALAL SOMNATH SARKAR & CO., OF RATANPOLE, /AHMEDA BAD ON 17-12-94, IT IS SEEN THAT TOTAL SALE PROCEEDS WORTH RS. 29,52 ,324/- IS NOTED AS CREDITED ON YOU'RE A/C' BY THE JEWELER, HOWEVER, TH E ASSESSEE HAS NOT FURNISHED ANY COPY OF BANK ACCOUNT IN WHICH THE SAL E VALUE OF GOLD AND SILVER AMOUNTING TO RS. 29,52,324/- WERE CREDITED. (3) FURTHER, IT IS NOTICED ON VERIFICATION OF COP Y OF CUSTOM CLEARANCE OF AHMEDABAD AIRPORT AND SALE BILL OF GOLD AND SILVER SOLD TO AMBALAL SOMNATH SARKAR &. CO., THAT THE DATE OF ARRIVAL AND DATE OF SALE IS SAME, I.E. 17-12-94, IT IS NOT BELIEVED THAT SHRI SHAILES H PATEL WAS IN SO HURRY TO SELL 100 KG. OF SILVER AND 4943 GRAMS OF GOLD ON TH E SAME DAY OF HIS ARRIVAL TO AHMEDABAD. (4) THE COPY OF BANK PASS BOOK OF THE AHMEDABAD DI STRICT CO.OP. BANK LTD., NARANPURA, BRANCH BEARING A/C NO. 5086 S UBMITTED BY THE ASSESSEE IS IN THE NAME OF BHANUPRASAD L. PATEL THE TRANSACTIONS RECORDED FROM 01-10-94 TO 14-12-95 ARE PROVIDED. HO WEVER, IT IS RIOT ASCERTAINABLE THAT WITHDRAWAL OF RS. 13,00,000/- MA DE ON 14-02-95 PERTAINS TO BHANUPRASAD L PATEL OR SHRI SHAILESH L. PATEL. (5) FURTHER, WHILE DETERMINING THE INCOME OF THE A SSESSEE BY THE THEN A.O, U/S. 143(3) OF THE ACT, HE HAD ALSO NOTED THAT THE ASSESSEE IS IN THE HABBIT OF EARNING INCOME OUT OF BOOKS OF A/CS WHICH WAS ADMITTED IN STATEMENT DATED 24-25/7/92 U/S. 132(4) OF THE ACT D URING THE SEARCH. THE ADOPTION OF PARTICULAR MODE OF EARNING UNACCOUNTED INCOME CAN NOT EXIST I.T.A NO. 516/AHD/2011 A.Y. 1995-96 PAGE NO ITO VS. GALLOPS INFRASTRUCTURE LTD 4 ONLY IN THE YEAR IN WHICH IT COME TO THE SURFACE AN D MORE PARTICULARLY DURING THE SEARCH PROCEEDINGS. IT MUST HAVE BEEN AD OPTED AND APPLIED IN THE BUSINESS BY THE ASSESSEE IN OTHER YEAR LSO. ONC E MODUS OPERANDI IS PROVED IN A PARTICULAR CASE IT HAS TO BE APPLIED; I N OTHER ASSESSMENT YEAR ALSO. FROM THE ABOVE, IT IS CLEAR THAT ASSESS EE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION. MERE FILING OF CONFIRMATORY LETTERS, COPY OF BANK ACCOUNT, LEDGER, CUSTOM CLEARANCE, SAL E BILL ETC. DOES NOT DISCHARGE THE ONUS THAT LIES ON THE ASSESSEE. THER EFORE, IN VIEW OF FORE- GOING DISCUSSION, THE DEPOSIT OF RS. 13,00,000/- M ADE IN THE NAME OF SHRI SHAILESH PTEL REMAINS UNEXPLAINED AND THEREFORE, TH E SAME IS TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT AND ADDED TO THE INCOME OF THE ASSESSEE. 5. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE S UBMISSION OF THE ASSESSEE WHICH HAS BEEN REPRODUCED BY HIM AT PARA 4 .1 OF HIS ORDER AGAIN DELETED THIS ADDITION BY OBSERVING AS UNDER:- 4.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER. THE TRIBUNAL'S DIRECTION TO THE A.O. WAS TO CONSIDER THE ADDITIONAL EVIDENCE PRODUCED BEFORE CIT(A) (IN THE FIRST ROUND OF APPEAL PROCEEDINGS, RELYING ON WHICH CIT(A) DELETED THE ADDITION). THE OBSERVATIONS OF THE A.O. IN THE IMPUGNED ORDER ARE GENERAL AND VAGUE. A S CONTENDED IN THE WRITTEN SUBMISSIONS APPELLANT WAS ABLE TO DEMONSTRA TE THE IDENTITY, CREDIT- WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE IMPUGNED AMOUNT OF RS. 13 LAKHS WAS RECEIVED BY THE APPELLANT BY WAY O F SHARE-APPLICATION MONEY. IN THE LIGHT OF THE CASE-LAWS RELIED BY THE LEARNED A.R. ONCE THE BASIC DETAILS OF THE SHARE-APPLICANT ARE FURNISHED, NO ADDITION IS PERMISSIBLE IN THE HANDS OF THE COMPANY. AS SEEN FR OM CIT{A)'S ORDER DATED 20.05.2002, THE ADDITION WAS DELETED WITH THE FOLLOWING OBSERVATIONS:- 'I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSIONS OF THE LEARNED COUNSEL CAREFULLY. I HAVE ALSO GONE THROUGH THE DETAILS FILED BEFORE ME BY THE LEARNED COUNSEL CAREFULLY AND THE VIEW TAKEN BY THE A.O. IN HIS ORDER. HAVING CONSIDERED THE MATTER CAREFULLY I SEE NO JUSTIFICATION FOR THE DISALLOWANCE MADE BY THE A O ON THIS SCORE AS SHRI SHAILESH PATEL HAS PROVEN HIS CAPACITY AND CREDITWORTHINESS OF HAVING BEEN MONEY GIVEN FOR SHARE APPLICATION TO THE APPELLANT COMPANY. EVEN THE REPAYMENT THROUGH BANKING CHANNEL S ALSO LENDS SUPPORT TO APPELLANT'S CON T ENTIONS, IN THE LIGHT OF ABOVE I.T.A NO. 516/AHD/2011 A.Y. 1995-96 PAGE NO ITO VS. GALLOPS INFRASTRUCTURE LTD 5 MENTIONED EVIDENCE AND EXPLANATIONS THE ADDITION MA DE BY THE A.O .OF RS.13,00,000/- IS NOT JUSTIFIED AND THEREFO RE DELETED. HAVING CONSIDERED THE FACTS OF THE CASE AND THE LEG AL POSITION AS ON DATE ON THE ISSUE, I AM OF THE VIEW THAT THE ADDITION IS NOT SUSTAINABLE. IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 6. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW THE RE VENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. DR VEHEMENTLY SUPPORT ED THE ORDER OF AO AND TOOK US TO THE RELEVANT PORTION OF HIS ORDER. LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND TOOK US TO THE VARIOUS P AGES OF PAPER BOOK TO SHOW THAT AMOUNT OF RS. 13,00,000/- WAS RECEIVED BY THE ASSESSEE BY WAY OF SHARE APPLICATION MONEY FROM SRI SAILESH PATEL N RI AND ALSO RELEVANT PAPERS IN RESPECT OF HIS CAPACITY AND CREDITWORTHIN ESS OF HAVING GIVEN THIS MONEY. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT AO HAS MADE THIS ADDITION OF RS. 13,00,000/- ON ACC OUNT OF UNEXPLAINED CASH CREDIT, DOUBTING THE CAPACITY AND CREDITWORTHI NESS OF CREDITOR SHRI SHAILESH PATEL, NRI WHO HAS GIVEN THIS AMOUNT TO TH E ASSESSEE BY WAY OF SHARE APPLICATION MONEY. BEFORE LD. CIT(A), ASSESSE E WAS ABLE TO PROVE THE CAPACITY AND CREDITWORTHINESS OF SHRI SHAILESH PATEL OF HAVING GIVEN THIS MONEY FOR SHARE APPLICATION. THE NECESSARY DE TAILS HAVE ALSO BEEN GONE THROUGH BY US WHICH ARE AVAILABLE IN PAPER BOO K. WE FURTHER FIND THAT THIS AMOUNT HAS SINCE BEEN REPAID BY THE ASSESSEE T O SHRI SHAILESH PATEL THROUGH BANKING CHANNEL WHICH FURTHER SUPPORTS THE CASE OF THE ASSESSEE. WE ARE THEREFORE NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. I.T.A NO. 516/AHD/2011 A.Y. 1995-96 PAGE NO ITO VS. GALLOPS INFRASTRUCTURE LTD 6 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (N.S. SAINI) ( D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 20/06/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,