S.G Enterprises, Faizabad V. Asstt. Commissioner of Income Tax, Faizabad

ITA 527/LKW/2014

• Counselvise Citation: 52723714 RSA 2014
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 16-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: Y P SRIVASTA VA
• Keywords: Gift; Source of fund
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.527/LKW/2014 ASSESSMENT YEAR:2010 - 11 A.C.I.T., CIRCLE - FAIZABAD. VS. M/S S. G. ENTERPRISES, VILLAGE & POST - BILARI, BIKAPUR, FAIZABAD. PAN:ABBFS3300D (RESPONDENT) (APPELLANT) NONE APPELLANT BY SHRI Y. P. SRIVASTAVA, D. R. RESPONDENT BY 15/09/2014 DATE OF HEARING 10 /11/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 05/03/2014 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN THE LAW AND FACTS OF THE CASE IN CONFIRMING ADDITION OF RS. 17.80 LACS. 2. THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS) HAS WRONGLY HELD THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT ARE NOT R ELIABLE AND HENCE REJECTED. 2 3. THE LEARNED COMMISSIONER OF INCOME TAX, (APPEAL) HAS WRONGLY HELD THAT THE APPELLANT CLAIMED BOGUS EXPENSES TO THE EXTENT OF RS. 17.80 LACS AND THE SAME HAD BEEN INTRODUCED IN ITS BOOKS OF ACCOUNTS IN THE GARB OF CAPITAL OF ONE OF THE PARTNERS. 4. THE LEARNED COMMISSIONER OF INCOME TAX, (APPEAL) DID NOT GIVE ANY OPPORTUNITY TO THE APPELLANT BEFORE REJECTING APPELLANT'S BOOKS OF ACCOUNTS AND HOLDING THAT EXPENSES TO THE EXTENT OF RS. 17.80 LACS WERE BOGUS. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE DATE OF HEARING INSPITE OF NOTICE AND HENCE, WE PROCEED TO DECIDE THIS APPEAL OF THE ASSESSEE EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ONLY ISSUE RAISED BY THE ASSESSEE IS REGARDING CONFIRMING THE ADDITION OF RS.17.80 LAC MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA 8 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 8. I HAVE DULY CONSIDERED THE MATTER. THE INCOME DECLARED IN RETURNS FILED BY THE DONORS I S NOT SUPPORTED BY ANY EVIDENCE. THE DONORS THEMSELVES ADMITTED THIS FACT AND IN ALMOST ALL THE RETURNS MISCELLANEOUS RECEIPTS HAVE BEEN SURRENDERED AS INCOME FOR WANT OF PROOF. THESE DONORS DEPOSITED CASH IN THEIR BANK ACCOUNT WHICH WAS GIVEN AS GIFT AND SUBSEQUENTLY TRANSFERRED AS CAPITAL OF THE APPELLANT FIRM. IN AY 2008 - 09 ALSO THE SAME MODUS OPERANDI WAS ADOPTED. THE DONORS ARE MAN OF NO MEANS AND THERE IS NO OCCASION TO GIVE GIFTS TO SHRI GOPESH AGARWAL WHO IS VERY RICH IN COMPARISON TO THE DONORS. TH ERE IS NO OPENING OR CLOSING BALANCE OR ANY OTHER SUBSTANTIAL TRANSACTION IN THE BANK 3 ACCOUNT OF THE DONORS. IT IS NOTED THAT THE APPELLANT FIRM BY FURNISHING VARIOUS DOCUMENTS HAS ONLY BEEN ABLE TO PROVE THE IDENTITY OF THE DONORS BUT NOT BEEN ABLE TO EST ABLISH THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IT IS ALSO NOTED THAT THE APPELLANT FIRM HAS WITHDRAWN RS. 77.15 LAKH IN CASH IN MONTH OF MARCH, 2010 WHICH HAS BEEN UTILIZED TO INCUR EXPENSES OF RS. 87.13 LAKH IN CASH WHICH IS ABNORMALL Y HIGH IN COMPARISON TO OTHER MONTHS. AS DISCUSSED EARLIER THE SAID EXPENSES ARE NOT SUPPORTED BY ANY THIRD PARTY BILL. THE APPELLANT HAS PREPARED ONLY SELF - MADE VOUCHERS TO JUSTIFY THE EXPENSES WHICH WERE NOT FOUND TO BE VERIFIABLE BY THE AO. DURING THE A PPELLATE PROCEEDINGS WHEN THE AR OF THE APPELLANT WAS ASKED TO PRODUCE THESE BILLS AND VOUCHERS HE CONVENIENTLY SUBMITTED THAT THESE HAVE BEEN LOST. IT IS ALSO NOTED THAT SHRI GOPESH AGARWAL IS 90% PARTNER OF THE APPELLANT FIRM AND FOR ALL PRACTICAL PURPOS ES CONTROLS IT. THE APPELLANT FIRM IS A CONTRACTOR AND NET PROFIT DECLARED BY IT IS IN THE VICINITY OF 1.3% WHICH IS VERY LOW. EVEN AFTER INCLUDING INTEREST AND REMUNERATION PAID TO THE PARTNERS, NET PROFIT WOULD BE ABOUT 4.2% ONLY. THE AUDIT REPORT FURNIS HED BY THE APPELLANT IS BLAND AS IN MOST OF THE COLUMNS THE AUDITOR HAS WRITTEN NIL OR NOT APPLICABLE. THE APPELLANT HAS NOT MAINTAINED ANY STOCK REGISTER. IN THE AUDIT REPORT IN THE ITEM 'BOOKS OF ACCOUNT MAINTAINED' THE AUDITOR HAS WRITTEN THAT THE VOUCH ERS ARE ALSO COMPUTERIZED MEANING THEREBY THAT MOST OF THE EXPENSES INCURRED IN CASH ARE THROUGH SELF - MADE VOUCHERS. IN VIEW OF THE ABOVE, I AM NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE APPELLANT FIRM. BOOKS OF ACCOUNT MAIN TAINED BY THE APPELLANT FIRM ARE HELD NOT TO BE RELIABLE AND HENCE REJECTED. THE APPELLANT INFLATED THE EXPENDITURE TO THE EXTENT OF RS. 17.80 LAKH WHICH WAS INTRODUCED IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM AS CAPITAL BY THE PARTNER, SHRI GOPESH AG ARWAL. IN VIEW OF THE ABOVE DISCUSSION, I CONFIRM THE ADDITION OF RS.17.80 LAKH MADE BY THE AO. GROUND NO. 2 IS DISMISSED. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF LEARNED CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT THE DONORS ARE MAN OF N O MEANS AND THERE IS NO OCCASION TO GIVE GIFTS TO SHRI GOPESH AGARWAL WHO IS VERY RICH IN 4 COMPARISON TO THE DONORS. THE SOURCE OF FUNDS CREATED IN THE BOOKS OF THE ASSESSEE IN THE NAME OF SHRI GOPESH AGARWAL IS NOT PROPERLY EXPLAINED BECAUSE THE EXPLAINED SOURCE OF INVESTMENT IN THE HANDS OF SHRI GOPESH AGARWAL IS NOT PROPER. THEREFORE, IT HAS TO BE ACCEPTED THAT THE CREDITWORTHINESS OF THE CASH CREDITOR IS NOT ESTABLISHED. IT IS ALSO SEEN THAT IT IS NOTED BY CIT(A) IN THE SAME PARA OF HIS ORDER THAT THE ASSESSEE FIRM IS CONTRACTOR AND NET PROFIT DECLARED BY IT IS IN THE VICINITY OF 1.3% WHICH IS VERY LOW. UNDER THESE FACTS, THIS CONCLUSION CAN BE REASONABLY DRAWN THAT THE INCOME OF THE ASSESSEE FIRM WAS DIVERTED AND WAS REINTRODUCED IN THE BOOKS OF THE F IRM IN THIS MANNER THAT IS UNEXPLAINED GIFT IN THE HANDS OF THE PARTNER SHRI GOPESH AGARWAL AND THEREAFTER TRANSFERRED BY SHRI GOPESH AGARWAL TO THE ASSESSEE FIRM. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /11/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1 . THE APPELLANT 2 . THE RESPONDENT. 3 . CONCERNED CIT 4 . THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR