ITO, JODHPUR V. Shri Ramesh Soni Prop. M/s. Trimurti Abhushan, JODHPUR

ITA 556/JODH/2009

• Counselvise Citation: 55623314 RSA 2009
• Duration Of Justice: 3 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 26-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: ANIL BHANSALI
• Keywords: Unexplained cash credit
• Section: 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 556/JODH/2009 (A.Y. 2005-06) THE I.T.O. VS SHRI RAMESH SONI WARD 3(2) P/O M/S TRIMURTI ABHUSHAN JODHPUR 6-7, KAMAL TOWER, 1 ST B ROAD JODHPUR PAN NO. AEMPS 2226 J C.O. NO. 7/JODH/2013 (ARISING OUT OF ITA NO. 556/JODH/2009) (A.Y. 2005-0 6) SHRI RAMESH SONI VS. THE I.T.O. 6-7, KAMAL TOWER, 1 ST B ROAD WARD 3(2) P/O M/S TRIMURTI ABHUSHAN JODHPUR JODHPUR PAN NO. AEMPS 2226 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL BHANSALI. DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 22/07/2013. DATE OF PRONOUNCEMENT : 30/08/2013. O R D E R PER HARI OM MARATHA, JM:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), JODHP UR DATED 25/08/2009. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS PROPRIETOR OF THE CONCERN, NAMELY, M/S TRIMURTI ABH USHAN, SITUATED AT B ROAD, SARDARPURA, JODHPUR. THE ASSESSEE DERIVE S INCOME FROM THE BUSINESS OF TRADING IN JEWELLERY AND OTHER SOURCES. FOR A.Y. UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME [ROI] ON 31.10.2005 DECLARING TOTAL INCOME AT RS. 1,03,070/-. ASSESSME NT WAS COMPLETED ON 26.12.2007 AT A TOTAL INCOME OF RS. 54,95,960/-. BEING AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL AND WAS SUCCESS FUL IN GETTING SOME OF THE ADDITIONS DELETED. NOW BOTH THE PARTIES ARE AGGRIEVED AND HAVE FILED THEIR RESPECTIVE APPEAL AND CROSS OBJECTIONS. 2.1 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: 1. DELETING THE TRADING ADDITION OF RS. 2,50,000/ WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE A.O. 2. DELETING THE ADDITION MADE U/S 68 RS. 37,85,000/ - IGNORING THE FACTS THAT THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF THE FACTS THAT ASSESSEE FAILED TO PR OVE THE 3 GENUINENESS OF THE CREDITORS DURING ASSESSMENT PROC EEDINGS AS WELL AS DURING INQUIRY U/S 250(4) OF THE ACT. 3. DELETING THE INTEREST RS. 6,63,701/- CLAIMED ON UNEXPLAINED CASH CREDITORS. 4. DELETING THE DISALLOWANCE OF EXPENSES RS. 34045/ - IGNORING THE INVOLVEMENT OF PERSONAL ELEMENT OF ASS ESSEE AND INCOMPLETE EVIDENCE OF EXPENSES. 2.2 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N ITS CROSS OBJECTIONS: THAT THE LD. AUTHORITIES BELOW HAVE ERRED IN MAKIN G AND SUSTAINING ADDITION ON ACCOUNT OF LOANS AND INTERES T THEREON TAKEN BY THE ASSESSEE FROM THE FOLLOWING WI THOUT OBJECTIVELY CONSIDERING THE EVIDENCES EXPLANATIONS OF THE ASSESSEE. LOAN AMOUNT INTEREST A. RUKMANI DEVI KHATRI 1,00,000/- 4,312 /- B. TULSARAM GURJAR 2,00,000/- 8,333/- C. SHANTA DEVI JAIN 3,00,000/- 46,063/- D. BANSHI LAL KHATRI 2,50,000/- 46,500/- 8,50,000/- 1,05,208/- 2. THAT THE LD. AUTHORITIES BELOW HAVE ERRED IN MAK ING AND SUSTAINING WITHOUT ASSIGNING ANY COGENT REASONS THE DISALLOWANCE OF RS. 21,000/- BEING ADVERTISEMENT EX PENSES 4 INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. 3.1 FIRST GROUND IN REVENUES APPEAL IS REGARDING D ELETION OF TRADING ADDITION OF RS. 2,50,000/-. 3.2 FACTS OF THIS ISSUE ARE THAT THE A.O. MADE A LU MPSUM ADDITION IN TRADING ACCOUNT WITHOUT REJECTING THE BOOKS OF ACCO UNT AND WITHOUT CITING ANY MATERIAL DEFECT OR DISCREPANCY IN THE BO OKS OF ACCOUNT, WHICH ARE REGULARLY MAINTAINED. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE GROSS PROFIT RATE OF THIS ASSESSEE IN THIS YEAR WAS 21.44% AS COMPARED TO 15.52% IN TH E IMMEDIATELY PRECEDING YEAR. THE A.O, AFTER OBSERVING THAT IN S OME OF THE ACCOUNTS OF TRADING THE ASSESSEE HAS NOT MAINTAINED INVENTOR Y AND OPENING AND CLOSING STOCK, AND VOUCHERS WERE EITHER NOT MAINTAI NED OR WERE SELF- MADE VOUCHERS, MADE LUMPSUM ADDITION OF RS. 2.5 LAK HS IN THE TRADING ACCOUNT. IN THE FIRST APPEAL, NATURALLY, AFTER GOI NG THROUGH THE ABOVE MENTIONED FACTS, THE LD. CIT(A) SUMMARILY DISMISSED THE FINDING OF THE A.O. BECAUSE THE OVERALL GROSS PROFIT RATE OF THIS YEAR IS FOUND TO BE 5 BETTER THAN THE IMMEDIATELY PRECEDING YEAR. THE A. O. HAS NOT REJECTED THE BOOKS OF ACCOUNT AND HAS NOT, IN FACT, FOUND ANY MATERIAL DEFECT IN THE BOOKS. UNLESS THE BOOKS OF ACCOUNT A RE REJECTED, NO TRADING ACCOUNT ON ESTIMATE BASIS CAN BE MADE AS PE R SETTLED LAW. MOREOVER, EVEN AFTER THE REJECTION OF BOOKS, THE PA ST HISTORY OF THE ASSESSEE IS TO BE TAKEN INTO CONSIDERATION. SINCE THE GROSS PROFIT RATE IS BETTER THAN THE IMMEDIATELY PRECEDING YEAR, EVEN IN THAT CASE, NO SUCH ADDITION COULD HAVE BEEN MADE. ACCORDINGLY, WE UPHOLD THE IMPUGNED FINDING AND DISMISS GROUND NO. 1 OF REVENU ES APPEAL. 4. FACTS OF GROUND NO. 2 AND 3 WHICH ARE INTER-RELA TED GROUNDS ARE THAT THE A.O. HAS MADE ADDITION OF RS. 43,35,000/- U/S 68 OF THE ACT. THE A.O. HAD REQUIRED THE ASSESSEE TO PRODUCE SOME OF THE CASH CREDITORS FOR EXAMINATION WHEREUPON NONE OF THEM WA S PRODUCED. THE A.O. PERUSED THE COPIES OF BANK PASS BOOKS OF SOME PERSONS [CASH CREDITORS] WHICH REVEALED A CREDIT IN THE ACCOUNT A MOUNTING TO RS. 50,000/- ONE DAY BEFORE THE DATE OF ISSUE OF CHEQUE . ACCORDINGLY, HE HAS FOUND THE CASH CREDITORS AS BOGUS AND HAS ADDED THE CASH CREDITORS LISTED AT PAGES 6 AND 7 OF THE ASSESSMENT ORDER IN THE HANDS OF THE ASSESSEE. 6 4.1 IN FIRST APPEAL, THE ASSESSEE WAS SUCCESSFUL IN GETTING DELETION OF RS. 37,85,000/- MADE U/S 68 AND RELATED INTEREST OF RS. 6,63,701/- CLAIMED TO HAVE BEEN PAID TO THESE UNEXPLAINED CASH CREDITORS. NOW THE REVENUE IS IN APPEAL AGAINST THE DELETED CASH C REDITS BUT THE ASSESSEE IN CROSS OBJECTION IS AGAINST THE SUSTAINE D CASH CREDITS. 4.2 BOTH THE PARTIES HAVE MAINTAINED THEIR EARLIER STANDS BEFORE US ALSO. THE LD. CIT(A) HAS GIVEN VARIOUS REASONS FOR DELETING AND SUSTAINING THE ADDITIONS. AFTER HEARING BOTH THE S IDES, WE HAVE NOT FOUND ANY INFIRMITY IN THE IMPUGNED DELETION OF RS. 37,85,000/- AND INTEREST OF RS. 6,36,701/-. ACCORDINGLY, GROUND NO S. 2 AND 3 OF REVENUES APPEAL ARE DISMISSED. 5. IN SO FAR AS THE SUSTAINED ADDITION IN RESPECT O F VARIOUS CREDITORS ARE CONCERNED, THEIR AMOUNTS OF LOAN AND RELATED IN TEREST AMOUNT IS CLEARLY DEPICTED IN GROUND NO. 1 OF THE CROSS OBJEC TION. 6. AT THE TIME OF HEARING, THE LD. A.R. SHRI ANIL B HANSALI DID NOT PRESS THE LOAN AMOUNT OF RS. 3 LAKHS AND RELATED IN TEREST PAID AT RS. 46,063/- IN RESPECT OF SMT. SHANTI DEVI JAIN AT SL. NO. 1 OF THE GROUND. THEREFORE, THIS GROUND TO THIS EXTENT IS DISMISSED. IN RESPECT OF SHRI 7 BANSILAL KHATRI WHO HAS ALLEGED DEPOSIT OF RS. 2.5 LAKHS AND RS. 46,500/- HAS BEEN PAID AS INTEREST DURING THE YEAR. IT WAS ARGUED THAT IN A.Y. 2004-05 THE TRIBUNAL HAS DELETED THIS ADDIT ION WHICH WAS MADE ON IDENTICAL REASONS. COPY OF THE TRIBUNAL ORDER I S ENCLOSED AT PAGES 193 OF THE ASSESSEES PAPER BOOK. THIS FACT WAS NO T DENIED AND COULD NOT BE DENIED BY THE LD. D.R. 7. AFTER PERUSING THE TRIBUNAL ORDER, WE HAVE FOUND THAT THE FACTS REGARDING DEPOSIT AND PAYMENT OF INTEREST ARE ALMOS T SIMILAR TO THAT OF THE A.Y. UNDER CONSIDERATION AND, THEREFORE, WITH S IMILAR REASONING AND BY RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER IN QUESTION, WE DELETE THIS ADDITION. 8. REGARDING SMT. RUKMANI DEVI KHATRI, PROOF ARE EN CLOSED AT PAGES 78 TO 83 OF THE APB AND WITH REGARD TO SHRI TULSA R AM GURJAR, PROOF ARE ENCLOSED AT PAGES 115 TO 119 OF THE APB. WE HAVE G ONE THROUGH THIS EVIDENCE AND HAVE FOUND THAT THE LOAN AMOUNT STANDS PROVED AS IDENTITY, CREDIT WORTHINESS AND GENUINITY OF DEPOSI T STAND PROVED ON RECORD. ACCORDINGLY, WE REVERSE THE FINDINGS OF TH E LD. CIT(A) IN THESE CASES AND ORDER TO DELETE THE LOAN AMOUNT AND INTER EST AMOUNT IN RESPECT OF SMT. RUKMANI DEVI AND SHRI BANSILAL. IN THE CASE OF SMT. 8 SHANTI DEVI JAIN, ORDER HAS BEEN RECTIFIED U/S 154 AND THIS AMOUNT HAS ALREADY BEEN DELETED BY THE DEPARTMENT AND THEREFOR E, THE ASSESSEE HAS NOT PRESSED THE SAME. ACCORDINGLY, THIS PORTIO N OF THE GROUND STANDS DISMISSED AS NOT PRESSED. 9. GROUND NO 2 RELATING TO SUSTAINED DISALLOWANCE O F RS. 21,000/- BEING ADVERTISEMENT EXPENSES WHICH IS STATED TO HAV E BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WAS NOT PRESSED. THEREFORE, THIS GROUND STANDS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR AR, ITAT