Nisharg Share Broking Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 600/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5535 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B D BAROT
• Keywords: Unexplained cash credit
• Section: 234B; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH SMC SMC SMC SMC BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI, , , , ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE OF HEARING :27-7-10 DRAFTED ON:2710 ITA NO. 600 /AHD/ 2010 ASSESSMENT YEAR :2007-08 NISHARG SHARE BROKING LTD., 710 EMPIRE STAT BUILDING, NR. PARAG HOUSE, RING ROAD, SURAT. VS. INCOME TAX OFFICER, WARD 1(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. : AACCM 7549P (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : NONE (WRITTEN SUBMISSION) RESPONDENT BY: SHRI B.D. BARO T, D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT DATED 28-1-2010. 2. GROUND NO.1 OF THE APPEAL READS AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF RS.3,00,300 /- AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS TAKEN FOLL OWING LOANS IN RESPECT OF WHICH THE ASSESSEE HAS NOT DISCHARGED IT S ONUS:- ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 2 - SR. NO. NAME OF THE DEPOSITOR AMOUNT OF LOAN CLAIMED TO HAVE BEEN TAKEN. 1. BHAVESH DESHI 18,7 00 2. CHAGAN DAS PATEL 10,000 3. DHANSUKH PANCHAL 17,500 4. DILIP PANCHAL 19,800 5. KANJI LAKHANI 18,500 6. KANTI HADWANI 19,000 7. PARSHOTTAMMAKADIA 19,000 8. PRADEEP MENDPARA 19,200 9. PRASHANTR DESHI 18,600 10. RAJIV BHATT 17,000 11. RAKESH PANCHOLI 19,500 12. RAVINDRA PATIL 65,000 13. RAVINDRA PATIL 19,000 14. SURE NDRA PATIL 19,500 TOTAL 3,00,300 4. THE A.O. STATED THAT IN RESPECT OF THESE LOANS T HE ASSESSEE HAS FILED ONLY CONFIRMATION LETTER, COPY OF PAN CAR DS AND AFFIDAVITS OF SOME OF THE DEPOSITORS, BUT NO ADDRESS HAS BEEN PROVIDED AND HENCE THE A.O. COULD NOT VERIFY THE TRANSACTION FRO M THESE DEPOSITORS. THE A.O., THEREFORE, ISSUED A SHOW CAUS E NOTICE IN THIS REGARD ASKING THE ASSESSEE TO PRODUCE ALL THESE DEP OSITORS FOR PERSONAL EXAMINATION. THE ASSESSEE DID NOT MAKE ANY SUBMISSION ON THIS ISSUE IN ITS LETTER DATED 18-09-2009, WHERE IN OTHER ISSUES WERE CONSIDERED. SINCE THE ASSESSEE DID NOT GIVE AN Y EXPLANATION AS REQUIRED IN THE SHOW CAUSE NOTICE DATED 12-11-20 09, THE A.O. ISSUED NOTICES UNDER SECTION 133(6) TO SOME OF THE DEPOSITORS WHOSE ADDRESSES WERE AVAILABLE. THE LEARNED ASSESSI NG OFFICER. STATED THAT NOTICES SENT TO RAVINDRA EKNATH PATIL A ND SHRI KANJIBHAI SHAMJIBHAI LAKHANI WERE RETURNED BACK UNSERVED. THE A.O., THEREFORE, GAVE ANOTHER OPPORTUNITY TO THE ASSESSEE , VIDE ORDER SHEET DATED 27-11-2009, WHEREIN THE ASSESSEE WAS AS KED TO PRODUCE ALL THESE PARTIES FOR PERSONAL EXAMINATION. SINCE THE ASSESSEE DID NOT PRODUCE ANY OF THESE PARTIES FOR P ERSONAL EXAMINATION, THE A.O. ADDED ALL THE AMOUNTS SAYING THAT THE ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 3 - ASSESSEE HAS NOT DISCHARGED THE ONUS OF PROVING THE IDENTITY OF THE DEPOSITORS, CAPACITY OF THE CREDITORS TO GIVE THE L OAN AND ALSO THE GENUINENESS OF THE TRANSACTION. 5. IN APPEAL, BEFORE THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) THE APPELLANT STATED THAT IT HAD GIVEN CO NFIRMATION ACCOUNTS AND COPIES OF PAN CARDS WERE GIVEN FOR ALL THE PARTIES EXCEPT THREE PARTIES NAMELY, KANTI HADWANI, PURSHOT TAM MAKADIA AND PRADEEP MENDPARA. THE APPELLANT HAD ALSO GIVEN AFFIDAVITS OF THREE PARTIES, NAMELY, RAVINDRA PATIL, PRASHANT DES AI AND SHRI BHAVESH DESAI. THE APPELLANT FURTHER STATED THAT TH E NOTICES UNDER SECTION 133(6) WERE ISSUED AND SERVED UPON THE DEPO SITORS EXCEPT IN CASE OF RAVINDRA PATIL AND KANJI LAKAHANI. THE F ACT THAT THE NOTICES WERE SERVED PROVES THE IDENTITY OF THE DEPO SITORS. IT WAS STATED THAT IN RESPECT OF SHRI RAVINDRA PATIL, THE APPELLANT HAS GIVEN AFFIDAVIT AND COPY OF BANK STATEMENTS WHICH PROVES THE TRANSACTIONS. IN VIEW OF THE ABOVE, THE APPELLANT HAS RELIED ON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF ROHINI BUILDERS (76 TTJ- 521) TO SAY THAT IT HAS DISCHARGED ITS ONUS. THE AP PELLANT FURTHER STATED THAT ALL THESE PARTIES WERE ACTUALLY GIVEN M ARGIN MONEY DEPOSIT FOR TRANSACTION DONE BY THEM IN SHARES AND DERIVATIVES AND HENCE NO ADDITION SHOULD BE MADE. 6. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE AS SESSEE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ACTION OF THE LEARNED ASSESSING OFFICER 7. IN THE INSTANT CASE, AT THE TIME OF HEARING NEIT HER THE ASSESSEE NOR ANY OTHER AUTHORISED PERSON APPEARED B EFORE ME. THE ASSESSEE HAS FILED A WRITTEN SUBMISSION AND PRA YED THAT THE APPEAL BE DISPOSED OF AFTER CONSIDERING THE WRITTEN SUBMISSION FILED. ACCORDINGLY, THE LEARNED DEPARTMENTAL REPRES ENTATIVE WAS ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 4 - HEARD AND THE WRITTEN SUBMISSION OF THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORDS WERE PERUSED. 8. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED LOAN OF `.3,00,300/- FROM 14 PERSONS. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS AN D CREDIT WORTHINESS OF THE CREDITORS. HE OBSERVED THAT THE A SSESSEE COULD FURNISH ADDRESS IN RESPECT OF ONLY 3 PERSONS AND NO TICES ISSUED UNDER SECTION 133(6) TO THOSE CREDITORS RETURNED B ACK UNSERVED. THE ABOVE FACT WAS COMMUNICATED TO THE ASSESSEE AND THE ASSESSEE WAS REQUESTED TO PRODUCE THE CREDITORS FOR EXAMINATION WHICH THE ASSESSEE FAILED TO DO. THE LEARNED ASSESS ING OFFICER THEREFORE, ADDED `.3,00,300 TO THE INCOME OF THE AS SESSEE UNDER SECTION 68 OF THE ACT. 9. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ACTION OF THE A.O. BY OBSER VING AS UNDER :- I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. THE APPE LLANT HAS GIVEN ONLY CONFIRMATIONS AND COPY OF PAN CARD IN RE SPECT OF ALL THE PARTIES. AS ADMITTED BY THE APPELLANT, IT H AS GIVEN PAN CARD EXCEPT FOR THREE PARTIES MENTIONED ABOVE. IT H AS ALSO GIVEN AFFIDAVITS IN RESPECT OF THREE PARTIES MENTIO NED ABOVE. BY GIVING PAN CARD COPIES AND ACCOUNT CONFIRMATION COPY, THE ASSESSEE HAS DISCHARGED ONLY THE ONUS OF PROVIN G THE IDENTITY. GENUINENESS OF THE TRANSACTION IS NOT EST ABLISHED BY GIVING THE PAN CARD OR CONFIRMATION OR IDENTITY. TH E DECISION OF THE HON'BLE I.T.A.T., AHMEDABAD IN THE CASE OF R OHINI BUILDERS (SUPRA) IS NOT AT ALL APPLICABLE. IN THAT CASE THE APPELLANT HAD NOT ONLY RECEIVED LOAN BY CHEQUE BUT ALSO RETURNED THE LOAN BY CHEQUE. IN THE PRESENT CASE, T HE GENUINENESS OF THE TRANSACTION IS NOT AT ALL EXPLAI NED AS TO HOW THIS MONEY WAS GIVEN. WHEN THIS MONEY WAS GIVEN , WHETHER THIS AMOUNT STILL LYING WITH THE ASSESSEE O R IT HAS BEEN RETURNED BACK? NO SUCH DETAILS HAVE BEEN GIVEN BY APPELLANT EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS. BY GIVING AFFIDAV IT THE ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 5 - ASSESSEE CANNOT DISCHARGE ITS ONUS BECAUSE AFFIDAVI TS HAVE NOT ONLY TO BE CORROBORATED BUT THE A.O. HAS TO BE ALLOWED CROSS-EXAMINATION OPPORTUNITY. SINCE NONE OF THIS H AS BEEN DONE, THE AFFIDAVITS DO NOT HAVE ANY EVIDENTIARY VA LUE. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE A.O. IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. 10. BEFORE ME IN THE WRITTEN SUBMISSION THE ASSESSE E STATED THAT COPY OF PAN AND CONFIRMATION OF THE CREDITORS WERE FILED BEFORE THE LOWER AUTHORITIES AND AFFIDAVITS IN RESPECT OF 3 CR EDITORS WERE FILED BEFORE THE LEARNED ASSESSING OFFICER. THE ABOVE MAT ERIAL EVIDENCES THAT THE CREDITORS WERE ASSESSED TO TAX A ND AS THE AMOUNT OF LOAN WERE SMALL AMOUNTS THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ACCEPTED THE SAME. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 11. I FIND THAT COPY OF PAN CARD OF 9 PERSONS WERE ONLY FILED BEFORE US AND COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURNS AND COMPUTATION SHEET IN RESPECT OF TWO CREDITORS WERE FILED. THUS, IT IS OBSERVED THAT IN RESPECT OF REMAINING THREE CREDITO RS THE ASSESSEE COULD NOT EVEN PRODUCE ANY MATERIAL TO SHOW THEIR P AN. FURTHER, IT IS OBSERVED THAT THE ASSESSEE COULD NOT CONTROVERT THE FINDING OF THE LOWER AUTHORITIES THAT THE ASSESSEE WAS NOT ABL E TO FURNISH ADDRESS IN RESPECT OF 11 CREDITORS AND ADDRESS IN R ESPECT OF THREE CREDITORS FURNISHED WERE ALSO FOUND TO BE NOT CORRE CT AS THE NOTICES ISSUED UNDER SECTION 133(6) WERE RETURNED UNSERVED . 12. FURTHER, NO SUBMISSION WAS MADE BEFORE ME ABOUT THE MODE OF PAYMENT TO THE AFORESAID ALLEGED CREDITORS EVEN AFTER THE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) TO THE EFFECT THAT THE ASSESSEE FAILED TO FURNISH T HE DETAILS AS TO WHETHER THE ALLEGED LOANS ARE STILL OUTSTANDING OR REPAID. IN THE ABOVE CIRCUMSTANCES, IN MY CONSIDERED OPINION, THE ASSESSEE WAS ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 6 - NOT ABLE TO DISCHARGE HIS INITIAL BURDEN OF PROVING THE GENUINENESS OF THE CASH CREDIT WHICH WAS ON HIM UNDER SECTION 6 8 OF THE ACT. IN THE CIRCUMSTANCES, I DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. THEREFORE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. GROUND NO. 2 READS AS UNDER:- 2. THAT HON'BLE C.I.T. (A) HAS ERRED IN SUSTAINING THE CHARGING OF INTEREST UNDER SECTION 234BOF THE ACT. 14. IN THE WRITTEN SUBMISSION THE LEARNED AUTHORISE D REPRESENTATIVE OF THE ASSESSEE HAS RELIED UPON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. R AINBOW INDUSTRIES PVT. LTD., (2005) 196 CTR (GUJ) 180 WHERE IT HAS BE EN HELD THAT ADDITION MADE TO ASSESSEES INCOME PERTAINING TO VA LUATION OF CLOSING STOCK BEING UNANTICIPATED ADDITION, SINCE T HE ASSESSEE HAD VALUED THE CLOSING STOCK ON THE SAME BASIS AS IN TH E PAST, TRIBUNAL WAS JUSTIFIED IN DELETING THE LEVY OF INTEREST UNDE R SECTION 215 EVEN THOUGH THE ADDITIONS MADE BY AO WERE CONFIRMED BY T HE TRIBUNAL AND THE ADVANCE TAX PAID BY THE ASSESSEE WAS LESS T HAN 75 PER CENT OF ASSESSED TAX. 15. IN THE INSTANT CASE THE INTEREST WAS CHARGED UN DER SECTION 234B OF THE ACT AS THE ADVANCE TAX PAID BY THE ASS ESSEE WAS LESS THAN THE ASSESSED TAX. THE DECISION OF THE HON'BLE GUJARAT HIGH COURT RELIED UPON BY THE ASSESSEE IS IN THE CONTEXT OF SECTION 215 AND THEREFORE, DOES NOT SQUARELY COVER THE ISSUE UN DER CONSIDERATION WHICH IS IN RESPECT OF CHARGE OF INTE REST UNDER SECTION 234B OF THE ACT. NO MATERIAL WAS BROUGHT BEFORE US BY THE ASSESSEE TO SHOW THAT WHY AS PER PROVISIONS OF SECT ION 234B OF THE ACT CHARGE OF INTEREST IN THE INSTANT CASE WAS NOT VALID. IN THE CIRCUMSTANCES, I DO NOT FIND ANY GOOD REASON TO INT ERFERE WITH THE ITA NO.604/AHD/2010 M/S.NISHARG SHARE BROKING LTD., A.Y.:2007-08 - 7 - ORDERS OF THE LOWER AUTHORITIES. THEREFORE, THIS GR OUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30TH JULY, 2010. SD/- ( N.S. SAINI ) ACCOUNTANT MEMBER AHMEDABAD; ON THIS 30TH DAY OF JULY, 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 27-7-10 ------------------ - 2. DRAFT PLACED BEFORE AUTHORITY 27-7-10 -------- ----------- 3. DRAFT PROPOSED & PLACED 28-7-10 -------------- ----- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED --------------- ---- --------------- AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- -- ------------------ 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------