The ITO, Ward-1(3), RAJKOT-GUJARAT V. Rhyno Thermopack Industries,

ITA 608/RJT/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8867 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND N SOMTAPEKE
• Assessee Lawyers: RK DOSHI
• Keywords: Unexplained cash credit; Source of fund; Competent authority
• Section: 143(3); 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I TA.NO.607 AND 608/RJT/2012 ASSTT.YEAR 1998-98 AND 1999-2000 ITO, WARD - 1(3) RAJKOT. VS RHYNOTHERMOPACK INDUSTRIES SHAPER (VERAVAL) TAL. KOTDA SANGANI, DIST. RAJKOT. )* / (APPELLANT) +, )* / (RESPONDENT) REVENUE BY : SHRI ARVIND N. SOMTAPEKE, SR.DR ASSESSEE BY : SHRI R.K. DOSHI, AR / DATE OF HEARING : 17/01/2018 / DATE OF PRONOUNCEMENT: 19/03/2018 -.// O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-I, RAJKOT DATED 27.8.2012 VIDE WHICH THE LD.CIT(A) HAS DECIDED TWO APPEALS OF THE ASSESSEE FOR THE ASSTT.YEAR 1998 -99 AND 1999-2000. SINCE COMMON ISSUES ARE INVOLVED IN BOTH APPEALS, THEREFO RE, WE TAKE UP BOTH APPEALS TOGETHER AND DISPOSE OF THEM BY THIS COMMON ORDER. 2. AT THE VERY OUTSET, THE LD.COUNSEL FOR THE ASSES SEE POINTED OUT THAT AS FAR AS ASSTT.YEAR 1998-99 IS CONCERNED, REVENUE IS CHAL LENGING DELETION OF RS.10,53,260/- ADDED BY THE AO ON ACCOUNT OF UNEXPL AINED CASH CREDIT FROM ITS CREDITORS AND DELETION OF RS.18,18,000/- ADDED BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE FORM OF CAPITAL INTR ODUCED BY ITS PARTNERS. TAX ITA NO.607 AND 608 /RJT/2012 2 EFFECT OF DELETION OF THESE TOTAL ADDITION WOULD BE LESS THAN RS.10 LAKHS, AND THEREFORE, THIS APPEAL IS NOT MAINTAINABLE IN VIEW OF CBDT BOARD CIRCULAR NO.25 OF 2015. HOWEVER LOOKING TO THE INTER-CONNEC TION WITH THE ADDITIONS REQUIRED TO BE ADJUDICATED ON MERIT IN THE ASSTT.YE AR 1999-2000, WE DEEM IT APPROPRIATE TO DISPOSE OF BOTH APPEALS ON MERIT. 3. BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT- FIRM WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF EXPANDED POLYSTRAIRINE PACKING GOODS. IT HAS FILED ITS RETURN OF INCOME DECLARING LOSS OF RS.2,0 00/- IN THE ASSTT.YEAR 1998- 99 AND NET LOSS OF RS.5,65,000/- IN THE ASSTT.YEAR 1999-2000. EARLIER RETURNS WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. TH EREAFTER, AN ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WAS PASSED BY THE AO DETERMINING TOTAL INCOME AT RS.28,69,260/- AND RS.28,32,907/- IN THE ASSTT.YEAR 1998-99 AND 1999-2000. BASICALLY, THE LD.AO HAS MADE TWO ADDIT IONS IN EACH YEAR AS UNDER: A.Y NATURE OF TRANSACTIONS AMOUNT 1998-99 PARTNERS CAPITAL 1818000 DEPOSITORS 1053260 1999-2000 PARTNERS CAPITAL 2119000 DEPOSITORS 1278907 4. IN ORDER TO EXPLAIN CASH CREDITS, THE ASSESSEE H AS FILED CONFIRMATION LETTERS, AFFIDAVITS OF DEPOSITORS , PROOF OF AGRICU LTURE INCOME IN FORM NO.7/12 ISSUED BY THE COMPETENT AUTHORITY AND DETAILS OF IN COME-TAX RETURNS OF FOUR DEPOSITORS FOR THE ASSTT.YEAR 1998-99 AND TWO DEPOS ITORS FOR THE ASSTT.YEAR 1999-2000. THE LD.AO WAS NOT SATISFIED WITH THE N ATURE OF PROOF PRODUCED BY THE ASSESSEE, AND HENCE MADE ADDITION. DISSATIS FIED WITH THE ADDITION, THE ASSESSEE THE CARRIED MATTER IN APPEAL BEFORE THE LD .CIT(A). THE LD.CIT(A) HAS ITA NO.607 AND 608 /RJT/2012 3 ADMITTED FURTHER EVIDENCE AND CALLED FOR REMAND REP ORT FROM THE AO. THE ASSESSEE HAS FILED ITS WRITTEN SUBMISSIONS, WHICH H AS BEEN REPRODUCED BY THE LD.CIT(A). THE ASSESSEE HAS POINTED OUT OBJECTIONS OF THE AO IN TABULAR FORM WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) ON PAGE NOS.6 AND 7 OF THE IMPUGNED ORDER. THEREAFTER, THE ASSESSEE HAS COMPI LED DETAILS IN TABULAR FORM CONTAINING SERIAL NUMBER, NAME OF CREDITOR, AMOUNT TAKEN FROM HIM, DATE OF TRANSACTION, DOCUMENTS FILED IN SUPPORT OF THE EXPL ANATION, DATE OF ISSUE OF SUMMONS, WHETHER SUMMONS ISSUED OR SERVED ON THE CR EDITORS; WHETHER PERSON ATTENDED BEFORE THE AO OR NOT; WHETHER STATE MENT WAS RECORDED OR NOT. THE LD.CIT(A) HAS NOTED ALL THESE DETAILS ON PAGE N OS.30 TO 32 OF THE IMPUGNED ORDER. THE LD.CIT(A) AFTER ANALYSIS OF AL L THESE DETAILS DELETED ADDITION MADE ON ACCOUNT OF UNACCOUNTED RECEIPTS RE CEIVED FROM THE CREDITORS IN THE ASSTT.YEAR 1998-98. IN THE ASSTT.YEAR 1999- 2000, HE HAS PARTLY CONFIRMED ADDITION TO THE EXTENT OF RS.1,13,000/-. ADDITIONS CONFIRMED RELATED TO AMOUNTS BORROWED FROM CHHAANBHAI VASHRAM BHAI, RAMESHBHAI VASHRAMBHAI AND RAMESHBHAI JADAVBHAI. REASONS FOR SUCH CONFIRMATION IS THAT THE ASSESSEE FAILED TO FILE CONFIRMATION FROM THESE THREE CREDITORS. 5. AS FAR AS CAPITAL CONTRIBUTION FROM PARTNERS ARE CONCERNED, THE LD.CIT(A) HAS DELETED ADDITION IN BOTH YEARS ON THE GROUND THAT IDENTITY OF THE PERSONS ARE NOT IN DISPUTE. THEY HAVE CONFIRMED CO NTRIBUTION TOWARDS FIRM EXCEPT ONE PARTNER, EVERY ONE APPEARED BEFORE THE A O AND DEPOSED THAT THEY HAVE CONTRIBUTED CAPITAL. THUS, THE LD.CIT(A) WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND DELETE ADDITIONS. 6. BEFORE US, THE LD.DR RELIED UPON ORDERS OF THE A O. ON THE OTHER HAND, THE ASSESSEE RELIED UPON ORDER OF THE LD.CIT(A). T HE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAS FI LED WRITTEN SUBMISSION ITA NO.607 AND 608 /RJT/2012 4 WHICH WERE FILED BEFORE THE LD.CIT(A) ALSO. HE REL IED UPON THESE SUBMISSIONS. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. SECTION 68 OF THE INCOME TAX ACT CONTEM PLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE M AINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE AC COUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 8. IN ORDER TO DISCHARGE ONUS CAST UPON THE ASSESSE E BY VIRTUE OF SECTION 68, IT HAS FILED CONFIRMATION FROM THE DEPOSITORS. IT HAS FILED THEIR AFFIDAVITS. FILED DETAILS OF LAND HOLDINGS FOR DEMONSTRATING CR EDIT-WORTHINESS. THE LD.AO HAS ISSUED SUMMONS TO THE CREDITORS. THE ASSESSEE POINTED OUT THAT THERE ARE FIVE CREDITORS IN THE ASSTT.YEAR 1998-99 AND SIXTEE N CREDITORS IN THE ASSTT.YEAR 1999-2000. ON 6-3-2012 SIX CREDITORS APPEARED BEFO RE THE AO. AGAIN ON 9.3.2012 FIFTEEN CREDITORS APPEARED. THE LD.AO COU LD RECORD STATEMENTS OF ASHWINBHAI SANTOKI, BHUPATBHAI SANTOKI AND VASHRAM V. DETROJA ON 6.3.2012. ON 9.3.2012 HE WAS BUSY TO RECORD STATEM ENT OF FEW MORE PERSONS. WE HAVE PERUSED DETAILS TABULATED BY THE LD.CIT(A) IN PARA-6.7 OF THE IMPUGNED. A PERUSAL OF THESE DETAILS WOULD INDICAT E THAT WITH REGARD TO MAJOR CASH CREDIT VIS. RS.1,90,000/- FROM KANTIBHAI LAXMA NBHAI ASSESSEE HAS PRODUCED DEPOSITORS, HIS STATEMENT WAS RECORDED. S IMILARLY, RS.1,00,000/- RECEIVED FROM SANATHBHAI DEVSHIBHAI, THESE DEPOSITO RS ALSO APPEARED BEFORE THE AO. THUS, DETAILS INDICATE THAT ALMOST ALL PER SONS APPEARED BEFORE THE AO AND DEPOSED IN FAVOUR OF THE ASSESSEE. THEIR IDENT ITY COULD NOT BE IN DISPUTE ON ACCOUNT OF THEIR APPEARANCE BEFORE THE AO ALONG WITH THEIR IDENTITY PROOF. ITA NO.607 AND 608 /RJT/2012 5 THEY ARE HAVING AGRICULTURE INCOME; THEY HAVE DEPOS ED ADVANCEMENT OF MONEY TO THE ASSESSEE. THUS, TO OUR MIND THE ASSES SEE HAS FULFILLED INGREDIENTS OF SECTION 68. THE LD.CIT(A) HAS APPRE CIATED ALL THESE FACTS IN DETAIL. 9. AS FAR AS CAPITAL CONTRIBUTIONS FROM THE PARTNER S ARE CONCERNED, THEIR IDENTITIES ARE NOT IN DISPUTE. THEY HAVE CONFIRMED ABOUT THE CAPITAL CONTRIBUTION. IF THE AO HAS ANY DOUBT THEN THEIR I NDIVIDUAL CASES COULD BE OPENED AND SOURCE OF FUNDS COULD BE EXAMINED IN THE IR INDIVIDUAL CAPACITIES. IT COULD NOT BE UNEXPLAINED MONEY OF THE FIRM. TAK ING INTO CONSIDERATION DETAILED ORDER OF THELD.CIT(A), WE DO NOT FIND ANY MERIT IN THESE APPEALS, THEY ARE DISMISSED. 10. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH MARCH, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER