The ITO, Ward-1, Vapi V. Shri Birampali Vasudev K.Nayak, SILVASSA

ITA 617/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60591 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Gift

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.617/AHD/2010 ( ! ) ! ) ! ) ! ) / / / / ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER WARD-1 VAPI ! ! ! ! / VS. SHRI BIRAMPALI VASUDEV K.NAYAK 05, GLADYS 01 BEHIND HOTEL DAN TOURIST SILVASSA * $% ./+, ./ PAN/GIR NO. : AAZPN 9529 N ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 $ / APPELLANT BY : SHRI B.L. YADAV, SR.D.R. ./*- 1 0 $ / RESPONDENT BY : -NONE- !2 1 % / / / / DATE OF HEARING : 26/06/2012 34) 1 % / DATE OF PRONOUNCEMENT : 13/07/2012 $5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LD.CIT(APPEALS)-VALSAD DATED 15/10/2009. GROUNDS R AISED ARE HEREBY DECIDED AS UNDER:- (1) THE LD.CIT(A) HAS ERRED IN LAW AND IN FACT IN DELET ING THE ADDITION MADE U/S.68 OF THE IT ACT ON ACCOUNT OF UNSECURED L OAN OF RS.8,25,000/- RECEIVED FROM SHRI B.S.NAYAK. (2) THE LD.CIT(A) HAS ERRED IN LAW AND IN FACT IN DELET ING THE ADDITION MADE U/S.68 R.W.S. 41(1) OF IT ACT ON ACCOUNT OF NO T PRODUCING THE ITA NO617/AHD/2 010 ITO VS. SH.BIRAMPALI VASUDEV K.NAYAK ASST.YEAR - 2006-07 - 2 - CONFIRMATION OF THE CREDITOR AMOUNTING TO RS.42,28, 969/- EVEN THOUGH SUITABLE OPPORTUNITY WAS GRANTED TO THE ASSE SSEE FIRM DURING ASSESSMENT PROCEEDINGS. 2. ON THE DATE OF HEARING, NO ONE HAS APPEARED FROM THE SIDE OF THE RESPONDENT-ASSESSEE, HOWEVER CONSIDERING THE TRIFLE NATURE, OF THE GROUNDS, WE HAVE DECIDED TO PROCEED EX-PARTE QUA TH E ASSESSEE AFTER HEARING THE LD.DR. 3. APROPOS TO GROUND NO.1, FACTS IN BRIEF AS EMERGE D FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT DATED 24/12/2008 WERE THAT THE ASSESSEE IN INDIVIDUAL C APACITY IS IN THE TRADING OF ELECTRICAL GOODS AND ELECTRICAL CONTRACT WORK. ON VERIFICATION OF BALANCE-SHEET, IT WAS FOUND THAT THERE WAS AN UNSEC URED LOAN FROM ONE SHRI B.S.NAIK. IN THE ABSENCE OF SATISFACTORY EXPL ANATION, AO HAS ADDED THE AMOUNT OF RS.8,25,000/- U/S.68 OF THE IT ACT. THE MATTER WAS CARRIED BEFORE THE CIT(A) AND THE EXPLANATION OF TH E ASSESSEE IS AS UNDER:- 5.2. THE AR OF THE APPELLANT SUBMITTED THAT THE AMOUNT REFERRED BY THE AO IS ROTATED THROUGH BANK ACCOUNT BY CHEQU ES, WHICH ARE APPEARING IN DEVELOPMENT CREDIT BANK LTD. AS UNDER: - DATE CHEQUE NO. AMOUNT 7.12.2004 116941 RS.1,25,000/- 16.12.2004 116942 RS.2,00,000/- 27.12.2004 116943 RS.1,00,000/- 18.01.2005 116944 RS.4,00,000/- ---------------- RS.8,25,000/- HE FURTHER SUBMITTED THAT THE AO HAS ALSO NOT DISPU TED THAT MR.NAYAK IS NO MORE AND ACCEPTED THE LETTER OF SMT. SUMAN NAYAK, ITA NO617/AHD/2 010 ITO VS. SH.BIRAMPALI VASUDEV K.NAYAK ASST.YEAR - 2006-07 - 3 - WIFE OF LATE SHRI B.S.NAYAK, REQUESTING HIM TO CONS IDER THE SAID AMOUNT AS GIFT GIVEN TO THE APPELLANT. SMT.SUMAN N AYAK ALSO FURNISHED AN AFFIDAVIT OF THE SAID FACT CONVEYED HE R RELATIONSHIP WITH THE APPELLANT AND THEREBY IDENTITY AND CREDITW ORTHINESS OF THE DEPOSITOR ALONG WITH THE GENUINENESS OF THE TRANSAC TIONS WAS ESTABLISHED. HE ALSO CONTENDED THAT HE IS NOT NEED ED THE SOURCE OF THE SOURCE. 3.1. LD.CIT(A) HAS GIVEN THE FINDING IN THE FOL LOWING MANNER:- FINDING :- 5.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE AR OF THE APPELLANT AS WELL AS THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER. THE ARGUMENTS ADVANCED BY THE APPELLANT OF THE SEEMS TO BE JUSTIFIED AS THE APPELLANT IS A RELATIVE OF THE DEPOSITOR WHO WAS NOT SURVIVING DURING THE YEAR OF THE ASSESSMENT. T HE AFFIDAVIT FILED BY THE SPOUSE OF THE DISEASED DEPOSITOR CONFIRMS TH E RELATIONSHIP AND THEREFORE, HER REQUEST TO TREAT THE DEPOSIT AS GIFT WOULD ABSORB THE SAID AMOUNT FROM TAXATION IN TERMS OF SECTION 5 6(V) OF THE ACT. SINCE THE DEPOSITS ARE ROTATED THROUGH A BANK ACCOU NT, WHICH IS NOT DISPUTED BY THE AO AFTER ACCEPTING THE AFFIDAV IT AND NOT DISPUTING THE FACTS STATED THEREIN, THE AO IS NOT JUSTIFIED IN MAKING THE ADDITION. THEREFORE, THE ADDITION MADE BY THE AO IS DELETED. THUS, THIS GROUND OF APPEAL IS ALLOWED. 4. HAVING HEARD THE LD.DR, WE ARE OF THE VIEW THAT THERE IS NO FALLACY IN THE FINDINGS OF LD.CIT(A). THE ADMITTED FACTUA L POSITION IS THAT THE SAID DEPOSITOR IS RELATIVE OF THE ASSESSEE. AN ANO THER FACT HAS NOT BEEN CONTROVERTED THAT THE SAID DEPOSITOR HAD EXPIRED AN D ON BEHALF OF THE DECEASED HIS WIFE HAS CONFIRMED THE TRANSACTION. I T HAS ALSO NOT BEEN CONTROVERTED THAT THOSE SAID TRANSACTIONS HAVE BEEN ROUTED THROUGH BANK. IN SUPPORT, CERTAIN EVIDENCES WERE ALSO PLACED ON R ECORD BEFORE THE REVENUE AUTHORITIES ALONG WITH AN AFFIDAVIT. THUS, UNDER THE TOTALITY OF ITA NO617/AHD/2 010 ITO VS. SH.BIRAMPALI VASUDEV K.NAYAK ASST.YEAR - 2006-07 - 4 - THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY CONFIRM THE FINDING OF LD.CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 5. APROPOS TO GROUND NO.2, IT WAS NOTICED BY THE A O THAT AGAINST THE TURNOVER OF RS.29,60,700/- THERE WAS OUTSTANDIN G BALANCES OF SUNDRY CREDITORS IN THE BALANCE-SHEET AMOUNTING TO RS.42,2 8,969/-. AS PER AO, EVEN THE TOTAL PURCHASES WERE ONLY TO THE TUNE OF R S.22,71,634/-. THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION OF T HOSE CREDITORS. IN THE ABSENCE OF SATISFACTORY COMPLIANCE, AO HAS HELD THA T THE APPELLANT HAD NOT PROVED THE EXISTENCE OF THE LIABILITY, THEREFOR E BY INVOKING THE PROVISIONS OF SECTION 41(1) R.W.S. 68 OF IT ACT, T HE SAID AMOUNT OF RS.42,28,969/- WAS ACCORDINGLY TAXED. 5.1. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST A PPELLATE AUTHORITY, THE ASSESSEE HAS SUBMITTED BEFORE LD.CIT(A) AS UNDE R:- 6.2. THE AR OF THE APPELLANT FURNISHED THE AUDITE D BALANCE SHEET ALONG WITH GROUPINGS FOR THE YEAR ENDED 31.03.2005 AND 31.03.2006. HE FURTHER CONTENDED THAT THE AMOUNT S HOWN AS A CREDIT CANNOT BE TAXED U/S.68 OF THE ACT AND IT WOU LD BE NEEDLESS TO ASK FOR THE CONFIRMATION FROM THE CREDITORS, AS IT WAS NOT DISPUTED AND ACCEPTED IN THE EARLIER YEARS. HE FURTHER CONT ENDED THAT SINCE THE AO ACCEPTED THE PURCHASES, SALES, G.P. AND N.P . OF THE BUSINESS, IT WOULD NOT BE JUSTIFIED TO ADD AN AMOUN T OF RS.42,28,969/-, WHICH INCLUDES THE CARRIED FORWARD BALANCE OF RS.37,90,673/-. HE ALSO FURNISHED THE COPY OF THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF ITO V/S. SHRI CHANDR A MORARJI TANDEL, WHEREIN THE ITAT HAS DECIDED THE ISSUE IN F AVOUR OF THE ASSESSEE STATING THAT THE PARTIES REFEREED TO ARE N OT CASH CREDITORS BUT THE TRADE CREDITORS. THEREFORE, THE ADDITION U /S.68 OF THE ACT IS UNWARRANTED. ITA NO617/AHD/2 010 ITO VS. SH.BIRAMPALI VASUDEV K.NAYAK ASST.YEAR - 2006-07 - 5 - 6. HAVING HEARD THE SUBMISSIONS OF THE ASSESSEE, LD .CIT(A) HAS GIVEN THE FINDING AS UNDER:- FINDING :- 6.3. I HAVE CONSIDERED THE WRITTEN SUBMISSION OF TH E AR OF THE APPELLANT AS WELL AS THE OBSERVATION OF THE MADE BY THE AO IN HIS ASSESSMENT ORDER. I FOUND AO TO BE NOT JUSTIFIED BY DRAWING A SIMPLE CONCLUSION THAT IN ABSENCE OF CONFIRMATION O F SUNDRY CREDITORS, THE SAME IS ADDED BACK U/S.68 R.W.S. 41( 1) OF THE ACT. THE AR OF THE APPELLANT HAS RIGHTLY RAISED THE ISS UE OF CREDITORS THAT IT CANNOT BE ADDED BACK U/S.68 OF THE ACT AFTE R HAVING ACCEPTED THE PURCHASES, SALES, GP, NP ETC. IN VIEW OF THE D ECISIONS OF CIT V/S. SILVER COTTON MILLS CO.LTD. (2002) 125 TAXMAN 741 (GUJ.HC) AND ITO V/S. CHANDRA MORARJI TANDEL ITA NO.1940/AHD /2003, THE ADDITION IS DELETED. 7. WE HAVE HEARD LD.DR. ON CAREFUL PERUSAL OF THE ORDER OF THE AO, WE ARE OF THE VIEW THAT THE ISSUE HAS BEEN MIXED UP DUE TO INVOKING OF SECTION 68 ALONG WITH SECTION 41(1) OF IT ACT. BOT H THE SECTIONS HAVE ALTOGETHER DIFFERENT AREAS OF APPLICABILITY AND, TH EREFORE, IF THE AO WAS OF THE VIEW THAT THOSE SUNDRY CREDITORS WERE NOT GENUI NE, THEN HE HAD TO CHOOSE THE CORRECT SECTION FOR THE IMPUGNED DISALLO WANCE. AS FAR AS THE FACTS OF THE CASE ARE CONCERNED, THE ADMITTED FACTU AL POSITION IS THAT PART OF THE SUNDRY CREDITORS HAVE BEEN CARRIED OVER FROM THE PREVIOUS YEAR. FURTHER, THE AO HAS ASKED THE ASSESSEE TO CATEGORIZ E THE SUNDRY CREDITORS AND ACCORDINGLY A GROUPING HAS BEEN DONE OF THOSE 2 3 PARTIES. EVEN THIS FACT HAS NOT BEEN CONTROVERTED THAT THE NATURE OF T HE SAID CREDITORS WAS NOT FALLING UNDER THE CATEGORY OF CASH CREDITORS BUT FA CTUALLY IT WAS TRADE CREDITORS. THEREFORE, UNDER THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT LD.CIT(A) HAS RI GHTLY DECIDED THIS ITA NO617/AHD/2 010 ITO VS. SH.BIRAMPALI VASUDEV K.NAYAK ASST.YEAR - 2006-07 - 6 - ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING FEW PR ECEDENTS AS CITED THEREIN. THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 07 /2012 6..!, .!../ T.C. NAIR, SR. PS $5 1 .7 8$7) $5 1 .7 8$7) $5 1 .7 8$7) $5 1 .7 8$7)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-VALSAD 5. 7<= .! , , / DR, ITAT, AHMEDABAD 6. = >2 / GUARD FILE. $5! $5! $5! $5! / BY ORDER, /7 . //TRUE COPY// ? ?? ?/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER .. 7.7.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9.7.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S13.7.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.7.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER