Dharmesh M. Kalyani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(3), RAJKOT-GUJARAT

ITA 633/RJT/2012

• Counselvise Citation: 63324914 RSA 2012
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: DR ADHIA
• Keywords: Additional evidence; Assessment record; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 633 /RJ T/201 2 ASSESSMENT YEAR : 200 8 - 0 9 DHARMESH M KALYANI, C/O. N K DIESEL, OPP. GARDEN RESTAURANT, MARKETING YARD ROAD, NR. SANT KAB IR ROAD, RAJKOT PAN: ANVPK 0713 C V. ITO, WARD - 2(3), RAJKOT DATE OF HEARING : 21 .0 6 .2013 DATE OF PRONOUNCEMENT : 10 .0 7 .2013 ASSESSEE BY : SHRI D R ADHIA, CA REVENUE BY : SHRI M K SINGH, DR ORDER D. K. SRIV ASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - III, RAJKOT ON 13 . 0 9 .20 12 , ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING ADDITION OF RS.1,83,400/ - MADE BY THE LD. AO AS NOT GENUINE. THE ADDITION NEEDS DELETION. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING ADDITION OF RS.4,77,800/ - MADE BY THE LD. AO AS NOT GENUINE. THE ADDITION NEEDS DELETION. 3. WITHOUT PREJUDICE, THE ASSESSMENT MADE BEING BAD IN LAW DES ERVES ANNULMENT. 4. WITHOUT PREJUDICE, THE LD. C.I.T.(A) HAS ERRED IN NOT CONSIDERING THAT THE LD. A.O. HAS ERRED IN NOT GIVING REASONABLE TIME AND OPPORTUNITY. 5. WITHOUT PREJUDICE, THE LD. C.I.T.(A) HAS ERRED IN NOT GIVING REASONABLE TIME AND OPPORTU NITY. 6. THE APPELLANT CRAVES LEAVE TO ADD / ALTER / AMEND AND / OR SUBSTITUTE AND / ALL GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKES PLACE. 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES. HE FIL ED HIS RETURN OF INCOME RETURNING TOTAL LOSS AT RS.3,99,028/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED SEVERAL CASH CR E D ITS RECORDED IN THE NAME S OF 23 PERSONS IN THE BOOKS BY 2 633 - RJT - 2012 DHARMESH M KALYANI THE ASSESSEE. HE CALLED UPON THE ASSESSEE TO EXPL AIN THE NATURE AND SOURCE OF THE AFORESAID CASH CRED ITS . THE ASSESSING OFFICER ACCEPTED THE NATURE AND SOURCE OF SIX CASH CREDITS. H E HOWEVER DID NOT ACCEPT SEVEN CASH CREDI TS AGGREGATING TO RS.1,33,400/ - APPEARING IN THE NAME S OF (1) BHARTIBEN D. KORADIA RS.18,500/ - , (2) HAMIDA H. RATHOD RS.18700/ - , (3) MAYUR P GHONIYA RS.18500/ - , (4) RASILABEN P GHONIYA RS.19700/ - , (5) VARSHABEN V. KOTADIA RS.19500/ - , (6) VINODBHAI G. KOTADIA RS.19000/ - AND (7) VINUBHAI R. THUMAR RS.19500/ - AS THE ASSESSEE COULD NOT FILE ANY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER DID NOT ACCEPT THE GENUINENESS OF TEN CASH CREDITS AGGREGATING TO RS.4,77,800/ - STANDING IN THE BOOKS NAMES OF TEN PERSONS AS MEN TIONED AT PAGE 4 OF THE ASSESSMENT ORDER. RESULTANTLY, THE AFORESAID CASH CREDITS WERE TREATED AS UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE INCOME - TAX ACT. ON APPEAL BEFORE THE LD CIT(A), THE ASSESSEE DID NOT ENTER APPEARANC E BEFORE HIM INSPITE OF NOTICE OF HEARING ISSUED BY HIM ON 26.11.2011, 08.07.2011, 11.10.2011 AND 24.04.2012 WITH THE RESULT THAT THE LD . CIT(A) HAS PASSED THE IMPUGNED ORDER EX - PARTE ON MERITS AFTER GOING THROUGH THE MATERIALS AVAILABLE ON RECORD INCLUDIN G THE ASSESSMENT ORDER. HE HAS CONFIRMED THE IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATIONS: - 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND ASSESSMENT RECORDS. APPELLANT HAD SUBMITTED THE CONFIRMATION OF LOAN FROM 2 3 LENDERS OF LOAN. IN CASE OF 6 LENDERS, THE CONFIRMATION WAS ACCOMPANIED WITH THE HOLDING OF AGRICULTURAL LAND OF SUCH LENDERS. THE ASSESSING OFFICER DID NOT CONSIDER THE LOANS ADVANCED BY THEM AS INCOME OF APPELLANT APPARENTLY BECAUSE ASSESSING OFFICER FOUND THEM CREDIT WORTHY BECAUSE OF THE HOLDING OF THE AGRICULTURAL LAND. ASSESSING OFFICER HAS NOT ACCEPTED 7 LOANS WORTH RS.1,33,400/ - WHERE APPELLANT HAS NOT SUBMITTED ANY EVIDENCE OF CREDITWORTHINESS AND THESE LENDERS ARE NOT THE INCOME TAX ASSESSEES A LSO. I FIND THAT THE LENDERS HAVE IDENTIFIED THEMSELVES BY SUBMITTING THEIR ADDRESSES IN THE CONFIRMATION LETTERS AND HAVE ALSO CERTIFIED THAT THE AMOUNTS CREDITED IN THE BOOKS OF APPELLANT AGAINST THEIR NAMES IS IN THE NATURE OF LOAN/DEPOSIT. HOWEVER, ME RE CERTIFICATION OF ANY TRANSACTION AS LOAN BY ANY PERSON WHO 3 633 - RJT - 2012 DHARMESH M KALYANI MAY BE IDENTIFIABLE MAY NOT BE ACCEPTABLE, IF SUCH PERSON IS NOT CREDITWORTHY TO ADVANCE SUCH LOAN. THE PRIMARY BURDEN TO PROVE THE CREDITWORTHINESS OF THE LENDER IS ON THE APPELLANT. IN CASE OF 7 LOANS WORTH RS.1,33,400/ - , I FIND THAT THE APPELLANT HAS THOROUGHLY FAILED TO PROVIDE ANY EVIDENCE OF CREDITWORTHINESS OF SUCH LENDERS. APPELLANT HAS NOT MADE ANY SUBMISSION TO PROVE THE CREDITWORTHINESS OF SUCH LENDERS DURING EH APPELLATE PROCEEDING AL SO. THEREFORE, THE ASSESSING OFFICER HAS CORRECTLY CONSIDERED THE 7 LOANS OF RS.1,33,400/ - AS INCOME OF APPELLANT U/S 68 OF THE I.T. ACT WHERE NO EVIDENCE OF CREDITWORTHINESS EXCEPT THE CONFIRMATION OF THE LENDERS WAS SUBMITTED BY THE APPELLANT. 4.2 ASSE SSING OFFICER HAS NOT ACCEPTED 10 LOANS WORTH RS.4,77,800/ - WHERE APPELLANT HAS NOT SUBMITTED ANY OTHER EVIDENCE OF CREDITWORTHINESS OF LENDERS EXCEPT THEIR PANS. I FIND THAT THE LENDERS HAVE IDENTIFIED THEMSELVES BY SUBMITTING THEIR ADDRESSES IN THE CONF IRMATION LETTERS AND HAVE ALSO CERTIFIED THAT THE AMOUNTS CREDITED IN THE BOOKS OF APPELLANT AGAINST THEIR NAMES IS IN THE NATURE OF LOAN/DEPOSIT. THE LENDERS HAVE SUBMITTED THE COPY OF THEIR PAN CARDS SHOWING THEIR PAN, DATE OF BIRTH ETC. I FIND THAT FILI NG A RETURN OF INCOME LENDS A CERTAIN DEGREE OF CREDIBILITY TO A LENDER IN RESPECT OF HIS CAPACITY TO ADVANCE A LOAN. HOWEVER, MERE OBTAINING A PAN FROM INCOME TAX DEPARTMENT AND NOT FILING THE RETURN OF INCOME WOULD NOT LEND ANY CREDIBILITY TO SUCH LENDER . APPELLANT DID NOT SUBMIT ANY EVIDENCE THAT THE LENDERS WHO HELD PAN HAD FILED THEIR RESPECTIVE RETURN OF INCOME TO PROVE THEIR CREDITWORTHINESS. NO SUCH EVIDENCE WAS SUBMITTED DURING THE APPELLATE PROCEEDINGS ALSO. THE PRIMARY BURDEN TO PROVE THE CREDITW ORTHINESS OF THE LENDER IS ON THE APPELLANT. IN CASE OF 10 LOANS WORTH RS.4,7,800/ - ALSO I FIND THAT THE APPELLANT HAS FAILED TO PROVIDE SUFFICIENT EVIDENCE OF CREDITWORTHINESS OF SUCH LENDERS. APPELLANT HAS NOT MADE ANY SUBMISSION TO PROVE THE CREDITWORTH INESS OF SUCH LENDERS DURING THE APPELLATE P ROCEEDING ALSO. THEREFORE, THE ASSESSING OFFICER HAS CORRECTLY CONSIDERED THE 10 LOANS OF RS.4,77,800/ - AS INCOME OF APPELLANT U/S 68 OF THE I.T. ACT WHERE NO EVIDENCE OF CREDITWORTHINESS EXCEPT THE CONFIRMATION OF THE LENDERS WAS SUBMITTED BY THE APPELLANT. 4 633 - RJT - 2012 DHARMESH M KALYANI 3. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. THE APPEAL WAS LISTED FOR HEARING ON 25.02.2013, 05.03.2013, 19.03.2013, 22.03.2013, 05.06.2013, 07.06. 2013 AND 20.06.2013. THE ASSESSEE WAS EITHER NOT PRESENT ON THE AFORESAID DATES OR HAD SOUGHT ADJOURNMENT S ON ONE GROUND OR ANOTHER. THE APPEAL WAS ULTIMATELY HEARD ON 21.06.2013 AFTER THE BENCH EXPRESSED ITS ANGUISH OVER SUCH FRIVOLOUS ADJOURNMENTS BEING SOUGHT IN THE MATTER . 4. IN SUPPORT OF APPEAL, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WHICH READ AS UNDER: 1.1. THE LD. A.O. MADE ADDITION OF RS.1,33,400/ - AND CONFIRMED BY THE LD. CIT (A) ARE AS UNDER: - 1 . BHARTIB EN D. KORADIA RS.18.500/ - 2 . HAMIDA H. RATHOD RS.18,700/ - 3 . MAYUR P. GHONIA RS.18,500/ - 4 . RASILABEN P. GHONIA RS.19,700/ - 5 . VARSHABEN B. KOTADIA RS.19,500/ - 6 . VINODBHAI G. KOTADIA RS.19,000/ - 1.2 THE ASSESSEE FURNISHED CONFIRMATION LETTER IN RESPECT OF ALL TH E ABOVE PERSONS HOWEVER THE LD. A.O. DID NOT ACCEPT THE SAME THOUGH THE AMOUNT INVOLVED IS VERY SMALL AND WITHOUT VERIFYING OR CALLING THE PERSONS BY ISSUING SUMMONS HE MADE THE ADDITION. THE ADDITION IS THEREFORE AGAINST THE DECISIONS OF THE FOLLOWING. 1.247 ITR 574 (RAJ) NECK KUMAR V/S. CIT 2.267 ITR 308 (P & H) CIT V/S. JAWAHAR OSWAL 3.227 ITR 900 (GAU) KHANDELWAL CONSTRUCTION CO. VS.CIT 1.3 THE HON. HIGH COURTS HAS BEEN PLEASED TO HOLD THAT WITHOUT MAKING PROPER INQUIRY OR WHERE THERE IS LEAK OF P ROPER INQUIRY THE ADDITION IS NOT SUSTAINABLE. 1.4 IT IS THEREFORE REQUESTED THAT THE ADDITION OF RS.1,83,000/ - MAY KINDLY BE DELETED. 2.1 THE LD. A.O. HAS ALSO MADE ADDITION OF RS.4,77,800/ - IN RESPECT OF FOLLOWING 10 PERSONS. 5 633 - RJT - 2012 DHARMESH M KALYANI 1. BHIKHUBHAI N. RUPAPA RA RS. 18,500/ - 2. HANSABEN P. RUPAPARA RS. 19,500/ - 3. HUSSAINBHAI D. RATHOD RS. 19,000/ - 4. IMTIHAZ R. RATHOD RS. 18,500/ - 5. KANTABEN P. KOTADIA RS. 2,55,000/ - 6. KETANBHAI G. RAMANI RS. 18,000/ - 7. MIHIR MANOJBHAI KALYANI RS. 90 ,000/ - 8. PRAVINBHAI K. GHONIYA RS. 19,300/ - 9. PRIYESHBHAI P. KOTADIA RS. 19,000/ - 10. VIJAYBHAI K. PARMAR RS. 19,000/ - 2.2. THE LD. A.O. MENTIONED AT PARA 6 PAGE 3 THAT IDENTITY OF THE PERSON GIVING LOAN IS ESTABLISHED. HE ALSO MENTIONS THAT C ONFIRMATION LETTERS ARE ALSO FILED. HE SIMPLY MADE ADDITION ON THE GROUNDS THAT SOURCE OF DEPOSIT IS REMAIN UNEXPLAINED. 2.3 OUT OF ABOVE 10 PERSONS IN RESPECT OF 8 PERSONS THE AMOUNT INVOLVED IS VERY MERGE. MOREOVER NOT TO ACCEPT SUCH SMALL AMOUNT AND T HAT TO WITHOUT MAKING INQUIRY EVEN BY CALLING THEM IS NOT SUSTAINABLE IN VIEW OF THE DECISIONS OF THE FOLLOWING HIGH COURT. 1 .247 ITR 574 (RAJ) NECK KUMAR V/S. CIT 2. 267 ITR 308 (P & H) CIT V/S. JAWAHAR OSWAL 3. 227 ITR 900 (GAU) KHANDELW AL CONSTRUCTION CO. VS.CIT 2.4 IN RESPECT OF AMOUNT OF RS.2,55,000/ - AND IN RESPECT OF RS.90,000/ - THOUGH THE ASSESSEE HAS FURNISHED PAN NO. AND CONFIRMATION LETTER THE NON ACCEPTANCE THEREOF IS ALSO AGAINST THE DECISIONS OF THE ABOVE 3 DECISIONS AND ALSO AGAINST THE DECISIONS OF THE HON. GUJARAT HIGH COURT IN THE FOLLOWING CASES : 1. 256 ITR 360 (GUJ) - ROHINI BUILDERS 2. 278 ITR 170 (GUJ) - PRAGATI CO - OP. BANK. 2.5 THE HON. HIGH COURT HAS BEEN PLEASED TO HOLD THAT WHEN SOURCE IS PROVED, ASSESSEE I S NOT SUPPOSED TO PROVE SOURCE OF SOURCE. 2.6 THUS THE ADDITION IS AGAINST THE LAW LAID DOWN BY THE HON. GUJARAT HIGH COURT AND HON. RAJASTHAN HIGH COURT, P & H HIGH COURT AND GAUHATI HIGH COURT MAY KINDLY BE ORDER TO BE DELETED. 2.7 IN RESPECT OF AMOUNT OF RS.2,55,000/ - COPY OF HER BANK ACCOUNT MAINTAINED WITH BANK OF INDIA, RAJKOT IS FURNISHED HEREWITH. THIS SHOWS THAT 6 633 - RJT - 2012 DHARMESH M KALYANI ASSESSEE HAVING CAPACITY AS ALSO THE AMOUNT HAVING BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE, THE GENUINENESS OF TRANSACTION IS ESTABLI SHED THE ADDITION NEEDS DELETION. 2.8 AS REGARDS AMOUNT OF RS.90,000/ - PERTAINING TO MIHIR MANOJBHAI KALYANI COPY OF HIS ACCOUNT IS ALSO FURNISHED HEREWITH WHICH SHOWS THAT IS THROUGH ACCOUNT PAYEE CHEQUE AND THEREFORE THE LD. A.O. OUGHT TO HAVE ACCEPTED THE SAME. THE ADDITION NEEDS DELETION. 3. ALTERNATIVELY IT IS SUBMITTED THAT THE MATTER MAY KINDLY BE RESTORED BACK TO THE A.O. WHO HAS NOT CALLED THE CONCERN PERSON AND NOT HAVE EXAMINED THEM, WITH A DIRECTION TO EXAMINE THE PERSON CONCERN AS ALSO EVIDEN CES OF EARNING INCOME BY CONCERN DEPOSITORS. 5. I N REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. IT IS QUITE APPARENT ON PERUSAL OF T HE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE BEFORE THE ASSESSING OFFICER TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACTIONS. THE LD CIT(A) GAVE SEVERAL OPPORTUNITIES TO THE ASSESSEE BUT THE ASSESSE E DID NOT FILE ANY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACTIONS BEFORE HIM ALSO. AT THE TIME OF HEARING BEFORE US, IT WAS FAIRLY ADMITTED BY THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE IM PUGNED SUM WAS RECEIVED IN CASH AND WAS ALSO REPAID IN CASH. IT IS FAIRLY WELL SETTLED THAT CASH CREDITS FOUND RECORDED IN THE BOOKS OF ACCOUNT CAN BE TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE IF THE ASSES SEE FAILS TO OFFER SATISFACTOR Y EXPLANATION REG ARDING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. T HE ASSESSEE HAS NEITHER ESTABLISHED THE CREDITWORTHINESS OF THE CREDITORS NOR THE GENUINENESS OF THE LOAN INSPITE OF HAVING SEVERAL OPPORTUNITIES BEFORE THE ASS ESSING OFFICER AS WELL AS BEFORE THE LD CIT(A). IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD CIT(A) CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN THIS BEHALF IS REASONABLE AND IN CONFORMITY WITH THE LAW. 7 633 - RJT - 2012 DHARMESH M KALYANI 7. THE ASSESSEE HAS FILED A COPY OF B ANK ACCOUNT OF SMT . KANTABEN PARSOTTAMBHAI KOTADIA, WHO IS REPORTED TO HAVE LEN T A SUM OF RS.2,55,000/ - TO THE ASSESSEE. THE SAID BANK ACCOUNT WAS NEITHER FILED BEFORE THE ASSESSING OFFICER NOR BEFORE THE LD CIT(A). THE ASSESSEE HAS NOT MADE ANY APPLICAT ION FOR ADMISSION FOR THE AFORESAID BANK ACCOUNT OF SMT . KANTABEN PARSOTTAMBHAI KOTADIA AS ADDITIONAL EVIDENCE. HENCE THE SAID PIECE OF EVIDENCE CANNOT BE TAKEN ON RECORD. WITHOUT PREJUDICE TO THE AFORESAID, IT IS FURTHER SEEN THAT SEVERAL CASH DEPOSITS HA VE BEEN MADE IN THE BANK ACCOUNT OF SMT KANTABEN PARSOTTAMBHAI KOTADIA IMMEDIATELY PRECEDING THE DATE ON WHICH SHE IS REPORTED TO HAVE GIVEN THE LOAN TO THE ASSESSEE. NATURE AND SOURCE OF THOSE CASH DEPOSITS IN THE BANK ACCOUNT OF SMT . KANTABEN PARSOTTAMBH AI KOTADIA HAVE NOT BEEN EXPLAINED. THE BANK ACCOUNT OF SHRI MIHIR MANOJBHAI KALYANI ALSO SUFFERS FROM THE SAME INFIRMITY IN AS MUCH AS IT WAS NEVER FILED BEFORE THE ASSESSING OFFICER OR BEFORE THE LD CIT(A). AFTER CAREFULLY GOING THROUGH THE SUBMISSIONS M ADE BY THE ASSESSEE AND THE ORDERS PASSED BY THE ASSESSING OFFICER AND THE LD CIT(A), WE CONSIDER IT APPROPRIATE TO CONFIRM THE ORDER PASSED BY THE LD CIT(A). HIS ORDER IS THEREFORE CONFIRMED. THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCE D ON 10 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 10 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT DHARMESH M KALYANI, C/O. N K DIESEL, OPP. GARDEN RESTAURANT, MARKETING YARD ROAD, NR. SANT KABIR ROAD, RAJKOT 2 . RESPONDENT - ITO, WARD - 2(3), RAJKOT 3 . CONCERNED CIT - II I, RAJKOT 4 . CIT (A) - III, RAJKOT 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT