Shree Swami Industries, Ahmedabad V. The Income tax Officer,Ward-6(4), Ahmedabad

ITA 643/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89493 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DIVETIA
• Assessee Lawyers: SONIA KUMAR
• Keywords: Unexplained cash credit; Principle of natural justice; Peak credit
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 643 /AHD/2011 (ASSESS MENT YEAR: 2005-06) SHREE SWAMI INDUSTRIES PLOT NO. 75/3/1, PHASE-1, GIDC, VATVA, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 6(4), C.U. SHAH BUILDING, ASHRAM ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAAFS5141C APPELLANT BY : SMT. SONIA KUMAR, SR. D.R RESPONDENT BY : SHRI S.N. DIVETIA, A.R. ( )/ ORDER DATE OF HEARING : 21 -04-201 5 DATE OF PRONOUNCEMENT : 28 -05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-XI, AHMEDABAD DATED 20.12.2010 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC SHEETS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 10.08.2005 DECLARING TOTAL INCOME AT RS. 45,210/-. THE CASE WAS ITA NO 643/ AHD/2011 . A.Y. 2005- 06 2 SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 27.12.2007 AND THE TOTAL IN COME WAS DETERMINED AT RS. 42,76,623/-. THEREAFTER THE ASSESSMENT FRAMED U /S. 143(3) WAS SET ASIDE BY LD. CIT BY INVOKING PROVISIONS OF SECTION 263 OF THE ACT AND PURSUANT TO WHICH ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 263 VIDE ORDER DATED 24.11.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 19,23,440/- BY MAKING ADDITION ON ACCOUNT OF UNEXPLAINED CASH CRE DIT U/S. 68 OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 20.12.2010 GRANTED PART IAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. C IT(A), REVENUE AND ASSESSEE PREFERRED APPEAL BEFORE HONBLE TRIBUNAL. THE GROUND RAISED BY THE ASSESSEE READS AS UNDER;- 1.1 THE ORDER PASSED U/S.250 ON 20.12.2010 FOR A.Y. 2005-06 BY CIT(A)-XI, ABAD PARTLY CONFIRMING THE ADDITION OF RS.7 LAKHS MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN JAW AND OR ON FACTS IN PASSING THE IMPUGNED ORDER WITHOUT ALLOWING SUFFICIENT OPPORTUNITY TO TH E APPELLANT. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS A SUFFICIENT CAUSE FOR FAILURE TO PRODUCE FURTHER EVIDENCE RELATING TO M/S. SURAJ TEXTILES. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE CASH CREDIT OF M/S. SURAJ TEXTILES WAS UNEXPLAINED. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE APPELLANT HAD FAILED TO DISCHARGE T HE ONUS CAST UPON IT TO PROVE THE CASH CREDIT OF M/S. SURAJ TEXTILES 2.3 THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT TH E APPELLANT HAD FILED XEROX COPY OF CHEQUES ISSUED BY THE SAID PARTY SO THAT THE FURTHE R ENQUIRY SHOULD HAVE BEEN MADE BY AO. 4. IT WAS NOTICED THAT ASSESSEE HAD RECEIVED RS. 10,50 ,000/- AS DEPOSIT FROM SURAT TEXTILE, AHMEDABAD. IT WAS NOTICED BY LD. CIT THAT DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, NO ENQUIRIES TO DETERMINE THE GENUINENESS OF THE CREDITS WERE MADE BY A.O AND THE REFORE THE ASSESSMENT ORDER PASSED U/S. 143(3) WAS SET ASIDE BY LD. CIT(A ) AND THE A.O WAS ITA NO 643/ AHD/2011 . A.Y. 2005- 06 3 DIRECTED FOR THE EXAMINATION OF DEPOSITS RECEIVED B Y ASSESSEE AND RE-DECIDE THE ISSUE. IN THE 2 ND ROUND, A.O NOTICED THAT ASSESSEE HAD FAILED TO EST ABLISH THE SOURCE OF CREDITS AND SUBSTANTIATE THE INGREDIE NTS REQUIRED U/S. 68 OF THE ACT NAMELY THE IDENTITY, CREDITWORTHINESS OF THE DE POSITOR AND THE GENUINENESS OF TRANSACTION. ACCORDINGLY THE ADDITIO N WAS MADE BY A.O. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE BY HOLDING AS UNDER:- 3.2.1. AS REGARDS THE ADDITION OF RS. 10.5 LAKHS IN RESPECT OF SURAT TEXTILE, THE ADDITION WAS MADE U/S. 68 ON THE GROUND THAT THE APPELLANT H AD MERELY SUBMITTED LEDGER ACCOUNT; THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS WERE NOT ESTABLISHED. AS SEEN FROM THE WRITTEN SUBMISSIONS, IT IS APPARENT THAT NOT EVEN C ONFIRMATION LETTER FROM THE SAID PARTY WAS FILED LET ALONE ESTABLISHING THE ABOVE-MENTIONE D THREE INGREDIENTS. THE CONTENTIONS ARE GENERAL, VAGUE AND DO NOT GO ANYWHERE NEAR CONT ROVERTING THE A.O'S FINDINGS. THEREFORE, I HOLD APPELLANT FAILED DO DISCHARGE THE ONUS CAST ON IT. 3.2.2 THE ALTERNATE PLEA OF THE LEARNED A.R. IS THA T ONLY THE PEAK BALANCE IS TO BE ADDED. THE LEDGER ACCOUNT FURNISHED IS REPRODUCED BELOW:- DATE PARTICULAR VCH. TYPE VCH.NO DEBIT CREDIT 6-05-04 BY S.V. SAHKARI BANK A/C. 431 RECEIPT 71 2,00,000 18-10-04 BY BOI CURRENT A/C. 672 RECEIPT 282 2,00,000 23-10-04 BY BOI CURRENT A/C. 672 RECEIPT 287 3,00,000 29-10-03 TO BOI CURRENT A/C. 672. CH. NO. 497 PAYMENT 362 3,00,000 1-11-04 BY BOI CURRENT A/C.672 RECEIPT 293 293 1,50,000 22-11-04 TO DO- PAYMENT 390 2,00,000 4-12-04 BY DO- RECEIPT 312 2,00,000 9-03-05 TO BOI CCA/C. 3281 CH. NO. PAYMENT 672 3,50,000 ITA NO 643/ AHD/2011 . A.Y. 2005- 06 4 508514 TO CLOSING BA LANCE. 10,50,000 2,00,000 10,50,000 10,50,000 IT IS CONTENDED BY THE LEARNED A.R. THAT THE PEAK B ALANCE WORKS OUT TO RS. 7 LAKHS. ON THIS ISSUE ALSO IT IS SEEN THAT THE SAID CLAIM WAS NOT B EFORE THE A.O. HENCE, A.O IS DIRECTED TO WORK OUT THE PEAK CREDIT BALANCE AND RESTRICT THE A DDITION TO THE PEAK CREDIT. THE BALANCE ADDITION SHALL BE DELETED. THUS, SUBJECT TO VERIFIC ATION, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUBMITTED THAT THE ADDITION BE DELETED. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT LD. CIT(A) HAS REMITTED THE ISS UE TO THE FILE OF A.O AND DIRECTED HIM TO RECOMPUTE THE ADDITION ON THE BASIS OF PEAK CREDIT METHOD AND RESTRICT THE ADDITION TO PEAK CREDIT. HE FURTHE R SUBMITTED THAT AS PER PROVISIONS OF SECTION 251 OF THE ACT LD. CIT(A) DOE S NOT HAVE POWER TO REMAND AND THEREFORE REMANDING THE MATTER TO A.O IS NOT AS PER THE PROVISIONS OF SECTION 251. HE THUS SUPPORTED THE OR DER OF A.O. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ON THE ISSUE OF ADDITION OF DEPOSITS RECE IVED FROM SURAT TEXTILES, THE ENTIRE AMOUNT WAS CONSIDERED TO BE UNEXPLAINED CREDIT BY THE A.O. ON THE OTHER HAND LD. CIT(A) REMITTED THE ISSUE TO THE FILE OF A.O AND DIRECTED THE A.O TO WORK OUT THE PEAK CREDIT. AGAINST THE OR DER OF LD. CIT(A) WHEREBY PARTIAL RELIEF WAS GRANTED, ASSESSEE AND RE VENUE HAD PREFERRED APPEAL BEFORE US. IN THE CONNECTED APPEAL OF REVENU E IN ITA NO. ITA NO 643/ AHD/2011 . A.Y. 2005- 06 5 632/A/2011 BY ORDER DATED 07.05.2015, THE ISSUE WAS DECIDED BY US BY HOLDING AS UNDER:- 6.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. WE FIND THAT A.O HAD MADE ADDITION OF RS. 3 LAC ON ACCOUNT OF DE POSIT RECEIVED BY ASSESSEE FROM ARIHANT FINVEST AND RS. 10,50,000/- ON ACCOUNT OF R ECEIPTS FROM SURAT TEXTILES. WITH RESPECT TO THE ADDITIONS MADE IN RESPECT OF DEPOSIT FROM ARIHANT FINVEST, LD. CIT(A) HAS REMITTED THE MATTER TO A.O TO VERIFY THE CONTENTION S OF THE ASSESSEE AND IF THE CONTENTIONS WAS FOUND CORRECT, THE ADDITION WAS DIRECTED TO BE DELETED. WITH RESPECT TO THE ADDITION IN RESPECT OF SURAT TEXTILE LD. CIT(A) DIRECTED THE A. O TO WORK OUT THE PEAK CREDIT BALANCE AND RESTRICT THE ADDITION TO THE PEAK CREDIT SUBJEC T TO THE VERIFICATION. WE THUS FIND THAT CIT(A) WHILE DECIDING THE ISSUE HAD DIRECTED THE A. O TO VERIFY THE VARIOUS EVIDENCES SUBMITTED BY THE ASSESSEE AND THEREAFTER DELETE THE ADDITION. AT THIS MOMENT IT WILL BE RELEVANT TO REFER TO RELEVANT PROVISIONS OF SECTION 251 WHICH READS AS UNDER:- POWERS OF THE COMMISSIONER (APPEALS) 251 (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 7.THE PERUSAL OF PROVISIONS OF SECTION 251(1)(A) RE VEALS THAT CIT(A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT CAN CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. THE POWER OF SETTING ASIDE WHICH WAS AVAILABLE TO CIT(A), IS NO MORE AVAILABLE TO CIT(A) BY VIRTUE OF AMENDMENT MADE BY FINANCE ACT 2001 WITH EFFECT F ROM 1.06.2001. THUS IT CAN BE SEEN THAT IN THE PRESENT CASE CIT(A) HAS SET ASIDE THE I SSUE TO THE FILE OF A.O, THE POWERS OF WHICH ARE NOT AVAILABLE TO HIM AT THE RELEVANT TIME . WE THEREFORE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF CIT(A) F OR CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THEREAFTER DECIDING THE ISSUE ON THE B ASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN ACCORDANCE WITH LAW AND AFTER RECORDIN G A CLEAR FINDING ON THE ISSUE. IN THE RESULT BOTH THE GROUND OF REVENUE ARE ALLOWED FOR S TATISTICAL PURPOSES. ITA NO 643/ AHD/2011 . A.Y. 2005- 06 6 8. IT IS A FACT THAT THE GROUND RAISED BY REVENUE AND ASSESSEE ARE INTERCONNECTED. WHILE DECIDING THE REVENUES APPEAL , IN ITA NO. 632/A/2011, THE MATTER WAS RESTORED BY US TO THE FI LE OF LD. CIT(A) WITH CERTAIN DIRECTIONS. WE ARE OF THE VIEW THAT SINCE T HE GROUND RAISED BY ASSESSEE IS CONNECTED WITH THE GROUND RAISED BY REV ENUE AND SINCE THE GROUND RAISED BY REVENUE HAS BEEN RESTORED BY US TO LD. CIT(A) BY ORDER DATED 07.05.2015, THE GROUNDS RAISED BY ASSESSEE I N THE PRESENT APPEAL ALSO THEREFORE NEEDS TO BE RESTORED TO LD. CIT(A) AND WI TH SIMILAR DIRECTIONS. WE THEREFORE RESTORE THE ISSUE TO LD. CIT(A) WITH SIMI LAR DIRECTIONS AS CONTAINED WHILE DECIDING REVENUES APPEAL IN ITA NO. 632/A/20 11(SUPRA). THUS THE GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 28 - 05 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD