The ITO, Ward-4, Bharuch V. M/s. Surya Developers, Ankleshwar

ITA 673/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80292 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Onus to prove

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.673/AHD/2013 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2009-10) THE ITO WARD-4 BHARUCH / VS. M/S.SURYA DEVELOPERS A-402, SANSKAR COMPLEX SHIVPARAS SOCIETY GIDC, ANKLESHWAR ( !./)* !./ PAN/GIR NO. : ABMFS 4007 J ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI BHUVNESH KULSHRESTHA, SR.DR ,-(+ / . / RESPONDENT BY : MS. URVASHI SHODHAN ' 0 / $1 / / / / DATE OF HEARING 19/08/2014 23' / $1 / DATE OF PRONOUNCEMENT 28/08/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA (CIT(A) IN SHORT) DATED 31/12/2012 PERTAINING TO ASSESSMENT Y EAR (AY) 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, (I) THE LEARNED CIT(A) ERRED IN RESTRICTING ADDITION OF ` 33,00,000/- TO ` 1,00,000/- MADE U/S.68 OF THE IT ACT THOUGH ASSESSEE HAD NOT SATISFACTORILY DISCHARGED O NUS ON IT U/S.68. ITA NO.673/AHD/ 2013 ITO VS. M/S.SURYA DEVELOPERS ASST.YEAR 2009-10 - 2 - 2. THE APPELLANT CRAVES TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE CIT(A) ON THE ABOVE ISSUE BE SET ASIDE AND THAT OF THE ASSESSING OFFICE BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT A SURVEY ACTION U /S.132A OF THE I.T.ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 24/03/200 9. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASS ESSMENT AND THE ASSESSMENT U/S.143(3) OF THE ACT WAS FRAMED VIDE OR DER DATED 23/12/2011, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE AD DITION RS.1,30,02,000/- ON ACCOUNT OF UNACCOUNTED INCOME A DMITTED DURING THE COURSE OF SURVEY AND NOT OFFERED FOR TAXATION IN TH E RETURN, RS.12,01,048/- ON ACCOUNT OF ESTIMATED PROFIT ON HOUSING PROJECT A ND RS.33,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 AND THE T OTAL INCOME WAS DETERMINED AT RS.1,75,03,050/-. AGAINST THIS, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APP EAL, THE LD.CIT(A) DELETED THE ADDITION OF RS.12,01,048/- ON ACCOUNT OF ESTIMATED U/S.44AD OF THE ACT. THE LD.CIT(A) FURTHER RESTRICTED THE A DDITION OF RS.33 LACS TO RS.1 LAC MADE U/S.68 OF THE ACT. AGAINST THIS, NOW THE REVENUE HAS FILED THE PRESENT APPEAL. 3. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND V EHEMENTLY ARGUED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN REST RICTING THE ADDITION. HE SUBMITTED THAT THE AO HAS GIVEN A FINDING THAT THE PERSONS FROM WHOM THE ASSESSEE HAD TAKEN LOAN WERE NOT HAVING CREDITW ORTHINESS. HE FURTHER ITA NO.673/AHD/ 2013 ITO VS. M/S.SURYA DEVELOPERS ASST.YEAR 2009-10 - 3 - SUBMITTED THAT THE AO HAS FURTHER GIVEN A FINDING T HAT IN SOME OF THE CASES AMOUNT WAS DEPOSITED PRIOR TO ISSUING THE CH EQUES TO THE ASSESSEE. IN SUPPORT OF THE CONTENTION, HE PLACED RELIANCE ON THE JUDGEMENT(S) OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF UMESH KRISHNANI VS. ITO REPORTED AT (2013) 35 TAXMANN.COM 598 (GUJ. ) AND OF BLESSING CONSTRUCTION VS. ITO REPORTED AT (2013) 32 TAXMANN. COM 366 (GUJ.) 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND PLACED RELIANCE ON THE JUDGEMENT (S) OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RACHHOD JIVABHAI NAKHAVA REPORTED AT (2012) 21 TAXMANN.COM 159 (GUJ. ) AND OF CIT VS. CHANAKYA DEVELOPERS REPORTED AT (204) 43 TAXMANN.CO M 91 (GUJ.) THE LD.COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECI SION OF THIS TRIBUNAL (ITAT A BENCH AHMEDABAD) IN THE CASE OF SHAILESH P.GONAWALA VS. ACIT IN IT(SS)A NO.110/AHD/2012 FOR AY 2007-08, OR DER DATED 05/02/2014. THE LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE TRANSACTION WAS EFFECTED THROUGH BANKING CHANNELS A ND ALL THE REQUIRED DOCUMENTS IN SUPPORT OF THE CLAIM WAS FURNISHED BEF ORE THE AO. SHE FURTHER SUBMITTED THAT OUT OF RS.33 LACS, RS.27 LAC S HAVE ALREADY BEEN REPAID BY THE ASSESSEE. IN THIS RESPECT, SHE SUBMI TTED THAT THE LD.CIT(A) HAS GIVEN A CATEGORICAL FINDING IN HIS ORDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAS GIVEN A FINDING THAT EXCEPT TWO DEPOSITORS, OTHER DEPOSITORS WERE NOT HAVING CREDITWORTHINESS. IN RE SPECT OF FIVE ITA NO.673/AHD/ 2013 ITO VS. M/S.SURYA DEVELOPERS ASST.YEAR 2009-10 - 4 - DEPOSITORS; NAMELY, GEETABEN B.CHODWADIA, KANUBHAI MANUBHAI, MUKESH D. MANGROLIA, RAJESH D.PATEL AND RASILABEN K ANBHAI, IT IS OBSERVED THAT THESE DEPOSITORS HAVE DEPOSITED CASH IN THEIR BANK ACCOUNTS PRIOR TO ISSUING THE CHEQUES TO THE ASSESSEE. T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHA I NAKHAVA(SUPRA), HAS HELD AS UNDER:- 18. WE THUS, FIND THAT IN THE CASE BEFORE US THE TRIBUNAL BELOW RIGHTLY SET-ASIDE THE DELETION MADE BY THE ASSESSING OFFICE R, BASED ON ERRONEOUS APPROACH BY WRONGLY SHIFTING THE BURDEN A GAIN UPON THE ASSESSEE WITHOUT VERIFYING THE INCOME TAX RETURN OF THE CREDITORS. THE POSITION, HOWEVER, WOULD HAVE BEEN DIFFERENT IF THO SE CREDITORS WERE NOT INCOME TAX ASSESSEES OR IF THEY HAD NOT DISCLOSED T HOSE TRANSACTIONS IN THEIR INCOME TAX RETURNS OR IF SUCH RETURNS WERE NO T ACCEPTED BY THEIR ASSESSING OFFICERS. 4.1. THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RE LIED UPON BY THE REVENUE IN THE CASE OF BLESSING CONSTRUCTION VS. IT O(SUPRA), WHEREIN THE HONBLE COURT HAS HELD AS UNDER:- 7.. IT WAS NOTICED THAT SUCH CREDITORS DID NOT M AINTAIN ANY BOOKS OF ACCOUNT. NOWHERE THEIR CAPACITY TO RAISE SUCH AMOU NT FOR DRAWING CHEQUE OF SIZABLE AMOUNTS WAS ESTABLISHED. IN SHOR T THEREFORE, THE V VERY GENUINENESS OF THE TRANSACTION WAS NOT ESTABLI SHED. THIS THEREFORE, IS NOT A CASE WHERE THE REVENUE MAKES ADDITION ON T HE ASSESSEE FAILING TO ESTABLISH SOURCE OF THE SOURCE. ALL THESE ARE E SSENTIALLY BASED ON FACTS AND APPRECIATION OF EVIDENCE ON RECORD. NO Q UESTION OF LAW ARISES. TAX APPEAL IS DISMISSED. 4.2 THE OTHER JUDGEMENT OF HONBLE GUJARAT HIGH COURT RELIED UPON BY THE REVENUE IN THE CASE OF UMESH KRISHNANI VS. ITO, WHEREIN THE HONBLE COURT HAS HELD AS UNDER:- 18. THREE BASIC INGREDIENTS VIZ. (A) IDENTITY; (B ) CREDITWORTHINESS AND (C) GENUINENESS OF THE TRANSACTION, WHEN ARE CONSID ERED, IT CANNOT BE DISPUTED THAT ALL THE THREE OF THEM REQUIRE INDEPEN DENT CONSIDERATION ITA NO.673/AHD/ 2013 ITO VS. M/S.SURYA DEVELOPERS ASST.YEAR 2009-10 - 5 - AND YET THEY ARE NOT MUTUALLY EXCLUSIVE OR CAN BE C ONSIDERED IN ISOLATION. IT HARDLY NEEDS TO BE SPECIFIED THAT TH E WELL RECOGNIZED PRINCIPLE OF NOT INSISTING UPON SOURCE OF THE SOURC E NEEDS NO ELABORATION. UPON APPRECIATION OF MATERIALS ON REC ORD AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUE AU THORITIES AND THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ENTIRE TRA NSACTION WAS A CIRCUITOUS ROUTE TO BRING ON BOOKS THE ASSESSEES O WN ACCOUNTED MONEY. THE ACTOR THAT THE DONORS DID NOT POSSESS INDEPENDE NT SOURCE TO MAKE SUCH DEPOSITS MUST BE VIEWED IN LIGHT OF THE FINDIN GS THAT THE ASSESSEE HAD NO JUSTIFICATION FOR BORROWING SUCH AMOUNTS AT SUCH HIGH RATE OF INTEREST. THESE ASPECTS WOULD HAVE A BEARING ON TH E GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE DONORS AND CANNOT BE SEEN AS AN ATTEMPT TO THROW THE BURDEN TO PROVE SOURCE O F THE SOURCE ON THE ASSESSEE. 19. AS IS VERY ELOQUENT FROM THE RECORD ITSELF, SU BSTANTIAL AMOUNT OF CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF ALL THE CREDITORS SHORTLY PRIOR TO ISSUANCE OF CHEQUES AND INSUFFICIENCY OF T HE FUND WITH THE CREDITORS WHEN COULD BE DULY ESTABLISHED FROM THE O VERALL FACTS AND CIRCUMSTANCES OF THE CASE AND WHEN IT IS FURTHER FO UND AS A MATTER OF FACT THAT THE ASSESSEE HAD NO JUSTIFICATION FOR BOR ROWING SUCH AMOUNTS AT HIGH RATE OF INTEREST, EVEN WITHOUT DISTURBING T HE WELL ESTABLISHED PRINCIPLE OF NOT INSISTING ON THE ASSESSEE PROVING SOURCE OF THE SOURCE, ON THE ROBUST FACTS OF THE REVENUE AUTHORITIES HAVE RIGHTLY NOT CONCLUDED IN FAVOUR OF THE ASSESSEE. ALL ISSUES ARE ESSENTIA LLY IN THE REALM OF APPRECIATION OF FACTS. 4.3. IT IS SETTLED PROPOSITION OF LAW THAT THE REVE NUE CANNOT FORCE THE ASSESSEE TO DISCLOSE THE SOURCE OF THE SOURCE, BUT IN THE PECULIAR FACTS, WHERE IT COMES TO THE NOTICE OF THE AO THAT THE CRE DITORS WHO HAVE GIVEN LOAN TO THE ASSESSEE ARE NOT HAVING SUFFICIENT MEAN S OF INCOME. UNDER SUCH FACTS, THE AO IS AT LIBERTY TO EXAMINE THE ASP ECT OF THE CREDITWORTHINESS OF THE CREDITORS. HOWEVER, IN THE CASEIN HAND, IT IS NOT THE CASE WHERE THE ENTIRE TRANSACTION WAS A CIRCUIT OUS ROUTE TO BRING ON BOOKS ASSESSEES OWN UNACCOUNTED MONEY, IN VIEW OF THE FACT THAT THE SUBSTANTIAL AMOUNT HAS ALREADY BEEN RETURNED BY WAY OF ACCOUNT PAY CHEQUES. IN THE LIGHT OF THE JUDGEMENT OF HONBL E HIGH COURT OF ITA NO.673/AHD/ 2013 ITO VS. M/S.SURYA DEVELOPERS ASST.YEAR 2009-10 - 6 - GUJARAT IN THE CASE OF DY.CIT VS. ROHINI BUILDERS ( 256 ITR 360), THE AO WAS AT LIBERTY TO PROCEED AGAINST THE CREDITORS, IF HE WAS NOT SATISFIED WITH THE SOURCE OF CREDIT. MORE PARTICULARLY, WHEN THE S UBSTANTIAL LOAN AMOUNT HAS BEEN REPAID BY WAY OF ACCOUNT PAYEE CHEQUES T O THE CREDITORS. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENU ES APPEAL IS REJECTED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/08/2014 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-VI, BARODA 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 25.8.14(DICTATION-PAD 11-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..27.8.14 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 B ACK TO THE SR.P.S./P.S.28.8.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.8.14 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