Dy.CIT, Agra V. M/s Sharda Oil Mills, Agra

ITA 72/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7023 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SRIVASTAVA
• Assessee Lawyers: K K JAIN
• Keywords: Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 72/AGRA/2010 ASSTT. YEAR : 2006-07 D.C.I.T., CIRCLE 1, VS. M/S. THE SHARDA OIL M ILLS, AGRA. 22/157, MOTI LAL NEHRU ROAD AGRA. (PAN : AAFT 7439C) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SRIVASTAVA, JR. D.R. FOR RESPONDENT : SHRI K.K. JAIN, ADVOCATE. ORDER PER BENCH: THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF T HE CIT(A) DATED 17.12.2009 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS : 1. THAT THE CIT(A)-1, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,50,000/- MADE ON ACCOUNT OF CASH CREDITS WITHOUT APPRECIATING THE FACTS THAT ASSESSEE HAS FA ILED TO PROVE THE SOURCE OF CASH CREDITED IN HIS ACCOUNT WHICH HAVE BEEN INTRODUCED IN THE FIRM. 2. THAT THE CIT(A)-1, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.8,70,000/- MADE ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS RAISED FROM THE FAMILY MEMBERS AND RELATIVE WITHOUT APPRECIATING THE FACTS THAT ASSESSEE IS NOT ABLE TO FURNISH EVIDENCE IN RESPECT OF SOURCE OF CASH INTRODUCED BY THE FAMILY MEMBERS IN THE FIRMS ACCOUNT AND TRANSACTION MANAGED BY INTRODUCING CASH THROUGH THE CREDITORS. 3. THAT THE CIT(A)-1, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,57,511/- MADE ON ACCOUNT OF CERTAIN EXPENSES WITHOUT APPRECIATING THE FACTS THAT MOST OF THE PAY MENT HAS BEEN MADE IN CASH AND MOST OF THE VOUCHERS PRODUCED BY THE ASSESSEE A RE SELF MADE VOUCHERS NOT OPEN TO VERIFICATION. 2 2. THE GROUND NO. 1 RELATES TO THE DELETION OF ADDI TION OF RS.1,50,000/-. THE FACTS RELATING TO THIS ADDITION ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF HEARING NOTED THAT SHRI AJAY GUPTA, PARTNER OF THE FIRM HAD DEPOSITED A SUM OF R S.1,50,000/- IN THE FIRM AS HIS CAPITAL. SHRI AJAY KUMAR GUPTA IS SEPARATELY ASSESSED. THE ASSESS ING OFFICER WAS NOT SATISFIED WITH THE SOURCE OF THE AMOUNT, THEREFORE, HE ADDED THE SAME U/S. 68 OF THE INCOME-TAX ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED T HE ADDITION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. THE ISSUE, IN OUR OPINION, IS DULY COVERED BY THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF SUNDER LAL JAIN VS. CIT, 117 ITR 316 (ALL.), IN WHICH IT W AS HELD THAT THE CREDIT IN THE ACCOUNT OF A PARTNER IS NOT A LOAN TO THE FIRM AND IT IS NOT ASS ESSABLE IN THE HANDS OF THE FIRM. SIMILAR VIEW HAS BEEN TAKEN BY M.P. HIGH COURT IN THE CASE OF CIT VS . METACHEM INDUSTRIES, 245 ITR 160 (MP). HONBLE GUJRAT HIGH COURT IN THE CASE OF PANKAJ DYE STUFF (IT REFERENCE NO. 241 OF 1993) HAS HELD THAT NO ADDITION U/S. 68 CAN BE MADE IN RESPEC T OF THE CAPITAL INTRODUCED BY THE PARTNERS IN THE FIRM. SIMILAR VIEW HAS BEEN TAKEN BY THIS BENCH IN ITA NO. 324/AGRA/2009 IN THE CASE OF M/S. OM BRIQUETTE INDUSTRIES VS. ITO. AHMEDABAD BEN CH OF THIS TRIBUNAL HAS ALSO TAKEN SIMILAR VIEW IN THE FOLLOWING CASES : (I). C BENCH IN ITA NO. 3886/AHD./2008, ITO VS. M/S. EMPIRE TRADE CENTRE. (II). B BENCH IN ITA NO.336/AHD./2006 IN THE CASE OF BHAGYODAYA RESTAURANT VS. ITO (III). C BENCH IN ITA NO.176/AHD./2001 IN THE CAS E OF DCIT VS. ASHIRVAD CONSTRUCTION. (IV). C BENCH IN ITA NO. 1394/AHD./1987 IN THE CA SE OF DURGAJI CONSTRUCTION CO., 39 TTJ 159. 3 IN VIEW OF THE AFORESAID DECISIONS, WE ARE OF THE V IEW THAT THE ADDITION U/S. 68 IN THIS REGARD CANNOT BE MADE IN THE HANDS OF THE FIRM. WE, ACCORD INGLY, DISMISS THE GROUND NO. 1 TAKEN BY THE REVENUE. 4. GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF RS.8,70,000/-. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSING OFFICER HAS M ADE ADDITION U/S. 68 IN RESPECT OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM FAMILY MEMBERS OF THE PARTNERS DURING THE YEAR EVEN THOUGH THE ASSESSEE FIRM HAS RECEIVED AGGREGATE DEPOSITS OF RS .14,30,000/- DURING THE YEAR THROUGH CHEQUES FROM CLOSE RELATIVES NAMELY SMT. GEETA GUPTA, RCUCH I GUPTA, ANAMIKA GUPTA, MANJU GUPTA SHARDA DEVI GUPTA. THE ASSESSING OFFICER NOTED THAT IN RESPECT OF THE DEPOSITS OF RS.8,70,000/- RECEIVED FROM THESE PARTIES, THESE PARTIES HAVE DUL Y DEPOSITED THE CASH IN THEIR RESPECTIVE ACCOUNTS JUST BEFORE GIVING THE CHEQUES TO THE ASSE SSEE. THE DETAILS OF THESE AMOUNTS ARE GIVEN AS UNDER : S.NO. NAME OF THE PERSON DATE OF CREDIT AMOUNT CREDITED IN SAVING BANK A/C IN CASH DATE OF CREDIT AMOUNT CREDITED IN THE FIRM, M/S. SHARDA OIL MILLS BY CHEQUE 1. GEETA GUPTA 16.5.05 01.8.05 150000 20000 17.5.05 21.9.05 150000 50000 2. RUCHI GUPTA 16.5.05 01.8.05 150000 20000 17.5.05 21.9.05 150000 50000 3. ANAMIKA GUPTA 19.5.05 01.8.05 200000 50000 19.5.05 19.9.05 200000 50000 4. MANJU GUPTA 16.5.05 01.8.05 150000 30000 17.5.05 19.9.05 150000 30000 5. SHARDA DEVI GUPTA 16.5.05 100000 17.5.05 100000 4 THE ASSESSING OFFICER ALSO NOTED THAT IN THE BANK A CCOUNT OF THESE PARTIES, THERE IS NOT MUCH TRANSACTION EXCEPT ONE OR TWO TRANSACTIONS. THE CAS H HAS BEEN DEPOSITED IN THE ACCOUNTS OF THE FAMILY MEMBERS ON THE SAME DAY EXCEPT ONE ENTRY IN CASE OF ANAMIKA GUPTA, WHICH IS JUST THREE DAYS LATER. ON THE NEXT DAY, THE CHEQUES HAVE BEEN ISSUED FOR CREDIT OF THE SIMILAR AMOUNT IN THE ACCOUNT OF THE FIRM. THE ASSESSING OFFICER ALSO NOT ED FROM THE RETURN FILED BY THESE PERSONS THAT THESE PERSONS DID NOT HAVE ANY OTHER SOURCE OF INCO ME EXCEPT INCOME FROM INTEREST ETC. EVEN THE ASSESSEE DID NOT FURNISH ANY OTHER EVIDENCE FOR THE CASH INTRODUCED BY THE FAMILY MEMBERS OF THE FIRM. THE ASSESSING OFFICER, THEREFORE, WAS NOT SAT ISFIED ABOUT THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION TO THE EXTENT OF RS. 8,70,000/- AND ACCORDINGLY ADDED THE SAME IN THE INCOME OF THE ASSESSEE BY RELYING ON THE FOLLOW ING CASE LAWS : A. CIT VS. BIJU PATNAIK, 160 ITR 674 (SC) B. SUMATI DAYAL VS. CIT 214 ITR 801 (SC) C. NANAK CHANDRA LAXMAN DAS 140 ITR 151 (ALLD.) D. SUNIL SIDHARTH BHAI 156 ITR 509 (SC) E. WORKMEN OF ASSOCIATED RUBBER INDUSTRY LTD 157 ITR 7 7(SC) THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE ADDITION IN VIEW OF THE OBSERVATION MADE IN PARA 3.5 OF THE IMPUGNED ORDER AND ESPECIALLY THE FACT THAT THE CASH DEPOSITED IN THE BANK ACCOUNT OF MANJU GUPTA, SHARD A DEVI GUPTA, ANAMIKA GUPTA AND RUCHI GUPTA WAS DULY SURRENDERED BY THEM RESPECTIVELY IN THEIR INCOME-TAX RETURNS AND SHOWN AS THEIR INCOME IN THE ASSESSMENT YEAR 2006-07. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. SECTION 68 LAYS DOWN THE RULE OF EVIDENCE. ACCORDING TO SECTION 68, IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION 5 ABOUT THE NATURE AND SOURCE OF DEPOSIT OR THE EXPLA NATION OFFERED BY HIM IS NOT SATISFACTORY IN THE OPINION OF THE ASSESSING OFFICER, THE SUM SO CREDIT ED MAY BE CHARGED TO INCOME TAX AS INCOME OF THAT PREVIOUS YEAR. THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY, CREDITWORTHINESS OF CREDITOR AND THE GENUINENESS OF TRANSACTION. IN THE CASE BEF ORE US, THE ASSESSEE HAS DULY SUBMITTED THE CONFIRMATION OF ALL THE DEPOSITORS, THEIR PAN, COPI ES OF THEIR INCOME TAX RETURNS ALONGWITH COMPUTATION STATEMENTS, COPY OF THEIR BANK ACCOUNT ETC. IN THE CONFIRMATION, EACH OF THE DEPOSITORS HAS DULY EXPLAINED THAT THE CASH DEPOSIT ED IN THE BANK HAS DULY BEEN SHOWN AS THEIR INCOME IN THEIR RESPECTIVE RETURN. THE CONFIRMATION SO MADE IS DULY CORROBORATED BY THE COMPUTATION STATEMENT, THE COPIES OF WHICH ARE AVAI LABLE ON THE PAPER BOOK WHICH WE HAVE PERUSED. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DULY DISCHARGED HIS BURDEN OF PROOF BY PROVING ALL THE INGREDIENTS, I.E ., THE IDENTITY, CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF THE TRANSACTIONS. IN VIEW OF THESE F ACTS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) AND THE CIT(A) HA S RIGHTLY DELETED THE ADDITION. WE, THEREFORE, CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE AND DISMI SS THE GROUND TAKEN BY THE REVENUE. 6. THE THIRD GROUND RELATE TO THE DELETION OF ADDIT ION OF RS.1,57,511/-. IN OUR OPINION THIS GROUND TAKEN BY THE REVENUE IS INFRUCTUOUS. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A). IN THE ASSESSMENT ORDER , WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED OUT OF MISCELLANEOUS EXPENSES INCLUDING BROKERAGE AND COMMISSION A SUM OF RS.74,936/- AND OUT OF TELEPHONE EXPENSES A SUM OF RS.21,677/-. THE DISALLOWANCE OF RS.21,677/- WAS DULY CONFIRMED BY THE CIT(A) WHILE DISALLOWANCE OF RS.74,936/- WAS DELETED BY THE CIT(A). WE ASKED THE LEARNED DR TO POINT OUT FR OM WHERE THIS GROUND HAS ARISEN. NEITHER THE LEARNED DR NOR THE LEARNED AR COULD EXPLAIN US FROM WHERE THE GROUND RELATING TO DELETION OF 6 ADDITION OF RS.1,57,511/- HAS ARISEN. UNDER THESE F ACTS, WE ARE OF THE OPINION THAT THE GROUND OF REVENUE IS INFRUCTUOUS AND IS, THEREFORE, DISMISSED AS SUCH. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 31.05.11 . SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST MAY, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY