Messrs Shiv Shankar Expeller Industries, Kolkata V. D.C.I.T Cir - 40,kolkata, Kolkata

ITA 749/KOL/2013

• Counselvise Citation: 74923514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 09-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU
• Assessee Lawyers: N O N E
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 68; 69

Judgement Text

I.T.A. NO.: 749/ KOL. / 2013 ASSESSMENT YEAR : 2005-2006 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER I.T.A. NO.: 749/ KOL./ 2013 ASSESSMENT YEAR : 2005-2006 M/S. SHIV SHANKAR EXPELLER INDUSTRIES,............. ........APPELLANT SWAMI VIVEKANANDA ROAD, KOLKATA-700 157 [PAN : AAKFS 6682 G] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,............... ...RESPONDENT CIRCLE-40, KOLKATA 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: N O N E, FOR THE APPELLANT SHRI DAVID Z. CHAWNGTHU, ADDL.CIT, SR. D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : AUGUST 19, 2014 DATE OF PRONOUNCING THE ORDER : 2 ND SEPTEMBER, 2014 O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS ARISING OUT O F THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA I N APPEAL NO. 771/XII/CIR-40/07-08 DATED 08.11.2012 FOR THE ASSES SMENT YEAR 2005-06. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF LD. CIT(APPEALS) CONFIRMING THE ADDITION MADE BY THE AS SESSING OFFICER ON ACCOUNT OF CAPITAL INTRODUCTION BY THE PARTNER IN T HE FIRMS HAND AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 3. I HAVE HEARD LD. SR. D.R. AND GONE THROUGH THE F ACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE PARTNER OF THE ASSESSEE-FIRM SHRI I.T.A. NO.: 749/ KOL. / 2013 ASSESSMENT YEAR : 2005-2006 PAGE 2 OF 5 VINAY GUPTA INTRODUCED A SUM OF RS.62,000/- AS CAPI TAL IN THE FIRM. SHRI VINAY GUPTA IS AN INCOME-TAX ASSESSEE AND HE HAS WI THDRAWN CASH AMOUNT FROM HIS INDIVIDUAL SOURCES. THE ASSESSING OFFICER REQUIRED THE ASSESSEE- FIRM TO EXPLAIN THE CASH CREDIT, I.E. CAPITAL INTRO DUCED BY THE PARTNER AT RS.62,000/-. THE ASSESSING OFFICER WAS NOT CONVINCE D BY THE REPLY OF THE ASSESSEE AND HE MADE ADDITION OF CAPITAL INTRODUCTI ON BY THE PARTNER AT RS.62,000/- IN THE RETURNED INCOME OF THE ASSESSEE BY TREATING THE UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(APPEALS), WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. I FIND FROM THE FACTS OF THE CASE THAT THIS IS M ERELY A CAPITAL INTRODUCTION BY THE PARTNER SHRI VINAY GUPTA IN THE FIRM FOR AN AMOUNT OF RS.62,000/-. THERE IS NO CHARGE BY THE REVENUE THAT THE FIRM HAS GENERATED OWN UNACCOUNTED CASH AND INTRODUCED THE S AME THROUGH THE PARTNER. IN SUCH CIRCUMSTANCES, I FIND THAT THE ISS UE IS COVERED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS.- PANKAJ DYESTUFF INDUSTRIES IN I.T. REFERENCE NO. 241 OF 19 93 DATED 06.07.2005, WHEREIN IT WAS OBSERVED AS UNDER:- 13. APPLYING THE AFORESAID PRINCIPLES TO THE FACTS OF THE PRESENT CASE, IT IS APPARENT THAT THE ASSESSEE HAD FURNISHED THE DETAILS, WHICH WOULD DISCHARGE THE ONUS WHICH L AY ON THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THA T THE PARTNERS OF THE ASSESSEE FIRM ARE FICTITIOUS. THE I NCOME TAX OFFICER HAS NOT DISPUTED THAT THE CREDITS IN THE AC COUNTS OF THE PARTNERS WERE NOT DEPOSITS FROM THE PARTNERS. MOREOVER, IT IS AN ADMITTED POSITION THAT THIS WAS THE SECOND YEAR OF THE FIRM, AND THAT IT WAS RUNNING IN LOSS. IT IS TRUE THAT THE INCOME TAX OFFICE DID NOT ACCEPT T HE EXPLANATION GIVEN ON BEHALF OF THE ASSESSEE IN RESP ECT OF THE NEW DEPOSITS OR CASH CREDITS IN THE ACCOUNTS OF THE PARTNERS. THE MERE NON-ACCEPTANCE OF THAT EXPLANATI ON DOES NOT, HOWEVER, PROVIDE MATERIAL FOR FINDING THA T THE SAID SUM REPRESENTED INCOME OF THE ASSESSEE-FIRM. A S HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF JAISWAL MOTOR FINANCE (SUPRA), IN THE ABSENCE OF ANY MATERIAL TO INDICATE I.T.A. NO.: 749/ KOL. / 2013 ASSESSMENT YEAR : 2005-2006 PAGE 3 OF 5 THAT THERE WERE PROFITS OF THE FIRM, THE AMOUNT CRE DITED TO THE PARTNERS ACCOUNTS COULD NOT BE ASSESSED IN THE HANDS OF THE FIRM. ONCE THE PARTNERS HAVE OWNED THAT THE MON IES DEPOSITED IN THEIR ACCOUNTS ARE THEIR OWN, THE INCO ME TAX OFFICER IS ENTITLED TO AND MAY PROCEED AGAINST THE PARTNERS AND ASSESSEE THE SAME IN THEIR HANDS, IF THEIR EXPL ANATION IS NOT FOUND SATISFACTORY. SIMILARLY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS.- JAISWAL MOTOR FINANCE REPORTED IN (1983) 141 ITR 706 ALSO CONSIDERED THE SIMILAR ISSUE AND HELD THAT IN CASE THE CAPITAL IS INTRODUCED BY THE PARTNER THAT CAN BE ADDED ONLY IN THE HANDS OF THE PARTNER AND NOT IN THE HANDS OF THE FIRM. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF JAISWAL MOTOR FINANCE (SUPRA) HAS OBSERVED AS UNDER:- 27. WE HAVE HEARD BOTH THE PARTIES. THE IMPUGNED ADDITION HAS BEEN MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN THE N ATURE AND SOURCE OF IMPUGNED INVESTMENT. IT IS HOWEVER NOT TH E CASE OF THE AO THAT THE IMPUGNED INVESTMENT HAS NOT BEEN RE CORDED IN THE BOOKS TO MAKE THE INVESTMENTS. UNDER SECTION 69, INVESTMENTS, WHICH ARE NOT RECORDED BY THE ASSESSEE IN HIS BOOKS, CAN BE CONSIDERED NOR ADDITION IF THE ASSESS EE IS UNABLE TO SATISFACTORILY EXPLAIN THE NATURE AND SOU RCE OF INVESTMENT. THIS SECTION 69 COVERS ONLY THOSE INVES TMENTS WHICH ARE NOT RECORDED IN THE BOOKS. SIMILARLY, AMO UNT OF INVESTMENTS, ETC. NOT FULLY DISCLOSED IN BOOKS OF A CCOUNT CAN BE CONSIDERED FOR ADDITION U/S. 69B, IF THE ASSESSE E IS UNABLE TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF INVESTMENTS DECLARED IF, THE BOOKS CANNOT BE TREATE D AS UNEXPLAINED UNLESS A FINDING IS RECORDED THAT INVES TMENTS HAVE EITHER NOT BEEN FULLY DECLARED IN THE BOOKS. I N THE ABSENCE OF SUCH A FINDING IN THE ASSESSMENT ORDER, THE ACTION OF THE AO IN TREATING AN INVESTMENT AS UNEXPLAINED CANNOT BE SUSTAINED. IN THIS VIEW OF THE MATTER, THE ORDER OF THE CIT(A) DELETED THE IMPUGNED ADDITION IS CONFIRMED. GROUND NO. 3 TAKEN BY THE DEPARTMENT IS DISMISSED. AS THE ISSUE IS SQUARELY COVERED FROM THE ABOVE LEG AL PROPOSITION LAID DOWN BY THE HONBLE GUJARAT HIGH COURT AND HONBLE ALLAHABAD HIGH COURT, RESPECTFULLY FOLLOWING THE SAME I DELETE THE ADDITION AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. I.T.A. NO.: 749/ KOL. / 2013 ASSESSMENT YEAR : 2005-2006 PAGE 4 OF 5 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF LD. CIT(APPEALS) CONFIRMING THE ESTIMATED EXPENSES ON A CCOUNT OF CARRIAGE OUTWARDS, GENERAL CHARGES AND REPAIRS AND MAINTENAN CE AT RS.14,124/-. 7. I HAVE HEARD LD. SR. D.R. AND GONE THROUGH THE F ACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE ASSESSIN G OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED FROM THE PRO FIT & LOSS A/C. OF THE ASSESSEE THAT IT HAS DEBITED A SUM OF RS.75,181/- U NDER THE HEAD CARRIAGE OUTWARDS, RS.26,571/- UNDER THE HEAD GE NERAL CHARGES AND THE SUM OF RS.39,484/- UNDER THE HEAD REPAIRS AND MAINTENANCE. IN THE ABSENCE OF EVIDENCE THE ASSESSING OFFICER MADE A DI SALLOWANCE OF 1/10 TH OF THESE EXPENSES. 8. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(APPEALS), WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFI CER. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE ME. 9. I FIND FROM THE ABOVE FACTS THAT EVEN NOW BEFORE ME THE ASSESSEE COULD NOT PRODUCE ANY SUPPORTING EVIDENCE IN RESPEC T OF THESE EXPENSES. HENCE, THE ASSESSING OFFICER HAS REASONABLY DISALLO WED 1/10 TH OF THE EXPENSES. I FIND THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS QUITE REASONABLE AND LD. CIT(APPEALS) HAS RIGHTLY C ONFIRMED THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DAY OF SEPTEMBER, 2014. SD/- MAHAVIR SINGH (JUDICIAL MEMBER) KOLKATA, THE 2 ND DAY OF SEPTEMBER, 2014 I.T.A. NO.: 749/ KOL. / 2013 ASSESSMENT YEAR : 2005-2006 PAGE 5 OF 5 COPIES TO : (1) M/S. SHIV SHANKAR EXPELLER INDUSTRIES, SWAMI VIVEKANANDA ROAD, KOLKATA-700 157 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-40, KOLKATA 18, RABINDRA SARANI, KOLKATA-700 001 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.