The ITO,Vapi Ward-4, Nani Daman V. M/s. Sidharth Corporation, Nani Daman

ITA 752/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2059 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: TUSHAR P HIMANI
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALAN KAMONY, AM) ITA NO.752/AHD/2010: A. Y.: 2005-06 THE INCOME TAX OFFICER, VAPI WARD-4, DAMAN VS M/S. SIDDARTH CORPORATION, PLOT NO.27, HINGRAJ INDUSTRIAL ESTATE, DABHEL, NANI DAMAN P. A. NO. AAOFS 1257R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAHUL KUMAR, SR. DR RESPONDENT BY SHRI TUSHAR P. HIMANI, AR DATE OF HEARING: 06-03-2013 DATE OF PRONOUNCEMENT: 10-05-2013 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A )- VALSAD DATED 12-10-2009, FOR THE ASSESSMENT YEAR 2005-06 IN APPE AL NO. CIT(A)/VLS/200/07-08, PASSED U/S 250 READ WITH SECT ION 144 OF THE IT ACT. 2. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEA L WHEREIN GROUNDS NO. 3 AND 4 ARE GENERAL IN NATURE AND DO NO T SURVIVE FOR ADJUDICATION. THE LONE SURVIVING GROUNDS NO.1 AND 2 OF THE APPEAL ARE REPRODUCED HEREIN BELOW FOR REFERENCE. (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DISALLOWAN CE U/S. 40A(IA) ITA NO.752/A/2010(AY 2005-06) ITO, VAPI, W-4, VALSAD VS M/S. SIDDHARTH CORPORATIO N 2 OF RS.7,10,874/-, AS THE ASSESSEE HAS SUBMITTED DOC UMENTS AND EXPLANATION BEFORE THE HONBLE CIT(A) AS ADDITIONAL EVIDENCES WHICH WERE NOT PRODUCED DURING THE ASSESSMENT PROCE EDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CAPITAL IN TRODUCED BY THE PARTNERS AS THE CREDIT WORTHINESS AND GENUINENESS O F CASH INTRODUCTION IS NOT PROVED BY THE ASSESSEE. THE ASS ESSEE HAS SUBMITTED DOCUMENTS AND EXPLANATION BEFORE THE HON BLE CIT(A) AS ADDITIONAL EVIDENCES WHICH WERE NOT PRODUCED DUR ING THE ASSESSMENT PROCEEDINGS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN SSI UNIT SITUATED IN DAMAN WHICH IS BACKWARD DISTRICT DECLAR ED U/S 80 IB OF THE IT ACT FILED ITS RETURN OF INCOME ON 29-10-2005 FOR TH E ASSESSMENT YEAR 2005-06 DECLARING TOTAL INCOME OF RS.1,42,000/- ALO NG WITH AUDITED ACCOUNTS AND AUDIT REPORT IN FORM NO.3CB, 3CD AND 1 0CCB WHEREIN THE ASSESSEE CLAIMED DEDUCTION OF RS.44,184 U/S 80 IB O F THE ACT. THE CASE WAS SELECTED FOR SCRUTINY U/S 143(2) OF THE ACT AND ASSESSMENT ORDER U/S 144 OF THE ACT WAS PASSED BY THE LEARNED AO ON 30-1 1-2007 DETERMINING THE INCOME OF THE ASSESSEE AT RS.32,27, 540/- WHEREIN ALONG WITH CERTAIN ADDITIONS, ADDITION OF RS.9,95,622/- WAS MADE FOR NOT DEDUCTING TAX AT SOURCE AND ANOTHER ADDITION OF RS. 16,00,000/- WAS MADE BY THE LEARNED AO U/S 68 OF THE ACT BY DISALLO WING ASSESSEES CLAIM OF CAPITAL INTRODUCTION BY A PARTNER. THE LEA RNED AO ON SCRUTINY OF THE BOOKS OF ACCOUNTS AND AUDIT REPORT OBSERVED THA T THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION MADE TOTAL CONT RACT PAYMENTS OF RS.38,54,541/- UNDER THE FOLLOWING HEADS: ITA NO.752/A/2010(AY 2005-06) ITO, VAPI, W-4, VALSAD VS M/S. SIDDHARTH CORPORATIO N 3 HEAD AMOUNT (IN RS.) PROCESSING CHARGES 18,72,786 FREIGHT INWARD 1,09,507 FREIGHT OUTWARD 86,762 PROFESSIOINAL CHARGES 9,14,595 SECURITY CHARGES 57,617 REPAIRS & MAINTENANCE 8,13,274 TOTAL 38,54,541 THE LEARNED AO FURTHER OBSERVED THAT OUT OF THE ABO VE CONTRACT PAYMENT THE ASSESSEE HAD PAID TDS ON CONTRACT EXPENSES OF R S.28,58,919/- AND PAID TO THE GOVERNMENT ACCOUNT WITHIN STIPULATED PE RIOD BUT DID NOT PAY TDS ON THE BALANCE PAYMENT OF RS.9,95,622/-. THE L EARNED AO, FOR THE ABOVE MENTIONED REASON ADDED THIS AMOUNT OF RS.9,95 ,622/- TO THE INCOME OF THE ASSESSEE INVOKING SECTION 40(A) (IA) OF THE ACT. 3.1 THE ASSESSEE CARRIED THE MATTER BEFORE THE LEAR NED CIT(A) AND THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE MADE BY THE LEARNED AO OF RS.9,95,622/- TO RS.2,84,748/- BY ALLOWING PART REL IEF OF RS.7,10,874/- BY OBSERVING IN PARA 9 OF HIS ORDER AS UNDER: 9. DECISION: THE APPELLANT HAS FURNISHED THE RECONCILIATION STATEMENT RELATING TO THE AMOUNT WHERE TDS APPLICAB LE AND TDS NOT APPLICABLE. THE DIFFERENCE WORKED OUT TO BE RS. 2,84,748/- (RS.38,54,541 7,10,874/-). THEREFORE, THE AO IS D IRECTED TO DISALLOW ONLY RS.2,84,748/-. ACCORDINGLY THE APPELL ANT GETS PART RELIEF IN THIS GROUND OF APPEAL. ITA NO.752/A/2010(AY 2005-06) ITO, VAPI, W-4, VALSAD VS M/S. SIDDHARTH CORPORATIO N 4 4. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D AO AND PRAYED HIS ORDER MAY BE SUSTAINED. 5. THE LEARNED AR RELIED ON THE ORDER OF THE LEARNE D CIT(A) AND SUBMITTED THAT THE LEARNED CIT(A) HAS ARRIVED AT HI S DECISION AFTER EXAMINING THE BOOKS OF ACCOUNT AND RELEVANT RECORDS PRODUCED BY THE ASSESSEE BEFORE HIM AND, THEREFORE, PLEADED HIS DEC ISION MAY BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. IT IS APPARANT THAT THE LEARNE D CIT(A) HAD EXAMINED THE RECORDS PRODUCED BY THE ASSESSEE AND SUSTAINED THE ADDITION ONLY FOR RS.2,84,748/- BY VIRTUE OF SECTION 40 (A) (IA) OF THE ACT. THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDE R AT THIS STAGE. HENCE, WE HEREBY CONFIRM HIS ORDER. THUS, GROUND NO.1 RAIS ED BY THE REVENUE IS DISMISSED. 7. WITH REGARD TO GROUND NO.2 RELATING TO THE ISSUE OF CAPITAL INTRODUCTION, THE LEARNED AO ON PERUSAL OF THE BOOK S OF ACCOUNTS OF THE ASSESSEE FIRM NOTICED THAT ONE OF THE PARTNERS SHRI RAVINDRA JAIN HAD INTRODUCED CAPITAL AMOUNTING TO RS.16,00,000/- DURI NG THE RELEVANT ASSESSMENT YEAR. THE LEARNED AO QUERIED THE ASSESSE E FOR THE SOURCE OF INTRODUCTION OF CAPITAL OF RS.16,00,000/-. THE A SSESSEE DID NOT FURNISH ANY INFORMATION WITH RESPECT TO SOURCE OF SUCH CAPI TAL INTRODUCTION. THEREFORE, THE LEARNED AO TREATED THIS AMOUNT OF RS .16,00,000/- AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND ADDE D THE SAME TO THE INCOME OF THE ASSESSEE. 8. WHEN THE MATTER CROPPED UP BEFORE THE LEARNED CI T(A), THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. T HE RELEVANT PORTION OF HIS ORDER IS REPRODUCED HEREIN UNDER FOR REFEREN CE: ITA NO.752/A/2010(AY 2005-06) ITO, VAPI, W-4, VALSAD VS M/S. SIDDHARTH CORPORATIO N 5 GROUND NO.7. DURING THE APPELLATE PROCEEDINGS THE LD. AR RAISED ADDITIONAL GROUND THAT THE AO ERRED IN MAKING ADDIT ION OF RS.16.00 LAKHS U/S. 68 OF THE IT ACT AS UNEXPLAINED CASH CRE DITS. THE LD. AR SUBMITTED THE DETAILS OF CAPITAL INTRODUCED BY THE PARTNERS. THE BANK STATEMENTS OF THE PARTNERS WERE ALSO FILED. IN THIS CIRCUMSTANCE IT IS APPROPRIATE TO HOLD THAT THE ADD ITION MADE BY THE AO IS NOT SUSTAINABLE AND HENCE THIS GROUND OF APPE AL IS ALLOWED. 9. THE LEARNED DR RELIED ON THE ORDER OF THE LEARNE D AO WHILE AS THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT(A ) AND ALSO RELIED UPON THE DECISION OF ITAT AHMEDABAD A BENCH IN TH E CASE OF M/S. RAMESH INDUSTRIES IN ITA NO.3131 AND 3148/AHD/2008 FOR THE ASSESSMENT YEAR 2005-06 ORDER DATED 21-01-2011. 10. WE HAVE HEARD THE RIVAL SUBMISSION, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CAREFULLY CONSIDERED THE MATE RIALS PRODUCED BEFORE US. ON PERUSING THE PAPER BOOK PAGE NO.17, IT IS AP PARENT THAT THE CAPITAL WAS INTRODUCED INTO THE ASSESSEE FIRM BY AC COUNT PAYEE CHEQUE DRAWN ON HDFC BANK. FURTHER, ALL THE PARTICULARS OF SUCH CAPITAL INTRODUCED WERE EXPLAINED BEFORE THE LEARNED CIT(A) , WHO AFTER EXAMINING THE SAME ARRIVED AT A CONCLUSION THAT SUC H SOURCE OF INTRODUCTION OF CAPITAL IS EXPLAINED AND, THEREFOR E, DELETED THE SAME. FURTHER, IN A SIMILAR SITUATION, THE AHMEDABAD BENC H OF THE TRIBUNAL IN THE CASE M/S. RAMESH INDUSTRIES, SUPRA, HAD HELD TH AT WHEN A PARTNER INTRODUCES CAPITAL INTO A FIRM, ADDITION U/S 68 OF THE ACT CANNOT BE MADE IN THE CASE OF THE FIRM WHEN THE PARTICULARS OF THE PARTNER ARE BEFORE THE REVENUE AND SUCH ADDITION CAN BE MADE ONLY IN THE H ANDS OF THE PARTNER, IF THE SOURCE OF SUCH CAPITAL IS NOT EXPLAINED. IN THESE CIRCUMSTANCES, WE DO NOT FIND IT NECESSARY TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) AND, THEREFORE, WE CONFIRM THE SAME. THUS, GROUND N O.2 RAISED BY THE REVENUE IS ALSO DISMISSED. ITA NO.752/A/2010(AY 2005-06) ITO, VAPI, W-4, VALSAD VS M/S. SIDDHARTH CORPORATIO N 6 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/05/2013. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 06-03-13 /07-05-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: