M/s. Raj Corporation, Ahmedabad V. The Income tax Officer,Ward-9(3), Ahmedabad

ITA 77/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76836 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO. 77/AHD/2011 (ASSESSMENT YE AR: 2007-08) M/S. RAJ CORPORATION PLOT NO. 152, SURALIYA ESTATE OPP. JAIN MILAN SOCIETY AMRAIWADI, BAGHE FIRDOSH, AHMEDABAD V/S THE I.T.O WARD ((3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAJFR 7615K APPELLANT BY : NONE RESPONDENT BY : SHRI J.P. JHANGID, SR. D.R. ( )/ ORDER DATE OF HEARING : 09-06-2014 DATE OF PRONOUNCEMENT : 13 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-XV, AHMEDABAD DATED 16.11.2010 FOR A.Y. 2007-08. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, HOWEVER A N ADJOURNMENT APPLICATION WAS SUBMITTED BUT THE SAME WAS REJECTED AND THE CASE WAS DECIDED ON MERITS EX-PARTE QUA THE ASSESSEE. ITA NO 77/AHD/2011 . A.Y. 2007- 08 2 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE BUSI NESS OF DEVELOPERS CONTRACTORS, BUILDING ORGANIZERS. ASSESSEE FILED IT S RETURN OF INCOME FOR A.Y. 2007-08 ON 01.10.2007 DECLARING TOTAL INCOME O F RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESS MENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 29.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 31,00,000/-. AGGRIEVED BY THE ORD ER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 16.11.2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 5. THE GROUNDS RAISED BY ASSESSEE READS AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS TO CON FIRM THE ADDITION OF RS. 31,00,000/- U/S. 68 BY THE LEARNED A.O. 2. THE LEARNED CIT (A) ERRED ON FACTS IN STATING THAT THE PARTNERS OF THE APPELLANT FIRM ARE THE SAME INDIVIDUALS OF THE FIRM WHO HAS GIVEN LOAN TO THE A PPELLANT FIRM. 3. THE LEARNED CIT (A) ERRED ON IN LAW IN VERIFYING TH E SOURCE OF THE SOURCE IN CASE OF UNSECURED LOANS RECEIVED BY THE APPELLANT FIRM AND MAKING ADD ITION IN THE HANDS OF THE APPELLANT FIRM. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DE LETE, CHANGE OR MODIFY ANY OR ALL GROUNDS OF APPEALS BEFORE OR AT THE TIME OF THE HEARING. THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO ADDITI ON OF RS. 31,00,000/- UNDER SECTION 68 OF THE ACT. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD TAKEN UNSECURED LOAN FROM VARIOUS PARTIES. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE CLAIM BY FURNISHING CONFIRMATIO NS, PROOF OF IDENTITY AND CREDITWORTHINESS OF THE TRANSACTIONS. IN THE CA SE OF KESHA ITA NO 77/AHD/2011 . A.Y. 2007- 08 3 CONSTRUCTION, ASSESSEE PRODUCED PROPRIETOR SHRI RON AK TRIVEDI AND HIS STATEMENT WAS RECORDED U/S. 131 OF THE ACT WHEREIN HE STATED THAT HE HAS NOT FILED HIS RETURN OF INCOME SINCE LONG AND HE WA S ALSO UNABLE TO PROVE THE SOURCE OF INCOME FROM WHICH HE MADE LOAN TO ASS ESSEE OF RS. 31,00,000/- A.O THEREFORE CONCLUDED THAT THE CREDIT WORTHINESS OF THE LENDER HAS NOT BEEN PROVED UNDER SECTION 68 OF THE ACT. HE FURTHER CONCLUDED THAT ASSESSEE INTRODUCED ITS UNEXPLAINED INCOME IN THE BOGUS NAME. HE THEREFORE ADDED THE UNSECURED LOAN OF RS. 31,00,000/- AS INCOME UNDER SECTION 68 OF THE ACT. AGGRIEVED BY T HE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) C ONFIRMED THE ORDER OF A.O BY HOLDING AS UNDER:- 9. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEEN SPECIALLY FROM THE REPLY OF THE BANK THAT THAT BAN K ACCOUNT OF KESHA CONSTRUCTION WAS OPENED BY THE TWO PARTNERS OF THE APPELLANT FIRM NAMELY : SHRI HARSUKH NANJIBHAI PANSURIA AND SHRI RONAK D TRIVEDI . IT IS ALSO SEEN THAT THE FIRM KESHA CONSTRUCTION CONSISTS OF THE SAME PARTNERS AS THE A PPELLANT FIRM RAJ CORPORATION. THERE ARE FOUR PARTNERS IN THE FIRM RAJ CORPORATION AS UNDER: I. SHRI HARSUKHBHAI N PANSURIA II. SHRI PARSHOTTAMBHAI N PANSURIA III. SHRI RONAKBHAI D TRIVEDI IV. GUNAWANTIBEN D TRIVEDI AND EXACTLY THE SAME INDIVIDUALS ARE PARTNERS IN KE SHA CONSTRUCTION NOT LESS NOT MORE. HOW CAN SAME PERSONS GIVE LOAN TO SAME PERSONS ? FURTHER THE REP LY OF THE BANK SHOWS THAT SAME PERSONS ARE MANAGING / ROTATING SAME MONEY IN SAME DENOMINATION AND ROUTING IT THROUGH BANKING CHANNELS TO GIVE IT COLOUR OF AUTHENTICITY OR MAKE IT LOOK LIKE GENUINE LOAN. TO TOP IT ALL DURING THE COURSE OF PRESENT APPELLATE PROCEEDINGS A PLEA HAS BEEN RAISE D THAT THE ITO DID NOT ALLOW THE APPELLANT TO CROSS EXAMINE SHRI RONAK D TRIVEDI. I FIND THIS AMUSING T HAT THE APPELLANT WISHES TO CROSS EXAMINE ITS OWN PARTNER - SHRI RONAK D TRIVEDI WHO IS A PARTNER IN KESHA CON STRUCTION ALSO AND APPEARED BEFORE THE ITO ON BEHALF OF KESHA CONSTRUCTION THE CREDITOR IN RESPONSE TO THE SUMMONS ISSUED TO KESHA CONSTRUCTION. KESHA CONSTRUCTION THUS EMERGES AS ANOTHER, NAME IN WHICH THE SAME FOUR PARTNERS OPERATE IN THE SAME LINE OF BUSINESS THAT IS REAL ESTATE A ND CONSTRUCTION . BEFORE THE AO SHRI RONAK D TRIVEDI INFORMED.THAT HE WAS NOT FILING HIS RETURNS AND NEITHER COULD HE INFORM ABOUT THE SOURCE OF LO AN EXTENDED OF RS.31,00,000 TO RAJ CORPORATION. KESHA CONSTRUCTION INFORMS THAT IT HAS RECEIVED THE AMOUNTS FROM KESHA DEVELOPERS. INTERESTINGLY KESHA CONSTRUCTION IS LEFT WITH VERY MEAGER BALANCES ITA NO 77/AHD/2011 . A.Y. 2007- 08 4 AFTER LENDING THE AMOUNTS TO RAJ CORPORATION. POOR KESHA CONSTRUCTION LENDS THE SAME AMOUNTS IT RECEIVES FROM KESHA DEVELOPERS. AND KESHA DEVELOPER S ON INQUIRIES WAS FOUND NOT EXISTING IN THE PAN DATA BASE OF THE INCOME TAX DEPARTMENT. THUS THE CREDIT WORTHINESS OF KESHA CONSTRUCTION IS NOT PROVED AN 0 D NEITHER GENUINENESS OF THE TRANSACTION BECAUSE SA ME SET OF INDIVIDUALS IS LENDING TO SAME SET OF INDIVIDUALS. AND THE BANK ACCOUNT SHOWS VERY MEAGER BALANCE BEFORE AND AFTER LENDING. IMMEDIATELY BEFORE LENDING SAME AMOUNT IS RECEIVED THROUGH BANKING CHANNEL FROM A DUBIOUS ENTITY AND AFTER LENDING AGAIN A MEAGER BALANCE IS LEFT IN THE BANK ACCOUNT OF KESHA CONSTRUCTION WHICH HAS EXACTLY THE SAME FOUR INDIVIDUALS AS PARTNERS IN TH E SAME LINE OF CONSTRUCTION AND REAL ESTATE BUSINES S AS THE APPELLANT FIRM. THUS IN THE PRESENT MATRIX O F FACTS IN MY VIEW THE GENUINENESS AND CREDIT WORTHINESS OF THE CREDITOR KESHA CONSTRUCTION I S NOT ESTABLISHED AND THE ADDITION MADE U /S.68 OF RS.31,00,000 IS UPHELD. 7. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 8. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND CIT(A). 9. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE UPHOLDING THE ADDITION HAS NOTED THAT BEFORE A.O, SHRI RONAK TRIVEDI THE PARTNER OF KESHA DEVELOPERS HAS I NFORMED THAT HE WAS NOT FILLING HIS RETURN OF INCOME AND NEITHER COULD HE INFORM ABOUT THE SOURCE OF LOAN OF RS. 31,00,000/- EXTENDED TO THE A SSESSEE. CIT(A) HAS FURTHER NOTED THAT KESHA CONSTRUCTION WAS LEFT WITH VERY MEAGER BALANCES AFTER LENDING THE AMOUNT TO THE ASSESSEE AND KESHA DEVELOPER WAS NOT FOUND EXISTING IN THE PAN DATA BASE OF THE INCOME-T AX DEPARTMENT. CIT(A) HAS ALSO NOTED THAT KESHA CONSTRUCTION AND T HE ASSESSEE FIRM WERE HAVING SAME SET AS PARTNERS. BEFORE US, NOTHI NG HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO CONTRADICT THE FINDING S OF A.O AND CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE O RDER OF CIT(A) AND THUS CONFIRM THE ORDER OF CIT(A). IN THE RESULT, TH E GROUND OF ASSESSEE IS DISMISSED. ITA NO 77/AHD/2011 . A.Y. 2007- 08 5 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 06 - 2014. SD/- SD/- (D.K. TYAGI) (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