M/s. M.R. International, Ahmedabad V. The Income tax Officer,Ward-11(4), Ahmedabad

ITA 777/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94242 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Assessee Lawyers: R B RATHI
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 68; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM & ANIL CHATURVEDI, AM. ITA NO.777/AHD/2012 ASST. YEAR 2008-09 .M/S M. R. INTERNATIONAL, C/O R. B. RATHI & CO., 35, NEW CLOTH MARKET, AHMEDABAD. VS INCOME-TAX OFFICER, WARD-1(4), AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AAIFM 5245P APPELLANT BY SHRI R. B. RATHI, AR RESPONDENT BY SHRI D. C. MISHRA, SR.DR DATE OF HEARING: 11/8/2015 DATE OF PRONOUNCEMENT: 13/8/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD. CIT(A) DATED 20.01.2012 PASSED FOR AY 2008-09. 2. BEFORE ADVERTING TO THE GRIEVANCE OF THE ASSESSE E WE DEEM IT FIT TO TAKE NOTE OF THE BACK GROUND. THE ASSESSEE HAS F ILED ITS RETURN OF INCOME ON 29.9.2008 DECLARING TOTAL INCOME AT RS.68 ,193/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED ON THE A SSESSEE. ON ITA NO.777/AHD/2012 ASST. YEAR 2008-09 2 SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT THERE IS A CREDIT BALANCE APPEARING IN THE BALANCE SHEET AGAINST THE NAME OF M/S SUBODH ENTERPRISE. THE LD. AO OBSERVED THAT ASSESSE E HAS SHOWN OPENING BALANCE OF RS.3,86, 940/- AGAINST THIS ENTI TY AND ADDITION OF RS.2,31,000/- HAS BEEN MADE IN THIS YEAR. THE ASSES SEE HAS SHOWN PAYMENT OF INTEREST OF RS.73,499/-. THE AO INVITED EXPLANATION OF THE ASSESSEE AS TO WHY A FRESH LOAN RECEIVED FROM THIS CONCERN PLUS ALLEGED INTEREST PAYMENT SHOULD NOT BE DISALLOWED B ECAUSE IT CAME TO THE NOTICE OF THE AO THAT THIS CONCERN WAS IN THE B USINESS OF PROVIDING ACCOMMODATION ENTRIES. ACCORDING TO THE AO ASSESSEE DID NOT SUBMIT ANY PLAUSIBLE EXPLANATION, THEREFORE, HE MADE AN ADDITION OF RS.2,31,000/-UNDER SECTION 68 OF THE I.T. ACT, 1 961 ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. THE AO FURTHER DISALLOW ED A SUM OF RS.73,499/- REPRESENTING THE ALLEGED INTEREST PAID TO M/S SUBODH ENTERPRISE. THE AO HAS COMPUTED THE INCOME OF THE A SSESSEE AS UNDER :- TOTAL INCOME AS PER STATEMENT OF INCOME RS.68,193/- ADD: DISALLOWANCE/ADDITION ON ACCOUNT OF 1. OUT OF EXPENSES AS PER PARA NO.4 2. OUT OF VATVA EXPENSES AS PER PARA NO.5 3. ADDITION OF UNSECURED LOAN U/S 68 OF THE ACT, AS PER PARA NO.6 4. DISALLOWANCE OF INTEREST PAID TO M/S SUBODH ENTE RPRISE AS PER PARA NO.6 RS.7,747/- RS.28,040/- RS.2,31,000/- RS.73,499/- ITA NO.777/AHD/2012 ASST. YEAR 2008-09 3 TOTAL INCOME RS.4,08,479/- ROUNDED OFF RS.4,08,480/- DISSATISFIED WITH THE ADDITIONS, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE CIT(A). THE LD. FIRST APPELLATE A UTHORITY HAS DISMISSED THE APPEAL OF ASSESSEE VIDE ORDER DATED 5 TH OCTOBER, 2011. THIS ORDER HAS BEEN PASSED EX PARTE AND LD. FIRST A PPELLATE AUTHORITY HAS TOUCHED THE ISSUES SUMMARILY. THE ASSESSEE FILE D AN APPLICATION UNDER SECTION 154 OF THE ACT FOR RECALLING OF THE E X PARTE ORDER. IT PLEADED THAT SIMILAR ADDITION WAS MADE IN AY 2009-1 0 ALSO WHICH HAS BEEN DELETED BY THE CIT(A) VIDE ORDER DATED 21 ST DECEMBER, 2012. IT WAS PRAYED THAT EX PARTE ORDER BE RECALLED AND THE ISSUES BE DECIDED ON MERIT. THE LD. FIRST APPELLATE AUTHORITY HAS REJ ECTED THE MISCELLANEOUS APPLICATION OF THE ASSESSEE VIDE THE IMPUGNED ORDER. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE AO HAS RELIED UPON THE STATEMENT OF ONE SHRI RAMDIN ESH SHARMA RECORDED DURING THE COURSE OF SURVEY CONDUCTED IN T HE CASE OF SHRI LALIT S. SHARMA AND OTHERS. THE AO HAS NOT PROVIDE D ANY OPPORTUNITY TO CROSS EXAMINE THIS PERSON. HE FURTHE R RELIED ON THE ORDER OF ITAT IN THE CASE OF ITO VS. M/S MUKESHKUMA R & CO. IN ITA ITA NO.777/AHD/2012 ASST. YEAR 2008-09 4 NO.3270/AHD/2011 AS WELL AS THE ORDER OF CIT(A) DAT ED 21 ST DECEMBER, 2012 PASSED IN AY 2009-10 IN ASSESEES OW N CASE. 4. ON THE OTHER HAND, THE LD. DR CONTENDED THAT THE ASSESSEE CANNOT AGITATE THE ISSUES ON MERIT. BECAUSE THE APP EAL HAS BEEN FILED AGAINST THE ORDER DATED 20 TH JANUARY, 2012 ON AN APPLICATION FOR RECTIFICATION OF THE ORDER. THE ASSESSEE HAS TO POI NT OUT APPARENT ERROR IN THE ORDER OF CIT(A) WHICH IT MISERABLY FAI LED. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS. W E FIND THAT IN AY 2009-10 CREDIT BALANCE AGAINST THE NAME OF SUBOD H ENTERPRISE WAS AVAILABLE. THE LD. AO MADE ADDITION OF THE INTE REST PAID ON SUCH LOAN ON THE BASIS OF STATEMENT OF RAMDINESH SHARMA. BUT THE LD. CIT(A) HAS OBSERVED THAT LOAN TAKEN IN EARLIER YEAR AND SHOWN AS AN OPENING BALANCE CANNOT BE TREATED AS UNEXPLAINED CR EDITS OF THE ASSESSEE IN AY 2009-10. IN OTHER WORDS ALLEGED LOAN WAS TAKEN BY THE ASSESSEE IN EARLIER YEAR NAMELY IN 2007-08, WHI CH HAS BEEN SHOWN AS AN OPENING BALANCE IN 2009-10. THE LD. AO TREATED THIS LOAN AS UNEXPLAINED CREDIT IN 2009-10. THIS ACTION OF THE AO HAS NOT BEEN APPROVED BY THE LD. CIT(A). IN THAT CIRCUMSTAN CE THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE INTEREST PAYMEN T ON SUCH LOAN(S). ITA NO.777/AHD/2012 ASST. YEAR 2008-09 5 WE FIND IN THE PRESENT CASE, THE AO HAS MADE ADDITI ON OF THE LOAN TAKEN DURING THIS YEAR AND INTEREST HAS ALSO BEEN D ISALLOWED TOWARDS THAT AMOUNT WHICH HAS BEEN TAKEN THIS YEAR AND ASSE SSEE FAILED TO EXPLAIN THE SOURCE. IT IS THE ASSESSEE WHO HAS TO F ILE CONFIRMATION AND TO PRODUCE THE CREDITORS BEFORE THE AO. THEREFORE, THERE IS DISPARITY ON FACTS. THE ASSESSEE CANNOT DRAW ANY BENEFIT FROM THE ORDER FOR AY 2009-10 PASSED BY THE CIT(A). 6. THE OBSERVATIONS MADE BY US ARE IN RESPECT OF BR IEF BACKGROUND OF THE LITIGATION. WE FIND THAT LD. FIRS T APPELLATE AUTHORITY HAS DISMISSED THE APPEAL OF THE ASSESSEE EX PARTE A ND DID NOT DELIBERATE ON THE ISSUES ON MERITS. APART FROM THIS ISSUE, THERE IS AN ADDITION OF RS.28,040/- AND DISALLOWANCE OF EXPENSE S. WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS COMMITT ED AN ERROR BY NOT RECALLING HER EX PARTE ORDER. THE APPEAL OUGHT TO H AVE BEEN DECIDED AFTER HEARING THE ASSESSEE OR THE LD. CIT(A) OUGHT TO HAVE SPECIFICALLY STATED THE POINTS IN DISPUTE AS REQUIRED UNDER SUB- SECTION (6) OF SECTION 250 OF THE ACT AND THEREAFTER REASONS SHOUL D HAVE BEEN ASSIGNED IN SUPPORT OF HER CONCLUSION. IN VIEW OF A BOVE DISCUSSION WE ALLOW THE APPEAL OF ASSESSEE FOR STATISTICAL PURPOS E SETTING ASIDE THE ITA NO.777/AHD/2012 ASST. YEAR 2008-09 6 ORDERS OF CIT(A) DATED 20 TH JANUARY, 2012 AND ALLOW THE RECTIFICATION APPLICATION OF THE ASSESSEE BY SETTING ASIDE THE OR DER DATED 5 TH OCTOBER, 2011. WE RESTORE ALL THESE ISSUES TO THE F ILE OF CIT(A) FOR RE- ADJUDICATION AFTER PROVIDING DUE OPPORTUNITY OF HEA RING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERA TE WITH THE CIT(A) AND FILE AN APPLICATION FOR TAKING UP THE MA TTER WITHIN TWO MONTHS FROM RECEIPT OF THE ORDER FROM THE TRIBUNAL. IT IS NEEDLESS TO SAY THAT OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFE NSE/EXPLANATION OF THE ASSESSEE. THE LD. FIRST APPELLATE AUTHORITY SHA LL ADJUDICATE THE ISSUES ON MERIT IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/8/2015 SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER DATED 13/8/2015 MAHATA/- ITA NO.777/AHD/2012 ASST. YEAR 2008-09 7 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 DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION:12/8/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 12/8/2015 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: 13/8/2015 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: