Shri Bhadresh Jasubhai Shah, Ahmedabad V. The Income tax Officer,Ward-1(3), Ahmedabad

ITA 800/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0329 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: N C AMIN
• Keywords: Additional evidence; Question of law; Deemed dividend
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 800/AHD/2012 / ASSESSMENT YEAR : 2008-09 BHADRESH JASUBHAI SHAH, 603, STATUS-II, B/H. SHAKAMBA PARTY PLOT, MEMNAGAR, AHMEDABAD-380052 PAN : ACZPS 4367 H VS INCOME TAX OFFICER, WARD 1 (3), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI N.C. AMIN, AR REVENUE BY : SMT. SONIA KUMAR, SR DR / DATE OF HEARING : 06/10/2016 / DATE OF PRONOUNCEMENT: 07/10/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, AHM EDABAD DATED 01.02.2012 FOR ASSESSMENT YEAR 2008-09. 2. VARIOUS GROUNDS ARE RAISED; HOWEVER, THE EFFECTI VE GROUNDS ARE AS UNDER:- 1. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND O N THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS.15,00,000/- BE ING CASH AMOUNT DEPOSITED IN THE BANK, HOLDING IT AS UNEXPLAINED. 2. THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN CONFIR MING AN ADDITION OF RS.4,96,196/- HOLDING IT AS DEEMED DIVIDEND U/S 2(2 2)(E) OF THE ACT. OTHER GROUNDS RAISED ARE REPETITIVE IN NATURE. 3. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT I N THE ORIGINAL ASSESSMENT, THE LD. AO MADE THE ADDITION OF ALL CRE DIT ENTRIES IN THE BOOKS OF ACCOUNTS AMOUNTING TO RS.41,60,117/-. AGGRIEVED, T HE ASSESSEE PREFERRED FIRST APPEAL WHERE ADDITIONAL EVIDENCE WAS FILED AN D A REMAND REPORT WAS CALLED FOR. THE LD. CIT(A), HOWEVER, ON ESTIMATED BASIS, RETAINED THE SMC-ITA NO.800/AHD2012 BHADRESH JASUBHAI SHAH VS. ITO AY : 2008-09 2 ADDITION OF RS.15,00,000/-. THUS, IMPLIEDLY THE BRE AK-UP OF RS.15,00,000/- IS AS UNDER:- I) OPENING CASH BALANCE - RS. 55,277/- II) SMALL LOANS RECEIVED - RS. 1,07,174/- III) INTRA BANK DEPOSITS BETWEEN - RS.13,37,549/- THE CATHOLIC SYRIAN BANK LTD & IDBI BANK 4. APROPOS THE OPENING CASH BALANCE, IT IS CONTENDE D BY LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE WAS HAVING SUFFICIEN T CASH BALANCE AT THE BEGINNING OF THE YEAR. APROPOS THE LOANS FROM PRIV ATE PARTIES, CONFIRMATIONS FROM THREE PERSONS WERE FILED AND FOR OTHERS CONFIRMATIONS COULD NOT BE FILED. HOWEVER, THESE WERE SMALL LOANS GENUINELY TAKEN BY THE ASSESSEE AND DEPOSITED IN THE BANK ACCOUNT. APROPO S THE BANK DEPOSITS IN THE CATHOLIC SYRIAN BANK LTD AND IDBI BANK, IT IS C ONTENDED THAT THE ASSESSEE WAS HAVING SUBSTANTIAL SHARE HOLDING AND A N OVER-DRAFT (OD) ACCOUNT WAS OBTAINED FROM THE IDBI BANK. TO AVOID A NY BANKING OBLIGATION, THE AMOUNTS WERE WITHDRAWN IN CASH FROM THE IDBI OD A/C AND CORRESPONDING DEPOSITS WERE MADE WITHIN SHORT TIME IN CATHOLIC SYRIAN BANK LTD ACCOUNT. THE ADDITION HAS BEEN MADE ON AS SUMPTION THAT WHEN THE ASSESSEE WAS HAVING CASH IN BOOKS, THERE WAS NO NECESSITY TO WITHDRAW THE AMOUNT FROM OVER-DRAFT (OD) ACCOUNT. IT IS CON TENDED THAT THIS ADDITION IS BASED PURELY ON SUCH PRESUMPTION, ALTHO UGH THE ASSESSEE BY DETAILED BANK STATEMENTS FROM BOTH BANK ACCOUNTS RE CONCILED THE WITHDRAWALS AND DEPOSITS. REFERENCE IS MADE TO TH E BANK ACCOUNTS PLACED AT PAGE NO. 68 (IDBI BANK OD A/C.) AND PAGE NOS. 72 -93 (THE CATHOLIC SYRIAN BANK LTD) OF THE PAPER-BOOK. IT IS ALSO CON TENDED THAT THE ASSESSEE HAS PROPERLY DISCHARGED PRIMARY ONUS IN RESPECT OF ALL THE INTER-BANK DEPOSITS IN RESPECTIVE ACCOUNTS; THEREFORE, NO ADDI TION U/S 69 IS CALLED FOR. SMC-ITA NO.800/AHD2012 BHADRESH JASUBHAI SHAH VS. ITO AY : 2008-09 3 5. APROPOS SECOND GROUND, IT IS CONTENDED THAT TH E ASSESSEE WAS AN EMPLOYEE DIRECTOR, HAVING A RUNNING CURRENT ACCOUNT WITH THE COMPANY M/S. ATIRESH TRADING CO. THE ASSESSEE USED TO GIVE ADVANCE AMOUNTS TO COMPANY WHICH WAS RETURNED BY COMPANY & VICE VERSA AS AND WHEN NECESSARY. THUS, THERE WAS NO ELEMENT OF LOAN OR D EPOSIT IN THESE TRANSACTIONS. THEY BEING PURELY NEED BASED CURRENT ACCOUNT TRANSACTIONS, THERE IS NO JUSTIFICATION IN DEEMING IT TO BE DEEME D DIVIDEND AND ADDING U/S 2(22)(E) OF THE ACT. RELIANCE IS PLACED ON HON BLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SCHUTZ DISHMAN BIO- TECH (P) LTD IN TAX APPEAL NO. 958 & 959 OF 2015, HOLDING AS UNDER:- EVEN OTHERWISE, IF THE TRANSACTIONS ARE NOT IN THE NATURE OF CURRENT ACCOMMODATION ADJUSTMENT ACCOUNT, THE SAME ARE IN T HE NATURE OF DEPOSITS AS IT APPARENT FROM THE NOMENCLATURE OF THE LEDGER ACCOUNT. IF THE TRANSACTIONS ARE IN THE NATURE OF DEPOSITS AND THE SAME ARE BE TWEEN TWO CORPORATE, IT IS NOTHING BUT INTER CORPORATE DEPOSITS (ICD) WHICH IN ANY CASE WOULD BE OUTSIDE THE PURVIEW OF SECTION 2(22)(E) OF THE ACT . THIS VIEW SUPPORTED BY THE FOLLOWING DIRECT BINDING DECISIONS OF THE ITATS . M/S. UTKARSH FINCAP(P) LTD., V ITO 1288 ITR 38 ON.(TRI. AHMEDABAD) M/S. BOMBAY OIL INDUSTRIES LTD, V. DCIT, CENTRAL CIRCLE-35 MUMBAI 128 SOT 383 (MUM.)' 4. IT CAN THUS BE SEEN THAT THE COMMISSIONER AS A M ATTER OF FACT FOUND THAT THE PAYMENTS WERE NOT IN THE NATURE OF CURRENT AD JUSTMENT. THERE WAS MOVEMENT OF FUND BOTH WAYS ON NEED BASIS. THE TRANS ACTIONS IN THE NATURE OF LOANS AND ADVANCES ARE USUALLY VERY FEW IN NUM BER WHEREAS IN THE PRESENT CASE, SUCH TRANSACTIONS ARE IN THE FORM OF CURRENT ACCOMMODATION ADJUSTMENT ENTRIES. THE COMMISSIONER THEREFORE, HEL D THAT THE TRANSACTIONS WERE NOT IN THE NATURE OF LOANS AND ADVANCES. THE R EVENUE CARRIED THE MATTER IN APPEAL. THE TRIBUNAL CONCURRED WITH THE V IEW OF THE CIT (APPEALS) AND HELD THAT THE AMOUNTS WERE NOT I N THE NATURE OF INTER CORPORATE DEPOSITS AND WERE THEREFORE, NOT TO BE TR EATED AS LOANS OR ADVANCES AS CONTEMPLATED IN SECTION 2(22)(E) OF THE ACT. 5. THE ISSUE IS SUBSTANTIALLY ONE OF APPRECIATION O F FACTS. WHEN THE CIT (APPEALS) AS WELL AS TRIBUNAL CONCURRENTLY HELD TH AT LOOKING TO LARGE NUMBER OF ADJUSTMENT ENTRIES IN THE ACCOUNTS BETW EEN TWO ENTITIES, THE AMOUNTS WERE NOT IN THE NATURE OF LOAN OR DEPOSIT, BUT MERELY ADJUSTMENTS, APPLICATION OF SECTION 2(22)(E) OF THE ACT WOULD NOT ARISE. CONSEQUENTLY, NO QUESTION OF LAW ARISES. TAX APPEALS ARE DISMISS ED. SMC-ITA NO.800/AHD2012 BHADRESH JASUBHAI SHAH VS. ITO AY : 2008-09 4 6. LD. DR, IN REPLY, CONTENDS THAT THE ASSESSEES C ONDUCT FROM BEGINNING HAS BEEN EVASIVE AS NO BOOKS OF ACCOUNTS WERE PRODU CED BEFORE THE LD. AO AND FOR THE FIRST TIME THEY WERE PRODUCED BEFORE TH E LD. CIT(A). THE AO SUBMITTED HIS OBJECTIONS IN THE REMAND REPORT CALLE D FOR IN THIS BEHALF. LD. CIT(A) WAS MORE THAN REASONABLE IN ADMITTING THE AD DITIONAL EVIDENCE, CALLING FOR REMAND REPORT AND RESTRICTING THE ADDIT ION TO RS.15,00,000/-. THE ADDITION RETAINED BY LD. CIT(A) IS BASED ON PROPER FACTUAL FINDING AND BASED ON MATERIAL AVAILABLE ON RECORD AND THE SAME DESERV ES TO BE UPHELD. 7. APROPOS GROUND NO.2 ALSO, THE ORDER OF THE LD. C IT(A) IS RELIED ON. 8. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. ADVERTING TO FIRST GROUND, THE ADDITION OF RS.15,00,000/- CONSIS TS OF THREE PARTS. AS FAR AS THE THIRD PART, I.E., CASH WITHDRAWALS FROM OVER DR AFT ACCOUNT IN IDBI BANK AND CORRESPONDING DEPOSITS IN THE CATHOLIC SYRIAN B ANK LTD ARE CONCERNED, THE ASSESSEE HAS BEEN ABLE TO DEMONSTRATE THE NEXUS BETWEEN THE WITHDRAWALS AND DEPOSITS. THIS EVIDENCE IN THE FORM OF BANK ACCOUNTS CANNOT BE REJECTED ONLY ON PRESUMPTION THAT THE ASS ESSEE HAD ALREADY HAD CASH BALANCE AND THERE IS NO NEED FOR HIM TO WITHDR AW FROM THE OD ACCOUNT. SUCH PRESUMPTION CANNOT OVERRIDE THE WRIT TEN EVIDENCE IN THE FORM OF BANK STATEMENTS AND EXPLANATION OF REASONAB LE NEXUS. CONSEQUENTLY, THE ADDITION IN RESPECT OF INTRA BANK A/C OF IDBI BANK AND THE CATHOLIC SYRIAN BANK LTD IS DELETED. 9. APROPOS REMAINING TWO ITEMS, THE ASSESSEE COULD NOT DEMONSTRATE THE SOURCES OF ALLEGED AVAILABILITY OF OPENING BALANCE. SIMILARLY, IN RESPECT OF CASH LOANS, THE ASSESSEE COULD NOT ESTABLISH THE CR EDITWORTHINESS OF THE DEPOSITORS. IN VIEW THEREOF, IT IS HELD THAT IN RES PECT OF OPENING CASH AND SMC-ITA NO.800/AHD2012 BHADRESH JASUBHAI SHAH VS. ITO AY : 2008-09 5 SMALL LOANS AS MENTIONED ABOVE, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS; CONSEQUENTLY, THE ADDITIONS IN RESPECT OF THE SAME ARE UPHELD, WHEREAS THE ADDITION IN RESPECT OF INTRA-BANK DEPOSIT IS DELETE D. THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 10. APROPOS GROUND NO.2, THE NATURE OF TRANSACTIONS REFLECTED FROM THE ASSESSEES ACCOUNT AND COMPANY ACCOUNT DEMONSTRATES THAT IT WAS A RUNNING CURRENT ACCOUNT AND THE TRANSACTIONS THEREIN ARE NO T IN THE NATURE OF LOANS AND ADVANCES SO AS TO BE TERMED AS DEEMED DIVIDEND. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF SCHUTZ DISHMAN BIO-TECH (P) LTD (SUPRA), TH E ADDITION MADE U/S 2(22)(E) IS DELETED. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE COURT ON 7 TH OCTOBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 07/10/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD