M/s. Maruti Developers, Surat V. The Income tax Officer,Ward-9(3), Surat

ITA 816/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60526 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-05-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 13-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAPNESH SHETH
• Assessee Lawyers: B L YADAV
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 142(1); 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.2080, 2081 / AHD/2008 (ASSESSMENT YEAR 2001-02 & 2002-03) ITO, WARD 9(3), SURAT VS. SHRI RAMESH NARSINHBHAI PATEL, PROP. VIKAS MEDICAL STORES, 5, TRIBHUVAN NAGAR SOCIETY, VED ROAD, KATARGAM, SURAT PAN/GIR NO. : AEPPP0506F I.T.A.NO. 398, 816/AHD/2009 (ASSESSMENT YEARS 2001-02 & 2002-03) MARUTI DEVELOPERS. 27, SARDAR COMPLEX, MINI BAZAR, VARCHHA ROAD, SURAT (APPELLANT) VS. ITO, WARD 9(3), SURAT (RESPONDENT) APPELLANT BY: SHRI B L YADAV, SR. DR RESPONDENT BY: SHRI SAPNESH SHETH, AR DATE OF HEARING: 03.05.2012 DATE OF PRONOUNCEMENT: 15. 06.2012 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THESE FOUR APPEALS, TWO APPEALS ARE FILED B Y THE ASSESSEE IN THE CASE OF MARUTI DEVELOPERS FOR THE ASSESSMENT YE ARS 2001-02 AND 2002-03 AND THE REMAINING TWO APPEALS ARE FILED BY THE REVENUE IN THE CASE OF RAMESH NARSINHBHAI PATEL, SURAT FOR THE SAM E TWO ASSESSMENT YEARS. THESE APPEALS ARE CONNECTED BECAUSE ADDITIO NS WERE MADE BY THE I.T.A.NO.2080,2081,398,816 /AHD/2008 2 A.O. ON PROTECTIVE BASIS IN THE CASE OF INDIVIDUAL SHRI RAMESH NARSINHBHAI PATEL AND ON SUBSTANTIVE BASIS IN THE C ASE OF THE FIRM, M/S. MARUTI DEVELOPERS OF WHICH THE INDIVIDUAL IS ONE OF THE PARTNERS. SUCH ADDITIONS WERE DELETED BY LD. CIT(A) IN THE CASE OF THE INDIVIDUAL FOR BOTH THESE YEARS AND, THEREFORE, REVENUE IS IN APPE AL AND THE SAME WAS CONFIRMED IN THE CASE OF THE FIRM AND THEREFORE, TH E ASSESSEE IS IN APPEAL. 2. IN THE CASE OF THE FIRM, IN BOTH THESE YEARS, GR OUND NO.1 RAISED BY THE ASSESSEE IS REGARDING VALIDITY OF REOPENING PRO CEEDINGS. 3. ON THIS ISSUE, IT WAS SUBMITTED BY THE LD. A.R. BEFORE US THAT NO NOTICE WAS ISSUED U/S 142(1) AND STRAIGHTAWAY, NOTI CE U/S 148 WAS ISSUED AND, THEREFORE, THE REOPENING IS NOT VALID. 4. LD. D.R. SUPPORTED THE ORDER OF LD. CIT(A) IN BO TH THESE YEARS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT IT I S NOTED BY THE A.O. IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2001-02 TH AT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE INDIVIDUA L SHRI R. N. PATEL, IT WAS NOTED THAT THE ASSESSEE M/S. MARUTI DEVELOPERS HAS MADE PAYMENT OF RS.83.25 LACS ON VARIOUS DATES DURING 25.12.2000 TO 06.03.2001 TOWARDS PURCHASE OF LAND AND THAT FIRM IS NEITHER ASSESSED TO TAX NOR IT HAS FILED ANY RETURN OF INCOME IN RESPECT OF THESE YEARS OR F OR ANY EARLIER ASSESSMENT YEARS. IT WAS NOTED THAT THE ASSESSEE F IRM WAS NOT HAVING ANY REGULAR AND KNOWN SOURCE OF INCOME AND, THEREFORE, THE SOURCE OF PAYMENT MADE AGAINST PURCHASE OF LAND REMAINED UNVE RIFIED AND UNEXPLAINED AS PER THE A.O. AND HENCE, THE A.O. WAS OF THE VIEW THAT THE CONCEALED INCOME OF THE ASSESSEE FIRM CAN BE THERE. HE FURTHER NOTED THAT THE ADDITION WAS MADE IN THE HANDS OF INDIVIDUAL SH RI R N PATEL ON PROTECTIVE BASIS AND, THEREFORE, THE ASSESSMENT OF THIS ASSESSEE WAS I.T.A.NO.2080,2081,398,816 /AHD/2008 3 REOPENED U/S 147 OF THE INCOME TAX ACT, 1961 AND NO TICE U/S 148 WAS ISSUED ON 05.01.2007. SINCE THE PROVISO TO SECTION 147 IS NOT APPLICABLE IN THE PRESENT CASE AND THE NOTICE WAS ISSUED BY TH E A.O. AFTER RECORDING THE REASONS, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE AUTHORITIES BELOW REGARDING REOPENING OF THE ASSESSMENT U/S 147 AND HENCE, GROUND NO.1 OF THE ASSESSEES APPEAL IS REJECTED IN BOTH T HE YEARS IN THE CASE OF THE FIRM M/S. MARUTI DEVELOPERS. 6. THE ISSUE IN DISPUTE ON MERIT IS REGARDING ADDIT ION OF RS.70.45 LACS AND 13.25 LACS MADE BY THE A.O. AND CONFIRMED BY LD . CIT(A) IN RESPECT OF PLOT BOOKING ADVANCES AND CAPITAL INTRODUCED BY THE PARTNERS RESPECTIVELY IN ASSESSMENT YEARS 2001-02 AND OF RS. 1,11,500/- IN ASSESSMENT YEAR 2002-03 IN RESPECT OF PLOT BOOKING ADVANCE TREATED AS UNEXPLAINED CASH CREDIT U/S 68. 7. IT WAS AGREED BY BOTH THE SIDE THAT THE ISSUE IN DISPUTE IS IDENTICAL IN BOTH THE YEARS AND THE FACTS OF THE ASSESSMENT Y EAR 2001-02 CAN BE CONSIDERED AND ON THE BASIS OF THIS, THE MATTER IN BOTH THE YEARS CAN BE DECIDED. REGARDING INTRODUCTION OF CAPITAL BY TH E PARTNERS IN THE FIRM OF RS.13.25 LACS IN ASSESSMENT YEAR 2001-02, IT WAS SU BMITTED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUD GMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS P ANKAJ DYESTUFF INDUSTRIES AS REPORTED IN (INCOME TAX REFERENCE NO. 241 OF 1993) ORDER DATED 06.07.2005. REGARDING PLOT BOOKING ADVANCE R ECEIVED FORM 41 PERSONS OF RS.70.45 LACS IN ASSESSMENT YEAR 2001-02 , IT WAS SUBMITTED THAT ONLY 3 PARTIES COULD BE PRODUCED WHO HAVE CONF IRMED BEFORE THE A.O. AND FOR THE REMAINING 20 PARTIES, AFFIDAVITS W ERE FILED. HE ALSO SUBMITTED THAT POSSESSION COULD NOT BE GIVEN TO THE SE PARTIES OF PLOTS BECAUSE THE ASSESSEE COULD NOT GET POSSESSION AND T HEREFORE, THESE PARTIES I.T.A.NO.2080,2081,398,816 /AHD/2008 4 ARE NOT HELPING AND THE CASE IS GOING ON. HE SUBMI TTED THAT UNDER THESE FACTS, ADDITION MADE BY THE A.O. IS NOT JUSTIFIED A ND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MEHTA PRAKASH & CO. VS CIT AS REPORTED IN 30 ITR 181 AND THE JUDGMENT OF HONBLE GUJARAT HIGH C OURT RENDERED IN THE CASE OF GLASS LINES EQUIPMENTS CO. LTD. VS CIT. AS REPORTED IN 253 ITR 454. 8. LD. D.R. OF THE REVENUE SUPPORTED THE ORDER OF L D. CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. WE FIND THAT THE AMOUNT IN QUESTION OF RS.70.45 LACS RECEIVED AS ADVANCE TOWARDS PLOT BOOK ING WAS RECEIVED FORM 41 PERSONS OUT OF WHICH THE ASSESSEE PRODUCED ONLY 3 PERSONS BEFORE THE A.O. THE A.O. ALSO STATED THAT MERE FI LING OF IDENTITY AND COPIES OF LAND RECORD I.E. 7/12 DO NOT PROVE THE CR EDITWORTHINESS OF DEPOSITORS AND GENUINENESS OF TRANSACTION. REGARDI NG THESE THREE PERSONS PRODUCED BEFORE THE A.O., IT WAS OBSERVED BY THE A. O. THAT NONE OF THEM COULD PROVE THAT THEY HAVE BOOKED A PLOT IN THE PRO JECT OF THE ASSESSEE BECAUSE THEY DID NOT HAVE ANY RECORD IN THE FORM OF BOOKING RECEIPT OF THE PLOT, PURCHASING AGREEMENT OR ANY OTHER DOCUMENT RE LATING TO THE ALLEGED BOOKING OF THE PLOT IN THE PROJECT OF THE ASSESSEE. THE A.O. ALSO NOTED THAT ALL THESE THREE PERSON PRODUCED BEFORE HIM ARE DIAMOND CUTTING AND POLISHING LABOURS HAVING MEAGER INCOME AND HARDLY M EET BOTH THE ENDS AND THEREFORE, IT WAS BEYOND IMAGINATION FOR THESE THREE LABOURERS TO INVEST SUCH A HUGE AMOUNT OF RS.3 LACS AND RS.1.50 LACS IN PLOTS WHICH MANY OF THEM HAVE NEVER SEEN. LD. CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE REGARDI NG CREDITWORTHINESS OF I.T.A.NO.2080,2081,398,816 /AHD/2008 5 THE ALLEGED DEPOSITORS. BEFORE US ALSO, NO SUCH EV IDENCE REGARDING CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF TRANSACTION COULD BE PRODUCED BY THE LD. A.R. AND HENCE, WE DO NOT FI ND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THEREFORE, WE CONFIRM THE ADDITION OF RS.70.45 LACS IN ASSESSMENT YEAR 20 01-02 AND RS.1,11,500/- IN ASSESSMENT YEAR 2002-03 U/S 68 IN RESPECT OF PLOT BOOKING ADVANCES ALLEGED TO HAVE BEEN RECEIVED BY T HE ASSESSEE. 10. REGARDING INTRODUCTION OF CAPITAL BY THE PARTNE RS IN ASSESSMENT YEAR 2001-02 OF RS.13.25 LACS, WE FIND THAT THIS IS SUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF PANKAJ DYESTUFF (SUPRA) AND HENCE, NO ADDITION COULD BE MADE IN THE HANDS OF THE FIRM BUT THE REVE NUE IS AT LIBERTY TO REOPEN ASSESSMENT OF THE PARTNERS AS PER LAW AND TH IS ISSUE CAN BE EXAMINED IN THEIR CASES AS TO WHETHER THEY COULD EX PLAIN THE SOURCE OF INVESTMENTS IN THE ASSESSEE FIRM OR NOT. THE ADDIT ION OF RS.13.25 LACS IS DELETED IN ASSESSMENT YEAR 2001-02. - REGARDING RELIANCE PLACED BY THE LD. A.R. ON THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MEHTA PA RIKH & CO. (SUPRA), WE FIND THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE ISSUE I N DISPUTE WAS REGARDING ASSESSMENT OF RS.30,000/- FROM OUT OF MERE 60,000/- FOR INCOME TAX AND EXCESS PROFIT TAX BUSINESS PROFIT TAX PURPOSE REPRE SENTING THE VALUE OF HIGH DENOMINATION NOTES WHICH WAS ENCASHED ON 18 TH DAY OF JAN 1946. IN THE PRESENT CASE, THE DISPUTE IS REGARDING ADDITION MADE BY THE A.O. U/S 68 IN RESPECT OF AMOUNT SAID TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM 41 DEPOSITORS ON ACCOUNT OF PLOT BOOKING ADVANCES F OR WHICH THE ASSESSEE COULD NOT ESTABLISH THE CREDITWORTHINESS OF THE DEP OSITORS AND GENUINENESS I.T.A.NO.2080,2081,398,816 /AHD/2008 6 OF TRANSACTION. HENCE, THIS JUDGEMENT IS NOT APPLI CABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. - RELIANCE WAS ALSO PLACED BY THE LD. A.R. ON THE J UDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF GLASS LINES EQUIPMENTS CO. LTD. (SUPRA). IN THAT CASE, THE ISS UE IN DISPUTE WAS DIFFERENT. IN THAT CASE, THE DISPUTE WAS REGARDING AS TO WHETHER THE EXPENDITURE OF RS.1,69,218/- WAS PART OF ACTUAL COS T OF PLANT OR NOT WHEREAS, IN THE PRESENT CASE, THE DISPUTE IS REGARD ING APPLICABILITY OF SECTION 68 IN RESPECT OF AMOUNT RECEIVED BY THE ASS ESSEE AS DEPOSITS FOR PLOT BOOKING ADVANCES AND THE ASSESSEE COULD NOT ES TABLISH THE CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF TRANSACTION. FACTS AND THE ISSUE IN DISPUTE BEING DIFFERENT, THIS JUDG EMENT OF HONBLE GUJARAT HIGH COURT IS ALSO NOT APPLICABLE IN THE PR ESENT CASE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IN THE CA SE OF M/S. MARUTI DEVELOPERS IS PARTLY ALLOWED IN ASSESSMENT YEAR 200 1-02 AND DISMISSED IN THE ASSESSMENT YEAR 2002-03. 12. NOW, WE TAKE UP THE REVENUES APPEAL IN THE CAS E OF SHRI R. N. PATEL FOR THE ASSESSMENT YEAR 2001-02 AND 2002-03. IN ASSESSMENT YEAR 2001-02, THE REVENUE IS DISPUTING THE DELETION OF A DDITION MADE BY THE A.O. OF RS.110.25 LACS AND IN ASSESSMENT YEAR 2002- 03, THE REVENUE IS DISPUTING REGARDING DELETION OF ADDITION OF RS.1 LA CS MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT TOWARD PURCHASE O F LAND IN BOTH THESE YEARS. FOR THIS CASE ALSO, IT WAS AGREED BY BOTH T HE SIDES THAT THE ISSUE CAN BE DECIDED IN ASSESSMENT YEAR 2001-02 AND ON THE SA ME BASIS, THE ISSUE MAY BE DECIDED IN ASSESSMENT YEAR 2002-03. I.T.A.NO.2080,2081,398,816 /AHD/2008 7 13. WE FIND THAT LD. CIT(A) HAS PASSED A COMBINED O RDER IN THE CASE OF SHRI R N PATEL FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 AND THE LAST PARA OF HIS ORDER IS THE RELEVANT PARA WHICH I S REPRODUCED BELOW: I HAVE CAREFULLY CONSIDERED THE ARGUMENTS GIVEN BY ASSESSING OFFICER & THE SUBMISSIONS OF ID. AR. AS STATED BY I D. AR THE ADDITION ON SUBSTANTIVE BASIS IS ALREADY MADE IN CA SE OF THE FIRM M/S MARUTI DEVELOPERS. AS SUCH ADDITION MADE ON PRO TECTIVE BASIS IN ASSESSEE'S CASE IS REQUIRED TO BE DELETED AS GEN UINENESS OF INVESTMENT IS REQUIRED TO BE VERIFIED IN CASE OF AS SESSEE'S WHO CLAIMS TO HAVE MADE INVESTMENT & FOR WHICH ADDITION ON SUBSTANTIVE BASIS IS ALSO MADE. IN THE INSTANT CASE , INVESTMENT TO THE EXTENT OF RS.84,47,500/- IS CLAIMED TO HAVE BEE N MADE BY THE FIRM M/S MARUTI DEVELOPERS & ADDITION IN THEIR CASE IS MADE ON SUBSTANTIVE BASIS. THIS INVESTMENT IS ALSO REFLECTE D IN THE BALANCE SHEET OF PARTNERSHIP FIRM-M/S MARUTI DEVELOPERS & H ENCE, IN MY OPINION GENUINENESS OF THE SAME IS REQUIRED TO BE V ERIFIED IN THE CASE OF THE FIRM. THE BALANCE INVESTMENT OF RS.27,0 0,000/- IS CLAIMED TO HAVE BEEN MADE BY ANOTHER FIRM M/S HARI OM DYG. & PTG. MILLS & THIS FACT IS ALSO CONFIRMED BY PARTNER SHRI PRANJIVAN BHAGAT IN REPLY TO LETTER OF ASSESSING OFFICER U/S 133(6) OF THE ACT. THIS INVESTMENT IS ALSO REFLECTED IN THE BOOKS OF M /S HARI OM DYG. & PTG. MILLS & AS SUCH ADDITION CANNOT BE MADE TO T HE INCOME OF ASSESSEE EVEN ON PROTECTIVE BASIS. THE ADDITION CAN BE SUSTAINED ONLY IN THE CASE OF THE ABOVE TWO FIRMS, IF SOURCE RELATING TO INVESTMENT IN LAND COULD NOT PROPERLY BE EXPLAINED. 14. WE FIND THAT THE ENTIRE ADDITION IN BOTH THE YE ARS WAS DELETED BY LD. CIT(A) ON THIS BASIS THAT SUBSTANTIVE ADDITION HAS ALREADY BEEN MADE IN THE CASE OF THE FIRM M/S. MARUTI DEVELOPERS AND THEREFORE, THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE INDIVI DUAL PARTNER IS TO BE DELETED. IN THE CASE OF M/S. MARUTI DEVELOPERS, SU BSTANTIVE ADDITION WAS MADE OF RS.84,47,500/- AND SUCH ADDITION WAS ALREAD Y CONFIRMED BY US IN THE ABOVE PARA AND BALANCE ADDITION OF RS.27 LACS I S SAID TO HAVE BEEN INVESTED BY ANOTHER FIRM M/S. HARIOM DYING AND PRIN TING MILLS AND IT IS NOTED BY LD. CIT(A) THAT PARTNER OF THIS FIRM SHRI PRANJIVAN BHAGAT HAS I.T.A.NO.2080,2081,398,816 /AHD/2008 8 CONFIRMED THE INVESTMENT BY THIS FIRM OF RS.27 LACS AND THE SAME IS REFLECTED IN THE BOOKS OF THIS FIRM. THEREFORE, TH IS FINDING IS GIVEN BY LD. CIT(A) THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. CONSIDERING THESE FACTS, WE DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) IN BOTH THESE YEARS. 15. IN THE RESULT, BOTH THESE APPEALS OF THE REVENU E ARE DISMISSED. 16. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND THE APPEAL OF ASSESSEE IN ASSESSMENT YEAR 2001-02 IS PARTLY ALLOWED AND IN ASSESSMENT YEAR 2002-03 IS DISMISSED . 17. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 12/6 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/6. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.14/6 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/6 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.15/6 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/6 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER.