M/s. Mona Tex, Surat V. The Income tax Officer,Ward-2(3), Surat

ITA 838/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80431 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: R N VEPARI

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , ! '# ! '# ! '# ! '# $ $$ $0 00 0 0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & ! & ! & ! & ! BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 838/AHD/2011 ASSESSMENT YEAR: 2007-08 M/S. MONA TEX, R-14, BOMBAY MARKET, UMARWADA, SURAT. PAN: AAEFM0626L. VS. THE INCOME TAX OFFICER, WARD-2(3), SURAT. )* / APPELLANT +,)* / RESPONDENT REVENUE BY : SHRI B.L. YADAV, SR. DR ASSESSEE(S) BY : SHRI R.N. VEPARI, AR $'- . /'/ // / DATE OF HEARING : 07/10/2014 123 . /' / // / DATE OF PRONOUNCEMENT: 17/10/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 0 4.01.2011. 2. IN THE APPEAL, THE ONLY GRIEVANCE OF THE ASSESS EE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN S USTAINING ADDITION OF RS 4,19,577/- U/S. 68 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN OF RS 1,13,86,146/-. ON VERIFICATION OF BANK STATEMENT A TTACHED WITH THE CONFIRMATIONS FILED BY THE DEPOSITORS, THE ASSESSIN G OFFICER FOUND THAT IN THE FOLLOWING CASES, CASH HAVE BEEN DEPOSIT ED IN THE ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 2 - DEPOSITORS BANK ACCOUNT AND CHEQUES WERE ISSUED IN FAVOUR OF THE ASSESSEE: SR. NO. NAME OF THE PARTY CASH DEPOSITED IN BANK ACCOUNT (RS) 1 ZYBEDABHAI H. GANI RESHMATWALA 255000 2 SAJID SIDDIK POTHIWALA 45000 3 MOHD. IRFAN MOHD. IQBAL LADHA 353770 653770 FURTHER, FROM COPIES OF THE INCOME TAX RETURN FILED BY THE DEPOSITORS, THE ASSESSING OFFICER NOTICED THAT THE THREE PARTIES HAD NO TAXABLE INCOME. THEREFORE, THE ASSESSING OFFICE R HELD THAT THE DEPOSITORS DID NOT HAVE THE CAPACITY TO ADVANCE THE AMOUNT TO THE ASSESSEE AND THE ASSESSEE FAILED TO PROVE THE GENUI NENESS AND CREDITWORTHINESS OF SUCH LOAN AMOUNT. THE ASSESSIN G OFFICER, THEREFORE, ADDED RS 6,53,770/- U/S. 68 OF THE ACT. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) OBSERVED THAT THE ASSESSEE HAS EXPLAINED THAT OUT O F DEPOSIT OF RS 2,55,000/- IN THE NAME OF SMT. ZYBEDABHAI H. GANI R ESHMATWALA SOURCE OF RS 2,52,423/- IS RETURN OF HER DEPOSIT FR OM PREVIOUS BORROWERS AND ONLY RS 42,577/- WAS DEPOSITED IN CAS H IN HER BANK ACCOUNT TO ISSUE CHEQUE OF RS 2,55,000/-. THUS, TH E CONTENTION OF THE ASSESSEE IS THAT SOURCE OF CASH AMOUNT DEPOSITE D IN THE BANK ACCOUNT BY SMT. ZYBEDABHAI H. GANI RESHMATWALA FOR WHICH NO EVIDENCE IS THERE, WAS ONLY RS 42,577/- AND NOT RS 2,55,000/-. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO OBSER VED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF DEPOSIT OF RS 42,577/-. SIMILARLY, IN RESPECT OF DEPOSITS OF RS 11,770/-, RS 2,72,000/- AND RS 1,95,000/- RECEIVED FROM MOHD. IR FAN MOHD. IQBAL LADHA, THE ASSESSEE SUBMITTED THAT HE HAS GIV EN TOTAL ADVANCE OF RS 4,78,770/- TO THE ASSESSEE OUT OF WHI CH RS ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 3 - 1,28,000/- AND RS 11,770/- WERE RECEIVED IN THE ACC OUNT OF SHRI MOHD. IRFAN MOHD. IQBAL LADHA BY WAY OF CHEQUE AND ONLY RS 3,42,000/- HAS BEEN DEPOSITED IN CASH. THEREFORE, THE ASSESSING OFFICER HAS WRONGLY TREATED THE AMOUNT OF RS 11,770 /- ALSO AS CASH, THE SOURCE OF WHICH IS CHEQUE DEPOSIT. THE COMMISS IONER OF INCOME TAX (APPEALS) THEREFORE OBSERVED THAT THE AS SESSEE HOWEVER HAS NOT EXPLAINED THE SOURCE OF CASH DEPOSI T OF RS 3,42,000/- IN THE ACCOUNT OF SHRI MOHD. IRFAN MOHD. IQBAL LADHA BEFORE ISSUE OF CHEQUE OF AMOUNT OF RS 4,78,770/-. REGARDING THE CASH DEPOSIT IN THE BANK ACCOUNT OF SHRI SAJID SIDD IK POTHIWALA, THE ASSESSEE HAS SUBMITTED THAT TOTAL ADVANCE OF RS 45, 000/- HAS BEEN MADE TO THE ASSESSEE OUT OF WHICH SOURCE OF RS 13,3 93/- IN THE ACCOUNT OF SHRI SAJID SIDDIK POTHIWALA WAS BY WAY O F CHEQUE AND ONLY RS 35,000/- WAS BY WAY OF CASH. THE COMMISSIO NER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSEE HAS NOT EX PLAINED THE SOURCE OF CASH OF RS 35,000/- IN THE ACCOUNT OF SHR I SAJID SIDDIK POTHIWALA BEFORE ISSUE OF CHEQUE OF AMOUNT OF RS 45 ,000/- TO THE ASSESSEE. THEREFORE, THE COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED THAT THE SUM AND SUBSTANCE OF THE ASSESSEE S SUBMISSION IS THAT OUT OF RS 6,53,770/- ADDED U/S. 68 OF THE A CT ON THE GROUND THAT THIS AMOUNT REPRESENTS UNEXPLAINED CASH IN THE BANK ACCOUNTS OF THE DEPOSITORS RS 4,19,577/- ONLY IS REPRESENTED BY WAY OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE DEPOSITORS BEFOR E ISSUE OF CHEQUES TO THE ASSESSEE FIRM. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER WENT ON TO OBSERVE THAT THE ASSES SING OFFICER VIDE ORDER SHEET ENTRY DATED 30.10.2009 ASKED THE ASSESS EE TO PRODUCE THE DEPOSITS OR PROVE THEIR CREDITWORTHINESS AND GE NUINENESS OF THE TRANSACTIONS. HOWEVER, THE ASSESSEE HAS NOT COMPLI ED WITH THE SAME. THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS ON THIS FINDING GIVEN BY THE ASSESSING OFFICER. THE ASSESSEE HAS A LSO NOT DENIED ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 4 - THAT IT WAS ASKED TO PRODUCE DEPOSITORS AND HAD FAI LED TO DO SO AND ALSO THE ASSESSEE DID NOT REQUEST THE ASSESSING OFF ICER TO ISSUE SUMMONS TO THE PARTIES. IN THESE CIRCUMSTANCES, TH E COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS CAST ON IT UNDER THE LAW TO ESTABLISH THE GENUINENESS OF UNSECURED LOANS. HE OBSERVED THAT T HE ASSESSEE ALSO DENIED THAT CASH OF RS 4,19,577/- WAS DEPOSITE D IN THE THREE ACCOUNTS BEFORE THE ISSUE OF CHEQUES TO THE ASSESSE E. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT OUT OF DEPOSIT OF RS 6,53,577/- APPEARING IN THE NAME OF THE ABOVE DEPOSITORS, SOURCE OF AMOUNT TO THE EXTENT OF RS 2,34,193/- ONL Y WAS PROVED IN THE BANK ACCOUNTS OF THE ABOVE DEPOSITORS AND THE R EMAINING AMOUNT OF RS 4,19,577/- SOURCE OF THE SAME HAS NOT BEEN PROVIDED AT ALL. HE THEREFORE CONFIRMED THE ADDITION OF RS 4,19,577/-. 5. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE A RGUED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS A CCEPTED THE DEPOSIT FROM THE ABOVE THREE PARTIES TO THE EXTENT OF RS 2,34,193/- AND THUS THE IDENTITY OF THE CREDITORS AND GENUINEN ESS OF THE TRANSACTIONS IS PROVED. HE SUBMITTED THAT IN THESE CIRCUMSTANCES, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JU STIFIED IN CONFIRMING THE DISALLOWANCE OF RS 4,19,577/-. HE F URTHER SUBMITTED THAT THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE THE SOURCE OF SOURCE WHICH IN LAW THE ASSESSEE CANNOT BE REQUI RED TO DO SO. FOR THIS, HE RELIED ON THE DECISION OF THE AHMEDABA D BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. ROYAL ORGANISE RS IN ITA NO. 124/AHD/2011 ORDER DATED 04.07.2014. 6. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 5 - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER ADDED THE CASH CREDITS OF RS 6,53,770/- U/S. 68 RECEIVED FROM THE FOLLOWING PERS ONS: SR. NO. NAME OF THE PARTY CASH DEPOSITED IN BANK ACCOUNT (RS) 1 ZYBEDABHAI H. GANI RESHMATWALA 255000 2 SAJID SIDDIK POTHIWALA 45000 3 MOHD. IRFAN MOHD. IQBAL LADHA 353770 653770 THE REASON FOR DOING SO WAS THAT THESE PARTIES HAVE DEPOSITED THE CASH BEFORE ISSUE OF CHEQUE TO THE ASSESSEE. 8. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) OBSERVED THAT ZYBEDABHAI H. GANI RESHMATWALA FROM W HOM RS 2,55,000/- WAS RECEIVED BY THE ASSESSEE, RS 42,577/ - ONLY WAS DEPOSITED IN CASH IN HER BANK ACCOUNT. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION OF RS 2,12,423/- AND CONFIRMED THE ADDITION TO THE EXTENT OF RS 42,577/-. SIMILARLY, IN THE CASE OF MOHD. IRFAN MOHD. IQBAL L ADHA, OUT OF THE TOTAL AMOUNT OF RS 3,53,770/-, THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT RS 3,42,000/- DEPOSITED IN CAS H IN HIS BANK ACCOUNT PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION OF RS 11,770/- AND CONFIRMED THE ADDITION TO THE EXTENT O F RS 3,42,000/-. SIMILARLY, IN THE CASE OF SAJID SIDDIK POTHIWALA, T HE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT RS 35,000/- WAS DEP OSITED IN CASH IN HIS BANK ACCOUNT PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE AND THEREFORE THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION TO THE EXTENT OF RS 10,000/- AND CONFIRMED THE ADDITION OF RS 35,000/-. THUS, THE COMMISSIONER OF INCOME TAX (APPEALS) ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 6 - RESTRICTED THE ADDITION OF RS 6,53,770/- MADE BY TH E ASSESSING OFFICER TO RS 4,19,577/-. 9. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US. 10. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE RAISED LOAN OF RS 6,53,770/- FROM THREE PERSONS THROUGH PR OPER BANKING CHANNEL. IT IS OBSERVED THAT THE IDENTITIES OF THE THREE CREDITORS ARE NOT IN DISPUTE WHICH IS EVIDENCED BY THE FACT THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED PART OF LOAN FROM THE THREE CREDITORS. FURTHER, THE GENUINENESS OF THE TRANSAC TION IS ALSO NOT IN DOUBT AS THE TRANSACTIONS ARE MADE THROUGH BANKING CHANNEL AS WELL AS THE SAME ARE ALSO SUPPORTED BY CONFIRMATION LETTERS ISSUED BY THE CREDITORS. WE FIND THAT THE ASSESSEE IN SUP PORT OF HIS TAKING OF LOAN FROM THE THREE CREDITORS IN QUESTION ALSO F ILED BEFORE THE LOWER AUTHORITIES COPY OF INCOME TAX RETURN FILED B Y THE THREE CREDITORS SHOWING THEIR PERMANENT ACCOUNT NUMBERS A ND ADDRESSES AND ALSO EVIDENCING THAT ALL THE THREE CREDITORS AR E ASSESSED TO TAX. FURTHER, THE ASSESSEE ALSO FILED BEFORE THE LOWER A UTHORITIES COPY OF BALANCE SHEET OF ALL THREE CREDITORS WHEREIN LOAN I N QUESTION ADVANCED BY THEM TO THE ASSESSEE WERE DULY REFLECTE D. COPY OF BANK STATEMENT OR PASS BOOK OF THE CREDITORS WERE A LSO FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. THUS, IN OU R CONSIDERED VIEW, THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS OF PROVING THE NATURE AND SOURCE OF CREDIT IN HIS ACCOUNT. WE FIN D THAT THEREAFTER THE LOWER AUTHORITIES HAVE BROUGHT NO MATERIAL ON R ECORD TO SHOW THAT THE CASH DEPOSITS MADE IN THE ACCOUNT OF THE C REDITORS WERE EMANATED FROM THE ASSESSEE. IN ABSENCE OF ANY SUCH MATERIAL, IN OUR CONSIDERED OPINION, THE ADDITION WAS MADE AND C ONFIRMED BY THE LOWER AUTHORITIES WITHOUT DISCHARGING THE BURDE N WHICH IS ITA NO 838/AHD/2011 M/S. MONA TEX, SURAT FOR AY 2007- 08 - 7 - SHIFTED ON THEM UNDER THE LAW. THERE IS NO PROVISI ON IN THE LAW WHICH EMPOWERS ANY AUTHORITY TO MAKE ADDITION OF TH E LOAN RECEIVED BY AN ASSESSEE WHEN THE CREDITOR HAS DEPOS ITED CASH IN BANK ACCOUNT BEFORE ADVANCING THE LOAN TO THE ASSES SEE. THUS, IN OUR CONSIDERED VIEW, THE ADDITION OF RS 4,19,577/- CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS UNSUSTAINA BLE. WE, THEREFORE, DELETE THE ADDITION OF RS 4,19,577/- MA DE U/S. 68 OF THE ACT AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 17 TH OF OCTOBER, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT (N. S. SAINI) ACCOUNTANT MEMBER V AHMEDABAD; DATED 17/10/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY &4 . +5 6&53 &4 . +5 6&53 &4 . +5 6&53 &4 . +5 6&53/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. ## 7 / CONCERNED CIT 4. 7() / THE CIT(A)-III, AHMEDABAD 5. 5': +$ , , / DR, ITAT, AHMEDABAD 6. ;< =- / GUARD FILE. &4$ &4$ &4$ &4$ / BY ORDER, / // / # # # # ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD