Shree M.D. Weaves, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 897/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9356 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 01-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 897/AHD/2013 / ASSESSMENT YEAR : 2003-2004 SHREE M. D. WEAVES, B-141, UMA INDUSTRIAL ESTATE, UDHANA, SURAT 394210 PAN : AAPFS 1068 M VS INCOME-TAX OFFICER, WARD 2 (1), SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA, AR REVENUE BY : SHRI ASHISH POPHARE, DR DATE OF HEARING : 12 /01/2017 DATE OF PRONOUNCEMENT IN COURT : 20/01/20 17 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, SU RAT DATED 17.01.2013 FOR ASSESSMENT YEAR 2003-2004. 2. THE SOLE GROUND RAISED IS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF RS.5,62,000/- MA DE ON ACCOUNT OF CAPITAL INTRODUCED BY PARTNERS, AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME-TAX ACT, 1961. 3. BRIEF FACTS ARE THE ASSESSEE IS A PARTNERSHIP FIRM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MA DE TWO ADDITIONS OF RS.3,62,000/- AND RS.2,00,000/- BY FOLLOWING OBSERV ATIONS:- 8. THE CAPITAL ACCOUNT OF SMT. RATANBEN SHOWED BA LANCE OF RS.3,50,000/- WHEREAS IN HER CAPITAL ACCOUNT ATTACHED WITH THE RE TURN OF INCOME CAPITAL BALANCE REFLECTED AT RS.3,62,000/-. AS OBSERVED BY THE ITO, WARD 9 (3), SURAT THE ENTIRE CAPITAL BALANCE OF RS.3,62,000/- S TANDING IN THE NAME OF SMT. RATANBEN WAS FROM UNEXPLAINED SOURCES AND THE SAME WAS TAXED IN HER SMC-ITA NO. 897/AHD/2013 SHREE M D WEAVES VS. ITO AY : 2003-04 2 CASE ON PROTECTIVE BASIS. THEREFORE, THE ENTIRE BA LANCE OF RS.3,62,000/- IS TAXED IN THE CASE OF THE ASSESSEE AS A SUBSTANTIVE MEASURE TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. 9. PARTNERS SHRI ARVINDBHAI PATEL AND NILESHABEN PA TEL HAVE INTRODUCED FRESH CAPITAL OF RS.1,00,000/-, EACH IN CASH. THE REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCES OF FRESH CAPITAL I NTRODUCED BY BOTH THE PARTNERS. HOWEVER, NO EXPLANATION HAS BEEN OFFERED . IN ABSENCE OF EXPLANATION, THE CAPITAL INTRODUCED BY BOTH THE PAR TNERS IS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT AND TAXED IN THE HANDS OF THE ASSESSEE. PROCEEDINGS U/S 274 R.W.S. 271 ARE INITIA TED FOR LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL W HERE IT WAS CONTENDED THAT THE CAPITAL OF RS.2,00,000/- STANDING IN THE N AME OF PARTNERS COULD NOT BE ADDED IN THE HANDS OF A FIRM IN VIEW OF JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF INDIA RICE MILLS VS. CIT, REPORTED IN 218 ITR 508. APROPOS THE ADDITION AMOUNTING TO RS. 3,62,000/- IN RESPECT OF SMT. RATANBEN M. PATEL, THE ASSESSEE CONTENDED THAT THIS AMOUNT HAS BEEN OWNED IN THE HANDS OF M.D. PATEL GROUP. THE LD. CIT(A), HOWEVER, OBSERVED THAT THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT (SUPRA ) WAS DISTINGUISHABLE AND IN THE CASE OF SMT. RATANBEN M. PATEL, IT WAS E RRONEOUSLY HELD THAT NO EXPLANATION WAS OFFERED AND THE ADDITIONS WERE CONF IRMED. 5. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFO RE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT L D. CIT(A) HAS GIVEN A FLIMSY REASON THAT THE HONBLE ALLAHABAD HIGH COURT JUDGMENT (SUPRA) WAS DISTINGUISHABLE WITHOUT GIVING CONCRETE FINDING AND DISALLOWING THE SAME ON PRESUMPTIONS. SIMILARLY, IN THE CASE OF SMT. RA TANBEN M. PATEL, THOUGH AN EXPLANATION WAS GIVEN, IT HAS BEEN ERRONEOUSLY H ELD THAT NO EXPLANATION WAS GIVEN. THEREFORE, THE ADDITIONS SHOULD BE DELET ED. IN THE ALTERNATIVE, IT WAS CONTENDED THAT THE ISSUES MAY BE SET ASIDE AND RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. SMC-ITA NO. 897/AHD/2013 SHREE M D WEAVES VS. ITO AY : 2003-04 3 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. I FIND MERIT IN THE ALTERNATIVE CONTENTION OF THE LD. COUNSEL FOR T HE ASSESSEE. THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF INDI A RICE MILLS (SUPRA) IS TO BE PROPERLY APPLIED; BESIDES, BY NOW ON THIS ISSUE A CATENA OF JUDGMENTS IS AVAILABLE ABOUT THE POINT OF ADDITION EITHER IN THE HANDS OF A FIRM OR PARTNERS. SIMILARLY, IN THE CASE OF SMT. RATANBEN M. PATEL, IT IS TO BE ASCERTAINED WHETHER THE SUBSTANTIVE ADDITION IN THI S REGARD HAS BEEN CONFIRMED IN THE CASE OF M/S. M.D. PATEL GROUP BY W AY OF ASSESSMENT OR SETTLEMENT PETITION OR NOT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, I SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER PROVIDING THE ASSESSEE ADEQUATE OPPORT UNITY OF BEING HEARD. THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED FOR ST ATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 20/01/2017 *BIJU T., SR. PS / 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