M/S. ASIAN CABLE COMPANY, RAIGARH(CG) V. ITO - 1, RAIGARH(CG)

ITA 92/BIL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2429 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M MOHARANA
• Assessee Lawyers: R B DOSHI
• Section: 68; 69

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 92/BILR/2013 ( / ASSESSMENT YEAR : 2008 - 09 ) ASIAN CABLE COMPANY, 2, INDUSTRIAL ESTATE, CHAKRADHAR NAGAR, RAIGARH / VS. ITO - 1, AAYAKAR BHAVAN, NEAR CHAKRADHAR NAGAR, RAIGARH ./ ./ PAN/GIR NO. : AADFA 9649 N ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.B.DOSHI / RESPONDENT BY : SHRI H.M.MOHARANA / DATE OF HEARING : 1 6 - 02 - 2016 / DAT E OF PRONOUNCEMENT : 19 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM AN ORDER OF THE LD CIT(A), BILASPU R DATED. 3.1.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ONLY GROUND RAISED BY THE ASS ESSEE IS AS UNDER: THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.22,50,000/ - MADE BY THE AO ON ACCOUNT OF CAPITAL INTRODUCED BY THE PARTNERS OF THE FIRM, WITHOUT APPRECIATING THE FACT OF THE CASE JUDICIALLY. THE ADDITION IS ILLEGAL, ARBITRARY AND C ONTRARY TO THE PROVISIONS OF LAW. 2 I .T.A. NO. 92/BILR/2013 / ASSESSMENT YEAR :2008 - 09 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE I.T.ACT, 1961 DATED 29.12.2010 WERE THAT THE ASSESSEE FIRM IS IN THE BUSINESS OF MANUFACT URING OF EL ECTRICITY WIRE AND CONTROL PANEL, ETC. A FTER EXAMINING THE CAPITAL ACCOUNT OF THE PARTNERS, THE AO HAD FOUND THAT THE PARTNERS HAVE IN TRODUCED A SUM OF RS.22,50,000/ - . T HE AO HAS TAXED THE SAME AFTER ASSIGNING THE FOLLOWING REASONS: ON GOING THROUGH CAP ITAL ACCOUNT OF THE PARTNERS, IT HAS BEEN NOTICED THAT THE PARTNERS HAVE INTRODUCED CAPITAL OF RS.22,50,000/ - (RS.9,00,000/ - BY SHRI ANIL GOEL, RS.9,50,000/ - BY SHRI AJAY GOEL AND RS.4,00,000/ - BY SHRI SURESH GOEL) IN TOTAL. F URTHER, IT IS NOTICED THAT TH E PARTNERS HAVE WITHDRAWN A SUM OF RS.,26,08,000 DURING THE YEAR UNDER CONSIDERATION. V IDE POINT - 123 OF NOTICE U/S.142(1) DT.31.5.210 QUERY WAS RAISED TO JUSTIFY THE INTRODUCTION OF FRESH CAPITAL AND SUBSEQUENTLY WITHDRAWAL BY THE PARTNERS., T HE ASSESSE E IN HIS REPLY FILED ON 11.6.2010 STATED THAT THE PARTNERS USED TO INTRODUCE FUNDS FROM TIME TO TIME TO MEET THE BUSINESS REQUIREMENT AND SUBSEQUENTLY WITHDRAW THE SAME ON AVAILABILITY OF THE SURPLUS FUNDS WITH THE FIRM. IT IS WORTHWHILE TO MENTION HERE T HAT FUNDS INTRODUCED BY PARTNERS IN FIRM IS IN CASH AND WITHDRAWALS ARE THROUGH BANK. T HE ASSESSEE FIRM COULD NOT EXPLAIN THE REASON FOR SUCH TRANSACTION. O N VERIFICATION OF ACCOUNTS AND BANK STATEMENT FILED/PRODUCED, DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT IS SEEN THAT WHEN FUNDS WERE INTRODUCED BY THE PARTNERS THERE WAS NO SUCH REQUIREMENT OF FUNDS IN THE FIRM. T HE ASSESSEE FIRM WAS HAVING SUFFICIENT BALANCE AS ON THE DATE OF INTRODUCTION OF FUNDS B Y THE PARTNERS. R EGARDING WITHDRAWAL IT HAS BEEN EXPLAINED THAT PARTNERS HAVE INVESTED THE WITHDRAWAL AMOUNT IN PURCHASING OF LANDS. C OPY OF THE REGISTRY OF LAND HAS BEEN FILED AND THE SAME IS PLACED ON RECORD. S INCE THE ASSESSEE FIRM FAILED TO EXPLAIN THE REASON FOR INTRODUCTION OF FUNDS, THE ENT IRE AMOUNT OF RS.22,50,000/ - SO INTRODUCED B Y THE PARTNERS IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE TREATING SUCH AMOUNT AS UN - NECESSARY RAISING OF FUNDS IN THE FIRM AND WITHDRAWAL FOR PURCHASING OF LAND. PENALTY PROCEEDINGS U/S.271(1)(C) ARE BE ING INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS. ADDITION - RS.22,50,000/ - . 3 I .T.A. NO. 92/BILR/2013 / ASSESSMENT YEAR :2008 - 09 3. B E FORE THE LD CIT(A), IT WAS PLEADED THAT THE PARTNERS HAVE ADMITTED THE INTRODUCTION OF FUNDS FROM TIME TO TIME TO MEET THE BUSINESS REQUIREMENTS OF THE FIRM. LATER ON WHEN THE PARTNERS WERE PURCHASING THE LAND, THE FUNDS AS PER THE REQUIREMENTS WERE WITHDRAWN FROM THEIR RESPECTIVE ACCOUNT FROM THE FIRM. HOWEVER, LD CIT(A) WAS NOT CONVINCED AND IN HIS VIEW THE CASH WAS DEPOSITED AND THE WITHDRAWALS WERE MADE TH ROUGH BANK TRANSA C TI ONS, WHICH HAD CREATED SUSPICIO N. A CCORDING TO HIM, IT HAS ALSO BEEN EXPLAINED THAT FOUR PARTNERS H AVE DEPOSITED THE AMOUNT ALMOST FROM TIME TO TIME. HE HA S ALSO COMMENTED THAT THE PARTN ERS WERE NOT HAVING ANY OTHER INCOME THAN THE IN TEREST AND REMUNERATION RECEIVED FROM THE FIRM. T HEREFORE, THE LD CIT(A) HAS AFFIRMED THE IMPU GNED ADDITION. I T IS WORTH TO MENTION THAT THE ASSESSEE HAD DRAWN THE ATTENTION OF THE LD CIT ( A) THAT THE AO HAD NOT SPECIFICALLY ME NTIONED THE INVO CATION OF SE CTION 68, THEREFORE, THE REASONS GIVEN BY T HE AO IS NOT SUSTAINABLE IN THE EYES OF LAW BUT AS PER LD CIT(A), ASSESSEE WAS STILL UNDER OBLIGATION TO ESTABLISH THE SOURCE OF DEPOSIT THAT TO O IN CASH BY THE PARTNERS. 4. FROM THE SIDE OF THE ASSESSEE , SHR R.B .DOSHI ,LD A R. APPEARED AND EXPLAINED THAT THE PARTNERS HAVE INDEPENDENTLY FILED THE RETURN OF INCOME AND OUT OF KNOWN RESOURCES , RESPECTIVE AMOUNTS WERE DEPOSITED WITH THE FIRM. H E HAS ALSO PLEADED THAT THERE WERE WITHDRAWAL WHICH WERE RE - DEPOSITED., LD A.R. SUBMITTED THAT ALL THE PARTNERS WHO HAVE INTRODUCED THE AMOUNT IN ASSESSEE COMPANY ARE ASSESSED TO INCOME TAX IN THEIR INDIVIDUAL CAPACITY, THE CAPITAL 4 I .T.A. NO. 92/BILR/2013 / ASSESSMENT YEAR :2008 - 09 INTRODUCTION IS OWNED BY THE PARTNERS, THEREFORE, THE ADDITION CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE FIRM. IN SUPPORT OF THIS, R ELIANCE HAS ALSO BEEN P L A CED ON THE FOLLOWING DECISIONS: I) CIT VS. ME TACHEM INDUSTRIES, 245 ITR 160 II) CIT VS. BURMA ELECTRO CORPORATION, 252 IT 344 (PH) 5. FROM THE SIDE OF THE REVENUE, SHRI H.M.,MOHARANA, LD D.R. APPEARED AND SUPPORTED THE A CTION OF THE AUTHORITIES BELOW. 6. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS. ON CAREFUL EXAMINATION OF FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE BASIC REQUIREMENTS OF SECTION 68 HAVE BEEN DISCHARGED BY THE ASSESSEE BY F URNISHING THE RELEVANT EVIDENCES. THE EVIDENCES WHICH WERE FURNISHED BY THE ASSESSEE WERE CONFIRMATION LETTERS OF THE CREDITORS, COPIES OF I.T.RETURNS, PAN NOS, INCOME DECLARED AND THE BANK ACCOUNTS . THE PRELIMINARY ONUS WAS DISCHARGED BY THE ASSESSEE. T HERE IS NO DISPUTE TO THE FACT THAT ALL THE PARTNERS HAVE OWNED THE INTRODUCTION OF CAPITAL IN ASSESSEES FIRM. THE AO HAS NOT CHALLENGED THE CORRECTNESS OF THE EVIDENCES FILED BY THE ASSESSEE. WE F IND THAT THIS IS A CASE WHERE THE PARTNERS HAVE INTRODUCE D THE CAPITAL, THEREFORE, THE ISSUE IS COVERED BY THE DECISION PRONOUNCED BY HONBLE M.P HIGH COURT IN THE CASE OF METACHEM INDUSTRIES (SUPRA), WHEREIN, IT HAS BEEN HELD AS UNDER: 5 I .T.A. NO. 92/BILR/2013 / ASSESSMENT YEAR :2008 - 09 SO FAR AS THE RESPONSIBILITY OF THE ASSESSEE IS CONCERNED, IT IS SATISFACT ORILY DISCHARGED. WH ETHER THAT PERSON IS INCOME TAX PAYER OR NOT OR FROM WHERE HE HAS BROUGHT THIS MONEY IS NOT THE RESPONSIBILITY OF THE FIRM. T HE MOMENT THE FIRM GIVES SATISFACTORY EXPLANATION AND PRODUCES THE PERSON WHO HAS DEPOSITED THE AMOUNT, THEN THE BURDEN OF THE FIRM IS DISCHARGED AND IN THT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE INCOME OF THE FIRM FOR THE PURPOSES OF INCOME TAX. I T IS OPEN FOR THE AO TO TAKE APPROPRIATE ACTION UNDER SECTION 69 OF THE ACT AGAINST THE PERSON WHO HAS NOT B EEN ABLE TO EXPLAIN THE INVESTMENT. I N THE PRESENT CASE, THERE IS THE CONCURRENT FI NDING OF BOTH THE CIT(A) AS WELL AS OF THE TRIBUNAL THAT THE FIRM HAS SATISFACTORILY EXPLAINED THE AFORESAID ENTRIES. 7. IN THE CASE AT HAND, THE ASSESSEE HAS DISCHARGED ITS ONUS SATISFACTORILY BY FURNISHING ALL THE RELEVANT EVIDENCES. T HEREFORE, RESPECTFULLY FOLLOWING THE DE CISION OF HONBLE HIGH COURT (SUPRA), WE REVERSE THE FINDINGS OF LD CIT(A) AND DIRECT THE DELETION OF ADDITION OF RS.22,50,000/ - . 8. IN THE RESUL T, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 /02/2016 . S D/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 19 / 02 /20 1 6 . . ./ PARIDA , SR. PS 6 I .T.A. NO. 92/BILR/2013 / ASSESSMENT YEAR :2008 - 09 / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : ASIAN CABLE COMPANY, 2, INDUSTRIAL ESTATE, CHAKRADHAR NAGAR, RAIGARH 2. / THE RESPONDENT: ITO - 1, AAYAKAR BHAVAN, NEAR CHAKRADHAR NAGAR, RAIGARH 3. ( ) / THE CIT(A) - BILASPUR 4. / CIT , BILASPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RA IPUR