Dy. CIT, Circle-2, Kolhapur V. M/s. Menon Sales & Services, Kolhapur

ITA 934/PUN/2013

• Counselvise Citation: 93424514 RSA 2013
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.934/PN/2013 (A.Y: 2009-10) JT.CIT, RANGE-2, KOLHAPUR APPELLANT VS. M/S. MENON SALES & SERVICES GUR MARKET YARD, VIKRAM NAGAR, KOLHAPUR PAN: AACFM9773C RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI HAR IDAS BHAT DATE OF HEARING: 21.04.2014 DATE OF ORDER : 29.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS), [IN SHORT C IT(A)] KOLHAPUR, DATED 18.02.2013 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS.39,14,000/-, ADDED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER FOR A.Y. 2009-10 AS UNEXPLAINED CA SH CREDITS U/S 68 OF THE IT ACT, 1961, OWING TO UNEXPL AINED CASH CREDITED IN THE BOOKS OF THE ASSESSEE FIRM. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEAL) ERRED IN DELETING THE ADDITION OF RS.67,23,000/-, ADDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR A.Y.2009-10 AS UNEXPLAINED CAS H CREDITS (SUNDRY ADVANCES) U/S 68 OF THE IT ACT,1961 , OWING TO UNEXPLAINED CASH CREDITED IN THE BOOKS OF THE ASSESSEE FIRM. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEAL) ERRED IN DELETING THE ADDITION OF RS.7,20,500/-, ADDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR A.Y.2009-10 AS UNEXPLAINED CASH CREDITS SHOWN AS RECOVERY OF CASH BY THE ASSES SEE FIRM FROM MRS. PADMINI C. MENON AND MRS. SHANTA NARAYANAN U/S 68 OF THE IT ACT 1961, OWING TO UNEXPLAINED CASH CREDITED IN THE BOOKS OF THE ASSES SEE FIRM, AS RECEIVED FROM THEM. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEAL) ERRED IN DELETING THE ADDITION OF RS.9,68,800/-, ADDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR A.Y.2009-10 AS UNEXPLAINED CASH CREDITS IN THE CAPITAL ACCOUNT OF THE PARTNER SHRI VIJAY C. MENON U/S 68 OF THE IT ACT, 1961, OWING TO UNEXPLAINED CASH CREDITED IN THE BOOKS OF THE ASSES SEE FIRM. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEAL) ERRED IN DELETING THE ADDITION ON ACCO UNT OF UNDISCLOSED AMOUNT OF LEASE RENT OF RS.5,18,066/- THEREBY HOLDING THAT THE MISMATCH OF THE AMOUNT DISCLOSED IN THE RETURN AND ACCOUNTS AND ALSO THE T DS DEDUCTED WAS EXPLAINED BY THE ASSESSEE FIRM. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) FAILED TO APPRECIATE THAT DURING THE REMAND PROCEEDINGS, THE ASSESSEE MANAGED TO PROVIDE THE IDENTITY OF ONLY 6 CREDITOR WHEREAS FOR EXPLAINING THE CASH CREDITS NOT ONLY IDENTITY OF THE CREDITORS BUT THE CREDITWORTHINESS OF THE CREDITOR AS WELL AS THE GENUINENESS OF THE TRANSACTION HAS TO BE PROVED SIMULTANEOUSLY, WHICH WAS NOT DONE IN THIS CASE. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (APPEAL) ERRED IN ACCEPTING THE STATEMENT OF TH E ASSESSEE AT FACE VALUE DESPITE THE FACT THAT THE AS SESSEE HAS FAILED TO ESTABLISH THE EXISTENCE OF ALL THE CR EDITORS, THE GENUINENESS OF EACH AND EVERY TRANSACTIONS AND CREDIT WORTHINESS OF EACH CREDITOR. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (APPEAL) ERRED IN NOT EXERCISING HIS POWERS TO VERIFY THE CORRECTNESS OF THE CLAIM MADE DURING THE APPELL ATE PROCEEDINGS WHEN THE CLAIM WAS MADE FOR THE FIRST T IME BEFORE HIM AND THEREFORE, PASSED AN INCORRECT AND ERRONEOUS ORDER, BY RELYING ON PATENTLY ERRONEOUS REMAND REPORT. 3 9. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS), KOLHAPUR BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADDITION, ALTER, AMEN D, RAISE, ANY OF THE ABOVE, OR ANY OTHER GROUNDS RAISE D. 2. THE ASSESSEE IS ENGAGED IN TRADING IN AUTO COMPO NENTS. IT ALSO RENTS OUT MACHINERIES. THE FIRST ISSUE IS WIT H REGARD TO ADDITION OF 39,14,000/- ADDED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS U/S.68 OF THE ACT OWING TO U NEXPLAINED CASH IN THE BOOKS OF ASSESSEE FIRM. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEIVED CASH AMOUNT TOTALING TO 39,14,000/- ON BEHALF OF M/S. MENON AND MENON LTD. FROM UNNAMED PARTIES AS PER VARIOUS ENTRIES DATED 16.09. 2008 TO 02.12.2008 IN ITS BOOKS OF ACCOUNTS. AS THESE AMOU NTS WERE SHOWN AS CASH RECEIPT BY THE ASSESSEE, THE ASSESSIN G OFFICER ASKED TO EXPLAIN THE NATURE AND SOURCE OF THIS CASH CREDIT. NO EXPLANATION WAS FURNISHED FROM THE ASSESSEE, THEREF ORE, THE ASSESSING OFFICER MADE ADDITION OF 39,14,000/- TO ASSESSEES INCOME AS UNEXPLAINED U/S.68 OF THE ACT. 2.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CALLED FOR REMAND REPORT, GRANTED RELIEF TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON B EHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF 39,14,000/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDITS U/S 68 OF THE I T ACT, 1961. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNE D AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 2.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE CIT(A) GRANTED RELIEF TO T HE ASSESSEE ON THE POINT AFTER CALLING THE REMAND REPORT. AS PER THE ASSESSING 4 OFFICER, THE GENUINENESS OF THE FARMERS WAS PROVED AND THEY HAVE ACCEPTED THAT THE MONEY WAS RECEIVED BY THEM AS ADV ANCE AGAINST SALE OF THEIR AGRICULTURAL LAND WHICH WAS R ECEIVED IN CASH FROM THE ASSESSEE FIRM. THEREFORE, THE ASSESSING O FFICER REPORTS THAT THE GENUINENESS OF THE TRANSACTION HAS NOT PRO VED ON THE BASIS OF STATEMENTS ONLY AS THEY HAVE NOT PRODUCED ANY DOCUMENTARY EVIDENCE WHILE THE RETURN OF SUCH A BIG AMOUNT AND THAT TOO IN CASH. THE CIT(A) DID NOT ACCEPT THE CO NTENTION OF THE ASSESSING OFFICER. SINCE HE HAS ACCEPTED THE GENUI NENESS OF THE CREDITORS AND EXISTENCE OF TRANSACTION, NOTHING HAS PREVENTED HIM TO MAKE ANY ENQUIRY HE DEEMED PROPER TO ESTABLI SH OR CONTRADICT THE GENUINENESS OF THE TRANSACTION. ONC E IT IS ACCEPTED THAT THE FARMERS HAVE RECEIVED AMOUNT FROM THE ASSESSEE FIRM FOR SALE OF THEIR LAND. ONCE IT IS A CCEPTED THAT THE DEAL WAS CANCELLED AND THEREFORE, THE AMOUNT WAS RE TURNED BY THEM WAS TRUE. THERE WAS NO REASON TO DOUBT THE GE NUINENESS OF THE CASH CREDIT. ACCORDINGLY, THE CIT(A) WAS JUSTI FIED IN DELETING THE ADDITION IN QUESTION, WHICH NEEDS NO INTERFEREN CE FROM OUR SIDE. WE UPHOLD THE SAME. 3. THE NEXT ISSUE IS WITH REGARD TO DELETION OF ADD ITION OF 67,23,000/- MADE BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER AS UNEXPLAINED CREDIT (SUNDRY ADVANCE U/S.68 OF THE ACT) OWING TO UNEXPLAINED CASH CREDIT IN BOOKS OF ASSESS EE FIRM. AS MENTIONED IN EARLIER PARA THAT THE ASSESSEE FIRM HA D ADVANCED 67,23,000/- TO FARMERS FOR PURCHASE OF LAND ALONG W ITH 39,14,000/- ADVANCED BY A GROUP CONCERN M/S. MENON & MENON LTD. THIS CASH CREDIT IN ASSESSEES BOOKS WAS ADDE D BY THE ASSESSING OFFICER AS ASSESSEES INCOME U/S.68 OF TH E ACT AS APPARENTLY NO EXPLANATION WAS FURNISHED BY THE ASSE SSEE. 3.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF 5 ASSESSEE, WHEREIN, THE ASSESSEE EXPLAINED THIS AMOU NT WAS RECEIVED FROM FARMERS IN CASH. THE EXPLANATION WAS FURNISHED TO THE ASSESSING OFFICER AND THE REMAND REPORT WAS CAL LED FOR AS DISCUSSED IN PREVIOUS PARA. 3.2 IN THIS BACKGROUND AND FOR SIMILAR REASONING AS IN EARLIER, THIS ADDITION WAS RIGHTLY DELETED BY CIT(A) HAVING CONSIDERED REMAND REPORT. THIS REASONED FINDING OF CIT(A) NEE DS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF 7,20,500/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH C REDIT SHOWN AS RECOVERY OF CASH AMOUNTS FROM MRS. PADMINI C MEN ON AND MRS. SHANTA NARAYANAN U/S.68 OF THE ACT OWING TO UN EXPLAINED CASH CREDIT IN BOOKS OF ASSESSEE HAS RECEIVED FROM THEM. THE ASSESSING OFFICER HAS NOTED THAT AS PER CASH BOOK O F ASSESSEE, CASH OF 4,39,250/- AND 2,81,250/- WAS RECEIVED FROM MRS. PADMINI C. MENON AND MRS. SHANTA NARAYANAN RESPECTI VELY AND THE SAME WAS RECEIVED MOSTLY IN CASH AMOUNT OF 20,000/- IN BOTH THE CASES. HE OBSERVED THAT THE ASSESSEE DID NOT EXPLAIN THE ABOVE ENTRIES BEFORE THE ASSESSING OFFICER, THE REFORE, THIS AMOUNT WAS ADDED AS INCOME OF ASSESSEE U/S.68 OF TH E ACT. IN FIRST APPEAL AT THE REMAND REPORT STAGE, THE ASSESS EE EXPLAINED THAT IN F.Y. 2007-08, THE ASSESSEE FIRM SOLD A CAR BEARING NO.MH 09 AB-7533 TO MRS. SHANTA NARAYANAN IN RESPECT OF W HICH 2,81,250/- WAS DUE FROM HER, WHICH WAS RECEIVED BY THE ASSESSEE IN F.Y. 2008-09. REGARDING AMOUNT DUE FROM MRS. PA DMINI C. MENON, IT WAS EXPLAINED THAT THERE WAS OPENING BALA NCE OF 6,09,250/- IN F.Y. 2004-05 AGAINST WHICH, 1,70,000/- WAS RECEIVED BY THE ASSESSEE ON 11.12.2004 AND THE BALA NCE DUE WAS RECOVERED IN F.Y. 2007-08, WHICH WAS 4,39,250/-. THE ASSESSING OFFICER HAS REPORTED IN THE REMAND REPORT THAT REGARDING AMOUNTS CREDITED AS RECOVERY FROM MRS. PA DMINI C. 6 MENON AND MRS. SHANTA NARAYANAN VIDE LETTER DATED 2 8.09.2012, THE ASSESSEE HAS NOT PRODUCED ANY ADDITIONAL EVIDEN CE TO ESTABLISH ITS CLAIM, HENCE, IT WAS NOT POSSIBLE TO MAKE ANY COMMENT ON THE GENUINENESS OF THE AMOUNT RECEIVED F ROM THESE TWO PERSONS. THE ADDITION OF ABOVE AMOUNT WAS MADE BY THE ASSESSING OFFICER IN VIEW OF ASSESSEES FURNISHING NO EXPLANATION. AT THE REMAND REPORT STAGE, THE ASSESSEE HAS EXPLAI NED THE FACTS OF THE CASE AS DISCUSSED ABOVE ON WHICH, THE ASSESS ING OFFICER WAS ALLOWED AN OPPORTUNITY VIDE REMAND REPORT TO VE RIFY THE FACTS. SINCE THE ASSESSING OFFICER HAD NOTHING TO ADD, THE ADDITION MADE BY HIM WAS DELETED BY THE CIT(A) IN BACKGROUND OF REMAND REPORT WHEREBY, HE HAS DELETED THE ADDITION IN QUES TION BY REASONED ORDER. THIS REASONED FINDING OF CIT(A) NE EDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. THE NEXT ISSUE AS RAISED BY THE ASSESSEE IS WITH REGARD TO ADDITION OF 9,68,800/- ADDED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT IN CAPITAL ACCOUNT OF PARTN ER SHRI VIJAY C. MENON U/S.68 OF THE ACT OWING TO UNEXPLAINED CAS H CREDIT IN BOOKS OF ASSESSEE FIRM. THE ASSESSING OFFICER OBSE RVED THAT ONE OF THE PARTNER SHRI VIJAY C. MENON HAD INTRODUCED A DDITION TO CAPITAL TOTALING TO 14,31,990/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE DETAILS AND EXPLANATION OF THE SOURCE. THE DETAILS SUCH AS COMPUTERIZED PERSONAL CASH BOOK OF SHRI VIJ AY C. MENON WAS FURNISHED. THE ASSESSEE WAS FURTHER ASKED TO F URNISH THE BASIS FOR OPENING CASH BALANCE OF 10,68,800/- AS ON 01.04.2008 AND WEALTH TAX RETURN OF SHRI VIJAY C. M ENON. THESE DETAILS WERE NOT FURNISHED, THEREFORE, AN AMOUNT OF 10,68,800/- WAS ADDED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 5.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS DETAILS WERE FURNISHED IN THIS REGARD AND AFTER GOING THE SAME, THE ASSESSING OFFICER, IN THE REMAND REPORT, 7 COMMENTED THAT THE ASSESSEE HAS PRODUCED A COPY OF WEALTH TAX RETURN FILED BY THE PARTNER FOR A.Y. 2008-09 IN WHI CH A CASH BALANCE OF 10,68,800/- WAS REFLECTED. IN VIEW OF ABOVE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION IN QU ESTION. IT IS PERTINENT TO MENTION HERE THAT IN GROUNDS OF APPEAL , THE ASSESSEE HAS RAISED THE ISSUE OF 9,68,800/- WHILE IN THE MAIN BODY OF ORDER OF CIT(A), THE ADDITION IS WITH REGARD TO 10,68,800/-. IT APPEARS THAT THE AMOUNT MENTIONED IN GROUND OF APPE AL MAY BE WRONG. THE ASSESSING OFFICER MAY TAKE NOTE OF IT. 6. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF 5,18,066/- MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER MADE THE ADDITION OF 5,18,066/- DUE TO MISMATCH BETWEEN THE AMOUNT OF LEASE RENT CREDITED AND TDS MADE. THE MATTER WAS C ARRIED BEFORE FIRST APPELLATE AUTHORITY, WHEREIN THE VARIOUS CONT ENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND THE CIT(A) AFTER C ALLING FOR REMAND REPORT ON THE ISSUE. IN REMAND PROCEEDINGS, THE ASSESSING OFFICER AFTER GOING THROUGH THE PAPER FUR NISHED ON BEHALF OF ASSESSEE, WAS SATISFIED AS MENTIONED IN T HE REMAND REPORT. SO, THE CIT(A) ON THE BASIS OF POSITIVE RE PORT OF ASSESSING OFFICER, RIGHTLY DELETED THE ADDITION IN QUESTION. THIS REASONED FINDING OF CIT(A) BASED ON REMAND REPORT, WHEREBY, HE HAS DELETED THE ADDITION IN QUESTION, NEEDS NO INTERFER ENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 29 TH OF APRIL, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH APRIL, 2014 GCVSR 8 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE