Bansidhar Cotton Processing Pvt.Ltd., Gandhinagar V. The ACIT., GNR Circle, Gandhinagar

ITA 936/AHD/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9053 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 28-03-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Unexplained cash credit; Gift; Onus to prove; Set aside
• Section: 131; 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.936/AHD/2005 A. Y.: 2001-02 BANSIDHAR COTTON PROCESSING PVT. LTD., 4/12, JAWAHAR MARKET, DEHGAM, GANDHINAGAR, PA NO. AAACB 8431B VS THE A.C. I.T., GANDHINAGAR CIRCLE, GANDHINAGAR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SANJAY R. SHAH, AR RESPONDENT BY SHRI SANJEEV KASHYAP, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), GANDHINAGAR, AHMED ABAD DATED 06 TH DECEMBER, 2004 FOR ASSESSMENT YEAR 2001-02. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.2,00,000/- ON ACCOUNT OF LOW GROSS PROFIT. THE A O NOTED THAT THE GROSS PROFIT OF THE ASSESSEE AS COMPARED TO EARLIER YEAR HAS FALLEN. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AND THE AO BY COMPARING THE LOSS FROM EARLIER YEAR IN THE STOCK DIRECTED TO MAKE ADDITION OF RS.2,00,000/-. THE LEARNED CIT(A) CONSIDERING THE S UBMISSIONS OF THE ASSESSEE NOTED THAT THE ASSESSEE HAS NOT MAINTAINED ANY DAY TO DAY STOCK REGISTER AND COMPARED THE PURCHASES FOR SEVER AL MONTHS. THE LEARNED CIT(A) ALSO COMPARED THE SALES AND THEREAFT ER NOTED THAT THE ASSESSEE WAS NOT MAINTAINING PROPER RECORD WITH A P URPOSE AND WAS ITA NO.936/AHD/2005 BANSIDHAR COTTON PROCESSING PVT. LTD. 2 SHOWING LOW YIELD. THE LEARNED CIT(A) ACCORDINGLY R EJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOU NT OF THE ASSESSEE. HE HAS SUBMITTED THAT THE AO HAS COMPARED THE LOSS IN THE EARLIER YEAR IN THE STOCK AND ONLY BECAUSE OF LOW GROSS PROFIT RATE ADDITION IS MADE WHICH IS UNJUSTIFIED. ON THE OTHER HAND, THE LEARNE D DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND CO NSIDERING THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT THE ADDITION IS CLEARLY UNJUSTIFIED. THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN MAINTENANCE OF THE BOOKS OF ACCOUNT BY THE ASSESSEE . THE AO HAS COMPARED THE GROSS PROFIT RATE AS COMPARED TO EARLI ER YEAR AND ALSO THE LOSSES IN THE STOCK. IN THE ABSENCE OF ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE ABOVE REASO NS ARE NOT SUFFICIENT TO MAKE ADDITION ON ACCOUNT OF GROSS PROFIT. THE AO HAS ALSO NOT REJECTED THE BOOK RESULTS OF THE ASSESSEE U/S 145 OF THE IT ACT. THE LEARNED CIT(A) HAS HOWEVER, COMPARED THE PURCHASES AND SALES IN OR DER TO JUSTIFY THE ACTION OF THE AO. THE LEARNED CIT(A) HAS HOWEVER, F AILED TO NOTE THAT THE AO HAS NOT GIVEN ANY SPECIFIC FINDING FOR MAKING TH E LUMP SUM AD HOC ADDITION OF RS.2,00,000/-. IN THE ABSENCE OF ANY SP ECIFIC DISCREPANCIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, WE DO NOT FIN D ANY JUSTIFICATION TO UPHOLD THE AD HOC ADDITION IN THE MATTER. WE ACCORD INGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. AS A RESULT, GROUN D NO.1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. ON GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.1,15,000/- BEING UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT RECEIVED FROM THE DEPOSITOR SMT. SARIKA PATEL. IT IS STATED THAT THE ASSESSEE RECEIVED THE ABOVE DEPOSIT FROM SMT. SARIK A PATEL WHO HAS ITA NO.936/AHD/2005 BANSIDHAR COTTON PROCESSING PVT. LTD. 3 RECEIVED GIFT FROM SHRI VITHALBHAI PATEL OF USA. SU MMONS U/S 131 OF THE IT ACT WAS ISSUED AGAINST HER FOR HER EXAMINATION B Y THE AO BUT THE ASSESSEE STATED THAT SHE IS RESIDING AT HOOGLY (WES T BENGAL) AND HENCE IT IS NOT CONVENIENT FOR HER TO APPEAR BEFORE THE AO. THE AO ACCORDINGLY NOTED THAT THERE IS NO RELATION BETWEEN THE DONOR A ND THE DONEE AND THERE IS NO OCCASION FOR MAKING THE GIFT. SHE IS NO T ASSESSED TO TAX. THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF SM T. SARIKA PATEL AND ACCORDINGLY THE SAME WAS TREATED AS UNEXPLAINED DEP OSIT U/S 68 OF THE IT ACT. ADDITION WAS ACCORDINGLY MADE. IT WAS SUBMIT TED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE HAS FILED HER CONF IRMATION BEFORE THE AO AS WELL AS COPY OF THE PAY ORDER RECEIVED BY HER FO R GIFT TO PROVE HER CREDITWORTHINESS. THE DECISION OF THE HONBLE GUJAR AT HIGH COURT IN THE CASE DCIT VS ROHINI BUILDERS 256 ITR 360 (GUJ) AND THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF NEMICHAND KOTHARI VS ACIT 264 ITR 254 (GAU) WERE RELIED UPON . THE LEARNED CIT(A) HAS HOWEVER , NOTED THAT THE ASSESSEE FAILED TO PROVE EVEN THE IDENTITY OF T HE CREDITOR. HER CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAS ALSO NOT BEEN PROVED. IN THE CASE OF ROHINI BUILDERS (SUPRA), THE DEPOSITORS WERE ASSESSED TO INCOME TAX. THEREFORE, THEIR IDENTITY W AS PROVED. THE LEARNED CIT(A) ALSO NOTED THAT THE CREDITOR SMT. SARIKA PAT EL THOUGH STATED TO BE RESIDING AT HOOGLY (WEST BENGAL) BUT SHE HAS OPENED ACCOUNT WITH UNION COOPERATIVE BANK LTD. AT NARODA, AHMEDABAD, GUJARAT . THEREFORE, THERE WAS NO NECESSITY FOR HER TO RECEIVE THE GIFT AND OP EN ACCOUNT AT AHMEDABAD AND TO GIVE LOAN. THE LEARNED CIT(A) NOTE D THAT SINCE SHE FAILED TO APPEAR BEFORE THE AO FOR EXAMINATION ON O ATH, THEREFORE, HER SIGNATURE ON THE CONFIRMATION LETTER IS ALSO NOT PR OVED. THE LEARNED CIT(A) ALSO NOTED THAT COPY OF HER BANK ACCOUNT HAS NOT BEEN FILED AND EVEN HER ADDRESS IN THE CONFIRMATION LETTER IS NOT GIVEN. IT IS ONLY CARE OF ADDRESS OF SOME BUSINESS CONCERN. THE LEARNED CIT(A ), THEREFORE, NOTED THAT THE FACTS OF THIS CASE ARE CLEARLY DISTINGUISH ABLE FROM THE CASES ITA NO.936/AHD/2005 BANSIDHAR COTTON PROCESSING PVT. LTD. 4 RELIED UPON BY THE ASSESSEE. ACCORDINGLY, THIS GROU ND OF APPEAL OF THE ASSESSEE WAS DISMISSED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAID SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND A GAIN RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF ROHINI BUILDERS (SUPRA), THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF NEMICHAND KOTHARI (SUPRA) AND ALSO RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIMAL VS CIT 280 ITR 512 (GUJ). HE HAS REFERRED TO PAPER BOOK PA GE 34 WHICH IS COPY OF THE REPLY FILED BEFORE THE AO, PAPER BOOK PAGE 3 6 COPY OF THE CONFIRMATION OF THE DEPOSITOR AND PAPER BOOK PAGE 3 7 WHICH IS PAY ORDER GIVEN BY THE DONOR TO SARIKA PATEL AS GIFT. HE, HA S, THEREFORE, SUBMITTED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE THE IDENTITY OF THE CREDITOR, HER CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS IN THE MATTER. THEREFORE, THIS MAY BE DELETED. 8. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LEARNED CI T(A) HAS GIVEN SPECIFIC FINDING AGAINST THE ASSESSEE THAT EVEN NO ADDRESS OF THE DEPOSITOR IS GIVEN AND NO COPY OF THE BANK ACCOUNT IS FILED. THEREFORE, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE GENU INENESS OF THE TRANSACTION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS REC EIVED LOAN FROM SMT. SARIKA PATEL. HER CONFIRMATION IS FILED AT PAPER BO OK PAGE 36 IN WHICH HER ADDRESS IS SHOWN AS C/O. ANNAPURNA TIMBER CO., VILLAGE & P. O. SHIAKHALA , DISTRICT HOOGLY, WEST BENGAL. IN THE S AME CONFIRMATION IT IS STATED THAT SHE HAS DEPOSITED RS.1,15,000/- WITH TH E ASSESSEE THROUGH CHEQUES DRAWN ON UNION COOPERATIVE BANK LTD., NAROD A. THE LEARNED CIT(A) NOTED THAT NARODA IS IN AHMEDABAD. THE ABOVE FACTS, THEREFORE, ITA NO.936/AHD/2005 BANSIDHAR COTTON PROCESSING PVT. LTD. 5 SHOW THAT THE DEPOSITOR OPENED ACCOUNT AT AHMEDABAD . THEREFORE, THERE WAS NO DIFFICULTY FOR HER TO APPEAR BEFORE THE AO F OR EXAMINATION ON OATH. HOWEVER, SHE FAILED TO APPEAR BEFORE THE AO FOR EXA MINATION ON OATH. THE EXPLANATION OF THE ASSESSEE THAT THE SHE IS RESIDIN G AT HOOGLY, WEST BENGAL, THEREFORE APPEARS TO BE CONCOCTED STORY AND THEREFORE, CANNOT BE ACCEPTED. SINCE HER CORRECT RESIDENTIAL ADDRESS HAS NOT BEEN GIVEN, THEREFORE, THE AO COULD NOT HAVE EXAMINED HER SIGNA TURE ON THE CONFIRMATION. SHE IS ALSO NOT ASSESSED TO TAX AND C OPY OF HER BANK ACCOUNT IS ALSO NOT FILED. THE ABOVE FACT, THEREFOR E, SHOWS THAT THE ASSESSEE HAS FAILED TO PROVE EVEN THE IDENTITY OF T HE CREDITOR, HER CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. IN THE CASE OF MURLIDHAR LAHORIMAL (SUPRA) THE DEPOSITOR A PPEARED BEFORE THE AO AND GENUINENESS OF THE TRANSACTION WAS ESTABLISH ED. THE LEARNED CIT(A) HAS ALREADY OBSERVED THAT THE DECISIONS RELI ED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE CLEARLY DISTINGUISHABL E FROM THE FACTS OF THIS CASE. WE, DO NOT FIND ANY ERROR IN THE FINDING OF T HE LEARNED CIT(A). 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT THE ASSESSEE HAS ALSO FILED CONFIRMATION OF THE DEP OSITOR WHICH IS ALSO NOT PROVED AND SUBSTANTIATED THROUGH ANY MATERIAL ON RE CORD. THEREFORE, MERELY FILING OF THE CONFIRMATION WITHOUT GIVING CO RRECT ADDRESS IN THE SAME AND THAT THE DEPOSITOR OPENED BANK ACCOUNT AT AHMEDABAD, WOULD SHOW SUSPICION IN THE STORY PUT FORTH BY THE ASSESS EE. MERE FILING OF CONFIRMATION IN THIS CASE WOULD NOT PROVE THE IDENT ITY OF THE CREDITOR, HER CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. HONBLE SUPREME COURT IN THE CASES OF CIT, WEST BEN GAL II VS DURGA PRASAD MORE 82 ITR 540 (SC) AND SUMATI DAYAL VS CIT 214 ITR 801 (SC) HELD THAT THE COURTS AND THE TRIBUNALS HAVE TO JUDG E THE EVIDENCES BEFORE THEM BY APPLYING TEST OF HUMAN PROBABILITIES AND AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES. IN THE ABOVE CASE AS NOTED ABOVE, THE CIRCUMSTANCES LEADS ONLY TO THE IRRESISTIBLE CONCLU SION THAT THE ASSESSEE ITA NO.936/AHD/2005 BANSIDHAR COTTON PROCESSING PVT. LTD. 6 FAILED TO PROVE THE IDENTITY OF THE CREDITOR, HER C REDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. WE A CCORDINGLY DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THIS GRO UND OF APPEAL. WE CONFIRM THE FINDINGS OF THE AUTHORITIES BELOW AND D ISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 11. NO OTHER POINT IS ARGUED. 12. AS A RESULT, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED ON 18-02-2010 SD/- SD/- (A. N. PAHUJA) ACOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 18-02-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD