The ITO, Ward-2(4), Surat V. Smt. Minarani M.Dhanda, Surat

ITA 95/AHD/2009

• Counselvise Citation: [2011] 129 COUNSELVISE.COM (IT) 9958 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & A. K. GARODIA, A.M.) I.T.A. NO. 95 /AHD/2009 (ASSESSMENT YEAR : 2005-2006) INCOME TAX OFFICER, WARD -2(4), AAYAKAR BHAVAN, MAJURA GAGE, SURAT. (APPELLANT) VS. SMT. MINARANI M. DHANDA, PROP. OF M/S. S.P. & SONS, 2/1892, LAL WADI, OPP. ANAND NAGAR, SAGRAMPURA, SURAT. (RESPONDENT ) PAN: AATPD 0535 E APPELLANT BY : SHRI B. L. YADAV, D.R . RESPONDENT BY : SHRI HARDIK VORA. ( )/ ORDER DATE OF HEARING : 24-11-2011 DATE OF PRONOUNCEMENT : 9-12-2011 PER: SHRI D. K. TYAGI , J. M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)-II, SURAT IN APPEAL NO.CAS/II/256/07-08 DATED 30-10-2008 FOR THE ASSESSMENT YEAR 2005- 06. 2. THE ONLY EFFECTIVE GROUND TAKEN BY THE REVENUE I S THAT ON THAT THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LED. CIT (A), SURAT HAS ERRED IN DELETING ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 2 THE ADDITION OF RS.15,36,500/- ON ACCOUNT OF UNEXPL AINED CASH CREDITS IN THE NAMES OF DHARMESH CORPIORATION AND D.B. ENTERPRISES MEREL Y ON THE ENTRY OF REPAYMENT OF BANK PASSBOOK OF THE ASSESSEE, IGNORING THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY OF THE CREDITORS ITSELF AND THAT THE ASSES SEE HAD NEITHER FURNISHED THE ADDRESS, PAN, ETC. OF THE CREDITORS AT THE ASSESSME NT STAGE NOR AT THE APPELLATE STAGE BEFORE THE LD. CIT (A). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED HER RETURN OF INCOME ON 13- 10-2005 DECLARING THEREIN TOTAL INCOME OF RS.1,21,0 60/- ALONG WITH RETURN OF INCOME AUDIT REPORT U/S. 44AB ALONG WITH FORM NO.3C & 3D, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ALSO WERE FILED. THE SAID R ETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT ON 27-3-2006 ACCEPTING THE R ETURNED INCOME. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143( 2) WAS ISSUED ON 18-10-2006. THE ASSESSEE IS DOING THE BUSINESS IN THE NAME OF M /S. S.P & SONS ENGAGED IN THE BUSINESS OF TRADING IN YARN. DURING THE YEAR THE TO TAL TURNOVER OF RS.85,15,675/- AND GROSS PROFIT OF RS.4,95,718/-. THE G.P. RATIO W ORKED OUT TO 5.82% AS AGAINST G.P. DISCLOSED AT RS.4,64,265/- GIVING GROSS PROFIT RATE OF 6.69% ON TOTAL TURNOVER OF RS. 69,43,.400/- IN THE IMMEDIATELY PRECEDING YE AR. THERE IS FALL IN THE G.P. RATIO. FOR THIS FALL IN G.P. THE ASSESSEE HAS SUBM ITTED REASONS WHICH ARE PLACED ON RECORDS. 4. BEFORE THE A.O. ASSESSEE HAD SHOWN UNSECURED LOANS AS UNDER: 1. DHARMESH CORPORATION : RS. 4,91,000/- 2. D.B. ENTERPRISES : RS.10,45,500/- ------------------ TOTAL RS.15,36,500/- ------------- ------ THE A.O. ASKED THE ASSESSEE TO FURNISH ALL REQUISIT E DETAILS AND EVIDENCES REGARDING THE SAID LOANS. IT HAS BEEN RECORDED BY THE A.O. TH AT THE ASSESSEE WAS UNABLE TO ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 3 PROVIDE ANY DETAIL OR ANY EVIDENCE, WHICH MEANT THA T THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AS ALSO THE GENUINENESS OF T HE TRANSACTIONS REMAINED UNVERIFIED AND UNEXPLAINED. PLACING RELIANCE ON CE RTAIN CASE-LAWS THE AO TREATED THE TOTAL OF SUCH LOANS, I.E. THE SUM OF RS.15,36,5 00/- AS UNEXPLAINED CASH CREDITS UNDER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT. 5. BEFORE THE LD. CIT (A) IN THE WRITTEN SUBMISSION S IT HAS BEEN CONTENDED BY THE A.R. THAT THE ASSESSEE WAS THE PROPRIETOR OF M/ S. S.P. & SONS WHICH WAS ENGAGED IN THE BUSINESS OF TRADING IN YARN. BOTH T HE CREDITORS I.E. M/S. DHARMESH CORPORATION AND M/S. D.B. ENTERPRISES, BELONGED TO THE SAME GROUP AND THE LOANS WERE REPAID DURING THE YEAR BY CHEQUES. SINCE, THE ASSESSEE HAD CERTAIN BUSINESS DISPUTE WITH THE SAID PARTIES, LOAN CONFIRMATIONS C OULD NOT BE OBTAINED. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED COPIES OF LOAN ACCOUNTS OF BOTH THE PARTIES ALONG WITH COPIES OF H ER BANK STATEMENT EVIDENCING THE REPAYMENT OF THE SAID LOANS BY ACCOUNT-PAYEE CHEQUE S. THE ASSESSEE HAD REQUESTED THE AO TO ISSUE SUMMONS TO THE SAID PARTIES OR TO I SSUE NOTICE U/S. 133(6) OF THE ACT, SINCE THEY WERE NOT COOPERATING WITH THE ASSES SEE. A COPY OF THE ASSESSEES LETTER TO THE AO MAKING SUCH REQUEST HAS BEEN ANNEX ED TO THE WRITTEN SUBMISSION,. IT HAS BEEN ALLEGED BY THE AR THAT ALL SUCH EVIDENC ES AND REQUESTS HAD BEEN IGNORED BY THE AO. WITHOUT PREJUDICE, IT HAS BEEN A RGUED BY THE AR THAT EVEN IF IT IS TO BE PRESUMED THAT THE AOS ACTION WAS CORRECT, THEN THE AO OUGHT TO HAVE MADE THE ADDITION OF ONLY THE PEAK AMOUNT OF THE LO AN TRANSACTIONS WITH M/S. D. B. ENTERPRISES WITH WHOM THERE WERE A NUMBER OF TRANSA CTIONS OF RECEIPTS AND PAYMENTS. THE PEAK AMOUNT INVOLVED WAS RS.5,27,500/ -. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE AR, THE LD. CIT (A) OBSERVED AS UNDER:- ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 4 5. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. I F IND THAT THE AO HAD CLEARLY IGNORED THE FACT THAT THE LOANS ALLEGEDLY T AKEN BY THE ASSESSEE FROM M/S. DHARMESH CORPORATION AND D. B. ENTERPRISES, DU RING THE YEAR, OF THE SUMS OF RS.4,91,000/- AND RS.10,45,500, HAD BEEN RE PAID BY THE ASSESSEE IN COURSE OF THE YEAR ITSELF. COPIES OF THE LEDGER ACC OUNTS OF BOTH THESE CREDITORS, ALONG WITH THE BANK STATEMENT OF THE ASS ESSEE CLEARLY INDICATING THE TRANSACTIONS ENTERED INTO WITH THE SAID PARTIES , WERE FURNISHED BEFORE THE AO VIDE LETTER DATED 26-12-2007. IF THIS WAS THE CA SE, THEN THE AO WAS UNJUSTIFIED AND FACTUALLY INCORRECT IN OBSERVING TH AT NO DETAIL OR EVIDENCE WHATSOEVER HAD BEEN FURNISHED BEFORE HIM WITH REGAR D TO THE SAID LOANS. IT IS EVIDENT THEREFORE THAT THE AO HAD ALREADY MADE UP H IS MIND TO MAKE THE ADDITION. UNLESS THE ASSESSEE HAD ACTUALLY MADE REC EIVED THE SAID LOANS, THERE COULD BE NO CAUSE OR REASON OR OPPORTUNITY TO REPAY THE SAME, AND THE REPAYMENT WAS DONE IN COURSE OF THE YEAR ITSELF. TH EREFORE, THERE WAS ABSOLUTELY NO CASE FOR MAKING ANY ADDITION U/S. 68 OF THE ACT. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.15,36,500/-. 7. NOW AGAINST THE ABOVE DELETION OF ADDITION, THE REVENUE IS IN APPEAL BEFORE US. THE LD. D.R. RELIED ON THE ORDER OF THE ASSESS ING OFFICER WHEREAS THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT (A). 8. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECO RDS. WE FIND THAT A.O HAS MADE AN ADDITION OF RS.15,36,500/- AS UNEXPLAINED C ASH CREDIT U/S. 68 OF THE I.T. ACT ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS AND THE EVIDENCE IN RESPECT OF THESE LOANS. THE LD. CIT (A) ON THE OTHE R HAND HAS GIVEN RELIEF TO THE ASSESSEE ON THE BASIS OF INFORMATION PRODUCED BY TH E ASSESSEE TO THE AO VIDE ITS LETTER DATED 26-12-2007 DURING THE ASSESSMENT PROCE EDINGS ITSELF. WE FURTHER FIND THAT ONLY BASIS OF THE DECISION OF LD. CIT (A) WAS THAT LOANS WERE REPAID BY THE ASSESSEE DURING THE YEAR ITSELF. IN OUR OPINION, TH IS MAY ESTABLISH THE IDENTITY OF THE LOAN CREDITORS BUT THEIR CREDITWORTHINESS REMAINED TO BE ESTABLISHED. THEREFORE, WE FEEL THAT THE MATTER SHOULD GO BACK TO THE FILE OF LD. CIT (A) FOR FRESH ADJUDICATION ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 5 FOR EXAMINING THE CREDITWORTHINESS OF THE LOAN CRED ITORS SINCE NO EVIDENCE WAS MADE AVAILABLE EVEN BEFORE US IN THIS RESPECT. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 9 - 12- 2011. (A. K. GARODIA) (D. K.TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II, SURAT 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO.95/AHD/2009 ASSES SMENT YEAR 2005-06. 6 1.DATE OF DICTATION 24 - 11 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 1 / 12 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 19 - 12 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 9 - 12 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 20 -12 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 0 - 12 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..