M/S. SARVODAYA INDUSTRIES, Jaipur V. ITO, Jaipur

ITA 951/JPR/2011

• Counselvise Citation: 95123114 RSA 2011
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Corroborative evidences
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER ITA NO. 951/JP/2011 ASSTT. YEAR : 2005-06. M/S. SARVODAYA INDUSTRIES VS. THE ITO 779-A, ROAD NO. 12 WARD- 4 (2) VKI AREA, JAIPUR JAIPUR [PAN : AAMFS 0490 C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH AGARWAL RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 27.04.2012 DATE OF PRONOUNCEMENT : 04.05.2012 ORDER DATE OF ORDER :04.05.012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2.1 THE FIRST ISSUES OF THE ASSESSEE IS AGAINST SUS TAINING THE ADDITION OF RS. 8.00 LACS MADE U/S 68 OF THE ACT AND FURTHER ADDITION OF RS. 87,616/- ON ACCOUNT OF INTEREST PAID TO THE CASH CREDITORS. 2.2 IN THIS CASE, THE ASSESSEE HAS TAKEN LOAN OF RS . 8.00 LACS FROM FOUR PARTIES I.E. RS. 2.00 LACS EACH. THE ASSESSEE DERIVED INCOME FROM MA NUFACTURING OF CR STRIPS. ON ACCOUNT OF UNSECURED LOANS FROM THE PARTIES, THE AS SESSEE HAD FILED THE CONFIRMATIONS, AFFIDAVITS, BANK PASS BOOKS OF CASH CREDITORS, BANK STATEMENT OF THE ASSESSEE, KHATEDARI DOCUMENTS AND DECLARATION FORMS IN FORM NO. 15G. ON E OF THE CASH CREDITORS SHRI KALYAN SAHAI YADAV WAS PRODUCED BEFORE THE AO AND HIS STAT EMENT WAS ALSO RECORDED BY THE AO 2 WHO HAS ADMITTED IN ADVANCING THE LOAN TO THE ASSES SEE. INTEREST ON THE AMOUNT OF LOAN WAS ALSO CREDITED. HOWEVER, THE AO WAS NOT SATISFIE D WITH THE CREDITWORTHINESS OF THE CASH CREDITORS. THEREFORE, THE AO ADDED A SUM OF RS . 8.00 LACS U/S 68 OF THE ACT. HOWEVER, NO DISALLOWANCE WAS MADE ON ACCOUNT OF INT EREST PAID TO THE CASH CREDITORS. DETAILED SUBMISSIONS WERE FILED BEFORE THE LD. CIT( A). IT WAS SUBMITTED THAT THE CASH CREDITORS ARE AGRICULTURISTS AND LAND HOLDING OF E ACH CASH CREDITOR WAS ALSO FILED WHICH WAS 18 KACHI BIGHAS, 3.4 KACHI BIGHAS, 19.7 KACHI BIGHAS AND 1.21 KACHI BIGHAS I.E. IN CASE OF KALYAN SAHAI YADAV, RAM KISHORE YADAV, TARA CHAND YADAV AND BANWARI LAL SHARMA RESPECTIVELY. FURTHER THE CONTENTIONS RAISED BEFORE THE AO WERE REITERATED. RELIANCE WAS PLACED ON VARIOUS CASE LAWS ALSO. HOWE VER, THE LD. CIT(A) WAS NOT SATISFIED WITH THE CONTENTIONS OF THE ASSESSEE. THEREFORE, HE CONFIRMED THE ACTION OF THE AO IN MAKING THE ADDITION U/S 68 OF THE ACT. THE LD. CIT( A) ALSO ENHANCED THE INCOME BY WAY OF DISALLOWANCE OF INTEREST OF RS. 87,616/- PAYABLE ON THE AMOUNT OF THE UNSECURED LOAN FOR WHICH AN OPPORTUNITY WAS PROVIDED TO THE ASSES SEE. 2.3 THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORI TIES WERE REITERATED HERE BEFORE THE TRIBUNAL. THE WRITTEN SUBMISSION WAS ALSO FILED. RE LIANCE WAS PLACED ON VARIOUS CASE LAWS INCLUDING THE DECISION OF HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF BHAWANI OIL MILLS (P) LTD., 49 DTR 212 AND THE DECISION OF THIS BENCH IN THE CASE OF MANOJ JINDAL VS. ITO (IN ITA NO. 242/JP/2011 DATED 2-07-2011). 2.4 ON THE OTHER HAND, THE LD. DR PLACED RELIANCE O N THE ORDER OF THE AO. 2.5 AFTER CONSIDERING THE ORDERS OF THE LOWER AUTHO RITIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, I FOUND THAT THE ASSESSEE DESE RVES TO SUCCEED ON THE ISSUES INVOLVED. IT IS SEEN THAT CONFIRMATIONS ALONGWITH AFFIDAVITS OF THE PARTIES WERE FILED. ONE OF THE 3 CREDITORS WAS ALSO PRODUCED AND WHOSE STATEMENT WAS RECORDED BY WHICH IT WAS ADMITTED THAT HE HAS ADVANCED A SUM OF RS. 2.00 LACS AS LOAN TO THE ASSESSEE. OTHER CREDITORS COULD NOT BE PRODUCED. HOWEVER, THE SOURCE OF LOAN ALONGW ITH BANK PASS BOOK, AFFIDAVIT AND EVIDENCE SHOWING AGRICULTURAL HOLDINGS WERE FILED B EFORE THE AO AS WELL AS BEFORE THE LD. CIT(A). THE ONUS LAYS UPON THE ASSESSEE HAS BEEN DU LY DISCHARGED. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BH AWANI OIL MILLS (SUPRA) HAS HELD THAT MERE NON APPEARANCE OF 8 OTHER PERSONS IN RESPONS E TO THE NOTICE GIVEN BY AO, BY ITSELF CANNOT BE A REASON TO DISCARD THEIR VERSION PARTICU LARLY WHEN SOME OF THEM HAD APPEARED AND ADMITTED ADVANCEMENT OF LOANS. IT IS FURTHER OB SERVED THAT EVEN IF OTHERS HAVE SUBSEQUENTLY FILED THEIR CONFIRMATIONS SUPPORTED BY THEIR AFFIDAVITS IT CANNOT BE ASSUMED THAT THEY WOULD NOT HAVE MADE THE SAME STATEMENTS I F THEY HAD APPEARED IN RESPONSE TO THE NOTICE ISSUED BY THE AO. IT HAS ALSO BEEN PROV ED THAT AO WAS REQUIRED TO EXAMINE THE CONFIRMATIONS AND CONTENTS OF THE AFFIDAVITS ON THEIR MERIT TREATING IT AS IF THEIR STATEMENTS GIVEN TO HIM, THEIR VERSION CONTAINED IN THE AFFIDAVIT COULD NOT BE TREATED AS OF LESSER IMPORTANCE THAN THE STATEMENTS GIVEN BY ONE OF THE CREDITORS SHRI KALYAN SAHAI YADEV BEFORE THE AO. THIS DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN CONSIDERED BY THE JAIPUR BENCH IN THE CASE OF MANO J JINDAL VS. ITO (SUPRA) AND ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE. THE FACTS ARE SIMI LAR IN THE PRESENT CASE AS IN THIS CASE ALSO OUT OF FOUR CASH CREDITORS, ONE CASH CREDITOR WAS PRODUCED AND AFFIDAVITS OF REMAINING CASH CREDITORS WERE FILED ALONGWITH SUPPORTING EVID ENCES. HOWEVER, THEY WERE NOT FOUND SATISFACTORY TO THE SATISFACTION OF THE AO AND THE LD. CIT(A). IN MY CONSIDERED VIEW, THE AFFIDAVITS SHOULD HAVE BEEN CONSIDERED IN RIGHT PER SPECTIVE. THE ASSESSEE HAS PAID INTEREST TO THE CREDITORS. THE AMOUNT OF LOAN HAS BEEN TAKEN THROUGH BAKING CHANNEL AND ALL THE 4 SUPPORTING EVIDENCES WERE FILED BEFORE THE LOWER AU THORITIES. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I DELETE THE ADDITION OF RS. 8.00 LACS AND ALSO DELETE THE ADDITION ON ACCOUNT OF INTEREST OF RS. 87616/- DISA LLOWED BY THE LD. CIT(A) 3.1 THE REMAINING ISSUE OF THE ASSESSEE IS AGAINST UPHOLDING THE DISALLOWANCE OF RS. 8,065/- OUT OF TELEPHONE EXPENSES. 3.2 THE AO DISALLOWED 20% OUT OF TELEPHONE EXPENSES . THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 3.3 AFTER CONSIDERING THE ORDERS OF THE LOWER AUTHO RITIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, I FOUND THAT THE DISALLOWANCE OF TELEPHONE EXPENSES @ 20% IS ON HIGHER SIDE. I FEEL THAT IF A DISALLOWANCE OF RS. 2 ,000/- IS CONFIRMED THAT WILL MEET THE END OF JUSTICE. I ORDER ACCORDINGLY. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.05 .2012. SD/- ( R. K. GUPTA ) JUDICIAL MEMBER JAIPUR, MISHRA COPY FORWARDED TO :- M/S. SARVODAYA INDUSTRIES, JAIPUR . THE ITO , WARD- 4 (2), JAIPUR THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO.951/JP/2011) BY ORDER, AR ITAT JAIPUR. 5