The ACIT, Circle-8, Ahmedabad V. Unipon India Ltd., Ahmedabad

ITA 953/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94312 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Revised return
• Section: 69C; 143(3); 142(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NOS.953 & 993/AHD/2011 ASST. YEARS : 2002-03 & 2005-06 ASSTT. C.I.T., CIR-8, AHMEDABAD. APPELLANT VS. UNIPON INDIA LTD., 13/14, RADHAKUNJ SOCIETY, DRIVE-IN-ROAD, AHMEDABAD. RESPONDENT PAN :AACU1997K APPELLANT BY : SHRI R. I. PATEL, CIT, DR WITH SHRI DINESH SINGH, SR.DR RESPONDENT BY : SHRI SUNIL TALATI, AR DATE OF HEARING : 27.7.2015 DATE OF PRONOUNCEMENT :02/09 /2015 O R D E R PER SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER. THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE A GAINST TWO SEPARATE ORDERS DATED 29/12/2010 AND 28/01/2011 PASSED BY THE CIT(A) FOR ASST. YEARS 2002-03 AND 2005-06 RESP ECTIVELY. THE YEAR-WISE GROUNDS RAISED BY THE REVENUE ARE AS UNDE R :- ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 2 ITA NO.953/AHD/2011 FOR ASST. YEAR 2002-03: 1. THE CIT(A)-XIV, AHMEDABAD ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.58,01,339/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT. 2. THE LD. CIT(A) HAS ERRED AND ON FACTS IN DELETING T HE DISALLOWANCE OF RS.1,20,670/- MADE BY THE ASSESSING OFFICER UNEXPLAINED EXPENDITURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE ASSESSING OFFICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. ITA NO.993/AHD/2011 FOR ASST. YEAR 2005-06 1. THE LD. CIT(A)-XIV, AHMEDABAD ERRED IN LAW AND ON F ACTS IN DELETING THE DISALLOWANCE OF RS.58,61,657/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CR EDITS U/S 68 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDE R OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 3 2. FIRST WE TAKE UP ITA NO.953/AHD/2011 FOR AY 2002 -03 WHEREIN THE FIRST GROUND RELATES TO DISALLOWANCE OF RS.58,01,339/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED INVESTMENT. 2.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF YARN. T HE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FOR ASST. YEAR 2002-03 ON 31.10.2002 DECLARING TOTAL INCOME OF RS. NIL. THE A SSESSEE COMPANY FILED ITS REVISED RETURN OF INCOME ON 27.11 .2003 DECLARING TOTAL INCOME OF RS.NIL THE CASE WAS REOPENED BY ISS UING NOTICE U/S 148 OF THE I.T. ACT ON 23.03.2009 WHICH WAS DUL Y SERVED ON THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 148 THE ASS ESSEE FILED ITS RETURN OF INCOME ON 25.06.2009 DECLARING TOTAL INCO ME OF RS.NIL. THE ASSESSING OFFICER DISCUSSED THE PARTICULARS OF CASE AS DETAILED AT PARA 3 OF HIS ORDER AS UNDER :- 'THE ASSESSEE HAD FILED AN APPLICATION ON 22-06-2006 U/S. 245C'BEFORE THE SETTLEMENT COMMISSION FOR ASSESSMENT YEAR 2005-06. WHILE DOING SO THE ASSESSEE HAD ALSO REQUESTED THE COMMISSION TO RE-OP EN PROCEEDINGS FOR ASSESSMENT YEAR 2001-02 TO 2004-05 U/S, 245E OF THE ACT FOR THE PROPER DISPOSAL OF THE SETTLEMENT APPLICATION. THE ASSESSE E HAD DISCLOSED AN AMOUNT OF RS.53,00,000/- FOR THE ASSESSMENT YEAR 20 02-03. NO PROCEEDINGS WERE PENDING ON THE DATE OF FILING OF APPLICATION F OR THE ASSESSMENT YEAR 2002-03. AS PER THE PROVISIONS OF SECTION 245D(2 A), THE ASSESSEE WAS REQUIRED TO PAY THE ADDITIONAL TAX ON THE INCO ME DISCLOSED IN THE APPLICATION BEFORE THE SETTLEMENT COMMISSION. AS THE ASSESSEE HAD FAILED TO PAY THE FULL AMOUNT OF ADDITIONAL TAX.AND INTEREST ON THE INCOME DISCLOSED IN ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 4 THE APPLICATION THE PROCEEDINGS ABATED BEFORE THE S ETTLEMENT COMMISSION VIDE ORDER DATED 17-12-2007 OF THE SETTLEMENT COMMISSION . THE ASSESSEE THEREAFTER FILED A SCA BEFORE THE HON'BLE GUJARAT H IGH COURT. THE HON'BLE GUJARAT HIGH COURT VIDE ORDER DATED 08-05-2008 DIRE CTED THE ASSESSING- OFFICER NOT TO PROCEED WITH THE ASSESSMENT 'PROC EEDINGS TO THE EXTENT OF INCOME, WHICH WAS SURRENDER BEFORE THE SETTLEMENT. IN VIEW OF THE ORD ER OF THE HON'BLE GUJARAT HIGH COURT ASSESSMENT PROCEEDINGS TO THE EXTENT OF INCOME SURRENDERED BEFORE THE SETTLEMENT COMMISSION IS NOT BEING PROCE EDED WITH.'. . THEREAFTER, IT IS STATED BY THE ASSESSING OFFICER I N PARA 4.1 OF HIS ORDER AS UNDER::. 'ON THE, BASIS, OF CERTAIN INFORMATION GATHERED FROM THE CIT (OB}, AN INQUIRY WAS CONDUCTED BY AC IT, CIRCLE-W, AHMEDABAD AND THE ITO WARD 10(2}, AHMEDABAD THE INQUIRY REVEALED THAT ONE SHRI RAKESH KUMAR PANCHAF HUF HAD CARRIED OUT TRANSACTIONS THROUGH BANK ACCOUNT I N CATHOLIC SYRIAN BANK, AHMEDABAD AND MUMBAI ON BEHALF OF THE ASSESSEE TO T HE EXTENT OF RS.58,01,339/- WHICH WAS FOUND TO BE UNDISCLOSED TO THE DEPARTMENT ACCORDINGLY THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THIS ENTIRE DEPOSIT SHOULD NOT BE ADDED BACK TO THE HANDS TO TH E COMPANY AS UNEXPLAINED INVESTMENT/MONEY OF THE ASSESSEE. THE A SSESSEE VIDE LETTER DATED 18-08-2010 FURNISHED ITS REPLY. THE ASSESSEE STATED THAT THE BANK ACCOUNT WAS NEVER OPERATED BY THE ASSESSEE DIRECTLY OR INDIRECTLY. THE ASSESSEE FURNISHED A COPY OF THE PAN CARD OF SHRI R AKESH I. PANCHAL HUF. THE ASSESSEE ALSO FURNISHED THE RETURN OF INCOME OF THE HUF FOR ASSESSMENT YEAN 2008-09 WHICH SHOWS GROSS TOTAL INCOME OF RS, 108004/-. HOWEVER, NO RETURN OF INCOME FOR THE- ASSESSMENT YEAR 2002-03 HAS BEEN FILED. THE ASSESSEE A/SO COULD NOT PRODUCE THE KARTA OF THE HUF FOR CROSS EX AMINATION. UNDER THE CIRCUMSTANCES IT IS VERY DIFFICULT TO ACC EPT THE VIEW OF THE ASSESSEE THAT A HUF, HAVING NO TAXABLE INCOME WOULD HAVE SUC H HUGE INFLOW AND OUT FLOW OF FUNDS WITHOUT ANY REASONS. IT IS ALSO BEYON D THE DOCTRINE OF PREPONDERANCE OF PROBABILITY THAT ON HIS INDIVIDUAL BASIS SHRI PANCHAL WOULD ACT AS CONDUIT OF THE ASSESSEE BUT WOULD NOT ACT SO THROUGH THE HUF.' AFTER CONSIDERING THE DETAILED SUBMISSION GIVEN BY THE ASSESSEE INCLUDING AFFIDAVIT FILED BY THE SAID PERSON, THE ASSESSING O FFICER BY PRODUCING VARIOUS DECISIONS OBSERVED AS UNDER: 'AFTER GOING THROUGH THE SUBMISSION MADE BY THE ASSESSEE, THE BANK ACCOUNT OF THE RELEVANT ASSESSMENT YEAR, THE SURROU NDING FACTS AND CIRCUMSTANCES OF THE CASE AND INTER ALIA THE DECISI ON OF THE HON'BLE SUPREME COURT AND THE OTHER JUDICIAL DECISIONS REFE RRED TO ABOVE THE SUM OF RS,$B,01,339/- IS TREATED AS EXPLAINED INVES TMENT AND IS ACCORDINGLY ADDED BACK TO THE HANDS OF THE ASSESSEE .' ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 5 ACCORDINGLY, HE ADDED BACK THE IMPUGNED AMOUNT AS UNEXPLAINED INVESTMENT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 2.2 THE CIT(A) DELETED THE IMPUGNED ADDITION BY OBS ERVING AS UNDER :- 4. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AND THE BASIS ON WHICH THE ADDITIONS ARE MADE. I HAVE CAREFULLY PERU SED THE SUBMISSIONS MADE BY THE APPELLANT. BASED ON THE DETAILS FILED I T TRANSPIRES THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BASED ON TH E FACT THAT THE ASSESSEE HAD. FILED A PETITION BEFORE HON'BLE SETTL EMENT COMMISSION WHEREIN INCOME. GENERATED FROM 10 DIFFERENT CONCERN S WERE OWNED UP BY THE ASSESSEE. IHE TO NAMES INCLUDE ONE RAKESH PANC HAL & OTHERS.. .THE ASSESSEE HAS OWNED UP INCOME OF RAKESH PANCHAL, IND IVIDUAL AND HIS WIFE HEMA RAKESH PANCHAL AND HAD SPECIFICALLY NOT O WNED UP THE INCOME AND BANK TRANSACTIONS OF RAKESH PANCHAL H.U.F. THE ASSESSEE WHILE FILING PETITION BEFORE SETTLEMENT COMMISSION HAS TO DISCLO SE THE TRUE AND CORRECT INCOME. WHEN THE ASSESSEE IS OWNING UP AND DISCLOSI NG SO MANY OTHER CONCERNS' INCOME AS HIS INCOME, THERE WAS NO REASON NOT TO DISCLOSE THE INCOME OF RAKESH.PANCHA! H.U.F. IF GENUINELY IT HAD BELONGED TO IT. THE CONTENTION OF THE APPELLANT IS STRENGTHENED FROM TH E FACT THAT RAKESH PANCHAL HUF HAS FILED; AN AFFIDAVIT 'CTEARFY MENTIO NING AS UNDER: 'I, THE UNDERSIGNED ML RAKESHPANCHAL S/O ISHWARFATPANCHAL DO HEREBY SFAFE AND CONFIRM THAT THE BANK ACCOUNT WITH CATHOLIC SYRIAN BANK LT AT, ASHRAM ROAD BRANCH, AHMEDABAD IN THE NAME OF RAKESH I. PANCHAL-HUF HAVING BONK A/C. MO, 000400 AND' ALT THE TRANSACTIONS APJIEARING IN THAT BANK STATEMENT FOR THE PERIOD FROM 01.04.2001 TO 31 .03.2002 OF THAT BANK ACCOUNT ARE SOLELY BELONGS TO ME IN THE REPRESENTAT IVE CAPACITY AS KARTA OF RAKESH I. PANCHAL-HUF. THEREFORE ALL THE TRANSACTIO NS CARRIED OUT THROUGH THAT BANK ACCOUNT AND ALSO ANY INCOME WHATS OEVER GENERATED FROM TRANSACTIONS AS APPEARING IN SUCH BANK ACCOUNT FOR THE PERIOD MENTIONED HERE IN ABOVE ARE PERTAINS TO MY HUF'S ON LY. THEY SHOWN ME THE NOTICE U/S. 142(1) OF THE INCOME TAX ACT, 1961 DATED 25-09.2009 ISSUED TO UNIPON (INDIA) LIMITED FOR A.Y . 2002-03 AND ALSO REMINDER THEREOF DATED 9.11.2009 WHEREIN NAME OF RA KESH I PANCHAL- HUF HAS BEEN REFLECTED. I THEREFORE STATE AND CONFI RM THAT THE ABOVE ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 6 REFERRED BANK A/C. NO.000400 IS PURELY PERTAINS TO MY HUF AND UNIPON( INDIA] LIMITED IS NO ANY WAY CONCERN WITH THE SAID BANK ACCOUNT. 5. ONCE THE AFFIDAVIT IS SQ, CLEARLY CONFIRMING THA T ALL THE TRANSACTIONS BELONG TO THE H.U.F. OF RAKESH PANCHAL AND NOT TO THE APPE LLANT, THE ASSESSING OFFICER HAD POWER TO ISSUE SUMMONS AND EXAMINE THE PERSON IF HE HAD STILL ANY DOUBT. HOWEVER, THE ASSESSING OFFICER HAS NOT C ONSIDERED ALL THESE DETAILS FILED BY THE APPELLANT COMPANY INCLUDING TR ANSACTIONS IN BANK ACCOUNT, AFFIDAVIT AND OTHER DETAILS WHICH ARE NOT BELONGI NG TO IT. I AGREE WITH THE APPELLANT THAT ONCE THE AFFIDAVIT IS FILED, CONF IRMING THAT THE TRANSACTIONS OF RAKESH PANCHAL H.U.F. BELONGED TO-HIM AND NOT OF T HE COMPANY, THE BURDEN IS SNIFFED TO THE ASSESSING OFFICER TO ISSUE SUMMON S AND VERIFY FURTHER DETAILS IF HE HAD ANY DOUBT. HOWEVER, THE ASSESSING OFFICER HAS MADE THE ADDITION AS IS EVIDENT FROM PARA 4.1 OF THE ORDER THAT THE AS SESSEE COULD NOT PRODUCE THE KARTA OF H.U.F. FOR CROSS EXAMINATION. IN MY VIEW THE ASSESSEE HAS DISCHARGED HIS ONUS FULLY BY FILING THE COMPLETE DE TAILS OF BANK TRANSACTIONS, NAME AND ADDRESS, :P.A; NO ABOVE ALL DECLARATION ON OATH IN SHAPE OF AFFIDAVIT WHEREIN THE SAID PARTY RAKESH PANCHAL HUF HAS OWNED UP THE ENTIRE TRANSACTIONS OF THE BANK ACCOUNT. IT IS FO R THE ASSESSING OFFICER OF RAKESH PANCHAL HUF TO VERIFY AS TO WHY THERE IS NO INCOME GENERATED FROM SEVERAL TRANSACTIONS IN THE BANK ACCOUNT OR FOR THA T MATTER CONDUCT OTHER INQUIRIES. THE ASSESSEE HAVING DISCHARGED ITS ONUS CLEARLY CONFIRMING THAT WHATEVER TRANSACTIONS WERE OUTSIDE THE BOOKS HAVE B EEN OWNED UP BEFORE THE SETTLEMENT COMMISSION AND THESE TRANSACTIONS OF RAKESH PANCHAL HUF ARE NOT OWNED UP BEFORE THE SETTLEMENT COMMISSION A ND BEFORE THE ASSESSING OFFICER THE SAID PERSON HIMSELF IS OWNING UP ALL THESE TRANSACTION, THERE IS NO QUESTION OF MAKING ADDITION OF RS.58,01 ,339/- AS UNEXPLAINED INVESTMENT. THE ADDITION MADE IS THEREFORE, DELETED . THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE THE TRIBUNAL. 2.3 THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, THE LD. AAUTH ORISED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 2.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND CAR EFULLY GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS RIGHTLY O BSERVED THAT THE ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 7 ASSESSEE HAS DISCHARGED HIS ONUS FULLY BY FILING TH E COMPLETE DETAILS OF BANK TRANSACTIONS, NAME AND ADDRESS, PER MANENT ACCOUNT NUMBER, ABOVE ALL DECLARATION ON OATH IN SHAPE OF A FFIDAVIT WHEREIN THE SAID PARTY RAKESH PANCHAL H.U.F. HAS OW NED UP THE ENTIRE TRANSACTIONS OF THE BANK ACCOUNT. IT IS FO R THE ASSESSING OFFICER OF RAKESH PANCHAL HUF TO VERIFY AS TO WHY T HERE IS NO INCOME GENERATED FROM SEVERAL TRANSACTIONS IN THE B ANK ACCOUNT OR FOR THAT MATTER CONDUCT OTHER INQUIRIES. THE ASSESS EE HAVING DISCHARGED ITS ONUS CLEARLY CONFIRMING THAT WHATEVE R TRANSACTIONS WERE OUTSIDE THE BOOKS HAVE BEEN OWNED UP BEFORE TH E SETTLEMENT COMMISSION AND THESE TRANSACTIONS OF RAKESH PANCHAL HUF ARE NOT OWNED UP BEFORE THE SETTLEMENT COMMISSION AND B EFORE THE ASSESSING OFFICER THE SAID PERSON HIMSELF WAS OWNIN G UP ALL THESE TRANSACTION, THERE IS NO QUESTION OF MAKING ADDITIO N OF RS.58,01,339/- AS UNEXPLAINED INVESTMENT. THE ADDIT ION MADE WAS THEREFORE RIGHTLY DELETED BY CIT(A). THERE IS NO IN FIRMITY IN CIT(A)S ORDER. THEREFORE, WE UPHOLD THE SAME. 3. THE SECOND GROUND OF THE APPEAL IS PERTAINING TO DELETION OF DISALLOWANCE OF RS.1,28,670/- MADE BY THE ASSESSEEI NG OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE. ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 8 3.1 THE FACTS OF THE CASE ARE THAT THE ASSESSING OF FICER HAS MADE THE ADDITION AS PER PAGE 4 OF HIS ORDER IN PARA 5 B Y OBSERVING AS UNDER :- DURING THE YEAR THE ASSESSEE HAD RECEIVED A SUM O F RS.2.57 CRORES FROM VARIOUS SUNDRY DEBTORS WHICH WERE DISCO UNTED THROUGH A SHROFF AND DEPOSITED INTO THE ACCOUNT OF M/S KRISHNA FINANCE AND M/S SHRIJI TRADING & INVESTMENT S. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY EXPENDIT URE INCURRED ON PAYMENT TO SHROFF ON CHEQUE DISCOUNTING SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. THE ASSE SSEE VIDE LETTER DATED 19.8.2010 STATED THAT IT DID NOT DENY DISCOUNTING OF CHEQUE BY THE SHROFF BUT SUBMITTED THAT IT HAD N OT INCURRED ANY ADDITIONAL EXPENDITURE ON SUCH CHEQUE DISCOUNTI NG. THE PROVISIONS OF SECTION 69C ARE MERELY CLARIFICA TORY AND EMBODY A RULE OF EVIDENCE WHICH IS OTHERWISE QUITE CLEAR. THIS IS SO BECAUSE EVEN OTHERWISE AN ADDITION COULD BE MADE IN RESPECT OF THE AMOUNT OF EXPENDITURE WHICH THE A SSESSEE IS FOUND TO HAVE ACTUALLY INCURRED BUT NOT SATISFACTOR ILY EXPLAINED. EVEN WHERE THERE IS NO SUCH DIRECT EVIDENCE, IT IS POSSIBLE FOR THE AUTHORITIES TO MAKE A FAIR AND HONEST ESTIMATE. RELIANCE IN THIS REGARD IS PLACED UPON THE FOLLOWING DECISION. YADU HARI DALMIA VS. CIT (1980) 126 ITR 48, 57, 58 (DELHI) AS HELD BY THE HONBLE SUPREME COURT IN THE CASE D URGA PRASAD MORE CITED SUPRA THE TOTALITY OF SURROUNDING FACTS AND CIRCUMSTANCES HAVE TO BE CONSIDERED. PAYMENT TO SHR OFF IS ON UNDISPUTED PRACTICE OF CASH DISCOUNTING. THEREFORE, A SUM OF RS.1,28,670/- I.E. @ 0.5% OF THE VALUE OF RECOVERY FROM ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 9 DEBTORS IS ADDED BACK IN TO THE HANDS TO THE COMPAN Y AS UNEXPLAINED EXPENDITURE U/S 69C. 3.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A). THE ASSESSEE MADE SUBMISSIONS AND ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SHANTI RAM MEHTA VS. ACIT (2009) 119 ITD 62 (KOL)(TM), WHEREIN IT HAS BEEN OB SERVED AS UNDER: ASSESSING OFFICER MADE AN ADDITION OF RS.50,000/- ON ESTIMATE BASIS ON ACCOUNT OF TRANSPORTATION CHARGES , INCURRED FOR FERTILIZERS PURCHASED BY ASSESSEE ON GROUND THA T SUCH EXPENSES WERE PAID FROM UNDISCLOSED SOURCES -WHETHER SINCE ASSESSING OFFICER HAD NOT FOUND ANY EVIDENCE OF INCURRING ANY EXPENDITURE ON TRANSPORTATION OF FERT ILIZERS, IT COULD BE SAID THAT ADDITION WAS BASED ONLY ON PRESUMPTION/SU SPICION WHICH COULD NOT BE SUSTAINED HELD, YES. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE DELETED THE ADDITION BY OBSERVING AS FOLLOWS :- 7. I HAVE CAREFULLY GONE THROUGH SUBMISSIONS MADE BY THE APPELLANT COMPANY AND ALSO THE ADDITION MADE BY THE ASSESSING OFFICER. IT IS APPARENT FROM THE ORDER TH AT THE ASSESSING OFFICER HAS NO BASIS, NO MATERIAL EXCEPT THE PRESUMPTION THAT WHEN THE ASSESSEE HAS RECEIVED RS. 2.57 CRORES FROM VARIOUS SUNDRY DEBTORS BY WAY OF CHEQUE S AND DRAFTS WHICH WERE DISCOUNTED THROUGH SHROFF, IT MIG HT HAVE INCURRED DISCOUNTING CHARGES AT 0.5%. RESPECTFULLY AGREEING THE OBSERVATION OF HONBLE ITAT BENCH, I AGREE THAT THE PROVISIONS OF SEC.69C CAN BE INVOKED ONLY WHEN THE DEPARTMENT HAS EVIDENCE EVEN TO SUGGEST THAT THE AS SESSEE HAS ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 10 INCURRED EXPENDITURE FOR WHICH HE HAS NO EXPLANATIO N REGARDING THE SOURCE. THE LAW IS VERY CLEAR THAT WH EN THE ASSESSING OFFICER HAS NOT FOUND ANY EVIDENCE OF ASS ESSEE HAVING INCURRED ANY EXPENDITURE FOR DISCOUNTING OF CHEQUES, THE ADDITION MADE ONLY ON PRESUMPTION AND SUSPICION CANNOT BE MADE U/S 69C. THE ADDITION OF RS.1,28,670/- IS ACCORDINGLY DELETED. THE REVENUE BEING AGGRIEVED HAS COME IN APPEAL BEFO RE US. 3.3 THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ASSESSING OFFICERS ORDER WHEREAS THE LD. AUTHORIZED REPRESEN TATIVE SUPPORTED THE CIT(A)S ORDER. 3.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE MATERIAL ON RECORD. WE FIND THAT CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION BY OBSERVING THAT THE LAW IS VERY CLEAR THAT WHEN THE ASSESSING OFFICER HAS NOT FOUND ANY EVIDENCE OF ASSESSEE HAVING INCURRED ANY EXPENDITURE FOR DIS COUNTING OF CHEQUES, THE ADDITION MADE ONLY ON PRESUMPTION AND SUSPICION CANNOT BE MADE U/S 69C. THE ADDITION OF RS.1,28,670 /- IS ACCORDINGLY DELETED. NOTHING CONTRARY HAS BEEN BROU GHT TO OUR KNOWLEDGE BY THE REVENUE. THEREFORE, WE FIND NO INF IRMITY IN CIT(A)S ORDER AND WE UPHOLD THE SAME. 4. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 11 5. NOW WE TAKE UP ITA NO.993/AHD/2011 FOR AY 2005-0 6 WHERE THE SOLE ISSUE IS IN RESPECT OF DELETION OF D ISALLOWANCE OF RS.56,61,60,657/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 5.1 THE FACTS OF THE CASE ARE THAT ADDITION OF RS.5 6,61,60,657/- WAS MADE BY THE ASSESSING OFFICER CONSIDERING ALL T HE ENTRIES IN ALL THE BANK ACCOUNTS AS UNEXPLAINED CASH. THIS PARTICU LARLY HAPPENED BECAUSE AS MENTIONED IN THE ORIGINAL SUBMISSION NOT ICE WAS ISSUED ON 8.12.2008 FOR THE FIRST TIME, THE FIRST EFFECTIV E NOTICE WAS ISSUED AS LATE AS ON 27 TH JANUARY, 2009 AND ORDER U/S 143(3) MAKING SUCH HUGE ADDITION WAS PASSED WITHIN THREE DAYS I.E. ON 30 TH JANUARY, 2009. AS THE ASSESSEE WAS PREVENTED FROM FILING DET AILS AND EXPLANATION BEFORE THE ASSESSING OFFICER, AS APPLIC ATION UNDER RULE 46A WAS MADE. ASSESSEES APPLICATION WAS FORWA RDED TO THE ASSESSING OFFICER AND THEREAFTER THE ASSESSING OFFI CER HAD SUBMITTED THE REMAND REPORT, A COPY OF WHICH WAS FO RWARDED TO THE ASSESSEE. THE ASSESSING OFFICER HAD ADMITTED AN D ACCEPTED THAT THE SPECIAL TAX AUDIT HAD BEEN CONDUCTED AND SPECIA L AUDITOR HAD GIVEN HIS REPORT WITH REGARD TO EXPLANATION OF ALL THE ENTRIES. THERE WAS NO FURTHER ADVERSE COMMENTS OF THE ASSESSING OF FICER. THE ASSESSING BEING AGGRIEVED CARRIED THE MATTER BEFORE THE CIT(A). ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 12 5.2 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER, DETAILED SUBMISSION MADE BY THE APPELLANT AND ALSO THE REMAND REPORT AN D HAVE EXAMINED THE FACTS THOROUGHLY. IT IS VERY APPARENT THAT THE ASSESSING OFFICER HAS MADE HUGE ADDITION OF RS.57,3 3,60,657/- AND THEREAFTER EXCLUDED RS.72,00,000/- AS THE INCOME OF FERED BEFORE SETTLEMENT COMMISSION BY THE ASSESSEE COMPANY ITSEL F. NOTWITHSTANDING THE FINAL OUTCOME OF THE GUJARAT HI GH COURT PETITION AGAINST ADMISSION OR OTHERWISE OF SETTLEME NT APPLICATION, IT IS ESSENTIAL TO DECIDE THE CASE ON MERIT AS TO W HETHER THE ENTRIES APPEARING IN DIFFERENT BANK ACCOUNTS OF 10 CONCERNS /PERSONS ARE UNEXPLAINED INCOME OF THE APPELLANT COMPANY OR NOT. FOR THIS THERE CANNOT BE A BETTER PROOF AND EVIDENCE THAN TH E EXHAUSTIVE AUDIT REPORT SUBMITTED BY THE CHARTERED ACCOUNTANTS , PRAMOD KUMAR DAD & ASSOCIATES, WHO WAS APPOINTED U/S 142(2 A) OF THE INCOME-TAX ACT. THE SAID AUDITORS HAVE EXAMINED ALL THE BANK ACCOUNTS IN GREAT MINUTE DETAILS. SUCH AUDITORS HAV E ALSO EXAMINED VARIOUS BOOKS OF ACCOUNTS MAINTAINED LIKE CASH BOOK , BANK BOOK, JOURNAL REGISTER, GENERAL LEDGER, PURCHASE REGISTER , SALES REGISTER STOCK REGISTER ETC. AND ALL THE BANK ACCOUNTS OF TH E APPELLANT COMPANY. FROM THE VOLUMINOUS AUDIT REPORT OF MORE T HAN 250 PAGES, I HAVE SEEN THAT THE AUDITORS HAVE EXAMINED AND REPRODUCED EVERY BANK ACCOUNT AND CREDIT ENTRIES AN D HAVE OBTAINED APPROPRIATE AUDIT EVIDENCES AS WELL AS OTH ER EVIDENCES TO EXPLAIN THE SOURCE OF THE SAME. THE AUDITORS HAVE O BTAINED ALL MATERIAL AND CONFIRMATIONS, WHICH EXPLAINS THE GENU INENESS, CAPACITY AND CREDITWORTHINESS OF ALL THE CREDITORS AND CREDITS APPEARING IN BANK ACCOUNT. AFTER VERIFYING AND SATI SFYING THEMSELVES, THE AUDITORS HAVE FINALLY GIVEN THEIR O PINION ON PAGE 22 OF THE REPORT THAT INCOME EARNED IN THE ABOVE 10 CONCERNS/PERSONS FROM MUTUAL FUNDS, SHARE INVESTMEN T AND OTHER INCOME, ARE OF RS.68,55,384/-. THUS ALL OTHER BANK ENTRIES AND ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 13 CREDITS THEREIN STAND CLEARLY EXPLAINED AND CANNOT BE CONSIDERED AS UNEXPLAINED. IN VIEW OF THIS, THE ADDITION MADE OF RS.56,61,60,657/- DESERVES TO BE DELETED.. 7. THIS IS PARTICULARLY SO BECAUSE THE INCOME OF RS .68,55,384/- AS SUGGESTED BY SPECIAL AUDITOR ALSO CANNOT BE ADDE D AND SUSTAINED INASMUCH AS THE ASSESSEE HAS OFFERED RS.7 2,00,000/- AS ITS UNEXPLAINED INCOME BEFORE SETTLEMENT COMMISSION . THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THIS FACT AN D HAVE EXCLUDED THE INCOME OF RS.72,00,000/- AS PER THE DIRECTIONS OF HONBLE GUJARAT HIGH COURT, I AGREE WITH THE APPELLANT THAT THE INCOME OF RS.72,00,000/- INTER ALIA INCLUDES SUCH INCOME OF R S.68,55,384/- SUGGESTED BY THE SPECIAL AUDITOR AND THEREFORE, THE RE IS NOT CASE AND JUSTIFICATION TO MAKE ANY SEPARATE ADDITION IN THE INCOME OF RS.68,55,384/-. IN VIEW OF THIS, THE ENTIRE ADDITIO N MADE BY THE ASSESSING OFFICER OF RS.56,61,60,657/- IS DELETED. 5.3 BEING AGGRIEVED WITH THIS ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5.4 THE LD. DR SUPPORTED THE ASSESSING OFFICERS OR DER AND SUBMITTED THAT CIT(A) HAS WRONGLY DELETED THE ADDIT ION, HIS ORDER MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RE LIED ON THE ORDER OF FIRST APPELLATE AUTHORITY. 5.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE MATERIAL ON RECORD. WE FIND NO INFIRMIT Y IN THE ORDER OF ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 14 CIT(A), SINCE HE HAS GIVEN REASONED FINDING THAT TH E AUDITORS HAD OBTAINED ALL MATERIAL AND CONFIRMATIONS, WHICH EXPL AINED THE GENUINENESS, CAPACITY AND CREDITWORTHINESS OF ALL T HE CREDITORS AND CREDITS APPEARING IN BANK ACCOUNT. AFTER VERIFYING AND SATISFYING THEMSELVES, THE AUDITORS HAD FINALLY GIVEN THEIR OP INION ON PAGE 22 OF THE REPORT THAT INCOME EARNED IN THE ABOVE 10 CO NCERNS/PERSONS FROM MUTUAL FUNDS, SHARE INVESTMENT AND OTHER INCOM E, WERE OF RS.68,55,384/-. THUS ALL OTHER BANK ENTRIES AND CRE DITS THEREIN STAND CLEARLY EXPLAINED AND COULD NOT BE CONSIDERED AS UNEXPLAINED. IN VIEW OF THIS, THE ADDITION MADE OF RS.56,61,60,657/- DESERVED TO BE DELETED. THIS IS P ARTICULARLY SO BECAUSE THE INCOME OF RS.68,55,384/- AS SUGGESTED B Y SPECIAL AUDITOR ALSO COULD NOT BE ADDED AND SUSTAINED INASM UCH AS THE ASSESSEE HAD OFFERED RS.72,00,000/- AS ITS UNEXPLAI NED INCOME BEFORE SETTLEMENT COMMISSION. THE ASSESSING OFFICER HIMSELF HAD ACCEPTED THIS FACT AND HAD EXCLUDED THE INCOME OF R S.72,00,000/- AS PER THE DIRECTIONS OF HONBLE GUJARAT HIGH COURT , HE AGREED WITH THE ASSESSEE THAT THE INCOME OF RS.72,00,000/- INTER ALIA INCLUDES SUCH INCOME OF RS.68,55,384/- SUGGESTED BY THE SPECIAL AUDITOR AND THEREFORE, THERE IS NOT CASE AND JUSTIF ICATION TO MAKE ANY SEPARATE ADDITION IN THE INCOME OF RS.68,55,384 /-. IN VIEW OF THIS, THE ENTIRE ADDITION MADE BY THE ASSESSING OFF ICER OF ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 15 RS.56,61,60,657/- WAS DELETED. THE REVENUE COULD NO T REBUT THIS FINDING OF THE CIT(A). THEREFORE, WE UPHOLD THE SAM E. 6. THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF SEPTEMBER, 2015 SD/- SD/- (ANIL CHATURVEDI) (S HAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :02/09/2015 MAHATA/- 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 DY.REGISTRAR,ITAT, AHMEDABAD ITA NOS.953 & 993/AHD/2011 ASST. YEARS_2002-03 & 2005-06 16 1. DATE OF DICTATION: 28/7/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 30/7/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 2/9/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: