THE ITO- Ward-8(2), Ahmedabad V. SUVIDHA APPLIANCES PVT. LTD., Ahmedabad

ITA 960/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2270 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-01-2011
• Assessment Year: 1990-1991
• Appeal Filed On: 31-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURAG SHARMA
• Keywords: Set aside
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND D.C. AGRAWAL, ACCOUNTANT MEMBER) ITA NO.960/AHD/2009 [ASSTT. YEAR : 1990-91] DICTATED ON: 17-01-2011 THE ITO, WARD-8(2) AHMEDABAD. VS. SUVIDHA APPLIACNES PVT. LTD., 02, SAHYADRI APARTMENTS OPP: STADIUM, NAVRANGPURA AHMEDABAD. PAN : 31-110-CV-4265 (APPELLANT) (RESPONDENT) REVENUE BY : MS.ANURAG SHARMA ASSESSEE BY : NONE O R D E R PER BHAVNESH SAINI, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XIV, AHMED ABAD DATED 12.01.2009 FOR ASSESSMENT YEAR 1990-1991CHALLENGING THE IMPUGNED O RDER IN DELETING THE ADDITION OF RS.5,14,882/- MADE BY THE AO ON ACCOUNT OF DEEMED I NCOME UNDER SECTION 69D OF THE INCOME TAX ACT, 1961. 2. WE HAVE HEARD LEARNED DR AND PERUSED THE FINDING S OF THE AUTHORITIES BELOW. NOTICE OF HEARING WAS SENT TO THE ASSESSEE THROUGH REGISTERED POST, WHICH WAS SERVED, AS THE AD SLIP WAS PLACED ON RECO RD. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, THE ASSESSEE IS PROCEEDED EX- PARTE . 3. IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLE TED WHEREIN AN ADDITION HAS BEEN MADE OF RS.5,14,882/- BY MAKING DISALLOWAN CE UNDER SECTION 69D OF THE IT ACT. THE LEARNED CIT(A) DELETED THE ADDITIO N, HOWEVER, THE TRIBUNAL SET ASIDE THE ORDER OF THE REVENUE AUTHORITIES AND REST ORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN ACCORDANC E WITH LAW AND THE BOARD ITA NO.960/AHD/2009 -2- CIRCULAR NO.208 DATED 15-11-1976 AFTER VERIFYING TH E NATURE OF HUNDIES . THE AO ASKED THE ASSESSEE TO PROVE THAT HUNDIES WERE DARSHANI HUNDIES AND PROVISIONS OF SECTION 69D OF THE ACT WERE NOT APPLI CABLE TO THE ASSESSEE. THE ASSESSEE FILED REPLY AND RELIED UPON THE BOARD CIRC ULAR NO.208 AND 221 AND SUBMITTED THAT J.K. FINANCE HAD EXTENDED CREDIT FAC ILITIES TO THE ASSESSEE BY MEANS OF HUNDIES WHICH ACTED AS SECURITY AND WERE CALLED DARSHANI HUNDIES . THE ASSESSEE FILED COPY OF BLANK HUNDIES AND DIRECTED TO FILE COPIES OF THE HUNDIES WHICH WERE ACTUALLY EXECUTED, BUT THE SAME WERE NOT FILED. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAD BORROWED FUNDS ON HUNDI FROM J.K.FINANCE AND HAD MADE THE REPAYMENT TO THE OTHER PARITIES WHICH WERE NOT IN ACCORDANCE WIT H THE TRANSACTIONS SPECIFIED IN CIRCULAR NO. 221. SINCE THE ASSESSEE HAD DRAWN HUNDI ON J.K. FINANCE CO., AND THE COMPANY MADE PAYMENT ON BEHALF OF THE ASSES SEE BY ACCOUNT PAYEE CHEQUE AND IN FORM NO.3CD, THE ASSESSEE HAD ITSELF SHOWN THE TRANSACTION AS HUNDI TRANSACTION., THE AO HELD THE PROVISIONS OF SECTIO N 69D WERE APPLICABLE IN ASSESSEES CASE. THE AO FURTHER NOTED THAT THE TRIBUNAL DIRECTED THE AO TO VERIFY THE NATURE OF THE HUNDIES WHICH ARE SEVERAL IN NATURE, THEREFORE, IN THE ABSENCE OF ACTUAL HUNDIES , IT IS DIFFICULT TO VERIFY THE NATURE OF HUNDIES AND ACCORDINGLY, THE ADDITION WAS AGAIN MADE ON THE SAM E COUNT. 4. THE ASSESSEE REITERATED THE SUBMISSION MADE BEFO RE THE LEARNED CIT(A) IN THE EARLIER PROCEEDINGS FOR DELETING THE ADDITIO N. IT WAS FURTHER SUBMITTED THAT CERTIFICATE FROM J.K.FINANCE, WAS FILED STATIN G THAT THE SAID CONCERN WAS AN INDIGENOUS BANKER AND ALSO FURNISHED COPY OF HUNDI PROVIDED BY J.K. FINANCE. ON FACE OF THE HUNDIES, IT WAS WRITTEN IN GUJARATI WORD DEKHADNAR JOG WHICH MEANS DHARSHINI HUNDI. THE SAID LETTER AND DOCUMENTS WERE ALSO PR ODUCED BEFORE THE AO. IT WAS THEREFORE SUBMITTED THAT SIN CE THE ASSESSEE FILED REPLY AND SPECIMEN COPY OF THE HUNDI BEFORE THE AO AND THE TRANSACTION WAS CARRIED OUT THROUGH BANKING CHANNEL THEREFORE ADDITION SHOU LD HAVE BEEN DELETED. THE LEARNED CIT(A) CONSIDERING THE MATERIAL PLACED BEFO RE HIM DELETED THE ADDITION. HIS FINDING IN PARA-2.3 READS AS UNDER: ITA NO.960/AHD/2009 -3- 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS OF THE AR OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT HAD FILED A COPY OF BLANK FORM OF HUNDI ISSUED BY J.K. FINANCE ALONG WITH A CERTIFICATE FROM THE SAID FIRM, WHICH CLEARLY STATE D THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. FROM THE DETAILS FILED BY THE APPELLANT, IT CAN BE SEEN THAT THE NATURE OF HUNDI IS OF DARSHANI HUNDI AND SINCE THE PAYMENTS HAVE BEEN MADE THROUGH A/C. PAYEE CHEQUES, I AM OF THE VIEW THAT PROVISIONS OF SEC. 69D ARE NOT APPLICABLE IN THE PRESENT CASE. IT IS FURTHER WRITTEN AS DEKHADNAR JOG IN GUJARATI AT THE BOTTOM OF SUCH HUNDI, WHICH LITERALLY MEANS IT IS A DARSHANI HUNDI. THE CIRCULAR NO.208 DATED 15-11-1976 GIVES CLARIFIC ATION ABOUT NEW PROVISIONS OF SECTION 69D AND TYPES OF HUNDIS AND C IRCULAR NO.221 DATED 6/6/97 SAYS THAT THE PROVISIONS OF SECTION 69D ARE NOT APPLICABLE TO DARSHANI HUNDI TRANSACTIONS. AS THE HUNDI TRANSACT ED BY THE APPELLANT ARE DARSHANI HUNDIES, PROVISIONS OF SECTION 69D ARE NOT APPLICABLE IN THE APPELLANT. I, THEREFORE, DELETE THE ADDITION M ADE U/S.69D OF THE IT ACT OF RS.5,14,882/- THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT SINCE EXECUTED HUNDI WAS NOT PRODUCED BEFORE THE AO AND CONSIDERED NOW BY THE CIT(A), THEREFORE, OPPORTUNITY SHOULD BE GIVEN TO T HE AO AT THE APPELLATE STAGE. 5. ON CONSIDERATION OF THE ABOVE FACTS, WE FIND THA T IT IS NOT A FIT FOR INTERFERENCE IN THE ORDER OF THE CIT(A) ON THIS ISS UE. SECTION 69D OF THE IT ACT PROVIDES THAT WHERE ANY AMOUNT IS BORROWED ON A HU NDI FROM, OR ANY AMOUNT DUE THEREON IS REPAID TO, ANY PERSON OTHERWISE THAN THROUGH AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK, THE AMOUNT SO BORROWED OR R EPAID SHALL BE DEEMED TO BE THE INCOME OF THE PERSON BORROWING OR REPAYING T HE AMOUNT AFORESAID FOR THE PREVIOUS YEAR IN WHICH THE AMOUNT WAS BORROWED OR R EPAID, AS THE CASE MAY BE. THEREFORE, IT IS CLEAR THAT FOR BORROWING OR REPAYING OF THE AMOUNT ON HUNDI, IF THE TRANSACTION IS CARRIED OUT OTHERWISE THAN THROUGH AN ACCOUNT PAYEE CHEQUE DRAWN ON THE BANK, DEEMED ADDITION COULD BE MADE. THE ASSESSEE IN THIS CASE FILED COPY OF THE HUNDI ISSUED BY THE J.K . FINANCE ALONG WITH CERTIFICATE OF THE SAID FIRM WHICH SHOWED THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE. THE DETAILS FILED BY THE ASS ESSEE ALSO SHOWED THAT NATURE OF THE HUNDI WAS DARSHANI HUNDI . SINCE THE TRANSACTION WAS CARRIED OUT, ITA NO.960/AHD/2009 -4- THROUGH ACCOUNT PAYEE CHEQUE, THEREFORE, THE LEARNE D CIT(A) RIGHTLY HELD THAT SECTION 69D WOULD NOT BE APPLICABLE IN THE MATTER. THE REVENUE HAS NOT TAKEN ANY SPECIFIC GROUND IN THE APPEAL ABOUT NOT GIVING ANY OPPORTUNITY TO THE AO AT THE APPELLATE STAGE. SINCE CONDITIONS OF SECTION 6 9D OF THE I.T.ACT ARE NOT APPLICABLE IN THIS CASE, THE LEARNED CIT(A) WAS JUS TIFIED IN DELETING THE ADDITION. 6. IN RESULT, THE REVENUES APPEAL FAILS AND IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY, 2011 SD/- SD/- (D.C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 21-01-2011 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD