Shri Jay Kishore Chaturvedi, Baroda V. The ACIT., Baroda Circle-2, Baroda

ITA 969/AHD/2005

• Counselvise Citation: 96920514 RSA 2005
• Duration Of Justice: 6 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 30-01-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 31-03-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Business income; Depreciation; Income from undisclosed sources; Bad and doubtful debts; Revised return
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.969/AHD/2005 & ITA NO.902/AHD/2008 ASSESSMENT YEAR:2000-01 SHRI JAY KISHORE CHATURVEDI 2 ND FLOOR, 204, STERLING CENTRE, R.C. DUTT ROAD, BARODA PAN NO.ABKPC6672R / V/S . ASST. C.I.T. BARODA, CIRCLE-2, BARODA / APPELLANT .. / RESPONDENT ITA NO.828/AHD/2008 ASSESSMENT YEAR: 1995-96 ITA NO.1399/AHD/2008 ASSESSMENT YEAR: 1999-00 SHRI JAY KISHORE CHATURVEDI 2 ND FLOOR, 204, STERLING CENTRE, R.C. DUTT ROAD, BARODA PAN NO.ABKPC6672R / V/S . ASST. C.I.T. BARODA, CIRCLE-2, BARODA / APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI M.K. PATEL, AR /BY REVENUE SHRI B.L. YADAV, SR-DR / DATE OF HEARING 30-01-2012 !'# / DATE OF PRONOUNCEMENT 31-01-2012 $ $ $ $ / // / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 2 THESE FOUR APPEALS OF THE ASSESSEE ARISE FROM 4 DIF FERENT ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) AS PER DETAILS HEREIN:- ITA NO. A.Y. ORDER DATED CIT(A) 969/AHD/2005 2000-01 17-01-2005 CIT(A)-V BARODA 902/AHD/2008 2000-01 24-01-2008 CIT(A)-II BARODA 808/AHD/2008 1995-96 14-12-2007 CIT(A)-II BARODA 1399/AHD/2008 1999-00 24-01-2008 CIT(A)-II BARODA SINCE THE ISSUES IN THESE APPEALS PERTAIN TO THE SA ME ASSESSEE. THEREFORE ALL THE APPEALS ARE BEING DECIDED BY THIS CONSOLIDATED ORDE R. THE ASSESSEE HAS RAISED THE GROUNDS IN THE SAID APPEALS AS UNDER:- ITA NO.969/AHD/2005 (FOR A.Y. 2000-01) 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION S MADE ON ACCOUNT OF DISALLOWANCES OF THE FOLLOWING EXPENSES: A) 1/TH OUT OF OFFICE EXPENSES - RS.9858/- B) 1/10 TH OUT OF TELEPHONE EXPENSES - RS.36162/- C) 1/6 TH OUT OF VEHICLE EXPENSES & DEPRECIATION RS.106559/ - D) 1/6 TH OUT OF STAFF-WELFARE EXPENSES RS.7114/- 2. IT IS PRAYED THAT THE DISALLOWANCE OUT OF EXPENS ES MADE AS ABOVE BE DELETED. 3. THE LD. CIT(A) ERRED IN HOLDING THAT UNSECURED L OANS RECEIVED OF RS.1,40,75,000/- FROM THE FOLLOWING PARTIES ARE NOT GENUINE: A) VIJAY CHATURVEDI, PROP OF CALLMAN TRADING CORPN RS.1,10,75,000/- B) ATV PROJECT INDIA LTD. RS. 30,00,000 RS.1,40,75,000/- 4. THE LD. CIT(A) ERRED IN HOLDING THAT YOUR APPELL ANT DID NOT DISCHARGE HIS ONUS PROVIDED U/S68 OF THE IT ACT IN RESPECT OF UNS ECURED LOANS OF RS.1,40,75,000/- 5. THE LD. CIT(A) ERRED IN NOT PROPERLY APPRECIATIN G THE DETAILS AND EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS CI T(A) IN RESPECT OF UNSECURED LOANS OF RS.1,40,75,000/-. 6. THE LD. CIT(A) CONSEQUENTLY ERRED IN HOLDING THA T THE UNSECURED LOANS OF RS.1,40,75,000/- AS ABOVE IS NOT GENUINE AND FURTHE R ERRED IN CONFIRMING THE ADDITION OF RS.1,40,75,000/- MADE TO THE TOTAL INCO ME ON THIS ACCOUNT. ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 3 7 IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF YOU R APPELLANT AND IN LAW THE LEARNED CIT(A), ON PROPER APPRECIATION OF EVIDENCES PRODUCED BEFORE HIM, OUGHT TO HAVE HELD THAT THE LOANS OF RS.1,40,75,000 /- WAS SATISFACTORILY EXPLAINED AND CONSEQUENTLY OUGHT TO HAVE DELETED TH E ADDITION OF RS.1,40,75,000/- ITA NO.902/AHD/2008 (FOR THE A.Y. 2000-01) 1) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING T HE ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX, 1961, IMPOSING PENALTY OF RS.46,44,750/-. 2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF YO UR APPELLANT, THE LEARNED CIT (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE ORDER PASSED U/S 271(1)(C), IMPOSING PENALTY OF RS.46,44,750/-. 3) IT IS PRAYED THAT THE ORDER PASSED U/S 271(1)(C) , IMPOSING PENALTY OF RS.46,44,750/- BE CANCELLED. ITA NO.808/AHD/2008 (FOR THE A.Y.1995-96) 1) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING T HE ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX, 1961, IMPOSING PENALTY OF RS.12,30,000/-. 2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF YO UR APPELLANT, THE LEARNED CIT (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE ORDER PASSED U/S. 271(1)(C), IMPOSING PENALTY OF RS.12,30,000/-. 3) IT IS PRAYED THAT THE ORDER PASSED U/S. 271(1)(C ), IMPOSING PENALTY OF RS.12,30,000/- BE CANCELLED. ITA NO.1399/AHD/2008 (FOR THE A.Y. 1999-00) 1) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF CLAIM OF BAD DE BTS OF RS.29,50,082/-/ 2) IT IS PRAYED THAT THE DISALLOWANCE OF RS.29,50,0 82/- BE DELETED. 3) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION MADE U/A 68 OF THE ACT OF RS.2,62,750/- 4) IT PRAYED THAT THE ADDITION OF RS.2,62,750/ BE D ELETED. 5) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION MADE U/S 68 OF THE ACT BY THE ASSESSING OFFICER OF RS.10,00,000/- IN RESPECT OF UNSECURED LOAN RECEIVED FROM CALLMAN TRADING CO. 6) IT IS PRAYED THAT THE ADDITION OF RS.10,00,000/- BE DELETED. ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 4 7) THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF CLAIM OF INTERE ST OF RS.1,41,895/-. 8) IT IS PRAYED THAT THE DISALLOWANCE OF RS.1,41,89 5/- BE DELETED. 2. FIRST OF ALL, WE TAKE UP THE APPEAL OF ASSESSEE IN ITA NO.969/AHD/2005 FOR ASSESSMENT YEAR 2000-01 AS UNDER:- 3. AS REGARDS GROUND NO.1 AND 2 OF THE ASSESSEE. TH E BRIEF FACTS AS PER ASSESSING OFFICERS ORDER PAGE-2 ARE REPRODUCED AS UNDER:- 1. OFFICE EXPENSES: A PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE ASS ESSEE, IT IS NOTED THAT THE ASSESSEE HAD DEBITED THE SAME BY R.59,147/- ON ACCO UNT OF OFFICE EXPENSES. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS. ON P ERUSAL OF WHICH, IT IS NOTED THAT MOST OF THE EXPENSES ARE INCURRED ON CAS H BASIS AND ARE NOT VERIFIABLE IN NATURE. IN VIEW OF THIS FACT AND CIRC UMSTANCES, I DISALLOW 1/5 TH OF THE SAID EXPENDITURE WHICH WORKS OUT TO RS.11,830/- AND THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 2. TELEPHONE CHARGES: FURTHER, A PERUSAL OF THE PROFIT AND LOSS ACCOUNT, IT IS NOTED THAT THE ASSESSEE HAD DEBITED HE SAME BY RS.3,61,621/- ON ACCOUNT OF TELEPHONE EXPENSES. THE ASSESSEE HAS FURNISHED THE DETAILS WHICH SHOWS THAT THE TELEPHONES ARE ALSO INSTALLED AT THE RESIDENCE OF THE PROPRIETOR A ND SENIOR OFFICIALS OF THE ENTERPRISE. PERSONAL USE OF IT BY THEM AND THEIR FA MILY MEMBERS CANNOT BE RULED OUT. IN VIEW OF THIS FACT, 1/10 TH OF THE TOTAL EXPENDITURE IS DISALLOWED WHICH WORKS OUT TO RS.36,162/- AND THE SAME IS ADDE D BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. VEHICLE EXPENSES AND DEPRECIATION : FURTHER, A PERUSAL OF THE PROFIT AND LOSS ACCOUNT, IT IS NOTED THAT THE ASSESSEE HAS DEBITED THE SAME BY RS.2,76,625/- ON ACCOUNT OF VEHICLE PETROL, RS.39,072/- ON ACCOUNT OF VEHICLE REPAIRS. MOST OF THESE EXPENSES ARE INCURRED IN RESPECT OF CAR WHICH IS AT THE DISPOSAL OF THE PROPRIETOR. SHRI J.K. CHATURVEDI. THE PERSONAL USE OF IT BY HIM AND HIS F AMILY MEMBES CANNOT BE RULED OUT. IN VIEW OF THIS, 1/5 TH OF THE SAID EXPENDITURE I.E.RS.2,70,024.00 + RS.39,072) = 1/9 TH RS.09,140/- IS DISALLOWED AND ADDED BACK TO THE T OTAL INCOME. FURTHER, INSURANCE PAID ON CAR FOR RS.38,22 1/- AND DEPRECIATION ON VEHICLE FOR RS.2,85,436/- ARE ALSO DISALLOWED BY 1/ 5 TH IN VIEW THE ABOVE NOTED FACT WHICH WORKS OUT TO RS.64,731/- (R,23,657/-). R ELIANCE IS ALSO PLACED ON THE DECISION OF THE CHANDIGARH BENCH DECISION IN TH E CASE OF GULATI SAREE CENTRE, 240 ITR 94.THUS, ON THIS ACCOUNT, A TOTAL ADDITION OF RS.1,27,871/- IS MADE AND THE SAME IS ADDED BACK TO ITS TOTAL INCOME . 4. STAFF WELFARE EXPENSES: ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 5 THE ASSESSEE HAS ALSO DEBITED TO HIS PROFIT AND LOS S ACCOUNT, A SUM OF RS.42,684/- ON ACCOUNT OF STAFF WE4LFARE EXPENSES. A PERUSAL OF THE BREAK UP FURNISHED, IT IS NOTED THAT MOST OF THE EXPENSES DE BITED THEREIN ARE IN THE NATURE OF PERSONAL EXPENSES THE PROPRIETOR AND THE GUESTS BEING INCURRED ON ACCOUNT OF TEA, COLD DRINKS, SNACKS, ETC., NO SEPAR ATE DETAILS ARE MAINTAINED, 1/5 OF THE TOTAL EXPENSES CLAIMED ARE DISALLOWED WH ICH WORKS OUT TO RS.8,537/- THE SAME IS ADDED BACK TO ITS TOTAL INCO ME. 4. THE LD. CIT(A) CONSIDERING THE OVERALL FACTS RED UCED THE DISALLOWANCE ON ACCOUNT OF OFFICE EXPENSES, VEHICLE EXPENSES, DEPRE CIATION AND STAFF WELFARE EXPENSES TO 1/6 TH OF THE CLAIM MADE BY THE ASSESSEE. HOWEVER, THE LD . CIT(A) CONFIRMED THE DISALLOWANCE ON ACCOUNT OF TELEPHONE EXPENSES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. SINCE THE ASSESSEE HAD INCURRED THE OFFICE EXPENSES IN CA SH AND THE SAME WERE NOT VERIFIABLE IN NATURE, THE ASSESSEE HAS NOT MAINTAIN ED ANY LOG BOOK WITH RESPECT TO TELEPHONE EXPENSES AND VEHICLE EXPENSES AND THE PER SONAL ELEMENT COULD NOT BE DENIED AND SIMILARLY THE PERSONAL ELEMENT IN THE ST AFF WELFARE EXPENSES HAS NOT BEEN DENIED. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE, OR IN THE ABSENCE OF ANY COGENT EXPLANATION BY THE ASSESSEE BEFORE ANY O F THE AUTHORITIES BELOW OR EVEN BEFORE US, WE FIND NO ERROR IN THE ORDER OF LD. CIT (A). THUS, BOTH THE GROUNDS OF ASSESSEE ARE DISMISSED. 6. AS REGARDS GROUNDS NO.3 TO 7, THE BRIEF FACTS AR E THAT UNSECURED LOAN OF RS.1,50,75,000/- WAS RAISED FROM M/S CALIMAN TRADIN G COMPANY. THE ASSESSEE WAS REPEATEDLY REQUESTED TO FURNISH PAN NO., CONFIR MATION LETTER FROM THE AFORESAID CONCERN, NOTICE U/S.142(1) ALONG WITH QUESTIONNAIRE WAS SERVED ON 17-01-2003 VIDE ORDER-SHEET ENTRY DATED 04-02-2003 & 27-02-2003. ON 07-02-2003, THE ASSESSEE SUBMITTED THAT THE CONFIRMATION IS BEING OBTAINED A ND SAME WILL BE FURNISHED. VIDE LETTER DATED 27-02-2003 ASSESSEE PRODUCED PHOTO COP Y OF THE LETTER WRITTEN BY THE ASSESSEE TO THE AFORESAID FIRM AT ITS ADDRESS OF TH ANE. HOWEVER, IT WAS NOTICED BY THE ASSESSING OFFICER THAT IT WAS ONLY ACKNOWLEDGEM ENT OF THE RECEIPT OF THE LETTER OF THE ASSESSEE TO THE AFORESAID CONCERN. IT WAS NOT A CONFIRMATION OF LOAN FROM THE AFORESAID CONCERN, WHOSE PROPRIETOR WAS SHOWN TO BE SHRI VIJAY CHATURVEDI, NO. PAN NO. OF THE CREDITOR WAS GIVEN AND ONLY WARD/CIR CLE WAS MENTIONED AS ACIT, CIRCLE-2(3). AS THE ASSESSEE HAS NOT FURNISHED THE CONFIRMATION FROM THE PERSON IN ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 6 WHOSE NAME CASH CREDIT ENTRY OF LOAN HAS BEEN SHOWN , THE AO TRIED TO MAKE INDEPENDENT ENQUIRIES ON HIS OWN THROUGH LETTER U/S .133(6) WHICH WAS SENT AT THE ADDRESS OF THE PARTY GIVEN BY THE ASSESSEE. HOWEVER , THE LETTER RETURNED UNSERVED AND SAME WAS INTIMATED TO THE ASSESSEE. AFTER GETTI NG INTIMATED, THE ASSESSEE FILED LETTER DATED 13-03-2003 AND SUBMITTED THAT THE PROP RIETOR M/S. CAILMAN TRADING COMPANY WAS SHRI VIJAY CHATURVEDI AND A LETTER ON T HE LETTER HEAD OF M/S. CALIMAN TRADING CO. WAS ALSO ATTACHED. ON COMPARISON OF THE SIGNATURE, IT WAS OBSERVED BY THE AO THAT THESE WERE NOT MATCHING AND MOREOVER, I N NONE OF THE CASE, THE SAID PROPRIETOR, SHRI VIJAY CHATURVEDI HAD SIGNED. THE A O HAS FURTHER MADE ENQUIRIES AND FOUND OUT THAT SHRI VIJAY CHATURVEDI IS NOT ASSESSE D IN CIRCLE-2(3),MUMBAI, AS CONTENDED BY THE ASSESSEE. AFTER GIVING SHOW-CAUSE NOTICE TO THE ASSESSEE AND IN VIEW OF THE AFORESAID FACTS, THE AO OBSERVED THAT A SSESSEE HAS SQUARELY FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION OF THE LOAN AND IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND ACCORDINGLY, A DDED RS.1,50,75,000/- TO THE INCOME OF THE ASSESSEE. 7. LD. CIT(A) VIDE PARA-4.15 OF HIS ORDER OBSERVED AS UNDER:- 4.15 IN VIEW OF THE AFOR4ESAID FACTS AND CIRCUMSTA NCES, THE ASSESSING OFFICERS ACTION N TREATING THE CASH CREDIT SHOWN I N THE NAME OF SHRI VIJAY CHATURVEDI, PROP. M/S. M/S CALIMAN TRADING COMPANY, IN THE BOOKS OF ACCOUNT, AS UNEXPLAINED, IS HEREBY CONFIRMED. HOWEV ER, IT IS NOTICED THAT AMOUNT OF RS.10 LACS STATED TO BE RECEIVED FROM SHR I VIJAY CHATURVEDI HAS BEEN CREDITED IN THE BANK ACCOUNT OF THE APPELLANT ON 31.03.99 AND ACCORDINGLY, THIS CASH CREDIT HAS APPEARED IN THE B OOKS OF THE APPELLANT IN THE PERIOD RELEVANT TO A.Y. 99-00. THE ASSESSING OFFICE R MAY ACCORDINGLY TAKE NECESSARY ACTION IN THE RELEVANT ASSESSMENT YEAR. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IN THE PRESENT CASE THE LD. CIT(A) FOUND THE CONFIRMATION FURNISHED TO BE DEFECTIVE VIS--VIS THE DETAILS FURNISHED BY THE ASSESSEE. FURTHER, IT WAS OBSERVED BY THE LD. CIT(A) THAT THE LETTERS SENT BY ASSESSING OFFICER AT THE ADDRES S OF THE CREDITOR GIVEN BY THE ASSESSEE RETURNED UN-SERVED. THE PARTICULARS OF THE AO OF SHRI VIJAY CHATURVEDI GIVEN BY THE ASSESSEE AS ACIT, CIRCLE-2(3) MUMBAI W AS FOUND TO BE WRONG ON INQUIRY BY THE AO. BEFORE LD. CIT(A) THE ASSESSEE F URNISHED ANOTHER PARTICULAR OF AO OF SHRI VIJAY CHATURVEDI, NAMELY ACIT, CENTRAL CIRC LE-2, MUMBAI AND REQUESTED TO GET VERIFICATION DONE THROUGH OFFICIAL SOURCES BUT SAME WAS FOUND TO BE WRONG ON ENQUIRY MADE BY THE AO. THE ASSESSEE AFTER BEING GE TTING INTIMATED ABOUT WRONG ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 7 DETAILS OF THE ASSESSING OFFICER, SOUGHT REPEATED A DJOURNMENTS AND EVEN SOMETIMES MADE NON-COMPLIANCES TO THE APPELLATE PROCEEDINGS, IN AS MUCH AS THAT TWO SPECIFIC LETTERS WERE ISSUED TO THE ASSESSEE TO REMIND HIM A BOUT HIS REPEATED ADJOURNMENTS AND NON-COMPLIANCES BY THE UNDERSIGNED, APART FROM NUMBER OF ADJOURNMENTS GRANTED TO HIM. AFTER AVAILING SO MANY OPPORTUNITIE S, THE ASSESSEE HAS COME UP WITH ALTOGETHER DIFFERENT CONTENTION THAT OUT OF RS.1,50 ,75,000/- EARLIER CLAIMED TO BE RECEIVED FROM SHRI VIJAY CHATURVEDI, ONLY RS.1,20,7 5,000/- WAS RECEIVED FROM SHRI VIJAY CHATURVEDI AND RS.30 LAKH FROM M/S. ATV PROJE CTS INDIA LTD. NO DETAILS WERE FURNISHED AS TO WHETHER IT WAS A LOAN OR WAS A TRAD ING TRANSACTION WITH M/S. ATV PROJECTS INDIA LD. THE COPY OF ACCOUNT OF M/S. ATV PROJECTS INDIA LTD IN THE BOOKS OF THE ASSESSEE AND COPY OF CONTRA-ACCOUNTS OF THE AS INN THE BOOKS OF M/S. ATV PROJECTS LTD WERE ALSO NOT FURNISHED ON ITS OWN IN SUPPORT OF ITS CLAIM BUT EVEN NOT FURNISHED. THE INSTRUMENT NUMBER DD CHEQUE, DATE AN D AMOUNT MENTIONED IN THE LETTER OF M/S ATV PROJECTS INDIA LTD WERE NOT TALLY ING WITH THE DETAILS SUBMITTED BY THE ASSESSEE VIDE LETTER DATED 13-02-2004. IN THE SO-CA LLED CONFIRMATION OF M/S. CALIMAN TRADING, THE DATE OF CHEAUE NO.312200 IS 10-05-1999 AND AMOUNT IS RS.5.5 LAKH, WHEREAS IN THE SUBMISSION DATED 13-02-2004, CHEQUE NO.312200 IS DATED 05-04- 1999 FOR AMOUNT OF RS.5 LAKH. THUS, THERE IS CLEAR- CUT DIFFERENCE NOT ONLY IN THE AMOUNT BUT ALSO IN THE DATE OF ISSUE OF CHEQUE. MOR EOVER, AS PER THE SO-CALLED CONFIRMATION, TOTAL AMOUNT RECEIVED FROM M/S. CALIM AN TRADING CO. IS RS.1,20,75,000/- WHEREAS AS PER THE SUBMISSION DATE D 13-02-2004 THE DETAILS OF TOTAL AMOUNT OF RS.1,01,25,000/- ONLY IS GIVEN. 9. THE ASSESSEE HAD SUBMITTED THE CONFIRMATION IS N OT UNDER-DISPUTE. THE LD. CIT(A) HAS TAKEN THE DECISION WITHOUT VERIFYING THE DETAILS FROM THE ASSESSEE AND THE CREDITORS. THEREFORE, IT WILL BE A PREMATURE DECISI ON BY THE LD. CIT(A) TO CONFIRM THE ACTION OF THE ASSESSING OFFICER WITHOUT VERIFYING T HE CONFIRMATION SO PRODUCED, WHETHER THE SAME IS FALSE OR NOT. IT WILL BE IN THE INTEREST OF JUSTICE IF THE MATTER IS REMANDED TO THE FILE OF AO WHO WILL EXAMINE THE GEN UINENESS OF THE CONFIRMATION AND DECIDE THE ISSUE DE NOVO BUT BY PROVIDING OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. THUS, GROUNDS NO.3 TO 7 OF THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 8 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO .969/AAHD/2005 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO.902/AHD/2008 FOR A.Y 2000-01. THE BRIEF FACTS IN THE PRESENT APPEAL ARE THAT ASSE SSING OFFICER HAS LEVIED THE PENALTY U/S. 271(1)(C) OF THE ACT WITH REGARD TO AD DITION ON ACCOUNT OF UNSECURED LOAN OF RS.1,40,75,000/- CONFIRMED BY LD. CIT(A). 12. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. SINCE THE ISSUE WITH REGARD QUANTUM ADDITION OF RS.1,40,7 5,000/- HAS BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE M ATTER DE NOVO IN ASSESSEES APPEAL IN ITA NO.969/AHD/2005 OF EVEN DATE HEREINABOVE. THEREFORE, THE PRESENT P ENALTY U/S. 271(1)(C) OF THE ACT DOES NOT SURVIVE AND THE SAME IS SET ASIDE. THE ASSESSING OFFICER IS AT LIBERTY TO DECIDE THE ISSUE OF PENALT Y U/S. 271(1)(C) DE NOVO AFTER DECIDING THE MATTER IN QUANTUM IN THE SAID ASSESSMENT YEAR. THUS, GROUNDS NO.1 TO 4 OF THE ASSESSEE ARE ALLOWED. 14. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.902/ AHD/2008 IS ALLOWED. 15. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.828/AHD/2008 FOR A.Y. 1995-96. THE BRIEF FACTS OF THE CASE ARE THAT ASSES SEE HAD FILED RETURN OF INCOME ON 17-11-1997 DECLARING TOTAL INCOME OF RS.33,59,610/- . THE RETURN OF INCOME INCLUDES THE BUSINESS INCOME OF M/S. J.K. ENTERPRISE AND ALS O INCOME FROM UNDISCLOSED SOURCES INVESTED TO THE EXTENT OF RS.6,04,500/- IN SHARE APPLICATION OF BRIJLAXMI LEASING FINANCE LTD. AND RS.2 LAKH INVESTED IN SHAR E APPLICATION OF WORLD TECH IMPACTS PVT. LTD. BOTH THESE INVESTMENTS WERE MADE IN CASH AND DETECTED DURING THE ASSESSMENT PROCEEDINGS OF RESPECTIVE COMPANIES. ASS ESSING OFFICER MADE THE ORDER U/S.144 BY DETERMINING INCOME AT RS.1,43,80,520/- W HICH INCLUDED UNEXPLAINED INVESTMENT IN BRIJLAXMI LEASING & FINANCE LTD. AFTE R THE APPEAL, THE FOLLOWING ADDITIONS ATTRACTED PENALTY U/S. 271(1)(C):- 1) UNEXPLAINED EXPENDITURE U/S. 69C RS. 53,700 2) UNEXPLAINED INVESTMENT IN SILVER ARTICLES RS. 42,900 ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 9 3) INVESTMENTS IN SHARES OF BLL RS.29,58,000 4) SUPPRESSION OF SALE COMMISSION RS. 19,651 AFTER CONSIDERING THE REPLY OF THE ASSESSEE, ASSESS ING OFFICER CONCLUDED THAT EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT WAS A PPLICABLE AND LEVIED PENALTY OF RS.12.30 LAKH BEING MINIMUM PENALTY LEVIABLE. AO RE FERRED THE DECISION IN THE CASE OF K.P. MADHUSUDAN V. CIT REPORTED IN 251 ITR 99 (SC). 16. LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OF FICER. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAD SUBMITTED THE EXPLANATION WITH REGARD TO THE ADDITIONS IN PENALTY PROCEEDINGS AS UNDER:- AS REGARD ADDITION OF RS.53,700/- IT IS CONTENDED THAT THE ADDITION WAS MADE ON THE BASIS OF NOTING ON PAGE NO.31 AND 34 OF ANN EXURE-A/1 SEIZED FROM THE MUMBAI OFFICE OF THE APPELLANT AND THE NOTINGS WERE PROJECTED RECEIPTS BUT NOT ACTUAL RECEIPTS. AS REGARDS ADDITION OF RS.42,900/- IT IS CONTENDED BY THE COUNSEL THAT AS PER CUSTOMS SIN HINDU FAMILIES TO RECEIVE UTENSILS, COI NS, ETC. DURING MARRIAGE AND OTHER AUSPICIOUS OCCASIONS AND THE GIFT WAS ESTIMAT ED AT RS.85,900/- AND 50% THEREOF RS.42,900/- WAS CONFIRMED. AS REGARDS ADDITION OF RS.29.58 LAKH, IT IS CONTEND ED BY THE COUNSEL THAT INVESTMENT WAS IN BRIJLAXMI LEASING & FINANCE LTD. FROM THE CASH RECEIPTS FROM FIVE PARTIES ON ACCOUNT OF OLD OUTSTANDING DEB TS AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD PROVIDED C OMPLETE ADDRESS OF THESE PARTIES AND SINCE THE MATTER INVOLVED WAS VER Y OLD, THE APPELLANT WAS NOT ABLE TO PRODUCE THESE PARTIES. 18. NONE OF THE AUTHORITIES BELOW HAVE TAKEN INTO C ONSIDERATION THE EXPLANATION FURNISHED BY THE ASSESSEE. THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS ARE SEPARATE PROCEEDINGS. THE EXPLANATI ON GIVEN DURING THE PENALTY PROCEEDINGS HAVE TO BE CONSIDERED AND THEREAFTER ON LY THE DECISION TO LEVY THE PENALTY HAS TO BE TAKEN. IN THE PRESENT CASE, THIS HAS NOT BEEN DONE AND THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OF FICER WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE. THEREFORE, THE LEVY OF PENALTY MADE BY THE ASSESSEE IS NOT JUSTIFIED AND ACCORDINGLY, THE ORDER OF LD. CIT (A) IS CONFIRMING THE ACTION OF AO IS REVERSED AND THE AO IS DIRECTED TO CANCEL THE PENAL TY LEVIED U/S. 271(1)(C). THUS, APPEAL OF ASSESSEE IS ALLOWED. ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 10 19. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO.828 /AHD/2008 IS ALLOWED. 20. NOW WE TAKE UP THE APPEAL OF ASSESSEE IN ITA NO.1399/AHD/2008 FOR A.Y.1999-00. AS REGARDS GROUND NO.1 AND 2, THE BRIE F FACTS OF THE CASE ARE THAT ASSESSEE HAD CLAIMED A SUM OF RS.11,75,223/- AS BAD DEBT ORIGINALLY IN THE PROFIT AND LOSS ACCOUNT, FURNISHED ALONG WITH TAX AUDIT RE PORT U/S. 44AB SUBMITTED ORIGINALLY ON 27-12-1999. IN THE REVISED RETURN OF INCOME FURN ISHED BY THE ASSESSEE SUBSEQUENTLY ALONG WITH THE REVISED TAX AUDIT REPOR T, FURTHER CLAIM OF BAD DEBT WAS ALSO INCLUDED AT RS.29,50,082/-. IT WAS OBSERVED BY AO THAT FOR CLAIMING REVISED BAD DEBTS THE ASSESSEE WAS ALSO REQUIRED TO REVISE HIS AUDITED ACCOUNTS TO ENABLE SUCH CLAIM AS THE ADDITIONAL BAD DEBT WHICH ALSO WERE RE QUIRED TO BE WRITTEN OFF IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS EXPLAINED DURING THE PROCEEDINGS THAT AN INADVERTENT ERROR HAD CREPT INTO THE COMPUTATION OF BAD DEBTS ON THE BASIS OF APPRAISAL MADE BY THE ASSESSEE IN REGARD TO THE CLA IM OF BAD DEBTS BY ASSESSEE. THE AO WAS NOT SATISFED WITH THE EXPLANATION OF THE ASSESSEE AND ACCORDINGLY DID NOT ALLOW THE ADDITIONAL CLAIM OF BAD DEBT AMOUNTIN G TO RS.29,50,082/-. 21. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE HAS MADE TH E ASSESSMENT ON THE BASIS OF THE REVISED RETURN. THE ASSESSEE HAD FILED THE REVISED BALANCE-SHEET, PROFIT AND LOSS ACCOUNT, REVISED AUDIT REPORT AND NOTES TO THE BALA NCE-SHEET, WHICH ARE ON RECORD. THEREFORE, ONCE THE ASSESSEE HAS PASSED AN ENTRY IN THE BOOKS OF ACCOUNT FOR WRITING OFF THE DEBTS AS IRRECOVERABLE IN THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THEN THE CONDITIONS OF SECTION 36(I)(VII) OF THE ACT ARE FULFILLED. THIS HAS BEEN DONE BY THE ASSESSEE. THEREFORE IN VIEW OF THE JUDG MENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF TRF LIMITED V. CIT (2010) 323 ITR 397 (SC) AND IN THE CIRCUMSTANCES AND FACTS OF THE PRESENT CASE, THE CL AIM OF THE ASSESSEE U/S.36(I)(VII) OF THE ACT HAS TO BE ALLOWED. THE AO IS DIRECTED AC CORDINGLY TO ALLOW THE SAME. THUS, GROUND NO.1 AND 2 OF THE ASSESSEE ARE ALLOWED. 23. AS REGARDS GROUNDS NO.3, 4, 7 & 8 THE BRIEF FAC TS ARE THAT ASSESSEE HAD BORROWED FRESH UNSECURED LOANS AS UNDER:- ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 11 1. MEHARA CHINDANWALA RS. 20,000/- 2. GAURIBEN PATEL RS.2,00,000/- 3. JYOTSNABEN R PATEL RS. 12,750/- 4. PARISAD MIRZAN RS. 10,000/- 5. PARVIN MIRZAN RS. 20,000/- TOTAL RS.2,62,750/- THE ASSESSEE WAS REQUESTED TO FURNISH CONFIRMATIONS FROM THESE PARTIES, COMPLETE ADDRESSES, PAN NO. MODE OF LOAN AND THE AMOUNT OF I NTEREST THAT WAS DUE TO BE PAID BY THE ASSESSEE ON SUCH BORROWINGS. THE ASSESS EE WAS ALSO REQUESTED TO FURNISH EVIDENCES FOR THE GENUINENESS, CREDITWORTHI NESS AND THE CAPACITY OF THE LENDERS. DESPITE SEVERAL OPPORTUNITIES AND REPEATED REQUESTS MADE BY THE AO, THE ASSESSEE COULD NOT FILE THE CONFIRMATIONS UNDER ONE PRETEXT OR ANOTHER. SINCE THE ASSESSEE HAS NOT FILED THE CONFIRMATIONS OF THE LOA NS, THESE CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE ARE HELD TO BE UNEXPLA INED. ACCORDINGLY, THE AO INVOKED PROVISIONS OF SECTION 68 AND THE SAID AMOUN T OF RS.2,62,750/- HAD BEEN ADDED. 24. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 25. SIMILARLY, THE ASSESSING OFFICER MADE ADDITIONS ON ACCOUNT OF THE INTEREST ON THE SAID LOANS WHICH ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT PRIMAR ILY ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTH INESS OF THE CASH CREDITORS. THE ASSESSEE HAD NOT FURNISHED EVEN CONFIRMATIONS FROM THE CASH CREDITORS. THE CONFIRMATIONS FURNISHED CANNOT BE TAKEN ANY COGNIZA NCE IN THE ABSENCE OF ANY PAN NO AND IN THE ABSENCE OF ANY EVIDENCE THAT THE INCO ME IS FROM AGRICULTURE. IN FACT, THE ASSESSEE HAD NOT MADE ANY EFFORTS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN THE CIRCUMSTANC ES AND FACTS OF THE CASE, WE FIND NO ERROR IN THE ORDER OF LD. CIT(A). THUS, GROUNDS, 3, 4, 7 AND 8 OF THE ASSESSEE ARE DISMISSED. 27. AS REGARDS GROUND NO.5 AND 6 OF THE ASSESSEE. T HE ISSUE IS WITH REGARD TO ADDITION OF RS.10 LAKH FROM M/S.CALIMAN TRADING CO. THE SAID ISSUE HAS BEEN ITA NO.969/A/05, 902, 828, 1399/A/08 A.YS.00-01 , 95-96 & 99-00 SH JAY KCHATURVEDI V. ACIT, CIR-2 BRD PAGE 12 RESTORED BACK TO THE FILE OF THE AO TO DECIDE THE S AME DE NOVO BY OUR ORDER IN ASSESSEES APPEAL IN ITA NO.969/AHD/2005 OF EVEN DATE HEREINABOVE. THEREFORE, THE SAID ISSUE IS ALSO IS REMANDED BACK TO THE FILE OF AO FOR DECIDING THE SAME DE NOVO BUT BY PROVIDING SUFFICIENT OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. THUS, GROUND NO.5 AND 6 OF THE ASSESSEE ARE ALLOWED FOR S TATISTICAL PURPOSES. 28. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.1399 /AHD/2008 IS ALLOWED FOR STATISTICAL PURPOSES. 29. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO.969/AHD/2005 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, APPEAL IN ITA NO.902/AHD/2008 IS ALLOWED; IN ITA NO.828/AHD/2008 IS ALLOWED AND ITA NO.1399/AHD/2008 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. % $ !'# &'( 31 / 01 /201 2 ! , - . / THIS ORDER PRONOUNCED IN OPEN COURT ON 31/01/ 201 2. SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) &'(- 31/01/2012 1 / DKP* $ $ $ $ 223 223 223 223 43' 43' 43' 43' / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''27 8 / CONCERNED CIT 4. 8- / CIT (A) 5. 3;. 2227, 27#, 1 / DR, ITAT, AHMEDABAD 6. .>? @% / GUARD FILE. BY ORDER/ $ , /TRUE COPY/ A/1 ' 27#, 1 /