The ACIT,(OSD)Circle-8, Ahmedabad V. M/s. Shree Vaidehi Impex Pvt.Ltd., Surat

ITA 995/AHD/2011

• Counselvise Citation: 99520514 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: ASHWIN C SHAH
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEM BER ACIT (OSD), CIRCLE-8, AHMEDABAD (APPELLANT) VS SHREE VAIDENI IMPEX PVT. LTD, C/O, NIRAJ AGARWAL- DIRECTOR, 1-A, NIDHIVAN APPARTMENT, BRIDEVASI ESTATE, B/S, GOKUL RAW HOUSE, PARLE POINT, SURAT- 395007 PAN: AAJCS 3063 R (RESPONDENT) REVENUE BY: SRI P.L. KUREEL, SR.D.R. ASSESSEE BY: SRI ASHWIN C. SHAH, A.R . DATE OF HEARING : 18-02-2014 DATE OF PRONOUNCEMENT : 26-02-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-XIV AHMEDABAD DATED 27-01-2011. ITA NO. 995/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 2 2. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- [1]. THE LD. CIT(A)-XIV, AHMEDABAD ERRED IN L AW AND ON FACTS IN DELETING THE ADDITION OF RS.1,44,16,792/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITORS U/S.68 OF THE ACT. [2]. THE LD. CIT(A)-XLV, AHMEDABAD ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 18,60,318/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OR UNEXPLAINED INVESTMENTS IN FIXED ASSE TS U/S.69 OF THE ACT. [3]. THE LD CIT(A)-XIV , AHMEDABAD ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 28,85 , 039/- MADE BY THE ASSESSING 0FFICER ON ACCOUNT OF UNEXPLAINED PURCHASES. [4.] THE LD. CIT(A)-XLV. AHMEDABAD ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF RS.L,50,000/- OUT OF AD DITION OF RS.6,95 , 662/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADMINISTRATIVE AND OTHER EXPENSES. [5]. THE LD. CIT(A]-XIV, AHMEDABAD ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,41,946/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PRELIMINARY EXPENSES U/S. 35D OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A D EALER IN FURNISHING MATERIAL. RETURN OF INCOME WAS FILED BY HIM ALONG AUDITED ACCOUNTS. HOWEVER DURING THE ASSESSMENT PROCEEDINGS IN SPITE OF SEVERAL NOTICES ASSESSEE DID NOT FURNISH ANY DETAIL, THEREFORE AO P ASSED EX-PARTE ORDER DATED 07-12-2009 U/S. 144 R.W.S. 143(3). ASSESSEE WENT I N APPEAL BEFORE LD. CIT(A) AND FILED A PAPER BOOK ALONG WITH ALL NECESS ARY EVIDENCES. THERE WAS ALSO PRAYER MADE THAT THIS ADDITIONAL EVIDENCE MAY BE ADMITTED. THE PLEA TAKEN BY THE ASSESSEE BEFORE LD CIT(A) FOR NOT PRODUCING EVIDENCE AT THE TIME OF ASSESSMENT PROCEEDINGS WAS THAT THERE W AS DISPUTE BETWEEN THE I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 3 DIRECTORS. THE SHOP WAS CLOSED DOWN SOMEWHERE IN A UGUST, 2009 BY DIRECTORS RADHESHYAM AGRAWAL AND AMIT AGRAWAL DUE T O DISPUTES BETWEEN THEM. THEY LEFT FOR CALCUTTA SOMEWHERE IN SEPTEMBE R, 2009. THE BOOKS OF ACCOUNTS AND ALL RECORDS WERE IN THE SHOP. THESE B OOKS COULD NOT BE TAKEN OUT BECAUSE THEY WERE UNDER LOCK AND KEY. EVEN THE ASSESSMENT ORDER WAS NOT SERVED DUE TO CLOSURE OF THE SHOP AND THE SAME WAS RECEIVED BY ASSISTANT OF ASSESSEES CA. THIS ACCORDING TO ASSESSEE WAS R EASONABLE CAUSE FOR NOT PRODUCING BOOKS OF ACCOUNTS AT THE TIME OF ASSESSME NT PROCEEDINGS. LD. CIT(A) AFTER GIVING OPPORTUNITY TO THE AO TO COMMEN T ON THIS SUBMISSION OF THE ASSESSEE HELD THAT THERE WAS SUFFICIENT CAUSE F OR ASSESSEE BEING NOT ABLE TO EITHER PRODUCE BOOKS OF ACCOUNTS OR OTHER EVIDEN CE BEFORE AO DURING ASSESSMENT PROCEEDINGS AND HE ADMITTED THIS ADDITIO NAL EVIDENCE AND WENT ON TO DECIDE THE APPEAL AFTER OBTAINING REMAND REPO RT ON THE SUBMISSIONS OF THE ASSESSEE. IN THIS BACKGROUND OF THIS CASE, WE WILL NOW TAKE UP EACH GROUND SEPARATELY ON THE FACTS AS THEY EMERGED FROM THE ORDER OF LD. CIT(A). 4. FIRST GROUND OF APPEAL RELATES TO ADDITION OF RS . 1,44,16,792/- ON ACCOUNT OF UNEXPLAINED CREDITS U/S. 68 OF THE ACT. 5. THE AO IN HIS REMAND REPORT HAS STATED THAT DURI NG THE YEAR UNDER APPEAL, THE ASSESSEE-COMPANY ACCEPTED UNSECURED LOA NS OF RS. 1,44,16,792/- FROM FOLLOWING CREDITORS:- SRI AMIT AGARWAL RS. 3745353 SRI DHIRAJKUMAR AGARWAL RS. 1258899 SRI NIRAJKUMAR AGARWAL RS. 616717 SRI RADHESHYAM AGARWAL RS. 4257598 I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 4 SRI RADHESHYAM AGARWAL-HUF RS. 596009 SRI PALLAVIDEVI AGARWAL RS. 504244 SRI PUSHPADEVI AGARWAL RS. 1008488 SRI REKHADEVI AGARWAL RS. 2429484 --------------- TOTAL RS. 14416792 --------------- 6. BEFORE LD. CIT(A) ASSESSEE FILED THE CONFIRMATIO NS, STATEMENTS FROM CREDITORS ALONG WITH THE COPY OF PAN, ITR, BALANCE SHEET, BANK BOOK ETC. FROM THE ABOVE MENTIONED 8 DEPOSITORS. SHRI AMIT A GRAWAL ALSO FILED THE CONFIRMATION LETTER DATED 27-08-2010 STATING THAT H E HAS MADE THE DEPOSIT BY ACCOUNT PAYEE CHEQUE AS UNDER:- DATE BANK DETAILS CHEQUE NO. AMOUNT RS. 12-07-2006 UNION BANK OF INDIA, SARAT BOSE ROAD BRANCH, KOKATTA 715914 500000.00 11-11-2006 HDFC BANK SG ROAD, BODEKDEV BRANCH, AHMEDABAD 210077 300000.00 04-01-2007 HDFC BANK SG ROAD, BODEKDEV BRANCH, AHMEDABAD 210078 1850000.00 03-03-2007 HDFC BANK SG ROAD, BODEKDEV BRANCH, AHMEDABAD 210082 575000.00 22-03-2007 UNION BANK OF INDIA, SARAT BOSE ROAD BRANCH, KOLKATTA 055792 755000.00 INTEREST OF RS. 1,39,592/- WAS RECEIVED @ 15 % PER ANNUM DURING THE ASSESSMENT YEAR AND TDS OF RS. 14,230/- WAS ALSO DE DUCTED THEREON. HE I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 5 MADE THE ABOVE DEPOSIT OUT OF ABOVE MENTIONED BANK ACCOUNT. HE ENCLOSED HIS BOOKS OF ACCOUNT ALONG WITH PAN CARD, INCOME TA X, BANK STATEMENT OF RESPECTIVE BANK ACCOUNTS ALONG WITH STATEMENT OF AF FAIRS AND CAPITAL ACCOUNT FOR THE YEAR UNDER APPEAL. 7. ON THE BASIS OF ABOVE SUBMISSIONS OF THE ASSESSE E, LD. CIT(A) DELETED THIS ADDITION BY OBSERVING AS UNDER:- 7.2 1 HAVE VERIFIED THE CONFIRMATION ALONG WITH TH E DOCUMENTS MENTIONED HEREIN ABOVE AND FORMING PART OF PAPER BO OK IN CASE OF SHRI AMIT AGRAWAL. SIMILARLY, I HAVE ALSO VERIFIED THE CONFIRMATION ALONG WITH DOCUMENTS IN CASE OF OTHER DEPOSITORS AL SO. I FIND THE SAME AS GENUINE. THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN BY PRODUCING ALL EVIDENCES. NOW IT IS FOR THE AO TO RE BUT THE SAME. IN THE PRESENT CASE, ME AO HAS NOT REBUTTED ANYTHING OR HA S GIVEN ANY COMMENTS. FURTHER, ALL THE DEPOSITORS ARE HOLDING P AN AND THEREFORE THE ADDITION CANNOT BE MADE IN VIEW OF GUJARAT HIGH COURT DECISION IN THE CASE OF ROHINI BUILDERS 256 ITR 360 (GUJ). THEREFORE, THE ADDITION OF RS. 1,44,16,792 MADE ON ACCOUNT OF UNEX PLAINED CREDITORS IS DELETED. SINCE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE B Y GIVING OPPORTUNITY TO THE AO TO REBUT THE SUBMISSION OF THE ASSESSEE WHIC H HE HAS FAILED TO DO AND SINCE ALL THE DEPOSITORS WERE HOLDING PAN NOS., LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION BY PLACING RELIANCE ON THE DE CISION OF GUJARAT HIGH COURT IN THE CASE OF ROHINI BUILDERS 256 ITR 306 AN D THE ORDER PASSED BY HIM IS HEREBY UPHELD. THIS GROUND OF REVENUES APP EAL IS DISMISSED. 8. GROUND NO. 2 RELATES TO UNEXPLAINED INVESTMENT I N FIXED ASSETS OF RS. 18,60,319/-. I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 6 9. THE AO IN HIS REMAND REPORT HAS OBSERVED THAT DU RING THE YEAR UNDER APPEAL, THE ASSESSEE COMPANY HAS MADE ADDITION OF R S. 1,86,03,188/- IN FIXED ASSETS. THE ASSESSEE-COMPANY DURING THE REM AND PROCEEDINGS FILED THE COPY OF LEDGER ACCOUNTS AND ALL THE DETAILS FOR PURCHASE OF FIXED ASSETS EXCEPT FOR RS. 5 LACS WHICH WAS AMOUNT-WISE VERY S MALL IN NATURE ACCORDING TO HIM. HOWEVER AO DID NOT POINT OUT ANY DISCREPAN CY. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE REMAND REPORT OF THE AO AND VERIFYING ALL THE INVOICES FILED BY ASSESSEE IN SUPPORT OF PURCHASE O F FIXED ASSETS FOUND THAT ADDITION MADE TO THE FIXED ASSETS WERE GENUINE AND THEREFORE ADDITION OF RS. 18,60,319/- U/S. 69 BEING 10% OF TOTAL ADDITION OF RS. 1,86,03,188/- IN FIXED ASSETS WAS NOT SUSTAINABLE AS THE SAME WAS MADE ON PRESUMPTION BASIS AND WITHOUT BRINGING ANY MATERIAL ON RECORD. WE FIND N O INFIRMITY IN THE ORDER OF LD. CIT(A) AS THE SAME HAS BEEN PASSED BY HIM AF TER GIVING OPPORTUNITY TO THE AO ON THE SUBMISSIONS AND EVIDENCE PRODUCED BEFORE HIM BY THE ASSESSEE AND THEREFORE THE ORDER PASSED BY HIM IS H EREBY UPHELD. GROUND NO. 2 OF REVENUES APPEAL IS ALSO DISMISSED. 10. THIRD GROUND RELATES TO ADDITION OF RS. 28,85,0 39/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT PURCHASES. 11. THE AO IN HIS REMAND REPORT HAS MENTIONED THAT ASSESSEE HAS FILED THE DETAILS AND INVOICES. HOWEVER MONTH-WISE PURCHASES WERE NOT GIVEN, THEREFORE 10% DISALLOWANCE MADE BY AO WAS JUSTIFIED . LD. CIT(A) HOWEVER WAS OF THE VIEW THAT SINCE ASSESSEE HAS FUR NISHED ALL THE INVOICES AND LEDGER ACCOUNTS ABOVE RS. 5 LACS DURING THE REM AND PROCEEDINGS WHICH WERE DULY EXAMINED BY THE AO AND NOTHING ADVERSE WA S FOUND BY HIM I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 7 DURING THIS INVESTIGATION. 10% ADDITION ON LUMP S UM BASIS CANNOT BE MADE AND HE DELETED THE ADDITION OF RS. 28,85,39/- BEING 10% OF RS. 2,88,50,392/-. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISS ED. 12. 4 TH GROUND RELATES TO ADDITION OF RS. 6,95,662/- OUT OF ADMINISTRATIVE AND OTHER EXPENSES. 13. DURING THE REMAND PROCEEDINGS ASSESSEE PRODUCED LEDGER ACCOUNT AND INVOICES IN RESPECT OF ADMINISTRATIVE EXPENSES OF R S. 69,56,623/- ALONG WITH BOOKS OF ACCOUNTS. AO AFTER EXAMINING THIS EVIDENC E IN HIS REPORT WAS OF THE VIEW THAT IN THE ABSENCE OF ALL INVOICES THESE EXPENSES BEING NOT GENUINE 10% OF THESE EXPENSES ARE DISALLOWABLE. LD. CIT(A) HOWEVER FOUND THIS FINDING OF AO AS UNREASONABLE AND HOLDING THAT DISA LLOWANCE MADE BY AO BEING ON HIGHER SIDE RESTRICTED THIS ADDITION TO RS . 1,50,000/-. SINCE LD. CIT(A) HAS GIVEN RELIEF AFTER GOING THROUGH THE NAT URE OF THESE EXPENSE WHICH WERE MAINLY ON ACCOUNT OF INTEREST/ADVERTISEM ENT EXPENSES, PROFESSIONAL CHARGES AND AUDIT FEES, WE ARE NOT INC LINED TO INTERFERE WITH THE ORDER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. SO THIS GROUND OF REVENUE IS ALSO DISMISSED. 14. THE LAST GROUND TAKEN BY REVENUE RELATES TO ADD ITION OF RS. 2,41,946/- BEING 1/5 TH OF TOTAL PRELIMINARY EXPENSES OF RS. 12,09,774/-. 15. DURING THE REMAND PROCEEDINGS ASSESSEE FURNISHE D THE BREAK-UP OF THESE PRELIMINARY EXPENSES. AO EXAMINED THESE EXPE NSES AND WAS SATISFIED TO THE CLAIM OF ASSESSEE AS MUCH AS THERE WAS NO AD VERSE FINDING BY HIM IN I.T.A NO. 995/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. SHREE VAIDEHI IMPEX PVT. LTD 8 HIS REMAND REPORT. THEREFORE, LD. CIT(A) RIGHTLY H ELD THAT PRELIMINARY EXPENSES OF RS. 2,41,946/- BEING 1/5 TH OF THE TOTAL EXPENSES OF RS. 12,09,774/- WERE ALLOWABLE U/S. 35D AND THEREFORE H E DELETED THE ADDITION SO MADE BY AO. THIS GROUND OF REVENUE IS ALSO DISMISS ED. 16. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 26/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,