Elcon Exports Pvt.Ltd., Ahmedabad V. The ACIT.,Circle-4, Ahmedabad

ITSSA 14/AHD/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2189 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-05-2016
• Assessment Year: misc
• Appeal Filed On: 25-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained cash credit; Question of law; Block assessment
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER ELCON EXPORTS PVT. LTD. AIRPORT CROSS ROAD, HANSOL, AHMEDABAD - 04 PAN: AAACE2641J (APPELLANT) VS THE ACIT, CIRCLE - 4, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI R.I. PATEL, CIT - D . R. ASSESSEE BY: S H RI VIJAY RANJAN , A.R. DATE OF HEARING : 12 - 05 - 2 016 DATE OF PRONOUNCEMENT : 29 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASS ESSEE S APPEAL FOR A.Y. 01 - 04 - 1985 TO 05 - 09 - 1995 , AR ISES FROM ORDER OF THE ACIT , CIR - 4 AHMEDABAD DATED 28 - 12 - 2011 , IN PROCEEDINGS UNDER SECTION 158BC R.W.S. 158BD R.W.S. 254 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T (SS) A NO . 14 / A HD/2 0 12 A SSESSMENT YEAR 01 - 04 - 1985 TO 05 - 09 - 1995 I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 2 2. IT IS EVIDENT TO US FROM A P ERUSAL OF THE CASE FILE THAT THE ASSESSEE HAS RAISED A VERY LENGTHY PLEADINGS. IT HAS FILED CONCISE GROUNDS AS STATED TO BE DIRECTED BY THE BENCH ON 04 - 09 - 2015. LEARNED COUNSEL SUBMITS TH AT THE ASSESSEE S SOLITARY SUBS TANTIVE GROUND IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF THE SECTION 68 ADDITION IN THE NATURE OF UNEXPLAINED CASH CREDIT AMOUNTING TO RS. 43,72,000/ - MADE IN COURSE OF THE IMPUGNED BLOCK ASSESSMENT IN QUESTION. 3. WE COME TO FACTS OF THE CASE. THIS LITIGATION HAS SEEN MANY REMAND ORDERS FROM THIS TRIBUNAL AND THE IMPUGNED SECTION 68 ADDITION OF RS. 43,72,000/ - BEING REITERATED IN ALL CONSEQUENTIAL ORDERS OF THE ASSESSING OFFICER. THE ASSESSEE COMPANY IS IN EXPORT BUSINESS. THE DEPARTMENT SEARCHED ITS SISTER CONCERN NAMELY M/S ELC ON FINLEAS AND INDUSTRIES LTD. ON 05 - 09 - 1995. IT APPEARS TO HAVE SEIZED ALLEGED INCRIMINATING DOCUMENTS AND BOOKS OF THE ASSESSEE. THE ASSESSING OFFICER INVOKED SECTION 158BD VIDE LETTER DATED 19 - 01 - 1996. THE ASSESSEE FILED RETURN ON 01 - 03 - 1996 STATING LOSS OF RS. 17,45,500/ - ALONG WITH NIL UNDISCLOSED INCOME. THE ASSESSING OFFICER IN COURSE OF BLOCK ASSESSMENT NOTICED IT TO HAVE GIVEN LOANS TO 26 ALLEGED BENAMI PERSON OUT OF 67 FOR INVESTMENTS TO BE MADE IN THEIR SHARE CAPITAL IN M/S BALA FINVEST PVT. LTD. BY AVAILING LOANS FROM ASSESSEE AMOUNTING TO RS. 43.72 LACS IN QUESTION FOLLOWED BY REPAYMENT THEREOF. HE FRAMED FIRST BLOCK ASSESSMENT ON 30 - 09 - 1996 INTER ALIA HOLDING THAT ASSESSEE S BALANCE SHEET FILED WITH RETURN DID NOT MENTION THE SAID 26 PERS ONS, THEY HAD BEEN CREATED FOR TAX I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 3 PURPOSE, THERE WAS NO EVIDENCE OF THEIR SHARE HOLDING ACQUISITION AND THERE WAS NO GENUINE OR CREDITWORTHY STATEMENT SUPPORTING THE ASSESSEE S CASE. ALL THIS RESULTED IN THE IMPUGNED ADDITION. THE ASSESSEE PREFERRED ITA 4426/AHD/1996 BEFORE THE TRIBUNAL. A CO - ORDINATE BENCH IN ITS ORDER DATED 19 - 05 - 2000 REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER TO EXAMINE THE 26 PERSONS IN QUESTION. 4 . THE ASSESSING OFFICER AGAIN REITERATED THE IMPUGNED ADDITION VIDE ORDER DAT ED 23 - 02 - 2002 ON THE GROUND THAT THE ASSESSEE ONCE AGAIN HAD SOUGHT TO SHIFT THE BURDEN ON THE DEPARTMENT INSTEAD OF ITSELF PRODUCING THE 26 PERSONS IN QUESTION . THIS M ADE THE ASSESSEE TO APPROACH TH E TRIBUNA L. A COORDINATE BENCH IN ITA NO . 96/AHD/2002 D ECIDED ON 04 - 08 - 2006 ONCE AGAIN REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER AS THE APPROVAL IN QUESTION WAS TAKEN FROM JOINT COMMISSIONER INSTEAD OF COMMISSIONER. 5 . THE ASSESSING OFFICER RESUMED WITH THE CONSEQUENTIAL PROCEEDINGS. THE IMPUGNED AS SESSMENT ORDER READS THAT HE MADE A PROTECTIVE ADDITION OF THE IMPUGNED SUM THIS TIME VIDE ORDER DATED 26 - 12 - 2007. THE ASSESSEE ONCE AGAIN FILED APPEAL IT(SS)A NO . 08/AHD/2008. A CO - ORDINATE BENCH IN ITS ORDER DATED 13 - 12 - 2010 ONCE AGAIN SET ASIDE THE IS SUE BACK TO THE FILE OF ASSESSING OFFICER FOR DECISION AFRESH AFTER CONSIDERING TRIBUNAL S DECISION IN CASE OF UMEDSINGH P. CHAMPAVAT VS. ACIT IN IT(SS)A NO. 18/AHD/2007 PERTAINING TO THE SAME BLOCK PERIOD INVOLV ING SUBSTANTIVE ADDITION, IT SPECIFICALLY D IRECTING THE ASSESSING OFFICER TO CONSIDER THE ABOVE I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 4 STATED DECISION AND FIND OUT WHETHER THE CO - ORDINATE BENCH IN QUESTION HAD DELETED THE ADDITION ON ME RIT OR NOT AS PE RTAI NING TO 26 CREDITORS IN QUESTION. 6. IT TRANSPIRES FROM THE CASE FILE THAT THE A SSESSING OFFICER HAS ONCE AGAIN REPEATED THE IMPUGNED ADDITION BY OBSERVING IN THE ASSESSMENT ORDER IN QUESTION THAT THE TRIBUNAL IN CASE OF SHRI UMEDSINGH CHAMPAVAT (SUPRA) HAD NOT DE LETED THE ADDITION MADE ON SUBS TA N T I VE BASIS ON MERITS. HE THEREAFTER Q UOTES LONG HISTORY OF THIS LITIGATION THEREBY MAKING THE ADDITION IN QUESTION. THIS LEAVES THE ASSESSEE AGGRIEVED. 7. WE HAVE HEARD BOTH SIDES. CASE FILE PERUSED. THERE IS NO DISPUTE SO FAR AS RELEVANT FACTS NARRATED IN THE PRECEDING PARAGRAPHS ARE CON CERNED. SUFFICE TO SAY, THIS TRIBUN AL IN LAST REMAND DIRECTIONS (S UPRA) MADE IT CRYSTAL CLEAR TO THE ASSESSING OFFICER THAT HE SHALL FIND OUT AS TO WHETHER THE EARLIER BENCH HAD DELETED THE SUBSTANTIVE ADDITION ON MERITS IN CASE OF SHRI CHAMPAVAT. THE A SSESSING OFFICER DOES NOT TREAT TRIBUNAL S ORDER IN CASE OF SHRI CHAMPAVAT TO BE ON MERITS. BOTH PARTIES RAISE THEIR RESPECTIVE SUBMISSIONS ON THESE LINES ONLY. WE NOTICE AT THIS STAGE THAT A CO - ORDINATE BENCH HAD DECIDED THE ISSUE IN SHRI CHAMPAVAT S CA SE AS UNDER: - KEEPING IN VIEW THE ABOVE ORDER OF THE TRIBUNAL IN THE INSTANT CASE, WE FIND THAT THE AO HAS MADE THE ADDITION MAINLY ON THE ADMISSION MADE BY THE ASSESSEE AND HIS ACCEPTANCE IN THE STATEMENT RECORDED U/S,132(4)/131 OF THE ACT . HOWEVER, THE TRIBUNAL HAS ALREADY HELD IN THE INSTANT CASE THAT ADDITION CANNOT BE MADE ON THE BASIS OF THE SAID ADMISSION FOR THE REASONS MENTIONED IN DETAIL IN THE I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 5 SAID ORDER QUOTED ABOVE THE TRIBUNAL DIRECTED TO EXAMINE THE VARIOUS PERSONS AND ONLY ON THE BASIS OF THE MATERIAL GATHERED ON EXAMINATION OF THOSE PERS ONS AND AFTER CONFRONTING THOSE MATERIALS TO THE ASSESSEE, THE ADDITION COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. WE FIND THAT IN THE INSTANT CASE, NO ADVERSE MATERIAL COULD BE BROUGHT ON RECORD EX CEPT IN THE CASE OF 15 PERSONS, WHO DENIED THE TRANSACTIONS WITH THE ASSESSEE AND IN RESPECT OF 7 PERSONS IT HAS BEEN STATED THAT SUMMONS COULD NOT BE SERVED BY THE DEPARTMENT. FURTHER IN RESPECT OF THOSE 15 PERSONS, WHO DENIED THE TRANSACTIONS, THE ASSESS EE EXPLAINED BEFORE THE AO THAT THESE PERSONS HAVE RIGHTLY STATED THAT THEY DO NOT HAVE ANY FINANCIAL TRANSACTIONS WITH THE ASSESSEE AS THEY HAD INVESTED IN THE VARIOUS GROUP CONCERNS OF THE ASSESSEE AND DID NOT HAVE ANY TRANSACTIONS WITH THE ASSESSEE AS A N INDIVIDUAL. THUS, THE STATEMENTS OF THESE FIFTEEN PERSONS CANNOT BE READ AGAINST THE ASSESSEE FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE AO COULD NOT CONTROVERT THE ABOVE EXPLANATION OF THE ASSESSEE. WE FIND THAT THE EXPLANATI ON OF THE ASSESSEE WAS THAT THESE PERSONS HAVE DENIED THE TRANSACTIONS WITH THE ASSESSEE AND NOT WITH THE COMPANIES WHERE THEY HAVE, MADE THE INVESTMENT. THE LEARNED DR COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAD CLAIMED TO HAVE MA DE ANY TRANSACTIONS WITH THESE 15 PERSONS IN HIS INDIVIDUAL CAPACITY. THUS, IN OUR CONSIDERED OPINION, THE AO HAS MADE THE ADDITION WITHOUT PROPERLY APPRECIATING THE EXPLANATION OF THE ASSESSEE AND THE STATEMENTS OF THESE FIFTEEN PERSONS. IN OUR VIEW, NO A DVERSE INFERENCE FROM MERELY SUCH DENIAL I N THE STATEMENTS CAN BE DRAW N AGAINST THE ASSESSEE. IN RESPECT OF SEVEN PERSONS, ON WHOM THE SUMMONS COULD NOT BE SERVED, THE ASSESSEE EXPLAINED THAT THESE SUMMONS COULD NOT BE SERVED EITHER BECAUSE OF INCOMPLETE A DDRESS OR CHANGE IN ADDRESS. HE SUBMITTED THAT THE NEW AND COMPLETE ADDRESS IN RESPECT THREE PERSONS WERE PROVIDED TO THE AO ON 22.11.2006 BY WAY OF AFFIDAVIT OF THOSE PERSONS AND SIMILARLY COMPLETE ADDRESS OF FURTHER THREE PERSONS WERE PROVIDED TO THE AO BY WAY OF AFFIDAVIT ON 27.11.2006. HOWEVER, AFTER THIS THE AO HAD NOT ISSUED ANY FRESH SUMMONS TO THESE SIX PERSONS. IN RESPECT OF THE ONE PERSON LEFT, THE ASSESSEE POINTED OUT THAT TH IS PERSON APPEARED BEFORE THE A. O. ON 1.3.2006 AND HIS STATEMENT WAS R ECORDED AT THAT TIME WHEREIN HE AFFIRMED THE TRANSACTION. WE FIND THAT THE EXPLANATION OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE AO WAS NOT JUSTIFIED IN DRAWING AN, ADVERSE INFERENCE AGA INST THE ASSESSEE. THUS, ON PERUSAL OF MATERIAL ON RECORD, WE FIND THAT NO I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 6 ADVERSE MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE AFTER EXAMINING THE PERSONS IN PURSUAN CE TO THE TRIBUNAL'S ORDER DT. 7. 4.1998 . IN THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, IN VIEW OF THE CATEGORICAL DIRECTION OF THE TRIBUNAL CONTAINED IN TH E ORDER DT. 7.4.1998 THE AO OUGHT NOT TO HAVE MADE ADDITION AGAIN ONLY ON THE BASIS OF THE STATEMENT RECORDED U/S.132(4)/131 OF THE ACT HENCE, WE DELETE THE ADDITION OF RS. 1,17,12,060 IS DELETED. GROUNDS NO. 1 AND 2 OF THE APPEAL ARE ACCORDINGLY ALLOWED. THERE IS HARDLY ANY DISPUTE ABOUT THE TRIBUNAL HAVING DELETED THE ABOVE STATED ADDITION. THE REVENUE PREFERRED TAX APPEAL NO . 1054 OF 2008 BEFORE HON BLE JURISDICTIONAL HIGH COURT. THEIR LORDSHIPS IN ORDER DATED 03 - 07 - 2009 FRAMED SUBSTANTIAL QUESTION OF LAW AS TO WHETHER THIS TRIBUNAL HAD CORRECTLY APPRECIATED FACTS ON RECORD TO DELETE THE ADDITION IN QUESTION OF RS. 1,17,12,060/ - MADE AS UNDISCLOSED I NVESTMENT OF 41 BENAMIDARS. IT IS VERY MUCH CLEAR TO US IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT THIS TRIBUNAL IN CASE OF SHRI CHA MPAVAT HAD INDEED DELETED THE IMPUGNED ADDITION ON MERITS AFTER APPRECIATING ALL FACTS AND EVIDENCE AVAILABLE ON THE CASE FILE. WE DO NOT FIND ANY FORCE IN REVENUE S SUBMISSIONS SUPPORTING ASSESSING OFFICER S ACTION IN REPEATING THE IMPUGNED SECTION 68 ADDITION OF RS. 43,72,000/ - . THE SAME STANDS DELETED. 8. THIS ASSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN TH E OPEN C OURT ON 29 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /06 /2016 I.T(SS)A NO. 14 /AHD/20 12 A.Y. BLOCK PERIOD PAGE NO ELCON EXPORTS PVT. LTD VS. ACIT 7 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/ , / ,