The ACIT, (OSD)Circle-8, Ahmedabad V. Sughad Dairy Pvt.Ltd., Ahmedabad

ITSSA 146/AHD/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8769 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-12-2010
• Assessment Year: misc
• Appeal Filed On: 07-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Income from undisclosed sources; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) IT(SS)A NO.146/AHD/2007 B. P.: 01-04-1990 TO 05-09-2000 THE A. C. I. T.(OSD), CIR-8, A WING, AGANTA COMMERCIAL CENTRE, ASHRAM ROAD, AHMEDABAD VS SUGHAD DAIRY PVT. LTD., 3/B, RANGDEEP APARTMENTS, NR. VIJAY RESTAURANT, NAVRANGPURA, AHMEDABAD PA NO. AACS 6852K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ROBIN RAWAL, SR. DR RESPONDENT BY SHRI DIPAK K. PATEL, DIRECTOR OF THE ASSESSEE COMPANY O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XI V, AHMEDABAD DATED 13-08-2007 FOR THE ABOVE BLOCK PERIOD. 2. WE HAVE HEARD THE LEARNED DR AS WELL AS THE DIR ECTOR OF THE ASSESSEE COMPANY AND PERUSED THE FINDINGS OF THE AU THORITIES BELOW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH U/S 132 OF HE IT ACT AT THE RESIDENCE OF SHRI TUSHAR GANDHI , ACCOUNTANT OF DR. VIKRAM SHAH. DURING THE SEARCH, 4 CHEQUES OF THE AS SESSEE COMPANY, WHICH WERE BLANK CHEQUES, WERE SEIZED. A S TATEMENT OF SHRI TUSHAR GANDHI WAS RECORDED AND HE SUBMITTED TH AT THESE WERE ISSUED BY SUGADH DAIRY PVT. LTD. TO AMRATBHAI THAKK AR, PROPRIETOR OF IT (SS) A NO.146/AHD/2007 ACIT (OSD) CIR-8, AHMEDABAD VS SUGHAD DAIRY PVT. LT D. 2 N. T. FINANCE FOR TAKING CASH LOAN. THE AO HAS LEVI ED PENALTY U/S 271 D OF THE IT ACT FOR TAKING CASH LOAN IN VIOLATION O F SECTION 269SS OF THE IT ACT. 4. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO PASSED THE ORDER ONLY ON THE STATEMENT OF SHRI TUSHAR GAND HI. THERE WAS NO EVIDENCE THAT THE CHEQUES WERE GIVEN TO THE ACCOUNT ANT FOR BUSINESS PURPOSE WHICH WERE LYING IN HIS POSSESSION WITHOUT USING THE SAME. THERE WAS ALSO NO EVIDENCE THAT CASH LOAN WAS TAKEN AGAINST THOSE CHEQUES. IT WAS FURTHER SUBMITTED THAT IN THE ASSES SMENT PROCEEDINGS THE SAME WAS BASED FOR MAKING THE ADDITION AS IT WA S USED FOR TAKING THE CASH LOAN AND INVESTMENT IN THE BUSINESS THEREB Y EARNING INTEREST THEREON, HOWEVER, THE INTEREST ADDITION HAS BEEN DE LETED BY THE LEARNED CIT(A) VIDE ORDER DATED 19-03-2007. IT WAS FURTHER SUBMITTED THAT THE STATEMENT OF THIRD PARTY CANNOT BE CONSIDE RED FOR IMPOSING PENALTY. SINCE THERE IS NO MATERIAL AVAILABLE ON RE CORD TO SHOW ANY LOAN WAS TAKEN OR PAYMENT OF INTEREST WAS MADE OUT OF THE UNACCOUNTED INCOME, THEREFORE, THE BLANK CHEQUES OU T OF THE BANK ACCOUNT WHICH WAS CLOSED AND WAS NOT IN OPERATION, PENALTY IS UNJUSTIFIED. THE LEARNED CIT(A) ON MERIT FOUND THAT THE CHEQUES WERE ISSUED FROM A BANK ACCOUNT WHICH WAS CLOSED AND NOT IN OPERATION. FURTHER, THE CHEQUES WERE LYING WITH THE ACCOUNTANT AND NO MATERIAL WAS BROUGHT ON RECORD BY THE AO THAT THE SAME CHEQU ES WERE USED FOR OBTAINING LOAN FROM FINANCIAL INSTITUTIONS. NO EVIDENCE WAS ALSO FOUND THAT THE BLANK CHEQUES WERE USED FOR THE PURP OSE OF AVAILING THE LOAN. PENALTY WAS ACCORDINGLY DELETED. IT (SS) A NO.146/AHD/2007 ACIT (OSD) CIR-8, AHMEDABAD VS SUGHAD DAIRY PVT. LT D. 3 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE DIRECTOR OF THE ASSESSEE COMPANY FILED A COPY OF THE ORDER OF THE TRIBUNAL DATED 15-02-2008 IN THE CASE OF THE SAME ASSESSEE IN IT (SS) A NO.106/AHD/2007 FOR THE SAME BLOCK PERIOD IN WHICH THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED ON ACCOUNT O F ADDITION MADE OF INTEREST EXPENSES. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL. NO EVIDENCE IS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE OBTAINE D ANY CASH LOAN AGAINST THE CHEQUES FOUND DURING THE COURSE OF SEAR CH. SINCE THE CHEQUES WERE ISSUED FROM BANK ACCOUNT OPERATION OF WHICH WAS CLOSED, THE CHEQUES CANNOT BE USED FOR ANY PURPOSE. PENALTY COULD BE IMPOSED U/S 271D OF THE IT ACT IF THE ASSESSEE C ONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE IT ACT WHICH PRO VIDES THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON A NY LOAN OR DEPOSIT OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT P AYEE DRAFT OF RS.20,000/- OR MORE. SINCE NO EVIDENCE IS BROUGHT ON RECORD THAT THE ASSESSEE OBTAINED ANY CASH LOAN FROM THE CHEQUES IN QUESTION, THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE PENALT Y. IT MAY ALSO BE NOTED THAT ON THE SAME BASIS ADDITION WAS MADE IN T HE BLOCK ASSESSMENT IN RESPECT OF INTEREST EXPENDITURE LAID OUT OF UNDISCLOSED SOURCES, THE LEARNED CIT(A) ON THE SAME MATERIAL DE LETED THE ADDITION AND THE TRIBUNAL ALSO DISMISSED THE DEPART MENTAL APPEAL VIDE ORDER DATED 15-02-2008 (SUPRA). THE FINDINGS O F THE TRIBUNAL IN PARA 6 OF THE ORDER ARE REPRODUCED AS UNDER: IT (SS) A NO.146/AHD/2007 ACIT (OSD) CIR-8, AHMEDABAD VS SUGHAD DAIRY PVT. LT D. 4 6. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMIS SIONS AND THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HAV E OBSERVED THAT IT IS AN ADMITTED FACT THAT THE ASSES SING OFFICER HAS PROCEEDED SOLELY ON THE BASIS OF STATEM ENT OF SAID SHRI TUSHAR GANDHI WHICH, AT THE RELEVANT TIME , WAS NOT CONNECTED WITH THE ASSESSEE, IN ANY WAY, AND EX CEPT HIS STATEMENT, THERE WAS NO EVIDENCE IN SUPPORT OF THE FINDINGS OF THE ASSESSING OFFICER. IN VIEW OF THESE FACTS, COUPLED WITH THE FACTS THAT THE CHEQUES QUESTION WE RE BLANK, NO PROMISSORY NOTES WERE FOUND AND THE REVEN UE HAVING NOT DISPUTED THE ASSESSEES EXPLANATION THAT THE CHEQUES WERE GIVEN TO SAID SHRI TUSHAR GANDHI FOR PAYMENT OF EXPENSES ON ACCOUNT OF ELECTRICITY BILLS , FDRS, TELEPHONE BILLS, ETC., WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE CIT (APPEALS). IN OTHER WORDS, THE ORDER OF THE CIT (APPEALS) BEING ON THE APPRECIATION OF F ACTS, WHICH HAVING NOT BEEN DISPUTED BY THE REVENUE BEFOR E US, HERE IS NO REASON FOR INTERFERING WITH THE FIND INGS AND THE SAME ARE CONFIRMED. 7. CONSIDERING THE ABOVE DISCUSSIONS AND THE FACT T HAT ON THE SAME MATERIAL IN QUESTION, THE ADDITION ON MERIT HA S BEEN DELETED BY THE LEARNED CIT(A) AND HIS ORDER IS CONFIRMED BY TH E TRIBUNAL, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DER OF THE LEARNED CIT(A). WE CONFIRM THE SAME AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-12-2010 SD/- SD/- (G. D.AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 31 -12-2010 LAKSHMIKANT/- IT (SS) A NO.146/AHD/2007 ACIT (OSD) CIR-8, AHMEDABAD VS SUGHAD DAIRY PVT. LT D. 5 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 D Y. REGISTRAR, ITAT, AHMEDABAD