The ACIT, Central Circle-1, Baroda V. M/s. RSA Digi Prints, Baroda

ITSSA 35/AHD/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1071 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 12-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Section: 143(3); 153A; 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) IT(SS)A NO: 35/AHD/2014 (ASSESSMENT YEAR: 2006-07) ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, BARODA V/S M/S. RSA DIGI PRINTS, FF- 19, CLASSIC COMPLEX, BPC ROAD, AKOTA, BARODA- 390020 (APPELLANT) (RESPONDENT) PAN: AAIFR 3385F APPELLANT BY : SHRI PRADIP KUMAR MAJUMDAR SR. D .R. RESPONDENT BY : ANIL KSHATRIYA, A.R. ( )/ ORDER DATE OF HEARING : 12-10-2015 DATE OF PRONOUNCEMENT : 16 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-IV, AHMEDABAD DATED 28.11.2013 FOR A.Y. 2006-07. IT(SS)A NO 3 5/AHD/2014 . A.Y. 2006-07 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF PRINTING OF FLEX, VINYL AND OTHER MEDIA. A SEARCH A CTION U/S. 132 OF THE ACT WAS CARRIED OUT IN RMD GROUP OF CASES INCLUDING THE CASE OF ASSESSEE ON 20.01.2010 CONSEQUENT TO WHICH PROCEEDING U/S. 153A WERE INITIATED. ACCORDINGLY NOTICE U/S. 153A WAS ISSUED ON 09.09.20 11 AND IN RESPONSE TO WHICH ASSESSEE FILED ITS RETURN OF INCOME ON 10.10. 2011 FOR A.Y. 2006-07 DECLARING TOTAL LOSS OF RS. 10,82,637/-. THEREAFTER ASSESSMENT WAS FRAMED U/S. 153A R.W.S. 143(3) VIDE ORDER DATED 28.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS. 4,20,795/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 28.11.2013 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEV ED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CLT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,03,432/- , WHICH WAS MADE ON ACCOUNT OF CASH CREDIT U/S.68 OF THE IT ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS RECEIVED LOAN OF RS. 15,03,432/- FROM RSA MARKETING . ASSESSEE FURNISHED COPY OF THE BANK STATEMENT OF RSA MARKETING AND FRO M ITS PERUSAL, A.O CONCLUDED THAT RSA MARKETING MAKES DEPOSITS WHICH I N TURN ARE ROUTED TO ASSESSEES ACCOUNT. A.O NOTED THAT ASSESSEE DID NOT EXPLAIN THE SOURCE OF SUCH LOAN AND THAT THE RETURN OF INCOME OF RSA MARK ETING SHOWED TOTAL INCOME OF RS. 1,03,619/-. HE ACCORDINGLY CONCLUDED THAT RSA MARKETING DID NOT HAVE THE CAPACITY TO ADVANCE THE LOAN TO THE AS SESSEE AND ACCORDINGLY IT(SS)A NO 3 5/AHD/2014 . A.Y. 2006-07 3 MADE ADDITION OF RS. 15,03,432/- U/S. 68 OF THE ACT . AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHO DELETED THE ADDITION BY HOLDING AS UNDER:- 5.4.1 THE ACTION OF THE AO OF ADDING RS.15,03,432/- U/S 68 OF THE ACT DOES NOT SEEM TO BE CORRECT IN VIEW OF THE FOLLOWING FACTS. (I) FIRST OF ALL, M/S RSA MARKETING IS A CONCERN OF THE SAME APPELLANT GROUP AND IT IS A RELATED CONCERN. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS ITSELF APPELLANT HAS SUBMITTED ADDRESS, COPY OF PAN CARD, CONFIRMATION L ETTER, COPY OF RETURN, AUDITED ACCOUNTS AND BANK STATEMENT OF M/S RSA MARKETING. T HEREFORE, APPELLANT HAS FULLY DISCHARGED ITS ONUS OF PROVING IDENTITY, CAPACITY O F THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. (II) THE LOAN WAS TAKEN BY THE APPELLANT BY RECEIVI NG CHEQUES FROM M/S RSA MARKETING. A PERUSAL OF THE BANK STATEMENT OF M/S RSA MARKETING REFLECTS THAT THERE WERE NO CASH DEPOSITS IMMEDIATELY BEFORE ISSUING CHEQUES TO THE APPELLANT (III) THE OBSERVATION OF THE AO THAT THE INCOME OF M/S RSA MARKETING AS PER RETURN WAS ONLY OF RS.1,03,619/- IS NOT RELEVANT AS THE INCOME OF AN ASSESSEE IS COMPUTED AFTER TAKING INTO ACCOUNT VARIOUS FACTORS LIKE DEDUCTIONS, EXEMP TIONS ETC. INCOME AS PER RETURN, BY NO MEANS, CAN BE TAKEN AS A CRITERIA TO JUDGE THE FINA NCIAL CAPACITY OF A PERSON. THERE ARE MANY BIG INDUSTRIES HAVING TURNOVER AND FINANCIAL T RANSACTIONS OF THOUSANDS OF CRORES OF RUPEES BUT REFLECTING INCOME OF VERY NOMINAL AMOUNT AND EVEN LOSSES IN SOME CASES. (IV) THE OTHER OBSERVATION OF THE AO THAT SOURCES O F DEPOSITS IN THE BANK ACCOUNT OF M/S RSA MARKETING IS ALSO NOT CORRECT. FIRSTLY, THERE A RE NO CASH DEPOSITS AND ALL THE DEPOSITS ARE BY CHEQUE. THE APPELLANT HAS ALSO SUBMITTED COP IES OF ACCOUNT OF VARIOUS DEBTORS TO SHOW THE RECEIPTS OF FUNDS IN THE BANK ACCOUNT OF M /S RSA MARKETING. (V) THE APPELLANT HAS ALSO DEDUCTED TAX ON THE INTE REST PAID TO M/S RSA MARKETING ON THE LOANS RECEIVED ESTABLISHING THE GENUINENESS OF TRAN SACTIONS. (VI) AS FAR AS THE CREDITOR M/S RSA MARKETING IS CO NCERNED, DURING APPELLATE PROCEEDINGS, APPELLANT HAS NOT SUBMITTED ANY NEW AD DITIONAL EVIDENCES AND ALL THE DOCUMENTS RELATED TO THIS CREDITOR WERE ALREADY FUR NISHED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. THEREFORE, THERE WERE NO F RESH EVIDENCES WHICH WERE REQUIRED TO BE FORWARDED TO THE AO FOR REMAND REPORT. STILL THE COMMENTS GIVEN BY THE AO IN THE IT(SS)A NO 3 5/AHD/2014 . A.Y. 2006-07 4 REMAND REPORT HAVE BEEN CONSIDERED. NOTHING NEW HAS BEEN STATED BY THE A.O IN THE REMAND REPORT. THE AO HAS RELIED ON THE JUDGMENT OF APEX COURT IN THE CASE OF CIT VS. P. MOHANAKALA [2007] 291 ITR 278 (SC) WHEREIN IT WAS H ELD THAT MERELY GIVING OF LOAN BY BANK CHEQUE IS NOT SUFFICIENT IN ITSELF. THE RELIAN CE OF THE AO ON THIS CASE IS NOT RELEVANT AS FOR DECIDING ANY ISSUE, ALL THE CIRCUMSTANTIAL E VIDENCES NEED TO BE CONSIDERED. IF LOAN TRANSACTIONS ARE BY CHEQUE BUT IDENTITY, CAPACITY O F THE CREDITOR IS DOUBTFUL THEN MERE FACT THAT LOAN WAS TAKEN BY CHEQUES, DOES NOT MAKE THE L OAN GENUINE. THIS IS THE RATIO OF THIS JUDGEMENT. BUT IT DOES NOT MEAN THAT ALL LOAN TRANS ACTIONS BY CHEQUE ARE NON-GENUINE. AS STATED ABOVE, ALL RELEVANT FACTORS HAVE TO BE CONSI DERED BEFORE COMING TO A CONCLUSION. 5.4.2 THE CONDITIONS FOR THE APPLICABILITY OF SECTI ON 68 ARE: I. THE EXISTENCE OF BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HIMSELF; II. A CREDIT ENTRY IN THE BOOKS OF ACCOUNT; AND III. THE ABSENCE OF A SATISFACTORY EXPLANATION BY T HE ASSESSEE ABOUT THE FOLLOWING: (I) IDENTITY OF CREDITOR (II) CAPACITY OF CREDITOR, AND (III) GENUINENESS OF TRANSACTION APPELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS REFLECTING CREDIT ENTRY IN THE NAME OF M/S RSA MARKETING. APPELLANT HAS ALSO GIVEN SATISFA CTORY EXPLANATION AND EVIDENCES FOR ESTABLISHING IDENTITY, CAPACITY OF CREDITOR AND GEN UINENESS OF TRANSACTION. .. 5.4.9 IN VIEW OF ABOVE, IT IS HELD THAT APPELLANT H AS SUFFICIENTLY DISCHARGED THE ONUS OF PROVING THE IDENTITY AND CAPACITY OF THE CREDITOR M /S RSA MARKETING AND ALSO THE GENUINENESS OF THE LOAN TRANSACTIONS. THEREFORE, TH E ADDITION MADE BY THE AO OF RS.15,03,432/- U/S 68 OF THE ACT CANNOT BE SUSTAINE D AND THE SAME IS HEREBY DELETED. THIS GROUND IS ALLOWED. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. IT(SS)A NO 3 5/AHD/2014 . A.Y. 2006-07 5 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUBMITTED THAT ASSESSEE HAS DISCHARGED THE ONUS OF PROVING TH E IDENTITY AND CAPACITY OF THE CREDITOR. HE THUS SUPPORTED THE ORDER OF LD. CI T(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITI ON U/S. 68 OF THE ACT. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HA S GIVEN A FINDING THAT ASSESSEE HAD SUBMITTED THE COPY OF PAN CARD, ADDRES S, CONFIRMATION LETTER, COPY OF RETURN AND BANK STATEMENT OF RSA MARKETING, THE PARTY FROM WHOM THE ASSESSEE HAD RECEIVED LOAN. SHE HAS FURTHER GIV EN A FINDING THAT THE LOAN WAS TAKEN BY CHEQUES AND THE PERUSAL OF THE BANK ST ATEMENT OF RSA MARKETING DID NOT REFLECT ANY CASH DEPOSITS IMMEDIA TELY BEFORE ISSUING CHEQUES TO THE ASSESSEE. SHE HAS FURTHER NOTED THAT ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE IDENTITY AND CAPACITY OF TH E CREDITOR AND ALSO THE GENUINENESS OF LOAN TRANSACTION. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD . CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WIT H THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 10 - 2015. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY