The ACIT, Central Circle-1(1), Ahmedabad V. M/s. Prime Pressmatics, Palanpur

ITSSA 834/AHD/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8143 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 27-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 153A; 68

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH BAHMEDABAD BEFORE S/SHRI G. D. AGRAWAL, V.P. AND D. K. TYAGI, J.M. ASSTT. CIT, CEN. CIR 1(1), AHMEDABAD. V/S . M/S PRIME PRESSMATICS, BADARPURA, OPP. GREEN WOOD HOTEL, DEESA HIGHWAY, PALANPUR. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI ALOK JOHRI, CIT, DR RESPONDENT BY:- NONE DATE OF HEARING : 2/9/2011. DATE OF PRONOUNCEMENT : 9.9.2011. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 1/11/2010. THE REVENUE HAS RAISED THE FOLLOWING GROUND IN ITS APPEAL :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.8,94,500/- MADE ON ACCOUNT OF UNEXPL AINED CASH LOAN. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE DESPITE THE FACT THAT NOTICE WAS SENT BY THE REGIST RY ON THE ADDRESS AVAILABLE IN APPEAL MEMO OF THE REVENUE. SO WE PROC EEDED TO DECIDE THE IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 2 APPEAL AFTER HEARING THE LD. DR AND PERUSING THE MA TERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT ASSESSEE FIRM HAS RECEIVED VARIOUS CASH LOANS. HE NOTICED THAT MAJORITY OF THE LOANS WERE S QUARED UP DURING THE FINANCIAL YEAR ITSELF. THE ASSESSEE WAS ASKED TO EX PLAIN THE GENUINENESS OF THESE LOANS, IDENTITY AND CREDITWORTHINESS OF LOAN GIVERS. THE ASSESSEES REPLY WAS AS UNDER :- PLEASE REFER TO THE HEARING TAKEN PLACE IN THE AFO RESAID CASE, WHERE YOUR GOODSELF HAS CALLED FOR TO FURNISH EXPLANATION ON CASH LOANS TAKEN BELOW RS.20,000/- IN THE NAME OF VARIOUS PERSONS IN THE F.Y. 2003-04 OF RS.6 ,94,5000/- AND REPAID IN THE SAME YEAR. SIMILARLY, DURING THIS YEAR, FIRM HAS TAKEN L OAN OF RS.200,000/- FROM SHRI KANTIBHAI RANCHHODBHAI PATEL, WHOSE CONFIRMATION IS NOT FURNISHED. IN THIS REGARD, IT IS FURNISHED THAT THE SAID CASH LOANS OF RS.6,94,500/- AS PER LIST ATTACHED ARE INTRODUCED IN THE FIRM BY PARTNER SHRI KIRTILAL N. SHAH, OUT OF HIS UNACCOUNTED INCOMES, WHICH HE HAS OFFERED IN THE CO URSE OF SEARCH PROCEEDINGS AND IS PART OF HIS TOTAL DISCLOSURE OF RS.10 CRORES FOR WH OLE OF THE GROUP. THE PEAK OF ABOVE CASH LOANS IS COVERED BY SHRI KIRTILAL N. SHAH, IN THE OVERALL DISCLOSURE AND IS FORMING PART OF APPLICATION OF DISCLOSURE IN ASST. YEAR 200 4-05 AND IN THE PREVIOUS YEARS. SIMILARLY, DURING THIS YEAR, FIRM HAS TAKEN LOAN OF RS.200,000/- FROM SHRI KANTIBHAI RANCHHODBHAI PATEL, WHO IS NOT TRACEABLE AS ON TO-D AY, AS LOAN IS REPAID THEREFORE THE SAID LOAN IS ALSO OFFERED AS INCOME IN THE OVERALL DISCLOSURE BY SHRI KIRTILAL N. SHAH, AS HE BROUGHT THIS DEPOSIT IN THE FIRM, THE SAID LO ANS IS COVERED BY SHRI KIRTILAL N. SHAH, IN THE OVERALL DISCLOSURE AND IS FORMING PART OF APPLICATION OF DISCLOSURE IN ASST. YEAR 2004-05 AND IN THE PREVIOUS YEARS. IN VIEW OF THE ABOVE, IT IS PRAYED THAT NO ADDITION MAY KINDLY BE MADE IN THE HANDS OF FIRM, AS THE SAID AMOUNT IS INTRODUCED BY PARTNER S HRI KIRTILAL N. SHAH OF HIS PERSONAL UNACCOUNTED FUNDS, WHICH HE HAS ACCEPTED IN THE SEA RCH PROCEEDINGS U/S 132(4) OF THE I.T. ACT. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO ON THE GROUND THAT NO SPECIFIC DISCLOSURE ON THIS ISSUE WA S MADE BY SHRI KIRTILAL N. SHAH AT THE TIME OF SEARCH PROCEEDINGS. THE CLAI M OF THE ASSESSEE, ACCORDING TO THE AO WAS WITHOUT ANY BASIS AS THE AS SESSEE WAS CLAIMING THESE AMOUNTS AS PART OF DISCLOSURE OF SHRI KIRTILA L N. SHAH MADE U/S IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 3 132(4) OF THE ACT AT THE TIME OF SEARCH OPERATION. THESE FACTS SHOULD HAVE BEEN MENTIONED IN THE RETURN FILED BY THE FIRM IN R ESPONSE TO NOTICE U/S 153A. ACCORDING TO HIM NO SUCH CLAIM WAS MADE BY TH E ASSESSEE. IT WAS ONLY WHEN THESE UNEXPLAINED CASH LOANS WERE DETECTE D, THE ASSESSEE CLAIMED THAT THESE AMOUNTS WERE SOURCED BY THE INCO ME OFFERED BY SHRI KIRTILAL N. SHAH AND WERE FORMING PART OF APPLICATI ON OF DISCLOSURE BY HIM FOR THE ASST. YEAR 2004-05. HE, THEREFORE, TREA TED THIS AMOUNT OF RS.8,94,500/- AS UNEXPLAINED CASH RECEIPTS AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 4. IN APPEAL, THE ASSESSEES CONTENTION BEFORE LD. CIT(A) WAS AS UNDER;- THE LD. AO HAS ERRED IN LAW AND ON FACTS IN TREATI NG THE CASH CREDITS OF RS.894,500/- AS UNEXPLAINED, WHEREAS THE SAME WAS O FFERED/ADMITTED BY PARTNER, SHRI KIRITLAL NAGARDAS SHAH IN HIS DISCLOS URE. THE ADDITION IN THE HANDS OF APPELLANT FIRM IS AMOUNTS TO DOUBLE AD DITION I.E. ONCE IN THE HANDS OF PARTNER AND AT THE SAME TIME IN THE HANDS OF FIRM. IT IS THEREFORE PRAYED THAT THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS MAY KINDLY BE DELETED. THE CASH CREDIT OF RS.894,500/- WAS INTRODUCED BY PARTNER, SHRI KIRITLAL NAGARDAS SHAH, THE SAID AMOU NT IS DISCLOSED BY HIM IN HIS OVERALL DISCLOSURE OF RS.10 CRORES FOR GROUP AND MORE PRECISELY DISCLOSURE OF RS.9 CRORE FOR HIMSELF, THEREFORE, TH E UNSECURED LOAN ARE ADMITTED/COVERED IN THE DISCLOSURE OF SHRI KIRITLAL NAGARDAS SHAH. WE ENCLOSE HEREWITH THE DETAILS OF YEARWISE DISCLOSURE AND CASH FLOW STATEMENT OF SHRI KIRTILAL N. SHAH (EXHIBIT-A) FROM WHICH IT IS CLEAR THAT THE SAID CASH CREDIT AMOUNT OF RS.894,500/- WAS SUR RENDER BY HIM IN HIS PERSONAL INCOME-TAX RETURN FILED U/S 153A FOR THE A SST. YEAR 2004-05. WE ALSO ENCLOSE HEREWITH NOTES ANNEXED TO THE SAID RET URN FILED BY SHRI KIRTILAL N. SHAH IN WHICH HE HAS SPECIFICALLY DECLA RED THAT IN THIS REGARD, THE INCOMES ARE OFFERED ON ESTIMATE BASIS WHICH INC LUDES INVESTMENT IN GROUP COMPANIES/FIRMS, PERSONS AND FAMILY MEMBERS I N THE HANDS OF MAIN PERSON TREATING THAT THE UNDISCLOSED INCOMES ARE EA RNED JOINTLY BY THE FAMILY MEMBERS BUT THESE ARE OFFERED IN THE SINGLE HAND FOR THE PURPOSE OF CONVENIENCE AND SIMPLICITY. IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 4 THEREFORE, THE INCOMES OR ASSETS OF GROUP COMPANIES /FIRMS, PERSONS AND FAMILY MEMBERS, WHICH ARE OFFERED BY ME, SHOULD NOT BE TAXED SEPARATELY IN THE HANDS OF OTHER MEMBERS/COMPANY/FIRMS OF THE FAMILY (EXHIBIT-B). COPY OF ASSESSMENT ORDER OF SHRI KIRTILAL N. SHAH U /S 153A FOR THE ASST. YEAR 2004-05 IS ENCLOSED IN WHICH THE ASSESSING OFF ICER HAS DESCRIBED THE DETAILS OF DISCLOSURE BY SHRI K. N. SHAH AND ASSESS ED THE INCOME AS DISCLOSED IN THE RETURN OF INCOME (EXHIBIT-C). IT IS, THEREFORE, PRAYED THAT THE ADDITION ON ACCOU NT OF UNEXPLAINED CASH CREDITS MAY KINDLY BE DELETED. AFTER TAKING INTO CONSIDERATION THESE SUBMISSIONS O F THE ASSESSEE, LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : - 5.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT. AS PER THE APPELLANT, AT THE TIME OF SEARCH ACTION, SHRI KIRTI LAL N. SHAH HAS MADE OVERALL DISCLOSURE OF RS.10 CRORES FOR THE GROUP AN D DISCLOSURE OF RS.9 CRORE FOR HIMSELF. THE UNSECURED LOANS OF RS.8,94,5 00/- HAS BEEN SURRENDERED BY SHRI KIRTILAL N. SHAH IN THE ASST. Y EAR 2004-05 AS HIS UNDISCLOSED INCOME. IN VIEW OF THE ABOVE, THE ADDIT ION OF RS.8,94,500/- COULD NOT BE MADE IN THE ASSESSMENT OF THE APPELLAN T. THE ASSESSMENTS IN THE PERSONAL CASE OF SHRI KIRTILAL N. SHAH HAVE ALR EADY BEEN COMPLETED ON 31.12.2008 WHEREIN THE DISCLOSURE SO MADE, HAVE BEEN ACCEPTED. IN VIEW OF THE ABOVE, THE ADDITION OF RS.8,94,500/- IS DELETED. AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE REVENUE HAS COME IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING THE LD. DR VEHEMENTLY SUP PORTED THE ORDER PASSED BY THE AO BY SUBMITTING THAT AT THE TIME OF FILING OF RETURN THE ASSESSEE DID NOT DISCLOSE THE FACT THAT THE CASH LO ANS OF RS.8,94,500/- WERE PART OF DISCLOSURE OF SHRI KIRTILAL N. SHAH MADE UN DER SECTION 132(4) DURING THE SEARCH OPERATION. IT WAS ONLY WHEN THE C ASH LOANS WERE DETECTED BY THE AO THE ASSESSEE HAD COME WITH THIS EXPLANATION. HE FURTHER SUBMITTED THAT NO SPECIFIC DISCLOSURE OF TH IS AMOUNT WAS MADE BY SHRI KIRTILAL N. SHAH AT THE TIME OF SEARCH PROCEED INGS. THEREFORE, THE LD. IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 5 CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT ADDITION O F RS.8,94,500/- COULD NOT BE MADE IN THE ASSESSMENT OF THE ASSESSEE AS TH E ASSESSMENT IN THE PERSONAL CASE OF SHRI KIRTILAL N. SHAH HAS ALREADY BEEN COMPLETED WHERE DISCLOSURE SO MADE HAS BEEN ACCEPTED. HE, THEREFORE , PRAYED THAT THE ORDER PASSED BY THE LD. CIT(A) BE SET ASIDE AND THAT OF T HE AO BE RESTORED. 6. AFTER HEARING THE LD. DR AND PERUSING THE RECORD , WE FIND THAT WHEN DURING THE ASSESSMENT PROCEEDINGS THE AO ASKED FOR THE SOURCE OF CASH LOANS OF RS.8,94,500/- ASSESSEES EXPLANATION WAS T HAT IT WAS PART OF SURRENDERED AMOUNT OF RS.10 CRORES MADE BY SHRI KIR TILAL N. SHAH AT THE TIME OF SEARCH OPERATION. THIS EXPLANATION OF THE A SSESSEE WAS NOT ACCEPTABLE TO THE AO AS ACCORDING TO HIM NO SPECIFI C DISCLOSURE OF THIS AMOUNT WAS MADE BY SHRI KIRTILAL N. SHAH. ASSESSEE S PLEA BEFORE LD. CIT(A) WAS THAT IF THIS ADDITION WAS SUSTAINED IN T HE HANDS OF ASSESSEE IT WILL AMOUNT TO DOUBLE TAXATION AS THIS AMOUNT HAS A LREADY BEEN ASSESSED IN THE HANDS OF SHRI KIRTILAL N. SHAH VIDE ASSESSME NT ORDER DATED 31.12.2008. IN SUPPORT OF HIS SUBMISSION THE COPY O F ASSESSMENT ORDER OF SHRI KIRTILAL N. SHAH U/S 153A FOR ASST. YEAR 2004- 05 WAS RELIED UPON IN WHICH IT WAS CLAIMED THAT AO HAS DESCRIBED THE DETA ILS OF DISCLOSURE BY SHRI KIRTILAL N. SHAH. THE LD. CIT(A) GAVE RELIEF T O THE ASSESSEE BY ACCEPTING THIS PLEA OF THE ASSESSEE WITHOUT GETTING THE COMMENTS OF A.O. SINCE THE ASSESSMENT ORDER OF SHRI KIRTILAL N. SHAH FOR ASST. YEAR 2004- 05 IS NOT ON RECORD, THE FINDING OF FACT OF LD. CIT (A) THAT CASH LOANS OF RS.8,94,500/- WERE PART OF DISCLOSURE BY SHRI KIRTI LAL N. SHAH REQUIRES VERIFICATION. FOR THIS PURPOSE, THE MATTER IS RESTO RED BACK TO THE FILE OF AO. IF THE CONTENTION OF THE ASSESSEE THAT THIS AMO UNT IS COVERED BY THE DISCLOSURE OF SHRI KIRTILAL N. SHAH IS FOUND CORREC T, NO ADDITION SHOULD BE MADE. NEEDLESS TO SAY THAT THE AO WILL GIVE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE WHILE DOING SO. REVENUES APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.834/AHD/2010 ASST. YEAR 2004-05 6 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 9.9.2011. SD/- SD/- (G. D. AGRAWAL) (D. K. TYAGI) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD, DATED : 9/9/2011. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 6/9/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 7/9/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..