GUMAN FURNITURE & SERVICES P LTD., Jaipur v. ACIT, Jaipur

ITA 157/JPR/2011 | 2004-2005
Pronouncement Date: 02-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 15723114 RSA 2011
Assessee PAN AABCG7610G
Bench Jaipur
Appeal Number ITA 157/JPR/2011
Duration Of Justice 6 month(s) 6 day(s)
Appellant GUMAN FURNITURE & SERVICES P LTD., Jaipur
Respondent ACIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 02-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 02-09-2011
Assessment Year 2004-2005
Appeal Filed On 24-02-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.157/ JP/2011 ASSESSMENT YEAR 2004-05 PAN: AABCG 7610 G M/S. GUMAN FURNITURE & SERVICE (P) LTD. VS. THE A CIT A-2 RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.318/ JP/2011 ASSESSMENT YEAR 2004-05 PAN: AABCG 7610 G THE ACIT VS. M/S. GUMAN FURNITURE & SERVICE (P) LTD CENTRAL CIRCLE- 1 A-2 RANA PRATAP NAGAR JAIPUR JHOTWARA JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI K.L. MOOLCHANDANI DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 09-08-2011 DATE OF PRONOUNCEMENT:02-09-2011 ORDER PER N.L. KALRA AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEA LS AGAINST THE ORDER OF THE LD. CIT(A) CENTRAL JAIPUR DATED 28-01-2011 FOR THE ASSESSMENT YEAR 2004-05. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 6.47 LACS IN RESPECT OF UNEXPLAINED INVESTMENT IN SHARE CAPITAL ENTRIES IN THE BOOKS OF ACCOUNT IN THE NAME OF SIX PERSONS BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT TH OUGH THE AO HIMSELF HAS HELD THAT THESE SIX PERSONS ARE BENAMI OF SHANKAR L AL KHANDELWAL. 2.2 THE AO NOTICED THAT PAID UP CAPITAL STOOD INCRE ASED FROM RS. 5.00 LACS TO RS. 15.00 LACS. THE ASSESSEE WAS ASKED TO P RODUCE THE ACCOUNT BOOKS BANK STATEMENT NAMES AND FULL PARTICULARS AND PAN OF THE FRESH CONTRIBUTORS THEIR SOURCE AND MODE OF RECEIPT OF F RESH SHARE APPLICATION MONEY BY THE ASSESSEE. THE ASSESSEE DID NOT FURNISH ANY INFORMATION. THE AO ACCORDINGLY ADDED A SUM OF RS. 10.00 LACS U/S 68 OF THE ACT. 2.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE AO AT THE FAG END OF THE LIMITATION REQUIRED THE ASSESSEE TO FILE THE BA NK STATEMENT AND OTHER DETAILS IN RESPECT OF THE PERSONS WHO HAVE CONTRIBU TED THE SHARE CAPITAL DURING THE YEAR. SHRI SHANKAR LAL KHANDELWAL WAS LO OKING AFTER THE AFFAIRS OF THE COMPANY AND HE WAS ALSO REQUIRED TO FILE THE INFORMATION IN RESPECT OF OTHER CASES OF THE GROUP IN WHICH THE ASSESSMENTS W ERE TO BE FINALIZED U/S 153A OF THE ACT. ACCORDINGLY THE ADDITIONAL EVIDEN CES WERE FILED BEFORE THE LD. CIT(A) UNDER RULE 46A. THE SHARE CAPITAL HAVE B EEN CONTRIBUTED BY THE PERSONS AND THE NAMES OF TEN PERSONS ARE AVAILABLE AT PAGES 2 AND 3 OF THE 3 APPELLATE ORDER. BEFORE THE LD. CIT(A) THE ASSESS EE FURNISHED THE DETAILS IN RESPECT OF THE AMOUNT RECEIVED AS SHARE CAPITAL. IT WILL BE USEFUL TO REPRODUCE THE INFORMATION WHICH HAS BEEN GIVEN BEFORE THE LD. CIT(A). (I) SMT. ANITA DANGAYACH W/O SHRI SURESH KUMAR DANGAYACH- RS. 89 000/- :- IN THIS CASE AFFIDAVIT CONFIRMATION LETTER COPY OF PAN CARD ID PROOF AS VOTER CARD FILED AT P.B. (PAGE NO. 35-3 7). DETAIL OF SOURCE OF DEPOSITS. COPY OF BANK STATEMENT AND COPY OF ACKNOWLEDGE OF I TR IS ENCLOSED AS PER PAGE 61 TO 64 DATE AMOUNT NATURE OF ENTRY EXPLANATION 19-05-2003 75 000/- CASH AMOUNT OF RS. 1 30 000/- H AS WITHDRAWN CASH ON 19-05-2003 FROM BANK ACCOUNT OF CENTURION BANK AND DEPOSITED IN CASH WITH THE ASSESSEE. NO CASH DEPOSIT IN THE ACCOUNT BEFORE THIS DATE. 11.11.2003 14 000/- CASH AMOUNT OF RS. 40 000/- HAS WITHDRAWN CASH ON 10-11-2003 FROM BANK ACCOUNT OF CENTURION BANK AND DEPOSITED IN CASH WITH THE ASSESSEE. NO CASH DEPOSIT IN THE BANK ACCOUNT BEFORE THIS DATE. COPY OF BANK STATEMENT AND COPY OF ACKNOWLEDGE OF ITR IS ENCLOSED AS PER E- (II)SMT. ANITA KUMAWAT- (RS. 1 00 000/)-:- SMT ANITA KUMAWAT IS WIFE OF SHRI DILIP KUMAWAT. SH RI DILIP KUMAWAT WAS CONSIDERED BY THE LD AO AS BENAMI OF SH RI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOULD BE TREATED AS BELONGING TO SHRI SHANKER KUMAWAT NOT THE UNDIS CLOSED 4 INCOME OF THE ASSESSEE COMPANY. THEREFORE THE ADDIT ION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (III) SHRI DILIP KUMAWAT- RS. 1 65 000/-:- SHRI KUMAWAT HAS DEPOSITED RS. 1 65 000/- WITH THE COMPANY AS SHARE CAPITAL OUT OF THE MONEY RECEIVED FROM THE SHANKER KHANDELWAL GROUP. SHRI DILIP KUMAWAT WITHDRAWN CASH RS. 6 00 000/- ON 19-04-2002 RS. 75000/- ON 20.04.2002 AND RS. 15000/- ON 23.04.2002 FROM HIS SBBJ A/C AND THIS M ONEY WAS UTILIZED FOR SHARE APPLICATION MONEY. THE SOURCE OF WITHDRAWAL FROM THE BANK WAS DEPOSIT OF CHEQUE OF RS. 793600/- GIVEN BY SHRI SHNAKER KHANDELWAL OUT OF THE LOAN TAKEN FROM HSBC. FURTHER SHRI DILIP KUMAWAT RECEIVED CASH RS. 13000 /- FROM THE ASSESSEE ON 31.1.2003 AND RS. 16000/- ON 10.08. 2003 FROM SMT GUMAN KHANDELWAL. ON THE DATE OF DEPOSIT THERE WAS SUFFICIENT CASH BA LANCE IN THE CASH BOOK. THE COPY OF THE CASH BOOK OF SHRI DILIP KUMAWAT AND LEDGER ACCOUNT IN THE BOOKS OF ASSESSEE IS PLAC ED AT PB PAGE 39. SHRI DILIP KUMAWAT WAS CONSIDERED BY THE LD AO AS B ENAMI OF SHRI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOU LD BE TREATED AS BELONGING TO SHRI SHANKER KUMAWAT NOT T HE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THEREFO RE THE ADDITION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (IV) SMT. MEENA GUPTA- RS. 2 15 000/-:- SMT MEENA GUPTA IS WIFE OF SHRI RAKESH GUPTA. SHRI RAKESH GUPTA WAS CONSIDERED BY THE LD AO AS BENAMI OF SHRI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOULD BE TREATED AS 5 BELONGING TO SHRI SHANKER KUMAWAT NOT THE UNDISCLO SED INCOME OF THE ASSESSEE COMPANY. THEREFORE THE ADDIT ION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (V) SHRI MANOHARLAL CHAUDHARY (RS. 25 000/-):- AFF IDAVIT AND CONFIRMATION LETTER FILED AS ADDITIONAL EVIDENCE U/ R 46A IN YOUR OFFICE PB (PAGE NO. 41-42) DETAIL OF SOURCE OF DEPOSITS. DATE AMOUNT NATURE OF ENTRY EXPLANATION 13-05- 2003 5 000/- CASH EVIDENCES U/S 46 HAVE ALREADY BEEN FIL ED IN YOUR OFFICE PB (PAGE NO. 41 TO 42). 13-10- 2003 15 000/- CASH EVIDENCES U/S 46 HAVE ALREADY BEEN FI LED IN YOUR OFFICE PB (PAGE NO. 41 TO 42). 11-11- 2003 5 000/- CASH EVIDENCES U/S 46 HAVE ALREADY BEEN FIL ED IN YOUR OFFICE PB (PAGE NO. 41 TO 42). COPY ACKNOWLEDGEMENT OF I.T.R IS SUBMITTED AT PB PAGE 71 (VI) SHRI RAKESH GUPTA. (RS. 2 15 000/-):- COPY OF LEDGER ACCOUNT PLACED AT P.B. (PAGE NO. 43). SHRI RAKESH GUPTA WAS CONSIDERED BY THE LD AO AS BE NAMI OF SHRI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOU LD BE TREATED AS BELONGING TO SHRI SHANKER KUMAWAT NOT T HE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THEREFO RE THE ADDITION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (VII) SMT. SONA JHALANI. (RS. 25 000/-):- COPY OF LEDGER ACCOUNT OF SMT. SONA JHALANI IS PLACED AT P.B. (PAG E NO. 44). 6 SMT SONA JHALANI IS WIFE OF SHRI SUSHIL JHALANI. SH RI SUSHIL JHALANI WAS CONSIDERED BY THE LD AO AS BENAMI OF SH RI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOULD BE TREATED AS BELONGING TO SHRI SHANKER KUMAWAT NOT THE UNDISCLO SED INCOME OF THE ASSESSEE COMPANY. THEREFORE THE ADDIT ION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (VIII) SHRI SURESH KUMAR DANGAYACH (RS. 1 05 000/-) :- AFFIDAVIT CONFIRMATION LETTER COPY OF PAN CARD I .D. PROOF (VOTER CARD) ARE FILED IN YOUR OFFICE AS ADDITIONAL EVIDENCE UNDER RULE 46A P.B. (PAGE NO. 45-47). DETAILS OF SOURCE OF DEPOSIT. COPY OF BANK STATEMENT AND COPY OF ACKNOWLEDGE OF I TR IS AT PB PAGE 61-64 DATE AMOUNT NATURE OF ENTRY EXPLANATION 19-05-2003 50 000/- CASH AMOUNT OF RS. 1 30 000/- H AS WITHDRAWN CASH ON 19-05-2003 FROM BANK ACCOUNT OF CENTURION BANK AND DEPOSITED IN CASH WITH THE ASSESSEE. NO CASH DEPOSIT IN THE ACCOUNT BEFORE THIS DATE 18.10.2003 35 000/- CASH AMOUNT OF RS. 40 000/- HAS WITHDRAWN CASH ON 17-10-2003 FROM BANK ACCOUNT OF CENTURION BANK AND DEPOSITED IN CASH WITH THE ASSESSEE. NO CASH DEPOSIT IN THE BANK ACCOUNT BEFORE THIS DATE. 11.11.2003 20 000/- CASH AMOUNT OF RS. 40 000/- HAS WITHDRAWN CASH ON 10-11-2003 FROM BANK ACCOUNT OF CENTURION BANK AND DEPOSITED IN CASH WITH THE ASSESSEE. NO CASH DEPOSIT IN THE BANK ACCOUNT BEFORE THIS DATE. 7 (IX) SHRI SUSHIL JHALANI (RS. 25 000/-):- COPY OF L EDGER ACCOUNT OF SHRI SUSHIL JHALANI IS PLACED P.B. (PAGE NO. 48) . SHRI SUSHIL JHALANI WAS CONSIDERED BY THE LD AO AS BENAMI OF SHRI SHANKER KHANDELWAL. THEREFORE THIS MONEY SHOU LD BE TREATED AS BELONGING TO SHRI SHANKER KUMAWAT NOT T HE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THEREFO RE THE ADDITION CANNOT BE MADE IN THE HANDS OF ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE WE SUBMIT THAT THE TELESCOPING BENEFIT FOR RECYCLING/ROTATION OF FUND SHOULD BE GI VEN. (X) SHRI TIKAM KHANDELWAL (RS. 36 000):- CONFIRMA TION LETTER IN RESPECT OF SHARE APPLICATION FILED AS ADDITIONAL EVIDENCE UNDER RULE 46A IN YOUR OFFICE PLACED AT P.B (PAGE 4 9). FURTHER THE CASE OF THIS PERSON WAS ALSO UNDER ASSESSMENT P ROCEEDING WITH THE SAME AO AND THE DETAIL OF INVESTMENT SUBMI TTED IN THE CASE OF THIS PERSON AND VERIFIABLE FROM THE BALANCE SHEET OF THIS PERSON. IN THE ABOVE CASES THE IDENTITY OF THE PERSONS ARE PROVED. EVEN IN THE CASE OF SHARE APPLICATION MONEY IN THE NAME OF BENAMI OF SHRI SHANKER KHANDELWAL IT SHOULD BE TAKEN THAT THE INVESTMENT WAS MADE BY SHRI SHANKER KHANDELWAL. IT CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPA NY. RELIANCE PLACED ON (I) COMMISSIONER OF INCOME TAX VS. STELLER INVESTMENT LTD. (2001) 251 ITR 263 (SC) WHEREIN IT HAS BEEN HELD THAT EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSESSEE-COMPANY WERE NOT GENUINE THE AMOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE-COMP ANY. II) COMMISSIONER OF INCOME TAX VS. DOWN TOWN HOSP ITAL (P) LTD. (2004) 267 ITR 439 (GAU) HELD THAT NO AD DITION UNDER S. 68 IS PERMISSIBLE WHERE THE SHAREHOLDERS A RE IDENTIFIED AND IT IS ESTABLISHED THAT THEY HAD INVESTED THE MO NIES IN THE PURCHASE OF THE SHARE - CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) FOLLOWED (III) JAYA SECURITIES LTD. VS. COMMISSIONER OF IN COME TAX (2008) 166 TAXMAN 7 (ALL) HELD THAT NO ADDITION UN DER S. 68 8 CAN BE MADE IN THE HANDS OF COMPANY LIMITED BY SHAR ES IN RESPECT OF INVESTMENT IN SHARE CAPITAL OF THE COMPA NY - CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 : ( 2001) 251 ITR 263 (SC) FOLLOWED EACH AND EVERY UNEXPLAINED CASH CREDIT CANNOT BE TR EATED AS INCOME OF THE ASSESSEE. THE INTENTION OF PARLIAMENT IN ENACTING SECTION 68 WAS NOT TO TREAT EVERY UNEXPLAINED CASH CREDIT AS INCOME OF THE ASSESSEE. IN THE CORRESPONDING CLAUSE IN THE BILL WHICH WAS INTRODUCED IN PARLIAMENT THE WORD SHALL HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON RECOMMENDATION OF THE SELECT COMMITTEE THE WORD S HALL WAS SUBSTITUTED BY THE WORD MAY. THIS CLEARLY INDICAT ES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTION 68. THE REFORE THE GENUINE LOAN EVEN IF UNEXPLAINED SHOULD NOT BE CONS IDERED AS INCOME OF THE ASSESSEE AND THE SAME SHOULD NOT BE T REATED AS ASSESSEES INCOME. RELIANCE IS PLACED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME TAX VS SMT. P. K. NOORJAHAN 237 ITR 570 (SC) THE ASSESSEE FURTHER RELIES ON THE FOLLOWING DEC ISIONS:- (I) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) THE ASSESSEE HAD GIVEN NAME AND ADDRESSES OF THE CA SH CREDITORS WHO WERE INCOME TAX ASSESSEE. REVENUE AP ART FROM ISSUING SUMMON U/S 131 NOTICES TO CREDITORS DID NO T PURSUE THE MATTER FURTHER- IT DID NOT EXAMINE CREDITWORTHINESS OF THE CREDITORS- ASSESSEE COULD NOT UNDER THE CIRCUMSTAN CES DO ANYTHING FURTHER. HELD THAT THE ADDITIONS WERE RIG HTLY DELETED. (II) ARAVALI TRADING CO VS INCOME TAX OFFICER (20 08) 8 DTR (RAJ) 199. ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND S UCH PERSONS OWN THE CREDITS THE ASSESSEES ONUS STANDS DISCHAR GED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM W HICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED W ITH HIM. HELD THAT MERELY BECAUSE THE DEPOSITORS EXPLANATI ON ABOUT THE 9 SOURCES OF MONEY WAS NOT ACCEPTABLE TO THE AO IT C ANNOT BE PRESUMED THAT THE DEPOSITS MADE BY THE CREDITORS AR E MONEY BELONGING TO THE ASSESSEE ITSELF. IN VIEW OF THE ABOVE SUBMISSION THE HUMBLE ASSESS EE PRAYS YOUR HONOR KINDLY TO DELETE THE ADDITION OF R S. 10 00 000/- MADE BY THE LD. AO AND PRAY JUSTICE. 2.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S CONFIRMED THE ADDITION TO THE EXTENT OF RS. 7.45 LACS AFTER OBSER VING AS UNDER:- 3.4 I HAVE CONSIDERED THE SUBMISSION MADE BY T HE LD AR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E APPEAL PROCEEDING WERE CONDUCTED IN THE PRESENCE OF A.O. A ND ONE SET OF ADDITIONAL EVIDENCE WAS GIVEN TO A.O. A.R. HAS E XPLAINED THE DOCUMENTS TO THE UNDERSIGNED AND ALSO TO A.O. THE ASSESSEE HAS FILED AFFIDAVIT COPY OF PAN CARD ID PROOF AND BANK STATEMENT IN RESPECT OF SHARE CAPITAL RECEIVED BY THE ASSESSEE FROM ANITA DANGAYACH AND SHRI SURESH DANG AYACH. THE ASSESSEE HAS FILED AFFIDAVIT CONFIRMATION LETT ER AND COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN IN RESPECT OF SHARE CAPITAL RECEIVED FROM SHRI MANOHAR LAL CHOUDHARY. T HE SHARE CAPITAL RECEIVED FROM SMT ANITA DANGAYACH AND SHRI SURESH DANGAYACH IS VERIFIABLE FROM THE CASH WITHDRAWALS M ADE BY THESE PERSONS ON THE SAME DAY FROM THEIR BANK STATE MENT. AS REGARD SHARE CAPITAL OF RS. 25000/- RECEIVED FROM SHRI MANOHAR LAL CHOUDHARY SAME IS CONFIRMED FROM THE SWORN AFF IDAVIT OF SHRI MANOHAR LAL CHOUDHARY AND SHRI MANOHAR LAL CHO UDHARY 10 IS AN INCOME TAX ASSESSEE. AS REGARD SHRI TIKAM KH ANDELWAL THE SAME AO HAS ASSESSED THE INCOME OF SHRI TIKAM KHANDELWAL U/S 153A AND THE INVESTMENT HAS BEEN DIS CLOSED IN THE BALANCE SHEET FILED BEFORE THE AO IN HIS ASSESS MENT PROCEEDINGS AND THE A.O. HAS NOT MADE ANY ADVERSE F INDINGS IN THIS REGARD IN HIS ASSESSMENT. THE A.O. PRESENT BEF ORE ME ALSO AGREED FOR DELETION OF THESE ADDITIONS. THUS THE A DDITION ON ACCOUNT OF SHARE CAPITAL COMING FROM SMT ANITA DANY GAYACH RS. 89000/- SHRI M.L. CHOUDHARY RS. 25000/- SHRI S URESH DANGAYACH RS. 105000/- AND SHRI TIKAM KHANDELWAL RS . 36000/- TOTALING TO RS. 255000/- IS HEREBY DELETED. THE SHARE CAPITAL FOR THE BALANCE AMOUNT RS. 7 45 000/- WAS I NTRODUCED IN THE COMPANY IN THE NAME OF BENAMI OF SHRI SHANKER KHANDELWAL. THE ASSESSEE COULD NOT PROVE THE SOURCE OF FUND IN THE HANDS OF THE BENAMI THEREFORE THE ADDITION TO THE EXTENT RS. 7 45 000/- IS CONFIRMED. 2.5 BEFORE US THE LD. AR FILED THE FOLLOWING SUBMI SSIONS. IN ABSENCE OF THE REQUIRED DETAILS AND DOCUMENTS IN SUPPORT OF SUCH SHARE CAPITAL. IN APPEAL HAVING CO NSIDERED THE WRITTEN SUBMISSIONS AND OTHER DETAILS THE LD. CIT (A) HAD ALLOWED RELIEF TO THE TUNE OF RS.2 55 000/- AND CO NFIRMED ADDITION OF RS.7 45 000/- ON THE PLEA THAT THESE FUNDS WERE INTRODUCED IN THE COMPANY IN THE NAME OF BENAMI OF SHANKARLAL KHANDELWAL. THE ASSESSEE COULD NOT PROVE DTHE SOURC E OF FUND IN THE HANDS OF THE BENAMI THEREFORE ADDITION TO T HE EXTENT OF RS.7 45 000/- WAS ON ACCOUNT OF THE DEPOSITS APPEAR ING IN THE FOLLOWING NAMES: 1. SHRI SUNIL JHALANI RS.25 000/- 11 2. SHRI SONA JHALANI. RS.25 000/- 3. DILIP KUMAWAT. RS.1 65 000/- 4.SMT. ANITA KUMAWAT. RS.1 00 000/- 5.SMT MEENA GUPTA RS.2 15 000/- 6.SHRI RAKESH GUPTA RS.2 15 000/- OBVIOUSLY SUCH FINDINGS OF THE LD. CIT(A) ARE VERY GENERAL IN NATURE AND DO NO SPELL OUT AS TO HOW THE SE DEPOSITS COULD NOT BE EXPLAINED SATISFACTORILY WHEN THE BOOK S AS MAINTAINED BY THESE BENAMIDHARS WERE DULY PRODUCED BEFORE THESE AUTHORITIES. WITHOUT POINTING OUT SPECIFIC DE FICIENCY OR DISCREPANCY SUCH BOOKS COULD NOT BE IGNORED MERELY ON THE PLEA THAT THEY WERE BENAMI OF SHRI SHANKARLAL KHAND ELWAL SO THESE DEPOSITS COULD NOT BE EXPLAINED. APPARENTLY S UCH FINDINGS ARE DEVOID OF MERITS AND DESERVE TO BE QUASHED FOR THE FOLLOWING REASONS: (1) IN FACT ALL THE ABOVE NAMED PERSONS WERE ADMIT TED TO BE BENAMI OF SHRI SHANKARLAL KHANDELWAL. IN THE CIRCUMSTANCES THE FUNDS SO INTRODUCED IN THESE NAM ES STOOD DULY ACCOUNTED FOR IN THE BOOKS AS PRODUCED BY THEM . IN ABSENCE OF ANY SPECIFIC DISCREPANCY OR DEFECT THE CORRECTNESS OF SUCH BOOKS COULD NOT BE QUESTIONED AND AVAILABIL ITY OF THE FUNDS AS PER THESE BOOKS COULD NOT BE IGNORED BY GE NERAL REMARKS THAT THEY WERE BENAMI OF SHIR SHANKARLAL KH ANDELWAL. THE FACT REGARDING THESE PERSONS BEING BENAMI OF S HRI SHANKARLAL KHANDELWAL AND HAVING DEPOSITED THESE FU NDS IN THE CO. COULD NOT BE DENIED MERELY ON THE PLEA THAT TH EY WERE BENAMI OF SHRI SHANKARLAL KHANDELWAL. AS THE EXISTE NCE OF THESE PERSONS AND THEIR BENEFACTOR SHRI SHANKARLAL KHANDELWAL IS ESTABLISHED BEYOND DOUBT SO IT WOULD BE ILLOGICA L TO CONCLUDE THAT THE SOURCES OF THESE FUNDS COULD NOT BE PROVED BY THE APPELLANT. (2) AS PER NUMBER OF JUDICIAL CITATIONS AS QUOTED IN THE WRITTEN SUBMISSIONS NO VALID ADDITION COULD BE MAD E IN THE CASE OF A COMPANY ON ACCOUNT OF THE SHARE CAPITAL INTRODUCED PARTICULARLY WHEN THE EXISTENCE OF THE SHARE HOLDER IS NOT DENIED . FOR READY REFERENCE THESE CITATIONS ARE RE-PRODU CED HEREUNDER ONCE AGAIN AT THE COST OF REPETITION. 12 (A) CIT VS STELLER INVESTMENT LTD. (2001) 251 ITR 263 (SC) WHEREIN IT HAS BEEN HELD THAT EVEN IF THE SUBSCRIB ERS TO THE INCREASED SHARE CAPITAL OF ASSESSEE-COMPANY WERE NOT GENUINE THE AMOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. (B) CIT VS DOWN TOWN HOSPITAL (P) LTD. (2004) 267 ITR 439(GAU) HELD THAT NO ADDITION UNDER S. 68 IS PERMISSIBLE WHERE THE SHAREHOLDERS ARE IDENTIFIED AND IT IS EST ABLISHED THAT THEY HAD INVESTED THE MONIES IN THE PURCHASE O F THE SHARE. (C) (C) JAYA SECURITIES LTD. VS. CIT (2008) 166 TAX MAN 7 (ALL) HELD THAT NO ADDITION UNDER S. 68 CAN BE MADE IN THE HANDS OF THE COMPANY LIMITED BY SHARES IN RESPE CT OF INVESTMENT IN SHARE CAPITAL OF THE CO. (D) FURTHER HONORABLE ITAT JAIPUR BENCH JAIPUR HAVE B EEN REPEATEDLY HOLDING THE VIEW THAT THE ASSESSEE HAS DISCHARGED ITS BURDEN BY PROVIDING RELEVANT DOCUMENTS AND INFORMATION NECESSARY FOR PROVING THE GENUINENESS OF TRANSACATION IN QUESTION .. THE LATEST JUDGMENT ON THE POINT WAS PRONOUNCED IN THE CASE OF BHARTI SYSTEX LTD. VS DCIT (2011) 137 TTJ 82 (ITAT JAIP). IN VIEW OF ABOVE DISCUSSIONS THE ADDITIONS AS CONF IRMED BY THE LD. CIT (A) ON THIS ACCOUNT ARE NOT LEGALLY MAINTAINABLE AND DESERVE TO BE DELETED. 2.6 ON THE OTHER HAND THE LD. DR SUPPORTED THE ORD ERS OF THE AO. IN RESPECT OF THE ADDITION CONFIRMED BY THE LD. CIT(A) THE LD. DR RELIED UPON THE ORDER OF THE AO. 2.7 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) IN HIS ORDER HAS MENTIONED SHRI SHAILESH KUMAR ACIT CC-1 JAIPUR W AS PRESENT FOR THE DEPARTMENT DURING THE APPELLATE PROCEEDINGS. THE AO PRESENT BEFORE THE LD. 13 CIT(A) HAD AGREED FOR DELETION OF ADDITION IN RESPE CT OF CONTRIBUTION OF SHARE CAPITAL COMING FROM SMT. ANITA DANGAYACH- RS . 89 000/- SHRI M.L. CHOUDHARY RS. 25 000/- SHRI SURESH DANGAYACH R S. 1 05 000/- AND SHRI TIKAM KHANDELWAL RS. 36 000/-. BEFORE US NO MATE RIAL HAS BEEN PLACED TO SHOW THAT THE AO PROVIDED ADEQUATE OPPORTUNITY FOR FILING CONFIRMATIONS IN RESPECT OF SHARE CAPITAL INTRODUCED BY TEN PERSONS. IN THE CASES BELONGING TO THIS GROUP WE HAVE NOTICED THAT ADDITIONAL EVIDENC ES HAVE BEEN FILED BEFORE THE LD. CIT(A) AND WE HAVE HELD THAT IN THE CASES B ELONGING TO THIS GROUP THAT THE LD. CIT(A) WAS JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES. HENCE THE RELIEF ALLOWED BY THE LD. CIT(A) IS IN O RDER. 2.8 THE PERSON IN WHOSE NAME THE INTRODUCTION OF SH ARE CAPITAL HAS BEEN CONFIRMED BY THE LD. CIT(A) ARE THE PERSON WHO HAVE BEEN HELD AS BENAMI OF SHANKAR LAL KHANDELWAL. THE CASH FLOW STATEMENTS OF THESE PERSONS WERE PREPARED ACCORDING TO WERE FILED IN THE COURSE OF S EARCH ASSESSMENT OF SHANKAR LAL KHANDELWAL. THUS THE SOURCES OF THE DEP OSIT STAND EXPLAINED. HENCE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION TO THE EXTENT OF RS. 7.45 LACS IN RESPECT OF MONEYS CREDI TED IN THE NAME OF BENAMI PERSONS.. HENCE GROUND NO. 1 OF THE ASSESSEE IS ALL OWED WHILE GROUND NO. 2 OF THE REVENUE IS DISMISSED 14 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2 59 066/- BY ESTIMA TING THE G.P.RATE OF 10% ON ELECTRONIC AND OTHER ITEMS ON DECLARED TURNOVER OF RS. 1 50 47 967/- 3.2 THE AO HAS REJECTED THE BOOKS OF ACCOUNT AND TH E FINDING OF THE SAME IS GIVEN IN ASSESSMENT YEAR 2003-04. DURING THE YEA R THE ASSESSEE CARRIED ON FOLLOWING BUSINESSES. 1. TRADING IN ELECTRONICS ETC. 2. FURNITURE JOB WORK 3. CAR HIRE 4. COMMISSION INCOME THE ASSESSEE HAS SHOWN THE G.P.RATE OF 4.46% AS AGA INST 3.23% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. THE AO NOTICED THAT THE ASSESSEE HAS NOT PRODUCED THE SUPPORTING VOUCHERS AND STOCK RECORD T HE AO APPLIED THE G.P.RATE OF 15.04% ON SALES OF ELECTRONIC ITEMS AND APPLIED THE G.P.RATE OF 54.73% ON FURNITURE JOB WORK BUSINESS. THUS THE GRO SS PROFIT WAS ESTIMATED AT RS. 25 76 385/- AS AGAINST RS. 12 45 720/- DECLA RED BY THE ASSESSEE. 3.4 BEFORE THE LD. CIT(A) IT WAS STATED THAT THE C OMPARISON FROM LAST YEAR IS NOT BASED ON CORRECT FIGURES. IN THE IMMEDIATELY PRECEDING YEAR THE TOTAL SALES WERE NOT OF ELECTRONIC ITEMS BUT THESE INCLUD ED THE SALES OF FURNITURE. IT WAS FURTHER SUBMITTED THAT THERE IS INCREASE IN SAL ES TO THE EXTENT OF 46.57% AS COMPARED TO LAST YEAR. IT WAS POINTED OUT THAT I N THE LAST YEAR THE JOB 15 RECEIPT FROM FURNITURE JOB WERE TO THE EXTENT OF RS . 5 44 445/- AND THE EXPENSES WERE TO THE EXTENT OF RS. 5 09 486/-. THUS THE G.P.RATE ON JOB WORK WAS AT 6.42% IN THE IMMEDIATELY PRECEDING YEAR WHILE THE AO HAS ADOPTED THE G.P.RATE OF 54.73%. 3.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S REDUCED THE ADDITION TO RS. 3 40 773/- AFTER ALLOWING THE RELIEF OF RS. 9 89 922/- AFTER OBSERVING AS UNDER. 5.3 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R. AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. AT T HE OUTSET I AGREE WITH THE CONTENTION OF LD. A.R. THAT THE DECLARED GROSS PROFIT WAS NOT DEDUCTED FROM ESTIMAT ED GROSS PROFIT IN ORDER TO ARRIVE THE ADDITION FOR LO W G.P. THE AO ESTIMATED THE GROSS PROFIT OF RS. 2576385/- BY APPLYING THE GP RATE ON THE TURNOVER AND MADE THE ADDITION FOR THE SAME AMOUNT WITHOUT REDUCING THE F IGURE OF THE DECLARED GP OF RS. 12 45 730/-. THUS THE AD DITION OF RS. 12 45 730/- IS DELETED STRAIGHT WAY ON ACCOU NT OF THIS APPARENT MISTAKE IN THE ASSESSMENT ORDER OF TH E AO. AFTER RECTIFICATION OF THIS APPARENT MISTAKE NOW T HE ADDITION ON ACCOUNT OF LOW GP REMAINS AT RS. 13 30 655/- THE AO ESTIMATED THE JOB WORK INCOME BY APPLYING TH E PROFIT RATE OF 54.73% OF GROSS RECEIPTS. THE AO MENTIONED THE SAME IS BASED ON THE LAST YEAR. IN LA ST YEAR THE JOB RECEIPTS WERE OF RS. 5 44 445/- AND JOB EXP ENSES WERE OF RS. 5 09 486/- WHICH GIVES THE PROFIT FROM JOB WORK RS. 34959/- RESULTING THE PROFIT RATE OF 6.42% . HOWEVER THE PART OF THE JOB EXPENSES MIGHT HAVE INCURRED FOR SELF WORK AND CONSIDERING THIS FACT IT WOULD BE APPROPRIATE TO ESTIMATE THE PROFIT FROM JOB WORK BY APPLYING THE NP RATE OF 15% WHICH COMES TO RS. 816 67/- . 16 AS REGARD ESTIMATION OF PROFIT FROM OF THE TRADING OF ELECTRONIC AND OTHER ITEMS I FIND THAT THE RESULT OF THE CURRENT YEAR CANNOT BE COMPARED TO AY 2002-2003. IN AY 2002-2003 THE TOTAL TURNOVER WAS OF RS. 23 92 0 93/- WHEREAS THE TURNOVER OF CURRENT YEAR IS OF RS. 1 50 47 967/-. THUS THE TURNOVER HAS INCREASED MOR E THAN FIVE TIMES. IN LAST YEAR THE DECLARED GP WAS 9.89% AGAINST WHICH I ESTIMATED 12%. DURING THIS YEAR TH E TURNOVER OF THE ASSESSEE HAS INCREASED BY MORE THAN 40% FROM LAST YEAR. HOWEVER THE CONTENTION OF THE LD. A.R THAT THE INCREASE IN OVERALL GROSS PROFIT WAS ACHIE VED BY LOWERING THE G.P. MARGIN CANNOT BE FULLY ACCEPTED. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE MORE PARTICULARLY INCREASE IN TURNOVER WHICH USUALLY IS ACHIEVED BY WAY OF REDUCING THE MARGIN IT WILL BE REASONABLE TO ESTIMATE THE GROSS PROFIT BY APPLY ING G.P. RATE OF 10% WHICH GIVES GROSS PROFIT OF RS. 15 04 796/-. THUS THE COMBINED ESTIMATED GROSS PRO FIT FROM THE TRADING AND JOB WORK COMES TO RS. 15 04 79 6/- + 81667= RS. 15 86 463/- AS AGAINST DECLARED GROSS P ROFIT OF RS. 12 45 730/- WHICH GIVES AN ADDITION OF RS. 3 40 733/-. THEREFORE IN THE FACTS AND CIRCUMSTANC ES OF THE CASE THE ADDITION ON ACCOUNT OF LOW GP RS. 1330655- 340733/- = RS. 989922/- IS HEREBY DELETED AND ADDITION OF RS. 340733/- IS SUSTAINED. 3.6 THE ASSESSEE IS AGGRIEVED AGAINST CONFIRMATION OF ADDITION OF RS. 2 95 066/- BY APPLYING THE G.P.RATE OF 10% ON ELECT RONIC ITEMS. 3.7 VIDE GROUND NO. 3 THE ASSESSEE IS AGGRIEVED AG AINST CONFIRMING THE ADDITION OF RS. 81 667/- BY ESTIMATING THE NET PROF IT RATE OF JOB WORK AT 15%. THUS THE ASSESSEE IS AGGRIEVED IN CONFIRMING THE OV ERALL TRADING ADDITION OF RS. 3 40 733/-. 17 3.8 THE REVENUE IN GROUND NO. 1 IS AGGRIEVED AGAINS T RELIEF OF RS. 9 89 922/-. 3.9 BEFORE US THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS. (I) THE LD. CIT(A) HAD ERRED IN REJECTING THE BOOKS RES ULTS FOLLOWING THE FINDINGS OF THE LD. AO ON THE POINT W ITHOUT ATTRIBUTING ANY REASON OR POINTING OUT ANY SPECIFI C INSTANCES OF THE UN-VOUCHED AND UNVERIFIABLE SALES AND PURCHASES . IN ABSENCE OF ANY SPECIFIC DISCREPANCY OR INSTANCE TH E BOOK RESULTS COULD NOT BE REJECTED BY GENERAL AND CURSOR Y REMARKS. THUS SUCH CONCLUSION IS ILLOGICAL AND BAD IN LAW. (II) AGAIN THE LD. CIT (A) DID NOT ANALYZE THE NATURE & VOLUME OF THE TRADED GOODS NATURE OF THE RECEIPTS OF THE PRO CEEDS ETC. IN ABSENCE OF EXAMINATION OF THESE FACTS NO LOGICAL C ONCLUSION COULD BE ARRIVED AT. IN THE PRESENT CASE THE LD. C IT(A) HAD APPLIED FLAT RATE OF 10 % & 15% RESPECTIVELY WITHOU T CARRYING OUT SUCH AN EXERCISE. THUS SUCH WORKING IS WITHOUT ANY BASIS AND IS CONTRARY TO THE JUDICIAL DISCIPLINE. IN FACT THE APPELLANT CO. HAD BEEN TRADING IN TWO TYPES OF GOODS ELECTRO NICS & FURNITURE BESIDES JOB RECEIPTS ETC. THERE IS VAST VARIATION IN THE G.P. IN FURNITURE GOODS & ELECTRONIC GOODS. GENERA LLY ELECTRONIC GOODS ARE FAST SELLING GOODS WHICH YIELD VERY NOMINAL MARGIN OF PROFIT WHEREAS IN FURNITURE ITEMS G.P. IS COMPARATIVELY MORE THAN ELECTRONIC GOODS. THE JOB R ECEIPTS HAVE GREATER IMPACT ON THE G.P. RATE. IN THE CIRCUM STANCES FOR APPLYING FAIR AND REASONABLE RATE OF PROFIT ALL THE SE FACTORS ARE NECESSARILY TO BE TAKEN CARE OF. THUS G.P. RATE SO APPLIED BY THE LD. CIT (A) FOR SUSTAINING SUCH ADDITION IS OBVIOUS LY ARBITRARY AND WITHOUT ANY BASIS. (III) AGAIN PAST HISTORY OF THE CASE IS VERY IMPORTANT G UIDING FACTOR TO DETERMINE THE G.P. RATE. IN THE PRESENT CASE TH E G.P. SHOWN IN EARLIER YEARS VARIED FROM 3.27% TO 4.85% DEPENDING UPON THE VOLUME OF THE GOODS TRADED IN AND THE VOLUME & PRO PORTION OF THE JOB RECEIPTS ETC. (AS PER CHART SUBMITTED IN TH E PB AT PAGE NO. 13) 18 (IV) THE LD. CIT (A) HAD NOT FOLLOWED THE RULE OF CONSIS TENCY. IN THIS YEAR HE HAD ARBITRARILY APPLIED G.P. RATE AT 10% AS AGAINST 12% IN THE A.Y. 2003-04 10% IN THE A.Y. 2007-08 & 2008-09 & 8% IN THE ASSESSMENT YEARS 2005-06 & 2006-07. TH US THE PERCENTAGE OF THE DISALLOWANCE HAD BEEN VARIED AND GUIDED BY THE PERSONAL WHIMS OF THE AUTHORITY WITHOUT FOLLOW ING THE RULE OF CONSISTENCY WHICH IS BAD IN LAW AND THE DES ERVES TO BE QUASHED IN LIMINE. IN VIEW OF ABOVE DISCUSSIONS THE ADDITION OF RS. 8 39 124/- CONFIRMED BY THE LD. CIT (A) BY APPLYING ADHOC G. P. RATE OF 8% IS ARBITRARY AND DESERVES TO BE DELETED. 3.10 ON THE OTHER HAND THE LD. DR SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. IT WAS STATED THAT THE ASSESSEE HAS NOT PROD UCED THE BOOKS OF ACCOUNT OR VOUCHERS AND THEREFORE THE AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT. THE AO ON THE BASIS OF THE GROSS PROFIT DI SCLOSED IN THE ASSESSMENT YEAR 2002-03 APPLIED THE G.P.RATE OF 15% ON ELECTRO NIC ITEMS AND 54.73% ON JOB WORK RECEIPTS. 3.11 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE F ILED THE ORIGINAL RETURN ON 01-07-04. THIS RETURN WAS ACCOMPANIED WITH AUDIT REPORT. THE AUDITOR IN THE TAX AUDIT REPORT HAS MENTIONED THAT THE ASSESSE E IS MAINTAINING THE CASH BOOK LEDGER BANK BOOK PURCHASE BOOK SALES BOOK PURCHASE VOUCHERS AND SALE BILL BOOK. IT IS TRUE THAT ALL THESE MATERIAL S HAVE NOT BEEN PRODUCED BEFORE THE AO WHILE COMPLETING THE ASSESSMENT ORDE R U/S 153A OF THE ACT. FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2003 -04 WE HOLD THAT THE 19 AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT. DURING THE YEAR UNDER REFERENCE THE AO HAS SHOWN CAR HIRE INCOME TO THE EXTENT OF RS. 69 494/-. THERE WAS NO SUCH INCOME IN THE IMMEDIATELY PRECEDI NG YEAR. THE COMMISSION INCOME DURING THE YEAR IS TO THE EXTENT OF RS. 10 72 605/- AS AGAINST RS. 5 12 022/-. IN ABSENCE OF THE COMPLETE VOUCHERS OF EXPENSES AND PURCHASES IT IS NOT POSSIBLE TO ASCERTAIN THE G.P. RATE IN RESPECT OF VARIOUS BUSINESSES UNDERTOOK BY THE ASSESSEE. IT WILL BE US EFUL TO REPRODUCE THE COMPARATIVE DETAILS OF INCOME DURING THE YEAR AND T HE EXPENSES RELATING THE TRADING ACCOUNT. HEAD A.Y. 2003/04 A.Y. 2004-05 SALES 1 01 13 699/- 1 50 47 967/- OTHER INCOME 12 19 586/- 17 32 908/- CLOSING STOCK 30 23 400/- 53 14 968/- PURCHASES 1 13 80 514/- 1 58 12 105/- DIRECT EXPENSES 7 52 671/- 8 55 580/- GROSS PROFIT 3.23% 4.46% THE OTHER INCOME IS COMPARABLE IN PERCENTAGE OF THE SALES FOR BOTH THE ASSESSMENT YEARS. FOR ASSESSMENT YEAR 2003-04 WE HAVE DIRECTED TO APPLY THE G.P.RATE OF 4.5% ON THE DECLARED TURNOVER. WE T HEREFORE FEEL THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE TRADING ADD ITION TO RS. 50 000/-.. THUS GROUND NO. 2 AND 3 OF THE ASSESSEE IS PARTLY ALLOWE D AND GROUND NO. 1 OF THE REVENUE IS DISMISSED. 20 4.1 THE FOURTH GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 4.2 IN THE ORIGINAL RETURN THE INCOME WAS DECLARED AT RS.37 559/- WHILE THE INCOME OF RS. 44 011/- HAS BEEN SHOWN IN THE RE TURN FILED IN RESPONSE TO NOTICE U/S 153A. HENCE IT IS NOT A CASE WHERE THE O RIGINAL RETURNED INCOME HAS BEEN FILED. THUS THE REGULAR ASSESSMENT WAS REQ UIRED TO BE MADE U/S 153A OF THE ACT THE LD. CIT(A) WAS JUSTIFIED IN NOT ANNULLING THE ASSESSMENT ORDER. HENCE THE GROUND NO. 4 OF THE AS SESSEE IS DISMISSED. 5.1 THE GROUND NO. 3RD AND 5 TH RAISED BY THE REVENUE ARE AGAINST ALLOWING RELIEF OF RS. 5.20 LACS U/S 68 OF THE ACT AFTER ADMITTING THE ADDITIONAL EVIDENCES. 5.2 THE AO AT PAGE 2 OF THE ASSESSMENT ORDER HAS GI VEN THE CHART SHOWING THE AMOUNT CREDITED DURING THE YEAR. THE AO ACCEPTE D THE CASH CREDITS IN THE NAME OF SHRI MOHAN LAL KHANDELWAL AND SHRI SHANKAR LAL KHANDELWAL. THE CASH CREDIT IN THE NAME OF M/S.TIRUPATI ENTERPRISES WAS HELD AS UNEXPLAINED ON THE SAME BASIS AS PER FINDINGS FOR ASSESSMENT YE AR 2003-04. THE CONFIRMATION IN RESPECT OF SHRI AMARCHAND MAKKAR WA S REJECTED. THE AO ACCORDINGLY MADE THE ADDITION OF RS. 5.20 LACS U/S 68 OF THE ACT. 5.3 BEFORE THE LD. CIT(A) THE ASSESSEE FILE THE FO LLOWING SUBMISSIONS. 4.2 SUBMISSION OF THE ASSESSEE IS AS FOLLOWS:- 21 THE ASSESSEE FILED THE CONFIRMATION OF CASH CREDITO RS CONTAINING THEIR NAME ADDRESS AND PAN. THE AO REJECTED THE CONFIRMATIONS MERELY BECAUSE OF THE REASONS THAT TH E ASSESSEE COULD NOT PRODUCE THE PARTIES FOR VERIFICATION HENC E THE SAME REJECTED. BUT THE FACT REMAINS THAT THE LD. A.O NEV ER ASKED THE ASSESSEE TO PRODUCE THE PARTIES. WE HAVE SUBMITTED THE FOLLOWING DOCUMENTS IN RESPECT OF CASH CREDITORS BE FORE YOUR HONOUR: - M/S. TIRUPATI ENTERPRISES (RS. 20 000/-). AFFIDAVIT CONFIRMATION LETTER COPY OF LEDGER ACCOUNT ARE FIL ED IN YOUR OFFICE AS ADDITIONAL EVIDENCE UNDER RULE 46A OF I.T . RULES P.B (PAGE 50-55). DETAILS OF SOURCE OF DEPOSITS. COPY OF BANK STATEMENT AND ITR OF THE PARTY IS AT P B PAGE 72- 74 DATE AMOUNT NATURE OF ENTRY EXPLANATION 31-3-2003 50 000/- CHEQUE IN THE ACCOUNT THERE WAS OPENING BALANCE OF RS. 25 000/- ON 1.4.2003. LATER ON 30 000/- WAS PAID BY CHEQUE ON 21.5.2003. AN AMOUNT OF RS. 50 000/- RECEIVED BY CHEQUE NO.062694 OF ALLAHABAD BANK. ON 31.03.2003. THERE WAS NO CASH DEPOSIT IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE TO THE ASSESSEE. SHRI AMARCHAND MALKAR (RS. 5 00 000/-). AFFIDAVIT CONFIRMATION LETTER COPY OF ID PROOF AND STATEMENT OF LEDGER ACCOUNT OF THE CREDITOR FILED IN YOUR OFFICE AS ADD ITIONAL EVIDENCE UNDER RULE 46A P.B (PAGE NO. 56-60). DETAILS OF SOURCE OF DEPOSITS. COPY OF BANK STATEMENT IS AT PB 22 FURTHER THE ABOVE NAMED CREDITOR IS INCOME TAX ASSE SSEE AND HIS PAN IS ABUPM1547M. HE IS ASSESSEE OF WARD 7(2) JAIPUR. (PB PAGE 75 TO 77) DATE AMOUNT NATURE OF ENTRY EXPLANATION 13-01-2004 2 00 000/- CHEQUE CHEQUE OF RS. 2 00 000 /- RECEIVED FROM BANK OF RAJASTHAN. COPY OF BANK STATEMENT IS ENCLOSED HEREWITH AS E- NO CASH DEPOSIT IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE IN QUESTION. THE DEPOSITS IN THE ACCOUNT ARE BY CHEQUE ONLY. 19-01-2004 1 00 000/- CHEQUE CHEQUE OF RS. 1 00 000 /- RECEIVED FROM BANK OF RAJASTHAN. COPY OF BANK STATEMENT IS ENCLOSED HEREWITH AS E- NO CASH DEPOSIT IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE IN QUESTION. THE DEPOSITS IN THE ACCOUNT ARE BY CHEQUE ONLY. 09-02-2004 1 00 000/- CHEQUE CHEQUE OF RS. 1 00 000/- RECEIVED FROM BANK OF RAJASTHAN. COPY OF BANK STATEMENT IS ENCLOSED HEREWITH AS E- NO CASH DEPOSIT IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE IN QUESTION. THE DEPOSITS IN THE ACCOUNT ARE BY CHEQUE ONLY. 08-03-2004 1 00 000/- CHEQUE CHEQUE OF RS. 1 00 000/- RECEIVED FROM BANK OF RAJASTHAN. NO CASH DEPOSIT IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE IN QUESTION. THE DEPOSITS IN THE ACCOUNT ARE BY CHEQUE ONLY. EACH AND EVERY UNEXPLAINED CASH CREDIT CANNOT BE TR EATED AS INCOME OF THE ASSESSEE. THE INTENTION OF PARLIAMENT IN ENA CTING SECTION 68 WAS NOT TO TREAT EVERY UNEXPLAINED CASH CREDIT AS INCOM E OF THE ASSESSEE. IN THE CORRESPONDING CLAUSE IN THE BILL WHICH WAS INT RODUCED IN 23 PARLIAMENT THE WORD SHALL HAD BEEN USED BUT DURI NG THE COURSE OF CONSIDERATION OF THE BILL AND ON RECOMMENDATION OF THE SELECT COMMITTEE THE WORD SHALL WAS SUBSTITUTED BY THE WORD MAY. THIS CLEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTION 68. THEREFORE THE GENUINE LOAN EVEN IF UNEXPLAINED SHOULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE AND THE SAME S HOULD NOT BE TREATED AS ASSESSEES INCOME. RELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME TAX VS SMT. P. K. NOORJAHAN 237 ITR 570 (SC) THE ASSESSEE FURTHER RELIES ON THE FOLLOWING DECI SIONS:- CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 7 9 (SC) THE ASSESSEE HAD GIVEN NAME AND ADDRESSES OF THE CA SH CREDITORS WHO WERE INCOME TAX ASSESSEE. REVENUE APART FROM ISSUIN G SUMMON U/S 131 NOTICES TO CREDITORS DID NOT PURSUE THE MATTER FURTHER- IT DID NOT EXAMINE CREDITWORTHINESS OF THE CREDITORS- ASSESSEE COULD NOT UNDER THE CIRCUMSTANCES DO ANYTHING FURTHER. HELD THAT T HE ADDITIONS WERE RIGHTLY DELETED. ARAVALI TRADING CO. V/S INCOME TAX OFFICER (2008) 8 DTR (RAJ.) 199. ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND S UCH PERSONS OWN THE CREDITS THE ASSESSEES ONUS STANDS DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CRE DITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM. HELD THAT M ERELY BECAUSE THE DEPOSITORS EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCEPTABLE TO THE AO IT CANNOT BE PRESUMED THAT TH E DEPOSITS MADE BY THE CREDITORS ARE MONEY BELONGING TO THE ASSESSEE I TSELF. IN VIEW OF THE ABOVE SUBMISSION THE HUMBLE ASSESS EE PRAYS YOUR HONOR KINDLY TO DELETE THE ADDITION OF RS. 5 2 0 000/- MADE BY THE LD. AO AND PRAY JUSTICE. 5.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S DELETED THE ADDITION AFTER OBSERVING AS UNDER: 24 4.3 I HAVE CONSIDERED THE SUBMISSION MADE ABO VE BY LD. A.R AND MATERIAL AVAILABLE ON RECORD. THE ASSES SEE HAS FILED SWORN AFFIDAVIT AND CONFIRMATION IN SUPPORT OF THE CASH CREDITS FROM THESE PERSONS. THE CREDITORS MADE THE DEPOS ITS BY CHEQUE.. FURTHER THE ASSESSEE HAS FILED COPY OF IN COME TAX RETURN AND PAN IN THE CASE OF M/S SHRI TIRUPATI ENT ERPRISES AND SHRI AMARCHAND MALKAR RESPECTIVELY. SHRI AMARCH AND MALAKAR AND SHRI RAVINDRAKUMAR SHARMA PROP. TRIPUPA TI ENTERPRISES ARE ASSESSED TO TAX IN ITO WARD 7(2) AN D 4(2) JAIPUR RESPECTIVELY. FURTHER THE COPY OF BANK ACCOU NT OF THE CREDITORS WAS ALSO PRODUCED BEFORE ME. FROM PERUSAL OF THESE BANK ACCOUNTS IT WAS SEEN THAT THERE WAS NO CASH DEPOSIT IN THESE BANK ACCOUNTS TO CLEAR THE CHEQUE ISSUED TO T HE ASSESSEE. AS ALREADY MENTIONED IN THE EARLIER GROUND THE A.O . PRESENT DURING THE APPEAL HEARING HAS ALSO CHECKED THESE DE TAILS FOUND THEM TO BE CORRECT AND HE STATED THAT HE HAS NO OB JECTION FOR DELETION OF ADDITION ON MERITS EXCEPT THE LEGAL OB JECTION OF ADMISSION OF ADDITIONAL EVIDENCE. THE ISSUE REGARDI NG ADDITIONAL EVIDENCE HAS ALREADY BEEN CONSIDERED BY ME AND THESE HAVE BEEN ALLOWED TO BE ADMITTED. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE I HEREBY DELETE THE ADDITION OF RS. 5 20 000/- MADE BY A.O. U/S 68 OF I.T. ACT 1 961. 5.5 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS CLEARLY MENTIONED IN HIS ORDER THAT THE AO PRESENT DURING THE APPEAL HEARING CHECKED THE DETAILS AND FOUND THESE DETAILS TO BE CORRECT. THE AO STATED THAT HE HAS NO OBJECTION FOR DELETION OF ADDITION ON MERIT. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS THE LD. CIT(A) WA S JUSTIFIED IN DELETING THE ADDITION. 25 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 02/09/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. GUMAN FURNITURE & SERVICES (P) LTD. JAIPUR 2. THE ACIT CENTRAL CIRCLE- 1 JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.157/JP /11) A.R ITAT JAIPUR 26 27