M/s. Jemini Plastic Industies, Nani Daman v. The Income tax Officer,Vapi Ward-4,, Daman

ITA 193/AHD/2011 | 2006-2007
Pronouncement Date: 30-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 19320514 RSA 2011
Assessee PAN AATFS0234M
Bench Ahmedabad
Appeal Number ITA 193/AHD/2011
Duration Of Justice 8 month(s) 5 day(s)
Appellant M/s. Jemini Plastic Industies, Nani Daman
Respondent The Income tax Officer,Vapi Ward-4,, Daman
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 30-09-2011
Assessment Year 2006-2007
Appeal Filed On 25-01-2011
Judgment Text
. .. . . .. . IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M .) . / I.T.A. NO. 193/AHD./2011 ! '# ! '# ! '# ! '# / ASSESSMENT YEAR : 2006-2007 M/S. JEMINI PLASTIC INDUSTRIES NANI DAMAN -V S- ITO VAPI WARD-4 DAMAN (PAN : AATFS 0234M) $% / APPELLANT &'$% / RESPONDENT $% ( ) / APPELLANT BY SHRI RAJESH UPADHYAY &'$% ( ) / RESPONDENT BY SHRI VINOD TANWANI SR.D.R. *!' + ( - / DATE OF HEARING 17.08.2011 ./# ( - / DATE OF PRONOUNCEMENT 30.09.2011 / ORDER THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 20.10.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) V ALSAD FOR THE ASSESSMENT YEAR 2006-2007. 2. GROUND NO.1 RAISED BY THE ASSESSEE IN THIS APPEA L READS AS UNDER: (1) LR.ITO HAS ERRED IN LAW AND ON FACTS TO ADD AN AMOUNT OF RS.1 90 000/- CAPITAL CONTRIBUTED BY PARTNER- RUSHIKESH GOVINDRAM MAJUMDAR DURING THE YEAR TO THE INCOME OF THE APPELLANT FIRM. CIT(APPLS.) HA S ALSO ERRED TO SUSTAIN THIS ADDITION. 3. THE FACTS RELATING TO CONTROVERSY INVOLVED IN TH E AFORESAID GROUND OF APPEAL ARE THAT IN PARA 5 OF THE ASSESSMENT ORDER THE AO AFT ER VERIFICATION OF LEDGER ACCOUNT AND THE CAPITAL ACCOUNT OF SHRI RUSHIKESH GOVINDRAM MAJUMDA R OBSERVED THAT HE HAD INTRODUCED 2 ITA NO. 193-AHD-2011 CASH OF RS.95 000/- EACH ON 11.3.2006 AND 14.3.2006 IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. THE CORRESPONDING WITHDRAWAL FROM TH E CAPITAL ACCOUNT OF SHRI MAJUMDAR IS MISSING. FURTHER IF THE TRANSACTION IS GENUINE WHEY THE PARTNER SHOULD BRING IN CAPITAL IN CASH WITHOUT APPROPRIATE REASONS. HE ACCORDINGLY MADE ADDITION OF RS.1 90 000/- ON ACCOUNT OF CAPITAL INTRODUCED BY THIS PARTNER. 4. ON APPEAL BEFORE THE LD. CIT(A) ON BEHALF OF TH E ASSESSEE IT WAS CONTENDED THAT WHEN THE AO ACCEPTED AN AMOUNT OF RS.7 68 268/- OF CAPITAL CONTRIBUTED BY RUSHIKESH G. MAJUMDAR IN THE FIRM OF JEMINI PLASTIC INDUSTRIES NO ADDITION CAN BE MADE OF RS.1 90 000/- AS INCOME OF THE ASSESSEE FIRM. THE A .R. OF THE ASSESSEE FILED THE CAPITAL ACCOUNT AND BALANCE-SHEET AND CONTENDED THAT THESE DOCUMENTS PROVE THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. TO BUTTRESS HIS ARGUMENT RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE ITAT MUMBAI (TRIB.) (2007) 104(3) IN THE CASE OF MISS AISHWARYA RAI VS- DCIT. 4.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ADDITION AND ALSO HELD THAT ON THIS I NCOME THE ASSESSEE FIRM IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IB OF THE I.T. ACT AS THERE IS NO FIRST DEGREE NEXUS WITH THE INCOME OF THE INDUSTRIAL UNDERTAKING. AGGRIEVED WIT H THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING ON BEHALF OF THE ASSESSE E SHRI RAJESH UPADHYAY APPEARED AND POINTED OUT THAT RS.1 90 000/- WAS WITHDRAWN FR OM RAJENDRA INDUSTRIES BY MR. MAJUMDAR FOR PUTTING IN THE ASSESSEE FIRM. THIS AMO UNT WAS WITHDRAWN IN CASH FROM RAJENDRA INDUSTRIES DAMAN ON 17.12.2005 AND 28.12. 2005. ON 11 TH AND 14 TH MARCH 2006 THE ASSESSEE HAS DEPOSITED RS.1 90 000/- IN T HE BOOKS OF THE ASSESSEES ACCOUNT WHEREIN SHRI MAJUMDAR IS PARTNER. IN THE IMPUGNED O RDER THE LD. CIT(A) REJECTED THIS SOURCE MAINLY ON THE GROUND THAT CASH TRANSACTION A BOVE THE LIMIT OF RS.20 000/- IS PROHIBITED BY LAW EXCEPT ON CERTAIN EXEMPTED SITUAT ION. HE SUBMITTED THAT THIS CANNOT BE A GROUND FOR SUSPECTING THE SOURCE. HE SUBMITTED TH AT EXPLANATION OF THE ASSESSEE IS 3 ITA NO. 193-AHD-2011 REJECTED ON DOUBTS AND SUSPICION. IN CASE OF CASH T RANSACTION PROVISIONS CONTAINED IN SECTIONS 269SS AND 269T ARE APPLICABLE BUT ON THAT GROUND THE SOURCE OF INVESTMENT CANNOT BE DISBELIEVED. HE ACCORDINGLY CONTENDED THA T EXPLANATION OF THE ASSESSEE BE ACCEPTED AND ADDITION OF RS.1 90 000/- MADE UNDER S ECTION 68 BE DELETED. 6. ON THE OTHER HAND SHRI VINOD TANWANI APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). T HE LD. D.R. POINTED OUT THAT IT IS UNACCEPTABLE THAT AMOUNT OF RS.1 90 000/- WITHDRAWN FROM THE FIRM ON 17.12.2005 AND 28.12.2005 WAS NOT UTILIZED FOR ANY OTHER PURPOSE T ILL THE MID-MARCH 2006. SINCE NO EXPLANATION WHATSOEVER WAS FURNISHED BEFORE ANY OF THE AUTHORITIES BELOW HOW THE AMOUNT OF RS.1 90 000/- IN CASH WAS KEPT FOR ALMOST THREE MONTHS. THEREFORE THE ADDITION OF RS.1 90 000/- WAS RIGHTLY MADE AND CONF IRMED BY THE LD. CIT(A). 7. HAVING HEARD BOTH THE SIDES I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT EXP LANATION OF THE ASSESSEE HAS BEEN REJECTED ON DOUBTS AND SUSPICION. THE SOURCE OF WITHDRAWAL O F RS.1 90 000/- IS NOT IN DISPUTE. THERE CAN BE MANY REASONS FOR KEEPING RS.1 90 000/- IN CASH AT HOME. FURTHER MERELY RS.1 90 000/- IS DEPOSITED BY PARTNER IN ASSESSEE F IRM IN CASH IS NO GROUND TO SUSPECT THE SOURCE PARTICULARLY WHEN LEDGER ACCOUNT OF THE FIR M NAMELY RAJENDRA INDUSTRIES- DAMAN CLEARLY INDICATES THAT THE ASSESSEE HAS WIT HDRAWN RS.1 90 000/- IN THE MONTH OF DECEMBER 2005. IN VIEW OF THIS ADDITION OF RS.1 9 0 000/- MADE BY THE AO UNDER SECTION 68 OF THE I.T. ACT IS HEREBY DELETED. 8. GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UN DER: (2) LR. ITO HAS ERRED IN LAW AND ON FACTS TO TREAT TRADE ADVANCES OF RS.95 990/- AS DEEMED INCOME OF THE APPELLANT U/S.6 8 OF I.T. ACT 1961 LR. CIT(APPLS.) HAS ALSO ERRED IN CONFIRMING THIS ADDIT ION. 9. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THIS GROUND OF APPEAL ARE THAT IN THE ASSESSMENT ORDER THE AO MADE THE ADDITION OF RS.95 990/- UNDER SECTION 68 OF THE I.T. ACT FOR THE DETAILED REASONS GIVEN IN PARA 8 WHICH READS AS UNDER: 4 ITA NO. 193-AHD-2011 ON VERIFICATION OF CASH BOOK IT IS OBSERVED THAT T HE ASSESSEE HAS RECEIVED CASH AND DETAILS OF THE SAME IS AS UNDER :- NAME OF THE DEPOSITORS ___DATE OF DEPOSIT AMOUNT. MAA ANADI COLLECTION SURAT 02.12.2005 RS.19 330/- RAJ RATAN JEWELLERS SURAT 10.12.2005 RS.19 000/- LAXMI FASHION POINT BILLIMORA 06.12.2005 RS.19 330/- ALANKAR DRESSES NAGPUR 07.12.2005 RS.19 230/- MONA CUT-PIECE SURAT 08.12.2005 RS.19 100/- RS.95 990/- THE ABOVE AMOUNTS ARE RETURNED BEFORE THE END OF TH E FINANCIAL YEAR. THEREFORE VIDE ORDER-SHEET DATED 5.8.2008 IT WAS ASKED TO FU RNISH CONFIRMATIONS AND LEDGER ACCOUNTS FROM THE ABOVE PARTIES. IN COMPLIANCE THE ASSESSEE HAS SUBMITTED LEDGER ACCOUNTS OF THESE PARTIES WHEREIN DETAILS OF CASH R ECEIVING AND REPAYMENT ARE WRITTEN ONLY. THE ASSESSEE HAS FAILED TO FURNISH CO NFIRMATIONS IN RESPECT OF LOANS FROM THE ABOVE PARTIES. IN THE ABSENCE OF CONFIRMAT IONS IDENTITY AND GENUINENESS AND CREDITWORTHINESS IS NOT PROVED. THEREFORE RS.9 5 990/- IS TREATED AS UNEXPLAINED U/S. 68 OF THE I.T. ACT AND ADDED TO TH E TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I.T. ACT ARE INITIATED. 10. ON APPEAL BEFORE THE LD. CIT(A) IT WAS EXPLAIN ED BY THE LD. A.R. THAT THIS AMOUNT IS BOOKING DEPOSIT FROM CERTAIN CUSTOMERS TO SUPPLY OF GOODS URGENTLY TO THEM. FURTHER IT WAS CONTENDED THAT THE AO HAS NOT FOUND AND PROVED BY BRINGING ANY EVIDENCE ON RECORD THAT RS.95 990/- IS THE BUSINESS INCOME OF THE ASSE SSEE. DETAILS OF THE SAME IS GIVEN BY THE LD. CIT(A) IN PARA 4 OF THE IMPUGNED ORDER. BEF ORE THE LD. CIT(A) IT WAS CONTENDED THAT IN THE ALTERNATE THE AMOUNT OF BOOKING DEPOS IT HAS BEEN ADDED AS A DEEMED BUSINESS INCOME TO INCREASE THE PROFIT OF THE BUSINESS AND T HEREFORE THE AO BE DIRECTED TO ALLOW DEDUCTION UNDER SECTION 80IB OF THE I.T. ACT 1961. 10.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS I N THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ADDITION FOR THE DETAILED REASONS GIV EN IN PARA 7.2 WHICH READS AS UNDER: 5 ITA NO. 193-AHD-2011 7.2 DECISION : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A ND THE SUBMISSIONS MADE BY THE LD. AR. I HAVE ALSO PERUSED THE LEDGER A/C. COPY SUBMITTED BY THE AR. THE APPELLANT IS A MANUFACTURE R OF PLASTIC BAGS. THE DEMAND IS NOT AS MUCH AS THE SUPPLY AS EVIDENT FROM THE SA LES RECORDS OF THE APPELLANT. FURTHER FROM THE LEDGER A/CS OF VARIOUS PARTIES IT IS CLEAR THAT THE APPELLANT RECEIVES SALES PROCEEDS AFTER 2-3 MONTHS OF DELIVER Y OF GOODS. THE SO CALLED ADVANCES RECEIVED FROM THE CUSTOMERS TO DELIVER THE GOODS URGENT BASIS BUT THE APPELLANT FAILED TO DO SO AFTER 4-5 MONTHS AND IN S OME CASES 7-8 MONTHS OF ADVANCE RECEIPTS. THIS REASONING DEFIES ALL LOGIC A ND BUSINESS PRUDENCE. PLASTIC BAGS ARE COMMONLY AVAILABLE GOODS AND THE SUPPLY IS MORE THAN THE DEMAND. THE CUSTOMERS WAITING FOR 5-6 MONTHS FOR SUPPLY OF GOOD S DO NOT STAND ON MERIT. THE APPELLANT HAS BEEN VERY MUCH INTO THE CIRCULATION O F OWN UNACCOUNTED FOND BY RESORTING TO SUCH GIMMICK. THUS I CONFIRM THE ACTI ON OF THE AO IN THIS GROUND. FURTHER THE SAID ADDITION IS NOT ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80-IB OF THE ACT BECAUSE THE INCOME HAS NO FIRST DEGREE NEX US WITH THE INDUSTRIAL UNDERTAKING. THEREFORE THIS GROUND OF APPEAL IS DI SMISSED. 11. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 12. AT THE TIME OF HEARING ON BEHALF OF THE ASSESS EE SHRI RAJESH UPADHYAY APPEARED AND CONTENDED THAT THIS WAS A BOOKING ADVANCE AND S UBSEQUENTLY THIS WAS ADJUSTED IN PARTIES ACCOUNTS. TO A QUERY FROM THE BENCH WHETHE R ANY GOODS WERE SUPPLIED TO ANY OF THE PARTIES THE LD. COUNSEL OF THE ASSESSEE COULD NOT EXPLAIN THE SAME. HOWEVER ALTERNATIVELY THE LD. COUNSEL OF THE ASSESSEE CONT ENDED THAT BOOKING DEPOSIT ADDED IS DEEMED BUSINESS INCOME. IT WILL INCREASE THE PROFIT OF THE BUSINESS AS HELD BY THE ITAT AHMEDABAD IN THE CASE OF STAMCOR DAMAN-VS- ITO DA MAN THAT WHATEVER ADDITIONS MADE ARE IN ALL EITHER UNDER SECTION 68 OF THE I.T. ACT OR DISALLOWING BUSINESS EXPENSES RESULTING IN INCREASED BUSINESS INCOME WHICH IS EXI GIBLE TO DEDUCTION UNDER SECTION 80IB(10) OF THE I.T. ACT 1961. 13. ON THE OTHER HAND SHRI VINOD TANWANI APPEARIN G ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). H E POINTED OUT THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE AC T BECAUSE THIS INCOME HAS NO FIRST DEGREE NEXUS WITH THE INDUSTRIAL UNDERTAKING. 6 ITA NO. 193-AHD-2011 14. HAVING HEARD BOTH THE SIDES I HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN HOW THE BOOKING ADVANCE WAS APPROPRIATED BY SUPPLYI NG THE GOODS TO THE CUSTOMERS. NO CONFIRMATION FROM THE CUSTOMERS WAS FURNISHED. IN T HESE CIRCUMSTANCES THE AO IS LEGALLY AND FACTUALLY CORRECT IN TREATING THE CREDIT OF RS. 95 990/- AS UNEXPLAINED INCOME UNDER SECTION 68 OF THE I.T. ACT 1961. WITH REGARD TO AL TERNATE PLEA OF THE ASSESSEE THAT THE AO BE DIRECTED TO ALLOW THE DEDUCTION UNDER SECTION 80 IB OF THE I.T. ACT ADMITTEDLY THIS INCOME IS NOT DERIVED FROM INDUSTRIAL UNDERTAKING. FROM THE PERUSAL OF THE ASSESSMENT ORDER ALSO IT IS EVIDENT THAT THE AO ASSESSED THIS INCOME UNDER SECTION 68 I.E. UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE THE VI EW TAKEN BY THE LD. CIT(A) THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80-IB ON ADDITION OF RS.95 990/- AS UNEXPLAINED INCOME IS UPHELD. THUS THIS GROUND OF THE APPEAL OF THE ASSESSEE IS REJECTED. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 0 ( ./# 1! 2 30 / 09 /2011 / 7 ( 8+ 9 ORDER PRONOUNCED IN THE COURT ON 30.09.2011. SD/- (T.K. SHARMA) JUDICIAL MEMBER DATED : 30/09/2011 ( (( ( & : & : & : & : ;:# ;:# ;:# ;:# / COPY OF ORDER FORWARDED TO:- 1. $% / APPELLANT 2. &'$% / RESPONDENT 3. *= / CONCERNED CIT 4. *=- / CIT (A) 5. :'A 8 & ! / DR ITAT AHMEDABAD 6. 8 C D 0 / GUARD FILE. BY ORDER/ E / F 9 TALUKDAR/SR.P.S. 7 ITA NO. 193-AHD-2011