National Security And Personal Services Vapi v. The Income Tax Officer Ward 2 Vapi

In The Income Tax Appellate Tribunal Ahmedabad Bench Smc Before Shri N S Saini Accountant Member Ita No 2873 Ahd 2009 Assessment Year 2005 06 National Security And Personal Services Plot No 728 1 St Floor 40 Shed Area Gidc Vapi V S The Income Tax Officer Ward 2 Vapi Appellant Respondent Appellant By Shri Rajesh M Upadhyay Ar Respondent By Shri Mahesh Kumar Sr Dr O R D E R This Appeal Has Been Filed By The Assessee Agains T The Order Of The Learned Commissioner Of Income Tax Ap Peals Dated 29 05 2009 For Assessment Year 2005 06 2 Ground No 1 Raised By The Assessee In This Appea L Reads As Under 1 Ld Ao Has Erred In Law And On Facts To Add An Amount Of Rs 2 42 509 Applying Provisions U S 68 Of I T Ac T 1961 Which Are Opening Balances Of Ay 2005 06 Ld Cit A Has Also Erred In Confirming Addition 3 The Facts Of The Case Are That The Learned Asses Sing Officer Observed That The Assessee Has Shown Unsecu Red Loans Worth Rs 2 42 509 Out Of Which Rs 1 40 000 Has Been Shown As Sundry Loans And Sundry Loans Were Not Shown In The Groupi Ngs In The Audited Statements The Details Of Loan Of Rs 1 40 000 Are As Under 1 Gorekhnath Pandey Rs 19 000 2 Ishnarayyan Choubey Rs 18 500 3 Munna Tiwari Rs 18 500 4 Ram Akbal Dubey Rs 18 500 5 Ram Sevak Tiwari Rs 18 500 2 6 Ram Surat Pandey Rs 18 500 7 Umashankar Mauriya Rs 19 500 8 Vidyavachaspati Dubey Rs 10 000 Rs 1 40 000 The Learned Assessing Officer Further Observed That The Assessee Did Not Furnish Any Confirmation And Even In Respect Of Unsecured Loans From Azad Security Services And Noble Security Serv Ices Rs 50 000 And Rs 52 509 Respectively The Asses See Did Not Furnish Any Confirmation He Further Observed That Since The Assessee Did Not Offer Any Explanation About The Nature And Source Of The Credits He Failed To Comply With The Conditions U S 68 Of The Act Relying Upon The Following Decisions The Learned A Ssessing Officer Has Made An Addition U S 68 Of The Act I Cit Vs Durga Prasad More 1971 82 Itr 540 Sc Ii Sumati Dayal Vs Cit 1995 214 Itre 801 80 Taxman 89 Sc Iii Cit Vs Precision Finance P Ltd 1994 208 Itr 4 65 4 On Appeal Before The Learned Commissioner Of Inc Ome Tax Appeals The Learned Authorised Representativ E Of The Assessee Contended That The Credits Were Obtained I N The Earlier Years And Therefore In The Case Of Old Credits Th E Provisions Of Section 68 Are Not Applicable He Requested To Give Time To Prove The Genuineness Of The Credits Under Dispute 5 The Learned Commissioner Of Income Tax Appeals After Considering The Submissions Held As Under 4 3 Considering The Rival Contentions I Found Ao To Be Justified In Making An Addition U S 68 Of The Act For The Couple Of Reasons That Irrespective Of The Conditions Stipulated U S 68 Of The Act The Appellant Has Mala Fide Intention To Hide The Facts Of The Credit S Under Dispute As Even In The Audited Books Of Accounts The Credits Under Di Spute Are Not Shown As 3 Loans Since All The Conditions Stipulated U S 68 Seems To Be Not Complied With I Found Ao To Be Justified In Making The Addi Tion U S 68 Of The Act Therefore The Addition Is Upheld 6 The Learned Authorised Representative Of The Ass Essee Reiterated The Submission Made Before The Learned C Ommissioner Of Income Tax Appeals 7 The Learned Departmental Representative Supporte D The Order Of The Lower Authorities 8 I Have Heard The Rival Submissions And Perused T He Orders Of The Lower Authorities And The Materials Availabl E On Record In The Instant Case The Learned Assessing Officer Observed That Rs 2 42 509 Was Appearing On The Credit Side Of T He Balance Sheet Of The Assessee And Therefore The Learned Assessing Officer By Applying Provisions Of Section 68 R W S 41 1 Bein G Not Satisfied With The Explanation Of The Assessee Added The Same To The Income Of The Assessee On Appeal The Learned Commissioner O F Income Tax Appeals Confirmed The Addition On The Ground T Hat The Learned Assessing Officer Was Justified In Invoking Provisi Ons Of Section 68 Of The Act I Find That The Consistent Plea Of The Assessee Before The Lower Authorities Was That As The Credits In Questi On Are Brought Forward Balances Of Earlier Years The Same Cannot Be Added To The Income Of The Assessee By Invoking Provisions Of Se Ction 68 Of The Act I Find That The Lower Authorities Have Not De Alt With This Contention Of The Assessee The Learned Authorised Representative Of The Assessee Reiterated The Above Contention Bef Ore Me And Submitted A Statement In Respect Of The Creditors I N Question At Page No 3 Of The Paper Book Which Shows That No Fresh Lo An Was Accepted From Them During The Previous Year Relevant To The Assessment Year Under Consideration The Learned Departmental Repr Esentative Did Not Dispute The Above Claim Of The Assessee Thus I Find That The Amounts In Appeal Were Brought Forward Balances For The Year Under 4 Consideration And Are Not Fresh Credits Of The Year Under Consideration On The Above Facts In My Considere D View Provisions Of Section 68 Are Not Attracted In The I Nstant Case And Addition Of The Amount Cannot Be Legally Made In Th E Assessment Of The Assessment Year Of The Appeal My Above View F Inds Support From The Decision Of The Honble Delhi High Court I N The Case Of Commissioner Of Income Tax Vs Usha Stud Agricultur Al Farms Ltd 2008 5 Dtr Del 335 2008 301 Itr 384 2009 183 Taxman 277 Wherein It Was Held As Under The Cit A Has Deleted The Addition Of Rs 15 Lacs Mainly On The Ground That This Credit Balance Of Rs 15 Lacs Is Being Reflected In The Accounts Of The Assessee Over The Past Four To Five Years Or So And Hence This Was Not A Fresh Cre Dit Entry Of The Previous Year Under Consideration And These Cre Dit Entries Were Already Made And Accounted For In The Asst Yr S 1995 96 And 1997 98 Which Were Introduced In The Form Of Ad Vance Against Breeding Stallions Owned By The Assessee An D Thus These Credit Entries Did Not Relate To The Year Under Con Sideration For Being Considered Under S 68 Since It Is A Finding Of Fact Recorded By The Cit A That This Credit Balance App Earing In The Accounts Of The Assessee Does Not Pertain To Th E Year Under Consideration Under These Circumstances The Ao Wa S Not Justified In Making The Impugned Addition Under S 68 And As Such No Fault Can Be Found With The Order Of The Tr Ibunal Which Has Endorsed The Decision Of The Cit A The Above Being The Position No Fault Can Be Found With The View Taken By The Tribunal Thus The Order Of The Tribunal Do Es Not Give Rise To A Question Of Law Much Less A Substantial Question Of Law To Fall Within The Limited Purview Of S 260 A Which Is Confined To Entertaining Only Such Appeals Against The Order Which Involve A Substantial Question Of Law 9 In View Of The Above I Delete The Addition Of Rs 2 42 509 Thus The Ground Of Appeal Of The A Ssessee Is Allowed 10 Ground No 2 In This Appeal Reads As Under 2 Ld Ao Has Erred In Law And On Facts To Disallow Advertisement Expenses Which Is Not Found By Ao For Non Business Purpose Or Personal One Ld Cit A Has Confirmed Disallowance Without Any Reason 5 11 The Facts Of The Case Are That The Ao Observed That The Assessee Could Not Prove The Expenses For Advertise Ment Published And He Therefore Disallowed The Same 12 Before The Learned Commissioner Of Income Tax Appeals The Assessee Contended That Simply For O Ne Of The Proof Of Advertisement The Expenses May Not Be Disallowed The Learned Commissioner Of Income Tax Appeals Held As Under 5 3 Considering The Rival Contentions I Found Ao T O Be Justified In Making Disallowance As The Assessee Failed To Prod Uce An Evidence In Respect Of The Expenses Claimed Therefore The Add Ition Is Upheld 13 The Learned Authorised Representative Of The As Sessee Reiterated The Submission Made Before The Learned C Ommissioner Of Income Tax Appeals 14 The Learned Departmental Representative Support Ed The Order Of The Lower Authorities 15 I Have Heard The Rival Submissions And Perused The Orders Of The Lower Authorities And The Materials Availabl E On Record In The Instant Case The Advertisement Expenses Of Rs 11 5 00 Was Disallowed By The Learned Assessing Officer As The Assessee Could Not File Proof Of Publishing Such Advertisement In Any Form Which Was Confirmed In Appeal By Learned Commissioner Of Income Tax Appeals Even Before Me No Such Proof Of Adv Ertisement Made By The Assessee Has Been Filed Hence I Do Not Fi Nd Any Good Reason To Interfere With The Order Of The Lower Authoritie S Which Is Confirmed And The Ground Of Appeal Of The Assessee Is Dismissed 16 Ground No 3 And 4 In This Appeal Reads As Under 3 Ld Ao Added An Amount Of Rs 2 811 As Esic No T Paid Within Statutory Limit But Paid U S 43 B Is Wrongly Disallo Wed Ld Cit A Has Not Commented On This Issue 6 4 Ld Ao On Ad Hoc Basis Disallowed 15 Of Expens Es Of Rs 5 07 153 On Presumptive Ground Of Personal Ele Ment Ld Learned Commissioner Of Income Tax Appeals Has Also Err 5 Ed In Confirming 10 As Against 15 Without Any Reason For Such A Fi Nding 17 At The Time Of Hearing The Learned Authorised Representative Of The Assessee Submitted That He Is Not Pressing The Above Grounds Of Appeal Therefore The Above Groun Ds Of Appeal Are Dismissed As Not Pressed 18 In The Result The Appeal Of The Assessee Is Pa Rtly Allowed Order Pronounced In The Open Court Today On 29 01 2010 Sd N S Saini Accountant Member Date 29 01 2010 Copy Of The Order Forwarded To 1 National Security And Personal Services Plot No 728 1 St Floor 40 Shed Area Gidc Vapi 2 The Ito Ward 2 Vapi 3 Cit Concerned 4 Cit A Valsad 5 The Dr Itat Ahmedabad 6 Guard File By Order Deputy Registrar Assistant Registrar Itat Ahmedaba