Hajee Texturising Pvt.Ltd.,, Surat v. The Income tax Officer,Ward-1(2),, Surat

ITA 2956/AHD/2008 | 2005-2006
Pronouncement Date: 02-07-2010 | Result: Allowed

Appeal Details

RSA Number 295620514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 2956/AHD/2008
Duration Of Justice 1 year(s) 10 month(s) 15 day(s)
Appellant Hajee Texturising Pvt.Ltd.,, Surat
Respondent The Income tax Officer,Ward-1(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 02-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 02-07-2010
Date Of Final Hearing 18-06-2010
Next Hearing Date 18-06-2010
Assessment Year 2005-2006
Appeal Filed On 18-08-2008
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM HAJEE TEXTURISING (P) LTD. 401 GOOD LUCK TEXTILE MARKET RING ROAD SURAT. VS. INCOME-TAX OFFICER WARD 1(2) SURAT. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI MANISH MALPANI AR REVENUE BY:- SHRI T. K. TIWARI DR O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING F OLLOWING GROUNDS :- (1) THAT THE HON. CIT(A) HAS ERRED IN SUSTAINING ADDITI ON OF RS.7 01 000/- U/S 68 OF THE I.T. ACT 1961 IN RESPE CT OF UNSECURED LOANS RECEIVED BY THE APPELLANT. (2) THAT THE HON. CIT(A) HAS ERRED IN SUSTAINING THE DI SALLOWANCE OF INTEREST PAID ON UNSECURED LOANS OF RS.42888/-. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ADDITI ON IN RESPECT OF UNSECURED LOAN MADE U/S 68 OF AND DISALLOWANCE OF I NTEREST PAID BY THE ASSESSEE THEREON. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LTD. COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTU RING TEXTURISING YARN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE AO NOTICED CREDITS ITA NO.2956/AHD/2008 ASST. YEAR :2005-06 2 IN THE BOOKS OF ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATION FROM EACH PARTY ALONG WITH THEIR NAMES COMPLETE AD DRESSES PAN COPY OF THEIR LEDGER ACCOUNT AS APPEARING IN THE BOOKS O F THE ASSESSEE AND BANK STATEMENT OF THE DEPOSITORS. HE REQUIRED THE ASSESS EE TO PRODUCE ALL THE CREDITORS BEFORE HIM FOR VERIFICATION. HE HAD ALSO ISSUED NOTICE U/S 133(6) TO THESE PERSONS FOR APPEARING BEFORE HIM BUT THEY DID NOT RESPOND. 4. IN RESPECT OF SANGITADEVI PERIWAL THE AO NOTICED THAT SHE WAS DOING ONLY EMBROIDERY WORK. SHE HAD OPENING BALANCE OF RS.1 82 666/- WHICH WAS NOT EXPLAINED THE COPY OF ACCOUNT FILED IN RESPECT OF THIS CREDITOR WAS FABRICATED SHOWING BOGUS CAPITAL. CASH OF RS.1 50 000/- WAS DEPOSITED FOR GIVING LOAN TO THE ASSESSEE AND ON TH AT DATE SHE HAD BALANCE OF ONLY RS.1 000/-. 5. IN RESPECT OF RAM PIYARI S. PERIWAL THE AO NOTICED THAT SHE IS SHOWING INCOME BELOW TAXABLE LIMIT. OPENING CAPITAL WAS ONLY RS.31 500/- THERE WAS A TRANSFER OF CAPITAL INTO H ER ACCOUNT FROM LATE SHRI SOHANLAL PERIWAL. INTEREST INCOME DECLARED IS RS.27 173/-. SUMMONS ISSUED UNDER SECTION 131 WERE NOT COMPLIED AND WHEN THESE FACTS WERE BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE NO EXPLAN ATION WAS OFFERED. THE DOCUMENTS PREPARED TO ESTABLISH HER CAPITAL WER E APPARENTLY BOGUS. 6. IN RESPECT OF MANKA DEVI SHARMA THE AO NOTICED THAT SHE HAD A MEAGER CREDIT OF RS.1 853/- AS ON 16.9.2004. A SUM OF RS.99 900/- WAS DEPOSITED IN CASH ON 16.9.2004 AND THEREAFTER RS.1 00 000/- WAS TRANSFERRED TO THE ASSESSEE COMPANY ON THE SAME DAT E. THE CREDITOR WAS NOT PRODUCED BEFORE HIM. 3 7. IN RESPECT OF SHRI MAHAVIR PRASAD SHARMA THE AO NOTICED THAT IN HIS BANK ACCOUNT THERE WAS A BALANCE OF RS.1 194/- AND A CASH OF RS.1 75 000/- WAS DEPOSITED AND ON THE SAME DAY A L OAN OF RS.1 75 000/- WAS GIVEN TO THE ASSESSEE. HE DID NOT COMPLY WITH T HE SUMMONS OR NOTICE ISSUED U/S 133(6). WHEN FACTS WERE BROUGHT TO THE K NOWLEDGE OF THE ASSESSEE NO EXPLANATION WAS FURNISHED. 8. IN RESPECT OF SHRI RAM AVTAR SHARMA THE AO NOTIC ED THAT IN HIS BANK ACCOUNT THERE WAS A CREDIT BALANCE OF RS.1 045 /- ONLY AND CASH OF RS. 1 LAC WAS DEPOSITED ON 14.9.2004 AND THEREAFTER ON 16.9.2004 HE HAD GIVEN A LOAN OF RS. 1 LAC TO THE ASSESSEE. HIS SALA RY INCOME WAS ONLY RS.6 500/- PER MONTH AND HE HAD FAMILY OF 5 TO TAKE CARE OF. HE HAD BORROWED RS.96 000/- FROM HIS BROTHER AND WAS RETUR NING IN INSTALMENT. HE ALSO DID NOT APPEAR BEFORE THE AO. 9. IN RESPECT OF SHRI SUNILKUMAR CHANDAK-HUF IT WAS NOTICED BY THE AO THAT HE DID NOT FILE ANY CONFIRMATION AND HE ALSO DID NOT RESPOND TO THE NOTICE ISSUED BY HIM. 10. AFTER POINTING OUT LACK OF CREDITWORTHINESS AND LACK OF GENUINENESS OF THE LOAN TRANSACTIONS THE AO PROPOSED ADDITION OF RS.7 01 000/-AND DISALLOWED PAYMENT OF INTEREST OF RS.42 888/-. 11. LD. CIT(A) CONFIRMED THE ADDITION. 12. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTE D THAT HE HAS DISCHARGED THE PRIMARY ONUS OF GIVING BASIC EVIDENC E IN THE FORM OF IDENTITY OF THE CREDITORS AND THEIR CREDITWORTHINES S. THE AO HAS NOT 4 BROUGHT OUT ANY MATERIAL TO SHOW THAT LOAN TRANSACT IONS ARE BOGUS. HE RELIED ON VARIOUS JUDGEMENTS AS UNDER :- (1) UMACHARAN SHAW & BROS. VS. CIT (1959) 37 ITR 271(SC ) (2) ROHINI BUILDERS VS. DCIT (2002) 76 TTJ (AHD) 521 (3) DCIT VS. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ) (4) ARAVALI TRADING CO. VS. ITO (2008) 8 DTR (RAJ) 199 (5) MURLIDHAR LOHRIMAL VS. CIT (2006) 280 ITR 512 (GUJ) (6) CIT VS. MICRO MELT (P) LTD. (2009) 177 TAXMAN 35 (G UJ) (7) CIT VS. DIAMOND PRODUCTS LTD. (2009) 21 DTR (DEL) 9 (8) CIT VS. ORISSA CORPORATION (1986) 52 CTR (SC) 138 13. ON THE OTHER HAND LD. DR SUBMITTED THAT AO HAS EXAMINED ALL THE ASPECTS OF THE CASE AND FOUND THAT CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN ESTABL ISHED. IT IS NOT A CASE THAT AO HAS SIMPLY REJECTED THE EXPLANATION FURNISH ED BY THE ASSESSEE. FURTHER ALL THE INFERENCES AND FINDING HAVE BEEN B ROUGHT INTO THE KNOWLEDGE OF THE ASSESSEE AND NO EXPLANATION WAS FU RNISHED BY HIM THEREAFTER. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE PRIMARILY ING REDIENTS LIKE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS ARE NOT ESTABLISHED AND APPARENTLY THESE LENDERS ARE PE RSONS OF NO WORTH TO GIVE CREDIT TO THE ASSESSEE. BUT IN ANY CASE IT CAN NOT BE FINALLY ESTABLISHED AT THIS STAGE UNLESS CREDITORS ARE EXA MINED BY THE AO. FOR THE PURPOSE OF PRODUCING THE CREDITORS BY THE ASSESSEE WE RESTORE THE MATTER TO THE FILE OF AO WHO WILL GIVE REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE FOR PRODUCING THE CREDITORS. HE WILL SATIS FY HIMSELF ABOUT THE CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE LOAN TRANSACTIONS. 5 THUS WE RESTORE THE MATTER TO THE FILE OF AO. THE Q UESTION OF INTEREST IS CONSEQUENTIAL AND WILL BE DECIDED THEREAFTER. 15. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 02/07/2010 SD/- SD/- (MAHAVIR SINGH) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 02/07/2010 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