The DCITSabarkantha Circle,, Dist.Sabarkantha v. Shri Mehulkumar M.Kothari,, Dist.Sabarkantha

ITA 3122/AHD/2008 | 2001-2002
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 312220514 RSA 2008
Assessee PAN ABDPK9474G
Bench Ahmedabad
Appeal Number ITA 3122/AHD/2008
Duration Of Justice 2 year(s) 10 month(s) 20 day(s)
Appellant The DCITSabarkantha Circle,, Dist.Sabarkantha
Respondent Shri Mehulkumar M.Kothari,, Dist.Sabarkantha
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 22-07-2011
Date Of Final Hearing 14-06-2011
Next Hearing Date 14-06-2011
Assessment Year 2001-2002
Appeal Filed On 02-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D.AGRAWAL V.P. & HONB LE SHRI T.K. SHARMA J.M.) I.T.A. NO. 3122/AHD./2008 ASSESSMENT YEAR : 2001-2002 D.C.I.T. SABARKANTA CIRCLE -VS- SHRI MEHULKUMAR M. KOTHARI HIMATNAGAR (PAN : ABDPK 9474G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMIR TEKRIWAL SR.D.R. RESPONDENT BY : SHRI S.N.DIVATIA A.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 27-06-2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-X AHME DABAD FOR THE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF DEALERSHIP IN BAJAJ AUTO. FOR THE A SSESSMENT YEAR UNDER APPEAL HE FILED THE RETURN OF INCOME ON 30.10.2001 DECLARING NET L OSS OF RS.2 83 630/-. THIS RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT 1961. THEREAFTER A NOTICE UNDER SECTION 148 OF THE I.T. ACT WAS ISSUED ON 15.07.200 4. THE ASSESSMENT WAS FRAMED ON 10.02.2005 UNDER SECTION 143(3) READ WITH SECTION 147 AT A TOTAL INCOME OF RS.30 38 750/-. IN THIS ASSESSMENT ORDER THE AO TR EATED THE CASH CREDIT OF RS.27 95 610/- AS NON-GENUINE AS DISCUSSED IN PARA 3.2 OF THE ASSESSMENT ORDER IN THE CASH BOOK AND ALSO MADE THE FOLLOWING ADDITIONS: 1. UNEXPLAINED CASH CREDIT IN CASH BOOK AS DIS CUSSED IN PARA 4 RS.1 43 000/- 2. UNEXPLAINED INCOME INTRODUCED IN CAPITAL AS DISCUSSED IN PARA 5 RS.3 33 725/- 3. UNEXPLAINED INVESTMENT U/S.69 OF THE I.T.AC T DISCUSSED IN PARA 6 RS. 51 037/- 2.1 ON APPEAL THE LD. CIT(A) VIDE ORDER DATED 08. 07.2005 CONFIRMED ALL THE AFORESAID ADDITIONS. ON FURTHER APPEAL BEFORE THE S ECOND APPELLATE AUTHORITY THE ITAT I.T.A. NO. 3122/AHD./2008 2 D BENCH VIDE ORDER DATED 08.02.2008 IN ITA NO.18 68/A/2005 SET ASIDE THE ORDER OF THE LD. CIT(A) FOR FRESH ADJUDICATION IN ACCORDANC E WITH LAW BY PASSING A SPEAKING ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF HE ARING. WHILE DIRECTING SO THE TRIBUNAL HAS ALSO OBSERVED THAT THE LD. CIT(A) IS A T FULL LIBERTY TO CONSIDER ALL THE MATERIALS ADDUCED BY BOTH THE SIDES. 2.2 IN PURSUANCE OF THE ABOVE DIRECTION OF THE ITAT THE LD. CIT(A)-X PASSED A FRESH ORDER VIDE ORDER DATED 27.06.2008 WHEREIN TH E LD. CIT(A) DELETED THE ADDITION OF RS.27 95 610/- MADE BY THE AO ON ACCOUNT OF UNEX PLAINED CASH CREDIT INTRODUCED AS BOOKING ADVANCE FOR THE DETAILED REASONS GIVEN I N PARA 5.5 OF THE IMPUGNED ORDER WHICH READS AS UNDER: 5.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. CAREFULLY. THE APPELLANT HAS EXPLAINED THE MODUS OPERANDI BY SAYING THAT AS AND WHEN A CUSTOMER APPROACHED HIM FOR PURCHASE OF A TWO WHEELER OR THR EE WHEELER VEHICLE HE GAVE ADVANCE WHICH WAS CREDITED AS BOOKING ADVANCE IN HIS BOOKS. THEREAFTER WHEN THE CUSTOMER APPROACHED A HIRE PURCHASE FINANC E COMPANY/CONCERN FOR TAKING LOAN FOR VEHICLE THE DEMAND DRAFT OR CHEQUE ISSUED BY THE FINANCIER WAS DEPOSITED BY HIM IN BANK ACCOUNT WITH MEHSANA U RBAN CO.OPERATIVE BANK LTD AND THE BOOKING ADVANCE WHICH HAD BEEN PAID EAR LIER BY THE CUSTOMER WAS REFUNDED TO HIM IN CASH AFTER WITHDRAWING FROM THE BANK ACCOUNT .AS THE CUSTOMERS FROM VILLAGES DID NOT HAVE BANK ACCOUNTS BECAUSE THEY WERE ILLITERATE AND THEY WERE RESIDING IN REMOTE PLACES THE BOOKING ADVANCE WAS WITHDRAWN IN CASH AND REFUNDED TO THE CUSTOMERS . W HEN THE VEHICLES WERE SOLD THE SALES INVOICES WERE PREPARED. IN ADDITION TO THAT THE APPELLANT HAS ALSO ANNOUNCED SALES PROMOTION SCHEME WHEREIN CUSTO MERS USED TO PAY BOOKING ADVANCE IN MONTHLY INSTALLMENTS AND A LUCKY DRAW WAS DRAWN EVERY MONTH WHEREBY THE WINNER USED TO GET THE VEHICLE WI THOUT PAYING THE BALANCE AMOUNT OR HE COULD TRANSFER THE BOOKING ADVANCE TO A THIRD PARTY IF HE DID NOT WANT TO PURCHASE AFTER THE DRAW. IT WAS SUBMITTED T HAT THE A.O. HAS MADE THE ADDITION OF RS.27 95 610/- AS PER PAGE-2 & 3 OF THE ASSESSMENT ORDER THE AMOUNTS ADDED IN RESPECT OF EACH PARTY REPRESENT TH E SALE PRICE OF THE MOTOR CYCLE OR THE THREE WHEELER IN MOST OF THE CASES WHI CH CAN NOT BE A CASH CREDIT AND THAT THE SAME REPRESENTED SALE OF VEHICLES MADE TO THEM. THE APPELLANT HAS RETURNED THE BOOKING ADVANCE TO 14 PARTIES WHO COUL D NOT BE SUPPLIED THREE WHEELERS AND PARTICULAR COLOUR OF TWO WHEELERS AND THEIR COPIES OF ACCOUNTS HAVE BEEN FILED . IN THEIR CASES BOOKING ADVANCE WA S RECEIVED PARTLY BY CHEQUE AND PARTLY BY CASH .FOR EXAMPLE IN CASE OF KALPESH PURSHOTAMDAS MEGHA BOOKING ADVANCE OF RS.58 000/- BY CHEQUE AND RS.3 4 95/- BY CASH WERE RECEIVED FOR THREE WHEELER AND THE SAME WAS REFUNDE D ON 15-9-2000 AS THE VEHICLE COULD NOT BE SUPPLIED TO HIM . IN CASE OF H EENABEN CHIMANBHAI PATIL I.T.A. NO. 3122/AHD./2008 3 THE BOOKING ADVANCE OF RS.35 775/- WAS RECEIVED BY CHEQUE AND THE SAME WAS REFUNDED BY CHEQUE ON 18.12.2000 AS THE BOOKING WAS CANCELLED . SIMILAR DETAILS HAVE BEEN FILED IN CASE OF 14 SUCH PARTIES . IN CASE OF 19 CASES IT HAS BEEN SUBMITTED THAT THEY HAD BOOKED VEHICLES BY JOI NING SALES PROMOTION SCHEME AND BY PAYING MONTHLY SUBSCRIPTION OF RS.850 /-. THE SALES PROMOTION REGISTER WAS PRODUCED BY THE A.O. AND THE SAME WAS VERIFIED. IT WAS SUBMITTED THAT MOST OF THE CUSTOMERS HAVE PURCHASED THE VEHIC LES. THE APPELLANT HAS GIVEN A CHART AT PAGE-13 & 14 OF THE PAPER BOOK FOR THE 70 PERSONS. THE APPELLANT HAS ALSO GIVEN THE ACCOUNT COPIES OF THE VARIOUS PARTIES. THE APPELLANT HAS EXPLAINED THE MODUS OPERANDI THAT CAS H REPAYMENTS HAVE BEEN MADE WHENEVER BOOKING HAS BEEN CANCELLED OR WHEN TH E CUSTOMER USED TO BOOK THROUGH A FINANCIER AND THE SALE PRICE OF THE VEHIC LE WAS RECEIVED FROM THE FINANCIER. FOR EXAMPLE IN CASE OF CHETAN PATEL VEH ICLE HAS BEEN SOLD TO HIM ON 8.11.2000 FOR RS.33 725/- BY BILL NO.1990. SIMILARL Y VEHICLE HAS BEEN SOLD TO GAFURBHAI YUSAFBHAI CHANDI ON 26.10.2000 FOR RS.33 725/-WHICH HAS BEEN HYPOTHECATED WITH JALARAM FINANCE LTD. SIMILARLY V EHICLE HAS BEEN SOLD TO HASMUKH PRAJAPATI ON 6.11.2000 FOR RS.34 425/- AS P ER PAGE-43 OF THE PAPER BOOK. SIMILARLY FOR ALL THE CUSTOMERS THE APPELLA NT HAS SUBMITTED COPIES OF SALE INVOICES AND THE NAME OF THE FINANCIER HAS ALS O BEEN GIVEN. IN RESPECT OF 14 PARTIES OUT OF 70 PARTIES LISTED BY THE A.O. B OOKING WAS CANCELLED AND THE MONEY HAS BEEN REFUNDED THE COPIES OF ACCOUNTS OF THESE 14 PARTIES HAVE BEEN FURNISHED. IT IS NOTICED THAT THE REPAYMENTS MADE T O THE CUSTOMERS THROUGH BEARER CHEQUES HAVE BEEN ADDED BY THE A.O. EVEN IF THE A.O.'S CONTENTION THAT THE REPAYMENTS HAVE BEEN MADE IN CASH TO THE CUSTOM ERS IS ACCEPTED THE SAME CAN NOT BE ADDED AS CASH CREDITS AS ONLY THE RECEIP TS OF CASH CREDITS CAN BE ADDED IF NOT EXPLAINED BY THE APPELLANT . THE CONTE NTION OF THE A.R. THAT THE PARTIES IN QUESTION HAD GIVEN GENUINE BOOKING ADVAN CES IS PROVED BY SALE OF VEHICLES TO THE CUSTOMERS AND PAYMENTS RECEIVED FRO M FINANCIERS IN CASE OF HIRE PURCHASE OF VEHICLE AND COPIES OF LETTERS FROM RTO CONFIRMING REGISTRATION OF VEHICLES IN THEIR NAMES . THUS THER E ARE NO CASH CREDITS BUT GENUINE BOOKING ADVANCES. THUS IT IS FOUND THAT TH E PARTIES ARE IDENTIFIABLE AND VEHICLES HAVE BEEN SOLD TO THEM AND BOOKING ADV ANCE HAS BEEN REFUNDED ONLY TO 14 PARTIES IN WHOSE CASES THE BOOKINGS WERE CANCELLED THUS SALE BILLS HAVE BEEN ISSUED TO THE PARTIES AND THE APPELLANT H AS FILED RTO CERTIFICATES IN RESPECT OF SALE OF VEHICLES AND WHEREVER THE VEHIC LES HAVE BEEN PURCHASED ON HIRE PURCHASE THE FINANCIER HAS ISSUED THE DRAFTS. THE A.O. HAS ADDED THE SALE PRICE OF THE VEHICLES AS UNEXPLAINED CASH CREDITS W HILE IN FACT THE CORRESPONDING SALES HAVE BEEN ACCOUNTED BY THE APPE LLANT THEREFORE THE ADDITION MADE BY THE A.O. IS HELD TO BE RIOT JUSTIF IED AND THE SAME IS DELETED. 2.3 IN THE IMPUGNED ORDER THE LD. CIT(A) ALSO DELE TED THE ADDITION OF RS.1 43 000/- ON ACCOUNT OF DIFFERENCE IN DATES AS UNEXPLAINED CA SH CREDIT FOR THE DETAILED REASONS GIVEN IN PARA 6.2 WHICH IS REPRODUCED AS UNDER: I.T.A. NO. 3122/AHD./2008 4 6.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. CAREFULLY. THE A.O. OBSERVED THAT THE APPELLANT HAS INTRODUCED CASH OF RS.1 43 000/- ON 23.5.2000 UNDER THE HEAD RAJASHREE SALES PROMOTION SCHEME. THE A.O. HAS RELIED ON THE PAPER WHICH HAS BEEN MARKED AS EXHIBIT-B TO THE ASSESSMENT ORDER WHICH IS DATED 27.5.2000 .ON THAT PAPER IT HAS BEEN MENTIONE D THAT CASH OF RS.2 03 000/- WAS RECEIVED ON 27.5.2000 THROUGH 12 VOUCHERS OUT OF WHICH A SUM OF RS.1 43 000/- HAS BEEN INTRODUCED IN THE BOO KS ON 23.5.2000. THEREFORE THE A.O. CONCLUDED THAT THE SOURCE FOR INTRODUCTION OF CASH OF RS.1 43 000/- ON 23.5.2000 WAS NOT CORRECT AS CASH OF RS.1 43 000/- WAS NOT AVAILABLE WITH THE APPELLANT ON 23.05 2000 ACCORDING TO THE A.O. THE ACTUAL DATE ON WHICH ALL THE 12 ENTRIES HAVE BEEN MADE SHOWING CASH RECEIPTS OF RS.2 03 000/- IS 27.5.2000. THE APPELLANT HAS EXPLAINED THAT THE CAS H DEPOSIT OF RS.1 43 000/- AS MENTIONED IN THE CASH BOOK ON 23.5.2000 WAS THE COLLECTION MADE NOT ON A SINGLE DAY BUT THE SAME REPRESENTED CASH COLLECTION S 'MADE IN THE MONTH OF APRIL AND MAY AND THE SUMMARY OF SUCH COLLECTION HA S BEEN MENTIONED ON THE PAPER DATED 27.5.2000 WHICH CONTAINS THE DETAILS OF VOUCHERS WITH NOS.205 TO 216 AND THE NOTINGS ON THE IMPOUNDED PAPER SHOW ONL Y A SUMMARY SHEET OF THE CASH COLLECTIONS AS RECORDED IN VOUCHERS WITH SL.NO .205 TO 216. THE APPELLANT HAS ALSO FILED COPIES OF THE SAID VOUCHERS AT PAGES 186 TO 194 OF THE PAPER BOOK AS IT REPRESENTS CASH COLLECTION OVER A PERIO D OF TWO MONTHS I.E. APRIL AND MAY 2000 AS PER THE VOUCHER NOS. 205 TO 216 T HE ADDITION MADE BY THE A.O. IS HELD TO BE NOT JUSTIFIED AND THE SAME IS DE LETED. 2.4 OUT OF THE THIRD ADDITION OF RS.3 33 725/- MADE BY THE AO IN THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE ADDITION OF RS.50 000/- AND CONFIRMED THE ADDITION OF RS.1 39 747/- AND DIRECTED THE AO TO VERIFY THE SOU RCE OF DEPOSIT BY CHEQUE AMOUNT OF RS.1 43 978/- FOR THE DETAILED REASONS GIVEN IN PAR A 7.4 OF THE IMPUGNED ORDER WHICH READS AS UNDER: 7.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. C AREFULLY. THE A.R. HAS SUBMITTED THAT OUT OF THE TOTAL CREDIT OF RS.3 33 7 25/- THE APPELLANT HAD TAKEN LOAN FROM OUR DIFFERENT PARTIES AMOUNTING TO RS.2 5 0 000/- AND HE HAS SUBMITTED CONFIRMATION LETTERS FROM THE SAID PARTIE S AS PER PAGES 195 TO 198 OF THE PAPER BOOK AND SUBMITTED THAT ALL OF THEM ARE A GRICULTURISTS . HOWEVER I DO NOT FIND THE EXPLANATION OF THE APPELLANT CONVINCIN G. I ALSO FIND THAT THE APPELLANT HAD NOT MADE SUCH CLAIM OF LOANS NOR HAD GIVEN ANY EXPLANATION AT THE TIME OF ASSESSMENT REGARDING THE BALANCE AMOUNT OF CAPITAL. THE CONFIRMATION LETTERS FOR THE LOANS HAD NOT BEEN SUB MITTED BY THE APPELLANT AT THE TIME OF ASSESSMENT BEFORE THE A.O. THEREFORE T HE EXPLANATION OF CASH CREDITS IS NOT ACCEPTED .THE EXPLANATION OF THE APP ELLANT THAT HE HAS DEPOSITED RS.50 000/- OUT OF WITHDRAWALS IS ACCEPTABLE THOU GH THE A.O. HAS NOT ACCEPTED THE SAME . THE APPELLANT HAS GIVEN A PLAUSIBLE EXPL ANATION HENCE ADDITION TO THE TUNE OF RS.50 000/- IS DELETED. THE LD. A.R. HA S CLAIMED THAT AMOUNTS TO THE EXTENT OF RS. 1 43 978/- HAVE BEEN CREDITED IN THE CAPITAL ACCOUNT OF THE I.T.A. NO. 3122/AHD./2008 5 APPELLANT BY CHEQUES AND DEPOSITED IN MEHSANA URBAN CO-OPERATIVE BANK . IT IS STATED THAT THE APPELLANT CAN EXPLAIN THE SOURCE OF THE SAID DEPOSITS. CONSIDERING THE DEPOSITS BY CHEQUES OF RS. 1 43 978 /- FOR THIS AMOUNT OF RS.1 43 978/- I DIRECT THE A.O. TO VERIFY THE SOUR CE OF THE CHEQUE DEPOSITS AND REDUCE THE SAME FROM ADDITION IF THE SAME ARE EXPLA INED BY THE APPELLANT. THE BALANCE ADDITION OF RS.1 39 747/- IS HOWEVER CONFIR MED AS THE SOURCE FOR THE SAME HAS NOT BEEN EXPLAINED. 2.5 FINALLY FOR THE DETAILED REASONS GIVEN IN PARA 8.2 OF THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE ADDITION OF RS.43 019/- OUT OF T OTAL ADDITION OF RS.51 037/- WHICH IS REPRODUCED AS UNDER: 8.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R . CAREFULLY. I FIND THAT THERE ARE SMALL DIFFERENCES IN RESPECT OF TWO PARTIES I.E . RS.4 489/- IN RESPECT OF RAJSHREE AUTO PVT. LTD. AND RS.3 529/- IN RESPECT O F BAJAJ AUTO LTD. I FIND FORCE IN THE EXPLANATION OF THE LD. A.R. IN THIS REGARD T HAT THE DIFFERENCE IN THE ACCOUNTS IS NOT SUBSTANTIAL CONSIDERING THE NATURE AND VOLUME OF BUSINESS. AS THE APPELLANT HAS GOT COMMERCIAL TRANSACTIONS WITH THE SAID TWO PARTIES THE SAID DIFFERENCE IS LIKELY TO BE DUE TO DISPUTE RELA TING TO DEBIT/CREDIT NOTES NOT ACCEPTED BY EITHER PARTY. CONSIDERING THAT THERE AR E SMALL DIFFERENCES AND THE CORRESPONDING INCOME/EXPENDITURE IF ANY WOULD BE AC COUNTED IN THE YEAR OF RECEIPT OF CREDIT NOTE/DEBIT NOTE I AM OF THE OPIN ION THAT NO ADDITION CAN BE MADE FOR THE DIFFERENCE ALONE HENCE THE ADDITIONS OF RS.4 489/- AND RS.3 529/- ARE DELETED. IN RESPECT OF THE DIFFERENCE OF RS.43 019/- RELATING TO BAJAJ AUTO LTD WARRANTY CLAIM THE APPELLANT SUBMITTED THAT TH ERE IS NO INCOME ELEMENT IN IT AND IT IS BASICALLY REIMBURSEMENT OF EXPENSES IN CURRED BY THE APPELLANT ON FREE SERVICES PROVIDED ON NEW VEHICLES AND REPLACEM ENT OF PARTS DURING WARRANTY PERIOD WHICH WERE REIMBURSED FROM BAJAJ AU TO LTD. AND THIS BEING A RUNNING ACCOUNT WITH BAJAJ AUTO LTD. IT IS DIFFICUL T TO RECONCILE THE DIFFERENCE. CONSIDERING THE FACT THAT THERE IS NO INCOME ELEMEN T IN THE AMOUNT SHOWN AS RECEIVABLE THE ADDITION OF RS.43 019/- MADE BY THE A.O. IS DELETED . THUS THIS GROUND IS ALLOWED. 3. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.27 95 610/- MADE BY THE AO BEING UN EXPLAINED CASH CREDITS INTRODUCED AS BOOKING ADVANCES. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1 43 000/- BEING UNEXPLAINED CASH CR EDITS IN CASH BOOK. I.T.A. NO. 3122/AHD./2008 6 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1 96 178/- OUT OF ADDITION OF RS.3 3 3 925/- BEING UNEXPLAINED CASH INTRODUCED IN CAPITAL ACCOUNT. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 51 037/-. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE REVENUE SHRI SAMIR TEKRIWAL APPEARED AND IN RESPECT OF GROUND NO.1 HE DREW OUR ATTENTION TO THE ORDER OF THE ITAT D BENCH DATED 8-2-2008 IN THE CASE OF TH E ASSESSEE WHEREBY IN THE INTEREST OF JUSTICE THE MATTER WAS RESTORED BACK TO THE FIL E OF THE LEARNED CIT(A) FOR CONSIDERATION OF THE SAME AFRESH IN ACCORDANCE WITH LAW BY PASSING SPEAKING ORDER. THE LEARNED DR FURTHER POINTED OUT THAT NORMAL PRAC TICE FOLLOWED BY AUTO DEALERS IS TO ADJUST THE BOOKING ADVANCE IN THE FINAL BILL AT TH E TIME OF DELIVERING THE SCOOTERS. IN THIS CASE INSTEAD OF ADJUSTING THE ADVANCE IT WAS CLAIMED THAT BOOKING ADVANCE WAS REFUNDED TO THE CUSTOMERS. THIS ITSELF INDICATES T HAT THE ALLEGED BOOKING ADVANCE OF RS.27 95 610/- WAS RIGHTLY TREATED BY THE AO AS UNE XPLAINED CASH CREDIT UNDER SECTION 68 OF THE IT ACT. 5. THE LEARNED DR THEREAFTER DREW OUR ATTENTION T O CONFESSION STATEMENT OF MEHULBHAI KHOTARI MADE ON 29-12-2008 IN WHICH HE CL EARLY CONFIRMED THAT THE CASH CREDIT OF RS.27 95 610/- IS NON-GENUINE. THE ASSES SEE HAS ALREADY ADMITTED THAT HE WAS NOT HAVING ANY EVIDENCE TO SUPPORT SUCH CASH CR EDIT AS BEING GENUINE. A FEW COPIES OF BEARER CHEQUES (BOTH SIDE VISIBLE) ISSUED BY THE ASSESSEE IN THE NAMES OF VARIOUS PARTIES ARE ENCLOSED BY THE AO AS PART OF T HE ORDER AS EXHIBIT-A (PAGE-4). THE LEARNED DR DREW OUR ATTENTION TO THE STATEMENT OF SHRI AIYUB J. DEEWAN EMPLOYEE OF THE ASSESSEE RECORDED ON 29-12-2004. I N THIS REPLY IN REPLY TO QUESTION NO.4 SHRI AIYUB DEEWAN CLEARLY ADMITTED THAT HE WI THDREW THE CASH ON BEARER CHEQUE ISSUED AND GIVEN THE CASH TO SHRI MEHULBHAI M. KOTH ARI (ASSESSEE) THE PROPRIETOR M/S.RAJ SHREE AAUTO ENTERPRISES. TO THE QUESTION N O.6 HE ADMITTED THAT THERE WAS NO WAITING PERIOD SO FAR AS SCOOTER AND MOTOR CYCLE IS CONCERNED. FROM THIS IT IS CLEAR THAT THERE WAS NO BOOKING ADVANCE. SHRI MEHUL KOTH ARI WHOSE STATEMENT RECORDED ON 29-12-2004 WAS ALLOWED OPPORTUNITY TO CROSS-EXAMINE HIS EMPLOYEES AND HE WAS ALSO I.T.A. NO. 3122/AHD./2008 7 REQUESTED TO FURNISH ADDRESSES AND DETAILS TO PROVE SUCH PERSONS ARE GENUINE. IN REPLY TO QUESTION NO.8 SHRI MEHUL KOTHARI CATEGORICALLY STATED THAT HE HAS RECEIVED BACK THE ENCASHED AMOUNT FROM HIS EMPLOYEES WITHDRAWN FROM T HE BANK. HOWEVER HE CONFIRMED THAT HE COULD NOT PRODUCE THE CREDITS IN THE NAMES ALLEGEDLY SHOWN AS CUSTOMERS AND HAS EXPRESSED HIS INABILITY TO PROV E THIS TRANSACTION WITH THE CUSTOMERS AS GENUINE. THE LEARNED DR POINTED OUT T HAT ENOUGH OPPORTUNITY WAS ALLOWED TO THE ASSESSEE BUT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS AS LAID DOWN UNDER SECTION 68 OF THE ACT. THEREFORE THE ADDITION WAS RIGHTLY MADE BY THE AO AND THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE SAM E. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(A). 7. HAVING HEARD BOTH THE SIDES WE HAVE GONE THROUG H THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE H AS CREDITED HUGE AMOUNT IN THE BOOKS OF ACCOUNTS SHOWING THEM AS BOOKING ADVANCE RECEI VED FROM THE ALLEGED CUSTOMERS. THE NORMAL PRACTICE FOLLOWED BY THE AUTO DEALERS IN THIS LINE OF BUSINESS IN RESPECT OF BOOKING ADVANCE IS THAT AT THE TIME DELIVERY OF SCO OTERS THEY ADJUST THE BOOKING ADVANCE FROM THE RESPECTIVE FINAL BILL. IN THIS CA SE AFTER EXPIRY OF MORE THAN THREE MONTHS INSTEAD OF ALLOTTING THEM VEHICLES THE ASSE SSEE HAD REFUNDED THE SAME TO THE ALLEGED CUSTOMERS WHOSE IDENTITY AND GENUINENESS H AVE NOT BEEN PROVED BY THE ASSESSEE. IN THE STATEMENT RECORDED ON 29.12.2004 TO THE QUESTION NO.6 THE ASSESSEE STATED THAT THERE WAS NO WAITING PERIOD SO FAR AS S COOTER AND MOTORBIKES ARE CONCERNED. FURTHER THE ASSESSEE HAS NOT DENIED THE FACT THAT THE CHEQUES ISSUED IN FAVOUR OF THE CUSTOMERS ALLEGEDLY TO PAY BACK THE BOOKING ADVANC ES HAD IN FACT BEEN ENCASHED BY THE ASSESSEES OWN STAFF AND THE ENCASHED AMOUNT WA S RETURNED TO THE ASSESSEE. THIS FACT HAS ALSO BEEN ADMITTED BY THE ASSESSEES EMPLO YEES AND THE ASSESSEE HIMSELF IN CONFESSIONAL STATEMENT ON 29-12-2004. IN THE ASSES SEES BOOKS THE SAID REPAYMENTS HAVE BEEN SHOWN AS HAVING REPAID BY CHEQUES WHILE O N VERIFICATION OF THE BANK ACCOUNT IT IS ACTUALLY FOUND THAT SUCH CHEQUES WER E BEARER AND HAVE BEEN ENCASHED (REPAID) BY WAY OF SELF/BEARER CHEQUE AND THE AMOUN T IS ACTUALLY WITHDRAWN BY THE I.T.A. NO. 3122/AHD./2008 8 ASSESSEE THROUGH ITS OWN MEN BY CASH WHICH HAS COM E BACK TO THE ASSESSEE. THE LIST OF SUCH PARTIES HAS BEEN TABULATED BY THE AO PAGE N O.2 AND 3 OF THE ASSESSMENT ORDER. THE STATEMENT OF SHRI MEHULBHAI M. KOTHARI WAS RECO RDED ON 29-12-2004 WHEREIN HE WAS GIVEN OPPORTUNITY TO CROSS EXAMINE HIS EMPLOYEE S. IN REPLY TO QUESTION NO.8 SHRI MEHULBHAI CATEGORICALLY CONFIRMED THAT HE HAS RECEIVED BACK CASH FROM SUCH BEARER CHEQUES FROM THE BANK ACCOUNT OF M/S.RAJSHRE E AUTO ENTERPRISE AND ENCASHED BY HIS EMPLOYEES. FURTHER THE ASSESSEE HAS ALSO ADMITTED THAT HE COULD NOT PROVE THE CREDITS IN THE NAMES OF THE ALLEGED CUSTOMERS AND HENCE EXPRESSED HIS INABILITY TO PROVE THESE PERSONS/CREDITORS AS GENUINE. IN THES E CIRCUMSTANCES CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE MATERI AL AVAILABLE ON RECORD IN OUR OPINION THREE INGREDIENTS NECESSARY FOR PROVING TH E CASH CREDITS VIZ. (I) IDENTITY OF THE PERSON (II) CREDIT WORTHINESS OF THE PARTY AND (II I) THE GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN DISCHARGED BY THE ASSESSEE. IT IS SE TTLED PROPOSITION OF THE LAW THAT THE ONUS TO PROVE THE CASH CREDIT SOLELY CASTS ON THE A SSESSEE. EVEN IN REMAND PROCEEDINGS THE ASSESSEE HAVING FAILED TO DO SO I N OUR OPINION THERE IS NO JUSTIFICATION WHATSOEVER FOR THE CIT(A) TO DELETE T HE ADDITION MADE BY THE AO. THOUGH THE AO HAS GIVEN ENOUGH OPPORTUNITY TO THE A SSESSEE TO PROVE THE CASH CREDITS THE ASSESSEE FAILED TO PROVE THE GENUINENE SS OF THE TRANSACTION AND THEREFORE THE AO RIGHTLY TREATED THE SUM OF RS.27 95 610/- AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT. 8. KEEPING IN VIEW OF THE REASONING GIVEN BY THE AO IN THE ASSESSMENT ORDER THE REMAND REPORT SUBMITTED TO THE CIT(A) BY THE AO WE ARE OF THE VIEW THAT THE ADDITION OF RS.27 95 610/- WAS RIGHTLY MADE BY THE UNDER SEC TION 68. THEREFORE THE ADDITION OF RS.27 95 7610/- MADE BY THE AO BEING UNEXPLAINED CASH CREDITS INTRODUCED AS BOOKING ADVANCES IS CONFIRMED AND THAT OF THE CIT(A ) IS SET ASIDE. ACCORDINGLY GROUND NO.1 OF THE REVENUE IS ALLOWED. 9. WITH REGARD TO GROUND NO.2 THE LEARNED DR POINT ED OUT THAT THE AMOUNT OF RS.2 03 000/- WAS RECEIVED ON 27.5.2000 THROUGH 12 VOUCHERS OUT OF WHICH A SUM OF RS.1 43 000/- HAS BEEN INTRODUCED IN THE BOOKS ON 2 3.5.2000. HE SUBMITTED THAT NO I.T.A. NO. 3122/AHD./2008 9 EXPLANATION WAS FURNISHED BEFORE THE AO FOR THE INT RODUCTION OF CASH ON 27-5-2000 THEREFORE THE ADDITION WAS RIGHTLY MADE. 10. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE CASH DEPOSIT OF RS.1 43 000/- AS MENTIONED IN THE CASH B OOK ON 23.05.2000 WAS THE COLLECTION MADE NOT ON A SINGLE DAY BUT THE SAME RE PRESENTED CASH COLLECTIONS MADE IN THE MONTH OF APRIL AND MAY AND THE SUMMARY OF SUCH COLLECTION HAS BEEN MENTIONED ON THE PAPER DATED 27.5.2000 WHICH CONTAINED THE DE TAILS OF VOUCHERS WITH NOS.205 TO 216 AND NOTINGS ON THE IMPOUNDED PAPER SHOWED ONLY A SUMMARY SHEET OF THE CASH COLLECTION AS RECORDED IN VOUCHERS WITH SL.NO.205 T O 216. HE SUBMITTED THAT THE CASH WAS COLLECTED OVER A PERIOD OF TWO MONTHS I.E. APRI L AND MAY 2000 AND THEREFORE THE ADDITION IS RIGHTLY DELETED BY THE CIT(A). 11. RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. FROM T HE REASONING GIVEN BY THE AO IN THE ASSESSMENT ORDER FOR MAKING THE ADDITION AND THE REASONING GIVEN BY THE LEARNED CIT(A) IN THE IMPUGNED FOR DELETING THIS ADDITION IT APPEARS THAT THIS ADDITION WAS MADE ON DOUBTS AND SUSPICION BY THE AO AND THE LEAR NED CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN DELETING THE SAME. WE THEREFO RE INCLINED TO UPHOLD THE ORDER OF THE CIT(A). THIS GROUND OF THE REVENUES APPEAL IS REJ ECTED. 12. WITH REGARD TO CONTROVERSY INVOLVED IN GROUND N O.3 THE LEARNED DR POINTED OUT THAT THE ASSESSEE HAS INTRODUCED RS.50 000/- OU T OF HIS WITHDRAWALS FOR HOUSEHOLD EXPENSES OF RS.1 53 000/- AND FOR THE BALANCE AMOUN T OF RS.2 83 725/- NO EXPLANATION WAS FURNISHED. THE AO OBSERVED THAT THE WITHDRAWAL S SHOWN BY THE ASSESSEE OF RS.1 53 000/- WERE SUFFICIENT FOR THE STANDARD OF L IVING OF THE APPELLANT AND THEREFORE HE DID NOT ACCEPT THE SOURCE OF EXPLANATION OF RS.5 0 000/- AND MADE THE ADDITION FOR THE ENTIRE CAPITAL INTRODUCED OF RS.3 33 725/-. THE LEARNED DR FURTHER POINTED OUT THAT IN THE REMAND REPORT THE ASSESSEE FAILED TO PRODUCE THE PARTIES DESPITE THREE OPPORTUNITIES ALLOWED TO THE ASSESSEE TO PROVE GENU INENESS OF THE CASH CREDIT. IN THE IMPUGNED ORDER THE LEARNED CIT(A) DELETED THE ADDI TION TO THE EXTENT OF RS.1 43 978/- ON THE GROUND THAT THE ASSESSEE HAS SUBMITTED CONFI RMATION LETTER FROM THE SAID PARTIES. I.T.A. NO. 3122/AHD./2008 10 IN THIS CONTEXT THE LEARNED DR DREW OUR ATTENTION TO THE REMAND REPORT. THE LEARNED DR FURTHER DREW OUR ATTENTION TO PAGE NO.65 BEING T HE REMAND REPORT DATED 9-6-2008 SUBMITTED BY THE AO TO THE CIT(A). HE SUBMITTED TH AT FROM THE PERUSAL OF THIS REMAND REPORT IT CAN BE SEEN THAT ON 15-5-2008 TH E AO ASKED THE ASSESSEE TO PRODUCE PARTIES WITH THEIR CONFIRMATIONS FOR PERSONAL VERIF ICATION AND GENUINENESS OF THE CASH CREDIT ON 20-5-2008. IN RESPONSE TO THE SAID LETTE R THE ASSESSEE SOUGHT EXTENSION OF TIME FORE MORE THAN 10 DAYS. THEREAFTER FURTHER L ETTER WAS ISSUED REQUESTING THE ASSESSEE TO PRODUCE ON 30-5-2008. IN RESPONSE TO T HE SAID LETTER THE ASSESSEE VIDE HIS LETTER DATED 29-5-2008 FILED AFFIDAVIT OF THE FOLLO WING PARTIES: I) PATEL VASANTBHAI JETHABHAI DEVIYA CAMPA II) PATEL ARVINDBHAI JESANGBHAI DHANSURA III) PATEL KANUBHAI JESANGHBHAI DHANSURA IV) PATEL MOHANBHAI MEGHJIBHAI DEVIYA CAMPA 13. THE LEARNED DR FURTHER DREW OUR ATTENTION TO PA RA-4 OF THE REMAND REPORT WHEREIN THE AO ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO SHRI N.J. RATHOD NOTARY GOVT. OF INDIA TO ATTEND HIS OFFICE ON 30.5 .2008 WITH NOTARY REGISTER. ON 30- 5-2008 SHRI N.J. RATHOD ATTENDED AND STATED THAT T HE ABOVE MENTIONED PARTIES HAD NOT ATTENDED IN HIS OFFICE BUT THE PERSON EMPLOYED BY S HRI MEHULKUMAR M. KOTHARI ALONE ATTENDED IN HIS OFFICE. ALL THE AFORESAID PARTIES DID NOT SIGN THE AFFIDAVITS IN HIS (NOTARY) PRESENCE. THE VISIT REGISTER WAS TAKEN TO THE OFFICE OF STAMP VENDOR SHRI M.B. MISTRY AND IT WAS FOUND THAT THE ABOVE PARTIES HAVE NOT SIGNED IN VISIT REGISTER IN HIS PRESENCE AND HE EVEN NOT KNOWN THE ABOVENAMED P ARTIES. SUMMONS UNDER SECTION 131 OF THE ACT HAVE ALSO BEEN ISSUED TO THE ABOVE N AMED PARTIES TO ATTEND OFFICE OF THE AO BUT NONE OF THE PARTIES WERE ATTENDED HIS OFFICE . ON THIS BASIS AND AS PER THE REMAND REPORT OF THE AO IT CLEARLY INDICATED THAT IT IS NOT POSSIBLE TO CONDUCT THE INQUIRY AS PROVIDED UNDER SECTION 68 OF THE IT ACT THEREFORE THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1 96 1 78/- MADE BY THE AO UNDER SECTION 68 OF THE ACT. THE LEARNED DR FURTHER SUBMITTED T HAT NONE OF THE CREDITORS IS HAVING PAN NUMBERS. AFFIDAVITS SUBMITTED ARE NOT RELIABLE AS THESE WERE NOT SIGNED BEFORE THE NOTARY THEREFORE THE LEARNED CIT(A) IS NOT JU STIFIED IN DELETING THE ADDITION OF I.T.A. NO. 3122/AHD./2008 11 RS.1 9 178/- OUT OF ADDITION OF RS.3 33 925/- BEING UNEXPLAINED CASH INTRODUCED IN CAPITAL ACCOUNT. 14. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). THE COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE LOAN OF RS.1 43 978/- WERE RECEIVED BY CHEQUE. THE LOAN TOTALLING TO RS. 2 50 000/- WAS RECEIVED FROM FOUR PARTIES AND THEIR AFFIDAVITS WERE FILED. IF THE ST ATEMENT OF NOTARY IS BELIEVED THEN IT IS SERIOUS BREACH ON THE PART OF NOTARY FOR WHICH THE ASSESSEE CANNOT BE PENALISED. THE PRESUMPTION IS THAT THE PARTY IS APPEARED AND THE A FFIDAVITS WERE PROPERLY NOTARISED. 15. IN REJOINDER THE LEARNED DR POINTED OUT THAT P RESUMPTION POINTED BY THE LEARNED COUNSEL OF THE ASSESSEE IS NOT APPLICABLE B ECAUSE NOTARY HAS DENIED HAVING SIGNED THE AFFIDAVIT BY DEPONENTS IN HIS PRESENCE. 16. HAVING HEARD BOTH THE PARTIES WE HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT DU RING THE ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO PRODUCE PARTIES. ONLY AFF IDAVITS WERE FILED. ALL THESE AFFIDAVITS WERE NOT SIGNED BY THE CREDITORS (DEPONE NTS) BEFORE THE NOTARY. WE ARE THEREFORE OF THE VIEW THAT THESE AFFIDAVITS ARE NOT RELIABLE AND THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION SOLELY RELYI NG ON THE AFFIDAVITS WHICH WERE NOT SIGNED BY THE DEPONENTS PERSONALLY BEFORE THE NOTAR Y. THE TOTALITY OF THE FACTS AND CIRCUMSTANCES CLEARLY INDICATES THAT EVEN IN SECOND INNINGS OF THE LITIGATION THE ASSESSEE COULD NOT DISCHARGE ITS ONUS LAID UNDER SE CTION 68 OF THE ACT. IN THESE CIRCUMSTANCES THE LEARNED CIT(A) HAS CLEARLY ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS.1 96 178/-. THIS ADDITION MADE BY THE AO IS ACCORDINGLY RESTORED. THE GROUND NO.3 IS ALLOWED. 17. THE LAST GROUND NO.4 IS AGAINST THE DELETION OF THE DISALLOWANCE OF RS.51 037/-. 18. RIVAL SUBMISSIONS OF BOTH THE PARTIES HAVE BEEN HEARD. THIS AMOUNT OF RS.51 037/- IS THE DIFFERENCE IN THE ACCOUNTS OF TH REE DEBTORS VIZ. RAJASHREE AUTO DEALERS P. LTD. OF RS.4 489/- BAJAJ AUTO LTD. OF R S.3 529/- AND BAJAJ AUTO LTD. I.T.A. NO. 3122/AHD./2008 12 WARRANTY CLAIM OF RS.43 019/-. IN RESPECT OF RS.4 489/- AND RS.3 529/- LOOKING TO THE SMALLNESS OF THE AMOUNT WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. WITH REGARD TO THE REMAINING DELETION OF RS .43 019/- RELATING TO BAJAJ AUTO LTD. BEING WARRANT CLAIM THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THIS AMOUNT IS BASICALLY INCURRED BY THE ASSESSEE ON FRE E SERVICES PROVIDED ON NEW VEHICLES AND REPLACEMENT OF PARTS DURING WARRANTY PERIOD WHI CH WERE REIMBURSED FROM BAJAJ AUTO LTD. AND THIS BEING A RUNNING ACCOUNT WITH BA JAJ AUTO LTD. IT IS DIFFICULT TO RECONCILE THE DIFFERENCE. LOOKING TO THE SMALL DIF FERENCE OF RS.43 019/- WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR WITH THE VI EW TAKEN BY THE LEARNED CIT(A) IN DELETING THIS ADDITION. THIS GROUND OF THE REVENUE S APPEAL IS REJECTED. 18. IN THE RESULT THE REVENUES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY 2011. SD/- SD/- (G.D.AGRAWAL) (T.K. S HARMA) VICE-PRESIDENT JUDICIAL MEMBER DATED : 22 /07/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AH MEDABAD. TALUKDAR/ SR. P.S.