The DCITNavsari Cirlce,, Navsari v. M/s. Sahjanand Exports, Navsari

ITA 3235/AHD/2009 | 2006-2007
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 323520514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 3235/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 24 day(s)
Appellant The DCITNavsari Cirlce,, Navsari
Respondent M/s. Sahjanand Exports, Navsari
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-07-2011
Date Of Final Hearing 27-07-2011
Next Hearing Date 27-07-2011
Assessment Year 2006-2007
Appeal Filed On 03-12-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K. TYAGI JM AND A. K. GARODIA A. M. DY. CIT NAVSARI CIRCLE NAVSARI. VS. M/S SAHJANAND EXPORTS RATNAMANI APARTMENT GROUND FLOOR JALALPORE ROAD NAVSARI. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SAMIR TEKRIWAL SR.DR RESPONDENT BY:- SHRI MANISH J. SHAH AR O R D E R PER D.K. TYAGI JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 12.08.2009. THE REVENUE HAS TAKEN ONLY ONE EFFECTIVE GROUND WHICH READS AS UNDER :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONBLE CIT(A) ERRED IN DELETING THE ADDITION OF RS .7 75 000/- MADE U/S 68 OF THE I.T. ACT. 2. THE FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT DURING THE YEAR UNDER APPEAL THE P ARTNERS OF THE FIRM HAD INTRODUCED A CAPITAL OF RS.7 75 000/-. THE AO A SKED THE ASSESSEE TO FURNISH THE DETAILS OF CAPITAL INTRODUCED ALONG WIT H SOURCE. HE ALSO ISSUED ITA NO.3235/AHD/2009 ASST. YEAR 2006-07 ITA NO.3235/AHD/2009 ASST. YEAR 2006-07 2 A SHOW CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN THE INTRODUCTION OF CAPITAL OF RS.7 75 000/-. AFTER CONSIDERING THE SU BMISSIONS MADE BY THE ASSESSEE THE AO MADE AN ADDITION OF RS.7 75 000/- U/S 68 OF THE ACT STATING THAT THE EXPLANATION FURNISHED BY THE ASSES SEE IS NEITHER CONVINCING NOR ACCEPTABLE. HE ALSO OBSERVED THAT TH E SOURCE OF INTRODUCTION OF CAPITAL REMAINED UNEXPLAINED AS THE ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENESS OF THE CREDITORS THEIR CREDITWORTHINESS. FURTHER THE AO RELIED ON THE FOLL OWING PRONOUNCEMENTS:- I) PRABHU DAYALAL LALLURAM VS. CIT 277 ITR 537 (P & H) II) BHARAT P. LTD. VS. CIT 111 ITR 951 (CAL) III) ROSHAN D. HATTI VS. CIT (1977) 107 ITR 938 (SC) IV) KALE KHAN MOHAMMAD HANIF VS. CIT (1963) 50 ITR 1 (SC) V) A. GOVINDARAJULU MUDALIAR VS. CIT (1958) 34 ITR 807 (SC) VI) CIT VS. M. GANAPATHI MUDALIAR (1964) 53 ITR 623 (SC ) 3. IN APPEAL LD. CIT(A) DELETED THIS ADDITION BY O BSERVING AS UNDER :- 6.5 I HAVE CONSIDERED THE SUBMISSION MADE BY THE L D. AR OF THE APPELLANT FINDING OF THE ASSESSING OFFICER AND THE REMAND REPORT SUBMITTED BY THE AO. I FOUND THAT THE APPELLANT EXP LAINED THREE CRUCIAL THINGS TO DISCHARGE HIS OBLIGATION. THOSE ARE (I) I DENTITY OF THE CREDITORS (THEY ARE PARTNERS) (II) SOURCES OF THE CREDITORS (WITHDRAWN FROM THEIR CASH BOOK) AND FINALLY (III) CREDITWORTHINESS OF TH E CREDITORS (PARTNERS). FURTHER THE LD. AR OF THE APPELLANT SUBMITTED INDI VIDUAL BALANCE SHEET AND THE RETURN OF INCOME FILED BY THEM. IT WAS ALSO CONTENDED THAT NO DISCREPANCIES WERE FOUND BY THE AO FROM THE PARTNER S INDIVIDUAL RETURN OF INCOME. IN THIS CIRCUMSTANCES THE APPELLANT HAS FULFILLED HIS/ITS OBLIGATION. ITA NO.3235/AHD/2009 ASST. YEAR 2006-07 3 4. AT THE TIME OF HEARING BEFORE US THE LD. DR REL IED ON THE ORDER OF AO. ON THE OTHER HAND THE LD. AR RELIED ON THE ORD ER OF LD. CIT(A) AND FURTHER RELIED ON THE DECISION OF JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. PANKAJ DYESTUFF INDUSTRIES IN INCOME-TAX RE FERENCE NO.241 OF 1993 DATED 06/07/2005. 5. AFTER HEARING BOTH THE PARTIES WE FIND THAT ON I DENTICAL FACTS THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. P ANKAJ DYESTUFF INDUSTRIES (SUPRA) HAS OBSERVED AS UNDER :- 13. APPLYING THE AFORESAID PRINCIPLES TO THE FACTS OF THE PRESENT CASE IT IS APPARENT THAT THE ASSESSEE HAD FURNISHE D THE DETAILS WHICH WOULD DISCHARGE THE ONUS WHICH LAY ON THE ASS ESSEE. IT IS NOT THE CASE OF THE REVENUE THAT THE PARTNERS OF THE AS SESSEE FIRM ARE FICTITIOUS. THE INCOME TAX OFFICER HAS NOT DISPUTED THAT THE CREDITS IN THE ACCOUNTS OF THE PARTNERS WERE NOT DEPOSITS F ROM THE PARTNERS. MOREOVER IT IS AN ADMITTED POSITION THAT THIS WAS THE SECOND YEAR OF THE FIRM AND THAT IT WAS RUNNING IN LOSS. IT IS TRUE THAT THE INCOME TAX OFFICER DID NOT ACCEPT THE EXPLANATION G IVEN ON BEHALF OF THE ASSESSEE IN RESPECT OF THE NEW DEPOSITS OR C ASH CREDITS IN THE ACCOUNTS OF THE PARTNERS. THE MERE NON-ACCEPTANCE O F THAT EXPLANATION DOES NOT HOWEVER PROVIDE MATERIAL FOR FINDING THAT THE SAID SUM REPRESENTED INCOME OF THE ASSESSEE FIR M . AS HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONE R OF INCOME TAX ALLAHABAD VS. JAISWAL MOTOR FINANCE (SUPRA) IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THERE WERE PROFITS OF THE FIRM THE AMOUNT CREDITED TO THE PARTNERS ACCOUNTS COULD NOT BE ASSESSED IN THE HANDS OF THE FIRM. ONCE THE PARTNERS HAVE OWNED THAT THE MONIES DEPOSITED IN THEIR ACCOUNTS ARE THEIR OWN T HE INCOME TAX OFFICER IS ENTITLED TO AND MAY PROCEED AGAINST THE PARTNERS AND ASSESS THE SAME IN THEIR HANDS IF THEIR EXPLANATIO N IS NOT FOUND SATISFACTORY. 14. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE BOTH THE DEPUTY CIT(APPEALS) AND THE TRIBUNAL HAVE FOUND THA T THE ITA NO.3235/AHD/2009 ASST. YEAR 2006-07 4 ASSESSEE HAD DISCHARGED THE PRIMARY ONUS WHICH WAS ON IT BY OFFERING EXPLANATION WHICH HAS NOT BEEN FOUND TO B E INCORRECT OR FALSE IN ANY MANNER. THE INTEREST OF THE REVENUE IS ALSO SAFEGUARDED AS THE INCOME-TAX OFFICER HAS BEEN GIVE N THE LIBERTY TO CONSIDER THE SAID CREDITS IN THE HANDS OF THE PA RTNERS IF HE IS NOT SATISFIED WITH THE SOURCES OF INVESTMENT OF CASH CR EDITS IN THE ACCOUNTS OF THE PARTNERS. 15. IN THESE CIRCUMSTANCES IT IS NOT POSSIBLE TO F IND THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM ANY INFIRMITY WH ICH WOULD REQUIRE INTERFERENCE AT THE HANDS OF THIS COURT. AC CORDINGLY IT IS HELD THAT THE TRIBUNAL WAS RIGHT IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.87 250/- BEING DEPOSITS IN THE ACCOU NTS OF THE PARTNERS. THE QUESTION REFERRED TO THIS COURT IS A CCORDINGLY ANSWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE JU RISDICTIONAL HIGH COURT WE UPHOLD THE ORDER PASSED BY THE LD. CIT(A) . ACCORDINGLY REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27/7/11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 27/7/11. MAHATA/- ITA NO.3235/AHD/2009 ASST. YEAR 2006-07 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 27/7/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 28/7/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..