The ITO, Ward-6(1),, Surat v. M/s. Amrut Cement Industries, Surat

ITA 3693/AHD/2008 | 2005-2006
Pronouncement Date: 28-05-2010 | Result: Dismissed

Appeal Details

RSA Number 369320514 RSA 2008
Assessee PAN AAKFA5376P
Bench Ahmedabad
Appeal Number ITA 3693/AHD/2008
Duration Of Justice 1 year(s) 6 month(s) 14 day(s)
Appellant The ITO, Ward-6(1),, Surat
Respondent M/s. Amrut Cement Industries, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 21-05-2010
Next Hearing Date 21-05-2010
Assessment Year 2005-2006
Appeal Filed On 14-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.3693/AHD/2008 ASSESSMENT YEAR: 2005-06 DATE OF HEARING:24.5.10 DRAFTED:25.5.10 INCOME TAX OFFICER WARD-6(1) ROOM NO.614 6 TH FLOOOR AAYAKAR BHAVAN MAJURA GATE SURAT V/S . M/S. AMRUT CEMENT INDUSTRIES 27/402 PANCHADEV INDUSTRIAL ESTATE MANGROL DIST. SURAT PAN NO.AAKFA5376P (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI H.P. MEENA SR-DR RESPONDENT BY:- SHRI P.M. JAGSHETH AR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY REVENUE RAISING FOLLOWI NG GROUNDS:- [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDITION OF RS.17 77 000/- MADE BY THE ASSESSING OFFICER ON THE GROUND OF FRES H CAPITAL INTRODUCTION TREATED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE IN COME TAX ACT 1961. [2] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A)-IV SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. ITA NO.3693/AHD/2008 A.Y. 2005-06 ITO WD.6(1)SRT V. M/S. AMRUT CEMENT INDUSTRIES PAGE 2 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAG ED IN THE BUSINESS OF MANUFACTURING OF CEMENT ARTICLES. DURING THE COURS E OF ASSESSMENT PROCEEDINGS HE NOTICED THAT ALL THE PARTNERS HAVE INTRODUCED A FRESH CAPITAL OF RS.23 26 700/- WHICH WAS CLAIMED TO HAVE BEEN RECEIVED EITHER BY W AY OF LOAN FROM SOME BANKS OR RELATIVES OR RECEIVED FROM THE AGRICULTURA L INCOME. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE SOURCE OF FRESH CAPITAL INTRODUCED ALONG WITH NECESSARY DOCUMENTS IN SUPPORT OF THE GE NUINENESS AND CREDITWORTHINESS OF THE PERSONS FROM WHOM THE SAID AMOUNT WAS CLAIMED TO HAVE BEEN RECEIVED. AO NOT SATISFIED WITH THE EXPL ANATION FURNISHED BY THE ASSESSEE PROPOSED THE ADDITION OF THE AMOUNT U/S.68 OF THE ACT IN RESPECT OF FOLLOWING CREDITS APPEARING IN THE ACCOUNT OF THE P ARTNERS:- SR. NO. NAME OF THE PARTNER AMT. INTRODUCED AS CAPITAL IN FIRM (RS.) 1. ARUNKUMAR R DOBARIA 2 70 000/- 2. ANILKUMAR R DOBARIA 2 9 900/- 3. BHAVESHSKUMAR P BARVALIA 3 52 800/- 4. SUNILKUMAR DUDHAT 5 00 000/- 5. VIPULKUMAR A PATEL 4 50 000/- 6. VRAJLALA A KUKADIA 4 54 000/- 3. LD. CIT(APPEALS) DELETED THE ADDITION ON THE GRO UND THAT THE CAPITAL WAS INTRODUCED IN THE ACCOUNT OF THE PARTNERS AND PARTN ERS HAVE ADMITTED TO HAVE INTRODUCED THE CAPITAL THEN AMOUNT HAS TO BE TAXED IN THE HANDS OF THE PARTNERS ONLY LD. CIT(APPEALS) DELETED THE ADDITION BY OBS ERVING AS UNDER:- I HAVE GONE THROUGH THE DETAILS AND THE CASE LAWS CITED BY THE LD. AR. ALL THE PARTNERS WERE CONTRIBUTED FRESH CAPITAL ARE REG ULARLY ASSESSED TO TAX AND HAVE SUFFICIENT CAPITAL AVAILABLE WITH THEM TO CONTRIBUTE TOWARDS CAPITAL ALONG WITH THE CASH RECEIVED FROM THEIR FAT HERS WHO WERE AGRICULTURIST HAVING SUFFICIENT INCOME TO BE ABLE T O GIVE THE SAID AMOUNTS TO THEIR SONS. FURTHER AS HELD BY HONBLE ITAT AH MEDABAD IN THE CASE OF DHORAJIA CONSTRUCTION CO. (SUPRA) IF CASH CREDI TS IN THE NAMES OF PARTNERS IN THE FIRMS ACCOUNT WERE NOT FICTITIOUS THE SCOPE OF FURTHER ITA NO.3693/AHD/2008 A.Y. 2005-06 ITO WD.6(1)SRT V. M/S. AMRUT CEMENT INDUSTRIES PAGE 3 INQUIRY AS TO WHEREFROM PARTNERS OBTAINED THE SAID AMOUNT SHOULD BE RESTRICTED TO THE CASE OF INDIVIDUAL PARTNERS AND N ADDITION U/S.68 OF THE ACT CAN BE MADE IN REASSESSMENT OF THE FIRM. A SIMI LAR VIEW HAVE BEEN TAKEN BY VARIOUS OTHER COURTS AND THEREFORE EVEN ON THIS GROUND ADDITION MADE U/S.68 OF THE ACT IS NOT SUSTAINABLE SPECIALL Y WHEN THE PARTNERS HAVE EXPLAINED THEIR SOURCES OF INVESTMENT IN CONTR IBUTION OF CAPITAL IN THE FIRM. I AM THEREFORE OF THE CONSIDERED VIEW THA T THE AO'S ACTION IN TREATING THE CAPITAL INTRODUCTION BY THE PARTNERS W AS UNEXPLAINED IS NOT SUSTAINABLE AND THE SAME IS DIRECTED TO BE DELETED. 4. BEFORE US LD. SR-DR SUBMITTED THAT ASSESSING OFF ICER HAS MADE IT CLEAR IN HIS ORDER THAT ASSESSEE HAS FAILED TO PROVE THE IDENTITY CAPACITY OF CREDITORS AND GENUINENESS OF THE TRANSACTION. HE HAS ALSO RE FERRED TO VARIOUS CASE LAWS AS PER CIT(A)S ORDER. 5. BEFORE US LD. AR FOR THE ASSESSEE SUBMITTED THAT PARTNERS HAVE EXPLAINED THE INTRODUCTION OF CAPITAL IN THE FIRM AS UNDER:- SR. NO. NAME OF THE PARTNER AMT. INTRODUCED AS CAPITAL IN FIRM (RS) SOURCE OF FUND 1. ARUNKUMAR R DOBARIA 2 70 000/- 1 00 000/- URBAN CO-OP. BANK LOAN HAS BEEN TAKEN 1 70 000 CASH RECEIVED FROM FATHER OUT OF FATHERS AGRICULTURE INCOME. 2. ANILKUMAR R DOBARIA 2 99 900/- 3 00 000/- URBAN CO-OP. BANK LOAN HAS BEEN TAKEN. 3. BHAVESHKUMAR BARVALIA 3 52 800 2 15 000/- OWN CAPITAL & CASH BALANCE 1 37 800/- CASH RECEIVED FROM FATHER OUT OF FATHERS AGRICULTURE INCOME. 4. SUNILKUMAR P DUDHAT 5 00 000/- 1 50 000/- OWN CA PITAL & CASH BALANCE 3 50 000/- CASH RECEIVED FROM FATHER OUT OF FATHERS AGRICULTURE INCOME. 5. VIPULKUMAR A PATEL 4 50 000/- 1 00 000/- OWN CAP ITAL & CASH BALANCE 3 50 000/- CASH RECEIVED FROM FATHER OUT OF FATHERS AGRICULTURE INCOME. ITA NO.3693/AHD/2008 A.Y. 2005-06 ITO WD.6(1)SRT V. M/S. AMRUT CEMENT INDUSTRIES PAGE 4 6. VRAJLAL A KUKADIA 4 54 000/- 2 65 000/- OWN CAPI TAL & CASH BALANCE 90 000/- LOAN RECEIVED BY CHEQUE FROM RELATIVES 99 000 CASH RECEIVED FROM FATHER OUT OF FATHERS AGRICULTURE INCOME ONCE THE PARTNER ADMITTED TO HAVE INTRODUCED A CAPI TAL NO ADDITION CAN BE MADE IN THE HANDS OF THE FIRM. EVEN LD. ASSESSING OFFIC ER HAS GIVEN A FINDING THAT PARTNERS HAVE ADMITTED TO HAVE INTRODUCED CAPITAL I N THE FIRM. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIALS ON RECORD. IN OUR CONSIDERED VIEW IF PARTNERS OF THE FIRM AFFIRM TO HAVE INTRODUCED THE AMOUNT IN THE BOOKS OF ACCOUNT OF THE FIRM THEN IT WOULD BE ASSESSED IN THE HANDS OF THE PARTNERS AS UNEXPLAINED INVESTMENT. T HIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF CIT V. MD. PERWAZ AHMEAD (2004) 268 ITR 381 (PTN) AND BY THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. KEWAL KRISHNA & PARTNER (2009) 18 DTR 121 (RAJ) WHEREIN IT IS HELD THAT IF THERE IS CAPITAL CONTRIB UTION BY THE PARTNERS ON THE FIRST DAY OF THE COMMENCEMENT OF BUSINESS THEN IT COULD N OT BE ADDED IN THE HANDS OF THE FIRM. BUT WHERE PARTNERS FAILED TO DISCHARGE TH E ONUS OF PROVING THE SOURCE OF SUCH DEPOSITS BY THEM IN THE FIRM THEN THE SAME COULD BE ADDED TO THE INCOME OF PARTNERS CONCERNED IN TERMS OF SEC.69 OF THE ACT . IN THE CASE OF CIT V. V. METACAM INDUSTRIES (2000) 245 ITR 160 (MP) IT IS HELD THAT THAT THE B URDEN OF PROOF OF THE CREDIT IN THE FIRM IS ON THE ASSESSEE BUT WHERE EXPLANATION GIVEN BY THE ASSESSEE IS SATISFACTORY THEN THAT ENTRY WILL N OT BE CHARGED AS INCOME OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR. ONCE IT IS ESTABLISHED THAT AMOUNT HAS BEEN INVESTED BY PARTNER IN THE FIRM THEN THE RESPO NSIBILITY OF THE ASSESSEE IS OVER. WHETHER THAT PERSON IS ASSESSED OR NOT OR FRO M WHERE HE HAS BROUGHT THIS MONEY IS NOT THE RESPONSIBILITY OF THE FIRM. THE MO MENT THE FIRM GIVES A SATISFACTORY EXPLANATION AND PRODUCED THE PERSON WH O HAS DEPOSITED THE AMOUNT ITA NO.3693/AHD/2008 A.Y. 2005-06 ITO WD.6(1)SRT V. M/S. AMRUT CEMENT INDUSTRIES PAGE 5 THEN THE BURDEN OF THE FIRM IS DISCHARGED. IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED AS THE INCOME OF THE FIRM FOR THE PURPOSE O F INCOME-TAX. IN THE CASE OF CIT V. BARMA ELECTRO CORPORATION (2001) 252 ITR 344 (P & H) IT IS HELD THAT IF IT IS PROVED THAT CASH CREDITS APPEARING IN THE ACC OUNT OF THE PARTNERS IN THE BOOKS OF THE FIRM BELONGED AND OWNED BY THE PARTNER S THEN THEY COULD NOT BE ASSESSED AS THE FIRMS INCOME BUT THE UNEXPLAINED I NVESTMENT COULD BE ASSESSED IN THE HANDS OF THE PARTNERS U/S.69 OF THE ACT IF T HAT WAS PERMISSIBLE. AS PER FACTS THE ASSESSING OFFICER SOUGHT THE EXPLANATION FROM VARIOUS PARTNERS WHO HAVE SUBMITTED THE EXPLANATION OF THE MONEY INTRODU CED IN THEIR CAPITAL ACCOUNT. THEIR DETAILS ARE GIVEN BY LD. AR WHICH ARE REPRODU CED AS ABOVE. 7. IN VIEW OF THESE THE BURDEN IS DISCHARGED BY THE ASSESSEE-FIRM. IN CASE EXPLANATION SO FURNISHED IS NOT FOUND SATISFACTORY THEN ADDITION CAN ONLY BE MADE IN THE HANDS OF THE PARTNERS U/S.69 OF THE ACT . WE CONFIRM THE ORDER OF CIT(APPEALS) AND DISMISS THE APPEAL FILED BY REVENU E. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 28/05/2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (A CCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- IV SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD