The ACIT, Circle-4,, Ahmedabad v. Jhanvi Agrofoods Pvt. Ltd.,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.466/AHD/2005 ASSESSMENT YEAR: 2001-02 DATE OF HEARING:8.4.10 DRAFTED:11.5.10 ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-4 AHMEDABAD NAVJIVAN TRUST BUILDING OFF. ASHRAM ROAD V/S . JHANVI AGROFOODS PVT. LTD. 6 SURYA COMPLEX 3 RD FLOOR NR. SWASTIK CHAR RATA C.G. ROAD AHMEDABAD PAN NO.AAACJ9556B (APPELLANT) .. (RESPONDENT) ITA NO.467/AHD/2005 ASSESSMENT YEAR: 2001-02 ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-4 AHMEDABAD NAVJIVAN TRUST BUILDING OFF. ASHRAM ROAD V/S . JHANVI GREENWOODS PVT. LTD. 6 SURYA COMPLEX 3 RD FLOOR NR. SWASTIK CHAR RATA C.G. ROAD AHMEDABAD PAN NO.AAACJ9557A (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI MEHUL K PATEL AR REVENUE BY:- SHRI B.S. GEHLOT CIT-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE TWO APPEALS BY THE REVENUE ARE ARISING OUT O F DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-VIII AHMEDABA D IN APPEAL NOS. CITAVIII/ITO/4(2)/42-43/04-05 DATED 29-11-2004. THE ASSESSMENTS WERE FRAMED BY THE INCOME-TAX OFFICER WARD-4(2) AHMEDABAD U/S 14 3(3)(II) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 25-03-2004 FOR ASSESSMENT YEAR 2001-02 IN BOTH THE CASES. ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 2 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF REVEN UE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF DISALLOWANCE OF LOS S ON ACCOUNT OF SALE OF SHARES OF ALPS INDUSTRIES LTD. FOR THIS REVENUE HAS RAISED T HE FOLLOWING GROUND NO.1 :- ITA NO.466/AHD/2005. 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.6612668/- MADE BY WAY OF DISALLOWANC E OF LOSS ON SALE OF SHARES OF ALPS INDUSTRIES LTD. WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION. ITA NO.467/AHD/2005 1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.13357551/- MADE BY WAY OF DISALLOWANCE OF LOS S ON SALE OF SHARES OF ALPS INDUSTRIES LTD. WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION. 3. THE BRIEF FACTS RELATING TO ABOVE ISSUE IN BOTH THE APPEALS ARE THAT THE RETURN OF INCOME DECLARING LOSS AT RS.6 61 59 667/- IN THE CASE OF JHANVI AGROFOODS PVT. LTD. (JAPL IN SHORT) WAS FILED ON 31-03-2002. SIMIL ARLY IN THE CASE OF JHANVI GREENWOODS PVT. LTD.(JGPL IN SHORT) RETURN OF INCOM E DECLARING LOSS AT RS.1 40 18 668/- WAS FILED ON 31-03-2002. SUBSEQUEN TLY AFTER PROCESSING OF RETURNS NOTICE U/S.143(2) OF THE ACT WERE ISSUED FOR SCRUTI NIZING THESE TWO RETURNS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED FROM THE STATEMENT OF INCOME THAT THE ASSESSEE HAS INCURRED SUBSTANTIAL L OSS ON ACCOUNT OF SALE OF SHARES. THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATIONS OF THE RESPECTIVE ACCOUNTS BUT THE ASSESSEE STATED THAT THESE PARTIES ARE NOT CO-OPERA TING AND ACCORDINGLY THEY COULD NOT FURNISH THE DETAILS. SUBSEQUENTLY THE AO ISSUE D SHOW CAUSE NOTICES WHICH ARE IDENTICAL WORDED WE ARE TAKING THE SHOW-CAUSE FROM THE CASE OF JAPL AND REPRODUCE(FROM THE ASSESSMENT ORDER) AS IT IS:- I LOSS ON SALE OF SHARES AS REGARD THE SALE OF SHARES OF ALPS INFOSSYS LTD. PLEASE NOTE THAT WE SOLD THE SAID SHARES THROUGH THE BROKER. WE HAVE ALREADY SUB MITTED THE COPY OF THE BROKER BILL DELIVERY SLIP WHEREIN THE NAME OF THE BROKER AND I.D. NO. OF THE BUYER WERE MENTIONED. WE ALSO SUBMITTED THE STATEME NT OF HDFC BANK BEING OUR DEMAT ACCOUNT WHEREIN ALSO THE TRANSACTION OF S ALE OF THE SAID COMPANY HAS BEEN MENTIONED. EVEN WE HAVE SUBMITTED THE COPY OF THE CHEQUES GIVEN BY THE BROKER AGAINST THE SALE OF THE SHARES OF THE SAID COMPANY. WE HAVE ALSO SUBMITTED AND FILED OUR ORIGINAL BANK STATEMEN T WHEREIN THE SALE PROCEEDS OF SHARES SOLD IS REFLECTED. WHAT ELSE EVI DENCE YOU REQUIRE TO PROVE THE GENUINENESS OF TRANSACTION. WE HAD GIVEN THE NA ME AND ADDRESS OF ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 3 BROKER WHICH WAS AVAILABLE WITH US AT THE TIME OF TRANSACTION. THE SALE TRANSACTION TOOK PLACE BEFORE 3 YEARS AND THERE IS EVERY POSSIBILITY THAT THE BROKER HAVE CHANGED THE PLACE OF THE BUSINESS. YOUR PROPOSAL TO DISALLOW THE LOSS MERELY UNDER GROUND THAT THE BROKER IS NOT AVA ILABLE ON GIVEN ADDRESS IS NOT A GENUINE OR BONAFIDE GROUND AND LOSS CANNOT BE DISALLOWED ON SUCH GROUND. WE HAVE THEREFORE TO REQUEST YOU THAT WE HA VE FURNISHED ALL NECESSARY DOCUMENTS WHICH PROVE THE GENUINE SALE T RANSACTION AND THEREFORE THERE IS NO REASON AND JUSTIFICATION IN D ISALLOWANCE OF LOSS. WE THEREFORE REQUEST YOU TO PLEASE ALLOW THE SAME. THE ASSESSING OFFICER NOTED THAT WITHOUT CONFIRMATI ON OF THE RELEVANT TRANSACTION THE GENUINENESS OF TRANSACTION CANNOT BE ACCEPTED AND I N THE CASE OF BROKER R.K. CONSULTANCY LOANS AND ADVANCES ARE SHOWN AT RS.6 1 8 331/- IN THE CASE OF JAPL AND RS.57 551/- IN THE CASE OF JGPL. THE AO NOTED T HE ENTIRE RECORDED TRANSACTIONS AS APPEARING IN THE ASSESSEES BOOK AS UNDER IN THE CASE OF JAPL:- DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1.4.2000 OP. BALANCE 75000000 20.11.00 DR R.K. CONSULTANCY JOUMAL 1 5370 DR R.K.CONSULTANCY 3569767.06 21.11.00 CR. R.K.CONSULTANCY JOUMAL 2 219057.6 0 DR. R.K.CONSULTANCY JOUMAL 3 4981379.29 31.3.2001 DR PROFIT/LOSS ON SALE OF SHARES JOUMAL 2 66121668.65 DR R.K.CONSUNTALCY JOUMAL 3 551612.60 75112707.20 15750000 DR CLOSING BALANCE 59362707.20 75224427.607 75224427.60 IN THE ABOVE ACCOUNT ASSESSEE COMPANY CARRIED OUT BUSINESS OF SALE AND PURCHASE OF SHARES OF ALPS INDUSTRIES LIMITED AND ACTUAL TRA NSACTION STATED TO BE CARRIED OUT IS FURTHER ELABORATED AS UNDER. 25 LAC SHARE OF R.30 EACH OF ALP IND. LTD. RS.7 5 0 00 000/- ADD: 37780 SHARES PURCHASED OF ALP INDS. LTD. RS. 2 24 427/- RS. 7 52 24 427/- LESS: SALES OF SHARES RS. 91 02 759/- LOSS ON SALE OF HARES RS. 6 61 21 668/- AND IN THE CASE OF JGPL AS UNDER:- ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 4 DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1.4.2000 OP. BALANCE 75000000 21.11.00 DR R.K. CONSULTANCY JOUMAL 1 243000 27.11.00 CR R.K.CONSULTANCY JAUMAL 2 112707.20 21.11.00 CR. R.K.CONSULTANCY JOUMAL 3 151215 6 DR. LOSS ON SALE OF SHARE JOUMAL 4 13994844 75112707.20 15750000 59362707.20 75112707.20 75112707.20 IN THE ABOVE ACCOUNT ASSESSEE COMPANY ALLEGED TO H AVE CARRIED OUT BUSINESS OF ALE AND PURCHASE OF SHARES OF ALP INDUSTRIES LIMITED AN D ACTUAL TRANSACTIONS STATED TO BE CARRIED OUT I FURTHER SUMARISED AS UNDER 5 LAC SHARE OF R.30 EACH OF ALP IND. LTD. RS.1 50 00 000/- ADD: 25000 SHARES PURCHASED OF ALP INDS. LTD. RS. 1 12 707/- RS. 1 51 12 707/- LESS: SALES OF SHARES RS. 17 55 156/- LOSS ON SALE OF SHARES RS. 1 33 57 551/- SINCE THE ASSESSEE HAS NOT FURNISHED THE CONFIRMATI ONS AND ALSO NOT PRODUCED THE BROKER M/S. R.K CONSULTANCY THE ASSESSING OFFICER DISALLOWED THE LOSS BY STATING THAT THE COPY OF BILLS FURNISHED BY THE ASSESSEE OF R.K. CONSULTANCY IT IS APPARENT THAT THE ASSESSEE HAS ENTERED INTO OFF MARKET TRANS ACTION AND THIS IS NOT A TRANSACTION THROUGH THE REGISTERED BROKER AND EVEN THIS IS NOT THROUGH STOCK EXCHANGE. ACCORDING TO HIM ASSESSEE IS UNABLE TO S UBSTANTIATE THE TRANSACTIONS AND IN THE ABSENCE OF ANYTHING HE DISALLOWED THE LOSS I N BOTH THE CASE. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A ) ALLOWED THE CLAIM OF THE ASSESSEE IN THE CASE OF JAPL AND THE RELEVANT PARA-2 OF HIS APPELLATE ORDER AS UNDER:- GROUND NO.2 : THIS RELATES TO DISALLOWANCE OF LOSS ON SALE OF SHARES OF RS.6 61 21 668/-. THIS IS DISCUSSED BY THE AO AT PA GE 2 AND 3 OF THE ASSESSMENT ORDER. IT WAS NOTED BY HIM THAT THE APP ELLANT COMPANY HAD PURCHASED 25 LACS SHARES OF R.30 EACH OF ALPS INDUS TRIES LTD. FOR RS.7.5 CRORE. FURTHER 33780 SHARES WERE PURCHASED OF THE S AME COMPANY FOR RS.2 24 427/- AND THEREAFTER ENTIRE HARES HAVE BEEN SOLD OFF FOR RS.91 02 759/- WHEREBY LOSS HAS BEEN CLAIMED AT RS. 6 61 21 668/-. BEFORE THE AO IT WAS CLAIMED THAT THE TRANSACTIONS HAS BEE N CARRIED OUT THROUGH THE BROKER VIZ. M/S. R.K. CONSULTANCY. CONFIRMATION LE TTER FROM THE AID CONSULTANT ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 5 WAS NOT FURNISHED BEFORE THE AO AND THE AO ACCORDIN GLY DISALLOWED THE SAID LOSS AS PER HIS FINDING AT PAGE 3 OF THE ORDER. BEF ORE ME THE APPELLANTS REPRESENTATIVE SHRI PATEL HAS SUBMITTED THAT COPY O F ACCOUNT HAD BEEN SUBMITTED BEFORE THE AO DISCUSSED AT PAGE 3 OF THE ORDER AND A FRESH COPY IS AGAIN FURNISHED IN THE PAPER BOOK BEFORE ME. COPIES OF DELIVERY INSTRUCTIONS TO HDFC BANK HAVE ALSO BEEN SUBMITTED AT PAGE 54 TO 57 OF THE PAPER BOOK. I HAVE GONE THROUGH THE SAME AND FIND THAT THE TRANSA CTIONS REFERRED BY THE AO AT PAGE 3 OF THE ORDER HAD BEEN ACTUALLY CARRIED OU T AS PER DEMAT ACCOUNT AND DELIVERY INSTRUCTIONS FROM DP.ID NO.IN300757 CL IENT LD. 10748064 DATED 21.11.2000. COPY OF THE SAME HAS BEEN SUBMITTED AT PAGE 54 TO 57 OF THE PAPER BOOK. THE TRANSACTIONS HAVE BEEN EFFECTED BY CHEQUES AND SUPPORTING EVIDENCE LIKE COPIES OF CHEQUES HAVE ALSO BEEN ADDU CED AT PAGE 47 OF THE PAPER BOOK. AFTER PERUSING THE SAME I DO NOT SEE A NY REASON AS TO WHY THE GENUINENESS OF THE TRANSACTION SHOULD NOT BE ACCEPT ABLE BY THE AO M/S. HDFC BANK IS A SCHEDULED BANK AND TRANSACTIONS HAVE BEEN EFFECTED THROUGH DEMAT ACCOUNT AND THEREFORE THE SAME ARE VERIFIABLE AS REFERRED ABOVE. THE ADDITION MADE ON THIS ACCOUNT IS THEREFORE NO SUSTA INABLE AND THEREFORE DELETED. SIMILARLY IN THE CASE OF JGPL THE CIT(A) ALSO ALLO WED THE CLAIM OF THE ASSESSEE AS UNDER:- GROUND NO.2 : THIS RELATES TO DISALLOWANCE OF LOSS ON SALE OF SHARES OF RS.1 33 57 551/-. THE DISALLOWANCE OF CLAIM OF LOSS HAS BEEN DISCUSSED BY THE AO AT PAGE 3 OF THE ASSESSMENT ORDER AS UNDER:- 5 LACS SHARES OF RS.30 EACH OF ALPS INDS LTD. RS.1 50 00 000 ADD: 25000 SHARES PURCHASED OF ALPS INDS LTD. RS. 1.12.707 RS. 1 51 12 707 LESS: SALE OF SHARES RS. 17 55 156 LOSS ON SALE OF SHARES RS.1 33 57 551 2.1 THE AO DID NOT ACCEPT THE LOSS SINCE CONFIRMATI ON LETTERS HAD NOT BEEN PRODUCED FROM THE BROKER VIZ. M/S. R.K. CONSULTANC Y. THIS ISSUE HAS COME UP IN THE CASE OF M/S. JHANVI AGROFARMS PVT. LTD. FOR THE SAME ASSESSMENT YEAR WHEREBY THE MATTER HAS BEEN DISPOSED OF IN FAVOUR O F THE APPELLANT. THE FACTS ARE SIMILAR AS IN THAT CASE IN AS MUCH AS COPIES OF DEMAT ACCOUNT NO.DPID NO.IN300757 CLIENT LD. 10748064 DATED 23.11.2000 OF HDFC BANK COPIES OF DELIVERY INSTRUCTIONS HAVE BEEN PRODUCED AS PER PAG E NOS. 34-37 OF THE PAPER BOOK. HAVING REGARD TO THE SAME AND ALSO WITH REFER ENCE TO MY FINDINGS IN THE CASE OF M/S. JHANVI AGROFARMS PVT. LTD. AS PER ORDE R NO. CIT(A)/VIII/ITO/4(2)/43/04-05 DATED 29.11.2004 THE INFERENCE DRAWN BY THE AO THAT THE TRANSACTION IS NOT GENUINE CANNOT BE UP HELD AND THE DISALLOWANCE MADE IS ACCORDINGLY DIRECTED TO DELETED IN THIS CAS E ALSO. EXACTLY ON IDENTICAL REASONS IN BOTH THE CASES RE VENUE CAME IN APPEALS BEFORE US. ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 6 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER THE ORDER OF CIT(A) AND THE DOCUM ENTS FILED BY THE ASSESSEE. WE FIND FROM THE RECORDS AND ARGUMENTS OF LD. CIT DR THAT TILL NOW THE ASSESSEE COULD NOT PRODUCE THE CONFIRMATIONS FROM M/S. R.K. CONSULTANCY AND EVEN THE ASSESSING OFFICER HAS REQUIRED THE ASSESSEE TO PROD UCE THE SAID BROKER FOR EXAMINATION. BUT THE ASSESSEE FAILED TO PRODUCE THE SAME. LD. COUNSEL FOR THE ASSESSEE AGREED THAT THIS IS OFF MARKET TRANSACTION AND THIS IS NOT THROUGH STOCK EXCHANGE AND EVEN THE DETAILS OF DEMAT A/C. HAS NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER. ONCE THE CONFIRMATION IS NOT PR ODUCED AND EVEN BROKER IS NOT PRODUCED FOR EXAMINATION IN RESPECT OF TRANSACTION CARRIED ON BY HIM THE TRANSACTION CANNOT BE TREATED AS GENUINE. ON QUERY FROM THE BE NCH LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE CAN BE REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR RE-VERIFICATION OF THIS TRANSACTION AND HE UNDE RTOOK ON BEHALF OF THE ASSESSEE THAT HE WILL FILE THE CONFIRMATIONS AND OTHER DETAIL FRO M M/S. R.K. CONSULTANCY. ON THIS THE BENCH REQUIRED THE ASSESSEE TO PRODUCE M/S. R.K. CO NSULTANCY FOR EXAMINATION BEFORE THE ASSESSING OFFICER. SIMILAR ARGUMENTS WER E MADE IN THE CASE OF JGPL. NO DOUBT THE ASSESSEE HAS FILED DETAIL AS AVAILABLE IN ITS BOOKS OF ACCOUNT THE COPY OF ACCOUNT OF M/S. R.K. CONSULTANCY THE BANK TRANSACT ION THROUGH BROKER AND PAYMENT IS THROUGH ACCOUNT PAYEE CHEQUE ETC. BUT THE VITAL INFORMATION THAT THE IDENTITY OF THE PARTY IS NOT ESTABLISHED. ACCORDINGLY TAKING INTO CONSIDERATION THE FACTS IN ENTERITY WE FEEL THAT THIS COMMON ISSUE NEEDS RE-EXAMINATION AT THE LEVEL OF ASSESSING OFFICER AFRESH. THE ASSESSEE IS ALSO DIRECTED TO PR ODUCE THE DETAILS IN RESPECT OF M/S. R.K. CONSULTANCY AND THE TRANSACTION OF SHARES OF A LPS INDUSTRIES. ACCORDINGLY THIS COMMON ISSUE OF THESE APPEALS OF THE REVENUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER AND ALLOWED FOR STATISTICAL PURPO SES. 5. THE NEXT COMMON ISSUE IN THESE APPEALS OF REVENU E IS AS REGARDS TO THE ORDER OF CIT(A) DELETING THE ADDITION OF UNEXPLAINE D CREDITS U/S/68 OF THE ACT MADE BY THE ASSESSING OFFICER. FOR THIS REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- ITA NO.466/AHD/2005. 2) THE LD. CIT(A) HA ERRED IN LAW AND AS WELL AS S ON FACTS SIN DELETING THE ADDITION OF RS.6 CRORES ON ACCOUNT OF UNEXPLAINED C ASH CREDIT U/S.68 OF THE I.T. ACT. ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 7 GROUND NO.2 IN ITA NO.467/AHD/2005:- 2) THE LD. CIT(A) HAS ERRED IN LAW AND AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.4 CRORES ON ACCOUNT OF UNEXPLAINED C ASH CREDIT U/S.68 OF THE I.T. ACT. 6. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSU E ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BALANCE-SHEET THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.6 CRORES IN THE CASE OF JAPL AND RS.4 CRORES IN THE CASE OF JGPL FROM ONCE SHRI SANJAY C AMIN. THE ASSESSEE WAS ASKED TO CLARIFY THE NATURE OF TRANSACTIONS AND ALSO FILE DETAILS AND PROVE THAT THE TRANSACTIONS ARE GENUINE. THE ASSESSEE COULD NOT FU RNISH ANY CONFIRMATION FROM THE CONCERNED PARTY AND ACCORDINGLY THE ASSESSEE WAS AS KED TO SHOW CAUSE AS TO WHY THE AMOUNT RECEIVED FROM SHRI SANJAY C AMIN SHOULD NOT BE ADDED U/S.68 OF THE ACT. THE ASSESSEE EXPLAINED VIDE LETTER DATED 24-03-2004 IN BOTH THE CASES AND THE COMMON REPLY READS AS UNDER:- DURING THE YEAR UNDER CONSIDERATION MR. SANJ AY AMIN HAD ADVANCED US A SUM OF RS.4 CRORE. PLEASE NOTE THAT MR. SANJAY AMIN IS ASSESSED TO TAX. WE HAVE FILED NOT ONLY HIS COPY OF ACCOUNT BUT ALSO FILED OUR BANK STATEMENT SHOWING THE AMOUNT DEPOSITED IN OUR BANK ACCOUNT. N OT ONLY THIS BUT WE HAVE ALSO FILED THE BANK STATEMENT OF MR. SANJAY AMIN WH ERE FROM SUCH WITHDRAWAL ARE APPEARED. WHAT ELSE YOUR HONOUR REQUIRES TO PRO VE THE GENUINENESS OF AMOUNT RECEIVED FROM MR. SANJAY AMIN. YOUR HONOUR D ESIRE TO DISALLOW THE SAME MERELY ON THE GROUND THAT WE COULD NOT SUBMIT THE CONFIRMATION FROM MR. SANJAY AMIN. PLEASE NOTE THAT MR. SANJAY AMIN I S OUT OF INDIA AT PRESENT AND WE COULD NOT OBTAIN HIS CONFIRMATION. WE WROTE A LETTER BY REGD. A.D. FOR HIS CONFIRMATION BUT THE SAME COULD NOT BE SERVED O N HIM AND RETURNED US WITH A REMARK THAT THE ADDRESS HAS THE LEFT INDIA . UNDER SUCH SITUATION WE COULD NOT FILE THIS CONFIRMATION. EXCEPT THIS WE HA VE FILED ALL EVIDENCE ETC. LOOKING TO SUCH EVIDENTIAL PROOFS AND DETAILS OF SU CH TRANSACTION RECORDED IN THE BANK ACCOUNT OF BOTH THE PARTIES ARE MORE THAN EVIDENTIAL THAN THE CONFIRMATION AND THEREFORE THE SAID ADVANCES ARE TH E GENUINE AND THERE IS NO REASON AND JUSTIFICATION IN CONSIDERING THE INCOME U/.68 OF I.T. ACT. THE ASSESSING OFFICER NOTED THAT A PER THE PROVISIO NS OF SEC.68 OF THE ACT THE ASSESSEE IS DUTY BOUND TO PROVE THE TRANSACTIONS IN TERMS OF SEC.68 BUT THE ASSESSEE HERE HAD FAILED TO DISCHARGE ITS ONUS AND ACCORDINGLY HE ADDED THE AMOUNT U/S.68 OF THE ACT IN BOTH THE CASES. AGGRIE VED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) ASSESSEE STATED THAT THE ASSESSEE IN THE CASE OF JAPL HAS RECEIVED THE FOLLOWING AMOUNTS BY CHEQUE:- ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 8 DATE PARTICULARS AMOUNT 14.2.2001 VIJAYA BANK NAVRANGPURA A/C. NO.2903 1 25 00 000 14.2.2001 -DO- 1 25 00 000 14.2.2001 -DO- 1 25 00 000 14.2.2001 -DO- 50 00 000 14.2.2001 -DO- 50 00 000 14.2.2001 -DO- 1 25 00 000 AND IN THE CASE JGPL AS UNDER:- DATE PARTICULAR AMOUNT 14.2.2001 VIJAYA BANK NAVRANGPURA A/C. NO.2904 1 25 00 000 14.2.2001 -DO- 1 25 00 000 14.2.2001 -DO- 1 25 00 000 14.2.2001 -DO- 25 00 000 IT WAS ALSO CONTENDED THAT THE ASSESSEE HAS ALSO FI LED CONFIRMATIONS FROM THE BOOKS OF THE ASSESSEE-COMPANY I.E. THE ACCOUNT COPY OF SH RI SANJAY C ANMIN FROM 01-04- 2002 31-03-2001 THE ASSESSEE ALSO SUBMITTED PAN N O. WHICH IS AFEPA2144J. THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDING IN PARA-3.2 IN THE CASE OF JAPL:- 3.2 COPY OF ACCOUNT OF SHRI SANJAY C AMIN IN VIJAY BANK NAVRANGPURA BRANCH ACCOUNT NO.2977 HAS ALSO BEEN SUBMITTED TO PROVE THAT THE AMOUNTS HAVE BEEN RECEIVED BY CHEQUES ON THE SIDE DATES. IT IS FURTHER SUBMITTED BY THE APPELLANTS REPRESENTATIVE SHRI PATEL THAT ALL THE ABOVE AMOUNTS HAVE BEEN RECEIVED BY SHRI SANJAY C AMIN BY CHEQUES FROM M/S. ALPS INFOY LTD. FROM ACCOUNT NO.2871 IN THE SAME BANK I.E. VIJAYA B ANK NAVRANGPURA. COPY OF ACCOUNT NO.2871 IN THE SAME BANK HAS ALSO BEEN S UBMITTED BEFORE ME TO PROVE THAT THE AMOUNT HAVE BEEN TRANSFERRED FROM AL PS INFOSYS LTD. WHICH HAVE BEEN DEPOSITED IN ACCOUNT NO.2977 OF SHRI SANJ AY C AMIN WHICH HAVE BEEN FURTHER ADVANCED TO THE APPELLANT COMPANY. IT IS THEREFORE PLEADED THAT THE APPELLANT COMPANY HAS DISCHARGED ITS ONUS IN PR OVING THE IDENTITY OF SHRI SANJAY C AMIN AND ALSO THE SOURCE OF THE DEPOSITS M ADE BY HIM IN HIS BANK ACCOUNT AS ABOVE. BEFORE ME AN OPPORTUNITY WAS GRA NTED TO THE APPELLANT AGAIN TO PRODUCE SHRI SANJAY C AMIN ON 23.11.2004. HOWEVER THE APPELLANT COMPANY EXPRESSED IT INABILITY TO PRODUCE HIM SINCE HE IS NOT AVAILABLE IN INDIA. HOWEVER IT IS PLEADED THAT ALL WHAT WAS POSS IBLE HAS BEEN DONE AND ALL THE NECESSARY SUPPORTING EVIDENCE HAVE BEEN SUBMITT ED. COPY OF BLOCK ASSESSMENT ORDER OF SHRI SANJAY C AMIN FOR THE BLOC K PERIOD 1.4.95 TO 14.3.96 DATED 31.3.97 WHEREBY UNDISCLOSED INCOME OF RS.189 97 547/- HAS BEEN ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 9 DETERMINED BY DCIT (ASSTT) PENALTY. RANGE-5 AHMEDA BAD HAS ALSO BEEN SUBMITTED. RELIANCE IS ALSO PLACED ON THE DECISION OF GUJARAT HIGH COURT 256 ITR 630 IN THE CASE OF ROHINI BUILDERS VS. CIT TO P ROVE THAT THE BURDEN HAS BEEN DISCHARGED BY THE APPELLANT AND NO ADVERSE VIE W CAN BE TAKEN IN THIS ISSUE. I HAVE EXAMINED THE FACTS BROUGHT ON RECORD AND EVIDENCES PRODUCED BEFORE THE AO AND ALSO BEFORE ME. ON GOING THROUGH THE SAME IT IS CLEAR THAT AMOUNTS WHICH HAVE BEEN RECEIVED BY THE APPELLANT COMPANY HAVE BEEN RECEIVED BY CHEQUES AND THE SAID CREDITOR NAMELY SHRI SANJAY C AMIN HAS ALSO RECEIVED THESE AMOUNT FROM M/S. ALPS INFOSYS L TD. BY CHEQUES AND THEREFORE IT IS NOT JUSTIFIED TO HOLD THAT THE MONI ES INVOLVED ARE NOT EXPLAINED BY THE APPELLANT COMPANY. THUS HAVING REGARD TO TH E FACT THAT THE IDENTIFY OF SHRI SANJAY C AMIN HAS BEEN ESTABLISHED THE PAYMEN T SHAVE BEEN RECEIVED BY CHEQUES AND THE SOURCE OF THE FUNDS HAVE ALSO BE EN EXPLAINED I.E. M/S. ALPS INFOSYS LTD. THE ADDITION MADE BY THE AO CANN OT BE SUSTAINED AND ACCORDINGLY DIRECTED TO BE DELETED. SIMILAR ARE THE FINDING IN THE CASE OF JGPL. IN BOT H THE CASE REVENUE CAME IN APPEAL BEFORE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASES. WE FIND THAT BOTH THE A SSESSEE HAS RECEIVED AMOUNTS OF RS.6 CRORE AND RS.4 CRORE FROM SHRI SANJAY C AMIN A S UNSECURED LOAN. THE ASSESSEE COULD NOT PRODUCE SHRI SANJAY C AMIN FOR E XAMINATION BEFORE ASSESSING OFFICER BY STATING THE REASON THAT SHRI AMIN IS OUT OF INDIA AND EVEN CONFIRMATION COULD NOT BE OBTAINED. THE ASSESSEE FILED INFORMAT IONS BEFORE THE CIT(A) FOR THE FIRST TIME LIKE COPY OF BANK ACCOUNT NO.2871 MAINTAINED W ITH VIJAY BANK NAVARANGPURA AND STATED THAT THE AMOUNT RECEIVED BY SHRI AMIN BY CHEQUE FROM M/S. ALPS. INFOSYS LTD. FROM THIS ACCOUNT IN THE ASSESSEES BANK ACCOU NT MAINTAINED WITH THE SAME BANK. IT WAS THE CONTENTION OF THE ASSESSEE THAT T HE NECESSARY EVIDENCES PROVING THE IDENTITY OF SHRI AMIN WAS FILED IN THE SHAPE OF BLOCK ASSESSMENT ORDER OF SHRI AMIN FOR THE BLOCK PERIOD 01-04-1995 TO 14-03-1996 (IT SEEMS THAT THE BLOCK PERIOD MENTIONED BY THE CIT(A) IS NOT CORRECT BLOCK PERIOD ) AND THE ASSESSEE BEFORE US HAS NOT FILED THE COPY OF BLOCK ASSESSMENT ORDER. THE A SSESSEE HAS FILED THE DETAILS FROM ITS BOOKS OF ACCOUNT REGARDING THE CREDITOR SHRI SA NJAY C AMIN AND NOT THE INDEPENDENT INFORMATIONS. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE ASSESSEE IS UNABLE TO PROVE THE CASH CREDIT AND THE INFORMATION WAS FILED BEFORE THE CIT(A) FOR THE FIRST TIME AND WITHOUT VERIFYING THE SAME THE CIT(A) ACCEPTED THE GENUINENESS OF THE TRANSACTION. IN VIEW OF THESE F ACTS WE SET ASIDE THIS COMMON ISSUE IN BOTH THE APPEAL. WE DIRECT THE ASSESSING OFFICER TO DECIDE THE COMMON ITA NO.466-467/AHD/2005 A.Y. 2001-02 ACIT CIR-4 ABD V. JHANVI AGROFARMS & GREENWOOD P. LTD. PAG E 10 ISSUE IN TERMS OF THE PROVISIONS OF SEC.68 OF THE A CT AND ALSO CONSIDER THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND HONBLE AP EX COURT LAYING DOWN PRINCIPLES AS REGARDS TO IDENTITY CAPACITY AND GENUINENESS OF TH E TRANSACTION OF CASH CREDITS. THIS COMMON ISSUE IN THESE APPEALS OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT BOTH THE REVENUES APPEALS ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 14/05/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 14/05/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VIII AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD