The ITO, Ward-1(2),, JUNAGADH v. Shri Vinodkumar Naranbhai Ram,, JUNAGADH

ITA 593/RJT/2012 | 2006-2007
Pronouncement Date: 25-10-2013 | Result: Dismissed

Appeal Details

RSA Number 59324914 RSA 2012
Assessee PAN AHVPR2558J
Bench Rajkot
Appeal Number ITA 593/RJT/2012
Duration Of Justice 11 month(s) 19 day(s)
Appellant The ITO, Ward-1(2),, JUNAGADH
Respondent Shri Vinodkumar Naranbhai Ram,, JUNAGADH
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-10-2013
Date Of Final Hearing 21-10-2013
Next Hearing Date 21-10-2013
Assessment Year 2006-2007
Appeal Filed On 05-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH RAJKOT .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM ITA NO. 593/RJT/2012 / ASSESSMENT YEAR : 2006-2007 ITO WARD-1(2) JUNAGADH ( / APPELLANT) SHRI VINODKUMAR NARANBHAI RAM RAJLAXMI SOCIETY JUNAGADH PAN : AHVPR 2558 J / RESPONDENT ! '# / REVENUE BY SHRI ALOK KUMAR DR $% ! '# / ASSESSEE BY SHRI D M RINDANI CA ' & ' %( / DATE OF HEARING 23.10.2013 ) %( / DATE OF PRONOUNCEMENT 25.10.2013 / ORDER .. / T. K. SHARMA J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 06.08.2012 OF THE CIT(A)-IV RAJKOT FOR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SHARES FROM PARTNERSHIP FIRM. FOR THE ASSESSMENT YE AR UNDER APPEAL HE FILED THE RETURN OF INCOME ON 26.04.2006 DECLARING TOTAL INCOME AT R S.62 235/- AND AGRICULTURAL INCOME AT RS.3 45 703/-. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS BORROWED CERTAIN AMOU NTS FROM HIS FATHER WHO IS INTER- ALIA AGRICULTURIST AS WELL AS HAVING BUSINESS INCO ME AND THIS AMOUNTS ARE RECEIVED BY DIFFERENT CHEQUES. ON FURTHER VERIFICATION THE ASS ESSING OFFICER FOUND THAT BEFORE ISSUING THE CHEQUES IN THE BANK ACCOUNT THE FATHER OF THE ASSESSEE NAMELY SHRI NARANBHAI KANABHAI RAM HAS DEPOSITED CASH ON THE SA ME DATE ON WHICH THE CHEQUES WERE ISSUED IN FAVOUR OF THE ASSESSEE NAMELY SHRI V INODKUMAR NARANBHAI RAM. THE ASSESSING OFFICER FURTHER OBSERVED THAT FATHER OF T HE ASSESSEE IS CARRYING ON BUSINESS IN THE NAME OF M/S. VINOD CONSTRUCTION AND HIS GROS S TOTAL INCOME IN FINANCIAL YEAR 2005-06 WAS RS.1 95 594/-. THERE WAS SALE PROCEEDS OF AGRICULTURAL PRODUCE AT RS.2 35 474/-. BEFORE THE ASSESSING OFFICER THE AS SESSEE CONTENDED THAT HIS FATHER SHRI NARANBHAI KANABHAI RAM IS ALSO AN ASSESSEE TH EREFORE NO ADDITION CAN BE MADE 593-RJT-2012 SHRI VINODKUMAR NARANBHAI RAM 2 IN THE HANDS OF HIS SON I.E. THE ASSESSEE BECAUSE THE TRANSACTION ARE CONFIRMED BY BOTH THE PARTIES. SINCE IDENTITY OF THE PARTY IS ES TABLISHED AND TRANSACTION IS ACCEPTED BY HIS FATHER THERE IS NO REQUIREMENT TO PROVE THA T THE CREDIT ENTRY IS GENUINE. AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE ASSESSIN G OFFICER MADE AN ADDITION OF RS.11 21 500/- FOR THE DETAILED REASON GIVEN IN PAR A 7 OF THE ASSESSMENT ORDER WHICH READS AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE AND I DO NOT FIND ANY MERITS IN THEM. THE ASSESSEE HAS NO T DENIED THE FACT THAT HUGE CASH IS FOUND DEPOSITED IN THE BANK ACCOUNT OF HIS FATHER AND CHEQUE OF THE SAME AMOUNT IS GIVEN TO THE ASSESSEE. THE ONLY SOUR CE OF INCOME IN THE HANDS OF HIS FATHER SHOWN INCOME FROM CONSTRUCTION BUSINE SS AND AGRICULTURAL INCOME FROM MEAGER LAND HOLDING ONLY 1.51 HECTORS OF LAND. IT IS VERY OBVIOUS THAT SUCH SMALL PIECE OF LAND CANNOT GENERATE SUCH HUGE CASH SURPLUS OF MORE THAN RS.10 00 000/-. EVEN THE AGRICULTURAL INCOME OF RS. 2 35 000/- SHOWN BY SHRI NARANBHAI RAM IS APPARENTLY ON HUGE SIDE THOUGH NO SCRUTINY ASSESSMENT SEEMS TO HAVE BEEN MADE. HOWEVER IT DOES NOT MEAN THAT MERE FILING OF RETURN AND SHOWING SOME INCOME WOULD ABSOLVE THE ASSESSEE FROM HIS BASIC ONUS TO PROVE THE GENUINENESS OF THE CREDIT ENTRY IN HIS BA NK ACCOUNT ARE IN NO . EVIDENCE IN SUPPORT OF CAPACITY OF LENDER I.E. SH RI NARANBHAI RAM WHO IS HAVING VERY SMALL PIECE OF AGRICULTURAL LAND BARELY SUFFICIENT FOR HIS HOUSE HOLD EXPENSES. THE. CONSTRUCTED ACCOUNT FILED WITH THE RETURN OF INCOME OF SHRI NARANBHAI K RAM CANNOT BE ACCEPTED AS UNASSAILABLE PIECE OF EVIDENCE. IN FACT IT IS SEEN FROM THE CERTIFICATE IN FROM NO.7/ 12 THAT LENDER HAS HIMSELF TAKEN LOAN FROM BANK OF BARODA AMRAPUR BY WAY OF MORTGAGE OF AGRICULTURE LAND. WHEN THE ALLEGED LENDER HIMSELF IS A CREDITOR TOWAR DS BANK LOAN IT CAN NOT BE ACCEPTED THAT HE HAS THE CAPACITY TO GIVE SUCH HUGE LOAN TO HIS SON. THE ATTEMPT ON THE PART OF THE A.R. TO SHOW GROSS CONTR ACT RECEIPTS IN CASH WITHOUT ANY OUTGOING TOWARDS EXPENSES HAS TO BE REJECTED OU TRIGHT. IN FACT IN CONTRACT BUSINESS OF THIS NATURE CONTRACTOR INCURS EXPENDIT URE FIRST AND THEN ONLY PAYMENT IS MADE TO HIM. THE CLAIM OF OPPOSITE TREND IN THIS CASE IS NOTHING BUT TO CONCOCT EVIDENCE TO SUIT THE THEORY OF SHOWING N EXUS BETWEEN CASH DEPOSITS AND ISSUE OF CHEQUES. ON TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE I AM NOT SATISFIED ABOUT THE CREDITWORTHINESS OF SHRI NARANBHAI K RAM AND HOLD THAT THE CREDIT ENTRIES IN THE NAME OF HIS FATHER R OUTED THROUGH BANK ACCOUNT IS UNEXPLAINED WITHIN THE MEANING OF SEC. 68 OF THE AC T. I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME PROCEEDINGS U/S 271(1)(C) OF THE ACT IS SEPARATELY INITIATED. 3. ON APPEAL IN THE IMPUGNED ORDER LD CIT(A) DELE TED THE ADDITIONS FOR THE DETAILED REASON GIVEN IN PARAGRAPH 6 OF HIS ORDER WHICH READS AS UNDER:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER SUBMI SSIONS OF APPELLANT AND ASSESSING OFFICER. APPELLANT IS A PARTNER IN THE FI RM M/S. P H WADIA & SONS. APPELLANT INTRODUCED CAPITAL OF RS.11 21 500/- IN T HIS FIRM IMMEDIATELY AFTER RECEIVING THE CHEQUES OF RS.3.5 LAKH ON 16.2.2006 2.2 LAKH ON 17.2.2006 2.75 LAKH ON 18.2.2006 AND RS.2.265 LAKH ON 30.3.2006 FR OM HIS FATHER SHRI NARANBHAI KANABHAI RAM. SHRI NARANBHAI KANABHAI RAM OPENED HIS BANK ACCOUNT NO.030801503634 IN ICICI BANK ON 01.02.2006 . HE DEPOSITED CASH OF RS.3.5 LAKH ON 16.2.2006 2.2 LAKH ON 16 & 17.02.20 06 2.75 LAKH ON 17 & 18.02.2006 BEFORE ISSUING THE ABOVE MENTIONED CHEQU ES OF EQUAL AMOUNTS TO THE APPELLANT. SHRI NARANBHAI KANABHAI RAM RECEIVED 7 CHEQUES OF ABOUT RS.94 TO 98 THOUSAND EACH TOTALING RS.6.7 LAKH BETW EEN 24.2.2006 TO 8.3.2006 593-RJT-2012 SHRI VINODKUMAR NARANBHAI RAM 3 AND WITHDRAW ALMOST THE ENTIRE AMOUNT IN CASH IMMED IATELY AND AGAIN DEPOSITED RS.2 76 500/- IN CASH ON 30.03.2006 AND ISSUED THE CHEQUE OF SAME AMOUNT TO APPELLANT ON THE SAME DATE. THE CASH BOOK OF SHRI N ARANBHAI KANABHAI RAM SHOWS OPENING BALANCE OF CASH OF CASH OF RS.1 92 30 0/- ON 16.2.2006 RECEIPT OF CASH OF RS.3 39 300/- FROM ABOUT 7 PERSONS IN RE SPECT OF CONSTRUCTION WORK A FURTHER RECEIPT OF RS.3 73 500/- CASH FROM ANOTHER 6 PERSONS ON 17.02.2006 ON ACCOUNT OF CONSTRUCTION WORK AND ANOTHER RECEIPT OF RS.40 000/- IN CASH ON 18.02.2006 FROM ONE PERSON FOR CONSTRUCTION WORK AN D WITHDRAWAL OF RS.24 000/- FROM PARTNERSHIP FIRM VINOD CONSTRUCTIO N. THE CASH BOOK ALSO SHOWS SOME SMALL PAYMENTS IN CASH FOR CONSTRUCTION WORK OF A LITTLE MORE THAN RS.1 LAKH BETWEEN 16.2.2006 TO 18.2.2006 FROM THE A BOVE RECEIPT OF CASH OF RS.7 52 800/- FROM CONSTRUCTION WORK AND RS.40 000/ - AS WITHDRAWAL FROM PARTNERSHIP FIRM VINOD CONSTRUCTION WHERE SHRI NARA NBHAI KANABHAI RAM IS A PARTNER. THE CHEQUES OF RS.8.45 LAKH HAVE BEEN ISSU ED BY SHRI NARANBHAI KANABHAI RAM TO APPELLANT FROM ABOVE NET RECEIPT OF CASH BETWEEN 16.2.2006 TO 18.2.2006 AND THE OPENING BALANCE OF CASH OF RS. 1 92 300/- ON 16.2.2006 IN THE CASH BOOK OF SHRI NARANBHAI KANABHAI RAM. THE L AST CHEQUE OF RS.2.765 LAKH HAS BEEN ISSUED BY SHRI NARANBHAI KANABHAI RAM TO APPELLANT ON 30.3.2006 APPARENTLY FROM THE LOAN OF RS.6.7 LAKH R ECEIVED FROM SHRI BHIMA RAMSHIBHAI. SHRI NARANBHAI KANABHAI RAM IS ALSO ASS ESSED WITH THE SAME ASSESSING OFFICER AS THE APPELLANT. THE ASSESSING O FFICER HAS TO COLLECT EVIDENCES TO COUNTER THE CLAIM OF APPELLANT WHO EXP LAINED THE SOURCE OF CASH DEPOSIT AND CHEQUE DEPOSITS IN THE ACCOUNT OF HIS F ATHER SHRI NARANBHAI KANABHAI RAM BEFORE REACHING A DECISION THAT SUCH D EPOSITS ARE THE INCOME OF APPELLANT ROUTED THROUGH THE BANK ACCOUNT OF HIS FA THER. I HAD ASKED THE ASSESSING OFFICER TO EXAMINE SHRI NARANBHAI KANABHA I RAM DURING THE APPELLATE PROCEEDINGS FOR ESTABLISHING THE FACT WHE THER ANY CONSTRUCTION WORK WAS ACTUALLY CARRIED OUT BY HIM AND WHETHER THE CLI ENTS WHOM HE NAMED FOR RECEIPT OF CASH COULD CONFIRM SUCH PAYMENT AND CONS TRUCTION WORK. HOWEVER THE ASSESSING OFFICER COULD NOT EXAMINE SHRI NARANB HAI KANABHAI RAM BECAUSE HE DID NOT RESPOND TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER AND THEREFORE ASSESSING OFFICER COULD NOT COLLECT A NY EVIDENCE TO SHOW THAT THE CASH AND CHEQUES DEPOSITED IN THE ACCOUNT OF SHRI N ARANBHAI KANABHAI RAM ACTUALLY BELONGED TO THE APPELLANT. IN ABSENCE OF A NY POSITIVE EVIDENCE THAT SUCH DEPOSITS COULD BE INCOME OF APPELLANT AND NOT OF SHRI NARANBHAI KANABHAI RAM IT IS NOT PRUDENT TO DEEM THE LOANS RECEIVED F ROM SHRI NARANBHAI KANABHAI RAM AS INCOME OF APPELLANT. SHRI NARANBHAI KANABHAI RAM IS ASSESSED WITH THE ASSESSING OFFICER HIMSELF. HIS IDENTITY AND CAP ACITY IS NOT IN DOUBT BECAUSE HE HAS FILED THE RETURN OF INCOME OF ASSESSMENT YEA R 2006-07 WITH THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS EXA MINED THE SAME DURING THE APPELLATE PROCEEDINGS ALSO. THE NON-ATTENDANCE OF S HRI NARANBHAI KANABHAI RAM AND NON SUBMISSION OF THE DETAILS OF HIS CLIENT S WHO HAD PAID HIM CASH FOR CONSTRUCTION WORK IN RESPONSE TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER MAY BE A GOOD REASON FOR THE ASSESSING OFFICER TO I NITIATE REASSESSMENT PROCEEDINGS IN CASE OF SHRI NARANBHAI KANABHAI RAM. IF SHRI NARANBHAI KANABHAI RAM FAILS TO PROVE THE EXISTENCE OF CONTRA CT WORK AND THE SOURCE OF RECEIPTS FROM SUCH WORK THE REMEDY LIES IN MAKING APPROPRIATE ASSESSMENT IN HIS CASE. THE SUBMISSION OF SHRI NARANBHAI KANABHAI RAM ON OATH AND AFFIDAVIT THAT HE ADVANCED LOAN OF RS.11 21 500/- TO APPELLAN T FROM HIS AGRICULTURAL INCOME CONSTRUCTION INCOME WITHDRAWAL FROM PARTNE RSHIP CONCERN AS REFLECTED IN HIS BOOKS MAKES HIM ANSWERABLE TO THE RECEIPTS OF HIS BOOKS OF ACCOUNT VIS A VIS HIS RETURN OF INCOME. AS FAR AS APPELLANT IS CO NCERNED HE HAS SUBMITTED ENOUGH EVIDENCES TO PROVE THE IDENTITY AND CAPACITY OF SHRI NARANBHAI KANABHAI RAM AND THE GENUINENESS OF THE TRANSACTION . I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.11 2 1 500/- MADE BY HIM ON ACCOUNT OF LOAN RECEIVED BY APPELLANT FROM SHRI NAR ANBHAI KANABHAI RAM U/S 68 OF THE I.T. ACT. 4. AGGRIEVED WITH THE ORDER OF LD. CIT(A) THE REVE NUE IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS:- 593-RJT-2012 SHRI VINODKUMAR NARANBHAI RAM 4 1. THE LD. CIT(A) RAJKOT HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.11 21 500/- MADE U/S 68 OF THE IT ACT. 2. THE LD. CIT(A) RAJKOT HAS ERRED IN LAW AND ON F ACTS OF THE CASE IN ALLOWING THE APPEAL THOUGH THE ASSESSEE DID NOT APP EAR BEFORE THE AO AND CO- OPERATE DURING THE REMAND PROCEEDINGS AND DID NOT E STABLISH THE VERACITY AND GENUINENESS OF THE EVIDENCES FILED BEFORE THE CIT(A ) WHO HAD SPECIFICALLY DIRECTED THE AO TO CARRY OUT THE NECESSARY INQUIRIE S TO ESTABLISH THE GENUINENESS OF THE LOAN TRANSACTION. 3. THE LD. CIT(A) OUGHT TO HAVE DISMISSED THE APPEA L FILED BY THE ASSESSEE AS THE ASSESSEE DID NOT COMPLY WITH HIS DIRECTIONS GIVEN TO THE AO TO BE COMPLIED WITH DURING THE REMAND PROCEEDINGS. 4. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN NOT APPLYING THE RATIO OF THE HONBLE SC GIVEN IN THE CASE OF P. MOH ANKALA 291 ITR 278 (SC). 5. AT THE TIME OF HEARING ON BEHALF OF REVENUE SH RI ALOK KUMAR DR APPEARED AND CONTENTED THAT FATHER OF THE ASSESSEE WAS JUST ISSUING CHEQUES TO THE ASSESSEE AGAINST THE CASH WHICH WAS DEPOSITED ON THE SAME DA TE ON WHICH THE CHEQUES WERE ISSUED IN FAVOUR OF THE ASSESSEE. FURTHER HE SUBMIT TED THAT THE FATHER OF THE ASSESSEE HAS FILED RETURN OF INCOME U/S 44AD THEREFORE THE RATIO OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF P. MOHANKALA 291 ITR 2 78 (SC) IS SQUARELY APPLICABLE AND THE LD CIT(A) ERRED IN NOT APPLYING THE SAME. 6. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSES SEE POINTED OUT THAT THE ASSESSMENT OF ASSESSEES FATHER NAMELY SHRI NARANBH AI KANABHAI RAM HAS BEEN REOPENED U/S 148 OF THE INCOME-TAX ACT. IN THE REAS ONS RECORDED BEFORE THE REOPENING THE ASSESSMENT IT WAS CLEARLY MENTIONED THAT THERE WERE REASONS TO BELIEVE THAT INCOME OF RS.11 25 000/- HAS ESCAPED ASSESSMENT. IN THE REASONS IT WAS ALSO MENTIONED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS FOR ASSESSMENT YEAR 2006-07 IN THE CASE OF SHRI VINODKUMAR NARANBHAI RA M (ASSESSEE) IT WAS NOTICED THAT SHRI NARANBHAI KANABHAI RAM (ASSESSEES FATHER ) HAS ADVANCED A LOAN OF RS.11 25 500/-. THE LD. COUNSEL OF THE ASSESSEE FUR THER SUBMITTED THAT IN ORDER TO EXAMINE THE SOURCE OF LOAN GIVEN BY THE FATHER OF T HE ASSESSEE THE ASSESSMENT OF FATHER IS REOPENED U/S 148 OF THE INCOME-TAX ACT; T HEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT ASS ESSMENT OF ASSESSEES FATHER NAMELY 593-RJT-2012 SHRI VINODKUMAR NARANBHAI RAM 5 SHRI NARANBHAI KANABHAI RAM WHO HAS GIVEN A LOAN O F RS.11 25 500/- TO THE ASSESSEE HAS ALREADY REOPENED U/S 148 OF THE INCOM E-TAX ACT 1961. THE FATHER OF THE ASSESSEE IS ALSO ASSESSED TO TAX. THE LOAN AMOUNT W AS RECEIVED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES. KEEPING IN VIEW OF T HESE CONSPICUOUS FACTS OF THE CASE THE VIEW TAKEN BY THE LD CIT(A) IS UPHELD. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- ( *.#. % D. K. SRIVASTAVA ) ( .#. -. / T. K. SHARMA) #( '/ / ACCOUNTANT MEMBER '/ /JUDICIAL MEMBER /#- 0/1/ ORDER DATE 25.10.2013 /RAJKOT *BT !'# $%'& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- ITO WARD-1(2) JUNAGADH 2. / RESPONDENT- SHRI VINODKUMAR N. RAM RAJLAXMI SOCI ETY JUNAGADH 3. '151 % & 6% / CONCERNED CIT-III RAJKOT 4. & 6%- / CIT (A)-IV RAJKOT 5 . 9:; % / DR ITAT RAJKOT 6 . ;* <= / GUARD FILE /#- '# / BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT