Shri Shiv Narayan Garg, HUF, Surat v. The Income tax Officer,Ward-2(1),, Surat

ITA 607/AHD/2007 | 2002-2003
Pronouncement Date: 14-05-2010 | Result: Allowed

Appeal Details

RSA Number 60720514 RSA 2007
Assessee PAN AAEHS1256A
Bench Ahmedabad
Appeal Number ITA 607/AHD/2007
Duration Of Justice 3 year(s) 3 month(s) 6 day(s)
Appellant Shri Shiv Narayan Garg, HUF, Surat
Respondent The Income tax Officer,Ward-2(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 14-05-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 2002-2003
Appeal Filed On 08-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.607/AHD/2007 & 3841/AHD/2008 [ASSTT.YEAR: 2002-03] SHRI SHI NARAYAN GARG-HUF -VS- INCOME TAX OFFICER PROP. ASHISH SILK MILLS WARD-2(1) SURAT S-101 J.J.AC MARKET RING ROAD SURAT PAN NO.AAEHS3937A ITA NO.3842/AHD/2008 [ASSTT. YEAR: 2005-06] SHRI SHIV NARAYAN GARG (HUF) -VS- INCOME TAX OFFICE R PROP: ASHISH SILK MILLS WARD-2(1) SURAT S-101 J.J. A/C. MARKET RING ROAD SURAT (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NEETA SHAH SR-DR ASSESSEE BY: SHRI R.N. VEPARI AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE THREE APPEALS BY THE ASSESSEE ARE ARISING OU T OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II SURAT IN APPEAL NOS.CAS/II /40/2006-07 CAS/II/45/2008-09 & CAS/II/343/2007-08 I.E. DATED19-01-2007 AND 17-09-2 008. THE ASSESSMENTS WERE FRAMED BY THE ITO WARD-2(1) SURAT U/S.143(3) OF THE INCOME-T AX AC 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS 28-03-2005 AND 19-11-200 7 FOR ASSESSMENT YEARS 2002-03 & 2005- 06 RESPECTIVELY. THE PENALTY UNDER DISPUTE WAS LEVI ED BY THE ITO WARD-2(1) SURAT U/S.271(1) OF THE ACT VIDE HIS ORDER DATED 28-03-2 008 FOR ASSESSMENT YEAR 2002-03. FIRST WE WILL TAKE UP ASSESSEES APPEAL IN ITA NO.6 07/AHD/2007. ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 2 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 O F THE ACT AMOUNTING TO RS.44.75 LAKH IN RESPECT OF CASH CREDITS NUMBERING 33. FOR THIS ASS ESSEE HAS RAISED FOLLOWING GROUND :- (1) ADDITION U/S.68 RS.44 75 000/- :- (A) THE LEARNED COMMISSIONER OF INCOME-TAX(A) ERRED IN CONFIRMING ADDITION OF RS.44 75 000/- U/S.68 IN RESPECT OF 33 LENDERS WHEN A) CONFIRMATIONS HAVE BEEN FILED IN ALL CASES B) ALL LENDERS ARE ASSESSED TO TAX HAVE P.A NOS C) AMOUNTS HAVE BEEN ACCEPTED BY ACCOUNT PAYEES CHE QUES AND REPAYMENTS MADE IN 23 CASERS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE S D) TAX HAS BEEN DEDUCTED WHENEVER APPLICABLE E) PARTIES HAVE APPEARED AND CONFIRMED LENDING (B) THE LEARNED COMMISSIONER OF INCOME-TAX (A) HAS NOT DEALT WITH DIRECT JUDGMENTS APPLICABLE IN THE CASE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ADDIT ION IS REQUIRED TO BE DELETED. 3. THE BRIEF FACTS LEADING TO ABOVE ISSUE IN THE PR ESENT CASE ARE THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 WAS FIELD ON 31-10-2002 DECLARING INCOME AT RS.1 96 869/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESAL E TRADING IN ART SILK CLOTH. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED. THE ASSESSEE HAS PROD UCED THE BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FROM WHERE THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAS OBTAINED UNSECURED LOANS DURING THE FI NANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND THE NAME AND AMOUNTS F ROM FOLLOWING 33 PERSONS AS UNDER:- SR. NO NAME OF PARTY AMOUNT (RS) 1. BALAJI SILK MILLS 200000 2. BALAPRASAD R JOSHI 150000 3. BHAVANI TEXTILES 200000 4. CHAMPA DEVI SHARMA 50000 5. DAMADAR PRASAD SHARMA 50000 6 DEVRAJ ATTAL HUF 75000 7 GEETADEVI TAPARLA 175000 ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 3 8 GOPAL KRISHNA ATTAL 75000 9 JAYPAL JAYANTILAL SHAH 200000 10 JHUMARMAL PANCHARLYA HUF 50000 11 KESHERDEV SHARMA 250000 12 KRISHNA SANTHOSHKUMAR RATHI 125000 13 MAHESHKUMAR SHARMA 50000 14 MANGILAL SHARMA 250000 15 MANISHKUMAR MANHARBHAI 50000 16 NAR NARAYAN ATAL 250000 17 NAR NARYAN ATTAL HUF 175000 18 NENURAM RAMNATH TANDI 150000 19 PUSHPADEVI SHARMA 50000 20 RADHEY SHYAM TAPARIA 75000 21 RAMESHWAR PRASAD MAHESHWARI 50000 22 RAMESHWARLAL P GANDHI 250000 23 RAMESHWAR PRASAD MAHESHWARI HUF 100000 24 SANJU SILK MILLS 200000 25 SHANTADEVI J PANCHARIYA 50000 26 SHRI KISHAN PRAJAPAT 50000 27 RANABHAI TEXTILES 200000 28 SHYAM SUNDER P GANDHI 250000 29 SITARAM TAPARIA 150000 30 SUNDERLAL JHAWAR 300000 31 SUNILKUMAR NAVAJI PUROHIT 75000 32 SURAJMAL PANCHARIYA 100000 33 SURESHKUMAR SHARMA 50000 TOTAL 44 75 000 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPL AIN THESE DEPOSITS VIS--VIS THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE SAID TRANSA CTIONS. THE ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO PRODUCE THE DEPOSITORS SO THAT HE CAN EXAMINE ALL THE DEPOSITORS. DESPITE VARIOUS OPPORTUNITIES ASSESSEE COULD NO PR ODUCE THE CREDITORS. THE ASSESSEE PRODUCED 8 PERSONS ON 07-12-2004. THE AO NOTED THAT OUT OF 8 PERSONS NONE OF THEM BROUGHT ANY DETAILS LIKE BANK PASS BOOKS ETC. THE A O EXAMINED ONLY 2 PERSONS SHRI ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 4 DAMADAR PRASAD SHARMA AND SHRI SURESH SHARMA. SUBSE QUENTLY SHRI SHANKARLAL TIWARI WAS ALSO EXAMINED ON 09-12-2004 WHO IS ENGAGED IN TRADING OF ART SILK CLOTH FROM HIS RESIDENCE AND HAD ADVANCED A SUM OF RS.2 LAKH IN TH E CAPACITY OF INDIVIDUAL CAPACITY AND FURTHER RS.2 LAKH FROM M/S. RAMESARI TEXTILE WHOSE PROPRIETOR IS SHRI SHANKARLAL TIWARI HUF. SHRI SANKARLAL TIWARI IN HIS DEPOSITION ON 09-12-20 04 VIDE Q. NO.14 ADMITTED THE FACT SHRI SHIV NARAYAN GARG HAD GIVEN HIM THE CASH AND IT WAS DEPOSITED IN HIS BANK ACCOUNT AND IN TURN THE ASSESSEE HAS ADVANCED THIS LOAN OF RS.4 LA KH I.E. RS.2 LAKH IN CAPACITY OF INDIVIDUAL AND RS. 2 LAKH IN THE CAPACITY OF HUF. THE ASSESSIN G OFFICER REQUIRED THE ASSESSEE TO PRODUCE OTHER DEPOSITORS ON VARIOUS DATES BUT THE A SSESSEE COULD NOT PRODUCE. SUBSEQUENTLY THE AO ISSUED SUMMONS ON 20-03-2005 T O THE ASSESSEE TO FILE DETAILS / INFORMATION IN RESPECT OF DEPOSITORS TO ESTABLISH I DENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IN RESPECT OF THESE CREDITORS. ON 17-0 3-2005 THE INSPECTOR OF THE CONCERNED WARD WAS DIRECTED BY THE ITO TO MAKE ENQUIRIES IN R ESPECT OF DEPOSITORS AND DURING THE ENQUIRY THE FOLLOWING PERSONS IN THEIR STATEMENTS FILED AFFIRMATIONS AS UNDER:- 1. SHRI GOPAL KRISHNA ATTAL 2. SHRI DEVBRAJ KRISHANLAL ATAL HUF 3. RAMESHWAR PRASAD MAHESHWARI HUF 4. RAMESHWAR PRASAD MAHESHWARI INDI. THESE PERSONS ADMITTED TO HAVE BEEN GIVEN THE CHEQU ES TO THE ASSESSEE OUT OF THE CASH RECEIVED FROM THE ASSESSEE HIMSELF. IT WAS NOTED BY THE ASSESSING OFFICER THAT THEY HAVE FURTHER STATED THAT THESE PERSONS COULD NOT AFFORD TOO MUCH HUGE ADVANCES AND THESE WERE AS PER THE ASSESSEES ARRANGEMENTS THE ENTRIES WER E GIVEN TO THE ASSESSEE. THE DEPOSITORS WERE DIRECTED BY GIVING CASH TO DEPOSIT IN THE SAM E INTO THE BANK AND IN TURN GIVE CHEQUES IN LIEU OF CASH FOR THIS ARRANGEMENT AND ACCORDINGLY T HEY WERE PAID 18 TO 80 PAISA FOR EACH RS.100/-. IN VIEW OF THESE FACTS THE ASSESSING OF FICER FURTHER GRANTED OPPORTUNITY TO ASSESSEE TO PRODUCE ALL THE DEPOSITORS. FINALLY TH E ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE ON 11-03-2005 TO ASSESSEE TO PRODUCE ALL THE CREDITORS BUT THE ASSESSEE AGAIN FAILED TO PRODUCE THE CREDITORS. THE AO FINALLY MADE ADDIT ION U/S.68 OF THE ACT AS THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) EXACTLY ON SAME LINES CONFIRMED THE ADDITION. AGGRIEVED ASSESSEE CAME IN SECOND APPEAL BEFORE US. 4. BEFORE US LD. COUNSEL SHRI R.N. VAPERI APPEARED ON BEHALF OF ASSESSEE AND FILED COPY OF CHART SHOWING THE DETAILS OF ALL THE DEPOSITORS AND STATED THAT THERE ARE THREE CATEGORIES OF ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 5 DEPOSITS I.E. FIRST CATEGORY DEPOSITORS IN NUMBERI NG 5 WHERE CASH WAS DEPOSITED IN THEIR BANK ACCOUNTS WERE RECEIVED FROM THE ASSESSEE SECOND CA TEGORY DEPOSITORS NUMBERING 21 WHERE CASH WAS DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUA NCE OF CHEQUES TO THE ASSESSEE AND THE THIRD CATEGORY OF 7 DEPOSITORS WHO WERE PRODUCED BEFORE ASSESSING OFFICER BUT WERE NOT EXAMINED. HE FILED A COMPLETE CHART SHOWING THE DE TAILS OF DEPOSITORS AS UNDER:- SR. NO. NAME & ADD. OF THE DEPOSITOR PAN NO ACCEPTED DURING THE YEAR REPAID DURING THE YEAR AMOUNT/DATE OF REPAYMENT INTEREST PAID FOR A.Y.02- 03 GROSS TOTAL INCOME A.Y. 02-03 CAPITAL AS ON 31.3.02 (RS. IN LACS) DOCUMENTS ALREADY SUBMITTED RELEVANT TO DEPOSITORS A.Y. 02-03 REPAID SUBSEQUENTLY BY PAYEES CHEQUES DATE AMT. (RS) 1. 2. 3. 4. 5 6 7. 8. 9. 10 11 12 1. BALAJI SILK MILLS CONFIRM ATION. (PROP. SUNDERIAL JHANWAR ACKNOWLE DGEMENT BANK HUF 319 GOODLUCK MARKET STATEMENT COMPUTATION RING ROAD SURA AAEHS1256A CAPITAL ACCOUNT BALANCE 200000 SHE ET INTEREST A/C. ASSTT. 2000 000 - 31-2-04 7 989 147 908.00 13.77 ORDER 6.4.04 213.500 REF.PAGE NO.1-9 2. BALAPRASAD R JOSHI 416 81.430.00 CONFIRMATION DHANALAXMI MARKET AAYPH7528E SALARY ACKNOWLEDGEMENT BEGAMPURA SURAT 150 000 - 150000 INTEREST BANK STATEMENT 8.10.04 6 584 BUSINESS - COMPUTATION 11.10.04 212.737 DO 10-13 CASH DEPOSIT 3. BHAVANI TEXTILES CONFIRMATION (PROP. SANKARLAL R TIVARI ACKNOWLEDGEMENT HUF) 430A SITARAM SOC.2 OP. 49612.0 0 BANK STATEMENT TRIKAMNAGAR OPP. ARCHNA 57 373 200000 BUSINESS BALANCE SHEET SCHOOL SURAT AAEHS6649K 200000 58 073 1.9 .04 10 258 INTEREST 2.14 3.9.04 282.935 DO 14-19 CASH DEPOSIT 4 CHAMPADEVI SHARMA B CONFIRMATION 302 ADINATH APARTMENT ACKNOWLEDGEMENT B ANK BHAIYANAGAR PUNA GAM AFXPS2864N 75193.00 STATEMENT COMPUTATION SURAT 50000 BUSINESS P&L A/C. CAPITA L A/C. 50 000 - 19.4.04 1.997 INTEREST 1.74 BALANCE SHEET 22.4.04 66 940 DO.20-25 CASH D EPOSIT 5 DAMODARPRASAD SHARMA CONFIRMATION 215 SAGAR TEXTILE MARRKET 50000 720 49 SALARY ACKNOWLEDGEMENT RING ROAD SURAT AHHPSS2380R 50 000 19.4.04 1.997 INTEREST - STATEMENT COMPUTATION 22.4.04 66 940 DO 26-30 CASH DEP OSIT 6 DEVRAJ ATAL HUF 103 CONFIRMATION SHIKHA APARTMENT SALASAR 75000 41 960 ACKNOWLEDGEMENT BANK NAGAR DUMBHAL SURAT AABHD4371A 75 000 - 10.12.03 - 3.329 INTEREST S TATEMENT COMPUTATION 13.12.03 97.191 DO 31-3 3 CASH DEPO SIT 7 GEEADEVI TAPARIA R.2112 167644 CONFIRMATION SURAT TEXTILE MARKET RING (OPENING) 2 7742 ACKNOWLEDGEMENT BANK ROAD SURAT AAWPT1182C 175 000 171 447 - 16 409 INTEREST 3.19 STATEMENT BALANCE SHEET 22.11.06 99 967 16.1.07 10 0.034 DO 34-37 CASH DEPOS IT TDS M ADE 8 GOPAL KRISHNA ATAL 103 CONFIRMATION SHIKHA APARTMENT SALASAR 75499 ACKNOWLEDGEMENT NAGAR DUMBHAL SURAST AAPPA6360R 75000 BUSINESS COMPUTATION BALANCE SHEET 75 000 - 10.12.03 3.329 INTEREST 3.59 11.12.03 97.191 DO 38- 40 CASH DEPOS IT 9. JAYPAL J SHAH 310 RATAN CONFIRMATION ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 6 CHAMBER SALABATPURA 152250 ACKNOWLEDGEMENT AHPPS8346 P 200000 BUSINESS COMPUTATION BALANCE SHEET 2000 000 - 02.05.02 5.2 50 INTEREST 4.33 & BANK STATEMENT 2.5 .02 2000 000 DO 41-43 10. JHUMAMAL PANCHAAARIYA HUF CONFIRMATION SHOP NO.26 RESHAMWALA 61260 ACKNOWLEDGEMENT MARKET RING ROAD SURAT AABHJ9126K BUSINESS COMPUTATION BALANCE SHEET 50 000 - - 2.342 INTEREST 2.26 & BANK STATEMEN T 26.7.08 100 000 29.7.08 8 4 335 DO 44-48 CASH DEPO SIT 11 KESHARDEV SHARMA 35/392 CONFIRMATION SATYAMNAGAR UDHNA SURAT ASPPS5381P 71246 ACKNOWLEDGEMENT 25000 00 BUSINESS COMPUTATION P&L A/C 250 000 - 03.09.04 11.096 INTEREST 3.48 BALANCE SHEET 06 .09.04 410897 DO 49-54 CASH DE POSIT 12 KRISHNA SANTOSH RATHI CONFIRMATION 521 HARI KRUPA MARKET MOTI 80096 ACKNOWLEDGEMENT BEGAMWADI SURA ADRPR4799K 125000 BUSINESS COMPUTATION BANK 125 000 - 08.10.04 6 226 INTEREST - STATEMENT 11.10.04 178 283 DO 5-5-58 CASH DEPOSI T 13 MAHESHKUMAR SHARMA 55866 CONFIRMATION 163 SAGAR TEXTILE MARKET B/H SALARY ACKNOWLEDGEMENT ABHISHEK MARKET RING ROAD 50000 BUS INESS COMPUTATION P & L A/C. SURAT 50 000 - 19.4.04 1 997 INTEREST 2.16 BALANCE SHEET CAPITAL A/C. 22.04.04 66 940 DO 59-64 CASH DEPOSIT 14 MANGILAL SHARMA VILL CONFIRMATI ON SANWALI TEHSIL LAXMANNAGAR 84475 SALARY ACKNOWLEDGEMENT CAP[ITAL SIKAR RAJASSTHAN AGCPS4030N 250000 BUSINES S A/C. BALANCE SHEET 250 000 - 03.09.04 11 096 INTEREST 4.31 BANK STATEMENT 0 6.09.04 470.250 DO 65-68 15 MANISHHKUMAR MANHARLAL OP. CONFIRMATION CAP ITAL A/C. MUNIWALA A-45 TRIKAMNAGAR 55 573 46771 BALANCE SHEET SWASTIK SOCIETY SURAT 50000 50000 BUS INESS ACKNOWLEDGEMENT AFMPM36 69Q 56 806.00 30.06.03 3 600 INTERE ST 2.08 COMPUTATION 02.07.04 6 1 396 26 12 01 15.05.01 DO 69-71 16 NAR NARAYAN ATAL 103 CONFIRMATIO N SHIKHA APARTMENT SALASAR 99062 ACKNOWLEDGEMENT NAGAR DUMBHAL SURAT AAPPA6883J 250000 BUSINESS COMPUTATION BALANCE SHEET 250 000 - 10.12.03 11 712 INTEREST 6.16 11.12.03 324.734 DO 72-74 17 NAR NARYAN ATAL (HUF) CONFIRMATI ON 103 SHIKHA APARTMENT ACKNOWLEDGE MENT SALASAR NAGAR DUMBHAL AABHN0488G 175000 45170 COMPUTATION BALANCE SHEET SURAT 175.000 - 10.12.03 7 1 63 INTEREST 3.94 11.12.03 226.029 DO 75-77 18 NENURAM RAMNATH TANDI VII 37050 CONFIRMATION ASST. O RDER GODHAYASI DIST. NAGOUR ACYPT8732A BUSINE SS ACKNOWLEDGEMENT RAJASTHAN 150 000 - - 7 2 000 INTEREST - 16.1.07 269.603 DO 78-79 TDS MADE 19 PUSHPADEVI SHARMA B-302 CONFIRMATION ADINATH APARTMENT 70190 ACKNOWLEDGE MENT BHAIYANAGAR PUNA GAM AEDPS1191K 50000 BUSINESS COMPUTATION P&L A/C. SURAT 50 000 - 19.04.04 1 997 INTEREST 2.28 BALANCE SHEET SUTEX 20.04.04 66 940 DO 80-85 CASH DEP OSIT 20 RADHAY SHYAM TAPARIA R CONFIRMATIO N 2112 SURAT TEXTILE MARKET 32173 SALARY ACKNOWLEDGEMENT RING ROAD SURAT ADWPT3625M 75 00 0 - - 3 773 INTEREST 2.55 BALANCE SHEET BANK STATEMENT 15.1.07 135.099 DO 86-9 0 CASH D EPOSIT TDS MADE 21 RAMESHWARPRASAD CONFIR MATION MAHESHWARI 203 KRISHNA 48320 ACKNOWLEDGEME NT APARTMENT L.H. ROAD ABIPM2604R 50000 BUSINESS COMPUTATION 12.03.04 SURAT 50 000 - 10.03.04 2.3 42 INTEREST - BANK STATEMENT 66 903 DO 91-94 ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 7 CASH DEPOSIT 22 RAMESHWARLAL P GANDHI 5D CONFIRMATI ON PANCHSIL APARTMENT DUDHARA ACKNOWLED GEMENT SHERI SURAT AFNPG7222A 59397 SALARY COMPUTATION 250 000 - - 12 822 BUSINESS 4.51 BALANCE SH EET INTEREST A/C. CAPITAL A/C. 15.1.07 450.748 DO 95-98 TDS MA DE 23 RAMESHWARPRASAD CONFI RMATION MAHESHWARI (HUF) 203 44549 ACKNOWLED GEMENT KRISHNA APARTMENT L.H INTEREST & COMPUTATION BANK ROAD SURAT AACHQ4574E 100 000 - 4 685 OTHER INCOME - STATEMENT 12.03.04 1 33 808 DO 99-1 03 CASH DE POSIT 24 SANJU SILK MILLS (PROP. CON FIRMATION ASHADEVI SHANKARLAL TIWARI) ACKNOW LEDGEMENT 342 VIVEKANAND SOCIETY AAFPT4302B 8220 8 COMPUTATION TRIKAMNAGAR-2 SURAT 200000 BUSINESS CAPITAL A/C. 2000 000 - 01.09.04 1 060 INTEREST 2.47 BALANCE SHE ET INTEREST A/C. 03.09.04 282.669 DO 104-1`1- 25 SHANTADEVI J PANCHARIYA CONFI RMATION 14-B GODAVINAGAQR VASANT ACKNOWL EDGEMENT BHIKA NI WADI L.H. ROAD AGHPP8318H 83380 COMPUTATION TRADING SURAT BUSINESS CAPITAL A/C. BALANCE 50 000 - - 2.342 INTEREST 2.45 SHE ET BANK STATEMENT 16.01.07 236 454 DO 111-115 CASH DEPOSIT TDS MADE 26 SHRI KISHAN PRAJAPATI 145 CONFIRMAT ION SAGAR TEXTILE MARKET B/H 62254 SALARY ACKNOWLEDGEMENT ABHISEK MARKET RING ROAD BUSINESS COMPUTATION P&L A/C SURAT ABLPP4023G 50000 BALANCE SHEET BANK 50 000 - 19.04.04 1 9 97 INTEREST 2.05 STATEMENT 22.04.04 66 939 DO 116 -121 27 SHRI RANABAI TEXTILES CON FIRMATION (SHANKARLAL R TIWARI) 430A ACKNOW LEDGEMENT SITARAM SOCIETY-2 ABBPT9894R 172488 72089 SAL ARY COMPUTATION TRIKAMNAGAR BH ARCHNA (OPENING) 200000 BUSI NESS BALANCE SHEET SCHOOL SURAT 200000 176 486.00 01.09.04 10 258 INTEREST 2.16 03.09.04 401.456 DO 122-12 8 CASH DE POSITS 28 SHYAM SUNDER P GANDHI CONFIRMAT ION 5D PANCHSHIL APARTMENT AFKPG3052P ACKNOWLEDGEMENT DUDHARA SHERI SURAT 58524 SALARY COMPUTATION BUSINESS BALANCE SHEET 250 000 - - 12 575 INTEREST 4.37 INTE REST A/C. CAPITAL A/C. 15.1.07 450.327 DO 129- 133 TDS MADE 29 SITARAM TAPARIA R-2112 CONFIRMA TION SURAT TEXTILE MARKET AAOPT9852D OPEN ING ACKNOWLEDGEMENT RING ROAD SURAT 35924 61443 SALARY COMPUTATION 150 000 36 739.00 - 8.508 INTEREST 4.51 BALANCE SHEET 15.1.07 270 448 18.12.06 17.5.01 BANK STATEMENT DO 134-138 TDS MADE 30 SUNDERLAL JHANWAR 319 CONFI RMATION GOODLU9CK TEXTILE MARKET ACKNO WLEDGEMENT RING ROAD SURAT AAVPJ2398B COMPUTATION P&L A/C 300000 181101 BALANCE SHEET BANK 300 000 - 31.03.04 11.984 INTEREST 41.85 STATEMENT 06.04.04 320 250.00 DO 139-145 31 SUNIL P PUROHIT 26 OPENING CONFIRMATI ON RESHAMWALA MARKET 5 7373 75000 57 490 SALARY ACKNOWLEDGEMENT RING ROAD SURAT ACFPP2076C 75 000 60 683.00 08.10.04 7 016 INTEREST COMPUTATION 11.10.04 106 971 21.12.01 27.7.01 BANK STATEMENT DO 146-149 CASH DEPOSIT 32 SURAJMAL PANCHARIYA 27 11 5486 CONFIRMATION RESHAMWALA MARKET ACSPP79978 (OPENING) 51563 ACKNOWLEDGEMENT RING ROAD SURAT 75000 122 148.00 - 11 496 IN TEREST COMPUTATION 15.1.07 179 791 24.12.01 27.7.01 BANK STATEMENT DO 150-154 TDS MADE ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 8 33 SURESHKUMAR SHARMA 4 CONFIRMATI ON PRABHALKAKA BUILDING 61597 SALARY ACKNOWLEDGEMEN T 1 ST FLOOR PUNA GAM AEDPS1461C BUSINESS COMPUTATION 50 000 - - 1 997 INTEREST 2.12 BALANCE SHEET 14.6.07 90 995 BANK STATEMENT DO 155-159 CASH DE POSIT SNO. NO. IN CHART NAME/ADDRESS AMOUNT RS. REMARKS 1 3 BHAVANI TEXTILE S (PROP. SHANKAARLAL 200 000 (I) COPY OF STATEMENT NOT GIVEN NOR C ROSS EXA- R TIWARI HUF 430A SITASRAM SOCIETY (II) MINATION PERMITTED OP. BAL. 57 373 1.4.01 TRIKAMNAGAR OPP. ARCHANA SCHOOL REPAID WITH INTEREST 58 703 18.5.01 SURAT FRESH LOAN GIVEN 200 000 18.12.01 R EPAID 282.935 3.9.0 4 (P. 5 OF (BEFORE COMMENCEMENT OF INQUIRY) PAP ER BOOK) 2 27 SHRI RANABAI TEX TILES 200 000 (I) COPY OF STATEMENT NOT GIVEN NOR CROSS (SHANKARLAL R TIWARI) EXAMINATION PERMI TTED 430A SITARAM SOCIETY-2 TRIKAMNAGAR (II) OP. BAL. 1 72 488 1.4.01 B/H ARCHNA SCHO OL SURAT REPAID WITH INTEREST 1 76.486 18.5.01 FRESH LOAN GIVEN 200.000 18.12.01 REPAI D 401 456 3.9.04 (P 5 OF (BEFORE COMMENCEMENT OF PAPER BOOK) INQUIRY) 3 6 DEVRAJ ATTAL HUF 75 0 00 STATEMENT TAKEN BY INSPECTOR ON 17.2.05 (P. 103 SHIKHA APART MENT 90-91 OF PAPER BOOK FILED ON 10. 4.07) AFFIDAVIT ON SALASAR NAGAR DUMBHAL SURAT 23.3.05 (P.97 OF PAPER BOOK FILED ON 10.4.07) REPAID ON 13.1 2.03 (I.E. BEFORE COMMENCEMENT OF ASSESSMENT PR OCEEDINGS ) 4 8 GOPAL KRISHNA ATTA L 75 000 STATEMENT TAKEN BY INSPECTOR ON 17.2 .05 (P. 92-93 103 SHIKHA APART MENT AFFIDAVIT ON 23.3.05 ( P. 98 OF P APER BOOK FILED ON SALASAR NAGAR DUMBHAL SURAT 10.4.07) REPAID ON 11.12.03 (I.E. BEFO RE COMMENCE- MENT OF ASSESS MENT PROCEEDINGS) 5 21 RAMESHWARPRASAD MAH ESHWARI 50 000 STATEMENT TAKEN BY INSPECTOR ON 17.2.05 (P. 94 203 KRISHNA APART MENT OF PAPER BOOK FILED ON 10.4.07) AFFIDAVIT ON 23.3.05 L.H. ROAD SURAT (P. 96 OF PAPER BOOK FILE D ON 10.4.07) REPAID ON 12.03.04 (I.E. BEFORE COMMENCEMENT OF ASSESSMENT PROCEEDINGS) 5. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS AND EVIDENCES IN SUPPORT OF ALL CREDITORS I NCLUDING THE CONFIRMATION LETTERS FROM THE DEPOSITORS ALONG WITH THE COPY OF BANK ACCOUNT IN T HE CASE OF 21 PERSONS. HE STATED THAT SINCE THE ASSESSING OFFICER WAS NOT SATISFIED ABOUT THE GENUINENESS OF THE DEPOSITORS ON THE BASIS OF EVIDENCE PRODUCED BY THE ASSESSEE HE VIDE HIS LETTER NO.ITO/ASSTT./PRO/BMA/04-05 DATED 22-11-2004 REQUIRED THE ASSESSEE TO PRODUCE A LL 43 PARTIES PERSONALLY FROM WHOM THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED LOANS/DEPOSIT S. BUT THE ASSESSING OFFICER NOTED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE COULD PRODUC E ONLY 8 PERSONS ON 07-12-2004 AND AO RECORDED THE STATEMENT OF SHRI SURESH SHARMA AND SHRI DAMODAR SHARMA WHO HAD ATTENDED WITHOUT THEIR BANK STATEMENT ETC. THE ASS ESSING OFFICER ACCORDINGLY DIRECTED THEM TO PRODUCE THEIR BANK STATEMENTS ON THE NEXT DAY. BUT THE ASSESSEES COUNSEL ATTENDED ON THE NEXT DAY BUT THE TWO DEPOSITORS DID NOT ATTEND. THE COUNSEL FOR THE ASSESSEE PRODUCED ANOTHER DEPOSITOR SHRI SHANKERLAL TIWARI WHOSE ST ATEMENT WAS RECORDED AND THEREAFTER SEVERAL OPPORTUNITIES WERE GIVEN TO THE ASSESSEE B UT HE FAILED TO PRODUCE ANY OTHER WITNESS. ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 9 THE COUNSEL FOR THE ASSESSEE ATTENDED BEFORE ASSESS ING OFFICER ON SEVERAL DATES I.E. 07-02- 2005 28-02-2005 05-03-2005 15-03-2005 16-03-200 5 AND 22-03-2005 BUT ON NO OCCASION HE PRODUCED ANY WITNESS AS SPECIFICALLY REQUIRED BY THE A.O. THE AO HAD REITERATED HIS REQUIREMENT OF PERSONAL APPEARANCE OF ALL THE DEPOS ITORS AS PER PARA-3 OF HIS FURTHER LETTER SRT/WD.2(1)/ASST./04-05 DATED. 13-01-2005. IT MAY K INDLY BE SEEN FROM THE ABOVE THAT DESPITE AO'S SPECIFIC REQUIREMENTS FOR PRODUCTION O F WITNESSES PERSONALLY BEFORE HIM THE ASSESSEE DID NOT CARE TO PRODUCE THE SAME EVEN WHEN TIME OF MORE THAN TWO MONTHS WAS AVAILABLE SINCE THE LAST WRITTEN REQUISITION DATED 13-01-2005 REFERRED TO ABOVE. 6. THE AO IN THE MEANTIME CAUSED SPOT INQUIRIES M ADE AT THE ADDRESSES SUPPLIED BY THE ASSESSEE. THE WARD INSPECTOR VIDE REPORT DATED 17-02-2005 AND 23-02-200 INFORMED THE AO THAT NO PERSON AS MENTIONED IN THE REPORT WA S AVAILABLE AT THE GIVEN ADDRESS. THE WARD INSPECTOR HOWEVER COULD CONTACT THREE DEPOSI TORS VIZ. SHRI RAMESHWAR PRASAD MAHESHWARI SHRI GOPAL KRISHNA ATTAL AND SHRI DEVRA J ATTAL. UPON INQUIRY WITH THEM THEY GAVE A SUO MOTU STATEMENT INFORMING THAT THE ASSESS EE HAS GIVEN THEM CASH WHICH WAS DEPOSITED IN THEIR BANK ACCOUNT AND CHEQUES WAS ISS UED TO THE ASSESSEE. ALL THE THREE PERSONS WERE WORKING AS EMPLOYEES WITH DIFFERENT TE XTILE UNITS. THE ABOVE MATERIAL COLLECTED BY HE AO WAS CONFRONTED TO THE ASSESSEE AS PER LETT ER NO.SRT/WD.2(1)/ASST./04-0 DATED 11- 03-2005 AND THE ASSESSEE WAS GIVEN AN OPPORTUNITY O F BEING HEARD ON 18-03-200. THE COUNSEL FOR THE ASSESSEE ATTENDED ON 16-03-2005 AND 22-03-2005 BUT COULD NOT GIVE ANY SATISFACTORY EXPLANATION ABOUT THE GENUINENESS OF T HE DEPOSITS. THE AO WAS THEREFORE LEFT WITH NO ALTERNATIVE BUT TO COMPLETE THE ASSESSMENT BY HOLDING THAT THE CREDITS WERE UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ASSESSEE WAS GIVEN NUMEROUS OPPORTUNITIES BY ASSESSING OFFICER TO PRODUCE THE D EPOSITORS PERSONALLY AND HE HAD VALID REASON FOR SUCH REQUIREMENT BECAUSE ON THE BASIS OF THE DOCUMENT PRODUCED BY THE ASSESSEE AND HOLD THAT GENUINENESS COULD NOT BE EST ABLISHED. ACCORDINGLY ON THE BASIS OF THE MATERIAL ON RECORDS THE AO HAS CONCLUDED THAT THE DEPOSITS ARE UNEXPLAINED. 7. IN THE COURSE OF THE APPEAL BEFORE CIT(A) THE A SSESSEE HAS SOUGHT ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF CERTAIN AFFIDAVI TS. WE FIND THAT THESE THREE DEPOSITORS WHEN CONTACTED BY THE WARD INSPECTOR GAVE SUO MOTU STAT EMENT CLEARLY ADMITTING THAT THEY HAD RECEIVED CASH WHICH WAS DEPOSITED IN THEIR BANK ACC OUNTS AND CHEQUES WERE GIVEN TO THE ASSESSEE ON 17-02-2005. THE AR OF THE ASSESSEE ATT ENDED BEFORE THE AO ON SEVERAL OCCASIONS THEREAFTER BUT NO PLEA WAS RAISED ABOUT T HE STATEMENT BEING OBTAINED UNDER ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 10 DURESS AND NOW THESE AFFIDAVITS WERE EXECUTED ON 18 -03-2005 ALLEGING THAT THESE PERSONS WERE COERCED INTO MAKING STATEMENT AS GIVEN TO THE INSPECTOR. IF THERE REALLY WAS ANY COERCION THEY WOULD HAVE IMMEDIATELY FILED AFFIDAV IT BEFORE THE AO. IT IS ALSO PERTINENT TO NOTE THAT THE MATERIAL COLLECTED BY THE A.O WAS CON FRONTED TO THE ASSESSEE VIDE DETAILED SHOW CAUSE NOTICE ISSUED ON 11-03-2005 BUT EVEN AT THIS STAGE NO EVIDENCE IN THE FORM OF AFFIDAVIT WAS FILED. IT IS ALSO PERTINENT TO NOTE T HAT THE A.R OF THE ASSESSEE LAST ATTENDED BEFORE THE A.O ON 22-03-200 BUT EVEN AT THIS STAGE HE DID NOT FILE A COPY OF THE ALLEGED AFFIDAVITS DATED 18-03-2005. UNDER THE ABOVE CIRCUM STANCES THE CIT(A) DID NOT ADMITTED SUCH NEW EVIDENCES UNDER RULE 46A OF THE I.T. RULES . THE CIT(A) NOTED THAT IT IS JUDICIALLY HELD THAT THE BASIC ONUS TO PROVE IDENTITY CAPACIT Y AND GENUINENESS OF THE DEPOSIT IS SOLELY ON THE ASSESSEE AND IF ON THE BASIS OF DOCUMENTS PR ODUCED THE AO IS NOT SATISFIED AND THE REQUIRES PERSONAL APPEARANCE OF THE DEPOSITORS THE ONUS AT THIS STAGE ALSO CONTINUES TO REMAIN WITH THE ASSESSEE ONLY. MORE FILING OF CONFI RMATION LETTERS ETC. IS NOT SUFFICIENT PROOF. IN VIEW OF THESE FACTS THE CIT(A) CONFIRMED THE ADDIT ION. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE TRIBUNAL. 8. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE STAT ED FACTS THAT THE ASSESSEE HAS FILED ALL DETAILS AND BRIEF CONTENTION OF THE ASSESSEE IS RECAPITULATED AS UNDER:- I) ALL CONFIRMATIONS HAVE BEEN FILED. II) PERMANENT ACCOUNT NOS. HAVE BEEN GIVEN. III) COPIES OF COMPUTATION AND ACKNOWLEDGEMENT OF R ETURN OF INCOME HAVING BEEN FILED AND COPIES OF BALANCE SHEET IN ALL CASES HAVE BEEN GIVEN. THAT MEANS THAT THEY ARE ALL ON THE RECORD OF THE DEPARTMENT. IV) COPIES OF BANK STATEMENTS AND BALANCE SHEETS FI LED IN 19 CASES. V) 23 OF 33 DEPOSITORS HAVE BEEN REPAID BY PAYEES A CCOUNT CHEQUE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON IN THE CASE OF CIT V. ORISSA CORPORATION PVT. LTD. (1986) 159 ITR 78 (SC) AND SEVERAL OTHER JUDGMENTS AND STATED THAT ONCE THE LENDER/DEPOSITOR IS ON THE RECORD OF THE DEPARTMENT EXCEPT FILING CONFIRMATIONS ADDRESSES AND PAN NO. THE ASSESSEE IS NOT REQUIRED TO DO ANYT HING. AS MENTIONED ABOVE OUT OF 33 DEPOSITORS 23 HAVE BEEN REPAID BEFORE THE COMMENCEM ENT OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 AND ALL THESE DEPOSITORS AR E ON RECORD. THE LD. COUNSEL STATED THAT THOUGH AMPLE PROOF HAS BEEN GIVEN BY FILING PA N CAPACITY SHOWING ADVANCE GIVEN TO THE ASSESSEE AND REPAYMENTS MADE IN LARGE NUMBER OF CASES BUT THIS HAS ALL BEEN IGNORED ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 11 AND NOT EVEN DEALT WITH IN THE REMAND REPORT OR IN THE COMMENTS ON THE REMAND REPORT. SINCE THE ACIT RANGE-2 SURAT IN HIS LETTER DATED 21-12- 2005 HAS ELABORATELY DEALT WITH AND COVERED ALL THE ISSUES RAISED BY ASSESSING OFFICER AND LD. COUNSEL DEAL WITH THE REPLY AS UNDER:- I) IN CASE OF 21 DEPOSITORS CASH WAS DEPOSITED PR IOR TO ISSUE OF CHEQUES. IN CASE OF KRISHNA SANTOSH RATI OUT OF 125 000/- CHEQUES WAS 7 0 000/- AND CASH WAS RS.55 000/- II) SHRI SURESH SHARMA AND SHRI DAMODAR SHARMA ATTE NDED WITHOUT THEIR BANK STATEMENTS AND DID NOT FURNISH THEM. SUBSEQUENTLY THE BANK STATEMENT OF SHRI DAMODAR SHARMA HAS BEEN FILED AS PER PAGE 19 OF THE PAPER BOOK AND SHRI SURESH SHARMA AS PER PAGE 22 OF THE PAPER BOOK. THEREFORE THE STATEMENT OF ACIT IS NOT CORRECT. III) IN PARA 2 OF ACIT FURTHER STATES THAT THE ASSE SSING OFFICER HAS REQUIRED THE ASSESSEE TO PRODUCE 43 PARTIES (ACTUALLY THERE ARE ONLY 33 PARTIES) BUT THE ASSESSEE DID NOT DO SO. IT APPEARS THAT BEFORE GIVING THIS REMAND REPORT ATTENTION OF THE ASSESSING OFFICER ESCAPED PARA 12(IV) OF LETTER DAT ED 21.05.2005 WHERE THE ASSESSEE HAD REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMON SES BY LETTER OF 5.3.05. THAT WAS SO BECAUSE A LARGE NUMBER OF DEPOSITORS HAD REPAID AND WERE NOT INCLINED TO APPEAR BEFORE THE ASSESSING OFFICER AND THE ASSESSEE COULD NOT DO ANYTHING ABOUT IT. THE ASSESSING OFFICER HAVE WIDE POWERS AND ARE GENERALL Y USED IN SUCH CASE. THE ADDITIONAL COMMISSIONER OF INCOME-TAX DOES NOT EVEN MENTION AS TO WHY THIS REQUEST OF THE ASSESSEE FOR ISSUE OF SUMMONS WAS NOT CONSID ERED BY THE ASSESSING OFFICER. IV) IN PARA 3 HE MENTIONS ABOUT THE SPOT INQUIRIES MADE IN THE CASE OF THREE DEPOSITORS VIZ. SHRI RAMESHWAR PRASAD MAHEHWARI SHRI GOPAL KR ISHNA ATAL AND SHRI DEVRAJ ATAL. THEY DID NOT GIVE ANY SUM MOTO STATEMENT BUT THEY H AD RECEIVED CASH FROM THE ASSESSEE. NOW THESE ARE THE WITNESSES OF THE DEPAR TMENT BECAUSE THE DEPARTMENT HAD OBTAINED THEIR STATEMENTS IN PARA 3 AND 4 THE A DDL. CIT STATES AS TO WHY THE ASSESSEE DID NOT FURNISH THESE AFFIDAVITS WHEN HE W AS ASKED TO DO SO ON 18.03.2005. WHEN COPIES OF THEIR STATEMENTS WERE GIVEN THE ASS ESSEE HAD ASKED THE DEPOSITORS TO STATE IN WHAT CIRCUMSTANCES THEY HAD GIVEN THIS WRONG STATEMENT. THE DEPOSITORS MENTIONED THAT THEY WERE FORCED TO DO SO AND THAT I S WHY THEY MADE AFFIDAVITS. THE AFFIDAVITS WERE GIVEN TO THE DEPOSITORS ON 23.03.20 005 BY THE NOTARY PUBLIC AS CAN BE SEEN FROM PAGE NOS. 76 77 AND 78 OF THE PAPER BOOK AS PER SEAL ON THE RIGHT SIDE AT THE BOTTOM OF THE AFFIDAVIT. IT IS THEREAFTER THAT THE ABOVE PARTIES GAVE AFFIDAVITS TO THE ASSESSEE WHO APPROACHED THE ASSESSING OFFICER. THE ASSESSEE WAS INFORMED THAT THE ORDER HAS BEEN PASSED. THEREFORE THE ASSESSEE HAD NO OPTION EXCEPT TO FILE THEM BEFORE YOU AND THEREFORE IN THE CIRCUMSTANCES THE Y MAY BE ADMITTED AS EVIDENCE UNDER RULE 46A OF THE INCOME-TAX RULES 1962. INSTE AD OF GOING ON TECHNICALITIES ABOUT ADMISSION OF EVIDENCE THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS COULD HAVE SUMMONED THEM FOR PERMITTING CROSS EXAMI NATION BY THE ASSESSEE. V) IN PARA 5 HE MENTIONS THAT CROSS-EXAMINATION COU LD NOT BE GIVEN OF OTHERS AS THEY WERE BROUGHT BY THE ASSESSEE. AS PER CHART GIVEN IN LETTER DATED 01.12.2005 AND REPRODUCED FOR YOUR READY REFERENCE ONLY TWO HAD S TATED THAT CASH WAS RECEIVED BY THEM. ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 12 TOTAL NO. OF DEPOSITORS 33 DEPOSITORS WHO WERE PRODUCED 8 DEPOSITORS WHO WERE EXAMINED TWO OF WHOM ONLY STATED THAT CASH WAS RECEIVED. 5 DEPOSITOR WHO WERE NOT EXAMINED 3 DEPOSITORS WHOSE STATEMENTS WERE RECORDED BY THE INSPECTOR AND IN WHOSE CASE AFFIDAVITS WERE FILED AS PER PAGES 76-78 OF PAPER FILED WITH COMMISSIONER OF INCOME-TAX (APPEALS) OF WHOM ONE DID NOT STATE THAT CASH WAS PAID. 3 1 4 NOW AT THE SECOND EXAMINATION ON 9/12/2004 SHRI SH ANKAR LAL TIWARI WAS PRODUCED AND DURING THE COURSE OF RECORDING HIS STATEMENT T HE CHARTERED ACCOUNTANT OF THE ASSESSEE SHRI RAJENDRA GOYAL WAS ASKED TO GO OUT FO R SOME TIME. THEREFORE TO FIND OUT THE TRUTH AND IN THE INTEREST OF NATURAL JUSTIC E NOTHING PREVENTED THE ASSESSING OFFICER FROM PERMITTING CROSS-EXAMINATION OF THE AB OVE. IN VIEW OF THE ABOVE SUBMISSIONS LD. COUNSEL FOR T HE ASSESSEE STATED THAT THE ASSESSEE IS NOT EXPECTED TO EXPLAIN CASH DEPOSITS IN HIS BANK A CCOUNT AND NOT EXPECTED TO PRODUCE LENDER IN ALL THE DETAILS ARE FILED AND IN CASE THE ASSESSING OFFICER FAILED TO ISSUE SUMMONS DESPITE REQUESTED TO DO SO. ACCORDINGLY HE URGED THE BENCH TO DELETE THE ADDITION MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) IN RESPEC T OF 33 CASH CREDITS. 9. ON THE OTHER HAND LD.SR-DR SMT. NEETA SHAH ARG UED THAT THESE ARE BOGUS CASH CREDITS AS APPROVED BY THE ASSESSING OFFICER AND CO NFIRMED BY CIT(A). SHE TOOK AN EXAMPLE OF SHRI SANKARLAL TIWARI WHO IN HIS STATEMENT CLEA RLY ADMITTED THAT HE WAS GIVEN CASH BY ASSESSEE AND SAME WAS DEPOSITED INTO HIS BANK ACCOU NT AND IN TURN THE CHEQUES WAS ISSUED TO THE ASSESSEE AMOUNTING TO RS.2 LAKH IN THE CAPAC ITY OF INDIVIDUAL AND AMOUNTING TO RS.2 LAKH IN THE CAPACITY OF HUF. SHE FURTHER STATED THA T SIMILAR ARE THE FACTUAL POSITION IN OTHER CASH CREDITS AND THERE IS NO CASE FOR THE ASSESSEE TO ALLOW RELIEF. SHE STATED THAT THE ASSESSEE IS UNABLE TO PRODUCE 28 CREDITORS. THE AS SESSING OFFICER EXAMINED ONLY ONE CASH CREDITOR I.E. SHRI SANKARLAL TIWARI AND THE INSPEC TOR OF THE ASSESSING OFFICER ALSO RECORDED HIS STATEMENT FROM 4 CASH CREDITORS NAMELY SHRI GO PAL KRISHNA ATTAL SHRI DEVRAJ KRISHANLAL ATTAL HUF SHRI RAMESHWAR PRASAD MAHESHWARI HUF AND SHRI RAMESHWAR PRASAD MAHASHWARI INDIVIDUAL. SHE STATED THAT THEY HAVE ADMITTED TO HAVE GIVEN THE CHEQUES IN LIEU OF CASH GIVEN BY THE ASSESSEE AND AFTER DEPOSI TING THE CASH INTO BANK ACCOUNT THEY ISSUED CHEQUES. SHE STATED THAT SINCE THE ASSESSEE COULD NOT PRODUCE THESE CASH CREDITORS THE ASSESSEE IS EVEN UNABLE TO PROVE THE IDENTITY A S TO WHO OF CAPACITY OF GENUINENESS OF ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 13 TRANSACTION. IN VIEW OF THESE ARGUMENTS SHE STATE D THAT THE ADDITION SHOULD BE SUSTAINED AT AL COSTS. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS AS RECAPITULATED ABOVE WE FIN D THAT THE ASSESSEE COULD NOT PRODUCE ALL THE CREDITORS BEFORE THE ASSESSING OFFICER FOR EXAM INATION DESPITE REQUIRED BY THE ASSESSING OFFICER BUT HE HAS FILED THE PRELIMINARY INFORMATIO N LIKE CONFIRMATIONS NAME AND ADDRESSES PAN NO. AND COMPUTATION OF INCOME AND ACKNOWLEDGEME NT OF RETURNS. IT WAS ALSO THE CONTENTION OF THE ASSESSEE THAT ALL THESE AMOUNTS H AVE BEEN RECEIVED BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE ALSO STATED THAT COPIES OF BAN K STATEMENTS OF DEPOSITORS AND BALANCE SHEET SHOWING AMOUNT OF ADVANCE BY 19 DEPOSITORS HA VE ALREADY BEEN PLACED ON RECORD. RE-PAYMENT OF 23 OUT OF 33 DEPOSITORS HAVE ALREADY BEEN MADE AND ALL REPAYMENTS HAVE BEEN DONE PAYEES ACCOUNT CHEQUE AND ALSO FILED CER TIFICATE FROM CANARA BANK IN RESPECT OF THE SAME. IN CASE 5 DEPOSITORS WHO HAVE YEARLY ST ATED THAT CASH DEPOSITS IN THEIR BANK ACCOUNTS WERE DEPOSITED AFTER RECEIPT OF THE SAME F ROM THE ASSESSEE AND THEREAFTER THE CHEQUE WERE ISSUED TO THE ASSESSEE. IN CASE OF 21 DEPOSITORS CASH WAS DEPOSITED IN THEIR RESPECTIVE BANK ACCOUNTS BEFORE ISSUE OF CHEQUE TO THE ASSESSEE. IN RESPECT OF 8 DEPOSITORS PRODUCED BEFORE THE ASSESSING OFFICER BY THE ASSESS EE BUT 7 WERE NOT EXAMINED. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AO HAS NOT PROVIDED OPPORTUNITY TO CROSS-EXAMINE THESE 5 PERSONS WHO HAVE STATED THAT THEY HAVE RECE IVED CASH FROM THE ASSESSEE AND DEPOSITED IN THEIR RESPECTIVE BANK ACCOUNTS AND THE REAFTER ISSUED CHEQUE TO THE ASSESSEE. IN RESPECT OF 21 DEPOSITORS THE AO HAS NOT ISSUED SUMMONS U/S.131 OF THE ACT FOR EXAMINATION. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE ISSUED SUMMONS AND CALL FOR THESE 33 PERSONS FOR EXAMINATION OR CR OSS-EXAMINATION AS THE CASE MAY BE AS THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS IN CASE HE HAS DOUBTS. NO DOUBT THE ASSESSING OFFICERS SATISFACTION AS REGARDS TO IDEN TITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IS MUST IN TERMS OF SEC. 68 OF THE ACT . ACCORDINGLY TAKING INTO CONSIDERATION THE FACTS IN ENTIRETY WE ARE OF THE VIEW THAT THE ENTI RE CASH CREDITS NUMBERING 33 NEEDS RE- VERIFICATION AT THE LEVEL OF THE ASSESSING OFFICER DE NOVO. NEEDLESS TO SAY THAT THE AO WILL LOOK INTO THE LAW LAID DOWN BY THE HONBLE APEX COU RT AND HONBLE JURISDICTIONAL HIGH COURT IN VARIOUS CASE LAWS CITED BEFORE US WHICH NEEDS TO B E CONSIDERED BY THE ASSESSING OFFICER BEFORE DECIDING THE ISSUE. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER AND ALLOWED FOR STATI STICAL PURPOSES. ITA NO.607/AHD/07 & 3841-42/AHD/2008 A.YS. 02-03 & 05-06 SH. SHIV NARAYAN GARG V. ITO WD-2(1) SURAT PAGE 14 11. THE NEXT COMMON ISSUE IN THESE APPEALS OF ASSES SEE IN ITA NO.607/AHD/2007 & 3842/AHD/2008 IS AS REGARDS TO THE DISALLOWANCE OF INTEREST ON T HE ABOVEMENTIONED CASH CREDITS. WE HAVE ALREADY SET ASIDE THE ISSUE OF CASH CREDITS TO THE FILE OF ASSESSING OFFICER FOR DE NOVO ASSESSMENT. ACCORDINGLY THIS CONSEQUENTIAL ISSUE I S ALSO SET ASIDE TO THE FILE OF THE ASSESSING OFFIC ER IN BOTH THE APPEALS. 12. THE NEXT COMMON ISSUE IN THESE APPEALS OF THE A SSESSEE IN ITA NO.607/AHD/2007 AND 3842/AHD/2008 IS AS REGARDS TO DISALLOWANCE OUT OF TELEPHONE EXP ENSES AND DEPRECIATION OF VEHICLE AT 20%. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT ARGUED THIS COMMON ISSUE IN BOTH THE YEARS AND ACCORDINGLY SAME IS DISMISSED AS NOT INTERESTED IN PROSECUTION. EVEN OTHERWISE THE REASONING SUBMITTED BY CIT(A) THAT THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THESE EXPENSES ON ACCOUNT OF PERSONAL USER AS NOT DENIED BY ASSESSEE IS NOT CONTROVERTED. ACCORDINGLY THIS COMMON ISSUE OF THE ASSESSEES APPEALS IS DISMISSED. 14. COMING TO ITA NO.3841/AHD/2008 WHICH IS ON ACCOUNT OF LEVY OF PENALTY BY THE ASS ESSING OFFICER U/S.271(1) OF THE ACT AND CONFIRMED BY CIT (A) ON THE ADDITIONS OF CASH CREDITS. SINCE THE QUANTUM APPEAL HAS ALREADY BEEN SET ASIDE TO THE FI LE OF THE ASSESSING OFFICER FOR FRAMING ASSESSMENT DE NOVO THIS PENALTY CANNOT SURVIVE. A CCORDINGLY THE PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY CIT(A) U/S.271(1)(C) OF TH E ACT IS DELETED. HOWEVER THE AO CAN RE-INITIATE THE PENALTY PROCEEDINGS IN CASE HE IS SATISFIED THA T THIS IS A FIT CASE FOR INITIATION OF PENALTY U/S.271(1)(C) OF THE ACT. 15. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS DAY OF 14 TH MAY 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : /05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- II SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD