The ITO, Ward-2(2),, JAMNAGAR v. Shri Vaikunthbhai Mithubhai Gajara,, JAMNAGAR

ITA 646/RJT/2010 | 2006-2007
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 64624914 RSA 2010
Assessee PAN AEDPG4529G
Bench Rajkot
Appeal Number ITA 646/RJT/2010
Duration Of Justice 1 year(s) 7 month(s) 12 day(s)
Appellant The ITO, Ward-2(2),, JAMNAGAR
Respondent Shri Vaikunthbhai Mithubhai Gajara,, JAMNAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 09-09-2011
Date Of Final Hearing 29-08-2011
Next Hearing Date 29-08-2011
Assessment Year 2006-2007
Appeal Filed On 27-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.646/RJT/2010 (ASSESSMENT YEAR 2006-07) ITO WD.2(2) VS SHRI VAIKUNTHBHAI MITHUBHAI JAMNAGAR GAJARA PROP OF GAJARA TRADING CO PLOT NO.E-232 GIDC PHASE-II DARED(JAMNAGAR) PAN : AEDPG4529GH (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI KALPESH DOSHI DATE OF HEARING : 29-08-2011 DATE OF PRONOUNCEMENT : 09-09-2011 O R D E R PER N.R.S. GANESAN JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) JAMNAGAR DATED 26-11-2009 AND PERTAINS TO ASSESSMEN T YEAR 2006-07. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DEL ETION OF ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 19 91 00 0 U/S 68 OF THE INCOME-TAX ACT. 3. SHRI MK SINGH THE LD.DR SUBMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAS TAKE N UNSECURED LOAN TO THE EXTENT OF RS. 19 91 000. IN THE COURSE OF ASSESSME NT PROCEEDINGS THE ASSESSEE WAS ASKED TO PROVE THE IDENTITY GENUINENESS AND CR EDITWORTHINESS OF THE CREDITORS. HOWEVER THE ASSESSEES REPRESENTATIVE APPEARED AND SUBMITTED ITA NO.646/RJT/2010 2 BEFORE THE ASSESSING OFFICER THAT THE DETAILS WERE ALREADY FILED BY A LETTER DATED 18-07-2008. DURING THE ASSESSMENT YEAR 2005-06 A S IMILAR CREDIT WAS RECEIVED BY THE ASSESSEE FROM THE ABOVE SAID PERSONS. HOWEV ER THIS TRIBUNAL DELETED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06. THE CIT(A) BY FOLLOWING THE ORDER OF ITAT FOR THE A SSESSMENT YEAR 2005-06 DELETED THE ADDITION FOR THE YEAR UNDER CONSIDERATI ON. 4. ON THE CONTRARY SHRI KALPEH DOSHI THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE A DDITION OF RS.19 91 000 IN RESPECT OF CREDITS RECEIVED BY THE ASSESSEE FROM EI GHT PERSONS. THE ASSESSING OFFICER FOUND THAT THE CREDIT RECEIVED FROM THOSE P ERSONS FOR THE ASSESSMENT YEAR 2005-06 WAS INGENUINE; THEREFORE HE MADE THE ADDIT ION. ACCORDING TO THE LD.REPRESENTATIVE THOUGH THE CIT(A) CONFIRMED THE A DDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06 T HIS TRIBUNAL DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. SINCE THE CIT(A) HAS FOLLOWED THE ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2005-06 A CCORDING TO THE LD.REPRESENTATIVE NO INTERFERENCE CAN BE CALLED FO R. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE HAS RECEIVED RS.19 91 000 FROM THE FOLLOWING PERSONS: 1. SHRI BABULAL NAGJIBHAI RS. 16 20 000 ITA NO.646/RJT/2010 3 2. DIPAKBHAI KHIJADA RS. 30 000 3. DINESHBHAI M GAJARA RS. 50 000 4. SMT. NASRMADABEN JETHALAL RS. 41 000 5. SMT. MANGLABEN B MANGE RS. 1 00 000 6. SMT. SARSWATIBEN S MAV RS. 35 000 7. SMT. KALPNABEN D MAV RS. 60 000 8. SMT. KANTABEN R MAV RS. 55 000 ------------------ TOTAL RS.19 91 000 ------------------ THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS HAD CALLED FOR DETAILS. THE ASSESSEE EXPLAINED BEFORE THE ASSESSI NG OFFICER THAT ALL THE DETAILS WERE FURNISHED BY A LETTER DATED 18-07-2008. THE F ACT REMAINS IS THAT IN ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS RECEIVED S IMILAR CREDITS FROM THE ABOVE SAID PERSONS. THIS TRIBUNAL BY FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS ROHINI BUILDERS ( 2002) 256 ITR 360 (GUJ) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS FILED CONFIRMATION L ETTERS FROM ALL THE EIGHT CREDITORS LEDGER ACCOUNTS COPIES OF INCOME-TAX RE TURNS ETC. THEREFORE AS FOUND BY THE JURISDICTIONAL HIGH COURT THE ASSESSE E HAS DISCHARGED THE BURDEN OF PROOF. ONCE THE BURDEN OF PROOF WAS DISCHARGED BY THE ASSESSEE IT IS FOR THE REVENUE TO SHOW THAT THE CREDITS ARE NOT GENUINE. THE JURISDICTIONAL HIGH COURT ITA NO.646/RJT/2010 4 AFTER CONSIDERING THE JUDGMENT OF THE APEX COURT IN ORISSA CORPORATION (1986) 159 ITR 68 (SC) HAS OBSERVED AS FOLLOWS: THUS IT IS CLEAR THAT THE ASSESSEE HAD DISCHARGE D THE INITIAL ONUS WHICH LAYS ON IT IN TERMS OF SECTION 68 BY PRO VING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES GIR NUMBERS / PERMANENT ACCOUNTS NUMBERS AND THE COPIES OF ASSESS MENT ORDERS WHEREVER READILY AVAILABLE. IT HAS ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK A CCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO P ROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOU NTS OF THOSE CREDITORS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURC E OF THE SOURCE AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD V. CIT (1963) 49 ITR 723. THE GENUINENESS OF T HE TRANSACTION IS PROVED BY THE FACT THAT THE PAYMENT TO THE ASSES SEE AS WELL AS REPAYMENT OF THE LOAN BY THE ASSESSEE TO THE DEPOSI TORS IS MADE BY ACCOUNT PAYEE CHEQUES AND THE INTEREST IS ALSO PAID BY THE ASSESSEE TO THE CREDITORS BY ACCOUNT PAYEE CHEQUES. MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COU LD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSIN G OFFICER CANNOT BE A GROUND TO TREAT THE LOANS TAKEN BY THE ASSESSE E FROM THOSE CREDITORS AS NON-GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF ORISSA CORPORATION (19 86) 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBS ERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND THE GIR NUMBERS THE BURDEN SHIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUES CASE AND IN ORDER TO SUS TAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABL ISH THE LACK OF CREDITWORTHINESS AND MERE NON-COMPLIANCE OF SUMMONS ISSUED BY ITA NO.646/RJT/2010 5 THE ASSESSING OFFICER UNDER SECTION 131 BY THE ALL EGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THE CASE OF SIX CREDITORS WHO APPEARE D BEFORE THE ASSESSING OFFICER AND WHOSE STATEMENTS WERE RECORDE D BY THE ASSESSING OFFICER THEY HAVE ADMITTED HAVING ADVANC ED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND IN CASE T HE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPO SITED BY THOSE CREDITORS IN THEIR BANK ACCOUNTS THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CRED ITORS BY TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS A S UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. 6. IN VIEW OF THIS OBSERVATION OF THE JURISDICTIONA L HIGH COURT IN OUR OPINION IT IS FOR THE REVENUE TO SHOW THAT THE CREDITS ARE NOT BOGUS. AS RIGHTLY SUBMITTED BY THE LD.REPRESENTATIVE THE ASSESSING OFFICER HAS MA DE THE ADDITION SINCE A SIMILAR CREDIT RECEIVED FROM THE ABOVE SAID PERSONS FOR ASS ESSMENT YEAR 2005-06 WERE FOUND TO BE NON GENUINE. HOWEVER THE FACT REMAINS IS THAT THE ORDER OF THE ASSESSING OFFICER WAS SET AIDE FOR THE ASSESSMENT Y EAR 2005-06 AND THE ENTIRE ADDITION WAS DELETED BY THIS TRIBUNAL. IN VIEW OF THE ABOVE IN OUR OPINION THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LOWE R AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF INTEREST ON THE ABOVE CASH CREDIT. SINCE THE CASH CREDIT WAS DELET ED THE INTEREST PAID THEREON IS ITA NO.646/RJT/2010 6 ALLOWED AS REVENUE EXPENDITURE. THEREFORE WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THE SAME IS UPHELD. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-09-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 09 TH SEPTEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A) JAMNAGAR 4. THE CIT JAMNAGAR 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT