TaxTMI 
TaxTMI 
2013 (1) TMI 134
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.... of the creditor, Shri Dilipkumar Atmaram, contra account etc., furnished before the A.O. Similarly, Shri Hemendra L. Shah admitted in his statement on 11-3-2002 that his books of accounts are not completed and returns for the year under consideration had not been filed. 3. The Ld. Commissioner of Income tax (Appeal)-XIII, Ahmedabad, erred in law and on facts in reducing the addition made u/s. 68 of the I.T. Act from Rs. 116,28,25,838/- to Rs. 1,22,545/-. 4. The Ld. Commissioner of Income tax (Appeal)-XIII, Ahmedabad, erred in law and on facts in not considering the factual aspects discussed by the A.O. in the assessment order in paras 18,19,20 and 21 in this respect. 5. The Ld. Commissioner of Income tax (Appeal)-XIII, Ahmedabad, erred in law and on facts in deleting the addition of Rs.1,72,17,951/- being added as unproved bank charges and commission. 6. The Ld. Commissioner of Income tax (Appeal)-XIII, Ahmedabad, erred in law and on facts in not appreciating that even after affording number of opportunities the assessee could not produce any evidence before the A.O. to arrive at a conclusion that the transactions done through the bank have been properly accounted in h....
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....f these parties had been produced, neither contra account nor source of deposits by these parties had been furnished. Thus, the ultimate source had not been explained. Therefore, the A.O. made the addition of Rs.1,74,00,000/- in the income of the assessee. 4. Being aggrieved by the order of the A.O., the assessee filed first appeal before ld. CIT (A) who has given detailed findings on paragraph nos. 3, 3.1 & 3.2 of his order dated 27.01.2003 at page no.4 and deleted the addition. The finding of the CIT(A) is reproduced as under:- "3.2 I have considered the submissions of the Authorised Representative carefully and have gone through the observations of the Assessing Officer in the assessment order. I find that the appellant has explained the source of cash credits of Rs.1,74,00,000/- and the same has been made out of withdrawals from the bank accounts and the appellant has also explained the source from which the funds were deposited in the said bank accounts before the Assessing Officer. The appellant has explained the source of such deposits and the appellant had furnished Xerox copies of acknowledgements of return of income of the persons from whom the money was borrowed....
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....o.1 is regarding deletion of addition of Rs.1,74,00,000/- being unexplained cash deposited in the Bank. Ground No.3 is regarding reducing the addition made u/s. 68 of Rs.116,28,25,838/- to Rs. 1,22,545/-. Ground No.2 & 4 are arguments related to these two grounds. In respect of addition of Rs. 116,28,25,838/- the CIT(A) has stated in para 6.3 on page 18 on his order that this addition was rectified by the A.O. being a typographical mistake in respect of addition of amount concerning Sonu Exim which according to CIT(A) the correct amount was Rs. 2,96,00,000/- but was wrongly taken by the A.O. at Rs.29,60,00,000/-. In this regard it is stated that the matter was taken up the Assessing Officer but he has not be able to verify the same. It appears that appellant also does not have any such rectification order. 2. In view of the above these grounds are discussed in the paras hereunder: Addition of Rs.1,74,00,000/- being cash deposit in Indusland Bank Ltd. (Para 22 & Page 14 of Assessment Order). The A.O. has stated that the verification of case records show the following case deposits:- Sr. No. Amount (in Rs. Lacs) Date 1. 35 09.03.1998 2. 50 09.03.1998 3. 45 0....
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....ce of cash deposit in his own account of Induslnd Bank from the withdrawals of cash from his own account in his proprietary concern viz. Parth Mercantile and Dilipkumar Atmaram Modi (HUF). Shri Dilipkumar Atmaram Modi (HUF) has not been produced and no contra account has been filed. The source of deposit in his proprietary concern viz. Parth Mercantile has not been explained by the assessee before the A.O. Therefore the order of CIT(A) is not correct as the findings given by the CIT(A) is not based on documents. Therefore the addition made by the A.O. should be confirmed and the order of CIT (A) should be set-aside on this ground." 6. From the side of assessee, Shri Aseem L. Thakkar, Senior counsel appeared, who has also filed written submission dated 25.06.2012 and copy of the order of CIT(A)-XIII, Ahmedabad, dated 30.01.2004 for A.Y. 1997-98 in the case of assessee. The submission of ld. Counsel is reproduced as under:- "4. The first ground of appeal relates deletion of Rs. 1.74 lac by way of unexplained cash deposits. The relevant discussion has been made in para 22 and page 14 of the assessment order. The Ld. CIT(A) has adjudicated the issue in para 3 to 3.2 & pg.2 to 4 o....
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....al v CIT (2006) 280 TTR 512 (Guj.) 2) Sarogi Credit Corporation v. CIT (1976) 103 ITR 344 (Patna). 2) CIT v Ramnarayan Goyal (1997) 244 ITR 180 (P&H) 3) Tholaram Dada v. CIT (1966) 59 ITR 638 (Assam) . 4) CIT v Dolatram Ravatmal (1973) 87 ITR 349 (SC). 4.3 It is an accepted fact by the A.O that the respondent had furnished complete information and details regarding the source of the deposits, the parties from whom cash credits had been accepted. Their names, addresses, confirmation and income tax particulars etc. were furnished. Not only complete identification of those parties was furnished but also of such parties/entities who in turn had advanced money to the cash creditors of the appellant. Therefore, the respondent had furnished complete details regarding his own depositor as well as the depositor of such cash creditors. The A.O while rejecting the explanation has relied upon the non production of the depositor of depositor which is in contravention to the settled position of law as referred supra. The Ld. CIT (A) has therefore rightly deleted the addition made since the A.O has not doubted either the identity, capacity or the genuineness of these c....
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.... Nyalchand Fin.Co. Rs. 21,397/- The copy of account from assessee's books is furnished only. From Parth Mercantile Inc. Set: Anand Jewellers Rs. 1.40.00.000/- & Interest Rs. 27,616/- Copy of contra account and copy of acknowledgement of proof for filing return have been furnished, but source is not explained nor interest account is given. Anand Property Fin. Ltd. 12,00,000/- & Interest Rs. 2,367/- Copy of contra account, copy of acknowledgement of proof for filing return, have been furnished, but the source is not explained nor interest account is given. Galaxy Impex: Rs. 1,14,00,000/- & Interest Rs. 4,62,615 /- Copy of contra account, copy of acknowledgement of proof for fifing return, etc are filed, but no further details have been furnished. Hemendra L Shah Rs.73,54,30,900/- & Interest Rs. 3,99,50,101/- The issue is discussed later on. Sonu Exim Rs.29,60,00,000/- & Inerest Rs. 23,35,561/ Copy of contra account, copy of acknowledgement of proof for filing return Showing loss of Rs. 62.033/- have been furnished, but no other details have been submitted." The A.O. observed that the copy of accounts filed on computer sheet and in same rubber st....
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....and copy of interest of account was not given. Therefore, the addition of Rs.4,61,02,392/- was made along with interest of Rs. 22,14,392/- in the income of the assessee. Besides this, there was an addition of Rs.30,492/- on account of interest on cash creditor received in A.Y.97-98 which were added in the total income for A.Y. 97-98. Thus, total addition of Rs.1,16,28,25,838/- was made in the income of the assessee. The A.O. had given detailed finding on page nos. 11 to 16 of the assessment order. 9. Being aggrieved by this order, the assessee filed first appeal before CIT(A), who has discussed this issue on page nos. 4 to 22 and deleted most of additions except Rs.1,22,545/- by discussing individual cash creditor in paragraph nos. 6.1 to 6.13 and the findings of the CIT(A) in paragraph no. 6.13 is reproduced as under:- "6.13 As discussed above I find that all the above deposits except the deposit of Rs.2l,397/- from H. Nyalchand Finance Co. and Rs.70,656/- from Speedwell Properties Ltd. have been received through bank cheques and all these depositors have got PANos. or GIR Nos. and they have filed returns of income and the said advances have been reflected in their balance-s....
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....ts are all genuine, hence I reduce the addition of Rs. 1,16,28,25,838/- to Rs. 1,22,545/- and delete the balance amount of Rs.1,16,27,03,293/-. As regards the disallowance of Rs. 30,492/- representing interest paid on the cash credits added in A.Y. 1997-98, I find that in the assessment of A.Y. 1997-98, certain cash credits have been treated as unexplained cash credits and addition has been made. Accordingly, the Assessing Officer has not allowed interest on the said deposits. If is found that the first appeal of that year is pending for decision. Depending on the decision of CIT(A) for the ;A.Y. 1997-98 regarding the genuineness of the said cash credits, the interest disallowance needs to be revised. The Assessing Officer is directed to allow interest later on those deposits which would be held to be genuine by the CIT(A) for the A.Y. 1997-98. As regards the deposit of Rs.70,656/- from Speedwell Properties Ltd. it is found that the said amount is not appearing as loan advanced in the balance-sheet of Speedwell Properties Ltd. as on 31.3.1998, hence I direct the Assessing Officer to verify from the books of accounts of Speedwell Properties Ltd whether the same has been reflected....
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....000000 2335561 298335561 Match es with copy of a/c No PAN Yes Yes (only principal amt.) Yes 1. Address is of same apartment as in S. No. 3, 5, 7, 12 & 13. 2. No PAN 3. confirmation given for principal amount only. 4. No response to the enquiry conducted by A.O. 5. Source is not properly explained. 6. Tushar bhai K. Shah (Page 13, para 20(ii) of assess ment order) 37 to 39, 163 10500000 859562 11359562 Match es with copy of a/c Yes Yes Yes (only principal amt.) Yes 1. Address given in the return is incomplete. 2. confirmation given for principal amount only. 3. No response to the enquiry conducted by A.O. 5. Source is not properly explained as balance sheet is unsigned. 7 & 15. Speed well Properti es Ltd. (Page 13, para 19 (ii) of assess ment order) 40 to 43 and 172 to 185 70000 650000 656 0 70656 650000 Matches with copy of a/c Yes Yes Yes (only principal amt.) Yes 1. Address is of same apartment as in S. No. 3, 5, 7, 12 & 13. 2. confirmation given for principal amount only. 3.The signature on return and confirmation are different. 4. No response to the enquiry conducted by A.O. 5. Source is not prop....
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.... 1162825838 11. From the side of assessee, ld. Counsel for the assessee again relied upon whatever submission filed before the CIT(A), he draw our attention to the paper book submitted during the course of hearing which is being considered for deciding the individual cash creditor. (i) Alka Barot- The assessee has shown loan from Alka Barot at Rs. 5000/- for which he has drawn our attention on page nos. 19 & 20. The page no.19 is a ledger account for the period of 01/04/97 to 31/03/98 a loan from Alka Barot of Rs. 5000/- through cheque no. 45644 in assessee's account maintained with the Catholic Syrian Bank Ltd. Page no.20 is a copy of return for A.Y. 98-99 in case of Alkaben Jashvantlal Brahmbhatt. Ld. A.R. claimed that he has discharged his onus and proved the case creditor as genuine. (ii) Anand Jewellers- The assessee has shown loan at Rs. 1,40,00,000/- from Anand Jewellers. The A.R. submitted confirmation at page nos. 21 to 25 and 166 of the paper book. Page no. 21 is the copy of account from the assessee's book of Anand Jewellers for the period of 01/04/97 to 31/03/98 where this loan including interest has been reflec....
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....8. Page 35 is a copy of return for A.Y. 98-99 without PAN. Page no.36 is a copy of computation of income for A.Y. 98-99. Page no.162 is unsigned balance sheet of Sony Exim for A.Y. 98-99 as on 31.03.98 in which Parth Mercantile Inc. has shown the liability side of balance sheet Rs. (-)2,96,00,000/-. (vi) Tusharbhai K. Shah- The assessee has shown a loan at Rs. 1,05,00,000/- for which the appellant has filed the confirmation in paper book at page nos. 37 to 39. Page 37 is unsigned copy of account for the period of 01/04/97 to 31/03/98 in which loan at Rs. 1,05,00,000/- has been shown to Atlas Jewellers (propriety concern to the assessee) which has shown outstanding as on 31.03.98. Page 38 is copy of return of Shri Tusharbhai K. Shah for A.Y. 98-99. (vii & xv) Speedwell Properties Ltd.- The assessee has shown the loans of Rs. 75,000/- & Rs. 6,55,000/- from Speedwell Properties Ltd. for which the assessee has filed evidence of confirmation at page nos. 40 to 43 and 172 to 185. Page 40 is a signed copy of ledger account for the period of 01/04/97 to 31/03/98 in which Rs. 70,000/- has been given to Atlas Jewellers (propriety concern to the assessee) and the same amount has been sh....
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....y assessment order in case of Shri Hemendra L. Shah for A.Y. 98-99. Page nos. 167 to 169 are copies of balance sheet of Shri Hemendra L. Shah as on 31.03.98 in which the outstanding loan by Shri Hemendra L. Shah has shown in the name of Atlas Jewellers at Rs.99,18,000/- whereas in the name of Parth Mercantile Inc. at Rs. 77,53,81,001/- which includes interest of Rs.3,99,50,101/-. (Xii & Xiii) Pinky Corporation (Proprietory concern of Shri Hemendra L. Shah)- The assessee has shown loan of Rs. 84 lacs and Rs. 50 lacs from Pinky Corporation for which the confirmation at page nos. 51 to 53 & 170 of paper book have been given by the assessee. Page no.53 is a copy of unsigned ledger account in the name of Pinky Corporation for the period of 01/04/97 to 31/03/98 in which the loan of Rs.84 lacs has been shown in the name of Atlas Jewellers. He reflected loan of Rs. 84 lacs and Rs. 50 lacs in the name of Atlas Jewellers and closing balance as on 31.03.98 has been shown at Rs. 1,34,00,000/- at page 170. Page 51 is a copy of return of Shri Rameshchandra L. Shah for A.Y. 98-99 on which PAN has been mentioned. (xiv) Vidhi Corporation - The assessee has shown loan of Rs.50 lacs from....
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.... the CIT(A) was right in deleting addition in above cash creditors. In case of Speedwell Properties Ltd. the loan of Rs. 6.5 lacs was actual advance from the assessee to the Company not loan which has been confirmed by the concerned A.O. of Company and the same has been reflected as a liability in the balance sheet in the Company for A.Y. 98-99. Regarding loan of Rs.70,000/- including interest, there is a confirmation at page 40 by the Company which has been shown outstanding liability of the Company for A.Y. 98-99. But, this amount has not been shown as debtors by the Company. Cash credit of Rs.70000/- in case of Speedwell Properties Ltd. including interest has not been disclosed by the cash creditor in its balance sheet. No confirmation in case of H. Nyalchand Finance company of Rs.21,397/-. Therefore, (70000 + 21397) addition of Rs. 91397/- is confirmed by the CIT (A), is justified. But interest amount in case of Galaxy Impex of Rs.462615/-, in case of Sonu Exim of Rs.2335561/-, in case of Tusharbhai K. Shah of Rs.859562/-, in case of Hemendra L. Shah of Rs.362548/-, in case of Pinky Corporation of Rs.463956/- & Rs.175068/-, in case of Vidhi Corporation Rs.175068/- in case of R.....
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....at the assessee has not justified the purpose of expenses with evidence before the A.O. From the assessee side, Shri Aseem Thakkar (CA) relied upon the order of the CIT(A) and requested to confirm the order of CIT(A). He has also drawn our attention on page 18 of his reply at paragraph no.22.2 which is reproduced as under:- "22.2 The Ld. CIT(A) while deleting the addition has made relevant discussion in para 7 and page 22 of his order. It was pointed out that the respondent vide his letter dated 14-03-2002 had furnished the copies of the bank statements and bank advice from IndusInd Bank to whom such bank charges /commission had been paid. Various documents in support of the expenditures claimed were furnished which have also been placed on page 97 to 101 of the paper book. The copy of accounts, transaction history, the vouchers of the bank etc. are enclosed therein. The Ld. CIT(A) has also in para 7.2 and page 23 of the order given a categorical finding that the appellant was doing financial business in the name of Parth Mercantile INC. The respondent had shown interest income of Rs.5,71,56,957/-. There is a Net profit of Rs.71,562 which has been duly assessed by the A.O. The e....
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....f bullion and jewellery and the appellant had already shown sales of Rs.12,07,25,000/- from business of bullion. Therefore, as the profit has been earned by the appellant from the jewellery, the bank charges and commission payment should be held as business expenditure. I find that Bill discounting charges of Rs.19,24,117/-, are revenue business expenses and have been incurred for the purpose of business: I find from the Profit & Loss Account of M/s. Atlas Jewellers filed alongwith the return of income that the appellant has shown gross profit from trading of T.T. gold bars as Rs.25,24,780/- against which the appellant has claimed the above bill discounting charges and L.C. opening charges of 5,93,331/- and net profit of Atlas Jewelers has been shown as Rs.65,860/- which has been included in the income returned by the appellant. Therefore, the said expenditure of discounting charges is held to be revenue expenditure allowable u/s.37 of the I.T. Act. as corresponding income has been reflected in the P&L account. Accordingly, the addition of Rs.19,24,117/- made by the Assessing Officer is hereby deleted." 18. Now the Revenue is before us. The CIT D.R. vehemently relied upon the or....