TaxTMI 
TaxTMI 
2013 (1) TMI 134
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.... 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 his regular books of accounts. 7. The Ld. Commissioner of....
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.... 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 prior to the cash deposit in the bank. Therefore, the addition made by the A....
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....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 09.03.1998 4. 44 09.03.1998 Total 174 3. From Para 22 of the assessment order it is seen tha....
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....ietary 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 of his order. The A.O. has stated that the following cash credits were made by the respondent. Date Amount 09-03-....
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....80 (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 cash credits in the hands of the respondent. In view of the settled legal position that the respondents is not required to prove the source of source or the o....
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....,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 stamp and signatures were not verifiable. The assessee has not filed any evidence other than computer sheet, copy of account from the party even 18 dates of hearing were given to the assessee. Therefore, he ....
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.....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-sheets. J also find that the deposit of Rs. 2,00,000/- from Hemendra Shah has been received by Account payee cheque. Thus all the above deposits have been received through cheques. For the deposit from H. Nyalchand F....
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....he 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 in their books of accounts and if the same is reflected in the books of accounts of Speedwell Properties Ltd., the Assessing Officer is directed to accept the same as genuine." 10. Now the Revenue is before us. The ld. ....
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....ara 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 properly explained. 8. Praful L. Shah (Page 13, para 20(iv & v) of assess ment order) 47 to 50 50000 00 177534 5177534 Matches with copy of a/c GIR No. Yes Yes Yes 1. No response to the enquiry conducted by A.O. 2. Source is not properly explained. 3. There is no PAN on the income-tax Return and Address on the return is not verifiable from the return 9, 10 & 11 Hemen dra L. Shah (Page 15, para 23 o....
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....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 reflected at Rs. 1,40,27,616/-. Page 22 is a copy of return of M/s. Anand Jewellers for A.Y. 98-99. Page 23 is a copy of computation of income. Page 24 is a copy of list of documents attached and depreciation chart and page 25 again ledger account for the period of 01/04/97 to 31/03/98. Page166 is a copy of balance sheet as on 31.03.98 in which loan of Rs.1,40,27,616/- has been shown. (iii) Anand Property Finance Ltd.- The assessee has shown loan at Rs.12,00,000/- for which the appellant submitted the confirmation from page ITA No. 565/Ahd/03 & C.O.No.74/Ahd/04 & A.Y.98-99 Pa....
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....n 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 shown outstanding as on 31.03.98. Page no.41 is a copy of return filed by the cash creditor for A.Y. 98-99 on which PAN applied for mentioned. Page nos. 42 & 43 are the computation of income for A.Y. 98-99. Page nos. 172 to 185 are copies of balance sheet along with annexures on page 176 in schedule-8. The current assets loan and advances receivable in schedule 8 at page 181 has been shown at Rs.1,40,86,648/- by Speedwell Properties Ltd. in which the assessee's name has not been reflected whereas page 40 shows the outstanding balance as on 31.03.98 in the name of Atlas Jewellers (pr....
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....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 Vidhi Corporation (propriety concern of Shri Hemendra L. Shah) for which confirmation in page nos. 58 & 59 and 93 to 96 have been submitted by the assessee. Page 58 & 59 are copies of interest running ledger account for the period of 01/04/97 to 31/03/98. Page 93 to 96 are a running copies of account for the period of 01/04/97 to 31/03/98 of Parth Mercantile Inc. where total outstanding loan of Rs.21,59,23,912/- has been shown. The assessee has not verified on what date of loan of Rs. 50 lakhs had been accepted. Therefore, the A.O. is directed to verify the loan with reference to additio....
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....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.A. Corporation Rs.7397/-. The explanations are not verified from the copy of accounts. Therefore, the A.O. is directed to verify the above interest, which are claimed by the assessee as expenses. The loan shown from Vidhi Corporation is also required to verify as per findings on page 27. 13. Ground nos. 5, 6 & 7 are against deletion of Rs.1,72,17,951/- on account of bank charges and commission. The A.O. observed at page 16 of the assessment order that the assessee has debited commission of bank charges of Rs.1,72,17,951/-. The justification of this expense was asked for by the A.O. but no reply ....
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....nk 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 expenditure being completely related to the business activities the disallowance so made has been deleted." Ld. CIT(A) had allowed the bank charges and commission as per pages 78 to 82 and bank charges payments were to Induslnd Bank but on verification of paper book submitted before us the page nos. 78 & 79 are the copy of running ledger account of Shri Hemendra L. Shah with Induslnd Bank for the period of 29.11.97 to 04.12.97 in which no commission / bank charges debited and not pertained to the assessee. But, as per reply of assessee page nos. 97 and 98 are the copy of bank charges in the name of Parth M....
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....ant 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 order of the A.O. and the counsel for the assessee is relied on the order of the CIT(A). He also filed written reply on this issue, which is reproduced as under:- "23 Ground No.8 relates to the addition of Rs.19,24,117/- towards alleged claim of bill discounting charges. The relevant discussion has been made in para 27 and page 16 of the assessment order. The A.O. stated that on enquiry with the respondent and verification of his return, it is not proved as to why the discounting charges were paid to the bank and what was the income earned by the appellant. It has also been stated inspite of repeated requests only the ....