Lion Tapes Pvt. Ltd.,, Bhavnagar v. The ACIT., Inv.Circle-1,, Bhavnagar

ITA 2636/AHD/2007 | 2003-2004
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 263620514 RSA 2007
Assessee PAN AAACL3629B
Bench Ahmedabad
Appeal Number ITA 2636/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 7 day(s)
Appellant Lion Tapes Pvt. Ltd.,, Bhavnagar
Respondent The ACIT., Inv.Circle-1,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 21-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year 2003-2004
Appeal Filed On 13-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 12.5.10 DRAFTED ON:12.05.2010 ITA NO.2636/AHD/2007 ASSESSMENT YEAR : 2003-2004 M/S. LION TAPES PVT. LTD. 283/B GIDC CHITRA BHAVNAGAR. VS. ACIT CIRCLE-1 AAYKAR BHAVAN BHAVNAGAR. PAN/GIR NO. : AAACL3629B (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI T.P.HEMANI AD. RESPONDENT BY: SHRI DR. JAYANT JAVERI SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-XIX AHMEDABAD DATED 14.01.2006. 2. GROUND OF THE APPEAL OF THE ASSESSEE READS AS UN DER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN ADDING RS.9 62 000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN DISALLOWING INTEREST EXPENDITURE OF RS.1 12 079/- IN RESPECT OF ALLEGED UNEXPLAINED CAS H CREDIT U/S 68 OF THE ACT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN DISALLOWING REMUNERA TION PAID TO THE DIRECTORS OF THE APPELLANT COMPANY AMOUNTING TO - 2 - RS.4 48 000/-. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) OUGHT TO HAVE DELETED THE DISALLOWANCE MADE BY THE AO. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE RESPECTIVE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THE Y FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS EXPLANATIO NS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IM PUGNED ORDER. 5. LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE LEVY OF INTEREST U/S 234A/B/C OF THE ACT. 6. LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WITHOU T THERE BEING ANY SATISFACTION RECORDED BY THE LD. AO. WHILE FRAM ING THE ASSESSMENT ORDER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD AS UNDER:- 2. THE AUTHORISED REPRESENTATIVE HAS FURNISHED CONFIRMATION LETTERS ALONG WITH COPIES OF PASS BOOK . THE AUTHORISED REPRESENTATIVE HAS ALLEGED THAT THE ASSE SSING OFFICER HAS MADE ADDITION U/S.63 OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACTS AND EXAMINATION OF T HE CREDITORS HENCE THE ASSESSING OFFICER VIDE THIS O FFICE LETTER NO.CIT(A)-XIX/INQUITY/06-07 DOLED 12.7.2006 WAS DIR ECTED TO EXAMINE THE CREDITORS WHOSE CONFIRMATIONS WERE F ILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AS PER THE DIRECTION THE ASSESSING OFFICER CONDUCTED NECESSAR Y ENQUIRIES AND SENT REMAND REPORT DATED 27/10/2006 W HICH HAS BEEN PLACED ON RECORD AFTER PERUSAL. A COPY OF SAID REMAND REPORT WAS GIVEN TO THE APPELLANT FOR ITS CO MMENTS. BUT NOTHING HAS BEEN HEARD EITHER FROM THE APPELLAN T OR FROM THE AUTHORISED REPRESENTATIVE. 3. THE APPELLANT HAS RAISED FOUR GROUNDS OF APPEAL WHICH ARE DEALT WITH AS UNDER: 4. THE FIRST GROUND SAYS THAT THE ASSESSMENT ORDER IS AGAINST LAW EQUITY AND JUSTICE. THE AUTHORISED REPRESENTATIVE DID NOT BRING IN MY NOTICE ANY DEFEC TS TO PROVE THE ORDER PASSED BY THE ASSESSING OFFICER IS AGAINST LAW EQUITY AND JUSTICE EXCEPT FOR AGITATING ADDITI ONS MADE - 3 - BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. T HE ASSESSMENT ORDER HAS BEEN PASSED AS PER THE PROVISI ON OF THE ACT. THE APPELLANT HAS BEEN GIVEN PROPER OPPORTUNITY OF BEING HEARD. NO INFIRMITY HAS BEEN BROUGHT IN MY NO TICE. HENCE THIS GROUND OF APPEAL IS REJECTED. 5. THE NEXT GROUND PERTAINS T O AN ADDITION OF RS.10 62 000/- MODE U/S.68 OF THE INCOME TAX ACT AS UNEXPLAINED CASH CREDITS. THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS EXISTENCE AND CREDITWORTHINESS OF 10 C REDITOR. THUS BY MAKING ELABORATE DISCUSSION OF EACH CREDIT OR HE MADE AN ADDITION OF RS.10 62 000/- U/S.68 AS UNEXPL AINED CASH CREDIT. 5.1. DURING THE COURSE OF APPELLATE PROCEEDINGS TH E AUTHORISED REPRESENTATIVE FILED A WRITTEN SUBMISSIO N IN WHICH IT IS EXPLAINED THAT THE APPELLANT IS A PRIVA TE LIMITED COMPANY AND THE COMPANY FILED ITS RETURN OF INCOME ON 31/1/2003 TOGETHER WITH AUDITED ACCOUNTS. AFTER FIL ING OF THE RETURN THE FIRST NOTICE OF U/S. 143(2) WAS ISSU ED ON 15/10/2004 AND WHICH IS SERVED ON 25/10/2004. THEN OTTER THE FRESH NOTICE DATED 2/12/2004 TOGETHER WITH QUESTIONNAIRE CONTAINING 13 QUESTION AND HEARING W AS FIXED ON 9/1/2005. AS THE DAY FIXED THE APPELLANT APPEA R ON THE DATE AND SUBMITTED REPLY OF THE ORIGINAL QUESTIONER . WITH THIS REPLY THE APPELLANT FILED CONFIRMATION LETTERS OF ALL THE DEPOSITORS AND XEROX COPY OF BANK PASSBOOK OF ALL DEPOSITORS AND OUT OF SOME DEPOSITORS XEROX COPY RE CEIPT OF RETURN FILING. BUT AFTER COMPLIANCE OF THE ABOVE N OTICE THE ASSESSING AUTHORITY ALLOWED TO ELAPSE ONE YEAR TIME AND THE AFTER THE ASSESSING AUTHORITY ISSUE A FRESH NOTICE ON 10/3/2006 AND WHICH WAS SERVED TO 11/3/2006 (I.E. SATURDAY) UPON TO ASSESS ASKING TO VERIFY SOURCE OF FUND GIVEN TO THE ASSESSEE BY SUCH DEPOSITORS AND IF PO SSIBLE PRODUCE THE DEPOSITORS ON 17/3/2006. AS THE APPELL ANT ACCEPTED MOST OF THE LOAN THROUGH THE FINANCE BROKE RS HE WAS NOT IN DIRECT CONTACT OF MANY DEPOSITORS IN SP ITE OF THIS APPELLANT TRIED LEVEL BEST TO CONTACT TO DEPOSITORS AND FORCED TO THEM TO ATTEND TO INCOME TAX OFFICE BEFOR E THE ASSESSING AUTHORITY ON THE HEARING DATE BUT DUE TO SHORT PERIOD NOTICE NOBODY ATTENDED. THEREFORE THE APPELLANT - 4 - WAS FORCED TO REQUEST THE ASSESSING AUTHORITY TO IS SUE SUMMONS TO DEPOSITORS. THIS REQUEST REMAINED UNATTE NDED BY THE ASSESSING AUTHORITY. THEN AFTER THE ASSESSIN G AUTHORITY ISSUED THE SHOW CAUSE NOTICE ON 20/3/2006 AND SAY THAT 12 DEPOSITORS ARE NON GENUINE. IN REPLY OF ABOVE SAID SHOW CAUSE NOTICE THE APPELLANT SUBMITTED THE POSTAL ADDRESS OF ALL 12 DEPOSITORS ACCOUNTS CO PY ONE XEROX COPY OF BANK PASS BOOK AND ALSO REQUESTING T HE ASSESSING AUTHORITY TO PLEASE ISSUE THE SUMMONS TO ALL DEPOSITORS BUT THE ASSESSING AUTHORITY FAILED TO PREVENT APPELLANT FROM PRODUCING PROPER EVIDENCE TO T HE LOAN TAKEN BY THE ASSESSEE. 5.2 IN THE ASSESSMENT ORDER THE ASSESSING AUTHORIT Y ALLEGING THAT THE SOME DEPOSITORS' BANK PASS BOOK S HOW CASH CREDIT AND THAT CASH CREDIT WAS DEPOSITED TO A PPELLANT FIRM THAT IS WRONG OF THE ASSESSING AUTHORITY. WE A RE SUBMITTING HEREWITH THE XEROX COPY OF BANK PASSBOOK OF THE DEPOSITORS WHICH WAS SUBMITTED BEFORE THE ASSESSING AUTHORITY. IN THIS BANK PASSBOOK SHOWS THAT ALL AMO UNT DEPOSITED IN THE BANK WAS BY CLEARING. SO I THE UN DERSIGNED BEG TO SUBMIT THAT YOUR HONOUR ARE REQUESTED TO ASS ESSING AUTHORITY VERIFY ALL THE DEPOSITORS AGAIN. 5.3 IN VIEW OF THE SPECIFIC REQUEST OF THE APPELLANT T HE ASSESSING OFFICER AS MENTIONED IN EARLIER PARA WA S DIRECTED TO EXAMINE THE ALLEGED CREDITORS AND SEND HIS REMAN D REPORT. IN VIEW OF THESE DIRECTIONS THE ASSESSING OFFICER MADE NECESSARY ENQUIRIES AND THEREAFTER SENT A REMA ND REPORT DATED 27/10/2006. A COPY OF SAID REMAND REPO RT WAS GIVEN BY THE ASSESSING OFFICER DIRECTLY TO THE APPE LLANT AS PER MY INSTRUCTION WITH A VIEW TO OVOID DELAY IN AP PELLATE PROCEEDINGS. THE AUTHORISED REPRESENTATIVE VIDE MY ORDER SHEET ENTRY DATED 18/10/2006 WAS REQUESTED TO SEND HIS COMMENTS ON SUCH REMAND REPORT BY 26/10/2006. HOWEV ER AS PER THE REQUEST THE AUTHORISED REPRESENTATIVE DI D NOT APPROACH THE ASSESSING OFFICER TO COLLECT A COPY OF REMAND REPORT. THEREFORE THE ASSESSING OFFICE SERVED A CO PY OF REMAND REPORT ON SHRI RAMESH D. MEHTA DIRECTOR OF THE COMPANY ON 27/10/2006. HOWEVER NO COMMENTS WERE RECEIVED. CONSIDERING THE PRINCIPLE OF NATURE JUSTI CE THE - 5 - APPELLANT WAS GIVEN FINAL OPPORTUNITY VIDE THIS OFF ICE LETTER NO.CIT(A)-XIX/CIR.L/BNR/L7/06-07 DATED 6/11/2006 WI TH A REQUEST TO SEND HIS COMMENTS ON THE REMAND REPORT B Y 13/11/2006 POSITIVELY. SAID LETTER IS REPRODUCED FO R READY REFERENCE AS UNDER:- 'YOUR AUTHORISED REPRESENTATIVE SHRI R.C. PAREKH ADVOCATE APPEARED BEFORE ME ON 18/10/2006 AND HE WAS REQUESTED TO COLLECT A COPY OF REMAND REPORT FROM THE ASSESSING OFFICER DIRECTLY TO AVOID UNNECESSARY DELAY IN DISPOSAL OF THE APPEAL. HOWEVE R THE ASSESSING OFFICER INFORMED ME THAT THE APPELLAN T DID NOT TURN UP AND A COPY OF SAID REMAND REPORT HA S BEEN SERVED UPON THE DIRECTOR OF THE APPELLANT COMPANY ON 27/10/2006. THOUGH YOUR AUTHORISED REPRESENTATIVE WAS REQUESTED TO SUBMIT COMMENTS ON THE SAID REMAND REPORT BY 26/10/2006 HOWEVER THE SAID REMAND REPORT HAS BEEN SERVED LATER ON. THEREFORE YOU ARE REQUESTED TO GIVE YOUR COMMENTS IF ANY ON THE SAME BY 13/11/2006 POSITIVELY. IT MA Y BE TREATED AS LAST OPPORTUNITY. IF NOTHING IS HEARD FROM YOU BY THE STIPULATED DATE THEN THE ISSUE INVOLVED IN THIS APPEAL WILL BE DECIDED ON MERITS O F THE FACTS AVAILABLE ON RECORD. PLEASE ENSURE IT.' NEITHER THE AUTHORISED REPRESENTATIVE APPEARED NOR ANY ADJOURNMENT WAS SOUGHT. CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE I HAVE NO OTHER ALTERNATIVE BUT TO DE CIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5.4 AS PER THE DIRECTION THE ASSESSING OFFICER FILED HIS ENQUIRY REPORT DATED 27/10/2003 WHICH IS REPRODUCED AS UNDE R: 'THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003-04 W AS FINALISED U/S.143(3) OF THE INCOME TAX ACT 1961 ON 28.03.2006 DETERMINING TOTAL INCOME RS.23 45 590/- WITH FOLLOWING ADDITIONS/ DISALLOWANCES. 1 NONE GENUINE CASH CREDIT U/S.68 1062000 2 INTEREST PAID ON NON GENUINE CASH CREDITS U/S.68 120704 3 REMUNERATION PAID TO 448000 - 6 - DIRECTORS TOTAL 1630704 IN THIS LETTER UNDER REFERENCE INQUIRY REPORT U/S.2 50(4) WAS CALLED FOR OFFER CONDUCT OF INDEPENDENT INQUIRIES F ROM DEPOSITORS AND IT WAS ALSO DIRECTED TO VERIFY WHETH ER THE ENCLOSURES FILED WITH THE WRITTEN SUBMISSION DURING THE COURSE OF APPELLATE PROCEEDINGS WERE PRODUCED DURI NG THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. SUMMONS WERE ISSUED TO ALL DEPOSITORS IN ORDER TO E XAMINE THEM PERSONALLY. THE REPORT ON THE INQUIRY CONDUCTED IN INDIVIDUAL C ASES IS GIVEN BELOW; I. ASHABEN GENDRASINH PARMAR RS. 1 00 000/- 11 GOPI COMPLEX BHAIKAKANAGAR THALTEJ CHAR RASTA AHMEDABAD. IN THE CASE OF ASHABEN G. PATEL PRIOR TO ISSUING S UMMONS SHE HAD SENT WRITTEN SUBMISSION BY SPEED POST ALONG WITH AFFIDAVIT ON NON JUDICIAL PAPER OF RS.20/- ALONG WI TH BANK PASS BOOK OF DENA BANK WHICH WAS RECEIVED IN THIS O FFICE ON 25.7.2006. SHE HAS STATED IN THE AFFIDAVIT THAT SHE HAS NO TAXABLE INCOME AND THE AMOUNT OF RS.1 LAC DEPOSITED IN LION TAPES IS OUT OF AMOUNT RECEIVED BEFORE MARRIAGE AND AFTER MARRIAGE WHICH WAS IN 1991. ON VERIFICATION OF BANK PASS BOOK IT IS FOUND THAT SHE HAS DEPOSITED RS.1 LAC IN CASH ON 11.11.2002 AND WITHDRAWN RS.1 LAC BY CHEQUE ON THE SAME DATE TO BE GIVEN TO LION TAPES. NO DETAILS OF SOURC E OF INCOME ARE FURNISHED. THEREAFTER SUMMONS U/S.131 DA TED 21.5.2006 WAS ISSUED AND SERVED ON THE SAME DATE. I N RESPONSE THERETO LETTER DATED 22.8.2006 WAS FILED S TATING THAT AMOUNT DEPOSITED IN LION TAPES OF RS.1 LAC WAS OUT OF PERSONAL SAVINGS. THEREAFTER ANOTHER LETTER DATED 26.09.2006 WAS RECEIVED STATING HER INABILITY TO AT TEND IN RESPONSE TO SUMMON ISSUED. ON VERIFICATION OF DETAILS FILED IT IS FOUND THAT SHE HAS NO CAPACITY WHATSOEVER TO EXTEND THE LOAN OF RS.1 LAC. CASH HAS BEEN DEPOSITED ON 11.11.2002 AND CHEQUE GIVEN TO LI ON TAPES ON THE SAME DATE. NO SATISFACTORY EXPLANATION IS - 7 - OFFERED REGARDING SOURCE OF CASH DEPOSIT NOR HAS SH E ATTENDED IN RESPONSE TO SUMMON ISSUED. HENCE THE EXPLANATION GIVEN BY THE PARTY CANNOT BE ACCEPTED AND THEREFORE DEPOSIT OF RS.1 LAC TREATED BY ASSESSING OFFICER AS NON GENUINE IS CORRECT AND REQ UIRES TO BE UPHELD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A COPY OF BANK PASS BOOK HAD BEEN FURNISHED AND THE ASSESSING OFFI CER HAD ALREADY PERUSED THE SAME BEFORE GIVING HIS FINDING AND MAKING THE ADDITION. NEW EVIDENCE IN THE FORM OF AF FIDAVIT IS FILED BY THE PARTY WHICH IS NOT ACCEPTED. 2. BHARTIBEN MOHANLAL RS.1 00 000/- & SHRI DINESH DHANJIBHAI GOHEL RS.2 72 000/- GAUTAMNAGAR NEAR AKHLOL JAKAT NAKA BHAVNAGAR. IN RESPONSE TO SUMMONS DATED 21.8.2006 BOTH HUSBAND AND WIFE ATTENDED ON 25.8.2006 STATEMENT ON OATH WERE RECORDED OF BOTH PARTIES. IN HER STATEMENT BHARTIB EN STATED THAT SHE IS A HOUSE WIFE AND IN ADDITION TO THAT DO ING HOUSE HOLD LABOUR WORK IN DIFFERENT HOUSES OUT OF WHICH HER MONTHLY EARNINGS ARE ABOUT RS.1 THOUSAND. WITH REGA RD TO SOURCE OF DEPOSIT NO ANSWER COULD BE GIVEN BY HER. SHE HAS STATED THAT SHE IS UNEDUCATED AND IS UNAWARE OF THE DEPOSIT OF RS.1 LAC SHOWN IN HER NAME. SHRI DINESHBHAI IN HIS STATEMENT SLATED THAT HE WAS SERVING SINCE LAST 25 YEARS IN STRETCH BANK A SISTER CONCE RN OF THE ASSESSEE AND WAS EARNING ABOUT RS.4 300/-(NET). WIT H REGARD TO DEPOSIT OF RS.2 72 000/- SHOWN IN HIS NAM E LION TAPES HE STATED HE DOES NOT REMEMBER ANYTHING ABOU T SUCH DEPOSIT AT THE MOMENT. AS SUCH GENUINENESS OF THE TRANSACTION IS NOT PROVED. BOTH OF THEM HAVE DENIED ANY KNOWLEDGE OF SUCH DEPOSITS DURING THEIR STATEMENT RECORDED. THEREFORE THE DEPOSIT OF RS.1 00 000/- A ND RS.2 72 000/- MADE BY SMT. BHARTIBEN MOHANBHAI AND DINESHBHAI GOHEL RESPECTIVELY IS REQUIRED TO BE TRE ATED AS UNEXPLAINED AND HENCE NON GENUINE. - 8 - DURING THE COURSE OF ASSESSMENT PROCEEDINGS A COPY OF BANK PASS BOOK HAD BEEN FURNISHED AND THE ASSESSING OFFI CER HAD ALREADY PERUSED THE SAME BEFORE GIVING HIS FINDING AND MAKING THE ADDITION. NO FRESH EVIDENCE IS FURNISHED DURING THE COURSE OF STATEMENT RECORDED. 3. BIJAL R. MEHTA RS.1 00 000/- D-225 KALVIBID OPP; WATER TANK BHAVNAGAR. IN RESPONSE TO SUMMONS ISSUED OR. 21.08.2006 WHICH WAS DULY SERVED ON THE SAME DAY THERE WAS NEITHER ATTE NDANCE NOR WAS ANY WRITTEN SUBMISSION FILED. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS A COPY OF BANK PASS BOOK HAD BEEN FURNISHED AND THE ASSESSING OFFICER HAD ALREADY PER USED THE SOME BEFORE GIVING HIS FINDING AND MAKING THE ADDIT ION. SINCE THE DEPOSITOR HAS ROT ATTENDED IN RESPONSE T O SUMMONS ISSUED HE COULD NOT BE EXAMINED. HENCE EVE N THOUGH OPPORTUNITY WAS GIVEN THE DEPOSITOR HAS FAI LED TO AVAIL OF THE SAME. UNDER THE CIRCUMSTANCES IN ABSE NCE OF ANY EXPLANATION THE FINDINGS OF THE ASSESSING OFFI CER REQUIRES TO BE UPHELD. 4. MANSI M. MEHTA RS.50 000/- MIG 81 SHASHTRINAGAR BHAVNAGAR. IN RESPONSE TO SUMMONS SHE ATTENDED ON 28.8.2006 AN D STATEMENT WAS RECORDED ON OATH. SHE STALED THAT SHE IS PRESENT SERVING AS TEACHER IN NAND KUNVERBA CHHATRI YA KANYA VIDYALAY BHAVNAGAR. IN THE RELEVANT PERIOD S HE WAS DOING COMPUTER JOB WORK. SHE IS ASSESSED TO TAX VID E PAN AFRM 1546 F AND SUBMITTED PROOF OF ACKNOWLEDGEMENT OF RETURN OF INCOME AND COMPUTATION OF INCOME FOR A.Y. 2003- 04. SHE HAD GIVEN DEPOSIT OF RS.50 000/- TO LION TA PES ON 22.4.2002 OUT OF MATURITY PROCEEDS RECEIVED FROM AK SHYA FIXED DEPOSIT RECEIPT WHEREIN SHE HAD INITIALLY MA DE DEPOSIT OF RS.45 000/- ON 4.12.2000 NECESSARY EVIDE NCES ARE PRODUCED AND FOUND TO BE IN ORDER. IN VIEW OF THIS CREDIT WORTHINESS GENUINENESS OF TRANSACTION AND SOURCE O F INVESTMENT IS ESTABLISHED. THEREFORE DEPOSIT OF RS .50 000/- AND INTEREST EARNED THEREUPON RS.2 250/- ARE FOUND TO BE GENUINE. 5. NITEBEN AJAYBHAI SHAH RS.50 000/- A-3 SNITAL FIATS KALIUBHA BHAVNAGAR. - 9 - IN RESPONSE TO SUMMONS SHE ATTENDED ON 29 8.2006 AN D HER STATEMENT WAS RECORDED. THE DEPOSITOR IS ASSESSED T O TAX VIDE PAN NO.ANKPS 8740 G AND IN RESPECT OF A.Y.2003 -04 SHE HAD FILED HER RETURN OF INCOME DECLARING INCOME OF RS.44 090/-. HER MAIN SOURCE OF INCOME IS INVESTMEN T IN SHARE AND INTEREST INCOME. IN REPLY TO PARTICULAR Q UESTION OF DEPOSIT OF RS.50 000/- -IN LION TAPES ON 18.07.2002 SHE STATED THAT THE DEPOSIT WAS MADE OUT OF MATURITY PR OCEEDS OF RS.52 625/- RECEIVED ON 17.7.2002 FROM KHUBSURAT ENTERPRISE WHEREIN DEPOSIT OF RS.50.000/- WAS GIVEN ON 17.4.2002 PROOF OF TRANSACTION IS VERIFIED AND FOU ND TO BE GENUINE. IT IS ALSO TO BE MENTIONED HERE THAT IN TH E ASSESSMENT ORDER IT WAS STATED THAT AT THE TIME OF ASSESSMENT PROCEEDINGS ASSESSEE COULD NOT PRODUCE THE PASS BOOK OF THE ASSESSEE. HOWEVER THE SAME IS NOW PRODUCED AND VERIFIED FOR GENUINENESS OF DEPOSIT. 6. PANKAJ HARKANI VYAS RS.40 000/- KHIJAOAVALI SHERI SONI FALL VADVA BHOVNAGAR. IN RESPONSE TO SUMMONS ISSUED THE DEPOSITOR ATTEND ED AND HIS STATEMENT WAS RECORDED. HE HAS DENIED GIVING AN Y DEPOSIT TO ANYBODY IN THE RELEVANT YEAR. HE FURTHER STATED THAT HE WAS STUDYING IN STANDARD-X AND NOT HAVING A NY SOURCE OF INCOME. IN VIEW OF THE FACTS MENTIONED CR EDIT WORTHINESS OF DEPOSITOR GENUINENESS OF TRANSACTION AND SOURCE OF INVESTMENT IS NOT ESTABLISHED. A S SUCH DEPOSIT OF RS.40 000/- AND INTEREST EARNED THEREUPON RS.18 120 /- SHOWN IN THE NAME OF DEPOSITOR IS NOT FOUND TO BE G ENUINE AND ADDITION MADE REQUIRES TO BE UPHELD. 7. RANJANBEN J. SHETH RS.50 000/- C/O. BHARATKUMAR & BROS. OPP: RAILWAY STATION BHAVNAGAR. IN RESPONSE TO SUMMONS ISSUED SMT. RANJANBEN JITEND RABHAI SHETH ATTENDED ON 29.8.2006 AND HER STATEMENT WAS RECORDED. SHE WAS NOT HAVING ANY SOURCES OF INCOME EXCEPT PETTY AMOUNTS RECEIVED ON VARIOUS AUSPICIOUS OCCASI ONS. NO SUITABLE REPLY COULD BE GIVEN BY DEPOSITOR REGARDI NG SOURCE OF DEPOSIT IN QUESTION. IN VIEW OF THE FACTS MENTIO NED CREDIT WORTHINESS OF DEPOSITOR GENUINENESS OF TRANSACTION AND - 10 - SOURCE OF INVESTMENT IS NOT ESTABLISHED. THEREFORE DEPOSIT OF RS.50 000/- AND INTEREST EARNED THEREUPON RS.9 1 61/- ARE NOT FOUND TO BE GENUINE AND REQUIRES TO BE UPHELD IT IS FURTHER TO BE STATED THAT COPY OF PASS BOOK WAS NOT PRODUCED BY ASSESSEE OF THE STAGE OR ASSESSMENT PROCEEDINGS AS MENTIONED IN THE ASSESSMENT ORDER. 8. CHANDRIKABEN RASIKLAL MEHTA RS.2 00 000/ - & MILAN RASIKLAL MEHTA RS.1 0 0 000/- 13 NILKANTH ASHISH 60FT R.B.MEHTA ROAD.GHATKOPAR MUMBAI. SUMMONS ISSUED ON THE ADDRESS FURNISHED BY THE ASSE SSEE WAS RETURNED UNSERVED IN THE CASE OF THE TWO DEPOSI TOR. THEREFORE DEPOSITORS COULD NOT BE EXAMINED. THE CREDITWORTHINESS OF EXPOSITORS AND GENUINENESS OF TRANSACTIONS CANNOT BE ESTABLISHED ON THE BASIS OF ABSTRACT OF BANK PASS BOOK. THEREFORE DEPOSIT OF RS.1 00 00 0/- AND INTEREST EARNED THEREUPON RS.12 477/- IN THE CASE M ILANBHAI AND RS.2 00 000/- AND INTEREST EARNED THEREUPON RS.29 112/-. IN THE CASE OF CHANDRIKABEN R. MEHTA H AS BEEN CORRECTLY HELD TO BE NON GENUINE AND REQUIRES TO BE UPHELD. THEREFORE OUT OF 10 DEPOSITORS IN WHOSE CASES ADDI TION U/S.68 WAS MADE IN THE ASSESSMENT ORDER ALTER CONSI DERING THE DEPOSITS TO BE NON GENUINE AND DISALLOWANCES MA DE UNDER SECTION 37 IN RESPECT OF INTEREST THEREON. 7 DEPOSITORS WERE EXAMINED AND 3 DEPOSITORS DID NOT C ITED IN RESPONSE TO SUMMONS ISSUED. TWO OF THE DEPOSITS IN THE NAME OF MANSI M. MEHTA (DEPOSIT RS.50.000/-PLUS INT EREST RS.2 250/-) AND NITABEN A. SHAH (DEPOSIT RS.50 000/ - PLUS INTEREST OF RS.6 375/-) ARE CONSIDERED TO BE GENUIN E. IN RESPECT OF THE OTHER GENUINENESS IS NOT ESTABLISHED . AS MENTIONED EARLIER THE APPELLANT DID NOT FILE AN Y COMMENTS. THEREFORE IT IS PRESUMED THAT THE APPELL ANT HAS NOTHING TO SAY AGAINST THE PRESENT ENQUIRY CONDUCTE D BY THE ASSESSING OFFICER. AS PER ASSESSING OFFICER'S INQUI RY THE FOLLOWING CREDIT REMAINED UNEXPLAINED. 1) ASHABEN GENDRASINH PARMAR RS.1 00 000/- 2) BHARTIBEN MOHANLAL RS.1 00 000/- 3) SHRI DINESH DHANJIBHAI GOHEL RS.2 72 000/- - 11 - 4) BIJAL R. MEHTA RS.1 00 000/- 5) PANKAJ HARKANT VYAS RS. 40 000/- 6) RANJANBEN J. SHETH RS. 50 000/- 7) CHANDRIKABEN RASIKLAL MEHTA & RS.2 00 000/- 8) MILAN RASIKLAL MEHTA RS.1 00 000/- TOTAL RS.9 62 000/- THE APPELLANT FAILED TO DISCHARGE ITS ONUS 10 PROVE THE GENUINENESS CREDITWORTHINESS AND EXISTENCE OF THE CREDITORS. THUS IN VIEW OF THESE FACTS ADDITION T O THE EXTENT OF RS.9 62 000/- IS SUSTAINED AND BALANCE OF RS.1 0 0 000/- IS TREATED AS EXPLAINED. THE APPELLANT GETS RELIEF OF RS.1 00 000/- ONLY. 6. THE NEXT GROUND IS IN RESPECT OF DISALLOWANCE O F INTEREST OF RS.1 20 704/-. THE ASSESSING OFFICER HA S DISALLOWED THE CLAIM OF INTEREST OF RS.1 20 704/- C LAIMED TO HAVE PAID TO THE ALLEGED CREDITORS BECAUSE THE ASSE SSEE COULD NOT PROVE THE GAMINESS CREDITWORTHINESS AND EXISTENCE OF THE CREDITORS. AS DISCUSSED IN THE SEC OND GROUND ONLY TWO CREDITORS WERE FOUND GENUINE HENCE INTEREST OF RS.8 625/- IS ALLOWED FOR CREDIT ENTRIE S IN THE NAMES OF SHRI MANSI MEHTA AND NITABEN A. SHAH WHILE REST OF THE 8 CREDITS REMAINED UNEXPLAINED. HENCE REMAI NING DISALLOWANCE OF INTEREST OF RS.1 12 079/- IS CONFIR MED. 7. LAST GROUND PERTAINS TO DISALLOWANCE OF REMUNERA TION OF RS.4.48 LACS TO LADY DIRECTORS. IDENTICAL ISSUE WAS INVOLVED IN THE CASE OF THE APPELLANT THE IMMEDIATELY PRECED ING YEAR WHEREIN I HAVE CONFIRMED THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER VIDE MY APPELLATE ORDER NO. CIT(A )- XIX/A.C.CIR.L/BNR/48/05-06 DATED 21/11/2005. THE FA CTS FOR THE YEAR UNDER CONSIDERATION ARE SOME AND IDENTICAL : HENCE FOR THE DETAILED REASONS GIVEN IN MY SAID APPELLATE ORDER THE DISALLOWANCE MADE IN THIS YEAR IS CONFIRMED. - 12 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ADDITION OF FOLLOWIN G CASH CREDIT UNDER SECTION 68 OF THE ACT. 1) ASHABEN GENDRASINH PARMAR RS.1 00 000/- 2) BHARTIBEN MOHANLAL RS.1 00 000/- 3) SHRI DINESH DHANJIBHAI GOHEL RS.2 72 000/- 4) BIJAL R. MEHTA RS.1 00 000/- 5) PANKAJ HARKANT VYAS RS. 40 000/- 6) RANJANBEN J. SHETH RS. 50 000/- 7) CHANDRIKABEN RASIKLAL MEHTA & RS.2 00 000/- 8) MILAN RASIKLAL MEHTA RS.1 00 000/- TOTAL RS.9 62 000/- THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALS O CONSEQUENTLY UPHELD THE DISALLOWANCE OF CLAIM OF INTEREST OF THE ASSESSEE IN RESPECT OF THE ABOVE PARTIES TOTALING TO RS.1 12 079/-. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED BEFORE US THAT ALL THE PARTICULARS WHICH WERE AVAIL ABLE WITH HIM WERE FILED BEFORE THE LOWER AUTHORITIES AND THE SAME CLE ARLY ESTABLISHES THE IDENTITY OF THE CREDITORS GENUINENESS OF THE TRANS ACTIONS AND THE CREDITWORTHINESS OF THE CREDITORS. HE SUBMITTED THA T THE ABOVE ADDITIONS WERE MAINLY MADE AS THE LEARNED ASSESSING OFFICER W AS NOT SATISFIED ABOUT THE SOURCE OF SOURCE OF THE CASH CREDITS. HE ARGUED THAT BURDEN UNDER SECTION 68 ON THE ASSESSEE IS TO EXPLAIN HIS SOURCE ONLY AND NOT THE SOURCE OF SOURCE. IN CASE THE ASSESSING AUTHORITY IS NOT SATISFIED ABOUT THE SOURCE OF THE CREDITOR THEN THE ADDITION IS TO BE MADE IN THE HANDS OF THE CREDITOR AND NOT IN THE HANDS OF THE ASSESSEE. HE ALSO CONTENDED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS DRAWN ADVERSE VIEW SOLELY ON THE BASIS OF REMAND REPORT S UBMITTED BY THE - 13 - LEARNED ASSESSING OFFICER BEFORE HIM. HE CONTENDE D THAT NO SUFFICIENT OPPORTUNITY WAS ALLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO THE ASSESSEE TO CONTROVERT THE REMA ND REPORT BEFORE ADMISSION OF THE SAME BY THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS). 6. WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS UPHELD THE ADDITION ONLY ON THE BASIS OF THE FI NDINGS GIVEN BY THE LEARNED ASSESSING OFFICER IN HIS REPORT DATED 27.10 .2006. FROM THE MATERIAL AVAILABLE BEFORE US IT IS NOT CLEAR THAT WHETHER ANY OPPORTUNITY OF HEARING WAS ALLOWED TO THE ASSESSEE OR NOT BY TH E LEARNED ASSESSING OFFICER BEFORE FINALIZING THE REMAND REPORT. WE OBS ERVE FROM THE CIT(A)S ORDER THAT COPY OF THE REMAND REPORT WAS FORWARDED TO THE ASSESSEE BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VID E HIS LETTER DATED 6.11.2006 AND ASKING THE ASSESSEE TO SUBMIT HIS COM MENTS BY 13.11.2006. THUS WE FIND THAT TIME OF EVEN LESS TH AN 7 DAYS WAS ALLOWED TO THE ASSESSEE BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) FOR MAKING SUBMISSIONS IN RESPECT OF THE REMAND REPORT WHICH INVOLVED AS MANY AS 10 PARTIES AND THE TRANSACTIONS WERE FOR TH E FINANCIAL YEAR 2002- 03 I.E. MORE THAN 3 YEARS EARLIER. IN OUR CONSIDER ED OPINION THE ABOVE TIME ALLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON FACTS OF THE CASE CANNOT BE CONSIDERED AS REASONABL E AND SUFFICIENT. WE THEREFORE ARE OF THE VIEW THAT IS SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE ISSUES UNDER CONSIDERATION BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR ADJUDICATIO N AFRESH AS PER LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO BOTH THE PARTIES. WE - 14 - ORDER ACCORDINGLY. THUS THE APPEAL OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON THIS 21 ST DAY OF MAY 2010 SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; ON THIS 21 ST DAY OF MAY 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIX AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 12.05.2010 ---------------- --- 2. DRAFT PLACED BEFORE AUTHORITY14.05.2010 ------- ------------ 3. DRAFT PROPOSED & PLACED 14.05.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 14.05.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 14.05.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 21.05.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 21.05.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------