M/S Brijlaxmi Leasing & Finanece P Ltd, Baroda v. The Dy Cit Cir-1, Baroda

ITA 3533/AHD/2002 | 1996-1997
Pronouncement Date: 29-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 353320514 RSA 2002
Assessee PAN AAACB9524F
Bench Ahmedabad
Appeal Number ITA 3533/AHD/2002
Duration Of Justice 7 year(s) 2 month(s) 6 day(s)
Appellant M/S Brijlaxmi Leasing & Finanece P Ltd, Baroda
Respondent The Dy Cit Cir-1, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 29-01-2010
Date Of Final Hearing 20-01-2010
Next Hearing Date 20-01-2010
Assessment Year 1996-1997
Appeal Filed On 22-11-2002
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI BHAVNESH SAINI JM & SHRI A.N. PAHUJA AM I.T.A. NO.3533& 3558/AHD/2002 (ASSESSMENT YEAR 1996-97& 1992-93) BRIJLAXMI LEASING & FINANCE PVT LTD VS DY.CIT CIR CLE-1 204 STERLING CENTRE R.C. DUTT ROAD BOARDA ALKAPURI BARODA- 390 005 [PAN : AAACB9524F] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MEHUL K PATEL AR REVENUE BY : SHRI CK MISHRA DR O R D E R AN PAHUJA : THESE TWO APPEALS BY THE ASSESSEE AGAINST TWO SEP ARATE ORDERS DATED 03-09-2002 FOR THE AY 1996-97 AND DATED 5.8 .2002 FOR THE AY 1992-93 OF THE LD. CIT(A)-III BARODA RAISE THE FOLLOWING GRO UNDS: I.T.A. NO.3533/AHD/2002-AY 1996-97 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE FO LLOWING INVESTMENT IN SHARE CAPITAL IS UNEXPLAINED INVESTME NT: (1) ASHOK SHARMA RS. 50 000 (2) MINAXI SHARMA RS. 25 000 (3) JAYANTIBHAI TAILOR RS. 25 000 (4) KAMALA R PATEL RS. 58 000 (5) RAJESH GOHIL RS. 25 000 (6) DILIP PATEL RS. 25 000 ---------------- TOTAL RS.2 08 000 ----------------- 2. THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ADDITION OF RS.2 08 000/- MADE U/S 68 OF THE ACT. 3. IT IS PRAYED THAT THE ADDITION OF RS.2 08 000 BE DELETED. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE OF RS.1 24 999/- OUT OF DEPRECIATION ON PLANT & MACHIN ERIES. 5. IT IS PRAYED THAT DISALLOWANCE OUT OF DEPRECIATI ON OF RS.1 24 999/- BE DELETED. ITA NO.3533/AHD/2002 2 6. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER OR AME ND ANY OF THE GROUNDS MENTIONED ABOVE. I.T.A. NO.3558/AHD/2002-AY 1992-93 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EXPLAN ATION OF YOUR APPELLANT REGARDING THE DEPOSIT OF RS.4 40 000 /- IN THE NAME OF SHRI J.K. CHATURVEDI WAS NOT SATISFACTORY A ND FURTHER ERRED IN HOLDING THE SAID DEPOSIT AS NON GENUINE. 2. THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ADDITION OF RS.4 40 000/- MADE U/S 68 OF THE ACT. 3. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER OR AME ND ANY OF THE GROUNDS MENTIONED ABOVE. 2. SINCE THESE TWO APPEALS PERTAINED TO THE SAME A SSESSEE THESE WERE HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. ADVERTING FIRST TO GROUND NOS. 1 TO 3 IN THE APPEAL FOR THE AY 1996-97 RELATING TO ADDITION OF RS.2 08 000/- FACT S IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS. 22 2 4 290 FILED ON 31.3.1998 BY THE ASSESSEE AFTER BEING PROCESSED U/S 143(1) OF T HE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TA KEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE COMPANY HAD RECEIVED THE FOLLOWING AMOUNTS FROM SIX PERSONS TOW ARDS SHARE CAPITAL OF THE COMPANY: SR.NO. NAME OF THE INVESTOR AMOUNT (RS) -------- ------------------------------- ------- ------------ 1. ASHOK SHARMA 50000 2. MINAXI SHARMA 25000 3. SH.JAYANTIBHAI TAILOR 25000 4. KAMLA R PATEL 58000 5. RAJESH GOHEL 25000 6. SH. DILIP PATEL 25000 -------------- TOTAL 208000 -------------- ITA NO.3533/AHD/2002 3 DESPITE OPPORTUNITY GIVEN BY THE AO ON 18-08-1998 1 1.9.1998 24-09-1998 07- 12-1998 30-12-1998 AND 15-01-1999 THE ASSESSEE DI D NOT FURNISH DETAILS OF THE AFORESAID INVESTORS VIZ. THEIR NAMES AND ADDRESSES AND CHEQUE NUMBERS WHILE LETTERS TO THE AFORESAID PERSONS ISSUED U/S 133(6) OF THE ACT WERE ALSO RETURNED UNSERVED WITH THE REMARKS NOT AVAILABLE. IN THE ABSENCE OF GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS THE AO ADDED THE ENTIRE AMOUNT U/S 68 OF THE ACT. 3. ON APPEAL THE ASSESSEE CONTENDED THAT THE AFORE SAID AMOUNTS HAD BEEN RECEIVED BY WAY OF CROSSED ACCOUNT PAYEE CHEQUES AN D ALSO SUBMITTED CONFIRMATIONS OF THE SHAREHOLDERS. THE ASSESSEE EX PLAINED THAT THESE CONFIRMATIONS COULD NOT BE RECEIVED DUE TO NON-COOP ERATIVE ATTITUDE OF THE AFORESAID INVESTORS. THE ASSESSEE EXPLAINED THAT S MT. KAMLA R PATEL IS AN NRI AND INVESTED FUNDS OUT OF HER BANK ACCOUNT WITH STA TE BANK OF INDIA ALKAPURI. THE INVESTMENT BY SHRI RAJESH GOEL AND DALIT PATEL WAS MADE FROM THE BANK ACCOUNT OF DALIT PATEL WITH CANARA BANK RAOPURA BRA NCH BARODA. SINCE THE ASSESSEE DID NOT SUBMIT THE AFORESAID INFORMATION B EFORE THE AO THE LD. CIT(A) CALLED FOR COMMENTS FROM THE AO. WHO IN HIS REPORT SUBMITTED AS UNDER: III UNEXPLAINED SHARE CAPITAL IN THE NAME OF OTHER RS.2 08 000/- THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 6 8 OF THE ACT ON ACCOUNT OF THE FACT THAT THE ASSESSEE FAILED TO FURNISH DETAILS IN RESPECT OF INVESTORS INSPITE OF GIVING NUMBER OF OPPORTUNITIES. NOW THE ASSESSEE HAS FURNISHED DETAILS AND CONFIRMA TIONS FROM THE SHARE HOLDERS. AS PER THE DETAILS ON PATES 33 TO 3 5 OF THE PAPER BOOK THE CHEQUE NUMBERS OF THE INVESTORS ISSUING CH EQUES HAVE BEEN MENTIONED. SIMILARLY FROM PAGES 81 TO 89 CON FIRMATIONS OF THE PARTIES HAVE BEEN FILED. IN VIEW OF THIS FACT THE SUBMISSION OF THE ASSESSEE ON THIS ISSUE APPEARS TO BE ACCEPTABLE . 3.1 EVEN THOUGH THE AO IN HIS AFORESAID REMAND REP ORT MENTIONED THAT SUBMISSIONS OF THE ASSESSEE APPEARED TO BE ACCEPTAB LE THE LEARNED CIT(A) DID ITA NO.3533/AHD/2002 4 NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND UPHE LD THE ADDITION IN THE FOLLOWING TERMS: WITH REGARD TO INVESTMENT OF RS.2 08 000/- MADE B Y OTHERS THE ASSESSING OFFICER HAS REPORTED THAT CONFIRMATIO NS HAVE BEEN FILED AND THE CHEQUE NUMBER THROUGH WHICH THE MONEY HAS BEEN RECEIVED HAVE ALSO BEEN GIVEN. BUT ON GOING THROUGH THE CONFIRMATION IT IS SEEN THAT SHRI ASHOK SHARMA SM T. MINAXI SHARMA SHRI JAYANTIBHAI TAILOR AND SHRI DILIP PATE L HAVE STATED THAT THE SOURCE OF THE INVESTMENT IS OUT OF THEIR O WN SOURCES AND SAVINGS. IN CASE OF SHRI RAJESH GOEL IT HAS BEEN STATED THAT HE HAD RECEIVED LOAN OF RS.25 000/- FROM SHRI DILIP PA TEL FOR MAKING THE INVESTMENT. IT IS SEEN THAT NONE OF THESE PERS ONS ARE ASSESSED TO TAX AND SOURCES OF THEIR INCOME AND THE EVIDENCE OF SAVINGS HAVE NOT BEEN MENTIONED / GIVEN. SIMPLY BECAUSE TH E MONEY HAS BEEN ALLEGEDLY RECEIVED BY WAY OF CHEQUE AND THAT T OO WITHOUT PRODUCTION OF THEIR BANK ACCOUNTS IT CANNOT BE SAI D THAT THE SOURCES AND CAPACITY OF THE INVESTOR IS PROVED. IN VIEW OF THE ABOVE THE INVESTMENT MADE BY THEM CANNOT BE CONSIDERED AS EXP LAINED. IN RESPECT OF INVESTMENT MADE BY SMT. KAMLABEN PAT EL IT IS MENTIONED THAT SHE IS AN NRI AND THE COPY OF HER NR I BANK ACCOUNT HAS BEEN SUBMITTED. BUT AGAIN THE SOURCES OF INCO ME OF SMT. PATEL HAS NOT BEEN INDICATED. ON GOING THROUGH THE COPY OF THE BANK ACCOUNT IT IS SEEN THAT IT IS OPENED ON 12.3. 96 AND ON THE SAME DAY THE AMOUNT OF RS.59 150/- HAS BEEN DEPOSI TED BY WAY OF TRANSFER AND ON 15.3.96 RS.58 000/- HAS BEEN WITHD RAWN FOR THIS INVESTMENT. THERE IS HARDLY ANY TRANSACTION AFTER THAT. THIS INDICATES THAT THE ACCOUNT HAS BEEN OPENED ONLY WIT H A VIEW TO PROVIDING AN EVIDENCE REGARDING THE INVESTMENT ALLE GEDLY SHOWN IN THE NAME OF SMT. PATEL. IN VIEW OF NOT SO UNCOMMON INSTANCES OF HAWALA TRANSACTIONS THE AMOUNT RECEIVED FROM AN NR I CANNOT BE ACCEPTED ON FACE VALUE TILL OTHER EVIDENCES REGARDI NG THE SOURCE OF INCOME OF THE NRI ETC IS GIVEN. IN VIEW OF THE ABO VE THE ADDITION OF RS.2 08 000/- IS CONFIRMED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID ORDER OF THE LD. CIT(A).THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE CIT(A) CONTENDED THAT EVEN T HOUGH THE AO ACCEPTED THE GENUINENESS OF THE INVESTMENTS IN HIS REMAND REPORT THE LEARNED CIT(A) PROCEEDED TO UPHOLD THE ADDITION. WHILE RELYING UP ON THE DECISION IN THE CASE OF ITA NO.3533/AHD/2002 5 CIT VS LOVELY EXPORTS(P) LTD 216 CTR (SC) 195 THE LEARNED AR CONTENDED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING T HE ADDITION. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE AO IN HIS REMAND REPORT DATED 26-0 8-2002 AFTER EXAMINING THE CONFIRMATIONS OF THE AFORESAID INVESTORS FILED BEFO RE THE LEARNED CIT(A) ACCEPTED THE GENUINENESS OF THE AFORESAID INVESTMENTS. THE LEARNED CIT(A) UPHELD THE ADDITIONS ON THE GROUND THAT NONE OF THE AFORESAID INVESTORS WERE ASSESSED TO TAX AND SOURCE OF THEIR INCOME AND EVIDENCE IN REGA RD TO THEIR SAVINGS HAD NOT BEEN GIVEN. UNDISPUTEDLY SINCE THE AMOUNT HAD BEE N RECEIVED BY CROSSED ACCOUNT PAYEE CHEQUES AND CONFIRMATIONS WERE FILED BEFORE THE LEARNED CIT(A) APPARENTLY THE EXISTENCE OF THE AFORESAID INVESTORS WAS ESTABLISHED. THE HONBLE APEX COURT IN THE AFORESAID CASE OF LOVELY EXPORTS PVT LTD.(SUPRA) HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCO RDANCE WITH LAW. THUS THE HONBLE APEX COURT HELD THAT IN SUCH CIRCUMSTANCES THE AMOUNT RECEIVED TOWARDS SHARE CAPITAL OF THE COMPANY CANNOT BE REGA RDED AS UNDISCLOSED INCOME OF THE COMPANY. IN THE LIGHT OF VIEW TAKEN IN THIS DECISION ESPECIALLY WHEN THE EXISTENCE OF AFORESAID SHAREHOLDERS HAS NOT BEEN DO UBTED AND THE AO DID NOT DOUBT THE GENUINENESS OF THE AFORESAID INVESTMENTS IN HIS REMAND REPORT WE HAVE NO ALTERNATIVE BUT TO VACATE THE FINDINGS OF L EARNED CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THEREFORE GROUND NOS. 1 TO 3 IN THE APPEAL ARE ALLOWED. 6. GROUND NOS 4 &O 5 RELATE TO DISALLOWANCE OF DEPR ECIATION OF RS.1 24 999/-. THE AO NOTICED THAT THE ASSESSEE HAD SHOWN PURCHASE OF NEW PLANT AND MACHINERY WORTH RS. 9 99 994. TO A QUERY BY THE AO THE ASSESSEE SUBMITTED THAT MACHINERY WORTH RS. 9 99 994 WERE PURCHASED FR OM THE FOLLOWING PARTIES: ITA NO.3533/AHD/2002 6 SR.NO. DATE ITEMS PURCHASED PARTY AMOUNT -------- --------- ----------------------- - -------------- ----------- 1. 29.12.95 PRINTING MACHINERY ADITYA ENGINEERING 599994 INVOICE NO.009 2. 29.12.95 ELECTRIFICATION AND -DO- 300000 DEBIT NOTE INSTALLATION OF PRINTING NO.001 MACHINE ----------- TOTAL . RS. 999994 ----------- THE ASSESSEE ALSO SUBMITTED A COPY OF LEDGER ACCOUN T OF M/S ADITYA ENGINEERING WHEREIN IT WAS FOUND THAT ON 31-03-199 5 ONE JOURNAL ENTRY WAS PASSED SHOWING PAYMENT OF RS.50000/- FROM SHREENATH PLASTO PACK PVT LTD TO ADITYA ENGINEERING. ACCORDING TO THE ASSESSEE MAC HINERY WAS LEASED OUT TO THEIR SISTER CONCERN . IT WAS NOTICED BY THE AO TH AT THE ASSESSEE DID NOT MAKE ANY PAYMENT TO ADITYA ENGINEERING FOR PURCHASE OF M ACHINERY AND THE BALANCE OUTSTANDING AS ON 31 ST MARCH 1996 WAS SHOWN AT RS.9 49 994. THE AMOUNT WAS NOT SHOWN UNDER THE HEAD CURRENT LIABILITIES IN T HE BALANCE-SHEET; INSTEAD IT WAS SHOWN AS OUTSTANDING UNSECURED LOAN. THE ASSESSEE ALSO DID NOT FURNISH EVIDENCE OF PAYMENT OF RS.50 000/- TO ADITYA ENGINE ERING BY SHREENATH PLASTO PACK PVT LTD. ACCORDINGLY THE AO ISSUED ANOTHER N OTICE DATED 18-11-1998 TO THE ASSESSEE. IN RESPONSE THE ASSESSEE SUBMITTED VIDE LETTER DATED 07 TH DECEMBER 1998 THAT A. NO MODVAT HAS BEEN CLAIMED ON THE PURCHASES OF THIS MACHINERY AND THEREFORE NO MODVAT CERTIFICATE IS AV AILABLE HENCE NOT FURNISHED. B. TRANSPORTATION BILLS IN RESPECT OF THESE MACHINE RIES ARE NOT TRACEABLE AND THEREFORE NOT SUBMITTED HEREWITH. HO WEVER WE ARE TRYING TO LOCATE THE SAME AND THE SAME WILL BE FURN ISHED LATER ON. C. INSTALLATION REPORT IN RESPECT OF THE MACHINERY IS NOT AVAILABLE WITH US. HOWEVER COPY OF DEBIT NOTE RAISED BY ADITYA E NGINEERING IN RESPECT OF INSTALLATION OF THE MACHINERY HAS ALREAD Y BEEN FURNISHED EARLIER DURING THE COURSE OF HEARING. D. NO PAYMENTS WERE EFFECTED TO ADITYA ENGINEERING DUE TO PAUCITY OF FUNDS. ITA NO.3533/AHD/2002 7 E. THE MACHINERY PURCHASED FROM ADITYA ENGINEERING WAS INSTALLED AT THE FACTORY PREMISES OF SHREENATH PLASTOPACK PVT LT D AT G.I.D.C. WAGHODIA AGAINST WHICH LEASE RENTALS WERE RECEIVED BY THE COMPANY. HOWEVER SINCE MACHINE WAS NOT REQUIRED B Y SHREENATH PLASTOPACK PVT LTD THE SAME WAS RETURNED BACK TO AD ITYA ENGINEERING. F. AS STATED ABOVE MACHINERY WAS PUT TO USE BY SHR EENATH PLASTOPACK PVT LTD DURING F.Y. 95-96 RELEVANT TO A. Y. 1996-97 AGAINST WHICH LEASE RENTALS WERE RECEIVED BY COMPAN Y. SINCE COMPANY IS ENGAGED IN BUSINESS AND THEREFORE IT IS HUMBLY SUBMITTED THAT DEPRECIATION BE ALLOWED AS CLAIMED I N THE RETURN OF INCOME. 6.1 SINCE THE AFORESAID REPLY WAS INCOMPLETE TH E AO SOUGHT FURTHER DETAILS VIDE ORDER SHEET ENTRY DATED 07 TH DECEMBER 1998 AS MENTIONED ON PAGE 4 OF THE ASSESSMENT ORDER. HOWEVER DESPITE SUFFICIENT OPPO RTUNITY GRANTED THE ASSESSEE DID NOT FURNISH THE RELEVANT DETAILS. IN THESE CIRCUMSTANCES WHEN THE ASSESSEE FAILED TO ESTABLISH PURCHASE INSTALLATION AND TRANSPORTATION OF AFORESAID MACHINERY WHILE NO PAYMENTS WERE MADE BY THE ASSESS EE AND EVEN NO EXPLANATION WAS GIVEN AS TO HOW MACHINERY WAS DISMA NTLED AND AT WHAT PRICE MACHINERY WAS TAKEN BACK BY ADITYA ENGINEERING THE AO DISALLOWED THE CLAIM OF DEPRECIATION OF RS. 2 49 998/-. 7. ON APPEAL THE ASSESSEE CONTENDED THAT THEY HAD CLAIMED DEDUCTION OF DEPRECIATION @50% OF THE NORMAL DEPRECIATION ON TH E AFORESAID MACHINERY I.E. RS. 1 24 999 INSTEAD OF RS.2 49 998 DISALLOWED BY T HE AO. WHILE REITERATING THEIR CONTENTIONS BEFORE THE AO THE ASSESSEE PLEADED THA T THEY HAD RECEIVED LEASE RENTALS OF RS. 1 17 715 FROM M/S ADITYA ENGINEERING WHO INSTALLED THE MACHINERY IN THE PREMISES OF SHREENATH PLASTO PACK PVT LTD E NGAGED IN THE BUSINESS OF MANUFACTURE OF LDP HDP BAGS AND OTHER PACKAGING MA TERIALS AND THIS MACHINE WAS USED FOR PURPOSE OF PRINTING ON BAGS MANUFACTUR ED BY IT. IT WAS CONTENDED THAT SINCE MACHINERY WAS TAKEN AWAY BY ADITYA ENGIN EERING AND THEREFORE THE PROOF REGARDING THE DISMANTLING OF MACHINERY AND TR ANSPORTATION WERE NOT AVAILABLE WITH THE ASSESSEE NOR ANY PAYMENTS WERE M ADE TO ADITYA ENGINEERING ITA NO.3533/AHD/2002 8 DUE TO PAUCITY OF FUNDS. AFTER HAVING A REMAND REP ORT FROM THE AO THE LEARNED CIT(A) UPHELD THE DISALLOWANCE TO THE EXTENT OF RS. 1 24 999 IN THE FOLLOWING TERMS: 3.2 FACTS OF THE CASE AND SUBMISSIONS OF THE APPELL ANTS COUNSEL ARE CONSIDERED. IT IS SEEN THAT THE APPELLANT HAS ALLEGEDLY PURCHASED FROM ADITYA ENGINEERING ROTO GRAVIER PRI NTING MACHINE FOR RS.6 99 994/- WHICH HAS BEEN ALLEGEDLY LEASED T O A SISTER CONCERN NAMELY SHRINATH PLASTOPACK P LTD. THIS MAC HINE HAS BEEN STATED TO BE INSTALLED AT THE FACTORY PREMISES OF THE SISTER CONCERN FOR WHICH INSTALLATION BILLS HAVE BEEN RAIS ED BY ADITYA ENGINEERING FOR RS.3 LAC. THE APPELLANT HAS CLAIME D DEPRECIATION AT 50% OF THE NORMAL RATE CONSIDERING THE PERIOD OF ITS USE. ON THE OTHER HAND THE ASSESSING OFFICER AFTER CONSIDERIN G THE SUBMISSION OF THE APPELLANT HAS COME TO A CONCLUSION THAT PUR CHASE OF MACHINERY ITS TRANSPORTATION AND ITS USE ARE NOT P ROVED. IT IS SEEN THAT FOR THE PURCHASE OF MACHINERY OF NEARLY RS.10 LAC INCLUDING INSTALLATION CHARGES HAVE NOT BEEN PAID BY THE APPE LLANT TO ADITYA ENGINEERING EXCEPT A SUM OF RS.50 000/- BUT THIS HA S ALSO NOT BEEN PAID BY THE APPELLANT BUT BY SHRINATH PLASTOPACK. THE APPELLANT HAS SUBMITTED THE BILL OF ADITYA ENGINEERING IN THI S REGARD BUT NO TRANSPORTATION BILL HAS BEEN SUBMITTED. THE APPELL ANT HAS ALSO FAILED TO ESTABLISH THE FACT THAT THE MACHINE WAS I NSTALLED AT THE PREMISES OF SHRINATH PLASTOPACK EXCEPT SUBMISSION O F A BILL IN THIS REGARD RAISED BY SHRINATH PLASTOPACK HAS USED THIS MACHINERY FOR PRINTING ON BAGS MANUFACTURED BY IT AND THIS IS SUP PORTED BY THE HIGHER TURNOVER. I DO NOT AGREE. HIGH TURNOVER DO ES NOT PROVE THAT THE MACHINERY WAS USED. THE APPELLANTS COUNSEL HA S FURTHER PLEADED THAT LEASE RENTAL OF RS.1 17 715/- HAS BEEN RECEIVED FROM SHRINATH PLASTOPACK WHICH HAD BEEN INCLUDED IN THE APPELLANTS INCOME AND ALSO DEBITED IN THE P&L A/C OF SHRINATH PLASTOPACK. IN THIS REGARD IT IS SEEN THAT THE APPELLANT HAS SHOW N LEASE RENTALS AT RS.16 29 892/- BUT HAS MADE NO ATTEMPT TO PROVE THA T THIS INCLUDES THE ALLEGED LEASE RENT RECEIVED ON THE MACHINERY UN DER CONSIDERATION. IN THE CASE OF SHRINATH PLASTOPACK THE PAYMENT OF SUCH LEASE RENTAL IS NOT INDICATED IN THE DETAILS O F VARIOUS EXPENDITURE CLAIMED IN THE P&L A/C FILED ALONGWITH THE AUDITED REPORT. FURTHER IT HAS BEEN CLAIMED THAT MACHINER Y HAS BEEN TAKEN AWAY BY ADITYA ENGINEERING AFTER DISMANTLING BUT NO EVIDENCE HAS BEEN ADDUCED IN THIS REGARD. THUS IT IS SEEN THAT THE APPELLANT HAS FAILED TO PROVE THE PURCHASE OF MACHINERY AND ITS I NSTALLATION AT THE PREMISES OF SHRINATH PLASTOPACK TO WHOM IT HAS BEE N ALLEGEDLY GIVEN ON LEASE. IN VIEW OF ABOVE IT IS HELD THAT THE ASSESSING OFFICER HAS CORRECTLY DISALLOWED THE DEPRECIATION C LAIMED ON THE ITA NO.3533/AHD/2002 9 MACHINERY UNDER CONSIDERATION. HOWEVER THE APPELL ANT HAS CLAIMED DEPRECIATION AT 50% OF THE NORMAL RATE WHIC H IS RS.1 24 999/- AND NOT RS.2 49 998/- AS TAKEN BY THE ASSESSING OFFICER. HENCE THE DISALLOWANCE WILL BE LIMITED TO THE CLAIM MADE I.E. RS.1 24 999/-. AS A RESULT THE DISALLOWANCE IS CONFIRMED TO THE EXTENT OF RS.1 24 999/-. 8.THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE CIT(A).THE LEARNED AR ON BEHALF OF THE ASSESSEE MER ELY CONTENDED THAT LEASE RENTALS INCLUDED IN THE AMOUNT OF RS. 16 29 892 SHO ULD BE EXCLUDED. ON THE OTHER HAND THE LEARNED DR SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LOWER AUTHORITIES HAVE CONCLUDED THAT THE ASSESSEE FAILED TO PROVE THE PURCHASE OF MACHINERY AND ITS INSTALLATIO N IN THE PREMISES OF SHRINATH PLASTOPACK PVT LTD TO WHOM IT HAS BEEN ALLEGEDLY G IVEN ON LEASE. IN THESE CIRCUMSTANCES IT IS APPARENT THAT THE GENUINENESS OF THE AFORESAID TRANSACTIONS HAVE NOT BEEN ESTABLISHED. SINCE THE LD. AR ON BEHA LF OF THE ASSESSEE DID NOT PLACE BEFORE US ANY MATERIAL CONTROVERTING THE AFOR ESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TA KE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. THEREFORE WE HAVE NO OTHER ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE CIT(A). HOWEVER AS A LOGICAL COROLLARY THE PLEA ON BEHALF OF THAT THE ASSESSEE THAT IN THAT EVENT L EASE RENTALS BROUGHT TO TAX SHOULD BE EXCLUDED IS REASONABLE. ACCORDINGLY THE AO IS DIRECTED TO EXCLUDE LEASE RENTALS INCLUDED IN THE TOTAL INCOME. WITH T HESE DIRECTIONS GROUNDS NOS. 4 & 5 IN THE APPEAL FOR THE AY 1996-97 ARE DISMISSED . I.T.A. NO.3558/AHD/2002 10. ADVERTING NOW TO THE APPEAL IN THE AY 1992-93 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS. 1 22 610/- WAS FILED ON 06-01-1994 WHILE THE ORIGINAL ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE ACT ON AN INCOME OF RS. 7 16 685/- VIDE ORDER DATED 28. 9.1995. AFTER APPEAL EFFECT INCOME WAS FINALLY DETERMINED AT RS.5 11 358/- IN T ERMS OF ORDER DATED 09-11- 1995 OF THE LEARNED CIT(A). IN THE MEANTIME A SEA RCH WAS CONDUCTED IN THE ITA NO.3533/AHD/2002 10 OFFICE PREMISES OF THE ASSESSEE AND CERTAIN INCRIMI NATING EVIDENCE WAS FOUND INDICATING UNEXPLAINED INVESTMENT IN SHARE APPLICAT ION MONEY. ACCORDINGLY A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 31-01-1997. IN RESPONSE THE ASSESSEE FILED RETURN DECLARING INCOME OF RS.1 28 940 ON 01- 07-1997. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD INTER-ALIA SHOWN A DEPOSIT OF RS.4 40 000 IN THE NAME OF SHRI JK CHATURVEDI ON 31-03- 1992. TO A QUERY BY THE AO THE ASSESSEE EXPLAINED THAT DEPOSIT OF RS.4 40 000 WAS MADE BY SHRI JK CHATURVEDI OUT OF SALE PROCEED S OF THE SHARES. ACCORDINGLY THE AO ASKED FOR A COPY OF RETURN FILE D BY SHRI CHATURVEDI WHEREIN INCOME ON SALE OF SHARES OF RS. 4 40 000 WAS REFLEC TED. DESPITE SUFFICIENT OPPORTUNITY GIVEN BY THE AO THE ASSESSEE DID NOT F URNISH COPY OF RETURN FILED BY SHRI CHATURVEDI NOR FILED ANY CONFIRMATION. ACCORD INGLY THE AO ADDED THE AMOUNT U/S 68 OF THE ACT. 11. ON APPEAL THE ASSESSEE FILED A CONFIRMATION OF SHRI CHATURVEDI WHO IS ALSO ASSESSED TO TAX BY THE SAME AO. IT WAS EXPLAI NED THAT THE ASSESSEE HAD RECEIVED CERTAIN MONEY FROM SHRI MUKESH DALAL ON AC COUNT OF SALE PROCEEDS OF SHARES HELD BY SHRI CHATURVEDI. THIS AMOUNT WAS CR EDITED IN THE ACCOUNT OF SHRI MUKESH DALAL AGAINST SALE OF SHARES BUT SINCE IT B ELONGED TO SHRI CHATURVEDI IT WAS TRANSFERRED THROUGH A JOURNAL ENTRY IN THE LEDG ER ACCOUNT OF SHRI CHATURVEDI. A COPY OF SALE AND PURCHASE ACCOUNT OF THE SHARES O F SHRI MUKESH DALAL AND SHRI CHATURVEDI WAS ALSO SUBMITTED IN THE PAPER BOOK. I T WAS POINTED OUT THAT ASSESSMENT IN THE CASE OF SHRI CHATURVEDI HAD BEEN FINALIZED BY THE SAME AO WHEREIN NO ADDITION HAS BEEN MADE. IN THE LIGHT O F THESE SUBMISSIONS THE LEARNED CIT(A) CONCLUDED AS UNDER: 5.2 FACTS OF THE CASE AND SUBMISSIONS OF THE APPEL LANTS COUNSEL ARE CONSIDERED. I FIND THAT IN THE LEDGER ACCOUNT OF MR. MUKESH DALAL A SUM OF RS.4 13 000/- IS CREDITED BY CASH A ND RS.37 000/- BY PAMAX STEEL. IT HAS BEEN PLEADED THAT THIS AMOU NT ARE AGAINST SALE OF SHARES BELONGING TO SHRI CHATURVEDI AND THE REFORE THESE AMOUNTS HAVE BEEN CREDITED IN SHRI JK CHATURVEDIS ACCOUNT BY WAY OF JOURNAL ENTRY. HOWEVER THERE IS NO EVIDENC E THAT THESE AMOUNTS HAVE BEEN RECEIVED BY WAY OF SALE OF SHARES BELONGING TO ITA NO.3533/AHD/2002 11 SHRI CHATURVEDI. IF THE CONTENTION OF THE APPELLAN T AND THAT TOO THAT THESE AMOUNTS REPRESENT SALE OF SHARES OF SHRI CHAT URVEDI IS TAKEN AS CORRECT THIS SHOULD HAVE BEEN REFLECTED IN HIS RETURN FILED BY SHRI CHATURVEDI WHICH IS NOT THE CASE HERE. THE APPELL ANT HAS NOT PRODUCED ANY EVIDENCE TO INDICATE THAT THESE AMOUNT S HAVE BEEN CONSIDERED IN THE RETURN FILED BY SHRI CHATURVEDI W HEN HE IS ASSESSED TO TAX AND SHRI CHATURVEDI HAPPENS TO BE T HE DIRECTOR OF THE APPELLANT COMPANY. THEREFORE I HOLD THAT THE ENTRIES IN THE VARIOUS LEDGERS ARE NOT SUPPORTED BY ANY EVIDENCE. I THEREFORE HOLD THAT THE EXPLANATION SUBMITTED BY THE APPELLAN TS COUNSEL IS NOT SATISFACTORY AND THE GENUINENESS OF THE DEPOSIT OF RS.4 40 000/- IN THE NAME OF SHRI CHATURVEDI HAS NOT BEEN SATISFACTO RILY PROVED AND THEREFORE THE ADDITION MADE IS CONFIRMED . 12. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LEARNED CIT(A).THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO PAGE 22 OF THE PAPER BOOK SUBMITTED TH AT CONFIRMATION HAD BEEN FILED EVEN DURING THE COURSE OF ORIGINAL ASSESSMENT PROCE EDINGS AS IS EVIDENT FROM PAGE 9 OF THE PAPER BOOK. RELYING ON THE DECISION IN THE CASE OF DCIT VS.ROHINI BUILDERS 256 ITR 360 (GUJ) THE LEARNED AR CONTENDE D THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION. THE L EARNED DR ON THE OTHER HAND SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE AO MADE THE ADDITION SINCE THE ASS ESSEE DID NOT FILE A COPY OF RETURN FILED BY SHRI J.K.CHATURVEDI WHEREIN THE TR ANSACTIONS RELATING TO AMOUNT OF RS. 4 40 000/- ON ACCOUNT OF SALE OF SHARES WERE R EFLECTED NOR ANY CONFIRMATION OF SHRI CHATURVEDI. ON APPEAL THE LEARNED CIT(A) U PHELD THE ADDITION ON THE GROUND THAT THERE WAS NOTHING TO SUGGEST THAT THE A MOUNTS HAD BEEN RECEIVED ON ACCOUNT OF SALE OF SHARES BELONGING TO SHRI CHATUR VEDI NOR THE FACTUM OF SALE OF SHARES WERE REFLECTED IN THE RETURN OF INCOME FILED BY SHRI CHATURVEDI. UNDISPUTEDLY THE ASSESSEE DID NOT PRODUCE ANY EVID ENCE BEFORE THE LEARNED CIT(A) TO INDICATE THAT THE AMOUNT HAD BEEN REFLECT ED IN THE RETURN FILED BY SHRI CHATURVEDI DIRECTOR OF THE ASSESSEE COMPANY WHO I S STATED TO BE ASSESSED TO TAX. THOUGH THE LD. AR INVITED OUR ATTENTION TO A CONFIRMATION OF SHRI CHATURVEDI PLACED ON PAGE 2 OF THE APPEAR BOOK THIS DOES NOT PROVE THAT THE INCOME OR THE ITA NO.3533/AHD/2002 12 AMOUNT OF SALE PROCEEDS OF SHARES WAS REFLECTED IN HIS RETURN. EVEN THE RELIANCE BY THE LD. AR ON THE DECISION IN THE CASE OF ROHINI BUILDERS (SUPRA) IS ALSO MISPLACED SINCE THAT DECISION WAS RENDERED ON ITS O WN FACTS AND CIRCUMSTANCES WHILE THE LD. AR DID NOT ESTABLISH BEFORE US AS TO HOW THE FACTS OBTAINING IN THE CITED DECISION WERE PARALLEL TO THE FACTS OF THE CA SE UNDER CONSIDERATION. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS NOR HAVE PLACED BEFORE US ANY M ATERIAL SUGGESTING THAT INCOME OWING TO TRANSACTIONS RELATING TO SALE OF SH ARES WERE REFLECTED IN THE RETURN OF INCOME OF SHRI J.K CHATURVEDI WE HAVE NO OTHER ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LEARNED CIT(A). THEREFO RE GROUND NOS. 1 &O 2 IN THE APPEAL OF THE ASSESSEE FOR THE AY 1992-03 ARE DISMI SSED. 14. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERM S OF RESIDUARY GROUND NO.6 IN THE APPEAL FOR THE AY 1996-97 & GROUND NO.3 IN T HE APPEAL FOR THE AY 1992-93 BOTH THESE GROUNDS ARE DISMISSED. 15. IN THE RESULT APPEAL FOR THE AY 1996-97 IS PAR TLY ALLOWED WHILE FOR THE AY 1992-93 IS DISMISSED. . ORDER PRONOUNCED ON THIS 29 TH DAY OF JANUARY 2010 . SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED :29TH JANUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. DY.CIT CIRCLE-1 BARODA 3. CIT(A)-III BARODA 4. CIT-II BARODA 5. DR D BENCH BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD