Income Tax Appellate Tribunal - Ahmedabad
Dharmesh G. Joshi, Bhavnagar vs Income Tax Officer,Ward-2(3),, ... on 20 January, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER,
AND SHRI S. S. GODARA, JUDICIAL MEMBER.
ITA Nos.1928 & 1968Ahd/2012
(Assessment Year:2008-09)
Income-tax Officer,
Ward-2(3), Bhavnagar Appellant
Vs.
Dharmesh Ghanshyambhai Joshi
Prop. of M/s. Shivangi Impex, Vadva,
Vadva Panvadi Road, Bhavnagar Respondent / Cross Appellant
PAN: AENPJ3441H
राज व क ओर से/By Revenue : Shri Jagadish, CIT. D.R.
आवेदक क ओर से/By Assessee : Shri Tushar P. Hemani
सन
ु वाई क तार ख/Date of Hearing : 06.12.2016
घोषणा क तार ख/Date of
Pronouncement : 20.01.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
The Revenue and assessee have filed the instant cross appeals for assessment year 2008-09 against the CIT(A)-XX, Ahmedabad's order dated 06.06.2012 in case no. CIT(A)/XX/479/10-11 in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. We come to rival pleadings first. The Revenue raises two substantive grounds in its appeal ITA No.1928/Ahd/2012. Former one challenges ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -2- CIT(A)'s lower appellate order reversing Assessing Officer's action in assessment order dated 31.12.2010 making additions of Rs.7,11,38,628/- on account of unexplained sundry creditors, Rs.74,88,382/- pertaining to unexplained advances from customers and Rs.50,59,888/- relating to unexplained unsecured loans; respectively. Its latter substantive ground assails correctness of the lower appellate order alleging the same to have estimated too low gross profits @0.94% on alleged unaccounted sales to M/s. Avdhesh Trading Company and Maa Amba Enterprises.
3. The assessee's cross appeal ITA No.1968/Ahd/2012 raises three substantive issues. Its first three substantive grounds seek to delete gross profits estimation in case of the above two entities @0.94% to the extent of net profits of 0.74%. It then challenges both the lower authorities' action; more particularly that of the CIT(A) upholding addition of Rs.10,12,000/- out of Rs.60,71,888/- under the head of unexplained unsecured loans thereby deleting the remaining addition sum of Rs.50,59,888/- pleaded in Revenue's appeal. The assessee's third substantive ground then pleads that the Assessing Officer as well as the CIT(A) have erred in adding interest payable of Rs.6,47,594/- to M/s. Alang Marine making it a case of double addition since the said amount already stood added in a figure of Rs.49,64,888/- by the Assessing Officer.
Both the learned representatives agree at the outset that Revenue's as well as assessee's pleadings are inter-connected. We thus proceed to take up these appeals together for disposal.
4. We now advert to Revenue's first substantive ground seeking to revive unexplained sundry creditors addition of Rs.7,11,38,628/-. This case file reveals that the actual amount involved under this head is that of Rs.6,12,30,589/- as per assessment order dated 31.12.2010. There are total ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -3- seven parties in the instant issue. First one in M/s. Avdhesh Trading Company involving an amount of Rs.1,00,10,000/- along with account balance of Rs.8,50,000/-. It filed reply and confirmation supporting assessee's books of account. The Assessing Officer added the sum total of the above two figures coming to Rs.1,08,60,000/- since the same were not reflected in assessee's books.
M/s. Deepak Trading Co. happens to be the second party qua an amount of Rs.14,45,387/-. The Assessing Officer added this figure for assessee's failure in getting its reply to Section 133(6) notice remaining unserved. Third entity relevant to the instant issue is M/s. Keta Trading Co. qua a sum of Rs.1,33,83,346/-. The Assessing Officer added the same for want of its reply despite service of notice as well as in view of the fact that its VAT TIN stood cancelled. He observed that the said entity was a billing entry provider without involving genuine transactions. Similar are the facts regarding next four entities M/s. Maa Amba Enterprises (Rs.1,83,618/-), Maruti Traders (Rs.2,25,26,901/-) and M/s. Paresh Trading Co. (Rs.2,23,50,077/-); respectively. They also did not file reply to Section 133(6) notices. Last entity is M/s. Ramesh Mulji Bhanushali (Rs.5,07,935/-). Its VAT registration had been cancelled. It further did not submit reply to Section 133(6) notices. The Assessing Officer thus made the impugned unexplained sundry creditors additions of Rs.6,12,380/-.
5. We come to the lower appellate proceedings now. The assessee filed additional submissions / evidence. The CIT(A) called for remand report. The Assessing Officer filed the same inter alia contending therein that he had afforded three fresh opportunities. The assessee did not produce the above seven creditor parties making him to confirm the impugned addition. The assessee filed rejoinder thereto pleadings to have filed ledger account of all parties in its books, contra confirmation accounts, PAN details, Income Tax ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -4- returns, Bank statements, sale-purchase invoices to prove genuineness / creditworthiness of its explanation. The CIT(A) thereafter deletes the impugned addition except to the extent of applying gross profit rate @ 0.94% in case of M/s. Avdhesh trading and Maa Amba Enterprises having respective amounts of Rs.1,08,60,000/- and Rs.1,83,618/-; coming to Rs. 97,097/- and Rs.4,864/-; respectively. We deem it appropriate the lower appellate findings under challenge reading as follows:
"3.3. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer. In the assessment order, the AO observed that the appellant was a trader of ferrous & non-ferrous and machinery parts etc; in respect of sundry creditors in spite of several opportunities given, there was no response; in response to letters u/s.133(6) issued to 7 sundry creditors, in respect of 5 parties no reply was received and therefore the outstanding balances were being added; in respect of two other parties in view of the discrepancy between appellant's books and the letters received in response to 133(6) notices, addition was being made. Accordingly, he added sums of Rs.1,00,10,000/-, Rs.8.5 lacs and Rs.6,12,30,589/-. At the last page of the assessment, A.O. made a passing remark that the appellant and his customers are involved in billing system.
3.4. In the first written submission filed by the appellant, it was contended that all the information and details called for were furnished during the assessment proceeding and the AO ignored or overlooked the details furnished. As seen from the remand report, AO did not controvert this contention. Thus the above additions were made primarily on account of non-response to notices u/s. 133(6) or discrepancy between the books of the appellant and books of the creditors. In this background the additions made party-wise are adjudicated as follows:-
(1) Avdesh Trading Co. Rs.1,00,10,000/- +
Rs. 8,50,000/-
AO stated in a cryptic manner that as seen from the reply received from the party sales of Rs.1,00,10,000/- were made by the appellant to the said party. Since the sales was not reflected in appellant's books the said sum was being added. Further he added the sum of Rs.8.5 lacs being credit balance shown in the appellant's books in the name of the said party. The contentions of the ld.AR. are that the entire amount of sales cannot be added and only net profit of 0.74% may be assessed to tax. As regards, the sum of Rs.8.5 lacs it is contended that this is the amount receivable against the unaccounted sales made to the party and therefore no separate addition is required to be made. As regards the unaccounted sales made to the party, I am of the view that it is reasonable to assess the gross profit on the sales. Appellant admitted gross profit @0.94%. Thus the income assessable on the unaccounted sales would work out to Rs.97,097/-. As regards the amount of Rs.8.5 lacs the appellant's contention that the said credit balance is attributable to the unaccounted sales stands to reason. Hence no separate disallowance of this ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -5- amount needs to be made. In this connection, it is to be noted that in the remand report the only contention of the AO is that since the parties were not produced the additions may be upheld. In the absence of AO issuing summons to the parties to enforce their attendance, appellant's inability to produce parties before the AO cannot lead to any adverse inference that too keeping in view the fact that all the creditors are trade creditors. Accordingly addition of this sum of Rs.97,097/- is upheld. Balance addition is not sustainable.
(2) Deepak Trading Co. Rs.14,45,387/-
In the assessment order, AO observed that since no reply was received in response to letter u/s.133(6) the amount outstanding in the name of the party was being added. The contentions of the ld.A.R. are that during the course of assessment proceedings contra confirmation from the party, return of income filed by the party, copy of bank statement of the party were furnished; the said amount represented advance received against which sales were made in the succeeding year and non-response to notice u/s.133(6) cannot be the basis for making the addition. Keeping in view the fact that all the necessary details in support of the advance received from the party and the sales made to the party were furnished and no attempt was made by the AO to enforce the attendance of the party, I am inclined to accept the contentions of the ld.A.R. During the course of remand proceedings, the AR of the party appeared before the AO and furnished relevant details appearing in the books of accounts of the party. AO did not make any adverse comments in the remand report specifically. Therefore addition of the impugned amount is not sustainable.
(3) Keta Trading Co. Rs.1,33,83,346/-
In the assessment order, AO observed that the party did not respond the notice u/s. 133(6); the TIN number of the party was cancelled by the VAT Department; therefore the transactions were not genuine and accordingly the outstanding amount of Rs.1,33,83,346/- was being added. The contentions of the Id.A.R. are that during the year under consideration purchases of Rs.1,36,73,528/- were made from the party, payment of Rs.2,90,182/- was made to the party leaving closing balance of Rs.1,33,83,346/-; bank statement showing payments to the party, entire set of purchase invoices and contra account were furnished during the assessment proceedings; TIN number was cancelled w.e.f. 01.07.2008 meaning thereby that for the year under consideration it had no effect; the entire amount outstanding was actually paid in the succeeding year as may be seen from the ledger account and copy of bank statement and therefore no addition was warranted. I have considered the facts of the matter. I am inclined to accept the contentions of the A.R. The only ground on which the addition was made was that no reply was received in response to notice u/s. 133(6). Since A.O. did not issue summons to enforce the attendance of the party, no adverse inference can be drawn only on the basis of appellant's inability to produce the party before the A.O. Impugned addition is not sustainable.
(4) Ma Amba Enterprise Rs. 1,83,618/-
ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -6- In the assessment order, AO observed that in response to notice u/s. 133(6), reply was received from the party; there was a difference of Rs.1,83,618/- and therefore the said sum was being added. The contentions of the Id.A.R. are that the difference was attributable to the accountant not accounting for one sale invoice amounting to Rs.5,17,504/- in the appellant's books of accounts and at best the gross profit on the said sales omitted to be accounted for may be estimated. I have considered the facts of the matter. I consider it reasonable to estimate the gross profit @0.94% admitted by the appellant on the unaccounted sales of Rs.5,17,504/-, which works out to Rs.4,864/-. Addition to that extent is upheld. Balance addition is not sustainable.
(5) Maruti Traders Rs.2,25,26,901/-
In the assessment order, the AO observed that in response to the notice u/s.133(6), no reply was received; it came to his notice that the TIN number of the party was cancelled by the VAT department; this party was only a billing party and the transactions were not genuine and therefore the outstanding amount in respect of this party was being added. The contentions of the Id.A.R. are that the correct name of the party is Maruti Trading Co.; during the year, the appellant made total purchases of RS.4,43,41,665/-, made payment of Rs.2,18,14,764/- leaving the closing balance at Rs.2,25,26,901/-; during the assessment proceedings, the ledger account for the year under consideration and for the succeeding year, bank statement for both the years and invoices were furnished to the AO; not receiving reply to notice u/s. 133(6) cannot be the basis for making the addition; cancellation of TIN of the party at a later date by the VAT Department does not make the transactions non-genuine; in the succeeding year the entire outstanding amount was paid to the party as may be seen from the ledger account and bank statement furnished during the assessment proceedings. I have considered the facts on the matter. I am inclined to accept the contentions of the Id.A.R. Neither in the assessment order nor in the remand report AO could point out any defects/contradictions in the evidences furnished by the appellant in support of the purchases made from the party. Therefore, addition made is not sustainable.
(6) Paresh Trading Co. Rs.2,23,50,077/-
ln the assessment order, the AO observed that in response to the notice u/s.133(6), no reply was received; it came to his notice that the TIN number of the party was cancelled by the VAT department w.e.f. 1.7.2008; this party was only a billing party and the transactions were not genuine and therefore the outstanding amount in respect of this party was being added. The contentions of the Id.A.R. are that during the year, the appellant made total purchases of Rs.6,80,15,509/-, made payment of Rs.4,56,65,432/-leaving the closing balance at Rs.2,23,50,077/-; during the assessment proceedings, the ledger account for the year under consideration and for the succeeding year, bank statement for both the years and invoices were furnished to the AO; not receiving reply to notice u/s.133(6) cannot be the basis for making the addition; cancellation of TIN of the party at a later date by the VAT Department does not make the transactions non-genuine; in the succeeding year the entire outstanding amount was paid to the party as may be seen from the ledger account and bank statement furnished during the assessment ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -7- proceedings. I have considered the facts on the matter. I am inclined to accept the contentions of the Id.A.R. Neither in the assessment order nor in the remand report AO could point out any defects/contradictions in the evidences furnished by the appellant in support of the purchases made from the party. Therefore, addition made is not sustainable.
(7) Ramesh Mulji Bhanushali Rs.5,07,935/-
In the assessment order, AO observed that in response to the notice u/s. 133(6), no reply was received and therefore the outstanding amount was being added. The contentions of the Id.A.R. are that during the year under consideration there was no transaction with the party; closing balance was the same as opening balance of the year and therefore no addition was warranted. I am inclined to accept the contentions of the Id.A.R. During the course of remand proceedings, the A.R. of the party appeared before the AO and furnished relevant details appearing in the books of account of the party. AO did not make any adverse comments in the remand report specifically. Therefore, addition made is not sustainable.
3.5. In this connection, it is also seen that in the immediately preceding assessment year 2007-08, addition of sundry creditors outstanding was made. My predecessor vide his order dt.25.11.2010 deleted the addition by observing as under:-
"4.2(1) A remand report was called for from the AO vide this office letter dated: 13-5-2010 and the AO has submitted his report vide his letter dated 16-7-2010. It is seen that as far as the addition on account of undisclosed sources of income totaling to Rs. 1,81,81,579/- is concerned, the AO has only reiterated the fact that these amounts -were credited to the books of the appellant hence the same should be added under section 68 of the IT Act. He has not made any attempt to verify the genuineness of the creditors.
4.2(11) It is seen that the debit balance of Rs.1,81,81,579/-arises out of accounts of two parties Suhani Enterprise and Raj Enterprise amounting to Rs.80,30,555/- and Rs.1,01,51,024/-respectively. Confirmations from both these parties have been filed.
It is seen that the AO did not examine the creditworthiness of both these parties. Both the above persons have stated that the amounts due from the appellant is on account of sales effected by them with the appellant.
In view of the above AO was not justified in making the addition of Rs.1,81,81,579/- in respect of above parties. Addition made by the AO hence deleted."
3.6 In view of the above discussion, addition to the extent of Rs.1,01,961/- is upheld and the balance addition is deleted. These grounds of appeal are partly allowed."
ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -8-
6. We have heard both the parties reiterating their respective stands. Learned representatives thereafter vehemently argued about correctness of GP estimation @0.94%. The Revenue seeks to enhance the same whereas assessee's case in its first three substantive ground is that only the profit element in the nature of net profits is to be added instead of gross profits as per hon'ble jurisdictional high court decision in CIT vs. President Industries 258 ITR 654.
7. We have given our thoughtful consideration to rival contentions. It has already come on record that the assessee has filed a detailed compilation of party-wise particulars in case of all seven creditors (supra). We put up a specific query to the Revenue to rebut CIT(A)'s findings extracted hereinabove that the assessee had filed all relevant details of the above seven creditors right from scrutiny which were not even dealt with either in assessment order or in Assessing Officer's remand report. This made the CIT(A) to observe that the assessee has placed the necessary relevant information in the nature of books of account/contra accounts, confirmations, party-wise ledgers, bank statements, PAN details, returns of all seven creditor entities not attracting any doubt at a slighter pretext even to doubt genuineness of its claim. It is thus apparent that the Assessing Officer had merely quoted failure of the above entities in replying to Section 133(6) notices without adverting to the other relevant evidence on record. We accordingly find no reason to interfere with the lower appellate findings extracted in preceding paragraph deleting the impugned addition of unexplained sundry creditors.
8. We now proceed to deal with the CIT(A)'s action estimating gross profits (supra) @0.94%. Hon'ble jurisdictional high court admittedly holds in President Industries case (supra) that only the profit element is to be added ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 -9- in such a case. It is very much clear that the CIT(A) adopted the above gross profits @0.94% without even taking cognizance of the fact that he was dealing in unaccounted sales nowhere forming part of assessee's books. We further find assessee's arguments also seeking to delete the above GP estimation figure in principle wherein it has already been found to have adjudicated unaccounted sales. We thus grant only part relief to the assessee and direct the Assessing Officer to grant it a lump sum decrease in above profits of Rs.10,000/- out of the above two sums of Rs.97,097/- & Rs.4,864/- hereinabove. The Revenue's arguments are rejected on both counts along with its corresponding substantive grounds whereas assessee's first three grounds are partly accepted.
9. Next comes Revenue's argument seeking to revive unexplained advance addition of Rs.74,88,382/- pertaining to for parties namely M/s. Accost Impex Pvt Ltd. (Rs.10lacs), M/s. Arti Agency (Rs.10,282/-), M/s. Urmi Agency (Rs.56,22,519/-) and M/s. Vinod Traders (Rs.8,55,581/-); respectively. The Assessing Officer made the impugned addition citing these parties' no response/absence of cogent evidence to support assessee's claim.
10. It is evident to us that the CIT(A) sought for Assessing Officer's remand report alike the first issue herein as well to delete the impugned addition as under:
4.1. In this regard, the relevant paras of the written submissions filed by the A R. of the appellant are reproduced hereunder :-
2.1 The Id. AO has made addition in respect of following parties :
S.No. Particulars Amount in Rs.
1. Accost Impex Pvt. Ltd. 10,00,000/-
2. Arti Agency 10,282/-
3. Urmi Agency 56,22,519/-
4. Vinod Traders 8,55,581/-
Total 74,88,382/-
ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 10 -
2.2. Accost Impex Pvt. Ltd. - Rs. 10,00,000/-
Ld. AO issued notice u/s 133(6) of the Act, but it was not replied by the said party. Accordingly, the Id. AO without any giving further opportunity to the Appellant and without any cogent reason and merely on the basis of assumption, surmises and suspicious made an addition of Rs.10,00,000/-.
During the course of remand proceedings, the accountant of Accost Impex Pvt. Ltd. represented himself before the Id. AO and furnished PA No., ROI, contra-confirmation account and Balance Sheet, wherein categorically, advances of Rs.10,00,000/- made to the Appellant has been reflected. PI. refer page nos.198-204 of P/B. From the remand report, it can be seen that the Id. AO has not raised any objection or has made any adverse observation, which itself suggests that documents / evidences placed on record in as much as appearance of accountant before the Id. AO, has satisfied the verification of the Id. AO and therefore, addition made by the Id. AO is required to be deleted.
2.3. Arti Agency - Rs.10,282/-
The Appellant has placed confirmation-contra account, PA No. and ledger account on page nos. 205-210 of P/B. Considering-the same addition made by the Id. AO is required to be deleted.
2.4 Urmi Traders - Rs.56,22,519/-
Notice u/s 133(6) of the Act was issued by Id. AO, which was not replied by Urmi Traders and accordingly, the Id. AO made addition of Rs.56,22,519/-, again which is nothing, but the closing balance outstanding in the books of accounts of the Appellant. The Appellant, in this connection, during the course of remand proceedings, submitted confirmation-contra accounts, PA No. and copy of passport of proprietor, ROI and bank statement. In fact, the accountant of Urmi Traders appeared before the Id. AO and placed on record all the above evidences. PL refer page nos. 214 to 229. From the remand report, it can be seen that the Id. AO has not raised any objection or has made any adverse observation, which itself suggests that documents / evidences placed on record in as much as personal appearance of accountant before the Id. AO, has satisfied the verification of the Id. AO and therefore, addition made by the Id. AO is required to be deleted.
2.5. Vinod Traders - Rs.8,55,581/-
The Appellant has placed on record ledger account of Vinod Traders and confirmation-contra account alongwith PA No., address, sales tax no. etc. PI. refer page nos. 230 to 232 of P/B. From the perusal of such record, it can be seen that the amount of Rs.8,55,5817- represents difference in opening balance in the books ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 11 -
of accounts of the Appellant and in the books of Vinod Traders, otherwise, the transactions carried out during the year under consideration is tallied. Therefore, the difference amount is pertaining to earlier year and accordingly the same cannot be added to the total income for the year under consideration. Therefore, in view of above submission, addition made by Id. AO is required to be deleted.
2.6. During the course of assessment proceedings, it was submitted and explained to the Id. AO that advances received from customers have been settled either by selling the material or making repayment thereto in the subsequent year/s and therefore no inference can be drawn with regard to credit balance outstanding in the balance sheet, particularly when the other side of books of accounts has not been disturbed and accepted by the Id.AO. In fact, this submission of the Appellant is reproduced in the body of assessment order by the Id. AO. However, the Id. AO without appreciating the facts and explanation submitted by the Appellant and without placing on record any evidently proof, he made an addition for the sake of making the same and that also without providing any cogent reasons. In fact, in remand report also, no comment has been given by the Id. AO with regard to the claim of the Appellant. Therefore, in view of this submission, the addition made by the Id. AO is required to be deleted.
4.2 I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer. Vide para-5 of the assessment order, AO made addition of Rs.74,88,382/- being the advances received by the appellant from his four customers. While doing so, Assessing Officer observed that in response to the notices u/s.133(6), no reply was received from any of the parties and therefore the said sum was being considered as assessee's income from undisclosed sources. The contentions of the Id.A.R. are that all the necessary evidences in support of the advances received from four parties were furnished to the A.O. either during the assessment proceedings or during the remand proceedings; such evidences included PAN, copies of written submission, contra confirmation from the parties, passport, bank statements etc.; during the assessment proceedings, it was also submitted that the advances received were settled either by selling material or making repayments in the subsequent year; AO did not controvert or find defects in the evidences furnished; during the remand proceedings, the A.R. of the first three parties (mentioned by the A.O. at para-5 of the assessment order) appeared before the AO and confirmed the transactions with supporting evidences; in respect of the fourth party, the outstanding amount represented only the opening balance and no transactions were made during the year and therefore the addition is unwarranted.
4.3. I have considered the facts of the matter. The only basis for the addition made was that no response was received from any of the parties in response to notices u/s.133(6). Other than this, there is no adverse observation by the AO either in the assessment order or in the remand report. In this connection, it is also seen that AO did not issue summons to any of the parties to enforce their ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 12 -
attendance nor he did bring any material on record to controvert the contentions of the appellant. Therefore, the addition is without any basis. It is deleted. This ground of appeal is allowed."
11. Heard both sides vehemently supporting their respective stands. Relevant findings perused. It transpires that the CIT(A) reasoning herein as well qua the instant issue are identical to those in first substantive issue that the assessee had placed on record all the relevant particulars of above four parties in order to prove genuineness of customers' advances received from them. Ld. Departmental Representative fails to rebut the same in the course of hearing. This Revenue's plea is accordingly declined.
12. The Revenue's next substantive grievance seeks to restore unsecured loans addition of Rs.60,71,888/- involving three parties i.e. M/s. Alang Marine (Rs.49,64,888/-), M/s. Gayatri Mineral Rs.12,000/-) & M/s. Harsh Impex (Rs.10lacs); respectively as added by the Assessing Officer and partly confirmed to the extent of latter two parties in course of the lower appellate proceedings. The CIT(A) observes that the assessee itself did not pursue its ground pertaining to M/s.Gayatri Minerals keeping in mind smallness of the amount involved of Rs.12,000/-. He then upholds the last figure of Rs.10lacs in case of M/s. Harsh Impex as follows:
"5.1. With regard to the above ground, the relevant paras of the written submissions filed by the A. R. of the appellant are reproduced hereunder :-
"3.1 The Id. AO has made addition with respect to following parties S.No. Particulars Amount in Rs.
1. Alang Marine 49,64,888/-
2. Gayatri Mineral 12,000/-
3. Harsh Impex 10,00,000/-
Total 60,71,888/-
3.2. Alang Marine - Rs.49,64,888/-
Out of total amount of Rs.49,64,888/-, an amount of Rs.43,17,294/-pertains to carried forward from the previous year 2006-07, wherein, the same was received and balance amount of Rs.6,47,594/- pertains to the interest ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 13 -
thereon. PI. refer page nos.235-237. It is settled law that u/s 68 of the Act, addition can be made only with respect to the credit entry found during the year under consideration. Hence, on this short ground only addition made by the Id. AO is required to be deleted. The Id. AO has further disallowed an amount of Rs.6,47,594/- u/s 40(a)(ia) of the Act on the ground that the Appellant has failed to deduct tax at source on such interest amount. In this connection, it is submitted that direction may be given to the Id. AO to allow the expenditure in the year in which TDS is paid.
Further it is pointed out that while computing the total income, the Id. AO has added an amount of Rs.6,47,594/- twice, once while making an addition of Rs.60,71,888/- (which includes amount of Rs.49,64,888/-) and second time by making disallowance and adding Rs.6,47,594/- to the total income of the Appellant. Therefore, alternatively and without , prejudice to above, direction may be given to delete the same.
3.3. Gayatir Mineral - Rs. 12,000/-
For smallness of amount, not pressed.
3.4. Harsh Impex- Rs.10,00,000/-
No addition can be made merely on account of non-reply in pursuant to notice Issued u/s 133(6) of the Act. Hence, addition made by ld. AO is required to be deleted.
4 The Appellant most respectfully submits that Id. AO has not properly appreciated and considered various submissions, evidences and supporting placed on record during the course of the assessment proceedings and not properly appreciated various facts and law In Its proper perspective. Appellant most respectfully submits that this action of Id. AO In not appreciating various evidences placed before him and framing assessment order without referring to evidences placed before him is in breach of principles of natural justice and therefore deserves to be quashed."
5.2. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer. At para-6 of the assessment order, AO observed that in respect of three parties from whom unsecured loans were obtained by the appellant, notices were issued u/s.133(6). In respect of the first party namely Alang Marine, the notice was served but no reply was received and therefore a sum of Rs.49,64,888/- was being added. The contentions of the ld.A.R, are that during the course of assessment proceedings, it was explained that out of the amount outstanding of Rs.49,64,888/-, the sum of Rs,43,17,294/- was carried forward from the earlier year and the balance amount of Rs.6,47,594/- was the interest credited thereon; since the amount was not borrowed during the year, no addition could have been made. I have considered the facts of the matter. I am inclined to accept the contentions of the appellant. The addition of the said sum cannot be sustained.
ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 14 -
5.3. As regards the second party namely M/s.Gayatri Mineral, the ld.A.R. stated that he did not want to press the issue in view of the meager quantum involved. Therefore, addition made of Rs.12,000/- in respect of the said party is upheld. As regards the third party M/s. Harsh Impex, the ld. A.R. could not furnish any details regarding the loan secured of Rs.10 lakhs from the said party. Therefore, addition of the said sum of Rs.10 lakhs in respect of this party is upheld.
5.4 To sum up, out of the addition made of Rs.60,71,888/- addition to the extent of Rs.10,12,000/- is upheld and balance is deleted. This ground of appeal is partly allowed."
13. This leaves both the parties aggrieved. The Revenue's grievance seeks to restore the entire addition sum. The assessee's substantive ground no.4 in its cross appeal prays for deleting the remaining addition of Rs.10,12,000/- despite the fact that it had itself not pressed for its grievance in case of M/s. Gayatri Minerals.
14. We have given our thoughtful consideration to rival submissions. It is evident that the CIT(A) has considered assessee's relevant details filed pertaining to M/s. Alang Marine (supra) to delete the first addition amount to Rs.49,64,888/-. Both the parties failed to pin point any specific irregularity or infirmity therein. We thus conclude that the ld. CIT(A) has correctly appreciated facts pertaining to the instant issue along with all necessary evidence on record. We thus find no reason to interfere with the lower appellates' findings challenged by both the parties. The Revenue's last substantive plea as well as its appeal ITA No.1928/Ahd/2012 fails.
15. We now come to assessee's last substantive ground that the CIT(A) has erred in confirming interest disallowance of Rs.6,47,594/- as made by the Assessing Officer for non deduction of TDS u/s. 40(a)(ia) of the Act. It pleads that the same has amounted to double addition since the very figure formed part of the addition of Rs.49,64,888/-. We notice that the CIT(A)' order in para 6 page 21 already takes note of assessee's argument to conclude that its double addition plea no more survives since the former addition figure ITA Nos. 1928 & 1968/Ahd/2012 (ITO vs. Dharmesh G. Joshi) A.Y. 2008-09 - 15 -
already stands deleted to the tune of Rs.49,64,888/-. Learned counsel is unable to rebut this factual position. We thus find no reason to interfere in the CIT(A)'s findings pertaining to the instant issue. This assessee's ground is accordingly rejected. Assessee's appeal 1928/Ahd/2012 is partly accepted.
16. The Revenue's appeal ITA No.1928/Ahd/2012 is dismissed and assessee's cross appeal ITA No.1968/Ahd/2012 is partly allowed.
[Pronounced in the open Court on this the 20th day of January, 2017.] Sd/- Sd/-
(PRAMOD KUMAR) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 20/01/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय!
ु त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।