Income Tax Appellate Tribunal - Ahmedabad
Moti Laminates Pvt.Ltd., Mehsana vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "A" BENCH AHMADABAD
Before Shri Mukul Kr. Shrawat, Judicial Member and
Shri T.R. Meena, Accountant Member
ITA No. 977/Ahd/2012
Assessm ent Year :2007-08
Moti Laminates P. Ltd. V/s. The Commissioner of Income
Plot No.67/2, 68, GIDC, Tax, Gandhinagar.
Visnagar,
Dist. Mehsana
PAN No. AABCM 9054C
(Appellant) .. (Respondent)
अपीलाथȸ कȧ ओर से Shri M. K. Patel, A.R.
By Appellant
ू×यथȸ कȧ ओर से/By Respondent Shri Shelly Jindal, CIT. D.R.
सुनवाई कȧ तारȣख/Date of Hearing
19.03.2013
घोषणा कȧ तारȣख/Date of Pronouncement 17.05.2013
ORDER
PER : T.R.Meena, Accountant Member
This is an appeal at the behest of the assessee which has emanated from the order of CIT, Gandhinagar, dated 16.03.2012 for A.Y. 2007-08. The sole ground of appeal passing order u/s.263 by the CIT, Gandhinagar, by setting aside the order passed by the A.O. dated 24.12.2009.
2. The CIT issued show cause notice dated 25.11.2010 u/s.263(1) of the IT Act:
"During the course of assessment proceedings, as per order sheet dated 18/12/2009, the following information was called for.
(i) Trading, P&L A/c and Balance Sheet as on the date of survey on 15/02/07 from 15/02/2007 to 31/03/2007.
(ii) Closing stock of Raw Material, work in process and finished goods as on 15-02-2007 and 31-03-2007 with quantitative details.
However, it has been found that no such details were furnished by you.
2. During the course of survey, it was claimed that as per books of accounts the closing stock as on 15-02-2007 was under:
(i) Raw Material Rs. 1,02,80,915/-
(ii) Semi finished goods Rs. 97,757/-
(iii) Finished goods Rs. 23,26,099/-
Rs. 1,27,02,099/-
3. Whereas the stock physically found was as under :-
(i) Finished goods Rs. 1,94,29,307/-.
4. Accordingly the difference in stock at Rs. 67,26,537/- was admitted and during the course of statement recorded in 133A not invest on 15.02.2007 was admitted at Rs. 59,97,884/- and therefore on such undisclosed income advance tax payment of Rs. 15,00,000/- was agreed to be paid.
5. During the course of submission on 18.12.2009, it was explained that out of total undisclosed income at Rs.55 lakhs, an amount of Rs. 40,00,000/- is shown under the head Reserve and Surplus and further amount of Rs.15,00,000/- was shown in goods in process. However, on going through the balance sheet, the amount shown in Reserve and Surplus is only Rs. 25,00,00/- is shown and therefore it is not known where the difference amount of Rs. 1500000/- is shown. The working of goods in process as on 15.02.2007 and as on 31.03.2007 is furnished enabling verification of amount of Rs. 15 lakhs disclosed under the head work in progress.
6. No reconciliation statement was furnished enabling verification of stock as on 15-02-2007 as per books of accounts and the stock found on physical verification.
7. There is also no reconciliation between the actual stock during the course of survey physically found as on 15-2-07 and the closing stock at the end of the year 31-3-2007.
8. As regards verification of cash credits are concerned, it has been found that in respect of following transaction, no confirmations were filed dully supported by copy of relevant bank account, copy of acknowledgement for filing return of income, P&L A/c and Balance sheet.
(i) Umiya Finlease Pvt. Ltd. Rs. 15.00.000/- dated 13-10-2006.
(ii) Patei Somabhai Narayandas. Rs. 19,300/- dated 20-04-2006.
(iii) Patel Somabhai Naryandas HUF. Rs. 19,800/- dated 20-04-2006.
9. In respect of credits Rs. 11,06,916/- in the name of Patel Revabhai Motidas, HUF, it has been found that the gross income for A.Y. 2007-08 has been shown at Rs. 1,65,032/- only, whereas, total receipt of credit is more that Rs. 13,50,000/- during the year, it has been claimed that the assessee was having credit balanced of Rs. 3,18,639/- with Shri Patel Motidas Jivandas and from that account an amount of Rs. 1,95,132/- and Rs. 4,00,000/- was received by the assessee but it has been found that there is deposit of more than Rs. 3,50,000/-for which the source is to be satisfactorily explained which has not been done. It has been claimed that the assessee has advanced Rs. 9,00,000/- out of Dena Bank Account but on going through the said bank account, it has been found that the assessee has deposited cash of more than Rs.60,000/- and source of such deposit is to be explained. Moreover, in the bank account No. 9300 of Dena Bank, there are following credits of deposits.
(i) 17.4.2006 Rs. 250000/- (ii) 18.4.2006 Rs. 250000/- (iii) 24.4.2006 Rs. 3010225/- (iv) 29.4.2006 Rs. 195507/- (v) 3.8.2006 Rs. 50335/- (vi) 4.8.2006 Rs. 119132/- (vii) 8.11.2006 Rs. 400000/- (viii) 24.11.2006 Rs. 51000/- (ix) 21.12.2006 Rs. 900000/-
Unless the source of creditors are satisfactorily explained, the transactions cannot he treated as genuine.
Besides above, in the aforesaid bank account, there are deposits of money by way of drafts of Rs. 250000/- on 22/5/2006 and Rs. 300000/- on 21/5/2006. The source of deposits of Rs.550000/- are not known. Unless all these transactions are explained the cash credits cannot be treated as genuine.
Moreover, there are credits from SB Account No. 141, CA 1345 and CA 1241, unless copies of all these bank accounts are produced for verification the same cannot be treated as explained particularly in absence of any copy of balance sheet as on 31-03-2006 & 31-03-2007.
10. In respect of credit of Rs. 642780/- in the name of Patel Purviben Dahyabhai, it has been claimed that on received of Rs. 642780/- from M/S. Aone Coated Abrasive the said amount is advanced to the assessee but on going through the copy of Bank account No. 9190, there are following credits and debits.
(i) 18,4.2006 Rs. 250000/- (ii) 19.4.2006 Rs. 250000/- (iii) 24.4.2006 Rs. 49826/- (iv) 26.2.2007 Rs. 131269/- (v) 26.2.2007 Rs.369000/- (vi) 16.3-2007 Rs.642780/- (vii) 29.3.2007 Rs. 484000/- (viii) 19.3.2007 Rs.642780/- (debit) A/c. No. CA 1536. (ix) 30.3.2007 Rs. 464000 to Shri B.A. Patel.
Unless, all these entries are properly explained the same cannot be treated as genuine transactions. Moreover, these are transfer to the following SB Accounts. (i) SB A/c.No.9287 Rs.180000/- (ii) SB A/c. No.10590 Rs. 30000/- (iii) SB A/c. No.9209 Rs. 80000/- (iv) SB A/c. No. 9528 Rs. 105000/- (v) SB A/c .No. 9225 Rs. 104000/- . Unless the copies of balance sheet as on 31-03-2006 & 31-03-2007 are not furnished, the same cannot be treated as genuine transactions.
11. In respect of credits of Rs.1284617 in the name of Shri Narottamdas Motidas Huf, the assessee has shown receipt of Rs. 750000/- during the year under consideration. The income of the assessee is only Rs. 160895/- and the source of deposit is explained as receipt of Rs.500000/- from Smt. Pashiben Ramdas Patel on 20- 04-2006 and Rs.250000/- from Thakore Laxmanji Parjapatiji. In absence of copy of Balance sheet as on 31-03-2006 & 31-03-2007, the transaction of receipt cannot be treated as genuine as both the tenders are not assessed to tax.
Moreover, the copies of Bank Account in Dena Bank reveal- following transactions.
(i) Cash Deposits Rs.60000/- (ii) Deposits on 18.4.2006 Rs.250000/- A/c No. SB 141 (iii) Deposits on 20-4-2006 Rs.500000/ No, SB 741. (iv) Deposits of draft on 22-05-2006 Rs.2500000/- (v) Deposits of draft on 26-05-2006 Rs.3,00,000/- (vi) Deposits of draft on 2-03-2007 Rs.2,00,000/-
In the aforesaid account money has transferred as under:
(i) 13-4-2006 Rs. 10000/- (ii) 19-4-2006 Rs. 250000/- (iii) 21-4-2006 Rs. 50000/- (iv) 27-5-2006 Rs. 20000/- (v) 27-5-2006 Rs. 105000/- A/c. No. CA 1345 (vi) 2-3-2007 Rs. 20000/- A/c. No. SB 7055 (vii) 2-3-2007 Rs. 50000/- A/c. No. SB 10022 (viii) 2-3-2007 Rs. 70000/- A/c. No. SB 10590 (ix) 2-3-2007 Rs. 60000/- A/c. No. SB 9528 (x) 8-3-2007 Rs. 30000/- A/c. No. 10022 (xi) 8-3-2007 Rs. 50000/- A/c. No. 9287
In absence of copy of Balance sheet as on 31-03-2006 & 31-03- 2007 the aforesaid transactions cannot be treated as genuine.
12. In respect of transactions cash credits in the name of Patel Narayanbhai N. HUF of Rs. 10,800/-, the copy of bank account reveal the tally of credits and debits.
(i) Rs. 80013.38 on 28.4.2006.
(ii) Rs. 30864.44 on 3.8.2006
(iii) Rs. 259324 on 19.3.2007 transferred to A/c. No. CA 1536.
In absence of copies of Balance sheet as on 31-03-2006 & 31-03-2007, the same cannot be treated as explained.
13. In respect of Patel Manjulaben Mahendrakumar, an amount of Rs. 271223 was sent to A/c. No. CA 1536 on 19-3-2007, the said transactions may be explained by furnishing copy of said bank account.
14. In respect if creditor Smt. Maniben Ambalal Patel there is deposit of Rs. 331500/- on 29-04-2006, and Rs. 175119/- on 29-07-2006 from A/c. No.CA 1349. From the said account a sum or Rs. 331500/- was sent to Multi Poly Ltd. On 29-04-2006. Rs. 175719/- was transferred on 29-07-2006 and Rs. 485288/- on 19-03-2007. In absence of copy of balance sheet as on 31-03-2006 & 31-03-2007, the same cannot be treated as explained.
15. In respect of credit of Rs. 40100/-in the name of Shri Maganbhai N. Patel, HUF, the bank account No. 9231 of Dena Bank reveal that there is deposits of draft of Rs. 90000/- on 19-05-2006 and Rs.90000/- on 10-05-2007 which were transferred to A/c. CA 1241. As the source of deposit of Rs. 1,00,000/- is not satisfactorily explained, it cannot be said that the assessee has any regular source of income for which he can advance Rs. 40100/- unless the source of Rs. 40500/- account for the bank account is explained property.
16. In respect of credits of Rs. 350000/- in the name of Patel Kantilal Revab haii, it appears that fund of Rs.350000/- was transferred from the A/c of Patel Motidas Jivandas. The bank account No. 9192 of the creditor reveal credit of Rs.350000/- from Ac. No.CA 1345 on 20-4-2006 and Rs. 500000/- on 25-04-06 which were sent to A/c. No. CA 1241 on 25/4/2006. In absence of copy of A/c. No. CA 1345 & CA 1241, the transaction cannot be treated as properly explained.
17. In respect of credit in the name of Kantaben Kantilal Patel, the amount of Rs. 697865/- was shown to have been revealed from SBM dalal by cheque No.634356 and there is credit of Rs.182830/- from CA No. 1345 and there is transfer of Rs.363159/- on 19-3-2007 to unknown account In absence of the details, the transactions in the bank accounts cannot be treated as properly explained.
18. In respect of credit in the name of Jayaprakash Narayandas Patel & J.N. Patel, HUF. unless all the credits on 25-4-2006 at Rs. 100000/-, 28-4-2006 Rs. 249602, 3-8-20096 Rs. 50038/- are explained properly, the said credits in bank a/c. No. 12684 and No. 14429 cannot be treated as properly unexplained.
19. In respect of Gomtiben Maganlal Patel A/c. No. 9290, there are deposits of Rs.70021 on 19.4.2006, Rs.25227 on 22/8/2006 to A/c. No.1241 and transfer from CA No. Rs. 40000/- on 19/5/2006, and deposits of two drafts of Rs. 90000/- on 19-5-2006 and Rs.90000/- on 19-5-2006, in absence of supporting material, the transaction cannot be treated as explained.
20. In respect of credit in the name of Dashntbhai there are two deposits of draft of Rs. 85000/- on 15-5-2006, are transfer from 515000 CA A/c 1345, and transfer of Rs. 600000/- on 17-05-06, in absence of supporting material, the transaction cannot be treated as explained.
21. In the account of Kanitlal Rasikbhai Patel there is transfer of Rs.200000/- on 19/3/2007 to A/c. No.1526. In absence of copy of said bank A/c. the transactions cannot be treated as explained.
22. In respect of Dahyabhai Jethabhai Patel, there were deposits as under:
(i) 18-5-2006 Drafts Rs. 90,000/- (ii) 18-5-2006 TRF, CXA No.1345 Rs. 595000/- (iii) 22-8-2006 -do- Rs. 115200/- (iv) 6-12-2006 TRF Rs. 90000/-
23. In respect of account of Dahyabhai Jethabhai Patel,HUF the money of Rs. 40000/- was credited after receipt Rs. 45000/- by draft on 17-5-2006 from Smt. Shuahilben Kacharalal Patel. As there is no balance sheet as on 31-3-2006 & 31-3-2007 of the creditor and in absence of copy of the bank account of Smt, Shushilaben the transactions cannot be treated as genuine.
24. In the copy of Bank account No. 11888 of Bhavinkumar K. Patel, an amount of Rs. 195710 was sent to the bank account CA 1536. In absence of the copy of said bank account, the credits cannot be treated as genuine.
25. In the copy of account No. 12353 of Shri Bhavinkumar Kantilal Patel, HUF, an amount of Rs. 531794/- was transferred to A/c. No. CA 1536. In absence of copy of Bank A/c. No. 1536, the credits cannot be treated as explained and genuine.
26. In the account of Shri Patel Amratlal Bhikhabhai the said party has allowed Rs.300000/- on 11.7.2006 and Rs. 340000/- on 6-3-2007. Interest credited is only 12144/-. The rate of interest is not known and in absence of copy of Bank account form which the money has been advanced, the transactions cannot be treated as fully explained and genuine.
27. In the bank account No. 9196 of Ambalal N. Patel, an advanced of Rs. 230000/- was transferred from CA A/c No. 1345 on 29-4-2006 and against there is transfer of Rs. 77888.53 on 4/8/06 from the said account. Thereafter, the fund amount was sent to A/c. No. CA 1241. In absence of copies of aforesaid bank a/cs., the transactions of credits cannot be treated as explained and genuine.
28. The copy of Bank A/c. No.9228 of Shri Ambalal Narrotamdas Patel, HUF, reveal transfer of Rs. 92821 to A/c. No. CA 1536 of Rs. 92821 on 9.3.07. In the absence of copy of said bank account, the transaction of credit cannot be treated as fully explained and genuine.
29. In respect of copy of bank account No. 12177 of Smt. Alpaben Jitendrakumar Patel, there is credit of Rs, 91229/- on 19.4.2006, deposits of 4 drafts each of Rs. 45000/- on 19-5-2006, credit of Rs.27734.51 on 22/8/2006. In absence of proper explanation dully supported by documentary evidence, the transactions of credits cannot be treated as explained & genuine.
30. In the copy of bank a/c. No. 12693 of Shri Jitendrakumar Maganblal Patel, HUF, there are credits of 4 drafts each oOf Rs. 45000/- on 19-5-2006, In absence of copy of bank a/c from which these drafts have been received, the transaction of credits cannot be treated as genuine.
31. In the bank a/c. No.9582 of Shri Jiterbhai Maganlal Patel, there is credit of Rs. 50244/- on 19/4/2006, and credit of two drafts each Rs.45000/- on 19-5-2006. In absence of satisfactory explanation supported by documentary evidence the credit cannot be treated as genuine and properly explained.
In view of the aforesaid observation the order u/s. 143(3) at 18- 12-2009 is treated as erroneous and prejudicial to the interest of venue. I, therefore propose to issue appropriate direction u/s.263 of the IT Act setting aside the said assessment with a direction to frame de novo assessment. Please explain why no such direction should be issued. Your case is fixed for hearing on 6-12-2010 11.30A.M." In response to the notice dated 25.11.2010, the assessee also filed reply dated 03.01.2011. The ld. CIT held that the assessee had submitted various details vide letter dated 02.09.2009 before the ld. A.O. which include the copy of trading account, p&l account, balance sheet on the date of survey & upto 31.03.2007 and disclosure made u/s. 133A of Rs.40,00,000/- had been shown by the assessee. The appellant before CIT also stated the reasons for fall of GP and submitted the revised working of net profit which was minus at Rs.6,41,930/- as on the date of survey i.e. 15.02.2007. The assessee had made another submission on 24.01.2011 before the CIT and had furnished another revised working of net profit of Rs.38,38/- as on the date of survey.
The contention of the appellant that all the particulars, items relating to manufacturing and trading account had been submitted before the A.O. up to the date of survey and as on 31.03.2007 on 02.09.2009 but which were not found correct to the CIT(A). On verification of D-1 to 8 & 23 of letter dated 02.09.2009 were pertained to whole year not as on date of survey. The ld.
A.O. did not make any inquiry for fall in GP. Therefore, it is observed by the CIT(A) that here that no books of account had been properly examined by the A.O. The book results were prima facie accepted by the Assessing Officer without making any verification whatsoever. The reasons for fall of G.P. given by the appellant before the CIT were found in general nature and not supported by any documentary evidence. The contention of the appellant that price increased of the raw material reduced the profitablility whereas no such increase in sale price had been shown by the appellant. On the issue of the cash creditor of M/s. Umiya Finlease Pvt. Ltd., Somabhai Narayandas Patel & Somabhai Narayandas Patel HUF, the assessee had furnished confirmation, copy of acknowledgement of return, bank pass book for verification, which were submitted before the CIT(A). Therefore, he held that it required further verification by the A.O. on the issue of cash creditor in the name of different persons discussed at serial nos. 19 to 31 of show cause notice. The assessee had stated to have furnished required details during the assessment proceeding but the A.O. had not verified details and had not ascertained genuineness of the transaction and creditworthiness of these creditors. No attempt had been made by Assessing Officer to verify the source of the money in the accounts of the depositors furnishing of details like PAN, copy of acknowledgement of return and contra account to prove the identity of the creditors but the same does not prove the genuineness of the transaction and creditworthiness of the creditors. Transactions by cheque by itself do not prove the genuineness of the transaction. It was the duty of the A.O. to make inquiry in this matter, which was not done by him. During revision proceeding, bank accounts of different persons listed below were obtained through Assessing Officer:
1 Bhagwati Boards P. Ltd. CA GEN 1536 2 Moti Polymers P. Ltd. CA GEN 1241 3 Ambica Marbles Store Suppliers CA GEN 1408 4 Bhavna Sales Agency CA GEN 10022 5 Motidas Jivandas patel CA GEN 1345 The A.O. was directed to verify the said bank account and to obtain further necessary details, to examine the details and make necessary inquiry and decided accordingly, directed by the CIT. The ld. CIT further relied in case of East Asiatic Co. (India) Ltd. V. State of Madras (1956) 7 STC 299 (mad.) and held that the A.O. cannot sit on the evidence furnished by the appellant but investigate and ascertain the truth of the case. He further relied upon following cases:
(i) Ram Pyari Devi Saraogi v CIT (1968) 67 ITR, 84 (SC)
(ii) Tara Devi Aggarval v CIT (1973) 88 ITR, 323 (SC)
(iii) Gee Vee Enterprises v Addl. CIT (1975) 99 ITR, 375 (Del.)
(iv) CIT v Pushpa Devi (1988) 173 ITR, 445 (Pat.)
(v) K.A. Ramaswamy Chettair v. CIT (1996) 220 ITR, 657 (Mad.)
(vi) CIT v Shree Manjumathesware Packing Products and Comphor Works (1998) 231 ITR, 53 (SC) He further relied upon the case of Venkatakrishna Rice Co. v CIT (1987) 163 ITR, 129 (mad.), Malabar Industrial Co. Ltd. v CIT (2000) 243 ITR, 83(SC).
The ld. CIT held that the order dated 24.12.2009 of the A.O. is erroneous and prejudice to the interest of the Revenue and accordingly he set aside to make a de novo assessment after detailed and proper verification of the facts of the case with reference to issues mentioned in the order u/s.263 after giving opportunity of hearing to the assessee.
3. The assessee carried the matter before us. Ld. Counsel for the appellant filed three paper books in this case which includes the copy of computation of income, copy of Audit Report, A.O's. query letter dated 12.08.2009, reply of the assessee dated 02.09.2009, 11.09.2009, 18.11.2009 & 18.12.2009. The appellant had not filed any reply against the query raised by the AO on fall of G.P. Further confirmation in case of M/s. Umiya Finlease Pvt. Ltd., Somabhai Narayandas Patel & Soma Bhai Narayandas Patel HUF filed before CIT not before the A.O. The bank account in case of Bhagwati (Pvt.) Ltd., Moti Polymers (Pvt.) Ltd., Ambica Marbles Store Suppliers, Bhavna Sales Agency and Motidas Jivandas Patel had not been examined by the A.O. The order of the A.O. to that extent is erroneous and prejudicial of interest of Revenue. However, on other issues the ld. CIT had passed order under Section 263 of the I.T. Act without specific observations. The remarks of CIT are general. The Assessee had filed the confirmation in case of cash creditors, copy of return & copy of bank accounts. The Ld. A.O. had satisfied himself with evidences filed before him. Thus, we confirmed the order of CIT passed under Section 263 of the I.T. Act for limited purpose a discussed above.
4. In the result, the Assessee's appeal is allowed partly.
This Order pronounced in open Court on 17- 05-2013 Sd/- Sd/-
(Mukul Kr. Shrawat) (T.R. Meena)
Judicial Member Accountant Member
S.K.Sinha
TRUE COPY
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।