Income Tax Appellate Tribunal - Ahmedabad
M/S. Mahalaxmi Housing & Finstock ... vs The Acit.,Cent.Circle-1(4),, ... on 3 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
" SMC " BENCH, AHMEDABAD
BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER And
SHRI WASEEM AHMED, ACCOUNTANT MEMBER
आयकर (ss)अपील सं./IT(ss)A No.18/Ahd/2011
( नधा रण वष /Assess ment Year : 2002-03)
Mahalaxmi Housing & बनाम/ The ACIT
Finstock Pvt.Ltd. Vs. Central Circle-1(4)
1, Narayan Chambers Ahmedabad
nd
2 Floor
Nr. NehruBridge Corner
Ashram Road, Ahmedabad-
380 009
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AABCM 0364 R
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Shri Pritesh L. Shah, AR
यथ क ओर से/Respondent by: Smt. Aparna M. Agarwal, CIT-DR
ु वाई क तार ख/
सन Date of Heari ng 14/11/2018
घोषणा क तार ख /Date of Pronounce ment 03 /12/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-I, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)- I/CC.1(4)/382/2008-09 dated 19.11.2009 arising in the assessment order passed under s.153A(1)(b) r.w.s.144 of the Income Tax Act, 1961(hereinafter referred to as "the Act") dated 31.12.2008 relevant to Assessment Year (AY) 2001-2002.
2. The assessee has raised following ground of appeal:-
IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -2-
1. The learned CIT(A) has erred in confirming the addition of Rs.48,47,870/- as unexplained cash credit u/s.68 of the I.T.Act, 1961 which is requested to be quashed.
3. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the addition made by the AO for ₹ 47,48,870.00 under section 68of the Income Tax Act, 1961 (hereinafter referred to as "the Act") on account of unexplained cash credit.
4. Briefly stated facts are that the assessee in the present case is a private limited company and engaged in the business of construction and development. There was a search under section 132 of the Act on the Neptune group of cases dated 1st Novembers 2006. The premise of the assessee was also covered under search and seizure operation carried out under section 132 of the Act. As a result of the search, proceedings under section 153A(1) of the Act were initiated against the assessee. Accordingly, the AO during the assessment proceedings required the assessee to furnish necessary details. However, the assessee in response to the notice issued by the AO replied vide letter dated 16th December 2008 that the statement recorded during search and seizure and post- search & seizure can be considered for the purpose of the assessment. As the assessee did not furnish the required details, therefore, the AO made the addition of ₹ 47,48,870/- as made in the original assessment framed under section 143(3) of the Act vide order dated 30th March 2005. The AO made the same addition as made in the original assessment framed under section 143(3) of the Act by observing that the year under IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -3- consideration got abated. Thus the AO added the sum of ₹ 47,48,870/- to the total income of the assessee.
5. Aggrieved, assessee preferred an appeal to ld. CIT (A). The assessee before the ld. CIT (A) submitted that the impugned amount of ₹47,48,870/- is representing the amount received from Mahalaxmi Bhavan Co. Operative Housing Society Ltd. out of the opening balance of ₹1,26,03,575/- only. Accordingly, the assessee claimed that no addition for the impugned amount received from Mahalaxmi Bhavan Co. Operative Housing Society Ltd. could be added to the total income of the assessee on account of a cash credit.
6. However, the ld. CIT (A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under:
"7. I have considered the aforementioned submissions of the appellant. In its submission dated 16.11.2009, reproduced above, the counsel of the appellant has mentioned that fresh assessment order for A.Y. 2002-03 is pending with the Assessing Officer. However, the counsel of the appellant has failed to take cognizance of the fact that the original proceedings got abated, after issue of the notice u/s.153A of the I.T. Act.
7.1. In the original assessment order dated 30.03.2005, the Assessing Officer has very clearly mentioned that the amount of Rs.47,48,870/- was found to be deposited in the bank account of the appellant, Bank A/c.No.1921 (Current Account) of Mehsana Urban Co-op. Bank, C.G. Road Branch, Ahmedabad. In appellate proceedings, in both the submissions, reproduced in the instant appellate order, the appellant has failed to explain the nature and source of these deposits. The identity of the creditors, genuineness IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -4- of the transactions as well as creditworthiness of the creditors is also not established. It is well established by the series of decisions of the Hon'ble Supreme Court namely Kale Khan Mohammad Hanif Vs. CIT 50 ITR 1 (SC), CIT Vs. Devi Prasad Viswanath Prasad 72 ITR 194 (SC), that the onus of proving source of any money received by the assessee is upon him. In the present case, the appellant has miserably failed to discharge the onus of proof and to explain the source and nature of credits, as appearing in the bank accounts of the appellant. In view of the above, the addition of Rs.48,47,870/- is considered justified. The Assessing Officer's action is computing the total taxable income of Rs.46,95,220/- in the impugned assessment order is confirmed.
7.2. As regards to appellant's contention for allowance of b/f losses, the Assessing Officer is directed that while giving effect to this order, consider this point and pass a speaking order on this point.
7.3. As regards to initiation of penalty proceedings u/s.271(1)(c) and 271E of the I.T. Act is concerned, the mere initiation of penalty proceedings is not appellable. Hence, this ground is dismissed.\
8. In the result, the appeal is dismissed."
7. Being aggrieved by the order of ld. CIT (A), assessee is in appeal before us. The learned AR before us filed 2 paper books one is running from pages 19 to 199 and another one is running from 1 to 47 and submitted that "Regarding receipts of Rs.47,48,870/-.
20. The Assessing Officer made addition of Rs.47,48,870/- without verifying the records properly as there is no such amount of Rs.47,48,870/-. The amounts mentioned by the Assessing Officer himself in the assessment order were not totaled correctly by him. The actual total of the amounts mentioned in the assessment order amounted to IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -5- Rs.43,69,600/- as against addition made by Assessing Officer of Rs.47,48,870/-. Thus the Assessing Officer is himself not sure about the amount of addition he wants to make.
21. The Assessing Officer as well as the Honourable CIT(A) failed to appreciate the fact that the amount credited in The Mehsana Urban Co- Op Bank Account No. 1921 was received against the dues from the Mahalaxmi Co-Op Housing Society Ltd through cheques only. The receipts were just collection from the debtors. Accordingly, there are no unexplained cash credits in the books of the assessee and hence it is not a fit case for section 68 of the Income Tax Act, 1961.
22. Mahalaxmi Co-Op Housing Society Ltd. was a debtor of the assessee since F.Y. 1997-98 due to cancellation of a contract. But due to lack of funds, the debtor did not made payment to the assessee. Accordingly, the assessee has shown the outstanding amount from the debtor in his books of accounts under the head 'Sundry Debtors'. The assessee has never written off the amount as bad debts.
23. Nevertheless, after 4 years the debtor Mahalaxmi Bhavan Co. Op. Housing Society Ltd. was aided with funds and so it made the payment towards the outstanding dues during the Financial Year 2001/02 by issuing many cheques. Accordingly, it is evident that it is mere case of collection of dues from the debtors. Also, all the credits in the books of accounts are not covered by the ambit of section 68 of the Income Tax Act, 1961.
24. Following chart reveals that dues from the Debtor Mahalaxmi Bhavan Co. Op. Housing Society Ltd. were outstanding in the books of the Assessee and the money received in the Mehsana Bank A/c of the Assessee was towards the said dues.
Year End Balance of Debtor - Mahalaxmi Bhavan Co. Op. Housing Society Ltd. In the Books of the Assessee Company Financial Year Assessment Amount (Rs.) Year IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -6- 1996-97 1997-98 3,56,703 1 997-98 1998-99 1,69,56,703 1998-99 1999-00 1,37,08,703 1999-00 2000-01 1,26,03,575 2000-01 2001-02 1,26,03,575 2001-02 2002-03 54,000 Full outstanding dues of Rs.1,26,03,575/- were received in the year under consideration. The amounts received were the recovery from the Debtor.
25. Total Collection from Debtor Mahalaxmi Bhavan Co. Op. Housing Society Ltd. of Rs. 1,26,03,575/- was by cheques. The Balance of Rs.54,000/- was debited during the year and the same was carried forward in subsequent year. It is pertinent to note that the Assessing Officer treated only Rs. 47,48,870/- received by cheques which were deposited in The Mehsana Urban Co-Op Bank Account No. 1921 as Unexplained Cash credit out of total collection of Rs. 84,43,850/- from Mahalaxmi Bhavan Co. Op. Housing Society Ltd credited in the same bank. The total collection from Mahalaxmi Bhavan Co. Op. Housing Society Ltd amounted to Rs. 1,26,03,575/- but the Assessing Officer made addition of Rs.47,48,870/- as cash credit which is baseless. Which means that balance Rs. 78,54,705/- [ 1,26,03,575 - 47,48,870/-] received are treated as Genuine by the Assessing Officer. There is no logic as to why the Assessing Officer treated part amount as Unexplained cash credit and part amount as Genuine, when all collection of dues are from the same party."
8. On the contrary, learned DR submitted that there was no detail furnished by the assessee before the authorities below during the earlier proceedings. The learned DR in support of his claim relied on the order of this tribunal in the case of Pavankumar M Sanghvi versus ITO in ITA IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -7- No. 2447/AHD/2016. The learned DR vehemently supported the order of authorities below.
9. We have heard the rival contentions and perused the materials available on record. In the instant case the assessee has received a sum of ₹ 47,48,870/- from Mahalaxmi Bhavan Co. Operative Housing Society Ltd. which was treated as an unexplained cash credit. Therefore, the addition was made by the AO under section 68 of the Act which was subsequently confirmed by the ld. CIT (A).
9.1. Now the controversy arises before us whether the amount received from Mahalaxmi Bhavan Co. Operative Housing Society Ltd. represents the unexplained cash credit in the hands of the assessee. In this regard, we note that the assessee has shown amount receivable from Mahalaxmi Bhavan Co. Operative Housing Society Ltd in its financial statements as on 31st March 1997, 1998, 1999 and 2001 which are placed on pages 58 to 148 of the paper book.
9.2. We also note that the assessee during the year has claimed to have received a sum of ₹ 1,26,03,575/- from Mahalaxmi Bhavan Co. Operative Housing Society Ltd which was accepted by the AO during the assessment proceedings except a sum of ₹47,48,870/- only. Thus it is clear that the AO has treated part of the amount received from Mahalaxmi Bhavan Co. Operative Housing Society Ltd as unexplained cash credit under section 68 of the Act. The necessary details of the total amount received by the assessee are placed on page 57 of the paper book.
IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -8- 9.3. The amount shown as receivable by the assessee in its books of accounts in the earlier years cannot be treated as unexplained cash credit at the time of receipt. In this regard we find support and guidance from the judgment of this tribunal in the case of Alkaben Tejpal Patwa & others versus ITO & others reported in 46 CCH 0482 pertaining to the assessment year 2008-09 wherein it was held as under:
"5. Heard both sides. Case filed perused. Relevant facts narrated in the preceding paragraphs are not repeated for the sake of brevity. This one is second round of litigation before the parties before the tribunal (supra). There is no dispute about the fact that the assessee's HDFC bank account stands credited with 14 payments of Rs. 49,000/- each followed by another one involving Rs. 14,000/-. This gross figure of Rs. 7 lacs forms subject matter of section 68 addition. The assessee's endeavour seeks to treat the same as repayment of loans/old advances. A co-ordinate bench has already directed the Assessing Officer to verify the same from the material on record. The assessee files before us her ledger account maintained in case of above stated 15 parties right from 01-04- 2003 to 31-03-2008 stating outstanding closing balances of Rs. 49,000/- and Rs. 14,000/-. This is not the Revenue's case that these accounts are not genuine or improper maintained. There is hardly any dispute that the same stands accepted as correct in the relevant intervening assessment year. Ld. DR fails to rebut this factual position. We do not find any observation in Assessing Officer's consequential order alleging that he ever summoned these creditors for the purpose of conducting verification and they did not turn up to confirm assessee's stand. We take into account totality of all these facts and circumstances to hold that the assessee has successfully proved her case of having received repayment of earlier loans and advances given to the above stated 15 creditors in financial year 2003-04. The Revenue's arguments strongly supporting Assessing Officer's action making the IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03 -9- impugned addition stand rejected. We accordingly delete the impugned section 68 addition of Rs. 7 lacs in question. ITA 3486/Ahd/2015 succeeds."
9.4. In the backdrop of the above case, we are of the view that the amount received from Mahalaxmi Bhavan Co. Operative Housing Society Ltd cannot be treated as unexplained cash credit under section 68 of the Act. Therefore, we are not impressed with the finding of the authorities below. Accordingly, we set aside the order of Learned CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
10. In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 03 /12/2018
Sd/- Sd/-
(MAHAVIR PRASAD) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 03/12/2018
ट .सी.नायर, व.(न.स./T.C. NAIR, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं*धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त(अपील) / The CIT(A)-I, Ahmedabad
5. /वभागीय (त(न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड5 फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या/पत (त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad IT(ss)A No.18/Ahd/2011 Mahalaxmi Housing & Finstock vs.ACIT Asst.Year - 2002-03
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1. Date of dictation (word processed by Hon'ble AM in his computer)
2. Date on which the typed draft is placed before the Dictating Member ..28.11.2018
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S ...
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......10.12.2018
7. Date on which the file goes to the Bench Clerk.....................10.12.2018
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order...............