Income Tax Appellate Tribunal - Ahmedabad
Ramesh Industries, Baroda vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "c"
[CAMP AT BARODA]
(BEFORE S/SHRI P K BANSAL AND D T GARASIA)
ITA No.3090/Ahd/2007
(Assessment Year:- 1992-93)
M/s Ramesh Industries, V/s The Income-tax Officer,
1936, GIDC Halol, Ward-2,
Panchmahal Godhra
[Appellant] [Respondent]
Appellant by :- Shri Saurabh Acharya, AR
Respondent by:- Smt. Smiti Samant, Senior DR
ORDER
Per P K Bansal (Accountant Member): This appeal has been filed by the assessee against the order of the CIT(A) dated 02-04- 2007 for Assessment Year (AY) 1992-93 by which the CIT(A) has confirmed the addition of Rs.8,33,000/- made by the Assessing Officer (AO) u/s 68 of the Income-tax Act, 1961 ["the Act" for short].
2 The brief facts of the case are that the assessee submitted the return on 18-07-2004 declaring total income of Rs.37,791/-. Action u/s 148 was taken to regular the return and accordingly assessment was completed rejecting the books of account of the assessee on income of Rs.10,55,800/- making the addition in the Gross Profit amounting to Rs.1,84,829/- and also for cash credits u/s 68 amounting to Rs.8,30,000/-. The CIT(A) 1 vide his order dated 26-04-1996 deleted both the additions. When the matter went before the Tribunal, the Tribunal reduced the estimated Gross Profit from 24% to 21% in respect of cash credits. The Tribunal restored the matter to the AO with the following directions:
"We have heard the ld. Representative of the parties. We find that the CIT(A) has admitted fresh evidence and material which were not before the AO; without providing opportunity of hearing to the AO. Under the circumstances and in view of the judgment of jurisdictional High Court in case of CIT v Valimohmed Ahmedbhai 134 ITR 214 (Guj) we send back this issue to the file of the AO to decide the same in afresh in accordance with law after providing reasonable opportunity of hearing to the assessee."
Accordingly the AO again completed the assessment by making the addition of Rs.8,33,000/- u/s 68 of the Act. The assessee went in appeal before the CIT(A). The CIT(A) confirmed the addition as per the observations given under paras 17 to 22 of his order. The assessee has come in appeal before us.
3 The learned AR before us vehemently contended that the assessee has given the names and addresses of each of the depositors along with their age, number of family members, land holding in acres, their income other than agricultural income, as well as agricultural income, quantum of savings. Our attention was drawn towards page 19 of the paper book. It was also pointed out that six persons are the close relatives and related to the same family group from whom the assessee has received the deposits for Rs.20,000/-, Rs.30,000/-, Rs.35,000/-, Rs.15,000/-, Rs.17,000/- and Rs.18,000/-. The assessee has duly submitted the 2 affidavits in the second round of appeal in respect of each of the depositors before the AO. None of the depositors was called for cross examination and the affidavits were not accepted by the AO. Thus, it was contended that the assessee has proved identity as well as the genuineness of the transactions and creditworthiness of the creditors. On a query from the Bench, the learned AR was fair enough that out of 20 cash creditors only two creditors appearing at Sr. Nos.16 and 17, viz., Vasantiben P Jain and Chandrikaben G Jain were having PA Numbers but it was also pointed out that Nemichand S Jain, Jyotiben N Jain and Sumitraben J Shah are also income-tax assessees. Thus, it was contended that no addition should be made. Further, as an alternative contention, it was submitted that there was trading addition in AYs 1991-92 and 1992-93 to the extent of Rs.1,81,974/- and Rs.1,84,829/-. The assessee should be allowed telescoping for the additions against the addition of cash credits. The learned DR, on the other hand, vehemently contended that the order of the AO should be sustained. The onus is on the assessee to prove the identity, creditworthiness and genuineness of the transactions. All the payments have been received in cash from various parties. They are not regular assessees except in the cases of two creditors. The assessee has not discharged his onus to the satisfaction of the AO. Therefore, the addition should be sustained.
4 We have carefully considered the rival submissions and perused the material on record along with the order of the tax authorities below. We noted that in this case the original 3 assessment has been completed u/s 143(3) by rejecting the books of account u/s 145 of the Act and making the addition of Rs.1,84,829/-. Once the assessment has been completed by estimating the income of the assessee, there cannot be any separate addition as the existence of books of account cannot be accepted for the purpose of invoking other provisions of the Act. In fact no addition could have been made u/s 68 of the Act but since the issue relating to the addition u/s 68 has traveled to the Tribunal in earlier round of litigation and the Tribunal has restored this issue to the file of the AO to decide the same afresh in accordance with law after providing reasonable opportunity to the assessee, and the CIT(A) has admitted the facts and evidence / material which were not before the AO. The assessee has also not taken any plea before the Tribunal in the first round of appeal. We, therefore, cannot delete whole of the addition made u/s 68 of the Act, as this plea was not before us.
5 Now coming to the merit of the case, we find force in the submissions of the learned AR that he should be granted telescoping for the GP addition sustained in the case of the assessee. The learned AR claimed that during AY 1992-93 the addition to the extent of Rs.1,81,974/- was sustained while we noted in the AY 1992-93 the GP addition was made by the AO to the extent of Rs.1,84,829/- at the rate of 24% while the Tribunal has reduced it to 21% of the receipt of the assessee. The quantum of the addition sustained is not before us. We direct the AO to reduce the addition sustained by us u/s 68 of the Act out of the amount of Rs.8,33,000/- by the amount for which the addition 4 has been sustained by the Tribunal for AYs 1991-92 and 1992-93 in respect of Gross Profit.
6 Section 68 lays down rule of evidence. The onus is on the assessee to prove the cash credits, identity and creditworthiness of the creditors as well as genuineness of the transactions. In this case we noted that the assessee has received the deposits in cash from 20 parties appearing at page 19 of the paper book out of which only 6 parties viz., Parimal V Shah, Vasantiben P Jain, Chandrikaben G Jain, Nemichand S Jain, Jyotiben N Jain and Sumitraben J Shah are the persons who are income-tax assessees. Their identity, in out opinion, cannot be doubted. The assessee has given the income in respect of each of the parties from whom the deposits have been received, their household expenses. Except these parties, the parties at Sr. Nos. 1 to 14 are non-income tax payees and in each case, the main source of income is the agricultural income. Annual saving in the case of Manaji B Prajapati is Rs.10,000/- while he advanced Rs.20,000/-. In the case of Vardhasingh D Prajapsti the saving is Rs.16,000/- while he advanced Rs.20,000/-. In the case of Hirabhai D Prajapati the saving is Rs.24,000/- while he advanced Rs.20,000/-. In the case of Somaji D Prajapati, the saving is Rs.8,000/- to Rs.10,000/- while he advanced Rs.20,000/-. In the case of Virji P Zala the saving is Rs.5000/- to Rs.7000/- while he advanced Rs.25,000/-. In the case of Vardhasingh A Zala, the amount of saving is not mentioned by the assessee. Similarly in the case of Kaji S Zala, who advanced Rs.25,000/-, the amount of saving is not mentioned. In the case of Kesarsingh P Zala, the 5 amount advanced is Rs.1,00,000/- while saving is Rs.80,000/-to Rs.90,000/-. In the case of Jivaji M Prajapati the amount advanced is Rs.31,000/- while saving is Rs.20,000/-. In the case of Rupaji M Prajapati the amount advanced is Rs.77,000/- while saving is Rs.35,000/-. In the case of Aayadanji M Prajapati no saving was pointed out. In the case of Meshru A Prajapati the amount advanced is Rs.35,000/- and the saving is Rs.28,000/-. In the case of Virji V Prajapati the amount advanced is Rs.1,00,000/- while saving is Rs.80,000/-. In the case of Kalaji A Zala the amount advanced is Rs.1,00,000/- and the saving is not mentioned. In our opinion, the assessee has failed to discharge his onus in respect of the following parties and to the extent the deposit is more than saving, we confirm the addition detailed as under:-
Sr Name of Amount of Savings Addition
No. Depositor Deposit (Rs.) Confirmed
(Rs.)
1 Manaji B 20,000 10,000 10,000
Prajapati
2 Vardhasingh 20,000 16,000 to 4,000
D Prajapati 17000
3 Hirabhai D 20,000 24,000 -
Prajapati
4 Somaji D 20,000 8000 to 12,000
Prajapati 10000
5 Virji P Zala 25,000 5000 to 20000
7000
6 Vardhasingh 1,00,000 1,00,000
A Zala
7 Kanji S 25,000 25,000
Zala
8 Kesarsingh 1,00,000 80,000 20,000
P Zala
6
9 Jivaji M 31,000 20,000 11,000
Prajapati
10 Rupaji M 77,000 35,000 42,000
Prajapati
11 Aayadanji 25,000 25,000
M Prajapati
12 Meshru A 35,000 28,000 7,000
Prajapati
13 Virji V 1,00,000 80,000 20,000
Prajapati
14 Kalaji A 1,00,000 1,00,000
Zala
Total 3,78,000
15 Parimal V 20,000 20,000
Shah
16 Vasantiben 30,000 15,000
P Jain
17 Chanrikaben 35,000 17,000
G Jain
18 Nemichand 18,000 18,000
S Jain
19 Jyotiben N 17,000
Jain
20 Sumitraben 18,000
J Shah
Out of the deposits received from close relatives as contended by the learned AR, viz. Parimal V Shah - Rs.20,000/-, Vasantiben P Jain - Rs.30,000/-, Chandrikaben G Jain - Rs.35,000/-, Nemichand S Jain - Rs.15,000/-, Jyotiben N Jain - Rs.17,000/- and Sumitraben J Shah - Rs.18,000/-, we noted that it is only Vasantiben P Jain and Chandrikaben G Jain are the persons who are holding PA Numbers, therefore, the additions made in respect of these two persons amounting to Rs.30,000/- and Rs.35,000/- stand deleted. So far as other persons are concerned, we are of the opinion that in the case of the close 7 relatives, the burden on the assessee is much. We accordingly confirm the additions in respect of Parimal V Shah - Rs.20,000/-, Nemichand S Jain - Rs.15,000/-, Jyotiben N Jain - Rs.17,000/- and Sumitraben J Shah - Rs.18,000/-. Thus, the addition of Rs.3,78,000/- + Rs.70,000/- totaling Rs.4,48,000/- is confirmed subject to our directions in the earlier paragraph that this should be reduced by the addition sustained for the AYs 1991-92 and 1992-93 at the rate of 21% of the gross receipts in the gross profit.
7 In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court today on 03-11-2009 Sd/- Sd/-
(D T GARASIA) (P K BANSAL)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date : 03-11-2009
Copy of the order forwarded to :
1. M/s Ramesh Industries, 1936, GIDC Halol, Panchmahal
2. The ITO, Ward-2, Godhra
3. CIT concerned
4. CIT(A)-VI, Baroda
5. The DR, ITAT, Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABA 8