INCOME TAX OFFICER Vs. APEX THERM PACKAGING PVT. LTD.
LAWS(IT)-2014-5-77
INCOME TAX APPELLATE TRIBUNAL
Decided on May 23,2014

INCOME TAX OFFICER Appellant
VERSUS
Apex Therm Packaging Pvt. Ltd. Respondents

JUDGEMENT

KUL BHARAT,JM. - (1.) THIS appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax (Appeals) -I, Surat ('CIT(A)' for short) dated 26.11.2009 pertaining to Assessment Year (AY) 2006 -07. The Revenue has raised the following grounds of appeal: - 1) On the facts and in the circumstances of the case and in law, the learned CIT(A) -I, Surat has erred in restricting the addition made by AO of Rs.43,70,000 on account of unexplained cash credit u/s.68 of the Act to Rs.2,00,000. 2) On the facts and in the circumstances of the case and in law, the learned CIT(A) -I, Surat has erred in restricting the disallowance of interest made by the AO of Rs.1,82,648 claimed to have been paid by the assessee on the amount of unexplained cash credit to Rs.11,770. 3) On the facts and in the circumstances of the case, the learned CIT(A) ought to have upheld the order of the Assessing Officer. 4) It is, therefore, prayed that the order of the CIT(A) may be set -aside and that of Assessing Officer may be restored to the above extent.
(2.) THIS appeal is restored by the Hon'ble High Court of Gujarat vide order dated 03/12/2013 passed in Tax Appeal No.584 of 2013. Before the Hon'ble High Court, the grievance of the assessee was that number of decisions of the Jurisdictional High Court as well as the learned Tribunal were relied upon and cited on on behalf of the assessee, however, without considering and/or dealing with the decisions relied upon by the assessee, this Tribunal observed in one line in para -9 that "due to these reasons, the case laws relied upon by the assessee do not come to its rescue". The Hon'ble High Court has directed to pass order afresh in accordance with law and on merits considering and/or dealing with the decisions which may be relied upon by either of the parties and pass a speaking order.
(3.) DURING the course of hearing, the ld.counsel for the assessee submitted that a miscellaneous application No.36/Ahd/2013 was also filed by the assessee and this Tribunal (ITAT "A" Bench Ahmedabad) was pleased to recall its order and the order dated 13/12/2013 was passed. In the order dated 13/12/2013, the Tribunal had partly allowed the Revenue's appeal and Cross Objection of the assessee was allowed for statistical purposes. It appears this fact was not brought to the notice of the Hon'ble High Court by the assessee which amounts to suppression and concealment of fact. This act of the assessee is highly deprecated, Revenue authority is at liberty to take appropriate step against the assessee as per law. In pursuance to the direction of the Hon'ble High Court, this appeal was fixed for hearing on 23/04/2014. Ground No.1 is with regard to restricting the addition made by the AO of Rs.43,70,000/ - on account of unexplained cash credit u/s.68 of the Act to Rs.2,00,000/ -. 4.1. The ld.counsel for the assessee strongly placed reliance on the order of the ld.CIT(A) and submitted that all relevant details were furnished before the Assessing Officer(AO). He submitted that out 17 lenders, 8 were produced before the AO during remand proceedings who have confirmed the payment of money. He submitted that the balance - sheet and the capital accounts of the concerned parties make it ample clear that the parties were having sufficient capital to advance loans to the assessee. The loans received and repaid with interest were through banking channels by way of 'account payee cheques'. Reliance has been placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT vs. Ranchhod Jivabhai Nakhava in Tax Appeal No.50 of 2011 dated 20/03/2012. He submitted that the Hon'ble High Court has categorically held that once the AO gets hold of the PAN of the lenders, it was his duty to ascertain from the AO of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the AO of the lenders of the assessee, the AO decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, in our opinion, the AO did not follow the principle laid down under Section 68 of the Income Tax Act. He submitted that the Hon'ble High Court further held that if on verification, it was found that those lenders did not disclose in their income tax return the transaction or that they had not disclosed the aforesaid amount, the AO could call for further explanation from the assessee to prove the genuineness of the transaction or creditworthiness of the same. However, without verifying such fact from the income tax return of the creditors, the action taken by the AO in examining the lenders of the assessee was a wrong approach. He submitted that the Hon'ble High Court has categorically held that If the AO of those creditors are satisfied with the explanation given by the creditors as regards those transactions, the AO in question has no justification to disbelieve the transactions reflected in the account of the creditors. He also placed reliance on the judgement of Hon'ble Rajasthan High Court rendered in the case of Aravali Trading Co. vs. Income Tax Officer reported at (2000) 220 CTR (Raj) 622. He submitted that the Hon'ble Rajasthan High Court has held that neither the provisions of section 68 nor on general principle, it can be said that once the existence of persons in whose name credits are found in the books of the assessee is proved and such persons own such credits with the assessee still the assessee is to further prove the source from which the creditors could have acquired money to be deposited with him. The ld.counsel for the assessee relied on the decision of the Hon'ble Gujarat High Court rendered in the case of Dy.CIT vs. Rohini Builders reported at (2002) 256 ITR 360 (Guj.). The ld.counsel for the assessee submitted that the view of the ld.Tribunal has been affirmed by the Hon'ble High Court of Gujarat. He submitted that the Hon'ble ITAT Ahmedabad 'B' Bench in ITA No.3860/Ahd/1992 in the case of Rohini Builders vs. Dy.CIT has held that the assessee has furnished the complete addresses of all the creditors along with GIR numbers/PAN as well as confirmations along with copies of assessment orders passed in the cases of some creditors. It is held by the Tribunal that it is clear that the assessee has discharged the initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR Numbers/Permanent Account Numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by 'account payee cheques' drawn from bank account of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Hon'ble Bombay High Court in the case of Orient Trading Co. vs. CIT (1963) 49 ITR 723(Bom). The ld.counsel for the assessee also placed reliance on the decision of the Hon'ble Co - ordinate Bench (ITAT 'B' Bench Ahmedabad) rendered in the case of ACIT vs. Shri Pareshbhai Chandrakant Jariwala in ITA No.2425/Ahd/2008 for A.Y. 2005 -06 dated 25/03/2011. He submitted that in the said case, the Tribunal has held once the assessee produced the basic records of the creditors which show the identity of the creditors, capital accounts of the creditors and the bank accounts through which money was transferred through cheques to the assessee and evidence that all of them are income -tax assessees then it cannot be said that assessee has still to discharge the onus. The ld.counsel for the assessee has also relied on the judgement of Hon'ble Madya Pradesh rendered in the case of CIT vs. Barjatiya Children Trust reported at (1997) 225 ITR 640 (M.P.) and also the judgement of Hon'ble High Court of Gauhati rendered in the case of P.K. Sethi vs. CIT reported at (2006) 286 ITR 318 (Gau). In support of the contention that the creditors are income -tax assessees and the transactions were accepted as genuine in the cases of creditors. Thus, no inference could be drawn that these are fake transactions. Further, the ld.counsel for the assessee relied on the judgement(s) of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Apex Them Packaging (P.) Ltd. reported at (2014) 42 taxmann.com 473 (Gujarat) and of CIT vs. Ayachi Chandrashekhar Narsangji reported at (2014) 42 taxmann.com 251 (Gujarat). The ld.counsel for the assessee submitted that the ld.CIT(A) has given a very detailed finding and no fault can be found in the order of the ld.CIT(A). ;


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