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Income Tax Appellate Tribunal, RAJKOT
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of the ld.Commissioner of Income Tax(A)-II, Rajkot dated 29.7.2013 passed for the assessment year 1991-92.
Grounds of appeal taken by the assessee are not in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In brief, grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.2,45,637/- and Rs.62,000/- which were added by the AO with the aid of section 68 of the Income Tax Act, 1961.
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Brief facts of the case are that the assessee has filed its return of income declaring loss of Rs.9,221/-. The assessment order was passed under section 143(3) on 29.3.1996 determining total income at Rs.3,47,340/-. The ld.AO has made additions as under: 1) Addition on account of cash 2,45,637/- credits in the names of 8 creditors appearing in the books of assessee treated as unexplained 2) Additions made on account of credits in the accounts of the partners treated as unexplained Shri C.S. Rathore 64,900/- Shri K.C. Rathore 37,000/- 3) Disallowance of loss claimed in 9,221/- the return of income
Dispute with regard to the above issue travelled to the Tribunal vide ITA No.23/RJT/2007. The appeal of the assessee was allowed for statistical purpose by the Tribunal vide order dated 2.8.1999 and the additions made at Rs,2,45,637/-, Rs.64,900/- and Rs.37,000/- were remitted back to the AO for fresh examination. The ld.AO has reproduced the issues which have been remitted back by the ITAT in the fresh assessment order, and thereafter conducted inquiry. He determined taxable income of the assessee at Rs.3,63,116/- as against Rs.3,47,340/- determined in the original assessment. This assessment order has been passed on 26.3.2002. Appeal to the CIT(A)did not bring any relief to the assessee.
In response to the notice of hearing, Shri D.R. Adhia filed written submission which has been placed on record.
With assistance of the ld.DR, we have gone through the written submissions as well as the finding of Revenue authorities. A perusal of the
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record would indicate that on scrutiny of the accounts, it revealed to the AO that the assessee had taken advances from eight persons viz. S/Shri Rudresh B. Patel, Hemand B.Patel, Ramniklal Thanki, M.G. Parmar, D.C. Soni, K.C. Rathod, K.B. Karavadara, and Y.K. Vala. From the five persons, a sum of Rs.20,000/- each was taken. From rest of three persons ,loans were taken and repaid partly. Similarly, the assessee took loan from five more persons viz. K.B. Bharathi, Ramniklal Jain, Shailesh Rathod, Babubhai Mistry and L.P. Modi. Section 68 of the Act contemplates where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by the assessee is not, in the opinion of the AO satisfactory, then the sum so credited in the accounts may be treated as income of the assessee of that previous year. The ld.AO has made analysis of each loan taken by the assessee which alleged to have been repaid. He observed that though the assessee has claimed that loan was repaid to K.C. Rathod and K.B.Karavadara and Y.K. Vala on different dates, but no evidence was produced by the assessee in support of such claim. Similarly, the assessee could not discharge the burden contemplated by section 68 of the Act. The ld.AO got conducted field inquiry and the official deputed on such inquiry given a report that no such persons are residing at the given address. The reason for such field inquiry was because in the first round of appeal, the assessee has contended it has filed confirmation and such other details. However, no such details were available in the record and the assessee could not furnish the copies of such details. Under these circumstances, the Tribunal has remitted this issue back to the file of the AO for fresh examination. We have gone through the order of the Tribunal dated 2.8.1999 filed in the record. The Tribunal has observed that form no.11 filed by the assessee was not traceable in the office record amply indicate that the claim of the assessee that it had filed letter dated
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28.5.1995 should not be brushed off merely on the ground of non-availability of office record. Under this direction, the ld.AO in the fresh assessment proceedings got conducted the inquiry from the ward Inspector. He offered examination to the assessee for such official who has conducted inquiry. Observation in this regard is worth to note from the assessment order. It reads as under:
“Looking to the materials on record and specifically no detailed accounts or confirmation letters are filed even not a single depositor is being produced or any other type of evidence was produced in respect of deposits outstanding shown in the balance sheet.
On field inquiry it is gathered that neither of the above mentioned persons (depositors) is in existence on the given address by the assessee. On 21.3.2002 the assessee offered a cross-examination regarding inquiry made. The assessee stated that he do not wish any cross-examination further he has stated that he do not wish to make any type of submission on any points. Further he has stated that submission made at the time of earlier assessment may be considered.”
Thus, under the compelling circumstances, the ld.AO has made additions of Rs.2,45,637/-, 64,700/- and Rs.62,000/-. In the written submissions the ld.counsel for the assessee submitted that the assessee has discharged onus cast upon it under section 68 of the Act. He has made reference to the decision of ITAT, Indore Bench in the case of late Shri Sanjay Paliya in ITA No.922/Ind/2016. He has placed on record copy of this order. He also made reference to the decision of Hon’ble Madhya Pradesh High Court in the case of CIT Vs. Metachem Industries, 245 ITR 160. We find that both the decisions are on their facts. The assessee has received loan and if the AO is satisfied about the credit-worthiness of the creditor, genuineness of transaction and identity of creditors, addition ought not to be made under section 68. But where the assessee failed to demonstrate these
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aspects with help of evidence, then such decision would not come to its help. One important aspect has been raised by the ld.counsel for the assessee. He submitted that with regard to Shri K.C. Rathore, addition of Rs.37,000/- was made in the original assessment order. The issue regarding genuineness of this addition was remitted back to the AO. The ld.AO in the fresh assessment order made addition of Rs.62,000/- instead of Rs.37,000/-. We are of the view that the AO cannot travel beyond the issue remitted to him. Therefore, qua K.C. Rathore addition of Rs.37,000/- is confirmed as against Rs.62,000/- made by the AO. Except this variation, we do not find any merit under any other grounds of appeal, which are confirmed. Thus, appeal of the assessee is partly allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the Court on 1st October, 2019 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER