M/S AMBITIOUS FINANCE & INVESTMENT PVT. LTD.,,RAJKOT-GUJARAT vs. THE INCOME TAX OFFICER, WARD-2(4),, RAJKOT-GUJARAT
No AI summary yet for this case.
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: MRS. ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MRS. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 123/Rjt/2014 िनधा�रणवष�/Assessment Year: 1997-98 M/s. Ambitious Finance & Vs. Income Tax Officer, Investment Pvt. Ltd., Ward- 2(4), 107, Kapad Market, Para Bazar, Rajkot Rajkot PAN : AABCA 8076 C अपीलाथ� अपीलाथ�/ (Appellant) अपीलाथ� अपीलाथ� �� �� यथ� �� �� यथ� यथ�/ (Respondent) यथ� Assessee by : Written Submission Revenue by : Shri V.J. Boricha, Sr. DR सुनवाई क� तारीख/Date of Hearing : 14.12.2022 घोषणा क� तारीख /Date of Pronouncement: 06.03.2023 आदेश आदेश/O R D E R आदेश आदेश PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER:
Present appeal has been filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals)-III, Rajkot [hereinafter referred to as "CIT(A)" for short] dated 20.11.2013 passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Assessment Year (AY) 1997-98.
The present appeal was initially disposed of by the ITAT vide order dated 12.03.2021, but was subsequently recalled in a Miscellaneous Application filed by the assessee pointing out the error in the order of the ITAT that it had failed to consider the various arguments made by the assessee and the case-laws cited by it while adjudicating the appeal. The ITAT found merit in this mistake pointed out, noting that while the assessee had filed written submission and case-laws running into three pages, the ITAT, while adjudicating the issue, had recorded that the learned AR had filed one page written submission which they noted was contrary to the facts on records. On
2 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
this basis, the ITAT held that the order passed was without considering all the arguments of the learned AR and, therefore, recalled the appeal for adjudication afresh vide order in Miscellaneous Application No. 07/Rjt/2021 dated 21.09.2022. In consequence to the same, the present appeal came up for hearing before us.
The grounds raised by the assessee are as under:-
“1. The Ld. CIT(A) has erred in law and facts in confirming order passed U/s. 144 which is totally bad on facts as also in law. The same deserves to be quashed. 2. The Ld. CIT(A) has erred in law and facts in confirming order passed U/s. 144 determining income of Rs. 51,95,100/- as against return income of Rs. 2,860/- which is totally bad on facts as also in law. The same deserves to be quashed. 3.1. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs.49,30,000/-. The addition needs deletion. 3.2. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs.11,25,000/- in the name of H.K. Keshria - HUF. The addition needs deletion. 3.3. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs.27,00,000/- in the name of Maganlal Padalia. The addition needs deletion. 3.4. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs.11,05,000/- in the name of Bharatbhai Singala. The addition needs deletion. 4. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs.2,62,241/- without accepting explanation furnished. The addition needs deletion. 5. Taking into consideration the legal, statutory, factual, accounting and administrative aspects, no addition amounting to Rs.49,30,000/- and Rs.2,62,241/- ought to have been confirmed. The addition needs deletion. 6. The Ld. CIT(A) has erred in law and facts in confirming action of the Ld. A.O. charging interest U/s. 234B and 234C. The same needs deletion. 7. The Ld. CIT(A) has erred in law and facts in confirming action of the Ld. A.O. charging interest U/s. 234B and 234C. The same needs suitable reduction.
3 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
Without prejudice, the assessment made is bad in law and deserves annulment.
Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while framing assessment. The assessment needs annulment.
Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while passing appeal order. The assessment needs annulment.
Without prejudice, all the 3 amounts of addition made has already been added in the hands of concern person viz Shri H.K. Keshria - HUF, Bharatbhai P. Singala and Shri Maganbhai H. Padalia. Thus the same amount cannot be taxed in the hands of the assessee and therefore there is violation of basic principals in taxing the same amount twice. The addition made in the hand of the assessee needs deletion.”
The solitary issue, as transpires from the grounds raised above, is with regard to the addition made of cash credits received from various parties by the assessee remaining unexplained. It is pertinent to begin by pointing out that the present case relates to Assessment Year 1997-98. A perusal of the assessment order reveals that this issue has moved back and forth several times - moving from the Assessing Officer who framed the assessment initially, making addition under Section 68 of the Act of Rs.29,25,103/-, to the CIT(A) who restored the issue back to the Assessing Officer for examining afresh; when the Assessing Officer on re-examination of the issue enhanced the addition to Rs.49,30,000/- which matter again travelled to the learned CIT(A) who dismissed the assessee’s appeal who in turn carried the matter to the ITAT who restored the matter back to the Assessing Officer to reconsider the issue. The Assessing Officer, on reconsideration, reconfirmed the additions made of Rs.49,30,000/- in the absence of any information submitted by the assessee passing the order under Section 144 of the Act. The entire sequence of events as noted above are reproduced in the assessment order at paragraph Nos. 1 to 4 as under:-
4 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
“A return of income declaring total income of Rs.2,854/- was filed on 30.11.1997. The said return of income was processed u/s 143(1)(a) of the Income-tax Act on 09.03.1998 without any modification. Subsequently, the return was selected for scrutiny, an order u/s 143(3) of the I.T. Act was passed on 30.03.2000 determining the total income at Rs.31,90,204/- after making addition of Rs.29,25,103/- u/s 68 of the I.T. Act on account of unexplained cash credit & Rs.2,62,241/- on account of interest
Against this assessment order u/s. 143(3) of the LT. Act, the assessee preferred an appeal before CIT(A)-III, Rajkot. The CIT(A)-III, Rajkot vide his order dated 14.12.2000 in Appeal No. CIT.R.III/0163/00-01 has allowed the appeal for statistical purpose and set aside the aforesaid additions made to the total income with a direction to take decision after examining the inter connection between the appellant and the 3 depositors and the link between receipt of money in the account of 3 depositors and transactions thereof into the books of the assessee.
Accordingly an order u/s. 143(3) r.w.s. 250 & 144 of the I.T. Act was passed on 08.03.2002 determining the total income at Rs.51,95,100/- after making addition of Rs. Rs.49,30,000/- u/s 68 of the I.T. Act on account of unexplained cash credit & Rs.2,62,241 /- on account of interest.
Against the order u/s 143 (3) r.w.s. 250 & 144 of the I.T. Act, the assessee preferred an appeal before the Ld. CIT(A)-III, Rajkot. The Ld. CIT(A)-III, Rajkot vide his order in appeal No. CIT(A)-III/0012/02-03 dated 16.10.2006 dismissed the appeal filed by the assessee. Aggrieved by the orders of CIT(A)- II1, Rajkot, the assessee filed appeal before the Hon’ble 1TAT, Rajkot. The Hon’ble 1TAT, Rajkot vide its order in ITA No.67/RJT/2007 dated 26.08.2010 restored the matter to the file of the AO with a direction to redo the assessment after calling for the required details and also after providing adequate opportunity of being heard to the assessee. The Hon’ble 1TAT also observed that at the original assessment stage the assessee did not produce any evidence and the Ld. CIT(A)-III, Rajkot restored this matter and the assessee did not co- operate with the assessing officer at the re-assessment stage also and therefore, the assessing officer had repeated the impugned additions.”
In the fresh round before the learned CIT(A), none appeared again on behalf of the assessee; and, the appeal of the assessee, therefore, was dismissed confirming the addition on merits, in the absence of the assessee being unable to establish the genuineness of the cash credits so added. It is aggrieved by
5 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
this order of the learned CIT(A) that the assessee has come up in appeal before us.
The grievance of the learned Counsel for the assessee in the Miscellaneous Application was that its submissions and case-laws had not been considered by the ITAT while passing the order in its case. The ITAT, as noted above in the Miscellaneous Application, had noted that three pages submissions were filed by the learned Counsel for the assessee while only one page submissions were noted to be considered by it for passing the order. During the course of hearing before us on restoration of the appeal, no fresh submissions were filed by or on behalf of the assessee. The three page submissions noted by the ITAT, as available in the records, are therefore being relied upon to adjudicate the issue and the same are reproduced hereunder:-
“Written Submissions- The appeal may kindly be decided on the bases of written submission furnished below:
Kind attention is invited for the hearing fixed of the above matter on 27-1-2021.
At the time of hearing of appeal fixed on 21/11/2019 the following written submission has been furnished on 20/11/2019. The same is reproduce below. As mention there in the entire amount of addition has been tax in the end of all the three person in whose name the same is standing. It is there for humbly prayed that accepting the decision of Hon. Rajasthan High Court in the case of Aravali Trading Company Ltd. 220 CTR 0622 (copy enclose already furnished) The Hon. Rajasthan High Court has been pleased to consider the guidelines of Hon. Supreme Court provided in the case of Daulatram Rawatmull 1972 CTR 411 at Para.12 Page 5 of this order.
I.T.A. No. ITA/123/ RJT OF 2014 Fixed for hearing on 21-11-2019, A.Ys. 1997-98
M/s Ambitious Finance & Investment Pvt. Ltd. The ITO, WARD Rajkot Rajkot APPELLANT Versus RESPONDENT
6 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
Written Submissions: Kind attention is invited to the hearing fixed of the above matter on 21-11- 2019.
The Ld. A.O. has made addition U/s. 68 in respect of the following persons for the amount mentioned against them,
Rs. 11,05,000/- Shri Bharatbhai Shinagala 2. Rs. 11,25,000/- Shri S.K.Kesariya (HUF) 3. Rs. 27,00,000/- Shri Maganlal Padaliya
3.1 As mentioned at para 6 page no 3 of the assessment order the assessee is doing finance business in has obtained cash credit. From above 3 persons. It is further mentioned in the assessment order that the confirmation letters from these persons were filed but the Ld. A.O. consider the same as not acceptable. Thus it is admitted by the Ld. A.O. that the cash credits were made by the above 3 persons in their names with the assessee.
3.2 The humble attention of the Ld. A.O. was drawn to the legal position that where,
Once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee’s onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him and, therefore, addition U/s. 68 cannot be sustained in the absence of anything to establish that the source of the creditor deposited flew from the assessee itself.
As enumerated by the Hon. Rajasthan High Court in the case of Aravlali Trading Co. 220 CTR 0622 (Copy enclose) The Hon. High Court has been pleased to consider the guidelines of the Hon. Supreme Court provided in the case of DAULATRAM RAWATMULL 1972 CTR (SC) 411 at para 12 on page no 5 of its order.
3.4 In view of the above it is humbly submitted that the actions of the Ld. A.O. to make addition in respect of cash credits pertaining to above 3 persons are against the judicial guidelines mention above ’in at needs deletion. The Hon. High Court has specifically provide guidelines that actions to be taken, the same can be taken in the hands of concern person and not in the case of assessee
7 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
3.5 It is therefore requested that addition made in the case of assessee may kindly be deleted in view of above judicial decisions.
Without prejudice it may be submitted that in respect of all the above 3 persons additions has been made individually making addition in the hands of each of the persons for the above amount as under,
I. Rs. 11,05,000 in the case of Shri Bharat P Shingala has been added vide assessment order dated 22-3-2002 (copy enclose) as mentioned at page 2 para 4 of the assessment order on protective basis. It appears that the same amount has been retained and not deleted in the case of Bharat P Shingala and therefore making any addition in the case of assessee amounts to double taxation or taxing the amount twice in the hands of assessee. Which is not permissible under the provisions of Act. It is therefore requested that addition may kindly be deleted in the case of assessee having been tax on hands of Shri Bharat P Shingala. In either case the matter may kindly be restore to the Ld. A.O. to ascertain the position of assessing this amount in the case of Shri Bharat P Shingala and to delete the same from the income of the assessee.
II. In respect of addition made of Rs. 11,25,000/- pertaining to Hasmukh Kesariya (HUF)a copy of assessment order dated 27-12-2011 (copy enclose) made by the Ld. ITO Ward 2(1) Rajkot is enclosed herewith which shows that the entire amount of cash deposit of Rs. 66,93,550/- pertaining to him was considered by the concern A.O. and after considering all evidences he has deleted the entire amount retaining only Rs. 4,40,090/-. Thus the department itself has considered the cash credit in the hands of Shri Hasmukhbhai Kesariya (HUF) and therefore it is requested that addition made of Rs. 11,25,000/- may kindly be deleted being taxing the same income twice and or may kindly be restore to the Ld. A.O. to delete the addition after verification of the above.
III. In respect of addition of Rs. 27,00,000/- in the case of Shri Maganlal H Padaliya assessment has been made on 25-2-2002 (copy enclose) by the Ld. ITO 1(2) Rajkot making addition of Rs. 46,15,500/-. At page no 3 of the assessment order the details of this amount of Rs. 46,15,500/- shows that the amount added in the case of assessee of Rs. 27,00,000/- is the same. Thus when theaddition is made in the case of Shri Maganlal Padaliya, deletion of addition made of Rs. 27,00,000/- in the case ofassessee would be law full and the same may kindly be deleted. In either case the matter may be restored to the Ld.A.O. for deletion of this amount after verification.
8 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
In view of the above it is requested that the addition made may kindly be deleted as requested above. Copy of submissions dated 28-12-2011 made before the Ld. A.O. is also submitted herewith for kind consideration on which the details whereof is also relied on.
3 In view of the above it is humbly prayed that the appeal may kindly be allowed as mention at Para. 3.1 to 3.5 reproduce above. In either case as mention at Para. 4.1, 4.2, 4.3 above since the same amount has been tax twice, once in the case of assesses and second time in the case of respective case creditor in the respective cases matter may kindly be restored to The Ld. A.O. to a certain the position and to delete the same from the income of the assessees.”
Encl : As above Sd/- (DR Adhia, AR)”
Taking note of the above, it is relevant to consider the facts of the case and the basis with the Assessing Officer for reconfirming the addition under Section 68 of the Act.
As is evident from the order of the Assessing Officer, the assessee is in the business of finance and during the impugned year it had obtained cash credits from the following three parties:-
i) Shri H.K. Kesaria (HUF) ii) Shri Bharat P. Shingal iii) Shri Maganlal H. Padalia
Except for filing confirmation of these parties, nothing else was filed by the assessee to prove the genuineness of the cash credit in the first round of assessment. The Assessing Officer, however, noted that all the three cash depositors were not creditworthy, because there were huge cash deposited in their bank accounts immediately before the cheques were issued to the assessee-company; that the depositors had opened their bank accounts with a meager amount of Rs.500/- and their closing balance was also Rs.520/-; that the depositors did not furnish their bank account details and it was noted that
9 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
the source of deposits of the depositors was loan from farmers which the depositors were unable to verify. Accordingly, these depositors were treated by the Assessing Officer in the first found of assessment as unexplained. Further opportunity granted to the assessee in the restored proceedings; the assessee remained uncooperative and the Assessing Officer, therefore, proceeded to decide the issue on the basis of material before him, some of which was collected from the bank. With respect to each depositor, he noted that their source of making deposits with the assessee-company was small loans taken from various farmers. None of the farmers were produced before the Assessing Officer for verification. Further, these farmers were noted to have bank accounts in the same bank where the depositors had bank accounts. That all these accounts were opened only during this period when the advances were made to the assessee-company and all these accounts had been introduced by the director of the assessee-company Shri Priyesh Kesaria or another account holder with bank. All the villagers were noted to reside in the small villages of Gondal Taluka and surprisingly they had come to Rajkot to open their account and for the sole purpose of advancing loan to Shri Kesaria. From all these information, the Assessing Officer held that these cash deposits were of ingenuine and treated them all, therefore, unexplained cash credits under Section 68 of the Act in the hands of the assessee. He noted that the amount of advances made by the three parties was to the tune of (i) Rs. 11,25,000/- (Shri Haskukhlal Keshavlal), (ii) Rs. 26,00,000/- (Shri Maganbhai Haribhai Padalia) and (iii) Rs.11,05,000/- (Shri Bharat P. Shingala). Accordingly, he made an addition of Rs.49,30,000/- on account of unexplained cash deposits relating to these three parties. His findings in this regard at paragraph Nos. 5 to 8 of the order is asunder:-
“5. In compliance to Hon’ble ITAT’s directions, notice u/s 142(1) dated 20.05.2011 was issued. In response to the notices u/s 142(1) and query letter
10 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
issued by this office, the assessee vide its letter dated 07.06.2011 has submitted copy of audited P & L A/c and balance sheet. Further, a notice u/s 142(1) was issued on 26.09.2011 and served upon the assessee, in which the assessee was asked to produce following depositors from whom it has received deposits:
Shri H.K. Kesaria (HUF) 2. Shri Bharat P. Shingal 3. Shri Maganlal H. Padalia
The assessee has failed to respond to this notice. By another notice u/s. 142(1) dated 14.10.2011, the assessee was once again requested to attend alongwith books of account and above depositors to this office on 19.10.2011. Ultimately, Shri Harish Ranpara from M/s J.C. Ranpura & Co, C.As, duly Authorised Representative of the assessee vide his letter dated 24.10.2011 requested for adjournment. Again a detailed show cause notice was issued on 09.11.2011 and served upon the assessee. In response to show cause, the A.R. Of the assessee attended on 16.11.201 l and requested for adjournment. At his request, the case was finally adjourned on 09.12.2011. However, neither the assessee nor his Authorised Representative attended on 09.12.2011. No written submission has been received so far. No books of accounts have been produced till date. Since, the assessee failed to respond as mentioned above, it is presumed that the assessee is not interested to comply with the requirements of notices and directions of the Hon'ble ITAT. Under these circumstances, I proceed to finalise the assessment as per provisions of Section 144 of the I.T. Act on the best judgment and on the basis of material available with Department and inquiries conducted in this regard to establish interconnection between the deposits made by the depositors and introduction of the same into the books of accounts of the assessee.
The assessee is doing finance business. During the A.Y. 97-98 the assessee has obtained following cash credits which were added to its total income while finalising assessment u/s. 143(3) r.w.s. 250 & 144 of the I .T. Act.
Shri H. K. Kesaria HUF - Rs. 8, 93, 148/- 02. Shri Bharat P. Shingala - Rs. 10, 83,997/- 03. Shri Maganbhai H. Padalia - Rs. 9, 47, 958/-
During the course of assessment proceedings, the assessee was asked to explain the deposits in the name of above 3 persons. The assessee filed confirmations from these persons. However, it was found that all the three depositors of the assessee company are not credit worthy because of the following reasons:
11 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
Huge amounts have been deposited by cash in their bank a/c. and these amounts have been withdrawn immediately for giving cheque to the assessee company. 2. The depositors have opened their bank a/cs. with an amount of Rs. 500/- and the closing balance is also Rs.520/- or so. 3. The depositors were asked to furnish their bank a/c. No. during the course of assessment however, they failed to give such details. 4. The source of deposits made with this company by the depositors is loans from farmers and were asked to produce at least some farmers for verification, the same was not complied with.
Accordingly, these deposits were treated as unexplained and added to the total income of the assessee u/s. 68 of the I.T. Act.
The assessee was asked to produce books of a/cs. and produce the depositors for personal verification to investigate the link between the depositors and the assessee company and also to establish inter-link of the transactions in their books of a/cs. and in the accounts of the company. However, the assessee has failed to produce the depositors despite ample opportunities for doing so have been given. There is no option left for me but to decide the matter on merits and on the basis of details filed during the course of original assessment. Some information's had also been called for from bank for establishing interconnection and inter-linking of the deposits at time of assessment u/s 143(3) r.w.s. 250 & 144 of I.T. Act. The genuineness of each depositor is discussed as under:-
1) Shri Hasmukhlal Keshavlal (HUF).
This person has given deposit of Rs.8,93,148/-. As per the balance sheet of this person he has obtained loans of Rs.50,000 to Rs. 1 lac from various farmers @ of 13%. During the course of original assessment he was asked to produce some farmers for verification of their credit worthiness and genuineness of transaction. However, Shri Kesaria did not produce them for verification of the A.O. This shows that the deposits received by this person is not genuine, likewise the deposits made by him before the assessee company also becomes ingenuine. While finalising the original asstt. the A.O. has made addition only of Rs.8,93,148/- which is the closing balance in the case of the depositor, actually an amount of Rs.8,50,000/- is deposited on 08.02.97 and Rs.2,75,000/- is deposited on 10.02.1997 therefore, an addition of Rs.11,25,000/- has made in respect of unexplained cash credits instead of Rs.8,93,148/-.
12 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
The assessee has obtained deposit of Rs.50,000/- to Rs. 1 lac from 38 persons who are small farmers having a small land around 1 to 3 acres. All these farmers who have deposited money with Shri H. K. Kesaria are having their bank account with Veraval Mercantile Co-op. Bank, Rajkot though their residential addresses are from different places. With a view to investigate the matter following details were called for from the bank in respect of accounts of farmers.
Copy of account opening form, 2. Copies of pay-in-slip in respect of money deposited during the period 1.04.96 to 31.03.97. Sr. No. Name of the A/c. holder. 01. Vinodrai Nathabhai Chaniara 02. Vasur Lakhamanbhai Der 03. Vllabh Lalji Raiyani 04. Suleman Zafar Kaida 05. Samji Nanji Chaniara 06. Samji Bhikha Raiyani 07. Samji Nath a Bavariya 08. Rafiq Jusab Kaida 09. Pravinchandra B. Chaniara 10. Prafulkumar Jivraj Gondaliya 11. Parshotam Nanji Bharad 12. Nanji Bhagvanbhai Sakhiya 13. Najabhai Lakhamanbhai Der 14. Mavji Hirabhai Makwana 15. Mansukh Karasan Ghonia 16. Mansukh Bachubhai Jesani 17. Mahesh Keshabhai Bhutt 18. Mahendra Nar^hibhai Raiyani 19. Kantila Devrajbhai Vekaria 20. Karshan Bhimji Raiyani 21. Karankumar Narshibhai Raiyani 22. Keshabhai Nathabhai Bhutt 23. Jentilal Laljibhai Vekaria 24. Jentilal Mohanbhai Ghonia 25. Jagdishbhai Gokalbhai 26. Ishabhai Umarbhai Savani 27. Harun Abrahambhai
13 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
Jivraj Karamshibhai Padaliya 29. Jivraj Narshibhai Kothiya 30. Jivraj Nanjibhai Jesani 31. Gordhan Nathabhai Jesani 32. Gokalbhai Becharbhai 33. Girdhar Karasanbhai Raiyani 34. Dilip Gandubhai Padaliya 35. Dhirajlal Kanjibhai Thumar 36. Dhirajbhai Chhaganbhai Vekariya 37. Dayabhai Gobarbhai Ghoniya 38. Bijal Mula Makwana
The Veraval Mercantile Co-op Bank Ltd., vide its letter dtd. 29.1 1.2002 has sent copies of a/c. of these account holders and copies of account opening forms in respect of a/cs. of farmers. On verification of a/c. opening forms, it was noticed that all these accounts have been opened during the period of December, 1996 to January, 1997. It was also noticed that these accounts have either been introduced by Shri Priyesh Kesaria, who is one of the director of the assessee company or by Merunben Osmanbhai Thayam holding a/c. No. 150 with the Bank. It is further seen that most of the persons are residing in the small villages of Gondal Taluka. The people from different villages have came to Rajkot to open their a/c. with the bank and for the sole purpose of advancing the amount to Shri Kesaria, who also happens to be the director in the Company. Thus, it is quite clear that Shri H. K. Kesaria has arranged these funds of the Company in such a way so that it seems genuine. He has managed to get these accounts opened in the bank in the names of different farmers and then has plowed this money into the Company. It was also seen that the accounts of these persons have been opened by depositing Rs.500. Thereafter, cash deposits has been made by these farmers on various dates. The money deposited by these farmers have gone to the a/c. of Shri H. K. Kesaria immediately and thereafter the same has been deposited by Shri Kesaria with the Company. Following instances and chart given proves that there is inter- link between the transactions with the farmers and with the Company.
Sr. Name of the farmer Amt. Deposited Date This Amt. This amt. No. in the Bank given to Shri given to Kesaria on Co. on date Date 01. Rafiq Jusab 120000 30.01.97 31.01.97 08.02.97 02. Vasur Laxmanbhai 110000 30.01.97 31.01.97 08.02.97 03. Vallabh Lalji Raiyani 100000 01.02.97 03.02.98 08.02.97 04. Shamji Nanji 125000 31.01.97 01.02.97 08.02.97 05. Shamji Nathabhai 105000 3,1.01.97 01.02.97 08.02.97
14 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
This proves beyond doubt that the deposits collected by Shri H. K. Kesaria from the farmers and given to the assessee Company, is ingenuine because the assessee had failed to produce the farmers for verification of A.O. at the time of original asstt. as well as at the time of asstt u/s 143(3) r.w.s. 250 & 144 and also not complying during this asstt. The interconnection and inter- link between the transactions proved, the deposits in the case of Shri H. K. Kesaria (HUF) is, therefore treated as unexplained cash credits u/s. 68 of the I.T. Act and an amount of Rs.11,25,000/- as discussed earlier in the assessment order is added to the total income of the assessee.
2.) Shri Maganbhai Haribhai Padalia :
This person has given deposit of Rs. 10,83,997/-. Actually while finalising the original assessment the closing balance appearing in the balance sheet has been considered for the purpose of addition. However, on verification of a/cs. It was seen that the assessee has credited Rs.26 lacs by cheques, therefore while finalising the set-aside assessment the figure of Rs. 26 Lacs was taken into consideration for finalisation of assessment. During the course of original assessment statement of the depositor was recorded u/s. 131 of the IT Act. The depositor is not assessed to tax. The nature of occupation is farming. During the course of original assessment he was asked to produce some of the farmers from whom he has obtained cash loans. However, he did not produced any of the farmer for verification of A.O. The depositor is a farmer who is not having credit worthiness to deposit an amount of Rs.26 lacs. The depositor has received these amounts from small farmers who can’t have such large funds. Further, the assessee has failed to discharge onus by not producing any of the farmer before the A.O. at the time of the original assessment. During the course of assessment a copy of bank a/c. of the depositor was called for from Jivan Comm. Bank, Main Branch, Rajkot. On verification of the same it is seen that following huge cash has been deposited in his bank a/c. and the same has been given to the assessee Company. The following chart will reveal that the amount so deposited has been given to the assessee Company.
Sr. Date of deposit in the A/c. Amount (Rs.) Dt of giving loan To Amount (Rs.) No. of Maganbhai Padalia the assessee
02.09.1996 7, 00, 000/- 02.09.1996 7, 00, 000/- 02. 02.09.1996 7, 50, 000/- 02.09.1996 7, 50, 000/- 03. 20.09.1996 1,00,000/- 20.09.1996 1,00, 000/- 04. 20.09.1996 2,50,000/- 20.09.1996 2,50, 000/- 05. 21.09.1996 2,50,000/- 21.09.1996 2,50, 000/-
15 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
This chart shows that the depositor has deposited cash and on very same day the same has been transferred to the a/c. of the Company. The depositor has taken cash loans from following persons as under:
Sr. No. Name of the farmer Amount in cash Date 01. Nagabhai Laxmanbhai Der 1,15,000/- 01.09.1996 02. Dilip Gandubhai Padalia 80,000/- 01.09.1996 03. Hamir Jiva Chandpara 1,00,000/- 01.09.1996 04. Jagdish Gokal 1,00,000/- 01.09.1996 05. Jentibhai M. Ghonia 30,000/- 01.09.1996 06. Mansukh Bachubhai Jasani 1.10.000/- 01.09.1996
On verification of this chart it can be seen that Shri Padalia has obtained cash worth Rs.5,35,000/- from the farmers as on 01.09.1996. However, he has deposited Rs. 14,50,000/- by cash into his bank a/cs. As on this date he was not having enough cash balance to deposit an amount of Rs. 14,50,000/- in the bank a/c. Further, on verification of pay-in-slip called for from the bank it was seen that the pay-in-slip are filled-up in English and no sign of depositor has been made by the a/c holder. All this proves beyond doubt that the deposits shown by the assessee Company in the name of Shri M. H. Padalia is unexplained cash credits. The assessee Company has failed to prove genuineness of the deposits in the case of Shri M. H. Padalia, therefore an amount of Rs.26,00,000/- is added to the total income of the assessee u/s. 68 of the I.T. Act.
3.) Bharat P. Shingala:
This person has given deposit of Rs.9,47,958/-. Actually while finalising the original assessment the closing balance appearing in the balance-sheet has been considered for the purpose of addition. However, on verification of a/cs. it was seen that the assessee has credited Rs. 11,05,000/- by cheques. Therefore while finalising the set-aside assessment the figure of Rs.l 1,05,000/- was taken into consideration for finalisation of assessment. Shri Bharat Shingala in his statement has stated that he is assessed to tax with ITO, 2(2), Rajkot. He has obtained loans from farmers @ 12% and has given loan to the assessee Company @ 13.5%. During the course of original asstt. Proceedings, Shri Bharat Shingala was asked produce some farmers for verification purpose but he has not produced any of the farmers for verification of the AO. Shri Shingala has accepted loans in cash from various farmers and has deposited the amounts through cheques with the assessee Company. During the course of assessment a copy of bank a/c. of the same has been given to the assessee company. The following chart will reveal that the amount so deposited has been given to the assessee Co.,
16 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
Sr. Date of deposit in the A/c. Amount (Rs.) .. Dt of giving loan To Amount (Rs.) No. of Bharat Shingala the assessee 01. 29.08.1996 1, 00, 000/- 29.08.1996 1, 00, 000/- 02. 02.09.1996 8, 00, 000/- 02.09.1996 8,050, 000/- 03. 16.09.1996 1,00,000/- 16.09.1996 1,00, 000/- 04. 07.11.1996 1,00,000/- 07.11.1996 1,00, 000/-
This chart shows that the depositors have deposited cash and on very same day the said deposits has been transferred to the a/c. of the assessee company. The depositor has taken cash loans from farmers in cash and the same has been deposited into his bank a/c. Shri Shingala is one of the director of the assessee company. The fact that cash deposits has routed through his a/c. proves beyond doubt that the depositor has introduced the funds through his bank a/cs. He has also failed to produce farmers for verification purpose. Therefore, the cash credits in the name of Shri Bharat Shingala is also treated as unexplained u/s 68 of the I.T. Act.
To sum-up, it is further seen that out of the aforesaid depositors most of the deposits from farmers are common between all the 3 depositors. All the farmers are having small piece of land which cannot be considered for credit worthiness for such huge amount. The depositors do not remember even their bank a/c number and the pass book is said to have been with Shri Priyesh Kesaria. It is the duty of assessee to prove genuineness and credit worthiness of the depositors. The assessee has failed to discharge onus laid on him.
In view of the above discussion the cash credits in the name of all the 3 depositors are treated as unexplained u/s 68 of the I.T. Act. Penalty proceedings u/s 271(1)(c) are also initiated for furnishing inaccurate particulars and concealment of income.”
Noting the above findings of the Assessing Officer and also the fact that before the learned CIT(A) no contentions were made on behalf of the assessee, we now revert to the written submissions filed by one Shri D.R. Adhia, AR, on behalf of the assessee. A perusal of the entire records before us reveals that there is no power of attorney in favour of Shri D.R. Adhia, given by the assessee. In view of the same, we are not inclined to give any consideration to the written submissions filed by Shri D.R. Adhia before us and the appeal
17 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
accordingly needs to be dismissed at this stage itself noting the absence of any submissions made on behalf of the assessee.
But be that so, even considering the submissions filed before us, we do not find any merit in the same. One aspect of the submissions made by Shri Adhia is that all these amounts attributed to the three parties have been taxed as incomes of the said parties in their hands in assessments framed. In the written submissions, he also mentioned that copies of the assessment orders of all the three parties were enclosed, but surprisingly there is no such assessment orders relating to the above three parties enclosed. Therefore, this contention of Shri D.R. Adhia is rejected for want of substantiation. His other contention is that since confirmation from the above three parties was filed; therefore, the genuineness of the transactions was established. The only response which such a submission can get is to throw it out of the window immediately. The detailed findings of the Assessing Officer proving the ingenuineness of the transactions noting that these three parties had issued cheques to the assessee for advances made from cash deposited in their accounts immediately before the cheques were issued. These cash deposits were attributed to loans taken from several farmers who were never verified to the Assessing Officer. Moreover, the improbability of so many farmers giving loans to these persons was clearly made out by the Assessing Officer pointing out that all these farmers are residing at a far away Taluka Gondal and had come to Rajkot apparently to open a bank account and to make these cash deposits only for advancing it to these persons. Their bank accounts were also found to be opened in the same bank where these depositors had bank accounts. Even the person introducing the farmers was found to be the director of the assessee-company. The preponderance of probability of such circumstances clearly is that the genuineness of the advances was clearly not established as rightly held by the Assessing Officer. The entire facts and
18 ITA No. 123/Rjt/2014 M/s. Ambitious Finance & Investment Pvt Ltd Vs. ITO AY : 1997-98
circumstances leading to the advances made to the assessee were suspect and the assessee having failed to discharge its onus of clearing all these suspicions in any whatsoever - be it by producing parties for confirmation or the farmers for confirmation, the Assessing Officer, we hold that, has rightly held that the cash deposits were unexplained. We, therefore, see no reason to interfere with the order of the learned CIT(A) confirming the addition of Rs.49,30,000/-.
In effect, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 06/03/2023 at Ahmedabad.
Sd/- Sd/-
(ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 06/03/2023 **bt आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु� ( ) / The CIT(A)- अपील 5. िवभागीय �ितिनिध , /DR,ITAT, Rajkot, अिधकरण अपीलीय आयकर 6. गाड� फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Rajkot
Date of dictation ……02.03.2023…….. 1. Date on which the typed draft is placed before the Dictating Member :..… 02.03.2023….…… 2. Other Member…03.03.2023…….………….. 3. Date on which the approved draft comes to the Sr.P.S./P.S……03.03.2023….……………. 4. Date on which the fair order is placed before the Dictating Member for pronouncement…06.03.2023 5. Date on which the fair order comes back to the Sr.P.S./P.S……06.03.2023….……… 6. Date on which the file goes to the Bench Clerk…06.03.2023…….…… 7. Date on which the file goes to the Head Clerk……. 8. The date on which the file goes to the Assistant Registrar for signature on the order………… 9. Date of Despatch of the Order………………
