Ramesh M.Parikh, Ahmedabad vs Department Of Income Tax
- CitationITA No. 3033/Ahd/2011
Ratio decidendi
The rule this decision rests on
The Tribunal, sitting as a bench, applied the following principles to the facts found by the first appellate authority. Where an amount credited in the assessee's books is shown to be an advance received against goods sold in the succeeding year, and the sale consideration is disclosed in the accounts and the applicable sales tax has been paid thereon, such a credit is a trade advance and not a loan or borrowed sum, and it cannot be treated as an unexplained cash credit under section 68 of the Income-tax Act, 1961. Where the first appellate authority, on the material before it, has found as a fact that the identity and creditworthiness of the creditors and the genuineness of the transaction are established, and the Assessing Officer has not controverted the assessee's explanation that the advances were against sales effected in the succeeding year, the addition under section 68 cannot be sustained. Additional evidence admitted by the first appellate authority under Rule 46A(4), after calling for and considering the Assessing Officer's remand report, is properly before the appellate authority for decision on the merits.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
बी' IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER आयकर अपील सं./ ./ ITA No. 3033/Ahd/2011 िनधा रण वष /Assessment Year: 2007-08 I.T.O., Vs. Shri Ramesh M. Parikh Ward-10(4), B-7, Navrang Complex, Ahmedabad Nr.Swastik Cross Road, Navrangpura, Ahmedabad PAN: AENPP 7205 F
अपीलाथ / अपीलाथ / (Appellant) ू!यथ यथ / थ / (Respondent)
Revenue by : Shri Roopchand, Sr. DR.
Assessee(s) by : Shri S.N. Divetia, AR
सुनवाई क$ तार&ख/ / Dateof Hearing : 22/04/2015 घोषणा क$ तार&ख / Date of Pronouncement: 24/04/2015
आदे श/O R D E R
PER G.D. AGRAWAL, VICE PRESIDENT:
This is an appeal filed by the Revenue and is directed against the order of the Ld. Commissioner of Income-tax(Appeals)-XX, Ahmedabad dated 09.09.2011 pertaining to the Assessment Year 2007-08.
2. The only ground raised in this appeal by the Revenue reads as under:-
The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.18,35,000/- made u/s 68 of the Act, treating it as advances.
3. We have heard both the parties and perused the material placed before us. The Assessing Officer has made the addition of Rs.18,35,000/- as ITA No. 3033/Ahd/2011 ITO vs. Shri Ramesh M. Pariskh For AY 2007-08 2
unexplained cash credit u/s 68 of the Act in respect of credit of following three parties:-
1. Shah Metal Alloys Rs.500000/-
2. Sudarshan Corporation Ltd Rs.700000/-
3. Shyam Enterprise Rs.635000/-
4. On appeal, the CIT(A) considered the facts of the case in detail from pages 2 to 32 of his order and thereafter, in paragraph 4.6, he recorded his findings pointing that all the three credits were trade advances against the sale of goods. The assessee is a dealer in bullion and all the three parties had given the advance by cheque to the assessee against the purchase of gold and ultimately, gold was sold to all of them in the immediately succeeding year. Such sales have been duly disclosed by the assessee in the accounts as well as return of Assessment Year 2008-09 and was accepted by the Revenue. In the above circumstances, the CIT(A) arrived at the conclusion that the addition for the cash credit was not justified.
5. The ld. Departmental Representative, at the time of hearing before us, has pointed out that all the details were not furnished before the Assessing Officer, but additional evidences were filed before the CIT(A). He further submitted that the assessee has not given even the confirmation of the parties and therefore, the Assessing Officer was fully justified in making the addition of unexplained cash credit. He, therefore, submitted that either the order of the Assessing Officer should be sustained or the matter may be set aside to the file of the Assessing Officer for considering the additional evidences.
ITA No. 3033/Ahd/2011 ITO vs. Shri Ramesh M. Pariskh For AY 2007-08 3
6. In rejoinder, it was pointed out by the ld. Counsel that the CIT(A) has forwarded the additional evidences to the Assessing Officer and called for his remand report. He decided the appeal only after considering the remand report. He also stated that the assessee has not borrowed any money from any of the three parties. It was a trade transaction against the sale of bullions and ultimately bullions were sold to all the three parties. That it was the one time transaction and the assessee is not in contact with these three parties; therefore, the assessee could not obtain their confirmation. However, all the payments were received by cheque and the CIT(A) has examined at details the information collected by the Assessing Officer from the banks. He, therefore, submitted that the order of the CIT(A) should be sustained.
7. After considering the arguments of both the sides and the facts of the case, we do not find any justification to interfere with the order of the CIT(A). At page No.34 in paragraph 4.8, the CIT(A) has discussed the issue relating to the admission of additional evidences. He considered the remand report and Assessing Officer's objection for admission of additional evidences; and after considering all the relevant facts and submission of both the parties, he overruled the objection of the Assessing Officer and admitted the additional evidences within the meaning of Rule 46A(4). He has also recorded the finding that the credit in the assessee's books of accounts was not for loan but advance against the sale transaction. His relevant finding at paragraph 4.9 of the order reads as under:-
4.9 Coming to the merits, the first point to be noted is the above sums do not represent loans or borrowings made by the appellant, instead they were advances received against sales effected in the succeeding year. As stated in the preceding para, the identity and creditworthiness of the parties and the genuineness of these transactions stand established. AO has not been able to ITA No. 3033/Ahd/2011 ITO vs. Shri Ramesh M. Pariskh For AY 2007-08 4
controvert the appellant's contention that the sales were affected in the succeeding year, VAT was paid and the VAT return was filed.
The above factual finding recorded by the CIT(A) has not been controverted by the Revenue before us. Thus the credit in the assessee's books of accounts was a trade advance and goods have been sold against those advance. The sale consideration has been disclosed in the assessee's books of accounts and VAT has been paid thereon. The CIT(A) also recorded the finding that the identity and creditworthiness of the parties and genuineness of the transactions have been established. On these facts, in our opinion, the CIT(A) was fully justified in deleting the addition made by the Assessing Officer for unexplained cash credit. Thus, the order of the CIT(A) is sustained and the appeal of the Revenue is dismissed.
8. In the result, the Revenue's appeal is dismissed.
Order pronounced in the Court on 24th April, 2015 at Ahmedabad.
Sd/- Sd/-
(RAJPAL YADAV) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 24/04/2015 Biju T., PS
षत Copy आदे श क$ ूितिल,प अमे,षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू!यथ / The Respondent. 3. संबंिधत आयकर आयु. / Concerned CIT 4. आयकर आयु.(अपील) / The CIT(A)
5. ,वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
/ BY ORDER, दे शानुसार
TRUE COPY
Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad
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