Shree Swami Industries, Ahmedabad vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No. 643 /AHD/2011 (Assessment Year: 2005-06)

Shree Swami Industries Plot V/S Income Tax Officer, Ward- No. 75/3/1, Phase-1, GIDC, 6(4), C.U. Shah Building, Vatva, Ahmedabad Ashram Road, Ahmedabad

(Appellant) (Respondent)

PAN: AAAFS5141C

Appellant by : Smt. Sonia Kumar, Sr. D.R Respondent by : Shri S.N. Divetia, A.R.

(आदे श)/ORDER

Date of hearing : 21 -04-2015 Date of Pronouncement : 28 -05-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. This appeal filed by the Assessee is against the order of CIT(A)-XI, Ahmedabad dated 20.12.2010 for A.Y. 2005-06.

2. The relevant facts as culled out from the material on record are as under.

3. Assessee is a partnership firm stated to be engaged in the business of

manufacturing of plastic sheets. Assessee filed its return of income for A.Y. 2005-06 on 10.08.2005 declaring total income at Rs. 45,210/-. The case was 2 ITA No 643/AHD/2011 . A.Y. 2005-06 selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 27.12.2007 and the total income was determined at Rs. 42,76,623/-. Thereafter the assessment framed u/s. 143(3) was set aside by ld. CIT by invoking provisions of Section 263 of the Act and pursuant to which assessment was framed u/s. 143(3) r.w.s. 263 vide order dated 24.11.2009 and the total income was determined at Rs. 19,23,440/- by making addition on account of unexplained cash credit u/s. 68 of the Act. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 20.12.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue and Assessee preferred appeal before Hon'ble Tribunal. The ground raised by the Assessee reads as under;-

1.1 The order passed u/s.250 on 20.12.2010 for A.Y.2005-06 by CIT(A)-XI, Abad partly confirming the addition of Rs.7 lakhs made by AO is wholly illegal, unlawful and against the principles of natural justice.

1.2 The Ld. CIT(A) has grievously erred in Jaw and or on facts in passing the impugned order without allowing sufficient opportunity to the appellant. The Ld.CIT(A) has failed to appreciate that there was a sufficient cause for failure to produce further evidence relating to M/s. Suraj Textiles.

2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the cash credit of M/s. Suraj Textiles was unexplained.

2.2 That in the facts and circumstances of the case, the Ld. CIT(A) ought not to have upheld that the appellant had failed to discharge the onus cast upon it to prove the cash credit of M/s. Suraj Textiles 2.3 The Ld. CIT(A) has failed to appreciate that the appellant had filed xerox copy of cheques issued by the said party so that the further enquiry should have been made by AO.

4. It was noticed that Assessee had received Rs. 10,50,000/- as deposit from Surat Textile, Ahmedabad. It was noticed by ld. CIT that during the course of regular assessment proceedings, no enquiries to determine the genuineness of the credits were made by A.O and therefore the assessment order passed u/s. 143(3) was set aside by ld. CIT(A) and the A.O was 3 ITA No 643/AHD/2011 . A.Y. 2005-06 directed for the examination of deposits received by Assessee and re-decide the issue. In the 2nd round, A.O noticed that Assessee had failed to establish the source of credits and substantiate the ingredients required u/s. 68 of the Act namely the identity, creditworthiness of the depositor and the genuineness of transaction. Accordingly the addition was made by A.O. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the Assessee decided the issue by holding as under:-

3.2.1. As regards the addition of Rs. 10.5 lakhs in respect of Surat Textile, the addition was made u/s. 68 on the ground that the appellant had merely submitted ledger account;

that the identity, creditworthiness and genuineness were not established. As seen from the written submissions, it is apparent that not even confirmation letter from the said party was filed let alone establishing the above-mentioned three ingredients. The contentions are general, vague and do not go anywhere near controverting the A.O's findings. Therefore, I hold appellant failed do discharge the onus cast on it. 3.2.2 The alternate plea of the learned A.R. is that only the peak balance is to be added. The ledger account furnished is reproduced below:-

Date Particular Vch. Type Vch.No Debit Credit 6-05-04 By S.V. Receipt 71 2,00,000 Sahkari Bank A/c.

431 18-10-04 By BOI Receipt 282 2,00,000 current A/c. 672 23-10-04 By BOI Receipt 287 3,00,000 current A/c. 672 29-10-03 To BOI Payment 362 3,00,000 Current A/c. 672. Ch. No. 497 1-11-04 By BOI Receipt 293 293 1,50,000 Current A/c.672 22-11-04 To -do- Payment 390 2,00,000 4-12-04 By -do- Receipt 312 2,00,000 9-03-05 To BOI - Payment 672 3,50,000 CCA/c. 3281 Ch. No. 4 ITA No 643/AHD/2011 . A.Y. 2005-06 508514 10,50,000 To Closing balance. 2,00,000 10,50,000 10,50,000

It is contended by the learned A.R. that the peak balance works out to Rs. 7 lakhs. On this issue also it is seen that the said claim was not before the A.O. Hence, A.O is directed to work out the peak credit balance and restrict the addition to the peak credit. The balance addition shall be deleted. Thus, subject to verification, this ground of appeal is partly allowed.

5. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us.

6. Before us, ld. A.R. reiterated the submissions made before A.O and ld.

CIT(A) and submitted that the addition be deleted. The ld. D.R. on the other hand submitted that ld. CIT(A) has remitted the issue to the file of A.O and directed him to recompute the addition on the basis of peak credit method and restrict the addition to peak credit. He further submitted that as per provisions of Section 251 of the Act ld. CIT(A) does not have power to remand and therefore remanding the matter to A.O is not as per the provisions of Section 251. He thus supported the order of A.O.

7. We have heard the rival submissions and perused the material on record. We find that on the issue of addition of deposits received from Surat Textiles, the entire amount was considered to be unexplained credit by the A.O. On the other hand ld. CIT(A) remitted the issue to the file of A.O and directed the A.O to work out the peak credit. Against the order of ld. CIT(A) whereby partial relief was granted, Assessee and Revenue had preferred appeal before us. In the connected appeal of Revenue in ITA No. 5 ITA No 643/AHD/2011 . A.Y. 2005-06 632/A/2011 by order dated 07.05.2015, the issue was decided by us by holding as under:-

6.We have heard the rival submissions and perused the material on record. We find that A.O had made addition of Rs. 3 lac on account of deposit received by Assessee from Arihant Finvest and Rs. 10,50,000/- on account of receipts from Surat Textiles. With respect to the additions made in respect of deposit from Arihant Finvest, Ld. CIT(A) has remitted the matter to A.O to verify the contentions of the Assessee and if the contentions was found correct, the addition was directed to be deleted. With respect to the addition in respect of Surat Textile ld. CIT(A) directed the A.O to work out the peak credit balance and restrict the addition to the peak credit subject to the verification. We thus find that CIT(A) while deciding the issue had directed the A.O to verify the various evidences submitted by the Assessee and thereafter delete the addition. At this moment it will be relevant to refer to relevant provisions of Section 251 which reads as under:-

Powers of the Commissioner (Appeals)

251 (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers-

(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment.

7.The perusal of provisions of Section 251(1)(a) reveals that CIT(A) in an appeal against an order of assessment can confirm, reduce, enhance or annul the assessment. The power of setting aside which was available to CIT(A), is no more available to CIT(A) by virtue of amendment made by Finance Act 2001 with effect from 1.06.2001. Thus it can be seen that in the present case CIT(A) has set aside the issue to the file of A.O, the powers of which are not available to him at the relevant time. We therefore are of the view that the matter needs to be restored to the file of CIT(A) for considering the submissions of the Assessee and thereafter deciding the issue on the basis of facts and circumstances of the case and in accordance with law and after recording a clear finding on the issue. In the result both the ground of Revenue are allowed for statistical purposes.

6 ITA No 643/AHD/2011 . A.Y. 2005-06

8. It is a fact that the ground raised by Revenue and Assessee are interconnected. While deciding the Revenue's appeal, in ITA No. 632/A/2011, the matter was restored by us to the file of ld. CIT(A) with certain directions. We are of the view that since the ground raised by Assessee is connected with the ground raised by Revenue and since the ground raised by Revenue has been restored by us to ld. CIT(A) by order dated 07.05.2015, the grounds raised by Assessee in the present appeal also therefore needs to be restored to ld. CIT(A) and with similar directions. We therefore restore the issue to ld. CIT(A) with similar directions as contained while deciding Revenue's appeal in ITA NO. 632/A/2011(supra). Thus the ground of Assessee is allowed for statistical purposes.

9. In the result, the appeal of Assessee is allowed for statistical purposes.

Order pronounced in Open Court on 28 - 05 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad