TMI Blog2019 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of these alleged transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 - Transaction shall be accepted to be real as there is no evidence showing otherwise. The surrounding circumstances apart from the direct evidence in the instant case did not contain anything which belied the claim of the assessee. In view of this we are of the opinion that the addition made by the AO cannot be sustained. - Decided in favour of assessee. - ITA No.490/Coch/2018, ITA No.491/Coch/2018, CO No.83/Coch/2018, CO No.84/Coch/2018, ITA No.492/Coch/2018, ITA No.493/Coch/2018, CO No.85/Coch/2018, CO No.86/Coch/2018 - - - Dated:- 16-9-2019 - Shri Chandra Poojari, AM And Shri George George K, JM For the Assessees : Sri. Iype Mathew For the Revenue : Smt.A.S.Bindhu, Sr.DR ORDER PER BENCH : These appeals by the Revenue and the Cross Objections by two different assessees are directed against the orders of the CIT(A), both dated 19.07.2018, for the assessment years 2010-2011 and 2011-2012. 2. The common grounds, except for variance in figures, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT should have noted that the main objection of the Appellant was that the assessment was re-opened only on the basis of suspicion regarding the credits in the books of accounts of the Appellant and therefore the reopening was against the directions. of the CBDT vide circular No. 40 of 2016 dtd 09/12/2016. 5. Based on the above objection of the Appellant, the order should have been quashed by the CIT Appeals on the ratio of the Supreme Court decision in the case of GKN Drive Shafts (India) Ltd Vs. ITO Ors 259 ITR 19 and of the Madras High Court decision in Jayant Natrajan Vs ACIT 300 CTR (Mad) 225. 6. The Appellant craves leave to adduce additional grounds at the time of hearing. 4. There was a short delay in filing these cross objections, as follows:- (i) M/s.Sabari Switch Gear Pvt. Ltd. for Asst.Years 2010-2011 2011-2012 8 days. (ii) M/s.Sabari Millennium Impex Pvt. Ltd. for Asst.Years 2010-2011 2011-2012 8 days. 5. However, at the time of hearing before us, the learned Counsel for the assessee has not pressed the cross objections filed by the assessee. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly show lot of trade activity between the assessee and his companies namely, M/s.Sabari Enterprises P Ltd, M/s. Sabari Millenium Exports P Ltd. M/s. Sabari SwitchGear P Ltd , and Basanth Impex, Shyam International, Sree Chao Impex, Ajay Iron and Steel P Ltd. Vani Exports and Mayur Impex. The total turnover of the aforementioned businesses and their turnover with each of businesses ofSabari Group (Sabari Quality Foods. i. Basanth Impex Shree Chao Impex Asst.Year Total Turnover Turnover with SQF Turnover with Sabari Millennium Exports Pvt. Ltd. Turnover with Sabari Enterprises Ltd. Turnover with Sabari Switchgear Pvt. Ltd. 2009-10 410006631 386596312 8594439 0 14815880 2010-11 244490336 194527698 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 0 0 0 0 0 2013-14 0 0 0 0 0 2014-15 371758345 156528239 47586619 167643487 0 2015-16 341213767 164791823 176521944 0 0 Total 0 1279027551 28487253 167643487 7775455 iii. M/s.Ajay Iron and Steel P Ltd. Asst.Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Pvt. Ltd. 2009-10 120407959 15500035 58934156 0 45973768 2010-11 125761421 118503685 87124 0 7170612 Total 0 134003720 59021280 0 53144380 It can be noted from the aforesaid mentioned tables that business mentioned in para 3 were having substantial transaction with the business of Shri Sunil Kumar, M/s.Sabari Millennium Exports Pvt. Ltd., Sabari Enterprises P Ltd. and Sabari Switchgear P. Ltd. 5. On an examination of the books of accounts of Sabari Quality Foods, Sabari Enterprises P Ltd, and Sabari Switchgear P. Ltd. they have declared a profit as a percentage of their sales as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 252810 0.11 2012-13 1636835083 189540 0.28 2013-14 1194591232 218590 0.19 2014-15 801062840 291630 0.73 M/s.Ajay Iron and Steel P. Ltd. Asst.Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 0 640 0 2010-11 0 5390 0 2011-12 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2863662066 990900 0.60 2010-11 3031108532 760114 0.34 2011-12 845673545 211683 3.00 2012-13 2184183988 982890 0.42 2013-14 658241184 374514 0.60 2014-15 444409756 525030 1.06 2015-16 220741120 408150 2.92 Shyam International Asst.Year Total Turnover T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- 3 Shyam International Mrs.Seema Khetan -do- 4 Mayur Impex Shri Manish Khetan -do- All these proprietorships concerns run from 9 Old China Bazar Street, Kolkotta-Ol . Further he has stated that his late father Gouri Shankar Khetan managed and controlled all the above proprietorships and after his death he has taken over the business related work. In answer to question 12 he has explained that books of accounts of M/s Basanth lrnpex, M/s Shree Chao Impex, M/s Shyam International and M/s Mayur Impex are maintained by Sabari Group and are kept in their possession. He stated, they only put signature on legal documents, P L Ale, Balance Sheet, Cheque books as per direction of Sabari Group. He also went on slate under Oath that M/s Basanth Impex, M/s Shree Chao Impex. Mis Shyam International and M/s Mayur Impex are controlled and mamaged by Sabari Group itself According to him all the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just a ploy to prevent further investigation and unearthing the truth behind the whole dealings. In order that retraction to be accepted as evidence, the witness need to be cross-examined. Even though, Shri Manish Khetan has retreated the statement given before the Income tax Authority, there are stark facts which cannot be denied. One of them is, it was his father and later on he himself who handled the business. They received a commission every year for their dealing with Sabari Group. His Pan is AFCPK5709F. Another fact is that bank accounts of these proprietorship are in Kollam branches of various banks as under: i. A/c No 200007114711 with IndusInd Bank, Kollam Branch in the name of Basanth Impex ii. A/c No 2000071 14811 with IndusInd Bank, Kollam Branch in the name of Mayur Impex iii. A/c No 200007114803 with Indus1nd Bank, Kollam Branch in the name of Shyam International 9. Another Kolkotta based business having substantial transactions with Shri Sunil Kumar and his companies are Mis. Ajay Iron and Steel P Ltd,. A survey uls I33A was conducted at the business premises of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex, Mayur Impex and Shyam International do not have income in the scale of Shri Sunil Kumar. In fact they have only income in the range of I to 9 lakhs in spite of heavy turnover. This meager income cannot be account of any trade activity but some fees or commission for services rendered. d. All the aforementioned Kolkotta businesses are functioning from the same address and the fact that they are only businesses on paper are strengthened on the above facts. 11. On an examination of the books of accounts of the assessee and his companies it is noted that enormous funds have obtained under the head loans and advances from the Ko/kotta businesses. These loans are non interest bearing and remained in the books for period ranging from one to three years. Such substantial amounts loaned by busineeses with meagre income lacks credibility even though obtained through banking channels. Round tripping of funds or ploughing back of funds seem to be a dear possibility. On the basis of the principle of preponderance of probability these funds are income of the assessee and treated as unexplained cash credits u/s. 68 of the Act. 12. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Round tripping of funds or ploughing back of funds seem to be a clear possibility. On the basis of the principle 'of preponderance of probability these funds are income of the assessee and treated as unexplained cash credits u/s. 68 of the Act. From the above, it is seen that, the AO has himself accepted that the transactions are through banking channels, and, therefore, genuineness of these transactions cannot be doubted. However, the AO suspects that there is a possibility of round tripping of funds or ploughing back of funds is also a possibility, and with these remarks, the AO added the difference between opening and closing balance as income of the appellant u/s. 68. In my opinion, the AO has stretched the scope of section 68 a bit too far in this case. In this case a search took place at the premises of Shri Sunil Kumar, the Managing Director of the appellant company, but no evidence regarding round tripping was found. The creditors are identifiable and they are admittedly income tax assesses. Admittedly, the transactions have happened through banking channels, adding credibility to the transaction. On the other hand, the AO has only suspicion and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses from exporters in Kerala and other neighbouring states and sells them to these Kolkota based companies and who sells it to other importers. These alleged Kolkota based companies acted as middlemen between the assessee and the final buyers, i.e. importers and, therefore, these Kolkota based companies have no option but to operate on thinnest of margins. Search was conducted at the residential as well as business premises of the assessee, Shri Sunil Kumar and consequently, statement of Shri Mahesh Khetan, s/o Late Shri Gauri Shankar Khetan, who managed the affairs of M/s. Basanth Impex, Shree Chao Impex, Shyam International and Mayur Impex, was recorded by DDIT, Kolkota, wherein Shri Mahesh Khetan stated that all the business activities, books of accounts etc. in respect of these proprietory concerns were performed and maintained by Sabari Group. They were used only for signing authorities by Sabari group. In lieu of signature they got commission from Sabari group . However, Shri Mahesh Khetan, later retracted from his statement claiming that the statement from him was taken exerting undue pressure and force. Subsequent to retraction by Shri Mahesh Khetan, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, suspicion cannot be reason for making additions and it cannot replace the evidence on record. As rightly pointed out by the CIT(A), neither the Assessing Officer nor the Investigating authorities have brought on record any incriminating documents to suggest that the assessee is holding unaccounted income which was lend to the certain persons and got it back as loans and advances. The Assessing Officer cannot draw inference on the basis of suspicion, conjuncture and surmises. Suspicion cannot take place of material in support of the findings of the Assessing Officer. The Assessing Officer should act in a judicial manner, proceed with judicial spirit and should come to judicial conclusion. The Assessing Officer is required to act as a reasonable person and not arbitrarily and capriciously. The assessment should be made on the basis of adequate material and it should stand on its own legs. The Assessing Officer without examining the issue properly, he cannot come to the conclusion that the assessee had advanced loans to other business concerns and got it back. The evidence brought on record by the Assessing Officer does not suggest that the source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 of the Act. In our opinion, transaction shall be accepted to be real as there is no evidence showing otherwise. Further, the surrounding circumstances apart from the direct evidence in the instant case did not contain anything which belied the claim of the assessee. In view of this we are of the opinion that the addition made by the Assessing Officer cannot be sustained. As such, the CIT(A) is justified in deleting such additions made u/s. 68 of the I.T. Act and confirm the order of the CIT(A). Similar ground was raised in other appeals. This ground of appeals of the Revenue is dismissed for all the assessment years. 9. In view of the above order of the Tribunal, we do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, the ground raised by the Revenue before us, in case of both the assessees, for both the assessment years, are dismissed. 10. In the result, the appeals filed by the Revenue and cross objections filed by the assessee are dismissed. Order pronounced on this 16th day of September, 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
