ITO, Ludhiana V. M/s Big Dig Resorts Ltd., Ludhiana

ITA 1042/CHANDI/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1269 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-12-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 28-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Unexplained cash credit; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1042/CHD/2010 ASSESSMENT YEAR: 2002-03 THE ITO, VS. M/S BIG DIG RESORTS LTD., WARD-VII(1), LUDHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI ASHWANI KUMAR ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-II, LUDHIANA DATED 31.5.2010 RELATING TO ASSESSMENT YEA R 2002-03 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE ONLY GROUND OF APPEAL RAISED BY THE REVENUE IS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE L D. CIT(A)-II LUDHIANA HAS ERRED IN DELETING AN ADDITIO N OF RS. 7,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED UNSECURED L OANS TOTALING RS.7 LACS FROM DIFFERENT PERSONS. THE ASSESSEE FILED THE CON FIRMATIONS OF THE DEPOSITORS AND ALSO THEIR RESPECTIVE INCOME-TAX RET URNS. IN THE CASE OF ONE 2 PARTY, SHRI MANMOHAN SINGH NO INCOME-TAX RETURN WAS FILED. THE ASSESSEE WAS REQUIRED TO FURNISH THE COPIES OF BANK ACCOUNTS, WHICH WERE NOT FILED. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE SAID PERSONS FOR EXAMINATION, WHO WERE NOT PRODUCED. THE ASSESSING OFFICER HELD THAT THE SOURCE OF THE SAID UNSECURED LOANS BEING NOT EXPLAI NED AND THE SUM OF RS.7 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. BEFORE THE CIT(A) THE LD. AR FOR THE ASSESSEE PO INTED OUT THAT THE CONFIRMATION FROM THE PERSONS WERE FILED BEFORE THE ASSESSING OFFICER AND ALL WERE EXISTING ASSESSEES, WHOSE PERMANENT ACCOUN TS NUMBERS WERE ALSO FILED. MERELY BECAUSE THE ASSESSEE WAS NOT ABLE TO FURNISH THE BANK STATEMENTS, THE SAID LOANS WERE TREATED AS NON-GENU INE BY THE ASSESSING OFFICER. THE LD. AR FOR THE ASSESSEE FURTHER POINT ED OUT THAT ALL THE FOUR PERSONS WERE DIRECTORS IN THE COMPANY AND HAD SINCE RESIGNED AND THE PRESENT DIRECTOR HAD NO CONTACT WITH THEM. A REQU EST WAS MADE TO THE ASSESSING OFFICER TO SUMMON THEM PERSONALLY. THE A MOUNT HAD ALSO BEEN RETURNED TO THE PARTIES AND BECAUSE OF LAPSE OF TIM E THE BANK ACCOUNTS COULD NOT BE TRACED. THE CIT (A) HELD AS UNDER : 4. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. IN THIS CASE, IT IS SEEN THAT, TH E APPELLANT HAD DULY FURNISHED BEFORE THE A.O. CONFIRMATIONS FROM THE RESPECTIVE CREDITORS. COPIES OF THESE CONFIRMATIONS FILED DURING APPEAL PROCEEDINGS REVEAL THAT THE PAN NUMBERS OF THE CREDITORS ARE DULY MENTIONED IN THE SAME. COMPLETE ADDRESSES OF ALL THESE CREDITORS ARE ALSO INDICATED IN THE SAID CONFIRMATIONS. THE A.O. HAS TAKEN THE ADVERSE VIEW ON THE GROUND THAT THESE CREDITORS WERE NOT PRODUCED FOR EXAMINATION BEFORE HIM AND FURTHER THAT THEIR BANK STATEMENTS WERE ALSO NOT FILED. HOWEVER AS EXPLAINED IN THE WRITTE N SUBMISSIONS OF THE LD. COUNSEL VIDE LETTER DATED 23.12.2009, A COPY OF WHICH WAS ALSO FILED DURING APPEAL PROCEEDINGS, THE APPELLANT HAD INFORMED THE A.O. THAT THE DIRECTORS AT THE TIME OF ASSESSMENT 3 PROCEEDINGS HAD JOINED IN THE YEAR 2005 AND OLD DIRECTORS HAD RESIGNED. IT WAS ALSO INFORMED THAT THE UNSECURED LOANS OF THESE OLD DIRECTORS WERE ALSO REPAID DURING THAT YEAR. NEW DIRECTORS ACCORDINGLY EXPLAINED BEFORE THE A.O. THAT THEY HAD NO CONTACTS WITH THEM SINCE THE DATE OF THEIR APPOINTMENT. THE APPELLANT HAD SPECIFICALLY MENTIONED IN THIS LETTER THAT THE A.O. MIGHT SUMMON THEM PERSONALLY TO FILE THEIR BANK ACCOUNTS ETC. I T IS SETTLED POSITION BY NOW THAT ONCE AN ASSESSEE MAKES REQUEST TO THE A.O. THAT THE CREDITORS COULD BE SUMMONED AT HIS LEVEL, THE A.O. COULD NOT DRAW ADVERSE INFERENCE OF THE FACT THAT SUCH CREDITORS WERE NOT PRODUCED BY AN ASSESSEE BEFORE HIM. IN THE CASE IN HAND THE POSITION IS FURTHER IN FAVOUR OF THE APPELLANT IN AS MUCH AS ALL THE CREDITORS ARE SHOWN TO BE EXISTING INCOME TAX ASSESSEES AND THEIR PAN NUMBERS ARE DULY INDICATED IN THEIR CONFIRMATION. KEEPING IN VIEW THE ABOVE DISCUSSED POSITION, THE A.O. COULD NOT DRAW ADVERSE INFERENCE AGAINST THE APPELLANT WITH REGARD TO PROVING THESE CASH CREDITS. AS FAR AS THE RATIO OF VARIOUS DECISIONS CITED BY THE A.O. IS CONCERNED NO DOUBT, THE ONUS TO PROVE THE CASH CREDITS LIES UPON THE ASSESSEE AND THAT HE HAS TO PROVE THE IDENTITY OF T HE CREDITORS AND CAPACITY OF THE CREDITORS ETC., IN TH E FACE OF ABOVE DISCUSSED POSITION IT CANNOT BE SAID THAT THE APPELLANT HAS NOT DISCHARGED ITS ONUS. RATHER THE RATIO OF VARIOUS DECISIONS RELIED UPON I N THE SUBMISSIONS OF THE LD. COUNSEL REPRODUCED ABOVE SUPPORT THE CASE OF THE APPELLANT. THE DECISION OF HON'BLE JURISDICTIONAL BENCH OF ITAT, CHANDIGARH IN THE CASE OF RAMAN KUMAR IN I.T.A.NO. 415/2009 AND 431/2009 RELIED UPON BY THE LD. COUNSEL FURTHER COVERS THIS GROUND IN FAVOUR OF THE APPELLANT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE PRESENT ASSESSMENT WAS COMPLETED AFTER REOPENING U/ S 147/148 OF THE ACT. THE CASE WAS REFERRED TO DEPARTMENTAL VALUATION OFF ICER TO ASSESS THE COST OF CONSTRUCTION FROM FINANCIAL YEAR 2001-02 TO THE COMPLETION OF THE BUILDING. THE DEPARTMENTAL VALUATION OFFICER INFOR MED VIDE LETTER 13.10.2009 THAT THERE WAS NO BUILDING AT THE SITE A ND THE SAME WAS DEMOLISHED SINCE LONG. THE PROCEEDINGS IN THIS RES PECT WERE DROPPED. THE ASSESSING OFFICER HOWEVER FOUND THE ASSESSEE TO HAVE RECEIVED LOAN OF RS. 7 LACS FROM THE FOLLOWING PERSONS : 4 SR.NO. NAME OF THE INDIVIDUAL AMOUNT (RUPEES) 1. SHRI HARMEET SINGH 1,25,000.00 2. SHRI JATINDER PAL SINGH 2,00,000.00 3. SHRI M.S.GANDHI 2,50,000.00 4. SHRI RAVINDER SINGH 1,25,000.00 5. THE ASSESSEE FILED THE CONFIRMATION FROM THE AFO RESAID DEPOSITORS INCLUDING THEIR NAMES AND ADDRESSES AND PAN NUMBERS . THE INCOME-TAX RETURNS EXCEPT SHRI MANMOHAN SINGH WERE ALSO FILED. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE COMPANY WAS TAKEN OVER BY THE PRESENT DIRECTORS AND THE OLD DIRECTORS WHO HAD CONTRIBUTED RS.7 LACS HAD SINCE RESIGNED AND THE PRESENT DIRECT OR HAD NO CONTACT WITH THEM. ON TAKING OVER THE COMPANY, THE SAID DIRECT ORS HOWEVER, HAD REPAID THE SUM OF RS.7 LACS. THE ASSESSEE FURTHER REQUESTED THE ASSESSING OFFICER TO SUMMON THE SAID PARTIES. THE ASSESSEE H AS FURNISHED BEFORE US THE CONFIRMATION ALONGWITH COPIES OF RETURNS OF INC OME FILED BY THE AFORESAID PARTIES, WHICH ARE PLACED AT PAGES 10 TO 19 OF THE PAPER BOOK. THE PERUSAL OF THE SAME REVEALS THAT ALL THE FOUR P ARTIES ARE ASSESSED TO TAX AND THEIR PERMANENT ACCOUNT NUMBERS WERE FURNISHED. VIDE LETTER DATED 29.12.2009 THE ASSESSEE INFORMED THE ASSESSING OFFI CER THAT THE PRESENT DIRECTORS HAD JOINED IN THE YEAR 2005 AND OLD DIREC TORS HAD RESIGNED AND EVEN THE UNSECURED LOANS WERE REPAID DURING THAT YE AR. IT WAS ALSO INFORMED THAT THE MATTER BEING OLD, THE INFORMATION WITH REGARD TO THEIR BANK ACCOUNTS WAS NOT TRACEABLE WITH THE ASSESSEE C OMPANY. FURTHER A REQUEST WAS MADE TO SUMMON THE SAID PARTIES PERSONA LLY. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES WHERE THE ASSESSEE HAD F URNISHED THE NAMES AND ADDRESSES OF THE OLD DIRECTORS, WHO HAD CONTRIB UTED THE SAID UNSECURED LOANS OF RS.7 LACS AND EVEN THEIR INCOME- TAX PARTICULARS WERE 5 FURNISHED ALONGWITH THE COPIES OF THE INCOME-TAX RE TURNS FILED, THE ONUS UPON THE ASSESSEE CAN BE SAID TO BE DISCHARGED, IN VIEW OF THE PECULIAR CIRCUMSTANCES OF THE CASE. THE CONTRIBUTION WAS MA DE BY THE OLD DIRECTORS IN 2001 AND THE ASSESSEE COMPANY CHANGED HANDS NEW DIRECTORS WERE INDUCTED IN THE YEAR 2005, WHEN THE OLD DIRECT ORS RESIGNED. THE ASSESSMENT PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT AND WERE TAKEN UP IN THE YEAR 2009. THE NEW DIRECT ORS SHOWED THEIR INABILITY TO CONTACT THE OLD DIRECTORS. THOUGH A R EQUEST WAS MADE TO SUMMON THE SAID PERSONS, WHO WERE EXISTING INCOME-T AX ASSESSEES. IN THE ABOVE SAID CIRCUMSTANCES, IT COULD NOT BE SAID THAT THE ASSESSEE IN THE PRESENT CASE HAD NOT DISCHARGED ITS ONUS IN RESPECT OF THE AFORESAID CREDITS OF RS.7 LACS. IN THE TOTALITY OF FACTS AND CIRCUMS TANCES OF THE CASE WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GRO UND NO.1 RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30TH DAY OF MARCH, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : MARCH, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR