Sri Purna Chandra Palchowdhury, Burdwan V. I.T.O Wd - 2(2),Burdwan, Burdwan

ITA 1088/KOL/2013

• Counselvise Citation: 108823514 RSA 2013
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2013
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Bogus loan
• Section: 234B; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE HON BLE SHRI B.P.JAIN, AM] I.T.A NO S.1088 & 1089 /KOL/2013 ASSESSMENT YEAR S : 2003 - 04 & 2004 - 05 SRI PURNA CHANDRA PALCHOWDHURY VS I.T.O., WARD - 2(2 ) BURDWAN BURDWAN (A PPELLANT) ( RESPONDENT) (PAN: AFOPP 0532 K) FOR THE APPELLANT : SHRI SOUMITRA CHOWDHURY,ADVOCATE FOR THE RESPONDENT : SHRI SANJAY, SR.DR, ADDL. C.I.T. DATE OF HEARING : 03 .06 .2015. DATE OF PRONOUNCEMENT: 03 .06 .2015. ORDE R PER SHRI B.P.JAIN, AM : THESE TWO APPEAL S OF THE ASSESSEE ARI SE FROM THE ORDER OF LD.CIT(A) - DURGAPUR, KOLKATA EACH DATED 25.02.2013 FOR ASSESSMENT YEAR S 2003 - 04 AND 2004 - 05 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN A.YRS. 2003 - 04 & 2004 - 05 : - 1. FOR THAT ON THE FACTS OF THE CASE, THE ORDER PASSED BY THE CIT(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 2. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A) WAS COMPLETELY WRONG IN NOT QUASHING THE REOPENING P ROCEEDING U/S 147/143(3) OF THE I.T.ACT WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION OF RS.190,000/ - (RS.90,000/ - FOR A.YR .2004 - 05) AS UNSECURED LOAN WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 4. FOR THAT ON THE FACTS OF THE CASE THE LD.CIT(A) WAS WRONG IN NOT DELETING THE UNDISCLOSED INVESTMENT IN TERM DEPOSIT AMOUNTING TO RS.27,200/ - (RS.20,000/ - FOR A.YR.2004 - 05) WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 5. FOR THAT THE INTEREST U/S 234B & 234C CHARGED MECHANICALLY ARE WRONG & ILLEGAL. 6. FOR THAT THE APPELLANT RESERVES THE RIGHT TO ADDUCE ANY FURTHER GROUND OR GROUNDS, IF NECESSARY AT OR BEFORE T HE HEARING OF THE APPEAL. 3 . SINCE THE ISSUES IN BOTH THE APPEALS ARE IDENTICAL THEREFORE WE TAKE UP BOTH THE APPEALS TOGETHER BY THIS CONSOLIDATE D ORDER. FIRST OF ALL WE TAKE UP APPEAL IN ITA ITA NO S.1088&108 9/KOL/2013 SRI PURNA CHANDRA PALCHOWDHURY A.YR S.2003 - 04 & 2004 - 05 2 NO.1088/KOL/2013 FOR A.YR.2003 - 04 AND OUR ORDER HEREIN BELOW SHALL BE IDENTICALLY APPLICABLE FOR A.YR.2004 - 05 ALSO. ITA NO.108 8/KOL/2013 (A.YR.2003 - 04) 4. GROUND NOS. 1 AND 6 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 5. GROUND NO.2 IS NOT PRESSED BY THE LD .COUNSEL FOR THE ASSESSEE AND AC CORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 6. GROUND NO.5 OF THE ASSESSEE IS REGARDING INTEREST U/S 234B AND 234C OF THE ACT WHICH IS CONSEQUENTIAL AND DO NOT REQUIRE ANY ADJUDICATION. 7. THE EFFECTIVE GROUNDS ARE GROUND NOS. 3 AND 4. GROUND NO.4 DOES NOT ARISE FROM THE ORDER OF LD. CIT(A). SINCE THE ASSSESSEE HAS NOT TAKE N UP THAT GROUND BEFORE THE LD. CIT(A) ACCORDINGLY IT IS INFRUCTUOUS AND DISMISSED. 8. AS REGARDS GROUND NO.3 THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF AO ARE REPROD UCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : IT IS FOUND FROM THE BALANCE SHEET THAT THE ASSESSEE TOOK UNSECURED LOAN OF RS.190000/ - FROM 10 PERSONS AS NOTED BELOW : SL.NO. NAME OF THE LOAN CREDITORS AMOUNT 1. SANJOY KUNDU 19000 2. BIMAL GHOSAL 1900 0 3. GIRIDHARI DEY 19000 4. ASHALATA PALCHOWDHURY 19000 5. SOMA PALCHOWDHURY 19000 6. TAPAN DAS 19000 7. MUKTA GHOSH 19000 8. NABA GHOSH 19000 9. SOMNATH PALCHOWDHURY 19000 10. NIRANJAN KUNDU 19000 TOTAL 190000 NOTICE U/S 13 1 WAS ISSUED ASKING THE ABOVE LOAN CREDITORS TO APPEAR ON 26.12.08. IN RESPONSE, SHRI NABA GHOSH, SANJOY K U NDU, BIMAL GHOSAL APPEARED AND THEIR STATEMENTS HAVE BEEN RECORDED WHICH ARE NARRATED BELOW : NABA GHOSH : NABA GHOSH HAS STATED THAT HE IS ENGAGED I N PRIVATE TUITION. HIS YEARLY INCOME IS ABOUT RS.30000/ - . HE GAVE LOAN TO PURNA PALCHOWDHURY OF 19000/ - IN CASH. EXACT DATE COULD NOT BE REMEMBERED BUT PROBABLY IN THE MONTH OF MARCH OR APRIL, 2003. HE HAS ALSO STATED THAT LOAN WAS GIVEN FROM HIS PAST SAVI NGS. HE DID NOT MAINTAIN BANK ACCOUNT. SANJOY KUNDU : HE HAS STATED THAT HE IS ENGAGED IN THE BUSINESS OF PAN/BIRI/CIGARATE ETC. SINCE 1996. HE HAS ALSO STATED THAT HE IS A PASS GRADUATE. ACCORDING TO HIS STATEMENT HIS AGE IN 1996 WAS 18 YEARS WHEN HE WAS A STUDENT. HE DOES NOT MAINTAIN BOOKS OF ACCOUNTS, BANK ACCOUNT. HE HAS STATED THAT HE GAVE A LOAN OF RS.19000/ - IN CASH BUT THE DATE OF PAYMENT HAS NOT ITA NO S.1088&108 9/KOL/2013 SRI PURNA CHANDRA PALCHOWDHURY A.YR S.2003 - 04 & 2004 - 05 3 BEEN REMEMBERED. ASSESSEE IS THE MATERNAL UNCLE OF SHRI KUNDU.HE FAILED TO PRODUCE ANY PROOF OF IDENTIF ICATION. BIMAL GHOSAL : BIMAL GHOSAL HAS STATED THAT HE HAD A GROCERY SHOP AT MANASHATALA, KATWA. HE DOES NOT MAINTAIN BOOKS OF ACCOUNTS. HIS MONTHLY INCOME IS RS 2500 TO 3000. HE HAS STATED THAT HE GAVE A LOAN OF RS. 19000/ - IN CASH. EXACT DATE OF PAYMENT IS NOT REMEMBERED. IT WILL BE IN THE MONTH OF MARCH, 2003. HE COULD NOT PROVE ANY EVIDENCE FOR GIVING LOAN TO THE ASSESSEE WH IS HIS BROTHER - IN - LAW. IT IS FOUND FROM THE ABOVE STATEMENT THAT NABA GHOSH, SANJOY KUNDU AND BIMAL GHOSAL FAILED TO GIVE ANY E VIDENCE FOR GIVING SUCH LOAN TO THE ASSESSEE. MOREOVER, AS PER STATEMENT OF SANJOY KUNDU, HE WAS A STUDENT AT THE TIME OF THE TRANSACTION OF LOAN. THEREFORE, THE TRANSACTION OF LOAN COULD NOT BE SUBSTANTIATED. SANJOY KUNDU ALSO FAILED TO PROVE ANY EVIDENCE OF SUCH TRANSACTION OF LOAN. MOREOVER THEIR INCOME IS TOO LOW TO SUBSTANTIATE THE CAPABILITY AS WELL AS CREDIBILITY OF GIVING SUCH LOAN. THEREFORE, THE L9OAN CLAIMED TO HAVE BEEN GIVEN BY ABOVE PERSONS AMOUNTING TO (RS 19000+RS.19000+RS.19000) OR RS.57000 / - IS CONSIDERED AS BOGUS. SRI SOMNATH PAULCHOWDHURY COULD NOT APPEAR DUE TO HIS ILLNESS. HOWEVER, HE HAS SUBMITTED A WRITTEN PETITION STATING THAT HE GAVE LOAN TO THE ASSESSEE FOR RS.19000/ - IN CASH IN 2003. EXACT DATE IS NOT MENTIONED. COPY OF RETURN FOR THE ASSESSMENT YEARS 2003 - 04 & 2004 - 05 HAVE BEEN FURNISHED. BUT NO BALANCE SHEET WAS ATTACHED WITH THE RETURN. AS SUCH, THE TRANSACTIONS OF LOAN COULD NOT BE SUBSTANTIATED. THEREFORE, THE CLAIM OF GIVING LOAN OF RS.19000/ - BY SOMNATH PALCHOWDHURY IS CONSI DERED AS BOGUS. SOMA PALCHOWDHURY COULD NOT APPEAR DUE TO HER ILLNESS BUT LD.COUNSEL OF THE ASSESSEE HAS SUBMITTED A PETITION SIGNED BY SOMA PALCHOWDHURY WHEREIN IT HAS BEEN STATED THAT SHE GAVE LOAN OF RS.19000/ - TO THE ASSESSEE ON 01.03.2003.SHE HAS STAT ED THAT SHE GAVE THE LOAN BY EARNING FROM EMBROIDERY AND MISCELLANEOUS WORK. BUT SHE COULD NOT GIVE ANY EVIDENCE FOR SUCH TRANSACTION OF LOAN. THEREFORE, THE LOAN CLAIMED TO HAVE BEEN GIVEN TO THE ASSESSEE IS CONSIDERED BOGUS. IT HAS ALSO BEEN STATED BY T HE ASSESSEE THROUGH HIS PETITION SUBMITTED DURING THE COURSE OF HEARING ON 29.12.08 THAT SMT. ASHALATA PALCHOWDHURY DIED ON 16.06.2004. COPY OF DEATH CERTIFICATE FURNISHED. HOWEVER, IT IS LEARNT THAT SMT. ASHALATA PALCHOWDHURY IS A HOUSEWIFE. THEREFORE, TH E LOAN CLAIMED TO HAVE BEEN GIVEN BY SMT. ASHALATA PALCHOWDHURY IS ALSO CONSIDERED AS BOGUS. OTHER LOAN CREDITORS MADE NO COMPLIANCE TO THE NOTICE U/S 131 OF THE ACT. THEREFORE, THE LOAN CLAIMED TO HAVE BEEN RECEIVED FROM THOSE PERSONS IS ALSO CONSIDERED A S BOGUS. IN VIEW OF THE ABOVE DISCUSSION IT IS CONSIDERED THAT THE ENTIRE LOAN TRANSACTIONS OF RS.190000/ - IS BOGUS AND AS SUCH IT IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 9. I HAVE HEARD THE RIVAL CONTEN TIONS AND GONE THROUGH THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS SUBMITTED THE NAMES AND ADDRESSES OF ALL THE CREDITORS. THE ASSESSEE TOOK LOAN FROM 10 PERSONS, OUT OF WHICH THREE I.E. SHRI NABA GHOSH, SHRI SANJOY KUNDU A ND SHRI BIMAL GHOSAL CONFIRMED OF HAVING GIVEN LOAN OF RS.19000/ - EACH TO THE ASSESSEE IN THEIR STATEMENT RECORDED U/S 131 OF THE ACT BY THE AO. ITA NO S.1088&108 9/KOL/2013 SRI PURNA CHANDRA PALCHOWDHURY A.YR S.2003 - 04 & 2004 - 05 4 9.1. AS REGARDS SOMA PALCHOWDHURY, WHO HAD SUBMITTED A WRITTEN PETITION AND CONFIRMED OF HAVING GIVEN LOAN TO THE ASSESSEE. SIMILARLY SOMA PALCHOWDHURY HAD CONFIRMED OF HAVING GIVEN LOAN TO THE ASSESSEE. SMT. ASHALA PALCHOWDHURY HAD DIED ON 16.06.2004 AND THE DEATH CERTIFICATE WAS FURNISHED. BUT THE AO HAD GIVEN TREATMENT TO ALL THE PERSONS AS A BOGUS CREDITOR F OR THE REASONS BEST KNOWN TO HIM AND HAS NOT ACCEPTED THEIR CAPABILITY OF GIVING THE LOAN. FOR SUCH SMALL LOANS I HAD NOT FOUND THAT SUCH PERSONS DO NOT HAVE ANY CAPABILITY. AS REGARDS OTHER PERSONS WHO COULD NOT APPEAR, THE SAME YARDSTICK WAS APPLIED BY T HE AO WHICH IN FACT IS A WRONG APPROACH ADOPTED BY THE AO. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE AO IS NOT JUSTIFIED IN TREATING ALL THE CREDITORS TOTALING TO RS.1,90,000/ - AS BOGUS AND THEREFORE THE ADDITIONS MADE BY THE AO IS DIRECTED TO BE DELE TED AND ORDER OF THE LD. CIT(A) IS REVERSED. THUS GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.1088/KOL/2013 IS PARTLY ALLOWED. 11. AS REGARDS APPEAL IN ITA NO.1089/KOL/2013 GROUND NO.2 HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AND ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 12. GROUND NOS.1 AND 6, BEING GENERAL IN NATURE DO NOT REQUIRE ANY ADJUDICATION. 13. AS REGARDS GROUND NO.5 WHICH RELATES TO THE INTEREST U/S 234B AND 234C OF THE ACT IS CONSEQUENTIAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 14. AS REGARDS GROUND NO.4 THE SAME DOES NOT ARISE FROM THE ORDER OF LD. CIT(A), AS THE ASSESSEE HAS NOT TAKEN UP THE GROUND ON THE SAID ISSUE BEFORE THE LD. CIT(A). ACCORDINGLY THE SAME IS IN FRUCTUOUS AND IS DISMISSED. 15. THE EFFECTIVE GROUND IS GROUND NO.3 WITH REGARD TO ADDITION OF RS.90,000/ - AS UNSECURED LOAN. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF AO AT PAGE 2 ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE : IT APPEARS FROM THE BALANCE SHEET THAT THE ASSESSEE RECEIVED LOAN OF RS.90000/ - DURING THE F.Y. 2003 - 04 FROM THE FOLLOWING PERSONS : SL. NO. NAME OF THE LOAN CREDITOR AMOUNT 1 . MUNNA GHOSAL RS.18000/ - 2 . TARAK N ATH GHOSAL RS.17000/ - 3 . NARAYAN CHANDRA PAL CHOWDHURY RS.19000/ - ITA NO S.1088&108 9/KOL/2013 SRI PURNA CHANDRA PALCHOWDHURY A.YR S.2003 - 04 & 2004 - 05 5 4 . KESTO PAL RS.18000/ - 5 . RAM GOPAL PAL RS.18000/ - TOTAL RS.90000/ - NOTICE U/S 131 WAS ISSUED ON 18.12.08 FOR VERIFICATION OF THE GENUINENESS OF THE LOAN TO THOSE PERSONS. IN RESPONSE TO NOTICE U/S 131 OF THE I.T.ACT MUNNA GH OSAL AND TARAK NATH GHOSAL APPEARED AND THEIR STATEMENT HAS BEEN RECORDED AND WHICH ARE NARRATED BELOW. MUNNA GHOSAL ALIAN RAGHUNATH GHOSAL MUNNA GHOSAL ALIAS RAGHUNATH GHOSAL HAS STATED THAT HE IS ENGAGED IN THE RICE TRADING BUSINESS. HE HAS NO SALE COUNT ER. HE HAS STATED THAT HIS MONTHLY INCOME IS RS.1800 TO 2000. NO BOOKS OF ACCOUNTS ARE MAINTAINED. BANK ACCOUNT NOT MAINTAINED. I.T RETURN WAS NOT FILED. THE ASSESSEE IS THE MATERNAL UNCLE OF MUNNA GHOSAL. HE HAS STATED THAT HE GAVE LOAN OF RS.18000/ - IN C ASH AND THE DATE OF PAYMENT IS AUG.2003. HE HAS NO EVIDENCE OF SUCH LOAN TRANSACTIONS. TARAK NATH GHOSAL TARAK NATH GHOSAL HAS STATED THAT HE IS ENGAGED IN THE RICE TRADING BUSINESS.. NO TRADE LICENCE IS POSSESSED BY HIM. NO BOOKS OF ACCOUNTS ARE MAINTAINE D. NO BANK ACCOUNT IS MAINTAINED. HE HAS STARTED HIS BUSINESS IN 1999. HIS MONTHLY INCOME IS RS.3000/ - . NO INCOME TAX RETURN IS FILED BY HIM. HE HAS STATED THAT HE GAVE LOAN OF RS.17000/ - TO PURNA CHANDRA PALCHOWDHURY IN THE MONTH OF MARCH OR APRIL, 2003. HE COULD NOT PRODUCE ANY EVIDENCE OF SUCH CASH TRANSACTIONS. NARAYAN CHANDRA PALCHOWDHURY NARAYAN CHANDRA PALCHOWDHURY APPEARED BUT HIS STATEMENT COULD NOT RECORDED DUE TO HIS ILLNESS. HOWEVER, HE HAS SUBMITTED A WRITTEN SUBMISSION MENTIONING THAT HE GAVE LOAN OF RS.19000/ - TO PURNA CHANDRA PALCHOWDHURY ON 12.08.03. PHOTO COPY OF ACKNOWLEDGEMENT OF RETURN FOR THE ASSESSMENT YEAR 2004 - 05 HAS BEEN SUBMITTED. BUT NO BALANCE SHEET WAS FURNISHED ALONG WITH THE SAID RETURN OF INCOME. AS SUCH, THE LOAN CLAIMED TO HAVE BEEN GIVEN TO PURNA CHANDRA PALCHOWDHURY COULD NOT BE SUBSTANTIATED. THEREFORE, IT IS CONSIDERED THAT ASSESSEE S CLAIM OF LOAN OF RS.19000/ - FROM NARAYAN CH.PALCHOWDHURY IS NOT SUPPORTED BY ANY EVIDENCE. HENCE, IT IS CONSIDERED AS BOGUS LOAN CLAIMED BY THE ASSESSEE. OTHER PERSONS NAMELY, KESTO PAL AND RAM GOPAL PAL MADE NO COMPLIANCE TO NOTICE U/S 131 OF THE I.T.ACT. THEREFORE, IT IS CONSIDERED THAT THE LOAN OF RS.90000/ - CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE DURING THE ASSESSMENT YEARS 2004 - 05 IS BOGUS AND AS SUCH IT IS CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 16. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. IN THE PRESENT CA SE ALSO MUNNA GHOSAL AND TARAK NATH GHOSAL CONFIRMED OF HAVING GIVEN LOAN TO THE ASSESSEE IN LIEU OF THE STATEMENT RECORDED U/S 131 OF THE ACT BY THE AO. AS REGARDS NARAYAN CHANDRA PALCHOWDHURY HIS STATEMENT COULD NOT BE RECORDED DUE TO HIS ILLNESS BUT HE MADE A WRITTEN SUBMISSION THAT HE HAS GIVEN LOAN OF RS.19000/ - AND PHOTO COPY OF THE ACKNOWLEDGEMENT RETURN WAS ALSO SUBMITTED. TWO CREDITORS COULD NOT APPEAR BUT THE AO APPLIED THE SAME YARDSTICK TO TREAT ALL THE CREDITORS AS BOGUS ITA NO S.1088&108 9/KOL/2013 SRI PURNA CHANDRA PALCHOWDHURY A.YR S.2003 - 04 & 2004 - 05 6 EVEN IF THE CREDITORS H AD CONFIRMED OF HAVING GIVEN THE LOAN. THE REASONS MAINLY FOR HOLDING THE CREDITORS AS BOGUS BY THE AO WAS THAT THE SAID CREDITORS ARE NOT CAPABLE OF GIVEN LOANS TO THE ASSESSEE. NO EVIDENCE FOR THE SAME HAS BEEN PRODUCED IN THE ORDER OF THE AO AND THEREFO RE IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE AO IS NOT JUSTIFIED IN TREATING ALL THE LOANS TOTALING RS.90000/ - AS BOGUS AND ADDITIONS SO MADE IS DIRECTED TO BE DELETED. ACCORDINGLY THE ORDER OF LD. CIT(A) IS REVERSED. GROUND NO.3 OF THE ASSESSEE S APP EAL IS ALLOWED. 17. IN THE RESULT THE APPE AL OF THE ASSESSEE IN ITA NO.108 9/KOL/2013 IS PARTLY ALLOWED. ORDE R PRONOUNCED IN THE OPEN COURT ON 03 .06 .2015. SD/ - [ B.P.JAIN ] ACCOUNTANT MEMBER DATE: 03 .06 .2015. R.G.(.P.S.) C OPY OF THE ORDER FORWARDED TO: 1 . SRI PURNA CHANDRA PALCHOWDHURY, NEW MARKET, BURRABAZAR, P.O.KATWA, DIST. BURDWAN - 713 130. 2 I.T.O., WARD - 2(2 ), BURDWAN. 3 . CIT(A) - DURGAPUR. 4. CIT - KOLKATA. 5. CIT - DR, KOLKA TA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES