Vijay Fulaji Vanzara, Sabarkantha V. The Dy.Commissioner of Income Tax, Sabarkantha Circle, Himatnagar

ITA 1135/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5737 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained cash credit; Additional evidence; Corroborative evidences
• Section: 143(3); 208; 68

Judgement Text

ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR VICE PRESIDENT AND MADHUMITA R OY JM] ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 VIJAY FULAJI VANZARA ..APPELLANT PROP BANJARA CONSTRUCTION SAMRAYA COMPLEX, MEHTAPURA CHAR RASTA HIMATNAGAR 383 001, SABARKANTHA [PAN: ACRPV9084A] VS DEPUTY COMMISSIONER OF INCOME TAX SABARKANTHA CIRCLE, HIMATNAGAR ..........R ESPONDENT APPEARANCES BY S N DIVETIA FOR THE APPELLANT LALIT P JAIN FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 05, 2018 DATE OF PRONOUNCEMENT : DECEMBER 03, 2018 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE LEARNED COMMISSIONER (APPEALS)S ORDER DATED 29 TH FEBRUARY 2016, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012-13. 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS THAT , ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITIONS AGGREGATING TO RS 74,86,562, AS UNEXPLAINED CREDITS TAXABLE UNDER SECTION 68, ON AC COUNT OF CASH LOANS OF UNDER RS 20,000 EACH, SAID TO HAVE BEEN TAKEN FROM 372 PARTIES. 3. THE ISSUE IN APPEAL LIES IN A RATHER NARROW COMP ASS OF MATERIAL FACTS. THE ASSESSEE BEFORE US IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND OF CARRYING OUT SUB-CONTRACT WORK. DURING THE COURSE OF SCRUTINY AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED CASH LOANS, AND INTERESTINGLY ALL THE LOANS BEING ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 2 OF 6 OF MARGINALLY BELOW RS 20,000, FROM 372 DIFFERENT P ERSONS, AND THESE AMOUNTS, AGGREGATING TO RS 74,86,562 ARE SHOWN IN THE BOOKS OF THE ASSES SEE AS UNSECURED CREDITORS. WHEN HE PROBED THE MATTER FURTHER, ALL THAT THE ASSESSEE CO ULD FURNISH WAS A LIST OF NAMES AND THE AMOUNT OF BORROWINGS INDICATED AGAINST EACH SUCH NA ME. ON 29 TH SEPTEMBER 2014, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE WHICH INTER ALIA STATED THAT ON GOING THROUGH THE SUBMISSIONS FILED BY YOU, IT IS S EEN THAT YOU HAVE TAKEN UNSECURED LOANS FROM 372 PARTIES OF RS 74,86,562 BUT FAILED TO GIVE / PROVE CREDITWORTHINESS OF PERSONS, I.E. SOURCE OF INCOME, COMPLETE NAME AND ADDRESSES, IDEN TITY OF PERSONS, AND GENUINENESS OF TRANSACTIONS, PAN ETC. IT IS ALSO OBSERVED THAT ALL THE PERSONS HAVE GIVEN CASH LOANS BELOW RS 20,000. IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, WHY SHOULD THIS AMOUNT NOT BE TREATED AS NON GENUINE AND ADDED TO YOUR INCOME UNDER SECTION 68 OF THE IT ACT. THERE WAS NO RESPONSE BY THE ASSESSEE, DESPITE FURTHER FOLLOW UP , INCLUDING BY TELEPHONE CALLS, BY THE ASSESSING OFFICER. IT WAS IN THIS BACKDROP THAT THE AMOUNT OF RS 74,86,562 WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. WHILE C ONFIRMING THE ACTION OF THE ASSESSING OFFICER, THE CIT(A), INTER ALIA, OBSERVED AS FOLLOW S: 5.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE AO MADE THE ADDITION OF RS.74,86,56 2/- U/S. 68 OF THE ACT SINCE THE APPELLANT HAD NOT DISCHARGED THE ONUS OF PROVING TH E IDENTITY AND CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS, IN RESPECT OF THE UNSECURED LOANS TAKEN IN CASH. THE APPELLANT'S REQUEST FOR ADMISSIO N OF ADDITIONAL EVIDENCE WAS ACCEPTED DURING THE APPELLATE PROCEEDINGS AND ALL T HE EVIDENCES FILED WERE SENT TO THE AO FOR VERIFICATION. A PERUSAL OF THE REMAND REPORT , HOWEVER, SHOWS THAT DURING REMAND PROCEEDINGS, THE AO GAVE SEVERAL OPPORTUNITI ES TO THE APPELLANT TO GIVE EXPLANATIONS AND MADE FURTHER SUBMISSIONS FROM WINC H THE GENUINENESS OF TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE P ARTIES COULD BE PROVED. HOWEVER, THE APPELLANT DID NOT AVAIL OF THESE OPPORTUNITIES BUT KEPT SEEKING ONE ADJOURNMENT AFTER ANOTHER DURING REMAND PROCEEDINGS. 5.2.1 IT IS NOT SUFFICIENT FOR AN APPELLANT TO JUST PRODUCE A VOLUMINOUS PAPER BOOK CONTAINING LEDGER ACCOUNTS AND SIMPLE CONFIRMATION LETTERS OF DEPOSITORS AND TREAT THE SAME AS DISCHARGE OF HIS ONUS TO ESTABLISH THE GENU INENESS OF TRANSACTIONS, CREDITWORTHINESS AND IDENTITY OF THE PARTIES. THESE 'EVIDENCES' BY NO MEANS ESTABLISH THE GENUINENESS OF THE TRANSACTIONS OR CREDITWORTHI NESS OF THE DEPOSITORS. IT IS AT THE APPELLANT'S OWN REQUEST THAT AN OPPORTUNITY WAS GIV EN TO HIM TO EXPLAIN THE CASH DEPOSITS TO THE AO. NONE OF THE DEPOSITORS WERE PRO DUCED BEFORE THE AO. IF THE DEPOSITORS ARE GENUINE AND HAVE ADVANCED LOANS TO T HE APPELLANT, THEY SHOULD BE AVAILABLE AS WELL AND THERE IS NO JUSTIFICATION FOR THEIR NON APPEARANCE ESPECIALLY IN LIGHT OF THE FACT THAT THE APPELLANT HAS STATED THA T HE WAS NOT GIVEN SUFFICIENT ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 3 OF 6 OPPORTUNITY DURING THE COURSE OF APPELLATE PROCEEDI NGS AND HE WAS GIVEN THE SAME DURING REMAND PROCEEDINGS. MOREOVER, I ALSO AGREE W ITH THE AO THAT MERELY STATING ON A PIECE OF PAPER THAT LOANS HAVE BEEN ADVANCED, WITH NO FURTHER DETAILS OF THE TRANSACTION IN QUESTION DOES NOT PROVE THE GENUINEN ESS OF THE TRANSACTION OR THE CREDITWORTHINESS OF THE DEPOSITORS. A PERUSAL OF TH E SUBMISSION MADE BY THE APPELLANT SHOWS THAT HE HAS MERELY FURNISHED HANDWRITTEN CONF IRMATIONS ON PLAIN PAPER WHICH DOES NOT AUTHENTICATE THE TRANSACTION. MOREOVER, IT IS SEEN FROM THE SUBMISSIONS AND THE REMAND REPORT THAT THE APPELLANT HAS BEEN ABLE TO PROVIDE SUFFICIENT DOCUMENTS AND EVIDENCES TO PROVE THE GENUINENESS OF THE TRANS ACTION IN ONLY TWO CASES. IF ALL THE TRANSACTIONS WERE GENUINE, THERE IS NO REASON FOR T HE APPELLANT TO BE UNABLE TO ESTABLISH THE SAME IN ALL CASES, LIKE IT WAS DONE F OR THESE TWO CASES. 5.2.2 IT HAS FURTHER BEEN STATED BY THE APPELLANT THAT THE OPENING BALANCE OF UNSECURED LOAN OF RS.29,16,362/- CANNOT BE ADDED BY THE AO. HOWEVER, THIS CONTENTION OF THE APPELLANT IS NOT CORRECT, SINCE I T IS SEEN THAT THE IMPUGNED ADDITION DOES NOT INCLUDE THE OPENING BALANCE. MOREOVER, ON PAGE 2 OF HIS REJOINDER, THE APPELLANT HAS SUBMITTED THAT IN CASE THE AO WANTED FURTHER DETAILS RELATING TO UNSECURED LOANS, HE COULD HAVE CALLED THE APPELLANT IN THIS REGARD AND THAT THE APPELLANT WAS NOT PROVIDED ANY SUCH OPPORTUNITY. TH E APPELLANT HAS ALSO STATED THAT A FRESH REMAND REPORT MAY BE CALLED FOR. THESE SUBMIS SIONS OF THE APPELLANT ARE COMPLETELY UNACCEPTABLE. THE APPELLANT AT HIS OWN R EQUEST WAS PROVIDED AN OPPORTUNITY DURING THE APPELLATE PROCEEDINGS AS WEL L AS BY THE AO DURING REMAND PROCEEDINGS TO STATE HIS CASE. HOWEVER, JUST LIKE A T THE TIME OF ASSESSMENT PROCEEDINGS, HE FAILED TO APPEAR BEFORE THE AO DURI NG REMAND PROCEEDINGS AS WELL AND PRODUCE EVIDENCES AND DOCUMENTS AS REQUIRED BY THE A.O . BY NO MEANS IS THE APPELLANT ENTITLED TO ADOPT SUCH A CASUAL APPROACH AND KEEP SEEKING ENDLESS OPPORTUNITIES AND NOT AVAIL THE SAME WHEN GIVEN. 5.2.3 CONSIDERING THESE FACTS AND AS PER THE DISCU SSION ABOVE, THE ADDITION OF RS.69,61,562/- IS CONFIRMED, SINCE THE CREDITWORTHI NESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS REMAINS UNPROVED. THE APPELLANT GETS RELIEF OF RS.5,25,000/- WHICH IS THE AMOUNT THAT HAS BEEN VER IFIED BY THE AO. GROUNDS OF APPEAL NOS. 2.1 & 2.2 ARE PARTLY ALLOWED. 4. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. AS WE DEAL WITH THIS MATTER, WE ARE REMINDED OF HON'BLE SUPREME COURT'S OBSERVATION, IN THE CASE OF CIT V. DURGA PRASAD MORE [1971] 82 ITR 540 , TO THE EFFECT THAT ' SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COURTS A ND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES '. SIMILARLY, IN A LATER ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 4 OF 6 DECISION IN THE CASE OF SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC), HON'BLE SUPREME COURT REJECTED THE THEORY THAT IT IS FOR ALLEGER TO PROVE THAT THE APPARENT AND NOT REAL, AND OBSERVED THAT, THIS, IN OUR OPINION, IS A SUPERFICIAL APPROACH TO THE PROBLEM. THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABIL ITIES..................SIMILARLY THE OBSERVATION ................... THAT IF IT IS ALLEG ED THAT THESE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS, IT IS UPON THE ALLEGER TO PROVE T HAT IT IS SO, IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RARELY AVAILABLE ..... ........IN OUR OPINION, THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELL ANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BE EN REJECTED UNREASONABLY '. WE WILL BE SUPERFICIAL IN MY APPROACH IN CASE WE EXAMINE THE C LAIM OF THE ASSESSEE ON THE BASIS OF DOCUMENTS AND AFFIDAVITS FILED BY THE ASSESSEE AND OVERLOOK CLEAR THE UNUSUAL PATTERN IN THE DOCUMENTS FILED BY THE ASSESSEE AND PRETEND TO BE O BLIVIOUS OF THE GROUND REALITIES. AS HON'BLE SUPREME COURT HAS OBSERVED, IN THE CASE OF DURGA PRASAD MORE(SUPRA), ........... IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS T O HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITI ES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS '. AS A FINAL FACT FINDING AUTHORITY, THIS TRIBUNAL CANNOT BE SUPERFICIAL IN ITS ASSESSMENT OF GENUINENESS OF A TRANSACTION, AND THI S CALL IS TO BE TAKEN NOT ONLY IN THE LIGHT OF THE FACE VALUE OF THE DOCUMENTS SIGHTED BEFORE THE TRIBUNAL BUT ALSO IN THE LIGHT OF ALL THE SURROUNDING CIRCUMSTANCES, PREPONDERANCE OF HUMAN P ROBABILITIES AND GROUND REALTIES. HERE IS A CASE IN WHICH THE ASSESSEE HAS TAKEN LOANS OF JUST UNDER RS 20,000 IN CASH AND FROM 372 PARTIES, THESE LENDERS ARE NOT TAXPAYERS AND THE CO NFIRMATIONS GIVEN BY THEM, IN THE REMAND ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 5 OF 6 PROCEEDINGS, ARE STEREO TYPED CONFIRMATIONS STATING THAT THESE MONIES ARE PAID FROM THEIR PAST SAVINGS AND THAT AS THEIR INCOME WAS BELOW TAXABLE LIMITS, THE INCOME TAX RETURNS WERE NEVER FILED. IT IS HARDLY BELIEVABLE THAT THE ASSESSEE, IN LESS THAN 372 DAYS, GETS 372 PERSONS WHO GIVE HIM JUST UNDER RS. 20,000 EACH IN CASH, AND AL L THESE PERSONS ARE PERSONS NOT FILING INCOME TAX RETURNS AND HAVING LESS THAN MINIMUM TAX ABLE INCOME. THE SHEER NUMBERS, MAGNITUDE OF TRANSACTIONS, ALARMING RECURRENCE OF C OINCIDENCES AND PATTERN OF BORROWINGS DO NOT INSPIRE ANY FAITH IN THE EXPLANATION ADVANCED B Y THE ASSESSEE. WE ARE NOT INCLINED TO HOLD THAT THESE ARE GENUINE TRANSACTIONS. WE MUST BEAR I N MIND THE FACT THAT THE EXPRESSION 'NATURE AND SOURCE' APPEARING IN SECTION 68 HAS TO BE UNDER STOOD AS A REQUIREMENT OF IDENTIFICATION OF SOURCE AND ITS GENUINENESS. IT IS ALSO A SETTLED LE GAL POSITION THAT THE ONUS OF THE ASSESSEE, OF EXPLAINING NATURE AND SOURCE OF CREDIT, DOES NOT GE T DISCHARGED MERELY BY FILING CONFIRMATORY LETTERS, OR DEMONSTRATING THAT THE TRANSACTIONS ARE DONE THROUGH THE BANKING CHANNELS OR EVEN BY FILING THE INCOME TAX ASSESSMENT PARTICULARS. IN THE CASE OF CIT V. UNITED COMMERCIAL AND INDUSTRIAL CO (P.) LTD [1991] 187 ITR 596, HON'BLE CALCUTTA HIGH COURT HAS HELD THAT 'IT WAS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF CREDITORS, THE CAPACITY OF SUCH CREDITORS AND LASTLY THE GENUINENESS OF TRANSACTION S'. SIMILARLY, IN THE CASE OF CIT V. PRECISION FINANCE (P.) LTD [1994] 208 ITR 465, IT WAS OBSERVE D THAT 'IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF CREDITORS, THEIR CREDITWORTHINESS AND G ENUINENESS OF TRANSACTIONS'. THERE IS THUS NO ESCAPE FROM PROVING GENUINENESS OF A TRANSACTION, A ND THAT IS THE AREA ON WHICH THE CASE OF THE ASSESSEE CLEARLY FAILS. FOR THIS REASON ALONE, THE CONCLUSIONS ARRIVED AT BY THE AUTHORITIES BELOW MUST BE CONFIRMED. IN THE LIGHT OF THESE DIS CUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE AUTHORITIES BELOW, AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 3 RD DAY OF DECEMBER, 2018. SD/- SD/- MADHUMITA ROY PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT ) AHMEDABAD, DATED THE 3 RD DAY OF DECEMBER, 2018 ITA NO.: 1135/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 6 OF 6 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD