ACIT Cir.-2, Nashik V. M/s. Raj Constructions, Nashik

ITA 1189/PUN/2009

• Counselvise Citation: 118924514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1189/PN/2009 (ASSTT. YEAR: 2006-07) ASSTT. COMMISSIONER OF INCOME TAX , ... APPELLANT CIRCLE 2, NASHIK V. M/S RAJ CONSTRUCTIONS, RESPONDENT 333, WADHAWA HOUSE, REST CAMP ROAD, DEOLALI CAMP DIST. NASHIK PAN :AABFR 7053D APPELLANT BY : SHRI S.K. AMBASTA RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING :20.10.11 DATE OF PRONOUNCEMENT: .11.11 ORDER PER I.C. SUDHIR, JM IN THE GROUNDS, THE REVENUE HAS QUESTIONED FIRST A PPELLATE ORDER WHEREBY THE LD CIT(A) HAS DELETED THE ADDITION OF RS. 10,50,000 /- MADE BY THE A.O U/S. 68 OF THE ACT. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE, A CIVI L CONTRACTOR HAD INTRODUCED CREDITS IN THE NAMES OF SHRI NIVRUTTI AJAY KISANRAO MOJAD (RS. 5,00,000/) AND SHRI BABURAO MOJAD (RS. 5,50,000/-). BEFORE THE A.O, TH E ASSESSEE FILED CONFIRMATION OF BOTH THE ALLEGED CREDITORS. OUT OF THE TWO, SHRI B ABURAO MOJAD WAS PRODUCED BEFORE THE A.O, WHOSE STATEMENTS ON OATH WERE ALSO RECORDED BY THE A.O. THE A.O, HOWEVER, WAS NOT SATISFIED WITH THE CREDIT WORTHINE SS OF THESE CREDITORS AND DENIED THE CLAIMED CREDITS OF RS. 10,50,000/- MAINLY ON TH E FOLLOWING BASIS : THE AFORESAID DISCUSSION BASED ON RECORD CLEARLY I NDICATE FOLLOWING FACTS : ITA . NO 1189/PN/2009 M/S. RAJ CONSTRUCTIONS A.Y. 2006-07 PAGE OF 4 2 (I) ALLEGED CREDITORS HAVE NOT ESTABLISHED CREDIT W ORTHINESS AS THEY HAVE NOT FURNISHED ANY EVIDENCE OF SUBSTANTIAL CASH HOLD ING. BANK ACCOUNT OF THE CREDITOR DOES NOT SHOW ANY SUCH CASH FLOW OR CASH B ALANCE NOR HE HAS FURNISHED PROPER EVIDENCE IN RESPECT OF AGRICULTURA L INCOME EXCEPT 7/12 EXTRACT WHICH IS NOTHING BUT A GENERAL AND SEASONAL CROP NOTINGS. (II) BOTH THE ALLEGED CREDITORS HAVE NOT EXPLAINED AS TO WHY ALLEGED LOANS ARE OUTSTANDING FOR A LONGER PERIOD WHEN THESE WERE ALLEGEDLY GIVEN FOR FEW MONTHS THIS FACT IS CONTRARY TO THE CONTENTS OF THE AFFID AVITS. (III) INSTEAD OF FURNISHING PROPER EVIDENCE, AFFIDA VITS OF THE ALLEGED CREDITORS ARE OBTAINED BY THE PARTNERS OF THE ASSES SEE FIRM IN THEIR SELF INTEREST ONLY TO SAFE GUARD THEIR INTEREST AND HENC E THE AFFIDAVITS ARE NOTHING BUT SELF SERVING STATEMENTS WITHOUT HAVING ANY EVID ENTIAL VALUE. SUCH, THEREFORE, CANNOT BE ACCEPTED. (IV) BOTH THE CREDITORS FAILED TO PROVE AS TO HOW T HEY COULD SPARE SUBSTANTIAL AND UNIMAGINABLE AMOUNT ALLEGEDLY LENT TO THEIR FRIENDS WHEN BOTH OF THEM ARE DEBTORS TO THE BANK ON ACCOUNT OF SUBST ANTIAL LOAN AGAINST THEM. 3. THE LD CIT(A) HAS, HOWEVER, DELETED THE ADDITION MADE BY THE A.O U/S. 68 OF THE ACT AFTER CALLING FOR REMAND REPORT ON THE SUBM ISSIONS MADE BY THE ASSESSEE MEETING OUT THE OBJECTION OF THE A.O. AGAINST THIS ACTION OF THE LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASIC ALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE ASSESSEE H AS THOROUGHLY FAILED TO ESTABLISH THE CREDIT WORTHINESS OF 2 CREDITORS, WHO WERE NOT EVEN ABLE TO PAY INTEREST TO THE BANKS ON THE LOAN OF RS. 22 LAKHS TAKEN BY THEM. T HUS, IT WAS NOT CONVINCING THAT THOSE CREDITORS HAD GIVEN THE INTEREST FREE LOAN OF RS. 10,50,000/- TO THE ASSESSEE. ITA . NO 1189/PN/2009 M/S. RAJ CONSTRUCTIONS A.Y. 2006-07 PAGE OF 4 3 5. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER. HE SUBMITTED THAT BOTH THE CREDITORS ARE FARMERS HAVIN G LAND HOLDING OF 7 ACRES AND 29 GUNTAS IN CASE OF SHRI BABURAO MOJAD AND 4 ACRES AN D 32 GUNTAS IN CASE OF SHRI NIVRUTTI MOJAD. THEY ARE CULTIVATING GRAPES IN THE IR LAND AND EARNING INCOME OF AROUND RS. 1,00,000/- PER ACRE IN A YEAR. BOTH THE CREDITORS BEFORE THE AUTHORITIES BELOW HAVE CONFIRMED THAT THEY HAD GIVEN THE CLAIME D LOAN TO THE ASSESSEE. IN SUPPORT OF HOLDING OF ABOVE STATED LAND AREA BY THE CREDITORS, THE ASSESSEE HAD ALSO FILED 7/12 EXTRACTS SHOWING UNDER-CULTIVATION OF GR APES, THEIR AFFIDAVITS CONFIRMING THE LOANS GIVEN BY THEM WERE ALSO FILED BEFORE THE A.O AND CONTENTS THEREOF HAVE NOT BEEN PROVED BY THE A.O TO BE FALSE. THE LD. A. R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) NEMI CHAND KOTHARI VS. CIT & ANR., 264 ITR 254 (GAU.) 2) S.K. JAIN VS. ITO, (2004) 2 SOT 579 (AGRA) 3) ACIT VS. RAJASTHAN ASBESTOS CEMENT CO. (2009), 2 3 DTR (JP)(TRIB) 430. 6. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE LD CIT(A) HAS DEALT WITH THE ISSUE IN DETAILS. HE HA S INVITED THE COMMENT OF THE A.O ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM ON THE ISSUE. DURING REMAND PROCEEDINGS, THE A.O HAS ALSO EXAMINED SHRI NIVRUT TI YASHWAND MOJAD. IN HIS STATEMENTS BEFORE THE A.O, HE HAS AFFIRMED THAT H E OWNS 4 ACRES OF AGRICULTURAL LAND UNDER CULTIVATION AND INCOME PER ACREA PER AN NUM IS RS. 1,00,000/-. IN REPLY TO QUESTION NO. 5, HE HAS STATED THAT HE HAD GIVEN TEMPORARY LOAN OF RS. 5,00,000/- TO THE ASSESSEE. HOWEVER, AS THE ASSESSEE DID NOT REFUND THE LOAN IN SHORT TIME, SHRI. WADHWA I.E. PARTNER OF THE ASSESSEE FIRM HAD AGREED TO PAY INTEREST AT THE RATE AT WHICH THE BANK LOAN WAS RE-PAID. IN REPLY TO QUESTION NO. 6, SHRI NIVRUTTI MOJAD HAS STATED THAT HE HAD SOLD GRAPES TO THE TRA DERS IN THE MONTHS OF APRIL AND MAY AND THE AMOUNT WAS RECEIVED IN MAY AND JUNE, WH ICH WAS DEPOSITED IN THE FIRST WEEK OF JULY IN BANK AND CHEQUE WAS ISSUED TO THE A SSESSEE. WE THUS FIND THAT ITA . NO 1189/PN/2009 M/S. RAJ CONSTRUCTIONS A.Y. 2006-07 PAGE OF 4 4 BOTH THE LENDERS I.E. SHRI BABURAO MOJAD AND SHRI N IVRUTTI MOJAD HAVE CONFIRMED THE LOANS ADVANCED TO THE ASSESSEE. IN KEEPING IN MIND, THE AREA OF LAND OWNED BY THEM, THEIR EARNING FROM CULTIVATION OF GRAPES THE RE-FROM AT AROUND RS. 1,00,000/- PER ACRE PER ANNUM AND THE VERY FACT THAT THE BANKS HAD GIVEN THEM LOAN OF RS. 22.50 LAKHS SUPPORT THEIR CREDIT WORTHINESS. UNDE R THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE WAS NO REASON TO DOUBT ON THE STATEMENTS OF THE ABOVE NAMED LENDERS SHOWING THEIR CREDIT WORTHINESS. UNDER THE SE CIRCUMSTANCES, WE FIND THAT ALL THE REQUIRED INGREDIENTS OF SECTION 68 OF THE ACT I .E. IDENTITY OF THE CREDITORS, THEIR CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIO NS HAVE BEEN ESTABLISHED BY THE ASSESSEE AGAINST THE CLAIMED LOAN BY THE ASSESSEE FROM THEM. THE LD CIT(A) THUS HAS RIGHTLY DIRECTED THE A.O TO DELETE THE ADDITION OF RS. 10,50,000/- MADE BY THE A.O IN THIS REGARD U/S. 68 OF THE ACT. THE SAME IS UPHELD. THE RELATED GROUNDS ARE ACCORDINGLY REJECTED. 7. CONSEQUENTLY, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -I, NASHIK 4. THE CIT(A)-I, NASHIK 4. THE D.R. A BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE