Appeal details
Counselvise Citation
[2022] 106 COUNSELVISE.COM (IT) 8319 (ITAT-PATNA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-07-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2015-2016
Appeal Filed On
04-04-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH VIRTUAL HEARING AT KOLKATA Before: SHRI MANISH BORAD, ACCOUNTANT MEMBER and SHRI SONJOY SARMA, JUDICIAL MEMBER आयकर अपील सं.य / ITA No. 119/PAT/2019 Assessment Year:2015-16 ACIT, Circle 2(1), Muzaffarpur Bela Kothi, Muzaffarpur- 842005. बनाम / V/s . M/s. Salauddin, Chhatradhari Bazar, Chapra, Saran-841301. PAN: AASFS 5008E अपीलाथ /Appellant .. यथ /Respondent अपीलाथ क ओर से/By Appellant Shri Sanjeev Anwar, Advocate, Ld.AR यथ क ओर से/By Respondent Shri Rupesh Agarwal, Ld.SR-DR स ु नवाई क तार ख/Date of Hearing 29-06-2022 घोषणा क तार ख/ Date of Pronouncement 12-07-2022 आदेश /O R D E R PER MANISH BORAD, AM. The present appeal has been preferred by the revenue against the order dated 25-01-2019 of the Ld. Commissioner of Income-tax, Appeal [hereinafter referred to as ‘CIT(A)’], Muzzfarpur passed u/s. 250 of the Income-tax Act, 1961 hereinafter referred to as ‘the Act’. 2. The revenue has raised the following grounds of appeal:- 1. The CIT(A) has allowed relief amounting to Rs 1,50,29,200/ against unverified creditors without considering the following facts: 2. According to Section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 2 nature and source of the same or the explanation offered by him is not satisfactory in the opinion of AO, the sum so credited may be charged to income tax as the income of the assessee of that previous year. 3. The basic precondition for the Section 68 is that the assessee should file a valid confirmation, valid confirmation has specific format but it must contain name, complete address of the lender. It is better if PAN of the lender is also obtained as, if no PAN given then ambit of doubt is far more for the AO. With the confirmation, the AO must insist on some identity proof like copy of driving license, copy of passport, copy of ration card or election ID card etc. 4. The confirmation so filed must indicate complete details of transactions ( like modecash or cheque, with number date of cheque with bank details). The AO have right to demand the copy of bank account of the lender evidencing such transactions and the same needs to be filed. In case transaction is in cash then AO must demand cash flow statement of the lender, preferably containing details of opening balance and its source thereof. 5. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in tis accounts to enable it to subscribe to the share capital. Above requirement of the provision U/S 68 such as identity of the creditors, creditworthiness of the creditors, advance money and genuineness of the transaction are not found in the Ld CIT(A)'s order Hence only the basis of method of payment of loan through the Bank the Ld CIT(A) has delete the addition made by the AO. The order passed by the CIT(A) is erroneous & prejudicial in respect of revenue in the absence of misappreciation of facts and laws. In fact, the principle of onus, that the assessee is required to establish the identity, prove the genuineness of the transaction and establish the creditworthiness of the donor, has been reiterated even in a recent decision of Hon'ble Delhi High Court in the case of CIT Vs Oasis Hospitalities Pvt Ltd, 333 ITR 119 (Delhi)(2011). In this case it was held by the Hon. Court that " The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/investments; and (iii) genuineness of the transaction. In this case the AO has issued the letter to the donor but it was not served to the donor. It establishes that the identity of the ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 3 investors are not genuine and therefore further appeal in this case may be filed as the order of Ld CIT(A) is erroneous and bad in law. 3. Brief facts of the case are that the assessee is a partnership firm and engaged in the business as a contractor. Income of Rs. 91,78,650/- was declared in e-return filed on 27-09-2015. The case was selected for limited scrutiny for examination of sundry creditors, transaction with persons in notified jurisdiction and other expenses claimed in the P & L account. Notices u/s. 143(2) and 142(1) of the Act were duly served. The ld. AO called for the details to examine the sundry creditors appearing in the audited balance sheet at Rs. 9,63,79,502/-. After conducting enquiry, the ld.AO made the addition for unexplained sundry creditor at Rs.1,50,29,200/- observing that the assessee failed to get sundry creditors verified. 4. Aggrieved, the assessee preferred appeal before the ld. CIT(A) and succeeded. 5. Now, the Revenue is in appeal before this Tribunal. 6. The Ld. Departmental Representative vehemently argued supporting the order of the ld. AO. 7. Per contra, the Ld. Counsel for the assessee relied on the finding of the ld. CIT(A) and also stated that the alleged sundry creditors are genuine creditors and regular business transactions are carried on with them. He further stated that the payment to the alleged sundry creditors have been made in the subsequent year and details of such payment stands duly recorded by the ld. CIT(A) in the impugned order. 8. We have heard the rival contentions and perused the records placed before us. Though the Revenue has raised five grounds of appeal, but the sole grievance is against the finding of the ld. CIT(A) in deleting the addition made u/s. 68 of the Act by the ld. AO for unverified sundry creditors amounting to Rs.1,50,29,200/-. We observe that the assessee filed details before the ld.AO stating that they are genuine sundry creditors and payments have been made in the subsequent year. However, the ld.AO made the ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 4 impugned addition only for the reason that the assessee failed to produce these alleged sundry creditors for verification. We further observe that the ld. CIT(A) has examined the facts in detail on the issue raised in the instant appeal and deleted the impugned addition made u/s. 68 of the Act observing as follows:- I have gone through the assessment order, the grounds of appeal, written submission as well as material on record. The appellant derives income from contractual business. Return of Income was filed on 27.09.2015 disclosing income of Rs. 91,78,650/. The case was selected for scrutiny assessment and appropriate notices were issued. Thereafter assessment was completed on 26.12.2017 u/s 143(3) on a income of Rs. 2,42,07,850/. The following addition made included addition as under: Rs. 1,50,29,200/ Discussed and named as unexplained credit. I have considered the facts of the case, submissions of the AR and cases relied upon by him. I have also gone through the assessment order as well as the statement of facts and grounds of appeal filed. During the course of appellate proceedings, the appellant has submitted as follows: The learned A.O. has made addition of closing balance of following Sundry Creditors on the sale ground that notices u/s 133 (6) returned unserved: S. No. Name Amount (Rs ) I. Sri Vinod Kumar Yadav 42,80,800/ ll.Sri Radhey Shyam Chaudhary 23,67,000/ III.Sri Santosh Kumar 6,11,7001 IV. Sri Sanjeet Kumar 29,30,500/ V. Sri Ashok Kumar Prasad 4839.200/ Rs. 1.50.29.200/ The appellant would humbly submit that nonservice of notice u/s 133 (6) would not be made a ground for disbelieving the creditors. Reliance is placed on Phool Singh vs. ACIT. 2017 (8) TM l24 (ITAT Delhi).Moreover, the addition 0/1 account of creditors would not be made once the purchases has been accepted by the learned A.O and the trading results are accepted. CIT vs. Panchan Das lain (2005) 205 CTR ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 5 444 (Ail), Zazsons Export Ltd. vs. CIT. Kanpur (2017) 397 ITB 40 (All.). Payments have been made to these creditors In subsequent year through banking channels and major payments have been cleared. Details of payment and copy of relevant bank accounts in SBl and Allahabad Bank (maintained in the name of site supervisor and owned in' the books of accounts of appellant) are enclosed. On perusal, your honour will find that all the payments have been made through banking channels. Thus, the addition is totally unwarranted and liable to be deleted. The A.O has based his addition on a single premise that the notice u/s 133(6) sent to two out of the several parties has come back unserved. These parties form trade creditors of the appellant from whom regular purchase have been made over the years and no infirmity has been pointed out by the A.O regarding purchases which form part of the Audited books of accounts. Therefore, to make addition of such creditors only on the ground that 133(6) notices have come back unserved does not appear to be reasonable. As regard the identity and genuineness of the transactions, the appellant has submitted complete details of the transactions with these parties. The amount was paid through regular banking channels in subsequent year and the details of the same form part of the record. The details are as under as per record. Liabilities Payment Name of Creditors Date Amount Cheque no, Name of Bank A.Binod Kumar Yadav 060415 260000 219 Allahabad Bank, Hajipur Rs. 4280800 080415 150000 215 Allahabad Bank, Hajipur 150415 50000 RTGS Allahabad Bank, Hajipur 170415 150000 229 Allahabad Bank, Hajipur 230415 125000 231 Allahabad Bank, Hajipur 230415 156000 232 Allahabad Bank , Hajipur 240415 200000 226 Allahabad Bank, Hajipur 280415 166000 246 Allahabad Bank, ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 6 Hajipur 290415 181343 240 Allahabad Bank, Hajipur 200515 100000 259 Allahabad Bank, Hajipur 210515 835786 1671 Allahabad Bank, Hajipur 220515 800000 227801 SBI, Gorakhpur 010815 1000000 377973 Allahabad Bank, Hajipur 061115 800000 790059 SBI, Gorakhpur Total: 4221921 Balance: 58879 B.Radhey Shyam 210415 345000 227794 SBI, Gorakhpur Chaudhary Rs. 2367000/ 030615 487000 227814 SBI, Gorakhpur 061115 1500000 790062 SBI, Gorakhpur Total: 2332000 Balance: 35000 C. Santosh Kumar 070515 280000 252 Allahabad Bank, Hajipur Rs. 611700/ 061115 300000 790063 SBI, Gorakhpur . Total: 580000 Balance: 31700 D. Sanjit Kumar 060415 900000 RTGS Allahabad Bank, Hajipur Rs. 2930500/ 130415 250000 RTGS Allahabad Bank, Hajipur 040815 600000 RTGS Allahabad Bank, Hajipur 071115 950000 RTGS Allahabad Bank, Hajipur Total: 2700000 Balance: 230000 E. Ashok Kumar Pal 280115 2700000 227812 SBI, Gorakhpur Rs. 4839200/ 170615 2000000 227824 SBI, Gorakhpur Total: 4700000 Balance: 139200 Thus the identity and genuineness of the transaction with Shri Vinod Kumar Yadav, Shri Radhey Shayam Chaudhary, Shri Santosh Kumar, Shri Sanjeet Kumar, Shri Ashok Kumar Prasad should not be doubted and therefore the A.O is directed to delete the addition of Rs. 1,50,29,200/. ITA No.119/Pat/19 AY 2015-16 M/s.Salauddin Page 7 9. From perusal of above finding of the ld. CIT(A), it remains an uncontroverted fact that the alleged sundry creditors have been paid in the subsequent year through banking channel and regular purchases have been made from these parties. The books of account of the assessee are duly audited and the same has not been rejected by the ld. AO, thereby accepting the book result. Looking to the entirety of facts and detailed finding of the ld. CIT(A) accepting the identity, creditworthiness and genuineness of transactions as well as the sundry creditors, we find no reason to interfere with the findings of the ld. CIT(A) and therefore, the same stands confirmed. Grounds ( Nos. 1 to 5) raised by the revenue stand dismissed. 10. In the result, the appeal of the revenue is dismissed. Order pronounced in open court on 12 -07-2022 Sd/- Sd/- (SONJOY SARMA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 12-07-2022 Kolkata/ कोलकाता **PP/Sr.PS दनांकः-12/07/2022 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. अपीलाथ /Appellant- ACIT, Circle 2(1), Muzaffarpur Bela Kothi, Muzaffarpur-842005. 2. यथ /Respondent-M/s. Salauddin, Chhatradhari Bazar, Chapra, Saran- 841301. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त- अपील / CIT (A) 5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Patna 6. गाड फाइल / Guard file. /True Copy/ By order/आदेश से, सहायक पंजीकार आयकर अपील य अ धकरण,कोलकाता ।
