Shailesh Sharma, New Delhi V. DCIT, New Delhi

ITA 1203/DEL/2012

• Counselvise Citation: 120320114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RENUKA JAIN GUPTA
• Keywords: Onus to prove
• Section: 131

Judgement Text

ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 1 IN THE INCOME TAX APPELLATE TRIBU NAL DELHI BENCH G NE W DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMB ER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 872/DEL/2012 ASSTT.YE AR: 2007-08 ASSTT.COMMISSIONER OF INCOME TAX, VS SHAILESH SHARMA, CIRCLE 35(1), VIKAS BHAVAN, PROP. M/S GOLDEN CROWN OVERSEAS, NEW DELHI C-45, SURAJMAL VIHAR, DELHI-110092 (PAN: AAXPS2857A) ITA NO.1203 /DEL/2012 ASSTT.YEAR: 2007-08 SHAILESH SHARMA, VS DCIT, CIRCLE 35(1), PROP. M/S GOLDEN CROWN OVERSEAS NEW DE LHI. C-45, DELHI (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. RENUKA JAIN GUPTA, C.I.T. DR RESPONDENT BY: SHRI RAJ KUMAR GUPTA, SHRI SUMIT GOEL THE ASSESSEE AS WELL AS THE REVENUE ARE IN CROSS APPEALS FOR AY 2007-08 CHALLENGING THE ORDER OF THE LD. FIRST APPELLATE AU THORITY XXVII, NEW DELHI. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25, 00,000/- MADE BY THE AO U/.S 68 OF THE INCOME TAX ACT, 1961, ON ACCO UNT OF CLAIM OF THE ASSESSEE REGARDING RAISING OF LOAN FROM M/S RAM ESH BAIS (HUF). ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCE D HEREUNDER:- THAT UNDER THE FACTS AND CIRCUMSTANCES, NO REASONA BLE AND PROPER OPPORTUNITY OF HEARING HAS BEEN ALLOWED. 2. THAT THE ASSTT. IS WITHOUT JURISDICTION, ALSO FO R THE REASON OF NON - SERVICE OF STATUTORY NOTICE U/S. 143 (2) A S PER LAW AND WITHIN THE MANDATORY STATUTORILY PROVIDED TIME PERI OD. 3.1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS ABSOLUTELY NO LEGALITY AND JUSTIFICATION IN MAKING AND SUSTAINING ADDITIONS U/S 68 FOR FOLLOWING CASH CRED ITORS. 3.2. THAT WITHOUT PREJUDICE , THE LD. AO EXCEEDED HIS JURISDICTION IN EXAMINING THE CREDIT WORTHINESS OF THE CASH CREDITORS, WHICH IN ANY CASE, COULD HAD BEEN EXAMIN ED ONLY BY THE AO OF THE CASH CREDITOR AS HAS BEEN HELD IN THE FOLLOWING CASES * CIT VS. DATAWARE (P) LTD. IN ITA NO. 263 OF 2011 BY HON'BLE CALCUTTA HIGH COURT DTD. 21.11.2011. * C.I.T. VS. AMAR CHAND & SONS IN ITA NO. 243 OF 20 11 BY HON'BLE P & H HIGH COURT ORDER DTD. 25.11.2011. S.NO. NAME AMOUNT (RS.) 1. EASTMAN VIDEO PRODUCTION (PROP. MAHESH GOLANI) 500000 2. SHELLY ASSOCIATES LTD. 3600000 3. DOT COM CITY 2500000 4. LONDON HOME INTERNATIONAL (PARTNER MAHESH GOLANI) 2750000 5. BOLLYWOOD INSTITUTE DANCE & DRAMA 500000 TOTAL 9850000 ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 3 3. DURING THE HEARING OF THESE APPEALS, WE HAVE HEA RD SMT. RENUKA JAIN GUPTA, LD. CIT, DR AND SHRI RAJ KUMAR GUPTA ALONG W ITH SHRI SUMIT GUPTA, LD. COUNSEL FOR THE ASSESSEE. THE SUM AND SUBSTANCE OF THE ARGUMENTS PREFERRED ON BEHALF OF THE ASSESSEE IS THAT NO PROPER OPPORTUNIT Y OF HEARING WAS GRANTED TO THE ASSESSEE AND FURTHER THERE IS NO JUSTIFICATION IN M AKING/SUSTAINING THE ADDITION MADE U/S 68 OF THE ACT. ON THE OTHER HAND, LD. CIT DR STRONGLY DEFENDED THE ADDITION MADE BY THE AO AND CONTRADICTED THE PART R ELIEF GRANTED BY THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIA L AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSE E IS ENGAGED IN TRADING OF CURTAIN CLOTH AND FABRICS. THE ASSESSEE DECLARED HIS INCOM E FROM HOUSE PROPERTY, BUSINESS AND OTHER SOURCES DECLARING TOTAL INCOME AT RS. 8,5 6,750 IN HIS RETURN FILED ON 31.3.2008 WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 20 TH JANUARY, 2009. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY, T HEREFORE, NOTICE ISSUED U/S 143(2) WAS SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED THE PROCEEDINGS AND FURNISHED DETAILS. ON PERUSAL OF RECORD, IT WAS FO UND BY THE AO THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.36 LAKH FROM M/S SHE LLY ASSOCIATES LTD., RS.5 LAKH FROM M/S EASTMAN VIDEO PRODUCTION, RS. 25 LAKH FROM M/S DOT COM CITY, RS. 27,50,000 FROM LONDON HOME INTERNATIONAL, RS. 2 5 LAKH FROM RAMESH BAIS (HUF) AND RS. 5 LAKH FROM BOLLYWOOD INSTITUTE OF DA NCE AND DRAMA, TOTAL ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 4 AMOUNTING TO RS.1,23,50,000. THE ASSESSEE WAS ASKE D TO ESTABLISH THE IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANSACTION AND C REDITWORTHINESS OF THE CREDITORS IN RESPECT OF UNSECURED LOANS/DEPOSITS ACCEPTED DUR ING THE YEAR AS PER THE PROVISIONS OF SECTION 68 OF THE ACT. 4.1 THE ASSESSEE, IN RESPONSE, VIDE SUBMISSIONS DAT ED 28 TH MAY, 23 RD JUNE AND 27 TH JULY 2009 FILED THE CONFIRMATION COPY OF ACCOUNTS IN RESPECT OF THESE CREDITORS. HOWEVER, SUMMONS U/S 131 OF THE ACT WER E ISSUED ON 6.11.2009 TO M/S EASTMAN VIDEO PRODUCTION, M/S SHELLY ASSOCIATES LTD ., M/S DOT COM CITY, LONDON HOME INTERNATIONAL, RAMESH BAIS (HUF) AND M/ S BOLLYWOOD INSTITUTE OF DANCE & DRAMA. AS PER THE REVENUE, NOBODY ATTENDED . THE SUMMONS ISSUED TO M/S BOLLYWOOD INSTITUTE OF DANCE & DRAMA RECEIVED B ACK ON 16.11.2009 WITH COMMENTS. S/G SE POOCHNE SE PATA CHALA HAI KAFI DI NO SE INSTITUTE BAND PARI HAI ATAH WAAPIS. THE ASSESSEE WAS ASKED TO PRODUCE TH ESE PERSONS/ORGANIZATIONS/ENTITIES TO SATISFY THE REQUI REMENT OF SECTION 68 IN RESPECT OF UNSECURED LOAN OF RS.1,23,50,000. NOT SATISFIED WI TH THE RESPONSE, STATEMENT, REPLY AS DETAILED IN PARA 3.2 ONWARDS OF THE ASSESS MENT ORDER, THE AO WAS OF THE VIEW THAT THE ASSESSEE DID NOT ESTABLISH THE GENUIN ENESS OF THE TRANSACTION AND CREDITWORTHINESS AS MENTIONED IN PARA 3.8 OF THE AS SESSMENT ORDER, CONSEQUENTLY, THE LOAN AMOUNT OF RS.1,23,50,000 WAS TREATED AS DE EMED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 5 4.2 ON APPEAL, THE LD. CIT(A) RESTRICTED THE ADDI TION TO RS.98,50,000 (RS.1,23,50,000 RS. 25,00,000 IN THE CASE OF MR. RAMESH BAIS (HUF). AT THIS STAGE, THE ASSESSEE IS AGGRIEVED BY THE PART RELIEF WHEREAS THE REVENUE IS AGAINST THE RELIEF GRANTED TO THE ASSESSEE. 4.3 ON PERUSAL OF RECORD AND AFTER HEARING THE RIVA L SUBMISSIONS, THE GRIEVANCE OF THE ASSESSEE IS THAT PROPER OPPORTUNIT Y WAS NOT PROVIDED TO THE ASSESSEE. WE ALSO NOTE THAT IDENTICAL GROUND WAS R AISED BEFORE THE LD. CIT(A) AS IS EVIDENT FROM FORM NO. 35 (GROUND NO.2) AND GROUND N O. 1(FORM NO. 36) BEFORE THIS TRIBUNAL. EVEN DURING THE HEARING, THIS GROUN D WAS STRONGLY PRESSED BY THE ASSESSEE. THE ASSESSEE ALSO CANVASSED THAT THE PAR T RELIEF GRANTED TO THE ASSESSEE MAY BE SUSTAINED AS IT IS AND FOR REMAINING ADDITIO N IT MAY BE SENT BACK OR ADDITION, SUSTAINED BY THE LD. CIT(A), MAY BE DELET ED WHEREAS THE LD. CIT, DR DEFENDED THE ADDITION MADE BY THE AO. WE ARE OF TH E VIEW THAT FOR CLAIMING THE RELIEF U/S 68 OF THE ACT, ALL THE THREE INGREDIENTS OF SECTION 68 HAVE TO BE SATISFIED BY THE ASSESSEE. THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF MONEY FOUND TO BE RECEIVED BY AN ASSESSEE IS ON THE ASSESSEE ITSELF. WHERE THE NATURE AND SOURCE OF A RECEIPT CANNOT BE SATISFACTO RILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE AS WAS HELD BY HONBLE APEX COURT IN ROSHAN DI HATTI VS CIT 107 IT R 938(SC) AND KALE KHAN MD. HANIF VS CIT 50 ITR 1 (SC). THE HONBLE RAJASTH AN HIGH COURT EVEN WENT TO ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 6 THE EXTENT THAT EACH ENTRY MUST BE SEPARATELY EXPLA INED BY THE ASSESSEE (CIT VS R.S. RAHTORE 212 ITR 390 (RAJ) AND THE HONBLE CAL CUTTA HIGH COURT IN THE CASE OF KORLAY TRADING LTD. 232 ITR 820. SO FAR AS CONTE NTION OF THE ASSESSEE THAT THE TRANSACTION BY CHEQUE IS ITSELF A PROOF, WE ARE OF THE VIEW THAT TRANSACTION BY CHEQUE ITSELF MAY NOT BE SACROSANCT. OUR VIEW OF FO RTIFIED BY HONBLE GAUHATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI 264 IT R 254. IN THE CASE OF NOVA PROMOTERS AND FINLEASE, THOUGH ON SHARE APPLICATION MONEY, IT WAS HELD THAT IN VIEW OF THE LINK BETWEEN THE ENTRY PROVIDERS AND IN CRIMINATING EVIDENCE, MERE FILING OF PAN NO., ACKNOWLEDGEMENT OF INCOME TAX RE TURN OF THE ENTRY PROVIDER, BANK ACCOUNT STATEMENT ETC. WAS NOT SUFFICIENT TO D ISCHARGE THE ONUS. IDENTICALLY, IN A LATER DECISION ON 22 ND NOVEMBER, 2013 IN THE CASE OF CIT VS N. R. PORTFOL IO PVT. LTD. (ITA NO. 1019/2011) HELD THAT THE ONUS TO PROVE THE THREE INGREDIENTS I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION, IS ON THE ASSESSEE. ELABORATE DISCUSSION HAS BEEN MADE ON SECTION 68 OF THE ACT BY THE INDORE BENCH OF THE TRIBUNAL IN THE CASE OF AGARWAL COAL CORPORA TION (P) LTD. VS ADDL. CIT(2012) 135 ITD 270 (INDORE)/19 TAXMANN.COM 209 O RDER DATED 31.10.2011. WITHOUT GOING INTO MUCH DELIBERATION, SO THAT NO GR IEVANCE IS CAUSED TO EITHER SIDE, THE APPEAL OF THE REVENUE AS WELL AS OF THE A SSESSEE IS DIRECTED TO BE REMANDED TO THE FILE OF THE LD. AO FOR FRESH ADJUDI CATION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BE ING HEARD BE PROVIDED TO THE ITA NO.872 & 1203/DEL/2012 ASSTT.YEAR: 2007-08 7 ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE THE PARTIES AND SUBSTANTIATE HIS CLAIM FROM WHOM THE AMOUNTS/UNSECURED LOANS WERE TAKEN AS REQUIRED U/S 68 OF THE ACT. FINALLY, THE APPEAL OF THE REVENUE AS WELL AS OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 7.4.2014. SD/- SD/- (S.V. MEHROTRA) (JOGINDER SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 11 TH APRIL 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR