Trimurti Coal Trading Co, Pune V. Deputy Commissioner of Income-tax, Circle - 9, Pune

ITA 1236/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3517 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Source of fund
• Section: 131; 68; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, A CCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / I TA NO S . 12 34 TO 1 236 /PUN/20 1 9 / ASSESSMENT YEAR S : 20 0 8 - 0 9 , 200 9 - 1 0 & 20 1 0 - 11 TRIMURTI COAL TRADING CO., M/S. SHAH KHANDELWAL JAIN & ASSOCIATES, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN: AA FFT1442A ....... / APPELLANT / V/S. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT A SSESSEE BY : SHRI RAJIV THAKKAR REVENUE BY : SHRI RAJESH GAWALI / DATE OF HEARING : 0 5 .0 3 .2020 / DATE OF PRONOUNCEMENT : 05 .0 3 .2020 / ORDER PER D. KARUNAKARA RAO , A M : TH E CAPTIONED APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6 , PUNE , DATED 11 . 06 .201 9 FOR THE ASSESSMENT YEAR S 200 8 - 0 9 , 200 9 - 1 0 & 20 1 0 - 11 . ASSESSEE CLAIMED TAKING LOAN OF RS.40 LAKHS AND PAYMENT OF INTEREST THERE ON IN THESE THREE ASSESSMENT YEARS. ALLOWABILITY OF THE SAME ARE THE ISSUES IN THESE APPEALS. 2 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. 2. THERE ARE THREE APPEALS UNDER CONSIDERATION INVOLVING A.YS. 2008 - 09, 2009 - 10 AND 2010 - 11. ITA NO.1234/PUN/2019 FOR A.Y. 2008 - 09 IS THE MAIN APPEAL . ASSESSEE TOOK THE LOAN OF RS.40 LAKHS IN THIS ASSESSMENT YEAR. HOWEVER, THE ASSESSING OFFICER REJECTED THE SAID CLAIMS AND ADDED THE LOAN AS WELL AS THE INTEREST U/S 68 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) . INTEREST CLAI MED ON THE SAID LOANS IS COMMON IN ALL THESE APPEALS AND THE SAME IS A COMMON GROUND. 3. GROUNDS FOR A.Y. 2008 - 09 ARE EXTRACTED HERE AS UNDER : 1 . IN FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS AND SCHEME OF THE ACT IT BE HELD THAT T HE ADDITION OF RS.40,00,000 MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 IS IMPROPER IMAGINARY AND CONTRARY TO PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE ADDITION MADE BY THE AO SHOULD BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPE R RELIEF IN THIS RESPECT. 2 . ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS AND SCHEME OF THE ACT IT BE HELD THAT THE ADDITION OF RS.2,15,280 PERTAINING TO DISALLOWANCE OF INTEREST MADE BY THE LD. AO IS UNWARRANTED UNJUSTIFIED AND CONTRARY TO THE PROVISIONS & SCHEME OF THE ACT AND FACTS PREVAILING IN THE CASE. IT BE FURTHER HELD THAT THE ENTIRE CLAIM SHOULD HAVE BEEN ALLOWED AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 4 . BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE RECEIVED LOAN S FROM SHRI DINKAR SHANKAR KUMBHAR, PROP. SHRI SWAMI BRICKS. SHRI DINKAR SHANKAR KUMBHAR IS ENGAGED IN THE BUSINESS OF TRADING OF BRICKS AND NEVER FILED RETURN S OF INCO ME TILL A.Y. 2011 - 12. DURING THE YEAR, MR. D.S. KUMBHAR GAVE LOAN OF RS.40 LAKHS (RS.20 LAKHS ON 14.09.2007 AND RS.20 LAKHS ON 16.10.2007) . SHRI DINKAR SHANKAR KUMBHAR SOLD A PIECE OF LAND ON 11.09.2007 VIDE AGREEMENT OF SALE FOR RS.16,77,938/ - ( TOTAL SALE CONSIDERATION OF RS.20,05,938/ - ) . FURTHER SMT. SUNITA KUMBHAR, PROP. VISHAL TRANSPORT (WIFE) ALSO SOLD ANOTHER PIECE OF LAND ON 20.09.2007 VIDE AGREEMENT OF SALE FOR RS. 40,79,375/ - ( TOTAL SALE CONSIDERATION OF RS.48,69,375/ - ) . SMT. SUNITA 3 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. KUMBHAR T RANSFERRED FUNDS OUT OF HER SALE PROCEEDS TO HER HUSBAND S BANK ACCOUNT WITH PEN CO - OPERATIVE URBAN BANK LTD. OUT OF HIS FUNDS, RS.40 LAKHS WAS TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE AS LOANS AGAINST THE INTEREST . AS PER THE ASSESSEE, T HE SOURCES OF LOANS STANDS EXPLAINED AND THEREFORE, NO ADDITION IS CALLED FOR. THERE WERE CASH DEPOSITS IN THE ACCOUNT OF MR. D.S. KUMBHAR TO THE TUNE OF RS.13 LAKHS. HOWEVER, CONSIDERING THE ABSENCE OF NON - FILING OF THE NATURE OF RETURNS BY THE LENDERS, THE ASSESSING OFFICER TREATED THE TRANSACTION AS NON - GENUINE TRANSACTION AND THE LENDER IS NOT CREDITWORTH Y . THE AO INVOKED THE PROVISIONS OF SECTION 131 OF THE ACT TOO AND RECORDED STATEMENT OF SHRI DINKAR SHANKAR KUMBHAR. HOWEVER, T HE LENDER CONFIRMED THE TRANSACTI ON AND EXPLAINED THE SOURCE OF FUNDS OF RS.40 LAKHS, LOAN GIVEN BY HIM TO THE ASSESSEE. THE SAID LOAN IS INTEREST BEARING LOAN. 5 . DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEE COULD NOT IMPROVE HIS CASE. THE CIT(A) CONFIRMED THE SAME AS PER DISCUSSION IN PARA 4.3 OF THE CIT(A)S ORDER. 6 . AGGRIEVED WITH THE SAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR ALL THE THREE YEARS. ITA NO.1234/PUN/2019, A.Y. 2008 - 09 7. BEFORE US, LD. COUNSEL BROUGHT OUR ATTENTION TO THE SAID PARA 4.9 OF CIT(A)S ORDER AND SUBMITTED THAT BOTH THE AUTHORITIES BELOW IGNORED THE FACTS RELATING TO CREDITWORTHINESS OF LENDERS SHRI DINKAR SHANKAR KUMBHAR AND SMT. SUNITA KUMBHAR. IT IS HIS PRAY ER THAT LENDERS HAVE ADEQUATE 4 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. CREDITWORTHINESS ALTHOUGH THEY ARE NON FILERS OF THE RETURNS OF INCOME. ACCORDING TO LD. AR , AO DID NOT DISPROVE THE FACTS ABOUT THE SALE TRANSACTION OF LAND S AS WELL AS THE RECEIPT OF SALE CONSIDERATION OF MORE THAN RS.40 LAKHS , WHICH WAS THE ACTUAL SOURCE OF INCOME. EXPLAINING THE CHRONOLOGY OF EVENTS, LD. COUNSEL TRIED TO DEMONSTRATE THAT THE LOAN TO ASSESSEE WAS GIVEN THROUGH THE BANK ACCOUNT OF THE LENDER OUT OF THE SALE PROCEEDS OF THE LAND SALE TRANSACTIONS. AS PER LD AR, MR. D.S. KUMBHAR AND HIS WIFE ARE CREDITWORTHY. ACCORDING TO LD. AR , THE AO FAILED TO DISCHARGE HIS ONUS BEFORE DECLARING THE LENDER AS LACK OF CREDITWORTHINESS. 8 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF ASSESSING OFFICER AS WELL AS C IT(A). REFERRING TO THE CREDITWORTHINESS OF SHRI D.S. KUMBHAR, T HE LD. DR SUBMITTED THAT FIRST INSTALLMENT OF LOAN OF RS.20 LAKHS WAS PAID TO ASSESSEE ON 20.09.2007 (PAGE 1 OF PAPER BOOK) AND THE SAME IS OUT OF SALE PROCEEDS OF LAND SOLD BY SHRI DINKAR SHANKAR KUMBHAR FOR SUM OF RS. 20,05,938/ - . FURTHER, THERE IS CREDIT OF RS.20 LAKHS FROM HIS WIFES ACCOUNT (VISHAL TRANSPORT). THE LD. DR HAS NO ARGUMENT ON THIS PART OF THE TRANSACTION. HOWEVER, REFERRING TO SECOND PAYMENT OF RS.20 LAKHS TO THE ASSESSE E ON 26.09.2007, LD. DR SUBMITTED THAT THE ASSESSEE DEPOSITED CASH OF RS.8 LAKHS ON 26.09.2007 AND RS.3 LAKHS ON 26.09.2007. SHRI D.S. KUMBHAR FAILED TO EXPLAIN THE SOURCE OF THESE CASH DEPOSITS IN HIS ACCOUNT AND TO THAT EXTENT, THE CIT(A)S ORDER IS FAI R AND REASONABLE AND THE SAME NEEDS TO BE CONFIRMED. 9. DURING REBUTTAL TIME, LD. COUNSEL SUBMITTED THAT THERE IS WITHDRAWAL OF CASH FROM THE BANK ACCOUNT OF SHRI DINKAR SHANKAR KUMBHAR WITH PEN CO - OPERATIVE URBAN BANK LTD. AND OTHERS. THE SAID CASH WITH DRAWALS FROM APRIL 5 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. TO SEPTEMBER, 2007 WILL CONSTITUTE THE SOURCE FOR SAID DEPOSIT OF CASH OF RS.8 LAKHS AND RS.3 LAKHS, AS THE CASE MAY BE . HOWEVER, LD. COUNSEL MENTIONED THAT SUM OF RS.9 LAKHS IS RECEIVED THROUGH INTRA - BANK TRANSFER FROM VISHAL TRANSPORT , PROPRIETARY CONCERN OF HIS WIFE. HOWEVER, ON THE CASH DEPOSITS OF RS.11 LAKHS, HE FAIRLY MENTIONED THAT THIS ASPECT WAS NEVER EXAMINED BY THE AUTHORITIES BELOW. FURTHER, LD. COUNSEL SUBMITTED THAT FOR THE LIMITED PURPOSE OF EXAMINING THE SOURCE OF CASH DEPOSIT OF RS.11 LAKHS, THE MATTER CAN BE REMANDED TO THE FILE OF ASSESSING OFFICER FOR WANT OF DECISION IN THE MATTER. HE ALSO MENTIONED AS SUCH THE CIT(A) IGNORED THE FACT RELATING TO SALE OF LANDS BEING THE SOURCE OF FUNDS FOR THE LENDER TO GIVE LOANS TO THE ASSESSEE. 10 . ON HEARING BOTH THE SIDES, WE FIND THAT THE EXPLANATION OF ASSESSEE SHOULD BE ACCEPTABLE SO FAR AS FIRST INSTALMENT LOAN OF RS.20 LAKHS IS CONCERNED AND TO THAT EXTENT, THE LOAN OF RS.20 LAKHS STANDS EXPLAINED. REGARDING SECOND CREDIT OF RS.20 LAKHS, WE FIND T HAT TO THE EXTENT OF RS.9 LAKHS RECEIVED FROM VISHAL TRANSPORT, THE EXPLANATION SHOULD BE ACCEPTABLE. HOWEVER, REGARDING CASH DEPOSIT OF RS.11 LAKHS (RS.8 LAKHS + RS.3 LAKHS), THERE IS REQUIREMENT OF INVESTIGATION INTO THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT OF SHRI DINKAR SHANKAR KUMBHAR, PROP. SHRI SWAMI BRICKS. 11. ACCORDINGLY, WE ARE OF THE OPINION THAT THE MATTER SHOULD BE REMANDED TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION OF ASSESSEES ARGUMENTS I.E. CASH WITHDRAWALS FROM THE ACCOUNT OF THE ASSESSEE CONSTITUTES SOURCE OF CASH OF RS.11 LAKHS. THE ASSESSING OFFICER SHALL GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND IN CASE THE ASSESSEE FILES ANY EVIDENCES, EXPLANATIONS, ETC. SHOULD ACCEPT THE SAME AND MAKE RE - ASSESSMENT ON THIS 6 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. ISSUE. THUS, GROUNDS RAISED BY ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. THE FACTS AND ISSUES IN OTHER APPEALS IN ITA NOS.1 235 & 1 236 /PUN/201 9 ARE SIMILAR TO THE FACTS AND ISSUES IN ITA NO.1 234 /PUN/201 9 . ACCORDINGLY, OUR DECISION IN ITA NO.1 234 /PUN/201 9 SHALL APPLY MUTATIS MUTANDIS TO APPEALS IN ITA NOS.1 235 & 1 236 /PUN/201 9 . 13. REGARDING THE ISSUE RELATING TO THE INTEREST CLAIMS, WE FIND THE ISSUE REQUIRES TO BE EXAMINED BY THE AO IN THE LIGHT OF OUR OBSERVATIONS ABOVE. AO SHALL RE - DECIDE THE ISSUE AFTER GIVING HIS FINDINGS ON THE SURMISE OF CASH DEPOSIT IN THE ACCOUNT OF MR. D.S.KUMBHAR. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER SETTLED PRINCIPLES OF NA TURAL JUSTICE. THUS, RELEVANT GROUNDS IN ALL THREE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 1 4 . IN THE RESULT, ALL THE THREE APPEAL S OF ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH , 2020. SD/ - SD/ - S.S. VISWANETHRA RAVI D. KARUNAKARA RAO JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 5 TH MARCH , 2020. GCVSR 7 ITA NO S . 1 23 4 TO 1 236 /PUN/20 1 9 TRIMURTI COAL TRADING CO. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT 3. THE CIT (APPEALS) - 6 , PUNE . 4. THE PR. CIT - 5 , PUNE . 5. , , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // // TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE