The ITO, Ward-3(4), Surat V. M/s. Royal Organizers, Surat

ITA 124/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76904 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 25-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2011
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained cash credit; Question of law
• Section: 131; 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , , , 0 00 0 0 00 0 , , , , !' !' !' !' ! # ! # ! # ! # BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NOS. 124/AHD/2011 ASSESSMENT YEAR 2007-08 INCOME TAX OFFICER, WARD-3(4), SURAT. VS M/S. ROYAL ORGANISERS, 6-GULZAR AVENUE, KOZWAY CIRCLE, RANDER ROAD, SURAT. PAN: AANFM4827A $%/ APPELLANT '($% / RESPONDENT REVENUE BY : SHRI J.P. JHANGID, SR. DR ASSESSEE(S) BY : SHRI R.N. VEPARI, AR ) * +'/ // / DATE OF HEARING : 25/06/2014 ,-. * +' / DATE OF PRONOUNCEMENT: 04/07/2014 !/ !/ !/ !// // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, AHMEDABAD DATED 19.10.2010. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDIT ION OF RS 13,50,000/- MADE AS UNEXPLAINED UNSECURED LOANS U/S. 68 OF THE INCOME TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF CONSTRUCTION OF ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 2 - RESIDENTIAL FLATS. THE ASSESSEE HAS SHOWN UNSECURE D LOANS OF RS 13,50,000/- FROM THE FOLLOWING FOUR PERSONS: SR.NO. NAME OF THE PERSON RS. DATE OF LOAN 1 SABBIR HAJI KARIM DANGRA 2,00,000/- 02.09.2006 2 NASIAMA SABIIR DANGRA 4,00,000/- 02.09.2006 3 YAKOOB GANI POTHIAWALA 5,00,000/- 08.09.2006 4 JARINA JAMALBHAI NOORANI 2,50,000/- 08.09.2006 TOTAL 13,50,000/- IN ORDER TO VERIFY THE LOANS TAKEN BY THE ASSESSEE FIRM, THE ASSESSING OFFICER ISSUED SUMMONS U/S. 131 WHICH WERE SERVED ON THE CR EDITORS AND THE STATEMENT ON OATH WAS RECORDED. THE ASSESSING OFFI CER OBSERVED THAT SHRI SABBIR HAJI KARIM DANGRA HAD ADVANCED RS TWO LAKHS ON 02.09.2006. THE ASSESSING OFFICER FOUND FROM THE BANK STATEMENT THA T RS TWO LAKHS WAS DEPOSITED IN CASH ON 01.09.2006 AND ON THE VERY NEX T DAY I.E. ON 02.09.2006, RS TWO LAKHS WAS ADVANCED TO THE ASSESS EE BY CHEQUE. THE CREDITOR DURING THE COURSE OF RECORDING HIS STATEME NT SUBMITTED THAT HE ADVANCED RS TWO LAKHS TO THE ASSESSEE OUT OF SALE P ROCEEDS OF CLOTHS AND THAT HE WAS DOING CLOTHS BUSINESS. THE CREDITOR EX PLAINED THAT HE MADE SALES OF RS 6,84,279/- AND HAS ALSO EARNED RS 89,80 0/- FROM ACCOUNTING WORK. THE ASSESSING OFFICER NOTED THAT HE HAS SHOWN GROSS PROFIT FROM SALE OF CLOTHS AT RS 56,221/- AND NET PROFIT WAS SHOWN A T RS 1,03,798/- AND FROM THIS, HE MADE WITHDRAWALS FOR HOUSEHOLD EXPENSES OF RS 36,000/-. FROM THIS, THE ASSESSING OFFICER HELD THAT THE CREDITOR HAD NO CREDITWORTHINESS TO ADVANCE LOAN OF RS TWO LAKHS TO THE ASSESSEE. 4. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE H AS RECEIVED LOAN OF RS FOUR LAKHS FROM THE NASIAMA SABIIR DANGRA ON 02.09.2006. HE OBSERVED FROM THE BANK ACCOUNT OF THE CREDITOR THAT SHE HAD DEPOSITED RS FOUR LAKHS IN CASH ON 01.09.2006 AND ON THE VERY NE XT DAY I.E. ON ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 3 - 02.09.2006, RS FOUR LAKHS WAS ADVANCED BY CHEQUE TO THE ASSESSEE. DURING THE COURSE OF HER STATEMENT, SHE SUBMITTED THAT SHE WAS DOING BUSINESS OF TAILORING AND SALE OF CUT PIECE CLOTH AND THAT SUM OF RS FOUR LAKHS WAS ADVANCED AS LOAN OUT OF SALE PROCEEDS AND TAILORING INCOME. THE CREDITOR EXPLAINED THAT SHE HAD MADE SALES OF RS 6,24,418/- AND INCOME FROM TAILORING OF RS 45,562/-. THE ASSESSING OFFICER FU RTHER OBSERVED THAT SHE HAS SHOWN GROSS PROFIT OF RS 95,684/- FROM SALE OF CLOT H AND THE NET PROFIT SHOWN WAS RS 1,25,720/-. SHE HAS ALSO WITHDRAWN RS 36,00 0/- FOR HOUSEHOLD EXPENSES FROM HER ACCOUNT. FROM THIS, ASSESSING OF FICER CONCLUDED THAT SHE DID NOT HAVE THE CREDITWORTHINESS TO ADVANCE RS FOU R LAKHS TO THE ASSESSEE. 5. FURTHER, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS RECEIVED LOAN OF RS FIVE LAKHS FROM SHRI YAKOOB GAN I POTHIAWALA ON 08.09.2006. HE OBSERVED FROM THE BANK STATEMENT TH AT A SUM OF RS FIVE LAKHS WAS DEPOSITED ON 07.09.2006 AND ON THE VERY N EXT DAY I.E. ON 08.09.2006, AMOUNT OF RS FIVE LAKHS WAS GIVEN BY CH EQUE TO THE ASSESSEE. THE CREDITOR CLAIMED THAT HE WAS DOING BUSINESS OF SELLING OF CLOTHS AND RS FIVE LAKHS WERE ADVANCED FROM OUT OF THE SALE PROCE EDS. IT WAS SUBMITTED THAT HE WAS FILING HIS RETURN U/S. 44AF OF THE ACT. HE HAD SHOWN INCOME OF RS 1,77,940/- IN THE RETURN OF INCOME. THE ASSESSI NG OFFICER OBSERVED THAT HE HAS WITHDRAWN RS 70,000/- FOR HOUSEHOLD EXPENSES . FROM THIS, THE ASSESSING OFFICER CONCLUDED THAT HE DID NOT HAVE TH E CREDITWORTHINESS TO ADVANCE RS FIVE LAKHS TO THE ASSESSEE. 6. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAD RECEIVED RS 2,50,000/- ON 08.09.2006 FROM JARINA JAMALBHAI N OORANI. HE FOUND FROM THE BANK ACCOUNT OF THE CREDITOR THAT RS 1,25,000/- WAS DEPOSITED IN CASH ON 07.09.2006 IN ONE BANK ACCOUNT AND SUM OF RS 1,25,0 00/- WAS DEPOSITED IN CASH IN ANOTHER BANK ACCOUNT ON 07.09.2006 AND ON T HE VERY NEXT DAY I.E. 08.09.2006, RS 2,50,000/- WAS GIVEN BY CHEQUE TO TH E ASSESSEE. THE CREDITOR CLAIMED THAT HE WAS IN THE BUSINESS OF SEL LING OF CLOTHS AND AMOUNT ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 4 - OF RS 2,50,000/- WAS ADVANCED TO THE ASSESSEE OUT O F SALE PROCEEDS. IT WAS SUBMITTED THAT SHE WAS FILING HER RETURN OF INCOME U/S. 44AF OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT SHE HAD WITHDRAWN R S 40,000/- FOR HOUSEHOLD EXPENSES. FROM THIS, THE ASSESSING OFFIC ER OBSERVED THAT THE CREDITOR DID NOT HAVE CREDITWORTHINESS TO ADVANCE R S 2,50,000/- TO THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER MADE AD DITION U/S. 68 OF THE ACT OF RS 13,50,000/- AS UNEXPLAINED CREDITS OF THE ASS ESSEE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 7. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE ADDITION BY OBSERVING AS UNDER: 4. DECISION: 4.1 I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT. THE ADDITION OF RS 13,50,000/- MADE U/S. 68 OF THE ACT, ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS, IS ON THE G ROUND THAT CREDITWORTHINESS OF THE LOAN CREDITORS HAS NOT BEEN ESTABLISHED. IN SO FAR AS THE GENUINENESS AND IDENTITY OF THE LO AN CREDITORS ARE CONCERNED, THE SAME HAS NOT BEEN DISPUTED BY TH E ASSESSING OFFICER. 4.2 IN RESPECT OF THE FIRST TWO LOAN CREDITORS, NAM ELY SHRI SABBIR HAJI KARIM DANGRA AND SMT. NASIAMA SABBIR DA NGRA, I FIND THAT BOTH ARE HUSBAND AND WIFE AND ARE MAINLY IN THE BUSINESS OF TRADING OF CLOTH FOR THE LAST 6 TO 7 YE ARS AND HAVE BEEN FILING RETURN 4BCOME FOR ALL THESE ASSESSMENT YEARS. BOTH THESE PERSONS APPEARED BEFORE THE ASSESSING OFFICER AND PRODUCED THEIR BOOKS OF ACCOUNT, INCLUDING CASH BOO K AND IT WAS SUBMITTED BY THEM THAT THE AMOUNT OF RS 2 LAC DEPOS ITED IN CASH ON 1.9.2006 BY SHRI SHABBIR DANGRA AND RS 4 LAC BY SMT. NASIAMA DANGRA IS BY WAY OF WITHDRAWAL FROM THEIR C ASH BOOK WHICH WAS DULY PRODUCED BEFORE THE ASSESSING OFFICE R. THE ASSESSING OFFICER HAS NOWHERE HELD THAT THE CASH BO OK WAS NOT PRODUCED OR THAT THE CASH DEPOSITED IN THE BANK ACC OUNT IS NOT FROM WITHDRAWAL MADE FROM THE CASH BOOK. HE HAS OBS ERVED THAT CASH HAS BEEN DEPOSITED ON 01.09.2006 BY THE ABOVE PERSONS AND WITHDRAWN FROM THE BANK ON THE VERY NEXT DATE T HAT IS ON 2.9.2006. THE ASSESSING OFFICER HAS ONLY HELD THAT SINCE THE ABOVE TWO PERSONS' INCOME IS NOT MUCH AND GP FROM T HEIR BUSINESS IS ALSO LOW, THEIR CREDITWORTHINESS HAS NO T BEEN ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 5 - ESTABLISHED. I FIND THAT THIS FINDING HAS BEEN GIVE N WITHOUT DISPUTING THE ACTUAL ENTRIES MADE IN THE CASH BOOK, FROM WHERE THE ABOVE CASH HAS BEEN WITHDRAWN. THUS, WHEN THE S OURCE OF THE CASH DEPOSITED IN THE BANK IS FROM THE CASH BOO K OF THE ABOVE TWO PERSONS, THE ASSESSING OFFICER M ORDER TO CHECK THE CREDITWORTHINESS OF THE ABOVE PERSONS SHOULD HAVE E XAMINED THE CASH BOOK OF THESE PERSONS AND ONLY IF THE ENTRIES IN THE CASH BOOK WERE NOT FOUND PROPER, DURING THE COURSE OF TH EIR STATEMENT, THEY SHOULD HAVE BEEN CONFRONTED WITH TH E SAME AND THEIR REPLY NOT FOUND CONVINCING AND ACCEPTABLE, TH EN ONLY THE CREDITWORTHINESS COULD HAVE PEEN DOUBTED. THE APPEL LANT HAS FURTHER BY THE WRITTEN SUBMISSION, REPRODUCED ABOVE , IN RESPECT OF THE ABOVE TWO PERSONS, GIVEN DETAILS AS TO HOW T HE ABOVE AMOUNT BEING PART OF THE CASH BOOK WAS GENERATED OU T OF THEIR BUSINESS I, THEREFORE, HOLD THAT ONCE THE CASH HAS BEEN WITHDRAWN FROM THE CASH BOOK, UNTIL AND UNLESS, THE ENTRIES IN THE CASH BOOK ARE NOT FOUND PROPER, CREDITWORTHINES S OF THE ABOVE TWO PERSONS-.CANNOT BE DOUBTED. I, THEREFORE, DELETE THE ADDITION OF UNSECURED LOANS OF RS 2 AND 4 LAC RESPE CTIVELY, OUTSTANDING AGAINST THE NAME OF ABOVE PERSONS. 4.3 THE THIRD LOAN CREDITOR, SHRI YAKUB GANI POTHIW ALA ALSO APPEARED BEFORE THE ASSESSING OFFICER AND IN THE ST ATEMENT GIVEN BEFORE HIM, HE STATED THAT HE HAS GIVEN RS 5 LAC OU T OF HIS SAVINGS WITH AN INTENTION TO PURCHASE A FLAT, BUT S INCE THE SAME DID NOT MATERIALIZE DURING THE YEAR, THE SAME AMOUN T HAS BEEN TREATED AS LOAN IN HIS NAME, BY THE APPELLANT FIRM IN ITS BOOKS OF ACCOUNTS. THE ABOVE AMOUNT HAD BEEN DEPOSITED IN C ASH BY THE ABOVE PERSON ON 7.9. 2006 AND WITHDRAWN ON THE VERY NEXT DAY, THAT THIS ON 8.9 .2006 AND CHEQUE OF THE ABOVE AMOU NT WAS GIVEN TO THE APPELLANT FIRM. SHRI YAKUB ALSO STATED THAT THE ABOVE AMOUNT WAS TAKEN OUT FROM HIS CASH BOOK AND D EPOSITED IN HIS BANK ACCOUNT ON 7.9. 2006. THIS STATEMENT OF THE SHRI YAKUB HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICE R. THE ASSESSING OFFICER HAS ONLY STATED THAT THE FINANCIA L POSITION OF THE LOAN CREDITOR IS NOT SOUND AND, THEREFORE, HIS CRED ITWORTHINESS HAS NOT BEEN ESTABLISHED. THIS FINDING OF THE ASSES SING OFFICER IS AGAIN WITHOUT PROPER APPRECIATION OF THE RECORDS OF SHRI YAKUB, WHO IS FILING HIS RETURN OF INCOME FOR THE LAST 7 T O 8 YEARS AND ALSO MAINTAINING BOOKS OF ACCOUNT INCLUDING CASH BO OK, THEREFORE, THE FINDING GIVEN IN THIS REGARD IN RE SPECT OF THE FIRST TWO CREDITORS WOULD ALSO BECOME APPLICABLE IN T HE CASE OF THE THIRD CREDITOR. THE APPELLANT HAS ALSO FURNISHED DE TAILS AS TO HOW THE ABOVE AMOUNT WAS GENERATED OUT OF THE BUSINESS OF SHRI YAKUB, WHO IS TRADING IN CLOTH AND IS A COMMISSION AGENT. IT HAS FURTHER BEEN SUBMITTED THAT THE ABOVE AMOUNT WAS AC TUALLY ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 6 - ADVANCE GIVEN FOR BOOKING OF FLAT, BUT SINCE THE PR OJECT DID NOT MATERIALIZE DURING THE YEAR, THE SAME HAS BEEN TREA TED AS LOAN. I, THEREFORE, FOR THE REASONS GIVEN IN THE CASE OF FIRST TWO CREDITORS DELETE THE ADDITION OF RS 5 LAC, BEING TH E AMOUNT OUTSTANDING IN THE NAME OF SHRI YAKUB. 4.4 THE LAST CREDITOR SMT. JARINA JAMALBHAI NOORANI IS WIFE OF SHRI YAKUB GANI POTHIWALA, AND IS ALSO TRADING IN C LOTH AND HAS FILED RETURN OF INCOME U/S 44 AF OF THE ACT. THE AS SESSING OFFICER OBSERVED THAT SHE HAS DEPOSITED CASH OF RS 1,25,000 IN EACH OF HER TWO BANK ACCOUNTS ON 7.9. 2006 AND ON THE VERY NEXT DAY, THAT IS 8.9. 2006 WITHDRAWN RS 2,50,000 FROM THE ABOVE BANK ACCOUNTS AND ISSUED CHEQUES IN FAVOUR OF T HE APPELLANT FIRM. THE ASSESSING OFFICER HAS, THEREFORE, DOUBTED THE CREDITWORTHINESS OF SMT. JARINA. THE ASSESSING OFFI CER HAS, HOWEVER, NOT DOUBTED THE IDENTITY AND GENUINENESS O F SMT. JARINA AND IT IS A MATTER OF RECORD THAT SHE'S WIFE OF SHRI YAKUB. BOTH OF THEM HAVE MADE ADVANCE FOR BOOKING OF FLAT WITH THE APPELLANT FIRM. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING AS TO WHETHER THE ABOVE AMOUNT PAID WAS FOR ADVANCE AG AINST PURCHASE OF FLATS. HE HAS ALSO NOT DISPUTED THAT TH E APPELLANT IS TRADING IN CLOTH AND HAS FILED HER RETURN U/S 44 AF OF THE ACT. IN CASE HER CREDIT WORTHINESS IS NOT THERE TO ADVANCE RS 2.5 LAC TO THE APPELLANT FIRM, SHE BEING THE WIFE OF SHRI YAKU B, WHO IS FILING RETURNS OF INCOME FOR THE LAST 7-8 YEARS AND SHE FI LING HER RETURN U/S. 44AF OF THE ACT, THE QUESTION OF ADDITION OF T HE ABOVE AMOUNT WOULD ARISE IN THE HANDS OF HER HUSBAND SH. YAKUB AND NOT THE APPELLANT FIRM. I, THEREFORE, FIND THAT TH E CREDITWORTHINESS OF SMT. JARINA HAS NOT BEEN PROPER LY INQUIRED AND INVESTIGATED AND THE SAME HAS BEEN DOUBTED ONLY FOR THE REASON THAT SHE IS HAVING LOW INCOME, AND THEREFORE , CANNOT ADVANCE AN AMOUNT OF RS 2,50,000/-. I, ACCORDINGLY , DELETE THE ADDITION OF THE ABOVE AMOUNT, BEING THE AMOUNT OUTS TANDING IN THE NAME OF SMT. JARINA. 8. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF ASSESSING OFFICER WHEREAS THE AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX ( APPEALS). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON REC ORD, WE FIND THAT IN THE ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 7 - INSTANT CASE, THE ASSESSEE HAS RECEIVED SUM OF RS 1 3,50,000/- FROM FOLLOWING FOUR PERSONS: SR.NO. NAME OF THE PERSON AMOUNT RS. DATE OF LOAN 1 SABBIR HAJI KARIM DANGRA 2,00,000/- 02.09.2006 2 NASIAMA SABIR DANGRA 4,00,000/- 02.09.2006 3 YAKOOB GANI POTHIAWALA 5,00,000/- 08.09.2006 4 JARINA JAMALBHAI NOORANI 2,50,000/- 08.09.2006 TOTAL 13,50,000/- THE ASSESSING OFFICER FOUND THAT THE CREDITORS DID NOT HAVE CREDITWORTHINESS TO ADVANCE SUM OF MONEY TO THE ASSESSEE AND THAT CA SH WAS DEPOSITED ON THE PREVIOUS DAY OF ADVANCING OF LOAN TO THE ASSESS EE AND THEREFORE, HELD THAT THE CREDITS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WERE NOT GENUINE AND ADDED THE LOAN AMOUNT OF RS 13,50,000/- TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE ADDITION ON THE GROUND THAT SUMS WERE WITHDRAWN BY THE CREDITORS FROM THE CASH BOOK AND DEPOSITED IN THE BANK ACCOUNT AND THE ASSESSING OFFICER AFTER INVESTIGATION HAS NOT FOUND THE SAME TO BE NO T CORRECT. 10. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 11. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT ALL THE FOUR CREDITORS WERE EXAMINED ON OATH A ND IN THEIR STATEMENT RECORDED U/S. 131 OF THE ACT THEY HAVE ADMITTED TO HAVING ADVANCED SUM OF MONEY TO THE ASSESSEE. IT WAS THUS HIS ARGUMENT TH AT AS FAR AS THE ASSESSEE IS CONCERNED, THE ASSESSEE HAS EXPLAINED T HE SOURCE OF HIS CREDITS IN THE BOOKS OF ACCOUNT. WHAT THE ASSESSING OFFICE R WAS TRYING TO REQUIRE THE ASSESSEE TO EXPLAIN WAS THE SOURCE OF THE SOURC E WHICH HE CANNOT DO U/S. 68 OF THE ACT. HENCE, IT WAS HIS SUBMISSION T HAT THE ADDITION MADE WAS RIGHTLY DELETED BY THE COMMISSIONER OF INCOME TAX ( APPEALS). HE FURTHER ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 8 - POINTED OUT FROM THE PAPER BOOK FILED BY HIM THAT S MT. NASIAMA SABIIR DANGRA WAS INCOME TAX ASSESSEE AND SHOWN THE AMOUNT OF RS FIVE LAKHS ADVANCED TO THE ASSESSEE IN THE BALANCE SHEET FILED ALONGWITH RETURN OF INCOME. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOM E AND THE AND BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNT ARE FILED AT PAGE NOS. 1 TO 15 OF THE PAPER BOOK FILED BY THE ASSESSEE. FURTHE R, IN THE CASE OF SHRI SABBIR HAJI KARIM DANGRA, FROM WHOM RS TWO LAKHS WA S RECEIVED BY THE ASSESSEE, IT WAS ARGUED THAT HE WAS AN INCOME TAX A SSESSEE AND HAS SHOWN IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOM E, SUM OF RS TWO LAKHS ADVANCED TO THE ASSESSEE. COPY OF THE BALANCE SHEE T, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNT AS WELL AS COPY OF ACKN OWLEDGEMENT OF RETURN OF INCOME FILED ARE PLACED AT PAGE NOS. 16 TO 32 OF TH E PAPER BOOK FILED BY THE ASSESSEE. FURTHER, HE SUBMITTED THAT SHRI YAKOOB G ANI POTHIAWALA FROM WHOM RS FIVE LAKHS WAS RECEIVED BY THE ASSESSEE WAS ALSO AN INCOME TAX ASSESSEE AND HAS SHOWN A SUM OF RS 5 LAKHS ADVANCED TO THE ASSESSEE IN THE BALANCE SHEET FILED BY HIM ALONGWITH THE RETURN OF INCOME. HE SUBMITTED THAT COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME, B ALANCE SHEET, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNT ARE PLACED AT PAGE NO. 33 TO 40 OF PAPER BOOK. SIMILARLY, IN THE CASE OF JARINA JAMALBHAI N OORANI FROM WHOM RS 2,50,000/- WAS RECEIVED, IT WAS SUBMITTED THAT SHE WAS AN INCOME TAX ASSESSEE AND HAS SHOWN SUM OF RS 2,50,000/- ADVANCE D TO THE ASSESSEE IN THE BALANCE SHEET FILED ALONGWITH RETURN OF INCOME. HE SUBMITTED THAT COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME, BALANCE SHE ET, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNTS ARE PLACED AT PAGE NOS . 41 TO 56 OF THE PAPER BOOK. HE SUBMITTED THAT ALL THESE DOCUMENTS WERE F ILED BEFORE THE ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS). HENCE, HE SUBMITTED THAT THE ADDITION WAS RIGHTLY DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 12. WE FIND THAT NO SPECIFIC ERROR IN THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) COULD BE POINTED OUT BY THE DEPARTMENTAL ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 9 - REPRESENTATIVE. WE FIND THAT ALL THE FOUR CREDITOR S WERE EXAMINED BY THE ASSESSING OFFICER WHEREIN THEY ADMITTED THE FACT OF ADVANCING OF LOAN IN QUESTION TO THE ASSESSEE. AFTER EXAMINATION OF THE CREDITORS, NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW T HAT THE CASH WHICH WAS DEPOSITED IN THE BANK ACCOUNT OF THE CREDITORS HAD FLOWN FROM THE ASSESSEE OR CREDITORS HAD ACTUALLY NO SOURCE OF THEIR OWN. 13. WE FIND THAT IT IS NOT IN DISPUTE THAT ALL THE FOUR CREDITORS WERE INCOME TAX ASSESSEE, ADVANCED THE LOAN TO THE ASSES SEE THROUGH BANKING CHANNEL AND THEY ALL HAD THEIR INDEPENDENT SOURCE O F INCOME AND THE ONLY OBSERVATION OF THE ASSESSING OFFICER IS THAT IN HIS SUBJECTIVE OPINION, THEY ARE PERSONS OF SMALL MEANS. HOWEVER, BALANCE SHEET S FILED ALONGWITH RETURN FILED BY THE CREDITORS SHOWS THAT THEY HAVE CAPACIT Y TO ADVANCE LOAN IN QUESTION TO THE ASSESSEE. 14. WE FIND THAT THE ASSESSEE HAS FILED BEFORE US IN THE PAPER BOOK COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME FILED TO GETHER WITH THE COPIES OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND CAPITAL ACCOUNT OF THE CREDITORS. WE FIND FROM THE BALANCE SHEET OF THE CREDITORS THA T THEY HAVE SHOWN AMOUNT OF LOAN ADVANCED TO THE ASSESSEE IN THE BALA NCE SHEET FILED ALONGWITH RETURN OF INCOME. THUS, ON THE BASIS OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT WHERE THE LOAN CREDITORS HAVE SHOWN THE AMOUNT ADVANCED TO THE ASSESSEE IN THE INCOME TAX RETURN F ILED WITH THE INCOME TAX DEPARTMENT AND THE DEPARTMENT HAS ACCEPTED THE SAME , THEN THE CREDITS ARE PRIMA FACIE GENUINE. OUR ABOVE VIEW FINDS SUPP ORT FROM THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF JALA N TIMBERS VS. COMMISSIONER OF INCOME TAX (1997) 223 ITR 11 (GAU). FURTHER, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI B UILDERS 256 ITR 360 (GUJ.) HAS HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE INCOME TAX ACT, 1961 WAS CLEAR, THAT THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CRED IT MAY BE CHARGED TO ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 10 - INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR, THAT THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS S HALL BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 OF THE ACT BY PROVIDING THE IDENTITY OF CREDITORS, GIVING THEIR ADDRESSES, GIR/ PAN AND COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE THAT I T HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUN TS WERE RECEIVED BY THE ASSESSEE BY THE ACCOUNT PAYEE CHEQUES DRAWN FROM BA NK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROV E THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CR EDITORS BECAUSE UNDER LAW, THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORA TION P. LTD. (1986) 159 ITR 0078 HAS HELD AS UNDER: HELD, THAT IN THIS CASE THE RESPONDENT HAD GIVEN TH E NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASS ESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTA NCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CR EDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFOR T MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMST ANCES, THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE P REMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN IT COULD NOT BE SAI D THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHICH THE CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARO SE. THE HIGH COURT WAS RIGHT IN REFUSING TO STATE A CASE. THUS, AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUM STANCES OF THE CASE, WE FIND THAT THE LOAN CREDITORS WHO HAVE ADVANCED SUM OF RS 13,50,000/- TO THE ASSESSEE WERE INCOME TAX ASSESSEES AND HAVE DISCLOS ED THE SUM ADVANCED ITA NO. 124/AHD/2011 M/S. ROYAL ORGANISERS. AY 2007-08 - 11 - TO THE ASSESSEE IN THEIR RETURN OF INCOME FILED WIT H THE INCOME TAX DEPARTMENT AND ALSO ADMITTED TO ABOVE FACTS IN THEI R STATEMENT RECORDED U/S. 131 OF THE ACT. FURTHER, THE LOANS WERE RECEIV ED BY THE ASSESSEE THROUGH CHEQUES DRAWN ON THE BANK ACCOUNTS OF THE C REDITORS. THUS, IN VIEW OF THE ABOVE QUOTED DECISIONS, THE ASSESSEE HAS DIS CHARGED ITS BURDEN OF PROVING THE IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LOAN CREDITORS AND THEREFOR E, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS FULLY JUSTIFIED IN DELETIN G THE ADDITION OF RS 13,50,000/-. THEREFORE, WE DO NOT FIND ANY GOOD RE ASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) WHICH IS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 4 TH OF JULY, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 04/07/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY !/ * '0 1!0. !/ * '0 1!0. !/ * '0 1!0. !/ * '0 1!0./ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. '($% / THE RESPONDENT. 3. 2 / CONCERNED CIT 4. 2() / THE CIT(A)-III, AHMEDABAD 5. 056 ' , , / DR, ITAT, AHMEDABAD 6. 678 9) / GUARD FILE. !/ !/ !/ !/ / BY ORDER, : :: :/ // / ; ; ; ; ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD