DCIT, New Delhi V. M/s. GDA Finvest Trade (P) Ltd., New Delhi

ITA 1272/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7276 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL BAJPAI
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1272/DEL./2013 (ASSESSMENT YEAR : 2003-04) DCIT, CENTRAL CIRCLE 13, VS. M/S. GDA FINVEST & TR ADE PVT.LTD., NEW DELHI. DELHI ROHTAK ROAD, ASSAM TIMBER MARKET, SWARNA PARK, MUNDKA, NEW DELHI. (PAN : AAACG4200D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE & SMT. RANO J AIN, ADVOCATE REVENUE BY : SHRI SUNIL BAJPAI, CIT ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT(APPEALS)-I, NEW DELHI DATED 13.12.2012 FOR THE ASSESSMENT YEAR 2003-04. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL :- 1. THE ORDER OF THE LD. CIT (APPEALS) IS NOT CORRE CT IN LAW AND FACTS. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN LAW, FACT AND IN CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.10,00,000/- MADE BY AO ON UNEXPLAINED UNSECURED LOAN RECEIVED FROM M/S CSR ITA NO.1272/DEL/2013 2 ELECTRONICS P. LTD. SINCE THE GENUINENESS OF TRANSA CTION AND CREDITWORTHINESS OF THE COMPANY WAS NOT PROVED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE EQUIVALENT AMOUNT OF CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE COMPANY ON THE SAME DATE AS THE DATE OF LOAN TO THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN LAW, FACT AND IN CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.22,027/- MADE BY AO ON A/C OF DISALLOWANCE OF INTEREST ON UNSECURED LOANS WHICH A RE TREATED AS UNEXPLAINED UNSECURED LOAN. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/AL L THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ADDITION OF RS.10 LAKH MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOANS AND INTEREST THEREON OF RS.22,027/- DURING THE YEAR UNDER CONSIDERATION. 3. THE BRIEF FACTS LEADING TO THE PRESENT APPEAL AR E THAT A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED IN THE SWASTIK PIPE GROUP OF COMPANIES ON 28 TH AUGUST, 2008 WHICH INCLUDED THE ASSESSEE COMPANY AS WELL. CONSEQUENT TO THE AB OVE, NOTICE WAS ISSUED UNDER SECTION 153A AND PROCEEDINGS FOR THE R EASSESSMENT WERE TAKEN UP BY THE ASSESSING OFFICER. 4. IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE COMPANY HAS RECEIVED A LOAN OF RS.10 L AKH FROM CSR ELECTRONICS PVT. LTD. THE ASSESSEE COMPANY WAS AS KED TO SUBMIT ITA NO.1272/DEL/2013 3 NECESSARY DETAILS THEREOF. THE ASSESSEE COMPANY SU BMITTED THE CONFIRMATION, COPY OF THE INCOME TAX RETURN AS WELL AS THE BANK STATEMENT OF THE CSR ELECTRONICS PVT. LTD. THE ASSESSING OFF ICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE COMPANY AND AD DED A SUM OF RS.10 LAKH AS UNEXPLAINED CREDIT AND ALSO INTEREST OF RS. 22,027/- PAID TO THIS CREDITOR DURING THE YEAR UNDER CONSIDERATION. THE ALLEGATION OF THE ASSESSING OFFICER WAS THAT THERE IS A DEPOSIT OF RS .5 LAKH IN CASH BEFORE THE PAYMENT OF RS.5 LAKH TO THE ACCOUNT OF THE ASSE SSEE COMPANY. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS DELE TED THE ADDITION BY HOLDING AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSIONS OF THE APPELLANT. THE LOAN CREDITO R IS A COMPANY DULY REGISTERED UNDER THE COMPANIES ACT AND REGULARLY FILES INCOME-TAX RETURNS AND IS ALSO REGU LARLY ASSESSED TO TAX. THE TOTAL FUND AVAILABLE WITH THE LOAN CREDITOR IS RS.79.55 LAKH. THE LOAN GIVEN TO THE APPELLANT COMPANY APPEARS IN THE BALANCE SHEET OF THE LOAN CREDITOR. THE AMOUNTS WERE TRANSFERRED THROUGH BANK CHANNEL AND HAVE BEEN DULY ACCOUNTED FOR. IN THE CIRCUMSTANCES, IT CANNOT BE HELD THAT THE COMPANY HAVING INCOME OF ONLY RS.22,540/- DOES NOT HAVE THE RESOURCES TO PROVIDE LOAN OF RS.10,00,000/- TO THE APPELLANT. ACCORDINGLY, THE ADDITION IS NOT LEGALLY SUSTAINABL E AND IS DELETED. THIS GROUND OF APPEAL IS ALLOWED AND APPE LLANT GETS RELIEF OF RS.10,00,000/-. 6.1 THE TENTH GROUND OF APPEAL IS AGAINST THE ADDIT ION OF AN AMOUNT OF RS.22,027/- ON ACCOUNT OF INTEREST ON ABO VE SAID LOAN. DURING THE ASSESSMENT PROCEEDINGS, THE AO HA D OBSERVED THAT THE UNSECURED LOAN HAS ALREADY BEEN T REATED AS UNEXPLAINED, THE INTEREST CLAIMED ON THIS LOAN CANN OT BE ITA NO.1272/DEL/2013 4 ALLOWED AS EXPENSES. THUS, THE INTEREST OF RS.22,0 27/- IS DISALLOWED. 6. IT WAS CONTENDED BY THE LEARNED DR THAT CIT(A) W AS NOT JUSTIFIED IN DELETING THE ADDITION. IT WAS SUBMITTED THAT TH E CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE FACT AS BROUGHT BY THE ASSES SING OFFICER ABOUT THE BANK STATEMENT FOR JUSTIFYING THE CASH CREDIT. THE ONUS IS UPON THE ASSESSEE TO PROVE THE IDENTITY, SOURCE AND GENUINEN ESS OF THE LOAN. IN THE PRESENT CASE THE ASSESSEE HAVING FAILED TO PROVE TH E SOURCE AND GENUINENESS THE CIT(A) WAS NOT JUSTIFIED IN DELETIN G THE ADDITION. 7. AS AGAINST THIS, THE LD. AR SUBMITTED THAT THE A DDITION HAS BEEN RIGHTLY DELETED BY THE CIT(A). IT WAS SUBMITTED TH AT IT IS A CASE OF REASSESSMENT UNDER SECTION 153A AND NOTHING INCRIMI NATING WAS FOUND DURING THE COURSE OF THE SEARCH. IT WAS FURTHER SU BMITTED THAT THE ASSESSEE HAS FULLY DISCHARGED ITS ONUS IN RESPECT OF THE LOA N UNDER SECTION 68 OF THE ACT. IT HAS SUBMITTED THE INCOME TAX RETURN OF THE CSR ELECTRONICS PVT. LTD. IT HAS FILED THE BALANCE SHEET OF THE SAID CO MPANY AND ALSO COPY OF ACCOUNT DULY CONFIRMED WITH PAN AND COMPLETE ADDRES S. THE PAYMENT HAS BEEN RECEIVED BY CHEQUE IN THE MONTH OF JANUARY , 2003 AND THIS LOAN WAS A LOAN ON WHICH INTEREST FOR THE PERIOD ENDED 3 1 ST MARCH, 2003 OF RS.22,027/- WAS CREDITED AND OUT OF WHICH TAX AT SO URCE OF RS.4626/- WAS DEDUCTED. THE CSR ELECTRONICS PVT. LTD. HAS FILED THE RETURN AND HAS SHOWN THE INTEREST INCOME AS IS EVIDENT FROM THE PR OFIT AND LOSS ACCOUNT ITA NO.1272/DEL/2013 5 AND HAS ALSO TAKEN CREDIT OF THE TAX DEDUCTED AT SO URCE AS IS EVIDENT FROM THE COMPUTATION OF INCOME. THE PAYMENT HAS BEEN RE CEIVED BY CHEQUE ON VARIOUS DATES AND THE BANK STATEMENT OF CSR ELEC TRONICS PVT. LTD. SHOWS THE DEBIT IN THE NAME OF THE ASSESSEE COMPANY . THERE IS NO ALLEGATION WHATSOEVER FROM ANY QUARTER ABOUT THE CR EDENTIAL OF CSR ELECTRONICS PVT. LTD. NO ENQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER SO AS TO DISCREDIT THE EXPLANATION OF THE ASSESSEE. 8. THE AR HAS RELIED UPON TO THE FOLLOWING JUDGMENT S IN SUPPORT OF ITS CONTENTION THAT CIT(A) RIGHTLY DELETED THE ADDI TION:- (I) ADDL. CIT BIHAR VS HANUMAN AGARWAL (1985) 151 I TR 151 (PATNA HIGH COURT) (II) JALAN TIMBER VS CIT (1997) 223 ITR 11 (GAUHATI H.C.) (III) SAROGI CREDIT CORPORATION VS CIT (1976) 103 I TR 344 (PATNA HC) 9. WE HAVE HEARD BOTH THE PARTIES. ON GOING THROUG H THE FACTS OF THE CASE AND PERUSING THE ASSESSMENT ORDER AS WELL AS T HE ORDER OF THE CIT(A) WE NOTE THAT THE ASSESSEE HAS RAISED LOAN OF RS.10 LAKH BY WAY OF THREE CHEQUES DURING THE MONTH OF JANUARY, 2003. THESE C HEQUES HAVE BEEN DEBITED IN THE BANK ACCOUNT OF THE CSR ELECTRONICS PVT. LTD. CSR ELECTRONICS PVT. LTD. IS BEING ASSESSED TO INCOME T AX AND IT HAS CONFIRMED HAVING MADE THE PAYMENT. THE ASSESSING OFFICERS O NLY ALLEGATION AS EMERGING FROM THE ASSESSMENT ORDER IS THAT THERE IS A CASH DEPOSIT IN THE BANK ACCOUNT OF THE CSR ELECTRONICS PVT. LTD. WE A RE OF THE VIEW THAT ITA NO.1272/DEL/2013 6 ONLY THAT CANNOT BE A GROUND FOR MAKING THE ADDITIO N AND TREATING THE CASH CREDIT AS UNEXPLAINED CREDIT. THERE IS NO BAR AGAI NST ANY PERSON ON DEPOSITING CASH IN HIS BANK ACCOUNT. DEPOSIT OF CA SH IN THE BANK ACCOUNT CAN RAISE A DOUBT IN THE MIND OF ASSESSING OFFICER AND ON THAT BASIS, HE IS SUPPOSED TO CARRY OUT FURTHER INVESTIGATION TO TAKE ISSUE TO THE LOGICAL END. THIS LOAN IS REFLECTED IN THE BOOKS OF THE CSR ELEC TRONICS PVT. LTD. FURTHER THE BANK STATEMENT OF CSR ELECTRONICS PVT. LTD. REFLECTS THAT THERE ARE VARIOUS DEBITS AND CREDITS THROUGH CHEQUES. TH E ASSESSING OFFICERS ALLEGATION IS THAT THERE IS A DEPOSIT OF CASH IN TH E BANK ACCOUNT OF THE CREDITOR BUT WE FIND THAT ALL THE MONEY HAS NOT BEE N DEPOSITED IN CASH. IN FACT THERE ARE CASH WITHDRAWALS FROM THE BANK ACCOU NT. THE ASSESSEE COMPANY HAD PRODUCED CONFIRMATIONS. THE EVIDENCES IN SUPPORT OF THE LOAN WERE FILED THAT THIS ADVANCE WAS RECEIVED FROM CSR ELECTRONICS PVT. LTD. AND THE SAME HAS ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT. THE CREDITOR COMPANY WAS BEING ASSESSED INDEPENDENTLY TO INCOME- TAX. IN VIEW OF THIS, THERE IS NO REASON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE COMPANY UNLESS THERE IS SOMETHING OTHER MATERIAL TO DEMONSTRATE THAT THE TRANSACTION ENTERED INTO BY THE CSR ELECTRONICS PVT . LTD. ARE NOT GENUINE OR ARE ACCOMMODATION ENTRIES. WITHOUT CARRYING OUT INVESTIGATION TO THE LOGICAL END AND FINDING OUT ANYTHING ADVERSE IN SUC H INVESTIGATION, THE ASSESSING OFFICER CANNOT COME TO A CONCLUSION THAT THE CREDIT RECEIVED BY THE ASSESSEE COMPANY IS NOT GENUINE. THERE IS NO A LLEGATION OF ANY ITA NO.1272/DEL/2013 7 ACCOMMODATION ENTRY OR THERE IS ANY STATEMENT BY AN Y OF THE PERSON THAT CSR ELECTRONICS PVT. LTD. HAS INDULGED INTO ACCOMMO DATION ENTRIES. THE ASSESSEE COMPANY HAS DISCHARGED ITS ONUS BY FILING THE NECESSARY CONFIRMATION, COPY OF INCOME TAX RETURN AND COPY OF BANK ACCOUNT. THE ASSESSEE COMPANY HAS ALSO PAID INTEREST AND DEDUCTE D TDS. IN VIEW OF THESE FACTS THE CIT(A) WAS JUSTIFIED IN DELETING TH E ADDITION AND WE UPHOLD THE ORDER OF THE CIT(A). 10. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF OCTOBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 10 TH DAY OF OCTOBER, 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT