Shri Komalkant F.Sharma, Ahmedabad V. The Income tax Officer, Ward-2(2), Bhavnagar

ITA 1348/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9000 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2009
• Assessment Year: 1991-1992
• Appeal Filed On: 25-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india; Set aside
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 02/09/09 DRAFTED ON: 08/09 /09 ITA NO.1348/AHD/2006 ASSESSMENT YEAR : 1991-92 KOMALKANT F.SHARMA (BHAVNAGAR) C/O. MUKESH M.PATEL & CO. 3-4, VITHALBHAI BHAVAN NR.S.P.COLONY RLY.CROSSING AHMEDABAD 380 013 VS. THE ITO WARD-2(2) BHAVNAGAR PAN/GIR NO. : AJBPS 7087 S (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.K. PATEL, AR RESPONDENT BY : SHRI MAHESH KUMAR, DR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-XVIII, AHMEDABAD DATED 31/03 /2006 PASSED FOR ASSESSMENT YEAR 1991-92, BY RAISING FO LLOWING GROUNDS: 1. THAT THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON F ACTS IN CONFIRMING THE ADDITION OF RS.5,50,000/- MADE BY TH E ASSESSING OFFICER AS UNEXPLAINED CASH CREDITS UNDER SEC.68 OF THE I.T. ACT AND FURTHER CONFIRMING THE DISALLOWANCE OF RS.78,75 0/- BEING INTEREST PAID ON THE ABOVE DEPOSITS. 2. THAT THE CIT(APPEALS) FURTHER ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE MERITS OF THE APPELLANTS SUBMISSI ONS AND THE EVIDENCES PLACED BEFORE HIM WHICH ADEQUATELY ESTABL ISH THE IDENTITY OF THE CREDITORS AND THE GENUINENESS OF TH E TRANSACTIONS ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 2 - AND THUS DISCHARGE THE ONUS ON THE APPELLANT. MER ELY BECAUSE THE DEPOSITORS WHO HAD PLACED DEPOSITS ALMOST 15 YE ARS AGO COULD NOT BE LOCATED AT THE RELEVANT POINT OF TIME WHEN THE ASSESSMENT CAME TO BE COMPLETED IN THE YEAR 2005, T HERE WAS NO BASIS OR JUSTIFICATION FOR THE LEARNED CIT(APPE ALS) TO CONCUR WITH THE A.O. THAT THE DEPOSITS WERE BOGUS. THE LE ARNED CIT(APPEALS) GRIEVOUSLY ERRED IN NOT APPRECIATING S EVERAL MATERIAL FACTS AND EVIDENCES SUCH AS THE PAN OF THE DEPOSITORS PLACE ON RECORD, THEIR I.T. RETURNS AND ASSESSMENT DETAILS, COPIES OF BANK ACCOUNTS EVIDENCING RECEIPTS OF THE DEPOSITS BY CHEQUES, PAYMENT OF INTEREST BY CHEQUES AND REPAYME NTS OF THE DEPOSITS BY CHEQUES WHEN ALL THESE COGENT AND MATE RIAL EVIDENCES ALONG WITH THE COPY OF THE ITAT ORDER IN ANOTHER CASE, WHEREIN THESE VERY DEPOSITORS WERE ACCEPTED T O BE GENUINE AND CREDITWORTHY WAS ALSO PLACED ON RECORD BEFORE THE LEARNED LEARNED CIT(APPEALS), THERE WAS NO JUSTIFIC ATION ON HIS PART IN DRAWING ADVERSE CONCLUSIONS AGAINST THE APP ELLANT. THE APPELLANT REQUESTS THAT LEAVE BE GRANTED TO ADD , ALTER, AMEND OR WITHDRAW ANY GROUNDS OF APPEAL ON OR BEFORE FINAL H EARING OF THE APPEAL. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LEARNED CIT(APPEALS) HAS CONFIRMED ADDITION U/S.68 OF THE I .T. ACT, 1961 IN RESPECT OF THE CREDITS TOTALING TO RS.5,50,000/- AP PEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT ORIGINAL R ETURN OF INCOME FOR THE ASSESSMENT YEAR 1991-92 WAS FILED BY THE A SSESSEE ON 30/10/1991 DECLARING TOTAL INCOME AT RS.43,370/-. IT WAS PROCESSED U/S.143(1)(A) OF THE I.T. ACT, 1961 ON 20/01/1992. ASSESSMENT WAS RE-OPENED U/S.147 OF THE I.T. ACT, 1961 BY ISSUING NOTICE U/S.148 OF ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 3 - THE I.T. ACT, 1961 ON 29/05/2001. IN PURSUANT TO T HIS, ASSESSMENT U/S.143(3) OF THE I.T. ACT, 1961 WAS FINALIZED ON 05/03/2003 ON ORIGINALLY ASSESSED INCOME. THIS ASSESSMENT ORDER WAS SET ASIDE BY THE CIT AHMEDABAD-VI DIRECTING THE ASSESSING OFFIC ER TO MAKE FRESH ASSESSMENT AFTER CARRYING OUT NECESSARY ENQUI RIES IN RESPECT OF GENUINENESS OF THE CREDIT GIVEN THREE FIRMS; NAMELY , M/S.VINOD ASSOCIATES, M/S.SHAKTI COAL CORPORATION AND M/S.M.D .MEHTA & CO. THEREAFTER, THE ASSESSING OFFICER PROCEEDED TO MAKE FRESH ASSESSMENT. 4. THE ASSESSING OFFICER NOTED THAT FOLLOWING CRE DITS APPEARED IN THE BOOKS OF THE ASSESSEE FROM THESE THREE PERSONS: - SL.NO(S) NAME OF THE FIRM(S) AMOUNT (RS.) + INTERES T 1. M/S.VINOD ASSOCIATES 2,00,000/- AND INTEREST THEREON RS.27,500/- 2. M/S.SHAKATI COAL CORPORATION 50,000/- AND INTEREST THEREON RS.6,250/- 3. M/S.M.D.MEHTA & CO. 3,00,000/- AND INTEREST THEREON RS.45,000/- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS OF THE CREDITORS, SUCH AS, THEIR LATEST ADDRESSES. ON THE BASIS OF ADDRESSES FURNISHED ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 4 - BY THE ASSESSEE SUMMONS U/S.131(1) OF THE I.T. ACT, 1961 WERE ISSUED TO THE THREE CONCERNS THROUGH THE INSPECTOR OF THE WARD. THE ASSESSING OFFICER HAD REQUIRED THE CREDITORS TO PRO DUCE THEIR BANK PAPER-BOOKS REFLECTING THE TRANSACTIONS OF THE LOAN GIVEN TO THE PRESENT ASSESSEE. IN ADDITION, THE CREDITORS WER E ASKED TO SUBMIT COPIES OF ACKNOWLEDGEMENT OF IT RETURNS FOR ASSESSM ENT YEAR 1991-92 FOR THE PRESENT AND SUBSEQUENT YEARS ALONG WITH PANS AND DETAILS OF ASSESSING OFFICERS ASSESSING THE CREDIT ORS. THE WARD INSPECTOR SUBMITTED THE FOLLOWING REPORT ON 04/02/ 2005: (1) THAT FIRST OF ALL THE GIVEN ADDRESS I.E. C/12 , SONAL COMPLEX, OPP. SUNRISE PARK, VASTRAPUR, AHMEDABAD IS BOGUS SINCE SONAL COMPLEX IS HAVING ONLY TWO BUILDING I .E. A & B BLOCK SO QUESTION OF BLOCK C/12 DOES NOT ARISE WHER E ALL THE THREE CONCERNS SAID TO HAVE BEEN EXIST AS PER ASSES SEES REPLY. (2) THAT IT WAS THOROUGHLY INQUIRED AND REPORTED B Y THE INSPECTOR AFTER INQUIRED FROM THE WATCHMAN OF THE S AID COMPLEX, THE BUSINESSMEN DOING BUSINESS IN A& B BLO CK OF SONAL COMPLEX AND OTHER PERSONS RESIDING AND DOING BUSINESS ADJOINING TO SONAL COMPLEX ARE AND ALL OF THEM HAVE DENIED THE EXISTENCE OF ALL THE THREE CONCERNS AND EXISTEN CE OF BLOCK C/12. 8. IN VIEW OF THE FACTS REPORTED BY INSPECTOR AFTE R THOROUGH INQUIRY MADE BY HIM, IT IS WAS KNOWN THAT ABOVE THR EE CONCERNS I.E. VINOD ASSOCIATES, SHAKTI COAL CORPORA TION AND M.D.MEHTA & CO. ARE BOGUS AND FICTITIOUS AND NEVER EVER EXISTED. ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 5 - 6. THEREAFTER, THE ASSESSING OFFICER PROVIDED AN OP PORTUNITY TO THE ASSESSEE TO EXPLAIN HOW NONE OF THE ADDRESSES WERE FOUND GENUINE. FURTHER, AS PER REPORT OF INCOME TAX INSP ECTOR, NO SUCH PERSONS EVER RESIDED ON THESE ADDRESSES. IN RESPON SE TO THIS, THE ASSESSEE FURNISHED FOLLOWING REPLY:- COMING TO THE CONTENTS OF YOUR PRESENT LETTER UNDE R REPLY, IT IS STATED THAT THE IDENTITIES, CAPACITIES AND GENUINEN ESS OF DEPOSITORS, NAMELY M/S.VINOD ASSOCIATES, M/S.SHAKTI COAL CORPORATION, M/S.M.D.MEHTA ARE ALREADY PROVED IN BU NCH OF NINE APPEALS DECIDED, IN DIFFERENT ASSESSEES CASES , ON DT. 9/7/2003 UNDER APPELLATE TRIBUNAL ORDER, RAJKOT BEN CH, RAJKOT, THE COPY OF WHICH IS ENCLOSED FOR VERIFICAT ION. AS YOUR OFFICE IS COVERED BY SUCH TRIBUNAL TERRITORIAL JURI SDICTION, THE EFFECT IS OF BINDING NATURE. HENCE, PRESENT FACTS AND MERITS ARE IDENTICAL, SIMILAR TO THOSE APPEAL CASES, IT IS NOT EXPECTED TO MAKE DEPARTURE BY ADOPTING DIFFERENT STAND, BUT TO ENDORSE THE RELIANCE OF ASSESSEE. IT FURTHER BE STATED THAT YOUR ACTION OF ENQUIRY/WH EREABOUTS OF DEPOSITORS ASAFTER A LAPSE OF, SAY 15 YEARS, IS UNJUSTIFIED, NOT BINDING TO ASSESSEE FOR CONCLUDING THAT THOSE CASH CREDITORS ARE NON-EXISTING PARTIES. SUCH ACT IONS, IF NEED BE, OUGHT TO HAVE BEEN TAKEN WITHIN REASONABLE TIME . FOR THE DEFAULT/FAILURE OF DEPARTMENT THE ASSESSEE CANNOT B E PLACED ON RACK TO EXPLAIN THE CASH CREDITS AND ASSESSEES HEL PLESSNESS CANNOT BE TAKEN AS ADVANTAGE. FOR MORE THAN ONE RE ASONS SAID DEPOSITORS MAY BE AT ELSEWHERE, PLACES/PREMISES THO UGH LAST KNOWN ADDRESSES WERE TENDERED. HENCE, THEREFORE AS SESSEES CASE STANDS EXPLAINED TO DEPOSITORS IDENTITIES WITH FULL DETAILS OF P.A.NOS., A/C.COPIES, CONFIRMATIONS, ASST.ORDERS COPIES, ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 6 - ADDRESSES, ETC. COUPLED WITH CAPACITIES AND GENUINE NESS OF TRANSACTIONS/CASH CREDITS. 7. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION. HE ACCORDINGLY MADE THE ADDITION OF CASH CREDIT OF RS.5,50,000/- AND INTEREST THEREON TOTALING TO RS.78,750/- PAID ON S UCH LOANS. 8. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE RE FERRED TO A DECISION OF ITAT RAJKOT BENCH IN THE CASE OF SOME OTHER ASSESSEES WHO HAD ALSO SHOWN CREDITS FROM THESE THREE CONCERN S BUT IN WHOSE CASES TRIBUNAL HAD DELETED THE ADDITION. THE LEARN ED CIT(APPEALS) DIFFERENTIATED THE FACTS OF THOSE CASES BY POINTING OUT THAT THE ADDRESSES FURNISHED BY THE PRESENT ASSESSEE ARE NOT -EXISTING ADDRESSES WHICH WAS NOT IN THE CASE DECIDED BY THE ITAT RAJKO T BENCH. THEREFORE, EVEN IF PRESENT ASSESSEE MIGHT HAVE TAKE N CREDITS FROM THE SAME THREE PARTIES, BUT THE DECISION OF THE ITAT RA JKOT BENCH CANNOT BE APPLIED ON ACCOUNT OF DIFFERENT FACTS. THE LEA RNED CIT(APPEALS), THEREAFTER, REFERRED TO THE DECISION OF HON'BLE KER ALA HIGH COURT IN THE CASE OF CIT VS. KERALA ROADLINES CORPORATION (1 986) 162 ITR 669 (KER.), OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF NANAK CHANDRA LAXMANDAS VS. CIT 140 ITR 151, OF HON'BLE HIGH COURT OF ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 7 - PUNJAB IN THE CASE OF ANRAJ NARAYAN DAS VS. CIT 20 ITR 562 (PUNJ) AND OF HON'BLE MADRAS HIGH COURT IN THE CASE OF A.D . JAYAVEERAPANDIAN NADAR VS. CIT 54 ITR 401 (MAD.) AN D HELD THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND ESTABLISH THE GENUINENESS OF THE LOAN TRANSACTIONS TO THE SATISFACTION OF THE ASSESSING OFFICER. HE ACCO RDINGLY CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 13. IN THE PRESENT CASE, THE APPELLANT HAD ONLY PR ODUCED THE ADDRESSES OF THE CREDITORS WHICH WAS FOUND TO B E NON- EXISTING AND THEREFORE IT CAN BE SAID THAT THE APPE LLANT HAD PRODUCED BEFORE THE ASSESSING OFFICER UNRELIABLE INFORMATION. IT IS NOT A CASE WHERE THE ADDRESSES F URNISHED WERE IN EXISTENCE BUT SIMPLY THE CREDITORS WERE NO T FOUND SITUATED AT THOSE PLACES/PREMISES AS PREMISES ITSEL F \\ERE FOUND TO BE NEVER IN EXISTENCE. THEREFORE, NOT ONLY THAT THE APPELLANT HAD FAILED TO DISCHARGE THE PRIMARY ONUS OF FURNISHING CREDIBLE INFORMATION BUT HAD FURNISHED F ALSE INFORMATION AT THE TIME OF ASSESSMENT PROCEEDINGS A ND THEN TRIED TO TAKE SHELTER BEHIND LAME EXCUSE THAT THE POSSIBILITY OF THE CREDITORS SHIFTING FROM THE PREM ISES AFTER LONG LAPSE OF TIME I.E. OF 15 YEARS CANNOT BE DENIE D. IT IS TO BE NOTED THAT ONLY AFTER THE CREDITORS COULD BE TRA CED OUT BY THE ASSESSING OFFICER, QUESTION OF EXAMINATION O F OTHER FACTS AND EVIDENCES TO FIND OUT THE CAPACITY OF THE CREDITORS AND GENUINENESS OF TRANSACTIONS COULD HAVE BEEN UNDERTAKEN AS THE ASSESSING OFFICER HAD REQUIRED TH E CREDITORS IN THE SUMMONS U/S. 131 TO PRODUCE THE DE TAILS OF THEIR BANK PASSBOOKS REFLECTING THE TRANSACTION OF LOAN GIVEN TO THE ASSESSEE, COPIES OF ACKNOWLEDGEMENT OF IT ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 8 - RETURNS FILED FOR A. Y. 1991-92 AND SUBSEQUENT YEAR S, P.A. NOS. AND DETAILS OF PRESENT ASSESSING OFFICERS HAVI NG JURISDICTION OVER THE CASE, DETAILS OF SOURCE OF FU ND ADVANCED TO THE ASSESSEE AS ALSO THE PARTICULARS OF THE PAYMENT MADE. AS THE CREDITORS WERE NOT AVAILABLE, IT CAN BE SAID THAT THE ASSESSING OFFICER WAS PREVENTED FR OM MAKING FURTHER ENQUIRIES REGARDING THE SOURCE OF TH E FUND AVAILABLE WITH THE CREDITORS TO ADVANCE THE LOAN TO THE ASSESSEE WHICH COULD ESTABLISH THE CAPACITY OF THE CREDITORS AND THEREAFTER THE GENUINENESS IRE TRANSA CTION. IN THESE CIRCUMSTANCES, THE ONLY CONCLUSION THAT CA N BE DRAWN WAS THAT THE CASH CREDITS WERE NOT GENUINE AS THE ASSESSEE COULD NOT DISCHARGE HIS ONUS TO PRODUCE CR EDIBLE MATERIAL AND EVIDENCES TO ESTABLISH THE IDENTITY AN D CAPACITY OF THE CREDITORS AS ALSO THE GENUINENESS O F THE TRANSACTIONS. DURING THE APPELLATE PROCEEDING UNDER COVER OF LETTER DTD. 22.07.2005 THE APPELLANT HAS FURNISH ED CERTAIN DOCUMENTS INCLUDING COPIES OF INTIMATION U/ S. 143(1)(A) AND ACKNOWLEDGEMENT OF ITS-2 OF M/S. VINO D ASSOCIATES, M/S. M.D. MEHTA & CO., FOR A.Y 1991-92 IN WHICH TOTAL INCOME OF APPROX. RS.75,000/- HAS BEEN SHOWN. HOWEVER, THESE DOCUMENTS INDICATING INCOME OF APPRO X. RS.75,000/- IN ONE ASSESSMENT YEAR DO NOT GO TO EST ABLISH THE CAPACITY OF THE CREDITORS TO ADVANCE THE LOAN OF SU CH AMOUNT. 14. IN VIEW OF THE ABOVE DISCUSSION AND AFTER CAREF ULLY CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT A ND ALL THE MATERIAL FACTS, I HOLD THE ACTION OF THE ASSESS ING OFFICER IN TREATING THE CREDITS FROM M/S. VINOD ASS OCIATION OF RS.2,00,000/-, M/S. SHAKTI CORPORATION OF RS.2 0,000/- AND M/S. M.D. MEHTA & CO. OF RS.3,00,000/- AS BOGUS CASH CREDITS AND TREATING IT AS DEEMED INCOME U/S. 68 OF THE I.T. ACT AS CORRECT. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED. SIMILARLY, THE ACTI ON OF THE ASSESSING OFFICER IN DISALLOWING INTEREST ON THESE BOGUS ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 9 - CASH CREDITS AMOUNTING TO RS.78,750/- IS ALSO HELD AS CORRECT AND HENCE CONFIRMED. 9. BEFORE US, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT IS UNFAIR ON THE PART OF THE REVE NUE TO ASK THE ASSESSEE TO SEARCH THE CREDITORS AND PRODUCE DOCUME NTS FROM THEM. IT IS NOT NECESSARY AND ALSO NOT POSSIBLE FOR THE ASS ESSEE TO KEEP CONTACT WITH THE CREDITORS AFTER THE LAPS OF SO MANY YEARS. THE BUSINESS OF THE ASSESSEE MAY HAVE STOPPED OR THE CREDITORS MIGHT HA VE MIGRATED FROM THE LAST KNOWN ADDRESSES WITHOUT INTIMATING THE ASS ESSEE AS TO WHERE THEY ARE GOING. SECONDLY, LEARNED AUTHORISED REPR ESENTATIVE OF THE ASSESSEE POINTED THAT THE LAW EXPECTS AN ASSESSEE TO MAINTAIN THE BOOKS OF ACCOUNTS AND OTHER RECORDS ONLY FOR SIX YE ARS FROM THE END OF THE ASSESSMENT YEAR AS TILL THEN REVENUE HAS RIG HT TO RE-OPEN THE ASSESSMENT. AFTER EXPIRY OF SIX YEARS FROM THE AS SESSMENT YEAR, THE ASSESSEE IS NOT THAT VIGILANT AND ITS RECORDS MAY G ET LOST AND HE MAY NOT BE IN TOUCH WITH PAST EVENTS OR WITH THE PERSO NS WITH WHOM HE HAD DEALING IN THE PAST. THE BURDEN ON THE ASSES SEE SHOULD NOT BE PRESUMED AS FIXED OF THE SAME QUALITY AS IN THE INI TIAL YEAR OF THE TRANSACTION. THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 10 - NOTWITHSTANDING SUBMITTED THAT THE TRANSACTIONS WIT H THESE THREE PARTIES HAVE PASSED THROUGH BANKING CHANNELS. IN SUPPORT OF THIS, HE DREW OUT ATTENTION TO THE COPIES AND THE ACCOUNTS O F THE CREDITOR IN THE BOOKS OF THE ASSESSEE AND PHOTOCOPIES OF ACKNOWLEDG MENT OF THE RETURNS OF THE THREE CREDITORS. ON THESE BASIS, HE SUBMITTED THAT IDENTITY OF THE CREDITORS IS ESTABLISHED AND SINCE TRANSACTIONS ARE PASSED THROUGH BANKING CHANNELS, THE GENUINENESS OF THE TRANSACTION IS ALSO ESTABLISHED. THE ASSESSEE HAS DISCHARGED I NITIAL ONUS AND, THEREFORE, CREDIT SHOULD BE ACCEPTED AS GENUINE. HE DREW OUR ATTENTION TO THE DECISION OF HON'BLE ITAT RAJKOT BE NCH AND ONE OF THE DECISIONS OF ITAT AHMEDABAD BENCH WHEREIN CREDI TS FROM THESE THREE CONCERNS HAVE BEEN ACCEPTED AS GENUINE. ONC E IT IS SO, AND FACTS BEING SAME, NO DISTINCTION SHOULD BE CREATED BETWEEN THE PRESENT ASSESSEE AND OTHER ASSESSEES. 10. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAD TAKEN CREDITS FROM THESE PARTIES FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 1992-93. THE ADDITION WAS MADE BY THE ASSESSING OFFICER, BUT WERE DELETED BY THE LEARNED CIT(APPEALS) AND THE APPEAL OF THE REVENUE WAS DISM ISSED BY THE ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 11 - TRIBUNAL, THOUGH IN LIMINE ON ACCOUNT OF LOW REVENUE EFFECT. THEREFORE, THE ORDER OF THE LEARNED CIT(APPEALS) IN THE ASSESSMENT YEAR 1992-93 HAD BECOME FINAL. FROM THIS, IT SHOUL D BE INFERRED THAT IF IN THE ASSESSMENT YEAR 1992-93, CREDITS FROM THE SE THREE CONCERNS ARE TREATED AS GENUINE, THEN IN THE ASSESSMENT YEAR 1991-92 ALSO, THE CREDIT SHOULD BE TREATED AS GENUINE. 11. AGAINST THIS, THE LD.DR SUBMITTED THAT THE FACT S IN THE CASE DECIDED BY THE ITAT RAJKOT BENCH WERE DIFFERENT. I N THAT CASE, ADDRESSES OF THE CREDITORS WERE SUBMITTED, COPIES O F BANK ACCOUNTS OF THE CREDITORS WERE FURNISHED AND IN ADDITION TO THI S, THE CONFIRMATION FROM THE CREDITORS WERE ALSO FURNISHED. ON THAT BA SIS, TRIBUNAL HAD INFERRED THAT INITIAL ONUS IS DISCHARGED BY THE ASS ESSEE. BUT IN THE PRESENT CASE, THE ASSESSEE HAS NOT FURNISHED ANY EV IDENCE. HE IS ONLY RELYING ON THE COPIES OF ACCOUNTS IN ITS OWN BOOKS. UNLESS THERE IS AN EVIDENCE FROM THREE PARTIES, IT CANNOT BE SAID THAT INITIAL ONUS CAST ON THE ASSESSEE HAS BEEN DISCHARGED. THEREFORE, THE ONLY INFERENCE IS THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF P ROVING THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUIN ENESS OF THE ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 12 - TRANSACTIONS. THEREFORE, FOR THE REASONS MENTIONED BY THE LEARNED CIT(APPEALS) AND FOR THE REASONS MENTIONED BY HIM, THE ADDITIONS SHOULD BE CONFIRMED. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT THE A SSESSEE HAS PRODUCED ONLY THE COPIES OF ACCOUNTS OF THE TRANSACTIONS WIT H THESE THREE PARTIES IN ITS OWN BOOKS. THERE IS NO THIRD PARTY EVIDENC E TO SHOW THAT THE ASSESSEE HAD ACTUALLY BORROWED MONEY FROM THOSE THR EE PERSONS. THE ASSESSEE DID NOT PRODUCE OWN BANK STATEMENT SHOWING THAT HE HAD RECEIVED MONEY FROM THOSE THREE CREDITORS THROUGH BANKING CHANNELS. THE ASSESSEE IS ALWAYS AT LIBERTY TO WRITE ITS OWN BOOKS OF ACCOUNT AND ONUS LIES ON HIM TO PROVE THE CORRECTNESS OF TH E ENTRIES MADE THEREIN BY PRODUCING COGENT MATERIAL, PARTICULARLY WHEN TRANSACTIONS COVERED U/S.68 OF THE I.T. ACT, 1961 ARE QUESTIONED BY THE DEPARTMENT. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS VEHEMENTLY RELIED ON THE DECISION OF ITAT RAJKO T BENCH IN THE CASE OF SHRI SANDEEP J.MEHTA VS. THE ITO & OTHERS DECIDED ON 09/07/2003. THE FACTS IN THOSE CASES WERE THAT ASSESSEES HAD ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 13 - FURNISHED VARIOUS DOCUMENTS, SUCH AS, CONFIRMATION FROM THE CREDITORS, BANK ACCOUNTS OF THE PARTIES, SHOWING AB OVE TRANSACTIONS ASSESSMENT PARTICULARS OF THOSE CREDITORS AS TO WHE RE THEY WERE ASSESSED. ON THE BASIS OF THESE FACTS, ITAT RAJKOT BENCH HELD THAT WHERE AN EXPLANATION OF AN ASSESSEE IS BASED ON A N UMBER OF FACTS SUPPORTED BY EVIDENCE AND CIRCUMSTANCES, THEN THE E FFECT OF THE EXPLANATION SHOULD BE CONSIDERED NOT IN ISOLATION O F INDIVIDUAL FACTS BUT BY ASSESSING THE CUMULATIVE EFFECT OF ALL THE F ACTS IN THEIR SETTING AS A WHOLE. THE TRIBUNAL ALSO HELD THAT THE ASSESS EE HAS SUCCESSFULLY DEMONSTRATED THE GENUINENESS OF THE CASH CREDITS AP PEARING IN THEIR BOOKS OF ACCOUNT. THE REVENUE HAS NOT BROUGHT ON R ECORD TO DISPROVE THIS EXPLANATION. 13. THE ITAT AHMEDABAD BENCH IN THE CASE OF OTHER PERSONS, SUCH AS, ACIT VS. M/S.BHAGWATI SHIP BREAKING INDUS. & OT HERS IN ITA NO.733 (RJT)/2003 & OTHERS DECIDED ON 18/05/2007 HA D FOLLOWED THE RAJKOT BENCH DECISION AND BY POINTING OUT SIMIL ARITY OF THE FACTS AND DOCUMENTS PRESENTED BY THOSE ASSESSEES. IN THE PRESENT CASE, WHAT IS GLARINGLY MISSING IS ANY THIRD PARTY EVIDEN CE, SUCH AS, ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 14 - CONFIRMATION, STATEMENT OF BANK ACCOUNT FROM WHERE MONEY IS TRANSFERRED TO THE ASSESSEE OR FROM THE ASSESSEE TO THE CREDITORS BY WAY OF PAYMENT OF INTEREST. THEREFORE, SIMILARITY CANNOT BE DRAWN, FROM THE FACTS OF THE PRESENT CASE WITH THE FACTS O F OTHER CASES DECIDED BY THE TRIBUNAL. THE PROOF OF GENUINENESS OF THE C ASH CREDITS IS ESSENTIALLY A QUESTION OF FACT. IF ONE LOAN TRANS ACTION FROM THE SAME CREDITOR IS FOUND GENUINE IN ONE YEAR IT DOES NOT N ECESSARILY MEAN THAT OTHER LOAN TRANSACTIONS FROM THE SAME CREDITOR WOUL D BE GENUINE IN OTHER YEARS. EVERY LOAN TRANSACTION IS AN INDEPEND ENT CASH CREDIT WHETHER IT IS COMING FROM SAME CREDITOR OR IN THE S AME YEAR OR IN DIFFERENT YEARS. SECTION 68 OF THE I.T. ACT, 1961 APPLIES WITH EQUAL FORCE TO ALL THE CREDITS IRRESPECTIVE OF THE PERSON FROM WHOM IT IS COMING OR IRRESPECTIVE OF THE YEAR WHEN IT IS COMIN G. THE ONUS OF THE ASSESSEE IS EQUAL IN RESPECT OF EACH CREDIT. IF TH ERE ARE CIRCUMSTANCES AND FACTS WHICH MAKE DIFFERENCE IN THE CASE OF TWO TRANSACTIONS, THEN PARALLEL CANNOT BE DRAWN AND ACCEPTABILITY OF GENU INENESS OF ONE TRANSACTIONS, CANNOT AUTOMATICALLY LEAD TO THE GENU INENESS OF OTHER TRANSACTIONS. SINCE IN THE PRESENT CASE, THE ASS ESSEE HAS NOT GIVEN ANY EVIDENCE TO CREATE ANY IMPRESSION THAT MONEY HA D COME FROM ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 15 - OUTSIDE INTO THE BOOKS OF THE ASSESSEE, IT CANNOT B E SAID THAT ASSESSEE HAS DISCHARGED THE ONUS. 14. HOWEVER, WE FIND SUBSTANCE IN THE ARGUMENT OF T HE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT ASSE SSEE CANNOT BE ASKED TO SUBMIT EVIDENCE AFTER 15 OR 20 YEARS OF TR ANSACTIONS, THE ONUS IS NEVER FIXED. IT KEEPS ON OSCILLATING BET WEEN THE PARTIES DEPENDING UPON EVIDENCE FURNISHED BY THEM. THE INIT IAL ONUS MAY BE DECIDED EITHER BY THE STATUTE OR BY THE CLAIM EITHE R OF THE PARTY MAKES. THE BURDEN OF THE PROOF IS ON THE PARTY WHO LODGES A CLAIM BEFORE THE COURT AND, THEREFORE, INITIAL ONUS IS UPON HIM TO S UBMIT DOCUMENTS/EVIDENCES IN SUPPORT OF THE CLAIM. ONCE AN EXPLANATION IS FURNISHED, THEN THE ONUS WILL SHIFT ON THE OTHER PA RTY TO COUNTER IT OR TO FIND OUT WHETHER THE DOCUMENTS ARE WORTHY OF ACCEPT ANCE OR THEY LACK CREDIBILITY. ONCE DEFECTS OR SHORT-COMINGS ARE POI NTED OUT IN THE EXPLANATION BY OTHER PARTY, THE ONUS WILL SHIFT TO THE FIRST PARTY TO PLUG THE LOOP-HOLES OR TO REMOVE THE DEFECTS. IN THIS MANNER, ONUS OSCILLATES AND FINALLY WHEN EITHER OF THE PARTIES FAILS TO REBUT THE CLAIM OF OTHER PARTY, THE ISSUE IS DECIDED ACCORDI NGLY. U/S.68 OF THE ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 16 - I.T. ACT, 1961 THE INITIAL ONUS IS DECIDED BY THE S TATUTE AND, THEREFORE, IT IS FOR ASSESSEE TO SUBMIT THE NECESSARY EVIDENCE /DOCUMENTS ABOUT SOURCE AND NATURE OF THE CREDITS. THIS HAS BEEN I NTERPRETED BY THE COURTS AS EQUIVALENT TO IDENTITY OF THE CREDITOR, T HEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THUS, ASSES SEE IS REQUIRED TO SUBMIT DOCUMENTARY EVIDENCE AND/OR PRODUCE THE CRED ITORS SO AS TO CREATE A REASONABLE BELIEF THAT TRANSACTIONS OF THE CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE ARE SATISFACTORILY EXPLAI NED. ONCE THIS IS DONE, THE INITIAL ONUS IS DISCHARGED BY THE ASSESSE E AND SHIFTS TO THE ASSESSING OFFICER WHO IS REQUIRED TO COLLECT EVIDEN CE OR POINT OUT DEFECTS IN THE EVIDENCE SUBMITTED BY THE ASSESSEE O R HE MAY REQUIRE THE ASSESSEE TO FURTHER PRODUCE SOME MORE EVIDENCE SO AS TO BRING THE EXPLANATION TO HIS SATISFACTION LEVEL. TO DISCHAR GE THE INITIAL ONUS FROM THE ASSESSEE, THERE SHOULD BE MATERIAL FROM WH ICH A REASONABLE RESPONSIBLE PERSON COULD INFER THAT ASSESSEE HAS EX PLAINED THE CLAIM OF CASH CREDITS IN ACCORDANCE WITH REQUIREMENT OF L AW. THIS WOULD IN A NORMAL CIRCUMSTANCE INCLUDE CONFIRMATION FROM THE PARTIES, THE PROOF OF IDENTITY SUCH AS, PAN, IT ACKNOLEDGEMENT, OR SOME OTHER EVIDENCE, COPY OF THE BANK ACCOUNT OF THE CREDITOR SHOWING ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 17 - MOVEMENT OF MONEY IN THE NORMAL COURSE OF BUSINESS AND TO SHOW THE AVAILABILITY OF MONEY AT THE TIME OF GIVING CREDIT, ANY DOCUMENTARY EVIDENCE SHOWING THAT CREDITOR HAS EVIDENCE TO REC OVER THE MONEY FROM THE ASSESSEE IN THE EVENT OF HIS DEFAULT, CHAR GING OF INTEREST AND OFFERING THE SAME FOR TAXATION. AFTER INITIAL ON US IS DISCHARGED, IT IS FOR THE ASSESSING OFFICER TO PROCEED FURTHER FIND T HE DEFECTS, OR CALL FOR SOME MORE EVIDENCE OR MAY ASK THE ASSESSEE TO P RODUCE THE CREDITORS. IN THE EVENT OF ASSESSEE SHOWING HIS IN ABILITY TO PRODUCE THE CREDITOR, THEN TO SUBMIT THE CORRECT ADDRESS OF THE CREDITORS SO AS TO ENABLE THE ASSESSING OFFICER TO SUMMON THE CREDI TORS TO SATISFY ABOUT THE GENUINENESS OF THE CREDITS. 15. HOWEVER, THE GRAVITY AND EXTENT OF ONUS IS NEV ER FIXED ON TIME SCALE. IT CANNOT BE ACCEPTED THAT THE GRAVITY AND EXTENT OF ONUS IS OF THE SAME DEGREE IN INITIAL COUPLE OF YEARS AS AFTE R 15 OR 20 YEARS. WHEN ASSESSEE IS ASKED TO SUBMIT THE EVIDENCE IN SU PPORT OF HIS CREDIT AFTER 15 OR 20 YEARS, THEN A BURDEN IS PUT ON HIM T O DO PRACTICALLY SOMETHING IMPOSSIBLE. WE AGREE WITH THE LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE THAT AFTER EXPIRY OF SIX YEARS FROM THE ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 18 - RELEVANT ASSESSMENT YEAR, I.E. TILL THE PERIOD WHE N THE REVENUE HAS RIGHT TO RE-OPEN THE ASSESSMENT U/S.147/148 OF THE I.T. ACT, 1961, THE TAXPAYER IS NOT EXPECTED TO RETAIN THE DOCUMENTS OF THE TRANSACTIONS ENTERED BY HIM. THE PREPONDERANCE OF HUMAN PROBAB ILITIES AND HUMAN CONDUCT SUGGEST THAT AFTER PASSAGE OF TIME, PEOPLE TEND TO IGNORE THE EVIDENCE OF TRANSACTIONS ENTERED INTO BY THEM IN THE PAST OR IN THE LONG PAST AND, ACCORDINGLY THE EVIDENCE RELATING TO THEM GO ON FADING AS A TIME PASSES. IT MAY BE DIFFICULT FOR TAXPAYER TO RECOVER THE DOCUMENTS EVEN FROM THE BANKS AFTER LAP SE OF 10 YEARS. THE CREDITOR MAY LEAVE THE PLACE AND MAY SETTLE ELS EWHERE. AFTER THE PASSAGE OF TIME, THE ASSESSEE MAY NOT HAVE CONTACT ANY MORE, WITH THE CREDITORS. EITHER THE CREDITOR MAY NOT SURVIVE AND THEIR GENERATIONS MAY NOT REMEMBER ANYTHING ABOUT THE TRA NSACTIONS, OR THE EVIDENCE RELATING TO TRANSACTIONS MAY GET LOST DUE TO NATURAL EVENTS. THEREFORE, DISCOUNT IS REQUIRED TO BE GIVEN TO THE ASSESSEE IF HE IS ASKED BY THE ASSESSING OFFICER IN 2005 TO SUBMIT EV IDENCE IN RESPECT OF TRANSACTIONS ENTERED INTO FINANCIAL YEAR 1991-92 . THEREFORE, IN OUR CONSIDERED VIEW, IT IS TOO HEAVY A BURDEN TO A SK THE ASSESSEE TO PRODUCE THE CREDITOR OR TO BRING ANY CONFIRMATION F ROM HIM OR TO ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 19 - PRODUCE PERSONS ADDRESSES OR WHEREABOUTS AFTER 15 20 YEARS. IN OUR CONSIDERED VIEW IN THE PRESENT CASE, IT IS SUFF ICIENT IF ASSESSEE IS ABLE TO PRODUCE HIS OWN BANK ACCOUNT SHOWING THAT H E HAS RECEIVED MONEY FROM THESE THREE CREDITORS AND PAID BACK INTE REST TO THEM. IF ASSESSEES BANK ACCOUNT REFLECTS THAT MONEY HAS COM E FROM THESE THREE PARTIES AND INTEREST FROM THE ASSESSEE WERE P AID TO THESE THREE PARTIES, THEN CREDIT SHOULD BE ACCEPTED AS GENUINE . NO FURTHER EVIDENCE SHOULD BE REQUIRED FROM HIM TO DISCHARGE THE INITIAL ONUS. OF COURSE, THE ASSESSING OFFICER IS AT LIBERTY TO F IND DEFECTS AND LOOP- HOLES IN WHAT ASSESSEE SUBMITS SO AS TO THROW BACK ONUS ON HIM, BUT WHERE THE ASSESSING OFFICER IS NOT ABLE TO FIND ANY DEFECT IN THE ASSESSEES BANK STATEMENT SHOWING RECEIPT OF MONEY FROM THESE THREE PARTIES AND PAYMENT OF INTEREST TO THESE THREE PART IES, THEN THERE IS NO CASE FOR MAKING ADDITIONS U/S.68 OF THE I.T. ACT, 1 961. BUT WHERE THE ASSESSEE FAILS TO FURNISH HIS OWN BANK STATEMENT, T HEN ADDITION SO MADE BY THE ASSESSING OFFICER IS CONFIRMED. WITH THESE OBSERVATIONS, WE RESTORE THE MATTER BACK TO THE ASS ESSING OFFICER WITH A DIRECTION TO GIVE A PROPER OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. THIS DISPOSES OF THE ALTERNATIVE ARGUMEN T OF THE LEARNED ITA NO.1348/AHD/2006 KOMALKANT F.SHARMA VS. ITO ASST.YEAR 1991-92 - 20 - AUTHORISED REPRESENTATIVE THAT HE SHOULD BE GIVE N AN OPPORTUNITY TO PRODUCE BANK STATEMENT SHOWING THESE TRANSACTION S. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 18/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D.C .AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED / /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT . 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-XVII I, AHMEDABAD 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD PRONOUNCED BY US ON 18/09/2009 SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER