Shri Chetan Dhirubhai Patel, Surat V. The Income tax Officer,Ward-6(1), Surat

ITA 1365/AHD/2010

• Counselvise Citation: 136520514 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Corroborative evidences
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.1365/AHD/2010 A. Y.: 2006-07 SHRI CHETAN DHIRUBHAI PATEL, 399, MOTA VARACHHA, DABHI FALIYA, SURAT VS INCOME TAX OFFICER, WARD 6 (1), SURAT PA NO. ALBPP 8762 E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI HARDIK VORA, AR RESPONDENT BY SHRI VINOD TANWANI, DR DATE OF HEARING: 23-08-2011 DATE OF PRONOUNCEMENT: 26-08-2011 O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-IV, SURAT DATE D 15-12-2009 FOR ASSESSMENT YEAR 2006-07, CHALLENGING THE ADDITION O F RS.1,56,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. 2. THIS APPEAL WAS EARLIER DISMISSED IN DEFAULT VID E ORDER DATED 15-09-2010. THE SAME WAS RECALLED WHILE ALLOWING MI SC. APPLICATION OF THE ASSESSEE. THE APPEAL WAS, THEREFORE, RE-FIXE D FOR HEARING ON MERIT. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO F OUND THAT THE ASSESSEE HAD RECEIVED CASH DEPOSITS OF RS.19,500/- EACH FROM 8 ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 2 PARTIES TOTALING TO RS.1,56,000/-. THE ASSESSEE WAS SHOW-CAUSED FOR THE SAME TO EXPLAIN THE SAME ISSUE BUT THE ASSESSEE COULD NOT COMPLY WITH THE SAME. THE ASSESSEE HAS ONLY FURNISH ED PERMANENT ACCOUNT NUMBER AND CONFIRMATION FROM THESE PARTIES BUT THE CREDITWORTHINESS OF THESE PARTIES WAS NOT PROVED WI TH SUPPORTING EVIDENCE. THEREFORE, THE ASSESSEE WAS REQUESTED TO PRODUCE THESE PARTIES FOR VERIFICATION, BUT NO REPLY WAS FILED BE FORE THE AO. THE AO, THEREFORE, NOTED THAT BURDEN IS UPON THE ASSESSEE T O PROVE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENE SS OF THE TRANSACTION AND RELIED UPON SEVERAL DECISIONS IN SU PPORT OF HIS FINDINGS INCLUDING THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF KHAN MOHAMMAD HANIF VS CIT, 50 ITR 1. THE A O FURTHER NOTED THAT THE ASSESSEE FAILED TO PRODUCE THESE PAR TIES FOR EXAMINATION BEFORE HIM AND FAILED TO PROVE THEIR CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. FURTHER, NO REPLY I S FILED. THEREFORE, IT WAS HELD THAT MERE FILING OF THE CONFIRMATION LETTE RS IS NOT SUFFICIENT TO PROVE THE CASH CREDITS AS GENUINE ONE. THE AO, THER EFORE, HELD THAT THE ASSESSEE FAILED TO PROVE THE IDENTITY OF THE PE RSONS, THEIR CREDITWORTHINESS AS WELL AS GENUINENESS OF THE TRAN SACTION. ADDITION U/S 68 OF THE IT ACT WAS ACCORDINGLY MADE. IT WAS S UBMITTED BEFORE THE LEARNED CIT(A) THAT THE AMOUNT BORROWED FROM EA CH OF THE CREDITORS DID NOT EXCEED A REASONABLE AMOUNT SO AS TO WARRANT THE ASSESSEE TO PROVE THE CREDITWORTHINESS AS THE BORRO WED AMOUNT WAS ONLY TO THE TUNE OF RS.19,500/- ONLY. THE LEARNED C IT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THA T THE ASSESSEE FAILED TO PROVE THE CASE AND THE AMOUNTS HAVE BEEN CONSCIOUSLY KEPT AT RS.19,500/- JUST TO CIRCUMVENT THE REQUIREMENT O F CHEQUE MODE FOR ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 3 RS.20,000/- AND ABOVE. THE APPEAL OF THE ASSESSEE W AS ACCORDINGLY DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE FILED CONFIRMATION AND PERMANENT ACCOU NT NUMBERS OF THE DEPOSITORS; THEREFORE, ONUS UPON THE ASSESSEE I S DISCHARGED. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ORISSA CORPORATION PVT. LTD.,159 ITR 78 AS WELL AS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN TH E CASE OF BHARATBHAI A. PATEL VS DCIT IN IT(SS) A NO.37/AHD/2 009 DATED 31- 03-2011. ON THE OTHER HAND THE LEARNED DR RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. IT IS SETTLED LAW THAT BURDEN IS UPON THE ASSESSEE TO PROVE IDENTITY OF THE CREDITOR S, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S IN THE MATTER. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BHAR ATI PVT. LTD. VS CIT, 111 ITR 951 HELD AS UNDER: IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE INCOME-TAX OFFICER FOUND THAT THE ASSESSEE HAD SHOWN RS.20,000 AS LOAN IN ITS BOOKS TAKEN FROM TWO PARTIES. THE ASSESSEE PRODUCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEFORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INCOME TAX ACT, 1961, ON THE ALLEGED CREDIT ORS AND SINCE THOSE NOTICES CAME BACK UNSERVED, THE INCOME-TAX OFFICER TREATED THE LOAN AS ASSESSEES ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 4 INCOME FROM UNDISCLOSED SOURCES. THE APPELLATE ASSISTANT COMMISSIONER DISMISSED THE ASSESSEES APPEAL ON THE GROUND THAT THE ASSESSEE COULD NOT EVEN ESTABLISH THE IDENTITY OF THE PARTIES. ON FURT HER APPEAL BY THE ASSESSEE, THE APPELLATE TRIBUNAL HELD THAT MERE FILING OF CONFIRMATORY LETTERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND THERE WAS NO MATERIAL ON THE RECORD TO ESTABLISH TH E IDENTITY OF THE CREDITORS: HELD, THAT THE TRIBUNAL HAD TAKEN ALL THE RELEVANT FACTS INTO CONSIDERATION AND THE CONCLUSION ARRIVED AT BY THE TRIBUNAL THAT THE LOANS REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES WAS NOT PERVERSE OR UNREASONABLE. 5.1 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD., 187 ITR 596 HELD AS UNDER: THE PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDITS IN ITS ACCOUNT. IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THESE THINGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FACTS DOES THE ONUS SHIFT O N TO THE DEPARTMENT. IT IS NOT ENOUGH TO ESTABLISH THE IDENTITY OF THE CREDITORS. MERE PRODUCTION OF THE CONFIRMATION LETTERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT THE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN CREDITORS OR THAT THEY HAV E CREDIT-WORTHINESS. HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL MISDIRECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUINE SIMPLY BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQUES. THE ASSESSEE ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 5 HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDERS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMITTED THAT LOANS OBTAINED FROM THESE BANKER S AGAINST HUNDIS WERE NOT GENUINE AND SUCH HUNDI LOANS REALLY REPRESENTED THEIR OWN CONCEALED INCOME . THE ASSESSEE HAD NOT DISCHARGED ITS BURDEN OF PROVING THAT THE LOANS IN QUESTION WERE GENUINE. 5.2 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. PRECISION FINANCE PVT. LTD., 208 ITR 465 RELIED UPON BY THE A O IN THE ASSESSMENT ORDER HELD THAT EVEN THE LOAN THROUGH BANK CANNOT BE ACCEPTED AS GENUINE UNLESS THE IDENTITY AND CRED ITWORTHINESS OF THE CREDITORS ARE PROVED. MERE PAYMENT OF ACCOUN T PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON-GENU INE TRANSACTION GENUINE. 5.3 THE HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE, 82 ITR 540 AND SUMATI DAYAL, 214 ITR 801 HELD THAT THE COURTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCES BEFORE THE M BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONS IDERING THE SURROUNDING CIRCUMSTANCES. WHEN THIS TEST IS APPLIED TO THE FACTS OF THE CASE, IT IS CLEAR THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING AND CONFIRMING THE ADDITION. THE ASSESSEE FI LED MERE CONFIRMATION AND PERMANENT ACCOUNT NUMBERS BEFORE T HE AO WITHOUT PRODUCING ANY EVIDENCE OF THE CREDITWORTHINESS OF 8 CREDITORS AS WELL AS FAILED TO ADDUCE ANY EVIDENCE TO SHOW THE GENUIN ENESS OF THE TRANSACTION IN THE MATTER. THEREFORE, IN THE PRESEN T CASE THE ASSESSEE HAS NOT ADDUCED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE CREDITWORTHINESS OF THE CREDITORS, AND GEN UINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSEE ALSO FAILED TO PRODUCE THESE ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 6 EVIDENCES BEFORE THE LEARNED CIT(A) BECAUSE IT WAS EXPLAINED BEFORE THE LEARNED CIT(A) THAT SINCE THE AMOUNT IS ONLY RS .19,500/-, THEREFORE, THE ASSESSEE IS NOT REQUIRED TO PROVE CR EDITWORTHINESS OF THE CREDITORS. THE SUBMISSION OF THE ASSESSEE BEFOR E THE LEARNED CIT(A) ITSELF IS SUFFICIENT TO DISMISS THE APPEAL O F THE ASSESSEE. THE FACTS OF THE CASE OF THE ASSESSEE ARE CLEARLY DISTI NGUISHABLE FROM THE CASES CITED BY THE LEARNED COUNSEL OF THE ASSESSEE. IN THE CASE OF BHARATBHAI A. PATEL, IT WAS A CASE OF BLOCK ASSESSM ENT AND THE ASSESSEE COULD NOT PRODUCE THE PARTIES AFTER A LAPS E OF A DECADE. THEREFORE, THIS DECISION IS ALSO CLEARLY DISTINGUIS HABLE. FURTHER, THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES FOR VERI FICATION BEFORE THE AO AND WHEN SPECIFIC SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE IN THIS REGARD, EVEN THE ASSESSEE CHOOSE NOT TO FI LE ANY REPLY BEFORE THE AO. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS DIFFICULT FOR THE AO TO VERIFY THE CREDITWORTHINESS OF THE CREDIT ORS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSEE FAIL ED TO DISCHARGE ONUS UPON HIM TO PROVE GENUINE CREDITS IN THE MATTE R. APPEAL OF THE ASSESSEE HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ITA NO. 1365/AHD/2010 SHRI CHETAN DHIRUBHAI PATEL VS ITO, W- 6(1), SURAT 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- CONCERNED 5. THE DR, ITAT, CONCERNED 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD