Income-tax Officer, Ward-1(2), Aurangabad V. Shri Ambadas Vishvanath Mete, Aurangabad

ITA 1377/PUN/2011

• Counselvise Citation: 137724514 RSA 2011
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-01-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K OJHA
• Keywords: Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1377/PN/2011 (ASSTT.YEAR : 2008-09) ITO, WARD-1(2), JEEVAN SUMAN, 2 ND FLOOR, LIC BUILDING, N-5, CIDCO, AURANGABAD-431003 .. APPELLANT VS. AMBADAS VISHVANATH METE, PROP. A.V. METE, C-167, MIDC, WALUJ, AURANGABAD. .. RESPONDENT PAN NO. ABUPM 9472H APPELLANT BY : SHRI K.K. OJHA RESPONDENT BY : SHRI PRAYAG JHA DATE OF HEARING : 04-06-2013 DATE OF PRONOUNCEMENT : 18-06-2013 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 23- 08-2011 OF THE CIT(A)-AURANGABAD RELATING TO ASSESS MENT YEAR 2008-09. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E REVENUE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN DELETING AN AMOUNT OF RS.17 LAKHS OUT OF ADDITION OF RS.41,58,146/- MADE BY THE ASSESSING OFFICER U/S .68 OF THE INCOME TAX ACT. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF DEALING IN SCRAP AND ALSO MANUFACTURING OF PLAST IC GRANULES. HE FILED HIS RETURN OF INCOME DECLARING TAXABLE INCOME OF RS.16, 70,826/- AND AGRICULTURAL INCOME OF RS.2,21,230/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE 2 ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN UNSECURED LOANS FROM VARIOUS PERSONS THE DETAILS OF WHICH ARE AS UNDER : 3. IN ORDER TO VERIFY THE CREDIT WORTHINESS AND GEN UINENESS OF THE LOANS THE ASSESSING OFFICER ISSUED SUMMONS U/S.131 WHICH WAS DULY SERVED ON THE LENDERS. THE ASSESSING OFFICER RECORDED THE STATEM ENT ON OATH OF THE FOUR LENDERS WHO ATTENDED BEFORE HIM. THE INFORMATION G ATHERED BY THE ASSESSING OFFICER AS PER THE STATEMENT HAS BEEN SUMMARISED BY THE LD. CIT(A) AT PAGE 4 OF HIS ORDER WHICH IS AN UNDER : NAME OF THE LENDER AND AMOUNT OF LOAN SOURCE OF INCOME STATED BY THE LENDERS PROOF IN SUPPORT OF THE SOURCE FILED WHETHER AMOUNT OF LOAN GIVEN IS CONFIRMED BY LENDERS MODE OF PAYMENT STATED BY THE LENDERS SHRI D.V. METE RS. 1,50,000/- AGRICULTURAL INCOME OF ABOUT RS.2 TO 3 LAKHS PER ANNUM. NOT FILED BEFORE THE A.O. YES NOT REMEMBERED SHRI VIJAY VIDHATE RS.5, 00,000/- YEARLY AGRICULTURAL INCOME AND CONTRACT WORK INCOME IS RS.1, 09, 000/- AND EXPENDITURE IS RS.30,000/-. YEARLY SAVINGS IS RS.79,000/-. OUT OF SAVINGS OF FEW YEARS RS.1,50,000/-. ALSO OUT OF RETIREMENT BENEFITS OF HIS FATHERRS.3,50,000/ - . NOT FILED BEFORE THE A.O. YES SHRI C.K. GURJAR RS.9,15,420/ - NOT ATTENDED. SHRI VIJAY JOSHI RS.6,50,000/ - NOTE ATTENDED. SHRI KACHRU METE RS.7,50,000/- AGRICULTURAL INCOME FROM LAND OF 3.5 ACRES AND ALSO 8.5 ACRES RECEIVED AFTER DEATH OF FATHER AND OUT OF SALE PROCEEDS OF AGRICULTURAL LAND. NOT FILED BEFORE THE A.O. YES. THE AMOUNT IS OWNED BY SHRI SURESH KESHAV AND KACHRU METE NOT REMEMBERED SHRI K.R. FUKE RS.3,00,000/- AGRICULTURAL INCOME OF RS.74,000/ - AND OTHER INCOME OF RS.36,000/- PER ANNUM. THE MONTHLY EXPENDITURE IS RS. 3,000/-. OUT OF THE SAVINGS AMOUNTS WERE ADVANCED FOUR TIMES. NOT FILED BEFORE THE A.O. YES PAID IN CASH IN FOUR INSTALMENTS SHRI VISHWANATH METE RS.8,92,726/- NOT ATTENDED. NAME AMOUNT SHRI D.V. METE 1,50,000 SHRI VIJAY VIDHATE 5,00,000 SRI C.K. GURJAR 9,15,420 SHRI VIJAY JOSHI 6,50,000 SHRI KACHRU METE 7,50,000 K. R. FUKE 3,00,000 SHRI VISHWANATH METE 8,92,726 3 4. THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE L OANS AS GENUINE ON THE GROUND THAT THE LENDERS HAVE NOT FILED EVIDENCE IN THE FORM OF 7/12 EXTRACTS, SALE DEED OF AGRICULTURAL LAND ETC. HE NOTED THAT THESE LENDERS COULD NOT REMEMBER THE MODE OF PAYMENT OF THE ABOVE-MENTIONED SUBSTANT IAL LOANS. HE THEREFORE CAME TO THE CONCLUSION THAT THE ASSESSEE FAILED IN DISCHARGING THE ONUS CAST ON HIM BY PROVING SOURCE OF THE SAID LOANS AND HAS FAI LED TO SATISFACTORILY EXPLAIN THE LOANS. RELYING ON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF ROSHAN D. HATTI VS. CIT REPORTED IN 107 ITR 937 AND KALE KHAN MOHD. HANIF VS. CIT REPORTED IN 50 ITR 1 THE ASSESSING OFFICER MADE ADDITION OF THE ABOVE AMOUNT U/S.68 OF THE I.T. ACT. 5. BEFORE THE CIT(A) IT WAS ARGUED THAT THE ASSESSE E HAS SUBMITTED THE COMPLETE IDENTITY OF THE LONEES, THEIR PERMANENT AC COUNT NUMBERS, THEIR ADDRESSES AND AVAILABLE DOCUMENTARY EVIDENCE. SUMM ONS ISSUED BY THE ASSESSING OFFICER WERE SERVED ON THE LENDERS OUT OF WHICH 4 LENDERS HAVE ATTENDED AND HAVE CONFIRMED THAT THE LOANS WERE GIV EN TO THE ASSESSEE. IT WAS ACCORDINGLY SUBMITTED THAT THE ADDITION OF RS.41,15 ,146/- SHOULD NOT BE ADDED AS UNEXPLAINED LOANS. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD. CIT(A) DELETED AN AMOUNT OF RS.17 LAKHS AND SUSTAINED THE BALANCE AMOUNT OF RS.24,58,146/- BY HOLDING AS UNDER : 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS OF THE A.O. AND THE APPELLANT. ON PERUSAL OF THE SAME, IT HAS BEEN NOTICED THAT THE IDENTITY OF THE CREDITORS AND SOURCE OF THE CREDITS HAS BEEN PROVED AS THE FOUR LENDERS HAVE ATTENDED BEFORE THE A.O. AND HAVE ALSO STATED THE S OURCE OF THE AMOUNTS LENT TO THE APPELLANT AND HAVE CONFIRMED THAT THEY HAVE GIVEN T HE SAID LOANS TO THE APPELLANT. THE APPELLANT CANNOT BE FURTHER REQUIRED TO PROVE S OURCE OF THE SOURCE I.E. TO PROVE THE SOURCE FROM WHICH THE LENDERS HAVE ADVANCED THE LOANS TO THE APPELLANT. THIS PROPOSITION OF LAW IS SUPPORTED BY THE DECISION IN THE CASE OF S. HASTIMAL VS. CIT (1963) 49 ITR 273 (MADRAS). IT HAS BEEN HELD BY HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT.LTD. (2008) 216 CTR 1 95 THAT IN CASE OF ALLEGED BOGUS CREDITORS WHO ARE CLAIMED TO BE SHAREHOLDERS, THE R EVENUE IS FREE TO PROCEED TO 4 REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WI TH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE COMPANY. IN V IEW OF THE ABOVE FACTS AND DISCUSSION, THE A.O. IS FREE TO PROCEED TO REOPEN T HE INDIVIDUAL ASSESSMENTS OF THE FOUR LENDERS WHO HAVE CONFIRMED THE LOANS GIVEN BY THEM TO THE APPELLANT. THE A.O. HOWEVER, IS NOT JUSTIFIED IN TREATING THE SAID LOAN S FROM SHRI D.V. METE OF RS.1,50,000/-, SHRI VIJAY VIDHATE OF RS.5,00,000/-, SHRI KACHRU METE OF RS.7,50,000/- AND SHRI K.R. FUKE OF RS.3,00,000/-. THE ADDITION ON ACCOUNT OF UNEXPLAINED LOANS IS, THEREFORE, DELETED TO THE EXTENT OF RS.17,00,000/-. 6.4 AS REGARDS LOANS FROM SHRI C.K. GURJAR OF RS.9 ,15,420/-, SHRI VIJAY JOSHI OF RS.6,50,000/- AND SHRI VISHWANATH METE OF RS.8,92,726/- TOTALING TO RS.24,58,146/-, THE APPELLANT HAS FAILED TO PROVE T HE SOURCE OF THE LOANS AS THE APPELLANT HAS NOT FILED ANY ACCEPTABLE SUPPORTING E VIDENCE TO PROVE THE SAID LOANS. MOREOVER, THE SAID LENDERS DID NOT ATTEND IN RESPON SE TO SUMMONS ISSUED BY THE A.O. AND THE APPELLANT HAS ALSO NOT PRODUCED THE SA ID LENDERS BEFORE THE A.O. IN VIEW OF THE ABOVE FACTS, THE A.O. IS JUSTIFIED IN T REATING THE SAID LOANS OF RS.24,58,146/- AS UNEXPLAINED LOANS. THE ADDITION O F RS.24,58,146/- IS, THEREFORE, CONFIRMED. GROUND NO.2 STANDS PARTLY ALLOWED. 6.1 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CHA LLENGED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE LD. CIT(A) DELET ED THE ADDITION ON THE GROUND THAT THE SOURCE OF THE CREDITS HAS BEEN PROV ED BY THE 4 LENDERS WHO HAVE ATTENDED BEFORE THE ASSESSING OFFICER AND CONFIRMED TO HAVE GIVEN THE LOAN. HE SUBMITTED THAT SHRI D.V. METE IN HIS STATEMENT R ECORDED ON 03-12-2010 (PAPER BOOK PAGE NO.1) IN REPLY TO QUESTION NO.7 HA S STATED THAT HE DOES NOT REMEMBER AS TO WHETHER HE HAS PAID THE SAME BY CASH OR BY CHEQUE. FURTHER, ALTHOUGH HE HAD AGREED TO FURNISH THE 7/12 EXTRACTS TO SUBSTANTIATE HIS AGRICULTURAL LAND HOLDING HE HAS NOT PRODUCED THE S AME BEFORE THE AO. REFERRING TO THE STATEMENT OF SHRI VIJAY VIDHATE (A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO.9) HE SUBMITTED THAT SHRI VIJAY RAMARAO VIDHATE IN HIS REPLY TO QUESTION NO.6 HAS STATED THAT HE DOES NOT REMEMBER TO HAVE GIVEN LOAN AT ONE TIME BUT FROM TIME TO TIME. HE HAS ALSO NOT SUBMITTED THE EVIDENCE IN RESPECT OF THE PENSIONERS BENEFITS FROM THE BANK AN D WITHDRAWAL FROM BANK AND DEATH CERTIFICATE IN RESPECT OF HIS FATHER. REFERR ING TO THE STATEMENT OF SHRI 5 KACHRU METE, MUKUNDWADI (A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO.10) HE SUBMITTED THAT SHRI METE IN HIS STATEMENT NEITHER FURNISHED THE 7/12 EXTRACTS NOR FURNISHED THE SALE DEED OF AGRICULTURA L LAND TO SUBSTANTIATE THE SOURCE OF THE LAND AMOUNTING TO RS.7,50,000/-. REF ERRING TO THE STATEMENT OF SHRI K.R. FUKE HE SUBMITTED THAT HE HAS ALSO NOT FU RNISHED ANY DETAILS REGARDING THE AGRICULTURAL INCOME. THEREFORE, MERE LY BECAUSE THEY HAVE APPEARED BEFORE THE ASSESSING OFFICER AND STATED TO HAVE GIVEN LOAN, THE SAME CANNOT BE ACCEPTED TO PROVE THE CAPACITY OF THE LOA N CREDITOR AND GENUINENESS OF THE TRANSACTION. HE SUBMITTED THAT FOR ACCEPTIN G THE CASH CREDIT AS GENUINE THREE THINGS, NAMELY (1) IDENTITY OF THE LOAN CREDI TOR (2) CAPACITY OR CREDIT WORTHINESS OF THE LOAN CREDITOR AND (3) GENUINENESS OF THE TRANSACTION HAS TO BE PROVED. HOWEVER, IN THE INSTANT CASE, ONLY THE IDE NTITY OF THE LOAN CREDITORS HAVE BEEN PROVED BUT THEIR CREDIT WORTHINESS AND TH E GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN PROVED. UNDER THESE CIR CUMSTANCES, THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS.17 LAKHS IS NOT JUSTIFIED. 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. MISRA PRESERVERS (P) L TD. REPORTED IN 31 TAXMANN.COM 214 AND THE DECISION IN THE CASE OF CIT VS. JAY DEE SECURITIES & FINANCE LTD. REPORTED IN 32 TAXMANN.COM 91 HE SUBMI TTED THAT HONBLE ALLAHABAD HIGH COURT FOLLOWING THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. REPORTED IN 217 CT R 195 HAS DELETED THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY FROM VARIOUS CREDITORS. REFERRING TO THE ORDER OF THE ASSESSING OFFICER PAS SED U/S.271D OF THE I.T. ACT ON 17-02-2012 HE SUBMITTED THAT THE ASSESSING OFFIC ER IN THE PENALTY ORDER HAS ACCEPTED THE AMOUNT AS LOAN AND HAS LEVIED PENALTY FOR RECEIVING SUCH LOAN IN 6 SHAPE OF CASH. HE ACCORDINGLY SUBMITTED THAT THE O RDER OF THE LD. CIT(A) BEING BASED ON APPRECIATION OF PROPER FACTS SHOULD BE ALL OWED AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE OUT OF THE ADDITION OF RS.41,58,146/- BY THE ASSESSING OFFICER U/S.68 OF THE I.T. ACT THE LD . CIT(A) SUSTAINED ADDITION OF RS.24,58,146/- FOR WHICH THE ASSESSEE IS NOT IN APPEAL BEFORE US. 9.1 SO FAR AS THE DELETION OF RS.17 LAKHS IS CONCER NED THE REVENUE HAS CHALLENGED THE SAME ON THE GROUND THAT ASSESSEE HAS NEITHER PROVED THE CREDIT WORTHINESS OF THE LOAN CREDITORS NOR PROVED THE GEN UINENESS OF THE TRANSACTIONS. WE FIND FROM THE ORDER OF THE CIT(A) THAT HE HAS SI MPLY DELETED THE ADDITION ON THE GROUND THAT THE 4 CREDITORS HAVE ATTENDED BEFOR E THE ASSESSING OFFICER AND HAVE CONFIRMED TO HAVE GIVEN THE LOAN TO THE ASSESS EE AND THEREFORE THE ASSESSEE CANNOT BE FURTHER REQUIRED TO PROVE THE SO URCE OF THE SOURCE. WHILE DOING SO HE HAS ALSO RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. REPORTED IN 217 CT R 195. 9.2 WE FIND THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS PVT. LTD. (SUPRA) RELIED ON BY THE LD. CIT( A) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE IN THE INSTANT CASE THE CREDITORS HAVE EXPRESSED THEIR INABILITY TO SAY AS TO WHETHER THEY HAVE PAID THE LOAN IN SHAPE OF CASH OR IN SHAPE OF CHEQUE. FURTHER, OUT OF THE 4 CREDITORS O NLY 1 CREDITOR HAS STATED TO BE AN INCOME TAX ASSESSEE AND THAT TOO HE HAS NEITHER FURNISHED HIS PAN NOR HE HAS REMEMBERED THE WARD/CIRCLE UNDER WHICH HE WAS A SSESSED TO. NONE OF THE 4 CREDITORS HAVE FURNISHED THE REQUISITE DETAILS BEFO RE THE ASSESSING OFFICER TO 7 PROVE THEIR CREDIT WORTHINESS. FROM THE PENALTY ORD ER PASSED U/S.271D WE FIND THE ASSESSEE HAS STATED BEFORE THE ASSESSING OFFICE R THAT THE AMOUNT OF RS.7,50,000/- RECEIVED FROM KACHRU METE INCLUDES AN AMOUNT OF RS.5 LAKHS RECEIVED DURING F.Y. 2006-07 RELEVANT TO A.Y. 2007- 08 WHEREAS THE IMPUGNED ASSESSMENT YEAR IS 2008-09. HOWEVER, THERE IS NO S UCH ARGUMENT BEFORE THE LD. CIT(A). UNDER THESE CIRCUMSTANCES, WE ARE OF T HE CONSIDERED OPINION THAT THE LD. CIT(A) HAS DELETED THE ADDITION OF RS.17 LA KHS ON THE BASIS OF WRONG APPRECIATION OF FACTS. HOWEVER, CONSIDERING THE TO TALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER T O RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO G IVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS S ATISFACTION REGARDING THE CREDIT WORTHINESS OF THE 4 LOAN CREDITORS AND THE GENUINEN ESS OF THE LOAN TRANSACTION TO THE EXTENT OF RS.17 LAKHS. THE ASSESSING OFFICER S HALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW IN RESPECT OF THE 4 CREDITOR S AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF JUNE, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOU NTANT MEMBER PUNE, DATED : 18 TH JUNE 2013 SATISH 8 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-AURANGABAD 4. THE CIT-AURANGABAD 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE