ACIT, CIR-31, KOLKATA, Kolkata V. Smt. Sashi Mehta, Kolkata

ITA 1409/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3816 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE CIT DR REVE
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Assessment record; Onus to prove; Bonafide mistake
• Section: 271(1)(c); 143(3); 133(6); 250; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-31 KOLKATA.............APPELLANT VS. SMT. SASHI MEHTA.....................RESPONDENT 4 TH FLOOR, NO. 24 409, MANGALAM HEMANTA BASU SARANI KOLKATA -700 001 [PAN : AFGPM 9032 B] APPEARANCES BY: SHRI MIRAJ D. SHAH, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SHRI PINAKI MUKHERJEE, ADDL. CIT, D/R APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 24 TH , 2019 DATE OF PRONOUNCING THE ORDER : AUGUST 14 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 31/03/2016, FOR THE ASSESSMENT YEAR 2012- 13. 2. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM SHARE TRADING AND CAPITAL GAINS ON INVESTMENTS. HE FILED HIS RETURN OF INCOME ON 15/03/2013, DECLARING TOTAL INCOME OF RS.54,98,290/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3) OF THE ACT, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.2,57,29,040/- INTERALIA MAKING AN ADDITION OF UNSECURED LOANS AS UNEXPLAINED OF RS.1,63,50,000/-. ON THE ISSUE OF COMPUTATION OF CAPITAL GAINS, THE ASSESSEE FILED A REVISED COMPUTATION DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER ACCEPTED THE SAME. THE ASSESSING OFFICER GAVE A FINDING THAT THE ASSESSEE FURNISHED INAPPROPRIATE PARTICULARS OF INCOME AND INITIATED PENALTY U/S 271(1)(C) OF THE ACT. IN THE APPELLATE ORDER, THE LD. FIRST APPELLATE AUTHORITY RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. VS. COMMISSIONER OF INCOME-TAX, KOLKATA-I REPORTED IN 2 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA [2012] 348 ITR 306 (SC) AND HELD THAT THE MISTAKE WAS BONAFIDE AND THAT THE ERROR IS INADVERTENT AND HENCE IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. HE ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-9, KOLKATA ERRED IN HOLDING THAT THE STCG OF RS. 39, 25,242/- OFFERED BY THE ASSESSEE FOR TRANSACTION WAS ON ACCOUNT OF HUMAN ERROR AND IS NOT IN FURNISHING OF INACCURATE OF PARTICULARS. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-9, KOLKATA ERRED IN HOLDING THAT THE MUTUAL FUND OF RS. 48,764/- OFFERED BY THE ASSESSEE WAS A HUMAN ERROR AND IS NOT IN FURNISHING OF INACCURATE OF PARTICULARS. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A)-9, KOLKATA ERRED IN PASSING THE ORDER IN DELETING THE ADDITION MADE BY THE AO OF RS. 1,63,50,000/- ON ACCOUNT OF LOANS TREATED AS BOGUS. 4. THAT THE APPELLANT REQUEST TO SUBMIT ADDITIONAL GROUNDS OF APPEAL, IF ANY AT OR BEFORE THE TIME OF HEARING AND / OR ALTER, MODIFY, REFRAME ANY GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 4. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 5. GROUND NO. 1 & 2 OF THE REVENUE ARE DIRECTED AGAINST THE FINDING OF THE LD. CIT(A) THAT THE ERROR IN OFFERING CAPITAL GAINS BY THE ASSESSEE AS LONG TERM CAPITAL GAINS INSTEAD OF AS SHORT TERM CAPITAL GAINS, WAS AN INADVERTENT ERROR AND A BONAFIDE MISTAKE. THE ASSESSEE EXPLAINED THAT THIS ERROR OCCURED DUE TO SOME SOFTWARE ERROR IN THE EXCEL SOFTWARE AND THAT THIS WAS DETECTED BY THE CHARTERED ACCOUNTANT WHILE PREPARING AND RECONCILING THE DOCUMENTS TO BE FILED DURING THE ASSESSMENT PROCEEDINGS. THIS FINDING OF THE LD. CIT(A) THAT THE ERROR IS BONAFIDE, INADVERTENT AND HAS NO BEARING ON THE COMPUTATION OF TOTAL INCOME IN THIS CASE. THE REVISED COMPUTATION FILED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THIS REGARD. THIS FACTUAL FINDING OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D/R. HENCE, WE DO NOT SEE ANY REASON TO INTERFERE IN THESE FINDINGS OF THE LD. CIT(A). THUS, GROUND NO. 1 & 2 OF THE REVENUE ARE DISMISSED. 3 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA 6. GROUND NO. 3 & 4 IS AGAINST THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER OF UNSECURED LOANS AS UNEXPLAINED CREDITS. THE ENTIRE LIST OF THE LOANS THAT ARE THE MATTER OF DISPUTE ARE GIVEN IN PAGE NO. 5 OF THE LD. CIT(A)S ORDER. THESE ARE 20 IN NUMBER. OUT OF THESE 20, THE LOANS FROM SR. NO. 1 TO 7 ARE COVERED BY THE PROCEEDINGS BEFORE THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. THE LOAN TRANSACTIONS LISTED FROM SR. NO. 8 TO 20 ARE NOT THE SUBJECT MATTER OF INVESTIGATION OR REPORT BY THE INCOME TAX DEPARTMENT. 6.1. THE LD. CIT(A) AT PARA 4.5. AND 4.6. HELD AS FOLLOWS:- 4.5. THE ASSESSMENT RECORD OF THE CASE WAS CALLED FOR AND EXAMINED. I FIND THAT THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO ALL THESE PARTIES AND EXCEPT 1 PARTY ALL OTHER PARTIES RESPONDED TO THE TRANSACTION AND CONFIRMED THE TRANSACTION. THE ASSESSEE FILED A DETAILED PAPER BOOK IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE AO AS WELL AS THIS OFFICE. 4.6. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE SUBMISSION OF THE APPELLANT, THE PAPER BOOK AND ALSO PERUSED THE ASSESSMENT RECORD. I FIND THAT THE ASSESSEE HAD TAKEN LOAN FROM 20 PARTIES TOTALLING TO RS.1,63,50,000. OUT OF THESE 20 PARTIES 7 PARTIES WERE COVERED BY INVESTIGATION REPORT AND THE REST 13 PARTIES WERE SUCH AGAINST WHICH NO ADVERSE REPORT WAS ON RECORD BEFORE THE AO. 6.2. THE ASSESSEE FILED A PAPER BOOK WHEREIN, HE FILED COPIES OF THE DOCUMENTS FILED BEFORE THE ASSESSING OFFICER, TO PROVE THE CLAIM OF GENUINENESS OF TRANSACTIONS, IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS. THESE ARE AT PAGES 31 TO 270 OF THE PAPER BOOK. THE LD. CIT(A) DEALT WITH EACH OF THESE EVIDENCES AT PARA 4.10. FROM PAGES 35 TO 38 OF HIS ORDER. FOR THE SAKE OF BREVITY, WE DO NOT EXTRACT THE SAME. SUFFICE TO SAY THAT THE LD. D/R COULD NOT CONTROVERT THE FACTUAL FINDINGS OF THE LD. CIT(A) AND THAT NO ADVERSE MATERIAL HAD BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT LAY ON IT INCLUDING THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. AS THE LD. D/R COULD NOT CONTROVERT THESE FINDINGS, WE UPHOLD THE SAME. COMING TO THE 7 CREDITORS, THERE WAS AN ADVERSE FINDING BY THE INVESTIGATION WING OF THE DEPARTMENT. THE LD. CIT(A) AT PARA 4.11 OF HIS ORDER STATED THAT THE FOLLOWING EVIDENCES WERE AVAILABLE WITH THE ASSESSING OFFICER IN ALL THESE CASES:- 1) CONFIRMATION OF THE TRANSACTIONS WITH THE ASSESSEE. 2) COPIES OF THE INCOME TAX RETURN 4 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA 3) COPIES OF THE BALANCE SHEET OF THE CREDITOR 4) BANK STATEMENT OF MOST OF THE CREDITORS 5) ALL LOANS WERE GIVEN BY ACCOUNT PAYEE CHEQUES 6) NOTICES U/S 133(6) OF THE ACT WERE ISSUED AND DULY COMPLIED WITH BY MOST OF THE CREDITORS AND 7) IN MOST OF THE CASES, LOANS HAVE BEEN REPAID. 6.2.1. AT PARA 4.12, THE LD. CIT(A) HELD AS FOLLOWS:- 5 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA 6.3. THEREAFTER HE HAS GIVEN A FINDING THAT EXCEPT IN THE CASE OF PRAKASH JAJODIA WHO IS A DIRECTOR OF BURNPUR POWER PVT. LTD. AND QUEST FINANCIAL SERVICES PVT. LTD., STATEMENTS 6 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA WERE RECORDED FROM PARTIES WHO WERE NOT DIRECTORS OF THOSE COMPANIES. THE ASSESSEE CLAIMS THAT STATEMENTS WERE RECORDED BY PERSONS WHO HAD NO LOCUS STANDI WITH THESE COMPANIES AND HAD NO CONNECTION WITH THEM AND HENCE NOT RELEVANT. AT PARA 4.15 & 4.16, HE HELD AS FOLLOWS:- 4.15. I FIND THAT SAVE AND EXCEPT PRAKASH JAJODIA WHO IS A DIRECTOR OF BURNPUR POWER PVT. LTD. & QUEST FINANCIAL SERVICES P. LTD. THE OTHER TWO PERSONS I.E., MANISH AGARWAL AND RAJESH KUMAR AGARWAL ARE NOT DIRECTORS OF THE 5 CREDITOR COMPANIES I.E., KUBER GOODS PVT. LTD., GAJANAND AGRO TECH LTD., KABERI VINIMAY PVT. LTD., BAISAKHI VYAPAAR PVT. LTD., SAAKSHEE SALES P. LTD. 4.16. ONCE THE ADMITTED POSITION ON RECORD IS THAT THE PERSONS GIVING STATEMENT ON BEHALF OF THESE 5 COMPANIES HAVE NO LOCUS STANDI WITH THESE COMPANIES, THEN THE STATEMENT OF SUCH PERSONS CANNOT BE RELEVANT OR BE MADE A BASIS OF HOLDING THAT THE LOAN WAS BOGUS. I THEREFORE HOLD THAT THERE IS NO JUSTIFICATION ON THE PART OF THE AO IN RELYING ON THE STATEMENT OF MANISH AGARWAL AND RAJESH KUMAR AGARWAL WHO ARE NOT DIRECTORS OF THE 5 COMPANIES I.E. KUBER GOODS PVT. LTD., GAJANAND AGRO TECH LTD., KABERI VINIMAY PVT. LTD., BAISAKHI VYAPAAR PVT. LTD., SAAKSHEE SALES P. LTD. I HOLD THAT THE STATEMENTS OF THESE PERSONS ARE NOT RELEVANT FOR THE DETERMINATION OF THE GENUINENESS OF THE LOAN TRANSACTION. 6.4. IN THE CASE OF PRAKASH JAJODIA, WHO IS DIRECTOR OF OF BURNPUR POWER PVT. LTD. AND QUEST FINANCIAL SERVICES PVT. LTD., THE LD. CIT(A) FOUND THAT A SPECIFIC REQUEST WAS MADE FOR CROSS-EXAMINATION AND THAT THE ASSESSING OFFICER HAS FAILED TO PROVIDE SUCH OPPORTUNITY TO THE ASSESSEE. HE HELD THAT THE ASSESSING OFFICER HAS MERELY RELIED ON THE STATEMENT GIVEN BEFORE THE INVESTIGATION WING, WITHOUT EXAMINING THE SAME. HE FURTHER GAVE A FINDING THAT THE STATEMENTS RECORDED BY THE INVESTIGATION WING FROM PRAKASH JAJODIA, MANISH AGARWAL AND RAJESH KUMAR AGARWAL ARE IDENTICALLY WORDED. HE HELD THAT IT IS HUMANLY IMPOSSIBLE FOR THE STATEMENTS TO BE SAME, WORD TO WORD AND HENCE THERE IS NO EVIDENTIARY VALUE OF THE SAME, AND THAT THESE ANSWERS TO QUESTIONS WERE NOT VOLUNTARY BUT DETECTED BY THE INVESTIGATION OFFICER. AT PARA 4.20. OF HIS ORDER, THE LD. CIT(A) HELD AS FOLLOWS:- 4.20. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES I HOLD THAT THE STATEMENT OF PRAKASH JAJODIA IS DISCREDITED AND CANNOT BE HELD TO BE MATERIAL FOR THE PURPOSE OF ASSESSMENT AND HENCE BASED ON THE STATEMENT NO ADVERSE VIEW CAN BE TAKEN AGAINST THE ASSESSEE FOR THE PURPOSE OF ASSESSMENT. 7 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA 6.4.1. THEREAFTER, HE RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S. DATAWARE PRIVATE LTD. IN ITAT NO. 263 OF 2011, G.A. NO. 2856 OF 2011, ORDER DT. 21/09/2011 AND ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS [2002] 256 ITR 360 (GUJARAT) AND CAME TO A CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE ONUS THAT LAY ON IT TO PROVE THE THREE INGREDIENTS OF ALL THE CREDITORS I.E., IDENTITY, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS AND THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE IDENTITY OR CREDITWORTHINESS OF THE LOAN CREDITOR. AT PARA 4.23 & 4.24. OF HIS ORDER, THE LD. CIT(A) HELD AS FOLLOWS:- 4.23 IN THE ABOVE BACKGROUND OF THE CASE, NOW LET ME EXAMINE WHETHER ADDITION OF RS.1,63,50,000 IS WARRANTED IN THE HANDS OF THE ASSESSEE. PROVISIONS OF SEC.68 OF THE ACT HAVE BEEN JUDICIALLY CONSIDERED BY SEVERAL COURTS OF LAW, AS PER WHICH AN ADDITION U/S. 68 CAN BE MADE WHERE AN ASSESSEE FAILS TO PROVE IDENTITY OF THE CREDITOR; HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE IT WAS NECESSARY FOR A.O. TO PROVE THAT ON ALL 3 INGREDIENTS THE ASSESSEE HAD FAILED AND, THEREFORE, ADDITION WAS WARRANTED. IT WAS THEREFORE, NECESSARY THAT THE AO PROVED INFIRMITY IN THE DOCUMENTS TO WARRANT ADDITION U/S. 68 OF THE ACT. IN THE CASE BEFORE US, THE A.O. DID NOT DISPUTE THE IDENTITY OF THE LOAN CREDITOR AND ITS CREDITWORTHINESS. I FIND THAT ALL THE PARTIES HAVE SUBSTANTIAL CREDITWORTHINESS TO EXTENT THE LOAN. FURTHER THE IMPUGNED LOAN TRANSACTION IS DULY RECORDED IN THE BOOKS OF ACCOUNT OF BOTH THE ASSESSEE AS WELL AS THE CREDITOR. THEREFORE, IN SUCH CIRCUMSTANCES, THE GENUINENESS OF THE TRANSACTION COULD NOT BE DOUBTED MERELY ON GUESS, SURMISE AND CONJECTURE, MORE SO WHEN ADVANCING OF LOAN IS DULY SUPPORTED BY DOCUMENTS INCLUDING CONFIRMATION FROM THE LENDERS WHICH THE DEPARTMENT COULD NOT CONTROVERT BY ADDUCING ANY EVIDENCE ON RECORD. 4.24 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS (SUPRA) AND HON'BLE GAUHATI HIGH COURT IN THE CASE OF NEMICHAND KOTHARI VS. CIT (SUPRA) HAVE HELD THAT WHERE THE LOAN CREDITORS ARE IDENTIFIED AND THEY ARE REGULARLY ASSESSED TO TAX AND HAVE ADMITTED THE LOAN TRANSACTION WITH THE ASSESSEE, THEN ADDITION U/S. 68 OF THE ACT IS NOT PERMISSIBLE. REFERRING TO SEC. 106 OF THE EVIDENCE ACT, THE HON'BLE GAUHATI HIGH COURT IN THE SAID CASE OF NEMICHAND KOOTHARI (SUPRA) HELD THAT WHERE THE PAYMENT HAS BEEN MADE BY THE LOAN CREDITOR BY ACCOUNT PAYEE CHEQUE AND GOES THROUGH THE BANK ACCOUNT OF THE LOAN CREDITOR, THEN IT CAN BE HELD THAT THE ASSESSEE ESTABLISHED THE CREDITWORTHINESS OF THE LOAN CREDITOR. IN THE CASE BEFORE ME, IDENTITIES OF ALL THE CREDITORS ARE BEYOND DOUBT. THE GENUINENESS OF THE TRANSACTION RECORDED IN THE AUDITED BOOKS / BALANCE SHEET OF ACCOUNTS OF BOTH THE PARTIES HAS NOT BEEN DISPUTED AND THE CAPACITY OF THE LOAN CREDITOR IS ALSO PROVED BEYOND DOUBT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE I HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,63,50,000 AS CASH CREDIT U/S 68 OF THE IT ACT, 1961. I THEREFORE DELETE THE ADDITION MADE BY THE AO. 8 I.T.A. NO. 1409/KOL/2016 ASSESSMENT YEAR: 2012-13 SMT. SASHI MEHTA 6.5. THE LD. D/R COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE LD. CIT(A). IN FACT, THE LD. CIT(A) HAS SPECIFICALLY RECORDED THAT THE ASSESSEE HAS REPAID AN AMOUNT OF RS.1,46,00,000/- OUT OF RS.1,73,50,000/- TAKEN AS LOAN AND THAT THESE REPAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. ON THESE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND UPHOLD HIS FINDINGS ON THE DELETIONS MADE. IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 14 TH DAY OF AUGUST, 2019. SD/- SD/- [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14.08.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. SMT. SASHI MEHTA 4 TH FLOOR, NO. 24 409, MANGALAM HEMANTA BASU SARANI KOLKATA -700 001 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-31 KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES