A/Dy. C.I.T., Central Circle, Agra V. Sh. Praveen Kumar, Agra

ITA 144/AGR/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5979 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA [CORAM : BHAVNESH SAINI JM AND PRAMOD KUMAR AM] I.T.A. NO.144/AGRA/2013 ASSESSMENT YEAR: 2009-10 ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, AGRA .APPELLANT VS. PRAVEEN KUMAR, ..RESPONDENT 3/51 B, BHARATPUR HOUSE, KHANDARI, AGRA [ PAN: ABXPS 7293 R] APPEARANCES BY: INDERJIT SINGH, FOR THE APPELLANT DEEPENDRA MOHAN WITH PRARTHANA JALAN, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 26, 2014 DATE OF PRONOUNCING THE ORDER : JULY 04, 2014 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 30 TH OCTOBER 2012, PASSED BY LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCES RAISED BY THE APPELLANT ASSESSING OFF ICER ARE AS FOLLOWS: 1. THAT THE LD CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.13,50,000/- ON ACCOUNT OF EXPLAINED FOUR UNSECUR ED LOANS U/S 68 OF THE I.T. ACT, 1961 WITHOUT REALISING THE FACT THAT THE CREDITWORTHINESS OF THE LOAN PROVIDER WAS NOT PROVED AND GRANTING RELIE F ONLY ON THE BASIS OF AOS ASSESSMENT WITHOUT GIVING THEIR OWN FINDING AS APPELLATE AUTHORITY. I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 2 OF 6 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.13,50,000/- U/S 68 OF THE I.T. ACT, 1961. 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.1,94,000/- ON ACCOUNT OF INTEREST PAID ON WIT HOUT VERIFYING THE FACTS & ASSIGNING ANY LOGICAL REASON. 4. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDER OF TH E A.O. BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR AMORE OF THE GROUND OF THE APPEAL AS STATED ABOVE A S AND WHEN NEED FOR DOING SO MAY ARISE. 3. BRIEFLY STATED, THE RELEVANT FACTS ARE LIKE THIS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTED THAT THE ASSE SSEE HAS TAKEN CERTAIN UNSECURED LOANS AGGREGATING TO RS.13,50,000/-. THE ASSESSEE WAS ACCORDINGLY REQUIRED TO FURNISH COMPLETE DETAILS OF THE PERSONS FROM WHOM THE LOANS WERE TAKEN AND TO EXPLAIN HIS RELATIONSHIP WITH THESE CREDITOR S. THE ASSESSEE FURNISHED COPY OF ACCOUNT OF THE CREDITORS ALONG WITH ACKNOWLEDGEMENT OF THEIR INCOME TAX RETURNS AND BANK STATEMENT. ON A PERUSAL OF THE BANK STATEMENT THE A.O. WAS OF THE VIEW THAT THESE CREDITORS DID NOT HAVE SUFFICIENT FUNDS TO JU STIFY THEIR CAPACITY OF GIVING LOANS. THE INCOME TAX RETURNS FILED BY THE CREDITORS WERE ALSO PERCEIVED TO BE ON LOWER SIDE AND ARE THUS NOT JUSTIFIED LENDING OF MONIES TO THI S EXTENT. SUMMONS WERE ALSO ISSUED FOR PERSONAL APPEARANCE OF THESE PERSONS BUT THIS REMAINS TO BE COMPLIED WITH. IT WAS IN THIS BACKDROP THE A.O. MADE AN ADD ITION OF RS.13,50,000/- AS UNEXPLAINED CREDIT. THE A.O. HAS ALSO DISALLOWED I NTEREST AMOUNT OF RS.1,94,000/- IN RESPECT OF THE BORROWING FROM THESE PERSONS. AGGRI EVED BY THE STAND SO TAKEN, THE A.O. CARRIED THE MATTER IN APPEAL BEFORE THE LD. CI T(A). IT WAS CONTENDED THAT ALL THE NECESSARY DETAILS INCLUDING ASSESSMENT DETAILS, CON FIRMATION LETTERS, PERMANENT ACCOUNT NUMBERS, COPIES OF INCOME TAX RETURNS, COPI ES OF BANK STATEMENT WERE DULY FURNISHED TO THE A.O. IT WAS ALSO POINTED OUT THAT ALL THE TRANSACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE FURTHER CONTEN DED, DURING THE FIRST APPELLATE PROCEEDINGS, THAT THE LENDERS ARE IN EXISTENCE AND THEY CAN BE VERY WELL EXAMINED BY THE A.O. FOR ASCERTAINING THE GENUINENESS OF THE LOANS. THE LD. CIT(A), IN THE ALIGHT OF THESE ARGUMENTS, DIRECTED THE A..O TO EXA MINE ALL THE FOUR LENDERS AND SUBMITTED A REMAND REPORT IN RESPECT OF SUCH AN EXA MINATION. ACCORDINGLY, THE A.O. VIDE REPORT DATED 25.07.2012 SUBMITTED AS FOLLOWS:- I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 3 OF 6 (I) SHRI GYAN PRAKASH MITTAL AND SHRI HASHISH MITT AL, TRUSTEES OF BHAGWATI TRUST, WHO WAS GIVEN LOAN TO SHRI PRAVEEN KUMAR HAS PAID THE AMOUNT OF LOAN OF RS.3,00,000/- TO THE TRUST FROM THEIR OVER DRAFT AC COUNT NO.080653800000152- INR IN IDBI BANK AND RS.4,00,000/- TO THE TRUST FROM THEIR OVERDRAFT ACC OUNT NO.080653800000170. COPY OF THE STATEMENT OF ACCOUNT AS FURNISHED BY THE DONOR IS ENCLOSED OR KI ND PERUSAL. (II) SHRI GYAN PRAKASH MITTAL AND SHRI HASHISH MITT ALA, TRUSTEES OF RAMA RANI TRUST, WHO HAS GIVEN LOAN TO SHRI PRAVEEN KUMAR HAS PAID THE AMOUNT OF LOAN RS.3,50,000/- TO THE TRUST FROM THEIR OVERDRAFT ACC OUNT NO.080653800000189-INR IN IDBI BANK. COPY OF THE STATEMENT OF ACCOUNT AS FURNISHED BY THE DONOR IS ENCLOSED FOR KIND PERUSAL. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, LOAN TAKEN BY SHRI PRAVEEN KUMAR FROM BHAGWATI TRUST AND RAMA RANI TRUST APPEA RS TO BE GENUINE. 4. ON THESE FACTS AND IN THE LIGHT OF THE REMAND RE PORT GIVEN BY THE A.O. THE LD. CIT(A) DELETED THE ADDITION OF RS.13,50,000/- BY DI SCUSSING MERITS OR OTHER DEMERITS OF THE ADDITIONS SO MADE BY THE A.O., AS FOLLOWS :- 5.5 IN THE ABOVE REMAND REPORT, AFTER EXAMINING OF SHRI GYAN PRA K ASH MITTAL WHO HAS GIVEN UNSECURED LOAN OF RS.3 LAC IN HIS PERSONAL CAPACITY AND ALSO BEING TRUSTEE OF OTHER TRUSTS IN WHOSE NAME THE LOANS WERE GIVEN, IT IS SUBMITTED THAT THE LOANS TAKEN BY THE ASSESSEE (APPELLANT) FROM ALL THESE TRUSTS APPEARS TO BE GEN UINE. IN THIS CONNECTION, I HAVE GONE THROUGH THE STATEMENT OF SH RI GYAN PRAKASH MITTAL RECORDED BY THE THEN AO, SHRI K.D. BHATT ON 15.03.2012 AND I HAVE FOUND THAT IN THIS STATEMENT SHRI GYAN PRAKASH MITTAL HAS ADMITTED TO HAVE GIVEN UNSECURED LOAN TO THE APPELL ANT FROM HIS OVERDRAFT ACCOUNT MAINTAINED WITH H D FC BANK. HE HAS ALSO GIVEN THE DETAILS OF LOAN GIVEN BY OTHER THREE TRUSTS I.E. BHAGWATI TRUST, BHARAT TRUST AND R AMA RANI TRUST AND SUPPORTING BANK STATEMENT FROM W HERE THESE LOANS WERE GIVEN BY THESE TRUSTS WERE ALSO SU BMITTED SHOWING THAT THE AMOUNT GIVEN AS LOAN TO THE ASSESSEE (APPELLANT) BY THESE TRUSTS WERE TRANSFERRED FROM THE OVERDRAFT ACCOUNT OF SHRI GYAN PRAKASH MITTAL AND SHRI ASHISH MITTAL MAINTAINED WI TH L D BI BANK. IN THIS STATEMENT, THE AO ALSO INQUIRED AS TO WHY HE HAS GI VEN UNSECURED LOAN TO THE ASSESSEE (APPELLANT) FROM HIS OD ACCOUNT. IN RESPONSE TO THIS I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 4 OF 6 QUERY OF THE AO, SHRI GYAN PRAKASH MITTAL HAS JUSTI FIED GIVING UNSECURED LOAN TO THE ASSESSEE STATING THAT THE RATE OF INTEREST PAID IN THE OD ACCOUNT IS LESS THAN THE RATE OF INTEREST WHICH HE IS CHARGING FROM THE ASSESSEE (APPELLANT) ON THE LOAN GIVEN TO HIM AND THE INTERE ST RECEIVED FROM THE ASSESSEE (APPELLANT) HAS BEEN SHOWN IN HIS RETURN OF INCOME. DURING THE COURSE OF RECORDING OF STATEMENT, SHRI G YAN PRAKASH MITTAL HAS ALSO FILED COPY OF TRUST DEED OF ALL THE THREE TRUSTS TO ESTABLISH THE GENUINENESS OF ALL THE THREE TRUSTS. HE ALSO INFORMED THAT SHRI ASHISH MITTAL IS HIS SON. ASKING ABOUT HIS REL ATIONSHIP WITH THE ASSESSEE (APPELLANT), HE REPLIED TO THE AO THAT SHR I PRAVEEN KUMAR, APPELLANT IS HIS OLD FRIEND AND WHENEVER HE NEEDED FUND, HE HAS GIVEN LOAN TO HIM ON INTEREST FROM HIS INDIVIDUAL ACCOUNT AS WELL AS FROM HIS TRUST. THE AO HAS ALSO ASKED IN THIS STATEMENT THAT WHY HE DID NOT APPEAR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN RESPONSE TO THIS QUERY, HE REPLIED THAT AT THAT TIME HIS HEALTH WAS NOT VERY GOOD AND, THEREFORE, HE COULD NOT APPEAR IN PERSON BUT H E FURNISHED ALL THE DETAILS CALLED FOR. AFTER CONSIDERING THE STATEMENT OF SHRI GYAN PRAKASH MITTAL, THE AO HAS STATED IN HIS REMAND REPORT THAT THESE LOANS APPEARS TO BE GENUINE. IN RESPONSE TO THE REMAND REPORT FUR NISHED BY THE AO, THE ID. AR HAS FILED FURTHER WRITTEN SUBMISSION ON 30.10.2012 JUSTIFYING THE GENUINENESS OF THE LOAN AND ALSO PLEADING TO DE LETE THE INTEREST OF RS.1,94,400 /- BECAUSE THE ALLEGED LOANS HAVE BEEN FOUND TO BE GENUINE LOANS. 5.6 I HAVE CONSIDERED ALL THE FACTS AVAILABLE ON RECORD WITH REGARD TO THE ALLEGED UNSECURED LOANS AND FURTHER INQUIRY MAD E BY THE AO DURING THE COURSE OF APPELLATE PROCEEDING BY RECORDING THE STATEMENT OF SHRI GYAN PRAKASH MITTAL AND SUBMITTING HIS REMAND REPOR T. AS PER THE DETAILS AVAILABLE ON RECORD, I HAVE FOUND THAT THE FIRST LOAN OF R S .3 LAC FROM M/S. BHAGWATI TRUST HAS BEEN GIVEN ON 05.08.2008 AND THI S AMOUNT HAS BEEN MADE AVAILABLE TO M / S. BHAGWATI TRUST FROM THE OD ACCOUNT NO. 080653800000152 MAINTAIN E D WITH L D BI BANK BY SHRI GYAN PRAKASH MITTAL ON 05.08.2008. SIMILARLY, THE SECOND LOAN OF RS .4 LAC FROM M/S.BHARAT TRUST HAS BEEN PROVIDED AFTER TRANSFERRING OF THIS AMOUNT FROM OD BANK ACCOUNT NO. 0 80653800000170 MAINTAINED WITH ID BI BANK BY SHRI ASHISH MITTAL ON 05.08.2008. THE THIRD UNSECURED LOAN OF R S .3 LAC HAS BEEN GIVEN BY SHRI GYAN PRAKASH MITTAL F ROM HIS OD BANK ACCOUNT NO. 02972070000053 MAINTAINED WITH HD FC BANK ON 05.08.2008. THE FOURTH UNSECURED LOAN OF RS. 3,50, 000/- HAS BEEN PROVIDED BY M/S. RAMA RANI TRUST ON 05.08.2008 AFTER TRANSFER OF FUN D OF RS.3,50, 000/- ON 05.08.2008 FROM OD BANK ACCOUNT I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 5 OF 6 NO. 0 80653800000189 MAINTAINED WITH ID BI BANK BY SHRI GYAN PRAKASH MITTAL. AFTER EXAMINATION OF ALL THE ABOVE DETAILS ABOUT THE SOURCE OF LOAN, I FIND THAT ALL THE FOUR LOANS ARE PROVIDED F ROM OVERDRAFT BANK ACCOUNTS AND BEFORE ISSUING OF CHEQUE FOR UNSECURED LOAN, N O CASH WAS DEPOSITED. ALL THESE BANK ACCOUNTS HAVE BEEN OWNED BY THE LENDERS AND IT HAS BEEN CONFIRMED DURING THE RECORDING OF THE STATEMENT BY THE PERSON WHO WAS CONTROLLING ALL THESE FOUR BANK ACCOUNTS. T HE AO IN HIS REMAND REPORT HAS NOT DISPUTED THE CORRECTNESS OF S TATEMENT GIVEN BY SHRI GYAN PRAKASH MITTAL ADMITTING GIVING OF LOANS AND EXPLAINING THE SOURCE OF GIVING OF LOAN AND HE HAS ALSO SUBMITTED IN HIS REMAND REPORT THAT THESE UNSECURED LOANS MAY BE CONSIDERED AS GENUINE. THE EXAMINATION OF SHRI GYAN PRAKASH MITTA L WAS DONE BY THE EARLIER AO AND THE REMAND REPORT WAS ALSO PREPARED BY HIM AND THE SAME REMAND REPORT HAS BEEN FURNISHED BY THE PRESEN T AO BEFORE ME AND IT HAS BEEN CLEARLY STATED BY HIM IN THE HEARIN G HELD ON 13.10.2012 THAT HE AGREES WITH THE REMAND REPORT PREPARED BY H IS PREDECESSOR. THEREFORE, CONSIDERING THE ABOVE FACTS AS AVAILABLE IN THE RECORD WITH RESPECT TO THE SOURCE OF LOAN AND THE REMAND REPORT FURNISHED BY THE AO, I FIND THAT IDENTITY AND CREDITWORTHINESS OF TH E LENDERS IN WHOSE NAME THESE UNSECURED LOANS HAVE BEEN SHOWN ARE ESTA BLISHED BECAUSE THE AO HAS NOT DOUBTED THE CORRECTNESS OF S TATEMENT GIVEN BY SHRI GYAN PRAKASH MITTAL WHO IS TRUSTEE IN ALL THE THREE TRUST AND HAVE CONTROL OVER THEM AND HE HIMSELF HAS GIVEN A LOAN O F R S .3 LAC TO THE APPELLANT IN HIS INDIVIDUAL CAPACITY. THEREFORE, GE NUINENESS OF UNSECURED LOANS UNDER CONSIDERATION DOES NOT REMAIN UNDER DISPUTE AFTER SUBMISSION OF THE REMAND REPORT BY THE AO. SINCE DURING APPELLATE PROCEEDING, AFTER NECESSARY INQUIRY AND E XAMINATION HAS BEEN MADE BY THE AO, THE IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE UNSECURED LOANS HAS BEEN ESTABLI SHED, THESE UNSECURED LOANS CANNOT BE SAID TO BE UNEXPLAINED AS HELD BY THE AO IN THE ASSESSMENT ORDER AND HENCE, THE ADDITION OF RS.13,50, 000/- MADE BY THE AO IN THE ASSESSMENT ORDER CANNOT BE SUSTAINED AND, THEREFORE, THIS ADDITION IS DELETED. 5. THE A.O. IS AGGRIEVED AND IS IN APPEAL BEFORE US . 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. WE HAVE NOTED THAT IN THE REMAND PROCEEDINGS THE A.O. HIMSELF HAS ACCEPTED THAT LOANS TAKEN BY PRAVEEN KUMAR (I.E. ASSESSEE) . APPEARS TO BE GENUINE . THUS, THE A.O. HIMSELF HAS GIVEN A CLEAN CHIT TO THE ASSESSEE AND YET WHEN THE LD. CIT(A) I.T.A. NO.: 144/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 6 OF 6 DELETES THE ADDITION IN RESPECT OF THE SAME, THE A. O. IS IN APPEAL BEFORE US. IT IS NOT POSSIBLE TO RECONCILE THESE TWO CONFLICTING STAND T AKEN BY THE A.O. IN ANY EVENT, WE FIND THAT THE LD. CIT(A) IN A VERY DETAILED AND ANA LYTICAL ORDER, DELETED THE IMPUGNED ADDITION FOR GOOD AND SUFFICIENT REASONS. THE LOAN S WERE GIVEN FROM THE OVERDRAFT BANK ACCOUNTS AND NO CASH DEPOSITS WERE MADE BEFORE ISSUANCE OF CHEQUES. IDENTITY OF THE CREDITORS STANDS PROVED AND THE CRE DIT WORTHINESS OF THE CREDITORS IS ALSO REASONABLY ESTABLISHED. IN VIEW OF THE FACT T HAT THE GENUINENESS OF THE BORROWING/CREDIT ITSELF IS ESTABLISHED, THERE CANNO T BE ANY GOOD REASON TO DISPUTE THE SAME WITH RESPECT TO PAYMENT OF INTEREST EITHER. A S THE LD. CIT(A) HAS RIGHTLY OBSERVED, GENUINENESS OF THE UNSECURED LOANS UNDER CONSIDERATION DOES NOT REMAIN UNDISPUTED IN THE LIGHT OF THE REMAND REPORT SUBMIT TED BY THE A.O. HIMSELF. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND THE ENTIRETY OF THE CASE, WE SEE NO MERITS IN THE GRIEVANCES RAISED BEFORE US BY THE A.O. THE WE LL REASONED ORDER OF THE LD. CIT(A) DESERVES TO BE CONFIRMED ON MERITS AS WELL. IN VIEW OF THESE DISCUSSIONS, WE UPHOLD THE ORDER OF LD. CIT(A) AND DECLINE TO INTER FERE IN THE SAME. 7. IN THE RESULT, APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 04/07/2014) SD/- SD/- BHAVNESH SAINI PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AGRA, THE 4 TH DAY OF JULY, 2014. COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA