ITO, New Delhi V. Sh. Manjit Singh, New Delhi

ITA 1441/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4012 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 13-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: S D KAPILA; R R MAURYA
• Keywords: Unexplained cash credit; Business income; Additional evidence
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI A.D. JAIN AND SHRI B.P. JAIN ITA NO. 1441(DEL)2009 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER, SHRI MANJIT SINGH (HUF), WARD 19(2), NEW DELHI. V. B-172, AS HOK VIHAR, PH-1, DELHI-52. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI G.S. SAHOTA, SR. DR RESPONDENT BY: S/SHRI S.D. KAPILA, ADV. & R.R. MAURYA ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2003-04 AGAINST THE LD. CIT(A)S ACTION OF DELETING THE ADD ITION OF RS.8,75,000/- MADE ON ACCOUNT OF UNEXPLAINED CREDIT OF RS. 5,75, 000/- IN THE NAME OF SHRI JAGDISH PRASHAD AND OF RS. 3 LAKHS IN THE NAME OF SHRI HARBHAGWAN BATRA. 2. WHILE MAKING THE ADDITION THE AO OBSERVED , INTE R ALIA, THAT AS PER THE RETURN OF INCOME FILED BY SHRI JAGDISH PRASHAD FOR ASSESSMENT YEAR 1992-93, HE HAD DECLARED INCOME OF RS. 20,880/- ONL Y; THAT IT WAS NOT BELIEVABLE THAT A PERSON WITH SUCH A SMALL EARNING COULD GIVE LOAN OF RS. ITA 1441(DEL)09 2 5,75,000/-; THAT THE ASSESSEE HAD NOT FILED ANY DOC UMENTARY EVIDENCE TO SHOW THAT SHRI JAGDISH PRASHAD HAD FILED HIS INCOME TAX RETURN AFTER ASSESSMENT YEAR 1992-93; THAT THE ASSESSEE HAD ALSO NOT FILED ANY COPY OF BANK STATEMENT TO PROVE THE CREDIT-WORTHINESS OF E ITHER SHRI JAGDISH PRASHAD OR SHRI HARBHAGWAN BATRA; THAT THE ASSESSEE HAD NOT PRODUCED ANY DOCUMENT WITH REGARD TO SHRI HARBHAGWAN BATRA, SO A S TO PROVE HIS IDENTITY AND CREDITWORTHINESS OR THE GENUINENESS OF THE TRANSACTION; THAT THE ASSESSEES CASE WAS THAT SINCE THE ALLEGED CREDITOR S HAD FILED INCOME TAX RETURNS, THEIR CREDITWORTHINESS STOOD PROVED; THAT AS PER CIT V. KORLAY TRADING CO. LTD., 232 ITR 820 (CAL), MERE FILING O F INCOME TAX RETURN IS NOT ENOUGH TO PROVE THE CREDITWORTHINESS OF THE CRE DITOR; THAT THE MONEY WAS IN FACT NOTHING OTHER THAN THE ASSESSEES OWN I NCOME FROM UNDISCLOSED SOURCES ROUTED IN THE NAMES OF THE ALLEGED CREDITOR S; AND THAT AS SUCH, THE AMOUNT HAD REMAINED UNVERIFIED AND THE CLAIM OF LO AN HAD ALSO REMAINED UNSUBSTANTIATED. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS. 8,75,000/-. IT IS AGGRIEVED AGAINST THIS A CTION OF THE LD. CIT(A), THAT THE DEPARTMENT HAS APPROACHED THIS TRIBUNAL BY WAY OF THE PRESENT APPEAL. 4. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS C ONTENDED THAT WHILE WRONGLY DELETING THE ADDITION CORRECTLY MADE BY THE AO AS ITA 1441(DEL)09 3 UNEXPLAINED CREDITS OF RS. 5,75,000/- IN THE NAME O F SHRI JAGDISH PRASHAD AND OF RS. 3 LAKHS IN THE NAME OF SHRI HARBHAG WAN BATRA, TOTAL AMOUNTING TO RS. 8,75,000/-, THE LD. CIT(A) ER RED IN HOLDING THAT THE ASSESSEE HAD DISCHARGED ITS BURDEN OF PROVING THE I DENTITY AND CREDITWORTHINESS OF THE ALLEGED CREDITORS AS WELL A S THE GENUINENESS OF THE TRANSACTIONS; THAT THE ASSESSEE HAD FAILED TO PRODU CE THE CREDITORS BEFORE THE AUTHORITIES BELOW; AND THAT SO MUCH SO, EVEN THE CONFIRMATIONS OF THE CREDITORS HAD NOT BEEN FILED. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEE N SUBMITTED THAT THE ASSESSEE HAD ADDUCED DOCUMENTARY EVIDENCE TO SUPPOR T BOTH THE LOANS; THAT THIS DOCUMENTARY EVIDENCE WAS DULY TAKEN INTO CONSI DERATION BY THE LD. CIT(A); THAT IT WAS ONLY AFTER TAKING INTO CONSIDER ATION THIS EVIDENCE THAT THE LD. CIT(A) DELETED THE ADDITION WRONGLY MADE; T HAT THE ASSESSEE HAD DULY DISCHARGED ITS BURDEN OF PROVING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS, AS ALSO THE GENUINENESS OF THE TRANS ACTION; THAT THE BURDEN CAST ON THE ASSESSEE UNDER SECTION 68 OF THE I.T. A CT WAS THUS AMPLY DISCHARGED; THAT THIS BEING SO, THERE IS NO MERIT I N THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT AGAINST THE WELL VERSED ORDER OF THE LD. CIT(A). ITA 1441(DEL)09 4 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. BEFORE THE LD. CIT(A), THE ASSESSEE FURNISHED THE F OLLOWING DOCUMENTARY EVIDENCE TO SUPPORT THE CLAIM OF THE LOAN OF RS. 3 LAKHS FROM SHRI HARBHAGWAN BATRA:- 1. COPY OF INCOME TAX RETURN OF SHRI HARBHAGWAN BATRA FOR ASSESSMENT YEAR 2002-03. 2. COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 19 98-99. 3. COPY OF INCOME TAX RETURN UNDER WEALTH TAX RULES FO R ASSESSMENT YEAR 19990-2000. 4. COMPUTATION OF WEALTH AS ON 31.3.2000, SHOWING A TA XABLE WEALTH OF RS. 15,68,600/-. 5. COPY OF PAN CARD. 6. COPY OF BANK ACCOUNT OF SHRI HARBHAGWAN BATRA. 7. THESE DOCUMENTS WERE FURNISHED AS ADDITIONAL EVI DENCE. IN THE REMAND REPORT, THE AO STATED THAT DESPITE HAVING BE EN ASKED TO DO SO ON NON-SERVICE OF THE SUMMONS ISSUED TO SHRI HARBHAGWA N BATRA, THE ASSESSEE DID NOT PRODUCE SHRI HARBHAGWAN BATRA AND THEREFORE , THE FRESH EVIDENCE COULD NOT BE ACCEPTED. HOWEVER, FINDING THAT THE ADDITIONAL EVIDENCE WAS VITAL TO THE ISSUE, THE LD. CIT(A) ADMITTED THE SAM E. 8. IT IS SEEN THAT THERE IS NO REBUTTAL TO THE CON TENTION OF THE ASSESSEE, CONTAINED IN THE REJOINDER TO THE AOS REMAND REPOR T, THAT THE AFORESAID ITA 1441(DEL)09 5 DOCUMENTARY EVIDENCE WAS REFUSED BY THE AO TO BE TA KEN ON RECORD ON 7.12.2007 AND THAT THE ASSESSEE, ON THAT VERY DAY, FORWARDED THESE DOCUMENTS TO THE AO BY REGISTERED POST. 9. THESE DOCUMENTS SHOWED THAT SHRI HARBHAGWAN BATR A WAS AN INCOME TAX ASSESSEE AND WAS ALSO ASSESSED TO WEALTH TAX. THE PAN OF SHRI HARBHAGWAN BATRA HAD ALSO BEEN MADE AVAILABLE TO THE AO. HOWEVER, NO SUMMONS WAS ISSUED BY THE AO TO SHRI HA RBHAGWAN BATRA FOR APPEARANCE. NO INDEPENDENT ENQUIRY WAS CONDUC TED ON RECEIVING THE AFORESAID EVIDENCE. NO FURTHER QUESTION WAS PUT T O THE ASSESSEE. 10. SHRI HARBHAGWAN BATRA HAD DISCLOSED TOTAL INCOM E OF RS. 1,13,630/- FOR ASSESSMENT YEAR 2002-03, CONSISTING OF BUSINESS INCOME OF RS.73,879/-, CAPITAL GAIN OF RS. 32,454/- AND INCOME OF RS. 7,30 0/- FROM OTHER SOURCES. HIS WEALTH TAX RETURN DISCLOSED NET WEALTH OF RS. 1 5,68,600/- FOR ASSESSMENT YEAR 1999-2000. FOR THE LOAN OF RS. 3 LAKHS, THE ASSESSEE HAD PAID TO HIM INTEREST OF RS. 18,000/- FOR ASSE SSMENT YEAR 2004-05 AND OF RS. 19,080/- FOR ASSESSMENT YEAR 2005-06. 11. SHRI JAGDISH PRASHAD WAS FOUND TO HAVE FILED I NCOME TAX RETURN DECLARING TOTAL INCOME OF RS. 1,17,255/- FOR ASSESS MENT YEAR 2001-02. THIS INCOME CONSISTED OF BUSINESS INCOME OF RS. 88, 291/- AND INCOME FROM OTHER SOURCES OF RS. 28,964/-. AS PER HIS BALANCE SHEET AS ON 31.3.2000, ITA 1441(DEL)09 6 THERE WAS CAPITAL OF RS.37,94,700/-. HIS WEALTH TA X RETURN FOR ASSESSMENT YEAR 2000-01 SHOWED NET WEALTH OF RS. 15,44,700/-. SHRI JAGDISH PRASHAD WAS FOUND TO HAVE RECEIVED INTEREST OF RS. 34,500/- ON THE LOAN AMOUNT OF RS. 5,75,000/- FOR ASSESSMENT YEAR 2004-05 AND OF R S. 36,570/- FOR ASSESSMENT YEAR 2005-06. 12. AS PER THE BANK ACCOUNTS OF THE CREDITORS , SHR I JAGDISH PRASHAD HAD ISSUED CHEQUE OF RS. 5,75,000/- ON 27.12.2002 TO THE ASSESSEE AND SHRI HARBHAGWAN BATRA HAD ISSUED CHEQUE OF RS. 3 L AKHS IN THE NAME OF THE ASSESSEE ON 3.8.2002. 13. IT WAS FROM THESE DETAILS THAT THE LD. CIT(A) C ONCLUDED AND RIGHTLY SO, THAT BOTH THE CREDITORS DID HAVE THE FINANCIAL CAPACITY TO GIVE THE LOANS. IT IS NOWHERE THE CASE OF THE AO THAT THE SAID CHEQ UES EMANATED, IN ANY MANNER, FROM THE ASSESSEE. THE AO DID NOT ASSIGN ANY REASON FOR HIS OBSERVATION THAT THE MONEY IN QUESTION WAS IN FACT THE ASSESSEES OWN MONEY WHICH WAS PLOUGHED BACK, DISGUISED AS LOANS. OTHERWISE ALSO, THERE WOULD BE NO BUSINESS PRUDENCE FOR THE ASSESSE E TO FIRST ISSUE CHEQUES TO THE LOAN CREDITORS AND LATER TO GET THE MONEY BA CK BY WAY OF LOANS. IT IS ALSO NOT THE AOS CASE THAT ANY CASH DEPOSIT HAD BE EN MADE IN THE BANK ACCOUNT OF THE LOAN CREDITORS PRIOR TO THE LOAN TR ANSACTIONS. THE ASSESSEE HAVING FAILED TO PRODUCE THE CREDITORS BEFORE THE A O, IT WAS BOUNDEN ON THE ITA 1441(DEL)09 7 AO TO SUMMON BOTH THE PERSONS SO AS TO ASCERTAIN TH E VERACITY OF THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE. T HE AOS INACTION AMPLY DEMONSTRATES THAT HE DID NOT NURTURE ANY DOUB T IN THIS REGARD. ELSE, THERE WAS NOTHING DEBARRING THE AO TO ISSUE SUMMONS U/S 131 OF THE ACT TO BOTH THE CREDITORS OF THE ASSESSEE. EVEN THOUGH T HE AO WAS ARMED WITH THE STATUTORY PROVISIONS OF THE SAID SECTION, HE CH OSE NOT TO INVOKE THEM. WHEN THE ASSESSEE WAS INTIMATED OF THE SUMMONS ISSU ED TO SHRI HARBHAGWAN BATRA HAVING BEEN RETURNED UNSERVED WITH THE POSTAL REMARK NO SUCH PERSON AT THE GIVEN ADDRESS, THE ASSESSEE VIDE REGISTERED LETTER DATED 13.1.2009, HAD DULY INFORMED THE NEW ADDRESS OF SHRI HARBHAGWAN BATRA TO THE AO. NO ACTION WAS TAKEN BY THE AO. RATHER, THE ADDITION WAS MADE ON THE PRETEXT THAT IT WAS THE ASSESSEE WH O HAD FAILED TO PRODUCE THE CREDITORS AND SO, IT HAD FAILED TO DISCHARGE IT S ONUS OF PROVING THE INGREDIENTS OF SECTION 68 OF THE ACT. 14. IN OUR CONSIDERED OPINION, THE APPROACH OF THE AO WAS ENTIRELY UNJUSTIFIED, PARTICULARLY IN THE FACE OF THE AFORED ISCUSSED DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE TO DISCHARGE THE ONU S U/S 68 OF THE ACT. AS RIGHTLY CONSIDERED BY THE LD. CIT(A), THIS ONUS OF THE ASSESSEE STOOD AMPLY DISCHARGED. ITA 1441(DEL)09 8 15. IN THE ABOVE FACTS AND CIRCUMSTANCES, THE BASIS TAKEN BY THE AO FOR MAKING THE ADDITION WAS, IN FACT, TOO SPECIOUS A BA SIS FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THEREFORE, F INDING NO ERROR WHATSOEVER IN THE ORDER OF THE LD. CIT(A), WE HEREB Y CONFIRM THE SAME. THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJECTED. 16. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2010. SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.04.2010 *RM COPY FORWARDED TO: 1. INCOME TAX OFFICER, WARD 19(2), NEW DELHI 2. SHRI MANJIT SINGH (HUF), B-172, ASHOK VIHAR, PH-1, DELHI-52. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR