M/s Bhandari Knit Exports, Ludhiana V. DCIT, Circle- III, Ludhiana

ITA 1464/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7972 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , . '.., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 1464/CHD/2017 / ASSESSMENT YEAR : 2010-11 BHANDARI KNIT EXPORTS, BHANDARI HOUSE, VILLAGE MEHARBAN RAHON ROAD, LUDHIANA PUNJAB -147007 THE DCIT, CIRCLE III, LUDHIANA ./PAN NO. AAIFB3055A / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. VIBHOR GARG, CA ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR.DR # $ % /DATE OF HEARING : 12.02.2019 &'() % / DATE OF PRONOUNCEMENT : 16.04.2019 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDERS DATED 10.08.2017 OF THE COMMISSIONER OF INCO ME TAX-2, LUDHIANA [HEREIN REFERRED TO AS CIT(A)]. THE ASSESSEE IN T HIS APPEAL HAS AGITATED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF 4 LACS TREATING THE UNDISCLOSED LOAN RAISED BY THE ASSESSEE AS UNEXPLAI NED INCOME OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT, 1961 (IN SHO RT 'THE ACT'). 2. THE ASSESSING OFFICER DURING THE ASSESSMENT PROC EEDINGS, NOTED THAT THE ASSESSEE DURING THE YEAR HAD RECEIVED A LOAN OF 4 LACS FROM ONE SHRI SHAM SINGH. ON BEING ASKED TO EXPLAIN THE GENUINEN ESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITOR, THE ASSESSEE STATED THAT SHRI SHAM ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 2 SINGH HAD ADVANCED THE LOAN FROM HIS BANK ACCOUNT. THAT HE HAD APPLIED TO THE BANK FOR SUPPLY OF COPY OF THE BANK STATEMENT. HOWEVER, SINCE THE BANK AUTHORITIES DID NOT SUPPLY THE COPY OF THE BANK STA TEMENT, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT MAKING THE ADDITIO N OF 4 LACS INTO THE INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPL AINED INCOME OF THE ASSESSEE. 3. IN APPEAL, THE ASSESSEE FURNISHED THE COPIES OF THE BANK STATEMENT AND ALSO CONFIRMATIONS FROM THE CREDITOR SHRI SHAM SIN GH ABOUT THE AFORESAID LOAN TRANSACTION. THE ASSESSEE ALSO FURTHER SUPPLI ED THE CONFIRMATION FROM THE CREDITOR OF SHRI SHAM SINGH NAMELY M/S SUNIL KU MAR GOEL HUF WHO DULY CONFIRMED THAT THEY HAD GIVEN A LOAN AMOUNT OF 4 LACS TO SHRI SHAM SINGH AND SHRI SHAM SINGH FURTHER HAD GIVEN THE SAI D AMOUNT TO THE ASSESSEE. DURING THE COURSE OF APPELLATE PROCEEDING S, THE LD. CIT(A) ALSO DIRECTED THE ASSESSEE TO PRODUCE THE COPY OF THE A CCOUNTS OF SHRI SHAM SINGH IN THE BOOKS OF SHRI SUNIL KUMAR GOEL, HUF A LONG WITH COPY OF THE BANK STATEMENT OF THE SAID HUF, WHICH WAS DULY PROD UCED BEFORE THE CIT(A). ON PERUSAL OF THE AFORESAID DOCUMENTS, THE LD. CIT(A) OBSERVED THAT THOUGH SHRI SHAM SINGH HAD GIVEN LOAN TO THE A SSESSEE WITHOUT ANY INTEREST, HOWEVER, SHRI SHAM SINGH WHILE PAYING BA CK THE SAID AMOUNT OF 4 LACS TO SHRI SUNIL KUMAR HUF ON 6.3.2010 HAD ALS O PAID THE INTEREST AMOUNT OF 27000/-. THE LD. CIT(A) UNDER THE CIRCUMSTANCES O BSERVED THAT IT WAS VERY UNLIKELY THAT A PERSON WOULD TAKE LOAN ON INTEREST AND GIVE IT INTEREST FREE TO THE ASSESSEE. EVEN THE NEC ESSITY OF THE LOAN BY THE ASSESSEE WAS NOT ESTABLISHED AS HE AS WAS HAVING SU FFICIENT OWN FUNDS. HE ALSO OBSERVED THAT EVEN IT WAS NOT CLEAR THAT WHAT WAS THE SOURCE OF SHRI SHAM SINGH TO RETURN THE LOAN TO SUNIL KUMAR GOEL, HUF ALONG WITH ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 3 INTEREST. HE THEREFORE, HELD THAT FROM THE CIRCUMS TANCES IT APPEARED THAT ASSESSEE HAD ROUTED ITS OWN UNACCOUNTED MONEY THROU GH DIFFERENT ACCOUNTS WHICH ULTIMATELY HAD BEEN SHOWN AS A LOAN FROM SHRI SHAM SINGH. HE, THEREFORE, HELD THAT THE ASSESSEE HAD FAILED TO EST ABLISH CREDITWORTHINESS OF SHRI SHAM SINGH. HE, ACCORDINGLY CONFIRMED THE ORD ER OF THE ASSESSING OFFICER MAKING THE IMPUGNED ADDITION OF 4 LACS. 4. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE CAME IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. A PERUSAL OF THE ORDER OF THE CIT(A) REVEAL S THAT THE ASSESSEE HAD DULY FURNISHED NOT ONLY THE BANK STATEMENT OF SHRI SHAM SINGH, CREDITOR BUT ALSO THE BANK STATEMENT OF SUNIL KUMAR GOEL, H UF FROM WHOM SHRI SHAM SINGH HAD TAKEN LOAN WHICH WAS FURTHER ADVANCE D TO THE ASSESSEE. ALL THE TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNE L. THE CONFIRMATIONS OF THE AFORESAID TRANSACTIONS WERE DULY FILED BEFOR E THE ASSESSING OFFICER, WHEREBY, NOT ONLY SUNIL KUMAR GOEL, HUF CONFIRMED THE LOAN TRANSACTIONS WITH SHRI SHAM SINGH BUT ALSO SHRI SHA M SINGH FURTHER CONFIRMED THE LOAN TRANSACTIONS WITH THE ASSESSEE. NOW, SO FAR AS THE QUESTION THAT THE CIT(A) RAISED THAT WHY A PERSON W OULD TAKE LOAN ON INTEREST TO PAY IT FURTHER INTEREST FREE TO THE ASS ESSEE, IS CONCERNED, WE ARE OF THE VIEW, THAT THE AFORESAID FACT IS NOT SUFFICI ENT TO HOLD THAT IT WAS THE OWN MONEY OF THE ASSESSEE WHICH WAS ROUTED THROUGH SHRI SHAM SINGH. HAD IT BEEN SO, IN THOSE CIRCUMSTANCES, SHRI SHAM S INGH WOULD NOT HAVE REQUIRED TO PAY THE INTEREST TO SHRI SUNIL KUMAR HUF. WHETHER SHRI SHAM SINGH HAD PAID INTEREST ON THE LOAN AMOUNT TO SHRI SUNIL KUMAR GOEL HUF OR NOT, IN OUR VIEW, IS NOT RELEVANT AND CANNOT FORM THE BASIS TO HOLD ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 4 THAT IT WAS THE OWN MONEY OF THE ASSESSEE ROUTED T HOUGH SHRI SHAM SINGH. SO FAR AS THE VIEW OF THE LD. CIT(A) THAT IT WAS NO T CLEAR AS TO FROM WHERE SHRI SHAM SINGH RETURNED THE MONEY TO SH. SUNIL KU MAR GOEL HUF, IN OUR VIEW, THAT IS A MATTER OF SUBSEQUENT TRANSACTI ON BETWEEN SHRI SHAM SINGH AND SHRI SUNIL KUMAR GOEL HUF AND THE ASSESSE E IS NOT SUPPOSED TO EXPLAIN ABOUT THAT SUBSEQUENT TRANSACTION. THE LD. CIT(A) DID NOT CHOOSE TO SUMMON AND CROSS EXAMINE OF SHRI SHAM SINGH ABOU T ANY SUBSEQUENT TRANSACTION AS IT WAS ONLY SHRI SHAM SINGH WHO COUL D HAVE EXPLAINED THE SOURCE OF THE RETURNED MONEY TO SHRI SUNIL KUMAR GO EL HUF. THE SAID TRANSACTION HOWEVER, IS NOT RELATED TO THE APPELLAN T AND THUS HE IS NOT SUPPOSED TO ANSWER THAT QUESTION. THE ASSESSEE IN T HIS CASE HAS NOT ONLY DULY PROVED THE TRANSACTION BUT HAS ALSO PROVED THE SOURCE OF THE AFORESAID LOAN AMOUNT IN THE HANDS OF THE CREDITOR. WE THEREFORE, DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING THE IMPUGNED ADDITION, THE SA ME IS ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS, HEREB Y, ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2019. SD/- SD/- ( ' . . , # $ / B.R.R. KUMAR) %& / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 16/04/2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 5 '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR