Binay Chandra Sadhukhan, Kolkata V. ITO, WD-53(2), KOLKATA, Kolkata

ITA 1508/KOL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4973 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-07-2014
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ K TIWARI
• Keywords: Unexplained cash credit; Source of fund; Additional evidence
• Section: 68

Judgement Text

I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1508/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 BINAY CHANDRA SADHUKHAN,........................... .....................APPELLANT TONA, MACHIBANGHA, BARUIPUR, 24-PARGANAS (SOUTH)-700 135 [PAN : AUDPS 6613 G] -VS.- INCOME TAX OFFICER,................................ ............................RESPONDENT WARD-53(2), KOLKATA, AAYAKAR BHAWAN, DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 APPEARANCES BY: SHRI MANOJ K. TIWARI, A.R., FOR THE ASSESSEE SHRI AMITABH CHOWDHURY, JCIT, SR. D.R., FOR THE DEP ARTMENT DATE OF CONCLUDING THE HEARING : FEBRUARY 17, 2016 DATE OF PRONOUNCING THE ORDER : MARCH 02, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, KOLKAT A DATED 27.03.2014 FOR THE ASSESSMENT YEAR 2008-09 AND THE SOLITARY IS SUE RAISED THEREIN RELATES TO THE ADDITION OF RS.3,78,000/- MADE BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(APPEALS) ON ACCOUNT OF LOAN S CLAIMED TO BE TAKEN BY THE ASSESSEE FROM TWO PERSONS/CREDITORS TREATING THE SAME AS UNEXPLAINED CASH CREDITS UNDER SECTION 68. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING OF FERTILIZERS AND PESTICID ES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM O N 26.09.2008 DECLARING TOTAL INCOME OF RS.1,41,318/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAS I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 6 RECEIVED LOANS OF RS.2,09,000/- EACH FROM SHRI M. S AHABUDDIN AND SHRI MOLLA AMIR ALI AND THE SAID LOANS RECEIVED IN CASH HAVE BEEN REPAID AGAIN IN CASH DURING THE YEAR UNDER CONSIDERATION. HE, T HEREFORE, PROCEEDED TO EXAMINE THE SAID LOANS RECEIVED BY THE ASSESSEE REP RESENTING CASH CREDITS UNDER SECTION 68 AND RECORDED HIS FINDINGS/ OBSERVA TIONS ON SUCH EXAMINATION IN RESPECT OF BOTH THE CREDITORS AS UND ER:- SHRI M. SAHABUDDIN I) THE CASH LOANS AS ENTERED REGULARLY IN THE BOOKS OF RS.19,000/- INSTEAD OF A ROUND FIGURE OF RS.20,000/ - IS VERY MUCH IMPROBABLE CONSIDERING THE FREQUENCY OF TRANSACTION . II) THE HUGE CASH LOANS TAKEN FROM M. SAHABUDDIN DU RING THE MONTH OF JYESHTHA 2007 I.E. BEGINNING OF LEAN SEASO N WHEN MONEY IS VERY MUCH IN NEED FOR THE POOR AGRICULTURI ST IS HIGHLY IMPROBABLE. III) THE ADMISSION OF M. SAHABUDDIN THAT BETWEEN RS .10,000/- TO RS.20,000/- WAS HELD AT THE TIME OF JYESHTHA, 2007 DECISIVELY NEGATES THE FACT THAT RS.2,09,000/- HAD BEEN EXTEND ED AS LOAN BY THE DEPONENT TO THE ASSESSEE IN THAT MONTH . THIS A SSERTION OF DEPONENT FURTHER HOLDS CREDENCE SINCE THE ASSESSEE HAD INFORMED THE DEPONENT OF THE BALANCE IN THE VERY MONTH ITSEL F. IV) IT IS HIGHLY IMPROBABLE FOR A SMALL FARMER LIKE M. SAHABUDDIN TO GIVE LOAN TO THE ASSESSEE IN LAKHS OF RUPEES. V) IT IS QUITE IMPROBABLE THAT THE AGRICULTURIST WO ULD LEND SUCH HUGE AMOUNTS OF MONEY WITHOUT ANY INTEREST WHERE HE CAN EARN REASONABLE INTEREST BY DEPOSITING THE SAME IN A BAN K OR IN ANY OTHER MODES OF INVESTMENT OR USING THE SAME IN HIS BUSINESS. IT MAY BE NOTED THAT THERE IS A BANK LOCATED RIGHT IN THE LOCALITY IN WHICH THE ASSESSEE HAS HIS SHOP. THIS IS PERTINENT SINCE THE DEPONENT IS NOT ENTIRELY ILLITERATE AND HAS BEEN CO NDUCTING AGRICULTURAL BUSINESS ON HIS OWN WHICH INCLUDES PRO DUCTION AND SALE OF THE PRODUCE. THIS IMPLIES THAT HE HAS THE M INIMUM BUSINESS ACUMEN AND KNOWLEDGE OF VALUE OF MONEY. IT IS QUITE IMPROBABLE THAT HE WOULD ALLOW ALL THE SAVINGS OUT OF HIS MEAGRE RESOURCES TO BE LENT OUT WITHOUT INTEREST, WITHOUT ANY RECEIPT, WITHOUT KEEPING TRACK OF THE DEPOSITS AND WITHOUT T HE SECURITY PROVIDED BY THE BANK WITH THE ASSESSEE. IT IS FURTH ER IMPROBABLE WHEN IT IS KNOWN TO HIM THAT THE SAME MONEY IS BEIN G USED BY THE ASSESSEE TO FURTHER HIS OWN BUSINESS WITHOUT TH E LENDER GAINING ANYTHING. VI) UPON BEING ASKED TO SHOW CAUSE WHY THIS AMOUNT NOT BE CONSIDERED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961, SRI NANDY FAILED TO GIVE ANY CONVINCING REPLY. I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 6 SHRI MOLLA AMIR ALI I) THE CASH LOANS AS ENTERED REGULARLY IN THE BOOKS OF RS.19,000/- INSTEAD OF A ROUND FIGURE OF RS.20,000/ - IS VERY MUCH IMPROBABLE CONSIDERING THE FREQUENCY OF TRANSACTION . II) THE HUGE CASH LOANS TAKEN FROM MOLLA AMIR DURIN G THE MONTH OF SHRAVAN, 2007 I.E. MIDDLE OF LEAN SEASON WHEN MO NEY IS VERY MUCH IN NEED FOR THE POOR AGRICULTURIST IS HIGHLY I MPROBABLE. III) THE ADMISSION OF M. SAHABUDDIN THAT BETWEEN RS .10,000/- TO RS.20,000/- WAS HELD AT THE TIME OF JYESHTHA, 2007 DECISIVELY NEGATES THE FACT THAT RS.2,09,000/- HAD BEEN EXTEND ED AS LOAN BY THE DEPONENT TO THE ASSESSEE IN THAT MONTH. THIS AS SERTION OF DEPONENT FURTHER HOLDS CREDENCE SINCE THE ASSESSEE HAD INFORMED THE DEPONENT OF THE BALANCE IN THE VERY MONTH ITSEL F. IV) IT IS HIGHLY IMPROBABLE FOR A SMALL FARMER LIKE M. SAHABUDDIN TO GIVE LOAN TO THE ASSESSEE IN LAKHS OF RUPEES. V) IT IS QUITE IMPROBABLE THAT THE AGRICULTURIST WO ULD LEND SUCH HUGE AMOUNTS OF MONEY WITHOUT ANY INTEREST WHERE HE CAN EARN REASONABLE INTEREST BY DEPOSITING THE SAME IN A BAN K OR IN ANY OTHER MODES OF INVESTMENT OR USING THE SAME IN HIS BUSINESS. IT MAY BE NOTED THAT THERE IS A BANK LOCATED RIGHT IN THE LOCALITY IN WHICH THE ASSESSEE HAS HIS SHOP. THIS IS PERTINENT SINCE THE DEPONENT IS NOT ENTIRELY ILLITERATE AND HAS BEEN CO NDUCTING AGRICULTURAL BUSINESS ON HIS OWN WHICH INCLUDES PRO DUCTION AND SALE OF THE PRODUCE. THIS IMPLIES THAT HE HAS THE M INIMUM BUSINESS ACUMEN AND KNOWLEDGE OF VALUE OF MONEY. IT IS QUITE IMPROBABLE THAT HE WOULD ALLOW ALL THE SAVINGS OUT OF HIS MEAGRE RESOURCES TO BE LENT OUT WITHOUT INTEREST, WITHOUT ANY RECEIPT, WITHOUT KEEPING TRACK OF THE DEPOSITS AND WITHOUT T HE SECURITY PROVIDED BY THE BANK WITH THE ASSESSEE. IT IS FURTH ER IMPROBABLE WHEN IT IS KNOWN TO HIM THAT THE SAME MONEY IS BEIN G USED BY THE ASSESSEE TO FURTHER HIS OWN BUSINESS WITHOUT TH E LENDER GAINING ANYTHING. VI) UPON BEING ASKED TO SHOW CAUSE WHY THIS AMOUNT NOT BE CONSIDERED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961, SRI NANDY FAILED TO GIVE ANY CONVINCING REPLY. 3. ON THE BASIS OF THE ABOVE OBSERVATIONS/FINDINGS RECORDED BY HIM, THE ASSESSING OFFICER CONSIDERED THE LOANS RECEIVED FROM TWO CREDITORS ONLY TO THE EXTENT OF RS.20,000/- EACH AS EXPLAINED AND THE BALANCE AMOUNT AGGREGATING TO RS.3,78,000/- WAS ADDED BY HI M TO THE TOTAL I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 6 INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLA INED CASH CREDIT UNDER SECTION 68. 4. THE ADDITION OF RS.3,78,000/- MADE BY THE ASSESS ING OFFICER UNDER SECTION 68 WAS CHALLENGED BY THE ASSESSEE IN THE AP PEAL FILED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PR OCEEDINGS BEFORE THE LD. CIT(APPEALS), AFFIDAVITS OF BOTH THE CONCERNED CREDITORS SHRI M. SAHABUDDIN AND SHRI MOLLA AMIR ALI WERE FILED BY TH E ASSESSEE AS ADDITIONAL EVIDENCE, WHEREIN THE SOURCE OF FUNDS FO R GIVING LOANS TO THE ASSESSEE WAS SOUGHT TO BE EXPLAINED BY THEM. THIS A DDITIONAL EVIDENCE WAS FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESS ING OFFICER AND AFTER TAKING INTO CONSIDERATION THE COMMENTS OFFERED BY T HE ASSESSEE THEREON IN THE REMAND REPORT AS WELL AS THE COUNTER COMMENT S OFFERED BY THE ASSESSEE ON THE REMAND REPORT SUBMITTED BY THE ASSE SSING OFFICER, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION OF RS.3,78,000/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 68 AFTER DISCUSSING EACH AND EVERY ASPECT ELABORATELY IN HIS IMPUGNED ORDER BEFORE ARRIVING A T A CONCLUSION THAT THE CREDITWORTHINESS OR CAPACITY OF THE CONCERNED TWO C REDITORS TO ADVANCE THE LOAN AMOUNTS IN QUESTION TO THE ASSESSEE WAS NO T SATISFACTORILY ESTABLISHED. AGGRIEVED BY THE ORDER OF THE LD. CIT( APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS MAINLY REITERATED BEFORE ME THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW IN SUPPORT OF THE ASSESSEES CASE THAT THE RE LEVANT CASH CREDITS IN QUESTION REPRESENTING LOANS TAKEN FROM THE TWO CRED ITORS ARE DULY EXPLAINED IN TERMS OF SECTION 68. HE HAS ALSO INVIT ED OUR ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT OF BOTH THE CREDITOR S PLACED AT PAGE NO. 18 & 31 OF THE PAPER BOOK TO SHOW THAT THEY HAD SUF FICIENT FUNDS GENERATED FROM THEIR AGRICULTURAL ACTIVITIES TO ADV ANCE THE LOAN AMOUNTS IN QUESTION TO THE ASSESSEE. IT IS, HOWEVER, OBSERV ED THAT THE ROUND FIGURES OF SALE OF AGRICULTURAL PRODUCE AND CORRESP ONDING AGRICULTURAL I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 6 EXPENSES REFLECTED THEREIN ARE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE WHATSOEVER IN THE FORM OF BILLS, VOUCHERS, ETC. IT IS ALSO OBSERVED THAT NONE OF THESE TWO CREDITORS HAS MAINTAINED ANY BANK ACCOUNT. IN THESE FACTS AND CIRCUMSTANCES, I AM OF THE VIEW THA T MERE OWNERSHIP OF AGRICULTURAL LAND BY THE CONCERNED TWO CREDITORS IS NOT SUFFICIENT TO ESTABLISH THEIR CREDITWORTHINESS OR FINANCIAL CAPAC ITY TO ADVANCE THE LOAN AMOUNTS IN QUESTION TO THE ASSESSEE ESPECIALLY WHEN THERE IS NOT EVEN AN IOTA OF EVIDENCE TO SHOW THE EXTENT OF AGRICULTURAL INCOME CLAIMED TO BE GENERATED BY THEM. EVEN THE OTHER SOURCE OF FUNDS E XPLAINED BY THEM IN THE AFFIDAVITS WAS FOUND TO BE NOT SATISFACTORY BY THE LD. CIT(APPEALS) FOR THE ELABORATE REASONS GIVEN BY HIM IN HIS IMPUGNED ORDER AND KEEPING IN VIEW THE SAME AS WELL AS THE SPECIFIC ADVERSE FINDI NGS/OBSERVATIONS RECORDED BY THE ASSESSING OFFICER, I AM OF THE VIEW THAT THE CREDITWORTHINESS OR THE FINANCIAL CAPACITY OF THE C ONCERNED TWO CREDITORS TO ADVANCE THE LOAN AMOUNTS IN QUESTION HAS NOT BEE N SATISFACTORILY ESTABLISHED. IN THAT VIEW OF THE MATTER, I UPHOLD T HE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE ADDITION OF RS. 3,78,000/- MADE BY THE ASSESSING OFFICER BY TREATING THE LOAN AMOUNTS IN Q UESTION AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 AND DISMISS THIS APPE AL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 02, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 2 ND DAY OF MARCH, 2016 COPIES TO : (1) SHRI BINAY CHANDRA SADHUKHAN, TONA, MACHIBANGHA, BARUIPUR, 24-PARGANAS (SOUTH)-700 135 (2) INCOME TAX OFFICER, WARD-53(2), KOLKATA, AAYAKAR BHAWAN, DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 I.T.A. NO. 1508/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 6 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII, KO LKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.