ITO,Ward-8(1),Nagpur, Nagpur V. Shri.Vijayikumar J.Dundani, Nagpur

ITA 161/NAG/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9596 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H WANARE
• Assessee Lawyers: M MANI
• Keywords: Source of fund; Corroborative evidences; Onus to prove
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 61/NAG/2010 / ASSESSMENT YEAR 2005-06 SHRI VIJAYKUMAR JAMNADAS DUNDANI, PLOT NO. 299, OPP: VMV COLLEGE, WARDHAMAN NAGAR, NAGPUR-8. PAN: AALPD 7492 E VS. DCIT CIRCLE 8 NAGPUR. / ITO WARD 8(1), NAGPUR. . / ITA NO. 161/NAG/2010 / ASSESSMENT YEAR 2005-06 INCOME TAX OFFICER, WARD 8 (1), NAGPUR. VS. SHRI VIJAYKUMAR JAMNADAS DUNDANI, PLOT NO. 299, OPP: VMV COLLEGE, WARDHAMAN NAGAR, NAGPUR-8. PAN: AALPD 7492 E ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SHRI H. WANARE ASSESSEE BY : SHRI M. MANI ! '#$ / DATE OF HEARING : 19-12-2012 %& ! '#$ / DATE OF PRONOUNCEMENT : 19-12-2012 '( / O R D E R PER RAJENDRA, AM THESE CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE ASSESSING OFFICER (AO) AGAINST THE ORDER DT. 20-05-2010 OF THE CIT(A) -II, NAGPUR RAISING THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 61/NAG/2010 ITA NO. 161/NAG/2010 SHRI VIJAYKUMAR JAMNADAS DUNDANI 2 IN THE APPEAL FILED BY THE ASSESSEE (ITA NO. 61/NAG/2010) FOLLOWING ARE THE GROUNDS: 1.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) II, NAGPUR ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER, WHICH IS IL LEGAL, INVALID AND BAD IN LAW. 2.THE CIT (A) II NAGPUR ERRED IN CONFIRMING PARTIAL ADDITION U/S 68 OF INCOME TAX ACT. 3.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS. 1,00, 000.00 WHICH STANDS IN THE NAME OF CREDI TOR MRS. MEEN VIJAYKUMAR DUNDANI, WHO IS ASSESSED TO INCOME TAX. 4.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,00, 000. 00 WHICH STANDS IN THE NAME OF CREDIT OR MRS. MEENA VIJAYKUMAR DUNDANI, WHO IS ASSESSED TO INCOME TAX. 5.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,40,000. 00 WHICH STANDS IN THE NAME OF CREDITO R MRS. NIRMALA ADWANI. 6.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,50,000. 00 WHICH STANDS IN THE NAME OF CREDITO R MRS. NIRMALA DUNDANI. 7.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.50,000. 00 WHICH STANDS IN THE NAME OF CREDITOR LATE KISHOR TECKCHAND ADWANI, WHO WAS ASSESSED TO INCOME TAX. 8.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,60, 000.00 WHICH STANDS IN THE NAME OF CREDITO R MRS. ISHWAREEDEVI JAMNADAS DUNDANI, WHO IS ASSESSED TO INCOME TAX. 9.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,00, 000. 00 WHICH STANDS IN THE NAME OF CREDIT OR MRS. MEENA VIJAYKUMAR DUNDANI, WHO IS ASSESSED TO INCOME TAX. 10.THE HONBLE COMMISSIONER OF INCOME TAX(APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,00,000. 00 WHICH STANDS IN THE NAME OF CREDITO R MRS. BARKHA ADWANI, WHO IS ASSESSED TO INCOME TAX. 11.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) ,II, ERRED IN CONFIRMING AN ADDITION OF RS. 2,00,000.00 WHICH STANDS IN THE NAME OF CREDIT OR MR. JAMNADAS DUNDANI, WHO IS ASSESSED TO INCOME TAX. 12.THE HONBLE COMMISSIONER OF INCOME TAX(APPEALS), II, ERRED IN CONFIRMING AN ADDITION OF RS.1,60,000. 00 WHICH STANDS IN THE NAME OF CREDITO R MRS. MANJU DUNDANI. 13.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) ,II, ERRED IN CONFIRMING AN ADDITION OF RS.5,00,000.00 WHICH STANDS IN THE NAME OF CREDITO R MR. TECKCHAND FATEHCHAND ADWANI. 14.THE HONBLE CIT (A) II ERRED IN DIRECTING THE AS SESSING OFFICER TO EXAMINE THE INITIATION OF ACTION FOR ACCEPT OF THE AMOUNT IN CASH. 15.ANY OTHER GROUND WHICH MAY COME UP DURING THE CO URSE OF HEARING OF APPEAL. ITA NO. 61/NAG/2010 ITA NO. 161/NAG/2010 SHRI VIJAYKUMAR JAMNADAS DUNDANI 3 IN THE APPEAL FILED BY THE AO (ITA NO. 161/NAG/2010) ONLY EFFECTIVE GROUND READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN REDUCING THE ADDITION MADE U/S. 68 OF THE INCOME TA X ACT, 1961. 2. ASSESSEE, A CIVIL CONTRACTOR, FILED HIS RETURN OF I NCOME ON 30-10-2005 DECLARING TOTAL INCOME OF RS. 2.22 LAKHS. ASSESSMENT WAS FIN ALISED BY THE AO ON 31-12-2007 DETERMINING TOTAL INCOME AT RS. 36.64 LAKHS. 3. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT AS SESSEE HAD TAKEN UN-SECURED LOANS FROM THE FOLLOWING PERSONS IN THE YEAR UNDER CONSIDERATION: I. MEENA DUNDANI - RS. 2,00,000/- II. NIRMALA ADWANI - RS. 2,60,000/- III. NIRMALA DUNDANI - RS. 2,50,000/- IV. KISHORE ADWANI - RS. 1,00,000/- V. ISHWARIDEVI DUNDANI - RS. 3,10,000/- VI. BARKHA ADVANI - RS. 1,50,000/- VII. JAMNADAS DUNDANI - RS. 3,20,000/- VIII. MANJU DUNDANI - RS. 2,10,000/- IX. TEKCHAND ADWANI - RS. 8,60,000/- X. CHANDA ADWANI - RS. 10,000/- AO RECORDED THE STATEMENTS OF NIRMALA ADWANI AND TE KCHAND ADWANI (SR. NOS. 2 AND 9) ON 03-12-2007 TO VERIFY THE IDENTITY OF THE CREDITORS AND CREDITWORTHINESS OF THE LENDERS AS WELL AS GENUINENESS OF TRANSACTION. HE ALSO ISSUED LETTERS U/S. 133(6) OF THE INCOME TAX ACT, 1961 (ACT) ON 04-12-2007 TO MANJU D UNDANI (SR.NO.8); MEENA DUNDANI (SR.NO.1); NIRMALA DUNDANI (SR.NO.3); ISHWA RIDEVI DUNDANI (SR.NO.5); JAMNADAS DUNDANI (SR.NO.7) TO VERIFY THE IDENTITY G ENUINENESS AND CREDITWORTHINESS OF THE CREDITORS/TRANSACTION. ASSESSEE WAS GIVEN O PPORTUNITY TO CROSS-VERIFY THE ABOVE MENTIONED PERSONS WITH REGARD TO THE PIECES OF INFO RMATION SUBMITTED BY THEM. BUT ASSESSEE DID NOT CROSS-VERIFY/CROSS-EXAMINE THEM. STATEMENT OF ASSESSEE WAS ALSO RECORDED ON 24-12-2007. AFTER CONSIDERING THE MATE RIAL AVAILABLE ON THE FACTS, AO MADE FOLLOWING ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE ACT AS HE WAS OF THE OPINION THAT ASSESSEE HAS NOT DISCHARGED THE ONUS OF PROVING CREDITWORTHINESS OF THE CREDITORS. LOAN FROM MEENA DUNDANI U/S. 68 - RS. 2,00,000/- LOAN FROM NIRMALA ADWANI U/S. 68 - RS. 2,60,000/- LOAN FROM NIRMALA DUNDANI U/S. 68 - RS. 2,50,000/ - LOAN FROM KISHORE ADWANI U/S 68 - RS. 1,00,000/- LOAN FROM ISHWARIDEVI DUNDANI U/S. 68 - RS. 3,10,0 00/- LOAN FROM BARKHA ADVANI U/S. 68 - RS. 1,50,000/- LOAN FROM JAMNADAS DUNDANI U/S. 68 - RS. 3,20,000 /- LOAN FROM MANJU DUNDANI U/S. 68 - RS. 2,10,000/- LOAN FROM TEKCHAND ADWANI U/S. 68 - RS. 8,60,000 /- LOAN FROM CHANDA ADWANI U/S. 68 - RS. 10,000/- ----------------- TOTAL RS. 26,70,000/- ----------------- ITA NO. 61/NAG/2010 ITA NO. 161/NAG/2010 SHRI VIJAYKUMAR JAMNADAS DUNDANI 4 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, FAA DE ALT THE ISSUE OF UN-SECURED LOANS CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE I N DETAILS. CONCLUSIONS DRAWN BY THE FAA WITH REGARD TO THE CREDITORS OF THE ASSESSE E ARE AS UNDER: I. MEENA DUNDANI, UNSECURED LOAN OF RS. 2 LAKHS HE HELD THAT SMT. MEENA DUNDANI HAD ANNUAL INCOME O F RS. 1.44 LAKHS ONLY, THAT THE ENTIRE LOAN AMOUNT OF RS. 2 LAKHS WAS GIVEN IN CASH , THAT THE CREDITOR COULD NOT PRODUCE ANY EVIDENCE WITH REGARD TO THE LOAN ADVANC ED TO THE APPELLANT, THAT LOAN TRANSACTION HAD NOT BEEN ROUTED THROUGH ANY BANK A/ C, NO BANK A/C HAD BEEN BROUGHT ON RECORD TO PROVE SAVINGS OF THE CREDITOR WHICH WE RE ACCUMULATED FOR A PERIOD OF TIME SO AS TO PROVIDE AN AUTOMATIC SOURCE FOR LENDI NG AMOUNT OF RS. 2 LAKHS, THAT SMT. MEENA DUNDANI WAS THE WIFE OF THE APPELLANT, T HAT CONSIDERING THE CLOSE RELATIONSHIP OF THE APPELLANT WITH THE CREDIT OR IT WAS EXPECTED THAT CERTAIN CORROBORATIVE EVIDENCES WERE FURNISHED IN SUPPORT O F THE VERSION THAT LOAN WAS ADVANCED TO THE APPELLANT, THE BURDEN OF PROOF TO B E DISCHARGED BY THE APPELLANT IN A CLOSELY RELATED AND INTERESTED PARTIES, WAS OF HIGH ER DEGREE, THAT THERE WAS A DISTINCTION BETWEEN INCOME AND SOURCE OF ADVANCEMEN T MONEY. FAA HAD DIRECTED THE AUTHORISED REPRESENTATIVE (AR) OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS TO FURNISH EVIDENCE TO ESTABLISH THE NEXUS BETWEEN SOURCE AND MONEY ADVANCE. FAA HAS GIVEN A CATEGORICAL FINDING THAT AR HAD NOT BEE N ABLE TO FURNISH ANY SUCH EVIDENCES. AFTER CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASES, HE RESTRICTED THE ADDITION U/S. 68 OF THE ACT TO RS. 1 LAKH. II. NIRMALA ADWANI LOAN AMOUNT RS. 2,60,000/- & NIR MALA DUNDANI LOAN AMOUNT RS. 2,50,000/- AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE W ITH REGARD TO THESE TWO LOAN CREDITORS, FAA HELD THAT THE ENTIRE LOAN AMOUNTS WE RE GIVEN IN CASH, THAT THE CREDITORS COULD NOT PRODUCE ANY EVIDENCE ABOUT THE SOURCES OF SUCH LOANS, THAT NO EVIDENCE WAS PRODUCED TO REFLECT ANY SAVINGS OF THE CREDITORS WH ICH WERE ACCUMULATED OVER A PERIOD OF TIME, THAT THE LENDERS WERE CLOSE RELATIVES OF T HE APPELLANT. HE DIRECTED THE AO TO RESTRICT ADDITION U/S. 68 OF THE ACT IN RESPECT OF NIMALA ADWANI RS. 1.4 LAKHS AND IN CASE OF NIRMALA DUNDANI TO RS. 1.5 LAKHS. 5. WITH REGARD TO THE LOANS ADVANCED BY SHRI KISHORE A DWANI RS. 1 LAKHS, ISHWARIDEVI DUNDANI RS. 3.1 LAKHS, BARKHA ADVANI RS . 1.50 LAKHS, JAMNADA DUNDANI RS. 3.20 LAKHS, MANJU DUNDANI RS. 2.10 LAKH S, TEKCHAND ADWANI RS. 8.60 LAKHS AND CHANDA ADWANI RS. 10,000/-. HE HELD THAT APPELLANT HAD NOT PRODUCED EVIDENCE WITH REGARD TO CREDITWORTHINESS OF THE CRE DITORS AND GENUINENESS OF THE TRANSACTION. CONCLUSIONS DRAWN IN THE CASES OF MEE NA DUNDANI, NIRMALA ADWANI AND NIRMALA DUNDANI WERE REPEATED IN OTHER CASES. FINA LLY, HE HELD THAT ASSESSEE HAS NOT DISCHARGED THE BURDEN OF PROOF WITH REGARD TO THE A BOVE MENTIONED LOANS RELYING UPON THE RATION OF THE DECISION OF SUMATI DAYAL VS. CIT (SC) ( 214 ITR 801) DELIVERED BY THE HONBLE SUPREME COURT, HE UPHELD THE ORDER OF T HE AO IN PART. ITA NO. 61/NAG/2010 ITA NO. 161/NAG/2010 SHRI VIJAYKUMAR JAMNADAS DUNDANI 5 HE ALLOWED PART RELIEF TO THE ASSESSEE AND RESTRIC TED THE ADDITION AS UNDER: KISHORE ADWANI RS. 50,000/- ONLY; ISHWARIDEVI DUNDANI 1.5 LAKHS; BARKHA ADVANI RS. 1 LAKH, JAMNADAS DUNDANI RS. 2 LAKHS, MANJU DUNDANI 1.6 LAKHS; TEKCHAND ADWANI RS. 5 LAKHS. 6. BEFORE US, AR SUBMITTED THAT SUBMISSIONS WITH REGAR D TO CREDITORS WERE FILED BEFORE THE AO, THAT SOME OF THE CREDITORS WERE ASSESSED TO TAX. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT ASSESSEE HAD FAILED TO PROVE TH E GENUINENESS OF THE TRANSACTIONS BEFORE THE AO AS WELL AS THE FAA, THAT CASH WAS INT RODUCED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE NAME OF HIS CLOSE RELATIVES, THAT CREDITORS HAVE NO APPARENT SOURCE OF INCOME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PUT BEFORE US. WE FIND THAT FAA, IN HIS 14 PAGES ORDER, HAS DISCUSSED THE ISSUE AT LENGTH AND HAS ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE IN PROPER PERSPECTIVE. AFTER CONSIDERING THE AVAILABLE MATERIAL, HE HAS PARTLY A LLOWED THE APPEAL OF THE ASSESSEE. 8. HE HAS GIVEN CATEGORICAL FINDINGS ABOUT NON-GENUINE NESS OF THE TRANSACTION. ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF ANY OF THE LOANS. AS PER THE ESTABLISHED PRINCIPLES OF LAW RELATED WITH CASH CRE DITS (SECTION 68 OF THE ACT), THE PRIMARY ONUS TO PROVE THE GENUINENESS OF THE TRANSA CTION AND CREDITWORTHINESS OF THE LENDER LIES ON THE ASSESSEE. THE BURDEN OF PROOF SH IFTS ONLY AFTER THE ASSESSEE PRODUCES SOME EVIDENCES ABOUT THE TRANSACTIONS. WE FIND THA T IN THE CASE UNDER CONSIDERATION, ASSESSEE HAS NOT DISCHARGED HIS DUTIES OF PROVING T HE GENUINENESS OF THE TRANSACTIONS. FAA HAS HIGHLIGHTED THE POINT THAT THE CREDITORS WE RE HIS NEAR RELATIVES. HE HAS RIGHTLY POINTED OUT THAT IN SUCH CASES, TO PROVE TH E CREDITWORTHINESS/GENUINENESS OF THE CREDITORS/TRANSACTION INCREASES MANIFOLDS. WE FIND THAT CREDITORS HAD NO APPARENT SOURCE OF INCOME EVEN THEN THEY HAVE ADVANCED LOANS TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 9. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA NEEDS TO BE UPHELD. GROUND NOS.1 TO 14 FILED BY THE ASSESSEE ARE DECIDE D AGAINST HIM. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS DI SMISSED. ITA NO. 161/NAG/2010 10. ARGUING THE APPEAL FILED BY THE AO, DR RELIED UPON THE ORDER OF THE AO WHEREAS AR SUPPORTED THE ORDER OF THE FAA. 11. WE HAVE PERUSED THE ORDER OF THE AO AS WELL AS THE FAA. WE FIND THAT A FEW OF THE CREDITORS WERE ASSESSED TO TAX AND THEY HAD SOM E SOURCES OF INCOME. FAA HAS ITA NO. 61/NAG/2010 ITA NO. 161/NAG/2010 SHRI VIJAYKUMAR JAMNADAS DUNDANI 6 AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, TAKEN A VERY PRAGMATIC VIEW. IN OUR OPINION, THERE IS NO NEED TO INTERFERE WITH THE ORDER PASSED BY THE FAA. SO WE REJECT THE APPEAL FILED BY THE AO. AS A RESULT, APPEALS FILED BY BOTH THE ASSESSEE AN D AO STAND DISMISSED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 1 9 TH DAY OF DECEMBER, 2012. SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) ') / JUDICIAL MEMBER $ ') / ACCOUNTANT MEMBER *+ MUMBAI, ,' DATE: 19 TH DECEMBER, 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE -' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT