Chaturbhuj Soma Sonawane, Jalgaon V. ITO, Jalgaon

ITA 1627/PUN/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7654 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 29-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Unexplained investment; Opportunity of being heard; Retraction; Reason to believe
• Section: 147; 69

Judgement Text

IN THE INCOME TAX APPLLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1627/PN/08 (A.Y 2000-01) CHATURBHUJ SOMA SONAWANE, SHIVSHAKTI NIVAS, CHAUGHULE PLOT SHANI PETH OPP. SHANI MANDIR JALGAON 425001 PAN NO. BMMPS4513H .... APPELLANT VS. ITO, WARD-1(2), JALGAON . RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-II, NASHIK DATED 18-09-2008 FOR THE A.Y 2000-01. 2. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL FILED AN LETTER DATED 11-11- 2010 ENCLOSING REVISED APPEAL MEMO AS THE ORIGINAL ON E WAS NOT FREE FROM MISTAKES. THE ASSESSEE ALSO ENCLOSED COPY OF THE REVISED GROUND S OF APPEAL WHICH READS AS UNDER:- 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ISSU ANCE OF NOTICE U/S. 148 OF THE I.T. ACT 1961, THE IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW, PATENTLY I LLEGAL AND VOID AB INITIO AND WITHOUT JURISDICTION AND THEREFORE THE S AME MAY PLEASE BE VACATED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 6,73,663.00 OUT OF TOTAL ADDITION OF RS. 8,74,663.00 MADE BY THE LEARN ED ASSESSING OFFICER ON THE GROUND OF ALLEGED UNPROVED INVESTMENT. THE S AID ADDITION BEING ARBITRARY, PRESERVE AND BASED ON SURMISES AND CONJE CTURE AND BEING DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED AND IT MAY PLEASE ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 2 OF 10 HELD THAT THE LOAN AMOUNTING TO RS. 6,73,663.00 ARE GENUINE LOANS AND THE APPELLANT ASSESSEE HAS SUCCESSFULLY DISCHARGED THE ONUS THAT LAY ON HIM TO PROVE THE GENUINENESS OF THE SAID LOANS. 3. RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SALE OF SAND. ORIGINALLY, ASSESSEE N EVER FILED THE RETURN OF INCOME ON HIS OWN TILL THE NOTICE U/S. 148 WAS ISSUED BY THE A.O ON 28-03-2007. ASSESSEE OBTAINED THE REASONS FOR RE-ASSESSMENT OF THE ASSESSM ENT ON 10-07-2007 AS A PART OF HIS RIGHT TO THE SAME AND ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL LOSS OF RS. 75,763/-. AT THE END OF THE ASSESSMENT PROCEEDINGS ASSESSEES INCOME IS COMPUTED AT RS. 14,09,263/- AND THE AGRICULTURAL INCO ME OF RS. 15,000/- WAS ACCEPTED AS A RETURN BY THE ASSESSEE. THE ADDITIONS I N THE ASSESSMENT INCLUDES RS. 3,81,600/- ON ACCOUNT OF UNEXPLAINED DEPOSITS OFFERE D FOR TAXATION BY THE ASSESSEE OF UNEXPLAINED INVESTMENT OF RS. 60,000/- OUT OF CA SH BALANCE OF RS. 3.1 LAKHS . UNEXPLAINED INVESTMENT IN DEPOSITS AMOUNTING TO RS. 8,74,663/- . THERE IS A SMALL ADDITION ON ACCOUNT OF LOW WITHDRAWALS TOWARDS HOUSE HOLD EXPENSES. AS PER THE RE-ASSESSMENT ORDER THE SOURCES FOR THE DEPOSITS OF RS. 15,60,763/- MAINTAINED WITH THE GOVERNMENT TREASURY IN CONNECTION WITH SAND C ONTRACT WAS THE BONE OF CONTENTION. AS PER THE A.O, ASSESSEE FAILED TO PROVE THE SOURCES WITH ANY EVIDENCES. DURING THE PROCEEDINGS BEFORE THE CIT(A), T HE ASSESSEE GOT A PART RELIEF. THE EXTENT OF ADDITIONS CONFIRMED BY THE CIT(A) WORKS OUT TO RS. 6,53,863/- INVOLVING 36 CREDITORS AND THESE ARE DISPUTED BEFORE US VIDE THE WRITTEN SUBMISSION FILED BEFORE US. IN THE LIGHT OF THE ABOVE DEVELOPM ENTS DURING THE ASSESSMENT AND THE FIRST APPELLATE PROCEEDINGS, THE GROUND WISE ADJU DICATION IS UNDERTAKEN IN HE PRECEDING PARAGRAPHS. 4. GROUND NO. 1 RELATES TO THE VALIDITY OF THE NOTICE ISSUED U/S. 148 AND THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS. LD. COUNSE L FOR THE ASSESSEE STATED THAT THE REASONS GIVEN BY THE A.O FOR ISSUE OF THE NOTICE U/S. 148 ARE NOT A PROPER AND THEY ARE NOT SUFFICIENT FOR GENERATING A REASON TO BELIEVE AS MENTIONED IN THE SECTION 147 OF THE INCOME TAX ACT, RELATING TO INCOME ESCAPING ASSESSMENT. IN THIS REGARD HE TOOK US THROUGH THE COPY OF THE REASONS GIVEN BY THE A.O DATED 10- 07-2007 AND STATED THAT THE A.O MISTAKENLY DRAFTED T HE SCANNED SENTENCES STANDING WITH THE SOURCES OF THE AMOUNT. FURTHER, HE MENTIONE D THAT THE VERIFICATION OF THE SOURCE CAN NEVER BE BROUGHT UNDER THE AMBIT OF SEC. 147 . IN THE PROCESS HE MADE SPECIAL EMPHASIS ON SOURCES NEED TO BE VERIFIED. FU RTHER, LD. COUNSEL REFERRED TO THE JURISDICTIONAL HIGH COURT JUDGEMENT IN THE CASE O F SMT. MANIBEN VALJI SHAH (206) 283 ITR 453 (RAJ) FOR THE PROPOSITION THAT, CONDUCTIN G FISHING ENQUIRIES IS NOT IN THE SCOPE OF THE REASON TO BELIEVE THEREFORE IT IS OUTSIDE THE SCOPE OF PROVISIONS OF ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 3 OF 10 SEC. 147 OF THE ACT. FURTHER, LD. COUNSEL ALSO RELIE D ON SUPREME COURT JUDGEMENT IN THE CASE OF JOTI PARSHAD VS. STATE OF HARYANA 1992 -(SC2)-GJX-0657-SC FOR DETAILED MEANING OF THE EXPRESSION REASON TO BELIEVE AS DEFINED BY THE SECTION 26 IPC AND SAID THAT SUSPICION OR DOUBT OR EVEN BE LIEVING CANNOT BE EQUATED WITH THE EXPRESSION REASON TO BELIEVE. 5. ON THE OTHER HAND LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AND MENTIONED THAT AO DID NOT RAISED THIS IS SUE BEFORE THE LOWER AUTHORITIES. REFERRING FURTHER ACTION TO THE SAME LETTER OF THE A.O DATED 10-07-2007 I.E. THE REASONS RECORDED U/S. 148 OF THE ACT, AND MEN TIONED THAT AO IS IN A POSITION OF THE INFORMATION ABOUT THE PAYMENT OF RS. 15,60,76 3/- TO THE TREASURY IN THE YEAR 1999-00 TOWARDS SAND CONTRACT. THIS PAYMENT WAS REQUIRE D IN CONNECTION WITH SAND CONTRACT RECEIVED FROM THE GOVERNMENT. THE SAID PAYMENT WAS MADE ON 30-11-99, 01-12-99 AND 02-12-99 OF THE YEAR 1999 IN THREE INSTA LLMENTS, THIS IS A FACT. RELEVANT SENTENCE WAS NOT HAPPILY WORDED IN ENGLISH. AS PER LD. DR ASSESSEES FAILURE TO FILE RETURN OF INCOME FOR THE A.Y 2000-01 EV EN TILL THE DATE OF ISSUE OF THE CURRENT LETTER DT. 10-07-2007 ASSESSEE IS JUSTIFIED I N HAVING REASON TO BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. THE DR ALSO RELIED ON VARIOUS CITATIONS TO SUBSTANTIATE HIS REASONING. 6. WE HAVE HEAD THE PARTIES ON THIS ISSUE OF VALIDITY OF THE NOTICE U/S. 147 OF THE ACT AND PERUSED THE AVAILABLE MATERIAL BEFORE US. WE HAV E ALSO GONE THROUGH THE CITATIONS RELIED UPON BY THE PARTIES. TO S TART WITH IT IS THE REQUIREMENT THAT THE REASONS GIVEN BY THE A.O SHOULD BE REPRODUCE D. THE INFORMATION GATHERED FROM THE REVENUE DEPARTME NT REVEALS THAT DURING THE F.Y. 99-2000, THE ASSESSEE HAS DEPOSITED AN AMO UNT OF RS. 15,60,763/- WITH TREASURY TOWARDS SAND CONTRACT RECEIVED FROM G OVT. THE SOURCES OF THIS AMOUNT ARE STATED TO BE WAY OF DEPOSIT OF RS. 3,75,250/- ON 30/11/99, RS. 11,25,750/- ON 1/12/99 AND RS. 59,763/- ON 2/12/99. THESE SOURCES NEED TO BE VERIFIED . THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. A.Y. 2000-01. HENCE, I HAVE REASON TO BELIEVE THAT THE INCOME OF RS. 15,60,763/- HAS ESCAPED ASSESSMEN T WITH THE MEANING OF PROVISIONS OF SECTION 147 OF THE I.T. ACT. 7. FROM THE ABOVE, THE DEPOSITING OF AN AMOUNT OF RS . 15,60,763/- IN THREE INSTALLMENTS ON THE SPECIFIC DATES I.E., 30-11-99, 01-12-99 AND 02-12-99 WITH TREASURY REVENUE DEPARTMENT IS UNDISPUTED. THE A.O HAS UNDERLINED THE ASSESSEES ACT OF DOING SAND CONTRACT BUSINESS DURING THE PERIOD AND FURTHER UNDERLINED ALL NON- FILING OF RELEVANT INCOME FOR THE YEAR 2000-01. WE HAV E TO ADJUDICATE WITH THE HELD OF UNDISPUTED FACTS IF THE SAID INFORMATION IS SUFFI CIENT ENOUGH TO CONSTITUTE THE ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 4 OF 10 REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESS MENT WITHIN THE MEANING OF PROVISIONS OF SEC. 147 OF THE I.T. ACT. FURTHER, WE H AVE ALSO PERUSED THE CASE LAWS RELIED UPON BY THE LD. COUNSEL. FOR THE ELUCIDATION O N THE EXPRESSION REASON TO BELIEVE IN SEC. 26 OF THE IPC, THE SAME IS REPRODUCE D AS UNDER:- SECTION 26 IPC EXPLAINS THE MEANING OF THE WORDS REASON TO BELIEVE THUS: 26. REASON TO BELIEVE A PERSON IS SAID TO HAVE REASON TO BELIEVE A THING, IF HE HAS SUFFICIENT CAUSE TO BELIEVE THAT THING BU T NOT OTHERWISE. IN SUBSTANCE WHAT IT MEANS IS THAT A PERSON MUST HA VE REASON TO BELIEVE IF THE CIRCUMSTANCES ARE SUCH THAT A REASONABLE MAN WO ULD, BY PROBABLE REASONING, CONCLUDE OR INFER REGARDING THE NATURE O F THE THING CONCERNED. SUCH CIRCUMSTANCES NEED NOT NECESSARILY BE CAPABLE OF ABSOLUTE CONVICTION OR INFERENCE, BUT IT IS SUFFICIENT IF THE CIRCUMSTANCE S ARE SUCH CREATING A CAUSE TO BELIEVE BY CHAIN OF PROBABLE REASONING LEADING TO T HE CONCLUSION OR INFERENCE ABOUT THE NATURE OF THE THING. THESE TWO REQUIREMEN TS I.E., KNOWLEDGE AND REASON TO BELIEVE HAVE TO BE DEDUCTION FROM VARIO US CIRCUMSTANCES IN THE CASE. 8. FURTHER WE HAVE ALSO PERUSED JURISDICTIONAL HIGH COU RT JUDGEMENT IN THE CASE OF SMT. MANIBEN VALJI SHAH (SUPRA) AND FIND THE SAID CASE IS A ONE WHERE ASSESSEE FILED THE RETURN OF INCOME IN TIME AND THE NOTICE U/S . 148 WAS ISSUED FOR THE REASONS WHICH COULD HAVE BEEN OTHERWISE ATTENDED TOO BY THE A.O U/S. 143(2) OF THE ACT. IN OUR OPINION, THESE JUDGMENTS DOES NOT HELD THE CASE OF THE ASSESSEE WHERE ASSESSEE WHILE DOING THE BUSINESS OF SAND CONTRACT D ID NOT FILE THE RETURN OF INCOME TILL NOTICE U/S. 148 WAS ISSUED ON 10-07-2007 I.E., NEARLY7 YEARS GAP. FROM THE SUPREME COURT DECISION IN THE CASE OF JOTI PARSHAD (S UPRA) THAT THE SUSPICION OR DOUBT ARE MERE SEEING CANNOT BE EQUATED TO BELIEVING. FROM THE EXPLANATION GIVEN IN SEC. 26 OF THE IPC SUFFICIENT CAUSE TO BELIEVE IS AN ESSENTIAL INGREDIENT OF REASON TO BELIEVE. THE CIRCUMSTANCES ALSO ASSUMES I MPORTANCE FOR ARRIVING AT THE CONCLUSION THAT A PERSON FOR REASON TO BELIEVE IS IN T HE WORDS OF SUPREME COURT. CIT(A)-I STAND NEED NOT NECESSARILY BE CAPABLE OF A BSOLUTE CONVICTION OR INFERENCE, BUT IT IS SUFFICIENT IF THE STAND ARE SUCH CREATING CAUSE TO BELIEVE BY GENERATING OF PROBABLE REASONING LEADING TO THE CONCLUSION ABOUT TH E NATURE OF THE THING. THE CIRCUMSTANCES MUST GAVE RISE TO KNOWLEDGE ABOUT THE T HING AND REASON TO BELIEVE ABOUT THE THING. CONSIDERING THE ABOVE WISDOM FROM TH E SUPREME COURT WE HAVE PERUSED, IF THE A.O HAS KNOWLEDGE ABOUT THE THING I. E, ABOUT THE ASSESSEE IS PARTY TO THE TRANSACTION OF PAYMENT IN CONNECTION WITH BU SINESS TRANSACTION RELATING TO SAND CONTRACTS. FURTHER, WE HAVE TO EXAMINE THE CIRCUMS TANCES ABOUT WHETHER THE ASSESSEE IS ENGAGED IN THE BUSINESS AND HE IS REGUL ARLY ADHERING TO THE LAW THAT MADE IN THE MATTERS OF COMPLYING WITH THE PROVISIONS OF INCOME TAX ACT IN FILING THE RETURN, MAY BE LOSS RETURN FOR THE YEAR UNDER CONSIDERATIO N. WE HAVE ALSO EXAMINED ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 5 OF 10 IF ASSESSEE SHOULD HAVE FILED THE RETURN OF INCOME FO R THE YEAR UNDER CONSIDERATION STATUTORILY. THE FACT IS THAT HE FILED THE RETURN OF INCOME DECLARING THE BUSINESS LOSS WHICH HE SHOULD HAVE FILED UNDER THE PROVISIONS OF IN COME TAX ACT. THERE IS NON- COMPLIANCE TO THE LAW OF THE LAND RELATING TO THE FI LING OF RETURN OF INCOME OR LOSS. CONSIDERING THESE CIRCUMSTANCES IN OUR OPINION CLUBBED WITH THE FACT OF PAYMENT OF RS. 15,60,763/- CONTRIBUTES TO THE SUFFICIENT CAUSE OF BELIEVE OR REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT FOR THE A.Y. 2000-01. THEREFORE, THE NOTICE ISSUED BY THE AO FOR THE REASON MENTIONED ON L ETTER DATED 10-07-2007 IS VALID THEREFORE THE GROUND ONE RAISED BY THE ASSESSEE IS DISMISSED . 9. GROUND NO. 2 RELATES TO THE MERITS OF THE ADDITION AND DECISION O F THE CIT(A) IN CONFIRMING THE SAID ADDITION OF RS. 6,53,863.00/- . ASSESSEES CONTENTION IS THAT THE SAID AMOUNT, INVOLVING MANY CREDITS, IS GENUINE CREDITS AND THE ASSESSEE DISCHARGED THE ONUS AND HOWEVER, THE SAME WAS ERRONEOUSLY CONFIRMED BY THE CIT(A) IN THE IMPUGNED ORDER. BELOW MENTIONED TABLE RE FLECTS THE DETAILS OF CREDITS, QUANTUM INVOLVED AND THE REMARKS. THE DETAILS OF ADDI TIONS ON ACCOUNT OF LOAN CREDITORS AS CONFIRMED BY THE CIT(A) ARE BRIEFLY TABULAT ED AS UNDER:- SR NO. PARTICULARS AMOUNT REMARKS 1. TOTAL 29 CREDITORS AS PER LIST GIVEN VIDE PAGE NO. 9 OF THE ORDER OF CIT[A] 5,27,263.00 REFER LAST PARA ON PAGE 14 OF THE ORDER OF THE CIT[A] CONFIRMING THE ADDITION. OUT OF THESE CREDITORS THE APPELLANT SURRENDERED TWO CREDITORS AMOUNTING TO RS. 38,000.00 DURING APPELLANT PROCEEDING. REFER PAGE 13 OF THE ORDER OF THE CIT[A]. 2. TOTAL 8 CREDITORS WHO DID NOT APPEAR BEFORE I.T.O DURING THE REMAND THOUGH THEY APPEARED DURING ASSESSMENT. REFER PAGE 10 OF THE ORDER OF THE CIT[A]. 1,44,700.00 REFER PAGE 12 OF THE ORDER OF THE CIT[A] CONFIRMING THE ADDITION. 3. ONE CREDITOR NAMELY MR. ATMARAM RAMDAS PAWAR TURNED HOSTILE DURING REMAND PROCEEDINGS REFER PAGE 12 OF THE ORDER OF THE CIT[A] 19,700.00 REFER PAGE 12 OF THE ORDER OF THE CIT[A] CONFIRMING THE ADDITION. 4 ONE CREDITOR NAMELY MR. VASUDEO RAJARAM PAWAR DID NOT PRODUCE CERTAIN INFORMATION ASKED BY THE I.T.O IN REMAND PROCEEDINGS REFER PAGE 19,900.00 REFER PAGE 12 OF THE ORDER OF THE C.I.T(A) CONFIRMING THE ADDITION THE C.I.T(A) ON PAGE 12 OF HIS ORDER HAS MISTAKENLY MENTIONED THE LOAN AMOUNT AS ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 6 OF 10 12 OF THE ORDER OF THE C.I.T(A) 19,700.00 TOTAL 7,11,563.00 LESS: AN AMOUNT OF RS 38,000/- WAS SURRENDERED IN RESPECT OF TWO CREDITORS DURING REMAND PROCEEDINGS REFER PAGE 13 OF THE ORDER OF THE C.I.T(A) LESS: ONE CREDITOR NAMELY MR. ATMARAM RAMDAS PAWAR TURNED HOSTILE DURING REMAND PROCEEDINGS REFER PAGE 12 OF THE ORDER OF THE C.I.T(A) THIS AMOUNT OF RS 19,700/- WAS NOT CONTEST ED BEFORE THE HON. ITAT DURING ARGUMENTS. TOTAL 6,53,863.00 NET AMOUNT CONTESTED BEFORE THE HON. ITAT 10. THUS, THE NET CASH CREDIT OF RS. 6,53,863/- PERT AINED TO 36 CREDITORS ARE DISPUTED BEFORE US. THE ABOVE TABLE REFLECTS THE DETA ILS AS FURNISHED BY LD. COUNSEL DURING THE PROCEEDINGS BEFORE US. A. FURTHER, DURING THE PROCEEDINGS BEFORE US, REGARDING THE CONFIRMING OF THE ADDITION OF RS. 5,27,263/-, LD. COUNSEL FOR THE ASSE SSEE TOOK US THROUGH VARIOUS DETAILS FROM THE RECORDS AVAILABLE BEFORE US AND ATTEM PTED TO DEMONSTRATE THAT THE CIT(A) IS UNFAIR IN CONFIRMING THE SUM OF RS. 5,27,26 3/- WHILE GIVING RELIEF IN RESPECT OF 9 OTHER COMPARABLE CASES OF CREDITORS WHO WERE ALSO H AVING EQUAL LAND HOLDING VIZ-A-VIZ 29 CREDITORS, WHO CONTRIBUTE SUM OF RS. 5,27 ,263/-. THE DECISION OF THE CIT(A) IS ARBITRARY AND REFERRED TO VARIOUS PAGES IN THE P APER BOOK. AS PER LD. COUNSEL, THE HAVING LIABILITIES TO THE CREDITORS IS A USUAL PHENOMENON IN SUCH CASES OF AGRICULTURIST AND IT SHOULD NOT COME ON THE WAY OF CREDITWORTHINESS OF THE CREDITORS. B. FURTHER, COMMENTING ON THE CONFIRMING OF RS. 1,44 ,700/- INVOLVING 8 CREDITORS, LD. COUNSEL ARGUED THAT THESE PARTIES ARE EXI STING AND THE IDENTITY OF SUCH PERSONS WAS PROVED AND THEREFORE, THE CIT(A) SHOULD NOT HAVE CONFIRMED THE CREDITS AMOUNTING TO RS. 1,44,700/-. C. REGARDING THE CREDITS FROM SHRI ATMARAM RAMDAS PAWA R (RS. 19,700/-) AND SHRI VASUDEO RAJARAM PAWAR (RS. 19,900/-). LD. COU NSEL ARGUED STATING THAT OVER THE PERIOD OF TIME, THE PERSONS ON THE OTHER HAND TURNED HOSTILE OR THE REASONS FOR THE SAME IS NOT AVAILABLE. OTHERWISE, IT IS A GEN UINE LOAN WHICH SHOULD NOT HAVE BEEN CONFIRMED BY THE CIT(A). FURTHER, HE ARGUED THAT A LL THESE 36 CREDITORS ARE IDENTIFIABLE AND THEY ARE CREDITWORTHY BY VIRTUE OF LAN DHOLDINGS. THEREFORE, THE CLAIMS OF THE ASSESSEE MUST BE ALLOWED IN FULL. LD. COUNSEL RELIED ON VARIOUS DECISIONS IN THIS REGARD TO SUBSTANTIATE HIS ARGUMENTS . ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 7 OF 10 11. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED UPON THE ORDERS OF THE REVENUE HEAVILY. FURTHER, LD DR ADVANCED CERTAIN ARGUME NTS AND HE IS OF THE VIEW THAT THE IMPUGNED CREDITORS WITH AGRICULTURAL INCOME AS THE SOURCE OF THE IMPUGNED CREDIT, WHERE SUCH ENJOYS THE STATUS OF EXEMPTION FROM TAX, THE ONUS IS HEAVILY ON THE ASSESSEE TO DEMONSTRATE THE GENUINENESS OF THE T RANSACTIONS. SUCH ONUS IS SO STRONG, MERE FURNISHING OF THE NAMES AND ADDRESS OR CONF IRMATIONS DOES NOT AMOUNT TO FULL DISCHARGE OF SUCH ONUS. FURTHER, HE ARGUED STAT ING THAT THIS IS THE INCOME WHICH WAS NEVER TAXED IN ANYBODYS HANDS, BE IT IN T HE HANDS OF THE CREDITOR, THE AGRICULTURALIST, OR THE ASSESSEE. FURTHER, THE DR MENTI ONED THAT THE AMOUNT WAS BROUGHT INTO THE BOOKS IN CASH IE., NOT THROUGH THE B ANKING CHANNELS. THE FACT THAT EACH CREDIT AMOUNT IS BELOW RS 20,000/- WAS ALSO OBS ERVED BY HIM. FURTHER, HE ARGUED STATING THAT ASSESSEE IS UNDER OBLIGATION TO N OT ONLY EVIDENCE THE IDENTITY OF THE CREDITOR BUT ALSO EARNING ABILITY OF THE CREDITOR A S WELL AS THE GENUINENESS OF THE TRANSACTION. FURTHER, HE MENTIONED THAT THE A.OS SATI SFACTION IN THESE MATTERS IS ALSO A ISSUE OF IMPORTANCE. IN THIS CASE, THE ASSESS EE FAILED TO NOT ONLY TO DEMONSTRATE THE CREDITWORTHINESS OF THE 36 CREDITORS BUT ALSO FAILED TO MEET THE SATISFACTION STRANDS OF THE CONCERNED A.O. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELE VANT MATERIAL AVAILABLE BEFORE US. CONFIRMING OF THE ADDITION OF RS. 6,53,863 /- INVOLVING 36 CREDITORS IS THE BONE OF CONTENTION IN THIS APPEAL. THE TRANSACTIONS INVOLVED ARE CASH IN NATURE AND THE PEOPLE INVOLVED ARE AGRICULTURIST . IN THE BACKGROUND OF THESE BASIC FACTS, WE HAVE PERUSED THE IMPUGNED ORDER IN GENERAL AND PARA 5.2 .6 IN PARTICULAR FOR THE FACTS AND THE DECISION OF THE CIT(A) IN SEARCH OF REA SONING FOR CONFIRMING THE ABOVE ADDITION. IN BRIEF, THE REASONS FOR CONFIRMING THE AMOU NT OF RS. 144,700/- INVOLVING 8 CREDITORS IS FOR FAILURE TO PRODUCE THE CREDITORS FOR ESTABLISHING GENUINENESS OF THE CLAIM, DESPITE VARIOUS OPPORTUNITIES GRANTED TO TH E ASSESSEE. IN SO FAR AS THE CREDITS FROM SHRI ATMARAM RAMDAS PAWAR IS CONCERNED, IT IS THE CASE OF RETRACTION OF THE CONFIRMATIONS ORIGINALLY GIVEN BY SHRI PAWAR. S HRI VASUDEO RAJARAM PAWAR, THE OTHER CREDITOR FOR RS. 19,900/- DID NOT TURNED UP B EFORE THE A.O THOUGH THERE IS A CONFIRMATION LETTER FROM HIM. REGARDING THE BALANCE O F 29 CREDITORS FOR CREDITS OF RS. 5,27,263/-, THE CIT(A) DID NOT FIND THESE 29 CRE DITORS CREDITWORTHY AND THEY IN VIEW OF THE OPINION OF THE CIT(A)/AO, THE CREDITORS A RE NOT CAPABLE OF GIVING LOANS WHILE THEY ARE TRAPPED WITH LIABILITIES. IN OUR OPINI ON, IT IS APPROPRIATE TO REPRODUCE THE RELEVANT PARAGRAPH RELEVANT PARA 5.2.6 FROM THE O RDER OF THE CIT(A) AND THE SAME READS AS FOLLOWS. ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 8 OF 10 5.2.6 I HAVE EXAMINED THE DETAILED SUBMISSIONS OF THE APPELLANT AND ALSO THE REMAND REPORTS OF THE A.O IN RESPECT OF THE ADDITIO N U/S 69 OF THE ACT ON ACCOUNT OF LOAN CREDITORS. THE ADDITION MADE BY THE A.O IS EXAMINED IN DETAIL AND DECIDED AS UNDER: II. CREDITORS NOT PRODUCED BY THE APPELLANT : IT MAY BE SEEN FROM THE REMAND REPORT DT 09.07.2008 AND 13.08.2008 EXTRACTED ABOVE THAT THE FOLLOWING CREDITORS WERE NOT PRODUCED BY THE APPELLANT AT THE TIME OF REMAND PROCEEDINGS INSPITE OF THE SUFFICIENT OPPORTUNITY GIVEN: 1) SHRI ANIL VITHAL KALE, JALGAON RS 17,500/- 2) SHRI VITHAL MAHIPAT SONAWANE, NANDRA RS 16,000/ - 3) SHRI RAMESH UTTAMRAO PAWAR, NANDRA RS 18,000/- 4) SHRI NAVAL SUKA PATIL (PAWAR),KAVAGTHA RS 18,50 0/- 5) SHRI DAGDU RAMRISHNA PATIL, AVHANE RS 17,000/- 6) SHRI HARI HART AVCHIT PATIL, KHAPARKHEDA RS 19, 000/- 7) SHRI DIGAMBAR TUKARAM PATIL, JALGAON RS 19,700 /- 8) SHRI UTTAM NAMDEO PATIL, AVAHANE RS 19,000/- ---------------- RS 144,700/- ======= IT IS FOR THE APPELLANT TO PRODUCE THE CREDITORS FOR ESTABLISHING THE GENUINENESS OF THE CLAIM WHEN IT IS DOUBTED BY THE A.O. THE A.O GAVE SUFFICI ENT AND REASONABLE OPPORTUNITY TO THE APPELLANT TO PRODUCE THE SAID CREDITORS BUT THE APP ELLANT FAILED IN THIS REGARD. THE REASONS GIVEN BY THE APPELLANT FOR NOT PRODUCING THE CREDIT ORS IS NOT SATISFACTORY . THEREFORE, THE CREDITS AMOUNTING TO RS 1,44,700/- IN RESPECT OF TH E SAID 8 CREDITORS HAS TO BE CONFIRMED . THEREFORE, THE AO IS DIRECTED ACCORDINGLY. III. AMOUNT OF CREDITS DENIED BY THE CREDITORS AT T HE TIME OF ENQUIRIES DURING THE REMAND PROCEEDINGS : SHRI ATMARAM RAMDAS PAWAR , CHANDSAR HAS CATEGORICALLY DENIED TO HAVE GIVEN ANY LOAN TO THE APPELLANT. SHRI PAWAR FIRST S TATED TO HAVE ADVANCED AN AMOUNT OF RS 19,700/- TO THE APPELLANT. DURING THE COURSE OF THE STATEMENT RECORDED ON 27.12.2007 HE DENIED TO HAVE GIVEN LOAN TO THE APPELLANT. THE APP ELLANT WAS ALSO ALLOWED CROSS- EXAMINATION IN RESPECT OF THE STATEMENT GIVEN BY TH E SAID CREDITOR. THE APPELLANT DID NOT AVAIL THIS OPPORTUNITY GIVEN BY THE A.O. SHRI ATMARAM PAW AR STATED THAT HE HAD INADVERTENTLY MENTIONED THAT HE HAD GIVEN LOAN IN HIS ORIGINAL ST ATEMENT RECORDED. IN VIEW OF THE FINDINGS OF THE A.O, THE CREDIT OF RS 19,700/- IN THE NAME OF THE SAID CREDITOR CANNOT BE ACCEPTE D AS GENUINE AND LIABLE TO BE CONFIRMED. THE OTHER CREDITOR SHRI VASUDEO RAJARAM PAWAR THOUGH ADMITTED IN HIS STATEMENT DATED 07.07.2008 THAT HE HAD GIVEN A LOAN OF RS 19, 900/- TO THE APPELLANT BUT HE COULD NOT FULFILL THE REQUIREMENTS CALLED FOR BY THE A.O TO P ROVE THE SOURCES FOR ADVANCING THE LOAN. HE WAS SUPPOSED TO APPEAR BEFORE THE A.O WITH DETAILS TO PROVE HIS CREDITWORTHINESS BUT NEVER TURNED UP. THEREFORE, THE A.O CONCLUDED THAT THIS C REDIT ALSO CANNOT BE ACCEPTED AS GENUINE. THOUGH THE SAID CREDITOR HAD ADMITTED THAT HE HAD A GRICULTURAL INCOME AND ALSO DERIVING PENSION AS A RETIRED TEACHER BUT UNABLE TO PRODUCE NECESSARY ROOF BEFORE THE A.O IN THIS REGARD. THEREFORE, THIS AMOUNT OF RS 19,900/- ALSO CAN BE HELD AS UNPROVED CREDIT IN THE NAME OF SHRI VASUDEO RAJARAM PAWAR AND HAS TO BE CONFIRMED. THE A.O IS DIRECTED ACCORDINGLY. IV .. V IN RESPECT OF OTHER CREDITS, IT MAY BE SEEN THAT T HE AGRICULTURAL INCOME IN RESPECT OF THE OTHER 29 CREDITORS REPORTED IN THE LETTER DATED 13.08.2008 THAT THEIR INCOME RANGE WAS ONLY BETWEEN RS 50,000/- - RS 60,000/-. MOREOVER, A LL OF THEM HAD OUTSTANDING LIABILITIES WITH THE CO-OPERATIVE BANKS AS CAN BE SEEN FROM THE 7/12 EXTRACTS FILED BEFORE THE A.O. ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 9 OF 10 THOUGH THE APPELLANT TRIED TO ARGUE THAT IT IS COMM ON PRACTICE THAT AGRICULTURISTS AVAIL LOANS FROM THE CO-OPERATIVE SOCIETIES AND ROTATE THE SAME , BUT HE WAS UNABLE TO PROVE THE CREDITWORTHINESS TO THE SATISFACTION OF THE A.O. CO NSIDERING THE INCOME EARNED BY THE AGRICULTURAL ACTIVITY AND OTHER FACTS REPORTED BY T HE A.O IN HIS REPORT, IT IS DIFFICULT TO BELIEVE THAT THEY WERE CREDITWORTHY ENOUGH TO ADVANCE LOANS TO THE APPELLANT. THEREFORE, THE AMOUNT OF RS 5,27,263/- REPRESENTING LOANS FROM 29 PERSONS DETAILED IN REPORT DATED 13.8.2008 CANNOT BE ACCEPTED IN VIEW OF THE FACT T HAT THEY ARE NOT CREDITWORTHY. THEREFORE, THE A.O IS DIRECTED TO CONSIDER THIS AMOUNT IN THE ASSESSMENT ACCORDINGLY. 13. FROM THE ABOVE PARAS AND THE LOGIC OF THE CIT(A) IN CONFIRMING ADDITIONS, WE FIND THAT THE AUTHORITIES HAVE RESORTED TO GLOBAL APPRO ACH IN SO FAR AS GROUPING OF THE CREDITORS ARE CONCERNED. EVERY CREDIT IS A SPECIFIC T RANSACTION AND IT DESERVES TO BE ADJUDICATED INDEPENDENTLY AFTER CONSIDERING THE FA CTS OF EACH CREDIT TRANSACTION. IN THAT REGARD, THE CIT(A) DOES NOT APPEAR TO BE A SPE AKING ORDER AT LEAST TO THE EXTENT OF 8 CREDITORS AMOUNTING TO RS 1,44,700/- AND 29 CREDITORS TO RS. 5,27,263/-. IN THE CASE OF THESE CREDITORS, CIT(A) HAS NOT CONSID ERED THE FACT THAT SOME OF THEM HAVE MATCHING LAND HOLDING ON PART WITH OTHERS, WHOSE CREDITS WERE ACCEPTED BY THE CIT(A). THERE IS NEED PASSING REASONED ORDER ON THIS IMPORTANT FACTUAL MATRIX OF THE CASE. REGARDING THE ROLE OF THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS TO DISCHARGE THE ONUS FULLY AND TO THE SATISFACTION OF THE AO, WHERE HIS SATISFACTION IT SELF CONSTITUTES A RELEVANT FACTOR IN THESE MATTERS. M ERE FILING CONFIRMATION AND FURNISHING ADDRESS IS NOT ADEQUATE. IT IS NOT CLEAR FRO M THE FILED AS TO WHAT DID THE AO WITH THE INFORMATION FURNISHED BY THE ASSESSEE AND WHETHER THE AO ISSUED NOTICES THESE IMPUGNED CREDITORS AND THERE IS NO RESPON SE FROM THE CREDITORS OR MERELY AO WAITED FOR THE ASSESSEE TO PRODUCE THE CREDIT ORS?. IT IS A SETTLED LAW THAT ONUS IS ON THE ASSESSEE DISCHARGE & TO DEMONSTRATE TH EIR IDENTITY, CREDITWORTHINESS, GENUINENESS OF TRANSACTION AND THE MEETING OF THE SA TISFACTION LEVELS OF THE A.O. THE PERUSAL OF THE ABOVE PARAS OF THE CIT(A) ORDER, IT IS NOTICED THAT THERE IS NO REFERENCE TO THE LAND HOLDING CAPACITIES OF THE IMPUG NED AGRICULTURIST. TO THAT EXTENT, CIT(A) IS EXPECTED TO PASS AN ORDER NOT ONLY WITH REFERENCE TO THE CREDITS GIVEN TO THE ASSESSEE BUT ALSO TO THE AGRICULTURIST H OLDING ABILITY OF THE AGRICULTURIST AND OTHER LIABILITIES. IT IS REQUIREMENT OF THE ORDER TH AT CREDITOR WISE ANALYSIS IS EXPECTED TO BE COMMENTED UPON IN ORDER TO MAKE THE ORD ER COMPLETE IN ALL ASPECTS. THEREFORE, WE ARE OF THE VIEW THAT THE CREDITS AMOUNTS TO RS. 5,27,263/- AND RS. 1,44,700/- INVOLVING 36 CREDITORS SHOULD BE SET ASIDE TO THE FILES OF THE AO FOR MAKING OF AN ORDER AFRESH IN THIS REGARD AFTER GRANTING REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NOS. 1627/PN/08 A.Y: 2000-01 PAGE 10 OF 10 14. SO FAR AS THE CREDIT OF SHRI ATMARAM RAMDAS PAWAR IS CONCERNED WHO TURNED HOSTILE, THE ASSESSEE DID NOT PRESS THE CONFIRMATION OF ADDITION. THEREFORE, THE SAME IS CONFIRMED AND TO THAT EXTENT, THE ORDER OF TH E CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. THIS PART OF THE GROUND IS DISMISSED AND IN FAVOUR OF THE REVENUE. 15. THE ISSUE OF CREDIT INVOLVING SHRI VASUDEO RAJARAM PAWAR IS ALSO SET ASIDE TO THE FILES OF THE AO, WHO SHALL ADJUDICATE THE ISSUE AFRESH ON CONSIDERING THE RELEVANT PROVISIONS OF THE ACT. THE ASSESSEE IS ALSO DIRECTED TO FILE REQUISITE EVIDENCES REQUIRED TO DISCHARGE THE ONUS FULLY. AO SHALL NOTE TH AT IT IS A SETTLED ISSUE THAT THE ONUS SHIFTS FROM TIME TO TIME WITH THE KIND OF INFORM ATION FURNISHED BY THE ASSESSEE AND IT IS HIS RESPONSIBILITY TO TAKE ON WHEN THE SAM E IS SHIFTED ON TO HIM. ACCORDINGLY THIS ISSUE IS SET ASIDE. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDERS PRONOUNCED IN THE OPEN COURT ON 07 TH FEBRUARY, 2011. (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 07 TH FEBRUARY, 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO, WARD 1(2), JALGAON 3. CIT(A)-II, NASHIK 4. CIT-II, NASHIK 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE