M/s. Ramesh Kothari, Dhule V. Income-tax Officer, Ward - 3, Dhule

ITA 1747/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1334 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 20-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Bogus loan
• Section: 143(3); 131; 68; 6

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1747 /P U N/201 7 / ASSESS MENT YEAR : 20 1 3 - 1 4 M/S. RAMESH KOTHARI KOTHARI HOUSE, 696, STATION ROAD, DONDAICHA, DIST: DHULE - 425408 . / APPELLANT PAN: A A NFR6929E VS. THE INCOME TAX OFFICER , WARD 3 , DHULE . / RESPONDENT / APP ELLANT BY : SHRI VINAY V. KAWDIA / RESPONDENT BY : S HRI M.K. VERMA / DATE OF HEARING : 1 0 . 1 0 .201 8 / DATE OF PRONOUNCEMENT: 28 . 1 1 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 1 1 . 05 .20 1 7 RELATING TO ASSESSMENT YEAR 20 1 3 - 1 4 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS O F APPEAL BUT HAS ONLY PRESSED GROUND OF APPEAL NO.1 WHICH READS AS UNDER: - 1) IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OFRS.5,00,000/ - MADE BY THE AO IN RESPECT OF LOAN CREDI TOR MR. R.D. MALI U/S 68 OF THE ACT WITHOUT FULLY APPRECIATING THE EVIDENCES ON RECORD. ITA NO. 1747 /P U N/20 1 7 M/S. RAMESH KOTHARI 2 3. THE REST OF GROUNDS OF APPEAL NO.2 AND 3 ARE DISMISSED AS NOT PRESSED. 4. THE ISSUE RAISED IN GROUND OF APPEAL NO.1 IS AGAINST ADDITION OF 5 LAKHS UNDER SECTION 6 8 OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED LOAN OF 20 LAKHS FROM SHRI RATILAL DHONDU MALI. THE ASSESSEE FILED CONFIRMATION FROM THE SAID PERSON. HOWEVER, IN ORDER TO VERIFY THE IDE NTITY, CREDITWORTHINESS OF FINANCIAL CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION, SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED BY THE ASSESSING OFFICER. THE SAID PERSON DID APPEAR BEFORE THE ASSESSING OFFICER AND HIS STATEMENT WAS RECO RDED ON OATH. THE CREDITOR EXPLAINED HIS CAPACITY TO FINANCE THE SAID AMOUNT AND ALSO POINTED OUT THAT HE WAS HOLDING AGRICULTURAL LAND, FROM WHICH AGRICULTURAL INCOME WAS RECEIVED. HE ALSO STATED THAT THE SAID LOAN HAD BEEN REPAID AND ONLY SUM OF 3 LAKHS WAS OUTSTANDING. THE CREDITOR ALSO EXPLAINED THE STATUS OF ALL THE LOANS TAKEN BY HIM AND ALSO POINTED OUT THAT ALL THE LOANS WERE REPAID EXCEPT LOAN OF 3 LAKHS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID CREDITOR DID NOT HAVE CAPACI TY TO PAY THE SAID LOAN TO ASSESSEE. IT WAS ALSO NOTED BY HIM THAT THERE WAS UNEXPLAINED AMOUNT OF CREDIT IN HIS BANK ACCOUNT AND CASH WAS DEPOSITED IN HIS BANK ACCOUNT BEFORE THE ISSUE OF CHEQUE FOR 20 LAKHS TO THE ASSESSEE . THE EXPLANATION OF ASSESSE E VIS - - VIS SAID CASH WAS HIS SAVINGS OVER A PERIOD OF TIME WHICH WAS DEPOSITED IN THE BANK ACCOUNT. THIS PLEA OF CREDITOR WAS NOT ACCEPTED AND THE ASSESSING OFFICER MADE ADDITION OF 20 LAKHS. 6. THE CIT(A) HAS ELABORATELY CONSIDERED EXPLANATION OF ASS ESSEE VIS - - VIS CREDITWORTHINESS OF LENDER AND HAS ACCEPTED CREDITWORTHINESS TO THE EXTENT OF 15 LAKHS AND THE BALANCE SUM OF 5 LAKHS HAS BEEN HELD TO BE BOGUS LOAN. ITA NO. 1747 /P U N/20 1 7 M/S. RAMESH KOTHARI 3 THE BASIS FOR THE SAME WAS THAT OUT OF 20 LAKHS LYING WITH THE ASSESSEE, SUM OF 15 LAKHS WAS TRANSFERRED TOWARDS ADVANCE FOR PURCHASE OF PROPERTY AND THE BALANCE SUM OF 5 LAKHS CONTINUED WITH THE ASSESSEE AS ON 31.03.2016. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. SHRI VINAY V. KAWDIA APPEARED ON BEHALF OF ASSES SEE AND SHRI M.K. VERMA APPEARED ON BEHALF OF REVENUE. 9. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF 5 LAKHS UNDER SECTION 68 OF THE ACT. T HE ASSESSEE HAS RECEIVED LOAN OF 20 LAKHS FROM SHRI RATILAL DHONDU MALI. THE ASSESSEE HAD PRODUCED THE SAID PERSON BEFORE THE ASSESSING OFFICER, WHO IN TURN, HAD GIVEN EXPLANATION ABOUT HIS CREDITWORTHINESS AND THE CAPACITY TO PAY THE SAID SUM OF 20 L AKHS. SINCE THE PERSON HAD APPEARED BEFORE THE ASSESSING OFFICER, IDENTIFY OF THE PERSON STANDS ESTABLISHED. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE PLEA OF THE LENDER AND HELD THAT THE LENDER HAD NO CAPACITY TO PAY THE SAID LOAN OF 20 LAKHS AND MADE THE ADDITION. THE CIT(A) ON THE OTHER HAND, HAS CONSIDERED THE EXPLANATION FILED BY LENDER AND THE ASSESSEE IN THIS REGARD AND HAS OBSERVED THAT HE HA D CAPACITY TO ADVANCE SUM OF 5 LAKHS TO THE ASSESSEE. WITH REGARD TO BALANCE SUM OF 5 LAKHS , THE CIT(A) NOTES THAT AGAINST THE OUTSTANDING OF 20 LAKHS, THE ASSESSEE HAD PAID 15 LAKHS ON BEHALF OF LENDER FOR PURCHASE OF PROPERTY AND THE BALANCE SUM OF 5 LAKHS WAS STILL OUTSTANDING IN 2016. HENCE, HE WAS OF THE VIEW THAT THE SAID LOAN WAS B OGUS LOAN. THERE IS NO MERIT IN THE FINDINGS OF CIT(A) IN THIS REGARD. THE LENDER HAD APPEARED BEFORE THE ASSESSING OFFICER AND HIS IDENTITY STANDS ITA NO. 1747 /P U N/20 1 7 M/S. RAMESH KOTHARI 4 ESTABLISHED. FURTHER, HE HAD ALSO GIVEN EXPLANATION WITH REGARD TO THE SOURCE OF AMOUNT ADVANCE D AND THE SOURCE TO THE EXTENT OF 15 LAKHS HAS BEEN ACCEPTED BY THE CIT(A), AGAINST WHICH THE REVENUE IS NOT IN APPEAL. 10. NOW, COMING TO THE BALANCE SUM OF 5 LAKHS, THE VIEW OF THE CIT(A) WAS THAT THE SAID AMOUNT WAS STILL OUTSTANDING AND HENCE, WAS BOGUS. T HERE IS NO MERIT IN THE STAND OF CIT(A) IN THIS REGARD. THE ASSESSEE HAS TO ESTABLISH HIS CREDITWORTHINESS ON THE DATE OF GIVING LOAN IN ORDER TO PROVE THE GENUINENESS OF TRANSACTION. MERELY BECAUSE THE AMOUNT WAS STILL PENDING IN 2016, STAND OF CIT(A) I N THIS REGARD WAS NOT CORRECT AS THE ONUS WAS UPON LENDER TO PROVE CREDITWORTHINESS OF LOAN ADVANCED ON THE DATE OF GIVING LOAN AND IN CASE HE ESTABLISHES THE SAME AND EVEN IF THE AMOUNT HAS NOT BEEN REPAID TILL DATE WOULD NOT RESULT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE UNDER SECTION 68 OF THE ACT . IN VIEW THEREOF, THERE IS NO MERIT IN THE ORDER OF CIT(A) AND THE SAME IS REVERSED. I ACCEPT THE EXPLANATION OF ASSESSEE VIS - - VIS SOURCE OF SAID SUM OF 5 LAKHS AND DELETE THE ADDITION OF 5 LAKHS MADE UNDER SECTION 68 OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 1 1 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF NOVEMBER , 201 8 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 28 TH NOVEMBER , 201 8 . GCVSR ITA NO. 1747 /P U N/20 1 7 M/S. RAMESH KOTHARI 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2 . / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE