Assistant Commissioner Income-tax, V. Jagannath Nathu Wani, Jalgaon

ITA 1801/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1693 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU SHEKHAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1801/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE - 1, JALGAON . / APPELLANT V/S SHRI JAGANNATH NATHU WANI, PROP. OF M/S. UNITY DEVELOPERS, NEHRU CHOWK, NAVI PETH, DIST. JALGAON PAN NO. AABPW0283A . / RESPONDENT / ASSESSEE BY : SHRI SUNIL GANOO / REVENUE BY : SHRI SUDHANSHU SHEKHAR / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 01-07-2014 OF THE CIT(A)-II, NASHIK RELATING TO ASS ESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM BUSINESS OF REAL ESTATE AND OTHER SOURCES. HE FILED HIS RETURN OF INCOME ON 30-07-2010 DISCLOSING TOTAL INCOME OF RS.12,99,410/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE AO ASKED THE ASSESSEE TO EXPLAIN THE LOANS APPEARING IN THE BALANCE SHEET. HE OBSERVED FROM VARIOUS DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS MAINTAINED 2 SETS OF BALANCE SHEE TS, I.E. ONE IS / DATE OF HEARING :14.06.2016 / DATE OF PRONOUNCEMENT:15.06.2016 2 ITA NO.1801/PN/2014 ALLEGED AS PERSONAL BALANCE SHEET, I.E. SHRI JAGANNATH NATHU WANI AND THE OTHER ONE OF THE PROPRIETARY FIRM UNITY DEVELOPE RS. HOWEVER, HE NOTED THAT IN THE BALANCE SHEET, THE BALANCE OF PROPR IETARY FIRM WAS NOT MENTIONED AS CAPITAL BALANCE WITH PROPRIETARY FIRM. FURTHER, WHILE FILING THE RETURN OF INCOME BOTH BALANCE SHEETS WERE M ERGED AND TOTAL OF BOTH BALANCE SHEETS WAS FILED FOR THE ITR-IV. ON VERIFICATION OF ITR-IV THE AO NOTICED THAT THE ASSESSEE H AS UNSECURED LOANS AMOUNTING TO RS.4,37,22,352/-. HE, THEREFORE, ASKED T HE ASSESSEE TO FURNISH THE COMPLETE DETAILS WITH CONTEMPORAR Y EVIDENCES IN RESPECT OF LOANS TAKEN OR ACCEPTED INCLUDING SQUARED O FF ACCOUNTS WITH EVIDENCE AS REGARDS THE GENUINENESS OF THE PERSON AS WELL AS TRANSACTION AND CREDIT WORTHINESS OF PARTIES. 3. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, TH E AO NOTED THAT THE FOLLOWING AMOUNTS WERE OUTSTANDING AT THE END OF THE YEAR UNDER THE HEAD UNSECURED LOANS : I. J.M. COTTON GINNING & PRESSING CO. (P) LTD. RS.28,9 85,000 II. SAU. SUPRIYA PRAMOD CHANDRASHEKHAR RS.4,346,560 /- III. UNITY INFRASTRUCTURE LTD. RS.9,610,792/- 4. FROM THE DETAILS FURNISHED BY THE ASSESSEE THE AO NO TED THAT THE ASSESSEE HAS NOT OFFERED SATISFACTORY EXPLANATION REG ARDING UNSECURED LOANS FROM THE FOLLOWING 2 PARTIES : I. SAU. SUPRIYA PRAMOD CHANDRASHEKHAR RS.4,346,560/- II. SHRI ASHOK NARAYAN BAGADE RS.780,00/- IN VIEW OF THE ABOVE, THE AO MADE ADDITION OF RS.51,26,560/- TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE I.T. ACT. 5. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT BOTH THE A BOVE LOANS ARE OLD, I.E. BALANCES ARE BROUGHT FORWARD FROM F.Y. 2007-08 FOR 3 ITA NO.1801/PN/2014 WHICH THE COPIES OF BALANCE SHEET AS ON 31-03-2008 AND 31-03-2009 ALONG WITH VARIOUS SCHEDULES WERE ENCLOSED FOR HIS PERUSAL. THE ACCOUNT EXTRACTS OF THE ABOVE LOAN CREDITORS AND THEIR CONFIRMATIONS WERE ALSO FURNISHED BEFORE THE CIT(A). THE COPIES OF THE BA NK STATEMENTS IN WHICH THE CHEQUES WERE RECEIVED ON ACCOU NT OF LOAN FROM THE ABOVE 2 CREDITORS WERE ALSO ENCLOSED FOR THE PE RUSAL OF THE CIT(A). 6. BASED ON THE VARIOUS SUBMISSIONS MADE BEFORE HIM THE LD.CIT(A) DELETED THE ABOVE ADDITION BY OBSERVING AS UNDER : 7. I HAVE PERUSED THE ASSESSMENT ORDER AND DETAILED WR ITTEN SUBMISSION FILED BY THE APPELLANT. FROM THE DETAILED SU BMISSION FILED BY THE APPELLANT, IT IS APPARENT THAT NO NEW CREDIT IS T HERE DURING THE YEAR UNDER CONSIDERATION. THE APPELLANT HAS SUBMITTED THE DETAILS OF BOTH CREDITORS FROM THE DATE OF INCEPTION OF THE CREDITS. FURTHER, IT IS OBSERVED THAT THERE WAS SCRUTINY ASSESSMENT FOR A.Y. 2008-09, DURI NG WHICH A SPECIFIC QUERY WAS RAISED BY THE ASSESSING OFFICER ON THE UNSECURED LOANS, WHICH INCLUDED THE ABOVE LOAN CREDITORS AND A DETAILED SUBMISSION OF BOTH THE CREDITORS WERE SUBMITTED BY THE ASSESSEE & TH E SAID EXPLANATION WAS ACCEPTED BY THEN ASSESSING OFFICER, VIZ. JOINT COMMISSIONER OF INCOME TAX, RANGE-L, JALGAON AS GENUIN E & THE COPY OF THE SAID ASSESSMENT ORDER IS ALSO PLACED ON RECORD. THE AP PELLANT HAS SUBMITTED THE CONFIRMED ACCOUNT EXTRACT OF BOTH THE CREDITORS, THEIR PAN NUMBERS, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FILED, PROFIT & LOSS A/C, BALANCE SHEET ALONG WITH ANNEXURE IN WHICH T HE APPELLANT IS APPEARING UNDER THE HEAD LOANS & ADVANCES. FURTHER, T HE APPELLANT HAS FURNISHED THE COPY OF BANK STATEMENT IN WHICH THE LOA NS WERE CREDITED IN THE PREVIOUS YEARS. FROM THE DETAILS FURNISHED BY THE A SSESSEE FROM THE DATE OF INCEPTION OF THE CREDIT, IT IS FOUND THAT I N THE CASE OF CREDITOR SUPRIYA P. CHANDSARKAR LOAN WAS FIRST OBTAINED ON 25/8 /99 & 13/3/2000 I.E. IN A.Y.2000-2001 & IN THE CASE OF SH RI. ASHOK NARAYAN BAGADE (HUF) LOAN WAS FIRST OBTAINED ON 2/1/2003 I.E. IN ASSESSMENT YEAR 2003-04 & THERE ARE NO FRESH LOANS THEREAFTER AN D FROM 1/4/2008, THERE ARE NO TRANSACTIONS WITH BOTH OF THESE CREDITORS AND THERE ARE ONLY OPENING BALANCES BROUGHT FORWARD FROM 1/4/2008. THUS, THERE IS NO NEW CREDIT DURING THE YEAR UNDER CONSIDERATION AND I T IS ARGUED BY THE AUTHORIZED REPRESENTATIVE THAT NO ADDITION CAN BE MA DE ON ACCOUNT OF THE CREDITS WHICH ARE BROUGHT FORWARD FROM PREVIOUS Y EARS I.E. OPENING BALANCES AND FOR WHICH HE HAS RELIED UPON VARIOUS DEC ISIONS CITED SUPRA. IT IS HELD BY THE DELHI HIGH COURT IN THE CASE OF CI T V/S. USHA STUD AGRICULTURAL FARMS LTD. AT PAGE NO.337 IN PARA NO.6 OF 5 DTR AS FOLLOWS:- 'HERE, THE CIT (A) HAS DELETED THE ADDITION OF RS.15 LACS MAINLY ON THE GROUND THAT THIS CREDIT BALANCE OF RS.15 LACS IS BE ING REFLECTED IN THE ACCOUNTS OF THE ASSESSEE OVER THE PAST FOUR TO FIV E YEARS OR SO AND HENCE THIS WAS NOT A FRESH CREDIT ENTRY OF THE P REVIOUS YEAR 4 ITA NO.1801/PN/2014 UNDER CONSIDERATION AND THIS CREDIT ENTRIES WERE ALREA DY MADE AND ACCOUNTED FOR IN THE ASSESSMENT YEAR 1995-96 AND 19 97-98 WHICH WERE INTRODUCED IN THE FORM OF ADVANCE AGAINST BREEDING STALLIONS OWNED BY THE ASSESSEE AND THUS THESE CREDIT ENTR IES DID NOT RELATE TO THE YEAR UNDER CONSIDERATION FOR BEING CONSIDERED UNDER SECTION 68 OF THE ACT. SINCE IT IS A FINDING OF FACT RECORDED BY THE CIT (A) THAT THIS CREDIT BALANCE APPEARING IN TH E ACCOUNTS OF THE ASSESSEE, DOES NOT PERTAIN TO THE YEAR UNDER CONSIDER ATION, UNDER THESE CIRCUMSTANCES, THE A.O. WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION UNDER SECTION 68 OF THE ACT AN D AS SUCH NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL W HICH HAS ENDORSED THE DECISION OF THE CIT (A). FURTHER, THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS BESIDES ABOVE DECISION:- (A) NUCHEM LTD. VS. DY. CIT, REPORTED IN 87 TTJ 166 (DELHI). (B) CIT V/S. PARMESHWAR BOHRA, REPORTED IN (2007) 20 8 CTR (RAJ) 218. (C) TULIP HOTELS PVT. LTD. VS. DY. CIT, REPORTED IN (2010) 132 TTJ (MUM) (TM) 633. 7.1 I AM INCLINED TO AGREE WITH THE ARGUMENTS RAISED BY THE APPELLANT TO THE EFFECT THAT NO ADDITION CAN BE MADE UNDER SEC TION 68 IN RESPECT OF OLD BALANCES BROUGHT FORWARD FROM PREVIOUS YEARS AND SE CTION 68 CONTEMPLATES ONLY THE ADDITIONS MADE DURING THE YEAR AND FURTHER, THE APPELLANT HAD ESTABLISHED THE IDENTITY OF BOTH THE CR EDITORS BY FURNISHING THEIR PAN CARDS, COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME FILED, AND GENUINENESS OF THE TRANSACTIONS IN THE YEAR OF CREDIT I S ESTABLISHED BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY CHEQUES AND THE SAME WERE CREDITED IN THE BANK ACCOUNT (COPIES OF BANK STATEMEN TS ARE PLACED ON RECORD) AND CREDITWORTHINESS OF THE CREDITOR IS ESTABLI SHED BY SHOWING THAT BOTH THE CREDITORS ARE MAINTAINING REGULAR BOOK S OF ACCOUNTS AND THE CREDITS ARE AS PER REGULAR BOOKS OF ACCOUNTS MAINTA INED BY THE CREDITORS. THUS, ALL ESSENTIAL INGREDIENTS OF SECTION 68 VIZ. THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION, NATURE & SOURCE OF THE SUM CREDITED I.E. CREDITWORTHINESS OF THE CREDITORS HAVE B EEN ESTABLISHED BY THE APPELLANT. EVEN DURING THE COURSE OF ASSESSMENT PRO CEEDINGS WHILE REPLYING TO QUERY ON LOANS ACCEPTED & REPAID DURING THE YEAR, THE APPELLANT HAD SUBMITTED THE DETAILS OF THE CREDITORS D URING THE YEAR UNDER CONSIDERATION ONLY, WHICH MEANS THAT OTHER REMA INING CREDITORS ARE OLD CREDITORS AND HENCE, THE APPELLANT HAD NOT F URNISHED THEIR INFORMATION. FURTHER, THE APPELLANT HAD REPAID THOSE LOANS IN SUBSEQUENT YEAR I.E. DURING A.Y. 2011-12 AND CONFIRMATION OF T HE SAME IS PLACED ON RECORD. REPAYMENT OF LOAN IS BY ACCOUNT PAYEE CHEQUE S AND COPIES OF BANK STATEMENTS SHOWING THE SAME ARE ALSO PLACED ON RECO RD. IN VIEW OF THE DECISION CITED SUPRA AND FACTUAL POSITION, THE ADD ITION MADE OF RS. 51,26,560/- IS HEREBY DELETED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 5 ITA NO.1801/PN/2014 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-II, NASHIK HAS ERRED IN NOT GRANTING AN OP PORTUNITY TO THE ASSESSING OFFICER UNDER RULE 46A OF THE INCOME TAX RULE S, 1962 FOR THE ADDITIONAL EVIDENCES AS PRODUCED BY THE ASSESSEE BEFORE THE APPELLATE AUTHORITY, WHICH WAS NOT PRODUCED BEFORE THE ASSESSING O FFICER DURING ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A)-II, NASHIK HAS ERRED IN DELETING THE ADDIT ION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME TAX A CT,1961, WITHOUT ALLOWING THE ASSESSING OFFICER TO EXAMINE THE REQUISITE DETAILS AS CALLED FOR, WHICH WAS FURNISHED BY THE ASSESSEE TO THE LD. CIT(A )-II, NASHIK DURING APPELLATE PROCEEDINGS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE ORDER OF THE LD. CIT(A)-II, NASHIK BE CANCELLED ON THE ABOVE ISSUE AND THAT OF THE A.O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE HON'BLE CI T, AS PER THE CIRCUMSTANCES OF THE CASE. 5. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONAL EVIDENCE APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 8. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE VARIOUS DETAILS FURNISHED BY THE ASSESSEE DURING THE APPE AL PROCEEDINGS WERE NOT PRODUCED BEFORE THE AO DURING ASS ESSMENT PROCEEDINGS. THEREFORE, THE SAID DETAILS SHOULD HAVE BEEN REJECTED BEING FRESH EVIDENCES. HE SUBMITTED THAT IN VIEW OF RULE 46 A(3) OF THE INCOME TAX RULES, THE CIT(A)-II, NASHIK SHOULD HAVE FORWARDED SUCH DETAILS/EVIDENCES TO THE AO FOR HIS VERIFICATION AND C OMMENTS. HOWEVER, NO SUCH REPORT HAVE BEEN CALLED FOR FROM THE AO . SINCE THE ASSESSEE HAS FAILED TO PRODUCE THE REQUISITE DETAILS TO SU PPORT THE CASH CREDIT, THEREFORE, THE AO HAS MADE THE ADDITION U/S.6 8. SINCE THE CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE AO AND VIOLATED THE PROVISIONS OF RULE 46A, THEREFORE, THE ORDER OF THE CIT(A) B E REVERSED AND THAT OF THE AO BE RESTORED. 9. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) FAIRLY ADMITTED THAT TH E CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCES AND NO OPPORTUNITY WAS GIVEN TO 6 ITA NO.1801/PN/2014 THE AO. HE SUBMITTED THAT HE HAS NO OBJECTION IF THE MA TTER IS RESTORED TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CASE. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. ADMITTEDLY, THE ASSESSEE IN TH E INSTANT CASE DID NOT FILE THE REQUISITE DETAILS TO SUBSTANTIATE THE UNSECURED LOAN TAKEN FROM SAU. SUPRIYA PRAMOD CHANDRASHEKHAR RS.43,46,560/- AND SHRI ASHOK NARAYAN BAGADE RS.7,80,000/ -. WE FIND THE ASSESSEE FILED CERTAIN DETAILS BEFORE CIT(A) ON THE BASIS OF WHICH THE LD.CIT(A) DELETED THE ADDITION. HE HAS NEITHER C ALLED FOR REMAND REPORT FROM THE AO NOR GAVE AN OPPORTUNITY TO THE AO TO REBUT THE VARIOUS SUBMISSIONS MADE BEFORE HIM WHICH WERE NOT BEFORE THE AO. IT IS THE SETTLED PROPOSITION OF LAW THAT FO R ACCEPTING ANY CASH CREDIT AS GENUINE THE ONUS IS ALWAYS ON THE A SSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF THE AO REGARDING THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITOR AND TH E GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SAME BEFORE THE AO. WHATEV ER DETAILS WERE FURNISHED BEFORE THE CIT(A) ARE IN THE SHAPE OF ADD ITIONAL EVIDENCES AND THE LD.CIT(A) SHOULD HAVE FORWARDED THOSE D ETAILS TO THE AO FOR HIS COMMENTS. HOWEVER, IN THE INSTANT CASE HE HAS FAILED TO DO SO. HE HAS NOT CITED ANY JUSTIFIABLE REASONS AS TO HOW AND WHY HE HAS ACCEPTED THE ADDITIONAL EVIDENCES FROM THE ASSES SEE IN VIOLATION OF RULE 46A. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RES TORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GIVE AN OPPORTUNIT Y TO THE 7 ITA NO.1801/PN/2014 ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITORS A ND THE GENUINENESS OF THE TRANSACTION. THE AO SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATIST ICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15-06-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 15 TH JUNE, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - 2, NASHIK 4. 5. 6. THE CIT-2, NASHIK $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE