Assistant Commissioner of Income Tax, Bangalore V. M/s.Just 4 Hospitality, Bangalore

ITA 1890/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7696 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAKSHMY KARTHIK
• Assessee Lawyers: M K BIJU JT BENGALURU
• Keywords: Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1890/BANG/2016 ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(2)(1), BENGALURU. VS. M/S. JUST 4 HOSPITALITY, NO.541-543, MOTHER EARTH, 4 TH FLOOR, AMARJYOTHI HBBCS LAYOUT, BENGALURU 560 071. PAN: AAHFJ 0427F APPELLANT RESPONDENT APPELLANT BY : SHRI LAKSHMY KARTHIK RESPONDENT BY : SHRI M.K. BIJU, JT. CIT(DR)(ITAT) BENGALURU DATE OF HEARING : 03.08.2017 DATE OF PRONOUNCEMENT : 09.08.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN S O FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DEL ETING THE ADDITION OF RS.54,75,076/- MADE BY THE A.O AS UNSEC URED LOANS IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO D ISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE CREDIT AS THE CAPAC ITY OF THE ITA NO.1890/BANG/2016 PAGE 2 OF 6 CREDITOR TO ADVANCE MONEY AND GENUINENESS OF THESE TRANSACTIONS ARE NOT ESTABLISHED. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RE STORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED' AT THE TIME OF HEARING OF APPEAL. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD AR E THAT DURING THE COURSE OF HEARING, THE AO HAS NOTED CURRENT CLOSING BALANCE IN BOOKS OF ACCOUNT OF ASSESSEE WITH RESPECT TO 4 CREDITORS. H E ACCORDINGLY MADE ADDITION OF THE SAME U/S. 68 OF THE ACT. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( APPEALS) WITH THE SUBMISSION THAT THERE WAS SUBSTANTIAL OPENING BALAN CE IN THE NAME OF THESE 4 CREDITORS I.E., DEVETA ROADLINES, GURUNANAK ROADLINES, GURUPREET EARTH MOVERS AND GURUPREET SINGH. IT WAS FURTHER C ONTENDED THAT ASSESSEE HAS MADE CERTAIN PAYMENTS OUT OF OPENING C REDIT BALANCE RESULTING INTO REDUCTION OF CREDIT BALANCES IN RESP ECT OF THESE 4 CREDITORS. THE ASSESSEE HAS ALSO FILED THE PAN, CONFIRMATIONS, ETC. BEFORE THE CIT(APPEALS). THE CIT(APPEALS) HAS CAREFULLY EXAM INED ALL THESE EVIDENCE AND BEING CONVINCED WITH IT, HE DELETED TH E ADDITIONS. THE RELEVANT OBSERVATIONS OF THE CIT(APPEALS) ARE EXTRA CTED HEREUNDER FOR THE SAKE OF REFERENCE:- ITA NO.1890/BANG/2016 PAGE 3 OF 6 5. ACCORDING TO THE APPELLANT DURING THE HEARING ON 16/03/2015 MOST OF THE DETAILS CONCERNING THE LOAN CREDITORS WERE PRODUCED AND FURTHER CONFIRMATIONS WERE ALSO GIVEN ON 27/03/2015 WHICH THE AO HAD RECEIVED BUT DID NOT DI SCUSS ANYTHING FURTHER. INSPITE OF THAT THE AO HAS NOT AC KNOWLEDGED IN THE ASSESSMENT ORDER THAT THE DETAILS HAVE BEEN FIL ED AND PRODUCED. HE HAS STATED THAT THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS. IT IS NOT MENTIONED WHETHER ASSESSEE H AS PRODUCED THE SAME AND HOW IT IS STATED THAT THE ASSESSEE HAS FAI LED TO PROVE THE GENUINENESS. THE SAME DETAILS AND EVIDENCES THAT W ERE FILED DURING ASSESSMENT PROCEEDINGS, HAVE BEEN FILED DURI NG THE APPELLATE PROCEEDINGS ALSO. 6. ACCORDING TO THE APPELLATE THE SCHEME OF OPERAT ION OF THE ABOVE SECTION IS WELL SETTLED. IT REQUIRES AN ASSES SEE TO ESTABLISH: - IDENTITY OF THE CREDITORS; - CAPACITY OF CREDITORS TO ADVANCE MONEY; AND - GENUINENESS OF TRANSACTION. 6.1 IN THE INSTANT CASE, THE APPELLANT DID FURNISH THE NAME AND ADDRESS OF THE CREDITORS ALONG WITH THEIR PAN IN A TABULAR FORMAT WHICH ARE REPRODUCED ABOVE IN PARA 2, WHICH ARE ALS O CLEARLY MENTIONED IN THEIR RESPECTIVE CONFIRMATION LETTERS. THEREFORE, THE FIRST REQUIREMENT OF ESTABLISHING THE IDENTITY OF T HE CREDITORS STANDS DISCHARGED AND THE SAME HAS NOT BEEN DOUBTED BY THE LD. AO. 6.2 WITH RESPECT TO THEIR CAPACITY TO ADVANCE MONE Y, IT IS SUBMITTED THAT ALL THE CREDITORS ARE INCOME TAX ASS ESSEE AND THEIR RESPECTIVE PAN WERE PROVIDED TO THE LD. AO. IN THE CONFIRMATION LETTERS, THEY HAVE ACKNOWLEDGED ADVANCING MONEY TO THE APPELLANT AND HAVE CONFIRMED THE OUTSTANDING BALANC E AS ON 31- MAR-2012. THE APPELLANT THEREBY HAS DISCHARGED THE ONUS TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. 6.3 IT IS SUBMITTED THAT FURTHER, THE LD. AO OUGHT TO HAVE NOTED THAT THE LOANS WERE BORROWED AND BEING REPAID THROU GH PROPER BANKING CHANNELS. LOAN FROM ONE OF THE PARTNERS, M R. GURUPREET SINGH WAS BORROWED ON INTEREST AT THE RATE OF 12% P ER ANNUM ON THE REDUCING OUTSTANDING BALANCE. ITA NO.1890/BANG/2016 PAGE 4 OF 6 6.4 THE APPELLANT HAS CITED THE CITATION IN THE C ASE OF CIT V SAHIBGANJ ELECTRIC CABLES (P) LTD. [1978] 115 ITR 4 08 (CAL.) WHEREIN THE LD. ITO WITHOUT MAKING ANY FURTHER ENQ UIRY, DISBELIEVING THE EVIDENCE OF THE ASSESSEE, MADE ADD ITIONS TO THE ASSESSEES INCOME. THE HONBLE ITAT HELD THAT THE SAID ADDITIONS CANNOT BE JUSTIFIED AS THE ASSESSEE HAS D ISCHARGED THE ONUS. 6.5 IT IS FURTHER SUBMITTED THAT THE UNEXPLAINED C REDITS IN THE BOOKS OF ACCOUNT MAINTAINED FOR A PREVIOUS YEAR MAY BE ADDED TO THE INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR I TSELF AND NOT ANY SUBSEQUENT PREVIOUS YEAR. IN THE PRESENT CASE, THE CREDITS BROUGHT TO TAX BY THE LD. AO BELONGS TO EARLIER ACC OUNTING YEAR WHICH WAS CARRIED FORWARD TO THE RELEVANT ACCOUNTIN G YEAR ENDED ON 31-MAR-2012. DURING THE YEAR 2011-12, THE APPE LLANT REPAID PART OF THEIR OUTSTANDING LOANS. THERE WERE NO FRES H CREDITS IN ANY OF THE ACCOUNTS OF THE LOAN CREDITORS. THE CLOSING BALANCES AS ON 31-MAR-2012 REPRESENTED ONLY THE OPENING BALANCES. 6.6 FROM THE ABOVE, IT IS CLEAR THAT THE AO HAS TO TALLY DISREGARDED THE EVIDENCE PRODUCED BY THE APPELLANT, IGNORED THEM AND NOT EVEN MENTIONED IN THE ASSESSMENT ORDER THAT WHAT HAD BEEN ASKED FOR, WAS FILED. AFTER THIS THE ONUS IS SHIFTED TO THE AO, WHO HAS NOT CONSIDERED THE ISSUES OR EXAMINED THEM IN DETAIL. CREDITS ALSO BELONGED TO THE PREVIOUS YEAR. THERE IS NO BASIS OF DISALLOWANCE OF THE SAME AS THERE ARE NO F RESH CREDITS. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION THE DI SALLOWANCE OF RS.54,75,075/- AS LOAN CREDITORS IS DELETED. 4. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL B EFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE ORDER OF AO; WHEREAS T HE LD. COUNSEL FOR THE ASSESSEE BESIDES MAKING ORAL SUBMISSIONS HAS ALSO F ILED WRITTEN SUBMISSIONS, FURNISHING COMPLETE DETAILS OF OPENING & CLOSING BALANCE WITH RESPECT TO ALL THESE 4 CREDITORS AND SAME IS EXTRAC TED HEREUNDER FOR THE SAKE OF REFERENCE:- ITA NO.1890/BANG/2016 PAGE 5 OF 6 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED THAT SINCE NO CREDIT WAS INTRODUCED IN THE IMPUGNED ASSESSMENT YE AR, NO ADDITION U/S. 68 IS CALLED FOR. WHATEVER CLOSING BALANCES ARE THERE , IT IS OUT OF THE OPENING BALANCES. THEREFORE, THE ADDITION MADE BY THE AO I S UNCALLED FOR. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT NO CREDIT WAS INTRODUCED IN THE IMPUGNED ASSESSMENT YEAR. IN RESPECT OF THESE CRED ITS, THERE WERE SUBSTANTIAL OPENING BALANCES AGAINST WHICH ASSESSEE MADE CERTAIN PAYMENTS TO CREDITORS AND CLOSING BALANCE WAS REDUC ED. IT IS QUITE EVIDENT FROM THE AFORESAID DETAILS OF CREDITS THAT THE ASSE SSEE HAS NOT INTRODUCED ANY CASH CREDIT IN THE IMPUGNED ASSESSMENT YEAR, TH EREFORE, NO ADDITION U/S. 68 IS CALLED FOR. THE CIT(APPEALS) HAS PROPER LY ADJUDICATED THE ISSUE ITA NO.1890/BANG/2016 PAGE 6 OF 6 IN THE LIGHT OF GIVEN FACTS AND WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. WE THEREFORE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF AUGUST, 2017. SD/- SD/- ( JASON P. BOAZ ) (SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 9 TH AUGUST, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.