Shri Dipakkumar C.Doshi, Ankleshwar V. The Addl.CIT.,Range-4, Baroda

ITA 1909/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73165 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: YASH BHATT
• Keywords: Unexplained cash credit; Salary income
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO.1909/AHD/2012 A.Y. 2009-10 DIPAK KUMAR C. DOSHI, S-206, ANMOL PLAZA, OPP. GIDC BUS STAND, ANKLESHWAR. PAN: AACPD 4384Q VS ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 4, BARODA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : SHRI YASH BHATT, A.R. / DATE OF HEARING : 31/03/2014 / DATE OF PRONOUNCEMENT: 31/03/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LEARNED CIT(A)-VI, BARODA, DATED 26.08.2012. THE SU BSTANTIVE GROUNDS ARE REPRODUCED BELOW: THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIR MING DISALLOWANCE OF RS.394969/- ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS AND INTEREST THEREON. YOUR APPELLANT SUBMITS THAT THE DISALLOWANCE IS NOT JUSTIFIED AN PRAYS THAT THE SAME IS DELETED. THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRM ING DISALLOWANCE OF RS.44800/- ON ACCOUNT OF EXPENDITURE ON BONUS. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3), DATED 01.02.2011 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAS DECLARED THE RETURN AT RS.3,04,500/-, HOWEVER, THE ASSESSMENT WAS MADE ON AN INCOME OF RS.45,94,680/-. AN ADDITION OF ITA NO.1909/AHD/2012 DIPAK KUMAR C. DOSHI VS. ACIT, RANGE-4, BARODA. A.Y.2009-10 - 2 - RS.3,94,969/- WAS MADE BY INVOKING THE PROVISIONS O F SECTION 68 OF IT ACT. THE ASSESSEE IS IN THE BUSINESS OF TRADING OF SOLUTION MEANT FOR ABRASION AND CORROSION. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD OBTAINED UNSECURED LOANS AMOUNTING TO RS.6,20,926/- . THE ASSESSEE HAS FURNISHED A COPY OF THE CONFIRMATION LETTER SIGNED BY THOSE DEPOSITORS. THE ASSESSEE HAS ALSO FURNISHED A COPY OF PAN CARD IN RESPECT OF FEW PARTIES. LATER ON, THE ASSESSEE HAS ALSO FURNISHED COPIES OF PASSPORTS, IDENTIFICATION LETTER FROM GRAM PANCHAYAT, ELECTION CARD, DRIVING LICENSE, ETC. ALONG WITH CONFIRMATION LETTERS IN RESPECT OF MOST OF THE CASH CREDITORS RESPECTIVELY. THE OBSERVATION OF THE AO W AS THAT IN RESPECT OF 24 PARTIES THE ASSESSEE HAD FURNISHED EITHER COPY O F PASSPORT, LETTER FROM GRAM PANCHAYAT, ELECTION CARD, DRIVING LICENSE OR P AN CARD. THE AO HAS FURNISHED A LIST OF THOSE 24 PARTIES INDICATING THE NAME OF THE DEPOSITORS, THEIR PAN CARD, AMOUNT OF LOAN, INTEREST PAID ON LO AN AND IN THE REMARK COLUMN THE NATURE OF EVIDENCE SUCH AS COPY OF PASSP ORT, ELECTION CARD, PAN CARD, DRIVING LICENSE, I-CARD, ETC. THE ASSESSE ES MAIN EXPLANATION WAS THAT THOSE DEPOSITORS WERE HAVING SALARY INCOME AND OUT OF THE SALARY SAVINGS THE SAID AMOUNT WAS DEPOSITED WITH THE ASSE SSEE. IN SUPPORT OF THE SAID CLAIM; THE PROOF IS IN THE SHAPE OF SALARY CERTIFICATE HAS ALSO BEEN FURNISHED. THE AO HAS ACCEPTED THE SOURCE OF DEPOSI T IN RESPECT OF SOME OF THE CASES, HOWEVER IN RESPECT OF 21 DEPOSITORS, ALTHOUGH THERE WAS SALARY CERTIFICATE AND BANK STATEMENTS BUT HE HAS H ELD THAT MERE FILING OF SALARY CERTIFICATE DID NOT BY ITSELF PROVED THE CRE DITWORTHINESS OF THE DEPOSITORS. HENCE, FINALLY HE HAS TREATED A SUM OF RS.3,66,500/- + INTEREST OF RS.28,469/- AS UNEXPLAINED CASH CREDIT AND TAXED IN THE HANDS OF THE ASSESSEE AFTER INVOKING THE PROVISIONS OF SECTION 6 8 OF IT ACT. ITA NO.1909/AHD/2012 DIPAK KUMAR C. DOSHI VS. ACIT, RANGE-4, BARODA. A.Y.2009-10 - 3 - 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY. ALTHOUGH THE ASSESSEE HAS REITERATED THE EXPLANATIO N WHICH WAS TENDERED BEFORE THE AO, ALONG WITH CERTAIN CASE LAWS, BUT LE ARNED CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE DEPARTME NT IN A CRYPTIC MANNER AS FOLLOWS: I HAVE CONSIDERED THE REASONS GIVEN BY THE AO FOR REJECTING THE EVIDENCES SUBMITTED BY THE APPELLANT AND SUBMISSION S OF THE APPELLANT BEFORE THE UNDERSIGNED. FROM EXAMINATION OF THE CON FIRMATION FILED BY THE APPELLANT AND COPY OF PAN CARD FILED (WHEREVER FILED BY THE APPELLANT) IT IS SEEN THAT SIGNATURES ON THE PAN CA R DO NOT MATCH WITH THOSE ON THE CONFIRMATION. THEREFORE, IT CANNOT BE SAID THAT THE IDENTITY OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIO NS HAS BEEN ESTABLISHED BY THE APPELLANT. IN MANY CASES NO EVID ENCES IN SUPPORT OF CREDIT WORTHINESS OF DEPOSITORS HAVE BEEN FILED. WH EREVER THEY HAVE BEEN FILED, MANY OF SUCH UNEXPLAINED LOANS WERE TAK EN IN THE MONTH OF APRIL, 2008 OR WITHIN FIRST THREE MONTHS, AS AN EVI DENCE OF THE CREDIT WORTHINESS THE APPELLANT HAS FILED SALARY CERTIFICA TE FOR THE F.Y. 2008- 09 WHICH SHOW THAT THESE PERSONS WERE EARNING MONTH LY SALARY BETWEEN 8 TO 10 THOUSAND RUPEES. QUANTUM OF LOAN IS ABOUT TWO TIMES THE MONTHLY SALARY. THERE IS NO EVIDENCE THAT THESE PERSONS WERE WORKING IN EARLIER FINANCIAL YEAR. THUS, SALARY CER TIFICATES FILED DO NOT PROVE CREDIT WORTHINESS OF THE DEPOSITORS. IN VIEW OF SUCH DEFECTS IN THE EVIDENCES FILED, THEY WERE RIGHTLY REJECTED BY THE AO. THE APPELLANT ALSO FAILED TO PRODUCE THE DEPOSITORS FOR EXAMINATI ON. SINCE, THE APPELLANT COMPLETED FAILED TO DISCHARGE ITS PRIMARY ONUS IN RESPECT OF UNSECURED LOANS TO THE EXTENT RS.3,66,500/- THE ADD ITION MADE BY THE AO U/S.68 OF THE IT ACT TO THAT EXTENT IS HEREBY CO NFIRMED. DISALLOWANCE OF INTEREST ON THESE LOANS AMOUNTING T O RS.28,469/- IS ALSO CONFIRMED. THUS, THIS GROUND OF APPEAL IS DISM ISSED. 4. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE SIDES. IT IS A VERY SHORT ISSUE THAT WHETHER THE PROVISIONS O F SECTION 68 IN SUCH CIRCUMSTANCES IN RESPECT OF ALL THE CASES HAVE RIGH TLY BEEN INVOKED BY THE REVENUE AUTHORITIES. FROM THE SIDE OF THE REVENUE R ELIANCE WAS PLACED ON A DECISION OF HONBLE KARNATAKA HIGH COURT PRONO UNCED IN THE CASE OF CIT VS. SARAVANA CONSTRUCTIONS (P) LTD., 22 TAXM ANN.COM 259 (KAR.), CIT VS. PRECISION FINANCE CALCUTTA, 208 ITR 465 (CA L) AND NIZAM WOOL AGENCY VS. CIT, 193 ITR 0138 (ALLD.). AT THE OUTSET , IT IS WORTH TO ITA NO.1909/AHD/2012 DIPAK KUMAR C. DOSHI VS. ACIT, RANGE-4, BARODA. A.Y.2009-10 - 4 - MENTION THAT IN SUCH TYPE OF CASES WHERE THE PROVIS IONS OF SECTION 68 IS INVOKED, THE CASE LAWS ARE DECIDED ON THE FACTS OF EACH CASE. THE HONBLE KARNATAKA HIGH HAS FOUND THAT THE TRIBUNAL WAS JUST IFIED IN ISSUING DIRECTION TO THE REVENUE AUTHORITIES TO ACCEPT THOS E CASH CREDITS WHERE LENDERS HAVE CONFIRMED FOR HAVING ADVANCED MONEY TO THE ASSESSEE AND NOT IN OTHER CASES. SIMULTANEOUSLY, IT WAS ALSO REM ARKED THAT THERE IS NO PRESUMPTION THAT MERELY BECAUSE PAYMENT WAS MADE BY CHEQUE, IT WAS A GENUINE LOAN TRANSACTION. ACCORDING TO HONBLE COUR T, THE CREDITORS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S WERE ALSO REQUIRED TO BE VERIFIED. HOWEVER, IN THE CASE OF PRECISION F INANCE (SUPRA) ON INQUIRY IT WAS ALSO FOUND THAT THOSE CREDITORS WERE NOT EXISTING AT THE ADDRESSES GIVEN, THEREFORE, IT WAS HELD THAT THE ID ENTITY OF THOSE CREDITORS COULD NOT BE ESTABLISHED; HENCE, THE ADDITION WAS U PHELD. 3.1 NEVERTHELESS, THE FACTUAL POSITION IN THE PRESE NT CASE IS SOMEWHAT DIFFERENT ESPECIALLY IN THOSE CASES WHERE THE ASSES SEE HAD REPAID THE LOAN TO THOSE CASH CREDITORS BY WAY OF CHEQUE. THE DETAI LS OF THE CHEQUE PAYMENT IS VERY MUCH ON RECORD WHICH HAS NOT BEEN D OUBTED BY THE REVENUE DEPARTMENT. WE HAVE NOTED THAT IN RESPECT O F SIX CASES THE AMOUNT REPAID TO THOSE CASH CREDITORS WAS THROUGH C HEQUE. AS PER PAPER BOOK, PAGES 8, 9 & 10, THE DETAILS OF THOSE SIX PER SONS IS AVAILABLE ON RECORD. IN RESPECT OF THESE SIX PERSONS ADDITIONALL Y THE EVIDENCE ARE THAT THEY ARE EMPLOYEE OF M/S. EROCARE ENTERPRISES AND T HEY HAVE FURNISHED THE PROOF OF THEIR IDENTITY AS WELL. SINCE, THEY WE RE STATED TO BE AN OLD EMPLOYEE, THEREFORE, IN A POSITION TO ADVANCE THE P ETTY AMOUNT IN QUESTION TO THE ASSESSEE. THEREFORE, IN A SITUATION WHEN A CONFIRMATION LETTER OF THESE SIX PERSONS ARE ON RECORD AND IN RE SPECT OF THEIR IDENTITY ITA NO.1909/AHD/2012 DIPAK KUMAR C. DOSHI VS. ACIT, RANGE-4, BARODA. A.Y.2009-10 - 5 - THEY FURNISHED THE REQUISITE EVIDENCE SUCH AS PAN C ARD/ELECTION CARD/GRAM PANCHAYAT LETTER, ETC. THEN WE CAN SAFELY HEREBY HOLD THAT THE PRIMARY CONDITION AS PRESCRIBED U/S.68/ OF IT ACT H AVE BEEN FULFILLED BY THE ASSESSEE BUT ONLY IN RESPECT OF THESE SIX PERSO NS. THE APPELLANT HAS PLACED RELIANCE ON ORISSA CO-OPERATION PVT. LTD., 1 59 ITR 78 (SC), ROOPCHANDRA MANOJ KUMAR, 235 ITR 461, JALAN TIMBERS , 223 ITR 11 (GUWAHATI). IN REST OF THE CASES, THE AMOUNT BEING RECEIVED IN CASH AND ALSO REPAID IN CASH HAVE PUT THE TRANSACTION UNDER DOUBT; HENCE, WE HEREBY HOLD THAT THE PROVISIONS U/S. 68 HAS RIGHTLY BEEN INVOKED. THE RESULT OF THE ABOVE DISCUSSION IS THAT THE ASSESSEE SHALL GET PART RELIEF IN RESPECT OF THE GROUND RAISED. THE AO IS DIRECTED TO RE-COMPUTE THE ADDITION U/S.68 AND ALLOW THE NECESSARY RELIEF ONLY TO THE EXTENT AS DIRECTED HEREINABOVE. 4. APROPOS TO DISALLOWANCE OF BONUS OF RS.44,800/-, THE AO AS WELL AS LEARNED CIT(A) HAVE RAISED A DOUBT IN RESPECT OF THE SIGNATURES OF THE EMPLOYEES WHICH WAS NOT EVEN REMOVED BEFORE US. THE REFORE, IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION WE ARE NOT INCLINED TO INTERFERE WITH THE FACTUAL FINDING OF THE AUTHORITIES BELOW; HENCE, THIS GROUND OF THE ASSESSEE IS HEREBY REJECTED. 5. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 31/03/2014 PRABHAT KR. KESARWANI, SR. P.S. ITA NO.1909/AHD/2012 DIPAK KUMAR C. DOSHI VS. ACIT, RANGE-4, BARODA. A.Y.2009-10 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD