Mr. Ashish Jhunjhunwala, Kolkata V. D.C.I.T., CC-XXVII, Kolkata, Kolkata

ITA 1931/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1845 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Earning of tax free income; Source of fund; Question of law; Onus to prove
• Section: 143(3); 14A; 133(6); 131; 68

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1931 / KOL / 2014 ASSESSMENT YEAR :2011-12 MR. ASHISH JHUNJHUNWALA, 10/4, ALIORE PARK PLACE, KOLKATA-700 027 [ PAN NO.ACPPJ 2618 E ] V/S . DCIT, CENTRAL CIRCLE- XXVIII, KOLKATA /ASSESSEE .. / RESPONDENT /BY ASSESSEE SHRI S.K. TULSIYAN, ADVOCATE /BY RESPONDENT SHRI S. DASGUPTA, ADDL. CIT-DR /DATE OF HEARING 20-12-2017 /DATE OF PRONOUNCEMENT 25-01-2018 / O R D E R PER DR. A.L. SAINI, ACCOUNTANT MEMBER:- THIS CAPTION APPEAL FILED BY THE ASSESSEE, PERTAINING THE ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL-II, KOLKATA, DATED 28.08.2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), VIDE HIS ORDER DATED 22.11.2013. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED HEREUNDER:- 1.THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE ARBITRARY, ERRONEOUS, WITHOUT PROPER REASONS, INVALID AND BAD IN LAW, TO THE EXTENT TO WHICH THEY ARE PREJUDICIAL TO THE INTERESTS OF THE ASSESSEE. ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE AMOUNT OF RS.2,00,00,000/- IN THE NAME OF SHRI T.T. SEMA, U/S. 68 OF THE INCOME-TAX ACT, 1961. 3.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDITION OF THE AMOUNT OF RS.48,000/- AS UNDISCLOSED INTEREST INCOME OF THE ASSESSEE AND ALSO IN CONDITIONALLY SUSTAINING THE FURTHER ADDITION OF RS.1,20,000/- ON THE SAME ACCOUNT INSTEAD OF DELETING THE SAID ADDITION CLEARLY. 4.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE / ADDITION UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 5.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF THE CLAIM OF LOSS OF RS.2,01,023/- BEING SHORT TERM CAPITAL LOSS INCURRED BY THE ASSESSEE ON THE GROUND THAT THE RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE BELATEDLY ALTHOUGH THE APELLANT DID NOT FILE ANY LOSS RETURN. 6.THE ASSESSEE CRAVES LEAVE TO AMEND, ALTER, MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/ OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 3. ALTHOUGH IN THIS APPEAL, ASSESSEE HAS RAISED FIVE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING THE SOLITARY GRIEVANCE OF THE ASSESSEE HAS BEEN CONFINED TO GROUND NO. 2 ONLY AND OTHER GROUNDS WERE NOT PRESSED. GROUND NO.2 RELATES TO ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A), UNDER SECTION 68 OF THE INCOME TAX ACT, 1961.THE SOLITARY GRIEVANCE OF ASSESSEE IN GROUND NO.2, IS THAT LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDITION OF 2 CRORES, HOLDING THAT ASSESSEE HAS FAILED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITOR, SHRI T.T. SEMA (TTS FOR SHORT),UNDER SECTION 68 OF THE I.T. ACT. 4.THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 30.03.2013 DECLARING TOTAL INCOME OF 16,97,690/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 3 143(2) OF THE ACT AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AFTER MAKING THE ADDITIONS U/S 68 OF THE ACTAT 3,01,50,000/- AND THE SAID AMOUNT INCLUDES THEAMOUNT RECEIVED FROM TTS OF 2,00,00,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE TOOK FRESH LOAN AMOUNTING TO 3,01,50,000/- WHEREIN THE ASSESSEE COULD NOT PROVE THE IDENTITY, CAPACITY,AND CREDITWORTHINESS OF THE CREDITORS. THEREFORE, AO HELD THAT THE LOAN TOTALING OF 3,01,50,000/- WAS BOGUS AND THEREFORE TREATED AS INCOME OF ASSESSEE FROM UNDISCLOSED SOURCE. ON PERUSAL OF THE DETAILS OF UNSECURED LOAN IT WAS OBSERVED BY THE AO THAT IN THE FOLLOWING CASES NEW LOAN WAS CLAIMED TO HAVE BEEN ACCEPTED. THE ASSESSEE HAD ALSO CLAIMED INTEREST AMOUNTING TO RS.5,67,671/-, DETAILS ARE GIVEN BELOW: SL.NO. NAME OF THE ALLEGED LOAN CREDITOR [PAN] FRESH LOAN AMOUNT ADDED DURING THE YEAR INTEREST CLAIMED [RS] 1 NAVIN CONSTRUCTION & CREDIT PVT LTD. 20,00,000/- 1,26,575/- 2 RUNIT INVESTMENT CO. LTD. 70,00,000/- 4,41,096/- 3 CONSORTIUM COMDEALPVT LTD 11,50,000/- - - 4 TOHOKHU T SEMA 2,00,00,000/- - TOTAL 3,01,50,000/- 5,67,671/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO ASKED THE ASSESSEE TO FILE THE DETAILS OF THE ABOVE CREDITORS, IN RESPONSE TO THAT ASSESSEE EXPLAINED THAT THE DETAILS WERE TO BE OBTAINED FROM THE LOAN CREDITORS AND THEREFORE SOMETIME SHOULD BE ALLOWED FOR PRODUCTION OF DOCUMENTS AND DETAILS. HOWEVER, ASSESSEE COULD NOT PRODUCE ANY DETAILS AND DOCUMENTS BEFORE THE AO. THEREFORE, THE ALLEGED LOAN TOTALING TO RS.3,01,50,000/- & INTEREST CLAIMED THEREON OF RS.5,67,671/- WERE HELD AS BOGUS AND TREATED AS AN INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND ADDED TO THE INCOME OF THE ASSESSEE. 5.AGGRIEVED BY THE ORDER OF AO ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THE ADDITION TO THE EXTENT OF 1,01,50,000/- BUT CONFIRMED THE ADDITION IN RESPECT OF LOAN TAKEN FROM SHRI TTS AT 2 CRORES. THE LD CIT(A) ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 4 OBSERVED THAT THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEEHAD RECEIVED LOAN OF RS.2 CRORE FROM AN INDIVIDUAL SHRI TOHOKHU T. SEMA (TTS) OF DIMAPUR, NAGALAND. AS MENTIONED ABOVE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT SUBMIT THE PROPER EVIDENCES WITH REFERENCE TO LOAN TAKEN FROM THE SAID PERSON. IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED A COPY OF LOAN CONFIRMATION, COPY OF THE EXEMPTION CERTIFICATE U/S 10(26) OF THE ACT ISSUED BY THE ITO, WARD DIMAPUR DATED 25.01.2000 AND THE COPY OF HIS BANK STATEMENT. IN HIS SUBMISSION, IT WAS STATED BY THE ASSESSEE THAT SINCE THE LOAN CREDITOR WAS EXEMPTED FROM PAYMENT OF INCOME TAX AS PER SECTION 10(26) OF THE I.T. ACT, 1961, THEREFORE, THE CREDITOR IS NOT IN THE PRACTICE OF MAINTAINING HIS BOOKS OF ACCOUNT. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT IF NOT SATISFIED, WITH THE DOCUMENTARY EVIDENCES SUBMITTED BY HIM, IN RESPECT OF SAID LOAN CREDITOR, THE MATTER BE REMANDED TO THE AO WITH A DIRECTION TO SERVE NOTICE U/S 131 OF THE ACT TO THE SAID LOAN CREDITOR DEMANDING PERSONAL ATTENDANCE FOR THE PURPOSE OF FURTHER VERIFICATION. ACCORDINGLY, THE MATTER WAS REMANDED TO THE AO FOR MAKING VERIFICATION OF LOAN CLAIMED TO BE RECEIVED FROM SHRI TOHOKHU T. SEMA. IN THE COURSE OF REMAND PROCEEDINGS, THE AO ISSUED A NOTICE U/S 133 OF THE ACT TO THE LOAN CREDITOR ON 06.03.2014 TO CALL FOR VARIOUS DETAILS AND EXPLANATION. AS PER THE REPORT OF THE AO DATED 04.04.2014, NO COMPLIANCE WAS MADE BY THE CREDITOR TILL THAT DATE. FURTHER, THE AO ALSO ISSUED SUMMON U/S 131 OF THE ACT ON 06.03.2014 IN THE NAME OF THE LOAN CREDITOR AS REQUESTED BY THE ASSESSEE AND SENT BY SPEED POST. BUT NO COMPLIANCE WAS MADE BY THE LOAN CREDITOR. AGAIN, AS PER THE AO'S REPORT DATED 21.04.2014, THE REPLY OF THE NOTICE U/S 133(6) WAS RECEIVED FROM THE LOAN CREDITOR ON 21.04.2014. IT WAS OBSERVED THAT IN HIS LETTER, IT HAD BEEN STATED BY THE LOAN CREDITOR THAT HE IS EXEMPTED FROM PAYING INCOME TAX BEING LOCAL INHABITANT OF STATE OF NAGALAND. HE ENCLOSED THE COPY OF HIS PAN CARD AND BANK STATEMENT ALONG WITH HIS LETTER. REGARDING LOAN OF RS.2 CRORE ADVANCED TO THE ASSESSEE, HE STATED THAT HAVING SPARE MONEY, HE HAD LOANED TO SHRI ASHISH JHUNJHUNWALA. AS REGARDS SOURCE OF FUND, HE SUBMITTED THAT HE UNDERTAKES FLYING BUSINESS AND CARRY ON SOME LOCAL CONTRACTS AND ALSO WORK ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 5 AS COMMISSION AGENT WITH SOME LOCAL PERSONS WHO ARE UNDERTAKING NUMBER OF CONTRACT WORKS. IN HIS REPORT, IT WAS SUBMITTED BY THE AO THAT THE ALLEGED CREDITOR HAD FURNISHED A VAGUE REPLY WITH REFERENCE TO HIS SOURCE OF INCOME AND BUSINESS ACTIVITIES AND THAT THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE LOAN TRANSACTION CANNOT BE JUDGED BECAUSE IN THE BANK ACCOUNT OF THE LOAN CREDITOR THERE ARE FREQUENT DEPOSITS OF CASH ON VARIOUS DATES AND THERE WERE CREDITS AND DEBITS IN THE BANK ACCOUNT THROUGH TRANSFER ENTRIES. SINCE, THE LOAN CREDITOR DID NOT COMPLY THE SUMMON ISSUED BY THE AO U/S 131 OF THE ACT, THE AO ALLOWED AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE LOAN CREDITOR. HOWEVER, VIDE HIS REMAND REPORT DATED 15.05.2014, IT WAS INFORMED BY THE AO THAT THE ASSESSEE DID NOT PRODUCE THE LOAN CREDITOR. IT WAS OBSERVED THAT THE ASSESSEE WROTE A LETTER DATED 08.05.2014 TO THE AO AND SUBMITTED THAT IT WAS VERY DIFFICULT TO PRODUCE MR. T. T. SEMA AT SUCH A SHORT NOTICE AS HE RESIDES IN DIMAPUR, NAGALAND. THE ASSESSEE REQUESTED TO ALLOW 30 DAYS FOR APPEARANCE. ALONG WITH THE SAID LETTER THE ASSESSEE ENCLOSED THE COPY OF LETTER DATED 27.03.2014 OF THE LOAN CREDITOR WHICH WAS ADDRESSED BY HIM TO THE AO IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT. HOWEVER, IT WAS OBSERVED THAT TILL DATE, EVEN AFTER EXPIRY OF THAN 30 DAYS, THE ASSESSEE DID NOT MADE ANY EFFORT TO PRODUCE THE LOAN CREDITOR BEFORE THE AO FOR THE PURPOSE OF VERIFICATION OF LOAN TRANSACTION I.E. THE CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. 5.1 THE COPIES OF THE REMAND REPORTS SUBMITTED BY THE AO WERE FORWARDED TO THE ASSESSEE FOR COUNTER COMMENTS. IN HIS LETTER DATED 29.05.2014, IT WAS SUBMITTED BY THE ASSESSEE THAT THE LOAN CREDITOR HAD ALREADY REPLIED TO THE LETTER ISSUED BY THE AO U/S 133(6) OF THE ACT AND CONFIRMED THE LOAN TRANSACTION. FURTHER, THE CREDITOR HAD ALSO EXPLAINED THE SOURCE OF SUCH FUND BEING FROM HIS BUSINESS WHICH INCLUDES FLYING BUSINESS, CONTRACTUAL BUSINESS AND COMMISSION INCOME RECEIVED FROM LOCAL CONTRACTORS. THE COPY OF THE BANK STATEMENT WAS ALSO PROVIDED BY THE CREDITOR. IN HIS SUBMISSION IT WAS ALSO CONTENDED BY THE ASSESSEE THAT IN THE REMAND REPORT THE AO HAS ALLEGED ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 6 THAT THE SOURCE OF FUND OUT OF WHICH THE LOAN WAS GIVEN TO THE ASSESSEE WERE SOME CASH DEPOSITS AND OTHER AMOUNTS RECEIVED BY WAY OF TRANSFER AND CLEARING. THE ASSESSEEWAS UNABLE TO PROVIDE HIS COMMENTS ON THE SAME, SINCE NONE OF THESE DOCUMENTS HAVE BEEN PROVIDED TO THE ASSESSEE BUT IT WOULD NOT BE OUT OFPLACE TO SUBMIT THAT THE CLEARING DEPOSITS CLEARLY IMPLY THAT THESE WERE RECEIVED THROUGH BANKING CHANNEL AND NO ADVERSE INFERENCE CAN BE DRAWN. IT WAS ALSO ARGUED BY THE ASSESSEE, THAT HE WAS NOT REQUIRED TO ESTABLISH THE SOURCE OF SOURCE U/S 68 OF THE ACT. THE NON-APPEARANCE OF THE LENDER BEFORE THE AO CANNOT BE HELD AGAINST THE ASSESSEE SPECIALLY SINCE THE ASSESSEE HAS MADE ALL POSSIBLE EFFORTS TO PRODUCE MR. SEMA BEFORE THE AO BUT HAS BEEN UNABLE TO ENFORCE HIS ATTENDANCE SINCE HE RESIDES IN NAGALAND AND THE ASSESSEE HAS NO PHYSICAL CONTROL OVER HIM. 5.2 THELD CIT(A) OBSERVED THAT IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS CAST UPON HIM TO PROVE THE CREDITWORTHINESS AND THE GENUINENESS OF LOAN TRANSACTION IN THE CASE OF SHRI T.T. SEMA AND IT WAS NOT ENOUGH TO SIMPLY STATE THAT THE SOURCE OF FUND OF THE ALLEGED LOAN WAS FROM FLYING BUSINESS, CONTRACTUAL BUSINESS AND THE COMMISSION INCOME FROM LOCAL CONTRACTORS. THE LD CIT(A) OBSERVED THAT IN LOAN CREDITOR`S BANK ACCOUNT, FROM WHICH THE ALLEGED LOAN AMOUNT WAS GIVEN TO THE ASSESSEE, THERE WERE HUGE CASH DEPOSITS, HUGE DEPOSITS AND WITHDRAWAL BY WAY OF CLEARING AND TRANSFER ENTRIES. WHEN THERE WAS HUGE VOLUME OF THE TRANSACTIONS IN THE BANK ACCOUNT, IT WAS DIFFICULT TO BELIEVE THAT THE LOAN CREDITOR HAD NOT KEPT ANY RECORD THEREOF. THE ONUS WAS ON THE ASSESSEE TO PRODUCE THE LOAN CREDITOR BEFORE THE AO FOR THE PURPOSE OF VERIFICATION BECAUSE HE HAD CLAIMED THE CREDIT IN HIS BOOKS OF ACCOUNT FROM THE SAID CREDITOR. HOWEVER, ON ASSESSEE'S REQUEST THE AO ISSUED SUMMON U/S 131 OF THE ACT TO THE SAID LOAN CREDITOR. BUT, NO COMPLIANCE WAS MADE BY HIM. UNDER THE CIRCUMSTANCES, THE AO ALLOWED AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE SHRI T.T. SEMA. BUT THE ASSESSEE FAILED TO DO SO.FURTHER, IT WAS OBSERVED THAT THE ASSESSEE HAD RECEIVED THE ALLEGED LOAN OF RS.2,00,00,000/- FROM T.T. SEMA ON 06.09.2010. BUT, NO INTEREST WAS PAID UPTO 31.03.2011. IT IS NOT KNOWN AS TO HOW SUCH A ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 7 HUGE AMOUNT OF LOAN WAS RECEIVED BY HIM WITHOUT INTEREST. THUS, IT CANNOT BE SAID THAT THE ASSESSEE HAD DISCHARGED HIS ONUS TO PROVE THE CREDIT IN HIS BOOKS OF ACCOUNT IN THE NAME OF SHRI SEMA AND THEREFORE, LD CIT(A) CONFIRMED THE ADDITION OF RS. 2 CRORES. 6.NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A),ASSESSEE IS IN FURTHER APPEAL BEFORE US.LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT DURING THE APPELLATE PROCEEDINGS,ASSESSEE HAS PRODUCED A COPY OF BANK STATEMENT OF THE CREDITOR TOGETHER WITH TRIBAL CERTIFICATE (TC FOR SHORT) AND SAME WAS PRODUCED BEFORE LD. CIT(A). THE ASSESSEE EXPLAINED BEFORE THE CIT(A) THAT AS PER THE TRIBAL CERTIFICATE (TC), SHRI T.T.SEMA (CREDITOR) WAS EXEMPTED FROM INCOME-TAX U/S 10(26) OF THE I.T ACT. SINCE THE SAID DOCUMENT WAS PRODUCED BEFORE ASSESSING OFFICER THEREFORE LD. CIT(A) REMITTED THE ISSUE BACK TO THE FILE OF AO, WHO IN TURN ISSUED NOTICE U/S.133(6) OF THE ACT TO MR.TTS AND MR.TTS CONFIRMED THE ALLEGED TRANSACTIONS WITH THE ASSESSEE. MR. TTS ALSO FURNISHED A COPY OF PAN AND BANK STATEMENT SHOWING THE PAYMENT OF LOAN TO ASSESSEE. THE LOAN CREDITOR, MR. TTS FURNISHED THE SOURCE OF HIS FUNDS STATING THAT HE WAS ENGAGED IN FLYING BUSINESS AND WORKING AS COMMISSION AGENT WITH LOCAL PUBLIC AND UNDERTOOK CONTRACT WORK. FURTHER, MR. TTS ALSO EXPLAINED THAT SINCE HE IS NOT LIABLE TO PAY INCOME-TAX U/S 10(26) OF THE ACT,THEREFORE, NO BOOKS OF ACCOUNT WERE MAINTAINED BY HIM. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED BEFORE US THAT IN THE REMAND REPORT, THE AO HAS NOWHERE CONTROVERTED ANY OF THE AFORESAID MATERIALS PRODUCED BY MR.TTS. THE LD. CIT(A) MERELY OBSERVED THAT THERE WERE FREQUENTLY CASH DEPOSITS IN THE SAID BANK ON VARIOUS DATES AND THERE WERE DEBIT -CREDITS TRANSACTIONS IN THE ACCOUNT THROUGH TRANSFER ENTRIES. LD. COUNSEL FOR THE ASSESSEE STATED THAT BY PRODUCING THE PAN NUMBER, BANK STATEMENT AND BY EXPLAINING THE SOURCE OF THE MONEY BY THE CREDITOR- SHRI TTS,IT IS EVIDENTLY CLEAR THAT ASSESSEE HAS DISCHARGED THE ONUS TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITOR. THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT IF THE INCOME TAX AUTHORITY WANTED MORE INFORMATION, IN THAT CASE, THEY CAN ISSUE ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 8 SUMMONS U/S 131 OF THE ACT AND ENFORCE THE ATTENDANCE OF LOAN CREDITOR OF SHRI TTS. THE SECTION 131 OF THE I.T. ACT EMPOWERS THE ASSESSING OFFICER AND LD. CIT(A) TO ENFORCE THE ATTENDANCE OF THE LOAN CREDITOR, BUT IN THE ASSESSEE`S CASE UNDER CONSIDERATION NEITHER THE AO NOR THE LD. CIT(A) HAS EXERCISED THEIR POWER U/S. 131 OF THE ACT. THEREFORE, LD COUNSEL STATED THAT THE ASSESSEE HAS PROVED PRIMA FACIE TRANSACTIONS WHICH RESULTS IN CASH CREDIT IN HIS BOOKS OF ACCOUNT, HE PROVED THE IDENTIFY OF HIS CREDITOR, THE CAPACITY OF SUCH CREDITOR AND THE GENUINENESS OF SAID TRANSACTIONS, THEREFORE, ADDITION SHOULD NOT BE MADE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IDENTITY OF THE CREDITOR STAND ESTABLISHED BEYOND DOUBT AS THE CREDITOR IN COURSE OF REMAND REPORT PROCEEDINGS PRODUCED COPY OF BANK STATEMENT AND CLEARLY EXPLAINED HIS SOURCE OF FUND BEING REVENUE FROM HIS BUSINESS AND THAT NO MATERIAL WAS BROUGHT ON RECORD BY LD. CIT(A) TO CONTROVERT SUCH CLAIM. THE AO IN HIS REMAND REPORT MERELY OBSERVED THAT THERE WERE FREQUENT CASH DEPOSITS IN THE CREDITORS ACCOUNTS. IN THIS REGARD, IT WAS POINTED OUT THAT THE CASH DEPOSITS, WHICH WERE MADE, DOES NOT LEAD ANY INFERENCE THAT SUCH DEPOSITS WERE FUNDED BY ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT CREDITOR DID NOT MAINTAIN HIS BOOKS OF ACCOUNT BECAUSE HE WAS EXEMPTED TO PAY INCOME TAX U/S 10(23) OF THE I.T.ACT. THEREFORE, THE COPY OF THE BOOKS OF ACCOUNTS COULD NOT BE FURNISHED BEFORE ASSESSING OFFICER, AND HENCE THE ASSESSEE BY PRODUCING THE PAN AND BANK STATEMENT OF THE CREDITOR TOGETHER WITH SOURCE OF FUND CLEARLY DISCHARGED ONUS U/S. 68 OF THE ACT.IF THE CREDITOR DOES NOT CO-OPERATE WITH ASSESSEE THEN IT IS THE DUTY OF THE INCOME TAX AUTHORITY TO EXERCISE THE POWER U/S. 131 OF THE ACT TO ENFORCE THE ATTENDANCE. THE ASSESSEE HAS DISCHARGED HIS ONUS AND THE ONUS NOW HAS SHIFTED ON THE DEPARTMENT TO ENFORCE THE CREDITOR BY EXERCISING POWERS U/S.131 OF THE ACT. 6.1 IN ADDITION TO THIS, LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION (P) LTD. 159 ITR 78 (SC), WHEREIN IT WAS HELD THAT THE ASSESSEE HAD GIVEN THE ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 9 NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLOWED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO- CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. THE LD COUNSEL ALSO RELIED ON THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF TAMTAMPEDDAGURUVA REDDY VS. JCIT 291 ITR 44 (KAR) WHEREIN THE FACTS OF THE CASE WERE THAT THE ASSESSEE, A CONTRACTOR, EXECUTED NUMEROUS CONTRACTS AND SOME OF THEM WERE EXECUTED IN OUT OF THE WAY PLACES WHERE BANKING FACILITIES WERE POOR. FOR THE ASSESSMENT YEAR 1992-93, THE ASSESSING AUTHORITY ADDED A SUM OF RS.2,87,000 ON ACCOUNT OF LOAN ADVANCED BY ONE R TO THE ASSESSEES INCOME. THE TRIBUNALSUSTAINED THIS ADDITION HOLDING THAT R WAS A RELATIVE OF THE ASSESSEE, THAT HE COULD NOT HAVE SAVED OR ADVANCED SUCH A HUGE SUM OF RS.2,87,000 TO THE ASSESSEE AND THAT THERE WAS NO PROOF OF THE SOURCE OF THE LOAN. THE ASSESSEE HAD WITHDRAWN A SUM OF RS.1,51,869 FROM HIS BANK ACCOUNT TOWARDS EXPENSES BUT THE ASSESSING AUTHORITY TREATED THIS WITHDRAWAL AS INCOME OF THE ASSESSEE AND TAXED IT. ALLOWING THE APPEAL, THE HIGH COURT HELD THAT 'THE AFFIDAVIT FILED BY R SHOWED THAT HE HAD INCOME FROM AGRICULTURE AND FROM BUSINESS AND THAT HE HAD TWO FIXED DEPOSITS WHICH HAD MATURED DURING THE SAID PERIOD. THEREFORE, THE SOURCE OF INCOME HAD BEEN CLEARLY SPELT OUT AND THIS CREDIT COULD NOT BE TREATED AS UNEXPLAINED CREDIT IN TERMS OF SECTION 68. THE FINDING OF THE AUTHORITY THAT THE SAID AMOUNT WAS UNEXPLAINED INCOME COULD NOT BE ACCEPTED. IN THE INSTANT CASE TOO, THE ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 10 CREDITOR HAD ADVANCED THE LOAN FROM HIS TAX-EXEMPT INCOME AND IN HIS REPLY TO NOTICE U/S 133(6) HAD EXPLAINED HIS SOURCE OF FUNDS. THUS, APPLYING THE PRINCIPLE LAID OUT IN THE AFORESAID CASE, THE ONUS OF PROOF AS REQUIRED U/S 68 STANDS DISCHARGED. 7.BEFORE US, LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD. CIT(A) AND DEFENDED THE ORDER PASSED BY LD. CIT(A). 8. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS, AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT ASSESSEE COULD NOT PRODUCE ANY EVIDENCE BEFORE THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDINGS, IN RESPECT OF LOAN OF 2 CRORES TAKEN FROM SHRI TTS. HOWEVER, DURING THE APPELLATE PROCEEDINGS, WE OBSERVE THAT ASSESSEE PRODUCED A COPY OF BANK STATEMENT OF THE CREDITOR AND TRIBAL CERTIFICATE. THE ASSESSEE HAS ALSO PROVIDED TO THE ASSESSING OFFICER, THE ADDRESSES OF THE LOAN CREDITOR OF SHRI TTS. SINCE THE BANK STATEMENT AND TRIBAL CERTIFICATE (TC) ETC., WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER, THEREFORE LD. CIT(A) IN THE REMAND PROCEEDINGS, SENT THESE DOCUMENTS TO THE AO, WHO IN TURN ISSUED NOTICE U/S. 133(6) OF THE ACT TO SHRI TTS. ALTHOUGH, SHRI TTS DID NOT APPEAR PERSONALLY BEFORE THE AO DURING THE REMAND PROCEEDINGS, BUT HE REPLIED AND CONFIRMED THE LOAN WITH THE ASSESSEE.SHRI TTS FURNISHED A COPY OF PAN AND BANK STATEMENT SHOWING THE PAYMENT TO ASSESSEE. SHRI TTS, LOAN CREDITOR, ALSO EXPLAINED ABOUT HIS SOURCE OF FUNDS STATING THAT HE WAS IN FLYING BUSINESS AND WORKED AS A COMMISSION AGENT WITH LOCAL PUBLIC AND UNDERTOOK CONTRACT WORK. THE LOAN CREDITOR ALSO EXPLAINED THAT HE WAS NOT LIABLE TO INCOME TAX THEREFORE NO BOOKS OF ACCOUNT WERE MAINTAINED BY HIM. WE NOTE THAT THE ASSESSING OFFICER DID NOT CONTROVERT ANY OF THE AFORESAID MATERIALS PRODUCED BY LOAN CREDITOR. HOWEVER, AO OBSERVED THAT THERE WERE FREQUENT CASH DEPOSITS IN THE SAID BANK ACCOUNT ON VARIOUS DATES AND THERE WERE DEBITS AND CREDITS IN THE SAID BANK ACCOUNT THROUGH TRANSFER ENTRIES. DURING THE APPELLATE PROCEEDINGS WE OBSERVE THAT ASSESSEE HAS ASKED THE DEPARTMENT TO EXERCISE POWER U/S. ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 11 131 OF THE ACT TO ENFORCE ATTENDANCE OF LOAN CREDITOR. WE NOTE THAT BY PRODUCING PAN NUMBER, COPY OF BANK STATEMENT AND EXPLANATION OF THE SOURCE OF FUND, THE ASSESSEE HAS DISCHARGED HIS PRIMARY OBLIGATION TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITOR. THE ASSESSEESTATED THAT HE WAS UNABLE TO ENFORCE THE ATTENDANCE OF THE LOAN CREDITOR BUT HE REQUESTED THE LD. CIT(A) TO EXERCISE HIS POWER U/S. 131 OF THE ACT TO ENFORCE THE ATTENDANCE OF THE LOAN CREDITOR SHRI TTS, BUT LD. CIT(A) HAS FAILED TO DO SO. THE INCOME TAX AUTHORITY HAS THE SAME POWER AS VESTED BY CIVIL PROCEDURE CODE 1908 AND BY EXERCISING THESE POWERS THE ASSESSING OFFICER ORTHE LD. CIT(A) MAY ENFORCE THE ATTENDANCE OF THE LOAN CREDITOR. WE NOTE THAT AFTER TRANSACTIONS ARE OVER, NORMALLY THE LOAN CREDITOR MAY NOT CO- OPERATE WITH THE ASSESSEE. IN ASSESSEES CASE, WE NOTE THAT ASSESSEE HAS TRIED ENOUGH TO PRODUCE THE LOAN CREDITOR AND HAS COOPERATE WITH THE DEPARTMENT IN GIVING THE ADDRESS OF THE LOAN CREDITOR. NOW THE ONUS WAS ON THE INCOME-TAX AUTHORITY TO ENFORCE THE ATTENDANCE OF SHRI TTS. WE NOTE THAT IN ASSESSEES CASE UNDER CONSIDERATION,THE ASSESSEE HAD FURNISHED THE NAME AND ADDRESS OF SHRI TTS AND IT WAS IN THE KNOWLEDGE OF REVENUE AUTHORITY THAT THE SAID CREDITOR WAS HAVING PAN NUMBER. THE INCOME TAX AUTHORITY APART FROM ISSUING NOTICE U/S 131 OF THE ACT, AT THE INSTANCE OF ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THEREFORE, WE ARE OF THE VIEW THAT ASSESSEE, BY PRODUCING THE PAN NUMBER, ADDRESS, AND BANK STATEMENT OF THE LOAN CREDITOR CLEARLY DISCHARGED HIS ONUS U/S. 68 OF THE ACT. BESIDES, THE LOAN CREDITOR HAS HIMSELF EXPLAINED THE SOURCE OF MONEY. FOR THAT WE RELY ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION (P) LTD. 159 ITR 78 (SC), WHEREIN IT WAS HELD THAT THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO COULD ADVANCE THE ITA NO.1931/KOL/2014 A.Y. 2011-12 MR. A. JHUNJHUNWALA VS. DCIT, CC-XXVII, KOL. PAGE 12 ALLOWED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. WE ALSO NOTE THAT THE LD. CIT(A) HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE TRANSACTIONS IS NOT GENUINE, THEREFORE BASED ON THE FACTUAL POSITION, EXPLAINED ABOVE, WE ARE OF THE VIEW THAT ADDITION MADE BY THE AO AND CONFIRMED BY LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE SAME. 9. IN THE RESULT, THE ASSESSEES GROUND NO.2, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 25/01/2018. SD/- SD/- (N.V.VASUDEVAN) (DR. A.L. SAINI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S - 25/01/2018 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-MR. ASHISH JHUNJHUNWALA, 10/4, ALIPORE PARK PLACE, KOLKATA-27 2. /RESPONDENT-DCIT, CENTRAL CIRCLE-XXVII, KOLKATA 3. / CONCERNED CIT KOLKATA 4. - / CIT (A) KOLKATA 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. BY ORDER/ , SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO ,