Ajay Kumar Agarwal, Siliguri V. ITO, Ward - 1(1), Siliguri, Siliguri

ITA 1943/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78404 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-10-2010
• Court: TRIBUNAL
• Department Lawyers: APURBA DAS
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1943/KOL/2010 #$ %&/ ASSESSMENT YEAR: 2007-08 AJAY KUMAR AGARWAL V INCOME-TAX OFFICER, WD-1 (1), SILIGURI (PAN: ACBPA8354N) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 03.07.2014 DATE OF PRONOUNCEMENT: 18.7.2014 FOR THE APPELLANT: SHRI RAVI TULSIYAN, FCA FOR THE RESPONDENT: SHRI APURBA DAS, JCIT, SR. D R / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), SILIGURI IN APPEAL NO. 62/CIT(A)/SLG/09-10 DATED 06.09.2010. ASSESSMENT W AS FRAMED BY ITO, WARD-1(1), SILIGURI U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 29.12.2009. 2. THE ONLY COMMON ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF UNEXPLAINED CASH CREDITS I.E. UNSECURED LOAN AMOUNTING TO RS.18 LACS BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT . 3 . BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS BOR ROWED MONEY FROM FOLLOWING NINE PERSONS: I) VINEETA AGARWAL RS.5,00,000/- II) BAJRANG AGARWAL RS.5,00,000/- III) BISHNU KUMAR MITTAL RS.1,00,000/- IV) DIPAK MITTAL RS.3,00,000/- V) GOURI SHANKAR MITTAL RS.1,50,000/- VI) SANTOSH DEVI MITTAL RS.1,50,000/- VII) SHAMBHU KUMAR MITTAL RS.1,00,000/- VIII) AJAY KUMAR AGARWAL & OTHERS RS.1,00,000/- IX) MAHABIR PD. AGARWAL RS. 50,000/- TOTAL RS.19,50,000/- AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ACCE PTED LOANS AS GENUINE AS MENTIONED AT SL. NO. (VIII) AND (IX) ABOVE I.E. SHRI AJAY KUMAR AGAR WAL & OTHERS AND SHRI MAHABIR PD. AGARWAL AMOUNTING TO RS.1,00,000/- AND RS.50,000/- RESPECTIVELY. AO SUMMONED THE PERSONS 2 ITA NO.1943/K/2010 AJAY KUMAR AGARWAL AY 2007-08 APPEARING AT SL. NOS. (I) TO (VII) FOR EXAMINATION AND ASKED TO PRODUCE THEIR I. T. DETAILS, BANK DETAILS AND IDENTITY. THE PERSONS AT SERIAL NOS (I II) TO (VII) APPEARED BEFORE AO, PRODUCED THEIR I. T. RECORDS AND PERSONAL EXAMINATION WAS DONE. F ROM SL. NOS. (III) TO (VII) CONFIRMED THE LOAN GIVEN BY THEM AS NOTED ABOVE. ALL THE PARTIES FILE D THEIR INCOME TAX DETAILS, PAN AND BALANCE SHEET AND CAPITAL ACCOUNT FILED WITH THE RETURNS OF INCOME OF THE RESPECTIVE CREDITORS. BEFORE US AND BEFORE CIT(A), ASSESSEE FILED ALL THE BALANCE S HEETS OF THE CREDITORS, BANK ACCOUNT DETAILS AND PERMANENT ACCOUNT NO. (PAN) AND INCOME TAX RETU RNS DETAILS. THE CIT(A) CONFIRMED THE ADDITION BY HOLDING THAT THESE PERSONS HAD DEPOSITE D THE MONEY IMMEDIATELY BEFORE THE ISSUANCE OF CHEQUE IN ALL THE CASES FROM SL. NOS. ( III) TO (VII). FOR THIS, THE CIT(A) OBSERVED AS UNDER: IN FINE, IT CAN BE CONCLUDED THAT THE SUBMISSION OF THE LD AR IS NOT CONVINCING. THE AO OBSERVED THAT THE CREDITORS COUL D NOT EXPLAN SATISFACTORILY THE SOURCE OF THE FUND SHOWN TO HAVE BEEN DEPOSITED IN THE BANK A/C. THEREFORE, THE DECISIONS CITED BY THE LD AR ARE NOT APPLICABLE TO) THE FACT OF THIS CASE. HOWEVER, THEE COURTS HELD THAT IF THE ASSESSEE OFFERS AN EXP LANATION ABOUT THE CASH CREDIT, THE AO CAN ASK THE ASSESSEE TO PROVE HIS EXPLANATIO N AND IF THE ASSESSEE FAILS TO TENDER EVIDENCE OR BURKES AN ENQUIRY, THEN THE ASSE SSING OFFICER IS JUSTIFIED IN REJECTING THE EXPLANATION AND HOLDING THAT THE INCO ME IS FROM UNDISCLOSED SOURCE. THE AO IS NOT REQUIRED TO SPECIFY OR PROVE WHAT THA T SOURCE IS, WHICH FROM THE NATURE OF THE CASE MUST BE KNOWN ONLY TO THE ASSESS EE, AS HELD IN SETH KALEKHAN MD HANIF VS. CIT (1963) 50 ITR 1 (SC). FROM ALL RESPECT, IT IS HELD THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE LEGAL OBLIGATION. IT IS NECESSARY FOR THE ASSESSEE TO PR OVE PRIMA FACIEL THE TRANSACTIONS GENUINE WITH IDENTITY OF THE CREDITOR, HIS CAPACITY AND THE TRANSACTION. ONLY AFTER THESE THREE THINGS PROVED PRIMA FACIE ONLY THEN THE BURDEN SHIFTS ON THE DEPARTMENT. MERELY ESTABLISHING THE IDENTITY OF TH E CREDITOR IS NOT EMOUGH (REF. PRAKASH TEXTILE AGENCY VS. CIT (1980) 121 ITR 890 ( CAL). THE HONBLE KOLKATA HIGH COURT IN THE CASE OF SHANKAR INDUSTRIES VS CIT 114 ITR 689 (CAL ) HAS HELD THAT IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FA CIE THE TRANSACTION WHICH RESULTS IN A CASH CREDIT IN HIS BOOKS OF ACCO UNTS. SUCH PROOF INCLUDES PROOF OF THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE MONEY AND LASTLY, THE GENUI NENESS OF THE TRANSACTION. THESE THINGS MUST BE PROVED PRIMA FACI E BY THE ASSESSEE AND ONLY AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID, THE ONUS SHIFTS ON THE DEPARTM ENT. LN THE INSTANT CASE, IT SEEMS THAT THE ASSESSEE ESTABLISHED ONLY T HE IDENTITY OF THE CREDITOR AND NOTHING MORE. MERE FILING OF PARTICULARS OF THE CASH-CREDITOR IS NOT ENOUGH. LN THE CASE OF CIT VS BAISHNAV CHANRAN MAHANTI (L995) 212 ITR 99 (ORI), IT WAS HELD THAT ONLY WHEN THREE CONDITIONS FULFILLED BY THE ASSESSEE THEN THE BURDEN SHIFTS TO THE DEPARTMENT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE US. 3 ITA NO.1943/K/2010 AJAY KUMAR AGARWAL AY 2007-08 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE FILED COMPLETE DETAILS I. E. INCOME TAX, BANK ACCOUNT, COPIES OF BALANCE SHEETS, COPIES OF CAPITAL ACCOUNT AND CONFI RMATIONS OF THE PERSONS FROM WHOM AMOUNTS BORROWED AT SL. NOS. (III) TO (VII) ABOVE. IN RESPECT TO THESE CREDITORS I.E. SERIAL NOS (III) TO (VII) NAMELY, BISHNU KUMAR MITTAL AMOUNTIN G TO RS.1 LAC, DIPAK MITTAL AMOUNTING TO RS.3,00,000/-, GOURI SHANKAR MITTAL AMOUNTING TO RS.1,50,000/- , SANTOSH DEVI MITTAL AMOUNTING TO RS.1,50,000/- AND SHAMBHU KUMAR MITTAL AMOUNTING TO RS.1,00,000/-. ALL ACCEPTED IN THEIR DEPOSITION BEFORE THE AO TO HAVE ADVANCED THESE AMOUNTS. WE FIND THAT ONCE ALL THE INCOME TAX PARTICULARS, CAPITAL ACCOUNT, BA LANCE SHEETS AND BANK ACCOUNTS WERE FILED BY THESE CREDITORS, FROM WHERE THE AMOUNTS WERE ADVANC ED, IN THAT CASE, THE IMMEDIATE SOURCE OF THE ENTRIES ARE PROVED. EVEN OTHERWISE, WHEN THESE EVIDENCES WERE PROVIDED, THE AO SHOULD HAVE TAKEN ACTION IN THE HANDS OF THESE CREDITORS/P ERSONS, IN CASE HE FEELS, THAT THESE ENTRIES ARE UNEXPLAINED. THIS VIEW OF OURS IS SUPPORTED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. DATAWARE PRIVATE LIMITED, ITAT NO.263 OF 2011, GA NO.2856 OF 2011 DATED 21.09.2011, WHEREIN HONBLE H IGH COURT HAS OBSERVED AS UNDER: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER G ETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY T HE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORT HY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMI TTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE G ENUINENESS OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (A PPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQU IRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. THE APPEAL IS THUS DEVOID OF ANY SUBSTANCE AND IS S UMMARILY DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE CALC UTTA HIGH COURT IN THE CASE OF DATAWARE PRIVATE LIMITED, SUPRA, WE DELETE THE ADDITION EXCE PT THE UNSECURED LOAN OF VINEETA AGARWAL AND BAJRANG AGARWAL. 5. IN REGARDS TO THE UNSECURED LOAN OF VINEETA AGAR WAL AMOUNTING TO RS. 5,00,000/- AND BAJRANG AGARWAL AMOUNTING TO RS.5,00,000/-, THESE T WO CREDITORS HAVE FILED ALL THE DETAILS I.E. INCOME TAX DETAILS, BANK ACCOUNTS, BALANCE SHEETS A ND COPY OF CAPITAL ACCOUNT BUT THESE PERSONS/CREDITORS COULDNT PRODUCE BEFORE THE AO FO R THE REASONS THAT THESE CREDITORS ARE 4 ITA NO.1943/K/2010 AJAY KUMAR AGARWAL AY 2007-08 RESIDING IN JAIPUR, RAJASTHAN. COMPLETE ADDRESS OF THESE PERSONS WERE AVAILABLE AND EVEN INCOME TAX PARTICULARS WERE GIVEN. THE AO REQUIRED THE ASSESSEE TO PRODUCE THESE PERSONS AT SILIGURI, SINCE THESE PERSONS ARE LIVING FROM FAR A WAY IN OTHER PART OF INDIA I.E. WESTERN PART, SOME 2000 KMS AWAY FROM THIS PLACE, IT IS NOT POSSI BLE TO PRODUCE THEM AT SILIGURI. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT LET THIS ISS UE BE RESTORED BACK TO THE FILE OF THE AO AND IN CASE THESE PERSONS DEPOSE BEFORE THE AO AT JAIPUR, AS DEPUTED BY ISSUING OF COMMISSION TO THE AO OF JAIPUR AND SOURCE IS PROVED BY FILING BALANCE SHEETS AND CAPITAL ACCOUNT, THE SAME CAN BE DECIDED ACCORDINGLY. IN TERM OF THE ABOVE, THESE T WO CASH CREDITORS I.E. VINEETA AGARWAL AND BAJRANG AGARWAL ARE SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN TERM OF THE ABOVE DIRECTION. REST OF THE CREDITORS I.E. AT SL. NOS. (III) TO (VII) VIZ. BISHNU KUMAR MITTAL AMOUNTING TO RS.1 LAC, DIPAK DIPAK MITTAL AMOUNTING TO RS.3,0 0,000/-, GOURI SHANKAR MITTAL AMOUNTING TO RS.1,50,000/- ,SANTOSH DEVI MITTAL AMOUNTING TO RS.1,50,000/- AND SHAMBHU KUMAR MITTAL AMOUNTING TO RS.1,00,000/- ARE DELETED. IN TERMS O F THE ABOVE, THIS APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE . 6. IN THE RESULT APPEAL OF ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18.07.2 014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH JULY, 2014 -. #/0 1 JD.(SR.P.S.) 2 *3 4 3%5- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SHRI AJAY KUMAR AGARWAL, C/O M/S. MAHAB IR PRASAD AJAY KR. MR COMPOUND, SILIGURI 2 *+() / RESPONDENT ITO, WARD-1(1), SILIGURUI . 3 . # ( )/ THE CIT(A), SILIGURI 4. 5. # / CIT , SILIGURI 3:; *# / DR, KOLKATA BENCHES, KOLKATA +3 */ TRUE COPY, #