ITO, Pondicherry V. Sushila Chudiwala, Pondicherry

ITA 1954/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81202 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Unexplained cash credit; Additional evidence; Reasonable cause; Condonation of delay
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , ! ' , % & BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1586/MDS/2014 ( / ASSESSMENT YEAR : 2007-08) SMT. SUSHILA CHUDIWALA, 13, RUE DUMAS, PONDICHERRY-605 001. VS THE INCOME TAX OFFICER, WARD-I(2) PONDICHERRY. PAN:ALBPS4639K ( /APPELLANT) ( /RESPONDENT) & ./I.T.A.NO. 1954/MDS/2014 ( / ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, WARD-I(2) PUDUCHERRY-605 003. VS SMT. SUSHILA A.CHUDIWALA, 13, RUE DUMAS, PONDICHERRY-605 001. PAN:ALBPS4639K ( /APPELLANT) ( /RESPONDENT) ASSESSEE BY : MR. G.SEETHARAMAN, C.A. REVENUE BY : MR. GURU BHASHYAM, JCIT / DATE OF HEARING : 26 TH AUGUST, 2014 /DATE OF PRONOUNCEMENT : 16 TH OCTOBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THESE TWO CROSS APPEALS ARE FILED BY THE ASSESSEE A ND THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS)-VI, CHENNAI DATED 28.03.2014 FOR THE ASSESSMENT YEAR 2007-08 ARISING OUT OF THE ASSESSME NT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 2 ITA NOS.1586 & 1954/MDS/2014 2. THE REVENUE FILED APPEAL WITH THE DELAY OF TW ENTY FIVE DAYS AND A PETITION ALONG WITH AN AFFIDAVIT WAS FI LED PRAYING FOR CONDONATION OF DELAY. WE HAVE PERUSED THE RE ASONS GIVEN IN THE AFFIDAVIT AND ARE SATISFIED THAT THERE IS A REASONABLE CAUSE FOR THE DELAY IN FILING OF THE APP EAL. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF 25 DAY S IN FILING OF THE APPEAL. THE PETITION FOR CONDONATION OF DELAY IS ALLOWED AND THE APPEAL OF THE REVENUE IS ADMITTED. 3. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AS WELL AS REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) IN DELETING / SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT. OUT OF THE EIGHT CREDITORS, COMMISSIONER OF INCOME TAX (APPEAL S) DELETED SEVEN CREDITORS AGAINST WHICH REVENUE IS I N APPEAL BEFORE US AND THE ADDITION SUSTAINED BY THE COMMISS IONER OF INCOME TAX (APPEALS) IN RESPECT OF ONE CREDITOR AGA INST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. BRIE F FACTS ARE THE ASSESSING OFFICER WHILE COMPLETING THE ASSE SSMENT 3 ITA NOS.1586 & 1954/MDS/2014 UNDER SECTION 143(3) OF THE ACT ON 30.11.2009 TREAT ED ` 26,73,308/- AS UNEXPLAINED CASH CREDIT UNDER SECTIO N 68 OF THE ACT BEING LOANS APPEARING IN THE NAMES OF EIGHT LOAN CREDITORS . THE ASSESSING OFFICER MADE THIS ADDITIO N FOR THE REASON THAT SOME OF THE LETTERS SENT TO THE CREDITO RS WERE RETURNED WITH ENDORSEMENT THAT CREDITORS HAVE LEFT THE PLACE; SOME OF THE LOAN CREDITORS HAVE SIGNED CONFIRMATION ON BEHALF OF SOME OTHER CREDITORS AND IN RESPECT OF ONE CREDI TOR, ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS SHOWN THAT THE CREDIT IS OUTSTANDING WHEREAS THE SAID LOAN WAS SQ UARED UP BY THE CREDITOR IN HIS BOOKS OF ACCOUNT. THEREFORE , FOR FAILURE TO GIVE CORRECT ADDRESSES BY THE ASSESSEE IN RESPEC T OF LOAN CREDITORS, THE ASSESSING OFFICER MADE ADDITION TREA TING THEM AS UNEXPLAINED CASH CREDIT. THE MATTER REACHED BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO THIS TRIBUNAL. THIS TRIBUNAL BY ORDER DATED 24.8.2012 IN ITA NO.459/MDS/2012 REMITTED THE MATTER BACK TO THE FIL E OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO DECIDE THE MATTER AFRESH AFTER VERIFYING THE VERACITY OF THE EVIDENCE FURNISHED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER 4 ITA NOS.1586 & 1954/MDS/2014 CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICE R AND ON EXAMINING THE EVIDENCES PRODUCED BY THE ASSESSEE DELETED THE CASH CREDIT IN RESPECT OF SEVEN CREDITORS AMOU NTING TO ` 23,23,551/- AND SUSTAINED ADDITION IN RESPECT OF ON E CREDITOR AMOUNTING TO ` 3,49,757/-. AGAINST THIS ORDER, BOTH REVENUE AND ASSESSEE ARE IN APPEAL BEFORE US. 5. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN MAKING ADDITION I N RESPECT OF LOAN CREDITORS STATING THAT THEY WERE NOT PROVED BY THE ASSESSEE WITH PROPER EVIDENCES. 6. COUNSEL FOR THE ASSESSEE RELIES ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITS TH AT ALL THE CREDITORS ARE ASSESSEES, THEY ARE ASSESSED TO T AX AND THEIR PAN NUMBERS WERE GIVEN, FULL DETAILS OF CRED ITORS AND THEIR ACCOUNT COPIES WERE SUBMITTED. COUNSEL SUBMI TS THAT LOANS WERE TAKEN THROUGH CHEQUES, THEY WERE REPAID THROUGH CHEQUES AND INTEREST WERE ALSO PAID THROUGH CHEQUE S. COUNSEL SUBMITS THAT OBSERVATION OF THE ASSESSING O FFICER THAT IN THE CASE OF CREDITOR MR. PRAHLAD RAI, CRED ITOR HAS 5 ITA NOS.1586 & 1954/MDS/2014 SHOWN THAT LOAN IS SQUARED UP AND AMOUNT IS NOT DU E FROM THE ASSESSEE IS FACTUALLY WRONG AS THE CONFIRMATIO N SUBMITTED BY MR. PRAHLAD RAI SHOWS THAT ASSESSEE O WES LOAN OF ` 11.60 LAKHS TO HIM AS ON 31.3.2007. COUNSEL FOR T HE ASSESSEE VEHEMENTLY SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITION MADE IN RESPECT OF SEVEN CREDITORS EXCEPT BHARAT CHOKHANI. IN RESPECT OF MR. BHARAT CHOKHANI, COUNSE L SUBMITS THAT HE IS THE PROPRIETOR OF RASSI ROAD CAR RIERS AND DIRECTOR OF CHOKHANI TRADE EXCHANGE PVT. LTD. HE SUBMITS THAT BOTH CONCERNS ARE INVOLVED IN TRANSPORT BUSINE SS AND HE IS ASSESSED TO TAX VIDE PAN AACPC4203B ITO., WARD VIII(1),CHENNAI. HE SUBMITS THAT ASSESSEE HAS RECEI VED LOAN THROUGH CHEQUE NO.169514 OF KARUR VYSYA BANK, WHIT ES ROAD, CHENNAI ON 23.6.2006. HE SUBMITS THAT LOAN W AS REPAID ON 18.10.2008 BY WAY OF ACCOUNT PAYEE CHEQUE . HE SUBMITS THAT ALL THESE INFORMATION WAS PROVIDED TO THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X (APPEALS). HE SUBMITS THAT HOWEVER, COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ADDITION ONLY BE CAUSE CREDITOR HAS DEPOSITED CASH IN HIS ACCOUNT ONE DAY PRIOR TO 6 ITA NOS.1586 & 1954/MDS/2014 LENDING THIS AMOUNT TO THE ASSESSEE. COUNSEL SUBMI TS THAT THIS CANNOT BE A REASON FOR NOT ACCEPTING CREDIT IN THE HANDS OF THE ASSESSEE ESPECIALLY WHEN THE CREDITOR IS DO ING TRANSPORT BUSINESS AND HAVING SUFFICIENT SOURCES FO R LENDING MONEY. 7. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DISALLOWED CREDITS TO THE EXTENT OF ` 26,73,308/- IN RESPECT OF EIGHT CREDITORS FOR THE REASON THAT LETTERS SENT TO SOME OF THE CREDITORS HAVE BEEN RETURNED AND SOME CREDITORS HAV E SIGNED ON BEHALF OF SOME OTHER CREDITORS ETC. THE ASSESSE E HAS PRODUCED ADDITIONAL INFORMATION BEFORE THE COMMISSI ONER OF INCOME TAX (APPEALS) BY WAY OF PETITION UNDER RULE 46A. THE COMMISSIONER OF INCOME TAX (APPEALS) ADMITTED T HE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE AND C ALLED FOR REMAND REPORT. AFTER OBTAINING REMAND REPORT AND CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE CREDITS IN RESPECT OF SEVEN CREDITORS AND SUSTAINED IN RESPECT OF ONE CREDITOR. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE 7 ITA NOS.1586 & 1954/MDS/2014 DELETING THE ADDITIONS IN RESPECT OF SEVEN CREDITOR S OBSERVED AS UNDER:- 4.2 I HAVE CONSIDERED THE FINDINGS GIVEN BY THE AO IN THE ORDER OF ASSESSMENT DATED 30.11 . 2009, THE SUBMISSIONS MADE BY THE AO IN HIS REMAND REPORT DATED 15.01 . 2014 AND VARIOUS SUBM I SSIONS MADE BY THE AR OF THE APPELLANT FROM TIME TO TIME. IT WAS T HE STAND OF THE AR OF THE APPELLANT THAT SRI PRAHALAD ROY WAS THE FATHER OF THE APPELLANT WHO I S THE REGULAR INCOME TAX PAYEE . IT WAS FURTHER STATED BY THE AR OF THE APPELLANT THAT SMT. RENU CHUDIWALA, SRI OMPRAKASH CHUDIWALA, SRI SURENDRA KUMAR KOTHARI, SMT. URMILA DEVI, SRI JAYAKUMAR N I MANI AND SMT. SUMITRA NIMANI ARE . ALSO REGULAR INCOME TAX ASSESSEES AND FILED THEIR RETURNS OF INCOME WHICH INCLUDES THE AMOUNT OF LOANS GIVEN BY THEM TO THE APPELLANT. IT WAS 'IF FURTHER STATED BY THE AR OF THE APPELLANT THAT THE LOANS WERE TAKEN BY THE APPELLAN T FROM THESE PARTIES THROUGH BANKING CHANNELS. THE COMPLETE ADDRESSES OF THE LOAN CREDITORS WERE ALSO PLACED ON RECORD. THE CREDITWORTHINESS OF THE LOANS TAKEN FROM THESE PARTIES WAS ALSO NOT DOUBTED BY THE AO IN THE REMAND REPORT. THEREFORE, THE GENUINENESS OF THE ABOVE LOAN CREDITORS ARE TREATED AS EXPLAINED AND AO IS DIRECTED TO DELETE THE ADDITION IN RESPECT OF THE LOAN STANDING IN THE NAM E OF THE ABOVE PERSONS. 8. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) WE FIND THAT ALL THE CREDITORS ARE INCOME TAX ASSESSEES FILED THEIR RETURNS OF INCOME SHOWING THE AMOUNTS LENT TO THE ASSESSEE BY THEM. THE LOANS WERE 8 ITA NOS.1586 & 1954/MDS/2014 TAKEN THROUGH BANKING CHANNELS. THE ASSESSING OFFIC ER ALSO DID NOT DOUBT THE CREDIT WORTHINESS IN HIS REMAND R EPORT. THE GENUINENESS OF THE LOAN CREDITORS ARE EXPLAINED BY THE ASSESSEE . THEREFORE, IN SUCH CIRCUMSTANCES COMMISS IONER OF INCOME TAX (APPEALS) DELETED THE ADDITION IN RES PECT OF SEVEN CREDITORS TO THE EXTENT OF ` 23,23,551/-. NONE OF THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ) ARE REBUTTED BY THE REVENUE. IN THE CIRCUMSTANCES WE UP HOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N DELETING THE ADDITION IN RESPECT OF SEVEN CREDITORS . 9. COMING TO THE ADDITION SUSTAINED BY THE COMMISSI ONER OF INCOME TAX (APPEALS) IN RESPECT OF ONE CREDITOR SHRI BHARAT CHOKHANI TO THE EXTENT OF ` 3,49,757/- , WE FIND THAT COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THIS ADDITION ONLY FOR THE REASON THAT THE CREDITOR HAS DEPOSITED ` 3,50,000/- IN HIS ACCOUNT A DAY PRIOR TO GIVING LOA N TO THE ASSESSEE. IN OUR OPINION, THIS CANNOT BE A REASON F OR NOT ACCEPTING THE CREDIT AS GENUINE UNLESS THE REVENUE DOUBTS THAT THE AMOUNT DEPOSITED BY THE CREDITOR IN HIS AC COUNT IS NOT FROM HIS OWN SOURCE. THE CREDITOR IS DOING TRANSPOR T BUSINESS 9 ITA NOS.1586 & 1954/MDS/2014 AND HAS HIS OWN SOURCE FOR LENDING MONEY TO THE ASS ESSEE. THE ASSESSING OFFICER NEVER DOUBTED THE CAPACITY OF THE CREDITOR TO LEND MONEY TO THE ASSESSEE NOR IT IS TH E CASE OF THE REVENUE THAT ASSESSEE HIMSELF HAS BROUGHT IN B ACK THE CASH INTO HIS BOOKS OF ACCOUNT THROUGH THE SAID CRE DITOR. THEREFORE, WE ACCEPT THE LOAN GIVEN BY MR. BHARAT C HOKHANI AS GENUINE AND DIRECT THE ASSESSING OFFICER TO DELE TE THE ADDITION IN RESPECT OF THIS CREDITOR ALSO. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, TH E 16 TH DAY OF OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( & () ) ( DR . O.K. NARAYANAN ) ( CHALLA NAGENDRA PRASAD ) ,- /VICE-PRESIDENT ( . / JUDICIAL MEMBER ( /CHENNAI, / /DATED, 16 TH OCTOBER, 2014 SOMU 12 32 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .