Bhagaban Prasad Sahu, Mayurbhanj V. ITO, Ward-1, Baripada

ITA 199/CTK/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7192 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: B PANDA
• Keywords: Unexplained cash credit; Principle of natural justice; Onus to prove
• Section: 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.199 /CTK/2016 ASSESSMENT YEAR : 2008 - 09 SHRI BHAGABAN PRASAD SAHU, AT/PO: HATY BADRA, DIST: MAYURBHANJ. VS. ITO, WAQRD - 1, BARIPADA PAN/GIR NO. AHMPS 3986 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.PANDA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 08 /03 / 2017 DATE OF PRONOUNCEMENT : 08 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 23.2.2016 , FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING A DDITION OF RS.11,60,000/ - AS UNEXPLAINED CASH CREDIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE CASH CREDIT TOTALLING TO RS.11,60,000/ - WERE ENTERED INTO IN THE BALANCE SHEET OF THE ASSESSEE UNDER THE HEAD 'ERM' THE FRIENDS & RELATIVES' AND 2 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 THE AMOUNT WAS SHOWN TO BE REPAID ON DIFFERENT DATES. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE NAME, COMPLETE POSTAL ADDRESS AND PAN OF THE CREDITORS ALONG WITH CONFIRMATIONS FROM THEM IN RESPECT OF EACH CASH CREDIT. THE ASSESSEE WAS ALSO REQUESTED TO FURNISH SUFFICIENT EVIDENCE TO SUBSTANTIATE THE GENUINENESS OF THE CASH CREDITS BY FURNISHING EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION, IDENT ITY AND CREDITWORTHINESS OF THE CASH CREDITORS. THE ASSESSING OFFICER OBSERVED THAT ALTHOUGH SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE AS SESSEE, ASSESSEE COULD NOT FURNISH THE REQUIRED DETAILS AND CONFIRMATION AND, THEREFORE, HE MADE ADDITION OF RS.11,60, 000/ - AS UNEXPLAINED CASH CREDIT. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE FILED CONFIRMATION OF FOUR PERSONS ALONGWITH THEIR ADDRESSES, PAN CARD , REGARDING THE ADVANCE AND RECEIPT OF SUCH LOAN DURING THE FINANCIAL YEAR 2007 - 08. SINCE THE ASSESSING O FFICER HAD CATEGORICALLY MENTIONED THAT SUCH DETAILS WERE NOT FURNISHED BEFORE HIM AND BECAUSE THE CONFIRMATIONS HAVE BEEN FILED FOR THE FIRST TIME IN THE APPEAL PROCEEDINGS, THE CIT(A) REQUESTED THE ASSESSING OFFICER TO VERIFY THE SAME AND PREPARE A REMA N D REPORT U/S.250(4) OF THE ACT. THE CIT(A) OBSERVED FROM THE REMAND REPORT THAT THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT FOR VERIFICATION AND TO PRODUCE THE LOAN CREDITORS ALON G WITH DETAILS OF THEIR IDENTITY, CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION FOR FURTHER EXAMINATION. THE ASSESSEE EXPRES SED HIS INAB ILITY TO PRODUCE THE LOAN 3 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 CREDITORS BEFORE T HE ASSESSING OFFICER FOR EXAMINATION AND CROSS - EXAMINATION. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE IDEN TITY OF THE CREDITORS AND THEIR CREDITWORTHINESS REGARDING ADVANCEMENT OF THE CASH LOANS. THE REMAND REPORT WAS FORWARDED TO THE ASSESSEE FOR COMMENTS. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER AT LEAST COULD HAVE CONTRACTED THE LTO,WARD - 2(3),CUTTACK TO FIND OUT THE GENUINENESS OF THE PERSONS, THEIR B USINESS ACTIVITIES, CREDITWORTHINESS AND OTHER DETAILS WHICH HAVE BEEN FULLY DISCLOSED IN THE IT RECORDS AND THE AMOUNT SINCE HAVE BEEN RETURNED BACK TO THE CONCERNED CREDITORS THE DETAILS OF WHICH HAVE ALREADY BEEN STATED, HENCE NO DOUBT OR SUSPICION COUL D HAVE BEEN RAIS ED IN THE MATTER.' THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSING OFFICER COULD HAVE COLLECTED DETAILS FROM SUCH LOAN CREDITORS DIRECTLY AS THE ADDRESS, PAN DETAILS AND ASSESSMENT PARTICULARS OF THE LOAN CREDI TORS WERE PRODUCED BEFORE THE A SSESSING OFFICER . ACCORDINGLY , THE ASSESSING OFFICER WAS ONCE AGAIN DIRECTED TO COLLECT DETAILS FROM THE LOAN CREDITORS DIRECTLY FOR VERIFYING THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER IN TURN HAD MADE A Q UESTIONNAIRE AND ISSUED THE SAME TO THE 4 PERSONS REQUIRING INFORMATION U / S .133[6) OF THE ACT. IN RESPONSE , ALL THE FOUR PERSONS WHOSE NAME, ADDRESS AND PANS WERE SUBM ITTED BY THE ASSESSEE REPLIED THAT 'IN RESPONSE TO YOUR NOTICE D ATE D.31.07.2014 THE ASSES SEE BEGS TO SUBMIT THAT HE HAD NO TRANSACTIONS, WHATSOEVER, WITH BHAGWAN PRASAD SAHU OF HATBHADRA, MAYURBHANJ DURING THE FY 2007 - 08 OR 4 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 ANY TIME AFTERWARDS SO FAR. MOREOVER, THE ASSESSEE DOES NOT KNOW THE AFORESAID PERSON IN ANY WAY NEITHER HAD/HAS ANY CONN ECTION WITH HIM. THE ASSESSEE IS REGULARLY ASSESSED TO INCOME - TAX IN YOUR WARD AND HAS FILED L.T. RETURNS FOR ALL THE YEARS IN PAST'. THE ASSESSING OFFICER SENT THE QUESTIONNAIRE TO THE CAS H CREDITORS AND THEIR REPLIES IN THE REMAND REPORT U/S.250(4) OF THE ACT TO THE CIT(A). THE SAID REMAND REPORT WAS FORWARDED TO THE ASSESSEE BUT THE ASSESSEE ONCE AGAIN REQUESTED FOR CROSS - EXAMINATION OF THE CASH CREDITORS WITH HIM . 5. THE CIT(A) THEREAFTER HELD THAT THE ASS ESSEE HIMSELF HAS NOT BEEN ABLE TO PRODUCE T HE CASH CREDITORS FOR CROSS - VERIFICATION THOUGH THE BURDEN TO PROVE LIES WITH HIM. UNDER THE CIRCUMSTANCES AND THAT THE STATEMENT OF THE FOUR PERSONS DENYING ANY TRANSACTION WITH THE ASSESSEE TO WHICH THE ASSESSEE COULD NOT PRODUCE ANY RESPONSE, HE WAS NO T INCLINED TO ACCEPT THAT THE ASSESSEE HAS ACCEPTED THE CASH CREDIT AND REPAID THE SAME. RATHER THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD UNDERSTATED HIS RECEIPTS AND INTRODUCED THE SAME AS CASH CREDIT TO THE BOOKS AS AND WHEN NECESSARY AN D HAD SHOWN THOSE AS REPAID APPEARS TO BE MORE GENUINE. HE, THEREFORE, CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE POINTED OUT FROM PAGE 29 OF PAPER BOOK THAT THE ASSESSEE HAD FILED PETITION B EFORE THE CIT(A) ON 10.3.2016 SEEKING CROSS EXAMINATION OF THE FOUR CASH CREDITORS 5 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 NAMELY; SMT. BHANU KAMANI, GNVANT P KAMANI, Y. BHASKAR RAO AND Y. PUSHPAVATI, WHO HAD STATED BEFORE THE ASSESSING OFFICER THAT THEY HAVE NOT GIVEN ANY LOAN TO THE ASSESSEE. HE AGAIN POINTED OUT FROM PAGE 32 OF P APER BOOK THAT ON 3. 3. 2016 BY WAY OF A PETITION TO THE CIT(A) , THE ASSESSEE HAD SOUGHT FOR CROSS EXAMINATION OF THE FOUR CASH CREDITORS WHO DENIED OF HAVING GIVEN LOAN TO THE ASSESSEE. HE FURTHER POINTED OUT FROM PAGE 40 OF PAPER BOOK THAT ON 17.6.2015, THE INCOME TAX OFFICER WARD - 1, BARIPADA WAS DIRECTED BY THE CIT(A) TO ALLOW CROSS EXAMINATION OF THE FOUR LOAN CREDITORS WHO HAVE DENIED HAVING ADVANC ING THE LOAN TO THE ASSESSEE. HE SUBMITTED THAT IN SPITE OF SPECIFIC REQUEST OF THE ASSESSEE, CROSS EXAMINATION OF THE FOUR LOAN CREDITORS WHO HAVE DENIED HAVING GIVEN LOAN TO THE ASSESSEE WAS NOT ALLOWED TO THE ASSESSEE EITHER BY THE ASSESSING OFFICER OR BY THE CIT(A). HENCE, HE SUBMITTED THAT IN ABSENCE OF CROSS EXAMINATION OF CREDITORS ALLOWED TO THE ASSESSEE, WHO HAVE DENIED HAVING ADVANCED LOAN TO THE ASSESSEE, N O ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE BASED ON THOSE STATEMENTS. HE RE LIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANADMAN TIMBER INDUSTRIES VS CCE, (2015) 281 CTR 241 , WHEREIN, IT WAS HELD THAT NOT ALLOWING ASSESSEE TO CROSS - EXAMINE WITNESSES BY ADJUDICATING AUTHORITY THOUGH STATEMENTS OF THOSE WITNESSES WE RE MADE AS BASIS OF IMPUGNED ORDER, AMOUNTED IN SERIOUS FLAW WHICH MAKE IMPUGNED ORDER NULLITY AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. 6 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 7. HE ALSO RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TADS VS. CHARTERED SPEED PVT LTD., IN TAX APPEAL NO.126 OF 2015 WITH TAX APPEAL NO.127 OF 2015 ORDER DATED 3.3.2015, WHE REIN, IT HAS BEEN HELD AS NO CROSS EXAMINATION OF THE MAKER OF THE STATEMENT WAS ALLOWED TO THE ASSESSEE, THEIR STATEMENT COULD NOT BE USED AS AN EVIDENCE AGAINST THE ASSESSEE. HENCE, IT WAS THE SUBMISSION OF LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT THE ADDITION SHOULD BE DELETED. 8. LD DEPARTMENTAL REPRESENTATI VE RELIED ON THE ORDERS OF LOWER AUTHORITIES. 9. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER APPEAL, THE ASSSSEE RECEIVE D LOAN FROM FOUR PERSONS WHICH WERE SHOWN UNDER THE HEAD 'ERM' THE FRIENDS & RELATIVES OF RS.11,60,000/ - S INCE THE ASSESSEE FAILED TO FILE DETAILS OF THE LOAN CREDITORS , SUCH AS NAME, ADDRESSEES, AND PAN, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.11,60,000/ - AS UNEXPLAINED CASH CREDIT AND ADDED TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE FURNISHED NAMES, 7 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 ADDRESSES, PAN OF THE LOAN CREDITORS FROM WHOM LOAN S OF R S.11, 60,000/ - WERE RECEIVED BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR. THE CIT(A)CALLED FOR A REMAND REP ORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER ISSUED NOTICE U/S.133(6) TO THE FOUR LOAN CREDITORS NAMELY, SMT. BHANU KAMANI, GNVAN T P KAMANI, Y. BHASKAR RAO AND Y. PUSHPAVATI, WHO IN RESPONSE TO SAME, DENIED HAVING ADVANCED THE LOANS TO THE ASSESSEE. ACCORDINGLY, THE REMAND REPORT WAS SENT TO THE CIT(A) BUT ON CONFRONTATION OF THIS REMAND REPORT TO THE ASSESSEE, THE ASSESSEE REQUEST ED FOR CROSS EXAMI NATION OF THE LOAN CREDITORS AND THE CIT(A) VIDE ITS LETTER NO. CIT(A)/CTK/2015 - 16 DATED 17.6.2015 DIRECTED THE ASSESSING OFFICER TO ALLOW CROSS EXAMINATION OF THE LOAN CREDITORS. 11. THE ASSESSING OFFICER DID NOT ALLOW CROSS EXAMINATION OF THE LOAN CREDITORS TO THE ASSESSEE AND THE CIT(A) WITHOUT RECEIVING REPORT FROM THE ASSESSING OFFICER ON THE CROSS EXAMINATION OF THE L OAN CREDITORS PASSED ORDER ON 23.2.2016 CONFIRMING THE ADDITION OF RS.11,60,000/ - AS UNEXPLAINED CASH CREDIT IN THE H ANDS OF THE ASSESSEE BASING ON THE STATEMENT OF THE FOUR LOAN CREDITORS. 12 . LD AUTHORISED REPRESENTAITVE HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANADMAN TIMBER INDUSTRIES (SUPRA),, WHEREIN, IT WAS HELD THAT NOT ALLOWING ASSESSEE TO CROSS - EXAMINE WITNESSES BY ADJUDICATING AUTHORITY THOUGH STATEMENTS OF THOSE WITNESSES WERE MADE AS BASIS OF IMPUGNED ORDER, AMOUNTED IN SERIOUS FLAW WHICH 8 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 MAKE IMPUGNED ORDER NULLITY AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NA TURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. . 13 . SIMILARLY, HONBLE GUJARAT HIGH COURT IN THE CASE OF CHARTERED SPEED PVT LTD(SUPRA) HAS HELD THAT WHERE THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF THE MAKER OF THE STATEMENT AND THE ASSESSING OFFICER DID NOT TAKE ANY STEP TO ALLOW EFFECTIVE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE MAKERS OF THE STATEMENT, STATEMENT OF THOSE PERSONS CANNOT BE CANNOT BE READ AGAINST THE ASSESSEE. 1 4 . IN THE PRESENT APPEAL BEFORE ME, I FIND THAT INSPITE OF SPECIFIC DIRECTION GIVEN BY THE CIT(A) VIDE HIS LETTER DATED 1 7.6.2015 TO THE ASSESSING OFFICER TO ALLOW CROSS EXAMINATION TO THE ASSESSEE OF THE FOUR LOAN CREDITORS WHO DENIED OF ADVANCING LOAN TO TH E ASSESSEE, THE SAME HAVE NOT BEEN ALLOWED TO THE ASSESSEE BY THE ASSESSING OFFICER. THE CIT(A) PASSED THE APPEAL ORDER ON 23.2.2016 CONFIRMING THE ADDITION BASED ON THOSE STATEMENTS OF THE LOAN CREDITORS IN SPITE OF HIS DIRECTING THE ASSESSING OFFICER TO ALLOW CROSS EXAMINATION OF THE LOAN CREDITORS TO THE ASSESSEE VIDE HIS LETTER DATED 17.6.2015 . IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I N MY CONSIDERED VIEW, ADDITION CANNOT BE SUSTAINED IN LAW IN VIEW OF THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CHARTERED SPEED PVT LT D (SUPRA) KEEPING IN VIEW THE FACT THAT ALL 9 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 THE DETAILS OF THE LOAN CREDITORS SUCH AS , NAME AND ADDRESSES, PAN WERE PROVID ED BY THE ASSESSEE AND, THEREFORE, THE INITIAL BURDEN OF PROVING IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITS WAS DULY DISCHARGED BY THE ASSESSEE. IF THE STATEMENT OF LOAN CREDITORS ARE REMOVED THEN THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE LOAN OF RS.11,60,000/ - RECEIVED FROM FOUR LOAN CREDITOROS IS NOT GENUINE OR BOGUS. I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.11,60,000/ - ON ACCOUNT OF UNEXPLAINED CASH C REDIT AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 15 . THE SECOND ISSUE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER ADDING RS.2,96,865/ - AS INTEREST ON FIXED DEPOSIT NOT DISCLOSED BY THE ASSESSEE. 1 6 . AT THE TIME OF HEA RING, NO ARGUMENTS WERE MADE BY LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE ON THIS GROUND OF APPEAL OF THE ASSESSEE. THEREFORE, THIS GROUND OF THE ASSESSEE IS DISMISSED FOR WANT OF PROSECUTION. 17 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 08 /03 / 2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 08 /03 /2017 B.K.PARIDA, SPS 10 ITA NO.199/CTK/2016 ASSESSMENT YEAR :2008 - 09 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SHRI BHAGABAN PRASAD SAHU, AT/PO: HATY BADRA, DIST: MAYURBHANJ. 2. THE RESPONDENT. ITO, WAQRD - 1, BARIPADA 3. THE CIT(A) CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//