M/s Savitri Devi, Amita Jaiswal & Ors., Kolkata V. DCWT, Cir 10 Kolkata, Kolkata

ITA 2/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9329 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI J M THARD
• Keywords: Unexplained cash credit; Onus to prove
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.02/KOL/2017 ASSESSMENT YEAR: 2011-12 M/S SAVITRI DEVI, AMITA JAISWAL & ORS. 7, RAJENDRA DEV ROAD, KOLKATA-700 007 [ PAN NO. AABAS 4315 E ] / V/S . DCIT, CIRCLE-10, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SHRI J.M THARD, ADVOCATE /BY RESPONDENT SHRI SUPRIYO PAL, JCIT, SR-DR /DATE OF HEARING 25-11-2019 /DATE OF PRONOUNCEMENT 02-01-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKATAS ORDER DATED 17.10.2016 PASSED IN CASE NO.419/CIT(A)-15/15-16/CIR-10/R&T/KOL, INVO LVING PROCEEDINGS 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CANVA SSED IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIE S ACTION TREATING CAPITAL INTRODUCED ON BEHALF OF ITS 161 EXISTING MEMBER(S) AMOUNTING TO 1,61,00,000/- @ 1 LAKH EACH AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. BOTH THE LEARNED REPRESENTATIVES INVITE ITA NO.02/KOL/2017 ASSESSMENT YEAR 20 11-12 M/S SAVITRI DEVI, AMITA JAISWAL & ORS. VS DCI T, CIR-10 KOL. PAGE 2 OUR ATTENTION TO THE CIT(A)S DETAILED DISCUSSION A FFIRMING THE ASSESSING OFFICERS ACTION TO THIS EFFECT AS UNDER:- 3 ASSESSEE IS AN AOP AND IS IN THE BUSINESS OF SELLI NG LIQUOR. DURING THE YEAR, ASSESSEE HAS CLAIMED TO HAVE RECEIVED RS. 1,00,000/ - EACH FROM ITS 161 MEMBERS. THUS RS.1,61,00,000/- IN AGGREGATE, HAS BE EN RECEIVED. AO HAS TAKEN VARIOUS FACTORS INTO ACCOUNT AND HAS ARRIVED AT THE CONCLUSION THAT THE SOURCE OF RS.1,61,00,000/- COULD NOT BE SATISFACTORILY EXP LAINED BY ASSESSEE. HENCE, ADDITION OF RS. 1,61,00,000/- HAS BEEN MADE U/S. 68 . IN APPEAL PROCEEDINGS ASSESSEE HAS SUBMITTED THAT NATURE OF BUSINESS REQU IRES THAT LOCAL PEOPLE BE MADE MEMBERS OF THE AOP TO CARRY ON THE BUSINESS IN RURAL AREAS. AO'S INSISTENCE ON PRODUCING ALL THE MEMBERS OF THE AOP WAS NOT POSSIBLE BECAUSE OF LOGISTICAL PROBLEMS. BUT THESE MEMBERS WERE CLAI MED TO BE OLD MEMBERS AND IDENTITY PROOF, RETURN RECEIPTS ETC. WERE PRODUCED. IT IS FURTHER SUBMITTED THAT AO HAS NOT GONE DEEP INTO DOCUMENTS SUBMITTED BY TH E ASSESSEE, BEFORE ARRIVING AT AN ADVERSE CONCLUSION. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS OF THE ASSESSEE ASSESSEE'S GROUND OF APPEAL ARE IN FACT, IN THE NAT URE OF ELABORATE WRITTEN SUBMISSION WHICH HAS BEEN DULY CONSIDERED WHILE DEC IDING THIS APPEAL. NO DOUBT ASSESSEE HAS FURNISHED THE PAPER IDENTITIES O F ALL THE 161 MEMBERS BUT AO HAS POINTED OUT SEVERAL DISCREPANCIES AND UNUSUA L CIRCUMSTANCES, WHICH ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN. IT CANNOT BE A MERE COINCIDENCE THAT ALL THE MEMBERS OF THE AOP, RESIDING IN DIFFERENT DISTR ICTS / STATES, HAVE SAME INCOME IN THREE DIFFERENT ASSESSMENT YEAR FURTHER, RETURNED INCOMES OF ALL THESE PERSONS ARE BELOW TAXABLE LIMIT. STILL THEY H AVE FILED THEIR RETURNS. RETURNS ARE ALSO FILED FROM COMMON ADDRESSES. FURTH ER, CONTRIBUTIONS TO AOP HAS BEEN MADE IN CASH BY ALL THESE PERSONS. ALTHOUG H THERE IS NO ILLEGALITY IN ANY OF THE ACTIONS ABOVE AT INDIVIDUAL LEVEL, BUT I T DOES RAISE A DOUBT WHEN SAME ACTIONS ARE REPLICATED BY A LARGE NUMBER OF UN RELATED PERSONS, RESIDING SEPARATELY AND WORKING SEPARATELY. ONLY ONE THING I S COMMON BETWEEN THESE PERSONS AND I.E., THEY ARE ALL MEMBERS OF THE SAME AOP, WHICH HAS BEEN CREATED BY JAYASAWAL FAMILY TO PROMOTE THEIR LIQUOR BUSINESS INTERESTS. IT IS APPARENT THAT SOMEBODY HAS MADE EFFORTS TO GIVE A L EGAL IDENTITY TO THESE PERSONS BY FILING THEIR RETURNS BUT THIS HAS BEEN A CHIEVED AT MINIMAL COST, AS NO TAXES ARE PAID. INCOME IS KEPT BELOW THE TAXABLE LI MIT. DURING APPEAL PROCEEDINGS, APPELLANT HAS SUBMITTED COPIES OF ACKN OWLEDGMENT OF RETURNS FILED FOR AY 2009-10 & 20 10-11 OF THE FOLLOWING PERSONS. SL NO. NAME ADDRESS 1 AJAYU PANDEY 406, BEHIND SHARDA TALKIES, GORAKHPU R, JABALPUR, MP-482001 2 AJAY PRASAD 101, JAWAHAR NAGAR, ADHARTAL, JABLPUR , MP- 482001 3 AMBIKA GUPTA 564, BLDG. NO. 2, NEAR VEGETABLE MAR KET, GORAKHPUR, JABALPUR, MP-482001 ITA NO.02/KOL/2017 ASSESSMENT YEAR 20 11-12 M/S SAVITRI DEVI, AMITA JAISWAL & ORS. VS DCI T, CIR-10 KOL. PAGE 3 PERUSAL OF THE ACKNOWLEDGMENTS SHOW THAT RETURNS OF 3 PERSONS FOR AY 2009-10 HAS BEEN FILED BY IP ADDRESS 59:95:110:143 AND FOR AY 2010-11 RETURNS HAVE BEEN FILED BY IP ADDRESS 117: 200: 147:25. FURTHER, THE ADDRESSES MENTIONED ARE NOT SUFFICIENT. EVEN GORAKHPUR IS SHOWN AS A LO CALITY OF JABALPUR IN MP. EVEN A LOOK AT ADDRESSES OF OTHER PERSONS, AS MENTI ONED IN THE ASSESSMENT ORDER, SHOWS THAT MOST OF THE ADDRESSES ARE INCOMPL ETE. ALL THESE FACTS CLEARLY POINT OUT THAT SOMEBODY, WITH VESTED INTEREST, HAS CREATED THE LEGAL IDENTITY OF THESE PERSONS. CONCERNED PERSONS MIGHT NOT HAVE EVE N BEEN AWARE OF FULL CONSEQUENCES OF ALL THESE DOCUMENTATIONS AND THEY W OULD NOT BE BOTHERED ALSO, AS IT DOES NOT HURT THEIR INTERESTS IN ANY MANNER. FURTHER, ASSESSEE HAS BEEN CLAIMING THAT THE NATURE OF BUSINESS REQUIRED THAT LOCAL PERSONS IN VILLAGES BE ASSOCIATED WITH THE BUSINESS. BUT ADDRESSES SHOW TH EY ARE BASED IN THE CITIES OF ALLAHABAD, GORAKHPUR AND JABALPUR RESPECTIVELY. ALL THESE FACTS, AS ABOVE, AND THOSE MENTIONED IN ASSESSMENT ORDER, DO RAISE ISSUE S ABOUT THE REAL IDENTITIES OF THESE PERSONS. BESIDES, CREDIT WORTHINESS OF THESE PERSONS ALSO REMAINS UNVERIFIED. THESE PERSONS HAVE INCOMES BELOW TAXABL E LIMIT. IT IS NOT CLEAR HOW THEY HAD GENERATED THE SURPLUS OF RS.1,00,000/- TO BE INVESTED IN BUSINESS. PERUSAL OF COMPUTATION OF THE MEMBERS SHOWS THAT TH EY RECEIVED GROSS PROFIT OF RS. 4767 ( NET PROFIT RS. 2,856/- ) IN AY 2009-10 AND GROSS PROFIT OF RS.4,862/- ( NET PROFIT RS.3,181/- ) IN AY 2010-11. SO THE NET RETURN ON THEIR INVESTM ENTS HAVE BEEN LESS THAN 3% IN THE LAST TWO YEARS. ANY P RUDENT PERSON WOULD NOT PUT HIS MONEY IN THE THIRD YEAR IN THE SAME LOW YIELDIN G INVESTMENTS, WHEN HE HAS OTHER SAFE OPTIONS OF INVESTMENTS, LIKE BANK/PO FDS ETC, WHICH YIELD A HIGHER INCOME. HENCE, TAKING A HOLISTIC VIEW OF THE MATTER , CONTENTIONS OF ASSESSEE ARE NOT ACCEPTABLE. AO HAS RAISED VALID ISSUES WHICH HA VE NOT BEEN SATISFACTORILY ANSWERED BY THE ASSESSEE. UNDER THE FACTS & CIRCUMSTANCES AS ABOVE, ADDITION OF RS. 1,61,00,000/- IS CONFIRMED . 3. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CON TENDED DURING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE QUA THE IMPUGNED CAPITAL INTRODUCTION COMING FROM 161 MEMBER(S) OF THE AOP. HE TOOK PAINS TO REF ER TO ASSESSMENT ORDER FROM PAGES 4 TO 8 INDICATING THE 161 MEMBER(S) OF THE AO P TO HAVE BEEN RESIDING IN ALLAHABAD (UTTAR PRADESH) AND JABALPUR (MADHYA PRAD ESH). HIS CASE IS THAT THE ASSESSEE HAD FILED ALL THE DETAILED SUPPORTIVE EVID ENCE OF THE SAID MEMBER(S) RUNNING INTO 1194 PAGES ( FORMING PART OF RECORD BEFORE US ) AT THE FIRST INSTANCE DURING SCRUTINY. AND THAT ALTHOUGH THE SAID MEMBER(S) HAD BEEN DRAWING SALARY AND PROFITS FROM THE ASSESSEES AOP ONLY, THE LOWER AUTHORITIES HAVE WRONGLY REJECTED ITS ITA NO.02/KOL/2017 ASSESSMENT YEAR 20 11-12 M/S SAVITRI DEVI, AMITA JAISWAL & ORS. VS DCI T, CIR-10 KOL. PAGE 4 EXPLANATION WITHOUT EVEN PUTTING THE SAID 161 MEMBE R(S) FOR FACTUAL VERIFICATION BY WAY OF APPOINTING A COMMISSION AT THEIR RESPECTIVE PLACES. THE ASSESSEES LAST PLEA IS THAT SUCH A CAPITAL CONTRIBUTION COMING FROM AN AOP MEMBER(S) DOES NOT AMOUNT TO UNEXPLAINED CASH CREDITS AS PER HON'BLE GUJARAT HIG H COURTS DECISION IN PCIT VS. VAISHNODEVI REFOILS & SOLVEX (2018) 89 TAXMANN.COM 80 (GUJ). 4. THE REVENUE HAS CHOSEN TO PLACE A STRONG RELIANC E ON THE CIT(A)S FOREGOING DETAILED DISCUSSION AFFIRMING THE IMPUGNED ADDITION . IT PLEADS THAT IT WAS THE ASSESSEES ONUS TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE IMPUGNED CAPITAL CONTRIBUTION FROM 161 MEMBER(S) IN QUESTION AND SINCE IT HAS FAILED TO DISCHARGE THE SAME, THE IMPUGNED ADDITION HAS BEEN RIGHTLY MADE IN HIS CASE. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO FO REGOING RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE ALLEGED CAPITAL CONTR IBUTION AMOUNTING TO 161,00,000/- ADDED AS UNEXPLAINED CASH CREDITS IN BOTH THE LOWER PROCEEDINGS. THREE IS HARDLY ANY DISPUTE THAT THIS ASSESSEE IS ASSESSED AS AN AOP. I TS SOLE EXPLANATION WAS THAT THE IMPUGNED SUM HAD COME AS CAPITAL CONTRIBUTION FROM 161 MEMBER(S) @ 1 LAKH EACH. WE NOTICE FROM THE CORRESPONDING ASSESSMENT FINDING S THAT ALL THE ALLEGED 161 MEMBER(S) HAVE DRAWN IDENTICAL INCOME OF 96,000/- EACH IN ASSESSMENT YEAR 2009- 10, 1,32,000/- IN CASE OF FIRST THIRTY-SIX OF THEM BASE D IN ALLAHABAD FOLLOWED BY 96,000/-, EACH IN REMAINING CASES IN ASSESSMENT YEA R 2010-11 1,08,000/- EACH IN CASE OF THE SAID VERY THIRTY-SIX PARTIES FOLLOWED B Y IDENTICAL SUMS OF 1,20,000 IN ALL OTHER CASES IN ASSESSMENT YEAR 2011-12; RESPECTIVEL Y. ALTHOUGH THE ASSESSEE HAD DULY PRODUCED THE SAID MEMBERS DETAILS ALONG WITH NECES SARY DOCUMENTARY EVIDENCE IN SUPPORT, SOME OF THEM COULD BE PUT TO NECESSARY FAC TUAL VERIFICATION. NOR THE ASSESSING OFFICER REQUISITIONED COMMISSION TO THE T WIN LOCATIONS TO THIS EFFECT. WE OBSERVE IN THIS BACKDROP OF FACTS THAT THE INSTANT SOLE ISSUE OF THE ALLEGED CAPITAL CONTRIBUTION FROM ASSESSEES MEMBER(S) OF THE AOP R EQUIRES A DETAILED FACTUAL VERIFICATION FOR THE PURPOSE OF IDENTITY, GENUINENE SS AND CREDITWORTHINESS OF ALL 161 MEMBER(S). WE MAKE IT CLEAR THAT ALTHOUGH THE ASSES SEE HAD FILED ITS VOLUMINOUS DOCUMENTARY EVIDENCE FROM ASSESSMENT TO THIS TRIBUN AL, THE ONUS OF SATISFYING THE ITA NO.02/KOL/2017 ASSESSMENT YEAR 20 11-12 M/S SAVITRI DEVI, AMITA JAISWAL & ORS. VS DCI T, CIR-10 KOL. PAGE 5 BASIC PARAMETERS OF IDENTITY, GENUINENESS AND CREDI TWORTHINESS OF THE IMPUGNED CAPITAL CONTRIBUTION REMAIN TO BE DISCHARGED IN VIE W OF THE FOREGOING FACTS AND CIRCUMSTANCES. WE ACCORDINGLY RESTORE THE SOLE ISSU E BACK TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARING. HE MAY ALSO TAKE RECOURSE TO APPOINTMENT OF COMMISSION AS PER LAW FO R THE PURPOSE OF VERIFYING THE ASSESSEES DETAILED EVIDENCE. THE ASSESSEES SOLE S UBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL IS REMITTED BACK TO THE ASSESSING OF FICER THEREFORE. 6. THIS ASSESSEES APPEAL IS ACCEPTED FOR STATISTIC AL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 10/01/2020 SD/- SD/- ( ') () ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 10/01/2020 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S SAVITRI DEVI, AMITA JAISWAL & ORS. 7 , RAJENDRA DEV ROAD, KOLKATA- 007 2. /RESPONDENT-DCIT, CIR-10, AAYAKAR BHAWAN, P-7, CHOW RINGHEE SQ. KOL-69 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,