Vivek Rungta, Burdwan V. ITO, Wd-2(3), Asansol, Asansol

ITA 217/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99770 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND AGARWAL
• Keywords: Unexplained cash credit; Gift; Source of fund
• Section: 68; 143(3)

Judgement Text

I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P. M . JAGTAP , ACCOUNTANT MEMBER I.T.A. NO. 217 / KOL / 20 1 4 ASSESSMENT YEAR : 200 8 - 20 0 9 VIVEK RUNGTA,........................... ......... ........... ...... ............... ....AP PELLANT P.O. SALANPUR, DISTRICT - BURDWAN - 713201 [PAN : A CNPR 5539 B ] - VS. - I NCOME TAX OFFICER , ............................ .......... . ......... .......... .RESPONDENT WARD - 2 ( 3 ) , ASANSOL , G.T. ROAD (WEST), 2 ND FLOOR, P.O. ASANSOL - 713 304 APPEARANCES BY : SHRI ARVIND AGARWAL, ADVOCATE , FOR THE ASSESSEE S MT. RANU BISWAS , JCIT, SR. D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 0 9 , 2 01 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 11 , 201 5 O R D E R TH IS APPEAL FIL ED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) , ASANSOL D ATED 26 . 11 .20 1 3 FOR THE ASSESSMENT YEAR 200 8 - 0 9 AND THE SOLITARY ISSUE ARISING FROM THE SAME RELATES TO THE ADDITION OF RS.5,00,000/ - MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY THE LD. CIT(APPEALS) ON ACCOUNT OF LOANS RECEIVED BY THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDIT S UNDER SECTION 68. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL, WH O IS CARRYING ON THE BUSINESS OF LOTTERY AGENCY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 01.10.2008 DECLARING TOTAL INCOME OF RS.2,54,950/ - . IN THE BALANCE - SHEET FILED ALONG WITH THE SAID RETURN, LOANS OF RS.5,00,000/ - WERE SHOWN TO BE RECEIVED BY THE ASSESSEE FROM THE FOLLOWING THREE PERSONS : - I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 2 OF 6 NAME AMOUNT SEEMA BAIDYA RS.1,00,000/ - SHIV RATAN BAIDYA RS.3,00,000/ - SHIV RATAN BAIDYA (HUF) RS.1,00,000/ - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ABOVE LOANS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERAT ION WERE EXAMIN ED BY THE ASSESSING OFFICER IN TERMS OF SECTION 68 AND ON SUCH EXAMINATION HE RECORDED HIS FINDINGS/OBSERVATIONS IN RESPECT OF EACH AND EVERY LOAN CREDITOR AS UNDER: - SEEMA BAIDYA : - THE P&L ACCOUNT AND BALANCE - SHEET PRODUCED WITH SUPPORT O F CREDITWORTHINESS OF LOAN CREDITORS REFLECTED THAT THE MAIN SOURCE OF INCOME WERE FROM HOME PRODUCTS (RS.48,750/ - ), TUITION FEES (RS.18,000/ - ), STITCHING & EMBROIDERY (RS.35,640/ - ) AND ACCRUED INTEREST (RS.40,152/ - ). ON VERIFICATION OF BANK ACCOUNT OF LOA N CREDITOR WITH FEDERAL BANK LTD. BEING ACCOUNT 12000100099601, IT IS OBSERVED THAT CASH WAS DEPOSITED ON 11.01.08 TO THE TUNE OF RS.1,00,000/ - OUT OF WHICH SMT. SEEMA BAIDYA ISSUED CHEQUE OF RS.1,00,000/ - IN FAVOUR OF VIVEK RUNGTA WHICH WAS CLEARED FROM T HE ACCOUNT OF 12.01.08. THE ENTRIES AS WERE REFLECTED IN THE BANK STATEMENT ARE AS FOLLOWS: - DATE NARRATION WITHDRAWALS DEPOSITS BALANCE 10.01.08 CLOSING BALANCE 0 0 12 11.01.08 CASH 0 40,000 40,012 11.01.08 CASH 0 20,000 60,012 11.01.08 CASH 0 40,000 1,00,012 12.01.08 VIVEK RUNGTA - CHEQUE NO. 683137 100,000 0 12 13.01.08 0 0 12 SHIV RATAN BAIDYA : - THE LOAN CREDITOR HAS SHOWN INCOME FROM JOB WORK AT RS.1,15,741/ - ONLY. ON VERIFICATION OF BANK ACCOUNT OF LOAN CREDITOR WITH VIJAYA BANK, IT IS OBSERVED THAT ON 12.01.2008 CASH OF RS.3,00,000/ - WAS DEPOSITED THROUGH 9 NOS. DEPOSITS SLIPS OUT OF WHICH CHEQUE OF RS.3,00,000/ - WAS ISSUED IN FAVOUR OF VIVEK R UNGTA WHICH WAS CLEARED FROM THE ACCOUNT ON THE EVEN DATE. THE ENTRIES AS WERE REFLECTED IN THE BANK STATEMENT OF SHIV RATAN BAIDYA, BEARING NO. 720301010016379 WITH VIJAYA BANK, ARE AS FOLLOWS: - I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 3 OF 6 DATE NARRATION WITHDRAWALS DEPOSITS BALANCE 10.01.08 CLOS ING BALANCE 0 0 1261 12.01.08 CASH 0 40,000 41,261 12.01.08 CASH 0 40,000 81,261 12.01.08 CASH 0 30,000 111261 12.01.08 CASH 0 20,000 131261 12.01.08 CASH 0 20,000 15126 1 12.01.08 CASH 0 40,000 191261 12.01.08 CASH 0 40,000 231261 12.01.08 CASH 0 40,000 271261 12.01.08 CASH 0 30,000 301261 12.01.08 VIVEK RUNGTA - CHEQUE NO. 655868 300,000 1261 13.01.08 1261 S HIV RATAN BAIDYA (HUF ): - IN THE P&L ACCOUNT, THE MAIN SOURCE OF INCOME IS REPORTED FROM SHARE DEALING RS.26,983/ - , MISC. RECEIPT RS.44,112/ - AND ACCRUED INTEREST RS.39,547/ - . ON PERUSAL OF THE BANK STATEMENT OF LOAN CREDITOR WITH FEDERAL BANK LTD. BEARING NO. 12000100103692 , IT IS OBSERVED THAT CASH TO THE TUNE OF RS.1,00,000/ - WAS DEPOSITED ON 11.,01.2008 OUT OF WHICH THE CHEQUE AMOUNTING TO RS.1,00,000/ - WAS ISSUED IN FAVOUR OF VIVEK RUNGTA WHICH WAS CLEARED FROM THE ACCOUNT O THE LO A N CREDITOR ON 12.,01. 2008 . THE ENT4RIES AS WERE REFLECTED IN THE BANK ACCOUNT STATEMENT BEARING NO. 12000100103692 ARE AS UNDER: - DATE NARRATION WITHDRAWALS DEPOSITS BALANCE 10.01.08 CLOSING BALANCE 0 0 1069 11.01.08 CASH 0 30000 31069 11.01.08 CASH 0 30000 61069 11.01.08 CASH 0 40000 101069 12.01.08 VIVEK RUNGTA - CHEQUE NO.969125 100000 0 1069 13.01.08 0 0 1069 I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 4 OF 6 ON THE BASIS OF THE ABOVE FINDINGS /OBSERVATIONS , THE ASSESSING OFFICER HELD THAT ALL THE THREE LOAN CREDITORS WERE NOT SATISFACTORILY EXPLAINED BY THE ASSESSEE IN TERMS OF SECTION 68, INASMUCH AS, THEIR CREDITWORTHINESS FOR ADVANCING THE LOANS TO THE ASSESSEE WAS NOT PROVED. HE, THEREFORE , INVOKED THE PROVISIONS OF SECTION 68 AND ADDED THE AMOUNT OF SUCH LOANS AGGREGATING TO RS.5,00,000/ - TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDITS IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 21.12 .2010. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) DISPUTING THE ADDITION OF RS.5,00,000/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 68. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) SUMMARIZED HIS FINDINGS ON THE ISSUE AS UNDER: - (A) ACCRUED INTEREST IS NOT A SOURCE OF CASH TRANSFER. (B) CASH DEPOSIT BY DELIBERATELY SPLITTING UP BELOW RS.50,000/ - IS TO AVOID QUOTING PAN/FILING FORM 60 OR 61 DESPITE HOLDING PAN PRIOR TO 12.01.2008. (C) THE SOURCE LIKE MISCELLANEOUS INCOME, INCOME FROM TAILORING ETC. ARE UNSUBSTANTIATED. (D) NO INTEREST IS CHARGED ON THE PURPORTED LOANS. ON THE B ASIS OF THE ABOVE FINDINGS AS WELL AS FOR THE OTHER REASONS GIVEN IN HIS IMPUGNED ORDER, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OBSERVING THAT NOT ONLY THE CREDITWORTHINESS OF THE CONCERNED CREDITORS WAS NOT ESTABLISHED BUT EVEN THE GENUINENESS OF THE RELEVANT CREDITS REMAINED UNPROVED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSE D THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 5 OF 6 ASSESSEE HAS CONTENDED THAT SOME OF THE FINDINGS RECORDED BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER ARE NOT CORRECT, INASMUCH AS, INTEREST INCOME IN THE HANDS OF THE CONCERNE D CREDITORS HAD NOT ACCRUED AS ASSUMED BY HIM BUT THE SAME WAS ACTUALLY RECEIVED BY THEM, I FIND THAT THIS IS NOT THE SOLITARY BASIS ON WHICH THE LD. CIT(APPEALS) HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 TREATING THE RELEVA NT LOAN CREDITS AS UNEXPLAINED. AS FOUND BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(APPEALS), ALL THE THREE CREDITORS BELONGING TO ONE FAMILY HAD DEPOSITED CASH IN THEIR BANK ACCOUNTS JUST BEFORE ADVANCING THE AMOUNTS IN QUESTION TO THE ASSESSEE AND S INCE THERE WAS A FAILURE ON THE PART OF THE ASSESESE TO EXPLAIN THE SOURCE OF FUNDS FOR MAKING THE SAME DEPOSIT IN CASH, IT WAS HELD BY THEM THAT THE CREDITWORTHINESS OF THE CONCERNED CREDITORS WAS NOT SATISFACTORILY PROVED. AT THE TIME OF HEARING BEFORE ME, LD. COUNSEL FOR THE ASSESSEE HAS MADE AN ATTEMPT TO PROVE THE CREDITWORTHINESS OF THE SAID CREDITORS BY FILING THEIR INCOME - TAX RETURNS AS WELL AS BALANCE - SHEETS AND PROFIT & LOSS A/CS. A PERUSAL OF THE SAME HOWEVER SHOWS THAT THIS DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IS NOT SUFFICIENT TO ESTABLISH TH E CREDITWORTHINESS OF THE CONCERNED CREDITORS TO ADVANCE THE IMPUGNED AMOUNT TO THE ASSESSEE . F OR EXAMPLE SHIV RATAN BAIDYA, WHO IS STATED TO HAVE ADVANCE D A SUM OF RS.3,00,000/ - TO THE ASSESSEE, HAD EARNED A NET PROFIT OF RS.1,15,741/ - ONLY DURING THE RELEVANT YEAR I.E. ASSESSMENT YEAR 2008 - 09 AND AFTER CREDITING THE SAID AMOUNT OF PROFIT TO HIS CAPITAL ACCOUNT, HE HAD WITHDRAWN ONLY RS.85,500/ - , WHICH WAS INCLUSIVE OF ONE GIFT ALSO APPARENTLY GIVEN B Y HIM IN HIS INDIVIDUAL CAPACITY. IT IS, THEREFORE, NOT CLEAR FROM WHERE THE SAID CREDITOR HAS RECEIVED THE AMOUNT OF RS.3,00,000/ - IN CASH FOR MAKING DEPOSIT IN HIS BANK ACCOUNT BEFORE GIVING THE ADVANCE OF RS.3,00,000/ - TO THE ASSESSEE. THE CASH FLOW OF THE SAID CREDITOR HAS ALSO NOT BEEN FURNISHED BEFORE ME TO SHOW THE AVAILABILITY OF CASH OF RS.3,00,000/ - DURING THE RELEVANT PERIOD TO MAKE DEPOSIT IN THE BANK ACCOUNT. SIMILAR IS THE POSITION IN RESPECT OF OTHER TWO CREDITORS ALSO IN WHOSE CASES THE ASSE SSEE AGAIN HAS FAILED TO PROVE THE AVAILABILITY OF CASH OF RS.1,00,000/ - EACH AT THE RELEVANT TIME TO MAKE DEPOSITS IN THE BANK ACCOUNT BEFORE I.T.A. NO . 217 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 6 OF 6 GIVING THE ADVANCES TO THE ASSESSEE ON EVIDENCE. I, THEREFORE, AGREE WITH THE VIEW TAKEN BY THE AUTHORITIES BELOW THAT THERE IS A FAILURE OF THE ASSESS E E TO ESTABLISH THE CREDITWORTHINESS OF THE CONCERNED CREDITORS FOR GIVING THE AMOUNT S IN QUESTION AS LOAN S TO THE ASSESSEE AND THUS THE RELEVANT CASH CREDITS REPRESENTING THE LOANS STATED TO BE RECEIVED BY THE ASSESSE E REMAINED UNEXPLAINED IN TERMS OF SECTION 68. I, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 AND UPHOLD THE SAME. 5 . IN THE RES ULT, THE APPEAL OF THE ASSESSEE IS TREATED A S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 11 , 2015. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA , THE 11 TH D AY OF SEPTEMBER , 201 5 COPIES TO : (1) VIVEK RUNGTA, P.O. SALANPU R, DISTRICT - BURDWAN - 713201 (2) INCOME TAX OFFICER, WARD - 2(3), ASANSOL, G.T. ROAD (WEST), 2 ND FLOOR, P.O. ASANSOL - 713 304 (3) COMMISSIONER OF INCOME - TAX (APPEALS) , ASANSOL (4) COMMISSIONER OF INCOME TAX , KOLKATA ( 5 ) THE DEPARTMENTAL REPRE SENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .