Income Tax Officer Ward-30(3), Kolkata, Kolkata V. Sanjeev Kejriwal, Kolkata

ITA 2190/KOL/2013

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9770 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: A K TIBREWAL
• Keywords: Unexplained cash credit; Bad and doubtful debts; Revised return
• Section: 143(3); 133(6); 68; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 2190/KOL/20 13 ASSESSMENT YEAR : 2008-0 9 ITO, WARD-30(3), KOLKATA -VS- SANJEEV K EJRIWAL [PAN: AEVPK 7424 H ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SAURABH KUMAR , ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI A.K. TIBREWAL, FCA DATE OF HEARING : 26.11.2018 DATE OF PRONOUNCEMENT : 12 .12.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XIV, KOLKATA, [IN SHORT THE LD CIT(A)] IN APPEAL NO. 308/CIT(A)-XIV/KOL/10-11 DATED 15.05.2013 AGAINST THE ORDER PASSED BY THE ITO, WARD-30(3), KOLKATA [ IN SHORT THE LD AO] UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.12.2010 FOR TH E ASSESSMENT YEAR 2008-09. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,89,34,2 32/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE INTERCONNECTED ISSUE IS THE REVENUE 2 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 2 HAD ALSO RAISED A GROUND WITH REGARD TO VIOLATION O F PROVISION OF RULE 46A OF THE INCOME TAX RULES. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF SWAN TIMBERS IN THE NAME OF RAJEEV TRADING CO. AND ALSO DERIVED INCOME FROM COMMISSION, SALARY AND PROFIT F ROM TRADING OF SHARES. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 WAS FILED BY THE ASSESSEE ON 21.07.2008 DECLARING TOTAL INCOME OF RS. 1,83,414/-. SUBSEQUEN TLY, A REVISED RETURN WAS FILED ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 2,67,518/- . THE LD. AO OBSERVED THAT THE ASSESSEE APPEARED BEFORE THE LD. AO FROM TIME TO TI ME AND PRODUCED BOOKS OF ACCOUNTS AND ALL DOCUMENTS FOR VERIFICATION. FROM THE DETAIL S FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO SOUGHT TO VERIFY THE SUNDRY DEBTORS BALANCE AS APPEARING IN THE BOOKS OF PROPRIETARY CONCERN M/S R AJEEV TRADING CO. AND ISSUED NOTICES U/S 133(6) OF THE ACT TO SEVEN PARTIES. THE SAID NOTICES RETURNED UNSERVED. SINCE THE NOTICES GOT RETURNED UNSERVED, THE LD. AO CAME TO CONCLUSION THAT THE ENTIRE CREDITS SHOWN BY THE ASSESSEE IN THE FORM OF REALIZATION FR OM DEBTORS TO THE TOTAL SUM OF RS. 1,89,34,232/- DURING THE YEAR AS NOT PROVED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT. 4. THE ASSESSEE PLEADED THAT THE ASSESSEE CREDITED A SUM OF RS. 1,89,34,232/- IN CASH TO THE ACCOUNT OF THE VARIOUS SUNDRY DEBTORS AS DETAIL ED IN PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSEE STATED THAT THESE REALIZATIONS WERE MA DE AGAINST THE SUPPLIES MADE IN EARLIER YEAR. THE ASSESSEE FURNISHED THE NAMES AND ADDRESSES OF THE DEBTORS AND HAS FILED A STATEMENT SHOWING PARTICULARS OF ACCOUNT IN THEIR NAMES DURING THIS YEAR, RECOVERY OF AMOUNTS DURING THE YEAR AND CLOSING BALANCE OUTSTAN DING AS ON 31.03.2005 TO 31.03.2009, PROFIT AND LOSS ACCOUNT FOR THE SAME PE RIOD, LIST OF SUNDRY DEBTORS, CONFIRMATORY CERTIFICATES AND SUCH OTHER PARTICULAR S TO PROVE THAT THESE SUMS REPRESENT REALIZATION FROM DEBTORS. ACCORDINGLY, IT WAS PLEAD ED THAT THE PROVISIONS OF SECTION 68 3 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 3 PER SE ARE NOT AT ALL APPLICABLE IN THE FACTS OF TH E INSTANT CASE AS IT PERTAINS TO TRADE RECEIPTS AND NOT LOAN RECEIPTS OR SHARE CAPITAL RE CEIPTS. THE ASSESSEE ALSO PLACED RELIANCE ON CERTAIN DECISIONS IN SUPPORT OF THESE CONTENTION S. THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 12. ALL THE GROUNDS OF APPEAL ARE DIRECTED AGAINST THE ADDITION OF RS. 1,89,34,232/- MADE BY THE A.O. I HAVE GIVEN CAREFUL CONSIDERATION TO THE CONTENTION OF THE APPELLANT AND HAVE ALSO PERUSED THE ORDER OF THE A.O. AND REL EVANT DOCUMENTS. I FIND, THERE ARE SUFFICIENT FORCE TO THE ARGUMENTS PLACED BY THE ID. COUNSEL FOR THE APPELLANT. BEFORE DWELLING UPON THE IMPUGNED ISSUE RELATED TO ADDITIO N OF RS.1,89,34,232 IT MAY BE NECESSARY TO EXAMINE FIRST THE METHOD OF ACCOUNTS F OLLOWED BY THE APPELLANT WHICH RESULTED DEBTS DUE FROM THE CUSTOMERS IN EARLIER YE ARS. THE APPELLANT WAS ENGAGED IN THE BUSINESS OF SAWN TIMBERS DURING THE PREVIOUS YE AR RELEVANT TO THE ASST. YEAR 2005-06 AND THE APPELLANT DERIVED INCOME OF RS.1,20,306 FRO M THE BUSINESS WHICH WAS DISCLOSED IN THE RETURN FOR THE ASST. YEAR 2005-06. AS PER AU DITED STATEMENTS OF ACCOUNT FOR THE YEAR ENDED 31.3.2005 THERE WERE SUNDRY DEBTORS OF R S.7,54,45,999 AND SUNDRY CREDITORS OF RS.7,91,60,460. THE APPELLANT REALIZED MONEY PAR TLY FROM SUNDRY DEBTORS AND MET LIABILITIES OUT OF THE SUMS COLLECTED FROM THE SUND RY DEBTORS IN THE SUBSEQUENT YEARS. IT IS ALSO IMPORTANT TO NOTE THAT AS PER BALANCE SHEET AS AT 31.3.2007, I.E., IMMEDIATELY PRECEDING YEAR, THE APPELLANT HAD AN OUTSTANDING LI ABILITY OF SUNDRY CREDITORS TO THE TUNE OF RS.1 ,35,58,275 AND AT THE SAME TIME HE HAD SUNDRY DEBTORS OF RS.2,96,92,935. THIS CLEARLY DEMONSTRATES THAT ON THE ONE HAND THE APPELLANT HAD LIABILITY TOWARDS THESE CREDITORS AND ON THE OTHER HAND HE HAD ASSETS IN TH E FORMS OF SUNDRY DEBTORS AND OTHER KINDS. DURING THE RELEVANT PREVIOUS YEAR THE APPELL ANT REALIZED RS.1 ,89,34,232 OUT OF SUNDRY DEBTORS OF RS.2,96,92,935 STANDING AS ASSETS ON 31.3.2007. A CASH FLOW CHART FOR THE YEAR UNDER CONSIDERATION WAS FURNISHED BY THE A PPELLANT WHICH INDICATED RECOVERY OF DEBTS AND DISBURSEMENT OF FUND AS MENTIONED THER EUNDER: 3.3 IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE AP PELLANT FURNISHED A CASH FLOW STATEMENT (ANNEXURE-C) WHICH INDICATED DISBURSEMENT OF THE SUM REALIZED FROM THE SUNDRY DEBTORS AS MENTIONED HEREUNDER: OPENING CASH BALANCE, I.E. AS ON 01.04.2007 2,76 ,302.80 ADD: MONEY REALIZED DURING THE YEAR FROM: SUNDRY DEBTORS 1,89,34,232.00 WITHDRAWAL FROM STANDARD CHARTERED BANK 12, 500.00 1,92,23,034.00 LESS: PAYMENTS MADE DURING THE YEAR: DEPOSIT WITH SCB 23,13,000 THE FEDERAL BANK 1,09,30,000 TRANSFERRED TO PERSONAL ACCOUNT PAYMENTS MADE TO : 36,00,000 RAJPUTANA GENERAL COMM. CORP. P. LTD. 20,00,000 ARVIND TRADING CO. 2,50,000 4 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 4 RITU KEJRIWAL 25,000 EXPENSES 9,045 1,91,27,045.00 CLOSING BALANCE 95,989.80 13. THE APPARENT STATE OF AFFAIRS CLEARLY INDICATE THAT THE APPELLANT SOLD GOODS ON CREDIT IN EARLIER YEARS AND MET LIABILITIES IN SUBSEQUENT YEARS OUT OF SUMS COLLECTED FROM THE SUNDRY DEBTORS. IN MY VIEW THE ASSESSING OFFICER AC TED UPON MERE ASSUMPTION THAT THOSE SUMS CREDITED TO THE ACCOUNTS WERE NOT GENUINE TRAN SACTIONS. MERE SUSPICION CANNOT TAKE THE PLACE OF PROOF. ACCORDINGLY, THE OVERALL C IRCUMSTANCES ALSO DO NOT SUGGEST THAT ANY ADVERSE INFERENCE SHOULD BE DRAWN AGAINST THE A PPELLANT. THE SAME PROCEDURE WAS FOLLOWED BY THE APPELLANT IN THE PREVIOUS YEAR RELE VANT TO THE ASST. YEAR 2006-07 AND THE REALIZATION OF MONEY FROM THE SUNDRY DEBTORS WAS BR OUGHT INTO CONTROVERSY IN THE ASSESSMENT. THE DISPUTE CROPPED UP FOR THE ASST. YE AR 2006-07 WAS RESOLVED BY THE ORDER OF THE HON'BLE TRIBUNAL IN THE APPEAL IN ITA NO-371/KOL/2010 PREFERRED BY THE APPELLANT. THE RELEVANT OBSERVATION OF THE HON'BLE TRIBUNAL IN PARA 6 OF THE SAID ORDER READ AS UNDER : ' ... THE CONTENTION OF ASSESSEE THAT THE REALIZATI ON MADE BY THE ASSESSEE IN CASH FROM THE SUNDRY DEBTORS AND SUBSEQUENT PAYMENTS TO THE SUNDRY CREDITORS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS ARE NOT RE JECTED BY THE REVENUE AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07 WHICH I S UNDER DISPUTE. WE FIND NO JUSTIFICATION ON THE PART OF THE REVENUE TO MAKE EI THER ADDITIONS OF RS.25,00,000 BY AO OR ENHANCEMENT MADE BY THE LD. CIT(A) TO THE EXTENT OF RS.2,37,06,226 IS NOT SUSTAINABLE IN THE EYES OF LAW, KEEPING IN VIEW OF THE FACT THAT NEITHER THE AO NOR THE LD. CIT(A) HAS REJECTED THE BOOKS OF ACCOUN TS MAINTAINED BY ASSESSEE NOR DISPUTED THAT THE ASSESSEE IS SHOWING SUNDRY DE BTORS AS WELL AS SUNDRY CREDITORS AS ON 31.03.2005 WHICH WERE SUBSTANTIALLY REDUCED AS ON 31.03.2006. UNDER THESE CIRCUMSTANCES, THE ADDITION MADE BY THE AO AND ENHANCEMENT MADE BY LD. CIT(A) ARE LIABLE TO BE DISMISSED .... ' 14. IT MAY BE VIEWED FROM ANOTHER ASPECT. THE POINT RAISED BY THE LD. COUNSEL WITH REFERENCE TO THE OBSERVATION MADE IN THE CITED CASE S IS AN IMPORTANT ISSUE, THE LD. COUNSEL ARGUED THAT WHEN THE HON'BLE TRIBUNAL ON SA ME FACTS AND CIRCUMSTANCES AND CONSIDERING ALL THE .MATERIALS HAS HELD THAT REALIZ ATION FROM DEBTORS CANNOT BE TREATED AS CASH CREDIT IN VIEW OF THE FACT THAT THE AMOUNT OF SUNDRY DEBTORS REPRESENTED A TRADING ASSET AND A RECEIPT REMAINED CONVERSION OF TRADING ASSET INTO CASH IN THE INSTANT CASE, IT WAS NOT OPEN FOR THE ASSESSING OFFICER TO UPSET THE JUDGEMENT OF THE HONBLE TRIBUNAL. SUCH ACT IS A GROSS BREACH OF QUASI-JUDIC IAL DISCIPLINE. IN THIS VIEW OF THE MATTER, WHERE THE BASIC FACTS BEFORE THE ASSESSING OFFICER FOR SUBSEQUENT YEAR WERE THE SAME AS WERE BEFORE THE HONBLE TRIBUNAL FOR AN EAR LIER YEAR, IT WOULD NOT BE APPROPRIATE FOR THE ASSESSING OFFICER TO DIFFER FRO M THE VIEW EXPRESSED BY THE HIGHER APPELLATE AUTHORITY FOR THE EARLIER YEAR PARTICULAR LY BECAUSE IT IS THE SAME DISPUTE IN ONE AND SAME SETTING. THE HON'BLE CALCUTTA HIGH COURT I N VOEST ALPINE IND. GMBH V. ITO & ORS. (246 ITR 745, 749 CAL.) HELD THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE 5 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 5 JUNIOR INCUMBENT IS SUPPOSED TO OBEY AND CARRY OUT THE ORDER AND / OR OBSERVATIONS 'MADE BY THE SUPERIOR AUTHORITY, BE IT JUDICIAL FOR UM OR A QUASI-JUDICIAL FORUM OR EVEN IN ANY ADMINISTRATION FIELD. IN CIT V. RALSON INDUSTRI ES LTD. (288 ITR 322 SC) THE HON'BLE SUPREME COURT OBSERVED THAT WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRIN CIPLES OF JUDICIAL DISCIPLINE. THEREFORE, I HOLD THAT THE ASSESSING OFFICER SHOULD NOT DEVIATE FROM THE EARLIER DECISION OF THE HON 'BLE TRIBUNAL IN THE CASE OF THE APPELLA NT FOR APPLICATION OF THE SAME VIEW IN THIS YEAR. 15. HAVING CONSIDERED THE CONTENTION OF THE APPELLA NT, THE RELEVANT FACTS, MATERIAL ON RECORD AND CITATION RELIED UPON I AM OF OPINION THA T THE ADDITION IS NOT SUSTAINABLE IN LAW. I FIND THAT THE ISSUE IS SQUARELY COVERED IN F AVOUR OF THE APPELLANT VIDE ORDER DATED 9.11. 2012 OF THE JURISDICTIONAL TRIBUNAL IN ITA NO - 371/KOL/2010 IN THE APPELLANT'S OWN CASE FOR THE A.Y.2006-07. RESPECTFULLY FOLLOWIN G THE AFORESAID ORDER OF THE HONOURABLE TRIBUNAL IN THE APPELLANT'S OWN CASE, TH E ADDITION OF RS. 1,89,34,232/ - MADE BY THE ASSESSING OFFICER IS DELETED. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTS ET, WE FIND THAT THERE WERE CERTAIN CASH DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSES SEE WHICH WERE EXPLAINED AS REALIZATION MADE FROM VARIOUS DEBTORS OF THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION. WE HOLD THAT EXCEPT CREDITING THE CA SH TO THE CREDIT OF VARIOUS DEBTORS ACCOUNT IN THE LEDGER ACCOUNTS OF THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD NOT PRODUCED ANY OTHER CORRESPONDING EVIDENCES FROM EXT ERNAL SOURCES SUCH AS FROM DEBTORS CONFIRMING THIS FACT OF HAVING SETTLED THE IR DUES TO THE ASSESSEE IN CASH. THE CONFIRMATORY CERTIFICATE STATED TO HAVE BEEN FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) IS NOT FORMING PART OF PAPER BOOK FILED BEFORE US AND HENCE THE SAME CANNOT BE TAKEN INTO ACCOUNT FOR WANT OF PROOF. WE HOLD THAT ONCE T HE CASH IS DEPOSITED INTO BANK ACCOUNT OF THE ASSESSEE, THE ONUS IS PRIMARY ON THE ASSESSEE TO PROVE THAT THE SAID CASH IS SOURCED BY REALIZATION FROM DEBTORS, WHICH IN THE I NSTANT CASE HAS NOT BEEN PROVED BY THE ASSESSEE EXCEPT MAKING AN ORAL STATEMENT AND TA KING CREDENCE FROM THE ENTRIES PASSED BY HIM IN THE BOOKS OF ACCOUNTS OF RAJEEV TR ADING CO. IT IS NOT IN DISPUTE THAT THE SEVEN NOTICES SENT BY THE LD. AO U/S 133(6) TO SEVEN SUNDRY DEBTORS RETURNED UNSERVED. THE ASSESSEE DID NOT TAKE CORRECTIVE MEAS URES TO PRODUCE CONFIRMATIONS FROM 6 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 6 THESE SEVEN SUNDRY DEBTORS EITHER DURING THE ASSESS MENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS. HENCE WE HOLD THAT THE PRIMA RY ONUS AND THE THREE INGREDIENTS OF SECTION 68 HAS NOT BEEN DISCHARGED BY THE ASSESSEE IN THE INSTANT CASE. WE HOLD THAT THE HONBLE SUPREME COURT HAD ADDRESSED THE VERY SAME I SSUE IN THE CASE OF VIJAY KUMAR TALWAR VS. CIT REPORTED IN 330 ITR 1 DATED 06.12.20 10 AGAINST THE ASSESSEE. HENCE THE PRIMARY ARGUMENT ADVANCED BY THE LD AR ON BEHALF OF THE ASSESSEE DESERVES TO BE DISMISSED IN THE INSTANT CASE. 6. HOWEVER WE FIND THAT THE LD AR HAD MADE AN ALTER NATIVE ARGUMENT BEFORE US STATING THAT IN CASE IF THE SAID CREDIT TO THE ACCOUNT OF T HE SUNDRY DEBTORS ARE NOT BELIEVED TO BE GENUINE BY THE DEPARTMENT, IT CANNOT BE DISPUTED TH AT THE ASSESSEE HAD REDUCED THE DEBTORS ACCOUNT BALANCES TO THE TUNE OF RS. 1,89,3 4,232/- IN ITS BOOKS OF ACCOUNTS WHICH EFFECTIVELY AMOUNTS TO WRITE OFF OF DEBTS TO THAT E XTENT. THE LD. AR ARGUED THAT THIS WRITE OFF IS OTHERWISE ALLOWABLE AS A DEDUCTION AS BAD DE BTS U/S 36(1)(VII) OF THE ACT. IN SUPPORT OF THIS PROPOSITION, HE PLACED RELIANCE ON THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL AUTHORED BY THE UNDERSIGNED IN THE CASE OF D.K. INDUSTRIES VS. ITO IN I.T.A. NO. 683/KOL/2013 FOR ASSESSMENT YEAR 2009-10 DATED 08.04.2016, WHEREIN IT WAS HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASS ESSEE COMPRISING OF (I) COPY OF PARTNERSHIP DEEDS DATED 1.4.1994, 1.4.2007 AND 1.4.2008 VIDE PAGES 1 TO 41 OF PAPER BOOK ; (II) COPY OF IT RETURN ACKN OWLEDGEMENT TOGETHER WITH AUDITED ACCOUNTS FOR ASST YEAR 2009-10 VIDE PAGES 4 2 TO 56 ; (III) COPY OF ASSESSMENT ORDER U/S 143(3) OF THE ACT DATED 7.12.2 010 FOR ASST YEAR 2008-09 VIDE PAGES 57 TO 72 ; (IV) COPY OF INTIMATION U/S 1 43(1) OF THE ACT DATED 27.7.2001 FOR ASST YEAR 1999-2000 VIDE PAGE 73 ; (V ) COPY OF TAX AUDIT REPORT TOGETHER WITH AUDITED ACCOUNTS FOR ASST YEAR 1999-2 000 VIDE PAGES 74 TO 105 ; (VI) COPY OF IT RETURN ACKNOWLEDGEMENT AND ASSESS MENT ORDER US 143(3) OF THE ACT FOR THE ASST YEAR 1998-99 VIDE PAGES 106 TO 113 AND (VII) COPY OF AUDITED BALANCE SHEET AS ON 31.3.1998 TOGETHER WITH TAX AUDIT REPORT VIDE PAGES 114 TO 140 . 7 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 7 6.1. WE FIND THAT THE ADDITION HAS BEEN MADE THE LE ARNED AO ON THE GROUND THAT THE ASSESSEE COULD NOT OBTAIN THE CONFIRMATION FROM M/S RAJ ENTERPRISES AND M/S BRAND ALLOYS LTD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD INDEED FURNISHED CONFIRMATION FROM MR.VINAY KUMAR BAID TOG ETHER WITH HIS PAN DETAILS WHICH FACT IS ALSO MENTIONED IN THE ASSESSM ENT ORDER. THE ASSESSEE HAD CLAIMED THAT THE SOURCE OF CASH DEPOSITS ARE NO THING BUT REALIZATION OF LOAN DUES FROM THE THREE PARTIES IN CASH WHICH WERE DEPOSITED INTO THE BANK ACCOUNT OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD INDEED REQUESTED THE LEARNED AO TO ISSUE SUMMONS TO M/S RA J ENTERPRISES AND M/S BRAND ALLOYS LTD TO MAKE VERIFICATION OF THE SUBJEC T MENTIONED RECEIPTS. BUT THE SAID SUMMONS COULD NOT BE SERVED ON THE PARTIES AT THE ADDRESS GIVEN BY THE ASSESSEE TO LEARNED AO. THE ASSESSEE HAD ONLY P ROVED THE IDENTITY OF THE LOAN CREDITORS (AS THEY ARE EXISTING FROM 31.3.1998 IN ITS BOOKS WHICH IS ALSO ACCEPTED BY REVENUE) , BUT HOWEVER, THE ASSESSEE WA S NOT ABLE TO PROVE THE CREDITWORTHINESS OF THOSE PARTIES. THE GENUINENESS OF TRANSACTION HAS NOT BEEN PROVED BY THE ASSESSEE. IN THESE CIRCUMSTANCES , THOUGH THERE IS NO DIRECT EVIDENCE TO PROVE THAT THE ASSESSEE HAD ONLY ROUTED ITS UNDISCLOSED MONIES IN THE FORM OF REALIZATION FROM LOAN PARTIES, BY VIRTU E OF OPERATION OF DEEMING PROVISIONS OF SECTION 68 OF THE ACT, THE ADDITION M ADE BY THE LEARNED AO NEEDS TO BE SUSTAINED. WITH REGARD TO THE DECISION RELIED UPON BY THE LEARNED AR ON THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SANJEEV KEJRIWAL VS ITO IN ITA NO. 371/KOL/2010 DATED 9.11.2012, WE FIND THAT THE FACTS STATED THEREON ARE SQUARELY DISTINGUISHABLE WITH REGARD TO REALIZATION OF MONIES FROM DEBTORS. IN THAT CASE, THERE WAS A CLEAR FINDI NG GIVEN BY THE LEARNED CIT(A) THAT THE MONIES RECEIVED REPRESENT REALIZATI ON FROM DEBTORS. WHEREAS, IN THE INSTANT CASE, THE ENTIRE DISPUTE REVOLVES ON THE FACT OF REALIZATION OF MONIES FROM LOAN DEBTORS. HENCE RELIANCE PLACED ON THE AFORESAID DECISION DOES NOT ADVANCE THE CASE OF THE ASSESSEE ON THIS A SPECT. HENCE THE SAME WOULD BECOME TAXABLE AS INCOME FROM OTHER SOURCES. 6.2. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD SHO WN THESE LOAN BALANCES DUE FROM THESE THREE PARTIES AS LOANS AND ADVANCES RECE IVABLE IN ITS BALANCE SHEET FOR MORE THAN 10 YEARS. IT IS ALSO NOT IN DISPUTE T HAT ONE OF THE MAIN BUSINESSES OF THE ASSESSEE FIRM IS MONEY LENDING AC TIVITY. THIS IS QUITE EVIDENT FROM THE VARIOUS PARTNERSHIP DEEDS OF THE ASSESSEE VIDE CLAUSE 3 WHICH ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE :- 3. THAT THE BUSINESS OF THE FIRM SHALL BE MAINLY TH AT OF EXPORT & IMPORT OF AGRO PRODUCTS LIKE RAW COTTON, PULSES, FO OD GRAIN, SPICES ETC., GINNING AND PRESSING OF COTTON, COMMISSION AG ENT, MANUFACTURERS REPRESENTATIVE, GENERAL MERCHANT, FI NANCIER INCLUDING MONEY LENDING BUSINESS, REAL ESTATE AND SHALL BE EN TITLED TO CARRY ON ANY OTHER TRADE OR BUSINESS OR MANUFACTURING WHATSO EVER AS MUTUALLY AGREED UPON BY THE PARTNERS. 8 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 8 THE SAME CLAUSE IS PRESENT IN THE ORIGINAL PARTNERS HIP DEED DATED 1.4.1994 VIDE CLAUSE 3 AND ALSO IN RECONSTITUTED PARTNERSHIP DEEDS DATED 1.4.2007 AND 1.4.2008. THIS GOES TO PROVE THAT THE ASSESSEE IS INDEED ENGA GED IN MONEY LENDING BUSINESS ALSO. WE ALSO FIND THAT THE ASSESSEE HAD D ULY SHOWN THE AMOUNTS RECEIVABLE FROM THE AFORESAID THREE PARTIES (I.E RA J ENTERPRSIES, BRAND ALLOYS LTD AND VINAY KUMAR BAID) AS LOANS AND ADVANCES IN THE BALANCE SHEET AS ON 31.3.2008 (IMMEDIATELY PRECEDING ASST YEAR) WITH TH E BALANCES OF RS. 36,50,036/- IN TOTAL OF THESE THREE PARTIES. THIS G OES TO PROVE THAT THE ASSESSEE HAD CONTINUED ITS MONEY LENDING BUSINESS. DURING TH E ASST YEAR UNDER APPEAL, THE BALANCES FROM THESE THREE PARTIES ARE SHOWN AS NIL IN VIEW OF RECOVERIES MADE BY THE ASSESSEE FROM THEM, ACCORDING TO ASSESS EE , WHICH FACT IS ALSO EVIDENT FROM THE BALANCE SHEET AS ON 31.3.2009 FILE D IN THE PAPER BOOK. HOWEVER, THE REALIZATION OF MONIES FROM THESE LOAN PARTIES HAVE BEEN DISBELIEVED BY THE LEARNED AO AND WE HAVE ALREADY G IVEN OUR FINDING IN THAT REGARD HEREINABOVE IN FAVOUR OF THE REVENUE. BUT ON E MORE FACT CANNOT BE SWEPT UNDER THE CARPET THAT THE ASSESSEE HAD BROUGH T THE LOAN BALANCES FROM THESE THREE PARTIES TO NIL AS ON 31.3.2009 IN ITS B OOKS OF ACCOUNTS. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS INDEED CARRYING ON MO NEY LENDING BUSINESS IN THE PAST AND HAD DERIVED INTEREST INCOME THEREON. T HIS IS QUITE EVIDENT FROM THE COPY OF AUDITED BALANCE SHEETS FILED BY THE ASS ESSEE FOR THE YEARS ENDED 31.3.1998 AND 31.3.1999, WHEREIN THE INTEREST INCOM E IS ADMITTED BY THE ASSESSEE AS INCOME FROM BUSINESS. IT IS ALSO NOT IN DISPUTE THAT THE REVENUE HAD ALSO ACCEPTED THE SAME AS INCOME FROM BUSINESS IN THE PAST. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD CONTINUED TO CARRY ON ITS MONEY LENDING BUSINESS. IT IS ALSO NOT IN DISPUTE THAT THE LENDIN G TO THESE PARTIES WERE MADE IN THE ORDINARY COURSE OF MONEY LENDING BUSINESS OF THE ASSESSEE. SINCE THE ASSESSEE HAS CLAIMED THAT THE MONIES HAVE BEEN REAL IZED FROM THESE PARTIES, IT IS ESTOPPED FROM PROCEEDING AGAINST THESE PARTIES F ROM MAKING ANY RECOVERIES. IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE HAD BROUGHT THE BALANCES OF THESE PARTIES TO NIL AS ON 31.3.2009 IN ITS BOOK S OF ACCOUNTS. HENCE THE ASSESSEE IS ENTITLED TO CLAIM THE BALANCES OF THESE THREE PARTIES AS A TRADING LOSS U/S 28 OF THE ACT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FIND LOT OF FORCE IN THE ALTERNATIVE ARGUMENT OF THE ASSESSEE T HAT THE NON-RECOVERY OF THE LOAN DUES , ACCORDING TO LEARNED AO, SHOULD BE ALLO WED AS A DEDUCTION AS REGULAR BUSINESS LOSS FROM MONEY LENDING ACTIVITY , WHICH IN TURN WOULD ONLY GO TO INCREASE THE BUSINESS LOSS OF THE ASSESSEE FO R THE YEAR UNDER APPEAL AND THE SAME WOULD IN TURN BE AVAILABLE FOR SET OFF AGA INST THE ALLEGED INCOME FROM OTHER SOURCES U/S 68 OF THE ACT. HENCE IN ANY CASE, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE IN THE SUM OF RS. 36,50,036/-. HENCE WE FIND LOT OF FORCE IN THE ALTERNATIVE ARGUMENT OF TH E LEARNED AR. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9 ITA NO.2190/KOL/2013 SANJEEV KEJRIWAL A.YR. 2008-09 9 WE FIND THAT THE DECISION PLACED BY THE LD. AR IS W ELL FOUNDED AND IS DIRECTLY APPLICABLE TO THE FACTS OF THE INSTANT CASE. HENCE BY PLACING RELIANCE ON THE SAID DECISION, WE HOLD THAT THE ASSESSEE IN THE INSTANT CASE IS ENTITLED F OR DEDUCTION AS BAD DEBTS BASED ON ALTERNATIVE ARGUMENT ADVANCED BY THE LD. AR. ACCORD INGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 12.12.20 18 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12.12.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-30(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN , 2, GARIAHAT ROAD SOUTH, 5 TH FLOOR, KOLKATA-700068. 2. SRI SANJEEV KEJRIWAL, 6/1B-PALM AVENUE, KOLKATA- 700019. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES