ITO, Ward - 35(4), Kolkata, Kolkata V. Madan Chand Surana (HUF), Kolkata

ITA 2298/KOL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70511 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2010
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Assessment record
• Section: 143(3); 133(6); 68

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , !' ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] # # # # / I.T.A NO. 2298/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-35(4), KOLKATA. VS. MADAN CHAND SURANA (HUF) (PAN: AACHM5226J) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 24.12.2013 DATE OF PRONOUNCEMENT: 24.12.2013 FOR THE APPELLANT: SHRI KALYAN NATH, JCIT, SR. DR. FOR THE RESPONDENT: SHRI S. M. SURANA ! / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XX, KOLKATA IN APPEAL NO. 196/CIT(A)-XX/WARD-36(3)/08-09/KOL DATED 23.09.2010 . ASSESSMENT WAS FRAMED BY ITO, WARD-36(3), KOLKATA U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DA TED 02.12.2008. 2. AT THE OUTSET, IT IS TO BE NOTICED THAT REVENUE HAS FILED ADJOURNMENT IN ALL THE CASES OF B BENCH TO BE ARGUED BY LD. SR. DR I.E., ON 24.12 .2013. ON QUERY FROM THE BENCH, LD. CIT (DR), ITAT-II INTIMATED THAT, EXCEPT ONE, FOUR SR. DRS POSTS ARE LYING VACANT SINCE LONG. LD. CIT, DR STATED THAT ALL CASES REPRESENTED BY CIT, D R ARE FULLY PREPARED AND NORMALLY NO ADJOURNMENT IS ASKED FOR. THIS IS GRIM POSITION AS REGARDS TO ATTITUDE OF SR. DRS AND NORMALLY SR. DRS, WHO ARE GIVEN TIMELY DUTY TO REPRESENT THE CASES BEFORE VARIOUS BENCHES IN KOLKATA TRIBUNAL ARE EITHER NOT PREPARING OR SEEKING ADJOUR NMENT IN ALL CASES. THIS TYPICAL DETAIL IN RESPECT OF ONE SR. DR REPORTED BY CIT, DR, ITAT-II VIDE LETTER NO. CIT/ITAT/KOL/MISC/2013- 14/2068 DATED 24.12.2013, WHICH READS AS UNDER: SUB: DETAILS OF DUTY ALLOCATION IN REFERENCE TO SR I SADHAN BHATTACHARYA, ADDL. CIT/(SR. DR): MATTER REGARDING. KINDLY REFER TO THE ABOVE. 2 ITA NO. 2298/K/2010 MADAN CHAND SURANA (HUF), AY:2006-07 AS INSTRUCTED BY LD. CIT (ITAT)-II, KOLKATA TO INTI MATE SRI MAHAVIR SINGH, HONBLE J.M., ITAT, KOLKATA BENCH ABOUT THE DETAILS OF DUTY ALLOCATED TO SRI SADHA BHATTACHARYA, ADDL. CIT (AUDIT)-2, KOLKATA DURING T HE YEAR, I AM SENDING HEREWITH THE DETAILS AS FOLLOWS: DATE ON WHICH DUTY ALLOCATED TO SRI BENCH REMARKS SADHAN BHATTACHARYA, SR. DR 07.11.2013 B NOT APPEARED (ADJOURNED) 08.11.2013 B NOT APPEARED (ADJOURNED) 23.12.2013 C NOT APPEARED (ADJOURNED) 26.12.2013 C REQUEST LETTER FOR ADJOURNMEN T ISSUED AS DCIT, SAP-I, KOLK- ATA INTIMATED THAT SRI SADHAN BHATTACHARYA WILL BE ON C.L. ON 26.12.2013. IT IS RESPECTFULLY REQUESTED TO CBDT, LD. CCIT, INC HARGE ITAT KOLKATA BENCHES AND LD. CCIT, CADRE CONTROLLING, KOLKATA, WEST BENGAL TO AP POINT SR. DRS ON REGULAR OR TENURE BASIS I.E. WEEKLY OR MONTHLY BASIS, OTHERWISE WORKING OF KOLKATA BENCHES OF TRIBUNAL WILL SUFFER. WE HOPE CBDT, LD. CCIT, INCHARGE ITAT, KOLKATA AND CCIT, CADRE CONTROLLING, KOLKATA, WEST BENGAL WILL LOOK INTO THE MATTER. 3. THIS APPEAL WE HAVE HEARD EX PARTE QUA REVENUE. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF UNEXPLAINED CASH CREDITS WORTH RS.14.75 LAKHS. FOR THIS, REVENUE HAS RAISED FOLLO WING TWO GROUNDS: 1. THE CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.14,75,000/- MADE AS UNDISCLOSED SOURCE ON THE BASIS OF THE CONSIDERING OF THE SUBMI SSIONS OF THE ASSESSEE AND WITHOUT GIVING WEIGHTAGE TO THE POINT OF CREDITWORTHINESS O F THE LOAN CREDITORS. 2. THE CIT(A) HAS ERRED IN DELETING THE ADDITION AS UNDISCLOSED SOURCE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO S UBSTANTIATE THE GENUINENESS OF TRANSACTION AND OFFER ANY EXPLANATION IN COURSE OF ASSESSMENT P ROCEEDING. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS T AKEN A FRESH LOAN OF RS.8.75 LAC, RS. 4 LAC AND RS.2 LAC FROM SHRI CHAINRUP CHORARIA, SMT. CHAN DRA KALA DUGAR AND SHRI BABULAL DUGAR RESPECTIVELY. ACCORDING TO AO, THE ASSESSEE HAS NO T FILED ANY EVIDENCE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINEN ESS OF TRANSACTION AND ACCORDINGLY, HE MADE ADDITION OF THESE UNSECURED LOANS AS INCOME FROM UN DISCLOSED SOURCES U/S. 68 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 5 AS UNDER: 5. I HAVE PERUSED THE ASSESSMENT ORDER AND THE ASS ESSMENT RECORD. I FIND MERIT N THE CONTENTIONS OF THE APPELLANT. THE LOAN CONFIRMATION S WERE FILED AT THE ASSESSMENT STAGE. THE LOAN CREDITORS ARE ASSESSED TO INCOME TAX; AND, COPY OF THEIR PAN CARD WAS FILED. THE BANK STATEMENTS OF TWO LOAN CREDITORS, AND, BAN K CERTIFICATE IN THE CASE OF THE THIRD LOAN CREDITOR WERE ALSO FILED. IN FACT, TWO OF THEM ARE OLD CREDITORS WHO HAVE GIVEN FRESH LOANS DURING THE YEAR. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT NO REPLIES 3 ITA NO. 2298/K/2010 MADAN CHAND SURANA (HUF), AY:2006-07 WERE RECEIVED FROM THE LOAN CREDITORS. HOWEVER, I F IND FROM THE ASSESSMENT RECORD THAT, IN COMPLIANCE TO NOTICE U/S 133(6), THE LOAN CREDIT ORS HAD SENT THEIR REPLIES WHICH ARE AVAILABLE IN THE ASSESSMENT RECORD. THE REPLIES WER E RECEIVED IN THE OFFICE OF THE AO ON 05-12-2008. SINCE THE ASSESSMENT WAS MADE ON 02-12 -2008, THE SAME COULD NOT BE CONSIDERED. BUT, EVEN OTHERWISE, THE APPELLANT HAD PRODUCED ALL RELEVANT DOCUMENTS BEFORE THE AO TO ESTABLISH THE GENUINENESS OF LOANS . I FIND SUBSTANCE IN THE ARGUMENT THAT THE APPELLANT DISCHARGED HIS ONUS OF ESTABLISH ING THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TR ANSACTIONS. ON THE OTHER HAND, THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW ANYTHING THAT COULD CAST SUSPICION OR DOUBT ABOUT THE GENUINENESS OF LOANS. THE AO ALSO DID NOT FIND ANY FAULT OR DEFECT IN THE DOCUMENTS PRODUCED BY THE APPELLANT. THE AO HAS MEN TIONED IN THE ASSESSMENT ORDER THAT DEPOSITS WERE MADE IN THE BANK ACCOUNT OF THE LOAN CREDITORS BEFORE THE CHEQUES WERE ISSUED TO THE APPELLANT. BUT, THERE IS NO MATE RIAL ON RECORD TO SHOW THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT OF THE LOAN CREDITORS IS THE UNACCOUNTED MONEY OF THE APPELLANT. IN ABSENCE OF ANY POSITIVE MATERIAL ON R ECORD TO SHOW ANY NEXUS, THE AO CANNOT PRESUME THAT THE DEPOSITS IN THE BANK ACCOUN T OF THE LOAN CREDITORS WAS UNACCOUNTED MONEY OF THE APPELLANT. THERE IS NO MAT ERIAL ON RECORD TO SUGGEST THAT THE APPELLANT EARNED UNACCOUNTED INCOME WHICH WAS PASSE D ON TO THE LOAN CREDITORS, AND THEN, FLEW BACK N THE FORM OF LOANS. IN VIEW OF TH E ABOVE, THE ADDITION OF RS.14,75,000/- IS DIRECTED TO BE DELETED. GROUND NO. 2, 3, 4 & 5 A RE ALLOWED. 5. WE FIND THAT THE ASSESSEE HAS FILED LOAN CONFIRM ATIONS, DETAILS OF INCOME TAX ASSESSMENT OF LOAN CREDITORS I.E. COPY OF THEIR PAN, BANK STAT EMENTS, CONFIRMATION OF ACCOUNTS ETC. THESE LOANS WERE TAKEN BY ACCOUNT PAYEE CHEQUES, AS IS EV IDENT FROM THE FACTS, OUT OF THEIR BANK ACCOUNTS. THE ASSESSEE HAS DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTITY OF THE LOAN CREDITORS. THE ASSESSEE HAS FILED BANK ACCOUNTS FROM WHERE CHE QUES WERE ISSUED TO THE ASSESSEE. WE FIND THAT CIT(A) HAS INSPECTED ASSESSMENT RECORDS AND RE CORDED A FACT THAT IN COMPLIANCE TO NOTICES ISSUED TO THESE LOAN CREDITORS U/S. 133(6) OF THE A CT BY THE AO THE LOAN CREDITORS REPLIED. IN SUCH CIRCUMSTANCES, HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S. DATAWARE PRIVATE LIMITED, ITAT NO.263 OF 2011, GA NO.2856 OF 2011 DA TED 21.09.2011, WHEREIN HONBLE HIGH COURT HAS HELD AS UNDER: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE AO OF T HE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDIT OR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMB ER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING O FFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS OF TH E TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE C REDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENT ER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBM ITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE G ENUINENESS OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX ( APPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQU IRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH AUTHORITIES. 4 ITA NO. 2298/K/2010 MADAN CHAND SURANA (HUF), AY:2006-07 THE APPEAL IS THUS DEVOID OF ANY SUBSTANCE AND IS SUMMARILY DISMISSED. 6. AS THE HONBLE HIGH COURT LAID DOWN THE PRINCIP LE THAT THE AO SHOULD HAVE VERIFIED THE TRANSACTIONS IN THE HANDS OF LOAN CREDITOR PARTICUL ARLY WHEN THE LOAN CREDITOR IS ASSESSED TO TAX AND COMPLETE DETAILS ARE WITH THE AO. IN THE PRESE NT CASE ALSO THE ASSESSEE HAS FILED COMPLETE DETAILS I.E. CONFIRMATION OF LOAN CREDITORS, ASSESS MENT DETAILS OF LOAN CREDITORS, PAN DETAILS AND BANK ACCOUNTS OF LOAN CREDITORS ETC., IN SUCH CIRCU MSTANCES, RESPECTFULLY FOLLOWING THE PRINCIPLE LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT, WE CONFIRM THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF REVENUE. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 TH DEC., 2013. SD/- SD/- , !' , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24TH DECEMBER, 2013 -. $/0 1 JD.(SR.P.S.) ! 2 +3 4!3&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT ITO, WARD-35(4), KOLKATA 2 +,)* / RESPONDENT MADAN CHAND SURANA(HUF), P-4, NEW HO WRAH BRIDGE APPROACH ROAD, B-40A, NANDARAM MARKET, KOL-1. . 3 . $ ( )/ THE CIT(A), KOLKATA 4. 5. $ / CIT KOLKATA 3;< +$ / DR, KOLKATA BENCHES, KOLKATA ,3 +/ TRUE COPY, !$=/ BY ORDER, 0 /ASSTT. REGISTRAR .