ACIT, Patiala V. M/s Aggarwal Sales, Zirakpur

ITA 232/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86211 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 01-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SUDHIR SEHGAL SHRI ASHOK GOYAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NOS. 224/CHD/2013 ASSESSMENT YEAR: 2004-05 M/S. AGGARWAL SALES, VS. THE DCIT C/O ROYALE ESTATE CENTRAL CIRCLE CHANDIGARH AMBALA HIGHWAY, PATIALA ZIRAKPUR PAN NO. AAJFA5732C & ITA NOS. 232/CHD/2013 ASSESSMENT YEAR: 2004-05 THE ACIT, VS. AGGARWAL SALES CENTRAL CIRCLE C/O ROYALE ESTATE PATIALA CHANDIGARH AMBALA HIGHWAY ZIRAKPUR PAN NO. AAJFA5732C ASSESSEE BY : SHRI. SUDHIR SEHGAL SHRI. ASHOK GOYAL DEPARTMENT BY : SHRI. S.K. MITTAL DATE OF HEARING : 23/03/2015 DATE OF PRONOUNCEMENT : 25/03/2015 ORDER PER T.R.SOOD, A.M. THE CROSS APPEALS FILED BY THE ASSESSEE AND DEPARTM ENT IS DIRECTED AGAINST THE ORDER DATED 19/12/2012 PASSED BY THE CIT(A)-I, LUDHIANA. ITA NO. 224/CHD/2013 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS WHICH ARE AS UNDER : 2 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS )-I, LUDHIANA HAS ERRED IN CONFIRMING THE ADDITION TO TH E TUNE OF RS. 21,59,000/- OUT OF ADDITION OF RS. 41,59,000 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE INCOME TAX ACT, 1961. 2. THAT THE ACTION OF THE WORTHY COMMISSIONER OF INCOM E TAX (APPEALS) IN UPHOLDING ADDITION OF RS. 21,59,000/- IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY NOT CONSIDERING THE FACT THAT, REQUISITE DETAILS ES TABLISHING IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF ABOV E SAID PARTIES HAD ALREADY BEEN FILED BEFORE THE ASSESSING OFFICER, WHICH OUGHT TO HAVE BEEN CONSIDERED BY THE WORTHY CIT(A). ITA NO. 232/CHD/2013 3. IN THIS APPEAL DEPARTMENT HAS RAISED THE FOLLOWI NG GROUNDS WHICH ARE AS UNDER : 1.. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE AO AMOUNTING TO RS. 20,00,000/- OUT OF TOTAL ADDITION OF RS. 41,52,670/- MADE ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE INCOME TAX ACT, 1961 BY ADMITTING ADDITIONAL EVIDENCE AT A PPELLATE STAGE AND KEEPING IN VIEW THE SPECIFIC FINDINGS GIVEN IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT SUBMITTED BY THE AO. 2.. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FA CTS IN NOT APPRECIATING THE FACTS MENTIONED IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT, AS UNDER: (I).. A PERUSAL OF COPIES OF ACCOUNT OF THE LENDERS SUBMITTED BY THE ASSESSEE SHOWS THAT THESE ARE UNSIGNED AND ARE UNDATED. (II).. NO DOCUMENTARY EVIDENCE FOR PAYMENT OF TDS H AS BEEN FURNISHED. (III).. THE PERSONS CLAIMED TO BE LENDERS HAVE CLEA RLY MENTIONED THAT NO INTEREST HAS BEEN CHARGED FROM M/S AGGARWAL SALES ON THE LOA N AMOUNT MENTIONED ABOVE. (IV).. NO INCOME ON INTEREST HAS BEEN DECLARED BY T HESE PERSONS IN THEIR RETURNS OF INCOME FOR THE YEAR UNDER CONSIDERATION AS IS CL EAR FROM THE COPIES FILED ALONGWITH THE CONFIRMATIONS. (V).. COPY OF ACCOUNT OF THE ASSESSEE ATTACHED BY O NE OF THE LENDERS M/S PIARA LAL RAJINDER KUMAR SHOWS NO CREDIT OF INTERES T INCOME. ONLY LOAN AMOUNT HAS BEEN SHOWN. (VI).. THE LENDERS DID NOT HAVE THE CAPACITY TO ADV ANCE SUCH HUGE AMOUNT AS THEY HAD MEAGER INCOME. (VII).. THE LENDERS HAVE NOT GIVEN THE DETAILS OF T HEIR BANK ACCOUNTS FROM WHERE SUCH PAYMENTS HAVE BEEN MADE. 3.. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN NOT APPRECIATING THE FACTS THAT WHILE SUBMITTING THE REMAND REPORT, THE AO HAD SPECIFICALLY OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AT APPELLATE STAGE UNDER RULE 46A OF THE INCOME TAX RULES. 4. AFTER HEARING BOTH THE PARTIES WE FIND THAT A SE ARCH WAS CONDUCTED IN THE MOTIA GROUP OF CASES AND ASSESSEE IS A PART OF THE SAME GROUP. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAS SHOWN UNSECURED LOANS AMOUNTING TO RS. 1,17,57,702/- AND THEREFORE ASSESSEE WAS REQUIRED TO PROVE THESE UNSECURED LOANS BY SHOWING IDENTITY, GE NUINENESS AND CREDIT WORTHINESS OF THE PARTIES. CERTAIN DETAILS WERE FIL ED BY THE ASSESSEE. HOWEVER NO CONFIRMATIONS WERE FILED IN THE FOLLOWING CASES : 3 S.NO. NAME OF THE PERSON ADDRESS AMOUNT OF LOAN(RS) 1 ASHOK KUMAR LUXMI TRADING CO., ANAJ MANDI, PANCHKULA 150000 2 ASHOK KUMAR WARAICH COLONY, SAMANA, PUNJAB 20000 0 3 G.S. BRICKS COMPANY. CHERRIAN- PANCHKULA 200000 4 GURMAIL SINGH ZKP-KALKA RD. DHAKAULI TEHSIL MOHAL I, PB 45000 5 HARBANS LAL BHUSHAN MEDICOS, MANSA 150000 6 MISHRA SINGH VILL KANUSHA KALAN, TEHSIL NABHA 990 00 7 MONIKA RANI NABHA 100000 8 SMT. NEHA CHANDIGARH 120000 9 NEW BHARAT SHUTTERING STORE VILL. DHAKAULI, ZIRAK PUR 200000 10 PIARE LAL RAJINDER KUMAR DIRBA 300000 11 PIARE LAL SHYAM LAL DIRBA 400000 12 PUNJAB TRADING CO. PANCHKULA 350000 13 RAJ KUMAR NO ADDRESS GIVEN BY ASSESSEE 100000 14 RAMAN KUMAR H.NO. 225, NEW LAL BAG COLONY, PATIALA 200000 15 SANJAY KUMAR NO ADDRESS GIVEN BY ASSESSEE 10000 0 16 SANJEEV BANSAL H.NO. 519, CINEMA RD NABHA 200000 17 SH. SAROJ GUPTA 361/8, STATE BANK COLONY, SAMANA MANDI, SAMANA 100000 18 SHIVA BRICKS CO. PANCHKULA 200000 19 SUBHASH KUMAR NO ADDRESS GIVEN BY THE ASSESSEE 1 00000 20 SURESH JAIN PANCHKULA 200000 21 SURJEET SINGH ZKP-KALKA RD. DHAKAULI TEHSIL MOHA LI, PB 45000 22 VINOD JAIN PANCHKULA 100000 23 VINOD KUMAR NO ADDRESS GIVEN BY THE ASSESSEE 200 000 24 VIPIN KUMAR H.NO. 225, NEW LAL BAG COLONY, PATIALA 300000 TOTAL 41,59,000 IN THE ABSENCE OF ANY CONFIRMATION THE SUM OF RS. 4 1,59,000 WAS ADDED TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL CERTAIN ADDITIONAL EVIDENCES WERE FILE D IN THE FORM OF CONFIRMATION ETC. AND THE SAME WERE SENT FOR OBTAIN ING REMAND REPORT. FINALLY THE ISSUE HAD BEEN ADJUDICATED BY THE LD. CIT(A) VI DE PARA 7 & 8 WHICH IS AS UNDER: 7. I HAVE CONSIDERED THE ISSUE OF ADMISSION OF ADDI TIONAL EVIDENCE AS SOUGHT BY THE APPELLANT AND COMMENTS OF THE ASSESSI NG OFFICER ON THE SAME. IT IS A MATTER OF FACT THAT THE ASSESSING OFF ICER HAD GIVEN NUMBER OF OPPORTUNITIES TO THE APPELLANT AT THE TIME OF ASSES SMENT TO FILE CONFIRMATIONS AS WELL AS ADDRESS / RELATED IDENTITY INFORMATION RESPECT OF VARIOUS LOANS AND ADVANCES RAISED DURING THE YEAR. THE APPELLANT DID COMPLY TO CERTAIN EXTENT SO MUCH SO THAT OUT OF TOT AL AMOUNT UNSECURED LOANS OF RS. 1,17,57,702/-, ONLY THE AMOUNT OF RS. 41,59,000/- WAS FOUND TO BE IN SUFFICIENT IN TERMS OF SECTION 68. IN THE CIRCUMSTANCES THE CLAIM OF THE AR THAT THE C ONFIRMATION SOUGHT COULD NOT BE FOLLOWED UPON AND SUBMITTED BEFORE THE ASSESSING OFFICER BECAUSE OF LIMIT TIME AND IN SUFFICIENT INFORMATION IS REASONABLE. THE 4 CONSEQUENCE OF NOT BEING ABLE TO ARRANGE AND FILE C ONFIRMATION SOUGHT BY THE ASSESSING OFFICER IN TERM OF THE AMOUNT BEIN G TREATED AS ASSESSEES INCOME U/S 68 HAS ALREADY SUBJECTED THE APPELLANT T O PROCESS OF APPEAL ALONGWITH CREATION OF TAX/INTEREST DEMAND. THE ADDI TIONAL EVIDENCE SOUGHT TO BE FILED ACCORDINGLY STATED/CONFIRMATION THE FACTS THAT HAD ACCEPTED MUCH BEFORE THE COMMENCEMENT OF THE ASSESS MENT PROCEEDINGS AND HENCE COULD NOT BE TERMED TO BE IN THE NATURE OF FABRICATED EVIDENCE TO SUPPORT A PARTICULAR CONCOCT ED THEORY. IT IS IMPERATIVE TO ALLOW THE ADMISSION OF ADDITIONAL EVI DENCE TO IN ORDER TO GET TO THE FACT TO THE CASE SO AS TO THE TOTAL INCO ME OF THE APPELLANT. THEREFORE, THE ADDITIONAL EVIDENCE IS ADMITTED. 8. THE APPELLANT WITH REFERENCE TO THE MERITS OF TH E ADDITIONAL EVIDENCE HAS COMMENTED THAT ALL THE CONFIRMATIONS W ERE OF STEREO TYPE, ON A PLAIN PAPER MENTIONING NO SPECIFIC DATE OF PAY MENT / INTEREST. THE ASSESSING OFFICER HAS FURTHER ADMITTED THAT COPIES OF RETURN OF INCOME AND PAN OR EACH LENDER HAS BEEN ATTACHED AS EVIDENCE. I T HAS ALSO BEEN OBSERVED THAT THE LENDER HAS NOT CHARGED ANY INTERE ST DESPITE HAVING MEAGER INCOME. IT HAS ALSO BEEN OBSERVED THAT IT IS NOT CLEAR AS TO WHETHER LOANS WERE EVER RETURNED BACK AND NO INTERE ST HAD BEEN CHARGED BY ANY OF THE LENDER FOR LENDING MONEY FOR INDEFINITE. I HAVE PERUSED THE CONFIRMATION FILED BY THE APPELLANT DUR ING THE APPELLATE PROCEEDINGS AS WELL AS THE COPIES OF ACCOUNT OF SUC H LENDER AS RECORDED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. IT IS TO APPRECIATE TAT THE ASSESSING OFFICERS OBSERVATION THAT O INTEREST HAD BEEN CHARGED BY ANY OF THE LENDER AND NO AMOUNT HAD BEEN REPAID BY THE ASSESSEE IS FACTUAL IN CORRECT. IT IS SEEN THAT THE ASSESSEE HAD RECEIV ED IMPUGNED AMOUNT BY CHEQUE AND HAVE BEEN RETURNED ACCORDINGLY WITHIN A PERIOD OF YEAR OR SO. IT IS ALSO SEEN THAT INTEREST HAS BEEN PAID BY THE APPELLANT ON THE LOANS RAISED AND THE TAX HAS ALREADY BEEN DEDUCTED AS SOU RCES BEFORE THE PAYMENT OF SAME. THE SAID AMOUNTS ARE AS UNDER:- I. G.S. BRICKS: THE AMOUNT FROM THIS LENDER HAD BEEN R ECEIVED BY TWO CHEQUES DATED 23/3/2004 AND 6/4/2004 FOR RS. 2 LAC EACH AND INTEREST AMOUNTING TO RS. 35,753/- HAD BEEN PAID ON WHICH TD S AMOUNTING TO RS. 3738 HAD BEEN DEDUCTED. II. NEW BHARAT SHUTTERING STORE:_ DEMAND DRAFT DATED 18 /02/2005 AMOUNTING TO TO RS. 2 LAC ON WHICH INTEREST AMOUNTI NG TO RS. 18,000/- HAD BEEN PAID TAX AS DEDUCTED AMOUNTING TO RS. 1882/- T HE AMOUNT HAS BEEN RETURNED ALONGWITH INTEREST BY CHEQUE DATED 7/ 5/2005 AND 20/5/2005. III. PYARE LAL RAJINDER KUMAR DEMAND DRAFT DATED 18/2/20 05 AMOUNTING TO TO RS. 3 LAC ON WHICH INTEREST AMOUNTING TO RS. 18,000/- HAD BEEN PAID TAX AS DEDUCTED AMOUNTING TO RS. 1882/- THE AMOUNT HAS BEEN RETURNED ALONGWITH INTEREST BY CHEQUE DATED 25/12/2005. THE SAID LENDER ALONGWITH OTHERS FOR SPECIFICALLY MENTIONING THEIR PAN FOR AN Y INDEPENDENT VERIFICATION. IV. PUNJAB TRADING CO. DEMAND DRAFT DATED 18/2/2005 AMO UNTING TO TO RS. 3.50 LAC ON WHICH INTEREST AMOUNTING TO RS. 23, 215/- HAD BEEN PAID TAX AS DEDUCTED AMOUNTING TO RS. 2427/- THE AMOUNT HAS BEEN RETURNED ALONGWITH INTEREST BY CHEQUE DATED 25,12,2004 AND 7 /5/2005. IT IS THEREFORE APPELLANT FROM THE PERUSAL OF DETAI LS FILED BY THE APPELLANT ALONGWITH THE CONFIRMATION THAT THE ASSESSING OFFIC ERS OBJECTIONS FOR NO FACTUAL BASIS WITH REGARD TO AMOUNTS RECEIVED FROM EIGHT LENDERS TO THE TUNE OF RS. 20 LACS. THE APPELLANT HAS DISCHARGED O NUS CAST UPON U/S 68 WITH RESPECT TO THESE CREDITS AS IDENTITY, CREDIT W ORTHINESS AS WELL AS GENUINE OF THE TRANSACTION HAS BEEN ESTABLISHED. TH EREFORE, THE ADDITION TO THE TUNE OF RS. 20 LAC IS DIRECTED TO BE DELETED HOWEVER WITH RESPECT TO REST OF RS. 21,59,000/-. THE APPELLANT HAS NOT BEEN ABLE TO FILE ANY CONFIRMATION FROM THE SAID PARTIES DESPITE OPPORTUN ITIES AVAILABLE TO HIM DURING APPELLATE PROCEEDINGS. THEREFORE, THE ADDITI ON TO THE TUNE OF RS. 21,59,000/- IS CONFIRMED. 5 6. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE CAN FILE CERTAIN MORE CONFIRMATION BECAUSE THE SAME WERE ALS O NOT AVAILABLE AT THE TIME OF ASSESSMENT BECAUSE OF DISPUTES WITH THE PAR TIES ETC. HE HAS MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES V IDE LETTER DT. 15/05/2014. THE LD. COUNSEL SUBMITTED THAT THESE EVIDENCES GO TO TH E ROOT OF THE MATTER AND THEREFORE SAME SHOULD BE ADMITTED. 7. ON THE OTHER HAND LD. DR REFERRED TO PAGE 11 TO 14 OF THE APPLICATION DT. 15/05/2014 AND POINTED OUT THAT THESE ARE ONLY COPI ES OF ACCOUNTS AND TDS CERTIFICATE WHICH CANNOT BE CONSTRUED AS EVIDENCE T HEREFORE SAME CANNOT BE ENTERTAINED. LD. DR FURTHER SUBMITTED THAT LD. CIT( A) HAS ALLOWED THE RELIEF WITHOUT GIVING REASONS IN RESPECT OF SUM OF THE LOA NS AND HE HAS ALSO NOT VERIFIED THE CREDIT WORTHINESS OF THE PARTIES. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULLY W E FIND THAT AS FAR AS THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCES IS C ONCERNED BEFORE US LD. COUNSEL FOR THE ASSESSEE HAS FILED ONLY COPIES OF T HE ACCOUNTS AND COPIES OF THE TDS CERTIFICATE, WHICH CANNOT BE CONSTRUED AS E VIDENCES BECAUSE FOR PROVING THE LOANS UNDER SECTION 68. ASSESSEE IS REQ UIRED TO FILE CONFIRMATION AS WELL AS SHOW CREDIT WORTHINESS OF SUCH PARTIES THER EFORE WE DECLINE TO ADMIT THESE PAPERS AS ADDITIONAL EVIDENCE BECAUSE ASSESSE E IS IN THE GUISE OF THESE COPIES OF ACCOUNTS ASKING FOR MORE OPPORTUNIT Y WHICH IS NOT PERMISSIBLE UNDER THE LAW. THEREFORE, APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IS REJECTED . 9. IN THE LIGHT OF THE REJECTION OF APPLICATION FOR AD DITIONAL EVIDENCE THE GROUND RAISED BY THE ASSESSEE REQUIRED TO BE DISMIS SED BECAUSE ASSESSEE HAS MISERABLY FAILED TO PROVE THE LOANS TO THE EXTENT O F RS. 41,59,000/- BECAUSE NO CONFIRMATION OR ANY EVIDENCE PROVING SUCH TRANSACTI ON WAS FURNISHED BEFORE AO OR EVEN BEFORE LD.CIT(A) OR EVEN BEFORE US. 10. AS FAR AS THE REVENUES APPEAL IS CONCERNED, WE HAVE ALREADY REPRODUCED THE PARA 7 AND 8 OF THE IMPUGNED ORDER. CAREFUL PER USAL OF PARA 8 WOULD SHOW THAT LD. CIT(A) HAS DISCUSSED FOUR ITEMS OF LOANS I N CASE OF G.S.BRICKS, NEW BHARAT SHUTTERING STORE, PYARE LAL RAJINDER KUMAR, PUNJAB TRADING CO. FROM WHOM LOANS OF RS. 2 LACS, RS.2 LACS, RS. 3 LACS, AND RS. 3.50 LAC S HAVE RESPECTIVELY BEEN TAKEN. HOWEVER THE RELIEF HAS BEEN ALLOWED TO THE EXTENT O F RS. 20 LACS WITHOUT 6 ANY DISCUSSION IN RESPECT OF THE REST OF THE ITEMS AMOUNTING TO RS. 9,50,000/-. IN THE FOUR CASES, IN OUR OPINION THE LD. CIT HAS CORR ECTLY ACCEPTED THE LOANS BECAUSE THE AMOUNT COMES THROUGH CHEQUES AND CONFIR MATION OF PAN NUMBERS WERE FURNISHED. HOWEVER, SINCE NO DISCUSSION HAS BEEN MADE IN RESPE CT OF OTHER LOANS TO THE EXTENT OF RS. 9,50,000/- THEREFORE WE SET ASIDE THE ORDER OF LD. CIT(A) IN RESPECT OF THE REST OF THE ITEMS AMOUNTING TO RS. 9 ,50,000/- AND REMIT THE MATTER BACK TO HIS FILE WITH A DIRECTION TO DECIDE THE ISS UE AFTER RECORDING FINDINGS IN RESPECT OF SUCH ITEMS ALSO. 9. THEREFORE IN THE LIGHT OF THE ABOVE DISCUSSION T HE APPEAL OF THE ASSESSEE IS DISMISSED AND APPEAL OF THE REVENUE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25/03/2015 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 25/03/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR