DCIT, New Delhi V. Sh. Vivek Nagpal, New Delhi

ITA 2501/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7190 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Keywords: Assessment record
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SH. I.C. SUDHIR, JUDICIAL M EMBER AND SH. PRASHANT MAHARISHI , ACCOUNTANT MEMBER ITA NO . 2501/DEL/2013 ASSESSMENT YEAR: 2009 - 10 DEPUTY COMMISSIONER OF INCOME TAX, CENT. CIRCLE 18, NEW DELHI. VS. SH. VIVEK NAGPAL, 101 - C, KUNDAN NIWAS, 1 ST FLOOR, HARI NAGAR, ASHRAM, NEW DELHI. (PAN: AAEPN0284D ) (APPELLANT) (RESPONDENT) APPELLANT BY SH. GAURAV DUDEJA, SR.DR RESPONDENT BY SH. SANJEEV JAIN, CA ORDER PER PRASHANT MAHARISHI, A. M. : 1 . THIS APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DATED 15.02.2013, RA ISING THE ONLY GROUND OF APPEAL THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 33,15,000 / - MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT) . 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL , FILED RETURN OF INCOME ON 16 TH MARCH, 2010 SHOWING INCOME OF RS. 9,15,680/ - . THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT ON 22.12.2011. DURING THE COURSE OF ASSESSMENT, THE STATEMENT ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 2 OF AFFAIRS OF THE ASSESSEE WERE EXAMINED WHEREIN IT WAS FOUND THAT LOAN OF RS. 33,15,000/ - HAS BEEN TAKEN BY THE ASSESSEE FROM M/S. ZO DIC.COM SOLUTION (P) LTD. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THE CONFIRMATION OF M/S. ZODIC.COM SOLUTION (P) LTD . STATING ITS ADDRESS AND PAN OF THE LENDER. HOWEVER, THE ASSESSEE COULD NOT SUBMIT THE INCOME TAX RETURN AND BANK STATEMENT OF THE LENDER AND, THEREFORE, THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WHO DELETED THE ADDITION. THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 3 . LEARNED SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DID NOT FILE INCOME TAX RETURN AND BANK STATEMENT OF THE LENDER AND THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AS ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE LENDER . HE VEHEMENTLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER . 4 . LD AR SUBMITTED THAT THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THE CONFIRMATION, PERMANENT ACCOUNT NUMBER, AUDITED BALANCE - SHEET AND PROFIT AND LOSS ACCOUNT, AND CASH FLOW STATEMENT OF THE CREDITO R COMPANY, WHO HAD GIVEN LOAN TO THE APPELLATE. FURTHER, IN THE BALANCE - SHEET OF THE COMPANY, A LOAN OF RS. 33,15,000/ - IS SHOWN AND THE COMPANY HAS THE SOURCES OF THE ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 3 FUNDS TO THE TUNE OF RS. 2,11,00,000/ - IN FORM OF SHARE CAPITAL AND B0RROWED FUNDS AND HAS SALES OF RS. 22.98 CRORES. THEREFORE, HE SUBMITTED THAT HE IS FULLY DISCHARGED THE ONUS CASTE ON THE ASSESSEE UNDER SECTION 68 OF THE ACT PROVING IDENTITY, CREDITWORTHINESS AND GEUINENESS OF THE TRANSACTIONS. HE FURTHER SUBMITTED THAT ON SUBMISSION OF THESE DETAILS, NO INQUIRY HAS BEEN DONE BY THE ASSESSING OFFICER AND IN SUBSEQUENT YEARS LOAN OF THIS PARTY RAISED FURTHER WAS ACCEPTED BY AO. THEREFORE HE CONTENDED THAT CIT (A) HAS RIGHTLY DELETED THE ADDITION. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND COULD SEE FROM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE ASSESSING OFFICER THAT THE ASSESSEE HAS FILED CONFIRMATION, PERMANENT ACCOUNT NUMBER, AUDITED BALANCE - SHEET AND PROFIT AND LOSS ACCOUNT OF THE LENDER . ON GOING THROUGH ORDER OF LD AO. WE FOUND THAT MERELY BECAUSE THE ASSESSEE COULD NOT FILE THE BANK ACCOUNT STATEMENTS AND INCOME TAX RETURNS OF LENDER COMPANY, THE ADDITION HAS BEEN MADE. WHEN ASSESSEE HAS SUBMITTED THE CONFIRMATION OF THE COMPANY W HICH IS HAVING PAN AND ASSESSED TO INCOME TAX THE ACCOUNT ALSO SHOWS THE RECEIPTS BY THE CHEQUES AND I N SUBSEQUENT YEARS , LOANS OF THIS COMPANY WAS ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 4 ACCEPTED BY AO . LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DEALT THE ISSUE IN ITS APPEAL ORDER AS UNDER: 5. I HAVE GONE THOUGH THE ABOVE SUBMISSIONS OF THE APPELLANT AND HAVE PERUSED THE AD'S ORDER AND CONSIDERED THE FACTS AND EVIDENCES ON RECORDS AND OTHER JUDICIAL PRONOUNCEMENTS ON THE ISSUE. ON GOING THROUGH THE ASSESSMENT RECORDS I FOUND THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 13.12.2011 THE APPELLANT FILED THE CONFIRMATION, PAN NUMBER AND THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT AND THE CASH FLOW STATEMENT OF THE CREDITOR COMPANY WHO HAD GIVEN LOAN TO THE APPELLANT. FROM THE PERUSAL OF BALANCE SHEET IT IS FURTHER NOTICED THAT ZODIAC.COM SOLUTIONS P. LTD. THAT WHO HAD ADVANCE LOAN OF RS.33,15,000 TO THE APPELLANT, HAD THE SOURCES OF FUND TO THE TUNE OF RS 2,11,00,000 AND AUDITED FINANCIAL STATEMENT REVEALS T HAT IN THE YEAR UNDER CONSIDERATION THAT THEY HAD SALES/INCOME OF R.S 22.98 CRORES. KEEPING THE AUDITED FINANCIAL STA TEMENTS OF THE CREDITOR COMPANY , (ZODIAC.COM SOLUTIONS P. LTD.) INTO CONSIDERATION, I FAIL TO UNDERSTAND ON WHAT BASIS THE AD CAME TO THE CONCLUSION THAT THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE TRANSACTION. SIMPLY THE APPELLANT DID NOT FILE THE COPY OF INCOME TAX RETURN OF ZODIAC.COM SOLUTIONS P. LTD. WITH THE AD DOES NOT MEAN THE APPEL LANT HAS FAILED IN HIS DUTY TO PROVE THE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE TRANSACTION. THE APPELLANT DID INFORM THE AD ABOUT THE PAN NUMBER WHICH IS 'AAACZ2289D', TO THE AD. IF THE AD HAD ANY DOUBT ABOUT THE CREDITWORTHINESS OF THE LENDER, THE AD COULD HAVE VERIFIED FROM THE ASSESSMENT RECORD FROM THE AD OF THE CREDITOR COMPANY AS THEY ARE BEING ASSESSED IN THE SAME CITY AS THAT OF THE APPELLANT. 5.1 I FURTHER FIND THAT THE AD IN HIS ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW T HAT THE CONFIRMATION FILED BY THE CREDITOR IS NOT GENUINE, HERE I WOULD LIKE TO PLACE RELIANCE IN THE CASE OF CIT VS. GANGOUR INVESTMENT LTD. (INCOME TAX ACT NO. 34/2007) DATED 30.1.2009 WHERE IT WAS HELD THAT REVENUE CAN MAKE ADDITION UNDER SECTION 68 OF THE ACT ONLY IF THE ASSESSEE IS UNABLE TO EXPLAIN THE CREDITS APPEARING IN ITS BOOKS OF ACCOUNTS. IN THE SAID CASE THE APPELLANT HAS DULY EXPLAINED THE SAID CREDIT ENTRIES IN THE FORM OF VARIOUS DOCUMENTARY EVIDENCES. THE SAID DOCUMENTARY EVIDENCE CONTAINE D DETAILS, WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIBERS, BUT ALSO GAVE INFORMATION, WITH RESPECT TO THEIR ADDRESS, AS WELL AS, PAN, ETC. BASED ON THESE FACTS, THE HON'BLE DELHI COURT DISMISSED THE APPEAL OF REVENUE. 5.2 IT IS SEEN FROM THE AD' S ORDER THAT NO ENQUIRY WAS CONDUCTED TO EXAMINE L THE CONTENTS OF THE INFORMATION FILED BY THE APPELLANT. IT IS ALSO SEEN THAT THE AD HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE INFORMATION FILED BY THE APPELLANT IS NOT GENUINE. FURTHER NOTHIN G ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AD TO ESTABLISH THAT THE MONEY RECEIVED FROM ZODIAC.COM SOLUTIONS P. LTD REPRESENTS APPELLANT'S OWN UNDISCLOSED INCOME. 5.3 THE FACTS AND EVIDENCE OF THE CASE SHOWS THAT FROM THE VERY BEGINNING AD HAD SHIFTED ENTIRE BURDEN UPON THE APPELLANT AND NO MATERIAL ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 5 HAS BEEN BROUGHT BY THE AD HIMSELF TO PROVE HIS ALLEGATION THAT THE TRANSACTION OF THE APPELLANT WITH ZODIAC.COM SOLUTIONS P. LTD IS NOT GENUINE ONE AND THE IMPUGNED AMOUNT REPRESENTED THE APPELLANT'S OWN UN DISCLOSED INCOME. THEREFORE ON THIS GROUND ALSO IN MY VIEW THE ADDITION MADE BY THE AD DESERVES TO BE DELETED. IN COMING TO THIS CONCLUSION, I CARRY SUPPORT FROM THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. PRADEEP GUPTA 207 CTR 115 WHICH HAS AL SO BEEN RELIED UPON BY DELHI ITAT. 5.4 IN VIEW OF THE FACTUAL POSITION AS WELL AS THE JUDICIAL PRONOUNCEMENT ON THE SUBJECT, DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BONA - FIDES OF THE TRANSACTIONS BY FILING THE CONFIRMAT ION, AUDIT FINANCIAL STATEMENT AND PAN PARTICULAR OF THE CREDITOR VIZ. ZODIAC.COM SOLUTIONS P. LTD. AND THE AD WAS NOT JUSTIFIED IN IGNORING THESE EVIDENCES PROVIDED TO HIM BY THE APPELLANT. THUS IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE FACT THAT CONFIRMATION OF THE CREDITOR COMPANY ITS FINANCIAL STATEMENTS AND PAN NUMBER DETAILS WAS FILED WITH THE AO, L AM OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE AD DESERVES TO BE DELETED. IN A RESULT THE APPEAL IS ALLOWED. 6 . LEARNED DEPARTM ENTAL REPRESENTATIVE COULD NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . BEFORE AO IT IS EVIDENT THAT THE ASSESSEE HAS DISCHARGED ITS ONUS CAST UPON HIM UNDER SECTION 68 OF THE ACT BY SUBMITTING THE CONFIRMATION S TATING NAME, ADDRESS, PERMANENT ACCOUNT NUMBER OF THE LENDER AND ALSO ANNUAL ACCOUNTS OF THE DEPOSITOR COMPANY. THERE IS NO INQUIRY MADE BY THE ASSESSING OFFICER ON SUBMISSIONS OF THE SE DETAILS. MERELY NON FILING OF BANK ACCOUNT OR INCOME TAX RETURN OF THE LENDER IT CANNOT BE SAID THAT ASSESSEE COULD NOT PROVE CREDITWORTHINESS OF THE LENDER WHEN FROM THE BALANCE SHEET IT APPEARS THAT IT THE LENDER HAS SOURCES OF FUNDS IN SHARE CAPITAL AND BORROWINGS OF RS 2.11 CRORES AND SALES OF RS 22.98 CRORE. F URTHER IN ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 6 SUBSEQUENT YEARS, THIS DEPOSITOR HAS ALSO DEPOSITED MONEY WITH THE ASSESSEE WHERE THE CONFIRMATION HAS BEEN RECEIVED IN RESPONSE TO NOTICE UNDER SECTION 133(6) OF THE ACT AND AS ON 31 ST MARCH, 2010, THE OUTSTANDING BALANCE OF THAT DEPOSITOR IS RS. 66,85,00 0/ - AND ASSESSEE HAS SUBMITTED ITS BANK STATEMENTS ALSO. THIS HAS BEEN ACCEPTED BY REVENUE AND NO ADDITION HAS BEEN MADE U/S 68 OF THE ACT ON THIS COUNT IN THAT YEAR. FURTHERMORE ON SUBMISSION OF CONFIRMATION BY THE ASSESSEE LD AO DID NOT MAKE ANY FURTHE R INQUIRY U/S 131 OF 133 (6) OF THE ACT WHICH HE DID IN SUBSEQUENT YEARS AND SATISFIED HIMSELF ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WHICH COULD ALSO HAVE BEEN DONE IN THIS YEAR TOO. BUT LD AO DID NOT DO SO. FURTHER THE PROVISIONS OF SECTION 68 DOES NOT PRESCRIBE THE SPECIFIED DOCUMENTS WHICH AND ASSESSEE IS REQUIRED TO LAY DOWN BEFORE AO TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF AMOUNT CREDITED IN THE BOOKS OF ACCO UNTS , IT IS LEFT UPON ASSESSEE TO SATISFY THE ASSESSING OFFICER WITH THE SUBSTANTIAL EVIDENCE/ DOCUMENTS FOR DISCHARGING HIS ONUS. THEREFORE MERELY BECAUSE THE BANK STATEMENT AN ITR OF THE LENDER WERE NOT SUBMITTED, IN SPITE OF SUBMITTING BALANCE SHEET A ND PROFIT AND LOSS ACCOUNT OF THE COMPANY , CONFIRMATION STATING ITS PAN AND ALSO TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES AND IN ABSENCE ITA NO. 2501/DEL/201 3 DCIT CC 18 NEW DELHI VS SH. VIVEK NAGPAL AY. 2009 - 10 7 OF ANY INQUIRY , WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT OF THIS AMOUNT. THEREFORE, WE CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEAL OF REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 0 9 T H FEB RUARY , 2016 . - S D / - - S D / - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 T H FEBRUARY , 2016 . RK/ - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI