Gauri Shankar, New Delhi V. ACIT, New Delhi

ITA 2581/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82086 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Unexplained cash credit
• Section: 143(3); 37(1); 68

Judgement Text

ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 GAURI SHANKAR, VS ACIT , PROP. M/S PEE GEE INTERNATIONAL, CIRCLE-35(1), D-203, VIVEK VIHAR, NEW DELHI. NEW DELHI-110095 (PAN: AAXPS7465G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K. SAMPATH, ADV. RESPONDENT BY: SHRI SATPAL SINGH, SR.DR O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE CIT(A), NEW DELHI DATED 16.02.2012 IN APPEAL NO.161 /09-10 FOR AY 2008-09. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THI S APPEAL:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE FOLLOWING ACTIONS OF THE ASSESSING OFFICER- I) IN TREATING LOAN OBTAINED BY THE APPELLANT IN A SUM OF RS. 15 LAKHS AS UNEXPLAINED AND MAKING AN ADDITION OF RS.1 5 LAKH ON THAT ACCOUNT; ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 2 II) IN MAKING AN ADDITION OF RS.33,535/- BEING THE AMOU NT OF INTEREST ON THE LOAN. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SH . GAURI SHANKAR IS THE PROPRIETOR OF THE FIRM M/S PEE GEE INTERNATIONAL & M/S PREM WIRE INDUSTRIES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF FERROUS AND NON-FERROUS METALS. THE ASSESSEE FILED HIS RETURN OF INCOME ELE CTRONICALLY ON 21.8.2008 DECLARING TAXABLE INCOME OF OF RS.5,85,030/-. THE C ASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 30.1 1.2010 ON TOTAL ENHANCED INCOME OF RS. 21,56,880/- (TOTAL TAXABLE INCOME OF RS, 5,85,030/- PLUS DISALLOWANCE MADE RS. 15,71,845/-) AND DEMAND NOTIC E U/S 156 CREATING ADDITIONAL DEMAND OF TAX OF RS. 722,167/- WAS SERVE D UPON THE ASSESSEE ON 22.12.2010. THE ASSESSEE, DURING ASSESSMENT PROCEED INGS, ADMITTED THE TOTAL DISALLOWANCES OF RS.38,311/- MADE ON ACCOUNT OF PE RSONAL USE OF EXPENSES RELATING TO TELEPHONE, CAR EXPENSES, DIWALI FESTIVA L, SCOOTER EXPENSES AND BUSINESS PROMOTION EXPENSES. THE ADMITTED TAX THERE ON AMOUNTING TO RS. 12,000/- IS ALSO DEPOSITED ON 31.12.2010. THE ASSE SSEE HOWEVER DID NOT AGREE TO THE OTHER ADDITION AMOUNTING TO RS.15,33,534/- ( INCLUDING INTEREST OF RS.33,534/-) MADE BY THE LD. AO UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF NON-SUBMISSION OF COPY OF ITR AND BAN K STATEMENT OF THE LENDER M/S SWASTIK TRADING COMPANY. 4. AGAINST THE ABOVE ADDITION AND AGGRIEVED BY THE SAID ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE US. ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 3 GROUND NO.1 5. APROPOS GROUND NO.1, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL AND RECORD PLACED BEFORE US. LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT T HE AO HAS ERRED IN TREATING THE LOAN AMOUNT OF RS. 15 LAKH OBTAINED BY THE ASES SEE AS AN UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. LD. COUNSEL FURTHER CONT ENDED THAT THE AO WRONGLY HELD THAT THE ASSESSEE HAS NOT ESTABLISHED THE GENU INENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS AS THE ASSESSEE F ILED SUFFICIENT EVIDENCE TO PROVE THE SAME AND THE AO WAS NOT JUSTIFIED IN HOLD ING THAT THE AO DID NOT DISCHARGE ITS ONUS TO ESTABLISH THE GENUINENESS AND CREDITWORTHINESS OF THE SAID TRANSACTION. LD. COUNSEL FURTHER CONTENDED THAT TH E CIT(A) WAS ALSO NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE DID NOT FILE A COPY OF THE BANK ACCOUNT AND ITR OF THE CREDITOR DESPITE THE FACT THAT THE CIT(A ) NOTED THAT THE ASSESSEE RECEIVED LOAN THROUGH CHEQUE FROM THE BOOK OF ACCOU NTS OF THE ASSESSEE. 6. LD. COUNSEL REITERATED ITS ARGUMENTS, WHICH WERE MADE BEFORE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE RECEIVE D AMOUNT OF RS. 1.5 LAKH FROM SWASTIK TRADING CO. AND RETURNED THE SAME ON 3.7.20 08 WITH INTEREST OF TOTAL RS. 15,60,354 TO THE LOANER THROUGH ASSESSEES DEBTOR M /S PREM WIRE INDUSTRIES, MUMBAI AND THE TDS ON INTEREST PAID WAS ALSO DEDUCT ED AND DEPOSITED WITH THE ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 4 DEPARTMENT. HE HAS DRAWN OUR ATTENTION TO PAPER BO OK OF THE ASSESSEE AND SUBMITTED THAT ALL DETAIL WAS PLACED BEFORE THE AO AND THE CIT(A). 7. LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES B ELOW AND SUBMITTED THAT THE ASSESSEE DID NOT DISCHARGE ITS STATUTORY ONUS T O PROVE THAT THE ALLEGED LOAN TRANSACTION WAS GENUINE AND THE ASSESSEE DID NOT FI LE COPIES OF THE BANK STATEMENT AND ITR OF THE CREDITOR TO ESTABLISH ITS CREDITWORTHINESS, HENCE ADDITION SO MADE WAS QUITE JUSTIFIED. 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE ASSESSEE HAS VERIFIED IN THE FIRST PAGE OF ITS PAPER BOOK TH AT ALL DOCUMENTS INCLUDING BANK STATEMENT OF M/S SWASTIK TRADING CO. WAS SUBMITTED BEFORE THE LOWER AUTHORITIES. THE DR HAS ALSO NOT DISPUTED THE FACT THAT THE ASSESSEE RECEIVED MONEY THROUGH BANKING CHANNELS FROM M/S SWASTIK TRA DING CO. AND THE SAME WAS RETURNED ON 3.7.2008 WITH INTEREST. THE DR HAS ALSO NOT DISPUTED THE FACT THAT THE ASSESSEE DEDUCTED TDS ON INTEREST PAID AND THE SAME WAS DEPOSITED WITH THE DEPARTMENT AS PER APPLICABLE PROVISIONS OF THE ACT. 9. HENCE, WE ARE NOT IN AGREEMENT WITH THE CONCLUSI ON OF THE CIT(A) THAT THE ASSESSEE DID NOT DISCHARGE ITS ONUS CAST UPON H IM TO PROVE THE GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF T HE CREDITOR. THE AO HAS NOT BROUGHT OUT ANY ADVERSE FACT TO SHOW AND ESTABLISH THAT THE IMPUGNED TRANSACTION WAS AN ACCOMMODATION ENTRY. ACCORDINGL Y, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW WERE NOT WELL WITHIN ITS JURISDICTION AND JUSTIFIED IN ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 5 MAKING AND CONFIRMING THE ADDITION SO MADE BY THE A O U/S 68 OF THE ACT, TREATING THE AMOUNT OF LOAN AS UNEXPLAINED CASH CRE DIT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSE E IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION. GROUND NO.2 10. APROPOS GROUND NO.2, LD. COUNSEL SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.33,535/- BEING THE AMOUNT OF INTEREST PAID BY THE ASSESSEE TO M/S SWASTIK TRADING CO. ON LOAN. LD. C OUNSEL ALSO CONTENDED THAT THE ASSESSEE DEDUCTED TDS ON THE INTEREST PAID AND DEPOSITED THE SAME WITH THE DEPARTMENT. 11. LD. DR REPLIED THAT THE ASSESSEE HAS NOT RAISED THIS GROUND BEFORE CIT(A) AND THERE ARE DISCREPANCIES IN THE FIGURES REFLECTE D IN ENTRY DATED 3.7.2008 AND THE AMOUNT CLAIMED BY THE ASSESSEE, HENCE, THE AO W AS RIGHT IN DISALLOWING THE SAME. 12. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE OBSERVE THAT THE ASSESSEE HAS CLAIMED RS.33,534/- AS INTEREST PAID O N LOAN FROM M/S SWASTIK TRADING CO. ON THE OTHER HAND, FROM PAPER BOOK PAG E NO. 16, WE NOTE THAT THE AMOUNT OF RS.15,60,354 WAS CREDITED TO THE BANK ACC OUNT OF M/S SWASTIK TRADING CO. BY THE ASSESSEE THROUGH M/S PREM WIRE I NDUSTRIES. IN THIS SITUATION, WE ARE INCLINED TO HOLD THAT SINCE BY TH E EARLIER PART OF THIS ORDER, WE ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 6 HAVE HELD THAT THE ASSESSEE COMPANY RECEIVED A SUM OF RS.15,00,000 AS LOAN FROM M/S SWASTIK TRADING CO. AND THE SAME WAS RETUR NED ON 3.7.2008 ALONG WITH INTEREST, THEREFORE, WE FURTHER HOLD THAT THE INTEREST PAID BY THE ASSESSEE ON SAID LOAN IS ALLOWABLE EXPENDITURE U/S 37(1) OF THE ACT. BUT FOR THE PURPOSE OF QUANTIFICATION OF INTEREST ACTUALLY PAID AND TDS DE DUCTED THEREFROM AND DEPOSITED WITH THE DEPARTMENT, WE RESTORE THE ISSUE FOR THIS LIMITED PURPOSE TO THE FILE OF THE AO WITH A DIRECTION THAT THE INTERE ST PAID AND TDS DEPOSITED BY THE ASSESSEE ON THE LOAN FROM M/S SWASTIK TRADING C O. SHALL BE QUANTIFIED AFRESH AND ALLOWED TO THE ASSESSEE AFTER AFFORDING DUE OPPORTUNITY OF HEARING ON THIS LIMITED ISSUE. ACCORDINGLY, GROUND NO. 2 OF T HE ASSESSEE IS DEEMED TO BE ALLOWED AS INDICATED ABOVE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D ON GROUND NO. 1 AND DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES ON GR OUND NO.2. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 28TH NOVEMBER, 2014 GS ITA NO. 2581/DEL/2012 ASSTT.YEAR: 2008-09 7 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR