ASSISTASNT COMMISSIONER OF INCOME TAX, CIRCLE 4(1), RAIPUR V. M/S SUNIL PARAKH (HUF), RAIPUR

ITA 260/RPR/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0156 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 07-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT M JAIN
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 68; 143(3); 133(6); 143(2)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 260/RPR/2017 Ǔनधा[रण वष[ / Assessment Year : 2013-14 The Assistant Commissioner of Income Tax-4(1), Raipur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. M/s. Sunil Parakh (HUF), Prop. A.M. Jewellers, Sadar Bazar, Raipur (C.G.) PAN : AAMHS0154B ......Ĥ×यथȸ / Respondent Assessee by : Shri Amit M Jain, AR Revenue by : Shri G.N Singh, Sr. DR स ु नवाई कȧ तारȣख / Date of Hearing :25.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 29.07.2022 2 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 29.08.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 23.03.2016 for assessment year 2013-14. Before us the impugned order has been assailed on the following grounds of appeal: “1. Whether on the points of law and on facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.2,07,82,130/- made by the AO u/s.68 of the Income Tax Act, 1961 on account of unexplained cash credit in guise of unsecured loan. 2. Whether on the points of law and on facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.2,07,82,130/- made by the AO when the onus to prove the genuineness lies with the assessee, could not be discharged. 3. The order of the Ld. CIT(A) is erroneous both in law and on facts. 4. Any other ground that may be adduced at the time of hearing.” 2. Succinctly stated, the assessee HUF which is engaged in the business of wholesale and retail trading of jewellery had e-filed its return of income for the assessment year 2013-14 on 29.09.2013, declaring an income of Rs.20,47,780/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to have received unsecured loans from eight parties aggregating to an amount of Rs.2,07,82,137/-. In order to verify the authenticity of the aforesaid loan transactions the A.O called upon the assessee to furnish supporting documentary evidence. In compliance, the assessee placed on record the copies of the income-tax returns a/w. computation of income, bank statements and confirmations of the lenders in question. However, the A.O was not persuaded to accept the claim of the assessee of having raised genuine loans from aforementioned parties. Raising doubts as regards the explanation of the assessee, it was observed by the A.O that the creditworthiness of the lenders in question was not proved for threefold reasons, viz. (i). that all the lenders had their respective bank accounts with the same bank, viz. Jammu & Kashmir Bank, Branch: Raipur; (ii) that on the same date on which the impugned loans were advanced by the lenders an equivalent amount was parked to the credit of their respective bank accounts; and (iii) that against the respective transactions of credit of an equivalent amount in the bank accounts of the lenders there was a mention of a term “TRF” which could be cash transferred in their bank accounts through net banking. Accordingly, the A.O backed by his aforesaid observations held the aforesaid unsecured loans as an unexplained cash credit u/s.68 of the 4 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 Act and made an addition of Rs.2,07,82,130/- to the returned income of the assessee. 4. Aggrieved, the assesee carried the matter in appeal before the CIT(Appeals). It was observed by the CIT(Appeals) that though the assessee in the course of assessment proceedings had by placing on record the copies of the income-tax returns a/w. computations of income, bank statements and confirmations of the lenders in question had discharged the primary onus that was cast upon it, but the A.O had failed to dislodge the same by carrying out necessary verifications u/s.131 or u/s 133(6) of the Act. As regards the view taken by the A.O that the term “TRF” referred to against the credits appearing in the bank statements of the lenders could be cash deposited in their accounts through net banking, the CIT(Appeals) did not find favor with the same. Relying upon the judgment of the Hon’ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal Vs. ITO, Ward-2(2), Bilaspur, Tax Case No.24 of 2011 dated 04.04.2017, it was observed by the CIT(Appeals), that now when the assessee had placed on record documentary evidences in support of its claim of having raised genuine loans from the aforesaid lenders, then, the AO without conducting necessary enquiries as regards the creditworthiness of the lenders could not have held otherwise and drawn adverse inferences in the hands of the assessee. Accordingly, the 5 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 CIT(Appeals) on the basis of his aforesaid observations vacated the addition of Rs.2,07,82,130/- made by the A.O u/s. 68 of the Act. 5. The Revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. As observed by us hereinabove, the A.O had held the unsecured loans that were received by the assessee from eight persons (out of which seven persons were the family members of the assessee) as an unexplained cash credit u/s.68 of the Act. On a perusal of the records to which our attention was drawn by the Ld. Authorized Representative (for short ‘AR’) for the assessee, it transpires that the assessee had discharged the primary onus that was cast upon it as regards proving the authenticity of the loan transactions in question by filing before the AO documentary evidences which substantiated the identity and creditworthiness of the lenders and genuineness of the loan transactions, viz. copies of returns of income, copies of bank accounts and confirmations of the lenders. 7. Admittedly, it is a matter of fact borne from record that all the aforesaid lenders have advanced the respective loans from their bank accounts with Jammu & Kashmir Bank, Branch: Raipur. Also, there is no escape from the fact that in the case of all the aforesaid eight lenders the advancing of the respective loans was preceded by crediting in their bank 6 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 accounts of an amount equivalent to that advanced by them to the assessee. But then, on a careful perusal of the bank statements of the lenders to which our attention was drawn by the Ld. AR, we find that in all the cases the respective amounts were credited in the bank accounts of the lenders through transfer entries. In so far the adverse inferences drawn by the A.O as regards the genuineness of the loan transactions, for the reason that all of the lenders were holding their respective bank accounts with the same bank, i.e., Jammu & Kashmir Bank, Branch: Raipur, we are unable to persuade ourselves to subscribe to the same. At this stage, we may herein observe, that as seven lenders (out of eight lenders) were the family members of the assessee, therefore, there is nothing strange that all of them had their bank accounts with the same bank. Be that as it may, we are unable to comprehend as to on what basis a mere holding of the bank accounts by the lenders with a specific bank would on such standalone basis justify drawing of adverse inferences as regards the authenticity of the loan transactions in question. As regards the doubts raised by the AO about the authenticity of the loan transactions for the reason that the advancing of the impugned loans by the respective lenders was preceded by crediting of an equivalent amount on the same date in their respective bank accounts, we are afraid that the same too is devoid and bereft of any merit and does not carry any substance. As observed by us hereinabove, now when lenders were mainly the family members of the assessee, 7 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 therefore, they might have joined hands to financially assist the assessee from their available resources. In so far the source out of which the lenders have advanced the loans to the assessee is concerned and in fact is material for adjudicating the controversy in hand, the same, admittedly, was out of certain funds received by them by way of transfers in their respective bank accounts. Observation of the A.O that the term “TRF” mentioned against the respective credits of the amounts in the bank accounts of the lenders was to be construed as cash deposited through net banking in their banking accounts is beyond comprehension. In our considered view the term ‘TRF” in the normal parlance used in the banking circles is to be construed as transfer of amount from/to other bank accounts. Also, it is beyond our comprehension as to how the fact that the amounts advanced by the lenders were sourced out of the amounts credited in their bank accounts on the same date would adversely hit the genuineness of the claim of the assessee of having raised loans from them. We, say so, for the reason that in neither of the case the amount advanced by the lenders is preceded by and/or sourced out of cash deposits in their bank account, nor is it even the case of the department that the amounts received by the lenders forms part of a chain of transactions which were carried out to facilitate providing of accommodation entries. 8 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 8. On the basis of our aforesaid observations, we are of a strong conviction that as the assessee had duly substantiated the creditworthiness of the aforementioned lenders by placing on record supporting documentary evidences, viz. copies of the returns of income, bank statements out of which the respective loans were sourced a/w their respective confirmations and there is neither any cash deposits in their respective bank accounts nor any concrete observation of the AO justifying drawing of adverse inferences as regards the amounts credited in the bank accounts of the lenders through transfer entries, i.e, prior to advancing of the loans by them to the assessee, therefore, it can safely be concluded that the primary onus that was cast upon the assessee to substantiate the authenticity of the loan transactions in question was duly discharged. Now, in case the A.O had any doubts as regards the authenticity of the loan transaction in question or the documents that were filed by the assessee before him, then, he was obligated to prove to the contrary by carrying out independent verifications, i.e either by summoning the lenders u/s.131 of the Act or calling for information from them in exercise of powers vested with him u/s. 133(6) of the Act. However, as the A.O had miserably failed to discharge the onus that was shifted on him for disproving the claim of the assessee of having raised genuine loans from the aforementioned parties, therefore, he could not have summarily held the loans in question as unexplained cash credits within the meaning of 9 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 section 68 of the Act. Accordingly, we are of the considered view, that now when the assessee had discharged the primary onus that was cast upon it as regards proving the identity and creditworthiness of the lenders and the genuineness of the transaction in question, therefore, the A.O without disproving the same on the basis of irrefutable documentary evidence could not have held the same as unexplained cash credits u/s.68 of the Act. Our aforesaid conviction is supported by the judgment of the Hon’ble Madras High Court in the case of CIT Vs. Mark Hospitals (P) Ltd. (2015) 373 ITR 115 (Mad.). In its aforesaid order the Hon’ble High Court, had held, that where the loans were given to the assessee through cheques and all the creditors had confirmed that they had advanced loans to the assessee and their identities were established, then, the onus cast upon the assessee stood duly discharged and the amount in question could not have been summarily held by the A.O as an unexplained cash credit u/s.68 of the Act i.e, without dislodging the claim of the assessee on the basis of supporting documentary evidence/materials. We, thus, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition of Rs.2,07,82,130/- made by the A.O u/s.68 of the Act, uphold his order. Thus, the Grounds of appeal No.(s) 1 & 2 raised by the Revenue are dismissed in terms of our aforesaid observations. 10 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 9. Grounds of appeal No.(s) 3 & 4 being general in nature are dismissed as not pressed. 10. In the result, appeal of the Revenue is dismissed in terms of our aforesaid observations. Order pronounced in open Court on 29 th July, 2022. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 29 th July, 2022 **SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5 .ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 11 ACIT Vs. M/s. Sunil Parakh (HUF) ITA No. 260/RPR/2017 Date 1 Draft dictated on 25.07.2022 Sr.PS/PS 2 Draft placed before author 26.07.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order