Dhararaj Agarwal, Kolkata V. ITO, Ward - 34(3), Kolkata, Kolkata

ITA 261/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75015 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2011
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN SATPATI
• Section: 143(3); 131; 68

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 261/KOL/2011 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2006-07 DHANRAJ AGARWAL VS. INCOME-TAX OFFICER, WD-34(3 ), KOLKATA (PAN: ACSPA5065B) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 06.01.2014 DATE OF PRONOUNCEMENT: 27.01.2014 FOR THE APPELLANT: SHRI SOMNATH GHOSH, ADVOCATE FOR THE RESPONDENT: SHRI NIRANJAN SATPATI, JCIT, SR. DR $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 143/CIT(A)-XX/WD-34(3/2008-09/KOL DATED 27.12.2010. ASSESSMENT WAS FRAMED BY ITO, WARD-34(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 21.11.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED LOAN CREDITORS FROM FOLLOWING FOUR DIFFERENT PERSONS: LOAN AMOUNT INTEREST 1. RAJANI KANT JANI (HUF) RS.1,00,000/- RS.11,90 1/- 2. RAJANI KANT JANI RS.1,00,000/- RS. 953/- 3. SANDEEP AGARWAL RS.2,00,000/- RS. 510/- 4. ANITA KHAITAN RS.2,50,0000/- RS.29,240/- RS.6,50,000/- RS.42,604/- THE TOTAL AMOUNT ADDED WAS RS.6,92,604/- I.E. INCOL UDING INTEREST. 3. BRIEFLY STATED FACTS ARE THAT THE AO NOTICED THA T THERE ARE UNSECURED LOANS OF RS.6,50,000/- IN THE BALANCE SHEET OF THE ASSESSEE FROM ABOVE STATED FOUR LOAN CREDITORS ALONG WITH INTEREST OF RS.42,604/-. HE REQUIRED THE ASSE SSEE TO PRODUCE THE LOAN CREDITORS. THE LOAN CREDITORS APPEARED IN RESPONSE TO SUMMONS U/S. 131 OF THE ACT AND CONFIRMED THE AMOUNT 2 ITA NO. 261/K/2011 SHRI DHANARAJ AGARWAL , AY:2006-07 ADVANCED BUT AO FOUND THAT THERE IS CASH DEPOSIT IN BANK ACCOUNT OF THE LOAN CREDITORS BEFORE CHEQUES WERE ISSUED IN FAVOUR OF THE ASSESSEE. ACC ORDINGLY, HE TREATED THE LOAN CREDITORS AS UNEXPLAINED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION OF UNEXPLAINED LOANS BY TREATED THE SAME AS EXPLAINED BY OBSERVING AS UNDER: 5. I HAVE PERUSED THE ASSESSMENT ORDER AND CONSID ERED THE SUBMISSIONS OF THE APPELLANT. I DO NOT FIND MERIT IN THE CONTENTIONS O F THE APPELLANT. THE LOAN CREDITORS ADMITTED BEFORE THE AO THAT THEY WERE NOT EVEN AWAR E ABOUT THE SOURCE OF DEPOSITS IN THEIR BANK ACCOUNT. I FIND SUBSTANCE IN THE ARGUMEN T THAT THE APPELLANT WAS NOT SUPPOSED TO EXPLAIN THE SOURCE OF DEPOSITS IN THE BANK ACCOU NT OF THE LOAN CREDITORS. BUT THEN, IN THE PRESENT CASE, THE LOAN CREDITORS HAVE THEMSELVE S FAILED TO EXPLAIN THE SOURCE OF DEPOSIT IN THEIR BANK ACCOUNT. THE LOAN CREDITORS A RE CERTAINLY EXPECTED TO EXPLAIN THE SOURCE OF DEPOSITS IN THEIR BANK ACCOUNT. SECONDLY, THE LOAN CREDITORS EXPRESSED UNAWARENESS ABOUT THEIR SOURCE OF INCOME THOUGH THE SAME IS SHOWN IN THEIR P&L A/C. THEY WERE ALSO NOT AWARE ABOUT THE SHARES HELD BY T HEM THOUGH THE SAME IS SHOWN IN THEIR BALANCE SHEET. THE LOAN CREDITORS CATEGORICAL LY STATED THAT NO BOOKS OF ACCOUNT WERE MAINTAINED, AND, THAT THE P&L A/C AND BALANCE SHEET WERE SIMPLY PREPARED BY THE CHARTERED ACCOUNTANT. IN VIEW OF SUCH CATEGORICAL A DMISSION BY THE LOAN CREDITORS, THE AO WAS JUSTIFIED IN HOLDING THAT THE DOCUMENTARY EV IDENCE IN THE FORM OF P&L A/C, BALANCE SHEET, ETC CANNOT BE RELIED UPON. THE AO HA S RIGHTLY HELD THAT THE APPELLANT HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE LOA N CREDITORS. THE ADDITION MADE BY THE AO IS CONFIRMED. THE DISALLOWANCE OF CLAIM OF INTER EST IS ALSO JUSTIFIED. GROUND NO. 1 IS DISMISSED. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THE FIRS T LOAN CREDITOR I.E. SHRI RAJANI KANT JANI. HE DREW OUR ATTENTION TO ASSESSEES PAPER BOOK AND STA TED THAT THIS LOAN CREDITOR CONFIRMED IN RESPONSE TO SUMMONS ISSUED U/S. 131 OF THE ACT AND ALSO FILED DETAILS LIKE BANK STATEMENT, COPIES OF LEDGER ACCOUNT, CONFIRMATION AND THIS LOA N CREDITOR IS ASSESSED TO INCOME TAX I.E. PARTICULARS OF TAX ASSESSMENT WERE ALSO FILED. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGES 23 TO 36 OF ASSESSEES PAPER BOOK WHEREIN COM PLETE DETAILS I.E. COPY OF INTIMATION, RETURN, FORM NO. 16, FINAL ACCOUNTS, BANK STATEMENT , CASH FLOW STATEMENT, CONFIRMATION AND ALSO RETURN AND ACCOUNTS FOR AY 2005-06 WHEREIN SHRI RAJ ANI KANT JANI, THE LOAN CREDITOR HAS DISCLOSED THIS UNSECURED LOAN. LD. COUNSEL FOR THE ASSESSEE PARTICULARLY DREW OUR ATTENTION TO PAGE 33 OF ASSESSEES PAPER BOOK WHEREIN ASSESSEE H AS INCOME EARNING AS PER THE BANK ACCOUNT MAINTAINED WITH FEDERAL BANK, KOLKATA BURRA BAZAR B RANCH AND ALSO TDS CERTIFICATE ON THE WORK DONE OF RS.1,56,355/-. LD. COUNSEL FOR THE AS SESSEE ALSO DREW OUR ATTENTION TO DOCUMENTS OF SHRI SANDIP AGARWAL ENCLOSED IN ASSESSEES PAPER BOOK AT PAGES 38 TO 52. SIMILAR DOCUMENTS WERE ALSO FILED IN THE CASE OF SMT. ANITA KHAITAN, WHICH ARE ALSO AVAILABLE IN ASSESSEES PAPER BOOK PAGES 54 TO 64. SIMILAR DOCU MENTS WERE ALSO FILED IN THE CASE OF RAJANI KANT JANI,HUF AT PAGES 13 TO 21 OF ASSESSEES PAPER BOOK. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT ONCE ALL THESE LOAN CREDITORS HAVE CO NFIRMED UNDER DEPOSITION U/S. 131 OF THE ACT 3 ITA NO. 261/K/2011 SHRI DHANARAJ AGARWAL , AY:2006-07 AND ALSO FILED ALL DETAILS, THEY HAVE DISCHARGED IN ITIAL ONUS. IN SUCH CIRCUMSTANCES, HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S. DAT AWARE PRIVATE LIMITED, ITAT NO.263 OF 2011, GA NO.2856 OF 2011 DATED 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. THE APPEAL IS THUS DEVOID OF ANY SUBSTANCE AND IS SUMMARILY DISMISSED. 5. AS THE HONBLE HIGH COURT LAID DOWN THE PRINCIPL E 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 REVERSE THE ORDER OF CIT(A) AND ALLOW THE APPEAL OF ASSESSEE. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.01.2 014 SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27TH JANUARY, 2013 12 '3' 4 JD.(SR.P.S.) 4 ITA NO. 261/K/2011 SHRI DHANARAJ AGARWAL , AY:2006-07 $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT SHRI DHANARAJ AGARWAL, C/O, SHRI SOMNAT H GHOSH, ADVOCATE, 2, GARSTIN PLACE, SECOND FLOOR, SUITE NO. 203, KOLKATA-700 001. 2 ./,- / RESPONDENT ITO, WARD-34(3), KOLKATA 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .