DCIT, New Delhi V. Smt. Vimmy Sachdeva, New Delhi

ITA 2790/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65369 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Keywords: Unexplained cash credit; Gift; Source of fund; Accommodation entries

Judgement Text

ITA NO. 2790/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER I.T.A. NO. 2790/DEL/2012 A.Y. : 2008-09 DY. COMMISSIONER OF INCOME TAX, CIRCLE-26(1), NEW DELHI VS. SMT. VIMMY SACHDEVA, J-11/32, RAJOURI GARDEN, NEW DELHI 110 027 (PAN/GIR NO. : ABPPS9271B) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. R.S. SINGHVI, CA DEPARTMENT BY : DR. B.R.R. KUMAR, SR. DR. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, NEW D ELHI DATED 09.3.2012 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AS WELL AS ON FACTS BY DELETING THE ADDITION OF ` 8,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONSTRUCTION EXPENSES IN SPITE OF THE FACT THAT THE ASSESSING OFFICER HAD MADE THE ADDITION AFTER ANALYZING THE TERMS AND ITA NO. 2790/DEL/2012 2 CONDITIONS OF CONTRACT AGREEMENT AND AFTER NOTICING DISCREPANCIES IN THIS REGARD. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AS WELL AS ON FACTS BY DELETING THE ADDITION OF ` 12,40,000/- MADE BY THE ASSESSING OFFICER U/S. 68 OF THE I.T. ACT, 1961 IN SPITE OF THE FACT THAT CASH WAS DEPOSITED IN THE RESPECTIVE BANK ACCOUNTS OF THE SO CALLED LENDERS JUST BEFORE THE ISSUANCE OF CHEQUES TO THE ASSESSEE AND THE ASSESSING OFFICER HAD BROUGHT SUFFICIENT MATERIAL ON RECORD IN THIS REGARD. III) THE APPELLANT CRAVES THE RIGHT TO ADD ANY OTHE R GROUND(S) OF APPEAL DURING THE COURSE OF HEARING OF THIS APPEAL. 3. APROPOS THE ISSUE OF DELETION OF ` 8,00,000/-. IN THIS CASE DURING THE COURSE OF ASSESSMENT ASSES SING OFFICER NOTED THAT DURING THE YEAR THERE WAS SALE MADE OF PR OPERTY BEARING D- 51, SHANKER GARDEN, NEW DELHI FOR A CONSIDERATION OF ` 44,10,000/- VIDE SALE DEED DATED 28.1.2008. THE SAID PROPERTY MEASURING 200 SQ. YARDS WAS PURCHASED BY THE ASSESSEE VIDE SALE DEED DATED 20.12.2005 FOR A CONSIDERATION OF ` 8,50,000 AND PAID STAMP DUT Y THEREON OF ` 51,000/-. BUT THE ASSESSING OFFICER NOTED THA T ASSESSEE HAS ADJUSTED THE COST OF THE PROPERTY AT ` 19,01,000/-. ASSESSEE WAS ASKED TO SUBMIT THE DETAILS THEREOF. ASSESSEE S UBMITTED THAT ASSESSEE HAS INCURRED THE EXPENDITURE OF ` 10,00,00 0/- IN CONSTRUCTION OF SINGLE STOREY HOUSE VIDE AGREEMENT OF CONSTRUCTI ON DATED 8.8.2007 ITA NO. 2790/DEL/2012 3 WITH SH. KARAM SINGH. IN HER SUPPORT THE ASSESSEE SUBMITTED THE COPY OF THE AGREEMENT MADE BETWEEN ASSESSEE AND SH. KARAM S INGH. AS PER THE AGREEMENT THE ASSESSEE I.E. FIRST PARTY WA S INTERESTED TO CONSTRUCT THE GROUND FLOOR OF THE SAID PLOT. THE S AID TERMS AND CONDITIONS WERE AS UNDER:- I) THAT THE FIRST PARTY SHALL HAND OVER THE VACANT PHY SICAL POSSESSION LAWFULLY AND PEACEFULLY OF THE SAID GROU ND FLOOR OF PROPERTY NO. B-51, MEASURING 200 SQ. YARDS SITUATED AT SHANKER GARDEN, NEW DELHI TO THE SECOND PARTY FOR CONSTRUCTION. II) WHEREAS THE FIRST PARTY AGREES TO GIVE THE CONTRACT FOR CONSTRUCTION OF ENTIRE GROUND FLOOR WITHOUT ROOF RI GHTS III) THAT THE FIRST PARTY AGREES TO PAY TO THE SECOND PA RTY SUM OF ` 10,00,000/- (` 10 LACS ONLY) AS PER DETAILS GIVEN BELOW: A) ` 1,00,000/- (RUPEES ONE LACKH ONLY) IN CASH IN ADVANCE. B) ` 9,00,000/- (RUPEES NINE LAKHS ONLY) AFTER EIGHT MONTH OR SALE OF THE ABOVE SAID PROPERTY WHICHEVER IS EARLIER. IV) THAT THE SECOND PARTY TAKES THE RESPONSIBILITY OF COMPLETE CONSTRUCTION WITH IN EIGHT MONTHS. V) THAT THE SECOND PARTY SHALL PROVIDE PEST CONTROL TREATMENT OF THE ABOVE MENTIONED PROPERTY. VI) THAT THE SECOND PARTY SHALL PROVIDE WATER PROOFING OF ALL THE BATHROOMS AND KITCHEN OF THE ABOVE MENTIONED PROPERTY. ITA NO. 2790/DEL/2012 4 VII) THAT THE SECOND PARTY SHALL PUT TARCOL ON THE TOP ROOF OF THE SAID PROPERTY. 3.1 ASSESSING OFFICER WANTED THAT ASSESSEE SHOULD JUSTIFY THE COST OF CONSTRUCTION OF ` 10 LACS AGAINST THE SAID PROPERTY . THE ASSESSING OFFICER PROCEEDED TO CONCLUDE AS UNDER:- THE PERUSAL OF THE DETAILS OF THE PAYMENTS MADE TO THE CONTRACTOR IN CONNECTION WITH THE ABOVE JOB IT I S SEEN THAT THE ASSESSEE HAS GIVEN ONLY ` 1,00,000/- IN CASH TO THE CONTRACTOR AND NO PAYMENT DURING THE FINANCIAL YEAR 2007-08 HAS BEEN MADE BY THE ASSESSEE. WHILE AS PER THE AGREEMENT IT WAS TO BE MADE WITHIN EIGHT MONTHS FROM THE DATE OF THE AGREEMENT OR AT THE TIME OF THE SALE PROPERTY. FROM THE DETAILS OF THE PAYMENT IT IS NOTICED THAT ` 9 L ACS WAS PAID AFTER THE END OF THE FINANCIAL YEAR 2007-0 8. THE FACTS SUBMITTED BY THE ASSESSEE ARE NOTHING BUT TO MANIPULATE THE THINGS TO REDUCE THE TAX INCIDENT S AFTER TAKING INTO ACCOUNT THE SALE CONSIDERATION RECEIVED AND COST TO BE REDUCED FROM THE SAME. HOWEVER, KEEPING IN VIEW THE JOB UNDERTAKEN IN THE AGREEMENT AND TO MAKE THE RENOVATION IN THE HOUSE BEFORE THE SALE OF THE SAME, THE RENOVATION COST ON THE HEADS UNDERTAKEN IS ESTIMATED AT ` 2 LACS AND REST CLAIM IS DISALLOWED. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT THE AGREEMENT BETWEEN THE ASSESSEE AND THE CONTRACTOR ITA NO. 2790/DEL/2012 5 WAS PLACED BEFORE THE ASSESSING OFFICER AND AS PER THE CONTRACT ASSESSEE WAS TO PAY AN ADVANCE OF ` 1 LAC IN CASH A ND BALANCE ` 9 LACS ON COMPLETION OF THE JOB. LD. COMMISSIONER OF INCO ME TAX (A) NOTED THAT ASSESSING OFFICER HAS ALSO NOTED IN THE ASSES SMENT ORDER THAT BALANCE AMOUNT OF ` 9 LACS APPEARED TO HAVE BEEN PA ID AFTER THE END OF THE FINANCIAL YEAR 2007-08. THUS, LD. COMMISSI ONER OF INCOME TAX (A) OPINED THAT ASSESSING OFFICER WAS CONTRADICTIN G HIMSELF IN THE ASSESSMENT ORDER ITSELF WHERE ON THE ONE HAND HE MA DE AN ADDITION OF ` 8 LACS TO THE INCOME OF THE ASSESSEE AND ON THE O THER HAND HE ACCEPTED THAT ` 9 LACS WERE PAID TO THE CONTRACTOR AFTER THE END OF THE FINANCIAL YEAR 2007-08. LD. COMMISSIONER OF INCOME T AX (A) FURTHER NOTED THAT ASSESSEES CONTENTION IS THAT THE PAYMENT WAS ACCOUNTED IN BOOKS OF ACCOUNT ON ACCRUAL BASIS SINCE CERTAIN PAR T OF THE WORK WAS NOT COMPLETED AND ACTUALLY PAYMENT WAS MADE TO SH. KA RAM SINGH ON THE COMPLETION OF THE WORK TO THE SATISFACTION OF TH E ASSESSEE AND BUYER OF THE PROPERTY. IN VIEW OF THE ABOVE CONSID ERATION, LD. COMMISSIONER OF INCOME TAX (A) DIRECTED THAT THE ADD ITION OF 8 LACS TO THE INCOME OF THE ASSESSEE IS NOT JUSTIFIED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE CONTRACTOR, A SSESSEE WAS TO PAY ADVANCE OF ` 1 LAKH AND THE BALANCE ` 9 LAKHS O N COMPLETION OF THE JOB. ASSESSING OFFICER HIMSELF HAS NOTED THAT ` 9 LACS WAS PAID AFTER THE END OF THE FINANCIAL YEAR 2007-08. SINCE ASSE SSEE WAS FOLLOWING ACCRUAL SYSTEM OF ACCOUNTING, ASSESSEE ACCOUNTED FO R THE BALANCE PAYABLE OF ` 9 LACS. THESE WERE DULY ENTERED INTO THE ASSESSEES BOOKS ITA NO. 2790/DEL/2012 6 AND THIS ASPECT HAS NOT BEEN DISPUTED. UNDER THE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ADDITION MADE BY THE AS SESSING OFFICER IS WITHOUT JUSTIFICATION. HENCE, WE AFFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. APROPOS ISSUE OF ADDITION OF ` 12,40,000/- ON THIS ISSUE DURING THE COURSE OF ASSESSMENT, AS SESSING OFFICER NOTED THAT ASSESSEE HAS DISCLOSED THE UNSECURED LOA NS OF ` 37,90,000/- FROM THE FOLLOWING PARTIES:- S.NO. NAME OF THE PERSON AMOUNT OF LOAN AS ON 31.3.2007 LOAN RAISED DURING THE YEAR 1. SH. RAJIV KUMAR ` 10,50,000/- ` 10,50,000/- 2. SH. PREM PRAKASH ` 1,40,000/- ` 2,40,000/- 3. SH. VIJAY SACHDEVA ` 4,00,000/- ` 4,00,000/- 4. SH. BALJEET SINGH ` 17,00,000/- ` 17,00,000/- 5. SH. SATISH SEHGAL ` 2,50,000/- ` 2,50,000/- 6. SMT. MANJU SEHGAL ` 2,50,000/- ` 2,50,000/- TOTAL TOTAL TOTAL TOTAL ` 37,90,000/ ` 37,90,000/ ` 37,90,000/ ` 37,90,000/- -- - ` 38,90,000/ ` 38,90,000/ ` 38,90,000/ ` 38,90,000/- -- - 7.1 ASSESSEE IN SUPPORT OF THE ABOVE, FILED THE CO NFIRMATION, AFFIDAVIT FROM THE ABOVE PARTIES AND ALSO FILED THE STATEMENT OF BANK ACCOUNTS. ASSESSING OFFICER OBSERVED THAT FROM THE PERUSAL OF THE BANK ACCOUNTS OF THE FOLLOWING PERSONS, IT IS NOTICED THAT CASH H AS BEEN DEPOSITED IN THEIR BANK ACCOUNTS EITHER ON THE SAME DAY OR PRIOR TO ONE OR TO TWO DAY OF ISSUE OF CHEQUE IN FAVOUR OF THE ASSESSEE. ASSESSING OFFICER HELD THAT THESE WERE ACCOMMODATION ENTRIES TAKEN BY THE ASSESSEE ITA NO. 2790/DEL/2012 7 WHILE INTRODUCING THE CASH IN THOSE ACCOUNTS. ASSE SSING OFFICER ADDED THE FOLLOWING AMOUNTS U/S. 68 OF THE I.T. ACT. I) SH. BALJEET SINGH UBHI - ` 5,00,000/- II) SH. PREM PRAKASH - ` 2,40,000/- III) SH. SATISH SEHGAL - ` 2,50,000/- IV) SMT. MANJU SEHGAL - ` 2,50,000/- 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) ELABORATELY CONSIDERED THE SUBMISSIONS AND HELD AS U NDER:- A) LOAN OF RS. 2,50,000/- FROM SMT. MANJU SEHGAL : THE APPELLANT SUBMITTED THAT AFFIDAVIT OF CONFIRMATION, C OPY OF BANK STATEMENT AND COPY OF PAN CARD OF SMT. MANJU SEH GAL WAS SUBMITTED BEFORE THE ASSESSING OFFICER. SMT. MANJU SEHGAL IS ASSESSED TO TAX UNDER PAN - BMJPS0845M. TH IS AMOUNT WAS ADDED BY THE ASSESSING OFFICER ONLY BECA USE THERE WAS A CASH DEPOSIT OFRS.2,50,000/- BEFORE GIV ING LOAN TO THE APPELLANT, WHO SUBMITTED THAT SMT. MANJU SEHGAL HAD WITHDRAWN AN EQUAL AMOUNT OF RS.2,50,000/- IN DECEMBER , 2007 AND IT WAS THIS CASH IN HAND WHICH WAS RE-DEPO SITED BY HER IN HER BANK ACCOUNT IN MARCH, 2008 BEFORE GIV ING A LOAN BY HER. THESE FACTS WERE VERIFIED FROM THE BANK STATEMENT SMT. MANJU SEHGAL WHO HAD WITHDRAWN RS.2,50,000/- FROM HER BANK ACCOUNT NO. 064010004411 IN DENA BANK, NEHRU PLACE, NEW DELHI ON 18.12.2007, WHI CH WAS RE-DEPOSITED IN MARCH, 2008 BEFORE GIVING A LOAN TO THE APPELLANT. THEREFORE, THE ADDITION OF THIS RS.2,50, 000/- AS ITA NO. 2790/DEL/2012 8 UNEXPLAINED CASH CREDIT TO THE INCOME OF THE APPELLA NT IS DELETED. B) LOAN OF RS.2,50,000/- FROM SH. SATISH SEHGAL : THE APPELLANT SUBMITTED THAT THE AFFIDAVIT OF CONFIRMATIO N, COPY OF BANK STATEMENT AND COPY OF ITR OF SH. SATISH SEH GAL WAS SUBMITTED BEFORE THE AO. SH. SATISH SEHGAL IS ASSES SED TO TAX UNDER PAN - AUAPS0700R. THIS AMOUNT WAS ADDED BY THE ASSESSING OFFICER ONLY BECAUSE THERE WAS A CAS H DEPOSIT OF RS.2,50,000/- BEFORE GIVING LOAN TO THE APPELLANT, WHO SUBMITTED THAT SH. SATISH SEHGAL HAD WITHDRAWN A N EQUAL AMOUNT OF RS.2,50,000/- IN DECEMBER, 2007 AND IT WAS THIS CASH IN HAND WHICH WAS RE-DEPOSITED BY HIM IN HIS BANK ACCOUNT IN MARCH, 2008 BEFORE GIVING A LOAN TO HER. THESE FACTS WERE VERIFIED FROM THE BANK STATEMENT SH . SATISH SEHGAL WHO HAD WITHDRAWN ` 2,50,000/- FROM H IS BANK ACCOUNT NO. 064010004395 IN DENA BANK, NEHRU PLACE, NEW DELHI ON 23.12.2007, WHICH WAS RE-DEPOSITE D IN MARCH, 2008 BEFORE GIVING A LOAN TO THE APPELLANT. THEREFORE, THE ADDITION OF THIS ` 2,50,000/- AS UNE XPLAINED CASH CREDIT TO THE INCOME OF THE APPELLANT IS DELET ED. C) LOAN OF RS.5,00,000/- FROM SH. BALJEET SINGH UBHI : THE APPELLANT SUBMITTED THAT THE AFFIDAVIT OF CONFIRMATIO N, COPY OF BANK STATEMENT AND COPY OF ITR OF SH. BALJEET SI NGH UBHI HAVING PAN NO. AAA PU4513E WAS SUBMITTED BY HER TO TH E ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDIN GS. SH. BALJEET SINGH HAS SUBMITTED HIS RETURN OF INCOME FOR A.Y. 2008-09 IN WHICH HE HAS CLEARLY STATED THE LOAN GIV EN BY ITA NO. 2790/DEL/2012 9 HIM TO THE APPELLANT, THE LOAN WAS GIVEN THROUGH A CCOUNT PAYEE CHEQUES AND THE RETURN OF INCOME OF SH. BALJE ET SINGH WAS SCRUTINIZED FOR A.Y. 2008-09, IN WHICH LO AN GIVEN TO THE APPELLANT HAS BEEN ACCEPTED. THE ASSESSING O FFICER ADDED THIS AMOUNT TO THE INCOME OF THE APPELLANT MERE LY ON THE GROUND THAT SH. BALJEET SINGH UBHI DID NOT APPE AR BEFORE HIM PERSONALLY. IN FACT, THE TOTAL AMOUNT OF LOAN GIVEN BY SH. BALJEET SINGH UBHI TO THE APPELLANT AMO UNTS TO RS.17 LACS. THE ASSESSING OFFICER HAS MENTIONED I N THE ASSESSMENT ORDER THAT CASH OF RS. 5 LACS WAS DEPOSI TED IN THE BANK ACCOUNT OF SH. BALJEET SINGH UBHI ON 07.08 .2007 AND RS. 85,000/- ON 11.08.2007. HE ALSO NOTED THAT A CHEQUE OF RS.12 LAC WAS DEPOSITED IN THE BANK ACCOU NT OF SH. BALJEET SINGH ON 08.08.2007. THE AO HELD THAT R S.5 LACS DEPOSITED IN CASH CAME FROM THE APPELLANT AND THEREFO RE, ADDED THIS AMOUNT TO THE INCOME OF THE APPELLANT U/S . 68 OF THE ACT. THE FACTS AS STATED ABOVE HAVE BEEN VERIFI ED FROM THE SYNDICATE BANK ACCOUNT NO. 37929 OF BALJEET SING H UBHI. IT IS SEEN FROM THE BANK ACCOUNT THAT AT THE B EGINNING OF F.Y. 200708, THERE WAS A CREDIT BALANCE OF RS. 1,20,30,885/-. THE ASSESSING OFFICER HAS NOT BROU GHT ON RECORD AS TO HOW HE HAS ESTABLISHED A NEXUS BETWEEN DEPOSIT OF RS. 5 LACS IN CASH IN THE BANK ACCOUNT O F SH. BALJEET SINGH UBHI AND THE APPELLANT. HE HAS NOT BE EN ABLE TO SHOW THAT THE MONEY HAS MOVED FROM THE COFFERS OF THE APPELLANT TO THE BANK ACCOUNT OF SH. BALJEET SINGH UBHI. SUCH ADDITIONS CANNOT BE SUSTAINED ON MERE SUSPICION S. THE ADDITION OF RS.5 LACS IS THEREFORE DELETED. ITA NO. 2790/DEL/2012 10 D) LOAN OF RS.2,40,000/- FROM SH. PREM PRAKASH : THE APPELLANT SUBMITTED THAT THE COPY OF THE AFFIDAVIT O F CONFIRMATION AND COPY OF BANK STATEMENT OF SH. PREM PRAKASH WERE PROVIDED TO THE ASSESSING OFFICER DUR ING ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER ADD ED THE AMOUNT OF LOAN TO THE INCOME OF THE APPELLANT, SINCE, THERE WERE CASH DEPOSITS IN THE ACCOUNT OF SH. PREM PRAKASH AMOUNTING TO RS. 49,900/- ON 13.03.2008, RS. 1,00,00 0/ ON 14.03.2008 AND RS.90,000/- ON 25.03.2008. THE FACT THAT THE APPELLANT CLAIMED TO HAVE RETURNED BACK RS. 1 LA C WAS REJECTED BY THE AO ON THE GROUNDS THAT IT APPEARS T O BE A BEARER CHEQUE. SH. PREM PRAKASH IN HIS LETTER DT. 0 7.09.2010 STATED THAT HE WAS IN PRIVATE SERVICE FOR THE LAST 35 YEARS AND THAT HIS SON WAS ALSO SERVING IN AN MNC AND DRA WING HIGH SALARY. HE SUBMITTED THAT HE HAD DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF HIS SAVINGS TO GIVE A LOAN TO T HE APPELLANT. THE LENDER SH. PREM PRAKASH HAS GIVEN A AF FIDAVIT THAT HE HAD GIVEN LOAN OF RS. 1,40,000/- TO THE APP ELLANT ON 14.03.2008 AND FURTHER RS. 1 LAC ON 27.03.2008. OUT OF THESE, HE RECEIVED BACK RS. 1 LAC VIDE CHEQUE NO. 8 77075 DT. 28.03.2008 AND THE BALANCE OUTSTANDING WAS RS. 1,40,000/-. SH. PREM PRAKASH IS ASSESSED TO TAX VID E PAN NO. BULPP2642K. THE ASSESSING OFFICER HAS HELD THAT THERE IS A NEXUS BETWEEN THE CASH DEPOSITED IN THE BANK A CCOUNT OF SH. PREM PRAKASH AND THE APPELLANT. HOWEVER, THIS REMAINS ONLY A SUSPICION. IT HAS NOWHERE BEEN CONCLU SIVELY PROVED BY THE AO THAT MONIES HAVE MOVED FROM THE COFF ERS OF THE APPELLANT TO THE BANK ACCOUNT OF SH. PREM PRAK ASH. ITA NO. 2790/DEL/2012 11 SUCH ADDITIONS CANNOT BE SUSTAINED MERELY ON THE BAS IS OF SUSPICIONS, SURMISES AND CONJECTURES. UNDER THESE CIRCUMSTANCES, THE ADDITION MADE TO THE INCOME OF THE APPELLANT IS DELETED. 8.1 IN ADDITION TO THE ABOVE, LD. COMMISSIONER OF IN COME TAX (A) PLACED RELIANCE ON THE JUDGEMENT OF THE HONBLE GUWH ATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. C.I.T. (2003) 26 4 ITR 254 AND ALSO ADDL. C.I.T. VS. HANUMAN AGARWAL (1985) 151 ITR 150. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 10.1 LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CASH WAS DEPOSITED IN THE ACCOUNTS OF THE PERSONS GIVING TH E LOAN IMMEDIATELY PRECEDING THE LOANS WERE GIVEN. LD. DEPARTMENTAL R EPRESENTATIVE FURTHER CONTENDED THAT THE GENUINENESS AND CREDITWO RTHINESS OF THE PARTIES INVOLVED IN THESE CASES HAVE NOT BEEN PROVE D. LD. DEPARTMENTAL REPRESENTATIVE FURTHER RELIED UPON THE 2 32 ITR 820; AND HONBLE HIGH COURT OF DELHI DECISION IN THE CASE OF C.I.T. VS. NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169. LD. DEPART MENTAL REPRESENTATIVE FURTHER RELIED UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SWAROOP KAUR VS. ACIT IN I.T.A. NO. 5478/D/2 010 (A.Y. 2001-02) VIDE ORDER DATED 23.12.2011. 10.2 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT THE LOANS WERE GENUINE AND HE RELIED UPON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). LD. AUTHORISED REPR ESENTATIVE ITA NO. 2790/DEL/2012 12 FURTHER RELIED UPON THE DECISION OF THIS TRIBUNAL I N I.T.A. NO. 4303/D/2011 FOR A.Y. 2006-07 VIDE ORDER DATED 30.11 .2011. 10.3 WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AN D PERUSED THE RECORDS. 10.4 WE FIND THAT IN THE CASE OF LOAN OF RS. 2,50,0 00/- FROM SMT. MANJU SEHGAL, THE ASSESSEE HAS SUBMITTED THE AFFIDAV IT OF CONFIRMATION, COPY OF BANK STATEMENT AND COPY OF PAN CARD OF SMT. MANJU SEHGAL. THIS AMOUNT WAS ADDED BY THE ASSESSIN G OFFICER BECAUSE THERE WAS A CASH DEPOSIT OF RS. 2,50,000/- BEFORE GIVING LOAN TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (A ) IN THIS REGARD GAVE A FINDING THAT SMT. MANJU SEHGAL HAD WITHDRAWN AN EQUAL AMOUNT OF RS.2,50,000/- IN DECEMBER, 2007 AND IT WAS THIS C ASH IN HAND WHICH WAS RE-DEPOSITED BY HER IN HER BANK ACCOUNT IN MARCH , 2008 BEFORE GIVING A LOAN BY HER. IN THIS VIEW OF THE MATTER, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF I NCOME TAX (A) AND HENCE, WE UPHOLD THE DELETION OF THIS AMOUNT. 10.5 AS REGARDS LOAN OF RS.2,50,000/- FROM SH. SATI SH SEHGAL, THE ASSESSEE SUBMITTED THE AFFIDAVIT OF CONFIRMATION, CO PY OF BANK STATEMENT AND COPY OF ITR OF SH. SATISH SEHGAL. TH IS AMOUNT WAS ADDED BY THE ASSESSING OFFICER BECAUSE THERE WAS A CASH DEPOSITS OF ` 2.50 LACS BEFORE GIVING LOAN TO THE ASSESSEE. IN THIS REGARD, LD. COMMISSIONER OF INCOME TAX (A) GAVE A FINDING THAT S H. SATISH SEHGAL HAS WITHDRAWN AN EQUAL AMOUNT OF RS. 2,50,000/- IN DE CEMBER, 2007 AND IT WAS THIS CASH IN HAND WHICH WAS RE-DEPOSITED BY HIM IN HIS BANK ACCOUNT IN MARCH, 2008 BEFORE GIVING A LOAN TO THE ASSESSEE. THUS LD. COMMISSIONER OF INCOME TAX (A) GAVE A FINDING THA T THESE FACTS WERE VERIFIED FROM THE BANK STATEMENT AND ACCORDIN GLY, HE DELETED THE ITA NO. 2790/DEL/2012 13 ADDITION. IN THIS VIEW OF THE FACTUAL FINDING OF THE LD. COMMISSIONER OF INCOME TAX (A), WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND HENCE, WE AFFIRM THE SAME ON THIS ISSUE. 10.6 AS REGARDS LOAN OF ` 5,00,000/- FROM SH. B ALJEET SINGH UBHI, THE ASSESSEE SUBMITTED THE AFFIDAVIT OF CONFIRMATION, CO PY OF BANK STATEMENT AND COPY OF ITR OF SH. BALJEET SINGH UBHI. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THAT SHRI BALJEET S INGH HAS SUBMITTED HIS RETURN OF INCOME FOR A.Y. 2008-09 IN WHICH HE HA S CLEARLY STATED THE LOAN GIVEN BY HIM TO THE ASSESSEE. THE LOAN WAS GI VEN THROUGH ACCOUNT PAYEE CHEQUES AND THE RETURN OF INCOME OF S H. BALJEET SINGH WAS SCRUTINIZED FOR A.Y. 2008-09, IN WHICH LOAN GIV EN TO THE ASSESSEE HAS BEEN ACCEPTED. LD. COMMISSIONER OF INCOME TAX ( A) FURTHER NOTED THAT ASSESSING OFFICER ADDED THIS AMOUNT TO THE INC OME OF THE ASSESSEE MERELY ON THE GROUND THAT SHRI BALJEET SI NGH UBHI DID NOT APPEAR BEFORE HIM PERSONALLY. LD. COMMISSIONER OF INCOME TAX (A) FURTHER FOUND THAT TOTAL AMOUNT OF LOAN GIVEN BY SH . BALJEET SINGH UBHI TO THE ASSESSEE AMOUNTS TO RS. 17 LACS. LD. COMMISSI ONER OF INCOME TAX (A) FURTHER NOTED THAT ASSESSING OFFICER HAS ME NTIONED IN ASSESSMENT ORDER THAT CASH OF ` 5 LACS WAS DEPOSITE D IN THE BANK ACCOUNT OF SH. BALJEET SINGH UBHI ON 07.08.2007 AND RS. 85,000/- ON 11.08.2007. ASSESSING OFFICER HAD FURTHER NOTED TH AT A CHEQUE OF RS. 12 LAC WAS DEPOSITED IN THE BANK ACCOUNT OF SH. BAL JEET SINGH ON 08.08.2007. THE AO HELD THAT RS.5 LACS DEPOSITED IN CASH CAME FROM THE ASSESSEE AND THEREFORE, ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. IN THIS REGARD, LD. C OMMISSIONER OF INCOME TAX (A) GAVE A FINDING THAT BANK ACCOUNT OF BALJEET SINGH UBHI WAS VERIFIED. LD. COMMISSIONER OF INCOME TAX (A) NOTED T HAT IT IS SEEN THAT ITA NO. 2790/DEL/2012 14 FROM THE BANK ACCOUNT THAT AT THE BEGINNING OF F.Y. 2 00708, THERE WAS A CREDIT BALANCE OF RS. 1,20,30,885/-. FURTHER, LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT ASSESSING OFFICER HAS NOT BROUGHT ON RECORD AS TO HOW HE HAS ESTABLISHED A NEXUS BETWEEN DEPOSI T OF RS. 5 LACS IN CASH IN THE BANK ACCOUNT OF SH. BALJEET SINGH UBHI A ND THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THAT AO HAS NOT BEEN ABLE TO SHOW THAT THE MONEY HAS MOVED FROM THE C OFFERS OF THE ASSESSEE TO THE BANK ACCOUNT OF SH. BALJEET SINGH UB HI. HENCE, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT SUCH ADDITI ONS CANNOT BE SUSTAINED ON MERE SUSPICIONS. IN THESE CIRCUMSTANCE S, THE ADDITION WAS DELETED. IN OUR CONSIDERED OPINION, LD. COMMI SSIONER OF INCOME TAX (A) HAS PASSED A REASONABLE ORDER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. WE AGREE WITH THE CONTEN TION THAT THERE WAS ADEQUATE BALANCE IN THE BANK ACCOUNT OF SH. BAL JEET SINGH UBHI AND THE ADDITION MADE IN THIS REGARD BY THE ASSESS ING OFFICER IS MERELY ON SUSPICION. HENCE, THE SAME CANNOT BE SUS TAINED. HENCE, WE AFFIRM THE DELETION OF THIS AMOUNT. 10.7 AS REGARDS LOAN OF RS. 2,40,000/- FROM SH. PR EM PRAKASH, THE ASSESSEE SUBMITTED THAT THE COPY OF THE AFFIDAVIT O F CONFIRMATION AND COPY OF BANK STATEMENT OF SH. PREM PRAKASH WERE PROVID ED TO THE ASSESSING OFFICER. LD. COMMISSIONER OF INCOME TAX ( A) NOTED THAT ASSESSING OFFICER ADDED THIS AMOUNT OF LOAN TO THE INCOME OF THE ASSESSEE, SINCE, THERE WERE CASH DEPOSITS IN THE AC COUNT OF SH. PREM PRAKASH AMOUNTING TO RS. 49,900/- ON 13.03.2008, RS. 1,00,000/ ON 14.03.2008 AND RS.90,000/- ON 25.03.2008. LD. COMMI SSIONER OF INCOME TAX (A) NOTED THAT ASSESSEE HAS CLAIMED TO HA VE RETURNED BACK RS. 1 LAC. THIS WAS REJECTED BY THE AO ON THE GRO UNDS THAT IT APPEARS TO BE A BEARER CHEQUE. LD. COMMISSIONER OF INCOME TAX (A) FURTHER ITA NO. 2790/DEL/2012 15 NOTED THAT SH. PREM PRAKASH IN HIS LETTER HAS STATE D THAT HE WAS IN PRIVATE SERVICE FOR THE LAST 35 YEARS AND HIS SON WAS ALSO SERVING IN AN MNC AND DRAWING HIGH SALARY. HE SUBMITTED THAT HE HA D DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF HIS SAVINGS TO GIVE A LOAN TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THAT SHRI PREM PRAKASH IS ASSESSED TO TAX AND HAS VALID PAN N O. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THAT ASSESSING OFFICER HAS HELD THAT THERE IS A NEXUS BETWEEN THE CASH DEP OSITED IN THE BANK ACCOUNT OF SH. PREM PRAKASH AND THE ASSESSEE. LD. CO MMISSIONER OF INCOME TAX (A) FOUND THAT THIS WAS ONLY ON SUSPICIO N. LD. COMMISSIONER OF INCOME TAX (A) HELD THAT IT WAS NOWH ERE BEEN CONCLUSIVELY PROVED BY THE ASSESSING OFFICER THAT MONIES HAVE MOVED FROM THE COFFERS OF THE ASSESSEE TO THE BANK ACCOUNT OF SH. PREM PRAKASH. UNDER THESE CIRCUMSTANCES, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT THE ADDITION MADE WAS MERELY ON SUSPI CIONS AND THE SAME CANNOT BE SUSTAINED. IN OUR CONSIDERED OPINIO N, LD. COMMISSIONER OF INCOME TAX (A) HAS TAKEN A CORRECT V IEW OF THE MATTER, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. ACCORDINGLY, WE AFFIRM THE ORDER OF THE LD. COMMISSI ONER OF INCOME TAX (A) IN THIS REGARD. 10.8 AS REGARDS THE DECISION OF THE RELIED BY THE LD. DEPARTMENTAL REPRESENTATIVE, WE FIND THAT TRIBUNALS DECISION IN THE CASE OF SWAROOP KAUR VS. ACIT (SUPRA) WAS CONNECTED WITH THE GIFT R ECEIVED BY THE ASSESSEE. HENCE, THIS CASE LAW IS NOT APPLICABLE O N THE PRESENT CASE. ITA NO. 2790/DEL/2012 16 10.9 WE FURTHER FIND THAT THE CASE OF C.I.T. VS. N OVA PROMOTERS & FINLEASE (P) LTD. IS RELATED TO THE ISSUE OF RECEIPT OF MONEY FOR SHARE CAPITAL AND HENCE, THE SAME IS NOT APPLICABLE ON TH E FACTS OF THE CASE. 10.10 WE FURTHER FIND THAT IN THE CASE OF C.I.T. V S. KORLAY TRADING COMPANY LTD. 232 ITR 820 THE FACTS OF THE CASE WERE THAT ASSESSEE HAD FURNISHED INCOME TAX FILE OF THE CREDITORS AT APPELLATE STAGE AND IT WAS HELD THAT MERE FILING OF INCOME TAX FILE NUMBER OF THE CREDITORS IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF CASH CRE DIT. IN THIS REGARD, WE FIND THAT THE FACTS IN THIS CASE ARE TOTALLY DI FFERENT FROM THE PRESENT CASE WE ARE CONSIDERING. IN THE HONBLE HIGH COUR T ORDER RELIED BY THE LD. DEPARTMENTAL REPRESENTATIVE, THE FACTS WERE THAT AT APPELLATE STAGE ASSESSEE ONLY FURNISHED THE INCOME TAX FILE N UMBER OF THE CREDITORS. HOWEVER, IN THE PRESENT CASE, WE FIND THAT ASSESSEE HAS SUBMITTED CONFIRMATIONS, PARTICULARS OF BANK ACCOUN T AND INCOME TAX DETAILS OF THE CREDITORS. UNDER THESE CIRCUMSTANCE S, WE FIND THAT THIS CASE LAW RELIED BY THE LD. DEPARTMENTAL REPRESENTATI VE IS NOT APPLICABLE. 10.11 WE FURTHER FIND THAT THE DECISION RELIED UPON BY THE ASSESSEES COUNSEL IS GERMANE AND SUPPORTS THE CASE OF THE ASSESSEE. IN THIS CASE OF ITO VS. SH. BRIJ LAL TAYAL, THE ITAT, NEW DELHI VIDE ORDER DATED 30.11.2011 HELD AS UNDER:- 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT THE ASSESSEE HAS RECEIVED LOAN OF ` 12 LACS FROM AJAY TAYAL. THE LOAN WAS RECEIVED THROUG H ACCOUNT PAYEE CHEQUE AND COPY OF BANK STATEMENT OF ITA NO. 2790/DEL/2012 17 AJAY TAYAL WAS PLACED ON RECORD ALONGWITH HIS CONFIRMATION, PAN, COPY OF BALANCE SHEET AS ON 31.3.2006 WHICH SHOWS THE LOAN WAS GIVEN TO THE ASSESSEE, COPY OF ACKNOWLEDGEMENT FOR FILING THE RETURN OF INCOME TAX FOR THE RELEVANT ASSESSMENT YE AR, THE COPY OF BALANCE SHEET AND ACKNOWLEDGEMENT FOR FINANCIAL YEAR 31.3.2005. MOREOVER, SH. AJAY TAYAL HAS APPEARED BEFORE THE ASSESSING OFFICER, HAS GIVE N A STATEMENT UNDER OATH, WHEREIN HE HAS STATED THAT TH E ASSESSEE SHRI BRIJ LAL TAYAL WAS HIS COUSIN BROTHER AND THAT HE HAD EXTENDED AN INTEREST FREE LOAN OF ` 12 LACS TO HIM DURING FY 2005-06. IN OUR CONSIDERED OPINIO N, WE FIND THAT FORM THE ABOVE IT IS CLEAR THAT ASSESS EE HAS DISCHARGED ITS ONUS AND SUBMITTED ALL THE NECESSARY DOCUMENTS TO PROVE THE VERACITY OF ` 12 LACS LOAN TAKEN FROM SHRI AJAY TAYAL. 8. AS REGARDS THE DEPOSIT FROM SHRI VIMAL DEVI TAYAL, IT IS ASSESSEES CLAIM THAT HE HAS FULLY AN D COMPLETELY DISCHARGED THE ONUS SINCE THE DEPOSIT IS THROUGH ACCOUNT PAYEE CHEQUE AND IT IS ALSO SUPPORTED BY COPY OF BALANCE SHEET AS WELL AS BANK STATEMENT. IT IS FURTHER SUBMITTED THAT SMT. BIMLA DEVI TAYAL HAD RECEIVED FUNDS FROM LIFE INSURANCE CORPORATION ON THE DEATH OF HER HUSBAND, WHICH WER E DEPOSITED BY HER IN BANK ACCOUNT, FROM WHERE SHE HAD GIVEN A LOAN OF ` 8 LACS TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER GIVEN A FINDING THAT A PERUSAL OF BALANCE SHEET OF SMT. ITA NO. 2790/DEL/2012 18 BIMLA DEVI TAYAL AS ON 31.3.2005 REVEALS THAT SHE RECEIVED ASSETS AFTER THE DEATH OF HER HUSBAND AMOUNTING TO ` 8,85,438.84 AND LIC CLAIM RECEIVED BY HER AFTER THE DEATH OF HER HUSBAND AMOUNTED TO ` 7,09,875/-. COPY OF HER BANK STATEMENT IN HDFC BANK, PITAMPURA, NEW DELHI AND HER LOAN CONFIRMATION IS ALS O PLACED ON RECORD. 9. IN VIEW OF THE AFORESAID DISCUSSION, IT IS CLE AR THAT THE ASSESSEE HAS DISCHARGED ITS ONUS AND GIVEN SUFFICIENT CREDENTIALS FOR THE LOAN OBTAINED BY HI M. IN THIS REGARD, THE HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF C.I.T. VS. DIAMOND PRODUCTS LTD. (2009) 177 TAXMAN 331 (DELHI) IS RELEVANT. IN THIS CASE I T WAS HELD THAT THE ASSESSING OFFICER IS NOT PERMITT ED TO EXAMINE THE SOURCE OF THE SOURCE ONCE THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THE TRANSACTION WITH HIS CREDITORS IS GENUINE AND THE CREDITORS IDENTIFIES AND CREDITWORTHINESS HAVE BE EN ESTABLISHED. WE FIND THAT THE RATIO FROM THIS CASE LAW IS APPLICABLE TO REPRESENT THE CASE. IN THE PRESENT CASE, ASSESSEE HAS DULY ESTABLISHED THE IDENTITY OF THE PERSONS FROM WHOM HE HAS TAKEN THE LOAN. THEY HAVE CONFIRMED THE LOAN, THEIR BANK STATEMENT, BALANCESHEET AND SOURCE OF FUNDS HAVE ALSO BEEN SUBMITTED. ONE OF THE PERSONS EVEN APPEARED BEFORE THE ASSESSING OFFICER AND ACCEPTED ON OATH FOR HAVING GIVEN THE LOAN TO THE ASSESSEE. ITA NO. 2790/DEL/2012 19 9.1 WE FIND THAT THE CASE LAWS RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE NOT APPLICABLE O N THE FACTS OF THE CASE AS STATED ABOVE. 10. IN LIGHT OF THE AFORESAID DISCUSSION AND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY, WE UPHOLD THE SAME. 11. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND ACCORDINGLY, WE UPHOLD THE SAME. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/8/2012. SD/- SD/- [ [[ [C.M. GARG C.M. GARG C.M. GARG C.M. GARG] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 27/8/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES