Dy. Commissioner of Income Tax , Lucknow V. Shri Hari Har Singh (HUF), Lucknow

ITA 305/LKW/2012

• Counselvise Citation: 30523714 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Question of law; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 305/LKW/2012 ASSESSMENT YEAR: 2008 - 09 DCIT RANGE VI LUCKNOW V. SHRI. HARI HAR SINGH (H UF) 551/226 JHA, KANPUR ROAD ALAMABGH, LUCKNOW PAN: AACHH5162E (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. AMIT NIGAM, D.R. RESPONDENT BY: NONE DATE OF HEARING: 16 0 7 2014 DATE OF PRONOUNCEMENT: 21 0 7 2014 O R D E R PER SUNIL KUMAR YADAV: T HIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 2 . THIS APPEAL CA ME UP FOR HEARING ON 16.7.2014, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE VALID SERVICE OF NOTICE OF HEARING. WE, THEREFORE, HAD NO OPTION BUT TO HEAR THE APPEAL IN THE ABSENCE OF THE ASSESSEE. WE HAVE ALSO EXAMINED THE GROUNDS OF APPEAL AND WE FIND THAT THE APPEAL CAN BE ADJUDICATED ON MERIT EVEN IN THE ABSENCE OF THE ASSESSEE. ACCORDINGLY, THE REVENUE WAS HEARD. 3 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW , WE FIND THAT THE ASSESSING OFFICER HAS NOTICED CASH CREDIT OF RS.27,9 9,139/ - IN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATORY LETTERS AND OTHER EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. IN RESPONSE THERETO , ASSESSEE FURNISHED RELEVANT INFORMATION. THE ASSESSING OFFICE R WAS CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE WITH REGARD TO MAJOR CASH CREDIT OF RS.17,01,759/ - RECEIVED FROM SHRI. HARI HAR SINGH AND HE ACCEPTED THE SAME TO BE GENUINE, BUT THE REMAINING CASH CREDIT , WHICH ARE RANGING BETWEEN RS.3,881/ - AND RS.1,50,712/ - , WERE CONSIDERED TO BE NON - GENUINE AND HE ACCORDINGLY MADE AN ADDITION OF RS.10,97,380/ - UNDER SECTION 68 OF THE ACT. 4 . THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THESE CASH CREDITS ARE SMALL CASH C REDITS, OF WHICH INTEREST WAS PAID AND WAS DULY CREDITED TO THEIR ACCOUNT. THE ASSESSEE HAS FURNISHED PAN CARD AND CONFIRMATION LETTERS BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS EXAMINED THE SAME. BEING CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE, THE LD. CIT(A) ACCEPTED T HE CASH CREDIT TO BE GENUINE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 4(4) I HAVE EXAMINED THE FACTS AND CIRCUMSTA NCES OF THE CASE AND I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. AS PER THE FACTS EMERGING FROM THE ASSESSMENT ORDER, THE APPELLANT RAISED UNSECURED LOANS OF RS.27,99,139/ - FROM 27 PERSONS. OUT OF T HIS, AN AMOUNT OF RS.17,01,759/ - CONCERNED SHRI HARI HAR SINGH, THE KARTA OF THE HUF - APPELLANT. THE AO MADE AN ADDITION OF THE BALANCE OF RS.10,97,380/ - ON THE BASIS OF EXAMINATION OF 3 ACCOUNTS OF SHRI MOHD. AZAM, SHRI O.P SINGH AND SMT. REEMA RASTOGI. IN THE CASE OF SHANKER INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAL), IT WAS HELD THAT IN ORDER TO DISCHARGE THE ONUS UNDER SECTION 68 TO SHOW THAT THE CASH CREDITS DO NOT PRESENT THE INCOME, THE APPELLANT HAS TO PROVE - I) IDENTITY OF CREDITOR II) CREDIT WORT HINESS OF THE CREDITOR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : III) GENUINENESS OF THE TRANSACTION 5(3) IN THE IMPUGNED ASSESSMENT, THE APPELLANT DISCHARGED THE ONUS BY GIVING THE IDENTITY OF THE PERSONS FROM WHOM THE MONEY WAS RECEIVED BY FURNISHING THE PAN NUMBERS AND WHERE EVE R POSSIBLE, THE COPIES OF VOTERS ID CARD OR DRIVING LICENSE ETC. THE TRANSACTIONS WITH THE CREDITORS ARE THROUGH CHEQUES AND INTEREST HAS BEEN PAID TO THE CREDITORS. THE CREDITORS WHO HAVE ADVANCED LOANS TO THE APPELLANT HAVE GIVEN THEIR CONFORMATIONS WHIC H WERE FILED WITH THE AO. I AM THEREFORE OF THE OPINION THAT THE AS SESSEE HAS DISCHARGED THE ONUS. NOW, THE AO HAS MADE OBSERVATIONS REGARDING TRA NSACTIONS WITH SHRI HARI HAR SINGH, KARTA OF THE HUF - APPELLANT, WHOSE ACCOUNT HAS BEEN ACCEPTED. FURTHER, THRE E OTHER PERSONS NAMELY, SHRI MOHD AZAM, SHRI O.P SINGH AND SMT. REEMA RASTOGI HAVE BEEN MENTIONED. UNDER THE CIRCUMSTANCES, I FIND THAT THERE WAS NO JUSTIFICATION WITH THE AO TO MAKE AN ADDITION FOR LOANS RAISED BY ASSESSEE FROM OTHER PERSONS WHO HAVE NOT EVEN BEEN EXAMINED AND IN RESPECT OF WHOM NOTHING ADVERSE HAS BEEN FOUND BY THE AO. THE ASSESSEE HAS MADE PAYMENT OF INTEREST TO THE PERSONS AND EVEN THOUGH ADDITION UNDER SECTION 68 OF THE ACT HAS BEEN MADE BY THE AO THERE IS NO CORRESPONDING DISALLOWANCE OF INTEREST WHICH HAS BEEN ACCEPTED BY THE AO. THE DEPOSIT OF CASH BY SHRI O.P SINGH IN HIS BANK ACCOUNT PRIOR TO ISSUE OF CHEQUE TO THE APPELLANT IS IMMATERIAL IF THE PERSON GIVING THE LOAN ACCEPTS THE SAME IN HIS CONFIRMATION. IN THE CASE OF NEMI CHAND KOTHARI VS CIT & ANOTHER 264 ITR 254 (GAUHATI), THE HON'BLE COURT LAID DOWN AS UNDER - 'A PERSON MAY HAVE FUNDS FROM ANY SOURCE AND AN ASSESSEE, ON SUCH INFORMATION RECEIVED, MAY TAKE A LOAN FROM SUCH A PERSON. IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT ETHER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE AMOUNTS WERE GENUINE OR NOT. IF A CREDITORS HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP IT IN THE BANK, TH E SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES.' 4(4) ANOTHER CRUCIAL POINT TO NOTE IS THAT THE ASSESSEE MADE PAYMENT OF INTEREST TO CREDITORS WHICH WERE ACCEPTED BY THE AO AS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : NO CORRESPONDING DISALLOWANCE HAS BEEN MADE. THE ISSUE HAS BEEN DISCUSSED IN THE CASE OF ROHINI BUILDERS AS UNDER - ROHINI BUILDERS VS. DCIT 76 TTJ 521(AHMD.) INCOME - CASH CREDIT - BURDEN OF PROOF - ASSESSEE FURNISHED COMPLETE ADDRESSES OF ALL THE CREDITORS ALONG WITH GIR NUMBERS/ PAN AS WELL AS CON FIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS PASSED IN THE CASES OF INDIVIDUAL CREDITORS, WHEREVER AVAILABLE, AND COPIES OF RETURNS FILED BY THE CREDITORS IN THE REMAINING CASES ALL LOANS WERE RECEIVED AND PAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQU ES ALONG WITH INTEREST - THUS , ASSESSEE HAS DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SEC.68 - ASSESSEE IS NOT FURTHER EXPTECTED TO PROVE THE GENUINENESS OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAILED TO APPEAR BEFORE THE AO THE LOANS TAKEN FROM THOSE CREDITORS COULD NOT BE TREATED AS NON GENUINE - FURTHER, AO HAS NOT DISALLOWED THE INTEREST PAID IN RELATION TO THESE CREDITS AND TAX HAS BEEN D EDUCTED AT SOURCE OUT OF THE INTEREST PAID IN RELATION TO THESE CREDITS AND HAS BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAID / CREDITED TO THE CREDITORS ADDITION NOT JUSTIFIED. B. DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJARAT) APPEAL ( HIGH C OURT) - SUBSTANTIAL QUESTION OF LAW - CASH CREDIT - ASSESSEE FURNISHED COMPLETE ADDRESSES OF ALL THE CREDITORS ALONG WITH GIR NUMBERS /PAN AS WELL AS CONFIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS PASSED IN THE CASES OF INDIVIDUAL CREDITORS, WHEREVER AVAILABLE, AND COPIES OF RETURNS FILED BY THE CREDITORS BIN THE REMAINING CASES - ALL LOANS WERE RECEIVED AND REPAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST - TRIBUNAL DELETED THE ADDITION - NO SUBSTANTIAL QUESTION OF LAW ARISES - APPE AL OF THE DEPARTMENT DISMISSED. C. CIT VS. ROHINI BUILDERS 254 ITR 275 SUPREME COURT DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE JUDGEMENT DATED 19 - 3 - 2001 OF THE GUJARAT HIGH COURT IN TAX APPEAL NO. 65 OF 2001, WHEREBY THE HIGH COURT DISMISS ED THE APPEAL OF THE REVENUE ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW AROSE. THE ASSESSEE WAS A FIRM ENGAGED IN THE BUSINESS OF DEALINGS IN LAND. THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES AND AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE HAD FURNISHED CONFIRMATIONS GIVING THE ADDRESSES OF ALL THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : DEPOSITORS. THE ASSESSING OFFICER PASSED A DETAILED ORDER TREATING THE CASH CREDIT OF RS. 12.8 LAKHS AS UNEXPLAINED. THE TRIBUNAL RELYING ON 237 ITR 570 HELD THAT AN UNSATISFACTORY EXPLANATIO N DID NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER HAD NOT DISALLOWED THE INTEREST PAID IN IN RELATION TO THESE CREDITS AND THE TAX HAD BEEN DEDUCTED OUT OF SUCH INTE REST: CIT V. ROHINI BUILDERS: S LP. (C) NO. 515 OF 2002. 4(5) THE AO HAS MADE ADDITION UNDER SECTION 68 OF THE ACT BY MAKING REFERENCE TO EXAMINATION IN THE CASE OF 4 PERSONS. THIS EXAMINATION IN THE CASE OF 4 PERSONS IS ALSO NOT HEATING TO THE CONCLUSION THAT THE CREDITORS ARE NOT GENUINE. THE CREDIT OF RS. 17,01,759/ - HAS BEEN ACCEPTED IN THE CASE OF SHRI HAD HAR SINGH. THERE IS NO SPECIFIC FINDING IN THE CASE OF SHRI MOHD AZAM, SHRI O.P SINGH AND SMT. REEMA RASTOGI EXCEPT THAT THESE WERE NOT CROSS EXAMIN ED. THE THREE PERSONS HAVE FILED THEIR CONFIRMATIONS AND THE ASSESSEE HAS PAID INTE REST TO SHRI O.P. SINGH AND SMT. REEMA RASTOGI. THE ADDITION OF REMAINING CREDITORS HAS BEEN MADE WITHOUT ANY REASON WHATSOEVER. ALL THE CREDITORS HAVE FILED THEIR CONFIRMA TIONS. IN THE CASE OF JALAN TIMBERS VS CIT 223 ITR 11 (GAUHATI) AND SONA ELECTRIC CO. VS CIT 152 I TR 507(DELHI), THE HON'BLE COURTS HAVE LAID DOWN THAT IN ORDER TO ESTABLISH THE FACT OF RECEIPT OF A CASH CREDIT AS REQUIRED UNDER SECTION 68 OF THE ACT THE ASSESSEE MUST PROVE THREE IMPORTANT CONDITIONS, NAMELY, (1) THE IDENTITY OF THE PERSON, (2) THE GENUINENESS OF THE TRANSACTION, AND (3) THE CAPABILITY OF THE PERSON GIVING THE CASH CREDIT. SECTION 68 OF THE AC: MAKES IT CLEAR THAT IN RESPECT OF A CASH CRED IT ENTRY THE EXPLANATION OFFERED BY THE ASSESSEE CAN BE REJECTED BY THE INCOME TAX OFFICER ON COGENT GROUNDS. WHEN SUCH GROUNDS THEMSELVES ARE BASED ON NO EVIDENCE, THE QUESTION OF PRESUMPTION AGAINST THE ASSESSEE DOES NOT ARISE. 4(6) I FIND FROM MY EXAMIN ATION THAT THE ASSESSEE ESTABLISHED THE IDENTITY OF THE CREDITORS, THE CONFIRMATIONS HAVE BEEN FILED AND SO HAVE THE PAN NUMBERS OF THE CREDITORS. THE TRANSACTIONS ARE THROUGH BANKING CHANNELS AND THERE IS PAYMENT OF INTEREST TO SEVERAL CREDITORS WHICH HAS BEEN ACCEPTED BY THE AO. IT IS EVIDENT THEREFORE FROM THE ABOVE THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS WHICH ARE FOUND IN THE BOOKS OF THE ASSESSEE, THE ASSESSEE'S ONUS STANDS DISCHARGED AND THE LATTER IS NOT F URTHER REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM, AND THEREFORE, THE ADDITION UNDER SECTION 68 CANNOT BE SUSTAINED IN THE ABSENCE OF ANYTHING TO ESTABLISH THAT THE SOURCES OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : CREDITORS' DEPOSITS FLEW FROM THE ASSESSEE ITSELF. IN THE INSTANT CASE ALSO THERE IS NO FINDING THAT THE APPELLANT'S OWN MONEY HAS FLOWN BACK TO APPELLANT IN THE FORM OF MONEY RECEIVED FROM THE PERSONS. IN VIEW OF THE ABOVE, I FIND THAT THERE IS NO MERIT IN ADDITION OF RS.10, 97,380/ - MADE BY THE AO. IN CASE THERE IS ANY DOUBT ON THE CAPACITY TO ADVANCE/GIFT THE MONEY, ACTION TO TAX THE AMOUNT IN QUESTION CAN BE TAKEN IN THEIR ASSESSMENTS. THE ONUS OF THE APPELLANT STANDS DISCHARGED AND THERE IS NO JUSTIFICATION IN MAKING AN AD DITION IN THE CASE OF THE APPELLANT. THE ADDITION OF RS.10,97,380/ - MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED GIVING CONSEQUENTIAL RELIEF TO THE APPELLANT. GROUND OF APPEAL IS ALLOWED. 5 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL, BUT COULD NOT POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE LD. CIT(A). WE, HOWEVER, HAVE CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT EXCEPT ONE, ALL THE CASH CREDITS ARE WITHIN THE RANGE BETWEEN RS.3,881/ - AND RS.50 ,000/ - AND THE ASSESSEE HAS PLACED RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF THE CASH CREDIT AND IDENTITY OF THE CREDITORS. SINCE THE LD. CIT(A) HAS PROPERLY EXAMINED THE CASH CREDITS IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND ALSO IN THE LIG HT OF EVIDENCE PLACED BY THE ASSESSEE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE CONFIRM THE SAME. 6 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.7.2014. SD/ - SD/ - [ A. K. GA RODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH JU LY , 2014 JJ: 1607 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )