DCIT, New Delhi V. Rajinder Pal, Delhi

ITA 3250/DEL/2010

• Counselvise Citation: 325020114 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Deemed to accrue or arise in india; Additional evidence; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO-3250/DEL./2010 ASSESSMENT YEAR -2007-08 DCIT, VS. RAJINDER PAL, PROP. M/S HOTEL KARLO CIRCLE 35(1), ROOM NO-D-4, KASTLE & HOTEL SILVER S HINE, VIKAS BHAWAN, X-1021, CHAND MOHALLA, NEW DELHI-02 GANDHI NAGAR, DELHI-31. PAN : AXHPP7924Q (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANJAY JAIN, SR. DR RESPONDENT BY: SH. KAPIL GOYAL, ADV. ORDER PER RAJPAL YADAV, JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A), DATED 19.02.2010 PASSED FOR AY 2007-08. 2. THE SOLITARY GRIEVANCES OF THE REVENUE IS THAT L D. CIT(A HAS ERRED IN DELETING THE ADDITION OF RS. 9,17,952/- & 7,30,000/- BY ENTE RTAINING ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A(I) OF THE INCOME TAX RULES. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE IS RUNNING PROPRIETORSHIP CONCERN NAMELY M/S HOTEL KARLO KASTL E & HOTEL SILVER SHINE. HE HAS FILED HIS RETURN OF INCOME ON 28.10.2007, DECLARING TOTAL INCOME AT RS. 66,310/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND A NOTICE U/S 143(2) DATED 29.09.2008 WAS ISSUED AND SERVED UPON THE ASS ESSEE. ON SCRUTINY OF THE I.T.A .NO-3250/DEL./2010 2 ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS TAKEN UNSECURED LOAN OF RS. 1.0 LAC FROM HOTEL INDIA INTERNATIONAL AND R S. 8,17,952/- FROM SH. BHUPINDER SINGH. HE FURTHER NOTICED THAT ASSESSEE HAS INTROD UCED CAPITAL OF RS. 7,30,000/- IN ITS CAPITAL ACCOUNT IN THE BOOKS OF HOTEL SILVER SHINE VIDE ORDER SHEET DATED 09.11.2009. LD. ASSESSING OFFICER DIRECTED THE ASSESSEE TO ESTA BLISH THE IDENTITY OF THE CREDITORS GENUINENESS OF TRANSACTIONS AND CREDIT-WORTHINESS O F THE CREDITORS. ACCORDING TO THE ASSESSEE, HE HAS SUBMITTED A LETTER DATED 03.12.200 9. VIDE WHICH HE HAS FILED DETAILS COPIES OF THE ACCOUNTS, CONFIRMATION FROM THE CREDI TORS, INCOME TAX PARTICULARS AND BANK STATEMENTS. 4. LD. ASSESSING OFFICER DID NOT ISSUE ANY NOTICE T O THE CREDITORS IN ORDER TO VERIFY THEIR IDENTIFIES. SIMILARLY, HE DID NOT VER IFY THE GENUINENESS OF THE TRANSACTIONS OR THE CREDIT-WORTHINESS OF THE CREDIT OR. HE SIMPLY MADE THE ADDITION BY OBSERVING AS UNDER:- 3.4. THE ASSESSEE DID NOT FILE THE COPY OF RETURN OF INCOME AND COPY OF BANK STATEMENT FROM WHICH THE AMOUNT HAS BE EN ADVANCED TO IT, EXPLAINING THE SOURCE OF CREDIT ENTRIES THEREIN, OF HOTEL INDIA INTERNATIONAL AND BHUPINDER SINGH FROM WHOM IT HAS TAKEN LOAN OF RS. 1,00,000/- AND RS. 8,17,952/- RESPECTIVELY, DURING THE FY 2006-07. 3.4.1. FURTHER, THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF ADDITION OF RS. 7,30,000/- IN ITS CAPITAL ACCOUNT I N HOTEL SILVER SHINE IN THE FY 2006-07. 3.5. THEREFORE, THE GENUINENESS OF TRANSACTIONS & CREDITWORTHINESS OF THE PERSONS FROM WHOM THE ASSES SEE HAS TAKEN LOAN DURING THE FY 2006-07 IS NOT ESTABLISHED. IN THE L IGHT OF VARIOUS PROVISIONS OF THE IT ACT & JUDICIAL PRONOUNCEMENTS, IT IS EVIDENT THAT THE ONUS TO PROVE THE IDENTITY OF THE CREDITOR, GEN UINENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR IS ON THE ASSESSEE, IN CASE OF CASH CREDITS IN ITS BOOKS OF A CCOUNTS. IN THE PRESENT CASE, THE ASSESSEE HAS NOT ESTABLISHED THE GENUINEN ESS OF TRANSACTIONS AND CREDITWORTHINESS OF HOTEL INDIA INTERNATIONAL ( LOAN OF RS. 1.0 LACS) I.T.A .NO-3250/DEL./2010 3 AND BHUPINDER SINGH (LOAN OF RS. 8,17,952/-), FROM WHOM IT HAS TAKEN LOANS DURING THE FY 2006-07. FURTHER, THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF ADDITION OF RS. 7,30,000/- IN ITS CAP ITAL ACCOUNT IN HOTEL SILVER SHINE IN THE FY 2006-07. 3.6. SUBJECT TO DISCUSSION ABOVE, THE AMOUNT/LOAN O F RS. 9,17,952/- FROM HOTEL INDIA INTERNATIONAL AND BHUPI NDER SINGH, CREDITED BY THE ASSESSEE IN ITS BOOKS OF HOTEL SILV ER SHINE IN THE FY 2006-07 AND AMOUNT OF RS. 7,30,000/- INTRODUCED/ADD ED BY THE ASSESSEE IN ITS CAPITAL ACCOUNT IN HOTEL SILVER SHINE, IN TO TAL AMOUNTING TO RS. 16,47,952/-, IS TREATED AS DEEMED INCOME OF THE ASS ESSEE U/S 68 OF THE I.T.ACT. 5. ON APPEAL, THE ASSESSEE POINTED OUT THAT HE HAS FIL ED CONFIRMATION FROM SH. BHUPINDER SINGH. HE HAS ANNEXED THE STATEMENT OF A CCOUNT OF SH. BHUPINDER SINGH AS WELL AS PERMANENT ACCOUNT NUMBER (PAN). IN THE CONFIRMATION, PAN OF SH. BHUPINDER SINGH HAS ALSO BEEN ENCLOSED AND ASSESSEE HAS DISCHARGED THE PRIMARY ONUS PUT UPON HIM. LD. ASSESSING OFFICER DID NOT M AKE EFFORT TO INVESTIGATE THE DETAILS. WITH REGARD TO THE CAPITAL ACCOUNT IN HOT EL SILVER SHINE, IT WAS CONTENDED BY THE ASSESSEE THAT HE HAS SUFFICIENT CASH BALANCE IN THE HOTEL KARLO KASTLE. THE WITHDRAWALS HAVE BEEN MADE FROM THE BOOKS OF THIS H OTEL AND DEPOSITED IN HOTEL SILVER SHINE. THE DETAILS HAVE BEEN PRODUCED BEFO RE THE ASSESSING OFFICER. IT APPEARS THAT LD. FIRST APPELLATE AUTHORITY FURTHER DIRECTED THE ASSESSEE TO PRODUCE BANK STATEMENT AND INCOME-TAX RETURN OF THE LENDERS . LD. FIRST APPELLATE AUTHORITY HAS ENTERTAINED THIS EVIDENCE UNDER RULE 46A(4) R.W .S 250(4) OF THE INCOME TAX ACT. LD. CIT(A) WAS SATISFIED WITH THE EXPLANATION OF TH E ASSESSEE AND DELETED THE ADDITION. I.T.A .NO-3250/DEL./2010 4 6. BEFORE US, LD. DR SUBMITTED THAT LD. FIRST APPEL LATE AUTHORITY HAS ENTERTAINED ADDITIONAL EVIDENCE IN VIOLATION TO RUL E 46A, AND HAD NOT GRANTED ANY OPPORTUNITY TO THE ASSESSING OFFICER ON THE FRESH E VIDENCE ADMITTED DURING THE APPEAL PROCEEDINGS. HENCE HIS ORDER DESERVES TO BE SET ASIDE. 7. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT EVEN IF, THE COPY OF INCOME TAX RETURN CALLED FOR THE LD. CIT(A) IS EXCLUDED FROM THE RECORD THEN ALSO THERE IS NO MATERIAL WITH THE ASSESSING OFFICE R FOR REBUTTING THE EVIDENCE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS. 8. WE HAVE DULY CONSIDERED THE RIVAL CONSIDERATION AND GONE THROUGH THE RECORD CAREFULLY. THE ASSESSING OFFICER HAS MADE ADDITION S U/S 68 OF THE INCOME TAX ON THE GROUND THAT ASSESSEE FAILED TO EXPLAIN THE SOUR CE OF CREDIT APPEARED IN THE ACCOUNTS. SECTION 68 OF THE INCOME TAX ACT, 1961 C ONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ASSESSEE MAINTAIN ED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM, IS NOT, IN THE OPINION OF THE ASSES SING OFFICER, SATISFACTORY, THE SUM SO CREDITED, MAY BE CHARGED TO INCOME TAX AS THE IN COME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 9. ADMITTEDLY, THERE ARE CREDITS IN THE BOOKS OF TH E ASSESSEE. NOW THE QUESTION IS WHETHER THE ASSESSEE HAS GIVEN ANY EXPLANATION AND IF GIVEN, HOW LD. ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION? TH E ASSESSEE HAS SUBMITTED CONFIRMATION FROM SH. BHUPINDER SINGH, DISCLOSED HI S PAN AND SUBMITTED THE COPY OF THE ACCOUNTS. LD. ASSESSING OFFICER DID NOT MAK E ANY INQUIRY. HE DID NOT TRY TO I.T.A .NO-3250/DEL./2010 5 VERIFY IDENTITY OF THE CREDITORS. SIMILARLY, THE A SSESSEE HAS POINTED OUT THAT HE HAS SUFFICIENT CAPITAL IN THE ACCOUNT OF HOTEL KARLO KA STLE FROM WHERE HE WITHDREW THE AMOUNT AND INTRODUCE IN THE CAPITAL ACCOUNT OF HOTE L SILVER SHINE. THE ASSESSING OFFICER REMAINED PASSIVE TO THIS MATERIAL ALSO. LD . FIRST APPELLATE AUTHORITY NOT ONLY INQUIRED THIS ACCOUNT BUT ALSO DIRECTED THE AS SESSEE TO SUBMIT OTHER MATERIAL FOR CROSSVERIFICATION. IN SUCH GIVEN CIRCUMSTANCES, W E DO NOT FIND ANY MATERIAL ON THE RECORD WHICH CAN PERSUADE US TO SET ASIDE THE FINDI NG RECORDED BY THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. THE SIM PLE REASON FOR THIS THAT ASSESSING OFFICER HAS NOT TAKEN ANY STEP FOR COLLECTING ANY M ATERIAL IN ORDER TO DISPROVE THE CLAIM MADE BY THE ASSESSEE. THEREFORE, WE DO NOT F IND ANY MERIT IN THIS APPEAL, IT IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2012. SD/- SD/- (T.S.KAPOOR) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .NO-3250/DEL./2010 6