Ranjitbhai Balvantrai Dod, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(1)(1), RAJKOT-GUJARAT

ITA 338/RJT/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3395 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAMITA KHURANA
• Assessee Lawyers: DM RINDANI
• Keywords: Unexplained cash credit; Gift; Set aside
• Section: 271(1)(c); 143(3); 234B; 208; 69; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED , ACCOUNTANT MEMBER AND MS MADHUMITA ROY , JUDICIAL MEMBER ./ I.T.A. NO. 338 /RJT/2018 ( / ASSESSMENT YEAR 2009 - 1 0 ) RANJITBHAI B. DOD , POST AT. KHAREDA, TAL. KOTDA SANGANI , DIST. RAJKOT / VS. I.T.O. , WARD - 1( 1 ) (1) , RAJKOT . ./ ./ PAN/GIR NO. : A KYPD3648M ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI D.M. RINDANI, A .R / RESPONDENT BY : MS NAMITA KHURANA , SR. D . R. / DATE OF HEARING 26 /02 /20 20 / DATE OF PRONOUNCEMENT 28 / 0 2 /20 20 / O R D E R PER BENCH : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) - 2 , RAJKOT [ LD. CIT(A) IN SHORT] DATED 27/07/2018 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) R.W.S 254 OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR S (A . Y . ) 2009 - 1 0 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, RAJKOT HAS ERRED DISMISSING H APPEAL OF THE APPELLANT WHEREBY UPHOLDING THE ADDITION OF RS.4,00,000/ - - MADE U/S. 68 OF THE ACT BY THE ASSESSI NG OFFICER IS UNWARRANTED UNJUSTIFIED AND BAD IN LAW. ITA NO. 338 /RJT / 20 18 A.Y.2009 - 1 0 - 2 - 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALSJ - I, RAJKOT HAS ERRED IN UPHOLDING THE ADDITION OF RS.75.000/ - OUT OF EXPENSES MADE BY THE ASSESSING OFFICER IS UNWARRANTED, UNJUSTIFIED AND BAD IN LAW. 3. THE LEARNED CO M MISSION ER OF INCOME TAX (APPEALS) - I, RAJKOT HAS ERRED I N UPHOLDING THE GROUND OF CHARGING INTEREST U/S. 234B & 234C IS UNWARRANTED, UNJUSTIFIED AND BAD IN LAW. 4. THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS ) - I, RAJKOT HAS ERRED IN UPHOLD ING THE GROUND OF INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) IS UNWARRANTED, UNJUSTIFIED AND BAD IN LAW. YOUR APPLICANT RESERVE THE RIGHT IN ADDITION OR ALTERATION IN THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE 1 ST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDITIO N MADE BY THE AO FOR RS. 4 LAKHS ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 3 BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF LABOUR CONTRACTOR. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION CLAIMED TO H AVE RECEIVED A SUM OF RS. 4 LAKHS FROM HIS PARENTS. BUT THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTARY EVIDENCE TO JUSTIFY THE C REDITWORTHINESS OF THE PARENTS. ACCORDINGLY THE AO TREATED THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO CONFIRMED THE O RDER OF THE AO BY OBSERVING AS UNDER: THE GROUND OF APPEAL NO. 1: - THE BRIEF FA CTS OF THE CASE ARE THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS FI NALIZED ON 22/09/2009 IN WHICH INTERALIA AN ADDITION OF RSA LAKH WAS MADE ON ACCOUNT OF UNEXPLAINED CASH CR EDIT WHICH WAS CONFIRMED BY THE CIT(A). SUBSEQUENTLY, THE HONABLE ITAT VIDE ITS ORDER DATED 08/ 06/2016 SET ASIDE THE ISSUE OF ADDITION OF RS 4 LAKHS U/S 68 IN RES PECT OF GIFTS CLAIMED FROM THE PARENTS OUT OF AGRICULTURAL INCOME. THE HONABLE ITAT HAD RES TORED THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH SPECIFIC DIRECTIONS THAT ASSESSEE WOULD BE GIVEN AN OPPORTUNITY T O PLACE ON RECORD THE RELEVANT REVENUE RECORD TO PROVE OWNERSHIP OF LAND HOLDING IN NAME OF THE PARENTS. DURING ASSESSMENT PROCEEDINGS IN THE CONSEQUENCE OF ITAT ORDER, ASSESSING OFFICER HAS GIVEN AMPLE OPPORTUNITY TO FURNISH THE RELEVANT DOCUMENTS TO PROVE OWNERSHIP ITA NO. 338 /RJT / 20 18 A.Y.2009 - 1 0 - 3 - OF AGRICULTURE LAND BY THE PARENTS, HOWEVER NO COMPLIANCE WAS MADE BY THE ASSESSEE AND OPPORTUNITY WAS NOT AVAILED OF A ND THEREFORE THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION. DURING APPELLATE PROCEEDINGS THE ASSESSEE FILED WRITTEN SUBMISSION IN WHICH THE COPIES OF FORM OF 7/12 AND 8A WERE FILED IN SUPPORT OF THE CLAIM THAT PARENTS OF ASSESSEE OWNED AGRICULTURAL L AND. SINCE THESE DOCUMENTS HAD NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER, HE WAS REQUESTED TO EXAMINE GENUINENESS OF THESE DOCUMENTS AND CLAIM OF THE ASSESSEE. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS REPORTED THAT DOCUMENTS PRODUCED BY ASSE SSEE PERTAIN TO F.Y. 15 - 16 TO 18 - 19 BUT THEY DO NOT PROVE THAT THE AGRICULTURAL LAND WAS IN THE POSSESSION OF THE PARENTS OF ASSESSEE IN F.Y. 08 - 09 WHICH IS THE YEAR UNDER CONSIDERATION. IN THE RE - JOINDER TO THE REMAND REPORT THE ASSESSEE HAS REMAINED SILENT ON THIS ISSUE AND THUS IN ABSENCE OF ANY REBUTTAL IT CAN BE REASONABLY HELD THAT ASSESSEE FAILED TO PROVE THE OWNERSHIP OF AGRICULTURAL LAND OF THE PARENTS IN THE RELEVANT PERIOD. IN VIEW OF THE ABOVE DISCUSSION ACTION OF ASSESSING OFFICER UPHOL DING THE ADDITION OF RS.4 LAKH BEING NON GENUINE GIFTS IS UPHELD. THE GROUND OF APPEAL 1 IS REJECTED. B EING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR BEFORE US SUBMITTED THAT HE HAS RECEIVED G IFT FROM HIS FATHER AND MOTHER FOR RS. 1.5 LAKHS EACH AND HE HAS MADE BALANCE AMOUNT OF CONTRIBUT ION TO HIS CAPITAL ACCOUNT FOR RS. 1 LAKH OUT OF HIS PERSONAL SAVINGS. THE ASSESSEE IN SUPPORT OF HIS CONTENTION HAS FILED THE DETAILS OF THE LAND HELD BY HIS P ARENTS. 6. ON THE OTHER HAND THE LEARNE D DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PROVISION OF SECTION 68 OF THE ACT FASTEN S THE LIABILITY ON THE ASSESSEE TO PROVIDE THE IDENTITY OF THE LENDERS, ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THESE LIABILITIES ON THE ASSESSEE WERE IMPOSED TO JUSTIFY THE CASH CREDIT ENTRIES UNDER ITA NO. 338 /RJT / 20 18 A.Y.2009 - 1 0 - 4 - SECTION 68 OF THE ACT BY THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE (P) LTD REPORTED IN 208 ITR 465 WHEREIN IT WAS HELD AS UNDER: IT WAS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. ON THE FACTS OF THIS CASE, THE TRIBUNAL DID NOT TAKE INTO ACCOUNT ALL THESE INGREDIENTS WHICH HAD TO BE SATISFIED BY THE ASSESSEE. MERE FURNISHING OF THE PARTICULARS WAS NOT ENOUGH. THE ENQUIRY OF THE ITO REVEALED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FILE AND, ACCORDINGLY, THE FIRST INGREDIENT AS TO THE IDENTITY OF THE CREDITORS HAD NOT BEEN ESTABLISHED . IF THE IDENTITY OF THE CREDITORS HAD NOT BEEN ESTABLISHED , CONSEQ UENTLY, THE QUESTION OF ESTABLISHMENT OF THE GENUINENESS OF THE TRANSACTIONS OR THE CREDITWORTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. THE TRIBUNAL DID NOT APPLY ITS MIND TO THE FACTS OF THIS PARTICULAR CASE AND PROCEEDED ON THE FOOTING THAT SI NCE THE TRANSACTIONS WERE THROUGH THE BANK ACCOUNT, IT WAS TO BE PRESUMED THAT THE TRANSACTIONS WERE GENUINE. IT WAS NOT FOR THE ITO TO FIND OUT BY MAKING INVESTIGATION FROM THE BANK ACCOUNTS UNLESS THE ASSESSEE PROVED THE IDENTITY OF THE CREDITORS AND THE IR CREDITWORTHINESS. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE WAS NOT SACROSANCT NOR COULD IT MAKE A NON - GENUINE TRANSACTION GENUINE. 7.1 FROM T HE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE HAS FURNISHED THE BASIC INFORMATION ABOUT THE SOURCE OF MONEY RECEIVED BY HIM ALONG WITH THE COPIES OF 7/12 EXTRACT DEPICTING THE AGRICULTURAL LAND HELD BY THEM. 7.2 THE ASSESSEE IN THE PRESENT CASE HAS DULY EXPLAINED THE SOURCE OF MONEY RECEIVED IN ITS HANDS. THE ASSESSEE IS NOT ANSWERABLE TO JUSTIFY THE SOURCE OF THE SOURCE OF THE MONEY RECEIVED BY IT. IN THIS CONNECTION, WE PLACE OUR RELIANCE ON THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS REPORTED IN 256 ITR 360 WHEREIN IT WAS HELD AS UNDER: IT HAS ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CRED ITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD. V. CIT [1963] 49 ITR 723. THE GENUINENESS OF THE TRANSACTION IS PROVED BY THE FACT THAT THE PAYMENT TO THE ASSESSEE AS WELL AS REPAYMENT OF THE LOAN BY THE ASSESSEE TO THE DEPOSITORS IS MADE BY ACCOUNT PAYEE CHEQUES AND THE INTEREST IS ALSO PAID B Y THE ASSESSEE TO THE CREDITORS BY ACCOUNT PAYEE CHEQUES. 7.3 W E ALSO CONSCIOUS TO THE FACT THAT THE ASSESSEE HAS FURNISHED THE BASIC DETAILS ABOUT THE LOAN TAKEN FROM ALL THE PARTIES AS DISCUSSED ABOVE, BUT THE AO HAS NOT MADE ANY VERIFICATION FROM SUCH PARTIES AND ARRIVED AT THE CONCLUSION THAT ITA NO. 338 /RJT / 20 18 A.Y.2009 - 1 0 - 5 - THE IMPUGNED AMOUNT REPRESENTS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. IN OUR CONSIDERED VIEW , ONCE THE ASSESSEE HAS DISCHARGED PRIMARY ONUS BY PROVING THE IDENTITY OF LENDER, GENUINENESS OF TRANSAC TION AND CAPACITY TO ADVANCE THE LOAN THEN IT IS THE BURDEN OF THE REVENUE TO PROVE IT OTHERWISE. IN THIS REGARDS WE DR A W GUIDANCE AND SUPPORT FROM DECISION OF HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. METACHEN INDUSTRIES REPORTED IN 116 TAX MAN 572 WHERE IT WAS HELD AS UNDER; ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY OF THE ASSESSEE - FIRM IS OVER. THE ASSESSEE - FIRM CANNOT ASK THAT PERSON WHO MAKE S INVESTMENT, WHETHER THE MONEY INVESTED IS PROPERLY TAXED OR NOT. THE ASSESSEE IS ONLY TO EXPLAIN THAT THE INVESTMENT HAS BEEN MADE BY THE PARTICULAR INDIVIDUAL AND IT IS THE RESPONSIBILITY OF THAT INDIVIDUAL TO ACCOUNT FOR THE INVESTMENT MADE BY HIM. IF THAT PERSON OWNS THAT ENTRY, THEN THE BURDEN OF THE ASSESSEE - FIRM IS DISCHARGED. IT IS OPEN FOR THE ASSESSING OFFICER TO UNDERTAKE FURTHER INVESTIGATION WITH REGARD TO THAT INDIVIDUAL WHO HAS DEPOSITED THIS AMOUNT. SO FAR AS THE RESPONSIBILITY OF THE ASSES SEE IS CONCERNED, IT IS SATISFACTORILY DISCHARGED. WHETHER THAT PERSON IS AN INCOME - TAX PAYER OR NOT OR FROM WHERE HE HAD BROUGHT THIS MONEY, IS NOT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM HAS GIVEN A SATISFACTORY EXPLANATION AND PRODUCED THE P ERSON WHO HAS DEPOSITED THE AMOUNT, THEN THE BURDEN OF THE FIRM IS DISCHARGED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE FIRM FOR THE PURPOSES OF INCOME - TAX. IT IS OPEN FOR THE ASSESSING OFFICER TO TAKE APPROPRIATE ACTION UNDER SECTION 69 AGAINST THE PERSON WHO HAS NOT BEEN ABLE TO EXPLAIN THE INVESTMENT. 7.4 IN THIS RESPECT WE ALSO FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE SUPREME COURT IN CASE OF PCIT VS. NRA IRON STEEL (P.) LTD. REPORTED IN 103 TAXMANN.COM 48. THE RELEVANT EXTRACT OF THE JUDGMENT ARE AS UNDER; 8.2 AS PER SETTLED LAW, THE INITIAL ONUS IS ON THE ASSESSEE TO ESTABLISH BY COGENT EVIDENCE THE GENUINENESS OF THE TRANSACTION, AND CREDIT - WORTHINESS OF THE INVESTORS UNDER SECTION 68 OF THE ACT. THE ASSESSEE IS EXPECTED TO ESTABLISH TO THE SATISFACTION OF THE ASSESSING OFFICER CIT V. PRECISION FINANCE (P.) LTD. [1995] 82 TAXMAN 31/[1994] 208 ITR 465 (CAL.): PROOF OF IDENTITY OF THE CREDITORS; CAPACITY OF CREDITORS TO ADVANCE MONEY; AND GENUINENESS OF TRANSACTION THIS COURT IN THE LAND MARK CASE OF KALE KHAN MOHAMMED HANIF V. CIT [1963] 50 ITR 1 (SC) AND ROSHAN DI HATTI V. CIT [1977] 107 ITR 938 (SC) LAID DOWN THAT THE ONUS OF ITA NO. 338 /RJT / 20 18 A.Y.2009 - 1 0 - 6 - PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, IS ON THE ASSESSEE. ONCE THE ASSESSEE HAS SUBMITTED THE DOCUMENTS RELATING TO IDENTITY, GENUINENESS OF THE TRANSACTION, AND CREDIT - WORTHINESS, THEN THE AO MUST CONDUCT AN INQUIRY, AND CALL FOR MORE DETAILS BEFORE INVOK ING SECTION 68. 7.5 THUS, IN THE PRESENT FACTS AND CIRCUMSTANCES, ALL INFORMATION S WERE AVAILABLE ABOUT THE LOANS BUT AO DID NOT MAKE FURTHER INQUIRY. IF HE HAS ANY DOUBT ON UNSECURED LOAN RECEIVED, THE AO COULD HAVE CONDUCTED NECESSARY ENQUIRIES . BUT THE AO FAILED TO DO SO. HOWEVER ASSESSEE HAS DISCHARGED ITS ONUS BY PROVIDING THE DOCUMENTS AS DISCUSSED ABOVE. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUN D OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. THE 2 ND ISSUE RAISED BY THE ASSESS EE IS THAT THE LEARNED CIT (A) E R RE IN CONFIRMING THE ADDITION OF RS . 75,000 / - FOR THE EXPENSES INCURRED BY HIM. 9. AT THE OUTSET WE NOTE THAT THE ISSUE IS NOT ARISING FROM TH E ORDER OF THE AO. THEREFORE SUCH ADDITION IS NOT WARRANTED. ACCORDINGLY, WE REJECT THE GROUND OF APPEAL OF THE ASSESSEE AS INFRUCTUOUS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 / 02 /20 20 - SD - - SD - ( MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DATED 28 /02 /20 20 MANISH