ITO 19(2)(1), MUMBAI V. JAYESH GANDHI, MUMBAI

ITA 3452/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0070 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: K A VIDYALINGAM
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68; 148; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 3452 /MUM/20 17 (ASSESSMENT YEAR 20 07 - 08 ) ITO - 19(2)(1) MATRU MANDIR ROOM NO. 221 MUMBAI - 400 007. V S . SHRI JAYESH GANDHI 5/B, JEEV AN ASHA 60A, PEDDAR ROAD MUMBAI - 400 026. PAN: AADPG2518C ( APPELLANT ) ( RESPONDENT ) A SSESSEE BY SHRI K.A. VIDYALINGAM DEPARTMENT BY MS. POOJA SWAROOP DATE OF HEARING 27 . 0 2 . 201 8 DATE OF PRONOUNCEMENT 27 . 0 2 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 27.2.2017 PASSED BY THE LEARNED CIT(A) - 30, MUMBAI AND IT RELATES TO A.Y. 2007 - 08. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS. 40 LAKHS RELATING TO UNSECURED LOAN, ADDED U/S. 68 OF THE ACT BY THE ASSESSING OFFICER. 2. THE ASSESSEE HAD RECEIVED A LOAN OF RS. 40 LAKHS FROM A PARTY NAME M/S. SPARSH DURING THE YEAR UNDER CONSIDERATION. THE ORIGINAL R ETURN OF INCOME FILED BY THE ASSES SEE WAS INITIALLY PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION THAT THE LOAN TAKEN BY THE ASSESSEE FROM M/S. SPARSH IS AN ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE IN ORDER TO INTRODUCE HIS UNACCOUNTED CASH. ACCORDINGLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED LEDGER ACCOUNT COPY OF LOAN BY MENTIONING THE SAME AS CONFIRMATION OF LOAN. THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE IDENTITY AND CREDITWORTHINESS OF LOAN CREDITOR AND GENUINENESS OF THE LOAN TRANSACTION. SHRI JAYESH GANDHI 2 ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE LOAN AMOUNT OF RS. 40 LA KHS AS UNEXPLAINED CASH CREDIT U/S. 68 OF TH E ACT. THE ASSESSING OFFICER ALSO PLACED RELIANCE ON A H OST OF CASE LAWS RENDERED BY HON'BLE SUPREME COURT. 3. BEFORE LEARNED CIT(A) THE ASSESSEE FURNISHED FOLLOWING DOCUMENTS : - (A) COPY OF BANK PASS BOOK OF THE ASSESSEE SHOWING LOAN RECEIVED FROM M/S. SPARS H (B) CONFIRMATION OF STATEMENT FROM LENDER (C) PAN CARD OF LENDER (D) COPY OF ITR - V OF THE LENDER FOR A.Y. 2007 - 08 (E) COPY OF BANK STATEMENT OF THE LENDER SHOWING DEBIT OF RS. 40 LAKHS (F) INTEREST PAYMENT DETAILS (G) LOAN PAYMENT DETAILS BASED ON THE ABOVE DOCUMENTS , THE LEARNED CIT(A) CONCLUDED THAT THE ASSESSEE HAS PROVED IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. ACCORDINGLY, HE DELETED THE ADDITION OF RS. 40 LAKHS MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT. THE REVENUE IS AG GRIEVED BY THE DECISION SO RENDERED BY THE LEARNED CIT(A). 4. LEARNED DR SUBMITTED THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE ONLY PROVE THE IDENTITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. SHE SUBMITTED THAT THE BANK STATEMENT OF LENDER WIL L NOT PROVE THE CREDITWORTHINESS OF THE CREDITOR. THE LEARNED DR PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF NAVODAYA CASTLE (P) LTD. V S. CIT (2015) 56 TAXAMNN.COM 18 AND SUBMITTED THAT THE CERTIFICATE OF INCORPORATION AND PAN ETC. ARE NOT SUFFICIENT FOR THE PURPOSE OF SECTION 68 OF THE ACT. 5. ON THE CONTRARY, LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER DID NOT CALL FOR THE FINANCIAL STATEMENT S OF LENDER AND HE HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF OBSERVA TION S MADE BY THE INVESTIGATION WING. HE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL THE AVAILABLE DOCUMENTS TO PROVE THE GENUINENESS OF LOAN. ACCORDINGLY, HE SUBMITTED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE IM PUGNED ADDITION. SHRI JAYESH GANDHI 3 6. WE HEAR D THE PARTIES AND PERUSED THE RECORD. IT IS WELL SETTLED PROPOSITION OF LAW THAT THE INITIAL BURDEN OF PROOF TO PROVE THE CASH CREDIT IS PLACED UPON THE SHOULDERS OF THE ASSESSEE. THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE CREDITOR, CREDITWORTHI NESS OF THE CREDITOR AND GENUINEN ESS OF THE TRANSACTION. ONLY IF THE ASSESSEE DISCHARGES PRIMARY BURDEN OF PRO OF PLACED UPON HIS SHOULDERS, THEN THE ONUS WOULD SHIFT UPON THE SHOULDERS OF THE ASSESSING OFFICER TO DISPROVE THE CLAIM OF THE ASSESSEE . IN THE INSTANT CASE, WE AGREE WITH THE CONTENTIONS OF LD D.R THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) WOULD PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTION. THEY DO NOT PROVE THE CREDITWORTHINESS OF THE CREDITOR. THE C REDITWORT HINESS CAN BE EXAMINED ONLY FROM THE FINANCIAL STATEMENT S OF THE LENDER. WHEN THIS WAS POINTED OUT TO LEARNED AR, HE SOUGHT AN OPPORTUNITY FOR PRESENTING THE FINANCIAL STATEMENT S . HOWEVER, THE LEARNED DR OBJECTED TO THE SAME. HOWEVER, IN THE INTEREST OF N ATURAL JUSTICE, WE ARE OF THE VIEW THAT THE ASSESSEE MAY BE PROVIDED WITH AN OPPORTUNITY TO PROVE THE CREDITWORTHINESS OF THE LENDER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND RESTORE THE THIS ISSUE TO THE FILE OF THE ASSESSING O FFICER FOR EXAMINING THE SAME AFRESH. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE DOCUMENTS TO PROVE THE CREDITWORTHINESS OF THE CREDITOR . AFTER EXAMINING THE DOCUMENTS FURNISHED BY THE ASSESSEE AND ALSO ON CONSIDERING ANY OTHER INFORMATION AND EXPLANATIO N S GIVEN BY THE ASSESSEE , THE ASSESSING OFFICER MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 7 . 0 2 .201 8 . SD / - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 27 / 0 2 / 20 1 8 SHRI JAYESH GANDHI 4 COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// SENIOR P RIVATE S ECRETARY PS ITAT, MUMBAI