M/s. Maganbhai Sankarbhai Patel & Co., Anand V. The Income tax Officer,Ward-1, Anand

ITA 358/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6441 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: ASHEEM L THAKKAR
• Keywords: Unexplained cash credit; Source of fund
• Section: 131; 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.358/AHD/2009 A. Y.: 2005-06 M/S. MAGANBHAI SANKARBHAI PATEL & CO., STATION ROAD, ANAND VS THE INCOME TAX OFFICER, WARD 1, ANAND PA NO. AADFM 8796 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ASHEEM L. THAKKAR, AR RESPONDENT BY SHRI B. L. YADAV, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)- I V, BARODA DATED 30 TH DECEMBER, 2008 FOR ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IN THIS APPEAL CHALLENGED CONFIRMAT ION OF ADDITION OF RS.10 LACS OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS.20.50 LACS ON ACCOUNT OF CASH CREDIT IN RESPECT OF CREDIT OR SHRI BHAVESH L. SHAH. 3. THE AO NOTED THAT THE ASSESSEE HAS ACCEPTED UNSE CURED LOANS BUT COMPLETE INFORMATION ARE NOT FILED. SHOW CAUSE NOTICE WAS ISSUED TO PROVE THE IDENTITY, GENUINENESS OF THE TRANSACTI ONS AND CREDITWORTHINESS IN RESPECT OF K.F. SHAH & BROS. (R S.10 LACS), BHAVESH L. SHAH (RS.10 LACS) AND A. M. PATEL (RS.50 ,000/-) TOTAL UNSECURED LOANS IN A SUM OF RS.20.50 LACS. ON ISSUE OF SHOW CAUSE ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 2 NOTICE TO THE ASSESSEE TO PROVE GENUINE CREDITS BUT NO REPLY WAS FILED BY THE ASSESSEE. THE BOOKS OF ACCOUNTS OF THE ASSES SEE AT SEVERAL PAGES WERE FOUND TO BE INCOMPLETE. IN THE ABSENCE O F ANY EXPLANATION THE ADDITION WAS MADE TREATING RS.20.50 LACS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. THE A SSESSEE FILED EXPLANATION BEFORE THE LEARNED CIT(A) ON WHICH REMA ND REPORT WAS CALLED FROM THE AO. THE LEARNED CIT(A) CONSIDERING THE REMAND REPORT AND MATERIAL ON RECORD DELETED THE ADDITION OF RS.10 LACS IN RESPECT OF K. F. SHAH & BROS. ADDITION OF RS.50,000 /- IN RESPECT OF A. M. PATEL WAS CONFIRMED ON ACCEPTANCE OF ADDITIONS B Y ASSESSEE ON WHICH THE ASSESSEE IS NOT IN APPEAL. THUS, THE ASSE SSEE CHALLENGED THE ADDITION CONFIRMED BY THE LEARNED CIT(A) IN A S UM OF RS.10 LACS ON ACCOUNT OF UNEXPLAINED CREDIT IN RESPECT OF BHAV ESH L. SHAH. THE AO IN HIS REMAND REPORT FORWARDED THE STATEMENT OF SHRI BHAVESH L. SHAH RECORDED U/S 131 OF THE IT ACT. IT WAS FOUND T HAT SHRI BHAVESH L. SHAH IS NOT ASSESSED TO TAX THOUGH HE CONFIRMED TO HAVE GIVEN LOAN TO THE ASSESSEE IN A SUM OF RS.10 LACS IN HIS STATEMENT. IN RESPECT OF SOURCES OF THE INCOME, THE SAME WAS STAT ED TO BE ACCRUING FROM PERSONAL SAVINGS, AS WELL AS THE AMOUNT RECEIV ED FROM THE CLOSURE OF BUSINESS OF HIS FATHER. HOWEVER, THE CRE DITOR DID NOT FURNISH BANK ACCOUNT, DETAILS/SOURCES OF INCOME AS REQUIRED IN THE SUMMONS AS WELL AS COMMITMENT MADE IN THE STATEMENT. THE CO MMENT OF THE ASSESSEE ON THE AOS REMAND REPORT WAS ALSO CALLED FOR. THE LEARNED CIT(A) CONSIDERING THE UNEXPLAINED LOAN FROM BHAVES H L. SHAH NOTED THAT THOUGH THE PARTY CONFIRMED GIVING OF LOAN IN H IS STATEMENT, BUT THERE IS A SERIOUS DOUBT ABOUT HIS CREDITWORTHINESS . THE CREDITOR WAS NOT ASSESSED TO TAX AND WAS WORKING ON SALARY OF RS .6,000/- PER ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 3 MONTH ONLY. HE HAS STATED THE SUM OF RS.10 LACS TO BE OUT OF SAVINGS AND FROM SALE OF HIS FATHERS BUSINESS, WHICH WAS N OT FOUND SATISFACTORY EXPLANATION. DETAILS OF BANK ACCOUNT W ERE ALSO NOT FILED. IN THE POWER OF ATTORNEY HELD BY HIM IN RESPECT OF PETROL PUMP, THERE WAS NO REFERENCE OF ANY DEPOSIT IN THIS DOCUMENT. I T WAS, THEREFORE, HELD BY THE LEARNED CIT(A) THAT GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF SHRI BHAVESH L. SHAH IS NOT PRO VED AND THE ADDITION WAS ACCORDINGLY CONFIRMED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND REFE RRED TO PB-4 WHICH IS THE STATEMENT OF SHRI BHAVESH L. SHAH RECO RDED ON 26-11-2008 IN WHICH HE HAS ADMITTED TO HAVE GIVEN L OAN OF RS.10 LACS TO THE ASSESSEE THROUGH CHEQUE IN MAY, 2004 AND IT IS ALSO EXPLAINED THAT THE AMOUNT IS NOT RECEIVED BACK BY HIM. HE HAS SUBMITTED THAT SOURCE OF THE DEPOSIT/MONEY IS ALSO EXPLAINED FROM THE SAVINGS AND THE AMOUNT RECEIVED FROM HIS FATHER. HE HAS ADMITTE D THAT HE IS WORKING ON A SALARY OF RS.6,000/- PER MONTH ONLY. H E HAS SUBMITTED THAT IF THE CREDITOR HAS NOT PRODUCED THE BANK ACCO UNT AS STATED IN THE STATEMENT, THE AO SHOULD HAVE TAKEN ACTION AGAINST THE CREDITOR AND NO ADDITION SHOULD BE MADE AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT THE ASSESSEE CANNOT BE ASKED TO PROVE SOURCE O F THE SOURCE. HE HAS SUBMITTED THAT SINCE LOAN IS TAKEN THROUGH BANK ING CHANNEL AND IS CONFIRMED BY THE CREDITOR, THEREFORE, THE ASSESSEE DISCHARGED THE INITIAL ONUS OF PROVING THE GENUINE CREDIT. HE HAS RELIED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO. VS ITO 8 DTR 199, DECISION OF THE HONB LE GUJARAT HIGH ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 4 COURT IN THE CASE OF MURLIDHAR LAHORIMAL VS CIT, 28 0 ITR 512 AND THE DECISION OF THE HONBLE M. P. HIGH COURT IN THE CAS E OF CIT VS METACHEM INDUSTRIES, 245 ITR 160. HE HAS, THEREFORE , SUBMITTED THAT THE ADDITION MAY BE DELETED. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO EVIDENCE WA S FILED BEFORE THE AO. NO BANK ACCOUNT IS FILED TO EXPLAIN CREDITWORTH INESS OF THE CREDITOR. SOURCE OF THE DEPOSIT IS NOT PROVED. THER E IS NO REFERENCE OF DEPOSIT IN THE POWER OF ATTORNEY. NO SOURCE OF THE DEPOSIT IS ALSO EXPLAINED IN THE STATEMENT RECORDED BY THE AO AT TH E APPELLATE STAGE. THEREFORE, THE ASSESSEE FAILED TO PROVE CREDITWORTH INESS OF THE CREDITOR AND ALSO FAILED TO PROVE THE GENUINENESS O F THE TRANSACTION, THEREFORE, ADDITION IS RIGHTLY CONFIRMED BY THE LEA RNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND MATE RIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE AO FOUND THE BOOKS OF ACCOUNTS OF THE ASSESSEE INCOMPLETE FOR WHICH THE BOOKS OF ACCO UNTS HAVE BEEN REJECTED. THE AO FURTHER FOUND THAT THE ASSESSEE HA S RECEIVED UNSECURED LOANS FROM 3 PERSONS INCLUDING SHRI BHAVE SH L. SHAH. SPECIFIC SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESS EE TO PROVE IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANS ACTIONS AND THEIR CREDITWORTHINESS. THE ASSESSEE DID NOT FURNISH ANY EXPLANATION BEFORE THE AO. IT IS ONLY AT THE APPELLATE STAGE, T HE ASSESSEE FILED EXPLANATION TO PROVE THE GENUINENESS OF THE CREDITS . IN THE CASE OF M/S. K. F. SHAH & BROS. IT WAS FOUND THAT THIS PART Y IS ASSESSED TO TAX AND HAD ALSO RECEIVED BACK PART OF THE AMOUNT. IN T HE CASE OF ANOTHER ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 5 CREDITOR, A. M. PATEL FOR RS.50,000/-, THE ASSESSEE WAS NOT ABLE TO FILE CONFIRMATION. THEREFORE, THE ASSESSEE ADMITTED TO C ONFIRMING OF THE ADDITION. IN THE CASE OF SHRI BHAVESH L. SHAH, THE CREDITOR WAS NOT ASSESSED TO TAX. HE WAS PRODUCED BEFORE THE AO FOR EXAMINATION AT THE REMAND PROCEEDINGS. THOUGH, THIS CREDITOR CONFI RMED GIVING PAYMENT TO THE ASSESSEE BUT THERE WAS A SERIOUS DOU BT ABOUT HIS CREDITWORTHINESS. HE HAS EXPLAINED FOR GIVING OF RS .10 LACS TO THE ASSESSEE THAT HIS SOURCE IS FROM HIS SAVINGS AND TH E AMOUNT RECEIVED ON CLOSURE OF FIRM OF HIS FATHER. HE WAS DOING SERV ICE AND RECEIVED SALARY OF RS.6,000/- PER MONTH ONLY. THERE WAS NO R EFERENCE IN HIS POWER OF ATTORNEY ABOUT ANY TRANSACTION. HE HAS SUB MITTED BEFORE THE AO IN THE REMAND PROCEEDINGS TO SEND COPY OF HIS BA NK ACCOUNT THROUGH POST BUT THE CREDITOR DID NOT FILE ANY BANK ACCOUNT BEFORE THE AO TO PROVE HIS CREDITWORTHINESS. THE ABOVE FACTS C LEARLY SHOW THAT SHRI BHAVESH L. SHAH WAS NOT ASSESSED TO TAX AND EV EN AT THE TIME OF RECORDING HIS STATEMENT HE WAS GETTING SALARY OF RS.6,000/- PER MONTH ONLY. THEREFORE, HE COULD NOT HAVE EARNED MOR E THAN THE SALARY IN PAST AS COMPARED TO THE SALARY DECLARED I N HIS STATEMENT. IN HIS STATEMENT HE HAS GIVEN HIS AGE 36 YEARS ON THE DATE OF RECORDING OF THE STATEMENT ON 26-11-2008, THEREFORE, ON THE D ATE OF GIVING OF ALLEGED LOAN, HE WAS HARDLY 32 YEARS OLD. NOTHING I S EXPLAINED WHAT HE WAS DOING EARLIER AND WHAT WAS HIS SOURCES OF ME ETING THE HOUSEHOLD EXPENSES FOR HIMSELF AND THE FAMILY. THE BANK DEPOSITS IN HIS ACCOUNT WOULD HAVE EXPLAINED THE MATTER IN DETA IL BUT IT WAS WITHHELD FOR CONSIDERATION FROM THE REVENUE DEPARTM ENT. THE MEAGER SALARY RECEIVED BY HIM WOULD NOT BE SUFFICIENT TO G IVE A LOAN OF RS.10 LACS TO THE ASSESSEE. EVEN IF, IT MAY BE PRESUMED T HAT HE COULD HAVE ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 6 SAVED SOME AMOUNTS OUT OF HIS MEAGER SALARY, THE CR EDITOR COULD NOT HAVE GIVEN LOAN OF RS.10 LACS TO THE ASSESSEE DURIN G HIS LIFETIME. HE HAS GIVEN FURTHER EXPLANATION THAT HE HAS BROUGHT T HE AMOUNT FOR GIVING LOAN OUT OF HIS SAVINGS AND THE AMOUNT RECEI VED ON CLOSURE OF FIRM OF HIS FATHER FOR WHICH NO EVIDENCE IS ALSO FU RNISHED. THE CREDITOR ALSO FAILED TO FURNISH BANK ACCOUNT TO PROVE HIS CR EDITWORTHINESS. THESE FACTS STATED IN THE STATEMENT OF THE CREDITOR MERELY PROVE THE IDENTITY OF THE CREDITOR BUT IT WOULD NOT PROVE ANY THING BEYOND THAT. IT IS SETTLED LAW THAT FOR PROVING GENUINENESS OF THE CREDIT, BURDEN IS UPON THE ASSESSEE TO PROVE IDENTITY OF THE CREDITOR , GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CRE DITOR. THE LEARNED COUNSEL FOR THE ASSESSEE MERELY EXPLAINED THAT SINC E THE AMOUNT IS GIVEN THROUGH CHEQUE, THEREFORE, THE ASSESSEE PROVE D GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CRED ITOR. HOWEVER, WE DO NOT AGREE WITH THE CONTENTION OF THE LEARNED COU NSEL FOR THE ASSESSEE. THE HONBLE CALCUTTA HIGH COURT IN THE CA SE OF CIT VS PRECISION FINANCE PVT. LTD., 208 ITR 465 HELD AS UN DER: IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. MERE FURNISHING OF THE PARTICULARS IS NOT ENOUGH. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE (SEE PP. 470 G, 471B). IT IS THUS ESTABLISHED BEYOND DOUBT THAT THE ASSESS EE FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AS WELL AS GE NUINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSEE DID NOT FUR NISH ANY EVIDENCE OR MATERIAL EVEN BEFORE US TO PROVE THE CREDITWORTH INESS OF THE ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 7 CREDITOR AND THE GENUINENESS OF THE TRANSACTION. TH E ASSESSEE SOLELY RELIED UPON THE STATEMENT RECORDED AT THE REMAND PR OCEEDINGS BUT THE SAME IS NOT SUFFICIENT TO PROVE THE CREDITWORTH INESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. THE HONBLE SUPREME COURT IN THE CASES OF DURGA PRASAD MORE 82 ITR 540 AND SU MATI DAYAL 214 ITR 801 HELD THAT THE COURTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCES BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONSIDERING THE SURROUNDING CIR CUMSTANCES. IT IS A CASE WHERE THE ASSESSEE FAILED TO FILE ANY EVIDENCE OF CREDITWORTHINESS OF THE CREDITOR AS WELL AS GENUINE NESS OF THE TRANSACTIONS IN THE MATTER. WHATEVER EXPLANATION IS GIVEN BY THE CREDITOR IN HIS STATEMENT AS IS REFERRED IF TESTED ON THE PRINCIPLE OF LAW PRONOUNCED BY THE HONBLE SUPREME COURT IN THE ABOV E CASES WOULD PROVE THAT THE ASSESSEE FAILED TO PROVE THE CREDITW ORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION IN THE MATTER. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR TH E ASSESSEE ARE CLEARLY DISTINGUISHABLE ON FACTS AND WOULD NOT SUPP ORT THE CASE OF THE ASSESSEE FOR TAKING HEAVY LOAN FROM PERSON OF NO ME ANS. IN THE CASE OF THE ASSESSEE SUBSTANTIAL AMOUNT IS GIVEN ON CRED IT FOR WHICH SOURCE IS NOT EXPLAINED AND WHATEVER MEAGER SOURCE WAS TRIED TO BE EXPLAINED FOR GIVING LOAN TO THE ASSESSEE, THE SAME WAS NOT FOUND TO BE SUFFICIENT FOR GIVING GENUINE LOAN TO THE ASSESS EE. THUS, THE ASSESSEE FAILED TO DISCHARGE THE ONUS UPON HIM TO P ROVE THE GENUINE CREDIT IN THE MATTER. SINCE THE SOURCE OF THE CREDI T IS NOT EXPLAINED, THERE IS NO QUESTION OF ASKING THE ASSESSEE TO PROV E SOURCE OF THE SOURCE AS IS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE. ITA NO.358/AHD/2009 M/S. MAGANBHAI SANKARBHAI PATEL & CO. VS ITO, WARD 1, ANAND 8 CONSIDERING THE FACTS OF THE CASE NOTED ABOVE, WE D O NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. SAME IS ACCORD INGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-06-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 17-06-2011 LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD