SHRI SHRI NITESHKUMAR GOYAL, RAIPUR, RAIPUR (CG) V. THE INCOME TAX OFFICER, WARD-4(4),RAIPUR, RAIPUR (CG)

ITA 36/BIL/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5647 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRAFULLA PANDSE
• Keywords: Unexplained cash credit; Search and seizure; Non compliance
• Section: 131; 68; 143(3); 264

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 36/RPR/2017 Ǔनधा[रण वष[ / Assessment Year : 2012-13 Shri Nitesh kumar Goyal Prop. Com Con India Net work Solution Shop No.327 Lal Ganga, Shopping Mall, Raipur (C.G.) PAN : AIGPG6386B .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer Ward-4(4), Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Prafulla Pandse, AR Revenue by : Shri Sanjay Kumar, DR स ु नवाई कȧ तारȣख / Date of Hearing :15.03.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 30.03.2022 2 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 आदेश / ORDER PER RAVISH SOOD, JM : The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-II, Raipur, dated 04.01.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’), dated 30.03.2015 for assessment year 2012-13. Before us the assessee has assailed the impugned order on the following grounds of appeal : “1. That the order of the Ld. CIT(A) is bad in law as well as on facts. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining addition of Rs.20,70,000/- u/s.68 of the Income Tax Act, 1961. 3. That the Ld. CIT(A) has erred in remanding the issue of addition u/s.40(a)(ia) amounting to Rs.2,20,920/- to the file of the Assessing Officer with certain directions instead of calling for remand report and adjudicating the matter himself and thus acted beyond jurisdiction. 4. That the appellant denies his liability to interest charged u/s.234B and 234C under the Income Tax Act, 1961. 5. That any other relief/deduction which the Hon’ble Tribunal may deem fit be granted to the appellant. 6. That the appellant craves leave, to urge, add amend, alter, enlarge, modify, substantiate and delete any of the ground or grounds and to adduce fresh evidence at the time of the hearing of the appeal.” 3 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 2. Controversy involved in the present appeal lies in a narrow compass i.e, as to whether or not the CIT(Appeals) is right in law and on facts of the case in sustaining the addition of Rs.20,70,000/- u/s.68 of the Act?. 3. Succinctly stated, the Assessing Officer in the course of assessment proceeding observed that the assessee had during the year claimed to have raised unsecured loans of Rs. 20,70,000/- from two persons, viz. (i) M/s. Seema R. Mutreja : Rs.2,50,000/-; (ii) Shri Anil Dengwani : Rs.18,20,000/-. As the assessee during the course of assessment proceedings failed to substantiate the identity and creditworthiness of the lenders as well as the genuineness of the loan transactions in question, therefore, the Assessing Officer held the same as unexplained cash credits u/s. 68 of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals), but without any success in so far treating of the aforesaid loans in question of Rs.20,70,000/-(supra) as an unexplained cash credit u/s.68 of the Act was concerned. 4 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. At the very outset of the hearing of the appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) for the assessee, that he was only pressing ground No.2 i.e, dubbing of the loan transactions of Rs.20,70,000/- as unexplained cash credits u/s.68 of the Act by the lower authorities. 7. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. As is discernible from the orders of the lower authorities, the assessee in the course of the assessment proceedings, on being called upon by the Assessing Officer to prove the authenticity of the aforesaid loan transactions had merely furnished PAN No. of one of the lender, viz. Shri Anil Dengwani, while for no details as regards the other lender, viz. Ms. Seema R Mutreja were filed by him. Backed by 5 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 the income-tax credentials of Shri Anil Dengwani (supra), the Assessing Officer after gathering his address from ITD system issued notice u/s.133(6) of the Act, dated 25.03.2015 and called upon him to furnish confirmations a/w other relevant details. As neither any reply was received by the Assessing Officer from Shri Anil Dengewani (supra) nor any details as regards the other lender, viz. Ms. Seema R. Mutreja (supra) were filed by the assessee, therefore, the Assessing Officer held both the loan transactions as unexplained cash credits u/s.68 of the Act, for the following reasons: Sl. No. Name of the Lender Amounts found unexplained Reason 1. M/s. Seema R Mutreja Rs.2,50,000/- (i) Her identify was not established as no PAN and address were produced. (ii) Her creditworthiness was also not proved as no details of her return of income, capital account etc. were furnished. (iii) Genuineness of the said transactions were also not proved beyond doubt due to non-submission of copy of relevant bank statement. 2. Shri Anil Dengewani Rs.18,20,000/- (i) The assessee could not provide the address except PAN. Further, no reply was furnished by him in response 6 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 to the notice u/s.133(6) of the I.T. Act, 1961. Hence his identity was not established. (ii) His creditworthiness was also not proved as no details of his return of income, capital account etc were furnished. (iii) Genuineness of the said transactions was also not provided beyond doubt due to non submission of copy of the relevant bank statement. 8. On appeal, the assessee for the very first time filed before the CIT(A) the PAN No. of Ms. Seema R Mutreja (supra). It was the claim of the assessee that as the respective amounts in question were borrowed from the market, therefore, the requisite documentary evidence substantiating the authenticity of the loan transactions in question i.e, copies of the returns of income, capital accounts of the lenders etc. could not be furnished. It was the claim of the assessee before the CIT(Appeals), that as he was unable to produce the aforesaid lenders for necessary verification, therefore, department in exercise of the powers vested with it under Sec. 131 of the Act may obtain the requisite documents directly from them. However, the CIT(Appeals) did not find favor with the aforesaid contentions of the 7 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 assessee and upheld the view taken by the Assessing Officer, observing as under: “2.1 The next ground of appeal relates to addition of Rs.20,70,000/- u/s. 68 of Act. The impugned amount were unsecured loans taken from M/s. Seema R Mutreja for an amount, of Rs. 2,50,000/- and from Anil Dengwani for Rs.18,20,000/- aggregating Rs. 20,70,000/-. During the assessment proceedings the AO called for various documents in order to establish the identity, creditworthiness and genuineness of the lenders and the loans taken. The AO held that these vital ingredients were not proved during the assessment proceedings despite according ample opportunity for the same. It was submitted by the appellant that in respect of Seema R Mutreja the PAN could not be submitted as the loan was raised from the market. However, the PAN was submitted during the appeal proceedings. It was further submitted that the return of income and the capital account of the unsecured loan holder could not be produced as the loans were borrowed from the market and these documents were not in the possession of the appellant. The appellant requested to call for the desired documents by issuing summons to the said party. It was further urged that the appellant does not have power to compel the lender to submit his documents which may be obtained directly from them. The appellant also submitted that all bank accounts were furnished to the AO wherein relevant entries were clearly highlighted and hence it was argued that the transactions were made through banking channels. In the case of Anil Kumar Dengwani it was submitted that the return of income and capital account of the unsecured loan holder could not be produced as the loans were borrowed from market and these documents were not in possession of the ant. It was urged d to call for the desired documents by calling for them-from panics. It submitted that the appellant does not have the power to compel the lender to submit, his documents to the appellant which was requested to be obtained directly from the party. The appellant also submitted that all bank accounts were furnished to the AO wherein relevant entries were clearly highlighted and hence it was argued that the transactions were made through banking channels. The appellant relied upon the following decisions of the hon'ble Courts: i. CIT vs. Metachem Industries 245 ITR 160 (MP) ii. Nemichand Kothari Vs CIT and another 264 1TR 254 (Gauhati). iii. Hon'ble Supreme Court in the case of CIT vs. Orissa Corporation (P) Ltd. 159 ITR 78 (SC). 2.2 I have gone through the grounds of appeal, gone through the submission of the appellant and read the findings of the AO in the order. During the assessment proceedings, the AO required the appellant to 8 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 furnish necessary documentary evidences in respect of the loans taken from the persons. From the given PAN number in the case of Shri Anil Dengwani i.e. Pan NO.ACTPD1251D the AO searched the details from the ITD system and the notice u/s.133(6) of the Act was issued to Anil Dengwani on the address against the above mentioned PAN requiring him to file the confirmations of the said loan with other relevant details. No replies whatsoever was furnished by the person. Further no reply on the issue of show cause was furnished by the appellant with respect to treating the loan as non genuine. Similarly in the case of Seema R Mutreja no PAN or address was provided to the AO. 2.3 I find from the submissions of the appellant that the replies and explanations offered in respect of the unsecured loans taken are cryptic indicating an attitude of non compliance to the basic requirements relating to confirmations of loans. During the assessment proceedings the AO had made all possible efforts to obtain the confirmations from the lenders on the basis of the PAN and address provided to him by the appellant and now at the appeal stage the appellant has come up with new PAN and address of the appellant requiring the authorities to directly summon the lenders knowing fully well that is the responsibility of the appellant to produce the evidences from the persons from whom loans have been obtained. Regarding the request of the appellant to summon the lenders directly the exercise was already undertaken by the Id. AO during the assessment proceedings to which there was no compliance in any manner whatsoever. The submissions of the appellant that the loans were borrowed from the market do not in any manner substantiate the submissions of the appellant rather it further adds to the non genuine loan transaction which the Id. AO has categorically held in the order.. The courts have held that " When a cash credit entry appears in the assessee's books of account in an accounting year the assessee has a legal obligation to explain the nature and source of such credit(see Sreelekha Banerjee v.C1T(1963) 49 ITR (SC)112, 117) If the assessee offers an explanation about the cash credit„ the income tax department can put the assessee to proof of his explanation and if the assessee fails to tender evidence or burkes an enquiry then the AO is justified in rejecting the explanation and holding that the income is from an undisclosed source. The assessing officer is not required to specify or prove what that source is which from the nature of the case must be known only to the assessee (SethKalekhan Md. Haif V. CIT (1958) 34 ITR 669, 673, 674 (MP) affirmed (1963) 50 ITR 1 (SC) CIT V. Krishna Mining Co. (1972) 83 ITR 860 ( AP). Observing the provisions of Section 68 and the proof of having shown that the payment was made through account payee cheques through banking channels it was held by the Hon’ble Kerala High Court “ "It is clear on the terms of section 68 that the burden is on the assessee to offer a satisfactory explanation about the nature and source lekhan Md. Hanif v. CIT (1958) 34 ITR 669, 673, 674 (MP) affirmed (1963) 50 ITR 1 (SC) CIT v. Krishna Mining Co., (1972) 83 ITR 860 (AP). 9 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 Observing the of the amount found credited in the books of the assessee. It is also- clear that the mere furnishing of particulars is not enough. The mere fact that the payment was by way of account payee cheque is also not conclusive (ITO v. Diz.a Holding (P) Ltd., (2002) 255 ITR 573, 577 (Ker.)". 2.4 With respect to filing of bank statement the hon'ble Andhra Pradesh High Court in 221 Taxman 143 held that mere filing of bank statement is not enough to establish identity of creditors. The courts have further held : It is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof includes proof of the identity of his creditor, the capacity of such creditor to advance the money and lastly the genuineness of the transaction. These things must be proved prima facie by the assessee and only after the assessee has adduced evidence to establish prima facie the aforesaid the onus shifts on the department. Merely establishing the identity of the creditor is not enough." (Shanker Industries v. CIT (1978) 114 ITR 689 (Cali: C. Kant & Co., v CIT (1980) 126 ITR 63 (Cal): Prakash Textile Agency v. CIT (1980) 121 ITR 890 (Cal). 2.5 Coming to the meaning of identity, creditworthiness and genuineness the hon'ble Delhi High Court in Oasis Hospitalities Ltd has comprehensively analyzed the three conditions. In the instant case the appellant has not been able to prove any of the above vital parameters laid down by the courts. Coming to the case laws relied upon by the appellant the same are distinguishable on Facts. In the case of CIT Vs. Metachem Industries the hon'ble MP High Court held that 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. In the instant case the appellant could not establish the identity of the persons either at the assessment proceedings or during the appeal. In the case of Nemichand Kothari the facts are similar to the decision quoted above wherein the identity of the creditor has been emphasised. In the case of CIT vs. Orissa Corporation the hon'ble Apex Court held that the appellant had given the names and addresses of creditors which was in the knowledge of the revenue that the said creditors were income tax assesses. It was further held that the Revenue apart from the issue notices u/s.131 of the Act did not pursue the matter further. In the instant case the whereabouts of the persons advancing the loan is not known and all efforts made by the assessing officer to locate and examine the creditors on the basis of details provided proved futile as there were no such persons on the given address and even the PAN numbers were not provided for one of the lenders. The initial burden lay heavily on the appellant which it has failed to discharge. In the light of the above discussions the addition of Rs.20,70,000/- u/s.68 of the Act is confirmed.” 10 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 9. We have given a thoughtful consideration to the aforesaid observations of the Ld. CIT(Appeals). As per the settled position of law, the primary onus to substantiate the authenticity of the credits appearing in the “books of accounts” is cast upon the assessee, failing which the same is to be treated as an unexplained cash credit in his hands. As in the case before us, the assessee had failed to substantiate the identity and creditworthiness of the lenders, as well as prove the genuineness of the loan transactions in question, therefore, we are of the considered view that the Assessing Officer had rightly held the loan transactions in question as unexplained cash credits within the meaning of section 68 of the Act. Before the CIT(Appeals), though the assessee had placed on record PAN No. of one of the lender, viz. Ms. Seema R Mutreja, however, the same in our considered view would not suffice for substantiating the ‘nature’ and ‘source’ of the credit appearing against her name in the “books of accounts” of the assessee. In so far the claim of the Ld. AR that the lower authorities had erred in law in not exercising the power vested with them u/s.131(1) of the Act i.e, by not summoning the respective 11 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 lenders despite specific requests of the assessee, the same we are afraid does not find favor with us. As is discernible from the records, the assessee had failed to place on record any documentary evidences which would substantiate the veracity of the loan transactions in question and would suffice to conclude that the primary onus that was cast upon it to substantiate the authenticity of the loan transactions was duly discharged by him. As a matter of fact, the assessee had been taking shifting stands before the lower authorities and had tried to shift the burden of proving the authenticity of the loan transactions upon the department. 10. Apart from that, the assessee had only during the course of proceedings before the CIT (Appeals), requested for the first time that the aforementioned parties be summoned in exercise of the powers that were vested with the department u/s.131(1) of the Act. In support of his aforesaid claim, Mr. Pandse, the Ld. AR, had placed reliance on the judgment of the Hon’ble High Court of Calcutta in the case of Commissioner of Income Tax Vs, Khamdhenu Vyapar Co. Ltd. (2003) 263 ITR 692 ( Cal.). Relying on the aforesaid judgment, it was 12 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 submitted by the Ld. AR that once a request is made by the assessee before the department to summon the parties u/s.131(1) of the Act, then, it is obligatory on the part of the department to exercise their said power. Although, we are principally in agreement with the aforesaid claim of the assessee, but are afraid that the same would not assist its present case before us. As observed by us hereinabove, now when the assessee before us had failed to discharge the primary onus that was cast upon it as regards proving the ‘nature’ and ‘source’ of the loan transactions in question, therefore, the raising of a request by him, and that too for the very first time in the course of the proceedings before the CIT (Appeals) did not merit acceptance. In our considered view, if the assessee in the course of the assessment proceedings would have placed on record any material which would have evidenced the authenticity of the loan transactions in question, then, in our considered view, the lower authorities would have been obligated to exercise the power u/s. 131(1) of the Act in order to dispel doubts, if any, as regards the authenticity of the loan transactions in question. However, as the assessee had in the course of proceedings 13 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 before the lower authorities adopted an evasive approach and failed to place on record any material/document substantiating the authenticity of the loan transactions in question, therefore, we are of the considered view that no infirmity arises from non-exercise the power u/s. 131(1) of the Act by the lower authorities, which as observed by us hereinabove, was sought by the assessee for the very first time in the course of the proceedings before the CIT(Appeals). 11. Be that as it may, we do not find any infirmity in the view taken by the lower authorities who had rightly held the loan transactions in question as unexplained cash credits within the meaning of Section 68 of the Act. We, thus, concurring with the view taken by the lower authorities uphold the order of the CIT(Appeals). The Ground of appeal No.2 raised by the assessee being devoid and bereft of any merit is dismissed. 12. Ground No.3 is not pressed by the Ld. AR and in view thereof, the same is dismissed as not pressed. 14 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 13. Ground No.4 is consequential and hence, the same is also dismissed. 14. Grounds No.(s) 1, 5 and 6 being general in nature are dismissed as not pressed. 15. In the result, appeal of the assessee is dismissed in terms of our aforesaid observations. Order pronounced in open court on 30 th day of March 2022. Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 30 th March, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु रबɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 15 Shri Niteshkumar Goyal Vs. ITO ITA No. 36/RPR/2017 Date 1 Draft dictated on 15.03.2022 Sr.PS/PS 2 Draft placed before author 17.03.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order