ACIT, Faridabad V. M/s. Friends Realtors, Faridabad

ITA 3675/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3527 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Additional evidence
• Section: 143(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 3675(DEL)/2010 ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF FR IENDS REALTORS, INCOME-TAX, CIRCLE 1, VS. SCO-11, BASEMENT BELOW, FARIDABAD. CANARA BANK, SECTOR-16 MARKET, FARIDABAD. PAN-AABFF4295M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KISHORE B., SR. DR RESPONDENT BY : S HRI GURJEET SINGH, C.A. ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN BY THE REVENUE BEFORE US IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS. 20.00 LAKH PLUS I NTEREST THEREON OF RS. 52,602/-, MADE BY THE AO ON ACCOUNT OF UNSECURED LOAN AND INTEREST THEREON FROM SHRI SANJEEV AGGARWAL. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSE E-FIRM FILED ITS RETURN OF INCOME ON 22.09.2006 DECLARING TOTAL INCOME OF RS . 24,59,108/-. THE RETURN WAS PROCESSED U/S 143(1) ON 02.11.2007 A ND THEREAFTER IT WAS ITA NO. 3675(DEL)/2010 2 PICKED UP FOR SCRUTINY ASSESSMENT BY ISSUING NOT ICE U/S 143(2) ON 29.03.2007. 2.1 IT WAS NOTED THAT THE ASSESSEE-FIRM WAS CON STITUTED ON 04.10.2005 FOR CARRYING OUT THE BUSINESS OF PURCHASE, SALE, C ONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL PROPERTIE S. THE ACCOUNTS OF THE ASSESSEE SHOWED UNSECURED LOANS AND ADVANCES FROM SIX PARTIES AGGREGATING TO RS. 3.39 CRORE, WHICH INCLUDED UNSE CURED LOAN OF RS.20.00 LAKH FROM SHRI SANJEEV AGGARWAL. THIS AMOUNT AND INTEREST OF RS. 52,602/- CREDITED IN THE ACCOUNT WERE ADDED T O THE TOTAL INCOME BY INVOKING THE PROVISION OF SECTION 68. IN THIS C ONNECTION, IT HAS BEEN MENTIONED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THIS UNSECURED LOAN. 2.2 THE ASSESSEE FURNISHED ADDITIONAL EVIDENCE BEF ORE THE LD. CIT(APPEALS) UNDER RULE 46A OF THE RULES. THE EVIDENCE WAS FORWARDED TO THE AO FOR EXAMINATION. IN THE ENQUIRY MADE B Y THE AO, IT WAS FOUND THAT SHRI SANJEEV AGGARWAL IS A NON-RESIDENT PERSON. ACCORDINGLY, IT WAS REPORTED THAT THE DOCUMENTS SUBMITTED TO PROV E THE GENUINENESS OF CREDIT FROM THIS PERSON COULD NOT BE VERIFIED. TH E LD. CIT(APPEALS), ITA NO. 3675(DEL)/2010 3 HOWEVER, DELETED THE ADDITION BY MENTIONING THA T CONFIRMATION LETTER HAS BEEN FILED AND THE TRANSACTION HAS BEEN CARRIED THROUGH BANKING CHANNEL. 3. BEFORE US, THE CASE OF THE LD. DR IS THAT THE V ERACITY OF THE CONFIRMATION LETTER COULD NOT HAVE BEEN EXAMINED BY THE AO AS SHRI SANJEEV AGGARWAL IS A NON-RESIDENT PERSON. THE FACTUM THAT THE TRANSACTION HAS BEEN CARRIED THROUGH BANKING CHANN EL DOES NOT ESTABLISH THE GENUINENESS OF THE TRANSACTION. FURTHER, TH ERE IS NO EVIDENCE ON RECORD TO ESTABLISH CREDIT-WORTHINESS OF THE LENDE R. ACCORDINGLY, IT IS ARGUED THAT THE LD. CIT(APPEALS) GRANTED RELIEF WITHOU T PROPERLY APPRECIATING THE FACTS OF THE CASE. 3.1 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IDENTITY OF THE LENDER STANDS PROVED BECAUSE OF EXISTENCE OF BANK ACCOUNT. THE CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSA CTION ALSO STAND PROVED BECAUSE THE PAYMENT HAS BEEN RECEIVED BY WAY OF A CCOUNT PAYEE CHEQUE. THEREFORE, IT IS AGITATED THAT THE ORDER OF THE LD. CIT(APPEALS) MAY BE UPHELD. WHEN QUESTIONED AS TO WHETHER MERE EXI STENCE OF A BANK ACCOUNT ESTABLISHES CREDIT-WORTHINESS OF THE LEND ER, IT WAS SUBMITTED THAT THE LENDER HAD ENOUGH MONEY IN HIS ACCOUNT AND, THEREFORE, THE SAME ITA NO. 3675(DEL)/2010 4 STANDS PROVED. HOWEVER, IT IS ALSO SUGGESTED THAT IF SUCH A CONCLUSION CANNOT BE DRAWN, THEN THE MATTER MAY BE RESTORED TO TH E FILE OF THE AO FOR MAKING FULL ENQUIRY INTO THE GENUINENESS OF THE TRANSACTION AS REQUIRED U/S 68 OF THE ACT. 3.2 IN THE REJOINDER, THE LD. DR SUBMITTED THAT EXISTENCE OF BALANCE IN THE BANK ACCOUNT DOES NOT PROVE CREDIT-WORTHINESS, WHICH CAN ONLY BE ESTABLISHED BY PRODUCING EVIDENCE REGARDING FINAN CIAL POSITION OF THE LENDER. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. IT IS SEEN THAT THE AO HAD REPORTE D TO THE LD. CIT(APPEALS) THAT THE LENDER IS A NON-RESIDENT PERSON AND, THE REFORE, DOCUMENTS SUBMITTED IN RESPECT OF GENUINENESS OF CREDIT AR E NOT VERIFIABLE AT ALL. IN SUCH A SITUATION, IT WAS NECESSARY FOR THE ASS ESSEE TO FURNISH FURTHER EVIDENCE REGARDING CREDIT-WORTHINESS OF THE LEND ER AND GENUINENESS OF THE TRANSACTION. IN ANY CASE, THE LD. CIT(APPEAL S) WAS BOUND TO EXAMINE THE MATTER FURTHER. SINCE CONDUCTING THE TRANSAC TION THROUGH BANKING CHANNEL DOES NOT BY ITSELF LEAD TO INFERENCE THA T THE TRANSACTION WAS GENUINE AND THE LENDER HAD CAPACITY TO ADVANCE THE SAME, THEREFORE, THE ITA NO. 3675(DEL)/2010 5 MATTER REQUIRES FURTHER EXAMINATION AS SUGGESTE D BY THE LD. DR. ACCORDINGLY, THE MATTER IS RESTORED TO THE FILE O F THE AO FOR FRESH ADJUDICATION WITH A DIRECTION TO THE ASSESSEE TO FURNISH EVIDENCE IN RESPECT OF CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTION. 5. IN THE RESULT, THE APPEAL IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 JULY, 2011. SD/- SD/- (RAJPAL YADAV) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 08 .07.2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- FRIENDS REALTORS, FARIDABAD. ACIT, CIRCLE-1, FARIDABAD. CIT CIT(APPEALS) THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.