Atul Mittal, New Delhi V. ITO WARD -14(3), New Delhi

ITA 3759/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9179 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 30-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARJUN GUPTA HUF
• Keywords: Gift
• Section: 68; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: SMC-1, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.3759/DEL./2019 ASSESSMENT YEAR: 2015-16 SHRI ATUL MITTAL, D-16, UDYOG NAGAR, ROHTAK ROAD, NEW DELHI VS. ITO, WARD-14(3), NEW DELHI PAN :AJHPM4655M (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 27/02/2019 PASSED BY THE LEARNED CIT(APPEALS)-5, NE W DELHI [IN SHORT THE LEARNED CIT(A)] FOR ASSESSMENT YEAR 201 5-16 RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [C IT(A)] IS BAD, BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION AMOUNTING TO RS. 43,46,970/- ON ACCOUNT OF UNSECURE D LOANS, MADE BY A.O. UNDER SECTION 68 OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF THE AO IN MAKING ADDITION OF RS. 3,26,715/- DESPITE THE FA CT THAT THE APPELLANT BY MS. RANO JAIN, ADV., SHRI PRANSHU SINGHAL, CA MS. MANSI JAIN, CA RESPONDENT BY SHRI. R.K. GUPTA, SR. DR DATE OF HEARING 06.08.2020 DATE OF PRONOUNCEMENT 11.08.2020 2 ITA NO. 3759/DEL./2019 CREDITS HAVING APPEARED IN EARLIER YEARS NO ADDITIO N U/S 68 IS CALLED FOR. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF THE AO REJECTING THE EXPLANATION AND EVIDENCES FILED BY TH E ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS AS WELL AS THE IDENTITIES OF THE LENDERS. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE WAS ENGAGED IN RUNNING BUSINESS OF FOOTWEAR MANUFACTURI NG IN THE NAME OF A PROPRIETARY CONCERN, M/S SUN INFOTECH ASI A. THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30/09/2015 DECLARING TOTAL INCOME OF 6,11,180/-. THE RETURN OF INCOME FILED WAS SELECTED FOR SCRUTINY AS SESSMENT AND ASSESSMENT PROCEEDINGS WERE COMMENCED BY WAY OF ISS UE OF STATUTORY NOTICES UNDER INCOME TAX ACT, 1961 ( IN S HORT THE ACT). THE INITIAL NOTICES WERE COMPLIED, HOWEVER, THE ASS ESSING OFFICER HAS MENTIONED THAT DURING THE PERIOD OF THE ASSESSM ENT PROCEEDING, THE ASSESSEE HAD SOUGHT MANY ADJOURNME NTS. THE ASSESSING OFFICER CALLED FOR DETAILS IN RESPECT OF THE UNSECURED LOAN RECEIVED DURING THE YEAR UNDER CONSIDERATION B UT THE ASSESSEE FAILED TO FURNISH INCOME-TAX PARTICULARS O F THE UNSECURED LOAN PARTIES AND STATED THAT THOSE PARTIES DID NOT FILE THEIR INCOME-TAX RETURN. IN RESPONSE TO THE SHOW CAUSE NO TICE ISSUED, THE ASSESSEE VIDE LETTER DATED 20/12/2017 (I.E. ON THE DATE OF THE ORDER) FILED REPLY, WHICH HAS BEEN REPRODUCED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER. ACCORDING TO THE R EPLY OF THE ASSESSEE, UNSECURED LOANS WERE RECEIVED FROM FOLLOW ING PERSONS AND THEY DID NOT FILE THEIR RETURN OF INCOME BEING INCOME BELOW THE EXEMPTION LIMIT: 3 ITA NO. 3759/DEL./2019 1. MRS. SUNITA MITTAL, WIFE OF THE ASSESSEE- SOURCE OF MONEY IN HER HAND WAS EXPLAINED AS RETURN OF LOANS GIVEN EARLIER TO MR HARI KISHAN AGARWAL AND M/S ARJUN GUPTA (HUF) . 2. M/S ATUL MITTAL (HUF), KARTA OF WHICH IS THE ASSESS EE HIMSELF. 3. MS. SAMYA MITTAL AND MR. ARYAN MITTAL-SOURCE OF MON EY IN THEIR HANDS WAS EXPLAINED AS FIXED DEPOSITS MADE THROUGH GIFT FROM RELATIVES 2.1 IN ABSENCE OF COPY OF RETURN OF INCOME FILED BY THE ALLEGED UNSECURED LOAN CREDITORS, THE ASSESSING OFFICER WAS OF THE VIEW THAT IDENTITY AND CREDITWORTHINESS OF THOSE PARTIES WAS NOT PROVED AND THEREFORE THE ASSESSEE FAILED TO EXPLAIN SATISF ACTORILY THE NATURE AND SOURCE OF THE CASH CREDIT. ACCORDING TO HIM, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN TERMS OF S ECTION 68 OF THE ACT AND THEREFORE, HE MADE ADDITION OF 43,46,970/-. IN SUPPORT OF THE ADDITION MADE, HE RELIED ON THE VARIOUS DECI SIONS OF THE HONBLE HIGH COURTS. 2.2 ON FURTHER APPEAL BEFORE THE LD. CIT(A), THE ASSES SEE SUBMITTED THAT MERE NON-FILING OF THE INCOME-TAX RE TURN CANNOT BE CONCLUSIVE TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS. ACCORDING TO THE ASSESSEE, SOURCE OF LOAN ADVANCED BY MRS. SUNITA MITTAL WAS ACTUALLY LOAN RECEIVED BACK FROM VARIOUS PARTIES AND THUS HER CREDITWORTHINESS WAS DULY ESTABLISHED. 2.3 THE LEARNED CIT(A), HOWEVER, REJECTED THE CONTENTI ONS OF THE ASSESSEE AND SUSTAINED THE ADDITION MADE BY THE ASS ESSING OFFICER. REGARDING THE LOAN OF 2,25,000/- FROM M/S ATUL MITTAL (HUF), HE SUSTAINED THE ADDITION OBSERVING AS UNDER : 4 ITA NO. 3759/DEL./2019 6.1 IT IS OBSERVED FROM THE BALANCE SHEET OF APPEL LANT THAT RS. 2,25,000/- HAS BEEN SHOWN AS UNSECURED LOAN FROM AT UL MITTAL (HUF) AS ON 31.03.2015. DURING APPELLATE PROCEEDING S A CONFIRMATION WAS SUBMITTED FROM ATUL MITTAL (HUF) F OR CONFIRMING SUCH BALANCE. ALONGWITH THIS, A PHOTO COPY OF BANK STATEMENT HAS BEEN PROVIDED, WHEREIN CERTAIN CASH DEPOSITS ARE RE FLECTED AND ALSO SHOWN THE MONEY PAID TO THE APPELLANT. IT IS INTERE STING TO NOTE THAT THIS IS THE HUF OF APPELLANT HIMSELF AND NO SOURCE OF INCOME HAS BEEN PROVIDED FOR SUCH HUF TO GENERATE AND JUSTIFY THESE CASH DEPOSIT. FURTHER, THE CONFIRMATION IS NOT DULY SIGN ED BY THE APPELLANT IN HIS CAPACITY AS INDIVIDUAL AND THE ADDRESS IN TH E BANK ACCOUNT IS MENTIONED AS B-2/7, MAIN WALI NAGAR, DELHI-87, WHIC H IS NOT THE ADDRESS MENTIONED BY THE APPELLANT IN THIS APPEAL. 2.4 REGARDING, CREDIT SHOWN FROM MRS SUNITA MITTAL, HE SUSTAINED THE ADDITION, OBSERVING AS UNDER: 6.4 I HAVE GONE THROUGH THE SUBMISSIONS/DOCUMENTS PROVIDED BY THE AR OF APPELLANT. IT IS OBSERVED FROM THE CONFIR MATION GIVEN BY MRS. SUNITA MITTAL TO SUPPORT THE SAID DEPOSIT IN T HE HANDS OF APPELLANT THAT IT IS ONLY A CONFIRMATION OF OUTSTAN DING BALANCE. IT IS STATED THAT SMT. SUNITA MITTAL HAS RECEIVED THESE F UNDS FROM MR. FLARIKRISHAN AGARWAL AND ARJUN GUPTA (HUF). ON GOIN G THROUGH THE CONFIRMATION OF ACCOUNT OF ARJUN GUPTA (HUF), GIVEN TO MRS. SUNITA MITTAL, IT IS OBSERVED THAT RS. 6,70,000/- IS THE O UTSTANDING BALANCE AS ON 31.03.2015, WHICH WAS RECEIVED BY HER ON 25.0 2.2015. IT IS NOT CLEAR THAT HOW THIS MONEY HAS BEEN RECEIVED BY MRS. SUNITA MITTAL AND THE PURPOSE FOR THIS LOAN IS ALSO NOT JU STIFIED . FURTHER, THIS LOAN WAS GIVEN TO THE APPELLANT WITHOUT ANY IN TEREST THEREFORE IT IS NOT DULY CORRELATED THAT HOW THIS AMOUNT IS SOUR CE FUND FOR MRS. SUNITA MITTAL TO GIVE TO MR. ATUL MITTAL. IT IS ALS O NOT ELABORATED THAT WHY THIS FUND HAS BEEN ROUTED THROUGH MRS. SUNITA M ITTAL, WHEN IT COULD HAVE BEEN DIRECTLY GIVEN TO APPELLANT BY ARJU N GUPTA (HUF). THEREFORE, THIS ARRANGEMENT DOES NOT JUSTIFY THE CO NTENTION OF APPELLANT. 6.5 FURTHER, WITH REFERENCE TO THE AMOUNT RECEIVED FROM MR. FLARIKRISHAN AGARWAL, IT IS SEEN THAT RS. 25,00,000 /- HAS BEEN SHOWN AS OPENING BALANCE ON 01.04.2014, WHICH IS RE PAID ON 19.02.2015. IT IS ALSO SEEN FROM THE SAID CONFORMAT ION THAT MRS. SUNITA MITTAL HAVE BEEN PROVIDED INTEREST OF RS. 2, 02,500/- DURING THE YEAR UNDER CONSIDERATION, WHICH IS NOT SHOWN AS INCOME BY MRS. SUNITA MITTAL AS PER HER STATEMENT OF INCOME. IF TH IS AMOUNT IS CONSIDERED, THE INCOME OF MRS. SUNITA MITTAL WILL B E ABOVE TAXABLE LIMITS. THIS ACTION OF NOT SHOWING INTEREST INCOME APPEARS TO BE AN ATTEMPT TO SHOW THAT MRS. SUNITA MITTAL IS NOT SUPP OSE TO SUBMIT RETURN OF INCOME, WHICH IS AGAINST THE FACTS. 6.6 FURTHER, THE TOTAL LOAN AMOUNT RECEIVED BY MRS. SUNITA MITTAL DOES NOT MATCH WITH THE LOANS GIVEN TO THE APPELLAN T WHICH IS MUCH LOWER THAN THE LOANS GIVEN AND NO STATEMENT OF AFFA IRS OF MRS. SUNITA 5 ITA NO. 3759/DEL./2019 MITTAL HAS BEEN PROVIDED TO JUSTIFY THE AMOUNT OF F ULL LOANS GIVEN TO ATUL MITTAL NOR PROVES THE SOURCE OF THE SAME TO TH E FULL EXTENT. 6.7 THEREFORE LOOKING TO THE FACTS OF THIS CASE AND THE SUBMISSIONS/ DOCUMENTS AS WELL AS DISCUSSIONS IN THE FORGOING PA RAGRAPHS, IT IS SEEN THAT THE APPELLANT COULD NOT JUSTIFY THE CREDI TWORTHINESS AND GENUINENESS OF THE UNSECURED LOANS IN HIS HANDS AND I DO NOT FIND ANY REASON TO DIFFER WITH THE FINDINGS BY THE ASSES SING OFFICER. 3. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE APP EARED THROUGH VIDEOCONFERENCING FACILITY AND FILED A PAPE R-BOOK ELECTRONICALLY. THIS PAPER-BOOK HAS BEEN FOUND TO B E NOT CERTIFIED AS PER THE REQUIREMENT OF THE ITAT RULES I.E. NO CE RTIFICATE OF DOCUMENTS, WHICH WERE FILED BEFORE THE LOWER AUTHOR ITIES. THE LEARNED DR ALSO APPEARED THROUGH VIDEOCONFERENCING AND RELIED ON THE ORDER OF THE LEARNED CIT(A). 4. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. FIRST OF ALL, BEFO RE US, THE LEARNED COUNSEL SUBMITTED THAT UNSECURED LOAN OF 43,46,970/- WAS OUTSTANDING IN THE BOOKS OF THE ASSESSEE AS ON 31/0 3/2015 FROM FOLLOWING THREE PARTIES: (A) ATUL MITTAL HUF : RS. 2,25,000/- (B) MD SHAUKAT ALI: RS. 1,01,715/-. (C) SUNITA MITTAL: RS. 40,20,255/-. 4.1 THE LEARNED COUNSEL SUBMITTED THAT OUT OF THE ABOV E UNSECURED LOANS FROM ATUL MITTAL AND MD SHAUKAT ALI WERE NOT RECEIVED DURING THE YEAR. ACCORDING TO HER, AS THER E WAS NO TRANSACTION WITH ABOVE TWO PARTIES DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE AS ON 31/03/2015 STOO D THE SAME AS OF THE OPENING BALANCE, BECAUSE OF THAT REASON, THE ADDITION OF THESE AMOUNTS UNDER SECTION 68 OF THE ACT WAS NOT J USTIFIED. THE 6 ITA NO. 3759/DEL./2019 LEARNED COUNSEL REFER TO THE CONFIRMATION LEDGER OF THE PARTIES FILED AT PAGE NO. 41 AND 42 OF THE PAPER-BOOK. 4.2 ON PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT THE PLEA OF UNSECURED LOAN RECEIVED FROM ATUL MITTA L (HUF) IN EARLIER YEAR, HAS BEEN MADE FOR THE FIRST TIME AND THEREFORE, THE CLAIM OF THE ASSESSEE ALONG WITH DOCUMENTARY EVIDEN CES, TO SUBSTANTIATE THAT SAID LOAN WAS NOT RECEIVED IN THE YEAR UNDER CONSIDERATION, COULD NOT BE EXAMINED BY THE LOWER A UTHORITIES. 4.3 REGARDING THE CLAIM OF LOAN FROM MD SHAUKAT ALI, W E FIND THAT NO SUCH NAME OF THE CREDITOR WAS SUBMITTED BEF ORE THE LOWER AUTHORITIES. THE CLAIM OF THE LOAN FROM THIS PARTY HAS BEEN MADE FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE ASSESSE E HAS FILED AN AUDITED BALANCE SHEET AS ON 31/03/2015, WHICH IS AV AILABLE ON PAGE NO.3 (THREE) OF THE PAPER-BOOK. WE DO NOT UNDE RSTAND, HOW THE ASSESSEE FAILED TO EXPLAIN NAME OF THIS UNSECUR ED LOAN PARTY, IF IT WAS APPEARING IN THE AUDITED BALANCE-SHEET. F URTHER, THE CLAIM HAS BEEN MADE BEFORE US FOR THE FIRST TIME TH AT THIS LOAN WAS NOT OBTAINED IN THE YEAR UNDER CONSIDERATION. 4.4 IN OUR OPINION, IT WAS THE DUTY AND RESPONSIBILITY OF THE ASSESSEE TO FILE THE CLAIM CORRECTLY BEFORE THE LOW ER AUTHORITIES ALONG WITH SUPPORTING DOCUMENTS, HOWEVER, IN THE IN TEREST OF THE SUBSTANTIAL JUSTICE, WE FEEL IT APPROPRIATE TO REST ORE THE ISSUE OF LOAN FROM M/S ATUL MITTAL (HUF) AND MD SHAUKAT ALI BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE YEAR IN WHICH LOAN WAS RECEIVED, ON THE BASIS OF THE DOCUMENTARY EVIDE NCES, WHICH WILL BE FILED BY THE ASSESSEE. IF THE LOANS ARE NOT RECEIVED IN THE YEAR UNDER CONSIDERATION, THEN NO ADDITION U/S 68 O F THE ACT CAN BE MADE IN THE YEAR UNDER CONSIDERATION. 7 ITA NO. 3759/DEL./2019 4.5 REGARDING CREDIT APPEARING IN THE NAME OF MRS. SUNI TA MITTAL, THE LEARNED COUNSEL REFERRED TO LEDGER ACCO UNT OF SUNITA MITTAL, APPEARING IN THE BOOKS OF PROPRIETARY CONCE RN M/S SUN INFO TECH ASIA, WHICH IS AVAILABLE ON PAGE 27 OF TH E PAPER BOOK. SHE SUBMITTED THAT TOTAL RS.57,71,100/- WAS RECEIVE D FROM SUNITA MITTAL DURING THE YEAR UNDER CONSIDERATION B UT OUT OF WHICH RS.17,50,845/- WAS RETURNED BACK AND NET BALA NCE OF RS.40,20,255/- WAS OUTSTANDING AS UNSECURED LOAN AS ON 31/03/2015. THE SAID LEDGER ACCOUNT IS REPRODUCED A S UNDER: 8 ITA NO. 3759/DEL./2019 4.6 IT HAS BEEN CLAIMED THAT MRS. SUNITA MITTAL DID NO T FILE INCOME-TAX RETURN FOR THE ASSESSMENT YEAR CONCERNED BEING INCOME BELOW EXEMPTION LIMIT, BUT MONEY WAS GIVEN O UT OF THE MONEY RECEIVED FROM MR. H.K. AGRAWAL, M/S. ARJUN GU PTA (HUF) AND SALARY RECEIVED. THE LEARNED COUNSEL IN SYNOPSI S HAS FILED SOURCE OF EACH AMOUNT OF THE CREDIT ALONG WITH CONF IRMATION FROM M/S HK AGRWAL, ITR RETURN OF HK AGRWAL, CONFIRMATIO N FROM M/S ARJUN GUPTA (HUF), ITR RETURN OF ARJUN GUPTA (HUF) AND KOTAK MAHINDRA BANK STATEMENT OF MRS SUNITA MITTAL. MAJOR SOURCE ON UNSECURED LOAN ADVANCED HAS BEEN EXPLAINED AS RETUR N OF LOAN GIVEN EARLIER FROM MR. HK AGRWAL ALONG WITH INTERES T, LOAN RECIVED FROM ARJUN GUPTA(HUF) AND SALARY RECEIVED FROM M/S ICA INTERNATIONAL PRIVATE LIMITED. THE SAME EXPLANATION WAS SUBMITTED BEFORE THE LEARNED CIT(A). THE LEARNED CI T(A) FOUND DISCREPANCY IN THE CONFIRMATION OF ATUL MITTAL (HUF ). HE FOUND THAT THE LOAN RE-PAYMENT WAS MADE TO MRS. SUNITA MU ITTAL ON 25/02/2015, STILL THE OUTSTANDING BALANCE OF 6,70,000/- WAS SHOWN ON 31/03/2015. HE ALSO NOTED THAT THE INTERES T INCOME OF 2,02,500/- TO MRS. SUNITA MITTAL WAS SHOWN IN THE CONFIRMATION FILED BY MR. HK AGRWAL, BUT THE SAME WAS NOT INCLUD ED BY MRS. SUNITA MITTAL IN THE COMPUTATION OF HER INCOME, A C OPY OF WHICH HAS BEEN FILED ON PAGE 25 OF THE OF THE PAPER BOOK. HE ALSO OBSERVED THAT NO STATEMENT OF THE AFFAIRS OF MRS SU NITA MITTAL HAD BEEN PROVIDED TO JUSTIFY THE AMOUNT OF LOANS GIVEN TO THE ASSESSEE. 4.7 WE FIND THAT BEFORE US THE LEARNED COUNSEL PROVIDE D DETAIL OF EACH ENTRY OF THE CREDIT RECEIVED FROM MRS SUNITA M ITTAL AND ALSO INFORMED SOURCE OF THE EACH CREDIT THEREFORE, IN TH E INTEREST OF THE 9 ITA NO. 3759/DEL./2019 SUBSTANTIAL JUSTICE, WE FEEL IT APPROPRIATE TO REST ORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMI NING THE NATURE AND SOURCE OF THE CREDIT IN TERMS OF SECTION 68 OF THE ACT. THE ASSESSEE MAY FILE ALL THE DOCUMENTARY EVIDENCES IN SUPPORT OF THE CREDITS APPEARING IN LEDGER ACCOUNT OF SUNITA MITTA L IN THE BOOKS OF THE ASSESSEE. 4.8 IN VIEW OF THE ABOVE DISCUSSION, THE GROUNDS OF TH E APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH AUGUST, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI