DCIT, Meerut V. M/s Prasandi Builders Pvt. Ltd., Meerut

ITA 3774/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5346 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 27-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT MEERUT BEFORE SH. N. S . SAINI, ACCOUNTANT MEMBER AND SH. KULDIP SINGH, JUDICIAL MEMBER ITA NO. 3092/DEL/2016 : ASSTT. YEAR : 2012 - 1 3 PRASANDI BUILDE RS PVT. LTD., C/O MEHRA & CO., CA, 7, RAJESHWARI PALACE, NEAR COMMISSIONER RESIDENCE, CIVIL LINES, MEERUT - 250001 VS ACIT, CIRCLE - 2 , MEERUT - 250002 (APPELLANT) (RESPONDENT) PAN NO. A A ACP8262G ITA NO. 3774/DEL/2016 : ASSTT. YEAR : 2012 - 1 3 ACIT, CIRCLE - 2, MEERUT - 250002 VS PRASANDI BUILDERS PVT. LTD., C/O MEHRA & CO., CA, 7, RAJESHWARI PALACE, NEAR COMMISSIONER RESIDENCE, CIVIL LINES, MEERUT - 250001 (APPELLANT) (RESPONDENT) PAN NO. AA ACP8262G ASSESSEE BY : SH. K. SAMPATH , ADV. REVENUE BY : SH. S. S. RANA, CIT DR DATE OF HEAR ING: 10 . 01 .201 9 DATE OF PRONOUNCEMENT: 28 .01 .201 9 ORDER PER N. S. SAINI, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AN D THE REVENUE AGAINST THE ORDER OF CIT(A) , MEERUT DATED 30.03.2016 . 2. IN GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.54,00,000/ - U/S 68 OF THE INCOME TAX ACT. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 2 3. THE ASSESSING OFFICER OBSERVED THAT FROM PERUSAL OF BALANCE SHEET, IT IS OBSERVED THAT THERE IS INCREASE IN CREDITORS AS UNDER: RAJENDER SINGH 1800000 RAJ PAL 2300000 RAMESH YADAV 1300000 4 . THE ASSESSING OFFICER FURTHER OBSERVED THAT DURING THE YEAR THERE ARE NO PURCHASES. NOTICE U/S 133(6) OF THE ACT WAS ISSUED ON 08.12.2014 TO ALL THE CREDITORS AND THE SAME WAS ALSO CONFIRMED. FROM THE REVIEW OF CONFIRMATION, IT WAS FOUND THAT THEY ARE NOT CREDITORS, BUT THE NATURE OF THE SAME IS UNSECURED LOAN AS NOTHING WAS PURCHASED FROM THEM. AS PER ORDER SHEET ENTRY DATED 04.03.2015 WAS REQUIRED BY THE ASSESSING OFFICER TO GIVE CONFIRMATION OF CREDITORS ALONGWITH BILLS FOR WHICH PAYMENT WAS DUE. FURTHER, AGAIN ON 13.03.2015, ASSESSEE WAS ASKED TO PRODUCE THE TH REE PARTIES BEFORE HIM, THE ASSESSEE FAILED TO PRODUCE THE CREDITORS. THE ASSESSEE SUBMITTED THAT THEY WERE UNSECURED DEPOSITOR AND WRONGLY MENTIONED IN BALANCE SHEET UNDER THE HEAD SUNDRY CREDITORS. THE ASSESSING OFFICER OBSERVED THAT EXPLANATION OF THE A SSESSEE WAS NOT ACCEPTABLE AS THIS WAS NOT REFLECTED IN THE TAX AUDIT REPORT. THE ASSESSEE ACCEPTED THIS FACT ONLY WHEN ASSESSEE WAS REQUIRED TO FURNISH BILLS OF GOODS SUPPLIED BY THEM. THEREFORE, THE ASSESSING OFFICER CONCLUDED FROM THE CONFIRMATIONS, BAN K STATEMENT AND PURCHASE/SALE DEED THAT ALL THE BANK ACCOUNT MAINTAINED ARE IN JOINT NAME OF SH. VIJAY PAL YADAV WITH UNION BANK OF INDIA, WHO IS THE DIRECTOR IN THE ASSESSEE COMPANY. ALL CHEQUES OF LOANERS FOR THE AMOUNT OF LOAN RECEIVED BY THE COMPANY FO R RS.18,00,000/ - , RS.23,00,000/ - AND RS.13,00,0 00/ - IS ONLY SIGNED BY DIRECTOR HIMSELF AND CHEQUES DOES NOT CONTAIN ANY SIGNATURE OF LOANERS. ALL LOANERS GAVE LOAN OUT OF SALE CONSIDERATION OF PROPERTY WHICH IS SOLD TO THE SISTER CONCERN OF THE SAID COMPAN Y WHERE BOTH THE DIRECTORS AND SHAREHOLDERS ARE SAME AND PURCHASE DEED IS ALSO EXECUTED BY SH. VIJAY ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 3 PAL YADAV IN HIS CAPACITY OF DIRECTOR. ON THE BASIS OF THIS INFORMATION, THE AO CONCLUDED THAT ABOVE TRANSACTIONS ARE BENAMI TRANSACTIONS ROUTED BY THE DIR ECTOR SH. VIJAY PAL YADAV. THE AO OBSERVED THAT T HE ASSESSEE HAS BEEN GIVEN OPPORTUNITY TO PRODUCE THE LOANER OTHERWISE SAME SHALL BE CONSIDERED AS UNEXPLAINED. THE ASSESSEE FAILED TO DO SO. SUMMON U/S 131 OF THE ACT WAS NOT RESPONDED TO BY THE PARTIES BY APPEARING BEFORE HIM OR BY FILING ANY REPLY. HE OBSERVED THAT THE ONUS OF THE ASSESSEE IS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF THE DEPOSITOR WHERE ASSESSEE COMPLETELY FAILED TO PROVE THE SAME. HENCE, HE ADDED RS.54,00,0 00/ - TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5 . ON APPEAL BEFORE CIT(A), THE ASSESSEE CONTENDED THAT DURING THE ASSESSMENT PROCEEDINGS, THE LOAN CREDITOR WAS BUSY, THEREFORE, HE COULD NOT APPEAR. HE FURNISHED AFFIDAVIT OF SH. RAJINDER SINGH YADAV AS AN ADDITIONAL EVIDENCE ALONGWITH APPLICATION UNDER RULE 46A FOR ADMISSION OF THE SAME. THE CIT(A) OBSERVED THAT IN THE AFFIDAVIT , IN PARA 6, SH. RAJINDER SINGH INFORMED THAT NOW HE I S READY TO PRESENT HIMSELF FOR NECESSARY S TATEMENT ETC. THE SUBMISSIONS ALONGWITH THE ADDITIONAL EVIDENCES WERE FORWARDED TO THE AO VIDE LETTER DATED 10.12.2015 INFORMING THE AO THAT NOW THE APPELLANT IS IN A POSITION TO PRODUCE THE CASH CREDITOR AND THEREFORE, THE AO IS DIRECTED TO EXAMINE THE AD DITIONAL EVIDENCE AND SEND HIS REPORT. THE ASSESSING OFFICER FURNISHED HIS REMAND REPORT ON 15.01.2016. 6 . IN THE SAID REPORT, THE ASSESSING OFFICER STATED FOR NOT ADMITTING THE ADDITIONAL EVIDENCE ON THE GROUND THAT THE APPELLANT WAS GIVEN SUFFICIENT OPP ORTUNITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO FOR THE REASON THAT THE APPELLANT DO NOT SATISFY ANY OF THE FOUR CONDITIONS AS MENTIONED IN RULE 46A(1). ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 4 7 . ON THE MERITS, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE ACT TO SH. RAJIND ER SINGH FOR COMPLIANCE ON 13.01.2016, HOWEVER, HE DID NOT TURN UP FOR THE STATEMENT. IN THE LIGHT OF THIS FACT, THE ASSESSING OFFICER SUBMITTED THAT CLAIM OF THE ASSESSEE ALONGWITH ADDITIONAL EVIDENCES SHOULD NOT ADMITTED. 8. THE CIT(A) OBSERVED THAT ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A, HE WAS OF THE CONSIDERED VIEW THAT UNDER THE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, THE ADDITIONAL EVIDENCE BEING AFFIDAVIT NEEDS TO BE ADMITTED, MORE SO, ALSO BECAUSE THE AO H AS EXAMINED THE ADDITIONAL EVIDENCE ON MERITS AND HAS OFFERED HIS COMMENTS ON MERITS ALSO. THE APPELLANT HAS ALSO FILED REPLY TO REMAND REPORT VIDE HIS LETTER DATED 17.02.2016. IT HAS BEEN STATED THAT SH. RAJINDER SINGH WAS DOWN WITH CANCER AND STILL UNDER TREATMENT, TH EREFORE, COULD NOT ATTEND. THE A PPELLANT FURNISHED THE CONFIRMATION OF SH. RAJINDER SINGH, COPY OF HIS PAN CARD, COPY OF ITR ACKNOWLEDGMENT OF ASSESSMENT YEAR 2012 - 13 SHOWING GROSS INCOME OF RS.5,18,780/ - , COMPUTATION OF INCOME OF ASSESSMENT YEAR 2012 - 13 AND BANK STATEMENT OF SH. RAJINDER SINGH. THE APPELLANT HAS CLAIMED THAT THE SOURCE OF THIS LOAN BY THE CREDITOR IS OUT OF THE SALE PROCEEDS OF PROPERTIES. COPIES OF SALE DEEDS WERE ALSO FILED. HOWEVER, ON EXAMINING THE BANK STATEMENT OF SH. R AJINDER SINGH AND SH. VIJAY PAL YADAV, THE CIT(A) FOUND THAT THE IMMEDIATE PRECEDING CREDIT OF RS.20,00,000/ - ON 24.03.2012 IS THROUGH SOME CLEARING VIDE INSTRUMENT NO. 345031. IT IS OUT OF THIS CREDIT THAT RS.18,00,000/ - HAS GIVEN TO THE ASSESSEE. THE SAL E PROCEEDS OF THE PROPERTY CREDITED IN THE BANK ACCOUNT WAS ALREADY UTILIZED/ CONSUMED PRIOR TO THE RECEIPT OF RS.20,00,000/ - ON 24.03.2012. HENCE, THE CLAIM THAT THE SOURCE OF RS.18,00,000/ - WAS OUT OF TH E SALE PROCEEDS OF PROPERTY BY S H. RAJINDER SINGH DI D NOT APPEAR TO BE CORRECT. THE CIT(A) FURTHER OBSERVED THAT NEITHER THE APPELLANT NOR SH. RAJINDER SINGH EXPLAINED THE SOURCE OF ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 5 CREDIT OF RS.20,00,000/ - IN THE BANK ACCOUNT ON 24.03.2012. HE OBSERVED THAT IT WAS IMPORTANT TO MENTION THAT NEITHER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED SH. RAJINDER SINGH FOR THE STATEMENT, NOR DURING THE COURSE OF REMAND PROCEEDINGS, HE WAS PRODUCED ALTHOUGH IN THE AFFIDAVIT, SH. RAJINDER SINGH DULY OFFERED FOR PRODUCING FOR THE NEEDFUL BEFORE TH E AO. HENCE, ALTHOUGH THE IDENTITY OF THE LOAN CREDITOR WAS NOT IN DOUBT, HOWEVER, THE CREDITWORTHINESS DOES NOT STAND PROVED AND UNDER THE FACTS, THE APPELLANT HAS FAILED TO DISCHARGE HIS ONUS FULLY IN RESPECT OF CASH CREDIT. THEREFORE, HE HELD THAT HE WA S OF THE VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING ADDITION OF RS.18,00,000/ - U/S 68 OF THE ACT. 9. THE CIT(A) OBSERVED THAT IN THE CASE OF SH. RAMESH YADAV, LOAN OF RS.13,00,000/ - A LL THE FACTS AND CIRCUMSTANCES ARE SIMILAR AS IN THE CAS E OF SH. RAJINDER SINGH DISCUSSED ABOVE. IN THIS CASE ALSO, ADDITIONAL EVIDENCE BEING AFFIDAVIT WAS FILED WHEREIN HE OFFERED FOR APPEARING FOR THE NEEDFUL FOR THE APPEAL PROCEEDINGS. THE ADDITIONAL EVIDENCE STANDS ADMITTED FOR THE REASON GIVEN IN THE CASE OF SH. RAJINDER SINGH ABOVE. HOWEVER, IN THIS CASE, SH. RAMESH YADAV WAS NOT PRODUCED DURING REMAND PROCEEDINGS INSPITE OF BEING SO DIRECTED BY THE AO. IN THIS CASE ALSO, THE APPELLANT HAS FURNISHED CONFIRMATION, COPY OF PAN CARD, COPY OF ITR ACKNOWLEDGMEN T DECLARING GROSS INCOME OF RS.4,50,933/ - , COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2012 - 13 AND ALSO COPY OF BANK STATEMENT IN THE NAME OF SH. RAMESH YADAV AND SH. VIJAY PAL YADAV. HE OBSERVED THAT IN THIS CASE ALSO, CLAIM HAS BEEN THAT THE SOURCE OF RS.1 3,00,000/ - IS THE SALE PROCEEDS OF PROPERTIES BY SH. RAMESH YADAV. COPIES OF SALE DEED HAS BEEN FILED. SIMILAR TO THE CASE OF SH. RAJINDER SINGH, IN THIS CASE ALSO, THE IMMEDIATE PRECEDING CREDIT OF RS.15,00,000/ - IN THE BANK STATEMENT ON 24.03.2012 THROUG H CLEARING IS VIDE INSTRUMENT NO. 345026. THE SOURCE OF RS.15,00,000/ - IS NOT EXPLAINED EITHER BY THE APPELLANT OR BY SH. RAMESH ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 6 YADAV. THE CIT(A) OBSERVED THAT IT WAS IMPORTANT TO POINT OUT THAT THE SALE PROCEEDS OF PROPERTIES WHICH WERE CREDITED IN THE S AME BANK EARLIER ALREADY STOOD CONSUMED/EXHAUSTED PRIOR TO RECEIPT OF IMMEDIATE PRECEDING CREDIT OF RS.15,00,000/ - ON 24.03.2012. THEREFORE, THE CLAIM THAT THE SOURCE IN THE BANK ACCOUNT OF SH. RAMESH YADAV IS OUT OF SALE PROCEEDS OF PROPERTIES REMAINS UNS UBSTANTIATED. UNDER THESE FACTS, ALTHOUGH THE IDENTITY OF THE LOAN CREDITOR IS NOT IN DOUBT, HOWEVER, CREDITWORTHINESS STANDS UNPROVED. THE APPELLANT HAS NOT SUCCESSFULLY DISCHARGED HIS FULL ONUS IN RESPECT OF THIS CREDIT AND THEREFORE, HE HELD THAT THE AO WERE JUSTIFIED IN MAKING ADDITION OF RS.13,00,000/ - U/S 68 OF THE ACT FOR UNSECURED LOAN IN THE NAME OF SH. RAMESH YADAV. 10. THE CIT(A) OBSERVED THAT IN THE CASE OF RAJ PAL, THE LOAN AMOUNT OF RS.23,00,000/ - A LL THE FACTS AND CIRCUMSTANCES ARE SIMI LAR IN THE ABOVE TWO CASES. THE ADDITIONAL EVIDENCE BEING AFFIDAVIT STANDS ADMITTED FOR THE REASON ALREADY GIVEN ABOVE. THE ONLY DIFFERENCE IN THIS CASE IS THAT DURING REMAND PROCEEDINGS, RAJ PAL ATTENDED BEFORE THE AO ON 13.01.2016 WHEN HIS STATEMENT WAS RECORDED. THE CIT(A) OBSERVED THAT HE HAS ALSO PERUSED THE SAID STATEMENT WHEREIN HE ADMITTED FOR GIVING RS.23,00,000/ - AS LOAN WITHOUT INTEREST FOR THE REASON THAT HE HAS FAMILY RELATIONS WITH THE DIRECTORS OF THE APPELLANT. THE SOURCE HE HAS STATED TO BE OUT OF SALE PROCEEDS OF PROPERTIES. IN THIS CASE ALSO, THE APPELLANT FILED CONFIRMATION, COPY OF PAN CARD, ITR ACKNOWLEDGMENT SHO W ING GROSS INCOME AT RS.2,91,920/ - FOR ASSESSMENT YEAR 2012 - 13 AND COPY OF BANK STATEMENT OF SH. RAJ PAL SINGH AND SH. VIJAY P AL YADAV AND ALSO COPY OF SALE DEEDS OF PROPERTIES. THE CIT(A) OBSERVED THAT AS IN THE ABOVE MENTIONED TWO CASES, IN THIS CASE ALSO, THE IMMEDIATE PRECEDING CREDIT OF RS.25,00,000/ - IN THE BANK ACCOUNT ON 24.03.2012 OUT OF WHICH, THE SAID LOAN HAS BEEN GIV EN IS A CREDIT THROUGH CLEARING INSTRUMENT NO. 345025. THE SOURCE OF THIS CREDIT REMAINS UNEXPLAINED. THE SALE PROCEEDS OF THE PROPERTIES ARE IN ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 7 THE SAME BANK ACCOUNT BUT THOSE CREDITS WERE ALREADY CONSUMED/UTILIZED PRIOR TO RECEIPT OF RS.25,00,000/ - ON 24 .03.2015 AND IT IS OUT OF THIS CREDIT THAT THE AMOUNT UNDER CONSIDERATION OF RS.23,00,000/ - HAS BEEN GIVEN. THUS, ALTHOUGH THE CASH CREDITOR APPEARED BEFORE THE AO, HIS IDENTITY IS NOT IN DISPUTE BUT HIS VERSION AND CLAIM THAT THE LOAN HAS BEEN GIVEN OUT O F SALE OF PROPERTIES REMAINS UNSUBSTANTIATED. THEREFORE, HE HELD THAT THE APPELLANT HAS FAILED IN PROVING CREDITWORTHINESS IN THIS CASE ALSO AND HAD NOT DISCHARGED HIS ONUS FULLY. THEREFORE, THERE WAS OF THE CONSIDERED OPINION THAT THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS.23,00,000/ - U/S 68 OF THE ACT IN THIS CASE ALSO. IN THIS WAY, HE CONFIRMED THE ADDITION OF RS.54,00,000/ - . 11. BEFORE US, THE AR OF THE ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT OF SH. RAJINDER SINGH IN THE BOOKS OF EMM VEE INFRASTRU CTURES (INDIA) PVT. LTD. AT PAGE NO. 173 OF THE PAPER BOOK. IT WAS POINTED OUT THERE FROM THAT THE ASSESSEE HAS GIVEN SUM OF RS.21,00,000/ - TO THE SAID COMPANY ON 06.01.2012 AND HE HAS ALSO FILED COPY OF BANK ACCOUNT OF UNION BANK OF INDIA, MEERUT IN THE N AME OF SH. RAJINDER SINGH AND SH. VIJAY PAL YADAV. THERE FROM IT HAS BEEN POINTED OUT THAT THERE IS DEPOSIT OF RS.21,00,000/ - ON 06.01.2012 IN THE NAME OF EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. THEREAFTER, THE AR OF THE ASSESSEE POINTED OUT THAT ON 22.0 3.2012 EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. RETURNED RS.20,00,000/ - VIDE DD NO. 345031 DATED 22.03.2012 TO THE ASSESSEE. HE POINTED OUT FROM THE BANK STATEMENT OF UNION BANK OF INDIA OF SH. RAJINDER SINGH AND SH. VIJAY PAL YADAV THAT THERE WAS A CREDI T OF RS.20,00,000/ - ON 24.03.2012 AND ON 26.03.2012 SH. RAJINDER SINGH VIDE RTGS FROM THE SAME BANK ACCOUNT WITH UNION BANK OF INDIA IN THE NAME OF SH. RAJINDER SINGH AND SH. VIJAY PAL YADAV ADVANCE A LOAN OF RS.18,00,000/ - TO THE ASSESSEE. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 8 12 . SIMILARLY, IN THE CASE OF MR. RAJ PAL SINGH , THE ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT IN THE BOOKS OF EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. WHICH IS PLACED AT PAGE NO. 190 OF THE PAPER BOOK AND POINTED OUT THERE FROM THAT ASSESSEE HAS ADVANCED RS.21,00,000/ - TO THE SAID M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. ON 06.01.2012 VIDE CHEQUE NO. 650813 DATED 06.01.2012 DRAWN ON UBI MAIN BRANCH, MEERUT. HE HAS ALSO PLACED COPY OF BANK STATEMENT OF SH. RAJ PAL SINGH AND SH. VIJAY PAL YADAV AT PAGE NO. 180 OF TH E PAPER BOOK WHEREIN ON 06.01.2012 THERE IS DEBIT OF RS.21,00,000/ - VIDE CHEQUE NO. 650813 IN THE NAME OF M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. HE THEN POINTED OUT FROM THE LEDGER COPY OF SH. RAJ PAL SINGH IN THE BOOKS OF M/S EMM VEE INFRASTRUCTURE S (INDIA) PVT. LTD. THAT ON 22.03.2012, T HE SAID COMPANY PAID RS.25,00,000/ - TO MR. RAJ PAL SINGH BY DD NO.345025 DATED 22.03.2012. ON 26.03.2012, MR. RAJ PAL SINGH PAID RS.23,00,000/ - TO THE ASSESSEE COMPANY THROUGH RTGS BEING CHEQUE NO. 650816. SIMILARLY , THE ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT OF SH. RAMESH CHANDER IN THE BOOKS OF M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. WHICH IS PLACED AT PAGE NO. 182 OF THE PAPER BOOK. HE POINTED OUT THERE FROM THAT SH. RAMESH CHANDER HAS PAID RS.21,00,000/ - TO THE SAID COMPANY VIDE CHEQUE NO. 599427 DATED 06.01.2012 DRAWN ON UBI MAIN BRANCH, MEERUT. ON 22.03.2012 M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. PAID RS.15,00,000/ - TO SH. RAMESH CHANDER VIDE DD NO. 345026 DATED 22.03.2012. THEN, SH. RAMESH CHAND ER ON 26.03.2012 PAID RS.13,00,000/ - TO THE ASSESSEE BY CHEQUE DRAWN ON UBI MAIN BRANCH, MEERUT. THUS, IT WAS SUBMITTED THAT THE SOURCE OF CREDIT IN THE BANK ACCOUNT OF THE LOAN CREDITOR WAS AMPLY PROVED BY THESE DOCUMENTS FILED BEFORE THE AO AS WELL AS CI T(A) AND HENCE, THERE WAS NO JUSTIFICATION FOR MAKING ADDITION OF RS.54,00,000/ - IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 9 13 . ON THE OTHER HAND, THE DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS TAKEN LOAN OF RS.18,00,000/ - FROM SH. RAJIDER SINGH, RS.23,00,000/ - FROM SH. RAJ PAL AND RS.13, 00,000/ - FROM SH. RAMESH YADAV. THE ABO VE THREE LOAN AGGREGATES TO RS.5 4,00,000/ - . THE ABOVE THREE LOAN CREDITORS WERE NOT PRODUCED BEFORE THE AO. THE AO ADDED RS.54,00,000/ - TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT . 15. THE ASSESSEE BEFORE THE CIT(A) FILED COPY OF ACKNOWLEDGMENT OF INCOME TAX RETURN FOR ASSESSMENT YEAR 2012 - 13 FILED BY THE THREE LOAN CREDITORS, COPY OF BANK STATEMENT OF THE LOAN CREDITORS, COPY OF DEED OF SALE OF LAND BY THE LOAN CREDITORS, COPY OF THEIR CONFIRMATIONS, COPY OF CONFIRMATION OF M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. WITH THE LOAN CREDITORS AND COPY OF AFFIDAVIT OF THE LOAN CREDITORS WHEREIN THEY ACCEPTED THE GIVING OF LOAN TO THE ASSESSEE. 16. THE CIT(A) AFTER ADMITTING THE AB OVE DOCUMENTS AS ADDITIONAL EVIDENCES CALLED FOR REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE, THE CIT(A) CONFIRMED THE ACTION OF THE AO IN RESPECT OF ALL THE THREE LOAN CREDITORS. 17. THE AR OF THE ASSESS EE SUBMITTED AT BAR THAT ALL THE THREE LOAN CREDITORS IN QUESTIONS ARE BROTHERS OF DIRECTOR OF THE ASSESSEE COMPANY, NAMELY, SH. VIJAY PAL YADAV. ALL OF THEM ARE ASSESSED TO TAX AND HAVE BEEN ALLOTTED PAN BY THE DEPARTMENT. THUS, THEIR IDENTITIES ARE NOT I N DISPUTE. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 10 18. FURTHER, THE LOANS IN QUESTION WERE ADVANCED THROUGH BANKING CHANNEL AND WERE ALSO CONFIRMED BY THE SAID CREDITORS BY WAY OF THEIR AFFIDAVITS. THUS, THE GENUINENESS OF THE TRANSACTIONS ARE ALSO NOT IN DISPUTE. 19. THE LOWER AUTHORITIES MAD E THE ADDITION ONLY BECAUSE THEY DOUBTED THE CREDITWORTHINESS OF THE SAID LOAN CREDITORS. ALL THE THREE CREDITORS HAD THREE PIECE OF LAND JOINTLY OWNED BY THEM WHICH WERE SOLD VIDE REGISTERED DEED DATED 24.12.2011 FOR RS.35,98,500/ - , DEED DATED 24.12.2011 FOR RS.40,81,500 AND REGISTERED DEED DATED 24.12.2011 FOR RS.35,05,500/ - AND THE RESPECTIVE SHARE OF SALE CONSIDERATION WAS CREDITED IN THE BANK ACCOUNT MAINTAINED WITH UNION BANK OF INDIA OF EACH OF THE LOAN CREDITORS ON 03.01.2012. OUT OF THIS, SH. RAJIN DER SINGH GAVE ADVANCE OF RS.33,00,000/ - TO M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. HE RECEIVED BACK RS.20,00,000/ - OUT OF THE AFORESAID ADVANCE FROM M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. ON 22.03.2012 AND OUT OF THIS REFUND HE PAID RS.18,00, 000/ - TO THE ASSESSEE COMPANY AS LOAN. SIMILARLY, SH. RAJ PAL GAVE ADVANCE OF RS.28,00,000/ - TO M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. HE RECEIVED BACK RS.25,00,000/ - FROM M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. ON 22.03.2012 AND OUT OF THIS R EFUND HE GAVE LOAN OF RS.23,00,000/ - TO THE ASSESSEE COMPANY. SIMILARLY, SH. RAMESH YADAV GAVE ADVANCE OF RS.28,00,000/ - TO M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. HE RECEIVED BACK RS.15,00,000/ - FROM M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. AND OUT OF THIS REFUND HE PAID RS.13,00,000/ - TO THE ASSESSEE COMPANY AS LOAN. 20. WE FIND THAT IT IS NOT IN DISPUTE THAT ALL THE THREE LOAN CREDITORS HAD SOL D THREE PIECE OF LAND JOINTLY HE LD BY THEM FOR RS.35,98,500/ - , RS.40,81,500 AND RS.35,05,500/ - VIDE REGISTERED DEED ALL DATED 24.12.2011 BEFORE ADVANCING LOAN TO THE ASSESSEE COMPANY. FURTHER, FROM ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 11 THE CONFIRMATION OF ACCOUNT OF SH. RAJINDER SINGH, SH. RAJ PAL AND SH. RAMESH YADAV IN THE BOOKS OF M/S EMM VEE INFRASTRUCTURES (INDIA) PVT. LTD. IT IS OBSERV ED THAT OPENING BALANCE OF ADVANCE GIVEN BY SH. RAJINDER SINGH WAS RS.65,00,000/ - , SH. RAJ PAL WAS RS.71,00,000/ - AND SH. RAMESH YADAV WAS RS.50,00,000/ - . THUS, IN OUR CONSIDERED OPINION, CREDITWORTHINESS OF SUCH A LOAN CREDITOR CANNOT BE DOUBTED. IN FACT, IN THE INSTANCE CASE, ACTUAL CREDITWORTHINESS OF THREE LOAN CREDITORS, NAMELY, SH. RAJINDER SINGH, SH. RAJ PAL AND SH. RAMESH YADAV WAS NOT IMPEACHED BY THE REVENUE BY BRINGING ON RECORD ANY RELEVANT MATERIAL BUT ADDITION WAS MADE BY DOUBTING THE SOURCE O F RS.18,00,000/ - IN THE CASE OF SH. RAJINDER SINGH, RS.23,00,000/ - IN THE CASE OF SH. RAJ PAL AND RS.13,00,000/ - IN THE CASE OF SH. RAMESH YADAV. IT IS OBSERVED THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT RS.18,00,000/ - , RS.23,00,000/ - AND RS. 13,00,000/ - HAS FLOWN FROM THE EXCHEQUER OF THE ASSESSEE AND WAS ROUTED BACK BY WAY OF LOAN FROM SH. RAJINDER SINGH, SH. RAJ PAL AND SH. RAMESH YADAV. IT IS AN ESTABLISHED POSITION OF LAW THAT U/S 68 OF THE A CT IN RESPECT OF LOAN CREDITOR, T HE ASSESSEE IS REQUIRED TO ESTABLISH HIS SOURCE AND NOT THE SOURCE OF THE SOURCE . THEREFORE, THE ADDITION MADE OF RS.18,00,000/ - RECEIVED FROM SH. RAJNDER SINGH, RS.23,00,000/ - RECEIVED FROM SH. RAJ PAL AND RS.13,00,000/ - RECEIVED FROM SH. RAMESH YADAV BY DOUBTING THE IR SOURCE CANNOT BE SUSTAINED. W E, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.18,00,000/ - , RS.23,00,000/ - AND RS.13,00,000/ - ALL AGGREGATING TO RS.54,00,000/ - AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE . 21 . IN GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE AND IN GROUND NO. 1 OF THE APPEAL OF THE REVENUE, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.9,34,394/ - ON ACCOUNT OF CLOSING STOCK AND THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 12 IN REDUCING THE ADDITION MADE BY THE AO ON ACCOUNT OF CLOSING STOCK FROM RS.66,00,000/ - TO RS.9,34,394/ - . 22 . SINCE, THE FACTS AND ISSUE S INVOLVED ARE SIMILAR, T HE GROUND OF APPEAL OF THE ASSESSEE AND THAT OF THE REVENUE AR E ADJUDICATED TOGETHER AS UNDER. 23 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY DECREASE OF RS.66,00,000/ - IN WORK - IN - PROGRESS. THE ASSESSEE SUBMITTED THAT IT HAS SHOWN GROSS OPENIN G WORK - IN - PROGRESS AT 1544 9.52 S Q. FT S . VALUED AT RS.1,89,75,196/ - I.E. RS. 1228.21 PER S Q. FT. IT WAS SUBMITTED THAT OUT OF OPENING STOCK, THE ASSESSEE REDUCED THE A REA SOLD IN ASSESSMENT YEAR 2012 - 13 MEASURING 9245 SQ. FTS. VALUED AT RS.1,228.21 PER SQ. FT. FOR RS.1,13,54,773/ - FO R THE BALANCE AMOUNT OF RS.2870.24 SQ. FTS. THE ASSESSEE SUBMITTED THAT THE SAME HAS BEEN TREATED AS NON SALEABLE BEING PARKING AREA ETC. WHICH WAS VALUED AT RS.35,25,226/ - @ RS.1228.21 PER SQ. FT. AND THE DIFFERENCE OF ALL THESE FIGURES BEING LEFT OVER/AV AILABLE AREA AS ON 31.03.2012 STOOD CALCULATED AT 3334.28 SQ. FT WHICH WAS CALCULATED AT RS.40,95,196/ - @ RS.1228.21 PER SQ. FT. IN THIS MANNER, THE CLOSING STOCK WAS CALCULATED AT RS.40,95,196/ - @ RS.1,228.21 PER SQ. FT. THE ASSESSING OFFICER WAS NOT SATI SFIED WITH THE EXPLANATION OF THE ASSESSEE AND OBSERVING THAT THE ASSESSEE HAS NOT EXPLAINED THE BASIS OF ALLOCATION OF OPENING WIP BETWEEN COST AND CLOSING WIP , THEREFORE, WIP TRANSFERRED TO COST I.E. RS.66,00,000/ - IS DISALLOWED AND ADDED TO INCOME OF TH E ASSESSEE AND ACCORDINGLY MADE THE ADDITION OF RS.66,00,000/ - TO THE INCOME OF THE ASSESSEE AS UNDER: OPENING WIP RS.1,06,95,196/ - LESS: - CLOSING WIP RS.40,95,196/ - DIFFERENCE RS.66,00,000/ - ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 13 24 . ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE MADE THE VERY SAME ARGUMENT WHICH WERE NOT ACCEPTED BY HIM ALSO BY OBSERVING THAT HE HAS MADE CALCULATIONS AS UNDER: OPENING WIP + STOCK 15,449.52 SQ. FT. RS.1,89,75,196/ - LESS: - NON SALEABLE AREA/ PARKING ETC. 2870.24 SQ. FT. ACTUAL AVAILABLE SA LEABLE AREA 12579.28 SQ. FTS. RS.1,89,75,196/ - COST OF ACTUAL AVAILABLE SALEABLE AREA RS.1,89,75,196/ - /12579.28 SQ. FTS. = RS.1508.448 PER SQ. FT. THUS, THE COST OF CLOSING AVAILABLE AREA 3334.28 SQ. FT. X RS.1508.448 PER SQ. FT. (CLOSIN G WIP) = RS.50,29,590/ - 25 . IN THIS WAY, HE MADE ADDITION FOR RS.9,34,394/ - BEING THE DIFFERENCE BETWEEN RS.66,00,000/ - AND RS.50,29,590/ - . 26. BOTH THE PARTIES BEFORE US COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE CIT(A), THEREFORE, THE GROUNDS OF APPEAL OF THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED. 27 . GROUND NO. 2 IN THE REVENUE S APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.46,54,068/ - ON ACCOUNT OF DISALLOWANCE OF COST ON DEVELOPMENT OF LAND CLAIMED BY THE ASSESSEE. 2 8 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED RS.46,54,068/ - AS COST INCURRED ON DEVELOPMENT OF LAND AT RAJPURA WHICH WAS SOLD DURING THE YEAR. ACCORDING TO THE ASSESSING OFFICER FROM THE SALE AND PURCHASE DOCUMEN TS IT IS NOT COMING OUT THAT ANY COST OF DEVELOPMENT WAS INCURRED ON THE SAID LAND AND THAT THE CLAIM WAS NOT SUPPORTED BY BILLS AND VOUCHERS. THEREFORE, HE ADDED RS.46,54,068/ - TO THE INCOME OF THE ASSESSEE. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 14 2 9 . ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE DEVELOPMENT COST OF RS.46,54,068/ - WAS INCURRED PRIOR TO THE ASSESSMENT YEAR 2012 - 13 AND THEREFORE, NO ADDITION CAN BE MADE IN THE YEAR UNDER APPEAL. 30 . THE CIT(A) OBSERVED THAT HE HAS EXAMINED THE ISSUE FROM THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE CURRENT YEAR AS WELL AS THE PRECEDING YEAR SUBMITTED BY THE ASSESSEE THAT THESE EXPENSES ARE ATTRIBUTABLE TO THE ASSESSMENT YEAR 2011 - 12 TOWARDS COST OF PLOTS AT RAJPURA AND THEREBY THE COST OF SUCH PLOTS AS ON 01.04.2011 WAS SHOWN TO RS.77,85,600/ - INCLUDING DEVELOPMENT COST OF RS.46,54,068/ - INCURRED IN ASSESSMENT YEAR 2011 - 12. THEREFORE, HE HELD THAT THIS EXPENSES WAS NOT INCURRED IN ASSESSMENT YEAR 2011 - 12 AND WAS ALREADY INCLUDED IN THE OPENING COST OF RAJPURA PLOTS. HE ALSO OBSERV ED THAT FOR ASSESSMENT YEAR 2011 - 12, THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT WHEREIN NO ADVERSE VIE W WAS TAKEN FOR SUCH LAND DEVELOPMENT COST AND THEREFORE, THERE WAS NO REASON FOR ANY ADDITION OR DISALLOWANCE OF RS.46,54,068/ - IN RESPECT O F SUCH LAND DEVELOPMENT COST WHICH HAS BEEN INCURRED IN THE ASSESSMENT YEAR 2011 - 12. ACCORDINGLY, HE DELETED THE ADDITION OF RS.46,54,068/ - AND ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE. 31 . BEFORE US, THE DR RELIED ON THE ORDER OF THE ASSESSING OFFICE R WHEREAS THE AR RELIED ON THE ORDER OF THE CIT(A). 32 . AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD. IN FIND THAT ADDITION OF RS.46,54,068/ - WAS MADE BY THE AO UNDER THE HEAD LAND DEVELOPMENT COST AT RAJPURA FOR THE REASON THAT FROM THE SALE AND PURCHASE DOCUMENT, IT IS NOT BORNE OUT THAT SUCH EXPENDITURE WAS INCURRED ON LAND AND THAT NO SUPPORTING BILLS AND VOUCHERS WERE PRODUCED BY THE ASSESSEE. ITA NO S. 3092 & 3774 /DEL /201 6 PRASANDI BUILDERS PVT. LTD. 15 33 . ON APPEAL, THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE SAID EXPENDI TURE OF RS.46,54,068/ - HAS BEEN INCURRED BY THE ASSESSEE TOWARDS DEVELOPMENT COST OF LAND AT RAJPURA IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2011 - 12 AND WAS ACCEPTED IN THE ASSESSMENT YEAR 2011 - 12, IN AN ASSESSMENT MADE BY THE AO U/S 143(3) OF THE ACT . THE DR MERELY RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). THEREFORE, WE FIND THAT NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS CONFIRMED AND THE G ROUND OF THE REVENUE IS DISMISSED. 34 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED . (ORD E R P RO NOUNCED IN THE COURT ON 28 /0 1 / 2019 ) . SD/ - SD/ - (KULDIP SINGH ) (N. S . SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 28 /01/2019 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . 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