ACIT, CHENNAI V. Lalith Kumar Kankariya, CHENNAI

ITA 380/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68690 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 380/MDS/2013 ASSESSMENT YEAR 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XI, KANNAMMAI BUILDING, CHENNAI. VS. SHRI LALITH KUMAR KANKARIYA, PROP. ARIHANT ENTERPRISES, NO. 34/2, CHINNAYA STREET, SARANGAPANI NAGAR MAIN ROAD, MADHAVARAM, CHENNAI 600 060. [PAN : ABHPL7595H] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. MADHAVAN, JCIT RESPONDENT BY : SHRI SUNIL KUMAR JAIN, C.A. DATE OF HEARING : 10.09.2013 DATE OF PRONOUNCEMENT : 10.09.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IV, CHENNA I DATED 31.10.2012 RELEVANT TO THE ASSESSMENT 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND FILED HIS RETURN DECLARING TOTAL INCOME OF ` .13,78,830/- FOR THE YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS COMPLETED U NDER SECTION I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 380 8080 80/M/ /M/ /M/ /M/13 1313 13 2 143(3) OF THE ACT AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT ` .1,29,22,830/- BY MAKING ADDITION OF ` .1,15,44,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER HAS OBSERVED THAT, DURING THE FINANCIAL YEAR 2007-0 8, THE ASSESSEE HAS CLAIMED A LOAN OF ` .1,15,44,000/- FROM A COMPANY M/S. BABA BASUKI COMMERCIAL P. LTD. ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEES PROPRIETARY CONCERN M/S. ARIHANT ENTERPRISES FOR TH E FINANCIAL YEAR ENDING ON 31.03.2008, THE ASSESSING OFFICER FOUND THAT THERE WERE UNSECURED LOANS OF ` .2,91,70,752/- FROM 46 LOAN CREDITORS, WHICH INCLUD ED A SUM OF ` .1,60,03,468/- OUTSTANDING IN THE NAME OF M/S. BABA BASUKI COMMERCIAL P. LTD. 4. THE ABOVE SUM OF ` .1,60,03,468/- OUTSTANDING IN THE NAME OF M/S. BABA BASUKI COMMERCIAL P. LTD. INCLUDES A OPENING C REDIT BALANCE OF ` .37,69,800/- (CR) AND THE TDS DEDUCTED AND REMITTED TO THE GOVERNMENT ACCOUNT WAS ` .1,78,932/- (DR). AS A RESULT, THE CLOSING CREDIT B ALANCE AS ON 31.03.2008 WAS ` .1,60,03,468/- (CR). 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED FOR THE CONFIRMATION LETTER FROM M/S. BABA BA SUKI COMMERCIAL P. LTD. WHICH THE ASSESSEE FAILED TO FURNISH. HENCE, THE AS SESSING OFFICER HAS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 380 8080 80/M/ /M/ /M/ /M/13 1313 13 3 DISALLOWED ASSESSEES CLAIM OF LOAN AMOUNT OF ` .1,15,44,000/- INTRODUCED FROM M/S. BABA BASUKI COMMERCIAL P. LTD., TREATED I T AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE THE LD. CIT(APPEALS). 7. IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) TH AT THE ABOVE SAID AMOUNT OF ` .1,15,44,000/- WAS RECEIVED BY ACCOUNT PAYEE CHEQUE AND ALSO FILED A CONFIRMATION LETTER FROM M/S. BABA BASUKI C OMMERCIAL P. LTD. ALONG WITH COPY OF RETURN, BALANCE SHEET, ETC. IT WAS ALS O EXPLAINED THAT THE SOURCE OF AMOUNT RECEIVED WAS FROM M/S. BABA BASUKI COMMER CIAL P. LTD. 8. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND THE RELEVANT PORTION OF THE LD. CIT(APPEALS)S ORDER IS EXTRACTED HEREUNDER: I HAVE CONSIDERED THE ASSESSEES SUBMISSIONS AND THE DETAILS FILED. AS COULD BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSMENT PROCEEDINGS WERE EFFECTIVELY TAKEN UP IN THE MONTH OF OCTOBER, 2010 WITH HARDLY 3 MONTHS TIME TO COMPLETE THE ASSESSMEN T. THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION LETTERS FROM ALL THE 46 LOAN CREDITORS ONLY ON 07.10.2010. THE ASSESSEE DID PROD UCE THE CONFIRMATION LETTERS FROM ALL THE LOCAL CREDITORS E XCEPT FROM BABA BASUKI COMMERCIAL P. LTD. WHICH IS LOCATED IN KOLKA TA. HENCE, THE ASSESSEES CLAIM THAT THERE WAS NO SUFFICIENT TIME TO OBTAIN THE CONFIRMATION FROM M/S. BABA BASUKI COMMERCIAL P. LT D. APPEARED GENUINE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 380 8080 80/M/ /M/ /M/ /M/13 1313 13 4 PERUSAL OF THE CONFIRMATION LETTER AND THE BALANCE SHEETS CLEARLY SHOWED THAT THE M/S. BABA BASUKI COMMERCIAL P LTD A DVANCED A SUM OF ` .L,15,44,000/- DURING THE FINANCIAL YEAR 2007-08 TO THE ASSESSEE. ALL THE AMOUNTS ARE PAID TO THE ASSESSEE THROUGH ACCOUN T PAYEE CHEQUES/DDS ONLY. M/S. BABA BASUKI COMMERCIAL P LTD IS A COMPANY AND HAS BEEN FILING THE RETURNS OF INCOME REGULARLY . EVEN THE IT RETURN OF A.Y.2008-09 WAS FILED IN TIME ON 30.09.2008. HEN CE THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION S ARE ESTABLISHED. FURTHER AS COULD BE SEEN FROM THE BALANCE SHEET OF M/S. BABA BASUKI COMMERCIAL P LTD, THE COMPANY DURING THE FINANCIAL YEAR 2007-08 SOLD SOME OF ITS SHARES HELD IN OTHER COMPANIES AND REAL IZED AN AMOUNT OF MORE THAN ` .7 CRORES. THUS THE CREDITWORTHINESS IS ALSO ESTABL ISHED. FURTHER, THE LOAN RECEIVED FROM M/S. BABA BASUKI CO MMERCIAL P LTD WAS AN INTEREST BEARING LOAN AND THE ASSESSEE PAID AN INTEREST OF ` .8,68,600/- FOR THE YEAR AND THE NECESSARY TDS OF ` .L,78,932/-WAS ALSO DEDUCTED AND REMITTED TO THE GOVT ACCOUNT. IT IS ALSO IMPORTANT TO NOTE THAT THERE WAS AN INTE REST PAYMENT OF ` .8,68,600/- PAID BY THE ASSESSEE TO M/S. BABA BASUK I COMMERCIAL P LTD DURING THE FINANCIAL YEAR 2007-08 ON THE LOAN O UTSTANDING. THE ASSESSEE CLAIMED THE SAID INTEREST AS EXPENDITURE A ND DEBITED TO THE P&L ACCOUNT. THE ASSESSING OFFICER HAS NOT MADE ANY DISALLOWANCE ON SUCH INTEREST PAYMENT. INSTEAD THE ASSESSING OFFICE R ALLOWED THE SAME AS AN ALLOWABLE EXPENDITURE. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER I S NOT JUSTIFIED IN TREATING THE ABOVE LOAN OF ` .L,15,44,000/- M/S. BABA BASUKI COMMERCIAL P LTD AS A NON-GENUINE LOAN, BEFORE INVO KING THE PROVISIONS OF SEC.68 OF THE ACT. HENCE THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 9. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. DR HAS SUPPORTED THE ORDER PASSED BY T HE ASSESSING OFFICER. 11. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT ALL THE DETAILS IN RESPECT OF THE AMOUNT BORRO WED FROM M/S. BABA BASUKI COMMERCIAL P. LTD. WERE FILED BEFORE THE LD. CIT(AP PEALS) AND THE LD. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 380 8080 80/M/ /M/ /M/ /M/13 1313 13 5 CIT(APPEALS), AFTER CONSIDERING THE ENTIRE FACTS AN D SUBMISSIONS, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(APPEALS). 12. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND HAVE ALSO GONE THE ORDERS OF AUTHORITIES BELOW. THE ONLY DISPUTE IN THIS APPEAL IS IN RESPECT OF THE ADDITION OF ` .1,15,44,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS BORROWED LOAN FROM VARIOUS CREDITO RS AND ASKED THE ASSESSEE TO FILE CONFIRMATION FROM THE PARTIES. THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM ALL THE LOCAL CREDITORS E XCEPT FROM M/S. BABA BASUKI COMMERCIAL P. LTD., KOLKATA OF ` .1,15,44,000/- DUE TO INSUFFICIENT TIME TO OBTAIN THE CONFIRMATION FROM M/S. BABA BASUKI COMME RCIAL P. LTD. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANAT ION AND ADDITION WAS MADE FOR THE ABOVE SAID CREDIT. THE LD. CIT(APPEALS ), AFTER PERUSING THE CONFIRMATION LETTER AND THE BALANCE SHEETS, OBSERVE D THAT M/S. BABA BASUKI COMMERCIAL P. LTD. ADVANCED A SUM OF ` .1,15,44,000/- DURING THE FINANCIAL YEAR 2007-08 TO THE ASSESSEE AND AMOUNTS ARE PAID T O THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES/DDS ONLY. THE LD. CIT (APPEALS) HAS FURTHER NOTED THAT M/S. BABA BASUKI COMMERCIAL P. LTD. IS A COMPANY AND HAS BEEN FILING THE RETURNS OF INCOME REGULARLY. THEREFORE, HE HELD THAT THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION S STAND ESTABLISHED. THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3 33 380 8080 80/M/ /M/ /M/ /M/13 1313 13 6 LD. CIT(APPEALS), AFTER CONSIDERING ALL THE FACTS A ND DETAILS, DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. THE LD. D R HAS NOT POINTED OUT ANYTHING WITH REGARD TO THE FACTS NOTED BY THE LD. CIT(APPEALS) EXCEPT SUPPORTING THE ORDER PASSED BY THE ASSESSING OFFICE R. WE, THEREFORE, AFTER TAKING INTO CONSIDERATION OF ALL THE FACTS AND CIRC UMSTANCES, FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS). 13. IN THE RESULT, THE APPEAL OF THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 10 TH OF SEPTEMBER, 2013 AT CHENNAI. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE-PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 10.09.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.