ITO, Sikar V. VISHWA NATH BIDAWATKA, Sikar

ITA 381/JPR/2013

• Counselvise Citation: 38123114 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H M SINGHVI
• Keywords: Unexplained cash credit; Additional evidence; Onus to prove
• Section: 68; 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 381/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD-1, SIKAR. CUKE VS. VISHWA NATH BIDAWATKA, PROP.- KHETU LAL GAURI LAL KRISHI UPAJ MANDI, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADHPB 3841 L VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI H.M. SINGHVI (C.A.) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/07/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 07/09/2015 VKNS'K @ ORDER PER: SHRI T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11/01/2013 PASSED BY THE LEARNED CIT (A)-III, JAIPU R FOR A.Y. 2009- 10. 2. THE RESPECTIVE GROUNDS OF APPEAL RAISED BY THE RE VENUE ARE AS UNDER:- ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 2 (I) THE CIT(A) HAS ERRED IN ACCEPTING THAT THE CASH CREDITS ADDED UNDER SEC. 68 OF THE ACT, WERE OLD AND NOT RELATED TO THE ASSESSMENT MADE FOR ASSESSMENT YEAR 2009-10. (II) THE CIT(A) HAS ERRED IN ACCEPTING THAT CONFIRMATION/RELATED ADDITIONAL EVIDENCES FILED UND ER RULE 46A, WAS VALID, DESPITE THE INFIRMITIES POINTED OUT BY THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 18/12/2012. (III) THE CIT(A) HAS ERRED IN HOLDING THAT THE ENTIRE BURDEN OF PROOF, PLACED ON THE ASSESSEE UNDER SEC. 68 OF THE ACT, HAD BEEN CONCLUSIVELY DISCHARGED. (IV) THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS. 4,58,122/- PAID TO THE STATED CREDITORS. 3. REGARDING GROUND NO. (I), THE REVENUE HAS CONTEN DED THAT THE LD CIT(A) HAS ERRED IN ACCEPTING THAT CASH CREDIT AD DED U/S 68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WERE OLD AND NOT RELATED TO THE ASSESSMENT MADE FOR ASSESSMENT YEAR 2009-10. IN THIS REGARD, THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT CONFIR MATION FROM ALL THE UNSECURED CASH CREDITORS. SOME OF THE CONFIRMAT IONS WERE PRODUCED AND SOME OF THE CONFIRMATIONS WERE NOT PROD UCED. FURTHER THE ASSESSEE HAS REPLIED VIDE ITS SUBMISSIONS DATED 24 TH NOVEMBER, 2011, WHICH IS REPRODUCED AS UNDER:- ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 3 IZKLAFXD CREDITORS DQN IFJOKJ DS GSA DQN VU; GS BU CREDITORS VKSJ FU/KKZFJRH DS CHP FOOKN PY JGK GS BLFY;S CONFIRMATION IZLRQR DJUK LAHKO UGHA GS FOFNR JGS FD IZKLAFXD CREDITORS DH JKF'K;KA DJ FU/KKZJ.K OKZ 2009&10 LS VUSD OKZ IWOZ LS PYH VK JGH GS VR% BUDKS BL LKY U RKS FOPKFJ R FD;K TK LDRK GS VKSJ U GH TKSM+K TK LDRK GSA THE AO HOWEVER HELD THAT THE EXPLANATION SUBMITTED BY THE ASSESSEE IS NOT AT ALL SATISFACTORY, THEREFORE, RS. 24,62,014/- FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS TREATED AS ASSESSEES INCOME OF THE PREVIOUS YEAR IN TERMS OF SEC. 68 OF THE ACT. SINCE NO CONFIRMATIONS HAVE BEEN FILED BY THE ASSESSEE, THER EFORE, THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS ARE NOT PROVED. SINCE THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE HIS PRIMARY DUTY, ADDITION E QUAL TO THE AMOUNT OF RS. 24,62,014/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT, TREATING THESE CASH CREDITORS AS SIMPLE ENTRY-PROVIDER TO THE ASSE SSEE AS SUCH ENTRIES ARE APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 3.1 DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE THE LD. CIT(A), THE ASSESSEE REITERATED ITS EARLIER POSITION AND SUBMITTED ADDITIONAL EVIDENCES IN THE FORM OF CONFIRMATION LE TTERS, WHICH WERE ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 4 ADMITTED BY THE LD CIT(A). FURTHER THE LD CIT(A) HAS HELD THAT THE ISSUE CAN BE DECIDED EVEN WITHOUT CONSIDERING THESE ADDITIONAL EVIDENCES. SINCE ALL THE AFORESAID CASH CREDITS WERE ADMITTEDLY OLD AND BALANCES THEREIN REFLECTED ONLY THE BROUGHT FOR WARDED BALANCES, THE SAME CANNOT BE ADDED AS UNDISCLOSED INCOME IN T HIS YEAR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 68 OF THE ACT. ACCORDINGLY, THE ADDITION OF RS. 24,62,014/- WAS DELETED. 3.2 THE LD CIT(A) ALSO SOUGHT A REMAND REPORT FROM TH E ASSESSING OFFICER WHEREIN IT WAS STATED BY THE AO THAT THE AD DITION OF RS. 24,62,014/- U/S 68 OF THE ACT WAS MADE FOR WANT OF CO NFIRMATION FROM THE ASSESSEE, THUS LOANS MAY BE OF EARLIER YEA RS BUT TO FIND OUT THE CURRENT STATUS OF THE LOANS, IT IS NECESSARY TO HAVE THE CONFIRMATIONS ON RECORD. MERELY FOR THE REASON THAT THE LOANS ARE OLD AND OF EARLIER YEARS, THE SOURCES WITH THE ASSESSEE IN FORM OF UNSECURED LOANS CANNOT BE ACCEPTED. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL ON RECORD. FIRSTLY, REFERENCE CAN BE DRAWN TO SECTI ON 68 OF THE ACT WHEREIN IT IS STATED AS UNDER:- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOU S YEAR , AND THE ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 5 ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE SUM SO CREDI TED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. FURTHER REFERENCE CAN BE DRAWN TO THE DECISION OF TH E HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. LAKSHMAN SWAROOP GUPTA & BROS [1975] 100 ITR 222 (RAJ) WHEREIN RELEVANT PRINCIPLE OF LAW HAS BEEN LAID IN PARA 8 OF ITS DECISION, WHICH IS REPRODUCED AS UNDER:- 8. GENERALLY, THE FINANCIAL YEAR IMMEDIATELY PRECE DING THE ASSESSMENT YEAR IS THE PREVIOUS YEAR AS COVERED BY SECTION 3(1)(A) BUT THE ASSESSEE HAS BEEN GIVEN AN OPTION BY LAW UNDER SECTION 3(1)(B) TO MAKE UP HIS ACCOUNTS ON THE BASIS OF A TWELVE-MONTH PERIOD START ING FROM ANY ODD DAY OF THE YEAR AND IN THAT CASE SO FA R AS THE ASSESSEE IS CONCERNED IT WILL BE HIS PREVIOUS YE AR. WE SEE NO JUSTIFICATION FOR GIVING A DIFFERENT CONNOTA TION TO THE TERM ' PREVIOUS YEAR ' FOR THE UNDISCLOSED INCO ME THAN THE PREVIOUS YEAR WHICH HAS BEEN OPTED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT AS THE PERI OD FOR THE PURPOSES OF COMPUTING HIS INCOME-TAX UNDER SECTION 68 OF THE ACT. WE FEEL FORTIFIED IN OUR CON CLUSION ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 6 WHEN WE RECALL THAT UNDER SECTION 68 WHEN ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAIN ED FOR ANY PREVIOUS YEAR AND HIS EXPLANATION IS REJECT ED, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AND TH E EXPRESS WORDS OF THE SECTION ARE ' AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR'. THESE ARE DECISIVE WORDS. CAN WE SAY THAT WHEN THE STATUTE PROVIDES A PRECISE METHOD FOR THE TAXING OF AN UNEXPLAINED CAS H CREDIT ENTRY IN THE ASSESSEE'S BOOKS OF ACCOUNT, AN Y OPTION IS AVAILABLE TO THE DEPARTMENT TO SHIFT THE OPTED PREVIOUS YEAR ENABLING IT TO ROPE IN THE UNEXPLAINE D ENTRY? THE ANSWER IS PLAINLY IN THE NEGATIVE. IN THI S CONTEXT A REFERENCE TO SECTION 69 WOULD FURTHER ILLU MINATE THE INTENTION OF THE LEGISLATURE. IT PROVIDES THAT WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESS MENT YEAR THE ASSESSEE HAD MADE INVESTMENTS WHICH ARE NO T RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINE D BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFE RS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NO T, IN THE OPINION OF THE INCOME-TAX OFFICER, SATISFACTORY , 'THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR'. THE DISTINCTION IN THE PHRASEOLOGY OF SECTIONS 68 AND 6 9 INDICATES THAT FOR THE PURPOSES OF AN UNEXPLAINED I NCOME WHICH IS CONTAINED IN THE BOOKS OF ACCOUNT IT IS THE ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 7 ASSESSEE'S PREVIOUS YEAR WHICH SHALL BE THE RELEVANT PERIOD FOR INCLUDING SUCH AN UNEXPLAINED CREDIT BUT WHERE THE INVESTMENTS ARE NOT CONTAINED IN ANY BOOKS OF ACCOUNT AND THEY ARE UNEXPLAINED OR THE EXPLANATION IS UNSATISFACTORY THE VALUE OF THE INVESTMENTS SHALL B E DEEMED TO BE THE INCOME OF THE ASSESSEE FOR THE FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR. THIS DISTINCTION IS PURPOSEFUL. SECTION 68 ACCEPTS THE E NTRY AS REPRESENTING THE CORRECT FINANCIAL POSITION OF THE ASSESSEE WITH REGARD TO THE QUANTUM OF MONEY AND THE DATE OF ITS ACQUISITION BUT WHEN ITS SOURCE IS UNEXP LAINED OR NOT ADEQUATELY EXPLAINED THEN FOR THE PURPOSES O F INCOME IT SHOULD BE TREATED AS THE INCOME OF THE ASSESSEE'S PREVIOUS YEAR. SECTION 69, HOWEVER, DEALS WITH INVESTMENTS WHICH ARE AT LARGE AND NEITHER RECO RDED IN ANY ACCOUNT BOOK NOR IS IT POSSIBLE TO PRECISELY LOCATE THEIR DATE OF ACQUISITION. IN SUCH A SITUATION LAW P ERMITS THE DEPARTMENT TO DEEM THAT IT ACCRUED IN THE PRECE DING FINANCIAL YEAR FOR THE PURPOSES OF ROPING IN SUCH I NCOME TO TAX. 3.4 NOW COMING THE FACTS OF THE INSTANT CASE, IT IS CLEAR AND BEYOND ANY DOUBT THAT THE UNSECURED CASH CREDITORS IN RESP ECT OF WHICH THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT HAS BEEN EXAMINED IN DETAIL BY THE LD CIT(A) AND HE HAS GIVEN A CLEAR ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 8 FINDING THAT ALL THE AFORESAID CASH CREDITS WERE ADM ITTEDLY OLD AND BALANCES THEREIN REFLECTED ONLY THE BROUGHT FORWARDE D BALANCES. THE ASSESSING OFFICER IN HIS REMAND REPORT HAS ALSO NOT DISPUTED THIS FACT. IN THE LIGHT OF THESE UNCONTROVERTED FACTS, THESE C ASH CREDITS PERTAINED TO YEARS PRIOR TO YEAR UNDER CONSIDERATIO N. FURTHER, IN TERMS OF SECTION 68 AND IN THE LIGHT TO THE DECISIO N OF THE HONBLE RAJASTHAN HIGH COURT LAKSHMAN SWAROOP GUPTA & BROS (SUPRA) , THE ADDITIONS MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AS THE UNSECURED CASH CREDITS DOESNT PERTAIN TO THE Y EAR UNDER CONSIDERATION. WE, ACCORDINGLY, FIND NO INFIRMITY I N THE ORDER OF THE LD CIT(A). HENCE GROUND NO. (I) OF THE REVENUES APPEAL IS DISMISSED. 4. AS REGARDS GROUND NO. (II) & (III) OF THE REVENU ES APPEAL, IN LIGHT OF THE FINDING IN RESPECT OF GROUND NO. (I), WE DO NOT FEEL IT NECESSARY TO EXAMINE THE SAME, HENCE NOT ADJUDICATE D. 5. REGARDING GROUND NO. (IV) OF THE REVENUES APPEA L WHERE THE REVENUE HAS RAISED THE CONTENTION THAT THE LD CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS. 4,58,12 2/- PAID TO THE STATED CREDITORS. WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(A) AND WE DO NOT FEEL ANY INFIRMITY IN THE SAID ORDER. NEITHER THE ITA 381/JP/2013_ ITO VS. VISHWA NATH BIDAWATKA 9 REVENUE HAS BROUGHT ANY FURTHER FACTS TO PROVE THAT THIS PAYMENT OF INTEREST TO THE CREDITORS WERE NOT GENUINE OR BOGUS. IN LIGHT OF THE ABOVE, WE, ACCORDINGLY, DISMISS THE GROUND NO. (IV) OF THE REVENUES APPEAL. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 07 TH SEPTEMBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD 1, SIKAR 2. IZR;FKHZ @ THE RESPONDENT- SHRI VISHWA NATH BIDAWATKA, SIKAR 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 381/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR