Kanagi Siddeshwar Shrishilappa (HUF), Solapur V. Income-tax Officer, Ward - 1(2), Saolapur

ITA 382/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2748 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 22-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: RIYA SHAH
• Keywords: Unexplained cash credit; Capital asset; Income from undisclosed sources; Source of fund; Corroborative evidences; Onus to prove
• Section: 68; 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, AM . / ITA NO.382/PUN/2018 / ASSESSMENT YEAR : 2004-05 SHRI KANAGI SIDDESHWAR SHRISHILAPPA (HUF), VENUS 165/8, RAILWAY LINE, SOLAPUR. PAN NO.AAFHK0144N. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(2), SOLAPUR. . / RESPONDENT ASSESSEE BY : MS. RIYA SHAH. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 9, PUNE DT.22.09.2017 FOR THE ASSESSMENT YEAR 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN HUF, WHO FILED ITS RETURN OF INCOME FOR A.Y . 2004-05 ON 31.01.2005 DECLARING INCOME OF RS.5,75,000/- FROM AGRICULTURE AND THE RETURN OF INCOME WAS FILED AS ASSESSEE WAS COVERED UNDER ONE BY SIX SCHEME. THE CASE WAS TAKE N UP FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAMED U/S 143(3) OF THE A CT VIDE / DATE OF HEARING : 29.11.2018 / DATE OF PRONOUNCEMENT: 25.02.2019 2 ITA NO.382/PUN/2018 ORDER DT.28.01.2006 AND THE TOTAL INCOME WAS DETERMINED AT RS.8,84,950/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.22.09.2017 (IN APPE AL NO.PN/CIT(A)-7/WD.1(2)/436/2014-15) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES THE CASE , LEARNED CIT (A) 9 PUNE HAS ERR E D I N TREATING UNEXPLAINED CASH CREDIT AMOUNTING TO RS. 4,25,000/- AND W RONGLY ADDED IN T H E ASSESSED INCOME. 2. UNEXPLAINED CASH CREDIT AMOUNTING TO RS. 4 , 25 , 000/- CONSISTING RS. 3 , 00 , 000 1 -BELON GING TO MR. HINGMERE & AMOUNT OF RS. 1 , 25 , 000/- BELONGING TO MRS. HINGMERE W RONGL Y ADDED IN THE ASSESSED INCOME IN SPITE OF MRS. & MRS. HINGMERE W ERE HA V ING T HE SO URCE OF INCOME FROM AGRICULTURE . 3. LEARNED CIT (A) 9 PUNE HAS NOT CONSIDERED THE FA CT THAT MR. & MRS. HINGMERE A RE HAVING SUPPORTING EVIDENCES FOR SOURCES OF INCOME OF AGRICULTURE. 4. LEARNED CIT (A) 9 PUNE HAS NOT CONSIDERED THE FO LLOWING FACTS. A) CREDITORS MR. & MRS. HINGMERE ARE HAVING SUBSTANTIAL DOCUMENTARY EVIDENCE FOR THE SOURCE OF AGRICULTURE INCOME AND THE PAYMENTS ARE MADE BY THE CHEQUE BY THE CRED I TO R TO THE APPELLANT AND THE SAME AMOUNT IS RETURNED SUBSE QUENTLY THROUGH CHEQUE B Y TH E APPELLANT TO THE CREDITORS MR. & MRS. HINGMERE. B) YOUR APPELLANTS CREDITORS MRS. & MRS. HINGMERE ARE HA V IN G THE SUBSTANTIAL S UP PORTIN G DOCUMENTARY EVIDENCES FOR THEIR AGRICULTURE INCOME LIKE SALE P A TTIES OF THE TRAD ERS AND THE SAHAKARI SUTGIRNI. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAS STATED TO HAVE TAKEN LOAN OF RS.3,00,000/- FROM MR. HINGMIRE AND AN AMOUNT OF RS.1,25,000/- FROM MRS. HINGMIRE. H E NOTICED THAT BOTH THE PERSONS FROM WHOM THE ASSESSEE HAS TAKEN THE LOANS ARE AGRICULTURISTS, THEIR ONLY SOURCE OF INCOME WAS AGRICULTURE 3 ITA NO.382/PUN/2018 AND ARE NOT TAX-PAYERS. TO VERIFY THE GENUINENESS OF THE TRANSACTION, AO ISSUED SUMMONS TO THE AFORESAID PERSONS. AO HAS NOTE D THAT ONLY MR. HINGMIRE ATTENDED HIS OFFICE AND HIS STATEMENT WAS RECO RDED. IN HIS STATEMENT, HE ADMITTED THAT HE AND HIS WIFE HAD ADVA NCED LOAN TO THE ASSESSEE. THE SOURCE OF LOAN WAS STATED BY MR. HING MIRE TO BE PARTLY OUT OF HIS OWN INCOME, PARTLY FROM LOAN AND PARTL Y FROM BANK LOANS. AO NOTED THAT MR. HINGMIRE HAS NOT QUANTIFIED AS TO HOW MUCH WAS HIS OWN INCOME, HOW MUCH HAND LOANS AND MR. HINGMIRE COULD NOT IDENTIFY THE PARTIES FROM WHOM THE HAND LOANS W ERE TAKEN. AO ALSO NOTED THAT THOUGH MR. HINGMIRE HAS STATED TO H AVE PAID INTEREST ON BANK LOANS BUT NO INTEREST WAS CHARGED ON THE ALLEGED LOAN GIVEN TO THE ASSESSEE. AO ALSO NOTED THAT THE A MOUNT HAS BEEN ADVANCED TO THE ASSESSEE FROM THEIR SEPARATE BANK ACC OUNTS AND IN THEIR ACCOUNTS, THE AMOUNT HAS BEEN DEPOSITED AND HAS WITHDRAWN ON THE SAME DAY. THE AMOUNTS HAVE BEEN DEPOSITED IN C ASH AND WITHDRAWN THROUGH CHEQUE. MR. HINGMIRE SUBMITTED THAT T HE LOANS HAVE SINCE RETURNED BUT HE COULD NOT FURNISH THE DETA ILS OF REPAYMENTS. AO NOTED THAT THE CREDITORS COULD NOT SHO W AS TO WHETHER THE AMOUNT WAS RETURNED IN ONE LUMPSUM OR IN P IECE-MEAL AND ON WHAT DATES. AO NOTICED THAT THOUGH THE AMOUN T HAS BEEN STATED TO HAVE REPAID BUT THE ASSESSEE WAS SHOWING T HE AMOUNT OF LOAN AS PAYABLE. AO THEREFORE, CONCLUDED THAT MR. AND M RS. HINGMIRE DID NOT HAVE THE FINANCIAL CAPACITY TO PROVIDE LOAN TO OTHE RS. HE THEREFORE CONCLUDED THAT THE AGGREGATE SUM OF RS.4,25,000 /- SHOWN AS LOAN BY THE ASSESSEE FROM MR. AND MRS. HINGMIRE WAS ASSESSEES OWN MONEY FROM UNDISCLOSED SOURCES. HE ACCORDINGLY TRE ATED IT AS INCOME FROM UNDISCLOSED SOURCES AND MADE ITS ADDITION. AG GRIEVED BY 4 ITA NO.382/PUN/2018 THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD .CIT(A), WHO VIDE ORDER DT.22.09.2017 (IN APPEAL NO.PN/CIT(A)- 7/WD.1(2)/436/2014-15) UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 7.3 . I HAVE CO N SIDERED CAREFULLY THE FACTS OF THE CASE AND SUBMIS S ION S OF TH E APPELLANT ON THE ISSUE. THE AO NOTICE D T H A T TH ERE IS C RE DIT ENTRY OF RS. 3,00 , 000/ - IN NAME OF MR. HINGM I RE AND RS. 1 , 25 , 0 0 0/- IN N A ME OF MRS . HINGMIRE . THE AO ISSUED SUMMONS TO BOTH TH E P E R S ON AND STA T E ME NT OF OAT H OF MR . HINGMI R E RECORDED. MRS . H I NGMI R E DID NOT AT TE ND I N RE SPO N SE T O S UMM O N. TH E AO OBSERV E D TH A T TH E CA S H HAS B E EN D E POS I TED IN ACCOU N TS OF MR . H ING M I R E AND MRS . H IN GM I R E A N D A MOUN T W E R E ADV A N CED T O T H E A SSE SS E E T H R O UG H C HEQU E . M R. H I NG MI R E C L A I M TH A T P AY M E NT S H AS B EE N RE T URNED AND NO D E T A IL S F URN I S H ED. THE AO O B S E RV ED TH AT TH E C R E DIT I S S T IL L AP PE ARING IN THE L IAB ILI TY SI D E DES P I T E O F REPAYMENT THROUGH CASH. THE AO ALSO O BSERVED THAT MR. HINGMIRE HAS PAID INTEREST ON BACK BORROW INGS AND NO INTEREST HAS BEEN CHARGED FROM THE ASSESSEE. THE AO ALSO OBS ERVED THAT MR. HINGMIRE ARE OF SMALL FINANCIAL MEANS. THE AO OBS ERVED THAT IN THE FINANCIAL STANDING OF MR. HINGMIRE ARE NOT PROVED A ND RS.4,25,000/- ARE ASSESSEES OWN MONEY. THE AO ADDED RS.4,25,000 /- AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68. 7.4. THE APPELLANT HAS FILED STATEMENT OF FACT ALONG WIT H FORM 35 WHICH IS MATTER OF RECORD . THE APPELLANT CONTENDED THAT MR & MRS . HINGMIRE ARE HAVING AGRICULTURE INCOME. 7 . 5 . OSTENSIBLY, THE APPELLANT HAS TAKEN LOAN OF RS.3 , 00,000/ - FROM MR . HINGMIRE AND RS.1,25,000/- FROM MRS. HINGMIRE THROUGH CHEQUE S . TH E AMOUNT HAS BEEN DEPOSITED IN CASH IN ACCOUNT OF THE SE PERSONS AND O N THE SAME DATE CHEQUES WERE ISSUED FOR ADVANCING LOAN. THE AO RECORDED STATEMENT OF MR. HINGMIRE AND FOUND THAT L OAN HAS BEEN REPA I D THOUGH I T IS APPEARING AS CREDIT IN STATEMENT OF THE APPELLAN T . APPARENTLY , THERE I S CONTRADICTION IN VERSION OF THE APPELLANT AND THAT OF MR. HINGMIRE . MOREOVER, THE MODE OF REPAYMENT IS SAID TO BE CASH. IT IS UN L IKELY THAT TH E AMOUNT IS TAKEN AS LOAN THROUGH CHEQUE AND PAID THROUGH CASH . DURI N G APPELLATE PROCEEDINGS THE APPELLANT COULD NOT CONTROVERT THE FINDINGS AO. THE AO HAS ALSO POINTED OUT IN RESPECT OF FINANCIAL CAPACITY OF THE M R. HINGMIRE THAT HE HAS TAKEN LOAN FROM BANK AND ADVANCE LOAN TO TH E APPELLANT WITHOUT CHARGING ANY INTEREST. FURTHER, THE SECOND PER S ON M RS . HINGMIRE DID NOT ATTEND BEFORE THE AO . THE BURDEN CAST O N AS S ESS EE T O PROVE GENUINENESS OF THE TRANSACTION AND C R EDITWORTHINESS O F THE CR E DIT OR HAS NOT BEEN DISCHARGED. THE ONUS TO PROVE THE FURTHER DETAIL IN RE SP E CT OF AMOUNT ADVANCED HAS NOT BEEN SHIFTED TO MR & MRS . HINGM I RE . THE GENUINENESS OF THE LOAN HAS NOT BEEN DEMONSTRATED THROUGH D E T A IL S O F T HE REPAYMENT OF THE LO A N W H I C H HAS ACTUALLY BEEN MADE ACCORDING TO APPELLANT. UNDE R THESE CIRCUMSTANCES, THE ACTION OF THE AO IN MAKING ADDIT ION OF RS.4,25,000/- IS UPHELD. ACCORDINGLY, THE GROUND NO .2 OF THE APPEAL IS DISMISSED. 5 ITA NO.382/PUN/2018 AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE ME. 5. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFOR E AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAS DEMONSTRATED THE IDENTITY OF THE CREDITOR, THE CREDITOR IN HIS STATEMEN T HAS ADMITTED TO HAVE ADVANCED LOAN TO ASSESSEE, HAS EXPLAINED HIS SOU RCE OF INCOME AND THUS THE ASSESSEE HAS DISCHARGE THE INITIAL ONUS CAS T UPON THE ASSESSEE AND THEREFORE NO ADDITION IS CALLED FOR. SHE FURT HER SUBMITTED THAT ASSESSEE IS UNDER NO OBLIGATION TO PROVE THAT WHEREFROM THE CREDITOR HAS GOT OR PROCURED THE MONEY ADVANCED T O THE ASSESSEE. SHE FURTHER SUBMITTED THAT IT IS NOT A CASE WH ERE THE LOAN HAS BEEN ACCEPTED IN CASH BUT IS A CASE WHERE THE LOAN HAS BEEN ACCEPTED THROUGH BANKING CHANNELS. SHE THEREFORE SUBMIT TED THAT NO ADDITION IS CALLED FOR. SHE FURTHER PLACED RELIANCE ON THE DE CISION IN THE CASE OF ARAVALI TRADING CO., VS. ITO REPORTED IN (2010) 187 TAXMANN 338 (RAJ) AND THE DECISION IN THE CASE OF KANHA ILAL JANGID REPORTED IN (2008) 217 CTR 354 (RAJ). LD.D.R. ON THE OTHE R HAND, POINTED TO THE FINDINGS OF AO AND SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE ADD ITION MADE OF RS.4,25,000/- U/S 68 OF THE ACT. THE REASON FO R MAKING ADDITION BY AO WAS INTER-ALIA THAT THE LENDERS WERE AGRICU LTURIST WITH LOW MEANS OF INCOME AND THEIR FINANCIAL STANDING HAS NOT BEE N PROVED. ON THE OTHER HAND, IT IS ASSESSEES CONTENTION THAT WHEN THE 6 ITA NO.382/PUN/2018 CREDITORS HAS ADMITTED TO HAVE ADVANCED THE LOANS THRO UGH BANKING CHANNELS THEN ASSESSEE HAS DISCHARGED THE INITIAL ONUS CA ST UPON THE ASSESSEE AND THAT ASSESSEE IS NOT OBLIGED TO PROVE SOU RCE OF MONEY ADVANCED. THE ONUS U/S 68 OF THE ACT CAN BE SAID TO HAVE BEEN DISCHARGED ONLY WHEN THE ASSESSEE PROVES IDENTITY AND CAPACITY OF THE CREDITOR ALONG WITH THE GENUINENESS OF TRANSACTION TO THE SATISFACTION OF THE AO. ALL THE TREE CONSTITUENTS ARE REQUIRED TO BE CUMULATIVELY SATISFIED. IF ONE OR MORE OF THEM IS ABSENT, THE AO CAN LAW FULLY MAKE THE ADDITION. 7. IN THE PRESENT CASE, AO ON EXAMINATION OF THE FACTS HAS NOTED THAT IN THE BANK ACCOUNT OF MR. & MRS. HINGMIRE, CASH WAS DEPOSITED AND ON THE SAME DAY THE AMOUNT WAS ADVANCED BY CHEQ UE TO ASSESSEE. THE AFORESAID FINDING OF AO HAS NOT BEEN CONTRO VERTED BY LD.A.R. NOR THE FINDING HAS BEEN FOUND TO BE UNTRUE. ESTA BLISHING THE CREDITWORTHINESS AND GENUINENESS, IN MY VIEW, WOULD IMPLY TH AT THE LENDER WOULD BE HAVING SUFFICIENT SURPLUS SAVINGS AND FUNDS B ACKED BY CAPITAL ASSETS TO PROVIDE LOAN TO ASSESSEE. THE GENU INENESS OF THE TRANSACTION HAS TO BE CONSIDERED BY LOOKING INTO SURROUN DING CIRCUMSTANCES ALSO. MERELY BECAUSE THE MONEY IS TRANSFE RRED THROUGH BANKING CHANNELS DOES NOT PROVE THAT THE TRANSACTION IS GENUINE AND EXPLAINED. BEFORE ME, LD.A.R. HAS RELIED ON THE DECISIONS CIT ED HEREIN ABOVE. IT IS A SETTLED LAW THAT EVERY CASE DEPENDS ON ITS OWN FACTS AND EVEN A SLIGHTEST CHANGE IN THE FACTUAL SCENARIO ALTERS TH E MATTER AND MAKES ONE CASE DISTINGUISHABLE FROM ANOTHER. IN THE CASE OF ARAVALI TRADING CO., (SUPRA) THE FACTS ARE DISTINGUISHABLE AS THE CRE DITORS WERE ASSESSED TO TAX AND IT WAS NOT A CASE WHERE THE CASH WAS DEPO SITED ON 7 ITA NO.382/PUN/2018 A DAY AND THE SAME AMOUNT WAS TRANSFERRED BY THEM. SIMILARLY, THE OTHER CASE RELIED UPON BY LD.A.R. IS ALSO DISTINGUISHABLE ON FA CTS AND THEREFORE NOT APPLICABLE TO THE PRESENT CASE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, I AM OF THE VIEW THAT NO INTERFERENCE TO THE ORDE R OF LD.CIT(A) IS CALLED FOR AND THUS, THE GROUND OF ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 25 TH DAY OF FEBRUARY, 2019. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 25 TH FEBRUARY, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-9, PUNE. PR. CIT-6, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.