ACIT circle 32 (1), V. Vijay Kumar Jha,

ITA 3853/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2091 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 17-11-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 14-09-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK SEHG AL
• Keywords: Unexplained cash credit
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NO. 3853/DEL/2007 ASSESSMENT YEAR: 1998-99 ASSISTANT COMMISSIONER OF IT, VS. SHRI VIJAY KUMA R JHA, CIRCLE 32(1), PROP. BALAJI EXPORTS, NEW DELHI. B-180, SECTOR 32, NOIDA (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANJAY KUMAR, SR DR RESPONDENT BY: SHRI VIVEK SEHG AL, AR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED CIT(APPEALS) DATED 25.06.2007 PASSED FOR ASSESSMENT YEAR 1998-99. THE REVENUE HAS TAKEN ONE GROUND OF APPEAL, HOWEVER, IT DOES NOT DEPICT THE EXACT GRIEVANCE OF THE REVENUE RATHER IT CREATES A CONFUSION. IN BRIEF, THE GRIEVANCE IS THAT ASSESSING OFFICER HAS MADE AN ADD ITION OF RS.86,20,771 ON ACCOUNT OF UNSECURED LOAN. THE LEARNED CIT(APPEALS) HAS DELETED THIS ADDITION EXCEPT CONFIRMING AN ADDITION OF RS.7,60,0 00. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN IPS OFFICER OF 1970 BATCH, TOOK VOLUNTARY RETIREMENT IN 1992 AND S TARTED HIS BUSINESS OF BUYING GOLD FROM SBI, GOT ORNAMENTS MANUFACTURED FR OM ARTISANS AND TO 2 EXPORT THEM SINGAPORE. HE SUFFERED HEAVY LOSSES AND CLOSED THE BUSINESS IN APRIL 2000. HE ALSO SURRENDERED THE SALES-TAX NUMBE R TO THE SALES-TAX AUTHORITIES. THE RETURN FOR THE PRESENT ASSESSMENT YEAR I.E. 1998-99 WAS FILED ON 31 ST OCTOBER, 1998 DECLARING A TOTAL INCOME OF RS.63,20 0. THE LEARNED ASSESSING OFFICER HAD ISSUED NOTICE UNDER SEC.143(2 ) OF THE ACT WHICH WAS SERVED UPON THE ASSESSEE. SHRI SURESH ARORA, CA AND SHRI LOKENDER SHARMA, ITP APPEARED BEFORE THE ASSESSING OFFICER ON BEHALF OF THE ASSESSEE. IT APPEARS THAT THEY DID NOT SUPPLY THE REQUISITE DETA ILS AND THEREFORE ASSESSMENT HAS BEEN FRAMED UNDER SEC. 144 OF THE IN COME-TAX ACT, 1961. THE OBSERVATIONS OF THE ASSESSING OFFICER IN THIS R ESPECT READ AS UNDER: NEITHER ANYBODY ATTENDED ON 21.3.2001 OR THEREAFT ER NOR ANY DETAILS HAVE BEEN FILED. THIS BEING A TIME BARRING CASE AS ON 31.3.2001, I HAVE NO ALTERNATIVE BUT TO COMPLETE TH E ASSESSMENT EX PARTE AND AS PER FACTS ON RECORDS. WITH THE ABOVE REMARKS, TOTAL INCOME OF THE ASSESSE E IS COMPUTED AS UNDER: THE ASSESSEE HAS SHOWN UNSECURED LOANS WORTH RS.86, 20,771 ABOUT WHICH NO CONFIRMATION HAVE BEEN FILED. NO NAM ES AND ADDRESSES OF PERSONS FROM WHOM LOANS HAVE BEEN RAISED, HAVE B EEN GIVEN. ALL THESE LOANS WORTH RS.86,20,771 ARE TREATED AS UNEXP LAINED AND THUS INCOME OF THE ASSESSEE AS PER SEC. 68 OF THE I.T. R ULES. 3 3. ON APPEAL, IT APPEARS THAT ASSESSEE HAS FILED CO PIES OF AUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND DETAILS OF CURRE NT LIABILITIES AND UNSECURED LOANS. HE WAS UNABLE TO FILE CONFIRMATION WITH REGA RD TO THE UNSECURED LOANS. THE LEARNED CIT(APPEALS) ON PERUSAL OF THE DETAILS FOUND THAT THE OUT OF TOTAL SUMS OF RS.86,20,771 A SUM OF RS.34,01,751 IS OUTST ANDING BALANCE OF SBI, RAJPURA, OD ACCOUNT. HE FOUND THAT A LOAN OF RS.64, 01,751 WAS OBTAINED BY THE ASSESSEE DURING THE YEAR OUT OF WHICH RS.30 LAC S WAS REPAID AND A BALANCE REMAINED AT RS.34,01,751. IN THE OPINION OF LEARNED CIT(APPEALS), THIS BEING A LOAN OF THE BANK, CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT OF THE ASSESSEE. WITH REGARD TO THE REST OF THE AMOUNT I.E. RS.52,19,020, THE LEARNED CIT(APPEALS) HAS OBSERVED THAT AS ON 31.3.1 997 AN OUTSTANDING BALANCE WAS AVAILABLE AT RS.84,20,000. THIS WAS ACC EPTED BY THE DEPARTMENT. IT HAS CAME DOWN TO RS.52,10,020. HOWEVER, ON FURTH ER PROBE OF THE DETAILS, HE NOTICED FOLLOWING FRESH LOANS TAKEN BY THE ASSES SEE DURING THE YEAR: 1. A. MUKHRJEE RS.1,75,000 2. KAALI DEVI RS.1,50,000 3. MOBEL PLAN RS.23,25,000 4. MOHAN MISHRA RS.1,00,000 5. NIMA MISHRA RS,.7,00,000 4. THE LEARNED CIT(APPEALS) ACCEPTED THE STAND OF T HE ASSESSEE WITH REGARD TO THE LOAN WHICH HAS BEEN BROUGHT FORWARD F ROM THE EARLIER YEARS 4 BECAUSE THE DEPARTMENT HAS ACCEPTED THOSE LOANS AS GENUINE. HE CONFIRMED THE ADDITION APPEARING AGAINST THE NAME OF SHRI NIM A MISHRA ON THE GROUND THAT IN THE CLOSING BALANCE, A SUM OF RS.9,75,000 I S SHOWN AGAINST HER NAME OUT OF THAT RS.7 LACS HAS BEEN RECEIVED DURING THIS YEAR AND ASSESSEE FAILED TO GIVE ANY CONFIRMATION FROM MISS MISHRA. AS FAR AS T HE CREDITOR MOBEL PLAN IS CONCERNED, LEARNED CIT(APPEALS) FOUND THAT RS.23 ,25,000 HAS BEEN RECEIVED IN THIS YEAR, RS.11,60,000 IS THE OPENING BALANCE AT THE BEGINNING OF THE YEAR IN THIS ACCOUNT. RS.34,25,000 HAS BEEN REP AID BY THE ASSESSEE. THE OUTSTANDING BALANCE OF RS.60,000 HAS BEEN ADDED. TH US, IT INDICATES THAT THE AMOUNTS THOUGH RECEIVED DURING THE YEAR BUT IF REPA ID BY THE ASSESSEE THEN WITHOUT ANY VERIFICATION THESE HAVE BEEN ACCEPTED B Y THE LEARNED CIT(APPEALS). 5. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) CONTENDED THAT THE YARDSTICK APPLIED WITH REGARD TO MISS NIMA MISHRA IS EQUALLY APPLICABLE TO THE CREDITORS FROM WHOM THE A MOUNTS HAVE BEEN RECEIVED DURING THIS YEAR. THE ASSESSEE IS SUPPOSED TO EXPLAIN THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . HE FAILED TO FILE ANY DOCUMENT ON THE RECORD EXCEPT AUDITED ACCOUNT OF EA RLIER YEARS OR THIS YEAR. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND RELIED UPON THE ORDERS 5 OF THE LEARNED CIT(APPEALS). HE SUBMITTED THAT AT T HE END OF THE YEAR, THERE WAS NO CREDIT BALANCE IN THE ACCOUNT OF MUKHERJEE, KAALI DEVI. AS FAR AS MISS NIMA MISHRA AND MOBEL PLAN ARE CONCERNED, WHAT EVER CREDIT BALANCE AVAILABLE AT THE END OF THE YEAR AND ADDED BY THE D EPARTMENT HAVE BEEN ACCEPTED BY THE ASSESSEE. THEREFORE, THERE SHOULD N OT BE ANY REASON TO THE REVENUE TO RAISE GRIEVANCE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE ACT PROVIDES THAT IF A NY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOU S YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSI NG OFFICER SATISFACTORY, THE SUMS SO CREDITED MAY BE CHARGED TO INCOME-TAX AS TH E INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IT NOWHERE SUGGESTS THAT THERE SHOULD BE A CREDIT BALANCE AT THE END OF THE YEAR ONLY THEN THE ADDITION WOULD BE MADE. THE REPAYMENT OF LOANS DURING THE YEAR ITSELF WOULD NOT IPSO FACTO ABSOLVE AN ASSESSEE TO DISCHARGE THE PARDON PUT UPON HIM BY SEC. 68 OF THE ACT. THE ASSESSEE HAS TO PRODUCE EVIDENCE IN SUPPORT OF HIS EXPLANATION. THE ASSESSING OFFICER IS REQUIRED TO LOOK INTO ALL THE ASPECTS EXHIBITING THE SOURCE OF CREDIT DURING THE YEAR AND HOW SUCH CREDI TS WERE DISCHARGED BY AN 6 ASSESSEE. THE ASSESSEE HAS NOT PRODUCED ANY DETAILS BEFORE THE ASSESSING OFFICER. WHATEVER DETAILS HE HAS PRODUCED BEFORE TH E LEARNED CIT(APPEALS), THOSE ARE NOT SUFFICIENT TO DISCHARGE THE BURDEN PU T UPON HIM. IF WE LOOK SEC.68 ALONGWITH THE FINDING OF THE LEARNED CIT(APP EALS) WITH RESPECT TREATMENT GIVEN TO CREDIT ENTRY IN THE NAME MISS NI MA MISHRA THEN ALL THE CASH CREDITORS RECEIVED DURING THE YEAR OUGHT TO HA VE BEEN TREATED AT PAR BY THE LEARNED CIT(APPEALS). IT IS ALSO EMERGING OUT F ROM THE RECORD THAT LEARNED CIT(APPEALS) BEFORE CONSIDERING THE MATERIA L FILED IN THE SHAPE OF AUDIT REPORT AND OTHER DETAILS HAS NOT CONFRONTED T HE ASSESSING OFFICER, THUS IN A WAY HE HAS VIOLATED THE CONDITIONS ENUMERATED IN RULE 46A OF THE IT RULES. TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW THE APPEAL OF REVENUE PARTLY. WE RESTORE T HE ISSUE TO THE FILE OF THE LEARNED CIT(APPEALS) FOR READJUDICATION WITH REGARD TO THE SUMS WHICH HAVE BEEN RECEIVED DURING THE YEAR. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON .12 .2009 ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: /12/2009 MOHAN LAL 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR