The Deputy Commissioner of Income Tax, Amritsar. V. Sh. Dhanraj Singh Prop, Amritsar.

ITA 39/ASR/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1408 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH ; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMEBR AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.39(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN :ALMPS3194E DY. COMMR. OF INCOME TAX, VS. SH.DHANRAJ SINGH CIRCLE-1, AMRITSAR. PROP. M/S. PRINCE FABRICS, SHASTRI MARKET, AMRITSAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEE BY: SH.PADAM BAHL, CA DATE OF HEARING:05/10/2015 DATE OF PRONOUNCEMENT: 06/10/2015 ORDER PER A.D.JAIN, JM THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2010-11 AGAINST THE ORDER DATED 13.11.2013 PASSED BY THE CIT(A), AM RITSAR. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (APPEALS) ERRED IN LAW WHILE DELETING THE ADDITION OF RS.20,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF TH E I.T. ACT, 1961, IGNORING THE FACT HAT CREDITWORTHINESS OF THE LENDE RS WAS SUSPICIOUS. ITA NO.39(ASR)/2014 2 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) ERRED IN LAW WHILE HOLDING THAT IT IS NOT REQUIRED FOR THE ASSESSEE TO EXPLAIN THE SOURCE OF THE INVESTMENT, I GNORING VARIOUS INCONSISTENCIES & CONTRADICTIONS MADE BY THE ASSESS EE IN EXPLAINING THE CREDITWORTHINESS OF THE LENDERS. 2. THE FACTS ARE THAT THE ASSESSEE A FIRM IS TRADIN G IN CLOTH ON WHOLESALE BASIS. FOR THE YEAR, IT DECLARED AN INCOME OF RS.1 ,21,39,550/-. THE AO NOTED THE FOLLOWING FACTS ABOUT UNSECURED LOANS T AKEN BY THE ASSESSEE: NAME OF THE PERSON WHO GAVE THE LOAN TO SH. DHANRAJ SINGH NAME OF THE BANK & BANK A/C NO. THROUGH WHICH MONEY CAME TO SH. DHANRAJ SINGH CASH DEPOSIT DATE ON WHICH CASH DEPOSITED DATE ON WHICH MONEY TRANSFERRED TO SH. DHANRAJ SINGH RUPINDER KAUR 00660514102 ICICI 300000/- 200000/- 27.06.2009 29.06.2009 27.06.2009 29.06.2009 DHANRAJ SINGH HUF 0200100304 DENA BANK 200000/- 100000/- 02.04.2009 04.04.2009 02.04.2009 06.04.2009 006606000066 ICICI 200000/- 22.06.2009 22.06.2009 HARINDER KAUR 020011003076 DENA BANK 200000/- 02.04.2009 04.04.2009 RAVI RAJ SINGH 13131000056249 200000/- 200000/- 27.06.2009 29.06.2009 (400000/-) TRANSFER 30.06.2009 ITA NO.39(ASR)/2014 3 HARJOT SINGH 020010005364 DENA BANK 200000/- 100000/- 100000/- 02.04.2009 04.04.2009 28.05.2009 02/04/2009 07.04.2009 28.05.2009 3. FROM THE ABOVE FACTS, THE AO OBSERVED AS FOLLOWS REGARDING EACH OF THE LOANS: FROM THIS TABLE IT IS CLEAR THAT SMT. RUPINDER KAUR GOT CASH DEPOSIT OF RS.3,00,000/- IN HER BANK ACCOUNT ON 27. 06.2009 WHICH WAS TRANSFERRED IN THE ACCOUNT OF SH. DHANRAJ SINGH ON THE SAME DATE. ON 29.06.2009 SHE AGAIN GOT CASH DEPOSIT OF RS.2,00,00 0/- IN HER ACCOUNT WHICH WAS AGAIN TRANSFERRED IN THE BANK OF SH. DHAN RAJ SINGH ON THE SAME DATE. DHANRAJ SINGH HUF GOT CASH DEPOSIT OF RS.2,00,000/- EACH ON 2.04.2009 AND 22.06.2009 IN HIS BANK ACCOUNT NO.020 01003064 WHICH AGAIN TRANSFERRED TO THE ACCOUNT OF SH. DHANRAJ SIN GH ON THE SAME DATE. CASH DEPOSIT OF RS.1,00,000/- ON 04.04.2009 IN THE BANK ACCOUNT OF DHANRAJ SINGH HUF WAS TRANSFERRED TO SH. DHANRAJ SINGHS BANK ACCOUNT ON 6.04.2009. SMT. HARINDER KAUR GOT CASH DEPOSIT OF RS.2,00,000 /- IN HER BANK ACCOUNT 020011003076 ON 2.04.2009 IN HER BANK ACCOU NT OF SH. DHANRAJ SINGH ON THE SAME DATE. SH.DEV RAJ SINGH GOT CASH DEPOSIT OF RS.2,00,000/- EACH IN HIS BANK ACCOUNT NO.13131000056249 ON 27.06.2009 RESPECTIVEL Y WHICH WERE TRANSFERRED IN THE BANK ACCOUNT OF SH.DHANRAJ SINGH ON 30.06.2009. SH.HARJOT SINGH GOT CASH DEPOSIT OF RS.2,00,000/- IN HIS BANK ACCOUNT NUMBER 020010005364 ON 2.04.2009 WHICH WAS TRANSFE RRED ON THE SAME DATE OF SH. DHANRAJ SINGHS BANK ACCOUNT. 1000 00/- CASH DEPOSIT HE GOT ON 4.04.2009 WAS TRANSFERRED TO THE BANK ACCOUNT OF ITA NO.39(ASR)/2014 4 SH. DHANRAJ SINGH ON 7.04.2009. 100000/- CASH DEPOS IT HE GOT ON 28.05.2009 WAS TRANSFERRED IN THE BANK ACCOUNT OF S H. DHANRAJ SINGH ON THE SAME DATE. 4. ACCORDINGLY, THE AO ASKED THE ASSESSEE TO EXPLAI N THE SOURCE OF ALL THESE CASH DEPOSITS IN THE BANK ACCOUNTS OF SMT. RU PINDER KAUR, DHANRAJ SINGH HUF, SMT. HARINDER KAUR, SH. RAVI RAJ SINGH A ND SH.HARJOT SINGH, WHICH ULTIMATELY LANDED IN THE BANK ACCOUNT OF SH. DHANRAJ SINGH TO DETERMINE THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN WHY THESE CASH DEPOSITS SHOULD NOT BE TR EATED AS HIS INCOME. 5. THE ASSESSEE FILED THE FOLLOWING EXPLANATION BEF ORE THE A.O.: EXPLANATION IN RESPECT OF AMOUNT RECEIVED FROM DEP OSITORS: THAT IN THIS RESPECT IT IS HEREBY STATED THAT COPY OF A/CS DULY CONFIRMED BY DEPOSITORS HAVE ALREADY BEEN FURNISHED . THEIR INCOME TAX PARTICULARS HAVE ALSO BEEN FURNISHED. HOWEVER, EXPLANATION IN RESPECT OF CASH DEPOSITS BY FAMILY MEMBERS OF S. DH ANRAJ SINGH PROP. M/S. PRINCE FABRICS AND TRANSFER OF THESE DEPOSITS INTO BOOKS OF M/S. PRINCE FABRICS IS ALSO FURNISHED AS UNDER: WHEREAS IT IS STATED THAT AT THE TIME OF DEATH OF S .PREM SINGH FATHER OF S.DHANRAJ SINGH AND SMT. SURJIT KAUR MOTH ER OF S.DHANRAJ HEY LEFT SOME FUNDS WHICH WERE LYING WITH DIFFERENT RELATIVES AND FRIENDS. MOREOVER, AT THE TIME OF DEATH BOTH HAVE A SKED S. DHANRAJ SINGH TO DISTRIBUTE THE SAID FUNDS BETWEEN THE FAMI LY MEMBERS AS THESE ARE RECEIVED. HOWEVER, AS AND WHEN THESE FUNDS WERE RECEIVED THEY WERE DISTRIBUTED AS PER VERBAL WILL OF PARENTS, WHEREAS THESE FUNDS WERE NOT TAXABLE IN HANDS OF RECIPIENTS BECAUSE THESE WE RE RECEIVED AT DEATH AS PER WILL. HOWEVER, THERE WAS NO LEGAL DOCU MENT SIGNED BY PARENTS WAS AVAILABLE. IT WAS DECIDED TO SHOW THESE FUNDS AS INCOME IN HANDS OF RECIPIENTS HENCE INCOME TAX RETURN OF A LL THE MEMBERS ITA NO.39(ASR)/2014 5 WERE FILED AND TAX WAS DULY DEPOSITED. HOWEVER, THE SE FUNDS WERE TRANSFERRED TO BANK ACCOUNT OF M/S. PRINCE FABRICS PROP. S. DHANRAJ SINGH. AS INCOME TAX DUE ON THESE FUNDS HAS ALREADY BEEN PAID AND DEPOSITS ARE DULY EXPLAINED. 6. THE AO REJECTED ASSESSEES EXPLANATION, OBSERVIN G THAT: EXPLANATION GIVEN BY THE ASSESSEE IS NOT ACCEPTABLE . HE HAS FAILED TO PROVE THE GENUINENESS OF THESE TRANSACTIONS. ARGUM ENT THAT AT THE TIME OF DEATH OF S. PREM SINGH FATHER OF S. DHANRAJ SINGH AND SMT. SURJIT KAUR MOTHER OF S. DHANRAJ SINGH THEY LEFT SO ME FUNDS WHICH WERE LYING WITH DIFFERENT RELATIVES AND FRIENDS AND SAME WERE DISTRIBUTED BETWEEN THE FAMILY MEMBERS AS THESE ARE RECEIVED CAN NOT BE ACCEPTED SINCE THERE IS NO EVIDENCE PRODUCED BY THE ASSESSEE TO PROVE THE SAME. [SIMILARLY ASSESSEE HAVE FAILED TO PRODUCE ANY EVIDENCE THAT INCOME TAX HAS ALREADY BEEN PAID ON T HESE DEPOSITS.] 7. IN THIS MANNER, THE AO MADE AN ADDITION OF RS.20 LACS TO THE ASSESSEES INCOME, HOLDING THAT THE ASSESSEES EX PLANATION WAS NOT SATISFACTORY AND THAT THE ASSESSEE HAD FAILED TO P ROVE THE GENUINENESS OF THE TRANSACTIONS. 8. THE LD. CIT(A) DELETED THE ADDITION. 9. AGGRIEVED, THE PRESENT APPEAL HAS BEEN FILED BEF ORE US BY THE DEPARTMENT. 10. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HA S ERRED IN DELETING THE ADDITION OF RS. 20 LACS MADE BY THE AO ON ACCOU NT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME-TAX ACT, 1961, IGNORIN G FACT THAT THE CREDIT- WORTHINESS OF THE LENDERS WAS SUSPICIOUS AND HOLDIN G THAT IT WAS NOT REQUIRED BY THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE OF THE INVESTMENT, ITA NO.39(ASR)/2014 6 IGNORING VARIOUS INCONSISTENCIES AND CONTRADICTIONS MADE BY THE ASSESSEE IN EXPLAINING THE CREDITWORTHINESS OF THE LENDERS. 11. IT HAS BEEN CONTENDED THAT AS AVAILABLE FROM TH E TABLE RECORDED BY THE AO AT PAGE 3 OF THE ASSESSMENT ORDER, THE AMOUNTS W ERE TRANSFERRED WITHIN A DAY OR SO OF THEIR HAVING BEEN DEPOSITED IN THE BA NK ACCOUNTS OF THE CREDITORS; THAT MOREOVER, NO EVIDENCE WAS BROUGHT BY THE ASSESSEE REGARDING THE RELATIVES AND FRIENDS TO WHOM MONEY HAD BEEN GI VEN BY THE DECEASED PARENTS OF THE ASSESSEE; THAT THE ONUS HAS WRONGLY BEEN SHIFTED BY THE LD. CIT(A) FROM THE ASSESSEE TO THE AO. RELIANCE HAS B EEN PLACED ON SOM NATH MAINI VS. CIT, 306 ITR 414 (P&H), ACCORDING T O WHICH THE PLEA OF GENUINENESS THE TRANSACTION CAN BE REJECTED, IF THE EVIDENCE OF THE ASSESSEE IS NOT TRUST-WORTHY AND THE DEPARTMENT DOES NOT LEAD A NY EVIDENCE AGAINST THE ASSESSEE. IT HAS ALSO BEEN CONTENDED THAT THE LD. C IT(A) HAS WRONGLY PLACED RELIANCE ON THE FACT THAT DUE TAX WAS PAID ON THE A MOUNTS BY THE CREDITORS. IT IS SUBMITTED THAT IF IT HAS BEEN TAXED IN THE WRONG HANDS, THE AMOUNT REQUIRES TO BE TAXED IN THE RIGHT HANDS. RELIANCE HAS BEEN P LACED ON SMT. TARA DEVI AGGARWAL VS. CIT, 88 ITR 323 (SC). FURTHER, TO BUT TRESS THE ARGUMENT THAT IF THE AMOUNT IS TRANSFERRED ON THE SAME DAY AS ON WHICH IT IS DEPOSITED IN THE CREDITORS ACCOUNT AND THE SOURCE THEREOF IS N OT KNOWN, ADDITION IS CALLED ITA NO.39(ASR)/2014 7 FOR, RELIANCE HAS BEEN PLACED ON DAYAL SINGH & SON S VS. CIT, 335 ITR 90 (P&H). 12. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. OUR ATTENTION HAS B EEN DRAWN TO ASSESSEES SUBMISSION/EXPLANATION BEFORE THE AO AS REPRODUCED HEREINABOVE. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO READ OUT THE AOS FINDINGS WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PORTION OF THIS ORDER. IT HAS BEEN ARGUED THAT THE ASSESSEES ONUS STOOD DULY DISCHARGED. CONFIRMATIONS WERE FILED. INCOME TAX RETURNS AND BA NK STATEMENTS OF THE CREDITORS WERE ALSO FILED. THE AO ASKED THE ASSESSE E TO PROVE THE SOURCE OF THE SOURCE, WHICH IS NOT PERMISSIBLE UNDER THE LAW. IT WAS THE AOS BURDEN WHICH HE MISERABLY FAILED TO DISCHARGE. APROPOS T HE PROPOSITION THAT THE ASSESSEE IS NOT SUPPOSED TO PROVE THE SOURCE OF THE SOURCE OF THE CREDITS, RELIANCE HAS BEEN PLACED ON THE FOLLOWING CASE LAWS : I) CIT VS. SHRI RAM NARAIN GOEL, 244 ITR 180 (P&H ) II) SAROJI CREDIT CORPORATION VS. CIT, 103 ITR 34 4 (PATNA) III) ARAVALI TRADING CO. VS. ITO, 220 CTR (RAJ.) 622 14. OUR ATTENTION HAS BEEN DRAWN TO PAGES 1 TO 4, 5 TO 12, 13 TO 18, 19 TO 23 AND 24 TO 29 OF ASSESSEES PAPER BOOK, WHICH ARE COPIES OF ITA NO.39(ASR)/2014 8 ACKNOWLEDGMENT OF THE INCOME TAX RETURNS FOR THE YE AR UNDER CONSIDERATION, STATEMENT OF TAXABLE INCOME, SAVING BANK ACCOUNT AN D PERSONAL BALANCE SHEET OF EACH OF THE CREDITORS OF THE ASSESSEE. IT HAS B EEN REQUESTED THAT THERE BEING NO MERIT THEREIN, THE APPEAL BE DISMISSED. 15. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT AS PER THE ASSESS MENT ORDER (PAGE-2), THE SPECIFIC INFORMATION ASKED FOR BY THE AO WAS AS F OLLOWS: PLEASE PROVE CREDIT-WORTHINESS OF PERSONS FROM WHO M FRESH UNSECURED LOAN TAKEN. FURNISH BANK ACCOUNTS STATEME NTS FROM WHICH MONEY GIVEN TO ASSESSEE. 16. SO, THE ASSESSEE WAS ASKED BY THE AO TO PROVE T HE CREDIT-WORTHINESS OF EACH OF HIS CREDITORS. HOWEVER, FROM THE BANK ST ATEMENT OF THE CREDITOR, AS FILED BY THE ASSESSEE BEFORE THE AO AND THE LD. CIT (A) AND ALSO FILED BEFORE US, THE FOLLOWING FACTS ARE DISCERNIBLE: I) SMT. RUPINDER KAUR LENT RS.5 LACS TO ASSESSEE B Y CHEQUE. AS PER HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDE RATION, SHE HAD TOTAL INCOME OF RS.700500/- TO HER CREDIT, AS I NCOME FROM OTHER SOURCES. II) SH.DHANRAJ SINGH GAVE LOAN OF RS. 5 LAC TO ASS ESSEE BY CHEQUES. HIS RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION SHOWS GROSS TOTAL INCOME OF RS.571334/-, AS INCOME FROM OTHER SOURCES. ITA NO.39(ASR)/2014 9 III) AN AMOUNT OF 2 LACS WAS LENT TO THE ASSESSEE BY SM T. HARINDER KAUR. HER RETURN OF INCOME FOR THE YEAR DEPICTS A SUM OF RS.1163913/- AS HER GROSS TOTAL INCOME. AS PER THE COMPUTATION OF INCOME, SHE EARNED RS.1166335/- AS INCOME FROM C APITAL GAIN. IV) SH.RAVI RAJ SINGH GAVE RS.4 LACS TO THE ASSESSEE BY CHEQUES. RS.600698/- HAS BEEN SHOWN AS HIS GROSS TOTAL INCO ME IN HIS RETURN OF INCOME, AS INCOME FROM OTHER SOURCES. V) RS. 4 LACS WAS GIVEN TO THE ASSESSEE BY HARJOT SING H. AS PER HIS RETURN, HIS GROSS TOTAL INCOME IS RS.700342/-, AS I NCOME FROM OTHER SOURCES. 17. FROM THE ABOVE, IT IS OBVIOUS THAT EACH OF THES E CREDITORS DID HAVE THE CAPACITY TO PAY THE SUMS GIVEN BY THEM TO THE ASSES SEE. THIS CAN BE TABULATED AS FOLLOWS: SL. NO. CREDITOR AMOUNT AVAILABLE AS GROSS TOTAL INCOME AMOUNT LENT TO ASSESSEE 1. RUPINDER JIT KAUR 7,00,496/- 5,00,000/- 2. DHANRAJ SINGH, HUF 5,71,334/0 5,00,000/- 3. HARINDER KAUR 11,63,913/- 2,00,000/- 4. RAVI RAJ SINGH 6,00,698/- 4,00,000/- ITA NO.39(ASR)/2014 10 5. HARJOT SINGH 7,00,342/- 4,00,000/- 16. THUS, EVIDENTLY, THE CREDITWORTHINESS WAS OF EA CH ONE OF THESE CREDITORS OF THE ASSESSEE STANDS PROVED BEYOND THE PALE OF A DOUBT. 17. THE AO, HOWEVER, WITHOUT TAKING INTO CONSIDERAT ION THE ABOVE AVAILABILITY OF FUNDS WITH THE CREDITORS, MERELY BA SED THE ADDITION ON THE FACT THAT THE MONEY IN ALL THESE CASES WAS TRANSF ERRED TO THE ASSESSEES ACCOUNT EITHER ON THE SAME DATE, OR WITHIN ONE OR T WO DAYS OF IT HAVING BEEN DEPOSITED IN THE CREDITORS ACCOUNTS. THIS IS PRECI SELY WHAT HAS BEEN STRESSED BY THE LD. DR BEFORE US ALSO. HOWEVER, THIS FACT, B Y ITSELF CANNOT AND DOES NOT LEAD TO THE INEXORABLE CONCLUSION THAT THE CRE DITS IN THE ASSESSEES ACCOUNT DO NOT STAND EXPLAINED. THE MATERIAL FACTOR IS THAT AMOUNTS MORE THAN THESE CREDITS STOOD AVAILABLE TO THE CREDI TORS AT THE TIME OF ADVANCING THEM TO THE ASSESSEE. FOR THESE REASONS, THE CASES RELIED ON BY THE LD. DR ARE NOT RELEVANT TO THE FACTS OF THE PRESENT CASE. 18. HENCE, BY PRODUCING, INTER-ALIA, THE RETURNS O F INCOME AND BANK ACCOUNTS OF ALL HIS CREDITORS BEFORE THE AO, THE AS SESSEE AMPLY DISCHARGED HIS ONUS. ERGO, THE ADDITION COULD NOT STAND. IT HA S RIGHTLY BEEN DELETED BY THE LD. CIT(A). ITA NO.39(ASR)/2014 11 19. BESIDES, IT IS NOTE-WORTHY, THAT THE CREDITORS HAVE PAID THE TAX DUE ON THESE AMOUNTS. 20. FOR THE ABOVE DISCUSSION, FINDING NO ERROR IN T HE ORDER OF THE LD. CIT(A), THE SAME IS CONFIRMED. 21. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER, 2015 SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 06/10/2015 COPY OF THE ORDER, FORWARDED TO: 1. THE ASSESSEE:SH.DHANRAJ SINGH PROP. PRINCE FABRICS , AMRITSAR. 2. THE DCIT, AMRITSAR. 3. THE CIT(A),ASR 4. THE CIT, ASR. 5. THE SR DR ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR)