S.Nageswari, CHENNAI V. ITO, CHENNAI

ITA 399/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6212 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Unexplained cash credit; Salary income
• Section: 68

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC C BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.399/MDS/2016 ( / ASSESSMENT YEAR: 2009-10) SMT. S. NAGESWARI, NO.3, J.RATNA APARTMENTS, 35, VELACHERY MAIN ROAD, CHENNAI 600 042. VS THE INCOME TAX OFFICER, SALARY WARD V(3), CHENNAI 600 034. PAN: ACNPN3295P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI K. MEENAKSHISUNDARAM, ITP /RESPONDENT BY : SHRI SUPRIYOPAL, JCIT /DATE OF HEARING : 12.06.2017 ! /DATE OF PRONOUNCEMENT : 31.08.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-5, CHENNAI DATED 01.01.2016 IN ITA NO.365/CIT(A)-5/201 3-14 FOR THE ASSESSMENT YEAR 2009-10 PASSED U/S.250(6) R.W.S .143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN 2 ITA NO.399/MDS/2016 CONFIRMING THE DISALLOWANCE MADE BY THE LD.AO AMOUN TING TO RS.20,30,000/- AS UNEXPLAINED CREDITS U/S. 68 OF TH E ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL EARNING INCOME FROM SALARY, FILED HER RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 28.03.2010, ADM ITTING TOTAL INCOME OF RS.5,11,450/-. INITIALLY THE RETURN WAS P ROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS S ELECTED FOR SCRUTINY UNDER CASS AND FINALLY ORDER U/S.143(3) OF THE ACT WAS PASSED ON 30.12.2011, WHEREIN THE LD.AO ADDED RS.19 ,20,346/- AS INCOME FROM OTHER SOURCES. 4. DURING THE COURSE OF SCRUTINY PROCEEDINGS, IT WA S OBSERVED BY THE LD.AO FROM THE CASH FLOW STATEMENT AND THE B ALANCE SHEET SUBMITTED BEFORE HIM THAT THE ASSESSEE HAS DI SCLOSED THE FOLLOWING DETAILS:- (I) LOAN FROM BROTHER RS.9,70,000/- (II) LOAN FROM SISTERS SON RS.2,00,000/- (III) AMOUNT RECEIVED FROM SON (RANJIT BAWA) RS.8 ,60,000/- TOTAL - RS.20,30,000/- THE ASSESSEE HAD ALSO DISCLOSED AN AMOUNT OF LOAN G IVEN TO ASSESSEES SON RANJIT BAWA AMOUNTING TO RS.15,30,00 0/- AND 3 ITA NO.399/MDS/2016 THE LOAN RECEIVED FROM THE ASSESSEES SISTER SON OF RS.2,00,000/- WAS ALSO REPAID. 5. IN ORDER TO JUSTIFY THE LOAN, THE ASSESSEE SUBMI TTED THE CONFIRMATION LETTER FROM HER BROTHER, SISTERS SON AND SON RANJIT BAWA. SHE ALSO FURNISHED ALL THE PARTICULARS OF HE R BROTHER, SON AND SISTERS SON. HOWEVER, THE LD.AO REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE BECAUSE THE ASSESSEE HAD NOT EXPLAINED THE SOURCE OF THE AMOUNT LEND BY THE ASSESSEES BRO THER, SISTERS SON AND HER SON. THEREAFTER THE LD.AO MADE ADDITIO N FOR RS.19,00,000/- UNDER THE HEAD INCOME FROM OTHER SO URCE. 6. ON APPEAL, THE LD.CIT(A) CONCURRED WITH THE VIEW OF LD.AO, HOWEVER CORRECTED THE TOTALING MISTAKE MADE BY THE LD.AO AND ACCORDINGLY THE AMOUNT OF RS.20,30,000/- WAS TREATED AS THE UNEXPLAINED CREDITS. WHILE DOING SO, THE LD. CIT(A) RELIED ON CERTAIN CASE LAWS DISCUSSED IN HIS ORDER WHEREIN IT WAS HELD THAT THE BURDEN OF PROVING THE IDENTITY OF THE CRED ITORS, CAPACITY OF THE CREDITORS TO ADVANCE MONEY AND GENUINENESS OF T HE TRANSACTION IS ON THE ASSESSEE AND IN THE CASE OF T HE ASSESSEE ALL THESE ASPECTS WERE MISSING. 4 ITA NO.399/MDS/2016 7. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAD BORROWED MONEY FROM HER RELATIVES AND SHE HAD FURNI SHED THE CONFIRMATION LETTERS FROM THEM AND ALSO HAD EXPLAIN ED THE SOURCE FROM WHERE HER RELATIVES HAD LENT THE MONEY TO HER. THE LD.AR FURTHER ARGUED STATING THAT THE LD.A.O WITHOUT VERI FYING THE EXPLANATION OFFERED BY THE ASSESSEE AND EXAMINING T HE CREDITORS, HAD HELD THE TRANSACTION NOT TO BE GENUINE ON THE B ASIS OF SURMISES AND CONJECTURES. IT WAS THEREFORE PLEADED THAT THE ADDITION MADE BY THE LD.AO WHICH WAS FURTHER UPHELD BY THE LD.CIT(A) MAY BE DELETED. THE LD.DR ON THE OTHER H AND RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES AND PR AYED FOR CONFIRMING THE SAME. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS O F THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS SUBMITTED THE CONFIR MATION LETTER FROM ALL HER RELATIVES FROM WHOM SHE HAD BORROWED T HE MONEY. SHE HAD ALSO FURNISHED THE PARTICULARS OF THE CREDI TORS. THE LD.AO WITHOUT EXAMINING THE CREDITORS AND BRUSHING ASIDE THE EXPLANATION OFFERED BY THE ASSESSEE SIMPLY MADE ADD ITION IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM O THER SOURCE. THIS ACT OF THE LD.AO IS NOT JUSTIFIABLE. THE LD.AO 5 ITA NO.399/MDS/2016 OUGHT TO HAVE SUMMONED THE CREDITORS AND EXAMINE TH EIR SOURCE BEFORE ARRIVING AT HIS DECISION. THE LD.CIT(A) ALS O WITHOUT FURTHER EXAMINING AND VERIFYING THE ISSUE HAD SIMPL Y FOLLOWED THE ORDER OF THE LD.AO. THIS ACTION OF THE LD.CIT(A) I S ALSO NOT JUSTIFIABLE. AT THIS JUNCTURE I AM REMINDED OF THE DECISION OF THE HONBLE GUWAHATI HIGH COURT & CALCUTTA HIGH COURT D ISCUSSED HEREIN BELOW: 1. JALAN TIMBERS V. CIT [1997] 223 ITR 11 (GAU.) WHERE, IN RESPECT OF CERTAIN CASH CREDITS, THE ASSE SSEE HAD NOT ONLY DISCLOSED THEM IN HIS RETURN OF INCOME BUT ALSO PRODUCED CONFIRMATORY LETTERS FROM THE CREDITORS, A ND THE CREDITORS HAD ALSO DECLARED THE AMOUNTS IN THEIR IN COME-TAX RETURNS WHICH WERE ACCEPTED BY THE ITO, ADDITION MA DE AS CASH CREDITS BY IGNORING THE AFORESAID FACTS WOULD NOT BE JUSTIFIED. 2. S.K. BOTHRA & SONS, HUF V. ITO [2011] 203 TAXMAN 436/15 TAXMANN.COM 298 (KOL.) : IT IS SETTLED LAW THAT WHILE CONSIDERING THE QUESTI ON WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUIN E TRANSACTION, THE INITIAL ONUS IS ALWAYS UPON THE AS SESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF LOAN. BUT TH E LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCH ARGED BY THE ASSESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPO RT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSIN G OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXP LANATION FROM THE ASSESSEE AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO THE ASSESSEE. HOWEVER, TH E ASSESSING OFFICER WOULD NOT BE JUSTIFIED IF HE MERELY DIRECTE D THE INSPECTOR TO VERIFY THE STATEMENTS, AND LATER ON TH E BASIS OF HIS REPORT, STRAIGHTAWAY ARRIVE AT THE CONCLUSION THAT THE TRANSACTIONS WERE NOT GENUINE WITHOUT GIVING FURTHE R 6 ITA NO.399/MDS/2016 OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE ALLEGED INFORMATION DISCLOSED BY THE INSPECTOR TO THE ASSESSING OFFICER . IN THE CASE BEFORE US THE ASSESSEE HAD FURNISHED AL L THE DETAILS WITH RESPECT TO THE LOAN RECEIVED BY HER, T HUS THE INITIAL ONUS THRUST ON THE ASSESSEE IS DISCHARGED AND SHIFT S TO THE LD.A.O. HOWEVER THE LD.A.O HAD HAD NEITHER EXAMINED NOR VERIFIED THE PARTICULARS FURNISHED BY THE ASSESSEE. CONSIDERING THESE FACTS AND THE DECISION OF THE HIGHER JUDICIAR Y CITED HEREIN ABOVE, I DO NOT HAVE ANY OTHER OPTION BUT DELETE TH E ADDITION MADE IN THE HANDS OF THE ASSESSEE BY THE LD. A.O BE CAUSE THE LD.A.O HAS NOT DISCHARGED HIS ONUS. ACCORDINGLY, I HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION OF RS.20,30,000/- MADE IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CREDITS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THE 31 ST AUGUST, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 31 ST AUGUST, 2017 7 ITA NO.399/MDS/2016 RSR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF