Sh. Sukhvinder Singh, Kanpur V. ACIT-3, Kanpur

ITA 406/LKW/2011

• Counselvise Citation: 40623714 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-07-2014
• Assessment Year: 1992-1993
• Appeal Filed On: 30-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Salary income; Principle of natural justice
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.406/LKW/2011 ASSESSMENT YEAR:1992 - 93 SHRI SUKHVINDER SINGH, C/O SANJAY NANDANI & CO. CHARTERED ACCOUNTANTS, 229, 2 ND FLOOR, CITY CENTRE, THE MALL, KANPUR. PAN:ACJPS2526C VS. A.C.I.T. - 3, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 02/07/2014 DATE OF PRONOUNCEMENT 2 1 /08/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, DEHRADUN HOLDING CONCURRENT CHARGE OF CIT(A) - I, KANPUR DATED 17/02/2011 FOR THE ASSESSMENT YEAR 1992 - 93. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, DEHRADUN, HOLDING CONCURRENT CHARGE OF C.I.T. APPEALS - 1, KANPUR HAS ERRED IN HOLDING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.3,15,000/ - UNDER SECTION 68 OF THE INCOME TAX ACT 1961 AS CORRECT AND CONFIRMING THE SAME. 2 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I HAS ERRED IN NOT ACCEPTING THAT THE REQUIRED DOCUMENTS TO SUBSTANTIATE THE IDENTITY OF THE PERSONS GIVING LOAN, GENUINE OF THE TRANSACTION AND CAPACITY OF THE PERSON DULY FILED BEFORE THE ASSESSING OFFICER DO DISCHARGE THE ONUS OF THE APPELLANT AS REQUIRED UNDER THE APPLICABLE SECTIONS OF THE INCOME TAX ACT 1961. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, HAS ERRED IN NOT ACCEPTING THAT IT WAS PRACTICALLY NOT POSSIBLE TO PRODUCE THE FOUR PERSO NS AFTER LAPSE OF ALMOST 15 YEARS, TO WHOM THE REPAYMENT OF THE LOAN HAS ALSO BEEN MADE AND WHO WERE THE RESIDENTS OF SHRI GANGA NAGAR, RAJASTHAN WHILE THE APPELLANT HAS MIGRATED AND SETTLED PERMANENTLY TO KANPUR. 4. THAT THE LEARNED COMMISSIONER OF (APPE ALS) - I, HAS ERRED IN NOT ACCEPTING THAT THE TIME ALLOWED BY THE ASSESSING OFFICER TO PRODUCE THESE PERSONS WAS SHORT. 5. THAT THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - I UNDER SECTION 250(6) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW, ON FACTS AND IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 6. THAT THE APPELLANT CRAVES LIBERTY TO ADD, ALTER OR VARY ANY GROUND OF APPEAL EITHER AT THE TIME OF HEARING OF THE APPEAL OR BEFORE THE DISPOSAL OF THE APPEAL. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE AFFIDAVIT OF ALL THE FOUR CREDITORS, WHO COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER ALONG WITH OTHER DOCUMENTS SUCH AS COPY OF RETURN OF INCOME, COPY OF COMPUTATION OF INCOME, COPY OF RATION CARD ETC. ARE AVAILABLE ON PAGE NO. 4 TO 21 OF THE PAPER BOOK. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF HASTIMAL (S.) VS COMMISSIONER OF INCOME - TAX [1963] 49 ITR 273 (MAD) . HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE GUJARAT HI GH COURT RENDERED IN THE 3 CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA IN TAX APPEAL NO. 50 OF 2011. HE SUBMITTED COPY OF THIS JUDGMENT. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO ON THE TRIBUNAL DE CISION IN ASSESSEES OWN CASE IN FIRST ROUND WHICH IS AVAILABLE ON PAGE NO. 22 TO 25 OF THE PAPER BOOK. HE POINTED OUT THAT THIS WAS THE DIRECTION OF THE TRIBUNAL IN THIS ORDER THAT THE ASSESSEE HAS UNDERTAKEN TO PRODUCE THE CASH CREDITOR S BEFORE THE ASSE SSING OFFICER AND IF THE ASSESSEE FAILS TO PRODUCE THE CASH CREDITORS FOR EXAMINATION BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WILL BE AT LIBERTY TO DECIDE THE ISSUE ON THE BASIS OF MATERIAL ON RECORD. HE SUBMITTED THAT THE ASSESSING OFFICER HAS ALLOWED RELIEF TO THE ASSESSEE IN RESPECT OF THOSE CREDITORS WHO WERE PRODUCED AND ONLY FOR THOSE CREDITORS WHO COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER, THE ADDITION WAS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) AND THE SAME SHOULD BE CONFIRMED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER PARA 9 OF THE TRIBUNAL ORDER IN I.T.A. NO.741/ALL D /2000 DATED 11/05/2005, IT WAS HELD BY THE TRIBUNAL THAT THE ASSESSEE HAS UNDERTAKEN TO PRODUCE CASH CREDITORS BEFORE THE ASSESSING OFFICER AT HIS OWN RESPONSIBILITY AND IF THE ASSESSEE FAILS TO PRODUCE THE CASH CREDITORS FOR EXAMINATION BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WILL BE AT LIBERTY TO DECIDE THE ISSUE ON THE BASI S OF THE EVIDENCE AND MATERIAL ON RECORD. NOW IN THE LIGHT OF THIS TRIBUNAL DECISION IN THE FIRST ROUND WHICH HAS ATTAINED FINALITY , WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE AND THE COPY OF AFFIDAVIT ETC., AV AILABLE ON PAPER BOOK TO WHICH OUR ATTENTION WAS DRAWN BY LEARNED A.R. OF THE ASSESSEE. 4 6. WE FIND THAT THE AFFIDAVITS, WHICH ARE NOW PLACED BY LEARNED A.R. OF THE ASSESSEE IN THE PAPER BOOK, ARE ALL DATED MARCH 2006 WHEREAS THE TRIBUNAL ORDER IS DATED 11 MAY 2005. HENCE, THESE AFFIDAVITS WERE NOT AVAILABLE ON RECORD WHEN THE TRIBUNAL PASSED THIS ORDER. AS PER THIS TRIBUNAL ORDER, THE ASSESSING OFFICER WAS TO DECIDE THE ISSUE ON THE BASIS OF EVIDENCE AND MATERIAL ON RECORD IF THE ASSESSEE FAILS TO PROD UCE THE LOAN CREDITORS BEFORE THE ASSESSING OFFICER. WE ALSO FIND THAT FOR THE PURPOSE OF SATISFYING THE INGREDIENTS OF SECTION 68, THE ASSESSEE HAS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AS WELL AS GENUINENESS OF THE TRANSAC TIONS. WE FAIL TO UNDERSTAND THAT WHEN THE ASSESSEE COULD OBTAIN THE AFFIDAVIT OF THESE FOUR PERSONS IN THE MONTH OF MARCH 2006, THEN WHAT WERE THE REASONS FOR WHICH THESE CREDITORS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER IN COURSE OF ASSESSMEN T PROCEEDINGS, WHICH WAS COMPLETED BY THE ASSESSING OFFICER ON 22/06/2006. BEFORE THE AUTHORITIES BELOW OR BEFORE US ALSO, NO REASON WAS GIVEN BY THE ASSESSEE DUE TO WHICH THESE FOUR LOAN CREDITORS COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER ALTHOU GH THEIR AFFIDAVITS COULD BE OBTAINED BY THE ASSESSEE AND PRODUCED BEFORE THE ASSESSING OFFICER. WE ALSO FIND THAT AS PER THESE AFFIDAVITS ALSO , NOTHING IS COMING OUT REGARDING THE CREDITWORTHINESS OF THESE LOAN CREDITORS THOUGH THE ASSESSEE HAS FURNISHED COPY OF COMPUTATION OF INCOME OF THESE PERSONS ALONG WITH THE BALANCE SHEET. AS PER THE COMPUTATION AND BALANCE SHEET OF SHRI MANGI LAL, FROM WHOM IT IS CLAIMED THAT THE ASSESSEE HAS TAKEN LOAN OF RS.1,00,000/ - , WE FIND THAT THIS PERSON HAS SHOWN SALARY INCOME OF RS.24,000/ - ONLY AND HIS TOTAL CAPITAL AT THE END OF THE YEAR AFTER INCLUDING THE INCOME OF THE PRESENT YEAR IS SHOWN AT RS.81,160/ - . IT IS SHOWN IN HIS BALANCE SHEET THAT HE WAS HAVING LOAN LIABILITY OF RS.20,000/ - FROM ONE RAMCHAND AND IN THIS MANNER , HE HAS SHOWN THE SOURCE OF LOAN 5 AT RS.1,00,000/ - AND HE HAS SHOWN A CASH IN HAND OF RS.1,160/ - . THERE IS NO BANK ACCOUNT OF THIS PERSO N. HENCE, FROM THESE DOCUMENTS ALSO, THE CREDITWORTHINESS OF THIS PERSON IS NOT BEING ESTABLISHED. THE SECOND PERSON IS SHRI YOGESH KUMAR FROM WHOM IT IS CLAIMED THAT LOAN OF RS.1,00,000/ - WAS TAKEN. THIS PERSON HAS SHOWN SALARY INCOME OF RS.23,400/ - AN D HE HAS SHOWN THE BALANCE IN HIS CAPITAL ACCOUNT AT THE END OF THE YEAR AFTER INCLUDING INCOME OF THE PRESENT YEAR AT RS,72,235/ - AND HAS SHOWN LOAN CREDIT OF RS.18,000/ - FROM ONE SHRI DULICHAND AND RS.5,000/ - FROM ONE SHRI MAMRAJ AND IN THIS MANNER , HE H AS CLAIMED THE SOURCE OF LOAN OF RS.1,00,000/ - AND CASH IN HAND SHOWN BY HIM OF RS.235/ - . THERE IS NO BANK ACCOUNT OF THIS PERSON ALSO. HENCE, IT IS SEEN THAT THE CREDITWORTHINESS OF THIS PERSON IS NOT ESTABLISHED. THE THIRD PERSON IS SHRI MANOJ KUMAR V ERMA FROM WHOM IT IS CLAIMED THAT LOAN OF RS.1,00,000/ - WAS TAKEN. THIS PERSON IS ALSO HAVING SALARY INCOME OF RS. 23,400/ - AND BALANCE IN CAPITAL ACCOUNT HAS BEEN SHOWN AT RS. 7 5,330/ - AFTER INCLUDING INCOME OF PRESENT YEAR. HE HAS ALSO SHOWN LOAN OF RS.1 5,000/ - FROM ONE SHRI SURAJ PRAKASH AND RS.10,000/ - FROM ONE SHRI NANAKCHAND AND IN THIS MANNER , HE HAS SHOWN SOURCE OF LOAN GIVEN TO THE ASSESSEE OF RS.1,00,000/ - AND CASH IN HAND OF RS.330/ - . THE 4 TH PERSON IS SHRI JUGAL KOSHORE JOSHI FROM WHOM IT IS CL AIMED THAT LOAN OF RS.15,000/ - WAS TAKEN. THIS PERSON HAS SHOWN SALARY INCOME OF RS.30,000/ - AND INTEREST INCOME OF RS.6,000/ - FROM SHRI GURMEET SINGH TO WHOM THAT PERSON HAS ADVANCE D LOAN OF RS.56,000/ - AT THE END OF THE YEAR. THIS PERSON IS NOT HAVING BANK ACCOUNT. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT THE CREDITWORTHINESS IS NOT PROVED FROM THE DOCUMENTS BROUGHT ON RECORD IN THE PAPER BOOK. IN SPITE OF GIVING UNDERTAKING BEFORE THE TRIBUNAL IN FIRST ROUND, THE ASS ESSEE HAS FAILED TO PRODUCE THES E CREDITORS BEFORE THE ASSESSING OFFICER ALTHOUGH THE ASSESSEE HAS 6 OBTAINED THE AFFIDAVITS FROM THESE PERSONS DURING THE SAME PERIOD WHEN THE ASSESSMENT PROCEEDINGS WAS GOING ON. NO REASON HAS BEEN SHOWN FOR FAILURE TO PRODUCE THESE PERSONS BEFORE THE ASS ESSING OFFICER. 7. NOW IN THE LIGHT OF THE ABOVE NOTED FACTS , WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 8. THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF HASTIMAL (S.) VS COMMISSIONER OF INCOME - TAX (SUPRA). WE FIND THAT IN THAT CASE , THE P ROCEEDINGS UNDER SECTION 34 WERE STARTED IN THE YEAR 1957 CALLING UPON THE ASSESSEE TO EXPLAIN A CREDIT IN THE BOOKS OF ACCOUNT OF THE FIRM H AND CO. MADE IN THE YEAR 1947. THE ASSESSEE EXPLAINED THAT HE HAD BORROWED MONEY FROM V AT BIKANER AND OBTAINED THE MONEY BY A BANK DRAFT IN HIS FAVOUR ON THE PUNJAB NATIONAL BANK, CASHED THE DRAFT AND DEPOSITED RS. 16,000 IN THE SAME BANK AND ON THE STRENGTH OF THE DEPOSIT RECEIPT HAD BORROWED RS. 15,000 FROM THE BANK AND PAID IT TO THE FIRM. THIS EXPLANATION WAS SUPPORTED BY DOCUMENTARY EVIDENCE BUT WAS RE JECTED BY THE TRIBUNAL ON THE GROUND THAT THE DRAFT HAD BEEN SENT BY G AND NOT V, AND THAT IT HAD NOT BEEN POSSIBLE TO CONTACT EITHER G OR V TO ASCERTAIN WHETHER G WAS V'S AGENT AS ALLEGED BY THE ASSESSEE. UNDER THESE FACTS, IT WAS HELD BY HON'BLE MADRAS HIGH COURT THAT AFTER LAPSE OF A DECADE, AN ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CALLED UPON TO EXPLAIN NOT MERELY THE ORIGIN AND SOURCE OF A CAPITAL CONTRIBUTION BUT THE ORIGIN OF ORIGIN AND SOURCE OF SOURCE AS WELL . IN OUR CONSIDERED OPINION, THE FACTS OF THIS CASE ARE DIFFERENT AND THIS JUDGMENT IS NOT APPLICABLE BECAUSE IN THE PRESENT CASE, WE HAVE SEEN THAT THE ASSESSEE HIMSELF HAS UNDERTAKEN THAT HE WILL BE PRODUCING LOAN CREDITORS AND ASSESSEE HAS ALSO PRODUCED 7 CREDITORS OUT OF 11 CREDI TORS. FOR THE 7 REMAINING 4 CREDITORS ALSO, THE ASSESSEE HAS OBTAIN ED AFFIDAVIT FROM THEM IN MARCH 2006 WHEREAS THE ASSESSMENT PROCEEDINGS WERE CONCLUDED IN THE MONTH OF JUNE 2006. IT MEANS THAT THESE PERSONS WERE VERY MUCH AVAILABLE IN COURSE OF ASSESSMENT PROCEEDINGS. IN SPITE OF THIS, THE ASSESSEE COULD NOT PRODUCE THESE PERSONS BEFORE THE ASSESSING OFFICER AND NO REASON HAS BEEN GIVEN FOR HIS FAILURE. FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE, IT IS SEEN THAT THE CREDITWORTHINESS OF THE CREDITORS IS NOT ESTABLISHED. THE LOAN IS CLAIMED TO HAVE BEEN TAKEN IN CASH AND NOT THROUGH BANKING CHANNEL. UNDER THESE FACTS, IN OUR CONSIDERED OPINION, THE ASSESSEE DOES NOT GET ANY HELP FROM THIS JUDGMENT BECAUSE IN THAT CASE , THE SECOND PERSON WAS NOT APPROACH ABLE AND THE DOCUMENT ARY EVIDENCE WERE MADE AVAILABLE BY THE ASSESSEE. HENCE, WE HOLD THAT THE ASSESSEE DOES NOT GET ANY HELP FROM TH I S JUDGMENT. 9. THE SECOND JUDGMENT ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED AR OF THE ASSESSEE IS THE JUDGMENT O F HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA (SUPRA). IN THAT CASE , IT IS NOTED BY HON'BLE HIGH COURT THAT THE ASSESSEE HAD RECEIVED LOANS BY ACCOUNT PAYEE CHEQUES FROM THREE PERSONS WHEREAS IN THE PRESENT CASE, THE LOAN IS RECEIVED IN CASH AND NOT THROUGH ACCOUNT PAYEE CHEQUE AND THEREFORE, THIS JUDGMENT OF HON'BLE GUJAR AT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE FACTS ARE DIFFERENT. 10. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NEITHER THE ASSESSEE HAS PRODUCED THESE FOUR CREDITORS BEFORE THE ASSESSING OFFICER NOR THE DOCUMENTS PRODUCED BY THE ASSESSEE ARE ESTABLISHING THE CREDITWORTHINESS OF THESE CREDITORS AND NO REASON HAS BEEN GIVEN BY THE ASSESSEE FOR FAILURE TO PRODUCE THESE PERSONS IN SPITE OF UNDERTAKING 8 GIVEN BY THE ASSESSEE BEFORE THE TRIBUNAL. NONE OF THE JUDGMENT S IS RENDERING ANY HELP TO TH E ASSESSEE. UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 /08/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR