POWER FUELS INDIA P.LTD, DELHI V. ITO 10(3)(4), MUMBAI

ITA 4132/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9896 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Unexplained cash credit; Salary income
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.4132/M/2015 ASSESSMENT YEAR: 2010-11 M/S. POWER FUELS INDIA PVT. LTD., D-216, SHOP NO.2, CENTRAL BLOCK, DILSHAD GARDEN, DELHI - 110095 PAN: AADCP 2583R VS. INCOME TAX OFFICER 10(3)(4), AAYAKAR BHAVAN, ROOM NO.554, 5 TH FLOOR, CHURCHGATE, MUMBAI - 400051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEEL KHANDELWAL, A.R. REVENUE BY : SHRI RAJAT MITTAL, D.R. DATE OF HEARING : 29.06.2017 DATE OF PRONOUNCEMENT : 14.07.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 04.12.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) OBSERVED THAT A SSESSEE COMPANY IS ENGAGED IN BUSINESS OF TRADING AND PURCHASE AND INSTALLATIO N OF CNG KITS AND CYLINDER IN THE AUTOMOBILES. DURING THE YEAR ASSESSEE HAS R ECEIVED LOANS FROM THE DIRECTORS/SHAREHOLDERS WHICH INCLUDED LOAN OF RS.83 ,00,000/- FROM THE DIRECTOR SMT. AMITA JAIN, INCLUDING THE OPENING CREDIT OF RS .4,74,298/- AND ASSESSEE REPAID A SUM OF RS.33,50,000/- DURING THE YEAR. IN ORDER TO EXAMINE THE ITA NO.4132/M/2015 M/S. POWER FUELS INDIA PVT. LTD. 2 CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT S FROM SMT. AMITA JAIN, THE AO ASKED THE ASSESSEE TO FILE A BANK ACCOUNT STATEM ENT AND COPIES OF THE RETURN. FROM THE DETAILS FILED, IT WAS SEEN THAT S MT. AMITA JAIN HAS FILED A RETURN OF INCOME OF RS.6,92,500/- FOR A.Y. 2010-11 AND RS.2,74,760/- FOR A.Y. 2009-10. HER INCOME IS RECEIVED FROM THE ASSESSEE COMPANY. IN A.Y. 2010- 11 SHE DECLARED HER INCOME FROM SALARY OF RS.7,80,0 00/-. SHE IS NEITHER FILING BALANCE SHEET NOR CAPITAL ACCOUNT. THUS, THE LOAN CREDIT OF RS.83,00,000/- REMAINED UNVERIFIED IN THE ABSENCE OF NARRATION OF INFLOW/OUTFLOW OF TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSEE HAS SHOWN RS.29 LAKHS STATED TO HAVE BEEN RECEIVED AGAI NST SALE OF PROPERTY WHICH WAS NOT REFLECTED IN THE RETURN OF INCOME FILED. F URTHER, THE LOAN OF RS.86,50,000/- APPROXIMATELY WAS RECEIVED IN THE FO RM OF FRIENDLY LOANS, THE NAMES OF PERSONS FROM WHOM FRIENDLY LOANS WERE TAKE N WERE NEVER REFLECTED IN THE RETURN OF INCOME. THE BANK STATEMENT SUBMITTED DOES NOT INDICATE THE ABOVE TRANSACTIONS IN THE DEPOSIT SIDE. THEREFORE, THE AO TREATED THIS LOAN AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL. 4. THE LD. A.R. SUBMITTED THAT ASSESSEE HAS RECEIVE D THIS LOAN THROUGH PROPER BANKING CHANNEL BY ACCOUNT PAYEE CHEQUE. TH E CONFIRMATION LETTER ALONG WITH BANK STATEMENT AND INCOME TAX RETURN OF SMT. AMITA JAIN HAVE BEEN FILED. THE LOAN CREDITOR IS ALSO DIRECTOR OF THE A SSESSEE COMPANY. THE IDENTITY, GENUINENESS AND SOURCE OF LOAN HAVE BEEN ESTABLISHE D BY THE ASSESSEE. THE ASSESSEE HAS REPAID RS.15,00,000/- DURING THE YEAR SO THE ACCOUNT IS A MOVING ACCOUNT AND THERE IS NO ONE SIDED TRANSACTION AND L OANS ARE TAKEN AND REPAID ALSO. THE LD. A.R. SUBMITTED THAT IN ASSESSMENT YE AR 2009-10 THE SAME ADDITION WAS MADE AND IT WAS DELETED BY THE LD. CIT (A). ITA NO.4132/M/2015 M/S. POWER FUELS INDIA PVT. LTD. 3 5. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT T HE CREDITWORTHINESS OF SMT. AMITA JAIN, DIRECTOR OF THE COMPANY IS NOT PRO VED. SHE HAS ONLY THE INCOME SOURCE IS THE SALARY FROM THE ASSESSEE COMPA NY. THE ASSESSEE DECLARED THAT SHE HAS RECEIVED FRIENDLY LOANS, SOLD OLD JEWE LLERY AND A RESIDENTIAL ACCOMMODATION BUT THAT HAS NOT BEEN DECLARED IN HER RETURN OF INCOME. SMT. AMITA JAIN HAS NOT DECLARED THE NAMES OF PERSONAL F AMILY FRIENDS AND DID NOT DECLARE THE DETAILS OF SOLD JEWELLERY IN HER RETURN , THEREFORE, LD. CIT(A) IS JUSTIFIED IN HIS ACTION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND TH AT THE ASSESSEE HAS RECEIVED THE LOAN FROM SMT. AMITA JAIN AND ASSESSEE HAS SUBM ITTED THE DETAILED STATEMENT OF SOURCE OF DEPOSIT DURING THE ASSESSMEN T PROCEEDINGS WHICH READ AS UNDER: DATE AMOUNT SOURCE OF DEPOSIT 01.05.2009 10,00,000 RECD. AGAINST SALE OF PROPERTY. COPY OF SALE DEED IS ENCLOSED HEREWITH EVIDENCING THE RECEIPT OF THE MONEY 09.05.2009 750000 RECD. AGAINST SALE OF PROPERTY. COPY OF SALE DEED IS ENCLOSED HEREWITH EVIDENCING THE RECEIPT OF THE MONEY 09.05.2009 750000 RECD. AGAINST SALE OF PROPERTY. COPY OF SALE DEED IS ENCLOSED HEREWITH EVIDENCING THE RECEIPT OF THE MONEY 09.06.2009 400000 RECD. AGAINST SALE OF PROPERTY. COPY OF SALE DEED IS ENCLOSED HEREWITH EVIDENCING THE RECEIPT OF THE MONEY 02.07.2009 2500000 LOAN RECEIVED FROM MR. VIVEK GUPTA, M/S. PRAMOD BUILDWELL, A-272, SURAJMAL VIHAR, 1 ST FLOOR, DELHI. PAN: AAOPG3278N 03.07.2009 984892 RECEIVED FROM SALE OF JEWEWLLERY. A COPY OF THE PURCHASE VOUCHER FROM M/S. GOPAL JEE JEWELLERSI IS ENCLOSED. 03.07.2009 950000 LOAN RECEIVED FROM M/S. BASIST LEASING & FINANCE COMPANY ITA NO.4132/M/2015 M/S. POWER FUELS INDIA PVT. LTD. 4 LTD. 35/A, PILI KOTHI, MB ROAD, KHANPUR, NEW DELHI-62. PAN: AAACB1948F 03.07.2009 1500000 LOAN RECEIVED FROM M/S. SHREE CHINTAMANI TRADERS, F.171/8, MANGAL BAZAR, LAXMI NAGAR, DELHI-92 03.07.2009 1200000 LOAN RECEIVED FROM MR. VIPIN KUMAR JAIN, A-18, PUSHPANJALI ENCLAVE, DELHI. PAN: AANPJ8711C 03.07.2009 1010516 RECEIVED FROM SALE OF JEWELLERY. A COPY OF THE PURCHASE INVOICE FROM M/S. BALAJI COMMODITIES IS ENCLOSED. 7. WE FIND THAT ASSESSEE HAD SUBMITTED THE LEDGER A CCOUNT OF THE COMPANY ON PAGE NO.1 OF THE PAPER BOOK. WE FIND THAT ON PA GE NO.8 OF THE PAPER BOOK, ASSESSEE HAS SUBMITTED THE SOURCE OF DEPOSIT IN SAV INGS BANK ACCOUNT WITH STANDARD CHARTERED BANK. THE ASSESSEE HAS FILED TH E PHOTOCOPY OF SALE DEED EVIDENCING THE SALE OF PROPERTY FROM PAGE NOS.9 TO 24. THE ASSESSEE HAS FILED THE ACKNOWLEDGMENT FOR FILING THE RETURN OF INCOME ALONG WITH COMPUTATION OF TOTAL INCOME OF SMT. AMITA JAIN FOR INCOME TAX ASSE SSMENT YEAR 2010-11 WHEREIN SHE HAD REVISED THE RETURN AND CALCULATED T HE CAPITAL GAIN, SHE HAS SHOWN THE CAPITAL INCOME RECEIVED IN CONSIDERATION OF SELLING HER HOUSE, SHE HAS ALSO SHOWN THE JEWELLERY IN HER RETURN. SMT. A MITA JAIN HAS ALSO RECEIVED ALL THESE AMOUNTS BY BANKING TRANSACTIONS. 8. WE FIND THAT ASSESSEE HAS RECEIVED LOAN FROM M /S. BASIST LEASING & FINANCE COMPANY LTD. THROUGH ACCOUNT PAYEE CHEQUE A ND PAN NUMBER IS ALSO MENTIONED. SIMILARLY, RS.15 LAKHS WERE RECEIVED FR OM M/S. SHREE CHINTAMANI TRADERS, DELHI AND RS.12 LAKHS LOAN WAS RECEIVED FR OM MR. VIPIN KUMAR JAIN. THEREFORE, ALL THESE DOCUMENTARY EVIDENCES SHOW THA T ASSESSEE HAS GIVEN DOCUMENTARY EVIDENCE WHICH PROVES THAT ASSESSEE HAS GIVEN THE SATISFACTORY EXPLANATION REGARDING THE SOURCE OF DEPOSIT, THEREF ORE, NO ADDITION IS CALLED FOR. ITA NO.4132/M/2015 M/S. POWER FUELS INDIA PVT. LTD. 5 9. WE ALSO FIND THAT UNDER SECTION 68 OF THE ACT, T HE AO IS EMPOWERED TO MAKE INQUIRY REGARDING CASH CREDIT. IF HE IS SATIS FIED THAT THESE ENTRIES ARE NOT GENUINE, THEN HE HAS EVERY RIGHT TO ADD THIS AS AN INCOME FROM OTHER SOURCES. BUT BEFORE REJECTING ASSESSEES EXPLANATION AO MUST MAKE PROPER ENQUIRIES. IN ABSENCE OF PROPER INQUIRIES THE ADDITION CANNOT BE SUSTAINED. THE ASSESSEE, IN THIS CASE, HAS DISCHARGED HIS ONUS OF PROOF BY P ROVING THREE THINGS I.E. IDENTITY, CREDIT CAPACITY OF CREDITOR AND GENUINENE SS OF TRANSACTION IN QUESTION. HENCE, THE ASSESSEE HAS PROVED ALL THESE THREE THIN GS, HENCE THE ONUS IS DISCHARGED. ASSESSEE ONLY NEEDS TO PROVE THE SOURC E OF ENTRY. HE NEED NOT PROVE THE SOURCE OF SOURCE OF CREDITORS. SECTION 6 8 OF THE ACT EXPLAINS THAT WHERE THE IDENTITY OF THE CREDITOR IS ESTABLISHED A ND ENTRY SHOWN NOT TO BE FICTITIOUS THEN THE BURDEN SHIFTS TO DEPARTMENT TO SHOW AS TO WHY ENTRY SALE REPRESENTED THE SUPPRESSED INCOME OF THE ASSESSEE. ASSESSEE CANNOT BE CALLED UPON TO PROVE THE WORTHY OF HIS CREDITORS CREDIT. 10. WE ARE OF THE VIEW THAT IN THIS CASE, BEFORE US , THE ASSESSEE HAS PRODUCED THE DOCUMENTARY EVIDENCE VIZ. THE LEDGER ACCOUNT OF SMT. AMITA JAIN, ACKNOWLEDGEMENT OF RETURN FILED BY SMT. AMITA JAIN FOR INCOME TAX ASSESSMENT YEAR 2010-11, PHOTOCOPY OF THE BANK STAT EMENT OF SMT. AMITA JAIN, STATEMENT SHOWING THE SOURCE OF DEPOSIT IN SAVING B ANK ACCOUNT OF SMT. AMITA JAIN, PHOTOCOPY OF THE SALE DEED EVIDENCING THE PRO PERTY SOLD BY SMT. AMITA JAIN, PHOTOCOPY OF INVOICES EVIDENCING SALE OF JEWE LLERY BY SMT. AMITA JAIN, LEDGER ACCOUNT OF SMT. AMITA JAIN IN BOOKS OF ASSES SEE FOR YEAR ENDED 31.03.09 AND ACKNOWLEDGEMENT FOR FILING RETURN OF INCOME TOG ETHER WITH A COMPUTATION OF TOTAL INCOME OF SMT. AMITA JAIN FOR INCOME TAX Y EAR 2009-10. MOREOVER, ASSESSEE HAS ALSO FILED ALL THE DOCUMENTARY EVIDENC ES BEFORE US. THEREFORE, NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT, B ECAUSE, ASSESSEE HAS PROVED THE IDENTITY, GENUINENESS AND SOURCE OF THE LOAN TH AT HAVE BEEN ESTABLISHED BY THE ASSESSEE. THEREFORE, WE ALLOW THE APPEAL OF TH E ASSESSEE. ITA NO.4132/M/2015 M/S. POWER FUELS INDIA PVT. LTD. 6 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 14.07.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.07.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.