The DCIT, Indore V. M/s. D.M. Woolens Mills Pvt. Ltd., Indore

ITA 419/IND/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9526 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Keywords: Additional evidence
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.419/IND/2009 A.Y. 2005-06 DCIT-1(1), INDORE APPELLANT VS M/S. D.M. WOOLENS MILLS PVT. LTD., INDORE PAN AAACD 6054 A RESPONDENT APPELLANT BY : SH. PRADEEP KUMAR MITRA, SR. DR RESPONDENT BY : REPRESENTATIVE FROM THE OFFICE OF SHRI S.S. SOLANKI, CA O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 12.5.2009 ON THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED 1. IN ACCEPTING THE ASSESSEES SELF SERVING DECLARA TION OF THE DIRECTORS MOTHER IN RESPECT OF LOAN OFN RS. 2,66, 55,000/- CLAIMED TO HAVE GIVEN BY HER OUT OF SALE OF HER HOU SE PROPERTY AS GENUINE WITHOUT APPRECIATING THE FACT T HAT NO EVIDENCE WITH REGARD TO SALE OF HOUSE PROPERTY WAS FURNISHED BEFORE HIM. 2 2. THIS CASE WAS FIXED FOR HEARING ON 23 RD MARCH, 2011. SHRI S.S. SOLANKI APPEARED ON BEHALF OF THE ASSESSEE AND SHRI PRADEEP KUMAR MITRA ARGUED ON BEHALF OF THE REVENUE. THE CASE FUL LY HEARD ON 23.3.2011. IN THIS CASE, ADDITION WAS MADE BY THE A SSESSING OFFICER IN RESPECT OF UNSECURED LOANS OF RS. 2,80,12,000/- T AKEN BY THE ASSESSEE FROM ONE SMT. USHA RANI BHATIA. IN RESPECT OF THI S UNSECURED LOAN THE ASSESSING OFFICER ASKED THE ASSESSEE TO ESTABLISH I DENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE ALLEGED AMOUNT OF CREDIT. ON ACCOUNT OF THE ASSESSEES FAILURE TO FURNISH ANY DETAILS TO ESTABLISH ANY OF THESE THREE INGREDIENTS THE ASSESSING OFFICER MADE THE AD DITION U/S 68 OF THE ACT. 3. IN AN APPEAL FILED BEFORE THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS), ADDITIONAL EVIDENCE WAS FURNISHED UNDER RULE 46A. VIDE OFFICE LETTER DATED 2.4.2009 AND 28.4.2009 THE ASSESSING O FFICER WAS REQUIRED TO SUBMIT HIS REPORT. THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) STATED THAT SINCE NO REPORT WAS OBTAINED BY THE ASS ESSING OFFICER, HE DISPOSED OF THE APPEAL ON 12.5.2009 WHEREIN THE ADD ITION MADE ON ACCOUNT OF UNSECURED LOAN OF RS.2,65,55,000/- WAS D ELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BY OBS ERVING THAT SMT. USHA RANI BHATIA WAS MOTHER OF ONE OF THE DIRECTOR S OF THE ASSESSEE COMPANY AND SHE HAD SOLD HER PROPERTY AND IN LIEU T HEREOF THE AMOUNT OF RS. 2,66,55,000/- WAS RECEIVED BY HER. IT WAS A LSO STATED THAT THE 3 SALE CONSIDERATION OF THE PROPERTY WAS DIRECTLY PAI D TO THE BANK IN DISCHARGE OF THE LIABILITY OF THE BANK. HOWEVER, N O FINDING WITH REGARD TO CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION WA S GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). AGAI NST THIS ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), T HE REVENUE IS IN APPEAL BEFORE US ALLEGING DELETION OF ADDITION IN R ESPECT OF UNSECURED LOAN OF RS. 2,66,55,000/- TAKEN FROM SMT. USHA RANI BHATIA. 4. AFTER HEARING THE APPEAL ON 23.3.2011 THE BENCH FOUND THAT IN ORDER TO SATISFY THE CONDITIONS OF GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF THE LOAN CREDIT, IT WAS ESSENTIAL TO BRING ON RECORD THE SALE DEED THROUGH WHICH THE PROPERTY WAS ALLOWED TO BE S OLD AND MONEY WAS PAID TO THE BANK IN LIQUIDATION OF LIABILITY OF THE ASSESSEE COMPANY. THE LEARNED DR ALSO VEHEMENTLY OBJECTED THAT NOWHERE TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN FIND ING WITH REGARD TO GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS O F LOAN CREDITOR. AS PER OUR CONSIDERED VIEW, TO PROVE THE GENUINENESS O F THE AMOUNT OF LOAN RECEIVED FROM SMT. USHA RANI BHATIA, IT WAS ESSENTI AL TO BRING ON RECORD THE SALE DEED TO INDICATE THAT THE AMOUNT SO RECEIV ED WAS OUT OF THE SALE CONSIDERATION OF THE PROPERTY. THE BENCH, THEREFOR E, SPECIFICALLY ASKED THE LD. COUNSEL FOR THE ASSESSEE TO PRODUCE THE COP Y OF SALE DEED OF THE PROPERTY EXECUTED BY SMT. USHA RANI BHATIA AND THE LD. COUNSEL FOR THE ASSESSEE ASSURED TO FURNISH THE SAME ON 24.3.2011. HOWEVER, ON 4 24.3.2011 THE LD. COUNSEL FOR THE ASSESSEE SENT A L ETTER THROUGH HIS OFFICE ASKING FOR ADJOURNMENT AS THE DOCUMENTS ASKE D FOR BY THE BENCH WERE NOT FOUND. THE LEARNED CIT DR VEHEMENTLY OBJE CTED THE ADJOURNMENT AND SUBMITTED THAT SINCE THE ENTIRE ISS UE HAS ALREADY BEEN ARGUED BY BOTH THE PARTIES AND HEARD BY THE BENCH, WHEREIN THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TR ANSACTION AND CREDIT WORTHINESS OF THE LOAN CREDITOR, THE MATTER SHOULD BE RESTORED TO THE FILE OF THE LEARNED ASSESSING OFFICER. HE ALSO ARGUED T HAT EVEN THE LOAN CREDITOR WAS NOT ASSESSED TO INCOME TAX, HER CREDIT WORTHINESS IS NOT ESTABLISHED IN TERMS OF THE ASSETS OWNED BY HER WHI CH WAS ALLEGED TO BE SOLD AND THE AMOUNT SO RECEIVED AS A SALE CONSIDERA TION WAS GIVEN TO THE ASSESSEE COMPANY AS UNSECURED LOAN. WE ALSO F IND THAT IN SPITE OF GIVING THE OPPORTUNITIES, THE LD. COUNSEL FOR THE A SSESSEE COULD NOT ESTABLISH THE ESSENTIAL INGREDIENTS TO PROVE THE GE NUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF LOAN CREDITOR. WE ALSO FIND THAT EVEN THE ASSESSING OFFICER DID NOT GET OPPORTUNITY TO VERIFY THE DOCUMENTS ALLEGED TO BE SENT BY THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) FOR REMAND REPORT INSOFAR AS VERY SHO RT TIME WAS GIVEN. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO NOT GIVEN ANY FINDING WITH REGARD TO THREE INGREDIE NTS REQUIRED TO BE ESTABLISHED IN CASE OF LOAN CREDITOR AS OBSERVED BY THE ASSESSING OFFICER IN HIS ORDER. 5 5. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS GROUND AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FO R DECIDING AFRESH AFTER RECORDING DUE FINDING WITH REGARD TO GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF THE LOAN CREDITOR. THE ASSESS EE IS ALSO DIRECTED TO SUBMIT COPY OF SALE DEED WHICH IS A MAIN CHAIN DOCU MENT INDICATING THE SOURCE OF MONEY IN THE HANDS OF THE LOAN CREDITOR, BEFORE THE LEARNED ASSESSING OFFICER ALONG WITH STATEMENT OF ACCOUNT A ND CONFIRMATION FROM THE LOAN CREDITOR. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES.S ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESE NCE OF LD. CIT(DR) AND REPRESENTATIVE FROM THE OFFICE OF THE LD. COUNS EL FOR THE ASSESSEE AT THE CONCLUSION OF THE HEARING ON 24 TH MARCH, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.3.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/-