ITO, New Delhi V. Shri Brij Lal Tayal, New Delhi

ITA 4303/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53317 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Keywords: Unexplained cash credit; Source of fund
• Section: 142(1); 68

Judgement Text

ITA NO. 4303/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4303/DEL/2011 A.Y. : 2006-07 I.T.O., WARD - 25(1), ROOM NO. 304-A, D-BLOCK, VIKAS BHAVAN, NEW DELHI VS. SHRI BRIJ LAL TAYAL, B-60, PUSHPANJALI ENCLAVE, PITAMPURA, DELHI-34 (PAN : AADPI1695D) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. R.S. SINGHVI, CA DEPARTMENT BY : MS. Y.S. KAKKAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: PER SHAMIM YAHYA: PER SHAMIM YAHYA: PER SHAMIM YAHYA: AM AMAM AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 02.1.2 009 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 20,00 ,000/- MADE U/S 68 OF THE INCOME TAX ACT ON ACCOUNT OF UNEXPLAINED CASH C REDITS. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- THE ASSESSEE HAD FILED HIS RETURN DECLARING AN INCO ME OF ` 1,70,560/- ON 08.3.2007. THE CASE WAS SELECTED FO R SCRUTINY. INFORMATION WAS RECEIVED AS PER AIR THAT DURING TH E YEAR UNDER ITA NO. 4303/DEL/2011 2 CONSIDERATION, THE ASSESSEE HAD DEPOSITED CASH AM OUNTING TO ` 11,55,000/- IN HDFC BANK, WHICH REQUIRED VERIFICATIO N. STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUE D AND SERVED ON THE ASSESSEE WITHIN TIME LIMIT PRESCRIBED UNDER TH E ACT. THE PERUSAL OF THE BANK STATEMENT OF THE ASSESSEE IN HDF C BANK REVEALED THAT THE ASSESSEE HAD WITHDRAWN CASH FROM THE BANK AMOUNTING TO ` 10 LACS AGAINST LOANS RAISED AND HAS RE-DEPOSITED CASH AMOUNTING TO ` 11,55,000/- DURING THE YEAR. THE ASSESSING OFFICER HAS WRITTEN IN THE ASSESSMENT ORDER THAT AS NOTED FROM THE DETAILS, THE ULTIMATE SOURCE OF CASH WITHDRAWN FROM THE BANK APPEARS TO BE LOANS RAISED AND DEPOSITED FROM VARI OUS PARTIES OF WHICH CONFIRMATIONS/ COPIES OF ACCOUNTS HAVE BEEN FILED. HOWEVER, THE ASSESSING OFFICER HAS DOUBTED THE VER ACITY OF TWO LOANS RECEIVED BY THE ASSESSEE FROM CLOSE RELATIVES , NAMELY SHRI AJAY TAYAL (LOAN OF ` 12 LACS) AND SMT. BIMLA DEVI TAY AL (LOAN OF ` 8 LACS) FOR THE REASON THAT CASH HAD BEEN INTRODUCE D IN THEIR BANK ACCOUNTS ONE DAY BEFORE ADVANCING LOAN TO THE APPEL LANT. THE ASSESSING OFFICER ISSUED SUMMONS TO BOTH THE LENDER S AND IN FACT, SHRI AJAY TAYAL APPEARED BEFORE THE ASSESSING OFFICER ON 21.11.2008 AND HIS STATEMENT WAS RECORDED UNDER OA TH IN THE PRESENCE OF LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE. ITA NO. 4303/DEL/2011 3 HOWEVER, SMT. BIMLA DEVI TAYAL DID NOT APPEAR BEFORE THE ASSESSING OFFICER. NOT BEING CONVINCED BY THE GE NUINENESS OF THESE LOANS, THE ASSESSING OFFICER ADDED ` 20 LACS TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 O F THE ACT. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUE AND HEL D AS UNDER:- THE APPELLANT HAS SUBMITTED THAT IN THE CASE OF SH. AJAY TAYAL, LOAN WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND THE COPY OF THE BANK STATEMENT OF SH. AJAY TAYAL WAS PLACED ON RECORD, ALONG WITH HIS CONFIRMATION, HIS PERMANENT ACCOUNT N UMBER, COPY OF BALANCE SHEET AS ON 31.03.2006 SHOWING LOAN GIVE N TO THE APPELLANT, COPY OF ACKNOWLEDGEMENT FOR FILING OF IN COME TAX RETURN FOR THE RELEVANT ASSESSMENT YEAR AND COPY OF BALANCE SHEET AND ACKNOWLEDGEMENT FOR F.Y. ENDING 31.03.2005 . MOREOVER, SH. AJAY TAYAL HAS APPEARED BEFORE THE ASS ESSING OFFICER, HAS GIVEN A STATEMENT UNDER OATH, WHEREIN HE HAS STATED THAT THE APPELLANT SH. BRIJ LAL TAYAL WAS HIS COUSI N BROTHER AND THAT HE HAD EXTENDED AN INTEREST FREE LOAN OF ` 12 LACS TO HIM DURING F.Y. 2005-06. HE HAS ALSO SUBMITTED IN HIS ST ATEMENT THAT HE HAD EXTENDED THIS LOAN OUT OF CASH IN HAND OUT O F ` 6 LACS AND LOAN OF RS.7 LACS TAKEN FROM HIS MOTHER SMT. KRISHNA DEVI. THE APPELLANT HAS SUBMITTED THAT HE HAS DISCHARGED HIS O NUS OF PROVIDING THE IDENTITY OF THE LENDER, HIS CREDITWOR THINESS AND ALSO THE GENUINENESS OF THE TRANSACTION THROUGH DOCUMENT ARY EVIDENCES. NOT ONLY THIS, HE HAS ALSO PRODUCED THE LENDER BEFORE ITA NO. 4303/DEL/2011 4 THE AO. THEREFORE, THE ADDITION OF ` 12 LACS SHOULD BE DELETED. THE APPELLANT HAS CITED THE FOLLOWING CASE LAWS IN HIS FAVOUR: (A) CIT VS. ORISSA CORPOR (B) CIT VS. LAUL TRANSPORT CORPORATION 180 TAXMAN 185 (P&H) (C) JCIT VS. MANOHAR COLD STORAGE & GENERAL MILLS (P ) LTD. (2005) 147 TAXMAN 101 (DEL) (MAG.) (D) ORIENT TRADING CO. VS. CIT (1963) 49 ITR 723 ( BORN), SAROGI CREDIT CORPORATION VS. CIT (1976) 103 ITR 344 (PAT.) (E) SONA ELECTRIC CO. VS. CIT (1985) 154 ITR 507 (DEL) (F) CIT VS. DIAMOND PRODUCTS LTD. (2009) 177 TAXMAN 331 (DELHI) (G) CIT VS. JAUHARIMAL GOEL (2005) 147 TAXMAN 448 ( ALL.) IN THE CASE OF DIAMOND PRODUCTS LTD. (SUPRA), THE HON' BLE HIGH COURT HAS HELD THAT THE ASSESSING OFFICER IS NOT P ERMITTED TO EXAMINE THE SOURCE OF THE SOURCE ONCE THE ASSESSEE H AS BEEN ABLE TO ESTABLISH THAT THE TRANSACTION WITH HIS CRE DITORS IS GENUINE AND THE CREDITOR'S IDENTITIES AND CREDITWORTHINESS HAVE BEEN ESTABLISHED. IN THE INSTANT CASE, IT HAD BEEN DONE. THEREFORE, IT WAS NOT OPEN TO THE ASSESSING OFFICER TO MAKE THE AD DITION OF THE AMOUNT IN QUESTION AFTER THE EXAMINATION OF THE SOURC E OF THE SOURCE. AS REGARDS THE DEPOSIT FROM SMT. BIMLA DEVI TAYAL, TH E APPELLANT HAS SUBMITTED THAT HE HAS FULLY AND COMPLET ELY DISCHARGED THE ONUS SINCE THE DEPOSIT IS THROUGH AC COUNT PAYEE ITA NO. 4303/DEL/2011 5 CHEQUE AND IT IS ALSO SUPPORTED BY COPY OF BALANCE SHEET AS WELL AS BANK STATEMENT. IT IS FURTHER SUBMITTED THAT SMT. B IMLA DEVI TAYAL HAD RECEIVED FUNDS FROM LIFE INSURANCE CORPOR ATION ON THE DEATH OF HER HUSBAND, WHICH WERE DEPOSITED BY HER I N HER BANK ACCOUNT, FROM WHERE SHE HAD GIVEN A LOAN OF ` 8 LACS TO THE APPELLANT. IT IS ALSO SUBMITTED THAT THE OBSERVATION OF THE AO THAT THE CASH WAS KEPT AT RESIDENCE OF SMT. BIMLA DEVI IS OF NO RELEVANCE AS THESE FUNDS WERE KEPT WITH HER FOR EME RGENCY USE ON ACCOUNT OF ILLNESS AND AS A SENSE OF SECURITY. N EVERTHELESS, THE FACT REMAINS THAT THE AVAILABILITY OF CASH IS CORRO BORATED FROM THE BALANCE SHEET FOR THE YEAR UNDER REFERENCE AND EVEN FOR THE PRECEDING YEARS. A PERUSAL OF HER BANK STATEMENT IN HDFC BANK, PITAMPURA, NEW DELHI AND HER LOAN CONFIRMATION IS ALSO PLACED ON RECORD. IN VIEW OF THE ABOVE DISCUSSION AND ON A CAREFUL PE RUSAL OF THE EVIDENCES PLACED ON RECORD BY THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS DISCHARGE D THE ONUS OF PROVING THE GENUINENESS OF THE CASH CREDITS, IDENTI TIES OF THE LENDERS AS WELL AS THEIR CAPACITY TO GIVE DEPOSITS/ LOANS. IN FACT, ONE OF THE DEPOSITORS EVEN APPEARED BEFORE THE AO A ND ACCEPTED HAVING GIVEN A LOAN TO THE APPELLANT. THUS, THE CAS E OF THE APPELLANT IS SQUARELY COVERED BY THE JUDGEMENT OF TH E HON'BLE DELHI HIGH COURT IN THE CASE OF DIAMOND PRODUCTS LTD. ( SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE JUDGEMENT OF T HE JURISDICTIONAL HIGH COURT IN THE ABOVE MENTIONED CAS E, THE ADDITION OF ` 20 LACS MADE IN THE CASE OF THE APPELL ANT U/S. 68 OF THE ACT IS HEREBY DELETED. ITA NO. 4303/DEL/2011 6 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORT ED THE ORDER OF THE ASSESSING OFFICER. SHE CLAIMED THAT AS SESSEES CLAIM WAS BEYOND THE HUMAN PROBABILITY. SHE FURTHER RELIANCE U PON THE FOLLOWING CASE LAWS:- - CORONATION FLOUR MILLS VS. ACIT 314 ITR 1 - SETHI COTTON TRADERS VS. ITO 286 ITR 548 - C.I.T. VS. DURGA PRASAD MORE 82 ITR 540 - TOBY CONSULTANTS P LTD. VS. C.I.T. 324 ITR 338 - SUMATI DAYAL VS. CIT 214 ITR 801 6.1 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND S UPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) . HE CLAIMED THAT ASSESSEE HAS DISCHARGED ITS ONUS AND LD. COMMIS SIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TA X (APPEALS) HAS GIVEN A FINDING THAT THE ASSESSEE HAS RECEIVED LOAN OF ` 12 LACS FROM AJAY TAYAL. THE LOAN WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE AND COPY OF BANK STATEMENT OF AJAY TAYAL WAS PLACED ON RECORD ALONGWITH HIS CONFIRMATION, PAN, COPY OF BALANCE SHEET AS ON 3 1.3.2006 WHICH ITA NO. 4303/DEL/2011 7 SHOWS THE LOAN WAS GIVEN TO THE ASSESSEE, COPY OF A CKNOWLEDGEMENT FOR FILING THE RETURN OF INCOME TAX FOR THE RELEVAN T ASSESSMENT YEAR, THE COPY OF BALANCE SHEET AND ACKNOWLEDGEMENT FOR FINA NCIAL YEAR 31.3.2005. MOREOVER, SH. AJAY TAYAL HAS APPEARED BEFORE THE ASSESSING OFFICER, HAS GIVEN A STATEMENT UNDER OATH , WHEREIN HE HAS STATED THAT THE ASSESSEE SHRI BRIJ LAL TAYAL WAS HIS COUSIN BROTHER AND THAT HE HAD EXTENDED AN INTEREST FREE LOAN OF ` 12 LACS TO HIM DURING FY 2005-06. IN OUR CONSIDERED OPINION, WE F IND THAT FORM THE ABOVE IT IS CLEAR THAT ASSESSEE HAS DISCHARGED ITS ONUS AND SUBMITTED ALL THE NECESSARY DOCUMENTS TO PROVE THE VERACITY OF ` 12 LACS LOAN TAKEN FROM SHRI AJAY TAYAL. 8. AS REGARDS THE DEPOSIT FROM SHRI VIMAL DEVI TAYAL, IT IS ASSESSEES CLAIM THAT HE HAS FULLY AND COMPLETELY DISCHARGED TH E ONUS SINCE THE DEPOSIT IS THROUGH ACCOUNT PAYEE CHEQUE AND IT IS ALSO SUPPORTED BY COPY OF BALANCE SHEET AS WELL AS BANK STATEMENT. IT IS FURTHER SUBMITTED THAT SMT. BIMLA DEVI TAYAL HAD RECEIVED FUN DS FROM LIFE INSURANCE CORPORATION ON THE DEATH OF HER HUSBAND, WHICH WERE DEPOSITED BY HER IN BANK ACCOUNT, FROM WHERE SHE H AD GIVEN A LOAN OF ` 8 LACS TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER GIVEN A FINDING THAT A PERUSAL OF BALAN CE SHEET OF SMT. BIMLA DEVI TAYAL AS ON 31.3.2005 REVEALS THAT SHE REC EIVED ASSETS AFTER THE DEATH OF HER HUSBAND AMOUNTING TO ` 8,85,4 38.84 AND LIC CLAIM RECEIVED BY HER AFTER THE DEATH OF HER HUSBAND AMOUNTED TO ` ITA NO. 4303/DEL/2011 8 7,09,875/-. COPY OF HER BANK STATEMENT IN HDFC BANK, PITAMPURA, NEW DELHI AND HER LOAN CONFIRMATION IS ALSO PLACED ON RE CORD. 9. IN VIEW OF THE AFORESAID DISCUSSION, IT IS CLE AR THAT THE ASSESSEE HAS DISCHARGED ITS ONUS AND GIVEN SUFFICIENT CREDEN TIALS FOR THE LOAN OBTAINED BY HIM. IN THIS REGARD, THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. DIAMOND PRODUCTS LTD. (2009 ) 177 TAXMAN 331 (DELHI) IS RELEVANT. IN THIS CASE IT WAS HELD THAT THE ASSESSING OFFICER IS NOT PERMITTED TO EXAMINE THE SOURCE OF THE SOURC E ONCE THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THE TRANSA CTION WITH HIS CREDITORS IS GENUINE AND THE CREDITORS IDENTIFIE S AND CREDITWORTHINESS HAVE BEEN ESTABLISHED. WE FIND THAT THE RATIO F ROM THIS CASE LAW IS APPLICABLE TO REPRESENT THE CASE. IN THE PRESENT CASE, ASSESSEE HAS DULY ESTABLISHED THE IDENTITY OF THE PERSONS FROM WH OM HE HAS TAKEN THE LOAN. THEY HAVE CONFIRMED THE LOAN, THEIR BANK STATEMENT, BALANCESHEET AND SOURCE OF FUNDS HAVE ALSO BEEN SUB MITTED. ONE OF THE PERSONS EVEN APPEARED BEFORE THE ASSESSING OFFI CER AND ACCEPTED ON OATH FOR HAVING GIVEN THE LOAN TO THE ASSESSEE. 9.1 WE FIND THAT THE CASE LAWS RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE NOT APPLICABLE ON THE FACTS OF T HE CASE AS STATED ABOVE. ITA NO. 4303/DEL/2011 9 10. IN LIGHT OF THE AFORESAID DISCUSSION AND PRECED ENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY, WE UPHOLD THE SAME. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2011. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/11/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES