DCIT, New Delhi V. M/s. R.G. Consultants Pvt. Ltd., New Delhi

ITA 4335/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5026 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove; Set aside
• Section: 133A; 13; 68; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI G BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 2515/DEL/2015 [ASSESSMENT YEAR 2011-12] R. G. CONSULTANTS PVT. LTD., 109, MCD MARKET, SARASWATI MARG, KAROL BAGH NEW DELHI PAN : AAACR 3394 M VS THE DY. C.I.T. CIRCLE 15(1), NEW DELHI ITA NO. 4335/DEL/2015 (ASSESSMENT YEAR 2011-12) THE D Y. C . I . T . CIRCLE 20(2), NEW DELHI (APPELLANT) VS R. G. CONSULTANTS PVT. LTD., 109, MCD MARKET, SARASWATI MARG, KAROL BAGH NEW DELHI PAN : AAACR 3394 M (RESPONDENT) DATE OF HEARING : 19.02.2020 DATE OF PRONOUNCEMENT : 20.02.2020 ASSESSEE BY : SHRI VED JAIN, ADV SHRI ASHISH GOEL, CA MS UMANG LUTHRA, ADV REVENUE BY : SHRI H. K. CHARUDHARI, CIT-D R SHRI SARAS KUMAR, SR. DR 2 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THE ABOVE TWO CROSS APPEALS BY THE ASSESSEE AND REV ENUE ARE PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11, NEW DELHI DATED 31.03.2015 PERTAINING TO ASSESSMENT YEAR 2011-12. SINCE BOTH THESE APPEALS WERE HEARD T OGETHER, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 2515/DEL/2015 [ASSESSEES APPEAL] 2. THE SOLITARY GRIEVANCE RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1 CR ORES ON ACCOUNT OF UNDISCLOSED CASH U/S 69 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT']. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT S OME INFORMATION WAS RECEIVED FROM THE POLICE STATION, KAROL BAGH, N EW DELHI THAT ON 22.11.2010, TWO PERSONS, NAMELY SHRI DEEPAK SINGH A ND SHRI HARISH KUMAR WERE CAUGHT BY THE POLICE WITH TWO BAGS AT GA FFAR MARKET, KAROL 3 BAGH, NEW DELHI. THESE TWO BAGS CONTAINED UNEXPLAI NED CASH OF RS. 1 CRORE. 4. THE POLICE FURTHER INFORMED THAT THESE TWO PERSO NS WERE EMPLOYEES OF M/S R.G. CONSULTANTS PVT LTD AND THESE BAGS BELONGED TO THE ASSESSEE. THE DIRECTOR OF THE COMPANY WAS CALL ED ON THE SPOT. PURSUANT TO THIS, SURVEY OPERATION U/S 133A OF THE ACT WAS CARRIED ON 23.11.2010 TO VERIFY THE SOURCE OF RS. 1 CRORE FOUN D AND RETAINED BY THE POLICE AUTHORITIES. 5. THE ASSESSING OFFICER OBSERVED THAT NO PROPER B OOKS OF ACCOUNT WERE AVAILABLE AT THE OFFICE PREMISES. THE DIRECTO R SHRI NEETU NAYYAR CLAIMED THAT CASH SEIZED BY POLICE WAS DULY RECORDE D IN THE BOOKS OF ACCOUNT AND, ACCORDINGLY, THE ASSESSING OFFICER ASK ED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT. 6. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, ONCE AGAIN THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF SOURCE OF RS. 1 CRORE FOUND AND SEIZED BY THE POLICE. 4 7. THE ASSESSEE FURNISHED DETAILS OF CASH IN HAND A S UNDER: S. NO. A.Y. DATE OF FILING CASH IN HAND AS PER BALANCE SHEET 1. 2005 - 06 09.09.2005 4613499.11 2. 2006 - 07 15.09.2006 5321019.11 3. 2007 - 08 06.10.2007 3419131.42 4. 2008 - 09 30.09.2008 2873520.19 5. 2009 - 10 27.09.2009 5385691.45 6. 2010 - 11 14.10.201 4784325.75 7. 2011 - 12 30.09.2011 7821212.75 8. IT WAS EXPLAINED THAT THE ASSESSEE IS AN AUTHORI SED MONEY CHANGER AND DUE TO BUSINESS REQUIREMENTS, THE ASSES SEE HAS TO MAINTAIN SUBSTANTIAL CASH BALANCE. IT WAS FURTHER EXPLAINED THAT HUGE AMOUNT WAS WITHDRAWN FROM HDFC BANK, NEW DELHI BUT THE ASSESSING OFFICER OBSERVED THAT THE CASH DOES NOT CARRY TAGS OF HDFC BANK. THE ASSESSING OFFICER FURTHER OBSERVED THAT CASH BOOK S O PRODUCED WAS NOT MADE AVAILABLE TO THE SURVEY PARTY WHEREIN IT WAS E XPLAINED THAT THE BOOKS OF ACCOUNT WERE LYING WITH THE CHARTERED ACCO UNTANT. THE ASSESSING OFFICER FURTHER MADE ENQUIRY FROM THE CA AND THE CA INFORMED THAT THE PEN DRIVE CONTAINED BOOKS OF ACCO UNT WAS PROVIDED, BUT THE SAME COULD NOT BE OPENED. 5 9. AFTER CONSIDERING THE DETAILED SUBMISSIONS AND E XPLANATION TENDERED BY THE ASSESSEE, THE ASSESSING OFFICER WAS NOT CONVINCED AND WAS OF THE FIRM BELIEF THAT RS. 1 CRORE FOUND AND S EIZED WAS NEVER DISCLOSED IN THE BOOKS OF ACCOUNT. THE ASSESSING O FFICER FURTHER OBSERVED THAT THE CASH WITHDRAWN FROM HDFC BANK FRO M 01.11.2010 TO 22.11.2010 AMOUNTED TO RS. 81.50 LAKHS. THE ASSESS ING OFFICER FURTHER OBSERVED THAT THE CASH HAS BEEN WITHDRAWN IN TRANCH ES. ANOTHER REASON FOR DISBELIEVING THE ASSESSEES CONTENTION W AS THAT THE BUNDLES OF NOTES CONTAINED THE SLIPS OF PNB, HISSAR WHEREIN THE CLAIM IS WITHDRAWAL FROM HDFC BANK. DISBELIEVING ALL THE CO NTENTIONS AND SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSING OFF ICER MADE ADDITION OF RS. 1 CRORE. 10. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEH EMENTLY STATED THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY DE FECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER HAS NOT APPRECI ATED THE NATURE OF BUSINESS OF THE ASSESSEE IN IT TRUE PERSPECTIVE. T HE LD. COUNSEL FOR THE 6 ASSESSEE FURTHER STATED THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH THAT IT HAS TO CARRY LARGE AMOUNT OF CASH IN H AND. 12. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT MERELY BECAUSE THE CASH BUNDLES CARRY THE SLIP OF PNB, HIS SAR, WOULD NOT JUSTIFY THE STAND TAKEN BY THE ASSESSING OFFICER IN AS MUCH AS MANY A TIMES BANKS GIVE CASH WHICH WAS RECEIVED BY IT FROM THE DEPOSITOR AS IT IS AND, THEREFORE, SOME CASH MUST HAVE BEEN DEPOSIT ED WHICH CARRIED THE TAG OF PNB, HISSAR AND THE SAME CASH WAS GIVEN BY HDFC BANK TO THE ASSESSEE. 13. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE ASSESSING OFFICER AND REITERATED WHAT HAS BEEN STAT ED IN THE ASSESSMENT ORDER. 14. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASS ESSEE IS AN AUTHORISED MONEY CHANGER. IN OUR CONSIDERED OPINIO N, THIS LINE OF BUSINESS REQUIRED AVAILABILITY OF CASH IN HUGE AMOU NT AS THE PERSONS GIVE DOLLARS TO BE EXCHANGED IN INDIAN CURRENCY. C ONSIDERING THE 7 EXCHANGE RATE, THE ASSESSEE HAS TO CARRY HEAVY CASH . TO THIS EXTENT, WE DO NOT FIND ANY QUARREL BETWEEN THE ASSESSEE AND THE REVENUE. 15. THE MAIN REASON WHICH WE FIND IS THAT THE CASH BUNDLES CARRY THE TAG OF PNB, HISSAR. AGAIN, IN OUR CONSIDERED VIEW, THIS SHOULD NOT BE GIVEN WEIGHTAGE IN AS MUCH AS IT IS A VERY COMMON P RACTICE AMONGST ALL BANKS TO ISSUE CURRENCY BUNDLES AS RECEIVED BY THEM . MOREOVER, ONCE A BUNDLE OF CURRENCY CARRIED TAG OF ANOTHER BANK, T HE ISSUING BANK NEED NOT HAVE TO COUNT AGAIN AND AGAIN. 16. ANOTHER REASON GIVEN BY THE ASSESSING OFFICER I S THAT THE CASH BOOKS WERE NOT AVAILABLE AT THE TIME OF SURVEY. IT IS COMMON PRACTICE THAT THOUGH THE CASH BOOKS ARE WRITTEN ON DAY TO DA Y BASIS, BUT IN PRACTICE, THERE IS ALWAYS A TIME GAP BETWEEN THE BO OK ENTRIES. BOOKS WERE LYING WITH THE CA, WHICH HAVE ALSO BEEN VERIFI ED BY THE ASSESSING OFFICER AND WHEN DURING THE COURSE OF ASSESSMENT PR OCEEDINGS BOOKS WERE PRODUCED, NOT EVEN A SINGLE DEFECT HAS BEEN PO INTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT OF THE AS SESSEE. WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE ADDITION HAS BE EN MADE ON THE BASIS OF SUSPICIONS AND SURMISES AND SUCH ADDITIONS CANNOT BE SUSTAINED. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND 8 DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 1 CRORE. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. ITA NO. 4335/DEL/2015 [REVENUES APPEAL] 17. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2.56 CRORES. 18. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS, AND ON PERUSAL OF THE BALANCE SHEET, THE ASSESSING OFFICER FOUND THAT A SUM OF RS. 2.56 CRORES HAS BEEN TAKEN AS UNSECURED LOAN FR OM THE DIRECTORS AND THEIR RELATIVES AS UNDER: S. NO. NAME OF THE PERSON AMOU NT (RS.) 1. NEETU NAYYAR 63,25,000 2. SHIV KUMAR NAYYAR 53 ,25,000 3. MEENA NAYYAR 23,25,000 4. HONEY NAYYAR 23,25,000 5. KARTIK NAYYAR 23,25,000 6. PARAGYA NAYYAR 23,25,000 7. CHANDRIKA NAYYAR 23,25,000 8. VINAYAK NAYYAR 23,25,000 TOTAL 2,56,00,000 9 19. THE ASSESSEE WAS ASKED TO JUSTIFY THE UNSECURED LOANS IN THE LIGHT OF PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESS EE SUBMITTED ALL THE BANK STATEMENTS ALONGWITH COPIES OF CONFIRMATIONS. THE ASSESSEE WAS ASKED TO PRODUCE ALL THE CREDITORS PERSONALLY BUT C OULD PRODUCE ONLY ONE PERSON, NAMELY, SHRI NEETU NAYYAR. THE ASSESSI NG OFFICER WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS FAILED TO DIS CHARGE THE INITIAL ONUS CAST UPON IT BY PROVISIONS OF SECTION 68 OF THE ACT AND ACCORDINGLY, MADE ADDITION OF RS. 2.56 CRORES U/S 68 OF THE ACT. 20. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND ONCE AGAIN FURNISHED ALL THE RELEVANT DOCUMENTS TO JUSTI FY THE LOAN. 21. AFTER CONSIDERING ALL THE FACTS AND SUBMISSIONS , THE LD. CIT(A) HELD AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER OF THE AO , WRITTEN SUBMISSIONS & PAPER BOOK OF THE ASSESSEE. I N THE ASSESSMENT ORDER THE AO HAS TREATED THE UNSECURED LO ANS OF RS. 2.56 CRORES RECEIVED BY THE APPELLANT FROM V ARIOUS PARTIES AS UNEXPLAINED AND ADDED THE SAME TO THE IN COME OF THE APPELLANT UNDER SECTION 68 OF THE INCOME TAX ACT 1961. ON GOING THROUGH THE PAPER BOOK, I NOTICE THA T THE APPELLANT IN ORDER TO DISCHARGE ITS PRIMARY ONUS TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE 10 LENDERS THE APPELLANT HAS SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE ASSESSING OFFICER. I. PAN II. BANK STATEMENT III. CONFIRMATION IV. ITR I HAVE PERUSED THE ABOVE STATED DOCUMENTS AT LENGTH AND IN DETAIL. I HAD ALSO CALLED FOR THE CASE RECORDS A ND PERUSED THE SAME. I FIND THAT THE APPELLANT HAVING PRODUCED ALL THESE DOCUMENTS AS STATED ABOVE HAS DULY ESTABLISHE D THE IDENTITY AND CREDITWORTHINESS AND HAS ALSO ESTABLIS HED THE GENUINENESS OF THE TRANSACTIONS. THE LENDERS ARE RE GULARLY FILING THEIR INCOME TAX RETURN. ALSO ON PERUSAL OF T HE BANK STATEMENT OF THE LENDERS, I NOTICE THAT THERE ARE N O IMMEDIATE CASH DEPOSITS BEFORE PAYMENT. THIS IS A CASE OF THE COMPANY. THE AMOUNT HAS BEEN CONTRIBUTED BY THE DIRECTORS AND THEIR RELATIVES. T HE IDENTITY OF EACH OF THESE PERSONS HAS BEEN ESTABLIS HED. FURTHER EACH OF THESE PERSONS HAVE CONFIRMED HAVING PAID THIS AMOUNT TO THE COMPANY. EACH OF THESE PERSONS H AVE BEEN FILING RETURNS. FURTHER BANK STATEMENTS OF THE SE PERSONS HAVE BEEN FILED AND THE PAYMENT HAS COME FR OM THE BANK ACCOUNT. THE ALLEGATION OF THE AO IS REGAR DING THE SOURCE OF THE CREDIT IN THE BANK ACCOUNT. IN THIS R EGARD I AM OF THE VIEW THAT THE AO IS NOT JUSTIFIED TO ASK S OURCE OF SOURCE. THE ASSESSEE BEING A COMPANY AND THE LOAN H AVING COME FROM THE DIRECTORS AND THEIR RELATIVES THEIR I DENTITY 11 HAVING BEEN ESTABLISHED AND THE MONEY HAVING BEEN C OME THROUGH BANK AND EACH OF THE PERSONS BEING A TAX PA YER, ADVERSE INFERENCE, IF ANY, REGARDING THE SOURCE OF CREDIT IN THE BANK ACCOUNT MAY BE AN ISSUE IN THE CASE OF SUC H INDIVIDUALS BUT CANNOT BE A GROUND FOR MAKING ADDIT ION IN THE HANDS OF THE ASSESSEE COMPANY. FURTHER IT IS NOT THE CASE THAT THE PARTY LENDERS/C REDITORS HAVE BEEN HELD ENGAGED IN ANY UNSCRUPULOUS ACTIVITY OR HAS BEEN FOUND TO BE ENGAGED IN THE PROVIDING ACCOMMODA TION ENTRIES. THE APPELLANT COMPANY ON ITS PART HAS SUBM ITTED NECESSARY DETAILS TO ESTABLISH THE IDENTITY OF THE LENDERS. THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS HAS NOT BEEN ABLE TO BRING ANY ADVERSE MATERIAL OR EVIDENCE TO DISCREDIT THE GENUINENESS OF THE TRANSA CTION. 22. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FI NDINGS OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR THE ASSES SEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 23. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT ALL THE LENDERS ARE EITHER DIRECTORS OR RELATIVES OF THE DIRECTORS. IT IS ALS O TRUE THAT THE ASSESSEE HAS FURNISHED PAN DETAILS, BANK STATEMENTS, CONFIRM ATIONS AND COPIES OF INCOME TAX RETURNS OF THE LENDERS. IT IS EQUALL Y TRUE THAT NONE OF 12 THE LENDERS IS ALLEGED TO BE AN ENTRY PROVIDER. A PERUSAL OF THEIR BANK STATEMENTS REVEALS THAT THEY HAVE GIVEN LOAN TO THE ASSESSEE OUT OF THEIR AVAILABLE BALANCES AND IT IS NOT THE CASE OF THE REVENUE THAT PRIOR TO ISSUING CHEQUES, THERE IS A DEPOSIT OF CASH IN T HE LENDERS BANK ACCOUNT. THEREFORE, IT CAN BE SAFELY CONCLUDED THA T THE ASSESSEE HAS NOT PURCHASED CHEQUE BY PAYING CASH. CONSIDERING T HE EVIDENCES WHICH ARE BEFORE US IN THE FORM OF PAPER BOOK AND C ONSIDERING THE FACT THAT THE LD. CIT(A) HAS DELETED THE ADDITION AFTER CAREFULLY PERUSING THE DOCUMENTS, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, THE GROUND RAISED BY THE REVE NUE IS DISMISSED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE ITA N O. 2515/DEL/2015 IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE ITA NO . 4335/DEL/2015 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.02. 2020. SD /- SD/- SD/- SD/- [SUCHITRA KAMBLE] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 20 TH FEBRUARY, 2020 13 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER