DCIT, Meerut V. M/s. Sarup Chand & Sons, Meerut

ITA 4345/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6005 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH SHARMA SENIOR
• Assessee Lawyers: R P NARANG
• Keywords: Proportionate interest
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCHES (CAMP AT MEERUT) BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4345/DEL./2016 (ASSESSMENT YEAR : 2012-13) DCIT, CIRCLE 2, VS. M/S. SARUP CHAND & SONS, MEERUT. SADAR BAZAAR SARRAFA, MEERUT. (PAN : AACFS8757N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.P. NARANG, ADVOCATE REVENUE BY : SHRI YOGESH SHARMA, SENIOR DR DATE OF HEARING : 07.01.2019 DATE OF ORDER : 21.01.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DCIT, CIRCLE 2, MEERUT (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.05.2016 PASSED BY LD. C IT (APPEALS), MEERUT QUA THE ASSESSMENT YEAR 2012-13 O N THE GROUNDS INTER ALIA THAT :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACT IN DELETING THE ADDITION OF RS.87,93,022/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT, 1961 IGNORING THE FACT THAT THE ASSESSEE FAILED TO TILE DOCUMENTARY EVIDENCES IN SUPPORT OF THE THESE DEPOSITS TAKEN BY IT AND THUS DID NOT CHARGE THE ONUS CAST UPON IT TO PR OVE THE CREDITWORTHINESS AND GENUINENESS OF THE SAID TRANSA CTIONS. ITA NO.4345/DEL./2016 2 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACT IN DELETING THE ADDITION OF RS.9,99,898/- MADE BY THE A.O. DUE TO DISALLOWANCE OF PROPORTIONATE INTEREST ON UNSECURED LOANS THAT WERE TAKEN BY THE ASSESSEE FROM PARTNERS AND RELATIVES. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACT IN DELETING THE ADDITION OF RS.12,21,6301- MADE BY THE A.O. DUE TO DISALLOWANCE OF PAYMENT MADE TOWARDS LABOUR CHARGES WITHOUT TAKING INTO CONSIDERATION THE FACT THAT IN SPITE OF BEING GRANTED REASONABLE OPPORTUNITY, THE ASSESSEE FAILED TO PRODUCE THE SAI D PARTIES BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER MADE AD DITION OF RS.87,93,022/- UNDER SECTION 68 OF THE INCOME-TAX A CT, 1961 (FOR SHORT THE ACT) ON FAILURE OF THE ASSESSEE TO EXPL AIN UNSECURED LOAN, DEPOSITS TAKEN FORM SMT. MEENAKSHI JAIN, M/S. SHIVAN JEWELLER, ROHIT JAIN, NEHA BANSAL AND SOUBRABH GOEL . AO ALSO MADE ADDITION OF RS.9,99,898/- BY WAY OF DISALLOWAN CE FOR PAYING HIGHER RATE OF INTEREST BY THE ASSESSEE @ 13% TO 18 %. AO ALSO MADE ADDITION OF RS.12,21,630/- CLAIMED TO HAVE BEE N PAID BY THE ASSESSEE AS LABOUR CHARGES, ON THE GROUND THAT THE SAID PAYMENT HAS BEEN MADE TO THE RELATED PARTIES AND THE NATURE OF BUSINESS REQUIRES HIGHLY SKILLED LABOUR WHICH CANNOT BE IN THE CASE O F RELATIVES OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY PARTLY ALLOWING THE ITA NO.4345/DEL./2016 3 APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 5. UNDISPUTEDLY, THE ASSESSEE HAS TAKEN UNSECURED L OANS FROM DIFFERENT PERSONS ON ACCOUNT OF WHICH ADDITION OF R S.87,93,002/- HAS BEEN MADE U/S 68 OF THE ACT WHICH IS DETAILED A S UNDER :- S.NO. NAME AMOUNT (RS.) 1. MAHENDER KUMAR JAIN (HUF) 8,00,000/- 2. SHANTI DEVI JAIN ESTATE 9,34,000/- 3. MENAKSHI JAIN 19,64,022/- 4. ROHIT JAIN 8,95,000/- 5. SHIVAM JEWELLERS 19.50,000/- 6. NEHA BANSAL 12,00,000/- 7. SAURABH GOEL 10,50,000/- TOTAL : 87,93,002/- 6. ASSESSEE IN ORDER TO PROVE THE IDENTITY AND CRED ITWORTHINESS OF MAHENDER KUMAR JAIN (HUF) FROM WHOM A LOAN OF RS.8,00,000/- WAS TAKEN BY THE ASSESSEE BROUGHT ON RECORD HIS LEDGER ACCOUNT WITH PAN WHO IS AN OLD CREDITOR WITH OPERATING LOAN OF RS.29,37,047/- HAVING BEEN ACCEPTED IN THE EARLIER YEARS. MOREOVER, IT IS PROVED ON RECORD THAT RS.8,00,000/- WAS RECEIVED ITA NO.4345/DEL./2016 4 DURING THE YEAR UNDER ASSESSMENT BY WAY OF CHEQUE N O.234137 DATED 06.04.2011 DRAWN AT PUNJAB NATIONAL BANK, AS HAS BEEN REFLECTED IN THE BANK STATEMENT. MOREOVER, FROM TH E INCOME-TAX RETURN AND COMPUTATION OF INCOME OF CASH CREDITOR F OR AY 2012-13, AN AMOUNT OF RS.7,33,466/- HAS BEEN DECLARED IN THE RETURN. FROM THE LEDGER ACCOUNT, IT IS ALSO PROVED THAT DURING T HE YEAR UNDER ASSESSMENT, TWO MORE LOANS OF RS.13,28,000/- AND RS .43,000/- HAS BEEN RECEIVED BY THE ASSESSEE WHICH HAS ALREADY BEE N ACCEPTED BY THE AO. SO, THE LD. CIT (A) HAS RIGHTLY REACHED TH E CONCLUSION THAT SOURCE OF CASH CREDIT OF RS.8,00,000/- IS OUT OF TH E OPENING BALANCE OF CASH CREDITOR AND THE SOURCE DOES NOT RELATE TO THE YEAR UNDER ASSESSMENT, HENCE NO ADDITION CAN BE MADE. 7. SO FAR AS CASE OF SMT. SHANTI DEVI JAIN IS CONCE RNED, IT IS ADMITTED CASE OF THE ASSESSEE THAT SHANTI DEVI JAIN HAD SOLD SOME JEWELLERY TO THE ASSESSEE FOR RS.9,34,000/- AND SOM E AMOUNT HAS BEEN LENT TO THE ASSESSEE. SHANTI DEVI JAIN IS ALS O PROVED TO BE OLD CASH CREDITOR HAVING OPERATING CASH CREDIT OF RS.41 ,32,385/- IN THE IN THE BOOKS OF THE ASSESSEE WHICH HAS BEEN ACCEPTE D IN THE EARLIER YEARS BY THE REVENUE. SALE OF ORNAMENTS OF RS.9,34 ,000/- BY THE CASH CREDITOR TO THE ASSESSEE HAS ALSO BEEN VERIFIE D BY THE LD. CIT (A) FROM PURCHASE VOUCHER NO.124 DATED 29.03.2011 F ROM BOOK NO.3 ISSUED BY ASSESSEE. JEWELLERY OF RS.3,90,000/ - IS PROVED TO BE ITA NO.4345/DEL./2016 5 SOLD BY THE CASH CREDITOR AND THE PAYMENT OF WHICH WAS MADE BY THE ASSESSEE TO THE CASH CREDITOR VIDE CHEQUE DRAWN AT PUNJAB NATIONAL BANK WHICH IS PROVED FORM THE BANKS STATEM ENT. 8. SIMILARLY, JEWELLERY OF RS.5,44,000/- WAS AGAIN SOLD ON 22.09.2011 TO THE ASSESSEE BY CASH CREDITOR BY INVO ICE NO.123 FROM BOOK NO.3 AND THE PAYMENT OF WHICH WAS ALSO MADE TH ROUGH CHEQUE DATED 22.04.2011 DRAWN AT PUNJAB NATIONAL BA NK. LD. CIT (A) ALSO EXAMINED ITR ACKNOWLEDGEMENT AND COMPUTATI ON OF INCOME OF THE CASH CREDITOR OF AY 2012-13 WHEREIN S ALE OF JEWELLERY AND CAPITAL GAIN THEREOF HAS BEEN DULY DE CLARED. SO, THE LD. CIT (A) HAS RIGHTLY HELD THAT THE SOURCE OF CAS H CREDITOR, IDENTITY, GENUINENESS AND CREDITWORTHINESS HAS BEEN DULY PROVED. 9. IN CASE OF AN AMOUNT OF RS.19,64,022/- CLAIMED TO BE CREDITED BY MEENAKSHI JAIN TO THE ASSESSEE, THE LD. CIT (A) HAS EXAMINED COPY OF LEDGER ACCOUNT OF CASH CREDITOR CO NTAINING PAN SHOWING OPENING CREDIT BALANCE WITH THE PARTY AT RS .28,48,963/- AS ON 01.04.2011 AND TOTAL TRANSACTION IN THE CREDIT S IDE INCLUDING OPERATING BALANCE OF RS.28,48,962/- IS RS.48,12,984 /-. SO, THE DIFFERENCE OF RS.19,64,022/- WHICH INCLUDES INTERES T OF RS.5,82,692/- HAS BEEN ADDED. SO, THE EXACT LOAN R ECEIVED DURING THE YEAR IS ONLY RS.13,81,330/-. THE LD. CIT (A) H AS DULY EXAMINED THE SOURCE OF VARIOUS LOAN CHEQUES ISSUED BY THE CASH ITA NO.4345/DEL./2016 6 CREDITOR TO THE ASSESSEE FROM THE BANK STATEMENT, D -MAT ACCOUNT AND FOUND THE SAME TO HAVE BEEN DULY EXPLAINED. SO , LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION IN CASE OF MEENAKS HI JAIN. 10. IN CASE OF ADDITION OF RS.8,95,000/- CREDITED B Y ROHIT JAIN, AO HAS MADE THE ADDITION ON THE GROUND THAT THE AS SESSEE HAS FAILED TO FURNISH CASH FLOW AND FOUND FLOW STATEMEN T OF THE CASH CREDITOR. HOWEVER, THE LD. CIT (A) AFTER EXAMINING THE CONFIRMED COPY OF LEDGER ACCOUNT OF CASH CREDITOR CONTAINING PAN NOTICED THAT THE AMOUNT OF RS.8,95,000/- WAS RECEIVED BY TH E ASSESSEE THROUGH BANKING CHANNEL/CHEQUES. IT IS ALSO PROVED ON RECORD THAT INTEREST OF RS.82,494/- HAS BEEN ALLOWED BY THE ASS ESSEE @ 15% ON WHICH TDS WAS ALSO DEDUCTED WHICH FACT IS PROVED FR OM INCOME- TAX RETURN OF CREDITOR FOR AY 2012-13. FROM THE BA NK STATEMENT OF THE CREDITOR ISSUED BY PUNJAB NATIONAL BANK AND IND IAN OVERSEAS BANK DULY EXAMINED BY LD. CIT A), THE LD. CIT (A) W AS SATISFIED AS TO THE IDENTITY, GENUINENESS AND CREDITWORTHINESS O F THE CREDITOR. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. 11. SO FAR AS ADDITION OF RS.19,50,000/- IN CASE OF SHIVAM JEWELLERS IS CONCERNED, THE SAME IS ALSO MADE BY TH E AO ON ACCOUNT OF NON-FURNISHING OF CASH FLOW AND FUND FLO W STATEMENT OF THE CASH CREDITOR. HOWEVER, AGAIN LD. CIT (A) GOT HIMSELF SATISFIED ITA NO.4345/DEL./2016 7 BY PERUSING THE CONFIRMED LEDGER ACCOUNT OF SHIVAM JEWELLERS IN THE BOOKS OF ASSESSEE CONTAINING PAN, WHO IS AN OLD CASH CREDITOR WHEREIN OPENING CREDIT BALANCE OF ASSESSEE IS RS.2, 628/-. 12. ASSESSEE HAS ALSO PAID THE INTEREST OF RS.1,61, 831/- @ 15% PER ANNUM AFTER DEDUCTING TDS WHICH AMOUNT HAS BEEN DULY SHOWN BY CASH CREDITOR IN HIS AUDITED BOOKS OF ACCO UNT. LD. CIT (A) HAS ALSO DULY VERIFIED THE SOURCE OF THIS LOAN DULY SHOWN IN THE PUNJAB & NATIONAL BANK ACCOUNT OF THE CASH CREDITOR SHOWING AMOUNT OF RS.8,50,000/- TAKEN AS LOAN BY SHIVAM JEW LLERS FROM ROHIT JAIN & SONS (HUF) ON 07.04.2011 THROUGH CHEQU E. SIMILARLY, SOURCE OF RS.8,00,000/- IS ALSO EXPLAINE D HAVING BEEN RECEIVED BY WAY OF CHEQUE CREDITED IN THE PUNJAB NA TIONAL BANK. CASH CREDIT OF RS.5,00,000/- HAS ALSO BEEN RECEIVED FROM MATI PRASAD RAM PRASAD SARAF IN RUNNING SALES ACCOUNT BY WAY OF CHEQUE CREDITED IN THE PUNJAB NATIONAL BANK. SO, L D. CIT (A) HAS RIGHTLY DELETED THE ADDITION BY SATISFYING HIMSELF AS TO THE SOURCE OF CASH CREDITOR WHO HAS CREDITED THE LOAN TO THE ASSE SSEE. 13. SO FAR AS ADDITION OF RS.12,00,000/- BEING THE LOAN TAKEN BY THE ASSESSEE FROM NEHA BANSAL IS CONCERNED, THIS AD DITION HAS ALSO BEEN MADE BY THE AO ON ACCOUNT OF NON-FURNISHING OF CASH FLOW AND FUND FLOW STATEMENT OF THE CASH CREDITOR BY THE ASSESSEE. LD. CIT (A) AGAIN GOT HIMSELF SATISFIED BY PERUSING CON FIRMED COPY OF ITA NO.4345/DEL./2016 8 LEDGER ACCOUNT WITH PAN SHOWING THE AMOUNT ADVANCED , IN HER ACCOUNT RECEIVED BY WAY OF CHEQUES CREDITED IN THE INDIAN OVERSEAS BANK. CASH CREDITOR HAS ALSO DULY DISCLOS ED THE LOAN AS WELL AS INCOME ARISING THEREFROM IN HER RETURN OF I NCOME. SO, WHEN IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITOR IS PROVED, THE LD. CIT (A) HAS RIGHTLY DEL ETED THE ADDITION. 14. SO FAR AS CASH CREDIT LOAN OF RS.10,50,000/- AD VANCED BY SAURABH GOEL IS CONCERNED, THE SAME IS ALSO ADDED B Y THE AO FOR WANT OF CASH FLOW AND FUND FLOW STATEMENT WHICH WAS DULY VERIFIED BY THE ASSESSEE. IN THIS CASE ALSO, LD. CIT (A) GO T HIMSELF SATISFIED FROM THE PERUSAL OF CONFIRMED LEDGER ACCOUNT OF SAU RABH GOEL WITH PAN. ASSESSEE HAS TAKEN TWO LOANS FROM SAURABH GOE L FOR RS.11,00,000/- (RS.7,50,000/- ON 14.07.2011 AND RS. 3,50,000/- ON 09.09.2011) AND INTEREST ON WHICH TO THE TUNE OF RS .87,450/- @ 15% PER ANNUM HAS BEEN ALLOWED BY THE ASSESSEE WITH TDS DEDUCTED. OUT OF THE SAID AMOUNT, AMOUNT OF RS.78, 705/- HAS BEEN RETURNED BY THE ASSESSEE THROUGH CHEQUE WHICH HAS B EEN ACCEPTED BY THE AO. FROM THE BANK STATEMENT OF CASH CREDITO R THAT A LOAN OF RS.1,00,000/- HAS BEEN GIVEN OUT TO SBI BANK ACCOUN T BY WAY OF CHEQUES. SO, WHEN THE SOURCE OF LOAN AVAILED OF BY THE ASSESSEE FROM SAURABH GOEL IS PROVED WHOSE IDENTITY IS NOT I N DISPUTE, THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. ITA NO.4345/DEL./2016 9 15. SO, IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDE RED VIEW THAT THERE IS NO ILLEGALITY OR PERVERSITY IN THE DELETIO N OF ADDITION OF RS.87,93,002/- MADE BY THE AO. CONSEQUENTLY, GROUN D NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 16. AO MADE ADDITION OF RS.9,99,898/- ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE INTEREST ON UNSECURED LOANS AVAILED OF BY THE ASSESSEE FROM THE PARTNERS OR RELATIVES W HICH HAS BEEN DELETED BY THE LD. CIT (A). IT IS THE CASE OF THE AO THAT THE ASSESSEE HAS PAID INTEREST OF RS.78,16,065/- ON UNS ECURED LOAN INCLUDING INTEREST PAID TO RELATIVES AND PARTNERS @ 13% TO 18% AND HELD THE SAME TO BE EXCESSIVE ONE BEYOND 12% PER AN NUM. HOWEVER, LD. CIT (A), FOLLOWING THE DECISION RENDER ED IN APPEAL NO.508/2013-14 OF AKSHAT AUTOMOBILES AND APPEAL NO. 292/2013- 14 OF RAKESH KUMAR GARG , HELD THE PAYMENT OF INTEREST @ 15% AS REASONABLE. MOREOVER, IN ASSESSEES OWN CASE FOR A Y 2010-11, AO HAS ACCEPTED RATE OF INTEREST @ 15%. SO, NO NEW FACTS HAVE BEEN BROUGHT ON RECORD TO DEPART FROM THE STAND TAK EN BY THE REVENUE IN THE EARLIER YEARS. SO, WE ARE OF THE CO NSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION M ADE ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE INTEREST ON UNSECURED LOANS TAKEN BY ITA NO.4345/DEL./2016 10 THE ASSESSEE FROM PARTNERS AND RELATIVES. SO, GROU ND NO.2 IS ALSO DETERMINED AGAINST THE REVENUE. GROUND NO.3 16. AO MADE ADDITION OF RS.12,21,630/- ON ACCOUNT O F DISALLOWANCE OF PAYMENT MADE TOWARDS LABOUR CHARGES . IT IS THE CASE OF THE ASSESSEE THAT HE BEING A JEWELER GOT TH E JEWELLERY MANUFACTURED ON LABOUR/JOBWORK BASIS. IT IS ALSO T HE CASE OF THE AO THAT THE ASSESSEE HAS FAILED TO PRODUCE THE LABO URERS. ASSESSEE FILED ONE LETTER DATED 23.03.2015 BEFORE AO THAT NO LABOUR CHARGES HAVE BEEN PAID TO THE RELATIVES, FAMILY MEMBERS, PA RTNERS, HUF AND TO THE RELATED PARTIES. FROM THE MATERIAL BROUGHT ON RECORD BEFORE THE LD. CIT (A), IT IS PROVED ON RECORD THAT THE AO HAS ONLY CALLED UPON THE ASSESSEE TO PRODUCE SUNIL KUMAR & HUF, VIK AS JAIN & HUF, SMT. RATTI JAIN AND SMT. PRIYANKA JAIN TO WHOM THE LABOUR CHARGES OF RS.3,50,127/- HAS BEEN MADE. HOWEVER, THE AO HAS NOT CALLED UPON THE ASSESSEE TO PRODUCE THE REMAINI NG 10 PARTIES TO WHOM THE LABOUR CHARGES WERE PAID. WHEN THE ASSESS EE HAS DULY FILED COPY OF INCOME-TAX RETURN WITH COMPUTATION OF INCOME FOR AY 2012-13 OF ALL THE FOUR PARTIES CALLED UPON BY T HE AO ALONG WITH THEIR AFFIDAVITS ADMITTING THAT THEY HAVE CARR IED OUT THE JOBWORK OF THE ASSESSEE AND ALSO RECEIVED THE LABOU R CHARGES. TDS ITA NO.4345/DEL./2016 11 ON THE PAYMENT MADE HAS ALSO BEEN DEDUCTED. SO, TH E AO AFTER SATISFYING HIMSELF ABOUT THE GENUINENESS OF THESE P AYMENTS AND BY TAKING INTO ACCOUNT THE FACT THAT SIMILAR EXPENSES HAVE BEEN ALLOWED BY THE REVENUE IN THE EARLIER YEARS, THE LD . CIT (A) HAS RIGHTLY DELETED THE ADDITION. SO, GROUND NO.3 IS A LSO DETERMINED AGAINST THE REVENUE. 17. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF JANUARY, 2019. SD/- SD/- (N.S. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF JANUARY , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.