DCIT, Meerut V. M/s. Samco Auto India (P) Ltd., Meerut

ITA 4346/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5381 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YOGESH SHARMA
• Assessee Lawyers: P S KASHLAP
• Section: 147; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (MEERUT CAMP, MEERUT) BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4346/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT VS. M /S. SAMCO AUTO INDIA (P) LTD. CIRCL-2 DELHI ROAD, MEERUT MEERUT UTTAR PRADESH (PAN : AABCS9883P) APPELLANT RESPONDENT ASSESSEE BY : SH. P.S.KASHLAP, ADV. REVENUE BY : SHRI YOGESH SHARMA, SR.DR DATE OF HEARING : 07.01.2019 DATE OF ORDER : 29.01.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT DY. COMMISSIONER OF INCOME TA X, CIRCLE-2, MEERUT (HEREINAFTER REFERRED TO AS 'THE REVENUE') BY FILIN G THE AFORESAID APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25/05 /2016 PASSED BY LD. COMMISSIONER OF INCOME TAX(APPEALS)-MEERUT QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT : 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACT IN DELETING THE ADDITION OF RS. 95,00,000/- MA DE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT, 1961, IGN ORING THE FACT THAT THE COMPANIES WHICH HAD ADVANCED UNSECURE D LOANS TO THE ASSESSEE HAD DECLARED VERY LOW INCOMES IN TH EIR ITRS, ITA NO.4346/DEL./2016 2 THUS CASTING A DOUBT UPON THE GENUINENESS OF THE TR ANSACTION. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ID.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACT IN DELETING THE ADDITION MADE BY THE A.O. WITHOUT TAKING INTO CONSIDERATION THE FACT THAT IN SPITE OF SEVERAL OPPORTUNITIES PROVIDED TO THE ASSESSEE, NEITHER DID THE ASSESSEE PRODUCE THE PRINCIPAL OFFICERS OF THE THRE E LENDER COMPANIES IN SPITE OF SUMMON ISSUED TO THEM U/S 131 OF THE I.T. ACT. 1961 NOR DID IT FILE ANY DOCUMENTARY EVID ENCE TO PROVE THE VERACITY AND THE GENUINENESS OF THE SAID TRANSACTIONS. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE ID. COMMISSIONER OF INCOME TAX(A), MEERUT MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD. MODIFY AND OR DELETE ANY GROUND(S) OF APPEAL. 2. BRIEFLY STATED THAT FACTS NECESSARY FOR ADJUDI CATION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER FRAMED THE ASSESSME NT U/S 147 OF THE ACT BY MAKING ADDITION OF RS. 95,00,000/- ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN AVAILED BY THE ASSESSEE FROM (I) AM RIT SALES PROMOTION PVT. LTD. RS. 50,00,000/- (II) WELCO OVERSAS PVT. LTD. - RS. 20,00,000/- (III) TRANSNATIONAL GROWTH FUND 25,00,000/- RESPE CTIVELY U/S 68 OF THE ACT ON FAILURE OF THE ASSESSEE TO PROVE THEIR IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. 3. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) BY W AY OF FILING THE APPEAL WHO HAS DELETED THE ADDITION BY PARTLY ALLOW ING THE APPEAL. FEELING ITA NO.4346/DEL./2016 3 AGGRIEVED THE REVENUE HAS COME UP BEFORE THE TRIBUN AL BY WAY OF FILING THE PRESENT APPEAL. 4. UNDISPUTEDLY ASSESSEE HAS AVAILED OF UNSECURED L OANS OF RS. 95,00,000/- (50,00,000 + 20,00,000+25,00,000 = 95,0 0,000/-) FROM AMRIT SALES PROMOTION PVT. LTD., WELCO OVERSEAS PVT . LTD. AND TRANSNATIONAL GROWTH FUND RESPECTIVELY. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS FILED COPY OF INCOME TAX RETURN, BANK ACCOUNT CONFIRMED COPY OF ACCOUNT FROM ITS BOOKS OF ACCOUNTS, BANK ST ATEMENT AND COPY OF FORM 16A TO PROVE THE FACT THAT ASSESSEE HAS DEDUCT ED TDS ON INTEREST PAYMENT TO THE AFORESAID PARTY. 5. WHEN ASSESSEE HAS DULY DISCHARGED ITS INITIAL ON US BY PROVING THE IDENTITY OF THE CREDITORS BY FILING THEIR COPY OF I TR, BANK ACCOUNTS, THE ADDITION U/S 68 OF THE ACT CANNOT SUSTAIN MERELY ON THE GROUND THAT ASSESSEE HAS FAILED TO PRODUCE THEM DESPITE ISSUANC E OF SUMMONS U/S 131 OF THE ACT. 6. HONBLE GUJARAT HIGH COURT IN CASE CITED AS 256 ITR 360 DY. COMMISSIONER OF INCOME TAX VS. ROHINI BUILDERS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE THAT WHEN ASSESSEE HAS DISCHARGED INITIAL ONUS LAY ON IT IN TERMS OF SECTION 68 BY PROVIDING THEIR COMPLETE ADDRESS, BANK STATEMENT AND THE ASSESSEE HAS ALSO PROVED ON RECORD CONFIRMED COPY OF ACCOUNT OF HIS CREDITORS FROM ITS BOOKS OF ACCO UNT, BANK STATEMENT AND COPY OF FORM 16A SHOWING THAT ASSESSEE HAS DEDUCTED TDS ON INTEREST PAYMENT TO THE CREDITORS ADDITION U/S 68 OF THE AC T IS NOT SUSTAINABLE. THE OPERATIVE PART OF THE FINDINGS RETURNED BY HONBL E HIGH COURT IN CASE OF ROHINI BUILDERS (SUPRA) ARE EXTRACTED AS UNDER :- THE ASSESSE WAS A FIRM ENGAGED IN THE BUSINESS OF ITA NO.4346/DEL./2016 4 DEALINGS IN LAND. DRUING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD TAKEN LOANS FROM VAR IOUS PARTIES AND DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVIN G FULL ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT NUMBERS, E TC., OF ALL THE DEPOSITORS. THE ASSESSING OFFICER HOWEVER I SSUED SUMMONS TO SOME OF THE CREDITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. AFTER CONSIDERING THE EVIDENCE, TH E ASSESSING OFFICER MADE AN ADDITION OF RS. 12,85,000 TO THE RE TURNED INCOME OF THE ASSESSEE. THIS WAS CONFIRMED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). ON FURTHER AP PEAL TO THE TRIBUNAL THE TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE INCOME-TAX ACT, 1961, WAS CLEAR, THAT THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CRED IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE IN COME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE UNSAT ISFACTORINSS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICA LLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCO ME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERM S OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVI NG THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT NUMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVE R READILY AVAILABLE, THAT IT HAD ALSO PROVED THE CAPA CITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ITA NO.4346/DEL./2016 5 ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN T HE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE A SSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. THUS TAKI NG INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMS TANCES OF THE CASE, AND, IN PARTICULAR THE FACT THAT THE ASSE SSING OFFICER HAD NOT DISALLOWED THE INTEREST CLAIMED/PAID IN REL ATION TO THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDER ATION OR EVEN IN THE SUBSEQUENT YEARS, AND TAX HAD BEEN DDUC TED AT SOURCE OUT OF THE INTEREST PAID/CREDITED TO THE CRE DITORS, THE TRIBUNAL HELD THAT THE DEPARTMENTAL AUTHORITIES WER E NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 12,85,000. ON APPEAL TO THE HIGH COURT : HELD, THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE NARRATED BY THE TRIBUNAL AND THE LAW EXPLA INED BY IT, THE APPEAL WAS LIABLE TO BE DISMISSED. [THE SUPREME COURT HAS DISMISSD THE SPECIAL LEAV PE TITION FILED BY THE REVENUE AGAINST THIS JUDGMENT : SEE [ 2002] 254 ITR (ST.) 275 ED.] 7. MORE OVER ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENU INENESS OF THE TRANSACTION BY BRINGING ON RECORD THE FACT THAT THE LOANS IN QU ESTION WERE TAKEN AND REPAID THROUGH BANKING CHANNEL AND TDS THEREON WAS DULY DEDUCTED AND ALL THE THREE CREDITORS WERE ASSESSED TO INCOME TAX . ITA NO.4346/DEL./2016 6 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITI ON, HENCE, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER OF P RESENT CASE FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH JANUARY, 2019. SD/- SD/- (N.S.SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/01/ 2019 BR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI. DATE OF DICTATION 15.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.01.2019 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 29.01.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE 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 REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER ITA NO.4346/DEL./2016 7