Shiva Chrome Chemicals (P) Ltd, Jajpur V. ACIT, Cuttack

ITA 459/CTK/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58412 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 13-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-11-2011
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 68

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 459/CTK/2011 (ASSESSMENT YEAR 2007 - 08) SHIVA CHROME CHEMICALS (P) LTD., AT/P.O.BYREE, VIA: CHHATIA, DIST.JAJPUR 754 082 PAN : AAFCS 1470 E VERSUS ASST.COMMISSIONER OF INCOME - TAX , CIRCLE 1(1), CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI NATABAR PANDA, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 13.03.2012 DATE OF PRONOUNCEMEN T : 16.03.2012 ORDER SHRI K.K.GUPTA, AM : THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY GROUND THAT THE ASSESSEE SHOULD NOT BE TAXED N A SUM OF 1,95,000 UNDER THE PROVISIONS OF SECTION 68 OF THE I.T.ACT,1962 WHEN THE SPECIFIC FINDING OF THE AUTHORITIES BELOW ARE ACCEPTING THE CONTENTION OF THE ASSESSEE APPELLANT THAT THE AMOUNT WAS ADVANCED BY MRS. ARCHANA KHUNTIA BEING THE WIFE OF THE DIRECTOR OF THE ASSESSEE AND ALSO A DIRECTOR IN THE ASSESSEE - COMPANY ON THE FACTS AND CIRCUMSTANCES AS HAVE BEEN BROUGHT ON RE CORD. 2. A CONDONATION PETITION HAS BEEN FILED BY THE ASSESSEE FOR THE DELAY IN FILING THE APPEAL BY 30 DAYS DUE TO INDISPOSITION OF THE DIRECTOR WHICH HAS BEEN PLACED ON RECORD ALONG WITH MEDICAL CERTIFICATE. THE DELAY IS CONDONED AS HAS NOT OBJECTED TO BY THE LEARNED DR. 3. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER OBSERVED FROM THE BALANCE SHEET THAT THE ASSESSEE COMPANY HAD OBTAINED UNSECURED LOAN OF 1 ,95,000 DURING THE YEAR 2006 - 07 RELEVANT TO THE A SSESSMENT YEAR 2007 - 08. THE A/R OF THE ASSESSEE WAS ASKED BY HIM TO PRODUCE THE LOAN CONFIRMATION STATEMENT, BANK ACCOUNT AND BALANCE SHEET OF THE LOAN CREDITORS. THE AO AFTER PERUSING IT FOUND THAT A LOAN OF 2,00,000 HAD BEEN GIVEN BY S MT. ARCHANA KHU NTIA, ONE ITA NO.459/CTK/2011 2 OF THE DIRECTORS ON 3 1.3.2007 VIDE CHEQUE NO.2 57475 DRAWN IN ALLAHABAD BANK, JAJPUR WHICH WAS PRESENTED BEFORE THE UNION CO - OP. BANK WHICH PURCHASED IT AT A DISCOUNTED PRICE AND CREDITED 1,95,000 TO THE ASSESSEES ACCOUNT. SCRUTI NY OF THE BANK ACCOUNT OF THE COMPANY REVEALED THAT AN AMOUNT OF 1,95,000 HAD BEEN DEPOSITED TO THE ACCOUNT OF THE COMPANY ON 31.3.2007. HOWEVER, AS PER THE BANK ACCOUNT OF SMT.KHUNTIA, THERE WAS NO SUFFICIENT BALANCE ON 31.3.2007. SMT.KHUNTIA HAD DEPOSIT ED AN AMOUNT OF 2,00,000 TO HER ACCOUNT ON 27.4.2007 AND THE SAME WAS WITHDRAWN ON 01.5.2007 IN FAVOUR OF URBAN CO - OP. BANK. THE AO THUS OBSERVED THAT DEPOSITING OF CASH AMOUNTING TO 2,00,000 AFTER THE CHEQUE WAS ISSUED ON 31.3.2007 SUGGESTED THAT SHE HA D NO CASH BALANCE OR BANK BALANCE AS ON 3 1. 3.2007. HOLDING THAT THERE WAS NO PROPER DOCUMENT EVIDENCING CREDITWORTHINESS OF THE CREDITORS, THE AO ADDED 1,95,9000 U/S.68 TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE SAME AND HENCE, THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED BEFORE US THAT SMT.ARCHANA KHUNTIA IS ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY . SHE ADVANCED A SUM OF 2,00,000 TO THE ASSESSEE COMPANY VIDE ACCOUNT PAYEE CHEQUE NO.257475 DATED 31.3.2007 DRAWN ON ALLAHABAD BANK, ARUHA FROM HER SB A/C. NO.1581. THE APPELLANT COMPANY PRESENTED THE SAID CHEQUE TO ITS BANKER THE UR BAN CO - OP. BANK, JAGATPUR ON 3 1.3.2007 FOR COLLECTION OF THE ABOVE AMOUNT THROUGH CLEARING SYSTEM TOWARDS THE TERM LOAN ACCOUNT. DUE TO URGENCY OF PAYMENT OF THE TERM LOAN TO THE BANK, THE SAID BANKER OF THE COMPANY PURCHASED THE AFORESAID CHEQUE FOR 1,95,000 ON 31.3.2007 AS PER BANKING NORMS. THE BANKER OF THE COMPANY I.E. THE URBAN CO - OP. BANK LTD., JAGATPUR SENT THE ALLEGED CHEQUE FOR COLLECTION OF THE AFORESAID AMOUNT TO THE BANKER ITA NO.459/CTK/2011 3 OF SMT.ARCHANA KHUNTIA (ALLAHABAD BANK,ARUHA). A SUM OF 2,00,000 WAS COLLECTED FROM THE AFORESAID BANK ACCOUNT OF SMT.KHUNTIA ON 01.5.2007. ON THE SAME DATE SMT.KHUNTIA DEPOSITED CASH OF 2,00,000 INTO HER AFORESAID ACCOUNT AND THE SAID CHEQUE WAS CLEARED. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE AO PRESUMED THAT ON 31.3.2007 I .E. ON THE DATE THE CREDITOR IS SUED THE CHEQUE TO THE COMPANY, THERE WAS NO BALANCE IN THE ACCOUNT OF SMT.KHUNTIA. SMT.KHUNTIA DEPOSITED 2,00,000 IN CASH ON 27.4.2007 INTO THE ABOVE ACCOUNT 3ND THE SAID CHEQUE AMOUNT WAS CLEARED ON 01.5.2007. DURING THE ASSESSMENT PROCEEDING, THE ASSES SEE PRODUCED (I) A CONF IRMATION LETTER, (II) COPY OF BANK ACCOUNT, (III) COP Y OF INCOME - TAX RETURN RECEIPT AND (IV) STATEMENT OF INCOME OF THE CREDITOR BEFORE THE AO. SMT.KHUNTIA IS AN ASSESSEE BEFORE THE ITO, WARD - 1(2),CUTTACK BEARING PAN - ABLPK2644N I.E. IN THE SAME CIRCLE WHERE THE ASSESSEE COMPANY IS ASSESSED AND SHE HAS CONFIRMED THAT THE ABOVE ADVANCE AMOUNT OF 2,00,000 ( 1,95,000 AFTER THE CHEQUE BEING PURCHASED ON 31.3.2007) HAS BEEN GIVEN OUT OF HER PAST SAVINGS FROM BUSINESS INCOME. IT WAS ALSO SUBMITTED THAT CREDITWORTHINESS OF THE CREDITOR, GENUINENESS OF TRANSACTION AND IDENTITY OF THE CREDITOR HAS BEEN P ROVED BY THE APPELLANT TO THE AO TO HIS UTMOST SATISFACTION. IN VIEW OF THE ABOVE, THE LEARNED AR OF THE ASSESSEE PRAYED TO DELETE THE ADDITION OF 1,95,000 MADE BY THE AO U/S.68 AND CONFIRMED BY THE LEARNED CIT(A). 5. THE LEARNED DR, ON THE OTHER HAND, SU PPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTUAL ASPECTS ARE UNDISPUTED THAT THE ASSESSEE HAD NOT DEPOSITED THE CHEQUE IN THE BANK BUT HAD ONLY GIVEN THE CHEQUE TO THE BANK FOR THE PURPOSE OF AVAILING THE DRAWING POWER AS ON 31 ST ITA NO.459/CTK/2011 4 MARCH. THE CASH WAS DEPOSITED LATER AND THE CHEQUE WAS ULTIMATELY ENCASHED AFTER DEPOSIT OF THE AMOUNT. SECTION 68 PROVIDES FOR ANY UNEXPLAINED CASH CREDIT TO BE BRO UGHT TO TAX IF THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITOR. BOTH THE AUTHORITIES THEMSELVES HAVE SATISFIED TO THE IDENTITY, GENUINENESS AND CREDITWORTHINESS IN AS MANY WORDS. SO FOR THE PRACTI CAL ASPECT OF BRINGING TO TAX ADDITION U/S.68 A CREDIT HAS TO BE INSCRIBED IN THE BOOKS OF ACCOUNT . HERE THE CHEQUE WAS NOT ENCASHED BY THE BANK AND THE CREDIT WAS HOLDING OF A CHEQUE ON DISCOUNT FOR LOAN OF 1,95,000 WHEN SUBSEQUENT FINDING OF FACTS RESU LTED IN DEPOSITS OF CASH IN THE ASSESSEES BANK ACCOUNT SIX DAYS PRIOR TO THE ENCASHMENT OF THE CHEQUE BY THE BANK. IN OTHER WORDS, THE ASSESSEE HAS TRIED TO EXPLAIN THAT HAVING SATISFIED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION, T HE ASSESSEE BEING AN INCOME - TAX PAYEE OF INCOME OF MORE THAN 2 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR WHICH SHE ENCASHED AND DEPOSITED IN THE BANK IN THE MONTH OF APRIL SO THAT THE CHEQUE WHICH WAS HELD BY THE BANK WAS TO JUSTIFY THEIR TERM LOAN PAYMENT W AS NOT A CREDIT REMAINING UNEXPLAINED AS ON 31 ST MARCH. THE CASH CREDIT, THEREFORE, IF AT ALL COULD BE TAXED, COULD NOT BE TAXED IN THE IMPUGNED YEAR AS THE BANK HAD GIVEN THE CREDIT UNDER BANKING NORMS. THE LEARNED DRS INSISTENCE FOR THE CREDIT REMAIN ING UNEXPLAINED WAS IN THE FORM OF CHEQUE LYING WITH THE BANK AGAINST WHICH THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS NOT DEPOSITED IN THE BANK BUT WAS HELD BY THE BANK TO BE PURCHASED AS AND WHEN SUFFICIENT FUNDS WERE AVAILABLE TO THE CREDIT OR. IN OTHER WORDS, IT WAS A CASH CREDIT FOR THE BANK AND NOT FOR THE ASSESSEE. THE ASSESSEE HAD THEREFORE D ISCHARGED ITS ONUS WHICH LIED UPON HIM FOR THE ASSESSMENT YEAR 2007 - 08 INSOFAR AS THERE WAS NO CREDIT APPEARING AS A CASH CREDIT IN THE NAME OF SMT. ARCHANA KHUNTIA , IN THE BOOKS BUIT BANK HAD ITA NO.459/CTK/2011 5 GRANTED LOAN THROUGH DISCOUNTED AT 1,95,000 . THE DEPOSIT OF CASH OF SMT. ARCHANA KHUNTIA AT A LATER STAGE WAS TO BE EXPLAINED BY HER AND WAS ALSO EXPLAINED BY THE ASSESSEE IN THE FORM OF SUBMITTING THE COPY OF THE RETURN FILED BY HER FOR THE ASSESSMENT YEAR 2007 - 08 WHEREIN SHE HAD DECLARED INCOME OF 2 LAKHS FOR DEPOSIT IN THE BANK ON 27.4.2007. CONSIDERING FROM ANY ANGLE, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ADDITION U /S.68 IS NOT JUSTIFIED ON THE F ACTS AND CIRCUMSTANCE AS HAVE BEEN BROUGHT ON RECORD. THE ADDITION OF 1,95,000 IS, THEREFORE, DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 16.03.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SHIVA CHROME CHEMICALS (P) LTD., AT/P.O.BYREE, VIA: CHHATIA, DIST.JAJPUR 754 082 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX , CIRCLE 1(1), CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.