The Assistnat Commissioner of Income Tax , 3(1), Bhopal V. M/s. Serman (India) Road Makers Pvt. Ltd., Bhopal

ITA 473/IND/2010

• Counselvise Citation: 47322714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Business income; Proportionate interest; Corroborative evidences
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.473/IND/2010 A.Y. 2007-08 ACIT-3(1), BHOPAL APPELLANT VS M/S. SERMAN (INDIA) ROAD MAKERS PVT. LTD., BHOPAL PAN AAECS 9371 D RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR ASSESSEE BY : SHRI PRAKASH JAIN, CA DATE OF HEARING : 18.8.2011 DATE OF PRONOUNCEMENT : 29.9.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, BHOPAL, DATED 18.3.2010, ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED 2 COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE ADDITION OF RS. 20,85,000/- MADE UNDER SECTION 68, OF THE ACT, ON ACCOUNT OF UNEXPLAINED LOAN CREDIT. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI ARUN DEWAN, LD SR. DR AND SHRI PRAKASH JAIN, LD. CO UNSEL FOR ASSESSEE. THE CRUX OF THE ARGUMENT ON BEHALF OF THE REVENUE IS IN SUPPORT OF THE ASSESSMENT ORDER, BY SUBMITTIN G THAT THE CREDITORS WERE NOT PRODUCED BEFORE THE ASSESSING OF FICER ,WHEREAS THE LD. COUNSEL FOR ASSESSEE DEFENDED THE IMPUGNED ORDER, BY SUBMITTING THAT THE NECESSARY DETAILS WER E FURNISHED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE FINDIN G OF LD. CIT (A) :- (I) ADITYA SINGHAI : IN THIS CASE THE APPELLANT HAS RECEIVED A LOAN OF R S.11,10,000/- OUT OF WHICH RS.3.00 LAKHS HAS BEEN ADDED BY THE AO U/S. THE LD. AR STATED THAT SUFFICIENT EVIDENCES HAVE BEEN P RODUCED BEFORE THE AO IN SUPPORT OF THE LOAN TAKEN BY THE A PPELLANT, WHICH INCLUDES COPY OF BANK ACCOUNT, PROOF OF RETUR N FILED, COPY OF PROFIT & LOSS ACCOUNT, BALANCE SHEET ETC. FOR TH E RELEVANT YEAR. THE ABOVE PARTY IS HAVING BUSINESS INCOME AND IS REGULARLY AND CONSISTENTLY ASSESSEED TO TAX. THE AO HAS MADE A GENERAL OBSERVATION THAT LOANS HAVE ADVANCED TO T HE APPELLANT 3 AFTER THE DEPOSIT OF CASH/CHEQUE BUT HAS NOT IDENTI FIED SUCH TRANSACTION WHICH CAN BE SAID TO BE UNEXPLAINED. I HAVE SEEN THE DETAILS AND DOCUMENTS FURNISHED BEFORE THE AO A ND BEFORE ME FROM WHICH IT IS EVIDENT THAT THE LOAN HAS BEEN GIVEN TO THE APPELLANT BY ACCOUNT PAYEE CHEQUE AND THROUGH PROPE R BANKING CHANNELS. THE LOAN HAS BEEN GIVEN BY THE ABOVE PART Y FROM HIS DISCLOSED INCOME AND IS REFLECTED IN HIS BALANCE SH EET AS ON 31.03.2007. I HAVE GONE THROUGH THE FACTS OF THE CA SE AND THE SUBMISSION OFFERED BY LD. COUNSEL. FROM THE DETAILS FILED IT IS CLEARLY EVIDENT THAT THE APPELLANT HAS DISCHARGED T HE ONUS CAST OF HIM TO PROVE THE IDENTITY OF THE LENDER, GENUINE NESS OF THE TRANSACTION AND HIS CREDITWORTHINESS. MOREOVER, THE APPELLANT HAS PAID INTEREST TO THE PARTY AND DEDUCTED TDS ON THEM AS APPLICABLE. IT IS ALSO TO BE NOTED THAT OUT OF TOTA L LOAN OF RS.11,11,000/- GIVEN BY THE APPELLANT ONLY RS.3,00, 000/- HAS BEEN ADDED BY THE AO WHEREAS THE REST HAS BEEN TREA TED AS GENUINE. IN VIEW OF THE ABOVE FACTS, THE ADDITION MADE BY THE AO AMOUNTING TO RS.3,00,000/- CANNOT BE SUSTAINED A ND, THEREFORE, IT IS DELETED. (II) SHRI ATUL SINGHAI HUF: IN THIS CASE, THE AO HAS ADDED RS. 1,00,000/- U/S 68 OUT OF RS.5,00,000/- TAKEN AS LOAN BY THE APPELLANT. IN TH IS CASE ALSO THE AO HAS MADE A GENERAL OBSERVATION OF LOAN BEING ADVANCED BY THE LENDER AFTER THE DEPOSIT OF CHEQUE/CASH IN T HE BANK ACCOUNT. THE LD.AR HAS FURNISHED COPY OF RETURN FIL ED, PROFIT & LOSS ACCOUNT, BALANCE SHEET COMPUTATION OF INCOME, BANK STATEMENT ETC. BEFORE AO. THE AO HAS NOT SPECIFIED ANY ENTRY IN THE BANK ACCOUNT OF THE LENDER WHICH CANNOT BE E XPLAINED BY THE APPELLANT. IN THIS CASE THE LENDER IS HAVING RE GULAR BUSINESS INCOME SINCE MANY YEARS AND THE LOAN HAS BEEN GIVEN BY ACCOUNT PAYEE CHEQUE FROM HIS BUSINESS INCOME WHICH IS ALSO REFLECTED IN THE BALANCE SHEET OF THE ASSESSMENT YE AR. THE APPELLANT HAS ALSO PAID INTEREST AND DEDUCTED TDS O N THEM. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUB MISSION GIVEN BY THE APPELLANT ALONGWITH DOCUMENTARY EVIDEN CE. FROM THE DETAILS FILED IT IS CLEARLY EVIDENT THAT THE AP PELLANT HAS DISCHARGED THE ONUS CAST ON HIM TO PROVE THE IDENTI TY OF THE LENDER, GENUINENESS OF THE TRANSACTION AND HIS CRED ITWORTHINESS. IT IS ALSO PERTINENT TO NOTE THAT WHILE THE LENDER HAS GIVEN RS.5,00,000/- AS LOAN BUT ONLY RS.1,00,000/- HAS BE EN ADDED BY THE AO WHEREAS THE REST HAS BEEN TREATED AS GENUINE . EVEN THE PROPORTIONATE INTEREST PAYMENT HAS NOT BE DISALLOWE D BY THE AO. IN VIEW OF THE ABOVE FACTS, THE ADDITION MADE BY T HE AO AMOUNTING TO RS.1,00,000/- CANNOT BE SUSTAINED AND, THEREFORE, IT IS DELETED. (III)SHRI MAHESH SINGHAI: 4 IN THIS CASE THE APPELLANT HAS RECEIVED A LOAN OF R S. 16,10,000/- DURING THE YEAR OUT OF WHICH THE AO HAS ADDED RS.8, 00,000/- THE LD. AR HAS FURNISHED A WRITTEN EXPLANATION ALON G WITH SUPPORTING EVIDENCE IN THE FORM OF BANK STATEMENT, PROOF OF RETURN FILED, COPY OF PROFIT & LOSS ACCOUNT, BALANC E SHEET ETC. WHICH WERE PRODUCED BEFORE THE AO. THE AO HAS MADE AN ADDITION ON THE BASIS OF OBSERVATION OF LOAN BEING GIVEN AFTER THE DEPOSIT OF CHEQUE/CASH IN THE BANK ACCOUNT. THE LD. AR HAS PRODUCED SUFFICIENT DOCUMENTARY EVIDENCE IN SUPPORT OF THE LOAN GIVEN WHICH IS REFLECTED IN THE BALANCE SHEET AND T HE BOOKS OF ACCOUNTS OF THE LENDER. THE AO HAS NOWHERE DOUBTED ABOUT THE SOURCE OF THE LENDERS WHO HAS BEEN REGULARLY ASSESS ED TO TAX FROM MANY YEARS HAVING BUSINESS INCOME AND INTEREST INCOME. THE LENDER HAS ADEQUATE CAPITAL TO ADVANCE SUCH LOA NS. IT IS ALSO NOTED THAT THE AO HAS ADDED RS.8,00,000/- OUT OF RS.16,10,000/- DURING THE YEAR WHEREAS THE REST HAS BEEN TREATED AS GENUINE. EVEN THE INTEREST HAS BEEN PAID TO HIM AND TDS HAS BEEN CLAIMED BY THE APPELLANT. IN VIEW OF T HE ABOVE FACTS, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 8,00,000/- CANNOT BE SUSTAINED AND, THEREFORE, IT IS DELETED. (IV) SHRI MAHESH SINGHAI (HUF):- IN THIS CASE THE APPELLANT HAS RECEIVED A LOAN OF R S.4,00,000/- OUT OF WHICH THE ENTIRE SUM HAS BEEN ADDED BY THE A SSESSING OFFICER U/S 68/ THE LD. AR HAS FURNISHED A WRITTEN SUBMISSION EXPLAINING THAT HE IS REGULARLY ASSESSED TO TAX AND PRODUCED PROOF OF RETURN FILED, COPY OF BANK ACCOUNT, COPY O F PROFIT & LOSS ACCOUNT, BALANCE SHEET ETC. WHICH WERE ALSO PRODUCE D BEFORE THE AO. IN ORDER TO PROVE THE GENUINENESS OF TRANSA CTION AND CREDITWORTHINESS OF THE LENDER. THE AO HAS NOT DISP ROVED THE EVIDENCES FILED BEFORE HIM DURING THE ASSESSMENT RE GARDING THE LOAN TAKEN BUT HAD MADE A GENERAL OBSERVATION THAT LOANS HAVE GIVEN BY DEPOSITING OF CHEQUE/CASH IN THE BANK ACCO UNT OF THE LENDER. THE INTEREST SHOWN ON THE CASH CREDIT HAS N OT ALSO BEEN DISALLOWED BY THE AO. FROM THE ABOVE DETAILS/EVIDEN CES FURNISHED, THE APPELLANT HAS DISCHARGED THE ONUS OF PROVING THE IDENTITY OF THE LENDER, GENUINENESS OF THE TRANSACT IONS AND HIS CREDITWORTHINESS. IN VIEW OF THE ABOVE FACTS, THE A DDITION MADE BY THE AO AMOUNTING TO RS.4,00,000/- CANNOT BE SUST AINED AND, THEREFORE, IT IS DELETED. (V) DR. RACHNA SINGHAI: IN THIS CASE THE APPELLANT HAS RECEIVED LOAN OF RS. 3,00,000/- DURING THE YEAR FROM THE LENDER WHEREAS THE AO HAS ADDED RS.4,00,000/- U/S 68 TO THE INCOME OF THE APPELLANT . THE APPELLANT HAS SUBMITTED SUFFICIENT DOCUMENTARY EVID ENCE IN SUPPORT OF THE LOAN TAKEN BY THE APPELLANT IN THE F ORM OF PROOF OF RETURN FILED, BANK ACCOUNT, COPY OF PROFIT &LOSS AC COUNT, BALANCE SHEET ETC. IN SUPPORT OF HIS CLAIM. THE LENDER IS A PRACTICING 5 DOCTOR AND ASSESSEED TO TAX SINCE SEVERAL YEARS. TH E LENDER HAS SHOWN INTEREST INCOME FROM THE PARTY ON LOAN AD VANCED TO APPELLANT ON WHICH TDS IS ALSO DEDUCTED. THE LOAN G IVEN IS ALSO REFLECTED IN THE BALANCE SHEET OF THE LENDER. THE A O'S ACTION IS BASED ON GENERAL OBSERVATION IN CASE OF THE LENDERS WHEREAS THE APPELLANT HAS EXPLAINED WITH EVIDENCES THE SOUR CE OF LOANS TAKEN FROM HER. IT IS ALSO PERTINENT TO NOTE THAT A S PER BALANCE SHEET THE LOAN APPEARING IS RS.4,00,000/- AS ON 31. 03.2007 WHEREAS LOAN TAKEN DURING THE YEAR IS ONLY RS.3,00, 000/-. IN VIEW OF THE ABOVE FACTS THE APPELLANT HAS PROVED TH E GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE LENDER AND THE ADDITION OF RS.4,00,000/- IS, HEREBY , DELETED. (VI) MASTER TANISHQ SINGHAI: IN THIS CASE, THE ADDITION HAS BEEN MADE U/S 68 IN RESPECT OF THE ABOVE LENDER BY THE AO. IN THIS CASE, ALSO THE LENDER HAS SHOWN INTEREST INCOME RECEIVED FROM THE LENDER ON T HE LOAN GIVEN WHICH IS CLUBBED WITH THE INCOME OF THE FATHE R. THE AO HAS ADDED THE AMOUNT U/S68 ALTHOUGH THE PROOF OF RE TURN FILED BY HIS FATHER, COPY OF BANK ACCOUNT AND THE BALANCE SH EET OF THE MINOR WAS FURNISHED BEFORE HIM. ALL THESE DOCUMENTA RY EVIDENCES HAVE BEEN FILED BEFORE ME ALSO. THE AO HA S MADE THE ADDITION OF LOAN OF RS.85,000/- ALTHOUGH ALL TH E EVIDENCES FILED HAVE NOT BEEN DISPROVED DURING THE ASSESSMENT PROCEEDINGS. MOREOVER, THE AO HAS NOT BROUGHT ANY M ATERIAL ON RECORD TO JUSTIFY THE ADDITION MADE BY HIM. IN VIEW OF THE ABOVE FACTS THE APPELLANT HAS DISCHARGED THE ONUS OF PROV ING THE CASH CREDIT IN RESPECT OF MASTER TANISHQ SINGHAI AND THE ADDITION OF RS.85,000/- MADE BY HIM IS DELETED. THE DETAILS OF LOANS ARE SUMMARIZED AS UNDER :- S. DATE MODE NAME OF BANK AMOUNT NO. 1. 08.08.2006 A/C. PAYEE CHQ. 400000.00 NO. 793941 2. 15.11.2006 TRANSFER 300000.00 3. 03.01.2007 ALE. PAYEE CHQ. 100000.00 NO. 269201 3. 03.01.2007 ALE. PAYEE CHQ. 200000.00 NO. 269202 4. 25.01.2007 ALE. PAYEE CHQ. 110000.00 NO. 102694 1110000.00 6 S.NO . DATE MODE NAME OF BANK AMOUNT 1. 06.11.2006 ALE. PAYEE CHQ. ICICI BANK M P. NAGAR 100000.00 NO. 981696 BRANCH, BHOPAL. 2 15.11.2006 ALE. PAYEE CHQ. DENA BANK, KOH-ESFIZA 400000.00 NO. BRANCH, BHOPAL. TOTAL (RS) 500000.00 S. DATE MODE NAME OF BANK AMOUNT NO. 1. 08.08.2006 ALE. PAYEE CHQ. DENA BANK, KOH-E- 450000.00 NO. 778474 FIZA BRANCH, BHOPAL. 2 08.08.2006 ALE. PAYEE CHQ. DENA BANK, KOH-E- 250000.00 NO. 778475 FIZA BRANCH, BHOPAL. 3 06.11.2006 ALE. PAYEE CHQ. ICICI BANK, MP. 800000.00 NO. 981652 NA~ARBRANCH,BHOPAL 4 25.01.2007 ALE. PAYEE CHQ. DENA BANK, KOH-E- 110000.00 NO. 796681 FIZA BRANCH, BHOPAL. TOTAL (RS) 1610000.00 S. DATE MODE NAME OF BANK AMOUNT NO. 1. 08.08.2006 ALC. PAYEE CHQ. DENA BANK, KOH-E-FIZA 400000.00 NO. 100082 BRANCH, BHOPAL. S. DATE MODE NAME OF BANK AMOUNT NO. 1. 03.01.2007 ALE. PAYEE CHQ. DENA BANK, KOH-E-FIZA 35000.00 NO. 794203 BRANCH, BHOPAL. 2 25.01.2007 ALE. PAYEE CHQ. DENA BANK, KOH-E-FIZA 50000.00 NO. 794204 BRANCH, BHOPAL. TOTAL (RS) 85000.00 7 4. IF THE TOTALITY OF FACTS ARE ANALYZED, FIRST OF ALL, THE TACTUAL FINDING MENTIONED BY THE LD. CIT(A) WAS NOT CONTROVERTED BY THE REVENUE. WE FIND THAT DURING TH E YEAR THE ASSESSEE ACCEPTED A LOAN OF RS. 11,10,000/- FROM SH RI ADITYA SINGHAI, R/O 40A, B.D.A.COLONY, BHOPAL, AND AN INTE REST @ 9% AMOUNTING TO RS. 1,50,600/- WAS PAID TO HIM AFTER D EDUCTING TAX AT SOURCE AT RS. 15,361/- OUT OF THE LOAN AMOUNT. L IKEWISE, THE AMOUNT OF RS. 5 LAKHS WAS TAKEN FROM SHRI ATUL SING HAI (HUF) AT THE INTEREST RATE OF 9% AND AFTER DEDUCTING THE TAX AT SOURCE, THE INTEREST WAS PAID. IN THE CASE OF SHRI MAHESH K UMAR SINGHAI A LOAN OF RS. 16.10 LAKHS AT THE INTEREST R ATE OF 9 % WAS TAKEN AND AFTER DEDUCTING THE TAX THE INTEREST WAS PAID. IN THE CASE OF MAHESH KUMAR SINGHAI (HUF) A LOAN OF RS. 4 LAKHS AT THE INTEREST RATE OF 9 % WAS PAID AFTER DEDUCTING T HE TAX. AN AMOUNT OF RS. 3 LAKHS WAS TAKEN FROM DR. RACHNA SIN GHAI AND THE INTEREST @ 9% AMOUNTING TO RS. 30,000/- WAS PAI D TO HER AFTER DEDUCTING THE TAX AT SOURCE AT RS. 3,060/-. L IKEWISE, A LOAN OF RS. 85,000/- WAS TAKEN FROM MR.TANISHK SING HAI AND THE INTEREST @ 9% AMOUNTING TO RS. 5100/- WAS PAID AFTER 8 DEDUCTING THE TAX AT SOURCE AT RS. 520/-. SUFFICIEN T DOCUMENTARY EVIDENCE IN RESPECT OF THE PERSONS FROM WHOM THE LO ANS WERE TAKEN, WERE FILED BY THE ASSESSEE ALONGWITH COPY OF BALANCE SHEET. THE CREDITORS ARE HAVING REGULAR BUSINESS TR ANSACTION IN THE BANK ACCOUNT AND THE LOAN WAS PROVIDED FROM THE IR BANK ACCOUNT. THESE AMOUNTS WERE ADDED UNDER SECTION 68 OF THE ACT . WE HAVE EXAMINED THE FACTS OF THE CASE AND FI ND THAT THE COMPLETE ADDRESSES, SOURCE OF INCOME ALONGWITH PAN NUMBERS OF THE CREDITORS, COPY OF BANK ACCOUNT, COM PUTATION OF TOTAL INCOME, COPY OF BALANCE SHEET/PROFIT AND LOSS ACCOUNT AND COPY OF INCOME TAX RETURNS WERE FILED BY THE ASSESS EE EVIDENCING THE CAPACITY AND GENUINENESS OF THE CRED ITORS AND THE AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNT OF THE CREDITORS. 5. IF THE FACTS OF THE PRESENT APPEAL ARE ANALYZED WITH THE HELP OF JUDICIAL PRONOUNCEMENTS, ESPECIALLY WHE N THE ASSESSEE HAS FURNISHED DOCUMENTARY EVIDENCE IN RESP ECT OF LOAN TAKEN FROM CREDITORS ALONGWITH OTHER DOCUMENTS SUCH AS COPY OF BANK ACCOUNT, COMPUTATION OF TOTAL INCOME O F LENDER, 9 THE INCOME TAX RETURN, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, WE ARE SATISFIED THAT THE GENUINENESS OF TRANSACTIONS ARE NOT IN DOUBT. MOREOVER, THE FACTS AND EVIDENCES FILED BY THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS, HAVE NOT B EEN PROVED FALSE OR CONDUCTED ANY ENQUIRY TO DISPROVE T HE GENUINENESS OF FACTS, THEREFORE, NO ADDITION CAN BE MADE IN ROUTINE MANNER, THAT TOO IN THE ABSENCE OF ANY EVID ENCE ON RECORD. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER. THE APPEAL OF THE REVENUE IS, THERE FORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2011. SD SD (R.C.SHARMA) (JOGINDER SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29.9.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE