Prakash Chand Bhandari, Hyd, Hyderabad V. ITO, Ward-6(1), Hyd, Hyderabad

ITA 487/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6318 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B (SMC) BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.487/HYD/2016 (ASSESSMENT YEAR: 2007-08) SHRI PRAKASH CHAND BHANDARI, PROP. M/S. PARASMAL SHANTILAL BHANDARI, HYDERABAD PAN: ABQPB 1196 H VS. INCOME TAX OFFICER WARD 6(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : S HRI K.J. RAO , DR DATE OF HEARING : 5.7.2016 DATE OF PRONOUNCEMENT : 29 .7.2016 O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE ADDITION OF RS.9,22,660 MADE BY THE AO AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE. FU RTHER, ASSESSEE IS ALSO AGGRIEVED BY THE DISALLOWANCE OF R S.71,281 BEING THE INTEREST PAID ON THE BANK LOANS AVAILED BY THE FAMILY PERSONS AND EMPLOYEES WHICH WAS ALSO CONFIRMED BY THE CIT ( A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, ENGAGED IN MONEY LENDING BUSINESS, FILED HIS RETURN OF INCOME FOR THE A.Y 2007-08 ON 27.07.2007 DECLARING A TOTAL INC OME OF RS.1,61,140. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT IN THE BALANCE SHEET FILED ALONG ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 2 OF 6 WITH THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN SECURED/UNSECURED LOANS TOTALLING TO RS.9,61,600. T HE AO ALSO OBSERVED FROM THE BALANCE SHEET AS ON 31.03.2007 TH AT FRESH LOANS FROM THE BANKS WERE TAKEN AGAINST THE GOLD AS UNDER: (I) MAHAJAN BANK RS.4,20,500 (II) GOLD LOANVB RS.3,54,600 (III) GOLD LOAN MAHESH BANK RS.1,47,500 THE AO VERIFIED THE BOOKS OF ACCOUNTS AND ACCOUNT C OPIES OF THE ABOVE BANKS IN THE BOOKS OF THE ASSESSEE. COPIES OF THE LEDGER FOR THE RELEVANT PERIOD INDICATING OUTSTANDING AMOUNTS AGAINST BANK WERE ALSO OBTAINED. THE ASSESSEE WAS ASKED TO FURNI SH LOAN ACCOUNT COPIES OF THE ABOVE BANK ALONGWITH LOAN SAN CTION LETTERS. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE, THE AO ADDRESSED SEPARATE LETTERS TO THE THREE BANKS ASKI NG THEM TO CONFIRM THE OUTSTANDING BALANCE AS ON 31.03.2007. I N RESPONSE, ALL THE THREE BANKS HAVE CATEGORICALLY DENIED THAT THERE EXISTS ANY OUTSTANDING BALANCE AGAINST THE NAME OF THE ASS ESSEE AS ON 31.03.2007 OR ANY GOLD LOAN OUTSTANDING AGAINST THE NAME OF THE ASSESSEE. THIS INFORMATION WAS CONFRONTED TO THE AS SESSEE AND A SHOW CAUSE LETTER WAS ISSUED AS TO WHY THE SAID LOA N FROM THE BANKS AGAINST THE ORNAMENTS PLEDGED BY THE CUSTOMER S TO THE ASSESSEE SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT. 3. THE ASSESSEE FILED A REPLY ALONGWITH THE LOAN CO NFIRMATION LETTERS OUTSTANDING IN THE NAMES OF THE SOME OTHER PERSONS. IT WAS CLAIMED BY THE ASSESSEE THAT HE SENDS HIS CHILDREN/WIFE/EMPLOYEES TO BANKS TO GET LOANS AGAIN ST GOLD PLEDGED BY HIS CUSTOMERS IN THE COURSE OF HIS GIRIV I BUSINESS, ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 3 OF 6 THAT THEY PLEDGE HIS GOLD TO BANK, OBTAIN LOANS FRO M THE BANK IN THEIR NAME AND GIVE LOAN MONEY BACK TO HIM, THAT HE REPAYS THROUGH THE SAME PERSONS WHO HAD OBTAINED THE LOANS FROM BANKS ETC. IN SUPPORT OF HIS CLAIMS, THE ASSESSEE F ILED COPIES OF LOAN ACCOUNTS STANDING IN THE NAMES OF (I) SRI ARUN (SON), (II) SRI TULSI RAM (EMPLOYEE), (III) T.R. KUMAWAT (EMPLOYEE) , (IV) SMT. BASANTI DEVI BHANDARI (WIFE) ETC. ALL THESE PERSON S CONFIRMED THAT THEY HAVE TAKEN LOANS AGAINST THE ORNAMENTS PL EDGED BY THE CUSTOMERS TO THE ASSESSEE ON BEHALF OF THE ASSESSEE . THERE WERE SOME DIFFERENCES AGAINST THE TOTAL LOAN AMOUNT CLAI MED AND THE CONFIRMATIONS SO FILED. 4. THE AO OBSERVED THAT THE LOANS STANDING IN THE N AMES OF OTHERS CANNOT BE STATED TO BE MAINTAINED BY THE ASS ESSEE AGAINST THE GOLD ITEMS. HE ALSO OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING A STOCK REGISTER AND THEREFORE, HE CAME TO THE CONCLUSION THAT IT IS NOT POSSIBLE TO VERIFY THE AS SESSEES CONTENTION BECAUSE WHEN THE STOCK REGISTER WAS NOT MAINTAINED, ACCORDING TO HIM, THE ASSESSEE CANNOT REMEMBER WHAT GOLD ITEM WAS PLEDGED AND WHAT AMOUNT AND ON WHAT DATE. HE TH EREFORE, TREATED THE TOTAL SUM OF RS.9,22,600 AS UNEXPLAINED CASH CREDIT AND BROUGHT IT TO TAX U/S 68 OF THE I.T. ACT. AGGRI EVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THIS TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBM ITTED THAT THE ASSESSEE IS IN THE BUSINESS OF MONEY LENDING AG AINST THE GOLD DEPOSITS BY THE CUSTOMERS AND THEREFORE, THE ASSESS EE IS ONLY ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 4 OF 6 MAINTAINING A GIRIVI ACCOUNT AND NOT A STOCK REGIST ER. HE SUBMITTED THAT THE DETAILS OF THE GOLD DEPOSITED AR E RECORDED ON THE GIRIVI A/C AND SUCH GOLD IS SENT TO THE BANK T HROUGH HIS FAMILY MEMBERS OR EMPLOYEES AND THE BANK LOAN IS OB TAINED AGAINST SUCH GOLD. HE SUBMITTED THAT THE LOAN AMOUN T IS UTILISED BY THE ASSESSEE AND THEREFORE, THE ASSESSEE HAS SHO WN THE BANKS AS CREDITORS. CONFIRMATION LETTERS OF THE FAMILY ME MBERS AND THE EMPLOYEES WERE ALSO FILED BEFORE THE CIT (A) ALONG WITH THE COPY OF THE GIRIVI A/C. HE HAS ALSO DRAWN OUR ATTENTION TO THE GIRIVI A/C TO DEMONSTRATE THAT THE QUANTUM OF JEWELLERY DEPOSI TED AND THE LOAN AMOUNT TAKEN FROM HIM ARE ALL RECORDED. ACCORD ING TO HIM, BOTH THE AUTHORITIES BELOW, HAVE ERRED IN HOLDING T HAT THE STOCK REGISTER IS NOT MAINTAINED BY THE ASSESSEE AND THER EFORE, DISALLOWANCE IS CALLED FOR. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESS EE, BEING A MONEY LENDER, COULD NOT HAVE MORTGAGED THE CUSTOMER S GOLD WITH OTHER PERSONS OR EVEN BANKS. FURTHER, ACCORDING TO HIM, ASSESSEE HAS ALSO NOT FURNISHED THE DETAILS OF THE GOLD DEPOSITED BY THE CUSTOMERS WHICH IN TURN HAS BEEN ALLEGEDLY D EPOSITED BY THE ASSESSEES FAMILY MEMBERS/EMPLOYEES WITH THE BA NK. THEREFORE, ACCORDING TO HIM, THE ORDERS OF THE LOWE R AUTHORITIES ARE TO BE CONFIRMED. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL PLACED ON RECORD, I FIND THAT THE ONLY QUESTION BEF ORE ME IS WHETHER THE LOANS IN THE NAMES OF HIS FAMILY MEMBER S/ EMPLOYEES FROM THE BANKS ALLEGEDLY TAKEN AGAINST TH E GOLD ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 5 OF 6 PLEDGED WITH THE ASSESSEE BY HIS CUSTOMERS CAN BE C ONSIDERED AS HIS LOANS. THE RELATIONSHIP BETWEEN THE EMPLOYEES A ND THE FAMILY MEMBERS AND THE ASSESSEE HEREIN CANNOT RULE OUT THE PROBABILITY OF THE ASSESSEE TAKING THE LOANS THROUGH THEM. HOWE VER, THE ASSESSEE HAS TO ESTABLISH HIS CONTENTION THAT THE L OAN TAKEN FROM THE BANK IS AGAINST THE GOLD PLEDGED BY HIS CUSTOME RS WITH HIM. THE ONUS IS ON THE ASSESSEE TO PROVE AND TALLY THE GOLD ORNAMENTS AND LOAN AMOUNT FROM THE BANK WITH THE GO LD DEPOSITED WITH HIM, BY HIS CUSTOMERS. AS PER THE PR ESCRIBED PROCEDURE, THE BANKS ISSUES A NOTE GIVING DETAILS O F THE ORNAMENTS DEPOSITED WITH THEM. THE ASSESSEE IS ALSO MAINTAINING A GIRVI A/C, WHICH IS IN THE VERNACULAR LANGUAGE (THE TRANSLATED COPY HAS NOT BEEN FILED BEFORE US) IN WH ICH SOME OF THE ENTRIES MENTION GOLD ORNAMENTS SUCH AS, NECKLAC E ETC. THEREFORE, IT APPEARS THAT THE GIRVI REGISTER IS AL SO CONTAINING THE DETAILS OF THE GOLD ORNAMENTS ALONG WITH THE WEIGHT OF THE SUCH ORNAMENTS DEPOSITED WITH THE ASSESSEE. THEREFORE, I T SHOULD NOT BE DIFFICULT FOR THE ASSESSEE TO CO-RELATE THE GOLD ORNAMENTS DEPOSITED WITH HIM AND THE GOLD ORNAMENTS DEPOSITED BY HIM TO OBTAIN LOAN IN THE NAMES OF HIS FAMILY PERSONS/EMPL OYEES. IN VIEW OF THE SAME I DEEM IT FIT AND PROPER TO SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMAND THE ISSUE TO TH E FILE OF THE AO FOR RECONSIDERATION IN ACCORDANCE WITH LAW. THE ASSESSEE SHOULD EXPLAIN AND TALLY THE GOLD ORNAMENTS WHICH H AVE BEEN PLEDGED WITH HIM WITH THOSE DEPOSITS IN THE BANK A/ C IN THE NAMES OF HIS FAMILY MEMBERS/EMPLOYEES TO THE AO. IN VIEW OF THE SAME, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO 487 OF 2016 PRAKASH CHAND BHANDARI HYDERABAD PAGE 6 OF 6 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016. S D/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2016. VNODAN/SPS COPY TO: 1. SHRI A.V. RAGHURAM, ADVOACTES, 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500001 2. INCOME TAX OFFICER WARD 6(1) IT TOWERS, AC GUARDS, HYDERABAD 500004 3. CIT(A) 9 HYDERABAD 4. PR. CIT 6 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER