Income tax Officer Ward-1(2), RAIPUR (CG) V. Shri Ashok Kumar Chopkar, RAIPUR (CG)

ITA 50/BIL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2440 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P PHATAK
• Assessee Lawyers: KISHORE M DESH
• Keywords: Salary income
• Section: 69C; 68

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 50/BLPR/2012 ( / ASSESSMENT YEAR : 2008 - 2009 ) INCOME TAX OFFICER, WA RD - 1(2), RAIPUR / VS. SHRI ASHOK KUMAR CHOPKA J - 42, JANATA COLONY, PAHARI, GUDHIYARI, RAIPUR ./ ./ PAN/GIR NO. : ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI O.P.PHATAK / RESPONDENT BY : SHRI KISHORE M DESHPANDE / DATE OF HEARING : 0 9 - 02 - 2016 / DATE OF PRONOUNCEMEN T : 12 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM AN ORDER OF THE LD CIT(A), RAIPUR DATED. 3.1.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1 . WH ETHER IN LAWS AND ON FATS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.45,70,000/ - MADE BY THE AO U /S.68 OF THE INCOME TAX ACT, 1961 AND ALSO DELETING THE DISALLOWANCE OF ALLEGED PAYMENT OF INTEREST AMOUNTING TO RS. 3,54,,240/ - ON THE UNPROVED CASH CREDITS. 2 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 2. WH ETHER IN LAWS AND ON FATS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,20,000/ - MADE BY THE AO ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. 3. APROPOS GROUND NO.1, F ACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE I.T.ACT, 1961 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAS DECLARED SALARY INCOME AND CAPITAL GAIN BY FILING INCOME TAX RETURN A T RS.1,54,130/ - . I T WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INTRODUCED A SUM OF RS.45,70,000/ - AS UNSECURED LOAN CLAIMED TO HAVE BEEN RECEIVED FROM 17 PERSONS. I N COMPLIANCE TO THE SHOW CAUSE NOTICE, THE ASSESSEE HAD FURNISHED CONFIRMA TION LETTERS FROM THOSE PARTIES. I T HAS ALSO BEEN OBSERVED BY THE AO THAT IN SOME CASE S BANK STATEMENTS HAVE ALSO BEEN FILED. T HE AO HAS EXAMINED THE INCOME TAX RETURNS OF THOSE PARTIES AND CAME TO KNOW THAT MOST OF THEM WERE DRAWING SALARY. T HEY WERE H ARDLY HAVING SUFFICIENT SPARE FUNDS TO GIVE ADVANCE TO THE ASSESSEE. T HE AO HAS ALSO DOUBTED THE MANNER IN WHICH CASH DEPOSITS WERE MADE IN THE RESPECTIVE ACCOUNTS OF THOSE PARTIES AND THEREAFTER CHEQUES WERE ISSUED TO THE ASSESSEE. A CCORDING TO THE AO, THE ADVANCE WAS NOT GENUINE. SEVERAL CASE LAWS WERE CITED INCLUDING T HE CASE OF SANIL K.M.P. VS CIT (2009) 177 TAXMAN 481 (KER). T HE AO HAS DISCUSSED THAT THE ALLEGED CREDITORS WERE NOT HAVING SUFFICIENT FI NANCIAL CAPACITY TO ADVANCE THE LOANS. H E HAS EVEN HELD THAT THE LOANS WERE ARRANGED FROM THE EMPLOYEES OF M/S. ANANDA COLOURS. T HE AMOUNTS WERE FINALLY ROUTED TO THE ACCOUNTS OF THE SAID CONCERNS. T HE ASSESSEES CONTENTION WAS THAT LOAN WAS RAISED ON THE CONDITIONS OF PAYMENT OF 3 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 INTEREST RANGING BE TWEEN 15 TO 18% AND, THEREFORE, THE GENUINENESS WAS ESTABLISHED. T HE ASSESSEE HAS ALSO PLEADED THAT THE AMOUNT WAS ADVANCED OUT OF SALARY INCOME OF THE RESPECTIVE PARTIES. A CCORDING TO THE ASSESSEE, THE TRANSACTION WAS EXECUTED THROUGH BANKING CHANNELS B Y I SSUING CHEQUES TO THE ASSESSEE. H OWEVER, AS PER THE AO, MERE ISSUANCE OF CHEQUES HAVE NOT ESTABLISHED THE CREDITWORTHINESS OF THE CREDITORS. C ASE LAW REFERRED TO WAS ACIT VS. RAJIV TANDON(2007) 108 ITD 560 (DEL). AFTER REFERRING FEW CASE LAWS, THE A O HAS REPRODUCED THE NAMES OF THE CREDITORS, SOURCE OF INCOME, THEIR RESPECTIVE BANK ACCOUNT NUMBERS AND THE AMOUNTS DISCLOSED AS PER INCOME RETURNS. H E HAD CONCLUDED THAT THE ASSESSEE HAS FAILED TO FULFILL THE CONDITIONS LAID DOWN U/S.68 OF THE I.T.ACT, 1961. H ENCE, THE ENTIRE AMOUNT OF RS.49,24,240/ - WAS TAXED IN THE HANDS OF THE ASSESSEE. B EING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. BEFORE THE LD CIT(A), IT WAS REITERATED THAT THE IDENTITY WAS ESTABLISHED A L ONGWITH THE CAPACITY OF THOSE PARTIES, THEREFORE, THE PROVISIONS OF SECTION 68 WERE WRONGLY INVOKED. F EW CASE LAWS HAVE ALSO BEEN CITED. T HE LD CIT(A) WAS CONVINCED THAT THE CONFIRMATIONS WERE ON RECORD AND THE BANK ACCOUNTS HAV E PROVED THE CAPACITY AS WELL AS THE IDENTITY OF THOSE PERSONS, HENCE, THE ONUS WAS DISCHARGED AS PRESCRIBED U/S.68 OF THE I.T.ACT, 1961. S INCE THE IMPUGNED ADDITION WAS DELETED BY THE LD CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 5. FROM THE SIDE OF THE REVENUE, SRHI O .P.PHAT AK, LD D.R. APPEARED AND VEHEMENTLY SUPPORTED THE ACTION OF THE ASSESSING OFFICER B Y REFERRING THAT THE ASSESSEE HAS TAKEN LOANS FR OM HIS COLLEA GUES, WHO WERE ALSO THE SALARIED EMPLOYEE S OF THE SAME CONCERN. THE AO HAS DOUBTED THE CREDITWORTHINESS AFTER E XAMINING THE RESPECTIVE BANK ACCOUNTS. T HE LD CIT(A) HAS NOT CORRECTLY APPRECIATED THOSE FACTS AS DISCUSSED BY THE AO, HENCE, THE FINDINGS GIVEN BY THE LD CIT(A) DESERVES TO BE REVERSED. 6. ON THE OTHER HAND, FROM THE SIDE OF RESPONDENT - ASSESSEE, SHRI K ISHORE B DESHPANDE, LD A.R. APPEARED AND AT THE OUTSET SUBMITTED THAT IN THE IMMEDIATE SUCCEEDING ASSESSMENT YEAR I.E. 2009 - 2010, THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE ORDER DATED 13.12.2011, AND NO SUCH DISALLOWANCE OR DISALLOWANCE ON P AYMENT OF INTEREST WAS MADE BY THE AO. T HE ASSESSEE HAS DECLARED THE INCOME OF RS.1,50,210/ - FOR THE SAID ASSESSMENT YEAR, WHICH WAS ASSESSED AS SUCH WITHOUT ANY CHANGE. A NOTHER FACT HAS ALSO BEEN BROUGHT OUR NOTICE THAT DURING THE COURSE OF APPELLATE PR OCEEDINGS, IT WAS INFORMED THAT IN THE SUBSEQUENT ASSESSMENT YEAR, ACCOUNTS OF THOSE CREDITORS WERE SQUARED UP BY REPAYING THE LOANS THROUGH CHEQUES. T HE LD CIT(A) HAD CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND NO ADVERSE OPINION WAS PLACED BY THE REVENUE DEPARTMENT. L D A.R. HAS TRIED TO DEMONSTRATE THROUGH CERTAIN CHARTS THAT THE PARTIES IN QUESTION WERE SUBJECTED TO TAX AND THE INTEREST PAID TO THEM WERE DULY TAXED IN THEIR RESPECTIVE HANDS AND FINALLY THE AMOUNTS WE R E REPAID BY 5 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 SQUARING UP THEIR ACCOUNTS, HENCE, THE VIEW TAKEN BY LD CIT(A) DESERVES TO BE ACCEPTED. 7. WE H AVE HEARD BOTH THE SIDES AT SOME LENGTH. T HE DISPUTE ABOUT INVOCATION OF PROVISIONS OF SECTION 68 OF THE ACT APPEARS TO BE UN - ENDING. S INCE THE REVENUE DEPARTMENT DID NOT ACCEPT THE EVIDENCES PLACED IN SUPPORT OF THE LOANS TAKEN ,BUT ON THE OTHER HAND, THE REVENUE DEPARTMENT DID NOT CONSIDER THOSE EVIDENCES AS GENUINE OR SATISFACTORY PRIMARILY ON THE GROUND THAT SUCH ARRANGEMENT OF LOAN WAS AGAINST THE HUMAN PROBABILITY , THEREFORE FULL OF SUSPICION. O N THE OTHER HAND, THE ASSESSEE HAS SHOWN PLACED STRONG RELIANCE ON THE DOCUMENTARY EVIDENCE S COLLECTED SUCH AS BANK STATEMENTS, CONFIRMATION LETTERS, RESPECTIVE INCOME TAX RETURNS, SO AND SO FORTH. THE HONBLE COURTS HAVE S O FAR NOT ABLE TO ISSUE CERTAIN GUIDELINES ON THIS CONSCIENTIOUS A DDITIONS. THEREFORE, EACH CASE IS REQUIRED TO BE DECIDED ON THEIR OWN FACTS AND CIRCUMSTANCES. IN THIS CASE, THE ASSESSEE IN QUESTION IS A SALARIED EMPLOYEE WHO HAD ARRANGED LOAN FROM HI S COLLEAGUES WHO ARE ALSO SALARIED EMPLOYEES. THE UNDISPUTED FACTS WERE THAT THE LOAN S WERE TAKEN VIDE CHEQUES WHICH WERE INTEREST BEARING LOAN. A LL THE CREDITORS WERE SUBJECTED TO TAX AND THE CONNECTED EVIDENCES WERE PLACED BEFORE THE REVENUE AUTHORITIE S APART FROM THE CONFIRMATION LETTERS, BANK STATEMENTS AND INCOME TAX RETURNS OF THOSE PARTIES . ONE MORE IMPORTANT FACT HAS A LSO BEEN BROUGHT TO OUR NOTICE THAT IN THE SUBSEQUENT PERIOD, THE IMPUGNED LOAN AMOUNTS WERE RETURNED BACK BY THE ASSESSEE TO THOSE COLLEAGUES THAT TO THROUGH BANKING TRANSACTION BY SQUARING UP THEIR ACCOUNTS. 6 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 THIS FACTS SHOW THAT THE ASSESSEE HAD TAKEN TEMPORARY LOAN, WHICH WERE LATER ON RETURNED BACK. ONE MORE IMPORTANT FACT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT ASSESSMENT MADE FOR ASSESSMENT YEAR 2009 - 2010 I.E. IMMEDIATE SUCCEEDING YEAR, BUT EVEN AFTER SCRUTINY ASSESSMENT, NO OBJECTION WAS RAISED BY THE REVENUE DEPARTMENT. ON ACCOUNT OF THOSE FACTS WHICH FOUND TO BE SUPPORTED IN THIS CASE, WE FIND NO REASON BUT TO CONFIRM THE F INDINGS OF THE LD CIT(A). R ESULTANTLY, WE HEREBY DISMISS GROUND NO.1 OF APPEAL TAKEN BY THE REVENUE. 8. APROPOS GROUND NO.2, THE OBSERVATION OF THE ASSESSING OFFICER WAS THAT A NOMINAL AMOUNT OF RS.2,500/ - P E R MONTH WAS WITHDRAWN BY THE ASSESSEE FROM HIS ACCOUNT AND R.4,000/ - PER MONTH WAS WITHDRAWN FROM THE ACCOUNT OF HER WIFE. THE AO HAS E XAM INED THE TOTAL HOUSEHOLD WITHDRAWAL OF THE ASSESSEE AND THEREAFTER HELD THAT ATLEAST RS.10,000/ - PER MONTH SHOULD HAVE BEEN INCURRED TO MEET THE EXPENDITURE. AS A RESULT, BY INVOKING PROVISIONS OF SECTION 69C, AN AMOUNT OF RS.1,20,000/ - WAS TAXED IN THE HANDS OF THE ASSESSEE. 9. WH EN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, HE HAS REVERSED THE FINDINGS OF THE AO BY HOLDING THAT THE DISCRETION VE STED WITH THE AO UNDER THE PROVISIONS OF SECTION 69C SHOULD HAVE BEEN EXERCISED JUDICIOUSLY. I N HIS OPINION, THE IMPUGNED ADDITION MADE BY THE AO IS NOT SUSTAINABLE. 10. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE NOT IN AGREEMENT WITH THE FIN DINGS OF THE LD CIT(A) THAT THE AO HAS NOT EXERCISED HIS DISCRETION 7 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 JUDICIOUSLY BECAU SE OF THE FACT THAT HE HAS EXAM INED THE STATUS OF THE FAMILY AS WELL AS THE EXPENDITURE INCURRED NAMELY, ELECTRICITY CHARGES, WATER CHARGES, ETC. H E HAS ALSO EXAMINED THE SAVINGS SUCH AS PAYMENT OF LIC PREMIUM AND THEREUPON ESTIMATED THAT ATLEAST RS.10,000/ - PER MONTH WOULD HAVE INCURRED TOWARDS HOUSEHOLD EXPENSES. THERE ARE DECISIONS, WHE R EIN, IT WAS HELD THAT THE HOUSEHOLD EXPENSES ARE TO BE EXAMINED ON THE BASIS OF FAC TS OF EACH CASE. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE WOULD HAVE SURVIVED BY WITHDRAWING RS.2,500/ - PER MONTH. I T IS ALSO NOT CLEAR WHETHER THE ALLEGED AMOUNT OF RS.4,000/ - WAS ACTUALLY WITHDRAWN BY WIFE. W E, THEREFORE, HOLD THAT THE ENTIRE DELETION BY LD CIT(A) WAS NOT JU STIFIABLE . I N OUR OPINION, IT IS JUSTIFIABLE AS WELL AS REASONABLE TO UPHOLD THE DISALLOWANCE TO THE EXTENT OF 50% ADDED BY THE AO. A S A RESULT, OUT OF TOTAL ADDITION OF R.1,20,000/ - , A SUM OF RS.60,000/ - WOULD BE TAXED IN THE HANDS OF THE ASSESSEE U/S.69C OF THE ACT. T O THIS EXTENT, THE RELIEF GRANTED BY THE L D CIT(A) IS HEREBY MODIFIED. T HIS G ROUND IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED IN PART. . ORDER PRONOUNCED IN THE OPEN COURT ON 12 /02/2016 . SD/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 12 / 02 /20 1 6 8 I.T.A. NO.50/BLPR/2012 ASSESSMENT YEAR :2008 - 2009 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : INCOME TAX OFFICER, WA RD - 1(2), RAIPUR 2. / THE RESPONDENT : SHRI ASHOK KUMAR CHOPKA, J - 42, JANATA COLONY, PAHARI, GUDHIYARI, RAIPUR 3. ( ) / THE CIT(A) - RAIPUR 4. / CIT , RAIPUR 5. , , / DR, ITAT , RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR