Dibyajyoti Chemicals Pvt. Ltd., Dhenkanal V. DCIT, Circle-1(1), Bhubaneswar

ITA 51/CTK/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7250 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 05-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.51 /CTK/2016 ASSESSMENT YEAR : 2011 - 2012 DIBYAJYOTI CHEMICALS PVT LTD., AT/PO: BHUBAN, KANAKHAI, DHENKANAL. VS. DCIT, CIRCLE 1(1), BHUBANESWAR. PAN/GIR NO. AABCD 7057 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 05 /01/ 2017 DATE OF PRONOUNCEMENT : 0 5 /01/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 17.11.2015 , FOR THE ASSESSMENT YEAR 2011 - 12 . 2. NOTICE OF HEARING FIXING THE HEARING OF APPEAL ON 28.10.2016 WAS SENT BY SPEED POST ON 17.10.2016. NONE APPEARED ON THAT DATE OF HEARING AND, THEREFORE, ANOTHER NOTICE OF HEARING FIXING THE HEARING OF THE APPEAL ON 25.11.2016 WAS SENT TO THE ASSESSEE BY SPEED POST ON 1.11.2016 . ON THAT DATE ALSO, NONE APPEARED ON BEHALF OF THE ASSESSEE. AS A LAST OPP ORTUNITY, ANOTHER NOTICE OF HEARING FIXING THE HEARING OF THE APPEAL ON 5.1.2017 WAS 2 ITA NO.51/CTK/2016 ASSESSMENT YEAR :2011 - 2012 SENT ON 25.11.2016. ON THIS DATE ALSO, NONE APPEARED ON BEHALF OF THE ASSESSEE AND NEITHER ANY ADJOURNMENT PETITION WAS FILED. 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.8,00,000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 4. THE LD CIT(A) HAS DISCUSSED AND DECIDED THE ISSUE AS UNDER: 3. GROUNDS NOS.1 & 2 RELATE TO ADDITION OF RS.8 LAKHS ON ACCOUNT OF UNEX PLAINED CASH CREDIT U/S.68 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD SHOWN UNSECURED LOANS OF RS.43,04,368/ - . THE AO ASKED THE ASSESSEE TO FURNISH ITS BANK ACCOUNTS AND THE DETAILS OF ALL T HE LOAN CREDITORS WITH SOURCES OF CASH DEPOSITS IN THEIR BANK ACCOUNTS. THE ASSESSEE FURNISHED ITS BANK STATEMENTS WITH BOTH THE LOAN CREDITORS NAMELY, SRI BASANTA BIHARI AND M/S. KALINGA MINERALS. THE AO FOUND THAT RS.90,000/ - AND RS.8 LAKHS WERE RECEIV ED FROM SHRI BASANTA BIHARI ON 30.6.2010 AND 8.10.2010 RESPECTIVELY. THE AO FURTHER FOUND FROM THE BANK STATEMENT OF SHRI BIHARI THAT AN AMOUNT OF RS.7,90,000/ - WAS DEPOSITED IN HIS BANK ACCOUNT ( NO.501010100029120) ON 8.10.2010 AND ON THE SAME DAY AN AM OUNT OF RS.8 LAKHS WAS TRANSFERRED TO THE ASSESSEES BAN K ACCOUNT VIDE CHEQUE NO.58640, THE BALANCE IN HIS BANK ACCOUNT AS ON 6.10.2010 WAS ONLY RS.47,058/ - . THE ACCOUNT OF SRI BIHARI DID NOT SHOW HUGE CASH DEPOSIT BEFORE OR AFTER SUCH CASH TRANSACTION. THE ASSESSEE COULD NOT SHOW ANY DOCUMENTARY EVIDENCE TO JUSTIFY THE CREDITWORTHINESS OF SRI BIHARI SINCE THERE WERE MEAGRE DEPOSITS IN HIS ACCOUNT EXCEPT THE IMPUGNED TRANSACTION. THEREFORE, THE AO ADDED RS.8 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68. 4. IN THE COURSE OF APPEAL HEARING, IT HAS BEEN ARGUED THAT THE CREDITOR SRI BASANTA BIHARI IS AN ASSESSEE REGULARLY FILING HIS RETURNS OF INCOME. THE LOAN HAS BEEN RECEIVED BY CHEQUE AND CONFIRMED BY THE CREDITOR. IT IS SUBMITTED THAT THE ASSESSEE H AS DISCHARGED THE ONUS OF PROVING THE THREE INGREDIENTS OF A LOAN TRANSACTION I.E. IDENTITY OF CREDITOR, HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND, THEREFORE, NO ADDITION CAN BE MADE TREATING THE LOAN AS NOT GENUINE. THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS (P) LT D HAS BEEN REFERRED TO BY THE ASSESSEE IN THIS CONNECTION. 3 ITA NO.51/CTK/2016 ASSESSMENT YEAR :2011 - 2012 5. I HAVE CONSIDERED THE MATTER CAREFULLY. THE PROVISION OF SECTION 68 OF THE I.T.ACT REQUIRES AS ASSESSEE TO PROVE THE CREDITS APPEARING IN ITS BOOKS OF ACCOUNT AND IS REQUIRED TO PROVE THREE IMP ORTANT INGREDIENTS OF THE SANE, NAMELY (I) THE IDENTITY OF THE CREDITOR, II) THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY AND (III) THE GENUINENESS OF THE TRANSACTION. WHAT EVIDENCE WOULD BE SUFFICIENT TO ESTABLISH THE SAID INGREDIENTS OR WHAT MATERI ALS WOULD BE RELEVANT IN A PARTICULAR CASE, WOULD DEPEND ON THE FACTS OF EACH CASE. IN THE CASE OF THE ASSESSEE, THE MOST IMPORTANT INGREDIENT OF PROVING A LOAN TRANSACTION SUCH CREDITWORTHINESS OF THE LOAN CREDITOR IS HIGHLY SUSPECT. AS HAS BEEN POINTED OUT BY THE AO IN THE ASSESSMENT ORDER ALMOST EQUAL AMOUNT OF CASH HAD BEEN DEPOSITED IN THE ACCOUNT OF THE CREDITOR JUST BEFORE THE LOAN TRANSACTION BY CHEQUE. IN SUCH A SITUATION THE RATIO OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS (P) LTD., IS OF NO HELP TO THE ASSESSEE. RATHER THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BLESSING CONSTRUCTION (2013) APPEARS TO BE APPLICABLE IN ASSESSEES CASE. SINCE IT IS CLEAR THAT THE LENDER DOES NOT HAVE THE CAPACITY T O LEND THE AMOUNT WHICH HAS COME THROUGH HIS BANK ACCOUNT AND ONE OF THE VITAL INGREDIENTS I.E. CAPACITY TO LEND, HAS NOT BEEN PROVED, THE ADDITION OF RS.8 LAKHS MADE BY THE AO U/S.68 IS CONFIRMED. 5. I AM FULLY SATISFIED AND IN AGREEMENT WITH THE ORDER O F THE LD CIT(A) QUOTED ABOVE AND DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF LD CIT(A). HENCE, I CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL F ILED BY TH E ASSESSEE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 05 /01/2017 . SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 05 /01 /2017 B.K.PARIDA, SPS 4 ITA NO.51/CTK/2016 ASSESSMENT YEAR :2011 - 2012 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : DIBYAJYOTI CHEMICALS PVT LTD., AT/PO: BHUBAN, KANAKHAI, DHENKANAL 2. THE RESPONDENT. DCIT, CIRCLE 1(1), BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//