ITO, CHENNAI V. N.Rakesh Kumar, CHENNAI

ITA 513/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2535 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DASGUPTA
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Unexplained cash credit
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 5 13 /MDS/201 3 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, BUSINESS WARD-XII(1) CHENNAI-600 006. VS. MR. N.RAKESH KUMAR, 169/3, MINT STREET, SOWCARPET, CHENNAI-600 079. PAN:AENPR3324P (APPELLANT) (RESPONDENT) APPELLANT BY : MR. DASGUPTA, JCIT RESPONDENT BY : MR. K.BALASUBRAMANIAN, ADVOCATE DATE OF HEARING : 5 TH JUNE, 2013 DATE OF PRONOUNCEMENT : 5 TH JUNE, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I V, CHENNAI DATED 16.11.2012 FOR THE ASSESSMENT YEAR 20 09-10. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL I S THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE ADDITION TO THE EXTENT OF 18 ,00,000/- OUT OF ` 29,10,000/- MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED C REDITS. ITA NO.513/MDS/2013 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED RETURN ON 10.02.2010 ADMITTING INCOME OF ` 2,85,020/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 23.12.2011 DETERMINING INCOME AT ` 31,95,020/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MA DE ADDITION OF ` 29,10,000/-TOWARDS UNEXPLAINED CREDITS BEING UNSECURED LOANS TREATING AS INCOME OF THE ASSESSEE. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) AC CEPTED THE SUBMISSION OF THE ASSESSEE THAT LOANS TO THE EX TENT OF ` 19,10,000/- ARE GENUINE AND PROPERLY EXPLAINED THE SOURCES BY THE ASSESSEE AND THEREFORE DELETED THE ADDITION TO THAT EXTENT. THE BALANCE LOAN AMOUNT OF ` 10,00,000/- RECEIVED BY THE ASSESSEE FROM THE LADY MEMBERS OF HIS FAMILY WA S SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE THE CREDITORS BEFORE THE ASSESSING OFFICER IN SPITE OF SUMMONS IS SUED TO THEM. NOW, THE DEPARTMENT IS IN APPEAL BEFORE US A GAINST THE DELETION OF ADDITION OF ` 18,00,000/- OUT OF ` 29,10,000/- BY THE COMMISSIONER OF INCOME TAX (APPEALS) TOWARDS UNEXPLAINED CREDITS. ITA NO.513/MDS/2013 3 3. THE DEPARTMENTAL REPRESENTATIVE REFERRING TO ASSESSMENT ORDER SUBMITS THAT THE ASSESSEES BROTH ER MR. MAHENDRA KUMAR, ADVANCED LOAN OF ` 18,00,000/- TO THE ASSESSEE AND THIS AMOUNT OF ` 18,00,000/- WAS IN TURN RECEIVED BY MR. MAHENDRA KUMAR FROM FIVE PERSONS A S LOAN. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT IN TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER I SSUED SUMMONS UNDER SECTION 131 TO THE CREDITORS OF MR. M AHENDRA KUMAR, BROTHER OF THE ASSESSEE, BUT THE SUMMONS COU LD NOT BE SERVED ON THEM AS THE ADDRESSES PROVIDED BY THE CREDITORS WERE ALL SAME AND THE ADDRESS PROVIDED WAS A SHOP WHICH WAS ALREADY CLOSED. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT SINCE THE CREDITORS OF MR. MAHENDRA KUMAR COULD NOT RESPOND TO THE SUMMONS, TH E ASSESSING OFFICER RIGHTLY MADE ADDITION IN THE HAND S OF THE ASSESSEE, AS THESE CREDITS WERE NOT PROPERLY EXPLAI NED. 4. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE SA ID LOAN OF ` 18,00,000/- WAS RECEIVED BY THE ASSESSEE FROM HIS BROTHER MR. MAHENDRA KUMAR, WHO IN TURN RECEIVED TH E ITA NO.513/MDS/2013 4 AMOUNT OF ` 18,00,000/- FROM FIVE PERSONS AS REFERRED TO IN TH E ASSESSMENT ORDER. THE COUNSEL SUBMITS THAT ALL THE SE FIVE PERSONS, WHO HAVE LENT MONEY TO MR. MAHENDRA KUMAR, ARE ASSESSEES, FILED RETURNS, REFLECTED THE LOANS ADVA NCED BY THEM TO MR. MAHENDRA KUMAR IN THEIR BALANCE SHEETS. THEREFORE AUTHORIZED REPRESENTATIVE SUBMITS THAT T HE CREDITS STOOD EXPLAINED AND NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. EVEN OTHERWISE HE SUBMITS THAT THE A SSESSING OFFICER CANNOT GO INTO THE SOURCE OF SOURCE AND REJ ECT THE EXPLANATION OF THE ASSESSEE. THE COUNSEL FOR THE AS SESSEE FILED A PAPER BOOK CONTAINING THE RETURN COPIES, BA NK STATEMENTS, COMPUTATION STATEMENT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF ALL THE FIVE PERSONS WHO HAVE LENT MONEY TO MR. MAHENDRA KUMAR. THE COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISION OF THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DATAWARE PVT. LTD. IN ITAT NO.263 OF 2011 G.A.NO.2856 OF 2011 DATED 21.9.2011, SUBMITS THAT WHEN THE RETURNS OF THE CR EDITORS WERE ACCEPTED BY THE CONCERNED ASSESSING OFFICER OF THE FIVE PERSONS, THE ASSESSING OFFICER OF THE ASSESSEE CAN NOT ITA NO.513/MDS/2013 5 DISBELIEVE THE RETURNS AND DOCUMENTS FILED BY THE M AND DISBELIEVE THE LOAN ADVANCED TO MR. MAHENDRA KUMAR SO AS TO MAKE THE ADDITION AS UNEXPLAINED CREDITS IN THE HANDS OF THE ASSESSEE. 5. IN REPLY, THE DEPARTMENTAL REPRESENTATIVE SUBMI TS THAT THE ASSESSEE HAS NOT PRODUCED ALL THESE DOCUMENTS B EFORE THE ASSESSING OFFICER AND THEREFORE ASSESSING OFFIC ER MAY BE GIVEN OPPORTUNITY TO EXAMINE THESE DOCUMENTS. 6. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE DECISION OF THE HONBLE CALCUTT A HIGH COURT CITED ABOVE. THE ASSESSING OFFICER HAS ISSUE D SUMMONS TO THE CREDITORS WHO HAVE LENT MONIES TO M R. MAHENDRA KUMAR, THE BROTHER OF THE ASSESSEE FROM W HOM THE ASSESSEE HAS TAKEN LOAN OF ` 18,00,000/- AND ALL THESE FIVE PERSONS DID NOT APPEAR BEFORE THE ASSESSING OF FICER. HOWEVER, IT APPEARS FROM THE ASSESSMENT ORDER THAT ON 16.12.2011 THE ASSESSEES REPRESENTATIVE APPEARED AND FILED COPIES OF PROFIT AND LOSS ACCOUNT, BALANCE SHEET ET C. OF THESE ITA NO.513/MDS/2013 6 FIVE PERSONS BEFORE THE ASSESSING OFFICER, BUT THE ASSESSING OFFICER IGNORED THESE EVIDENCES STATING THAT THOSE PAPERS WERE PREPARED ONLY AFTER CALLING FOR THE DETAILS. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CL AIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSING OFFIC ER CANNOT ASK FOR SOURCE OF SOURCE AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF S.HASTIMAL VS. CIT (49 ITR 273 [MAD] ). NO DOUBT, S OURCE OF SOURCE SHOULD NOT BE QUESTIONED BY THE ASSESSING O FFICER AS HELD BY THE JURISDICTIONAL HIGH COURT, BUT THE IDEN TITY OF THE CREDITORS HAVE TO BE PROVED. IN SPITE OF SUMMONS IS SUED BY THE ASSESSING OFFICER, THE FIVE PERSONS FROM WHOM M R. MAHENDRA KUMAR HAS TAKEN LOAN HAVE NOT APPEARED BU T THEY HAVE FILED ONLY RETURNS, PROFIT AND LOSS ACCOUNT AN D BALANCE SHEET ETC. WHICH SHOWS THAT THEY HAVE LENT MONIES T O MR. MAHENDRA KUMAR. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. DATAWARE PVT. LTD., (SUPRA), RELIED ON BY THE C OUNSEL FOR THE ASSESSEE, HELD AS UNDER:- SO LONG AS IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF ITA NO.513/MDS/2013 7 THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. 7. IN VIEW OF THE DECISION OF THE HONBLE CALCUTTA HIGH COURT, WE HOLD THAT THE ASSESSING OFFICER SHOULD N OT HAVE DISBELIEVED THE DOCUMENTS FURNISHED BY THE ASSESSEE IN RESPECT OF THE FIVE CREDITORS OF MR. MAHENDRA KUMAR , AS THE CONCERNED ASSESSING OFFICER OF THE FIVE CREDITORS HAS NOT REJECTED THE RETURNS OR DISBELIEVED THE DOCUMENTS F ILED BY THEM. THEREFORE, WE SET ASIDE THE ORDER OF THE COM MISSIONER OF INCOME TAX (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO CONSID ER THE MATERIALS PLACED BY THE ASSESSEE IN RESPECT OF THE FIVE PERSONS IN THE LIGHT OF THE DECISION OF THE HONBLE CALCUTTA HIGH COURT (SUPRA) AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER PROVIDING ADEQUATE OPPOR TUNITY TO THE ASSESSEE. ITA NO.513/MDS/2013 8 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, TH E 5 TH DAY OF JUNE, 2013, CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE) (CHALLA NAG ENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 5 TH JUNE, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT (A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.