M/s Rameswar Agro Industries Pvt. Ltd, Khurda V. ITO, Bhubaneswar

ITA 517/CTK/2012

• Counselvise Citation: 51722114 RSA 2012
• Duration Of Justice: 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 29-10-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: J M PATTNAIKA P MISHRAARS
• Keywords: Income from undisclosed sources; Assessment record
• Section: 68; 263; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 517/CTK/2012 / ASSESSMENT YEAR 2007 - 08 M/S. RAMESWAR AGRO INDUSTRIES PVT. LTD., AT - 52 INDUSTRIAL ESTATE, BHAGABANPUR, BHUBANESWAR, DIST - KHURDA PAN - AADCR - 0805 - J. - - - VERSUS - INCOME - TAX OFFICER, WARD 1(1),BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.M.PATTNAIK/A.P.,MISHRA, ARS / FOR THE RESPONDENT: / S MT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 07.11.2012 / DATE OF PRONOUNCEMENT: 09.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY GROUND THAT A SUM O F 64,80,000 HAS BEEN CONFIRMED BY THE LEARNED CIT(A) AS ASSESSED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME - TAX ACT,1961. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS, SUBMITTED THAT THE ASSESSEE IS A PRI VATE LIMITED COMPANY AND HAD E - FILED ITS RETURN OF INCOME DISCLOSING LOSS AT ( - ) 10,58,712 ON DT. 31.10.07 FOR THE ASSESSMENT YEAR 2007 - 08. THE SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR 2007 - 08 WAS ASSIGNED TO WARD 1(1) UNDER A SPECIAL JURISDICTION ORD ER DT. 23.09.2009. THE ASSESSEE COMPANY DEALT WITH THE MILLING OF PADDY. THE TR IAL PRODUCTION OF THE COMPANY COMMENCED W.E.F. DT.06.12.2006 AND REGULAR PRODUCTION STARTED W.E.F. JANUARY 2007. IT IS TRANSPARENT FROM THE ABOVE I.T.A.NO. 517/CTK/2012 2 FACTS THAT THIS IS THE FIRST YE AR OF PRODUCTION. THE REGULAR SCRUTINY ASSESSMENT WAS ORIGINALLY COMPLETED ON DT. 30.12.2009 ON A TOTAL INCOME DETERMINED AT 1,10,35,090 AS AGAINST THE RETURNED LOSS OF 10,58,712 BY REJECTING THE QUANTUM OF MANUFACTURING LOSS OF THE FINISHED PRODUCTS I.E. RICE, AND ALSO REJECTING A PART OF THE UNSECURED LOAN DISCLOSED IN THE BALANCE SHEET. THE ASSESSMENT WAS COMPLETED TO MEET TIME LIMITATION WITHOUT PROPER APPRAISAL OF THE ACCOUNTS VIS - - VIS THE DOCUMENTS PRODUCED ALONG WITH THE BOOKS OF ACCOUNTS. THE A.O. HAD SOUGHT FOR THE REVISION INTERVENTION OF THE COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TAX ACT. THE APPELLANT CO MPANY HAD ALSO MOVED THE COMMISSIONER OF INCOME TAX FOR REVISION OF THE ORDER U/S 264 OF THE I.T. ACT. THE COMMISSIONER OF INCOME TAX AFTER DUE CONSIDERATION HAD SET - A - SIDE THE ORIGINAL ASSESSMENT ORDER DIRECTING FOR FRESH ASSESSMENT. THE ASSESSEE COMPANY S PETITION KEEPING IN VIEW THE ISSUES RAISED IN THE ORDER U/S 263 WAS ALSO REJECTED AS BEING IN - FRUCTUOUS UNDER THE CIRCUMSTANCES. PURSUANT TO SUCH ORDER OF THE LEARNED CIT, THE IMPUGNED ASSESSMENT WAS PASSED. THE LEARNED COMMISSIONER OF INCOME TAX, WHILE ADJUDICATING THE ASSESSMENT MADE U/S 143 (3) HAS NOT INTERVENED ON THE QUANTUM OF ADDITION MADE BY THE A.O. ON THE ISSUE OF MANUFACTURING LOSS OF RICE WHILE MILLING PADDY. THERE HAS BEEN NO DIRECTION AS REGARDS THE DISALLOWANCE U/S 40 A (3) OF I.T. ACT. PU RSUANT TO SUCH ORDER OF THE LEARNED CIT, THE ASSESSING OFFICER MADE TWO ADDITIONS INCLUDING THE SUM OF 64,80,000. 2.1 . IN THE BALANCE SHEET FOR THE PERIOD ENDING DT.31.03.2007 THE APPELLANT COMPANY HAS DISCLOSED UN SECURED LOAN AT 1,24,80,000/ OUT OF WHI CH 60,00,000 HAS ALREADY BEEN ACCEPTED BY THE AO AND NOT CONSIDERED 64,80,000 AS THE SAID A.O.HAS NOT CONVINCED DUE TO NON - PRODUCTION OF THE UN - SECURED CREDITORS PHYSICALLY FOR INTERROGATION EVEN THOUGH ALL THE I.T.A.NO. 517/CTK/2012 3 DOCUMENTARY EVIDENCES IN SUPPORT OF LOAN AMOUNT HAS BEEN PRODUCED ALONG WITH THE LOAN CONFIRMATIONS, RESPECTIVE PAN , I NCOME - TAX RETURN COPIES AND BANKING MODE OF PAYMENT OF THE AFORESAID LOAN AMOUNT IN A/C.PAYEE DRAFTS EXCEPT 80,000 PAID IN SHAPE OF CASH BY ONE OF THE DIRECTOR URMILA MOHANTY. T HE DETAILS OF SAID UN - SECURED CREDITORS HAVE NARRATED BELOW: - . UNSECURED LOAN FROM OTHERS - AMOUNT DATE OF PAN NO. PAYMENT 1 ) URMILA MOHANTY 80,000 2 ) GANESH PRASD PADHY 4,00,000 06/06/2006 ACUPP 0328 G 3 ) PRAVAKAR ROUT 10,00,000 06/06/2006 ABMPR 7156 F 4 ) NURSINGH MUDULI 10,00,000 06/06/2006 ACHPN 9465 G 5 ) SUDARSAN SWAIN 10,00,000 07/08/20 06 AFVPS 0983 G 6 ) TAPAS KUMAR SAHOO 10,00,000 18 /08/2006 APZPS3696 G 7 ) BASANT KUMAR SWAI N 5,00,000 27 /05/2006 AJVPS 2384 P 8 ) ANAND CHANDRA BARIK 10,00,000 21/06 /200 6 AFLPB 6875 R 9 ) INDRAMANI BISWAL 5,00,000 27/05/2006 AGQPB 6958 A TOTAL : - 64,80,000 2.2. THE ASSESSING OFFICER HAS REJECTED UNSECURED LOAN CREDIT A T 80,000 AS ADVANCE RECEIVED FROM ONE OF THE DIRECTOR OF THE COMPANY URMILA MOHANTY DUE TO PAYMENT MADE THROUGH CASH IN A PHASED MANNER BY LESS THEM 20,000 AS WELL AS DUE TO NON - PRODUCTION OF THE SAID DIRECTOR PHYSICALLY FOR INTERROGATION. AS REGARDS TH E REMAINING CREDIT OF RS 64,00,000 THE COMPANY WAS ASKED TO SUBSTANTIATE THE LOAN FROM EIGHT DIFFERENT PERSONS WITH SUITABLE EVIDENCES. IT WAS CONTENDED BY THE ASSESSEE COMPANY THAT THE CREDITORS WERE RELUCTANT TO APPEAR BEFORE THE DEPTT. AUTHORITIES ALTHO UGH THEY HAD ADVANCED THE LOAN THROUGH BANKING CHANNELS, SUBMITTING THE RESPECTIVE CONFORMATIONS, IT PARTICULARS IN RESPECT OF FILING THEIR RESPECTIVE RETURNS SUPPORTED WITH PAN NOS. AS WELL AS ADDRESSES OF SAID UNSECURED CREDITORS. THIS EXPLANATION WAS A DDUCED IN COURSE OF THE ORIGINAL ASSESSMENT. THE ASSESSEE - COMPANY HAS INTRODUCED THE LOAN IN ITS BOOKS OF ACCOUNTS AND EXPLAINED THE SAME TO THE SATISFACTION OF THE ASSESSING OFFICER AS IT IS THE COMPANYS RESPONSIBILITY. THE APPELLANT - COMPANY HAS ALSO TA KEN A SPECIFIC STAND BEFORE THE A.O.AS CLEARLY REVELED AT PARA 5 OF THE ORDER OF I.T.A.NO. 517/CTK/2012 4 ASSESSMENT THE UNSECURED LOAN OBTAINED BY THE COMPANY IN THE PRE - PRODUCTION PERIOD I.E., IN THE PERIOD OF NON - GENERATION OF INCOME CANNOT BE TREATED AS UNDISCLOSED INCOME WIT HIN THE MEANING OF SECTION 68 OF THE I.T.ACT AND THE SAME CANNOT BE ADDED IN THE HAND OF THE COMPANY IN NO CIRCUMSTANCES WHEREAS THE ASSESSING OFFICER HAS MIS - INTERPRE TED THE SAME IN A MANNER IN FAVOUR OF REVENUE AND THE LEARNED CIT(A) HAS NOT GIVEN ANY EM PHASIS ON THAT POINT EVEN IF ARGUED BY THE APPELLANT IN COURSE OF HEARING OF THE APPEAL . INTEREST ON THE LOAN HAS BEEN PAID TO THE SAID UNSECURED CREDITORS IN SUBSEQUENT YEARS AND NECESSARY TDS HAVE BEEN MADE ON THE AMOUNT OF INTEREST PAID AS ALREADY SUBMI TTED BEFORE THE CIT(A ) WHICH IS AN UNDISPUTED FACT AND THE EVIDENCES ON RECORD. 2.3. BESIDES THIS, THE APPELLANT HAS SUBMITTED ALL THE CONFIRMATION IN SUPPORT OF UNSECURED LOAN AND THE SAID UNSECURED CREDITORS ARE THE OLD ASSESSEES OF THE DEPARTMENT SINCE ASSESSED MORE THAN FIVE YEARS, BUT FAILED TO PRODUCE THE UNSECURED CREDITORS FOR INTERROGATION. HOWEVER, ALL THE UNSECURED CREDITORS ARE THE INCOME TAX ASSESSEES, THEY HAVE NOT APPEARED BEFORE THE A.O. OUT OF FEAR EVEN THOUGH THEY HAVE SUBMITTED THE RESPE CTIVE CONFIRMATION WHICH HAVE KEPT IN ASSESSMENT RECORD. THE ASSESSING OFFICER WHILE DISALLOWING THE AFORESAID LOAN CREDITORS HAS CATEGORICALLY EXPRESSED HIS SATISFACTION FOR ALLOWBILITY OF LOAN CREDITS IN EACH OF THE CREDITORS TO THE TUNE OF 2,00,000 T O 3,00,000 AT PARA - VI - (B) AND FURTHER STATED AT PARA - III OF THE ORDER OF ASSESSMENT AS EIGHT PERSONS OF THESE CREDITORS ARE ALL SALARIED EMPLOYEES. THE ACKNOWLEDGMENT COPIES OF THEIR RETURN OF INCOME OF FILED BY THE A/R. DO NOT SHOW THEM MEN OF MEANS TO GIVE LOAN OF 4 LAKHS AND ABOVE, THEREBY THE A.O. HAS SATISFIED THE GENUINENESS OF THE LOAN CREDITORS AS WELL AS THEIR CREDIT WORTHINESS LIMIT FOR MAKING ADVANCE TO THE OUTER EXTENT OF 4 LAKHS. THE A.O. HAS ACCEPTED THE CREDIT WORTHINESS OF THE CREDITORS, AS WELL I.T.A.NO. 517/CTK/2012 5 AS IDENTITY AND NOT CONVINCED THE GENUINENESS OF THE TRANSACTION EVEN THOUGH ROUTED THOUGH BANK BY SHAPE A/C PAYEE DRAFTS ON THE SOLE REASON AS THE CREDITORS HAVE PERSONALLY NOT APPEARED BEFORE HIM. THE APPELLANT COMPANY HAS ISSUED TDS CERTIFICATE S TO THOSE UNSECURED CREDITORS EXCEPT URMILA MOHANTY ON THE INTEREST AMOUNT IN THE SUBSEQUENT YEAR AND THE SAME UNSECURED CREDITORS HAVE DISCLOSED TDS AMOUNT ON THEIR RESPECTIVE RETURNS SUBMITTED BEFORE THE IT DEPTT. IN VIEW OF THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE THE AFORESAID ADDITION OF 64,00,000 OUGHT TO BE DELETED. 2. 4. THE LEARNED COUNSEL OF THE ASSESSEE IN ADDITION TO THE ABOVE FURTHER SUBMITTED THAT I N THE INSTANT CASE, THE ASSESSING OFFICER ACCEPTED THE WORTHINESS OF THE LOAN - CREDITORS AND THEIR IDENTITY ON THE BASIS OF THE DOC UMENTARY EVIDENCE ; ESPECIALLY THE IT RETURNS FILED BY THE APPELLANT COMPANY OF THE SAID UNSECURED CREDITORS. THEREFORE, HE CONTENDED THAT ONCE THE IDENTITY AND WORTHINESS IS ACCEPTED, ONUS SHIFTED TO THE LEARNED ASSESSING OFFICER TO VERIFY THE DOUBTS IF A NY, IN THE MANNER KNOWN TO LAW. THEREAFTER, SHIFTING THE BURDEN THEREBY PENALIZING THE ASSESSEE COMPANY ON THE BASIS OF CONJECTURE AND SURMISES IS NOT AT ALL SUSTAINABLE IN THE EYES OF LAW. HENCE THE ORDER OF THE AO AMOUNTS TO SHIFTING THE BURDEN AND IS BA SED ON CONJECTURE AND SURMISES WHICH IS NOT SUSTAINABLE IN THE TOUCH STONE OF JUDICIAL SCRUTINY IN VIEW OF THE WELL SETTLED LAW QUOTED ABOVE. THAT THIS APART IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS CONCEALED ITS INCOME OR HAS DEL IBERATELY FURNISHED INACCURATE PARTICULARS WITHOUT ANY VALID MATERIALS. HE SUBMITTED THAT THE ASSESSEE DISCLOSED THE NAME S AND ADDRESS ES OF THE LOAN CREDITORS ALONG THEIR RESPECTIVE I.T. RETURNS BEFORE THE ASSESSING OFFICER . THE ASSESSING OFFICER VIRTUALLY RECORDED SATISFACTION ON THE IDENTITY AND WORTHINESS OF THE LOAN CREDITORS. THERE WAS NO OTHER I.T.A.NO. 517/CTK/2012 6 MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO DISBELIEVE THE LOAN CREDITORS. NO NOTICE WAS PUT TO THE LOAN CREDITORS. IN THE ABOVE CIRCUMSTANCES, THE ASSESSI NG OFFICER IS ESTOPPED UNDER LAW TO REGARD THE AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY SO AS TO CREDIT THE SAME ON THE TOTAL INCOME OF THE ASSESSEE COMPANY. THEREFORE, THE ORDER OF THE ASSESSING OFFICER IS BASED ON CONJECTURE AND SURMISES AND THE ASSESSING OFFICER HAS UNNECESSARILY SHIFTED THE ONUS ON THE ASSESSEE WHICH IS NOT SUSTAINABLE IN THE TOUCH STONE OF JUDICIAL SCRUTINY IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS LOVELY EXPORTS (P) LTD, [ (2 008) 216 CTR 195 ] . 2. 5 . THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE PROVED ITS CLAIM BY PRODUCING ADEQUATE MATERIALS WHICH WERE VIRTUALLY ACCEPTED BY THE ASSESSING OFFICER THEREBY INITIAL ONUS PLACED UPON THE ASSESSEE STOOD D ISCHARGED. AT THE SAME TIME, IT IS MOST UNFORTUNATE, WITHOUT ANY MATERIAL CONTRARY, THE ASSESSING OFFICER REACHED PERVERSE FINDING ON THE BASIS OF CONJECTURE AND SURMISES BY WAY OF SHIFTING BURDEN CONTRARY TO LAW. HENCE, THE ORDER IS NOT SUSTAINABLE IN VIE W OF THE LAW LAID DOWN IN THE CASE OF DWARIKADHISH SUGAR INDUSTRIES VS INCOME TAX OFFICER, 2012 VOLUME 149, ISSUE NO.40 PART IV AT PAGE 401 (AITTJ) . 2. 6 . THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE UNSECURED CREDITORS/LOAN CREDITORS HA VE ALREADY DISCLOSED BY THE ASSESSEE COMPANY IN ITS BALANCE SHEET ALL ALONG SINCE 2007 - 08 TO 2010 - 11 WHICH WAS VIRTUALLY ACCEPTED BY THE LEARNED ASSESSING OFFICER. THEREFORE, THE A.O. WOULD NOT HAVE HELD THE LOAN AMOUNT AS THE UNEXPLAINED INCOME OF THE C OMPANY AND ADDED THE SAME IN THE HAND OF THE COMPANY WITHOUT DISCHARGING THE ONUS SHIFTED TO HIM AND PUTTING ANY NOTICE TO THE LOAN CREDITORS. THE ASSESSEE COMPANY HAS DEDUCTED TDS ON THE INTEREST AMOUNT I.T.A.NO. 517/CTK/2012 7 PAID TO THE SAID UNSECURED LOAN CREDITORS EXCEPT URM ILA MOHANTY AS CLEARLY DISCLOSED UNDER ANNEXURE - 11 SERIES PAGE - 141 TO 156 OF THE PAPER BOOK. ALL THE INTEREST INCOME HAS CLEARLY REFLECTED IN THE 26AS FORM OF ALL THE UNSECURED LOAN CREDITORS EXCEPT URMILA MOHANTY. THE ASSESSEE COMPANY IN COURSE OF ASSESS MENT PROCEEDINGS HAS SUBMITTED THE WRITTEN NOTES OF SUBMISSION BEFORE THE AO BY COVERING ALL THE ISSUES ALLEGED ON DIFFERENT NOTICES ISSUED IN A PHASED MANNER UNDER ANNEXURE - 6 SERIES ON DIFFERENT DATES I.E. DT.28/10/2010, DT.26 - 11 - 2010, DT.01 - 12 - 2010, DT.0 6 - 12 - 2010 AND DT.13 - 12 - 2010. THE COPY OF SUCH WRITTEN NOTES OF SUBMISSION IS HEREIN WITH ENCLOSED UNDER ANNEXURE - 8 OF THIS PAPER BOOK AT PAGE - 127 TO 132. IN THE SAID WRITTEN NOTES OF SUBMISSION IN RESPECT OF ADDITION OF UNSECURED CREDITORS 64,00,000, TH E ASSESSEE HAS SUBMITTED HIS EXPLANATION AT PAGE - 130 UNDER ANNEXURE - 8 WHERE IT HAS AVERRED THE ASSESSEE HAS SUBMITTED CONFIRMATION LETTERS OF THE UNSECURED CREDITORS, IT PARTICULARS, PAN CARD XEROX COPY, CAPITAL ACCOUNT, INTEREST PAID ON THE RESPECTIVE LOA N AMOUNT. HOWEVER, IT IS FURTHER AVERRED BY THE ASSESSEE COMPANY IN VIEW OF THE DECISION OF HONBLE ALLHABAD HIGH COURT REPORTED 218 ITR PAGE - 508 IN CASE OF INDIAN RICE MILLS VRS. CIT, THE INTRODUCTION OF FUND PRIOR TO THE COMMENCEMENT OF BUSINESS TO YIEL D INCOME IN NO CIRCUMSTANCES CAN BE CONSTRUED AS INCOME FROM UNDISCLOSED SOURCES OF THE COMPANY. THE ASSESSEE COMPANY HAS ESTABLISHED THE IDENTITY(PAN CARDS), SOURCE(SALARY CERTIFICATES), CREDIT WORTHINESS(SALARY CERTIFICATES AND CAPITAL ACCOUNTS) AND MODE OF TRANSACTIONS THROUGH BANKS BY WAY OF ACCOUNT PAYEE DRAFTS WHICH ARE UNDISPUTED FACTS AS CLEARLY REVEALED FROM THE ORDER OF ASSESSMENT PASSED BY THE A.O. U/S. 143(3) R/W. SEC - 263 ON DT.31 - 12 - 2010 UNDER ANNEXURE - 15 PAGE - 171 LAST PARA WHICH IS REPRODUCED BELOW FOR KIND APPRECIATION OF THE FACTS AS APPRECIATED BY THE A.O. WHILE NOT ACCEPTING I.T.A.NO. 517/CTK/2012 8 64,80,000. OUT OF TOTAL UNSECURED LOAN OF 1,24,80,000, TWO ITEMS I.E. BROUGHT FORWARD AMOUNT 25 LAKHS AND THE EXPLAINED AWAY AMOUNT OF 35 LAKHS; THUS ARE FOUND T O BE OUT OF THE SCOPE OF ADDITIONS IN THE ASST. YEAR:2007 - 08, IN THE BALANCE LOAN AMOUNT OF 64.80 LAKHS 08 LAKHS RELATES TO LOAN FROM URMILA MOHANTY. ALL THE ENTIRE AMOUNT OF 08 LAKHS CONSIST OF FIVE SMALL AMOUNTS EACH OF WHICH IS SLIGHTLY LESS THAN 2 0,000. EACH SUCH AMOUNT IS RECEIVED IN CASH. THIS UNSECURED LOAN CREDITORS IS HAVING NO PAN. THUS, THE IDENTITY IS NOT ESTABLISHED. THE GENUINENESS IS ALSO DOUBTFUL BECAUSE OF CASH RECEIPTS. HOWEVER, THE C.I.T(A),BERHAMPUR IN THE ORDER OF APPEAL AT PA RA4.3 HAS STATED AS URMILA MOHANTY IS NOT AN INCOME TAX ASSESSEE AND THE PAYMENT HAS MADE IN CASH FOR WHICH THE ADDITION OF 80,000 REQUIRED NO INTERFERENCE. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT URMILA MOHANTY HAS NO P ERMANENT ACCOUNT NUMBER BUT SHE HAS ELECTION IDENTITY CARD AND SHE HAS BANK A/C. IN PUNJAB NATIONAL BANK VIDE A/C. NO.716 STARTING SINCE 2003 ONWARD S WHERE DEPOSITS AND WITHDRAWALS ARE VERY MUCH ON RECORD WHICH CLEARLY ESTABLISH THE IDENTITY OF SMT. URMILA MOHANTY , AS THE NECESSARY DOCUMENTS HAS ENCLOSED AT PAGE - 118 TO 194 UNDER ANNEXURE - 17 OF THE PAPER BOOK. THE SOURCE OF INCOME OF URMILA MOHANTY IS FROM AGRICULTURAL INCOME AFTER DEATH OF HER HUSBAND LATE BHABAGRAHI MOHANTY. 2. 7 . THE LEARNED COUNSEL OF THE ASSESSEE CONCLUDING HIS ARGUMENTS CONTENDED THAT THE A.O. HAS HIMSELF SATISFIED REGARDING IDENTITY, CREDITWORTHINESS, TRANSACTIONS THROUGH BANKIN G MODES AND NOT ABLE TO ALLOW 64.00 LAKHS AS UNSECURED CREDITORS AS ALL THE UNSECURED CREDITORS HAVE NOT PERSONALLY PRODUCED BEFORE HIM. BUT, ALL THE DOCUMENTS WHICH HAVE PRODUCED BEFORE HIM HAVE CLEARLY ESTABLISHED THE LOAN TRANSACTIONS ARE COMPLETELY G ENUINE WITHOUT ANY IOTA OF DOUBT. AS THE AO HAS HIMSELF I.T.A.NO. 517/CTK/2012 9 ADMITTED/ACCEPTED THE TDS WILL BE DEDUCED AND THE INTEREST INCOME HAS ALREADY BEEN SHOWN IN THE IT RETURNS OF THE SAID UNSECURED CREDITORS, THE A.O. HAS FAILED TO TAKE ANY INITIATION AT HIS END TO DI SPROVE BASED ON ANY UNIMPEACHABLE MATERIAL THAT THE CLAIM OF THE APPELLANT COMPANY IS UNJUSTIFIED. IN NO CIRCUMSTANCES, THE LOAN AMOUNT OF UNSECURED CREDITORS CAN BE REGARDED AS THE INCOME OF THE APPELLANT COMPANY. THEREFORE, THE ADDITION OUGHT TO BE DEL ETED AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE. HOWEVER, THE LEARNED CIT(A), WITHOUT DUE APPLICATION OF MIND BY TAKING INTO CONSIDERATION THE LAW ENUNCIATED ON THE SUBJECT. THE WRITTEN NOTES OF SUBMISSION FILED BEFORE THE C.I.T(A) ALONG WITH THE COPI ES OF BANK A/CS IN SUPPORT OF LOAN TRANSACTIONS VIDE ANNEXURES - 12 AND 10 RESPECTIVELY HAVE CLEARLY ESTABLISHED THE GENUINENESS OF THE LOAN CREDITORS AND ESPECIALLY THE SAID LOAN CREDITORS ARE ALL ALONG SHOWN BY THE ASSESSEE COMPANY IN ITS AUDITED REPORTS W.E.F. ASST.YEAR 2007 - 08 ON WARDS AND NECESSARY INTEREST AND NECESSARY TDS COMPLIANCE HAS BEEN CLEARLY SHOWN BY THE APPELLANT COMPANY AS CLEARLY REFLECTED AT PAGE 84 UNDER ANNEXURE: - 4 OF THE PAPER BOOK. 2.8 . IN VIEW OF THE ABOVE, THE LEARNED COUNSEL OF T HE ASSESSEE VEHEMENTLY ARGUED THAT THERE SHOULD NOT HAVE BEEN ANY ADDITION OF 64 .80 LAKHS IN THE HAND OF THE ASSESSEE COMPANY, WHICH MAY KINDLY BE DELETED. 3. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE. SHE SUBMITTED THAT NO EFFORT HAS BEEN MADE BY THE ASSESSEE TO PRODUCE THE PURPORTED LOAN CREDITORS INSPITE OF REPEATED OPPORTUNITIES GRANTED BY THE ASSESSING OFFICER AS HAS BEEN NOTED BY THE LEARNED CIT(A). SHE SUBMITTED THAT BANKS DO NOT RECORD THE PERSON WHO HAS COME TO D EPOSIT THE CASH WHEN THE CREDIT THE AMOUNT OF CASH DEPOSITS IN THE NAME OF ACCOUNT HOLDER. IT WAS THE ENDEAVOR OF THE ASSESSING OFFICER TO ESTABLISH THAT THE I.T.A.NO. 517/CTK/2012 10 CREDITWORTHINESS OF THE LOAN CREDITORS WAS NOT ESTABLISHED BEYOND DOUBT WHEN THE ASSESSEE SOUGHT T O TAKE TIME FOR PRODUCING THE LOAN CREDITORS. THE IDENTITY, GENUINENESS THEREFORE REMAIN ED TO BE SATISFIED TO THE EXTENT THAT THE LEARNED CIT(A) RIGHTLY NOTED THAT FURNISHING OF PAN IS EXCLUSIVE TO THE SAID IDENTITY AS WELL AS CREDITWORTHINESS. THE GENUINE NESS OF THE TRANSACTION IN CASH THEREFORE HAS ALSO TO BE EXPLAINED BY THE ASSESSEE ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT BEING CONVERTED INTO DEMAND DRAFTS AND CHEQUES RECEIVED BY THE ASSESSEE FROM THE LOAN CREDITORS. THE ASSESSING OFFICER COULD NOT OBTAIN INFORMATION FROM THE BANK WHICH ONUS LIED ON THE ASSESSEE TO BE DISCHARGED. SHE THEREFORE, VEHEMENTLY ARGUED THAT THE AO AND THE LEARNED CIT(A) HAVE TRIED TO GIVE AMPLE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE COMPLIANCE TO THE PROVISION S OF SECTION 68 WHEN THE LEARNED CIT(A) SOUGHT TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER DOES NOT CALL FOR ANY INTERFERENCE. EVEN AS OF NOW THE LEARNED COUNSEL OF THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS AND CREDITWORTHINESS OF SMT .URMILA MOHANTY FROM WHO M 80,000 WAS OBTAINED AS LOAN. SHE PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE UPHELD. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT TH E ASSESSMENT HAS TO BE MADE NOT ON THE BASIS OF DOUBTS AND SURMISES ARISING AFTER THE ONUS TO BE DISCHARGED BY THE ASSESSEE HAS BEEN PUT FORTH BY THE ASSESSEE TO THE BEST OF ITS ABILITY IN COMPLIANCE TO LAW . THE LEARNED COUNSEL OF THE ASSESSEE HAS FURNISH ED THE RELEVANT DOCUMENTS TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITORS INSOFAR AS IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO SEEK THE PURPOSE LOAN WAS ADVANCED BY COMPUTING THE CREDITORS BEING THE INDIVIDUAL LOAN C REDITORS BY INDICTING WHAT THEY ARE WORTH ON HOLDING A VIEW THAT THE LOAN WOULD NOT HAVE I.T.A.NO. 517/CTK/2012 11 RESULTED UNLESS HE HAS SAVED A LL THE INCOMES IS OF NO USE TO THE CASE OF THE ASSESSEE TRYING TO TAX THE INCOME IN THE HANDS OF THE CREDITORS ON ACCOUNT OF LOW DRAWINGS . THE LEARNED CIT(A) ALSO ERRED IN CONFIRMING THE SAME BY HOLDING A VIEW THAT PAN ISSUED BY THE DEPARTMENT HAS NO GUARANTEE FOR THEIR IDENTITY. WE ARE UNABLE TO SATISFY OURSELVES TO THIS OBSERVATION OF THE LEARNED CIT(A) INSOFAR AS THE ASSESSING OFFICER HA S CLEARLY TRIED TO ASSESS THE LOAN CREDITORS IN THE ASSESSMENT OF THE ASSESSEE WHICH HAS TO BE AS PER DEFINED BY THE HONBLE AP EX COURT IN THE CASE OF LOVELY EXPORTS INDIA LTD (SUPRA) RELIED O N BY THE LEARNED COUNSEL OF THE ASSESSEE . IN VIEW OF THE ABOVE, THE PRE - PRODUCTION LOANS WERE TO BE IDENTIFIED WHETHER COULD BE A CONTRIBUTION TO THE CAPITAL FOR PREPARING THE ASSETS OF THE COMPANY. THE LEARNED DRS OPPOSITION THAT THE CASH DEPOSITED IN THE BANK FOR THE PURPOSE OF ISSUE OF DEMAND DRAFTS OR CHEQUES CAN NOT BE DOUBTED TO REFLECT THAT ONLY A PARTICULAR AMOUNT OF LOAN SHOULD BE GIVEN IN A PARTICULAR MANNER WHEN THE INCOME - TAX LAW PROVIDES THAT LOAN RECEIVED IN CASH OR REFUND IN CASH ARE DEFINED UNDER THE PROVISIONS OF SECTION 269SS AND 269T. IT HAS BEEN SUB MITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE WIDOW SMT.URMILA MOHANTY HAS DEPOSITED THE CASH IN HER BANK ACCOUNT ON THE DEMISE OF HER HUSBAND WHO WAS AN AGRICULTURIST AND HAD SUBSTANTIAL AGRICULTURAL INCOME TO BE AVAILABLE FOR LOAN AS WELL AS DE POSIT IN THE BANK. THE LEARNED COUNSEL OF THE ASSESSEE ALSO FURNISHED THE COPY OF THE BANK ACCOUNT WHEN THE DEPOSITS HAVE BEEN RECEIVED IN THE ASSESSEE COMPANYS ACCOUNT, THEREFORE ALSO CLARIFIES HAVING REACHED SATISFACTION TO THE PROVISIONS OF SECTION 68. FURTHER THE CASE LAWS CITED AT BAR INDICATE THAT THE ASSESSEE COULD NOT HAVE HIS OWN FUNDS TO BORROW FROM THESE NAME LENDERS WHEN THE VERY FUNDS HAVE BEEN UTILIZED PRIOR TO PRODUCTION FOR GENERATING INCOME AS THE ASSESSEE WAS IN CONSTRUCTION STAGE THEN. T HEREFORE, CONSIDERING THE FACTS I.T.A.NO. 517/CTK/2012 12 AND CIRCUMSTANCES IN ENTIRETY, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF 64,80,000 U/S.68 AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) IS NOT JUSTIFIED AND AS SUCH WE DIRECT DELETION OF THE SAME. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 09.11.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S. RAMESWAR AGRO INDUSTRIES PVT. LTD., AT - 52 INDUSTRIAL ESTATE , BHAGABANPUR, BHUBANESWAR, DIST - KHURDA 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(1),BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P. S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 07.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P. S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLE RK 09.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF T HE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.