SHRI BADRI PRASAD AGRAWAL, Khategaon V. THE ITO 1(2) RANGE - I, Ujjain

ITA 525/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6076 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGRAWAL
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.525/IND/2015 A.Y. : 2007-08 SHRI BADRI PRASAD AGRAWAL, ITO, 1(2), PROP. M/S. AGRAWAL AGENCIES, VS. MAHAVEER MARG, KHATEGAON APPELLANT RESPONDENT PAN NO. ABDPA0840Q A PPELLANT S BY : SHRI S.N. AGRAWAL, C.A. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 18.02.2015 FOR THE ASSESSM ENT YEAR 2007-08. DATE OF HEARING : 24 .0 5 . 20 16 DATE OF PRONOUNCEMENT : 31 .0 5 . 201 6 BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 2 2 2. THIS APPEAL IS TIME BARRED BY 55 DAYS. THE LD. COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE DATE OF SERVICE WAS EXACTLY NOT KNOWN TO THE ASSESSEE AND TENTATIVE DATE OF SERV ICE WAS TAKEN A 15.3.2015. THE ASSESSEE FORGOT TO DELIVER T HE SAID ORDER TO HIS COUNSEL AND IT WAS HANDED OVER TO THE C OUNSEL ON 5.7.2015 AND THE PRESENT APPEAL WAS FILED BEFORE I.T .A.T. TO THIS EFFECT, THE ASSESSEE HAS FILED THE AFFIDAVIT WI TH THE PRAYER TO THIS BENCH TO CONDONE THE DELAY. ASSESSEE STATED ON OATH THAT HE WAS UNDER THE IMPRESSION THAT THE TIME LIMIT TO FILE THE APPEAL IS 120 DAYS AND RESULTANT DELAY OCCURRED. 3. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND ALSO GONE THROUGH THE AFFIDAVIT SWORN IN BY THE ASSE SSEE. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I CONDONE THE DELAY OF 55 DAYS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL DERIVING INCOME FROM AGENCY WORK OF BAJAJ ELECTRICALS LIMITED AND SUPPLY OF MATERIAL TO THE G OVERNMENT DEPARTMENT. IN F.Y. 2010-11, IT WAS FOUND THAT THE ASSESSEE HAS TAKEN LOAN OF RS. 10,00,000/- THROUGH A PERSON BY WHOM THE AMOUNT OF LOAN HAS BEEN ARRANGED AND ASSESSEES RELATIVE BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 3 3 HAS BEEN DEPOSITED THE CHEQUE IN BANK AT INDORE IN HIS ACCOUNT AND COMMUNICATED BY HIM AS THAT AN AMOUNT O F RS. 5,00,000/- HAS BEEN TAKEN FROM M/S. FAIR DEAL CHEMI CALS LIMITED, INDORE AND RS. 5 LAKHS FROM SHRINIWAS BHAND ARI, INDORE. IN FINANCIAL YEAR 2010-11, IT WAS FOUND THAT THE ASSESSEE HAS TAKEN RS. 7,00,000/- FROM M/S. FAIR DE AL CHEMICALS LIMITED, INDORE AND RS. 3,00,000/- FROM O NE SHRI BHAVNA PATHAK, INDORE. THE AO HAS TRIED TO VERIFY T HE GENUINENESS OF THE LOAN AND THE AO WAS OF THE VIEW TH AT THE BANK ACCOUNT OF THE COMPANY CASH OF RS. 1,45,000/- WAS DEPOSITED ON 17.03.2007 AND CASH OF RS. 5,25,000/- WAS DEPOSITED ON 19.03.2007. THE COMPANY HAS ISSUED CHE QUES IMMEDIATELY AFTER THE CASH HAS BEEN DEPOSITED IN TH E BANK. THEREFORE, THE COMPANY HAS NOT PRODUCED THE BOOKS O F ACCOUNTS FOR VERIFICATION. THEREFORE, THE AO HAS TR EATED THIS AS ACCOMMODATION ENTRY. IN CASE OF SHRINIWAS BHANDARI, HE HAS ISSUED THE CHEQUE OF RS. 2 LAKHS AND PRIOR TO GIVIN G THE CHEQUE, THE LOAN CREDITORS HAVE DEPOSITED THE LOAN AMOUNT. THEREFORE, THE ASSESSEE HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF SHRI SHRINIWAS BHANDARI. SIMILARL Y, IN THE BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 4 4 CASE OF BHAVNA PATHAK, THE ASSESSEE WAS NOT ABLE TO PROVE THE LOAN AS GENUINE AND IT IS ACCOMMODATION ENTRY ONLY. THEREFORE, THE AO HAS TREATED THIS AMOUNT AS UNEXPL AINED CASH CREDIT. 2. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THE APPEAL. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THE WRITTEN SUBMISSION, WHICH READS AS UNDE R :- THE AO ADDED THE FOLLOWING AMOUNT OF UNSECURED LOAN TO THE INCOME OF THE ASSESSEE :- SYNOD. NAME OF THE LOAN CREDITOR AMOUNT ( RS. ) 1. M/S. FAIR DEAL CHEMICALS LIMITED 7,00,000 2. SHRI SHRINIWAS BHANDARI 2,00,000 3. BHAWANA PATHAK 1,00,000 10,00,000 THE LOAN AS TAKEN BY THE ASSESSEE WAS GENUINE AND THE SAME IS ALSO JUSTIFIABLE. CONFIRMATION OF LOAN CREDITORS WERE FILED. SUMMON WAS ISSUED U/S 131 OF THE ACT AND THE SAME WAS DULY SERVED UPON THE LOAN CREDITORS. STATEMENT OF SHRI PRAHLAD RAI BIRLA, DIERCTOR OF M/S. FAIRDEAL CHEMICALS LIMITED WAS BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 5 5 RECORDED ON OATH. THE AO HIMSELF ACCEPTED THAT CHEQUES OF RS. 2,00,000/- AND RS. 5,00,000/- WAS TRANSFERRED FROM THE BANK ACCOUNT OF THE LOAN CREDITORS TO THE BANK ACCOUNT OF THE ASSESSEE, AS DETAILED BELOW : S.NO. CHEQUE NO. DATE AMOUNT ( RS. ) 1. 324937 19.03.2007 2,00,000 2. 324938 22.03.2007 5,00,000 THE AO OBSERVED THAT PRIOR TO ISSUANCE OF THE CHEQUES TO THE ASSESSEE, THE SAID LOAN CREDITORS DEPOSITED AN AMOUNT OF RS. 1,45,000/- IN CASH ON 17.03.2007 AND RS. 5,25,000/- ON 19.3.2007. HENCE, HE HAS DOUBTED THE GENUINENESS OF THE LOAN. THE ASSESSEE HAS DISCHARGED PRIMARY ONUS LYING ON HIM BY FILING THE CONFIRMATION. LOAN AMOUNT WAS RECEIVE D WAS RECEIVED BY THE ASSESSEE THROUGH AN ACCOUNT PAYEE CHEQUES, IDENTITY OF THE CREDITOR HAS BEEN ESTABLISHED, SUMMON AS ISSUED WAS ALSO DULY SERVED UPON THE LOAN CREDITOR AND HE HAS ALSO ACCEPTED ABOUT THE LOAN GIVEN BY HIM TO THE ASSESSEE. HENCE, BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 6 6 THE GENUINENESS OF THE LOAN WAS BEYOND DOUBT. THE AO WHILE ADDING THE SAID AMOUNT OF LOAN ONLY DOUBTED THE GENUINENESS OF THE LOAN WHICH WAS PROVED BEYOND DOUBT BY THE ASSESSEE. HENCE, MERELY CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE LOAN CREDITOR CANNOT BE THE GROUND TO ADDED THE AMOUNT T O THE INCOME OF THE ASSESSEE. TO VERIFY THE GENUINENE SS OF THE LOAN AS RECEIVED BY THE ASSESSEE FROM SHRI SHRINIWAS BHANDARI SUMMON WAS ISSUED U/S 131 WHICH WAS DULY SERVED UPON THE LOAN CREDITOR. STATEMENT OF SHRI SHRINIWAS BHANDARI WAS RECORDED ON OATH. THE AO HIMSELF ACCEPTED THAT CHEQUES OF RS . 2,00,000/- WAS TRANSFERRED FORM THE BANK ACCOUNT OF THE LOAN CREDITORS TO THE BANK ACCOUNT OF THE ASSESSEE. S.NO. CH.NO. DATE AMOUNT (RS.) 1 259606 12.03.2007 2,00,000 . THE AO OBSERVED THAT PRIOR TO ISSUANCE OF THE CHEQUES TO THE ASSESSEE, THE SAID LOAN CREDITORS BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 7 7 DEPOSITED AN AMOUNT OF RS. 30,000/-, RS. 45,000/-, RS. 40,000/-, RS. 45,000/- AND RS. 40,000/- WAS DEPOSITED IN CASH ON 07-03-2007. THE LOAN CREDITOR ALSO EXPLAINED THE SOURCE OF CASH DEPOSITED IN HIS BANK ACCOUNT. THE AO DOUBTED THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN. THE ASSESSEE HAS DISCHARGED PRIMARY ONUS LYING ON HIM BY FILING CONFIRMATION. LOAN AMOUNT WAS RECEIVED BY THE ASSESSEE THROUGH AN ACCOUNT PAYEE CHEQUES, IDENTITY OF THE LOAN CREDITOR HAS ALSO BEEN ESTABLISHED, SUMMON AS ISSUED WAS ALSO DULY SERVED UPON THE LOAN CREDITOR AND HE HAS ALSO ACCEPTED ABOUT THE LO AN GIVEN BY HIM TO THE ASSESSEE. THE LOAN CREDITOR ALS O EXPLAINED THE SOURCE OF CASH AS DEPOSITED BY HIM IN HIS BANK ACCOUNT. HENCE, THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN WAS BEYOND DOUBT. THE AO WHILE ADDING THE SAID AMOUNT OF LOAN TO THE INCOME OF THE ASSESSEE DOUBTED ABOUT THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN WHICH WAS PROVED BEYOND DOUBT BY THE ASSESSEE. HENCE, MERELY CASH WAS BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 8 8 DEPOSITED IN THE BANK ACCOUNT OF THE LOAN CREDITOR CANNOT BE THE GROUND TO ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. THAT LOAN TO THE ASSESSEE WAS GIVEN BY THE LOAN CREDITOR THROUGH SHRI PRAHLA D RAI BIRLA OF M/S. FAIR DEAL CHEMICALS LIMITED, INDORE, IN NO WAY THE REASON TO TAKE ANY NEGATIVE REFERENCE. THAT PRIOR TO GIVEN THE AMOUNT ON LOAN EVERY ONE WANTED TO KNOW ABOUT THE CREDENTIAL OF TH E BORROWER. TO VERIFY THE GENUINENESS OF THE LOAN AS RECEIVED BY THE ASSESSEE FROM BHAVNA PATHAK SUMMON WAS ISSUED U/S 131 OF THE ACT WHICH WAS DULY SERVED UPON THE LOAN CREDITOR. STATEMENT OF BHAVNA WAS RECORDED ON OATH WHEREIN SHE HAS ACCEPTED ABOUT THE LOAN GIVEN TO THE ASSESSEE. THAT CASH WAS DEPOSITED PRIOR TO LOAN GIVEN TO THE ASSESSEE WAS NOT THE REASON TO BE DOUBTED THE GENUINENESS OF THE LOAN. THE LOAN CREDITOR VIDE HER LETTER DATED 31.12.2012 WAS REFUSED TO ADVANCE THE AMOUNT TO THE ASSESSEE WAS FACTUALLY NOT CORRECT. BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 9 9 HENCE, NO NEGATIVE INFERENCE CAN BE DRAWN FROM THE SAME. 4. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF AO. 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. I HAVE ALSO PERUSED THE RECORD. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT ACCORDING TO SECTION 68 OF THE INCOME-TAX ACT, 1961, THE ASSESSEE OUGHT TO HAVE PROVED THE NATURE AND SOURCE OF THE CREDIT APPEARIN G IN THE BOOKS OF ACCOUNTS. IN OTHER WORDS, THE ASSESSEE HAS NOT TO PROVE ONLY PROOF BUT ALSO PROVE THE CAPACITY TO ADV ANCE THE LOAN AND THE GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE, ACCORDING TO LOWER AUTHORITIES, THE ASSESSEE HAS NOT DISCHARGED THE BURDEN CAST UPON HIM EVEN AFTER FILI NG CONFIRMATION LETTER FROM THE CREDITORS AND ALSO SOU RCE OF CREDIT FROM WHERE LENDER HAS BORROWED THE MONEY. NOW THE ASS ESSEE HAS DULY DISCHARGED THE BURDEN BY FILING THE CONFIR MATION LETTER, BURDEN SHIFTS TO THE REVENUE FOR DISCHARGIN G THE BURDEN. THERE CANNOT BE ONE GENERAL OR UNIVERSAL PR OPOSAL OF BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 10 10 LAW, WHICH CAN BE GUIDING OR YARDSTICK IN THE MATTER. IN THE PRESENT CASE, THE ASSESSEE HAS FILED THE CONFIRMATI ON LETTER FROM M/S. FAIR DEAL CHEMICALS LIMITED, SHRI SHRINIWA S BHANDARI AND BHAVNA PATHAK. ALL THE PARTIES HAVE PR OVIDED THE COPIES OF BANK ACCOUNT WITH CONFIRMATION LETTERS AND ALL THE PARTIES HAD GIVEN THE STATEMENTS ON OATH. IN RE SPECT OF LOAN OF RS. 7 LAKHS FROM M/S. FAIR DEAL CHEMICA LS LIMITED THROUGH ACCOUNT PAYEE CHEQUES NO. 324937 DATED 19.3 .2007 OF RS. 2,00,000/- AND RS. 5,00,000/- THROUGH A/C PA YEE CHEQUE NO. 324938 DATED 22.03.2007 BOTH DRAWN ON UN ION BANK OF INDIA, MURAI MOHALLA, INDORE. THE ABOVE AMO UNT HAS BEEN GIVEN BY THE LOAN CREDITOR FROM HIS REGULAR B ANK ACCOUNT IN WHICH HE HAS SO MANY OTHER TRANSACTIONS AND THE A BOVE RS. 7,00,000/-A HAS BEEN GIVEN OUT OF THE DEPOSITS OF R S. 21,00,000/-. THE CASH DEPOSITED BY GCS META ORGANI CS RS. 5,25,000/- AND THE BOOK ACCOUNT OF THE COMPANY HAS BEEN PRODUCED ON PAGE 20 & 21OF THE PAPER BOOK. I HAVE A LSO GONE THROUGH THE BANK STATEMENT OF M/S. FAIR DEAL CHEMIC ALS LIMITED, WHEREIN THE CASH HAS BEEN DEPOSITED ON TWO OCCASIONS. THEREAFTER, LOAN HAS BEEN ALSO DEPOSITED BY BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 11 11 CHEQUES ON TWO OCCASIONS AND OUT OF THIS, THE ASSESS EE HAS GIVEN RS. 7 LAKHS. THEREFORE, I AM OF THE VIEW THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS, IDENTITY AND CAPACI TY TO ADVANCE THE LOAN. THEREFORE, NO ADDITION CAN BE CAL LED FOR. 6. IN RESPECT OF SHRINIWAS BHANDARI, HE HAS RECEIVED TH E AMOUNT FROM ACCOUNT PAYEE CHEQUE OF RS. 259606 DATE D 12.03.2007 DRAWN ON UNITED BANK OF INDIA, SANYOGITA GANJ, INDORE, AND THE AMOUNT HAS BEEN GIVEN BY THE LOAN CREDITOR FROM HIS REGULAR BANK ACCOUNT, WHEREIN RS. 30,000/- CASH WAS DEPOSITED AND REST OF THE MONEY HAD COME BY WAY OF C HEQUES AND SHRINIWAS BHANDARI HAS SUBMITTED THAT THE DOCUME NTS SUCH AS COPY OF BANK ACCOUNT, COPY OF CONFIRMATION LETTERS ETC. THEREFORE, I AM OF THE VIEW THAT THE ASSESSEE H AS PROVED THE EXISTENCE OF CREDITORS, BY SUBMITTING THEIR PA N NOS. AND THEIR CONFIRMATION LETTERS FROM THEM. THEREFORE, I AM OF THE VIEW THAT THE REVENUE IS NOT JUSTIFIED IN SUSTAININ G THE ADDITION. 7. IN RESPECT OF RS. 1,00,000/- IN THE CASE OF BHAVNA PATHAK, SHE HAS STATED THAT SHE HAS NOT GIVEN LOAN TO THE ASSESSEE. THEREFORE, THE AO HAS TREATED THIS LOAN A S NOT BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 12 12 GENUINE. I AM OF THE OPINION THAT BHAVNA PATHAK HAS DENIED THE TRANSACTION. THEREFORE, IT IS NOT A GENUINE TRA NSACTION. THEREFORE, I CONFIRM THE ACTION OF AO. I FIND THAT IN THE CASES OF TWO CREDITORS, THEIR PAN NOS., CONFIRMATION LETTERS FROM THEM HAVE BEEN SUBMITTED. THEREFORE, I AM OF THE VIEW THA T THE AO AND LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A DDITION IN RESPECT OF TWO PARTIES, VIZ. M/S. FAIR DEAL CHEMICAL S LIMITED AND SHRNIWAS BHANDARI AND IN THE CASE OF BHAVNA PATH AK, I CONFIRM THE ACTION OF LOWER AUTHORITIES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 31 ST MAY, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 31 ST MAY, 2016. CPU* BADRI PRASAD AGRAWAL, KHATEGAON VS. ITO, 1(2), RANG E I, UJJAIN -I.T.A.NO. 525/IND/2015 A.Y. 2007-08 13 13 25