Shri Aseen Singh, Bhopal V. The Assistant Commissioner of Income Tax 1(1), Bhopal

ITA 539/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53931 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 18-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AMYPS2259P I.T.A.NO. 539/IND/2010 A.Y. : 2007-08 SHRI ASEEM SINGH, ACIT. BHOPAL. VS 1(1) BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI PRAKASH JAIN, C. A. RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 22.09.2011 DATE OF PRONOUNCEMENT : .09.2011 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 20.4.2010 FOR THE ASSESSMENT YEAR 2 007-08 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME -TAX ACT, 1961. -: 2: - 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO ADDIT ION OF RS. 1 LAKH ON ACCOUNT OF LOAN RECEIVED FROM SHRI MANISH JAIN. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. DURING THE COURSE OF ASSESSMENT, THE AO AD DED AN AMOUNT OF RS. 1 LAKH RECEIVED FROM SHRI MANISH JAI N U/S 68 OF THE ACT BY OBSERVING THAT THE ASSESSEE HAS FURNI SHED CONFIRMATION FROM SHRI MANISH JAIN, BUT FAILED TO F URNISH COPY OF BANK ACCOUNT OF SHRI MANISH JAIN. BY THE IMPUGNE D ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT SHRI MANISH JAIN HAS FILED BANK STATEMENT, WHEREIN CASH WAS DEPOSITED BEFORE ISSUE OF CHEQUE. AGAINST THIS ORDE R OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. LD. AUTHORIZED REPRESENTATIVE RELIED ON THE DECISI ON OF JURISDICTIONAL HIGH COURT IN THE CASE OF METACHEM I NDUSTRIES, (2000) 245 ITR 160 (MP), WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE FIRM HAD SATISFACTORILY EXPLAINED THE CRED ITS STANDING IN THE NAME OF ITS PARTNERS, THE RESPONSIBILITY OF THE ASSESSEE STANDS DISCHARGED. ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED, BY A PARTICULAR PERSON, BE HE A PART NER OR AN -: 3: - 3 INDIVIDUAL THEN THE RESPONSIBILITY OF THE ASSESSEE FIRM IS OVER. THE ASSESSEE FIRM CANNOT ASK THE PERSON WHO MAKES INVESTMENT, WHERE THE MONEY INVESTED IS PROPERLY TA XED OR NOT. IF THAT PERSON OWNS THE ENTRY THEN THE BURDEN OF TH E ASSESSEE FIRM IS DISCHARGED. IT IS OPEN TO THE AO TO UNDERTA KE FURTHER INVESTIGATION WITH REGARD TO THAT INDIVIDUAL WHO HA S DEPOSITED THE AMOUNT . RELIANCE WAS ALSO PLACED ON THE DECIS ION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SHRI BA RKHA SYNTHETICS LIMITED, 270 ITR 477, WHEREIN IT WAS HEL D THAT WHERE THE ASSESSEE FURNISHES FULL DETAILS REGARDING ALLEGED LENDERS/CREDITORS ETC., IT IS UP TO THE DEPARTMENT TO PURSUE THE MATTER TO EXAMINE THESE AND TO EXAMINE THEIR CREDITWORTHINESS. RELIANCE WAS ALSO PLACED ON THE D ECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF KHANDELWA L CONSTRUCTION, 227 ITR 900, WHEREIN IT WAS HELD THAT THE AO MUST MAKE PROPER ENQUIRY BEFORE MAKING ANY ADDITION U/S 68. IT HAS BEEN HELD THAT SECTION 68 OF THE INCOME-TAX ACT, 1961, EMPOWERS THE AO TO MAKE ENQUIRY REGARDING CASH CRED IT. IF HE IS SATISFIED THAT THESE ENTRIES ARE NOT GENUINE HE HAS EVERY RIGHT TO ADD THESE AS INCOME FROM OTHER SOURCES. BU T BEFORE -: 4: - 4 REJECTING THE ASSESSEES EXPLANATION, AO MUST MAKE PROPER ENQUIRIES AND IN THE ABSENCE OF PROPER ENQUIRIES, A DDITION CANNOT BE SUSTAINED. 5. ON THE OTHER HAND, THE LD. SENIOR D.R. RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND THAT THE ADDITION WAS MADE IN RESPECT OF LOAN OF RS . 1 LAKH RECEIVED SHRI MANISH JAIN FOR WHICH ASSESSEE FILED COPY OF LOAN CONFIRMATION AS WELL AS BANK STATEMENTS. THE AO HAS DECLINED THE CLAIM ON THE PLEA THAT THE ASSESSEE HAS NOT FUR NISHED BANK STATEMENT. THE BANK STATEMENT WAS FURNISHED BE FORE THE CIT(A), WHO HAS CONFIRMED THE ACTION OF THE AO BY O BSERVING THAT LOAN CREDITOR HAS DEPOSITED CASH IN HIS ACCOUN T BEFORE ISSUE OF CHEQUES. THERE IS NO DISPUTE TO THE WELL S ETTLED LEGAL PROPOSITION THAT IN CASE OF CASH CREDIT NOT ONLY ID ENTITY OF THE CREDITOR IS REQUIRED TO BE ESTABLISHED BUT ALSO GEN UINENESS OF LOAN TRANSACTION AS WELL AS CREDITWORTHINESS OF LOA N CREDITOR IS EQUALLY IMPORTANT TO BE FULFILLED. IN THE INSTANT C ASE, THERE IS NO DISPUTE TO THE IDENTITY. THE ASSESSEE HAS ALSO F ILED LOAN -: 5: - 5 CONFIRMATION FROM THE LOAN CREDITOR AND EVEN THE BA NK STATEMENT SHOWING THE CREDIT BALANCE SOURCE FROM WH ERE CHEQUE WAS ISSUED WAS ALSO PLACED BEFORE THE LOWER AUTHORITIES. BEFORE ISSUE OF THE CHEQUES, THERE WAS SUFFICIENT CREDIT BALANCE IN THE ACCOUNT OF THE LOAN CREDITOR. THUS, RECEIVING LOAN BY ACCOUNT PAYEE CHEQUES ALSO ESTABL ISHES GENUINENESS OF THE TRANSACTION AND SUFFICIENCY OF T HE BANK BALANCE BEFORE ISSUE OF CHEQUES ESTABLISHES CREDITW ORTHINESS OF THE LOAN CREDITORS. IF THE LOWER AUTHORITIES HAV E ANY DOUBT REGARDING CREDIT BALANCE, THEY CAN CALL THE LOAN CR EDITOR BY ISSUING SUMMONS U/S 131. IT IS ALSO WELL SETTLED TH AT SOURCE OF SOURCE CANNOT BE INQUIRED INTO. WITHOUT CALLING THE LOAN CREDITOR, THE LD. CIT(A) JUMPED TO THE CONCLUSION T HAT SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT WAS NOT EXPLAINED BY THE ASSESSEE. IN THE CASE OF BANK STATEMENT PERTAINING TO THE LOAN CREDITOR, ONLY LOAN CREDITOR CAN SHOW THE SOURCE AN D NOT THE ASSESSEE. IN VIEW OF THE DOCUMENTS PLACED ON RECORD , WE ARE SATISFIED THAT THE ASSESSEE HAS DISCHARGED PRIMARY ONUS CAST ON IT WITH REGARD TO IDENTITY, GENUINENESS AND CREDITWORTHINESS. ACCORDINGLY, NO ADDITION WAS WARR ANTED. -: 6: - 6 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2011. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER, 2011. CPU* 279