ITO, JODHPUR V. Shri Ramesh Soni Prop. M/s. Trimurti Abhushan, JODHPUR

ITA 610/JODH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54324 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N O N E
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ JODHPUR BENCH, JODHPUR ] BEFORE SHRI RAJPAL YADAV, JM AND SHRI K. D. RAN JAN, AM I. T. APPEAL NO. 610 (JODH.) OF 2009. ASSESSMENT YEAR : 200607. THE INCOME-TAX OFFICER, SHRI RAMESH SON I, W A R D : 3 (2), VS. PROP. M/ S. TRIMURTI ABHUSHAN J O D H P U R. SHOP NO. 1112, KAMA L TOWERB ROAD, SARDARPURA, J O D H P U R. P A N / G I R NO. AEM PS 2226 J. ( APPELLANT ) ( RE SPONDENT ) ASSESSEE BY : N O N E; DEPARTMENT BY : SHRI N. A. JOSHI, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEA R 2006-07 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS), JODHPUR. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS :- IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN :- I) DELETING THE ADDITION OF RS.35,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDITWORTHINESS OF THE CASH CREDITOR A ND INTEREST RS.3,639/- THEREON WITHOUT APPRECIATING THE FACT THAT CASH DEP OSITED IN THE BANK 2 I. T. APPEAL NO. 610 (JODH.) OF 2009 . ACCOUNT OF THE CREDITOR IMMEDIATELY BEFORE ISSUE OF CHEQUE TO ASSESSEE WAS NOT EXPLAINED; II) ALLOWING THE INTEREST RS.7,56,127/- CLAIMED ON UNPR OVED AND NON-GENUINE CASH CREDITS DISALLOWED IN ASSESSMENT YEAR 2005-06 WHICH ARE ALREADY SUBJECT MATTER OF APPEAL BEFORE HONBLE ITAT. 3.1 THE FIRST ISSUE FOR CONSIDERATION RELATES TO DE LETING THE ADDITION OF RS.35,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CAS H CREDITS AND INTEREST OF RS.3,639/- THEREON. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT FROM THE CONFIRMATION OF ACCOUNT OF SMT. UMA SONI, WIFE OF SHRI SAMPAT LAL SONI, IT WAS NOTED BY ASSES SING OFFICER THAT SMT. UMA SONI DEPOSITED CASH OF RS.35,000/- IN HER BANK ACCOUNT ON 20/08/20 05 AND ISSUED A CHEQUE OF RS.40,000/- TO THE ASSESSEE WHICH WAS CLEARED ON 25 TH AUGUST, 2005. SMT. UMA SONI WAS NOT ASSESSED TO T AX. HER IDENTITY WAS ALSO NOT PROVED. THE ASSESSING OFFICE R, THEREFORE, CAME TO THE CONCLUSION THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION WERE NOT PROVED. THE ASSESSING OFFICER MADE ADDITION OF RS.35,000/- AND ALSO DISA LLOWED INTEREST THEREIN AMOUNTING TO RS.3,639/-. 3.2 ON APPEAL IT WAS SUBMITTED THAT THE IDENTITY OF THE CREDITOR WAS PROVED FROM THE COPY OF BANK PASS BOOK. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THE ASSESSEE HAD FILED COPY OF CONFIRMATION. THEREFORE, THE INITIAL ONUS HAD BEEN DISCHARGED BY THE ASSESSEE. ONCE THE ASSESSEE HAD OFFERED EXPLANATION AS TO NATURE AND SOURCE OF THE SUM, THE ASSESSING OFFICER IS DUTY BOUND TO ESTABLISH THAT SUCH EXPLANATION WAS NOT SATISFACTOR Y ELABORATING THE REASONS AND MATERIAL ON THE BASIS OF WHICH SUCH OPINION HAD BEEN FORMED. THE L D. CIT (APPEALS), HOWEVER, NOTED THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER BASED ON THE FACT THAT THE SMT. UMA SONI WAS NOT AN INCOME-TAX ASSESSEE AND THE ASSESSEE DID NOT PRODUC E CREDITOR FOR EXAMINATION BY THE ASSESSING OFFICER. THESE REASONS WERE NOT SUFFICIENT TO JUST IFY THAT CASH CREDITOR WAS NOT GENUINE. MERELY BECAUSE CASH WAS DEPOSITED IN THE ACCOUNT OF THE CR EDITOR OR THAT THE CREDITOR WAS NOT ASSESSED TO TAX COULD NOT LEAD TO A SUSTAINABLE CONCLUSION THAT THE CREDITOR DID NOT HAVE CREDITWORTHINESS OR 3 I. T. APPEAL NO. 610 (JODH.) OF 2009 . HIS IDENTITY WAS NOT ESTABLISHED. THE ASSESSING OF FICER DID NOT ISSUE SUMMONS TO ENFORCE THE PRESENCE OF THE CREDITOR FOR THE PURPOSE OF EXAMINI NG HER CREDITWORTHINESS. NO MATERIAL WAS BROUGHT ON RECORD, WHICH COULD BE CONSIDERED TO EST ABLISH THAT THE CREDITOR DID NOT HAVE THE CAPACITY TO ADVANCE THE SUM OF CREDIT AS CLAIMED. THE LD. CIT (APPEALS) ACCORDINGLY TREATED THE CREDIT OF RS.35,000/- AS EXPLAINED AND DELETED THE ADDITION. SINCE HE HAS ACCEPTED THE CREDIT OF RS.35,000/- AS GENUINE HE DELETED THE INTEREST OF R S.3,639/-. 4. AT THE TIME OF HEARING, NONE ATTENDED ON BEHALF OF THE ASSESSEE. THE APPEAL IS DECIDED AFTER HEARING THE LD. SR. DR. BEFORE US THE LD. SR . DR SUBMITTED THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED AND, THEREFORE, INITIAL ONUS HAD NOT BEEN DISCHARGED. THE LD. CIT (APPEALS ), THEREFORE, WAS NOT JUSTIFIED IN DELETING THE ADDITION. 5. WE HAVE HEARD THE LD. SR. DR AND GONE THROUGH TH E MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE F ILED CONFIRMATION FROM SMT. UMA SONI, WIFE OF SHRI SAMPAT LAL SONI. THE AO DISALLOWED AMOUNT OF RS.35,000/- ON THE GROUND THAT THE AMOUNT WAS DEPOSITED IN HER BANK ACCOUNT JUST BEFOR E ISSUE OF CHEQUE OF RS 40,000/-. IT IS ALSO A FACT THAT SMT. UMA SONI WAS NOT ASSESSED TO TAX. T HERE IS NO MATERIAL ON RECORD TO PROVE THE CREDITWORTHINESS OF SMT. UMA SONI. THEREFORE, INIT IAL ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. IN VIEW OF THESE FACTS, IN OUR CONSIDERE D OPINION, THE LD. CIT (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION. SINCE THE AO HAD NOT EXA MINED THE CASH CREDITOR AND THE SOURCE OF DEPOSIT OF RS.35,000/- IMMEDIATELY FOR THE ISSUE OF CHEQUE, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION THA T HE WILL EXAMINE THE CREDITOR WITH REFERENCE TO THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTION. THE ASSESSEE IS DIRECTED TO PRODUCE SMT. UMA SONI BEFORE THE AO. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.7,56,127/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT FOR ASSE SSMENT YEAR 2005-06 THE ASSESSING OFFICER MADE 4 I. T. APPEAL NO. 610 (JODH.) OF 2009 . ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT. TH E ASSESSEE HAD PAID INTEREST ON SUCH CASH CREDITS DURING THE YEAR UNDER CONSIDERATION I.E. IN ASSESSMENT YEAR 2006-07. THE INTEREST OF RS.7,56,127/- WAS MADE TO 20 PERSONS AS MENTIONED I N THE ASSESSMENT ORDER. SINCE THE ASSESSING OFFICER DISALLOWED CASH CREDIT IN ASSESSMENT YEAR 2 005-06, HE DISALLOWED THE INTEREST IN ASSESSMENT YEAR 2006-07. 7. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE ASSESSING OFFICER HAD DISALLOWED INTEREST AMOUNTING TO RS.7,56,127/- BEING INTEREST PAID TO THE CASH CREDITORS TREATED UNEXPLAINED IN ASSESSMENT YEAR 2005-06 THOUGH THE VERIFICATION OF THE SAME WAS PENDING WITH THE ASSESSING OFFICER HIMSELF. IT WAS ALSO CONTENDED THAT THE AS SESSEE HAD BORROWED MONEY FROM THE CREDITORS IN THE YEARS PRIOR TO ASSESSMENT YEAR 2005-06 AND O UT OF TOTAL INTEREST TO THESE CREDITORS, THERE WAS ELEMENT OF INTEREST PAID ON AMOUNTS BORROWED IN THE YEARS PRIOR TO ASSESSMENT YEAR 2005-06 WHICH HAD BEEN ACCEPTED AS GENUINE. THE ASSESSEE F URTHER CONTENDED THAT THE AMOUNT BORROWED IN ASSESSMENT YEAR 2005-06 ONLY COULD HAVE BEEN TRE ATED AS NOT GENUINE AND, THEREFORE, INTEREST COULD BE DISALLOWED TO THE EXTENT IT PERTAINED TO T HE BORROWINGS MADE IN ASSESSMENT YEAR 2005-06. IT WAS FURTHER CONTENDED THAT THE LD. CIT (APPEALS) IN ASSESSMENT YEAR 2005-06 HAD SUBSTANTIALLY DELETED THE ADDITION MADE UNDER SECTI ON 68 OF THE ACT. IN VIEW OF THESE FACTS IT WAS CONTENDED THAT INTEREST PAID TO THE CREDITORS SHOUL D BE TREATED AS EXPLAINED. THE LD. CIT (APPEALS) ON GOING THROUGH THE ASSESSMENT ORDER FOU ND THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF INTEREST OF RS.7,56,127/- IN RELATI ON TO THE CASH CREDITS WHICH WERE ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED FOR ASSESSMEN T YEAR 2005-06. THE LD. CIT (APPEALS) FURTHER NOTED THAT SUBSTANTIAL ADDITION ON ACCOUNT OF CASH CREDIT WAS DELETED IN ASSESSMENT YEAR 2005-06. THEREFORE, ANY ADDITION FOR THE CURRENT Y EAR ON ACCOUNT OF INTEREST PERTAINING TO SUCH ADDITIONS MADE IN ASSESSMENT YEAR 2005-06 WERE ALSO BE DELETED. THE ASSESSING OFFICER WAS ACCORDINGLY DIRECTED BY THE LD. CIT (APPEALS). THE LD. CIT (APPEALS) FURTHER NOTED THAT THERE WAS ELEMENT OF INTEREST PAID ON THE AMOUNTS BORROWE D IN EARLIER YEARS WHICH HAD BEEN ACCEPTED AS GENUINE IN THOSE YEARS. THEREFORE, INTEREST PER TAINING TO SUCH DEPOSIT COULD NOT BE DISALLOWED. THE LD. CIT (APPEALS), THEREFORE, DIRECTED TO VERIF Y THE DETAILS AND DELETE THE ADDITION IN RESPECT OF DEPOSITS WHICH WERE FOUND GENUINE IN EARLIER YEA RS. 5 I. T. APPEAL NO. 610 (JODH.) OF 2009 . 8. WE HAVE HEARD THE LD. SR. DR. FROM THE ABOVE FA CTS IT IS CLEAR THAT THE ASSESSING OFFICER HAD DISALLOWED INTEREST IN RESPECT OF CASH CREDITS WHICH WERE ADDED IN ASSESSMENT YEAR 2005-06. SOME OF THE CASH CREDITS ADDED IN ASSESSMENT YEAR 2 005-06 HAVE BEEN TREATED AS GENUINE IN EARLIER YEARS. IT IS ALSO SEEN FROM THE ORDER OF T HE LD. CIT (APPEALS) THAT THE LD. CIT (APPEALS) HAS DELETED THE ADDITION ON ACCOUNT OF CASH CREDITS ADDED IN AY 2005-06. WE ARE NOT AWARE ABOUT THE STATUS OF ASSESSMENT YEAR 2005-06 WHETHER THE ORDER OF THE LD. CIT (APPEALS) HAD BEEN ACCEPTED BY THE DEPARTMENT OR NOT. IN VIEW OF THES E FACTS, IN OUR CONSIDERED OPINION, THE LD. CIT (APPEALS) HAS RIGHTLY DIRECTED THE ASSESSING OFFICE R TO VERIFY THE FACTS WHETHER INTEREST DISALLOWED RELATES TO THE CASH CREDITS WHICH HAVE BEEN FOUND G ENUINE IN EARLIER YEARS. SINCE THE FACTS ARE NOT CLEAR, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTI ON TO VERIFY THE FACTS WHETHER INTEREST DISALLOWED REL ATES TO THE CASH CREDITS WHICH HAVE BEEN FOUND GENUINE IN AY 2005-06 AND IN EARLIER YEARS. IF THE CASH CREDITS ARE GENUINE, NO DISALLOWANCE OF INTEREST CAN BE MADE. THE ASSESSING OFFICER IS DIR ECTED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH AUGUST, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER AT NEW DELHI . DATED : 26 TH AUGUST, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 6 I. T. APPEAL NO. 610 (JODH.) OF 2009 . 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 7 I. T. APPEAL NO. 610 (JODH.) OF 2009 .