Asstt. Commissioner of Income Tax-1, Kanpur V. Shri Harish Kumar Narang, Kanpur

ITA 613/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100338 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP KAPOOR
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.613/LKW/2013 ASSESSMENT YEAR:2009-10 ACIT-1 KANPUR V. SHRI. HARISH KUMAR NARANG PROP. M/S ARORA ENTERPRISES 51/45, NAYAGANJ KANPUR TAN/PAN:ABKPN8300K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. AMIT NIGAM, D.R. RESPONDENT BY: SHRI. PRADEEP KAPOOR, C.A. DATE OF HEARING: 12 08 2015 DATE OF PRONOUNCEMENT: 27 08 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY ISSUE THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1.50 CRORES MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') ON ACCOUNT OF UNEXPLAINED CASH CREDIT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.1.60 CRORES DURING THE YEAR FROM M/S SHUBHANG EXPORTS LTD. THE LEDGER COPY OF THE ACCOUNT DULY CONFIRMED BY THE DIRECTOR/CHAIRMAN, SHRI. BRAHMA NAND SHARMA WAS FURNISHED BEFORE THE ASSESSING OFFICER. THE ASSESSEE WAS ASKED TO :- 2 -: EXPLAIN THE NATURE OF THESE RECEIPTS AND THE WHEREABOUTS OF THE COMPANY. THE PAN OF THE SAID COMPANY WAS FURNISHED BEFORE THE ASSESSING OFFICER. HAVING NOTED THAT THE PERMANENT ACCOUNT NUMBER OF THE ABOVE COMPANY IS LYING WITH THE INCOME TAX OFFICER 6(2), KANPUR, THE ASSESSING OFFICER FOUND OUT THE ADDRESS OF THE SAID COMPANY. ACCORDINGLY THE INCOME TAX INSPECTOR WAS ASKED TO VISIT THE CHAIRMAN OF THE SAID COMPANY, SHRI. BRAHMA NAND SHARMA TO MAKE NECESSARY ENQUIRIES ABOUT THE ACTIVITIES AND DETAILS OF THE COMPANY. IN RESPONSE THERETO, IT WAS STATED BY SHRI. BRAHMA NAND SHARMA THAT THE COMPANY IS BEING RUN BY HIS SON, SHRI. SUBHANG AND ACTIVITIES BEING CARRIED OUT FROM KOLKATA. 3. ACCORDINGLY, A LETTER UNDER SECTION 133(6) OF THE ACT WAS WRITTEN TO M/S SHUBHANG EXPORTS LTD., 203, SARAD BOSE ROAD, KOLKATA REQUIRING TO FURNISH CERTAIN DOCUMENTS, BUT THE ASSESSING OFFICER DID NOT RECEIVE ANY REPLY AND HE THEREAFTER ISSUED A SUMMON TO SHRI. BRAHMA NAND SHARMA FOR APPEARANCE ALONG WITH THE BOOKS OF ACCOUNT AND BALANCE SHEET, PROFIT AND LOSS ACCOUNT, ETC. HOWEVER, ON THE GIVEN DATE, SHRI. BRAHMA NAND SHARMA COULD NOT APPEAR ON ACCOUNT OF HIS ILLNESS. HE, HOWEVER, SENT A LETTER THROUGH SPEED POST EXPLAINING HIS INABILITY TO APPEAR BEFORE THE ASSESSING OFFICER. HOWEVER, COPY OF THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT ALONG WITH BANK STATEMENTS WERE PROVIDED TO M/S ARORA ENTERPRISES WITH A REQUEST TO SUBMIT BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCORDINGLY ISSUED COMMISSION UNDER SECTION 131(1)(D) OF THE ACT TO SHRI. NAYANJYOTI NATH, ASSISTANT DIRECTOR OF INCOME TAX, UNIT 1(4), KOLKATA WITH A REQUEST TO ENQUIRE ABOUT THE EXISTENCE OF THE COMPANY AND ITS CAPACITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE REPORT WAS RECEIVED BY THE ASSESSING OFFICER FROM SHRI. NAYANJYOTI NATH, ASSISTANT DIRECTOR OF INCOME TAX, UNIT 1(4), KOLKATA IN WHICH IT WAS STATED THAT THE COMPANY WAS NOT AVAILABLE AT THE GIVEN ADDRESS. RELYING UPON THE REPORT, THE :- 3 -: ASSESSING OFFICER HAS TREATED THE ENTIRE RECEIPTS OF RS.1.60 CRORES AS UNEXPLAINED AND MADE ADDITION OF THE SAME IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 4. AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE REPORT OF THE ADIT WERE NOT FURNISHED TO THE ASSESSEE. THE ASSESSEE HAS FILED THE COPY OF PAN, COPY OF ITR FILED FOR ASSESSMENT YEAR 2011-12, CONFIRMATION, COPY OF RECEIPT OF THE REGISTERED REPLY SENT TO THE ACIT AND OTHER RELEVANT DOCUMENTS BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFRONTED ALL THESE EVIDENCE TO THE ASSESSING OFFICER. IT WAS ALSO STATED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS FURNISHED CONFIRMATION, PAN, BANK ACCOUNTS, BALANCE SHEET OF M/S SHUBHANG EXPORTS LTD. SHOWING LOAN ADVANCED BY THEM THROUGH CHEQUE, BUT THE ASSESSING OFFICER HAS NOT PROVIDED THE COPY OF THE INSPECTORS REPORT TO THE ASSESSEE ON THE BASIS OF THE ADIT HAS REPORTED TO THE ASSESSING OFFICER. ACCORDINGLY, A REMAND REPORT WAS SOUGHT FROM THE ASSESSING OFFICER AND IN THE REMAND REPORT, THE ASSESSING OFFICER HAS MAINLY RELIED UPON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. THE LD. CIT(A) RE-EXAMINED THE ISSUE IN THE LIGHT OF MATERIALS PLACED BEFORE HIM. IT WAS ALSO POINTED OUT BEFORE THE LD. CIT(A) THAT THE ASSESSING OFFICER HIMSELF HAD MADE RECTIFICATION AND REDUCED THE ADDITION OF RS.1.60 CRORES TO RS.1.50 CRORES. 5. HAVING CAREFULLY EXAMINED THE DETAILS AVAILABLE BEFORE THE LD. CIT(A) IN THE LIGHT OF ASSESSEES CONTENTIONS, HE WAS OF THE VIEW THAT M/S SHUBHANG EXPORTS LTD. IS ASSESSED TO TAX VIDE PAN AAJCS1526R AND FROM THE BALANCE SHEET AND BANK STATEMENT OF THE SAID COMPANY, IT IS SEEN THAT THE DEPOSITORS HAD SUFFICIENT FUNDS TO MAKE DEPOSITS WITH THE ASSESSEE. IT WAS ALSO NOTICED BY THE LD. CIT(A) THAT THE DEPOSITS WERE THROUGH CHEQUE AND CREDITS IN BANK ACCOUNT ARE MOSTLY THROUGH CLEARING. CASH DEPOSITS ARE MADE ONLY ON FEW DATES THAT TOO VERY NOMINAL AND :- 4 -: MEAGER AMOUNT. HAVING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) HAS DELETED THE ADDITION. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND EVIDENCES PLACED ON RECORD. FROM THE DETAILS FURNISHED AND INFORMATION RECEIVED U/S 133 (6) I FIND THAT THE DEPOSITOR COMPANY M/S. SUBHANG EXPORTS LIMITED IS ASSESSED TO TAX VIDE PAN AAJCS 1526 R, FROM THE BALANCE SHEET AND BANK STATEMENT OF THE SAID COMPANY IT IS SEEN THAT THE DEPOSITOR HAD SUFFICIENT FUNDS TO MAKE DEPOSITS WITH THE APPELLANT. ALL THE DEPOSITS ARE THROUGH CHEQUES. CREDITS IN BANK ACCOUNT ARE MOSTLY THROUGH CHEQUES/CLEARING. CASH DEPOSITS' ON SOME DATES ARE OF VERY NOMINAL AND MEAGER AMOUNT. ABOUT THE ADDRESS OF THE COMPANY AT KOLKATA SUFFICIENT EVIDENCES HAVE BEEN FURNISHED BY THE APPELLANT. THE SO CALLED REPORT OF THE INSPECTOR REFERRED IN THE REPORT OF ADIT, KOLKATTA HAS NEITHER BEEN MADE AVAILABLE TO THE APPELLANT NOR IT HAS BEEN ATTACHED WITH THE REMAND REPORT DATED 07-02-2013 AND REPRESENTED ACCOMMODATION ENTRIES AND THE DEPOSITOR WAS ONLY A PAPER COMPANY. OTHER SUBMISSIONS MADE BY THE APPELLANT WITH REGARDS TO ONUS, ENQUIRIES MADE BY U/S 133 (6) AND VARIOUS CASE LAWS FULLY SUPPORT THE CASE OF THE APPELLANT. THE APPELLANT HAS THUS FURNISHED ADEQUATE AND SUFFICIENT EVIDENCES DISCHARGING THEIR ONUS IN PROVING THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE DEPOSITOR. RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISIONS REACHED BY VARIOUS HIGH COURTS IN ADDITIONS TO CASES DISCUSSED ABOVE (SUPRA) :- 1. 71 DTR 371 (ALL.) 2012 - D.K. SHARES & SECURITIES LIMITED. 2. 330 ITR 298 (DEL.) 2011 - CIT VS. DWARKADISH INVESTMENT (P) LTD. :- 5 -: 3. 2012 - ITOL - 226 - HC - DEL -IT -CIT VS. KAMDHENU STEELS & ALLOYS LTD. 4. 338 ITR 563 (DEL.) 2011 - CIT VS. MAYAWATI 5. 254 CTR 648 (RAJ.) 2012 - CIT VS.ARUN KUMAR KOTHARI 6. 56 DTR 317 (COL) 2011 - DIAGNOSTICS VS. CIT 7. 2012 - TIOL - 180 - HC - CHATTISGARH - CIT VS. SHRI ABDUL AZIZ 8. 325 ITR 294 (DELHI) 2010 - CIT VS. SAMIR BIO-TECH PVT LTD. IN ALL THE ABOVE DISCUSSED CASES,, THE ONUS ON THE ASSESSEE IS REGARDED AS DISCHARGED ON SUBMISSION OF REQUIRED DETAILS LIKE PAN, CONFIRMATION, BANK STATEMENT ETC. HERE, IN THE INSTANT CASE, THE ASSESSEE HAS FILED THE DETAILS OF M/S. SUBHANG EXPORTS LIMITED AND THE M/S. SUBHANG EXPORT LIMITED HAS FURTHER SUBMITTED THE DETAILS OF THEIR SHARE APPLICATION/CREDITORS WITH CHEQUE NO, BANK DETAILS, PAN, AMOUNT, ADDRESS ETC. AS PER THEIR BOOKS OF ACCOUNTS. THEREBY, THE ASSESSEE HAS DISCHARGED HIS ONUS OF EXPLAINING THE CREDIT APPEARING IN HIS BOOKS OF ACCOUNTS. ACCORDINGLY, ON OVERALL CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMENTS (SUPRA), THE ADDITION OF RS.1,50,00,000/- DESERVES TO BE DELETED . HENCE, THE ADDITION IS HEREBY DELETED. 6. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER; WHEREAS THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS SUBMITTED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION, BANK STATEMENT, BALANCE SHEET OF THE CREDITORS AND ALL OTHER RELEVANT EVIDENCE IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS & IDENTITY OF THE :- 6 -: CREDITORS. SINCE THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS, WHICH LAYS UPON IT, ADDITION UNDER SECTION 68 OF THE ACT IS NOT CALLED FOR. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS:- 1. CIT VS. ORISSA CORPORATION PVT. LTD., 159 ITR 78 (SC). 2. CIT VS. RANCHHOD JIVABHAI NAKHAVA, 208 TAXMAN 35 (GUJ). 3. CIT VS. SWARKADHISH INVESTMENT (P) LTD., 330 ITR 298 (DEL) 4. CIT VS. H.S. BUILDERS (P) LTD., 78 DTR 169 (RAJ.) 5. CIT VS. ARUN KUMAR KOTHARI, 254 CTR 648 (RAJ) 6. CIT VS. MISHRA PRESERVERS (P) LTD., 350 ITR 222 (ALL). 7. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS FILED THE COPIES OF PAN CARDS OF THE CREDITORS, COPIES OF BANK ACCOUNTS, COPIES OF BALANCE SHEETS, ETC. OF THE CREDITORS IN ORDER TO ESTABLISH THE CREDITWORTHINESS & IDENTITY OF THE CREDITORS. IT WAS FURTHER CONTENDED THAT THE ASSESSING OFFICER HAS PLACED RELIANCE UPON THE INSPECTORS REPORT SUBMITTED TO THE ADIT, KOLKOTA AND DURING THE COURSE OF HEARING, THE INSPECTORS REPORT WAS NOT SUPPLIED TO THE ASSESSEE DESPITE REPEATED REQUESTS. BUT THE ASSESSING OFFICER HAS MADE THE REPORT AS BASIS FOR ADDITION. IT WAS FURTHER CONTENDED THAT THE LD. CIT(A) HAS APPRECIATED THE EVIDENCE FILED BEFORE HIM. 8. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAS DOUBTED THE GENUINENESS OF THE CREDITORS AND AFTER MAKING ENQUIRY FROM THE KOLKATA ADIT, HE TREATED THIS CREDIT TO BE UNEXPLAINED AND MADE ADDITION OF THE SAME. BEFORE THE LD. CIT(A), THE ASSESSEE HAS TAKEN A STAND THAT HE HAS FILED ALL THE RELEVANT EVIDENCE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE :- 7 -: TRANSACTION. ON A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT UNDISPUTEDLY THE INSPECTORS REPORT SUBMITTED TO THE ADIT, KOLKATA WAS NOT FURNISHED TO THE ASSESSEE, THEREFORE, THE ASSESSEE COULD NOT MAKE HIS COMMENTS THEREON. IT IS ALSO UNDISPUTED FACT THAT THE CREDITOR WAS ASSESSED TO TAX AS HIS PAN AND ASSESSMENT ORDER WERE FURNISHED BEFORE THE ASSESSING OFFICER. MOREOVER, THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE CREDITORS WERE ALSO FURNISHED AND FROM THE BALANCE SHEET, IT HAS BEEN ESTABLISHED THAT THE CREDITORS WERE HAVING SUFFICIENT BALANCE TO MAKE DEPOSIT IN THE ASSESSEE-COMPANY. MOREOVER, THE ASSESSEE HAS RECEIVED DEPOSITORS THROUGH BANKING CHANNEL, THEREFORE, ITS NATURE CANNOT BE DOUBTED. SINCE THE ASSESSEE HAS PLACED ALL THE RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS & IDENTITY OF THE CREDITORS, ADDITION UNDER SECTION 68 OF THE ACT IS NOT CALLED FOR. WE HAVE ALSO CAREFULLY PERUSED THE JUDGMENTS REFERRED TO BY THE ASSESSEE AND WE FIND THAT IT HAS BEEN REPEATEDLY HELD THAT ONCE THE ASSESSEE HAS DISCHARGED HIS ONUS OF PROVING THE CREDITWORTHINESS & IDENTITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION, NO ADDITION UNDER SECTION 68 OF THE ACT IS CALLED FOR. IN THE LIGHT OF THESE JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF THE GIVEN FACTS. THEREFORE, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY WE CONFIRM THE SAME. 9. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH AUGUST, 2015 :- 8 -: JJ:1908 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR