ITO, Ghaziabad V. M/s Habitat Infrastructure Ltd., Ghaziabad

ITA 6155/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4382 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: SH
• Section: 133(6); 131; 68

Judgement Text

1 ITA NO. 6155/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 6155/DEL/2015 ( A .Y 2010-11) ITO WARD 1(3), GHABIABAD (APPELLANT) VS HABITAT INFRASTRUCTURE LTD., KC-41, KAVI NAGAR GHABIZBAD AABCH5237N (RESPONDENT) APPELLANT BY SH. SURENDER PAL, SR. DR RESPONDENT BY DR. RAKESH GUPTA, SH. SOMIL AGGARWAL, SH. DEEPESH GARG, & SH. SHUBHAM SOBTI, ADVS ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 14/08/2014 PASSED BY CIT(A)-, MUZAFFARNAGAR FOR ASSESSMENT YE AR 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN LAW DELETING THE ADDITION OF RS. 3,19,50,000/- MADE ON ACCOUNT OF UN VERIFIABLE UNSECURED LOANS, AS THE CREDITWORTHINESS/CAPACITY TO THE LEND ER COULD NOT BE PROVED. 2. THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN LAW DELETING THE ADDITION OF RS. 3,19,50,000/- MADE ON ACCOUNT OF UN VERIFIABLE UNSECURED LOANS AS THE ASSESSEE FAILED TO PROVE THE GENUINEN ESS OF TRANSACTION. DATE OF HEARING 07.02.2019 DATE OF PRONOUNCEMENT 11.02.2019 2 ITA NO. 6155/DEL/2015 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIVI NG INCOME FROM BUSINESS. RETURN DECLARING INCOME AT RS. 4,21,980/ - WAS FILED ON 02/10/2010. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RAISED UNSECURED LOA NS AMOUNTING TO RS. 3,70,08,454/- FROM DIFFERENT COMPANIES. THEREFORE, THE ASSESSING OFFICER SOUGHT INFORMATION U/S 133(6) OF THE ACT FROM THE A FORESAID COMPANIES AT THE ADDRESS FURNISHED BY THE ASSESSEE. THE ASSESSEE M ADE WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSI NG OFFICER AFTER CONSIDERING WRITTEN SUBMISSIONS HELD THAT THE UNSECURED LOANS A S ANONYMOUS/BOGUS/NON GENIUS LOANS IN THE HANDS OF THE ASSESSEE COMPANY A ND MADE ADDITION OF RS. 3,19,50,000/- TO THE INCOME OF THE ASSESSEE AS UNEX PLAINED CASH CREDIT U/S 68 OF THE ACT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN D ELETING THE ASSESSEE ADDITION AS THE CREDIT WORTHINESS/CAPACITY TO THE L ENDER COULD NOT BE PROVED BY THE ASSESSEE. THUS, THE LD. DR RELIED UPON THE ORDE R OF THE ASSESSING OFFICER. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE FAIL ED TO PROVE THE GENUINENESS OF THE TRANSACTION. 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- THE FACTS OF THE CASE, SUBMISSIONS MADE BY THE APP ELLANT, REMAND REPORTS OF THE AO AND REJOINDERS OF THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE APPELLANT DURING THE YEAR HAD REC EIVED UNSECURED LOANS FROM 11 DIFFERENT CORPORATE ENTITIES AGGREGATING TO RS.3,19,50,000/-. DURING 3 ITA NO. 6155/DEL/2015 THE ASSESSMENT PROCEEDINGS, THE AO EXAMINED AND VER IFIED VARIOUS DOCUMENTARY EVIDENCES VIZ. CONFIRMATION LETTERS FRO M AFORESAID CORPORATE ENTITIES, ITS ACKNOWLEDGEMENT OF RETURNS OF INCOME UP TO AY. 2012-13, PANS, COPIES OF AUDITED BALANCE SHEETS, WRITTEN REPLIES F URNISHED IN COMPLIANCE TO NOTICES ISSUED U/S 133(6) OF THE ACT, COPIES OF THE IR BANK STATEMENTS FROM WHOM THE LOANS WERE ADVANCED TO THE APPELLANT WHICH ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE LENDER COMPANI ES AND ALSO GENUINENESS OF TRANSACTION. THE APPELLANT AT THE APPELLATE STAG E HAS ALSO FURNISHED COPIES OF THE AFORESAID DOCUMENTS IN SUPPORT OF ITS CLAIM. HOWEVER, THE AFORESAID EVIDENCES WERE REJECTED BY T HE AO AND IT WAS HELD THAT THE UNSECURED LOANS WERE NOT GENUINE AND THE I DENTITY AND CREDITWORTHINESS OF THE LENDER COMPANIES COULD NOT BE PROVED ON THE FOLLOWING GROUNDS:- (I) THAT THE REPLIES SUBMITTED BY THE DEPOSITOR COM PANIES IN RESPONSE TO NOTICE U/S 133(6) WERE POSTED FROM GHAZIABAD, (II) THAT THE INSPECTOR REPORTED IN SOME CASES THAT NO COMPANY EXISTS ON THE GIVEN ADDRESS, (III) THAT THE SIGNATURE ON THE BALANCE-SHEET OF THE DEP OSITOR COMPANIES DOES NOT MATCH WITH THE SIGNATURE ON THE CONFIRMATION LE TTERS, (IV) THAT THE OPENING & CLOSING BALANCE IN THE BANK ACC OUNT OF THE DEPOSITOR COMPANIES WERE LOW AND THUS THERE IS NO REAL GENERA TION OF INCOME, (V) THAT THE DEPOSITOR COMPANIES HAVE MAINTAINED THEIR BANK ACCOUNTS FOR ESTABLISHING THEIR EXISTENCE ON PAPER ONLY, (VI) THAT NO ACTUAL BUSINESS IS CARRIED OUT BY THE DEPO SITOR COMPANIES AND THEY EXIST ON PAPER ONLY, (VII) THAT MERE FILING OF RETURN DOES NOT PROVE THE EXIS TENCE, OF THE 4 ITA NO. 6155/DEL/2015 DEPOSITOR COMPANIES, AND (VIII) THAT THE AMOUNT CREDITED IN THE BANK ACCOUNT OF TH E DEPOSITOR COMPANIES IS SIPHONED OUT IN A DAY OR TWO. HOWEVER, SUCH ADVERSE INFERENCE DRAWN BY THE AO HAS NO FORCE DUE TO THE FOLLOWING REASONS:- REGARDING REPLIES SUBMITTED IN RESPONSE TO NOTICE U /S 133(6) OF THE ACT, THE SUBMISSION OF THE APPELLANT ALONG WITH EVIDENCE S SHOWS THAT IN SOME CASES THE DIRECTORS OF THE DEPOSITOR COMPANIES .WER E THE RESIDENTS OF GHAZIABAD AND IN OTHER CASES, THE AUDITORS WERE FRO M GHAZIABAD. THE AOS OBSERVATION THAT IN SOME CASES ENQUIRIES .WERE COND UCTED BY THE ITI WHO REPORTED THAT COMPANY DOES EXIST ON THE GIVEN ADDRE SS HAS NO FORCE IN AS MUCH AS THE NOTICES U/S 133(6) AS WELL AS THE SUMMO NS U/S 131 OF THE ACT WERE SERVED TO THE LENDER COMPANIES. AS REGARDS THE DIFFERENCE IN SIGNATURES ON THE REPLIES FILED IN RESPONSE TO NOTICE U/S 133( 6) AND CONFIRMATIONS LETTERS, IT IS OBSERVED THAT CONFIRMATIONS LETTERS HAVE BEEN SIGNED AUTHORIZED REPRESENTATIVE WHEREAS THE BALANCE SHEETS AND REPLI ES TO NOTICE U/S 133(6) OF THE ACT HAVE BEEN SIGNED BY THE DIRECTORS OF THE LE NDER COMPANIES. THE OBSERVATION OF THE AO IN REGARD TO THE LOW BALANCES IN THEIR BANK ACCOUNT HAS NO FORCE THESE ARE THE CURRENT BANK ACCOUNTS OF THE LENDER COMPANIES AND NO INTEREST IS ACCRUED ON THE BALANCES IN THE CURRENT ACCOUNTS. THE OBSERVATION IN REGARD TO MAINTENANCE OF THE BANK ACCOUNT FOR ESTAB LISHING THE EXISTENCE ON PAPER ONLY HAS NO LEGS AS IT IS A MANDATORY REQUIRE MENT OF LAW TO ACTUAL BUSINESS OF THE LENDER COMPANIES THE EVIDENCES FURN ISHED BY THE APPELLANT CLEARLY ESTABLISHES THAT SIX OF THE DEPOSITOR COMPA NIES ARE NON-BANKING FINANCE COMPANIES REGISTERED WITH THE RESERVE BANK OF INDIA AND TWO ARE REGISTERED WITH SEBI AND MCX CARRYING ON THEIR BUSI NESS ACTIVITIES. AS REGARDS THE FILING OF RETURN OF INCOME TAX RETURNS BY THE LENDER COMPANIES TO PROVE THEIR EXISTENCE HAS ALSO NO MEANING AS IT IS A MANDATORY REQUIREMENT OF THE I.T. ACT, 1961 TO FILE THE RETURN OF INCOME BY EVERY CORPORATE ENTITY. 5 ITA NO. 6155/DEL/2015 ON THE BASIS OF DETAILS, EVIDENCES AND ARGUMENTS OF THE APPELLANT, THE ADVERSE INFERENCE DRAWN BY THE AO' IN THE ASSESSMEN T ORDER AS DISCUSSED ABOVE, IS HELD AS BASELESS AND ACCORDINGLY REJECTED . FROM THE PERUSAL OF THE DETAILS AND EVIDENCES PLACE D ON RECORD, IT IS GATHERED THAT THE UNSECURED LOANS WERE RAISED FROM 11 CORPORATE ENTITIES THROUGH ACCOUNT PAYEE CHEQUES AND THE ADVANCES TO T HE APPELLANT WERE DULY REFLECTED IN THEIR AUDITED BALANCE SHEETS BY THE RE SPECTIVE CORPORATE ENTITIES. IT IS ALSO A MATTER OF FACT ON RECORD THAT ALL THE AFO RESAID COMPANIES ARE ASSESSED TO TAX AND EVIDENCE OF FILING THEIR RETURN S OF INCOME WAS MADE TO THE AO. FROM THE ORDER OF THE AO AND REMAND REPORTS, IT IS OBSERVED THAT THE AO HAS NOT BROUGHT ANY ADVERSE MATERIAL EVIDENCE ON RE CORD TO SUGGEST THAT THE DETAILS AND EVIDENCES FURNISHED BY THE APPELLANT WE RE NOT GENUINE. FURTHER, NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE A O TO ESTABLISH THAT THE UNSECURED LOANS RECEIVED FROM 11 CORPORATE ENTITIES , PART OF WHICH WAS REPAID IN THE SUBSEQUENT YEAR AND INTEREST WAS ALSO PAID T O SOME OF THE DEPOSITORS AFTER DEDUCTING 1JJS, REPRESENTED APPELLANTS UNDIS CLOSED INCOME. THE AO HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECO RD TO ESTABLISH THAT THE CONFIRMATION LETTERS FILED BY THE LENDER COMPAN IES IN RESPONSE TO NOTICES ISSUED U/S 133(6) OF THE ACT WERE NOT GENUINE. FROM THE PERUSAL OF THE REMAND REPORT OF THE AO DAT ED 10-06-2015 AND THE COPIES OF STATEMENTS RECORDED BY THE AO ON OATH , IT IS OBSERVED THAT ALL THE 11 CORPORATE ENTITIES HAVE DEPOSED THAT THEIR RESPE CTIVE COMPANIES HAD. ADVANCED LOANS TO THE APPELLANT THROUGH ACCOUNT PAY EE CHEQUES AND SUCH ADVANCE HAD BEEN REFLECTED IN THEIR RESPECTIVE BALA NCE SHEETS, FILED WITH THE VARIOUS AGENCIES INCLUDING THE INCOME TAX DEPARTMEN T ALONG WITH THEIR RETURN OF INCOME. THE AOS OBSERVATION' THAT THE AFORESAID LENDERS CO MPANIES WERE PAPER 6 ITA NO. 6155/DEL/2015 ENTITIES IS NOT BACKED BY ADVERSE MATERIAL EVIDENCE ON RECORD. FURTHER, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE TRANSACTIO NS OF THE APPELLANT WITH THE 11 CORPORATE ENTITIES WERE NOT GENUINE AND THE IMPU GNED AMOUNT REPRESENTED APPELLANTS OWN UNDISCLOSED INCOME ROUTED IN ITS BO OKS OF ACCOUNT IN THE GARB OF UNSECURED LOANS. RELIANCE IS PLACED .ON THE DECI SION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. KAPOOR CHAND MAGN ESH CHAND (2013) 218 TAXMAN 157 (ALLAHABAD) IN APPEAL NO.309 OF 2009 AND CIT VS. S. KAMALJEET SINGH REPORTED IN [2005] 147 TAXMAN 18 (ALL) BESIDE S OTHER PROCEEDINGS. IT IS OBSERVED THAT THE AOS INFERENCE THAT THE LEN DERS COMPANIES WERE NOT CREDITWORTHY ON THE GROUND THAT SUCH COMPANIES HAD SHOWN LOW PROFIT HAS NO FORCE IN AS MUCH AS THE CAPACITY TO INVEST FUNDS BY AN INVESTOR DEPENDS UPON THE AVAILABLILITY OF FUNDS WITH THE INVESTORS AND N OT ON THE TAX PAID/ANNUAL INCOME OF THE INVESTOR. THE APPELLANT HAS FURNISHED COPIES BALANCE SHEETS OF THE LENDER COMPANIES TO ESTABLISH THE CREDITWORTHIN ESS OF THE LENDER COMPANIES WHICH HIGHLIGHTS THEIR NET WORTH TO ADVAN CE LOANS TO THE APPELLANT FROM THE PERUSAL OF THE RESPECTIVE BALANCE SHEETS O F THE INVESTOR COMPANIES, IT IS CLEAR THAT SUCH COMPANIES ARE HAVING SUBSTANTIAL FINANCES AT THEIR COMMAND AND AS SUCH THESE COMPANIES ARE ENTITIES OF MEANS. RELIANCE IS PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT MEERUT VS. NAV BHARAT DUPLEX LTD. DATED 04-01-2013 IN ITA NO.279/2010. THE INTENTION OF LAW IS THAT UNACCOUNTED MONEY SHOU LD BE BROUGHT TO TAX. AS PER PROVISIONS OF SECTION 68 OF THE ACT ONUS IS ON THE PERSON IN WHOSE BOOKS OF ACCOUNT SUCH MONEY IS SURFACED. IF AN AMOU NT IS SURFACED IN THE BOOKS OF AN ASSESSEE EITHER IN. THE SHAPE OF SHARE APPLICATION MONEY OR A DEPOSIT/LOAN; IT IS PRESUMED THAT SUCH MONEY BELONG S TO THE PERSON IN WHOSE NAME IT HAS BEEN SHOWN. HOWEVER, AS PER PROVISIONS OF SECTION 68 OF THE ACT, DEEMING PROVISIONS POSTULATES THAT IT IS POSSIBLE T HAT THE ASSESSEE MAY CIRCULATE ITS OWN UNACCOUNTED MONEY IN THE SHAPE OF BOGUS PERSONS AND THEREFORE LEGAL ONUS HAS BEEN CREATED.. WHAT IS REL EVANT IS THE IDENTITY, 7 ITA NO. 6155/DEL/2015 CREDITWORTHINESS OF THE DEPOSITOR AND GENUINENESS O F THE TRANSACTION. ALL THESE THREE CONDITIONS HAVE BEYOND DOUBT BEEN ESTAB LISHED AND ONUS OF THE ASSESSEE/APPELLANT HAS BEEN DISCHARGED U/S 68 OF TH E ACT. THE APPELLANT HAS AMPLY PROVED AND DISCHARGED ITS BURDEN BY FILING TH E NECESSARY RELEVANT DOCUMENTARY EVIDENCES IN SUPPORT OF UNSECURED LOANS RAISED DURING THE YEAR. THUS IN THE LIGHT OF THE ABOVE FACTS AND FOLLOWING THE RATIO DECIDENDE OF THE HONBLE COURTS (SUPRA), IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.3,19,50,000/-. THE SAME IS DIRECTED TO BE DELETED. GROUNDS OF APPEAL NOS. L TO 9 ARE ALLOWED. 4. IN RESULT, THE APPEAL IS ALLOWED. THE CIT(A) HAS GIVEN DETAILED FINDING AND TAKEN INT O CONSIDERATION OF THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE REM AND REPORT OF THE ASSESSING OFFICER CALLED DURING APPELLATE PROCEEDIN GS. IN-FACT, FROM THE RECORDS IT EMERGES THAT THE UNACCOUNTED MONEY AS ALLEGED BY THE ASSESSING OFFICER WAS THE LOAN WHICH WAS REPAID SUBSEQUENTLY BY THE ASSES SEE. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH FEBR UARY, 2019 . (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/02/2019 R. NAHEED COPY FORWARDED TO: 8 ITA NO. 6155/DEL/2015 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 08.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 1 . 02.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 1 . 02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 1 . 02.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 9 ITA NO. 6155/DEL/2015