Shri Darshan Lal, Rohtak V. ITO, Narnaul

ITA 6163/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7401 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 18-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K KAMAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER ITA NO. 6163/DEL/2015 A.Y. 2011-12 SHRI DARSHAN LAL, VS. INCOME TAX OFFICER, C/O N.C. GARG CA, WARD-1, NARNAUL. M.G. ROAD, ROHTAK. PAN: AAUPL 3210 D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI GAUTAM JAIN ADV. & SHRI P.K. KAMAL ADV. RESPONDENT BY : SHRI RAJESH KUMAR SR. DR DATE OF HEARING : 18-08-2016 DATE OF ORDER : 22/08-2016. O R D E R PER S.V. MEHROTRA, A.M:- THIS IS ASSESSEES APPEAL AGAINST THE CIT(A), ROHTA KS ORDER DATED 29.10.2015 IN APPEAL NO. 543/2014-15, RELATING TO A.Y. 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, I N THE RELEVANT ASSESSMENT YEAR, FILED HIS RETURN OF INCOME DECLARING INCOME O F RS. 2,39,420/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED FROM THE LIST OF UNSECURED LOANS AS ON 31.3.2010, THAT THE ASSESSEE HAD SHOWN UNSECURED LOAN IN THE NAME OF SHRI PIYUSH KUMAR AMOUNTING TO RS. 5,62,000/-. BUT FROM THE LIST OF UNSECURED LOANS ATTACHED ALONG WIT H THE AUDIT REPORT FOR AY 2011-12, IT HAD BEEN FOUND THAT NO AMOUNT ON ACCOUN T OF UNSECURED LOAN IN RESPECT OF SHRI PIYUSH KUMAR HAD BEEN SHOWN BY THE ASSESSEE. FROM THE 2 COPY OF ACCOUNT OF SHRI PIYUSH KUMAR, FURNISHED IN COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE DID NOT MAKE REPAYMENT TO SHRI PIYUSH KUMAR EITHER IN CASH OR THROUGH CHEQUE BUT T HE LIABILITY HAD BEEN SHOWN AS CEASED WITHOUT MAKING PAYMENT. VERIFICATI ON FROM BANK ACCOUNT ALSO REVEALED THAT NO SUCH PAYMENT HAD BEEN MADE. T HE ASSESSEES REPLY VIDE LETTER DATED 24.12.2012 WAS AS UNDER: AMOUNT OF RS. 5,71,116/- TRANSFERRED TO M/S SHREE GOBIND TRADING COMPANY FROM THE ACCOUNT OF PIYUSH SIR, A S UM OF EXCEEDING RS. 5 LAKH WERE DUE FROM M/S SHREE GOBIND TRADING COMPANY A PROP. CONCERN OF SH. BHARAT BUSHAN WHO IS FATHER OF SH. PIYUSH. TO RECOVER THE AMOUNT FROM BHARAT BU SHAN WE TRANSFERRED THE AMOUNT FROM ACCOUNT OF POYUSH AND I NTIMATION WAS SENT TO MR. BHARAT BUSHAN AND PIYUSH ON TELEPHO NE. COPY OF ACCOUNT OF GOBIND TRADING CO., ATTACHED HEREWITH . 2.1. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTIO N AND OBSERVED THAT UNSECURED LOAN RAISED FROM SHRI PIYUSH KUMAR THROUG H ACCOUNT PAYEE CHEQUE SHOULD HAVE BEEN RETURNED THROUGH A/C PAYEE CHEQUE ONLY. HE FURTHER POINTED OUT THAT AS PER PRINCIPLE OF ACCOUNTANCY LI ABILITY OF UNSECURED LOAN CANNOT BE TRANSFERRED TO OTHER PARTY. HE, ACCORDING LY, MADE ADDITION OF RS. 5,71,446/-. 3. LD. CIT(A) CONFIRMED THE ADDITION, INTER ALIA, O BSERVING THAT THE EXPLANATION OF THE ASSESSEE REGARDING THE FACT THAT TRANSFER MADE TO A PROPRIETARY CONCERN OF THE PIYUSHS FATHER AND WA S DONE WITH THE CONSENT OF THE PIYUSH AND HIS FATHER, WAS NOT BORNE OUT BY AN Y EVIDENCE. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 3 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ROHTAK HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLD ING THE ADDITION OFRS. 5,71,446/- MADE BY INVOKING THE PROV ISIONS CONTAINED IN SECTION 41(1)(A) OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT THE AMOUNT RAISED WAS AN UNSECURED LOANS AND AS SUCH IN ABSENCE OF ANY DEDUC TION CLAIMED, APPLICATION OF SECTION 41 (1)( A) OF THE A CT IS HIGHLY MISPLACED. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ALSO FAILED TO APPRECIATE THAT THERE WAS NO VAL ID BASIS OR MATERIAL TO ASSUME THAT THE LIABILITY OF THE APPELL ANT IN RESPECT OF THE SUM OF RS. 5,71,446/-HAD CEASED TO EXIST AND , THEREFORE THE PROVISIONS OF SECTION 41 (1) WERE INAPPLICABLE AND, COULD NOT HAVE BEEN MADE ON THE BASIS TO UPHOLD THE IMPUG NED ADDITION. 5. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE EXPLA NATION OF ASSESSEE HAS BEEN REJECTED SOLELY ON THE GROUND THAT THE SAME WA S NOT BACKED BY ANY EVIDENCE. IT IS NOT DISPUTED THAT M/S GOVIND TRADIN G CO. WAS THE PROPRIETARY CONCERN OF PIYUSHS (CREDITORS) ASSESSEES FATHER AND IN THE BOOKS OF ACCOUNT THE SUM WAS RECOVERABLE FROM BHARAT BHUSHAN, WHO WAS FATHER OF SHRI PIYUSH KUMAR. THEREFORE, IN ORDER TO RECOVER THE AM OUNT FROM BHARAT BHUSHAN, THE ASSESSEE TRANSFERRED THE AMOUNT DUE TO PIYUSH KUMAR TO THE ACCOUNT OF SHRI BHARAT BHUSHAN. IT WAS FURTHER POIN TED OUT BY ASSESSEE THAT INTIMATION WAS GIVEN TO BOTH THE PARTIES ON TELEPHO NE. NO DISPUTE HAS BEEN RAISED BY EITHER PARTY. UNDER SUCH CIRCUMSTANCES, I T CANNOT BE SAID THAT THE TRANSFER ENTRY PASSED BY ASSESSEE FROM PIYUSH KUMAR S ACCOUNT TO M/S GOVIND TRADING CO.S ACCOUNT WAS NOT AS PER PREVAIL ING COMMERCIAL 4 CUSTOMS. AMOUNT HAD BEEN TRANSFERRED TO THE FATHER OF CREDITOR AND THE ENTRIES MADE IN THE BOOKS OF A/C. THIS CONSTITUTE SUFFICIENT EVIDENCE IN THIS REGARD AS PER SECTION 34 OF THE EVIDENCE ACT. ACCOR DINGLY, ADDITION OF RS. 5,71,446/- IS DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22-08-2016. SD/- ( S.V. MEHROTRA ) ACCOUNTANT MEMBER DATED: 22-08-2016. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR