M/s. JYOTI OVERSEASE LTD., Indore V. The DCIT 1(1), Indore

ITA 626/IND/2014

• Counselvise Citation: 62622714 RSA 2014
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 08-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Bogus loan
• Section: 143(3); 133(6); 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 626/IND/2014 ASSESSMENT YEAR : 2004-05 JYOTI OVERSEAS LIMITED, DY. CIT, 1(1), INDORE. VS INDORE. APPELLANT RESPONDENT PAN NO. AAACJ7198R APPELLANT BY : SHRI MANOJ GUPTA, CA RESPONDENT BY : SHRI R. A. VERMA, DR DATE OF HEARING : 05 . 10 .2015 . DATE OF PRONOUNCEMENT : 03 . 1 1 .2015 JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 2 2 O R D E R PER GARASIA, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 01.07.2014, FOR THE ASS ESSMENT YEAR 2004-05. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE H AS CLAIMED TO HAVE RECEIVED UNSECURED LOAN OF RS. 5 LA CS FROM M/S. BALAJI CAPITAL FINANCE CO., BOMBAY. IN THIS CO NTEXT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD MERELY FURNISHED THE CONFIRMATION LETTER OF THE CREDITOR. THE AO FURTHER NOTICED THAT THE CONFIRMATION, PAN N O. OF THE CREDITOR WAS NOT MENTIONED. HAVING NOTED THIS FACT AND IN ORDER TO ASCERTAIN THE GENUINENESS OF THE TRANSACTI ON, THE AO ISSUED LETTER CALLING THE INFORMATION U/S 133(6) FR OM IT. THE LETTER ISSUED AT THE ADDRESS PROVIDED IN CONFIRMATO RY LETTER. HOWEVER, THE SAME WAS RETURNED UNSERVED. HENCE, THE ASSESSEE COULD NOT ESTABLISH IDENTITY, CREDITWORTHI NESS OF THE JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 3 3 TRANSACTION AND THE AO HAS TREATED THE SAME AS UNEX PLAINED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSES SEE U/S 68. SIMILARLY, UNDER THE HEAD EXPENDITURE, THE AS SESSEE HAS CLAIMED EXPENDITURE OF RS. 78,524/- ACCRUED ON THE ABOVE LOAN. THE AO CONSIDERED THE LOAN TO BE NON-GENUINE AND, THEREFORE, THE INTEREST WAS ALSO DISALLOWED. THE AO HAS CONSIDERED THE REPLY OF THE ASSESSEE AND HE WAS OF THE VIEW THAT THE ASSESSEE HAD NO BONA FIDE CLAIM. THEREFORE , HE LEVIED THE PENALTY BY OBSERVING AS UNDER :- 5.1 AT THE OUTSET IT HAS TO BE MENTIONED THAT FROM THE FACTS DISCUSSED AT LENGTH IN THE PRECEDING PARA S IT IS QUITE APPARENT THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE CREDITWORTHINESS OF THE CREDI TOR. IN THIS CONTEXT IT HAS TO BE MENTIONED THAT IT IS A SETTLED LAW THAT IN RESPECT OF ANY CREDIT APPEARING IN THE BOOKS OF ACCOUNT, THE ONUS ALWAYS LIES UPON THE ASSESSEE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE THE ASSESSEE H AD JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 4 4 MERELY CLAIMED THAT IT HAD FURNISHED ONLY THE CONFIRMATORY LETTER OF THE CREDITOR. NO OTHER DETAI LS TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS WER E FURNISHED. THEREFORE, IN VIEW OF THE FINDINGS GIVEN IN THE ORDER U/S 143(3) IT WAS APPARENT THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS. NEEDLESS TO SAY EVEN DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE HAD MERELY CLAIMED THAT THE TRANSACTIONS O F LOAN WAS GENUINE WITHOUT FURNISHING ANY OTHER DETAI L TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITOR. THEREFORE, FROM ITS FACTS THAT APPARENT THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS OF LOAN. HENCE, IT WOULD RATHER BE INCORRECT ON THE PART OF THE ASSESS EE TO ASSERT THAT IT HAD NOT FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR CONCEALED CORRECT PARTICULARS OF ITS INCOME. JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 5 5 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE AO BY OBSERVING AS U NDER :- 5. APPELLANT HAS SHOWN CASH CREDIT OF RS. 5 LAKH FROM M/S. BALAJI CAPITAL FINANCE CO., BOMBAY, AND ALSO CLAIMED INTEREST EXPENSE ON THIS AT RS. 78,524 /-. BUT IN APPEAL PROCEEDING OF BOTH QUANTUM APPEAL AS WELL AS PENALTY APPEAL, APPELLANT HAS FAILED TO SUBMIT EVEN CONFIRMATION LETTER AND PAN OF DEPOSITO R AND FAILED TO ESTABLISH CREDITWORTHINESS OF DEPOSIT OR. AFTER DETAILED EXAMINATION OF THIS ISSUE, ADDITION OF THIS CASH CREDIT OF RS. 5 LAKH FROM AFORESAID PARTY U/S 68 OF THE INCOME-TAX ACT, 1961, HAS BEEN CONFIRMED IN APPEAL BY LD. CIT(A)-II, INDORE, AND T HAT ORDER HAS BECOME FINAL AS THAT ORDER IS NOT DISPUTE D IN FURTHER APPEAL BY THE APPELLANT. 6. IF THE ADDITION MADE IN ASSESSMENT ORDER HAS BECOME FINAL, IT IS BINDING ON BOTH PARTIES AND NEI THER PARTY COULD SEEK TO REOPEN IT IN PENALTY PROCEEDING S AS HELD IN THE CASE OF BHARAT RICE MILL (ALL) 278 I TR JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 6 6 599, AND S. S. RATANCHAND BHOLANATH (MP) 210 ITR 682. 7. AFTER ADDITION OF SUCH CASH CREDITS DURING ASSESSMENT, APPELLANT ACCEPTED THE ORDER OF CIT(A) WHO CONFIRMED SUCH ADDITION, HENCE ONUS SHIFTED ON APPELLANT IN PENALTY PROCEEDINGS TO SHOW THAT SUCH AMOUNT WAS NOT CONCEALED INCOME, AS HELD IN CASES OF JAMNADAS & CO., (GUJ)., 210 ITR 218, PRATHI HARDWARE STORE (CALCUTTA), 203 ITR 641, AND BHOOPATHY (MAD.) 113 ITR 188 AND APPELLANT FAILED TO DISCHARGE SUCH ONUS. 8. ON THE BASIS OF AFORESAID FACTS & CASE LAWS, CONCEALMENT PENALTY OF RS. 2,07,545/- LEVIED ON ADDITION OF CASH CREDIT & DISALLOWANCE OF INTEREST EXPENSE ON SUCH LOAN, IS HEREBY CONFIRMED. 9. AS A RESULT APPEAL IS DISMISSED. 4. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED AS UNDER :- JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 7 7 THE LOAN TRANSACTION OF RS. 5 LAKH WITH M/S. BALAJI FINANCE CO., BOMBAY, HAS BEEN DONE THROUGH A/C PAYEE CHEQUE ONLY AND ALSO THE INTEREST ON THE SAID LOAN WAS PAID THROUGH CHEQUE ONLY. IT WAS A SHORT TERM FINANCE ARRANGEMENT AND THE LOAN WAS REPAID IN SHORT PERIOD OF TIME. THE ASSESSEE HAD NO OTHER TRANSACTION WITH THE SAID PARTY THEREAFTER AND THE PARTY WAS NOT TRACEABLE. ASSESSEE FILED CONFIRMATION LETTER GIVEN BY MEDIATO R PERSON/BROKER AND THERE WAS GENUINE HARDSHIP IN GETTING CONFIRMATION LETTER FROM THE AID PARTY. IT WAS NEVER PROVED BY AO THAT IT WAS A BOGUS LOAN OR ACCOMMODATION TRANSACTION OR CONCEALED INCOME OF THE ASSESSEE. THE ASSESSEE HAD GENUINE HARDSHIP IN OBTAINING CONFIRMATION LETTER. PATNA HIGH COURT IN THE CASE OF ADDL. CIT VS. BAHRI BROS. P.LTD., 154 ITR 244 WHEREIN IT HAS BEEN HELD THAT THE VERY FACT THAT ALL THE TRANSACTION WERE ENTERED INTO BETWEEN THE PARTIES THROUGH A/C PAYEE JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 8 8 CHEQUES MAKES THE QUESTION OF IDENTITY OF CREDITORS FALL INTO OBLIVION AND IT BECOMES ABSOLUTELY IRRELEVANT. NO, PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE. SEE FOLLOWING :- NATIONAL TEXTILES V. CIT, 249 ITR 125 (GUJ) IN CASE OF CIT VS. UPENDRA V.MITHANI APPEAL.NO.1860 OF 2009(BOM) SAKET AGARWAL VS. ITO, (I.T.A.NO. 3194/DEL/2012) 5. ON THE OTHER HAND THE LD. DR RELIED UPON THE ORDER OF CIT(A). JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 9 9 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE ASSESSEE COMPANY HAS TAKEN UNSECURED LOAN OF RS. 5 LAKHS FROM M/S. BALAJI FINANCE COMPANY, BOMBA Y, THROUGH ACCOUNT PAYEE CHEQUE ON 28.5.2003. THE ASSE SSEE COMPANY HAS MADE PAYMENT OF RS. 78,524/- AFTER DEDU CTING TDS. THE ASSESSEE HAS REPAID THE LOAN ON 22.11.2003 AND 26.11.2003 BY ACCOUNT PAYEE CHEQUES TO THE PARTY AN D THE ACCOUNT WAS SQUARED UP. THE ASSESSEE COMPANY HAD NO OTHER TRANSACTION WITH THE SAID PARTY AFTER THIS TRANSACT ION. THE ASSESSEE TRIED TO CONTACT THE PARTY, BUT THE WHEREA BOUTS OF THE PARTY WAS NOT KNOWN TO THE ASSESSEE. THE NOTICE WAS ALSO SERVED BY THE INCOME TAX DEPARTMENT, WHICH WAS ALSO RETURNED UNSERVED. THEREFORE, THE ASSESSEE COULD NO T PRODUCE CONFIRMATION LETTER FROM THE SAID PARTY. WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION U/S 68 OF THE ACT AND THE PENALTY HAS ALSO BEEN IMPOSED ON THE SAME AMOUN T. THE ASSESSEE HAS NOT GONE IN APPEAL. WE ARE OF THE VIEW THAT WHEN THE ASSESSEE HIMSELF HAS ACCEPTED THE FACT THAT THE PARTY IS NOT ON THE KNOWN ADDRESS AND, THEREFORE, THE DEPARTMENT WAS JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 10 10 UNABLE TO FIND OUT THE PARTY. SIMILARLY, THE NOTICE COULD NOT BE SERVED. THEREFORE, THE AO HAS MADE THE ASSESSMENT A ND CONFIRMED THE ADDITION. SIMILARLY, THE ADDITION WAS CONFIRMED BEFORE THE CIT(A) AGAIN U/S 68 OF THE ACT. AS THE A SSESSEE HAS NOT GONE IN APPEAL BEFORE THE I.T.A.T., THE PENALTY PROCEEDINGS WERE INITIATED AND PENALTY IS CONFIRMED BY THE ASSE SSING OFFICER AND LD. CIT(A). WE FIND THAT THE SIMILAR IS SUE HAD COME UP BEFORE HON'BLE ORISSA HIGH COURT IN THE CASE OF CIT VS. PRATHI HARDWARE STORES, (1993) 203 ITR 641 (ORISSA) , WHEREIN IT IS HELD THAT SECTION 271(1)(C0 OF THE INCOME-TAX ACT, 1961, IS ATTRACTED WHERE IN THE COURSE OF ANY PROCEEDINGS UN DER THE ACT, THE AO OR THE FIRST APPELLATE AUTHORITY IS SAT ISFIED THAT ANY PERSON HAS CONCEALED PARTICULARS OF HIS INCOME, OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. TH E EXPRESSION HAS CONCEALED AND HAS FURNISHED INACC URATE PARTICULARS HAVE NOT BEEN DEFINED EITHER IN THE SE CTION OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING DIF FERENCES IN THE TWO CIRCUMSTANCES, THEY LEAD TO THE SAME EFFECT , VIZ. KEEPING OFF A CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 11 11 WHILE THE LATTER MAY BE INDIRECT IN ITS EXECUTION. THE POSITION OF LAW ON OR AFTER APRIL 1, 1976, IS THAT WHERE, IN RESPECT OF ANY ITEM OF CREDIT, (A) THE ASSESSEE FAILS TO OFFER AN EXPLANATION, OR (B) THE ASSESSEE OFFERS AN EXPLANATION WHICH THE TA XING OFFICER CONSIDERS TO BE FALSE, OR (C) THE ASSESSEE OFFERS A N EXPLANATION BUT NO MATERIAL OR EVIDENCE TO SUBSTANTIATE IT, HE SHALL BE DEEMED TO HAVE CONCEALED SUCH INCOME WITHIN THE MEA NING OF SECTION 271(1)(C). WHAT SECTIONS 68, 69, 69A, 69B AND 60C DEEM FOR THE PURPOSE OF ASSESSMENT WAS INJECTED FOR THE PURPOSE OF PENALTY BY OPERATION OF A DEEMED PROVISI ON. IN ESSENCE, THE EXPLANATION TO SECTION 271(1)(C) (BOTH AFTER 1964 AND 1976) IS A RULE OF EVIDENCE. PRESUMPTIONS WHICH ARE REBUTTABLE IN NATURE ARE AVAILABLE TO BE DRAWN. WE FIND THAT IN THAT CASE, THE HON'BLE ORISSA HIGH COURT HAS HELD A S UNDER :- HELD, THAT, IN THE INSTANT CASE, THE EXPLANATION O F THE ASSESSEE SO FAR AS GENUINENESS OF CREDIT OF THE LEN DER WAS CONCERNED WAS NOT ACCEPTED. THE ASSESSEES APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER FAILED. IT WAS OBSERVED THAT THE ASSESSEE OFFERED A N JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 12 12 EXPLANATION BUT NO MATERIAL OR EVIDENCE TO SUBSTANTIATE THE SAME. THE TRIBUNAL CAME TO A PRESUMPTUOUS CONCLUSION THAT THE ASSESSEE MAY HAVE SUCCEEDED IN THE APPEAL HAD IT COME BEFORE THE TRIBUNAL AGAINST THE ADDITION. NO BASIS OR REASON H AD BEEN INDICATED FOR SUCH CONCLUSION. THE TRIBUNAL DI D NOT CONSIDER THE CASE OF THE ASSESSEE KEEPING IN VI EW THE NEW EXPLANATION 1 TO SECTION 271(1)(C) APPLICAB LE ON AND AFTER APRIL 1, 1976. BY OPERATION OF THE EXPLANATION, THE ONUS LAY ON THE ASSESSEE AND FINDINGS GIVEN AT THE TIME OF ASSESSMENT ARE RELEVA NT AND HAVE PROBATIVE VALUE WHETHER THE ASSESSEE OFFERED NOTHING BEYOND THE EXPLANATION OFFERED AT T HE ASSESSMENT STAGE. IN SUCH A CASE, IT CANNOT BE SAID THAT THE ASSESSEE HAD DISCHARGED THE ONUS EVEN BY A PREPONDERANCE OF PROBABILITIES. THE INITIAL BURDEN WHICH LAY ON THE ASSESSEE WAS NOT DISCHARGED THERE WAS TOTAL ABSENCE OF MATERIAL TO REBUT THE JYOTI OVERSEAS LIMITED, INDORE, VS. DY. CIT, INDORE , I.T.A.NO. 626/IND/2014 A.Y. 2004-05 13 13 PRESUMPTION. THE CANCELLATION OF PENALTY WAS NOT VALID. 7. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE ARE OF THE VIEW THAT THE AO AND LD. CIT(A) IS JUSTIFIED IN IMPOSING THE PENALTY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 3 RD NOVEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 3 RD NOVEMBER, 2015. CPU* 1526