Shri Prakash Hari Patil, Jalgaon V. ITO wd-1 [1] Jalgaon, Jalgaon

ITA 642/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85128 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Unexplained cash credit; Business income; Salary income; Source of fund; Corroborative evidences; Accommodation entries
• Section: 143(3); 234B; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 642/PN/2012 ASSESSMENT YEAR : 2008 - 09 SHRI PRAKASH HARI PATIL, P. NO. 36/1, NEAR SCHOOL NO.-45, GANESH NAGAR, JILHA PETH, JALGAON VS. THE INCOME TAX OFFICER, WARD 1(1), JALGAON (APPELLANT) (RESPONDENT) PAN NO. ASLPP3773E APPELLANT BY: SHRI SUNIL GANOO RESPONDENT BY: SHRI P.S. NAIK DATE OF HEARING : 07-08-2014 D ATE OF PRONOUNCEMENT : 21-10-2014 ORDER PER R.S. PADVEKAR, JM:- THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNE D ORDER OF THE LD. CIT(A)-II, NASHIK DATED 16-01-2012 FOR THE A.Y. 2008-09. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS IN THE APPEAL: 1. IN THE FACTS, CIRCUMSTANCES AND IN LAW LEARNED COMMI SSIONER OF INCOME TAX (APPEALS)-II, NASHIK ERRED IN CONFIRMING TH E ADDITION MADE BY ASSESSING OFFICER U/S. 68 IN RESPECT OF THE FOLLOWING CREDITORS:- A. SHRI RAVINDRA BABURAO KOLHE OF RS.6,00,000.00 B. SHRI VINOD JAGANNATH WAGH OF RS.10,00,000.00 C. SHRI TARANJIT SINGH KARAM SINGH CHABADA OF RS.3,50,000/- D. SHRI BHARAT HIMMAT PATIL OF RS.7,00,000/- 2. IN THE FACTS CIRCUMSTANCES AND POSITION OF LAW LEARN ED CIT(APPEALS)-II, NASHIK ERRED IN NOT DECIDING THE GROUND RELATING TO CHARGING OF INTEREST U/S. 234B AT RS.257315/-. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDE R. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SAND. THE ASSES SEE FILED THE RETURN OF INCOME FOR THE A.Y. 2008-09 ON 30-09-2008 DECLA RING TOTAL LOSS OF (-) RS.1,85,965/-. THE ASSESSEE CLAIMED THAT HE HAS PA ID ROYALTY OF 2 ITA NO. 642/PN/2012, SHRI PRAKASH HARI PATIL, JALGA ON RS.2,42,69,000/- TO DISTRICT COLLECTOR, JALGAON ON THE EXTRAC TION OF SAND. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSE SSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME-TAX ACT. IT WAS NOTIC ED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS TO THE TUNE OF RS.1,84,93,098/- FROM THE FOLLOWING NINE PERSONS: I. SHRI RAVINDRA BABURAO KOLHE II. SHRI ANIL SHALIGRAM RADE III. SHRI VINOD JAGANNATH WAGH IV. SHRI TARANJITSING KARAMSINGH CHHABRA V. SHRI ASHOK K. PARDESHI VI. SHRI KAILASH NARAYAN SONAWANE VII. SHRI DEVIDAS SURESH PAWAR VIII. SHRI BABULAL BHIKARAM ZAWAR IX. SHRI BHARAT HIMMAT PATIL OUT OF THE ABOVE LOAN CREDITORS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT PROVE CREDIT WORTHINESS AND GENUINEN ESS OF THE LOAN TRANSACTIONS IN RESPECT OF THE FOLLOWING PERSONS: I. SHRI RAVINDRA BABURAO KOLHE RS.6,00,000/- II. SHRI VINOD JAGANNATH WAGH RS.10,00,000/- III. SHRI TARANJITSINGH KARAMSINGH CHABARA RS.3,50,000/- IV. SHRI BHARAT HIMMAT PATIL RS.7,00,000/- THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION TO THE E XTENT OF RS.26,50,000/- IN RESPECT OF THE ABOVE FOUR LOAN CREDITORS AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 3. THE ASSESSE CHALLENGED THE SAID ADDITION BEFORE THE CI T(A). THE ASSESSEE PLEADED BEFORE THE CIT(A) THAT (I) THE ASSESSE E HAS ESTABLISHED THE IDENTITY OF THE LOAN CREDITORS, (II) THE GENUINENESS OF THE TRANSACTIONS AND (III) THE CREDITWORTHINESS OF THE LOAN CREDITORS. IT WAS ALSO STATED BEFORE THE CIT(A) THAT ALL THE DOCUMENTARY EVIDENCES LIKE PAN NO., BANK 3 ITA NO. 642/PN/2012, SHRI PRAKASH HARI PATIL, JALGA ON STATEMENT, CONFIRMATIONS LETTER ETC. WERE FILED BEFORE THE A SSESSING OFFICER AND HENCE, THE ASSESSEE HAS DISCHARGED THE BURDE N PUT ON HIM U/S. 68 OF THE ACT. THE CIT(A) CALLED FOR THE REMAND REPOR T OF THE ASSESSING OFFICER AND PART OF SAME IS RE-PRODUCED IN THE IM PUGNED ORDER WHICH IS AS UNDER: 5. THE APPELLANT WAS NOT ASSESSED TO INCOME TAX EAR LIER. THUS, THE YEAR UNDER APPEAL WAS THE FIRST YEAR OF HIS FILI NG OF RETURN I.E. A.Y. 2008-09. FOR THIS YEAR HE FILED HIS RETURN OF INCOM E ON 29/03/2010 DECLARING A LOSS OF RS.1,85,965/-. THE CASE WA S SELECTED UNDER COMPULSORY SCRUTINY AS THE UNSECURED LO ANS RAISED BY THE ASSESSEE EXCEEDED RS. 50 LAC (LOAN RAISED RS.1,8 4,93,098/). DURING THE COURSE OF SCRUTINY, IT WAS REVEALED THAT T HE DISTRICT COLLECTOR HAD ACCEPTED ASSESSEES TENDER FOR EXTRACTIO N OF SAND OF RS.1,60,857/- BRASS FOR A TOTAL PAYMENT OF ROYALTY OF RS.2,46,10,450/-. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE EXTRACTED AND SOLD OUT 57,636 BRASS SAND AND HAD SHOWN THE SALE CONSIDERATION OF THIS SAND AT RS.1,02,07,500/-. THE MAIN ISSUE FOR CONSIDERATION DURING THE COURSE OF S CRUTINY OF ASSESSMENT WAS THE SOURCES OF PAYMENT OF ROYALTY BY THE ASSESSEE TO THE DISTRICT COLLECTOR. IT WAS EXPLAINED BY THE ASSE SSEE THAT A SUM OF RS.1,84,93,098/- WAS BORROWED FROM A PERSONS AS E NLISTED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER ON PA GE NO.2 PARA NO. 9. OUT OF THESE CREDITORS, CREDITS TO THE TUNE OF RS.26,50,000/- WERE NOT FOUND TO BE GENUINE AS PER DETAILS GIVEN BELOW: I. SHRI RAVINDRA BABURAO KOLHE RS.6,00,000/- II. SHRI TARANJITSINGH KARAMSINGH CHABARA RS.3,50,000/- III. SHRI VINOD JAGANNATH WAGH RS.10,00,000/- IV. SHRI BHARAT HIMMAT PATIL RS.7,00,000/- RS.26,50,000/- ACCORDINGLY THE ASSTT. WAS FINALIZED ON 29/12/2010 O N A TOTAL INCOME OF RS.24,64,035/- AS AGAINST LOSS RETURNED AT RS.1 ,85,965/-. THE ABOVE ADDITION OF RS.26,50,000/- BEING UNEXPLAINED CASH CREDITS IS THE SUBJECT MATTER OF THE PRESENT APPEAL. BEFORE THE HON'BLE CIT(A) THE APPELLANT ASSESSEE FILED WRITTEN SUB MISSION ON 04/07/2011 AND 11/07/2011 ON WHICH THE REMAND REPOR T FROM THE UNDERSIGNED HAS BEEN CALLED FOR. IN HIS MAIN SUBMISSIO NS VIDE LETTER DID. 04/07/2011, THE APPELLANT ASSESSEE HAS RAISED GR . NO. 1A TO GR. NO. 1D I.E. FOUR GROUNDS PERTAINING TO DISALLOWANCES OF CASH CREDITS IN FOUR CASES MENTIONED ABOVE. GR.NO.2 PERTAINS TO CHARGEABILITY OF INTEREST. WITH REGARD TO GR. NO. 1A WHICH IS IN THE CASE OF CRE DITOR SHRI RAVINDRA B. KOLHE AMOUNTING TO RS.6,00,000/-, IT WAS CONT ENDED BY THE ASSESSEE THAT THE CREDITOR SHRI R.B. KOLHE IS BEIN G ASSESSED TO TAX UNDER PAN AOXPK2412F, HAVING SOURCES OF INCOME S UCH AS AGRICULTURE AND CULTIVATION OF AGRICULTURAL LANDS OF OTHER AGRICULTURIST. 4 ITA NO. 642/PN/2012, SHRI PRAKASH HARI PATIL, JALGA ON THE APPELLANT ASSESSEE HAS FILED BANK ACCOUNT EXTRACT AND OTHER RELEVANT DETAILS. THE PAYMENT WAS MADE BY CHEQUE AND T HE SAME WAS PARTLY REPAID BY CHEQUES IN THE YEAR OF ASSTT. A ND IN SUBSEQUENT YEARS. THUS, IT IS CONTENDED THAT THE ASSE SSEE HAS PROVED IDENTITY OF CREDITOR, SOURCE AND GENUINENESS OF THE TRANSACTION. IT IS SUBMITTED THAT ON 14/12/2010 THE AO HAD RECORDED THE STATEMENT OF THIS CREDITOR, WHEREIN HE H AS DEPOSED THAT HIS YEARLY AGRICULTURAL INCOME BY CULTIVATING OTHERS AGRICULTURAL LANDS IS RANGING FROM RS.30,000/- TO RS.40,000/- P.A. HE H AS STATED IN REPLY TO QUESTION NO. 4 THAT HE HAS GIVEN R S.6,00,000/- TO SHRI PRAKASH HARI PATIL BY CHEQUE. HE WAS ALSO REQUES TED TO EXPLAIN THE SOURCES OF CASH DEPOSITS IN THE BANK ON VARIOUS DATES TO JUSTIFY CASH DEPOSITS VIS-A-VIS HIS TOTAL EARNING TO THE TUNE OF AS TO FROM WHICH INCOME THE AMOUNT HAS BEEN DEPOSITED IN THE B ANK AND WHO HAS DEPOSITED THE SAID AMOUNT. IN VIEW OF THIS, THE CA SH CREDIT IN THE CASE OF SHRI RAVINDRA B. KOLHE WAS NOT FOUND TO BE GE NUINE, AS THE CREDITOR HIMSELF WAS A MAN OF NO MEANS AND IT WAS RI GHTLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. WITH REGARD TO GR. NO. 1B WHICH IS IN THE CASE OF CRE DITOR SHRI VINOD JAGANNATH WAGH AMOUNTING TO RS.10,00,000/-, IT IS CONTEN DED BY THE ASSESSEE THAT THE CREDITOR SHRI V.J. WAGH IS BEIN G ASSESSED TO TAX UNDER PAN AANPW3266C, HAVING SOURCE OF INCOME FR OM AGRICULTURE. THE AGRICULTURE LAND IS IN THE NAME OF F ATHER AND THIS CREDITOR (ABOUT 26 ACRES AND 87 GUNTHA). THE LAND IS IRRIGATED AND THE NET AGRICULTURE INCOME IS STATED TO BE 3 LAC TO 4 LAC. IT IS SUBMITTED THAT ON 14/12/2010 THE AO HAD RECORDED THE STATEMENT OF THIS CREDITOR WHEREIN HE, IN REPLY TO QUESTION NO . 2 & 3 DEPOSED THAT HE DERIVED AGRICULTURE INCOME. IN F.Y. 2001-02 HE H AD ALSO RECEDED CONTRACT FROM JALGAON MUNICIPAL CORPN. HE HAS STATED THAT HE HAD FILED RETURN FOR A.Y. 2001-02 AND A.Y. 2002-03 ONLY . IN REPLY TO QUESTION NO.6 HE HAS STATED THAT HE HAS NOT MAINT AINED ANY BOOKS OF ACCOUNTS AND THE BANK ACCOUNT WAS OPENED I N F.Y. 2006- 07. HE HAS ALSO STATED THAT ABOUT RS.7 TO 8 LAC CASH R EMAINS IN THE HOUSE. IT IS INCREDIBLE THAT WHEN A MAN IS HAVING BANK ING FACILITY, HE SHALL TAKE THE RISK OF KEEPING HUGE CASH AT HOME. THE CREDITOR IS NOT SO BIG LANDLORD WHO CAN ADVANCE INTEREST FREE HUGE LO AN OF RS.10,00,000/-. IN SUCH CIRCUMSTANCES, THIS CREDITOR WAS ALSO NOT FOUND TO BE GENUINE AND HENCE IT WAS DISALLOWED. WITH REGARD TO GR. NO. 1-C SHRI TRANAJITSINGH KARAMSIN GH CHABRA AMOUNTING TO RS.3,50,000/-, THE AO HAD RECORDED THE STAT EMENT OF THIS CREDITOR ON 21/12/2010. IN HIS STATEMENT HE HAS DEPOSED THAT HIS BUSINESS INCOME IS AROUND 50,000/-AND BUSINESS I NCOME FOR THE A.Y. 2010-2011 IS NIL. IT IS FURTHER DEPOSED THAT THE AMO UNT OF RS.3,50,000/- HAS BEEN ADVANCED TO THE APPELLANT ASSESSE E OUT OF SALARY OF HIS UNMARRIED DAUGHTER MS. INDERJITSINGH T. KAUR, WHICH WAS ABOUT RS.1.5 TO 1.75 LAC. HE ALSO SAID OUT HIS PLOT AN D RECEIVED HIS SHARE ABOUT RS.75,000/- TO 1,00,000/-. HE HAS ALSO STA TED THAT CERTAIN AMOUNT WAS RECEIVED FROM PPF ACCOUNT OF HIS WIFE. HOWEVER, FOR ALL THESE STATEMENT NO DOCUMENTARY PROOF WAS FILED AT THE TIME OF RECORDING THE STATEMENT. ON GOING THROUGH THE RECORD IT IS SEEN THAT ASSESSEE'S DAUGHTER WAS EARNING