ITO-1(3), Agra V. M/s Rakesh Kumar Sunil Kumar Jain & Co., Agra

ITA 70/AGR/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6831 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Assessee Lawyers: RAKESH KUMAR AGARWAL
• Keywords: Unexplained cash credit; Search and seizure; Onus to prove; Bogus loan

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.70/AGR/2010 ASST. YEAR: 2001-02 INCOME-TAX OFFICER - 1(3), VS. M/S. RAKESH KUMAR SUNIL KUMAR AGRA. JAIN & CO., 30/129, CHHIPITOLA, AGRA. (PAN : AAFFR 2213 M). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA, JR. D.R. RESPONDENT BY : SHRI RAKESH KUMAR AGARWAL, C.A. ORDER THIS APPEAL HAS BEEN FIELD BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 28.01.2010 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- (1) THAT THE CIT(APPEALS)-I, AGRA HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.1,05,500/- & RS.12,660/- BEING BOGUS LOANS TAKEN FROM M/S. DEVI SAHAI BAIJ NATH, ASSOCIATES OF M/S. GANGA RAM GROUP OF CASES M ADE U/S. 68 OF I.T. ACT, 1961 ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND COR RESPONDING DISALLOWANCE OF INTEREST PAID ON THESE DEPOSITS WITHOUT APPRECIATIN G THE FACTS DISCUSSED IN THE ASSESSMENT ORDER. IN FACT, THESE CASH CREDIT ENTRI ES REPRESENTED THE ASSESSEES OWN CASH INTRODUCED IN THE BUSINESS THROUGH GANGA R AM GROUP OF CASES WHO HAVE ALREADY ADMITTED THAT THEY ARE ENGAGED IN BUSI NESS OF PROVIDING ENTRIES AND EARNING INCOME THEREFROM; (2) THAT THE CIT(APPEALS)-I , AGRA HAS ERRED IN LAW AND ON FACTS IN OBSERVING THAT THE DEPOSITORS HAVE NEVER ADMITTED THAT THEY W ERE ENGAGED IN ENTRY BUSINESS IGNORING THE FACT THAT THE ASSESSMENTS OF THE DEPOS ITORS HAVE BEEN COMPLETED HOLDING THAT THEY WERE ENGAGED IN ENTRY BUSINESS. THEY HAVE ADMITTED THIS FACT AND NO APPEAL ORDER WAS FILED BY THEM AGAINST THE A SSESSMENT. (3) THAT THE ORDER OF THE CIT(A)-I, AGRA IS BAD IN LAW AND ON FACT BECAUSE IN ALLOWING THE ASSESSEES APPEAL HE HAS COMPLETELY IG NORED THE FACT THAT IT HAS VEHEMENTLY BEEN PROVED THAT THE AMOUNTS INTRODUCED AS CASH CREDITS WERE ASSESSEES OWN UNACCOUNTED MONEY ROUTED THROUGH THE LOAN ENTRIES. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. WA S OF THE VIEW THAT GANGA RAM AGLARWAL GROUP ADOPTED MONEY-LAUNDERING WHICH WAS DETECTED A S A RESULT OF THE SEARCH AND SEIZURE OPERATIONS CONDUCTED IN THE SAID GROUP. AS PER THE MODUS OPERANDI ADOPTED, THIS GROUP HAS PROVIDED CHEQUES TO VARIOUS PERSONS IN LIEU OF CASH RECEIPTS FROM THEM. THE ENTRIES WERE REVERSED BY SHOWING THE RETURN OF LOAN BY CHEQUE WH EN THE DEBTORS WERE NO LONGER IN NEED OF THE LOAN BY RETURNING THE CASH THROUGH SELF WITHDRAWAL FROM THE BANK. THE ASSESSEE HAS SHOWN THE CHEQUE RECEIVED FROM THESE PARTIES AMOUNTING TO RS. 1,00,000/- INCLUDING INTEREST AMOUNTING TO RS.5,500/-. THE A.O. MADE THE ADDITION UNDER SECTI ON 68 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) AMOUNTING TO RS.1,05,500/- AND ALSO ES TIMATED INTEREST @ 12% BEING THE MONEY WHICH THE ASSESSEE WOULD HAVE EARNED AMOUNTING TO R S.12,660/-. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A), FOLLOWING THE DECISION OF T HE I.T.A.T., AGRA BENCH IN THE CASE OF ITO 1(1), AGRA VS. SHRI ADITYA AGARWAL ITA NO.262/AGR/2 006 FOR THE A.Y. 1998-99, DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF T HE CASE AND THE ARGUMENTS OF THE LD. A.R OF THE APPELLANT. INA THE ORDER DATED 15.02.2007 OF THE HONBLE ITAT, AGRA BENCH, AGRA IN ITO 1(1), AGRA VS . SRI ADITYA AGARWAL ITA NO.262/AGR/2006, AY 1998-99, IT HAS BEEN HELD AS UN DER :- WE HAVE CAREFULLY CONSIDERED THE ENTIRE MATERIAL O N RECORD AND CONCUR WITH THE FINDING OF THE LEARNED FIRST APPELL ATE AUTHORITY. IN OUR OPINION, THE AO WAS NOT JUSTIFIED IN HOLDING THE TR ANSACTION AS BOGUS MERELY ON THE BASIS OF GENERAL OBSERVATIONS. IT MA Y BE TRUE THAT THE TRANSACTIONS OF LENDER PARTY MIGHT HAVE BEEN FOUND TO BE FALSE BUT FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE, THE N ATURE OF PARTICULAR TRANSACTION IN DISPUTE IS TO BE EXAMINED. IT HAS N OT BEEN ESTABLISHED THAT THE TRANSACTION OF RS.1,00,000/- RELATING TO LOAN G IVEN BY DEVI SAHAI VINOD KUMAR WAS HELD TO BE BOGUS IN THEIR CASE. BE FORE THE CIT(A), IT WAS ALSO CLARIFIED THAT THE SAID LOAN WAS GIVEN BY THE SAID PARTY TO THE ASSESSEE OUT OF RS.1,71,000/- HAVING BEEN RECEIVED FROM M/S CR FOODS INDIA PVT. LTD THROUGH CHEQUE NO.320629 DATED 19.01 .1998. THUS, EVEN THE SOURCE OF THE SOURCE WAS EXPLAINED. IN ANY CAS E, THE ASSESSEE HAD 3 DISCHARGED THE BURDEN TO PROVE THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF THE TRANSACTION WHICH WAS CARRIED OUT THROUGH BA NKING CHANNEL AND THE CREDIT WORTHINESS OF THE CREDITOR. AFTER THE ASSES SEE HAD DISCHARGED THE BURDEN, IT WAS FOR THE DEPARTMENT TO HAVE DISPROVED THESE FACTS. THE AO DID NOT EXAMINE THE ASSESSEE NOR BROUGHT ANY MATERI AL ON RECORD TO PROVE SPECIFICALLY THAT THE LOAN TRANSACTION OF RS.1,00,0 00/- WAS FAKE OR BOGUS. THE AMOUNT OF LOAN WAS SUBSEQUENTLY REPAID AGAIN TH ROUGH BANKING CHANNEL. IN THE ABSENCE OF ANY MATERIAL TO THE CON TRARY, THE TRANSACTIONS CARRIED OUT IN REGULAR COURSE AND THROUGH BANKING C HANNEL HAVE TO BE ACCEPTED AS GENUINE. TO REPEAT, THE DEPARTMENT HAS NOT BEEN ABLE TO SHOW BY CONCRETE PROOF THAT THE TRANSACTION OF LOAN WAS NOT GENUINE. ON THE BASIS OF THE ABOVE, WE DO NOT FIND ANY SCOPE TO INT ERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). THE GROUNDS RAISED BY THE R EVENUE ARE, THEREFORE, REJECTED. AS IN THE ABOVE CITED CASE, IN THE PRESENT CASE ALS O, THERE DO NOT APPEAR ANY CASH DEPOSITS IN THE CONCERNED BANK ACCOUNT OF THE LENDER PRIOR TO THE ADVANCE OF THE IMPUGNED LOAN TO THE APPELLANT. IT IS AN ADMITTED POSITION THAT THE DEPOSIT HAS BEEN RECEIVED BY THE APPELLANT BY ACCOU NT PAYEE CHEQUE. THE DEPOSITOR IS ASSESSED TO TAX AND HAS CONFIRMED THE ADVANCE TO THE APPELLANT. MERE REFERENCE TO THE SEARCH IN THE CASE OF M/S GAN GA RAM AGARWAL & COMPANY AND OTHER ENTITIES OF THE SAID GROUP AND THE FINDIN GS GIVEN BYTE AO IN THOSE CASES ARE OF NO HELP IN THE PRESENT CASE. IT HAS NOT BEE N SHOWN THAT THE DEPOSITOR HAS EVER ADMITTED THAT IT WAS ENGAGED IN THE BUSINESS O F GIVING BOGUS ENTRIES OR THAT IT HAD GIVEN BOGUS ENTRIES TO THE APPELLANT. THIS BEI NG THE CASE UNLESS IT IS APPROVED BY THE AO WITH SOME CONCRETE EVIDENCE THAT THE APPE LLANTS TRANSACTION OF LOAN WITH THE ABOVE LENDER OF THE GANGA RAM AGARWAL GROU P IS NOT GENUINE, THE IMPUGNED DEPOSIT CANNOT BE BROUGHT TO TAX UNDER SEC TION 68 OF THE I.T. ACT, 1961. UNDER THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO UNDER SECTION 68 IS NOT SUSTAINABLE AND HENCE DELETED. 3. SIMILARLY, THE ADDITION OF RS.12,660/- WAS ALSO DELETED. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. THE LD. D.R. COULD NOT BRING ANY DECISION WHICH IS CONTRARY TO THE DEC ISION RELIED ON BY THE CIT(A), RATHER ACCEPTED THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE WHIC H ARE SIMILAR TO THE CASE OF ITO 1(1), AGRA VS. SHRI ADITYA AGARWAL ITA NO.262/AGR/2006. THE AMOUN T IN THE CASE OF THE ASSESSEE HAS BEEN RECEIVED AS DEPOSIT THROUGH ACCOUNT PAYEE CHEQUE. T HE DEPOSITOR HAS ASSESSED HIS INCOME TAX. 4 HE HAS CONFIRMED THE ADVANCE BEING GIVEN TO THE ASS ESSEE. THE ASSESSEE HAS THUS PROVED ALL THE INGREDIENTS GIVEN UNDER SECTION 68 OF THE ACT. HE HAS DISCHARGED THE BURDEN OF PROOF. THE ONUS IS ON THE PERSON WHO ALLEGES THAT APPARENT IS NOT R EAL. NO COGENT MATERIAL OR EVIDENCE BROUGHT TO MY KNOWLEDGE WHICH MAY PROVE THAT THE DEPOSIT RECEI VED BY THE ASSESSEE WAS BOGUS OR THE ASSESSEE HAS GIVEN CASH IN PLACE OF LOAN TAKEN THRO UGH ACCOUNT PAYEE CHEQUE. SIMILARLY, ADDITION OF RS.12,660./- WAS MADE MERELY ON ESTIMATE BASIS. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF THE CIT(A). 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 01.06.201 0). SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 1 ST JUNE, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY