Sh. Himanshu Chawla, New Delhi V. ITO, New Delhi

ITA 737/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8371 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Unexplained investment; Gift; Opportunity of cross examination; Onus to prove; Bogus loan
• Section: 133A; 68; 69

Judgement Text

ITA NO.737/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 737/DEL/2014 A.Y. : 2005-06 SH. HIMANSHU CHAWLA 4/5812, PYARE LAL ROAD, KAROL BAGH, NEW DELHI 5 (PAN: AAFPC5028D) VS. INCOME TAX OFFICER, WARD 33(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAMESH GOEL, CA DEPARTMENT BY : SH. V.R. SONBHADRA, SR. DR DATE OF HEARING : 23-03-2016 DATE OF ORDER : 04-04-2016 ORDER PER H.S. SIDHU : JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 26.12.2013 PASSED BY THE LD. CIT(A)-XXI, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- 1 THAT THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS ON RECORD. ITA NO.737/DEL/2014 2 2. THAT WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE APPEAL OF AD DITION OF RS. 5,00,000/- TAKEN AS LOAN BY CHEQUE AND REPAID BY CH EQUE.? 3. THAT THE CASE OF THE ASSESSEE WAS COVERED WITH T HE CASE OF GOLDEN REMEDIES PVT. LTD. VS. ITO (2007) 18 SOP 26 0 DELHI IN WHICH IT WAS HELD THAT TAKING OF LOAN BY CHEQUE AND REPAYMENT OF LOAN BY CHEQUE DO NOT COME UNDER THE PROVISIONS OF SECTION 68 AND SUCH THE ADDITION IS ILLEGAL. IT IS PRAYED THAT THE ADDITION OF RS. 5,00,000/- MA DE IN THE INCOME OF THE ASSESSEE BE DELETED AND OBLIGE. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/ S 133A IN THE CASE OF M/S. GURCHARAN JEWELLERS AND ITS PROPRIETOR SH. ASHOK KU MAR CHAUHAN WAS CONDUCTED BY THE DIRECTORATE OF INVESTIGATION, NEW DELHI AND IT WAS FOUND THAT THERE WAS A SCAM OF ACCOMMODATION ENTRY IN WHICH BO GUS ENTRIES IN THE GARB OF BOGUS GIFTS, BOGUS CAPITAL GAINS, BOGUS LOANS AND B OGUS SHARE CAPITAL ETC. WERE GIVEN ON COMMISSION BASIS AND THE CHEQUES WERE ISSU ED TO THE VARIOUS BENEFICIARIES AFTER TAKING UNACCOUNTED CASH FROM TH E VARIOUS BENEFICIARIES ETC. DETAILED ENQUIRIES WERE CONDUCTED BY THE DIT (INV) NEW DELHI AND THE VARIOUS ENTRY OPERATORS LIKE SH. MAHESH GARG AND TRILOK CHA ND BANSAL ETC. ADMITTED BEFORE THE ADDL. DIT (INV), UNIT-I NEW DELHI THAT T HERE WAS A SCAM OF ACCOMMODATION ENTRY GIVEN BY THE VARIOUS ENTRY OPER ATORS ON COMMISSION BASIS. THE DETAILS OF THE ACCOMMODATION ENTRY OPERATORS AN D THEIR BENEFICIARIES WERE COMPILED AND THE SAME WERE SENT TO THE VARIOUS AOS FOR NECESSARY ACTION. ITA NO.737/DEL/2014 3 2.1 ACCORDINGLY, ON THE SPECIFIC INFORMATION RECE IVED FROM THE DIT (INV), NEW DELHI, THE AO MADE THE ADDITION OF RS. 5 LACS VIDE ORDER DATED 24.12.2010 PASSED U/S. 143(3)/147 OF THE I.T. ACT, 1961 AND AS SESSED THE INCOME AT RS. 6,10,742/-. 3. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 24.12. 2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 26.12.2013 DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE IMPUGNED ORDER DATED 26.12.2013, A SSESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. 5. LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HA S STATED THAT ASSESSEE HAS RECEIVED A LOAN FROM SH. PREM CHAND BATRA FOR RS . 5 LACS ON 20.7.2004 VIDE ACCOUNT PAYEE CHEQUE AND DURING THE ASSESSMENT HEA RING HAS FILED THE COMPLETE DETAILS OF THE LENDER SH. PREM CHAND BATRA VIDE HIS LETTER DATED 12.11.2010, WHO IS DULY ASSESSED TO INCOME TAX ALONGWITH THE PAN C ARD, COPY OF BALANCE SHEET AND AFFIDAVIT AND BANK STATEMENT REGARDING GIVING LOAN TO HIMANSHU CHAWLA. HE FURTHER STATED THAT IF IT HAS BEEN AN ACCOMMODAT ION ENTRY THE ASSESSEE COULD NOT HAVE NOT REPAID TO SAME, WHICH WAS REPAID TO S H. PREM CHAND BATRA ON 06.11.2010 VIDE ACCOUNT PAYEE CHEQUE OF ICICI BANK. HENCE, HE REQUESTED THAT THE ADDITION OF RS. 5 LACS MADE BY THE AO AND CONFI RMED BY THE LD. CIT(A) MAY BE DELETED. IN SUPPORT OF HIS CONTENTION, HE FI LED A PAPER BOOK CONTAINING ITA NO.737/DEL/2014 4 PAGES 1 TO 70 HAVING THE DETAILS /DOCUMENTS RELEVA NT FOR THE ASSESSMENT ALONGWITH THE COPIES OF THE VARIOUS CASE LAWS. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REQUESTED THE SAME MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES, THE PAPER BOOK A ND DOCUMENTS ATTACHED THEREWITH AND THE CASE LAWS CITED BY THE LD. AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE. WE FIND THAT THE AO HAS NOTED THAT SPECI FIC INFORMATION FROM THE DIT(INV), NEW DELHI HAS BEEN RECEIVED ABOUT THE AC COMMODATION ENTRY OF RS. 5,00,000/- TAKEN BY THE ASSESSEE AND ACCORDINGLY A O HAS MADE THE ADDITION AND THE SIMILARLY, THE LD. CIT(A) IN HIS APPELLATE PROC EEDINGS HAS OBSERVED THAT THERE IS A SCAM OF ACCOMMODATION ENTRY OPERATORS AN D THE DETAILED ENQUIRIES WERE CONDUCTED BY THE DIT (INV.), NEW DELHI AND THE ENTRY OPERATORS HAD ADMITTED THAT THEY HAD GIVEN THE ACCOMMODATION ENTR IES TO THE VARIOUS BENEFICIARIES AFTER UNACCOUNTED CASH AND COMMISSIO N FROM THE VARIOUS BENEFICIARIES. LD. CIT(A) HAS ALSO OBSERVED THAT WH EN THE CASE WAS TAKEN UP FOR SCRUTINY THE ASSESSEE RETURNED THE ALLEGED LOAN TO AVOID SCRUTINY WHICH APPARENTLY SHOWS THAT THE IDENTITY, CREDITWORTHINES S AND THE GENUINENESS OF THE ALLEGED CLAIM OF LOAN ARE NOT AT ALL PROVED AS THE ASSESSEE HAD ACTUALLY RECEIVED THE ACCOMMODATION ENTRY AS FOUND IN THE ENQUIRIES C ONDUCTED BY DIT (INV) NEW DELHI AND THE AO AND ACCORDINGLY, HE CONFIRMED THE ACTION OF THE AO. ITA NO.737/DEL/2014 5 HOWEVER, WE NOTE THAT THE ASSESSEE SH. HIMANSHU CHAWLA RECEIVED A LOAN FROM SH. PREM CHAND BATRA FOR RS . 5,00,000/- ON 20 . 07.2004 BY DULY ACCOUNT PAYEE CHEQUE . DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FI L ED COMPLETE DETAI L S OF THE LENDER SH. PREM CHAND BATRA VIDE LETTER DAT ED 12.11 . 2010. THE LENDER SH. PREM CHAND CHAWLA HAS GIVEN A LO AN OF RS.5,00,000/ - TO SH. HIMANSHU CHAWLA. SH. PREM CHAND BATRA IS DULY ASSESSED TO INCOME TAX VIDE PAN AAGPB2136E. WE HAVE SEEN THE COMPLETE DETAILS OF THE LENDER SH. PREM CHAND BATRA I . E . COPY OF INCOME TAX RETURN, COPY OF PAN CA RD , COPY OF BALANCE SHEET AND HIS AFFIDAVIT CONFIRMING THAT HE HAS GIVEN THE LOAN TO HIMANSH U C HAWL A, BANK STATEMENT OF THE LENDER I . E. WITH CORPORATIO N BANK, KAROL BAGH, DELHI A/C NO. SB01/013579. WE FIND THAT THE LENDER HAS GIVEN LOAN O F RS . 5 , 00,0 00 /- ONLY FROM HIS BANK ACCOUNT AND THERE WAS BALANCE OF RS.15, 66,084.52 ON 20.07.2004 . FROM THE BALANCE SHEET OF DONOR ALSO WE FIND THAT THE D ONOR IS HAVING A CAPITAL OF RS. 75 . 43 LA CS. SO THE CO NCLUSION DRAWN BY THE LD. AO IS TOTALLY WRONG THAT IT IS AN ACCOMMODATION ENTRY. WE FIN D FORCE IN THE ASSESSEES AR CONTENTION THAT IF IT HAS BEEN A ACCOMM ODATION ENTRY THE ASSESSEE COULD HAVE NOT REPAID THE SAME. IN THE SAID CASE LOAN HAS BEEN REPAID BY THE ASSESSEE TO SH. PREM CHAND BATRA ON 06 .11 . 2010 VIDE CHEQUE NO.226883 DRAWN ON ICICI BANK. THUS, IN OUR CONSIDER ED OPINION, THE ASSESSEE HAS ESTABLISHED COMPLETE IDENTITY OF THE LENDE R AND HE DISCHARGED HIS ONUS. WE ARE OF THE VIEW THAT IF THE ASSESSEE WAS N OT ABLE TO PRODUCE THE ITA NO.737/DEL/2014 6 LENDER THE AO SHOULD HAVE CALLED HIM BY ISSUING SUMM ONS BUT NO SUCH OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN, SO THE AD DITION MADE BY THE AO IS TOTALLY UNJUST I FIED. IT IS A SETTLED LAW THAT IT IS NOT THE DUTY OF THE ASSE SS EE TO BRING OR PRODUCE THE LENDER/DONOR, IF HE HAS DISCHARGED HIS ONUS. BEFORE MAKING ANY ADDITION THE AO MUST BR I NG SOME MATERIAL ON RECORD TO PROVE H I S ALLEGATION THAT THE IMPUGNED AMOUNT REPRESENTED ASSESS EE'S UND I SCLOSED INCOME . BUT THE AO HAS NOT DONE ANY EFFORTS IN THIS REGARD . ADDIT I ONS ARE MADE TOTALLY ON SURMISES BASIS WHICH ARE NOT MA INTAINABLE IN LAW. IT IS EVIDENT THAT ASSESSEE HAS ESTABLISHED IDENTIT Y, SOURCE AND GENUINENESS OF THE TRANSACTION WHICH WAS DONE ONLY THROUGH BANK ING CHANNELS. TO SUPPORT OUR AFORESAID VIEW, WE DRAW SUPPORT FROM THE FOLLO WING DECISIONS:- A. CIT .V. GANGESHWARI METAL (P.) LTD. (2014) 361 ITR 10 (DELHI) (HC) S.68 CASH CREDITS-SHARE APPLICATION MONEY-EVIDENC E FURNISHED BY ASSESSEE-ADDITION WAS NOT JUSTIFIED. THE ASSESSEE R ECEIVED CERTAIN AMOUNT AS SHARE APPLICATION MONEY. IN ORDER TO PROVE GENUINENESS OF TRANSACTION, THE ASSESSEE BROUGHT ON RECORD VARIOUS DOCUMENTS SUCH AS NAMES AND ADDRESSES OF SH ARE APPLICANTS, CONFIRMATORY LETTERS OF SHARE APPLICANT S, COPIES OF THEIR BANK STATEMENTS ETC. THE ASSESSING OFFICER FO UND THE ASSESSEE'S EXPLANATION TO BE UNACCEPTABLE AND, CONS EQUENTLY, ADDED THE AMOUNT OF SHARE APPLICATION MONEY TO ASSE SSEE'S ITA NO.737/DEL/2014 7 TAXABLE INCOME WHICH WAS DELETED BY THE COMMISSIONER(APPEALS). THE TRIBUNAL UPHELD THE ORDE R OF THE COMMISSIONER (APPEALS).ON APPEAL HIGH COURT HEL D THAT, THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED A LL THE RELEVANT MATERIAL. IN SUCH AN EVENTUALITY NO ADDITI ON CAN BE MADE UNDER S. 68. (A Y. 2004-05). B. CIT V. KAMDHENU STEEL & ALLOYS LTD., SLP (CC) NO. 15640 OF 2012, DATED 17-09-2012 (SUPREME COURT) ISSUE INVOLVED: 'WHETHER ONCE THE ASSESSEE HAS DISC HARGED THE INITIAL BURDEN BY FILING ADEQUATE EVIDENCE/MATERIAL , REVENUE IS SUPPOSED TO DISLODGE THE INITIAL BURDEN DISCHARGED BY THE ASSESSEE AND TO THROW THE BALL AGAIN IN THE ASSESSEE'S' COUR T DEMANDING THE ASSESSEE TO GIVE SOME MORE PROOFS, AS THE DOCUMENTS PRODUCED EARLIER BY THE ASSESSEE EITHER BECOME SUSPECT OR AR E RENDERED INSUFFICIENT IN VIEW OF THE MATERIAL PRODUCED BY TH E DEPARTMENT REBUTTING THE ASSESSEE'S DOCUMENTARY EVIDENCE?' DECIDED IN FAVOUR OF : ASSESSEE HELD: THE HON'BLE SUPREME COURT HAS DISMISSED THE S PECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE CIT V. KAMDHENU STEEL & ALLO YS LTD. [2014] 361 ITR 220 IN WHICH IT HAS BEEN HELD: CASH CREDITS-- ITA NO.737/DEL/2014 8 UNEXPLAINED INVESTMENTS--BURDEN OF PROOF--SHARE APP LICATION MONEY--ASSESSEE EXPLAINING SOURCE' OF MONEY-IDENTIT IES OF APPLICANTS AND THEIR CREDITWORTHINESS ESTABLISHED-- BURDEN OF PROOF DISCHARGED BY ASSESSEE--ONUS SHIFTED TO DEPARTMENT- -NO EVIDENCE TO SHOW TRANSACTIONS WERE NOT GENUINE--SECTIONS 68 AND 69 NOT APPLICABLE--INCOME-TAX ACT, 1961, SS. 68, 69: 7.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE HONBLE SUPREME COURT AND HI GH COURT, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FULLY PROVED ITS BURDE N AND DISCHARGED THE ONUS UPON THE DEPARTMENT, HOWEVER, NO CONTRARY EVIDENCE WAS SHOWN BY THE AO WHICH WILL PROVE THAT THE TRANSACTIONS WERE NOT GEN UINE, THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS T OTALLY UNWARRANTED AND THE SAME NEEDS TO BE DELETED. ACCORDINGLY, WE DELE TE THE ADDITION IN DISPUTE AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/04/2016. SD/- SD/- [N.K. SAINI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04/04/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT ITA NO.737/DEL/2014 9 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES