ITO, Faridabad V. M/s Subhash Chand Aggarwal (HUF), Faridabad

ITA 755/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3872 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 19-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: K K AGGARWAL
• Keywords: Onus to prove; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.755 /DEL/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, VS. M/S SUBHASH CHAND AGGARWAL WARD-II (1), (HUF), PLOT NO.381, SECTOR-24 FARIDABAD /B-610, NEHRU GROUND, FARIDABAD PAN NO.AALHS 9558 N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KISHORE B., SR. DR RESPONDENT BY : SHRI K.K. AGGARWAL, CA ORDER PER K.G. BANSAL, AM: THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RET URN ON 29.10.2005 DECLARING TOTAL INCOME OF `1,64,300/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE-HUF IS A PROPRIETOR OF M/S PUSHPA AUTO INDUSTRIES AND IT IS CARRYING ON THE BUSINESS OF MANUFACTURE AND TRAD ING IN STEEL PARTS AND IRON AND STEEL RESPECTIVELY. THE ASSESSEE SHOWED RECEIPT OF UNSECURED LO AN FROM 24 PARTIES AGGREGATING TO `23,22,475/-. WHEN QUESTIONED ABOUT TH E NATURE AND SOURCE OF THE LOANS, IT FILED AFFIDAVITS, CONFIRMATIONS, COPIES OF INCOME-TAX RETURNS OR BANK ACCOUNTS OF THE LENDERS. NOT SATISFIED WITH THE EVIDENCE, THE ASSESSING OFFICER 2 DIRECTED THE ASSESSEE TO PRODUCE THE LENDERS. HOWEVER, EVEN AFTER AVAILING OF A NUMBER OF OPPORTUNITIES, THE ASSESSEE WAS ABLE TO PRODUCE O NLY TWO CREDITORS SHRI RAJU GARG AND SHRI MAHESH CHAND SHARMA. THE ASSESSING O FFICER RECORDED THE STATEMENTS AND CAME TO THE CONCLUSION THAT THEY DID NOT HAVE THE LENDING CAPACITY. THEREFORE, THE WHOLE OF THE AMOUNT AND INTEREST ALLEGEDLY PA ID TO THE AMOUNTS WAS ADDED TO THE TOTAL INCOME, WHICH WAS COMPUTED AT `26,77 ,260/-. 2. THE MATTER WAS AGITATED BEFORE THE CIT(A), FARIDABAD. THE LEARNED CIT(A) DELETED THE ADDITION IN RESPECT OF LOANS BY INTER ALIA ME NTIONING THAT NON-PRODUCTION OF THE LENDERS DOES NOT IPSO FACTO MAKES THE LOANS NON-GE NUINE. THE ASSESSEE HAD FURNISHED SUFFICIENT EVIDENCE SUCH AS PAN, ITRS., CONFIR MATIONS, AFFIDAVITS ETC. WHICH ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE LENDER S. THE GENUINENESS WAS ALSO ESTABLISHED BY FILING CONFIRMATIONS OR AFFIDAVIT S. THE ADDITION IN RESPECT OF INTEREST WAS ALSO DELETED BY MENTIONING THAT TAX WAS DEDUC TED AT SOURCE WHEREVER APPLICABLE. THUS, THE APPEAL OF THE ASSESSEE WAS ALLOWED. 3. BEFORE US, THE LEARNED DR SUBMITTED THAT THE BOOKS OF THE ASSESSEE WERE CREDITED WITH THE AMOUNTS OF LOAN. THEREFORE, THE BURDEN OF PROOF WAS ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE NATURE AND THE SOU RCE OF THE CREDITS. THE ASSESSEE COULD PRODUCE ONLY TWO LENDERS, WHO WERE FOUND TO BE PERSONS OF MEAGER MEANS. THEY DID NOT HAVE THE CAPACITY TO ADVANCE LOANS . OTHER CREDITORS COULD NOT BE PRODUCED AT ALL. THEREFORE, IT IS AGITATED THAT T HE BURDEN CAST ON THE ASSESSEE HAS NOT BEEN DISCHARGED. ACCORDINGLY, IT IS ARG UED THAT THE ASSESSING OFFICER WAS RIGHT IN ADDING THE CREDITS TO THE TOTAL IN COME. FURTHER, SINCE THE LOANS WERE NOT FOUND TO BE GENUINE, THE INTEREST WAS ALSO RIGHTL Y DISALLOWED BY THE ASSESSING OFFICER. 3 3.1 IN REPLY, THE LEARNED COUNSEL SUBMITTED THAT THERE ARE C ERTAIN ERRORS IN THE FIGURES ADOPTED BY THE ASSESSING OFFICER. DETAILS OF LO ANS IN TERMS OF THE NAME OF THE LENDER AMOUNT, INTEREST, TDS MADE, THE DATE ON WHICH L OAN AND INTEREST WERE PAID AND THE EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER W ERE PLACED BEFORE US IN A TABULAR FORM. ACCORDING TO THE TABLE, THE A GGREGATE OF LOAN AMOUNTS TO `21,59,500/-, INTEREST AT `1,80,986/- AND TDS AT `18,5 11/-. 3.2 THE TABLE ALSO DIVIDES THE LENDERS IN THREE PARTS. PAR T A CONSISTS OF THOSE LENDERS WHO ARE ASSESSED TO TAX AND WHO ADVANCED LOAN BY WAY OF ACCOUNT PAYEE CHEQUES. THE INTEREST AND LOAN WERE RETURNED TO THEM BY ACC OUNT PAYEE CHEQUES. THERE ARE 5 SUCH LENDERS. THE AGGREGATE LOAN FROM THESE FIV E LENDERS AMOUNT TO `18,08,000/- AND THE INTEREST PAID TO THEM AMOUNTS TO ` 1,80,986/-. TAX AMOUNTING TO `18,511/- HAS BEEN DEDUCTED AT SOURCE FROM THE INTEREST PAID TO THEM. FURTHER, THE EVIDENCE IN RESPECT OF THESE PERSONS HAS BEEN PLAC ED IN THE PAPER BOOK ON PAGE NOS. 3 TO 30. THE EVIDENCE CONSISTS OF CONFIRMA TIONS, AFFIDAVITS, ITRS. AND THE BANK DETAILS. THE CASE OF THE LEARNED COUNSEL IS THAT THE LENDERS ARE IDENTIFIABLE FROM THE RECORDS OF THE REVENUE. THEY ARE ASSESSED TO TAX. MONEYS HAVE BEEN RECEIVED AND PAID BY ACCOUNT PAYEE CHEQUES AND TAX HAD BEEN DEDUCTED AT SOURCE. THUS, THE DETAILS PRIMA FACIE ESTABLISH THEIR ID ENTITIES, CREDITWORTHINESS, AND GENUINENESS OF THE TRANSACTIONS. HAVING CONSIDERED THESE DETAILS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS EXPLAINED THE NATURE AND SOURC E OF THE CREDITS IN THE NAMES OF THESE FIVE PERSONS. IF THE ASSESSING OFFICER HAD ANY DOUBTS, HE COULD HAVE ISSUED SUMMONS FOR VERIFYING THE GENUINENESS OF THE LOAN S. HOWEVER, INSTEAD OF DOING SO, THE GOOD EVIDENCE FILED BY THE ASSESSEE HAS BEEN I GNORED AND TAKEN AS NO EVIDENCE. THAT IS NOT THE CORRECT APPROACH. ACCORDI NGLY, THE ADDITIONS OF `18,08,000/- AND `18,511/- ARE DELETED. 4 3.3 CATEGORY B CONSISTS OF FIVE PERSONS FROM WHOM AG GREGATE LOAN OF `91,000/- WAS TAKEN. NO INTEREST WAS PAID TO THEM. TH E LOAN WAS TAKEN IN CASH AND REPAID IN CASH. THE EVIDENCE CONSISTS OF THE COPIES O F INCOME-TAX RETURNS, AFFIDAVITS AND CONFIRMATIONS. THE CASE OF THE LEARNED C OUNSEL IS THAT THESE LENDERS ARE ALSO IDENTIFIABLE FROM THE RECORD OF THE REVENUE. THEY HAVE CONFIRMED THE LOAN AND THEY ARE ASSESSED TO TAX. THE MERE FACT THAT LOAN W AS TAKEN IN CASH AND REPAID IN CASH DOES NOT RENDER THE LOANS TO BE NON GENUINE IN T HE LIGHT OF EVIDENCES FILED. THESE EVIDENCES HAVE BEEN PLACED IN THE PAPER BOOK FROM PAGE NO S.35 TO 83. HAVING CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES A ND THE EVIDENCE, IT IS HELD THAT THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN CAST O N IT. THEREAFTER, IT WAS FOR THE ASSESSING OFFICER TO BRING ON RECORD SOME EVIDENCE TO R EBUT THE EVIDENCE FILED BY THE ASSESSEE. IN ABSENCE THERETO, IT IS HELD THAT THE LEAR NED CIT(A) WAS RIGHT IN DELETING THE ADDITION OF `91,000/- IN RESPECT OF THESE LEND ERS. 3.4 CATEGORY C CONSISTS OF 14 PERSONS FROM WHOM AGG REGATE LOAN OF `2,60,500/- HAS BEEN TAKEN. THE LOAN HAS BEEN TAKEN IN CA SH AND REPAID IN CASH. THESE PERSONS ARE NOT ASSESSED TO TAX. THE EVIDENCE CONSIS TS OF AFFIDAVIT, CONFIRMATION AND SALARY CERTIFICATE IN SOME CASES. THE SUBMISSIONS OF THE ASSESSEE IN RESPECT OF THESE LENDERS ARE THE SAME AS IN THE CASE OF OTH ER 10 LENDERS DISCUSSED ABOVE. HAVING CONSIDERED THE EVIDENCE PRODUCED BEFORE HIM, IT IS HELD THAT THE ASSESSEE HAS ESTABLISHED THE EXISTENCE OF THE PERSONS BY FILI NG AFFIDAVITS OR SALARY CERTIFICATES IN SOME CASES. HOWEVER, THE CAPACITY TO ADVA NCE LOANS HAS NOT BEEN ESTABLISHED. THE GENUINENESS OF THE TRANSACTIONS HAS ALS O NOT BEEN ESTABLISHED. ALL THE LOANS ARE OF DIFFERENT AMOUNTS VARYING BETWEEN `15,000 /- TO `19,000/-. IN FACT, MOST OF THE LOANS EXCEPT TWO FROM SHRI MAHESH SHARM A AND SHRI RAGHU RAJ SINGH ARE OF THE AMOUNT OF `19,000/-. AS PRIMA FACIE EV IDENCE IN REGARD TO 5 CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN FILED, IT IS HELD THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF ` 2,60,500/-. 3. IN RESULT, THE ADDITION OF `2,60,500/- IS CONFIRMED AND THE APPEAL IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27.05.20 11. SD/- SD/- ( RAJPAL YADAV ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 27.05.2011. NS COPY FORWARDED TO:- 1. INCOME TAX OFFICER, WARD-II(1), FARIDABAD. 2. M/S SUBHASH CHAND AGGARWAL, (HUF), PLOT NO.381, SECTOR -24/B-610, NEHRU GROUND, FARIDABAD. 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).