Dilip Motilal Chordiya, Pune V. Income-tax Officer, Pune

ITA 761/PUN/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6971 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-12-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 761/PUN/2017 / ASSESSMENT YEAR : 2012-13 SHRI DILIP MOTILAL CHORDIYA, FLAT NO.10, SAJJAN PLAZA, 3 RD FLOOR, OPP. HINDUSTAN BAKERY, CHINCHWAD, PUNE 411 033 PAN : AAMPC1174F . /APPELLANT VS. ITO, WARD-9(1), PUNE . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 14.12.2017 / DATE OF PRONOUNCEMENT: 15.12.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-9, PUNE DATED 16-01-2017 FOR THE ASSESSMENT YEAR 2012- 13. 2. BACKGROUND FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BUILDER AND PROMOTER AND FILED THE RETURN DECLARING LOSS OF RS.6,05 ,700/-. ASSESSMENT WAS COMPLETED AT THE ASSESSED INCOME OF RS.1,70,75,000/-. ADDITION ON ACCOUNT OF UNSECURED LOANS U/ S.68 OF THE ACT IS THE MAJOR ISSUE IN THE LITIGATION. DURING THE AS SESSMENT PROCEEDINGS, AO ISSUED QUESTIONNAIRE CALLING FOR MINUTE DETA ILS ABOUT THE CREDITORS AND ALSO ISSUED NOTICES U/S.131/133(6) OF TH E ACT TO THE CREDITORS. AO MADE ADDITION OF RS.1,70,75,000/- AND IT HAS 3 GROUPS. FIRST GROUP CONSISTS OF 15 CREDITORS AMOUNTING TO RS.77 LA KHS. SECOND ITA NO.761/PUN/2017 SHRI DILIP M. CHORDIA 2 GROUP CONSISTS OF 12 CREDITORS AMOUNTING TO RS.65 LAKHS A ND THIRD GROUP CONSISTS OF 4 CREDITORS AMOUNTING TO RS.28,75,000/-. THE CREDITORS WERE GROUPED INTO THREE ARTIFICIALLY BASING ON T HE EXTENT OF INFORMATION AND DOCUMENTARY EVIDENCES FURNISHED BY THE AS SESSEE DURING THE ASSESSMENT PROCEEDINGS. 3. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE C OULD NOT IMPROVE HIS CASE DESPITE THE WRITTEN SUBMISSIONS AND ARGU MENTS. EVENTUALLY, THE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE CIT(A). 4. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US WIT H THE 7 GROUNDS. ALL THE GROUNDS REVOLVE AROUND THE ISSUE OF SAID ADDITION OF RS.1,70,75,000/- U/S.68 OF THE ACT. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DESPITE FUR NISHING THE DETAILS OF CREDITORS TO THE AO AND DISCHARGING THE PR IMARY ONUS BY THE ASSESSEE AND RELYING ON VARIOUS JUDGMENTS, THE AO MADE THE ADDITION AND THE CIT(A) CONFIRMED THE ADDITION RELYING THE INA PPLICABLE JUDGMENTS SUCH AS JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF N.R. PORTFOLIO PVT. LTD. REPORTED IN 222 TAXMAN 157 (DEL.). 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE FILED THE PAPER B OOK CONTAINING 229 PAGES AND SUBMITTED THAT THESE PAPERS C ONSTITUTE BANK STATEMENTS OF THE CREDITORS INVOLVED AND THE EVIDENCES IN SUPPORT OF RECEIPT OF THE CASH CREDITS BY THE ASSESSEE AMOUNTING T O RS.1,70,75,000/-. FURTHER, BRINGING OUR ATTENTION TO THE C HARTS IN THE PAPER BOOK (A TO F), COVERING THE ABOVE REFERRED 31 CRED ITORS OF 3 GROUPS TO THE SAID AMOUNT OF RS.1,70,75,000/-, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE CHARTS WERE NOT FURNISHE D TO THE REVENUE AUTHORITIES AT THE RELEVANT POINT OF TIME. FURTHE R, STATING THAT THE ENTIRE AMOUNT OF RS.1,70,75,000/- WAS ALREADY RETURNED TO THE ITA NO.761/PUN/2017 SHRI DILIP M. CHORDIA 3 CREDITORS BY THE ASSESSEE SUBSEQUENT TO THE A.Y. 2012- 13. AS PER LD. AR FOR THE ASSESSEE, MAJOR REPAYMENTS TO THESE CREDITO RS WAS MADE THROUGH BANKING CHANNELS. DETAILS OF CHEQUES AND RTGS P ARTICULARS WERE ALSO TABULATED IN THE SAID CHARTS A TO F. REFERRING TO THE SOLITARY CASE WHERE REPAYMENT WAS MADE SUBSTANTIALLY IN CASH, LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE TRANSACTIONS WERE A LSO ACCOUNTED IN THE BOOKS OF ACCOUNT OF CONCERNED PARTIES. RELYING ON T HE ENTRIES IN THE SAID PAGE, LD. COUNSEL SUBMITTED THAT WHEN THE REPAY MENT IS MADE TO ALL THE CREDITORS THERE IS NO POINT IN SUSPECTING THE IDENTITY, CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTION S, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE DOCUMENT S MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND D ECISION IN THE MATTER. 7. IN REPLY, ON THIS ISSUE, LD. DR FOR THE REVENUE SUBMITT ED THE FACT OF GENUINENESS OF THE TRANSACTIONS AND THE REASONS FOR TAKING THE CREDITS AND REPAYMENT OF THE SAME SUGGEST THE SUSPICIOU S NATURE OF THE TRANSACTIONS. HE ALSO UNDERLINED THE REPAYMENTS MAD E IN CASH IN CASE OF SHRI BORA SANDIP CHANDRAKANT. 8. WE HEARD BOTH THE PARTIES ON THIS LIMITED OF REQUEST FOR REMANDING THE ISSUE TO THE FILE OF THE AO FOR CONSIDERING TH E FACTS RELATING TO THE REPAYMENTS OF THE LOANS. IT IS THE CAS E OF THE AO AND THE CIT(A) THAT THE TRANSACTIONS OF THE CASH CREDITS WER E NOT PROPERLY EVIDENCED BY THE ASSESSEE BEFORE THEM. THE FACT RELATIN G TO THE REPAYMENT OF CASH CREDITS BY THE ASSESSEE TO THE CRED ITORS IS A NEW ANGLE TO THE ISSUE WHICH REQUIRES THOROUGH INVESTIGATION A ND EXAMINATION. WE ARE OF THE VIEW THAT THE AO IS REQUIRED T O INVESTIGATE AS TO THE CORRECTNESS OF THESE REPAYMENTS AND THE SU STAINABILITY OF THE CLAIM OF THE ASSESSEE. AO ALSO HAS TO EXAMINE THE ISSUES RELATING TO ITA NO.761/PUN/2017 SHRI DILIP M. CHORDIA 4 IDENTITY, CREDIT WORTHINESS AND THE GENUINENESS OF TRANSACTION FROM THE POINT OF VIEW OF THE PROVISIONS OF SECTION 68 OF THE ACT WH EN THE REPAYMENTS ARE DULY MADE BY THE ASSESSEE TO THE SAID 31 CREDITORS. FURTHER, WE HAVE ALSO EXAMINED THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE (PAGE NO.25 TO 29 OF THE PAPER BOOK) IN THE CASE OF RASHMIKANT M. SHAH VS. ACIT REPORTED IN (2016) 67 (II) ITCL 402 (MUM-TRIB.). THE SAID DECISION IS FOUND TO BE RELEVANT ALSO FOR THE LEGAL PROPOSITION THAT THE ADDITION U/S.68 OF THE ACT ON AC COUNT OF UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE IS N OT SUSTAINABLE WHEN THE CREDITORS HAVE RECEIVED BACK THE LO ANS FROM THE ASSESSEE. IN THE SAID CASE, THE TRIBUNAL ALLOWED THE APPE AL OF THE ASSESSEE ON THIS ISSUE ON FINDING THAT THE CREDITS WERE A LREADY REPAID AND THE CREDITS ARE AS OLD AS A DECADE. 9. THEREFORE, WE ARE OF THE OPINION THAT THE FACT OF REPAY MENT OF THE LOANS TO THE CREDITORS IS AN IMPORTANT EVIDENCE WHICH IS R EQUIRED TO BE CONSIDERED BY AO WHEN HE DECIDES TO INVOKE THE PROVISION S OF SECTION 68 OF THE ACT. WHEN THE REPAYMENTS ARE MADE THROUGH BANKING CHANNELS, IT IMPLIES THE EXISTENCE OF THE CREDITORS QUA THE ASPECTS OF IDENTIFY OF THE CREDITORS AND ALSO THE GENUINENESS OF THE LOAN CREDITORS ETC. THIS BEING THE ISSUE OF REPAYMENT, THE ISSUES OF CRE DIT WORTHINESS OF THE ASSESSEE DOES NOT APPLY TO SUCH REPAYMENT. TH AT IS RELEVANT ONLY ON THE CREDITORS AT THE TIME OF GIVING LOAN TO THE ASSESSEE. AO IS REQUIRED TO EXAMINE THESE ASPECTS IN THE REMAND PROCEE DING AND APPLY THE ABOVE DISCUSSED POINTS BEFORE PASSING A SPEAKING ORD ER ON THE ISSUE. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.761/PUN/2017 SHRI DILIP M. CHORDIA 5 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF DECEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 15 TH DECEMBER, 2017. COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 9 , PUNE CIT - 9 , PUNE % , , A BENCH PUNE; GUARD FILE.