Sh. Harjinder Singh Raina Prop., Jammu V. The Assistant Commissioner of Income Tax, Jammu

ITA 77/ASR/2013

• Counselvise Citation: 7720914 RSA 2013
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: SSH S K BANSAL; SUBHASH DUTT S
• Keywords: Unexplained cash credit; Onus to prove
• Section: 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.77(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :AGKPR4068H SH.HARJINDER SINGH RAINA PROP.), VS. ASSTT. COMMR. OF INCOME TAX, M/S. SINGH & SINGH TRADING CO. CIRCLE-1, JAMMU. NEHRU MARKET, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH.S.K.BANSAL & SUBHASH DUTT, ADVO CATES RESPONDENT BY: SH.AMRIK CHAND, DR DATE OF HEARING:20/11/2013 DATE OF PRONOUNCEMENT:21/11/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU DATED 19.11.2012 FOR THE ASSESSMENT YEAR 200 6-07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER UNDER APPEAL IS AGAINST THE LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE REASSESSMENT PROCEEDI NGS RAISED BY THE AO U/S 148 OF THE INCOME TAX ACT, 1961 AS TH E ONLY REASON RECORDED FOR THE ISSUANCE OF NOTICE U/S 148 WAS ONLY TO DISALLOW THE INTEREST ON CREDITORS HELD AS BOGUS IN THE 2 ASSESSMENT ORDER FOR THE EARLIER ASSESSMENT YEAR I. E. ASSESSMENT YEAR 2005-06. ONCE THIS REASON FOR REOPENING THE AS SESSMENT BECAME NON-EXISTENT THE LD. CIT(A) HAS ERRED IN LA W IN HOLDING THE REASSESSMENT MADE AGAINST THE APPELLANT AS VALI D. 3. THAT IN ADDITION AND WITHOUT PREJUDICE TO THE GROUN D NO.2 ABOVE THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE AD DITION OF RS.38,25,795/-. 4. THAT IN ANY CASE THE IMPUGNED ORDER OF THE LD. CIT( A) IS LIABLE TO BE SET-A-SIDE IN VIEW OF THE JUDGMENT OF THE HO NBLE TRIBUNAL IN THE APPELLANTS CASE FOR THE A.Y. 2005 -06. 5. THAT ADDITION ON ACCOUNT OF INTEREST OF RS.5,15,807 /- ON THE CREDITS OF RS.38,25,795/- IS ALSO ILLEGAL AS THIS E XPENSE HAS BEEN PROVED BY THE APPELLANT AS INCURRED FOR BUSINESS PU RPOSES. 6. ANY OTHER GROUND WHICH MAY BE URGED AND ALLOWED AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D INTRODUCED CASH CREDITS AMOUNTING TO RS. 38,20,795/- IN 248 INDIVID UAL NAMES. THE AMOUNTS AGAINST THOSE NAMES WERE SHOWN VARYING BETWEEN RS. 1,000/- TO RS. 19,500/- EXCEPT IN ONE CASE- SMT. KAMAL KAUR A/C NO. 2432 A GAINST WHOM THE DEPOSIT OF RS. 1,00,000/- HAS BEEN SHOWN. /-THIS AM OUNT OF RS. 38,20,795/- WAS CREDITED IN ADDITION TO RS. 1,26,88,587/- ALREA DY CREDITED IN THE PREVIOUS YEAR YEARS WHICH HAS BEEN SHOWN AS OPENING BALANC E IN THE CURRENT YEAR. THE ASSESSEE HAS ALSO SHOWN TO HAVE REPAID AN AMOUN T OF RS. 34,34,499/- DURING THE YEAR AND CLOSING BALANCE AS ON 31.03.200 6 HAS BEEN SHOWN AT RS. 1,30,74,883/-. THE PERUSAL OF THE TRADING ACCOUNT O F THE ASSESSEE REVEALS THAT THE ASSESSEE IS DEALING IN SALE AND PURCHASE OF LAN D. AGAINST TOTAL SALE OF LAND, THE ASSESSEE HAS SHOWN GROSS PROFIT RATE OF 8 4% AND NET PROFIT RATE OF 3 8.85%. WHILE ARRIVING AT THE NET PROFIT, THE ASSESS EE HAS DEBITED INTEREST ON DEPOSITS AT RS. 20,01,832/- SHOWN TO HAVE BEEN PAID IN RESPECT OF ALLEGED DEPOSITS FROM DIFFERENT PERSONS. IN ORDER TO VERIFY THE GENUINENESS OF THE DEPOSIT HOLDERS RAISED DURING THE YEAR NUMBERING 24 8, AND IN THE LAST YEAR WERE THE NUMBER OF SUCH DEPOSIT HOLDERS WAS 177, TH E ASSESSEE WAS ASKED TO FURNISH THE COMPLETE ADDRESSES OF THE PERSONS WHO W ERE SHOWN TO HAVE MADE DEPOSITS, GIVING THE AMOUNT OF DEPOSIT, DATE OF INV ESTMENT, PERIOD FOR WHICH INVESTED, MODE OF RECEIPT OF DEPOSIT, PARTICULARS O F THE BANK WHERE DEPOSITED, RATE OF INTEREST ALLOWED, WHETHER INTEREST HAS BEEN DEBITED AND DETAILS OF TDS DEDUCTED. IN RESPONSE TO THE SAID QUERY, THE COUNSE L OF THE ASSESSEE FILED SOME PRINT OUTS FROM THE COMPUTED AND THESE STATEME NTS OF ACCOUNT GIVE THE NAME OF THE DEPOSIT HOLDER, RATE OF INTEREST, DATE OF OPENING OF ACCOUNT, PERIOD FOR WHICH UNDERTAKEN, AMOUNT OF DEPOSIT, DAT E OF RECEIPT AND PERIODICAL DEBIT OF INTEREST AND DETAILS OF THE CLO SING BALANCE AT THE END OF THE YEAR. HE FURTHER PRODUCED THE RECORDS MAINTAINED BY THE ASSESSEE IN SUPPORT OF HIS BOOKS OF ACCOUNT. ASSESSING OFFICER OBSERVED THAT ON PERUSAL OF THE COUNTERFOILS OF THE DEPOSIT RECEIPTS ISSUED BY THE ASSESSEE SHOWS THAT THOUGH THE NAME, AMOUNT, DATE OF DEPOSIT, RATE OF I NTEREST AND PERIOD FOR WHICH TAKEN HAVE BEEN MENTIONED, YET IT DOES NOT PR OVIDE ANY IDENTITY OF THE DEPOSIT HOLDER AS NEITHER THE SIGNATURE NOR THUMB I MPRESSION OR PHOTOGRAPH 4 OF THE DEPOSITOR HAS BEEN MAINTAINED. WHILE MAKING THE PAYMENTS, THE COPIES OF THE DEPOSIT RECEIPTS HAVE BEEN OBTAINED B Y THE ASSESSEE AND THESE DEPOSITS/ PAYMENT VOUCHERS ALSO DO NOT PROVIDE EXAC T CLUE OF THE RECIPIENTS. THE PARTICULARS OF SOME OF THE DEPOSIT HOLDERS WERE PROVIDED ONLY ON 10.12.2008 AND THE RECORDS MAINTAINED BY THE ASSESS EE WERE ALSO PRODUCED ON THE SAID DATE BUT IT WAS TOO LATE TO CROSS VERIF Y THE INFORMATION AND SUMMON THE PERSONS WHO ARE SHOWN TO HAVE MADE THE A LLEGED DEPOSITS. WHEN THE COUNSEL OF THE ASSESSEE WAS ASKED AS TO WH ETHER HE IS IN A POSITION TO PRODUCE SOME OF THE DEPOSIT HOLDERS, HE PRODUCED ABOUT 2-3 PERSONS AND DURING THE COURSE OF INFORMAL DISCUSSION WITH THEM, THOUGH THEY ADMITTED HAVING MADE THE DEPOSITS, YET KEEPING IN VIEW THE F ACT THAT ASSESSEE HAS NOT MAINTAINED ANY IDENTIFICATION OF THE DEPOSIT HOLDER S, IT IS DIFFICULT TO ACCEPT THE SAME ON THEIR FACE VALUE. A.O. FURTHER OBSERVED THAT SIMILAR ISSUE WAS INVOLVED IN THE PREVIOUS ASSESSMENT YEAR I.E. A.Y. 2005-06 AND WHILE COMPLETING THE SAID ASSESSMENT, A.O.S PREDECESSOR HAD MADE AN ATTEMPT TO IDENTIFY THE DEPOSIT HOLDERS, THEIR CREDITWORTHINES S AND CAPACITY TO DEPOSIT. HE HAD ISSUED SUMMONS TO A NUMBER OF PERSONS AND EX AMINED A FEW OF THEM. AFTER EXAMINATION OF THOSE PERSONS, HE HAD CO ME TO THE CONCLUSION THAT THESE DEPOSITORS HAD NO CREDITWORTHINESS TO AD VANCE THE DEPOSITS SHOWN AGAINST THEIR NAMES. A.O. FURTHER OBSERVED THAT IT IS A SETTLED LEGAL POSITION 5 THAT THE BURDEN OF PROOF IS ON THE ASSESSEE IN WHOS E BOOKS THE CREDITS APPEAR. THE ONUS CONTEMPLATES (I) THE IDENTITY OF THE CREDI TOR, (II) THE GENUINENESS OF THE TRANSACTION, AND (III) THE CREDITWORTHINESS OR CAPACITY OF THE CREDITOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE A.Y. 2005-06, MY PREDECESSOR CONFRONTED THE ASSESSEE WITH THE FACT T HAT CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION COULD NOT BE ESTABLI SHED THROUGH HE HAD MADE AN ATTEMPT TO EXAMINE SOME OF THE ALLEGED DEPOSIT H OLDERS. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE UNDERSI GNED, THE ASSESSEE ADOPTED TACTFUL DEVICE TO STRETCH THE PROCEEDINGS T O THE FAG END OF THE YEAR WITH THE MOTIVE THAT THE DEPARTMENT WILL BE LEFT W ITH THE LITTLE TIME TO CROSS VERIFY THE INFORMATION BROUGHT ON RECORD. THIS IS C LEAR FROM THE FACT THAT VIDE QUESTIONNAIRE DATED 21.10.2008, THE ASSESSEE WAS SP ECIFICALLY ASKED TO FURNISH THE DETAILS OF THE INTEREST ON DEPOSITS GIV ING THE NAME AND ADDRESS OF THE DEPOSIT HOLDER, AMOUNT INVESTED, DATE OF INVEST MENT, PERIOD FOR WHICH INVESTED, MODE OF RECEIPT OF DEPOSIT, PARTICULARS O F THE BANK WERE DEPOSITED, RATE OF INTEREST ALLOWED, WHETHER INTEREST HAS BEEN DEBITED ON ACCRUAL BASIS OR ON ACTUAL PAYMENT BASIS AND ALSO STATE WHETHER ANY TDS WAS DEDUCTED, IF SO, FURNISH DETAILS THEREOF . HOWEVER, WHILE FURNISHING THE INFORMATION, THE ASSESSEE COULD PROVIDE ONLY THE NAMES OF THE PERSON S AND THE DETAILS OF THE DEPOSITS AND AS A RESULT THE DEPARTMENT WAS UNABLE TO TAKE ANY ACTION FOR 6 CROSS VERIFICATION. THEREFORE, THE ASSESSEE WAS AG AIN SPECIFICALLY REQUIRED VIDE LETTER DATED 21.11.2008 TO PROVIDE THE INFORMA TION AS SPECIFICALLY ASKED FOR BUT THE SAME WAS DRAGGED TO THE YEAR END AND WA S PROVIDED ONLY ON 10.12.2008, THUS, LEAVING LITTLE TIME TO VERIFY ITS AUTHENTICITY. THEREFORE, A.O. OBSERVED THAT HE IS LEFT WITH NO ALTERNATIVE, AND KEEPING IN VIEW THE FACT THAT IDENTICAL FACTS ARE INVOLVED IN THIS YEAR AS I N ASSESSMENT YEAR 2005-06, BUT TO FOLLOW THE FINDING OF MY PREDECESSOR AND HOL D THAT ALL THE DEPOSITS AMOUNTING TO RS. 38,20,795/- SHOWN TO HAVE BEEN REC EIVED DURING THE YEAR UNDER ASSESSMENT FROM 248 PERSONS ARE ALSO BOGUS. A LL THESE CASH CREDITS HAVE BEEN INTRODUCED IN THE GARB OF DEPOSITS UNDER DIFFERENT NAMES THOUGH THE SAME HAVE BEEN EARNED BY THE ASSESSEE OUT OF HI S EXISTING BUSINESS. 2.1. ACCORDINGLY, THE AO TREATED THE SAID AMOUNT OF RS.38,20,795/- AS UNEXPLAINED CASH CREDITS FOUND IN THE BOOKS OF ASSE SSEE FOR WHICH EITHER NO EXPLANATION HAS BEEN OFFERED OR THE EXPLANATION OFF ERED IS NOT SATISFACTORY AND CHARGED THE SUM TO INCOME TAX UNDER SECTION 68 OF THE ACT AND ACCORDINGLY ALSO ADDED THE INTEREST ON THE SAID DEP OSITS AMOUNTING TO RS.7,51,029/- INCLUDING RS.2,35,222/- BEING INTERES T ON DEPOSITS OF RS.18,44,472/- WHICH HAS BEEN TREATED AS BOGUS IN T HE PRECEDING YEAR I.E. ASSESSMENT YEAR 2005-06. 7 3. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE SUB MISSIONS WHICH ARE PRODUCED BY THE LD. CIT(A) IN PARA 3 TO 3.6 AT PAGE S 3 TO 19 OF HIS ORDER. THE LD. CIT(A) UPHELD THE ACTION OF THE AO BUT DELE TED THE INTEREST OF RS.2,35,222/- ON DEPOSITS OF RS.18,44,472/- PERTAIN ING TO PRECEDING YEAR SINCE THE SAID ADDITION OF RS.18,44,472/- AND INTER EST THEREON HAD BEEN DIRECTED TO BE DELETED BY THE ITAT, AMRITSAR BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06. THE LD. CIT(A) WHI LE CONFIRMING THE ACTION OF THE AO FURTHER OBSERVED THAT HE IS INCLIN ED TO BELIEVE THAT THE TRANSACTIONS THROUGH BANKING CHANNELS HAVE DELIBERA TELY BEEN AVOIDED AND THE CASH DEPOSIT CEILING HAS BEEN PURPOSELY KEPT BELOW RS.20,000/-. THIS RAISES THE EYEBROWS AND A PERTINENT QUESTION ABOUT THE VERACITY OF THE DEPOSIT HOLDER AND ON THE DEPOSITS SLIPS TO ESTABLI SH THE IDENTITY. THE ASSESSEE PROVIDED PARTICULARS AT THE FAG END OF THE TIME BARRING MONTH AND PRODUCED 2-3 PERSONS AS SAMPLE BEFORE THE A.O. THE LD. CIT(A) FURTHER OBSERVED THAT THOUGH THESE PERSONS STATED TO HAVE M ADE DEPOSITS BUT WHO ARE THEY IS DIFFICULT TO ASCERTAIN IN THE ABSENCE OF AN Y IDENTITY PROOF WITH THEM. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.K.BANSAL , ADVOCATE ARGUED AT THE OUTSET THAT ALL THE DETAILS IN ORIGINAL I.E. RE CEIPTS AND THEIR SL. NO., DATE OF DEPOSIT, NAME AND ADDRESS OF THE DEPOSITOR, AMOUNT DEPOSITED, RATE OF INTEREST PAYABLE TO THE DEPOSITOR, PERIOD OF DEPOSI T WERE PRODUCED BEFORE THE 8 AO THERE IS NO DISPUTE WITH REGARD TO PRODUCTION OF ORIGINAL DOCUMENTS BEFORE THE A.O. TO THIS, THE LD. COUNSEL FOR THE AS SESSEE, MR. S.K.BANSAL, ADVOCATE INVITED OUR ATTENTION TO AOS ORDER WHERE THE AO HAS RECORDED THAT THE ASSESSEE WAS AGAIN SPECIFICALLY REQUIRED VIDE LETTER DATED 21.11.2008 TO PROVIDE INFORMATION AS SPECIFICALLY ASKED FOR BUT THE SAME WAS DRAGGED TO THE YEAR END AND WAS PROVIDED ONLY O N 10.12.2008, THUS LEAVING LITTLE TIME TO VERIFY ITS AUTHENTICITY. TH E LD. COUNSEL, THEREFORE, ARGUED THAT THERE IS NO DISPUTE THAT THE ASSESSEE H AS NOT PROVIDED COMPLETE NAMES AND ADDRESSES OF THE DEPOSITORS WHO VARIES B ETWEEN RS.1000/- TO RS.19,500/-. ALL THE BOOKS OF ACCOUNT ALONGWITH ALL THE VOUCHERS AND THE RECEIPTS WERE PRODUCED BEFORE THE AO IS PART OF AO S ORDER ITSELF. THE AO ASKED TO PRODUCE SOME CREDITORS WHICH WERE PRODUCED AND WHO HAD CONFIRMED TO HAVE PAID THE DEPOSITS TO THE ASSESSEE . THE AO DID NOT TAKE THE STATEMENTS OF THE FEW CREDITORS PRODUCED, INSPITE O F SPECIFIC REQUEST, IS ALSO A MATTER OF RECORD, WHICH WAS SUBMITTED BEFORE THE LD . CIT(A) AND AVAILABLE AT PAGE 7 OF CIT(A)S ORDER 4.1. AS REGARDS SUPPLY OF THE INFORMATION AT THE FA G END OF THE YEAR, THE QUESTIONNAIRE WAS ISSUED ONLY ON 21.10.2008 TO FILE THE REPLY ON 3.11.2008, WHICH WAS FILED ON 17.11.2008 AND ALL THE BOOKS OF ACCOUNT WERE PRODUCED AND FINALLY ALL THE DETAILS WERE SUPPLIED ON 10.12. 2008 WHEREAS ASSESSMENT 9 WAS COMPLETED ON 29.12.2008. STILL THE AO HAD SUFFI CIENT TIME TO VERIFY THE AUTHENTICITY OF THE INFORMATION. IT IS NONE OF THE FAULT OF THE ASSESSEE THAT THE ASSESSEE HAD FILED THE DETAILS AT THE FAG END OF TH E TIME BARRING MONTH. THE DETAILS WERE SUPPLIED WHEN ORIGINAL QUESTIONNAIRE W AS ISSUED ON 21.10.2008 TO FILE THE REPLY ON 03.11.2008 WHICH WERE COMPLET ED WITHIN ONE MONTH AND SEVEN DAYS AS REQUIRED BY THE AO. EVEN ALL THE RECE IPTS WHICH ARE PART OF THE PAPER BOOK BEFORE THIS BENCH IN FIVE VOLUMES WERE P RODUCED BEFORE THE LD. CIT(A) BUT NO ACTION FOR VERIFICATION WAS TAKEN BY THE LD. CIT(A) TO VERIFY THE AUTHENTICITY OF SUCH DEPOSITS. THESE RECEIPTS I N FIVE VOLUMES AS PART OF THE PAPER BOOK WERE PRODUCED IN ORIGINAL BEFORE THE AO IS PART OF THE RECORD AND THE ASSESSMENT ORDER AS MENTIONED HEREINABOVE. MOREOVER, EACH DEPOSIT IS A SEPARATE DEPOSIT WHICH HAS TO BE VERIFIED SEP ARATELY WHICH HAS NOT BEEN DONE BY THE AO OR BY THE LD. CIT(A). NON VERIFICATI ON BY THE AUTHORITIES BELOW OF THE DEPOSITS AFTER DISCHARGING ONUS BY THE ASSESSEE CANNOT BE A BASIS TO CONCLUDE THAT SUCH DEPOSITS ARE UNEXPLAINE D. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT, AMRI TSAR BENCH, DATED 22.10.2012 IN ASSESSEES OWN CASE FOR THE ASSESSME NT YEAR 2005-06 IN ITA NO.258(ASR)/2010, A COPY OF WHICH HAS BEEN PLACED O N RECORD AT PB 7 TO 20, WHERE ON IDENTICAL FACTS, THE ITAT, AMRITSAR BENCH HAS DIRECTED THE AO TO DELETE THE ADDITION. THE LD. COUNSEL FOR THE ASSESS EE, MR. S.K. BANSAL, 10 ADVOCATE, THEREFORE, PRAYED TO DIRECT THE DELETION OF ADDITION SO MADE OF RS.38,20,795/- AND THE INTEREST THEREON AMOUNTING T O RS.5,15,807/-. 5. THE LD. DR, MR. AMRIK CHAND, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE FIRST QUES TIONNAIRE FOR ASKING INFORMATION FROM THE ASSESSEE WAS ISSUED ON 21.10.2 008 FOR 03.11.2008 AND ASSESSMENT WAS COMPLETED ON 29.12.2008. THE ASSESSE E FILED PART INFORMATION ON 17.11.2008 AND COMPLETED ALL THE INF ORMATION ON 10.12.2008. ON ASKING INFORMATION TO BE SUPPLIED ON 03.11.2008, WHICH WAS SUPPLIED UPTO 10.12.2008 WHICH INCLUDES COMPLETE NAMES AND A DDRESSES OF THE DEPOSITORS AND OTHER INFORMATION AS MENTIONED HERE INABOVE AND AS SUBMITTED BY ASSESSEES AR IN HIS WRITTEN SUBMISSIO NS IN PARA 3 TO 3.7 AT PAGES 3 TO 19 OF CIT(A)S ORDER. THEREFORE, THE AO HAD A SUFFICIENT TIME TO VERIFY THE AUTHENTICITY OF THE INFORMATION SUPPLIED . THE AO DID NOT ISSUE ANY SUMMON TO ANY OF THE DEPOSITORS INSPITE OF THE FACT THAT THE AO WAS IN POSSESSION OF THE NAMES AND ADDRESSES OF THE DEPOSI TORS. MOREOVER, ASSESSEE ALSO PRODUCED THE PHOTOCOPY OF ALL THE DETAILS AND THE RECEIPTS OF THE DEPOSITORS BEFORE THE LD. CIT(A) AS WELL AND THE L D. CIT(A) DID NOT ACT TO VERIFY THE SAME HAVING THE CONCURRENT JURISDICTION . INSPITE OF THE FACT, THE 11 AO ASKED THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS TO PRODUCE SOME DEPOSITORS. THE ASSESSEE PRODUCED THREE DEPOSITORS OUT OF WHICH A DEPOSITOR NAMED AS SMT. KAMAL KAUR W/O SH.SURAIN SINGH WAS EX AMINED WHO HAD ADVANCED RS.1 LAC. THE AO EVEN DID NOT EVEN ACCEPT THE SAID DEPOSIT OF RS.1 LAC AND INTEREST THEREON. THE OTHER DEPOSITORS WHO MADE SPECIFIC REQUEST FOR RECORDING OF THEIR STATEMENTS, WERE NOT RECORDED BY THE AO, IS A MATTER OF RECORD, AS MENTIONED IN THE WRITTEN SUBMISSIONS OF THE ASSESSEE, AVAILABLE AT PAGE 7 OF CIT(A)S ORDER. THE ASSESSEE HAS DISCHARG ED ITS ONUS OF PROVING THE CASH CREDITS EVEN IF THEY DID NOT HAVE INCOME T AX NO. (PAN) AND IT IS THE POWER TO SUMMON CREDITORS VESTS WITH THE AO AND NOT WITH THE ASSESSEE. THIS AUTHORITY HAS TO BE UTILIZED BY THE INCOME TA X DEPARTMENT AND NOT BY THE ASSESSEE. BUT IN THE PRESENT CASE, THE AO AND T HE LD. CIT(A) CHOSE NOT TO SEND THE SUMMONS TO EXAMINE THE CASH CREDITORS AT ALL, EVEN AT THE ASSESSMENT STAGE OR AT THE FIRST APPELLATE STAGE I. E. CIT(A). THEREFORE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CIT VS. ORISSA CORPORATION LIMITED 159 ITR 78 ON SIMILAR FACTS, TH E ASSESSEE WILL BE TREATED TO HAVE DISCHARGED HIS ONUS OF PROVING THE CASH CRE DITS. IN THE PRESENT CASE, THE AO WAS REQUIRED TO ADVERT TO EACH AND EVERY ENTRY AND NOT TO PICK UP THE COUPLE OF ENTRIES AND LEVEL THE ENTIRE SET OF DEPOSITS AS U NDISCLOSED INCOME. THE SAID PROCEDURE WAS NOT FOLLOWED IN THE PRESENT CASE. THIS VI EW HAS BEEN UPHELD BY THE HONBLE 12 DELHI HIGH COURT IN THE CASE OF CIT VS. KINETIC CAP ITAL FINANCE LTD. (2011) 202 TAXMAN 548. ON IDENTICAL FACTS, THE ISSUE CAME UP BEFORE US IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-0 6 IN ITA NO.258(ASR)/2010 DECIDED ON 22.10.2012 WHERE IDENTI CAL ADDITION HAS BEEN DIRECTED TO BE DELETED. FOR THE SAKE OF CONVENIENCE , THE RELEVANT PARAS 7 TO 9 AT PAGES 7 TO 11 OF THE SAID ORDER ARE REPRODUCED H EREINBELOW: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE ASSESSEE IS STATED TO BE DOING THE BUSI NESS OF REAL ESTATE. IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. K. BANSAL, ADVOCATE, THAT THERE ARE IN ACTUAL 195 CASES AND N OT 177 CASES, AS REPORTED BY THE ASSESSING OFFICER AND THE LEARNED CIT(A). THIS FACT WAS AVAILABLE BEFORE BOTH THE AUTHORITIES BELOW. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE NAMES AND ADDRESSES OF THE PE RSONS HAVING DEPOSITED RS.15,000/- OR MORE DURING THE IMPUGNED YEAR. THE ASSESSEE ACCORDINGLY FURNISHED THE LIST OF SUCH 47 PERSONS. THE ASSESSING OFFICER CHOSE TO VERIFY 10 PERSONS AS MENTIONED HEREIN ABO VE AND ACCORDINGLY ISSUED SUMMONS U/S 131 TO THE SAID SELECTED PERSON S ON RANDOM BASIS. OUT OF THE 10 PERSONS, THE SUMMONS U/S 131 COULD N OT BE SERVED TO SIX PERSONS DUE TO INCOMPLETE ADDRESSES OR AT THE GIVE N ADDRESS NO SUCH PERSON WAS FOUND. REMAINING FOUR PERSONS I.E. SHR I S. P. SINGH, SHRI KAWALJEET SINGH, SHRI JASBIR SINGH AND SHRI MOHIND ER SINGH WERE EXAMINED BY THE ASSESSING OFFICER AND THEIR STATEM ENTS ARE AVAILABLE AT PAGE 2 TO 4 OF THE ORDER OF THE ASSESSING OFFICER. IT IS NOT IN DISPUTE THAT FOUR PERSONS HAVE CONFIRMED HAVING GIVEN LOAN TO T HE ASSESSEE. THEY HAVE SUBMITTED THEIR EXPLANATION WITH REGARD TO TH E SOURCE AS WELL. THE ASSESSING OFFICERS OBJECTION MAINLY WAS THAT THE ASSESSEE WAS THE CHIEF OF AKALI DAL HAVING SUFFICIENT CONTROL OVER GURUDW ARA AND CAN EASILY INFLUENCE THE PEOPLE TO BE TUTORED TO GIVE THE STA TEMENT IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER DID NOT ACCEPT THE FINANCIAL CAPACITY OF THE SAID FOUR PERSONS AND TREATED THE SAID PERSONS AS BOGUS CASH CREDITORS. ON THE BASIS OF THE EXAMINATION O F THE SAID FOUR PERSONS, THE ASSESSING OFFICER FORMED A VIEW THAT ALL THE C ASH CREDITS AMOUNTING TO RS.18,44,472/- ARE BOGUS. IT IS PERTINENT TO MENT ION THAT THE ASSESSING OFFICER, BEFORE TAKING UP THE MATTER FOR SCRUTINY, WAS PREDETERMINED THAT PROFIT MARGIN CANNOT BE, BY ANY IMAGINATION, BE TH E NET PROFIT OF A REAL ESTATE BUSINESS WHICH THE ASSESSEE IS DOING AND IS NOT REFLECTING THE TRUE 13 PROFIT MARGIN AND THE ONLY ALTERNATIVE AVAILABLE T O THE ASSESSEE WAS TO RAISE BOGUS CREDITORS TO FINANCE ITS OPERATION. A CCORDINGLY, THE CONCLUSION OF THE ASSESSING OFFICER WAS IDENTICAL THAT THE AS SESSEE WAS NOT REFLECTING TRUE PROFIT MARGIN WHERE THE ASSESSEE REQUIRES PLE NTY OF MONEY TO BE INVESTED FOR PURCHASE OF LAND AND ONLY ALTERNATIVE AVAILABLE TO HIM WAS TO RAISE THE BOGUS CREDITORS TO FINANCE ITS OPERATION WHICH HAS BEEN DONE BY THE ASSESSEE BY CREATING THE BOGUS CREDITORS AMOUN TING TO RS.18,44,472/- . THERE IS NO DISPUTE TO THE FACT THAT THE ASSESS EE HAD SUBMITTED THE LIST OF CREDITORS AS REQUIRED ALONG WITH THEIR ADDRESSES A ND THE AMOUNT SO RAISED. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS PRODUCE D THE LIST OF ALL THE CREDITORS WITH THEIR ADDRESSES AND THE CONFIRMATIO NS, WHICH WAS THE PART OF THE TWO PAPER BOOKS BEFORE LEARNED CIT(A). BEF ORE THE LEARNED CIT(A), THE ASSESSEE MADE AN ATTEMPT TO SUBMIT THE EXPLANATIONS BY SUBMITTING THE CONFIRMATION AND THE EXPLANATION WI TH REGARD TO THE SAID DEPOSIT OF RS.18,44,472/- WHICH WAS FORWARDED TO T HE ASSESSING OFFICER FOR THE REMAND REPORT. DURING THE REMAND REPORT, THE ASSESSING OFFICER ASKED THE ASSESSEES COUNSEL TO SUBMIT THE SOURCE OF INCOME AND TO PRODUCE THE CREDITORS WHOSE SUMMONS WERE RETURNED BACK. THE LIST OF SUCH CREDITORS IS AVAILABLE AT CIT(A)S ORDER PAGE 5 MENTIONED HEREIN ABOVE. THE ASSESSEE COULD NOT PRODUCE SUCH PERSO NS SINCE THEY WERE NOT TRACEABLE AND ACCORDINGLY AN AFFIDAVIT WAS FIL ED BY THE LEARNED COUNSEL FOR THE ASSESSEE, AS MENTIONED HEREIN ABOVE. THE SOURCE OF THE SAID PERSONS WERE EXPLAINED BY THE ASSESSEE WITH REGARD TO ALL THE SAID PERSONS AND IN FACT THE LEARNED CIT(A) ACCEPTED TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SEVEN PERSONS OUT OF THE SAID 10 PERSONS. WITH REGARD TO THE THREE PERSONS, AS MEN TIONED HEREIN ABOVE, THE LEARNED CIT(A) DID NOT ACCEPT THE CREDITWORTHI NESS AND GENUINENESS OF THE TRANSACTIONS. THE LEARNED CIT(A), ON THE B ASIS OF THREE CREDITORS I.E. SHRI JASBIR SINGH RS.50,000/-, SHRI MOHINDER SINGH RS.48,000/- AND SMT. MANPREET KAUR RS.18,000/-, HAD COME TO THE CO NCLUSION THAT THE BALANCE OF CASH CREDITS AMOUNTING TO RS.17,30,472/ - ARE ALSO BOGUS AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER THAT THE CASH CREDITS AMOUNTING TO RS.17,30,472/- ARE BOGUS. THIS APPR OACH OF THE LEARNED CIT(A) CANNOT BE ACCEPTED AND IS AGAINST THE FACTS OF THE PRESENT CASE WHERE THE ASSESSEE HAD DISCHARGED HIS ONUS BY PROD UCING THE LIST OF ALL THE CREDITORS WITH THEIR COMPLETE ADDRESSES AND TH E CONFIRMATIONS AS WELL. THE ASSESSING OFFICER AND THE LEARNED CIT(A) CHOSE TO VERIFY 10 PERSONS. OUT OF THE SAID 10 PERSONS, THE LEARNED CIT(A) WAS SATISFIED FOR THE DEPOSIT OF SEVEN PERSONS AS GENUINE AND THE ADDITI ON SO MADE BY THE ASSESSING OFFICER WITH RESPECT TO THE SAID SEVEN P ERSONS WAS DELETED, IS MATTER OF RECORD IN THE ORDER OF LEARNED CIT(A) AT PAGES 9 AND 10. THE CIT(A) IS NOT JUSTIFIED TO TAKE A VIEW ON THE BASI S OF THE SAID THREE PERSONS AND TO TREAT THE CASH CREDITORS AMOUNTING TO RS.17 ,30,472/- AS BOGUS WHEN THE ASSESSEE HAD SUBMITTED THE CONFIRMATIONS AND HAS DISCHARGED HIS ONUS W.R.T. ALL THE CASH CREDITORS. THEREFORE , IN THE CIRCUMSTANCES & FACTS OF PRESENT CASE, THE LEARNED CIT(A), THEREFO RE, IS NOT JUSTIFIED IN 14 CONFIRMING THE ADDITION OF RS.17,30,472/-. IN VIE W OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ORISS A CORPORATION LIMITED 159 ITR 78 WHERE IT HAS BEEN HELD THAT NOTICE ISSU ED TO THE CREDITORS FOR APPEARANCE WHEN RETURNED WITH INSTRUCTION LEFT A ND NO FURTHER ATTEMPT WAS MADE TO EXAMINE THE SOURCE OF CREDITS, THE TRI BUNAL FOUND THAT THE ASSESSEE HAS DISCHARGED HIS ONUS OF PROVING THE CA SH CREDITS. IN THE PRESENT CASE, THOUGH THE PRESENT CREDITORS DO NOT HAVE THE INCOME-TAX NUMBER BUT THE ASSESSEE, IN ALL THE CASH CREDIT, H AD SUBMITTED THE NAMES AND ADDRESS AND IT WAS ONLY FOR THE AUTHORITIES BE LOW TO SEND THE SUMMONS TO ALL OF THEM AND VERIFY THE SAME. BUT I N THE PRESENT CASE THE ASSESSING OFFICER AND THE LEARNED CIT(A) CHOSE TO SEND THE SUMMONS OR EXAMINE THE CASH CREDITS IN 10 CASES ONLY. MOREOV ER, WHILE MAKING THE ADDITION U/S 68, THE ASSESSING OFFICER HAS TO ADVE RT TO EACH AND EVERY ENTRY AND NOT TO PICK UP THE COUPLE OF ENTRIES AND LEVEL THE ENTIRE SET OF DEPOSITS AS UNDISCLOSED INCOME. THIS VIEW HAS BE EN HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KINETIC CA PITAL FINANCE LTD. [2011] 202 TAXMAN 548. THE SAID DECISION OF HON'BLE HIGH COURT HAS BEEN PLACED ON RECORD BY THE LEARNED COUNSEL FOR THE AS SESSEE . ON THE CIRCUMSTANCES AND FACTS OF THE CASE, THE LEARNED C IT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.17,30,472/- AND ADDI TION SO CONFIRMED IS DIRECTED TO BE DELETED. THUS, GROUND NO. 2 AND 3 OF THE ASSESSEE ARE ALLOWED. 8. AS REGARDS GROUND NO. 4 AND 5, THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER MADE AN ADDITION OF INTEREST ON THE DEPOSITS OF RS.18,44,472/- WHERE THE ASSESSEE HAD CLAIMED THE INTEREST @16% WHICH WAS WORKED OUT AT RS.2,95,115/- AND SAME WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. THE LEARNED CIT(A) ACCORDINGLY, ALLOWED THE RELIEF IN PROPORTION TO THE CASH CREDIT ALLOWED BY HIM. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED BY LEARNED COUNSEL FOR THE A SSESSEE SHRI S. K. BANSAL, ADVOCATE, THAT THE ASSESSING OFFICER HAS W RONGLY MENTIONED THE INTEREST @16% WHICH IN FACT IS @12% AND IT IS MATT ER OF RECORD AND ALL THE DOCUMENTS WERE SUBMITTED BEFORE THE ASSESSING OFFI CER AS WELL AS LEARNED CIT(A). SINCE THE SAID ADDITIONS HAVE BEE N DIRECTED TO BE DELETED HEREIN ABOVE, THEREFORE, THE INTEREST ON T HE SAID DEPOSITS HAVING BEEN CONFIRMED BY LEARNED CIT(A) IS DIRECTED TO BE DELETED. 6.1. FOLLOWING THE DECISION RELIED UPON HEREINABOVE, THE LD. CIT( A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.38,25,79 5/- AND INTEREST OF 15 RS.5,15,807/- THEREON. THE SAME IS DIRECTED TO BE D ELETED. THUS, GROUNDS NO. 3, 4 & 5 OF THE ASSESSEE ARE ALLOWED. 7. AS REGARDS GROUND NO.2, THE LD. COUNSEL FOR THE ASSESSEE DID NOT ADVANCE ANY ARGUMENT WITH REGARD TO THE LEGAL ISSUE U/S 148 OF THE ACT AND ACCORDINGLY THE SAME IS TREATED AS NOT PRESSED AND IS DISMISSED 8. GROUNDS NO. 1 & 6 ARE GENERAL IN NATURE AND THER EFORE, DO NO REQUI9RE ANY ADJUDICATION. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.77(ASR)/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST NOVEMBER., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21ST NOVEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.HARJINDER SINGH RAINA. JAMMU. 2. THE ACIT, CIR.1, JAMMU 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.