Ishwar Dass, Dhuri V. ITO, Malerkotla

ITA 80/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8438 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: AMAN BANSAL; ANJALI BANSAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 80/CHD/2016 (ASSESSMENT YEAR : 2009-10) ISHWAR DASS, VS. THE INCOME TAX OFFICER, PROP. M/S MAHADEV WARD IV(3), STEEL CORPORATION, MALERKOTLA. NEAR GEETA BHAWAN. DHURI. PAN: ABDPD9280B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAN BANSAL & MS.ANJALI BANSAL RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 03.03.2016 DATE OF PRONOUNCEMENT : 09.03.2016 O R D E R THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIANA DATED 8.12.2015, CHALLENGING THE ADDITION OF RS.9,27,000/- UNDER SECTION 68 OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE HAD INTRODUCED FOLLOWING CASH CREDITS IN THE GARB O F UNSECURED LOANS IN THE NAME OF FOLLOWING PERSONS, W HO ARE ASSESSEES OWN HUF AND FAMILY MEMBERS/NEAR RELATIVE S OF THE ASSESSEE : 2 S.NO. NAME ADDITION DURING THE YEAR INTEREST DISALLOWED 1. SHRI ISHWAR DASS, HUF RS.1,00,000/- RS.10,000/- 2. SMT.SATANJALA RS.1,80,000/- RS.18,000/- 3. SMT.SHIMLA DEVI RS.2,80,000/- RS.24,000/- 4. SMT.SEEMA RANI RS.2,75,000/- RS.20,000/- TOTAL: RS.8,55,000/- TOTAL: RS.72,000/- 3. THE ASSESSEE WAS ASKED TO EXPLAIN THE UNSECURED LOANS BUT THE ASSESSEE FAILED TO ATTEND THE PROCEED INGS. THEREFORE, SUMMONS WERE ISSUED TO ALL THE CREDITORS FROM WHOM THE UNSECURED LOANS WERE ALLEGEDLY TAKEN BY TH E ASSESSEE. THE ASSESSEE IN RESPONSE TO SUMMONS FURN ISHED THE NOTARIZED AFFIDAVITS, COPIES OF ITRS AND COPY O F THE ACCOUNTS TOGETHER WITH BANK STATEMENTS OF THE CREDI TORS. THE ASSESSING OFFICER NOTED THAT THESE PAPERS ARE N OTHING BUT A DEVICE TO DEFRAUD THE REVENUE. ON PERUSAL OF THE BILLS OF THE COMMODITY PROFITS, IT WAS SEEN THAT THE ASSE SSEE HAD RECEIVED COMMODITY PROFITS FROM M/S SATYAM COMMODIT IES AND M/S B.K. COMMODITIES. FURTHER THE ASSESSING OF FICER ISSUED LETTERS TO M/S SATYAM COMMODITIES AND M/S B. K. COMMODITIES RESPECTIVELY TO PRODUCE THEIR BOOKS OF ACCOUNT AND TO ATTEND PERSONALLY TO FIND OUT THE GENUINENE SS OF THE TRANSACTIONS. BUT BOTH THE BROKER FIRMS FAILED TO ATTEND AND NO COPIES OF ACCOUNTS WERE SUPPLIED. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSEE FAILED TO DISCHAR GE THE ONUS UNDER SECTION 68 OF THE ACT AND MADE ADDITION OF RS.9,27,000/- UNDER SECTION 68 OF THE ACT. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT (APPEALS) AND WRITTEN SUBMISSIONS OF TH E 3 ASSESSEE WERE REPRODUCED IN THE APPELLATE ORDER, IN WHICH THE ASSESSEE EXPLAINED THAT THE ASSESSEE FILED DOCU MENTARY EVIDENCE BEFORE THE ASSESSING OFFICER I.E. AFFIDAVI TS, COPY OF BANK ACCOUNT, PAN NUMBER, COPY OF ACKNOWLEDGEMENT O F FILING OF INCOME-TAX RETURNS AND COPY OF ACCOUNT DU LY CONFIRMED BY THE CREDITORS. THEREFORE, THE ONUS UP ON THE ASSESSEE UNDER SECTION 68 OF THE ACT HAS BEEN DISCH ARGED. THE ASSESSEE RELIED ON SEVERAL DECISIONS IN SUPPORT OF HIS CONTENTION. 5. THE LEARNED CIT (APPEALS), HOWEVER, DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE BECAUSE MERE FILING OF CONFIRMATION, PAN AND THAT AMOUNTS WERE RECEIVED TH ROUGH CHEQUES ARE NOT SUFFICIENT TO PROVE THE CREDITWORTH INESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. IT WAS ALSO NOTED THAT SINCE M/S SATYAM COMMODITIES AND M/ S B.K. COMMODITIES HAVE FAILED TO ATTEND THE OFFICE I N RESPONSE TO THE SUMMONS, THEREFORE, THE ASSESSEE FA ILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. THE L EARNED CIT (APPEALS) FURTHER NOTED THAT IN SEVERAL DECISIONS, IT WAS HELD THAT MERE FILING OF CONFIRMATORY LETTERS IS NOT ENO UGH TO PROVE THE GENUINENESS OF THE TRANSACTIONS IN THE MA TTER AND ACCORDINGLY, DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 6. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS ADMITTED FACT THAT WHEN THE ASSESSING OFFICER WANTE D TO VERIFY THE CREDITWORTHINESS OF THE CREDITORS AND GE NUINENESS 4 OF THE TRANSACTIONS, THE ASSESSEE WAS DIRECTED TO P RODUCE ALL THE CREDITORS FOR VERIFICATION AND EXAMINATION BUT THE ASSESSEE FAILED TO PRODUCE ANY OF THE CREDITORS BEF ORE THE ASSESSING OFFICER. IT IS ALSO ADMITTED FACT THAT A LL THE CREDITORS ARE RELATED TO THE ASSESSEE AND ONE OF TH E CREDITORS IS EVEN HUF OF THE ASSESSEE. NO REASON H AS BEEN EXPLAINED AS TO WHY THESE PERSONS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFICATION AND EXAMINAT ION OF THE TRANSACTIONS IN THE MATTER. THE ASSESSING OFFICER ON FURTHER EXAMINATION OF THE RECORD OF THE ASSESSEE, FOUND TH AT THE ASSESSEE HAS RECEIVED COMMODITY PROFITS FROM M/S SA TYAM COMMODITIES, DHURI AND M/S B.K. COMMODITIES, LUDHIA NA. IN ORDER TO FIND OUT THE GENUINENESS OF TRANSACTION S OF THE ASSESSEE WITH THESE PARTIES, BOTH WERE DIRECTED TO PRODUCE THEIR BOOKS OF ACCOUNT BUT THEY FAILED TO ATTEND TH E ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER ALSO VERIFIED THE GENUINENESS OF THESE PARTIES WHETHER THEY ARE R EGISTERED WITH M/S MULTI COMMODITIES EXCHANGE OF INDIA, MUMBA I, IT WAS INFORMED BY THE MULTI COMMODITIES EXCHANGE OF I NDIA, MUMBAI THAT BOTH THESE PARTIES ARE NOT MEMBERS OF T HEIR EXCHANGE. BOTH THESE PARTIES WERE NOT HAVING ANY REGISTRATION AND MEMBERSHIP OF THE EXCHANGE. THE STATEMENT OF SHRI ANKIT GARG, PROPRIETOR OF M/S SAT YAM COMMODITIES WAS RECORDED IN THE CASE OF ANKIT GARG, DIRECTOR OF M/S SATYAM COMMODITIES IN WHICH HE HAS ADMITTED THAT THE CASH IS RECEIVED FROM THE CLIENT S AND PAYMENT IS MADE THROUGH CHEQUES AFTER MAKING BILLS OF PROFITS IN FAVOUR OF THE PERSONS WHO BRING THE CASH . THE 5 ASSESSEE WAS CONFRONTED WITH THIS FACT BUT THE ASSE SSEE HAS NEVER ASKED FOR CROSS EXAMINATION OF SHRI ANKIT GAR G. ACCORDING TO SEBI GUIDELINES, SUCH BROKER FIRMS ARE REQUIRED TO BECOME MEMBER OF MULTI COMMODITY EXCHAN GE OF INDIA, MUMBAI AND REQUIRED TO BE REGISTERED WITH IT . THE ASSESSING OFFICER ON THE BASIS OF THESE FACTS FURTH ER NOTED THAT THE BANK ACCOUNTS OF THE CREDITORS SHOW THAT M ERE ENTRIES UNDER THE NOMENCLATURE OF COMMODITY PROFITS ARE TAKEN BY THE CREDITORS AS ABOVE AND THEN IMMEDIATEL Y AFTER CREDITING THE PROCEEDS OF SUCH ENTRIES IN THE BANK ACCOUNTS OF THESE PERSONS/CREDITORS, AMOUNTS WERE IMMEDIATEL Y TRANSFERRED TO THE ASSESSEE IN THE FORM OF UNSECURE D LOANS. THE ASSESSING OFFICER ALSO NOTED FROM THE BANK STAT EMENTS THAT THERE ARE NOT MUCH TRANSACTIONS IN THE BANK OT HER THAN ADJUSTMENT ENTRIES. THE DETAILS OF TRANSACTIONS OF THESE PERSONS ARE NOTED IN THE ASSESSMENT ORDER TO SHOW T HAT AFTER RECEIPT OF COMMODITY PROFITS, THE EQUIVALENT OR SIMILAR AMOUNTS HAVE BEEN TRANSFERRED TO THE ASSESSEE IN TH E NAME OF LOANS. THE ASSESSING OFFICER ALSO NOTED THAT TH ESE CREDITORS HAVE ALSO TAKEN COMMODITY PROFITS FROM M/ S SATYAM COMMODITIES AND M/S B.K. COMMODITIES FROM WH OM THE ASSESSEE HAD ALSO TAKEN THE ENTRIES. THE ASSES SING OFFICER WAS, THEREFORE, JUSTIFIED IN TAKING ADVERSE INFERENCE AGAINST THE ASSESSEE THAT THESE ARE NOT GENUINE TRA NSACTIONS AND THE TRANSACTIONS ARE ROOTED IN THE NAME OF LOAN S JUST TO INTRODUCE OWN UNEXPLAINED MONEY TO THE ASSESSEE. T HESE FACTS WERE SUFFICIENT FOR THE ASSESSING OFFICER TO HOLD THAT 6 THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS O F THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. 7. HOWEVER, DURING THE COURSE OF ARGUMENTS DESPITE REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORI TIES BELOW, THE LEARNED COUNSEL FOR THE ASSESSEE UNDERTO OK BEFORE ME TO PRODUCE ALL THE CREDITORS BEFORE THE A SSESSING OFFICER FOR EXAMINATION AND VERIFICATION OF THE TRA NSACTIONS AND ENTRIES CONTAINED IN THE BANK ACCOUNTS OF THE C REDITORS. THEREFORE, I AM OF THE VIEW THE ASSESSEE MAY BE GIV EN ONE MORE CHANCE TO EXPLAIN THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER B Y PRODUCING ALL THE CREDITORS BEFORE THE ASSESSING OF FICER FOR VERIFICATION OF THE TRANSACTIONS AND THEIR EXAMINAT ION IN ORDER TO FIND OUT THE TRUTH IN THE MATTER. 8. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO THE ASSE SSEE TO PRODUCE ALL THE FOUR CREDITORS BEFORE THE ASSESSING OFFICER FOR VERIFICATION AND EXAMINATION AND THE ASSESSEE S HALL NOT SEEK UNNECESSARY ADJOURNMENT IN THE MATTER. THE AS SESSEE IS DIRECTED TO PROVE THE CREDITWORTHINESS OF THE CR EDITORS AND GENUINENESS OF THE TRANSACTIONS AND ALSO DIREC TED TO EXPLAIN AS TO IN WHAT CIRCUMSTANCES THE COMMODITY P ROFITS HAVE BEEN RECEIVED BY THE CREDITORS FROM M/S SATYAM COMMODITIES AND M/S B.K. COMMODITIES FROM WHOM THE ASSESSEE WAS ALSO TAKING COMMODITY ENTRIES. THE AS SESSING OFFICER SHALL GIVE REASONABLE SUFFICIENT OPPORTUNIT Y OF BEING 7 HEARD TO THE ASSESSEE. I MAKE IT CLEAR THAT IN CAS E THE ASSESSEE FAILS TO PRODUCE ANY OF THE CREDITORS BEFO RE THE ASSESSING OFFICER, THE ASSESSING OFFICER IS AT LIBE RTY TO DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE AND SHAL L PASS ASSESSMENT ORDER IN ACCORDANCE WITH LAW, STRICTLY O N MERITS OF THE CASE, AS HAVE BEEN DISCUSSED AND CONSIDERED IN THE ASSESSMENT ORDER. 9. WITH THESE FINDINGS AND DIRECTIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED :9 TH MARCH, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8