Kailash Chander, Hisar V. Income Tax Officer, Hisar

ITA 817/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7525 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 13-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 817/DEL/2015 A.Y. : 2010-11 SHRI KAILASH CHANDER 151, PALIKA BAZAR, HISAR (PAN: AAQPC3128D) VS. INCOME TAX OFFICER, WARD-2, HISAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. GAUTAM JAIN, CA DEPARTMENT BY : NONE DATE OF HEARING : 14-07-2016 DATE OF ORDER : 02-08-2016 ORDER PER H.S. SIDHU : JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 16.1.2015 PASSED BY THE LD. CIT(A), HISAR RELE VANT TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HISAR HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDIN G THE ADDITION OF RS. 16,00,000/- REPRESENTING CASH DEPOS ITS IN ICICI BANK AND HELD TO BE ALLEGED UNEXPLAINED CREDIT U/S 68 OF THE ACT. ITA NO.817/DEL/2015 2 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS PROCEEDED TO UPHOLD THE ADDITION BY FAILING TO APPRECIATE THAT DEPOSITS IN THE BANK STOOD DULY EXPLAINE D OUT OF THE ADVANCE RECEIVED FROM ONE SHRI BALWANT SIN GH PANNU WHO HAD DULY CONFIRMED THE ADVANCE BY APPEARI NG IN PERSON AND AS SUCH THE ADDITION CONFIRMED IS LEGAL LY UNSUSTAINABLE. 1.2 THAT THE FINDING THAT SHRI BALWANT SINGH PANNU H AD NO MEANS AND SOURCE TO ADVANCE RS. 16 LACS IS NEITHER BASED ON PROPER APPRECIATION OF FACTS AND CIRCUMSTANCE S OF THE CASE AND NOR IS IN ACCORDANCE WITH LAW. 1.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS OVERLOOKED RELEVANT EVIDENCE PLACED ON RECORD AN D, DRAWN FACTUALLY INCORRECT AND LEGALLY UNSUSTAINABLE INFERENCES BASED ON IRRELEVANT AND EXTRANEOUS CONSIDERATION AND THUS, ADDITION SUSTAINED IS WHOLL Y UNWARRANTED AND NOT IN ACCORDANCE WITH LAW. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HISAR HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING ADDITION OF RS. 5,49,000/- REPRESENTING LO ANS ITA NO.817/DEL/2015 3 RECEIVED BY THE ASSESSEE AND, HELD TO BE UNEXPLAINE D CASH CREDIT U/S 68 OF THE ACT. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FAILED TO APPRECIATE THAT UNSECURED LOANS AGGREGAT ING TO RS. 5,49,000/- HAD BEEN RECEIVED BY ACCOUNT PAYEE CHEQUES FROM IDENTIFIABLE PARTIES WHO HAD DULY CONFI RMED THAT LOANS HAD BEEN ADVANCED TO THE APPELLANT AND AS SUCH, ADDITION SO SUSTAINED IS INVALID AND UNTENABLE. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER FAILED TO APPRECIATE THAT INABILITY OF TH E ASSESSEE TO EXPLAIN SOURCE OF SOURCE CANNOT BE A BAS IS TO CONFIRM ADDITION U/S 68 OF THE ACT. IT IS THEREFORE PRAYED THAT, ADDITIONS MADE BY THE LEA RNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE DELETED AND A PPEAL OF THE APPELLANT BE ALLOWED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 5.5.2010 DECLARING INCOME OF RS. 1,59, 250/- AND AGRICULTURE INCOME OF RS. 4,75,000/-. THE ASSESSEE HAS SHOWN INCOME FROM OTHER SOURCES AND INTEREST. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT THROUGH CASS TO EXAMINE THE SOURC OF CASH ITA NO.817/DEL/2015 4 DEPOSITS MADE BY THE ASSESSEE IN SAVING BANK ACCOUNT S. THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) AT INCOME OF RS. 27 ,83,250/- AFTER MAKING VARIOUS ADDITIONS. 3. AGAINST THE ORDER OF THE LD. AO, ASSESSEE APPEAL ED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 16.1. 2015 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SUSTAI NED THE ADDITION OF RS. 21,49,000/- 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. IN THIS CASE, NOTICE OF HEARING FOR 14.7.2016 W AS SENT TO BOTH THE PARTIES AND IN RESPONSE TO THE SAME, ASSESSEES AUT HORISED REPRESENTATIVE APPEARED, BUT NONE APPEARED ON BEHAL F OF THE DEPARTMENT, NOR FILED ANY APPLICATION FOR ADJOURNM ENT FROM THE DEPARTMENT SIDE. KEEPING IN VIEW THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSU E NOTICE AGAIN, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPART E QUA REVENUE, AFTER HEARING THE LD. A.R. OF THE ASSESSEE AND PERUSING T HE RECORDS. 6. LD. A.R. OF THE ASSESSEE WITH REGARD TO ADDITION O F RS. 16,00,000/- REPRESENTING CASH DEPOSITS IN ICICI BA NK, STATED THAT THE AMOUNT OF RS. 16 LACS CREDITED IN THE ASSESSEES B ANK ACCOUNT ITA NO.817/DEL/2015 5 WAS FROM SH. BALWANT SINGH PANNU WHICH WAS STOOD DULY EXPLAINED WHO HAD CONFIRMED THE ADVANCE BY APPEARING IN PERS ON. HE FURTHER STATED THAT LOWER AUTHORITIES FINDING THAT SHRI BALWA NT SINGH PANNU HAD NO MEANS AND SOURCE TO ADVANCE RS. 16 LACS IS NE ITHER BASED ON PROPER APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE CASE AND NOR IS IN ACCORDANCE WITH LAW. IT WAS FURTHER STATED THA T THE LOWER AUTHORITIES HAS OVERLOOKED RELEVANT EVIDENCE PLACED ON RECORD AND, DRAWN FACTUALLY INCORRECT AND LEGALLY UNSUSTAINABLE I NFERENCES BASED ON IRRELEVANT AND EXTRANEOUS CONSIDERATION AND THUS, ADDITION SUSTAINED IS WHOLLY UNWARRANTED AND NOT IN ACCORDANCE WITH LAW. TO SUPPORT HIS CONTENTION, HE RELIED UPON THE FOLLOWI NG CASE LAWS AND STATED THAT THE ISSUE IN DISPUTE STANDS SQUARELY CO VERED BY THE SAID DECISIONS AND THEREFORE, THE ADDITION IN DISP UTE MAY BE DELETED. A) CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC) B) CIT VS. DIAMOND PRODUCTS LTD. 177 TAXMAN 331 (DE L.) C) CIT VS. REAL TIME MARKETING (P) LTD. 306 ITR 35 (DEL.) D) ITA NO. 1583/DEL/2011 AY 1996-97 DATED 11.5.2013 IN THE CASE OF DCIT VS. RAINEE SINGH FOLLOWING JUDGMENTS . ITA NO.817/DEL/2015 6 I) 264 ITR 254 PAGE. 261 TO 266 (GAU.) NEMICHAND KOTHARI VS. CIT II) 220 CTR 622 (RAJ) ARAVALI TRADING CO. VS. ITO E) 256 ITR 360 (GUJ) DCIT VS. ROHINI BUILDERS F) 219 CTR 571 (RAJ.) LABH CHAND BOHRA VS. ITO G) 103 ITR 344 (PAT.) SARAOGI CREDIT CORPORATION VS. CIT H) 151 ITR 150 (PAT.). ADDL. CIT VS. HANUMAN AGGAR WAL I) 154 ITR 244 (PAT.) ADDL. CIT VS. BAHRI BROS. (P ) LTD. J) 59 ITR 632 (ASSAM) TOLARAM DAGA VS. CIT K) 361 ITR 220 (DEL) CIT VS. KAMDHENU STEEL & ALLO YS LTD. 6.1 AS REGARDS ADDITION OF RS. 5,49,000/- REPRESENT ING LOANS RECEIVED BY THE ASSESSEE AND, HELD TO BE UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT, LD. A.R. OF THE ASSESSEE STATED THAT THESE ARE THE UNSECURED LOANS AGGREGATING TO RS. 5,49,000/- HAD BE EN RECEIVED BY ACCOUNT PAYEE CHEQUES FROM IDENTIFIABLE PARTIES W HO HAD DULY CONFIRMED THAT LOANS HAD BEEN ADVANCED TO THE ASSESSEE AND AS SUCH, ADDITION SO SUSTAINED IS INVALID AND UNTENABLE. HE FURTHER STATED THAT LOWER AUTHORITIES FAILED TO APPRECIATE THAT INABILITY OF THE ASSESSEE TO EXPLAIN SOURCE OF SOURCE CANNOT BE A BA SIS TO CONFIRM ITA NO.817/DEL/2015 7 ADDITION U/S. 68 OF THE ACT. TO SUPPORT HIS CONTEN TION, HE RELIED UPON THE FOLLOWING CASE LAWS:- I) 151 ITR 150 (PAT.) ADDL. CIT VS. HANUMAN AGARWA L II) 168 ITR 493 (CAL) MATHER & PLATT (INDIA) LTD. VS. CIT III) 154 ITR 244 (PAT.) ADDL. CIT VS. BAHRI BROS. P LTD. IV) 245 ITR 160 (MP) CIT VS. METACHEM INDUSTRIES V) 136 TAXMAN 213 (GAU( NEMI CHAND KOTHARI VS. CI T VI) 219 CTR 571 (RAJ) LABH CHAND BOHRA VS. ITO VII) CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC) VIII) CIT VS. DIAMOND PRODUCTS LTD. 177 TAXMAN 331 (DEL.) IX) CIT VS. REAL TIME MARKETING (P) LTD. 306 ITR 35 (DEL.) X) ITA NO. 1583/DEL/2011 AY 1996-97 DATED 11.5.2013 IN THE CASE OF DCIT VS. RAINEE SINGH FOL LOWING JUDGMENTS. A) 264 ITR 254 PAGE. 261 TO 266 (GAU.) NEMICHAND KOTHARI VS. CIT ITA NO.817/DEL/2015 8 B) 220 CTR 622 (RAJ) ARAVALI TRADING CO. VS. ITO XI) 256 ITR 360 (GUJ) DCIT VS. ROHINI BUILDERS XII) 263 CTR 612 (ALL.) ZAFA AHMED & CO. VS. CIT XIII) 361 ITR 220 (DEL) CIT VS. KAMDHENU STEEL & AL LOYS LTD. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE CASE LAWS RELIED UPON, LD. AR REQUESTED T HAT THE ADDITION IN DISPUTE MAY BE DELETED AND THE APPEAL OF THE ASSES SEE MAY BE ALLOWED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS AVAILABLE WITH ME. 7.1 WITH REGARD TO ADDITION OF RS. 16 LACS IS CONCER NED, I FIND THAT IN THE INSTANT CASE THE ASSESSING OFFICER AND CIT(A) OBSERVED THAT 'THE IKRARNAMA WAS MADE ON 12.10.2009 WHEREAS THE C ONVEYANCE DEED, WAS TO BE EXECUTED ON 12.07.2010 I.E. AFTER A P ERIOD OF 10 MONTHS, WHICH IS ABNORMAL IN SUCH TRANSACTIONS.' IT IS SUBMITTED THAT, THE AMOUNT INVOLVED IN THE INSTANT TRANSACTION WAS HIGH I.E. RS. 1,05,00,000/- AND IT IS AN AGREEMENT BETWEEN THE BUYER AND THE SELLER AS PER THE TERMS SUITABLE TO THEM AND THE FI XED PERIOD OF SUCH AGREEMENT TO SELL (IKRARNAMA) IS NOWHERE LAID D OWN. HENCE, ITA NO.817/DEL/2015 9 BOTH ASSESSING OFFICER AND CIT(A) ARE NOT JUSTIFIED IN CONCLUDING THAT THE PERIOD OF 10 MONTHS IS ABNORMAL. FURTHER, BOTH THE AUTHORITIES BELOW OBSERVED THAT SHRI BALWANT SINGH PANNU HAD NO M EANS AND SOURCE TO ADVANCE RS. 16 LACS FOR THE PURCHASE OF P ROPERTY WORTH OF RS. 1 CRORE WHICH IS A WRONG PRESUMPTION. HOWEVER, THE PERSON CONCERNED WAS AN EXECUTIVE IN THE LAND MORTGAGE BANK WHO RETIRED IN 2004 AND WAS PRACTICING IN THE PUNJAB AND HARYAN A HIGH COURT SINCE THEN. FURTHER HE ALSO OWNED 20 ACRES OF AGRICUL TURAL LAND AGAINST WHICH HE HAS ALSO AVAILED KISAN CREDIT CARD LIMIT OF RS. 5,00,000/- FROM NATIONALIZED BANK. IN MY VIEW, SHRI BALWANT SINGH PANNU WAS A PERSON WAS OF SUFFICIENT CREDITWORTHINESS AND WAS IN A POSITION TO ADVANCE AN AMOUNT OF RS. 16,00,000/- AS AN ADVANCE FOR PURCHASE OF THE PROPERTY SITUATED AT SECTOR 51, GURGAO N. HENCE, THE FINDING OF THE LEARNED CIT(A) IS FACTUALLY NOT CORRE CT. IT IS ALSO NOTED THAT RS. 16,00,000/- WAS RECEIVED BY THE ASSESSEE AS AN ADVANCE AGAINST PROPERTY SITUATED AT SECTOR 51, GURGAON FROM SH. BALWANT SINGH PANNU IN PURSUANCE OF AN AGREEMENT TO SELL DA TED 12.10.2009 AS IS EVIDENT FROM CASH FLOW STATEMENT OF THE ASSESSEE FOR FINANCIAL YEAR 2009-10. HOWEVER, THE LD. CIT(A) HAS UPHELD TH E ADDITION ON THE BASIS THAT NO EVIDENCE HAS BEEN FURNISHED BY SHRI BALWANT SINGH PANNU REGARDING ADVANCE OF RS 5,00,000/- EACH FROM SH. MAMAN AND SH. UDAIVIR AND THE SOURCE OF AVAILABILITY OF THE CASH LYING AT HIS ITA NO.817/DEL/2015 10 HOME. I FIND CONSIDERABLE COGENCY IN THE ASSESEES AR CONTENTION THAT SHRI BALWANT SINGH PANNU WAS THE SOURCE OF CASH DEPOSITED IN THE ASSESSEE'S BANK ACCOUNT. ALSO, IT IS EVIDENT FRO M HIS STATEMENT RECORDED ON 26.2.3013 THAT ADVANCE GIVEN TO THE TUNE OF RS. 16,00,000/-. FURTHER, THE COPY OF AGREEMENT TO SELL, STATEMENT OF SH. BALWANT SINGH PANNU AND COPY OF PAN CARD OF SH. BALWANT SINGH PANNU WERE WITH THE LOWER AUTHORITIES. IN THE B ACKGROUND OF THE AFORESAID DISCUSSIONS, IT IS CRYSTAL CLEAR T HAT THE AMOUNT OF RS. 16,00,000/- CREDITED IN THE ASSESSEE'S BANK ACCOUNT WAS FROM SHRI BALWANT SINGH PANNU. IN MY VIEW, IT IS A WELL SETTLE D LAW THAT SOURCE OF SOURCE CANNOT BE A BASIS TO MAKE AN ADDITION ULS 68 OF THE ACT AND, ON FACTS BURDEN OF THE ASSESSEE STAND DISCHARGE D AND ACCORDINGLY, THE ADDITION OF RS. 16 LACS IS DELETED. MY AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- A) 220 CTR 622 (RAJ) ARAVALI TRADING CO. VS. ITO 'HELD THAT NEITHER THE PROVISIONS OF SECTION 68 NOR ON G ENERAL PRINCIPLE IT CAN BE SAID THAT ONCE THE EXISTENCE OF P ERSON IN WHOSE NAME CREDITS ARE FOUND IN THE BOOKS OF THE AS SESSEE IS PROVED AND SUCH PERSON OWN SUCH CREDIT WITH THE ASSESS EE, STILL THE ASSESSEE IS TO FURTHER PROVE THE SOURCE FRO M WHICH CREDITORS COULD HAVE ACQUIRED MONEY TO BE DEPOSITED WI TH HIM. ITA NO.817/DEL/2015 11 THE FACT THAT DEPOSITOR'S EXPLANATION ABOUT THE SOURCE W HERE FROM THEY ACQUIRED THE MONEY IS NOT ACCEPTABLE TO THE ASSESSING OFFICER, IT CANNOT BE PRESUMED THAT THE DEPOS IT MADE BY SUCH CREDITOR IS THE MONEY OF THE ASSESSEE HIMSELF. THERE IS NO WARRANT FOR SUCH PRESUMPTION.' B) 256 ITR 360 (GUJ) DCIT VS. ROHINI BUILDERS 'THUS IT IS CLEAR THAT THE ASSESSEE HAD DISCHARGED TH E INITIAL ONUS WHICH LAYS ON IT TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADD RESSES, GIR NUMBERS/PERMANENT ACCOUNTS NUMBERS AND THE COPIE S OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE. IT HA S ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT TH E AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAY EE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAU SE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURC E OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURC E OF THE SOURCE AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD. V. CIT [1963] 49 ITR 723. THE GENU INENESS OF THE TRANSACTION IS PROVED BY THE FACT THAT THE PAYMENT TO THE ITA NO.817/DEL/2015 12 ASSESSEE AS WELL AS REPAYMENT OF THE LOAN BY THE AS SESSEE TO THE DEPOSITORS IS MADE BY ACCOUNT PAYEE CHEQUES AND THE INTEREST IS ALSO PAID BY THE ASSESSEE TO THE CREDITORS BY ACCOUNT PAYEE CHEQUES. MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAIL ED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GRO UND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CRE DITORS AS NON-GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY T HE SUPREME COURT IN THE CASE OF ORISSA CORPORATION [198 6] 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRESSE S OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN SH IFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE E NQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON- COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICE R UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SU FFICIENT TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE .. ' [ EMPHASIS SUPPLIED] C) 149 TTJ 401 (LUCK) DWARIKADHISH SUGAR INDUSTR IES VS. ITO ITA NO.817/DEL/2015 13 'HELD THAT ONUS OF THE ASSESSEE (IN WHOSE BOOKS OF ACCOUNT CREDIT APPEARS) STANDS FULLY DISCHARGED IF T HE IDENTITY OF THE CREDITOR IS ESTABLISHED AND ACTUAL RECEIPT OF MONEY FROM SUCH CREDITOR IS PROVED. IN CASE, THE AO IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS', THE PROPER COURSE WO ULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAKING DUE ENQUIRIES FROM SUCH CREDITOR). ' D) 361 ITR 220 (DEL) CIT VS, KAMDHENU STEEL & ALLOYS LTD '12 WHAT DOES FOLLOW FROM THE AFORESAID? IT IS NOT IN DOUBT THAT THE ASSESSEE HAD GIVEN THE PARTICULARS OF REGISTR ATION OF THE INVESTING/APPLICANT COMPANIES; CONFIRMATIONS FROM THE SHARE APPLICANTS; BANK ACCOUNTS DETAILS; SHOWN PAYME NTS THROUGH ACCOUNT PAYEE CHEQUES, ETC. AS STATED BY US IN THE BEGINNING, WITH THESE DOCUMENTS, IT CAN BE SAID THAT TH E ASSESSEE HAS DISCHARGED ITS INITIAL ONUS. WITH THE REGI STRATION OF THE COMPANIES, ITS IDENTITY STANDS ESTABLISHED, THE APPLICANT COMPANIES WERE HAVING BANK ACCOUNTS, IT HAD MADE THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. 13 NO DOUBT, WHAT THE AO OBSERVED MAY MAKE HIM SUSPI CIOUS ABOUT SUCH COMPANIES, EITHER THEIR EXISTENCE, WHICH M AY BE ITA NO.817/DEL/2015 14 ONLY ON PAPERS AND/OR GENUINENESS OF THE TRANSACTION S, WHEN HE FOUND THAT INVESTING COMPANIES ARE NOT AVAILABLE AT GIVEN ADDRESSES OR THAT THE ISSUANCE OF THE CHEQUE REPRESE NTING SHARE APPLICATION MONEY OR PRECEDED BY THE DEPOSIT O F CASH IN THE BANK ACCOUNT OF THESE INVESTMENT COMPANIES. 14 THE IMPORTANT QUESTION WHICH ARISES AT THIS STAGE IS AS TO WHETHER ON THE BASIS OF THESE FACTS, COULD IT BE SAID TH AT IT IS THE ASSESSEE WHICH HAS NOT BEEN ABLE TO EXPLAIN THE S OURCE AND RECEIPT OF MONEY. ACCORDING TO THE ASSESSEE, HE H AD GIVEN THE REQUIRED INFORMATION TO EXPLAIN THE SOURCE AND WA S NOT OBLIGATED TO PROVE SOURCE OF THE MONEY. IT IS THE SUBM ISSION OF THE ASSESSEE THAT EVEN IN CASE THERE IS SOME DOUBT A BOUT THE SOURCE OF MONEY IN GIVING INTO COFFERS OF THE SHARE APPLICANTS WHICH THEY INVESTED WITH THE ASSESSEE, IT WOULD NOT AUTOMATICALLY FOLLOW THAT THE SAID MONEY BELONGS TO T HE ASSESSEE AND BECOMES UNACCOUNTED MONEY. ACCORDING TO US, THE ASSESSEE APPEARS TO BE CORRECT ON THIS ASPECT. WE FEEL THAT SOMETHING MORE WHICH WAS NECESSARY AND REQUIRED TO BE DONE BY THE AO WAS NOT DONE. THE AO FAILED TO CARRY HIS SU SPICIOUS TO LOGICAL CONCLUSION BY FURTHER INVESTIGATION. AFTER THE REGISTERED LETTERS SENT TO THE INVESTING COMPANY HAD B EEN RECEIVED BACK UNDELIVERED, TOE AO PRESUMED THAT THESE ITA NO.817/DEL/2015 15 COMPANIES DID NOT EXIST AT THE GIVEN ADDRESS. NO DOUB T, IF THE COMPANIES ARE NOT EXISTING, I.E., THEY HAVE ONLY PAPE R EXISTENCE, ONE CAN DRAW THE CONCLUSION THAT HE ASSESSE E HAD NOT BEEN ABLE TO DISCLOSE THE SOURCE OF AMOUNT RECEI VED AND PRESUMPTION UNDER S. 68 OF THE ACT FOR THE PURPOSE OF ADDITION OF AMOUNT AT THE HANDS OF THE ASSESSEE. BUT, IT HAS TO BE CONCLUSIVELY ESTABLISHED THAT THE COMPANY IS NON-EXISTE NCE. 15 THE AO DID NOT BOTHER TO FIND OUT FROM THE OFFICE OF THE REGISTRAR OF COMPANIES THE ADDRESSES OF THOSE COMPANIE S FROM WHERE THE REGISTERED LETTER RECEIVED BACK UNDELIVERE D. IF THE ADDRESS WAS SAME AT WHICH THE LETTER WAS SENT OR THE INSPECTOR VISITED AND NO CHANGE IN ADDRESS WAS COMMUNICATED, PERHAPS IT MAY HAVE BEEN ONE FACTOR. I N SUPPORT OF THE CONCLUSION WHICH THE AO WANTED TO ARRI VE AT, THAT BY ITSELF CANNOT BE TREATED AS THE CONCLUSIVE FAC TOR. AS POINTED OUT ABOVE, THESE APPLICANT COMPANIES HAVE PANS AND ASSESSED INCOME TAX NO EFFORT WAS MADE TO EXAMINE A S TO WHETHER THESE COMPANIES WERE FILING THE IT RETURNS AND IF THEY WERE FILING THE SAME, THEN WHAT KIND OF RETURNS THESE COMPANIES WERE FILING. IF THERE WAS NO RETURN, THIS COULD BE ANOTHER FACTOR LEADING TOWARDS THE SUSPICION NURTURED BY THE AO. FURTHER, IF THE RETURNS WERE FILED AND SCRUTINY TH EREOF ITA NO.817/DEL/2015 16 REVEALS THAT SUCH RETURNS WERE FOR NAMESAKE, THIS COUL D YET ANOTHER BE CONTRIBUTING FACTOR IN THE DIRECTION AO WANT ED TO GO. LIKEWISE, WHEN THE BANK STATEMENTS WERE FILED, THE AO COULD FIND OUT THE ADDRESS GIVEN BY THOSE APPLICANT COMPANIES IN THE BANK, WHO OPENED THE BANK ACCOUNTS AND ARE THE SIGNATORIES, WHO INTRODUCED THOSE BANK ACCOUNTS AND THE MANNER IN WHICH TRANSACTIONS WERE CARRIED OUT AND THE BANK ACCOUNTS OPERATED. THIS KIND OF INQUIRY WOULD HAVE GI VEN SOME MORE MATERIAL TO THE AO TO FIND OUT AS TO WHETHER THE AS SESSEE CAN BE CONVICTED WITH THE TRANSACTIONS WHICH WERE A LLEGEDLY BOGUS AND/OR COMPANIES WERE ALSO BOGUS AND WERE TRE ATED FOR NAMESAKE. WE SAY SO WITH MORE EMPHASIS BECAUSE OF TH E REASON THAT NORMALLY SUCH KIND OF PRESUMPTION AGAINST THE ASSESSEE CANNOT BE MADE AS PER THE LAW LAID DOWN IN VARIOUS JUDGMENTS NOTED ABOVE. JUST BECAUSE OF THE CREDITORS/S HARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE THE REVENUE A RIGHT TO INVOKE S. 68 OF THE ACT WITH OUT ANY ADDITIONAL MATERIAL TO SUPPORT SUCH A MOVE. WE ARE REMI NDING OURSELVES OF THE FOLLOWING REMARKS OF A DIVISION BEN CH OF THIS COURT IN ITS DECISION DT. 2ND AUG., 2010 IN THE CASE OF CIT VS. DWARKADHISH INVESTMENT (P) LTD. (IT APPEAL NO. 911 O F 2010) [REPORTED AT (2010) 45 DTR (DEL) 281 : (2011) 239 CT R (DEL) ITA NO.817/DEL/2015 17 478-ED.] IN THE FOLLOWING WORDS: 'JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE S. 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE AN Y PERSON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE 'SOURCE OF SOURCE'. 7.2 WITH REGARD TO ADDITION OF RS. 5,49,000/- REPRESE NTING LOANS RECEIVED BY THE ASSESSEE IS CONCERNED, I FIND THAT THE LD. CIT(A) HAS OBSERVED THAT THE MERE FACT THAT NONE OF THE PERSONS WE RE HAVING ENOUGH CREDIT TO ADVANCE SUCH LOANS TO THE ASSESSEE AND CASH OF MORE OR LESS EQUAL AMOUNTS WERE DEPOSITED IN THEIR RE SPECTIVE BANK ACCOUNTS BEFORE THE ISSUE OF CHEQUES TO THE ASSESSEE CLEARLY ESTABLISHES THAT THE UNSECURED LOANS IN THE NAME OF THE SE PERSONS IS AN ARRANGED AFFAIR. BUT, I FIND THAT LD. CIT(A) HAS FA ILED TO OBSERVED THAT UNSECURED LOANS AGGREGATING TO RS. 5,49,000/- HAD BEEN RECEIVED BY ACCOUNT PAYEE CHEQUES FROM IDENTIFIABLE PARTIES WHO HAD DULY CONFIRMED THAT THE LOANS HAD BEEN ADVANCED TO THE ASSESSEE AND AS SUCH, ADDITION SO SUSTAINED IS INVAL ID AND CONTRARY TO LAW. THE ASSESSEE HAD RAISED THE LOAN FROM FIVE D IFFERENT PERSONS WHO HAVE FILED THEIR AFFIDAVITS AS WELL AS STATEMENT O F ACCOUNTS THROUGH REGULAR BANKING CHANNEL AND BY ACCOUNT PAYEE CHEQUES. IN ITA NO.817/DEL/2015 18 MY CONSIDERED VIEW, THE BURDEN OF THE ASSESSEE IN RE SPECT OF THE LOANS STAND DISCHARGED AND THEREFORE, NO ADDITION IS TENABLE. ONCE THE AMOUNT HAS BEEN RECEIVED BY ACCOUNT PAYEE CHEQUES AND THE CREDITORS HAVE DULY CONFIRMED THE TRANSACTIONS NO AD VERSE INFERENCE CAN BE DRAWN. THEREFORE, ASSESSEE SHOWS HIS INABILI TY TO EXPLAIN THE SOURCE OF SOURCE, WHICH CANNOT BE A BASIS TO CONFIRM THE ADDITION U/S. 68 OF THE ACT. HENCE, I DELETE THE ADDITION OF RS. 5,49,000/-. THIS VIEW IS ALSO FORTIFIED BY THE DECISIONS AS REF ERRED IN PARA NO. 7.1 OF THIS ORDER, BECAUSE THE FACTS AND CIRCUMSTANCE S OF THE CASE ARE SIMILAR AND IDENTICAL TO THE ADDITION OF RS. 16 L ACS, AS AFORESAID. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 02/08/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES