Darshan Lal HUF, Sangrur V. ITO, Malerkotla

ITA 828/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9099 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Assessee Lawyers: N K GARG
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 828/CHD/2016 ASSESSMENT YEAR: 2009-10 SHRI DARSHAN LAL, HUF, VS THE IT O, PROP. M/S D.K.BROTHERS, WARD IV(3), 10-B/210, SHIVPURI MOHALLA, MALERKOTLA. DHURI,SANGRUR. PAN: AACHD8523M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.GARG RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 29.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 LUDHIANA DATED 16.05.2016 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLO WING GROUNDS : 1. THAT THE IMPUGNED APPELLATE ORDER IS BAD BOTH ON FA CTS AND LAW TO THE EXTENT THAT ADDITIONS HAVE BEEN CONFIRME D. 2. THAT THE LD. APPELLATE AUTHORITY HAS WRONGLY AND IL LEGALLY CONFIRMED THE ADDITION OF RS. 4,55,000/-UNDER SECTI ON 68 ON ACCOUNT OF CASH CREDIT IN THE FOLLOWING ACCOUNTS AG AINST THE FACTS AND CIRCUMSTANCES . A) SMT. DARSHNA DEVI RS. 95,000/- B) SMT. JINDER KAUR RS.1,50,000/- C) SMT. MEENA RANI RS.1,00,000/- D) SMT. POONAM RANI RS.1,10,000/- 2 3. THAT THE LD. APPELLATE AUTHORITY HAS WRONGLY AND ILLEGALLY CONFIRMED THE DISALLOWANCE OF PAYMENT OF INTEREST OF RS. 48,436/-IGNORING THE MATERIAL, PL EADING AND FACT OF CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE WA S ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF COT TON WASTE UNDER THE NAME OF M/S D.K. BROTHERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTED THAT ASSESSEE HAS INTRODUCED CASH CREDITS UND ER THE GARB OF UNSECURED LOANS FROM VARIOUS PERSONS WH O WERE NOT OTHERS BUT ASSESSEE'S OWN FAMILY MEMBERS/NEAR RELATIVES I.E. SMT. DARSHNA DEVI, SMT. JINDER KAUR, SMT. MEENA RANI AND SMT. PUNAM DEVI. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF UNSECURED LOANS TAKEN DURING THE YEAR. IN RESPONSE , ASSESSEE CONTENDED THAT ALL THE PAYMENTS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. HE ALSO FILED THE CONFIRMATIONS, PAN AND ITR AND COPY OF BANK ACCOUNT S TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CONTEN TION OF THE ASSESSEE ON FILING MERE PAPERS. THE ASSESSI NG OFFICER OBSERVED THAT THESE PAPERS ARE NOTHING BUT A DEVICE TO DEFRAUD THE REVENUE. 2(I) ON GOING THROUGH BILLS OF COMMODITY PROFITS, I T WAS SEEN THAT THE PERSONS HAD RECEIVED COMMODITY PROFIT S FROM M/S SATYAM COMMODITIES, LSE BUILDING, FEROZE GANDHI MARKET, LUDHIANA. THE DATES OF FLOW FUNDS FR OM SUCH BROKER FIRMS TO THE ALLEGED LOANEES AND FURTHE R TO 3 THE ASSESSEE CLEARLY SHOWS THAT ENTIRE GAMUT IS NOT HING BUT A DEVICE TO INTRODUCE OWN FUNDS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEN PAY INTEREST AND REDUCE HIS OWN INCOME TO EVADE TAX. KEEPING IN VIE W THESE FACTS, THE TRANSACTIONS MADE FOR EARNING COMMODITY PROFITS WERE FOUND TO BE INVALID AND CASH DEPOSITED WITH THE ABOVE NOTED BROKER COMPANIES AND CHEQUE RECEIVED FROM THESE COMPANIES WERE FOUND TO BE INGENUINE. THE ASSESSING OFFICER, ACCORDINGLY, MAD E ADDITION OF RS. 5,03,436/- ( RS. 4,55,000/- + INTER EST RS. 48,436/- ) UNDER SECTION 68 OF THE ACT. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER. THE LD. CIT(APPE ALS) DID NOT ACCEPT CONTENTION OF THE ASSESSEE BECAUSE T HE ASSESSING OFFICER NOTED THE LOAN DEPOSITERS DOES NO T HAVE CREDIT WORTHINESS AS JUST BEFORE LENDING LOAN TO THE ASSESSEE, THESE PERSONS HAVE RECEIVED COMMODITY PRO FITS IN THEIR BANK ACCOUNTS. IN ORDER TO ENQUIRE GENUIN ENESS OF THE BROKER FROM WHOM ASSESSEE HAS PURCHASED THES E SHARES, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE BROKER ALONGWITH BOOKS OF ACCOUNT AND COPIE S OF BANK STATEMENTS WHERE FROM CHEQUES OF PROFIT WERE RECEIVED. APART FROM THIS, ASSESSING OFFICER ASKED THE ASSESSEE TO PROVE THE CREDIT WORTHINESS OF THESE CREDITORS AS AFTER EXAMINATION OF GENUINENESS OF TH E COMMODITY PROFITS, THE ASSESSEE WAS CONFRONTED WITH 4 THIS FACT THAT SHARE BROKER HAS NOT BEEN REGISTERED WITH MCX EXCHANGE, BOMBAY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN ALL THESE FACTS BUT ASSESSE E FAILED TO DO SO. THE LD. CIT(APPEALS), THEREFORE, FOUND THAT THE COMMODITY PROFITS RECEIVED BY THE CREDITOR S AND FURTHER GIVING OF LOAN TO THE ASSESSEE ARE BOGUS TRANSACTION AND ACCORDINGLY, CONFIRMED THE ADDITION . 4. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO ORDER-SHEET OF THE ASSESSING OFFICER AND SUBMITTED THAT ASSESSING OFFI CER NEVER ASKED THE ASSESSEE TO PRODUCE THESE CREDITORS AND THE BROKER FOR EXAMINATION. THE LD. COUNSEL FOR TH E ASSESSEE UNDERTOOK BEFORE ME THAT HE WOULD PRODUCE ALL THE ABOVE FOUR CREDITORS BEFORE ASSESSING OFFICER F OR EXAMINATION UNDER SECTION 131 OF THE ACT AND WOULD ALSO PRODUCE THE BROKER FOR EXAMINATION PROVIDED TH E ASSESSING OFFICER MAY ISSUE SUMMONS UNDER SECTION 1 31 OF THE ACT AGAINST HIM. HE HAS, THEREFORE, SUBMITT ED THAT MATTER MAY BE REMANDED TO THE ASSESSING OFFICE R FOR RE-EXAMINATION OF THE ISSUE. HE HAS RELIED UPO N ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF AMARJ IT BEETON, HUF VS ITO IN ITA 458/2016 DATED 18.05.2016 IN WHICH ON IDENTICAL FACTS, MATTER HAS BEEN RESTOR ED TO THE FILE OF ASSESSING OFFICER. COPY OF THE ORDER I S FILED AT PAGE 24 OF THE PAPER BOOK. THE LD. DR, HOWEVER, RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 5 4(I) ON CONSIDERATION OF THE FACTS OF THE CASE, I A M OF THE VIEW MATTER REQUIRES RE-CONSIDERATION AT THE LE VEL OF THE ASSESSING OFFICER. THE ASSESSING OFFICER RECORD ED COMPLETE FACTS IN THE ASSESSMENT ORDER NOTING DETAI LS OF TRANSACTIONS AND FOUND THAT ALL THE ABOVE CREDITOR HAVE TAKEN ENTRY IN NOMENCLATURE OF COMMODITY PROFIT FRO M M/S SATYAM COMMODITIES. THE ASSESSING OFFICER FURT HER NOTED THAT THESE TRANSACTIONS ARE BOGUS AND FURTHER , LOAN TAKEN BY THE ASSESSEE FROM THESE CREDITORS WHO HAVE TAKEN COMMODITY PROFIT, ARE ALSO NOT GENUINE. THE LD. CIT(APPEALS) NOTED IN THE IMPUGNED ORDER THAT ASSESSEE WAS ASKED TO PRODUCE THE BROKERS ALONGWITH THE CREDITORS FOR EXAMINATION OF THEIR CREDIT WORTH INESS AND GENUINENESS OF THE TRANSACTION. 5. CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE MATERIAL ON RECORD I.E. THE ASSESSEE FILED CONFIRMA TIONS, BANK STATEMENTS, IT RETURNS OF THE CREDITORS IN SUP PORT OF THE EXPLANATION OF THE ASSESSEE THAT ASSESSEE HAS R ECEIVED CREDIT FROM THESE FOUR PARTIES. HOWEVER, AUTHORITI ES BELOW FOUND THAT ASSESSEE FAILED TO PROVE CREDIT WORTHINE SS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION BECAUS E THE CREDITORS HAVE RECEIVED COMMODITY ENTRIES FROM M/S SATYAM COMMODITIES AND THE TRANSACTIONS ARE NOT ROUTED THR OUGH MCX, BOMBAY. THE PROPRIETOR OF M/S SATYAM COMMODIT IES IN HIS STATEMENT ADMITTED THAT CASH IS RECEIVED FRO M THE CLIENTS AND PAYMENT IS MADE THROUGH CHEQUES AFTER I SSUING BILLS OF PROFITS IN FAVOUR OF THE ASSESSEE WHO BRIN G THE CASH. 6 IN SUCH CIRCUMSTANCES, IT IS NECESSARY FOR THE ASSE SSING OFFICER TO EXAMINE THE CREDITORS ON OATH UNDER SE CTION 131 OF THE ACT ALONGWITH BROKERS IN ORDER TO FIND OUT T HE TRUTH OF THE CASE. SINCE LD. COUNSEL FOR THE ASSESSEE UN DERTOOK BEFORE ME TO PRODUCE ALL THE CREDITORS ALONGWITH BR OKER BEFORE ASSESSING OFFICER FOR EXAMINATION ON OATH UNDER SECTION 131 OF THE INCOME TAX ACT, THEREFORE, I AM OF THE VIEW THAT INTEREST OF JUSTICE REQUIRES THAT ONE MOR E CHANCE MAY BE GIVEN TO THE ASSESSEE TO PROVE THE CREDIT WO RTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION IN THE MATTER BY PRODUCING ALL THESE CREDITORS BEFORE ASSE SSING OFFICER ALONGWITH BROKER FOR EXAMINATION IN ORDER T O FIND OUT THE TRUTH IN THE MATTER. 6. IN VIEW OF THE ABOVE DISCUSSION AND FACTS OF THE CASE AND UNDERTAKING GIVEN BEFORE ME, I SET ASIDE THE OR DERS OF AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE TH IS ISSUE IN ACCORDANCE WITH LAW BY GIVING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIREC TED TO PRODUCE ALL THE CREDITORS FOR EXAMINATION UNDER SEC TION 131 OF THE ACT. THE ASSESSEE SHALL ALSO PRODUCE THE BR OKER BEFORE ASSESSING OFFICER FOR HIS EXAMINATION AND IN CASE ASSESSEE NEED HELP OF THE ASSESSING OFFICER IN SUMM ONING THE BROKER UNDER SECTION 131 OF THE ACT, ASSESSING OFFICER SHALL TAKE ACTION IN ACCORDANCE WITH LAW BY SUMMONI NG BROKER FOR EXAMINATION ON OATH. THE ASSESSING OF FICER, THEREAFTER, SHALL PASS THE REASONED ORDER IN ACCORD ANCE 7 WITH LAW. WITH THESE OBSERVATIONS AND DIRECTIONS, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 14 TH SEPT.,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH