Asstt. Commissioner of Income Tax, Lucknow V. Shri Abhishek Agarwal, Barabanki

ITA 835/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4789 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Keywords: Unexplained cash credit; Gift; Depreciation; Additional evidence; Question of law; Assessment record; Onus to prove
• Section: 131; 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 835/LKW/2014 ASSESSMENT YEAR: 2010 - 11 ASSTT. CIT RANGE V LUCKNOW V. SHRI. ABHISHEK AG ARWAL PROP. M/S MERCHANT ASSOCIATES 2, NALA PARK SOUTH, TEHSIL FATEHPUR, BARABANKI T AN /PAN : AFTPA0939C (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. HARISH GIDWANI, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 06 01 201 6 DATE OF PRONOUNCEMENT: 01 201 6 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS; - 1 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LUCKNOW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 42,40,000 / - MADE U/S 69A/68 OF THE INCOME - TAX ACT, ON ACCOUNT OF UNEXPLAINED DEPOSIT IN CAPITAL ACCOUNT IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE ANY SUBSTANTIAL EVIDENCE IN SUPPORT OF THE CREDITWO RTHINESS/ GENUINENESS OF DEPOSITS SO MADE. 2 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LUCKNOW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION : - 2 - : OF RS. 2,00,50,000/ - MADE ON ACCOUNT OF UNVERIFIABLE UNSECURED LOANS WITHOUT APPRECIATING THE FAT S THAT THE ASSESSEE DID NOT PRODUCE COGENT EVIDENCE TO SUBSTANTIATE THE CAPACITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. 3 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LU C KNOW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS . 17,000/ - MADE ON ACCOUNT OF DISALLOWABLE INTEREST FOR DELAYED PAYMENT OF TDS IGNORING THE FACT THAT INTEREST BEING PENAL IN NATURE IS NOT ALLOWABLE EXPENDITURE. 4 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LUCKNOW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 25,384/ - , DISALLOWED DEPREC I ATION ON CAR @ 20% FOR PERSONAL USE, IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO ESTABLISH THAT THE CAR WAS USED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. 2 . APROPOS GROUNDS NO.1 AND 2, IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTED ADDITION IN THE CAPITAL ACCOUNT OF THE PROPRIETOR AMOUNTING TO RS.59.20 LAKHS . T HE ASSESSEE WAS ASKED TO EXPLAIN EACH CREDIT ENTRY SEEN IN THE CAP ITAL ACCOUNT. THE ASSESSEE HAS FURNISHED THE DETAILS OF THE CREDIT ENTRIES FOUND IN HIS CAPITAL ACCOUNT, BUT THE ASSESSING OFFICER WAS NOT CONVINCED WITH RESPECT TO THE ENTRIES FOR A SUM OF RS.42.40 LAKHS AND MADE ADDITION OF THE SAME. 3 . LIKEWISE, THE ASSES SING OFFICER HAS ALSO NOTED CREDIT ENTRIES OF UNSECURED LOAN IN THE NAME OF VARIOUS PERSONS FOR WHICH EXPLANATIONS WERE SOUGHT. THOUGH THE ASSESSEE HAS FURNISHED EXPLANATIONS, BUT THE : - 3 - : ASSESSING OFFICER WAS NOT CONVINCED WITH ALL THESE CREDIT ENTRIES AND H E ACCORDINGLY MADE ADDITION OF RS.2,00,50,000/ - . 4 . AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND FURNISHED CONFIRMATIONS, BANK STATEMENTS, PAN, ITRS, ETC. OF ALL THESE CREDITORS ALONG WITH WRITTEN SUBMISSIONS WHICH WERE CONFRONTED TO THE ASSESSING OFFICER FOR REMAND REPORT ON VERIFICATION, BUT THE ASSESSING OFFICER DID NOT SUBMIT THE REMAND REPORT DESPITE SUFFICIENT TIME AFFORDED TO HIM. HE, HOWEVER, OBJECTED TO THE ADMISSION OF THE ENTIRE EVIDENCE. THE LD. CIT(A) HIMSE LF HAS EXAMINED THE DETAILED EVIDENCE FURNISHED BY THE ASSESSEE AND BEING CONVINCED WITH IT, HE DELETED THE ADDITIONS. THE LD. CIT(A) IN HIS ORDER HAS EXTRACTED THE ASSESSMENT ORDER AS WELL AS THE WRITTEN S UBMISSI O NS FILED BY THE ASSESSEE IN HIS ORDER. 5 . FROM A CAREFUL PERUSAL OF THE ORDER OF THE LD. CIT(A), WE FIND THAT THE LD. CIT(A) HAS CATEGORICALLY RECORDED IN HIS ORDER THAT THE ASSESSEE HAS FILED CONFIRMATIONS OF THE DEPOSITORS/CREDITORS WITH FULL ADDRESS, PAN, COMPLETE DETAILS OF CHEQUE AMOUNT & NUM BER OF LOANS/DEPOSITS; PHOTOCOPY OF PAN OF DEPOSITORS/CREDITORS; PHOTOCOPY OF ITRS OF DEPOSITORS/CREDITORS SHOWING INTEREST INCOME RECEIVED FROM THE ASSESSEE BY DIFFERENT CREDITORS ON BORROWED FUNDS/LOANS; DETAILS OF TDS AMOUNT ON INTEREST PAYMENT TO DIFFE RENT CREDITORS/DEPOSITORS; PHOTOCOPY OF BANK STATEMENT SHOWING THE DEPOSITS OF LOAN/BORROWED FUND; COPY OF RELEVANT PAGES OF LEDGER SHOWING THE CREDITORS ACCOUNT. HAVING CAREFULLY EXAMINED, THE LD. CIT(A) HAS CC ME TO THE CONCLUSION THAT THE ASSESSEE HAS D ULY EXPLAINED THE IDENTITY, CREDITWORTHINESS & GENUINENESS OF THE LENDER/DEPOSITORS FROM WHOM ASSESSEE HAS RECEIVED LOAN DURING THE YEAR UNDER CONSIDERATION AND ALSO THE AMOUNT WAS INTRODUCED IN THE CAPITAL ACCOUNT IN THE LIGHT OF VARIOUS JUDICIAL : - 4 - : PRONOUNC EMENTS. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) AS UNDER: - GROUND NOS. 2 TO 5 ARE COMMON RELATING TO ADDITION MADE BY A.O. UNDER SECTION 68 OF I.T. ACT, 1961 OF RS. 42,40,000 / - AND RS. 2,00,50,000 / - ON ACCOU NT OF UNEXPLAINED DEPOSITS IN CAPITAL ACCOUNT AND UNSECURED LOANS RESPECTIVELY. THE A.O. HAS DISCUSSED THIS ISSUE IN PARA - 8& 9 OF ASSESSMENT ORDER MENTIONED ABOVE. THE A.O. HAS TREATED THE DEPOSITS IN CAPITAL ACCOUNT OF APPELLANT TO THE EXTENT OF RS. 42,4 0,000 / - OUT OF TOTAL DEPOSITS RS. 59,20,000 / - AS UNEXPLAINED DEPOSITS IN THE HANDS OF APPELLANT. DURING ASSESSMENT PROCEEDINGS THE APPELLANT HAS FILED THE DETAILS OF BANK ACCOUNT AND CHEQUES RECEIVED FRO M DIFFERENT PERSONS DURING THE ASSESSMENT YEAR UNDER C ONSIDERATION AND IT WAS STATED BY APPELLANT THAT THESE DEPOSITS IN HIS BANK ACCOUNT WERE REPRESENTED THE BORROWED MONEY RECEIVED FROM DIFFERENT PERSONS AND SAME WERE RECORDED IN HIS CAPITAL ACCOUNT DIRECTLY. HOWEVER THE A.O. HAS NOT ACCEPTED THE MONE Y RECE IVED TO THE EXTENT OF RS.42, 40,000 / - MENTIONED IN PARA - 8 (II) TO (VII) OF ASSESSMENT ORDER AS EXPLAINED AND ADDED BACK TO THE INCOME OF THE APPELLANT. FURTHER THE A.O. HAS MADE THE ADDITION U/S 68 OF I.T. ACT, 1961 OF RS. 2,00,50,000 / - VIDE PARA - 9 (A), 9(B) (I) & (II) AND 9(C) OF ASSESSMENT ORDER, TREATING THE CREDITORS AS UNEXPLAINED CREDITS IN THE HANDS OF APPELLANT. THE APPELLANT HAS CONTENDED THAT HE HAS FURNISHED ENTIRE DETAILS IN RESPECT OF BORROWED FUNDS RAISED FROM DIFFERENT PERSONS BUT THE A.O. DID N OT ACCEPT THE GENUINENESS AND CREDIT WORTHINESS OF DEPOSITORS, WITHOUT CONSIDERING THE DETAILS OF BANK ACCOUNT, CHEQUES AND OTHER RELEVANT INFORMATION PROVIDED BY : - 5 - : HIM DURING ASSESSMENT PROCEEDINGS. THE APPELLANT HAS ARGUED THAT HE HAD PROVED IDENTITY, CRED IT WORTHINESS AND GENUINENESS OF THE CREDITORS, BEFORE A.O. DURING THE ASSESSMENT PROCEEDINGS. THE PAPERS/ DOCUMENTS WHICH WERE CALLED BY A.O. DURING ASSESSMENT PROCEEDINGS WERE FURNISHED. THE BOOKS OF ACCOUNTS, BILLS & VOUCHERS ETC. WERE PRODUCED BEFORE A .O. DURING ASSESSMENT PROCEEDINGS AND THE A.O. HAS EXAMINED THE SAME. THE A.O. HIMSELF MENTIONED IN ASSESSMENT ORDER THAT THE REQUIRED DETAILS WERE F URNISHED BY HIM WHICH ARE PLACED ON RECORD. DURING APPELLATE PROCEEDINGS THE APPELLANT HAS FURNISHED WRIT TEN SUBMISSIONS ALONGWITH PAPERS/DOCUMENTS IN SUPPORT OF HIS VERSION THAT THESE DEPOSITS WERE GENUINE. DURING APPELLATE PROCEEDINGS THE APPELLANT HAS ASKED TO FILE THE PAPERS/DOCUMENTS INCLUDING CONFIRMATION LETTERS OF LENDERS, COPY OF THEIR PAN & ITR, BAN K STATEMENT AND OTHER RELEVANT DETAILS VIDE ORDER SHEET ENTRY. THE APPELLANT HAS FILED THE PAPERS/DOCUMENTS, WHICH WERE SENT TO A.O. FOR FURNISHING REMAND REPORT. THE A.O. HAS FILED REMAND REPORT VIDE LETTER DATED 21.07.2014 AND CONTENDED THAT THE PAPERS/D OCUMENTS SUBMITTED DURING APPELLATE PROCEEDINGS SHOULD HAVE NOT BEEN E NTER TA INED, AS THE SAME ARE ADDITIONAL EVIDENCES. FURTHER THE A.O. DID NOT PROVIDE ASSESSMENT RECORD, DES PITE OF SPECIFIC DIRECTION WAS GIVEN T O ATTEND THE APPELLATE PROCEEDINGS ALONGWIT H ASSESSMENT RECORD ON 24.07.2014. THE A.O. HAS REQUESTED TO ALLOW TIME FOR 30 DAYS FOR FILING OF REMAND R EPORT VIDE HER LETTER 16.07.2014 BUT TILL DATE THE REMAND REPORT HAS NOT BEEN SUBMITTED BY A.O. AS MENTIONED THE APPELLANT HAS FILED THE PAPERS/ DOCUMENTS ON SPECIFIC QUERY RAISED DURING APPELLATE PROCEEDINGS THROUGH : - 6 - : ORDER SHEET DATED 24.06.2014 TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF DEPOSITORS/LENDERS. THESE PAPERS/DOCUMENTS ARE VERY RELEVANT TO ADJUDICATE THE ISSUES INVOLVED IN PRESENT APPEAL. DURING APPELLATE PROCEEDINGS THE APPELLANT HAS FILED THE FOLLOWING DETAILS TO PROVE THE IDENTITY, CREDIT WORTHINESS & GENUINENESS OF DIFFERENT CREDITORS /DEPOSITORS: - 1. CONFIRMATION OF DEPOSITORS/CREDITORS WITH FULL ADDRESSES, PAN NOS . AND COMPLETE DETAILS OF CHEQUES AMOUNT AND NUMBER OF LOANS/DEPOSITS. 2. PHOTO COPY OF PAN OF DEPOSITORS/CREDITORS 3. PHOTO COPY OF ITR OF DEPOSITORS/CREDITORS SHOWING THE INTEREST INCOME RECEIVED FROM APPELLANT BY DIFFERENT CREDITORS ON BORROWED FUND S/LOANS, WHICH WERE TREATED UNEXPLAINED BY A.O. U/S 68 OF I.T. ACT, 1961. 4. DETAILS OF TDS AMOUNT ON INTEREST PAYMENT TO DIFFERENT CREDITORS/DEPOSITORS FILED BY THE APPELLANT. 5. PHOTO COPY OF BANK STATEMENT SHOWING THE DEPOSITS; OF LOAN/BORROWED FUND IN CAPITAL ACCOUNT OF APPELLANT AND REFLECTED IN THE NAME OF DIFFERENT CREDITORS/DEPOSITORS. 6. COPY OF RELEVANT PAGES OF LEDGER SHOWING THE CREDITORS ACCOUNT. AS MENTIONED SUPRA THE A.O. HAS PROVIDED AN OPPORTUNITY TO FURNISH REMAND REPORT ON WRITTEN SUBMISSION OF APPELLANT AND EVIDENCES FILED IN THE FORM OF PAPERS/DOCUMENTS MENTIONED SUPRA. FURTHER THESE ADDITIONAL EVIDENCES WERE FILED BY THE APPELLANT ON : - 7 - : THE QUERIES RAISED DURING APPELLATE PROCEEDINGS, THEREFORE, THE OBJECTION RAISED BY A.O. NOT TO ADMIT THESE EVIDENCES AT APPELLATE STAGE CANNOT BE CONSIDERED PROPER AND JUSTIFIED. EVEN THE CIT(APPEALS) MAY ADMIT THE ADDITIONAL EVIDENCES FILED DURING APPELLATE PROCEEDINGS, IN RESPONSE TO DIRECTION GIVEN BY HIM TO APPELLANT, WITHOUT PROVIDING OPPORTUNI TY BEING HEARD TO A. - O. AS MENTIONED AS ABOVE THE A.O. HAS PROVIDED AN OPPORTUNITY BEING HEARD TO SUBMIT THE REMAND REPORT ON WRITTEN SUBMISSION OF APPELLANT AN D PAPERS/DOCUMENTS FILED ALONGWITH WRITTEN SUBMISSION DURING APPELLATE PROCEEDINGS. 'ADMISSION O F ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER - ADDITIONAL EVIDENCE FILED BEFORE THE FIRST APPELLATE AUTHORITY CAN BE CATEGORIZED INTO TWO PARTS. THE FIRST CATEGORY CONSISTS OF THE ASSESSEE VOLUNTARILY FILING THE ADDITIONAL EVIDEN CE BEFORE THE CIT (APPEALS). IN SUCH A SITUATION, THE CIT (APPEALS) IS OBLIGED TO ALLOW THE ASSESSING OFFICER A REASONABLE OPPORTUNITY BEFORE ADMITTING THE ADDITIONAL EVIDENCE. THE SECOND CATEGORY DEALS WITH SUCH EVIDENCE, WHICH IS DIRECTED TO BE PRODUCED BY THE CIT (APPEALS) FOR THE DISPOSAL OF APPEAL BEFORE IT. THE VOLUNTARY CHARACTER OF FILING THE ADDITIONAL EVIDENCE IN THE FIRST SITUATION IS MISSING IN THE SECOND AS THE FILING OF ADDITIONAL EVIDENCE IS NECESSITATED DUE TO THE DIRECTION OF THE CIT(APPEAL S). WHEN THE ADDITIONAL EVIDENCE IS FILED UNDER THE SECOND CATEGORY, THEN THERE IS NO REQUIREMENT FOR CONFRONTING THE ASSESSING OFFICER WITH THE DOCUMENTS/EVIDENCE ENTERTAINED BY THE CIT(A) AT THE FIRST APPELLATE STAGE - DIT (INTERNATIONAL : - 8 - : TAXATION) V. THORE SEN CHARTERING SINGAPORE (PTE.) LTD. [2009] 118ITD 416 (MUM). IN YET ANOTHER DECISION, THE BENCH IN ITO V. INDUSTRIAL ROADWAYS [2008] 112 ITD 293(MUM.) HELD THAT WHERE THE ADDITIONAL EVIDENCE IS OBTAINED BY THE FIRST APPELLATE AUTHORITY ON ITS OWN MOTION, THERE IN NO REQUIREMENT IN LAW TO CONSULT OR CONFRONT THE ASSESSING OFFICER WITH SUCH ADDITIONAL EVIDENCE. THE BENCH FURTHER HELD THAT IF THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE THE APPELLATE AUTHORITY IS IN THE NATURE OF CLINCHING EVIDENC E LEAVING NO FURTHER ROOM FOR ANY DOUBT OR CONTROVERSY, NO USEFUL PURPOSE WOULD BE SERVED IN PERFORMING THE RITUAL OF FORWARDING THE EVIDENCE OR MATERIAL TO THE ASSESSING OFFICER AND OBTAINING HIS REPORT. IN SUCH EXCEPTIONAL CIRCUMSTANCES, THE REQUIREMENT OF PROVIDING A REASONABLE OPPORTUNITY TO] THE ASSESSING OFFICER, MAY BE DISPENSED WITH.' I HAVE EXAMINED THE FINDING GIVEN BY A.O. IN ASSESSMENT ORDER, WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING APPELLATE PROCEEDINGS AND PAPERS/DOCUMENTS, CONFIRMA TIONS TO PROVE IDENTITY, CREDIT WORTHINESS & GENUINENESS OF CASH CREDITS REFLECTED IN THE BOOKS OF ACCOUNT OF APPELLANT. ON MY EXAMINATION OF THESE PAPERS/DOCUMENTS, CONFIRMATION LETTERS, BANK STATEMENTS AND BOOKS OF ACCOUNTS OF THE APPELLANT I FIND THAT T HE APPELLANT HAS DULY EXPLAINED THE IDENTITY, CREDIT WORTHINESS & GENUINENESS OF DIFFERENT LENDERS/DEPOSITORS FROM WHOM THE APPELLANT HAS RECEIVED LOANS DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THE APPELLANT HAS DISCHARGED THE OBLIGATION TO PROVE TH E IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF CREDITORS, BY FURNISHING THE : - 9 - : CONFIRMATIONS, COPY OF PAN, COPY OF ITR , COPY OF BANK ACCOUNT AND DETAILS OF CHEQUES RECEIVED FROM LENDERS SHOWING THE DETAILS OF TDS ON INTEREST PAYMENT ON THE LOANS OBTAINED B Y APPELLANT WHICH WERE TREATED BY A.O. AS UNEXPLAINED U/S 68 OF I.T. ACT, 1961. FURTHER THE APPELLANT HAS ALSO FILED THE COPY OF AUDIT REPORT ALONGWITH ITS ANNEXURES AND EXPLAINED THAT THE APPELLANT HAS SHOWN AND CLAIMED INTEREST ON THESE CREDITORS IN P&L ACCOUNT. THE A.O. HAS ALLOWED THE INTEREST PAYMENT TO THESE CASH CREDITORS WHEREAS THE PRINCIPAL AMOUNT OF LOANS REFLECTED IN THE NAME OF DIFFERENT CREDITORS WERE WRONGLY TREATED UNEXPLAINED CASH CREDITS AND ADDED BACK TO THE INCOME OF APPELLANT. FURTHER T HE APPELLANT HAS DULY DEDUCTED TDS ON INTEREST PAYMENT ON THESE BALANCES APPEARING IN THE BOOKS OF ACCOUNTS , WHICH WERE CONSIDERED BY A.O. AS UNEXPLAINED IN THE HANDS OF APPELLANT. THE AMOUNT OF TDS DEDUCTED IN THE NAME OF DIFFERENT CREDITORS WERE DULY PA ID AND THESE SAID CREDITORS HAVE DULY SHOWN THE INTEREST INCOME AND TDS IN THEIR RESPECTIVE ITR FOR THE PERIOD UNDER CONSIDERATION. LOOKING INTO THESE FACTS & CIRCUMSTANCES, PAPERS/DOCUMENTS FILED DURING APPELLATE PROCEEDINGS AND WRITTEN SUBMISSIONS OF A PPELLANT, I FIND THAT THE ACTION OF A.O. IN TREATING THE LOAN AMOUNT RECEIVED FROM DIFFERENT PERSONS WHICH WAS EITHER CREDITED IN HIS CAPITAL ACCOUNT BY APPELLANT DIRECTLY OR RECORDED IN THE BOOKS OF ACCOUNTS OF APPELLANT AS CREDITORS IN THEIR RESPECTIVE N AMES, AS UNEXPLAINED U/S 68 OF I.T. ACT CANNOT BE SAID PROPER AND JUSTIFIED IN THE EYE OF LAW. FURTHER I HAVE OBSERVED THAT THE A.O. HAS MADE HUGE ADDITION WITHOUT CONDUCTING ANY ENQUIRY/VERIFICATION FROM THE RECORDS OF APPELLANT AND THE CONCERNED A.O. OF CREDITORS. EVEN IN APPELLATE PROCEEDINGS AN : - 10 - : OPPORTUNITY WAS PROVIDED TO THE A.O. TO PLEAD THE CASE IN PERSON ALONGWITH ASSESSMENT RECORD BUT THE A.O. DID NOT AVAIL OPPORTUNITY. AS MENTIONED ABOVE THE PAPERS/DOCUMENTS WHICH WERE RECEIVED DURING APPELLATE PR OCEEDINGS ALONGWITH WRITTEN SUBMISSION OF APPELLANT, HAVE BEEN SENT TO A.O. FOR REMAND REPORT AND IT WAS THE DUTY OF A.O. TO SUBMIT THE COMPREHENSIVE REMAND REPORT WITHIN THE TIME PROVIDED BUT THE A.O. DID NOT MAKE THE COMPLIANCE OF THE LETTERS ISSUED BY T HIS OFFICE. AS MENTIONED SUPRA THE APPELLANT HAS FILED CONFIRMATION LETTERS AND BANK STATEMENT IN SUPPORT OF HIS VERSION THAT FROM WHERE THE MONEY WAS RECEIVED BY THE APPELLANT, PAN, COPY OF ITR, DETAILS OF INTEREST PAYMENT ALLOWED BY THE A.O. ON PRINCIP AL AMOUNT OF THESE CASH CREDITS, THEREFORE, THE APPELLANT HAS SATISFACTORILY DISCHARGED OBLIGATION CAST UPON HIM TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF DIFFERENT CASH CREDITORS OF RS.2,42,90,000/ - (RS. 42,40,000 / - + RS. 2,00,50,000 / - ) . T HEREFORE, THE A.O. HAS WR ONGLY MADE THE ADDITIONS OF RS. 2,42,90,000 / - , TREATING LOAN AMOUNT, UNEXPLAINED U/S 68 OF I.T. ACT, 1961. THE ENTIRE TRANSACTIONS IN RESPECT OF MONEY RECEIVED FROM DIFFERENT LENDERS WERE UNDER TAKEN THROUGH BANKING CHANNEL. SINCE T HE ASSESSEE HAS FILED RELEVANT EVIDENCES TO ESTABLISH THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE CREDITOR. A DETAILED CHART OF DIFFERENT PERSONS FROM WHOM THE APPELLANT RECEIVED THE MONIES WHICH WERE ACCOUNTED FOR IN HIS BOOK S OF ACCOUNTS IS GIVEN AS BELOW: - DETAILS OF UNSECURED LOAN RECEIVED, INTEREST AND TDS DURING THE FINANCIAL YEAR 2009 - 10 : - 11 - : : - 12 - : THE ABOVE CHART TRANSPIRES THAT THE APPELLANT HAS FURNISHED CONFIRMATION OF ALL THE LENDERS, COPY OF SALE DEED OF SALES OF LAND, TH E DETAILS OF INTEREST PAYMENT AND TDS MADE THEREON, COPY OF PAN AND ITR ETC., IN SUPPORT OF TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF TRANSACTIONS IN RESPECT OF LOANS AND SALE PROCEEDS OF LAND. THUS NO ADDITION COULD BE MADE TREATING THE DIFFERENT CREDITORS AS UNEXPLAINED UNLESS AND UNTIL IT IS PROVED OTHERWISE. HENCE SUCH TYPE OF ADDITION CANNOT BE SUSTAINED IN THE EYE OF LAW. RELIANCE IS ALSO PLACED ON FOLLOWING JUDICIAL DECISIONS: - (L)COMMISSIONER OF INCOME TAX VS. JAI KUMAR BAKLIWAL RA JASTHAN 267CTR 396 (RAJ) HELD : THREE THINGS ARE REQUIRED TO BE PROVED BY RECIPIENT OF MONEY I.E. (1) IDENTITY OF THE CREDITOR (2) CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND (3) GENUINENESS OF THE TRANSACTION. FROM THE FACTS EMERGING ON THE FACE OF RECO RD, IT IS AN ADMITTED FACT THAT ALL THE CASH CREDITORS (12 IN NUMBER) ARE ASSESSED TO INCOME - LAX AND THEY PROVIDED A CONFIRMATION AS WELL THEIR PAN. THEY HAVE THEIR OWN RESPECTIVE BANK ACCOUNTS WHICH THEY HAVE BEEN OPERATING AND IT IS NOT THE CLAIM OF THE AO THAT THE ASSESSEE WAS OPERATING THEIR BANK ACCOUNTS RATHER THEY HAVE CATEGORICALLY STATED THAT THEY ISSUED CHEQUE TO THE ASSESSEE. IT IS ALSO THEY HAVE CATEGORICALLY STATED THAT THEY ISSUED CHEQUE TO THE ASSESSEE. IT IS ALSO AN ADMITTED FACT THAT MOST O F THE CASH CREDITORS APPEARED BEFORE THE AO AND THEIR STATEMENTS UNDER S. 131 WERE ALSO RECORDED ON OATH. THE CASH CREDITORS APPEARED TO BE FROM SMALL PLACE AND IT IS QUITE POSSIBLE THAT THEY MAY NOT BE IN A POSITION TO PIN POINTEDLY OR SPECIFICALLY SAY AB OUT EVERYTHING BUT BY AND LARGE STOOD TO THE TESTIMONY AND WERE ABLE TO EXPLAIN VARIOUS ISSUES AS PER THE QUESTION AND ANSWER REPRODUCED BY THE AO HIMSELF IN THE ASSESSMENT ORDER. IT MAY BE THAT MOST OF THE : - 13 - : CASH CREDITORS ARE RELATIVES OF THE ASSESSEE AND HEAVY BURDEN LAY ON THE ASSESSEE TO PROVE ABOUT THE CASH CREDIT BUT ONCE ALL THE CASH CREDITORS APPEARED BEFORE THE AO, THEIR STATEMENTS HAVING BEEN RECORDED UNDER S. 131, THEN INSOFAR AS THE ASSESSEE IS CONCERNED, THE ONUS WHICH LAY UPON HIM, STOOD DISCHA RGED AS HE WAS ABLE TO PROVE IDENTITY OF THE CREDITORS. ONCE THE AMOUNT WAS ADVANCED BY ACCOUNT PAYEE CHEQUE FROM THEIR RESPECTIVE OWN BANK ACCOUNTS AND WERE BEING ASSESSED TO INCOME - TAX, THEN CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION STO OD PROVED. IN SO FAR AS THE ASSESSEE IS CONCERNED, IT IS CORRECT THAT HE IS NOT REQUIRED TO PROVE SOURCE OF THE SOURCE AND IF THE AO HAD ANY DOUBT, THEN THE AO, ASSESSING THE ASSESSEE COULD HAVE SENT THE INFORMATION TO THE AO ASSESSING THE CASH CREDITORS F OR APPROPRIATE ACTION IN THEIR CASES BUT INSOFAR AS THE ASSESSEE IS CONCERNED, THE ASSESSEE HAS BEEN ABLE TO DISCHARGE THE BURDEN WHICH LAY UPON HIM. (PARA 9) CERTAINLY, DEPOSIT OF CASH AND IMMEDIATE TRANSFER OF CHEQUE OR CLEARANCE OF THE CHEQUE WITHIN A D AY OR TWO CASTS A DOUBT AS THE TRANSACTION APPEARS TO BE SOMEWHAT DOUBTFUL BUT SUSPICION HOWSOEVER STRONG IT MAY BE IS NOT SUFFICIENT ITSELF. ON PERUSAL OF THE FACTS IN THE PRESENT CASE, IT IS OBSERVED THE AMOUNTS ADVANCED ARE NOT SUBSTANTIAL AND IN MOST O F THE CASES, THE AMOUNTS ARE RANGING FROM RS.25,000 TO RS.90,000 AND IN SOME CASES, IT IS EXCEEDING RS.1,50,000. ON PERUSAL OF THE FACTS, IF IS ALSO APPARENT THAT IN SOME OF THE CASES EVEN THE KARTA OF THE HUF HAD PRODUCED THE CASH BOOK AND THEIR LEDGER AC COUNT BEFORE THE AO AND THE AO HAS DRAWN ADVERSE INFERENCE FINDING SOME DISCREPANCIES IN THEIR RESPECTIVE CASH BOOKS BUT AS OBSERVED ABOVE, THE DOUBT, IF ANY, MAY BE TRUE BUT INSOFAR AS THE ASSESSEE IS CONCERNED, THAT ISSUE CANNOT BE CONVERTED INTO AN ADDI TION OF INCOME UNDER S. 68 IN THE HANDS OF THE ASSESSEE AND APPROPRIATE COURSE, AS OBSERVED : - 14 - : HEREINABOVE, WAS THAT THE AO COULD HAVE INFORMED THE AO ASSESSING THE RESPECTIVE CASH CREDITORS FOR APPROPRIATE ACTION IN THEIR CASE. - ARAVALI TRADING CO. V S. ITO ( 2008) 220 CTR (RAJ) 622 : (2008) 8 DTR (RAJ) 199 FOLLOWED. (PARA 10) THOUGH UNDER S.68. AO IS FREE TO SHOW WITH THE HELP OF THE ENQUIRY CONDUCTED BY HIM INTO THE TRANSACTION WHICH HAS TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB - CREDITOR THAT THE TRANSACTIO N BETWEEN TWO WERE NOT GENUINE AND THAT THE SUB - CREDITOR HAD NO CREDITWORTHINESS, IT WILL NOT NECESSARILY MEAN THAT LOAN ADVANCED BY THE SUB - CREDITOR TO THE CREDITORS WAS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES UNLESS THERE IS EVIDENCE DIRECT OR CI RCUMSTANTIAL, TO SHOW THAT THE AMOUNT WHICH HAD BEEN ADVANCED BY THE SUB - CREDITOR TO THE CREDITOR HAD ACTUALLY BEEN RECEIVED BY THE SUB - CREDI TOR FROM THE ASSESSEE. IF THERE I S DIRECT EVIDENCE TO SHOW THAT THE LOAN RECEIVED BY THE ASSESSEE ACTUALLY BELONG T O THE ASSESSEE, THERE WILL BE NO DIFFICULTY IN ASSESSING SUCH AMOUNT AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE BUT IF THERE IS NO DIRECT EVIDENCE IN THIS REGARD, THEN THE INDIRECT OR CIRCUMSTANTIAL EVIDENCE HAS TO BE CONCLUSIVE IN NATURE AND SH OULD POINT TO THE ASSESSEE AS THE PERSON FROM WHOM THE MONEY HAS ACTUALLY FLOWN TO THE HANDS OF THE CREDITOR AND THEN FROM THE HANDS OF THE CREDITOR TO THE HANDS OF THE ASSESSEE. WHEN THERE IS CATEGORICAL FINDING EVEN BY THE AO THAT THE MONEY CAME FROM THE RESPECTIVE BANK ACCOUNTS OF THE CREDITORS, WHICH DID NOT FLOW IN THE SHAPE OF THE MONEY, THEN, SUCH AN ADDITION CANNOT BE SUSTAINED AND HAS BEEN RIGHTLY DELETED BY THE BOTH THE TWO APPELLATE AUTHORITIES. THERE IS NO CLINCHING EVIDENCE IN THE PRESENT CASE NOR THE AO HAS BEEN ABLE TO PROVE THAT THE MONEY ACTUALLY BELONGED TO NONE BUT THE ASSESSEE HIMSELF. THE ACTION OF THE AO APPEARS TO BE BASES ON MERE SUSPICION. : - 15 - : (PARAS 17 TO 20) CONCLUSION : ONCE THE AMOUNT WAS ADVANCED BY THE CREDITORS BY ACCOUNT PAYEE CH EQUE FROM THEIR RESPECTIVE BANK ACCOUNTS AND THE SAID CREDITORS WERE BEING ASSESSED TO INCOME - TAX, THEN CAPACITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS STOOD PROVED AND IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT MONEY ACTUALLY BELONGED TO T HE ASSESSEE HIMSELF, ADDITION UNDER S. 68 WAS NOT SUSTAINABLE.' (2) DWARIKADHISH SUGAR INDUSTRIES VS. ITO (2012) 137ITD 200 (LUCK) (TM) 'THE ASSESSEE FIRM OBTAINED LOANS FROM PARTIES BY MEANS OF CHEQUES. THE A.O. ACCEPTED PART OF LOANS AND TREATED BA LANCE AMOUNT AS UNDISCLOSED CASH CREDITS AND ADDED BACK TO THE TOTAL INCOME OF ASS ESSEE. ' NO MATERIAL WAS BROUGHT ON RECORD BY A.O. TO SHOW THAT ASSESSEE HAD ANY OTHER SOURCE OF INCOME WHICH COULD HAVE ROUTED INFORM OF LOAN GIVEN BY THIRD PARTY. ON OTHER HAND, INTEREST PAYABLE BY ASSESSEE ON SAID LOANS WAS ALLOWED BY A.O. SINCE INITIAL ONUS PLACED UPON 'A ' STOOD DISCHARGED AND THERE WAS NO MATERIAL TO PROVE SOURCE EXPLAINED BY 'A ' AND CREDITORS WERE NOT GENUINE, THE A. O. WAS NOT JUSTIFIED IN CALLING UPO N ASSESSEE TO PROVE SOURCE OF SOURCE. THEREFORE, IMPUGNED ADDITION MADE BY A.O. UNDER SECTION 68 WAS LIABLE TO BE DELETED. ACCORDINGLY I FIND NO MERIT IN THE ADDITION MADE BY A.O. HENCE I DELETE THE SAME. ' (3) SHRI HARI HAR SINGH (HUF) 551/226, JHA. KANPU R ROAD ALAMABGH, LUCKNOW 'HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ASSESSING OFFICER HAS ITA NO.305/LKW/2012 - ASSESSMENT YEAR - 2008 - 09 : - 16 - : NOTI CED CASH CREDIT OF RS.27,99,139/ - IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. TH E ASSESSEE WAS ASKED TO FURNISH CONFIRMATORY LETTERS AND OTHER EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. IN RESPONSE THERETO, ASSESSEE FURNISHED RELEVANT INFORMATION. THE ASSESSING OFFICER WAS CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE WITH REG ARD TO MAJOR CASH CREDIT OF RS. 17,01,759 / - RECEIVED FROM SHRI. HARI HAR SINGH AND HE ACCEPTED THE SAME TO BE GENUINE, BUT THE REMAINING CASH CREDIT, WHICH ARE RANGING BETWEEN AND HE ACCORDINGLY MAD E AN ADDITION OF RS. 10,97,3 80/ - UNDER SE CTION 68 OF THE ACT. THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE ID. CIT(A) WITH THE SUBMISSION THAT THESE CASH CREDITS ARE SMALL CASH CREDITS, OF WHICH INTEREST WAS PAID AND WAS DULY CREDITED TO THEIR ACCOUNT. THE ASSESSEE HAS FURNISHED PAN CARD AND CONFIRMATION LETTERS BEFORE THE ID. CIT(A) AND THE ID. CIT(A) HAS EXAMINED THE SAME. BEING CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE, THE ID. CIT(A) ACCEPTED THE CASH CREDIT TO BE GENUINE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. TH E RELEVANT OBSERVATIONS OF THE ID. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - '4(4) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE AND I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APP ELLANT, AS PER THE FACTS EMERGING FROM THE ASSESSMENT ORDER, THE APPELLANT RAISED UNSECURED LOANS OF RS.27,99,139/ - FROM 27 PER SONS. OUT OF THIS, AN AMOUNT OF RS.17,01,759/ - CONCERNED SHRI HARI HAR SINGH, THE KARTA OF THE HUF - APPELLANT, THE AO MADE AN ADDI TION OF THE BALANCE OF RS. 10,97,380/ - ON THE BASIS OF EXAMINA T ION OF 3 A CCOUNTS OF SHRI MOHD. AZAM, SHRI O.P. SINGH AND SMT. REEMA RASTOGI. IN THE CASE OF SHANKER INDUSTRIES VS. C1T (1978) 114 ITR : - 17 - : 689 (CAL), IT WAS HELD THAT IN ORDER TO DISCHARGE THE ONUS UNDER SECTION 68 TO SHOW THAT THE CASH CREDITS DO NOT PRESENT THE INCOME, THE APPELLANT HAS TO PROVE - I) IDENTITY OF CREDITOR II) CREDIT WORTHINESS OF THE CREDITOR III) GENUINENESS OF THE TRANSACTION 5(3) IN THE IMPUGNED ASSESSMENT, THE APPELLANT DISCHARGE D THE ONUS BY GIVING THE IDENTITY OF THE PERSONS FROM WHOM THE MONEY WAS RECEIVED BY FURNISHING THE PAN NUMBERS AND WHERE OVER PO SSIBLE, THE COPIES OF VOTERS ID CARD OR DRIVING LICENSE ETC. THE TRANSACTIONS WITH THE CREDITORS ARE THROUGH CHEQUES AND INTERE ST HAS BEEN PAID TO THE CREDITORS. THE CREDITORS WHO HAVE ADVANCED LOANS TO THE APPELLANT HAVE GIVEN THEIR CONFORMATIONS WHICH WERE FILED WITH THE AO. I AM THEREFORE OF THE OPINION THAT THE ASSESSEE HAS DISCHARGED THE ONUS. NOW, THE AO HAS MADE OBSERVATION S REGARDING TRANSACTIONS WITH SHRI HARI HAR SINGH, KARTA OF THE HUF APPELLANT, WHOSE ACCOUNT HAS BEEN ACCEPTED. FURTHER, THREE OTHER PERSONS NAMELY, SHRI MOHD AZAM SHRI O.P. SINGH AND SMT. REEMA RASTOGI HAVE BEEN MENTIONED. UNDER THE CIRCUMSTANCES, I FIND THAT THERE WAS NO JUSTIFICATION WITH THE AO TO MAKE A ADDITION FOR LOANS RAISED BY ASSESSEE FROM OTHER PERSONS WHO HAVE NOT EVEN BEEN EXAMINED AND IN RESPECT OF WHOM NOTHING ADVERSE HAS BEEN FOUND BY THE AO. THE ASSESSEE HAS MADE PAYMENT OF INTEREST TO THE PERSONS AND EVEN THOUGH ADDITION UNDER SECTION 68 OF THE ACT HAS BEEN MADE BY THE AO THERE IS NO CORRESPONDING DISALLOWANCE OF INTEREST WHICH HAS BEEN ACCEPTED BY THE AO. THE DEPOSIT OF CASH BY SHRI O.P. SINGH IN HIS BANK ACCOUNT PRIOR TO ISSUE OF CHEQUE TO THE APPELLANT IS IMMATERIAL IF THE PERSON GIVING THE LOAN : - 18 - : ACCEPTS THE SAME IN HIS CONFIRMATION. IN THE CASE OF NEMI CHAND KOTHARI VS CIT & ANOTHER 264 ITR 254 (GAUHATI), THE HON'BLE COURT LAID DOWN AS UNDER - 'A PERSON MAY HAVE FUNDS FROM ANY SOURCE AND AN ASSESSEE, ON SUCH INFORMATION RECEIVED, MAY TAKE A LOAN FROM SUCH A PERSON. IT IN NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT ETHER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE AMOUNTS WERE GENUINE OR NOT. IT A CREDITORS HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE , IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP IT IN THE BANK, THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. ' 4(4) ANOTHER CRUCIAL POINT TO NOTE IS THAT TH E ASSESSEE MADE PAY MET OF INTEREST TO CREDITORS WHICH WERE ACCEPTED BY THE AO AS NO CORRESPONDING DISALLOWANCE HAS BEEN MADE. THE ISSUE HAS BEEN DISCUSSED IN THE CASE OFROHINI BUILDERS AS UNDER - ROHINI BINDERS VS. DCIT 76 TTJ 521 (AHMD.) INCOME - CASH CRED IT - BURDEN OF PROOF - ASSESSEE FURNISHED COMPLETE ADDRESSES OF ALL THE CREDITORS ALONG WITH GIR NUMBERS/PAN AS WELL AS CONFIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS PASSES IN THE CASES OF INDIVIDUAL CREDITORS, WHEREVER AVAILABLE, AND COPIES OF RETU RNS FILED BY THE CREDITORS IN THE REMAINING CASES - ALL LOANS WERE RECEIVED AND PAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST - THUS, ASSESSEE HAS DISCHARGED THE INITIAL ONUS : - 19 - : WHICH LAY ON IT IN TERMS OF SEC. 68 - ASSESSEE IS NOT FURTHER EXPECTED TO PROVE THE GENUINENESS OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS - MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COUL D NOT BE SERVED OR THEY FAILED T O APPEAR BEFORE THE AO (HE LOANS TAKEN FROM THOSE CREDITORS COULD NOT BE TREATED AS NON GENUINE - FURTHER, AO HAS NOT DISALLOWED THE INTEREST PAID IN RELATION TO THESE CREDITS AND TAX HAS BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAID IN RELATION TO THESE CREDITS AND HAS BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAID/CREDIT ED TO THE CREDITORS - ADDITION NOT JUSTIFIED. B. DC IT VS. ROHINI BUILDERS 256 ITR 360(GUJARAT) APPEAL (HIGH COURT) SUBSTANTIAL QUESTION OF LAW - CASH CREDIT - ASSESSE E FURNISHED COMPLETE ADDRESSES OF ALL THE CREDITORS ALONG WITH GIR NUMBERS /PAN A S WELL AS CONFIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS PASSED IN THE CASES OF INDIVIDUAL CREDITORS, THE REMAINING CASES - ALL LOANS WERE RECEIVED AND REPAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST - TRIBUNAL DELETED THE ADDITIO N - NO SUBSTANTIAL QUESTION OF LAW ARISES - APPEAL OF THE DEPARTMENT DISMISSED. C. CI T VS. ROHINI BUILDERS 254 ITR 2 75 SUPR E ME COURT DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE JUDGEMENT DAT ED 19.03.2001 OF THE GUJARAT HI G H COURT IN TAX APPEA L NO. 65 OF 2001, WHEREBY THE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW AROSE. THE ASSESSEE WAS A FIRM ENGAGED IN THE BUSINESS OF DEALINGS IN LAND. THE ASSESSEE HAD TAKEN LOANS FROM VARIOUS PARTIES AND AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED CONFIRMATIONS GIVING THE ADDRESSES OF ALL THE : - 20 - : DEPOSITORS. THE ASSESSING OFFICER PASSED A DETAILED ORDER TREATING THE CASH CREDIT OF RS. 12.8 LAKHS AS UNEXPLAINED. THE TRIBUNAL RELYING ON 23 7 ITR 570 HELD THAT AN UNSATISFACTORY EXPLANATION DID NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER HAD NOT DISALLOWED THE INTEREST PAID IN R ELATION TO THESE CREDITS A ND THE TAX HAD BEEN DEDUCTED OUT OF SUCH INTEREST: CIT V. ROHINI BUILDERS: S LP. NO. 515 OF 2002. 4(5) THE AO HAS MADE ADDITION UNDER SECTION 68 OF THE ACT BY MAKING REFERENCE TO EXAMINATION IN THE CASE OF 4 PERSONS. THIS EXAMINATION IN THE CASE OF 4 PER SONS IS ALSO NOT HEATING TO THE CONCLUSION THAT THE CREDITORS ARE NOT GENUINE. THE CR EDIT OF RS. 17,01,759/ - HAS BEEN ACCEPTED IN THE CASE OF SHRI HAD HAR SINGH. THERE IS NO SPECIFIC FINDING IN THE CASE OF SHRI MOHD AZAM, SHRI O.P. AINGH AND SMT. REEMA RAST OGI EXCEPT THAT THESE WERE NOT CROSS EXAMINED. THE THREE PERSONS HAVE FILED THEIR CONFIRMATIONS AND THE ASSESSEE HAS PAID INTEREST TO SHRI O.P. SINGH AND SMT. REEMA RASTOGI. THE ADDITION OF REMAINING CREDITORS HAS BEEN MADE WITHOUT ANY REASON WHATSOEVER. A LL THE CREDITORS HAVE FILED THEIR CONFIRMATIONS. IN THE CASE OF JALAN TIMBERS VS CIT 223 ITR 11 (GAUHATI) AND SANA ELECTRIC CO. VS CIT 152 ITR 507 (DELHI), THE HON.BLE COURT HAVE LAID DOWN THAT IN ORDER TO ESTABLISH THAFACT OF RECEIPT OF A CASH CREDIT AS R EQUIRED UNDER SECTION 68 OF THE ACT THE ASSESSEE MUST PROVE THREE IMPORTANT CONDITIONS, NAMELY, (1) THE IDENTITY OF THE PERSON, (2) THE GENUINENESS OF THE TRANSACTION, AND (3) THE CAPABILITY OF THE PERSON GIVING THE CASH CREDIT, SECTION 68 OF THE AC: MAKES IT CLEAR THAT IN RESPECT OF A CASH CREDIT ENTRY THE EXPLANATION OFFERED BY TH E ASSESSEE CAN BE REJECTED BY THE INCOME TAX OFFICER ON COGENT GROUNDS. : - 21 - : WHEN SUCH GROUNDS THEMSELVES ARE BASED ON NO EVIDENCE, THE QUESTION OF PRESUMPTION AGAINST THE ASSESSEE DO ES NOT ARISE. 4(6) I FIND FROM MY EXAMINATION THAT THE ASSESSEE ESTABLISHED THE ID ENTITY OF THE CREDITORS, THE CONFIRMATIONS HAVE BEEN FILED AND SO HAVE THE PAN NUMBERS OF THE CREDITORS. THE TRANSACTIONS ARE THROUGH BANKING CHANNELS AND THERE IS PAYMENT OF INTEREST TO SEVERAL CREDITORS WHICH HAS BEEN ACCEPTED BY THE AO. IT IS EVIDENT THEREFORE FROM THE ABOVE THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS WHICH ARE FOUND IN THE BOOKS OF THE ASSESSEE, THE ASSESSEE'S ONUS S TANDS DISCHARGED AND THE LATTER IS NOT FURTHER REQUIRES TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH HIM, AND THEREFORE, THE ADDITION UNDER SECTION 68 CANNOT BE SUSTAINED IN THE ABSENCE OF ANYTHING TO ESTABLISH THAT THE SOURCES OF CREDITORS' DEPOSITS FLEW FROM THE ASSESSEE ITSELF. IN THE INSTANT CASE ALSO THERE IS NO FINDING THAT THE APPELLANT'S OWN MONEY HAS FLOWN BACK TO APPELLANT IN THE FORM OF MONEY RECEIVED FROM THE PERSONS. IN VIEW OF THE ABOVE, I FIND THAT THERE IS NO MERIT IN ADDITION OF RS.10,97,380/ - MADE BY THE AO. IN CASE THERE IS ANY DOUBT ON THE CAPACITY TO ADVANCE/GIFT THE MONEY, ACTION TO TAX THE AMOUNT IN QUESTION CAN BE TAKEN IN THEIR ASSESSMENTS. THE ONUS OF THE APPELLANT STANDS DISCHARGED AND T HERE IN NO JUSTIFICATION IN MAKING AN ADDITION IN THE CASE OF THE APPELLANT. THE ADDITION OF RS. 10,97,380/ - MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED GIVING CONSEQUENTIAL RELIEF TO THE APPELLANT. GROUND OF APPEAL IS ALLOWED.' AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL, BUT COULD NOT POINT OUT ANY SPECIFIC DEFECT IN THE : - 22 - : ORDER OF THE ID. CIT(A). WE, HOWEVER, HAVE CAREFULLY EXAMINED THE ORDER OF THE ID. CIT(A) AND WE FIND THAT EXCEPT ONE, ALL THE CASH CREDITS ARE WITHIN T HE RANGE BETWEEN RS.3,881/ - AN D RS.50,000/ - AND THE ASSESSEE H AS PLACED RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF THE CASH CREDIT AND IDENTITY OF THE CREDITORS. SINCE THE ID. CIT(A) HAS PROPERLY EXAMINED THE CASH CREDITS IN THE LIGHT OF VARIOUS JUDICIA L PRONOUNCEMENTS AND ALSO IN THE LIGHT OF EVIDENCE PLACED BY THE ASSESSEE, WE FIND NO INFIRMITY IN THE O RDER OF THE ID. C I T(A). ACCORDINGLY, WE CONFIRM THE SAME.' KEEPING IN VIEW OF FACTS & CIRCUMSTANCES AND VARIOUS JUDICIAL DECISIONS MENTIONED ABOVE, 1 HOLD THAT THE A.O. WAS NOT JUSTIFIED IN TREATING THE CREDITORS AS UNEXPLAINED. FURTHER THE A.O. WAS ALSO NOT JUSTIFIED IN TREATING THE DEPOSITS IN THE CAPITAL ACCOUNT OF APPELLANT AS UNEXPLAINED DEPOSITS, WHICH WERE RECEIVED BY APPELLANT OUT OF SALE PROCEE DS OF LAND MENTIONED SUPRA AND LOAN OBTAINED FROM DIFFERENT PERSONS. THUS THE TOTAL ADDITION MADE BY A.O. OF RS.2,42, 90,000/ - (RS.42,40,000/ - + RS. 2,00,50,000 / - ) IS LIABLE TO BE DELETED. THE A.O. IS DIRECTE D TO DELETE THE ADDITION OF RS. 2.42,90,000/ - (RS. 4 2,40,000 / - + RS.2,00,50,000/ - ). THUS T HE APPELLANT GETS RELIEF OF RS. 2,42.90,000 / - ( RS . 42,40,000/ - + RS. 2,00,50,000/ - ). 6 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL, BUT DID NOT POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE L D. CIT(A). HE HAS SIMPLY PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER WAS NOT AFFORDED PROPER OPPORTUNITY TO PRODUCE ALL THE EVIDENCE ON RECORD. HE, HOWEVER, EXPLAINED EACH AND EVERY CREDIT ENTRY FOUND IN ITS CAPITAL ACCOUNT OR : - 23 - : INTRODUCED AS UNSECURED CREDIT . B EFORE THE LD. CIT(A) THE ASSESSEE HAS FILED ALL THE RELEVANT DETAILS IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTION, IDENTITY & CREDITWORTHINESS OF THE CREDITORS. THE LD. CIT(A) HAS CALLED A REMAND REPORT ON THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND DOCUMENTARY EVIDENCE IN THIS REGARD, BUT TH E ASSESSING OFFICER DID NOT SUBMIT THE REMAND REPORT DESPITE REPEATED REMINDERS AND GIVING SUFFICIENT TIME TO THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT EVEN PRODUCED THE ASSESSMENT RECORD DESPITE DIRECTION OF THE LD. CIT(A). THE LD. CIT(A) HIM SELF HAS EXAMINED ALL THE RELEVANT EVIDENCE PRODUCED BEFORE HIM IN THIS REGARD AND BEING CONVINCED WITH IT HE DELETED THE ADDITION. 7 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESS ING OFFICER HAS SUMMARILY MADE ADDITION WITHOUT DISCUSSING AS TO WHY HE WAS NOT CONVINCED WITH A PARTICULAR CREDIT ENTRY AND BEFORE THE LD. CIT(A) . THE ASSESSEE HAS FILED ALL THE RELEVANT EVIDENCE AND THE LD. CIT(A) HAS CALLED A REMAND REPORT ON THE WRITT EN SUBMISSIONS AND EVIDENCE FILED BEFORE HIM , BUT THE ASSESSING OFFICER DID NOT SUBMIT HIS REMAND REPORT IN TIME. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE ASSESSING OFFICER SOUGHT TIME WHICH WAS ALLOWED TO HIM, BUT DESPITE TIME ALLOWED , HE HAS NOT SUBMIT TED THE REMAND REPORT. HE SIMPLY OBJECTED THE ADMISSION OF EVIDENCE BEFORE THE LD. CIT(A). THE LD. CIT(A) HIMSELF HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT PRODUCED THE ASSESSMENT RECORD DESPITE DIRECTIONS. ALL THESE FACTS CLEARLY DEMONSTRATE THAT DESPITE SUFFICIENT TIME AFFORDED TO THE ASSESSING OFFICER, HE DID NOT MAKE ANY EFFORT TO DEMOLISH THE EVIDENCE FURNISHED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. THE LD. CIT(A), HOWEVER, HAS EXAMINED THE DETAILS FURNISHED BEFORE HIM AND HE HAS OBSERVED T HAT BEFORE HIM ASSESSEE HAS FILED CONFIRMATIONS OF THE DEPOSITORS/CREDITORS WITH FULL ADDRESS, PAN, : - 24 - : COMPLETE DETAILS OF CHEQUE AMOUNT & NUMBER LOANS/DEPOSITS; ETC. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS OF TDS AMOUNT ON INTEREST PAYMENT TO DIFFERENT CREDITORS/DEPOSITORS; PHOTOCOPY OF BANK STATEMENT SHOWING THE DEPOSITS OF LOAN/BORROWED FUND; ETC . SINCE THE ASSESSEE HAS FURNISHED ALL THE RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION AND IDENTITY & CREDITWORTHINESS OF THE CREDITORS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY ACCEPTED THE CLAIM OF THE ASSESSEE. SINCE NO SPECIFIC INFIRMITY IS POINTED OUT IN THE ORDER OF THE LD. CIT(A), WE APPROVE THE SAME. 8 . APROPOS GROUND NO.3, IT IS NOTICED THAT THE ASSESSING OFFI CER HAS MADE DISALLOWANCE OF RS.17,000/ - UNDER THE HEAD INTEREST ON DELAYED PAYMENT OF TDS HAVING TREATED IT TO BE PENAL IN NATURE, BUT THE LD. CIT(A) HAS ALLOWED THE SAME HAVING TREATED IT TO BE IN COMPENSATORY NATURE. 9 . NOW THE REVENUE IS BEFORE US, BUT CO ULD NOT DEMONSTRATE AS TO HOW INTEREST ON DELAYED PAYMENT CAN BE CONSIDERED TO BE PENAL IN NATURE. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE SAME. 10 . APROPOS GROUND NO.4, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 25,384/ - OUT OF DEPRECIATION CLAIMED ON CAR AT 20% HAVING CONCLUDED THAT THERE IS POSSIBILITY OF PERSONAL USE OF THE VEHICLES WHICH WAS DELETED BY THE LD. CIT(A). NOW THE REVENUE IS BEFORE US. 11 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIE S IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT IN A CASE OF INDIVIDUAL HAVING PROPRIETORSHIP CONCERN, THE POSSIBILITY OF PERSONAL USE OF CAR CANNOT BE RULED OUT. HOWEVER, THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON HIGHER SIDE. WE ACCORDINGLY R EDUCE IT TO 10% OF THE : - 25 - : TOTAL CLAIM R AISED BY THE ASSESSEE. ACCORDINGLY WE MODIFY THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 12 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTI ON ED PAGE. [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: JANUARY, 2016 JJ: 0101 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR