ACIT, Chandigarh V. Sh. Jagjeet Singh, Chandigarh

ITA 864/CHANDI/2009

• Counselvise Citation: 86421514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: JYOTI
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 864/CHD/2009 ASSESSMENT YEAR: 2006-07 ACIT, CIRCLE 5(1), V SHRI JAGJEET SINGH, CHANDIGARH. HOUSE NO.1127, SECTOR 44-B, CHANDIGARH PAN: AOJPS-9789M (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. JAISHREE SHARMA ASSESSEE BY : MS. JYOTI DATE OF HEARING : 27.09.2011 DATE OF PRONOUNCEMENT : 30.09.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 26.06.2009 PASSED BY THE LD. CIT(A) U/S 143(3) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.42,90,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED LOANS GIVEN TO M/S MILK SPECIALITIES LT D. 3. THE FACTS OF THE CASE ARE THAT DURING THE FINANC IAL YEAR 2005-06, THE ASSESSEE HAD GIVEN A LOAN OF RS.42,90, 000/- TO 2 MILK TIME SPECIALITIES LTD. THE ASSESSEE WAS ASKED TO PROVIDE THE BANK STATEMENT FROM WHERE THE AMOUNT HAD BEEN G IVEN. A PERUSAL OF BANK STATEMENT SHOWS THAT A NUMBER OF DE POSIT ENTRIES HAD BEEN MADE BEFORE THE LOAN WAS GIVEN. TH E ASSESSEE WAS ASKED TO PROVIDE DETAILS REGARDING THE SOURCE O F THIS LOAN GIVEN TO THE COMPANY AS WELL AS THE DEPOSITS MADE I N THE BANK ACCOUNT. THE ASSESSEE, DURING THE YEAR HAD ALSO REC EIVED AN AMOUNT OF RS.42,90,000/- AS LOAN FROM TWO PERSONS N AMELY MRS.SUKHWINDER KAUR W/O SHRI JAGJEET SINGH AND SHRI CHARAN SINGH, S/O SHRI SOHAN SINGH BOTH RESIDENTS OF # 112 7, SECTOR 44B, CHANDIGARH. IT WAS STATED BY THE ASSESSEE THA T THE LOAN HAD BEEN GIVEN TO MILK TIME SPECIALITIES LTD. OUT O F THE LOAN RECEIVED FROM THE ABOVESAID PERSONS AND FROM ASSESS EE'S OWN AGRICULTURAL INCOME. SUMMONS WERE ISSUED TO SHRI C HARAN SINGH AND MRS.SUKHWINDER KAUR, WHO HAD GIVEN THE LO AN ON 27.08.2008 AND THEY WERE ASKED TO PRESENT THEMSELVE S ON 05.09.2008. ON THE SAID DATE, NONE OF THE PERSONS ATTENDED THE PROCEEDINGS. A LETTER WAS FILED STATING THAT BOTH HAD GONE ON PILGRIMAGE BECAUSE OF WHICH THEY WERE UNABLE TO ATT END THE PROCEEDINGS. NO EVIDENCE WAS FILED REGARDING THEIR PILGRIMAGE. YET ANOTHER OPPORTUNITY WAS PROVIDED AND PROCEEDING S WERE FIXED FOR 11.09.2008 ON WHICH DATE AGAIN, NONE ATTE NDED. REGARDING THE PROOF OF IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF LOAN, THE ASSESSEE PROVIDED THE BANK STATEMENTS, I.T. RETURNS OF BOTH THE PERSONS ALONGW ITH VOUCHERS OF SALES MADE DURING THE CONCERNED YEAR. THE VOUCH ERS ARE IN TELEGU LANGUAGE AND EVEN THE COUNSEL COULD NOT EXPL AIN WHAT SALE HAD BEEN MADE. IN THE ABSENCE OF ANY OTHER EV IDENCE, THE 3 GENUINENESS OF VOUCHERS IS HIGHLY DOUBTFUL. A NUMBE R OF OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE TO EXPL AIN HIS STAND REGARDING THE LOANS BUT NOTHING CONCRETE COULD BE P ROVIDED BY HIM. THE ITO, THROUGH A LETTER WAS ASKED TO PROVIDE DETAILS REGARDING THE AGRICULTURAL INCOME OF MRS.SUKHWINDER KAUR. IT WAS INTIMATED BY THE AO THAT THE CASE WAS STILL PEN DING IN SCRUTINY AND THE COMPLETE INFORMATION REGARDING THE AGRICULTURAL INCOME WAS NOT RECEIVED. THUS, THE ID ENTITY HAS BEEN PROVED BUT THE PERSONS CREDITWORTHINESS AND G ENUINENESS OF LOANS WAS NOT PROVED BY THE ASSESSEE. IN THE AB SENCE OF ANY EVIDENCE, THIS AMOUNT OF RS.42,90,000/- WAS TAKEN A S UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND WAS T AXED ACCORDINGLY. 4. THE CIT(A) DELETED THE ADDITION OF RS.42,90,000/ - MADE BY THE AO. BY MAKING THE FOLLOWING OBSERVATIONS : I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT WAS BROUGHT TO THE NOTICE OF THE AO THAT ASSESSMENT S OF THE PERSONS WHO HAVE GIVEN LOAN WERE FRAMED U/S 143 (3) WHEREIN AGRICULTURAL INCOME HAS BEEN ACCEPTED. IN THE ASSESSMENT ORDER, THE AO HAS ALSO MENTIONED THAT TH E ASSESSEE PROVIDED THE BANK STATEMENTS, INCOME TAX RETURNS OF BOTH THE PERSONS ALONGWITH VOUCHERS OF S ALES. IN THIS CASE, THERE IS A BLOOD RELATIONSHIP. IF THE AGRICULTURAL INCOME IS BOGUS, THEN THE CORRECT COUR SE WOULD HAVE BEEN TO TAX THE INCOME IN THE HANDS OF T HE PERSONS WHO HAVE GIVEN THE LOAN. THE AO OF THOSE PERSONS WHO HAVE GIVEN LOANS HAVE ACCEPTED THE INCO ME DECLARED BY THE ASSESSEES INCLUDING THE AGRICULTURA L INCOME. IT IS NOT KNOWN WHAT IS THE HOLDING OF THES E PERSONS. IT IS ALSO NOT KNOWN, ON WHAT EVIDENCE THE AO OF SMT.SUKHWINDER KAUR AND SHRI CHARAN SINGH 4 ACCEPTED THE QUANTUM OF AGRICULTURE INCOME. IF ANY ACTION LIES, THEN IT LIES IN THE HANDS OF SMT.SUKHW INDER KAUR AND SHRI CHARAN SINGH. THE ASSESSEE HAS ALSO F ILED CONFIRMATIONS FROM THESE TWO PERSONS. THE AO IS NOT JUSTIFIED IN MAKING ADDITION IN THE HANDS OF THE ASSESSEE. 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT PAPER BOOK INCLUDING THE FINDINGS OF THE AO AS WELL AS THAT OF THE CIT(A). THE LD. CIT(A ), HAS DELETED THE ADDITION OF RS.42,90,000/-, ON ACCOUNT OF UNEXP LAINED LOANS RECEIVED FROM TWO PERSONS NAMELY MRS.SUKHWINDER KAU R, W/O SHRI JAGJEET SINGH AND SHRI CHARAN SINGH, S/O SHRI SOHAN SINGH, BOTH RESIDENT OF HOUSE NO.1127 SECTOR 44-B, CHANDIGARH. IT WAS CONTENDED BY THE REVENUE THAT SH RI CHARAN SINGH S/O SHRI SOHAN SINGH DOES NOT HAVE THE CAPACI TY, TO MAKE SUCH LOAN TO THE ASSESSEE. A PERUSAL OF THE C OPY OF THE BANK ACCOUNT OF SHRI CHARAN SINGH CLEARLY REVEALS A UNIFORM PATTERN OF DEPOSITS OF RS.5 LACS, ON CERTAIN DATES AND IMMEDIATE WITHDRAWAL OF THE SAME, WHICH WERE NOT EXPLAINED. T HE ASSESSEE HAS FAILED TO EXPLAIN THE NATURE AND SOURCE OF THE LOAN AMOUNT OF RS.35,90,000/- RECEIVED FROM SHRI CHARAN SINGH. IT IS, FURTHER, ADDED THAT THE ASSESSEE HAS ALSO RECEIVED A LOAN OF RS.7 LACS FROM MRS. SUKHWINDER KAUR, DURING THE RELEVANT PERIOD UNDER CONSIDERATION. THE ASSESSEE HAS FILED INCOMP LETE COPY OF BANK ACCOUNT WHILE ADDUCING EVIDENCE TO JUSTIFY THE AMOUNT OF RS.35,90,000/- AS LOAN RECEIVED FROM SHRI CHARAN SI NGH. THE ASSESSEE ALSO FILED PHOTO COPY OF ACKNOWLEDGEMENT I N TOKEN OF HAVING FILING THE INCOME TAX RETURN BY SHRI CHARAN SINGH, WHICH WERE PROCESSED UNDER SUMMARY. THE PAPER BOOK REVEALS 5 THAT EVEN COMPLETE BANK ACCOUNT OF SHRI CHARAN SING H HAS NOT BEEN FILED BY THE ASSESSEE. THE ASSESSEE ALSO FAIL ED TO PRODUCE THE CREDITORS ON ONE PRETEXT OR THE OTHER. NO PROPE R EVIDENCE FILED IN RESPECT OF CROP GROWN AND SOLD BY SHRI CHA RAN SINGH, AS OBSERVED BY THE AO. IT IS A LEGALLY SETTLED PROPOSI TION THAT IDENTITY OF THE CREDITOR, CAPACITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION IS REQUIRED TO BE PR OVED BY THE ASSESSEE AND THE ONUS OF PROVING SUCH INGREDIENTS S QUARELY LIES ON THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO ADDUCE REQUISITE EVIDENCE TO PROVE THE CAPACITY OF SHRI CHARAN SINGH, BY WAY OF COGENT AND CORROBORATIVE EVIDENCE AND GENUINENESS OF THE TRANSACTION HAS NOT BEEN ESTABLI SHED. IN VIEW OF THIS, THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF SRILEKHA BANERJEE V CIT, 49 ITR 112, CIT V DURGA PARSAD MORE 82 ITR 540 AND SUMATI DAYAL V CIT, 214 ITR 801 ARE APPLICABLE. THE SUPREME COURT IN THE CASE OF CI T, WEST BENGAL-II V. DURGA PRASAD MORE 82 ITR 540 (SUPRA) HAS STATED THAT IT IS TRUE THAT THE APPARENT MUST BE CONSIDERE D REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO DISBELIEF AND TH E TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE MATTER HAS TO BE CONS IDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. AS PER T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SRILEKHA BANE RJEE V CIT 49 ITR 112, THE BURDEN OF PROOF WAS ON THE ASSESSEE WHICH HAS NOT BEEN DISCHARGED. IN THE CASE OF SUMATI DAYAL V CIT (SUPRA), THE HON'BLE SUPREME COURT STATED THAT THE CLAIM OF THE ASSESSEE WINNING JACKPOTS SEVERAL TIMES WAS CONTRARY TO THE STATISTICAL THEORIES AND EXPERIENCE OF THE FREQUENCIES AND PROB ABILITIES. 6 THEREFORE, THE FINDINGS OF THE CIT(A), IN RESPECT O F SHRI CHARAN SINGH ARE REVERSED. TO THIS EXTENT, THE REVENUE SU CCEEDS IN ITS GROUND OF APPEAL. 6. AS FAR AS AN AMOUNT OF RS.7 LACS RECEIVED BY THE ASSESSEE FROM MRS. SUKHWINDER LAUR IS CONCERNED, THE ASSESSM ENT ORDER OF THE CREDITOR FOR THE ASSESSMENT YEAR 2006-07, PASSED ON 30.12.2008, U/S 143(3) OF THE ACT HAS BEEN FILED AS AN EVIDENCE. IN THE IMPUGNED ASSESSMENT ORDER, THE AO HAS ACCEPT ED RS.8 LACS AS AGRICULTURE INCOME OF THE ASSESSEE WHEREAS THE ASSESSEE HAD RETURNED AN INCOME OF RS. 11 LACS FROM AGRICULT URE. WE HAVE ALSO GONE THROUGH THE BANK ACCOUNT OF SMT. SUK HWINDER KAUR. THEREFORE, HAVING REGARD TO THE AGRICULTURE INCOME ACCEPTED BY THE REVENUE ITSELF FOR THE IMPUGNED ASS ESSMENT YEAR, TO THE EXTENT OF RS.8 LACS, WE ARE OF THE CON SIDERED OPINION THAT THE LOAN IN RESPECT OF SUCH CREDITOR STANDS DU LY EXPLAINED. THEREFORE, TO THIS EXTENT THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH SEPT.,2011 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH