Makhan Lal, Dhuri V. JCIT, Ludhiana

ITA 882/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73515 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained cash credit; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 882/CHD/2012 ASSESSMENT YEAR: 2009-10 SHRI MAKHAN LAL VS. THE J.C.I.T PROP. M/S SHREE GURU NANAK RANGE IV HARVESTERS, DHURI LUDHIANA PUNJAB PAN NO. AAKPL8618F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 19/02/2014 DATE OF PRONOUNCEMENT : 06.03.2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.06.2012 OF CIT (APPEALS)-II, LUDHIANA. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING ADDI TION OF RS. 21 LACS IN RESPECT OF UNSECURED LOANS PLUS INTE REST OF RS. 71,862/- ACCRUED ON ABOVE SAID LOAN AS UNEXPLAINED CASH CREDITS IN RESPECT OF THE FOLLOWING PERSONS: I ISHWAR DASS, PROPRIETOR ISHWAR STEEL CORPORATION, DHURI RS. 3,00,000.00 II VINAY BANSAL, C/O BHARAT RESTAURANT,DHURI RS. 2, 00,000.00 2 III RAGHBIR SINGH, PROP. M/S SITA RAM RAGHBIR SINGH, DHURI RS. 5,00,000.00 IV RAJ RANI, W/O SHRI VIJAY KUMAR, 16A/8R, TEHSIL MOHALLA, DHURI RS. 8,00,000.00 V MISS HENNA GUPTA, D/O SHRI MAKHAN LAL RS. 3,00,0 00.00 TOTAL RS. 21,00,000.00 2. THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDE RING THAT ALL THE UNSECURED CREDITORS ARE REGULAR INCOME TAX ASSE SSES, HAVING THEIR INDEPENDENT SOURCES OF INCOME AND HAVE ADVANCED THE AMOUNT BY CHEQUES AND FURTHER IN ORDER TO PROVE GENUINENESS OF THE ABOVE CREDITORS, THE ASSESSEE HA D FILED CONFIRMATIONS OF THE ABOVE PERSONS, COPIES OF THEIR INCOME TAX RETURNS, BANK STATEMENTS AND THEIR AFFIDAVITS ALSO AND, AS SUCH, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION. 3 THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERIN G THAT A SUM OF RS. 8 LACS PAID BY SMT. RAJ RANI TO THE ASSE SSEE WAS NOT UNSECURED LOAN BUT WAS EARNEST MONEY FOR THE PU RPOSE OF SHOP AND WHICH WAS LATER ON SOLD TO SMT RAJ RANI 4 THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER DISALLOWING THE INTEREST OF R S. 37,566/- U/S 36(1)(III) OF THE ACT IN RESPECT OF SO CALLED I NTEREST FREE ADVANCES GIVEN TO: A. RG COMMISSION AGENCY, DHURI; AND B. VIDYA SAGAR INTERNATIONAL EDUCATIONAL & WELFARE SOCIETY, DHURI 3. OUT OF THE ABOVE GROUND NO.4 WAS NOT PRESSED AND , THEREFORE, THE SAME WAS DISMISSED AS NOT PRESSED. 4. GROUND NOS. 1, 2 & 3 : AFTER HEARING BOTH THE PA RTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS TAKEN LOAN FROM FOLLOWING PARTIES:- 3 I) ISHWAR DASS, PROP. ISHWAR STEEL CORPORATION, DHU RI RS. 3 LACS II) VINAY BANSAL C/O BHARAT RESTAURANT DHURI RS. 2 LACS III) RAGHBIR SINGH PROP. SITA RAM RAGHBIR SINGH, DH URI RS. 5 LACS IV) RAJ RANI W/O VIJAY KUMAR, 16 A / 8R TEHSIL MOH ALLA, DHURI RS. 8 LACS. V). MISS HEENA GUPTA D/O MAKHAN LAL RS. 3 LACS 6. ON ENQUIRY FOR PROVING GENUINENESS OF THESE CRED ITORS THE FOLLOWING DOCUMENTS WERE FILED:- I) SHRI ISHWAR DASS COPY OF ACCOUNT IN THE BOOKS OF ACCOUNT OF MEHRA SALES CORPORATION. II) SHRI VINAY BANSAL COPY OF HIS BANK STATEMEN T IN SBOP DHURI III) SHRI RAGHBIR SINGH - CONFIRMATION FROM SBOP DHURI IV) SMT. RAJ RANI BANK STATEMENT IN PNB DHURI S HOWING DEPOSITS MADE IN THE BANK ACCOUNT. V) SMT. HEENA GUPTA STATEMENT OF S.B. ACCOUNT IN SBOP 7. FURTHER, IT WAS NOTED THAT IN SOME OF THE CASES, THE CASH HAS BEEN DEPOSITED IMMEDIATELY BEFORE GIVING CHEQUE TO THE A SSESSEE, THEREFORE, SUMMONS WERE ISSUED ON THE REQUEST OF THE ASSESSEE TO THESE PARTIES. THESE PARTIES DID NOT APPEAR BEFORE THE ASSESSING OFFICER AND FILED THE F OLLOWING REPLIES:- SHRI ISHWAR DASS: FROM THE BARE READING OF THE SUMMONS IT IS NOT CLEA R THE NATURE OF PROCEEDINGS IN THE CASE OF SH. MAKHAN LAL AND THE NATURE OF THE EVIDENCE REQUIRED TO BE GIVEN BY ME I N THIS CASE. FROM THE READING OF THE SUMMONS, I UNDERSTAND THAT SOURCE OF RS. 3 LACS ADVANCED TO SH. MAKHAN LAL IS TO BE GIVE N. IN THIS REGARD I HAD ALREADY SUPPLIED INFORMATION / DOCUMEN TS TO SH. MAKHAN LAL IN THE SHAPE OF CONFIRMATION LETTER OF L OAN GIVEN, COPY OF BANK ACCOUNT, COPY OF ITR, COPY OF COMPUTAT ION OF INCOME AND AN AFFIDAVIT CONFIRMING THE LOAN/ADVANCE OF RS. 1 LAC ON DATED 26.09.2008 AND RS. 2 LAC ON DATED 27.0 1.2009. TO CONFIRM THIS LOAN I AGAIN ENCLOSE THE COPIES OF ABOVE SAID 4 DOCUMENTS ALONGWITH NARRATION OF ENTRIES IN MY BANK ACCOUNT NO. 28307 WITH PNB DHURI. I ONCE AGAIN CONFIRM THE LOAN OF RS. 3 LAC GIVEN BY ME THOUGH ACCOUNT PAYEE CHEQUES AS NARRATED ABOVE AND CLOSING BALANCE OF RS. 3,09,289/ -. IT IS FURTHER SUBMITTED THAT IT IS NOT POSSIBLE FOR ME TO ATTEND YOUR OFFICE AT THIS SHORTEST DATE. SH. VINEY KUMAR : FROM THE BARE READING OF THE SUMMONS IT IS NOT CLEA RED THE NATURE OF PROCEEDINGS IN THE CASE OF SH. MAKHAN LAL AND THE NATURE OF THE EVIDENCE REQUIRED TO BE GIVEN BY ME I N THIS CASE. FROM THE READING OF THE SUMMONS, I UNDERSTAND THAT SOURCE OF RS. 2 LACS ADVANCED TO SH. MAKHAN LAL IS TO BE GIVE N. IN THIS REGARD I HAD ALREADY SUPPLIED INFORMATION / DOCUMEN TS TO SH. MAKHAN LAL IN THE SHAPE OF CONFIRMATION LETTER OF L OAN GIVEN, COPY OF BANK ACCOUNT, COPY OF ITR, COPY OF COMPUTAT ION OF INCOME AND AN AFFIDAVIT CONFIRMING THE LOAN / ADVAN CE OF RS. 2 LAC ON DATED 20.10.2008. TO CONFIRM THIS LOAN I AGA IN ENCLOSE THE COPIES OF ABOVE SAID DOCUMENTS. I UNDERSTAND TH AT NO PERSONAL APPEARANCE IS NECESSARY FOR THIS PURPOSE A ND THE MATTER ENDS WITH THE ABOVE SAID CONFIRMATION FILED ALONGWITH HIS LETTER. I ONCE AGAIN CONFIRM THE LOAN OF RS. 2 LAC GIVEN BY ME THROUGH ACCOUNT PAYEE CHEQUE ON DATED 20.10.2008 AND CLOSING BALANCE OF RS. 2,04,668/- AS ON 31.03.2009. IT IS FURTHER SUBMITTED THAT IT IS NOT POSSIBLE FOR ME TO ATTEND YOUR OFFICE AT THIS SHORTEST DATE. SMT. RAJ RANI : IT IS SUBMITTED THAT SMT. RANI IS OUT OF STATION AN D WILL COME BACK AFTER 15 DAYS. HOWEVER, TO COMPLY WITH THE SUM MONS I, VIJAY KUMAR, ON BEHALF OF MY WIFE, ENCLOSE THE PHOT OCOPY OF DOCUMENTS AVAILABLE WITH ME. FROM THE READING OF TH E SUMMONS, I UNDERSTAND THAT SOURCE OF RS. 8 LAC GIVE N TO SH. MAKHAN LAL IS TO BE GIVEN. IN THIS REGARD I SUBMIT THAT MY WIFE HAD ALREADY FILED AN AFFIDAVIT IN WHICH SHE AFFIRME D THAT SHE HAD ENTERD INTO AN AGREEMENT FOR PURCHASE OF SHOP W ITH SH. MAKHAN LAL AND PAID A SUM OF RS. 8,00,000/- AS EARN EST MONEY DURING THE F.Y. 2008-09 RELEVANT TO A.Y. 2009-10 VI DE CH. NO. 240412 DATED 17.11.2008 FROM HER BAN ACCOUNT NO. 5 3474000101433756 WITH PNB LOHA BAZAR, DHURI. THE CONVEYANCE DEED WAS EXECUTED ON DATED 08.09.2009 FO R RS. 19,80,000/- IN WHICH SHE HAD 25% SHARE. OUT OF TOT AL PURCHASE CONSIDERATION PAID BY HER AND OTHERS HERE SHARE COMES TO RS. 4,95,000/- WHICH WAS ADJUSTED FROM THE EARNEST MONEY OF RS. 8,00,000/- ALREADY PAID BY HER ON DATE D 17.11.2008 AND SHE RECEIVED BACK THE BALANCE PAYMEN T OF RS. 3,05,000/- VIDE CHEQUE NO. 430711 FOR RS. 1,55,000/ - AND CHEQUE NO. 430712 FOR RS. 1,50,000/- ON DATED 12.09 .2009 AND 16.09.2009 RESPECTIVELY. SHE ALREADY SUPPLIED DOCUM ENTS TO SH. MAKHAN LAL IN THE SHAPE OF CONFIRMATION LETTER OF EARNEST MONEY GIVEN, COPY OF BANK ACCOUNT, AND AN AFFIDAVIT CONFIRMING THE ABOVE SAID FACTS. IT IS FURTHER SUBM ITTED THAT IT IS NOT POSSIBLE FOR HER TO ATTEND YOUR OFFICE AT TH IS SHORTEST DATE AS SHE IS OUT OF STATION FOR 15 DAYS. COPY OF CONVEYANCE DEED EXECUTED ON DATED 08.09.2009 IS ENCLOSED HEREW ITH. IT IS FURTHER SUBMITTED THAT SMT. RAJ RANI, MY WIFE, HAD NOT ADVANCED ANY LOAN TO SH. MAKHAN LAL BUT PAID RS. 8, 00,000/- AS EARNEST MONEY AGAINST PURCHASE OF SHOP ON DATED 17.11.2008. SH. RAGHBIR SINGH :- FROM THE BARE READING OF THE SUMMONS IT IS NOT CLEA R THE NATURE OF PROCEEDINGS IN THE CASE OF SH. MAKHAN LAL AND THE NATURE OF THE EVIDENCE REQUIRED TO BE GIVEN BY ME I N THIS CASE. FROM THE READING OF THE SUMMONS, I UNDERSTAND THAT SOURCE OF RS. 5 LACS ADVANCED TO SH. MAKHAN LAL IS TO BE GIVE N. IN THIS REGARD I HAD ALREADY SUPPLIED INFORMATION / DOCUMEN TS TO SH. MAKHAN LAL IN THE SHAPE OF CONFIRMATION LETTER OF L OAN GIVEN, COPY OF BANK ACCOUNT, COPY OF ITR, COPY OF COMPUTAT ION OF INCOME AND AN AFFIDAVIT CONFIRMING THE LOAN/ADVANCE OF RS. 5 LAC ON DATED 13.06.2008. TO CONFIRM THIS LOAN I AGA IN ENCLOSE THE COPIES OF ABOVE SAID DOCUMENTS ALONGWITH NARRAT ION OF ENTRIES IN MY BANK ACCOUNT NUMBER 65006926475 WITH SBOP, DHURI AND COPY OF BALANCE SHEET AS ON 31.03.2009 SH OWING A DEBIT BALANCE OF RS. 5,43,056/- IN THE NAME OF M/S SHRI GURU NANAK HARVESTOR, DHURI. I ONCE AGAIN CONFIRM THE LO AN OF RS. 5 LAC GIVEN BY ME THROUGH ACCOUNT PAYEE CHEQUE AS N ARRATED ABOVE. REGARDING AVAILABILITY OF CASH WITH THE ASSE SSEE IT IS 6 SUBMITTED THAT I AM A COMMISSION AGENT AND SOLD PRO DUCE OF AGRICULTURIST ON COMMISSION BASIS TO THE GOVERNMENT AGENCIES. DURING THE PERIOD 01.04.2008 TO 06.06.2008, I HAD W ITHDRAWN A SUM OF RS. 78 LACS APPROXIMATELY IN CASH FROM SBO P, DHURI TO MAKE THE PAYMENTS TO AGRICULTURISTS. COPY OF BAN K ACCOUNT IS ENCLOSED. I DEPOSITED A SUM OF RS. 5 LACS ON DAT ED 13.06.2008 IN SBOP, DHURI AND ISSUED A CHEQUE OF RS . 5 LACS ON DATED 13.06.2008 FAVOURING M/S SHREE GURU NANAK HARVESTOR, DHURI. IT IS NOT POSSIBLE FOR ME TO ATTE ND YOUR OFFICE AT THIS SHORTEST DATE AS I AM BUSY IN KHARIF MARKETING SEASON. 8. MS.HEENA GUPTA TO WHOM SUMMONS WERE NOT ISSUED O N THE REQUEST OF THE COUNSEL OF THE ASSESSEE ALSO DID NOT APPEAR. THE A SSESSING OFFICER FOUND VARIOUS DISCREPANCIES IN THE REPLIES AND SINCE THES E PERSONS WERE NOT PRODUCED, HE MADE ADDITION OF RS. 21 LAKHS TO THE INCOME OF T HE ASSESSEE AS ACCORDING TO HIM THESE LOANS WERE NOT GENUINE. 9. ON APPEAL THE ACTION OF THE ASSESSING OFFICER WA S CONFIRMED BY LD. CIT(A). 10. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT BASICALLY THE DETAILED REPLIES WERE GIVEN BY VARIOUS LOANEES. FU RTHER, THESE PERSONS COULD NOT BE PRODUCED BECAUSE ASSESSEE WAS HAVING DIFFERENCES WITH THEM. HOWEVER, HE FURTHER CONTENDED THAT IF THE BENCH SO DIRECTS, THE ASSESSEE WAS PREPARED TO PRODUCE THESE PERSONS BEFORE THE ASSESSING OFFICER. 11. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORT ED THE ORDER OF ASSESSING OFFICER AND CIT(A). 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT IF ASSESSING OFFICER DOUBTED THE GENUINENESS OF LOANS THEN THE ASSESSEE SHOULD HAVE PRODUCED THOSE 7 PERSONS. THE SUMMONS WERE ISSUED AT THE REQUEST OF ASSESSEE ONLY. HOWEVER, AT THE SAME TIME IF THERE WAS SOME DIFFERENCE BETWEEN THE PARTIES, IT MAY NOT BE POSSIBLE TO PRODUCE THOSE PERSONS. SINCE LD. COUNSE L FOR THE ASSESSEE HAS UNDERTAKEN TO PRODUCE THOSE PERSONS BEFORE ASSESSI NG OFFICER, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO TH E FILE OF ASSESSING OFFICER TO EXAMINE THOSE PERSONS AND THEN DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 13. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06.03.20 14 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 6 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR