SHRI RAMESH CHAND PRADHAN, Jaipur V. DCIT, Jaipur

ITA 884/JPR/2011

• Counselvise Citation: 88423114 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Gift; Onus to prove
• Section: 131; 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 884/JP/2011 ASSESSMENT YEARS : 2004-05 PAN : ACXPP 8356 M SHRI RAMESH CHAND PRADHAN VS. THE DCIT 38, SHIV PATH, SURAJ NAGAR WEST CIRCLE- 2 CIVIL LINES, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI K.L. MOOLCHANDANI DATE OF HEARING: 14-07-2014 DATE OF PRONOUNCEMENT: 25-07-2014 ORDER PER R.P. TOLANI, JM THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 02-09-2011 FOR THE ASSESSMENT YEAR 20 04-05 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE AUTHORITIES BELOW HAVE FACTUALLY AND LEGALLY ER RED IN MAKING AND CONFIRMING ADDITION OF RS. 1,50,000/- U/ S ON ACCOUNT OF THE ALLEGED HAWALA ENTRY OPERATING IN T HE NAME OF ONE SMT. MANJU TOMAR WITHOUT APPRECIATING T HE FACTS OF THE CASE IN RIGHT PERSPECTIVE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE AUTHORITIES BELOW HAVE FACTUALLY AND LEGALLY ER RED IN MAKING AND CONFIRMING ADDITION OF RS. 1,50,000/- U/ S ON 2 ACCOUNT OF DEPOSIT RECEIVED FROM ONE SHRI BHAGWANI SAHAI WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPECTIVE. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT ORIGINALLY THE ASSESSEE'S RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 12-01-2005. THER EAFTER IT WAS REOPENED AND A NOTICE U/S 148 DATED 20-03-2009 WAS ISSUED WH ICH WAS DULY SERVED ON THE ASSESSEE. THE CASE WAS REOPENED ON THE BASIS OF A SEARCH CONDUCTED IN ONE B.C. PUROHIT & COMPANY AT JAIPUR AND KOLKATA. I N THAT CASE, IT WAS FOUND THAT THE ABOVE NAMED TAX CONSULTANT WAS ENGAG ED IN PROVIDING HAWALA ENTRIES OF GIFTS, LOANS, SHARE APPLICATION MONEY A ND LONG TERM CAPITAL GAIN TO THE INTERESTED PERSONS. ON THAT BASIS OF INFORMA TION, IT WAS OBSERVED THAT SMT.MANJU TOMAR WAS A PART OF THIS SYSTEM AND ACCOM MODATION ENTRY OF RS. 1.50 LACS WAS TAKEN FROM HER ON AND THIS ENTRY OF R S. 1.50 LACS WAS CREDITED IN ASSESSEE'S ACCOUNT ON 29-12-2013. THE ASSESSEE W AS CALLED ON TO EXPLAIN AS TO WHY THE PROVISION OF SECTION 68 SHOULD NOT BE APPLIED. THE ASSESSEE EXPLAINED THAT THE AMOUNT WAS RECEIVED FROM HER VID E CHEQUE NO 073151 DATED 25-09-2003 DRAWN ON STATE BANK OF BIKANER & J AIPUR BUT NO TDS WAS DEDUCTED AS SHE HAD PROVIDED FORM NO. 15G TO THE AS SESSEE. SHE WAS HOLDER OF PAN BEARING NO. ACCPT 2865J . HER RESIDENTIAL AD DRESS WAS PROVIDED. THE ASSESSEE CONTENDED THAT THE AMOUNT OF LOAN ALON GWITH INTEREST THEREON AMOUNTING TO RS. 2,36,028/- WAS REPAID TO HER ON 02 -04-2008 VIDE CHEQUE 3 NO. 696949. THE AO ASKED THE ASSESSEE TO PRODUCE SM T. MANJU TOMAR. HOWEVER, THE ASSESSEE FAILED TO DO SO. THUS ON NON- COMPLIANCE OF THE AOS INSTRUCTION, THE SUMMON WAS ISSUED TO THE PARTY AT THE GIVEN ADDRESS IN CONFIRMATION. THE ADDRESS WAS LATER ON FOUND TO BE NON-SPECIFIC AND DUE TO WHICH THE SUMMON COULD NOT BE SERVED. THE AO HELD T HAT THE ASSESSEE FAILED TO DISCHARGE HIS BURDEN IN PROVING THE CASH CREDIT AND A MERE PAYMENT OF ACCOUNT PAYEE CHEQUE CANNOT BE HELD SACROSANCT EVID ENCE. THEREFORE, THE ACCOUNT PAYEE CHEQUE DOES NOT DISCHARGE THE BURDEN CAST UPON THE ASSESSEE. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE CAL CUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE (P) LTD. 208 ITR 465 (CAL.). 2.2 BESIDES, THE ASSESSEE HAD TAKEN A LOAN OF RS. 1 .50 LACS FROM ONE SHRI BHAGWAN SAHAI. THE ASSESSEE WAS CALLED ON TO EXPLAI N THIS CASH CREDIT BY PROVIDING PAN DETAILS, ADDRESS AND CONFIRMATION, C OPY OF RETURN AND BANK PASS BOOK ALONGWITH PRODUCTION OF CASH CREDITOR IN PERSON. THE ASSESSEE COULD ONLY PRODUCE THE CONFIRMATION OF SHRI BHAGWAN I SAHAI AND OTHER COMPLIANCE COULD NOT BE MADE BY THE ASSESSEE. THE A O ISSUED SUMMON U/S 131 OF THE ACT TO SHRI BHAGWAN SAHAI WHICH REMAINED UN-RESPONDED. IN VIEW OF THESE FACTS, THE AO WAS OF THE VIEW THAT TH E ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS U/S 68 OF THE ACT VIS-A-VIS THIS CREDIT ALSO. THUS BOTH THE ADDITIONS WERE MADE U/S 68 OF THE ACT. 4 2.3 AGGRIEVED THE ASSESSEE PREFERRED FIST APPEAL WH ERE THE LD. CIT(A) CONFIRMED THE ADDITION IN RESPECT OF SMT. MANJU TO MAR BY FOLLOWING OBSERVATION. 4.10 THUS THE VARIOUS JUDICIAL PRONOUNCEMENT HAVE HELD THAT THE EFFECT OF ENACTMENT OF SECTION 68 IS TO PLACE THE BURDEN ON THE ASSESSEE TO PROVE THE CREDITS A PPEARING IN HIS BOOKS OF ACCOUNTS. THE BURDEN HAS TO BE DISCHAR GED WITH POSITIVE MATERIAL. FROM THE FACTS OF THE CASE, IT I S SEEN THAT THOUGH THE ASSESSEE MERELY FILED CONFIRMATION LETTE R AND AFFIDAVIT, THE BURDEN WAS NOT DISCHARGED BECAUSE WH ILE ON PAPER THE IDENTITY OF THE ALLEGED CREDITOR WAS BROU GHT ON RECORD, HER CREDITWORTHINESS AND THEREBY THE GENUIN ENESS OF TRANSACTION COULD NOT BE PROVED IN VIEW OF THE INSP ECTORS REPORT MENTIONED IN THE ORDER AND HIS INABILITY TO TRACE HER AT THE ADDRESS GIVEN BY THE ASSESSEE. IN FACT THE AO W AS DENIED AN OPPORTUNITY TO VERIFY THE AVERMENT MADE IN THE AFFI DAVIT FILED. THEREFORE, THE IMPUGNED ADDITION OF RS. 1,50,000/- MADE U/S 68 ON ACCOUNT OF ALLEGED LOAN TAKEN BY THE ASSESSEE FROM SMT. MANJU TOMAR IS CONFIRMED. 2.4 SIMILARLY, THE ADDITION IN RESPECT OF SHRI BHA GWAN SAHAI WAS CONFIRMED BY THE LD. CIT(A) BY FOLLOWING OBSERVATI ON. 5.4 THUS IT IS SEEN THAT THE AR'S SUBMISSION ARE SELF CONTRADICTORY. MOREOVER, IF THE ALLEGED CREDIT OR LEFT THE OFFICE BEFORE HE COULD BE CROSS EXAMINED AND NO PUR POSE WAS SERVED BY HIS COMING TO THE DEPARTMENT. ALL THAT CA N BE INFERRED IS THAT MR. SAHAIS IDENTITY WAS ESTABLISH ED. I FIND THAT THE AO ISSUED SUMMONS TO THE ALLEGED CREDITOR WHICH REMAINED UN-RESPONDED. THEREFORE, DOCUMENT FILED BY THE ASSE SSEE COULD NOT BE VERIFIED BY THE AO AND THE CREDITWORTHINESS OR THE CAPACITY OF THE ALLEGED CREDITOR COULD NOT BE VERIF IED. THE BANK STATEMENT OF THE CREDITOR WAS NOT FURNISHED AND FRO M THE INCOME TAX RETURN FILED, IT IS SEEN THAT HE WAS MAN OF VER Y LIMITED MEANS. THE ANNUAL INCOME FROM JOB WORK OF CONSUMER ITEMS 5 WAS RS. 36,120/- IN A.Y. 2004-05 ALONGWITH INCOME F ROM OTHER SOURCES BEING RS. 18,850/-. IT IS NOT CLEAR FROM TH E RETURN OF INCOME HOW HE ACCRUED ENOUGH CAPITAL FOR ADVANCING LOAN OF SUCH A HUGE AMOUNT. THE BALANCE SHEET OR THE BANK S TATEMENTS HAVE NOT BEEN FURNISHED. PAYMENT BY CHEQUE IS NOT S ACROSANCT EVIDENCE TO PROVE THE CAPACITY OF THE CREDITOR OR T HE GENUINENESS OF THE TRANSACTION AS HAS BEEN HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS BY THE DIFFERENT HON'BLE H .CS. AND ALSO APEX COURT AS DISCUSSED ABOVE. IN VIEW OF THE FACTS OF THE CASE THE IMPUGNED ADDITIN OF RS. 1,50,000/- MADE BY THE AO U/S 68 ON ACCOUNT OF ALLEGED CREDITOR SHRI BHAGWANI SA HAI IS CONFIRMED. 2.5 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US . 2.6 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT SWEEPING ALLEGATION HAS BEEN MADE THAT SMT. MANJU TOMAR HAD PROVIDED ACCOMM ODATION ENTRY TO M/S. B.C. PUROHIT & COMPANY WHICH IN TURN HAD GIVEN ACCOMMODATION ENTRY TO THE ASSESSEE WHEREAS THE FACT OF THE MATTE R IS THAT THE AMOUNT WAS TAKEN ON LOAN FROM SMT. MANJU TOMAR AND NOT FROM M/ S. B.C. PUROHIT & COMPANY. SMT. MANJU TOMAR IS ASSESSED TO TAX. THE D ETAILS RELATING TO HER WERE SUBMITTED TO THE AO ALONGWITH HER CONFIRMATION . THE ASSESSEE WAS ABLE TO DEMONSTRATE THAT THE AMOUNT WAS REPAID TO H ER BY CHEQUE ALONGWITH INTEREST. HER NON-APPEARANCE BEFORE THE AO HAS WRON GLY BEEN ATTRIBUTED TO THE ASSESSEE GIVING VAGUE STATEMENT THAT ADDRESS A -46 IS NUMBER OF THE PLOT. IT IS VEHEMENTLY ARGUED THAT WHEN SHE IS ASSESSED T O TAX AND THE BANK DETAILS WERE FURNISHED ALONGWITH PAN THEN IN THESE EVENTUAL ITY IT WAS THE DUTY OF 6 THE AO TO ISSUE SUMMON AT PROPER ADDRESS WHICH IS U NCOMPLIED WITH TO SERVE THE NOTICE. TO THIS EFFECT, LD. AR OF THE ASS ESSEE RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT VS. ORISSA CORPORATION (P) 159 ITR 78. IT CLEARLY DEMONSTRATES THAT THE ASSESSEE F ROM HER SIDE DISCHARGED THE INITIAL BURDEN CAST ON HIM AND BOTH THE LOWER A UTHORITIES HAVE WRONGLY HELD THAT THE ASSESSEE DID NOT DISCHARGE HIS BURDEN . 2.7 AS REGARDS SHRI BHAGWAN SAHAI, THE LD. COUNSEL FOR THE ASSESSEE PLEADS THAT THE LOAN WAS OBTAINED BY WAY OF BANKING CHANNEL. THE CONFIRMATION THEREOF WAS PRODUCED. THE AO HAS GIVEN CONTRADICTORY FINDING INASMUCH AS AT ONE PLACE HE MENTIONED THAT THE ASSE SSEE WAS UNABLE TO PRODUCE THE PARTY AND ON THE OTHER HAND THE LD. CIT (A) HAS CLEARLY OBSERVED THAT SHRI BHAGWAN SAHAI APPEARED BEFORE THE AO BUT HE COULD NOT BE CROSS EXAMINED AND HE LEFT THE OFFICE. THIS FACT CLEARLY DEMONSTRATES THAT SHRI BHAGWAN SAHAI OF SERVICE OF SUMMON DULY ATTENDED T HE OFFICE OF THE AO AND HE LEFT THE OFFICE OF THE AO WITHOUT PERMISSION OF THE AO FOR WHICH THE FAULT CANNOT BE ATTRIBUTED TO THE ASSESSEE. ON THE CONTRARY, THE AO SHOULD HAVE PROCEEDED AGAINST SHRI BHAGWAN SAHAI AS PER LA W AS ENUNCIATED BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ORISS A CORPORATION (P) LTD. 159 ITR 78. IN PARA 5.4 OF THE LD. CIT(A)S ORDER, IT CLEARLY EMERGES THAT RETURN OF INCOME OF SHRI BHAGWAN SAHAI FOR ASSESSME NT YEAR 2004-05 WAS 7 PERUSED BY THE AO. THUS THE FINDING OF THE AO IS AL SO SELF-CONTRADICTORY THAT NO OTHER DETAILS COULD BE FILED THOUGH OTHER RECORD OF THE CREDITOR SHOULD BE FILED WHEREAS HIS INCOME TAX RECORD WAS DULY VERIF IED. THUS THE ASSESSEE WAS ABLE TO ESTABLISH THE IDENTITY OF THE PERSON. T HE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT DENIED BY THE AO AFTER VERIFICATION OF INCOME-TAX RECORD. ONCE INCOME-TAX RECORD OF THE CR EDITOR IS SEEN BY THE DEPARTMENT THEN HIS CREDITWORTHINESS CANNOT BE SUMM ARILY REJECTED BY HOLDING THAT ANNUAL INCOME FROM JOB WORK OF CONSUME R ITEMS WAS LESS. IT IS PLEADED THAT THE ONUS IN TERMS OF SECTION 68 OF THE ACT DOES NOT LAY DOWN TO PROVE THE CREDITWORTHINESS TO THE HILT. THUS IN THE CASE OF SHRI BHAGWANI SAHAI, THE BURDEN HAS BEEN DISCHARGED. 2.8 THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 2.9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW ASSESS EE FOR BOTH, SMT. MANJU TOMAR AND SHRI BHAGWAN SAHAI HAS DISCHARGED THE INI TIAL BURDEN TO PROVE THE GENUINENESS OF THE TRANSACTION OF LOANS WHICH IS EVIDENT FROM THE FACT AS WELL AS INCOME TAX RECORD, PAN AND CONFIRMATION FRO M THE BANKING CHANNEL. WE HOLD THAT THE ASSESSEE HAS DISCHARGED THE BURDEN IN TERMS OF SECTION 68 OF THE ACT. THEREFORE, BOTH THE ADDITIONS CONFIRMED BY THE LD. CIT(A) ARE DELETED. 8 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN OPEN COURT ON 25 TH JULY, 2014 SD.- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 25 TH JULY, 2014 *MISHRA COPY FORWARDED TO:- 1. SHRI RAMESH CHAND PRADHAN, JAIPUR 2. THE DCIT, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR 5..THE LD. DR 6.THE GUARD FILE (IT NO. 884/JP/2011) BY ORDER AR ITAT, JAIPUR 9 10