ITO, Sawai Madhopur V. SHRI DAMODAR LAL GUPTA, Hindaun City

ITA 91/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7817 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 131; 68

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 91/JP/2012 ASSTT. YEAR- 2008-09 PAN NO. ABRPG 5742 K THE I.T.O. SHRI DAMODAR LAL GUPTA, WARD 3, SAWAI MADHOPUR. VRS. PROP. M/S MUKESH TELECOM CENTRE, NEAR POLICE CHAUKI, HINDAUN CITY. (APPELLANT) (RESPONDENT) DEPARTMENT BY :- SHRI RAJESH OJHA ASSESSEE BY :- SHRI P.C. PARWAL. DATE OF HEARING : 11/09/2014 DATE OF PRONOUNCEMENT : 11/11/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 18/11/2011 OF THE LEARNED C.I.T.(A)-KOTA FOR THE A.Y . 2008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS NOT RIGHT IN: (I) REJECTING THE INVOKING OF PROVISIONS U/S 145(3) AND CONSEQUENTLY DELETING THE TRADING ADDITION OF RS.1, 00,000/-; (II) DELETING DISALLOWANCE OF RS. 33,55,062/- OUT OF ACTIVATION CHARGES PASSED ON TO RETAILERS; ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 2 (III) DELETING THE DISALLOWANCE OF CIF CHARGES OF RS . 2,08,250/- WHICH WERE PENAL IN NATURE; (IV) DELETING THE UNEXPLAINED CASH CREDITS U/S 68, AGGREGATING AT RS. 6,94,500/-; (V) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONA L GROUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HEARING. 2. THE FIRST GROUND OF APPEAL IS AGAINST REJECTING T HE BOOKS OF ACCOUNT U/S 145(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED AS THE ACT) AND CONSEQUENTLY, DELETION THE TRADING ADDITION OF RS. ONE LAC. THE ASSESSEE IS IN THE BUSINESS OF MOBILE SIM A ND RECHARGE COUPONS. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEES G.P. SHOWN IS VERY LESS COMPARED TO PRECEDING YEAR. HE GA VE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. IT WAS SUB MITTED BY THE ASSESSEE THAT IN A.Y. UP TO 2007-08 HE HIMSELF WAS S ELLING THE GOODS TO THE RETAILERS ON WHICH HE WAS GETTING 2% PROFIT BUT D URING THE YEAR UNDER CONSIDERATION, HE HAD SOLD THESE COUPONS THRO UGH FIVE ASSOCIATE DISTRIBUTORS ON WHICH .5% G.P. WAS RECEIVED BY HIM ON TOTAL SALE OF RS. 5,29,88,007/- I.E. MORE THAN 55% SALE AND REMAINING SALE OF MORE THAN 45% WAS DIRECTLY SOLD BY THE ASSESSEE IN CASH AND TH ERE IS NO NAME OF THE PURCHASER AS WELL AS FULL ADDRESS ON IT. THUS, T HE SAME IS NOT VERIFIABLE. THE LEARNED ASSESSING OFFICER GAVE VARIO US EXAMPLES TO ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 3 DEMONSTRATE THAT ALL THE PARTICULARS OF THE PURCHAS ER HAD NOT BEEN REFLECTED FROM THE SALE BILLS. THE ASSESSEE ADMITTED THAT HE DID NOT MAINTAIN QUANTITATIVE DETAILS AND WAS NOT ABLE TO VE RIFY THE BASIS OF OPENING AND CLOSING STOCK OF SIMS. IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT NEAR ABOUT 50% SALE IS UNVERIFIABLE, T HUS HE REJECTED THE BOOK U/S 145(3) OF THE ACT AND CAME TO CONCLUSION T HAT ON THE BASIS OF DETAILS SUBMITTED BEFORE HIM THAT MARGIN OF PROFIT WAS RS. 11,10,060/- IN PLACE OF RS. 10,71,837/-. THERE WAS A DIFFERENCE IN GROSS PROFIT OF RS. 38,226/-. THE ASSESSING OFFICER ALSO ASKED TO GIVE T HE DETAILS OF APPOINTMENT OF DISTRIBUTORS, ON THAT BASIS, THE LEA RNED ASSESSING OFFICER FOUND THAT SALE OF RS. 14,45,819/- WAS MADE BY THE ASSESSEE BEFORE APPOINTMENT OF DISTRIBUTORS ON WHICH 2% GROSS PROFIT WAS CALCULATED AT RS. 28,916/-. AFTER CONSIDERING ALL T HE DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN ASSESSMENT ORDER, HE MA DE RS. ONE LAC ADDITION IN GROSS PROFIT. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), W HERE THE APPELLANT SUBMITTED THAT THE ASSESSEE IS MAINTAINING DAY TO D AY BOOKS OF ACCOUNT, WHICH WERE DULY SUPPORTED BY THE BILLS AND VOUCHERS A ND ALSO AUDITED BY THE QUALIFIED C.A.. WHATEVER OBSERVATION MADE BY THE LEARNED ASSESSING OFFICER IS ACTUALLY INCORRECT. THE APPELLA NT ALSO SUBMITTED ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 4 DETAILED CHART BEFORE THE LEARNED CIT(A) AND CLAIME D THAT DURING THE YEAR, OUT OF TOTAL SALE OF RS. 5.05 CRORES, THE SAL E TRANSACTION WAS MADE THROUGH ASSOCIATE DISTRIBUTORS AND RS. 4.07 CRORES THROUGH RETAILERS, WHICH WERE NOT IN THE IMMEDIATE PRECEDING YEAR. HE AL SO FILED VARIOUS EVIDENCES BEFORE THE LEARNED CIT(A) TO DEFEND HIS CA SE. HE ALSO EXPLAINED THE DIFFERENCE OF RS. 38,226/- BEFORE THE LEARNED CIT(A) WITH EVIDENCES. FURTHER, THE SALE MADE PRIOR TO APPOINTM ENT OF ASSOCIATE DISTRIBUTORS HAS BEEN EXPLAINED WITH EVIDENCE. HE AL SO RELIED UPON THE VARIOUS DECISIONS. AFTER CONSIDERING THE REPLY OF T HE ASSESSEE, THE LEARNED CIT(A) HAS VIEW THAT THE ASSESSEES CLAIM WAS FOUND CORRECT, ACCORDINGLY HE DELETED THE ADDITION OF RS. ONE LAC. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. AT TH E OUTSET, THE LEARNED AR FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEAR NED CIT(A) AND DRAWN OUR ATTENTION ON PAGE NOS. 2 AND 3 OF PAPER BO OK AND REITERATED THE ARGUMENTS MADE BEFORE THE LEARNED CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AP PELLANT HAS EXPLAINED BOTH THE DIFFERENCES POINTED OUT BY THE A SSESSING OFFICER IN ASSESSMENT ORDER WITH EVIDENCE. THE ONLY DISCREPANCY WAS THAT HE WAS NOT MAINTAINING STOCK REGISTER ON WHICH HE APPLIED SECTION 145(3) OF THE ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 5 ACT. THE LEARNED ASSESSING OFFICER BEFORE APPLYING S ECTION 145(3) HAS TO BE POINTED OUT SPECIFIC DEFECTS IN THE BOOKS WITH REFERENCE TO PURCHASE/SALE. MERE NOT MAINTAINING STOCK REGISTER IS NOT ENOUGH TO APPLY SECTION 145(3) OF THE ACT. THEREFORE, WE CONFIR M THE ORDER OF THE LEARNED CIT(A). 6. THE SECOND GROUND OF APPEAL IS AGAINST DELETING T HE DISALLOWANCE OF RS. 33,55,062/- OUT OF ACTIVATION CHARGES PASSED ON TO RETAILERS. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE RECEIVED RS. 73,83,811/- AS ACTIVATION CHARGES AND CLAIMED AN EXPENDITURE AGAINST THIS INCOME AT RS. 67,32,269 /-. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE ASSESSEE ONLY ABLE TO EXPLAIN THE ACTIVATION CHARGE S PAID TO ASSOCIATED DISTRIBUTORS BUT NOT IN CASE OF RETAILERS. THE TOTA L ACTIVATION CHARGES PAID TO THE ASSOCIATED DISTRIBUTORS AT RS. 33,77,207/- A ND REMAINING RS. 33,55,062/- TO RETAILERS. THE SALE MADE THROUGH ASSO CIATE DISTRIBUTORS WAS LESS THAN RETAILERS AND WHICH IS NOT ACCEPTABLE A ND ON THE BASIS OF FACTS GIVEN BY THE ASSESSEE BEFORE HIM, THUS HE DIS ALLOWED FULL ACTIVATION CHARGE CLAIMED ON RETAILERS AT RS. 33,55 ,062/-. WHATEVER, PAYMENT MADE TO RETAILERS ON ACCOUNT OF ACTIVATION CHARGES IS LIABLE TO COVER U/S 40A(IA) OF THE ACT ON WHICH NO TDS IS MADE BY THE ASSESSEE. THUS, HE ALSO MADE SIMILAR ADDITION U/S 40A(IA) OF T HE ACT. ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 6 7. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE VERIFIED THE DETAILS PRODUCED BEFORE ME. IT WAS SEEN THAT ASSESSEE WAS SELLING VARIOUS PRODUCTS OF VODAFONE, E SSAR AND IN THE CASE OF RETAILERS THE AMOUNT OF ACTIVATION CHAR GES WERE REDUCED FROM THE INVOICE VALUE ITSELF, HOWEVER, THE GROSS SALE AMOUNT WAS CREDITED TO SALES ACCOUNT AND ACTIVATION CHARGES WERE DEBITED TO ACTIVATION CHARGES ACCOUNT [I AM NOT DISCUSSING PAYMENTS TO ASSOCIATED DISTRIBUTORS AS THE SAME IS NOT UNDER DISPUTE]. THIS BEING THE CASE THE TDS PROVISIONS ARE NOT ATTRA CTED. EVEN OTHERWISE A.O. HAS NOT BROUGHT ANY INSTANCE ON RECOR D TO SHOW THAT TDS WAS DEDUCTIBLE (CASES WHERE ACTIVATION CHARG ES IN A SINGLE BILL EXCEEDED RS. 20,000/- OR RS. 50,000/- I N A YEAR). SECONDLY, THE PAYMENT TO RETAILER WAS NOT DIRECTLY M ADE OUT BUT WAS REDUCED FROM INVOICE VALUE ITSELF AND WAS FULLY V ERIFIABLE. IN VIEW OF THE ABOVE, THE ADDITION OF RS. 33,55,052 /- IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. 8. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D DR SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICE R. 9. AT THE OUTSET, THE LEARNED AR FOR THE ASSESSEE S UBMITTED THAT THE ACTIVATION CHARGES PAID TO THE RETAILERS ARE AS PER THE SCHEMES FRAMED BY THE VODAFONE ESSAR LIMITED. PERIODICALLY (WEEKLY/ FORTNIGHTLY/MONTHLY) ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 7 DIFFERENT- 2 SCHEMES ARE LAUNCHED BY THE COMPANY WHI CH IS PASSED ON TO THE RETAILERS EITHER IN THE SALE BILLS OR BY WAY OF CLAIM. IN SUPPORT OF THIS, COPY OF THE SCHEME FOR EACH MONTH IS ENCLOSED AT PAPER BOOK PAGE NOS. 35 TO 46. SAMPLE COPIES OF THE SALES BILLS ARE ENCLOSED AT PAPER BOOK PAGE NOS. 47 TO 75. FROM THE COPY OF THE SCHEM E AND BILLS IT CAN BE NOTED THAT ACTIVATION SCHEME IS GIVEN TO EACH RE TAILERS AS PER THE SCHEME OF THE COMPANY AND FULLY SUPPORTED BY THE SA LE BILL. THE LEARNED ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC PAYMENT WHICH IS NOT VERIFIABLE. HE SIMPLY ON THE ASSUMPTION AND PRESUMP TION OBSERVED THAT THERE IS NO BASIS FOR CLAIMING THE ACTIVATION CHARG ES. IN FACT, THE LEARNED ASSESSING OFFICER AFTER VERIFYING THE ACTIVATION LE DGER ACCOUNT WITH SALE BILL NEVER ASKED TO FILE ANY FURTHER DOCUMENTS. IN THESE FACTS, THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER O NLY ON ASSUMPTION AND PRESUMPTION IS UNCALLED FOR AND BE DELETED. THE ACTIVATION CHARGES PAID TO THE ASSOCIATE DISTRI BUTORS IS FIXED BY THE COMPANY AND ROUTED THROUGH THE ASSESSEE. EAC H MONTH COMPANY SENDS MAILS TO THE ASSESSEE SPECIFYING THE AMOUNT OF THE CLAIM TO BE PASSED ON TO THE ASSOCIATE DISTRIBUTORS OUT OF THE CLAIM RECEIVED BY THE ASSESSEE. SAMPLE EMAILS ARE ENCLOSE D AT PAPER BOOK PAGE NOS. 76 TO 86. IN CASE OF RETAILERS ALSO, THE COMPANY SENDS EMAILS SPECIFYING THE AMOUNT OF SCHEMES TO BE PAID TO THEM . THIS IS OF VARIED ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 8 AMOUNT DEPENDING ON THE STARTER PACK. IT VARIES ON WEEKLY/FORTNIGHTLY/MONTHLY BASIS. THE SCHEME PAYABLE TO THE ASSOCIATE DISTRIBUTORS IS LESS THAN THAT PAYABLE TO THE RETAI LERS AND, THEREFORE, ACTIVATION CHARGES PAID TO THE ASSOCIATE DISTRIBUTO RS IS ALMOST EQUAL TO THAT PAID TO THE RETAILERS THOUGH THE SALES TO ASSO CIATE DISTRIBUTORS IS MORE THAN THAT TO THE RETAILERS BY RS. 97,87,143/-. THE LEARNED ASSESSING OFFICER HAS ACCEPTED THE ACTIVATION CHARG ES PAID TO THE ASSOCIATE DISTRIBUTORS BUT DISALLOWED THAT PAID TO T HE RETAILERS IGNORING THAT THE SAME IS FULLY VERIFIABLE FROM THE SCHEME C IRCULATED BY THE COMPANY AND THE SALE BILLS ISSUED TO THE RETAILERS. FEW BOUNDED SALES BILLS ISSUED TO THE RETAILERS ARE PRODUCED FOR READ Y REFERENCE. TWO SUCH BILL BOOKS WERE FILED TO THE LEARNED ASSESSING OFFIC ER IN ASSESSMENT PROCEEDINGS. THE LEARNED ASSESSING OFFICER HAS NOT P OINTED OUT ANY DEFECTS IN THE SALE BILLS. THUS, PAYMENT OF THE ACTI VATION CHARGES TO THE RETAILERS IS FULLY VERIFIABLE. SO FAR AS NON DEDUCTION OF THE TDS ON THE ACTIVATIO N CHARGES PAID TO RETAILERS IS CONCERNED, THE LEARNED ASSESSING OF FICER HAS NOT SPECIFIED AS TO UNDER WHICH SECTION TAX IS REQUIRED TO BE DEDU CTED AT SOURCE. THE ACTIVATION CHARGES PAID IS A TRADE DISCOUNT/SCHEMES ALLOWED TO THE RETAILERS AS PER SCHEMES FORMULATED BY THE COMPANY. THE ASSESSEE AND THE RETAILERS ARE WORKING ON PRINCIPAL TO PRINCIPAL BASIS. THE RETAILERS ARE ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 9 SELLING THE SIM CARD/RECHARGE COUPON OF VARIOUS COM PANIES. THERE IS NO CONTROL SUPERVISORY OR OTHERWISE OF THE ASSESSEE/COM PANY ON THE RETAILERS. RETAILERS CAN SALE THE SIM CARD/RECHARGE COUPON AT THEIR OWN. THERE IS ALSO NO AGREEMENT OF ASSESSEE WITH THE RETA ILERS FOR SALE OF THE SIM CARD/RECHARGE COUPONS. ANY RETAILER OR PERSON C AN PURCHASE THE SIM CARD/RECHARGE COUPON FROM THE ASSESSEE. ON SUCH DIS COUNT NONE OF THE PROVISION OF DEDUCTION OF TAX AT SOURCE APPLIES. HE NCE THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER ON THIS GROUN D IS UNCALLED FOR. IN VIEW OF THE ABOVE, THE DISALLOWANCE MADE BY THE L EARNED ASSESSING OFFICER BE DELETED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ACTIVATION CHARG ES PASSED ON TO RETAILERS AS PER THE SCHEME FRAMED BY THE TELECOM C OMPANY FOR WHICH THE ASSESSEE HAS FILED THE EVIDENCES BEFORE THE ASS ESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A). THE RETAILERS ACTIVAT ION CHARGE IS TO BE INFORMED BY THE TELECOM COMPANY THROUGH E-MAIL. THIS AMOUNT VARIES FROM TIME TO TIME. ASSOCIATE DISTRIBUTORS GET MORE CHARGES TO RETAILERS. FURTHER TDS IS ALSO NOT APPLICABLE ON THE ACTIVATION CHARGES CLAIMED BY THE ASSESSEE WHICH WERE IN THE FORM OF TRADE DISCOUN T OF SCHEME ALLOWED TO THE RETAILERS AS PER THE SCHEME FORMULATE D BY THE COMPANY. THE ASSESSEE AND RETAILERS ARE WORKING ON PRINCIPAL T O PRINCIPAL BASIS, ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 10 ON SUCH DISCOUNT NONE OF THE PROVISIONS OF TDS IS AP PLICABLE. THEREFORE, WE CONFIRM THE ORDER OF THE LEARNED CIT(A). 11. THE THIRD GROUND OF APPEAL IS AGAINST DELETING T HE DISALLOWANCE OF CIF CHARGES OF RS. 2,08,250/-, WHICH WERE PENAL IN NA TURE. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CL AIMED CIF CHARGES OF RS. 2,08,250/- FOR THE P&L ACCOUNT. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE AND OBSERVED THAT SUPPLIER COMPANY DEDUCTED THIS AMOUNT FROM THE ASSE SSEE ON ACCOUNT OF DEFECTS IN THE APPLICATION FORM OF CONSUMERS INC LUDING NOT ENCLOSING THE SUFFICIENT EVIDENCE WITH THE APPLICATION, WHICH I S FOUND BY THE LEARNED ASSESSING OFFICER AS PENALTY AND NOT ALLOWAB LE UNDER THE I.T. LAW. THE LEARNED CIT(A) ON HEARING OF APPEAL, HELD THA T CIF CHARGES WERE NOT PENAL IN NATURE BUT AROSE AS PER THE TERMS OF CONTRACT BETWEEN THE ASSESSEE AND VODAFONE ESSAR AND WERE INC URRED IN THE NORMAL COURSE OF BUSINESS, WHICH IS ALLOWABLE, ACCOR DINGLY, HE DELETED THE ADDITION. THE LEARNED DR HAD NOT CONTROVERTED TH E FINDINGS GIVEN BY THE LEARNED CIT(A) AT THE TIME OF HEARING AND ALSO WE FIND THAT THESE PAYMENTS ARE CONTRACTUAL OBLIGATION ON PART OF THE ASSESSEE. THEREFORE, THE LEARNED CIT(A) WAS RIGHT IN ALLOWING IN APPEAL IN FAVOUR OF THE ASSESSEE. ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 11 12. THE 4 TH GROUND OF APPEAL IS AGAINST DELETING THE UNEXPLAIN ED CASH CREDITORS U/S 68 OF THE ACT AMOUNTING TO RS. 6,94,5 00/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD TA KEN LOANS AT RS. 9,44,500/- FROM 49 PERSONS. ON VERIFICATION OF BOOK S OF ACCOUNTS, THESE LOANS WERE EITHER BELOW 19,000/- OR 19,500/- IN CASH IN THE MONTH OF APRIL, 2007. PRIMA FACIE, THESE LOANS WERE APPEARED TO THE ASSESSING OFFICER NON GENUINE. THESE CASH RECEIPTS IN FORM OF LOAN WERE DEPOSITED IN THE BANK ACCOUNT AND PAYMENTS WERE MADE TO S.K. J AIN AND SONS OF JAIPUR AND AIRCEL DIGILINK INDIA PVT. LTD. FOR PURC HASE OF GOODS. THE LEARNED ASSESSING OFFICER ASKED THE ASSESSEE TO PRO DUCE THESE PERSONS TO VERIFY THE GENUINENESS OF LOANS TAKEN BY HIM. THE APPELLANT HAD ABLE TO PRODUCE ONLY 26 PERSONS FOR VERIFICATION OUT OF THIS ONLY 10 PERSONS ABLE TO GIVE THE EVIDENCES RELATING TO INCOME. REMA INING 23 PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER. THE L EARNED ASSESSING OFFICER REPRODUCED ALL THE DETAILS OF CASH CREDITOR S ON PAGES 6 TO 8 WITH ADDRESSES, AMOUNT AND EVIDENCES PRODUCED, SOURCE OF INCOME AND CREDITWORTHINESS. THE LEARNED ASSESSING OFFICER FOUN D THAT CREDITWORTHINESS OF SHRI VIJAY CHAND GUPTA, SHRI SAN JAY KUMAR GOYAL AND SHRI SANTOSHI LAL HAD PROVED BUT REMAINING PERS ONS COULD NOT BE ABLE TO SUBSTANTIATE THEIR CREDITWORTHINESS. THUS, HE MADE ADDITION OF RS. 4,03,500/- IN THE INCOME OF THE ASSESSEE. HE FU RTHER OBSERVED THAT ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 12 REMAINING 23 PERSONS MENTIONED AT PAGE 9 OF THE ASS ESSMENT ORDER, ONLY IN CASE OF SHRI LAXMAN SINGH, SHRI RAMESHWAR DA YAL, SMT. SAROJ GUPTA, AND SHRI ASHOK KUMAR AGARWAL, THE ASSESSEE P ROVED THE GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS OF THE CREDITORS BUT REMAINING PERSONS WERE FOUND NON GENUINE BY THE ASSE SSING OFFICER, THUS HE MADE ADDITION OF RS. 3,67,500/- IN THE INCO ME OF THE ASSESSEE. ACCORDINGLY, TOTAL ADDITION WAS MADE AT RS. 7,71,000 /- UNDER THIS HEAD. 13. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASS ESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A ), WHO HAD CONSIDERED THE REPLY OF THE ASSESSEE AND HAD GIVEN DETAILED FINDINGS ON PAGE NO. 12 TO 19 OF ITS ORDER AND ALLOWED THE APPEA L PARTLY BY CONFIRMING ADDITION OF RS. 76,500/- AND DELETING TH E ADDITION OF RS. 6,94,500/-. 14. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARN ED D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND DR AWN OUR ATTENTION ON EACH CASH CREDITORS AND ARGUED THAT LOANS WERE TAKEN IN CASH BELOW RS. 20,000/-. THE CASH CREDITORS DO NOT HAVE ANY CREDITWO RTHINESS AND EVEN GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED BY THE A.R. BEFORE THE ASSESSING OFFICER. THEREFORE, THE SAME MAY PLEAS E BE REVERTED. 15. AT THE OUTSET, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE FILED AFFIDAVITS/ ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 13 CONFIRMATION OF ALL THE CREDITORS. IT HAS ALSO PROD UCED 26 CREDITORS WHOSE STATEMENTS WERE RECORDED BY THE LEARNED ASSESS ING OFFICER. IN THE STATEMENT, THEY HAVE EXPLAINED THE FACT OF LOAN GIVEN TO THE ASSESSEE AND ALSO EXPLAINED THE SOURCE OF THE LOAN. ALL THESE LOANS WERE REPAID DURING THE YEAR ITSELF. WE ARE ENCLOSING HER EWITH STATEMENT EXPLAINING THE LOAN RECEIVED FROM EACH CREDITOR. FR OM THE STATEMENT IT CAN BE NOTED THAT THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION IS PROVED BY PRODUCING THE CREDITOR S BEFORE THE LEARNED ASSESSING OFFICER FOR RECORDING THEIR STATEMENTS AN D FILING AFFIDAVITS/CONFIRMATIONS. THE CREDITWORTHINESS IS PR OVED BY GIVING THEIR SOURCE OF INCOME AS MENTIONED IN THE STATEMENT/ AFF IDAVIT/CONFIRMATION. HENCE, THE LOAN RECEIVED FROM THESE PERSONS IS FULL Y EXPLAINED. HE ALSO RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS. AJAY KUMAR SHARMA 259 ITR 240 (RAJ.). (II) SHRI MAQBOOL AHMED VS. ITO ITA NO. 624/JP/200 8 ORDER DATED 30/09/2008. (III) DR. BHAGHIRATH MEENA VS. ITO 925/JP/2008 DATE D 29/08/2008. (IV) CIT VS. HEERA LAL CHAGAN LAL 257 ITR 281 (RAJ. ). (V) KANHAIA LAL JANGID VS. ACIT 217 CTR 354 (RAJ.). (VI) LABHCHAND BOHRA VS. ITO 219 CTR 571 (RAJ.). THEREFORE, HE PRAYED TO DELETE THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 14 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE 26 CASH CREDITOR S, WHO WERE APPEARED BEFORE THE ASSESSING OFFICER AND THEIR STA TEMENTS HAD BEEN RECORDED BY HIM DURING THE ASSESSMENT PROCEEDINGS, WHO HAD ACCEPTED THE LOAN AND EXPLAINED THE SOURCE OF INCOME. THE LOA NS WERE REPAID DURING THE YEAR ITSELF. THE APPELLANT FILED SOME OF THE EVIDENCES IN THE CASE OF REMAINING 23 CASH CREDITORS BEFORE THE ASSE SSING OFFICER FOR WHICH HE HAS NOT ISSUED NOTICE U/S 131 OF THE ACT AS HELD BY THE LEARNED CIT(A). THE ONUS IS ON THE ASSESSEE TO PROVE THE CASH CREDITORS AS GENUINE, IDENTITY OF THE PERSONS AND CREDITWORTHI NESS OF THE CREDITORS. HE ONLY FILED SOME OF THE EVIDENCES LIKE COPY OF RETURN, COPY OF PASSBOOK IN CASE OF 10 PERSONS ONLY, NOT IN ALL CASES OF 23 PERSONS, THEREFORE, WE SET ASIDE THIS ISSUE TO THE ASSESSING OFFICER EXCEPT CONFIRMED BY THE LEARNED CIT(A) TO VERIFY THE CREDIT WORTHINESS OF THESE PERSONS, GENUINENESS OF TRANSACTIONS AND IDENTITY O F THE PERSONS AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD. THE LEARNED ASSESSING OFFICER WILL ALSO VERIFY WHETHER THESE AMOUNTS HAVE B EEN REPAID OR NOT. ACCORDINGLY, THE CASH CREDITORS TO THE EXTENT OF RS . 3,67,500/- IS SET ASIDE TO THE ASSESSING OFFICER. ACCORDINGLY, THIS G ROUND OF APPEAL IS PARTLY ALLOWED. ITA 91/JP/2012 ITO VS. DAMODAR LAL GUPTA 15 17. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 11 TH NOVEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. THE ITO, WARD 3, SAWAI MADHOPUR. 2. SHRI DAMODAR LAL GUPTA, HINDAUN CITY. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 91/JP/2012) BY ORDER, AR ITAT JAIPUR.