THE ITO, 2(2), V. SHRI RITESH KUMAR AJMERA,

ITA 93/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1435 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2009
• Assessment Year: misc
• Appeal Filed On: 13-02-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources
• Section: 44AD; 68

Judgement Text

PAGE 1 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO. 93/IND/2006 A.Y. : 2001-02 INCOME-TAX OFFICER, SHRI RITESH KUMAR AJMERA, 2(2) VS 29-30, PALIWAL NAGAR, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN, SR. DR RESPONDENT BY : SHRI ASHISH GOYAL, C.A. DATE OF HEARING : 17/11/2009 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-I, INDORE, DATED 02.12.2005, FOR THE ASSESSM ENT YEAR 2001-02. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUNDS RAISED BY THE REVENUE, IN THIS APPEAL, REA D AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF INCOME FROM CONSTRUCTION BUSINESS RS. 1,00,000/-. PAGE 2 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTION RS. 7, 00,000/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT RS. 10,40,000/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES RS. 6,30,000/-. 5. THE ORDER OF CIT(A) IS THUS ERRONEOUS IN LAW AS WEL L AS ON THE FACTS OF THE CASE. 6. THUS IT IS PRAYED THAT THE ORDER OF CIT(A) BE SET-A SIDE AND THE ORDER OF A.O. BE RESTORED. 4. IN RESPECT OF GROUND NO.1, THE FACTS , IN BRIEF, AR E THAT THE A.O. FOUND THAT THE ASSESSEE HAD MADE AN INVESTMENT OF R S. 6,76,440/- IN A CONCERN, NAMED AND STYLED AS M/S. NILESH CONSTRUCTI ON AND ON THIS BASIS, HE REQUIRED THE ASSESSEE TO EXPLAIN THE UTILIZATION OF THIS SUM IN THE ASSETS OF THE FIRM. THE ASSESSEE DID NOT SUBMIT ANY DETAIL S, WHICH RESULTED INTO AN ESTIMATION OF INCOME OF RS. 1 LAKH BY THE ASSESS ING OFFICER, AS THE A.O. FORMED A BELIEF THAT NO INCOME HAD BEEN OFFERE D BY THE ASSESSEE WHICH WERE EARNED THROUGH M/S. NILESH CONSTRUCTION. IN APPEAL, THE PAGE 3 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS DOING A CO NSTRUCTION BUSINESS THROUGH THIS FIRM AND INCOME AMOUNTING TO RS. 1,76, 442/- HAD BEEN OFFERED @ 10.51 % U/S 44AD. THE ASSESSEE ALSO SUBMI TTED THAT DETAILS OF CONTRACT WORK UNDERTAKEN BY THE ASSESSEE IN THIS FI RM, CONTRACT AGREEMENT AND THE AFFIDAVIT TO SUPPORT ITS CLAIM. THE LD. CIT (A) FOUND THAT THE ASSESSEE HAD DISCLOSED CONTRACT RECEIPTS AT RS. 15, 80,000/- IN RESPECT OF WORK DONE FOR ONE SHRI MEHBOOB KHAN. THE LD. CIT(A) ALSO REQUIRED THE A.O. TO VERIFY THESE FACTS BY CONDUCTING NECESSARY ENQUIRIES AND SUBMIT A REPORT. THE A.O., IN THE REMAND REPORT, SUBMITTED T HAT SHRI MEHBOOB KHAN WAS NOT RESIDING AT THE GIVEN ADDRESS AS REPOR TED BY THE INSPECTOR AND THE ENTRIES IN THE BANK STATEMENT COULD NOT BE CORRELATED WITH THE AMOUNT CLAIMED TO HAVE RECEIVED FROM SHRI MEHBOOB K HAN. THE LD. CIT(A), HOWEVER, FOUND THAT AT THE GIVEN ADDRESS, S ON OF SHRI MEHBOOB KHAN WAS FOUND. HE ALSO HELD THAT THE A.OS FINDING S WERE CONTRADICTORY AS ON ONE HAND, THE A.O. HAD HELD THAT THE ASSESSEE WAS HAVING CONSTRUCTION/CONTRACT BUSINESS AND, ON THE OTHER HA ND, HE DID NOT ACCEPT THE CONTRACT AGREEMENT WITH SHRI MEHBOOB KHAN, PART ICULARLY WHEN HE FAILED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE SUM OF RS. 15,80,000/- HAD BEEN RECEIVED FROM ANY OTHER PERSON . IT WAS ALSO CONTENDED THAT ONCE PROVISIONS OF SECTION 44AD WERE APPLICABLE, IT WAS NOT NECESSARY FOR THE ASSESSEE TO MAINTAIN THE BOOK S OF ACCOUNT, HENCE, NO PAGE 4 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESS EE ON ACCOUNT OF NON- MAINTENANCE OF BOOKS OF ACCOUNT. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 6. THE LEARNED COUNSEL, ON THE OTHER HAND, CONTENDED T HAT INSPECTORS REPORT WAS NOT CONFRONTED TO THE ASSESS EE NOR ANY CROSS EXAMINATION OF INSPECTOR WAS ALLOWED. HENCE, HIS RE PORT COULD NOT BE USED AGAINST THE ASSESSEE AND, IN ANY CASE, SHRI ME HBOOB KHANS SON WAS FOUND AT THE GIVEN ADDRESS, WHICH PROVED THE CREDEN TIALS OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO CONTENDED THAT THE A.O. DID NOT EXAMINE THE WITNESS TO THE AGREEMENT BETWEEN THE A SSESSEE AND SHRI MEHBOOB KHAN, WHICH COULD HAVE BROUGHT CORRECT FACT S ON RECORD. HENCE, THE ACTION OF THE A.O. WAS HALF HEARTED. HE FURTHER PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT THE A.O. HAS ACCEPTED THE FACT THA T THE ASSESSEE WAS ENGAGED IN THE CONSTRUCTION BUSINESS. IT IS FUR THER NOTED THAT THE A.O. HAS MADE THIS ADDITION SIMPLY IN VIEW OF THE INVEST MENT MADE BY THE ASSESSEE IN THE CONSTRUCTION FIRM. ON THE OTHER HAN D, THE ASSESSEE HAS PAGE 5 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE SUBMITTED COPY OF PROFIT AND LOSS ACCOUNT, BANK STA TEMENT, AGREEMENT BETWEEN HIM AND THE SHRI MEHBOOB KHAN FROM WHOM TH E RECEIPTS OF RS. 15.80 LAKHS HAVE BEEN SHOWN IN THE PROFIT AND LOSS ACCOUNT AND A REASONABLE PROFIT HAS ALSO BEEN SHOWN. THUS, ON PER USAL OF THE SAID EVIDENCES, WE ARE INCLINED TO AGREE WITH THE FINDIN GS OF THE LD. CIT(A), PARTICULARLY, WHEN IT IS A CASE GOVERNED BY THE PR OVISIONS OF SECTION 44AD OF THE ACT. THUS, THIS GROUND OF THE REVENUE I S DISMISSED. 9. AS REGARDS THE ISSUE RAISED IN GROUND NO.2, FACTS, IN BRIEF, ARE THAT THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAD CONSTRUCTED A HOUSE ON PLOT NO.29-30, WHICH HAD BEEN ACQUIRED BY THE AS SESSEE ON 29.3.2000. THE A.O. DEPUTED INSPECTOR, WHO SUBMITTED A REPORT ON 5.3.2004 REGARDING CONSTRUCTED AREA WHICH WAS ABOUT 2500 SQ. FT. OF GROUND FLOOR AND FIRST FLOOR AND COST OF CONSTRUCTION WAS ESTIMA TED BY THE I.T.I. AT RS. 400/- PER SQ.FT. ACCORDINGLY, THE A.O. WORKED OUT T HE COST OF INVESTMENT IN SUCH HOUSE AT RS. 10 LAKHS. THE A.O. FURTHER HEL D THAT THIS PROPERTY HAD BEEN SHOWN AS SELF-OCCUPIED IN THE NEXT YEAR AND, T HEREFORE, SOME CONSTRUCTION MUST HAVE BEEN MADE IN ASSESSMENT YEAR 2002-03. ACCORDINGLY, HE ADDED RS. 7 LAKHS AS UNDISCLOSED IN VESTMENT IN THE CONSTRUCTION OF HOUSE IN THE YEAR UNDER CONSIDERATI ON AND HELD THAT BALANCE OF RS. 3 LAKHS WAS TO BE ADDED IN THE ASSES SMENT YEAR 2002-03. PAGE 6 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE 10. THE ASSESSEE, IN APPEAL, BEFORE THE LD. CIT(A), SUB MITTED THAT THE REPORT OF THE INCOME TAX INSPECTOR DID NOT INDI CATE THE PERIOD OF CONSTRUCTION AND THE A.O. SIMPLY RELIED ON HIS REPO RT WHO WAS A NON- TECHNICAL PERSON. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT 800 SQ.FT. AREA WAS ALREADY THERE, WHEN THE ASSESSE E HAD PURCHASED THIS PLOT. THE LD. CIT(A) ALSO CALLED REMAND REPORT FROM THE A.O., WHEREIN IT WAS MENTIONED THAT IN THE SALE DEED ONLY SALE OF PL OT WAS MENTIONED AND THE FACT OF CONSTRUCTED AREA OF 800 SQ.FT. WAS HAND -WRITTEN, HENCE, NOT RELIABLE. THE ASSESSEE, HOWEVER, FURNISHED THE CERT IFICATE OF REGISTRAR, WHICH PROVED THAT SUCH HAND WRITTEN LINE WAS GENUIN E. THE LD. CIT(A) HELD THAT IF THE A.O. WAS NOT SATISFIED WITH THE EX PLANATIONS OF THE ASSESSEE FOR WANT OF NECESSARY DETAILS, THEN PROPER COURSE OF ACTION WAS TO REFER THE MATTER TO DVO INSTEAD OF RELYING ON THE R EPORT OF INCOME TAX INSPECTOR, WHO WAS NOT COMPETENT TO EVALUATE THE CO ST OF CONSTRUCTION. HE FURTHER HELD THAT THE A.O. DID NOT GIVE ANY BASIS F OR APPLYING A RATE OF RS. 400/- PER SQ.FT. TO ARRIVE AT THE VALUE OF CONSTRU CTION. ACCORDINGLY, HE DELETED THE ADDITION. AGGRIEVED BY THIS, THE REVENU E IS IN APPEAL BEFORE US. 11. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND CONTENDED THAT THE LD. CIT(A)S ORDER WAS VAGUE, HE NCE, THE ORDER OF THE A.O. WAS LIABLE TO BE RESTORED. PAGE 7 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE 12. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE HAD PAID PROPERTY TAX I N ASSESSMENT YEAR 2001-02, WHICH PROVED THE FACT OF EXISTENCE OF 800 SQ.FT. CONSTRUCTION. HE FURTHER CONTENDED THAT IN ASSESSMENT YEARS 2003-04 AND 2004-05, THE ASSESSEE CONSTRUCTED THE ADDITIONAL AREA AND INVEST MENT IN SUCH CONSTRUCTION HAD BEEN DISCLOSED IN THOSE YEARS AND NO ADDITION WAS MADE, HENCE, THERE WAS NO REASON TO MAKE ANY ADDITION IN THIS YEAR. HE FURTHER PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT( A). 13. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 14. IT IS NOTED THAT THE A.O. HAS BASED INSPECTORS REP ORT TO MEET THE IMPUGNED ADDITION, WHO IS NOT A TECHNICALLY QUALIFI ED PERSON TO GIVE SUCH REPORT AND, THEREFORE, MERELY FOR THIS REASON THE A CTION OF THE A.O. IS NOT JUSTIFIED. WE FURTHER FIND IN ASSESSMENT YEAR 2003- 04 AND 2004-05, THE ASSESSEE HAS DISCLOSED THE INVESTMENT MADE IN THE C ONSTRUCTION WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. HENCE, THE SAME AD DITION CAN NOT BE MADE IN THIS YEAR. IT IS ALSO PERTINENT TO MENTION HERE THAT INSPECTORS REPORT HAS BEEN SOUGHT ON 3.3.2004, WHEN THE TOTAL CONSTRUCTION WAS ALREADY IN EXISTENCE AND THE INCOME TAX INSPECTOR D ID NOT MENTION THE PERIOD OF CONSTRUCTION IN HIS REPORT. ACCORDINGLY, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. PAGE 8 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE 15. FACTS RELATING TO GROUND NO.3 ARE THAT THE A.O. FOU ND THAT THE ASSESSEE HAD DECLARED UNSECURED LOAN OF RS. 10,40,0 00/- FROM FOLLOWING PERSONS :- 1. SHALIMAR TOWNSHIP RS. 1,50,000/- 2. SHRI SUNIL JAIN RS. 4,90,000/- 3. SHRI ASHOK JAIN RS. 4,00,000/- RS.10,40,000/- 16. THE A.O. REQUIRED TO SUBMIT THE CONFIRMATION OF THE SE PERSONS, WHICH COULD NOT BE SUBMITTED. HENCE, THE A.O. ADDED THE TOTAL SUM AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME-TAX AC T, 1961. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A), WHEREIN CONFIRMATORY LETTERS AND OTHER EXPLANATIONS WERE GI VEN. THE LD. CIT(A) CALLED THE REMAND REPORT FROM THE A.O. IN RESPECT O F LOAN TAKEN FROM SUNIL JAIN, IT WAS NOTED THAT LOAN HAD ACTUALLY BEE N ADVANCED BY M/S. ARIHANT FINCAP LIMITED AND NOT BY SUNIL JAIN. THE S AID SUNIL JAIN ALSO DID NOT APPEAR. HENCE, THE A.O. REPORTED THAT IDENTITY AND CREDITWORTHINESS OF SUCH PARTY COULD NOT BE ESTABLISHED. IN RESPECT OF LOAN FROM SHALIMAR TOWNSHIP, NOBODY ATTENDED IN RESPONSE TO SUMMON U/S 131, HENCE, THE A.O. STATED THAT IDENTITY AND CREDITWORTHINESS OF T HIS CREDITOR COULD ALSO NOT BE ESTABLISHED. AS REGARDS THE LOAN TAKEN FROM SHRI ASHOK JAIN, HE APPEARED BEFORE THE A.O. IN THE REMAND PROCEEDINGS AND CONFIRMED THE PAGE 9 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUMA R AJMERA,INDORE FACT AND ALSO AGREED TO SUBMIT NECESSARY EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER WHICH WERE NOT FURNISHED. THE A.O . IN THE REMAND REPORT SUBMITTED THAT SUCH PERSON WAS NOT AN INCOME TAX PAYEE AND HE WAS HAVING ONLY A MARGINAL AGRICULTURE INCOME. HENC E, HE WAS NOT IN A CAPACITY TO GRANT SUCH LOAN AND THAT TOO INTEREST F REE. IF THE A.O. ALSO HELD THAT THE IMPUGNED SUM HAD BEEN GIVEN BY HIM TO THE ASSESSEE OUT OF THE CASH DEPOSITED MADE IN THE ACCOUNT 15 DAYS BEFORE T HE DATE OF LOAN. ACCORDINGLY, THE A.O. AGAIN DOUBTED THE GENUINENESS OF THIS LOAN TRANSACTION. 17. THE ASSESSEE, IN COUNTER REPLY, SUBMITTED THAT IN T HE CASE OF SHRI SUNIL JAIN, HE WAS DIRECTOR OF ARIHANT FINCAP LIMIT ED. HENCE, MERELY BECAUSE NAME WAS WRONGLY MENTIONED IN THE ASSESSEE S BOOKS. THE SAID LOAN WOULD NOT BECOME GENUINE, PARTICULARLY WHEN TH ERE COULD NOT BE ANY DISPUTE REGARDING THE FINANCIAL CAPACITY OF M/S. AR IHANT FINCAP LIMITED. 18. AS REGARDS, M/S. SHALIMAR TOWNSHIPS, THE ASSESSEE S UBMITTED THAT THE CREDITOR HAD ALREADY CONFIRMED THE TRANSAC TION AND THE IDENTITY AND CAPACITY OF SUCH CREDITOR WERE NOT IN DISPUTE, HENCE, MERELY BECAUSE, HE DID NOT APPEAR IN PERSON BEFORE THE A.O., THE TR ANSACTION COULD NOT BE TREATED AS BOGUS. 19. AS REGARDS TO THE TRANSACTIONS WITH ASHOK JAIN, THE ASSESSEE SUBMITTED THAT THE LAND HOLDINGS WAS NOT IN DISPUTE AND HIS INCOME WAS PAGE 10 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE RS. 1.20 LAKHS PER YEAR. HE HAD ALSO CONFIRMED THE TRANSACTIONS, WHICH WAS THROUGH BANK ACCOUNT, HENCE, MERELY BECAUSE SUC H CREDITOR WAS NOT HAVING PERMANENT ACCOUNT NUMBER, THE TRANSACTION WO ULD NOT BECOME INGENUINE. THE ASSESSEE ALSO RELIED ON VARIOUS JUDI CIAL DECISIONS. 20. THE LD. CIT(A) HELD THAT IN THE PRESENT CASE, THE A SSESSEE HAD PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF THE TRANSACTION. HENCE, THE ASSESSEE HAD DISCHARGED HIS ONUS AND, TH EREFORE, IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THE MONEY INVOLVED IN SUCH LOAN TRANSACTION WAS ACTUALLY MONEY BELONGING TO THE ASS ESSEE, NO ADDITION COULD BE MADE. HE ALSO HELD THAT THE PERSONAL PRESE NCE COULD BE MANDATORY ONLY WHEN THERE WAS NOT SUFFICIENT MATERI AL TO PROVE THE GENUINENESS AND IT WAS NOT SO, THEN, MERELY BECAUSE OF NON APPEARANCE OF A PERSON, ADDITION COULD NOT BE MADE. HE ALSO RELIE D ON THE DECISION OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF METACHEM IND USTRIES, AS REPORTED IN 245 ITR 160 FOR THE PROPOSITION THAT THE ASSESSE E COULD NOT BE MANDATORILY REQUIRED TO EXPLAIN THE SOURCE OF SOURC E. HE ALSO PLACED RELIANCE ON THE VARIOUS OTHER JUDICIAL DECISIONS. H E FURTHER HELD THAT IN THE REMAND PROCEEDINGS, THE A.O. HAD MISDIRECTED HIMSEL F DIRECTED INSTEAD OF EXAMINING AND VERIFYING THE FRESH EVIDENCE, HENCE, NOT MUCH WEIGHTAGE COULD BE GIVEN TO HIS OBSERVATIONS IN THE REMAND RE PORT. 21. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. PAGE 11 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE 22. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT IN THE CASE OF LOAN TRANSACTION OF SHRI ASHOK JAIN, CAPACITY DI D NOT EXIST AND IN THE CASE OF SHALIMAR TOWNSHIP, THE PARTY DID NOT APPEAR . HENCE, THE ORDER OF THE A.O. WAS LIABLE TO BE RESTORED. THE LEARNED COU NSEL FOR THE ASSESSEE MAINLY REITERATED THE SUBMISSION MADE BEFORE LD. CI T(A). HE ALSO PLACED STRONG RELIANCE ON THE DECISION OF HON'BLE M.P. HIG H COURT IN THE CASE OF METACHEM INDUSTRIES (SUPRA). 23. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 24. IT IS NOTED THAT IN CASE OF LOAN TRANSACTION PERTA INING TO SHRI SUNIL JAIN AND SHALIMAR TOWNSHIP, WE FIND THAT NECE SSARY INGREDIENTS OF SECTION 68 I.E. IDENTITY, CREDITWORTHINESS AND GENU INENESS HAVE BEEN ESTABLISHED IN A SUBSTANTIAL MANNER. HENCE, THE ORD ER OF THE LD. CIT(A) IS CORRECT IN LAW TO THAT EXTENT. AS REGARDS THE LOAN TAKEN FROM SHRI ASHOK JAIN, WE FIND THAT A NEW BANK ACCOUNT HAS BEEN OPEN ED, WHEREIN CASH OF RS. 4 LAKHS HAS BEEN DEPOSITED 15 DAYS BEFORE THE D ATE OF TRANSACTION OF LOAN. IT IS ALSO NOTED THAT THE SAID PERSON IS AN A GRICULTURIST HAVING A VERY MEAGER INCOME AND HAVE NEVER BEEN ASSESSED TO TAX. THOUGH SUCH PERSON HAS CONFIRMED THE TRANSACTION OF LOAN, HOWEVER, INS PITE OF THE EVIDENCES ON RECORD, THE PRINCIPLES OF HUMAN CONDUCT HAS TO B E APPLIED AS THE PERSON OF HIS CAPACITY CANNOT GIVE THE IMPUGNED LOAN THAT TOO WITHOUT INTEREST. PAGE 12 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE HENCE, IN OUR VIEW, THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN REGARD TO THIS TRANSACTION. BEFORE PARTING, WE MAY ALSO ADD T HAT IN THE CASE OF CIT VS. ORISSA CORPORATION PRIVATE LIMITED, AS REPORTED IN 25 TAXMAN 80 ( S.C.), THE HON'BLE SUPREME COURT CONFIRMED THE ACTI ON OF HIGH COURT FOR THE REASON THAT THE DEPARTMENT IN THAT CASE DID NOT EXAMINE THE SOURCE OF INCOME OF SAID ALLEGED CREDITOR TO FIND OUT HIS CRE DITWORTHINESS AND IN THE PRESENT CASE, THE A.O. HAS DONE THIS EXERCISE IN TH E COURSE OF REMAND PROCEEDINGS, HENCE, THE RATIO OF THIS DECISION IS N OT APPLICABLE. IT IS ALSO NOTED THAT IN THAT CASE THE CREDITORS WERE INCOME T AX PAYEES, WHEREAS SHRI ASHOK JAIN IS NOT A TAX PAYEE. THE ASSESSEE HAS ALS O PLACED RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF METACHEM INDUSTRIES (SUPRA), WHICH, IN OUR HUMBLE O PINION, IS ALSO NOT APPLICABLE AS IN THAT CASE, THE PARTNER OF THE FIRM HAD MADE INVESTMENT, IN HIS CAPITAL ACCOUNT AND HAD OWNED UP THAT ENTRY AT THE INSTANCE OF THE FIRM AND IN THAT SITUATION, THE HON'BLE COURT HELD THAT THE MOMENT FIRM GAVE SATISFACTORY EXPLANATIONS AND PRODUCED THE PERSON, WHO HAD DEPOSITED THE AMOUNT, THEN THE BURDEN OF FIRM WAS DISCHARGED AND, THEREFORE, SUCH CREDIT ENTRIES COULD NOT BE TREATED AS INCOME OF TH E FIRM FOR THE PURPOSES OF INCOME-TAX ACT, 1961, WHEREAS IN THE PRESENT CAS E IS NOT A TRANSACTION BETWEEN THE FIRM AND THE PARTNER AND ASSESSEE HAS ALSO FAILED TO GIVE SATISFACTORY EXPLANATIONS REGARDING CREDITWORTHINES S OF THE LENDER AS PAGE 13 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE POINTED OUT EARLIER. FURTHER, IT IS A SETTLED JUDIC IAL PRINCIPLE IN VIEW OF THE SEVERAL DECISIONS PRONOUNCED BY THE SUPREME COURT THAT ALL THE INGREDIENTS OF SECTION 68 MUST BE SATISFIED TO EXCL UDE THE OPERATIONALITY OF THIS SECTION, WHICH, AS STATED EARLIER, HAS NOT BEEN DONE IN THE CASE OF LOAN TRANSACTION RELATING TO SHRI ASHOK JAIN. ACCOR DINGLY, THIS GROUND OF THE REVENUE IS PARTLY ALLOWED. 25. AS REGARDS TO ISSUE RAISED IN GROUND NO.4, THE FACT S, IN BRIEF, ARE THAT THE A.O. FOUND THAT TOTAL CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE AMOUNTED TO RS. 19,70,000/-, WHICH REMAINED UN-SUBS TANTIATED. HENCE, AFTER GIVING CREDIT TO OTHER ADDITIONS OF RS. 13,40 ,000/-, HE MADE AN ADDITION OF RS. 6,30,000/-. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN T HE ASSESSEE SUBMITTED THAT IN VIEW OF APPLICATIONS OF SECTION 44AD, THE A SSESSEE WAS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT AND INSPI TE OF THAT FACT, HE FURNISHED THE DETAILS OF SOURCE OF EACH AND EVERY E NTRY WITH SUPPORTING DOCUMENTS. THE LD. CIT(A) CALLED THE REMAND REPORT FROM THE A.O., WHEREIN THE A.O. SUBMITTED THAT IN VIEW OF THE LACK OF COOPERATION BY THE ASSESSEE IN THE COURSE OF REMAND PROCEEDINGS ALSO, THE ADDITION MADE EARLIER WAS LIABLE TO BE SUSTAINED. THE ASSESSEE CO UNTERED THE FINDINGS A.O. BY STATING THAT DETAILS OF EACH AND EVERY ENTR Y HAD BEEN GIVEN WITH SUITABLE EXPLANATIONS. HOWEVER, THE A.O. DID NOT BO THER TO EXERT TO VERIFY PAGE 14 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE THE SAME AND, THEREFORE, THE A.OS ACTION WAS MOST CARELESS AND ARBITRARY. HENCE, THE ADDITION WAS LIABLE TO BE DELETED. THE L D. CIT(A) FOUND THAT IN THE ORIGINAL ASSESSMENT, THE ADDITION WAS MAINTA INED IN A ROUTINE MANNER. SIMILARLY, IN THE COURSE OF REMAND PROCEEDI NGS ALSO, THE A.O. DID NOT VERIFY THE DETAILS SUBMITTED BY THE ASSESSE E. HENCE, THE VERY PURPOSE OF CALLING FOR THE REMAND REPORT WAS DEFEAT ED. HE, THEREAFTER, FOUND THAT DEPOSITS MADE IN THE BANK WERE SUITABLY EXPLAINED. HENCE, HE DELETED THE ADDITION. 26. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 27. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED STRONG R ELIANCE ON THE ORDER OF THE A.O. 28. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 29. IT IS NOTED THAT, IN FACT, THE ASSESSEE APPEARED BE FORE THE A.O. ON 11.3.2005 AND HIS STATEMENT WAS ALSO RECORDED, COPY OF WHICH IS ENCLOSED AT PAPER BOOK AT PAGE 25 TO 31 OF THE PAPER BOOK. H ENCE, THE A.OS OBSERVATIONS IN THE REMAND REPORT APPEAR TO BE FACT UALLY INCORRECT. THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE VARIOU S DEPOSITS AGGREGATING TO RS. 6,30,000/-, WHICH ARE EITHER BY WAY OF TRANS FER OR OUT OF CASH WITHDRAWAL IMMEDIATELY PRIOR TO REDEPOSIT THEREOF. HENCE, WE HOLD THAT PAGE 15 OF 15 - I.T.A.NO. 93/IND/2006 RITESH KUM AR AJMERA,INDORE THERE IS NO MERIT IN THIS GROUND OF THE REVENUE. AC CORDINGLY, THE SAME IS DISMISSED. 30. IN THE RESULT, THE APPEAL FILED BY THE REVENUE PART LY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH NOVEMBER, 2009. CPU* 1720D24