Shri Sunil M. Shah, Ahmedabad V. The ACIT, Circle-7, Baroda

ITA 936/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5133 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: SHRI ANIL R SHAH
• Keywords: Unexplained cash credit; Question of law
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ITA NO. 936/AHD/2014 ( / ASSESSMENT YEAR : 2010-11 ) SHRI SUNIL M. SHAH A-1, KRISHNA DARSHAN DUPLEX MANJALPUR, BARODA / VS. THE ACIT CIRCLE-7 BARODA ./ ./ PAN/GIR NO. : AJMPS 8864 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SHRI ANIL R. SHAH AND MS. KINJAL SHAH, ARS / RESPONDENT BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING 21/01/2019 !'# / DATE OF PRONOUNCEMENT 01/02/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)VI, BARODA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/VI-251 /2012-13 DATED 03/02/2014 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 15/02/2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-1 1. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN CO NFIRMING THE APPLICABILITY OF SEC.68 OF THE ACT THEREBY CONFIRMI NG ADDITION OF RS.8,20,000/- MADE BY THE ASSESSING OFFICER. ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 2 - IT IS SUBMITTED THAT YOUR APPELLANT HAD RECEIVED AM OUNT BY CHEQUE FROM FOLLOWING PERSONS. (A) MRS. LAXMI R. RS.8,00,000/- (OUT OF RS.17,00,0 00/-) (B) ALOK CHAUDHRY RS. 20,000/- YOUR APPELLANT SUBMITS THAT THE ABOVE DEPOSITORS AR E KNOWN PERSONS, THEIR IDENTITY HAS BEEN ESTABLISHED AND TH EIR CREDITWORTHINESS IS PROVED BEYOND DOUBT AND IT BEIN G A GENUINE TRANSACTION THE AMOUNT IS NOT LIABLE TO BE TREATED AS CASH CREDIT U/S.68 OF THE ACT. 2. YOUR APPELLANT SUBMITS THAT SOURCE OF CREDIT HAV E BEEN PROVED IN ABOVE CASES AND IT WAS NOT LIABILITY OF THE APPE LLANT TO PROVE SOURCE OF SOURCE AS HELD BY VARIOUS APPELLATE AUT HORITIES. YOUR APPELLANT HAVE PROVED SOURCE OF AMOUNTS RECEIV ED FROM CREDITORS AND THEREFORE THE SAID AMOUNT OF RS.8,20, 000/- IS NOT LIABLE TO BE ADDED TO THE TOTAL INCOME. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAD BEEN INSTRUCTED NOT TO PRESS THE ADDITION MADE U/S 68 OF THE ACT FOR THE LOAN OF RS. 20,000/- RECEIVED FROM SHRI ALOK CHAUDH ARY. THEREFORE, WE DISMISS THE GROUND OF APPEAL OF THE ASSESSEE RELATI NG TO THE ADDITION FOR RS. 20,000/- U/S 68 OF THE ACT ON ACCOUNT OF LOAN R ECEIVED FROM SHRI ALOK CHAUDHARY. 4. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IS THA T THE LD.CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER BY SUSTAINING THE ADDITION OF RS. 8 LAKHS U/S 68 OF THE ACT ON ACCOUN T OF LOAN RECEIVED FROM MRS. LAXMI R. ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 3 - 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVING HIS INCOME UNDER THE HEAD SALARY AND HOUS E PROPERTY. THE ASSESSEE DURING THE YEAR AMONG OTHER PARTIES HAS RE CEIVED A LOAN OF RS.17 LAKHS FROM SMT. LAXMI R. THE ASSESSEE OUT OF SUCH LOAN OF RS. 17 LAKHS CLAIMED TO HAVE RECEIVED RS. 9 LAKHS FROM SMT. LAXM I R. AND THE BALANCE AMOUNT OF RS.8 LAKHS FROM HER HUSBAND NAMELY SHRI V ENKETARAMAN. THE ASSESSEE IN SUPPORT OF HIS CLAIM FOR THE LOAN RECEI VED FROM SHRI VENKETARAMAN HAS FILED THE COPY OF THE BANK STATEME NT, WHEREIN TWO CHEQUES OF RS.4 LAKHS EACH DATED 22.05.2009 WAS REF LECTED, I.E., THE PAYMENT TO THE ASSESSEE. 5.1. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF SOURCE AND NATURE OF RECEI PTS FROM SHRI VENKETARAMAN. THEREFORE, THE ASSESSING OFFICER TREA TED THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SUM OF RS. 8 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO TH E LD.CIT(A). THE ASSESSEE BEFORE THE LD.CIT(A) SUBMITTED THAT HE HAD FILED THE COPY OF CONFIRMATION, BANK STATEMENT AND FORM 26AS OF SHRI VEKETARAMAN. THEREFORE, THE ASSESSEE CLAIMED THAT THE IDENTITY A ND GENUINENESS OF THE TRANSACTIONS COULD NOT BE DOUBTED. 6.1. THE ASSESSEE ALSO SUBMITTED THAT THE LEDGER AC COUNT OF SMT. LAXMI R. WAS WRONGLY CREDITED IN PLACE OF SHRI VENKETARAM N IN HIS BOOKS OF ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 4 - ACCOUNTS INTENTIONALLY. AS SUCH, THE LOAN WAS PROV IDED BY SHRI VENKETARAMAN ON BEHALF OF HIS WIFE, SMT.LAXMI R. 6.2. HOWEVER, THE LD.CIT(A) OBSERVED CERTAIN FACTS AS DETAILED UNDER: (1) SHRI VENKETARAMAN HAS NOT FURNISHED THE COPY OF BANK STATEMENT SINCE THE BEGINNING OF THE FINANCIAL YEAR . THEREFORE, IT IS DIFFICULT TO ASCERTAIN WHETHER SHR I VENKETARAMAN PROVIDED SUCH LOAN OUT OF HIS OPENING BALANCE. ACCORDINGLY, THE LD.CIT(A) DOUBTED THE CREDITWORTHINESS OF SHRI VENKETARAMAN. (2) THERE WAS NO BALANCE-SHEET, CAPITAL ACCOUNT OF SHRI VENKETARAMAN FILED BY THE ASSESSEE. THEREFORE, AS PER THE LD.CIT(A) THE CREDITWORTHINESS OF THE LOAN CREDITOR WAS IN DOUBT. (3) THE LOAN WAS RECEIVED FROM SHRI VENKETARAMAN, B UT IT WAS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS T HE LOAN RECEIVED FROM SMT.LAXMI R. 6.3. IN VIEW OF THE ABOVE, THE LD. CIT(A) DISREGARD ED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER. 7. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. AR BEFORE US FILED A PAPER-BOOK RUNNING FROM PAGE NOS.1 TO 37. THE LD. AR BEFORE US REITERATED THE SUBMISS IONS AS MADE BEFORE THE LOWER AUTHORITIES. THE LD. AR ALSO DREW OUR AT TENTION ON VARIOUS DETAILS, SUCH AS A COPY OF ACCOUNT CONFIRMATION, FO RM 26AS, BANK ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 5 - STATEMENT AND INCOME-TAX RETURN WHICH ARE PLACED ON PAGES 25 TO 37 OF THE PAPER-BOOK. 8.1. THE LD.AR IN SUPPORT OF ASSESSEES CLAIM ALSO FILED THE AFFIDAVIT TO JUSTIFY THAT HE HAS RECEIVED THE LOAN OF RS.8 LA KHS FROM SHRI VENKETARAMAN. THE COPY OF THE AFFIDAVIT IS ALSO PL ACED ON RECORD. 9. ON THE OTHER HAND, THE LD.DR VEHEMENTLY SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE LD. REPRESENTATIVES APPEARING FOR THE RESPECTIVE PARTIES. WE HAVE PERUSED THE RELEVANT M ATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ADDITION OF RS. 8 LAKHS WERE MADE TO THE TOTAL INCOME OF THE ASSESSEE BY THE AUTHORITIES BELOW BY OBSERVING THAT THE CONDITIONS STIPULATED U /S 68 OF THE ACT WERE NOT COMPLIED. 10.1. ON PERUSAL OF THE ORDERS OF THE AUTHORITIES B ELOW, WE NOTE THAT THE ASSESSEE HAS FURNISHED THE BANK STATEMENT, FORM 26 AS AND CONFIRMATION, THE COPY OF INCOME-TAX RETURN BUT THE AUTHORITIES B ELOW HAVE NOT POINTED OUT ANY DEFECT IN SUCH DETAIL FILED BY THE ASSESSEE . 10.2. IN CASE, THE DETAILS AS DISCUSSED ABOVE WERE NOT BELIEVABLE, THEN THE AUTHORITIES BELOW WERE EMPOWERED TO VERIFY THE SAME TO THE CONCERNED PARTY, BUT NONE OF THE AUTHORITY BELOW HA S EXERCISED POWER GIVEN UNDER SECTION 131/133(6) OF THE ACT. ONCE TH E ASSESSEE HAS ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 6 - SUBMITTED BASIC DETAILS OF THE PARTY FROM WHOM HE H AS TAKEN A SECURED LOAN, THEN THE ONUS IMPOSED ON THE ASSESSEE UNDER S ECTION 68 OF THE ACT WAS DISCHARGED. THEREFORE, WITHOUT VERIFYING THE N ECESSARY DETAILS FILED BY THE ASSESSEE, THERE CANNOT BE ANY ADDITION U/S 6 8 OF THE ACT. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGM ENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MURLIDHAR LAHORIM AL VS. CIT REPORTED IN 280 ITR 512 (GUJ.) WHEREIN IT WAS HELD AS UNDER: 11. AS SECTION 68 OF THE ACT DENOTES, ONCE THERE IS A CREDIT IN THE BOOKS MAINTAINED BY THE ASSESSEE, THE PRIMARY ONUS IS ON THE ASSESSEE, NAMELY, TO OFFER AN EXPLANATION AS TO THE NATURE AND SOURCE OF THE CREDIT. WHAT WOULD BE THE DEGREE OF THE ONUS AND WHAT SHOULD BE THE EXTEN T OF EXPLANATION IN SUCH CIRCUMSTANCES, IS SUCCINCTLY LAID DOWN BY THIS COUR T IN THE DECISION IN CASE OF CIT V. PRAGATI CO-OPERATIVE BANK LTD. [2005] 278 ITR 170 1 . SUFFICE IT TO STATE THAT AN ASSESSEE CAN BE ASKED TO PROVE THE SO URCE OF CREDIT IN BOOKS, BUT CANNOT BE ASKED TO PROVE THE SOURCE OF THE SOURCE. 10.3. SIMILARLY, WE ALSO FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RO HINI BUILDERS 127 TAXMAN 523, WHERE THE HEAD NOTE READS AS UNDER: SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED ITS - ASSESSING OFFICER MADE ADDITION OF RS. 12,85,000 AS UNEXPLAINED CASH CREDITS IN RESPECT OF LOANS TAKEN BY ASSESSEE FROM 21 PARTIES - ASSESSEE HAD DISCHARGED INITIAL ONUS BY PROVIDING IDENTITY OF ALL CREDITORS BY GIVING TH EIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT NUMBERS AN D COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE - ASSE SSEE HAD ALSO PROVED CAPACITY OF CREDITORS BY SHOWING THAT AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF CREDITORS - REPAYMENT OF LOANS AND INTEREST THEREON WAS ALSO MADE BY ACCOUNT PAYEE CHEQUES BY ASSESSEE AND TAX ALSO HAD BEEN DEDUCTED AT SOURCE ON INTEREST PA YMENTS AND REMITTED - WHETHER ASSESSEE WAS NOT EXPECTED TO PROVE GENUINEN ESS OF CASH DEPOSITED IN BANK ACCOUNTS OF CREDITORS, BECAUSE UNDER LAW, ASSE SSEE CAN BE ASKED TO PROVE SOURCE OF CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT SOURCE OF SOURCE - HELD, YES - WHETHER MERELY BECAUSE SUMMONS ISSUED TO SOME OF CREDITORS COULD NOT BE SERVED OR THEY FAILED TO APPEAR BEFORE ASSESSING OFFICER, COULD NOT BE GROUND TO TREAT THOSE CREDITS AS NON-GENUINE - HELD , YES - WHETHER ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 7 - CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF CASE, ESPECIALLY FACT THAT ASSESSING OFFICER HAD NOT DISALLOWED INTEREST CLAIM ED/PAID IN RELATION TO THOSE CREDITS IN ASSESSMENT YEAR UNDER CONSIDERATION OR E VEN IN SUBSEQUENT ASSESSMENT YEARS, AND TAX AT SOURCE HAD BEEN DEDUCT ED OUT OF INTEREST PAID/CREDITED TO CREDITORS, TRIBUNAL WAS JUSTIFIED IN DELETING ADDITION MADE - HELD, YES - WHETHER AS THERE WAS NO SUBSTANCE IN AP PEAL AND NO SUBSTANTIAL QUESTION OF LAW AROSE, APPEAL WAS LIABLE TO BE DISM ISSED - HELD, YES 11. AFTER HAVING CONSIDERED THE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE AS SESSEE U/S 68 OF THE ACT. HENCE, WE SET ASIDE THE ORDER OF THE LD. CIT(A ) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE BY HI M. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01 /02/2019 SD/- SD/- (MS.MADHUMITA ROY) (WASEEM AH MED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/02/2019 &.., .(.. / T.C. NAIR, SR. PS ITA NO.936/AHD/2014 SUNIL M. SHAH VS. ACIT ASS T.YEAR 2010-11 - 8 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-VI, BARODA 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD 1. DATE OF DICTATION 21.1.2019 (DICTATION PAD 17- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.1.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.1.2.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1.2.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER