The ACIT, Range--8, Ahmedabad V. Shri Sharad S.Gupta, Ahmedabad

ITA 999/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68026 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Business income; Salary income; Onus to prove
• Section: 143(3); 133(6); 68

Judgement Text

ITA N O 999/AHD/2010 . A.Y. 2006- 07 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NO. 999/AHD/2010 (ASSESSMENT Y EAR:2006-07) THE DCIT (OSD), CIRCLE-8, AHMEDABAD V/S SHRI SHARAD S. GUPTA 9, PRATIMA SOCIETY, OPP. VIJAY RESTAURANT, NARANPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ADVPG 3031 B APPELLANT BY : SHRI P.L. KUREEL, SR. D.R. RESPONDENT BY : SHRI SAKAR SHARMA ( )/ ORDER DATE OF HEARING : 13 -11- 20 13 DATE OF PRONOUNCEMENT : 13 -12- 2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A), XIV, AHMEDABAD DATED 16.12.2009 FOR A.Y. 2006-07. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY , BUSINESS INCOME ETC. HE FILED ITS RETURN OF INCOME FOR AY 2006-07 O N 31.12.2006 SHOWING TOTAL INCOME OF RS 4,35,840/-. THE CASE WAS SELECTE D FOR SCRUTINY AND ITA N O 999/AHD/2010 . A.Y. 2006- 07 2 THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VID E ORDER DATED 21.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT R S 2,93,52,140/-. AGGRIEVED BY THE ORDER OF AO ASSESSEE CARRIED THE M ATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 16.12.2009 ALLOWED THE APPE AL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE ID. COMMISSIONER OF LNCOME-TAX(A)-XIV, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.32175000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UN-EXPLAINED UN-SECURED LOANS U/S.68. 4. GROUND NO 1 IS WITH RESPECT TO ADDITION ON ACCOUNT OF UNSECURED LOAN U/S 68: 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT THERE WAS INCREASE IN UNSECURED LOAN AS COMPARED TO THE IMMED IATELY PRECEEDING YEAR. THE ASSESSEE WAS ASKED TO FURNISH EVIDENCE LI KE NAME, ADDRESS, PAN NO, AND THE BANK STATEMENT OF THE LENDERS IN RE SPECT OF THE LOANS OBTAINED BY ASSESSEE. ASSESSEE FURNISHED PARTIAL IN FORMATION. AS THE ASSESSEE COULD NOT PRODUCE THE PROOF OF UNSECURED L OAN, THE ASSESSEE WAS ASKED TO PRODUCE THE UNSECURED HOLDERS FOR VERI FICATION TO WHICH THE ASSESSEE SUBMITTED THAT THE LENDERS WERE NOT COOPER ATING TO PRESENT THEMSELVES BEFORE THE AO AND ALSO WERE NOT SUBMITTI NG THEIR BANK STATEMENTS. ASSESSEE HOWEVER COULD PRODUCE CONFIRMA TIONS FROM 9 PARTIES. A.O. WAS THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE HAS FAILED TO FURNISH THE GENUINENESS, IDENTITY AND CREDITWORT HINESS OF THE LENDERS HE CONSIDERED THE SUM OF RS 3,21,75,000/- RECEIVED AS LOAN AS INCOME U/S 68 OF THE ACT. HE FURTHER DISALLOWED THE INTEREST OF R S 15,09,954/- ON THE AFORESAID LOANS. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE ITA N O 999/AHD/2010 . A.Y. 2006- 07 3 MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS OF THE APPELLANT. VARIOUS CASE LAWS RELIED ON BY BOTH A.O. AS WELL AS APPELLANT WE RE ALSO PERUSED. WITH DUE REGARDS TO AUTHORITIES WHOM RATIOS OF THE CASE LAWS RELIED ON BY THE A.O., I AM INCLINED TO ACCEPT THE CONTENTIONS AND RATIO OF THE CASE LAWS RELIED ON BY THE APPELLANT. IT IS NOW SETTLED LAW THAT ONUS TO PROVE IDENTITY, GENUINENESS AND CREDIT WORT HINESS IS ON THE ASSESSEE IN WHOSE BOOKS SUCH CREDIT IS BEING SHOWN AS RECEIVED. ONCE ASKED TO DISCHARGE ITS ONUS, THE-APPELLANT SUBMITTED COPY OF ACCOUNT, CONTRA A/C. CONTAINING C ONFIRMATION OF THE LENDER PARTY, ADDRESS, PAN AND DETAILS OF THE TRANSACTIONS. ONCE THE APPEL LANT HAS SUBMITTED SUCH DETAILS WHICH ALREADY SHOWS THAT ALL SUCH LENDING PARTIES ARE ASS ESSED TO TAX AND CONFIRMED THE TAX TRANSACTION, THE PRIMARY ONUS OF THE APPELLANT GET S DISCHARGED. IF THE A.O. FURTHER WANTS TO EXAMINE, HE CAN ISSUE SUMMONS OR CONDUCT NECESSARY INQUIRY AND THEREAFTER CAN CONFRONT THE APPELLANT IF ANY ADVERSE' REPORT IS THERE. THIS BEC OMES MORE NECESSARY WHEN APPELLANT SHOW'S ITS INABILIITY TO PRODUCE ALL SUCH PARTIES FOR EXAM INATION. BUT, THE A.O. HAS NOT MADE ANY INQUIRY AND CONVENIENTLY TREATED ALL THE LOAN AMJFO UNT WITH INTEREST AS ADDITION U/S. 68 OF THE ACT. EVEN, THE BASIC FACT IN TWO CASES WHERE THE AM OUNTS GOT SQUARED UP THROUGH BANKING CHANNEL ALSO NOT APPRECIATED BY A.O. PROPERLY. IT I S, THEREFORE, SUCH ADDITIONS CANNOT STAND IN THE EYES OF LAW AND ARE NOT SUSTAINABLE. THE A.O. H AS NOT POINTED OUT ANY DISCREPANCY OR ADVERSE INFERENCE FROM THE DETAILS SUBMITTED BY THE APPELLANT BEFORE COMING TO CONCLUSION OF IE ADDITIONS ON THE REASON THAT APPELLANT HAS NOT F URNISHED COPY OF BANK ACCOUNT OF SUCH PARTIES AND THEIR COPIES OF RETURN OF INCOME TO EST ABLISH THE SOURCES OF CREDIT. BUT, ONCE APPELLANT SUBMIT AFTER FURNISHING CONTRA A/C. WITH CONFIRMATION THAT THOSE PARTIES ARE NOT COOPERATING WITH APPELLANT, THEN A.O. COULD HAVE US ED HIS POWER OF INQUIRIES U/S. 131 OF THE ACTOR CALLING FOR INFORMATION U/S. 133(6) OF THE AC T OR THROUGH INSPECTOR INQUIRIES. NOW, THE APPELLANT HAS SUBMITTED VARIOUS ADDITIONAL DETAILS TO SHOW THAT ALL THESE PARTIES ARE ASSESSED TO TAX (COPY OF RETURN OF INCOME FILED FOR A.Y. 066 -07 SUBMITTED), ALL THESE PARTIES ARE HAVING PAN (COPY OF PAN CARD ISSUED BY THE DEPTT. SUBMITTE D) AND PROPER TDS HAD BEEN DEDUCTED BY THE APPELLANT ON INTEREST PAID TO THESE PARTIES TO EVIDENCE FURTHER SUCH INFORMATION SO AS TO PROVE IDENTITY AND GENUINENESS OF THE TRANSACTION. WHEN THE TRANSACTIONS ARE THROUGH BANKING CHANNEL, THEN AFTER RECEIPT OF SUCH INFORMATION, ON US SHIFTS TO THE DEPTT. HON'BLE M.P. HIGH COURT IN THE CASE OF CIT V. METAC HEM INDUSTRIES (2000)245 ITR 160 HELD THAT 'WHERE THE ASSESSEE FIRM HAD SATISFACTORILY EX PLAINED THE CREDIT STANDING IN THE NAME OF ITS PARTNERS, THE RESPONSIBILITY OF THE ASSESSEE ST ANDS DISCHARGED. ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON , BE HE A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY OF THE ASSESSEE FIRM IS OVER. TH E ASSESSEE FIRM CANNOT ASK THAT PERSON WHO ITA N O 999/AHD/2010 . A.Y. 2006- 07 4 MAKES INVESTMENT WHETHER THE MONEY INVESTED IS PROP ERLY TAXED OR NOT. IT IS OPEN TO A.O. TO UNDERTAKE FURTHER INVESTIGATION WITH REGARD TO THAT -INDIVIDUAL WHO HAS DEPOSITED THE AMOUNT' THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF NEMIC HAND KOTHARI V. CIT (2003) 264 ITR 254 HELD THAT 'IT CANNOT BE SAID THAT A TRANSACTION , WHICH TAKES PLACE BY WAY OF CHEQUE, IS INVARIABLY SACROSANET. ONCE THE ASSESSEE HAS PROVED THE IDENTIFY OF HIS CREDITORS, THE GENUINENESS OF THE TRANSACTIONS WHICH HE HAD WITH H IS CREDITORS, AND THE CREDIT WORTHINESS OF HIS CREDITORS VIS-A-VIS THE TRANSACTIONS WHICH HE H AD WITH THE CREDITORS, HIS BURDEN STANDS DISCHARGED AND THE BURDEN THEN SHIFTS TO THE REVENU E TO SHOW THAT THOUGH COVERED BY CHEQUES THE AMOUNTS IN QUESTION, ACTUALLY BELONGED TO, OR W AS OWNED BY THE ASSESSEE HIMSELF.' THE APPELLANT'S DETAILS SUBMITTED BEFORE A.O. AS WE LL AS DURING THE COURSE OF APPELLATE PROCEEDINGS ARE SUMMARISED IN A TABULAR FORM AND AT TACHED AS ANNEX. ASSESSEE TO THIS ORDER. SUCH DETAILS ARE SUFFICIENT TO EXPLAIN THE POSITION OF THE APPELLANT THAT ALL THESE LOANS ARE SUPPORTED BY DUE IDENTIFY, GENUINENITY AND CREDIT W ORTHINESS. THESE DETAILS WERE DULY EXAMINED DURING THE APPELLATE PROCEEDINGS AND FOUND CORRECT. IT IS, THEREFORE, THE ADDITION MADE BY A.O. FOR UNE XPLAINED CREDITS U/S. 68 OF THE ACT AS WELL AS DISALLOWANCE FOR INTEREST THEREON ARE DIRECTED TO B E DELETED AND OR ALLOWED ACCORDINGLY. THE APPELLANT GETS RELIEF OF RS. 3,21,75,000/- FOR ADDI TION U/S. 68 OF THE ACT AND RS, 15,09,954/- FOR DISALLOWED INTEREST. 6. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD.D.R. SUBMITTED THAT ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF THE DEPOSITORS BY PRODUCING THE PARTIES AND THEIR BANK STATEMENTS. HE FURTHER SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE ENTRIES IN HIS BOOKS OF ACCOUNTS. HE TH US SUPPORTED THE ORDER OF AO. LD. AR. ON THE OTHER HAND SUBMITTED THAT ASS ESSEE HAD SUBMITTED BEFORE AO THE NAMES OF THE ALL THE LENDERS, THEIR A DDRESSES OF THE LENDERS, THEIR PAN NUMBERS EXCEPT NIMESH KUMAR & CO AND UMES H SHAH. HE FURTHER SUBMITTED THAT THE PAN NUMBERS OF THE 2 PAR TIES NAMELY NIMESH KUMAR & CO AND UMESH SHAH WERE SUBMITTED BEFORE CIT (A). THE ASSESSEE HAD ALSO DEDUCTED TDS FROM THE INTEREST WH EREVER APPLICABLE ITA N O 999/AHD/2010 . A.Y. 2006- 07 5 AND THE TDS WAS ALSO DEPOSITED IN THE ACCOUNT OF TH E GOVERNMENT. HE THUS SUBMITTED THAT ASSESSEE HAS DISCHARGED THE ONU S BY GIVING THE NAME, ADDRESSES, PAN NUMBERS OF THE LENDERS AND THEREFORE NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE. HE THUS SUPPORTED TH E ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE YEAR ASSES SEE HAD OBTAINED UNSECURED LOANS FROM VARIOUS PARTIES. AO MADE THE A DDITION U/S 68 AS HE WAS OF THE VIEW THAT SINCE THE ASSESSEE HAD NOT SUB MITTED THE SOURCE OF INTRODUCTION OF LOAN AND IDENTITY AND CREDITWORTHIN ESS OF THE TRANSACTION WITH REFERENCE TO THE LENDERS BANK ACCOUNT, THE GEN UINENESS OF TRANSACTION WAS NOT PROVED BY THE ASSESSEE. CIT(A) WHILE DELETI NG THE ADDITION HAS NOTED THAT ASSESSEE HAD DISCHARGED THE INITIAL ONUS BY SUBMITTING THE COPIES OF ACCOUNT, CONTRA ACCOUNT, CONFIRMATION OF THE LENDER, THEIR ADDRESS, PAN NUMBERS. HE HAS FURTHER NOTED THAT THE LOANS WHICH WERE SQUARED UP DURING THE YEAR WERE THROUGH BANKING CHA NNELS. HE HAS FURTHER NOTED THAT ASSESSEE HAD ALSO DEDUCTED TDS O N THE INTEREST ON THE AFORESAID LOANS. CIT(A) HAS ALSO NOTED THAT AO DID NOT ISSUE SUMMONS OR CONDUCTED ANY INQUIRY WHERE THE ASSESSEE HAD SHOWN INABILITY TO PRODUCE THE PARTY FOR VERIFICATION. HE HAS FURTHER GIVEN A FINDING THAT THE LOANS ARE SUPPORTED BY IDENTITY, GENUINIETY AND CRE DITWORTHINESS. WE FIND THAT BEFORE CIT(A), ASSESSEE HAD FURNISHED THE NAME S, ADDRESSES AND PAN NUMBERS OF SHRI NIMESH KUMAR AND C.O. (FOR RS. 2 LAC) AND UMESH K. SHAH (FOR RS. 9.50 LACS). THE EVIDENCE WAS FURN ISHED BEFORE CIT(A) FOR THE FIRST TIME AND CIT(A) DID NOT OBTAIN ANY RE PORT FROM THE A.O. FOR THESE 2 PARTIES. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) WITH RESPECT TO DELETING THE ADDITION IN ITA N O 999/AHD/2010 . A.Y. 2006- 07 6 RESPECT OF OTHER PARTIES. WITH RESPECT TO ADDITION ON ACCOUNT OF LOAN FROM NIMESH KUMAR AND C.O. AND UMESH SHAH, WE FEEL THAT IN THE INTEREST OF JUSTICE THE MATTER NEEDS TO BE REMITTED TO CIT(A), SO THAT HE CAN OBTAIN A REPORT FROM A.O. AND THEREAFTER DECIDE THE ISSUE AS PER LAW. THUS THESE GROUNDS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . 9. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13 -12 - 2013. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD