M/S Estate Realators Pvt Ltd, Jamshedpur V. DCIT CENTRAL CIRCLE-3, Ranchi

ITSSA 61/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9642 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 06-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDAN DAS J
• Keywords: Unexplained cash credit; Bogus Share capital; Initiation of penalty proceedings; Onus to prove
• Section: 271(1)(c); 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER IT (SS) A NO. 61 / RAN / 201 6 ASSESSMENT YEAR :2009-10 M/S ESTATE REALTORS PVT. LTD. M. ROAD, QR. NO.37, BISTUPUR, JAMSHEDPUR- 831001 [ PAN NO.AABCE 8332 K ] V/S . DCIT, CENTRAL CIRCLE-3 RANCHI /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SHRI CHANDAN DAS, JCIT-DR /DATE OF HEARING 09-01-2019 /DATE OF PRONOUNCEMENT 15-02-2019 / O R D E R PER BENCH:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-3 PATNAS ORDER DATED 22.08.2016 PASSED IN CASE NO.68 & 69/CIT(A)-3/PAT/11-12 INVOLV ING PROCEEDINGS U/S 153C R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED 2. THE ASSESSEES ONLY SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL CHALLENGES CIT(A)S ACTION PARTLY AFFIRMING THE ASS ESSING OFFICERS ASSESSMENT YEAR ADDING UNSECURED LOAN OF RS.63 LAC TO THE EXTE NT OF RS.10 LAC IN LOWER APPELLATE PROCEEDINGS. THE CIT(A)S APPEAL DETAILED DISCUSSION ON THIS ISSUE READS AS FOLLOWS:- IT(SS)A NO.61/RAN/2016 A.Y. 2009 -10 M/S ESTATE REALTORS PVT. LTD. VS. DCIT CC-3, RA NCHI PAGE 2 GROUND NO. 2 & 3: THE APPELLANT HAS RAISE OBJECTIO N TO THE ADDITION OF RS.31,50,000/- U/S. 68 OF THE ACT. AO'S CONTENTION: IN THE ASSESSMENT ORDER, THE AO HAS NOTED THAT THE UNSECURED LOAN OF RS.31,50,00/- WAS NOTICED TO HAVE BEEN RECEIVED IN THE CURRENT ASSESSMENT YEAR. IN REPLY TO QUERY BY THE AO, THE A PPELLANT DID NOT COMPLY AT THE TIME OF ASSESSMENT PROCEEDINGS. THERE FORE, THE AO ADDED RS.31,50,000/- AS UNEXPLAINED CASH CREDIT U/S .68 OF THE ACT. APPELLANTS CONTENTION : DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT CONTENDED AS UNDER: THAT ALL THE CONCERNED LOANS WERE PROCURED BY THE APPELLANT THROUGH ACCOUNT PAYEE CHEQUES ONLY FROM ESTABLISHED PARTIES INCLUDING DIRECTOR OF THE APPELLANT, ALL THE LOAN C ONFIRMATIONS WERE DULY FURNISHED BEFORE THE AO. UNFORTUNATELY, LEARNE D AO HAS FAILED TO CONSIDER THE SAME. COPIES OF THE SAID CON FIRMATION ARE ENCLOSED HEREWITH FOR YOUR KIND CONSIDERATION (ANNE XURE-1) A SUM OF RS.30,00,000/- WAS RAISED AS LOAN DURING T HE YEAR. THESE LOANS WERE RAISED FROM FOUR PERSONS. ALL THE TRANSACTIONS WERE THROUGH BANKING CHANNEL. ALL THE FOUR LOAN CRE DITORS AREA ASSESSED TO TAX AND AS A MATTER OF FACT SRI KAUSHAL KUMAR SINGH IS THE MANAGING DIRECTOR OF THE COMPANY, M/S KRITIK A HOMES PVT. LTD. IS A SISTER CONCERN, SRI OM PRAKASH JAGGI IS A DIRECTOR OF THE COMPANY, SHREE LAXMI TIMBER AND TRADER CAN BE CONSI DERED AS AN OUTSIDER. WE HAVE ALREADY SUBMITTED CONFIRMATION LETTERS FROM ALL THE FOUR PARTIES ALONGWITH DETAILS OF THE CONTR IBUTION MADE BY THEM. THERE IS NO JUSTIFICATION FOR TREATING THE LO ANS AS UNEXPLAINED AND MAKING ADDITION U/S. 68. APPELLATE FINDINGS AND DECISION : AFTER CONSIDERING THE ASSESSING OFFICER'S FINDING I N THE ASSESSMENT ORDER AND APPELLANTS CONTENTION, I FIND THE ISSUE WAS REMANDED BACK TO THE AO AND IN THE REMAND REPORT DATED 05.07.2016 DU LY FORWARDED BY RANGE HEAD ON 08.05.2015, THE AO HAS SUBMITTED AS U NDER: THE SUBMISSION OF THE ASSESSEE HAS BEEN PERUSED AN D IT HAS BEEN FOUND THAT UNSECURED LOAN OF RS.30,00,000/- HA S BEEN ROUTED THROUGH BANK. THE DETAILS OF REMAINING UNSEC URED LOAN OF RS.1,50,000/- IS NOT FURNISHED BY THE ASSESSEE AND ALSO NOT REFLECTED IN ITS BANK ACCOUNT. THE APPELLANT SUBMITTED REJOINDER REPLY ON THE REMA ND REPORT OF THE AO AS UNDER: FOR THE AY 2008-09 WE MAY MENTION THAT ADDITION OF RS.31,50,000/- WAS MADE AS PER PARA 6 OF THE ASSESS MENT ORDER. WE HAVE ALREADY POINTED OUT THAT UNSECURED LOAN RAI SED WAS FOR RS.30,00,000/- AND NOT RS.31,50,00/-. APPELLANT COM PANY IT(SS)A NO.61/RAN/2016 A.Y. 2009 -10 M/S ESTATE REALTORS PVT. LTD. VS. DCIT CC-3, RA NCHI PAGE 3 RECEIVED SHARE CAPITAL CONTRIBUTION OF RS.1,50,000/ - WHICH WAS INCLUDED UNDER THE HEAD UNSECURED LOAN AND ADDED SE PARATELY ALSO VIDE PARA 7 OF T HE ASSESSMENT ORDER I FIND THAT THE AO HAS ACCEPTED IN THE REMAND REPOR T THAT THE UNSECURED LOAN OF RS.30,00,000/- WAS ROUTED THROUGH BANK. THE APPELLANT HAS ALREADY FILED CONFIRMATION AND THE AO HAS NOT GIVEN ANY ADVERSE COMMENT ON THESE CONFIRMATIONS IN THE REMAND REPORT DATED 05.07.2015. IT IS FURTHER NOTICED THAT THE UNSECURE D LOAN RECEIVED DURING THE YEAR WAS ONLY RS.30 LAKH AND NOT RS.31,50,000/- AS TAKEN BY THE AO IN ASSESSMENT ORDER. HENCE, THE ADDITION OF RS.3 1,50,000/- IS NOT SUSTAINABLE AND HEREBY DELETED. GROUND NOP.3: THE APPELLANT HAS RAISED OBJECTION TO THE ADDITION 1,50,000/- AS UNEXPLAINED CASH CREDIT. AO'S CONTENTION : IN THE ASSESSMENT ORDER, THE AO NOTED THAT SHARE CA PITAL OF RS.1,50,000//- WAS SHOWN IN THE BALANCE SHEET. IN R ESPONSE TO THE QUERY BY THE AO TO FURNISH THE DETAILS OF NAME, ADD RESS, PAN, ETC OF THE INVESTOR, THERE WAS NO COMPLIANCE BY THE APPELLANT. HENCE, THE AO TREATED THE SHARE CAPITAL OF RS.1,50,000/- AS UNEXP LAINED CASH CREDIT U/S.68 OF THE ACT. APPELLANTS CONTENTION : IN THE APPELLATE PROCEEDINGS, THE APPELLANT HAS SUB MITTED THAT THE SHARE CAPITAL OF RS.1,50,000/- WAS RECEIVED FROM THE SHAR E HOLDERS AT THE TIME OF INCORPORATION OF THE COMPANY IN THE CURRENT AY. THE APPELLANT ALSO CONTENDED THAT ALL THESE SIX PERSONS ARE ASSESSED T O TAX AND WERE PROMOTERS OF THIS COMPANY. APPELLATE FINDING AND DECISION : AFTER CONSIDERING THE AO'S FINDING AND SUBMISSION O F THE APPELLANT, I FIND THAT THE AO HAS NOT COMMENTED ABOUT THE CREDIBILITY OF THE SIX PROMOTERS OF THE COMPANY IN THE REMAND REPORT DATED 05.07.2016. HENCE, I AM INCLINED TO ACCEPT THE APPS CONTENTION AND THE ADDITION OF RS.12,\1,50,000/- AS UNEXPLAINED SHARE CAPITAL IS H EREBY DELETED. GROUND NO.4: THE APPELLANT HAS RAISED OBJECTION TO THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. THIS GROUND OF APPEAL IS PREMATURE IN NATURE AS THE APPELLANT WILL HAVE REMEDY OF FILING APPEAL AGAINST THE PENALTY ORDER I F ANY LEVIED. HENCE, THIS GROUND IS DISMISSED AS INFRUCTUOUS. AY- 2009-10 GROUNDS NO.1 & 3 IS SIMILAR TO THE GROUND NO.1 & 4 OF AY 2008-09 AND THE DISCUSSION AND FINDING GIVEN IN THE GROUND 1 & 4 OF AY 2008-09 HEREINABOVE IS CONSIDERED FOR THESE GROUNDS OF APPE AL OF CURRENT ASSESSMENT YEAR. GROUND NO. 2: THIS GROUND PERTAINS TO THE ADDITION OF RS.63,00,000/- AS UNEXPLAINED UNSECURED LOANS U/S.68 OF THE ACT. IT(SS)A NO.61/RAN/2016 A.Y. 2009 -10 M/S ESTATE REALTORS PVT. LTD. VS. DCIT CC-3, RA NCHI PAGE 4 THIS IS SIMILAR OF GROUND NO.2 OF ASSESSMENT YEAR 2 008-09 DISCUSSED HEREINABOVE. IN RESPECT OF THIS GROUND, THE REMAND REPORT OF THE AO IS AS UNDER: THE SUBMISSION OF THE ASSESSEE HAS BEEN PERUSED AN D IT HAS BEEN FOUND THAT UNSECURED LOAN OF RS.53,00,000/- HA S BEEN ROUTED THROUGH BANK ON VARIOUS DATES IN FY 2008-09 AND THE REMAINING AMOUNT OF RS.10,00,00/- WAS TAKEN IN CASH FROM SRI OM PRAKASH JAGGI ON 25.04.2008. IN RESPONSE TO THE SAID REMAND REPORT, THE APPELLAN T HAS SUBMITTED AS UNDER: THE LD AO HAS MENTIONED THAT CONFIRMATION FROM ALL THE CREDITORS LOAN WHOM LOAN WAS RECEIVED DURING AY 2008-09 & 20 09-10 WAS FILED. ALL THE DEPOSITS WERE THROUGH ACCOUNT PAYEE CHEQUES EXCEPT ONE CASH CREDIT OF RS.10,00,000/- AND WERE D EPOSITED IN OUT BANK ACCOUNT, COPY OF WHICH WAS ALSO PRODUCED B EFORE THE LD AO. IT WAS SUBMITTED BY US THAT LOAN OF CASH AMOUNT WAS RAISED TO MAKE PAYMENT FOR PURCHASE OF LAND IMMEDIATELY. SRI O.P. JAGGI FROM WHOM THIS LOAN WAS RECEIVED HAD OPENING LOAN A CCOUNT WITH US WHICH WAS RECEIVED BY CHJEQUE. LD. AO HAS NOT MADE ANY ADVERSE COMMENT REGARDING C REDITS / LOAN RECEIVED FROM DIFFERENT PERSONS REFLECTED IN A UDITED PROFIT & LOSS ACCOUNT. CONSIDERING THE FINDING OF THE AO IN THE REMAND REP ORT REGARDING THE CASH OF RS.10 LAKH RECEIVED FROM ONE OF THE LENDERS SH OM PRAKASH JAGGI, THE APPELLANT WAS REQUIRED TO FURNISH THE SO URCE OF FUND IN RESPECT OF CASH RECEIPT FROM SH O.P JAGGI. IN THE R EJOINDER REPLY, THE APPELLANT HAS NOT SUBMITTED ANY SUBSTANTIATING DOCU MENTS PERTAINING TO CASH RECEIPT FROM SH O.P. JAGGI. THUS, THE APPELLAN T HAS FAILED TO PROVE THE CREDITWORTHINESS OF CASH LOAN FROM SHRI O.P JAG GI. CONSIDERING THIS FACT, THE ADDITION OF RS.63 LAKH ON ACCOUNT OF UNSE CURED LOAN IS HEREBY DELETED TO THE TUNE OF RS.53 LAKH AND BALANCE RS.10 LAKH IS CONFIRMED AS UNEXPLAINED CASH LOAN. IT IS CLEAR FROM THE ABOVE EXTRACTED LOWER APPELLAT E DISCUSSION THAT THE ASSESSEE HAD CLAIMED TO HAVE AVAILED UNSECURED CASH LOAN OF RS.10 LAC FROM SHRI OM PRAKASH JAGGI. MR. PODDAR VEHEMENTLY CONTEN DED THAT DURING THE COURSE OF HEARING THAT THE ASSESSEE HAD PLACED ON R ECORD ALL DETAILS INCLUDING CONFIRMATION OF THE SAID CREDITOR IN LOWER PROCEEDI NGS. WE FIND NO MERIT IN ASSESSEES INSTANT SOLE ARGUMENT. THE FACT REMAINS THAT IT WAS ONLY THE TAXPAYERS BURDEN TO PROVE IDENTITY, GENUINENESS AN D CREDITWORTHINESS OF THE IMPUGNED UNSECURED CASH LOAN RIGHT FROM ASSESSMENT, REMAND PROCEEDINGS IT(SS)A NO.61/RAN/2016 A.Y. 2009 -10 M/S ESTATE REALTORS PVT. LTD. VS. DCIT CC-3, RA NCHI PAGE 5 AS WELL AS BEFORE THE CIT(A). HE ADMITTEDLY FAILED TO DISCHARGE HIS INITIAL ONUS EVEN MUCH LESS THAN THE BURDEN. WE THEREFORE HOLD T HAT THE CIT(A) HAS RIGHTLY AFFIRMED THE ASSESSING OFFICERS ACTION TO THE ABOV E EXTENT OF RS.10 LAC AS UNEXPLAINED UNSECURED LOAN. THIS ASSESSEES GRIEVAN CE IS REJECTED. MR. PODDAR AT THIS STAGE INVITE OUR ATTENTION TO HO N'BLE JURISDICTIONAL HIGH COURTS DECISION IN ITO VS. AJAY PRAKASH VERMA IN CR NO.66 OF 2013 DATED 01.09.2015 THAT SECTION 234B INTEREST IS TO B E COMPUTED ONLY ON RETURNED AND NOT ON ASSESSED INCOME. 3. THE ASSESSING OFFICER IS DIRECTED TO ENSURE SEC. 234B INTEREST COMPUTATION IS STRICTLY IN TERMS OF HON'BLE JURISDI CTIONAL HIGH COURTS DECISION. 4. THIS ASSESSEES APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT 15/ 02/2019 SD/- SD/- ( ) ('# ) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) RANCHI, *DKP $- 15 / 02 /2019 RANCHI / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S ESTATE REALTORS PVT. LTD. M. ROAD, Q R. NO.37 BISTUPUR JAMSHEDPUR-831001 2. /RESPONDENT-DCIT, CENTRAL CIRCLE-3, RANCHI 3. 0 3 / CONCERNED CIT RANCHI 4. 3- / CIT (A) RANCHI 5. 6 ##0, 0, / DR, ITAT, RANCHI 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 0,