SHRI NITIN RAJ JAIN S/O SHRI V.K. JAIN V. THE INCOME TAX OFFICER

ITA/86/2019

AI Insights

The case revolves around an appeal by Shri Nitin Raj Jain, who challenged the order of the Income Tax Appellate Tribunal, Jaipur, regarding the addition of Rupees Three Crores to his income under Section 68 of the Income Tax Act, 1961. The appellant had taken unsecured loans from two companies, TTPL and POCPL, which were later found to be non-genuine by the Assessment Officer. The appellant's explanations during the assessment proceedings were not accepted, leading to the addition of the loan amounts to his income. The Tribunal and subsequently the High Court dismissed the appellant's appeals, affirming the findings of the lower authorities.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 683235 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 27-11-2019
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Orissa v. Orissa Corporation (P) Ltd., Aravali Trading Company v. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: JAVED KHAN
• Keywords: Assessment Officer; Income Tax; Income tax appellate tribunal; Unsecured loans; Genuine Business Concerns
• Section: 143(2); 68; 253

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 86/2019 Shri Nitin Raj Jain S/o Shri V.k. Jain, Aged About 38 Years, R/o 4/435, Malviya Nagar, Jaipur. ----Appellant Versus The Income Tax Officer, Ward -6(1), Jaipur. New Central Revenue Building, Statue Circle, C-Scheme, Jaipur. ----Respondent For Appellant(s) : Mr. Javed Khan, Advocate HON'BLE MRS. JUSTICE SABINA HON'BLE MR. JUSTICE ABHAY CHATURVEDI Judgment / Order 27/11/2019 Appellant has filed this appeal challenging the order dated 14.5.2019 passed by the Income Tax Appellate Tribunal, Jaipur. The case of the appellant, in brief, is that the appellant- assessee was an individual and proprietor of a firm ‘M/s. Vinod Steels’. The appellant-assessee had filed his Income Tax Return on 19.9.2012 for Assessment Year 2012-13 declaring total income of Rs.1,86,260/-. The case of the appellant-assessee was taken-up for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter to be referred as ‘the Act’) was issued. One of the issue raised by the Assessment Officer was that during the course of assessment proceedings, it had transpired that the assessee had taken unsecured loans from two different companies. From one company, namely ‘Tanish Tradecom Pvt. (2 of 5) [ITA-86/2019] Ltd.’ (hereafter referred to as ‘TTPL’), loan of Rupees Two Crores was taken, whereas, from other company namely ‘M/s. Punit Oils and Chemicals Pvt. Ltd.’ (hereinafter referred to as ‘POCPL’) a loan to the tune of Rupees One Crore was taken. The explanation submitted by the assessee during the course of assessment proceedings was ignored by the Assessment Officer and it was held that the creditor companies were not genuine business concerns. Hence, it was held that the loans taken by the assessee were not genuine. The Assessment Officer, vide assessment order dated 30.3.2015, made an addition of Rupees Three Crores under Section 68 of the Act. Aggrieved against the said order, appellant-assessee preferred an appeal before the Commissioner, Income Tax (Appeals). The appeal filed by the appellant-assessee was dismissed vide order dated 20.11.2017. Aggrieved against the said order, the appellant-assessee preferred an appeal before the Income Tax Appellate Tribunal under Section 253 of the Act. However, the said appeal was dismissed vide order dated 14.5.2019. Hence, the present appeal by the appellant- assessee. Learned counsel for the appellant has submitted that the appellant-assessee had taken unsecured loans from genuine companies. The inquiry had not been properly conducted by the Assessment Officer while holding that the creditor companies were not genuine. In support of his arguments, learned counsel for the appellant has placed reliance on a decision of the Hon’ble Supreme Court in Commissioner of Income Tax, Orissa v. Orissa Corporation (P) Ltd., (1986) 159 ITR 78 (SC), wherein it has been held as under:- (3 of 5) [ITA-86/2019] “13. In this case the assessee hart given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises.” Learned counsel has next placed reliance on a decision of this court in Aravali Trading Company v. Income Tax Officer (2008) 220 CTR (Raj.) 622, wherein it has been held as under:- “9. Therefore, central issue arising from the three questions framed above, is whether it is incumbent upon the assessee before his explanation can be accepted, to prove the sources of income or to say source where from the depositor could have acquired the money or once the assessee establishes the existence of the real person who had deposited the money in question with the assessee and those person owned to have deposited with such money with the assessee, assessee's burden does not extend further to establish the source of the depositors from where they could have acquired the money.” Thus, in the present case, the appellant-assessee had explained in assessment proceedings that he had taken loan of Rupees Two Crores from TTPL and a loan of Rupees One Crore from POCPL. However, during the course of assessment proceedings, it transpired that the said companies were not genuine. The Inspector, Income Tax, had made verification with regard to genuineness of creditor companies. As per the report of the Inspector, reproduced in the order dated 20.11.2017 passed (4 of 5) [ITA-86/2019] by the Commissioner of Income Tax (Appeals), Ajmer, it was found that address of both the companies was same. When the Inspector went to the disclosed addresses of the companies, it was found that the premises was a seven storied old building having many offices and residential flats. However, the creditor companies were not found at the disclosed addresses. No signboards or letter-boxes in the names of creditor companies were found at the given address. The room was found locked. Inspector had met various persons in the vicinity and no person could state the existence and business activities of both the companies. During the course of arguments, learned counsel for the appellant had stressed that the creditor companies were also being assessed under the Income Tax Act. The documents shown by the learned counsel for the appellant with regard to Income Tax Returns of the creditor companies, filed for the assessment year 2012-13, reveal that addresses of the companies are the same on which verification had been done by the Inspector, Income Tax. Thus, it is evident that the Assessment Officer had conducted inquiry with regard to assessment proceedings and on inquiry, it transpired that the creditor companies were not genuine. Hence, the burden shifted on the assessee to controvert the material brought on record by the Assessment Officer. It has been noticed by the Tribunal that the assessee had failed to produce any contrary material to controvert the evidence brought on record by the Assessment Officer. The Tribunal, after elaborately considering the material on record, has rightly dismissed the appeal filed by the appellant-assessee. (5 of 5) [ITA-86/2019] The judgments relied upon by the learned counsel for the appellant-assessee fail to advance the case of the appellant- assessee as they are not applicable to the facts of the present case. Hence, no ground for interference is made out. Dismissed. (ABHAY CHATURVEDI),J (SABINA),J Govind/ "