Pramod Kumar Agarwalla Angul v. Ito Angul Ward Angul

In The Income Tax Appellate Tribunal Smc Bench Cuttack Before Shri N S Saini Accountant Member Ita No 12 Ctk 20 1 7 Assessment Year 20 1 2 20 1 3 Pramod Kumar Agarwalla Prop Pra Mod Trading Co Shankar Cinema Road Angul 759122 Vs Ito Angul Ward Angul Pan Gir No A Axpa 8746 Q Appellant Respondent Assessee By Shri D K Sheth Ar Revenue By Shri S K Bandyopadhyay Dr Date Of Hearing 1 3 1 2 201 7 Date Of Pronouncement 26 12 201 7 O R D E R Th Is Is An Appeal Filed By The Assessee Against The Order Of The Cit A 2 Bhubaneswa R Dated 22 08 2016 2 Ground No 1 Of The Appeal Is Directed Against The Order Of Cit A Confirming The Disallowance Of Payment Of Interest To Loan Creditors Rs 8 16 618 U S 40 A Ia Of The Act For Non Deduction Of Tds 3 Brief Facts Of The Case Are T Hat The Ao Made Addition Of Rs 8 16 618 By Disallowing Interest U S 40 A Ia Of The Act For Non Deduction Of Tax At Source The Ao Observed That On Growing Through The Ledger Copy Of Unsecured Loan It Was Found That The Amount Of Interest Paid Credited To The Payee Exceeded The Minimum Amount Not Chargeable To Tax And Therefore He Did Not Accept The Explanation Of The Assessee That Since The Assessee Had Collected Form No 15 G For Non Deduction Of Tax From The Payee Hence No Tds Was Deducted From The Payments Of Interest Made According To The Ao Column No 4 Of The Form No 15 G Read Ita No 12 Ctk 201 7 2 With Rule 29 C Of The I T Rules 1962 Stipulates That The Payee Should Furnish The Declaration That The Aggregating Amount Of Income Will Not Exceed The Maximum Amount Which Is Not Chargeable To Tax Hence He Held That This Form Cannot Be Used By The Payee If His Income From The Sources Stated Therein Are Exceeding The Taxable Limit Of Income If The Form Is Used By The Payee It Will Be Invalid And Will Not Be Acted Upon By The Payer 4 Being Aggrieved The Assessee Filed An Appeal Before The Cit A The Cit A Held That Section 40 A Ia Of The Act Provides That Any Interest Payable To A Resident Person On Which Tax Is Chargeable At Source Under Chapter Xvii B And Such Tax Has Not Been Deducted Or After Deduction Has Not Been Paid On Before The Due Date Of Filing Of The Return The Interest Amount Is Not A Deductible Expenditure And Hence Confirmed The Order Of Ao 5 The Ar Of The Assessee Submitted That Once Form 15 G Wa S Filed The Assessee Could Not Deduct Tax At Source From The Income Payable To The Payee And Therefore The Cit A Was Not Justified In Confirming The Order Of Ao 6 On The Other Hand Ld Dr Supported The Orders Of The Lower Authorities 7 I Have Heard Rival Submissions Perused The Orders Of Lower Authorities And The Materials Available On Record The Undisputed Facts Of The Case Are That The Assessee Claimed Deduction For Interest Payment Of Rs 8 16 618 Made To The Loan Creditors The Assessee Did N Ot Deduct Ita No 12 Ctk 201 7 3 Tds From The Payment Of Interest The Assessee Explained Before The Ao Since Form No 15 G Was Filed By The Recipient Of Interest Therefore No Tax Was Deducted By The Assessee The Ao Found That In Case Of Interest Payment To Sriniwas Agarwal Hu F Rs 3 09 456 Shanti Devi Agarwal Rs 2 83 466 And Shyama Agarwal Rs 2 23 696 Aggregating To Rs 8 16 618 The Amount Of Interest Payment Exceed The Taxable Limit Of Income And Therefore Form 15 G Could Not Have Been Utilised By The Recipient Of T He Income As No Tds Was Deducted From The Payments Made Therefore He Disallowed The Deduction Of Interest Expenditure Of Rs 8 16 618 On Appeal The Cit A Confirmed The Action Of Ao Before Us No Material Was Brought On Record By The Ar Of The Asses See To Show That Even Where Interest Payment Exceeded The Taxable Limit Of Income Still Form No 15 G Could Be Filed By The Recipient Of Income And Asking The Assessee To Not To Deduct Tax At Source From Payments Made To Them Further No Material Could Be Br Ought On Record By The Ar Of The Assessee To Show That The Recipient Of Interest Income Had Filed Return Of Income And Shown The Amount Of Interest Received From The Assessee As Their Income And Paid Due Taxes Thereon In Absence Of The Same I Find No Goo D Reason To Interfere With The Order Of Cit A Which Is Confirmed And This Ground Of Appeal Of The Assessee Is Dismissed 8 Ground No 2 In The Appeal Of The Assessee Is Directed Against The Order Of Cit A Making Addition Of Rs 23 00 000 U S 68 Of The Act 9 Brief Facts Of The Case Are That The Ao Found That The Assessee Claimed To Have Received Loan From 19 Persons Aggregating To Ita No 12 Ctk 201 7 4 Rs 35 77 200 The Ao Asked The Assessee To File Confirmations Acknowledgements Of Itr Statement Of Total Income Bank S Tatements And Balance Sheets Thereafter The Assessing Officer Analysed The Different Documents Filed By The Assessee He Found That In Case Of 9 Persons There Is Deposit Of Cash Just Before The Issue Of Cheque He Also Found That The Documents Submitted Of These Alleged Loan Creditors Do Not Prove Their Capacity To Give The Loans The Details Of Persons Are As Below Sl No Name Of The Lender Amount 1 Asha Agarwal Rs 1 50 000 2 Arun Kumar Agarwal Rs 2 50 000 3 Bimal Kumar Agarwal Huf Rs 2 50 000 4 Bhavana Jethwa Rs 2 00 000 5 Bhavesh B Jethwa Rs 2 00 000 6 Fatechand Agarwal Rs 2 00 000 7 Kamal Kumar Agarwal Huf Rs 4 00 000 8 Laxminarayan Pattnaik Rs 2 00 000 9 Sunil Agarwal Huf Rs 2 50 000 He Therefore Held Th At Alleged Loan Transactions In Respect Of 9 Persons Is Not Genuine As They Do Not Have The Capacity To Advance Alleged Loans And Added The Same To The Income Of The Assessee U S 68 Of The Act 1 0 On Appeal Before The Cit A The Assessee Submitted That A Ll The Persons Were Assessed To Tax And Amounts Were Received By The Cheque And Confirmation Letters Were Filed By The Said Creditors Therefore The Addition Made By The Ao By Citing Irrelevant Decisions Is Improper Arbitrary And Unjustified It Was Subm Itted That In The Case Of Cit Vs Baishnab Charan Mohanty 212 Itr 199 The Honble Orissa High Court Held That If The Assessee Establishes 1 Identity Of The Creditor 2 Genuineness Of The Transaction Then The Onus Shifts To The Department To Ita No 12 Ctk 201 7 5 Disprove The Same In These Circumstances The Addition As Made Is Uncalled For An Unjustified The Cit A After Considering The Submissions Of The Assessee Held That In Respect Of 9 Persons There Is Deposit Of Cash Immediately Before The Issue Of Cheques Furthe R As Per The Balance Sheet And Income Tax Return In Case Of Alleged Loan Givers Whose Details Have Been Filed By The Assessee Do Not Have The Capacity To Advance The Loans To The Assessee He Relied On The Decision Of Honble Chhattisgarh High Court In T He Case Of Kushal Prasad Manhar Vs Cit 52 Taxmann Com 335 Wherein It Was Held That Where Loans Had Been Channelled Through Bank Accounts By Depositing Cash In Bank Account And Then By Issuing Account Payee Cheques In Favour Of The Assessee Immediately Thereafter Loan Transactions Were Not Genuine 11 Being Aggrieved The Assessee Is In Appeal Before The Tribunal 12 I Find That It Is Not Disputed That Alleged Loan Taken By The Assessee From 9 Persons Of Rs 19 Lakhs Through Account Payee Cheques Was G Iven By The Loan Creditors By Depositing Cash In The Bank Account Are Day Prior To The Issuance Of The Cheques To The Assessee The Ao Doubted The Creditworthiness Of The Loan Creditors For Advancing Loan To The Assessee For The Reason That Before Issuance Of Cheque To The Assessee The Loan Creditors Have Deposited Cash In His Account On A Day Prior To The Issuance Of The Cheque Thus The Order Of Ao Was Confirmed By The Cit A In Appeal In The Above Background Of The Case I Am Of The Considered View Tha T Depositing Of Cash By Loan Creditors Are Day Prior To Ita No 12 Ctk 201 7 6 The Issuance Of Cheque To The Assessee Can Raise A Doubt About The Creditworthiness Of The Loan Creditor It Is Trite Law That Suspicion Howsoever The Case Cannot Take Place It Was Incumbent Upon The Ao To Investigate The Matter Further And Bring Material On Record To Show That The Loan Creditors Did Not Have Cash Balance In Hand On The Date Of Deposit The Cash In The Bank Account For Issuance Of Cheques To The Assessee No Such Material Has Been Brou Ght On Record By The Ao Therefore In Absence Of The Same The Addition Made U S 68 Of The Act By The Ao Merely On The Basis Of Suspicion Cannot Be Sustained In Law My View Find Supports With The Decision Of Honble Gujarat High Court In The Case Of D Cit Vs Rohini Builders 2002 256 Itr 360 Guj I Therefore Set Aside The Orders Of The Lower Authorities And Delete The Addition Of Rs 19 Lakhs Made U S 68 Of The Act And Allow This Ground Of Appeal Of The Assessee 13 Grounds No 3 4 5 Are General In N Ature And Hence Require No Further Adjudication By Me 14 In The Result Appeal Of The Assessee Is Partly Allowed Order Pronounced In The Open Court On This 26 12 201 7 S D N S Saini Accountant Member Cuttack Dated 26 12 201 7 Pkm Senior Private Secretary Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Cuttack 6 Guard File Ita No 12 Ctk 201 7 7 By Order Senior Private Sec Retary Itat Cuttack True Copy