Rajendra K. Agarwal, Pune v. ITO wd-2[3], Pune

ITA 1861/PUN/2012 | 2008-2009
Pronouncement Date: 29-10-2013 | Result: Allowed

Appeal Details

RSA Number 186124514 RSA 2012
Assessee PAN AAOPA8938K
Bench Pune
Appeal Number ITA 1861/PUN/2012
Duration Of Justice 1 year(s) 1 month(s) 3 day(s)
Appellant Rajendra K. Agarwal, Pune
Respondent ITO wd-2[3], Pune
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-10-2013
Assessment Year 2008-2009
Appeal Filed On 25-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1861/PN/2012 (ASSTT.YEAR : 2008-09) RAJENDRA K. AGARWAL 242 NANAPETH PUNE-411002 .. APPELLANT PAN NO.AAOPA8938K VS. ITO WARD-2(3) PUNE .. RESPONDENT APPELLANT BY : SHRI C.H.NANIWADEKAR RESPONDENT BY : SHRI WALIMBE DATE OF HEARING : 23-10-2013 DATE OF PRONOUNCEMENT : 29 -10-2013 ORDER PER R.K. PANDA AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 31-05-2012 OF THE CIT(A)-II PUNE RELATING TO ASSES SMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER : THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDIN G ADDITION OF RS.13 40 000/- U/S.68 OF THE ACT BEING LOAN TAKEN FR OM MRS. NALINI AGARWAL. HE FAILED TO APPRECIATE THAT THE LOAN WAS TAKEN QUITE OLD AND ADDITION COULD NOT BE MADE AT ALL IN THE CURRENT YE AR. HE ALSO FAILED TO APPRECIATE THE CONFIRMATIONS FILED WITH ASSESSEES PAN E TC. FILED IN THIS BEHALF. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN WHOLESALE DEALER IN COUNTRY LIQUOR IN THE NAME AND STYLE OF RAJA TRADERS. HE FILED HIS RETURN OF INCOME DECL ARING TOTAL INCOME OF RS.1 19 740/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE CON FIRMATIONS OF UNSECURED LOANS TAKEN AMOUNTING TO RS.20 15 558/- W ITH PAN AND 2 ADDRESS OF THE LOAN CREDITORS. THE ASSESSEE PRODUC ED THE LOAN CONFIRMATIONS AND TRANSACTION DETAILS AMOUNTING TO RS.9 LAKHS WHICH THE ASSESSING OFFICER ACCEPTED AS GENUINE. HOWEVER IN RESPECT OF LOAN TAKEN FROM MRS. NALINI AGARWAL THE WIFE OF THE ASS ESSEE THE ASSESSING OFFICER NOTED THAT NEITHER DETAILS OF TRANSACTION O F LOANS NOR COPY OF RETURN OF INCOME FILED BY MRS. NALINI AGARWAL WAS P RODUCED IN RESPECT OF THE CONFIRMATIONS GIVEN BY THE WIFE OF THE ASSES SEE. IN VIEW OF THE ABOVE THE ASSESSING OFFICER APPLYING PROVISIONS O F SECTION 68 MADE ADDITION OF RS.13 40 000/-. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE LOAN WAS ADVANCED LONG BACK BY MRS. NALINI AGARWAL AND THAT ONLY INTEREST AMOUNT WAS BEING ADDED WHICH HAS BEEN REFLECTED IN THE AUDIT REPORT FROM PAST SO MANY YEARS. IT WAS SUBMITTED THAT SINCE THE INTEREST AM OUNT WAS BELOW THE TAXABLE LIMIT FOR VARIOUS PREVIOUS YEARS RETURN WA S NOT FILED IN CASE OF MRS. NALINI AGARWAL. HOWEVER FOR A.Y. 2002-03 RET URN OF INCOME WAS FILED IN CASE OF MRS. NALINI AGARWAL. IT WAS SUBMI TTED THAT THE ASSESSEE HAS PROVED BEYOND DOUBT THE IDENTITY OF THE CREDITO R GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE CREDITOR. 5. HOWEVER THE LD.CIT(A) WAS ALSO NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT A LTHOUGH THE ASSESSEE HAS FILED THE CONFIRMATION WITH RESPECT TO THE LOAN TAKEN FROM HIS WIFE HOWEVER THE DETAILS OF THE LOAN ADVANCED BY HER HA S NOT BEEN FURNISHED EITHER AT THE STAGE OF ASSESSMENT OR DURING APPELLA TE PROCEEDINGS. ACCORDING TO HIM WHEN AN ASSESSEE CLAIMS THAT HE H AD BORROWED FROM A THIRD PARTY THE INITIAL ONUS LIES ON THE ASSESSEE TO ESTABLISH (A) IDENTITY OF THE THIRD PARTY (B) ABILITY OF THE PARTY TO ADVANCE MONEY AND (C) PRIMA- 3 FACIE THAT THE LOAN IS GENUINE ONE. IF THE ASSESSE E ESTABLISHES THE AFORESAID 3 PRE-CONDITIONS IT WOULD BE FOR THE ASS ESSING OFFICER TO DISPROVE THE SAME. HE OBSERVED THAT NO DETAILS OF T HE LOAN SUCH AS THE DATE AND THE MODE THROUGH WHICH THE SAID LOAN WAS A DVANCED HAVE BEEN PROVIDED SO AS TO JUSTIFY THE CREDIT TO BE GENUINE. ALTHOUGH THE CREDITOR POSSESSES PAN NO HOWEVER SHE IS NOT A REGULAR FIL ER OF THE INCOME TAX RETURN AND THE SOURCE OF INCOME BY WHICH EVEN THE B ELOW TAXABLE INCOME HAS BEEN EARNED HAS ALSO NOT BEEN BROUGHT ON RECORD BY THE ASSESSEE. RELYING ON VARIOUS DECISIONS THE LD.CIT(A) UPHELD T HE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF THE INCOME TAX ACT. 5.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PA GE 5 OF THE PAPER BOOK SUBMITTED THAT AN AMOUNT OF RS.1 30 000/- WAS TAKEN AS LOAN DURING A.Y. 1991-92 AND THEREAFTER THE INTEREST AMOUNT WAS CREDITED TO THE ACCOUNT OF MRS. NALINI AGARWAL EVERY YEAR. THE CRE DITOR HAS BEEN PAID RS.10 000/- DURING A.Y. 1996-97 RS.50 000/- DURING A.Y. 1999-00 RS.20 000 DURING A.Y.2001-02 AND RS.11 500/- DURING A.Y. 2002-03. HE SUBMITTED THAT SINCE THE LOAN WAS TAKEN DURING A .Y. 1991-92 AND ONLY INTEREST AMOUNT WAS BEING CREDITED TO THE ACCOUNT O F THE LOAN CREDITOR THEREFORE NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE I.T. ACT FOR THE LOAN TAKEN IN THE PAST. REFERRING TO PAGE 10 O F THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE UNSECURED LOAN OF RS.20 18 558/- AS ON 31-03-2004 W HICH HAS GONE UPTO RS.20 60 986/- AS ON 31-03-2005. SIMILARLY REFERR ING TO PAPER BOOK PAGE 11 HE SUBMITTED THAT THE UNSECURED LOAN INCLUD ES THE AMOUNT OF 4 RS.9 68 558/- FROM MRS. NALINI AGARWAL AS ON 31-03- 2004 WHICH HAS GONE UPTO RS.10 16 986/- DURING 31-03-2005. REFERR ING TO THE BALANCE SHEET FOR VARIOUS YEARS HE SUBMITTED THAT THE AMOUN T OF LOAN FROM MRS. NALINI AGARWAL APPEARS IN THE BALANCE SHEET OF PAST SO MANY YEARS WITH VARIATION IN THE INTEREST AMOUNT ONLY WHICH HAS BEE N CREDITED TO THE LOAN ACCOUNT. 6.1 REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF VARDHMAN OVERSEAS LTD. VS. ACIT REPORTED IN 24 S OT 393 HE SUBMITTED THAT WHEN ALL ENTRIES ARE OPENING BALANCE S THEN THERE IS NO QUESTION OF ADDITION U/S.68 OF THE I.T. ACT. REFER RING TO THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF MAHALAXMI HOUSING & FINSTOCK PVT. LTD. VS. ACIT REPORTED IN (2012) 32 CCH 465 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HA S HELD THAT THERE IS NO SCOPE U/S.68 OF THE ACT TO MAKE ADDITION OF THE OPE NING BALANCES IN THE BOOKS OF ACCOUNT. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE VIDE ITA NO.2928/DEL/2011 ORDE R DATED 25-05-2012 REPORTED IN (2012) 33 CCH 101 HE SUBMITTED THAT ADD ITION COULD NOT BE MADE U/S.68 OF THOSE AMOUNTS WHICH APPEAR AS OPENIN G BALANCES AT THE BEGINNING OF THE ACCOUNTING YEAR . HE ACCORDINGLY SUBMITTED THAT SINCE THE LOAN AMOUNT IS QUITE OLD AND THE CREDITOR IS BE ING PAID INTEREST EVERY YEAR THEREFORE CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF THE I.T. ACT. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER AND TH E CIT(A). 5 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUT E TO BE DECIDED IN THE INSTANT APPEAL IS AS TO WHETHER THE LD.CIT(A) IS JU STIFIED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF TH E ACT ON ACCOUNT OF LOAN OUTSTANDING IN THE NAME OF MRS. NALINI AGARWAL THE WIFE OF THE ASSESSEE. FROM THE VARIOUS DETAILS FURNISHED BY TH E ASSESSEE IN THE PAPER BOOK WE FIND THE ASSESSEE HAD TAKEN AN AMOUNT OF R S.1 30 000/- AS LOAN FROM MRS. NALINI AGARWAL DURING A.Y. 1991-92 WHICH HAS GONE UPTO RS.13 40 174/- AS ON 31-03-2008 ON ACCOUNT OF CREDI T OF INTEREST ONLY AND NO FRESH LOAN HAS BEEN TAKEN FROM MRS. NALINI AGARW AL. AFTER TAKING THE LOAN THE ASSESSEE WAS CREDITING THE INTEREST TO TH E LOAN ACCOUNT EVERY YEAR STARTING FROM A.Y. 2003-04 ONWARDS AND ONLY DU RING A.Y. 1996-97 1999-00 2001-02 AND 2002-03 THE LOAN CREDITOR HAS BEEN REPAID RS.10 000/- RS.5000/- RS.20 000/- AND RS.11.500/- RESPECTIVELY. THUS AS ON 31-03-2007 THE OUTSTANDING AMOUNT IN THE LOA N ACCOUNT WAS RS.12 64 316/- WHICH HAS GONE UPTO RS.13 40 174/- A S ON 31-03-2008 AFTER CREDITING INTEREST OF RS.75 858 UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION U/S.68 C OULD HAVE BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OPENING BALA NCE OF RS.12 64 316/- AND THE INTEREST AMOUNT OF RS.75 858 /- ACCRUED DURING THE YEAR. THE INTEREST AMOUNT COULD HAVE BEEN DISALLOW ED U/S.40A(2)(A) AND NO DISALLOWANCE ON ACCOUNT OF INTEREST COULD HAVE B EEN MADE U/S.68 OF THE I.T. ACT. IN OTHER WORDS NO ADDITION U/S.68 I S WARRANTED IN THE CASE OF THE ASSESSEE ON ACCOUNT OF OPENING BALANCE OF TH E LOAN AS WELL AS INTEREST CREDITED DURING THE YEAR. 6 8.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF VAR DHMAN OVERSEAS LTD. (SUPRA) HAS HELD THAT NO ADDITION U/S.68 CAN B E MADE IN CASE OF CREDIT ENTRIES BEING OPENING BALANCES. THE AHMEDAB AD BENCH OF THE TRIBUNAL IN THE CASE OF MAHALAXMI HOUSING & FINSTOC K PVT. LTD. (SUPRA) HAS HELD THAT THERE IS NO SCOPE U/S.68 OF THE ACT T O MAKE ADDITION OF THE OPENING BALANCE IN THE BOOKS OF ACCOUNT. SIMILAR V IEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE REPORTE D IN 33 CCH 101. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND RELYING ON THE ABOVE DECISIONS CITED WE ARE OF THE CONSIDERED OPINION T HAT NO ADDITION U/S.68 COULD HAVE BEEN MADE OF THOSE AMOUNTS WHICH APPEAR AS OPENING BALANCES AS ON 31-03-2008 NOR ANY ADDITION CAN BE M ADE U/S.68 ON ACCOUNT OF INTEREST CREDITED TO THE LOAN CREDITORS ACCOUNT. IN THIS VIEW OF THE MATTER WE SET-ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29-10-2013 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PA NDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED : 29 TH OCTOBER 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II PUNE 4. THE CIT-II PUNE 5. D.R. B BENCH PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE