Amar Singh, Kolkata v. ITO, Ward - 53(2),Kolkata, Kolkata

I.T.A NO. 222/KOL/2009-BKH 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA () . . ! . '. # '$ ) [BEFORE HONBLE SRI B.R.MITTAL JM & HONBLE SRI B. K. HALDAR AM] !% / I.T.A NO. 222/KOL/2009 &' () / ASSESSMENT YEAR : 2005-06 AMAR SINGH VS. INCOME-TAX OFFICER PAN: ALQPS 9511J WARD 53(2) KOLKATA (+ /APPELLANT ) (-.+ / RESPONDENT ) + / FOR THE APPELLANT : / / SHRI R.DHAR LD.AR -.+ / FOR THE RESPONDENT : / / SHRI P.KOLHE LD.DR '0 / ORDER .'.# '$ SHRI B.K.HALDAR ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) XXXIII KOLKA TA DATED 17-12-2008 FOR THE ASSESSMENT YEAR 2005-06. 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- 1. FOR THAT THE LD CIT(A) WAS WRONG UNJUSTIFIED A ND ERRED IN CONFIRMING THE ADDITION TO INCOME ORIGINALLY MADE B Y THE LD ASSESSING OFFICER OF RS.5 80 000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT BEING CASH LOAN TAKEN FROM VARIOUS PERSONS BY INVOKING SE C 68. 2. FOR THAT THE LD CIT(A) WAS WRONG UNJUSTIFIED AN D ERRED IN IGNORING AND OR NOT ACCEPTING THE EVIDENCES PRODUCE D BY THE APPELLANT IN SUPPORT OF THE LOANS ACCEPTED FROM VAR IOUS LOAN CREDITORS MORE PARTICULARLY WHEN ALL THE LOAN CREDITORS ARE R EGULARLY ASSESSED TO INCOME TAX FOR MANY YEARS AND THEY ALL HAVE THEI R BANK ACCOUNTS. 3. FOR THAT THE LD CIT(A) WAS WRONG UNJUSTIFIED AN D ERRED IN NOT ACCEPTING AS GENUINE OR NOT APPRECIATING THAT ALL T HE NOTICES U/S 131 SENT BY THE LD ASSESSING OFFICER TO ALL THE 31 LOAN CREDITORS FOR VERIFICATION OF THE LOAN TRANSACTION WERE DULY SERV ED ON THEIR RESPECTIVE ADDRESSES AND OUT OF WHICH SOME APPEARED BEFORE THE LD ASSESSING OFFICER AND SOME HAVE REPLIED IN WRITING. 4. FOR THAT THE LD CIT(A) WAS WRONG UNJUSTIFIED AN D ERRED IN UPHOLDING THE ACTION AND FINDINGS OF THE LD ASSESSI NG OFFICER THAT THE I.T.A NO. 222/KOL/2009-BKH 2 APPELLANT HAD FAILED TO DISCHARGE HIS ONUS IN PROVI NG THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT ORS. 5. THAT APPELLANT MOST RESPECTFULLY CRAVE LEAVE TO ALTER OR ADD FURTHER GROUNDS AND ADDITIONAL EVIDENCES AT THE TIME OF APP EAL. 3. THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.5.80 LAKH DURING THE RELEVANT PREVIOUS YEAR FROM 31 DIFFERENT PERSONS IN CASH. IN RESPONSE TO SUMMONS ISSUED U/S.131 OF THE ACT BY THE AO TO ALL THE 31 PARTIES ONLY 4 PERSONS AP PEARED BEFORE THE AO. THE STATEMENTS OF THE 4 PERSONS WHO APPEARED BEFORE THE AO WERE RECOR DED BY HIM. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE C ASES THE AO HELD THAT THE 4 PERSONS DID NOT HAVE CREDITWORTHINESS. REGARDING THE OTHER 27 LOAN CREDITORS WHO DID NOT APPEAR BEFORE THE AO IN RESPONSE TO SUMMONS ISSUED U/S.131 OF THE ACT IT WAS HELD BY THE AO THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIM ARY ONUS OF PROVING THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . HE THEREFORE ADDED THE IMPUGNED AMOUNT OF RS.5 80 000/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 3.1 RELIANCE WAS PLACED BY THE AO ON THE FOLLOWING CASE LAWS:- A. RAJSHREE SYNTHETICS (P) LTD VS. CIT 131 TAXMAN 391(RAJ) B. ROSHAN DI HATTI VS. CIT 107 ITR 938 (SC) C. KALE KHAN MOHAMMED HANIF VS. CIT 50 ITR.1(SC ) D. SUMATI DAYAL VS. CIT 214 ITR 801(SC) 3.2 THE AO DISTINGUISHED THE FOLLOWING CASE LAWS W HICH WERE RELIED ON BY THE ASSESSEE A. KAMAL MOTORS VS. CIT 131 TAXMAN 155(RAJ) B. NEMI CHAND KOTHATI VS. CIT 136 TAXMAN 213(GAU ) 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE L D.CIT(A). 5. BEFORE THE LD.CIT(A) THE ASSESSEE FILED THE DET AILS OF INCOME-TAX RETURNS ACKNOWLEDGEMENTS OF THE CASH CREDITORS. IT WAS CO NTENDED THAT ALL CASH CREDITORS WERE INCOME TAX ASSESSEE HOLDING PAN AND THAT THEY HAD FILED LOAN CONFIRMATIONS AND BALANCE SHEET BEFORE THE AO. ALL THE SUMMONS ISSUED U/S.13 1 OF THE ACT BY THE AO WERE SERVED ON THE PARTIES. HOWEVER SOME OF THE LOAN CREDITORS COULD NOT APPEAR AS THEY WERE RESIDING OUT OF STATION AND THAT FEW OTHERS APART F ROM THE 4 WHO DID APPEAR WERE NOT HEARD BY THE AO. IT WAS ALSO CONTENDED THAT THE LOANS HA VE BEEN REPAID SUBSEQUENTLY TO THE LOAN CREDITORS. IT WAS THEREFORE SUBMITTED THAT THE LOAN SHOULD BE TREATED AS GENUINE. I.T.A NO. 222/KOL/2009-BKH 3 6. THE LD.CIT(A) TAKING INTO CONSIDERATION THE FACT S AND CIRCUMSTANCES OBTAINED IN THE CASE IN PARA 3.3 OF HIS ORDER HELD AS UNDER:- 3.3. I HAVE CONSIDERED THE FINDINGS OF THE ASSESSI NG OFFICER AND THE SUBMISSION OF THE ASSESSEE. IT HAS BEEN HELD BY THE COURTS THAT FOR CASH CREDIT TO BE TREATED AS EXPLAINED THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE CASH CREDIT HAS TO BE ESTABLISHED. THE BURDEN OF PROOF TIES ON THE ASSESSEE. ONCE THE ASSE SSING OFFICER NOT WAS BEING SATISFIED WITH THE LOANS CONFIRMATION AND OTH ER SUBMISSION ISSUED SUMMONS TO THE CREDITORS WHO DID NOT APPEAR BEFORE HIM THE BURDEN SHIFTS BACK TO THE ASSESSEE. THE ASSESSING OFFICER WHILE I SSUING SHOW CAUSE TO THE ASSESSEE RELIED ON THE FACT THAT 27 OUT OF 31 CREDI TORS DID NOT APPEAR BEFORE HIM AND THOSE WHO DID APPEAR WERE FOUND TO BE OF N O MEANS. THE STATEMENT RECORDED (PAGE 2OF ASSTT. ORDER) ALSO SHOW THAT THE PERSON WAS NOT AWARE OF THE REAL NATURE OF THE 7 TRANSACTIONS. THE ASSESSEE IN ITS REPLY RELIED UPON CASE LAWS RATHER THAN PRODUCING THE SAID LOAN CREDI TORS OR ESTABLISHING THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S BY ALTERNATE METHOD. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMI TTED THE SAME DETAILS. ITS ARGUMENT HAS BEEN 1HQS SUMMONS WERE SERVED ON ALL 3 1 LOAN CREDITORS AND THAT THE LOAN CREDITORS WERE INCOME TAX ASSESSEE. S ERVICE OF SUMMONS AS WELL AS ACKNOWLEDGEMENT OF INCOME TAX RETURN ONLY ESTABL ISHES THE IDENTITY OF THE PERSON. THE 2 OTHER ASPECTS FOR HOLDING CASH CREDIT TO BE EXPLAINED I.E CREDITWORTHINESS AND GENUINENESS REMAIN TO BE ESTAB LISHED. THE STATEMENT RECORDED AND REPRODUCED IN THE ASSESSMENT ORDERS SH OW THAT THE PERSONS WHO DID APPEAR DID NOT HAVE ANY CREDITWORTHINESS TO ADV ANCE LOANS. PERSON EARNING RS.30001- MONTHLY IS NOT. EXPECTED TO ADVAN CE RS.20 000I- AS LOAN THAT TOO WITHOUT INTEREST. THE ASSESSEE DURING THE APPELLATE PROCEEDINGS FILED A CHART SHOWING THAT THE LOAN CREDITORS ARE BEING R EPAID AND THE FACT OF REPAYMENT PROVES THAT LOANS ARE GENUINE. FROM THE D ETAILS OF REPAYMENT FILED BEFORE ME IT IS SEEN THAT REPAYMENTS HAVE STARTED O NLY AFTER THE COMPLETION OF ASSESSMENT AND FILING OF THIS APPEAL. FURTHER NO IN TEREST IS ALLOWED TO ANY OF THE LOAN CREDITOR THAT HAVE BEEN HELD AS UNEXPLAINE D BY THE ASSESSING OFFICER ALTHOUGH INTEREST HAS BEEN CREDITED ON 2 OTHER LOAN S WHICH ARE MORE THAN RS.20 000/-. IT IS THEREFORE SEEN THAT PERSON OF LI TTLE CREDIT HAVING VERY SMALL MEANS ADVANCED MONEY TO THE ASSESSEE IN CASH WITHOU T INTEREST AND THEN WAITED PATIENTLY FOR 3 YEARS FOR REPAYMENT. THESE F ACTS CLUBBED WITH NON- APPEARANCE BEFORE THE ASSESSING OFFICER AND THE FAC T THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THEM ESTABLISHED THAT THE LOANS REMAIN UNEXPLAINED. THE ASSESSEE HAS NOT DISCHARGED ITS ONUS WITH REGAR D TO THE CREDITWORTHINESS AND GENUINENESS. THE ACTION OF THE ASSESSING OFFICE R IS THEREFORE UPHELD. THIS GROUND IS DISMISSED. I.T.A NO. 222/KOL/2009-BKH 4 7. AGGRIEVED THE ASSESSEE HAS FILED APPEAL BEFORE T HE TRIBUNAL. 8. BEFORE US THE LD.AR FOR THE ASSESSEE IN ADDITION TO SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW SUBMITTED THAT THE STATEMENTS OF THE TWO PARTIES WHICH HAVE BEEN PARTLY REPRODUCED BY THE AO CANNOT BE CONSIDERED AS SUFFIC IENT FOR COMING TO THE CONCLUSION THAT THE PARTIES DID NOT HAVE CREDITWORTHINESS. ME RELY ON THE BASIS THAT THE LOANS WERE ARRANGED BY ONE CHARTERED ACCOUNTANT IT CANNOT BE CONCLUDED THAT THE ENTIRE AMOUNT OF UNSECURED LOAN WAS UNEXPLAINED CASH CREDIT. HE ALS O PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- A. LABH CHAND BOHRA VS. ITO 219 CTR 571(RAJ) B. SHANTI KUMAR CHORDIA VS. ACIT 128 TTJ 0708(ITA T JAIPUR) 9.. THE LD.DR ON THE OTHER HAND IN ADDITION TO RE LYING ON THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT THE ONUS CAST ON THE ASSESSEE TO PROVE IDENTITY OF THE PARTIES THEIR CREDITWORTHINESS AND GENUINITY OF THE TRANSACTION HAS NOT BEEN DISCHARGED BY THE ASSESSEE AND THEREFORE THE IMPUGNED AMOUNT WAS R IGHTLY ADDED BY THE AO U/S.68 OF THE ACT AND THE SAME WAS RIGHTLY CONFIRMED BY THE LD.CI T(A). RELIANCE WAS PLACED BY HIM ON THE HONBLE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. PVT. LTD [187 ITR 596]. 10. WE HAVE HEARD THE PARTIES AND PERUSED THE RECO RD. ON PERUSAL OF THE CONFIRMATIONS OF THE SOME OF THE CASH CREDITORS AVAILABLE IN APB PAGES 6-33 WE FIND THAT THE LOANS WERE ADVANCED DURING THE MONTH OF APRIL-MAY 2004. IN PAPER BOOK PAGES 1-5 INCOME OF THE CASH CREDITORS FOR F.YR 04-05 I.E. AYR 05-06 HAVE BEEN REFLECTED. THUS THE SAME DO NOT HAVE ANY EVIDENTIARY VALUE IN SO FAR AS ADVANCI NG OF LOANS DURING THE MONTH OF APRIL- MAY04. 10.1 AS REGARDS THE LOANS TAKEN FROM THE PARTIES W HO DID NOT APPEAR BEFORE THE AO THE ASSESSEE IN THE PROCEEDING BEFORE THE LD.CIT(A) OR BEFORE US HAS NOT CONTENDED THAT ADEQUATE OPPORTUNITIES WERE NOT ALLOWED FOR DOING THE SAME. IN THIS VIEW OF THE MATTER AND TAKING INTO CONSIDERATION THE EVIDENCE ON RECO RD WE ARE OF THE CONSIDERED OPINION THAT LOANS RECEIVED FROM SUCH PARTIES HAVE BEEN RI GHTLY TREATED BY THE AO AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THOUGH ON THE BASIS OF PAN CARD AND SERVICE OF NOTICE I.T.A NO. 222/KOL/2009-BKH 5 ISSUED U/S. 131 OF THE ACT ON SUCH PARTIES IT COU LD BE ASSUMED THAT THE IDENTITY OF SUCH PARTIES HAVE BEEN PROVED THERE IS NO MATERIAL ON RECORD TO HOLD THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THEIR CREDITWORTHINE SS AND GENUINITY OF SUCH TRANSACTIONS. WE DRAW SUPPORT FOR THE ABOVE CONCLUSION ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF UNITED CO MMERCIAL & INDUSTRIAL CO. PVT. LTD (SUPRA). 10.2 OF THE 4 PARTIES/CASH CREDITORS WHO APPEARED B EFORE THE AO ONLY THE NAMES OF TWO ARE AVAILABLE ON THE RECORD OF THE TRIBUNAL NAMELY S/SHRI JITENDRA AGARWAL AND TARAK NATH SAHANI. SH. JITENDRA AGARWAL IN HIS STATEMENT HAS STATED THAT RS.19 500/- WAS GIVEN BY HIM TO SHRI O.P BAJORIA ON 23-4-04 FOR PURCHASI NG LAND WHICH DID NOT MATERIALIZE. SHRI JITENDRA AGARWAL WAS NOT AWARE AS TO WHETHER SUCH MONEY WAS ADVANCED TO ANY OTHER PARTY. THUS IN THIS CASE THE GENUINITY OF T RANSACTION HAS NOT BEEN PROVED. IT IS ALSO NOT KNOWN WHAT WAS HIS ANNUAL INCOME FOR THE FY 200 3-04. THOUGH IN HIS STATEMENT HE STATED THAT HIS INCOME WAS RS.3 000/- P.M AS PER APB PAGE-2 GROSS INCOME FOR THE F.Y 2004-05 WAS SHOWN AS RS.70 120/-. NO BALANCE SHEET OF THE PARTY AS ON 31-3-04 IS ALSO AVAILABLE ON RECORD. IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT THE CREDITWORTHINESS OF THE PARTY HAS ALSO NOT BEEN PR OVED BY THE ASSESSEE. WE THEREFORE HOLD THAT THE ONUS CAST ON THE ASSESSEE TO PROVE TH E CREDITWORTHINESS AND GENUINITY OF THE TRANSACTION HAS NOT BEEN DISCHARGED IN THIS CASE A ND THE IMPUGNED AMOUNT OF RS.19500/- WAS RIGHTLY ASSESSED U/S.68 OF THE ACT. 10.3 THE CASH CREDITOR SHRI TARAK NATH SAHANI HAS ACCEPTED IN HIS STATEMENT THAT RS.18 900/- WAS ADVANCED BY HIM TO SHRI AMAR SINGH ON 28-04-2004. THOUGH HE HAS A BANK ACCOUNT HE ADVANCED THE IMPUGNED AMOUNT IN CA SH. HE HAS STATED THAT HIS INCOME WAS ABOUT RS.10 000/- P.M. AND MONEY SAVED WAS DEPO SITED IN THE BANK. HOWEVER AS PER APB PAGE-5 GROSS INCOME OF THE LENDER FOR THE FY 0 4-05 WAS SHOWN AT RS.42 150/-. NO BALANCE SHEET OF THE PARTY AS ON 31-3-04 IS ALSO A VAILABLE ON RECORD OF THE TRIBUNAL. IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDERED O PINION THAT CREDITWORTHINESS OF THE CASH CREDITOR AND GENUINITY OF THE TRANSACTION IN T HIS CASE HAS ALSO NOT BEEN PROVED BY THE I.T.A NO. 222/KOL/2009-BKH 6 ASSESSEE AND THE IMPUGNED AMOUNT OF RS.18 900/- WA S RIGHTLY ASSESSED AS INCOME OF THE APPELLANT U/S.68 OF THE ACT. 10.4 AS REGARDS THE OTHER TWO PARTIES WHO APPEARED BEFORE THE AO IN RESPONSE TO SUMMONS ISSUED U/S. 131 OF THE ACT NO DETAILS ARE AVAILABLE ON THE RECORD OF THE TRIBUNAL. THE FINDINGS RECORDED BY THE AO IN THE ASSESSMENT O RDER WITH REFERENCE TO THESE PARTIES HAVE NOT BEEN DISLODGED BY THE ASSESSEE BY PRODUCIN G ANY EVIDENCE BEFORE US . IN THIS VIEW OF THE MATTER WE CONFIRM THE CONCURRENT FINDI NGS OF THE AUTHORITIES BELOW WITH REFERENCE TO THESE PARTIES ALSO. 10.5 WE WOULD LIKE TO STATE THAT WE HAVE NOTED THE FACT THAT THOUGH THE ASSESSEE WAS ALSO SUMMONED TO APPEAR BEFORE THE AO HE FAILED TO DO SO. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED ON BY THE LD.AR FOR THE ASSESSEE. THE FACTS OF THOSE CASES ARE NOT SIMILAR TO THAT OBTAINED IN THE PRESENT CASE. THUS THE RA TIO LAID DOWN IN THE SAID CASE LAWS DO NOT APPLY TO THE FACTS OF THE PRESENT CASE. 11. AS PER DISCUSSION MADE BY US HEREINABOVE THE GROUNDS TAKEN BY THE ASSESSEE ARE REJECTED. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS D ISMISSED. # '0 $1' 2 1& 3 #4 5$ 25-02-2011 ORDER PRONOUNCED IN THE OPEN COURT ON 25-02-2011 SD/- SD/- [ . . ] [ . ' . # '$ ] (B.R.MITTAL ) (B. K. HALDAR) JUDICIAL MEMBER ACCOUNTANT MEMBER (5$) DATED :25-02-2011 I.T.A NO. 222/KOL/2009-BKH 7 *PP 67 &89 : /SR.P.S. '0 ; -< ='<(>- COPY OF THE ORDER FORWARDED TO: 1. + /APPELLANT- SHRI AMAR SINGH C/O K.L BAJORIA ADVOC ATE BAJORIA MANAGEMENT CONSULTANCY PVT. LTD 7 C.R AVENU E 1 ST FL. LAHA PAINT HOUSE KOL-72. 2 -.+ / RESPONDENT : I.T.O W 53(2) AAYKAR BHAVAN DAKSH IN 2 GARIAHAT ROAD (S) KOL-68. 3. 0&/ THE CIT 4. 0& ()/ THE CIT(A) KOLKATA. 5. E3 -&/ DR KOLKATA BENCHES KOLKATA .< -/ TRUE COPY '0&1/ BY ORDER F !9 / DEPUTY REGISTRAR