Kali Charan Agarwal, Kolkata v. ITO, Ward - 35(3), Kolkata, Kolkata

ITA 273/KOL/2010 | 2002-2003
Pronouncement Date: 21-01-2011

Appeal Details

RSA Number 27323514 RSA 2010
Bench Kolkata
Appeal Number ITA 273/KOL/2010
Duration Of Justice 11 month(s) 11 day(s)
Appellant Kali Charan Agarwal, Kolkata
Respondent ITO, Ward - 35(3), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 21-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2002-2003
Appeal Filed On 09-02-2010
Judgment Text
SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA () BEFORE . . . . . . . . ) [BEFORE HONBLE SRI D. K. TYAGI JM] ! ! ! ! / I.T.A NO. 273/KOL/2010 '#$ %&' '#$ %&' '#$ %&' '#$ %&'/ // / ASSESSMENT YEAR : 2002-03 KALI CHARAN AGARWAL -VS- INCOME-TAX OFFICER WD- 35(3) KOLKATA (PA NO.ACRPA 9338 G) ()* / APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: SRI G. R. SHARMA FOR THE RESPONDENT : SRI S. BHADRA / ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 04.12.2009 FOR THE ASSESSMENT YEAR 2 002-03 ON THE SOLE GROUND OF CONFIRMING THE ADDITION OF RS.50 000/- AS UNDISCLOSED INCOME. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 17.3.2003 DECLARING TOTAL INCOME OF RS.49 530/- AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 28.3.2005 DETERMINING TOTAL INCOME AT RS.1 92 294/- BY MAKING THE ADDITION OF RS.50 000/- ON ACCOUNT OF LOAN TAKEN BY THE ASSESEE FROM SMT. USHA DEVI AGARW AL AND OF RS.84 000/- ON ACCOUNT OF UNSECURED LOAN AND RS.8 398/- ON ACCOUNT OF INTERES T ON SUCH UNSECURED LOAN. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) AND HE CONFIRM ED THIS ACTION OF THE ASSESSING OFFICER. THE ASSESSEE THEREAFTER FILED APPEAL BEFORE THE ITA T AND THE ITAT RESTORED THE ADDITION OF RS.50 000/- ON ACCOUNT OF LOAN TAKEN BY THE ASSESSE E FROM SMT. USHA DEVI AGARWAL TO THE ASSESSING OFFICER AND DELETED THE OTHER TWO ADDITIO NS VIDE ITS ORDER DATED 25 TH JUNE 2007. THE ASSESSING OFFICER THEREAFTER PASSED THE ORDER U/S. 143(3)/254 DATED 25.4.2008 BY OBSERVING THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF SM T. USHA DEVI AGARWAL AND IN FACT IT WAS UNDISCLOSED INCOME OF THE ASSESSEE WHICH HE BROUGHT IN HIS BOOK IN THE GUISE OF UNSECURED LOAN AND HENCE ADDED RS.50 000/- AS INCOME FROM OTHER S OURCE IN THE HAND OF THE ASSESSEE AND COMPUTED THE ASSESSEES REVISED TOTAL INCOME AT RS. 1 49 896/-. THE ASSESSEE THEREAFTER FILED A RECTIFICATION PETITION U/S. 154 OF THE I. T. ACT ON 5.5.2008 BY STATING THAT ON SCRUTINY ASSESSMENT U/S. 143(3)/254 RS.50 000/- HAS BEEN TWICE ADDED. ON PERUSAL OF THE RECORD THE SAME ASSESSING OFFICER RECTIFIED THE MISTAKE AND COMPUT ED THE REVISED TOTAL INCOME AT RS. 99 896/- BY HIS ORDER DATED 26.5.2008 PASSED U/S. 154/143(3) /254 OF THE I. T. ACT 1961. AGGRIEVED BY THE SAID ORDER THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). IN APPEAL THE LD. CIT(A) 2 VIDE HIS ORDER DATED 4 TH DECEMBER 2009 CONFIRMED THE ACTION OF THE ASSESSI NG OFFICER BY OBSERVING AS UNDER : I HAVE PERUSED THE RELEVANT ORDERS AND CONSIDERED THE SUBMISSION OF THE APPELLANT. THE STATEMENT OF THE LOAN CREDITOR WAS RECORDED U/S. 13 1. THE LOAN CREDITOR CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.5 036/- FROM CUSTOMERS BU T WAS NOT ABLE TO GIVE DETAILS OF SUCH CUSTOMERS. SECONDLY SHE CLAIMED TO HAVE RECE IVED CASH LOAN OF RS.19 500/- BUT WAS NOT ABLE TO GIVE DETAILS OF THE PERSON FROM WHO M THE LOAN WAS RECEIVED. THE A.O. HAS BROUGHT POSITIVE MATERIAL ON RECORD TO SUGGEST THAT THE SOURCE OF CASH DEPOSIT OF RS.50 000/- IN THE BANK ACCOUNT OF THE LOAN CREDITO R WAS NOT EXPLAINED. THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION. THE ORDER OF THE A.O. CALLS FOR NO INTERFERENCE. GROUND NO. 2 IS DISMISSED. BEING FURTHER AGGRIEVED THE ASSESSEE IS NOW IN APP EAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE TOOK LOAN OF RS.50 000/- FROM SMT. USHA DE VI AGARWAL DURING THE YEAR UNDER APPEAL. THE LOAN CREDITOR IS A TAXPAYER AND ASSESSED TO INC OME TAX AND THE TRANSACTION OF LOAN WAS BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE FURNISHED LETTE R OF CONFIRMATION CONTAINING THE DETAILS OF THE CREDITOR AND THE COPIES OF THE DEPARTMENTAL ACK NOWLEDGMENT OF CREDITORS RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 ALONG WITH THE BANK STA TEMENT P&L ACCOUNT BALANCE SHEET AND CASH FLOW STATEMENT TO THE ASSESSING OFFICER. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE CREDITOR APPEARED BEFORE THE ASSESSING OFFICER AND PRODUCED HER ALL RELEVANT DOCUMENTS SUPPORTED BY P&L ACCOUNT COPY OF BANK ACCOUNT AND CASH FLOW STATEMENT SHOWING DATE WISE INFLOW AND OUTFLOW OF THE CASH AND HER STATEMENT WA S RECORDED UNDER SECTION 131. HE ALSO CONTENDED THAT THE ASSESSEE EXPLAINED REGARDING SOU RCE OF LOAN VIDE HIS LETTER DATED 28.12.2004 TO THE AO. THEREFORE PROOF OF IDENTITY OF THE DONOR CAPACITY TO GIVE GIFT AND THE GENUINENESS OF THE TRANSACTION ARE ESTABLISHED. TH E A.O. HOWEVER WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE CREDITOR AND MADE THE ADDITION AND THE LD. CIT(A) SUSTAINED THE SAME ON THE SAME GROUND OF CREDITWORTHINESS. HE AL SO CONTENDED THAT THE ASSESSING OFFICER IN HIS ORDER DATED 25.4.2008 ADMITS THAT . A.R. OF THE ASSESSEE APPEARED AND FILED CASH FLOW STATEMENT AND P & L ACCOUNT AND BALANCE SHEET OF SM T. USHA DEVI AGARWAL. THE ASSESSING OFFICER FOLLOWING THE DIRECTION OF ITAT FURTHER OBS ERVES THE ASSESEE HAD ALREADY FILED ALL DETAILS IN RESPECT OF LOAN OF RS.50 000/- FRO M SMT. USHA DEVI AGARWAL. HE ALSO CONTENDED THAT THE REASONS FOR ADDITION OF RS.50 000/- ON BEH ALF OF THE ASSESSING OFFICER ARE THAT (I) THE ASSESSING OFFICER CONCEDES THAT THERE WAS A CASH BA LANCE OF RS.25 464/- WITH THE CREDITOR AS ON 21.3.2002 BUT SHE HAD DEPOSITED RS.50 000/- ON THE SAME DAY IN THE BANK (II) THE CREDITOR RECEIVED CASH LOAN OF RS.19 500/- ON 30.11.2001 BUT DEPOSITED IT IN THE BANK ON 21.3.2002 BUT COULD NOT STATE HER CREDITORS NAMES IN DEPOSITION ON 22.4.2008 IN ORAL EXAMINATION AND (III) THE CREDITOR TOOK ADVANCE OF RS.5036/- FROM TWO OR THRE E PARTIES FOR HOUSEHOLD EXPENSES AND CHILDRENS EDUCATION BUT DID NOT UTILIZE FOR THE SA ID PURPOSE AND INSTEAD DEPOSITED IN HER BANK 3 ACCOUNT FOR ADVANCING THE ASSESSEE. IN HIS REJOINDE R TO THE ABOVE REASONS THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT (I) THE QUESTION IS NOT OF THE ASSESSEES SOURCE OF CASH DEPOSIT BUT THE SOURCE OF THE CREDITOR. THE CASH BALANCE ON 20.3.2 002 WITH THE CREDITOR SMT. USHA DEVI AGARWAL WAS RS.50 000/- WHICH IS EVIDENT FROM HER C ASH FLOW STATEMENT AT PAGE NO. 14 OF THE PAPER BOOK-I AND THE SAME WAS DEPOSITED BY HER INTO BANK ON 21.3.2002 (II) THE MAIN CAUSE OF THE ASSESSING OFFICERS DISBELIEF OF CONFIRMATION O F THE CREDITORS BOTH ORAL TESTIMONY AND IN WRITING IS THE CREDITORS FAILURE TO TELL THE DETAI LS OF HER CREDITORS OFFHAND AFTER LAPSE OF ABOUT SEVEN YEARS. IN SUPPORT OF HIS SUBMISSIONS HE REL IED ON THE FOLLOWING DECISIONS : (I) S. HASTIMAL 49 ITR 273 (MAD.) (II) SUESH KALMADI (1988) 32 TTJ 300 (ITAT PUNE) (III) SARAOGI CREDIT CORPORATION (1974) GJX 426 (PA T) (IV) BAHRI BROTHERS PVT. LTD. (1985) 154 ITR 244 (P AT.) (V) TOLARAM DAGA (1966) 59 ITR 632 (ASSAM) HE LASTLY URGED BEFORE THE BENCH TO DELETE THE ADDI TION AS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A). 4. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES AND PRAYED BEFORE THE BENCH TO CONFIRM THE SAME. 5. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES PERUSED THE MATERIAL PLACED BEFORE US AND THE CASE LAWS CITED BY THE LD. COUNSE L FOR THE ASSESSEE. IT IS A SETTLED LAW THAT THE ONUS TO PROVE THE GENUINENESS OF THE LOAN CREDITOR IS UPON THE ASSESSEE. TO DISCHARGE SUCH ONUS THE ASSESSEE HAS TO ESTABLISH THE IDENTITY T HE CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS OF THE TRANSACTION. IN THIS CASE IDEN TITY OF THE CREDITOR IS NOT IN DISPUTE. THEREFORE LET ME EXAMINE WHETHER THE CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION ARE PROVED OR NOT. THE CREDITOR IS ASS ESSED TO INCOME-TAX. THE CREDITOR SMT. USHA DEVI AGARWAL HAS FILED THE RETURN OF INCOME FOR ASS ESSMENT YEAR 2002-03 I.E. THE YEAR UNDER CONSIDERATION. THE ASSESSEE ALSO FILED P&L ACCOUNT AND BALANCE SHEET ALONG WITH THE RETURN. FROM THE SAID BALANCE SHEET IT IS OBSERVED THAT THE RE IS NET PROFIT OF THE LOAN CREDITOR SMT. USHA DEVI AGARWAL IS ONLY RS.78 248/- AND THE DRAWING IS ONLY RS.19 000/-. BESIDES THIS IT IS ALSO FOUND FROM THE S.B. ACCOUNT OF THE LOAN CREDITOR TH AT SHE DEPOSITED CASH OF RS.50 000/- ON 21 ST MARCH AND ON THAT DAY ITSELF SHE WITHDREW THE SAID AMOUNT. IT IS ALSO FOUND THAT THE SOURCE OF THE SAID CASH DEPOSIT OF RS.50 000/- IN THE BANK AC COUNT OF THE LOAN CREDITOR WAS NOT EXPLAINED THE CLAIM OF THE LOAN CREDITORS THAT SHE RECEIVED C ASH LOAN OF RS.19 500/- AND RECEIVED AN AMOUNT OF RS.5 036/- FROM THE CUSTOMERS WAS ALSO UN PROVED AS SHE WAS NOT ABLE TO GIVE DETAILS OF THE PERSON FROM WHOM THE LOAN WAS RECEIVED AND W AS NOT ABLE TO GIVE DETAILS OF SUCH CUSTOMERS. SINCE THE LOAN CREDITORS DID NOT PROVE HER CREDITWORTHINESS THE CASE LAWS CITED BY THE LD. COUNSEL ARE OF NO HELP TO THE ASSESSEE. I ALSO FIND THAT SMT. USHA DEVI AGARWAL SPENT ONLY RS.19 000/- ON HER FAMILY DURING THE YEA R AND GAVE A SUM OF RS.50 000/- 4 INTEREST FREE LOAN TO THE ASSESSEE DOES NOT APPEAL TO COMMON SENSE AND IS AGAINST ALL HUMAN PROBABILITIES. IN VIEW OF ALL THIS THE CREDI TWORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS HAVE RIGHTLY BE EN DISBELIEVED BY THE LOWER AUTHORITIES. I ALSO FIND THAT THE COORDINATE BENC H IN THE FOLLOWING CASE HAS DISMISSED THE ASSESSEES GROUND OF APPEAL DUE TO LACK OF CRED ITWORTHINESS. I) ITA NO. 1027/K/2007 SMT. KALPANA GHOSH VS. ITO D ATED 15.2.2008 IN THE SAID CASE THE TRIBUNAL HAS HELD AS UNDER : 6. HEARD THE SUBMISSIONS OF BOTH THE SIDES CONSID ERED THE CASE LAWS CITED IN THE WRITTEN SUBMISSION AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. WE FIND THAT THE ONUS IS ON THE PART OF THE ASSESSEE TO PROVE THE IDENTIT Y CREDITWORTHINESS AND GENUINENESS OF THE PARTIES FROM WHOM HE HAD RECEIVED GIFTS. IN THI S CASE THE ASSESSEE WAS UNABLE TO PROVE THE CREDITWORTHINESS OF THE DONORS BEFORE THE LOWER AUTHORITIES. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER DID NOT DISPUTE THE FACT THAT BOTH THE DONORS ARE EXISTING PERSONS AND GIFT AMOUNT WAS GIVEN BY B ANK CHEQUES. THE ASSESSING OFFICER ALSO FOUND THAT THE DONORS WERE NOT CLOSE RELATIVES OF THE ASSESSEE. THE ONLY QUESTION REMAINS THAT WHETHER THE DONORS ARE CAPABLE TO GIFT SUCH A HUGE AMOUNT. WE FIND FROM ALL THE FACTS AND EVIDENCE THAT THE DONORS SMT. RAMA DAS AND SRI SOMNATH MAJUMDER HAD INCOME OF RS.93 478/- AND RS.54 100/- RESPECTIVELY AND HAVE WITHDRAWN MEAGER AMOUNTS OF RS.23 000/- AND RS.25 000/- FOR H OUSEHOLD EXPENSES DURING THE YEAR UNDER APPEAL AND HAVE CLAIMED TO HAVE GIFTED A SUM OF RS.2 50 000/- EACH TO THE ASSESSEE WHO FALLS IN HIGHER INCOME BRACKET THAN TH EM WITHOUT KEEPING ANY PROVISION FOR THEIR FUTURE AS HAS RIGHTLY BEEN OBSERVED BY TH E ASSESSING OFFICER BY ANALYZING THEIR BALANCE SHEETS. THEY HAVE ALSO FAILED TO PRODUCE A NY EVIDENCE REGARDING AMOUNTS DEPOSITED BY THEM IN CASH IN THEIR BANK ACCOUNTS TO THE EFFECT THAT THESE WERE THEIR BUSINESS RECEIPTS DESPITE OPPORTUNITY BEING GIVEN B Y THE ASSESSING OFFICER FOR THIS PURPOSE. THESE PECULIAR FACTS OF THIS CASE DO NOT APPEAL TO COMMON SENSE AND ARE AGAINST ALL HUMAN PROBABILITIES. IN VIEW OF ALL TH IS THE CREDITWORTHINESS OF THE DONORS AND THE GENUINENESS OF THE TRANSACTIONS HAVE RIGHTL Y BEEN DISBELIEVED BY THE LOWER AUTHORITIES AND THE ADDITIONS SO MADE BY THE ASSESS ING OFFICER AND SUSTAINED BY THE LD. CIT(A) ARE HEREBY CONFIRMED. THEREFORE THE ADDITIONS SO MADE BY THE ASSESSING O FFICER AND SUSTAINED BY THE LD. CIT(A) ARE HEREBY CONFIRMED. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.01.2011 SD/- . . (D. K. TYAGI) JUDI CIAL MEMBER ( - - - -) )) ) DATED : 21ST JANUARY 2011 %./ '#01 '2% JD.(SR.P.S.) 5 3 +''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SRI KALI CHARAN AGARWAL 40 STRAND ROA D 4 TH FLOOR R. NO. 4 KOLKATA-700 001 2 +)* / RESPONDENT : ITO WARD-35(3) KOLKATA. 3 . ' # / THE CIT KOLKATA 4 . ' # ( )/ THE CIT(A) KOLKATA 5 . %=' +'# / DR KOLKATA BENCHES KOLKATA 4 +'/ TRUE COPY #>/ BY ORDER ? 1 /DEPUTY REGISTRAR .