Mrs. Neha Rathi,, Pune v. ACIT, Range-5,, Pune

ITA 307/PUN/2010 | 2004-2005
Pronouncement Date: 27-07-2011 | Result: Allowed

Appeal Details

RSA Number 30724514 RSA 2010
Assessee PAN LLANT1336S
Bench Pune
Appeal Number ITA 307/PUN/2010
Duration Of Justice 1 year(s) 5 month(s) 3 day(s)
Appellant Mrs. Neha Rathi,, Pune
Respondent ACIT, Range-5,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-07-2011
Date Of Final Hearing 25-07-2011
Next Hearing Date 25-07-2011
Assessment Year 2004-2005
Appeal Filed On 23-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I. C. SUDHIR JUDICIA LMEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 307/PN/2010 (ASSTT. YEAR: 2004-05)) MRS NEHA RATHI .. APPELLANT 1336 SHUKRAWAR PETH PUNE PAN- AAZPR9287R VS. ADDL. COMMISSIONER OF INCOME-TAX .. RESPONDENT R-5 PUNE APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY : SHRI S K AMBASTHA ORDER PER G.S. PANNU A.M .: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III PUNE DATED 1 6.11.2009 WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 26.12.2006 PASSED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SH ORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2004-05. 2. THE SOLITARY ISSUE IN THIS APPEAL RELATES TO AN ADDIT ION OF RS 8 LAKHS SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN TERMS OF SECTION 68 OF THE ACT. BRIEFLY PUT THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SHARE TRADING ETC. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAD RECEIVED A LOAN OF RS 8 LAKHS F ROM ONE M/S GLOBAL MARKETING. THE ASSESSING OFFICER SUMMONED THE SAID PARTY I N RESPONSE TO WHICH SHRI VINAY SETIA PARTNER OF THE SAID FIRM WAS EXAMI NED. THE SAID PARTNER CONFIRMED HAVING ADVANCED THE IMPUGNED LOAN TO THE ASS ESSEE BUT THE ASSESSING OFFICER WAS NOT SATISFIED ABOUT THE CREDITWORTHI NESS OF THE CREDITOR AND 2 ACCORDINGLY SHE TREATED THE SUM OF RS 8 LAKHS AS AN UNEXPL AINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. 3. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS) ASSESSEE CONTENDED THAT SHE HAD SUCCESSFULLY PROVED THE IDENTITY OF THE CREDITOR GENUINENESS OF THE TRANSACTION AND ALSO THE CREDITWORTHIN ESS OF THE CREDITOR. HOWEVER THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS A LSO NOT SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND THEREFORE HE SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE POIN TED OUT THAT THE LOAN IN QUESTION WAS RECEIVED BY THE ASSESSEE BY WAY OF AN ACCO UNT PAYEE CHEQUE AND THE SAME STOOD CONFIRMED BY THE CREDITOR DURING EX AMINATION BY THE ASSESSING OFFICER. IT WAS ALSO POINTED OUT THAT MERELY BECA USE THE CREDITOR COULD NOT EXPLAIN SOME OF THE CREDIT ENTRIES APPEARING IN HI S BANK ACCOUNT THE SAME CANNOT BE CONSIDERED AS A FAILURE ON THE PART OF THE ASSE SSEE TO DISCHARGE THE ONUS CAST UNDER SECTION 68 OF THE ACT. IT WAS THEREFORE CONTENDED THAT THE ASSESSEE COULD NOT BE EXPECTED TO PROVE SOURCE OF THE SOURCE AND IN THIS REGARD RELIED UPON THE FOLLOWING JUDGMENTS: (I) NEMI CHAND KOTHARI 264 ITR 254 (GUA); (II) JAIKISHAN DADLANI 4 SOT 138 (MUM) (III) S.K. JAIN 2 SOT 579 (AGRA) APART THEREFROM IT HAS BEEN POINTED OUT THAT THE TR ANSACTION WAS GENUINE INASMUCH AS THE LOAN WAS RETURNED BY THE ASSESSEE IN SUBSEQUE NT YEAR THROUGH ACCOUNT PAYEE CHEQUE WHICH ALSO STOOD CONFIRMED BY THE CRED ITOR DURING THE COURSE OF HIS EXAMINATION BY THE ASSESSING OFFICER. IT HA S ALSO BEEN POINTED OUT THAT WHERE THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITOR AND THE CREDITOR HAD ACCEPTED ADVANCING OF THE AMOUNT TO THE ASS ESSEE NO ADDITION IS PERMISSIBLE UNDER SECTION 68 OF THE ACT AND IN THIS REGA RD RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS: 3 (I) KANHZAIYALAL JANGID 8 DTR 38 (RAJ.); (II) CIT V. DIAMOND PRODUCTS LTD. 21 DTR 9 (DEL). (III) MANOJ KUMAR GUPTA V. ITO 114 TTJ 253 (JP.) 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE AUTHO RITIES BELOW BY POINTING OUT THAT THE EXPLANATION OF THE ASSESSEE HAS BEEN FOUND TO BE UNSATISFACTORY AND HENCE THE ADDITION UNDER SECTION 68 OF THE ACT WAS JUSTI FIED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE THE ONLY REASON FOR INVOKING PROVISIONS OF SECTION 68 OF THE ACT I S THAT ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS FAILED TO DISCHARGE THE BUR DEN OF PROVING CREDITWORTHINESS OF THE CREDITOR. IN COMING TO SUCH INFERE NCE IT IS MADE OUT BY THE REVENUE THAT THE CREDITOR DURING EXAMINATION BY THE ASSESSING OFFICER DID NOT SATISFACTORILY EXPLAIN THE SOURCE OF CASH DEPOSITS IN HIS BA NK ACCOUNT. SECONDLY IT HAS ALSO BEEN POINTED OUT THAT THE CREDITOR M/S GLOBAL MARKETING DID NOT CARRY ON BUSINESS DURING THE YEAR AND NEITHER WAS IT HOLDING AN Y FIXED ASSETS AND THEREFORE THE ASSESSEE FAILED TO PROVE THE CREDITWORTH INESS OF THE SAID CREDITOR TO GIVE A LOAN OF RS 8 LAKHS TO THE ASSESSEE WE HAVE CAREFUL LY CONSIDERED THE FACT- SITUATION IN THE PRESENT CASE AND FIND THAT THE ASSESSEE HAS PRIMA FACIE DISCHARGED THE ONUS CAST ON HIM IN TERMS OF SECTION 68 OF THE ACT. IN THIS REGARD WE HAVE PERUSED THE STATEMENT OF SHRI VINAY SETIA PA RTNER OF M/S GLOBAL MARKETING RECORDED BY THE ASSESSING OFFICER A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 4 TO 10. IN THE COURSE OF EXAMI NATION THE SAID PARTNER HAS EXPLAINED THE SOURCES OF HIS INCOME OUT OF WHICH THE A MOUNT OF RS 8 LAKHS HAS BEEN ADVANCED TO THE ASSESSEE. THE ACTIVITIES CARRIED OUT BY THE CREDITOR HAVE ALSO BEEN EXPLAINED AND THERE IS NO MATERIAL TO SAY THAT THE EXPLANATION FURNISHED BY THE CREDITOR IS FALSE. IN FACT THE CREDITOR HAS CONFIRMED AND ADEQUATELY EXPLAINED THE AMOUNT OF LOAN ADVANCED TO THE ASSESSEE. MERELY BECAUSE IN THE OPINION OF THE ASSESSING OFFICER THE SOURCE OF THE CREDITOR WAS NOT INFALLIBLY PROVED THE SAME CANNOT BE CONSIDERED A S A FAILURE ON THE PART OF 4 THE ASSESSEE TO DISCHARGE THE ONUS CAST ON HIM UNDER SECTION 68 OF THE ACT. QUITE CLEARLY THE ONUS ON THE ASSESSEE IS TO PROVE THE IDENTITY CREDITWORTHINESS OF THE CREDITOR GENUINENESS OF THE TRANSACTION AND THE SAME CANNOT BE EXTENDED TO PROVE THE SOURCE OF THE CREDITORS TO THE HILT. THERE FORE HAVING REGARD TO THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE IN OUR VI EW THE INVOKING OF SECTION 68 OF THE ACT TO MAKE AN ADDITION OF RS 8 LAKHS REPRESEN TING LOAN RECEIVED FROM M/S GLOBAL MARKETING IN THIS CASE IS MISPLACED. RESULTANTLY WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JULY 2011. SD/- SD/- (I.C. SUDHIR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE: 27 TH JULY 2011 COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-III PUNE 4) THE CIT-III PUNE 5) THE DR A BENCH I.T.A.T. PUNE. 6) GUARD FILE BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE B