ACIT CEN CIR 13, MUMBAI v. RAJESH KUMAR GARG, NEW DELHI

ITA 4309/MUM/2009 | 2006-2007
Pronouncement Date: 14-05-2010 | Result: Dismissed

Appeal Details

RSA Number 430919914 RSA 2009
Bench Mumbai
Appeal Number ITA 4309/MUM/2009
Duration Of Justice 9 month(s) 29 day(s)
Appellant ACIT CEN CIR 13, MUMBAI
Respondent RAJESH KUMAR GARG, NEW DELHI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 14-05-2010
Assessment Year 2006-2007
Appeal Filed On 16-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 4309/MUM/2009 ASSESSMENT YEAR-2006-07 THE ACIT CEN. CIR. 13 OLD CGO ANNEXE BLDG. MUMBAI-400 020 VS. RAJESH KUMAR GARG SH. CHARAN DASS 31 ST AVENUE PUNJABI BAGH NEW DELHI PAN-AIMPG3713C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI UTTAM CHAND BOTHRA O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DT. 5.5.2009 PASSED BY THE LD. CIT(A)-VII MUMBAI F OR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF IN COME WAS FILED ON 27.2.2007 DECLARING TOTAL INCOME OF RS. 2 82 709/-. NOTICES U/S. 143(2) AND 142(1) OF THE I.T. ACT 1961 WERE ISSUED ALONGWI TH QUESTIONNAIRE DULY SERVED ON THE ASSESSEE. FINALLY THE ASSESSMENT WAS COMPLETED U/S. 143(3). 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN T HE CASE OF M/S. SKYLARK BUILD PARTNERSHIP FIRM WHICH IS ASSESSED I N THE SAME CHARGE AS THAT OF THE ASSESSEE IT WAS NOTICED THAT THE FIRM HAS OBTAINED LOANS FROM VARIOUS PERSONS. THE ASSESSEE SHRI RAJESH KUMAR GA RG HAS ALSO ITA NO. 4309/M/09 2 ADVANCED A LOAN OF RS. 1 CRORE TO THE SAID FIRM DUR ING THE YEAR UNDER CONSIDERATION. IT WAS INFORMED BY THE ASSESSEE M/S. SKYLARK BUILD THAT THE SAID LOANS ARE INTEREST BEING LOANS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEES AUTHORIZED REPRESENTATIVE WAS ASKED TO FILE THE COP Y OF ACCOUNT OF M/S. SKYLARK BUILD AND THE SOURCE FOR ADVANCING THE SAID LOAN WITH SUPPORTING DOCUMENTARY EVIDENCES. 5. THE ASSESSING OFFICER HELD THAT FROM THE INCOME FILED FOR A.Y. 2005- 06 IT IS SEEN THAT THE ASSESSEE HAS SHOWN TOTAL IN COME OF RS. 71 800/- WHICH COMPRISES SALARY OF RS. 43 200/- AND INCOME F ROM OTHER SOURCES OF RS. 28 600/- ONLY. THE ASSESSEE HAS FILED HIS RETURN FOR A.Y. 2006-07 SHOWING INCOME FROM OTHER SOURCES COMPRISING INTERE ST RECEIVED FROM M/S. SKYLARK BUILD OF RS. 3 03 288/- AND RS. 3 451/ - AS BANK INTEREST. NO OTHER INCOME HAS BEEN SHOWN BY THE ASSESSEE IN H IS RETURN OF INCOME AND FROM THE ASSESSEES BANK ACCOUNT WITH STATE BAN K OF PATIALA HARYANA IT WAS OBSERVED THAT HUGE AMOUNT OF CREDIT S HAVE BEEN RECEIVED ON 7.11.2005. THESE CREDITS WERE FROM M/S. VARDAYA K TRADERS AN AOP HAVING ADDRESS AT C-6/6596 VASANT KUNJ DELHI IN W HICH THE ASSESSEE IS A MEMBER AND THEREFORE THE AO OBSERVED THAT THE SOU RCE OF THESE AMOUNTS IN THE HANDS OF THE ASSESSEE IS FROM THIS A OP. IT WAS SEEN THAT THERE WAS HUGE CASH DEPOSITS IN THE BANK ACCOUNT OF THIS ENTITY M/S. VARDAYAK TRADERS IMMEDIATELY BEFORE GIVING THIS AM OUNT TO SHRI RAJESH KUMAR GARG WITHOUT ANY INTEREST. 6. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS GIV EN ABSOLUTELY NO CAPITAL CONTRIBUTION TO THIS AOP WHEREAS THE OTHER TWO MEMBERS HAD OPENING CAPITAL BALANCES OF RS. 4.70 CRORES AND RS. 6.06 CRORES. THE AO HELD THAT IT IS CLEAR THAT THE ASSESSEE IS A MAN OF LOW MEANS AND HAS NO CREDITWORTHINESS TO ADVANCE SUCH A HUGE AMOUNT AS A LOAN TO M/S. SKYLARK BUILD. IN THESE CIRCUMSTANCES THE AO WAS OF THE OPINION THAT ITA NO. 4309/M/09 3 THIS LOAN IS NOT GENUINE AND THEREFORE REPRESENTS U NEXPLAINED CASH CREDIT IN HIS BANK ACCOUNT. 7. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE PREFE RRED AN APPEAL BEFORE THE LD. CIT(A) AND IN THE WRITTEN SUBMISSION IT WAS STATED THAT THE LOAN WAS ADVANCED OUT OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE AOP NAMELY M/S. VARDAYAK TRADERS IN WHICH HE WAS A MEMBER. FURTHER DURING THE ASSESSMENT PROCEEDINGS OF M/S. S KYLARK BUILD THE ASSESSEE WAS EXAMINED U/S. 131 OF THE ACT AND ON BE ING SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE NO ADDITIO NS WERE MADE IN THE CASE OF SKYLARK BUILD. THE ASSESSEE ALSO SUBMITTED THAT HE HAD FILED AN AFFIDAVIT WHICH WAS SELF-EXPLANATORY. THE ASSESSEE FURTHER STATED THAT BEFORE THE AO HE HAD FILED A COPY OF ACCOUNT WITH VARDAYAK TRADERS ALONGWITH COPY OF THEIR BANK ACCOUNT CASH BOOK TH EIR INCOME TAX FILE NUMBER ETC. AND ALSO AN AFFIDAVIT EXECUTED BY VARDA YAK TRADERS CONFIRMING OF ADVANCING SUCH LOAN TO THE ASSESSEE. ALL THE DOCUMENTS FILED BEFORE THE AO WERE SUBMITTED FOR PERUSAL BEFO RE THE LD. CIT(A) IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT ALL THESE INFORMATION SUPPLIED BY THE ASSESSEE CLEARLY SHOWS THAT HE HAD DISCHARGE D THE ONUS BY PLACING (I) CONFIRMATION LETTER TO THE CASH CREDITO R (II) AFFIDAVIT OF CREDITORS (III) FULL ADDRESS AND GIRT NUMBER OF CREDITOR (IV) COPY OF BANK ACCOUNT OF CREDITORS AND (V) COPY OF CASH BOOK OF THE CREDITOR . THE ASSESSEE SUBMITTED THAT BY FILING ALL THESE DETAILS HE HAD DISCHARGED THE ONUS OF PROVING THE TRANSACTIONS. FURTHER THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE MONEY AND THE IDENTITY OF SUCH PERSON H AD ALSO BEEN PROVED. THE ASSESSEE SUBMITTED THAT AS THE TRANSAC TIONS ARE THROUGH BANK CHANNELS THERE IS NO DOUBT ABOUT THE GENUINEN ESS OF THE TRANSACTIONS. 8. THE LD. CIT(A) OBSERVED IN HIS ORDER AS FOLLOWS: IT IS INTERESTING TO NOTE THAT THE MATERIAL ON REC ORD SHOWS THAT VARDAYAK TRADERS AN AOP IS DEALING A CONTRACTOR IN COUNTRY ITA NO. 4309/M/09 4 LIQUORS AND HAD HUGE TURNOVER OF SALES EXCEEDING RS . 45.65 CR IN FULL YEAR AND ALMOST ALL SALES WERE IN CASH. FR OM TIME TO TIME THE CASH HAD BEEN DEPOSITED INTO THEIR BANK A CCOUNT. OUT OF WHICH CHEQUES HAD BEEN ISSUED IN FAVOUR OF THE APPELLANT AND THE SAME HAD BEEN DEPOSITED INTO HIS BANK ACCOUNT. SO THE FUND FLOWED FROM THE BANK ACCOUNT OF AOP TO THE BANK ACCOUNT OF THE APPELLANT . THE AO HAS NOT DISCUSSED ALL THESE IN HIS ASSESSMENT ORDER AND MADE THE ADDI TIONS. 9. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND FI ND SUFFICIENT FORCE IN THE CONTENTIONS OF THE APPELLAN T. THE AO HAS NOT BEEN ABLE TO FIND ANY FAULT IN THE CONTENTI ONS OF THE APPELLANT AND THE EVIDENCES PLACED ON RECORD. IT I S EVIDENT FROM THE FACTS STATED ABOVE THAT THE APPELLANT HAS BEEN ABLE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE P ARTY FROM WHOM HE RECEIVED THE NECESSARY FUNDS FOR LENDING TO SKYLARK BUILD. THE ACTION OF THE AO IS ALL THE MORE SELF-C ONTRADICTORY IN THE LIGHT OF THE FACT THAT EVEN THOUGH THE SAID LOA N HAS BEEN FOUND TO BE GENUINE IN THE HANDS OF THE SAID CONCER N THOUGH THE SAME WERE LENT BY THE APPELLANT ADDITION HAS B EEN MADE IN THE HANDS OF THE APPELLANT IN RESPECT OF THE SA ME FUNDS. MOREOVER THE APPELLANT HAS PROVED THE SOURCE OF SO URCE AS WELL BY BRING ON RECORD ENOUGH MATERIAL EVIDENCES B UT THE AO HAS COMPLETELY OVERLOOKED THEM. FROM THE FACTS STA TED ABOVE IT IS EVIDENT THAT THE APPELLANT HAS DULY DISCHARGE D THE PRIMARY ONUS IN THE MATTER AND THERE IS NO BASIS FO R TREATING THE SAID LOAN AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. APART FROM THE CITED DECISION RELIED BY THE APPELLA NT IN THE CASE OF ORIENT TRADING CO. LTD. VS CIT RELIANC E COULD ALSO BE PLACED ON LABH CHAND BOTHRA VS ITO 219 CTR 571 ( RAJ) IN WHICH IT WAS HELD THAT WHERE THE ASSESSEE HAD PROVE D THE IDENTITY OF THE LENDERS AND THEY HAD ALSO CONFIRMED LOANS IN THEIR STATEMENTS ON OATH THE BURDEN WAS DISCHARGED THE HONBLE COURT FOLLOWED CIT VS DAULAT RAM RAWAT MULL 87 ITR 349 (SC) AND LATE MANGILAL AGRAWAL VS ACIT 208 CTR 159 (RAJ). IN ANOTHER CASE OF CIT VS FLEX PACKAGING PV T. LTD. 211 CTR 607 (DEL) IT WAS HELD THAT THE ASSESSEE HAVING SHOWN THAT THE CREDITOR HAD SUFFICIENT BALANCE IN ITS BAN K ACCOUNT IMMEDIATELY BEFORE THE ADVANCEMENT OF LOAN TO THE A SSESSEE AND FURNISHED ALL MATERIAL PARTICULARS SHOWING CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENES S OF THE TRANSACTION THE ACTION OF THE APPELLATE AUTHORITIE S DELETING ITA NO. 4309/M/09 5 SIMILAR ADDITION WAS UPHELD HOLDING THAT NO SUBSTA NTIAL QUESTION OF LAW AROSE. 10. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 11. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ORDER OF THE AO. 12. WE HEARD BOTH THE PARTIES. 13. AT PAGE 34 THE CAPITAL ACCOUNT OF THE MEMBERS OF M/S. VARDAYAK TRADERS HAVE BEEN FILED IN THE PAPER BOOK AND AGAIN ST THE NAME OF M/S. RAJESH KUMAR WE FIND THAT THE CLOSING BALANCE IS A N AMOUNT OF RS. 1 04 53 437.90 WHICH IS MORE THAN ONE CRORE. THE A SSESSEE SEEMS TO BE A MEMBER OF AOP DEALING AS CONTRACTOR IN COUNTRY LI QUOR AND HAVING HUGE TURNOVER OF SALES. FROM TIME TO TIME CASH HAS BEEN DEPOSITED INTO THE BANK ACCOUNT OF M/S. VARDAYAK TRADERS AND CHEQU ES HAVE BEEN ISSUED IN FAVOUR OF THE ASSESSEE WHICH HAS BEEN DEP OSITED IN ASSESSEES BANK ACCOUNT. HENCE THE SOURCE OF THE FUNDS OF THE ASSESSEE IS UNDOUBTEDLY FROM M/S. VARDAYAK TRADERS WHICH IS CL EARLY BROUGHT OUT AT PAGE 34 OF THE PAPER BOOK. HENCE WE FIND THAT T HE CREDITWORTHINESS OF THE CREDITOR HAS BEEN ESTABLISHED SINCE AND IT HAS BEEN PROVED THAT HE HAD SUFFICIENT BALANCE IN HIS BANK ACCOUNT IMMEDIAT ELY BEFORE THE ADVANCEMENT OF LOAN. THE AO BY NO STRETCH OF IMAG INATION CAN HOLD IT TO BE A NON GENUINE TRANSACTION AND CONCLUDE THAT THE LOAN REPRESENTS UNEXPLAINED CASH CREDIT IN ASSESSEES BANK ACCOUNT. 14. THE ASSESSEE HAS DULY DISCHARGED THE ONUS OF PR OVING THE CAPACITY OF THE CREDITOR AND SOURCE OF THE FUNDS. FURTHER T HE TRANSACTION IS THROUGH PROPER BANKING CHANNEL AND HENCE WE ARE OF THE OPINION THAT THERE IS NO BASIS FOR TREATING THE SAID LOAN AS UNE XPLAINED CASH CREDIT ITA NO. 4309/M/09 6 U/S. 68 OF THE I.T. ACT. WE CONFIRM THE ORDER OF T HE LD. CIT(A) AND DISMISS THE REVENUES APPEAL. 15. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY 2010 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 14 TH MAY 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 4309/M/09 7 DATE INITIALS 1 DRAFT DICTATED ON: 6.5.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 7.5 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/ PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______