Income Tax Appellate Tribunal - Ahmedabad
Shri Sanjay K. Bishnoi,, Ahmedabad vs The Deputy Commissioner Of Income Tax, ... on 27 June, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'B' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 1321/Ahd/2017 ( नधा रण वष / Assessment Year : 2013-14) Shri Sanjay K. Bishnoi, बनाम/ DCIT, 11, Nirav Palace, Vs. Circle - 2(2), Chandkheda, Ahmedabad - Ahmedabad 382424 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AMUPB7496D (अपीलाथ /Appellant) .. (!"यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Vipul B. Khandhar, A.R. !"यथ क$ ओर से / Shri Mudit Nagpal, Sr. D.R. Respondent by :
सन ु वाई क$ तार ख / Date of 04/06/2018 Hearing घोषणा क$ तार ख /Date of 27/06/2018 Pronouncement आदे श/O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A)-10, Ahmedabad ('CIT(A)' in short), dated 20.03.2017 arising in the assessment order dated 29.02.2016 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2013-
14.
2. Assessee has filed belated appeal by twelve days. Considering the smallness of delay, the same stands condoned and the appeal is admitted for hearing.
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3. As per the captioned appeal, the assessee has challenged the addition aggregating amount of Rs.1,19,00,000/- on account of temporary loans taken from five parties as unexplained cash credit.
4. Briefly stated, the assessee, an individual, is engaged in the business of wholesales, trading, import and export in food grain and pulses. The return filed by the assessee was subjected to scrutin y assessment. In the course of scrutiny assessment, the AO noticed that the assessee has obtained unsecured loans from certain parties. It was observed by the AO that the assessee has failed to prove the identity, creditworthiness and genuineness of the depositors. In this regard, the AO also found that the parties have not responded to the notices under s. 133(6) of the Act and were not found traceable. The AO accordingly concluded that the unsecured loan aggregating to Rs.1,19,00,000/- in respect of following parties remains unexplained. The five parties are; (i) Anmol Traders Rs.20,00,000/-, (ii) Jalaram Finvest Ltd. Rs.34,00,000/-, (iii) Kalpana Textile Rs.25,00,000/-, (iv) M. K. Sales Rs.35,00,000/- and (v) S. V. Enterprise Rs.5,00,000/-. He accordingly added the same to the total income of the assessee b y resorting to Section 68 of the Act.
5. Aggrieved, the assessee preferred appeal before the CIT(A).
5.1. Before the CIT(A), the assessee filed additional evidence in the form of ledger copy of the parties and bank statements. The assessee also supported the bonafides of the loans by way of a certificate from Punjab National Bank regarding debit and credit transactions of aforestated parties in the bank account of the assessee. The CIT(A) obtained a remand report dated 03.03.2017 from the AO on the issue. The CIT(A), however, did not find merit in the appeal of the assessee and confirmed the action of the AO.
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6. Further aggrieved, the assessee preferred appeal before the Tribunal.
6.1 The learned AR for the assessee Shri Vipul B. Khandhar, at the outset, submitted that the assessee is engaged in the business of trading, import and export of food grains and pulses etc. in order to execute the transactions of import and export. The assessee obtained short term credit facilities from the private parties which were replenished almost immediately. The credits obtained from the borrowers were temporary and for a very short term period. The learned AR thereafter referred to the ledger account of all the five parties in question and submitted that as regards loan from Anmol Traders at page no.1 of the paper book, the assessee obtained loan on 03.04.2012 amounting to Rs.20 Lakhs, which was repaid on within 18- 20 days on 21.04.2012. The learned AR thereafter referred to the bank statements of the assessee as well as the bank certificate obtained from its banker-PNB (produced before the Revenue Authorities) to establish that the loan of temporary nature to meet its business requirement was obtained from Anmol Traders indeed. The re-payment was also made in few days' time. Similarly, as regards Jalaram Finvest Ltd., the transactions of receipts and repayment to the party is vouched by the bank statement and certificate. The learned AR thereafter referred to another party namely Kalpana Textile where the loan was taken on 03.04.2012 and repaid on 10.04.2012 in a gap of mere seven days. The learned AR next referred to the party namel y M. K. Sales and pointed out that loan of Rs.15 Lakhs was repaid through banking channel within two days. Another amount of Rs.20 Lakhs was also albeit paid in FY 2014-15 through banking channel. The learned AR thereafter referred to yet another party, namely, S. V. Enterprise where temporary loan of Rs.5 Lakhs was taken on 03.04.2012 and repaid within 20-25 days on 26.04.2012. The learned I T A N o . 1 3 2 1 / Ah d / 1 7 [ S h r i S a n j a y K . B i s h n o i vs. DC IT] A.Y. 2013-14 - 4 -
AR, thus, submitted in elaboration that this peculiar facts of payment received for a very short period and repaid through banking channel as affirmed by the specific certificate from the bank has been totall y overlooked by the Revenue.
6.2 Learned AR submitted that it is not a case where the loans have been availed for a long period or remained outstanding. The short term trade loans carried with it obligation of the re-payment in the near period. The assessee duly discharged such obligation. The money by way of trade loans was in the nature of money transacted to give effect to the business of import / export of food grains and pulses.
6.3 The learned AR emphasized that the certificate from the bank assumes a great significance in the sense that loans were taken and repaid through banking channel to the same parties. The learned AR pointed out that in such circumstances, it is highly unreasonable to sa y that the parties are not identifiable. The parties have bank accounts, which necessarily pre-supposes existence of PAN and current address. The learned AR thereafter emphasized that the overwhelming fact of re-payment of all loans in a short period cannot be ignored. The receipt of loan cannot be considered unexplained on the fact of re- payment thereof in entirety. The learned AR submitted that the assessee is not benefitted in the form of wrongful formation of capital by introduction of unexplained credit as alleged which is typical of wrongful entries. This is owing to the fact that loans received from the parties have been returned after meeting the temporary business requirement. The learned AR submitted that the assessee has no control over the information towards creditworthiness etc. in possession of the lender. The assessee has not availed such loans in future and therefore is not in contact with these parties. I T A N o . 1 3 2 1 / Ah d / 1 7 [ S h r i S a n j a y K . B i s h n o i vs. DC IT] A.Y. 2013-14 - 5 -
6.4 The learned AR thereafter submitted that with reference to one party namely 'Jalaram Finvest Ltd.', the AO himself in the remand report has accepted the identification of the party. The learned AR also pointed out that the aforesaid party (Jalaram Finvest Ltd.) is on the record of other statutory authorities also namely Ministry of Corporate Affairs (MCA). The requisite details of lenders under the strict governance of the MCA as uploaded by the lender itself was provided to the Revenue Authorities.
6.5 The learned AR accordingly submitted that the inference drawn against the assessee in the peculiar facts of the case is totall y unwarranted. The crucial fact of re-payment of such loans cannot be ignored. The learned AR contended that the addresses provided by the lender at the time of short term lending, was submitted to the AO which might have changed. However, the factum of re-payment to such parties cannot be ignored. The learned AR thus submitted that there is no justification for the Revenue to increase the assessed income on account of loans already re-paid.
7. We have carefully considered the rival submissions and perused the orders of the authorities below and material referred to and relied upon in the course of hearing. As noted, the assessee in the instant case has disputed the additions made on account of loans received from five parties named above. While it is the case of the Revenue that the five parties were not found available at the addresses provided by the assessee and the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction and hence the provisions of Section 68 get triggered, the assessee on the other hand pleads that the bonafides of the transactions requires to be seen having regard to the entirety of the facts.
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7.1 On going through the facts of each borrowing, we observe that with regard to the parties namely (i) Anmol Traders, (ii) Kalpana Textile and (iii) S. V. Enterprise; the loans are apparently ver y temporary in nature for very few days. Apparently, the receipt of loan is through banking channel from the bank account of lender. The re- payments in all the three cases have been made within a very short span of time ranging from two days to 25 days. Thus, the loans stood re-paid promptly. This overwhelming fact of re-payment itself transcends all other considerations. Coupled with this, the pattern of receipt and re-payment thereof clearly shows the transaction in the ordinary course of business. No doubt, the assessee is under obligation to prove the nature and source of deposits. The requirement, however, cannot be stretched to the hilt. The name of the parties from whom the money has been received and re-paid are appearing in the bank statement which is further confirmed by the specific certificate of receipt and re-payment from the bank. Thus, we are of the considered view that the onus cast upon the assessee in terms of Section 68 stands discharged in respect of loan transactions from these three parties. Thus, the order of CIT(A) cannot be sustained in respect of additions attributable to these parties. The addition made in respect of these three parties is therefore quashed.
7.2 We shall now advert to another party namely Jalaram Finvest Ltd. A perusal of the order of the CIT(A) clearly shows that the AO has himself accepted the identification of the aforesaid party in the remand proceedings. This apart other features of similar nature exists in this too i.e. the loans are very temporary and promptly re-paid within a very short span of time of few days. The lender is a registered company with the MCA. The master data of the lender company is available in public domain which is also placed on record. The transactions are vouched from the bank certificate. In these circumstances, the plea of the Assessee that the loan obtained from I T A N o . 1 3 2 1 / Ah d / 1 7 [ S h r i S a n j a y K . B i s h n o i vs. DC IT] A.Y. 2013-14 - 7 -
Jalaram Finvest Ltd. to be genuine is well founded. The action of Revenue Authorities is thus set aside. The addition made on this score is quashed.
7.3 We shall now advert to the loan taken from another party, namely, M. K. Sales amounting to Rs.35 Lakhs. A perusal of the bank statement shows that the assessee has obtained loans of Rs.20 Lakhs and another Rs.15 Lakhs during the financial year. While the loan of Rs.15 Lakhs was returned to the lenders within two days, the remaining loan of Rs.20 Lakhs was shown to be outstanding during the year. It is the case of the assessee that the outstanding loan has also been eventually re-paid in the FY 2014-15. However, the re-payment of Rs.20 Lakhs is not vouched by any bank statement/ bank certificate. Therefore, we are unable to ascertain the bonafides of loan outstanding of Rs.20 Lakhs. Thus, we consider it appropriate to set aside and restore the issue back on account of additions in respect of loans from M. K. Sales to the file of the AO. The AO is directed to verif y the factual aspects on claim of re-payment to the party and if found proper, is directed to grant appropriate relief. It shall be open to the AO to make appropriate inquiry from the bank to locate towards the fact of re-payment if so considered expedient. Thus, the action of CIT(A) is cancelled and the additions made on account of receipt from M. K. Sales is remitted back to the file of the AO for necessar y verification as noted above to enable him to pass a fresh order in accordance with law.
7.4 At this juncture, it will be relevant to note the pertinent observations of the Hon'ble Supreme Court in the case of CIT vs. Smt. P. K. Noorjahan (1999) 237 ITR 570 (SC) in the context of the expression 'may' with reference to Section 69 of the Act. The Hon'ble Supreme Court in that case observed that the word 'may' should not be read as 'shall'. The Hon'ble Supreme Court held that I T A N o . 1 3 2 1 / Ah d / 1 7 [ S h r i S a n j a y K . B i s h n o i vs. DC IT] A.Y. 2013-14 - 8 -
the expression 'may' indicates that the intention of Parliament in enacting Section 69 (similar to Section 68) was to confer a discretion on the AO in the matter of treating the source of investment, which has not been satisfactorily explained by the assessee. In terms of the decision of the Hon'ble Supreme Court, the AO is not obliged to invoke Section 68/s. 69 of the Act in every case where the explanation offered is found to be 'unsatisfactory' in the opinion of the AO. In view of the overriding fact that loans so obtained stood re-paid through banking channel without any real advantage to the assessee, the onus cast upon the assessee is substantially discharged in view of the observations of the Hon'ble Supreme Court.
8. In the result, the appeal of the assessee is partly allowed.
This Order pronounced in Open Court on 27/06/2018
Sd/- Sd/-
(MAHAVIR PRASAD) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 27/06/2018
True Copy
S. K. SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय1
ु त / Concerned CIT
4. आयकर आयु1त- अपील / CIT (A)
5. 5वभागीय !8त8न ध, आयकर अपील
य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड< फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील
य अ धकरण, अहमदाबाद ।