Income Tax Appellate Tribunal - Delhi
Vinod Kumar Gupta , Uttarpradesh vs Circle-1(1)(1) , Meerut on 30 August, 2022
THE INCOME TAX APPELLATE TRIBUNAL
DELHIBENCH 'H', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Anubhav Sharma, Judicial Member
ITA No. 664/Del/2022 : Asstt. Year : 2014-15
Vinod Kumar Gupta, Vs Pr. CIT,
A-11, Jawala Nagar Meerut, Ghaziabad
Meerut, Uttar Pradesh-250002
(APPELLANT) (RESPONDENT)
PAN No. AAQPG8113L
Assessee by: Sh. Salil Kapoor, Adv. &
Sh. Sumit Lal Chandani, Adv.
Revenue by: Sh. Surender Pal, CIT DR
Date of Hearing: 20.07.2022 Date of Pronouncement: 30.08.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. PCIT, Ghaziabad d ated 19.03.2022.
2. Following ground s have been raised by the assessee:
1. That in view of the facts and circumstances of the case and in law, the imp ugned notice dated 23.02.2022 issued under Section 263 of the Income Tax Act, 1961 ('the Act'), and the impugned order dated 19.03.2022 passed under Section 263 of the Act is illegal, bad in law, without jurisdiction and liable to be quashed.
2. That the impugned notice dated 23.02.2022 and the imp ugned order dated 19.03.2022 does not satisfy the jurisd ictional requirement for invocation of Section 263 of the Act. The Principal Commissioner of Income Tax ('PCIT') has erred in not establishing how the Assessing Officer ('AO') committed any error in passing the assessment order dated 07.07.2020under 143(3) read with Section 254 of the Act of the Act.2 ITA No.664/Del/2022
Vinod Kumar Gupta
3. That, without prejudice, the assessment order dated 07.07.2020 for A.Y. 2014-15 passed by the Joint Commissioner of Income Tax ("Joint CIT") is illegal, bad in law and without jurisdiction as the Joint CIT had no jurisdiction to pass the said assessment order. That Joint CIT was not competent to pass the assessment order. Hence, the assessment order passed under Section 263 of the Act is illegal, bad in law and without jurisdiction.
4. That the order passed under Section 143(3) read with Section 254 of the Act by the AO is neither erroneous nor prejudicial to the interest of the Revenue and as such the impugned order passed by the PCIT under Section 263 of the Act dated 19.03.2022is illegal and bad in law.
5. That the PCIT failed to appreciate that issue was duly examined during the course of assessment proceedings and the same was, therefore, outside the scope of revisionary jurisdiction under Section 263 of the Act. The view taken by the AO after conducting necessary enq uiries after considering detailed evidence as per direction of ITAT is a plausible view, hence the order passed under Section 263 is illegal and bad in law.
6. That this is not a case of lack of enquiry as the assessment order dated07.07.2020 passed under Section 143(3) read with Section 254 of the Act is after making the detailed enquiries and after due application of mind.
7. That, during the course of assessment proceedings, detailed questionnaires were issued from time-to-time which were duly responded to and enquiries were conducted and thereafter the assessment ord er was passed dated 07.07.2020. Hence, the assessment order is valid and correct in law.
8. That without prejudice, no independent enquiry has been done by the PCIT and in the absence of same the order passed u/s 263 is illegal, bad in law and without jurisdiction. PCIT has failed to appreciate that loan taken buy Assessee stands accepted in subsequent years (wherein the statements were 3 ITA No.664/Del/2022 Vinod Kumar Gupta recorded under section 131 and summon were issued under section 133(6) to the same creditors for the subsequent assessment years) and that the loan received by Assessee during the year under consideration stands returned subsequently back to the creditors by account payee cheques.
9. That, in view of the facts and circumstances of the case and in law, the PCIT has incorrectly invoked Section 263 of the Act without appreciating that if two views are plausible and the AO takes one view, then no revisionary jurisdiction can be exercised.
10. That the impugned notice dated 23.02.2022 and impugned order dated 19.03.2022passed by the PCIT under Section 263 of the Act is clearly without application of mind. Hence, the impugned notice dated 23.02.2022 and impugned order dated 19.03.2022 passed under Section 263 of the Act is liable to be quashed.
11. That all the facts and circumstances of the case and the material available on record have not been properly considered by the PCIT while passing the impugned order dated 19.03.2022 under Section 263 of the Act. The impugned order is illegal, arbitrary and bad in law.
12. That, even otherwise, all necessary enquires/investigations /verification relating to the issue referred in the order of the PCIT under Section 263 of the Act were made by the AO while framing the assessment under 143(3) read with Section 254 of the Act and the AO accordingly took the view that no addition is called for.
13. That, in view of the facts and circumstances of the case and in law, the PCIT has erred in not appreciating the case of the Assessee. The evidences/documents/material filed and placed on record has not been judiciously interpreted and considered/appreciated by the PCIT.
14. That, in view of the facts and circumstances of the case and in law, the PCIT has erred in cancelling earlier assessment order dated 07.07.2020 and directing the AO to revise the assessment order in 4 ITA No.664/Del/2022 Vinod Kumar Gupta view of findings of the PCIT. The said act of the PCIT is illegal and bad in law."
3. For the sake of completeness and ready reference, the entire order of the ld . PCIT is reproduced below:
"In this c as e, the ITR for A.Y. 2014-15 was e-filed on 1 0.09.2015 declari ng total income of Rs. 6,24,260/-. La ter on the cas e was selected for s crutiny under CASS. The A O com pleted assessment u/s 143(3) of the IT Act, 1961 dated 0 7.12.2016 on a total income of Rs. 1,72,58,260/-. A gai ns t the ass essment order, the appeal filed bef ore the C IT(A) was dismissed vide appellate order dated 03.07.2014. Further, the Hon'ble I TAT vide order dat ed27.05.2019sent the m atter to the Asses sing Of ficer. The Jt.C IT (OS D), Circle- 1 (1)(1 ), Meerut c ompleted the ass es sm ent order u/s 143(3)/254 of the IT Act , 1961 dat ed 07.07.2020 on a total returned inc ome of Rs. 6,24,260/-.
2. S how Cause notice and opport unities of heari ng prov ided:-
2.1 On examinati on of t he case records, it appeared that the assessment order dat ed07.07.2020u/s 143(3 )/254 in the present case is erroneous and prej udicial to the i nterest of revenue, and henc e it was decided t o i nvoke the revisionary j urisdiction under Secti on 263 of t he I ncom e-tax Act , 1961. Accordi ngly , a Show Caus e Notic e/Hea ri ng notic e u/s 263 of the Inc ome Tax Act dated 23.02.2022 vide DI N ITBA/R EV/F/REV1/2021-22/1040037186(1) was issued to the assess ee whi c h is reproduc ed bel ow for r eady ref erence:
"2 . Fr om perusal of assess ment record , for the year under consideration, followi ng disc repancies/ errors ha ve been noticed:
(i) It is obs erved t hat in the cas e at hand vide order u/s 143(3) dat ed 07.12.2016, sole addition of Rs. 1,66,34,000/- was made on account of 'bogus uns ec ured loans ' purported to be accepted rangi ng from 13 lacs to 2.5 lacs from 19 pers ons , stated to be family 5 ITA No.664/Del/2022 Vinod Kumar Gupta members & cl os e relatives & friends of the assess ee c onc erned. The af ores aid addition was made by t he then A O as all thes e pers ons after d epositi ng c ash i n t heir bank acc ounts on the very s ame date or i n next date issued cheque to the ass ess ee. Furthermore, neither the s aid alleged lenders & nor the ass essee himsel f were produc ed bef ore the A O des pite specific requi rement & issua nce of summ ons u/s 131.The Ld. CIT (A) ta ki ng i nto consideration provisions of s ec .
68 & vari ous cas e laws c onfirmed the addition of Rs.1 ,66,34,000/- in toto vide appellate, order dated 03.0 7.2017.
On appeal of the assessee bef ore ITA T, the ITA T vide its order dated 27.05.2019, has remanded the entire iss ue to the file of the AO to decide t he issue afr esh aft er c onsideri ng all the ma terial & aspec ts. The AO while deciding t he iss ue afres h, assess ed the i nc ome at ret urned i ncom e vide order u/s 143(3)/254 dated 07.07.2020, thereby making no addition at all in r/o earlier additions aggregati ng to Rs . 1,66,34,000/- which was confirmed in its entirely b y first appellate authority.
(ii) In t his case, it has been shown that on 17.03.2020, statement on oath of as ma ny as of 6 persons have been rec orded u/s 131. Notably, no s ummons u/s 131 were iss ued t hrough DI N (as per norms) or other wise. Needles to emphasize, bef ore rec ordi ng a stat ement on oath u/s 131 of t he I T Act, 1961, there is a mandat ory requirement of issuanc e of summons u/s 131 & as per norms the same wer e to be i ssued af ter generati ng t he sa me through DIN. As already m entioned, no summons u/s 131 were iss ued as per records (read i ncludi ng ITBA & dis patc h register). Not ably, there is no entry on order s heet regarding rec ordi ng of s tatement of six pers ons on 17.03.2020. Thus, the s o-called statement on oat hs u/s131 as shown to be rec orded on 17.03.2020 wit hout issua nce of s ummons . Significantly, vide order s heet entry dated 25.02.2020, t he counsel was as ked to produc e six persons namely Amit Bansal , Smt. Jagwati Devi, Kapil Garg K art a HU F, S mt. Sa ntos h Devi, S h. Subhash C hand Garg HU F & Sh. Sudhir B ans al on 17.03.2020. However, the said 6 ITA No.664/Del/2022 Vinod Kumar Gupta order s heet entry (i nfra) is not signe d by the c ouns el. As a matt er of fact, duri ng t he s et-aside proc eedings, though i n the or der s heet, two entri es have been made regard ing appear ance of couns el made but si gnatures of c ouns el a re not there on the order s heets.
(iii) It is nota ble tha t duri ng the ori gi nal ass essment proceedi ngs u/s 143(3) f or A .Y. 2014-15 duri ng F.Y. 2015-16, no person out of 19 persons appeared before the AO for rec ording of his/her stat ement despite issuanc e of summons u/s 131. All t hese persons hav e s hown t heir compl ete rel uctance t o appear by stati ng t hat they had alrea dy filed their af fidavits & stated identically as "That it is my c omplete reply, no other words wa nt to say about this and also consider my r eply in y our notice u/ s 131 and it also consider i n my personal appearance." Thus , it is evi dent by t his sort of reply tha t i n order to hide material facts , t he alleged lenders , who are stat ed to be clos ely related to assess ee, deliber ately not presented themselves for rec ordi ng of wrong footi ng. It is fur ther perti nent to menti on here that all thes e replies were rec eived i n identical manner at t hat tim e & identical env el opes were us ed and addr ess & nam es of senders were written on the sam e by a si ngl e pers on. Moreover, these replies were dispatc hed fr om a same poi nt office on s ame time.
It is evident t hat on both t he envelopes, on whic h address was written by a sa me person i n a n identical ma nner & were also dispatc hed through same pos t of fic e i.e. Meerut C antt . RMS at the same time. Similar is the positi on regar ding ot her replies rec eived from ot her 17 p ersons. The same approach shows tha t it was not i n norm al c ours e and i n order t o hi de material facts , this s ort of res pons e has been result ed in.
As already menti oned, (supra) on 17.03.2020, statement of 6 persons were s hown to be rec orded. As menti oned elsewhere i n t his report t here is no entry on order s heet regarding appea rance of the said 6 pers ons on 17.03.2020. Further, int er-alia, attenda nce of two old ladi es of 88 years (read Smt. Jagwati Devi, her age as writt en in 7 ITA No.664/Del/2022 Vinod Kumar Gupta stat ement) & S mt. Sant osh D evi (6 8 yea rs) in the office is diffic ult to believe i n view of si gnifica nt observations as to signature & thumb impr ession as af fix on their alleged st atem ent.
(iv) At the time of confirmati on of additi on of Rs.1,66,34,000/- by CIT(A ) vide his appellat e ord er dat ed 03.07.2017, vari ous cas e laws cited by his ki nd s elf as cited as under:
Hon'ble Apex C ourt S uma ti Day al Vs. CIT (1995) 125 CTR (SC) Suppl (2) SC C 453 Banarsi Prasad Vs. C ommissioner of Inc ome Tax 304 ITR 239 (Allahabad ) CIT V Mi hir Kanti Hazar [2015] 61 Taxmann.c om 315 (Calcutta) In the abov e backdrop, it is pointed out that t hough the ITA T has res ort ed the iss ue to be decided afresh by AO c onsideri ng all mat erials & aspects. I n s ubmission as filed during the s et-aside proc eedi ngs by the ass essee, not to s peak of controverti ng of said case laws even no ref erence t o the same menti oned in any manner. To my c hagri n, detrimental to cause of revenue, the AO too has not considered at all the cit ed cas e laws .
(v) In this case, the mos t glari ng fact & fi nding whic h is conspicuous is that all t he s aid 19 pers ons have deposited cash in their bank accounts and then provided alleged loan t o ass essee i ndividual on the same date or in very nex t dat e. This sort of trend i n all the involv ed c as es is not at all explicable by a ny stretch of imagi nati on.
In fact, t his pervasive trend shows t hat an easy mod us-operandi has been adopted by ass essee to i nt roduc e his blac k money i n the bank accounts of his family members & c lose relativ es/ fri ends and then to take said money from the s ame immediately t hrough cheque. Even whil e rec ording alleged stat ements on oaths duri ng s et-aside proc eedi ngs, questions were as ked in a perfunctory manner & without questi oni ng f urther, the replies of the pers ons were accepted. All the persons have stated i n an identical manner that the cash deposited was t heir savings but have also not given any 8 ITA No.664/Del/2022 Vinod Kumar Gupta plausible reply whats oever as to justify why the s aid so called lifetime savi ngs were not kept i n bank account earlier des pite havi ng bank acc ounts i n their names . All these pers ons have alleged to be stat ed i n like manner that cas h was kept at home for the help of family members . The similarity as to replies i n words & c ontents of all six pers ons raises serious doubts ab out t he recording of the said six statements in normal course.lt has been noticed that all these persons have declared meager income i n their ITRs for AY 2014-15 & in earlier years. In fact, to some of t hem PAN was allott ed ra ther get allot ted only just bef ore or after the act of pr ovidi ng said alleged l oa ns. In order to drive home t he poi nt f or a f ew persons dat e of allotm ent is tabulated as under:
SI . N a m e of al l eg ed P AN D ate of P A N M ob i le N o.
NO. l en d er al l ot m en t p r ovi d ed at th e
ti me of
al l ot m en t & a s
p er p r es en t P A N
d at a b as e
1 Ak as h G up ta BL QP G4 8 99 H 11. 11 .2 0 13 98 37 0 60 0 21 2 Sa nt os h D ev i BV D P D 02 2 4 Q 21. 09 .2 0 13 98 37 0 60 0 21 3 Ja gw at i D ev i BV D P D 01 3 4 K 21. 09 .2 0 13 98 37 0 60 0 21 4 R it u G a rg BK ZP G 64 3 9H 21. 09 .2 0 13 98 37 0 60 0 21 5 Sa nj a y Ga rg H U F A A YH S7 79 3 A 21. 09 .2 0 13 98 37 0 60 0 21 6 Ka p il Ga r g H UF A A KH K 33 2 0H 21. 09 .2 0 13 98 37 0 60 0 21 7 P ra v es h K r. G a rg A A NH P 39 97 A 21. 09 .2 0 13 98 37 0 60 0 21 HUF 8 Su b ha s h Cha nd A A KH K 33 2 0H 24. 09 .2 0 13 98 37 0 60 0 21 Ga r g H U F 9 Sa nj a y Ga rg BL IP G1 0 32 N 14. 10 .2 0 13 98 37 0 00 7 51 10 M onik a Ga r g BL IP G0 9 10 K 14. 10 .2 0 13 98 37 0 00 7 51 It is evident from above that out of 19 persons; PAN was allotted to as many as 10 persons /entities only in F.Y.2013-14 &that too i n close dates . Most signi fica ntly, i n as m any as 8 PANs , i n database mobile of assess ee i.e. of S h. Vinod K umar Gupta has been menti oned. Thus, it is evident that S h. Vinod K umar Gupta as a part of his modus-operandi was i nstrument al in applyi ng PAN for said 9 ITA No.664/Del/2022 Vinod Kumar Gupta persons i n order t o launder his una ccount ed money . Thus, many of the said 19 pers ons have filed ITR for the first time f or A Y 2014-15 & that that t oo at meager i ncome without payi ng any tax. The ITRs hav e been filed i n a perf unctory manner & showi ng income, whi ch is required t o be s hown under t he head 'Busi ness Inc ome' under the head 'Inc ome from ot her sourc es '. A mere l ook at the ITRs depicti ng mea ger incomes i n round fi gures i n identical manner ar e not at all inspiri ng & amply indica tes that t he same were filed as part of the modus-operandi to lend credence t o alleged loan trans action.
A partic ular menti on to S h. A kas h G upta S/o S h. Vinod Kumar Gupta may be menti oned here. The date of birth of S h. Akash Gupta is 25.09.1995. Thus, at t he time of providi ng alleged loan of Rs.13lacs to his father, his age was barely of 18 y ears . It is also not a cas e, where S h. Vi nod Kumar Gupta has shown large s um of amounts i n his ITRs i n A.Y. 2014-15 or in ea rlier years t o indicate t hat Sh. Akas h Gupta has receiv ed s ufficient pocket money or other wise monetary gifts t o acc umul ate s um of as muc h as of Rs.13lacs to lend his fa ther. In t hi s cont ext , in order t o driv e home the p oi nt, the ret urned i ncome of S h. Vi nod K umar G upta for A.Y . 2014-15 & for earlier years is tabulated as under :
Assessment Year Returned income
2014-15 624260
2013-14 410680
2012-13 418450
2011-12 259600
2010-11 344140
Here it may be menti oned t hat the ass essee concer ned has also shown i nterest free loans from his married daught ers & son-i n-law. Here, it is perti nent to menti on t hat in India soci et y t o ta ke int eres t free loans from in-taws & marri ed da ughters is very dif ficult to believe.
(vi ) No probi ng ques tion has been asked i n the six stat ements as allegedly i n a pre-det ermi ned manner, questi ons ha ve been writ ten in bla nk page l eaving space for ans wer t he same was photocopied & 10 ITA No.664/Del/2022 Vinod Kumar Gupta thereaf ter, ans wer have written i n left ov er spac e. The questions & ans wer are almos t identical. All persons whose s tatements have been record ed deni ed of taki ng any monetary help f rom Sh. Vinod Kumar Gupta i n t he past . It may be in which the said six stat ements were rec orded any staff post ed in ers twhil e circle-2. Here, it may also be mentioned t hat handwriti ng i n whic h the said s ix stat ements were recorded report edly does not of any s taff pos ted i n ers twhile cirle-2 . Here, it may also be mentioned t hat s tat ements of 13 persons were not rec orded f or t he reason that i n the assess ment proc eedi ngs for A .Y. 2015-16, their statements have already been rec orded. I t is pointed out t hat s ta tement of one Smt . S wati Bansal was not rec orded in A.Y.2015-16. Accordingly, r ecordi ng of her stat ement was necess ary duri ng t he set-aside 2015-16 were also rec orded i n a manner whic h were mor e prej udicial to the interest of rev enue & identi cal questi ons & identical respons es have been rec orded & i n normal c ours e this cannot be possible.
The above st atements amply proves t hat identical questi ons & ans wer written i n a m echanical manner as i f to go through a f ormality bei ng done to further the ca use of the assess ee & theref ore to rely on s uc h s o called support is unt enabl e inter -alia f or set-aside proc eedings. T he same sort of just goi ng through a f ormality t o f urther the c ause of the ass essee is also c onspicuous whil e alleged recordi ng of st atements of six persons as on 17.03.2020.
Further, i n respec t of s tat ements rec orded all persons ha ve st ated tha t S h. Vi nod Kumar Gupt a has als o helped them monetarily in the past but as a contradicti on, it is not the c ase as to statement s rec orded on 17.0 3.2020, as all pers ons denied of taking any help from Sh. Vinod Gupta i n the past year.
No det ails regarding retur n back of money to alleged l enders brought on rec ord in res pect of a ny cas e. For instance, S h. Ankit Gupta has stated that i n respons e to one questi on that in succ eeding years , he has rec eived the money lent & the outsta ndi ng balance 11 ITA No.664/Del/2022 Vinod Kumar Gupta has c ome to naught. B ut no details regardi ng the dates & modes of ret urni ng bac k of money brought on rec ord. It is anot her matter ev en if suc h det ails are given i n fut ure, it woul d not f urther the caus e of assess ee & is not goi ng to buttress c reditworthi ness of the alleged lenders & genui neness of t rans acti ons .
3. In view of the above, the assessment order u/s 143(3)/254 of the I.T. Act, 1961, dated 07.07.2020 passed by t he Joi nt Commissi oner of I ncom e Tax(OSD), Circl e-1 (1 )(1 ), Meerut is erroneous and prejudicial to the interest of revenue and may be cancelled or modified by i nvoking the provisions of secti on 263 of t he Inc ome Tax Ac t, 1961."
3. Assess ee's s ubmis sion:
3.1 In respons e of Show C ause notice dated 23.02.2 022 the assess ee filed its written s ubmission. The relevant porti on of the reply is reproduc ed here-und er:
"With r eferenc e to the capti oned notic e da ted 23.02.2022, we on behalf of and under the i nstr uction of the as sess ee humbly s ubmit as under:
Fr om t he perusal of the s aid notic e, it has been f ound that i n the said notice y our honor has poi nt ed out t he followi ng issued in the order dated 07.07.2020, pass ed u/s 143(3)/254 of the Act, by the Ld. A.O.
1. That no addit ion was made by t he ld. AO i n the set aside proc eedi ngs.
2. That the rec ordi ng of statement was done without issui ng summons u/s 131 of t he Act and only a n order s heet query was raised to the ass essee f or producti on of six persons.12 ITA No.664/Del/2022
Vinod Kumar Gupta
3. That no pers on appeared i n the origi nal assessment proceedi ngs and thereafter they appeared for the s tat ement in subsequent assessment pr oceedings and the present s et aside proc eedi ngs.
4. The case laws ci ted by the Ld. CIT(A ) i n t he firs t appeal proc eedi ngs have not been rebutted in the s et side order.
5. That uns ecur ed lenders were relat ed and t heir PA N data had same phone num bers and there were cas h deposits in their bank accounts before providi ng l oans to t he ass essee.
6. That no probi ng ques tions were asked from the uns ec ured lenders when t hei r stat ements were rec orded duri ng the s et-aside proc eedi ngs.
Our poi nt wise rebuttal t o the issues as poi nted by your honor are as under:
1) No addition bei ng made.
The order pass ed by the Ld. AO cannot be said to be er roneous and prejudicial to the interest of the revenue only because no additi on has been made i n the s et-aside proceedi ngs. Mere non maki ng of additi on/additi ons in t he as sessment proceedi ngs cannot b e the basis of t he iss uance of notic e u/s 263 of the Act .
2) Rec ordi ng of statement wit hout iss ui ng s ummons under sec tion 131 of the Act .
The rec ording of statem ents of any pers on duri ng the c ours e of reass essment p roceedi ngs can be made by iss ui ng s ummons u/s 131 of the Act or by raising an order s heet query as ki ng t he ass essee to prod uce the requi site persons . In the pres ent case, the Id . AO has as ked the assess ee to produc e the 6 persons whose stat ements were not rec orded duri ng the course of the assess ment proceedi ngs f or succ eeding years i.e. A .Y. 15 -16 and 16-17. As far as t he p ers ons appeared bef ore the AO and thei r s tatements were recorded, non- issua nce of s ummons u/s 131 of the Act, ca nnot be said to be 13 ITA No.664/Del/2022 Vinod Kumar Gupta err oneous or prejudicial to the int eres ts of the, revenue. The purpose of examini ng the unsecured lenders by the Id. A .O., was duly s erved ev en when t he pers ons appeared bef ore him at the behest of the assess ee ins tead of t he summon u/s 131 of the Act. Hence, t he order under consideration ca nnot be said to be erroneous or prejudicial to the int eres t of the rev enue as all the requisite persons dul y appeared befor e the ld. A O and their st atem ents were rec orded.
3) Non appearance of uns ec ured lenders duri ng the cours e of ori gi nal ass essment proceedi ngs .
The Hon'bl e ITA T, sent the matter back to the file of t he ld. AO, f or the reas on t hat t he l enders ap pear before the AO during the course of the assess ment proc eedi ngs for t he subsequent years. Thus, the Hon'ble I TAT granted the ass ess ee a nother opportuni ty to produce the lenders before the AO and confir m the uns ec ured loans taken by him. Further, t he appeara nce of lenders i n t he s et -asi de proceedi ngs is in the f avor of the D epart ment as if they were not genui ne, the same would have been brought out while recor ding t heir statements .
Hence, t he fact that uns ec ured lenders did not appear duri ng the ori gi nal ass ess ment proceedi ngs and appea red bef ore t he A O i n the set-aside proc eedings, does not make the assess ment order err oneous a nd prejudicial to the interests of t he revenue.
4) The case laws cited by the Ld . CIT(A ) i n the first appeal proc eedi ngs have not been rebutted in the s et side order.
While confirmi ng the additions s o made i n t he ori ginal assess ment proc eedi ngs, t he Id. CIT (A), relied upon some judicial pronouncements . The same were there bef ore the H on'ble ITA T, s till the Hon'ble ITAT sent t he matter bac k t o the file of t he Ld. AO f or rec onsiderati on by s et ting aside t he order of t he Id. CIT(A). The earlier or der of t he Ld. C ITA ) do not remai n in opera tion t herea fter. Hence, observation of y our good self t hat the order under 14 ITA No.664/Del/2022 Vinod Kumar Gupta consideration is err oneous and prej udicial to t he i nterests of the rev enue because the cas e laws r elied upon by t he Id. CIT(A ), in the first appeal p roceedi ngs were not discussed therei n is compl etely inc orrect.
5) The unsec ured lenders were related and their PA N data had same phone num bers and there were cas h deposits in their bank accounts before providi ng l oans to t he ass essee.
The assess ee at all the stages of the assess ment and appellate proc eedi ngs has s tat ed t his fact that all the 19 unsec ured lenders under considerati on were cl ose family members and relatives ; hence this is an undisp uted fact. With ref erenc e to the obs ervations that the PA N data has the phone numbers of t he ass essee is explai ned by the fact t hat all the persons wer e close family members a nd the assess ee us ed t o look aft er the filling of ITR of all the pers ons and it is a comm on prac tice that the telephone numbers of the pers on who looks af ter the filing of ITR is us ed i n t he PAN data.
Further, t he s ourc e of cash deposited i n t he bank accounts of the lenders has duly been explained by t he lenders i n their stat ements as rec orded during the c ours e of set-aside proc eedi ngs, whic h was accepted by t he l d. A O after application of his mi nd. The AO has ta ken a legally possible view by accepti ng the genui neness of loans and there is no error i n his order. Theref ore, the order under consideration cannot be said to be erroneous and prejudicial to the interests of t he revenue on this iss ue also.
6) The no probi ng ques tions were asked fr om the unsecur ed lenders when their statements wer e recorded duri ng the s et-aside proc eedi ngs.
The Id. AD, while rec ordi ng the st atements of t he lenders duri ng the cours e of the set-aside proc eedi ngs asked t hem t he questi ons , which he f elt fit as per his t hought process. The Id. AO after due application of mi nd asked t hem the questi ons whic h were releva nt as 15 ITA No.664/Del/2022 Vinod Kumar Gupta per him. Si nc e, the A D dul y applied his mi nd t o the issue at hand the same cannot be s aid erroneous. Section 263 does not provide the power to the Hon'ble C IT, t o look a gai n at t he cases wher e the AO has duly a pplied his mi nd. Henc e, the order under considerati on cannot be said to be erroneous and pr ejudicial to the i nterests of the revenue.
Fr om the abov e explanati ons , it is clear that , the Ld. AO after due application of his mind has taken a possible view permissible i n law. Further, t he power of revisions u/s 263 of the Act, is vested with the Hon'ble PC IT, only if t he or der is erroneous as well as prej udicial to the i nterest of t he r evenue. I n the pres ent case, the order of the ld. AO is neither prejudicial to the i nt eres t of t he rev enue, nor it is err oneous.
The I d. A .O. during the c ours e of the s et-aside proc eedi ngs, has ta ken a possible view after c onsideri ng t he f acts of t he c as e. The order of the Id. AO cannot be said t o be erroneous only bec aus e he has taken a possible view, whi c h is in opi nion of your good self is prejudicial to the int erest of revenue a nd there is another possibl e view on t he mat ter. In this regard, reliance is placed on the f ollowi ng judicial pronounc ements:
The H on'bl e Apex court in the c as e of C IT Vs. Amitab Bachc han (2016) (384 ITR 0 200) has i n para 21 of the order has observed as under:
"21. There can be no doubt t hat so long as the view taken by the Assessi ng Offic er is a pos sible view the same ought not t o be interfered with by the C ommissioner under S ecti on 263 of the Ac t, mer ely on the ground that there is anot her possibl e view of the mat ter. Permitting exercise of revisional power in a situation where two views are pos sible woul d really amount to conf erring some ki nd of an appellate power in t he revisional aut hority. This is a course of action that must be d esisted f rom. However, t he above is not the situati on in the present c as e........16 ITA No.664/Del/2022
Vinod Kumar Gupta The Hon' ble Apex Court i n the case of Malabar Industries C o. Ltd. Vs. C IT (2000) (243 ITR 0083), in para 5 & 7 have obs erved as under:
A bare readi ng of t his provisi on makes it clear that the prerequisite to exercise of j uri sdiction by the C IT s uo motu under it is that the order of the ITO is erroneous i ns ofar as it is prejudicial to the interests of t he Revenue. The C IT has to be sa tisfied of twi n conditions, namely the order of t he A O s ought to be revis ed is err oneous a nd it i s prejudicial to the i nterests of the Revenue, if one of them is absent if the order of the I TO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is pr ejudicial to the R evenue-recours e cannot be had t o s . 2631) of the Act .
Ther e can be no doubt that t he pr ovision c annot be i nv oked to correct each and every type of mistake or error c ommitted by the A O. It is only when an order is erroneous tha t the section will be attracted. An inc orrect ass umption of fact s or an i nc orrec t application of law will satisfy the requirement of the order bei ng err oneous. In the same c at egory fall orders pass ed without applyi ng the pri ncipl es of natural j us tice or without application of mind.
The phras e 'prejudicial to the i nterests of the Revenue' is not an expres sion of art and is not defi ned i n the Act . U nders tood in its ordi na ry meani ng it is of wide import and is not c onferred) to loss of tax.
6. Mr. A braham relied on the judgm ent of the Division B enc h of the High Court of Madras i n Venkata kris hna Rice C ompany vs. C IT (1987) 62 CTR (Mad) 152 : (1987) 163 ITR 129 (Mad) :TC 57R.303 interpreting "pr ejudicial to t he i nterests of the Revenue". The High Court held, "In this cont ext, it mus t be rega rded as involvi ng a concepti on of acts or orders whic h are subversive of the administration of Revenue. There must be s ome grievous error i n the order pas s ed by the ITO, whic h might s et a bad trend or pattern 17 ITA No.664/Del/2022 Vinod Kumar Gupta f or similar ass essments , whic h on abroad rec koning, the C IT mi ght thi nk t o be prej udicial to t he i nterests of R evenue administration".
In our view this i nt erpretati on is too narrow to merit acceptanc e. The sc heme of the Ac t is to levy and c ollect tax i n accordanc e with the provisions of the Act and this task is entr ust ed to the R evenue. If due to an err oneous order of the ITO, the R evenue is losing tax lawf ully payable by a pers on, it will certai nly be prejudicial to the interests of t he Revenue.
7. The phr ase p rejudicial to the i nterests of the Revenue' has to be read i n conjunction with an erroneous order passed by the A Q. Every loss of rev enue as a cons equenc e of an order of AO cannot be tr eated as prej udi cial to the i nterests of the Revenue f or example, when an ITO adopt ed one of the c ours es permissible i n la w and it has result ed in los s of rev enue: or wher e t wo views are possible and the ITO has ta ken one vi ew wit h whic h the C IT does not agree it cannot be treated as a n erroneous order prej udicial to the i nterests of the R evenue unless the vi ew taken by t he ITO is unsustai nabl e i n law. It has been held by t his Cour t that wher e a s um not ear ned by a person is ass es sed as inc ome i n his hands on his so off eri ng the order pass ed by the AO accepti ng the sa me as suc h will be err oneous and prejudicial to the i nteres t of t he Revenue. Rampyari Devi Sara ogi vs. C IT (1968) 67 ITR 84 (SC ): TC 57R.2 02 and in Smt. Tara Devi A ggarwal Vs. CIT (S C) 107: (1973) 88 ITR 323 (SC) : TC 57R.206.
[Emphasis s upplied by us] Further, the Id. AO has taken the view onl y after due application of mind and there is no fi ndi ng cont rary to t hat in the afor esaid notice henc e t he i nitiation of the pres ent 263 proc eedi ngs is bad i n law. In this regard, r eliance is placed on the j udgment of the Jurisdictional Hon'ble Allahabad High C ourt i n the case of Ms Meerut roller Flour Mills Pvt. L td. Vs . C IT (2020) (420 ITR 0216), wherein the Hon'ble in para 21 has hel d as under:
18 ITA No.664/Del/2022Vinod Kumar Gupta "21. It is clea r that af ter the notice was iss ued by the Ass essi ng Of ficer raising 28 queries from the a ssessee, which wa s also replied by him along with the doc ument ary evidenc e i n regard t o each of the query, t hus the ass essment order passed under Secti on 143(3) of t he Act woul d not render the s ame as er roneous and pr ejudicial to the int eres t of Revenue, unless the Commissioner exercisi ng power under S ecti on 263 bri ngs on rec ord to show that t he order of the Assessi ng Officer is erroneous, as the s ame was pass ed wi thout application of mind or the Assessing Offic er had made an i nc orrect assessment of fact or inc orrect appl ication of la w, but the same not bei ng the case, and t he CIT relying upon the reply and the doc ument ary evidence s ubmitt ed by the assess ee granted partial relief, as suc h t he order dated 09.02.2012 passed under Section 263 rel egati ng back the matter to t he Asses sing Officer as regards uns ec ured loans and c reditors is uns ustai nable."
[Emphasis s upplied by us] In vi ew of above, it is prayed that t he section 263 proceedi ngs under ref erence des erv es to be dropped.
Further, i n c as e y our good s elf requires a ny doc ument s /i nfor mation whic h was not placed bef ore the Id. AO duri ng the course of the s et- aside proc eedi ngs, we reques t your honour to kindly gi ve the assess ee anot her opport unity for filing t he sam e.
We hope that y our good self will fi nd t he a bove i n order.
4. Decision 4.1 Reply of the assess ee has been c aref ully ex ami ned and considered. In reply, it has b een s ubmitted that the AO wa s directed by the H on'bl e ITA T to verify t he matt er afres h in regard to uns ec ured loan received by the assessee. The decision pass ed by the Hon'ble I TAT is re-produc ed hereund er-
"The afor esaid appeal has been filed by the ass ess ee agai nst the impugned or der d ated 03.07.2017, passed by the C ommissioner of 19 ITA No.664/Del/2022 Vinod Kumar Gupta Inc ome Tax (Appeals ), Meer ut f or the quant um of assess ment pass ed u/s 143(3) f or the assess ment year 2014-15. In various grounds of appeal, the assess ee has challenged the addition of Rs.1,66,34,000/- made u/s 68 of t he Act.
1. The facts i n bri ef are that the ass essee is an i ndividual and has filed its retur n of i nc ome on 29.09.2014 at an income of Rs.6,24,260. As a gai nst this, the as sess ment has been com pleted at an income of Rs. 1,72,85,260/- after making t he addition on acc ount of unsecur ed l oan received from va rious pers ons aggrega ting to Rs . 1,66,34,000/-. T he addition has been made by the A O on the ground tha t ass essee has failed to submit pr oper evidences and c ould not subst antiat e the source of l oan.
2. Ld. CI T (A ) too has uphel d t he order of the AO on the ground tha t a ss essee ha s failed to esta blish the creditworthi ness and genui neness of the credit ors.
3. Before us, the I d. C ouns el for the ass essee submitted t hat assess ee has ta ken uns ec ured l oan from clos e fa mily members rela tives and fri ends amounti ng to Rs. 1,66,34,000/- and during the cours e of as sess ment proc eedi ngs , ass essee has filed copi es of inc ome tax return and copies of bank ac counts al ong wi th list of creditors. The AO has f ailed t o cons ider t hese docum ents and went f urther to make t he additi on des pite due complianc e wa s made by the credit ors. Not onl y that t he ass essee has submitted vari ous doc uments incl udi ng copy of confirmati on of acc ounts, bank acc ount stat ement, affidavits and replies al ong wi th computati on of i ncom e, ITR acknowl edgement etc . T he Id. AO has not even acknowl edged or given any findi ng on thes e evidenc es. In f act all the credit ors have duly c omplied wi th the notic es iss ued by t he Ass essing Offic er u/s 133(6).
4. Bef ore us, the as sessee has also filed a n application under Rul e 29 for admission of additi onal evid ences, wherei n assess ee has placed d ocuments includi ng assessment order f or subsequent 20 ITA No.664/Del/2022 Vinod Kumar Gupta assessment year wher ei n similar loan has been accepted. Followi ng doc uments have been submitted along with applicati on filed under Rul e 29 of t he Rul es .
Affidavit by S hri. Vinod K umar Gupt a in 25.12.2018 supp ort of applicat ion under R ule 29 Affidavit of creditors from whom 17.12.2018 unsecured loan was taken by as sessee in FY 2013-14 confirmi ng the repayment of t he part l oan 19.12.2018 Copy of submissi ons made befor e the 16.11.2017 Assessi ng Offi cer duri ng the assessment proceedi ngs of AY 2015-16 of 24 creditors alongwi th the copy of the ca pital ac count of t he ass ess ee in his propri et ary conc ern, phot ocopi es of all the bank s tatements mai ntai ned by the ass ess ee, other relevant doc uments and wit h r espect to t he 23 unsecured lenders their c onfirm ations , bank statements , return filing proofs and computation of total inc ome alongwi th capital accounts Copy of statement on oath u/s 131 of 27.12.2017 the IT Act, c opy of Aadhar card, c opy of 1TR , c omputati on of i ncome, confirmati ons and ba nk s tat ement of Vinod K umar Si nghal, A kas h Gupta, Vinod Kumar Gupta HU F, Amita Garg, Ankit Garg, Pravesh K umar Garg, R itu Garg, S anjay Garg, Sanj ay Garg (HU F), Swarana Lata, Usha Rani , I tika Gupta, Jayawati Devi, Kapil Garg, P radeep Kumar Bansal, Naresh Singhal , Monika Garg, Manis h Ba nsal and Kapil Garg HU F creditors of the assess ee Assessment Order under section 143(3) 01.11.2018 of the Ac t Reply t o notice u/s 142(1) of the Act 24.10.2018 dated 22.10.2018 cont ai ning the followi ng documents Copy of l edger a ccount of ass essee's capital i n propri etary firm (Shiv C oal Traders) 21 ITA No.664/Del/2022 Vinod Kumar Gupta
1. Ld. Counsel f urther s ubmitt ed that loan taken by the ass esse has returned bac k t o the creditors by acc ount payee cheques and has als o given .details of all the pa rties bef ore us. Thus, i n vi ew of these evidenc es , t he additions sustained by the authorities bel ow shoul d be s et aside.
2. On t he other hand, Id. DR has st rongly relied upon t he orders of the AO and I d. CIT(A ) and s ubmi tt ed that assess ee has failed to subst antiat e the genui neness and creditworthi nes s of all the creditors befor e the a uthorities below and ample opportunity was given by the AO and Id . CIT(A ). He also plac ed strong relianc e upon vari ous decisions and mai nly on the followi ng;
1. PC IT vs. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.c om 48 (SC )
2. PC IT vs . NDR Promot ers Pvt. L td. (2019) 102 taxmann.com 182 (Del hi )/[2019] 261 Taxman 270 (Del hi)/[2019] 410 I TR 379 (Del hi )
3. ITO vs . Synergy Fi nl eas e Pvt. Ltd. (ITA No.4778/Del/2 013)
4. Prem Castings (P.) Lt d. Vs. C IT[20 17] 88 taxmann.c om 189 (Allahabad )
5. CIT vs. MA F Academy (P.) Ltd. (361 ITR 258)
6. CIT vs. Navodaya Castl e Pvt. L td. [2014] 367 ITR 306 (D el )
7. CIT vs. Nova Pr omoters & Finleas e (P ) Ltd. (18 taxmann.c om 217, 206 Taxma n 207, 342 ITR 169, 252 CTR 187)
8. CIT vs. N.R. Port folio Pvt. Lt d. [2 014] 42 taxmann.com 339 (Del hi )/[2014] 222 Taxman 157 (Delhi) (MAG)/[2014] 264 CTR 258 (Del hi)
1. After c onsidering the rival submissions a nd on perusal of the material placed on rec ord bef ore us, we find t hat before the Assessi ng Officer . Assess ee has filed i nc ome tax ret urn and copies of bank account of the c reditors. H owever, the A O noted that t he creditors b efor e advanci ng l oan ha ve credited cas h in t hei r account and once summ ons were issued to all of them but none appeared. Sinc e no one appeared, he held t hat 22 ITA No.664/Del/2022 Vinod Kumar Gupta all the uns ec ured loan receiv ed from 19 parties aggr egati ng to Rs.1,66,34,000/- are not genui ne.
1. Bef ore us , it has been poi nted out from the rec ords that all these creditors have duly replied t o t he summons issued by the Assessi ng Of ficer u/s 133(6) and have filed their confirmati ons , their inc ome tax r eturns , bank s tat ement, etc . Apart f rom t hat, f urther additional evidenc es have been filed bef ore us wherein same p eople had appeared bef ore the A O in the subs equent assessment year and the s tat ement was rec orded u/s 131 along with other evidenc es a nd based on exami nati on Asses sing Officer has accept ed the loan rec eived from t he same parties i n the subs equent years. In vi ew of the additi onal evidenc es filed bef ore us and l ooki ng to t he f acts tha t inquiry was made by the Assessi ng Officer in the subsequent year and s tatement of t hese persons were rec orded u/s . 131, therefore, i n the int eres t of j ustice, we feel that the entire iss ue s hould be remanded back to the file of the Assessi ng Offic er who s hall decide this issue afresh not onl y i n the light of material placed on rec ord but also t he a dditional evidences filed by the ass essee befor e us. The Assessi ng Of ficer will provide suf ficient opportunity t o the a ss essee to subst antiat e his c ase. Si nc e we are remanding the entire iss ue bac k to the file of the AO , t heref ore, we do not deem fit to deal with the j udgment relied upon by the Id. C IT- DR as Assessi ng Offic er has to decide the issue afresh after consideri ng all the evidenc es and explanati on i n accordance with law.
2. In the result, the appeal of the assess ee is allowed f or statistical purpos es. "
4.2 As per t he abov e order, t he ma tter was remand ed bac k by the Hon'ble ITAT to t he file of t he Assessi ng Of fic er who s hall decide this issue af res h not only i n the light of material placed on rec ord but also the addit ional evidenc es filed by the assess ee before us . Accordi ngly, the A O s ent a notic e u/s 142(1)/253 of the IT Ac t, 1961 23 ITA No.664/Del/2022 Vinod Kumar Gupta Dated 23/01/2020 to the ass es see. In res pons e, the ass essee filed adj ournment appl ication 25/02/2020, the date was adjourned to 17/03/2020.
On fi xed date, t he AO recor ded s tat ement u/s 131 of the IT Act, 1961 of all the s ons . Af ter goi ng through the st atem ents and i nquiry made by the AO followi ng point are requi red to be mentioned herei n-
1. Fr om all the persons, the AO had as ked similar 14 set of questi ons of irr espective of t he saving patter n, expenditure pat tern etc. whic h shows the AO did not verify the matter afres h r ather he was preocc upied with as sum ption of confirmi ng t he lenders .
2. The AO ignored the fact that the matter was rema nded back to verify t he unsecured loan of Rs .1,66,34,000/- afresh i n the light of fac ts available of r ecord and additi onal evidenc es prod uced befor e the H on'ble ITAT. T he statements were rec orded in a mechanical manner as if there is no inquisitiv e, investigative c haracteristic of questions as ked to the lenders.
3. Moreover, t he AO did not as k any query r elated t o additi onal evidences fr om t he lenders .
4.4 All the above poi nts are clearly indicating the lac una i n inquiry made by the AO. It has also been f ound that the AO did not follow the direc tion of Hon'ble ITA T in l etter and spirit . Vide poi nt no. 5 of the order, Hon'ble I TAT has said tha t additional evidences under rule 29 acc epted by it on ass essee's request . List or additional evidences acc epted by the H on'ble Court hav e been i nc orporated in tabul ate f ormat along with s pecific direc tions. H owever, the AO did not enc ounter the assess ee or lenders by specifically m entioni ng the facts and additional evidenc es presented bef ore the Hon'ble C ourt .
4.5 It is perti nent t o menti on here that as disc ussed i n above para, the AO did not ma ke inquiry to verify the l ender, and rat her he did only form ality t o rec ord stat ement without any inquisitive nature of questi on. It is wort h menti oni ng here t hat the out of 14 ques tion 24 ITA No.664/Del/2022 Vinod Kumar Gupta only 1-2 ques tions are related to loan ot her questions were of intr oduct ory nat ure. The A O did not f ollow the evidence act , 1872, whic h allows an inv esti gator t o ask questi ons from the ans wers of the pers on on oat h, s o a s to reach to the truth. In the i ns tant cas e, the A O did not f ul f ill the role of i nvestigat or.
4.6 It is import ant p oint t hat the AO is required to take s tatement on oath of t he person to be verifi ed , wherever he fi nds fit to satisfy him about the genui neness of am ount c redit ed in books of account. So, only presence of pers on on oath does not certifi cate of itsel f tha t t he lenders are genui ne. There is a provision made available by the Act to AO take stat ement on oath of the lender to verify the genui neness of t he lender and it is inquisitiveness of the AO to reach t o the conclusion i n t he c ase. B ut the AO di d not us e t his caref ully and took statement i n perf unct ory manner.
4.7 It is very importa nt fact that PAN database of all the l enders are havi ng ass essee's mobile number. It is agai nst human prob ability i n the light of the f act that now a days mobile phone is very c ommon and why a person who is capable of lending the money will us e the mobile p hone of the assess ee i n PA N database meani ng thereby that pa n was obtaining by these per sons on t he behes t of the assess ee. The AO should have rais ed t his p oi nt during the stat ement rec ording and shoul d hav e c onf ronted t his iss ue. It is also important that i n reply dated 02/03/2022, it is s ubmitted t hat the lenders are close rela tives and family members. While in the stat ement not hi ng of this sort was as ked from l enders bef ore satisfying with the genui neness of loans. Therefore, relation of lenders (exc ept S h. A kash Gupta) with the ass essee is not known from the rec ord.
4.8 Moreover, t his f act ca nnot be kept out of place that thes e persons were rel uctant duri ng origi nal assessment proceedi ngs by dodgi ng in person pr esence to prove genui neness. They rather preferr ed to s end reply thr ough lett er and not to count er any inquisitive queri es . The AO did not encount er the l enders about not 25 ITA No.664/Del/2022 Vinod Kumar Gupta appearanc e duri ng ori gi nal assess ment proc eedings. Furt her, it cannot be relied upon that all the lenders were not availabl e to appear in pers on duri ng November - D ecember 2016. However, on the lat er dates they have appeared. This shows that the lenders may be ins trument of crediti ng ass esses own money i n his bank acc ount thr ough t hes e alleged l enders .
4.9 It has als o been submitted by t he assess ee before Hon'ble ITAT that i n other F.Y.s too, t hes e l end ers hav e giv en money to him. The same has been disc uss ed in para 6 of the order passed by the Hon'ble ITAT. The AO duri ng the set-aside proceedi ngs did not cross exami ne t he ass essee and l enders in res pect of t his. No ques tion was as ked by the AO in t he stat ement rec orded. This shows that the AO did not follow the directi on of the Hon'ble Tribunal in line to assessment pr oceedings.
4.10 In view of the abov e, the A.O. has passed t he assess ment order without maki ng enquiries or verificati on in this regard also whic h s hould ha ve been made by him bef ore passi ng the assess ment order. Theref ore, it is beyond doubt that the as sess ment order is err oneous a nd prejudicial to the interest of the revenue.
4.11 The reliance is placed on the followi ng j udgments f or tr eati ng the issue of unsecured loan where unsecured lenders were related and their PA N dat a had same phone numbers and there were cash deposits in t heir bank account s bef ore providing loans to the assess ee.
1. S uman Gupta V s C IT (2013-LL -01 22-69) (S upreme Court ) where H on'ble Supreme Court dismissed appeal of t he ass essee.
Suman Gupta Vs ITO (ITA No.680/12 vide jud gment dated 07.08.2012) (Allahabad Hi gh Court) where Hon'bl e Allahabad Hi gh C ourt hel d that where identical amounts were f ound t o hav e been deposit ed i n accounts of half a 26 ITA No.664/Del/2022 Vinod Kumar Gupta doz en lenders prior to lendi ng, and assess ee coul d onl y pr oduce one lender f or exami nation, 'additi on is to be m ade as ass ess ee f ailed to prov e genui neness of loans
1. PC IT Vs Bikram Singh [ITA No.55/2017] (Del hi ) (Copy Encl os ed) where Hon'bl e Delhi Hi gh Court hel d that ev en if a transac tion of loan is made t hrough c heque, it cannot be pres umed to be genui ne in the abs ence of a ny agreement , sec urity a nd i nterest payment. Mere s ubmission of PA N Card of c reditor does not establish the aut henticity of a huge loan tra nsaction partic ularly when the I TR does not inspire such confidence. Mere submission of ID proof and the f act t hat the l oan transacti ons were t hrough the banki ng channel , does not establish t he genui neness of transacti ons . Loan entri es a re generally mas ked to pump i n blac k money int o banki ng channels a nd s uch practic es conti nue t o plague Indian ec onomy.
1. Toby Cons ultant s (P.) Ltd. Vs C IT [2010] 324 ITR 338 (Delhi ) where H on'ble Del hi High C ourt held that where ass essee-company had shown i n books uns ecur ed l oa ns of Rs. 2.68 crores and Rs. 2 .45 crores from its t wo directors and it was explai ned that money bel onged to its own entity and was rout ed through directors and Tribunal f ound that directors who advanc ed l oan were admit tedly not at all men of means f or advanci ng such huge amount of loan amounti ng to about Rs. 5 crores a nd sec ondly that as sessee ev en f or ta ki ng suc h huge am ount of loan did not want to pay any interes t f or whic h creditors also agreed, Tribunal had ri ghtly, arriv ed at a findi ng of fact , on a nalysis of all relevant ma terial on record, t hat genui neness of transac tion had not been est ablished and assess ee had failed to i ndependently p rove s ame application m oney, amount so r eceived was liable t o be taxed under secti on 68.
1. Sanr aj Engineering Pvt. L td. Vs CIT (ITA 79/2016) (Del hi ) (C opy Enclos ed) 27 ITA No.664/Del/2022 Vinod Kumar Gupta where H on'ble Delhi Hi gh C ourt hel d that additi on made u/s 68 on account of unsec ured l oans was j ustified, where i nitial onus of provi ng t he credit worthi ness of t he lenders was not discharged by the ass essee.
1. Naresh C handra Jai n Vs CIT (ITA No.335 of 2009) (Allahabad) (C opy encl osed) Where Hon'bl e Alla habad High Court held t hat tribunal was justified in holdi ng t hat am ount of loan rec eiv ed by ass ess ee was unex plained i ncome u/s 68 in as muc h as identity, genui neness , creditworthi ness of t he trans acti on is not proved.
1. Rick Lunsf ord Trade & Investment Ltd. Vs C IT [2 016-TIOL-207- SC-I T] (S upreme Court ) (C opy Enclos ed) Where Hon'ble S upreme Court dismissed SLP uphol ding that it is open to t he R evenue Depar tment to m ake a ddition on acc ount of alleged share capi tal u/s 68, where t he assessee c ompany has filed to s how genui neness of its s hareholders.
1. CIT Vs Nipun B uilders & D evel opers (P.) Ltd. (3 - tax mann.c om 292, 214 Taxma n 429, 350 ITR 407, 256 CTR 34) Where H on'bl e Delhi Hi gh C ourt held t hat where ass essee failed to prov e identity a nd capacity of s ubscriber compani es to pay s hare application money , a mount so rec eived was liable t o be taxed under sec tion 68.
1. C IT Vs Empire Builtec h (P.) Ltd (366 ITR 110) where Hon'bl e Delhi Hi gh C ourt held t hat u/s 68 it is not s uf ficient f or ass essee to mer ely disclos e ad dress and identities of sharehold ers ; it has t o s how genui neness of s uc h individuals or entities .
28 ITA No.664/Del/2022Vinod Kumar Gupta 4.12 DEC IS IONS I N FAVOUR O F R EVENUE ON TH E ISSU E OF HUMA N PROBABIL ITY AS A LL TH E LENDERS HAVE SHOWN THE SAME MOB ILE NOS IN PA N DA TA BASE 1-In the cas e of CIT vs . Durga Prasad More [1971] 82 ITR 540 Hon'ble Supreme Court has held as under: -
".........It is true t hat an apparent mus t be c onsidered real until it is shown t hat t here are reas ons to believ e that t he a pparent is not the real. I n a cas e of the pres ent ki nd a party who r elies on a recital i n a deed has to es tablish t he trut h of t hose recitals, otherwis e it will be very easy to make sel f-servi ng statements in documents either execut ed or taken by a party and rely on t hose r ecit als. If all t hat an ass essee who wants to ev ade ta x is to have some recitals made in a d ocument eit her ex ec uted by him or exec uted in his favor then the door will be left wide-open t o evade tax. A little probi ng was sufficient in the p res ent cas e t o s how t hat t he apparent was not the real. The taxing aut horities wer e not required to put on blinkers whil e looki ng a t the doc uments produced bef ore t hem. They were entitled to look i nto t he s urroundi ng circ umstanc es t o fi nd out the rehlit y of the recitals made i n thos e documents .
".........S cience has not yet i nvented a ny i nst rument to tes t the reliability of the evidenc e plac ed bfore a C ourt or Tribunal. Ther efore, the C ourts a nd Trib unals have to j udge the evidence bef ore t hem by applyi ng t he rest of huma n probabi lities. Human minds may diff er as t o the reliability of a pi ece of evidenc e. But , i n tha t sp here, the decision of t he fi na l fact-fi ndi ng authority is made conclusive by law." (P. 545)"
1. In the cas e of Sumati Dayal 214 I TR 801 Hon'bl e Supreme Court has agai n gi ven the importanc e of human pr obability and held that "The majority opi ni on aft er consideri ng surroundi ng circumstances and applying the test of human probabilities had rightly concl uded t hat the appellant's claim about the amount bei ng her wi nni ng from rac es, was not genui ne. It coul d not be 29 ITA No.664/Del/2022 Vinod Kumar Gupta said t hat the expl anation of fered by t he app ellant i n respect of the said amounts had been rejec ted unreasonably and that the findi ng that the s aid amounts were income of the appellant from other s ourc es was not based on evidence."
2. Further, in the c ase of Me Dowell & C o. 154 ITR 148 Hon'ble Supreme C ourt has held that C olourable devices cannot be a part of tax planni ng and obs erved that "So far as the contention that it is open to everyone to so arra nge hi s affairs as to reduce the brunt of taxation to the mi nimum, was concerned, the ta x planni ng may be legi tima te provided it is withi n the fr amework of law. C olour able devices cannot be part of tax planni ng and it is wrong to enc ourage or entertai n the belief tha t it is honoura ble to av oi d the payment of tax by res tori ng t o dubious met hods . It is the obligati on of every citizen to pay the taxes hones tly without res orti ng to subterfuges . Courts are now c onc erning thems elves not m erely with the genui neness of a transaction, but with t he int ended effect of it for fiscal purposes . No one can now get awa y wit h a tax avoidanc e project wi t h the mere st atem ent t hat there is not hi ng illegal ab out it."
3. The Hon'ble Punjab and H aryana High C ourt i n the c as e of S om Na th Maini , 306 IT R 414 has hel d as under :-
"........That the burden of pr ovi ng that inc ome is subject to tax is on t he R evenue but on the facts, to show that the transaction is genui ne, burden is primarily on the assess es. The Assessi ng Of ficer is to apply the test of human prob abilities for decidi ng genui neness or ot herwise of a particular tra nsa ction. Mer e leading of evidence that the transaction was genui ne, cannot be concl usive. S uc h evidence is required to be assess ed by t he Ass essi ng Offi cer in a reasonable way. Genui neness of the trans acti on can be rej ec ted ev en if t he ass ess ee leads evidenc e whic h is not trust- wort hy, even if t he Department does not l ead any evidenc e on such an iss ue".30 ITA No.664/Del/2022
Vinod Kumar Gupta
1. Further, Hon'bl e Del hi Court i n the case of Ashok Mahehdru & Sons (HU F) v CIT 173 TAXMA NN 178 has held that even though the doc umenta tion ma y be in order, if there i s enough material to raise a very strong sus picion that there is somet hi ng not quit e ri ght with natur e of trans action, the aut hority under the ac t may rej ect the doc ument a nd require the as sess ee to s how that the t ransacti on is really one which is above b oard. Accordi ngly the explanati on s ubmitted by the ass essee with regards to genui neness of the trans actions is rejec ted.
2. Further, the fi ndi ngs of the Hon'ble ITAT D el hi in the cas e of Hers h Wi n C hadha Vs DCI T (I.T.A.Nos.3088 to 3098 & 3107/Del/2005) is also im portant wher e H on'ble I TAT has held that "T he ad missibility of doc uments, evidenc e or material differs greatly in income tax proceedi ngs and criminal proceedi ngs respectively. I n cri minal proceedi ngs, the c harge is to be proved by the State agai ns t the accused, esta blishi ng it beyond doubt, wherea s as per the settl ed pr opos ition, of law, the i ncome t ax liability is ascertai ned on t he bas is of the material available on rec ord, the s urroundi ng circumstances , huma n c onduct and pr eponder ance of probabilities."
4.13 As per Explanation 2 to sec tion 263 of the Act whic h is reproduc ed as under:
"[Expla nation 2.--For the purpos es of t his secti on, it is hereby declared t hat an order pas sed by t he Assessi ng Offic er shall be deemed t o be erroneous i n s o far as it is prej udicial to the i nter ests of t he revenue, if, in the opi nion of the Pri ncipal Commissioner or Commissi oner,--
(a) the order is pass ed without maki ng i nqui ries or verification whic h s houl d have been made;
(b) the order is passed allowing any r elief wit hout i nqui ring i nto the claim;31 ITA No.664/Del/2022
Vinod Kumar Gupta (c ) the order has not been made i n accordanc e with any order, direction or i ns truction issued by the B oard under s ec tion 119; or
(d) the order has not been passed i n ac cordanc e with any decision whic h is prej udicial to the ass es see, render ed by the jurisdictional High Court or Supr eme C ourt i n the cas e of t he assess ee or any ot her pers on.]"
4.14 With res pect to t he f act of due enquiri es having been made, allowi ng of claims without s uc h enquiry, and the ass essment order bei ng erroneous and prej udicial to the i nterest of revenue on t his account, followi ng judicial pronounc ements may be ref err ed t o:
• The Hon'ble Supreme Court in Rampyari Devi Saraogi v CIT 67 ITR 84 while taki ng note of the fac t that the AO had concl uded the ass essment in "und ue hur ry" by passi ng a short, stereotyped assessment order , wit hout ma ki ng any inquiri es, upheld the revision done by the C IT.
• In the case of Deni el Merc hants Pvt. L td. vs I TO dated 29.11.2017, the H on'ble S upreme C ourt upheld the law as laid down by t he Hi gh C ourts in S ubhlaks hmi Vanij ya Pvt . L td. Vs. CIT 155 ITD 171 (Kol.), Rajmandir Es tat es 386 ITR 162 (Cal) etc. a nd held t hat the C IT is entitiled to rrevis e the assessment order u/s 263 on t he ground that t he AO did not make a ny proper inq uiry while acc epting the explanation of the assess ee i ns of ar as rec eipt of share applicati on money is concerned.
• In the cas e of Malabar Industrial C o. L td. Vs C IT [2 000] 109 Taxman 66 (S C)/[2000] 243 I TR 83 (SC )/[2000] 159 CTR 1 (SC) Hon'bl e S upreme C ourt held that where Assessi ng Of fic er had acc epted entry in sta tement of acc ount filed by assessee, in absence of any supporti ng material without making any enquir y, exercis e of jurisdic tion by Commissi oner under s ecti on 263(1) was j ustifi ed.
• The Hon'ble Del hi High C ourt in t he cas e of C IT Vs. S hri Braham Dev Gupta in ITA no 907/2017 and 1162/2017 has 32 ITA No.664/Del/2022 Vinod Kumar Gupta clearly decided that Pr. C ommissioner of Inc ome tax can invoke the provision of s ection 263 of I ncom e Ta x Act where AO has not made adequate enq uiry and veri fication. In t his mat ter, SLP of the ass essee has also been dismissed by Hon'ble Apex C ourt.
• The Hon'bl e ITAT D elhi i n t he cas e of A nkus h Garg v CIT, Rohtak in I TA No 2287 & 2288/Del/2015 dated 21.05.2019, upheld the Pr. C ITs acti on u/s 263 by holdi ng t hat the order of the AO was cryptic, and was not passed after due exami nation and verification of certai n issues and therefor e, there was an err or on the part of AO which l ed to a correct c oncl usion of the CIT that the order of the AO was not only erroneous but also prejudicial to the i nterest of Rev enue.
• In the cas e of Pooja Gupt a i n ITA No 4057/D el/ 2018 dated 31.01.2019, the ITA T D el hi has discussed the validity of ac tion under secti on 263 in respect of penny stoc k ma tters. The Tribunal has r eferred t o the detailed SOP iss ued by t he C BD T, CBD T Instruc tion dt 16.03.2016 on penny s toc k/LTCG, and ot her specifi ed param eters in this order, and held that the order u/s 263 was justified since there was compl ete lac k of inqui ry wi t h r egard to t he pers pecti ve f or whic h the case was selected for scruti ny, and that the AO had merely relied on the assess ee's submissions .
• The decision of t he ITA T D el hi Benc h in the cas e of Bhus han Steel Lt d., New D elhi vs AC IT dated 30 March, 2015 is rel evant to note as it r elates to t he aspect of lack of inquiry a t t he end of the AO for valid initiation of proceedi ngs under S ection 263 of t he Ac t.
• Hon'ble HIGH C OURT OF KARNA TA KA in the case of C IT vs . Inf osys Tec hnol ogies Ltd. 341 ITR 293 dated 04.01.2012 has held that section 263 is a section whic h ena bles the Commissi oner to have a l ook at the orders or proc eedi ngs of the l ower authorities and to effect a c orrecti on, if s o need ed, particularly if the order or proc eedi ng is erroneous and prejudicial to the int erest of t he revenue. It is also held t hat 33 ITA No.664/Del/2022 Vinod Kumar Gupta the Commissioner ca n rega rd the order as erroneous on the ground that i n the circ umstanc es of the case, ITO should have made f urther i nquiries bef ore acc epting the s tat ements made by the ass essee i n his ret urn.
• Hon'ble ITAT Del hi Bench i n the c ase of R ames h K umar, ITA No. 1982/Del /2018 for A.Y. 2014-15 order dated 25.01.2019 has observed as U nder-
On-going t hrough the facts, it c an be obs erved t hat the Assessi ng Officer has not conduct ed any enquiry and this is a clear cas e of lack of enquir y not a cas e i nadequate enquir y. Further non application of mi nd by the Assessi ng Officer ca n be easily gauzed from the fact that the infor mation avai lable with the Ass essi ng Offic er has not been utilized during the assessment proc eedi ngs which makes the cas e fit for applyi ng the provisions of explanati on 2 (a) of secti on 263.
• Further, Hon'ble ITAT D el hi Benc h in t he case of Shanker Tradex Pvt. Ltd. vs. PCIT, ITA No. 2999/Del/2017 f or A.Y. 2007-08 order dat ed 16.04.2018 has rightly held that the Assessi ng Offic er though reopened the assess ment proceedi ngs did not make any inq ui ry and t here is no menti on of t he s ame in the Ass essment Order itself whic h proves t hat the order is pass ed without making i nquiries or verification which s houl d hav e been made by t he Assessing Officer. Thus , it is prejudicial to t he interest of the R evenue and there is loss of rev enue.
• Similar view is taken by H on'ble ITAT D el hi Bench i n the case of S urya Financial Servic es L td. vs. PC IT[2018-TI OL-74-ITAT- DEL ]order dated 08.01.2018, the rel evant part of which is reproduc ed as under-
"6 .5 I n vi ew of a bove, there is abs olutely no dispute tha t the AO has not ma de any enquiry regardi ng the acc ommodation entry regardi ng to t he ass essee specifically whic h was f ound duri ng the c ours e of s earch a nd i nvestigati on in SK Jain Group 34 ITA No.664/Del/2022 Vinod Kumar Gupta as hi ghlighted by t he Pr. CIT. O nce adequate or pr oper enquiry has not been done, then in t erms of Explanati on 2 inserted i n sec tion 263 of the Act by the Financ e Act , 2015, w.e.f . 1.6.2015, the assess ment order is deemed t o be erroneous in so f ar as it is pr ejudicial to the interest of R evenue ........."
• Hon'ble Del hi High Court i n the cas e of G ee Vee Enterprises vs Addl. CIT, 99 ITR 375 held that the C ommissioner ca n regard the ord er as erroneous on the ground that i n the circumstances of the case, ITO s houl d have made further i nqui ries bef ore accepti ng the statements made by the assess ee i n his return. • Further Hon'ble D el hi Benc h i n t he cas e of Perf etti Van Melle India Pvt. Lt d., ITA No. 3046/Del /2016 for A.Y. 2009-10 order dat ed 11.01.2019 has taken a similar view by obser ving that where the Assessing Officer has not pr operly adj udicated the issue of claim u/s 80I C before allowi ng the same t o the assess ee company, the Pr. C IT has r ightly invoked Section 263 of t he Ac t and pas sed the order.
4.15 Accordi ngly , the assess ment order u/s 143(3)/254 of the Act pass ed by the A O on 07 /07/2020 is set aside wit h a direction to make t he ass essment a fresh aft er taking i nto acc ount the facts menti oned abov e and aft er allowi ng opport unity to the ass essee of bei ng hear d."
4. The facts of the case are as under:
Date of filing of return - 10.09.2015 Date of Assessment Order u/s 143(3) - 07.12.2016 Order of the ld. CIT(A) - 03.07.2017 Date of ITAT order - 27.05.2019 Date of Assessment u/ s 143(3)/254 - 07.07.2020 Date of order u/s 263 - 19.03.2022 Date of hearing b efore ITAT - 20.07.2022 35 ITA No.664/Del/2022 Vinod Kumar Gupta
5. We have gone through the orders of all the authorities.
6. The assessee filed return of income declaring total income at Rs.6,24,260/- which has been assessed at Rs.1,72,85,260/-. The matter travelled upto the ITAT which set asid e the matter to the file of the Assessing Officer for examination of the loans received from the parties who are the relatives and family members of the assessee. During the assessment proceedings, the Assessing Officer has examined the details/ additional evidences filed before the Trib unal and also recorded the statements u/s 131 of the loan parties, satisfied himself and held that the loans received were genuine and the returned income was accepted.
7. The ld. PCIT after issuing show cause notice to the assessee held that the Assessment Order passed by the JCIT, Meerut was erroneous and prejudicial to the interest of the revenue and set aside the matter back to the Assessing Officer in the order passed u/s 263.
8. Aggrieved, the assessee filed appeal before us.
9. Heard the arguments of both the parties and perused the material availab le on record.
10. On going through the entire factum, we find that the ld . PCIT has resorted to the provisions of Section 263 on the following grounds:
• the most glaring fact & find ing which is conspicuous is that all the said 19 persons have deposited cash in their bank accounts and then provided alleged loan to assessee individual on the same date or in very next date.36 ITA No.664/Del/2022
Vinod Kumar Gupta • This sort of trend in all the involved cases is not at all explicable by any stretch of imagination. In fact, this pervasive trend shows that an easy modus-operandi has been adopted by assessee to introduce his b lack money in the bank accounts of his family members & close relatives/ friends and then to take said money from the same immediately through cheque.
• Even while recording alleged statements on oaths during set-aside proceedings, questions were asked in a perfunctory manner & without questioning further, the replies of the persons were accepted.
• All the persons have stated in an identical manner that the cash deposited was their sav ing s but have also not g iven any plausible reply whatsoever as to justify why the said so called lifetime savings were not kept in bank account earlier desp ite having bank accounts in their names. • All these persons have alleged to be stated in like manner that cash was kept at home for the help of family members. The similarity as to replies in words & contents of all six persons raises serious doubts ab out the recording of the said six statements in normal course. • It has been noticed that all these persons have declared meager income in their ITRs for AY 2014-15 & in earlier years. In fact, to some of them PAN was allotted rather get allotted only just before or after the act of providing said alleged loans.
• Sh. Akash Gupta S/o Sh. Vinod Kumar Gup ta was barely 18 years when he extended loan to his father. He could not have receiv ed sufficient pocket money or otherwise monetary gifts to accumulate sum of as much as Rs.13 lacs to lend his father.37 ITA No.664/Del/2022
Vinod Kumar Gupta • With regard to the statement recorded on 17.03.2020 by the AO u/s 131, the ld. PCIT held that no probing questions has been asked in the six statements and in fact questions have been asked in a pre-determined manner. • The ld. PCIT held that the AO passed the Assessment Order without making enquiries which should have been made by him before passing the Assessment Order.
11. The ld. PCIT has examined the details of 19 lenders and with specific reference to 10 lenders before setting aside the order of the Assessing Officer. We have gone through the details of all the 19 lenders to examine whether the order of the Assessing Officer is erroneous so far it is prejudicial to the interest of the revenue. In the earlier proceedings, all the creditors have duly compiled with the notices issued by the Assessing Officer u/s 133(6) and during the set aside proceedings, the Assessing Officer has further recorded statement u/s 131 to examine the veracity of the loans g iven and accep ted the loans as genuine. The lender consists of Akash Gupta, Amita Garg, Amit Bansal, Ankit Garg, Itika Gupta, Jagwati Devi, Jayawati, Kap il Garg, Kapil Garg HUF, Monika Garg, Pravesh Kumar Garg HUF, Ritu Garg, Sanjay Kumar Garg, Sanjay Kumar Garg HUF, Santosh Devi, Subhash Chand Garg HUF, Sudhir Bansal, Swaran Lata and Swati Bansalwho have filed all the details to prove the loans .
12. Akash Gupta is the S/o of Sh. Vinod Kumar Gup ta who has lent an amount of Rs.13 lacs to his father. The ld. PCIT held that he is a person of 18 years old and could not have given loan to his father. We have gone through the return of income showing the returned income of Rs.4,10,510/-. It's the father who managed the affairs of the son. The capital account has 38 ITA No.664/Del/2022 Vinod Kumar Gupta sufficient funds. In case the amount of the loan giv en by and as confirmed is proved to be un accounted , then the amount has to be taxed in the hands of Mr.Akash Gupta who has confirmed that he is the owner of the money. We find Amita Garg has returned income of Rs.2,17,500/-. Amit Bansal has filed returned income of Rs.7,70,500/- and sold flat for Rs.13,50,000/- during the year. His capital account of Rs.29,83,075/- and earning a salary of Rs.10,01,444/-. Sh. Ank it Garg had returned income of Rs.4,45,000/- whereas Itika Gupta who lend loan of Rs.4,00,000/- had a returned of income 2,65,077/-. Jag wanti Devi aged about 80 years had returned income of Rs.4,85,500/. Kapil Garg had returned income 2,13,179/-, 2,81,226/-. Monika Garg has shown returned income of Rs.2,52,500/-. Pravesh Kumar Garg HUF had returned income of Rs.1,99,500/- and capital account of Rs.25,10,750/-. Ritu Garg had returned income of Rs.2,15,500/- and capital account of Rs.25,18,450/-. Sanjay Kumar Garg had opening capital account of Rs.19,86,892/-. Sanjay Kumar Garg HUF had returned income of Rs.1,95,500/- and capital opening balance of Rs.23,10,630/. We find that all the other lenders have duly filed their income tax returns and had opening capital balance of Rs.15 lacs to Rs.20 lacs. We have examined the capital accounts and returns of all the lenders and find that there has been sufficient opening balance in the capital account of all the lenders. We have also examined the affidav its and the replies g iven by the lender parties which are on record. The identity is not in question, the genuineness was not suspected and the creditworthiness has been proved by way of their capital accounts. Thus, all the three basic ingredients have been proved. The Assessing Officer has further gone step ahead and also recorded statement u/s 131. The query raised in the statement pertains to their Income Tax 39 ITA No.664/Del/2022 Vinod Kumar Gupta details and the fact of lending the loan to the assessee. The AO has also inquired the source of the cash deposited in the bank before issuing the loan to the assessee. The Assessing Officer has also enq uired into the fact that the loan has indeed been extended consciously by these lenders. The Tribunal after going through the details filed on earlier occasion remanded the entire issue back to the file of the AO who has also recorded the statement of sample of 6 persons u/s 131 and completed the assessment accepting the returned income.
13. The ld. PCIT's contention that Jag wati Devi (88 years old) and Santosh Dev i (68 years)could not have attended the office for record ing the statement cannot be accep ted and cannot be reasoned primarily or secondarily to support revisionary proceedings. At the most they may call for internal departmental proceedings if found correct after due inquiry. The posting of replies from Meerut RMS office and the similarity of letters cannot overtake the tangible material of the returned income, cap ital account and statement of the lenders. It has not been proved that the statements have not been recorded by the AO and it is a make-believe exercise. The similarity in the handwriting of the 6 statements and the allegation that the statements of all the peoples have not been recorded by the incumbent Assessing Officer cannot give raise to revisionary proceedings. Statements are generally written in the handwriting of the person giving the statement or the officer recording the statement. It is more common that the Inspector or other officials of the assessment unit inscribe the statement in the presence of the officer recording the statement.
14. It is a fact on record that there have been cash deposits in the bank account and the bank account holders confirm the 40 ITA No.664/Del/2022 Vinod Kumar Gupta loan given to the assessee, the loan parties clearly identifiable would be liab le to tax u/s 68 for the unexplained cash deposits in their bank accounts. However, the taxab ility cannot be fastened to the assessee in the facts of the instant case. The lenders being an identifiab le entity are liab le to tax with regard to the deposits in their bank accounts. There is no proof that the lender parties have been used as conduit to channelize the assessee's unaccounted money. With regard to the uniformity of the statement as alleged by the ld. PCIT, the lenders have answered to the questions posed by the Assessing Officer. Questions pertaining to the loan given and the financial affairs of the lender parties need not be different to each lender. Since, all the lenders have given monies to the assessee, the AO is naturally bound to ask the more or less similar questions to each loan party. The purpose of recording of the statement of the parties is to examine in d etail the factum of extend ing the loan and the ability of the loan parties to indulge in such an act. In the instant case, all the loan parties have confirmed about the fact of giving loan. With regard to hav ing the same mobile number at the time of allotment of PAN, cannot be a conclusive prove that the assessee has utilized the names and bank accounts of the lender for his benefit. As we find that the lenders are the family members like son, mother, nephew, daughter-in-law, brother etc. Applying for the PAN for the family members with the mobile number of the assessee cannot be a reason sup portive of inviting proceedings u/s 263. The core allegation of the ld. PCIT that the AO d id not pose probing questions u/ s 131 cannot be termed as "no enquiry" or "insufficient enq uiry". The AO has posed the questions which he thought would be sufficient to examine the genuineness of the loan transactions. The ld . PCIT held that the AO had 14 sets of similar questions irrespective of age, gender, nature of 41 ITA No.664/Del/2022 Vinod Kumar Gupta business activity, expenditure pattern. We hold that the observation of the ld. PCIT wouldn't make any tang ible difference in proving the genuineness or non-genuineness of the loan given. The additional evidences filed before the Tribunal have been filed before the AO and the AO has duly taken cognizance of the same as mentioned at page 4 of the Assessment Order. The ld. PCIT's observation that the AO is required to take statement on oath of the person to be verified, wherever he find s fit to satisfy him about the genuineness of amount cred ited in books of account and only presence of person on oath d oes not certificate to itself that the lenders are genuine. The ld. PCIT also held that there is a provision made availab le by the Act to AO take statement on oath of the lender to verify the genuineness of the transactions. In the instant case, the AO has examined the parties on oath u/ s 131, satisfied himself and passed Assessment Order. The ld. PCIT's observation that the AO should have raised the issue of having common mob ile number while recording the statement, cannot be directive or conclusive proof that the entire transactions are bogus. The ld. PCIT held that the AO has passed Assessment Order without making enquiries or verifications which should have been made before passing of the Assessment Order which we find not acceptable as AO has duly recorded the statement of the loan parties and satisfied himself. The basic criteria of enquiry pertaining to loan transaction viz., identity, genuineness and creditworthiness has been examined to the satisfaction to the AO. We also find that the Hon'ble High Court in the case of PCIT Vs. Delhi Airp ort Metro Express Pvt. Ltd . in ITA NO. 705/2017 held that it is incumbent upon the ld. PCIT to undertake minimal enq uiry to prove that the order of the AO is erroneous and prejudicial to the interest of the revenue. In the instant case, the assessee was specifically queried regarding 42 ITA No.664/Del/2022 Vinod Kumar Gupta the nature and character of the loan and the loan parties and the loan parties have been examined independently. Hence, it cannot be said that this is a case of no enquiry or inadequate enquiry. Even the order u/s 263 did not point to anyone of the 19 loan parties as un-genuine. The order u/s 263 mainly revolves around not recording of statement by the AO in such a way as perceived by the ld . PCIT.to prove that the loans were bogus and were not genuine. We have gone through the case laws relied upon by the ld. PCIT and find that the facts are not applicable to the instant case. The depth of enquiry as determined by the ld. PCIT cannot be a reason to prove that the Assessing Officer has erred in d uties and pass an order which is erroneous and prejud icial to the interest of the revenue. The proposition that the Assessing Officer has made inadequate enquiry, that would not ipso facto give occasion to the Commissioner to pass order u/s 263 merely because the ld. PCIT had different higher standard of examination of the loan parties. The instant case is not the one where in the Assessing Officer passed an order without mak ing the inquiries or verifications which should have been done. It is only in case of lack of enquiry, no enquiry, irrelevant enquiry, vague enq uiry , improper enq uiry, inappropriate enquiry, inconclusive and hazy enquiry , that such course of action would be opened to the Pr. Commissioner to invoke the powers of revision vested by the Income Tax Act, 1961.Ergo,on going through the entire facts and the judicial pronouncements on this section, we hold that the order of the Assessing Officer cannot be considered as erroneous in so far as prejudicial to the interests of the revenue.
15. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 30/08/2022.
43 ITA No.664/Del/2022
Vinod Kumar Gupta
Sd/- Sd/-
(Anubhav Sharma) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 30/08/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
Date Initial
1. Draft punched on computer 23.08.2022 PS
2. Draft placed before author 24.08.2022 PS
3. Draft proposed & placed before the JM/AM
second member
4. Draft discussed/approved by Second JM/AM
Member.
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.
11. Date of uploading