Income Tax Appellate Tribunal - Panji
Pratap Singh Tanwar, Jaipur vs Ito, Alwar on 11 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 371JP/14
fu/kZkj.k o"kZ@Assessment Year : 2009-10
Sh. Pratap Singh Tanwar cuke The Income Tax Officer,
132, KAV Sub Station, Neelam Vs. Ward-2(2), Alwar.
Chowk, Bhiwadi, Alwar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. ADAPT0047M
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 423/JP/14
fu/kZkj.k o"kZ@Assessment Year : 2009-10
The Income Tax Officer, cuke Sh. Pratap Singh Tanwar
Ward-2(2), Alwar. Vs. 132, KAV Sub Station,
Neelam Chowk, Bhiwadi,
Alwar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. ADAPT0047M
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrhdh vksj ls@Assessee by : Shri P.C. Parwal (C.A)
jktLo dh vksj ls@Revenue by : Shri R. A Verma (Addl.CIT)
lquokbZ dh rkjh[k@Date of Hearing : 12/05/2017
?kks"k.kk dh rkjh[k@Date of Pronouncement: 11/08/2017.
vkns'k@ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
These are the cross appeals filed by the assessee and the Revenue against the order of ld. CIT(A), Alwar dated 14.03.2014 for A.Y. 2009-10.
ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar Both the appeals were taken up together and being disposed off by this consolidated order. The effective grounds of appeal are as under:-
Ground of assessee's appeal:-
"1. The Ld. CIT(A) has erred on facts and in law in confirming trading addition of Rs. 2,85,181/- by applying g.p. rate of 7% on declared sales as against g.p. rate of 6.04% declared by the assessee. He has further erred in confirming the addition even when purchased and sales are accepted by him.
2. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 85,49,700/- by treating the following cash creditors as unexplained:
S.No. Name of creditor Amount
1. Ravi Kant Rs. 1,00,000/-
2. Bishan Singh/Ashok Kumar Rs. 28,10,000/-
3. Raju/Satpal Tanwar Rs. 16,74,700/-
4. Rakesh Chiwa/ Bhukar Rs. 5,00,000/-
5. Vinita Devi Rs. 34,65,000/-
Total Rs. 85,49,700/-
3. The Ld. CIT(A) has erred on facts and in law in not allowing the set off of trading addition against the addition of cash credit confirmed by him."
Ground of Revenue's appeal:-
"1. That the Commissioner of Income-tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in reducing the trading addition of Rs. 23,49,472/- to Rs. 2,85,181/- made by the AO on a/c of low G.P. rate declared.
2. That the Commissioner of Income-tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in reducing the addition of Rs. 2,03,16,200/- to Rs. 85,49,700/- made by the AO on a/c of unexplained cash creditors u/s 68 of the I.T. Act, 1961 without appreciating material facts of the case."2
ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar
2. Regarding ground no. 1 of assessee's as well as revenue's appeal, the brief facts of the case are that the assessee is engaged in the business of trading in liquor. During the year, he declared gross profit of Rs. 18,02,976/- on turnover of Rs. 2,98,30,810/- giving a gross profit rate of 6.04% as against gross profit of Rs. 5,56,678/- on turnover of Rs. 76,27,050/- giving a gross profit rate of 7.29% in the immediately preceding year.
2.1 The AO observed that there is a decline in Gross profit rate as compared to the preceding year. The books of accounts maintained by the assessee cannot be said to be reliable and is subject to verification in as much assessee has not produced the books of accounts and purchase/sale bills to verify the correctness of the trading results declared. Accordingly, the AO rejected the books of accounts of the assessee by applying provisions of section 145(3) and made trading addition of Rs. 23,49,473/- by applying Gross profit rate of 13.92% on declared turnover. For applying Gross profit rate of 13.92%, the AO relied upon the case of Sh. Prahalad Singh (wine contractor), Bhiwadi who has declared this Gross profit rate on turnover of Rs. 85,53,932/-.
3. Before the Ld. CIT(A), the assessee submitted that he is maintaining regular books of accounts consisting of cash book, ledger, bank book, journal etc, all the purchases are made from the government department i.e. RSBCL and it is not practicable to maintain the sale bills being sales made to the consumers on retail basis having petty value. The assessee further submitted that there is no comparison of the case of Sh. Prahalad Singh relied by the AO with that of the assessee's case in as much as the turnover declared by the assessee is almost three times than that declared by Sh. Prahalad Singh and there are number of cases as mentioned at Page 4-6 of the CIT(A) order 3 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar wherein Gross profit rate of 5% or even lesser is confirmed in similar nature of business.
3.1 In the course of remand proceedings, the assessee produced the computerized cash book, ledger and purchase bills and claimed that bills/vouchers for expenses debited in the Profit & Loss A/c are not maintained owing to the same being petty in nature. The AO, however, held that the assessee has failed to discharge its onus regarding the rejection of books of accounts in as much as no details of stock, sale summary and bills/vouchers of expenses claimed in the Profit & Loss A/c were produced for verification. In response to the same, the assessee produced the sales summary and submitted that the stock details are not required being no opening and closing stock and bills for expenses claimed in the Profit & Loss are not maintained being some petty in nature and some fixed in nature. The assessee thus pleaded that application of Section 145(3) is unlawful and unjustified. The assessee also questioned the application of Gross profit rate of 13.92% by submitting that the same cannot be altered/changed in as much as all the bills/vouchers for purchase A/c and expenses towards the trading A/c are vouched and sales value is confirmed. Further, decline in Gross profit rate by 1.25% in comparison to the preceding year is very negligible in comparison to increase in sale by 3.91 times.
3.2 The Ld. CIT(A) confirmed the action of the AO in invoking the provisions of sec. 145(3) of the IT Act. However, he restricted the trading addition to Rs. 2,85,181/- by applying Gross profit rate of 7% on the declared turnover. The relevant finding of the ld CIT(A) is as under:
"4.5 I have perused the assessment order, remand report as well as submissions made by the AR of the appellant along-with judicial citation given therein and find that AO has made the trading addition of Rs.
4ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar 23,49,472/- by enhancing the GP rate from 6.04% to 13.92% on the declared turnover of the appellant of Rs. 2,98,30,810 for period under consideration. The AO has invoked the provisions of section 145 of the IT Act as the appellant could not produce complete books of accounts along-with supporting vouchers, copy of purchase and sale bills before the AO. AO has also stated that GP rate declared by the assessee at 6.04% is less than the GP rate of 13.92% declared in the case of Sh. Prahalad Singh (Wine Contractor) at Bhiwadi on gross sales of Rs. 85.53 lacs. Further, the appellant had declared a GP rate of 7.29% on a turnover of Rs. 76.27 lacs in the preceding year. Therefore, AO has invoked the provisions of section 145 of the IT Act and applied the estimated GP rate.
4.6 The appellant has stated that it is engaged in the business of trading of liquor and sales made to consumer are on a retail basis having petty value and therefore it is not possible to maintain all the sales bills. All the goods traded by the assessee are duly controlled by the government, quantity of stock is maintained as per the norms of the Excise Department. The purchases of liquor are made from the State Govt. Deptt. and the prices are also fixed by the State Govt. Further, all the purchase bills and ledger accounts were produced before the AO in the course of remand proceedings. The facts of the case relied upon by the AO are not comparable as the turnover of the assessee is Rs. 2.98 crores as compared to the turnover of Rs. 85.53 lacs of the wine contractor at Bhiwadi. The turnover has increased from Rs. 76.27 lacs in the preceding year to Rs. 2.98 crores as a result of selling goods at a lesser margin of profit. The gross profit declared has however increased from Rs. 5.56 lacs in the preceding year to Rs. 18.02 lacs in the period under consideration.
4.7 It is further stated by the appellant that the AO has accepted the GP rate 3.77% declared in A.Y. 2010-11 under an order passed u/s 143(3) of the IT Act. It is stated that complete books of accounts have been maintained and were produced before the AO in the course of remand proceedings also.
4.8 I have examined the contentions and judicial decisions cited by the appellant and material available on record and find that the appellant has not been able to controvert the fact that complete sales records in the form of supporting vouchers were not maintained and thus could not be produced before the AO in the course of appellate proceedings. Therefore, I hold that 5 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar the provisions of section 145 of the IT Act have been rightly invoked by the AO in view of the deficiencies noticed. However, as regards the estimation of GP rate is concerned, various courts have held that the best guide for making the best judgment assessment would be the history of the appellant and therefore it would be just and fair to adopt a GP rate of 7% on the declared turnover. This would take care of leakage of revenue on account of incompleteness of the vouchers, bills etc. and also it take into consideration the increase in turnover during the period under consideration.
4.9 In view of the above discussion, gross profit of the appellant would work out Rs. 20,88,157 (after applying 7% on turnover of Rs. 2,98,30,810) as against declared gross profit of Rs. 18,02,976. It would result in confirming a trading addition of Rs. 2,85,181 and the appellant would get a relies of Rs. 20,64,291 on this account."
4. During the course of hearing, the ld AR submitted that the assessee maintains regular books of accounts, which is subject to audit. In the course of remand proceedings, the assessee produced the computerised cash book, ledger, purchase bills and sales summary. All the purchases are made from the government department i.e. RSBCL. The purchases have been accepted by the lower authorities. The lower authorities have also not questioned about the expenses debited in the trading A/c. The only dispute is about verification of sales. In respect of sales, assessee has furnished the sales summary. There was no opening or closing stock. Thus, all the purchases made during the year are sold. The lower authorities have not brought any evidence on record that the sales are under invoiced. In these circumstances, application of Gross profit rate of 7% is unjustified.
4.1 It may be noted that in AY 2008-09, the gross profit rate is 7.30% on turnover of Rs. 76,27,050/-and the net profit rate was 2.54%. In the year under consideration, the gross profit rate is 6.04% on turnover of Rs. 2,98,30,810/- and net profit rate is 3.15%. In AY 2010-11, the Gross profit rate is 3.61% on turnover of Rs. 6,38,41,000/- and net profit rate is 1.59%.
6ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar In the subsequent year, AO made lump sum trading addition of Rs. 1 lakhs vide order dated 28.03.2013 u/s 143(3) of the IT Act, 1961, thereby determining the Gross profit rate at 3.77%. Thus, when in the subsequent year, on similar facts, Gross profit rate is determined at 3.77% (considering the addition of Rs. 1 lakhs), there is no justification to apply Gross profit rate of 13.92% applied by the AO and 7% applied by the Ld. CIT(A) by ignoring that net profit rate of 3.15% is better as compared to previous year and the subsequent year. Hence, the Gross profit rate of 6.04% declared by the assessee in the year under consideration be accepted.
4.2 It is a settled law that even if books of accounts are rejected it is not necessary that there should be a trading addition. After rejection of books of accounts, assessment is to be made in the manner provided u/s 144. This would require taking into consideration all the circumstantial facts and the past history. It is to be noted that overall gross profit has been increased from Rs. 5,56,678/- to Rs.18,02,976/- as compared to last year. The slight decline in the Gross profit rate of 1.25% is on account of increase in the turnover, which has increased by 3.91 times as compared to the last year. The assessee is interested in the volume of profit and not in the rate of profit. Thus, when the amount of profit declared by the assessee is better as compared to the results declared in earlier years, application of Gross profit rate of 7% by the Ld. CIT(A) as against Gross profit rate of 6.04% declared by the assessee is unwarranted more so when the purchases and sales are accepted by him.
4.3 The AO has applied the Gross profit rate of 13.92% on declared turnover by relying upon the case of Sh. Prahalad Singh (wine contractor), Bhiwadi who has declared this Gross profit rate on turnover of Rs. 85,53,932/. It may be noted that this case cannot be compared with that of 7 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar the assessee's case in as much as the turnover declared by the assessee is almost three times than that declared by Sh. Prahalad Singh and there are number of cases [as mentioned at Page 4-6 of the CIT(A) order] wherein Gross profit rate of 5% or even lesser is confirmed in similar nature of business.
5. The ld DR is heard who has vehemently argued the matter and relied on the order of the AO.
6. We have heard the rival contentions and perused the material available on record. Undisputedly, the books of accounts have been rejected u/s 145(3) and the assessee has not challenged such rejection of books of accounts. Regarding estimation of gross profit rate, the assessee has not satisfactorily explained the reason for the fall in the g.p rate from 7.3% last year to 6.04% this year except for the fact that the turnover has increased over the last year which has put pressure on the gross margins in the business. The AO has compared the results with another liquor contractor who has declared a g.p of 13.92% and has applied the same in the instant case without highlighting the comparability parameters. The ld CIT(A) has accepted the asseessee's contention regarding pressure on the gross margins in view of increase in the turnover and at the same time, looking at the past history, estimated the gross profit rate of 7%. In the peculiar facts and circumstances of the case where there is no satisfactory explanation to substantiate the fall in the G.P rate, we find the approach of the ld CIT(A) as reasonable where he has followed the past history of the assessee. In the result, the grounds taken by both the assessee and the revenue are dismissed.
7. Ground No. 2 of the assessee's appeal as well as ground no. 2 of the revenue's appeal are relating to additions under section 68 of the Act. The 8 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar AO has made an addition of 2,03,16,200/- which has been reduced to Rs. 84,49,700/- by the ld CIT(A). The assessee is challenging the sustenance of addition of Rs 84,49,700 and revenue is challenging the reduction in addition u/s 68 of the Act from Rs 2,03,16,200/- to Rs. 84,49,700/-.
7.1 Before we examine the facts of the case, it would be relevant to refer to the legal propositions in the context of section 68 which has emerged after examining various legal authorities including those quoted by the ld AR on the subject as under:
a) Where any sum is found credited in the books maintained by the assessee, Section 68 requires that the assessee should offer an explanation about the nature and source of such sum found credited in its books of accounts to the satisfaction of the Assessing officer. In absence of explanation, or in the event of explanation being not found satisfactory, the sum so credited would be included in the income of the assessee.
b) The primary requirements, which should be satisfied cumulatively by the assessee in such cases is identification of the creditor/shareholder, creditworthiness of creditor/shareholder and the genuineness of the transaction.
c) The explanation offered and material submitted by the assessee in support of its explanation should be wholesome, credible and verifiable.
These three requirements thereafter have to be tested by the Assessing officer not superficially but in depth having regard to the human probabilities and normal course of human conduct. It is only when the explanation and the material offered by the assessee at this stage passes this muster that the 9 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar initial onus placed on it would shift leaving it to the Assessing Officer to start inquiring into the affairs of the third party.
d) Whilst it is true that the assessee cannot be called upon to adduce conclusive proof on all these three requirements, it is nonetheless legitimate expectation of the process that he would bring in sufficient proof, which is credible and at the same time verifiable, so as to discharge the initial burden placed on him. Whether initial onus stands discharged would depend upon facts and circumstances of each case.
e) The degree of burden of proof on the assessee will vary from assessee to assessee. In case of private limited companies, where amounts are borrowed from or shares are allotted through private placement, to persons generally known to directors or shareholders, directly or indirectly, burden of proof is on higher pedestal as compared to public limited companies. In case of private limited companies, the Courts have laid down a strict approach in terms of satisfying such burden of proof.
f) In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly buy or subscribe to shares or lend money to the company. Upon receipt of money, the share subscribers/lenders do not lose touch and become incommunicado. Call money, dividends warrants, interest payout etc. have to be sent/made and the relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain quiet when summons/notices issued to shareholders/lenders remain un-served and uncomplied. As a general proposition, it would be improper to universally hold that the assessee can plead that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders'/lenders attendance in spite 10 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar of the fact that the shareholders/lenders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the shareholder/lender. It would be also incorrect to universally state that an inspector must be sent to verify the shareholders/lenders at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders/lenders themselves.
g) Unlike the case of private limited companies, in the case of public limited company which has gone for a public issue and got share subscriptions from prospective shareholders across the length and breadth of the country, the legal regime may not be the same. In such cases, the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents, bank transactions details and other related KYC documents submitted along with the share application.
h) The word "identity" means the condition or fact of a person or thing being that specified unique person or thing. The identification of the person would include the place of work, the staff, the fact that it was actually carrying on business and recognition of the said company in the eyes of public. Merely producing certificate of incorporation, PAN number or assessment particulars did not establish the identity of the person. PAN numbers are allotted on the basis of applications without actual de facto verification of the identity or ascertaining active nature of business activity.
11ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar The actual and true identity of the person or a company was the business undertaken by them. Further, these documents have their limitation and cannot be relied upon blindly when there are surrounding circumstances to show that the subscriber was a paper company and not a genuine investor.
i) In respect of the genuineness of the transaction and creditworthiness of the shareholder/lender, it would be incorrect to state that the onus to prove the same stands discharged in all cases if payment is made through banking channels and the fact that the money originally lent has been returned through banking channels. Whether or not onus is discharged depends upon facts of each case. It depends on whether the two parties are related or known to each other; the manner or mode by which the parties approached each other, whether the transaction was entered into through written documentation and due diligence to protect the investment and the pay back on such investment, whether the investor professes and was an angel investor, the object and purpose (profit motive) behind the investment and whether any dividend declared and distributed in the past or not. Whether share subscribers have their own profit making apparatus and were involved in any tangible business activity or were they merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. Creditworthiness and genuineness of the transaction is therefore not proved by showing merely issue and receipt of a cheque or by furnishing a copy of statement of bank account of share subscriber, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment. Similar analogy will apply in respect of any loan transaction.
j) The entire evidence available on record has to be considered and a reasonable approach has to be adopted. The final conclusion must be 12 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish identity, creditworthiness of the shareholders and the genuineness of the transaction.
k) Where the assessee has discharged the initial burden placed upon him under sec. 68 to prove and establish the identity and creditworthiness of the share applicant/lender and the genuineness of the transaction, the burden of proof shifts on the Assessing officer. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. If the Assessing Officer harbours any doubts of the legitimacy of any subscription, he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings or has no material in his possession, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company.
l) The case of CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80 (SC) exemplifies the category of cases where no action is taken by the Assessing Officer to verify or conduct an enquiry into the particulars about the creditors furnished by the assessee, including their income-tax file numbers. In these cases, the decision was based on the fundamental rule of law that evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ratio cannot be, and should not be, widened to include therein cases where there exists material to implicate the assessee in a collusive 13 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar arrangement with persons who are self-confessed "accommodation entry providers".
8. In light of above legal propositions, we now refer to the relevant facts in terms of each of 13 cash creditors where both assessee and revenue are in cross appeal, the AO's observation, assessee's submission in appellate and remand proceedings and AO's observation thereon, findings of CIT(A) and assessee's contentions before us. Each of the transactions hereinafter shall be tested in light of above legal propositions in order to determine whether necessary onus has been satisfied by the assessee in terms of section 68. Each of these 13 cases are discussed in detail in the following paragraphs:
8.1 Ravi Kant - Rs. 1 lakhs (assessee's appeal):
AO's observation Appellate & Remand CIT(A)'s findings proceedings AO Page 6 Appellate proceedings CIT(A) Page 31-33
- No confirmation filed - PAN is AAIPC2761N - Assessee has merely filed a
- No identity proof filed - Amount received on confirmation along with
- Address not provided 28.03.09 through demand PAN of the creditor at primary stage of draft - Assessee failed to produce scrutiny proceedings - Complete address given in the creditor and same was assessment proceedings as - No reply received from provided on Ravi Kant S/o Ram Chander, creditor in response to 27.12.2011 Chandna Bus Stand, Near notice u/s 133(6)
- No PAN Natraj Hotel, Rewari,- Notice issued u/s 131 came
- No regular source of Haryana back with the remark income to give loan 'refused service'
- No explanation about - Copy of bank statement Remand proceedings source of cash creditor not filed
- Copy of ITR not filed Confirmation filed on
- Details regarding source of 26.12.13 (PB 8) income not filed AO's observation
- No details filed by creditor in response to notice 14 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar dt.08.02.13 u/s 133(6)
- Notice dt.17.04.13 u/s 131 returned undelivered
- Notice dt.05.12.13 u/s 131 returned with remarks 'refused'
- Copy of bank a/c not filed 8.2 In this regard, the ld AR submitted that it can be noted that the identity of the creditor is established. The creditor has directly deposited this amount to the excise department for obtaining advance license of liquor. The amount was given by him by DD. This proves the genuineness of the transaction. The notice dated 08.02.13 u/s 133(6) was served on him. The amount is subsequently repaid to him on 16.06.2012. He is assessed to tax.
In the remand proceedings, assessee has categorically stated that bank A/c details is given in the income tax return of the cash creditor. All these facts prove his creditworthiness. The Ld. CIT(A) has confirmed the addition for the reason that notice issued u/s 131 to the creditor has come back with the remark 'refused service' ignoring that notice issued u/s 133(6) has been served on the creditor. Only because the creditor could not be produced, cannot be a reason for making an addition u/s 68 more particularly when the AO did not pursue the matter further inspite of providing his address and the PAN. In these facts, the addition confirmed by the Ld. CIT(A) is unjustified and the same be deleted.
8.3 The findings of the ld CIT(A) are as under:
"Considering the facts stated above, I find that the appellant has merely filed a confirmation along-with the PAN of the creditor. The appellant failed to produce the creditor before the AO. The AO has issued notice u/s 133(6) of the IT Act and in response to which no reply was received from the creditor. Further, notice u/s 131 of the IT Act was issued by the AO, which came back with the remark "refused service". When these facts were confronted to the appellant in the course of remand proceedings, the appellant has stated that amount was received through banking channel and beyond this he failed to 15 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar substantiate the transaction of loan having been received. No copy of the bank statement of the creditor was filed. No details regarding the sources of income so as to establish the creditworthiness of the creditor were filed, no copy of the ITR filed by the creditor was produced before the AO.
In view of the above facts, I find that the appellant has not been able to discharge the onus u/s 68 of the IT Act - identity & creditworthiness of creditor, genuineness of the transaction have not been proved. Thus, I confirm the addition of Rs. 1,00,000 made by the AO on this account."
8.4 We have heard the rival submissions and purused the material available on record. We do not find any infirmity in the order of ld CIT(A). The assessee has failed to satisfy the initial onus cast on him in terms of identity & creditworthiness of creditor, genuineness of the transaction. Hence, the addition of Rs 1 lacs is confirmed and to this extent, the ground of appeal's assessee is dismissed.
9. Anil Kumar - Rs.33,48,500/- (Department's appeal) AOs findings Appellate proceedings CIT(A)'s findings
- No confirmation -PAN is ADTPT4408C (PB -Appellant has filed filed 11) confirmation, affidavit of
- No identity proof creditor, copy of ITR, filed -Address is House No. 1, copy of bank a/c and
- Proper address not Sector No. 7, Rajasthan provided during sources of cash deposit Housing Board, Bhiwadi scrutiny in the bank account has proceedings and -Copy of confirmation is at been explained to be a same was provided PB 12 receipt from RIICO and on 27.12.2011 at supporting evidence for last stage -Copy of identity card is at such receipt from RIICO
- No PAN PB 10 against cancellation of
- No regular source of income to give plot has also been filed.
loan
- No explanation Remand proceedings
about source of
-The cash creditor has
cash creditor -Letter filed by Sh. Anil
confirmed the
Kumar addressed to the AO
transaction and
in reply to notice u/s 131 is
submitted supporting
16
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
at PB 17 evidence in response to
notice issued by AO u/s
-ITR for A.Y. 10-11 filed 131 of the IT Act in
-Affidavit dt.9.12.13 of Anil course of remand
Kumar filed (PB 13) proceedings
-Copy of DD's filed (PB 14-
16) -Thus, the appellant has
-A letter issued by RIICO for discharged the onus u/s cancellation of auction of plot 68 of the IT Act.
no. HT-61, Industrial Area,
Bhiwadi filed (PB 18-21)
-Bank statement of
Corporation Bank and ICICI
Bank filed
AO's observation
-All the above documents
filed with reply dt.
26.12.2013 by the assessee
through his AR and not by
the cash creditor
-Only one DD of
Rs.16,74,000/- has been
issued from ICICI bank on
23.07.08 and no details of
the manner of other DD of
Rs.16,74,000/- are available
as per copies of bank a/c
filed
-On 22.07.08 and 23.07.08,
there are cash deposits in
bank a/c of cash creditor
which ultimately has been
utilized in DD issued for
Rs.16,74,000/- from this
bank a/c
-No ITR of A.Y. 09-10 seems
to have been filed by Sh. Anil
17
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
Kumar
9.1 In this regard, the ld AR submits that he relied on the finding of CIT(A). It was further submitted that the AO wrongly stated that only one DD of Rs. 16,74,000/- was filed whereas assessee has filed three DD's, two of Rs. 16,74,000/- each and one of Rs. 500/-. Infact, assessee has deposited Rs. 8,37,200/- by DD at the time of participation in auction for allotment of a plot with RIICO Ltd . Thereafter, Rs. 50.23 lakhs was further deposited. Out of it, Rs. 33,48,500/- (Rs. 16,74,000 + Rs. 16,74,000 + Rs. 500) was deposited by Sh. Anil Kumar on behalf of the assessee. Accordingly, this amount was credited to the A/c of Sh. Anil Kumar in the books of the assessee. In support of the amount of Rs. 33,48,500/- paid by Sh. Anil Kumar to RIICO Ltd. on behalf of the assessee, copy of the bank A/c was submitted as noted by the AO during the remand proceedings. Further, AO on this basis has reopened the case of the creditor u/s 148 and vide order dated 22.02.2016 made addition of Rs. 33,48,500/- (Copy of assessment order of Shri Anil Kumar is at PB 22-23). Thus, when the AO has already added this amount in the hands of the creditor, no addition can be made in the hands of the assessee. Also, when the assessee has discharged the onus u/s 68, no addition can be made. Thus, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
9.2 The findings of the ld CIT(A) are as under:
"In view of the above facts, I find that the appellant has filed confirmation, affidavit of the creditor, copy of the ITR, copy of the bank account and sources of cash deposit in the account has been explained to be a receipt from RIICO and supporting evidence for such receipt from RIICO against cancellation of plot has also been filed. The cash creditor has confirmed the transaction and submitted the supporting evidence in his response filed in pursuance to the notice issued by the AO u/s 131 of the IT Act in the course of remand proceedings.18
ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have been proved. The creditor has filed these details in response to the notices issued by the AO and therefore no adverse inference can be drawn. The AO may if he so desires pass the information to the AO with whom the creditor is assessed to tax. Accordingly I delete the addition of Rs. 33,48,500 made by the AO on this account."
9.3 We have heard the rival contentions and pursued the material available on record. The source of cash deposit in the bank account has been explained to be receipt from RIICO pursuant to cancellation of plot. We accordingly confirm the above findings of the ld CIT(A) where he has held that the assessee has discharged the onus placed on him under section
68. The findings of ld CIT(A) remain uncontroverted before us. We hereby confirm the deletion of addition of Rs 33,48,500. The ground of revenue's appeal to this extent is hereby dismissed.
10. Bhishan Singh - Rs.28,10,000/- (Assessee's appeal) AO 's findings Appellate proceedings CIT(A)'s findings
- No confirmation filed - Complete address given -Appellant has filed
- No identity proof filed in assessment confirmation, a
- Proper address not provided proceedings as VPO certificate from bank during first reply of scrutiny Santhlaka, 278 Vasai- and affidavit of the proceedings
- Perusal of bank statement of 401202 creditor.
Sh. Bhishan Singh revealed
- Amount of Rs. 28.10 -Appellant failed to
that he deposited cash of Rs.
10,000 & Rs.28 lakhs on lakhs has been received produce the creditor
12.03.2009 in his Bank of from Bhishan Singh by and also failed to
Baroda, saving A/c and on A/c payee cheque no. furnish any evidence
the same date issued DD of 55682 of Bank of Baroda regarding sources of
Rs.28.10 lakhs in favour of credits and income of
assessee. Besides this, no creditor
such cash transaction was
routed during the year by Remand proceedings -No reply received in
Sh. Bhishan Singh.
- No PAN -Amt. of Rs. 28.10 lakhs response to notice
- No regular source of income has been received by A/c issued by AO u/s 133(6)
to give loan payee cheque no. 55682 -Initially appellant had
- Creditworthiness not genuine of Bank of Baroda from stated that loan has
joint a/c with son Ashok been given by Bhishan 19 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar Kumar. Since Bhishan Singh but in remand Singh is the 1st holder of proceedings the name the A/c, assessee of the creditor has been credited the money in his changed to Sh. Ashok name while his son Kumar Ashok Kumar has confirmed the loan given -Cash deposits were by him by filing affidavit, found by AO in account confirmation of account before the issue of and letter in response to cheque/DD in favour of notice u/s 131 . appellant
-Appellant has failed to furnish any details
-The name and the amt. regarding the sources of advanced by the income of creditor so as creditor has also been to establish confirmed by a letter or creditworthiness certificate issued by Bank of Baroda dt. -Copy of ITR filed by 09.12.13 but the AO the creditor was not has overlooked the produced before the AO certificate.
AO's observation - Notice dt.08.02.13 issued u/s 133(6) returned undelivered -No compliance made of notice issued u/s 131 dt. 17.4.13 & 05.12.13 -A new story has been evolved that Bhishan Singh is the 1st holder of A/c, assessee credited the money in his name while his son Ashok Kumar has confirmed the loan. How the assessee had known at the time of acceptance of loan that the 1st holder is Bhishan Singh. 20 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar It is merely an afterthought. Even after substitution of name of creditor, creditworthiness remains unexplained.
10.1 The ld AR submitted that from the above, it can be noted that the identity of the creditor is established. He has given the amount by directly depositing to the excise department for obtaining advance license of liquor. The amount was given by him by DD. This proves the genuineness of the transaction. He is assessed to tax. He has replied u/s 131 to the AO. All these facts prove his creditworthiness. The reason for giving the confirmation by Shri Ashok Kumar was explained in as much as the same was given out of the bank account which is jointly held by Bhishan Singh and Ashok Kumar. The assessee is not required to prove the source of the source more particularly when his PAN is provided. Only because notice issued u/s 131 to the creditor has come back with the remark 'refused service' and the creditor could not be produced, cannot be a reason to make the addition ignoring that notice issued u/s 133(6) has been served on the creditor and the AO did not pursue the matter further. In these facts, the addition confirmed by the Ld. CIT(A) is unjustified and the same be deleted.
10.2 The findings of ld CIT(A) are as under:
"In view of the above facts, I find that the appellant has filed a confirmation of the creditor, a certificate from the bank and affidavit of the creditor-Sh. Bishan Singh. The appellant failed to produce the creditor before the AO and also failed to furnish any evidence regarding the sources of credits and income of the creditor. The AO has issued notice u/s 133(6) of the IT Act and in response to which no reply was received from the creditor. Initially the appellant had stated that the loan has been given by Sh. Bishan Singh but in the course of remand proceedings the name of the creditor has been changed to Sh. Ashok Kumar. In the course of remand proceedings, AO has 21 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar also raised doubts about the name of the creditor as the confirmation filed was stated to have been signed by another person in the name of Ashok Kumar. The appellant has stated that the money was given out of the joint account and the creditor is the first account holder and therefore, his name has been shown as that of creditor in the account books of the appellant. However, cash deposits were found by the AO in the account before the issue of cheque/DD in favour of the appellant. The appellant has failed to furnish any details regarding the sources of income of the creditor so as to establish the creditworthiness. Further, no copy of the ITR filed by the creditor was produced before the AO. The appellant has also failed to produce the cash creditor for examination in response to the notices issued to verify the veracity of the contentions made in the affidavit.
Therefore, I hold that the appellant has not been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have not been proved beyond doubt. Accordingly I confirm the addition of Rs. 28,10,000/- made by the AO on this Account."
10.3 We have heard the rival submissions and pursued the material available on record. The AO has given a finding that cash was deposited in the creditor's bank account and on the same date, demand draft was issued. Nothing has been submitted to explain the source of such cash deposits. It is not a question of determining source of source rather it is a question of satisfying the test of creditworthiness. The said finding of the AO which has been confirmed by the ld CIT(A) remain unrebutted before us. The assessee has thus failed to satisfy the initial onus placed on him especially in terms of creditworthiness of the creditor. In the result, we confirm the findings of the ld CIT(A) and the addition of Rs 28,10,000 is hereby confirmed. The ground of assessee's appeal to this extent is thus dismissed.
11. Mangal Singh - Rs.7,20,000/-(Department's appeal) AO's findings Appellate proceedings CIT(A)'s findings
-Assessee produced Sh. -Sh. Mangal Singh is an -The appellant has filed Mangal Singh and his income tax assessee confirmation, copy of statement was recorded on holding PAN ITR, PAN, copy of bank 16.12.2011 wherein he ADYPT7676E, residing at 22 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar stated that he is filing Main Village Gali, Neelam a/c etc. before the AO. regular return of income Chowk, Bhiwadi.
since 2006-07 and is -Cash creditor was also having PAN ADYPT7676E -Assessee received produced before the Rs.5,20,000 by DD's and AO and statement was
-On perusal of bank Rs.2,00,000/- by a/c recorded statement of Sh. Mangal payee cheques Singh, it is revealed that -Thus, appellant has he deposited cash of -Confirmation is at PB 30, discharged the onus Rs.8,82,240/- on ITR is at PB 31 and u/s 68 of the IT Act 04.03.2009 and on the passbook is at PB 32-33 and addition made by same day issued DD's on -The assessee cannot be the AO on this account behalf of the assessee for required to explain the is deleted. the purpose of liquor source of source of cash license of the assessee credit in the books of
-Sh. Mangal Singh accounts of the creditor admitted in his statement though Sh. Mangal Singh that he received Rs.4.50 has himself admitted lakhs on maturity of FDR during the proceedings after death of his uncle but that he has received the did not file any amount on maturity of corroborative evidence of FDR after the death of his such FDR. uncle
- No regular source of income to give loan
- Creditworthiness not genuine 11.1 The ld AR relied on the finding of CIT(A). It was further submitted that the AO in case of Shri Mangal Singh has initiated proceedings u/s 148 and vide order dated 22.02.2016 made addition of Rs. 8,82,240/- being the amount of cash deposit in his bank account (Copy of assessment order of Shri Mangal Singh is at PB 34-35). Thus, when the AO has already added the cash deposited in the bank account of the creditor in his hand, no addition can be made in the hands of the assessee. Further, when the creditor has appeared before the AO and accepted the transaction in his statement, the onus of the assessee u/s 68 stood discharged. Thus, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
23ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar 11.2 The findings of ld CIT(A) are as under:
"In view of the above facts, I find that the appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, the cash creditor was also produced before the AO and statement was recorded in the course of remand proceedings.
This, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act- identity & creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of Rs. 7,20,000 made by the AO on this account."
11.3 We have heard the rival contentions and pursued the material available on record. In the instant case, the assessee has failed to discharge the onus placed on him under section 68 in terms of satisfying the test of creditworthiness of Shri Mangal Singh. Regarding assessee's contention that an amount of Rs 8,82,240 has already been brought to tax in the hands of Shri Mangal Singh and the same cannot be brought to tax in the hands of the assessee again, we are unable to accept the same. The reason for the same is that it is unclear at this stage whether the proceedings in case of Shri Mangal Singh has attained finality or not. Therefore, it cannot be said that the same amount has been subjected to tax twice. We further donot agree with the findings of the ld CIT(A) as the test of creditworthiness has not been satisfied in the instant case and thus, the initial onus placed on the assessee remain unsatisfied. We confirm the addition of Rs 7,20,000 u/s 68 of the Act. The ground of revenue's appeal to this extent is hereby confirmed.
12. Sh. Raju - Rs.16,74,700/-(Assessee's appeal) AO's findings Appellate proceedings CIT(A)'s findings
- No confirmation filed -Sh. Raju, S/o Budha Singh -Two confirmations have been
- No identity proof filed is residing at Gram filed for the same amount. One
- No source of cash Bhiwadi, Tijara, Alwar in the name of Raju and creditor filed 24 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar
- Assessee did not -Copy of confirmation is at another in the name of Satpal considered fit to PB 36-37 Tanwar provide address at primary stage of -Raju is the nick name of -There is cash deposit of Rs.
proceedings Sh. Satpal Tanwar 16.50 lakhs in the A/c of Raju
- No PAN Tanwar on 22.07.2008, a day
- No ROI filed
before the cheque is issued to
- No bank statement
filed Remand proceedings the appellant
-PAN is ADRPT3356L -The appellant has failed to
produce the creditor before the
-Letter filed by Raju AO
addressed to the AO in
reply to notice u/s 131 is -In remand proceedings, the at PB 38 appellant stated that Sh. Raju Tanwar and Satpal Tanwar are
-Confirmation of account is brothers and therefore the at PB 36-37 confirmation was signed earlier by Satpal Tanwar. None the
-Bank statement is at PB less, the explanation given by 39 the appellant remains
-Satpal Tanwar is brother unsubstantiated as it was of Raju Tanwar and he stated earlier that Raju is the has confirmed in his own nick name of Satpal Tanwar. signature the transaction Therfore, what are the real of his brother Raju facts still remains unclear. Tanwar
-Appellant has failed to furnish
-AO has overlooked the any details regarding the ITR of the creditor for sources of income of the A.Y. 08-09 and 09-10 creditor so as to establish the even when the same is creditworthiness filed in his jurisdiction ward only AO's observation
-One confirmation bears the signature which can be clearly read as 'Satpal Tanwar' and another confirmation bears the name Raju Tanwar and has been signed as 'Raju'.
Thus, how the cash
25
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
creditor is changing
names and even his
signatures with the
passage of time is not
clear which implies that
assessee has made entry
in his books as per his
own sweet.
-As per A/c statement filed
in respect of Sh. Raju
Tanwar for A/c no.
20441668239 with
Allahabad Bank, Bhiwadi,
it is evident that there
was cash deposit in the
bank A/c for Rs. 16.50
lakhs which was
subsequently utilized in
issuance of DD's. As per
confirmation of A/c filed, it
is stated that
Rs.16,74,700/- has been
received in A/c of Sh.
Pratap Singh Tanwar on
A/c of payment received
from RIICO. Thus, if DD's
were issued from A/c of
Sh. Raju Tanwar why the
encashment has been
made in A/c of Sh. Pratap
Singh Tanwar is not clear
-Though Sh. Raju is a PAN
holder but no ITRs are
being filed by him except
for A.Y. 06-07 and 07-08
at returned income of
Rs.81,456/- and
Rs.98,630/- i.e. below the
taxable limit.
12.1 The ld AR submitted that from the above, it can be noted that the identity of the creditor is established. He has given the amount by directly 26 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar depositing to the excise department for obtaining advance license of liquor. The amount was given by him by DD. This proves the genuineness of the transaction. He is assessed to tax. He has replied u/s 131 to the AO. All these facts prove his creditworthiness. The Ld. CIT(A) has confirmed the addition for the reason that the assessee has failed to prove the source of income of the creditor and failed to produce him. Only because the creditor could not be produced, when he has responded to the notice issued u/s 131, cannot be a reason for making an addition u/s 68. Further, assessee is not required to prove the source of the source. In these facts, the addition confirmed by the Ld. CIT(A) is unjustified and the same be deleted.
12.2 The findings of ld CIT(A) are as under:
"In view of the above facts, I find that the appellant has filed a confirmation of the creditor-in-fact on examination of records I could found two confirmations have been filed for the same amount i.e. one in the name of Raju and another in the name of Satpal Tanwar. The appellant has enclosed a copy of the bank statement of Raju Tanwar but there is cash deposit of Rs. 16.50 lacs on 22-07-2008, a day before the cheques were issued to the appellant. The appellant failed to produce the creditor before the AO. The AO has issued notice u/s 131 of the IT Act and in response to which a written communication was received from the creditor stating that- "eSus jhdks fyfeVsM vyoj ds uke ls fuEu MhMh cuokbZ FkhA ;g MhMh eSus fHkokMh ds IykV la0 ,p Vh&61 dks fuykeh gsrq Jh izrki flag th ds uke ls yxkbZ FkhA mudks nh FkhA fdUrq ;g jkf'k fuykeh fujLr gks tkus ds dkj.k jhdks fy0 fHkokM+h }kjk ;g jkf'k izrki flag th dks okfil dj nh xbZA" Accordingly, AO has raised doubts about the name of the creditor as the confirmation filed was stated to have been signed by another persons in the name of Satpal Tanwar and also the above communication reflects that funds have been rotated by the appellant by making deposits in cash in the name of the cash creditor. In the Course of remand proceedings, the appellant has stated that Sh. Raju Tanwar and Satpal Tanwar are brothers and therefore, the confirmation was signed earlier by Satpal Tanwar. None the less, the explanation given by the appellant remains unsubstantiated as it was stated earlier that Raju is the nick name of Satpal Tanwar. Therefore, what is the real fact still remains unclear.27
ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar The appellant has failed to furnish any details regarding the sources of income of the creditor so as to establish the creditworthiness. Further, no copy of the ITR filed by the creditor was produced before the AO. The appellant has also failed to produce the cash creditor for examination in response to the notices issued to verify the veracity of the contentions made by him in the letter. It is also worthwhile to note that a number of opportunities were afforded to the appellant in the course of assessment and in the course of remand proceedings but the result remained the same. In fact the remand report has also to be called twice from the AO so that due opportunity could be given to the appellant.
Therefore, I hold that the appellant has not been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have not been proved beyond doubt. Accordingly I confirm the addition of Rs. 16,74,700 made by the AO on this account."
12.3 We have heard the rival submissions and pursued the material available on record. The ld CIT(A) has given a finding that cash was deposited in the creditor's bank account and on the next date, cheque was issued. Nothing has been submitted to explain the source of such cash deposits. It is not a question of determining source of source rather it is a question of satisfying the test of creditworthiness. In other words, whether the cash creditor has the necessary financial standing of his own to lend to the assessee and what are the sources thereof. The ITR filed of the cash creditor doesn't inspire any confidence in our mind. There is nothing further on record to satisfy the test of creditworthiness of the creditor. The finding of the ld CIT(A), remain unrebutted before us. The assessee has thus failed to satisfy the initial onus placed on him especially in terms of creditworthiness of the creditor. In the result, we confirm the findings of the ld CIT(A) and the addition of Rs 16,74,700 is hereby confirmed. The ground of assessee's appeal to this extent is thus dismissed.
28ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar
13. Rakesh Chiwa - Rs.5,00,000/-(Assessee's appeal) AO's finding Appellate Proceedings CIT(A)'s findings
-No confirmation -Sh. Rakesh Thankar s/o -Appellant has merely filed Doongar Mal is residing at a confirmation along with
-No identity proof Chidawa, Village Bhiwadi, PAN of the creditor
-Incomplete addressTehsil Tijara, Alwar. His name is mistakenly -The appellant failed to provided as Village produce the creditor Bhiwadi, Tehsil Tijara, written as Chiwa instead of Thankar. before the AO District Alwar to avoid further verification -Notice issued u/s 133(6)
-Amt. has been received by a/c payee cheque received back with remark
-No PAN 'incomplete address'.
-No regular source of - The assessee cannot be Further, notice u/s 131 income to give such loan required to explain the was issued by the AO at source of source of cash the other address provided
-No explanation about credit by the AR which was the source of cash served but no compliance creditor was made by the creditor.
Remand Proceedings -Copy of bank statement
-The correct name of the of the creditor not filed cash creditor is Rakesh -Details regarding sources Bhukar s/o Doongar Mal of income so as to Bhukar. Copy of PAN card establish the is at PB 40. creditworthiness of the
-Address as per driving creditor not filed license is WN-19, -Copy of ITR filed by the Chirawa, Jhunjhunu. Copy creditor not produced of driving license is at PB before the AO 41.
-The name of the creditor and address has been AO's observation changed thrice in the course of remand
-Notice issued u/s 133(6) proceedings. First the returned undelivered with name of the creditor was the postal remarks given as Rakesh Chiwa, 'incomplete address' then changed to Rakesh Thankar and finally to
-Notice issued u/s 131 at Rakesh Bhukar the address as per driving license served but no compliance made by Sh.
29ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar Rakesh Chiwa or Thankar or later renamed as Bhukar
-How the cash creditor is changing names and cities i.e. earlier reported as Bhiwadi to later reported as Chidawa with the passage of time is not clear which implies that assessee has made entry in his books as per his own sweet.
13.1 The ld AR submitted that from the above, it can be noted that the identity of the creditor is established. The Ld. CIT(A) has confirmed the addition for the reason that the assessee has failed to produce the creditor. This cannot be a reason for making an addition u/s 68. In these facts, the addition confirmed by the Ld. CIT(A) is unjustified and the same be deleted.
13.2 The findings of the ld CIT(A) are as under:
"In view of the above facts, I find that appellant has merely filed a confirmation along-with the PAN of the creditor. The appellant failed to produce the creditor before the AO. The AO has issued notice u/s 133(6) of the IT Act and it was received back with the remark "incomplete address".
Further, notice u/s 131 of the Act was issued by the AO at the other address provided by the AR, which was served but no compliance was made by the creditor. When these facts were confronted to the appellant in the course of remand proceedings, the appellant has stated that amount was received through banking channel and beyond this he failed to substantiate the transaction of loan having been received. No copy of the bank statement of the creditor was filed. No details regarding the sources of income so as to establish the creditworthiness of the creditor were filed, no copy of the ITR filed by the creditor was produced before the AO.
Further, another interesting fact in this case is that the name of the creditor and address has been changed thrice in the course of remand proceedings.
30ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar First the name of the creditor was given as Rakesh Chiwa, than changed to Rakesh Thankar and finally to Rakesh Bhukar.
Thus, there is no doubt left that the appellant has not been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have not been proved beyond doubt. Thus, I confirm the addition of Rs. 5,00,000 made by the AO on this account."
13.3 We have heard the rival submissions and pursued the material available on record. The appellant has not been able to discharge the initial onus placed on him u/s 68 of the IT Act. The identity, creditworthiness of creditor, and genuineness of the transaction have not been proved The findings of the ld CIT(A) remain unrebutted before us and the same are hereby confirmed. In the result, the addition of Rs 5,00,000 is confirmed and appeal of the assessee to this extent is dismissed.
14. Bhagirath Singh Shekhawat - Rs.7.20 lakhs (Department's appeal) AO's findings Appellate proceedings CIT(A)'s findings
-No confirmation -PAN is ASVPS3578E -Appellant has filed confirmation, copy of
-No identity proof -Address is Vijay Deep ITR, PAN, copy of bank House, Transport Nagar, a/c etc. before the AO in
-Incomplete address Jaipur Road, Sikar -
provided as R/o 332001 course of remand
Basant Vihar, Sikar, proceedings. Further, the
Rajasthan to avoid -The assessee received cash creditor has also
further verification the amount through a/c furnished these
payee cheques documents before the
-No PAN AO in response to notice
-Bank statement is at PB issued u/s 133(6) of the
-No regular source of 47 IT Act in course of income to give such remand proceedings.
loan -ITR is at PB 44-46
-Books of a/c of the
-No explanation about - The assessee cannot be creditor are audited u/s the source of cash required to explain the 44AB of the IT Act and creditor source of source of cash the creditor is regularly credit assessed to tax
-Loan has been returned Remand Proceedings back by a/c payee 31 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar
-In response to notice cheque in March 2012 issued u/s 133(6) of the IT Act (PB 42), -The appellant has thus confirmation of A/c of the discharged the onus u/s creditor (PB 43), copy of 68 of the IT Act and ITR and computation of addition made by AO on total income for A.Y. 09- this a/c is deleted. 10 (PB 44-46) and bank statement was filed.
-The accounts of the creditor are audited u/s 44AB of the IT Act, 1961
-The loan has been returned back to the cash creditor through a/c payee cheque in March 2012. The same has been confirmed by the cash creditor in letter dt.
05.03.2013 filed in response to notice issued u/s 133(6) of the IT Act (PB 42) AO's observation Perusal of bank a/c statement of the cash creditor reveals that there are cash deposits in the bank a/c before advancement of loan to assessee towards the source of which no explanation has been filed by the cash creditor 14.1 In this regard, the ld AR submitted that he relied on the finding of CIT(A). It was further submitted that the assessee has filed the confirmation, return of income, PAN, bank account statement. Also, the books of accounts 32 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar of the creditor are audited u/s 44AB as confirmed by the AO and the creditor is regularly assessed to tax. The creditor has further replied to the AO u/s 133(6). The amount has been subsequently repaid on 29.03.2012. Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
14.2 The findings of the ld CIT(A) are as under:
"From examination of the above facts, I find that the appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, the cash creditor has also furnished these documents before the AO in response to the notice issued u/s 133(6) of the IT Act in the course of remand proceedings. Further, it is submitted by the appellant that books of accounts of the creditor are audited u/s 44AB of the IT Act and is regularly assessed to tax. It is also stated that the loan has also been returned back by account payee cheque in March 2012.
Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of Rs. 7,20,000 made by the AO on this account."
14.3 We have heard the rival submissions and pursued the material available on record. The AO has given a finding that cash was deposited in the creditor's bank account before advancement of loan to the assessee. Nothing has been submitted to explain the source of such cash deposits. It is not a question of determining source of source rather it is a question of satisfying the test of creditworthiness. In other words, whether the cash creditor has the necessary financial standing of his own to lend to the assessee and what are the sources thereof. The ITR filed of the cash creditor doesn't inspire any confidence in our mind to satisfy the test of creditworthiness of the creditor. The assessee has thus failed to satisfy the initial onus placed on him especially in terms of creditworthiness of the 33 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar creditor. The fact that the loan amount has subsequently been returned to the cash creditor is an event which at best, satisfy the linkage between lending and repayment. But the same is not a basis to hold that the money initially belongs to the cash creditor when there are facts on record to suggest that cash was deposited in the bank account immediately before the event of lending. The question that remains is what's the source of such cash deposits and whether cash belongs to cash creditor or to the assessee. As we have held above, it is not a question of determining the source of source rather it is a fundamental test to be satisfied to establish the creditworthiness of the cash creditor. In the result, we reverse the findings of the ld CIT(A) and the addition of Rs 7,20,000 is hereby confirmed. The ground of department's appeal to this extent is thus upheld.
15. Vikram Singh - Rs.2,30,000/- (Department's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-No confirmation -Sh. Vikram Singh s/o Sh. Shree -Appellant has filed Bajrang Singh resides at Behind confirmation, copy of ITR,
-No identity proof Krishi Upaj Mandi, W-18, Sikar - PAN, copy of bank a/c etc.
-The assessee did 3320011 before the AO in course of not considered fit - The assessee cannot be remand proceedings.
to provide proper required to explain the source of -The creditor is regularly
and complete source of cash credit assessed to tax
address at stage
of scrutiny -It is submitted by the
proceedings appellant that in regular
Remand Proceedings books of accounts of the
-Perusal of bank creditor, there is sufficient
statement of Sh. -PAN is AZZPS8187J cash balance which was
Vikram Singh (PB - In response to notice issued u/s deposited in the bank
51-52) filed by 133(6) of the IT Act (PB 50), account before the issue of
the assessee copy of ITR and computation of cheque to the appellant.
revealed that he total income for A.Y. 09-10 (PB deposited cash of 53-54) and bank statement filed -The appellant has thus Rs.1.50 lakhs on (PB 51-52). discharged the onus u/s 68 13.03.2009 and of the IT Act and addition credited -Sh. Vikram Singh has deposited made by AO on this a/c is Rs.80,000/- out of cash of Rs.1.50 lakhs in his bank deleted.
DD cancellation a/c out of cash in his cash book
34
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
on 13.03.2009 and Rs.91,239/- was lying in his
and on the same bank a/c. Out of total
day withdrawn it Rs.2,41,239/-, he has issued by pay order cheque no. 244382 of Rs.2.30 issued on behalf lakhs to the assessee of assessee for the purpose of obtaining liquor AO's observation license in the name of the There are cash deposits in the assessee bank a/c of the cash creditor towards the source of which no
- No PAN explanation has been filed by the
-No regular cash creditor in response to source of income notice issued u/s 133(6) of the to give such loan Act.
-No explanation about the source of cash creditor 15.1 The ld AR relied on the finding of CIT(A). It was further submitted that the assessee has filed the confirmation, return of income, PAN, bank account statement. The creditor is regularly assessed to tax. The creditor has further replied to the AO u/s 133(6). The amount has been subsequently repaid. The AO has made the addition as the assessee has not been able to prove the source of cash deposit in the account of the creditor. The assessee is not required to provide the source of cash deposit in the account of the creditor. The onus u/s 68 is to prove the identity, genuineness and the credit worthiness of the creditor. Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
15.2 The findings of the ld CIT(A) are as under:
"A careful examination of the above facts reveal that appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, the cash creditor has also 35 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar furnished these documents before the AO in the course of remand proceedings. Further, it is submitted by the appellant that in the regular books of accounts of the creditor there is sufficient cash balance, which was deposited in the bank account before the issue of cheque to the appellant. It is stated that the creditor is regularly assessed to tax. The AO may if he so desires pass the information to the AO with whom the creditor is assessed to tax.
Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act- identity & creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of Rs. 2,30,000 made by the AO on this account."
15.3 We have heard the rival submissions and pursued the material available on record. The ld CIT(A) has given a finding that in the regular books of accounts of the creditor, there was sufficient cash balance, which was deposited in the bank account before the issue of cheque to the appellant. The said finding of the ld CIT(A) remain unrebutted before us and the same is hereby confirmed. In the result, the appeal of the department to this extent is dismissed.
16. Jagdish Singh - Rs.2,00,000/-(Department's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-No confirmation -Sh. Jagdish Singh s/o Sh. -Appellant has filed Ganga Singh Shekhawat is an confirmation, copy of
-No identity proof income tax assessee having ITR, PAN, copy of bank
-The assessee did not PAN AJTPS9203M. a/c etc. before the AO considered fit to -He resides at 201, VPO Jherthi, in course of remand provide proper address Subhash Nagar, Tehsil and proceedings.
at stage of scrutiny District, Sikar 320011. -The creditor is
proceedings regularly assessed to
-Copy of ITR is at PB 58-59 tax and books of
-Perusal of bank
statement of Sh. -The assessee cannot be accounts are audited
Jagdish Singh (PB 60) required to explain the source u/s 44AB of the IT Act.
filed by the assessee of source of cash credit -It is submitted by the
revealed that he appellant that regular
deposited cash of books of accounts of
Rs.1.55 lakhs on the creditor have
36
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
14.02.2009 and Remand Proceedings sufficient cash balance
Rs.1,95,000/- on which was deposited in
16.02.2009 and - In response to notice issued the bank account.
thereafter withdrawn u/s 133(6) of the IT Act (PB
Rs.2 lakhs by pay order 56), copy of confirmation (PB -The appellant has thus
issued on behalf of 57), copy of ITR and discharged the onus
assessee for the computation of total income for u/s 68 of the IT Act
purpose of obtaining A.Y. 09-10 (PB 58-59) and and addition made by
liquor license in the bank statement filed (PB 60). AO on this a/c is
name of the assessee deleted.
- The accounts of the creditor
- No PAN are audited u/s 44AB of the IT
Act, 1961
-No regular source of
income to give such -The bank balance as on
loan 04.03.2009 i.e. before the issue
of cheque of Rs.2 lakhs to the
-No explanation about assessee is Rs.2,29,683/- while the source of cash the Ld. AO is asking for creditor explanation of credit entry dt.
14.02.09 and 16.02.09 16.1 The ld AR relied on the finding of ld CIT(A). It was further submitted that the assessee has filed the confirmation, return of income, PAN, bank account statement. The creditor is regularly assessed to tax and the books of accounts are audited u/s 44AB. The creditor has further replied to the AO u/s 133(6). The amount has been subsequently repaid. The AO has made the addition as no explanation has been filed by the creditor regarding the source of cash deposit in the account of the creditor. The onus on the assessee u/s 68 is to prove the identity, genuineness and the credit worthiness of the creditor. Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
16.2 The findings of the ld CIT(A) are as under:
"A careful examination of the above facts reveal that appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the 37 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar AO in the course of remand proceedings. Further, the cash creditor has also furnished these documents before the AO in the course of remand proceedings. Further, it is submitted by the appellant that regular books of accounts of the creditor have sufficient cash balance, which was deposited in the bank account. It is stated that the creditor is regularly assessed to tax and books of accounts are audited u/s 44AB of the IT Act. The AO may if he so desires pass the information to the AO with whom the creditor is assessed to tax.
Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act-identity & creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of Rs. 2,00,000 made by the AO on this account."
16.3 We have heard the rival submissions and pursued the material available on record. The ld CIT(A) has given a finding that in the regular books of accounts of the creditor, there is sufficient cash balance, which was deposited in the bank account before the issue of cheque to the appellant. The said finding of the ld CIT(A) remain unrebutted before us and the same is hereby confirmed. In the result, the appeal of the department to this extent is dismissed.
17. Sh. Thawaria - Rs.1,00,000/- (Department's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-No confirmation -Sh. Thawaria Singh S/o Sh. -Appellant has filed Ram is an income tax confirmation, copy of
-No identity proof assessee having PAN ITR, PAN, copy of
-The assessee did not ADMPT7955J. bank a/c etc. before considered fit to -He resides at Opp. 132 KV the AO in course of provide proper address Power remand proceedings.
Station, Neelam
at stage of scrutiny Chowk, Bhiwadi. -The cash creditor
proceedings was also produced
-Copy of confirmation before the AO in the
-Perusal of bank evidencing repayment of
statement of Sh. loan is at PB 64 course of remand
Thawaria filed by the proceedings and his
assessee revealed that -Copy of ITR is at PB 68 statement was
cash of Rs.4,51,660/- recorded on oath
was deposited on -The assessee cannot be
38
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
17.03.2009 out of required to explain the -The creditor is
which DD of Rs.1 lakhs source of source of cash regularly assessed to was issued on same credit tax and is filing return day on behalf of the of income assessee to obtain liquor license -The appellant has Remand Proceedings thus discharged the
- No PAN -The creditor was produced onus u/s 68 of the IT
-No regular source of for verification on Act and addition made by AO on this income to give such 01.02.2013 whose statement a/c is deleted.
loan was recorded on oath (PB
65-67)
-No explanation about
the source of cash -The loan is returned back to creditor the creditor through a/c payee cheque in F.Y. 11-12 and the same is also confirmed by the creditor in reply to Q.No.3 of the statement recorded
-The source of income of the creditor is renting of crane on daily or hourly basis. The creditor is 52 years old and doing business since a long period of time. The creditor has deposited cash from his business receipts as stated in reply to Q.No. 8 of statement recorded AO's observation As per Q.No. 8 and 9 of the statement recorded, the creditor was appraised of the fact that just before the issuance of DDs from his bank a/c, there was cash deposit of Rs.4,51,660/- in his bank a/c for which he was required to explain the source of cash deposit.
However, no satisfactory
39
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
reply could be offered and he
cannot produce any
documentary evidence
towards the cash deposit in
his bank a/c.
17.1 The finding of CIT(A) is relied upon. The assessee has filed the confirmation, return of income, PAN, bank account statement. The creditor is regularly assessed to tax. The creditor was produced before the AO and his statement was recorded under oath. The AO has made the addition as no explanation has been filed by the creditor regarding the source of cash deposit in the account of the creditor. In order to examine the source of credit in the bank account of the creditor, the AO issued notice u/s 148 to the creditor and after considering his explanation accepted the source of deposit in his bank account vide order dated 23.02.2016 (Copy of assessment order of Shri Thawaria is at PB 69). Thus, assessee has discharged his onus u/s 68. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
17.2 The findings of the ld CIT(A) are as under:
"An examination of the above facts reveal that appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, cash creditor was also produced before the AO in the course of remand proceedings and a statement was recorded on oath. It is submitted by the appellant that regular books of accounts of the creditor are maintained and it has sufficient cash balance, which was deposited in the bank account. It is stated that the creditor is regularly assessed to tax and is filing return of income. The AO may if he so desires pass the information to the AO with whom the creditor is assessed to tax Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act - identity & creditworthiness of creditor, genuineness of the 40 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar transaction have been proved. Accordingly, I delete the addition of Rs. 1,00,000 made by the AO on this account."
17.3 We have heard the rival submissions and pursued the material available on record. The cash deposit in the bank account of Shri Thawaria has been examined by his jurisdictional AO and the same has been accepted as duly explained as evidenced from the order passed under section 143(3) read with section 147 of the Act dated 23.02.2016 which is available on record. Apparently, the said order has been passed subsequent to the order of the ld CIT(A) but facts remain that the cash deposited has been found duly explained in cash creditor's own assessment proceedings. In light of the same, there cannot be any basis to add the same amount in the hands of the assessee under Section 68 of the Act. In the result, the department's appeal to this extent is dismissed.
18. Nisha Devi - Rs.6,00,000/- (department's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-Smt. Nisha Devi is -Mrs. Nisha Devi W/o Pratap -Appellant has filed the wife of the Singh is an income tax confirmation, copy of assessee. assessee having PAN ITR, PAN, copy of bank AIGPN9752L a/c etc. before the AO
-No confirmation in course of remand
- She resides at Near Shiv proceedings.
-No identity proof Mandir, Neelam Chowk, -Copy of bank a/c Bhiwadi -The cash creditor was filed (PB 71) also produced before
-The assessee has received Rs.6 the AO in the course of revealed that Smt. lakhs from her through a/c remand Nisha has no regular proceedings payee cheque and her statement was source of income to give loan -Confirmation is at PB 70 recorded on oath
-No PAN -The assessee cannot be -The creditor is required to explain the source regularly assessed to
-No explanation of source of cash credit tax and is filing return about the source of of income cash creditor
-The loan is stated to Remand Proceedings have been returned back by account payee 41 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar
- The creditor was produced for cheque in F.Y. 10-11 verification on 01.02.2013 whose statement was recorded -It is submitted by the on oath (PB 72-73) appellant that creditor has explained the
- The loan is returned back to sources of credits in the the creditor through a/c payee bank account cheque in F.Y. 10-11 and the same is also confirmed by the -The appellant has thus creditor in reply to Q.No.3 of discharged the onus u/s the statement recorded 68 of the IT Act and addition made by AO
-In reply to Q.No. 4 of the on this a/c is deleted.
statement recorded, the
creditor claimed that she has
taken a loan of Rs.33 lakhs
from Sh. Mahendra Singh, S/o
Kishan Lal, VPO, Bhiwadi
through cheque in its bank a/c
out of which a sum of Rs. 6
lakhs was advanced to
assessee.
18.1 The finding of CIT(A) is relied upon. The assessee has filed the confirmation, return of income, PAN, bank account statement. The creditor is regularly assessed to tax. The creditor was produced before the AO and his statement was recorded under oath. The amount has been subsequently repaid. Also, the creditor has explained the source of cash deposit in her account. Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
18.2 The findings of the ld CIT(A) are as under:
"An examination of the above facts reveal that appellant has filed confirmation, copy of the ITR, PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, the cash creditor was also produced before the AO in the course of remand proceedings and a statement was recorded on oath. It is submitted by the appellant that 42 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar creditor has explained the sources of credits in the bank account. It is stated that the creditor is regularly assessed to tax and is filing return of income. The loan is stated to have been returned back by account payee cheque in F.Y. 2010-11.
Thus, I find that the appellant has been able to discharge the onus u/s 68 of the IT Act - identity & creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of Rs. 6,00,000 made by the AO on this account."
18.3 We have heard the rival submissions and pursued the material available on record. The findings of the ld CIT(A) remain unrebutted before us and the same are hereby confirmed. In the result, the appeal of the department to this extent is dismissed.
19. Vinita Devi - Rs.34,65,000/- (Assessee's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-No confirmation -Mrs. Vinita Devi w/o Satveer -It is apparent from the Singh resides at Neelam bank a/c statement of
-No identity proof Chowk, Bhiwadi the creditor that the
-No PAN account has been
-The amount has been primarily used for
-NO ROI received through a/c payee deposition of cash and cheque subsequent issue of
-Perusal of pass book cheques and this pattern (PB 76) of Vinita has been repeated a Devi filed by the Remand Proceedings number of times in the assessee revealed year.
that cash of - The creditor was produced
Rs.34,65,000/- was for verification on 02.05.2013 -The fact that loan has
deposited on whose statement was been repaid by the
25.02.2009 and on recorded on oath. appellant does not carry
the same day much conviction as the
withdrawn by issue -The creditor submitted that
same amount stands
of DD in favour of the source of advancement of
withdrawn next day
the assessee loan to assessee is
which again
compensation received from
substantiates the version
- No regular source RIICO.
of the AO that the
of income to give
such loan -The loan has been repaid to transaction of loan is
the creditor through a/c payee sham
-No explanation cheque in F.Y. 11-12 and the
-Appellant though has
43
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
about the source of same is also confirmed by the proved the identity of the
cash creditor creditor in her statement. The creditor but failed to
assessee is least bothered/not adduce enough evidence
concerned about the usage of to satisfy about the
funds returned back to the creditworthiness of the
creditor creditor and genuineness
of the transaction.
-There are mistakes in the
peak credit working carried -The AO may, if he so out by the AO desires pass on the information about the peak working of cash AO's Observation deposits in the account of the creditor to the AO
-Perusal of bank a/c filed by having jurisdiction over the creditor reveals that the case of the cash immediately before the creditor advancement of loan of Rs.34.65 lakhs to the -The appellant has in the assessee there was equivalent counter comments cash deposit in the bank a/c. pointed out certain mistakes in the working
-Regarding the repayment of of the peak credit which loan, it is observed that cash may also be considered creditor has received Rs.30 while assessing the lakhs on 27.03.2012 and income in the hands of Rs.Rs.4.65 lakhs on the cash creditor.
28.03.2012 in its bank a/c.
However, these amounts were immediately withdrawn from bank for purchase of property but since the deal did not materialized, the cash remained with the creditor only.
-The claim of the AR that cash creditor has PAN AQOPV3722A does not hold good in view of the fact that PAN generation is 10.09.2012 and no ROI for A.Y. 09-10 has been filed by the creditor 44 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar 19.1 The assessee has filed the evidence regarding the identity of the creditor and her bank account statement. The creditor was produced before the AO and her statement was recorded under oath. The AO has made the addition on the basis that cash has been deposited just before the withdrawal. To examine the source of such cash, AO issued notice u/s 148 to the creditor and passed the order dated 26.02.2016 where the cash deposit in her bank account has been accepted (Copy of assessment order of Smt. Vinita Devi is at PB 78). Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) is unjustified.
19.2 The findings of the ld CIT(A) are as under:
"Considering the material available on record, I find that the appellant has been able to file evidence regarding identity and bank statement of the creditor. The cash creditor is not assessed to tax and the PAN has also been applied in 2012-13 (September, 2012). The creditor Smt. Vinita Devi was produced for verification on 02.05.2013, whose statement was recorded on oath wherein it has been claimed that she has advanced loan of Rs. 34,65,000 to Sh. Pratap Singh Tanwar which has been repaid in later years for which copy of bank a/c has been filed. The AO has observed that on perusal of bank a/c filed by the cash creditor, it is revealed that immediately before advancement of loan of Rs. 34,65,000 to the assessee there was equivalent cash deposit in bank a/c. It was also submitted by the cash creditor that during the year under consideration compensation from RIICO was received and the same funds were utilized for advancing of loans to Sh. Pratap Singh Tanwar. Regarding the repayment of loan as claimed by the cash creditor it is observed by the AO that the cash creditor has received two cheques of Rs. 30,00,000 on 27.03.2012 and Rs. 4,65,000 on 28.03.2012 in her bank a/c, however, these amounts were immediately withdrawn in cash. It was further claimed that the amount withdrawn from bank a/c was withdrawn for purchase of property but since the deal did not materialize, the cash remained with the cash creditor only.
Further, AO has observed that the claim that the cash creditor has PAN:
AQOPV3722A, as claimed by the A/R does not hold good in view of the fact 45 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar that pan generation is on 10.09.2012 and that no return of income for the AY 2009-10 has been filed by Smt. Vinita Devi. This fact was also confirmed by her in the statement recorded on 02.05.2013. AO has meticulously examined the bank account of the cash creditor which was enclosed to substantiate the transaction of having advance the money to the appellant through cheque and found that there are frequent cash deposits in the same. The AO has accordingly worked out a peak credit in the case of the cash creditor (Smt. Vinita) which is reproduced above. The peak of unexplained cash deposits in (her) bank account of cash creditor has been worked out at Rs. 65,60,000."
It is apparent from the bank account statement of the creditor that the account has been primarily used for deposition of cash and subsequent issue of cheques and this pattern has been repeated a number of times in the year. Even the fact that the loan has been repaid by the appellant does not carry much conviction as the same amount stands withdrawn next day, which again substantiates the version of the AO that the transaction of loan is a sham.
Therefore, I find that the appellant though has proved the identity of the creditor but has failed to adduce enough evidence of satisfy about the creditworthiness of the creditor and genuineness of the transactions. The AO may, if he so desires pass on the information about the peak working of the cash deposits in the account of the creditor, to the AO have jurisdiction over the case of the cash creditor. The appellant has in the counter comments pointed out certain mistakes in the working of the peak credit which may also be considered while assessing the income in the hands of the cash creditor.
Thus, I confirm the addition of Rs. 34,65,000 made by the AO u/s 68 of the IT Act."
19.3 We have heard the rival submissions and pursued the material available on record. The cash deposits in the bank account has been examined by the jurisdictional AO of Smt. Vinita Devi and the same has been accepted as evidenced by the order passed under section 143(3) read with section 147 of the Act dated 26.02.2016 which is available on record. Apparently, the said order has been passed subsequent to the order of the ld CIT(A) but facts remain that the cash deposited has been found duly 46 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar explained in her own assessment proceedings. In light of the same, there cannot be any basis to add the same amount in the hands of the assessee under Section 68 of the Act. In the result, the assessee's appeal to this extent is allowed.
20. Sh. Mahendra- Rs.58,48,000/- (Department's appeal) AO's findings Appellate Proceedings CIT(A)'s findings
-No confirmation -Sh. Mahendra Singh S/o -Appellant has filed Kishan Lal resides at confirmation, copy of
-No identity proof Village Santhalaka, PAN, copy of bank a/c
-The assessee did not Bhiwadi, Alwar etc. before the AO in considered fit to provide -The amount has been course of remand proper and complete received proceedings.
through a/c
address at stage of scrutiny payee cheque -The cash creditor was
proceedings also produced before the
-Confirmation is at PB 79 AO in the course of
-Perusal of bank statement
of Mahendra Singh (PB 81) -The agricultural land of remand proceedings and
filed by the assessee Sh. Mahendra Singh is his statement was
revealed that he deposited acquired by RIICO, recorded on oath on
cash of Rs.16 lakhs on Bhiwadi against which he 02.05.2013
10.02.09, Rs.9.78 lakhs on received compensation -The creditor has
11.02.09, Rs.20.20 lakhs on out of which he advanced explained the sources of
12.02.09 and Rs.12.50 Rs.58.48 lakhs to the cash credits in the bank
lakhs on 16.02.09 and assessee. a/c as having received an
thereafter withdrawn on the amount of
respective same days for Rs.1,24,54,137/- as
making DD's/pay orders in Remand Proceedings compensation from
favour of the assessee for RIICO for acquisition of
the purpose of obtaining - The creditor was
agricultural land. A copy
liquor license in the name produced for verification of certificate from the
of the assessee on 02.05.2013 whose
bank in support of the
statement was recorded
-No PAN said receipt was also
on oath wherein it has
filed before the AO (PB
-No regular source of been claimed that he 82)
income to give such loan advanced loan of Rs.58.48
lakhs to assessee which -The creditor has stated
-No explanation about the has been repaid in later that loan was received
source of cash creditor years. back by cheque in F.Y.
11-12
- The appellant has thus
47
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
discharged the onus u/s
68 of the IT Act and
addition made by AO on
this a/c is deleted.
20.1 The finding of CIT(A) is relied upon. The assessee has filed the confirmation, PAN, bank statement of the creditor. The creditor was produced before the AO and his statement was recorded under oath on 02.05.2013. The creditor has explained the source of cash deposit in his bank account. A certificate from the Bank Manager, Oriental Bank of Commerce regarding the same has also been submitted (PB 82). The loan has been subsequently repaid. Further, the AO of the creditor vide order u/s 143(3)/147 dated 23.02.2016 has accepted the source of cash deposit in the account of the creditor and has made no addition for the same (Copy of assessment order of Shri Mahendra Singh is at PB 83). Thus, when the assessee has discharged the onus u/s 68, no addition can be made. Therefore, the order of the Ld. CIT(A) be upheld by dismissing the ground of the department.
20.2 The findings of the ld CIT(A) are as under:
"On examination of the above facts, it is found that appellant has filed confirmation copy of the PAN, copy of the bank account etc. before the AO in the course of remand proceedings. Further, the cash creditor was also produced before the AO in the course of remand proceedings and a statement was recorded on oath on 02.05.2013. Further, it is submitted by the appellant creditor has explained the sources of cash credits in the bank account as having received an amount of Rs. 1,24,54,137 as compensation from RIICO for acquisition of agricultural land. A copy of the certificate from the Bank in support of the said receipt was also filed before the AO. The creditor has stated that the loan was received back by cheque in F.Y. 2011-
12. Thus, I find that he appellant has been able to discharge the onus u/s 68 of the IT Act - identity & creditworthiness of creditor, genuineness of the 48 ITA No. 371&423/JP/14 Sh. Pratap Singh Tanwar Vs. ITO,Alwar transaction have been proved. Accordingly, I delete the addition of Rs. 58,48,000 made by the AO on the this account."
20.3 We have heard the rival submissions and pursued the material available on record. The cash deposits in the bank account has been examined by the jurisdictional AO of Shri Mahendra Singh and the same has been accepted as evidenced by order passed under section 143(3) read with section 147 of the Act dated 23.02.2016 which is available on record. Apparently, the said order u/s 143(3) read with section 147 has been passed subsequent to the order of the ld CIT(A) but facts remain that the cash deposited has been found duly explained in his own assessment proceedings. In light of the same, there cannot be any basis to add the same amount in the hands of the assessee under Section 68 of the Act. In the result, the department's appeal to this extent is dismissed.
21. In respect of ground No. 3 of the assessee's appeal, the assessee has challenged the action of ld CIT(A) in allowing set off of trading additions against the addition of cash credit confirmed by him. We have gone through the order of the ld CIT(A) and the assessee's submission. We don't find any infirmity in the order of ld CIT(A) and the same is hereby confirmed. In the result, ground no. 3 of assessee's appeal is dismissed.
In the result, the appeal of the assessee and the revenue are partly allowed as per above directions.
Order pronounced in the open court on 11/08/2017.
Sd/- Sd/-
¼dqy Hkkjr ½ ¼foØe flag ;kno½
(Kul Bharat) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 11/08/2017
49
ITA No. 371&423/JP/14
Sh. Pratap Singh Tanwar Vs. ITO,Alwar
Santosh*
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Sh. Pratap Singh Tanwar 132, KAV Sub Station, Neelam Chowk, Bhiwadi, Alwar.
2. izR;FkhZ@ The Respondent- ITO,Ward-2(2), Alwar.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
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