Income Tax Appellate Tribunal - Chandigarh
Mr. Satinder Kumar Jain, Chandigarh vs Department Of Income Tax on 2 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A' CHANDIGARH
BEFORE Ms.SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No. 974/CHD/2011
Assessment Year: 2008-09
ITO, Ward 3(3), V Mr. Satinder Kumar Jain
Chandigarh. H.No. 2726, Sector 22-C,
Chandigarh.
PAN: AAQPJ-9911R
(Appellant) (Respondent)
Appellant by : Smt. Jaishree Sharma
Respondent Shri Ajay Kumar Jain
Date of Hearing : 02.05.2012
Date of Pronouncement : 15.05.2012
ORDER
PER MEHAR SINGH, AM
The present appeal filed by the Revenue is directed against the order dated 28.07.2011 passed by the ld. CI T(A) u/s 250(6) of the Income-tax Act,1961 (in short 'the Act').
2. In this appeal, the Revenue has raised the following Grounds of Appeal:
"1. On the facts and in the circumstances of the case, the learned CIT (Appeal) has erred in law in deleting the addition of Rs. 22,50,000/- made by the Assessing Officer on account of unexplained cash credit u/s 68 of Income Tax Act, 1961, as the assessee failed to produce the debtors/ parties from whom the said amount was claimed to have been received before the A.O. during assessment proceedings.2
2. It is prayed that the order of the Ld. CIT(A) be cancelled and that of the Assessing officer may be restored.
3. The appellant craves to add or amend any grounds of appeal before the appeal is heard or disposed off."
3. In the sole substantive ground of appeal raised by the revenue, it is contended that CI T(A) erred in law in deleting addition of Rs.22,50,000/- made by the AO u/s 68 of the Act.
4. In the course of present appellate proceedings, ld. 'DR' placed reliance on the order passed by the AO. Ld. 'DR' referred to page 9 of the CI T(A)'s order as also page 12 of the assessment order. Ld. 'AR', on the other hand, placed reliance on the order of the CIT(A) and referred to various pages of the Paper Book, demonstrating the track of the entries, with a view to establish the nature and source of such credits.
5. We have carefully perused the rival submissions, facts of the case and found that ld. CI T(A), has passed detailed and well-reasoned order, demonstrating by way of graphical chart, the flow of such entries and ultimate destination. In the final analysis, ld. CI T(A), deleted the impugned additions.
6. As the ld.CIT(A), by way of a graphic flow chart, successfully explained the nature and source of cash credits in the case of the present appellant assessee, we do not find any valid ground to interfere in his findings. Therefore, findings of the ld. CI T(A) are upheld. However, for the sake 3 of ready reference and proper appreciation of such findings, same are reproduced hereunder:
"2.3 I have considered the submission of the Ld. Counsel for the appellant. The appellant had used the banking facilities for making temporary arrangement of funds. The addition in this case has been made merely because the debtors of the firms could not be produced and cash transferred from various firms to the appellant's account was not verifiable. In my considered view, this finding of the Assessing Officer should not have been made the basis for addition because the five debtors whom the Assessing Officer wanted to be produced, were debtors of M/s Jai Jwala Flour Mills, which was not involved in arranging the temporary funds and no discounting of cheques was done in this firm. Further, there was no business transaction between M/s Jai Jwala Flour Mills and M/s Arihant Agencies/ M/s Sahu Traders and so no adverse inference could have been drawn due to non production of the debtors. The appellant was not able to persuade these parties due to paucity of time and fear of the department and had provided the addresses and if the Assessing Officer wanted, he could have summoned these parties but even then he would not have been able to take any adverse view after examination of these parties because these were debtors and not creditors.
2.3.1 The appellant in this case had made use of banking facilities to his advantage by arranging funds temporarily. He used to issue cheques from his Savings Bank Account in Punjab State Co-operative Bank in favour of firms which had their bank accounts in State Bank of Patiala. The cheques were got discounted by firms and after discounting, the money was transferred from the firms' accounts to the savings bank account of the appellant in State Bank of Patiala itself from where the money was withdrawn and deposited in the bank account of the appellant in Punjab State Co-operative bank, by which time the cheque sent by the bank from firm's account had arrived for collection from the account. The scheme of this 4 arrangement is depicted below......
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2.3.2 From the above chart and withdrawal pattern in the bank account, it is evident that the appellant was making use of the banking facilities as depicted in the above flow chart and so question of any unexplained cash credit in the case of appellant due to deposits in the bank account will not arise.
2.3.3 In view of the above, it is held that as a prudent businessman, the appellant had made a temporary arrangement of funds by taking advantages of banking facilities, which in turn helped the firms to get adequate funds for their day to day business needs. The cash withdrawals and deposits are duly reconciled. There is no unexplained credit as such and there are no deposits which could be treated as unexplained cash credit. Hence, the addition made by the Assessing Officer of Rs.22,50,000/- is deleted and ground of appeal taken by the appellant are allowed."
7. In the result, appeal of the revenue is dismissed.
Order pronounced in the Open Court on 15 t h May,2012.
Sd/- Sd/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15 t h May,2012. 'Poonam' Copy to:
The Appellant, The Respondent, The CI T(A), The CIT,DR Assistant Registrar, I TAT Chandigarh