Income Tax Appellate Tribunal - Chandigarh
Ito vs Mohan Singh on 21 October, 2003
Equivalent citations: (2004)87TTJ(CHD)829
ORDER
Vimal Gandhi V.P. This appeal by the revenue for the assessment year 1992-93 is directed against the order of the Commissioner (Appeals) deleting addition of Rs. 2,25,000 made on account of unexplained cash credits in the name of Shri Naresh Kapoor, Prop., City Enterprises, Jalandhar.
2. The assessing officer treated the above cash credits as unproved as assessee's income from undisclosed sources. He held that Shri Naresh Kapoor was indulging in hawala transactions merely to help the people in converting their unaccounted money into white money under the garb of foreign remittance. He held that people had surrendered credits in the account of Shri Naresh Kapoor on account of material collected by the revenue and when they had no choice. In the above circumstances, he made addition of Rs. 2,25,000 on account of unproved cash credits.
3. On appeal, the learned, Commissioner (Appeals) deleted the addition following her order dated 7-10-1999, in the case of Shri Parminder Singh, brother of the assessee. The cash credits in the name of Shri Naresh Kapoor were accepted as genuine.
4. The revenue, being aggrieved, has brought the issue in appeal. I have heard both the parties. The learned counsel for the assessee placed on record photostat copies of cheques through which sum of Rs. 1,25,000 (Rs. 50,000 + 75,000) was given on loan to the assessee, copy of account of City Enterprises, wherein the amount in question was debited to obtain drafts in the name of the assessee. Copies of bank account showing repayment of amount in question were also placed on record. Confirmation from the creditor has also been filed together with copy of assessment order in the case of Shri Naresh Kapoor dated 25-3-1997, for assessment year 1992-93 where total income was taken at Rs. 99,33,890. The learned counsel for the assessee further pointed out that order in the case of Shri Parminder Singh was confirmed by the Tribunal, SMC Bench, Chandigarh, vide decision dated 28-5-2003, with the following observations :
"7 On careful consideration of rival submissions and on examination of material on record, I do not see any good ground to interfere with the impugned order. It appears that Sh. Naresh Kapoor, Prop., City Enterprises, Jallandhar, was doing some hawala and was fraudulently showing NRI foreign remittance. On the basis of above information, the case of the assessee was reopened by recording that the assessee also received bogus gifts from aforesaid Sh. Naresh Kapoor. There might be justification for taking action under section 147 of the Income Tax Act in the case of the assessee. But in the re-assessment proceedings, the assessee proved through documentary evidence that no gift was received from the said Sh. Naresh Kapoor. Loan of Rs. 3,15,000 was received through drafts which were obtained by Sh. Naresh Kapoor after withdrawal from his bank account with Indian Overseas Bank , Jallandhar City. The loan taken in November, 1991, was repaid with interest through cheque in December, 1991. The total amount of Rs. 3,19,306 is debited in the accounts of the assessee. A sum of Rs. 4,306 was paid as interest on loan. This interest is also reflected in the books of account. The loan has been duly confirmed by Sh. Naresh Kapoor. The assessee, thus, proved identity of the creditor, genuineness of the transaction and capacity of the creditor. Sh. Naresh Kapoor for assessment year 1992-93 was assessed at a total income of Rs. 99,33,894 as per order dated 25-3-1997. The revenue has brought no material on record to show that the transactions in question were not genuine and could be rejected as a made up affair. The bold assertion that Sh. Naresh Kapoor was indulging in fictitious and non-genuine hawala transactions under the guise of NRI foreign gifts, is not sufficient to reject assessee's case established by documentary evidence and bank transactions.
8. The learned departmental Representative had submitted that the cash credits were not proved as the lender Sh. Naresh Kapoor was not produced for examination of the assessing officer. I do not find any force in these submissions. Cash credits have been proved through documentary evidence. Sh. Naresh Kapoor was not available when the assessee was directed to produce him. He was stated to be under arrest. There was, therefore, good ground in not producing the creditor before the assessing officer. On the facts and in the circumstances of the case, no adverse inference for non-production of Sh. Naresh Kapoor could be drawn against the assessee. The revenue further did not place any material on record to show that the assessee, a minor, had given unaccounted money to Sh. Naresh Kapoor to obtain Bank drafts and show them as loan to the assessee and then take back such unaccounted money when loan alongwith interest was returned to Sh. Naresh Kapoor. The case of the revenue based on surmises and conjectures, was rightly rejected by the learned Commissioner (Appeals). I agree with her finding and confirm the impugned order."
5. In the light of above documents and the decision on identical facts, I hold that credits to the extent of Rs. 1,25,000 in the name of Shri Naresh Kapoor were rightly accepted by the learned Commissioner (Appeals). But there is a problem. The assessing officer added Rs. 2,25,000 for unproved cash credits and the same amount was deleted by the learned Commissioner (Appeals) in the impugned order. The learned counsel for the assessee submitted that there was typographical error in the orders of the revenue authorities and in fact cash credits were only of Rs. 1,25,000. In this connection, the learned counsel for the assessee drew my attention to detailed submissions made by the assessee dated 4-1-2000, before the learned Commissioner (Appeals). In the above submissions, it was clearly pointed that loan received through two drafts from Shri Naresh Kapoor amounted to Rs. 1,25,000 and not Rs. 2,25,000. The learned Commissioner (Appeals) allowed relief without going into the above question.
6. I have given careful consideration to the rival submissions of the parties on the above alleged error. It is a question of fact whether credits aggregate to Rs. 1,25,000 or Rs. 2,25,000. The learned counsel for the assessee was fair enough to say that above limited question could be remitted to the assessing officer for verification. This suggestion was also accepted by the learned departmental Representative. In the above circumstances, I direct the assessing officer to verify this claim of the assessee. In case the total amount of cash credits is only Rs. 1,25,000 then nothing further is required to be done and the matter should be treated as closed. However, if the cash credits aggregate to As. 2,25,000, then addition of Rs. 1 lac should be made in the hands of the assessee in accordance with law. Subject to the above observations, the appeal of the revenue is treated as dismissed for statistical purposes.