Income Tax Appellate Tribunal - Delhi
Seema Jain,, Delhi vs Acit, Circle-59(1), New Delhi on 17 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : B : NEW DELHI
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA Nos.1812, 1813 & 6709/Del/2017
Assessment Years : 2008-09, 2009-10 & 2014-15
Seema Jain, Vs. ACIT,
C/o Raj Kumar & Associates, Circle-59(1),
Chartered Accountants, New Delhi.
L-7A (LGF), South Extn. Part II,
New Delhi - 110 049.
PAN: AAFPJ6460J
(Appellant) (Respondent)
Assessee By : Shri Raj Kumar, CA,
Shri Sumit Jain, CA
Department By : Ms Rachna Singh, CIT, DR
Date of Hearing : 16.05.2018
Date of Pronouncement : 17.05.2018
ORDER
PER R.S. SYAL, VP:
These three appeals by the assessee relate to assessment years 2008- 09, 2009-10 and 2014-15. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
ITA Nos.1812, 1813 & 6709/Del/2017 Assessment Year 2008-09
2. Following four grounds have been raised in this appeal :-
1. That under the facts and circumstances, the impugned Asstt.
Year being abated one as per 2nd proviso to section 153A(1), hence, Ld. AO exceeded his jurisdiction in examining the issue for addition of Rs.19,35,720/- as the same is not emanating from any material found/seized of incriminating nature or even otherwise.
2. That without prejudice, in the absence of finding of incriminating material etc. belonging to the assessee in the search of a 3rd party, the assumption of jurisdiction u/s 153C is unwarranted.
3. That without prejudice, in the absence of recording any satisfaction by the AO of the assessee, the whole proceedings are illegal and without jurisdiction.
4. That under the facts and circumstance, addition of Rs.19,35,720/- u/s 68 for receipts from 7 persons as mentioned in Para-4 of the Asstt. Order is absolutely unsustainable in law as well as on merits.
3. Ground nos.1 and 4 relate to the addition of Rs.19,35,720/- made by the AO u/s 68 of the Income-tax Act, 1961 (hereinafter also called `the Act'). Briefly stated, the facts of the case are that a search and seizure operation was carried out by the Income Tax Department u/s 132 of the Act on 19.10.2011 at the premises of M/s Agarwal Associates and M/s Jainco 2 ITA Nos.1812, 1813 & 6709/Del/2017 group of cases. In this search, certain material relating to the assessee was also found and seized. Notice u/s 153C read with section 153A was issued, in response to which the assessee filed a return declaring total income of Rs.11,86,960/-. During the course of assessment proceedings, the AO noticed that the assessee had shown sundry creditors/unsecured loans from the following persons:-
S.No. Name of the Person (s) Amount
1. Sanjay Kumar Rs.4,00,000/-
2. Sudam Chouhan Rs.4,80,000/-
3. Manak Chand Rs.15,000/-
4. Bhagwan Singh Rs.3,00,000/-
5. Matwar Prasad Rs.3,75,000/-
6. Vishwanath Rs.15,000/-
7. Late Sh. S.N. Gupta Rs.3,50,720/-
Total Rs.19,35,720/-
4. The Assessing Officer (AO) called upon the assessee to prove the genuineness of the above creditors. The assessee, in order to avoid litigation and to buy peace of mind, voluntarily offered an income of Rs.39,25,720/-, consisting of Rs.19,35,720/- relating to the assessment year under consideration. The AO held such unsecured loans/sundry creditors as bogus and made addition for the same u/s 68 of the Act. The assessee retracted from the surrender, made during the course of assessment 3 ITA Nos.1812, 1813 & 6709/Del/2017 proceedings, before the ld.CIT(A), who, after considering all the relevant material, upheld the addition. The assessee is aggrieved against the sustenance of the addition.
5. We have heard both the sides and perused the relevant material on record. It is an admitted position that a search and seizure action u/s 132(1) of the Act was carried out on 19.10.2011. Original assessment for the year under consideration was completed u/s 143(3) on 06.05.2010. A copy of the assessment order is placed on record, as per which the declared income of Rs.11,86,960/- was accepted. This shows that at the time of search, no proceedings in relation to the assessment year under consideration were pending.
6. At this juncture, it is significant to note that when a search is conducted, there can be possibly two types of assessment years, namely, completed assessments and non-completed or pending assessments. Assessment years having completed assessments mean the years for which either the assessments stood completed by the AO u/s 143(3) or section 144 before the date of search or the years for which the regular assessments were not taken up after the filing of the returns by the assessee and further 4 ITA Nos.1812, 1813 & 6709/Del/2017 that the time limit for issuing notice u/s 143(2) got lapsed on the date of search. On the other hand, the assessment years having non-completed or pending assessments mean the years for which the assessments are pending on the date of search which are abated in terms of the express provisions of the second proviso to section 153A. This will also embrace the years in respect of which the time limit for issuing notice u/s 143(2) is still available with the AO as on the date of search.
7. Adverting to the extant factual matrix, it is seen that the assessment year under consideration falls in the category of `completed assessments' and not the `pending assessments' abating on the date of search. The ld. AR relied on the judgment in the case of Kabul Chawla vs. CIT (2016) 380 ITR 573 (Delhi) to contend that the above addition could not have been made because it is a completed assessment year and further no incriminating material was found during the course of search qua the above creditors added by the AO. This was countered by the ld. DR, who claimed that such an addition was rightly made and sustained.
8. Facts in the case of Kabul Chawla (supra) are that a search was carried out u/s 132 on 15.11.2007 on BPTP Ltd., a leading real estate developer 5 ITA Nos.1812, 1813 & 6709/Del/2017 operating all over India and some of its group companies including the premises of the assessee, who owned and controlled the group. No assessment proceedings were pending for the assessment years 2002-03, 2005-06 and 2006-07 as on the date of the search. The assessments for such assessments years had already been made u/s 143(1) of the Act. The assessee filed returns for the three assessment years declaring certain income. The assessments were completed u/s 153A for the concerned assessment years making additions, inter alia, on account of low household withdrawals and deemed deduction u/s 2(22)(e) of the Act. It was submitted before the ld. CIT(A) that no evidence was found during the course of search so as to warrant an addition u/s 2(22)(e) of the Act. The ld. CIT(A) held that the additions need not be restricted only to the seized material. The Tribunal concluded that: 'If some incriminating material is found in respect of such assessment years for which the assessment is not pending, then, the total income would be determined by considering the originally determined income plus income emanating from the incriminating material found during the course of search'. That is how, the additions made u/s 2(22)(e), which were not based on any incriminating 6 ITA Nos.1812, 1813 & 6709/Del/2017 material found during the course of search, were held to be unsustainable in law and, hence, deleted. The Hon'ble High Court approved the view taken by the Tribunal. It summarized the legal position in para 37 of its judgment as under :-
`On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".
iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."
v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings.7
ITA Nos.1812, 1813 & 6709/Del/2017 vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.'
9. It is evident from the above judgment that once a search takes place u/s 132 of the Act, the assessee is obliged to file returns for the six assessment years immediately preceding the previous year relevant to the assessment year in which the search took place. In so far as the completed assessments as on the date of the search are concerned, the same are to be repeated as increased by certain additions strictly based on incriminating material found during the course of search. In other words, if no incriminating material is found during the course of search, then, the amount of total income determined under the earlier completed assessments, is to be adopted in such fresh assessments u/s 153A without making any further addition.
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ITA Nos.1812, 1813 & 6709/Del/2017
10. Turning to the facts of the instant case, it is seen that the Assessing Officer made total addition of Rs. 19,35,720/- u/s 68 of the Act on this score, which includes an amount of Rs.3,75,000/- appearing in the name of Sh. Matwar Prasad. The said person was working as an employee with M/s Jainco. Pvt. Ltd., being, a company in which the assessee is a related party. His statement was recorded u/s 132 of the Act during the course of search, in which he deposed not to have deposited any money with any person or any company. Such a statement has been reproduced on pages 6 and 7 of the impugned order. In response to question no. 2, he stated that he was working with M/s Jainco Pvt. Ltd. for the last 7-8 years. In response to question no. 8, he submitted that his monthly salary was Rs.8,000/-. Answering question no. 9, he stated that his monthly family expenditure was Rs.5,000/- to Rs.6,000/-. Replying to question no. 11 specifically on the point as to whether he had invested his savings anywhere, he replied in negative by deposing that he had neither made any investment nor given any amount to others. It is evident from the statement of Shri Matwar Prasad recorded during the course of search u/s 132 that he admitted not to have given any loan or advance to any person including the assessee. This 9 ITA Nos.1812, 1813 & 6709/Del/2017 statement of Shri Matwar Prasad, coupled with the fact that the assessee surrendered this amount during the course of assessment proceedings, in our considered opinion, constitutes incriminating material found during the course of search. The ld. AR was fair enough to concede that addition to the extent of Rs.3,75,000/- is backed by incriminating material found during the course of search and should be confirmed. We, therefore, uphold the addition to this extent.
11. As regards other loans/creditors, we find that there is no reference to any incriminating material found during the course of search casting shadow of doubt on the genuineness of these amounts. Going by the ratio laid down in the case of Kabul Chawla (supra), it is held that the remaining amount of Rs.15,60,720/- (Rs.19,35,720/- minus Rs.3,75,000/-) cannot be added as the same is not represented by any incriminating material found during the course of search.
12. The ld. DR heavily relied on the fact that the assessee made a surrender of Rs.19.35 lac during the course of assessment proceedings and, hence, the addition should be sustained. She further submitted that the 10 ITA Nos.1812, 1813 & 6709/Del/2017 retraction made during the course of first appellate proceedings was ill- founded.
13. It is no doubt true that the assessee did make a surrender of Rs.19.35 lac during the course of assessment proceedings. However, what is crucial to accentuate is that the scope of assessment, pursuant to search, in respect of completed assessments, as discussed above, is confined to repeating the originally assessed income u/s 143(3) plus any other addition which is borne out of incriminating material found during the course of search. If no material is found during the course of search, there can be no question of making any addition, either on the basis of assessee's surrender or on the basis of enquiries conducted by the Assessing Officer during the course of assessment proceedings u/s 153A/153C. Question of surrender of an income can arise only when the AO has jurisdiction to tax it. If the very foundation, being the jurisdiction of the AO to tax, is lacking, the surrender becomes illegal and cannot be enforced against the assessee. As the only incriminating material found during the course of search relates to alleged credit shown in the case of Shri Matwar Prasad to the tune of Rs.3,75,000/- in terms of his statement recorded u/s 132, we hold that in the absence of 11 ITA Nos.1812, 1813 & 6709/Del/2017 any incriminating material concerning the other six parties, no addition, except Rs.3,75,000/-, could have been made or sustained as the same is not backed by any incriminating material and relates to a completed assessment year as on the date of search. These grounds are, therefore, partly allowed.
14. The ld. AR did not press ground nos. 2 and 3. These grounds are, thus, dismissed as not pressed.
15. In the result, the appeal is partly allowed.
Assessment Year 2009-10
16. For this year, again, four grounds have been raised which are mutatis mutandis similar to those recorded above for the immediately preceding assessment year. Ground nos. 2 and 3 were not pressed by the ld. AR, which are, ergo, dismissed.
17. The sole issue raised through ground nos. 1 and 4 is against the confirmation of addition of Rs.16,70,000/- made by the AO u/s 68 of the Act.
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ITA Nos.1812, 1813 & 6709/Del/2017
18. Assessment for this year also stood completed as on the date of search. The Assessing Officer, in the instant proceedings, made an addition of Rs.16,70,000/- representing sundry creditors/unsecured loans in respect of seven persons, which include credit balance of Rs.4,30,000/- appearing in the name of Sh. Matwar Prasad. Both the sides are in agreement that the facts and circumstances of the instant year are similar to those of the preceding year. In fact, no separate arguments were advanced and the parties adopted their arguments made for the preceding year. In view of our decision rendered for the immediately preceding assessment year, we confirm the addition only to the extent of Rs.4,30,000/- and the remaining addition is directed to be deleted.
19. In the result, the appeal is partly allowed.
Assessment Year 2014-15
20. The assessee is in this appeal is aggrieved against the confirmation of addition of Rs.1 crore in respect of loan shown to have been received from M/s Pediment Tie-Up (P) Ltd., Kolkata (hereinafter referred to as 'PTU'). 13
ITA Nos.1812, 1813 & 6709/Del/2017
21. The facts apropos this addition are that the assessee declared to have received a loan of Rs.1 crore from PTU, which was claimed to have been extended to it in four equal installments of Rs.25 lac each on 27.09.2013. On being called upon to justify the receipt of the loan, the assessee furnished certain details and made submissions, which did not find favour with the Assessing Officer. It was opined by the AO that PTU is one of the paper/shell companies used to route funds and provide accommodation entries to the beneficiaries including the assessee by means of unsecured loans. In reaching this conclusion, the Assessing Officer examined particulars of PTU as furnished by the assessee. He sought report of PTU from DDIT (Investigation), Kolkata. Considering such report, the Assessing Officer concluded that PTU only provided accommodation entries to the assessee. To confirm the facts further, he issued summons u/s 131 to the directors of PTU, which remained uncomplied with. Statement of the assessee was recorded u/s 131 of the Act in which she could not give any appropriate reply about the genuineness of loan received from this company. In the ultimate analysis, the Assessing Officer made addition of 14 ITA Nos.1812, 1813 & 6709/Del/2017 Rs.1 crore, which got echoed in the first appeal. The assessee is aggrieved against this addition.
22. We have heard both the sides and perused the relevant material on record. The only dispute in this appeal is if the addition of Rs1.00 crore made u/s 68 of the Act on account of loan shown to have been received by the assessee from PTU, Kolkata, is sustainable. This section provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. It is trite law that an assessee can escape clutches of section 68 if he successfully proves three things to the satisfaction of the AO, viz., identity of the payer, capacity of the payer and genuineness of transaction. Genuineness of a loan transaction primarily depends upon the genuineness of the payer. If the alleged payer itself is not genuine, then the entire edifice of the genuineness of the transaction, created through a web of paper trail, falls flat. In concluding as to the genuineness of a transaction, the Hon'ble Courts have 15 ITA Nos.1812, 1813 & 6709/Del/2017 held that apparent must be considered real until there are reasons to believe that the apparent is not real. The facts and circumstances of the instant case, as will be seen infra, are a glaring example of apparent being not real, but just a facade of genuineness of loan transaction, which actually is not.
23. The assessee filed certain details concerning PTU including its return of income. A copy of the balance sheet of this company has been provided in the paper book from which it is palpable that it has no tangible or intangible fixed assets. The only item on the asset side of its balance sheet is 'Current assets.' On the liability side totaling Rs.19.35 crore, this company has share capital of Rs.48 lac and share premium of Rs.18.45 crore. The solitary other item on the liability side is Rs.42 lac represented by `Current liabilities'. A perusal of the income tax return of this company, whose copy has been placed in the paper book divulges that it declared total income of Rs.10,336/- for the year under consideration. The matter does not end here only. PTU filed its return for the succeeding assessment year also declaring a meager income of Rs.4,660/-. When the Bench required the ld. AR to show Profit & Loss Account of this company for the year under consideration, he expressed helplessness. A consistent meager income of a 16 ITA Nos.1812, 1813 & 6709/Del/2017 few thousands rupees not only in the current year but succeeding year as well, when combined with the absence of Profit & Loss Account for the year and the fact that it had shown a share premium of Rs.18.45 crore against the paid-up share capital of a Rs.48 lac, cast doubt on its genuineness. It is incomprehensible as to how a company which is earning just a few thousands rupees will command a premium of roughly more than 38 times of the face value of its shares.
24. The Assessing Officer noted that PTU has two directors, namely, Shri Dipak Singh and Shri Brijmohan S.A. He recorded that Shri Dipak Singh is a director in 16 companies whose list is given on pages 3 and 4 of the assessment order. Similarly, he noticed that Shri Brijmohan S.A. is a director in 12 companies. The ld. AR submitted that the list of 16 companies, given on pages 3 and 4 of the assessment order, and a mention in the assessment order of Sh. Dipak Singh being a director of PTU, run contrary to each other because such a list does not contain the name of PTU. This argument was countered by the ld. DR, who stated that it was an inclusive list inasmuch as there were other companies also in which Shri Dipak Singh is a director. We find force in the contention of the ld. DR. It 17 ITA Nos.1812, 1813 & 6709/Del/2017 is so for the fact that although the name of PTU does not figure in the list of 16 companies given in the assessment order in which Sh. Dipak Singh is a director, but, it is Sh. Dipak Singh who has signed the return of income of this company for the year under consideration. A copy of such a return has been placed on page 3 of the paper book, which manifests that Shri Dipak Singh signed the return of PTU in the capacity of its director. Similarly, return of income of PTU for the succeeding assessment year, namely, 2015- 16 has also been signed by Shri Dipak Singh in the capacity of its director. This indicates that the list of companies given by the Assessing Officer in his order is only inclusive and not exhaustive and it is further established that Sh. Dipak Singh is director in several companies operating in similar manner. The fact that Sh. Dipak Singh is not a real person managing the affairs of PTU but only a name-lender is also borne out from the statement of Shri Rajendra Bubna, discussed in a later para of this order.
25. It is further pertinent to note that the Assessing Officer has recorded that three companies from the list of 16 companies having Sh. Dipak Singh as a common director, have the same address, namely, 2A, Ganesh Chandra Avenue Commerce House, 7th Floor, Room No.1, Kolkata, W.B - 700013 18 ITA Nos.1812, 1813 & 6709/Del/2017 IN. It has further been recorded that 12 more companies are registered at this address, meaning thereby, that all such companies are allegedly operating from one room only. This factual position recorded in the assessment order has not been controverted on behalf of the assessee.
26. The Assessing Officer issued a letter to DDIT (Inv.), Unit 3(1), Directorate of Investigation, Kolkata to verify the credentials of PTU. A copy of the reply given by DDIT (Inv.), Kolkata is available on page 21 of the paper book. He intimated that the Directorate of Investigation, Kolkata has maintained a database which included the name of PTU as a paper company solely established to provide accommodation entries and is managed and controlled by an entry operator, namely, Shri Rajendra Bubna. Statement of Shri Rajendra Bubna recorded u/s 131 of the Act, copy on pages 22 and 23 of the paper book, was also sent to the AO, which has been reproduced in the assessment order. In response to question no. 2, Shri Rajendra Bubna stated that he was 'providing accommodation entries to various entities in the form of share capital and unsecured loan in lieu of net commission to the tune of 25-30 paise per 100 Rupees.' In answer to question no.3, he explained that most of the companies were formed with 19 ITA Nos.1812, 1813 & 6709/Del/2017 dummy directors and a common registered office. This part of the statement corroborates the AO's version that so many companies were allegedly operating from one room. Shri Rajendra Bubna further stated that the role of such dummy directors was limited to signing the statutory and other documents whenever directed against some remuneration. This part of the statement confirms that Sh. Dipak Singh was only a name lender and not actual director. In response to question no.4, he stated: "I control and manage several companies which are paper/shell companies and I have introduced several dummy directors in these paper and shell companies. These paper companies/shell companies have been created with the sole purpose of routing unaccounted funds/money in the garb of share capital/premium into other entities/companies. Cash is directly received by me from other entities/companies and its associated companies and the cheques are issued to the intermediary paper companies. This unaccounted funds/cash/money is routed through a complex web of paper companies and finally reaches the beneficiary company through cheques from whom cash was received." He reiterated his stand in answering question no. 5 by asserting that: "these companies are basically paper/shell companies 20 ITA Nos.1812, 1813 & 6709/Del/2017 having no genuine business activities. These companies are used for doing multiple layering of funds in the process of providing accommodation entries. All the accommodation entries done from these companies are wholly controlled by me from time to time as per the requirements of my clients'. The above disposition by Shri Rajendra Bubna, who was actually controlling PTU, leaves nothing to doubt that PTU is one of the paper/shell companies, having no other substantive business activity except providing accommodation entries to its clients.
27. The matter does not stop here. Having so much material to implicate the assessee for having obtained an accommodation entry of Rs.1.00 crore from PTU, the AO carried out further investigation by issuing summons u/s 131 of the Act to the directors of PTU requiring their appearance in person. Unfortunately, no compliance was made. Thereafter, the Assessing Officer recorded statement of the assessee u/s 131 of the Act, whose relevant parts have been reproduced on pages 6 and 7 of the assessment order. In response to question no.7 about the assessee having outstanding loans from around 24 parties and requiring to give: "the exact purpose for which you have taken these loans", she simply replied that the finances were managed 21 ITA Nos.1812, 1813 & 6709/Del/2017 by her husband and she had no idea of it. On a question as to whether she operated her account or had any ATM card/debit and credit card, she answered in negative. Her statement amply shows that she had absolutely no idea about any loan taken from PTU, which is one of the 24 parties appearing in her balance sheet.
28. When a final show cause notice was issued requiring the assessee to explain as to why a sum of Rs.1 crore received from PTU be not added to the income as it was a bogus loan received from a paper company, the assessee required cross-examination of Shri Rajendra Bubna and stated that name of PTU was not appearing in the statement of Shri Rajendra Bubna. In our considered opinion, the Assessing Officer has rightly rejected the assessee's contentions on the ground that Shri Rajendra Bubna was confronted with only a sample of companies and was asked to confirm if he used these companies to provide accommodation entries, which was answered by him in positive. We have noticed above that though name of the assessee company was not appearing in the list of 16 companies given on pages 3 and 4 of the assessment order, having Shri Dipak Singh as a director, but, the fact of his being a director has been proved from his 22 ITA Nos.1812, 1813 & 6709/Del/2017 signing the return of income for the year under consideration in the capacity of director. This shows that all the lists referred to in the assessment order are inclusive and the assessee cannot gain any mileage from the fact that name of PTU is not specifically depicted therein.
29. The ld. AR harped on fact that the assessee repaid the loan to PTU in a subsequent year and, hence, the genuineness of the loan transaction should not be doubted. He pointed out that the loan was raised on 27.09.2013 for a sum of Rs.1 crore which was repaid after one year on 23.09.2014. Copy of account of PTU for receipt and repayment of loan has been placed on pages 1 and 2 of the paper book. It is seen that the assessee allegedly received loan of Rs.1 crore and, after one year of usage, shown to have repaid it without any interest. On a further query to the ld. AR as to how the assessee came into contact with a Kolkata based company for obtaining a loan of Rs.1 crore and that too without any interest, when the she had not business or personal relations with it, he had no answer. The foregoing discussion ably shows that despite paper work done by the assessee for showing the receipt/repayment of loan through account payee cheques etc., there is predominant evidence which proves without an iota of doubt that 23 ITA Nos.1812, 1813 & 6709/Del/2017 the assessee received an accommodation entry of loan of Rs.1.00 crore from PTU.
30. At this juncture, it will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which was reversed by the Hon'ble High Court. Reversing the verdict of the Hon'ble High Court, their Lordships noticed that though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was 'sthridhan' property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not 24 ITA Nos.1812, 1813 & 6709/Del/2017 real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality.
31. Similar view has been canvassed in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). The question for consideration in that case was whether the assessee purchased winning tickets after the event. It was observed that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act, lies upon the assessee. But, in view of section 68, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In deciding the issue against the issue, their Lordships held that : `Apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be 25 ITA Nos.1812, 1813 & 6709/Del/2017 considered by applying the test of human probabilities'. This shows that a decision based on the attending circumstances and human probabilities does not get vitiated if there are compelling reasons to reject the frontage of a transaction based on the so-called evidence, which is nothing more than a mere paper work.
32. In view of the factual and legal position discussed above, it is crystal clear that PTU provided only accommodation entries to the assessee in the garb of unsecured loan of Rs.1 crore which, in our considered opinion, has been rightly added by the authorities below. We, therefore, countenance the impugned order on this score.
33. In the result, the appeal is dismissed.
The order pronounced in the open court on 17.05.2018.
Sd/- Sd/-
[SUCHITRA KAMBLE] [R.S. SYAL]
JUDICIAL MEMBER VICE PRESIDENT
Dated, 17th May, 2018.
dk
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ITA Nos.1812, 1813 & 6709/Del/2017
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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