Income Tax Appellate Tribunal - Delhi
Shri Pawan Kumar Garg, Prop. ... vs Ito, Hisar on 9 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'SMC' : NEW DELHI)
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA No. 373/DEL/2017
Assessment Year: 2012-13
SH. PAWAN KUMAR GARG PROP. VS. ITO, WARD-3,
M/S P.K. ENTERPRISES HISAR
C/O SH. BHARAT VIKRANT, ADVOCATE,
7, BASEMENT, PARIJAT COMPLEX,
HISAR-125001 - HARYANA
(PAN: AJAPG1382Q)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. Gautam Jain, Advocate &
Sh. Piyush Kumar Kamal, Adv.
Revenue by : Sh. T. Vasanthan, Sr. DR.
ORDER
The Assessee has filed the Appeal against the Order dated 14.10.2016 of the Ld. CIT(A), Hisar pertaining to assessment year 2012-13 on the following grounds:-
1. That the learned Commissioner of Income Tax (Appeals) law and on facts in upholding the addition of Rs.
10,70,000/- representing advance received from Shri Ishwar Singh and held to be unexplained cash credit u/s 68 of the Act 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that deposits in the 2 bank account against sale of ancestral property could not have been brought to tax as income of the appellant. 1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that, inability of the assessee to explain source of source cannot be a basis to confirm addition u/s 68 of the Act 1.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that appellant has led complete evidence to-demonstrate and discharge the burden that advance was duly received from Sh. Iswar Singh and as such addition is based on fundamental misconception of facts and provisions of law and therefore, untenable.
1.4 That the learned Commissioner of Income Tax (Appeals) has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition sustained is wholly unwarranted and not in accordance with law. 1.5 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are contrary to record and law and thus unsustainable. 3
2. That the learned Commissioner of Income Tax (Appeals) Hisar has further erred act in sustaining an addition of Rs. 4,00,000/- representing loan received from wife of the appellant and held to be unexplained cash credit u/s. 68 of the Act.
2.1 That the Ld. CIT(A) has failed to appreciate that deposit in the account of wife of the appellant before remittance of the money to the appellant cannot be a ground to bring to tax the credit as income of the appellant.
2.2 That finding that assessee has not proved the creditworthiness of the creditor is factually incorrect, legally misconceived and untenable.
2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that unsecured loans aggregating to Rs. 4,00,000/- had been received by account payee cheques from wife of the appellant who had duly confirmed that loans had been advanced to the appellant and as such, addition so sustained is invalid and untenable.
It is therefore prayed that, additions made by the learned Assessing Officer and confirmed by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant be allowed. 4
2. The brief facts of the case are that the assessee filed the return of income on 30.9.2012 declaring an income of Rs. 8,03,170/-. The assessee is running business of scrap. During assessment proceedings AO noticed that the assessee had shown credit liability in the name of Surya Roshni Limited, Bahadurgarh. To confirm the same, the AO called information u/s. 133(6) of the Income Tax Act, 1961 (hereinafter referred as the Act) and found NIL credit balance of the assessee in the books of M/s Surya Roshni Limited. On reconciliation, AO found difference of Rs. 10,70,000/- in the books of the appellant viz a viz the creditor. The AO summoned Shri Ishwar Singh, creditor and recorded his statement on 30.12.2014. From the statement recorded, AO inferred that the assessee could not adduce any documentary evidence from which it can be ascertained that the assessee has done any transaction in respect of sale/purchase of property; the story put forth by the assessee is only fabricated one because the assessee never disclosed that he has sold any property during the year under consideration and also not disclosed that he was in possession of any ancestral property which was given to Shri Ishwar Singh for a consideration of Rs. 10,70,000/- and also the purchaser failed to give any documentary evidence regarding the transaction for purchase of property in the shape of agreement or sale deed etc. The assessee has also failed to produce any evidence/proof of possession in respect of property in question which he claimed he had sold to Sh.
5Ishwar Singh; the assessee propounded this story only when he did not find any escape route to explain the entry of Rs. 10,70,000/- in the account of M/s Surya Roshini Ltd. Bahadurgarh; that no entry of Rs. 10,70,000/- on 21.11.2011 or nearby date neither in the ledger capital account nor in the bank account of the assessee had been found credited. He observed that the plea of the assessee is just an afterthought and proved false. The AO on the basis of above facts held that appellant had introduced capital of Rs.1O,70,000/- out of income from undisclosed sources. AO made addition of Rs. 10,70,000/- u/s. 68 of the IT Act.
2.1 AO further observed that assessee received Rs. 4,00,000/- from Smt. Urmila Devi, wife of the assessee as unsecured loan and found that the assessee had raised Rs. 4,00,000/- on 9.2.2012 from Smt. Urmila Devi as unsecured loan. The assessee has proof, produced copy of account, copy of bank account and copy of ITR before AO. On examination of the bank account, AO found that cash of Rs. 4 lacs had been deposited on 9.2.2012 and cheque issued to the assessee on the same date. AO required the assessee produce the creditor to prove the creditworthiness. The assessee did not produce the creditor stating that she was out of station and also did not make request to produce creditor on any other date. AO held that the assessee had failed prove the creditworthiness of the creditor, the assessee had received accommodation entry from the creditor and intentionally deposited money in the name of Smt. 6 Urmila Devei. AO held that the assessee had failed to prove the genuineness of the transaction and the treated the said amount as income from undisclosed sources and added the same u/s. 68 of the I.T. Act, 1961 vide order dated 30.12.2014 and completed the assessment at Rs. 38,94,750/- u/s.143(3) of the I.T. Act, 1961. Against the order of the AO dated 30.12.2014, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 14.10.2016 has partly allowed the appeal and confirmed the aforesaid additions.
3. Aggrieved with impugned order dated 14.10.2016, assessee filed the appeal before the Tribunal.
4. At the time of hearing, Ld. Counsel of the assessee has stated that the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in upholding the addition of Rs. 10,70,000/- representing advance received from Shri Ishwar Singh and held to be unexplained cash credit u/s 68 of the Act and he failed to appreciate that deposits in the bank account against sale of ancestral property could not have been brought to tax as income of the assessee. He further stated that it was also not appreciated that, inability of the assessee to explain source of source cannot be a basis to confirm addition u/s 68 of the Act and he has also failed to appreciate that assessee has led complete evidence to demonstrate and discharge the burden that advance was duly received from Sh. Iswar Singh and as such addition is based on fundamental misconception of facts and 7 provisions of law and therefore, untenable. With regard to addition of Rs. 4,00,000/- is concerned, he stated that the said amount representing loan received from wife of the assessee and it was not appreciated by the Ld. CIT(A) that the deposit in the account of wife of the assessee before remittance of the money to the assessee cannot be a ground to bring to tax the credit as income of the assessee. He further stated that the said unsecured loans aggregating to Rs. 4 lacs had been received by account payee cheques from wife of the assessee who had duly confirmed that loans had been advanced to the assessee and as such, addition so sustained is invalid and untenable. In support of this contention, he relied upon various case laws, as mentioned in the Synopsis filed by the assessee's counsel.
5. On the contrary, Ld. DR relied upon the orders of the authorities below.
6. I have heard both the parties and perused the records and gone through the orders of the authorities below, especially the contention raised in the grounds of appeal and the case laws cited by the Ld. Counsel of the assessee. I find that Ld. CIT(A) has elaborately discussed and adjudicated the issues in dispute vide para no. 3.3 & 5.1 of his impugned order. For the sake of convenience, I am reproducing the said relevant finding as under:-
"3.3 I have carefully considered the facts of the case, Appellant has relied on the fact that he had 8 ancestral property situated at village Sarsana, Distt. Hisar on 21.11.2011. That the amount of Rs. 10,70,000/- was received from Shri Ishwar Singh in cash as advance for sale of ancestral property. Here the plea of the appellant that it was not granted opportunity to cross examine Shri Ishwar Singh cannot be agreed to as Shri Ishwar Singh was the witness of the appellant itself. Appellant has claimed that Shri Ishwar Singh had given said advance of Rs. 10,70,000/- to the appellant out of sale proceeds received against sale of JCB Machine and as advance against sale of ancestral property for which possession was with Shri Ishwar Singh.
Appellant has claimed that there was no requirement to form an agreement in 'writing, verbal agreement is more than sufficient. However, it is a fact on record that the creditor has, not filed any return of income, did not have PAN, did not remember details of his bank account, did not remember date of transaction of property. The creditors also did not produce copy of agreement, sale purchase deed of the property or any other relevant documents relating to property in 9 question. Even the sale consideration of JCB Machine was made in cash. The said property was not reflected in the books of the appellant. The said entry of Rs. 10,70,000/- was found credited in the books of M/s Surya Roshni Limited Bahadurgarh. Thus it is found that the entry of cash credit found in the books of the appellant, the identity was of a different person and not M/s Surya Roshni, the creditworthiness of the creditor could not be proved in as much as no evidence was brought on record and the genuineness of the transaction also could not be established by any documentary evidence. In view of the above facts, the action of the AO in treating the said credit of Rs. 10,70,000/- as income from undisclosed sources u/s. 68 is therefore, confirmed. This ground of appeal is dismissed."
"5.1 Having examined the contentions of the appellant and the findings of the AO, it is found that the fact remains that cash was deposited on the same date on which cheque was issued to the appellant on 9.12.2012. In such circumstances, the onus is on the appellant to prove the genuineness of the transaction and the creditworthiness of the 10 creditor. AO has recorded that opportunity to prove the creditworthiness of the creditor was granted to the appellant. However, the appellant failed to avail of such opportunity. The appellant has not produced any additional evidence to prove the genuineness or creditworthiness of the creditor during appeal proceedings as well. In the light of the fact, that cash was deposited in the account of the creditor on the same date on which cheque was issued and also the fact that income declared by the creditor is only Rs. 64,007/-, it is held that the creditworthiness of the creditor is not established. The action of the AO in adding Rs. 4,00,000/- received from Smt. Urmila Devi as unexplained cash credit u/s. 68 is therefore, confirmed. This ground of appeal is dismissed."
6.1 After perusing the aforesaid finding of the ld. CIT(A), with regard to addition of Rs. 10,70,000/- is concerned, I find that assessee had ancestral property situated at village Sarsana, Distt. Hisar on 21.11.2011 and amount of Rs. 10,70,000/- was received from Shri Ishwar Singh in cash as advance for sale of ancestral property. Assessee has claimed that Shri Ishwar Singh had given said advance of Rs. 10,70,000/- to the assessee out of sale proceeds received against sale of JCB Machine and as advance against sale of 11 ancestral property for which possession was with Shri Ishwar Singh. Assessee has claimed that there was no requirement to form an agreement in writing, verbal agreement is more than sufficient. However, it is a fact on record that the creditor has, not filed any return of income, did not have PAN, did not remember details of his bank account, did not remember date of transaction of property. The creditors also did not produce copy of agreement, sale purchase deed of the property or any other relevant documents relating to property in question. Even the sale consideration of JCB Machine was made in cash. Even the said property was not reflected in the books of the assessee. The said entry of Rs. 10,70,000/- was found credited in the books of M/s Surya Roshni Limited Bahadurgarh. Thus it was found that the entry of cash credit found in the books of the assessee, the identity was of a different person and not M/s Surya Roshni, the creditworthiness of the creditor could not be proved in as much as no evidence was brought on record and the genuineness of the transaction also could not be established by any documentary evidence. In view of the above facts, the action of the AO in treating the said credit of Rs. 10,70,000/- as income from undisclosed sources u/s. 68 was rightly confirmed by the Ld. CIT(A), which does not need any interference on my part, hence, I uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the issue in dispute raised by the assessee.
126.2 With regard to addition of Rs. 4,00,000/- is concerned, I find that fact remains that cash was deposited on the same date on which cheque was issued to the assessee on 9.12.2012. In such circumstances, the onus is on the assessee to prove the genuineness of the transaction and the creditworthiness of the creditor. AO has recorded that opportunity to prove the creditworthiness of the creditor was granted to the assessee. However, the assessee failed to avail of such opportunity. The assessee has not produced any additional evidence to prove the genuineness or creditworthiness of the creditor during appeal proceedings as well. In the light of the fact, that cash was deposited in the account of the creditor on the same date on which cheque was issued and also the fact that income declared by the creditor is only Rs. 64,007/-, it was held that the creditworthiness of the creditor is not established. The action of the AO in adding Rs. 4,00,000/- received from Smt. Urmila Devi as unexplained cash credit u/s. 68 was rightly confirmed by the Ld. CIT(A), which does not need any interference on my part, hence, I uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the issue in dispute raised by the assessee. 6.3 As regards the case laws cited by the Ld. Counsel of the assessee in the written Synopsis, I am of the considered view that the facts and circumstances of the present case are distinguished to the facts and circumstances of the case of the case laws cited by the 13 Ld. Counsel of the assessee, hence, the said decisions are not applicable in the present case.
7. In the result, Assessee's appeal is dismissed.
Order pronounced in Open Court on this 09-08-2017.
Sd/-
(H.S. SIDHU) JUDICIAL MEMBER Dated :09-08-2017 SR BHATANGAR Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A), New Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT NEW DELHI.