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Income Tax Appellate Tribunal, “C ” BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C ” BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2231/Ahd/2012 (�नधा�रण वष� / Assessment Year : 2007-08) बनाम/ Income Tax Officer, Shri Suresh D. Thakkar, Ward – 9(1), 34, Maniratna-I, Vs. Ahmedabad. Nr. Ganesh Lawana Wadi, Municipal Garden, Vasana, Ahmedabad �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ADDPT 9463 E (अपीलाथ�/Appellant) (��यथ� / Respondent) .. अपीलाथ� ओर से/ Appellant by : Shri L. P. Jain, Sr. D.R. ��यथ� क� ओर से/Respondent by: Shri A. L. Thakkar, A.R. सुनवाई क� तार�ख/ Date of Hearing 26/04/2019 घोषणा क� तार�ख /Date of Pronouncement 27/05/2019 आदेश / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the revenue against the order of the Commissioner of Income Tax (Appeals)–XV, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-XV/9(4)/352/11-12 dated 10.07.2012 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dated 29.12.2009 relevant to Assessment Year (AY) 2007-08.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 2 - The grounds of appeal raised by the Revenue are as under: “1. The ld CIT(A)-XV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.1,15,10,000/- on account of unproved cash credits u/s 68 of the I.T. Act. 2. The Ld CIT(A)-XV, Ahmedabad has erred in law and on facts in admitting additional evidences in violation of Rule 46A. 3. On the facts and in the circumstances of the case, the Learned CIT(A)-XV, Ahmedabad ought to have upheld the order of the AO. 4. It is therefore, prayed that the order of the ld CIT(A)-XV, Ahmedabad may set- aside and that of the AO be restored.” The issue raised by the Revenue is that the Ld. CIT (A) erred in deleting the addition of Rs. 1,15,10,000/- made by the AO as unexplained cash credit u/s 68 of the Act.
The facts of the case are that the assessee is an Individual and engaged in the business of Developing & Construction of Building. The assessee was showing in his balance sheet as unsecured loan amounting to Rs. 1,36,94,887/- which were received from various parties as detailed under: Sr. Name of the party Amount (Rs.) No. 1 Ashokbhai J Patel 351000 2 Dharmadev Infra Pvt. Ltd. 10000 3 Ghanshyam Developers 700000 4 Gumanshinh Chavda 280000 5 Hiren Soni 75000 6 K. K. Shah 1390000 7 Manishbhai Shah 2000000 8 Manojbhai Shah 350000 9 Nareshbhai J Shah 500000
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 3 - 10 Nilesh Kumar 76887 11 Pinkiben B Thakkar HUF 240000 12 Pradipbhai R Patel 4730000 13 Pravinbhai Mistry 1000000 14 Rasmikant D Sonara 222000 15 Samir G Darji 275000 16 Tejasbhai 340000 17 Vipulbhai M Modi 500000 18 Pinkiben B Thakkar 410000 19 Bipinbhai Thakkar (HUF) 245000 Total 1,36,94,887
2.1 However the AO during the assessments proceedings was required to file the details in respect of the loan which was accepted by the assessee such as PAN No., ID Proof, Copy of Return, and Bank Statement along with their source of income. The AO also requested to produce physically to Pradip R Patel from whom the assessee accepted the Loan amounting to Rs. 47,30,000/-.
2.2 The assessee subsequently presented Shri Pradip R Patel before the AO dated 04/12/2009. The AO recorded the statement on oath of Shri Pradip R Patel u/s 131 of the Act. The necessary details of the statement are as under: 1. That he works as a supervisor in construction line business and received a salary of Rs. 5,000/- per month.
He never filed his return of income although he owned PAN.
Regarding the unsecured loan appearing in the books of account of the assessee, he explained that such amount was the booking amount for the project launched by the firm in which the assessee was a partner.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 4 - 4. He also claimed that the amount was received in cash as well as through cheque from the seven to eight members.
He received such amount from the members in the capacity of the chairman of M/s New Shivam (Thaltej) Commercial and Housing Co- operative Society Ltd.
2.3 However, the AO from the statement recorded Pradip R Patel observed certain facts as detailed under: 1. That he did not submit/produce any details of persons/members who had given the amount for booking the project.
That the agreement copy between the Co-operative Society and Sarvavitari Enterprises (i.e., Developer) submitted by the assessee during the assessment proceeding where it was clearly showing that the chairman was Kalpesh Dhirubhai Thakar.
Therefore the statement of Pradip R Patel that he received such amount in the capacity of chairman was misleading.
As such, the Co-operative society came into existence dated 25/08/2006, and the said society launched the project in October 2006. Therefore it’s very important to see how the booking amount was received in the hands of Pradip R Patel as he claimed that he had cash deposits from the very beginning of the accounting year. As such, there was no existence of Co- operative society as well as the project which was to be launched.
From the verification of construction fund, Shri Pradip R Patel himself deposited the sum of Rs. 1,09,900/- whereas in the statement, he claimed to have earned only Rs. 5000-/ per month as salary. Therefore the
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 5 - question arises how he could save Rs. 1,09,900/- with such a meager amount if his household expenses are considered. 2.4 Thus, the AO was of the view that the statement of Pradip R Patel was in contradiction with the evidence available with him. As such, the assessee also did not produce further any evidence in respect of the unsecured loan and documents as required.
2.5 Therefore, the AO randomly selected the four parties for verification of the loan and issued the summon u/s 131(1) of the Act who denied for any deposit made either with the assessee or any of the firm in which he was a partner. They further submitted that they were not members of any commercial or housing co-operative society. They also submit that they were not given any confirmation in respect of deposit as claimed by the assessee. However, the AO also noted that the signatures of the parties in the statement recorded and the confirmations filed by the assessee were different. The necessary details are available on pages 11 to 13 in the of the AO.
2.6 However, the AO also observed that the assessee did not produce the sufficient documentary evidence as required in discharging the onus in the case of unexplained cash credits u/s 68 of the Act, such as Identity and creditworthiness of the persons, and the genuineness of the transactions.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 6 - 2.7 The assessee during the proceedings agreed to offer the tax in respect of certain parties he was unable to produce the evidence as detailed under:
Shri Ashokbhai J Patel 2. Shri Gumansinh Chavda, 3. Shri Hiren Soni 4. Manojbhai K Shah 5. Shri Nileshkumar 6. Shri Rashmikant Sonara 7. Shri Samir G Darji 8. Shri Pravinbhai Mistry
2.8 However, the AO in view of the above facts treated the balance of Rs. 1,15,20,000/- as unexplained cash credit and added to the total income of the assessee.
The aggrieved assessee preferred an appeal before the Ld. CIT (A). The assessee before the Ld. CIT (A) reiterated the submission as made before the AO. The assessee further submits the detailed explanation regarding the depositors, which is recorded on pages 9 to 36 of the ld. CIT-A order. The Ld. CIT (A) after considering the submission of the assessee observed that the assessee had discharged his primary onus by submitting the details as discussed above.
3.1 However, Ld. CIT (A) further called the explanation from the assessee in respect of some of the parties. The assessee in compliance with it made his reply, which is recorded on pages 37 to 39 in the order of the ld. CIT-A.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
The Ld. CIT (A) after considering all the submissions made by the assessee observed certain facts as detailed under:
4.1 Regarding the receipt of Rs. 10,000/-, the assessee has shown in his books of account as a loan whereas on the other hand M/s Dharamdev Infrastructure Pvt. Ltd. claimed it as salary expenses. As such, the assessee did not consider the receipt of Rs. 10,000/- as salary income in his books account. Therefore the same was added to the total income of the assessee as salary and not u/s 68 of the Act.
4.2 Regarding the receipt of the balance amount from the remaining parties, the Ld. CIT (A) observed the two legal propositions as detailed under:
a. Whether the assessee has discharged his onus by submitting the relevant document as required u/s 68 of the Act.
b. The next is whether it is necessary to prove the source of the source by the assessee after submitting the relevant/sufficient evidence/document. 4.3 In respect of the first proposition there are various judgments which state that once the assessee has discharged his onus by filing the sufficient/relevant evidence/documents, then the addition would not be made u/s 68 of the Act.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 8 - 4.4 In respect of the second proposition, there are various judgments as the assessee need not prove the source of the source.
4.5 Thus, in view of the above the Ld. CIT (A) made party wise observation as detailed under; S.N. Party’s Name Amount Observation & Decision (Rs.) 1- M/s Ghanshyam 7,00,000/- The assessee submits the Pan No. as well Developers as Return of Income along with confirmation and details of the cheque which was credited in the assessee’s bank account on 08-11-06. Therefore the source of the loan with identity, creditworthiness and genuineness clearly established by the submission of the assessee. 2- K.K. Shah 13,90,000/ The amount received by the assessee was - later on deposited in the account of Hare Krishna Enterprises for flat booking on behalf of the K.K. Shah. As such all these transactions were carried through banking channel. Therefore the assessee discharges his onus about genuineness and creditworthiness of the transaction. 3- Manishbhai 20,00,000/ The amount received by the assessee was Shah - later on deposited in the account of Hare Krishna Enterprises in respect of purchase and construction of the plot on behalf of the Manishbahi Shah. Thus the identity, genuineness, and creditworthiness is satisfied of Manishbhai K shah
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 9 - 4- VipulModi 5,00,000/- This amount was received by the HUF in which VipulModi was the Karta for purchase of plot in Hare Krishna Enterprises on behalf of the HUF and deposited in assessee’s bank account as accountant by mistakenly entered the name of VipulModi because of cheque was received from VipulModi.Thus the assessee clearly establishes the source, identity as well as creditworthiness. 5- Pinky Thakkar 2,40,000/- The accountant of the assessee by mistake HUF and Pinky and entered the name of Pinky Thakkr HUF as Thakkr 4,10,000/- such there was not existing any HUF in the name of Pinki Thakkar. Actually the amount was received from BipinThakkr HUF of which Pinki Thakkar was co- parcener. But in subsequent date the cheque was returned in the name of BipinThakkr HUF which was shown as advance in the books of the Assessee. Thus it is established the source, genuineness, and creditworthiness. 6- Tejasbhai 3,40,000/- This amount was received from two persons one is Tejasbhai another is his mother. The assessee submitted the PAN No. Confirmation of both of them. As such the cheque were given by Tejasbhai so the entry in the book were made in his name. 7- Naresh J Shah 5,00,000/- The assessee submits the copy of Return of Income along with confirmation and details of the cheque which was credited in the assessee’s bank account. Therefore the
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 10 - source of the loan with identity, creditworthiness and genuineness clearly established by the submission of the assessee.
4.6 Thus, in all the above cases, the assessee discharged his primary onus to establish the identity, genuineness, and creditworthiness. Therefore there was no reason to made addition by the AO u/s 68 of the Act.
4.7 However, Ld. CIT (A) in respect of the Pradip R Patel observed that the AO did not believe in the assessee’s submission as well as statement recorded of Pradip R Patel. It was very clear that the Pradip R Patel was the chairman of Co- operative Ltd. through the copy of resolution dated 11-10-06 where the members of co-operative society appointed Shri Pradip R Patel as a chairman.
4.8 The confirmation received from Naresh J Shah where it was mention that he had given a cheque of Rs. 7,00,000/- to Pradip R Patel and the same was deposited in his account, but on the same day, Pradip R Patel issued the cheque in the name of Hare Krishna Enterprises on behalf of the Naresh J Shah.
4.9 Therefore, the Balance amount of Rs. 47,30,000/- was only to be considered in the hands of Pradip R Patel. In respect of this, there was no adverse view qua to the statement furnished by Shri Pradip R Shah.
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- 11 - 4.10 As such, the amount received on account of construction fund and land fund by Pradip R Patel from the members of Co-operative Society Ltd. was deposited in the bank account of the assessee. It is because the bank account of the scheme was not opened at that time. As such, from the cash book of the Pradip R Patel, it was clear that he has received cash of Rs. 1,41,300/- each from 35 persons. Similarly out of 35 persons, ten persons canceled their booking. Accordingly, a sum of Rs. 14,13,000/- was returned to these persons.
4.11 Therefore, the assessee could not prove the source and confirmation, but the identity and source of the loan have been proved. Now examination of Pradip R Patel was the source of the source which cannot be made as decided in various judgments.
4.12 The Ld. CIT (A) also observed that in the business of development of housing project it is common practice that interested person can make deposits as token money in advance if they know the developer even without knowing the scheme. As such, it provides benefit to both, i.e. members as well as the developer.
4.13 Thus in view of the above the Ld. CIT (A) concluded that Hare Krishna Enterprises was the first scheme of the assessee and the money was received before the registration of the Co-operative Ltd through a trusted person like Pradip R Patel which cannot be ignored/rejected.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 12 - 4.14 Thus the assessee for the remaining amount of Rs. 47,30,000/- has also discharged his onus in respect of the identity, genuineness, and creditworthiness of Pradip R Patel.
4.15 Therefore the addition made by the AO for a sum Rs 1,15,20,000/- except Rs. 10,000/- received as salary is deleted.
Aggrieved by the order of the Ld. CIT (A), Revenue is in appeal before us.
The Ld. DR before us submitted that the assessee has not established the credit worthiness of the persons deposited the money with him. Therefore the onus cast under section 68 of the Act has not been fulfilled.
The ld. DR also submitted that the 3rd paper book filed by the assessee 5.1 was not available before the authorities below. The ld. DR vehemently supported the order of the AO.
On the contrary, the Ld. AR before us filed 3 paper books containing pages 1 to 68, 1 to 161 and 1 to 24 respectively and further submitted that all the details were duly furnished qua the deposits received from the persons. As such, the assessee discharged his onus imposed under section 68 of the Act. Therefore the question of unexplained cash credit does not arise. The ld. AR vehemently supported the order of the ld. CIT-A.
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
We have heard the rival contentions of both the parties and perused the materials available on record. The assessee in the present case claimed to have accepted deposits from several persons which were treated as unexplained cash credit under section 68 of the Act by the AO. However, the ld. CIT-A deleted the addition by observing that the assessee has discharged his onus under section 68 of the Act. Now we proceed to adjudicate the each party individually whether the deposits from them represent the unexplained cash credit under section 68 of the Act.
I. The cash credit of Rs. 7 Lacs from Ghanshyam Developers:- In this regard, we note that the assessee has discharged his onus cast u/s 68 of the Act by furnishing the necessary details which have been elaborated in details in the order of the Ld. CIT (A) in the preceding paragraph.
In case the Revenue has any doubt about the impugned transaction, then it should have taken the confirmation from the party by issuing notice u/s 133(6)/131 of the Act. But the Revenue has not done so. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
II. The cash credit of Rs. 13.90 Lacs from K.K. shah:- Regarding this, we note that the assessee after receiving the money from K.K. Shah has transferred the same to Hare Krishna. Accordingly, the firm Hare
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 14 - Krishna has allotted the plot to Shri K.K. Shah. This fact can be verified from the copy of the ledger of Shri K.K. Shah in the books of Hare Krishna which is placed on page-29 of the paper book. The transaction above, i.e. allotment of land to K.K. Shah, is also supported with the agreement which is placed on pages 31 to 43 of the paper book.
Thus in view of the above, the money received by the assessee from Shri K.K. Shah and subsequently transferred to Hare Krishna cannot be treated as unexplained cash credit u/s 68 of the Act. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
III. The cash credit of Rs. 20 Lacs received from Manish Bhai Shah:- Regarding this, we note that the assessee after receiving the money from Manish Bhai Shah has transferred the same to Hare Krishna. Accordingly, the firm Hare Krishna has allotted the plot to Shri K.K. Shah. This fact can be verified from the copy of the ledger of Manish Bhai Shah in the books of Hare Krishna which is placed on page-44 of the paper book. The transaction above, i.e. allotment of land to Manish Bhai Shah, is also supported with the agreement which is placed on pages 46 to 65 of the paper book.
Thus in view of the above, the money received by the assessee from Manish Bhai Shah and subsequently transferred to Hare Krishna cannot be treated as
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 15 - unexplained cash credit u/s 68 of the Act. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
IV. The cash credit of Rs. 5 Lacs received from Vipul Modi:- Regarding this, we note that the assessee after receiving the money fromVipulModi/Pramodchandra C Modi HUF has transferred the same to Hare Krishna. Accordingly, the firm Hare Krishna has allotted the plot to Shri VipulModi/Pramodchandra C ModiHUF . This fact can be verified from the copy of the ledger of VipulModi/Pramodchandra C ModiHUF in the books of Hare Krishna which is placed on page-66 of the paper book. The transaction above i.e. allotment of land to VipulModi/Pramodchandra C Modi HUF is also supported with the agreement which is placed on pages 68 to 81 of the paper book. Thus in view of the above, the money received by the assessee from Vipul Modi/Pramodchandra C Modi HUF and subsequently transferred to Hare Krishna cannot be treated as unexplained cash credit u/s 68 of the Act. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT(A).
V. The cash credit of Rs. 4.10 & 2.40 Lacs received from Pinki Thakkar HUF and Pinki Thakkar:- In this regard, we note that the amount received by the assessee was returned to the party within the same financial year as evident from the copies of the ledger placed on pages 82 to 84 of the paper book. The entire transaction was carried
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 16 - out through the banking channel. The assessee has also furnished the copies of the PAN of the parties which are available on record. Considering all the relevant details as discussed above, we are of the view that the assessee has discharged his onus cast u/s 68 of the Act. In case of any doubt, the Revenue was empowered u/s 133(6)/131 of the Act to verify the transaction from the parties. But none of the authorities below has exercised their powers provided under the statute. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
VI. The cash credit of Rs 3.40 lacs received from Tejash Bhai:- In this regard, we note that the amount received by the assessee was returned to the party within the same financial year as evident from the copies of the ledger placed on pages 86 to 87 of the paper book. The entire transaction was carried out through the banking channel. The assessee has also furnished the copies of the PAN of the parties which are available on record. Considering all the relevant details as discussed above, we are of the view that the assessee has discharged his onus cast u/s 68 of the Act. In case of any doubt, the Revenue was empowered u/s 133(6)/131 of the Act to verify the transaction from the parties. But none of the authorities below has exercised their powers provided under the statute. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
VII. The cash credit of Rs. 5 Lacs received from Naresh Bhai J shah
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 17 - In this regard, we note that the assessee has discharged his onus cast u/s 68 of the Act by furnishing the necessary details which have been elaborated in details in the order of the Ld. CIT (A) in the preceding paragraph.
In case the Revenue has any doubt about the genuineness of the impugned transaction, then it should have taken the confirmation from the party by issuing notice u/s 133(6)/131 of the Act. But the Revenue has not done so. Accordingly, we do not find any reason to interfere in the order of the Ld. CIT (A).
VIII. The cash credit of Rs. 37.40Lacs received from Pardeep R Patel:-
Regarding the cash credit from the Pradeep R Patel, we note that such receipt was representing the money collected from the customers by Pradeep R Patel. The list of such customers has been filed which is available on record on pages 1 and 2 of the 3rd Paper Book.
7.1 We also note that all the customers were allotted the commercial/residential units against the money given to the Pradeep R Patel as evident from the allotment letter issued by the Housing Co-operative Society which are placed on pages 3 to 24 of the 3rd Paper Book.
The Ld. DR at the time of the hearing has not pointed out any defect in the argument advanced/details filed by the Ld. AR for the assessee. Accordingly, we hold that the money received by the Pradeep R Patel was
ITA No.2231/Ahd/2012 ITO Vs. Shri Suresh D. Thakkar A.Y. 2007-08
- 18 - against the sale of units. Therefore in our considered view, the same cannot be treated as unexplained cash credit u/s 68 of the Act. Accordingly, we do not find any infirmity in the order of the Ld. CIT (A).
In the result, the appeal filed by the Revenue is dismissed.
This Order pronounced in Open Court on 27/05/2019
-Sd- -Sd- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 27/05/2019 manish