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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & MS. MADHUMITA ROY
आदेश / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–3, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)- 3/ITO/Wd.3(3)(1)/353/14-15 Dated 16/02/2015 arising in the assessment order passed under s.143(3) r.w.s.254 of the Income Tax Act, 1961(hereinafter referred to as "the Act") dated 21/05/2012 relevant to Assessment Year (AY) 2008-09.
The assessee has raised the following grounds of appeal:-
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 2 - 1. Ld. CIT(A) erred in law and on facts in confirming addition made by Assessing Officer of Rs.2,55,000/- as unexplained cash credit u/s.68 of the Act. Ld. CIT(A) ought to have deleted additions appreciating that the appellant discharged onus cat under law by establishing identity, creditworthiness and genuineness of the transactions. It be so held now. 2. Ld. CIT(A) erred in law and on facts in confirming addition on frivolous grounds ignoring confirmations with PAN, bank a/c of the depositors with supporting evidence placed on record by the appellant. Ld. CIT(A) ought to have deleted addition made by Assessing Officer. It be so held now. 3. Ld. CIT(A) erred in not appreciating that Assessing Officer neither granted sufficient opportunity to the appellant as directed by the Hon’ble ITAT nor remarked on the evidence submitted in Remand Report for confirming the addition. The order of ld.CIT(A) against the Natural principles of justice and tenets of law deserves to be quashed. It be so held now. 4. Levy of interest u/s.234A, 234B & 234C of the Act is unjustified. 5. Initiation f penalty proceedings u/s.271(1)(c) of the Act is unjustified.
The only issue raised by the assessee is that the Ld.CIT(A) erred in confirming the action of the Assessing Officer by disallowing a sum of Rs. 2,55,000/- as unexplained cash credit u/s 68 of the Act.
Briefly stated facts are that the assessee in the present case is an individual and declared his income under the head ‘business & profession and Short Term Capital Gain (STCG)’. The assessee during the year has purchased two properties along with co-owners amounting to Rs. 2,74,960/- and Rs. 2,60,000/- only. On a question by the AO about the source of investment, the assessee submitted as under:
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09
Sl. Date Mode of Amt.(Rs.) Nature of Cheque Party’s Supporting Paid No. Transaction Trasaction No. Name documents 1. 18.3.08 - 1,25,000/- By cash - - - paid deposit 2. 18.3.08 - 30,000/- By Loan - - - - 3. 18.3.08 - 20,000/- By Loan 757675 Dinesh K. Confirmation - Parmar 4. 18.3.08 - 50,000/- By cash 349221 KK Patel No - confirmation 5. 18.3.08 - 30,000/- By cash - - - - • Remarks: Sl. No.2 no details were furnished.
However, the Assessing Officer disregarded the contention of the assessee by observing as under: (i) A loan of Rs. 30,000/- There were no details furnished by the assessee in support of his claim that the receipt of Rs. 30,000/- represents the loan taken by him.
(ii) A loan of Rs. 20,000/- from Shri Dinesh kumar Parmar Assessee failed to prove the identity and creditworthiness of Shri Dinesh Kumar Parmar. The assessee has also not furnished the copy of PAN of Shri Dinesh Kumar Parmar.
(iii) A loan of Rs. 50,000/- from Shri KK Patel The assessee has not proved the identity and creditworthiness of Shri KK Patel. The assessee also not filed any confirmation evidencing that the assessee has taken a loan from Shri KK Patel.
(iv) Deposit of cash of Rs. 1,25,000/- and Rs. 30,000/- There was declared income of Rs. 1,09,990/- by the assessee. Therefore, the Assessing Officer was of the view that there will not be
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 4 - any cash left with the assessee after the household expenses. Accordingly, the Assessing Officer disbelieved the contention of the assessee that he has deposited a sum of Rs. 1,25,000/- and Rs. 30,000/- out of the withdrawal from the bank in the earlier period.
In view of the above, the Assessing Officer treated the deposits above as unexplained cash credit u/s 68 of the Act and added to the total income of the assessee.
Aggrieved assessee carried the matter to the Ld. CIT(A) who confirmed the order of the Assessing Officer vide order dated 26/08/2011.
7.1. Subsequently, the matter was carried over to the ITAT. However, the ITAT remanded the matter to the Assessing Officer for fresh adjudication in ITA No.2841/Ahd/2011 vide order dated 12/03/2012 with the following direction:
“it would subserve the interest of justice if the assessee is aforesaid another opportunity to place on record the evidences and submissions he wishes to make in support of his claim. Therefore, the impugned order of Ld. CIT(A) is set aside and the assessee is directed to appear suo moto before the Assessing Officer along with all evidence he wishes to place on record within one month from the order of this Tribunal. The matter is remitted back to the file of Assessing Officer for expeditious disposal of the matter afresh in the light of new evidences, if any, placed on record. Further, it is made clear that we have not commented
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 5 - upon merit of the case hence the Assessing Officer is free to dispose the matter on merit of the case.”
Accordingly, the assessee was to appear before the Assessing Officer within one month from the order of Hon’ble ITAT, but he failed to do so. Therefore, the Assessing Officer made the addition again of the same amount as made in the original assessment order framed u/s 143(3) of the Act vide order dated 29.10.2010 amounting to Rs. 2,55,000/- only. Thus, the Assessing Officer assessed the total income of the assessee at Rs.3,64,990/- vide order dated 21/05/2012.
The aggrieved assessee preferred an appeal to the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted as under:
(i) The cheque bearing No.757675 dated 15/03/2008 for Rs.30,000/- was deposited in the bank account but the same was dishonored due to the insufficiency of the fund. Accordingly, the assessee claimed that there was no credit of Rs. 30,000/- in his bank account. Therefore, there cannot be any addition on account of the cheque deposited which was subsequently dishonored.
(ii) The addition for the loan of Rs. 20,000/- taken from Shri Dinesh Kumar Parmar was made on account of non-furnishing of PAN of the party. Accordingly, the assessee filed the PAN of the party before the Ld. CIT(A).
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 6 - (iii) The assessee also filed the confirmation of the loan taken from Shri KK Patel, the father of the assessee along with the PAN.
(iv) Regarding the deposit of cash of Rs. 1,55,000/- assessee submitted that there was a withdrawal of Rs. 90,000/- from the bank account dated 11/09/2007. There was also a withdrawal of Rs. 70,000/- from the bank account of Smt. Hemangi A. Patel dated 13/12/2007 being the wife of the assessee. Subsequently, a sum of Rs. 1,60,000/- was given to Shri Deepak N. Jadav for the purchase of land, but Shri Deepak N. Jadav returned the same as he wanted to take the payment through banking channel. Therefore, the assessee deposited a sum of Rs. 1,60,000/- in his bank account.
The HUF of the father of the assessee inherited about 50 Bighas of agricultural land which was generating a cash income of Rs. 1.25 lacs p.a. Besides this, the father of the assessee was also declaring income in his income tax return, and he used to withdraw a sum of Rs. 70,000/- to 80,000/- per annum from his capital account. Thus, the assessee claimed that there was sufficient income of his father/father’s HUF to meet the household expenses.
In view of above, the assessee prayed that no addition on account of unexplained cash credit could be made to his income. However, the Ld. CIT(A) disregarded the contention of the assessee and confirmed the order of the Assessing Officer by observing as under:
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 7 - ”5.2. I have carefully considered the submissions made by the counsel of the appellant and the finding of the Assessing Officer recorded in the assessment order. A perusal of the submissions and documents furnished by the appellant during appellate proceedings shows that the appellant has claimed that the loan of Rs.30,000/- deposited vide cheque No.757675 was dishonoured for want of sufficient funds. The appellant has stated vide his submissions dt 21-8-2013 that he is submitting the bank account to show this transaction. However, the appellant has not submitted a copy of bank statement as claimed and only photocopies of the cheque and cheque return memo have been submitted. In the absence of bank statement the entries as claimed cannot be verified and therefore this addition is confirmed. As regards the loan amount of Rs.50,000/-, the appellant has only submitted a confirmation from his father which contains the cheque number and bank. However the appellant has not produced the bank statement of the father from which this cheque has been purportedly issued. In absence of the same, the addition is confirmed.
In respect of the loan of Rs.20,000/- from Dinesh K Parmar, the appellant has submitted a confirmation from the person alongwith a copy of bank statement. A perusal of the bank statement shows that the same is in the name of Danabhai K Parmar and the corresponding entry of Rs.20,000/- is in the same of one Presa K Patel. This ambiguity has not been explained by the appellant and the addition is therefore confirmed.
In respect of cash deposit of Rs.1,25,000/- and Rs.30,000/- the appellant has submitted confirmations from the so called depositors and photocopies of the 7/12 Form regarding agricultural land holding. However, a perusal of the same shows that these forms do not establish the creditworthiness of the depositors. The same therefore cannot be accepted and the addition of Rs.1,25,000/- and Rs.30,000/- on account of cash deposits is confirmed.
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 8 - Therefore, it is seen that even during the second round of appellate proceedings, the appellant has not produced complete evidences which prove the creditworthiness of the depositors. It is settled law that the onus to prove the genuineness, identity and creditworthiness in respect of deposits and loans rests upon the appellant. Therefore, the total income of the appellant remains unchanged as per the original order passed u/s.143(3) dt 29-10- 2010 and the impugned order dt 21-5-2012 at Rs.3,64,990/-.”
Being aggrieved by the order of Ld. CIT(A), the assessee is in the second appeal before us.
The Ld. AR before us filed a paper-book running from pages 1 to 42 and submitted that a cheque of Rs.30,000/- was received from Shri Darmendra N. Yadav which was subsequently dishonored. The Ld. AR in support of his claim drew our attention to pages 17 & 18 where a photocopy of the cheque and memo issue by Corporation Bank for the dishonor of the cheque was placed.
The Ld. AR also filed the copies of the confirmation of Shri KK Patel, Shri Dineshkumar Parmar with the bank statement, Smt. Hemangi A. Patel, wife of the assessee with the bank statement and confirmation from Shri Dipak N. Jadav. The copies of the confirmations are placed at pages 19 to 25 of the paper-book. The Ld. AR for the assessee also filed the extracts of Form 7/12 showing the details of agricultural land held by the father of the assessee which is placed at pages 26 to 30 of the paper- book.
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 9 - 15. On the other hand, the Ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions and perused the materials available on record. The facts of the case are not in dispute. Therefore, we are not inclined to repeat the same for the sake of brevity.
Loan taken from Shri Dharmendra N. Yadav for Rs. 30,000/- 17. On perusal of the bank statement of the assessee, we note that there was a deposit of cheque bearing No.757675 for Rs. 30,000/- dated 18/03/2008 but the same was returned due to the insufficiency of fund dated 20/03/2008. The bank entries depict that the cheque deposited by the assessee for Rs. 30,000/- was dishonored due to the insufficiency of the fund. A copy of the statement is placed on the paper-book pages 36 to 38. We also note that the Corporation Bank has also issued cheque return memo on account of the insufficiency of the fund which is placed at page 18 of the paper-book. Therefore, in view of the above, we hold that the cheque deposited by the assessee was dishonoured. Therefore, the same cannot be treated as unexplained cash credit u/s 68 of the Act.
Loan taken from Dinesh K. Parmar for Rs.20,000/- 18. The assessee claimed to have taken a loan of Rs. 20,000/- from Shri Dinesh K. Parmar. The assessee in support of his claim filed the confirmation, bank details, address, and PAN, but the same was rejected by the Ld. CIT(A) on the ground that there is a mismatch in the name of
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 10 - Shri Dinesh K.Parmar in the bank statement of the assessee. Therefore, the Ld. CIT(A) disbelieved the contention of the assessee. However, from the preceding discussion, we note that the assessee has filed necessary documents in support of loan taken from Shri Dipak K.Parmar such as confirmation, a copy of PAN and bank statement. In our considered view, all these documents cannot be just brushed aside without any cogent reason. It was the duty of Assessing Officer to disprove the contention of the assessee by bringing the tangible materials on record. In our considered view, the assessee has discharged his onus by furnishing the necessary details. In fact, if the Assessing Officer had any doubt, he should have verified the same by issuing notice u/s 131/133(6) of the Act, but the authorities below had not exercised their power given under the statute. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of CIT vs. Chanakya Developers reported in 43 Taxmann.com 91 wherein it was held as under: “13. We find no error in the approach of either of the Revenue authorities. Both CIT(A) as well as the Tribunal when have concurrently held on an issue which is predominantly factual in nature and when no error has been committed, this issue also deserves no further consideration. As observed in case of first issue, the assessee on having parted with the confirmation by the creditors, the bank statements, PAN numbers as well as copy of the acknowledgment of the returns filed by those persons, had duly discharged his obligation, as the law has cast on him, and therefore, if any other further inquiry is necessary, it is for the Assessing Officer to so do and it was also so requested by the assessee while furnishing these details. On Assessing Officer having failed to exercise his discretion, in wake of overwhelming evidences in possession of the Revenue authorities, he was not right in making such additions and both the authorities have rightly deleted the same.”
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 11 - 19. Because of the aforementioned discussion, the amount shown by the assessee as a loan from Shri Dipak K.Parmar cannot be treated as unexplained cash credit u/s 68 of the Act.
Loan taken from Shri KK Patel 20. In this regard, we note that the assessee had filed a copy of confirmation along with the bank statements and income-tax return which are placed on pages 19, 38 and 41-42 of the paper-book. In our considered view, the assessee has discharged his onus by furnishing necessary details. Therefore, the same cannot be treated as unexplained cash credit u/s 68 of the Act.
Cash deposit of Rs. 1,55,000/- 21. On perusal of the bank statement, we note that the assessee has paid a sum of Rs. 90,000/- to Shri Dipak N. Jadav vide cheque No.023319 which is placed on page 38 of the paper-book. Similarly, we also note that there was a withdrawal of Rs. 70,000/- from the account of Smt. Hemangi A.Patel wife of the assessee dated 13/12/2007 as evident from the bank statement which is placed on page 24 of the paper-book.
21.1. Besides the above, we also note that Shri Dipak N.Jadav filed a confirmation for returning the cash of Rs. 1,60,000/- to the assessee. The copy of the confirmation is placed on page 25 of the paper-book.
21.2. From the above discussion, there remains no doubt that the amount deposited in a bank account is not unexplained cash credit as per the
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09 - 12 - provisions of section 68 of the Act. It is because the assessee has explained the sources of money which were deposited in the bank account of the assessee. Therefore, in our considered view, the assessee has discharged his onus by furnishing the necessary details. Therefore, no addition u/s 68 of the Act in the given facts and circumstances is warranted. We also find support and guidance from the judgment of Hon’ble Jurisdictional High Court in the case of Rohini Builders (127 Taxman 523) wherein it was held as under:
“Section 68 of the Income-tax Act, 1961 - Cash credits - Assessing Officer made addition of Rs. 12,85,000 as unexplained cash credits in respect of loans taken by assessee from 21 parties - Assessee had discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers/permanent account numbers and copies of assessment orders wherever readily available - Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques drawn from bank accounts of creditors - Repayment of loans and interest thereon was also made by account payee cheques by assessee and tax also had been deducted at source on interest payments and remitted - Whether assessee was not expected to prove genuineness of cash deposited in bank accounts of creditors, because under law, assessee can be asked to prove source of credits in its books of account but not source of source - Held, yes”
In view of the above propositions and after considering the facts in totality, we are of the opinion that no addition u/s 68 of the Act is warranted is in the given facts and circumstances. Accordingly, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to
ITA No.750/Ahd/2015 Ashokbhai K. Patel vs. ITO Asst.Year - 2008-09
- 13 - delete the addition made by him. Hence, the ground of appeal is allowed.
In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 01/01/2019
Sd/- Sd/- (MS.MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 01/01/2019
ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-3, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 27.11.2018(dictation pad 29 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member 12.12.2018 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S … 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….4.1.19 7. Date on which the file goes to the Bench Clerk…………………4.1.19 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order……………