ASSISTANT COMMISSIONER OF INCOME TAX, PANVEL vs. ASWAD JAIDAS PATIL, PEZARI POST POYNAD

Before the Ld. CIT(A) / NFAC the assessee uploaded the written submissions on various dates. The assessee thereafter filed certain additional evidences which were forwarded to the Assessing Officer for his comments. Considering the comments of the Assessing Officer in the remand report and rejoinder of the assessee to such remand report, the Ld. CIT(A) / NFAC deleted the addition of Rs.3,68,76,096/- made by the Assessing Officer as unexplained cash credit u/s 69A of the Act. He, however, restricted the addition on account of provision for routine expenses to Rs.2,83,000/-, restricted the addition to Rs.50 lakhs out of Rs.54 lakhs made by the Assessing Officer u/s 68 of the Act towards unsecured loans and restricted the disallowance out of expenses to Rs.3,23,704/-.

Aggrieved with such part relief granted by the Ld. CIT(A) / NFAC, the Revenue as well as the assessee are in appeal before the Tribunal by raising the following grounds:

On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in considering the remand report without exercising his coterminous powers u/s.250(4) of the Act.

In view of the facts and circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the correct facts.

On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that the contention of the assessee as per the additional evidences furnished, wherein it is categorically submitted by the assessee that the cash withdrawals from assessee's other banks were Rs.1,91,33,353/- which were majorly from Union Bank of India (Rs.6,60,000/-) and RDCC Cash Credit Account No. 37545 (Rs.1,84,73,353/-) is not correct.

On the facts and in the circumstances of the case, with regard to the addition of Rs.3,68,76,096/- towards unexplained cash credit u/s.69A, the ld. CIT(A) erred in non-appreciation of the fact that verification of sources of cash deposits in HDFC Bank Ltd has not been carried out properly in the remand report proceedings.

It is humbly requested that the order of the CIT(A) may be set-aside back to the file of the AO for verification afresh.

0 On facts and circumstances of the case and in law, Ld CIT(A) erred in confirming the addition u/s 68 of unsecured loan received from Janardan Patil of Rs.50,00,000/-.

0 The ld. CIT-(A) before confirming the addition of sec. 68 of unsecured loan of Rs.50,00,000/-, ought to have considered the understated vital facts being.

0 On facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the ad-hoc disallowance of expense of Rs.3,23,704/- (20% of Rs.16,18,250/-). grounds of appeal at the time of hearing.

So far as the grounds raised by the Revenue regarding deletion of Rs.3,68,76,096/- is concerned, we find on the basis of various submissions made by the assessee the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer who gave the following comments in the remand report on this issue: 7. We find after considering the above submissions, the Ld. CIT(A) / NFAC deleted the addition by observing as under: “7.1 During the course of appellant proceedings, the appellant submitted the additional evidences explaining the source of cash deposits and submitted that the basis of addition of Rs.3,68,76,096/- was not provided by the AO and it is not known as to how the AO arrived at the above figure.

2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that in ITS data, the same cash deposit transactions was shown twice. Therefore the AO after examining the additional actual. Thus the correct cash deposit amount was found to be Rs.1,84,38,048/-, Further the AO found that the appellant is in the business of sale of petrol, diesel & lubricant oil and the turnover of the appellant during FY 2011-12 was Rs.18,77,16,250/-. Therefore the AO reported that considering the nature of business of the appellant the source of cash is the business receipts Considering the finding of the AO in the remand report proceedings, the addition of Rs.3,68,76,096/- made by the AO is hereby deleted. Thus the ground of appeal raised by the appellant is allowed.”

After considering the rival arguments made by both the sides, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Admittedly the Assessing Officer in the remand report has categorically stated that the total cash deposit is not Rs.3,68,76,096/- but it is only Rs.1,84,38,048/- and the mistake occurred due to the duplication of entries. He has also gave a finding that the total turnover of the assessee from sale of petrol, diesel, lubricant oil is Rs.18,77,16,250/-. Further, it is also an admitted fact that the money has been withdrawn from one bank account and deposited in the other bank account for issuing cheques / transfer of funds to the oil companies for purchase of goods. Since the order of the Ld. CIT(A) / NFAC is based on the remand report of the Assessing Officer and the Ld. DR could not bring on record any contrary material to our notice to take a different view other than the view taken by the Ld. CIT(A) / NFAC, therefore, we do not find any infirmity in the order of the Ld. CIT(A)/ NFAC on this issue. The grounds raised by the Revenue challenging the order of the Ld. CIT(A) / NFAC in deleting the addition of Rs.3,68,76,096/- are dismissed. 9. So far as the assessee’s appeal is concerned, the first issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the addition on account of provision for routine expenses to Rs.83,000/- as against Rs.15,92,941/-.

We find the Ld. CIT(A) / NFAC on the basis of remand report of the Assessing Officer and the submissions of the assessee to such remand report has restricted the addition to Rs.83,000/- out of Rs.15,92,941/- by observing as under: “8. Ground No.3:- In this ground the appellant has contested the addition of Rs.15,92,941/-on account of disallowance of the provisions made in the balance sheet.

1 During the course of appellate proceedings, the appellant has submitted the additional evidences and explained that the provision of current year is only Rs.83,000/- and remaining amount is outstanding balance of earlier years.

2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully I find from the remand report that the contentions raised by the appellant is found to be correct by the AO and the current year's provision is only to the extent of Rs.83,000/-. Therefore the addition to the extent of Rs.83,000/- is confirmed and balance addition of Rs.15,09,941/- is hereby deleted. Thus the ground of appeal raised by the appellant is partly allowed.”

We find the Assessing Officer on this issue has in his remand report observed as under:

We find the order of the Ld. CIT(A) / NFAC is on the basis of remand report which in turn is on the basis of various documents filed by the assessee before the Assessing Officer during the remand proceedings. The Ld. Counsel for the assessee could not point out any mistake in the order of the Ld. CIT(A) / NFAC on this issue. The ground raised by the assessee on this issue is accordingly dismissed. 13. The second issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the addition to Rs.50 lakhs out of Rs.54 lakhs made by the Assessing Officer u/s 68 of the Act on account of unsecured loans.

After hearing both the sides, we find the Assessing Officer made addition of Rs.54 lakhs u/s 68 of the Act on account of unsecured loans out of which the Ld. CIT(A) / NFAC deleted an amount of Rs.4 lakhs but sustained the balance amount of Rs.50 lakhs by observing as under: “9.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that the appellant has produced the evidences in respect of unsecured loan of Rs.4,00,000/- only which has been accepted as genuine by the AO in the remand report proceedings However for the remaining unsecured loan of Rs50,00,000/- obtained from Shri. Janardan Anat Patil, the additional evidences produced by the appellant are not found to be acceptable since only PAN and bank statement is submitted but the creditworthiness of the lender is not proved with supporting documents. Therefore the addition of Rs.4,00,000/- is deleted and balance addition of Rs.50,00,000/- is confirmed. Thus the ground of appeal raised by the appellant is partly allowed.”

We find it is an admitted fact that the assessee has furnished PAN number and the bank statement of the loan creditor. It is the submission of the Ld. Counsel for the assessee that the assessee has provided the PAN number and the bank statement of the loan creditor along with the confirmation statement. No doubt the bank statement shows sufficient credit balance on the dates of transfer of money as loan. However, the allegation of the Assessing Officer was that the assessee has not submitted the copies of ITR and Balance Sheet of the lender. Relying on various decisions, it is the submission of the Ld. Counsel for the assessee that the addition is uncalled for. However, we are unable to accept the above contention of the Ld. Counsel for the assessee. It is the settled proposition of law that for accepting any cash credit, the onus is always lies on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer regarding the identity and creditworthiness of the loan creditor and the genuineness of the transaction. In the instant case, although the assessee has filed the bank statement of the loan creditor and PAN number, however, neither his balance sheet nor his income tax returns were filed and therefore there was only part compliance. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one opportunity to the assessee to substantiate his case by filing the requisite documents before him which were not filed during the remand proceedings. The Assessing Officer shall decide this issue afresh and in accordance with law after providing due opportunity of being heard to the assessee. The ground raised by the assessee on this issue is accordingly allowed for statistical purposes.

The third issue raised by the assessee in the grounds of appeal relates to the order of the Ld. CIT(A) / NFAC in restricting the disallowance of expenses from Rs.6,75,285/- to Rs.3,23,704/-.

After hearing both the sides, we find the Assessing Officer in absence of any documents produced by the assessee, disallowed an amount of Rs.6,75,285/- being 20% of total expenses claimed at Rs.33,76,425/-. 18. In appeal, the Ld. CIT(A) / NFAC restricted the disallowance to Rs.3,23,704/- by observing as under: “10.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including additional evidences, remand report submitted by the AO and counter comments submitted by the appellant on the remand report carefully. I find from the remand report that the appellant has claimed other expenses of Rs.33,76.425/, however no documentary evidences were produced before AO during assessment proceedings to prove the genuineness of the said expenses. Therefore AO had made disallowance of 20% expenses amounting to Rs.6.75,285/-. During appellate proceedings, the appellant has produced the evidences in respect of the said expenses. During remand report proceedings, the AO after examination of the additional evidences reported that the expenses of Rs.16,99,897/- are found to be in order with supporting evidences but the expenses of Rs.16,18,250/- are not found to be supported by any evidences. Therefore the AO worked out the correct disallowance at Rs.3,23,704/- as against Rs.6,75,285/- made by the AO during assessment proceedings. Therefore considering the finding of the AO in remand report, the addition of Rs.3,51,581/- is deleted and balance addition of Rs.3,23,704/- is confirmed. Thus the ground of appeal raised by the appellant is partly allowed.”

It is the submission of the Ld. Counsel for the assessee that such disallowance is on the higher side. Since the assessee during the course of assessment proceedings did not make any submission and has filed certain additional evidences before the Ld. CIT(A) / NFAC based on which he has called for a remand report and after considering the contents of the remand report and rejoinder of the assessee to such remand report restricted the addition to Rs.3,23,704/- by passing a speaking order on this issue, therefore, in absence of any distinguishable factors brought before us, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Accordingly the same is upheld and the ground raised by the assessee on this issue is dismissed. 20. In the result, the appeal filed by the Revenue is dismissed and the appeal filed by the assessee is partly allowed for statistical purposes.

अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent

4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file.