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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’, NEW DELHI
Before: SH. H.S. SIDHU & SH. O.P. KANT
Per O.P. KANT, A.M.: The instant appeal by the Revenue and the cross objection by the assessee respectively are directed against order dated 20/01/2012 of the learned Commissioner of Income-tax (Appeals)-XXXIII, New Delhi [in short ‘the CIT-(A)’] for assessment year 2006-07. Since both appeal and cross objections being connected with the same assessee, were heard together and disposed of by this consolidated order for convenience. 2. The cross objection raised by the assessee in is reproduced as under:
“The learned CIT(A) has erred on facts and in law in sustaining addition of Rs.95,50,000/- (wrongly mentioned Rs.95,95,000/- in the ground) on account of alleged unexplained cash credits – recovery from existing & accepted sundry debtors as on 31.03.2005.
The grounds raised in the appeal of the Revenue in are reproduced as under:
“1. On the facts and on the circumstances of the case the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs.50,00,000/- and opined that this amount after ascertaining its taxability may be added in the income of Mrs. Janak Gupta. The appellant craves leave to ad, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.”
The facts in brief of the case are that the assessee, a partnership firm, was having two partners, namely, Mrs. Janak Gupta and Mr. Ashwini Gupta. The assessee firm did not file its return of income for the year under consideration either within the period prescribed under section 139(1) of the Income-tax Act,1961 (in short ‘the Act’) or before the end of the assessment year. In view of non-filing of the return of income, the Assessing Officer issued notice under section 142(1) of the Act asking assessee to file the return of income. In response, the assessee firm filed return of income on 28/11/2008, declaring a loss of Rs.37,307/-. Subsequently, statutory notices under section 143(2) and 142(1) of the Act were issued alongwith questionnaire and assessment proceedings were completed on 31/12/2008 after making following two additions:
Addition on account of unexplained cash Rs.95,50,000/- credits 2. Rs.50,00,000/- Addition for unexplained credits from Sh. Krishna supply agency Total Rs.1,45,50,000/- 4.1 On appeal, the Ld. CIT-(A) upheld the first addition of Rs.95,50,000/, however, allowed relief to the assessee in respect of the second addition of Rs.50,00,000/-. Aggrieved, both the assessee and the Revenue are in appeal raising the grounds as reproduced above. 5. First, we take up the ground of assessee’s appeal. In the sole ground raised
, the assessee is aggrieved with addition of Rs.95,50,000/- (wrongly mentioned Rs. 95,95,000/- in the grounds of appeal) on account of unexplained cash credits sustained by the Ld. CIT-(A).
6. Before us, the Ld. counsel of the assessee submitted that relevant debtors have been accepted and not questioned in earlier years thus, disallowing the amount received from them in the year under consideration, was not justified.
7. On the contrary, the learned Senior DR relied on the order of the lower authorities and submitted that the assessee failed to discharge its onus under section 68 of the Act in respect of the cash amount credited in the books of accounts and therefore, the action of the Ld. CIT-(A), in affirming the additions made by the AO, was justified.
8. We have heard the rival submissions and perused the relevant material on record. The facts in respect of issue in dispute are that the Assessing Officer observed cash deposits in bank accounts, which the assessee explained as money received from debtors. The Assessing Officer observed that sundry debtors at the beginning of the year under consideration i.e. 31/03/2005 were of Rs.1,84,94,041/-, which at the end of the year under consideration i.e. 31/03/2006, have been shown as reduced to Rs.42,21,000/-. In the assessment order, the Assessing Officer has produced a table of the money shown to have been received from various sundry debtors, which is reproduced as under:
Name of the Party Mode of Opening Payments Closing Payment Balance received balance as received as on during the on 1.4.2005 year 31.3.2006 A.G. Impex 756200 756200 Cash NIL Ashu Plastic 428900 4289C0 Cash NIL Bombay Plastics Corpn. 232400 232400 Cash NIL Chopra Sales 287690 287690 Cash NIL Chopra Traders 256400 256400 Cash NIL Goel Plastic Sales 341,810 341810 Cash NIL Hanuman Plastic Bhandar 114500 114500 Cash NIL Hari Plastic Mart 620871 620871 Cash NIL. Hindustan Sales 399200 399200 Cash NIL Indochem & Polymers 305326 305326 Cash NIL Jaikishan Enterprises 874600 874600 Cash NIL Mohatta Commercial Enterprises 5221000 1000000 Cash 4221000 R.D. Sales 896700 896700 Cash NIL Shiv Plastic Bhandar 177400 177400 Cash NIL Shiv Plastic Traders Cash NIL 106020 106020 Shree Krishna Supply Agency 6335750 1335750 Cash NIL 500000.1 Cheque Super Sales 297700 297700 Cash NIL Tara Enterprises 1146900 1146900 Cash NIL
In the books of accounts, the cash shown to have been received from the debtors was in amounts of less than Rs.20,000/- on various dates.
The assessee failed to furnish confirmations of the said debtors. The Assessing Officer deputed the Inspector for verification of those sundry debtors at the address furnished by the assessee but either the addresses were found fake/incomplete/incorrect or those persons could not be located at those addresses.
The Assessing Officer confronted above observations and asked the assessee to produce those sundry debtors for examination. Despite providing sufficient opportunity the assessee failed to produce those sundry debtors. 12. The Assessing Officer further observed that huge cash of Rs.85,01,675/- was shown to have been received from various debtors from 01/04/2005 to 22/11/2005 and which was appearing as cash in hand and not deposited in the bank account. Thereafter, all the cash was deposited in the bank towards the outstanding loan taken by the assessee against the overdraft (OD) limit. The Assessing Officer has mentioned that it was unbelievable that a person having huge cash in hand available with it, would not deposit the same in the bank account, particularly in view of the interest liability on the outstanding bank loan. 13. The Assessing Officer concluded that the assessee failed to prove that said amount of cash credited/deposited in books of accounts was in fact received from debtors, despite reasonable opportunity afforded to the assessee. 14. The findings of the Ld. CIT-A on the issue in dispute are reproduced as under:
“2.3 I have carefully considered the submissions made by the appellant and views of the A.O. as contained in the assessment order. The appellant in its written submissions has basically stressed on the fact that the debtors are old and were accepted by the A.O. in preceding assessments and that the A.O. erred in presuming that the cash received by the assessee from debtors represented unexplained cash credits. The appellant also pleaded that the A.O. has not been able to show that the said amounts actually emanated from the coffers of the appellant. The appellant relied upon the decision of Delhi High Court reported at 307 ITR 334. No other detail, document or evidence was furnished by the appellant on this issue. On the other hand, the A.O. has made a detailed order wherein he has brought out the facts that appellant had used the sundry debtors account of debtors which were untraceable to bring in cash in its books of accounts. During the year under consideration, the appellant did not carry out any business activity. It was running an over-draft bank account and was paying substantial interest on it. The appellant's opening balance for debtors was Rs. 1,84,94,041/- and the closing balance was Rs.42,21,000/-. The appellant had introduced cash amounts of less than Rs.20,000/- on various dates. The A.O. tried to verify the said payments from the debtors. The appellant was given opportunity to produce the debtors which it failed to avail. The A.O. then deputed his Inspector for making on the spot enquiry and to serve summons u/s 131 to these debtors. The Inspector reported that the names and addresses of debtors provided by the assessee are fake or incomplete or incorrect and that not even a single debtor was traceable. The reports of the Inspector were annexed to the assessment order. Thus, the debtors remained untraceable despite-opportunity of production given to the appellant and field enquiries made by the Inspector. The appellant has not been able to rebut the findings of the A.O. regarding untraceability of debtors either during the assessment or during the appellate proceedings. The appellant’s submission that these debtors were accepted by the A.O. in earlier assessments has no relevance as the case of the Department is not based on non-genuineness of debtors but on cash deposited in the appellant’s bank account which the appellant has explained as having emanated from the debtors. This version of appellant failed the test of verification as no confirmations were filed by the appellant, the appellant was not able to produce the debtors and the enquiry by the A.O. failed to trace the debtors. In these circumstances, the repetitive deposit of cash of amount below Rs.20,000/- but totaling to Rs.95,50,000/- remained unexplained credit in the accounts of the appellant. The case law quoted by the appellant is relating to share capital where entire details of share holders were available with the Department. The facts of this case are entirely different from the facts of the case of the appellant. In the facts and circumstances discussed above, it is held that the appellant has been unable to explain the credit of cash of Rs.95,50,000/- in its accounts and accordingly, the addition made by the A.O. is sustained. Grounds no. 1 and 2 are, therefore, dismissed.”
We find that the Assessing Officer has not questioned whether debtors are genuine or not. The Assessing Officer has questioned the credit of Rs.95,50,000/- appearing in books of accounts of the assessee and asked to discharge its onus under section 68 of the Act, which the assessee failed. The assessee failed to file confirmation of those debtors. The Assessing Officer has observed that name and address of debtors provided by the assessee were found to be fake or incomplete or incorrect during Inquiry by the inspector and not a single debtor was traceable. The assessee could not produced any of the debtors either during assessment proceeding and could not rebut the finding of the assessee regarding non-traceability of the debtors, during the appellate proceedings. In view of above facts and circumstances, we find that the assessee has failed to discharge its onus under section 68 of the Act. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is comprehensive and well reasoned and no interference on our part is required, accordingly, we uphold the same. The sole ground of the assessee’s appeal is accordingly dismissed.
In the sole ground of the appeal of the Revenue, the addition of Rs.50,00,000/- deleted by the Ld. CIT-(A), has been challenged. 17. Before us, the Ld. Senior DR, relying on the order of the Assessing Officer submitted that in books of accounts credit of Rs.50,00,000/- was shown to have received from Shree Krishna Supply Agency, a sundry debtor, however, on verification of bank statement, it was found that said credit of Rs.50,00,000/- was received from the saving account of Mrs. Janak Gupta, partner of the assessee firm. According to ld. Senior DR, the assessee failed to explain the credit in terms of section 68 of the Act and, therefore, the action of the Ld. CIT-(A), in allowing relief to the assessee was not justified.
On the contrary, the learned counsel of the assessee relied on the finding of the Ld. CIT-(A).
We have heard the rival submission and perused the relevant material on record. The facts in respect of issue in dispute are that on examination of books of accounts, the Assessing Officer found a sum of Rs.50,00,000/- credited in the bank account on 05/12/2005 and shown as received from Shree Krishna Supply Agency, a sundry debtor of the assessee. The assessee was asked to furnish evidence in support of the claim. Further, the Assessing Officer on enquiry from the bank of the assessee, observed the said amount of Rs.50,00,000/- was transferred to the account of the assessee from saving account of Mrs. Janak Gupta. The Assessing Officer made further enquiries from the bank and discovered that said amount was paid to Mrs. Janak Gupta by M/s. Shivam Promoter in pursuance of collaboration agreement in respect of property E-27, Gitanjali, New Delhi. The assessee submitted that it was an accounting error and had no effect on the revenue. The Assessing Officer did not accept the contention of the assessee and held that the amount of Rs 50 Lacs credited in the books of the assessee remained unexplained.
The Ld. CIT-(A) after considering the submission of the assessee held that no addition could have been made in the case of the assessee. The finding of the Ld. CIT-(A) on the issue in dispute is reproduced as under:
“3.3 I have carefully considered the submissions made by the appellant and views of the A.O. as contained in the assessment order. The A.O., through enquiries made by him has reached the conclusion that the subject cheque of Rs.50,00,000/- had emanated from Shivam Promoters in pursuance of collaboration agreement in respect of property `E-27, Geetanjali, New Delhi. This amount was routed through the savings bank account of Mrs. Janak Gupta, a partner in the said firm. In the firm’s accounts, the said amount was credited to Shree Krishna Supply Agency instead of the account of Mrs. Janak Gupta. The appellant has submitted that this is an accounting error. The A.O. has Acknowledged that this amount has not been shown in the return of Mrs. Janak Gupta and that this amount was not considered in her assessment as the assessment was made ex-parte and as this information was not available to the A.O. at that time. The A.O. notes in his order that “assessment in her case was completed ex-parte. By not attending the proceedings, she had saved herself from any investigation, which would have been made and unfold the transaction of collaboration agreement ”. Since the A.O. had reached the conclusion that the said amount of Rs.50,00,000/- had ultimately emanated from M/s Shivam Promoters and was regarding collaboration agreement between Mrs. Janak Gupta and M/s Shivam Promoters, the right course of action would have been conduct of enquiry in the hands of Mrs. Janak Gupta to ascertain its taxability in her hands. The said addition cannot be sustained in the hands of the appellant. The appellant gets relief of Rs.50,00,000/-. The Department is free to take remedial action in the case of Mrs. Janak Gupta. In view of the facts and circumstances of this case, the said addition of Rs.50,00,000/- is deleted. Ground no. 3 is, accordingly, allowed.”
In our opinion, the Assessing Officer has not only verified the source of the deposit in the bank account of the assessee, but has also verified the source of said amount of Rs.50,00,000/- in the hands of Mrs. Janak Gupta. The assessee has discharged its onus in respect of the credit of Rs.50,00,000/- as far as requirements of Section 68 of the Act are concerned. In such circumstances no addition could have been made in the hands of the assessee. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and no interference on our part is required, accordingly we uphold the same. The ground of the Revenue’s appeal is accordingly dismissed.
In the result, the appeal filed by the Revenue and the Cross Objection of assessee are dismissed. The decision is pronounced in the open court on 29th May, 2017.