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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: Shri Joginder Singh, & Shri B.R. Baskaran
Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 30/01/2012 of the Ld. First Appellate Authority, Mumbai. The only ground raised in the appeal pertains to confirming the addition of Rs.10 lakh made u/s 68 of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, the ld. counsel for the assessee, Shri Lalchand Choudhary, contended that the assessee is trading in steel items, took private loans from forty parties out of which from 37, the loans were accepted by the Assessing Officer. The loan taken from Mrs. Smita Chavan was repaid but she could not be produced before the Assessing Officer. Our attention was invited to paper book pages 19, 22 and 23 of the paper book. A query was raised by the Bench to the ld. counsel for the assessee whether Mrs. Smita Chavan can be produced before the Assessing Officer, the ld. counsel for the assessee stated that they are not in a position to produce her.
2.1. On the other hand, the ld. DR, Shri B.S. Bist, strongly defended the addition made by the Assessing Officer and confirmed by Ld. Commissioner of Income Tax (Appeal). Our attention was invited to page-14, para-2 of the paper book by explaining that it was a different bank account.
2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief,
3 M/s Sidharth Traders are that the assessee, during the relevant period, was trading in steel, iron scrap and lending money. The assessee declared income of Rs.5,757/- in its return filed on 30/10/1998. The assessment was completed on 09/03/2001, u/s 143(3) of the Act making addition of Rs.13,25,000/- in respect of nine loan creditors, u/s 68 of the Act. The ld. Assessing Officer also disallowed the interest amount of Rs.15,092/- and made certain adjustment to the returned income.
2.3. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the additions made u/s 68 of the Act and disallowance of interest were contested by submitting additional evidence in the form of (a) six loan confirmation (b) an affidavit of the finance broker, Mr. V. Shridharan, who was involved in the borrowing from remaining three loan creditors with an application under Rule-46A of the I.T. Rules. The Ld. Commissioner of Income Tax (Appeal) considered the factual matrix and rejected the prayer for admission of additional evidences. Thereafter, the assessee moved this Tribunal, wherein, the additional evidence was admitted and the matter was restored back to the file of the Assessing Officer for fresh adjudication, in accordance with law and on consideration of additional evidence furnished by the assessee. The ld. Assessing Officer, pursuant to the direction of the Tribunal, framed fresh assessment u/s 143(3) r.w.s 254 of the Act on 18/12/2006. The ld. Assessing Officer out of the nine transactions, accepted six transactions. However, addition to 4 M/s Sidharth Traders Rs.10 lakh in respect of three lenders was affirmed for the reasons stated in the assessment order.
2.4. The assessee again went in appeal before the Ld. Commissioner of Income Tax (Appeal), wherein also, the factual matrix was considered and the impugned addition was affirmed. The assessee is in appeal before this Tribunal.
2.5. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that in the balance sheet, furnished with the return of income, the assessee showed 40 loan creditors out of which the loan pertains to 37 creditors was found to be explainable and for the remaining three creditors, the ld. Assessing Officer as well as the Ld. Commissioner of Income Tax (Appeal) were not satisfied with the explanation of the assessee and therefore addition u/s 68 of the Act was sustained. In support of its claim, the assessee furnished the following documents in support of borrowing from the remaining three loan creditors:-
A. Ledger account in the books of the appellant. B. Pay in slip showing amount deposited into the appellant’s bank. C. Certified true copies of encashed given to these parties for repayment of loan evidencing repayment
5 M/s Sidharth Traders through account payee cheques through normal banking channel. D. Zerox copies of appellant’s bank statement showing deposit and repayments in the name of loan creditors. E. A copy of letter dated 18/03/2002 addressed to one of the loan creditor (Mrs. Smita Chavan) with amount of repayment of Rs.2,50,000/- along with a copy of bank statement showing a debit entry in her name. F. True copy of the affidavit of the finance broker Mr. V. Shridharan. 2.6. The aforementioned documents were examined by Assessing Officer but the fact remains that notice sent by the Assessing Officer to the concerned party were returned unserved by the postal authorities and on asking by the Assessing Officer to produce the party, the assessee could not produce her. The assessee have claimed that the loan was repaid to her but she could not be produced before the Assessing Officer to examine the, identity, capacity and genuineness of the transaction. In our view, if the amount was repaid to the creditor, certainly, she was in contact with the assessee and could have been produced. The assessee could not discharge the onus cast upon it. In view of this factual matrix, we are of the view that mere claim is not enough and the assessee is expected to discharge the burden cast upon it, which has not been discharged. Therefore, we
6 M/s Sidharth Traders Ld. Commissioner of Income Tax (Appeal).
So far as, the amount of Rs.2 lakhs from Mr. Gopal Mahajan is concerned, it was explained by the assessee that Shri Gopal Mahajan appeared before Assessing Officer and accepted that he gave two loans to the assessee and refused for the amount of Rs.2 lakhs. With respect to the query raised by the Bench, the ld. counsel for the assessee merely stated that the account from which, the amount of Rs.2 lakhs was given was not disclosed to the Income Tax Department, therefore, Shri Gopal Mahajan refused the transaction. It was also contended that cross examination was not provided to the assessee to cross examine Shri Gopal Mahajan. Our attention was invited to letter dated 07/12/2006 (paper book page-14). The ld. DR strongly opposed the explanation of the assessee by inviting our attention to page-14, para-2nd by contending that it pertains to different bank account.
3.1. We have considered the rival submissions and perused the material available on record. We find that the assessee wrote a letter dated 07/12/2006 to the Ld. ACIT with respect to cheque of Rs.2 lakh bearing no.001790 dated 10/04/1997 drawn on Bank of Baroda, Goregaon East branch, which was issued from Account No.17580100003938, whereas, at page-50 of the paper book, the bank of Baroda, vide their communication to the ACIT with reference to notice u/s 131 dated 12/12/2006 mentions account no. 8696,
7 M/s Sidharth Traders meaning thereby it was a different bank account, therefore, the explanation of the assessee is not satisfactory, consequently, on this amount, we affirm the stand of the Ld. Commissioner of Income Tax (Appeal) by holding that the onus cast upon the assessee was not discharged and the explanation of the assessee is found to be false.
It is also noted that in these three cases, no interest was paid to the assessee and when the loan was arranged through broker still the interest was not paid and the element of interest is also not mentioned. The parties are closely known to the assessee, therefore, it was the duty of the assessee to produce them before the Assessing Officer so that the factual matrix could have been explained. However, the assessee could not discharged his onus. So far as, the decision from Hon'ble High Court of Madras, in CIT vs M/s Nippon Enterprise South (ITA No.413 of 2007), relied upon by the assessee, is concerned, we find in that case the quarterly interest was paid and brokerage was also given to the broker. However, like facts are missing in the present appeal, therefore, we are of the view that the facts are different, consequently, this judicial pronouncement may not help the assessee. Even otherwise, during hearing, this factual matrix was accepted by the ld. counsel for the assessee. Therefore, the contention of the assessee is not substantiated. Even otherwise, as per the provision of section 68 of the Act, where any sum is found credited in the books of the assessee and no explanation is offered about the nature and source thereof or 8 M/s Sidharth Traders Assessing Officer, is not found satisfactory then the sum of credited may be charged to Income-tax, meaning thereby, heavy burden has been cast upon the assessee to discharge the burden.
5 So far as, the amount of Rs.7 lakhs from Mr. Bharat Kumar Jain, is concerned, the ld. counsel for the assessee explained that the amount of Rs.2 lakh is a transfer entry and the accounts belongs to Dr. Nirmal Jain. It is noted that in the cases of remaining loan creditors, identically, the amount from Mr. Nirmal Kumar Jain was accepted, therefore, we are satisfied to the extent of Rs.2 lakh the assessee has explained the source and genuineness of the amount partly but not for the remaining amount of Rs. 5 lakhs, therefore, the addition to the extent of Rs.5 lakh is sustained and for remaining 2 lakh rupees out of Rs.7 lakh is deleted.
Finally, the appeal of the assessee is partly allowed.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 22/02/2017.