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Income Tax Appellate Tribunal, KOLKATA“A” BENCH, KOLKATA
Before: SHRIS.S.VISWANETHRA RAVI, HON’BLE & DR.A.L. SAINI, HON’BLE
PerDr. A. L. Saini, A.M.
Caption above mentioned two appeals filed by the assessee pertaining to Assessment Year (AY) 2010-11, are directed against the orders passed by the Commissioner of Income Tax (Appeals)-II & 21, Kolkata (CIT(A) for short), in appeal No.23/CC-XXVII/CIT(A)C- II/Kol/13-14 dated 28.10.2014, rectifying order of Ld. CIT(A) u/s. 154 of the Income Tax Act, 1961 (in short ‘the Act’) dated 28.10.2014 &05.05.2016, which in turn arise out of the orders passed by the Assessing Officer u/s 143(3) of the Act, both dated 26.03.2013 respectively.
2 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 2. This caption appeals filed by the assessee pertains to same Assessment Year, same assessee, common issue are involved, therefore these have been clubbed and hard together and a consolidated order is being passed for the sake of convenience and brevity.
First we take up ITA No.2258/Kol/2014. 3. The brief facts qua the assessee are that the assessee had filed its return of income for AY 2010-11 on 28.09.10 declaring total income of ₹10,29,630/-. The return of income was processed u/s. 143(1) of the Act on 06.05.2011. Later on, the case was selected for scrutiny u/s 143(3) of the Act and the Assessing Officer has completed the assessment by making addition on account of unexplained cash credit u/s. 68 of the Act to the tune of ₹48.50 lakh. The AO also made the addition on account of interest claim on bogus loan. While making the addition u/s 68 of the Act, the AO has observed the followings:- “7.3 One Mr. Sanjay Dewangan is found to have arranged accommodation entries to the assessee through his clients / relatives / known persons. The deposition recorded u/s 131 on oath of Sri Sanjay Dewangan is very clear, where he had stated that the money belonged to the assessee and as per his desire the said money was introduced in the accounts of his proprietorship concern, M/s Agarwal Steel Industries under the garb of unsecured loan.
7.4 The assessee in his submission claimed that Sri Sanjay Dewangan was examined u/s. 131 of the Act ‘behind the back of the assessee’ without allowing any ‘opportunity of cross-examination’ to him. The claim of the assessee was not correct. Copies of the depositions of the alleged loan creditors were forward to him in two phases – on 28.02.2013 and on 11.03.2013 and he was request to explain as to why the said loans will not be treated as bogus and as his income from undisclosed source. Had there been the contention of the assessee to cross-examine the alleged loan creditors as well as Sri Sanjay Dewangan, he would have promptly expressed his desire and arranged to make those persons available before the revenue immediately. No such prayer was forward to the undersigned either through his AR in course of assessment proceedings or through a written submission, rather the AR claimed that the loans were not at all bogus and TDS was made against payment on account of interest. The reply of the AR is not satisfactory. TDS is a mode of collection of tax in advance and the assessee by virtue of certain provisions of the Act is liable to make the TDS. But, mere deduction of tax from interest does not prove the alleged loan transaction in the instant case as genuine. It is evident that the intention of the assessee was to drag the time baring proceedings towards the limitation date for the reason best known to him.
7.5 In case of one of the alleged loan creditors, Subrta Dey, the assessee was allowed number of opportunities to furnish the correct address. On the basis of the revised address furnished, letter was issued but this time also it could not
3 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 be served to Sri Dey. Ultimately a summon u/s. 131 was issued for personal attendance of Sri Dey with the documents – ledger copy of M/s Agarwal Steel Industries and or Sunil Agarwal, evidence of payment of loan, PAN card, address proof, original bank pas book reflecting the transaction. But, neither the above documents were furnished nor Sri Dey had appeared before the department. Hence verification of the said loan transaction could not be done. It is therefore evident that the assessee did not want to face the alleged loan creditors for cross-examination. It is the duty of the assessee to discharge his onus. But in the instant case the assessee failed to submit any documents including loan confirmation. Hence, the assessee failed to discharge his onus.
7.6 In the case of another alleged loan creditor Prasenjit Jana, not a single document – proof of existence, proof of address, loan confirmation, copy of bank pas book reflecting the transaction was filed. Thus, the AO has no other alternative but to treat the alleged loan transaction as bogus and the loan amount as the income of the assessee from an undisclosed source, as per provision of section 68 of the Act which says- ‘where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.’
7.7. In the case of CIT vs. Dataware Pvt. Ltd., in ITAT No.263 of 2011 as referred by the assessee, it was observed that the AO of the assessee made no enquiry from the AO of the creditor, whereas in the instant case, necessary enquiry was conducted by the Investigation Wing, Raipur and deposition of the alleged creditors were recorded on oath u/s. 131, where they had admitted that no loan was advanced by them to the assessee and the modus operandi followed was disclosed. In view of the above, the said citation is found to be not applicable to the instant case.
7.8 In view of the above discussion, the alleged loans, as detailed below, totalling to Rs.48,50,000/- and interest claimed thereof of Rs.1,80,100/- are hereby treated as bogus and not at all genuine. The assessee failed to establish the creditworthiness of the following alleged loan creditors. Since the explanation offered by the assessee is not in the opinion of the Assessing Officer satisfactory, the sum so credited is treated as income of the assessee from unexplained source of the previous year:
Sl.No. Name of the alleged loan Fresh loan Interest creditor amount added claimed [Rs] during the year [Rs] 1 Chandra Prakash Dewangan 200000 1710 2 Hemant Kumar Dewangan 300000 2268 3 LataDewangan 250000 411 4 Manharan Gupta 200000 592 5 Mohan ChandDewangan 200000 1512 6 NirmalaDewngan 300000 197 7 PremlataVerma 300000 3945 8 Rakesh Singh Thakur 300000 2564 9 SarikaTotla 300000 197 10 VatsalaDewangan 350000 2877 11 ViinodDewangn 200000 197
4 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 12 SubrtaDey 500000 10617 13 Prasanjit Jana 200000 13801 14 Gopal Prasad 550000 48822 15 ManikMondal 500000 44383 16 Meera Gupta 200000 4471 17 Ajay Kumar Chouray -- 24694 18 Ajay Kumar Dewangan -- 11148 19 Manish Kumar Chirania, HUF -- 5562 Total 4850000 180100
Penalty proceedings u/s. 271(1)(c) is hereby initiated separately for the amounts of Rs.48,50,000/- and Rs.1,80,100/-.
Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before Ld. CIT(A), who has also confirmed the order passed by the AO by observing the following:- “7.8 In the case of appellant he has failed to prove the creditworthiness of the alleged loan creditors. In fact, some of the creditors as discussed above had already stated that they did not have the capacity to advance the loan to the appellant and that the cash deposited in their bank accounts is not owned by them. The facilitator of the appellant in providing the loan entries i.e. Sanjay Dewangan has also stated that the appellant asked him to arrange some loan entries and in the bank account of some of the alleged loan creditors he had deposited the cash after taking the same from the appellant. The return of income of the alleged creditors speaks for themselves that he persons were not having financial capacity to deposit cash in their bank account and advancing the loan to the appellant. One of the alleged creditors i.e Prasenjit Jana is simply a daily wage labourer. Thus, the appellant has failed to prove the genuineness of the alleged loan transactions. In view of above, I am of the opinion that the AO was justified in making the addition of Rs.48,50,000/- u/s 68 of the Act and disallowance of interest of Rs.1,80,100/-. The addition and disallowance made by the AO is confirmed. The ground no. 1 to 5 are dismissed.”
5.Not being satisfied with the order of Ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal:- “1. That, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of an aggregate sum of Rs.29,00,000 (included in the sum of Rs.48,50,000 added by Assessing Officer in the relevant Assessment order) in respect of the following loans taken by the Appellant from loan creditors of Raipur on the alleged ground that the Appellant could not prove their creditworthiness as well as the genuineness of the transaction.
Sl.No. Name of the loan creditor Loan amount (Rs) Interest paid (Rs) 1 Chandra Prakash Dewangan 2,00,000 1.710 2 Hemanta Kumar Dewangan 3,00,000 2,268 3 LataDewangan 2,50,000 411 4 Manharan Gupta 2,00,000 592
5 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 5 Mohan Chand Dewangan 2,00,000 1,512 6 Nirmala Dewangan 3,00,000 197 7 Premlata Verma 3,00,000 3,945 8 Rakesh Singh Thakur 3,00,000 2,564 9 SarikaTotla 3,00,000 197 10 Vatsala Dewangan 3,50,000 2877 11 Vinod Dewangan 2,00,000 329 12 Ajay Kumar Chouray -- 24,694 13 Ajak Kumar Dewangan -- 11,148 Total 29,00,000 52,444
That the Ld. Commissioner of Income Tax (Appeals)erred in making addition of an aggregate sum of Rs.19,50,000 (included in the sum of Rs.48,50,000/- added by the Assessing Officer in the relevant assessment order) in respect of the following Loan Creditors of Kolkata on the ground that, in absence of explanation regarding the source of credit in the respective bank accounts, the assessee failed to establish the credit worthiness of the loan creditors at Kolkata as well as the genuineness of the transactions with them.
Sl.No. Name of the loan creditor Loan amount (Rs) Interest paid (Rs) 1 Subrata Dey 5,00,000 10,617 2 Prasenjit Jana 2,00,000 13,801 3 Gopal Prasad 5,50,000 48,822 4 Manik Mondal 5,00,000 44,383 5 Meera Gupta 2,00,000 4,471 6 Manish Kumar Chirania (HUF) -- 5,562 Total 19,50,000 1,27,656
That the impugned order passed by Ld. Commissioner of Income Tax (Appeals) confirming the two additions of Rs.29,00,000 and Rs.19,50,000 as stated in Ground Nos. 1 and 2 above, and also confirming the disallowance of interest on those loans, is perverse since the impugned order has been passed on mere surmises and conjectures and without application of correct principles of law.
That the Ld. Commissioner of Income Tax (A) further erred in confirming the disallowance of the sum of Rs.52,444 and Rs.1,27,656 on account of interest paid by the Assessee on aforesaid Loans taken from Loan creditors at Raipur and at Kolkata respectively.
That, without prejudice to Ground No. 4 above, the learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of interest paid to the following two loan creditors whose loans were brought forward from immediately preceding assessment year and was accepted as genuine in that year.
Ajay Kumar Chouray Rs.24,694 Ajay Kumar DewanganRs. 11,148
That, without prejudice the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of loan received by the Appellant from SarikaTotla amounting to Rs.3,000,000 (included in the sum of Rs.29,00,000) and disallowance of interest thereon to the tune of Rs.197 when Sri Sanjay Dewangan, whose statement was relied on for confirming the additions under section 68 of the Act, specifically mentioned that neither did he give her name
6 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 to the assessee nor alleged that he or the assessee deposited cash in her bank account. 7. That the Ld. Deputy Commissioner of Income Tax, erred in disallowing the sum of Rs.1,41,360 by wrongly alleging that thee was no nexus between loan borrowed by the assessee in his individual name with the business of the assessee. 8. That without prejudice to Ground No. 7 above, the learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of aforesaid sum of Rs.1,41,360 which included the sum of Rs.5,562 on account of interest on loan taken in individual capacity from Manish Kumar, HUF leading to double disallowance. 9. That the Ld. Deputy Commissioner of Income Tax erred in charging interest of Rs.6,01,293 under section 234B and Rs.1,195 under section 234C of the Income Tax Act, 1961 without passing any specific order for such charging of interest in complete disregard of the judgment dated 6th January, 2012 passed by Hon'ble Jurisdictional Calcutta High Court in the case of Dhunser Tea & Industries Ltd. Vs. CIT in ITA No. 396 of 2005. 10. That the appellant craves leave to add, alter or withdraw any ground or grounds of appeal at or before the hearing of the appeal.”
Although in this appeal, the assessee has raised multiple grounds of appeal, but at the time of hearing the solitary grievance of the assessee has been confined to the main issue that a sum of ₹48.50 lakh added by the Assessing Officer and confirmed by Ld. CIT(A) by observing that assessee has failed to prove the identity, capacity and creditworthiness of the loan transactions, in respect of loan creditors of Raipur parties and Kolkata parties.
6.1 The Ld. AR for the Assessee has submitted that some of the loans have been coming and carried forward in the books of account of assessee from preceding previous years. There was also contradictory statements given by the parties u/s 131 of the Act, because of the coercive action taken by the AO and wrong attitude of the A.O. The Ld. AR for the assessee has vehemently submitted that in respect of loan received by assessee from various parties, the assessee has every kind of evidences and explanation. The assessee has submitted the following documents before the AO, namely: 1)Confirmation letters of the various money lenders, 2)Income Tax Return of the money
7 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 lenders3.Copies of balance-sheet and profit and loss account of the money lenders. In addition to this, assessee has taken the loan by cheque and paid the loan by account payee cheque only. The assessee has paid interest / accrued interest in respect of each person from whom he took the loan. The assessee deducted the TDS while making payment of interest to concerned parties.He has received certificate from the parties for (Deduction of TDS at lower rate /no deduction of TDS certificate). In addition to this, AO has summoned some of the parties u/s 131(1) of the Act and recorded their statements. In some cases/persons, the statements have been recorded twice and the AO found it contradictory because the person who gave statement did not have experience of Income Tax Proceedings. The Ld. AR for the assessee also pointed out that some of the statements taken by AO by applying coercion and undue influence, therefore while giving the statement to the AO, some of the parties spoke contradictory than their earlier statement. The Ld. AR has also produced before us a brief summary showing that loan has been received by cheque, loan has been paid by cheque, and interest has been paid by cheque. The assessee submitted the confirmation letters, copy of income tax return of each loan provider, and copies of balance-sheet and profit and loss a/c of each loan provider. There is a complete reconciliation that whatever amount received by assessee as loan, has been shown in the liability side of the balance-sheet of assessee and asset side in the balance-sheet of the lender. The interest income received by lender has been shown in their lender’s profit and loss a/c as income and assessment has been completed in their case. Therefore, by receiving the amount by way of cheque, repaying the amount by cheque, repaying interest by cheque, confirmation letters from lenders, IT return of lenders, balance-sheet of lenders, profit and loss a/c of lenders, the assessee has proved the identity, genuineness, and creditworthiness of the Money Lenders. The assessee had proved the identity, capacity and genuineness of the loan received from the receptive parties. The Ld. AR
8 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 has also submitted before us the summary of loan/confirmation letter/IT return/balance-sheet, profit and loss a/c and other information in respect of each lender which are given below:- “1. ChandrapakashDewangan: (i) Loan of Rs.2,00,000 received on 05.03.2010 by cheque. Loan was repaid by account payee cheque on 29.03.2013 Confirmation letters for- Asst Year 2010-11 at page 01-Vol 1 of the PB Asst Year 2011-12 at page 248-vol 3 of PB Asst Year 2012-13 at page 252-Vol 3 of PB Asst Year 2013-14 at page 257-Vol 3 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2013-14 are at pages 245, 249, 253 and 258. (iii) Copies of Balance sheet and profit &loss account are also furnished at pages 247, 251, 251, 256 and 261. (iv) On perusal of the bank account of the loan creditor at page 265 it would be noticed that the repayment of loan by the assessee has been used to grant a loan to “Shivam” on 06.04.2013. (v) No statement of the loan creditor was recorded under section 131 of the Act.
Manharan Gupta
(i) Loan of Rs.2,00,000 received on 22.03.2010 by cheque. Loan was repaid by account payee cheque on 11.03.2013.
Confirmation letters for- Asst Year 2010-11 at page 276-vol 3 of the PB Asst Year 2011-12 at page 273-Vol 3 of PB Asst Year 2012-13 at Page 270-Vol 3 of PB Asst Year 2013-14 at page 266-Vol 3 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2013-14 are at pages 277, 274, 271 and 264.
(iii) copy of the balance sheet as on 31.03.2013 is furnished at page 269
(iv) On perusal of the aforesaid balance sheet it would be noticed that the cash withdrawal from his bank account has been used for house construction or loans given to others. There is no cash balance.
(v) Statement of the Loan creditor was recorded under section 131 of the Act by DDIT(lnv), Raipur, initially on 05.02.2013 wherein he accepted to have granted loan to the assessee. The copy of this statement was not given to the assessee.
However, once again he was examined by the DDIT(lnv), Raipur on 28.02.2013 when he retracted his earlier statement and denied to have given loan to the assessee. In response to Q.2, Sri Manharan Dewangan stated that he knew one person named Sri Sanjay Dewangan to whom a signed cheque was given. He also stated that Sri Sanjay Dewangan deposited cash in his bank account without his knowledge. However, in the statement of Sri Sanjay Dewangan, he stated that cash has been deposited by some
9 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 employee of the assessee. Thus the statement of Sri Manharan Gupta is contrary to the statement of Sanjay Dewangan.
In reply to Q.3 Sri Gupta stated that he had also given a cheque to Sanjay Dewangan in 2008 but the assessee had not taken any loan from him in the year 2008.
(vi) In cross-examination he denied of knowing the assessee at all whereas the assessee immediately recognised him. In reply to Q.10 Sri Gupta said that cash was deposited by Sri Sanjay Dewangan in his bank account and a blank cheque was given to him. Whereas Sri Sanjay Dewangan did not say that cash was deposited by him in the bank account of Sanjay Dewangan.
(vii) In reply to 0.13 and 16 Sri Gupta said that he did not receive any cheque or cash from Sri Sunil Agarwal on account of Interest or repayment of loan But his bank account at Page 284 the interest of Rs.24,000 paid by assessee is reflected on 08.04.2011 and repayment of loan of Rs.2,49,407 is credited in his bank account on 14.03.2013.
Thus the statement of Sri Gupta cannot relied upon for the two reasons that initially he accepted to have given loan to assessee and thereafter he retracted to his statement. During cross-examination he has given wrong information as stated earlier. A man indulging in double- speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. Refer Calcutta High Court's judgment in the case of CIT vs. Eastern Commercial Enterprises reported in [1994] 210 ITR 103 (Cal) and also the judgment of Hon'ble Kolkata Tribunal in the case of AbhisekMohta vs. ITO in ITA No. 122 to 124/kol/2011.
Mohan Chand Dewangan
(i) Loan of Rs.2,00,000 received on 08.03.2010 by cheque. The Loan was repaid on 01.06.2013 (Pls see Page No.667 of PB Vol-V). However all interests were paid by account payee cheques. TDS was deducted.
Please see Page 298. Credit for this TDS has been claimed by Mr.Dewangan. The loan was ultimately repaid on 01.06.2013. The repayment of loan has been used by the loan creditor for further giving a loan to "SHREE Ganpati ISP" Please see page 312.
Confirmation Letters for -
Asst Year 2010-11 at Page 305 - Vol 3 of the PB Asst Year 2011-12 at Page 299 - Vol 3 of PB Asst Year 2012-13 at Page 293 - Vol 3 of PB Asst Year 2013-14 at page 286 - Vol. 3 of PB Asst Year 2014-15 at page 667- Vol. 5 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 306, 300, 294, 287 & 668.
(iii) Copy of the Balance Sheet as on 31.03.2010, 31.03.2011, 31.03.2012, 31.03.2013 & 31.03.2014 is furnished at Page 309, 303, 297, 290 & 671.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
10 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (v) Statement of the Loan creditor was recorded under section 131 of the Act by DDIT(lnv), Raipur, initially on 05.02.2013 wherein he accepted to have granted loan to the assessee. The copy of this statement was not given to the assessee.
However, once again he was examined by the DDIT(lnv), Raipur on 27.02.2013 when he retracted his earlier statement and denied to have given loan to the assessee. In response to Q.2, Sri ManharanDewangan stated that he knew one person named Sri Sanjay Dewangan to whom a signed cheque was given. He also stated that Sri Sanjay Dewangan deposited cash in his bank account. However, in the statement of Sri Sanjay Dewangan, he stated that cash has been deposited by some employee of the assessee. Thus the statement of Sri Mohan Chand Dewangan is contrary to the statement of Sanjay Dewangan.
(vi) No cross-examination was given.
Thus the statement of Sri Gupta cannot relied upon for the two reasons that initially he accepted to have given loan to assessee and thereafter he retracted to his statement. During cross-examination he has given wrong information as stated earlier. A man indulging in double- speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. Refer Calcutta High Court's judgment in the case of CIT vs. Eastern Commercial Enterprises reported in [1994] 210 ITR 103 (Cal) and also the judgment of Hon'ble Kolkata Tribunal in the case of Abhisek Mehta vs. ITO in ITA No. 122 to 124 Iko1l2011.
NirmalaDewangan
(i) Loan of RS.3,00,000 received on 29.03.2010 by cheque. Loan was repaid by account payee cheque on 07.10.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 328 - Vol 3 of PB Asst Year 2011-12 at Page 323 - Vol 3 of PB Asst Year 2012-13 at Page 318 - Vol 3 of PB Asst Year 2013-14 at page 314 - Vol. 3 of PB Asst Year 2014-15 at page 672 - Vol. 5 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 329, 324,319,315 and 676.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 331,327,322, 317 and 675.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet it would be noticed that the cash withdrawal from his bank account has been used for house construction and some remained as cash balance.
(vi) No statement of the Loan creditor was recorded under section 131 of the Act.
11 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 5. PremlataVerma
(i) Loan of RS.3,00,000 received on 19.02.2010 by cheque. Loan was repaid by account payee cheque on 13.09.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 346 - Vol 3 of PB Asst Year 2011-12 at Page 341 - Vol 3 of PB Asst Year 2012-13 at Page 337 - Vol3 of PB Asst Year 2013-14 at page 333 - Vol. 3 of PB Asst Year 2014-15 at page 679 - Vol. 5 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 347, 342, 338, 334 and 680.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 349, 344, 340, 336 and 682.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 353 PB Vol 3) it would be noticed repayment of the loan has been utilised to give loan to some Sana Hingora.
(vi) No statement of the Loan creditor was recorded under section 131 of the Act.
Rakesh Singh Thakur
(i) Loan of Rs.3,00,000 received by cheque. Loan was repaid by account payee cheque on 25.04.2011.
Confirmation Letters for -
Asst Year 2010-11 at Page 76 Vol1 of PB Asst Year 2011-12 at Page 360 - Vol 3 of PB Asst Year 2012-13 at Page 355 - Vol 3 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2012-13 are at Pages 365, 361, and 356
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 367, 359 and 363
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 368 PB Vol 3) it would be noticed repayment of the loan has been utilised to give loan to some DRS Associates.
(vi) No statement of the Loan creditor was recorded under section 131 of the Act.
12 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 7. SarikaTotla
(i) Loan of Rs.3,00,000 received on 29.03.2010 by cheque. Loan was repaid by account payee cheque on 01.06.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 386 - Vol3 of PB Asst Year 2011-12 at Page 381 - Vol 3 of PB Asst Year 2012-13 at Page 376 - Vol 3 of PB Asst Year 2013-14 at Page 371 - Vol 3 of PB Asst Year 2013-14 at Page 683 - Vol5 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 387, 382, 377, 372 and 684
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 390, 385, 380, 375 and 687.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 687 and 689 of PB Vol 5) it would be noticed repayment of the loan has been utilised to give loan to some Vinayak Trade Link.
(vi) No statement of the Loan creditor was recorded under section 131 of the Act.
vii) SarikaTotla was not identified by Sanjay Dewangan in his statement recorded under section 131 of the Act, a fact which is on record.
VatsalaDewanagan
(i) Loan of Rs.2,00,000 received on 19.02.2010 by cheque and Rs.1,50,000 received on 21.03.2010 by cheque. Loan was repaid by account payee cheque on 21.06.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 412 - Vol 3 of PB Asst Year 2011-12 at Page 407 - Vol 3 of PB Asst Year 2012-13 at Page 402 - Vol3 of PB Asst Year 2013-14 at Page 395 - Vol3 of PB Asst Year 2014-15 at Page 690 - Vol 5 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 413, 408, 403, 396 and 690.
(Hi) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 415, 410, 405, 399 and 694.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
13 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 417 PB Vol 3) it would be noticed repayment of the loan has been utilised to give loan to some GanpatiIspat& Alloys.
(vi) However all interests were paid by account payee cheques. TDS was deducted. Please see Page 400, 406 & 411. Credit for this TDS has been claimed by Mrs.Dewangan
(vii) No statement of the Loan creditor was recorded under section 131 of the Act.
(viii) Sanjay Dewangan identified VatsalaDewangan as his mother in his statement recorded under section 131 of the Act, a fact which is on record.
Hemant Kumar Dewangan
(i) Loan of Rs.3,00,000 received on 08.03.2010 by cheque. Loan was repaid by account payee cheque on 16.03.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 420 - Vol4 of PB Asst Year 2011-12 at Page 424 - VoI4 of PB Asst Year 2012-13 at Page 429 - VoI4 of PB Asst Year 2013-14 at Page 434 - Vol4 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2013-45 are at Pages 421, 425,430 and 435.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 423,427,433 and 438.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 443 PB Vol 4) it would be noticed repayment of the loan has been utilised to give loan to some Disha Enterprises.
(vi) Statement of the Loan creditor was recorded under section 131 of the Act on 14.02.2013
VinodDewangan
(i) Loan of Rs.2,00,000 received on 26.03.2010 by cheque. Loan was repaid by account payee cheque on 11.03.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 448 - Vol4 of PB Asst Year 2011-12 at Page 444 - Vol4 of PB Asst Year 2013-14 at Page 697 - Vol5 of PS
(ii) ITR acknowledgments for AY 2010-11,2011-2012 and 2013-14 are at Pages 449,445 and 698.
14 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (iii) Copies of Balance Sheet and Profit & Loss account for AY 2010- 11,2011-2012 and 2012-13 are also furnished at Pages 451,447 and 701.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 701 of PB Vol 5) it would be noticed repayment of the loan has been utilised to give loan to some Calcutta Tube Centres.
(vi) Statement of the Loan creditor was recorded under section 131 of the Act on 14.02.2013.
LataDewangan
(i) Loan of Rs.2,50,000 received on 26.03.2010 by cheque. Loan was repaid by account payee cheque on 11.03.2013.
Confirmation Letters for -
Asst Year 2010-11 at Page 465 - Vol4 of PB Asst Year 2011-12 at Page 461 - Vol4 of PB Asst Year 2012-13 at Page 456 - Vol4 of PB Asst Year 2013-14 at Page 452 - Vol 4 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2013-45 are at Pages 466, 462, 457 and 453.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 468,464,460 and 455.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 470 PB Vol 4) it would be noticed repayment of the loan has been utilised to give loan to some Calcutta Tube Centres.
(vi) Statement of the Loan creditor was recorded under section 131 of the Act on 14.02.2013 by her husband VinodDewangan on her behalf.
Ajay Kumar Dewangan
(i) No fresh loan was availed during the F.Y. 2009-2010 corresponding to A.Y. 2010- 2011. No additions were made on this loan in the earlier years.
Confirmation Letters for -
Asst Year 2010-11 at Page 488 - Vol4 of PB Asst Year 2011-12 at Page 484 - Vol4 of PB Asst Year 2012-13 at Page 478- Vol4 of PB Asst Year 2013-14 at Page 473 - Vol 4 of PB
15 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (ii) ITR acknowledgments for AY 2010-11 to 2013-14 are at Pages 489, 485,479 and 474.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 491,487,482 and 477.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) On perusal of the aforesaid Balance Sheet & Bank Statement (Page 470 PB Vol 4) it would be noticed repayment of the loan has been utilised to give loan to some Calcutta Tube Centres.
(vi) However all interests were paid by account payee cheques. TDS was deducted. Please see Page 483 & 492. Credit for this TDS has been claimed by Mr.Dewangan.
(vii) Statement of the Loan creditor was recorded under section 131 of the Act by DDIT(lnv), Raipur, initially on 29.01.2013 wherein he accepted to have granted loan to the assessee. The copy of this statement was not given to the assessee.
However, once again he was examined by the DDIT(lnv), Raipur on 28.02.2013 when he retracted his earlier statement and denied to have given loan to the assessee. In response to Q.2, Sri Ajay Kumar Dewangan stated that he knew one person named Sri Sanjay Dewangan, who belonged to his village to whom a signed cheque was given. He also stated that Sri Sanjay Dewangan deposited cash on 24.12.2008 in his bank account and withdrew the same amount on 26.12.2008. He also stated that this amount of RS.100,OOO did not belong to him. However, in the statement of Sri Sanjay Dewangan, he stated that cash has been deposited by some employee of the assessee. Thus the statement of Sri Ajay Kumar Dewangan is contrary to the statement of Sanjay Dewangan.
(viii) No cross-examination was given.
Thus the statement of Sri Dewangan cannot relied upon for the reason that initially he accepted to have given loan to assessee and thereafter he retracted to his statement. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. Refer Calcutta High Court's judgment in the case of CIT vs. Eastern Commercial Enterprises reported in [1994] 210 ITR 103 (Ca I) and also the judgment of Hon'ble Kolkata Tribunal in the case of AbhisekMohta vs. ITO in ITA No. 122 to 124 Iko1/2011.
Ajay Kumar Chouray
(i) No fresh loan was availed during the F.Y. 2009-2010 corresponding to A.Y. 2010- 2011. No additions were made on this loan in the earlier years. The Loan was partly repaid on 29.03.2013 by Cheque. The loan was fully repaid in the F. Y. 2013-14
Confirmation Letters for -
Asst Year 2010-11 at Page 514 - Vol 4 of PB Asst Year 2011-12 at Page 510 - Vol4 of PB Asst Year 2012-13 at Page 506 - Vol4 of PB Asst Year 2013-14 at Page 501 - Vol4 of PB
16 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11
(ii) ITR acknowledgments for AY 2010-11 to 2014-15 are at Pages 515, 511,507,502 and 497.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 517,513,509 and 500.
(iv) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(v) No statement of the Loan creditor was recorded under section 131 of the Act.
Gopal Prasad
(i) Loan of Rs.5,50,000 received on 04.06.2009 by cheque. Loan of Rs 5,00,000 was repaid by account payee cheque on 03.12.2013 and Rs. 91,943 on 01.04.2011.
Confirmation Letters for -
Asst Year 2010-11 at Page 538 - Vol 4 of PB Asst Year 2011-12 at Page 528 - Vol4 of PB Asst Year 2012-13 at Page 525 - Vol4 of PB
(iii) ITR acknowledgments for AY 2010-11 to 2012-13 are at Pages 539, 529, and 526.
(iii) Copies of Balance Sheet and Profit & Loss account are also furnished at Pages 540, 530 and 527.
(iv) The loan was given by the loan creditor out of the proceeds of a loan repayment as is evident from the bank statement on Pg 546 Vol IV.
(v) On perusal of the Balance Sheets it would be found that Loan to the assessee has been shown in the assets side for all the years.
(vi) The loan repayment has been utilised by the loan creditor applying for shares of Beyond Traders Pvt Ltd on 3/12/2010 - Rs.5,00,000/- and balance amount of Rs. 91943/- was utilised in giving a loan to Daga Auto Distributors on 18/4/11.
(vii) No statement of the Loan creditor was recorded under section 131 of the Act.
(viii) The return of Income of the Loan creditor has been accepted and processed by the Assessing Officer and anintimation under section 143(1) of the Act has been issued to the Loan creditor. Please see pages 532 to 537 & 542 to 544, wherein the credit of the TDS deducted by the Assessee has been allowed by the assessing officer.
SubrataDey
(i) Loan of Rs.5,00,000 received on 21.07.2009 by cheque. Loan of Rs 5,00,000 was repaid by account payee cheque on 01.10.2009.
Confirmation Letters for -
Asst Year 2010-11 at Page 548 - Vol 4 of PB
17 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (ii) ITR acknowledgments for AY 2010-11 is at Page 549.
(iii) Copies of Balance Sheet and Profit & Loss account is furnished at Page 550.
(iv) The loan was given by the loan creditor out of the proceeds of a loan repayment as is evident from the bank statement on Pg 556 Vol IV.
(v) The loan repayment has been utilised by the loan creditor for giving a fresh loan of Rs.4,00,000/- to some Viplove Agarwal and Rs.1,10,000/- as is evident from the bank statement on page 556 Vol IV.
(vi) No statement of the Loan creditor was recorded under section 131 of the Act.
(vii) The return of Income of the Loan creditor has been accepted and processed by the Assessing Officer and an intimation under section 143(1) of the Act has been issued to the Loan creditor. Please see pages 552 to 554, wherein the credit of the TDS deducted by the Assessee has been allowed by the assessing officer.
Prasenjit Jana
(i) Loan of Rs.2,00,000 received on 02.06.2009 by cheque. Loan of Rs 2,00,000 was repaid by account payee cheque on 23.01.2010.
Confirmation Letters for -
Asst Year 2010-11 at Page 557 - Vol4 of PB
(ii) Copy of Balance Sheet and Profit & Loss account is furnished at Page 558.
(iii) The loan was given by the loan creditor out of the proceeds of a loan repayment as is evident from the bank statement on Pg 740 Vol V.
(iv) The loan repayment has been utilised by the loan creditor for giving a transfer of Rs.5,45,OOO/- as is evident from the bank statement on page 740 Vol V.
(v) Statement of the Loan creditor was recorded under section 131 of the Act.
(vi) The return of Income of the Loan creditor has been accepted and processed by the Assessing Officer and an intimation under section 143(1) of the Act has been issued to the Loan creditor. Please see pages 559 to 561, wherein the credit of the TDS deducted by the Assessee has been allowed by the assessing officer.
ManikMondal
(i) Loan of Rs.5,00,000 received on 04.06.2009 by cheque. Loan of Rs 5,00,000 was repaid by account payee cheque on 01.04.2011.
Confirmation Letters for -
Asst Year 2010-11 at Page 566 - Vol4 of PB Asst Year 2011-12 at Page 563 - Vol4 of PB Asst Year 2012-13 at Page 562 - Vol4 of PB
(ii) ITR acknowledgments for AY 2010-11 is at Page 567.
18 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 (ii) Copy of Balance Sheet and Profit & Loss account for AY 2010-11 & 2011-12 is furnished at Page 568 & 564. (iii) The loan was given by the loan creditor out of the proceeds of a loan repayment as is evident from the bank statement on Pg 573 Vol IV. (iv) No statement of the Loan creditor was recorded under section 131 of the Act. (v) The return of Income of the Loan creditor has been accepted and processed by the Assessing Officer and an intimation under section 143( 1) of the Act has been issued to the Loan creditor. Please see pages 569 to 571, wherein the credit of the TDS deducted by the Assessee has been allowed by the assessing officer.
Meera Gupta (i) Loan of Rs.2,00,000 received on 22.01.2010 by cheque. Loan of Rs 2,00,000 was repaid by account payee cheque on 01.04.2011. Confirmation Letters for - Asst Year 2010-11 at Page 741 - Vol 5 of PB Asst Year 2011-12 at Page 571 - Vol4 of PB Asst Year 2012-13 at Page 575 - Vol4 of PB
(ii) ITR acknowledgments for AY 2010-11 to 2012-13 is at Page 582,579 & 576. (ii) Copy of Balance Sheet and Profit & Loss account for AY 2010-11 to 2012-13 is furnished at Page 583,580 & 577. (iii) The loan was given by the loan creditor out of the proceeds of a loan repayment as is evident from the bank statement on Pg 585 Vol IV. (iv) The loan repayment has been utilised by the loan creditor for giving a transfer of Rs.2,50,000/- to some Daga Auto Distributors as is evident from the bank statement on page 584 Vol IV (v) No statement of the Loan creditor was recorded under section 131 of the Act.
Therefore, the Ld. AR further submitted before us as a concluding remark that assessee has taken loan by cheque, paid the loan by cheque, interest on loan was paid by cheque.Assesseehad submitted before the AO the confirmation list of landers, IT return of lenders, balance-sheet and profit and loss a/c of lenders and other relevant documents. The assessee has completely discharged his duty towards the identity, capacity, genuineness of the loan taken from the respective parties. The Ld. AR for the assessee has also relied on the following judgments:-
19 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11
(i) CIT vs. M/s Dataware Pvt. Ltd. GA No.2856 of 2011 dt.21.09.2011 Wherein the Hon'ble jurisdictional High Court has held:- “In our opinion, in such circumstances, the Assessing Officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing Officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing Officer of the creditor but instead of adopting such course, the Assessing Officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing Officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established.”
(ii) DCIT vs. Rohini Builders (2002) 256 ITR 360 (Guj) wherein the Hon'ble High Court has held:-
“ 13…we have considered the rival submissions and have also gone through the order passed by the Assessing Officer, the relevant portion of which we have also extracted in para 2 above. The Commissioner of Income-tax (Appeals) more or less confirmed the addition on the reasoning given by the Assessing Officer in the assessment order. A perusal of the chart given by us in para 3 above indicates that out of 21creditors the Assessing Officer has recorded the statements of only six creditors, viz., creditors at serial Nos. 1,2, 3, 4, 6, and 7. However, in respect of all the 21 creditors the assessee has furnished their complete addresses along with GIR numbers/permanent account numbers as well as confirmations along with the copies of assessment orders passed in the cases of creditors at serial Nos. 1,2, 4, 5, 6, 7, 9, 10, 11, 12 and 16. In the remaining cases where the assessment orders passed were not readily available, the assessee has furnished the copies of returns filed by the creditors with the Department along with their statement of income. All the loans were received by the assessee by account payee cheques and the repayments of loans have also been made by account payee cheques along with the interest in relation to those loans. It is rather strange that although the Assessing Officer has treated the cash credits as non-genuine, he has not made any addition on account of interest claimed/paid by the assessee in relation to those cash credits, which has been claimed as business expenditure and has been allowed by the Assessing Officer. It is also pertinent to note that in respect of some of the creditors the interest was credited to their accounts/paid to them after deduction of tax at source and information to this effect was given in the loan confirmation statements by those creditors filed by the assessee before the Assessing Officer. Thus, it is clear that the assessee had discharged the initial onus which lays on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has
20 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 also proved the capacity of the creditors by sowing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. V. CIT (1963) 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.”
iii) CIT vs. Eastern Commercial Enterprises (1994) 210 ITR 193 (Cal) where the Hon'ble jurisdictional High Court has held:- “A man indulging in double-speaking cannot be said by any means a truthful man at any stage-and no court can decide on which occasion he was truthful. If ‘R’ was neutralized as a witness what remained was the accounts, vouchers, challans, bank accounts, etc., further the truth in R’s depositions, could havebeen revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness averse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the cornerstones of natural justice.... it is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him...”
iv) Andaman Timber Industries vs. CIT Central Excise (2015) 62 taxmann.com 3 (SC) wherein the Hon'ble Supreme Court has held as under:-
“Not allowing the assessee to cross-examine the witness by the adjudicating authority though the statements of those witness were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected....”
6.2 On the other hand, Ld. DR for the Revenue has submitted that some of the parties clearly spoke in their statements recorded by AO u/s 131 of the Act that assessee used to provide them cash and in turn the Money Lender used to deposit the said cash in his bank account and after that they used to issue the cheque to the assessee. Therefore, it is not a real loan taken by assessee, the loan which the assessee took is his undisclosed money. The assessee has given the money to the various parties and in turn these parties deposited cash in their banks and after that they used to issue the cheque to the assessee. Therefore,
21 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 these entries are kind of accommodation entries and the intention of the assessee is to hide the income and not to pay the taxes. In addition to this, Ld. DR has also relied on the stand taken by AO, which we have already noted in our earlier para of this order and is not being repeated for the sake of brevity.
6.3 Having heard rival submissions and perused the materials available on record, we are of the view that there is merit in the submissions raised by assessee, as the proposition canvassed by Ld. AR for the assessee are supported by the above cited case laws and the facts as explained by him above. He has explained that assessee has taken the loan by cheques,paid the loan by cheque, paid the interest by cheque, assessee submitted the income tax return of the lenders, the profit and loss account of lenders, balance-sheet of the lenders and other documents / explanation submitted by the assessee. The AO did not find any mistake or error and he did not bring on record any cogent evidence to establish that the loan taken from the parties are not genuine. In addition to this, interest paid by assessee is shown as anexpenditure in his profit and loss account and correspondingly the lenders have shown as income in their profit and loss account. Apart from this, amount taken by assessee as loan is getting reflected in his balance-sheet in liability side and correspondingly it is getting reflected in assets side of lender’s balance-sheet. The lenders who received the interest, has offered the saidinterest income for taxation purpose. Therefore there is complete reconciliation and we are of the view that assessee has proved the identity, capacity and creditworthiness of the lenders. Considering the above cited factual position and the case law cited by Ld. AR for the assessee, we are of the view that addition made by AO and confirmed by Ld. CIT(A) is not correct and it needs to be deleted. Accordingly, we delete the addition. 6.4. In the result, appeal filed by assessee on all the grounds are allowed.
22 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11
Assessee’s appeal in ITA No. No.1397/Kol/2016 for AY 2010-11.
The brief facts qua the assessee are that inappeal No.23/CC- XXVII/CIT(A)(C)-II/Kol./13-14, dated 28.10.2014,( Assessee`s appeal before Ld. CIT(A) for A.Y. 2010-11), there was a mistake and to rectify the said mistake the Ld. CIT(A) passed a rectification order U/s 154 of the Act. Therefore this appeal No.1397/Kol/2016 pertains to an order rectified by the Ld.CIT(A) u/s. 154 of the Act. The main contention of the assessee is that while passing the rectification order the Ld. CIT(A) observed that in respect of ground No. 1 to 5 of the appeal, the appellant has contested the action of AO making such addition of Rs.29 lakh and 19.50 lakh respectively aggregating to Rs.48.59 lakh, on account of cash credit u/s. 68 of the Act. In the course of assessment proceedings, it was observed by the AO that theassessee had accepted unsecured loans from various parties located at Raipur and Kolkata respectively. The Unsecured Loan were taken from various parties,both in his individual capacity as well as in the name of his proprietorship concern M/s Agarwal Steel Industries. The Ld CIT (A) observed that there was typographical errors in case of loan creditors. Therefore, Ld. CIT(A) has passed the rectification order u/s. 154 of the Act, observing the following:- “In view of above discussion, the mistakes as referredabove are found to be apparent fromthe record within the meaning of Sec. 154 of the Act and hence rectified U/s.154 of the Act. Accordingly the last sentence of the relevant sub paras of the para 7.2 of the appeal order should correctly be read as below. (i) sub para XIV of para 7.2 in respect of SubrataDey as appeared at page 63 of the appeal order should be read as “Hence it cannot be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction” (ii) Sub para XV of para 7.2 in respect of Prasenjit Jana as appeared at page 63 of the appeal order should be read as “Hence it cannot be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction” (iii) Sub para XVI of para 7.2 in respect of Gopal Prasad at page 64 of the appeal order should be read as “Hence it cannot be said that the
23 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”
(iv) Sub para XVII of para 7.2 in respect of ManikMondal as appeared at page 64 of the appeal order should be read as ”Hence it cannot be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”
(v) Sub para XVIII of para 7.2 in respect of Meera Gupta as appeared at page 64 of the appeal order shouldbe read as –“Hence it cannot be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”
Aggrieved, from the order of Ld. CIT(A) passed u/s. 154 of the Act, the assessee is in further appeal before us and has taken following grounds of Appeal:- “1. That the order dated 05th May 2016 passed by the Ld. Commissioner of Income Tax (Appeals) under section 154 of the Income Tax Act, 1961 is against law, illegal and voidab initio inasmuch as there was no mistake apparent in the Order dated 28th October 2014 passed under section 250 of the Income Tax Act, 1961”
8.1. Ld. AR for the assessee has submitted that rectification order passed by Ld. CIT(A) U/s. 154 of the Act is illegal and bad in law. It was not necessary to rectify the order u/s. 154 of the Act because there was no any appellant mistake on the face of the order. The ld CIT (A) who passed the original order has been transferred. Therefore, original order passed by Ld. CIT(A) has not rectified his order, in fact, the order of the Ld. CIT(A) has been rectified by another his predecessor therefore, he can not read the mind of the CIT(A) who passed the original order. Therefore, another predecessor cannot read the mind of the CIT(A) who passed the original order, without verifying the documents explanation of the assessee. Therefore, the Ld. CIT(A) cannot rectify the appellate order of the earlier Ld. CIT(A) without verifying the documents and explanation. The original order passed by Ld. CIT(A) is a final order and it does not require any rectification. The ld AR for the assessee further stated that the assessee has challenged the validity of the order dated 05.05.2016 passed by the Ld. CIT(A) u/s 154 of the Income Tax Act, 1961 inasmuch as there was no mistake apparent from record in the order dated 28.10.2014 passed u/s. 250 of the Act and that the Ld.
24 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 CIT(A), Central-II, Kolkata completely dealt with the facts of the case and by verifying the details of the transaction had given a specific finding that the “appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction.”
The facts of the loan creditors of Kolkata are totally different from the loan creditors of Raipur, which has not been disputed by the Ld. CIT(A) himself. In the case of all the loan creditors of Kolkata, there is a credit entry in the bank account of the loan creditors prior to the issue of the cheque of the loan account to the assessee. The transactions are all through banking channels and this has been duly noted and taken into account by the Ld. CIT(A) while disposing of the appeal of the assessee. The following observations of the loan creditors were noted by the Ld. CIT(A), Central II, Kolkata after carefully going through the details filed by the assessee and thereafter he concluded, as under:-
Loan creditor at Remarks by Ld. No remarks by the Our submission on CIT(A), Central Ld. CIT(A) who the same Raipur II, Kolkata in rectified order U/s his original 154 of the Act, on order dated dated 05.05.2016 28.10.2014
No remarks by the In all the 13 loan Therefore, on The Ld. CIT(A), creditors of Raipur, the basis of Central-II, Kolkata Ld. CIT(A) the Ld. CIT(A), these after discussing in Central II, Kolkata documents, it details the observed cannot be said transactions of the that the Raipur creditor and appellant has observing that there either proved was a cash deposit the prior to issue of creditworthiness cheque concluded by of the creditor quoting the these or the lines. genuineness of the loan transaction. SubrataDey Hence it can be Sub para XIV of The Ld. CIT(A), said that the para 7.2 in respect Central II, Kolkta appellant has of SubrataDey as going through the proved the appeared at page 63 details filed by the creditworthiness of the appeal order assessee observed of the alleged should be read as – that prior to issue of creditor or the “Hence, it can not issue to cheque to genuineness of be said that the assessee, there was the transaction. appellant has credit entry in the (Sub para XIV proved the bank account of the of para 7.2 as creditworthiness of loan creditor by way appeared in the alleged creditor of a transfer entry page 63 of or the genuineness and reached the said order of ld of the transaction” conclusion. A fact CIT(A) which is different from that of the loan creditors of Raipur. Prasenjit Jana ------do----- Sub para XV of para The Ld. CIT(A), (Sub para XV of 7.2 in respect of Central II, Kolkata para 7.2 as Prasenjit Jana as going through the appeared in appeared at page 63 details filed by the page 63) of the appeal order assessee reached the
25 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 should be read as – said conclusion. A fact “Hence, it cannot be which is different said that the from that of the loan appellant has creditors of Raipur. proved the creditworthiness of the alleged creditor or the genuineness of the transaction” Gopal Prasad ------do------ Sub para XVI of The Ld. CIT(A), (Sub Para XVI para 7.2 in respect Central II, Kolkata of para 7.2 as of Gopal Prasad as going through the appeared in appeared at page 64 details filed by the page 64) of the appeal order assessee observed should be read as – that prior to issue of “Hence, it cannot be cheque to assessee, said that the there was credit entry appellant has in the bank account of proved the the loan creditor by creditworthiness of way of a transfer the alleged creditor entry and reached the or the genuineness said conclusion. A fact of the transaction” which is different from that of the loan creditors of Raipur. ManikMondal -------do------ Sub para XIV of The Ld. CIT(A), (sub para XVII para 7.2 in respect Central II, Kolkata of para 7.2 as of ManikMondal as going through the appeared in appeared at page 64 details filed by the page 64) of the appeal order assessee observed should be read as – that prior to issue of “Hence, it cannot be cheque to assessee, said that the there was credit entry appellant has in the bank account of proved the the loan creditor by creditworthiness of way of a transfer the alleged creditor entry and reached the or the genuineness said conclusion. A fact of the transaction” which is different from that of the loan creditors of Raipur. Meera Gupta ------do----- Sub para XVIII of The Ld. CIT(A), (sub para XVIII para 7.22 in respect Central II, Kolkata of para 7.2 as of Meera Gupta as going through the appeared in appeared at page 64 details filed by the page 64) of the appeal order assessee observed should be read as – that prior to issue of “Hence, it cannot be cheque to assessee, said that the there was credit entry appellant has in the bank account of proved the the loan creditor by creditworthiness of way of a transfer the alleged creditor entry and reached the or the genuineness said conclusion. A fact of the transaction” which is different from that of the loan creditors of Raipur.
26 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 8.2 On the other hand, Ld. DR for the Revenue has stated that Ld. CIT(A) has committed a mistake which is apparent from the record, for example, on page 63 of his order, in case of SubrataDey, he wrote the findings stating “the source of credit in his bank account is not known, hence, it can be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”. We take example of another lender, Mr.Prasenjit Jana, Ld. CIT(A) mentioned in his concluding remark stating as “in course of appellate proceedings, the appellant did not submit copy of bank pass-book, and alleged loan creditor. Hence, it can be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”. Ld. DR further submitted that in case of Subrata Dey, the concluding remark mentioned by the Ld CIT(A) in his order is contradictory,which read as: “the source of the credit in his bank account is not known”. Therefore, the ld CIT(A) should come on a conclusion stating that: “hence, it can be said that the appellant has not proved the creditworthiness of the alleged credit or the genuineness of the transaction”. In case of Mr.Prasanjit Jana, the Ld. CIT(A) mentioned that in case of appellate proceedings, the appellant did not submit copy of pass-book of the alleged loan creditor. Therefore, his concluding remark must be stating “hence, it cannot be said that the appellant has proved the creditworthiness of the alleged creditor or the genuineness of the transaction”. Therefore, in both the cases, Ld. CIT(A) has forgotten to use the word “NOT”. Therefore, the order passed by Ld. CIT(A) was erroneous and it required to be rectified u/s. 154 of the Act and therefore, the rectification done by Ld. CIT(A) u/s. 154 is correct and logical.
8.3. Having heard the rival contentions and perused the materials available on record, we are of the view that there is merit in the submission of the assessee, as the propositions canvassed by Ld. AR for the assessee are supported by the facts narrated by him above. The Ld.
27 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 AR has rightly explained that in this case, assessee has taken the loan by cheque, he has paid the loan by account payee cheque, he has paid the interest to the lender by account payee cheque, the assessee submitted the income tax return of the lenders. The assessee submitted the balance-sheet and profit and loss a/c of the lenders, and there is complete reconciliation between balance-sheet of the assessee and the balance sheet of the corresponding lenders. The amount of loan shown by assessee in his balance-sheet in liability side is getting reflected in the balance-sheet of the lenders in asset side of the balance-sheet. The interest paid on the loan has been shown by the assessee as interest expense in his profit and loss accountand correspondingly the said interest has been shown as “income” by the lenders in their profit and loss account and they have offered said interest income for income tax. Therefore, the identity, capacity, genuineness and the creditworthiness of the creditors have been proved by assessee. Hence, Ld. CIT(A) has passed a reasoned order and it does not require any rectification. We have also allowed the appeal of assessee in ITA No.2258/Kol/2014 on the same issue, same assessment year. Therefore, we are of the view that the rectification order passed by Ld. CIT(A) U/s. 154 of the Act is not justified. Therefore, we allow the ground raised by assessee. 8.4 In the result, assessee’s appeal is allowed. 9. In the result, both appeals of the assessee are allowed. Order pronounced in open court on 30/11/2016. Sd/- Sd/- (S.S.VISWANETHRA RAVI) (A.L. SAINI) Judicial Member Accountant Member Dated : 30th November, 2016. Dkp.Sr.PS/- आदेशक���त�ल�पअ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Sunil Agarwal, DA-12, Salt Lake City, Sector-1, Kol-64 2. ��यथ�/Respondent-ACIT, Circle-50, Uttarapan Building Complex, Ultadanga,Kol-54 3. संबं�धतआयकरआयु�त/ Concerned CIT
28 ITA No. 2258/Kol/2014 & 1397/Kol/2016 Sunil Agarwal A.Y. 10-11 4.आयकरआयु�त- अपील / CIT (A) 5. �वभागीय��त�न�ध,आयकरअपील�यअ�धकरणकोलकाता / DR, ITAT, Kolkata 6. गाड�फाइल / Guard file.
By order/आदेशसे,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता