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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SHRI N.K. SAINI & SHRI H.S. SIDHU
Date of Hearing : 23-03-2016 Date of Order : 04-04-2016
ORDER PER H.S. SIDHU : JM Assessee has filed this Appeal against the impugned Order dated 26.12.2013 passed by the Ld. CIT(A)-XXI, New Delhi relevant to assessment year 2005-06 on the following grounds:-
“1 That the order of the Ld. CIT(A) is contrary to law and facts on record.
2. That whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in confirming the appeal of addition of Rs. 5,00,000/- taken as loan by cheque and repaid by cheque.?
That the case of the assessee was covered with the case of Golden Remedies Pvt. Ltd. vs. ITO (2007) 18 SOP 260 Delhi in which it was held that taking of loan by cheque and repayment of loan by cheque do not come under the provisions of Section 68 and such the addition is illegal.
It is prayed that the addition of Rs. 5,00,000/- made in the income of the assessee be deleted and oblige.”
The brief facts of the case are that a survey u/s 133A in the case of M/s.
Gurcharan Jewellers and its proprietor Sh. Ashok Kumar Chauhan was conducted by the Directorate of Investigation, New Delhi and it was found that there was a scam of accommodation entry in which bogus entries in the garb of bogus gifts, bogus capital gains, bogus loans and bogus share capital etc. were given on commission basis and the cheques were issued to the various beneficiaries after taking unaccounted cash from the various beneficiaries etc.
Detailed enquiries were conducted by the DIT (Inv) New Delhi and the various entry operators like Sh. Mahesh Garg and Trilok Chand Bansal etc. admitted before the Addl. DIT (Inv), Unit-I New Delhi that there was a scam of accommodation entry given by the various entry operators on commission basis.
The details of the accommodation entry operators and their beneficiaries were compiled and the same were sent to the various AOs for necessary action.
2.1 Accordingly, on the specific information received from the DIT (Inv), New Delhi, the AO made the addition of Rs. 5 lacs vide order dated 24.12.2010 passed u/s. 143(3)/147 of the I.T. Act, 1961 and assessed the income at Rs. 6,10,742/-.
3. Aggrieved with the assessment order dated 24.12.2010, the assessee preferred an appeal before the Ld. CIT(A), who vide impugned order dated 26.12.2013 dismissed the appeal of the Assessee.
Against the impugned order dated 26.12.2013, assessee has filed the Appeal before the Tribunal.
Ld. Authorised Representative of the assessee has stated that assessee has received a loan from Sh. Prem Chand Batra for Rs. 5 lacs on 20.7.2004 vide account payee cheque and during the assessment hearing has filed the complete details of the lender Sh. Prem Chand Batra vide his letter dated 12.11.2010, who is duly assessed to income tax alongwith the PAN card, copy of balance sheet and affidavit and Bank Statement regarding giving loan to Himanshu Chawla.
He further stated that if it has been an accommodation entry the assessee could not have not repaid to same, which was repaid to Sh. Prem Chand Batra on 06.11.2010 vide account payee cheque of ICICI Bank. Hence, he requested that the addition of Rs. 5 lacs made by the AO and confirmed by the Ld. CIT(A) may be deleted. In support of his contention, he filed a Paper Book containing pages 1 to 70 having the details /documents relevant for the assessment alongwith the copies of the various case laws.
On the other hand, Ld. DR relied upon the orders of the authorities below and requested the same may be upheld.
We have heard both the parties and perused the records, especially the orders of the revenue authorities, the Paper Book and documents attached therewith and the case laws cited by the Ld. Authorised Representative of the Assessee. We find that the AO has noted that specific information from the DIT(Inv), New Delhi has been received about the accommodation entry of Rs. 5,00,000/- taken by the assessee and accordingly AO has made the addition and the similarly, the Ld. CIT(A) in his appellate proceedings has observed that there is a scam of accommodation entry operators and the detailed enquiries were conducted by the DIT (Inv.), New Delhi and the entry operators had admitted that they had given the accommodation entries to the various beneficiaries after unaccounted cash and commission from the various beneficiaries. Ld. CIT(A) has also observed that when the case was taken up for scrutiny the assessee returned the alleged loan to avoid scrutiny which apparently shows that the identity, creditworthiness and the genuineness of the alleged claim of Loan are not at all proved as the assessee had actually received the accommodation entry as found in the enquiries conducted by DIT (Inv) New Delhi and the AO and accordingly, he confirmed the action of the AO.
However, we note that the assessee Sh. Himanshu Chawla received a loan from Sh. Prem Chand Batra for Rs. 5,00,000/- on 20.07.2004 by duly account payee cheque. During the assessment proceedings the assessee filed complete details of the lender Sh. Prem Chand Batra vide letter dated 12.11.2010. The lender Sh. Prem Chand Chawla has given a loan of Rs.5,00,000/- to Sh. Himanshu Chawla. Sh. Prem Chand Batra is duly assessed to income tax vide PAN AAGPB2136E. We have seen the complete details of the lender Sh. Prem Chand Batra i.e. copy of income tax return, copy of PAN card, copy of balance sheet and his affidavit confirming that he has given the loan to Himanshu Chawla, bank statement of the lender i.e. with Corporation Bank, Karol Bagh, Delhi A/c no. SB01/013579. We find that the lender has given loan of Rs.5,00,000/- only from his bank account and there was balance of Rs.15,66,084.52 on 20.07.2004. From the balance sheet of donor also we find that the donor is having a capital of Rs. 75.43 lacs. So the conclusion drawn by the Ld. AO is totally wrong that it is an accommodation entry. We find force in the assessee’s AR contention that if it has been a accommodation entry the assessee could have not repaid the same. In the said case loan has been repaid by the assessee to Sh. Prem Chand Batra on 06.11.2010 vide cheque no.226883 drawn on ICICI Bank. Thus, in our considered opinion, the assessee has established complete identity of the lender and he discharged his onus. We are of the view that if the assessee was not able to produce the 5 lender the AO should have called him by issuing summons but no such opportunity of cross examination was given, so the addition made by the AO is totally unjustified. It is a settled law that it is not the duty of the assessee to bring or produce the lender/donor, if he has discharged his onus. Before making any addition the AO must bring some material on record to prove his allegation that the impugned amount represented assessee's undisclosed income. But the AO has not done any efforts in this regard. Additions are made totally on surmises basis which are not maintainable in law. It is evident that assessee has established identity, source and genuineness of the transaction which was done only through banking channels. To support our aforesaid view, we draw support from the following decisions:-
A. CIT .v. Gangeshwari Metal (P.) Ltd. (2014) 361 ITR 10 (Delhi) (HC)
S.68 Cash credits-Share application money-Evidence furnished by assessee-Addition was not justified. The assessee received certain amount as share application money. In order to prove genuineness of transaction, the assessee brought on record various documents such as names and addresses of share applicants, confirmatory letters of share applicants, copies of their bank statements etc. The Assessing Officer found the assessee's explanation to be unacceptable and, consequently, added the amount of share application money to assessee's taxable income which was deleted by the Commissioner(Appeals). The Tribunal upheld the order of the Commissioner (Appeals).On appeal High Court held that, there was a clear lack of inquiry on the part of the Assessing Officer once the assessee had furnished all the relevant material. In such an eventuality no addition can be made under S. 68. (A Y. 2004-05).
B. CIT v. KAMDHENU STEEL & ALLOYS LTD., SLP (CC) no. 15640 of 2012, dated 17-09-2012 (Supreme Court)
Issue Involved: "Whether once the assessee has discharged the initial burden by filing adequate evidence/material, Revenue is supposed to dislodge the initial burden discharged by the assessee and to throw the ball again in the assessee's' court demanding the assessee to give some more proofs, as the documents produced earlier by the assessee either become suspect or are rendered insufficient in view of the material produced by the Department rebutting the assessee's documentary evidence?"
Decided in Favour of : Assessee
Held: The Hon'ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against the decision of Hon'ble Delhi High Court in the case CIT v. Kamdhenu Steel & Alloys Ltd. [2014] 361 ITR 220 in which it has been held: Cash credits--
Unexplained investments--Burden of proof--Share application money--Assessee explaining source' of money-Identities of applicants and their creditworthiness established--Burden of proof discharged by assessee--Onus shifted to Department--No evidence to show transactions were not genuine--Sections 68 and 69 not applicable--Income-tax Act, 1961, ss. 68, 69:
7.1 In the background of the aforesaid discussions and respectfully following the precedents of the Hon’ble Supreme Court and High Court, we are of the view that the assessee has fully proved its burden and discharged the onus upon the Department, however, no contrary evidence was shown by the AO which will prove that the transactions were not genuine, therefore, the addition made by the AO and confirmed by the Ld. CIT(A) is totally unwarranted and the same needs to be deleted. Accordingly, we delete the addition in dispute and allow this ground of appeal of the assessee.
In the result, the appeal filed by the Assessee is allowed.
Order pronounced in the Open Court on 04/04/2016.