M/S INDAR SAKSHI FINANCIAL SERVICES,LUDHIANA vs. ITO, LUDHIANA

PDF · subscribers
ITA 407/CHANDI/2017Status: DisposedITAT Chandigarh07 August 2018AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had sufficiently discharged its onus of explaining the cash receipt by providing evidence of share sales to the client and partial payment by cheque. The non-production of the client for examination was not a sufficient reason to deem the cash unexplained.

What were the facts?

The assessee, engaged in share and commodity trading, declared a low income. The Assessing Officer made an addition of Rs. 4,37,000 on account of unexplained cash credits from a client, Shri Guramritpal Singh, as the assessee failed to produce the client. The assessee contended that the cash was received from the sale of shares.

What were the issues?

Whether the addition on account of unexplained cash credit is justified when the assessee provided documentary evidence of the transaction and the identity of the payer, despite failing to produce the payer in person.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH

Before: SHRI SANJAY GARG & MS. ANNAPURNA GUPTA

For Appellant: Shri Parikshit Aggarwal
For Respondent: Ms. Deepika Mohan, JCIT
Hearing: 15.05.2018Pronounced: 07.08.2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.407/Chd/2017 (Assessment Year : 2009-10) M/s Inder Sakshi Vs. The Income Tax Officer, Financial Services, 455, Ward VII(1), 2nd Floor, Sohan Palace, Ludhiana. Ludhiana. PAN: AACF15590F (Appellant) (Respondent)

Appellant by : Shri Parikshit Aggarwal Respondent by : Ms. Deepika Mohan, JCIT Date of hearing : 15.05.2018 Date of Pronouncement : 07.08.2018

ORDER PER ANNAPURNA GUPTA, A.M.:

The present appeal has been filed by the assessee

against the order of learned Commissioner of Income

Tax(Appeals)-3, Ludhiana dated 15.3.2016 relating to

assessment year 2009-10.

2.

The only issue in the present appeal relates to addition

made on account of unexplained cash amounting to

Rs.4,37,000/- found credited in the Books of the assessee.

3.

Brief facts relating to the case are that assessee derives

its income from trading of shares and commodities and had

filed its return for the impugned year declaring income of

Rs.3560/-. Thereafter assessment was framed u/s 143 (3) of

the Income Tax Act, 1961 (in short ‘the Act’) making addition

of Rs.4,37,000/- on account of cash receipts shown from one

Shri Guramrit pal Singh on account of failure of the

assessee to produce the said person and in the absence of

any evidence in support of the said cash receipts.

4.

The assessee carried the matter in appeal before the Ld.

CIT(Appeals) where the assessee contended that the said

payment had been received on account of sale of shares

made to said client which were delivered in demat form.

Details of the demat account of the said client of the

assessee were furnished. Further confirmed copy of account

of client duly signed by him and having his PAN number and

address were also furnished .It was also pointed out from

the client ledger account that payment had been made by

him both in cash and cheque. The Ld. CIT(Appeals) upheld

the addition made by the Assessing Officer holding that

genuineness of cash received has not been proved by the

assessee, since he failed to produce the client in person for

examination when asked to do so holding as under at para

4.5 of its order:

“4.5 I have carefully considered the submissions of the appellant and the facts of the case on record. The assessing officer has added the cash receipts received from sale of shares amounting to Rs.4,37,000/- received from a client who could not be produced before the assessing officer. The Ld. Counsel has pointed out that the following amounts were received through cheque/tfd, i.e Rs.55,000 on 26.04.2008, Rs.4,000/- on 15.05.2008 Rs.1000 on 25.06.2008 and Rs.5000 on 15.11.2008 However, copy of Bank A/c has not been filed to prove that payments were received through cheque. During assessment proceedings, the assessee was required to produce Sh. Guramritpal Singh in person for examination which the assessee failed to do. The addition made by the assessing officer on account of cash received from the party is upheld, the genuineness of which was doubted by the assessing officer and the assessee failed to discharge the onus of proving the same above.”

5.

Aggrieved by same the assessee has come in appeal

before us raising the following grounds:-

“1. The learned Income Tax Officer has erred in making the addition of Rs.437000/ – on a/c of amount received from client against the sale of shares which has been transferred in demat a/c of the same clients. 2. That the order of the Income Tax Officer , Ward –VII (1), Ludhiana is bad in law and not based on facts and circumstances of the case. 3. That the appellant craves to add or amend any ground of appeal till the appeal is finally heard and disposed off.” 6. During the course of hearing before us Ld. counsel of

assessee reiterated the contentions made before the CIT

(Appeals) stating that the cash payment had been received

from Shri Guramritpal Singh on account of sale of shares

made to him in course of carrying out business of assessee

who was acting as a broker of shares. Ld. counsel for

assessee drew a attention to the copy of account of the said

client placed in the paper book at page no-6 and pointed

out therefrom that the information had been extracted by AO

from the said account which revealed sale of shares made to

the client and payment received on account of same both in

cash and by way of cheque. Ld. counsel for assessee stated

that the AO had only doubted the cash received shown in

said account and had accepted the fact of shares sold to

him and payment made by cheque also. Even otherwise Ld.

Counsel of assessee stated that it had been pointed out that

the shares had been transferred in Demat account and

demat A/C number of both the assessee and client had been

furnished. Ld. counsel of assessee stated that even

confirmed copy of the client had been furnished giving PAN

number and address of the client also. Ld. Counsel therefore

stated that the assessee had clearly discharged his onus of

proving the genuineness of cash received and addition could

not have been made merely for the reason that the concerned

person from whom cash was received was not produced

before the Assessing Officer.

7.

Ld. DR, on the other hand, relied on the order of the

Ld. CIT(Appeals).

8.

We have heard the contentions of both the parties, and

perused the orders of authority below. The issue before us

relates to addition made on account of cash receipts

amounting to Rs.4,37,000/- remaining unexplained.

9.

After considering the contentions of both the parties

and on going through the evidences filed before us, we find

merit in the contention of Ld. counsel for the assessee that

it had sufficiently discharged its onus of explaining the said

cash receipt, as having been received from one its client

Sh.Guramritpal Singh on account of shares sold to him, with

evidences and merely because of non production of the cash

depositor before the Assessing Officer for examination could

be no reason to hold the cash received as unexplained.

10.

The fact that the said cash was shown to have been

received from one Sh. Guramritpal Singh is not disputed.

The fact that the assessee deals in trading of shares and

commodities is also not disputed. That the account

maintained of the said person reflects shares sold to him

during the year and that part payment has been received by

way of cheque is also a fact on record which we find has

not been doubted by Revenue. Thus there is no dispute

about the fact that the said person was a client of the

assessee to whom shares were sold during the year and part

payment of which was received by cheque. It is only the cash

component of payment received which has been found not to

be genuine. We find that the assessee had filed confirmation

of the transaction from the said person. No infirmity has

been pointed out in the same. The assessee therefore has

proved the genuineness of the cash found deposited as

having been received from one its clients on account of sale

of shares .The only reason for holding the cash unexplained

is, we find, non production of the concerned person before

the Revenue authorities. We are unable to agree with the

reasoning of the Revenue on this account. Having found no

fault in the fact that the said person from whom cash was

received was a client of the assessee to whom shares were

sold and part payment received by way of cheque there was

no reason we find to doubt the cash component received of

the sale consideration especially when it was confirmed by

the said person. Moreover the assessee had given all details

of the concerned person, who could very well have been

summoned by the Revenue authorities for further

examination. The assessee we hold had clearly discharged

his onus of explaining the cash received and in the absence

of any infirmity found in his explanation, the cash received

from him could not be held to be unexplained merely

because the assessee did not produce the said person. The

addition therefore made on account of unexplained cash

amounting to Rs.4,37,000/- is directed to be deleted. The order of the CIT(Appeals) is, therefore, set aside.

11.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 7th August, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh

Recent GST High Court judgments

Search GST case law →