Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “E”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
Date of Hearing: Date of Hearing: 23 Date of Hearing: Date of Hearing: 23 23.11111111.201 23 .201 .2015 .201 Date of Order : 02.12.201 Date of Order : .2015 Date of Order : Date of Order : .201 .201 ORDER ORDER ORDER ORDER PER H.S. SIDHU, PER H.S. SIDHU, JM PER PER H.S. SIDHU, H.S. SIDHU, This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Meerut dated 29.1.2015 pertaining to assessment year 2002-03 on the following grounds:-
“1. That on the facts and circumstances of the case the ITO, Ward 1(4), Meerut erred in law by making an addition of rs. 7,30,000/- on account of deposits u/s. 68 of the I.T. Act, 1961, without any base and merits of the case. That Ld. CIT(A) is in error to conform the same.
2. That on the facts and circumstances of the case Ld. ITO, Ward 1(4), Meerut erred in law by making the addition u/s. 68 of the I.T. Act, 1961 to the income of assessee as the same does not belong to the assessee.
That on the facts and circumstances of the case the Ld. AO presumed and misled the department without any base and law.
4. That the order to this extent is bad in law and needs to be quashed.
That the assessee has right to add, delete or modify any grounds during the appeal proceeding.”
The brief facts of the case are that the assessee had filed a nil return income. During the course of assessment proceedings it was noted by the AO that the assessee made deposit of Rs. 8,94,000/- with District Excise Officer, Meerut for allotment of country liquor shop. The AO asked the assessee to explain the source of this deposit. The assessee stated that Rs. 75,000/- was her own capital contribution while the rest was contributed by seven different individuals. The assessee did not file copies of acknowledgements of the returns of the creditors for A.Y 2002-03. Copies of capital accounts and bank accounts of the creditors were also not submitted. The AO after making detailed discussion in the assessment order came to a conclusion that credits to the extent of Rs. 7,30,000/- are not properly explained. He therefore added the same to the total income of the assessee uls 68 of the IT Act vide his order dated 20.3.2006.
3. Against the above assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 29.1.2015 dismissed the appeal of the assessee.
Ld. Counsel for the assessee has stated that assessee had deposited the amount of Rs. 8,94,000/- with the District Excise Officer, Meerut as the License Fee for Country made Liquor Shop. The amounts were collected from the respective partners. The amounts have been incorporated in the books of M/s Madhu & Others on 1st day of April, 2002, Rs. 7,50,000/- have been deposited by seven persons and Rs. 2,88,000/- by Smt. Sneh Lata. The total amount thus becomes Rs. 10,38,000/- and out of this amount Rs. 8,94,000/- have been deposited with the authority. The partners are regular assessee and have deposited the returns of income tax with the respective wards. The copies thereof and necessary confirmations are available on record. He further submitted that the credit amount deposited by the assessee as license fees fully explained to the AO, therefore, onus of the assessee fully discharged. He further stated that the AO neither issued any notice u/s. 133(6), nor issued any summons to the depositors. Hence, the action of the AO was fully unjustified and deserve to be quashed. To support of his aforesaid arguments, he referred the following case laws:-
i) GL Foods vs. Income Tax Officer, Range-IV(4), [2011]16 taxmann.com 271 (Lucknow) ii) Mahaveer Exports vs. Income Tax Officer, Ward 7(2), Jaipur, [2014] 50 taxmann.com 336 (Jaipur –Trib) TM iiii) Commissioner of Income Tax vs. M. Venkateshwara Rao, [2015] 57 taxmann.com 373 (Andhra Pradesh and Telangana) iv) Anil Rice Mill vs. CIT (2005) 149 Taxman. 313 (All.) v) CIT vs. Bhital Das Modi (2005) 276 ITR 517 (All.) vi) Khandelwal Constructions vs. CIT (1997) 227 ITR 900 (Guj) vii) CIT vs. P. V. Bhoopathy (2006) 283 ITR 365 (Mad.) viii) Asst. CIT vs. Kumar Ice (1999) 237 ITR (AT) 117 (Pat). ix) CIT vs. Real Time Marketing P Ltd. (2008) 306 ITR 35 (Del) x) Asstt. CIT vs. Radhey Shyam Bansal (2000) 112 Taxman 246 (ITAT) Rajkot xi) Ami Chand Jain vs. DCIT (2002) 120 Taxman-29 (ITAT-Delhi) xii) CIT vs. Heeralal Chaganlal (2002) ITR 281 (Raj) xiii) Khopade Kisanrao Manikrao vs. ACIT (2000) 69 TTJ 135 (ITAT Pune) TM xiv) CIT vs. Rajeev Shukla (2008) 296 ITR 743 (MP) 5. On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Ld. CIT(A) has passed a well reasoned order, which does not need any interference, hence the same may be upheld.
We have heard both the parties and perused the records, especially the orders of the authorities below and the submissions made by the Ld. Counsel and the case laws relied upon by him. For the sake of convenience, we are reproducing the relevant findings vide para no. 4.3 of the impugned order passed by the Ld. CIT(A) as under:-
“4.3 I have considered the rival submissions as above. The AO has clearly demonstrated in his order that the transaction leading to the credit in question is not established to be genuine because the creditors were persons of small means and in many cases, copy of bank statement from which this transaction was made was not submitted. The AO has discussed in detail by analyzing the transactions with all the 7 creditors. On the other hand, the AR has not been able to establish the creditworthiness of depositors as well as the genuineness of transactions. Further the case laws cited by the AR are not of any help because the fact of each case which has been cited is unique to itself. The creditworthiness of the creditors and genuineness of transaction is a matter of fact which is 4 to be decided on the facts and circumstances unique to this case. Considering the above facts, I have come a conclusion that this addition has been rightly made by the AO and the same is therefore, confirmed. Grounds of appeal Nos. 1 & 2 are dismissed.”
6.1 In the background of the aforesaid discussions, we are of the considered view that the assessee has received unsecured loans from the persons who are related to assessee. To do the business the amounts have been received from them. Sh. Harnam Dass, Sh. Ram Dass and Sh. Lal Singh are three brother whereas Sh. Ram Dass is father-in-law of the assesssee and the other two are brothers of father-in-law. The depositors had sold their agricultural land and had invested with the assessee, the necessary confirmations have been filed which are placed on record. We also find considerable cogency in the submissions of the ld. Counsel for the assessee that the assessee has deposited the amount of Rs. 8,94,000/- with the District Excise Officer, Meerut as the License Fee for Country made Liquor Shop. The amounts were collected from the respective partners. The amounts have been incorporated in the books of M/s Madhu & Others on 1st day of April, 2002, Rs. 7,50,000/- have been deposited by seven persons and Rs. 2,88,000/- by Smt. Sneh Lata. The total amount thus becomes Rs. 10,38,000/- and out of this amount Rs. 8,94,000/- have been deposited with the authority. The partners are regular assessee and have deposited the returns of income tax with the respective wards. The copies thereof and necessary confirmations are available on record. We further find that the credit amount deposited by the assessee as license fees was fully explained to the AO, therefore, onus of the assessee fully discharged. We also note that the AO neither issued any notice u/s. 133(6), nor issued any summons to the depositors. Hence, in our considered opinion, the action of the AO was not justified. We have thoroughly gone through the case laws cited by the Ld. 5 Counsel for the assessee and find that in one of the cases the Hon’ble Jurisdictional High Court in the case of Anil Rice Mill vs. CIT (2005) 149- Taxman-313(Allahabad) has decided that in the case of cash credits the assessee has to prove three things:-
- Identity of the creditor;
- Capacity of such creditor to advance money; and - Genuineness of the transactions.
The Hon’ble Court has held that if all these are proved the burden shifts to the Revenue to prove that the amounts belonged to the assessee.
Respectfully following the above precedent, we delete the addition of Rs. 7,30,000/- made on account deposits u/s. 68 of the I.T. Act and accordingly, quash the orders of the authorities below and decide the Appeal of the Assessee in her favour.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 02/12/2015.