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Income Tax Appellate Tribunal, DIVISION BENCH ‘SMD’, CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
PER DR.B.R.R.KUMAR, A.M. :
Both the above appeals have been filed by the Assessee against the
order of the Ld. CIT(A)-2.
Firstly we shall deal with ITA No. 1545/Chd/2017 for A.Y. 2009-10 wherein
Assessee has raised the following grounds:
That the Worthy Commissioner of Income Tax (Appeals) has erred in dismissing the appeal filed by the appellant and, thus, confirming addition of Rs. 5,20,000/- on account of unsecured loans and Rs. 29,750/- on account of disallowance of interest thereon made by the Assessing Officer u/s 68 of the Income Tax Act. 2. That the Ld. CIT (A) has erred in not considering that as per directions of ITAT, Smt. Kanta Devi W/o Sh. Ashok Kumar appeared before the Ld. Assessing Officer and her statement was recorded. She had confirmed to have advanced the amount to Amarjeet Beeton HUF, while replying to question No. 33 of the
statement and further she has also explained the source of advance made to the Assessee by explaining that she was doing the trading of commodity business while replying to question No.24 and she has further confirmed that she had earned Rs. 1,50,000/- from the speculative business of trading in commodities while replying to question No.23 and, as such, the credit worthiness of Smt. Kanta Devi was proved.
That the Ld. CIT (A) has erred in not considering that the assessee could not produce Sh. Ram Lai and Sh. Ram Rattan and their statements could not be recorded as both of them have already expired.
That the Ld. CIT(A) has erred in not considering that in response to summons issued u/s 131 to Sh. Ram Lai and Sh. Ram Rattan the reply was filed through their legal heirs (Sons) stating that their father had expired and in support thereof, death certificates of their fathers alongwith their ITRs, Bank statements etc. evidencing their credit worthiness was filed and same was not questioned by the Ld. Assessing Officer and nothing more was demanded and no further clarification was called for.
That the addition as above has been upheld by the Assessing Officer against the facts and circumstances of the case and detailed reply filed by the assessee during the course of hearing vide letter, dated 06.09.2017 as incorporated at pages 4 to 10 of his order mentioning various case laws, has not been considered by him properly.
Notwithstanding the above said ground of appeal, though, the source of source had already been explained with all the creditors but still, it is submitted that the Ld. CIT (A) has failed to consider the fact that the source of source cannot be asked for as per binding judgement of Hon'ble Punjab & Haryana High Court in the case of Sh.Chuni Lai as reported in 211 ITR 11 (Statute), and where the SLP of the department has been dismissed.
The assessee has received Rs. 5,20,000/- from three persons namely Smt.
Kanta Devi of Rs. 1,50,000/- , Shri. Ram Ratan of Rs. 2,65,000/-, and Shri. Ram Lal
of Rs. 1,05,000/-.
The Ld. CIT(A) confirmed the addition on the grounds that Shri. Ram Lal
and Shri. Ram Ratan could not be produced as they were expired and they
were closed to the Karta of the HUF. Ld. CIT(A) doubted that Smt. Kanta Devi
who is said to have earned income from commodity trading could not be so as
she has no knowledge of commodity trading.
Before us, Ld. AR submitted that all the requirements like identity, genuinity
and creditworthiness of the loan parties have been proved and the primary
onus has been duly discharged by the assessee. He further argued that Smt.
Kanta Devi and Shri. Ram Lal have received profits from commodity trading
which can be proved by the fact that the statement of Shri. Ankit Garg,
Proprietor M/s Satyam Commodities was recorded by the department on
05/12/2011 and 14/12/2011 the copies of the assessment order reiterating the
fact of recording the statement has been filed before us.
The Ld. DR also argued that Shri. Ram Ratan has received back an
amount of Rs. 1,70,000/- from M/s S.P.K. Fibers and the same can be verified
from the bank statement which is an undisputable fact.
We have gone through the facts of the case. Regarding Smt. Kanta Devi it
can be found that the assessee has discharged its primary onus and no tangible
contra material was brought on record by the Revenue. Similarly the assessee
has discharged the primary onus pertaining to the loans before the Revenue.
The owner of M/s Satyam Commodities has confirmed the fact of commodity
trading and profit earning by Smt. Kanta Devi and Shri. Ram Lal. The fact of
receipt of the loan back from S.P.K. Fibers is on record. Hence keeping in view
the entire facts, we hereby delete the addition made by the Assessing Officer
on account of loans and the interest.
Now we shall deal with ITA No. 1547/Chd/2017 for A.Y. 2014-15 wherein
Assessee has raised the following grounds:
That the Worthy CIT (A) has erred in dismissing the appeal and, thus, confirming the addition of Rs. 1^80^000/; made by the Assessing Officer u/s 68 on account of unsecured loans received by the assessee from Manoj Kumar HUF, Samrala. 2. That the Worthy CIT (A) has erred in not considering that assessee has duly discharged his onus by proving the identity, creditworthiness and genuineness of transactions by filing the relevant documents alongwith ITRs of Sh. Manoj Kumar HUF, through his father as he himself was out of country. 3. Notwithstanding the above said ground of appeal, though, the source of source had already been explained with all the creditors but still, it is submitted that the Ld. CIT (A) has failed to consider the fact that the source of source cannot be asked for as per binding judgement of Hon'ble Punjab & Haryana High Court in the case of Sh.Chuni Lai as reported in 211 ITR 11 (Statute), and where the SLP of the department has been dismissed. 4. That the Worthy CIT(A) has erred in not considering that Sh. Manoj Kumar could not appear before the Assessing Officer as he was out of country at the relevant time and the father of Sh. Manoj Kumar has filed the relevant documents as mentioned in para 2 above.
That the Worthy CIT (A) 'has erred in not considering that Assessing Officer has made impugned addition as the assessee in the opinion of the Assessing Officer could not prove the source of cash credit as appearing in his books of account to the extent of Rs. 1,80,000/- in the name of Manoj Kumar HUF, without mentioning or giving back grounds of opinion and ignoring the relevant documents filed as per para 2 above. 6. That the addition of Rs. 1,80,000/- as above has been upheld against the facts and circumstances of the case and detailed submissions filed during the course of hearing alongwith various case laws vide letter, dated 06.09./2017 at page 3 to 8 of the order.
The assessee is HUF engaged in the business of trading of cotton waste
under the name and style of its proprietary concern namely M/s Shiva Udyog.
During the year the assessee has received an amount of Rs. 450000/- from
one Manoj Kumar (HUF). The Assessing Officer has made an addition of Rs.
180000/- out of the amount of Rs. 4,50,000/- in the hands of the assessee as cash
deposits of Rs. 1,80,000/- has been found in the bank account of Manoj
Kumar(HUF) four days prior to lending of the loan.
The Ld. CIT(A) upheld the addition on the ground that the source of cash
deposit in the bank accounts of the lender could not be explained with the help
of the income disclosed in his return of income by Manoj Kumar (HUF). The Ld.
CIT(A) held that there can be multiple bank accounts maintained by Manoj
Kumar (HUF) and also since Manoj Kumar (HUF) is not examined by the Assessing
Officer and hence the cash deposits remained unproved.
Before us the Ld. AR submitted that the total loan received from Manoj
Kumar (HUF) was Rs. 4,50,000/-. Ld. AR produced copy of the account,
confirmation, copy of the return of income, capital account balance sheet,
copy of the bank statement. And also submitted that when summons under
Section 131 of the Income Tax Act,1961 were issued Shri. Manoj Kumar, the Karta
was out of India and could not attend the assessment proceedings. It was
argued that the lender has only one bank account and the observation of Ld.
CIT(A) that the assessee might be having multiple bank accounts is only the
guess work of Ld. CIT(A) without bringing any cogent material on record. He
further argued that if at all the amount is not found to be explained satisfactory,
the addition has to be made in the hands of Manoj Kumar (HUF) only but not in
the case of the assessee.
We have heard both the parties and gone through the material available
on record. The action of the Assessing Officer cannot be accepted as the AO
has accepted the loan of Rs. 2,70,000/- as genuine and Rs. 1,80,000/- as
ingenuine when identity genuineness and creditworthiness of the loanee stands
discharged. The assessee has been paying interest regularly to the loan party
and just because cash deposits were made prior to lending cannot be the sole
reason to make addition under section 68 when all other elements proving the
genuineness of the loan are available on record. Similarly the Ld. CIT(A)’s
observation that the loanee could have had more than one bank account
while confirming the addition cannot be accepted. Hence, keeping in view the
overall facts of the case the addition made by the Assessing Officer is hereby
deleted.
In the result, both the appeals of the Assessee are allowed.
Order pronounced in the open Court.
Sd/- Sd/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 04/06/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR