M/s. Aditya Traders, Ratnagiri v. ITO, Ratnagiri

ITA 1389/PUN/2008 | 2005-2006
Pronouncement Date: 24-05-2010 | Result: Allowed

Appeal Details

RSA Number 138924514 RSA 2008
Assessee PAN AAKFA2433K
Bench Pune
Appeal Number ITA 1389/PUN/2008
Duration Of Justice 1 year(s) 6 month(s) 27 day(s)
Appellant M/s. Aditya Traders, Ratnagiri
Respondent ITO, Ratnagiri
Appeal Type Income Tax Appeal
Pronouncement Date 24-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 24-05-2010
Assessment Year 2005-2006
Appeal Filed On 27-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER & SHRI D KARUNAKARA RAO ACCOUNTANT MEMBER ITA 1389/PN/08 (A.Y.2005-06) M/S. ADITYA TRADERS APPELLANT MAHAD NAKA KHED TAL.KHED DIST.RATNAGIRI PAN AAKFA2433K VS. ITO WD 3 RATNAGIRI RESPONDENT APPELLANT BY : SHRI M.K.KULKARNI ADVOCATE RESPONDENT BY : SHRI AMRENDRA KUMAR SR.AR ORDER PER: D KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A) -I KOLHAPUR DATED 25.07.2008. THE GROUNDS RAISED BY T HE ASSESSEE READS AS UNDER. 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITIO N OF RS.2 00 000/- U/S.68 OF THE ACT WHEN THE CREDITORS WAS PRODUCED BEFORE THE A.O. FOR EXAMINATION AND HAD CONFIRMED THE PAYMENT OF LOAN EXPLAINING THE SO URCE THAT IT WAS OUT OF SALES PROCEEDS OF HOUSE PROPERTY WHICH FACT HAS NOT BEEN DENIED BY THE A.O. THE ADDITION OF RS.2 00 000/- U/S.68 IS UNWARRANTE D AND IT BE DELETED. 2. THE ISSUE IN THE APPEAL RELATES TO THE ADDITION OF RS.2 00 000/- MADE U/S.68 INVOLVING THE CREDITOR NAMELY SMT. SUNANDA NAMDEO S HELAR. DURING THE ASSESSMENT PROCEEDINGS AO NOTICED FROM CONFIRMATION LETTERS WH ICH WAS FILED BY HER THE CREDITOR THAT SHE IS ENGAGED IN THE BUSINESS OF GROCERY TRAD ING AND THE LOAN WAS GIVEN OUT OF HER BUSINESS. BUT SHE DID NOT FILED THE RETURN O F INCOME FOR THIS YEAR AS SHE DOES NOT HAVE INCOME IN EXCESS OF THE TAXABLE LIMIT. CO NSIDERING HER FINANCIAL POSITION THE BUSINESS AND THE ABSENCE OF I.T. RECORDS FOR THE RE LEVANT YEAR AO DOUBTED HER CREDITWORTHINESS. ASSESSEE PRODUCED HER FOR CROSS- EXAMINATION ALSO DURING THE FIRST APPELLATE PROCEEDINGS. IN THE REMAND PROCEEDINGS T HE CIT(A) DIRECTED TO AO TO COMPLETE THE CROSS-EXAMINATION PROCEEDINGS TOO. D URING THE SAID CROSS-EXAMINATION PROCEEDING AS PER THE AOS REPORT 22.01.08 IT WAS NOTICED THAT THE CREDITORS HAS CHANGED HER STAND AND INFORMED THE AO THAT THE SO URCE OF THE LOANS IS NOT FROM THE BUSINESS INCOME AS STATED IN THE ASSESSMENT PROCEEDINGS; BUT IT IS FROM THE SALE PROCEEDS OF HER HOUSE WHICH WAS SOLD TO HER BROTHER. TO SUPPORT THE SA ME THE CREDITOR FILED THE COPY OF AGREEMENT OF THE SAL E AND HER BANK ACCOUNT EXTRACTS. AO NOTICED THAT THE SUM OF RS.2 00 000/- DEPOSITED IN HER ACCOUNT ON THE SAME DATE THE DATE ON WHICH THE LOAN WAS GIVEN TO THE ASSSESS EE. IT WAS ALSO NOTICED THAT ITA 1389/PN/08 (A.Y.2005-06) M/S. ADITYA TRADERS 2 DURING THE PERIOD 28.01.05 TO 31.05.05 ONLY MAJOR CREDIT APPEARING IN HER BANK ACCOUNT IS THE IMPUGNED CREDIT OF RS.2 00 000/-. 3. DURING THE FIRST APPELLATE PROCEEDINGS ASSESSEE MENTIONED THAT THE CONDITION ON THE IDENTITY OF THE CREDITOR SOURCE OF FUNDS AN D CREDITWORTHINESS ARE SATISFIED AND AO DID NOT FOUND ANYTHING CONTRARY TO THE ARGUMENTS OF THE SALES TRANSACTION OF THE HOUSE AND THE RECEIPT OF SUM OF RS.2 00 000/- FROM HER BROTHER. IN THESE CIRCUMSTANCES ASSESSEES ARGUMENTS ARE SUPPORTED B Y SUPREME COURT JUDGMENT AS DISCUSSED IN PARA SIX OF THE IMPUGNED ORDER WHICH R EADS AS UNDER. 6. THE APPELLANT SUBMITTED THAT THE IDENTITY SOURC E OF FUNDS AND CREDITWORTHINESS OF THE CREDITOR HAD BEEN SATISFIE D. THE FACT OF SALE OF OLD HOUSE FOR CONSIDERATION OF RS.3 LAKHS HAD NOT BEEN DENIED BY THE AO. THE APPELLANT CANNOT BE HELD RESPONSIBLE BECAUSE THE CR EDITOR COULD NOT PROVE THE SOURCE OF CASH DEPOSITS IN HER ACCOUNT. THE APPEL LANT RELIED ON THE DECISION IN THE CASE OF S.HASTIMAL VS. CIT 49 ITR 273 CIT V S.BEDI & CO. 230 ITR 580 (SC) & CIT VS. METACHEM INDUSTRIES 245 ITR 160 (MP) . 4. FINALLY CIT(A) AGREED THAT THE VIEWS OF THE A O AS PER THE DISCUSSION GIVEN IN PARA 7 & 8 OF THE IMPUGNED ORDER AND THE SAME IS R EPRODUCED AS UNDER. 7. I HAVE CONSIDERED THE SUBMISSIONS. THERE ARE VARIOUS DISCREPANCIES IN THE EXPLANATION GIVEN BY THE CREDITOR POINTS OF TIM E WHICH LEAD TO SUSPICION ABOUT THE CREDITABILITY OF THE PERSON. THE BANK AC COUNT DOES NOT SHOW SUBSTANTIAL TRANSACTIONS TO PROVE THE CREDITWORTHIN ESS OF THE PERSON. THE CHEQUE GIVEN TO THE APPELLANT HAS OBVIOUSLY BEEN FU NDED BY CASH DEPOSIT IMMEDIATELY PRECEDING THE LOAN WHICH IN THE OVERALL CONTEXT AND THE NATURE OF TRANSACTION DURING THE YEAR FURTHER LEAD TO DOUBTS ABOUT THE CREDITWORTHINESS OF THE PARTY. THE CREDITOR MOREOVER HAS NOT BEEN ABLE TO PROVIDE A SATISFACTORY EXPLANATION OF THE SOURCES OF THE DEPO SITS WHICH HAVE OBVIOUSLY FUNDED THE PAYMENT TO THE APPELLANT. MOREOVER THE CREDITOR HAS ALSO BEEN SHIFTING HER STAND REGARDING THE SOURCE OF THE LOAN GIVEN TO THE APPELLANT. IN THE FIRST INSTANCE IT WAS SAID TO BE OUT OF BUSINE SS INCOME WHICH WAS LATER CHANGED TO CONSIDERATION RECEIVED ON SALE OF PROPER TY. 8. THE DECISION RELIED UPON WITH THE APPELLANT DID NOT REALLY HELP ITS CASE AS THEY ARE BASE ON DIFFERENT SET OF FACTS. IN HAS TIMALS CASE IT WAS HELD THAT THE EXPLANATION COULD NOT BE ASKED OUT OF THE ASSES SEE AFTER A DECADE. THIS IS NOT THE CASE HERE. IN THE CASE OF BEDI AND CO. MO NEY HAD COME FROM CANADIAN COMPANY WHICH WAS A PAPER MANUFACTURE AND HAD GIVEN THE AMOUNT FOR SETTING UP A PAPER FACTORY IN INDIA. IN SMT. SHELARS CASE HER SOURCE OF INCOME ITSELF IS IN DOUBT. 5. AGGRIEVED WITH THE SAME ASSESSEE IS IN APPEAL BE FORE US. DURING THE PROCEEDING BEFORE US BOTH THE PARTIES HAVE EXPLAINE D THE FACTS OF THE CASE. IN FAR AS THE ASSESSEES COUNSEL IS CONCERNED HE IS OF OPINI ON THAT THE ADDITION SHOULD NOT BE CONFIRMED BY THE CIT(A) WHEN THE CREDITOR OWNED UP THE CREDIT AND SHE WAS ALSO CROSS-EXAMINED BY THE AO. ON THE OTHER HAND DR SP ECIALLY MENTIONED THAT THE CHANGE OF STAND BY THE CREDITOR RECEIPT OF CASH FR OM HER BROTHER DEPOSITING THE ITA 1389/PN/08 (A.Y.2005-06) M/S. ADITYA TRADERS 3 SAME IN HER BANK ACCOUNT AND LOAN OF THE EQUIVALENT AMOUNT TO THE ASSESSEE ON THE SAME DATE I.E.01.02.05 GOES AGAINST THE ASSESSEE. H E ALSO MENTIONED THAT THE CREDITOR STATED ORIGINALLY THAT THE SOURCE OF THE L OAN IS HER BUSINESS INCOME AND SUBSEQUENTLY CHANGED THE STAND AS DISCUSSED ABOVE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE. IT IS UNDISPUTED FACT THAT THE CREDITOR IS IDENTIFIED AS APPEARED FOR CROSS EXAMINATION AND ALSO OWNED UP THE CREDIT OF RS.2 00 000/-. FURTHER SHE IS ASSESSED TO TAX FROM THE SUBSEQUENT ASSESSMENT YEAR TOO. THIS ALSO A FACT THAT THERE IS A SALE TRANSACTION OF HER HOUSE TO HER BROTHER WHICH MUST RESULT IN CREAT ION OF FLOW OF FUNDS TO HER ACCOUNT. THE REVENUE HAS NOT DISAPPROVED THIS PART OF THE FACT. THEREFORE IN OUR OPINION THERE IS NO DISPUTE ON THE IDENTITY SALE OF HER HOUSE AND ON THE TRADING OF BUSINESS OF THE GROCERY. THE ONLY REASON FOR THE RE VENUE IN SUSPECTING THE TRANSACTION IS IN VIEW OF THE DEPOSITING OF CASH O N 01.02.2005 THE DATE OF GIVING LOAN TO THE ASSESSEE. CONSIDERING THE FACT AND CI RCUMSTANCES OF THE CASE WE FIND THAT IT IS MERE A CASE OF SUSPICION RENDER A FACT. IN THESE CIRCUMSTANCES WHERE CONFIRMATION LETTERS ARE FILED AND SALE TRANSACTION OF THE HOUSE WAS COMPLETED WHICH RESULTED INFLOW OF RS 2 LACKS CREDIT TO HER ACCOUNT IN OUR OPINION THE CREDITOR IS NOT ONLY DISCHARGED HER PART OF THE ONUS AND THEREBY T HE ONUS IS SHIFTED TO THE REVENUE WHICH WAS NOT DISCHARGED BY THE AO. AO HAS NOT ANYT HING TO DISPROVE THE FACTUAL SUBMISSION OF THE ASSESSEE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THE REVENUE AS RUN INTO THE ERROR IN VIOLATING THE PROVISIONS OF SECTION 68 IN GENERAL AND PRINCIPLE O F DISCHARGE OF ONUS IN PARTICULAR. ACCORDINGLY GROUND OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTA NT MEMBER PUNE DATED THE 24 TH MAY 2010 ASHWINI COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I KOLHAPUR 4. CIT-I KOLHAPUR 5. D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSTT. REGISTRAR I.T.A.T PUNE