TaxTMI 
TaxTMI 
2017 (8) TMI 1138
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....eedings, the Assessing Officer, on 13th March 2014, made additions under Section 68 of the Income Tax Act, 1961 ('the Act') to the tune of Rs. 3,25,50,000/- in respect of loans/advances received from eight persons, on the ground that the Assessee was unable to establish the identity, creditworthiness and genuineness of the said persons and transactions. 4. The details of the loans/advances, received by the Assessee, as recorded by the AO, are : S. No. S. No. as per list Name of the Creditor Amount 1. 2. Amar Singh Rs.50,00,000/- 2. 4. Chandan Singh Rs.1,10,00,000/- 3. 5. Harpreet Singh Rs.3,50,000/- 4. 9. Om Prakash Rs.9,00,000/- 5. 11. Ram Charan Rs.10,00,000/- 6. 12. Shiv Tej Rs. 25,00,000/- 7. 13. Sunita Rs.98,00,000/- 8. 15 Virender Yadav Rs.20,00,000/- 5. In the appeal filed by the Assessee, the Commissioner of Income Tax (Appeals) ['CITA (A)'], on 7th September, 2015, upheld the said additions made by the Assessing Officer ('AO'). 6. The ITAT, in the appeal filed by the Assessee, deleted the additions in respect of the following four persons: (i) Shri Amar Singh Rs. 50,00,000/- (ii) ....
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....were filed by the Assessee to establish the identity, address etc. Even the PAN number or ID proof was not filed and he was also not even produced. (iv) Shri Om Prakash - No documents to establish the address, PAN number, source of deposit and ID proof, were filed. Neither was a confirmation letter filed nor was he produced. (v) Shri Shiv Tej - No documents to establish the address, PAN number, source of deposit and ID proof, were filed. Neither was a confirmation letter filed nor was he produced. (vi) Shri Ram Chander - Only a confirmation letter was filed. However, the AO observed that the same was not supported by any evidence of identification, cheque numbers, sources of income or sources of loan. The person was not produced. (vii) Smt. Sunita - Only a confirmation letter was filed. However, the AO observed that the same was not supported by any evidence of identification, cheque numbers, sources of income or sources of loan and even she was not produced. (viii) Shri Virender Yadav - A confirmation letter was produced but no PAN number was mentioned. The AO observed that the bank statements reveal the deposit of cash of Rs. 13,00,000/- and Rs. 7,00,000/- immediately before....
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....he gave Rs. 10,00,000/- to Shri Bikram Singh, out of the proceeds of sale of land but there was no documentary evidence to support the same. He later on claimed that the amounts of Rs. 18.48 Lakhs and Rs. 5.86 Lakhs reflected in his bank statement came from his sister Vidya. (iii) In respect of Shri Chandan Singh, he was unable to explain any of the bank entries in his bank statements. In the assessment order for the AY 2011-12 submitted by him, there was no reference to any unsecured loan transactions with the Assessee. He claimed that he had not given loans to anyone except the Assessee. (iv) In respect of Shri Harpreet Singh, in his statement, he stated that he had no transaction with the Assessee in AY 2010-11. He claimed that the sum of Rs. 3.5 Lakhs was given to the Assessee by his son Mr. Dakshdeep Singh and the said transaction, being attributed to Shri Harpreet Singh, is an inadvertent mistake by the Assessee's Chartered Accountant. 13. The CIT (A) thus held that the transactions with Smt. Sunita lacked in genuineness and creditworthiness; transaction with Shri Amar Singh was questionable as to genuineness and creditworthiness; transactions with Shri Ram Chander and Shr....
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....hat since his PAN card had been submitted by the Assessee, the matter deserved to be remanded to the AO to pass a speaking order. (iii) In respect of Shri Shiv Tej, the ITAT after relying upon the documents, produced by the Assessee, restored the matter to the file of the AO as he had not been produced before the AO. (iv) In respect of Shri Om Prakash, the Assessee relied upon the letter of confirmation, the PAN card and Voter Identity Card to establish the identity and also submitted that the AO did not record the statement of Shri Om Prakash despite his appearance before the AO. Thus, the ITAT concluded that the matter deserved to be restored to the file of the AO. (v) In respect of Shri Ram Chander, the ITAT referred to the confirmation letter issued by him, Voter ID Card, the copy of bank statement and the cheque of Rs. 18.48 Lakhs, which was explained by him as having been received from his sister Vidya. Thus, the ITAT concluded that the identity, creditworthiness and genuineness was established and the addition of Rs. 10 lakhs in respect of Shri Ram Chander was deleted. (vi) In respect of Shri Chandan Singh, the ITAT referred to the copy of PAN Card, Voter ID Card and the....
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....d any pale of doubt by the Assessee. It was his submission that the genuineness, having not been established, the deletion of these additions, that too by the ITAT, cannot be sustained. Mr. Bhatia submits that the onus is on the Assessee to establish that each transaction is a loan and that this initial onus on the Assessee has not been discharged. He relies upon Parimisetti Seetharanamma v. Commissioner of Income Tax (1965) 57 ITR 532 (hereafter 'Parimisetti') and Commissioner of Income Tax v. Daulat Ram Rawatmull 87 ITR 349 (hereafter 'Daulat Ram'). Mr. Bhatia took the Court through each of the transactions and the documents filed by the Assessee to defend the deletions made by the ITAT and submitted that the genuineness of each transaction is in severe doubt. He also relied upon CIT v. Divine Leasing & Finance Ltd. (2008) 299 ITR 268 (Del) (hereafter 'Divine Leasing') and CIT v. Kamdhenu Steel & Alloys Ltd. 361 ITR 220 (hereafter 'Kamdhenu'). Respondent-Assessee's Submissions 20. Mr. C. S. Aggarwal, learned Senior counsel for the Respondent-Assessee vehemently urged that in this case the Assessee has produced a large number of the documents to establish the identity, creditwor....
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....al vehemently urges that even where a question of law has been formulated, under Section 260A, the Court can still hold that no question of law arises as held in CIT vs. Peoples General Hospital Ltd [2013] 356 ITR 65. Lastly, Mr. Aggarwal submits that the Appeal has no basis in as much as not question as to the perversity in the ITAT's order has either been raised or pleaded and thus the appeal is not liable to be entertained. He relies upon Patnaik & Co. Ltd. vs. CIT 161 ITR 65 and CIT vs. Bhageeratha Engg. Ltd. 199 ITR 12 (SC) in support of his submissions. Analysis and Reasoning 24. In the present appeal, the Revenue has only challenged the impugned order of the ITAT to the extent of deletions made by the ITAT in respect of Shri Amar Singh, Shri Chandan Singh, Shri Ram Chander (sic Ram Charan) and Smt. Sunita. The impugned order, to the extent that the additions in respect of other four creditors has been restored to the file of the AO, has not been seriously challenged by the Revenue. Though ground-G in the appeal has been raised in respect of the said set of creditors, the same was not seriously pressed. Thus, in the present order, the Court is only dealing with the subm....
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....Revenue. This Court in Kamdhenu (supra) referred to CIT v. Sophia Finance, 205 ITR 98 which had held to the same effect. The Divine leasing (supra) and Sophia Finance (supra) judgments were reiterated by this Court in Dwarkadhish (supra). Thus, the law in relation to Section 68 is well settled. 28. Applying the settled law to the present case, the facts narrated above reveal that the Assessee was unable to discharge the initial onus cast upon him. A review of the documents filed on record, as also findings of the CIT(A) and the AO, reveal that the genuineness of the transactions and the creditworthiness of the creditors is seriously in issue and the findings of the ITAT are contrary to the settled law. 29. In the case of Shri Amar Singh the documents that were submitted by the Assessee, were a letter of confirmation dated 20th March, 2014, a letter dated 12th April, 2014 issued by the Gurgaon Gramin Bank, the bank statement for the period from 1st April, 2008 to 31st March, 2011, a copy of the cheque for Rs. 50,00,000/-, the voter ID Card and a copy of letter dated 15th May, 2015 of the Land Acquisition Officer, Gurgaon, Haryana. A perusal of the bank statement reveals that the a....
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....h of the creditor as required in law. Merely because the transaction was by payments through cheque, the ITAT presumes them to be genuine. A creditor who opens a bank account with just Rs. 500/-, depositing huge sums of cash into the account and then lending a sum of Rs. 1,10,00,000/- to the Assessee, without any agreement, interest payment or security, is `fantastic' and `incredible' to say the least. The ITAT ignored vital and tell-tale evidence which showed that the transaction was far from being genuine. The Assessee had clearly failed to discharge the onus cast upon him qua this creditor. 31. Insofar as Shri Ram Chander is concerned, first, there is a doubt as to his actual identity as whether he is Ram Chander or Ram Charan. The Assessee has produced a confirmation letter where this person is being referred to as Ram Chander in different places. His voter ID card described him as Ram Chander S/o Shri Bhagwana whereas the letter of confirmation purportedly signed by him refers to him as Ram Chander S/o Bhagwant Sahai. The bank statement produced for the period from 1st April, 2008 to 31st March, 2011 shows deposits and withdrawals in cash. He also tried to change his ....
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....e fact that the transactions are not genuine. The statements of the creditors and the documents produced do not leave anything to suspicion but point to the certainty of the transactions being not genuine. Each of the creditors did not have the financial strength to part with such huge sums of money and the transactions, as revealed from chronology of opening of bank accounts, deposits of cash and then the loan transaction, establish lack of genuinity. 36. The Assessee also relied upon Sona Electric Co. v. CIT 152 ITR 507 (hereafter 'Sona Electric') to argue that mere suspicion is not enough. However, in this case the Court appears to have been persuaded to hold in favour of the Assessee as the Assessee was not allowed to cross-examine the witness, whose statement was recorded and that there was an admitted supply of goods against which the payment was made. Thus, the facts are clearly distinguishable. 37. The Assessee further relied upon Mukundray Shah (supra) to argue that there can be no interference when the Tribunal has given findings of fact. However, the Supreme Court in the said case held that the finding of the Tribunal was not perverse, as the concept of giving deemed d....
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....ferred through cheque payments, does not by itself mean that the transactions are genuine. The AO and the CIT (A) have rightly held that the identity, creditworthiness and the genuineness are all in doubt. Moreover, the Court notes that that these amounts have been advanced to the Assessee without any explanation as to their relationship with the Assessee, the reason for the payment of such huge amounts, as also whether any repayments have, in fact, been made. There are contradictions in the explanation given by the Assessee and the statements recorded by these four individuals, which are irreconcilable. For example, in the case of Shri Ram Chander/Ram Charan, he had initially stated that he had given Rs. 10,00,000/- out of the proceeds of sale of the land but thereafter it was claimed by him that the money had come from her sister Vidya. Such contradictions clearly render all these transactions dubious. The ITAT could not have, merely because the payments were through cheques, held that the transactions were genuine. The ITAT erred in simply accepting the explanation of the Assessee qua the four transactions. The ITAT, clearly, did not follow the binding precedent in Divine Leasin....