TaxTMI 
TaxTMI 
2003 (5) TMI 201
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....e on 3rd Oct., 1992, declaring an income of Rs. 9,550. This return processed under s. 143(1)(a) of the IT Act, 1961, on 12th Jan., 1993. The Asstt. Director of IT (Inv. III), Ludhiana, vide his letter No. ADIT/(INV.III)/LDH/95-96/1381 dt. 22nd March, 1996, has passed on certain information which reveals that the assessee had received a bogus gift of Rs. 1,15,000, from one Sh. Naresh Kapoor, Prop. M/s City Enterprises, Jalandhar, under the guise of NRI foreign remittance and claimed the same exempt under Immunity Scheme remittance. Sh. Naresh Kapoor is reported to have run a scandal and has given huge amounts to various persons under guise of foreign remittance immunity scheme. The modus operandi was that the amount so given/gifted were collected by the hawala racketeer from the beneficiaries in cash and after depositing the same in his bank accounts he used to issue the drafts to the beneficiaries. The assessee is also one of such beneficiaries who has given Rs. 1,15,000, in cash to Sh. Naresh Kapoor and received the amount by bank draft under guise of foreign remittance immunity scheme. Since the amount of Rs. 1,15,000 which is hit by mischief of provisions of s. 88 of IT Act, 196....
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....iana. It was stated that the investment made by the appellant was thoroughly examined and credit was explained to the satisfaction of the then AO. After this reply was received the AO called certain further information and specifically asked to produce Sh. Naresh Kapoor. However, on the next date of hearing, the appellant filed reply and stated that as whereabouts of Sh. Naresh Kapoor is not known as he has been arrested by Police under some criminal case and, therefore, he could not be produced before the AO for examination. Thereafter, the AO insisted that since this sum of 3,15,000 was introduced in the books of the appellant it was his duty to produce Sh. Naresh Kapoor. It was replied by the appellant that Sh. Naresh Kapoor will come to India in December, 1998 and till then he cannot be produced. However, confirmation from Sh. Naresh Kapoor was filed along with reply dt. 4th Dec., 1998. As Sh. Naresh Kapoor was not produced, the AO held that Sh. Naresh Kapoor had run a scandal and his modus operandi is as that the amount so given as loan were firstly collected by him from the appellant in cash through racketeer and after depositing the same in his bank account, he issued ....
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....nd amount and in whose names it was made has been verified in detail. The capacity of the creditor is proved as he has been assessed to income-tax. The Department had assessed the income of Sh. Naresh Kapoor for the asst. yr. 1992-93 vide order dt. 25th March, 1997 as passed by the Asstt. CIT, Inv. Cir. II(3), Jalandhar, at an income of Rs. 99,33,890. It is stated that it is not the duty of the appellant to prove that from which source the creditor is earning his income. Further confirmation from Sh. Naresh Kapoor has also been filed. The counsel also relied on the decision of Tribunal, Jaipur, in Mola Bux vs. ITO (1995) 51 TTJ (Jp) 1, wherein it has been held that where the amount in question stood assessed in the respective hands of the creditor and that assessment has not been called as bad or ineffective and there was no material on record to suggest that the amounts of cash credits represented assessee's income. Other decisions have also been relied on. The counsel further argued that the Department has now accepted the fact that loans to the extent of Rs. 3,15,000 were raised by the appellant from Sh. Naresh Kapoor during the recovery of tax proceedings and a letter has been ....
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....tion in the form of drafts. In the absence of any other evidence the capacity cannot be doubted. In the assessment of Sh. Naresh Kapoor all the deposits in the bank account have been added back as his income including the amounts which have been advanced to Sh. Parwinder Singh. The bank authorities have confirmed that the withdrawal of Rs. 2,30,285 on 7th Nov., 1991 was made by Sh. Naresh Kapoor. From this account a draft of Rs. 1,15,000 was issued to Sh. Parwinder Singh. Similarly, on 19th Nov., 1991, a draft of Rs. 2,00,000 was issued in the name of Sh. Parwinder Singh from withdrawal of 5,50,700 from the bank account of Sh. Naresh Kapoor. Both these entries have duly been verified by the AO. There is no evidence available which would connect these entries to prove that Sh. Parwinder Singh had given his own cash to get the accommodation in the form of drafts. Decisions relied upon by the appellant are applicable in this case. The Tribunal, Chandigarh Bench, in its decision in the case of ITO vs. Amarnath Ram Kumar (1995) 81 Taxman 148 (Chd)(Mag) has held that when a creditor is not produced and the transaction is proved by producing a copy of the bank account showing the wi....
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.... the copy of account. The assessee returned the loan alongwith interest through cheque of amount of Rs. 3,19,306. It was debited to the account of the assessee with the State Bank of India on 24th Dec., 1991. The loan was returned through cheque No. 220222 duly shown in the account. He also drew my attention to the statement of bank account placed in paper book wherein loan taken was credited and loan returned was debited. My attention was also drawn to copy of assessment order dt. 25th March, 1997 in the case of Sh. Naresh Kapoor for asst. yr. 1992-93 wherein total income was assessed at Rs. 99,33,894. The above order was certified to have become final. It was accordingly claimed that the loans were proved and established and, therefore, could not be treated as assessee's income from undisclosed sources. 7. On careful consideration of rival submissions and on examination of material on record, I do not see any good ground to interfere with the impugned order. It appears that Sh. Naresh Kapoor, Prop. M/s City Enterprises, Jalandhar, was doing some Hawala and was fraudulently showing NRI foreign remittances. On the basis of above information, the case of the assessee was re-opene....