1 ITA No.2668/Del/2006
Asstt.Year: 2001-02
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES `H' NEW DELHI
BEFORE SHRI B.C. MEENA, ACCOUNANT MEMBER
AND
SHRI CHANDRAMOHAN GARG, JUDICICAL MEMBER
ITA NO. 2668/DEL/2006
ASSTT.YEAR: 2001-02
Shri Vinod Kumar Kaushik, vs Income Tax Officer,
C/o M/s Bhagwati Road, Ward-1, Narnaul.
Line Road,
Railway, Narnaul.
(Appellant) (Respondent)
Appellant by: Shri Vinod Kaushik
Respondent by: Shri Sameer Sharma, Sr.DR
ORDER
PER CHANDRAMOHAN GARG, J.M.
This appeal has been preferred by the assessee against the order of the
CIT(A), Rohtak dated 31.3.2006 in Appeal No. 171/NNL/2005-06 for AY
2001-02.
2. The grounds raised by the assessee in this appeal read as under:-
"1. That the Assessing Officer erred in confirming
addition of Rs.18,000/- on account of loan raised from
Shri Phool Singh.
2. That the Assessing Officer erred in confirming
addition of Rs.17,000/- on account of loan raised from
Shri Banarasi Lal.
2 ITA No.2668/Del/2006
Asstt.Year: 2001-02
3. That the Assessing Officer erred in confirming addition
of Rs.18,000/- on account of loan raised from Shri Ajay
Kumar.
4. That the Assessing Officer erred in confirming addition
of Rs.17,000/- on account of loan raised from Shri Magni
Ram.
5. That the Assessing Officer erred in confirming addition
of Rs.17,000/- on account of loan raised from Shri
Parshotam Dass.
6. That the Assessing Officer erred in confirming addition
of Rs.15,000/- on account of loan raised from Shri Sher
Singh.
7. That the Assessing Officer erred in confirming addition
of Rs.18,000/- on account of loan raised from Shri Jagan
Singh.
8. That the Assessing Officer erred in confirming addition
of Rs.17,000/- from Shri Parabhu Dayal."
3. When the case was called for hearing, the assessee Shri Vinod Kumar
Kaushik himself appeared and submitted a paper book spread over 59 pages
and copy of decision of ITAT Delhi SMC Bench dated 19.1.2007 in ITA
No.2711/Del/2006 for AY 2001-02 in the case of Shri Prem Chand C/o
Bhagwati Roadlines vs ITO Ward-1, Narnaul. The assessee submitted that
he is suffering from blood cancer and he has no means to engage a counsel
for this case, therefore, the appeal may kindly be decided on the basis of
paper book filed by him today and on the basis of decision of Shri Prem
Chand (supra) who was his partner in the same enterprise i.e. M/s Bhagwati
3 ITA No.2668/Del/2006
Asstt.Year: 2001-02
Roadlines. We also heard ld. DR and proceeded to decide the appeal on
merits on the basis of material placed before us.
4. On careful consideration and perusal of appeal record, paper book
filed by the assessee and the decision of ITAT Delhi SMC Bench dated
19.1.2007 (supra), at the outset, we observe that the case of Shri Prem Chand
a partner of M/s Bhagwati Roadlines has been decided in favour of the
assessee with following observations and findings:-
"17. Ld. DR supported the orders of ld. Commissioner
of Income Tax(A) and ld. Assessing Officer vehemently.
She very strongly argued that the additions made by the
Assessing Officer were rightly made, as the assessee
could not prove the creditworthiness of the creditors.
She further argued that there were valid reasons for
reopening of the case and therefore at this stage the ld.
counsel cannot argue about the validity of reopening.
She also argued that once the case is reopened the
primary burden is upon the assessee to meet his
obligations. She argued that it was the duty of the
assessee to prove the identity, creditworthiness and
genuineness of the transaction. In her opinion the
assessee failed in discharging this burden. Therefore, it
has been argued that there was no error in the order of
ld. Commissioner of Income Tax(A) and therefore the
same needs to be upheld.
18. On the reply stage the ld. counsel has argued that the
validity of reopening is not being challenged by them and
their contention is that presumably even if the reopening
has been done as per law, in view of provisions of section
147 supported with the latest judgment of Hon'ble Delhi
High Court in the case of Commissioner of Income Tax vs
Shri Pradeep Kumar Gupta (supra), the initial burden
was upon the ld. Assessing Officer who has failed to
4 ITA No.2668/Del/2006
Asstt.Year: 2001-02
discharge. On merits also he has stated that ld. DR has
not been able to meet out any contention of the ld.
Assessing Officer that in the statements recorded by
various persons factum of advancing the loans were
proved along with various other details which establishes
the creditworthiness of these creditors. He has further
argued that ld. DR has not been able to find any gap or
inconsistency in the statements recorded by the Assessing
Officer. He further argued that, in any case, in view of
the judgment of MP High Court in Metachem Industries
supra, and other judgments of Delhi Bench as mentioned
above, it was not the duty of assessee to prove the source,
to know about the financial affairs of the creditors or to
prove the source of the loans advanced by these creditors.
In this views the addition of Rs.1,77,000/- deserves to be
deleted.
19. I have heard the rival submissions and perused the
orders of the lower authorities and the materials
available on record. I find that the assessee produced 10
out of 12 loan creditors before the Assessing Officer. It is
observed that in this case the assessee has claimed to
have received loans of Rs.1.95 lakhs from 12 creditors out
of the same Rs.1.77 lakhs was added by Commissioner of
Income Tax(A) as unexplained cash credit from 11
persons and one loan of Rs.18000/- from Shri Khyali Ram
was accepted by Commissioner of Income Tax(A). I
observe that affidavit from all the 11 creditors were filed
before the Assessing Officer wherein the creditors have
duly affirmed the transaction with the assessee. Further,
out of the 11 creditors in question 9 were pr0duced by the
assessee before the Assessing Officer and 9 creditors even
affirmed the fact of advancing of money by them to the
assessee before the Assessing Officer. It is also observed
that no notice u/s 131 was issued by the Department to
the remaining 2 creditors. In the circumstances in my
considered opinion the primary onus which was on the
assessee to prove nature and source of his cash credit was
discharged by him and the onus was shifted on the
Revenue to bring cogent material on record for not
5 ITA No.2668/Del/2006
Asstt.Year: 2001-02
accepting such cash credit. I find that apart from a
subjective remark about the creditworthiness of the
creditors no positive material has been brought on record
by the Revenue for not accepting the cash credit in
question. In the circumstances, in my opinion the
addition so made cannot be sustained. Hence, I delete the
addition of Rs.1.77 lakhs made on account of unexplained
cash credit from 11 creditors. Accordingly, the grounds
of appeal of the assessee are allowed."
5. From the Paper Book filed by the assessee, we observe that the
creditors Jagan Singh, Parshotam Dass, Magni Ram, Ajay Kumar, Banarasi
Lal, Phool Chand, Ram Kkishan, Desh Raj and Prabhu Singh have deposed
before the ITO, Ward-1, Narnaul supporting the fact that they extended loan
to the assessee from their own means and the same fact was also reiterated
and supported by the affidavits of these creditors along with documents
pertaining to the source of money. Ld. DR has not disputed the point that
Shri Prem Chand was already a partner in M/s Bhagwati Roadlines with the
assessee and Shri Prem Chand and the assessee i.e. Shri Vinod Kumar
Kaushik faced the same addition in the AY 2001-02 pertaining to the
creditors and Shri Prem Chand got relief by the ITAT Delhi SMC Bench
vide order dated 19.7.2007 (supra) and the department has accepted that
decision without agitating the matter further in the higher forum.
6. On careful consideration of above set of facts and on perusal of the
orders of the lower authorities, paper book filed by the assessee today and
6 ITA No.2668/Del/2006
Asstt.Year: 2001-02
decision of ITAT SMC Bench dated 19.1.2007 (supra), we find that the
assessee produced all creditors before the Assessing Officer and their
statements were recorded on oath. The disputed creditors also supported the
version of the assessee by filing their affidavits and other documents
explaining the source of amount which was provided to the assessee as loan
wherein the creditors have duly affirmed the transaction with the assessee.
On the same set of facts and circumstances, the ITAT SMC Bench granted
relief for the partner of the assessee and facts and circumstances of the
assessee's case are also similar in the present appeal. In these
circumstances, in our considered opinion, the primary onus on the assessee
to prove the nature and source of cash credits was discharged by the assessee
and further onus was shifted on the revenue to bring out relevant and cogent
material on record for not accepting such cash credit as shown by the
assessee. We also find that the Assessing Officer has made a subjective
remark about the creditworthiness of the creditors but no positive material
has been brought on record by him for not accepting the cash credit shown
by the assessee. Accordingly, in our considered opinion, the assessee has
shown source of cash creditors and the creditors came forward to the desk of
the Assessing Officer to support the version of the assessee by way of giving
statement of oath and also submitted the affidavits and other relevant
7 ITA No.2668/Del/2006
Asstt.Year: 2001-02
documents, explaining the circumstances and source of amount given to the
assessee as loan. We also observe that the Assessing Officer has not brought
any relevant or cogent material to establish any doubt about the truthfulness
of the creditors, hence, the addition so made cannot be sustained. We also
hold that since the assessee has established identity, creditworthiness of the
creditors as well as genuineness of the source of loan and the Assessing
Officer has not made any adverse observations or could not bring any
adverse material to raise doubt about the identity and creditworthiness of the
creditors as well as genuineness of the transaction, therefore, the additions
made by the Assessing Officer and upheld by the CIT(A) cannot be
sustained. We also hold that the case of the present assessee is squarely
covered by the decision of ITAT SMC Bench in the case of Shri Prem
Chand c/o Shri Bhagwati Roadlines dated 19.7.2007 (supra) and we are
inclined to grant relief for the assessee by respectfully following this
decision. Accordingly, the orders of the authorities below are set aside and
we direct to delete all additions made by the Assessing Officer and upheld
by the CIT(A) pertaining to the cash credit shown by the assessee in the FY
2001-02.
7. In the result, the appeal of the assessee is allowed.
8 ITA No.2668/Del/2006
Asstt.Year: 2001-02
Order pronounced in the open court on 06.05.2014.
Sd/- Sd/-
( B.C. MEENA ) (CHANDRAMOHAN GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. 6th MAY 2014
`GS'
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT(A)
4. CIT 5. DR
By Order
Asstt.Registrar
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