IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : H : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
ITA No. 1982/Del/2012
Assessment Year : 2008-09
ACIT, Vs. Vinay Jain,
Circle 35 (1), B-260, Phase-I,
Room No.D-4, Vivek Vihar,
Vikas Bhawan, New Delhi.
New Delhi.
PAN : ABRPJ1666P
(Appellant) (Respondent)
Assessee by : None
Revenue by : Dr. B.R.R. Kumar, Sr. DR
O R D E R
PER A.D. JAIN, JUDICIAL MEMBER:
This is an appeal filed by the department for Assessment Year
2008-09 against the order dated 23.01.2012 passed by the CIT (A)-
XXVII, New Delhi. The grounds of appeal read as under:-
1. That the Ld. CIT (A) has committed a grave error
in not remanding the matter to the A.O. for making
inquiries and by accepting the assessee's averments
that the source of the loan has come from the sale of
property in the absence of any documentary evidence
adduced.
2. That the Ld. CIT (A) was wrong in observing that
the assessee has satisfactorily discharged the onus
placed upon him in explaining about the credit
worthiness of the loan given.
2 ITA No.1982/Del/2012
3. That by not inquiring about the correctness of the
claim made by the assessee, the Ld. CIT (A) has
committed palpable injustice.
4. That on the facts of the case and having regard to
the preponderance of the probabilities, the addition of
Rs.10 lacs made to the income of the assessee was
made on cogent grounds and should not have been
deleted.
2. The notice in this case was issued on 30.05.2012. The same was
duly received. However, none has put in appearance on behalf of the
assessee at the time of hearing of the appeal. But, finding that the
matter can be proceeded with in the absence of the assessee we are
doing so.
3. The facts regarding ground Nos.1 to 4 are that the assessee is in
the business of manufacturing and trading of brass rods, under the
name and style of M/s Jainex Metal. During the year, he had received
an unsecured loan of ` 22,50,000/- from three creditors. Out of this, a
sum of ` 10 lac had been advanced as loan to the assessee by Ms
Purnima Chaudhary. The Assessing Officer observed that Ms
Chaudhary had returned an income of ` 2,15,940/- only whereas she
had advanced the loan of ` 10 lac to the assessee. As per the
assessment order, when the assessee was asked to establish the
capacity of the said creditor to lend this loan to the assessee, the
assessee remained unable to satisfactorily explain the source of the
various creditors appearing in the bank statement of the creditors
before the date of advancing the loan. It was observed that the loan
had been advanced on 08.03.2008, vide cheque No.366445 and the
bank statement showed that an amount of ` 12,50,000/- had been
received from the assessee on 16.02.2008 and, further, a cash gift of `
2,50,000/- had been deposited in the account of the creditor on
07.03.2008, the source whereof had not been explained at all. On this,
3 ITA No.1982/Del/2012
the Assessing Officer was of the opinion that the assessee had utterly
failed to prove the credit worthiness of the creditor and the
genuineness of the transaction, thereby failing to discharge the initial
onus cast upon him. The cash credit of ` 10 lac received by the
assessee from Ms Purnima Chaudhary was, therefore, treated by the
Assessing Officer as deemed income of the assessee u/s 68 of the IT
Act.
4. By virtue of the impugned order, the Ld. CIT (A) deleted the
addition made by the Assessing Officer.
5. Aggrieved, the department is in appeal before us.
6. Challenging the impugned order, the Ld. DR has contended
before us that the Ld. CIT (A) erred in accepting the assessee's
contention that the source of the loan was sale of property, particularly
in view of the fact that no documentary evidence had been adduced to
support such sale; that the Ld. CIT (A), in fact, ought to have remitted
the matter to the Assessing Officer for making inquiries; that, further,
the Ld. CIT (A) has gone wrong in observing that the assessee had
satisfactorily discharged his onus under the provisions of Section 68 of
the IT Act; and that as such, the appeal of the department be allowed,
the order passed by the Ld. CIT (A) be cancelled and that passed by
the Assessing Officer revived.
7. We have heard the Ld. DR and have perused the material on
record before us. From the order under appeal, it is available that
before the Ld. CIT (A), the assessee had contended that he had taken
the unsecured loan of ` 10 lac from Ms Purnima Chaudhary vide
cheque No.366445 dated 08.03.2008. It was contended that before
the Assessing Officer, in the assessment proceedings, the assessee
4 ITA No.1982/Del/2012
had filed a copy of the creditor's PAN Card, a copy of her income-tax
return for Assessment Year 2008-09 i.e., the year under consideration,
a copy of her bank statement and proof of her residential address,
thereby discharging his onus of proving the identity and credit
worthiness of the creditor, as well as the genuineness of the
transaction. Further, in order to prove the source of the source of ` 12
lac (though the assessee was not obligated to prove such source of the
source of ` 12,50,000/- deposited in the creditor's bank account), the
assessee had filed before the Assessing Officer a copy of cheque
No.676930 dated 12.02.2008, favouring Ms Purnima Chaudhary for `
12,50,000/-, drawn on Andhra Bank, Preet Vihar, New Delhi, signed by
one Ms Raj Rani. It was this deposit which was stated to be the source
of advancing the unsecured loan of ` 10 lac to the assessee and it was
stated to have been received on account of sale of some property.
8. While deleting the addition, the Ld. CIT (A) observed that the
perusal of the bank statement of the assessee showed that the cheque
No.366445 dated 08.03.2008 from the bank account of Ms Purnima
Chaudhary had been duly debited, favouring M/s Jainex Metal, the
assessee's proprietary concern and, therefore, there was no doubt
about the genuineness of the transaction. Dealing with the issue of
credit worthiness of the creditor, the CIT (A)'s observation was that the
assessee had filed a copy of Ms Chaudhary's income-tax return both
before the Assessing Officer as well as in the appellate proceedings.
The Ld. CIT (A) opined that the Assessing Officer's opinion that the
credit worthiness of Ms Chaudhary did not stand prove, since she had
shown an income of ` 2,15,940/- only for Assessment Year 2008-09
whereas she had advanced a sum of ` 10 lac to the assessee did not
hold good. For holding so, the Ld. CIT (A) observed that it was not
necessary that the amount advanced by the creditor had to be out of
the current years income only. It was observed that there were
5 ITA No.1982/Del/2012
deposits of ` 12,50,000/- in the creditor's account on 16.02.2008 by
clearing and ` 2,50,000/- in cash on 07.03.2008; that though these had
been doubted by the Assessing Officer, neither any inquiry had been
conducted, nor had any material been brought on record to doubt the
source of the deposit entries in the creditor's account. The Ld. CIT (A)
also took into account the copy of cheque No.676930 dated
12.02.2008 from Ms Raj Rani favouring Ms Purnima Chaudhary for `
12,50,000/- drawn on Andhra Bank, Preet Vihar, New Delhi. It was also
observed that even in the copy of the creditor's bank account filed by
the assessee before the Assessing Officer, it stood clearly mentioned
that the amount of ` 12,50,000/- in the bank account of the creditor
had been deposited on account of outward clearing. It was on these
observations that the Ld. CIT (A) deleted the addition of ` 10 lac made
by the Assessing Officer, holding that the assessee had duly
discharged his onus of establishing the identity and credit worthiness
of the creditor, as well as the genuineness of the transaction.
9. We find that the order of the Ld. CIT (A) is a detailed and well
reasoned order. The department has remained unsuccessful in
dislodging the same before us. The findings of fact recorded therein
remained unhinged. It remains undisputed that in the creditor's
account, as on 16.02.2008 there were deposits of ` 12,50,000/-. These
deposits were by clearing. An amount of ` 2,50,000/- had been
deposited on 07.03.2008 in cash. Since the cheque No.676930 dated
12.02.2008 from Ms Raj Rani to Ms Purnima Chaudhary, the assessee's
creditor, for ` 12,50,000/- has not attracted any adverse finding from
the Assessing Officer, the Assessing Officer's doubt about the deposits
is entirely baseless, as rightly held by the Ld. CIT (A). Otherwise too,
there was no basis to hold that Ms Chaudhary's credit worthiness did
not stand prove, since whereas her income was of ` 2,15,940/- for the
year she had advanced ` 10 lac to the assessee. As correctly observed
6 ITA No.1982/Del/2012
by the Ld. CIT (A), the amount advanced by the creditor does not
necessarily have to be out of the current year's income only, nor is this
the case set up by the Assessing Officer.
10. Accordingly, finding no reason whatsoever to interfere with the
order under appeal, we hereby confirmed the same.
11. In the result, the appeal filed by the Department is dismissed.
The order pronounced in the open court on 03.07.2012.
Sd/- Sd/-
[J.S. REDDY] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 03.07.2012.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches
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