TMI Blog2014 (1) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant : Shri Waseem Arshad, Sr DR For the Respondent : Shri Rajendra Sharma, Adv. ORDER:- PER : Bhavnesh Saini The departmental appeal and the cross objection by the assessee are directed against the order of ld. CIT(A), Gwalior dated 11.06.2009 for the assessment year 2005-06. 2. The Revenue in their appeal, challenged the order of ld. CIT(A) in deleting the addition of Rs.45,30,500/- on account of unexplained cash credits and deleted the addition of Rs.4,27,130/- on account of interest on loan. The assessee in the cross objection challenged the confirmation of addition of Rs.6,75,000/- on the same cash credits. 3. Since the issues are connected in the departmental appeal and the cross objection, therefore, the same are disposed of through this common consolidated order. 4. The cross objection of the assessee is time barred by two days. The assessee explained that due to his illness, the cross objection could not be filed within time. There is no objection to the condonation of delay of two days, which is also not abnormal. We, therefore, accept the explanation of the assessee and condone the delay in filing the cross objection. 5. Briefly, the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letters of parties, from whom the loans taken alongwith the copy of accounts, promissory notes, before your honour. The submission of the assessee liable to be rejected as the assessee has given sufficient opportunity of being heard to submit the above documents during the course of assessment proceedings as under:- Vide letter dt. 10.05.2007 along with notice U/s. 142(1)/143(2). Vide Ordersheet entry dt. 28.05.2007 Vide Ordersheet entry dt. 18.06.2007 Vide Ordersheet entry dt. 16.10.2007 Vide Ordersheet entry dt. 30.11.2007 Vide letter dt. 13.12.2007 alongwith notice U/s 142(1)/143(2) Vide letter dt. 24.12.2007 and Vide letter dt. 27.12.2007 Moreover during the course of assessment proceedings, summons through notice server and Inspector were issued to parties for verification of genuineness of the loan taken on the request of the assessee as per their submission dated 24.12.2007. Due consideration has been given to the parties who have appeared and proved their genuineness and creditworthiness during the course of assessment proceedings to the level of my satisfaction. However, giving respect to you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Mangal had replied through the registered post mentioning that there was no transaction routed through them in the name of Om Prakash Gupta (HUF). Therefore, he submitted and requested that the transactions routed through brokers may be verified through them, whose name is mentioned in column titled as Broker's name and address. The transactions not routed through brokers may kindly be verified through the parties concerned, whose PAN No. and complete address is given on the confirmation and copy of account. On the date of hearing, the Assistant Commissioner of Income Tax was also present and requested for further time to issue the summons to the brokers for verification of transactions in the name of appellant as well as his trade name. 8. After considering the aforesaid submission of the Ld. Counsel for the assessee and request of the Assistant Commissioner of Income Tax, further time was allowed. Accordingly the Assistant Commissioner of Income Tax, had issued summons to twelve brokers only and examined the issue by recording the statement of brokers and placing the documents, namely detail transaction, detail of dalali paid by the assessee, copy of Income Tax Return of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered into and genuineness of the loans / documents submitted before your honour could not be confirmed or verified. Therefore, my views taken during the course of assessment proceedings remains unchanged and assessee still does not deserve any relief on this ground. Hence, in view of the above and under the circumstances, the request of the assessee may not be entertained." 9. After submitting the remand report, a copy of which was given to the Ld. Counsel for the assessee for furnishing the rejoinder, he vehemently contested and submitted the written submissions as under:- "During the year under consideration the appellant has accepted the unsecured loans from various creditors. Out of those unsecured loans, most of them through brokers, some of the loans were accepted directly from family members an relatives. During course of assessment proceedings, the Ld. Assistant Commissioner of Income Tax has accepted loans of Rs.3,00,000/- from few creditors but made the addition of Rs.52,05,500/- in the name of various persons. Since the appellant felt sick with the Parkinson disease, therefore he could not collect the relevant documents and prevented to file the necessary docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of statement, they have confirmed the transaction of unsecured loans in the name of the appellant routed through them. They have also confirmed the payment of brokerage paid to them by the assessee through account payee cheque only. All these brokers have submitted the copy of either their bank statement or counterfoil of deposit slip for depositing the cheque of brokerage in their bank account to verify the genuineness of the transaction of brokerage. They have also confirmed that the appellant had paid the brokerage to them after deducting tax at source, wherever applicable. Out of ten brokers, five brokers have submitted their copy of acknowledgement of return of income, two brokers have given their PAN No. and three re not assessed to tax. 10. After recording all these statements, the Assessing Officer has submitted the remand report dt. 05.06.09 as under: - "Out of the twelve brokers, ten brokers have attended the office in response to summons u/s. 131 and submitted the following :- 1. Only list of parties/dewal who have advanced loan to the above mentioned Assessee. 2. Five brokers namely Shri Deepak Mangal, Shri Pramod Goyal, Shri Sunil Goyal, Shri Bhag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power u/s 131 read with order 16 Rule 10 of the Civil Procedure Code, 1908 if their evidence is material in the opinion of the Ld. Asstt. Commissioner of Income Tax. Since the Ld. Asstt. Commissioner of Income Tax has not exercised the power u/s 131 read with order 16 Rule 10 of the Civil Procedure Code, 1908 to enforce the attendance of the witness i.e. two brokers, hence the remand report treating the transaction non genuine in respect of the transactions routed through those two brokers, is also not justified. The addition in respect of the transactions routed through those two brokers is not justified because they did not turn up inspite of summons served upon them. The appellant cannot be blamed and penalized for not attending the office in compliance of the summon by the witness inspite of service of the summons. Reliance is placed on: Smt. Leela vs. Gopal Singh Others, 2000(3)MPLT 449 (MP): "Code of Civil procedure (5) of 1908 Order XVI Rule 7a(3). 10 and section 115 witness did not attend court even after summons served on them - trial court opined that is the duty of litigant to keep them present in curt - evidence of plaintiff closed - against it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which was submitted before the Ld. Asstt. Commissioner of Income Tax on 22.05.09 along with written submission giving detail of tax deduction at source from brokerage paid to the brokers i.e. before finalizing the remand report. Copy of letter dt. 22.05.09 is enclosed herewith and marked as nnex.-P-1- 22. Therefore, in view of the above, the appellant has submitted the copy of account of the creditors, confirmation by creditors giving complete detail i.e. name, address, PAN, mode of transactions and discharged promissory notes also which were confirmed by all the ten brokers who have attended office in compliance of the summons and detail of TDS made from brokerage paid to brokers in respect of those transactions of unsecured loan routed through brokers. In view of all these, the addition u/s 68 of the Act treating them as non genuine is not justified. CIT Vs. ORISSA CORPORATION LTD. [1986J 159 ITR (SC) 0078 "Assessee producing letters of confirmation and discharged hundies and giving particulars of creditors - Creditors assessee's whose index numbers were with the department - Notices issued to creditors for appearance returned with endorsement "Left" - No further attem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings. The appellant could not submit the documents during course of assessment proceedings because of non availability at that time. The appellant could not collect those documents and accordingly was prevented to file the same during course of assessment proceedings, which were forwarded to the Asstt. Commissioner of Income Tax for his comments. Therefore, after considering the written submission and remand report these documents are being admitted in view of Rule 46A of the Income Tax Rules, 1962. I have gone trough the assessment order and find that the Assistant Commissioner of Income Tax has made the addition observing that the explanation furnished by the assessee is not satisfactory and reiterated the same finding even in the remand report dt. 30.03.09 and 05.06.09. On the other hand, the Ld. A.R. of the appellant vehemently contested that the appellant had submitted the documents namely copy of account duly confirmed by the creditors and copy of discharged promissory notes (wherever applicable and available) giving the details of name, address and PAN no. (wherever applicable. and available). During course of remand report, the Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant submitted the confirmation from broker as well as from the creditors also source as well as source of source also explained. Therefore the appellant had discharged the primary onus by filing the relevant details and accordingly, the addition for cash credits u/s 68 of the Act is not justified in view of decision in the case of CIT Vs. Gani Silk Palace [1988] 171 ITR 373(Mad.) and CIT Vs. Orissa Corporation Ltd. [1986] 159 ITR (SC) 0078. The Ld. A.R. of the appellant, relying upon the decision of Hon 'ble Supreme Court in the case of CIT Vs. Smt. P.K. Noorjahan [1999] 237 ITR 570 (SC) and Jindal Udyog Vs. ITO [2002] 83 ITD 248 (Chd.), submitted that normally, when there is a cash credit in the books of account maintained by the assessee for any previous year and no explanation, of the nature and source of credit is offered by the assessee or explanation offered is not considered as satisfactory by the Assessing Officer, the credit is to be charged as income of the assessee. The rule contained in section 68 is not absolute rule. The word used in section 68 is "may" and therefore credit may not be charged to tax even if nature and source thereof is not explained. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly cash credit to the extent of Rs. 45,30,500/- [Rs. 4,80,000/- through broker Shri Laxman Das Bangad, Rs. 8,13,000/- through broker Shri B.K. Bangad, Rs. 12,00,000/- through broker Shri Bhagwan Das Goyal, Rs. 2,00,000/- through broker Shri Pramod Goyal, Rs. 1,10,000/- through broker Shri Deepak Mangal, Rs. 50,000/- through broker Shri Murli Chaturvedi, Rs. 2,30,000/- through broker Shri Vijay Kumar Mehta, Rs. 3,15,000/- through broker Shri Om Prakash Dhariwal, Rs. 4,00,000/- through broker Shri Nathulal Gupta, Rs. 1,00,000/- through broker Shri Sunil Goyal and Rs. 6,32,500/- (Rs. 7,82,500/- - Rs. 1,50,000/-) directly from parties, stood established and the cash credits to the extent of Rs. 6,75,000/- (Rs. 50,000/- through broker Shri Sanjay Jain, Rs. 4,75,000/- through broker Shri Hem Kumar Jain and Rs. 1,00,000/- from Smt. Alka Kankane and Rs. 50,000/- from Smt. Pushpa Jain) remain unexplained because the transactions routed through two brokers namely Shri Sanjay Jain and Shri Hem Kumar Jain could not be verified through brokers and the permanent account number of Smt. Alka Kankane and Smt. Pushpa Jain could not be furnished and they have also not attended the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 6,75,000/- That, after going through the written submission, oral submission, assessment order, remand report submitted by the Assistant Commissioner of Income Tax, statements of brokers recorded and various documents submitted by the brokers during proceeding of remand report by the Assistant Commissioner of Income Tax, I find that the Ld. A.R. of the appellant has furnished the relevant details and could substantiate the transactions of unsecured loan to the extent of Rs. 45,30,500/- mentioned above. The remaining transactions of Rs. 6,75,000/- could not be substantiated. The appellant has not produced the two brokers for verification as well as has not submitted the PAN of the creditors Smt. Alka Kankane and Smt. Pushpa Jain. Although the Assistant Commissioner of Income Tax has not opted to issue the summons in those two cases Smt. Alka Kankane and Smt. Pushpa Jain. In view of all these, the cash credits to the extent of Rs. 45,30,500/- stood explained and established leaving cash credit of Rs. 6,75,000/- as unexplained. Accordingly, addition to the extent of Rs. 6,75,000/- is hereby confirmed." 15. The ld. DR relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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