TMI Blog2018 (4) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... the upshot, this addition made by the Assessing Officer is held to be bad and needs to be deleted as, in terms of well settled law, the same amount cannot be taxed for two separate years. - Decided in favour of assessee. - ITA No. 01/2014 - - - Dated:- 23-4-2018 - Mr Justice Ali Mohammad Magrey And Mr Justice M. K. Hanjura For the Appellant : Mr Asif Ahmad Bhat, Advocate For the Respondent : Mr J. A. Kawoosa, Advocate ORDER Per Magrey: J {Oral}; 01.) This appeal is filed, on behalf of the Assessee under Section 260A (1) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), challenging the order dated 24th of February, 2014, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as the Tribunal ) in ITA No. 458/ASR/2010 pertaining to the assessment year 2007-2008. 02.) The Assessee is a partnership firm having 3 partners, namely, Mr Syed Mohammad Iqbal, Mr Syed Mohammad Altaf and Mr Syed Mohamamd Tariq, constituted on the 1st day of April, 1992, under the name and style of M/s Kohinoor Enterprises. The Assessee's enterprises claims to be engaged in the business of trading of pesticides and fruit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer on account of addition of unexplained credit (Rs. 15,00,000/-/rupees fifteen lacs only) and unexplained expenditure (Rs. 18,30,000/-/ rupees eighteen lacs and thirty thousand only). In so far as the first item under the head 'unexplained credit' is concerned, it was held as under: The representative of assessee also filed the copies of balance sheets for both the years i.e. Assessment Year 2001-02 as well as Assessment Year 2007-08. There is no doubt that the loan from m/s Himachal Futuristic has been continuously been carried forward from Assessment Year 2001-02. In fact, the amount of such loan is not ₹ 15,00,000/- (Rs.15 lacs) but ₹ 1,50,00,000/- (Rs.1.5 Crores) which also escaped the attention of A.O. it is crystal clear that the said loan doesn't relate to the Assessment Year 2007-08 and in no case, it can be considered for addition in A.Y. 2007-08. It is curious to note that the A.O. has not at all made any effort to show this a fictitious loan. Even if it is the case, for discussion sake, it can in no way be added u/s 68 of the Income Tax Act, in the Assessment year 2007-08 when the Assessing Officer herself has accepted that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue in the ground no. 1, we are of the view that the Assessing Officer after examining the return filed by the assessee along with other documentary evidence of the assessee called upon to the assessee to submit the details of sundry creditors/loans outstanding for more than three years. Vide reply dated 03.09.2009, it was submitted by the assessee that the credit balance of M/S Himachal Futuristic Com. Ltd. was lying as an outstanding liability under the head unsecured loans for more than three years. M/s Himachal Futuristic Com. Ltd. is not a related concern of the assessee firm. The assessee has not furnished any detail I.T.A. No. 458(Asr)/2010 Assessment year: 2007-08 about the relationship between the assessee and M/s Himachal Futuristic Co. Ltd. which requires according to Section 40A(2)(b) of the Act. The assessee has also not produced any evidence regarding any business transaction with M/s Himachal Futuristic Co. Ltd. No doubt, the assessee has pleaded that the loan had been raised in the Financial Year 2001-02. It is against the preponderance of probabilities that a business concern would keep such a huge amount outstanding with an unrelated concern and with which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any effort to establish that the loan in dispute is a fictitious loan whereas the Assessing Officer herself has accepted that it was being carried forwarded since A.Y. 2001-02. 11.3 In our considered view, the finding of the learned first appellate authority is contrary to the law and facts on the record and we are of the view that as per provision of Section 69 of Act where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 11.4 During the course of assessment proceedings, the Assessing Officer found that credit balance of M/S Himachal Futuristic Com. Ltd. was lying as an outstanding liability under the head unsecured loans for more than three years. In spite of the fact that M/s Himachal Futuristic Com. Ltd. is not a related concern of the assessee firm within the meaning of section 40A(2)(b) of the Income Tax Act, 1961. The I.T.A. No. 458(Asr)/2010 Assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e negligence of the previous Assessing Officer should not be continued and should be stopped at one stage as has been stopped by the Assessing Officer in the present case. In our considered view, learned first appellate authority has wrongly deleted the addition of ₹ 15,00,000/- without appreciating the facts of the case on hand. Therefore, on this issue the impugned order is cancelled and ground no. 1 raised by the Revenue in the present appeal is allowed and we uphold the order of the Assessing Officer. 12. As regards to the deletion of addition of ₹ 18,30,000/- under Section 69C of the Act by the learned first appellate authority, after hearing both the parties and considering the reply filed by both the parties, our findings is as under:- 12.1 The addition of ₹ 18,30,000/- made by the Assessing Officer is almost on the identical ground on which the Assessing Officer made the addition of ₹ 15,00,000/-, as stated in the aforesaid paragraphs. The assessee has almost filed similar reply to that without the support of any evidence for substantiating its claim. We are of the considered view that the assessee had declared an unsecured loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year 2006-07 and no credit balance was shown against Sh. Ghulam Nabi for the financial year ending on 31.03.2007. For lack of documentary evidence establishing the identity of Sh. Ghulam Nabi, we hold that the assessee has shown this bogus liability with the intention to evade the tax and has introduced its own money in the books in the garb of unsecured loan. In our considered view, the order passed by the learned first appellate authority, wherein the addition of ₹ 18,30,000/- has been wrongly deleted, is against the law and facts on the file. Therefore, the impugned order deserves to be cancelled and accordingly we cancel the same by upholding the order passed by the Assessing Officer on the addition of ₹ 18,30,000/- as unexplained expenditure under Section 69C of the Act. 13. With the foregoing discussion, we are of the view that the Assessing Officer passed a well reasoned assessment order on the issue I.T.A. No. 458(Asr)/2010 Assessment year: 2007-08 in dispute and accordingly we uphold the assessment order dated 18.09.2009 on the issues involved in the present appeal and cancel the impugned order dated 28.09.2010 passed by the learned first appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found credited in the books of an Assessee maintained for any previous year and the assesse offers no explanation about the nature and source thereof or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory, then the sum so credited may be included in income of the assesse for that previous year. The learned counsel pleads that unless there is a fresh credit in the books of the assesse for the previous year, Section 68 of the Act has no application. It is stated that a carried forward amount of the previous year does not become an investment or cash credited during the next year. In this behalf, the learned counsel has invited the attention of the Court to the judgment of the Rajasthan High Court, rendered in the case of 'CIT v. Prameshwar Bohra' reported in '301 ITR (Raj)'. Paragraph Nos. 5 and 6, being relevant, are reproduced below, verbatim: 5. On the merit, of the additions made in the income of the Assessee, there is a clear finding, and about which there is no dispute, that the amount added in the income of the assessee as unexplained investment or cash credit in the asst. yr. 1993-94 was the same amount which was credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxed in respect of its income the same income cannot be charged again in the hands of the members individually and vice versa. Trust income cannot be taxed in the hands of the settler and also in the hands of the trustee or beneficiary or in the hands of both the trustees as well as the beneficiary. These principles are of course subject to any special provision enabling double taxation in the statute. 09.) In so far as the finding of the Tribunal that the first appellate authority deleted the addition merely on presumptions and assumptions and in absence of any documentary evidence supporting the claim of the Assessee, it has been held that the burden was on the assesse to establish the identity and creditworthiness as well as the genuineness of the transactions which Assessee fails to establish so far as the sum of ₹ 18,30,000/- (eighteen lacs and thirty thousand only) is concerned, it has been stated that the Tribunal has fallen in error inasmuch as since there was no fresh credit of ₹ 18,30,000/- (eighteen lacs and thirteen lacs only), there was no obligation on the Assessee to establish the identity, creditworthiness and genuineness of transactions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: Whether the learned Tribunal has fallen in error, while making the addition of the amount of ₹ 15,00,000/- (rupees fifteen lacs only) on account of unsecured loans as also the amount of ₹ 18,30,000/- (rupees eighteen lac and thirty thousand only) already added in the assessment year 2006-07? Let us deal with the two issues, set out in the aforesaid question, separately. 13.) With regard to the first plea, i.e. the addition of ₹ 15,00,000/- (rupees fifteen lacs only) on account of unsecured loans, what transpires from the pleadings placed on record is that during the course of assessment proceedings, the Assessee was asked to explain the reasons for loan of M/s Himachal Futuristic Co. Ltd. being stagnant for three years. The Assessee vide his reply dated 14th of September, 2009, submitted that regarding non- payment of unsecured loan to M/s Himachal Futuristic Com. Ltd., the said company is a listed company and have very friendly relations with the Assessee firm and in view of the liquidity crunch being faced by the Assessee firm for last so many years, the Assessee firm was not in a position to repay the said loan. The Assessing Officer held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 68 of the Act in the year 2007- 08, when the Assessing Officer has accepted that it was being carried forward since the assessment year 2001-02. Section 68 of the Act lays down that if any sum is found credited in the books of an Assessee maintained for any previous year, and the Assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the Assessee of that previous year. In the instant case, the matter pertains to some six years back and it has been explained by the Assessee that the loan in question is outstanding due to the financial crunch being faced by the appellant firm. In this view of the matter, we find substance in the contentions of the learned counsel for the Assessee/appellant before us as the material/ reply placed by the Assessee before the Assessing Officer has not been considered and no opportunity has been given to him to explain his position, therefore, the view taken by the Tribunal is perverse, accordingly, this question is answered in favour of the Assessee/ appellant before us. 14). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to them in the assessment year under reference. Such addition was already made in the assessment year 2006-07 and not the year in question. Simply by saying that this was a bogus liability for assessment year 2006-07 which is cleared in assessment year 2007-08, it must be repaid out of unrecorded sources is only a presumption without any evidence brought on record to that effect. In the upshot, this addition made by the Assessing Officer is held to be bad and needs to be deleted as, in terms of well settled law, the same amount cannot be taxed for two separate years. 15 ). For all that has been said and done above, the question, as framed herein above, is answered in favour of the Assessee/ appellant herein and against the revenue/ respondents herein. Consequently, the findings of the Commissioner of Income Tax (Appeals) vide its order dated 28th of September, 2010, are upheld and the order of the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, Amritsar, dated 24th of February, 2014, is set aside. Consequently, the additions made in respect of the unsecured loans and unexplained expenditure to the tune of ₹ 15,00,000/- (rupees fifteen lacs only) and ₹ 18,30, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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