TMI Blog2019 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ank account of Ms. Jasmine Kochhar Kapoor, is not explained, as a result her credit worthiness is not proved. In view of the above facts, we do not find any infirmity in the impugned order. The findings of fact are against the Appellant, as held concurrently by all the tax authorities. The Appellant has not raised any question of law much less substantial question of law. - Decided against assessee. - ITA 917/2019 - - - Dated:- 24-10-2019 - MR. VIPIN SANGHI AND MR. SANJEEV NARULA JJ. Appellant Through: Mr. Kirti Uppal, Senior Advocate with Mr. B.B. Pradhan, Mr. Aditya Awasthi and Mr. Aditya Raj, Advocates. Respondent Through: Mr. Zoheb Hossain, Senior Standing Counsel. SANJEEV NARULA, J. (Oral): C.M. No. 46336/2019 (exemption) 1. Exemption allowed, subject to all just exceptions. 2. The application stands disposed of. ITA 917/2019 CM. APPLs. 46334-46335/2019 3. The present appeal under Section 260A of the Income Tax Act, 1961 (hereinafter the Act) is directed against the common order dated 26.06.2018 (hereinafter the impugned order) passed by the Income Tax Appellate Tribunal in Appeal (s) No. 7700/2017 for AY-2013-14 and 7752/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, Nagpur A/C No. 0265101012274 3. 649338 23.10.2012 10,00,000 Yes Bank, Nagpur NRO A/c No. 002890400000072 7. The above noted cheques were issued by Ms. Jasmine Kochhar Kapoor, a citizen of GBR (United Kingdom), who is stated to be an Overseas Citizen of India (OCI). Assessee got its account audited under Section 44AB of the Act. As per the statutory requirement of tax audit under Section 44AB, mandatory disclosure was made under Particulars of Loan accepted during the previous year 2012-13 , by annexing the audit report in Form 3CD, disclosing receipt of unsecured loan of ₹ 26 lacs from Ms. Jasmine Kochhar Kapoor, during the previous year. 8. Similarly, in respect of AY 2014-15, Appellant received an unsecured loan of ₹ 87 lacs through six cheques as per details mentioned below: Sl. No. Chq. No. Date Amount Bank A/C 1. 649341 31.05.2013 ₹ 10,00,000/- Yes B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017, noting that the assessee has failed to discharge the onus of proving the credit worthiness of the lender and the genuineness of the transaction. The order of CIT (A) was challenged before the Income Tax Appellate Tribunal in ITA No. 7700/DEL/2017 (AY 2013-14). 10. Likewise, with respect to AY 2014-15, the Appellant sought to explain the unsecured loan of ₹ 87 lacs, by contending that the same was received by way of cheques issued by Ms. Jasmine Kochhar Kapoor. In this case as well, a notice was issued by the Assessing Officer under Section 143 (2) to the Appellant, followed by a show cause notice dated 06.12.2016 seeking explanation as to why the unsecured loan should not be treated as unexplained credit under Section 68 of the Income Tax Act. Pursuant to the said show cause notice, the Appellant submitted a written explanation. The Assessing Officer made an independent enquiry through emails and telephonic conversation with ITO-Ward 1 (3), Nagpur about the ITR status of Ms. Jasmine Kochhar Kapoor and in response thereto, ITO Nagpur informed that Ms. Kapoor had not filed any income tax return. Accordingly, the Assessing Officer made an addition of ₹ 87 lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account has also been well explained. The Appellant had produced a confirmation of accounts along with the copy of the bank statement, copy of the passport and also the PAN No. of Ms. Jasmine Kochhar Kapoor. If the Assessing Officer had any doubt with regard to the genuineness of the creditor, he ought to have issued a notice under Section 133 (6) of the Act to the creditor for confirming the veracity of the entries made in the books of account of the assessee for the AY 2013-14 and AY 2014-15. The assessee had satisfactorily discharged the primary onus by submitting the relevant documents, explaining the source of receipts. Thereafter, it was for the Assessing Officer to scrutinize the same and if he nurtured any doubt, he could have made an independent inquiry. In support of his arguments, Mr. Kirti Uppal learned senior counsel for the Appellant relied upon the judgment of this Court in Mod Creations Pvt. Ltd. v. Income Tax Officer (2013) 354 ITR 282 (Delhi). Mr. Uppal also produced a copy of the sale deed to explain the source of funds in the hands of the Creditor- Ms. Kapoor. 14. Mr. Zoheb Hossain learned senior standing counsel for the Respondent who ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, at this stage, the sale deed produced by the Appellant for the first time to demonstrate that the creditor had the credit worthiness to advance the loan cannot be taken into consideration. In this regard, it would be relevant to refer to Rule 46A of the Income Tax Rules, 1962 which specifically provides that the Appellant is not entitled to produce before Deputy Commissioner (Appeals) or the Commissioner (Appeals), as the case may be, any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except for the circumstances illustrated in the said provision. The said rule reads as under: 46A. (1) The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely :- (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplied with. If such a plea of the assessee is accepted, it would reduce Rule 46A to a dead letter because it would then be open to every assessee to furnish additional evidence before the CIT (A) and thereafter contend that the evidence should be accepted and taken on record by the CIT (A) by virtue of his powers of enquiry under sub-Section (4) of Section 250. This would mean in turn that the requirement of recording reasons for admitting the additional evidence, the requirement of examining whether the conditions for admitting the additional evidence are satisfied, the requirement that the assessing officer should be allowed a reasonable opportunity of examining the evidence etc. can be thrown to the winds, a position which is wholly unacceptable and may result in unacceptable and unjust consequences. The fundamental rule which is valid in all branches of law, including Income Tax Law, is that the assessee should adduce the entire evidence in his possession at the earliest point of time. This ensures full, fair and detailed enquiry and verification. A 7 Judge Bench of the Supreme Court in Keshav Mills Co. Ltd. v. Commissioner of Income-Tax, Bombay North, Ahmedabad (1965) 56 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uence which cannot at all be countenanced. [Emphasis supplied] 17. It, thus, becomes clear that taking any fresh evidence on record can only be done in certain circumstances at the appropriate stage. The same is an exception and not the Rule. The Appellant has not been able to provide any justification for not availing the benefit of any of the aforesaid provisions at the appropriate stage. We have also to be mindful of the fact that the said provision is applicable in respect of first appeals against the assessment order. The present appeal under Section 260A of the Act is against the order passed by the Appellate Tribunal, where a substantial question of law has to be shown to exist. Thus, we cannot permit the Appellant to bring new and additional evidence in the proceedings under Section 260A of the Act, and accordingly, we, disregard the sale deed shown to the Court , relied upon to prove the credit worthiness of Ms. Jasmine Kochhar Kapoor and do not find it to be a case worthy for remand. 18. The next question that arises for consideration is whether the Appellant has raised any substantial question of law. The transaction is sought to be proved by producing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assesse, and there would be no further burden on the revenue to show that the income is from any particular source. 8.3. With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence, that the investments made in share capital are genuine borrowings, since the facts are exclusively within the assessee s knowledge The Delhi High Court in CIT v. Oasis Hospitalities Pvt. Ltd., held that : The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/investments; and (iii) genuineness of the transaction. Only when these three ingredients are established prima facie, the department is required to undertake further exercise. XXX In Sumati Dayal v. CIT this Court held that: if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. [Emphasis supplied] 20. A Division Bench of the Bombay High Court in the case of Orient Trading Co. Ltd vs Commissioner of Income Tax (Central), Calcutta, 1962 SCC OnLine Bom 175 held as under: When cash credits appear in the accounts of an assessee, whether in his own name or in the name of third parties, the Income-tax Officer is entitled to satisfy himself as to the true nature and source of the amounts entered therein, and if after investigation or inquiry he is satisfied that there is no satisfactory explanation as to the said entries, he would be entitled to regard them as representing the undisclosed income of the assessee. When these credit entries stand in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of these entries and to show that they do not constitute a part of his business income liable to tax. When, however, entries stand not in the assessee's own name, but in the name of third parties, there has been some diver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [Emphasis supplied] 21. The plea of the Appellant that on filing of the bank statement and PAN details, the burden stood discharged or that it shifted on to the revenue is tenuous and is not correct. The credit worthiness of the transaction cannot be said to be proved merely on the strength of the bank statement or identity of the creditor. The assessee did not produce the income tax return of the lender or any confirmation. The purported confirmation has been found to be only a copy of unsigned account of the creditor. The source of funds has also not been explained. The judgment relied upon by the Appellant - Mod Creations Pvt. Ltd. (supra) is distinguishable on facts and circumstances, as in the said case, there was sufficient material on record including the tax returns, an affidavit stating the source of funds and an affidavit confirming that monies have been advanced to the assessee to prove the credit worthiness of the creditors and the genuineness of the transaction. In the current case, however, the assessee has failed to produce the tax returns of the creditor or any other material to show the creditworthiness. Thus, the credit worthiness and the genuineness o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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