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TMI Blog2014 (2) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year 2005-06 which the assessee has stated to be repaid during the financial 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. - Decided in favour of revenue - I.T.A. No. 458(Asr)/2010 - - - Dated:- 24-2-2014 - Sh. H.S. Sidhu, Judicial Member And Sh. B.P. Jain, Accountant Member Appellant by: Sh. Mahavir Singh, Sr.DR Respondent by: Sh. P.N. Arora, Advocate ORDER PER BENCH 1. The Revenue has filed the present appeal against the order dated 28.09.2010 passed by learned CIT(A), Jammu, for the assessment year 2007-08 on the following grounds: i. That on the facts and circumstances of the case, the learned CIT(A) was not justified in deleting the addition of ₹ 15,00,000/- {actually ₹ 1,50,00,000/- as observed by CIT(A)} without appreciating the fact that the assessee failed to justify the reasonableness as to how and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It was also observed during the course of assessment proceedings that the concern M/s Himachal Futuristic Com. Ltd. does not have any business transactions with the assessee firm in the normal course. During the course of assessment proceedings, the assessee had submitted 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 it does not have any normal business transactions, for a period of more than 3 years. It was also seen that no interest was being paid or credited to M/s Himachal Futuristic Com. Ltd. in respect of this credit balance. Accordingly, vide order sheet entry dated 03.09.2009, the assessee was called upon to explain as under: Explain the reasons for loan of M/s Himachal Futuristic Com. Ltd. being stagnant for 3 years and more. Explain - The year of loan - Mode of payment - Terms of payment - Repayment schedule Vide reply dated 14.09.2009, it was submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee failed to produce the stated lender and establish the genuineness of this cash credit. Accordingly, the liability was held to be bogus and it was held that this sum was nothing but assessee s own money introduced in the books in the garb of unsecured loan. During the course of assessment proceedings for A.Y. 2007-08, where the liability was stated to be repaid, the assessee was called upon vide order sheet entry dated 21.08.2009 to submit: Copy of a/c of Sri Ghulam Nabi whose a/c has been squared up during the year. Specify the source and mode of payment. 6. After perusing the reply filed by the assessee along with the documentary evidence, the Assessing Officer has given his findings regarding the second addition of ₹ 18,30,000/- under Section 68C of the Act, which is at page 4, is reproduced as under: During the course of assessment proceedings, the assessee failed to furnish any ledger account of Sri Ghulam Nabi or specify the mode of payment made to him. When the identity of Sri Ghulam Nabi itself is not established, the issue of making payments to him against the stated liability is also out of question. However, a bogus liability created during the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chal Futuristic Communications Ltd. to the effect that the loan was still outstanding. The assessee failed to discharge the onus cast upon it under the law and thus it became clear that the assessee owes no such liability to the said company. The learned CIT(A) deleted the addition on the ground that the provisions of section 68 are not applicable in this case and it was also not a case of cessation of liability under Section 41(1) of the Income Tax Act, 1961. It is submitted that the learned CIT(A) has erred in deleting the addition for the following reasons: (A) The assessee claims it had received loan from the said company during the accounting period relevant to the assessment year 2002-03 and it has been claimed by the assessee it had shown the amount of loan of ₹ 1,50,00,000/- in its balance sheet for the assessment year 2002-03. During the assessment year under consideration, the assessee fails to prove that the liability is existing as on 31.03.2007. When the liability had been found to be non-existent as on 31.03.2007, it had only one natural consequence that it became the assessee s income for the assessment year 2007-08. The gut issue involved is whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritsar 10. On the contrary, learned counsel for the assessee relied upon the order of learned CIT(A), Jammu, and in addition to his argument, he has filed his written submission, which is reproduced as under:- Before The Income Tax Appellate Tribunal, Amritsar Bench, Amritsar. In the matter of appeal of M/s Kohinoor Enterprises, 7, Sheikh Bagh, Srinagar. Sub:- Assessment year 2007-08 Appeal I.T.A.T. No. 458(ASR)/2010 against Order u/s 250(6)/143(3) of the IT Act, 1961 This is an appeal preferred by the department against the order of Commissioner of Income Tax (Appeals), wherein the addition of ₹ 15,00,000/- and ₹ 18,30,000/- was deleted by the worthy CIT(A). In this connection, it may be pointed out that this is a case of Partnership Firm and the assessee-firm derives income from Trading in Pesticides with Head Office at Srinagar. As far as the addition of ₹ 15,00,000/- is concerned, it may be pointed out that there is a credit of ₹ 15,00,000/- standing in the name of Himachal Futuristic Communications Ltd. It is true that this credit balance was appearing in the Balance-Sheet right from the Assessment Year 2001-02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ground no. 1 regarding deletion of addition of ₹ 15,00,000/- {actually ₹ 1,50,00,000/-} as mentioned by the 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 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Assessing Officer also found that the concern M/s Himachal Futuristic C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 ₹ 18,30,000/- from some Ghulam Nabi for the financial year 2005-06. This liability was stated to be repaid during the financial year 2006-07 and n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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