IT: Where there was sufficient funds in lender's account and loan was taken and repaid through cheques, there was no unexplained cash credit
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[2013] 38 taxmann.com 239 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax -I
v.
Kapoor Chand Mangesh Chand*
R.K. AGRAWAL AND RAM SURAT RAM (MAURYA), JJ.
IT APPEAL NO. 309 OF 2009†
OCTOBER 30, 2012
Section 68 of the Income-tax Act, 1961 - Cash credit [Burden of proof] - Loan was advanced and repaid through account payee cheques - PAN number of lenders were furnished - Lenders had sufficient funds in their bank accounts and cash was not deposited on date preceding to or at time when cheques were issued by lenders - Whether no addition under section 68 was called for - Held, yes [Para 5][In favour of assessee]
A.N. Mahajan for the Petitioner.
ORDER
1. The present appeal has been filed under Section 260-A of the Income Tax, 1961 (hereinafter referred to as the Act) against the order dated 6th March, 2009 passed by the Commissioner of Income Tax (Appeal)-I, Agra and on the basis of the following substantial questions of law, which according to him arises out of the order of the tribunal.
| "1. | Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition of Rs. 13,13,720/-made by the A.O. u/s 68 of the Act on account of unexplained cash credit? | |
| 2. | Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in following its own decisions in the case of Dinesh Kumar Jain & Mukesh Kumar Jain in ITAT Nos. 315, 314, 478 & 364/Agr/05 dated 30.9.08 despite the fact that these decisions have not been accepted by the Department and appeals u/s 260-A have been filed and the matter is subjudice?" |
2. Facts giving rise to the present appeal are as follows:—
The appeal relates to the assessment year 2001-2002. The respondent-assessee is a proprietary firm which carries on the business in the name and style of M/s Kapoor Chand Mangesh Chand Jain with its proprietor Shri Kapoor Chand Jain. It has been stated before the Assessing Officer that the firm had taken loan of Rs. 5,47,803/- from Baij Nath Agarwal and Companies and Rs. 7,65,917/- from M/s Amit Agarwal & Company. As there was a raid in the business premises of M/s Baij Nath Agarwal & Companies, which belongs to Ganga Ram Agarwal group and the said company was found engaged in providing accommodation entries, the Assessing Officer added the aforesaid amount in question by invoking provisions of Section 68 of the Act on the ground that the said group of companies are engaged in giving bogus/accommodation entries. The assessee carried the matter in appeal before Commissioner of Income Tax (Appeals), Agra who by order dated 28.11.2005 found that the lenders were regular income tax assessee and their PANs are on record. The amount had been advanced through Account Payee Cheques. Before issuing the cheques, they had got the balance in their accounts and the amount has also been repaid through Account Payee Cheques, thus the identity, credit, worthiness etc. of the lenders have been disclosed. The Commissioner Income Tax (A) further found that merely because there was a search in Ganga Ram Agarwal & Companies, no inference regarding giving of bogus/accommodation entries could be drawn.
3. The Commissioner of Income Tax (A), therefore, deducted the addition and the appeal preferred by the Revenue has been dismissed.
4. We have heard Shri Shambu Chopra, learned Senior Standing Counsel and Shri Krishna Agarwal for the Assessee. Shri Chopra, learned counsel submits that as the two lenders are belonging to Ganga Ram Agarwal & Companies and in the search operation carried thereon it has been established that the group is engaged and providing bogus/accommodation entries, merely because the lenders are tax-payers and regular assessee and the amount has been advanced through account payee cheques and repaid also through the account payee cheques. The cash credit/loan being bogus had rightly been found as un-explained under Section 68 of the Act.
5. The submission is wholly mis-conceived. In the search operation carried on M/s Ganga Ram Agarwal and Companies, there is no admission by the assessee therein that they were involved giving bogus/accommodation entries. Even if, findings recorded by the Assessing Authority to that effect is not correct and can not be relied upon. From the facts found by the authorities, it is clear that the amount of loan was advanced through the Account Payee Cheques and PANs were also furnished. The amount has been repaid through account payee cheques and the lenders has sufficient funds in their bank accounts not by cash deposited on the preceding date or when the cheques were issued by the money lenders.
6. We, therefore, observe that Commissioner of Income Tax (A) has rightly passed the orders. In such circumstances no addition under Section 68 of the Act was called for.
Consequently, the appeal is failed.
The appeal is dismissed.
SBRegards
Prarthana Jalan
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