Shri Nitin Raj Jain v. The Income Tax Officer, Ward -6(1), Jaipur. New Central Revenuebuilding, Statue Circle, C-Scheme, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 86/2019 Shri Nitin Raj Jain S/o Shri V.k. Jain, Aged About 38 Years, R/o4/435, Malviya Nagar, Jaipur. ----Appellant Versus The Income Tax Officer, Ward -6(1), Jaipur. New Central RevenueBuilding, Statue Circle, C-Scheme, Jaipur. ----Respondent For Appellant(s) : Mr. Javed Khan, Advocate HON'BLE MRS. JUSTICE SABINA HON'BLE MR. JUSTICE ABHAY CHATURVEDI Judgment / Order 27/11/2019 Appellant has filed this appeal challenging the order dated14.5.2019 passed by the Income Tax Appellate Tribunal, Jaipur. The case of the appellant, in brief, is that the appellant-assessee was an individual and proprietor of a firm ‘M/s. VinodSteels’. The appellant-assessee had filed his Income Tax Return on19.9.2012 for Assessment Year 2012-13 declaring total income ofRs.1,86,260/-. The case of the appellant-assessee was taken-upfor scrutiny and notice under Section 143(2) of the Income TaxAct, 1961 (hereinafter to be referred as ‘the Act’) was issued. Oneof the issue raised by the Assessment Officer was that during thecourse of assessment proceedings, it had transpired that theassessee had taken unsecured loans from two differentcompanies. From one company, namely ‘Tanish Tradecom Pvt. Ltd.’ (hereafter referred to as ‘TTPL’), loan of Rupees Two Crores was taken, whereas, from other company namely‘M/s. Punit Oils and Chemicals Pvt. Ltd.’ (hereinafter referred to as‘POCPL’) a loan to the tune of Rupees One Crore was taken. Theexplanation submitted by the assessee during the course ofassessment proceedings was ignored by the Assessment Officerand it was held that the creditor companies were not genuinebusiness concerns. Hence, it was held that the loans taken by theassessee were not genuine. The Assessment Officer, videassessment order dated 30.3.2015, made an addition of RupeesThree Crores under Section 68 of the Act. Aggrieved against thesaid order, appellant-assessee preferred an appeal before theCommissioner, Income Tax (Appeals). The appeal filed by theappellant-assessee was dismissed vide order dated 20.11.2017.Aggrieved against the said order, the appellant-assessee preferredan appeal before the Income Tax Appellate Tribunal under Section253 of the Act. However, the said appeal was dismissed vide orderdated 14.5.2019. Hence, the present appeal by the appellant-assessee. Learned counsel for the appellant has submitted that theappellant-assessee had taken unsecured loans from genuinecompanies. The inquiry had not been properly conducted by theAssessment Officer while holding that the creditor companies werenot genuine. In support of his arguments, learned counsel for theappellant has placed reliance on a decision of the Hon’bleSupreme Court in Commissioner of Income Tax, Orissa v.Orissa Corporation (P) Ltd., (1986) 159 ITR 78 (SC),wherein it has been held as under:- “13. In this case the assessee hart given the names andaddresses of the alleged creditors. It was in the knowledge ofthe Revenue that the said creditors were income-tax assessees.Their index number was in the file of the Revenue. The Revenue,apart from issuing notices under Section 131 at the instance ofthe assessee, did not pursue the matter further. The Revenuedid not examine the source of income of the said allegedcreditors to find out whether they were credit-worthy or weresuch who could advance the alleged loans. There was no effortmade to pursue the so called alleged creditors. In thosecircumstances, the assessee could not do any further. In thepremises, if the Tribunal came to the conclusion that theassessee had discharged the burden that lay on him then it couldnot be said that such a conclusion was unreasonable or perverseor based on no evidence. If the conclusion is based on someevidence on which a conclusion could be arrived at, no question oflaw as such arises.” Learned counsel has next placed reliance on a decision of this court in Aravali Trading Company v. Income Tax Officer (2008) 220 CTR (Raj.) 622, wherein it has been held as under:- “9. Therefore, central issue arising from the threequestions framed above, is whether it is incumbent upon theassessee before his explanation can be accepted, to prove thesources of income or to say source where from the depositorcould have acquired the money or once the assessee establishesthe existence of the real person who had deposited the money inquestion with the assessee and those person owned to havedeposited with such money with the assessee, assessee's burdendoes not extend further to establish the source of thedepositors from where they could have acquired the money.” Thus, in the present case, the appellant-assessee hadexplained in assessment proceedings that he had taken loan ofRupees Two Crores from TTPL and a loan of Rupees One Crorefrom POCPL. However, during the course of assessmentproceedings, it transpired that the said companies were notgenuine. The Inspector, Income Tax, had made verification withregard to genuineness of creditor companies. As per the report ofthe Inspector, reproduced in the order dated 20.11.2017 passed by the Commissioner of Income Tax (Appeals), Ajmer, it was foundthat address of both the companies was same. When theInspector went to the disclosed addresses of the companies, itwas found that the premises was a seven storied old buildinghaving many offices and residential flats. However, the creditorcompanies were not found at the disclosed addresses. Nosignboards or letter-boxes in the names of creditor companieswere found at the given address. The room was found locked.Inspector had met various persons in the vicinity and no personcould state the existence and business activities of both thecompanies. During the course of arguments, learned counsel for theappellant had stressed that the creditor companies were alsobeing assessed under the Income Tax Act. The documents shownby the learned counsel for the appellant with regard to Income TaxReturns of the creditor companies, filed for the assessment year2012-13, reveal that addresses of the companies are the same onwhich verification had been done by the Inspector, Income Tax. Thus, it is evident that the Assessment Officer had conductedinquiry with regard to assessment proceedings and on inquiry, ittranspired that the creditor companies were not genuine. Hence,the burden shifted on the assessee to controvert the materialbrought on record by the Assessment Officer. It has been noticedby the Tribunal that the assessee had failed to produce anycontrary material to controvert the evidence brought on record bythe Assessment Officer. The Tribunal, after elaborately consideringthe material on record, has rightly dismissed the appeal filed bythe appellant-assessee. The judgments relied upon by the learned counsel for theappellant-assessee fail to advance the case of the appellant-assessee as they are not applicable to the facts of the presentcase. Hence, no ground for interference is made out. Dismissed. (ABHAY CHATURVEDI),J (SABINA),J Govind/