The Commissioner Of Income Tax, Bhopal v. Subodh Varshney

HIGH COURT OF MADHYA PRADESH : JABALPURI.T.A. No.50/2015 The Commissioner of Income Tax, Bhopal -Versus- Subodh Varshney CORAM : Hon’ble Shri Justice Rajendra Menon &Hon’ble Shri Justice K.K. Trivedi, JJ. Shri Sanjay Lal, Advocate for the appellant. O R D E R( 03.12.2015) PER : RAJENDRA MENON, J. : This appeal preferred by the revenue under Section 260-A ofthe Income Tax Act, 1961 [hereinafter referred to as `the Act'], calls inquestion the legality of an order dated 24-11-2014 passed by the IncomeTax Appellate Tribunal, Indore (for brevity `the Tribunal') in IT(SS)ANo.236/IND/2014. 2.A search and seizure operation was conducted in theresidential and business premises of one Arun Lila, who was carrying outcertain business activities in the name and style of M/s LilasonsInfrastructure Pvt. Ltd., Bhopal. In the said search and seizure operation,certain papers and documents belonging to the present appellant/assessee,namely, Subodh Varshsney were found. 3.On the basis of the seized materials the Assessing Officerproceeded for issuance of a notice under Section 153-C read with Section 153-A of the Act, recording the reasons that the assessee is Non-Executive Director and had received an sum of Rs.2,18,15,000/- interestfree unsecured loan from Juned Qazi for the Assessment Year 2009-2010. Finding the aforesaid amount to be unexplained by the assessee, itwas added to his income with the finding, that the assessee failed toestablish the identity and creditworthiness of the lender. 4. It is the case of the appellant that on an appeal being filedbefore the Commissioner Income Tax (Appeals) this amount wasenhanced to Rs.2,30,15,000/-. However, on a further appeal having beenpreferred before the Income Tax Appellate Tribunal the amount inquestion, has not been been deleted as prayed. Hence, the present appealunder Section 260-A of the Act is filed by the Revenue before this Court,on the following substantial question of law for consideration: “Whether, considering in totality the factsas recorded by CIT(A), ITAT was justified in law indeleting the addition of Rs.2,18,15,000/- underSection 68 of the Act, further enhanced toRs.2,30,15,000/- on account of loan taken fromJuned Quazi.” 5.Shri Sanjay Lal, learned counsel for the appellant took us tothe findings recorded by the Commissioner (Appeal) and the AssessingOfficer and tried to indicate the shifting burden of proof and totaldisregard of requirement of Section 68 of the Act is unsustainable. Thelearned counsel for the Revenue further argued that the assessee has notproduced any cogent material in order to prove creditworthiness andidentity of the lender and to establish the transaction, as envisaged underthe Act. Therefore, interference should be made in the findings recordedby the Tribunal, as the same are perverse. 6.We have considered the contentions raised. We have gonethrough all the three orders impugned. The question involved in thisappeal, is a pure question of fact in the matter of addition of the amountin question, after due appreciation of the materials available, viz.Account book, bank statement and other financial transaction documents.The learned Tribunal taking into account the requirement under Section 68 of the Act and the detailed submissions duly supported by relevantdocuments, decided the appeal in paragraph 15 and proceeded to analysethe creditworthiness and genuineness of the loan said to have been paidby the lender Shri Juned Qazi, based on the material available, as under: “15. We have carefully considered the rival submissions along with the order of the tax authorities below. We noted that in this case the assessee has received unsecured loans of Rs.2,30,15,000/- during the impugned year from Shri Juned Qazi in the following manner: We also noted out of these loans the assessee has refunded the following loan upto 22-10-2012 through cheque: 68 of the Act and the detailed submissions duly supported by relevantdocuments, decided the appeal in paragraph 15 and proceeded to analysethe creditworthiness and genuineness of the loan said to have been paidby the lender Shri Juned Qazi, based on the material available, as under: “15. We have carefully considered the rival submissions along with the order of the tax authorities below. We noted that in this case the assessee has received unsecured loans of Rs.2,30,15,000/- during the impugned year from Shri Juned Qazi in the following manner: We also noted out of these loans the assessee has refunded the following loan upto 22-10-2012 through cheque: These facts have not been denied by the ld. A.R. The assessee has submitted following documents during the course of assessment proceedings: i) Copy of PAN Card and passport of the lender Shri JunedQazi.Qazi. ii) Copy of letter of loan agreement between Shri Juned Qaziand Dr. Subodh Varshney.and Dr. Subodh Varshney. iii)Copy of agreement dated 4-3-2011 between Shri Juned Qaziand Dr. Subodh Varshney.and Dr. Subodh Varshney. iv) Copy of affidavit dated 19-03-2011 executed by Shri JunedQazi affirming thtQazi affirming tht He is resident of HA 57, NRI Colony, Koheriza, Bhopal andpresently residing at Vancouver Road, Morganville, NewJersey, USA.He is resident of HA 57, NRI Colony, Koheriza, Bhopal andpresently residing at Vancouver Road, Morganville, NewJersey, USA. That he is NRI and has no source of income in India. Hence, heis not liable to submit the return of income in India (PB pageNo.140).That he is NRI and has no source of income in India. Hence, heis not liable to submit the return of income in India (PB pageNo.140). Copy of Bank statement of Shri Juned Quazi in ICICI BankA/c No.005501075973) for the period 02 August 2008 to 21 September2009 and No.005501075779 for the period 02/04/2008 to 04/11/2011(PB page No.141-146) 15.The assessee before the CIT(A) submitted that following additional evidence: a)Copy of confirmation from Shri Juned Quazi dated 15-10-2013 duly notarized, confirming the advancement of loan and source of loan,(PB Page No.147-148). b)Copy of Bank statement of Shri Juned Qazi in Citi Bank, New York, USA. (PB page No.149-154).c)Copy of income tax return of Shri Juned Qazi submitted by him in U.S. For the year 2005-06, 2006-07 to prove the creditworthiness of Shri Juned Qazi.” 7.Thereafter the Tribunal in paragraph 25 of the orderrecorded the finding as under: “25. In the case before us we have notedthat the assessee has duly explained the nature andsource of the unsecured loan received by him. Theconfirmation as well as copy of bank account of ShriJuned Qazi has duly been filed. All the loan has beenreceived through banking channel Shri Juned Qazi ishaving Pan card, therefore, identity cannot bedoubted. The transaction is through the bankingchannel genuinity of the of the transaction is alsostands proved until and unless some contrary evidenceare brought on record by the revenue. In theconfirmation dated 15-10-2013 the copy of which isavailable to page 147 to 148 and 149 and 149 to 154 itis apparently clear that the assessee has explained thesource of the loan advanced by Shri Juned Qazi. Eventhough in our opinion the assessee is not required toprove the source of sources the explanation advancedby the assessee is a plausible one and prove that theassessee has discharged his onus which is envisagedon him. We have also gone through the case laws. Allthese case laws realtes to the discharging of onus onthe part of the assessee. It is not the case where theassessee has not offered any explanation. Theexplanation offered by the assessee in our opinion isreasonable and has to be accepted keeping in mind allthe material and other circumstances available onrecord. We, therefore, set aside the order of theCIT(A) and delete the addition. Thus, the groundNos.3 to 4 stands allowed.” [Emphasis supplied] [Emphasis supplied] 8.In view of the aforesaid analysis made by the Tribunal, it isclear that based on the documents and the records of the revenue andother bank statements and financial transaction available, the finding offact has been recorded by the Tribunal to say, that identity andcreditworthiness of the lender and the transactions have been established.For the reasons as indicated hereinabove, and also lender Shri Juned Qazito be an NRI, who has submitted his entire financial transaction and hiscreditworthiness is said to have been established. This being the finding Chaturvedi/- of fact by the learned Appellate Tribunal which consisted of a JudicialMember and an Accountant Member, based on due consideration ofmaterials available. We see no substantial question of law is involvedwarranting consideration by this Court. 9.Accordingly, the appeal is dismissed. (Rajendra Menon) Judge (K.K. Trivedi) Judge