NITIN V SHAH, MUMBAI V. ITO 20(2)(3), MUMBAI

CO 177/MUM/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1496 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 02-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K KARDA M
• Keywords: Unexplained cash credit; Depreciation; Additional evidence; Corroborative evidences
• Section: 143(3); 133(6); 68

Judgement Text

MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI . , , BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 1537 /MUM/20 1 1 (ASSESSMENT YEAR :200 7 - 08 ) ASST. COMMISSIONER OF INCOME TAX - 15(2), MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 VS MR. NITIN V SHAH , 202, RAJESH CENTRE, S V ROAD, ANDHERI (EAST), MUMBAI (APPELLANT (RESPONDENT) APPELLANT BY : SHRI A K KARDAM RESPONDENT BY : SHRI RAHUL K HAKANI CO NO. 177/ MUM/2013 ARISING OUT OF ITA NO. : 1537/MUM/2011 , AY 2007 - 08 MR. NITIN V SHAH , 202, RAJESH CENTRE, S V ROAD, ANDHERI (EAST), MUMBAI .: PAN: AYJP S 62 3 9 E VS ASST. COMMISSIONER OF INCOME TAX - 15(2), MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 (APPELLANT (RESPONDENT) APPLICANT CROSS OBJECTOR BY : SHRI RAHUL K HAKANI RESPONDENT BY : SHRI A K KARDAM /DATE OF HEARING : 29 - 0 7 - 201 5 / DATE OF PRONOUNCEMENT : 30 - 10 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE A FORESAID APPEAL HAS BEEN FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSE E , AGAINST IMPUGNED ORDER DATED 22 . 1 2 . 201 0 , PASSED BY CIT(A) - 31 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2007 - 08. THE REVENUE HAS RAISED FOLLOWING GROUND IN ITS APPEAL: - MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 2 THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF UNS ECURED LOANS OF RS. 8,64,500/ - TAKEN FROM SMT. VEENA V SHAH AND OF RS. 8,49,360/ - FROM BUSINESS COMMUNICATION AS UNEXPLAINED CASE CREDITS U/S 68 OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS ARE THAT, THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUS INESS OF ARRANGING SEMINARS AND EDUCATIONAL LECTURES ETC. IN THE BALANCE SHEET, THE ASSESSEE HAD SHOWN UNSECURED LOANS OF RS. 32.13 LAKHS. BEFORE THE AO IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE COULD FURNISH THE DETAILS OF UNSECURED LOANS TO THE EXTENT OF RS. 23,64,500/ - I.E. , LOAN TAKEN FROM SMT. VEENA V SHAH OF RS. 8,64,500/ - AND FROM M/S SARTHAK DEVELOPERS OF RS. 15 LAKHS. FOR THE BALANCE LOAN, THE ASSESSEE COULD NOT FURNISH THE DETAILS. THE AO ISSUED NOTICE U/S 133(6) TO ONE OF THE LOAN PARTIE S , I.E. SMT . VEENA V . SHAH, HOWEVER, NO CONFIRMATION WAS RECEIVED FROM HER, HENCE LOAN OF RS. 8,65,500/ - REMAINED UNPROVED. FURTHER, ADDITION OF RS. 8,49,360 WAS ALSO MADE ON ACCOUNT OF DIFFERENCE BETWEEN TOTAL UNSECURED LOANS SHOWN IN THE BALANCE SHEET AN D EXPLANATION NOT FURNISHED BY THE ASSESSEE. 3. BEFORE THE CIT(A), IT WAS SUBMITTED THAT AFTER THE ASSESSEE HAD FILED THE REQUISITE DETAILS AND THE EXPLANATION, AO DID NOT G A VE FURTHER OPPORTUNITY TO THE ASSESSEE AND HE DID NOT SPECIFICALLY CONFRONTED TO THE ASSESSEE REGARDING NON - COMPLIANCE OF NOTICE BY SMT. VEENA V SHAH , WHO IS ASSESSEES MOTHER . THUS, ADDITIONAL EVIDENCE WERE FILED BEFORE THE CIT(A) CONTAINING ALL THE RELEVANT INFORMATION AND EXPLANATION TO PROVE THE GENUINENESS OF THE LOAN. IT WAS FURTHER SUBMITTED THAT SMT. VEENA V SHAH IS THE MOTHER OF THE ASSESSEE WHO HAD TAKEN OVERDRAFT FACILITY FROM ALLAHABAD BANK, ANDHERI (WEST) AGAINST IMMOVABLE PROPERTY OWNED BY HER FROM WHICH SHE HAS GIVEN LOAN TO THE ASSESSE E. IN SUPPORT, SHE HAD FILED CONFIRMATION OF ACCOUNT AND THE RELEVANT BANK ACCOUNT STATEMENT. REGARDING DIFFERENCE IN UNSECURED LOANS OF RS. 8,49,360/ - , IT WAS EXPLAINED THAT SAME WAS ON ACCOUNT OF UNSECURED LOAN TAKEN FROM MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 3 SMT . K A RISHMA B . SHAH , PROPRIETO R OF BUSINESS COMMUNICATION , WHO IS SISTER - IN - LAW OF THE ASSESSEE. THIS WAS ALR EADY STATED AND EXPLAINED IN THE BALANCE SHEET FILED AND ALSO BEFORE THE AO AND FURTHER THE CONFIRMATION OF LOAN ACCOUNT OF THE ASSESSEE ALONG WITH THE BANK ACCOUNT STATEMENT WA S FILED BEFORE CIT(A) . SINCE ADDITIONAL EVIDENCE S WERE FILED BY THE ASSESSEE FOR THE FIRST TIME , T HE MATTER WAS REMANDED TO THE AO, ALONG WITH THE WRITTEN SUBMISSIONS OF THE ASSESSEE. IN RESPONSE, THE AO SUBMITTED HIS REMAND REPORT, THE RELEVANT CONTENT OF WHICH HA VE BEEN REPRODUCED IN PARA 2.3 ON PAGES 4 & 5 OF THE APPELLATE ORDER. 4. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, EVIDENCES ON RECORD AND REMAND REPORT OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT, UNSECURED LOAN BY THE ASSESSEE ARE FROM T HE CLOSE RELATIVES I.E. MOTHER AND SISTER - IN - LAW. THE CONFIRMATIONS HAVE BEEN FILED GIVING ALL THE DETAILS OF MODE OF TRANSACTION AND THE SOURCE OF MONEY ADVANCES, WHICH HAS NOT BEEN DISPUTED BY THE AO. HE FURTHER NOTED THAT BOTH THESE LENDERS ARE REGULARL Y ASSESSED TO TAX AND HAVE BEEN FILING THEIR RETURN OF INCOMES AND THE FACTUM OF GIVING OF LOAN IS NOT ONLY REFLECTED IN THEIR BANK STATEMENT BUT ALSO BEEN SHOWN IN THEIR RELEVANT INCOME - TAX RECORDS. THUS, THE SOURCE OF THESE CREDITS STANDS FULLY EXPLAINED . THE RELEVANT OBSERVATION AND FINDING WITH REGARD TO EVIDENCES FILED BY BOTH THE LENDERS AND THE CONCLUSION DRAWN BY THE CIT(A) IS AS UNDER : - ACCORDINGLY, THE AR HAS FILED THE RELEVANT BANK ACCOUNT STATEMENT OF SMT. KARISHMA B SHAH , PROPRIETOR OF BUSINESS COMMISSION ALONG WITH HIS REPLY DATED 08.12.2010. FROM THE SAME, I FIND THAT ALL THESE TRANSACTIONS ARE DULY RECORDED THEREIN. THESE TRANSACTIONS ARE THROUGH CHEQUES WHICH ARE REFLECTING IN BOTH THE CONCERNED BANK ACCOUNTS OF THE APPELLANT AND THE CREDITOR. THEREFORE, THE IMMEDIATE SOURCES OF THESE CREDITS ARE FULLY EXPLAINED. BESIDES, IT IS ALSO SEEN THAT SMT. KARISHMA B SHAH HERSELF IS FILING HER RETURNS OF INCOME; THEREFORE, THE ADDITION MADE ON ACCOUNT OF LOAN TAKEN FROM SMT KARISHMA B SHAH , TO MY CONSIDERED OPINION IS UNJUSTIFIED. REGARDING, THE UNSECURED LOAN TAKEN FROM HIS MOTHER THE AR HAS FILED THE BANK CERTIFICATE DATED 12.12.2010 CONFIRMING THE OVERDRAFT FACILITY AVAILED BY SMT. VEENA V SHAH AND THE ISSUE OF THE RELEVANT CHEQUE IN FA VOUR OF THE APPELLANT OUT OF THE SAID OD ACCOUNT NO.20022515212 MAINTAINED WITH ALLAHABAD BANK, ANDHERI(W) BRANCH, MUMBAI. THE BANK HAS FURTHER CERTIFIED THAT DUE TO THE PROBLEMS FACED IN THEIR MAIN SERVER THE DUPLICATE MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 4 STATEMENT OF THE ACCOUNT FOR THIS PE RIOD CANNOT BE ISSUED. HOWEVER, THE BANK HAS CERTIFIED THAT CHEQUES OF RS. 8,40,000/ - DATED 23.02.2007 AND OF RS. 24,500/ - DATED 24,500/ - DATED 27.02.2007 ARE ISSUED OUT OF OD ACCOUNT OF THE CREDITOR WHICH ARE TRANSFERRED IN THE ACCOUNT OF THE APPELLANT MA INTAINED WITH THE SAME BANK BRANCH. THE OVERDRAFT FACILITY GRANTED BY THE BANK TO SMT VEENA V SHAH AND THE CONFIRMATION OF SMT. VEENA V SHAH IS NOT DISPUTED BY THE AO. MOREOVER, SHE HERSELF IS FILING HER REGULAR RETURNS OF INCOME A COPY OF HER RETURN OF IN COME ALONG WITH COMPUTATION OF INCOME FOR AY 2007 - 08 FILED BY THE AR IS PLACED ON RECORD. THEREFORE, ON ACCOUNT OF THESE FACTS OF THE CASE AND SUBMISSIONS OF THE AR AND FURTHER ON ACCOUNT OF THE SUPPORTING EVIDENCES PLACED ON RECORD, AS DISCUSSED ABOVE TO MY CONSIDERED OPINION THE AO IS NOT JUSTIFIED IN CONSIDERING THE LOAN RECEIVED ON FROM SMT. VEENA V SHAH AS HIS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. THEREFORE, ON ACCOUNT OF THE AFORESAID DISCUSSION, I FIND THAT THE APPELLANT HAS DISCHARGED THE ONU S CAST ON HIM SO AS TO EXPLAIN THE SOURCE OF CREDITS APPEARING IN HIS BOOKS OF ACCOUNT PERTAINING TO THE UNSECURED LOANS TAKEN FROM HIS MOTHER AND SISTER - IN - LAW BY FURNISHING THE NECESSARY EXPLANATION AND SUPPORTING EVIDENCES WITHIN THE MEANING OF THE PROV ISIONS OF SECTION 68 OF THE ACT. THE SOURCE OF THE LOANS GIVEN TO THE APPELLANT ARISING DIRECTLY OUT OF THEIR RESPECTIVE BANK ACCOUNTS , TO MY CONSIDERED OPINION THE SOURCE OF THE RELEVANT LOANS OR CREDITS ARE DULY EXPLAINED. THEREFORE, IN VIEW OF THE SAME I FIND THAT THE AO IS NOT JUSTIFIED IN CONSIDERING THE SAME AS UNEXPLAINED CASH CREDITS OF THE APPELLANT. THE ENTIRE ADDITION MADE ON THIS ACCOUNT, IT IS THEREFORE DIRECTED TO BE DELETED. THESE GROUNDS OF APPEALS ARE ACCORDINGLY ALLOWED. 5. AFTER HEA RING BOTH THE PARTIES AND ON PERUSAL OF THE MATERIAL ON RECORD IN THE PAPER BOOK AS WELL AS THE RELEVANT FINDING GIVEN BY THE CIT(A), WE FIND THAT THE TRANSACTION OF THE LOAN TAKEN BY THE ASSESSEE FROM HIS MOTHER AND SISTER - IN - LAW STANDS FULLY EXPLAINED. T HEY ARE NOT ONLY REGULARLY ASSESSED TO TAX BUT ALSO HAVE DULY SHOWN THE LOAN IN THEIR INCOME - TAX RETURNS. NOT ONLY THAT, IN THE CASE OF SMT. KARISHMA B SHAH, THE TRANSACTIONS HAS NOT ONLY BEEN CONFIRMED BUT IS ALSO REFLECTED IN THE BANK ACCOUNTS OF THE A SSESSEE AS WELL AS THE CREDITOR. THUS, THE SOURCE OF THE LOAN STANDS FULLY EXPLAINED THEREFORE, NO ADDITION ON ACCOUNT OF 68 COULD BE MADE. SIMILARLY, LOAN TAKEN FROM MOTHER, IT IS SEEN THAT , CHEQUE HAS BEEN ISSUED IN FAVOUR OF THE ASSESSEE FROM HER OD ACCOUNT AND BANK HAS FURTHER CERTIFIED THAT SUCH CHEQUES HAVE BEEN ISSUED OUT OF THE OD ACCOUNT AND TRANSFERRED TO THE ASSESSEES ACCOUNT IN THE SAME BRANCH. THUS, IN THIS CASE ALSO THE SOURCE O F THE LOAN STANDS FULLY EXPLAINED. ACCORDINGLY, THE FINDING AS RECORDED BY THE CIT(A) IS AFFIRMED AND GROUNDS RAISED BY THE REVENUE STANDS DISMISSED. MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 5 6. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED VARIOUS GROUNDS ON ACCOUNT OF VARIOUS AD - HOC DISALLOW ANCES ON ACCOUNT OF TELEPHONE, MOBILE, MOTOR EXPENSE AND DEPRECIATION. BESIDES THIS, THE ASSESSEE IS CHALLENGING THE ADDITION OF RS. 97,250/ - ON ACCOUNT OF CASH PAYMENT MADE TO HDFC BANK FOR PURCHASE OF A CAR. 7. AS REGARDS ADDITION OF RS. 9 7 ,250/ - MAD E U/S 68 AS RAISED VIDE GROUND NO.1 , B RIEF FACTS ARE THAT, THE ASSESSEE HAS PURCHASED A CAR FOR RS. 5,27,560/ - WHICH HAS BEEN FINANCED BY TAKING A LOAN OF RS. 4,35,000/ - FROM HDFC BANK AND FURTHER MAKING DOWN PAYMENT OF RS. 91,920/ - IN CASH. THE ASSESSEE C OULD NOT EXPLAIN BEFORE THE AO THE SOURCE OF DOWN PAYMENT MADE IN CASH, ACCORDINGLY, IT WAS ADDED U/S 68 BY THE AO. THE ASSESSEES CONTENTION HAD BEEN THAT, HE HAD SUFFICIENT BALANCE TO PAY THE CASH, HOWEVER, NO SUPPORTING DETAILS / DOCUMENTS WERE FILED. T HE LD CIT(A) TOO CONFIRMED THE SAID ADDITION ON THE GROUND THAT, ASSESSEE COULD NOT SUBSTANTIATE HIS EXPLANATION BY PRODUCING ANY EVIDENCE. ACCORDINGLY, THE SAID ADDITIONS WAS SUSTAINED. 8. EVEN BEFORE US, THERE IS NO REBUTTAL OF THE SUCH A FINDING OF FACT RECORDED BY THE CIT(A) BY WAY OF ANY MATERIAL OR EVIDENCE ON RECORD TO SHOW THAT ASSESSEE HAD AVAILABILITY OF CASH FUNDS FOR MAKING THE DOWN PAYMENT TO THE HDFC BANK , ACCORDINGLY, GROUND NO. 1 AS RAISED BY THE ASSESSEE IN CROSS OBJECTION IS DISMISSED . 9. AS REGARDS VARIOUS AD - HOC DISALLOWANCE ON ACCOUNT OF TELEPHONE, MOBILE, MOTORCAR EXPENSES, OFFICE EXPENSES, PRINTING AND STATIONERY, STAFF WELFARE, HOTEL EXPENSES AND TRAVELLING EXPENSES AS RAISED VIDE GROUND NO. 2 TO 9, WE FIND THAT THESE ADDITIONS HAVE BEEN MADE ON THE GROUND THAT, ASSESSEE COULD NOT PROVE THE ENTIRE EXPENDITURE INCURRED FOR THE BUSINESS PURPOSE. THE REASONS FOR MAKING THE DISALLOWANCE BY THE AO THAT THEY WERE EITHER FOR PERSONAL PURPOSE OR SAME WERE FOR NON - BUSINESS MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 6 PURPOSE. THE AS SESSEE COULD NOT PRODUCE ANY MATERIAL BEFORE US TO REBUT THE FINDING BY WAY OF RELEVANT EVIDENCE OR BILLS TO STATE THAT ALL THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSE. THE RELEVANT HEAD OF THE EXPENSES, AMOUNT CLAIMED AND DISALLOWANCE MADE BY THE AO A ND CONFIRMED BY THE CIT(A) ARE AS UNDER : - PARTICULARS OF EXPENSE AMT. OF EXPENSE(RS) DISALLOWANCE MADE (RS.) REASON FOR MAKING THE DISALLOWANCE TELEPHONE EXP 2,65,255 30,000 PERSONAL NATURE OF EXPENSES OF THE APPELLANT AND HIS FAMILY MEMBERS DEBITED TO P&L ACCOUNT FOR WHICH NO DETAILS ARE MAINTAINED BY THE APPELLANT MOTOR CAR EXP. 90,532 10,000 -- DO -- CONVEYANCE EXP 69,325 10,000 POSSIBILITY OF THE EXPENSE INCURRED FOR NON - BUSINESS PURPOSES. OFFICE EXP. 12,199 2,000 EXPENSE CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND POSSIBILITY OF INCURRED FOR NON - BUSINESS PURPOSES PRINTING & STAT - ONERY EXP 26,592 3,000 APPELLANT COULD NOT PRODUCE THE ENTIRE BILLS AND SUPPORTING VOUCHERS. THE EXPENSES CLAIMED ON SELF - MADE VOUCHERS. THE EXPENSES CLAIMED ON SELF - MADE VOUCHERS. POSSIBILITY OF THE CHEQUE INCURRED FOR NON - BUSINESS PURPOSES STAFF WELFARE EXP 16,169 2,000 APPEL LANT COULD NOT PRODUCE THE ENTIRE BILLS AND SUPPORTING EVIDENCES. EXPENSES CLAIMED ON SELF - MADE VOUCHERS BASIS. POSSIBILITY OF EXPENSE INCURRED FOR NON - BUSINESS PURPOSES HOTEL EXP. 2,31,366 20,000 APPELLANT COULD NOT PRODUCE THE ENTIRE BILLS AND SUPPORTING EVIDENCES. MOST OF THE EXPENSES CLAIMED ON SELF - MADE VOUCHERS. POSSIBILITY OF EXPENSE INCURRED FOR NON - BUSINESS PURPOSES. TRAVELLING EXP. 1,55,262 15,000 POSSIBILITY EXPENSE INCURRED FOR NON - BUSINESS PURPOSES. TOTAL 8,66,700 92,000 10. IN ABSENCE OF ANY REBUTTAL, WE FIND THAT SUCH AN AD - HOC DISALLOWANCE ARE QUITE REASONABLE AND HENCE NO INTERFERENCE IS CALLED FOR. ACCORDINGLY, ORDER OF THE CIT(A) ON THIS SCORE IS AFFIRMED AND CROSS OBJECTION IS DISMISSED. 11. IN THE RESULT, BOTH APPEAL OF THE REVENUE AND CROSS OBJECTION RAISED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER , 2015. MR. NITIN V SHAH ITA 1537 /M/201 1 CO 177/M/2013 7 SD/ - SD/ - ( . ) ( ) ( D. KARUNAKARA RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 30 TH OCTOBER , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 31 , MUMBAI. 4 ) THE CIT - 20 , MUMBAI. 5 ) , , / THE D.R. G BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS