KIRIT N, MEHTA, V. ITO 11(2)(3),

CO 67/MUM/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9719 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 22-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2013
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK L NL; DS LE{K ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.817/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2006-07 MR. KIRIT N. MEHTA 61-A, MITTAL TOWERS, NARIMAN POINT, MUMBAU 400 005. VS. INCOME TAX OFFICER-11(2)(4) 443, 4 TH FLOOR, AAYKAR BHAVAN, MUMBAI - 400 020 PAN:-AAHPM0566F APPELLANT RESPONDENT VK;DJ VIHY LA[;K / ITA NO.1088/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2006-07 INCOME TAX OFFICER-11(2)(4) 443, 4 TH FLOOR, AAYKAR BHAVAN, MUMBAI - 400 020 VS. MR. KIRIT N. MEHTA 61-A, MITTAL TOWERS, NARIMAN POINT, MUMBAI 400 005. PAN:-AAHPM0566F APPELLANT RESPONDENT CO NO. 67/MUM/2013 ARISING OUT OF INCOME TAX ACT 1088/MUM/2011 ASSESSMENT YEAR: - 2006-07) MR. KIRIT N. MEHTA 61-A, MITTAL TOWERS, NARIMAN POINT, MUMBAI 400005 VS. INCOME TAX OFFICER-11(2)(4) 443, 4 TH FLOOR, AAYKAR BHAVAN, MUMBAI - 400 020 PAN:-AAHPM0566F APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI KIRIT N. MEHTA REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI SUNIL AGARWAL DATE OF HEARING 22.07.2014 DATE OF PRONOUNCEMENT 25.07.2014 MR. KIRIT N. MEHTA 2 | P A G E ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS AND CROSS OBJECTION BY THE ASSE SSEE ARE DIRECTED AGAINST THE ORDER DATED 9.11.2010 OF CIT (A) FOR TH E A.Y. 2005-06. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE VARIOUS DEPOSITS BY CHEQUE IN HIS BANK ACCOUNT AND SOME OF THE CHEQUES ARE NOT RELATING TO THE INCOME DECLARED BY THE ASSE SSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF DEPO SITS FROM VARIOUS CHARGES WHICH WERE NOT DECLARED BY THE ASSESSEE AS INCOME I N PARA 3 OF THE ASSESSMENT ORDER AS UNDER:- S.NO. DATE NAME OF THE PARTY AMOUNT 1 1.4.05 MFBI RS.L,OO,OOO 2 8.6.05 MFBI RS. 1 ,00,000 TOTAL RS. 2,00,000 3. - 1.4.05 ., KNM RS. 1,00,000 4 1.5.05 KNM RS. 70,000 5 5.10.05 KNM RS. 2,60,000 6 6.7.05 KNM RS. 35,000 7 1.6.05 KNM RS. 20,000 8 7.8.05 KNM RS. 2,50,000 9 29.7.05 KNM RS. 1,00,000 10 19.8.05 KNM RS. 1,00,000 11 24.8.05 KNM RS. 5,00,000 12 9.1.05 KNM RS. 1,00,000 13 9.6.05 KNM RS. 22,000 14 11.7.05 KNM RS. 1,00,000 TOTAL RS.16,57,000 15 6.7.05 ULHAS PAVMASTER RS. 10.00.000 16 6.11.05 'CHCPL-CFS RS. 25,000 17 1.7.05 CHCPL-CFS RS. 15,000 TOTAL RS. 40,000 18 21.7.08 DEEPA K.MEHTA RS. 1,00,000 19 8.9.05 CFS RS. 1,00,000 MR. KIRIT N. MEHTA 3 | P A G E 20 21.01.06 CFS RS. 1,75,000 TOTAL RS.2.75,000 21 17.8.05 ALLIED METAL & STEEL RS. 50,000 22 10.6.05 NEHAMEHTA RS. 1,52,460 23 27.10.05 NEHA K. MEHTA RS. 2,23,281 24 11.10.05 NEHA K.MEHTA RS. 2,27,631' . 25 18.0.206 NEHAMEHTA RS. 2,19,031 TOTAL RS. 8,22,409 26. 14.10.05 JETHALAL RS. 5,00,000 27 1.02.06 CHCL RS. 4.00.000 28 8.3.06 MULTIPLE IMPORT & EXPORT RS. 4,00,000 29 10.3.06 GAUTAM DTOLAT FAMILY TRUST RS.3,00.000 30 16.3.06 REIMBNURSEMENT FROM GPK RS. 7,50.000 GRAND TOTAL RS. 64,94,409 2. ON QUERY THE ASSESSEE HAS GIVEN ONLY NAME OF THE PARTIES AND THEIR PAN NO. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASS ESSEE HAS NEITHER SUBMITTED ANY OTHER INFORMATION NOR ANY CONFIRMATION SO AS TO PROVE THE GENUINENESS OF TRANSACTION. SINCE THE DETAILS GIVEN BY THE ASSESSE E WAS FOUND TO BE INCOMPLETE AND WAS GIVEN AT THE FAG END OF THE YEAR, THE ASSES SING OFFICER FOUND IT IMPOSSIBLE TO INVESTIGATE OR MAKE THE ENQUIRY WHICH IS AN ESSENTIAL PART OF THE ASSESSMENT PROCEEDINGS. ACCORDINGLY THE ASSESSING O FFICER HAS OBSERVED THAT THE INTENTION OF THE ASSESSEE WAS NOT TO COOPERATE WITH THE DEPARTMENT AND WITH THE MOTIVE THAT THE ASSESSING OFFICER COULD NOT GO IN DETAILED TO MAKE ADDITION. IN THE ABSENCE OF ANY EXPLANATION AND COMPLETE DETAILS , THE ASSESSING OFFICER MADE THE ADDITION OF RS. 64,94,409/- U/S 68 OF THE INCOME TAX ACT AS UNEXPLAINED CASH CREDIT. MR. KIRIT N. MEHTA 4 | P A G E 3. ON APPEAL, CIT(A)N DELETED THE ADDITION IN RESPE CT OF OTHER CREDITORS EXCEPT A SUM OF RS. 7,20,000/- IN RESPECT OF CHCPL , CFS AND CHCL WHO ARE RELATED PARTY CREDITORS. ACCORDINGLY BOTH ASSESSEE AS WELL AS REVENUE AGGRIEVED WITH THE IMPUGNED ORDER OF CIT(A) AND FILED THE APP EALS AND CROSS OBJECTION BEFORE US. 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND CONSIDERING THE PROVISIONS U/S 68 AND THE JUDICIAL DECISIONS THE HO NBLE COMMISSIONER OF INCOME TAX-(A) ERRED IN SUSTAINING THE ADDITIONS OF RS. 7,20,000/- AS UNEXPLAINED LOANS. 4.1 BEFORE US, THE ASSESSEE HAS SUBMITTED THAT HE H AS DISCHARGED ITS ONUS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CRED ITOR AND GENUINENESS OF THE TRANSACTION BY GIVING THE COMPLETE ADDRESS, PAN AND BANK DETAILS TO SHOW THAT THE PAYMENT WAS MADE THROUGH BANKING CHANNEL. HE HA S REFERRED THE REMAND REPORT OF THE ASSESSING OFFICER FILED BEFORE THE CI T(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN MUCH EMPHASIS ON THE IN COME TAX RETURN OF THE CREDITOR WITHOUT APPRECIATING THE OTHER MATERIAL AN D MAJOR EVIDENCE PRODUCED BY THE ASSESSEE TO ESTABLISH THE IDENTITY AND CREDITWO RTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTION. THE ASS ESSEE HAS FURTHER CONTENDED THAT THE ASSESSING OFFICER AS WELL AS CIT (A) HAS D ISALLOWED THE CLAIM OF THE ASSESSEE AND MADE THE ADDITION U/S 68 IN RESPECT O F CHCPL AND CFS FOR WANT OF SOURCE OF SOURCE WHICH IS NOT PERMISSIBLE FOR MA KING ENQUIRY U/S 68 OF THE INCOME TAX ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF JAIKISHAN DADLANI VS. ITO (4 SOT 130) AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT WHILE EXA MINING THE APPLICABILITY OF SECTION 68 SOURCE OF SOURCE CANNOT BE INVESTIGATED. FURTHER THE BORROWINGS CANNOT BE DISPUTED AS THE ASSESSEE HAS BORROWED THE MONEY BY WAY OF ACCOUNT PAYEE CHEQUES. THUS THE ASSESSEE HAS SUBMITTED THAT WHEN HE HAS PRODUCED MR. KIRIT N. MEHTA 5 | P A G E THE RECORD TO ESTABLISH THAT THE DEPOSIT IN THE BAN K ACCOUNT IS THROUGH CHEQUES THEN THE SOURCE OF SOURCE IS BEYOND THE SCOPE OF EN QUIRY U/S 68 OF THE INCOME TAX ACT. THE ASSESSEE HAS ALREADY PRODUCED THE SUBS TANTIAL EVIDENCE IN SUPPORT OF THE CLAIM AND TO PROVE THE IDENTITY AND CREDITWO RTHINESS OF THE CREDITOR AS WELL AS GENUINENESS OF TRANSACTION THEN FURTHER DETAILS DEMANDED BY THE ASSESSING OFFICER ARE NOT NECESSARY FOR THE PURPOSE OF ENQUIR Y U/S 68. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. DIAMOND PRODUCTS LTD. (177 TAXMAN 3 31). HE HAS ALSO RELIED UPON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS (127 TAXMAN 523) AND SUBMITTED THAT ONCE T HE ASSESSEE HAS PROVED THE IDENTITY BY PRODUCING PAN AND GENUINENESS OF TH E TRANSACTION BY ESTABLISHING THE FACT THAT THE PAYMENTS WERE RECEIVED THROUGH A/ C PAYEE CHEQUES THEN THE SOURCE OF SOURCE CANNOT BE ASKED TO BE PROVED FOR T HE PURPOSE OF ADDITION U/S 68. HE HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE BANK PASS-BOOK, EXTRACTS OF BANK STATEMENTS SHOWING TRANSACTION OF THE ASSESSEE, LEDGER ACCOUNT OF THE CREDITOR COMPANY NAMELY CFS IN THE BOOKS OF THE ASSESSEE AS WELL AS LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE CFS. THE ASSESSEE HAS ALSO PRODUCED THE LOAN CONFIRMATION FROM CHCL. ALL THESE RECORDS CLEARLY ESTABLISH THE GENUINENESS OF THE TRANSACTION AND NO FURTHER EVIDE NCE WAS REQUIRED TO DISCHARGE THE ONUS OF THE ASSESSEE IN ORDER TO PROV E THE GENUINENESS OF THE TRANSACTION. ALL THESE RECORDS WERE SUBMITTED BEFOR E THE AUTHORITIES BELOW WHICH WERE EXAMINED BY THE ASSESSING OFFICER AS WELL AS B Y THE CIT(A), THEREFORE, IN THE ABSENCE OF ANY DEFECT IN THE RECORDS PRODUCED B Y THE ASSESSEE, ADDITION U/S 68 IS NOT JUSTIFIED. 4.2 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T ALL LOAN TRANSACTIONS ARE WITH THE RELATED PARTIES AND GROUP CONCERN OF THE A SSESSEE AND ITS FAMILY MR. KIRIT N. MEHTA 6 | P A G E MEMBERS. THE ASSESSING OFFICER AS WELL AS CIT(A) HA S CLEARLY BROUGHT ON RECORD THAT THE ASSESSEE HAS NOT PRODUCED THE COMPLETE DET AILS TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S. HE HAS REFERRED THE FINDINGS OF THE ASSESSING OFFICER AND CIT(A) AND SU BMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE BANK STATEMENT OF THE CRE DITOR COMPANY TO SHOW HOW THE AMOUNT IN THE BANK OF THE CREDITOR HAS BEEN DEP OSITED. THE ASSESSEE HAS PRODUCED ONLY THE RELEVANT ENTRIES IN THE BANK OF T HE CREDITOR AND NOT THE ENTIRE BANK STATEMENT FOR THE YEAR, THEREFORE, THE ASSESSE E HAS FAILED TO PROVE THE CREDITWORTHINESS OF CREDITORS WHICH IS A RELATED PA RTY AND ACCORDINGLY THE GENUINENESS OF THE TRANSACTION IS NOT PROVED. HE HA S RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS RECORDED IN THE A SSESSMENT ORDER THAT DESPITE VARIOUS NOTICES THE ASSESSEE DID NOT RESPOND AND FI NALLY ON 4.12.2008 THE ASSESSEE SUBMITTED A LETTER DATED 3.12.2008, HOWEVE R, FULL DETAILS ASKED AS PER THE QUESTIONNAIRE WERE NOT SUBMITTED BY THE ASSESSE E. THE ASSESSING OFFICER AGAIN GAVE A FINAL OPPORTUNITY TO THE ASSESSEE VIDE NOTICE DATED 11.12.2008. IN RESPONSE TO THAT, THE ASSESSEE SUBMITTED CERTAIN DE TAILS ON 16.12.2008 BUT STILL THE REQUISITE INFORMATION AND DETAILS WERE NOT PROD UCED BY THE ASSESSEE. ONLY ON 29.12.2008, THE ASSESSEE HIMSELF ATTENDED AND SUBMI TTED THE NARRATION OF THE CHEQUES DEPOSITED IN THE BANK ACCOUNT. THE ASSESSIN G OFFICER HAS OBSERVED THAT THE ASSESSEE HAD DELIBERATELY NOT PRODUCED THE DETA ILS TO AVOID THE EXAMINATION AND INVESTIGATION IN THE MATTER AND, THEREFORE, THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS TO PROVE THE IDENTITY OF THE CRE DITOR, CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND GENUINESS OF THE TRANSACTION. ON APPEAL, CIT(A) ISSUED A REMAND ORDER FOR GIVING A FURTHER OPPORTUNITY TO TH E ASSESSEE TO PRODUCE THE MR. KIRIT N. MEHTA 7 | P A G E RELEVANT DETAILS. EVEN DURING THE REMAND PROCEEDING S, THE ASSESSEE DID NOT FURNISH THE COMPLETE DETAILS WITH RESPECT TO THE CR EDITORS NAMELY CHCPL-CFS, CFS AND CHCL, WHICH ARE ASSESSEES GROUP CONCERN OW NED BY THE ASSESSEE AND ASSESSEES FAMILY MEMBERS. 4.4 WE NOTE THAT THE ASSESSEE AND HIS FAMILY MEMBER S ARE THE DIRECTORS OF THESE COMPANIES AND, THEREFORE, THE ASSESSEE WAS HA VING THE CONTROL OVER THE AFFAIRS OF THESE COMPANIES. THIS IS NOT A CASE OF U NRELATED LOAN CREDITOR WHERE THE ASSESSEE IS NOT EXPECTED TO PRODUCE THE ENTIRE RECORD OF THE CREDITOR. HOWEVER WHEN THE CREDITORS ARE RELATED TO THE ASSES SEE AND ARE ASSESSEES OWN GROUP CONCERN WHEREIN HE ASSESSEE AND HIS FAMILY ME MBERS ARE DIRECTORS AND SHARE HOLDERS THEN IT BECOMES MORE RELEVANT TO ESTA BLISH THE CLAIM WITHOUT ANY IOTA OF DOUBT BUT THE CONDUCT OF THE ASSESSEE BEFOR E ASSESSING OFFICER AS WELL AS BEFORE CIT(A) DURING THE REMAND PROCEEDINGS IS NON COOPERATIVE AS THE ASSESSEE HAS NOT FURNISHED THE BANK STATEMENT OF TH ESE CREDITORS WHO ARE ASSESSEES OWN COMPANIES RATHER TO AVOID THE SCRUTI NY OF THE SOURCE, THE ASSESSEES HAS PRODUCED ONLY THE SELECTIVE INFORMAT ION AND RECORD SHOWING ONLY THE TRANSACTIONS OF LOAN. THE CIT(A) HAS CATEGORICA LLY RECORDED IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS PRODUCED THE BANK STATE MENT ONLY FOR THE SPECIFIC DATES AND NOT FOR THE ENTIRE YEAR WHICH ITSELF CREA TES A REASONABLE DOUBT THAT THE ASSESSEE WAS UNWILLING TO DISCLOSE THE ENTIRE DETAI LS OF BANKS OF THESE COMPANIES FROM WHERE THE ASSESSEE HAS CLAIMED TO HA VE TAKEN LOAN. UNDER SECTION 68 THE ONUS IS UPON THE ASSESSEE TO PROVE T HE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR FROM WHOM THE LOAN WAS TAKEN AND THE GENUINENESS OF THE TRANSACTION. HOW THE ONUS IS DIS CHARGED WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND PARTIC ULARLY THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE CREDITOR IS ONE OF THE MOST IMPORTANT ASPECT TO BE MR. KIRIT N. MEHTA 8 | P A G E TAKEN INTO CONSIDERATION. IF THE TRANSACTION IS BET WEEN THE RELATED PARTIES THEN MERE PRODUCTION OF PAN, ADDRESS AND TRANSACTION THR OUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE TRANSACT ION. IN THE CASE IN HAND THOUGH THE ENTIRE LOAN TRANSACTION ARE FROM THE RELATED PA RTIES, HOWEVER, AS FAR AS THE ASSESSEES APPEAL IS CONCERNED THE DISPUTE IS REGAR DING THE LOAN TAKEN FROM THREE COMPANIES/CONCERN OWNED BY THE ASSESSEE AND H IS FAMILY MEMBERS, THEREFORE, THE ASSESSEE WAS UNDER STRICT OBLIGATION AND BURDEN TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITHOUT ANY DOUBT. WE ARE OF THE VIEW THAT IN CASE OF RELATED PARTY, THE BURD EN IS ON THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENES S OF THE TRANSACTION BY PRODUCING THE COMPLETE DETAILS OF SOURCE OF THE FUN DS AVAILABLE WITH THE CREDITOR FROM WHERE THE LOAN IS GIVEN TO THE ASSESSEE. IN TH IS CASE THE ASSESSEE HAS NOT PRODUCED THE COMPLETE BANK STATEMENT OF THESE RELAT ED PARTY CREDITORS, THEREFORE, THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS/BURDE N TO PROVE THE GENUINENESS OF THE TRANSACTION. THE DECISIONS RELIED UPON BY TH E ASSESSEE ARE NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE WHERE THE LOAN HAS BEEN TAKEN BY THE ASSESSEE FROM HIS OWN COMPANY IN WHICH THE ASSESSEE AS WELL AS HIS FAMILY MEMBERS ARE DIRECTORS AND CONTROLLING THE AFFAIRS OF THE CREDIT OR COMPANY. THE CIT(A) HAS CLEARLY RECORDED THE FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS NOT FURNISHED THE COMPLETE DETAILS TO PROVE THE CREDITW ORTHINESS BECAUSE THE COPIES OF THE BANK ACCOUNTS OF THESE COMPANIES FOR THE ENT IRE YEAR WERE NOT FURNISHED BY THE ASSESSEE. EVEN BEFORE US THE ASSESSEE HAS NO T PRODUCED THE COMPLETE BANK STATEMENT OF THESE COMPANIES OWNED BY THE ASSE SSEE AND HIS FAMILY MEMBERS, INSTEAD THE ASSESSEE HAS ARGUED THAT THESE DETAILS AND RECORD IS NOT NECESSARY. THIS SHOWS THAT THE ASSESSEE IS DELIBERA TELY AVOIDING TO PRODUCE SUCH AN IMPORTANT AND RELEVANT MATERIAL. HENCE, WE DO NOT FIND ANY REASON AS TO WHY THE ASSESSEE HAS NOT FURNISHED THE COMPLETE BAN K STATEMENT OF THE CREDITOR COMPANY OWNED BY THE ASSESSEE AND HIS FAMILY MEMBER S. ACCORDINGLY, WE DO MR. KIRIT N. MEHTA 9 | P A G E NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED OR DER OF CIT(A) IN CONFIRMING THE ADDITION MADE U/S 68 OF RS. 77,20,000/- WITH RESPEC T TO THESE THREE GROUP CONCERN OF THE ASSESSEE. 5. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THI S APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEI. CLT(A) MUMBAI HAS ERRED IN DELETING THE ADDITI ON OF RS. 10,00,000/- MADE BY THE AO AS UNEXPLAINED LOANS FRO M ULHAS PAYMASTER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CLTCA) MUMBAI HAS ERRED IN DELETING THE ADDITION OF RS.8,22,409/- MADE BY THE AO AS UNEXPLAINED LOANS FROM NEHA MEHTA . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CLTCA) MUMBAI HAS ERRED IN DELETING THE ADDITION OF RS.5,00,000/- MADE BY THE AO AS UNEXPLAINED LOANS FROM SHRI JETHA LAL V. NAYAK. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CLTCA) MUMBAI HAS ERRED IN DELETING THE ADDITION OF RS 1 ,84,000/- MADE BY THE AO AS UNEXPLAINED LOAN FROM. MEHTA FAMI LY BENEFICIARY TRUST OF RS.1,34,000/-. FROM DEPAK K. MEHTA RS.30,0 00/- AND FROM BHAVESH AJUDIA RS.20,000/-. 5. THE APPELLANT PRAYS THAT THE ORDER OF CL I'(APP EALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 5.1 GROUND NO. 1 IS REGARDING DELETION OF ADDITION OF RS. 10,00,000/- U/S 68 AS UNEXPLAINED LOAN FROM ULHAS PAYMASTER. 5.2 WE HAVE HEARD THE LD. DR AS WELL AS THE ASSESSE E AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS WE HAVE DISCUSSED A BOVE THE ASSESSING OFFICER MADE THE ADDITION FOR WANT OF COMPLETE DETAILS. ON APPEAL, CIT(A) ISSUED A REMAND ORDER AND DURING THE REMAND PROCEEDINGS, THE ASSESSEE FURNISHED THE MR. KIRIT N. MEHTA 10 | P A G E DETAILS AS WELL AS CONFIRMATION FROM THE CREDITOR R EGARDING THIS LOAN OF RS. 10,00,000/-. THE ASSESSEE HAS PRODUCED THE BANK STA TEMENT FOR THE PERIOD FROM 1.4.2005 TO 31.03.2006 CONFIRMING THAT THE BANK ACC OUNT WAS JOINTLY HELD BY THREE PERSONS NAMELY (1) TRUPTI ULHAS PAYMASTER (2) ULHAS C. PAYMASTER (3) ANUJA ULHAS PAYMASTER. THE ASSESSING OFFICER HAS OB JECTED THAT THE ASSESSEE HAS SHOWN THE CREDITOR AS ULHAS C. PAYMASTER WHEREA S THE ACCOUNT FROM WHERE THE LOAN WAS GIVEN BELONGS TO TWO OTHER PARTIES ALS O. THE LD. DR HAS ALSO RAISED A SIMILAR OBJECTION THAT THE ASSESSEE HAS SHOWN ONL Y ONE PARTY AS THE CREDITOR WHEREAS THE ACCOUNT IS IN THE JOINT NAME OF THREE P ARTIES. WE DO NOT FIND ANY SUBSTANCE IN OBJECTION OF THE REVENUE WHEN THERE IS NO DISPUTE ABOUT THE LOAN GIVEN FROM THE BANK ACCOUNT JOINTLY HELD BY THREE P ARTIES. FURTHER THE ASSESSEE HAS PRODUCED THE CONFIRMATION FROM TWO OF THE JOINT ACCOUNT HOLDERS AND STATEMENT OF BANK ACCOUNT. THE CIT(A) HAS NOTED THE FACT THAT THE MONEY WAS RECEIVED BY THE ASSESSEE FROM THE THIRD PARTY AND, THEREFORE, THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THE IDENTITY AND CRE DITWORTHINESS OF THE CREDITOR AS WELL AS GENUINENESS OF THE TRANSACTION. ONCE THE AS SESSEE HAS PRODUCED THE ENTIRE BANK STATEMENT OF LOAN CREDITOR AND THE CONF IRMATION FROM THE PARTY THEN THE LOAN TAKEN FROM THE THIRD PARTY IN THE ABSENCE OF ANY CONTRARY MATERIAL CANNOT BE TREATED AS ASSESSEES OWN MONEY. ACCORDINGLY WE DO NOT FIND ANY ERROR IN THE IMPUGNED ORDER OF CIT(A) IN DELETING THE ADDITION I N RESPECT OF THE LOAN AMOUNT OF RS. 10,00,000/- FROM ULHAS PAYMASTER. 6. GROUND NO. 2 IS REGARDING THE LOAN OF RS. 8,22,4 09/- TAKEN FROM MS. NEHA MEHTA. 7.1 WE HAVE HEARD THE LD. DR AS WELL AS THE ASSESSE E AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS TAKEN A LOAN OF RS. 8,22,409/- MR. KIRIT N. MEHTA 11 | P A G E FROM HIS DAUGHTER MS. NEHA MEHTA. IN THE REMAND PRO CEEDINGS, THE ASSESSEE SUBMITTED THE BANK STATEMENT, DOCUMENTARY EVIDENCE OF THE INCOME OF MS. NEHA MEHTA RECEIVED FROM THE EMPLOYER, CERTIFICATE OF FO REIGN REMITTANCE AND COPY OF RETURN OF INCOME. AFTER CONSIDERING THE EVIDENCE FI LED BY THE ASSESSEE, THE CIT(A) DELETED THE ADDITION. BEFORE US, THE LD. DR HAS RELIED UPON THE ASSESSMENT ORDER AS WELL AS THE COMMENTS OF THE ASS ESSING OFFICER IN THE REMAND REPORT. WE FIND THAT THE ASSESSEE HAS PRODUC ED THE EVIDENCE TO SHOW THE FOREIGN REMITTANCE IN THE ACCOUNT OF MS. NEHA M EHTA. ONCE THE COMPLETE DETAILS WERE FURNISHED BY THE ASSESSEE SHOWING THE SOURCE OF THE LOAN GIVEN BY MS. NEHA MEHTA TO ASSESSEE THEN THE ADDITION CANNOT BE MADE ON THE MERE ASSUMPTION THAT ASSESSEES OWN MONEY HAS BEEN ROUTE D THROUGH THE FOREIGN REMITTANCE IN THE ACCOUNTS OF HIS DAUGHTER. ACCORDI NGLY WE FIND THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE THE CREDITWORTHINE SS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS WHEN THE SOURCE OF LOAN IS FROM THE EARNING OF MS. NEHA MEHTA AND FURTHER IT WAS A FOREIGN REMITTA NCE BY THE EMPLOYER. HENCE WE DO NOT FIND ANY ERROR IN THE ORDER OF CIT(A) IN DELETING THE ADDITION IN RESPECT OF THE LOAN FROM MS. NEHA MEHTA. 8. GROUND NO. 3 IS REGARDING DELETION OF ADDITION O F UNEXPLAINED LOAN FROM SHRI JETHALAL V. NAYAK. 8.1 WE HAVE HEARD THE LD. DR AS WELL AS THE ASSESSE E AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. DR HAS SUBMITT ED THAT THIS LOAN CREDITOR NAMELY SHRI JETHALAL V. NAYAK WAS AN EMPLOYEE OF CH CPL A GROUP CONCERN OF THE ASSESSEE. HIS ANNUAL INCOME WAS LESS THAN 1,00, 000/- AND, THEREFORE, THE LOAN OF RS. 8,22,409/- IS NOT POSSIBLE. HE HAS FURT HER SUBMITTED THAT EVEN THE SAID CREDITOR HAS GIVEN LOAN TO THE ASSESSEE WITHOUT ANY INTEREST AND THE SOURCE OF THE MR. KIRIT N. MEHTA 12 | P A G E LOAN WAS EXPLAINED AS THE MONEY RECEIVED FROM ONE M S. KAMLA K. DESAI. THE LD. DR THUS SUBMITTED THAT THIS SHOWS THAT THE CRED ITORS SHRI JETHALAL V. NAYAK HAD NO CAPACITY TO GRANT THE LOAN OF RS. 8,22,409/- . 8.2 ON THE OTHER HAND, THE ASSESSEE HAS SUBMITTED T HAT HE HAS PRODUCED ALL THE RELEVANT RECORDING INCLUDING COPY OF PASS-BOOK OF THE CREDITOR AS WELL AS THE BANK PASS-BOOK OF MS. KAMLA K. DESAI FOR VERIFICATI ON, THE COPY OF RETURN OF INCOME FOR THE YEAR WAS ALSO PRODUCED BEFORE THE AS SESSING OFFICER. THUS THE ASSESSEE DISCHARGED ITS ONUS TO PROVE THE CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION. 8.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE INCOME OF SHRI JETHALAL V. NAYAK DOES NOT JUSTIFY THE GRANT OF LAON OF RS. 8,22,409/-. THE SOURCE OF THE LOAN WAS SHOWN AS AN AMOUNT OF RS. 5,00,000/- WAS TAKEN BY SHRI JETHALAL V. NAY AK FROM ONE MS. KAMLA K. DESAI. IT IS PERTINENT TO NOTE THAT SHRI JETHALAL V . NAYAK HAS GIVEN THE LOAN TO THE ASSESSEE FREE OF INTEREST AND THAT TOO BY TAKING A LOAN FROM ANOTHER PERSON MS. KAMLA K. DESAI WHICH IS SIMPLY UNACCEPTABLE AS WHY A PERSON WILL TAKE LOAN TO GRANT A FUTHER LOAN TO ASSESSEE AND THAT TOO WITHOU T INTEREST. THEREFORE, THE TRANSACTION IS NOT FREE FORM SUSPICION AND REQUIRES A PROPER EXAMINATION AND VERIFICATION SO FAR AS THE GENUINENESS OF THE TRANS ACTION IS CONCERNED. THE CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASS ESSING OFFICER HAS NOT MADE ANY FURTHER ENQUIRY OR VERIFICATION TO ESTABLISH WH ETHER THE CLAIM WAS INCORRECT. WE DO NOT APPROVE THIS APPROACH OF THE CIT(A) BECAU SE IN THE REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS THE LIMITED JURISDICTION AND TIME CONSTRAINED TO CONDUCT THE ENQUIRY. HAVING REGARD T O THE PECULIAR FACTS INVOLVED IN RESPECT OF THE LOAN TAKEN FROM SHRI JETHALAL V. NAYAK THAT THE LOAN WAS GIVEN MR. KIRIT N. MEHTA 13 | P A G E TO THE ASSESSEE FREE OF INTEREST BY AVAILING THE LO AN FROM ANOTHER PERSON. WE FIND IT DIFFICULT TO ACCEPT THE EXPLANATION OF THE ASSES SEE. IT IS AGAINST THE HUMAN PROBABILITY THAT A PERSON OF NO MEANS GIVES AN INTE REST FREE LOAN OF RS. 8,22,409/- BY TAKING A LOAN FROM ANOTHER PERSON. ACCORDINGLY W E SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR PROPER VERIFICA TION AND EXAMINATION ON THE POINT OF CREDITWORTHINESS OF THE CREDITOR AND GENUI NENESS OF THE TRANSACTION. 9. GROUND NO. 4 IS REGARDING DELETION OF ADDITION O F RS. 1,84,000/- AS UNEXPLAINED CASH CREDIT RECEIVED FROM ASSESSEES FA MILY BENEFICIARY TRUST, ASSESSEES WIFE DEEPA K. MEHTA AND ONE BHAVESH AJUD IA. THE ASSESSEE HAS SHOWN TO HAVE TAKEN A LOAN OF RS. 1,84,000/- FROM T HESE PERSONS. THE DETAILS OF LOANS ARE AS UNDER:- 1. 4.6.2005 MEHTA FAMILY BENEFICIARY TRUST 16,500/- 2 01.11.2005 DEEPA K. MEHTA 30,000/- 3. 15.11.2005 MEHTA FAMILY BENEFICIARY TRUST 17,500/- 4. 12.12.2005 BHAVESH AJUDIA 20,000/- 5. 06.01.2006 MEHTA FAMILY BENEFICIARY TRUST 1,00,000/ - TOTAL 1,84,.000/- 9.1 WE HAVE HEARD THE LD. DR AS WELL AS THE ASSESSE E AND CONSIDERED THE RELEVANT RECORD. THESE LOANS WERE TAKEN BY THE ASSE SSEE IN CASH. AS REGARDS THE MEHTA FAMILY BENEFICIARY TRUST, THE ASSESSEE SHOWN A LOAN OF RS. 1,34,000/- AND EXPLAINED BEFORE THE CIT(A) AS WELL AS DURING T HE REMAND PROCEEDINGS THAT THE TRUST HAS YEARLY INCOME OF RS. 5,00,000/-. THE ASSESSEE FURNISHED THE STATEMENT OF CASH SHOWING THE AVAILABILITY OF RS. 2 ,59,132/- WITH THE TRUST AS ON 1.6.2005. THE CIT(A) HAS NOTED THAT THE CASH WITHDR AWAL IS REFLECTED FROM THE BANK STATEMENTS OF THE EARLIER YEARS. ACCORDINGLY, THE CIT(A) HAS DELETED THE MR. KIRIT N. MEHTA 14 | P A G E ADDITION FOR WANT OF FURTHER ENQUIRY BY THE ASSESSI NG OFFICER TO ESTABLISH THAT THE MONEY IN QUESTION WAS ASSESSEES OWN MONEY ROUTED T HROUGH THE TRUST. RELEVANT FINDING OF THE CIT(A) IN PARA 2.3.4 AND 2.3.5 ARE A S UNDER:- 2.3.4 APPELLANT IN RESPONSE TO REMAND REPORT HAS S UBMITTED THAT THE TRUST HAD AN YEARLY INCOME OF RS. 5 LAKHS PLUS AND HAD ADEQUA TE CASH. APPELLANT DURING APPELLATE PROCEEDINGS WAS ASKED TO FURNISH STATEMEN T OF CASH AVAILABILITY OF TRUST SINCE CONFIRMATION, BANK AND OTHER DETAILS WERE ALR EADY PROVIDED. APPELLANT HAS FURNISHED THE STATEMENT WHEREBY THERE WAS ADEQUATE CASH AVAILABLE OF RS. 2,59,182/- WITH THE TRUST AS ON 1-6-05 OUT OF WHICH MONIES WERE PAID TO APPELLANT. BANK STATEMENTS OF EARLIER YEARS WHERE C ASH WAS WITHDRAWN ARE FILED ALSO. 2.3.5 FACTS AND MATERIAL ON RECORD ARE CONSIDERED. AD SEEMS NOT TO HAVE ASKED FOR EITHER A CLARIFICATION FROM THE TRUST NOR TO TH E APPELLANT REGARDING THE ISSUES RAISED IN REMAND REPORT, NOR HAS TAKEN THE ENQUIRY TO THE LEGITIMATE END BY ESTABLISHING FACTS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER QUERIES MADE, THE MEHTA FAMILY BENEFICIARY TRUST HAS BEEN S HOWN TO HAVE ADEQUATE CASH IN HAND FOR GIVING LOAN TO APPELLANT. MOREOVER , HOW THE INTENTION OF APPELLANT IS AN AFTERTHOUGHT AND CONCOCTED STORY AS HELD BY A D REMAINS UNSUBSTANTIATED. MORE SO, AS THE EXPLANATION REGARDING ENTRIES AND A MOUNTS RECEIVED FROM THE TRUST IS CONSISTENT AND MENTIONED IN THE ASSESSMENT ORDER ITSELF. THIS IS NOT A NEW CLAIM DURING REMAND PROCEEDINGS. IN THE FACTS A ND CIRCUMSTANCES, THE ADDITION IS DELETED. 9.2 THE CIT(A) FOUND THAT THE ENTRIES AND AMOUNTS R ECEIVED FROM THE TRUST IS CONSISTENT AND MENTIONED IN THE ASSESSMENT ORDER IT SELF, THEREFORE, THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT A NEW CLAIM DURING THE REMAND PROCEEDINGS. NOTHING CONTRARY HAS BEEN PRODUCED BEF ORE THE US TO DISPROVE THE FINDING OF THE CIT(A). ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A) IN RESPECT OF THE LOAN TAKEN FROM THE MEHTA FAMILY BENEFICIARY TRUST. 9.1.1 THE NEXT LOAN OF RS. 30,000/- WAS TAKEN FROM SMT. DEEPA K. MEHTA, THE WIFE OF ASSESSEE. MR. KIRIT N. MEHTA 15 | P A G E 9.1.2 WE HAVE HEARD THE LD. DR AS WELL AS ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS EXPLA INED THAT THE INCOME OF SMT. DEEPA K. MEHTA IS MORE THAN 1 5 LAKH, THEREFORE, KE EPING IN VIEW THE INCOME OF SMT. DEEPA K. MEHTA THE SOURCE OF LOAN OF RS. 30,00 0/- HAS BEEN DULY EXPLAINED. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDR OF CIT(A) ON THIS POINT. 9.2.1 THE NEXT LOAN OF RS. 20,000/- IS FROM MR. BHA VESH AJUDIA. 9.2.2 WE HAVE HEARD THE LD. DR AS WELL AS ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PRODU CED RECORD BEFORE THE CIT(A) TO SHOW THAT THIS AMOUNT WAS IN RESPECT OF THE REFUND OF THE AMOUNT PAID BY THE ASSESSEE TO THE SAID PERSON. IN SUPPORT OF H IS CONTENTION, THE ASSESSEE HAS PRODUCED THE BANK STATEMENT, WHEREIN THE SAID P AYMENT AND RECEIVED BACK IS REFLECTED. ACCORDINGLY WE DO NOT FIND ANY ERROR IN THE FINDING OF CIT(A) ON THS POINT AND THE SAME IS UPHELD. 10. IN THE CROSS OBJECTION 67/MUM/2013, THE ASSESSE E HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND BASED ON THE OBSERVATION OF THE LD. CIT(A) WHILE PASSING THE ORD ER, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.L0,OO,OOO/- MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND BASED ON THEO BSERVATION OF THE LD. CIT(A) WHILE PASSING THE ORDER, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.8,22,409/- MADE BY THE A O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND BASED ON THE OBSERVATION OF THE LD. CIT(A) WHILE PASSING THE ORD ER, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.5,OO,OOO/- MADE BY THE A O. MR. KIRIT N. MEHTA 16 | P A G E 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND BASED ON THE OBSERVATION OF THE LD. CIT(A) WHILE PASSING THE ORD ER, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.L,84,OOO/- MADE BY THE A O. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND AS PER THE OBSERVATION OF THE LD. CIT(A) WHILE PASSING THE ORD ER, THE REQUEST OF THE APPELLANT FOR SETTING ASIDE THE MATTER ON THE ABOVE GROUND SHOULD REJECTED. 10.1 AS IT IS CLEAR FROM THE GROUNDS RAISED IN THE CROSS OBJECTIONS THAT THE ASSESSEE HAS SUPPORTED THE ORDER OF CIT(A) AND NO N EW ISSUE IS RAISED IN THE CROSS OBJECTION. ACCORDINGLY IN VIEW OF OUR FINDING ON THE CROSS APPEALS OF THE PARTIES, THE CO FILED BY THE ASSESSEE BECOME INFUCT UOUS AND HENCE DISMISSED. 11. IN THE RESULT CROSS APPEALS ARE PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 2 5-7-2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 25-7 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI