Sri Mahesh Bhupathi (NRI), Bengaluru V. Deputy Commissioner Of Income Tax, Circle 1(1), Bengaluru

ITA 1155/BANG/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6498 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 23-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.1155/B/2017 ASSESSMENT YEAR: 2012-13 SHRI MAHESH BHUPATHI (NRI), B2, EAGLE ROCK, EAGLE STREET, LANGFORD TOWN, BENGALURU 560 025 PAN: AENPB5750P VS. DCIT, CIRCLE 1(1), ROOM NO.440, 4 TH FLOOR, BMTC BUILDING, KORMANGALA, BENGALURU (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 13.02.2019 DATE OF PRONOUNCEMENT : 19.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 20.03.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE VARIOUS GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- 1. THE CIT (APPEALS) WAS NOT CORRECT IN RESTRICTI NG THE DEDUCTION TO RS.75,000/- FROM RS.1,50,000/-. WITHOUT APPRECIATING THE FACTS THAT THE APPELLANT HAS PURCHASED FLAT AND BORROWED THE LOAN JOINTLY WITH WIFE. HENCE THE APPELLANT IS ELIGIBLE FOR FULL DEDUCTION OF RS.1,50,000/- AS CONTEMPLATED U/S 24 R .W.S. 26 BEING A CO -OWNER. 2. THE CIT WAS NOT CORRECT IN CONFIRMING THE ADDITI ON MADE BY A.O. TO THE EXTENT OF RS.2,66,70,000/- AS UNEXPLAINED CASH CRED IT U/S.68, THOUGH THE APPELLANT HAS EXPLAINED THE NATURE OF TRANSACTION, PROVED THE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF LENDER AND CIT (A) HAS NOT APPR ECIATED/UNDERSTOOD THE TRANSACTIONS WHICH IS DONE THROUGH BANKING CHANNELS . ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 2 3. THE CIT (APPEALS) WAS NOT CORRECT IN NOT ACCEPTI NG THE ADDITIONAL EVIDENCES SUBMITTED BEFORE HIM WHICH WAS NOT SUBMITTED BEFORE A.O. AND NOT CORRECT IN NOT ACCEPTING THE EXPLANATION GIVEN BY THE APPELLANT FO R NON SUBMISSION OF ADDITIONAL EVIDENCES BEFORE A.O. DURING THE COURSE OF HEARING. 4. THE APPELLANT BEING NRI LEVY OF INTEREST U/S.23 4B & C IS NOT MANDATORY AND NOT APPLICABLE. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. WHEREFORE ON THE ABOVE GROUNDS AND ON SUCH OTHER GR OUNDS THE APPELLANT PRAYS THE APPELLATE AUTHORITY TO DELETE THE ADDITIONS AS ABOVE AND MAY PASS SUCH OTHER AS THE APPELLATE AUTHORITY DEEMS FIT. 3. THE LD. COUNSEL OF THE ASSESSEE DID NOT PRESS T HE ISSUE RAISED IN GROUND NO.1, THEREFORE THE SAME IS DISMIS SED AS NOT PRESSED. 4. THE SECOND ISSUES RAISED IN GROUND NO. 2 AND 3 A RE AGAINST THE ORDER OF LD CIT(A) UPHOLDING THE ADDIT ION OF RS. 2,66,70,000 AS MADE BY THE AO ON ACCOUNT OF UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT AND LD. CIT(A) NOT ACCEPT ING ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE AN INT ERNATIONAL TENNIS PLAYER FILED THE RETURN OF INCOME FOR THE YE AR ON 27.09.2012 DECLARING AN INCOME OF RS. 82,81,290/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS A ND STATUTORY NOTICES WERE ISSUED AND DULY SERVED. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THE ASSESS EE HAS TAKEN AN UNSECURED LOAN OF RS. 2,66,70,000/- FROM S HRI RANJAN BASU WHO IS THE MANAGING DIRECTOR OF MOREGAN STAN LEY PRIVATE WEALTH MANAGEMENT, SITUATED AT 522 FIFTH AVENUE, 10 TH FLOOR, NEW YORK,10036 AND ACCORDINGLY ASKED THE ASSESSEE T O FILE DETAILS OF THE LOAN ALONGWITH EVIDENCES SUCH AS CON FIRMATION, , ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 3 RECONCILIATION WITH BANK STATEMENT, PAN ETC OF THE LENDER. THE ASSESSEE REPLIED VIDE WRITTEN SUBMISSIONS DATED 3. 2.2015 THAT THE LOAN WAS TAKEN ON 19.7.2011FROM MR RANJAN BASU WHO IS A FOREIGN RESIDENT. THE ASSESSEE ALSO SUBMITTED THAT THE SAID LOAN WAS REPAID DURING FINANCIAL YEAR 2013-14 AND 2014-1 5 BY FILING THE FINANCIAL STATEMENTS EVIDENCING REPAYMENT OF 20 0000 US $ IN FA 2013-14 AND ALSO PROOFS OF TELEGRAPHIC TRANSF ER FOR REPAYMENT ON 19.10.2014 AND 3.1.2015 FOR RS. 200000 US$ EACH THOUGH THE CONFIRMATION OF LOAN WAS NOT FILED BEFOR E THE AO. THE ASSESSEE FILED BEFORE THE AO COPIES OF BANK STATEME NT, CREDIT ADVICE OF DEUTSCHE BANK, COPIES OF MAILS EXCHANGED BETWEEN ASSESSEE AND THE LENDER, CREDIT AUTHORIZATION ISSUE D BY SHRI RANJAN BASU TO TRANSFER FUNDS TO ASSESSEE ACCOUNT B ESIDES FILING ADDRESS OF THE LENDER IN INDIA AND ABROAD , HIS COM PANYS ADDRESS, EMAIL ADDRESS AND PHONE NUMBER ETC. BESID ES THE ASSESSEE SUBMITTED THAT THE LENDER IS A FOREIGN RES IDENT AND THEREFORE THE MONEY TRANSFER WAS MADE AS PER FOREIG N EXCHANGE REGULATIONS. THE SUBMISSIONS OF THE ASSESSEE DID NO T FIND FAVOUR WITH THE AO AND HE ADDED THE AMOUNT OF LOAN OF RS. 2,66,70,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT PROVED IDENTIT Y, CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF T HE TRANSACTIONS. 6. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO ACCOUN T THE CONTENTIONS OF THE ASSESSEE AND REMAND REPORT ON TH E ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. THE ASSESSEE FILE D THE COPY OF CONFIRMATION AND COPY OF BANK ACCOUNT OF MR. RANJAN BASU AS ADDITIONAL EVIDENCES. THE AO OPPOSED THE ADMISSION OF ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 4 ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE C IT(A) AND LD CIT(A) DID NOT ADMIT THESE EVIDENCES FOR THE REASO NS THAT THE ASSESSEE FAILED TO GIVE SUFFICIENT REASONS AS TO WH Y THESE WERE NOT FILED BEFORE THE AO IN THE ASSESSMENT PROCEEDIN GS. ULTIMATELY, LD CIT(A) UPHELD THE ORDER OF AO ON THE GROUND THAT THE IDENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LENDER WERE NOT PROVED. 7. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH BY REFERRING TO VARIOUS DOCUMENTS FILED THAT DESPITE T HE ASSESSEE HAVING FILED VARIOUS EVIDENCES SUCH AS COPIES OF PA N, CREDIT AUTHORIZATION ISSUED BY SHRI RANJAN BASU, CREDIT A DVICE OF DEUTSCHE BANK DATED 10.7.2011, BANK STATEMENT OF TH E ASSESSEE, COPIES OF TELEGRAPHIC TRANSFER BY THE ASS ESSEE REPAYING THE LOANS AND COPIES OF MAILS BETWEEN THE ASSESSEE AND MR. RANJAN BASU, PASSPORT OF LENDER, STATEMENT OF NET W ORTH AND PROFILE OF THE LENDER, AND BANK STATEMENT OF THE LE NDER PROFILE OF THE ETC. THE LD AR ARGUED THAT BY FILING ALL THES E DOCUMENTS THE ASSESSEE HAS PROVED THE IDENTITY OF THE LENDER MR. RANJAN BASU BY FILING HIS PASSPORT, ADDRESSES IN INDIA AND IN F OREIGN BESIDES PROVING HIS CAPACITY TO LEND. CONSIDERING ALL THESE DOCUMENTS, THE LD. AR SUBMITTED THAT THE LOAN TRANSACTION WAS A GENUINE ONE. THE LD AR CONTENDED THAT THESE TRANSACTIONS WE RE MADE THROUGH BANKING CHANNEL AND THE LOAN WAS REPAID BAC K IN THE SUBSEQUENT YEARS IN FY 2013-14 AND 2014-15. THE LD AR ALSO SUBMITTED THAT THE CAPACITY OF THE LENDER IS PROVED BY THE FACT THAT HE IS HAVING LIQUID INVESTMENTS WORTH 16.72 CR . BY STATEMENT OF INVESTMENTS IN MOREGAN STANLEY ,PRIVAT E WEALTH MANAGEMENT. THUS THE LD AR PRAYED BEFORE THE BENCH THAT THE ORDER OF CIT(A) IS PATENTLY WRONG AND MAY BE REVERS ED AND THE ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 5 AO MAY BE DIRECTED TO DELETE THE ADDITIONS MADE U/S 68 OF THE ACT. 8. THE LD DR, PER CONTRA, SUBMITTED BEFORE THE BENC H THE MERE FILING OF SOME DOCUMENTS OF THE LENDER WOULD N OT AUTOMATICALLY PROVE THE LOAN TRANSACTION WHICH WAS NOT SUBSTANTIATED WITH DOCUMENTARY EVIDENCES. THE LD DR WHILE RELYING HEAVILY ON THE ORDERS OF THE AUTHORITIES BE LOW SUBMITTED THAT THE ASSESSEE HAS FILED UNAUTHENTIC DOCUMENTS. THE LD DR SUBMITTED THAT THE LOAN CONFIRMATION AND COPY OF ST ATEMENT OF DEPOSIT/WITHDRAWALS WHICH THE ASSESSEE STATED TO BE BANK STATEMENT BUT NOT IN FACT A BANK STATEMENT WERE NOT FILED BEFORE THE AO BUT ADDITIONAL EVIDENCES BEFORE CIT(A) WHERE AS THE CONFIRMATION LETTER WAS DATED 23.12.2014 WHEN THE H EARING BEFORE THE AO CONTINUED EVEN ON 14.11.2014, 03.12.2 015, 09.2.2015, 13.2.2015, 19.2.2015 AND 4.3.2015. THE A SSESSEE HAS TOTALLY FAILED TO EXPLAIN THE REASONS FOR NOT F ILING THE CONFIRMATION WHEREAS THE ASSESSEE TRIED TO REASON T HE NON FILING TO THE FACT THAT LENDER WAS NOT PREPARED TO GIVE LO AN CONFIRMATION AND BANK STATEMENT . THE LD DR FURTHER STATED THAT MERE REPAYMENT OF LOAN IN THE SUBSEQUENT YEARS WOUL D NOT RENDER THE LOAN TRANSACTION GENUINE. FINALLY THE LD DR PRAYED THAT THE ORDER OF CIT(A) MAY PLEASE BY UPHELD FOR T HE FOREGOING REASONS. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL RECORDS AS PLACED BEFORE US CAREFULLY. THE UNDISPUTED FACTS ARE THAT THE RAISED LOAN OF RS. 2,66,70,000/ - FROM MR RANJAN BASU A NON RESIDENT INDIAN SETTLED IN USA. THE SAID PERSON WAS HOLDING THE INDIAN AS WELL AS US PASSPOR TS , COPIES ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 6 OF WHICH ARE PLACED IN THE PAPER AT PAGE NO. 2 AND 3. THE ASSESSEE HAS FURNISHED THE INDIAN ADDRESS AT BANGL URU AS WELL AS OF US. THE ASSESSEE HAS FILED BANK CREDIT ADVICE ISSUED BY THE DEUTSCHE BANK AG, MUMBAI DATED 19.7.2011 WHEREIN IT IS STATED THAT A SUM OF RS.2,66,70,000/- IN THE ACCOUN T OF THE ASSESSEE AND THE ORIGINATING BANK IS MORGAN STANLEY AND REMITTER NAME IS MENTIONED AS RANJAN BASU. THE ASSE SSEE HAS FILED HIS BANK STATEMENT IN WHICH THE LOAN PROCEEDS WERE CREDITED IN THE ACCOUNT OF THE ASSESSEE. COPIES OF EMAILS EXCHANGED BETWEEN THE ASSESSEE AND MR RANJAN BASU A RE FILED IN THE PAPER BOOK AT PAGE 7 TO 9. COPIES OF APPLICA TION FOR TELEGHRAPHIC TRANSFER ARE FILED AT PAGE NO. 12 TO 1 4 OF THE PAPER BOOK. SIMILARLY THE LIQUID INVESTMENTS HELD BY THE ASSESSEE ARE FILED AT PAGE NO, 15 TO 31, PROFILE OF MR RANJAN BA SU AT PAGE NO. 33 TO 35, LOAN CONFIRMATION AT PAGE 36, BANK STATEM ENT OF MR RANJAN BASU AT PAGE 37 WERE FILED . WE OBSERVED TH AT THE FINDING OF THE LD CIT(A) THAT NO BANK STATEMENT OF LENDER IS FILED BY STATEMENT OF INVESTMENT WITH MORGAN STANLEY IS F ILED IS TOTALLY WRONG AS IS APPARENT FROM THE CREDIT ADVICE ISSUED BY THE DUETSCHE BANK IT IS CLEARLY MENTIONED THAT THE ORIG INATING BANK IS MORGAN STANLEY. THE LD CIT(A) HAS ALSO NOT ADMIT TED THE ADDITIONAL EVIDENCES CITING THE REASONS THAT ASSESS EE HAS GIVEN NO REASONS FOR NOT FILING THESE EVIDENCES BEFORE TH E AO. FURTHER, THE LOAN WAS REPAID BY THE ASSESSEE IN TWO SUBSEQUE NT YEARS FOR WHICH THE EVIDENCES WERE ALSO PLACED BEFORE US. NOW CONSIDERING ALL THE FACTS AND DOCUMENTS WE ARE OF THE VIEW THE ALL THE INGREDIENT OF SECTION 68 O THE ACT, I.E. IDENTITY, CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTIONS ARE PROVED. THEREFORE WE ARE NOT IN AGREEMENT WITH THE CONCLUSI ON DRAWN BY ITA NO.1155/M/2017 SHRI MAHESH BHUPATHI (NRI) 7 THE LD CIT(A) ON THE ISSUE. ACCORDINGLY WE REVERSE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE ADDITIONS OF RS. 2,66,70,000/-. 10. IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED:19.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.