Mohamed Yasin Nihal Ahmed, Nashik V. Principal Commissioner of Income-tax : 1,

ITA 1158/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2752 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-10-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: P S SHINGTE
• Section: 263; 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1158 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 12 SHRI MOHAMED YASIN NIHAL AHMED, 174, PAWAR GALI, MALEGAON, DISTT. - NASHIK PAN : ACEPM3712B ....... / APPELLANT / V/S. THE PR. COMMISSIONER OF INCOME TAX - 1, NASHIK / RESPONDENT ASSESSEE BY : S HRI P.S. SHINGTE REVENUE BY : MS. NANDITA KANCHAN / DATE OF HEARING : 29 - 11 - 2018 / DATE OF PRONOUNCEMENT : 26 - 02 - 2019 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PR. COMMISSIONER OF INCOME TAX - 1, NASHIK DATED 15 - 03 - 2016 PASSED U/S. 263 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2011 - 12. 2 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 2. THE FACTS GERMANE TO THE PRESENT APPEAL ARE : THE ASSESSEE IS A PROPRIETOR M/S. SARIM TEXTILES, MALEGAON AND IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF YARN ON WHOLESALE BASIS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 - 09 - 2011 DECLARING TOTAL INCOME OF RS.13,34,397/ - AND AGRICULTURAL INCOME OF RS.1,22,283/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. CONSEQUENTLY, STATUTORY NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 25 - 09 - 2012. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INTER ALIA OBSERVED THAT THE ASSESSEE HAS SHOWN UNSECURED LOA NS. THE ASSESSING OFFICER ISSUED SEPARATE NOTICES U/S. 133(6) TO ALL THE UNSECURED CREDITORS SEEKING INFORMATION VIZ. SOURCE OF INCOME ALONG WITH EVIDENCE, TOTAL AMOUNT OF LOAN GIVEN TO THE ASSESSEE, BANK DETAILS, PAN, DETAILS OF INCOME TAX RETURNS FILED FOR THE ASSESSMENT YEAR 2011 - 12 ALONG WITH THE COMPUTATION OF INCOME. THE ASSESSING OFFICER AFTER RECEIVING THE REQUISITE INFORMATION DID NOT MAKE ANY ADDITION WITH RESPECT TO UNSECURED CREDITORS AND COMPLETED THE ASSESSMENT VIDE ORDER DATED 03 - 02 - 2014. THE PR. COMMISSIONER OF INCOME TAX INVOKED THE PROVISIONS OF SECTION 263 RAISING DOUBT OVER THE GENUINENESS OF UNSECURED LOAN AND CREDITWORTHINESS OF THE LENDERS. THE PR. COMMISSIONER OF INCOME TAX SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO MAKE PROPER ENQUIRY WITH RESPECT TO CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 3. SHRI P.S. SHINGTE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE DETAILED ENQUIRIES REGARDING UNSECURED LOAN TRANSACTIONS DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS H AD ISSUED A 3 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 QUESTIONNAIRE ON 01 - 07 - 2013 SEEKING THE DETAILS OF UNSECURED LOANS AMOUNTING TO RS.1,46,48,773/ - , ACCOUNT EXTRACTS, CONFIRMATION LETTERS AND ACKNOWLEDGMENT OF RETURNS ETC. OF THE LENDERS. THE REQUISITE DETAILS WERE FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER ISSUED NOTICES U/S. 133(6) TO UNSECURED LENDERS. IN RESPONSE TO NOTICES THE LENDERS FILED CONFIRMATIONS AND RETURNS OF INCOME ALONG WITH COMPUTATION OF INCOME, BALANCE SHEET, ETC. THE ASSESSING OFFICER AFTER EXAMINING THE SAME WAS S ATISFIED WITH THE CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTIONS AND HENCE MADE NO ADDITIONS. THE LD. AR SUBMITTED THAT THE COPY OF NOTICE ISSUED TO UNSECURED CREDITORS AND CONFIRMATIONS FILED BY THEM ALONG WITH THE INCOME TAX RETURNS AND BANK DETAILS ARE AT PAGES 55 TO 202 OF THE PAPER BOOK. THIS CLEARLY SHOWS THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND AND AFTER BEING SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND CONFIRMATIONS DETAILS FURNISHED BY LENDERS MADE NO ADDITION W ITH REGARD TO UNSECURED LOANS. THE LD. AR FURTHER POINTED THAT WHILE COMPLETING ASSESSMENT U/S. 143(3) FOR ASSESSMENT YEAR 2009 - 10 THE ASSESSING OFFICER HAD SOUGHT DETAILS OF UNSECURED LOANS AND AFTER VERIFYING THE GENUINENESS OF TRANSACTIONS AND CONFIRMATIONS FROM THE CONCERNED PARTIES , NO ADDITION WAS MADE. THE LD. AR FURNISHED THE COPY OF ASSESSMENT ORDER DATED 19 - 11 - 2011 PASSED U/S. 143(3) FOR THE ASSESSMENT YEAR 2009 - 10. 3.1 THE LD. AR SUBMITTED THAT THE PR. COMMISSIONER OF INCOME TAX WHI LE PASSING IMPUGNED ORDER HAS ERRED IN OBSERVING THAT IN THE LIST OF UNSECURED CREDITORS FURNISHED BY ASSESSEE, THE P ARTIES MENTIONED AT SL. NO. 2 TO 21 HAVE COMMON ADDRESS , I.E. HOUSE NO. 1188, ISLAMPURA, MALEGAON. THE LD. AR FURNISHED THE LIST OF PARTIE S WHO HAD ADVANCED 4 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 UNSECURED LOANS TO THE ASSESSEE. THE LD. AR POINTED THAT ONLY PARTIES AT SL. NO. 4 TO 7 HAVE AFORESAID COMMON ADDRESS. THE LD. AR EXPLAINED THAT MOST OF THE UNSECURED LENDERS ARE RELATED TO THE ASSESSEE AND ARE RESIDING IN THE SAME COM PLEX, THEREFORE, SOME OF THEM MAY BE HAVING COMMON RESIDENTIAL ADDRESS. 3.2 THE LD. AR SUBMITTED THAT ONCE THE ASSESSING OFFICER HAS MADE DETAILED ENQUIRIES AND HAS NOT RAISED ANY DOUBT OVER THE GENUINENESS OF UNSECURED LOAN TRANSACTIONS AND THE CREDITW ORTHINESS OF PARTIES, THE PR. COMMISSIONER OF INCOME TAX CANNOT INVOKE THE PROVISIONS OF SECTION 263 TO SUBSTITUTE HIS OPINION. IN SUPPORT HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . COMMISSIONER OF INCOME TAX VS. NIRAV MODI, 71 TAXMANN.COM 272 (BOMBAY); II . COMMISSIONER OF INCOME TAX VS. RELIANCE COMMUNICATION LTD., 69 TAXMANN.COM 103 (BOMBAY); III . COMMISSIONER OF INCOME TAX VS. M/S. SHREEPATI HOLDINGS & FINANCE PVT. LTD. IN INCOME TAX APPEAL NO. 1879 OF 2013 DECIDED BY HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 05 - 10 - 2015; IV . DLF COMMERCIAL DEVELOPERS LTD. VS. COMMISSIONER OF INCOME TAX, 49 TAXMANN.COM 487 (DELHI - TRIB.). 3.3 THE LD. AR SUBMITTED THAT AFTER HAVING CONDUCTED DETAILED ENQUIRIES IF THE ASSESSING OFFICER HAS NOT MENTIONED THE SAME IN THE ASSESSMENT ORDER , THE ASSESSEE SHOULD NOT BE PANELIZED. IT IS NOT WITHIN THE CONTROL OF ASSESSEE TO DIRECT THE ASSESSING OFFICER TO DRAFT ASSESSMENT ORDER GIVING ALL THE DETAILS. THE LD. AR ASSERTED THAT AT THE MOST IT CAN BE A CASE OF IN ADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY. IT IS A WELL SETTLED LAW THAT 5 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 WHERE ENQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER EVEN IT IS IN ADEQUATE , REVISIONAL PROCEEDINGS U/S. 263 CANNOT BE INVOKED. 4. ON THE OTHER HAND MS. NANDITA KANCHAN REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF PR. COMMISSIONER OF INCOME TAX. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S. 143(3) HAS MERELY COLLECTED THE INFORMATION FROM ASSESSEE AND TH EREAFTER HAS MADE NO FURTHER ENQUIRIES. TO SUBSTANTIATE H ER POINT AS A SAMPLE , THE LD. DR REFERRED TO NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 133(6) TO ONE OF THE UNSECURED CREDITORS NAZIYA NAVID AHD. AT PAGE 24 AND REPLY FROM THE AFORESAID CREDITOR A T PAGE 23. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER IN ITS NOTICE HAS SPECIFICALLY SOUGHT THE SOURCE OF INCOME ALONG WITH THE EVIDENCES. HOWEVER, THE SAID CREDITOR HA S ONLY FURNISHED THE COPY OF LEDGER EXTRACT STATEMENT WITHOUT THE DETAILS OF SOUR CE AND EVIDENCE IN SUPPORT . IN MAJORITY OF CASES LOANS HAVE BEEN ADVANCED BY THE LENDERS AFTER SIMILAR AMOUNT IS CREDITED TO THEIR RESPECTIVE BANK ACCOUNTS BY CASH. THE LD. DR FURTHER POINTED THAT ONLY TWO PERSONS RESPONDED TO NOTICE ISSUED BY ASSESSING OFFICER U/S. 133(6) OF THE ACT. THEREFORE, IT IS A CASE OF LACK OF ENQUIRY. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED VARIOUS DOCUMENTS PLACED ON RECORD IN THE FORM OF PAPER BOOK BY THE ASSESSEE. THE PR. COMMISSIONER OF INCOME TAX HAS INVOKED REVISIONAL JURISDICTION U/S. 263 AFTER HAVING FORMING OPINION THAT THE ASSESSING OFFICER HAS FAILED TO MAKE PROPER ENQUIRY WITH RESPECT TO UNSECURE D LOAN S REFLECTED IN THE BOOKS OF ASSESSEE. THE PR. COMMISSIONER OF INCOME TAX IN THE IMPUGNED ORDER HAS POINTED SPECIFIC INSTANCES WHERE 6 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 THE LENDERS HAVE COMMON ADDRESSES RAISING AN EYE OF SUSPICION AND ALSO CREDITWORTHINESS OF LENDERS HAS NOT BEEN VERIFI ED BY THE ASSESSING OFFICER. 6. A PERUSAL ON RECORDS REVEAL THAT THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS HAS ISSUED QUESTIONNAIRE TO THE ASSESSEE ON 01 - 07 - 2013 INTER ALIA SEEKING INFORMATION WITH RESPECT TO UNSECURED L OANS AMOUNTING TO RS.1,46,48,773/ - . THE ASSESSING OFFICER HAS ISSUED NOTICES TO UNSECURE D CREDITORS U/S. 133(6) OF THE ACT. IN RESPONSE TO NOTICES ONLY TWO UNSECURED CREDITORS VIZ. TUFALI AHD. KHALIL AHD. AND NAZIYA NA V ID AHD. FURNISHED THE DETAILS AS SO UGHT BY THE ASSESSING OFFICER . THEIR REPLIES ARE AT PAGES 20 AND 23, RESPECTIVELY OF THE PAPER BOOK. AS PER THE LIST FURNISHED BY ASSESSEE THERE ARE 23 LENDERS OF UNSECURED LOAN. AS IS EVIDENT FROM DOCUMENTS FURNISHED BEFORE US, THE REMAINING 21 PARTIES HAVE NOT RESPONDED TO THE NOTICE ISSUED BY ASSESSING OFFICER. THOUGH THE ASSESSEE HAS FURNISHED VARIOUS DOCUMENTS I.E. CONFIRMATION S OF THE PARTIES, RETURN OF INCOME FILED BY THE LENDERS, THEIR LEDGER EXTRACTS ETC., BUT THEIR NON - APPEARANCE BEFORE THE AS SESSING OFFICER RAISES AN EYE OF SUSPICION, ESPECIALLY WHEN MAJORITY OF LENDERS ARE STATED TO BE CLOSELY RELATED TO THE ASSESSEE. 7. ANOTHER GLARING FACT THAT HAS BEEN BROUGHT OUT TO THE FORE BY THE PR. COMMISSIONER OF INCOME TAX IS THAT IN MAJORITY OF CASES LOANS HAVE BEEN ADVANCED BY THE PARTIES AFTER SIMILAR AMOUNTS HAVE BEEN CREDITED TO THEIR RESPECTIVE BANK ACCOUNTS. THIS FINDING HAS NOT BEEN CONTROVERTED BY THE LD. AR OF THE ASSESSEE. THE ASSESSING OFFICER AFTER HAVING RECEIVED RELEVANT DOCUMENTS INCLUDING CONFIRMATION HAS NOT TAKEN PAINS TO VERIFY THE VERACITY OF LOAN TRANSACTIONS AND THE CREDITWORTHINESS OF THE PARTIES EXTENDING LOAN. THE ASSESSING OFFICER AFTER ISSUING NOTICES U/S. 133(6) OF 7 ITA NO .1158/PUN/2016, A.Y. 2011 - 12 THE ACT, LEFT THE ENQUIRY IN BETWEEN. THEREFORE, IT IS CASE OF LACK OF ENQUIRY BY ASSESSING OFFICER AND NOT INADEQUATE ENQUIRY AS HAS BEEN ASSERTED BY THE ASSESSEE. 8. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER, ACCORDINGLY, THE SAME IS UPHELD. THE APPEAL OF ASSESSEE IS DISMISSED BEING DEVOID O F ANY MERIT. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 26 TH DAY OF FEBRUARY, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 26 TH FEBRUARY, 2019 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3 . THE PR. COMMISSIONER OF INCOME TAX - 1, NASHIK 4 . , , , / DR, ITAT, B BENCH, PUNE. 5 . / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE