ITO 21(2)(3), MUMBAI V. VISHAL K GANATRA, MUMBAI

ITA 133/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3782 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Source of fund
• Section: 69C; 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F, BENCH MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ITA NO.133/MUM/2013 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER-21(2)(4), ROOM NO.503, 5 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051. SHRI VISHAL K. GANATRA 12,MAHAVIR BLDG. 3 RD FLOOR, K.D. ROAD, VILE PARLE (W), MUMBAI-400 056. PAN: AAXPG 1027Q APPELLANT .. RESPONDENT APPELLANT BY SHRI SHAHNAWAZUL RAHMAN RESPONDENT BY NONE DATE OF HEARING: 16-05-2016 DATE OF PRONOUNCEMENT: 10-08-2016 O R D E R PER SANDEEP GOSAIN,JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LEARNED CIT (A)-32, MUMBAI DATED 05-10 -2012 PASSED IN APPEAL NO.CIT (A) -32-ITO-21(2)(3)/IT-212/2009-10 F OR ASSESSMENT YEAR 2007-08 WHEREBY THE LEARNED CIT (A) HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE, ON THE GROUND MENTIONED HEREIN BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.34, 74,077 J- ON ACCOUNT OF BOGUS PURCHASES BY NOT APPRECIATING THE FACT THAT T HE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER AS THE ASSESSEE FAILE D TO PRODUCE NECESSARY DETAILS DURING THE COURSE OF ASSESSING PR OCEEDINGS. WITHOUT PREJUDICE TO ABOVE, THE ID. CIT(A) SHOULD H AVE FOLLOWED THE ITAT AHMEDABAD DECISION AND CONFIRMED AN ADDITION OF 25% ON THE SAME ISSUE AS IN THE CASE OF M/S. VIJAY PROTEIN WHICH HA S ALSO BEEN CONFIRMED BY THE ITAT, MUMBAI IN THE CASE OF M/S. COMPURE. ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 2 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. CIT(A) HAS FAILED TO APPRECIATE THAT THE ADDITION O N ACCOUNT OF SUNDRY CREDITORS WERE MADE SINCE THE ASSESSEE FAILED TO ES TABLISH THE CREDITORS AS GENUINE. THE ID. CIT(A) OUGHT TO HAVE CONFIRMED THE ENTIRE ADDITION AS BOGUS PURCHASES IF SECTION 41(1) IS NOT APPLICABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ADDITION UJS.69 WAS MADE SINCE THE PROPERTY WAS NOT DISCLOSED IN THE BA LANCE SHEET OF THE ASSESSEE AND THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INVESTMENT EVEN DURING THE COURSE OF REMAND PROCEEDINGS. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE ID. CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 2. THIS APPEAL WAS FIXED FOR HEARING TODAY AND WAS CALLED FOR SEVERAL TIMES BUT, NOBODY APPEARED ON BEHALF OF THE ASSESSE E AND EVEN; NO APPLICATION FOR ADJOURNMENT OF THE CASE WAS FILED. AS PER THE RECORDS IT IS REVEALED THAT NONE APPEARED ON BEHALF OF THE ASSESS EE ON THE PREVIOUS DATE OF HEARING ALSO THOUGH NOTICE WAS ALREADY ISSU ED BY RPAD. THEREFORE, IT SEEMS THAT THE ASSESSEE IS NOT INTERE STED TO CONTEST THE PRESENT APPEAL. THE LEARNED DR REPRESENTING THE REV ENUE IS PRESENT BEFORE THE BENCH AND SUBMITTED THAT HE WISH TO CONT EST THE SAME. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL AFTE R HEARING THE LEARNED DR AND PERUSAL OF THE MATERIALS AVAILABLE ON RECORD . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PROPRIETOR OF M/S DEVANSH ENTERPRISES ENGAGED IN THE BUSINESS OF TRADING IN TEXTILE MATERIALS AND THE ASSESSEE CONDUCT THE BUSINESS FRO M HIS RESIDENCE. HE ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 3 IS ALSO PARTNER IN THE FIRM VIZ. INTER X. THE ASSES SEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,14,940/- ON 0 2/11/07. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE I.T. ACT. DU RING THE COURSE OF ASSESSMENT PROCEEDING NOTICE U/S 133(6) WERE ISSUED TO THE FOLLOWING PARTIES: 1. S.S. FAB 2. H.M. TRADERS 3. D.H. TEXT 1198261 4. M.B. TEXTILE ALL THE ABOVE NOTICES WERE RETURNED BY THE POSTAL A UTHORITIES WITH A REMARK NOT KNOWN. ALTHOUGH THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE AND THE ASSESSEE WAS REQUESTED TO PRODUCE ALL THE PARTIES ALONG WITH SUPPORTING DOCUMENTS I.E. BOOKS OF ACCOUNT, COPIES OF RETURN, BALANCE SHEET, P&L A/C, PAN DETAILS ETC. BUT EVEN AFTER THE RECEIPT OF NOTICE THE ASSESSEE DID NOT ATTENDED THE OFFICE OF THE AO NOR HAS FURNISHED ANY WRITTEN EXPLANATION AND SINCE THE ASSESSMENT WAS GE TTING BARRED BY LIMITATION THEREFORE, THE AO AFTER CONSIDERING THE MATERIAL PLACED ON RECORD PASSED ORDER OF ASSESSMENT THEREBY MAKING ADDITIONS INTO TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF THE AO, THE ASS ESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT (A) AND THE LEARNED C IT (A) AFTER CONSIDERING THE CASE HAS ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 4 AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE R EVENUE IS NOW IN APPEAL BEFORE US ON THE AFOREMENTIONED GROUNDS. GROUND NO.1 4. LD. DR APPEARING ON BEHALF OF REVENUE RELIED UPO N THE ORDERS PASSED BY AO AND SUBMITTED THAT THE CIT(A) HAS ERRE D IN DELETING THE ADDITION OF RS.34,74,077/- ON ACCOUNT OF BOGUS PURC HASES, BY NOT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MAD E BY THE AO AS THE ASSESSEE FAILED TO PRODUCE NECESSARY DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER ARGUED BY LD . DR THAT EVEN BEFORE CIT(A), THE AO HAS CATEGORICALLY STATED IN THE REMA ND REPORT THAT IN THE ABSENCE OF STOCK REGISTER, THE AO COULD NOT VERIF Y THE PURCHASES AND CORRESPONDING SALES. THE LD. DR FURTHER ARGUED THAT THE ONUS WAS UPON THE ASSESSEE TO PRODUCE ALL THE PARTIES FOR EXAMINA TION BUT THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES BEFORE THE AO. LA STLY, LD. DR REQUESTED FOR SETTING ASIDE THE ORDER OF CIT(A). WE HAVE HEARD LD. DR AND ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY LOWER AUTHOR ITIES. THE LD. CIT(A) HAS DEALT WITH THIS GROUND IN PARA NUMBER 3.2 OF IT S ORDER AND THE SAME IS REPRODUCED BELOW FOR REFERENCE. DURING THE APPELLATE PROCEEDINGS THE LD. AR SUBMI TTED THE LEDGER ACCOUNT OF ALL THE CREDITORS FOR LAST 3 YEAR S AND ALSO SUBMITTED CONFIRMATION FROM THE AFORESAID PARTIES A LONG WITH PAN AND NEW ADDRESS. THE SAID EVIDENCE WERE SENT TO THE AO FOR REMAND REPORT VIDE THIS OFFICE LETTER DATED 26-03-2010. IN THE REMAND REPORT DATED 28-05-2012, THE AO AFTER GOING THROUGH THE SUBMISSIONS AND EVIDENCES FURNISHED BY THE ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 5 APPELLANT HAS NOTED THAT THE ASSESSEE HAS SUBMITTED INVOICES OF THE ABOVE PARTIES ALONG WITH THEIR LEDGER AND CO NFIRMATIONS WITH THEIR PAN. DURING THE REMAND PROCEEDINGS THE A O ASKED THE ASSESSEE TO PRODUCE THESE PARTIES ALONG WITH TH EIR BOOKS OF ACCOUNT FOR VERIFICATION AND THE ASSESSEE VIDE L ETTER DATED 10-05-2010 EXPRESSED HIS INABILITY TO PRODUCE THESE PARTIES AS THE PURCHASES WERE MADE THROUGH BROKER AND HE HAD N O INTERFACE WITH THE PURCHASE PARTIES. THE AO ALSO ST ATED THAT IN ABSENCE OF STOCK REGISTER, HE COULD NOT VERIFY THE PURCHASES AND CORRESPONDING SALES. FINALLY THE AO CONCLUDED I N THE REMAND REPORT THAT ASSESSEE MIGHT HAVE PURCHASED TH ESE GOODS FROM SOME OTHER SOURCE AND ENTERED IN THE BOO KS OF ACCOUNTS IN THE NAME OF THE ABOVE PARTIES. THE COPY OF THE SAID REMAND REPORT WAS GIVEN TO THE APPELLANT FOR H IS REJOINDER. AFTER ANALYZING THE AFORE MENTIONED ORDER WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED AND JUDI CIOUS ORDER WHILE TAKING INTO CONSIDERATION ALL THE JUDICIAL PRONOUNC EMENT AND THE FACTS OF THE CASE THE LD. CIT(A) HAS TAKEN INTO CONSIDERATIO N THE REMAND REPORT FILED BY AO WHEREIN HE HIMSELF BELIEVES THAT THE PU RCHASES MIGHT HAVE BEEN MADE FROM OTHER PARTIES BUT ENTRIES IN BOOKS W ERE MADE FOR THESE PARTIES. ONCE THE ASSESSEE HAS MADE PAYMENTS TO THE SE PARTIES THROUGH CHEQUES AND THE SAID VALUE OF PURCHASES ARE RECORDE D IN BOOKS DULY SUPPORTED BY PURCHASE BILLS, NO FINANCIAL ADVANTAGE COULD BE DERIVED BY ASSESSEE BY CHANGING THE NAMES OF THE PARTIES IN IT S BOOKS. THE LD. CIT(A) HAS RIGHTLY TAKEN INTO CONSIDERATION THAT TH E CONCLUSION DRAWN BY AO IN THE REMAND REPORT ITSELF IS VERY HYPOTHETICAL AND DOES NOT SHOW THAT HOW THE ASESSEE GAINED BY DOING SO. THE LD. CIT(A) WHILE RIGHTLY RELYING UPON THE CASE TITLED BEDI AND CO. PVT. LTD. 144 ITR 352 (KAR), DAULATRAM RAWATMULL 87 ITR 349 (SC) HAS APPRECIATED THAT AS P ER THE RULE OF ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 6 EVIDENCE THE BURDEN OF SHOWING THAT THE APPARENT WA S NOT REAL IS ON THE PERSON WHO CLAIMS IT TO BE SO. THE LD. CIT(A) HAS R IGHTLY TAKEN INTO CONSIDERATION THAT IT WAS FOR THE AO TO HAVE INVEST IGATED THAT MATTER FURTHER IN ORDER TO PROVE THAT WHAT IS APPARENT WAS NOT REAL. THE AO SHOULD HAVE COMPARED THE PAST RESULTS TO CHECK WHET HER THERE WAS ANY FALL IN GP ETC AND FIND THE REASONS THEREOF, IF ANY . SINCE THE AO HAS NOT DOUBTED THE PURCHASE BILLS SUBMITTED BEFORE HIM AND MOREOVER SINCE THE ENTRIES ARE RECORDED IN THE BOOKS OF ACCOUNTS, THEN IT CANNOT BE A CASE OF ADDITION U/S 69C AS UNEXPLAINED EXPENDITURE. THEREF ORE CONSIDERING THE TOTALITY OF THE FACTS WE DISMISS THE SAID GROUND RA ISED BY REVENUE AND UPHOLD THE ORDERS PASSED BY LD. CIT(A). EVEN BEFORE US NO MATERIAL HAS BEEN PLACED BY LD. DR TO THE EFFECT THAT THE CIT(A) SHOULD HAVE FOLLOWED THE ITAT AHMEDABAD BENCH AND CONFIRMATION OF ADDITI ON OF 25% ON THE SAME ISSUE. WE HAVE ALREADY CONSIDERED THE JUDGMENT S OF BOMBAY HIGH COURT IN CASE OF J.S. PARKAR (94 ITR 616) WHEREIN T HE FACTS OF THAT CASE ARE SIMILAR TO THE FACTS OF THE PRESENT CASE. THERE FORE, RESPECTFULLY FOLLOWING THE JUDGEMENTS OF HONBLE HIGH COURT WE D ISMISS THE GROUND OF APPEAL AND UPHOLD THE ORDER OF CIT(A). GROUND NO.2 THIS GROUND HAS BEEN DEALT BY LD. CIT(A) IN PARA NO . 4.2 THE SAME IS REPRODUCED BELOW: 4.2 I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR AND PERUSED THE ASSESSMENT ORDER AS, WELL AS REMAND REP ORT ON THE ABOVE ISSUE. DURING THE REMAND PROCEEDINGS LEDG ER ACCOUNT OF ALL THE CREDITORS WERE SUBMITTED FOR 3 Y EARS AND HE ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 7 ALSO FOUND THAT PAYMENT HAS BEEN MADE TO THESE CRED ITORS M SUBSEQUENT YEARS. THE NECESSARY LEDGER A/C WERE ALS O WITH THE AO DULY SUPPORTED BY BILLS AND THE PAYMENTS WER E BY CHEQUES. STILL THE AO HAS STATED THAT SINCE IN THE PURCHASES IN RESPECT OF THE 3 PARTIES (FOR WHICH HE MADE SEPARAT E ADDITION U/S 69C) HAVE BEEN HELD TO BE NON VERIFIABLE, HENCE THE EXISTENCE OF THESE CREDITORS DOES NOT ARISE. THE CO NCLUSION DRAWN BY AO IS VERY ILLOGICAL, PRESUMPTUOUS, AND WI THOUT ANY EVIDENCE OR SUBSTANCE. THE AO MADE NO ENQUIRIES U/S 133(6) EVEN DURING THE REMAND PROCEEDINGS IN RESPECT OF TH E REMAINING CREDITORS OF 25,11,806 AND ASSUMED THEM T O BE NON- EXISTENT JUST BECAUSE SOME IN RESPECT OF OTHER 3 CREDITORS THE NOTICES U/S 133(6) COULD NOT BE SERVED DURING T HE ORIGINAL ASSTT PROCEEDINGS. THE AO HAS ALSO NOT AT ALL POINT ED 'OUT ANY DEFECT IN THE PAYMENTS MADE THROUGH CREDITORS THROU GH BANKING CHANNEL NOR HAS MADE ANY ATTEMPT TO VERIFY THE GENUINENESS OF THESE SUNDRY CREDITORS. THE AO HAS B ROUGHT NOTHING ON RECORD TO SHOW THAT THE PURCHASES FROM T HESE CREDITORS ARE BOGUS OR DO NOT EXIST AT THE GIVEN AD DRESSES AND NOR POINTED OUT ANY DEFECT IN THE CORRESPONDING SAL ES OF THESE SUNDRY CREDITORS OVER A PERIOD OF 3 YEARS TO WHICH THEY PERTAINED. THE PURCHASES MADE FROM THESE CREDITORS CLAIMED AS EXPENDITURE IN THE EARLIER YEARS HAVE NOT BEEN D ISPUTED BY THE AO, THEN HOW CAN THESE CREDITORS CAN BE TREATED AS CEASED EXIST JUST BECAUSE SOME IN RESPECT OF OTHER 3 CREDITORS THE NOTICES U/S 133(6) COULD NOT BE SERVED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS NO REASON TO TRE AT THESE SUNDRY CREDITORS AS CEASED TO EXIST WITHIN THE MEAN ING OF SECTION 41 ( 1) OF THE I. T .ACT. IT IS A FACT THAT THE ASSESSEE HAS SHOWN THE AMOUNT IN THE BALANCE SHEET AS PAYABLE AN D THEREBY THE ASSESSEE HAS ACKNOWLEDGED THE LIABILITY AS STILL PAYABLE AND THERE IS NO INTENTION OF ASSESSEE NOT T O HONOUR ITS LIABILITY. THE AMOUNT IS ALSO NOT UNILATERALLY WRIT TEN OFF IN THE BOOKS OF ACCOUNT. NO MATERIAL IS BROUGHT ON RECORD BY THE AO TO SHOW THAT EVEN THE CREDITORS HAS WAIVED OR GRANT ED A REMISSION AGAINST THE LIABILITY. FURTHER NO EXPENDI TURE HAD BEEN ALLOWED IN EARLIER YEARS IN RESPECT OF SUCH LI ABILITY. HENCE THE CONDITION PRECEDENT FOR INVOKING SECTION 41(1) ARE NOT SATISFIED AND IN ABSENCE OF ANY TANGIBLE PROOF OF S UPPLIER WOULD NOT BE JUSTIFIED IN IGNORING LIABILITY APPEA RING IN BALANCE SHEET AND MAKING OUT A' CASE FOR CESSATION OF LIABI LITY MERELY BECAUSE THESE ARE OUTSTANDING FOR A SINCE EARLIER Y EARS. THIS VIEW IS SUPPORTED IN THE DECISIONS REPORTED IN CASE OF JEHANGIR GULLABHAI 21 SOT 603 (MUM), DSA ENGINEERS 30 SOT 31(MUM), NIRMALA OVERSEAS 37 DTR 321 (DEL)(TRIB), 9 9 TTJ 718(DEL), NEW COMMERCIAL MILLS 175 TAXMAN 179(AHD), ALLIED ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 8 LEATHER 32 SOT 549(LKO). LIMITATION OF TIME IS NOT A DETERMINING FACTOR IN MATTERS RELATING TO REMISSION OR CESSATION OF LIABILITIES MERELY BECAUSE THE OUTSTANDING SUNDR Y CREDITOR BALANCES APPEARING IN BOOKS OF ACCOUNT OF ASSESSEE FOR A PERIOD LONGER THAN THREE YEARS AS HELD IN DSA ENGIN EERS 30 SOT 31(MUM), 40 SOT 253(AHD). EVEN IN THE CASE WHER E THE LIABILITIES HAD BEEN OUTSTANDING FOR PAST SEVERAL Y EARS AND ASSESSEE HAD FAILED TO FURNISH POSTAL ADDRESSES OF CONCERNED. PARTIES AND FAILED TO PROVE EXISTENCE OF THOSE LIAB ILITIES, THE !TAT IN NEW COMMERCIAL MILLS 175 TAXMAN 179(AHD), A LLIED LEATHER 32 SOT 549(LKO) HELD THAT IN ABSENCE OF ANY COGENT REASONS AND MATERIAL EVIDENCE IN SUPPORT OF FINDING THAT LIABILITIES HAD CEASED IN YEAR UNDER CONSIDERATION, ADDITION MADE WAS LIABLE TO BE SET ASIDE. MERELY BECAUSE NO CONFIRMATION HAS BEEN FILED BY THE ASSESSEE DURING THE YEAR CANNOT BE A BASIS THAT THE LIABILITY IS NO LONGER P AYABLE BY THE ASSESSEE AS HELD IN 37 DTR 321(DEL)(TRIB), 282 ITR 379(MAD). HENCE ON APPRECIATION OF THE (ACTS AND CIRCUMSTANCE S IN THE CASE OF PRESENT APPELLANT ALSO I FIND THAT THE COND ITIONS OF 41(1) ARE NOT SATISFIED. HENCE THE ADDITION OF RS.5 ,57,327/- AND RS.25,11,806/- MADE BY THE AO IN RESPECT OF SUN DRY CREDITORS IS DIRECTED TO BE DELETED. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY P ERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS PASSED BY THE REVEN UE AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) WHILE DE ALING WITH THE SAID GROUND HAS TAKEN INTO CONSIDERATION THAT THE CONCLU SION DRAWN BY AO IS VERY ILLOGICAL, PRESUMPTUOUS AND WITHOUT ANY EVIDEN CE OR SUBSTANCE. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THAT THE AO MADE NO ENQUIRES U/S 133(6) EVEN DURING THE REMAND PROCEEDINGS IN RESPEC T OF THE REMAINING CREDITORS OF RS.25,11,806/- AND ASSUMED THEM TO BE NON-EXISTENT JUST BECAUSE IN RESPECT OF SOME OF THE CREDITORS THE NOT ICES U/S 133(6) COULD NOT BE SERVED DURING THE ORIGINAL ASSESSMENT PROCEE DINGS. LD. CIT(A) HAS RIGHTLY APPRECIATED THAT THE CONDITION PRECEDENT FO R INVOKING SECTION 41(1) ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 9 ARE NOT SATISFIED AND IN ABSENCE OF ANY TANGIBLE PR OOF OF SUPPLIER HAVING GIVEN UP ITS CLAIM, THE AO WAS NOT JUSTIFIED IN IGN ORING LIABILITY APPEARING IN BALANCE SHEET AND MAKING OUT A CASE FOR CESSATION O F LIABILITY MERELY BECAUSE THESE ARE OUTSTANDING SINCE EARLIER YEARS. THE LD. CIT(A) HAS CONSIDERED THE FACTS THAT THE ASSESSEE HAS SHOWN TH E AMOUNT IN THE BALANCE SHEET AS PAYABLE AND THEREBY THE ASSESSEE H AS ACKNOWLEDGED THE LIABILITY AS STILL PAYABLE AND THERE IS NO INTE NTION OF ASSESSE NOT TO HONOUR ITS LIABILITY. THE AMOUNT IS ALSO NOT UNILAT ERALLY WRITTEN OFF IN THE BOOKS OF ACCOUNT. LD. CIT(A) HAS RIGHTLY APPRECIATE D THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO SHOW THAT EVEN THE C REDITORS HAVE WAIVED OR GRANTED A REMISSION AGAINST THE LIABILITY. HENCE , THIS GROUND RAISED BY REVENUE IS DISMISSED. GROUND NO.3 THIS GROUND HAS BEEN DEALT BY CIT(A) IN PARA NO.5.3 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW FOR REFERENCE: 5.3 I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR AND PERUSED THE REMAND REPORT. DURING THE REMAND PROCEEDINGS IT WAS STATED THAT SOURCE OF PURCHASE OF THE SAID FLAT AT RS.20,5 0,000/- WAS AS UNDER: 1) FROM (LATE) PAYAL GANTRA(SISTER) RS. 4,00,000 2) FROM INTER EX A PARTNERSHIP FIRM OF RS.13,00 ,OOO VISHAL GANTRA RS. 3,50,000 DURING THE REMAND PROCEEDINGS THE COPY OF BANK STAT EMENT SHOWING SUCH CREDIT OF THE RS 4,00,000 ON 5-3-2007 FROM PAYAL GANATRA RS 13,00,000 FROM INTER EX WAS FURNISHED BE FORE THE AO ALONG WITH THEIR PAN CARDS. BALANCE SHEET AND P&L [C OF INTER EX WAS ALSO FILED BEFORE THE AO. THE AO IN THE REMAND REPORT MENTIONED THAT SOURCE OF THE LOAN FUNDS CANNOT BE V ERIFIED AS MS. ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 10 PAYAL GANATRA DIED. REGARDING SOURCE OF FUNDS RECEI VED FROM INTER EX THE AO HAS MENTIONED THAT CAPITAL WITHDRAWN FROM THE FIRM IS OF RS.11,56,771/.- AND NOT RS 13,00,000/-. THIS CONCLU SION OF THE AO IS NOT CORRECT BECAUSE THE FIGURE OF RS.11,56,771/- IS NOT CAPITAL WITHDRAWN BUT IT IS THE CAPITAL CARRIED OUT TO NEXT YEAR AS APPEARING IN THE CAPITAL ACCOUNT. IT IS NOTED FROM THE PERUSA L OF THE CAPITAL ACCOUNT OF THE APPELLANT IN THE BOOKS OF INTER EX T HAT HIS TOTAL DRAWING ARE RS.13,70,547/- SO FAR AS THE CONCLUSION OF THE AO LOAN FROM PAYAL GANATRA CA E VERIFIED THE SAME IS ALSO N OT CORRECT. THOUGH MS. GANATRA HAS DIED BUT THE LOANS HAVE BEEN RECEIVED THROUGH HER BANK ACCOUNT AND CREDITED IN THE APPELL ANT'S ACCOUNT ON 05-03-2007 AND SINCE THE PAN CARD HAS ALSO BEEN PROVIDED, THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE SOU RCE OF FUNDS FROM MS. GANATRA AND IT WAS FOR THE AO TO HAVE BROU GHT THE MATERIAL TO PROVE THAT THE TRANSACTIONS SHOWN WERE NOT GENUINE. THE MERE FACT THAT THE LOAN CREDITOR HAS DIED AND N OT IN A OF RS. 4,00,000/- CANNOT BE VERIFIED AS THE INCOME TAX DET AILS ARE NOT FURNISHED IS IRRELEVANT AS THE ADDITION MADE BY THE AO IS IN RESPECT OF INVESTMENT OF RS. 20,50,000/- OUT OF WHICH THE S OURCE OF FUND TO THE EXTENT OF 17 LAKHS ARE FROM PAYAL GANATRA, INTE R EX AND BALANCE HAS BEEN CLAIMED TO BE INVESTED FROM OWN FUNDS AND NOT FROM THE LOAN TAKEN FROM KAMLESH GANATRA AND CHHAYA GANATRA WHO' ARE THE PARENTS OF THE APPELLANT AND NO ADDITION IN RES PECT OF LOAN TAKEN FROM CHHAYA GANATRA HAS BEEN MADE IN THE ASSESSMENT ORDER . NEVERTHELESS THE ASSESSEE HAS ALSO PRODUCED COPY OF THE PAN CARD AND LEDGER ACCOUNTS AND BANK STATEMENT OF CHHA YA GANTRA AND BALANCE SHEET, FUND STATEMENT AS WELL AS PAN OF KAMLESH GANANANTRA FROM WHERE THE CHEQUES HAVE BEEN ISSUED TO THE APPELLANT. HENCE ON MERITS ALSO THERE IS NOTHING WH ICH LEAD TO SUSPECT' THE GENUINENESS OF MONEY GIVEN BY CHHAYA A ND KAMLESH GANANTRA TO THE APPELLANT. THE CLAIM OF THE AO THAT INCOME TAX DETAILS ARE NOT GIVEN IS FACTUALLY INCORRECT.UNDER THESE CIRCUMSTANCES INVESTMENT OF RS. 20,50,000(- MADE BY THE APPELLANT IN PURCHASE OF PROPERTY AFTER OBTAINING LOAN FROM P AYAL GANANTRA AND INTER EX CANNOT SAID TO BE UNEXPLAINED AS THE S AME WAS APPEARING IN THE PERSONAL BALANCE SHEET OF ASSESSEE ; HENCE THE ADDITION OF RS 20,50,000 U/S 69 IS DIRECTED TO BE D ELETED. WE HAVE HEARD LD. DR AND WE HAVE ALSO TAKEN INTO CO NSIDERATION THE ORDERS PASSED BY CIT(A) AS WELL AS THE MATERIAL PLACED ON RECORD. WE ARE OF THE CONSIDERED VIEW, THAT THE CIT(A) HAS TAK EN INTO CONSIDERATION ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 11 THE REMAND REPORT FILED BY AO AND HAS CONSIDERED TH AT THE CONCLUSION OF THE AO WAS NOT CORRECT AS FIGURE OF RS.11,56,771/- IS NOT CAPITAL WITHDRAWN BUT IT IS THE CAPITAL CARRIED OUT TO NEXT YEAR AS A PPEARING IN THE CAPITAL ACCOUNT. LD. CIT(A) HAS RIGHTLY APPRECIATED THAT FR OM THE PERUSAL OF THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF INT ER EX THAT HIS TOTAL DRAWINGS ARE RS.13,70,547/-. LD. CIT(A) HAS ALSO TA KEN INTO CONSIDERATION THAT ON MERITS THERE IS NOTHING WHICH LEAD TO SUSPE CT THE GENUINENESS OF MONEY GIVEN BY CHHAYA AND KAMLESH GANANTRA TO THE A SSESSEE. THE LD. CIT(A) HAS RIGHTLY CONCLUDED THAT THE CLAIM OF THE AO THAT INCOME TAX DETAILS ARE NOT GIVEN WHICH WERE FOUND TO BE FACTUA LLY INCORRECT. THE LD. CIT(A) HAS RIGHTLY CONCLUDED THAT HE INVESTMENT OF RS.20,50,000/- MADE BY THE ASSESSEE IN PURCHASE OF PROPERTY AFTER OBTAI NING LOAN FROM PYAL GANANTRA AND INTER EX CANNOT SAID TO BE UNEXPLAINE D AS THE SAME WAS APPEARING IN THE PERSONAL BALANCE SHEET OF ASSESSEE . THEREFORE THIS GROUND RAISED BY REVENUE IS DISMISSED. GROUND NO. 4&5 ARE GENERAL IN NATURE AND NEEDS NO S EPARATE ADJUDICATION IN VIEW OF THE DECISION ON ABOVE GROUN D. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-08-2016. SD/- SD/- ( JASON P. BOAZ ) ( SANDEEP GOSAI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 10/8/2016 ITA NO.133/MUM/2013 ITO VS. VISHAL K. GANATRA 12 ASHWINI/ ASHWINI/ ASHWINI/ ASHWINI/PS PSPS PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//