SHRI MOHAN THAKUR, Mumbai V. A.C.I.T. CENT. CIR. 8(4), Mumbai

ITA 1435/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4413 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT ANOHLE
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Opportunity of being heard; Bad and doubtful debts; Corroborative evidences; Onus to prove; Reason to believe
• Section: 274; 13; 69

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 1434/MUM/2018 (ASSESSMENT YEAR 2009-10) I.T.A. NO. 1435/MUM/2018 (ASSESSMENT YEAR 2011-12) I.T.A. NO. 1436/MUM/2018 (ASSESSMENT YEAR 2012-13) I.T.A. NO. 1437/MUM/2018 (ASSESSMENT YEAR 2013-14) SHRI MOHAN THAKUR 4, FLORA VILLA, 35, ST. ANDREWS ROAD, BANDRA(W) MUMBAI-400 050. PAN : AAAPT2966N VS. ACIT, CC-8(4) 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD CHURCHGATE MUMBAI - 400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY DR. K. SHIVRAM DEPARTMENT BY SHRI BHARAT ANOHLE DATE OF HEARING 01.03.2021 DATE OF PRONOUNCEMENT 24 .0 5 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE APPEALS BY THE ASSESSEE AGAINST THE RESPE CTIVE ORDERS OF LEARNED CIT(A) FOR THE CONCERNED ASSESSMENT YEARS. SINCE THE ISSUES ARE COMMON AND CONNECTED THESE APPEALS ARE CONSOLIDATED AND DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE ITA 1434/MUM/2018 FOR ASSESSMENT YEAR 2009-10 2. THE GROUNDS OF APPEAL RAISED READ AS UNDER :- I. ADDITION OF RS. 25,97,980/- U/S. 69 BASED ON INFORMATION RECEIVED FROM AUSTRALIAN TAX AUTHORITIES: 1. NO ADDITION CAN BE MADE BASED ON MERE INFORMATIO N RECEIVED FROM FOREIGN AUTHORITIES WITHOUT ANY EVIDENCE ON RECORD, HENCE THE E NTIRE ADDITION IS BAD AND MAY BE DELETED. 2. NO ADDITION CAN BE MADE U/S 69 OF THE INCOME-TAX A CT, SINCE NO INVESTMENT HAS BEEN MADE BY THE ASSESSEE, AND IT DOES NOT ACT AS ANY SOURCE OF INCOME, FOR WHICH, THE ASSESSEE IS ALSO OFFERING AN EXPLANATION ABOUT ITS NATURE AND SOURCE, THUS NOT FULFILLING THE REQUIREME NTS OF S.69. SHRI MOHAN THAKUR 2 3. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS . 25,97,980/- BASED ON INFORMATION RECEIVED FROM DDIT(I&CI) VIA AUSTRALIAN T AX OFFICE THAT THERE WAS RECEIPT OF MONEY THROUGH ALLEGED HAWALA SYSTEM BY THE APPELLANT'S SON FROM VARIOUS PARTIES, ALL OF WHOM WERE LIVING OUTSIDE IN DIA, WHICH WAS ASSUMED TO BE TRANSFERRED FROM THE APPELLANT TO HIS SON WITHOUT A NY EVIDENCE ON RECORD AND A STATEMENT GIVEN BY THE APPELLANT'S SON BEFORE THE AUSTRALIAN TAX AUTHORITIES, THE COPY OF WHICH HAD NOT BEEN PROVIDED TO THE ASSESSEE AND ON MERE SUSPICION AND CONJECTURES NO ADDITION CAN BE MAD E AND HENCE THE ADDITION MADE MAY BE DELETED. 4. THE CIT(A) ERRED IN NOT APPRECIATING THAT NO TRANS ACTION HAS TAKEN PLACE BETWEEN APPELLANT AND HIS SON AND ALSO THAT THE TRANSAC TIONS, WHICH WOULD BE REPAID BY THE APPELLANT'S SON AND NOT THE APPELLAN T HIMSELF, AS CONFIRMED BY THE PARTIES PROVIDING LOANS, WERE OUTSIDE THE JURI SDICTION OF THE INCOME TAX ACT, WHERE NO PROVISION HAS BEEN PROVIDED UNDER WHICH SUCH FOREIGN TRANSACTIONS COULD BE TAXED, AND HENCE THE SAID ADDITI ON MAY BE DELETED. II. ADDITION OF RS.30.00.000/- ON ACCOUNT OF LOAN WRITTEN OFF THROUGH P&L A/C. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO MAKING AN ADDITION ON ACCOUNT AMOUNT OF LOAN WRITTEN OFF THROUGH P &L A/C, HENCE THE ADDITION MAY BE DELETED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. APROPOS ISSUE OF ADDITION U/S. 69: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- IN THIS CASE, CERTAIN INFORMATION WITH RESPECT OF A SSESSEE SHRI MOHAN THAKUR WAS RECEIVED FROM THE OFFICE OF THE DIRECTOR OF INCOME TAX (I&CI), MUMBAI ALONGWITH THE REPORT OF THE DEPUTY DIRECTOR OF INCOME TAX (I&CI), UNDER SPONTANEOUS EXCHANGES OF INFORMATION FROM TH E AUSTRALIAN TAX AUTHORITIES'. AS PER THE REPORT, INFORMATION WAS RE CEIVED FROM THE AUSTRALIAN TAXATION OFFICE THAT THE ASSESSEE UNDER CONSIDERATI ON HAS TRANSFERRED FUNDS AMOUNTING TO RS. 12,97,122 AU (AUSTRALIAN DOLLARS) TO SHRI. SHAGUN THAKUR (SON) AND THE OTHER FAMILY MEMBERS I.E. SHRI. SHIKH AR THAKUR (SON) SMT. DESIREE ANN THAKUR (WIFE) THROUGH HAWALA SYSTEM (IM TSTNFORMAL MONEY TRANSFER SYSTEM) FOR THE PERIOD OF F.Y. 2007-08 TO 2012-13. SHRI. SHAGUN THAKUR HAS CLAIMED BEFORE THE AUSTRALIAN TAXATION O FFICE, THAT THE SAID AMOUNT WAS RECEIVED BY HIM FROM HIS FATHER AS GIFT TO BUY A PROPERTY SITUATED IN SHRI MOHAN THAKUR 3 AUSTRALIA. IN HIS STATEMENT RECORDED BEFORE THE AUS TRALIAN TAXATION OFFICE, SHRI. SHAGUN THAKUR HAS SUBMITTED THAT HIS FATHER H AS INSTRUCTED TO HIS FRIENDS AND BUSINESS ASSOCIATED OVERSEAS TO SEND TH E FUNDS TO HIM THROUGH HAWALA SYSTEM I.E. INFORMAL MONEY TRANSFER SYSTEM ( I.M.T.S). AS PER THE STATEMENT ON OATH OF SHRI. SHAGUN THAKUR BEFORE THE AUSTRALIAN TAXATION OFFICE, IT IS RECORDED THAT THE SAID METHOD IS ADOP TED BY THE ASSESSEE, SHRI, MOHAN THAKUR DUE TO THE CURRENT RESTRICTIONS IN FOR EIGN EXCHANGE TRANSFERS IN INDIA. THE A.O. NOTED THAT AS PER THE DOCUMENTARY E VIDENCES, THE INFORMATION OF THE FUNDS TRANSFERRED HAVE BEEN RECEIVED BY THE DEPARTMENT AND IT PERTAINS TO F.Y. 2007-08 TO F.Y. 2012-13. HE NOTED THAT THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT BEFORE THE AUSTRALIAN TAXATION OFFICE ON 27/07/2012 WHICH IS REPRODUCED AS FOLLOWS:- 'TO WHOMSOEVER IT MAY CONCERN' 'I, MOHAN THAKUR, CONFIRM THAT ANY AND ALL AMOUNTS UTI LIZED BY MY SON, SHAGUN THAKUR, IN 2007 TO PURCHASE THE PROPERTY LOC ATED AT 13, BAYLISS ROAD, KARDINYA WERE ARRANGED BY ME, TO HIM, FOR USE AT MY DIRECTION I.E. TO PURCHASE A FAMILY HOME FOR MY WIFE, SHAGUN AND MY O THER SON SHIKHAR TO RESIDE IN. I CONFIRM THAT THE AMOUNTS DO NOT CONSTITUTE CONSIDERATION OF INCOME FOR OTHER SON SHIKHAR TO RESIDE IN. I CONFIRM THAT THE AMOUNTS DO NOT CONSTITUTE CONSIDERATION OR INCOME FOR THE SHAGUN IN R ETURN FOR ANY GOODS OR SERVICES OR OTHERWISE. RATHER, SIMPLY MONEY ARRANGED BY ME TO MY SON SO THAT MY FAMILY COULD PURCHASE AND LIVE IN THEIR OWN HO ME IN AUSTRALIA. I CONDUCT MY BUSINESS ON MY OWN AND GIVE HELP TO MY FA MILY AS I MAY DEEM FIT. I CATEGORICALLY DENY ANY IMPLICATION OR MY INSTRU CTION THAT I AM CARRYING ON MY BUSINESS PURSUANT TO A BARE TRUST ARRANGEMENT WITH MY SON. I CONFIRM THAT THERE IS NO TRUST THAT HAS BEEN SET UP, BARE OR OTHERW ISE, IN INDIA OR OVERSEAS UNDER WHICH SHAGUN IS ENTITLED TO DISBURSEME NT OR ANY BENEFIT. I FURTHER CONFIRM THAT THE AMOUNT TRANSFERRED TO SHAGUN IN 2010 RELATED TO A PAYMENT MADE IN THE AUSTRALIAN DEPARTMENT OF IMMIGRATION FOR THE FINALIZATION OF MY WIFE AND MY PERMANENT RESIDENCY AP PLICATION TO AUSTRALIA. ANY INFERENCE THAT AMOUNT WAS EARNED BY SHAGUN IS IN CORRECT. I TRUST THIS INFORMATION, COMBINED WITH DOCUMENTS ESTAB LISHING MY FINANCIAL CAPACITY ARE NOW SUFFICIENT TO ESTABLISH THAT MY 24 YEAR S OLD SON DID NOT HAVE THE FINANCIAL CAPACITY TO PURCHASE A HOUSE A WORTH $9 ,12,000 IN 2007. RATHER, THE AMOUNTS WERE ARRANGED BY ME TO MY SON FOR TH E BENEFIT OF WIFE AND THE CHILDREN IN AUSTRALIA TO HAVE THEIR OWN HOUSE. SD/- MOHAN THAKUR PLACE: - MUMBAI SHRI MOHAN THAKUR 4 DATE :- 30.07.2012' 4. THE A.O. FURTHER REFERRED THAT THE STATEMENTS OF THE ASSESSEE UNDER SECTION 131(A) OF THE I .T. ACT WERE RECORDED BEFOR E THE DEPARTMENT AUTHORITIES, DEPUTY DIRECTOR OF INCOME TAX (I & CI), UNIT 1(1), MUMBAI. HE OBSERVED THAT THE PERUSAL OF THE STATEMENT OF THE ASSESSEE IN CON SIDERATION TO THE ABOVE AFFIDAVIT SUBMITTED BY THE ASSESSEE BEFORE THE AUST RALIAN TAXATION OFFICE REVEALS GROSS INCONSISTENCIES IN THE REPLIES OF THE ASSESSEE VIS-A-VIS AFFIDAVIT SUBMITTED TO THE AUSTRALIAN TAXATION OFFICE (ATO). THE A.O. OBSERVED THAT ON PERUSAL OF THE EVIDENCES IN THE FORM OF AFFIDAVIT A ND THE OTHER DOCUMENTS RECEIVED FROM THE AUSTRALIAN TAXATION OFFICE, HE WA S SATISFIED AND HAVE A REASON TO BELIEVE THAT SHRI. MOHAN THAKUR, THE ASSE SSEE IN CONSIDERATION HAS TRANSFERRED FUNDS TO HIS SON DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THROUGH HAWALA SYSTEM. HE NOTED THAT THE DETAILS OF THE ENTIRE FUNDS TRANSFERRED ARE AS FOLLOWS; FUNDS TRANSFER DONE BY SHRI. MOHAN THAKUR TO BANK ACCOUNT OF SHRI. SHAGUN THAKUR IN AUSTRALIA PERTAINING TO A. Y. 2009-10 DATE AMOUNT US$ FROM COUNTRY ORDERING CUSTOMER 8.4.2008 9509/- HONG KONG ROYAL TRADING 2.4.2008 37,727/- UNKNOWN CALIBRATED COLOURS 5. HE FURTHER OBSERVED THAT AS PER THE APPROXIMATE EXCHANGE RATE CONVERSION OF RS. 55/- PER AUSTRALIAN DOLLAR THE AM OUNT TOTALS TO RS. 55,97,980/- IN TERMS OF INDIAN RUPEES. HENCE, THE A .O. IN THE LIGHT OF THE ABOVE FACTS, ISSUED A SHOW CAUSE TO THE ASSESSEE AS TO WHY THE AMOUNT OF RS. 55,97,980/- SHOULD NOT ADDED BACK TO HIS INCOME? 6. WITHOUT REFERRING TO THE EXPLANATION IN HIS ASSE SSMENT ORDER, THE A.O. OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE SA ME SATISFACTORILY. THAT THE CONFIRMATION FILED AND THE CONTRADICTORY STATEMENTS GIVEN BY SHRI. MOHAN THAKUR BEFORE THE (I&CL) WING VIS-A-VIS BEFORE AUST RALIAN TAX OFFICE IS AN AFTERTHOUGHT AND THE SAME IS HEREBY REJECTED. THAT THIS IS MERE AN SHRI MOHAN THAKUR 5 AFTERTHOUGHT DEVISED BY THE ASSESSEE TO ESCAPE FROM THE TAX LIABILITY. REPEATING HIS OBSERVATION AS ABOVE, HE ADDED RS. 25,97,980/-U NDER SECTION 69 AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN THE TOTAL INCOME OF THE ASSESSEE. 7. AGAINST THE ABOVE ORDER ASSESSEE APPEALED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) ELABORATELY NOTED THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE INTERALIA REFUTED THE ALLEGATIONS. THE ASSESSEE ALS O REFERRED TO THE CONFIRMATIONS SUBMITTED. IT WAS FURTHER SUBMITTED T HAT THE DEPARTMENT HAS NOT GIVEN THE COPY OF THE DOCUMENT RECEIVED FROM AU STRALIAN TAX AUTHORITIES EVEN THOUGH THE ASSESSEE HAS REQUESTED FOR THE SAME . IT WAS FURTHER SUBMITTED THAT THE ADDITION CANNOT BE MADE UNDER SECTION 69 I N AS MUCH AS THE IMPUGNED AMOUNT DOESNT FALL UNDER THE REALM OF PRO VISIONS OF SECTION 69. SEVERAL CASE LAWS WERE ALSO BE REFERRED. IT WAS ALS O SUBMITTED THAT THE INVESTMENT WAS IN THE NAME OF THE SON AND THE PROPE RTY STANDS IN HIS NAME IN A FOREIGN COUNTRY AND HENCE ASSESSEE CANNOT BE SUBJ ECT TO ADDITION UNDER SECTION 69 OF THE I.T. ACT. 8. THE LEARNED CIT(A) WAS NOT CONVINCED HE REFERRED TO THE AFFIDAVIT SUBMITTED BY THE ASSESSEE BEFORE THE AUSTRALIAN TAX OFFICE. REFERRING TO THE ABOVE HE HELD THAT IT WAS CLEAR THAT ASSESSEE HAS T RANSFERRED SEVERAL AMOUNTS TO HIS FAMILY MEMBERS IN AUSTRALIA THROUGH HAWALA. HE FURTHER NOTED THAT THE FUNDS TRANSFERRED WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THAT ASSESSEE HAS FAILED TO CONCLUSIV ELY PROVE THE NATURE AND SOURCE OF THE FUNDS TRANSFERRED TO AUSTRALIA. HE HE LD THAT THE FINDING OF THE AUSTRALIAN TAX OFFICE WAS CONCLUSIVE. HENCE REFERRI NG TO HIS ORDER FOR ASSESSMENT YEAR 2008-09 HE UPHELD THE ADDITION. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. LEARNED COUNSEL OF THE ASSESSEE HAS MADE ELABORATE SUBMISSI ON ALONGWITH A PAPER BOOKS. THE SUMMARY THEREOF HAS BEEN SUBMITTED AS UN DER :- NO ADDITION CAN BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM FOREIGN AUTHORITIES WITHOUT ANY EVIDENCES. SHRI MOHAN THAKUR 6 ADDITION CANNOT BE MADE WITHOUT PROVIDING A COPY OF THE STATEMENT RELIED UPON BY THE LD. AO; NO ADDITION CAN BE MADE O N THE BASIS OF MERE SUSPICION AND CONJECTURES FACTS THE ASSESSEE HAD REQUESTED FOR COPIES OF THE STATEME NT RELIED UPON BY THE LD. AO VIDE LETTER DATED SEPTEMBER 3, 2016. THE SAID STATEMENTS HAVE NEVER BEEN PROVIDED TO THE ASSESSEE IN SPITE OF SPECIFIC R EQUESTS. (PAGE 24 OF PB -I) THE LD. AO HAS MADE THE ADDITIONS RELYING ON THE SAID STATEMENTS. (PAGE 5 OF AO ORDER) PROPOSITION NO ADDITION CAN BE MADE MERELY BASED ON THE ALLEGED I NFORMATION RECEIVED FROM AUSTRALIAN TAX AUTHORITIES WITHOUT PROVIDING ANY EVIDENCE OF THE INFORMATION RECEIVED. THE SAID LETTER SINE QUA NON FO R MAKING THE ALLEGED ADDITION AGAINST THE ASSESSEE. THE SAID STATEMENTS HAVE NEVER BEEN PROVIDED TO THE ASSESSEE IN SPITE OF SPECIFIC REQUESTS. THE AO HAS MADE AN ADDITION MERELY ON THE BASIS OF SO ME INFORMATION RECEIVED FROM THE AUSTRALIAN TAX AUTHORITIES WITHOUT I NDEPENDENTLY VERIFYING THE CONTENTS AND AS APPLICABLE TO INDIAN LAW. A SPECIFIC REQUEST HAD BEEN MADE TO THE AO VIDE LETTE R DATED SEPTEMBER 3, 2016 (PAGE 24 OF PB I) .(STATEMENT ON OATH DATED 25-3-2 014 P. 7) WHERE THE STATEMENT RECORDED OF MR. SHAGUN THAKUR WAS ASKED FOR , HOWEVER, THE SAME HAS YET NOT BEEN PROVIDED TO THE APPELLANT DUE TO WHICH TH E VERACITY OF THE STATEMENT CANNOT BE CONSIDERED TO BE SACROSANCT. RELIANCE IS PLACED ON THE DECISION OF THE HONLDLE SUP REME COURT IN THE CASE OF KISHINCHAND CHELLARAM V. CIT [1980] 125 ITR 713 (SC) PAGE 269 - 274 OF PB-III (AT PARA 6 AT PAGE 274) WHEREIN IT WAS HELD THA T WHERE EMPLOYEE OF ONE OFFICE OF ASSESSEE MADE, THROUGH A BANK, TELEGRAPHIC TRANSFER OF CERTAIN AMOUNT TO EMPLOYEE OF ANOTHER OFFICE, THE ITO, ON THE BA SIS OF LETTERS FROM BANK MANAGER, NOT SHOWN TO ASSESSEE, TREATED AMOUNT S O REMITTED AS INCOME FROM UNDISCLOSED SOURCES, IT WAS HELD THAT THE REVENUE AUTHORITIES DID NOT PRODUCE COPIES OF THE LETTERS, ADDRESSED BY THE ITO TO THE MANAGER OF THE BANK. COPIES OF THESE LETTERS, IF PRODUCED, WOULD PER HAPS HAVE SHOWN THAT THE SUGGESTION THAT THE AMOUNT WAS REMITTED BY THE ASSESS EE WAS MADE BY THE ITO AND TAKING THE CUE FROM THIS SUGGESTION, THE MANA GER OF THE BANK MIGHT HAVE STATED THAT THE TELEGRAPHIC TRANSFER WAS SEN T BY THE ASSESSEE. BURDEN OF PROOF LAY ON DEPARTMENT TO SHOW THAT REMITTED AMOUNT BELONGED TO ASSESSEE BY BRINGING PROPER EVIDENCE. RELIANCE IS PLACED ON THE DECISION OF THE ITAT JODHPU R BENCH IN THE CASE OF R.K. SYNTHETICS V. ITO [2004] 3 SOT 268 (JODHPUR)[L 7-10-2O03] PAGE 275- 278 OF PB III (AT PARA 10 AT PAGE 277) WHERE BASED ON AN ADMISSION MADE BY PARTNER OF ASSESSEE-FIRM BEFORE CENTRAL EXCISE AUTHOR ITIES THAT THEY HAD RECEIVED CERTAIN PROCESSED MAN-MADE FABRICS FROM PR OCESSORS WHICH WERE WITHOUT COVER OF INVOICES AND WITHOUT PAYMENT OF CENTRAL EXCISE DUTY, ASSESSING OFFICER MADE ADDITION UNDER SECTION 69 OF THE ACT. FURTHER, A COPY OF THE STATEMENTS RECORDED BY THE CENTRAL EXCISE AUTHO RITIES WAS NEVER SHRI MOHAN THAKUR 7 PROVIDED TO THE ASSESSEE. IT DID NOT JUSTIFY ADDITIONS UN DER SECTION 69 MERELY ON BASIS OF STATEMENT OF SAID PARTNER WITHOUT ANY FURTH ER SUPPORTING EVIDENCE BEING ON RECORD. THE FACTS OF THIS CASE ARE SIMILAR TO THE CASE OF THE ASSESSEE, MERELY BASED ON AN ALLEGED STATEMENT MADE BY MR. SHAGUN THAKUR BEFOR E THE AUSTRALIAN AUTHORITY, WHICH HAS NOT BEEN PROVIDED TO THE ASSESSEE, ADDITION CANNOT BE MADE UNDER SECTION 69 OF THE ACT WITHOUT ANY FURTHER SU PPORTING EVIDENCE. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE SUP REME COURT OF INDIA IN THE CASE OF GOODYEAR INDIA LTD. V. CIT [2019] 112 TAX MANN.COM 136 (SC)[16- 10-2O19J PAGE 279-281 OF PB III (PARA 6 -9 AT PAGE 2 81) WHERE THE COURT UPHELD THE DECISION OF THE TRIBUNAL THAT THERE WAS NO MATERIAL TO SHOW THAT ASSESSEE HAD KEPT ANY AMOUNT OUTSIDE ITS BOOKS OF ACCOU NT AND ACCORDINGLY, DELETED UNDISCLOSED INCOME OF ASSESSEE AS RECORDED BY SEC IN USA. FURTHER, RELIANCE IS PLACED ON THE DECISION OF HON'B LE ITAT ALLAHABAD TRIBUNAL IN THE CASE OF BIOVED RESEARCH SOCIETY V. CIT(E) [2018] 91 TAXMANN.COM 268 (ALLAHABAD -TRIB.)[08-01-2O18] PAGE 282-289 (PARA 5.1 AT PAGE 286) WHERE EXCEPT REPORT RECEIVED FROM INVESTIG ATION WING, THERE WAS NO OTHER MATERIAL WITH COMMISSIONER (EXEMPTION) TO ASSUME THAT ASSESSEE WAS INDULGED IN RECEIVING UNACCOUNTED MONEY IN GARB OF FUND OR RE-DONATING FUNDS AFTER CHARGING COMMISSION, IT WAS HELD THAT IMP UGNED ORDER PASSED BY COMMISSIONER (EXEMPTION) MERELY ON ASSUMPTION AND PR ESUMPTION AND WITHOUT CONFRONTING ANY MATERIAL TO ASSESSEE WAS NOT SUSTAINABLE FURTHER RELIANCE IS PLACED ON THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CIT V. DAULATRAM RAWATMULL [1964] 53 ITR 574 (SC)[26-03-1964] PAGE 290-294 OF PB III (2 ND LAST PARA AT PAGE 294) WHERE THE TRIBUNAL, HOWEVER, HELD THAT SINCE THERE WAS NO CONNECTING LINK IN MATTER BETWEEN ASSESSEE AND AMOUNT DEPOSITED IN NAME OF 'S', SAID A MOUNT COULD NOT BE BROUGHT TO TAX AS SECRETED PROFIT OF ASSESSEE. IN LIGHT OF THE JUDICIAL PRECEDENTS, THE ADDITION CONFI RMED BY THE CIT (A) MAY BE DELETED. WITHOUT PREJUDICE, THE INVESTMENT IS NOT IN THE NAME OF ASSESSEE HENCE A DDITION CANNOT BE MADE UNDER SECTION 69 OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF THE HONBLE HIG H COURT OF PUNJAB 85 HARYANA IN THE CASE OF CIT V. ROSHAN LAL SETH [1989] 45 TAXMAN 187 (PUNJAB & HARYANA) PAGE 295 -297 OFPB III (PARA 12 AT PAGE 297) WHERE IT WAS HELD THAT AN AMOUNT DEPOSITED WITH A FIRM IN NAME O F ASSESSEE'S WIFE, COULD NOT BE ASSESSED IN HANDS OF ASSESSEE UNLESS E ITHER PERSON IN WHOSE NAME DEPOSIT STOOD OR FIRM IN WHOSE BOOKS DEPOSIT APPE ARED, WAS CALLED UPON TO EXPLAIN DEPOSIT. SINCE NEITHER OF THEM WAS CA LLED UPON TO DO SO. THERE WAS, THUS, CLEARLY NO WARRANT FOR ADDING THE SUM TO THE INCOME OF THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, SHRI MOHAN THAKUR 8 5. GROUND 2 NO ADDITION CAN BE MADE UNDER SECTION 69 OF THE ACT WH ERE ASSESSEE HAS OFFERED AN EXPLANATION FACTS THE APPELLANT HAS DISCHARGED THE BURDEN BY PROVIDING CONFIRMATION BY GIVING THE EXPLANATION AND GIVING STATEMENT ON OATH ON SEVERA L OCCASIONS. (PAGE 4 - 17 OF PB I) AND (PAGE 24 -28 OF PB I) MS. KOMAL RUPANI HAS STATED ON OATH AND CONFIRMED TO CE RTAIN TRANSACTION WITH ASSESSEE'S SON. (PAGE 29 - 30 OF PB I) THE ASSESSEE HAS FURNISHED PROOF OF REPAYMENT OF LO AN TO MR. SANJAY BALKRISHNA AND CONFIRMATION FROM MR. TREVOR FERNANDE S. (PAGE 24 -28 OF PB I) PROPOSITION THE APPELLANT HAS DISCHARGED THE BURDEN BY PROVIDING CONFIRMATIONS GIVING THE EXPLANATION, AND GIVING STATEMENT ON OATH ON SEVERA L OCCASIONS WHEN AFFIDAVIT IS FILED AND STATEMENT ON OATH IS TAKEN THE CONTENTS ARE PROVED TO BE CORRECT UNLESS PROVED. IN THE CASE OF MEHATA PARIKH & CO V. CIT (1956) 30 I TR 181 (SC) PAGE 298- 304 OF PB III (PARA 2 & LAST PARA AT PAGE 303) WHEREI N THE REVENUE HELD THAT THE ALLEGED SUMS WERE FROM UNDISCLOSED SOURCES, IT WA S HELD THAT IT WAS NOT ENOUGH WITHOUT FURTHER SCRUTINY TO DISLODGE POSITION TAK EN UP BY ASSESSEE WHICH WAS SUPPORTED BY ENTRIES IN CASH BOOKS AND AF FIDAVITS PUT IN BY ASSESSEE. THEREFORE, TREATING A PART OF CASE BALANCE AS ASSESSEE'S INCOME FROM UNDISCLOSED SOURCES WAS BASED ON PURE SURMISE AND BASED ON NO EVIDENCE AND, HENCE, TO BE QUASHED. THE APPELLANT IS NOT HAVING ANY EXPORT TRANSACTIONS OR DEALING IN ABROAD COMPLETE BANK DETAILS WERE FURNISHED HENCE THE APPELL ANT HAS DISCHARGED THE BURDEN. IT IS FOR THE REVENUE TO PROVE THAT THE APPELLA NT HAS MADE INVESTMENT IN ABROAD. ACCORDINGLY, THE ADDITION CONFIRMED BY THE CIT(A) WITHOUT PROVIDING THE ANY EVIDENCE AGAINST THE ASSESSEE, MAY B E DELETED. IT IS A WELL SETTLED PROPOSITION THAT WITH REGARD TO BUR DEN OF PROOF VIZ., THE CLAIM FOR DEDUCTION AND/OR EXEMPTION IS UPON AN ASSE SSEE. HOWEVER, IN MATTERS OF ADDITION AND DISALLOWANCE THE SAME IS ON R EVENUE. SUBSEQUENTLY, ONCE THE ASSESSEE SUBMITS EVIDENCES THE BURDEN IS DISCHARGED, THE ONUS TO DISPROVE LIES ON THE OTHER SI DE BY WAY OF ONUS OF PROOF. THE ASSESSEE HAS FURNISHED PROOF OF REPAYMENT OF LO AN TO MR. SANJAY BALKRISHNA (AY 2012-13) AND CONFIRMATION FROM MR. T REVOR FERNANDES (AY 2013-14). SINCE APART FROM AFORESAID ALLEGED INFORMA TION THERE WAS NO MATERIAL ON RECORD JUSTIFYING VIEW TAKEN BY INVESTIGATIO N WING AND, MOREOVER, SHRI MOHAN THAKUR 9 SAID INFORMATION WAS NOT EVEN SUPPLIED TO ASSESSEE, T HEREFORE, THE IMPUGNED ORDER PASSED BY COMMISSIONER (APPEALS) IS TO BE DELE TED. WITHOUT PREJUDICE, WHERE THE STATEMENT OF THE ASSESSEE IS TAKEN TO BE AN ADM ISSION OF TRANSFER OF MONEY TO HIS SON SHAGUN THAKUR WHEREAS IN FACT, TH ERE WAS NO TRANSFER AND MERELY THE WORDS 'ARRANGED' HAVE BEEN PICKED FRO M THE AFFIDAVIT OF THE ASSESSEE; WHICH IN NO MANNER CAN BE CONSTRUED TO BE INDIRECT PAYMENTS MADE BY THE ASSESSEE TO HIS FAMILY. THE WORD 'ARRANGE' IN NO MEANS SIGNIFY THAT THE ASSESSEE HAS MADE PAYMENT THROUGH INDIRECT METHODS. THE AFFIDAVIT AND STATEMENTS HAVE TO READ AS A WHOLE, TH E REVENUE CANNOT PICK UP FEW WORDS FROM THE AFFIDAVIT AND COME TO THE C ONCLUSION THAT THE AMOUNT RECEIVED BY SON FROM DIFFERENT PERSONS FROM AB ROAD IS BELONGS TO THE APPELLANT, IGNORING THE VARIOUS STATEMENTS GIVEN ON O ATH FROM TIME TO TIME BEFORE TAX AUTHORITIES. THEREFORE, IN ABSENCE OF ANY EVIDENCE, ADDITION MAD E MERELY ON THE BASIS OF PRESUMPTION AND ASSUMPTION CANNOT BE SUSTAINED RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF UMACHARAN SHAW & BROS. V. CIT [1959] 37 ITR 271 (SC)[15.O5.1959] PAGE 305-310 OF PB III (LAST PARA AT PAGE 309) WHEREIN IT WAS HELD THAT THERE WAS NO MATERIAL ON WHICH THE INCOME-TAX OFFICER COULD COM E TO THE CONCLUSION THAT THE FIRM WAS NOT GENUINE. THERE ARE MANY SURMISE S AND CONJECTURES, AND THE CONCLUSION IS THE RESULT OF SUSPICION WHICH CA NNOT TAKE THE PLACE OF PROOF IN THESE MATTERS. ADDITION CONFIRMED BY THE CIT (A) MAY BE DELETED. WITH OUT PREJUDICE TO THE ABOVE, 6. GROUND 4 TRANSACTIONS WERE BETWEEN PARTIES OUTSIDE THE JURISDIC TION OF INDIAN INCOME- TAX ACT, 1961, HENCE ADDITION CANNOT BE MADE. FACTS THE TRANSACTIONS PERTAINING TO DEPOSITS IN THE ACCOUNTS OF MR. SHAGUN THAKUR A CITIZEN OF AUSTRALIA AND A NON-RESIDENT FOR INDIAN INCOME TAX LAW, AND OTHER NON-RESIDENTS. PROPOSITION THE TRANSACTIONS PERTAINING TO DEPOSITS IN THE ACCOUNTS OF MR. SHAGUN THAKUR (NONRESIDENT) HAVE BEEN RECEIVED VIA NON-RES IDENTS. THEREFORE, THE SAME DOES NOT HAVE ANY NEXUS OR IMPACT WITH THE TERRITOR Y OF INDIA. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF GVK INDUSTRIES LTD. V. ITO [2011] 197 TAXMAN 337 /10 TAXMANN.COM 3 (SC) PAGE 311332 OF PB IN (PARA 76 AT PAGE 332) WHE RE IT WAS HELD THAT ANY SHRI MOHAN THAKUR 10 LAWS ENACTED BY PARLIAMENT WITH RESPECT TO EXTRA-TERRITORI AL ASPECTS OR CAUSES THAT HAVE NO IMPACT ON OR NEXUS WITH INDIA WOULD BE UL TRA VIRES AND WOULD BE LAWS MADE 'FOR' A FOREIGN TERRITORY. FURTHER RELIANCE IS PLACED ON THE DECISION OF THE HONT OLE SUPREME COURT IN THE CASE OF VODAFONE INTERNATIONAL HOLDINGS B.V. V. UN ION OF INDIA [2O12] 204 TAX.RN.AN 408/17 TAXMANN.COM. 2O2 (SC) PAGE 333 -415 OF PB III (PARA 173 AT PAGE 412) WHERE IT WAS HELD THAT FOR IMPOSING TAX , IT MUST BE SHOWN THAT THERE IS SPECIFIC NEXUS BETWEEN EARNING OF INCOME AND TERRITORY WHICH SEEKS TO LAY TAX ON THAT INCOME. SINCE THE TRANSACTIONS HAVE TAKEN PLACE OUTSIDE INDIA, TAXING THE SAME IS OUTSIDE THE JURISDICTION OF THE INCOME-TAX ACT, WHERE THERE IS NO PROVISION PROVIDED UNDER WHICH SUCH FOREIGN TRANSACTIONS CAN B E TAXED AND HENCE THE SAID ADDITION MAY BE DIRECTED TO BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, THE BURDEN IS UPON THE D EPARTMENT TO PROVE THAT THE ADDITION IS WITHIN THE AMBIT AND SCOPE OF INDI AN INCOME TAX LAWS. IN THE CASE OF PARIMISETTI SEETHARAMAMMA V. CIT [1965 ] 57ITR 532 (SC)[2.04.1965] PAGE 416-421 OF PB III (PARA 3 AT P AGE 419) WHEREIN IT WAS HELD THAT, IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHI N THE TAXING PROVISION. IN THE CASE OF DALMIA DADRI CEMENT LTD. V. CIT [1974] 94 ITR 303 (BOMBAY)[ 10.07.1973] PAGE 422 -427 OF PB III (LAST PARA AT PA GE 426) WHERE IT WAS HELD THAT BURDEN OF PROVING THAT SALE PROCEEDS OF CEMENT WE RE RECEIVED BY ASSESSEE COMPANY OR BY SOMEONE ON ITS BEHALF IN TAXAB LE TERRITORIES WAS ON DEPARTMENT AND IN ABSENCE OF MATERIAL IN THAT BEHALF, DEPARTMENT WOULD SUFFER AND NOT ASSESSEE-COMPANY SUMMARY OF SUBMISSION MAY BE CONSIDERED. (AT PAGE 4 3 OF PB I) IN VIEW OF THE ABOVE CONTENTIONS, SINCE THE DEPARTMEN T HAS NOT PROVED AS HOW THE SAME IS TAXABLE IN INDIA IN THE HAND OF THE A SSESSEE, THE ADDITIONS CONFIRMED BY THE CIT(A) MAY BE DELETED. 10. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF ASSESSING OFFICER. 11. UPON CAREFUL CONSIDERATION, WE FIND THAT THE AD DITION IS SOLELY MADE ON THE BASIS OF STATEMENT OF THE ASSESSEES SON BEFORE AUSTRALIAN TAX AUTHORITIES AND AFFIDAVIT BY THE ASSESSEE BEFORE THEM THAT FUND FOUND IN POSSESSION OF THE SON WERE ARRANGED BY ASSESSEE BY HAWALA TRANSACTION . WHEN CONFRONTED BY THE INVESTIGATION DEPARTMENT OF THE REVENUE, THE ASSESS EE HAS REBUTTED THE ABOVE SHRI MOHAN THAKUR 11 ALLEGATION. THE REBUTTAL OR REFUSAL BY THE ASSESSEE HAS ONLY BEEN REFERRED BY THE A.O. WITHOUT BRINGING ON RECORD THE ACTUAL REBU TTAL. THERE IS ABSOLUTELY NO OTHER MATERIAL IN THE HAND O F THE A.O. OF PROVING THE ADDITION IN THE HANDS OF THE ASSESSEE. DESPITE THE ASSESSEES REQUEST, THE COPY OF INFORMATION RECEIVED FROM AUSTRALIAN TAX AU THORITY HAS NOT BEEN GIVEN TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE ADDITI ON MADE, WHICH IS BASED UPON THE INFORMATION FROM A FOREIGN SOURCE, WITHOUT CONFRONTING THE SAME TO THE ASSESSEE AND WITHOUT ANY CORROBORATIVE MATERIAL IS NOT AT ALL SUSTAINABLE. THE CASE LAWS REFERRED BY THE LD. COUNSEL OF THE AS SESSEE AS ABOVE ARE GERMANE AND SUPPORT THE CASE OF THE ASSESSEE. SINCE THE ADDITION IS NOT AT ALL SUSTAINBALE AS FOU ND BY US HEREINABOVE, THE OTHER ASPECTS OF THE ASSESSEES CHALLENGE TO TH E ADDITION IS ONLY OF ACADEMIC INTEREST. HENCE, WE ARE NOT DEALING WITH THE SAME. APROPOS ADDITION OF 30 LAKH 10. ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS WRITTEN OFF THE BALANCE OF 30 LAKH IN PROFIT AND LOSS ACCOUNT. THAT ASSESSEE IS IN THE BUSINESS OF REAL ESTATE. THAT ASSESSEE RECEIVES BRO KERAGE INCOME ON TRANSFER OF PROPERTY HENCE HE HELD THAT THE BALANCE WRITTEN OFF MUST BE RELATING TO IMMOVABLE PROPERTY WHICH CANNOT BE WRITTEN OFF IN T HE PROFIT AND LOSS ACCOUNT. THE ASSESSEE RESPONDED THAT THE IMPUGNED AMOUNT REL ATED TO LOAN GIVEN TO A PARTY. THE ADDRESS OF THE SAID PARTY WAS ALSO FURNI SHED ALONG WITH THE PAN NO. IT WAS FURTHER SUBMITTED THAT THE COMPANY HAS NOT R ETURNED THE LOAN TO THE ASSESSEE AND IT HAS BECOME TIME BARRED. HENCE ASSES SEE HAS WRITTEN OF THE SAID AMOUNT IN THE PROFIT AND LOSS ACCOUNT. 11. BEFORE THE LEARNED CIT(A) ASSESSEE STATED THAT THE SAID LOAN WAS GRANTED IN 2007. THAT THE PARTY WAS NOT PAYING BACK THE MON EY HENCE THE ASSESSEE WAS CLAIMING IT AS BAD DEBTS UNDER SECTION 36(2)(V) OF THE INCOME TAX ACT. IT WAS FURTHER SUBMITTED THAT THE SAID COMPANY WHICH H AS RECEIVED THE LOAN IS A PRIVATE LIMITED COMPANY AND HAVE APPLIED TO REGISTR AR OF COMPANY FOR WRITING OFF THE NAME OF THE COMPANY FROM RECORDS OF THE ROC . HOWEVER LEARNED CIT(A) SHRI MOHAN THAKUR 12 WAS NOT SATISFIED HE FOUND THAT THE AMOUNT INVOLVED WAS NEVER CREDITED TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE IN ANY OF T HE EARLIER YEAR REFERRING TO THE PROVISIONS OF SECTION 36(2) HE HELD AS UNDER :- IN THE PRESENT CASE AT HAND, THE DEBT HAVE NEITHER BE EN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIO US YEAR NOR IN ANY OF THE EARLIER PREVIOUS YEAR. FURTHER, THE DEBT DOESN'T R EPRESENT MONEY LENT IN THE ORDINARY COURSE OF THE BUSINESS OF BANKING OR MON EY-LENDING. HENCE THE AMOUNT OF RS. 30 LACS IS NOT ALLOWABLE AS DEDUCTION UN DER SECTION 36(1)(VII) R.W.S. 36(2) OF THE ACT. 12. THE LEARNED CIT(A) FURTHER REFERRED TO THE JUDG EMENT OF HONOURABLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X VERSUS ESCOTRAC FINANCE & INVESTMENTS LTD. ( 84 TAXMANN.COM 67). 13. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL B EFORE US. 14. UPON HEARING BOTH THE PARTIES AND PERUSING THE CASE LAWS WE FIND THAT THE ASSESSEES CLAIM IS THAT THE ASSESSEE HAS GIVEN A LOAN TO A PARTY IN THE COURSE OF BUSINESS SEVERAL YEARS AGO. SINCE, THE PA RTY HAS NOT REPAID THE LOAN AND IT HAS REQUESTED ITS NAME TO BE STRUCK OFF FROM THE REGISTER OF COMPANY BY ROC, THE ASSESSEE HAS CLAIMED IT U/S.36(2) AS BAD D EBT. THE REVENUE HAS HELD THAT THIS CANNOT BE ALLOWED AS IT WAS NOT A DEBT WH ICH HAS BEEN WRITTEN OFF. WE NOTE THAT IF A LOAN IS NO LONGER RECOVERABLE THAT C AN BE CONSIDERED AS A LOSS AND ALLOWED U/S.37(I) OF THE ACT. QUOTING A WRONG SECTI ON IS NOT FALAL. HENCE, THE FACT THAT THE AMOUNT HAS BECOME IRRECOVERABLE NEEDS TO BE EXAMINED. HENCE, WE REMIT THE ISSUE TO THE FILE OF THE A.O. TO EXAMI NE THE CASE OF THE ASSESSEE IN LIGHT OF OUR OBSERVATION AS ABOVE. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY OF BEING HEARD. ITA NOS. 1435, 1436 AND 1437/MUM/2018 FOR A.Y. 2011 -12, 2012-13 AND 2013-14 15. THESE ARE ASSESSEES APPEAL AGAINST THE ADDITIO N U/S.69 AS UNDER: A.Y. AMOUNT 2011 RS.78,74,241/ - 2012 RS.9,86,665/ - 2013 RS.65,07,710/- SHRI MOHAN THAKUR 13 16. THE GROUND RAISED AND THE ORDER OF THE AUTHORIT IES BELOW ARE IDENTICAL TO THE ONE DEALT WITH BY US IN THE FIRST ISSUE ALREADY DEALT BY US IN ITA NO. 1434/MUM/2018 AS ABOVE. OUR ABOVE ADJUDICATION APPL IES MUTATES MUTANDIS TO THESE APPEALS. HENCE, THE ISSUE IS DECIDED IN FA VOUR OF THE ASSESSEE. 17. HENCE, ITA NO. 1434/MUM/2018 IS PARTLY ALLOWED AND ALL THE OTHER APPEALS STAND ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24.05.2021 SD/- S D/- (AMARJIT SINGH) (SHAMIM Y AHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 24/05/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI