H N TRADELINK P.LTD, NAVI MUMBAI V. DCIT CEN CIR 45, MUMBAI

ITA 1479/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88423 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 18-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Keywords: Accommodation entries
• Section: 131; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BE NCH, MUMBAI , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.1479 & 1475/MUM/2011 ( ' ' ' ' / ASSESSMENT YEARS : 2006-07 & 2007-08 M/S. H.N. TRADELINK PVT. LTD., S.S.-4 GROUND FLOOR, SHOP NO. 285, SECTOR-2, VASHI NEW MUMBAI-400 703 / VS. THE DCIT, CENTRAL CIRCLE-45, MUMBAI ( % ./ ) ./ PAN/GIR NO. : AABCH 5492D ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: NONE +,(* . - / RESPONDENT BY: SHRI VIJAY KUMAR BORA . /0% / DATE OF HEARING :18.02.2015 12' . /0% / DATE OF PRONOUNCEMENT :18.02.2015 3 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AG AINST THE TWO SEPARATE ORDERS OF THE LD. CIT(A)-36, MUMBAI DT. 31 .12.2010 PERTAINING TO ASSESSMENT YEARS 2006-07 & 2007-08. 2. FIVE TIMES THE NOTICES WERE SENT TO THE ASSESSEE THROUGH RPAD BUT EACH TIME THE NOTICE RETURNED UNSERVED. AS THE ASS ESSEE HAS NOT COME UP WITH ANY CHANGE IN ADDRESS, WE HAVE DECIDED TO PROC EED EX PARTE. IN BOTH ITA NOS.1479 & 1475/M/2011 2 THE YEARS, THE COMMON GRIEVANCE IS IN RELATION TO T HE ADDITION MADE U/S. 68 OF THE ACT. 3. FIRST WE WILL TAKE UP THE FACTS OF ASSESSMENT YE AR 2006-07 IN ITA NO. 1479/M/2011. WHILE SCRUTINIZING THE RETURN OF I NCOME, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE GENUINENE SS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM APPEARING IN TH E BALANCE SHEET AND RECEIVED DURING THE YEAR. THE ASSESSEE FILED DETAIL S OF SHARE APPLICATION MONEY RECEIVED DURING THE YEAR. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE SHARE APPLICATION RECEIVED DURING THE YEAR SHOULD NOT BE TREATED AS UNEXPLAINED AND ADDED AS INCOME U/S. 68 OF THE A CT. THE ASSESSEE FILED A DETAILED REPLY OBJECTING TO THE PROPOSED ACTION O F THE AO. THE EXPLANATION OF THE ASSESSEE WAS ACCEPTED IN ALL CAS ES EXCEPT FOR THE FOLLOWING: SR. NO. NAME OF THE PARTY AMOUNT (RS.) 1. ACCURATE MERCANTILE PVT. LTD. 12,10,000/- 2. NIKETAN MERCANTILE PVT. LTD. 31,00,000/- 3. NISHA ENTERPRISES 50,00,000/- 4. THREE A BROTHERS 49,50,000/- 5. ASPIRE MERCANTILE PVT. LTD. 75,00,000/- TOTAL 2,17,60,000/- 4. IN RESPECT OF SHARE APPLICATION MONEY THE AO ADD ED THE FOLLOWING TREATING THESE COMPANIES AS PROVIDING ACCOMMODATION ENTRIES SR. NO. NAME OF THE PARTY AMOUNT (RS.) 1. HARBOLE TRADELINKS PVT. 50,00,000/- ITA NOS.1479 & 1475/M/2011 3 LTD. 2. JAS TRADING PVT. LTD. 25,00,000/- 3. M.T. TRADELINKS PVT. LTD.` 50,00,000/- 4. R. KESHAVLAL TRADERS PVT. LTD. 30,00,000/- TOTAL 1,55,00,000/- 5. AGGRIEVED ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IN SO FAR AS THE ADDITION MADE IN RESPECT OF SHARE APPLIC ATION MONEY, STRONG RELIANCE WAS MADE ON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. 216 CTR 195 . RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LOVELY EXPORTS AND CIT VS DIVINE LEASING & FINANCE LTD. 299 ITR 268, T HE LD. CIT(A) DELETED THE ADDITION OF RS. 1.55 CRORES IN RESPECT OF SHARE APPLICATION MONEY. 5.1. IN SO FAR AS ADDITION ON ACCOUNT OF UNSECURED LOANS, THE LD. CIT(A) CONFIRMED THE ADDITION MADE ON ACCOUNT OF NISHA EN TERPRISES RS. 50 LAKHS AND THREE A BROTHERS RS. 49,50,000/-. 6. AGGRIEVED, ASSESSEE IS BEFORE US. 7. AS NONE APPEARED BEFORE US ON BEHALF OF THE ASSE SSEE, WE HEARD LD. DEPARTMENTAL REPRESENTATIVE AND CAREFULLY PERU SED THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE DELETION OF ADD ITION ON ACCOUNT OF SHARE APPLICATION MONEY IS CONCERNED, THE LD. CIT(A) HAS FOLLOWED THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT, THEREFORE, NO INTERFERENCE IS CALLED FOR. IN RESPECT OF ADDITION ON ACCOUNT OF U NSECURED LOANS, THE LD. CIT(A) HAS CONFIRMED THE ADDITION ON TWO ACCOUNTS I .E. NISHA ENTERPRISES AND THREE A BROTHERS. THE FINDINGS OF THE LD. CIT( A) READ AS UNDER; ITA NOS.1479 & 1475/M/2011 4 AS REGARDS LOANS FROM NISHA ENTERPRISE IS CONCERNE D, I HAVE SEEN THAT THOUGH THE AR OF THE CONCERNED CREDI TOR CONFIRMED THE TRANSACTION BY FILING THE CONFIRMATION AND BANK STATEMENT HE HAS NOT FILED THE SUPPORTING DOCUMENTS TO PROVE HIS CAPACITY TO LEND SUCH AN AMOUNT. BEFORE ME, THE LD. AR ARGUED THAT IT WAS FOR THE DEPARTMENT TO SEEK SUCH DOCUMENTS BY USING ITS INHERENT POWER U/S. 133(6)/131 AND IN HIS OPINION THE INITIAL ONUS WAS DISCHARGED. BUT I HAVE NOTICED THAT EVEN IN THE REMAND REPORT P ROCEEDINGS THE APPELLANT DID NOT PRODUCE THE RELEVANT DETAILS BEFO RE THE ASSESSING OFFICER. WITHOUT THE SUPPORTING BALANCE SHEET AND AUDITED ACCOUNTS THE APPELLANT FAILED TO SUBSTANTIATE THE C APACITY OF THE LENDERS. HENCE, I UPHOLD THE STAND OF THE AO IN CA SE OF UNSECURED LOANS FROM NISHA ENTERPRISE OF RS. 50,00,000/- AND THREE A BROS AMOUNTING TO RS. 49,50,000/-. CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ITA NO. 1475/M/2011 A.Y. 2007-08 8. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS MADE ADDITION U/S. 68 OF THE ACT ON ACCOUNT OF UNSECURED LOANS AMOUNTING TO RS. 13,61,000/-. 9. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND FILED THE NECESSARY DETAILS IN RESPECT OF UNSECURED LOANS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) HELD AS U NDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE AO . THE FACT THAT THE COMPANIES ACCUR ATE MERCANTILE PRIVATE LIMITED & ASPIRE MERCANTILE PRIVATE LTD. AR E UNDER SAME MANAGEMENT AND THAT THEY ARE ASSESSED IN THE SAME C HARGE IN THE SAME RANGE WITH SAME OFFICER IS ENOUGH TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTION AS THE SAME IS VERIFIABLE. THE APPELLANT HAS ESTABLISHED THE IDEN TITY OF EACH LOAN CREDITOR. THE APPELLANT HAS ALSO ESTABLISHED THE CA PACITY AND GENUINENESS OF THE TRANSACTION BY FILING THE ACCOUN TS OF ACCURATE MERCANTILE PRIVATE LIMITED AND ASPIRE MERCANTILE PR IVATE LIMITED. HENCE THESE LOANS STAND PROVED AND ADDITION ON ACCO UNT OF THESE LOANS IS DELETED. ITA NOS.1479 & 1475/M/2011 5 AS REGARDS LOANS FROM NISHA ENTERPRISE IS CONCERNED , I HAVE SEEN THAT THOUGH THE AR OF THE CONCERNED CREDITOR C ONFIRMED THE TRANSACTION BY FILING THE CONFIRMATION AND BANK STA TEMENT HE HAS NOT FILED THE SUPPORTING DOCUMENTS TO PROVE HIS CAP ACITY TO LEND SUCH AN AMOUNT. BEFORE ME, THE LEARNED AR ARGUED TH AT IT WAS FOR THE DEPARTMENT TO SEEK SUCH DOCUMENTS BY USING ITS INHERENT POWER U/S 133(6)/ 131 AND IN HIS OPINION THE INITIAL ONUS WAS DISCHARGED. BUT I HAVE NOTICED THAT EVEN IN THE REMAND REPORT P ROCEEDINGS THE APPELLANT DID NOT PRODUCE THE PARTNER/PROPRIETOR BE FORE THE ASSESSING OFFICER. AS THE APPELLANT HAS FAILED TO P RODUCE THE PARTNER/PROPRIETOR BEFORE THE ASSESSING OFFICER AT THE TIME OF THE REMAND REPORT PROCEEDINGS AND BASED ON THE REMAND R EPORT. I UPHOLD THE STAND OF THE AO IN THE CASE OF UNSECURED LOANS FROM NISHA ENTERPRISE OF RS 58,65,000 AND MR. T SUBHARAY ADU AMOUNTING TO RS. 8,20,000. AS REGARDS LOAN FROM NIS HA ENTERPRISE THE APPELLANT HAS DRAWN MY ATTENTION THAT THE BALAN CE OF RS 58,65,000 INCLUDES OPENING BALANCE OF RS 50,00,000/ - AND HENCE ADDITION OF RS 58,65,000/- AMOUNTS TO DOUBLE TAXATI ON. THE APPELLANTS CONTENTION IS CORRECT AND HENCE ONLY TH E INCREMENTAL LOAN AMOUNT OF RS 8,65,000/- IS LIABLE TO BE TAXED U/S 68 OF 1T ACT, 1961 . AS A RESULT, THE ADDITION OF UNEXPLAINED CAS H CREDIT BY WAY OF UNSECURED LOAN OF RS 8,65,000/- FROM NISHA ENTER PRISES AND RS 8,20,000 FROM T. SUHBARAYADU ARE CONFIRMED. 10. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE FINDING OF THE LD. CIT(A), WE DECLINE TO INTERFERE WITH IT. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 18 TH FEBRUARY, 2015. SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 18 TH FEBRUARY, 2015 . . ./ RJ , SR. PS ITA NOS.1479 & 1475/M/2011 6 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI