K VRUSHALI, THANE V. ITO 11(1)(2), MUMBAI

ITA 15/MUM/2011

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5317 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M N NANDGAONKAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 15/MUM/2011 ASSESSMENT YEAR: 2007 - 08 & ITA NO. 3667/MUM/2014 ASSESSMENT YEAR: 2007 - 08 MS. K. VRUSHALI, 4 - D, REGENCY PARK, EDEN WOODS, PAWAR NAGAR THANE - 400610. VS. INCOME TAX OFFICER - 11(1)(2), MUMBAI PAN NO. AGYPK5387J APPELLANT RESPONDENT ASSESSEE BY : MR. M.N. NANDGAONKAR, AR REVENUE BY : MR. MANOJ KUMAR SINGH, DR DATE OF HEARING : 09/08/2018 DATE OF PRONOUNCEMENT : 28/09/2018 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) AND PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT) . AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 2 ITA NO. 15/MUM/2011 ASSESSMENT YEAR: 2007 - 08 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN CONFIRM ING AN ADDITION OF RS.31,13,802/ - AS UNEXPLAINED CASH CREDIT U/S 68 MADE BY THE LD. AO AND CEASED LIABILITY U/S 41(1) OF THE INCOME TAX, 1961. DETAILS OF THE SAME WERE DULY SUBMITTED. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITIONS OF THIS SUM MAY KINDLY BE DELETED. 2. THE LD. CIT(A) HAS ERRED IN MAKING AN ADDITION OF RS.33,37,500/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. DETAILS OF THE SAME WERE DULY SUBMITTED. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITIONS OF THIS SUM MAY KINDLY BE DELETED. 3. IN A NUTSHELL , THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DISCLOSED IN ITS BALANCE SHEET AS ON 31.03.2007 THE FOLLOWING DETAILS : NAME OF LENDER/CREDITOR AMOUNT - RS. VIKAS 6,12,000 LOANS TAKEN 11,07,000 SUNDRY CREDITORS 8,81,892 ADVANCES TAKEN 5,12,910 TOTAL 31,13,802 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) GAVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO FILE THE NAME AND ADDRESS OF THE LENDERS AND SUNDRY CREDITORS. FURTHER, HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THESE LOANS, ADVANCES AND CREDITORS, FOR WHICH NO DETA ILS WERE SUBMITTED NOR ANY CONFIRMATIONS WERE FILED, SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 AND CEASED LIABILITIES U/S 41(1) . B UT THE ASSESSEE FAILED TO SUBMIT ANY EXPLANATION . LATER ON , THE ASSESSEE SUBMITTED THE CONFIRMATION OF LOANS OF MR. MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 3 DEEPAK , NITIN AND RAVI ALONG WITH THEIR PAN. HOWEVER, IN RESPECT OF SUNDRY LOANS AMOUNTING TO RS.11,07,000/ - THE ASSESSEE SUBMITTED CONFIRMATION FROM 62 DIFFERENT PERSONS BUT WITHOUT PAN. THE AO HAS NOTED THAT THE ASSESSEE SUBMITTED THE DETAILS AT THE FA G END OF THE YEAR ON 29.12.2009, THEREFORE, HE WAS NOT IN A POSITION TO VERIFY THE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THESE TRANSACTIONS. THEREFORE, EXCEPTING THE LOAN FROM MR. DEEPAK, NITIN AND RAVI, THE AO MADE AN ADDITION OF RS.31,13,802/ - U/S 68 AND CEASED LIABILITIES U/S 41(1) O F THE ACT (SUNDRY LOANS OF RS.11,07,000/ - , LOAN OF RS.6,12,000/ - FROM MR. VIKASH, ADVANCES OF RS.5,12,910/ - AND CREDITORS OF RS.8,81,892/ - ). 3.1 AS PER AIR INFORMATION, THE ASSESSEE HAD DEPOSITED CASH OF RS.12,37,5 00/ - ON VARIOUS DATES DURING THE FINANCIAL YEAR 2006 - 07 IN HIS SAVINGS BANK ACCOUNT WITH AXIS BANK, MANAPADA BRANCH, THANE. AS PER THE BALANCE SHEET FILED BY THE ASSESSEE, THIS BANK ACCOUNT WAS NOT DISCLOSED. THE AO HAS NOTED THAT THE ASSESSEE FAILED TO EX PLAIN THE ABOVE MATTER BEFORE HIM. THE AO CALLED FOR INFORMATION FROM THE SAID BANK AND FOUND THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.12,37,500/ - AND WITHDRAWN RS.50,000/ - DURING THE RELEVANT YEAR. FURTHER, THERE WAS ALSO ONE CHEQUE DEPOSIT/CREDIT OF RS .21,00,000/ - IN THE SAID BANK ACCOUNT. THE ASSESSEE COULD FILE ONLY A SUMMARY OF THE ABOVE BANK ACCOUNTS BUT FAILED TO EXPLAIN THE TRANSACTIONS THEREOF. AS THE ASSESSEE FAILED TO EXPLAIN THE TRANSACTIONS, THE AO MADE AN ADDITION OF RS.33,37,500/ - U/S 68 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). AS RECORDED BY THE LD. CIT(A), THERE WAS REPEATED NON - COMPLIANCE BY THE ASSESSEE DURING THE APPELLATE MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 4 PROCEEDINGS AND THEREFORE, SHE HAD TO PASS THE ORDER O N THE BASIS OF MATERIAL S AVAILABLE ON RECORD. IT HAS BEEN RECORDED BY THE LD. CIT(A) THAT IN THE SUBMISSION FILED DURING APPEAL, UNAUTHENTICATED PHOTOCOPIES WERE SUBMITTED WHICH COULD NOT BE CONSIDERED. THEREFORE, THE LD. CIT(A) AGREED WITH THE REASONS GI VEN BY THE AO AND UPHELD THE DISALLOWANCE/ADDITION OF RS.31,13,802/ - . 4.1 REGARDING THE ADDITION OF RS.33,37,500/ - MADE BY THE AO, IT HAS BEEN HELD BY THE LD. CIT(A) THAT ADEQUATE OPPORTUNITY WAS GIVEN BY THE AO TO THE ASSESSEE DURING THE ASSESSMENT PROCE EDINGS. FURTHER, IN SPITE OF FILING APPEAL, THE ASSESSEE WAS NOT CONCERNED TO MAKE SUBMISSIONS/ARGUMENTS. THE EXPLANATION FURNISHED IS UNSUBSTANTIATED BY EVIDENCE/PROOF REGARDING A SUM OF RS.11,87,500/ - . MOREOVER, THE TOTAL SUM SOUGHT TO BE EXPLAINED BY TH E APPELLANT IN HIS LETTER IS OF RS.32,87,500/ - WHICH DOES NOT MATCH WITH THE ADDITION MADE BY THE AO. THEREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.33,37,500/ - MADE BY THE AO . 5. BEFORE US, THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) COPY OF COMPUTATION OF INCOME AY 2007 - 08, (II) COPIES OF BALANCE SHEET AND P&L ACCOUNT FOR YEAR ENDED 31.03.2007, (III) COPY OF BALANCE SHEET AS ON 31.03.2006, (IV) COPY OF LETTER FILED ON 29. 12.2009 WITH STATEMENTS OF LOAN, (V) COPY OF LETTER DATED 27.02.2009, (VI) STATEMENT OF LOAN CONFIRMATIONS, (VII) COPIES OF LOAN CONFIRMATIONS AND (VIII) COPY OF SUBMISSIONS BEFORE CIT(A). THE ASSESSEE CERTIFIES THAT THE COPIES OF THE ABOVE DOCUMENTS WER E FILED BEFORE THE AO. MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 5 ALSO THE ASSESSEE FILE S AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE SHAPE OF (I) COPY OF CONFIRMATION FOR LOAN OF RS.6,12,000/ - FROM MR. HARMALKAR, (II) COPY OF ALLOTMENT LETTER, CANCELATION DEED FOR FLAT BOOKING WIT H KARIA DEVELOPERS AND BUILDERS AND COPY OF LEDGER ACCOUNT FROM THEIR BOOKS OF ACCOUNT AND (III) COPIES OF BOOKS OF ACCOUNTS IN TALLY FOR FY 2006 - 07. THE ASSESSEE SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE HAD PROVIDED HIS A UTHORIZE R EP RESENTATIVE (AR) WITH NECESSARY EVIDENCE SUCH AS LOAN CONFIRMATION LETTERS AND OTHER DOCUMENTS IN SUPPORT OF HIS RETURN OF INCOME. HOWEVER, THOSE WERE NOT FILED BY THE AR BEFORE THE AO. IT IS FURTHER STATED BY HIM THAT IN THE FIRST APPEAL, HE WAS REPRESENT E D BY THE SAME AR TO MISLED HIM. HE SUBMITS THE FACT THAT THE ERSTWHILE AR WAS MISREPRESENTING THE FACT IS ALSO EVIDENT FROM PARA NO. 2.1.4 OF THE ORDER OF CIT(A). THUS IT IS SUBMITTED THAT THE ADDITIONAL EVIDENCE BE ADMITTED. 6. ON THE OTHER HAND, THE LD . DR SUBMITS THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCES MADE BY THE AO AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO FILE COMPLETE DETAILS. FURTHER, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE HAS NOT SUFFICIENTLY CONCERNED HIMSELF TO MAKE ARGUMENTS/SUBMISSIONS. THUS THE EXPLANATION FURNISHED BY THE ASSESSEE IS UNSUBSTANTIATED BY EVIDENCE/PROOF. MOREOVER, AS RIGHTLY POINTED OUT BY THE LD. CIT(A), THE TOTAL SUM SOUGHT TO BE EXPLAINED BY THE APPELLANT IS OF RS.32,87,500/ - WHICH DOES NOT MATCH THE ADDITION MADE BY THE AO. THUS THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, THE AO HAS MENTIONED AT PAGE 2 OF HIS ASSESSMENT ORDER DATED 30.12.2009 THAT M OREOVER, THE ASSESSEE H AS SUBMITTED THE DETAILS AT THE FAG END OF THE YEAR ON 29.12.2009, SO THAT THIS OFFICE IS LEFT WITH NO TIME TO VERIFY THE GENUINENESS, IDENTITY AND CREDIT WORTHINESS OF THESE ALLEGED LENDERS. IT IS WELL SETTLED THAT IN ORDER TO DISCHARGE TO ONUS, THE ASSESSEE MUST PROVE THE IDENTITY OF THE CREDITOR, THE CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND THE GENUINENESS OF THE TRANSACTION. AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID, THE ONUS SHIFTS TO THE DEPARTMENT AS HELD IN SHANKAR IND V. CIT 114 ITR 689; PRAKASH TEXTILE V. CIT 121 ITR 890; CIT V. UNITED 187 ITR 596, RAJSHREE V. CIT 256 ITR 331. IN VIEW OF THE FACTUAL MATR IX AND POSITION OF LAW MENTIONED ABOVE, WE ADMIT THE ADDITIONAL EVIDENCE AND REMIT THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOC UMENTS/EVIDENCE BEFORE THE AO. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3667/MUM/2014 ASSESSMENT YEAR: 2007 - 08 9. THE GROUND OF APPEAL FILED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ASSESSING OFFICER HAS ERRED IN LEVYING AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.21,71,508/ - U/S 271(1)(C) OF THE ACT FOR AY 2007 - 08. MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 7 10. THE AO VIDE ORDER DATED 27.03.2012 HAS IMPOSED A MINIMUM PENALTY OF R S.21,71,508/ - ON THE ADDITION OF RS.64,51,302/ - (RS.31,13,802/ - + RS.33,37,500/ - ). IN APPEAL, THE LD. CIT(A) AGREED WITH THE ABOVE PENALTY LEVIED BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. AS MENTIONED HEREINABOVE, WE HAVE SET ASIDE THE OR DER OF THE LD. CIT(A) FOR THE IMPUGNED ASSESSMENT YEAR AND RESTORED THE MATTER TO THE FILE OF THE AO FOR A DE NOVO ORDER. WHERE AN ORDER OF ASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE HAS ITSELF BEEN FINALLY SET ASIDE BY THE TR IBUNAL OR OTHERWISE, THE PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED AS HELD IN THE CASE OF CIT V. BHAGWAN LTD . (1987) 168 ITR 846, 848 (CAL); CIT V. RAM LAL MANOHAR LAL (1986) TAXATION 82 (3) - 450 (DEL). THUS THE PENALTY LEVIED BY THE AO U/S 271(1)(C) IS DELETED. 11. IN THE RESULT, THE APPEAL IN ITA NO. 15/MUM/2011 IS ALLOWED FOR STATISTICAL PURPOSES AND IN ITA NO. 3667/MUM/2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 28/09/2018. SD/ - SD/ - ( C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 28/09/2018 RAHUL SHARMA, SR. P.S. MS. K. VRUSHALI ITA NOS 15/MUM/2011 & 3667/MUM/2014 8 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI