Shri Mohammed Arif Shafeeq Ahmed Patel, Raigad V. ITO, Raigad

ITA 1521/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8478 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PPL VS ITO WARD PANVEL
• Keywords: Unexplained cash credit; Business income; Opportunity of being heard
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1521/PN/2012 (ASSESSMENT YEAR 2006-07) SHRI MOHAMMED ARIF SHAFEEQ AHMED PATEL, HOUSE NO.92, PATEL MOHALLA, PANVEL 410 206, DIST : RAIGAD PAN NO. ABYPP0492L .. APPELLANT VS. ITO, WARD-2, PANVEL .. RESPONDENT ASSESSEE BY : SHRI PRAKASH PANDIT REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 15-09-2014 DATE OF PRONOUNCEMENT : 15-09-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-03-2012 OF THE CIT(A)-I, THANE RELATING TO ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE READS ARE UND ER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT APPEALS ERRED IN CONFIRMING THE ADDITION OF RS.19,51,365/- OUT OF THE TOTAL ADDITION OF RS.80,40, 000/- BEING THE LOAN TAKEN FROM M/S. PATEL & PATIL DEVELOPERS AS UNEX PLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE INCO ME TAX ACT 1961. 2. REASONS GIVEN BY THE CIT APPEALS OF CONFIRMING THE ADDITION OF RS.19,51,365/- OUT OF THE TOTAL ADDITION OF RS. 80,40,000/- BEING THE LOAN TAKEN FROM M/S. PATEL & PATIL DEVELOPERS A S UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE INCOME TAX ACT 1961, ARE WRONG INSUFFICIENT AND CONTRARY TO THE FA CTS AND EVIDENCE ON RECORD. 2 3. THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER, MOD IFY OR OMIT ANY OF THE AFORESAID GROUNDS OF APPEAL AS OCCA SION MAY ARISE OR DEMAND. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND A DEALER IN SKO AND LDO OIL. A SURV EY ACTION U/S.133A WAS CARRIED ON AT THE BUSINESS PREMISES OF THE ASSESSEE ON 04/05-03-2008. SINCE THE ASSESSEE HAD NOT FILED TH E RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR, THEREFORE , A NOTICE U/S.148 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE FILED THE RETURN OF INCOME ON 28-11-2008 D ECLARING TOTAL INCOME OF RS.9,22,300/-. 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE, DURING THE IMPUGNE D ASSESSMENT YEAR, HAS ACCEPTED LOAN OF RS.1,67,36,665/- FROM VA RIOUS PERSONS THE DETAILS OF WHICH ARE AS UNDER : NAME AMOUNT BANWARILAL YADAV RS.2,00,000/- HABIB FAKHI RS.17,00,000/- YASMIN PATEL RS.22,50,000/- M. WASSEEQ CAFETERIA RS.10,00,000/- PANKAJ CHEDA RS.11,46,665/- PATIL AND PATEL BUILDERS RS.95,40,000/- RAINBOW CONSTRUCTION RS.6,00,000/- ZAHIDA BUBERE RS.3,00,000/- TOTAL RS.1,67,36,665/- 2.3 FROM THE DETAILS OF CONFIRMATIONS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS TAKEN LOAN OF RS.95,40,000/- FROM M/S. PATIL AND PATEL DEVELOPERS. ON BEING QUESTIONED BY THE ASSES SING OFFICER, THE ASSESSEE CLARIFIED THAT IT HAS TAKEN LOAN FROM M/S. PATEL AND PATIL 3 DEVELOPERS AMOUNTING TO RS.80,40,000/- AND M/S.PATI L AND PATEL DEVELOPERS AMOUNTING TO RS.15 LAKHS. 2.4 THE ASSESSING OFFICER NOTED THAT SURVEY ACTION U/S.133A WAS CARRIED ON SIMULTANEOUSLY AT THE PREMISES OF M/S. P ATEL AND PATIL DEVELOPERS AND M/S. PATIL AND PATEL DEVELOPERS. HE OBSERVED THAT THE ASSESSEE HIMSELF WAS ONE OF TWO PARTNERS IN THE SAID FIRMS WHICH ARE IN THE CONSTRUCTION BUSINESS. HE OBSERVED THAT M/S. PATIL AND PATEL DEVELOPERS HAS NOT FURNISHED THE RETURN OF IN COME TILL DATE. HOWEVER, FOR THE FIRST TIME M/S. PATEL AND PATIL DE VELOPERS HAS FILED THE RETURN OF INCOME FOR A.Y. 2008-09 ON 12-08-2009 . THE ASSESSING OFFICER NOTED THAT BOTH THE FIRMS HAVE AC CEPTED THE INCOME FOR THE FIRST TIME FOR A.Y. 2008-09 AS PER T HE STATEMENT RECORDED DURING THE COURSE OF SURVEY. THEREFORE, H E OBSERVED THAT THE CREDIT WORTHINESS OF THE ABOVE TWO FIRMS ARE SU SPECT. ALTHOUGH THE ASSESSEE FILED THE LOAN CONFIRMATIONS ALONG WIT H THE BANK STATEMENT, THE ASSESSING OFFICER OBSERVED THAT THE BANK STATEMENT IS NOT A CONCLUSIVE EVIDENCE FOR ESTABLISHING THE GENU INENESS OF THE LOAN AS THE NARRATION IN THE BANK STATEMENT FOR DEB IT AND CREDIT ENTRIES ARE BRIEF ONLY. IN ABSENCE OF ANY SATISFAC TORY EXPLANATION GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER MADE A DDITION OF RS.95,40,000/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE I.T. ACT. 3. IN APPEAL THE LD.CIT(A) SUSTAINED AN AMOUNT OF RS.19,51,365/- BY OBSERVING AS UNDER : 4 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF APPEL LANT AND FACTS/MATERIAL AVAILABLE ON RECORD. I FIND THAT THE SOURCE OF RS. 15,00,000/- RECEIVED FROM M/S. PATIL & PATEL IS EXPLA INED AS THE TRANSFER ENTRIES FOR THE SAME ARE DULY REFLECTED IN TH E OD A/C. OF BOTH THE PARTIES AS IS EVIDENT FROM THE COPY OF BANK ST ATEMENT AND THE REMAND REPORT OF A.O THEREFORE, NO ADDITION ON THIS ACCOUNT IS CALLED FOR AND THE A.O IS DIRECTED TO DELETE THE SAME . 4.1 IN RESPECT OF AN AMOUNT OF RS. 80,40,000/-, IT IS NOTICED THAT THE SALE CONSIDERATION OF LAND HAD BEEN DEPOSITED IN THE BANK A/C. OF M/S. PATEL & PATIL DEVELOPERS WITH INDUS IND BANK, PANVEL WHICH WAS OPENED FOR THIS PURPOSE ONLY AS IS EVIDENT FROM THE STATEMENT ITSELF SHOWING ZERO BALANCE AND ALSO ADMITTED BY THE A PPELLANT VIDE REPLY DATED 16.03.2012. THUS, IT IS CLEAR THAT M/S. P ATEL & PATIL DEVELOPERS WAS NOT CARRYING OUT ANY BUSINESS ACTIVITY. I ALSO FIND THAT VIDE A MEMORANDUM OF UNDERSTANDING DT. 15.04.20 04, THE APPELLANT HAS ACQUIRED RIGHTS IN THE LAND ALLOTTED TO MR. PRAKASH A. SHRINGARPURE BY THE CIDCO, IN HIS INDIVIDUAL CAPACIT Y. THERE IS NO MENTION IN THE MOU THAT THE SAID RIGHTS IN THE LAND A RE ACQUIRED ON BEHALF OF THE FIRM. ADMITTEDLY PAYMENT OF PURCHASE CONSIDERATION WAS ALSO MADE BY THE APPELLANT HIMSELF. THEREFORE, IN MY CONSIDERED VIEW, THE RIGHTS IN THE LAND ACTUALLY BELO NG TO THE APPELLANT ONLY. THE ENTRIES OF LOAN AND ADVANCES TO FIRM M/S. PATEL & PATIL DEVELOPERS FOR THE PURPOSE OF BUYING LAND ARE SELF SERVING ONES. ANOTHER IMPORTANT ASPECT WHICH CAME TO MY NOTI CE IS THAT THE FIRM M/S. PATEL & PATIL DEVELOPERS IS NOT FILING A NY RETURN OF INCOME WHICH CAN BE REFERRED FOR VERIFICATION OF TH E CLAIM OF APPELLANT. THUS, I HOLD THAT THE ENTIRE INCOME FROM THE LAND TRANSACTION BELONGS TO THE APPELLANT ONLY WHICH WORKS CUT TO RS.19,51,365/-(RS.86,45,000 - RS.66,93,635/-). IN VIEW OF THESE FACTS AND CIRCUMSTANCES, SINCE THE AMOUNT OF RS. 80,40,0 00/- HAS BEEN RECEIVED BY THE APPELLANT OUT OF THE SALE CONSID ERATION OF LAND, SOURCE THEREOF STANDS EXPLAINED, THE RESULTANT INCOME O F RS.19,51,365/-, HOWEVER, IS LIABLE TO BE TAXED IN THE HANDS OF APPELLANT. THE ADDITION IS ACCORDINGLY, SUSTAINED TO THE EXTENT OF RS. 19,51,365/- AS BUSINESS INCOME INSTEAD OF UNEXPLAINED CASH CREDIT U/S. 68. WITHOUT PREJUDICE TO THE ABOVE, IT MAY ALSO BE STATED THAT SINCE THE FIRM HAS NOT PAID ANY TAX ON THE INC OME EARNED FROM THE LAND TRANSACTIONS, THE APPELLANT IS NOT ENTITLED T O ANY EXEMPTION U/S. 10(2A) OF THE ACT AND HENCE THE INCOME SO RECEIV ED IS CHARGEABLE TO THE TAX IN THE HANDS OF APPELLANT. ACC ORDINGLY, THE GROUNDS ARE PARTLY ALLOWED. 3.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE FIRM M/S. PATEL AND PATIL DEVELOPERS HAS SUBSEQ UENTLY FILED THE RETURN OF INCOME ACCEPTING THE AMOUNT OF RS.80,40,0 00/- AND THE 5 ASSESSING OFFICER IN THE ORDER PASSED U/S.148/143(3 ) HAS ASSESSED SUCH INCOME. THEREFORE, ADDITION OF THE SAME IN TH E HANDS OF THE ASSESSEE WILL AMOUNT TO DOUBLE ADDITION. HE SUBMIT TED THAT WHEN THE LD.CIT(A) PASSED THE IMPUGNED ORDER, THE ASSESS ING OFFICER HAD NOT PASSED THE ORDER U/S.148/143(3) IN THE CASE OF THE FIRM M/S. PATEL AND PATIL DEVELOPERS. HE ACCORDINGLY SUBMITT ED THAT THE ADDITION IN THE HANDS OF THE ASSESSEE SHOULD BE DEL ETED. ALTERNATIVELY, HE SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO A DJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE ORDER PASSED IN THE CASE OF THE FIRM SUBSEQUENT TO THE ORDER PASSED BY THE CIT(A) IN THE CASE OF THE ASSESSEE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ADJUDICATE THE ISSUE AF RESH. 6. AFTER HEARING BOTH THE SIDES, WE FIND MERIT IN T HE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECT ION TO ADJUDICATE THE ISSUE AFRESH KEEPING IN MIND THE ORDER PASSED B Y THE ASSESSING OFFICER U/S.148/143(3) IN THE CASE OF THE FIRM M/S . PATEL AND PATIL DEVELOPERS. WE, THEREFORE, RESTORE THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE IS SUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATIST ICAL PURPOSES. 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT 15-09-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE DATED: 15 TH SEPTEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, THANE 4. CIT-I, THANE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE