ALEX INTERNATIONAL, MUMBAI V. DCIT CEN CIR-31, MUMBAI

ITA 1555/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2684 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-11-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 06-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R DAS
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Opportunity of being heard; Peak credit; Set aside
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC : MUMBAI BEFORE SHRI D. MANMOHAN, HONBLE VICE PRESIDENT ITA. NO. 1552 TO 1555/MUM/2009 ASSESSMENT YEARS 2002-2003 TO 2005-2006 ALEX INTERNATIONAL MUMBAI 067. PAN AADFA-1523-F VS. DCIT, CENTRAL CIRCLE 31 MUMBAI (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI MANISH SANGHAVI (A.R.) FOR RESPONDENT : SHRI K.R. DAS (CIT/D.R) ORDER 1. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS P ASSED BY THE CIT(A), CENTRAL-IV, MUMBAI AND THEY PERTAIN TO THE ASSESSMENT YEARS 2002-2003 TO 2005-2006. SINCE ISSUES INVOLVED HEREIN ARE INTER- CONNECTED, I PROCEED TO DISPOSE-OF THE APPEALS TOGE THER, FOR THE SAKE OF CONVENIENCE. 2. AT THE OUT SET IT MAY BE NOTICED THAT IN SO FAR AS THE ASSESSMENT YEAR 2002-2003 IS CONCERNED, LEARNED COU NSEL APPEARING ON BEHALF OF THE ASSESSEE DID NOT PRESS THE APPEAL DESPITE RAISING SIX GROUNDS IN THE GROUNDS OF APPEAL ANNEXED TO FORM 36 . 3. LEARNED D.R. HAS NO OBJECTION IN THIS REGARD. U NDER THESE CIRCUMSTANCES, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 4. AS REGARDS THE OTHER ASSESSMENT YEARS, THE MAIN ISSUE, CONCERNING THE ADDITION MADE UNDER SECTION 68 OF TH E ACT, IS COMMON THOUGH AT THE ASSESSMENT STAGE AS WELL AS BEFORE TH E CIT(A) ASSESSEE CONTENDED THAT THE ADDITION MADE UNDER SECTION 68 O F THE ACT IS NOT IN ACCORDANCE WITH THE LAW, AT THE TIME OF HEARING, LE ARNED COUNSEL 2 APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFOR E THE TRIBUNAL THAT DUE TO SMALLNESS OF THE AMOUNT AND MATTER BEIN G OLD THE ASSESSEE IS NOT INTERESTED IN CHALLENGING THE FINDI NG OF THE ASSESSING OFFICER WITH REGARD TO CASH CREDITS. HOWEVER, HE RE QUESTED TO CONSIDER HIS ALTERNATIVE PLEA I.E., TO GRANT THE ASSESSEE BE NEFIT OF PEAK CREDIT SINCE MOST OF THE AMOUNTS SHOWN AS CASH CREDITS, IN THE YEAR OF RECEIPT, WERE REPAID AND TO THE EXTENT OF REPAYMENT SUCH AMOUNT SHOULD BE DEEMED TO BE AVAILABLE, WHICH CAN BE SET- OFF AGAINST FRESH CASH CREDITS. PLACING RELIANCE UPON THE FOLLOWING D ECISIONS OF THE ITAT SMC MUMBAI BENCH IN THE CASE OF BUDDADEV K. PAUL LEARNED COUNSEL SUBMITTED THAT IN THIS CASE ALSO THE MATTER WAS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR WORKING OUT T HE PEAK CREDIT. IN THE AFORECITED DECISION, THE ITAT OBSERVED AS UNDER : 3. AT THE TIME OF HEARING BEFORE ME, IT IS SUBMITTED BY THE LEARNED COUNSEL THAT DUE TO SMALLNESS OF THE AMOUNT AND MATTER BEING OLD, HE DOES NOT WANT TO CONTEST THE FINDING OF THE ASSESSING OFFICER WITH REGARD TO CASH CREDIT. HOWEVER, HIS ONLY REQUEST WAS THAT THE BENEFIT OF PEAK CREDIT SHOULD BE ALLOWED. HE STATED THAT IN EVERY YEAR THERE WAS A CREDIT OF THE SMALL AMOUNT IN THE NAME OF DIFFERENT PARTIES AND WHICH WAS ALSO REPAID DURING THE RELEVANT YEAR ITSELF. IF THE CASH CREDIT IN ONE YE AR IS TREATED AS INCOME OF THE ASSESSEE, THEN ON THE REPAYMENT THEREOF, THE CASH WOULD BECOME AVAILABLE WITH THE ASSESSEE AND SUCH CASH WOULD EXPLAIN THE SOURCE OF CREDIT IN THE SUBSEQUENT YEAR. HE, THEREFORE, SUBMITTED THAT WHILE CONSIDERING THE ADDITION FOR CASH CREDIT OF THE SUBSEQUENT YEAR, TH E BENEFIT TO THE EXTENT OF CASH CREDIT ASSESSED IN TH E EARLIER YEAR, WHICH IS REPAID, SHOULD BE ALLOWED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN PRINCIPLE DID NOT OPPOSE THE CONTENTION OF THE ASSESSEE; BUT HE STATED THAT IN THE ABSENCE OF COMPLETE PARTICULARS, NO FINDING CAN BE RECORDED AT THIS STAGE. THEREFORE, EITHER THE ASSESSEES APPEAL SHOULD BE DISMISSED OR AT THE MOST THE MATTER MAY BE SET ASIDE TO THE FILE OF ASSESSING OFFICER. 3 5. I HAVE CAREFULLY CONSIDERED THE ARGUMENT OF BOTH TH E SIDES AND PERUSED THE MATERIAL PLACED BEFORE ME. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF THE PARTIES, IN MY OPINION, THE MATTER NEEDS RE-EXAMINATION AT THE END OF THE ASSESSING OFFICER. I ORDER ACCORDINGLY. THE ASSESSEE HAS NOT DISPUTED THE FINDING OF THE ASSESSING OFFICER THAT THE CASH CREDIT IN THE RELEVANT YEAR WAS UNEXPLAINED. HOWEVER, HE ONLY CLAIMED THE SET OFF OF THE REFUND OF THE CASH CREDIT WITH THE SUBSEQUENT CASH CREDIT. I DIRECT THE ASSESSING OFFICER TO EXAMINE THIS CONTENTION OF THE ASSESSEE AND WHEN THE CASH CREDIT IS ASSESSED AS INCOME OF THE ASSESSEE ON ITS REPAYMENT, THE CASH BECOMES AVAILABLE WITH THE ASSESSEE. THE SET OFF OF SUCH CASH IS TO BE ALLOWED AGAINST THE SUBSEQUENT CREDIT. THE ASSESSING OFFICE R WILL RE-EXAMINE THE MATTER AND RE-ADJUDICATE THE SAME AS PER MY DIRECTION ABOVE. NEEDLESS TO MENTION THAT HE WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. LEARNED D.R. HAS NOT RAISED ANY OBJECTION IN TH IS REGARD. UNDER THESE CIRCUMSTANCES AND IN THE LIGHT OF DECIS ION OF THE ITAT CITED (SUPRA), WE HOLD THAT THOUGH IN PRINCIPLE ADD ITION IS MAINTAINABLE UNDER SECTION 68 OF THE ACT - IN THE A BSENCE OF PROVING THE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF T HE CREDITORS - ONLY PEAK CREDIT HAS TO BE ASSESSED TO TAX. SINCE THIS I SSUE WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL, I HEREBY DIRECT THE ASSESSING OFFICER TO WORK-OUT THE PEAK CREDIT AND RE-CONSIDER THE MAT TER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A PROPER OPPORTU NITY OF BEING HEARD. THIS DISPOSES OF GROUND NOS. 1 AND 2 FOR THE ASSESS MENT YEARS 2003- 2004 AND 2004-2005 AND GROUND NO.1 IN RESPECT OF AS SESSMENT YEAR 2005-2006. 6. GROUND NO.3 IN THE APPEAL FOR THE ASSESSMENT YE ARS 2003-2004 AND 2004-2005 WAS NOT PRESSED AND GROUND NO.5 FOR THE AFOREMENTIONED TWO YEARS ARE GENERAL IN NATURE. UND ER THESE 4 CIRCUMSTANCES, GROUND NO.3 IS DISMISSED AND GROUND NO.5 IS NOT TAKEN-UP FOR CONSIDERATION. 7. AS REGARDS GROUND NO.4 FOR THE ASSESSMENT YEARS 2003- 2004 AND 2004-2005 AND ALSO GROUND NO.2 IN ASSESSME NT YEAR 2005- 2006 THE CASE OF THE ASSESSEE IS THAT INTEREST CHAR GEABLE UNDER SECTION 234A, 234B AND 234C ARE CONSEQUENTIAL IN NATURE AND REQUESTED FOR A DIRECTION TO THE ASSESSING OFFICER TO RE-COMPUTE TH E INTEREST CHARGEABLE, IF ANY, IN ACCORDANCE WITH LAW. 8. LEARNED D.R. HAS NOT RAISED ANY OBJECTION IN TH IS REGARD. 9. UNDER THESE CIRCUMSTANCES, I SET ASIDE THE ISSU E TO THE FILE OF THE ASSESSING OFFICER WHO IS DIRECTED TO RECOMPU TED THE INTEREST CHARGEABLE UNDER SECTION 234A, 234B AND 234C OF THE ACT. 10. GROUND NO. 3 IN THE APPEAL FOR THE ASSESSMENT YEAR 2005- 2006 IS ALSO GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE INDEPENDENT CONSIDERATION. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FO R THE ASSESSMENT YEAR 2002-2003 IS DISMISSED AND APPEALS FOR THE OTHER ASSESSMENT YEARS ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT, ON THIS THE 1 1 TH DAY OF DECEMBER, 2009. SD/- (D.MANMOHAN) VICE PRESIDENT MUMBAI, DATE 11 TH DECEMBER, 2009. VBP/- 5 COPY TO 1. ALEX INTERNATIONAL, 2 ND FLOOR, GOVT. INDL. ESTATE, PLOT NO.74, CHARKOP, KANDIVALI (W), MUMBAI 400 067 PAN : AADFA1523F 2. DCIT, CENTRAL CIRCLE 31, MUMBAI 4. CIT, CENTRAL (APPEALS)-IV, MUMBAI 5. CIT, CENTRAL II, MUMBAI 6. D.R. SMC BENCH, MUMBAI. 7. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.