ITO 17(1)(3), MUMBAI V. CHANDRAKANT N. DEDHIA, MUMBAI

ITA 1647/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8843 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1647/MUM/2017 : A.Y : 2008 - 09 ITO - 17(1)(3), MUMBAI (APPELLANT) VS. SHRI CHANDRAKANT N. DEDHIA 171/9, JAI BHARAT BUILDING, NATHALAL PAREKH MARG, WADALA, MUMBAI 400 011 (RESPONDENT) PAN : AABPD2996F APPELLANT BY : MS. N. HEMALATHA RESPONDENT BY : SHRI K. GOPAL & MS. NEHA PARANJPE DATE OF HEARING : 26/07/2017 DATE OF PRONOUNCEMENT : 24 /10/2017 O R D E R THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 28 , MUMBAI DATED 01.12.2016 , PERTAINING TO THE ASSESSMENT YEAR 2008 - 09 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 29.03.2015 UNDER SECTION 1 43(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, REVENUE HAS CHALLENGED THE DECISION OF THE CIT(A) IN DELETING THE ADDITIONS OF RS.5,00,000/ - AND RS.30,00,000/ - WHICH HAVE 2 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 BEEN MADE BY THE ASSESSING OFFICER BY INVOKING SEC. 68 OF THE ACT TREATING THE AFORESAID AMOUNTS AS UNEXPLAINED CASH CREDITS. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ORIGINALLY THE ASSESSMENT U/S 143(3) OF THE ACT DATED 07.12.2010 WAS FINALISED IN THIS CASE WHEREIN AN ADDITION OF RS.37,42,000/ - WAS MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH BANK OF BARODA AND SARASWAT CO - OPERATIVE BANK. THE TRIBUNAL VIDE ITS ORDER DATED 24.07.2013 REMANDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER AND IN PURSUANCE THEREOF , THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ORDER. IN THE IMPUGNED ORDER, THE ASSESSING OFFICER NOTED THAT THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE SOURCE OF THE WITHDRAWALS FROM THE BANK ACCOUNTS WAS BORROWINGS RAISED BY THE ASSESSEE FROM FOUR PERSONS AS DETAILED IN PARA 4.2 OF THE IMPUGNED ORDER. THE ASSESSING OFFICER EXAMINED THE AFORESAID EXPLANATION AND CONCLUDED THAT THE LOAN OF RS.5,00,000/ - FROM M/S. BHAKTI BOOK DISTRIBUTORS AND RS.30,00,000/ - FROM SHRI ARVIND JAI N WERE NOT APPROPRIATELY EXPLAINED AND, THEREFORE, BY INVOKING SEC. 68 OF THE ACT HE TREATED THE SAME AS UNEXPLAINED CASH CREDIT S . THE CIT(A) HAS DELETED BOTH THE ADDITIONS, AGAINST WHICH REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. INSOFAR AS THE ADDITI ON OF RS.5,00,000/ - ON ACCOUNT OF LOAN RECEIVED FROM M/S. BHAKTI BOOK DISTRIBUTORS IS CONCERNED, THE CIT(A) HAS DELETED THE ADDITION BY NOTICING THAT THE SAID PARTY HAD DULY FURNISHED THE CONFIRMATION. ON THIS ASPECT, THE LD. DR POINTED TO THE RELEVANT DI SCUSSION IN PARA 4.3 OF THE ASSESSMENT ORDER WHEREIN IT IS 3 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 CATEGORICALLY OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT FURNISHED EITHER THE LOAN CONFIRMATION OR EVEN THE ADDRESS OF THE SAID CONCERN AND, THEREFORE, THE SAME WAS TO BE TREATED A S UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE CONCEDED THE POSITION THAT THERE WAS NO CONFIRMATION AVAILABLE FROM THE SAID CONCERN. SO HOWEVER, THE PLEA OF THE LEARNED REPRESENTATIVE IS T HAT THE ADDITION MADE BY THE ASSESSING OFFICER IS OTHERWISE ALSO NOT TENABLE. IT IS SOUGHT TO BE POINTED OUT THAT IN THE INITIAL ROUND OF LITIGATION, THE ADDITION WAS MADE ONLY ON THE BASIS OF THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT AND THAT NOW, IN TH E INSTANT PROCEEDINGS, WHICH ARE CARRIED OUT IN TERMS OF THE ORDER OF THE TRIBUNAL DATED 24.07.2013 (SUPRA) , THE BASIS OF ADDITION ITSELF HAS BEEN CHANGED. 5. I HAVE CAREFULLY CONSIDERED THE AFORESAID ASPECT PUT FORTH BY THE RESPONDENT AND FIND NO REASONS TO UPHOLD THE SAME. IN ITS ORDER DATED 24.07.2013 (SUPRA), THE TRIBUNAL NOT ONLY SET - ASIDE THE ISSUE TO THE ASSESSING OFFICER TO EXAMINE THE DETAILS OF BANK ACCOUNT, BUT ALSO THE SOURCE OF DEPOSITS AND WITHDRAWALS FROM THE BANK ACCOUNT. IN THE COURSE OF SUCH AN EXERCISE, WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE RECEIPT OF LOAN FROM M/S. BHAKTI BOOK DISTRIBUTORS, THE SAME COULD NOT BE SAID TO BE OUTSIDE THE PURVIEW OF THE ASSESSING OFFICER. BE THAT AS IT MA Y, IN MY CONSIDERED OPINION, IN TERMS OF THE DISCUSSION BY THE ASSESSING OFFICER, THE ASSESSEE HAD FAILED TO SATISFY THE INGREDIENTS OF SEC. 68 OF THE ACT QUA THE LOAN OF RS.5,00,000/ - RECEIVED FROM M/S. BHAKTI BOOK DISTRIBUTORS AND, THEREFORE, THE ADDITIO N WAS JUSTIFIED. THE CIT(A) HAS 4 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 DELETED THE ADDITION ON AN ERRONEOUS CONSIDERATION, WHICH IS HEREBY SET - ASIDE. 6. INSOFAR AS THE RECEIPT OF RS.30,00,000/ - FROM SHRI ARVIND JAIN IS CONCERNED, THE RELEVANT DISCUSSION IS CONTAINED IN PARAGRAPHS 7.3 AND 7.4 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THE SAID AMOUNT WAS RECEIVED BY THE ASSESSEE ON 05.09.2007 THROUGH AN ACCOUNT PAYEE CHEQUE. THE ASSESSING OFFICER NOTED THAT THE BANK ACCOUNT FURNISHED BY THE CREDITOR SHOWED THAT IMMEDIATELY PRIO R TO MAKING THE PAYMENT TO THE ASSESSEE, THERE WAS A CASH DEPOSIT. IN ORDER TO CARRY OUT FURTHER VERIFICATION , THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE SAID CREDITOR, BUT THE ASSESSEE FAILED TO SO. IN VIEW OF THE AFORESAID, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CREDIT - WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE LOAN TRANSACTION AND, THEREFORE, HE ADDED THE SAME AS UNEXPLAINED CASH CREDIT IN TERMS OF SEC. 68 OF THE ACT. 7. BEFORE THE CIT(A), THE ASSESSEE MADE VARIED SUBMISSIONS INCLUDING THE CONFIRMATION DATED 30.03.2015 ISSUED BY THE SAID CREDITOR, SHRI ARVIND JAIN. A COPY OF THE SAID CONFIRMATION HAS ALSO BEEN REFERRED TO IN THE PAPER BOOK FILED BEFORE ME. ON THAT BASIS, THE CIT(A) RECORDS THAT THE LOAN WA S ADVANCED BY SHRI ARVIND JAIN TO THE ASSESSEE FOR PURCHASE OF LAND AND THE TRANSACTION WAS ALSO SUPPORTED BY PUBLIC ADVERTISEMENT OF THE PURCHASE OF THE SAID LAND. THE CIT(A) NOTED THAT THE ASSESSEE WAS A REAL ESTATE BROKER AND THAT THE AMOUNT RECEIVED F ROM SHRI ARVIND JAIN WAS TO BE PAID TO THE OWNERS OF THE AGRICULTURAL LAND TO BE PURCHASED FOR SHRI ARVIND JAIN. IN THIS CONTEXT, THE CIT(A) 5 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 RECORDS IN HIS ORDER THAT HE HAS EXAMINED THE FURTHER PAYMENTS MADE TO THE OWNERS OF THE AGRICULTURAL LAND AND FOU ND SUBSTANCE IN THE AVERMENTS MADE BY THE ASSESSEE. SINCE THE TRANSACTION, AS CANVASSED BY THE ASSESSEE, WAS FOUND TO BE VERIFIABLE BY THE CIT(A), HE HAS SET - ASIDE THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST THE ABOVE, THE LD. DR CANVASSED BEFORE ME THAT THE FAILURE TO PRODUCE THE CREDITOR SHOWED THAT THE TRANSACTION WAS NOT GENUINE. IT WAS ALSO CANVASSED THAT THE CASH DEPOSIT IN THE ACCOUNT OF THE CREDITOR PRIOR TO ADVANCING OF MONEY TO THE ASSESSEE WAS ALSO A GOOD GROUND TO DOUBT THE GENUINENES S OF THE TRANSACTION. IN THIS MANNER, THE ADDITION HAS BEEN SOUGHT TO BE DEFENDED. 8. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE HAS VEHEMENTLY POINTED OUT THAT THE CIT(A) HAS APPROPRIATELY CONSIDERED THE EVIDENCE ON RECORD AND FOUND THAT THE TRANSACT ION STOOD PROPERLY EXPLAINED. 9. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN MY OPINION, IT WOULD BE APPROPRIATE TO NOTICE THE FOLLOWING FINDINGS ARRIVED AT BY THE CIT(A) : - ON A CAREFUL CONSIDERATION OF THE FACTS OF THE CASE I FIND THAT TH E WHOLE ADDITION IS BASED MERELY ON THE FACT THAT SHRI JAIN WAS NOT PRODUCED AND THERE WAS A DEPOSIT OF RS. 30 LACS IN THE ACCOUNT OF SHRI JAIN PRIOR TO GIVING OF THE LOAN. THE KEY EVIDENCE WHICH WAS BEFORE THE AO AND WHICH HAS BEEN PRODUCED BEFORE ME ALS O IS THE UNCONTROVERTED ASPECT THAT THIS AMOUNT WAS RECEIVED BY CHEQUE. THE SECOND KEY ASPECT IS CONFIRMATORY LETTER OF SHRI ARVIND JAIN DATED 30 TH 6 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 MARCH 2015 IN WHICH HE CLEARLY SAYS THAT HES PROPRIETOR OF M/S VAISHNAVI ENTERPRISES ENGAGED IN THE BUSINE SS OF DEALING IN LAND. HES DULY ASSESSED TO TAX. HE ADMITS ADVANCING AMOUNT OF RS.30 LACS TO THE APPELLANT FOR PURCHASE OF LAND. THE PUBLIC ADVERTISEMENT OF THE PURCHASE OF THE SAID LAND CEILING WAS PUBLISHED IN A LOCAL NEWSPAPER ON 22 ND OF APRIL 2008. HE ALSO ADMITTED THAT HES SEPARATELY FACING INVESTIGATION FOR THIS TRANSACTION AND FOR WHICH HE HAS FILED RELEVANT EVIDENCE. I FIND THAT ALL THE ASSERTIONS MADE BY SHRI JAIN IN THIS SUBMISSION HAVE GONE COMPLETELY UNCHALLENGED. I SEPARATELY ENQUIRED IN THE HEARING CONCERNED AND CAME ACROSS THE FACT THAT THE APPELLANT IS A BROKER AND AMOUNT WAS RECEIVED TO BE PAID TO THE OWNERS OF AGRICULTURAL LAND FOR PURCHASE BY SHRI JAIN. THE RELEVANT DOCUMENTATION WAS PROVIDED TO THE AO AND ALSO GIVEN IN PAPER BOO K; HOWEVER CONFIRMATION OF FURTHER PAYMENT HAS NOT BEEN SUBMITTED FOR WHICH THE AR OF THE APPELLANT REQUESTED TIME. HE WAS ALSO REQUIRED TO PROVIDE REGISTRATION PAPER OF SALE OF LAND TO SHRI JAIN AND THE CONFIRMATION OF AMOUNT PAID TO THE FARMER AS WELL A S RELEVANT DETAILS LIKE PAN NUMBER ET CETERA. IN THE HEARING CONDUCTED ON 28 TH OF NOVEMBER 2016 IT WAS SUBMITTED THAT THE PAYMENTS WERE MADE BY PAY ORDERS OF RS. 9.85 LACS DATED 28.11.2007 TO SHRI QSY KOTHARI. FURTHER RS. 3 LAKHS WERE PAID ON ON 12 TH OF FEBRUARY 2000 MADE IN THE NAME OF ASLAM TIWALE. FURTHER AMOUNT OF RS.3 LAKHS ON 30 TH OF JUNE 2007 AND 3 LAKHS ON 11.8.2007 WERE MADE BY CHEQUE TO SHAIDA MOHAMMAD AND ALSO FURTHER AMOUNT OF RS. 2 LAKHS BY CASH. FURTHER PAYMENT WAS MADE TO KISHORE JAIN BY CHEQUE ON 18 TH OF FEBRUARY 2008 BY RS. 3 LAKHS AND RS. 1 LAKH BY CASH THE RELEVANT AGREEMENTS OF PROPERTY ET CETERA HAVE BEEN FILED BEFORE ME. WHILE THE AO STARTED FROM A VERY PROMISING PREMISE OF CASH 7 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 DEPOSIT IN THE ACCOUNT PRIOR TO ISSUANCE OF CHEQUE TH E ONUS DID INDEED SHIFT ON THE APPELLANT. HOWEVER HE FURTHER SHIFTED THE ONUS BY PROVIDING CONFIRMATION FROM SHRI JAIN AND ALSO PROVIDING THE NECESSARY SUPPORTING DOCUMENTATION. AT THIS STAGE WHAT WAS REQUIRED WAS INVESTIGATION INTO THIS CASH DEPOSIT OF SHRI JAIN OR AT LEAST TO FORWARD THIS INFORMATION TO THE AO OF SHRI JAIN WHO COULD TAKE APPROPRIATE ACTION IF THE DEPOSIT OF RS. 30 LACS WAS FOUND TO BE UNEXPLAINED; THE TRANSACTION WITH SHRI JAIN AND THE CONSEQUENTIAL SALE OF LAND HAS BEEN DULY EVIDENCED BEFORE THE UNDERSIGNED. EVEN IN THE SECOND ROUND THE AO HAS MISERABLY FAILED TO FOLLOW THE DIRECTIONS OF THE HONORABLE ITAT AND HAS MERELY PRODUCED AN IPSE DIXIT WHICH CANNOT BE CONDONED. IN VIEW OF THE FACTS OF THE CASE AND THE HALF BAKED INVESTIGATION CARRIED OUT BY THE AO I AM UNABLE TO CONFIRM THE ADDITION MADE. ACCORDINGLY THE SAME IS DIRECTED TO BE DELETED. A PERUSAL OF THE AFORESAID FINDINGS REVEAL THAT THE CIT(A) NOT ONLY RELIED UPON THE CONFIRMATION FILED BY THE CREDITOR, BUT ALSO THE UTILISAT ION OF THE LOAN RECEIVED, WHICH SUBSTANTIATED THE PLEA OF THE ASSESSEE THAT THE AMOUNT WAS RECEIVED TO EFFECTUATE THE PURCHASE OF LAND ON BEHALF OF THE CREDITOR, SHRI ARVIND JAIN. MOREOVER, AT PAGE 37 OF THE PAPER BOOK IS PLACED A CERTIFICATE ISSUED BY TH E SAID CREDITOR, WHICH BRINGS OUT THE RELEVANT FACTS. THE SAID CREDITOR IS AN INCOME - TAX PAYEE AND IS STATED TO HAVE ADVANCED MONEY TO THE ASSESSEE IN CONNECTION WITH THE PURCHASE OF LAND THROUGH BANKING CHANNELS. IT IS ALSO AVERRED BY THE CREDITOR THAT HE HAS SUFFICIENT OWN FUNDS , AND THE FACTUM OF ASSESSEE HAVING DEPLOYED SUCH FUNDS TOWARDS THE PURCHASE OF LAND FOR THE SAID CREDITOR HAS ALSO BEEN VERIFIED BY THE CIT(A), WHIC H IS EVIDENT FROM THE AFORESAID EXTRACTED PORTION OF HIS ORDER. THERE IS NO CON TROVERSION TO ANY OF THE 8 SHRI CHANDRAKANT N. DEDHIA ITA NO. 1647/MUM/2017 AFORESAID FINDINGS RECORDED BY THE CIT(A) AND, THEREFORE, IN THIS VIEW OF THE MATTER, I HEREBY AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT. THUS, ON THIS ASPECT, REVENUE FAILS. 10. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 T H OCTOBER, 2017. SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 4 T H OCTOBER, 2017 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI