BENNIE PHILLIPS, MUMBAI V. ITO WD 10(3)(4), MUMBAI

ITA 1750/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4209 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2012
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Reasonable cause; Assessment record
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI .. , , BEFORE SHRI R. C. SHARMA, AM AND SHRI MAHAVIR SINGH , JM ./ I.T.A. NO. 1749/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) SHRI BOBBIE PHILLIPS 1, NAVBHAR CARTER ROAD, BANDRA (W), MUMBAI - 400 050 / VS. INCOME TAX OFFICER, WARD- 10(3)(4), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./PAN/GIR NO. AACPP 9181 F ( # /APPELLANT ) : ( $% # / RESPONDENT ) & ./ I.T.A. NO. 1750/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) SHRI BENNIE PHILLIPS 42, TRISHUL, KANE ROAD, BAND STAND, BANDRA, MUMBAI - 400 050 / VS. INCOME TAX OFFICER, WARD- 10(3)(4), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./PAN/GIR NO. AACPP 9180 E ( # /APPELLANT ) : ( $% # / RESPONDENT ) # & / APPELLANT BY : SHRI SATISH R. MODY $% #& / RESPONDENT BY : SHRI SANJEEV JAIN ( ) *&+ , / DATE OF HEARING : 28.03.2016 -./0 &+ , / DATE OF PRONOUNCEMENT : 07.04.2016 / O R D E R PER MAHAVIR SINGH, JM: BOTH THESE APPEALS OF ASSESSEE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A) IN APPEAL NOS. CIT(A)-22/ITO-10(3)(4)/IT.306/2011-12 A ND NO. CIT(A)-22/ITO- 2 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) 10(3)(4)/IT.305/2011-12 BOTH DATED 27.01.2012. ASS ESSMENTS WERE FRAMED SEPARATELY BY ITO-10(3)(4), MUMBAI U/S. 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2009-10 VIDE HIS O RDERS DATED 01.11.2011 AND 16.11.2011. 2. THE ONLY COMMON ISSUES IN THESE TWO APPEALS OF D IFFERENT ASSESSEES, I.E., IN THE CASE OF SHRI BOBBIE PHILLIPS (IN ITA NO. 1749/MUM/2 012) AND SHRI BENNIE PHILLIPS (IN ITA NO. 1750/MUM/2012), IS AS REGARDS TO THE OR DER OF CIT(A) CONFIRMING THE ACTION OF THE ASSESSING OFFICER (A.O.) IN MAKING TH E ADDITION OF UNSECURED LOAN RECEIVED BY THE ASSESSEE FROM HIS MINOR DAUGHTER AN D SON U/S. 68 OF THE ACT. FOR THIS, THE ASSESSEE IN ITA NO. 1749/MUM/2012 HAS RAISED FO LLOWING TWO GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS )-22, MUMBAI, HAS ERRED IN CONFIRMING THE ADDITION U/S. 68 OF THE INCOME-TAX A CT, 1961 FOR RS.14,00,000/- BEING LOANS RECEIVED FROM DAUGHTERS OF THE ASSESSEE VIZ. REBECCA PHILLIPS OF RS.4,40,000/- AND LYSSA PHILLIPS OF RS.9,60,000/- INSPITE OF THE FACT THAT LOAN CONFIRMATIONS, BANK STATEMENTS, SOURCE OF DEPOSITS WERE GIVEN AND FULLY EXPLAINED. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -22, MUMBAI, HAS ERRED IN STATING THAT SEVERAL OPPORTUNITIES WERE GIVEN TO TH E APPELLANT BY THE ASSESSING OFFICER FOR SUBSTANTIATING THE LOANS RECEIVED. SIMILARLY, THE ASSESSEE IN ITA NO. 1750/MUM/2012 HA S ALSO RAISED IDENTICAL GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS )-22, MUMBAI, HAS ERRED IN CONFIRMING THE ADDITION U/S. 68 OF THE INCOME-TAX A CT, 1961 FOR RS.14,85,000/- BEING LOANS RECEIVED FROM SON AND DAUGHTER OF THE ASSESSE E VIZ. ROHAN PHILLIPS OF RS.13,50,000/- AND ANNIKA PHILLIPS OF RS.1,35,000/- INSPITE OF THE FACT THAT LOAN CONFIRMATIONS, BANK STATEMENTS, SOURCE OF DEPOSITS WERE GIVEN AND FULLY EXPLAINED. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -22, MUMBAI, HAS ERRED IN STATING THAT SEVERAL OPPORTUNITIES WERE GIVEN TO TH E APPELLANT BY THE ASSESSING OFFICER FOR SUBSTANTIATING THE LOANS RECEIVED. 3. BRIEFLY STATED FACTS ARE THAT IN THE CASE OF SHR I BOBBIE PHILLIPS, THE ASSESSEE HAS RECEIVED LOANS FROM DAUGHTERS, I.E., REBECCA PHILLI PS OF RS.4,40,000/- AND LYSSA PHILLIPS OF RS.9,60,000/- AND SHRI BENNIE PHILLIPS, THE ASSESSEE HAS RECEIVED A SUM OF RS.13.50 LACS FROM SON ROHAN PHILLIPS AND A SUM OF RS.1.35 LACS FROM DAUGHTER ANNIKA PHILLIPS. IN BOTH THE CASES, THE A.O. HAS PA SSED THE ASSESSMENT ORDERS EXACTLY 3 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) IDENTICALLY WORDED. THE AO MADE THESE ADDITIONS OF ABOVE UNSECURED LOANS ARE THAT THE ASSESSEE IS UNABLE TO FILE THE DETAILS TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF THE ABOVE LOANS. ACCORDINGLY, HE MADE ADDITION OF THE ABOVE LOANS BY INVOKING THE PROVISION OF SECTION 68 OF TH E ACT IN BOTH THE CASES. AGGRIEVED, BOTH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CI T(A). 4. THE LD. CIT(A) ALSO PASSED IDENTICAL WORDED GROU NDS EXCEPT THE AMOUNT AND NAME OF LENDERS. FOR THE SAKE OF CLARITY, WE ARE RE PRODUCING THE ORDER OF CIT(A) IN ITA NO. 1749/MUM/2012: 2.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, PERU SED THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO DISCUSSED THE CASE WITH THE A.R. OF THE APPELLANT. A.O. NOTED THAT THE ASSESSEE HAD TAKEN LOANS FROM TWO PERSONS I.E. REBE CCA PHILLIPS OF RS.4,40,000/- AND LYSSA PHILLIPS OF RS.9,60,000/-, TOTALING TO RS.14, 00,000/-, DETAILS OF WHICH WERE FILED ON 3.05.2011. SUBSEQUENTLY, AO ISSUED NOTICE DATED 9.0 8.2011 TO FILE CONFIRMATIONS AND ALSO IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS WHO HAVE GIVEN THESE LOANS. THE ASSESSEE FILED LETTER DATED 17.8.2011 FI LING THE SAME DETAILS AS GIVEN EARLIER BUT NO EXPLANATION WAS SUBMITTED REGARDING SOURCE, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES. AO VIDE LETTER DATED 16.09.2011 ASK ED THE ASSEESEE TO SHOW CAUSE AS TO WHY THESE LOAN AMOUNT SHOULD NOT BE TAXED U/S.68 OF THE INCOME TAX ACT, BUT THE ASSESSEE AGAIN FAILED TO EXPLAIN SOURCE, GENUINENES S AND CREDITWORTHINESS OF THE TRANSACTIONS. ACCORDINGLY, FOR WANT OF THESE EXPLAN ATION A.O. ARRIVED AT THE CONCLUSION THAT THE SOURCES, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAS NOT BEEN ESTABLISHED. THE LENDER ARE MINOR STUDYING IN SCHOO L. A.O. ALSO NOTED THAT AS PER THE EARLIER ASSESSMENT RECORDS OF THE ASSESSEE NO CLUBB ING OF MINOR INCOME U/S.64 HAVE BEEN DONE. A.O. ALSO HIGHLIGHTED THE DEFICIENCIES I N THE LOAN CONFIRMATIONS FILED AS MENTIONED IN PAGE 2 AND 3 OF THE ASSESSMENT ORDER. THUS RELYING UPON SEVERAL CASE LAWS A.O. MADE ADDITION OF RS.14,85,000/-. BEFORE ME APP ELLANT HAS MADE AN EFFORT TO FILE THE EVIDENCES IN THE FORM OF RBI BONDS, VDIS CERTIFICAT E, ETC. TO SUPPORT THE INITIAL SOURCE. HOWEVER, THESE DOCUMENTS WERE NOT FILED BEFORE A.O. AND HENCE ARE ADDITIONAL EVIDENCES. THE APPELLANT HAS NOT ASSIGNED ANY REASO N NARRATING THE CIRCUMSTANCES AS TO WHAT WAS THE REASONABLE CAUSE FOR WHICH THIS COULD NOT BE FILED BEFORE A.O. DESPITE SEVERAL OPPORTUNITIES MADE AVAILABLE TO, THE APPELL ANT. FURTHER, IN THE BANK ACCOUNT OF LENDERS, THERE ARE DEPOSITS RELATING TO THE R.D. MA TURED, WHICH HAS NOT BEEN SUBSTANTIATED BY THE APPELLANT. IN VIEW OF THESE FA CTS I FIND NO REASON TO DEVIATE WITH THE FINDINGS OF THE A.O. MADE IN THE ASSESSMENT ORDER A ND ACCORDINGLY THE ADDITION MADE U/S.68 IS UPHELD. SIMILAR IS THE FINDING IN ITA NO. 1750/MUM/2012 BY THE CIT(A). AGGRIEVED AGAINST THE ORDERS OF CIT(A), THE ASSESSEE IS IN APPEAL BEF ORE US. 4 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, THE LD. C OUNSEL FOR THE ASSESSEE FIRST OF ALL TAKEN US THROUGH THE ASSESSMENT ORDER AND THE ORDER BY THE CIT(A). THEN HE TOOK US THROUGH THE PAPER BOOK FILED BY THE ASSESSEE CONSIS TING OF PGS. 1 TO 27. THE LD. COUNSEL FOR THE ASSESSEE FIRST OF ALL DREW OUR ATTE NTION TO PG. 21, WHEREIN CERTIFICATE U/S. 68(2) OF THE VOLUNTARY DISCLOSURES OF INCOME S CHEME, 1997, WHEREIN HE DREW OUR ATTENTION PARTICULARLY TO CASH DECLARATION MADE BY ROHAN PHILLIPS OF RS.8 LACS AT ITEM NUMBER 3 WHICH IS AS UNDER: SR. NO. AMOUNT OF INCOME DECLARED ASSESMENT YEAR(S) TO WHICH THE INCOME RELATES IF THE INCOME IS REPRESENTED BY CASH (INCLUDING BANK DEPOSITS) JEWELLERY BULLION INVESTMENT IN SHARES, DEBTS DUE FROM OTHER PERSONS, COMMODITIES OR ANY OTHER ASSETS REMARKS DESCRIPTION OF ASSET NAME IN WHICH HELD AMOUNT 3. RS.8,00,000/ - 1996 - 97 CASH ROHAN PILLIPS RS.8,00,000/ - THE LD. COUNSEL FOR THE ASSESSEE FURTHER TOOK US TH ROUGH BANK SUMMARY OF SAVING BANK ACCOUNT NUMBER 2251 MAINTAINED WITH BANK OF INDIA, TURNER ROAD BRACH, WHEREIN THE RBI MATURED BONDS AMOUNTING TO RS.8,75,000/- IS DEP OSITED IN THE BANK AND THESE BONDS WERE PURCHASED IN THE NAME OF HIS SON, ROHAN PHILLIPS. SIMILAR STATEMENT IS ALSO ENCLOSED AT PG. 2 OF THE ASSESSEES PAPER BOOK , WHEREIN RBI MATURED BOND AMOUNTING TO RS.40,000/- IS DISCLOSED AND THE SAME BANK SUMMARY OF SAVING BANK ACCOUNT NO. 22521 MAINTAINED WITH BANK OF INDIA, TU RNER ROAD BRANCH IS ENCLOSED. THE ASSESSEE HAS ENCLOSED THE COMPLETE BANK STATEME NT FROM WHERE IT IS CLEAR THAT MINOR DAUGHTER ANNICA PHILLIPS HAS ADVANCED A SUM O F RS.1,35,000/- OUT OF RBI BOND MATURITY AND RBI BOND INTEREST AND ALSO OTHER DEPOS ITS MADE. THE ASSESSEE HAS ALSO ENCLOSED COPIES OF RBI CERTIFICATE ISSUING RBI BOND S IN THE NAME OF ROHAN, MINOR SON AND ANNICA PHILLIPS, MINOR DAUGHTER WITH REPAYMENT OF 6.5% SAVING BONDS 2003 AND REPAYMENT OF 7% SAVING BANK SCHEMES 2002. THESE DOC UMENTS CLEARLY ESTABLISH THE SOURCE OF LOAN TRANSACTION, I.E., ADVANCING OF MONE Y BY MINOR ANNICA PHILLIPS AND 5 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) ROHAN PHILLIPS AMOUNTING TO RS.13.50 LACS AND RS.1. 350 LACS RESPECTIVELY. ON QUERY FROM THE BENCH, THE LD. SR. DR STATED THAT THESE DO CUMENTS WERE NOT FILED BEFORE THE A.O. BUT WE FIND THAT THE ASSESSEE HAS GIVEN CERTIF ICATE IN ITS PAPER BOOK THAT THESE WERE FILED BEFORE THE A.O. AS WELL AS CIT(A). THE C IT(A) HAS PARTICULARLY NOTED THIS FACT IN HIS ORDER WHICH IS REPRODUCED ABOVE. FURTHE R, THESE BANK DETAILS WERE AVAILABLE BEFORE THE A.O. FROM WHERE THESE LOANS WERE GIVEN A ND MATURITY PROCEEDS OF RBI BONDS WERE DEPOSITED. IN ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IN THE CASE OF THE ABOVE UNSECURED LO AN, THE ASSESSEE IS ABLE TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION , I.E., THE IMMEDIATE SOURCE OF THE TRANSACTION. IN SUCH CIRCUMSTANCES, WE FEEL THAT UN SECURED LOAN ADVANCED BY THESE TWO, MINOR SON AND MINOR DAUGHTER, TO THE ASSESSEE IS EXPLAINED AND CANNOT BE ADDED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. WE R EVERSE THE ORDERS OF THE LOWER AUTHORITIES ON THESE ISSUES AND THE APPEAL OF THE A SSESSEE IS ALLOWED. 6. IDENTICAL FACTS ARE IN ITA NO. 1749/MUM/2012 IN SHRI BOBBIE PHILLIPS, WHEREIN REBECCA PHILLIPS AND LYSSA PHILLIPS HAS MADE VOLUNT ARY DISCLOSURE U/S. 68(2) OF THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997, AMOUNT ING TO RS.6 LACS WHICH IS GIVEN AS UNDER: SR. NO. AMOUNT OF INCOME DECLARED ASSESMENT YEAR(S) TO WHICH THE INCOME RELATES IF THE INCOME IS REPRESENTED BY CASH (INCLUDING BANK DEPOSITS) JEWELLERY BULLION INVESTMENT IN SHARES, DEBTS DUE FROM OTHER PERSONS, COMMODITIES OR ANY OTHER ASSETS REMARKS DESCRIPTION OF ASSET NAME IN WHICH HELD AMOUNT 4. RS.6,00,000/- 1996-97 CASH REBECCA PHILLIPS RS.6,00,000/- 5. RS.6,00,000/- 1996-97 CASH LYSSA PHILLIPS RS.6,00,000/- THESE AMOUNTS WERE INVESTED BY THESE TWO MINOR D AUGHTERS IN RBI BONDS AND THESE WERE REPAID BY RBI ALONG WITH THE INTEREST AN D THESE PROCEEDS WERE DEPOSITED IN 6 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) SAVING BANK ACCOUNT MAINTAINED WITH BANK OF INDIA, TURNER ROAD, BANDRA AND THESE WERE DECLARED IN THE RETURNS OF INCOME. THE ASSESSE E HAS NOW ENCLOSED COMPLETE BANK ACCOUNT DETAILS OF RBI BOND AND ALSO BANK SUMMARY O F SAVING BANK ACCOUNTS IN ITS PAPER BOOK CONSISTS OF PAGES 1 TO 25 WHICH CLEARLY REVEALS THAT THESE UNSECURED LOANS ARE EXPLAINED. ACCORDINGLY, WE DELETE THE UNEXPLAIN ED CREDIT ADDED BY THE A.O. AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, BOTH THE ASSESSEES APPEALS ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL, 2016 SD/- SD/- (R. C. SHARMA) (MAHAVIR SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ( * MUMBAI; 1) DATED : 07.04.2016 .)../ ROSHANI , SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT 3. ( 2+ ( ) / THE CIT(A) 4. ( 2+ / CIT - CONCERNED 5. 56 7$+)89 , ,890 , ( * / DR, ITAT, MUMBAI 6. 7 : ; * / GUARD FILE ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , ( * / ITAT, MUMBAI 7 ITA NOS. 1749/MUM/2012 & 1750/MUM/2012 (A.Y. 2009-10) SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED YES SR.PS/PS 2 DRAFT DICTATED ON 28.3.16 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR 29.3.16 SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 7 ORDER PRONOUNCEMENT ON SR.PS/PS 8 FILE SENT TO THE BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER