SHALINI KHANCHANDANI, MUMBAI V. ITO WD 16(1)(4), MUMBAI

ITA 1769/MUM/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2683 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 143(3); 234B; 68

Judgement Text

P A G E | 1 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) IN THE INCOME TAX APPELLATE TRIBUNAL ' G ' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 1769 /MUM/2017 (ASSESSMENT YEAR: 2012 - 13 ) M/S SHALINI KHANCHANDANI BUN GALOW NO. 11, SHEFIELD, LOKHANDWALA COMPLEX, ROAD NO. 2, ANDHERI (W), MUMBAI - 400053 VS. INCOME TAX OFFICER, WARD - 16(1)(4), 438, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 PAN AALPS6796C ASSESSEE REVENUE ASSESSEE BY: SHRI MAHESH O. RAJORA , A.R REVENUE BY: SHRI NISHANT SAMAIYA, D.R DATE OF HEARING: 27 .09 .2018 DATE OF PRONOUNCEMENT: 1 0 .10.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 4, MUMBAI, DATED 09.12.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961, (FOR SHORT ACT), DATED 27.02.201 5 FOR A.Y. 2012 - 13. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEA L: THE APPELLANT APPEALS AGAINST THE IMPUGNED ORDER DATED DECEMBER 09, 2016 (RECEIVED BY HER ON JANUARY 31, 2017) PASSED BY THE COMMISSI ONER OF INCOME - TAX (APPEALS) - 4, MUMBAI (THE CIT(A)), UNDER SECTION 253 OF THE INCOME - TAX ACT, 1961 (THE ACT), ON THE FOLLOWING AMONGST OTHER GROUNDS EACH OF WHICH IS IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO ONE ANOTHER: 1. THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.53,42,550 / - UNDER SECTION 68 OF THE ACT ON THE GROUND THAT THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE LOAN TRANSACTIONS. 2. THE CIT(A) FAILED TO CONSIDER THE RELEVANT INFORMATION AND MATERIAL AND ERRED IN UPHOLDING THE ADDITION OF RS.53,42,550 / - AS MADE BY THE P A G E | 2 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) A . O UNDER SECTION 68 OF THE ACT BASED ON IRRELEVANT AND FACTUALLY INCORRECT CONSIDERATIONS. FURTHER, THE CONCLUSION REA CHED BY THE CIT(A) IS VITIATED BY ERRORS OF FACTS AND LAW. 3. THE CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF RS.4,00,300 / - UNDER SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT THE APPELLANT HAD FAILED TO DEDUCT TAX ON SOURCE ON LABOUR CHARGES, INTEREST EXPEN DITURE AND TRANSPORTATION CHARGES. 4. THE A . O ERRED IN LEVYING INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR TO ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEFLY STATED, THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS AS THAT OF A HAIR DRESSER AND PROVIDING BEAUTY PARLOUR SERVICES HAD E - FILED HER RETURN OF INCOME FOR A.Y 2012 - 13 ON 27.09.2012, DECLARING TOTAL INCOME AT RS.5,07,780/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCR UTINY ASSESSMENT 143(2) OF THE ACT . 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT A PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE REVEALED THAT SHE HAD TAKEN HUGE LOANS FROM VARIOUS PARTIES . AS THE ASSESSEE , DESPITE S UFFICIENT OPPORTUNITIES FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE LOAN TRANSACTIONS, THUS THE A.O TREATED THE SAME AS UNEXPLAINED CASH CREDIT S UNDER SEC.68 , AND MADE AN ADDITION OF RS.53,42,440/ - IN THE HANDS OF THE ASSESSEE. FURTHER, AS THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE ON CERTAIN PAYMENT S WHICH WERE CLAIMED AS EXPENSE IN HER P ROFIT AND LOSS ACCOUNT VIZ. (I) LABOUR CHARGES PAID TO MR. SALIM A NSARI: RS. 97,800/ - ; (II). INTEREST EXPENSES: RS.82,500/ - ; AND (III). TRANSPORTATION CHARGES: RS.2,20,000/ - , THUS THE SAME WERE DISALLOWED BY THE A.O UNDER SEC.40(A)(IA) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTION S ADVANCED BY THE ASSESSEE , WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THE SAME AND UPHELD THE ADDITIONS/DISALLOWANCES MADE BY THE A.O. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US . WE FIND THAT THE ASSESSEE HAS FILED AN P A G E | 3 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) APPLICATION SEEKING LIBERTY FOR ADMISSION OF CERTAIN DOCUMENTS VIZ. CONFIRMATION OF ACCOUNTS; COP IES OF BANK ACCOUNT S ; COP IES OF RETURNS OF INCOME; COPY OF DEATH CERTIFICATE; AND COP IE S OF PAN NUMBER S , AS ADDITIONAL EVIDENCE BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) OF THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SOUGHT LIBERTY FOR ADMISSION OF THE AFORESAID DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE, O N THE GROUND THAT THOUGH THE SAME HAVE A MATERIAL BEARING ON THE ADJUDICATION OF THE ISSUE UNDER CONSIDERATION, BUT DUE TO REASONS BEYOND THE CONTROL OF THE ASSESSEE , COULD NOT BE FILED BEFORE THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. A.R , THAT TH E ASSESSEE A MIDDLE AGED LADY WAS DURING THE YEAR UNDER CONSIDERATION ENGAGED IN THE BUSINESS AS THAT OF A HAIR DRESSER AND RUNNING A BEAUTY PARLOUR. IT WAS SUBMITTED BY THE LD. A.R THAT THE FINANCIAL AFFAIRS OF HER BUSINESS WERE BEING LOOKED AFTER BY HER HUSBAND. THE LD. A.R AVERRED , THAT THE HUSBAND OF THE ASSESSEE HAD RAISED LOAN S FROM VARIOUS PARTIES IN HER ACCOUNT, WHILE FOR THE ASSESSEE WAS KEPT IN THE DARK. SUBSEQUENTLY, RELATION S OF THE ASSESSEE WERE SE VERED WITH HER HUSBAND , AND THE MARRIAG E ENDED UP IN A DIVORCE . IT WAS SUBMITTED BY THE LD. A.R , T HAT AS THE ASSESSEE WAS ABSOLUTELY UNAWARE OF THE PARTIES FROM WHOM HER HUSBAND HA D RAISED LOANS IN HER ACCOUNT DURING THE YEAR , THUS SHE COULD NOT FURNISH THE REQUISITE DETAILS BEFORE THE A.O DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS. IN THE BACKDROP OF THE AFORESAID STATE OF AFFAIRS THE A.O TREATED THE RESPECTIVE AMOUNTS AS UNEXPLAINED CASH CREDIT S UNDER SEC. 68 , AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. SUBSEQUENTLY, T HE ADDIT IONS MADE BY THE A.O WERE CONFIRMED BY THE CIT(A). 6. THE LD. A.R SUBMITTED , THAT AS THE ASSESSEE WAS UNAWARE ABOUT THE PARTIES FROM WHOM LOANS WERE RAISED BY HER HUSBAND IN HER ACCOUNT , THUS FOR THE SAID REASON THE REQUISITE DETAILS LIKE PAN NUMBE R S , ADDRESSES ETC. PERTAINING TO THEM COULD NOT BE FURNISHED BEFORE THE LOWER AUTHORITIES. IT WAS AVERRED BY THE LD. A.R , THAT THE ASSESSEE AFTER GETTING DIVORCED WAS UNAWARE ABOUT THE WHEREABOUTS OF HER HUSBAND. IT WAS CLAIMED BY THE LD. A.R, THAT UNDER THE AFORESAID SET OF CIRCUMSTANCES THAT SOME OF THE PERSON S FROM WHOM THE HUSBAND OF THE ASSESSEE HAD RAISED LOANS IN HER NAME, P A G E | 4 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) CONTACTED HER FOR REPAYMENT OF THE OUTSTANDING LOANS . THE LD. A.R SUBMITTED , THAT IN THE BACKDROP OF THE AFORESAID DEVELOPMENT S WHIC H HAD TAKEN PLACE AFTER THE CULMINATION OF THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES, THE ASSESSEE WAS ABLE TO COLLECT DETAILS VIZ. PAN NUMBER S , ADDRESS ES , LOAN CONFIRMATIONS, COP IES OF ACKNOWLEDGMENT OF RETURN S OF INCOME AND COPIES OF BANK STATEMENTS O F FEW OF SUCH LENDERS, WHICH HAD BEEN PLACED ON RECORD BY WAY OF ADDITIONAL EVIDENCE . FURTHER, THE LD. A.R AVERRED THAT THAT ASSESSEE WAS ALSO TRYING HER LEVEL BEST TO COLLECT THE REQUISITE DETAILS IN RESPECT OF THE REMAINING LENDERS. ON THE BASIS OF THE A FORESAID CONTENTIONS, IT WAS AVERRED BY THE LD. A.R THAT IN ALL FAIRNESS THE AFOREMENTIONED DOCUMENTS , WHICH BUT FOR COMPELLING CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE COULD NOT BE FURNISHED BEFORE THE LOWER AUTHORITIES, MAY BE ADMITTED , AS THE SA ME HA VE A MATERIAL BEARING ON THE ADJUDICATION OF THE ISSUE UNDER CONSIDERATION. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO AVAIL THE AM PLE OPPORTUNITY THAT WAS AFFORDED TO HER TO FURNISH THE SAID DOCUMENTS BEFORE THE LOWER AUTHORITIES , THUS THE SAME COULD NOT BE NOW ADMITTED . THE LD. D.R IN SUPPORT OF HIS CONTENTION TOOK US THROUGH THE OBSERVATIONS OF TH E CIT(A) AT PAGE 6 PARA 3.4 OF THE ORDER. IT WAS THUS , THE CONTENTION OF THE LD. D.R. THAT AS THE APPEAL FILED BY THE ASSESSEE WAS DEVOID OF ANY MERIT, THUS THE S A ME MAY BE DISMISSED. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, P ERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , THAT AS THE ASSESSEE DESPITE HAVING BEEN AFFORDED SUFFICIENT OPPORTUNITY TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES FROM WHOM LOANS WERE RAISED, AS WELL AS PROVE GENUINENESS OF THE TRANSACTIONS, HAD FAILED TO DISCHARGE THE ONUS SO CAST UPON HER, THUS THE SAID RESPECTIVE AMOUNTS WERE CHARACTE RISED BY THE A.O AS UNEXPLAINED CASH CREDIT S UNDER SEC. 68 OF THE ACT. WE HAVE DELIBERATED AT LENGTH ON THE REASONING GIVEN BY P A G E | 5 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) THE LD. A.R , FOR THE FAILURE ON THE PART OF THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION , ALONG WITH PROVING T HE IDENTITY AND CREDITWORTHINESS OF THE RESPECTIVE LENDERS, AND FIND SUBSTANTI AL FORCE IN THE SAME. WE FIND OURSELVES AS BEING IN AGREEMENT WITH THE CONTENTION OF THE LD. D.R T H AT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS AS WAS C A ST UPON HER, AND COUL D NOT PROVE THE GENUINENESS OF THE TRANSACTION , ALONG WITH THE IDENTITY AND CREDITWORTHINESS OF THE RESPECTIVE LENDERS IN THE COURSE OF THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES. H OWEVER, THE REASONS LEADING TO THE FAILURE ON HER PART TO PLACE THE REQU ISITE DOCUMENTARY EVIDENCE , TO OUR UNDERSTANDING WERE CLEARLY BEYOND HER CONTROL. WE ARE OF THE CONSIDERED VIEW , THAT THE FACT THAT THE ASSESSEE HAD PLACED ON RECORD CONFIRMATIONS ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE IN RESPECT OF SOME OF THE PARTIES , IN ITSELF ESTABLISH ES THAT HER EXPLANATION FOR NOT HAVING PLACE D THE SAME BEFORE THE LOWER AUTHORITIES WAS NOT A CONCOCTED STORY OR A MERE EYEWASH, BUT WAS BACKED BY BONAFIDE REASONS , WHICH AS CANVASSED BY THE LD. A.R BEFORE US WERE BEYOND HER CONTROL. W E THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW , THAT THE APPLICATION FILED BY THE ASSESSEE SEEKING ADMISSION OF CERTAIN DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE MERITS ACCEPTANCE. THE DOCUMENTS PLACE D ON RECORD BY THE ASSESSEE AT PAGE NO.1 - 14 ALONG WITH HER APPLICATION DATED 26.09.2018 ARE THUS ADMITTED. 9. WE FIND THAT THE ASSESSEE HAD PLACED ON RECORD THE CONFIRMATIONS OF CERTAIN PARTIES, COPIES OF ACKNOWLEDGMENT OF RETURN OF INCOME, BANK STATEMENTS OF FEW OF THE LENDERS, COP IES OF PAN NO. ETC. HOWEVER, AS THE AFORESAID DOCUMENTS WERE NOT THERE BEFORE THE LOWER AUTHORITIES, THEREFORE, IN ALL FAIRNESS WE RESTORE THE MATTER AS REGARDS THE ADDITION OF RS.53,42,550/ - MADE BY THE A.O UNDER SEC. 68 TO THE FILE OF THE A.O FOR FRESH ADJU DICATION . THE A.O SHALL AFTER CONSIDERING THE AFORESAID DOCUMENTS WHICH HAVE BEEN FILED BY THE ASSESSEE BEFORE US BY WAY OF ADDITIONAL EVIDENCE, READJUDICATE THE MATTER. NEEDLESS TO SAY, THE A.O SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FURTHER, THE ASSESSEE SHALL ALSO REMAIN AT A LIBERTY TO P A G E | 6 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) PLACE ON RECORD THE CONFIRMATIONS OF THE REMAINING LENDERS , AND/OR SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE LOAN TRANSACTIONS UNDER CONS IDERATION, ON THE BASIS OF ANY OTHER SUPPORTING DOCUMENTARY EVIDENCE. THE A.O IS DIRECTED TO READJUDICATE THE ISSUE AS REGARDS THE ADDITION OF RS.53,42,550/ - AFRESH IN TERMS OF OUR AFORESAID OBSERVATIONS. THE G ROUND S OF APPEAL NO. 1 AND 2 ARE ALLOWED FOR S TATISTICAL PURPOSES. 10. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF AN AMOUNT OF RS. 4,00,300/ - MADE BY THE A.O UNDER SEC. 40(A)(IA) OF THE ACT, WHICH THEREAFTER HAD BEEN SUSTAINED BY THE CIT(A). THAT AS NO CONTENTION WAS ADVANCED BY THE LD. A.R AS REGARD S THE AFORESAID DISALLOWANCE, HENCE, FINDING NO REASON TO DISLODGE THE ORDER OF THE CIT(A) IN CONTEXT OF THE SAID ISSUE, WE UPHOLD THE SAME. THE GROUND OF APPEAL NO. 3 IS DISMISSED. A S THE LEVY OF INTEREST UNDER SEC. 234B AND 234C OF THE ACT IS MANDATORY, THUS THE G ROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IS RENDERED AS CONSEQUENTIAL IN NATURE. 11. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 1 0 .10.2018 S D / - S D / - ( B.R.BASKARAN ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 10 .10.2018 PS. ROHIT P A G E | 7 ITA NO. 1769/MUM/2017 A.Y. 2012 - 13 M/S SHALINI KHANCHANDA NI VS. INCOME TAX OFFICER, WARD - 16(1)(4) / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI