AKHIL K DALAL, MUMBAI V. ITO RG 4(1)(1), MUMBAI

ITA 1841/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7919 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1991-1992
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: KEYURI DESAI; RYAN SALDANA
• Keywords: Reopening of assessment; Opportunity of being heard
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1841/MUM/2015 : (A.Y : 1991-92) AKHIL K. DALAL 703, 7 TH FLOOR, ROTUNDA, B.S. MARG, DALAL STREET, FORT, MUMBAI 400 023 (APPELLANT) PAN : AAEPD5406D VS. ITO, RANGE-4(1)(1), MUMBAI (RESPONDENT) ASSESSEE BY : MS. KEYURI DESAI & SHRI RYAN SALDANA REVENUE BY : MS. BEENA SANTOSH DATE OF HEARING : 27/12/2016 DATE OF PRONOUNCEMENT : 24/03/2017 O R D E R THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF CIT(A)-9, MUMBAI DATED 16.01.2015, PERTAIN ING TO THE ASSESSMENT YEAR 1991-92, WHICH IN TURN HAS ARISEN F ROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 26.12 .2012 UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE SOLITARY ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO THE ACTION OF INCOME-TAX AUTHORITIES IN H OLDING THAT THE LOAN OF 2 AKHIL K. DALAL ITA NO. 1841/MUM/2015 RS.30,00,000/- RECEIVED FROM MR. M.K. MEATTLE IS U NEXPLAINED WITHIN THE MEANING OF SEC. 68 OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS AN INDIVIDUAL WHO WAS ENGAGED IN THE BUSINESS OF SHARE BROKING DU RING THE RELEVANT PREVIOUS YEAR RELATING TO THE CAPTIONED ASSESSMENT YEAR OF 1991-92. INITIALLY, ASSESSEE FILED A RETURN OF INCOME FOR AS SESSMENT YEAR 1991-92 ON 31.10.1991 DECLARING A LOSS OF RS.41,89,960/-. THE ASSESSMENT WAS ORIGINALLY COMPLETED ON 31.3.1994 DETERMINING THE T OTAL INCOME AT RS.4,43,950/-. THE SAID ASSESSMENT WAS SUBSEQUENTL Y REOPENED AND AN ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT WAS MAD E ON 23.3.2001. AT THE TIME OF ORIGINAL ASSESSMENT, NOTICES U/S 131 WE RE, INTER-ALIA , ISSUED TO CERTAIN PARTIES WHICH INCLUDED MR. M.K. MEATTLE. THE ASSESSEE HAD FILED THE CONFIRMATION OF LOAN FROM MR. M.K. MEATTL E IN THE ORIGINAL PROCEEDINGS. SUBSEQUENTLY, THE ASSESSING OFFICER M ADE INQUIRIES AND FOUND THE TRANSACTION WITH MR. M.K. MEATTLE AS NOT GENUINE AND, THEREFORE, THE REOPENING OF ASSESSMENT. IN THE REA SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, INTER-ALIA , MADE AN ADDITION TREATING THE LOAN OF RS. 30,00,000/- RECEIVED FROM MR. M.K. MEATTLE AS UNEXPLAINED VIDE ASSESSMENT ORDER DATED 23.3.2001 . SUBSEQUENTLY, THIS ADDITION TRAVELLED TO THE TRIBUNAL AFTER THE C IT(A) HAD DELETED IT VIDE ORDER DATED 23.12.2002. THE TRIBUNAL, VIDE OR DER IN ITA NO. 1754/MUM/2003 DATED 11.5.2007 IN THE APPEAL FILED B Y THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 23.12.2002, REMAN DED THE ISSUE RELATING TO ADDITION OF RS. 30,00,000/- TREATING TH E LOAN FROM MR. M.K. MEATTLE AS UNEXPLAINED TO THE FILE OF THE ASSESSI NG OFFICER WITH THE FOLLOWING DIRECTIONS :- 3 AKHIL K. DALAL ITA NO. 1841/MUM/2015 18. AFTER CONSIDERING RIVAL SUBMISSIONS, WE HAVE CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDL Y, NO CONFIRMATION IN RESPECT OF THIS LOAN IS FILED EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE US. U/S 68 BURDEN IS ON TH E ASSESSEE TO PROVE IDENTITY, CAPACITY AND CREDIT WORTHINESS. IN TH IS CASE, PRIMA- FACIE, IT APPEARS THAT THE IDENTITY IS PROVED. HOWEV ER, ASSESSEE IS ALSO REQUIRED TO PROVE THE GENUINENESS OF THE TRANSACTION AN D CAPACITY. SINCE THIS HAS NOT BEEN DONE, WE SET ASIDE THE ORDER OF THE LD CIT(A) AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFF ICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD FURNISH NECESSARY D ETAILS I.E. PAN NO. OF MR. M.K. MEATLE, CONFIRMATION BANK STATEMENT, COPY OF BANK ACCOUNT FROM WHICH HE PAID 30 LAKHS TO THE ASSESSEE. AFTER CARRYING OUT NECESSARY VERIFICATION, ASSESSING OFFICER WILL RE-A DJUDICATE THE ADDITION AFRESH AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN PURSUANCE OF SUCH DIRECTIONS, THE ASSESSING O FFICER HAS PASSED THE IMPUGNED ORDER. AS PER THE ASSESSING OFFICER, ASSESSEE HAS NOT FURNISHED COPY OF BANK ACCOUNT OF MR. M.K. MEATTLE AND THE PAN NUMBER OF MR. M.K. MEATTLE AND, THEREFORE, THE GENU INENESS OF THE TRANSACTION COULD NOT BE PROVED, THOUGH THE ASSESSI NG OFFICER ACCEPTED THAT THE IDENTITY OF THE CREDITOR STOOD PROVED. TH E ASSESSING OFFICER ADDED THE AMOUNT OF RS.30,00,000/- TO THE TOTAL INC OME. FOR SIMILAR REASONS, THE CIT(A) HAS ALSO UPHELD THE ADDITION, A GAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE ME. 5. BEFORE ME, THE LEARNED REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT AFTER REMANDING OF THE MATTER BY THE TRIBU NAL, ASSESSEE HAD DULY EXPLAINED THE TRANSACTION. IT WAS POINTED OUT THAT SINCE THE MATTER WAS ALMOST 20 YEARS OLD, ASSESSEE COULD NOT PRODUCE THE BANK 4 AKHIL K. DALAL ITA NO. 1841/MUM/2015 STATEMENT, BUT SO FAR AS THE CONFIRMATION FROM MR. M.K. MEATTLE WAS CONCERNED, SAME WAS DULY AVAILABLE ON RECORD WHICH, INTER-ALIA , ALSO CONTAINED THE PARTICULARS OF PAN, ETC. THE LEARNED REPRESENTATIVE EXPLAINED THAT THE ASSESSEE HAD STRAINED RELATIONS WITH THE SAID CREDITOR, A FACT WHICH HAS BEEN ALSO COMMUNICATED T O THE ASSESSING OFFICER VIDE COMMUNICATIONS DATED 18.12.1995 AND 21 .12.1995, A COPY OF WHICH IS PLACED ON RECORD AT PAGES 117-118 OF TH E PAPER BOOK. IN THE SAID COMMUNICATIONS, IT IS ALSO EVIDENT THAT THE AS SESSEE POINTED OUT THAT THERE WERE COUNTER-COMPLAINTS MADE BY THE PART IES AND THAT THE MATTER WAS ALSO REFERRED FOR ARBITRATION PROCEEDING S. IN THE SAID COMMUNICATION, ASSESSEE HAS ALSO FURNISHED THE LAST KNOWN ADDRESS OF MR. M.K. MEATTLE WITH A REQUEST THAT SUMMONS SHOULD BE ISSUED DIRECTLY TO HIM FOR APPEARANCE BEFORE THE ASSESSING OFFICER. AGAIN, VIDE COMMUNICATION DATED 13.2.1996, COPY OF WHICH IS PLA CED AT PAGE 120 OF THE PAPER BOOK, ASSESSEE CONTENDED THAT DUE TO STRA INED RELATIONS, ASSESSEE WAS NOT IN A POSITION TO PRODUCE HIM BUT R EQUESTED THE ASSESSING OFFICER TO ENSURE HIS PRESENCE BY ISSUING SUMMONS U/S 131 OF THE ACT. 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS REITERATED THE STAND OF THE ASSESSING OFFICER POINT ING OUT THAT THE FURNISHING OF CONFIRMATION LETTER WAS NOT ENOUGH TO PROVE THE GENUINENESS OF THE TRANSACTION. IN THIS MANNER, HE HAS DEFENDED THE ADDITION MADE UNDER SECTION 68 OF THE ACT. 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. THE SUM AND SUBSTANCE OF THE DISPUTE IN THIS APPEAL IS WITH RE GARD TO LOAN OF 5 AKHIL K. DALAL ITA NO. 1841/MUM/2015 RS.30,00,000/- RECEIVED BY THE ASSESSEE FROM MR. M .K.MEATTLE. THE SAID LOAN HAS BEEN TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT. SECTION 68 OF THE ACT CASTS A BURDEN ON THE ASSESSEE TO DEMONSTRATE THE NATURE AND SOURCE OF TH E CREDIT APPEARING IN THE BOOKS OF ACCOUNT. WITH RESPECT TO THE IMPUG NED LOAN, THE IDENTITY OF THE CREDITOR IS NOT IN DISPUTE. IN FAC T, THE PRESENT PROCEEDINGS ARE AS A RESULT OF THE ORDER OF THE TRI BUNAL DATED 11/05/2007(SUPRA), WHEREBY THE MATTER WAS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE DE TAILS, WHICH WERE TO BE FILED BY THE ASSESSEE; SUCH DETAILS BEING, PAN OF T HE CREDITOR, BANK STATEMENT CONFIRMATION AND THE COPY OF BANK ACCOUNT . IN SO FAR AS THE PAN DETAILS AND THE CONFIRMATION OF THE CREDITOR IS CONCERNED, THE SAME ARE ON RECORD. SO HOWEVER, THE OTHER DETAILS COULD NOT BE FURNISHED BY THE ASSESSEE AND, THEREFORE, IT HAS BEEN HELD THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE CREDITOR. BEFORE US, LD. REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT IN ASSESSMENT YEAR 1993-94, THERE WERE CERTAIN TRANSACTIONS WITH MR. M.K.MEATTLE, THOUGH NOT RELATING TO LOANS. SUC H TRANSACTIONS WERE A SUBJECT MATTER OF SCRUTINY AND IN FACT, THE MATTE R ALSO TRAVELLED TO THE TRIBUNAL AND THE BUSINESS TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH MR. M.K.MEATTLE HAVE BEEN ACCEPTED. ACCORDING TO TH E LD. REPRESENTATIVE FOR THE ASSESSEE, THE PROCEEDINGS FO R ASSESSMENT YEAR 1993-94 CLEARLY SHOW THAT THE GENUINENESS AND EXIS TENCE OF MR. M.K.MEATTLE, WHO HAD CARRIED OUT PURCHASE AND SALE OF SHARES THROUGH THE ASSESSEE HAS BEEN ACCEPTED. THE AFORESAID ASPEC T HAS BEEN BROUGHT OUT TO SUPPORT THE PLEA OF THE ASSESSEE THAT MR. M .K.MEATTLE WAS NOT A STRANGER TO THE ASSESSEE AND THAT MERELY BECAUSE A SSESSEE COULD NOT 6 AKHIL K. DALAL ITA NO. 1841/MUM/2015 PRODUCE BANK STATEMENT, ETC. OF THE SAID CREDITOR, THE IMPUGNED LOAN TRANSACTION COULD NOT BE TREATED AS NON-GENUINE. E VEN THE REASONS FOR NON-FURNISHING OF THE REQUIRED INFORMATION HAS BEEN EXPLAINED, BEING THE STRAINED RELATIONSHIP WITH THE SAID CREDITOR. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT IS QUITE EVIDENT THAT ASSESSEE HAS BEEN ABLE TO PRODUCE WHATEVER MATERIAL THAT WAS AVAILABLE WITH HIM, AND BECAUSE OF THE STRAINED RELATIONSHIP WITH THE CREDITOR, NO FURTHER INFORMATION COULD BE PRODUCED. IN FACT, AS SESSEE HAD REQUESTED THE ASSESSING OFFICER TO ISSUE THE REQUISITE SUMMON S UNDER SECTION 131 OF THE ACT TO THE CREDITOR TO ENSURE HIS ATTENDANCE . ALL THESE ASPECTS SUGGEST THAT THE AVERMENTS MADE BY THE ASSESSEE, AB OUT THE NATURE AND SOURCE OF THE IMPUGNED CREDIT HAS NOT BEEN FOUND TO BE FALSE OR CONTRARY TO THE FACTS. CLEARLY, ON ACCOUNT OF CERT AIN EXCEPTIONAL CIRCUMSTANCES, THE BANK STATEMENT OF THE CREDITOR C OULD NOT BE PRODUCED AND FOR THIS REASON, THE TRANSACTION COUL D NOT BE TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF T HE ACT , SINCE NONE OF THE FACTUAL ASSERTIONS OTHERWISE MADE BY THE AS SESSEE HAVE NOT BEEN FOUND TO BE FALSE. THEREFORE, IN MY CONSIDERE D OPINION, IT WOULD IN THE FITNESS OF THINGS THAT THE IMPUGNED ADDITION IS DELETED. I HOLD SO. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24/03/2017 SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 24/03/2017 VM , SR. PS 7 AKHIL K. DALAL ITA NO. 1841/MUM/2015 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. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI