UMESH A MISHRA, MUMBAI V. ITO 10(3)(3), MUMBAI

ITA 1848/MUM/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2417 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Initiation of penalty proceedings
• Section: 68; 143(3); 234B; 271D; 69A; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI SANJAY GARG (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1848/MUM/2018 Assessment Year: 2011-12 & ITA No. 4620/MUM/2019 Assessment Year: 2012-13 Mr. Umesh Ambikaprasad Mishra, B/401/402, Raheja Sherwood, Behind Hub Mall, Western Express Highway, Goregaon (E), Mumbai-400063. Vs. The Income Tax Officer-10(3)(3), Room No. 213, 2 nd floor, Aayakar Bhavan, Mumbai-400020. PAN No. AAGPM 0190 F Appellant Respondent Assessee by : None Revenue by : Mr. V.K. Chaturvedi, DR Date of Hearing : 12/05/2022 Date of pronouncement : 12/05/2022 ORDER PER OM PRAKASH KANT, AM These two appeals by the assessee are directed against two separate orders, each dated 29.12.2017, passed by the Ld. Commissioner of Income Tax (Appeals)-17, Mumbai [in short ‘the Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 2 Ld. CIT(A)] for assessment year 2011-12 and 2012-13 respectively. As common grounds have been raised in these appeals, these were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. The grounds raised by the assessee in appeal for assessment year 2011-12 are reproduced as under : (1) On The Facts and Circumstances of The Case, The Hon'ble Commissioner of Income Tax (Appeals) has erred in Law, in Confirming the Addition made under sec 68 of cash Income of Agricultural land of Rs. /- to the assessee's Income which is most unjustified and arbitrary. (2) (2) On the Facts and Circumstances of case, the Hon'ble Commissioner of Income Tax (Appeals)-17 Confirming the Addition on Account of house Property. (3) On the facts and Circumstances of the Case. The Commissioner of income Tax (Appeals)-17, Mumbai has erred in law in Confirming the initiation of Penalty Proceedings under Section 271(C) of the Income Tax 1961. (4) On the Facts and Circumstances of case, The Commissioner of Income Tax (Appeals) has erred in law in Confirming the Charge Interest under Section 234A, 234B and 234C of the Income Tax Act1961, Which is most Arbitrary. Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 3 2. Briefly stated, facts of the case are that the assessee filed return of income on 22.10.2011 declaring total income of Rs.17,69,625/-. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income-Tax Act, 1961 (in short ‘the Act’) were issued and complied with. In assessment completed u/s 143(3) of the Act on 29.04.2014, the Assessing Officer treated the agricultural income of Rs.32,08,825/- shown by the assessee as unexplained cash credit in terms of section 68 of the Act. The Assessing Officer also disallowed transfer fee of Rs.3,00,000/- paid to society for transfer of the property, on which the assessee had declared long term capital gain. On further appeal, the Ld. CIT(A) upheld the addition of unexplained cash credit following the finding of his predecessor in assessment year 2009-10, and finding of the Tribunal in ITA No. 870/Mum/2014 for AY 2009- 10. Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 4 3. On the issue of transfer fee, the Ld. CIT(A) directed the Assessing Officer to verify of the genuineness of the claim of transfer fee paid and decide accordingly. 4. At the outset, we may like to mention that neither anyone attended on behalf of the assessee despite notifying nor any request for adjournment was filed. On perusal of the record, we find that on immediate preceding hearing dated 04.04.2022, the aassessee was notified by way of Registered Post but none attended on said date also. In the circumstances, we were of the opinion that the assessee is not interested in prosecuting the appeal and therefore same was heard ex-parte qua the assessee after hearing the argument of Ld. Departmental Representative (DR) and perusal of the record. 5. As far as Ground No. 1 of the appeal of the assessee of treating agricultural income as unexplained cash credit is concerned, we find that the Ld. CIT(A) has followed binding precedent in the case and Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 5 therefore we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. 6. As far as Ground No. 2 of disallowance of ‘transfer fee’ while computing long term capital gain is concerned, we find that the Ld. CIT(A) has adjudicated the issue as under : “4.3.2 There is no dispute as far principle of allowance is concerned. The appellant has claimed that the expenditure on transfer charges which was not in dispute should be allowed. The AO is directed to verify the genuineness of this claim and allow the transfer charges which has actually been incurred for the purpose of transfer of flat. Thus, this ground of appeal is treated to be allowed for a statistical purpose.” 7. In the case, the Ld. CIT(A) has directed to verify the genuineness of the claim. The Ld. CIT(A) has agreed with submission of the assessee and sent the matter to the AO for verification only. In such circumstances, the assessee was required to approach the Ld. AO and produce necessary evidence of payment, rather than raising the ground before the Tribunal. We do not find any error in the order of the Ld. CIT(A). However, we direct the Ld. AO to give effect Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 6 to the order of Ld. CIT(A) if not given already. The ground of appeal is accordingly allowed for statistical purpose. ITA No. 4620/MUM/2019 Assessment Year: 2012-13 8. The Ground No. 1 of the appeal of the assessee in ITA No. 4620/Mum/2019 is reproduced as under : 1. The Ld. Commissioner of Income Tax (Appeals) - 17, Mumbai [hereinafter referred to as the Ld. CIT (A) erred in upholding the action of the Ld. A.O. in making addition of Rs.22,70,610/- under section 68 of the Act without appreciating that the said amount is received by the Appellant on account of Agriculture income. Thus, the same is exempt under section 10(1) of the Act. Thus, the addition of Rs.22,70,610/- is unjustified and the same may be deleted. 2. The Ld. CIT(A) erred in confirming the action of the Ld. A.O. in making addition of Rs.2,50,00,000/- under section 68 of the Act without appreciating the facts and circumstances of the case. Thus, the addition of Rs.2,50,00,000/- under section 68 of the Act is unjustified and the same may be deleted. 3. The Ld. CIT(A) erred in making addition of Rs.1,85,691/- under section 23(4) (b) without appreciating the facts and circumstances of the case. 9. As far as Ground No. 1 is concerned same is identical to the Ground No. 1 raised in the assessment year 2011-12 and therefore following our finding, the Ground No. 1 of the present appeal is also Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 7 dismissed. As far as Ground No. 2 of the appeal of the assessee is concerned, the Assessing Officer has made the addition of Rs.2,50,00,000/- in view of following observation: i. Vide order sheet entry dated 16.03.2015, Id. AR of the assessee was asked to produce the loan creditor Shri Shailesh Raval along with his bank passbook, Income Tax Return, ID Card/ PAN Card. Ld. AR failed to produce the loan creditor on appointed day, i.e., 18.03.2015 / 20.03.2015. The confirmation submitted by the assessee stated to be of Shri Shailesh Raval was not accompanied by any documentary evidences proving identity, creditworthiness and genuineness of transaction. It was not proved by Id. AR that the said confirmation is actually signed by Shri Shailesh Raval. Copy of IT of Shri Shailes Raval, his bank statement and his identity was not proved by Id. AR. ii. The assessee failed to discharge the statutory onus of proving the identity of loan creditor, creditworthiness of loan creditor and as also the genuineness of the transaction. iii. The confirmation submitted shows that there were huge cash payments to Mr. Shailesh Raval by the assessee and other concerns / persons (M/s Prama Instruments Pvt. Ltd., Mrs. Usha Mishra, Mrs. Vimla Mishra and Mr. Madan Mishra) on behalf of the assessee for which the assessee allowed credit to Shri Shailesh Raval. It is important to mention here provisions of Section 269SS which prohibits acceptance of loans and advances and provides penalty for such acceptance as per Section 271D. If the confirmation of Shri Shailesh Raval filed by the assessee is taken to be true, the assessee would be liable for penalty u/s 271D for Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 8 violation of Section 269SS by accepting cash loans from the above concerns which, were directly paid to Shri Shailesh Raval. The confirmation filed by the assessee (of Shri Shailesh Raval) is not acceptable as the assessee has failed to produce/ submit the evidences for cash payment to the tune of Rs.1;35,00,000/-. In case the assessee is able to substantiate the payment before appellate authority and get some relief, penalty u/s 271D gets attracted for violation of Section 269SS. The assessèe has failed to submit the bank account of. Shri Shailesh Raval hence the confirmation is rejected. The assessee has also failed to produce Shri Shailesh, Raval from: cross examination for which also the confirmation is rejected as the same has remain unverified. iv. The MoU dated 31.03.2011, a copy of which has been submitted, is not signed by any witness and there is no specific mention of payment of any amount. The document of property under negotiation is also not submitted. The MOU is neither, registered nor stamp duty has been paid on it. v. Similarly, the Cancellation Deed dated 25th Day of July, 2011 is also not acceptable as the deed is signed by any witness. The Deed is neither registered nor stamp duty has been paid on it. vi. In the Cancellation Deed Shri Shailesh Raval has confirmed the receipt of Rs.1,35,00,000) being the part consideration for is an property under negotiation.: But the mode of payment is evident only from the confirmation which shows that the entire amount was paid in cash by Shri Umesh Mishra, the assessee. The source of Rs.1,35,00,000/- has not been explained by the assessee and the amount is income of the assessee as per Section 69A of the Income Tax Act, 1961. vii. On cancellation of the MOU, Shri Shailesh Raval has paid Rs.2.5 crores against the payment of Rs.1,35,00,000/- looks highly Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 9 suspicious and unrealistic as in common parlance such transactions are not seen. It raises serious doubts about the genuineness of the transaction. viii. There is no witness to both MOU/ Cancellation Deed and it appears that the same are afterthought evidences created to explain the credit entry to give genuine color to the transaction. ix. In day to day practice such transactions are seen when loan is given in cash and cheques are taken from the borrower as a security to safeguard the repayment. It appears to be a case where the assessee has paid cash loan to Shri Shailesh Raval and took a cheque of equivalent amount which was deposited in the bank. In that case also, the, assessce has failed to explain the source of cash forwarded as, loan to Shri Shailesh Raval for which cheque was taken as security, the amount of loan forwarded is liable to be taxed as unexplained money / investment in the hands of the assessee. x. The confirmation submitted by the assessee from Shri Shailesh Raval is also not acceptable in view of the fact that the amount received of Rs.2.5 crores is retained by assessee and has not been forwarded to M/s Prama, Mr. Madan Mishra, Mrs. Usha Mishra and Mrs. Vimla Mishra who stated to have made cash payments on 10(3)(3) behalf of the assessee to Mr. Shailesh Raval. 10. Before the Ld. CIT(A) also, the assessee failed to substantiate any documentary evidence in support of its claim for justifying the nature and source of the credit. The Ld. CIT(A) sustained the addition observing as under : Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 10 “4.3.3 Conclusion: The core issue involved in this ground is relating to the additions made u/s. 68 of the Act. Let us have a look at the prescription of section 68, the relevant part of which provides that: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.". This section has received the attention of the Hon'ble Supreme Court and almost all the High Courts in numerous cases. It has been almost unanimously held that the burden under this section is discharged by the assessee only when the assessee proves three things to the satisfaction of the AO, viz., identity of the creditor, capacity of the creditor and genuineness of the transaction. The Hon'ble Calcutta High Court in CIT v. Korlay Trading Co. Ltd. [1998] 232 ITR 820 (Cal) has held that mere filing of the income-tax file number of the creditors is not enough to prove the genuineness of the cash credit. The creditor should be identified. There should be creditworthiness. There should be a genuine transaction. In K.M. Sadhukhan & Sons (P.) Ltd. v. CIT (1999] 239 IT 771 (Cal), it has been held that the burden lies on the assessee to prove the genuineness of loan. The Hon'ble High Court has held that the initial burden is on the Assessee to prove the identity of the creditor, the capacity of the creditor to advance the wheelcan and the genuineness of the transaction. In CIT v. Precision Finance (P.) Ltd. 11694] 208 ITR 465/ (Cal), the Tribunal deleted the addition on the footing that since the transactions were through bank account, hence it was to be presumed that those were Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 11 genuine. Setting aside the tribunal order, the Hon'ble High Court has held that: 'It is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. Mere furnishing of the particulars is not enough.' Similar view has been taken in several cases. On going through the above judgments, it is explicit that the onus u/s 68 can be said to have been discharged only when the assessee proves identity and capacity of the creditor along with the genuineness of transaction to the satisfaction of the AO. All the three constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can lawfully make addition. It is a well settled legal position that every case depends on its own facts. Even a slightest change in the factual scenario alters the entire conspectus of the matter and makes one case distinguishable from another. The crux of the matter is that the ratio of any judgment cannot be seen divorced from its facts. At this juncture, the assessee having not discharging its onus, it is relevant to refer to the case of A. Govindarajulu Mudaliar v. CIT (1958) 3 4 ITR 807 (SC) where in the Hon'ble Apex Court has held that there is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. The Hon'ble Delhi High Court in the case of CIT vs NR Portfolio Pvt Ltd [2013) 29 taxmann.com 291 (Delhi) has held that Permanent Account Number is allotted as a facility to revenue to keep track of transactions. The PA Number cannot be blindly and without consideration of surrounding circumstances treated as sufficiently disclosing the identity of the individual. The identification of a person includes the place of work, the staff and the fact that it was actually carrying on business and further recognition of the said company/individual in the eyes of public. We have further noticed that PAN Numbers are allotted on the basis of Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 12 applications without actual de facto verification of the identity or ascertainment of the active nature of business activity. The Hon'ble Calcutta High court in case of Maithan international [2015] 375 IT 123 (Calcutta) held that the Assessing Officer could not accept genuineness of loan taken by the assessee from various creditors merely on basis of their bank statements and letter of confirmation as he was required to examine creditworthiness of said creditor as well. Similarly, the decision in the case of Hon'ble Apex Court in CIT Vs P. Mohankala (2007] 291 TR 278 (SC), CIT Vs Divine leasing and Finance Ltd [2008] 299 ITR 68(SC), decision of Mumbai Tribunal in Royal Rich Developer Vs DCIT ITA No. 1836/M/2014 dated 24.08.2016, Disha N. Lalwani Vs IT in ITA No.6398/M/2012, decision of Hon'ble Calcutta High Court in Rajmandir Estato Pvt Ltd Vs PCIT (2016) 386 ITR 162 (Calcutta) also support the position that addition u/s. 68 of the Act was justified. In view of the above discussed facts, I do not find any justification to interfere with the addition made by the A.O. Hence, the addition of Rs.2,50,00,000/- made by the A.O. is confirmed and the grounds of appeal are dismissed.” 11. In our opinion, in absence of any documentary evidence to support identity, creditworthiness and genuineness of the transaction, the Ld. CIT(A) is justified in sustaining the addition. We do not find any error or infirmity in the order of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The grounds raised by the assessee are accordingly dismissed. Mr. Umesh Ambikaprasad Mishra ITA No. 1848/M/2018 & 4620/M/2019 13 12. In the result, both the appeals of the assessee are dismissed. Order pronounced in the open Court on 12/05/2022. Sd/- Sd/- (SANJAY GARG) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 12/05/2022 Rahul Sharma, Sr. P.S. 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// (Sr. Private Secretary) ITAT, Mumbai