ASST CIT 18(3), MUMBAI V. QUALITY APPARELS, MUMBAI

ITA 1886/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8289 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESPANDE
• Assessee Lawyers: VIJAY KUMAR BIYANI
• Keywords: Unexplained investment
• Section: 143(3); 133A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.1886/MUM/2014 (ASSESSMENT YEAR: 2007-08) A C I T - 18(3) VS. M/S. QUALITY APPARELS ROOM NO. 209, 2ND FLOOR PIRAMAL CHAMBERS LALBAUG, MUMBAI 9 - B/5, NAVJIVAN COLONY MORI ROAD, MAHIM MUMBAI 400016 PAN AAAFQ1904H APPELLANT RESPONDENT APPELLANT BY: SHRI SAURABH DESPANDE RESPONDENT BY: SHRI VIJAY KUMAR BIYANI DATE OF HEARING: 28.11.2017 DATE OF PRONOUNCEMENT: 28.11.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-29, MUMBAI DATED 26.12.2013 FOR A.Y. 2007-08 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO T HE DELETION OF ADDITION OF ` 90,88,980/- OUT OF THE CAPITAL INTRODUCED AMOUNTING TO ` 1,97,68,280/-. 3. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE THAT DURING THE COURSE OF SURVEY OPERATION TAKEN PLACE AT THE BUSIN ESS PREMISES OF THE ASSESSEE ON 30.08.2007 A STATEMENT OF THE PARTNER S HRI DINESH V. SANJAI WAS RECORDED AND FROM HIS THE SOURCE OF THE CAPITAL INTRODUCED IN THE ASSESSEE FIRM AMOUNTING TO ` 1,97,68,280/- WAS ASKED FOR. IT WAS STATED THAT A SUM OF ` 90,88,980/- WAS RECEIVED FROM HIS FATHER BUT IN THE ABSENCE OF EXACT SOURCE EXPLAINED BY THE ASSESSEE AT THAT M OMENT THE ASSESSEE OFFERED IT FOR TAXATION. THE ASSESSEE SUBMITTED HIS RETURN OF INCOME DECLARING AN INCOME OF ` 10,37,629/- THE AO COMPLETED THE ASSESSMENT ITA NO. 1886/MUM/2014 M/S. QUALITY APPARELS 2 UNDER SECTION 143(3) ADDING THE SAID SUM OF ` 90,88,980/- IN HIS TOTAL INCOME. SUBSEQUENTLY THE MATTER WENT IN APPEAL BEFO RE THE CIT(A) AND THE CIT(A) UPHELD THE ADDITION. 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSI DERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE CIT(A) DELETED THE SAID ADDITION BY HOLDING AS UNDER: - 16. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE APPELLANT HAD DECLARED AN AMOUNT OF RS. 90,88,9807- DURING THE CO URSE OF SURVEY AT HIS PREMISES ON 30/08/2007. DURING THE COURSE OF SU RVEY, THE STATEMENT OF THE SHRI DINESH V. SAJNANI, PROPRIETOR M/S QUALITY APPARELS WAS RECORDED. AT QUESTION NO.9 & 10, SHRI DINESH V. SAJNANI WAS ASKED TO EXPLAIN THE SOURCE OF THE CAPITAL INTR ODUCTION OF RS. 1,97,68,2507- IN THE BUSINESS DURING THE YEAR UNDER CONSIDERATION. THE QUESTIONS NO. 9 & 10 IS REPRODUCED AS UNDER:- Q.9. YOUR CAPITAL A/C. FOR THE FINANCIAL YEAR 2006- 07 SHOWS RS.1,97,68,250/-. THIS SHOWS A SUBSTANTIAL INCREASE IN YOUR CAPITAL ACCOUNT. HOW CAN YOU EXPLAIN THIS? ANS: I AM SHOWING THE XEROX COPY OF THE CHEQUE GIVE N BY MY FATHER FOR AN AMOUNT OF RS. 90,88,980/-. THIS AMOUN T IS INCLUDED IN MY CAPITAL. THAT'S THE REASON WHY MY CAPITAL A/C . IS INFLATED. Q.10. BUT THE CHEQUE NO.315296 DATED NOV 2005 FOR T HE SAID AMOUNT WAS GIVEN TO QUALITI APPARELS I.E. TO AOP AS ON DATE. SO HOW IT IS CAPITAL ACCOUNT? ANS: I AM NOT AWARE OF THIS FACT. AS I CANNOT SUBST ANTIATE THE AMOUNT PAID/GIVEN TO ME OR TO MY ACCOUNT, I AGREE T HAT THE AMOUNT DOES NOT BELONG TO ME OR NOT CREDITED TO MY ACCOUNT THEREFORE, I DECLARE THE AMOUNT OF RS. 90,88,950/- AS AN UNEXPLAINED INVESTMENT FOR THE A/C YEAR 2006-07 REL EVANT TO THE A. Y. 2007-08 AND PAY THE TAXES ACCORDINGLY.' 17. IT IS CLEAR FROM THE ABOVE STATEMENT OF SHRI DI NESH V. SAJNANI THAT HE COULD NOT GIVE SATISFACTORY ANSWER TO THE ABOVE QUESTION REGARDING THE CREDIT OF RS.90,88,9807-AND THEREFORE AGREED FO R A SURRENDER OF RS.90,88,9807- TAKEN FROM FATHER AND INTRODUCED IN THE CAPITAL DURING THE PERIOD UNDER CONSIDERATION. .NO OTHER QUESTION THE SOURCE OF CREDIT TO THE CAPITAL ACCOUNT HAS BEEN ASSESSED EXCEPT THE TE.90,88,9807-, WHICH WAS GIVEN BY THE FATHER OF THE PARTNER SHRI D INESH V.SAJNANI AND CREDITED TO THE ACCOUNT OF M/S. QUALITY APPAREL S ON 04/11/2005. IT WAS IN THE STATE OF CONFUSION DURING THE SURVEY THAT SHRI DINESH V. SAJNANI COULD NOT RECALL THE EXACT DETAILS OF THE A MOUNT OF RS.90,88,980/- CREDITED TO THE ACCOUNT OF THE FIRM BUT IT WAS DEFINITELY ITA NO. 1886/MUM/2014 M/S. QUALITY APPARELS 3 STATED THAT THE MONEY WAS RECEIVED FROM HIS FATHER. THE AMOUNT SURRENDERED AS PER THE STATEMENT RECORDED DURING TH E COURSE OF SURVEY WAS RS.90,88,980/-, WHICH IS RECEIVED FROM H IS FATHER BY SHRI DINESH V.SAJNANI, THE PARTNER OF THE FIRM. 18. LATER ON IT WAS REALIZED BY THE SHRI DINESH V. SAJNANI THAT THE ABOVE AMOUNT RS. 90,80,980/- TAKEN FROM FATHER SHRI VASHDEV L. SAJNANI, WHO HAD GIVEN THIS AMOUNT AFTER TAKING LOA N OF RS.91,00,000/- FROM STATE BANK OF INDIA. IN SUPPORT OF THE ABOVE, THE APPELLANT ALSO FURNISHED THE LOAN SANCTIONING LETTE R DATED 29/10/2005 OF STATE BANK OF INDIA IN THE NAME OF HI S FATHER AND ALSO A COPY OF THE CHEQUE OF RS. 90,80,980/- IN FAVOUR O F M/S QUALITY APPARELS AND FURTHER THE COPY OF THE BANK STATEMENT OF M/S QUALITY APPARELS SHOWING THE CREDIT OF THIS MONEY IN THE AC COUNT ON 04/11/2005. 19. THE AO HAS MADE THE ADDITION OF RS. 90,88, 980/-, THE AMOUNT WHICH WAS DECLARED DURING THE COURSE OF SURVEY U/S 133A AS ADDITIONAL INCOME, WHICH IS MENTIONED AT THE END OF THE ORDER IN THE COMPUTATION OF THE TOTAL INCOME. THE EXPLANATION RE GARDING THE SOURCE OF THIS MONEY RECEIVED IS FULLY EXPLAINED AND DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES LIKE THE BANK STATEMENT FROM WHERE THE MONEY IS CREDITED AND GIVEN TO THE FIRM AS OUTLINED IN DETAIL IN THE PRECEDING PARAS. THERE IS NO CONFUSIONS REGARDING T HE CREDIT OF THIS AMOUNT OF RS. 90,80,980/- IN THE BOOKS OF THE FIRM AND THEREFORE THERE IS NO QUESTION OF TREATING THIS AS UNEXPLAINED MONE Y. 20. FURTHER, THE ADDITION OF THIS MONEY CANNOT BE M ADE TO THE INCOME OF THE ASSESSEE FIRM AS THE MONEY HAS BEEN INTRODUC ED IN THE BOOKS OF THE FIRM ON 04/11/2005, WHICH FALLS IN THE F.Y. 2005-06 RELEVANT TO A.Y. 2006-07. THE MATTER NEED TO BE EXAMINED IN THE CASE OF THE APPELLANT FIRM IN THE A.Y. 2006-07 AND NO ADDITION ON THIS ISSUE CAN BE MADE TO THE INCOME OF THE ASSESSEE FIRM IN THE C URRENT YEAR I.E A.Y. 2007-08. 21. IN VIEW OF THE FACTS AND CIRCUMSTANCES EX PLAINED ABOVE, IN MY CONSIDERED, THE ADDITION MADE TO THE INCOME OF THE ASSESSEE FIRM AMOUNTING TO OF RS. - DURING THE PERIOD RELEVANT TO THE A.Y. 2007-08 IS NOT WARRANTED FIRSTLY AS THE SOURCE OF MONEY IS FUL LY EXPLAINED AND SECONDLY THE INTRODUCTION OF THIS MONEY IS IN THE F .Y. 2005-06 RELEVANT TO A.Y. 2007-08. THE ADDITION MADE, THEREFORE, AMOU NTING TO RS.90,80,980/- IN THE A.Y. 2007-08 IS HEREBY DELETE D. 2. THE LEARNED D.R. EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE AO BUT COULD NOT ADDUCE ANY COGENT MATERIAL OR EVID ENCE WHICH MAY PROVE THAT THE FATHER OF SHRI DINESH V. SANJAI, WHO HAD G IVEN THE SAID AMOUNT TO HIM HAS TAKEN LOAN OF ` 91,00,000/- FROM STATE BANK OF INDIA. IN VIEW OF ITA NO. 1886/MUM/2014 M/S. QUALITY APPARELS 4 THIS FACT WE DO NOT FIND ANY ILLEGALITY OR INFIRMIT Y IN THE ORDER OF THE CIT(A). WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A). 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2017. SD/ - SD/ - (RAVISH SOOD) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 28 TH NOVEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -29, MUMBAI 4. THE CIT - 18, MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.