M/S STONE HOUSE DEVELOPERS, KALYAN V. ITO WARD 3(4), KALYAN

ITA 1888/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4908 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Keywords: Unexplained cash credit; Proportionate interest; Set aside
• Section: 271(1)(c); 133(6); 201; 274; 13; 68

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC - I BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 1888 /MUM/ 201 9 (ASSESSMENT YEAR 2010 - 11 ) M/S. STONE HOUSE DEVELOPERS 206, AKBAR MASJID APARTMENT ABOVE GAJANAN SAREE CENTRE SHIVAJI CHOWK, KALYAN WEST MAHAR ASHTRA - 421 301. PAN : AAPFS5266H V S . ITO WARD 3(4) 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN - W THANE MAHARASHTRA PINCODE - 421 301. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI KAILASH GAIKWAD DATE OF HEARING 13 . 10 . 20 20 DATE OF PRONOUNCEMENT 15 .10 . 20 20 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] DATED 16.01.2019 PERTAINS TO A.Y. 2010 - 11. 2. THE GROUNDS OF APPEAL READ AS U NDER : - 1) THE LEARNED CIT(A) HAS ERRED IN FACT AND IN LAW IN CONFIRMING THE PEN A LTY OF RS. 1,32,239/ - LEVIED U/S. 68 BY THE ASSESSING OFFICER. 2) THE HON'BLE CIT(A)HAS ERRED IN FACT AND IN LAW AND HAS MISCONCEIVED THE PROVISION OF SECTION 271(1)(C) AND HAS NOT CONS I DERED CAREFULLY THE CHARGE ON THE ASSESSEE WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FILING OF INACCURATE PARTICULARS OF INCOME. 3) THE CIT(A) HAS ERRED IN FACT AND IN LAW IN CONSIDERING AN AMOUNT OF RS. 4,25,420/ - CLAIMED UNDER THE HEAD SUNDRY CREDITORS WHICH IS THE ARCHITECT BILLS IS PENDING AND THIS AMOUNT IS RS. 3,75,000/ - AND NOT RS. 4,25,420/ - . 3. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN BUSINESS OF CONSTRUCTION. DURING THE YEAR, IN THE BAL ANCE SHEET INTEREST FREE LOANS /ADVANCES OF RS 27,50,000/ - , TO VARIOUS PERSONS /ENTITIES M/ S. STONE HOUSE DEVELOPERS 2 WERE SHOWN. THE AO OBSERVED THAT THESE LOANS WERE ADVANCED TO PARTIES WHERE THERE WAS NO BUSINESS RELATIONSHIP AND THE SAME WERE NOT ADVANCED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE COULD NOT SUBSTANTIATE THE LOAN OF RS 11,50,000/ - ADVANCED ON 01.09.2009 TO SMT SABEERABEGAM QURESHI (WIFE OF SENIOR PARTNER AND MOTHER OF OTHER PARTNERS), WITH CREDIBLE DOCUMENTARY EVIDENCE. THE AO HEL D THAT THERE APPEARED TO BE NO BUSINESS RELATIONSHIP BETWEEN ASSESSEE AND SMT SABEERABEGAM AND THE FUNDS HAD BEEN CLEARLY USED FOR NON - BUSINESS PURPOSE, THEREFORE, PROVISIONS OF SEC TION 36(1)(III) OF THE ACT ARE CLEARLY ATTRACTED. THE AO, THEREFORE, DISALL OWED PROPORTIONATE INTEREST @ 12% PER ANNUM AND ADDED RS 80,500 / - TO THE INCOME OF ASSESSEE U/S . 36(1)(III) OF THE ACT. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S . 271(1)(C) OF THE ACT FOR FAILURE TO MAKE TRUE AND CORRECT RETURN OF INCOME AND FILING INA CCURATE PARTICULARS OF INCOME. LIKEWISE IN THE BALANCE SHEET THE ASSESSEE HAD CLAIMED LIABILITY OF RS . 4,25,420/ - IN THE NAME OF SHRI DILIP TAMBDAY. DURING THE COURSE OF ENQUIRIES CO NDUC TED U/S . 133(6) OF THE ACT, THE AO LEARNT THAT SHRI DILIP TAMBDAY HAD ANY RECEIVABLES FROM THE FIRM. ON BEING CONFRONTED, IT WAS STATED THAT SINCE SHRI DILIP TAMBDAY FOLLOWED CASH SYSTEM OF ACCOUNTING, NO RECEIVABLES ARE REFLECTED IN HIS BALANCE SHEET. THE AO, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AS SHRI DILIP TAMB DAY HAD STATED IN HIS CONFIRMATION THAT 'I AM NOT RECEIVABLE ANY FEES AMOUNT OR ANY OUTSTANDING BALANCE FROM M/S . STONE HOUSE.' THE AO, THEREFORE, TREATED THIS AMOUNT AS UNEXPLAINED CASH CREDIT U/S . 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE A ND ALSO INITIATED PENALTY PROCEEDINGS FOR FAILURE TO MAKE TRUE AND CORRECT RETURN OF INCOME AND FILING INACCURATE PARTICULARS OF INCOME. 4. IN PENALTY PROCEEDINGS, A SHOW - CAUSE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED. IN COMPLIANCE TO VARIO US NOTICES ISSUED BY THE AO FROM TIME TO TIME, THE ASSESSEE FAILED TO ATTEND AND ALSO FAILED TO FURNISH ANY EXPLANATION IN THIS REGARD. THE AO, THEREFORE, HELD THAT THE ASSESSEE HAD CONCEALED ITS PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS O F M/ S. STONE HOUSE DEVELOPERS 3 INCOME AND LEVIED MINIMUM PENALTY OF, RS 1,56,3297 - , BEING 100% TAX SOUGHT TO BE EVADED, U/S . 271(1)(C) OF THE ACT. 5. UPON ASSESSEE S AP P E AL LEARNED CIT(A) DELETED THE PENALTY QUA DEEMED INTEREST ADDITION, BUT SUSTAINED THE PENALTY FOR CREDITOR ADDITIO N. 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. NONE APPEARED ON BEHALF OF THE ASSESSEE. I NOTE THAT ADDITION U/S. 68 HAS SIMPLY BEEN MADE ON A VAGUE STATEMENT O BTAINED FROM THE CO NCERNED PERSON THAT 'I AM NOT RECEIVABLE ANY FEES AMOUNT OR ANY OUTSTANDING BALANCE FROM M/S . STONE HOUSE.' T HE ABOVE STATEMENT DOES NOT STATE THAT HE HAS NEVER DONE ANY WORK FOR THE ASSESSEE. IT ONLY PRIMA FACIE MEANS THAT THERE IS NO O UTSTANDING. HENCE, ASSESSEES PLEA THAT THE SAID PARTY WAS FOLLOWING CAS H SY STEM DESERVES AN EXAMINATION . W ITHOUT DOING THAT THE ADDITION HAS BEEN DONE AND PENALTY ALSO LEVIED. I FIND THAT ASSESSEES EXPLANATION IS COGENT. IN THIS VIEW OF THE MATTER THERE IS NO QUESTION OF LEVYING ANY PENALTY FOR CONCEALMENT OR SUBMITTING INACCURATE PARTICULARS OF INCOME. HENCE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THAT THE PENALTY BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 15.10.2020. SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 15 / 1 0 / 20 20 COPY OF THE ORDER FORW ARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI M/ S. STONE HOUSE DEVELOPERS 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI