ACIT 21(1), MUMBAI V. ANKUR ENTERPRISES, MUMBAI

ITA 192/MUM/2011

• Counselvise Citation: 19219914 RSA 2011
• Duration Of Justice: 4 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 142(1); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.192/MUM/2011 ASSESSMENT YEAR: 2006-07 ASST. CIT, CIRCLE - 21(1) 6 TH FLOOR, R.NO. 601, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA(E), MUMBAI-400051 VS. M/S ANKUR ENTERPRISES, 303, GALAXY ARCADE, M.G.ROAD, VILE PARLE (EAST), MUMBAI-400057 PAN:AAFFA8407L (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ABHINAY KUMBHAR ASSESSEE BY : SHRI NISHIT GANDHI DATE OF HEARING : 10.08.2015 DATE OF PRONOUNCEMENT : 19.08.2015 O R D E R PER SANDEEP GOSAIN, JM: THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DA TED 14.10.2010 PASSED BY (CIT(A)-32, MUMBAI THEREBY DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER (AO) U/S. 68 OF THE INCOME-TA X ACT (FOR SHORT THE ACT) VIDE ORDER OF AO DATED 24.12.2008 ON THE FOL LOWING GROUNDS OF APPEAL: 2 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES 1. I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.13,19,888/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT., I N RESPECT OF UNCONFIRMED LOANS AND INTEREST ACCRUED THEREON TAKEN FROM SEVEN PARTIES. IN DOING SO, THE LD. CIT(A) HAS NOT APPRECIATED THE FOLLOWING FACTS :- I) THE ASSESSEE DID NOT PRODUCE THE CONFIRMED COPY OF ACCOUNTS OF THE LENDERS DURING THE ASSESSMENT PROCEEDINGS DESPITE B EING GIVEN SEVERAL OPPORTUNITIES BY THE ASSESSING OFFICER TO FURNISH I T. II) THE ASSESSEE SUBMITTED THE CONFIRMATION OF LOAN S DURING THE REMAND PROCEEDINGS. HOWEVER, HE COULD NOT PRODUCE THE LEND ERS BEFORE THE ASSESSING OFFICER TO PROVE THE IDENTIFY AND CREDITW ORTHINESS OF LENDERS AND THE GENUINENESS OF THE LOANS. III) IN RESPECT OF FOUR NOTICES ISSUED U] S 133(6) OF THE ACT, THREE NOTICES WERE RETURNED UNSERVED. HENCE, THE GENUINENESS OF T HE LOANS AND THE IDENTITY & CREDITWORTHINESS OF THE LENDER COULD NOT BE VERIFIED BY THE ASSESSING OFFICER. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 31.10.2006 FOR ASSESSMENT YEAR (AY) 2006- 07 DECLARING THE TOTAL LOSS OF ` . 20,66,760/- ALONG WITH COMPUTATION OF TOTAL INCOM E, P&L A/C AND BALANCE-SHEET, AUDIT REPORT U/S. 44AB OF TH E ACT ETC. THIS RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND REQUIRED NOTICE U/S. 143(2) DATED 17.07.2007 WA S ISSUED AND SERVED ON THE ASSESSEE AND FURTHER, AN OPPORTUNITY WAS GIV EN TO THE ASSESSEE BY ISSUING NOTICE U/S. 143(2) AND 142(1) OF THE ACT . IN RESPONSE TO THE AFOREMENTIONED NOTICE THE ASSESSEE APPEARED BEFORE THE AO AND SUBMITTED THE DETAILS CALLED FOR. A NOTICE U/S. 142 (1) DATED 30.07.2008 WAS ISSUED TO THE ASSESSEE ALONG WITH THE QUESTIONN AIRE IN WHICH THE 3 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SECURE D AND UNSECURED LOANS ACCEPTED ALONG WITH THE CONFIRMATION. BUT SIN CE THE ASSESSEE COULD NOT FURNISH THE CONFIRMATION IN RESPECT OF THE FOLL OWING CREDIT ENTRIES IN THE BOOKS OF ACCOUNT. S.NO. NAME OF THE PARTY AMOUNT RECEIVED INTEREST PAID 1 BHARTI SADARANGANI 50,000 3,000 2 CLNFIELD TRADING CO. P. LTD. 2,00,000 11,240 3 GAYATRI R. SACHDEV 1,55,000 13,620 4 KAVITA SADARANGANI 2,00,000 12,000 5 MEGHNA A. ASRANI 2,50,000 15,000 6 RUKMANI HINDUJA 2,50,000 28,500 7 HASANAND G. SACHDEV 1,20,000 11,520 TOTAL 12,25,000 94,800 THEREFORE, AN AMOUNT OF ` . 12,25,000/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. IN ADDITION AN AMOUNT OF ` . 94,880/- WAS ALSO DISALLOWED AS EXPENSES AND HENC E THE SAME IS ADDED TO THE TOTAL INCOME AS UNEXPLAINED EX PENDITURE OF THE ASSESSEE AND IN THIS WAY THE AO DISALLOWED THE DEDU CTIONS OF ` . 13,19,880/- (12,25,000 + 94,880) U/S. 68 OF THE ACT VIDE ORDER DATED 24.12.2008. 3. AGGRIEVED BY THE ORDER OF ASSESSMENT PASSED BY A CIT, AND APPEAL WAS FILED BEFORE THE CIT(A). THE CIT(A) WHILE ACCEP TING THE ADDITIONAL EVIDENCE IN THE SHAPE OF CONFIRMATION, COPY OF ACCO UNTS OF THE LENDERS, THERE AFFIDAVITS ALONG WITH THE BANK A/C OF THE LEN DERS FORWARDED THE 4 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES SAME TO THE AO FOR COMMENTS IN VIEW OF PROVISIONS O F RULE 46A. THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS ADMIT TED BY CIT(A). AFTER CONSIDERING THE GROUNDS RAISED IN APPEAL AS WELL AS ON THE BASIS OF DOCUMENTS ADMITTED BY WAY OF ADDITIONAL EVIDENCE, T HE CIT(A) DELETED THE ADDITIONS OF ` . 13,19,880/- MADE BY THE AO VIDE HIS ORDER DATED 14.10.2010. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE PRESENT AP PEAL HAS BEEN FILED BY THE REVENUE ON THE GROUNDS REPRODUCED EARL IER. 5. WHILE APPEARING FOR THE APPELLANT, THE DEPARTMEN TAL REPRESENTATIVE (DR) SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE THE CONFIRMATION, COPY OF ACCOUNTS OF THE LENDERS DURIN G THE ASSESSMENT PROCEEDINGS, DESPITE BEING GIVEN SEVERAL OPPORTUNIT IES BY THE AO AND FURTHER THE DR SUBMITTED THAT THE CONFIRMATION OF L OAN SUBMITTED DURING THE REMAND PROCEEDINGS WERE NOT PROVED BY PRODUCING THE LENDERS BEFORE THE AO TO PROVE THE IDENTITY, CREDITWORTHINE SS OF LENDERS AND THE GENUINENESS OF THE LOANS. DR FURTHER SUBMITTED IN T HIS RESPECT THAT 4 NOTICES U/S. 133(6) OF THE ACT WERE ISSUED BUT 3 NO TICES WERE RETURNED UNANSWERED, HENCE THE GENUINENESS OF THE LOANS AND THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS COULD NOT BE VERIFI ED BY THE AO, BUT THE CIT(A) ERRED IN DELETING THE ADDITIONS MADE BY A.O. THEREFORE, THE 5 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES ADDITIONS MADE BY THE AO WERE CORRECTLY MADE AND HE NCE THE ORDER OF AO MAY BE CONFIRMED. 6. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTA TIVE (AR) APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE PRODUCED THE CONFIRMATION, COPY OF ACCOUNTS OF LEND ERS, THEIR AFFIDAVITS ALONG WITH THE BANK A/C OF THE LENDERS BY WAY OF AD DITIONAL EVIDENCE. THE OPPORTUNITY WAS GIVEN TO THE AO TO CONFIRMED TH E SAID DETAILS, HOWEVER, THE AO COULD NOT REBUT THE DOCUMENTARY EVI DENCES, THEREFORE, THE CIT(A) ADMITTED THE DOCUMENTS BY WAY OF ADDITIO NAL EVIDENCE AND SINCE THE SUBMISSIONS OF THE RESPONDENT WAS BASED O N DOCUMENTS IN THE SHAPE OF LOAN CONFIRMATION/AFFIDAVITS AND BANK STAT EMENTS OF THOSE PARTIES REFLECTING THE NECESSARY ENTRIES, HENCE THE ADDITIONS MADE BY THE AO OF ` . 13,19,880/- WERE RIGHTLY DELETED BY THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO MERITS IN THE C ONTENTIONS RAISED BY THE DR APPEARING FOR REVENUE/APPELLANT AS THE AO HA D MADE THE ADDITIONS OF ` . 13,19,880/- (12,25,000 + 94,880) U/S. 68 OF THE A CT SOLELY ON THE GROUND THAT THE ASSESSEE/RESPONDENT FAILED T O PRODUCE THE DETAILS OF LOANS ALONG WITH THE CONFIRMATION, PAN AND ADDRE SSES OF THE LENDERS FROM WHOM THE ASSESSEE HAD TAKEN THE LOAN. WHEREAS ON THE CONTRARY, 6 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES DURING THE APPEAL BEFORE THE CIT(A), THE RESPONDENT PRODUCE CONFIRMATION, COPY OF ACCOUNTS OF LENDERS, THEIR AF FIDAVITS ALONG WITH THE BANK A/C, WHICH THE RESPONDENT COULD NOT PRODUCE DU RING THE ASSESSMENT PROCEEDING. 8. THE SAID EVIDENCE WAS FORWARDED TO THE AO FOR CO MMENTS IN VIEW OF PROVISIONS OF RULE 46A. SINCE THE OPPORTUNITY UN DER RULE 46A WAS GRANTED TO AO BUT THE AO COULD NOT REBUT THE DOCUME NTS PRODUCED BY THE RESPONDENTS AND THEREFORE, ADDITIONAL EVIDENCE WAS ADMITTED BY THE CIT(A). EVEN ON MERITS, THE DOCUMENTS PRODUCED BY T HE RESPONDENT IN THE SHAPE OF CONFIRMATION, AFFIDAVITS, BANK STATEME NTS ETC. WERE FILED BY THE RESPONDENT AND THE AFOREMENTIONED DOCUMENTS WER E SUFFICIENT ENOUGH TO ESTABLISH THE GENUINENESS OF CREDITOR. ON CE THE SOURCE OF RECEIPT IS DISCLOSED AND THERE IS NO DISPUTE ON TRU TH OF DISCLOSURE, THE ASSESSEE WILL BE DEEMED TO HAVE DISCHARGED HIS BURD EN. THE CIT(A) HAS RIGHTLY EXPLAINED THE WORDS USED U/S. 68 OF THE ACT AS IT MENTIONS MAY AND SHALL WHICH GIVES DISCRETION TO ITO TO CONSID ER ALL THE CIRCUMSTANCES AND DECIDE WHETHER OR NOT THE CASH CR EDITS IN QUESTION ARE INCOME OF THE ASSESSEE. THE PROVISIONS OF SECTION 6 8 ARE THEREFORE, NOT MANDATORY IN NATURE BUT ARE DISCRETIONARY DEPENDING ON THE EVIDENCE AVAILABLE ON RECORD, AS HELD IN J.P.SETTHI 33 TTJ ( PUNE) 576. IN THE 7 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES PRESENT CASE OUT OF 7 PARTIES, 3 PARTIES HAVE NOT R ESPONDED TO THE NOTICE OF AO. BUT, THE RESPONDENT/ASSESSEE HAS DISCHARGED ITS BURDEN BY GIVING THE PAN, CORRECT ADDRESSES, CONFIRMATIONS, COPY OF BANK STATEMENTS OF THOSE PARTIES DURING THE REMAND PROCEEDINGS. THE TR ANSACTIONS BETWEEN THOSE PARTIES AND THE RESPONDENT/ASSESSEE WERE BY C HEQUES AND THE PARTIES ARE ASSESSED TO TAX, THEREFORE, NO ADVERSE INFERENCE REGARDING THE IDENTITY, CREDITWORTHINESS OR GENUINENESS OF TR ANSACTIONS COULD BE TAKEN, SOLELY FOR THE REASON THAT THE PARTIES DID N OT RESPOND. IT IS ALSO A SETTLED LAW THAT THE ASSESSEE CANNOT BE FAULTED FOR THE NON-ATTENDANCE OF CREDITORS IN RESPONSE TO NOTICE ISSUE BY AO AND IT CANNOT BE MADE THE SOLE BASIS FOR ADDITIONS U/S. 68 OF THE ACT. HENCE THE DECISIONS RENDERED IN CASE OF ANIS AHMAD 297 ITR 441 (SC) IS FULLY APP LICABLE TO THE FACTS OF THE PRESENT CASE AND THEREFORE, THE ORDERS PASSED B Y THE CIT(A) DO NOT NEED ANY INTERFERENCE AND ARE UPHELD. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF AUGUST, 2015. SD/- SD/- (G.S. PANNU) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.08.2015 SHARWAN P.S. 8 ITA NO.192/M/2011 M/S ANKUR ENTERPRISES COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR A BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.