MAHENDRA A GANDHI, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 1984/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3833 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 26-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 28

Judgement Text

ITA NO.1984 OF 2012 MAHENDRA A. GANDHI MUMBAI PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.1984/MUM/2012 (ASSESSMENT YEAR: 2008-09) SHRI MAHENDRA A GANDHI, 17A VISHWAS APARTMENT, JANKI KUTIR, JUHU CHURCH ROAD, JUHU, VILE PARLE (WEST), MUMBAI 400049 PAN: AACPG 2641 R VS. INCOME TAX OFFICER 12(3)(4), INCOME TAX OFFICE, CHURCHGATE, MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI SATISH R. MODY DEPARTMENT BY: SHRI MOHIT JAIN, DR DATE OF HEARING: 04/04/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL IN WHICH AN OUTSTANDI NG ADVANCE OF ` .10.00 LAKHS WAS BROUGHT TO TAX AS INCOME WHICH WAS CONFIRMED BY THE LEARNED CIT (A). 2. BRIEFLY STATED, AO NOTED FROM THE BALANCE SHEET OF THE PROPRIETARY CONCERN OF ASSESSEE NAMELY M/S INDIA YE LLOW PAGES THAT ASSESSEE HAS SHOWN AN AMOUNT OF ` .10.00 LAKHS AS CREDIT AGAINST M/S DINA CONSTRUCTION. AO ASKED FOR CONFIRMATION. A SSESSEE EXPRESSED HIS INABILITY AS THE SAID AMOUNTS WERE RE CEIVED WAY BACK IN 1999 AS A PART OF INVESTMENT THROUGH MR. KRISHNA KUMAR SUBRAMANIAN AS A BUSINESS PROPOSAL AND THE STATED T HERE WERE DISPUTES WITH THE PARTIES. ACCORDINGLY THE SAID AMO UNT IS OUTSTANDING. AO MADE EFFORTS IN CONTACTING AND GETT ING CONFIRMATION FROM THE PARTIES AND ULTIMATELY HE CAME TO A CONCLU SION THAT THERE IS NO LIABILITY TO PAY THE AMOUNT. CONSIDERING THAT THE MONEY WAS ITA NO.1984 OF 2012 MAHENDRA A. GANDHI MUMBAI PAGE 2 OF 4 RECEIVED AS PART OF BUSINESS ACTIVITY, THE SAME WAS BROUGHT TO TAX UNDER SECTION 28 AS PROFITS AND GAINS OF THE BUSIN ESS. ACCORDINGLY AO TREATED IT AS INCOME OF M/S INDIA YELLOW PAGES A ND TAXED THE SAME. 3. BEFORE THE LEARNED CIT (A) ASSESSEE MADE FURTHER SUBMISSIONS WHICH ARE EXTRACTED IN PARA 2.2 OF THE CIT (A) ORDER. HOWEVER, THE CIT (A) WHILE RECORDING THAT THERE WAS DISPUTE BETWEEN THE PARTIES AND THE MATTER HAS BEEN UNDER ARBITRATI ON AND ALSO NOTING DOWN THE CORRESPONDENCES WITH THE PARTIES, H OWEVER, CONFIRMED AS THE AMOUNT RECEIVED ON 23.12.1999 IS C ONTINUING UN- DISCHARGED TILL 31.03.2008 AND WITH THE EFFLUX OF T IME THE CHARACTER OF THE LIABILITY HAS CHANGED AND IS NO LONGER PAYAB LE THEREFORE, IT IS TAXABLE UNDER SECTION 28(IV) AND ACCORDINGLY THE SA ME WAS CONFIRMED. 4. THE LEARNED COUNSEL WHILE SUBMITTING THE FACTS ALSO SUBMITTED THAT THE ISSUE WAS STILL UNDER ARBITRATIO N AT THE RELEVANT POINT OF TIME AND SUBSEQUENTLY ASSESSEE WAS DISCHAR GING THE LIABILITY AND IN SUPPORT PLACED THE COPIES OF THE B ANK A/C EVIDENCING PAYING AMOUNTS OF ` .2.50 LAKHS EACH IN INSTALLMENTS AND ULTIMATELY DISCHARGED THE COMPLETE AMOUNT BY 30 TH MARCH, 2013. IT WAS SUBMITTED THAT THE LIABILITY WAS NOT DISCHARGED AS ON THE DATE OF ASSESSMENT AND ALSO AT THE TIME OF CIT (A) ORDER, S O THE SAME CANNOT BE CONSIDERED AS INCOME AND SINCE THE AMOUNT WAS DISCHARGED BY THIS TIME, HE HAS NO OBJECTION IF THE MATTER IS EXAMINED BY AO FRESH. 5. THE LEARNED DR HOWEVER, SUBMITTED THAT THE ORDER OF THE CIT (A) CLEARLY INDICATES WHY THE AMOUNTS WERE BROUGHT TO TAX. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT THE ORDERS OF AO AND THE CIT (A) CANNOT BE UPH ELD. FIRST OF ALL THE CREDIT WAS RECEIVED AS A BUSINESS PROPOSITION W AY BACK IN 1999 ITA NO.1984 OF 2012 MAHENDRA A. GANDHI MUMBAI PAGE 3 OF 4 AND THERE WAS NO DISPUTE ABOUT THE YEAR OF RECEIPT HENCE IT CANNOT BE TREATED AS AN UNEXPLAINED CASH CREDIT FOR THE YE AR. TO CONSIDER IT UNDER SECTION 28 THIS AMOUNT WAS RECEIVED FOR A NEW BUSINESS PROPOSITION IN WHICH THE PARTIES ARE TO START A NEW COMPANY AS EXPLAINED BEFORE THE CIT (A). SECTION 28(IV) DOES N OT APPLY TO CASH/CHEQUE RECEIVED AS THAT PROVISION IS APPLICABL E TO VALUE OF ANY BENEFIT OR PERQUISITE ARISING FROM BUSINESS OR EXER CISE OF A PROFESSION. FOR ALL THE REASONS, THE ACTION OF AO A ND THE CIT (A) CANNOT BE UPHELD. EVEN ON THE ISSUE OF CESSATION OF LIABILITIES, ASSESSEE HAS PLACED ON RECORD THE REPAYMENT OF THE AMOUNT TO DINA CONSTRUCTION WHICH WAS HOWEVER, NOT PLACED BEFORE A O AND THE CIT (A) AS IT HAPPENED SUBSEQUENT TO THE ORDERS OF THE AUTHORITIES. THEREFORE, WE RESTORE THE MATTER TO THE FILE OF AO TO EXAMINE THE REPAYMENT OF THE LIABILITY AND DELETE THE SAME IF A SSESSEE HAS DISCHARGED THE LIABILITY TO THE DINA CONSTRUCTION. IN THAT CASE, THERE CANNOT BE ANY ADDITION. THEREFORE, AO IS DIRECTED T O EXAMINE THE FACTS AND DECIDE ACCORDINGLY. ISSUE TO THE EXTENT O F VERIFICATION IS RESTORED TO THE FILE OF AO. 7. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH APRIL, 2013. VNODAN/SPS ITA NO.1984 OF 2012 MAHENDRA A. GANDHI MUMBAI PAGE 4 OF 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI