Mohinder Trilokchand Kalani, L/h. of Late Shri Trilokchand T Kalani, Mumbai V. Income-tax Officer, Nashik

ITA 1984/PUN/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9191 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.1984/PUN/2014 / ASSESSMENT YEAR : 2011-12 MR. MOHINDER TRILOKCHAND KALANI, LEGAL HEIR OF LATE SHRI TRILOKCHAND KALANI 3201, VERONA, CLIFF AVENUE ROAD, HIRANANDANI ESTATE, MUMBAI 400 076 PAN : AJDPK9428N VS. ITO, CENTRAL-3, NASHIK APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, NASHIK ON 26-09-2014 IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF THE ADDITION ANENT CERTAIN MATERIAL FOUND DURING THE COURSE OF SEARCH EVIDENCING THE ADVANCING OF CASH LO ANS BY THE ASSESSEE OUTSIDE HIS BOOKS OF ACCOUNT. APPELLANT BY SHRI RAKESH JOSHI RESPONDENT BY SHRI ABHIJIT HALDER DATE OF HEARING 03-10-2019 DATE OF PRONOUNCEMENT 04-10-2019 ITA NO.1984/PUN/2014 A.Y. 2011-12 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE ACTION U/S.132(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER CALLED THE ACT) WAS TAKEN AGAINST KALANI GROUP OF CASES O N 02-02-2011. THE ASSESSEE IS MEMBER OF THE KALANI GROUP . DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND. SOME OF SUCH DOCUMENTS, WHICH FORMED THE BEDROCK FOR TH E ADDITION IN THE INSTANT ASSESSMENT, ARE CERTAIN LOAN RECEIPTS/ CHEQUES ISSUED BY CERTAIN PARTIES FOUND AT THE PREMISES OF THE ASSES SEE. THE ASSESSING OFFICER (AO) SOUGHT EXPLANATION OF THE ASSESSEE QUA THESE LOAN RECEIPTS/CHEQUES AND MADE THE ADDITION ON NOT BE ING SATISFIED WITH THE EXPLANATION SO TENDERED. THE ACTION OF THE AO WAS ECHOED IN THE FIRST APPEAL. NOW THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL SEEKING RELIEF ON THIS COUNT. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. WE WILL TAKE UP THE ADDITION, MADE ON THE BASIS OF LOAN RECEIPTS/CHEQUES FOUND DURING THE COURSE O F SEARCH, IN SERIATIM. 5. CERTAIN CHEQUES TOTALING RS.22.00 LAKH WERE FOUND HAV ING BEEN ISSUED BY M/S. GOVIND RAM & SONS. DURING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE WAS RECORDED U/S.132 (4) OF THE ACT AND HE WAS ASKED TO EXPLAIN THE NATURE OF SUCH CHEQUE S. IN ITA NO.1984/PUN/2014 A.Y. 2011-12 3 REPLY TO QUESTION NO.17, HE STATED THAT HE WAS DOING BUSINESS INTER ALIA OF HAND LOAN FINANCE AND IN SUCH BUSINESS HE HAD GIVEN C ASH LOANS TO VARIOUS PERSONS AFTER TAKING CHEQUES AS SECURITY. HE FURTHER ADMITTED THAT THE LOANS GIVEN BY CHEQUES WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT. THE ASSESSEE WAS CALLE D UPON TO EXPLAIN THE NATURE OF CHEQUES OF RS.22.00 LAKH ISSUED BY M/S. GOVIND RAM & SONS AND FOUND AT HIS PREMISES. THE ASSES SEE STATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT OR IGINAL LOAN OF RS.13.75 LAKH WAS GIVEN TO M/S. GOVIND RAM & SONS OUT OF WHICH RS.4.00 LAKH WAS RECEIVED BACK AND TOTAL CHEQUES OF RS.22.00 WERE TAKEN AS SECURITY INCLUDING THE PROJECTED INTER EST COST. THE AO FOUND THAT THERE WAS NO LOAN SHOWN TO HAVE BEEN GIVEN BY THE ASSESSEE TO M/S. GOVIND RAM & SONS. HOWEVER, SUCH A LOAN WAS APPEARING IN THE BALANCE SHEET OF HIS SON, MR. MOHINDER T. KALANI, WITH CLOSING BALANCE AT RS.10.60 LAKH, WHICH W AS BEING SHOWN FROM THE A.YRS. 2005-06 TO 2011-12. OUT OF TOTAL C HEQUES OF RS.22.00 LAKH, CHEQUES TOTALING RS.14.00 LAKH WERE IN THE NAME OF MR. MOHINDER T. KALANI. SINCE THE REMAINING CHEQUES OF RS.8.00 LAKH WERE PAYABLE TO SELF, THE AO MADE ADDITION FO R SUCH RS.8.00 LAKH IN THE HANDS OF THE ASSESSEE, WHICH CAME TO BE AFFIRMED IN THE FIRST APPEAL. ITA NO.1984/PUN/2014 A.Y. 2011-12 4 6. THE LD. AR SUBMITTED THAT IN SOFARAS THE CASE OF ADVANC ING LOAN TO M/S. GOVIND RAM & SONS IS CONCERNED, IT WAS ADMITTED LY A LOAN GIVEN BY MR. MOHINDER T. KALANI. HE FURTHER SUBMITTED THAT AN ADDITION ON THIS SCORE CONCERNING THE CHEQUES IN HIS NAM E WAS MADE IN HIS HANDS, WHICH WAS CHALLENGED BEFORE THE TRIBUNA L. PLACING ON RECORD A COPY OF THE ORDER PASSED BY THE TRI BUNAL DATED 04-09-2019 IN ITA NO.321/PUN/2016, THE LD. AR SUBMITTED THAT SUCH AN ISSUE HAS BEEN RESTORED TO THE FILE OF AO FOR FRE SH ADJUDICATION. IT WAS FAIRLY SUBMITTED THAT IN SOFARAS THE ADDITION OF RS.8.00 LAKH ON ACCOUNT OF CHEQUES MADE IN THE HANDS OF THE ASSESSEE IS CONCERNED, THE SAME MAY ALSO BE EXAMINED IN THE HANDS OF MR. MOHINDER T. KALANI ALONG WITH GIVING EFFECT TO THE AFO RE REFERRED TRIBUNAL ORDER. THE LD. DR DID NOT RAISE ANY OB JECTION TO THE SAME. 7. IT IS SEEN THAT LOAN TO M/S. GOVIND RAM & SONS WAS GIVEN B Y SH. MOHINDER T KALANI AND NOT THE ASSESSEE. FURTHER SUCH CHEQUES OF RS.8.00 LAKH WERE NOT IN THE NAME OF THE ASSESSEE. PO SSIBLY, SUCH CHEQUES MAY HAVE RELATION ONLY WITH LOAN TRANSACTION IN THE HANDS OF SH. MOHINDER T KALANI, WHICH ISSUE HAS BEEN RE STORED BY THE TRIBUNAL TO THE AO FOR FRESH ADJUDICATION. IN VIEW OF THE FOREGOING DISCUSSION AND AGREEING WITH THE COMMON SUBMISSIO N, ITA NO.1984/PUN/2014 A.Y. 2011-12 5 WE DIRECT TO DELETE THE ADDITION OF RS.8.00 LAKH IN THE HANDS OF ASSESSEE AND SIMULTANEOUSLY HOLD THAT THE SAME MAY BE EXA MINED IN THE HANDS OF MR. MOHINDER T. KALANI. 8. THE SECOND ADDITION OF RS.1.08 CRORE IS ON THE BASIS O F CHEQUES FOUND AT THE PREMISES OF THE ASSESSEE HAVING BEE N ISSUED BY M/S. KARDA CONSTRUCTION. SUCH CHEQUES AMOUNTED TO RS.1,53,50,000/-. ON BEING CALLED UPON TO EXPLAIN AND CO RRELATE SUCH CHEQUES WITH THE LOANS GIVEN TO M/S. KARDA CONSTRUCTIONS , THE ASSESSEE GAVE CHEQUE-WISE EXPLANATION WHICH HAS BEEN REC ORDED ON PAGES 6 AND 7 OF THE ASSESSMENT ORDER. THE AO GO T CONVINCED WITH THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF CHEQU ES FROM SL. NOS. 9 TO 15 AND DID NOT MAKE ANY ADDITION ON THAT SCORE . AGAINST CHEQUE AT SL. NO.16 AGAIN HE DID NOT MAKE ANY ADDITIO N. HE, HOWEVER, ADDED RS.1.08 CRORE TOWARDS CHEQUES AT SL. NOS. 6 TO 8 AND 17 TO 20 BY NOTING THAT THE ASSESSEES CONTENTION OF MR. NARESH J KARDA OF KARDA CONSTRUCTIONS INADVERTENTLY FORG ETTING THESE CHEQUES AT THE PREMISES OF THE ASSESSEE, WAS WITHO UT FORCE. THE LD. CIT(A) AFFIRMED THE ADDITION. 9. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSITION THAT CHE QUES AMOUNTING TO RS.1.08 CRORE ISSUED BY M/S KARDA CONSTRUCTION S ITA NO.1984/PUN/2014 A.Y. 2011-12 6 WERE FOUND AT THE ASSESSEES PREMISES. THE ASSESSEE FAILED TO CO- RELATE SUCH CHEQUES WITH THE RECORDED LOAN TRANSACTIONS. CONSIDERING THE FACT THAT THE ASSESSEE HIMSELF ADMITTED DURING THE COURSE OF SEARCH THAT HE WAS ENGAGED IN THE BUSINESS OF MAKING CASH LOANS ON RECEIPT OF SECURITY BY CHEQUES, IT HAS TO BE HELD THAT SUCH CHEQUES FOUND AT THE PREMISES OF THE ASSESSEE WER E REPRESENTING SECURITY FOR THE LOANS ADVANCED, WHICH WERE N OT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 10. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND SIMILA R TO THE ONE TAKEN IN HIS APPEAL FOR THE A.Y. 2010-11 SEEKING THE BENEFIT OF TELESCOPING. THE LD. DR DID NOT RAISE ANY SERIOUS OBJECTION TO THE ADMISSION OF THIS ADDITIONAL GROUND, WHICH IS HEREBY ADMITTED F OR DISPOSAL ON MERITS. 11. WE HAVE DISPOSED OF THE APPEAL OF THE ASSESSEE F OR THE A.Y. 2010-11 BY FIRSTLY SUSTAINING THE ADDITION OF RS.2.00 CRORE AND THEN ALLOWING THE BENEFIT OF TELESCOPING TO THE EXTENT OF AVAILABLE UNDISCLOSED INCOME ALREADY TAXED. FOLLOWING THE SAME REASON ING, WE HOLD THAT THE ADDITION ON THIS COUNT IS WARRANTED AND ALSO BENEFIT OF TELESCOPING SHOULD BE GIVEN. WHILE GIVING THE BENEF IT OF TELESCOPING FOR THE PRECEDING YEAR, WE DID NOT ALLOW THE BENE FIT OF RS.22,06,750/- BECAUSE THE SAME WAS UNRECOVERED AT TH E TIME OF ITA NO.1984/PUN/2014 A.Y. 2011-12 7 ADVANCING LOAN OF RS.2.00 CRORE WHICH WAS SUBJECT MATTER O F ADDITION FOR THE PRECEDING YEAR. IN VIEW OF THE FACT THAT RS.22,06,750/- WAS SUO MOTO OFFERED BY THE ASSESSEE AS HIS UNDISCLOSED INCOME ALONG WITH CERTAIN OTHER INCOME, THE BENE FIT OF SUCH A PORTION, WHICH HAS NOT BEEN ALLOWED FOR THE PRECE DING YEAR, IS NOW AVAILABLE TO BE ADJUSTED AGAINST THE INCOME FOR THE CUR RENT YEAR. THUS, THE EXTENT OF THE BENEFIT OF TELESCOPING FOR THE YEAR WOULD BE RS.22,06,750/- AS AGAINST THE ADDITION OF RS.1.08 CRORE. WE, THEREFORE, SUSTAIN THE ADDITION OF RS.85,93,250/- (RS .1.08 CRORE MINUS RS.22,06,750). 12. THE NEXT ADDITION IS OF RS.10.00 LAKH ON ACCOUNT OF CH EQUES FOUND AS HAVING BEEN ISSUED BY MR. MANOHAR B.SADHWANI A ND ANOTHER ADDITION IS OF RS.5.00 LAKH ON THE BASIS OF CHEQUES ISSUED BY MR. BALDEVA AND FOUND FROM THE ASSESSEES PREMISES. THE AO MADE ADDITION TOTALING RS.15.00 LAKH ON THE BASIS OF SUCH CHE QUES FOUND, WHICH WAS COUNTENANCED IN THE FIRST APPEAL. 13. THE LD. AR FAIRLY CONCEDED BEFORE THE TRIBUNAL THAT HE HAD NO EXPLANATION IN RESPECT OF THESE TWO AMOUNTS. WE, THEREFORE, SUSTAIN THE ADDITIONS OF RS.10.00 LAKH AND RS.5.00 LAKH. ITA NO.1984/PUN/2014 A.Y. 2011-12 8 14. NEXT IS THE ADDITION ON ACCOUNT OF UNRECORDED LOANS GIVEN/CHEQUES FOUND TO HAVE BEEN ISSUED BY MR. PRADIP D. KALANI AMOUNTING TO RS.34,67,560/-. 15. PAGE NO. 92 OF THE PAPER BOOK IS A COPY OF A DOCUM ENT FOUND AT THE TIME OF SEARCH ACKNOWLEDGING RECEIPT OF RS.5.00 LAKH WHICH WAS SIGNED BY MR. PRADIP D. KALANI ON BEHALF OF DEEJAY DISTILLERIES P. LTD. PAGE 95 OF THE PAPER BOOK IS AGAIN A COP Y OF RECEIPT OF RS.15,50,000/- SIGNED BY MR. PRADIP D. KALANI ON BEHALF OF THE DEEJAY DISTILLERIES P. LTD. SIMILAR IS THE POSITION REGARDIN G PAGE 96 OF THE PAPER BOOK WHICH RECORDS CASH RECEIPT F ROM THE ASSESSEE AMOUNTING TO RS.15.50 LAKH. LAST IS PAGE 98 OF THE PAPER BOOK WHICH RECORDS RECEIPT OF RS.5.00 LAKH. THESE 4 PAG ES TOTAL TO RS.41.00 LAKH. THE ASSESSEE FAILED TO SHOW THAT SUCH CAS H LOAN TRANSACTIONS WERE RECORDED IN HIS BOOKS OF ACCOUNT. THE A O MADE THE ADDITION ON THE BASIS OF SUCH INCRIMINATING EVIDENCE FOUN D DURING THE COURSE OF SEARCH BY TREATING THE SAME AS LOANS ADVANCED BY THE ASSESSEE TO MR. PRADIP D. KALANI IN CASH. THE LD. CIT(A) AFFIRMED SUCH AN ADDITION. 16. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS SEEN THAT THESE ARE RECEIPTS OF RS. 41.00 LAKH DULY SIGNED BY MR. PRADIP D. KALANI ON BEHALF OF DEEJAY ITA NO.1984/PUN/2014 A.Y. 2011-12 9 DISTILLERIES P. LTD. AFFIRMING THAT HE RECEIVED CASH LOANS TO THIS EXTENT. SINCE SUCH LOANS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THERE IS DIRECT EVIDENCE AVAILABLE SHOW ING THE ADVANCING OF SUCH LOANS, IN PRINCIPLE, SUCH AMOUNTS NEED TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 17. HOWEVER, THE LD. AR SUBMITTED THAT MR. PRADIP D. K ALANI OFFERED RS.5.00 LAKH IN RELATION TO TRANSACTION DEPICTED AT PAG E 98 OF THE PAPER BOOK IN HIS OWN RETURN OF INCOME FOR THE A.Y . 2011, WHICH IF TAXED, WOULD AMOUNT TO DOUBLE TAXATION. THE LD. DR OBJECTED TO THE SAME. 18. WE ARE NOT CONVINCED WITH THE ARGUMENT OF THE LD. AR ON THIS SCORE THAT THE ADDITION TO THE EXTENT OF RS.5.00 LAKH SHOULD BE DELETED AS THE EQUIVALENT AMOUNT OF INCOME WAS OFFERED BY M R. PRADIP D. KALANI AS HIS INCOME. WHAT IS MATERIAL FOR OUR PU RPOSE IS THE TAXABILITY OF THE AMOUNT OF INCOME EARNED BY THE ASSE SSEE AND NOT DISCLOSED THE SAME FOR TAX PURPOSES. AS IT IS THE AS SESSEE WHO GAVE LOAN OF RS.5.00 LAKH TO MR. PRADIP D KALANI OUT OF HIS UNDISCLOSED INCOME, THE SAME HAS TO BE TAXED IN HIS HANDS. IT IS TRITE THAT INCOME SHOULD BE TAXED IN THE HANDS OF THE RIGHT PER SON AS HAS BEEN HELD IN ITO VS. CH. ATCHAIAH (1996) 218 ITR 239 (SC). WE, THEREFORE, HOLD THAT SUCH AN AMOUNT OF RS.5.00 LAKH S HOULD BE ITA NO.1984/PUN/2014 A.Y. 2011-12 10 SUBJECTED TO TAX IN THE HANDS OF THE ASSESSEE. HOWEVER, IT IS MADE CLEAR THAT SH. PRADIP K KALANI IS ENTITLED TO TAKE RECOURSE TO THE LEGAL REMEDIES AVAILABLE TO HIM FOR ENSURING THAT HE IS NOT WRONGFULLY CHARGED TO TAX. 19. TO SUM UP, WE UPHOLD THE ACTION OF THE AUTHORITIES BE LOW IN MAKING THE ADDITION OF RS.41.00 LAKH IN THE HANDS OF ASSES SEE AS THERE WAS SUFFICIENT EVIDENCE TO THE EFFECT THAT THE ASSESSEE ADVANCED CASH LOAN TO SH. PRADIP D KALANI OUT OF HIS UNDISCLOS ED INCOME. 20. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 04 TH OCTOBER, 2019 ITA NO.1984/PUN/2014 A.Y. 2011-12 11 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, NASHIK 4. 5. 6. THE CCIT, NASHIK , , / DR A, ITAT, PUNE; / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 03-10-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03-10-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *