ITO WD 3(1), KALYAN V. NARENDRA M. PATEL, NAVI MUMBAI

ITA 2007/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8194 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI N.V. VASUDEV AN, JM I.T.A.NO. 2007/MUM/2010 ASSESSMENT YEAR : 2006-07 THE INCOME-TAX OFFICER, WARD 3(1), 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN. VS. SHRI NARENDRA M. PATEL, C/203 & 204, AMBIKA TOWER, AYODHYA NAGARI, MANPADA ROAD, DOMBIVLI 421 201 PAN: AACPP 6393 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : NONE O R D E R PER P.M. JAGTAP, AM : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, THANE, DATE D 30.11.2009 FOR THE ASSESSMENT YEAR 2006-07 WHEREBY HE DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 ON ACCOUNT OF UNEXPLAINED LOAN CREDITS AND DISALLOWANCE OF INTEREST PAID BY THE ASSESSEE ON THE SAID LOANS. 2. THE ASSESSEE, IN THE PRESENT CASE, IS AN INDIVI DUAL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 19.10.20 06 DECLARING TOTAL INCOME OF RS. 2,20,050/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS TAKEN UNSEC URED LOAN OF RS. 53,35,799/- FOR MAKING INVESTMENT IN THE PARTNERSHIP FIRMS AS H IS CAPITAL. WHEN THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER TO ESTABLI SH THE IDENTITY AND CAPACITY OF THE CONCERNED LOAN CREDITORS AS WELL AS THE GENUINE NESS OF THE RELEVANT TRANSACTIONS, HE FILED CONFIRMATION LETTERS OF SOME OF THE LOAN CREDITORS ALONG WITH THEIR INCOME-TAX PARTICULARS. THE ASSESSEE ALSO FIL ED EVIDENCE IN THE FORM OF 7/12 EXTRACTS OF THE LOAN CREDITORS TO PROVE THEIR AGRIC ULTURAL ACTIVITIES. THE SAID 7/12 ITA NO.2007/M/2010 SHRI NARENDRA M. PATEL 2 EXTRACTS, HOWEVER, WERE FOUND TO BE PERTAINING TO T HE YEAR 2007-08 BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFI CER, THE SAID EVIDENCE THUS WAS NOT SUFFICIENT TO ESTABLISH THE FINANCIAL CAPACITY OF THE CONCERNED CREDITORS TO ADVANCE THE LOANS IN QUESTION TO THE ASSESSEE. HE, THEREFORE, ISSUED SUMMONS TO THE LOAN CREDITORS WHICH, HOWEVER, WERE RECEIVED BA CK FROM THE POSTAL AUTHORITIES UNSERVED. THE ASSESSEE WAS ALSO ASKED BY THE ASSES SING OFFICER TO PRODUCE THE CONCERNED CREDITORS FOR EXAMINATION BEFORE HIM AND ALSO TO PRODUCE THE RELEVANT DOCUMENTARY EVIDENCE TO EXPLAIN THE LOAN CREDITS IN TERMS OF SECTION 68. THE ASSESSEE, HOWEVER, FAILED TO COMPLY WITH THE SAID REQUIREMENTS DESPITE SUFFICIENT OPPORTUNITY AFFORDED BY THE ASSESSING OFFICER. THE LOAN AMOUNT OF RS. 53,35,799/-, THEREFORE, WAS TREATED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDITS AND THE SAME WAS ADDED BY HIM TO THE TOTAL INCOME OF TH E ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3). THE INTEREST CLAIME D TO BE PAID ON THE SAID LOAN AMOUNTING TO RS.4,89,768/- WAS ALSO DISALLOWED BY T HE ASSESSING OFFICER IN THE SAID ASSESSMENT. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND IT WAS SUBMITTED ON HIS BEHALF BEFORE THE LEARNED CIT(A), INTER ALIA, THAT OUT OF THE TOTAL LOAN AMOUNT OF RS. 53,35,799/- ADDED BY THE ASSESSI NG OFFICER U/S.68, A SUM OF RS.40,35,799/-WAS RECEIVED IN THE EARLIER YEARS. AF TER VERIFYING THESE SUBMISSIONS OF THE ASSESSEE FROM THE RELEVANT RECORD, THE LEARN ED CIT(A) FOUND MERIT IN THE STAND OF THE ASSESSEE THAT THE LOAN AMOUNT OF RS.40 ,35,799/- HAVING BEEN RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS COULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 IN THE YEAR UNDER CON SIDERATION. ACCORDINGLY, HE DELETED THE ADDITION OF RS. 53,35,799/- MADE BY THE ASSESSING OFFICER U/S.68 TO THE EXTENT OF RS. 40,35,799/- AND SUSTAINED THE BALANCE ADDITION. HE ALSO ALLOWED ITA NO.2007/M/2010 SHRI NARENDRA M. PATEL 3 CONSEQUENTIAL RELIEF TO THE ASSESSEE ON THE ISSUE O F DISALLOWANCE OF INTEREST TO THE EXTENT THE SAME WAS PAID ON THE LOANS TAKEN IN THE EARLIER YEARS. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, NONE HAS APPEA RED ON BEHALF OF THE ASSESSEE. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EX PARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RELEVANT MATERIAL O N RECORD. IT IS OBSERVED THAT OUT OF THE TOTAL AMOUNT OF RS. 53,35,799/- ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 TREATING THE SA ME AS UNEXPLAINED CASH CREDITS, A SUM OF RS. 40,35,799/- WAS RECEIVED BY THE ASSESS EE IN THE EARLIER YEARS AND NOT IN THE YEAR UNDER CONSIDERATION AS FOUND BY THE LEA RNED CIT(A). AT THE TIME OF HEARING BEFORE US, THE LEARNED DEPARTMENTAL REPRESE NTATIVE HAS NOT BEEN ABLE TO CONTROVERT/REBUT THIS FINDING RECORDED BY THE LEARN ED CIT(A). THE PROVISIONS OF SECTION 68 IN THIS REGARD ARE VERY CLEAR AND COVER WITHIN ITS AMBIT ONLY THE SUMS WHICH ARE FOUND CREDITED IN THE BOOKS OF THE ASSESS EE MAINTAINED FOR THE RELEVANT PREVIOUS YEAR, THE NATURE AND SOURCE OF WHICH THE A SSESSEE FAILS TO EXPLAIN SATISFACTORILY. IN THE PRESENT CASE, THE LOAN AMOU NT TO THE EXTENT OF RS.40,35,799/- HAVING BEEN ADMITTEDLY RECEIVED BY T HE ASSESSEE IN THE EARLIER YEARS AND NOT IN THE YEAR UNDER CONSIDERATION, THE SAME COULD NOT BE SAID TO BE CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FO R THE YEAR UNDER CONSIDERATION AND THE PROVISIONS OF SECTION 68 COULD NOT BE INVOK ED TO ADD THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 TREATING TH E SAME AS UNEXPLAINED CASH CREDITS. WE, THEREFORE, FIND NO INFIRMITY IN THE IM PUGNED ORDER OF THE LEARNED CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 TO THE EXTENT OF RS. 40,35,799/- AS WELL AS THE CONSEQUENT IAL RELIEF ALLOWED IN TERMS OF ITA NO.2007/M/2010 SHRI NARENDRA M. PATEL 4 INTEREST PAID ON SUCH LOANS AND UPHOLDING THE SAME, WE DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2011. SD. SD. (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 25 TH FEBRUARY, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT.I, THANE 4. THE CIT(A)-I, THANE 5. THE DR G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI