DEVANG GANDHI, NAVI MUMBAI V. ACIT, CENTRAL CIRCLE-45, MUMBAI

ITA 2034/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5824 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITRA
• Keywords: Unexplained cash credit; Search and seizure
• Section: 68; 132; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 2034 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 ) DEVANG GANDHI A/303, BALAJI GARDENS SECTOR 11, KOPARKHAIRNE NAVI MUMBAI 400 709 PAN ABHPG0909N . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 45, MUMBAI . RESPONDENT ITA NO. 2038 /MUM. /2018 ( ASSESSMENT YEAR :20 11 12 ) POOJA GANDHI A/303, BALAJI GARDENS SECTOR 11, KOPARKHAIRNE NAVI MUMBAI 400 709 PAN AABPA1069Q . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 45, MUMBAI . RESPONDENT ASSESSEEBY : SHRI GAURAV KA BRA REVENUE BY : SHRI S.K. MITRA DATE OF HEARING 13 . 1 2 .201 8 DATE OF ORDER 31.01.2019 2 DEVANG GANDHI POOJA GANDHI O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID APPEAL S HA VE BEEN FILED BY TWO DIFFERENT ASSESSEE S CHALLENGING TWO SEPARATE ORDER S , BOTH DATED 25 TH JANUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 4 8 , MUMBAI, PERTAINING TO ASSESSMENT YEAR 20 11 12. ITA NO.2034/MUM./2018 2 . AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THA T GROUND NO.1 IS NOT PRESSED, SINCE, IN CASE OF THE ASSESSEE THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR HAS ABATED. ACCORDINGLY, GROUND NO.1, IS DISMISSED AS NOT PRESSED. 3 . IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION MADE OF ` 10,18,986, UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 4 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR IN REGULAR COURSE ON 23 RD DECEMBER 201 1 , DECLARING INCOME OF ` 8,03,488. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN THE OFFICE PREMISES OF M/S. UNITY INFRA PROJECTS LTD., ITS DIRECTORS AN D OTHER RELATED PARTIES ON 10 TH FEBRUARY 2012 . SUBSEQUENTLY, THE ASSESSEE ALONG WITH HIS WIFE SMT. POOJA GANDHI, WERE ALSO COVERED UNDER THE 3 DEVANG GANDHI POOJA GANDHI SAID SEARCH AND SEIZURE OPERATION. ACCORDINGLY, PROCEEDINGS UNDER SECTION 153A OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR WERE INITIATED AGAINST THE ASSESSEE AND HIS WIFE. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER WHILE EXAMINING THE BALANCE S HEET OF THE ASSESSEE NOTICED THAT THE ASSESSEE HAS SHOWN UNSECURED LOANS OF ` 80,29,972, REMAINING UNP AID DURING THE YEAR. OUT OF THE AFORESAID AMOUNT A PART WAS ADDED WHILE COMPLETING ASSESSMENT S FOR ASSESSMENT YEAR 2006 07 TO 2009 10. THEREFORE, IN THE PRESENT APPEAL, WE ARE NOT CONCERNED WITH THOSE ADDITIONS. IN RESPECT OF NEW LOANS OF ` 10,18,986, AVAI LED DURING THE YEAR, THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE FOUND CERTAIN DISCREPANCIES AND ACCORDINGLY , HELD THE AMOUNT OF ` 10,18,986, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED BACK TO THE INCOM E OF THE ASSESSEE. 5 . THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, THE LEARNED COMMISSIONER (APPEALS) ALSO SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 6 . T HE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PROVED THE GENUINENESS OF THE LOAN TRANSACTION S BY FURNISHING ADEQUATE DOCUMENTARY EVIDENCES INCLUDING CONFIRMATION S FROM THE LOAN CREDITORS. HE SUBMITTED , ALL LOAN CREDITORS ARE INCOME TAX A SSESSEES AND THE ENTIRE LOAN TRANSACTION WAS 4 DEVANG GANDHI POOJA GANDHI THROUGH BANKING CHANNEL. HE SUBMITTED , THE ASSESSING OFFICER HAS TREATED THE UNSECURED LOAN AVAILED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT ON FLIMSY GROUND S THAT LOAN CONFIRMATIONS ARE NOT IN PRESCRIBED FORM AT AND THE LENDERS DO NOT HAVE CREDITWORTHINESS. TAKING US THROUGH DOCUMENTARY EVIDENCES FILED IN THE PAPER BOOK THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS ESTABLISHED ALL THE THREE INGREDIENTS , SUCH AS, IDENTITY OF THE CREDITORS, GE NUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. THEREFORE, HE SUBMITTED , ADDITION MADE SHOULD BE DELETED. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE SUBJECT MATTER OF DISPUTE IN THE PRESENT APPEAL IS THE FOLLOWING UNSECURED LOANS AVAILED BY THE ASSESSEE DURING THE YEAR: PRATHIK AGARWAL ` 5,00,000 POONAM AGARWAL ` 5,00,000 PREETIVAISH ` 18,986 TOTAL: ` 10,18,986 5 DEVANG GANDHI POOJA GANDHI 9 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT ONLY FURNISHED THE CONFIRMATIONS FROM ALL THE LOAN CREDITORS BUT HE ALSO PRODUCED VARIOUS OTHER DOCUMENTARY EVIDENCES LIKE INCOME TAX RETURNS OF THE LOAN CREDITORS INDICATING THEIR PAN DETAILS, BANK STATEMENT COPIES, LEDGER ACCOUNT COPIES, ETC. IT IS EVIDENT, THE ASSESSING OFFICER HAS DISBELIEVED THE UNSECURED LOAN WITH SOME GENERAL OBSERVATIONS LIKE LOAN CONFIRMATION S ARE NOT IN THE PRESCRIBED FORMAT, CREDITWORTHINESS OF THE CREDITORS NOT PROVED, ETC. ON A SPECIFIC QUERY FROM THE BENCH THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO LOAN CONFIRMATION FORM / FORMAT PRESCRIBED IN THE STATUTE. THEREFORE , THE AFORESAID ALLEGATION OF THE ASSESSING OFFICER IS TOTALLY IRRELEVANT. AS REGARDS THE GENUINENESS OF THE LOAN TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS ARE CONCERNED, IT IS A FACT ON RECORD THAT IN COURSE OF ASSESSME NT PR OCEEDINGS, THE ASSESSEE HAS NOT ONLY FURNISHED LOAN CONFIRMATION S OF ALL THE CREDITORS BUT HAS ALSO FURNISHED THEIR INCOME TAX RETURN COPIES, BANK ACCOUNT COPIES, BALANCE SHEET, LEDGER ACCOUNT COPIES, ETC. ON A PERUSAL OF THESE DOCUMENTS IT IS EVIDENT THAT ALL THE LOAN TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. MOREOVER, THE BANK ACCOUNT COPIES ALSO REVEAL REGULAR TRANSACTION. THE BALANCE SHEET AND CAPITAL ACCOUNT OF THE CREDITORS ALSO REVEAL THAT LOAN TRANSACTIONS ARE DULY REFLECTED IN T HEM. IT IS EVIDENT , THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY WITH THE LOAN CREDITORS OR THE CONCERNED ASSESSING OFFICERS 6 DEVANG GANDHI POOJA GANDHI WHERE THE CREDITORS ARE ASSESSED OR E VEN WITH THE BANK TO ASCERTAIN THE GENUINENESS OF THE LOAN TRANSACTION S. NO MATERIAL HAS BEEN BROUGHT O N RECORD BY THE ASSESSING OFFICER TO PROVE EITHER THE FACT THAT THE CREDITORS DO NOT HAVE CREDITWORTHINESS OR THE LOAN TRANSACTIONS ARE NOT GENUINE. MER ELY ON PRESUMPTION AND SURMISES THE ASSESSING OFFICER HAS TREATED THE LOAN T RANSACTION S AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. UNFORTUNATELY, LEARNED COMMISSIONER (APPEALS) HAS CONCURRED WITH THE VIEW EXPRESSED BY THE ASSESSING OFFICER IN A MECHANICAL MANNER WITHOUT PROPERLY EVALUATING T HE EVIDENCES FURNISHED BY T HE ASSESSEE OR EVEN CONDUCTING ANY ENQUIRY AT HER LEVEL , THOUGH , SHE IS EMPOWERED TO DO SO. AFTER OVER ALL CONSIDERATION OF FACTS AND MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE GENUINENESS OF LO AN TRANSACTION AMOUNTING TO ` 10,18,986. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF THE AFORESAID AMOUNT. GROUND IS ALLOWED. 10 . IN THE RESULT, APPEAL IS ALLOWED. ITA NO.203 8 /MUM./2018 11 . THE ONLY DISPUTE IN THIS APPEAL RELATES TO ADDITION OF UNSECURED LOAN OF ` 13 LAKH AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 7 DEVANG GANDHI POOJA GANDHI 12 . FACTS RELATING TO THE DISPUTED ISSUE ARE MORE OR LESS IDE NTICAL TO ITA NO.2034/MUM./2018, EXCEPT FOR THE FACT THAT IN ADDITION TO THE THREE LENDERS WHO ALSO ADVANCED UNSECURED LOAN TO ASSESSEES HUSBAND SHRI DEVANG GANDHI, THERE IS ONE MORE LENDER VIZ. SMT. N EHA AGARWAL, WHO ADVANCED LOAN OF ` 1.50 LAKH. IN THIS CASE ALSO, THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT CON DU CTING ANY INDEPENDENT ENQUIRY .I F THE ASSESSING OFFICER WAS HAVING ANY DOUBT WITH REGARD TO THE GENUINENESS OF LOAN TRANSACTION OR CREDITWORTHINESS OF THE CREDITORS, HE SHOULD HAVE CONDUCTED PROPER ENQUIRY BEFORE CONCLUDING THAT THE LOAN TRANSACTION IS NON GENUINE OR IN THE NATURE OF UNEXPLAINED CASH CREDIT. WITHOUT BRING ING ANY MATERIAL ON RECORD TO ESTABLISH THE AFORESAID FACT, THE ADDITION MADE CANNOT BE SUSTAINED. THEREFORE, FOLLOWING OUR DETAILED REASONING IN ITA NO.2034/MUM./ 2018, WE DELETE THE ADDITI ON MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT. 13 . IN THE RESULT, APPEAL IS ALLOWED. 14 . TO SUM UP, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2019 SD/ N.K. PRADHAN ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.01.2019 8 DEVANG GANDHI POOJA GANDHI COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPIES BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI