M/S. EXOTIC HOTELS & RESORTS LTD, MUMBAI V. DCIT CIR 6(3) , MUMBAI

ITA 2053/MUM/2021

AI Insights

The case involves appeals by M/s. Exotic Hotels & Resorts Ltd. against the orders of the Learned Commissioner of Income Tax (Appeals)-IX, Mumbai, for the Assessment Years 1998-99 and 1999-2000. The primary issues in the appeals included the confirmation of additions made under section 68 of the Income Tax Act, which pertained to unexplained cash credits and other income. The assessee argued that they were unable to provide the required documents and details due to their office premises being sealed by the Economic Offence Wing, Crime Branch. However, the Tribunal noted that despite multiple opportunities provided to the assessee, they failed to appear or provide the necessary documentation to substantiate their claims. Consequently, the Tribunal dismissed the appeals, supporting the decisions made by the lower authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123464 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-12-2022
• Assessment Year: 1999-2000
• Appeal Filed On: 08-11-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Bogus loan
• Section: 131; 68; 144; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORE KULDIP SINGH, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., C-505, Veena Nagar S.V. Road, Malad (W) Mumbai - 400064 PAN: AAACE3538J v. DCIT – Circle – 6(3) Mumbai -400020 (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Richa Gulati Date of Hearing : 13.12.2022 Date of Pronouncement : 02.01.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals)-IX, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 20.12.2002 for the A.Ys. 1998-99 and 1999-2000. 2 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., 2. Since appeals are belonging to the same assessee, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking ITA.No. 2052/Mum/2021 for Assessment Year 1998-99 as a lead case. 3. Assessee has raised following grounds in its appeal: - “1. At the outset, the learned CIT (A) has erred in confirming the Assessment Order of Learned Assessing Officer by not giving sufficient opportunity to the Appellant to arrange for the copies of the details asked for from Economic offence wing, Crime Branch who has sealed the office premises. 2) The learned CIT(A) has also erred in not providing sufficient opportunity to fetch the details from Crime Branch and, a) Confirming the addition of Rs. 45,56,424/- u/s 68 being unexplained cash credit Le loan taken from Green Agro Products Limited made by the learned Assessing Officer b) Confirming the addition of Rs. 1,75,28,185/- being membership fees received from various parties made by the learned Assessing Officer. c) Confirming the addition made by the learned Assessing Officer of Rs. 2,00,000/- by treating addition of Share Capital as unexplained Cash Credit u/s 68 d) Confirming the disallowance of loss of Rs. 20,75,510/- made by the learned Assessing Officer being the extra expenses over the receipts. The Appellant craves the right to add, amend or alter any of the grounds of appeal before or at the time of hearing.” 3 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., 4. We observe from the record that the hearing was posted since 04.05.2022 and was posted 10 times. Invariably, Ld. AR of the assessee sought time and the same was granted in the interest of justice. Finally, on 13.12.2022 none appeared to represent on behalf of assessee. We deem it fit and proper to proceed to dispose off these appeal as it is pending from 2021 and the Assessment Years pertaining to the appeals are 1998-99 and 1999-2000. The notice sent to the assessee has been duly served as is evident from the acknowledgement available on record. Since the assessee has not appeared in spite of the serving of notice, it seems that the assessee is not interested in prosecuting the appeal. Therefore, we proceed to decide these appeals on merits after hearing the Ld.DR and examining the material on record. 5. Ld. DR briefly explained the facts and supported the orders of the lower authorities. 6. Considered the submissions of Ld.DR and material placed on record. On perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) after providing several opportunities of hearing to the assessee and lastly on 20.12.2022 as none appeared on behalf of assessee nor filed any details passed appellate order relating to Assessment Order passed u/s. 144 4 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., r.w.s. 143(3) dated 20.12.2022. Ld.CIT(A) sustained the addition made by the Assessing Officer and observed as under: - “2. In ground no.1 the appellant has challenged addition of Rs.45,56,424/- made as unexplained cash credit treating the loan taken from M/s.Green Agro products Ltd. as bogus. The A.O has added this amount as cash credit u/s. 68 of the I.T.Act because no confirmation was filed by the assessee in spite of large number of hearings given by the A.O. It is evident from para 1, page 2 of the assessment order that A.O has issued several notices u/s. 143/2) and 142(1) and hearings were fixed several times requiring the assessee to furnish the details and confirmations etc. However, there was no response at all from assessee Therefore, the A.O has proceeded to complete the assessment u/s. 144. 3. In appellate proceedings also hearings were fixed on 26.12.2001, 15.1.2002, 20.2.2002, 5.3.2002, 12.9.2002, 7.10.2002, 11.11.2002, 25.11.2002 and finally on 20.12.2002 Every time either the assessee sought adjournment with the plea that their books have been seized by crime branch so it could not attend the hearings. On the request of assessee that they will furnish the required details after obtaining photo copies of books seized, a remand report was called by my predecessor vide letter dated 15.3.2002 and the A.O was directed to examine genuineness of loan, genuineness of membership fee, genuineness of share application and disallowances of losses made after giving one more opportunity to the appellant to explain their case. In response to this, the A.O has reported vide his letter dated 11.6.2002 that the assessee was called by him along with full details in support of its contention on 17.4.2002. However, neither the assessee attended the hearing on that day nor filed any details. Summons u/s. 131 was also issued by the A.O. However, no details were furnished in response to summons also. These facts goes to suggest that the appellant is not willing to furnish any details to prove genuineness of credits of Rs.45,56,424/- shown in its books in the name of M/s. Green Agro Products Ltd. This view also gets strength from the conduct of the assessee in appellate proceedings. Here also in spite of series of hearing given to it, the assessee has failed to furnish any details to prove its claim Since the credits are shown in the books of assessee and it is the duty of the assessee to prove identity of the creditor, credit worthiness of the creditor and also the genuineness of the transactions. However, the appellant has failed prove all the above conditions. Not only this, but assessee has also failed to furnish a confirmation letter from M/s. Green Agro Products Ltd. which was a minimum requirement to prove genuineness of loan. Proceedings by crime branch should not have 5 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., come in way of the assessee in obtaining confirmation letter from M/s Green Agro Products Ltd. However, the appellant has failed to file this also. This goes to suggest that this amount of Rs. 45,56,4241 is nothing but unaccounted money of the appellant which has been brought into the books as a bogus loan in the name of M/s. Green Agro Products Ltd. Therefore, no interference is called for in the order of A.O and ground of appeal taken by appellant is dismissed. 4. In ground no. 2 the appellant has argued that the A.O has erred in treating the Membership Fees Deposits received from innumerable parties amounting to Rs. 1,75,28,185/- as income. The A.O has observed at page 2 of the assessment order that the assessee company has not produced any details with regard to persons who have made these deposits. the nature of these deposits and its subsequent treatment that these are capital in nature or revenue was not explained. Therefore, the A.O has added the same. 5. This point was also referred in the remand report. However, the A.O could not do any investigation because membership register and terms and conditions of membership contract, names and addresses of members etc were not filed by the appellant in spite of specific requirement given by the A.O. The appellant could have filed these details by obtaining photo copies of books and documents from crime branch but no efforts at all were made by the appellant in this respect which goes to suggest that the appellant has nothing to say in support of the ground of appeal. As mentioned in earlier paras several hearings were given in appellate proceedings also but no details at all have been furnished by the appellant. So this goes to prove that the amount of Rs. 1,75,28,185/-is nothing but unaccounted money of assessee which has been rightly added by the A.O. No interference is called for in the order of the A.O. Ground of appeal is dismissed. 6. In third ground of appeal the appellant has challenged addition of Rs.2,00,000/- by treating share capital as unexplained cash credit u/s. 68. Since the amount is shown as credit in the books of accounts of the company for which no confirmation letters are filed, identity, credit worthiness of the share applicants and genuineness of transactions are not proved. The A.O has sightly added the amount of Rs.2,00,000/- as unexplained cash credit u/s. 68. No interference is called for in the order of the AO and the ground taken by the appellant is dismissed. 7. In ground no.4, the appellant has challenged disallowance of loss amounting to Rs. 20,75,510/-. The main argument of the appellant is that the accounts of the company are audited by C.A. Therefore, no disallowance should be made. The A.O has observed 6 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., in last para of assessment order that the assessee company has shown receipts of Rs. 44,19,764/- Whereas, the expenses are claimed at Rs.64,95,274/-. Thus, the assessee has shown loss of Rs. 20,75,510/- in P & L A/c. The assessee company has not furnished details and nature of expenses in assessment proceedings as well as in appellate proceedings. Therefore, the A.O was fully justified in disallowing the claim of loss made by the appellant. Ground of appeal is dismissed. 8. In ground no.5 and 6 the appellant has talked about natural justice and initiation of penalty u/s. 271 A, B and C. It is very clear from assessment order and appellate proceedings that several hearings were given to appellant by the A.O and the undersigned. Bur the appellant has failed to avail these opportunities only on the pretext that the books are seized by crime branch. In spite of repeated requests, it has not taken any pains to obtain photo copies of the books from the crime branch and make necessary compliance which goes to suggest the appellant has intentionally avoided the scrutiny. Therefore, ground no.5 is dismissed. 9. So far ground no. 6 is concerned, this appeal has been filed against the quantum addition on which the A.O has initiated penalty as per the requirements of law. Therefore, this ground is also dismissed.” 7. On a careful perusal of the order of the Ld.CIT(A) and the reasons given therein, we do not find any reason to interfere especially when there is no material to controvert the findings of the First Appellate Authority. Accordingly, appeal filed by the assessee is dismissed. ITA.No. 2053/MUM/2021 (A.Y. 1999-2000) 8. Assessee has raised following grounds in its appeal: - “1) The learned CIT (A) has erred in not giving sufficient opportunity to the Appellant and ought to have appreciated that the Books of Accounts were lying with the crime branch and the same was not made available to the Assessee inspite of repeated attempts by the Appellant. 7 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., 2) The learned CIT(A) has further erred in confirming the additions/disallowances made by the learned Assessing Officer, a) u/s 68 being unexplained cash credit on account of alleged additional Membership Deposit of Rs. 7.21,03.211/ b) Unexplained investments in purchase of Assets and Expenses during the year out of Investments and expenses in the absence of details Rs. 50,00,000/- The Appellant craves the right to add, amend or alter any of the grounds of appeal before or at the time of hearing.” 9. Coming to the appeal relating to A.Y. 1999-2000, inspite of several opportunities provided by the Bench, assessee has sought adjournment on one or other pretext and finally on 13.12.2022 none appeared on behalf of assessee and nor filed relevant documents. Accordingly, we sustain the order of the Ld.CIT(A) especially when there is no material to controvert the findings of the First Appellate Authority. Appeal filed by the assessee is dismissed. 10. In the result, appeals filed by the assessee are dismissed. Order pronounced in the open court on 02 nd January, 2023. Sd/- Sd/- (KULDIP SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 02.01.2023 Giridhar, Sr.PS 8 ITA NOs. 2052 & 2053/MUM/2021 (A.Ys: 1998-99 & 1999-2000) M/s. Exotic Hotels & Resorts Ltd., Copy of the Order forwarded to: 1. The Assessee 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum