DCIT- CC - 3(1), MUMBAI V. VIVEK SUNIL MEHTA, MUMBAI

ITA 2101/MUM/2019

AI Insights

The case revolves around an appeal by the Deputy Commissioner of Income Tax against the order of the CIT(A) which deleted an addition of Rs.11.92 crores made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The addition was initially made following a search and seizure operation and subsequent survey at the assessee's business premises, which led to a notice under section 148 of the Act. The assessee, Shri Vivek Sunil Mehta, contended that the amount was a loan from his sister, Ms. Tarana Mehta, an NRI, and provided substantial documentation to support this claim. The Tribunal examined the evidence, including bank statements and investment details, and concluded that the assessee had adequately demonstrated the legitimacy of the transaction, leading to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136074 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 15-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2019
• Other Referred Cases: PCIT vs. Veedhata Power Pvt. Ltd. 403 ITR 415(Bom), Gaurav Triyugi Singh vs. ITO, 423 ITR 31(Bom)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Search and seizure
• Section: 68; 148; 263; 132; 143(3)

Judgement Text

म ु ंबई ठ “एफ ”,म ु ंबई , ए ं ए . ! फ" हम न, ेख े म' IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ F ”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ं.2101/म ु ं/2019 ( न. . 2009-10) ITA NO.2101/MUM/2019(A.Y.2009-10) Deputy Commissioner of Income Tax Central Circle -3(1), Mumbai, Room No.1924, Air India Building, 19 th Floor, Nariman Point, Mumbai 400 021 ...... -/Appellant बन म Vs. Shri Vivek Sunil Mehta, 1/41, Sukh Shanti Building, 19, Peddar Road, Mumbai 400 026. PAN: AABPM-1758-Q ...... / /Respondent - 0 / Appellant by : Shri Achal Sharma, CIT-DR & Ms. Vranda U Matkari . / 0 /Respondent by : Shri N.R.Agarwal ु न ई 1 / / Date of hearing : 16/12/2022 234 1 / / Date of pronouncement : 08/03/2023 ेश/ORDER PER VIKASH AWASTHY, JM: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-51, Mumbai [in short ‘ the CIT(A)’ ] dated 28/01/2019 for the Assessment Year 2009-10. 2 ITA NO.2101/MUM/2019(A.Y.2009-10) 2. The solitary effective ground in the appeal by Revenue is against the findings of CIT(A) in deleting the addition of Rs.11.92 crores u/s.68 of Income Tax Act, 1961 [in short ‘the Act’]. 3. Shri N.R.Agarwal appearing on behalf of the assessee narrating the facts of the case submitted that, a search and seizure action u/s. 132 of the Act was carried out in the case of Sur Gems Group on 18/11/ 2015. Simultaneously, survey action was carried out at the business premises of assessee. Consequent to survey, notice u/s. 148 of the Act was issued to the assessee. In assessment proceedings u/s. 143(3) r.w.s. 147 of the Act, the Assessing Officer made addition of Rs.11.92 crores on account of unexplained cash credits u/s. 68 of the Act. The ld. Authorized Representative for the assessee submits that the assessee had explained to the Assessing Officer that the assessee had received the aforesaid amount from his sister Ms. Tarana Sunil Mehta. It was explained to the Assessing Officer that Ms. Tarana Mehta is NRI, the amount was transferred from her State Bank of India NRE Bank (SBI) account to the assessee’s bank account vide cheque. The assessee furnished bank statement of Ms. Tarana Mehta and the assessee. It was further pointed to the Assessing Officer that in scrutiny assessment proceedings u/s. 143(3) of the Act, the assessee had furnished the requisite information and the details with regard to the loan transaction. The Assessing Officer after examining the documents furnished by the assessee accepted the assessee’s explanation. In fact, in assessment year 2010-11, revision proceedings u/s. 263 of the Act were initiated to examine same very loan transaction beween the assessee and his sister. On due examination of relevant facts, the assessment order u/s.143(3) 3 ITA NO.2101/MUM/2019(A.Y.2009-10) r.w.s. 263 of the Act was passed accepting the veracity of loan transaction. The ld. Authorized Representative for the assessee submits that despite the fact that the issue was examined twice, first time in scrutiny assessment proceedings and second time in revision proceedings for Assessment Year 2010-11, the Assessing Officer brushed aside all relevant documents and the aforesaid assessment orders and made addition of Rs.11.92 crores as unexplained cash credit u/s. 68 of the Act. 3.1 The ld. Authorized Representative for the assessee submits that the assessee had fully discharged the onus of proving creditworthiness of the lender, identity of the lender and the genuineness of the transaction. He explained that in the year 2000, Ms.Tarana Mehta had made investment in India Millennium deposits with SBI. Thereafter, she enchased the said deposit in January 2008 and invested the amount in LIC Mutual Funds. Thereafter, investment in LIC Mutual Fund was liquidated by her on 06/10/2008 and a sum of Rs.1.61 crores were advanced to the assessee on 10/10/2008. The ld. Authorized Representative for the assessee pointed that the SBI had issued a certificate dated 20/08/2010 certifying that Ms. Tarana Mehta had closed two FCNB accounts and the amount was credited to her NRE account on 2 nd January 2008. The said certificate is at page 9 of the Paper Book. Thereafter, ld. Authorized Representative for the assessee referred to the India Millennium Deposit interest certificate aggregating to Rs.48.62 lacs at page 9A of the Paper Book. The ld. Authorized Representative for the assessee also referred to the bank statement (at page 10 & 11 of paper book) of Ms. Tarana Mehta indicating investment made in LIC Mutual Fund and thereafter, credit of the encashed amount of the LIC Mutual Fund. The same statement also reflects 4 ITA NO.2101/MUM/2019(A.Y.2009-10) amount advanced by Ms.Tarana Mehta to the assessee on 10/10/2008, Rs.1.61 crores and a further sum of Rs.10.00 crores on 15/10/2008 and Rs.31.00 lacs on 29/10/2008. The ld. Authorized Representative for the assessee submits that Ms. Tarana Mehta in her Balance Sheet as on 31/03/2009 had reflected the amount of Rs.11.92 cores as loans and advances to the assessee. The ld. Authorized Representative for the assessee further pointed that Ms. Tarana Mehta filed her return of income for Assessment Year 2010-11 and the same was accepted by the Department in scrutity assessment vide order dated 31/01/2013. The copy of the said order is at page 6 of the Paper Book. The ld. Authorized Representative for the assessee further submitted that the assessee had repaid Rs.6.26 crores out of the total loan of Rs.11.92 cores in September, 2009. Ms. Taranna Mehta had filed confirmation in this regard and the same is at page 15 of the Paper Book. The bank statement of assessee indicating repayment of Rs.6.26 crores is at page 18-19 of the paper book. 3.2 The ld. Authorized Representative for the assessee asserted that in the impugned assessment year the assessee was not required to show source of source. To support his argument the ld. Authorized Represenative for the assessee relied on following decisions: (i) PCIT vs. Veedhata Power Pvt. Ltd. 403 ITR 415(Bom) (ii) Gaurav Triyugi Singh vs. ITO, 423 ITR 31(Bom) However, the assessee in order to discharge his onus to prove creditworthiness and identity of the lender has gone to the extent of proving source of source. The ld. Authorized Representative for the assessee 5 ITA NO.2101/MUM/2019(A.Y.2009-10) vehemently supporting the impugned order prayed for dismissing the appeal of the Revenue. 4. Per contra, Shri Achal Sharma representing the Department prayed for reversing the findings of the CIT(A) and upholding the assessment order. The ld. Departmental Representative submits that the assessee has not been able to prove genuineness of the loan transaction. The assessee has been taking inconsistent stand in explaining the transaction. In assessment proceedings he stated that he has received the amount from Ms. Tarana Mehta as loan and in search proceedings he has stated that the said amount is gift from Ms. Tarana Mehta. 5. We have heard the submissions made by rival sides and have examined the orders of authorities below. For discharging the onus u/s. 68 of the Act, the assessee has to prove; (i) creditworthiness of the lender ; (ii) identity of the lender; and (iii) genuineness of the transaction. 5.1 In the instant case the assessee in order to prove creditworthiness and identity of lender and loan transaction, has furnished following documents before the authorities below: (i) Certificate from the Bank indicating closure of FCNB account of Ms. Tarana Mehta and the transfer of the amount to NRE account No.30302706678 of Tarana Mehta. (ii) Account statement of NRE A/c. No.30302706678 of Tarana Mehta. (iii) Statement of account of LIC Mutual Fund, to substantiate that Ms. Tarana Mehta had made the investment; 6 ITA NO.2101/MUM/2019(A.Y.2009-10) (iv) Confirmation from Ms. Tarana Mehta regarding repayment of loan amount. (v) United Bank of India Bank Statement indicating that Rs.6.00 crores was repaid by the assessee to Ms. Tarana Mehta in September, 2009. From examination of the above documents on record it is evidently clear that Ms. Tarana Mehta had means to advance loan, the identity of the lender is not in dispute, the genuineness of the transaction was also not questioned by the Assessing Officer. The only reason for making the addition u/s 68 of the Act by the Assessing Officer was doubt on creditworthiness of the lender. In the impugned assessment year the assessee was not obliged to prove source of source. The assessee has discharged his liability to comply the conditions mandated u/s. 68 of the Act . The CIT(A) after appreciating the evidence on record deleted the addition. We find no infirmity in the order of CIT(A), hence, the same is upheld and the appeal of Revenue is dismissed. Order pronounced in the open court on Wednesday the 8 th day of March, 2023. Sd/- Sd/- (SHRI S.RIFAUR RAHMA) (VIKAS AWASTHY) ेख /ACCOUNTANT MEMBER /JUDICIAL MEMBER म ु ंबई/ Mumbai, 6 न ं /Dated 08/03/2023 Vm, Sr. PS(O/S) 7 ITA NO.2101/MUM/2019(A.Y.2009-10) त ल प अ े षतCopy of the Order forwarded to : 1. -/The Appellant , 2. . / / The Respondent. 3. ु 7/( )/The CIT(A)- 4. ु 7/CIT 5. 9 : . / न , . . ., म ु बंई/DR, ITAT, Mumbai 6. : ;< फ = /Guard file. BY ORDER, //True Copy// (Dy./Asstt.Registrar)/Sr. Private Secretary ITAT, Mumbai