INFRA ONE VENTURES LLP, MUMBAI V. INCOME TAX OFFICER 23(1)(2), MUMBAI

ITA 2186/MUM/2022

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Infra One Ventures LLP, a limited liability partnership firm engaged in purchasing land for commercial and industrial purposes, filed an appeal against the order of the Commissioner of Income Tax (Appeals)-32, Mumbai, which upheld the addition of Rs. 83,94,840 to the firm's income under section 68 of the Income Tax Act, 1961. This amount represented the partners' capital contributions that were not substantiated by two of the six partners. The ITAT found that the AO and CIT(A) did not adequately consider the submissions and documents provided by the partners, particularly their NRI status and the loans received from Mr. Deepak Tolani. The Tribunal restored the matter to the AO for a detailed examination of the new evidence and proper adjudication.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123302 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 31-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 2186/Mum/2022 (A.Y. 2016-17) Infra One Ventures LLP, 3, Hill Top CHS Ltd. 40/49 A, Pali Mala Road, Pali Hill, Near Pali Hill Markte-400050 PAN: AAFFI3148E ...... Appellant Vs. ITO-23(1) (2), Matru Mandir, Tardeo Road, Mumbai-400007. ..... Respondent Appellant by : Sh. Satish Modi Respondent by : Mr. R.A. Dhyani, Sr. DR Date of hearing : 20/12/2022 Date of pronouncement : 13/01/2023 ORDER PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-32, Mumbai [for short ‘CIT (A)’] dated 04.07.2022 under section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2016-17. The assessee has raised the following grounds of appeal: 2 ITA No. 2186/Mum/2022-Infra One Ventures LLP “GROUND NO.1 The learned CITA) erred in upholding the order passed by the learned AO, Ward 23(1X) Mumbai, under section 143(3) of the Act, even though it is capricious in mature and has been made ignoring the established and undisputed facts. The said order is contrary to the facts and circumstances of the case and the applicable provisions of the Act. GROUND NO.2 The learned CIT(A) erred in upholding the order passed by the Ld AO u/s 143(3) of the Act, though the same unjust and is passed violating the principles of natural justice. GROUND NO. 3 The learned CIT(A) has erred in upholding the additions made by the Ld AO to the total income of the appellant of Rs.83,94,840, which is contrary to the facts and circumstances of the case and made without any basis whatsoever. GROUND NO. 4 The learned CIT(A) has erred in upholding the issuance of penalty notice u/s 271(1)e) of the Act passed by the learned AO, and the same must be quashed. The appellant craves leave to add, to alter or amend the aforesaid Group INFRA ONE VENTURES LLP called for, before the disposal of the appeal.” 2. Brief facts of the case are that assessee is a limited liability partnership firm engaged in purchasing land for commercial purposes and industrial activities. Assessee filed its return of income on 05-08-2016 declaring total income of Rs. NIL. Case of the assessee was selected for complete scrutiny under CASS. 3. During the year under consideration assessee firm received partners capital contribution of Rs. 5,29,45,766/- from 6 individuals as partners contribution. It is pertinent to mention here that out of 6 partners only 2 partners i.e. Mr. Mohan Das R Lakhani and Mr. Tejbhan Lakhani only were not able to substantiate there 3 ITA No. 2186/Mum/2022-Infra One Ventures LLP source of contribution amounting to Rs. 83, 94,840/- (Rs. 41, 97,420/- each). AO added this figure of Rs. 83, 94,840/- u/s 68 to the income of the firm. 4. Aggrieved with this assessment order assessee preferred an appeal before the Ld. CIT (A). Ld. CIT (A) also confirmed the addition u/s 68 made by the AO and sustained the assessment order. Assessee being further aggrieved with this order of Ld. CIT (A) preferred this appeal before ITAT. 5. We have thoroughly considered the order of AO, order of Ld. CIT (A) and submissions of the assessee narrated in the orders of both the authorities. Copies of submissions made before the authorities below were not filed with ITAT for our perusal. Ground no.1 and 2 are general in nature and ground no.3 being substantive ground needs our adjudication. 6. As relevant submissions are not before us we relied upon the facts available on record for our consideration in the form of assessment order and order of Ld. CIT (A). 7. As per para 4.1of AO’s order Mr. Mohan Das R Lakhani having no PAN and Mr. Tejbhan Lakhani having PAN no. ANFIL3696K. Mr. Tejbhan Lakhani DECLARED income of Rs. 1,55,280/- for AY 2016-17 in his individual return. Whereas copy of passport of Mr. Mohan Das R Lakhani was filed to substantiate the fact that he is an NRI. It is further observed by AO that both the partners received money from one Mr. Deepak Tolani. Copy of acknowledgement of ITR of Mr. Deepak Tolani was also enclosed for AY 2016-17 declared income of Rs. 4,26,030/-. 8. During the assessment proceedings PIO card dated 31-01-2012 towards proof of identity and NRO bank statement of Mr. Mohan Das R Lakhani is 4 ITA No. 2186/Mum/2022-Infra One Ventures LLP submitted. It is further submitted that both the individuals are Indonesia based wealthy NRI’s and both of them has given a loan of Rs 41,99,975/- each to Mr. Deepak Tolani on 16-01-2015. Subsequently Mr. Deepak Tolani returned this amount of loan to both the individuals on 12-10-2015. Thereafter on 13-10-2015 both the individuals contributed Rs. 41, 97,420/- each as partners contribution to the assessee firm. 9. In our observation AO himself agreed that out of a huge contribution totalling Rs. 5, 29, 45,766/- only an amount of Rs. 83,94,840/- is under doubt. In totality of facts, it can be reasonably assumed that assessee LLP is being incorporated by wealthy people and other than these two individuals are able to substantiate their identity, genuineness and credit worthiness as required by sec 68. 10. These two individuals being NRI (as claimed by them), when they are submitting their PIO card and NRO bank statement needs to be given and another opportunity to substantiate the ingredients of sec 68. Considering our observation above and facts of the case we restore this matter back to the record of AO. We further direct to give a fresh opportunity to both the individuals to substantiate their claims about source of the funds, identity and genuineness. Assessee is directed to arrange the relevant documents about the identity, genuineness and credit worthiness of this transaction before the AO. It is further directed to the assessing officer that in case both the individuals are able to establish their identity and status as NRI, the criteria of having substantial income in India should be ignored. The main focus of the AO should be on their overall income may be in India or abroad, authenticity of loans given to Mr. Deepak Tolani and repayment 5 ITA No. 2186/Mum/2022-Infra One Ventures LLP by him and balances lying in their NRO bank account. In this terms Ground no.3 raised by assessee is allowed for statistical purposes. 11. In the result, appeal of assessee is allowed for statistical purposes. Order pronounced in the open court on 13 th day of January, 2023. Sd/- Sd/- (KULDIP SINGH) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, िदनांक/Dated: 13/01/2023 SK, Sr.PS Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकर आयुƅ(अ)/The CIT(A)- 4. आयकर आयुƅ CIT 5. िवभागीय Ůितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाडŊ फाइल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai