VINOD K. SHAH, MUMBAI V. ITO 9 (3) (3), MUMBAI

ITA 2191/MUM/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 5941 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K GUBGOTRA LD DR
• Assessee Lawyers: MAYUR SHAH LD ARS
• Keywords: Deemed dividend; Tax effect; Onus to prove
• Section: 143(3)

Judgement Text

ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO. 2191/MUM/2016 ( ASSESSMENT YEAR: 2006-07) VINOD K. SHAH GITA NIWAS, MATHURADAS ROAD, OPP. LAXMINARAYAN TEMPLE KANDIVALI(W), MUMBAI 400 067 VS. INCOME TAX OFFICER - 9(3)(3) AAYKAR BHAVAN, 2 ND FLOOR M.K.ROAD MUMBAI 400 020 ! ' PAN/GIR NO. AAGPS-4899-H ( !# APPELLANT ) : ( $%!# RESPONDENT ) & I.T.A. NO. 2304/MUM/2013 & CROSS OBJECTION NO.117/MUM/2014 ( ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 9(3)(3) AAYKAR BHAVAN, 2 ND FLOOR M.K.ROAD MUMBAI 400 020 VS. VINOD K. SHAH GITA NIWAS, MATHURADAS ROAD, OPP. LAXMINARAYAN TEMPLE KANDIVALI(W), MUMBAI 400 067 ! ' PAN/GIR NO. AAGPS-4899-H ( !# APPELLANT ) : ( $%!# RESPONDENT ) ASSESSEE BY : NEERAJ SHETH & MAYUR SHAH, LD. ARS REVENUE BY : RAJEEV K. GUBGOTRA, LD. DR & DATE OF HEARING : 08/08/2018 '() / DATE OF PRONOUNCEMENT : 03/10/2018 ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 2 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2006-07 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEAL)-20 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-20/9(3)(3)/IT-238/2010-11 DATED 02/01/2013 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE. THE ASSESS EE, IN HIS CROSS OBJECTIONS, HAS AGITATED THE ADDITIONS AS SUSTAINED BY LD. FIRST APPELLATE AUTHORITY AND ALSO CONTESTED THE CONFIRMA TION OF PENALTY U/S 271(1)(C) BY WAY OF A SEPARATE APPEAL. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL HAS BEEN ASSESSED BY LD. INCOME TAX OFFICER-9(3)(3), MU MBAI [AO] U/S 143(3) ON 20/12/2010 WHEREIN THE INCOME OF THE ASSE SSEE HAS BEEN ASSESSED AT RS.54.16 LACS AFTER CERTAIN ADDITIONS A S AGAINST RETURNED INCOME OF RS.10 LACS FILED BY THE ASSESSEE ON 31/07 /2016. THE ASSESSEE HAS SUFFERED FOLLOWING QUANTUM ADDITIONS:- THE LD. CIT(A), AFTER DUE CONSIDERATION, HAS DELETE D THE ADDITIONS LISTED AT SERIAL NUMBERS 1 & 3, AGAINST WHICH THE REVENUE IS IN FURTHER APPEAL BEFORE US VIDE ITA NO. 2304/MUM/2013 WHEREAS THE AS SESSEE BY WAY OF CROSS-OBJECTION CO NO.117/MUM/2014 HAS CONTESTED TH E INTEREST ADDITION AS SUSTAINED BY LD. CIT(A). 3. AT THE OUTSET, IT HAS BEEN NOTICED THAT THE TAX EFFECT OF THE QUANTUM ADDITIONS AS CONTESTED BY THE REVENUE IS LESS THAN THRESHOLD LIMIT OF NO. NATURE AMOUNT (RS.) 1. ADDITION ON ACCOUNT OF HOUSE PROPERTY INCOME 61, 890/- 2. ADDITION ON ACCOUNT OF INTEREST & BANK CHARGES 6 ,04,069/- 3. ADDITION ON ACCOUNT OF DEEMED DIVIDEND 37,50,000 /- ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 3 RS.20 LACS AND THE SAME IS COVERED BY RECENTLY ISSU ED LOW TAX EFFECT CIRCULAR NO.03/2018 DATED 11/07/2018 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. THE LD. DR, SHRI. RAJEEV GUBGOTRA, HAS CONTROVERTED THE SAME BY SUBMITTING THAT NECESSARY INSTRUCTIONS / CE RTIFICATE, IN THIS REGARD, WOULD BE REQUIRED FROM HIGHER AUTHORITIES. 4. WE HAVE GONE THROUGH THE CIRCULAR AND FIND THAT THE TAX EFFECT OF QUANTUM IN DISPUTE IS BELOW PRESCRIBED LIMIT OF RS. 20 LACS AND THE ASSESSEE STOOD BENEFITTED BY THE ABOVE CIRCULAR ISS UED BY CBDT WHEREIN THE MINIMUM MONETARY LIMIT FOR FILING THE A PPEALS BEFORE VARIOUS APPELLATE AUTHORITIES HAVE BEEN FIXED AS UNDER:- S. NO. APPEALS/ SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1 BEFORE APPELLATE TRIBUNAL 20.00,000 2 BEFORE HIGH COURT 50.00,000 3 BEFORE SUPREME COURT 1,00.00,000 THE AFORESAID LIMITS, AS PER PARA 13 OF THE CIRCULAR APPLIES TO PENDING APPEALS ALSO. IN VIEW OF THE ADMITTED POSITION, WE DISMISS THE REVENUES APPEAL. 5. SO FAR AS THE CONTENTIONS RAISED BY LD. DR IS CO NCERNED, WE FIND THAT AFORESAID CIRCULAR DOES NOT ENVISAGE OBTAINING OF ANY CERTIFICATE FROM ANY AUTHORITIES, IN ANY MANNER. NEVERTHELESS, THE R EVENUE IS FREE TO MOVE APPROPRIATE APPLICATION TO RECALL THIS ORDER, IF AT A LATER STAGE, IT IS FOUND THAT THE MATTER IS COVERED BY ANY EXCEPTIONS PROVIDED IN THE AFORESAID CIRCULAR OR IN CASE THE TAX EFFECT OF THE QUANTUM ADDITIONS AS AGITATED BY REVENUE EXCEEDS THE PRESCRIBED MONETARY LIMIT. ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 4 6.1 FACTS QUA INTEREST ADDITIONS ARE THAT DURING IMPUGNED AY, THE ASSESSEE EARNED INTEREST INCOME OF RS.1.32 LACS FRO M CERTAIN LOANS & SAVINGS BANK ACCOUNT AND REFLECTED THE SAME AS INCOME FROM OTHER SOURCES. AGAINST THE SAME, IT CLAIMED INTEREST PAID TO BANKS, LIC AND BANK CHARGES AGGREGATING TO RS.6.04 LACS AND ACCORDINGLY, COMPU TED NEGATIVE FIGURE OF RS.4.71 LACS AS INCOME FROM OTHER SOURCES. THE LD. AO, AFTER PERUSAL OF BALANCE SHEET, CAME TO CONCLUSION THAT THE ASSESSEE FAILED TO ESTABLISH THE NEXUS BETWEEN LOAN S RAISED AND INTEREST PAID AND THEREFORE, BY DISALLOWING INTEREST EXPENDI TURE, MADE AN ADDITION OF RS.6.04 LACS IN THE HANDS OF THE ASSESSEE. THE S AME, UPON CONFIRMATION BY LD. CIT(A), IS BEING AGITATED BEFOR E US TO THE EXTENT OF RS.5.85 LACS BY WAY OF CROSS-OBJECTIONS. 6.2 THE LD. AUHTORIZED REPRESENTATIVE, ON THE STREN GTH OF ASSESSEES BALANCE SHEET, CONTESTED THE ADDITIONS WHICH HAS BEEN CONTROVERTED BY LD. DR. 6.3 WE HAVE CAREFULLY HEARD THE SUBMISSION AND PERU SED MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED IN THE PAPER-BOOK. UPON DUE CONSIDERATION, WE FIND THAT THE ONUS TO PROVE THE N EXUS BETWEEN INCOME EARNED AND EXPENDITURE MADE THERE-AGAINST , IN TERMS OF SECTION 57, SQUARELY LIED ON THE ASSESSEE, WHICH HAS NOT BEEN C ONCLUSIVELY ESTABLISHED. THE ASSESSEE HAS PAID INTEREST TO LOAN S OBTAINED FROM BANKS / FINANCIAL INSTITUTIONS. IT IS CATEGORICAL F INDING OF THE LOWER AUTHORITIES THAT THE LOANS HAVE BEEN OBTAINED AGAIN ST SHARES AND THE SAME HAVE BEEN INVESTED IN SHARES & BONDS AND THIS FACT COULD NOT BE REBUTTED BY ANY COGENT MATERIAL ON RECORD. SIMILARL Y, THE NEXUS BETWEEN ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 5 LOAN OBTAINED FROM LIC AND LOANS WHICH EARNED INTER EST INCOME COULD NOT BE DEMONSTRATED. THIS BEING THE CASE, WE HAVE N O HESITATION IN CONFIRMING THE STAND OF LOWER AUTHORITIES. THE CROS S-OBJECTION STANDS DISMISSED. 7.1 AGAINST QUANTUM ADDITIONS OF RS.6.04 LACS, THE ASSESSEE HAS BEEN SADDLED WITH PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) FOR RS.1,59,300/- VIDE ORDER DATED 27/03/ 2014, WHICH UPON CONFIRMATION BY LD. CIT(A), IS BEING AGITATED BEFOR E US IN ITA NO.2191/MUM/2016. 7.2 UPON DUE CONSIDERATION OF FACTUAL MATRIX, WE FI ND THAT THE ASSESSEE MADE A CLAIM WHICH HAS NOT BEEN ACCEPTED BY LOWER A UTHORITIES FOR WANT OF CONCLUSIVE EVIDENCE OF PROVING THE NEXUS BETWEEN FUNDS BORROWED BY THE ASSESSEE AND FUNDS ADVANCED BY THE ASSESSEE. HO WEVER, THE SAME, IN OUR OPINION, DID NOT LEAD TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO WARRANT IMPOSITION OF PENALTY U/S 271(1)(C). THEREFORE, BY DELETING THE SAME, WE ALLOW THE ASSESSEES APPEAL. 8. RESULTANTLY, REVENUES APPEAL ITA NO. 2304/MUM/2 013 AS WELL AS ASSESSEES CROSS-OBJECTION CO. NO. 117/MUM/2014 STA NDS DISMISSED WHEREAS ASSESSEES APPEAL ITA NO. 2191/MUM/2016 STA NDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NOS.2191/MUM/2016 & 2304/MUM/2013 CO.NO.117/MUM/2014 VINOD K. SHAH ASSESSMENT YEAR: 2006-07 6 *& MUMBAI; DATED : 03.10.2018 SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - -) *& / DR, ITAT, MUMBAI 6. , ./0 & GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *& / ITAT, MUMBAI