SIDDHARTH TRADERS, MUMBAI V. A.C.I.T. CENTRAL CIRCLE 10, MUMBAI

ITA 2290/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8230 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 10-11-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 09-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3); 131; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.2290/MUM/2012 ASSESSMENT YEAR: 1998-99 M/S SIDHARTH TRADERS, B-305, BYCULLA SERVICE IND. PERMISES, D.K. CROSS ROAD, BYCULLA (EAST), MUMBAI-400027 / VS. INCOME TAX OFFICER, WARD-17(1)(3), PIRAMAL CHAMBERS, 6 TH FLOOR, LALBAUG, PAREL, MUMBAI-400012 ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AAAFS5781J !'# $ / ASSESSEE BY SHRI LALCHAND CHOUDHARY % / REVENUE BY SHRI B.S. BIST-DR & % ' $ ( / DATE OF HEARING : 22/02/2017 ' $ ( / DATE OF ORDER: 22/02/2017 M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 30/01/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THE APPEAL PERTAINS TO CONFIR MING THE ADDITION OF RS.10 LAKH MADE U/S 68 OF THE INCOME TA X ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI LALCHAND CHOUDHARY, CONTENDED THAT THE ASSESSE E IS TRADING IN STEEL ITEMS, TOOK PRIVATE LOANS FROM FOR TY PARTIES OUT OF WHICH FROM 37, THE LOANS WERE ACCEPTED BY THE AS SESSING OFFICER. THE LOAN TAKEN FROM MRS. SMITA CHAVAN WAS REPAID BUT SHE COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. OUR ATTENTION WAS INVITED TO PAPER BOOK PAGES 19, 2 2 AND 23 OF THE PAPER BOOK. A QUERY WAS RAISED BY THE BENCH TO THE LD. COUNSEL FOR THE ASSESSEE WHETHER MRS. SMITA CHAVAN CAN BE PRODUCED BEFORE THE ASSESSING OFFICER, THE LD. COUN SEL FOR THE ASSESSEE STATED THAT THEY ARE NOT IN A POSITION TO PRODUCE HER. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI B.S. BIST , STRONGLY DEFENDED THE ADDITION MADE BY THE ASSESSIN G OFFICER AND CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (AP PEAL). OUR ATTENTION WAS INVITED TO PAGE-14, PARA-2 OF THE PAPER BOOK BY EXPLAINING THAT IT WAS A DIFFERENT BANK ACCOUNT. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 3 ARE THAT THE ASSESSEE, DURING THE RELEVANT PERIOD, WAS TRADING IN STEEL, IRON SCRAP AND LENDING MONEY. THE ASSESSE E DECLARED INCOME OF RS.5,757/- IN ITS RETURN FILED ON 30/10/1 998. THE ASSESSMENT WAS COMPLETED ON 09/03/2001, U/S 143(3) OF THE ACT MAKING ADDITION OF RS.13,25,000/- IN RESPECT OF NINE LOAN CREDITORS, U/S 68 OF THE ACT. THE LD. ASSESSING OFF ICER ALSO DISALLOWED THE INTEREST AMOUNT OF RS.15,092/- AND M ADE CERTAIN ADJUSTMENT TO THE RETURNED INCOME. 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEAL), THE ADDITIONS MADE U/S 68 OF THE ACT AND DISALLOWANCE OF INTEREST WERE CONTESTED BY SUBMITTI NG ADDITIONAL EVIDENCE IN THE FORM OF (A) SIX LOAN CON FIRMATION (B) AN AFFIDAVIT OF THE FINANCE BROKER, MR. V. SHRIDHAR AN, WHO WAS INVOLVED IN THE BORROWING FROM REMAINING THREE LOAN CREDITORS WITH AN APPLICATION UNDER RULE-46A OF THE I.T. RULE S. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) CONSIDERED THE FACTUAL MATRIX AND REJECTED THE PRAYER FOR ADMISSION OF ADD ITIONAL EVIDENCES. THEREAFTER, THE ASSESSEE MOVED THIS TRIB UNAL, WHEREIN, THE ADDITIONAL EVIDENCE WAS ADMITTED AND T HE MATTER WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFI CER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW AND ON CONSIDE RATION OF ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE. THE LD. ASSESSING OFFICER, PURSUANT TO THE DIRECTION OF THE TRIBUNAL, FRAMED FRESH ASSESSMENT U/S 143(3) R.W.S 254 OF THE ACT ON 18/12/2006. THE LD. ASSESSING OFFICER OUT OF THE N INE TRANSACTIONS, ACCEPTED SIX TRANSACTIONS. HOWEVER, ADDITION TO M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 4 THE EXTENT OF RS.10 LAKH IN RESPECT OF THREE LENDER S WAS AFFIRMED FOR THE REASONS STATED IN THE ASSESSMENT O RDER. 2.4. THE ASSESSEE AGAIN WENT IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), WHEREIN ALSO, THE FACTUAL MATRIX WAS CONSIDERED AND THE IMPUGNED ADDI TION WAS AFFIRMED. THE ASSESSEE IS IN APPEAL BEFORE THIS TRI BUNAL. 2.5. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT IN THE BA LANCE SHEET, FURNISHED WITH THE RETURN OF INCOME, THE ASSESSEE S HOWED 40 LOAN CREDITORS OUT OF WHICH THE LOAN PERTAINS TO 37 CREDITORS WAS FOUND TO BE EXPLAINABLE AND FOR THE REMAINING T HREE CREDITORS, THE LD. ASSESSING OFFICER AS WELL AS THE LD. COMMISSIONER OF INCOME TAX (APPEAL) WERE NOT SATISF IED WITH THE EXPLANATION OF THE ASSESSEE AND THEREFORE ADDIT ION U/S 68 OF THE ACT WAS SUSTAINED. IN SUPPORT OF ITS CLAIM, THE ASSESSEE FURNISHED THE FOLLOWING DOCUMENTS IN SUPPORT OF BOR ROWING FROM THE REMAINING THREE LOAN CREDITORS:- A. LEDGER ACCOUNT IN THE BOOKS OF THE APPELLANT. B. PAY IN SLIP SHOWING AMOUNT DEPOSITED INTO THE APPELLANTS BANK. C. CERTIFIED TRUE COPIES OF ENCASHED GIVEN TO THESE PARTIES FOR REPAYMENT OF LOAN EVIDENCING REPAYMENT M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 5 THROUGH ACCOUNT PAYEE CHEQUES THROUGH NORMAL BANKING CHANNEL. D. ZEROX COPIES OF APPELLANTS BANK STATEMENT SHOWING DEPOSIT AND REPAYMENTS IN THE NAME OF LOAN CREDITORS. E. A COPY OF LETTER DATED 18/03/2002 ADDRESSED TO ONE OF THE LOAN CREDITOR (MRS. SMITA CHAVAN) WITH AMOUN T OF REPAYMENT OF RS.2,50,000/- ALONG WITH A COPY OF BANK STATEMENT SHOWING A DEBIT ENTRY IN HER NAME. F. TRUE COPY OF THE AFFIDAVIT OF THE FINANCE BROKER MR . V. SHRIDHARAN. 2.6. THE AFOREMENTIONED DOCUMENTS WERE EXAMINED B Y ASSESSING OFFICER BUT THE FACT REMAINS THAT NOTICE SENT BY THE ASSESSING OFFICER TO THE CONCERNED PARTY WERE RETUR NED UNSERVED BY THE POSTAL AUTHORITIES AND ON ASKING BY THE ASSESSING OFFICER TO PRODUCE THE PARTY, THE ASSESSE E COULD NOT PRODUCE HER. THE ASSESSEE HAVE CLAIMED THAT THE LOA N WAS REPAID TO HER BUT SHE COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER TO EXAMINE THE, IDENTITY, CAPACIT Y AND GENUINENESS OF THE TRANSACTION. IN OUR VIEW, IF TH E AMOUNT WAS REPAID TO THE CREDITOR, CERTAINLY, SHE WAS IN C ONTACT WITH THE ASSESSEE AND COULD HAVE BEEN PRODUCED. THE ASSE SSEE COULD NOT DISCHARGE THE ONUS CAST UPON IT. IN VIEW OF THIS FACTUAL MATRIX, WE ARE OF THE VIEW THAT MERE CLAIM IS NOT ENOUGH AND THE ASSESSEE IS EXPECTED TO DISCHARGE TH E BURDEN CAST UPON IT, WHICH HAS NOT BEEN DISCHARGED. THEREF ORE, WE M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 6 AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 3. SO FAR AS, THE AMOUNT OF RS.2 LAKHS FROM MR. GO PAL MAHAJAN IS CONCERNED, IT WAS EXPLAINED BY THE ASSES SEE THAT SHRI GOPAL MAHAJAN APPEARED BEFORE ASSESSING OFFICE R AND ACCEPTED THAT HE GAVE TWO LOANS TO THE ASSESSEE AND REFUSED FOR THE AMOUNT OF RS.2 LAKHS. WITH RESPECT TO THE QUERY RAISED BY THE BENCH, THE LD. COUNSEL FOR THE ASSESSEE MERE LY STATED THAT THE ACCOUNT FROM WHICH, THE AMOUNT OF RS.2 LAK HS WAS GIVEN WAS NOT DISCLOSED TO THE INCOME TAX DEPARTMEN T, THEREFORE, SHRI GOPAL MAHAJAN REFUSED THE TRANSACTI ON. IT WAS ALSO CONTENDED THAT CROSS EXAMINATION WAS NOT PROVI DED TO THE ASSESSEE TO CROSS EXAMINE SHRI GOPAL MAHAJAN. OUR A TTENTION WAS INVITED TO LETTER DATED 07/12/2006 (PAPER BOOK PAGE-14). THE LD. DR STRONGLY OPPOSED THE EXPLANATION OF THE ASSESSEE BY INVITING OUR ATTENTION TO PAGE-14, PARA-2 ND BY CONTENDING THAT IT PERTAINS TO DIFFERENT BANK ACCOUNT. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE WROTE A LETTER DATED 07/12/2006 TO THE LD. ACIT WITH RESPECT TO CHEQUE OF RS.2 LAKH BEARING NO.001790 DA TED 10/04/1997 DRAWN ON BANK OF BARODA, GOREGAON EAST BRANCH, WHICH WAS ISSUED FROM ACCOUNT NO.1758010000 3938, WHEREAS, AT PAGE-50 OF THE PAPER BOOK, THE BANK OF BARODA, VIDE THEIR COMMUNICATION TO THE ACIT WITH REFERENCE TO NOTICE U/S 131 DATED 12/12/2006 MENTIONS ACCOUNT NO. 8696, M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 7 MEANING THEREBY IT WAS A DIFFERENT BANK ACCOUNT, TH EREFORE, THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY , CONSEQUENTLY, ON THIS AMOUNT, WE AFFIRM THE STAND O F THE LD. COMMISSIONER OF INCOME TAX (APPEAL) BY HOLDING THAT THE ONUS CAST UPON THE ASSESSEE WAS NOT DISCHARGED AND THE EXPLANATION OF THE ASSESSEE IS FOUND TO BE FALSE. 4. IT IS ALSO NOTED THAT IN THESE THREE CASES, NO I NTEREST WAS PAID TO THE ASSESSEE AND WHEN THE LOAN WAS ARRANGED THROUGH BROKER STILL THE INTEREST WAS NOT PAID AND THE ELEM ENT OF INTEREST IS ALSO NOT MENTIONED. THE PARTIES ARE CL OSELY KNOWN TO THE ASSESSEE, THEREFORE, IT WAS THE DUTY OF THE ASSESSEE TO PRODUCE THEM BEFORE THE ASSESSING OFFICER SO THAT T HE FACTUAL MATRIX COULD HAVE BEEN EXPLAINED. HOWEVER, THE ASSE SSEE COULD NOT DISCHARGED HIS ONUS. SO FAR AS, THE DECI SION FROM HON'BLE HIGH COURT OF MADRAS, IN CIT VS M/S NIPPON ENTERPRISE SOUTH (ITA NO.413 OF 2007), RELIED UPON BY THE ASSESSEE, IS CONCERNED, WE FIND IN THAT CASE THE QU ARTERLY INTEREST WAS PAID AND BROKERAGE WAS ALSO GIVEN TO T HE BROKER. HOWEVER, LIKE FACTS ARE MISSING IN THE PRESENT APPE AL, THEREFORE, WE ARE OF THE VIEW THAT THE FACTS ARE DI FFERENT, CONSEQUENTLY, THIS JUDICIAL PRONOUNCEMENT MAY NOT H ELP THE ASSESSEE. EVEN OTHERWISE, DURING HEARING, THIS FACT UAL MATRIX WAS ACCEPTED BY THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, THE CONTENTION OF THE ASSESSEE IS NOT SUBSTANTIATED . EVEN OTHERWISE, AS PER THE PROVISION OF SECTION 68 OF TH E ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSES SEE AND NO EXPLANATION IS OFFERED ABOUT THE NATURE AND SOURCE THEREOF OR M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 8 THE EXPLANATION OFFERED BY HIM, IN THE OPINION OF T HE ASSESSING OFFICER, IS NOT FOUND SATISFACTORY THEN THE SUM OF CREDITED MAY BE CHARGED TO INCOME-TAX, MEANING THEREBY, HEAVY BU RDEN HAS BEEN CAST UPON THE ASSESSEE TO DISCHARGE THE BURDEN . 5 SO FAR AS, THE AMOUNT OF RS.7 LAKHS FROM MR. BHA RAT KUMAR JAIN, IS CONCERNED, THE LD. COUNSEL FOR THE A SSESSEE EXPLAINED THAT THE AMOUNT OF RS.2 LAKH IS A TRANSFE R ENTRY AND THE ACCOUNTS BELONGS TO DR. NIRMAL JAIN. IT IS NOTE D THAT IN THE CASES OF REMAINING LOAN CREDITORS, IDENTICALLY, THE AMOUNT FROM MR. NIRMAL KUMAR JAIN WAS ACCEPTED, THEREFORE, WE A RE SATISFIED TO THE EXTENT OF RS.2 LAKH THE ASSESSEE H AS EXPLAINED THE SOURCE AND GENUINENESS OF THE AMOUNT PARTLY BUT NOT FOR THE REMAINING AMOUNT OF RS. 5 LAKHS, THEREFORE, THE ADDITION TO THE EXTENT OF RS.5 LAKH IS SUSTAINED AND FOR REMAIN ING 2 LAKH RUPEES OUT OF RS.7 LAKH IS DELETED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 22/02/2017. SD/- SD/- ( B.R. BASKARAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & MUMBAI; ) DATED : 22/02/2017 F{X~{T? P.S / *% %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT M/S SIDHARTH TRADERS ITA NO.2290/MUM/2012 9 2. /0-. / THE RESPONDENT. 3. & 1$ ( +, ) / THE CIT, MUMBAI. 4. & 1$ / CIT(A)- , MUMBAI 5. 3%4 /$! , +,( +! 5 , & / DR, ITAT, MUMBAI 6. 6' 7 / GUARD FILE. / BY ORDER, 03,$ /$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,