ORACLE ENTERTAINMENT P. LTD, NAVI MUMBAI V. ITO WD 1(4), MUMBAI

ITA 2306/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8219 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDI
• Assessee Lawyers: S PANDEY
• Keywords: Unexplained expenditure; Income from undisclosed sources; Additional evidence; Corroborative evidences
• Section: 69C; 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.2306/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. ORACLE ENTERTAINMENT PVT. LTD. PLOT NO.184, KAIRA SHOPPING CENTRE, OPP. RAGHUNATH VIHAR, SECTOR-13 KHARGHAR NAVI MUMBAI-410 610. PAN NO. AAACO 6741 P INCOME TAX OFFICER WARD-1(4), KALYAN RANI MANSION, 2 ND FLOOR, KALYAN MURBAD ROAD KALYAN (WEST) MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI K. GOPAL AND SHRI S. PANDEY RESPONDENT BY : SHRI RAJARSHI DWIVEDI DATE OF HEARING : 23.7.2012 DATE OF PRONOUNCEMENT : 3.8.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 30.11.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. T HE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GR OUNDS WHICH RELATE TO ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (THE ACT) AND ADDITION OF UNEXPLAINED EXPENDITURE UNDER SE CTION 69C OF THE ACT. ITA NO.2306/M/10 A.Y.06-07 2 2. WE FIRST TAKE UP THE DISPUTE RELATING TO ADDITIONS OF UNSECURED LOANS UNDER SECTION 68 OF THE ACT. THE AO DURING THE A SSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF FILM PRODUCTION AND MARKETING, HAD DECLARED UNSECUR ED LOANS TO THE TUNE OF RS.2.16 CRORES OUT OF WHICH A SUM OF RS.1.81 CROR ES HAD BEEN RAISED DURING THE YEAR. THE AO ASKED THE ASSESSEE TO FILE LOAN CONFIRMATIONS ALONG WITH COPY OF THE BANK PASS BOOKS AND COPY OF RETURNS OF INCOME OF THE CREDITORS. THE ASSESSEE FILED LOAN CONFIRMATION ON 9.4.2008 WITHOUT ANY SUPPORTING EVIDENCE SUCH AS BANK PASS BOOK ETC. WITH A VIEW TO VERIFY THE GENUINENESS OF LOANS, T HE AO ISSUED LETTERS UNDER SECTION 133(6) TO THE CREDITORS WHO DID NO T REPLY TO THESE LETTERS. THE AO NOTED THAT THE ASSESSEE HAD FILED ONLY P HOTOCOPIES OF CONFIRMATIONS AND NOT THE ORIGINALS. FURTHER ALL THE CO NFIRMATIONS HAD HANDWRITTEN ADDRESSES AND THE SAME PEN HAD BEEN USED FO R SIGNING THE CONFIRMATIONS. THE AO ALSO NOTICED DIFFERENCES IN SIG NATURES ON THE CONFIRMATIONS WITH RESPECT TO SIGNATURES OF CREDITORS IN TH E RETURNS OF INCOME AND PAN CARD. THE AO, THEREFORE, ISSUED SUMMONS TO THE CREDITORS UNDER SECTION 131 OF THE ACT IN RESPONSE TO WHI CH ONLY ONE CREDITOR I.E. SHIVPUJAN P. TIWARI ATTENDED. SHRI TIW ARI DENIED HAVING GIVEN ANY LOAN TO THE ASSESSEE AND ALSO STATED THAT HE WA S A MAN OF MEAGER MEANS AND THERE WAS NO QUESTION OF GIVING LOAN OF RS.2.00 ITA NO.2306/M/10 A.Y.06-07 3 LACS. AS PER THE AO, THE STATEMENT OF SHRI TIWARI WAS SH OWN TO AUTHORIZED REPRESENTATIVES OF ASSESSEE WHO SHOWED HELPLESSNE SS IN THE MATTER. THE AO THEREAFTER ASKED THE ASSESSEE TO PROD UCE LOAN CREDITORS BUT DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE CO ULD NOT PRODUCE LOAN CREDITORS FOR EXAMINATION. THE AO, THEREF ORE, CONCLUDED THAT THE ASSESSEE WAS DELIBERATELY AVOIDING TO PRODUCE TH E CREDITORS FOR CROSS EXAMINATION AND THAT THE ASSESSEE WAS TRYING TO P REVENT APPEARANCE OF CREDITORS TO AVOID BEING EXPOSED AS THE ON LY CREDITOR WHO APPEARED HAD DENIED THE LOAN. THE AO OBSERVED TH AT UNDER SECTION 68 OF THE ACT, THE BURDEN WAS ON THE ASSESSEE TO P ROVE THE IDENTITY OF THE CREDITORS, THEIR CREDIT WORTHINESS AS WE LL AS GENUINENESS OF THE TRANSACTIONS WHICH HAD NOT BEEN DISCHARGED BY THE ASSESSEE. 2.1 THE AO, THEREFORE, TREATED THE UNSECURED LOANS IN 18 CASES AGGREGATING TO RS.67.00 LACS AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT AS PER DETAILS GIVEN BELOW:- SR.NO. NAME AMOUNT (RS.) 1. REKHA P. MAV 3,00,000/- 2. BHAVESH J. BHANUSHALI 2,90,000/- 3. JETHALAL B. BHANUSHALI 8,00,000/- 4. KESARBEN HIRJI 1,25,000/- 5. ASHOK J. BHANUSHALI 8,00,000/- 6. ANNAPURNA R. BHANUSHALI 3,35,000/- 7. GOVIND H. JOSIER 3,75,000/- 8. CHANDRIKA S. BHANUSHALI 3,00,000/- 9. S.P. TIWARI 2,00,000/- ITA NO.2306/M/10 A.Y.06-07 4 10. DHANPATI J. LAPSIYA 7,50,000/- 11. VERSHI KARJI (HUF) 2,50,000/- 12. GOVINDJI B. NAKHAVA 3,00,000/- 13. TEJAL MITESH MANGE 3,25,000/- 14. DEEPAK SHIVJI (HUF) 1,50,000/- 15. RAMESH J. BHANUSHALI 4,00,000/- 16. NARANGJI R. BHANUSHALI 3,00,000/- 17. KIRIT D. THAKKAR 6,00,000/- 18. RAJESH R. MANGE 1,00,000/- TOTAL 67,00,000/- 3. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITT ED BEFORE CIT(A) THAT THE ASSESSEE HAD FILED LOAN CONFIRMAT IONS IN RESPECT OF LOAN CREDITORS WHO WERE REGULARLY ASSESSED TO TAX AND WERE HAVING P.A. NOS. THE ASSESSEE HAD ALSO GIVEN COPIES OF ACKNOWLEDGME NT OF FILING THE RETURNS OF INCOME BY THE CREDITORS AS WELL A S COPIES OF THEIR BANK PASS-BOOKS IN MANY CASES. THE AO HAD NEVER ASKED FO R GIVING ORIGINAL CONFIRMATIONS WHICH WERE LYING WITH THE ASSESSEE AND COPIES THEREOF HAD BEEN FILED BEFORE AO. AS REGARDS THE DIF FERENCES IN SIGNATURES POINTED OUT BY AO ON LOAN CONFIRMATION WITH RESPECT TO SIGNATURES OF CREDITORS IN THE RETURN OF INCOME AND PAN CARD, THE ASSESSEE SUBMITTED THAT IT HAD NO CONTROL OVER SUCH MATTERS AND THAT IT WAS QUITE COMMON THAT PEOPLE SIGN IN DIFFERENT STYLES AN D FORMAT AT DIFFERENT POINTS OF TIME. THE AO MADE ADDITION MEREL Y ON THE BASIS OF NON APPEARANCE OF THE CREDITORS AND INABILITY OF THE A SSESSEE TO PRODUCE THEM BEFORE AO. THE AO HAD NOT CONSIDERED OTHE R DOCUMENTS WHICH ESTABLISHED THE IDENTITY AND CREDIT WORTHINESS OF T HE CREDITORS ITA NO.2306/M/10 A.Y.06-07 5 AND WHICH PROVE THE GENUINENESS OF TRANSACTIONS. THE ASSE SSEE ALSO POINTED OUT THAT SHRI TIWARI WHO HAD DENIED LOAN HA D DULY SIGNED LOAN CONFIRMATION AND ALSO HAD GIVEN COPY OF ACKNOWLEDGMENT OF FILING RETURN OF INCOME. HE WAS BEING ASSESSED TO TAX. THUS, THERE WAS SUFFICIENT EVIDENCE OF SHRI TIWARI GIVING LOAN TO THE ASSESSEE AND IT WAS NOT CLEAR TO THE ASSESSEE AS TO THE REASONS FOR GIVING ADVE RSE STATEMENTS. CIT(A) AFTER CONSIDERING THE SUBMISSION OF TH E ASSESSEE AND MATERIAL ON RECORD, OBSERVED THAT THE ASSESSEE HAD R ECEIVED LOANS THROUGH BANKING CHANNELS AND THERE WAS NO DISPUTE REGAR DING FILING OF RETURN OF INCOME BY THE CREDITORS. HOWEVER, IF THE CREDI TORS WERE GENUINE, THEN IT WAS NOT CLEAR AS TO WHAT PREVENTED TH E ASSESSEE TO PRODUCE THEM BEFORE AO. CIT(A) ALSO OBSERVED THAT THER E WERE DISCREPANCIES IN THE SIGNATURES OF THE CREDITING PARTIES A ND ONE OF THE CREDITORS DENIED HAVING GIVEN LOAN. CIT(A), THEREFORE , AGREED WITH THE CONCLUSION DRAWN BY THE AO THAT THE CASH CREDIT WAS NOTHIN G BUT ASSESSEES OWN UNACCOUNTED INCOME INTRODUCED IN THE BOOKS OF ACCOUNT. HE, THEREFORE, CONFIRMED THE ADDITION MADE BY AO, AGGRIEVED BY WHICH, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAD FILED CONFIRMATIONS FROM ALL LOAN CREDITORS WHO WE RE ASSESSED TO TAX ALONG WITH THEIR INCOME TAX RETURN DETAIL. THE A SSESSEE HAD, THEREFORE, DISCHARGED THE ONUS PLACED ON IT. IT WAS ALSO SUBMITTED THAT ITA NO.2306/M/10 A.Y.06-07 6 THE CREDITORS WERE NOT CO-OPERATING WITH THE ASSESSEE AS IT HAD NOT BEEN ABLE TO REPAY THE LOAN AND WHICH WAS THE REASON F OR CREDITORS NOT APPEARING BEFORE THE AO AND ONE OF THEM DENYING THE LOAN. THEY HAD GIVEN LOANS BY CHEQUE AND FILED CONFIRMATIONS GIVING TH EM P.A. NUMBERS. THE LD. AR ALSO SUBMITTED THAT THE ASSESSEE HAD B EEN PURSUING WITH LOAN CREDITORS TO APPEAR BEFORE THE AO A ND HAS BEEN SUCCESSFUL IN OBTAINING AFFIDAVITS FROM NINE CREDITORS WHI CH ARE ENCLOSED IN THE FORM OF ADDITIONAL EVIDENCE. THESE CREDI TORS HAVE AGAIN CONFIRMED LOAN IN THE AFFIDAVIT AND ONE OF THEM HAS ALSO EXPLAINED THE REASONS FOR DIFFERENCE IN SIGNATURE ON DIFFERENT DOCUMEN TS WHICH IS FOR THE SAKE OF SECURITY. THEY HAVE ALSO STATED THAT THEY WILL APPEAR BEFORE THE AUTHORITIES WHEN REQUIRED. IT WAS POINTED OUT THAT AFFIDAVITS FROM EIGHT OTHER CREDITORS HAD BEEN FILED EARLIER BE FORE AUTHORITIES BELOW BUT NO ENQUIRIES HAD BEEN MADE. THE LD. AR FUR THER SUBMITTED THAT HE WAS GIVING AN UNDERTAKING TO PRODUCE THESE CRED ITORS ALSO AS AND WHEN REQUIRED BY THE AUTHORITIES BELOW. AS REGARD S SHRI TIWARI, IT WAS SUBMITTED THAT STATEMENT OF THE PARTY WAS NEVER PRO VIDED TO THE ASSESSEE. IT WAS REQUESTED THAT IN THE INTEREST OF JUSTICE T HESE ADDITIONAL EVIDENCES MAY BE ADMITTED AND ASSESSEE MAY BE PROVIDED OPPORTUNITY TO PRODUCE THE PARTIES BEFORE THE AUTHORI TIES AS AND WHEN REQUIRED. ITA NO.2306/M/10 A.Y.06-07 7 4.1 THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND ARGUED THAT THE ASSESSEE HAD ALREA DY BEEN PROVIDED ENOUGH OPPORTUNITIES BY THE AO AND THEREFOR E, FURTHER OPPORTUNITY IS NOT REQUIRED TO BE GIVEN. IT WAS ALSO SU BMITTED THAT ONE OF THE CREDITORS HAD CLEARLY DENIED HAVING GIVEN ANY L OAN. THE LD. DR PLACED RELIANCE ON THE FINDINGS GIVEN IN THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING AD DITION UNDER SECTION 68 OF THE INCOME TAX ACT. THE ASSESSEE DURING THE R ELEVANT YEAR HAD RAISED FRESH LOANS OF RS.1.81 CRORES. TO SUBSTANTI ATE THE LOANS THE ASSESSEE HAD FILED COPY OF CONFIRMATIONS FROM TH E CREDITORS GIVING THEIR P.A. NUMBER AND ALSO FILING COPY OF ACKN OWLEDGEMENT OF FILING RETURNS BY THEM. THE AO NOTED DIFFERENCES IN TH E SIGNATURES ON THE CONFIRMATIONS AND ON THE RETURN OF THE INCOME AND ON PAN CARD OF THE CREDITORS. HE, THEREFORE, ISSUED LETTERS UNDER SECTION 133(6) TO THE CREDITORS WHICH WERE NOT RESPONDED TO. THE AO THEREAFTE R ISSUED SUMMONS UNDER SECTION 131 IN RESPONSE TO WHICH ONLY ONE CRE DITOR ATTENDED WHO DENIED THE LOAN. THE AO, THEREAFTER ASK ED THE ASSESSEE TO PRODUCE CREDITORS WHICH WAS NOT COMPLIED WITH. THE AO, THEREAFTER, TREATED THE AGGREGATE LOANS OF RS.67.00 LACS IN 18 CASES, DETAILS OF WHICH HAVE BEEN GIVEN IN PARA-2 EARLIER TO THE TOTAL INCOME UNDER SECTION 68 OF THE ACT. IN APPEAL CIT(A) CONFIRMED THE ADDITION. ITA NO.2306/M/10 A.Y.06-07 8 5.1 THE CASE OF THE ASSESSEE IS THAT ALL LOAN CREDITORS ARE ASSESSED TO TAX AND CONFIRMATION OF THE P.A. NUMBERS HAD BEEN GIV EN TO THE AO. THE ADDITION HAS BEEN MADE ONLY ON THE GROUND THAT T HERE WERE DIFFERENCES IN THE SIGNATURES AND THAT THE ASSESSEE COULD NO T PRODUCE THE CREDITORS. IT HAS BEEN SUBMITTED THAT THE CREDITORS W ERE NOT CO- OPERATING WITH THE ASSESSEE AS THE ASSESSEE WAS UNABLE TO MAK E PAYMENT TO THEM. HOWEVER, THE ASSESSEE AFTER SUSTAINED EFF ORTS HAS OBTAINED AFFIDAVITS FROM NINE CREDITORS IN WHICH THEY H AVE CONFIRMED THE LOANS AGAIN AND HAVE ALSO STATED THAT THEY WILL A PPEAR BEFORE AUTHORITIES BELOW IF ASKED FOR. SOME OF THEM HAVE GIV EN REASONS FOR DIFFERENCES IN SIGNATURES. THE LD. AR ALSO SUBMITTED THA T HE WAS GIVING UNDERTAKING THAT HE WOULD PRODUCE THE REMAINING EIGH T CREDITORS ALSO BEFORE THE AUTHORITIES AS AND WHEN REQUIRED. AS REGARD S SHRI TIWARI WHO HAD DENIED LOAN, IT HAS BEEN SUBMITTED THAT COPY O F STATEMENT HAD NOT BEEN PROVIDED TO THE ASSESSEE. AFTER CONSIDERIN G ALL THE ASPECTS OF THE MATTER INCLUDING THE AFFIDAVITS AND UNDER TAKING GIVEN, BEFORE US AND ALSO THE FACT THAT THE CREDITORS ARE ASSESSED TO TAX WITH P.A. NUMBERS AND LOANS HAVE BEEN TAKEN BY CHEQUE, WE ARE OF THE VIEW THAT, ADDITIONAL EVIDENCES NEED TO BE CONSIDERED FOR ARRIVING AT A FAIR DECISION IN THE MATTER AND THE ASSESSEE NEEDS TO BE GIVEN ONE MORE OPPORTUNITY FOR PRODUCING THE CREDITORS. WE, THE REFORE, SET ASIDE ITA NO.2306/M/10 A.Y.06-07 9 THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HI M FOR FRESH ORDER AFTER EXAMINATION IF NECESSARY BY REMANDING THE MATTER TO THE AO AND AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE TO PRODUCE T HE CREDITORS AND AFTER CROSS EXAMINATION OF SHRI TIWARI AND AFTER H EARING THE ASSESSEE. 6. GROUND NO.2 IS REGARDING ADDITION OF RS.68,017/- UNDER SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. THE LD. AR FOR THE ASSESSEE DID NOT PRESS THIS GROUND AT THE TIME OF HEARING OF TH E APPEAL. THIS GROUND IS, THEREFORE, DISMISSED AS NOT PRESSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3.8.2012 SD/- SD/- (D. MANMOHAN) VICE PRESIDENT (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 3.8.2012. JV. ITA NO.2306/M/10 A.Y.06-07 10 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.