ITO, CHENNAI V. Rohit Mganlal Mehta, CHENNAI

ITA 2360/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90333 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K BALASUBRMANIAN
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO. 2360/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, BUSINESS WARD-XII(1), CHENNAI-600 006. VS MR. ROHIT MAGANLAL MEHTA, MALWA HOUSE, 10-1, RITHERDON ROAD 1 ST STREET, VEPERY, CHENNAI-7. PAN: AAGPM1007P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.DAS GUPTA, JCIT /RESPONDENT BY : MR. K.BALASUBRMANIAN, ADVOCATE /DATE OF HEARING : 24 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 20 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, CHENNAI DATED 30.4.2014 FOR THE ASSESSMENT YEAR 2010-11. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT COMM ISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDIT ION MADE UNDER SECTION 68 OF THE ACT. 2. BRIEF FACTS ARE THAT ASSESSEE FILED RETURN OF IN COME ON 24.08.2011 ADMITTING INCOME OF ` 1,13,420/-. ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 28.3.2013 DETERMINING THE INCOME OF THE ASSESSEE AT 2 ITA NO.2360/MDS/2014 ` 51,30,220/-. WHILE COMPLETING THE ASSESSMENT, ASSES SING OFFICER MADE ADDITION OF ` 50,00,000/- AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT IN RESPECT OF LOAN BORR OWED BY THE ASSESSEE FROM M/S. ADITICON. SERVICES INDIA PVT. LT D. ON THE GROUND THAT LOAN TRANSACTION REFLECTED IN THE BANK STATEMENTS, GENUINENESS, CREDITWORTHINESS AND EXISTENCE OF THE LOAN CREDITORS COULD NOT BE PROVED AND ESTABLISHED BY TH E ASSESSEE. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION AGAINST WHICH REVENU E IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT M/S. AD ITICON SERVICES INDIA PVT.LTD. IS NOT FUNCTIONING FROM T HE ADDRESS PROVIDED BY THE ASSESSEE. IN FACT, INSPECTOR WHO VI SITED THE PREMISES FOUND THAT NO SUCH COMPANY WAS THERE AT TH E ADDRESS GIVEN. THE ASSESSING OFFICER REQUIRED THE A SSESSEE TO PRODUCE DIRECTORS, BUT THE ASSESSEE COULD NOT PR ODUCE ANY OF THE DIRECTORS OF THE LENDER COMPANY. ENQUIRIES WERE ALSO MADE BEFORE THE REGISTRAR OF COMPANIES AND THE ROC PROVIDED CERTIFICATE OF INCORPORATION, MEMORANDUM O F ARTICLES OF ASSOCIATION OF THE COMPANY. DEPARTMENTAL REPRESE NTATIVE SUBMITS THAT LENDER IS NOT FILING ANY RETURN OF INC OME NOR ANY 3 ITA NO.2360/MDS/2014 ANNUAL STATEMENTS BEFORE THE REGISTRAR OF COMPANIES . THE IDENTITY, GENUINENESS, AND CREDITWORTHINESS OF THE COMPANY ARE NOT ESTABLISHED AND THEREFORE, ASSESSING OFFICE R HAS RIGHTLY TREATED THE LOAN GIVEN BY SUCH COMPANY TO T HE ASSESSEE AS UNEXPLAINED CREDIT. 4. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE H AS OBTAINED LOAN OF ` 50,00,000/- FROM M/S. ADITICON. SERVICES INDIA PVT.LTD. THROUGH RTGS FOR PURCHASE OF PROPERT Y. THE MONEY WAS ROUTED THROUGH BANKING CHANNELS. BOTH BAN K STATEMENTS OF THE ASSESSEE AND LENDER COMPANY WERE FURNISHED BEFORE THE ASSESSING OFFICER THUS THE TRA NSACTION IS GENUINE AND IDENTITY OF THE CREDITOR IS PROVED. SIN CE THE TRANSACTION WAS ROUTED THROUGH RTGS OF THE COMPANY, CREDITWORTHINESS OF THE LENDER IS PROVED AND THEREF ORE SUBMITS THAT THE SAID LOAN CANNOT BE TREATED AS UNEXPLAINED CREDIT OF THE ASSESSEE SIMPLY BECAUSE LENDER IS NOT FILING RE TURNS. BEFORE US, COUNSEL FOR THE ASSESSEE PLACES CONFIRMA TION LETTER FROM THE LENDER M/S. ADITICON. SERVICES INDIA PVT. LTD. CONFIRMING THAT IT HAS LENT LOAN OF ` 50,00,000/- THROUGH RTGS OUT OF WHICH ` 25,00,000/- WAS ALSO REPAID BY THE ASSESSEE THROUGH DEMAND DRAFT. HE HAS ALSO ENCLOSED 4 ITA NO.2360/MDS/2014 COPIES OF BANK STATEMENTS OF ASSESSEE AS WELL AS TH E LENDER. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT LENDE R HAS GIVEN NEW ADDRESS IN THE CONFIRMATION AND THEREFOR E, IT CANNOT BE SAID THAT LENDER IS NON-EXISTENT. COUNSEL FOR THE ASSESSEE SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) IN DELETING THE ADDITION. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, AT THE TIM E OF HEARING, ASSESSEE GAVE CONFIRMATION LETTERS FROM CR EDITORS INCLUDING M/S. ADITICON. SERVICES INDIA PVT. LTD AN D EXPLAINED BEFORE THE ASSESSING OFFICER THAT AMOUNT HAS BEEN TRANSFERRED THROUGH RTGS TO ASSESSEES BANK ACCOUNT . THOUGH THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE LE NDER COMPANY, THE ASSESSEE COULD NOT FURNISH THE SAME. I N THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER ISSUED LETTERS TO LENDER COMPANY TO THE ADDRESS GIV EN BY THE ASSESSEE REQUESTING FOR CONFIRMATION. HOWEVER, THER E WAS NO RESPONSE FROM THE COMPANY AND THE LETTER ADDRESSED TO THEM RETURNED UNSERVED. THEREFORE, ASSESSING OFFICER DEP UTED INSPECTOR TO VISIT THE LOAN CREDITOR IN THE ADDRES S GIVEN BY THE 5 ITA NO.2360/MDS/2014 ASSESSEE I.E. NO.10, RENGANATHAN STREET, TRIPLICANE , CHENNAI. THE INSPECTOR NOTICED THAT NO SUCH COMPANY WAS FUNCTIONING FROM THE GIVEN ADDRESS. THE ASSESSING O FFICER ALSO NOTICED THAT LENDER IS NOT FILING INCOME-TAX R ETURNS. IT WAS ALSO NOTICED THAT LENDER COMPANY IS NOT FILING ANNU AL RETURNS BEFORE THE REGISTRAR OF COMPANIES. THE ASSESSING OF FICER ALSO REQUIRED THE ASSESSEE TO PRODUCE MANAGING DIRE CTOR OR ANY OTHER DIRECTORS OF THE LENDER COMPANY. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THEM BEFORE THE ASSESSIN G OFFICER. THEREFORE, ASSESSING OFFICER CONCLUDED THA T LENDER IS NOT IN EXISTENCE, GENUINENESS OF THE TRANSACTION IS NOT PROVED AND CREDITWORTHINESS OF THE COMPANY IS NOT ESTABLIS HED. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETE D THE ADDITION FOR THE REASON THAT LOAN TRANSACTION WAS R OUTED THROUGH BANKING CHANNELS, THE LENDER COMPANY HAS AD VANCED LOAN TO THE ASSESSEE BY WAY OF RTGS. THIS WAS ALSO VERIFIED BY THE ASSESSING OFFICER. PAN & INCOME-TAX PARTICUL ARS OF THE LENDER COMPANY WERE GIVEN TO THE ASSESSING OFFICER. THE IDENTITY OF THE CREDITOR WAS ESTABLISHED. THE COMMI SSIONER OF INCOME TAX (APPEALS) THEREFORE HELD THAT ADDITION W AS MADE MERELY FOR THE REASON THAT LOAN IS NOT GENUINE BECA USE LENDER DID NOT FILE ITS RETURN WITH INCOME-TAX DEPARTMENT OR REGISTRAR 6 ITA NO.2360/MDS/2014 OF COMPANIES AND THE CREDITOR NOT FOUND IN THE ADD RESS GIVEN AND WHICH MATTERS WERE BEYOND THE CONTROL OF THE ASSESSEE AND THE SAME CANNOT LEAD TO THE CONCLUSION THAT LOAN IS NOT GENUINE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO TAKEN NOTE OF THE FACT THAT ASSE SSEE HAS REPAID 50% OF THE LOAN AMOUNT I.E. ` 25,00,000/- THROUGH DEMAND DRAFT ON 30.04.2013. THEREFORE, COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE SUBMISSIONS OF TH E ASSESSEE THAT THE SAID LOAN AMOUNT CANNOT BE TREATE D AS UNEXPLAINED CREDIT AND HE HELD THAT ALL THREE CONDI TIONS OF PROVING CASH CREDIT INCLUDING IDENTITY, CREDITWORTH INESS AND GENUINENESS OF THE TRANSACTION ARE PROVED. BEFORE U S, THE ASSESSEE FILED CONFIRMATION FROM THE LENDER COMPANY STATING AS UNDER:- ADITICON SERVICES (INDIA) PRIVATE LIMITED I, MR. SANTHANA KUMAR R, DIRECTOR OF ADITOCON SERVICES (INDIA) PVT.LTD., HAVE GIVEN A LOAN OF ` 50 LAKHS TO MR. M.ROHIT MEHTA ON 06/05/2009 THROUGH TRGS TRANSFER FROM OUR ACCOUNT WITH AXIS BANK, T.NAGAR, CHENNAI BEARING ACCOUNT NO.014010200028875 TO A/C. NO.1281101032481 IN CANARA BANK, MOWBRAYS ROAD OF MR. M.ROHIT MEHTA. WE CONFIRM THE ABOVE LOAN. OUT OF THIS LOAN ` 25 LAKHS WAS REPAID BY MR. ROHIT MEHTA THROUGH DD BEARING NO.163180 DT. 30.04.2013 O N CANARA BANK, MOBRAYS ROAD BRANCH. WE ARE ENCLOSING HEREWITH COPY OF OUR BANK ACCOUNT HIGHLIGHTING THE RTGS TRANSFER. WE ARE ASSESSED TO INCOME-TAX DEPARTMENT BY COMPANY CIRCLE. OUR PAN IS AAGCA8410P. DUE TO SOME 7 ITA NO.2360/MDS/2014 DIFFICULTIES WE DID NOT FILE OUR RETURNS FOR A.Y.20 12-13 AND WE WILL TAKE NECESSARY STEPS TO FILE OUR IT RETURNS . WE ARE ALSO ENCLOSING OUR LEDGER PRINTOUT OF MR. M.ROHIT MEHTA IN OUR BOOKS. THANKING YOU, YOURS FAITHFULLY FOR ADITICON SERVICES (INDIA) PVT.LTD. SD/- DIRECTOR. ADITICON: M.T.RAJENS PROPERTIES, 2 ND FLOOR, 73/40, BAZULLAH ROAD, T.NAGAR, CHENNAI-600 017. PH:044 66913800. 7. AS COULD BE SEEN FROM THE ABOVE CONFIRMATION, TH E DIRECTOR OF THE LENDER COMPANY CONFIRMED THAT LENDE R HAS ADVANCED LOAN OF ` 50,00,000/- TO THE ASSESSEE THROUGH RTGS, OUT OF WHICH ` 25,00,000/- WAS REPAID THROUGH DEMAND DRAFT BY THE ASSESSEE AND THEY ARE ASSESSED TO INCO ME-TAX DEPARTMENT AND PAN DETAILS WERE ALSO PROVIDED. IN T HE CONFIRMATION NEW ADDRESS OF THE LENDER WAS ALSO PRO VIDED. THE LENDER COMPANY ALSO PROVIDED ITS BANK ACCOUNT ESTABLISHING THAT LOAN WAS TRANSFERRED THROUGH RTGS . ALL THESE GO TO SHOW THAT LENDER HAS ADVANCED MONIES TH ROUGH RTGS TO THE ASSESSEE AND THE ASSESSEE IN FACT REPAI D HALF OF THE LOAN TO THE LENDER COMPANY. IT IS NOT IN DISPUT E THAT ASSESSEE HAS NOT PROVIDED CONFIRMATIONS IN THE COUR SE OF ASSESSMENT PROCEEDINGS. IN FACT, ASSESSING OFFICER HAS GIVEN 8 ITA NO.2360/MDS/2014 A FINDING THAT ASSESSEE ALSO PROVIDED CONFIRMATION LETTERS FROM THE CREDITORS INCLUDING M/S. ADITICON SERVICES INDIA PVT. LTD. THIS CONFIRMATION LETTER WAS NOT PLACED BEFOR E THE LOWER AUTHORITIES WHERE THE LENDER HAS GIVEN NEW ADDRESS. THEREFORE, SUBJECT TO VERIFICATION OF THE ASSESSING OFFICER, AS TO WHETHER THE LENDER IS OPERATING FROM THE SAID AD DRESS AND THIS CONFIRMATION LETTER IS GIVEN BY ONE OF THE DIR ECTORS OF THE LENDER, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) TREATING THE LOAN TRANSACTIONS AS GEN UINE, THE IDENTITY OF THE CREDITOR IS PROVED AND CREDITWORTHI NESS OF THE ASSESSEE IS ESTABLISHED AS THE TRANSACTION WAS ROUT ED THROUGH BANKING CHANNELS. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF MAY, 2015 . SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 20 TH MAY, 2015 SOMU 9 ITA NO.2360/MDS/2014 12 32 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .