VEERATH GOPALAN NAIR, THANE V. ASST CIT CIR 3, THANE

ITA 2387/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2012 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: DARIS DANIEL
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER / I .T A NO. 2387/MUM/2014 ( / ASSESSMENT YEAR : 2009 - 10 MR. VEERATH GOPALAN NAIR, GROUND FLOOR, GURUMILAN C.H.S. DR. R.P. ROAD, OPP. TILAK NAGAR, P.O. DOMBIVLI (E) - 421 201 DIST THANE / VS. THE ACIT - 3, KALYAN, THANE ./ ./ PAN/GIR NO. AAJPN 9435F ( / APPELLANT ) .. ( / RESPONDENT ) / A PPELLANT BY: SHRI DARIS DANIEL / RESPONDENT BY: SHRI N.V. NADKARNI / DATE OF HEARING : 17 .1 2 . 2015 / DATE OF PRONOUNCEMENT : 17 .1 2 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - I , THANE DATED 25.2.2014 PERTAINING TO ASSESSMENT YEAR 2009 - 10. 2. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITIONS MADE U/S. 68 OF THE ACT. 2.1. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OF F ICER FOUND THAT THE ASSESSEE WAS IN RECEIPT OF HUGE ITA. NO. 2387/M/2014 2 UNSECURED LOANS FROM 28 PERSONS AMOUNTING TO RS. 64,47,010/ - ON WHICH IT HAS PAID INTEREST OF RS. 3,03,726/ - . THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF TRANSACTIONS IN THE LIGHT OF THE PROVISION S OF SEC. 68 OF THE ACT. 2.2. THE ASSESSEE FILED A DETAILED REPLY. IT WAS CONTENDED IN THE REPLY THAT THE TIME GIVEN FOR FURNISHING THE DETAILS IS VERY SHORT AND FURTHER THE ASSESSEE HAS BEEN BORROWING MONIES FROM VARIOUS LENDERS SINCE SEVERAL YEARS AND IN SUCH A SHORT NOTICE IT WAS NOT POSSIBLE TO FURNISH THE NECESSARY DETAILS. 2.3. THE AO DID NOT GIVE ANY FURTHER OPPORTUNITY AND TREATED UNSECURED LOANS OF RS. 64,47,010/ - AS UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S. 68 OF THE ACT. SIMULTANEOUSLY , THE INTEREST OF RS. 3,03,726/ - WAS ALSO DISALLOWED. ON FURTHER PROBE, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED RS. 79,753/ - AS EXPENDITURE ON ACCOUNT OF LOSS ON SALE OF MOTOR CAR. THE AO WAS OF THE OPINION THAT SUCH LOSS IS A CAPITAL LOSS AND ACCORDI NGLY DISMISSED THE CLAIM OF EXPENDITURE. 3. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE UNSECURED LOANS WERE ACCEPTED AND REPAID THROUGH ACCOUNT PAYEE CHEQUE. SINCE SUFFICIENT OPPORTUNITY WAS NOT ALLOWED BY THE AO, THE ASSESSEE MADE A REQUEST FOR FILING OF ADDITIONAL EVIDENCE. THE LD. CIT(A) FORWARDED THE ADDITIONAL EVIDENCE TO THE AO FOR HIS COMMENTS. THE AO FURNISHED THE REMAND REPORT. 3.1. AFTER CONSIDERING TH E FACTS AND THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO, IN THE LIGHT OF THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT THE ITA. NO. 2387/M/2014 3 AO AFTER GOING THROUGH THE ADDITIONAL EVIDENCE DID NOT MAKE ANY ADVERSE OBSER VATION IN RESPECT OF 20 LENDERS AND POINTED OUT DISCREPANCIES IN RESPECT OF 8 LENDERS. THE LD. CIT(A) FURTHER OBSERVED THAT BANK ACCOUNT OF SOME OF THE LENDERS WERE EXAMINED AND IT WAS FOUND THAT IMMEDIATELY BEFORE ADVANCING, THERE WERE CASH DEPOSITS IN T HE BANK ACCOUNTS. ACCORDINGLY, THE LD. CIT(A) RESTRICTED THE ADDITIONS TO RS. 9 LAKHS IN THE CASE OF 3 LENDORS VIZ., SHRI ALEXANDER JOSEPH, MRS. SARASWATI NAIR AND SHRI CHINTAMANI GOKHALE. 4. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 5. THE LD. C OUNSEL FOR THE ASSESSEE STATED THAT THE ADDITIONS CONFIRMED BY THE LD. CIT(A) WAS WITHOUT ASKING THE ASSESSEE ANY QUERY IN RELATION TO THE CASH DEPOSITS FOUND IN THE BANK ACCOUNT OF THESE THREE PERSONS. IT IS THE SAY OF THE LD. COUNSEL THAT HAD AN OPPORTU NITY BEING GIVEN BY THE LD. CIT(A), THE ASSESSEE WOULD HAVE PRODUCED THE PERSON TO EXPLAIN THE CASH DEPOSITS. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD. COUNSEL. A PERUSAL OF THE ORDER OF THE FIRST APPELLATE AUTHORITY SHOWS THAT THE ASSESSEE WAS NEVER QUESTIONED IN RESP ECT OF CASH DEPOSITS FOUND IN THE BANK ACCOUNT OF SHRI ALEXANDER JOSEPH, MRS. SARASWATI NAIR AND SHRI CHINTAMANI GOKHALE. IN OUR CONSIDERED OPINION, THIS VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. AUDI ALTRUM PARTEM WE, THEREFORE RESTORE THIS ISSUE TO T HE FILE OF THE AO. THE AO IS DIRECTED TO DECIDE THE ISSUE AFRESH AFTER ALLOWING AN OPPORTUNITY TO ITA. NO. 2387/M/2014 4 THE ASSESSEE TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT OF THE THREE PERSONS NAMED HEREINABOVE. THE ASSESSEE IS DIRECTED TO FURNISH NECESSARY DETAILS AND IF NECESSARY, PRODUCE THE AFOREMENTIONED PERSONS BEFORE THE AO. GROUND NO. 1 IS ACCORDINGLY TREATED AS ALLOWED. SINCE WE HAVE RESTORED THIS ISSUE TO THE FILE OF THE AO, THE AO IS DIRECTED TO DECIDE THE ALLOWANCE OF INTEREST EXPENDITURE ON BORROWINGS AFTER NECESSARY VERIFICATION. 8. IN SO FAR AS THE DISALLOWANCE OF EXPENDITURE OF RS. 79,753/ - IS CONCERNED, THE LD. CIT(A) AT PARA - 24 HAS OBSERVED THAT SINCE THIS DISALLOWANCE OF CAPITAL LOSS ON SALE OF MOTOR CAR HAS NOT BEEN PRESSED BY THE APPELLANT, THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 9. HOWEVER, BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED THIS ISSUE THEREFORE THE SAME CANNOT BE BRUSHED ASIDE SLIGHTLY. SINCE WE HAVE RESTORED GROUND NO. 1 & 2 TO THE FILE OF THE AO TO THE SAME LIN E, WE RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO. THE AO IS DIRECTED TO DECIDE THE CLAIM OF LOSS ON SALE OF MOTOR CAR AS PER PROVISIONS OF THE LAW. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER , 2015 . SD/ - SD/ - ( PAWAN SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 17 TH DECEMBER , 2015 . . ./ RJ , SR. PS ITA. NO. 2387/M/2014 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI