MANISH KUMUDCHANDRA METHA , MUMBAI V. INCOME TAX OFFICER-19(2)(3), MUMBAI

ITA 2408/MUM/2022

AI Insights

The case involves Manish Kumudchandra Mehta, who appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the disallowance of interest amounting to Rs. 17,82,000 on loans taken from Maximus Gems, deemed as accommodation entries. The original assessment added Rs. 2,29,04,502 as income under section 68 of the Income Tax Act, 1961, which was later partially relieved by the CIT(A) but upheld the interest disallowance. The Tribunal's decision to restore the appeal to the CIT(A) was influenced by a similar precedent in the preceding assessment year, emphasizing a thorough re-examination of the case in light of the previous year's findings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125848 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-09-2022
• Other Referred Cases: Manish Kumudchandra Mehta vs ACIT, ITA No. 2407/Mum./2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Reasonable cause; Accommodation entries; Set aside
• Section: 68; 143(3); 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI G.S. PANNU, PRESIDENT, AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.2408/Mum./2022 (Assessment Year : 2012–13) Manish Kumudchandra Mehta 7, Sudha, 2 nd Floor, Patel Compound Nepean Sea Road, Mumbai 400 036 PAN – AADPM9184G ................ Appellant v/s Asstt. Commissioner of Income Tax Circle–19(2), Mumbai ................Respondent Assessee by : Ms. Mrugakshi Joshi Revenue by : Shri A.D. Chogule Date of Hearing – 06/02/2023 Date of Order – 07/02/2023 O R D E R PER BENCH The present appeal has been filed by the assessee challenging the impugned order dated 27/07/2022 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“learned CIT(A)”], for the assessment year 2012-13. 2. In this appeal, the assessee has raised the following grounds: “Ground No. 1: Addition of Interest of Rs.17,82,000/- payable to Maximus Gems. Manish Kumudchandra Mehta ITA no.2408/Mum./2022 Page | 2 1. The learned CIT(A) failed to take into consideration the facts of the case and the detailed submissions filed along with the all evidences supporting the claim of the Assessee and has made an addition purely on the basis of baseless presumption of nexus between Bhanwarlal Jain Group and impugned Loan Creditors. 2. The learned CIT(A) erred in confirming an addition of Rs. 17,82,000/- being interest paid to Maximus Gems (Unsecured Creditor), which has erroneously been treated as a bogus party'. Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 3. The brief facts of the case as emanating from the record are: The assessee is an individual. For the year under consideration, the assessee filed its return of income on 23/08/2012 declaring total income at Rs.Nil. The return filed by the assessee was selected for scrutiny and statutory notices under sections 143(2) and 142(1) of the Act were issued. On the basis of information received from DGIT (Investigation), Mumbai regarding the search and seizure action conducted on Shri Bhanwarlal Jain and his group, the Assessing Officer (“AO”) observed that the assessee has obtained accommodation entries for unsecured loans from the following concerns of Shri Bhawarlal Jain: Sr. No. Name of the entry issuer Amount 1. Maximus Gems Rs.2,25,87,732 2. Rose Impex Rs.3,16,770 Total Rs.2,29,04,502 4. Accordingly, the assessee was asked to show cause as to why said accommodation entries obtained by the assessee for the unsecured loan should not be treated as bogus/non-genuine and added to the total income. In reply thereto, the assessee furnished the details of loans received and interest Manish Kumudchandra Mehta ITA no.2408/Mum./2022 Page | 3 paid on the said loan. The assessee also submitted that the loans taken were genuine and no addition could be made. The AO vide assessment order dated 25/03/2015 passed under section 143(3) of the Act did not agree with the submissions of the assessee and made an addition of Rs.2,29,04,502 under section 68 of the Act in absence of any evidence regarding identity, creditworthiness, genuineness of the loan lenders. The AO also disallowed the interest amounting to Rs.17,82,000 debited by the assessee on loans taken from the aforesaid entities. 5. The learned CIT(A) vide impugned order granted partial relief to the assessee and deleted the addition of Rs.2,29,04,502 under section 68 of the Act on the basis that the loans were not received by the assessee in the year under consideration. However, the learned CIT(A) upheld the disallowance of interest debited by the assessee on loans taken from aforesaid entities, which were held as accommodation entries in the preceding years. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorised Representative (“learned AR”) at the outset submitted that in the preceding assessment year, the coordinate bench of the Tribunal has set aside the order passed by the learned CIT(A) and restored the appeal to the file of the learned CIT(A). Accordingly, it was submitted that since in the year under consideration only the interest in respect of the loans granted in the preceding year has been disallowed, therefore, the present appeal be also restored to the file of learned CIT(A). Manish Kumudchandra Mehta ITA no.2408/Mum./2022 Page | 4 7. On the other hand, the learned Departmental Representative (“learned DR”) did not raise any objections to the submissions made by the learned AR. 8. We have considered the rival submissions and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee’s own case in Manish Kumudchandra Mehta vs ACIT, in ITA No. 2407/Mum./2022, for the assessment year 2011-12, vide order dated 20/12/2022, set aside the order passed by the learned CIT(A), whereby assessee’s appeal was dismissed on the ground of delay in filing. The coordinate bench, while restoring the appeal to the file of the learned CIT(A), directed the learned CIT(A) to condone the delay, if there is reasonable cause for the delay, and thereafter, to decide the appeals on merits in accordance with the law. Therefore, in view of the above, we deem it appropriate to restore the appeal to the file of the learned CIT(A) for de novo adjudication after the decision in assessee’s appeal in the preceding year, as in this year only the interest debited by the assessee on the loans received in the preceding years is in dispute. As a result, grounds raised by the assessee are allowed for statistical purposes. 9. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 07/02/2023 Sd/- G.S. PANNU PRESIDENT Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 07/02/2023 Manish Kumudchandra Mehta ITA no.2408/Mum./2022 Page | 5 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai