ITO 2(3)(3), MUMBAI V. TEXIND CORPORATION P. LTD, MUMBAI

ITA 2521/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48391 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 11-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 20-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH BEFORE SHRI R.V.EASWAR (PRESIDENT) & SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NO.2521/MUM/2009 A.Y 2001-02 THE INCOME TAX OFFICER 2(3)(3), MUMBAI. VS. M/S TEXIND CORPORATION PVT. LTD., KERMANI BUILDING, SIR P.M.ROAD, FORT, M.G.ROAD, MUMBAI 400 023. PAN: AABCT 0882 D (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.K.SINGH. RESPONDENT BY : MR. ANIL THAKRAR. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GR OUNDS: 1. THE LD. CIT[A] HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO OF ` `` ` .10,84,000/- U/S.68 IN RESPECT OF LOANS FROM DIRECT ORS. 2. THE LD. CIT[A] ERRED IN ADMITTING ADDITIONAL EVIDEN CE UNDER RULE 46A WITHOUT GIVING ANY VALID REASON. 3. THE LD. CIT[A] HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO OF ` `` ` .12,56,464/- U/S.68. 2. GROUND NO.1 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ORIGINALLY SOME ADDITIONS WERE MADE AND THE MATTER TRAVELLED UPTO THE TRIBUNAL AND ULTIMATELY VARIOUS ISSUES WERE SET ASI DE TO THE FILE OF THE ASSESSING OFFICER. IN THE FRESH ASSESSMENT PROCEEDI NGS, IT WAS NOTED THAT ASSESSEE HAD RECEIVED LOANS FROM THREE DIRECTO RS WHICH ARE AS UNDER: MS ARCHANA MUNSHAW ` `` ` . 45,000/- MS HEENA MUNSHAW ` `` ` . 10,000/- SHRI ASHUTOSH MUNSHAW ` `` ` .10,29,000/- TOTAL ` `` ` .10,84,000 2 DURING FRESH PROCEEDINGS, IT WAS AGAIN CLAIMED THAT NO FRESH LOANS HAVE BEEN RECEIVED DURING THE YEAR. HOWEVER, ASSESS ING OFFICER OBSERVED THAT NO OTHER EXPLANATION WAS FILED. HE FU RTHER OBSERVED THAT IT WAS CLAIMED BEFORE HIM THAT EVIDENCE REGARDING L OAN TRANSACTION WAS NOT AVAILABLE AS THE SAME HAS BEEN DESTROYED IN THE WATER LOGGING THEREFORE IN THE ABSENCE OF ANY EVIDENCE OR ANY BAN K ACCOUNT, THESE AMOUNTS WERE ADDED TO THE INCOME OF THE ASSESSEE. 3. BEFORE THE LD. CIT[A] IT WAS MAINLY SUBMITTED TH AT LOAN CONFIRMATIONS HAVE ALREADY BEEN FILED BEFORE THE AS SESSING OFFICER ON 29-06-2006. IT WAS FURTHER SUBMITTED THAT, IN FACT, THE SO CALLED LOANS WERE NOT NEW LOANS BUT ONLY REVERSAL OF THE REPAYME NT ENTRY. THE LD. CIT[A] HAS SOUGHT FOR A REMAND REPORT VIDE LETTER D ATED 26-5-2008 AND HAS ALSO MENTIONED THAT THE REMAND REPORT HAS BEEN SUBMITTED VIDE LETTER DATED 5-6-2008. ON THE BASIS OF THE SUBMISSI ONS MADE, HE OBSERVED THAT NO NEW LOANS HAVE BEEN RECEIVED AND, THEREFORE, NO ADDITION COULD BE MADE U/S.68 OF THE ACT. 4. BEFORE US, LD. DR MAINLY SUBMITTED THAT SINCE NO EVIDENCE WAS FILED THAT LOANS ARE REALLY OLD BEFORE THE ASSESSIN G OFFICER, THEREFORE ADDITION MADE WAS JUSTIFIED. EVEN THE CIT[A] HAS NO T GIVEN ANY REASONS FOR THE RELIEF. 5. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE R EFERRED TO PAGE 196 OF THE PAPER BOOK, WHICH IS A COPY OF THE SCHED ULE FOR UNSECURED LOANS FOR F.Y 2000-01 AND THEN REFERRED TO PAGE 213 OF THE PAPER BOOK, WHICH IS THE COPY OF THE UNSECURED LOANS FOR F.Y 1999-2000 AND POINTED OUT THAT THE FIGURES LOANS REMAINED SAME IN CASE OF ALL THE 3 THREE DIRECTORS WHICH CLEARLY PROVES THAT NO FRESH LOANS WERE TAKEN. HE ALSO REFERRED TO PAGES 26 TO 28 OF THE PAPER BOOK, WHICH ARE COPIES OF ACCOUNTS AND POINTED OUT THAT NO FRESH LOANS HAVE B EEN TAKEN FROM THESE THREE DIRECTORS AND, IN FACT, CERTAIN CHEQUES ISSUED TO THEM HAD BEEN REVERSED DUE TO INSUFFICIENT FUNDS WHICH FURTH ER PROVES THAT NO FRESH LOANS WERE TAKEN. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT SCHEDULE ON UNSECURED LOANS FOR BOTH THE YEARS READ S AS UNDER: NAME OF THE DIRECTOR LOAN AMOUNT/ F.Y 1999-00 LOAN AMOUNT/ F.Y 2000-01 ARCHANA H. MUNSHAW 1741964.50 1,741,984.50 A.N.MUNSHAW 3933123.95 3,703,623.85 ALKA MUNSHAW 400000.00 ROHAN MUNSHAW 425000.00 HEENA MUNSHAW 423281.23 423,281.23 THE ABOVE CLEARLY SHOWS THAT LOANS REMAINED SAME FR OM F.Y 1999-00 TO F.Y 2000-01. FURTHER, THE COPIES OF ACCOUNTS OF THE DIRECTORS ARE AS UNDER: TEXIND CORPORATION PVT. LTD. ARCHANA H MUNSHAW LEDGER ACCOUNT 1-MAR-2001 TO 31-MAR-2001 DATE PARTICULARS VCH.TYPE VCH.NO. DEBIT CREDIT 1-3-2001 BY OPENING BALANCE 17,411,964.50 31-3-2001 TO NEW INDIA CO-OP-.BANK PAYMENT 2 45,000.00 CH.NO.711791/ISSUED TO HER ON A/C BY NEW INDIA CO-OP-.BANK RE CEIPT 2 45,000.00 CH.NO.711791/ISSUED TO HER ON A/C CANCELLED DUE TO INSUFFICIENT FUND TO CLOSING BALANCE 45,000.00 17,86,964.50 17, 41,964.50 17,86,964.50 4 THE ABOVE CLEARLY SHOWS THAT DURING THE YEAR CHEQUE S HAVE BEEN ISSUED TO THESE PARTIES WHICH WERE CANCELLED ON THE SAME DATE BECAUSE OF INSUFFICIENCY OF FUNDS. THIS MEANS THAT NO FRESH LOANS WERE TAKEN DURING THE YEAR. IN VIEW OF THE ABOVE, WE FIND NOTH ING WRONG WITH THE ORDER OF THE LD. CIT[A] AND CONFIRM THE SAME. 7. GROUND NO.2 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT LD. DR COULD NOT POINT OUT TO ANY PARTICULAR EVIDENCE WHIC H WAS PRODUCED BEFORE THE CIT[A] BUT WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER. IN ANY CASE, LD. CIT[A] HAS OBSERVED VIDE PARAS 5 & 7 AS UNDER: 5. REPORT UNDER SECTION 250(4) OF THE INCOME TAX A CT 1961 WAS CALLED FOR VIDE LETTER NO.CIT[A]XXX]REPORT]-8-09 AN D THE ASSESSING OFFICER SUBMITTED THE SAME VIDE HIS LETTER NO.ITO/2(3)(REMAND/TEXIND/ASSESSMENT YEAR 01-02/200 80-09 DATED 5-6-2008. 6. XX XX XX 5 7. S0 FAR AS OBJECTION OF THE ASSESSING OFFICER VID E REMAND REPORT DATED 05/06/08 REGARDING ADMISSION OF THE ADDITIONA L EVIDENCE UNDER RULE 46A IS CONCERNED, IT WAS SUBMITTED VIDE LETTER DATED 08/05/08 THAT THE APPELLANT HAD BEEN CONTENDING BEFORE THE ASSESS ING OFFICER ALSO THAT THESE ARE NOT NEW LOANS. HOWEVER, RELEVANT EVIDENCE COULD NOT BE PRODUCED BEFORE HIM BECAUSE OF SERIOUS ILLNESS OF T HE CHIEF ACCOUNTANT, SHRI SRIVASTAV WHO ULTIMATELY EXPIRED I N JANUARY, 2008 AND DESTRUCTION OF RECORDS DUE TO RAINS AND FLOODS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BOMBAY HIGH COURT DECISION IN PRABHAVATI S. SHAH, 23 ITRI AND SERETEC H HOSPITAL & RESEARCH CENTRE LTD. 164 TAXMAN 168, THESE ADDITION AL EVIDENCE ARE ADMITTED. THIS GROUND OF APPEAL IS THEREFORE ALLOWE D. THIS MEANS THAT EVEN IF SOME DETAILS WERE FILED BEF ORE THE LD. CIT[A], THE ASSESSING OFFICER WAS GIVEN OPPORTUNITY TO EXA MINE THE SAME. THEREFORE, WE REJECT THIS GROUND. 8. GROUND NO.3 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ORIGINAL ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT ASSESSEE HAD NOT SUBMITTED ANY EVIDENCE REGARDING LIABILITY AMOU NTING TO ` `` ` .6,87,696/- AND ` `` ` .5,68,769/- PERTAINING TO SIRMAN ENTERPRISES AND SPAN ENTERPRISES, RESPECTIVELY. IN VIEW OF THE DIRE CTIONS OF THE TRIBUNAL, ASSESSEE WAS AGAIN GIVEN AN OPPORTUNITY T O GIVE EVIDENCE. LETTERS U/S.133[6] OF THE ACT WERE ALSO ISSUED TO T HESE PARTIES. HOWEVER, NO REPLY WAS RECEIVED. THE ASSESSEE FILED COPIES OF THE BALANCE CONFIRMATION ALONG WITH THE PURCHASE BILLS, PAN OF THESE PARTIES. HOWEVER, AO WAS NOT SATISFIED AND ADDED TH ESE TWO LIABILITIES TO THE INCOME OF THE ASSESSEE. 9. BEFORE THE LD. CIT[A] IT WAS MAINLY CONTENDED TH AT PURCHASE BILLS FROM M/S SIMRAN ENTERPRISES AS WELL AS SPAN ENTERPR ISES ALONG WITH THE P.A. NUMBERS WERE FURNISHED BEFORE THE ASSESSING OF FICER. THE LD. 6 CIT[A] AFTER CONSIDERING THE SUBMISSIONS, DELETED T HE ADDITION VIDE PARA-9 WHICH IS AS UNDER: 9. I HAVE CONSIDERED THE MATTER CAREFULLY JUST BEC AUSE THE PARTIES COULD NOT BE PRODUCED AFTER A LAPSE OF ABOUT 5 YEAR S, THE ASSESSING OFFICER CANNOT REJECT THE EVIDENCE SUBMITTED BY THE APPELLANT VIZ. BALANCE CONFIRMATIONS, BILLS FOR BOTH THE PARTIES A ND PAN NO. OF M/S. SPAN ENTERPRISES. AS SUBMITTED BY THE APPELLANT CAS E LAWS RELIED UPON BY THE ASSESSING OFFICER ON ADDITION UNDER SECTION 68 [CASH CREDITS] ARE NOT APPLICABLE IN THE CASE OF CREDITORS ON ACCOUNT OF PURCHASES MADE IN BUSINESS. SO LONG AS THE APPELLANT GOT THE GOODS OR DERED, IT IS NOT ITS CONCERN TO KEEP TRACK OF THE SELLER AFTER SUCH A LO NG LAPSE OF TIME, AS HELD IN BHAICHAND H. GANDHI 141 ITR 67 BOM. IT WAS ALSO HELD IN THE CASE OF R.B.JESSARAM FATECHAND 75 ITR 33, BOM THAT IN THE CASE OF CASH TRANSACTION, IT IS HARDLY NECESSARY FOR THE SE LLER TO BOTHER ABOUT THE NAME AND ADDRESS OF THE PURCHASER. IN VIEW OF THE A BOVE FACTS AND CIRCUMSTANCES OF THE CASE, THIS GROUND OF APPEAL NO .2 IS ALLOWED AND THE ADDITION OF ` `` ` .12,56,464/-. IS DELETED 10. BEFORE US, LD. DR SUBMITTED THAT EVEN PERMANENT ACCOUNTANT NUMBER WAS NOT AVAILABLE IN THE CASE OF M/S SIMRAN ENTERPRISES. HE ALSO RELIED ON THE ORDER OF THE ASSESSING OFFICER. 11. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE REFERRED TO PAGES 51 & 52 OF THE PAPER BOOK, WHICH IS A COPY OF THE BALANCE CONFIRMATION OF M/S SPAN ENTERPRISES ALONG WITH THE P.A. NUMBER AND PAGE 53 OF THE PAPER BOOK WHICH IS A COPY OF THE CO NFIRMATION FROM M/S SIMRAN ENTERPRISES. THEN HE REFERRED TO PAGES 5 4 TO 187 OF THE PAPER BOOK, WHICH ARE COPIES OF PURCHASE BILLS FROM THESE PARTIES. HE ARGUED THAT PURCHASES HAVE NOT BEEN DISPUTED BY THE AO, THEN HOW LIABILITY PERTAINING TO SUCH PURCHASES COULD BE DOU BTED. IN ANY CASE, THE ACCOUNTANT OF THE ASSESSEE SHRI SRIVASTAV WAS S UFFERING FROM SOME MENTAL ILLNESS AND COULD NOT REPRESENT THE CASE PRO PERLY IN THE SET ASIDE PROCEEDINGS AND THAT IS WHY THE ADDITIONS HAV E BEEN REPEATED. 7 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. ALL THE PURCHASES BILLS HAVE BEEN FILED BEFORE THE AO AND E VEN CONFIRMATION OF BALANCE OUTSTANDING WAS ALSO FILED. MERELY BECAUSE OF NON FILING OF PAN OF ONE OF THE PARTY, WILL NOT MAKE THE OUTSTANDING LIABILITY DOUBTFUL WHEN PURCHASES HAVE NOT BEEN DOUBTED. THEREFORE, WE FIND NOTHING WRONG IN THE ORDER OF THE LD. CIT[A] AND CONFIRM TH E SAME. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 15/4/2011. SD/- SD/- (R.V.EASWAR) (T.R.SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI: 15/4/2011. P/-*