ONTRACK MEDIA P.LTD, MUMBAI V. ITO 8(2)(4), MUMBAI

ITA 2577/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1204 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 19-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2014
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Unexplained cash credit; Additional evidence
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI DT GARASIA, JM AND SHRI JASON P. BOAZ, AM I.T.A. NO. 2577/MUM/2014 ASSESSMENT YEAR: 2008 - 09 ONTRACK MEDIA PVT. LTD. FLAT NO. 3, EMPIRE BUILDINGM LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI - 400053 VS. ITO 8(2)(4) MUMBAI PAN: AAACO5876H (APPELLANT) : (RESPONDENT) APPELLANT BY : SHRI JITENDRA SINGH (AR) RESPONDENT BY : SHRI CHANDRA VIJAY (DR) DATE OF HEARING : 03/04 /2017 DATE OF PRONOUNCEMENT : 12 /04 /2017 O R D E R PER D. T. GARASIA, JM: THIS APPEAL IS FILED BY THE ASSESS EE AGAINST THE ORDER OF CIT(A) - 17 MUMBAI, DATED 07/01 /201 4 ARISING OUT OF ORDER OF ITO - 8(2)(4), MUMBAI DATED 16/11/2010 PASSED U/S 14 4 OF THE INCOME TAX ACT, 1 961 FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE FOLLOWING GROUNDS ARE RAISED: - 1. ERRED IN CONFIRMING THE ACTION OF THE A.O. IN MAKING THE ADDITION OF RS.14,71,400/ - BY TREATING THE UNSECURED LOAN RECEIVED AS INCOME. 2. ERRED IN CONFIRMING THE ACTION OF THE A.O. FOR MAKING THE ADDITION OF RS.8,91,725/ - BY MAKING AN AD HOC DISALLOWANCE OF 30% OF TOTAL EXPENDITURE OF RS.29,72,418/ - DEBITED TO THE PROFIT AND LOSS ACCOUNT. 2 ONTRACK MED IA ITA NO. 2577/M/2014 3. ERRED IN CONFIRMING THE ACTION OF THE A.O. IN MAKING AN AD HOC ADDITION OF RS.1,12,000/ - AS MISCELLANEOUS RECEIPTS. GROUND NO.3 IS NOT PRESSED. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE HAS FINED THE RETURN OF INCOME ON ELECTRONICALLY ON 30/09/2008. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT WERE ISSUED ACCORDINGLY AND DULY SERVED. BEFORE THE A.O. THE CASE WAS FIXED FOR HEARING ON 23/07/2010, 17/08/2010, 20/08/2010, 04/10/2010 AND 15/11/2010, THE ASSESSEE DID NOT REMAIN PRESENT. THEREFORE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ORD ER U/S 144 OF THE INCOME TAX ACT TO THE BEST OF HIS JUDGEMENT AND BASIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS VERIFIED THE BALANCE SHEET AND FOUND THAT UNSECURED LOANS WERE INCREASED FROM RS.74,13,659/ - AS ON 31/03/2007 TO RS.84,60,534 / - AS ON 31/03/2008. THE LOANS ARE FROM FOUR ENTITLES. OUT OF THESE CLOSING FIGURE OF LOAN FROM M/S CASTEL DEVELOPERS & ESTATE CONSULTANT INCREASED FROM RS.13,20,910/ - TO RS.27,92,310/ - . THE ASSESSEE WAS ASKED TO FILE THE VARIOUS IDENTIFICATION DETAILS OF THE LOAN CREDITORS, LOAN CONFIRMATION AND COPY OF BANK STATEMENTS AND COPY OF INCOME TAX RETURNS FILED BY SUCH CREDITORS. THE ASSESSEE DID NOT FILE ANY EVIDENCE. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE FAILED TO PROVE THE IDENTIF ICATION A ND CAPACITY OF THE SOURCE OF LOA N AND TREATED HIS LOAN AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. MATTER CARRIED TO CIT(A) AND CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING THE LD. AR SUBMITTED THAT THE ASSESSE E HAS TAKEN THE LOAN FROM ONE OF THE PARTNER OF THE ASSESSEE WHO IS SHRI RAJU MANWANI AND MISSES MANWANI, THEY ARE THE DIRECTOR OF CASTEL DEVELOPERS & ESTATE CONSULTANT. MOREOVER, THE ASSESSEE HAS FILED THE CONFIRMATION FROM THE SAME PARTY. MOREOVER, SAID LOAN WAS TAKEN IN EARLIER YEARS AND WHICH WAS ALLOWED BY THE DEPARTMENT THEREFORE, NO ADDITION CAN BE MADE. 5. ON THE OTHER HAND THE LD. DR RELIED UPON THE ORDER OF THE CIT(A). 3 ONTRACK MED IA ITA NO. 2577/M/2014 6. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. THE ASSESSEE HAS SUBMITTED THAT THE ADDITIONAL EVIDENCE BEFORE CIT(A) HAS CALLED FOR REMAND REPORT . F ROM T HE PERUSAL OF THE REMAND REPORT, T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS FILED THE LEDGER ACCOUNT OF LOAN CREDITORS M/S CASTEL DEVELOPERS AND ESTAT E CONSULTANT AND CASTEL INVESTMENT HUF IN THE BOOKS OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CONFIRMATION SIGNATURE OF PROPRIETOR OF M/S CASTEL DEVELOPERS AND ESTATE CONSULTANT AND CASTEL INVESTMENT HUF APPEARS TO BE SIGNED BY THE SA ME PERSON. THE DOCUMENT FILED BY THE ASSESSEE DOES NOT PROVE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. PAN, IT - RETURN AND BANK STATEMENT WERE NOT FILED. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE FAILED TO DISCHA RGE THE ONUS PROVING AND EXPLAIN THE CREDITS OF RS. 14,71,400/ - . HAVING GONE THROUGH , THE REMAND REPORT AND SUBMISSION OF THE ASSESSEE THAT LOAN IN EARLIER YEARS. THE BURDEN ON THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE PERSON GIVING LOAN AND T HE AS SESSEE HAS NOT FILED PAN NO., RETURN OF INCOME AND BANK STATEMENT BEFORE THE A.O. T HE A.O. TO VERIFY THE SAME. THE ASSESSEE IS DIRECTED TO GIVE THE I.T. RETURN, BANK STATEMENT AND PAN NO. TO ESTABLISH IDENTITY CREDITWORTHINESS OF THE LOAN CREDITOR AND GENUINENESS OF THE TRANSACTION . THE A.O. IS DIRECTED TO DECIDE THE MATTER AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7. GROUND NO. 2 THE ASSESSING OFFICER HAS VERIFIED THE VARIOUS EXPENSES DEBITED IN P&L ACCOUNT. THE ASSESSEE DID NOT FILE THE DETAIL. THEREFORE, THE ASSESSING OFFICER HAS GIVEN SHOW CAUSE NOTICE AN AD HOC DISALLOWANCE OF 30% OF THE TOTAL EXPENDITURE DEBITED TO P&L ACCOUNT SHOULD NOT BE DISALLOWED FOR WANT OF EVIDENCE AND PROVE S. THE ASSESSEE DID NOT FILE THE REPLY AND NOT COMPLIANCE WAS MADE THEREFORE, THE A.O. DISALLOWED 30% OF THE TOTAL EXPENDITURE OF RS.29,72,418/ - I.E. RS.8,91,725/ - . MATTER CARRIED TO CIT(A) AND CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER HAS DISALLOWED 30% OF TOTAL 4 ONTRACK MED IA ITA NO. 2577/M/2014 EXPENDITURE DEBITED TO P&L ACCOUNT FOR WANT OF EVIDENCE AND PROVES. WE FIND THAT THE ASSESSEE IS IN BUSINE SS OF CONSTRUCTION. THE ASSESSEE HAS INCURRED THE EXPENDITURE FOR PURCHASING THE PAPER AND NEWS PRINT AND THE ASSESSEE HAVE CLAIMED THIS EXPENDITURE. MOREOVER, THE ASSESSEE HAS ALSO THE COPY OF THE BILL BEFORE US. THEREFORE, LOOKING TO THE FACTS AND CIRCUM STANCES OF THE CASE 30% OF SUCH DISALLOWANCE OF EXPENDITURE IS HIGHER. THEREFORE, WE REDUCE IT FROM 30% TO 5%. IN THE RESULT APPEAL IS PARTLY ALLOWED. JUDGMENT PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL 2017. SD/ - SD/ - ( JASON P. BOAZ ) ACCOUNTANT MEMBER (D.T.GARASIA) JUDICIAL MEMBER MUMBAI, DATED: 12 TH APRIL 2017 *RAHUL SHARMA* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI