DHIREN SHIVJI GOSAR (pROP JAY ENTERPRISE), MUMBAI V. INCOME TAX OFFICER 17(2)(4), MUMBAI

ITA 2674/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5769 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: DINESH SHAH AW SHREYA DOSHI
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 2674 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 ) DHIREN SHIVJI GOSAR (PROP. JAY ENTERPRISES) B 60, RIDDHI SIDDHI APARTMENTS 54/57 , R.A. KIDWAI ROAD KING CIRCLE, MUMBAI 400 019 PAN AACPG6849H . APPELLANT V/S INCOME TAX OFFICER WARD 17 ( 2 ) (4) , MUMBAI . RESPONDENT ASSESSEE BY : SHRI DINESH SHAH A/W SHREYA DOSHI REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 06 . 1 2 .201 8 DATE OF ORDER 30.01.2019 O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 28 TH FEBRUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 32 , MUMBAI, PERTAINING TO ASSESSMENT YEAR 20 11 12. 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF ` 15 LAKH AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 DHIREN SHIVJI GOSAR 3 . B RIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF DEALING IN IRON AND STEEL GOODS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 29 TH SEPTEMBER 2012, DECLARING TOTAL INCOME OF ` 57,250. DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER ON EXAMINING THE BALANCE SHEET OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN OF ` 49,42,700. HE, THEREFORE, CALLED UPON THE ASSESSEE TO SUBMIT THE DETAILS OF THE UNSECURED LOAN. AFTER VERIFYING THE DETAILS OF UNSECURED LOA N AND INTEREST PAID THEREON , AS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES TO CROSS VERIFY THE GENUINENESS OF THE UNSECURED LOANS. AS OBSERVED BY THE ASSESSING OFFICER , NOTICE S I SSUED UNDER SECTION 133(6) OF THE ACT IN RESPECT OF THREE PARTIES REPRESENTING AGGREGATE LOAN AMOUNT OF ` 15 LAKH RETURNED BACK UN SERVED BY THE POSTAL AUTHORITIES ON ACCOUNT OF INCORRECT ADDRESS. THEREFORE, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE T O PRODUCE THE AFORESAID THREE PARTIES BEFORE HIM. SINCE , THE ASSESSEE DID NOT PRODUCE THE CONCERNED PARTIES, THE ASSESSING OFFICER TREATED THE LOAN AMOUNT OF ` 15 LAKH AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED BACK TO THE INCOME OF T HE ASSESSEE. 4 . BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, LEARNED 3 DHIREN SHIVJI GOSAR COMMISSIONER (APPEALS) ALSO UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SU BMITTED , SIMPLY FOR THE REASON THAT NOTICE S ISSUED UNDER SECTION 133(6) TO THE CONCERNED PARTIES RETURNED BACK UN SERVED, THE ASSESSING OFFICER HAS TREATED THE UNSECURED LOAN S AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HE SUBMITTED , THOUGH, BE FORE THE DEPARTMENTAL AUTHORITIES THE ASSESSEE HAD FURNISHED THE INCOME TAX RETURNS FILED BY THE CONCERNED PARTIES ALONG WITH LOAN CONFIRMATION LETTERS, HOWEVER, SUCH EVIDENCES PRODUCED BY THE ASSESSEE WERE NOT DULY CONSIDERED BY THE M. HE SUBMITTED , WHEN T HE CREDITORS ARE INCOME TAX ASSESSEES WITH VALID PAN AND THEIR INCOME TAX RETURNS ALONG WITH CONFIRMATION LETTERS WERE FILED , WITHOUT MAKING PROPER ENQUIRY / INVESTIGATION NO ADDITION COULD HAVE BEEN MADE UNDER SECTION 68 OF THE ACT. THEREFORE, HE SUBMITTE D , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR RE CONSIDERING THE CLAIM OF THE ASSESSEE BY PROPERLY EXAMINING THE DOCUMENTARY EVIDENCE FILED AND MAKING PROPER ENQUIRY. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , RELIED UPON OBSERVATIO NS OF THE DEPARTMENTAL AUTHORITIES, HOWEVER, HE SUBMITTED THAT ASSESSEES CLAIM CAN BE VERIFIED AFRESH BY THE ASSESSING OFFICER IN THE CONTEXT OF DOCUMENTARY EVIDENCES FILED BY HIM. 4 DHIREN SHIVJI GOSAR 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT I S EVIDENT , IN COURSE OF ASSESSMENT PROCEEDINGS, TO CROSS VERIF Y THE GENUINENESS OF UNSECURED LOANS THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO ALL THE SIX LENDERS .H OWEVER, SUCH NOTICES ISSUED TO THREE PARTIES REPRESENTING AGGREGATE LOAN AMOUNT OF ` 15 LAKH RETURNED BACK UN SERVED BY THE POSTAL AUTHORITIES DUE TO INCORRECT ADDRESS. FOR THE AFORESAID REASON COUPLED WITH THE FACT THAT THE ASSESSEE COULD NOT PRODUCE THES E LOAN CREDITORS BEFORE THE ASSESSING OFFICER , HE TREATED THE UNSECURED LOAN OF ` 15 LAKH AS UN EXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HOWEVER, FROM THE EVIDENCES PRODUCED BY THE ASSESSEE VIZ. INCOME TAX RETURNS OF THE CONCERNED LOAN CREDITORS, THEIR BANK ACCOUNT, COPIES OF LOAN CONFIRMATIONS, ETC., IT APPEARS THAT NOT ONLY THE LOAN CREDITORS ARE IDENTIFI ABLE BUT THEY ARE INCOME TAX ASSESSEES WITH VALID PAN. EVEN , THE BANK ACCOUNTS ALSO REFLECT THE LOAN TRANSACTIONS. IN THE CONFIRMATION S FILED AL SO THE CREDITORS HAVE ACCEPTED THE LOAN ADVANCED BY THEM TO THE ASSESSEE. THESE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE, IN OUR VIEW, WERE NOT PROPERLY EXAMINED/VERIFIED BY THE DEPARTMENTAL AUTHORITIES. BEFORE MAKING THE ADDITION, IT IS INCUMBENT U PON THE ASSESSING OFFICER TO CARRY OUT PROPER INVESTIGATION TO CONCLUSIVELY FORM AN OPINION THAT ALL THE INGREDIENTS OF SECTION 68 OF THE ACT ARE NOT SATISFIED . IN THE PRESENT CASE, THE RETURN S OF INCOME OF THE LENDERS ALONG WITH CONFIRMATION S AND BANK ACC OUNT COPIES 5 DHIREN SHIVJI GOSAR ESTABLISHE S THE IDENTITY OF THE CREDITORS. THEREFORE, THE OTHER CONDITIONS LIKE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS REQUIRES TO BE EXAMINED. THE ASSESSING OFFICER COULD HAVE ASCERTAINED THESE FACTS BY MAKING A PROPER ENQUIRY. H OWEVER, NO SUCH ENQUIRY APPARENTLY HAS BEEN MADE BY THE ASSESSING OFFICER OR BY THE LEARNED COMMISSIONER (APPEALS). WHEN THE ASSESSEE HAS FILED CERTAIN DOCUMENTARY EVIDENCES, IT IS NECESSARY AND PROPER TO VERIFY THE AUTHENTICITY OF THE EVIDENCES FILED AND MAKE ADEQUATE ENQUIRY TO FALSIFY ASSESSEES CLAIM . S INCE THE EVIDENCES PRODUCED BY THE ASSESSEE HAVE NOT BEEN EVALUATED / APPRECIATED, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE MUST MAKE IT CLEAR , THE ASSESSING OFFICER SHOULD NOT ONLY CONSIDER THE EVIDENCE S PRODUCED OR TO BE PRODUCED BY THE ASSESSEE BUT SHOULD ALSO MAKE PROPER ENQUIRY BEFORE DECIDING THE ISSUE. NEEDLESS TO MENTION , THE ASSESSING OFFICER SHOUL D AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESUL T, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2019 SD/ N.K. PRADHAN ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.01.2019 6 DHIREN SHIVJI GOSAR 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 (SR. PRIVATE SECRETARY) ITAT, MUMBAI