ITO, New Delhi V. M/s Himland Real Estates Pvt. Ltd., Delhi

ITA 2852/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4295 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2852/DEL./2013 ASSTT. YEAR : 2008 - 09 INCOME - TAX OFFICER, VS. HIMLAND REAL ESTATE PVT. LTD., WARD 12(4), NEW DELHI. B - 46/6, MAIN WAZIRABAD ROAD, BHAJANPURA, DELHI. (PAN: AABCH 7293 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMRIT LAL, SR. DR RESPONDENT B Y : SH. ANIL KUMAR GUPTA, CA DATE OF HEARING : 25.11.2016 DATE OF PRONOUNCEMENT : 13 .12.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: BY MEANS OF THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF LD. CIT(A) - XV, NEW DELHI DATED 21.03.2013 FOR THE ASSESSMENT YEAR 2008 - 09, CHALLENGING THE DELETION OF ADDITIONS OF RS.1,00,58,898/ - MADE ON ACCOUNT OF UNSECURED LOANS AND RS.1,91,17,339/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S. 68 OF THE IT ACT, 1961 (IN SHORT THE ACT ). 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS WITH RESPECT TO ADDITION OF RS.1,00,58,898/ - ALLEGED TO HAVE BEEN RECEIVED FROM MRS. MAMTA ITA NO. 2852/DEL./2013 2 CHOUDHARY. THE BRIEF FACTS ATTENDING TO THIS ISSUE ARE THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN AN INCREASE OF RS.2,09,70,863/ - ON ACCOUNT OF UNSECURED LOANS, OUT OF WHICH A SUM OF R S.1,00,58,898/ - WAS SHOWN TO HAVE BEEN RECEIVED FROM MRS. MAMTA CHAUDHARY, WHO IS ALSO THE DIRECTOR IN THE COMPANY. ON EXAMINATION OF THE DETAILS FURNISHED BY ASSESSEE, THE AO NOTICED THAT OUT OF THE ABOVE AMOUNT OF RS.1,00,58,898/ - , A SUM OF RS.67,87,390/ - WAS RECEIVED IN CASH IN RESPECT TO WHICH THE ASSESSEE PASSED AN ENTRY IN ITS BOOKS OF ACCOUNT ON 31.03.2008 TO THE EFFECT THAT MRS. MAMTA CHOUDHARY BEING AMOUNT RECEIVED AGAINST SALE OF PROPOSED MULTIPLEX TRANSACTION TO LOAN ACCOUNT . THE ASSESSEE WAS ASKED TO FURNISH COPY OF ACCOUNT OF MRS. MAMTA CHAUDHARY. THE ASSESSEE SUBMITTING THE CONFIRMATION OF ACCOUNT OF MRS. MAMTA CHOUDHARY, EXPLAINED THE MRS. MAMTA CHOUDHARY WAS THE PROPRIETOR OF M/S. ASIA HIMALAYA OVERSEAS, A 100% EXPORT ORIENTED UNIT HAVING A TURNOVER OF MORE THAN 30 CRORES AND THE AMOUNT DEPOSITED BY HER IN ASSESSEE - COMPANY WAS OUT OF HER FUNDS. IT WAS FURTHER SUBMITTED THAT IN FINANCIAL YEAR 2004 - 05, DURING THE COURSE OF SURVEY U/S. 131A, MRS. MAMTA CHOUDHARY ALONG WITH HER HUSBAND MR. DHIR AJ SINGH SURRENDERED A SUM OF RS.2,36,00,000/ - UNDER THE HEAD EXCESS CASH FOUND . SUBSEQUENTLY, THE EXPORT BUSINESS WAS CLOSED AND THE CAPITAL WAS INVESTED INTO THE ASSESSEE COMPANY ITA NO. 2852/DEL./2013 3 FOR THE PURPOSE OF PURCHASING THE MULTIPLEX WHICH WAS TO BE DEVELOPED BY THE ASSESSEE COMPANY . IT WAS, THUS, EXPLAINED THAT SMT. MAMTA CHOUDHARY HAD SUFFICIENT FUNDS TO ADVANCE THE ABOVE UNSECURED LOAN TO THE ASSESSEE - COMPANY. IT WAS ALSO EXPLAINED THAT MRS. CHOUDHARY HAD A SUM OF RS.6.11 CRORES RECEIVED FROM ONE MR. GHEVARCHAN D R. JAIN BY CHEQUE IN RESPECT OF PROPOSED SALES OF SHARES OF ASSESSEE COMPANY HELD BY MRS. CHOUDHARY AND THE TRANSFER OF SHARE WAS HELD UP DUE TO LITIGATION BETWEEN THE TWO PERSONS, WHICH IS PENDING BEFORE THE CIVIL COURT. THE ASSESSEE, THUS, TRIED TO EXP LAIN THE SOURCE OF THE IMPUGNED CREDITS. 3. THE LD. ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE REASONS, SUMMARIZED AS UNDER : (I). THE EXPLANATION OF THE ASSESSEE THAT THE SAID ADVANCE WAS FOR THE PURPOSE OF INVESTMENT IN MULT IPLEX WAS AN AFTERTHOUGHT AND THE RESPECTIVE AGREEMENT WAS A DUMB PAPER . (II). MRS. MAMTA CHOUDHARY HAD DECLARED INCOME OF ONLY RS.1,17,550/ - FOR THE YEAR UNDER CONSIDERATION. (III). THE SURRENDER OF AMOUNT ON SURVEY WAS NOT MADE EXCLUSIVELY BY MRS. CHOU DHARY, BUT JOINTLY WITH HER BROTHER - IN - LAW IN F.Y. 2004 - 0 5 AND THERE ARE NO DETAILS AS TO HOW MUCH CASH WAS SURRENDERED BY HER. MOREOVER, THERE WAS NO TRAIL OFF OF CASH AVAILABLE FROM F.Y. 2004 - 05 TO ITA NO. 2852/DEL./2013 4 F.Y. 2007 - 08 TO JUSTIFY AS TO HOW THE SURRENDERED AMOUNT IN 2004 - 05 WAS CARRIED TO 2007 - 08, PARTICULARLY WHEN MRS. MAMTA CHOUDHARY HAD ALSO GIVEN A CASH LOAN OF RS.92,45,130/ - DURING THE F.Y. 2005 - 06 . (IV). THE MONEY COULD BE ADVANCED IN THE YEAR OF SURRENDER , AS IT IS QUITE IMPROBABLE TO KEEP SUCH A HUGE CASH IN HAND FOR MORE THAN 3 YEARS . (V). THE VERACITY OF AGREEMENT SATED TO BE SIGNED BETWEEN MRS. CHOUDHARY AND ONE MR. GHEVARCHAND R. JAIN FOR SALE OF EQUITY SHARE ON ASSESSEE COMPANY AS SOURCE FOR FUNDING FOR MRS. CHOUDHARY IN THE ASSESSEE COMPANY, WAS AL SO DOUBTFUL. (VI). THE AGREEMENT FOR PURCHASE OF MULTIPLEX IS A SELF SERVING DOCUMENT TO JUSTIFY THE CLAIM, AS THE AGREEMENT WAS ENTERED BETWEEN THE TWO MAJOR SHARE HOLDERS, I.E., MRS. MAMTA CHOUDHARY AND SH. DHIRAJ SINGH FOR THAT PROJECT WHICH NEVER EXI STED EVEN ON PAPERS. IT WAS ALSO POINTED OUT THAT AS PER SAID AGREEMENT DATED 15.01.2007, THE MULTIPLEX WAS AGREED TO BE SOLD FOR RS.8,00,00,000/ - , BUT NO ADVANCE WAS TAKEN FROM THE BUYER TILL 14.04.2007. 4. ON THE STRENGTH OF ABOVE REASONS, THE AO, RELYING ON THE DECISION OF HON BLE DELHI HIGH COURT IN CIT VS. DIVINE LEASING AND FINANCE LIMITED, AND SEVERAL OTHER DECISIONS, CONCLUDED THAT THE CREDITWORTHINESS OF MRS. MAMTA ITA NO. 2852/DEL./2013 5 CHOUDHARY STOOD UNPROVED AND ACCORDINGLY ADDED A SUM OF RS.1,00,58,898/ - AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 5. THE ASSESSEE CHALLENGED THIS ADDITION IN APPEAL BEFORE THE LD. CIT(A) AND REITERATING THE SUBMISSIONS MADE BEFORE THE AO, AS NOTED ABOVE, SUBMITTED THE DETAILED CASH FLOW AVAILABILITY OF MR S . CHOUDHARY FROM THE DATE OF SURVEY U/S. 131A DURING WHICH THE UNDISCLOSED CASH WAS SURRENDERED. IT WAS ALSO SUBMITTED THAT SINCE ALL THE CONDITIONS ENVISAGED U/ S . 68 STOOD SATISFIED , THE ADDITION SO MADE BY THE AO WAS NOT SUSTAINABLE. RELIANCE WAS PL ACED ON SEVERAL DECISIONS. THE LD. CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AS TO THE CREDITWORTHINESS OF MRS. CHOUDHARY AND ALSO HER CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE FROM THE DATE OF SURVEY ONWARDS. HE ACCORDINGLY HELD THAT ALL THE ING REDIENTS OF SECTION 68 STOOD SATISFIED BY ASSESSEE AND THUS, DELETED THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITION AFTER ACCEPTING THE CASH FLOW STATEMENT OF MRS. CHOUDHARY WITHOUT CONSIDERING THE REMAND REPORTS SENT BY THE ASSESSING OFFICER IN THIS BE HALF. IT WAS SUBMITTED THAT THE CASH FLOW ITA NO. 2852/DEL./2013 6 STATEMENT WAS NOT GOT VERIFIED FROM THE BOOKS OF ACCOUNT . IN THE REMAND PROCEEDINGS, THE ASSESSEE EVEN DENIED TO PRODUCE THE BOOKS OF ACCOUNTS TO VERIFY THE CASH FLOW STATEMENT FURNISHED BEFORE THE LD. CIT(A). HENC E, THE CREDITWORTHINESS OF THE CREDITOR ACCEPTED BY THE LD. CIT(A) IS NOT JUSTIFIED. 7. THE LD. DR, ON THE OTHER HAND, REITERATED THE CONTENTIONS RAISED BEFORE THE LD. AUTHORITIES BELOW AND SUBMITTED THAT THE LD. CIT(A) HAS PASSED A REASONED ORDER IN DETA IL, WHICH NEEDS NO INTERFERENCE, AS ALL THE INGREDIENTS OF SECTION 68 STOOD SATISFIED AND THEREFORE, THE DELETION OF ADDITION IS QUITE JUSTIFIED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. UNDISP UTEDLY, THE ASSESSEE FILED CASH FLOW STATEMENT OF MRS. MAMTA CHOUDHARY BEFORE THE LD. CIT(A), WHICH WAS ADMITTED AS ADDITIONAL DOCUMENT. THIS CASH FLOW STATEMENT HAS A VERY CRUCIAL ROLE IN THE PRESENT CASE. HOWEVER, THE LD. CIT(A) VIDE LETTER DATED 13.02. 2012 (PLACED AT PAPER BOOK PAGE 43) REMANDED THE SAID ADDITIONAL DOCUMENT TO THE AO FOR GIVING HIS REPORT WITH THE FOLLOWING DIRECTIONS : SINCE THE ADDITIONAL DOCUMENTS HAVE NOW BEEN ACCEPTED, IT IS THEREFORE, REQUESTED THAT IN RESPECT OF CREDIT COMING FROM MAMTA CHAUDHARY PLEASE VERIFY THE CASH FLOW AND IF CONSIDERED FIT, THE BOOKS OF M/S. ASIA HIMALAYA OVERSEAS MAY ALSO BE EXAMINED AND SUC H VERIFICATIONS AS ARE ITA NO. 2852/DEL./2013 7 NEED IN THE CASE MAY BE MADE AND GIVEN YOUR COMMENTS ON THE CREDITWORTHINESS OF MAMTA CHADHARY AND IN RESPECT OF CREDIT COMING FROM KISHORE KAINTH, PLEASE VERIFY THE AUTHENTICITY OF THE DOCUMENTS ALREADY SUBMITTED TO YOU VIDE MY LETT ER DATED 05.12.2001. THE REPORT IN THE MATTER MAY BE SENT BY 12.03.2012. 8.1 THE AO SENT HIS REMAND REPORT VIDE LETTER DATED 12.03.2012, STATING THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE CREDITOR. TH E RELEVANT COMMENTS OF THE AO SPEAK AS UNDER : THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF A/C OF PROPRIETORSHIP CONCERN & ALSO OF COMPANY AS PER SPECIFIC INSTRUCTION OF YOUR LETTER PARA 3 TO VERIFY THE CASH FLOW VIS - - VIS WITH BOOKS OF M/S. ASIA HIMALAYA OVERSEAS. THESE DOCUMENTS COULD NO T BE VERIFIED SPECIALLY CASH FLOW STATEMENT ON WANT OF BOOKS OF ACCOUNTS WHICH ASSESSEE S COUNSEL PREFERRED NOT TO PRODUCE BEFORE THE UNDERSIGNED. NO WRITE UP HAS BEEN FILED BY THE COUNSEL. 8.2 THE LD. CIT(A) AGAIN VIDE LETTER DATED 05.10.2012 DIRECTED T HE AO TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE FOR EXAMINATION OF THE ADDITIONAL EVIDENCE. IN COMPLIANCE, THE AO GAVE SEVERAL OPPORTUNITIES TO THE ASSESSEE AS IS EVIDENT FROM ITS SECOND REMAND REPORT DATED 01.11.2012 (PLACED AT PAGE 45 OF THE PAPER BOO K) WHEREBY THE AO HAS REPORTED ASSESSEE S FAILURE TO VERIFY THE DOCUMENTS AND THE PLEA TAKEN BY ASSESSEE VIDE LETTER DT. 01.11.12 AS UNDER: THE ASSESSEE INSTEAD OF PRODUCING THE BOOKS OF ACCOUNTS FILED ONE PAGE LETTER DATED 01.11.2012. ACCORDING TO THIS L ETTER, THE ASSESSEE CLAIMED ITA NO. 2852/DEL./2013 8 THAT DOCUMENTS SUBMITTED AS ADDITIONAL EVIDENCE EITHER ARE NOT SUBJECT TO CROSS - VERIFICATION OR DO NOT CONSTITUTE AS ADDITIONAL EVIDENCE. IN THE THIRD PARA OF THIS LETTER CLAIMED THAT CASH FLOW STATEMENT OF MRS. MAMATA CHOUDHARY HAS NOTHING TO DO WITH THE BOOKS OF ACCOUNT OF THE COMPANY. 9. ON THE PREMISE OF THESE REMAND REPORTS, THE FACT WHICH EXISTS IN THE PRESENT CASE IS THAT THE ASSESSEE DID NOT GET THE CASH FLOW STATEMENT SUBMITTED BEFORE THE CIT(A) VERIFIED BEFORE THE AO. THE LD. CIT(A), HOWEVER, HAS ACCEPTED THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE WITHOUT CONSIDERING THE REMAND REPORTS SUBMITTED BY AO ON THIS ACCOUNT. THE LD. CIT(A) HAS NOT EVEN REFERRED TO ANY OF THE ABOVE REMAND REPORTS IN THE IMPUGNED ORDER I N SPITE OF THE FACT THE VERIFICATION OF THE ADDITIONAL DOCUMENT, I.E., CASH FLOW STATEMENT ETC. WAS DIRECTED BY HIM TO BE VERIFIED BY THE AO WITH REFERENCE TO THE BOOKS OF ACCOUNTS . WE, THEREFORE, FIND THAT THE MATTER REQUIRES RE - ADJUDICATION AT THE STAGE OF LD. CIT(A). ACCORDINGLY, THE ORDER OF THE LD. CIT(A) DESERVES TO BE SET ASIDE AND THIS ISSUE IS RESTORED TO HIS FILE FOR DECIDING THE SAME AFRESH BY WAY OF SPEAKING ORDER AS PER LAW AFTER CONSIDERING ALL THE FACTS AND EVIDENCES AVAILABLE ON RECORD AS WELL AS REPORTED BY THE AO . NEEDLESS TO SAY, BOTH THE PARTIES SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2852/DEL./2013 9 10. THE FACTS RELATING TO SECOND ISSUE OF DELETION OF A DDITION OF RS.1,91,17,339/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS, ARE THAT THE AO NOTICED THAT THE ASSESSEE DURING THE YEAR RECEIVED AN AMOUNT OF RS.1,57,00,000/ - FROM SHRI KISHOR KAINTH AND RS. 34,17,339/ - FROM M/S. HIMLAND (U.K). THE ASSESSEE WAS ASKED GIVEN THE DETAILS. IN RESPONSE, IT WAS SUBMITTED THAT THESE AMOUNTS WERE RECEIVED AS ADVANCE FROM THESE PARTIES AGAINST THE SALE OF FLATS. THE AMOUNT OF RS.1.57 CRORES RECEIVED FROM MR. KISHORE KAINTH WAS FORFEITED ON CANCELLATION OF THE AGREEMENT I N TERMS OF THE CANCELLATION AGREEMENT SINGE BETWEEN TWO PARTIES AND THAT THERE WAS A CIVIL SUIT PENDING IN THE HIGH COURT OF HIMANCHAL PRADESH FOR RECOVERY OF RS.49,67,943/ - IN THE CASE OF M/S. HIMLAND REAL ESTATE (UK). THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION OF RS.1,91,17,339/ - U/S. 68 OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION OBSERVING IN PARA 6.3 OF THE IMPUGNED ORDER AS UNDER : 6.3 REGARDING THE GROUND NO. 2 OF THE APP EAL RELATING TO UNEXPLAINED CASH CREDIT OF RS.1,91,17,339/ - , THE APPELLANT HAD FURNISHED BEFORE ME THE RELEVANT AGREEMENTS, CANCELLATION AGREEMENT, COPIES OF SUIT AND THE COPIES OF THE ORDER OF THE COURTS IN RESPECT OF THE CONTENTION THAT THE AFORESAID AMO UNT RECEIVED FROM MR. KISHORE KAINTH AND M/S. HIMLAND REAL ESATE (UK) (WHICH WAS CLOSELY HELD COMPANY OF MR. KISHORE KAINTH AND HIS FAMILY) WAS A GENUINE TRANSACTION FOR ACQUIRING MARKETING RIGHTS IN A PROPOSED REAL ESTATE VENTURE OF APPELLANT. THE FACT TH AT SUCH PAYMENTS WERE OUT OF THE NRE ACCOUNT OF MR. KISHORE KAINTH AND AS A PART OF WHICH, AN AMOUNT OF RS.34.87 LAKHS WAS PAID BY ONE MR. BALDEV ITA NO. 2852/DEL./2013 10 SINGH BY CHEQUE, IS ALSO UNDISPUTED. KEEPING IN VIEW THE ABOVE, THE CASH CREDIT IN RESPECT OF MR. KISHORE KAIN TH AND M/S. HIMLAND REAL ESTATE (UK) LTD. IS ALSO HELD TO BE PROVED. ACCORDINGLY, THE ADDITION ON THIS GROUND IS ALSO DELETED. 11. IN VIEW OF ABOVE FINDINGS OF THE LD. CIT(A) SUPPORTED BY EVIDENCES ON RECORD AS REFERRED TO BY THE FIRST APPELLATE AUTHORITY, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE DELETION OF THIS ADDITION. THE LD. DR COULD NOT BE ABLE TO REBUT THE FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE NOR IS THERE ANY MATERIAL AVAILABLE ON RECORD TO DISCARD THE SAME. ACCORDINGLY, GROUND NO. 3 OF THE REVENUE ON THIS ISSUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2016 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13.12.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI