DCIT CEN CIR 1(3), MUMBAI V. HARESH R. MAJETHIA, MUMBAI

ITA 3045/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0013 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-10-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRITA RANJAN
• Keywords: Unexplained cash credit; Validity of assessment; Reassessment proceedings
• Section: 143(3); 153A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI R C SHARMA , ACCOUNTANT MEMBER & SHRI RAVISH SOOD , J UDICIAL M EMBER IT A NO. 30 45 / MUM/ 20 1 5 ASSESSMENT YEAR : 20 0 6 - 07 DCIT CEN. CIR 1(3) MUMBAI VS. HARESH R MAJETHIA, 7, PATHAI NIWAS, N S ROAD, MULUND (W) MUMBAI 400 080 PAN AEQPM5542P ( APPELLANT ) (RESPONDENT) APPELLANT BY : MS. AMRITA RANJAN RESPONDENT BY : MS. RITIKA AGARWAL DATE OF HEARING : 0 4 / 12 / 2017 DATE OF PRONOUNCEMENT : 28 / 02 / 201 8 O R D E R PER R C SHARMA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A) - 36 , MUMBAI, DATED 09 . 03 . 201 5 , FOR A.Y.20 0 6 - 07 , IN THE MATTER OF ORDER PASSED U/S. 1 53A R.W.S. 143(3) OF THE I NCOME T AX ACT , 1961 . 2. IN THE APPEAL THE REVENUE IS AGGRIEVED BY THE DELETION OF ADDITION OF ` 44,65,000/ - MADE BY THE ASSESSING OFFICER U/S. 68 OF THE I.T. ACT AND ALSO FOR DELETING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 2,48,154/ - . 3. AT THE OUTSET, THE LEARNED AR PLACED ON RECORD SERIES OF ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE AS WELL AS OTHER FAMILY MEMBERS CASES , WHERE IN IDENTICAL ISSUE WAS DEALT BY THE TRIBUNAL VIDE ITS ORDER DATED 16.08.2016 FOR A.Y. 2010 - 11; ORDER DATED 14.11.2014 FOR A.Y.2007 - 08 AND ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 2 O RDER DATED 10.04.2015 FOR A.YS. 2008 - 09 AND 2009 - 10 AND DECIDED IN FAVOUR OF ASSESSEE BY DISMISSING THE APPEAL OF REVENUE. 4. IT WAS HIGHLIGHTED BY THE LEARNED A R THAT SIMILAR ADDITIONS MADE BY THE ASSESSING OFFICER WAS DELETED BY THE CIT(A) AND THE ORDER OF THE CIT(A) WAS CONFIRMED BY THE TRIBUNAL DISMISSING THE APPEAL OF THE REVENUE. 5. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT WITHOUT GIVING ANY COGENT REASON AND JUSTIFICATION, THE AO HAS MADE ADDITION U/S.68. BEFORE THE C IT(A) ASSESSEE STATED AS UNDER: - THE AR HAS SUBMITTED THAT THE AO HAS ERRED IN MAKING AN ADDITION OF RS.44,65,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THE ELEMENTS OF THIS ADDITION WERE EXPLAINED AS FOLLOWS: (1) SHRI MAHESH BAPAT RS. 35,000 / - THE ADDITION HAS BEEN MADE ON THE BASIS THAT THE INVESTIGATION WING HAD CARRIED OUT ENQUIRY AND STATEMENT U/S 131 WAS RECORDED FROM CERTAIN PARTIES WHERE THEY HAVE DENIED ADVANCING ANY LOAN TO THE APPELLANT. IT WAS SUBMITTED THAT THE STATEMENT OF SHRI MAHESH BAPAT AS REPRODUCED ON PAGE 13 OF THE ASSESSMENT ORDER FOR AY 2003 - 04 NOWHERE STATES THAT THE CHEQUE ISSUED AS LOAN TO THE APPELLANT SHRI HARESH R.MAJETHIA OR HIS CONCERN M/S JALARAM ENTERPRISES WAS FROM UNKNOWN SOURCE. THE STATEMENT TALKS OF CERTAIN AMOUNT GIVEN TO M/S MAJETHIA BROTHERS OR M/S EKTA TRADERS WITH WHOM THE APPELLANT IS NOT CONNECTED. THEREFORE, NO ADVERSE INFERENCE CAN BE DAWN IN APPELLANT'S CASE ON THE BASIS OF STATEMENT OF SHRI MAHESH BAPAT. IN FA CT, SHRI MAHESH BAPAT HAS GIVEN AN AFFIDAVIT DULY NOTARIZED DETAILING THE LOAN ADVANCED TO THE APPELLANT ALONG WITH SOURCE OF SUCH AMOUNT. A COPY OF THE SAID AFFIDAVIT HAS BEEN SUBMITTED ON PAGE 18 - 20 OF THE PAPERBOOK FILED ON 21.11.2011. THE SAID AFFIDAVI T REMAINS UN - REBUTTED FROM THE END OF AO. THE FOLLOWING DOCUMENTS, ALREADY FURNISHED TO THE AO DURING THE ASSESSMENT PROCEEDINGS IN SUPPORT OF THE LOAN TRANSACTION, WERE ALSO SUBMITTED: (A) AFFIDAVIT (B) RETURN OF INCOME (C) BALANCE SHEET OF SHRI MAHESH BA PAT DETAILS OF REPAYMENT OF LOAN ON PAGES 18 - 29 OF THE PAPERBOOK FILED ON 21.11.2011. ON PAGE 21 ON THE ASSESSMENT ORDER FOR AY 2003 - 04, AO HAS RELIED UPON THE DECISION OF THE HOH'BLE HIGH COURT IN 'THE CASE OF SHRI KRISHNA VS. CIT (142 ITR 618) TO HOLD TH AT AN AFFIDAVIT NEED NOT ALWAYS BE ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 3 ACCEPTED AS CORRECT. IT WAS SUBMITTED THAT THE SAID DECISION IS TOTALLY ON DIFFERENT FACTS AND THE HON'BLE ALLAHABAD HIGH COURT ITSELF HAS HELD THAT ON PARTICULAR FACTS OF THAT CASE IT IS BEING HELD THAT AFFIDAVIT IS NOT ACCEPTED AS CORRECT ALTHOUGH GENERAL RULE IS THAT AN UN - REBUTTED AFFIDAVIT HAS TO BE TAKEN AS THE CONCLUSIVE PIECE OF EVIDENCE. SECONDLY, IN THAT CASE THE AFFIDAVIT WAS FURNISHED BY THE ASSESSEE HIMSELF. IN THE CASE ON HAND HERE IT IS THE LENDER WHO HAS FU RNISHED AN AFFIDAVIT IN SUPPORT OF THE TRANSACTION. IN THE INSTANT CASE, THERE IS NO EVIDENCE TO REBUT THE AVERMENTS CONTAINED IN THE AFFIDAVIT WHICH FURTHER STAND SUPPORTED BY EVIDENCE IN THE FORM OF COPY OF RETURN OF INCOME OF LENDER, HIS BALANCE SHEET, DETAILS OF REPAYMENT OF LOAN, DETAILS OF INTEREST PAID ETC. HENCE, SUCH AN AFFIDAVIT CANNOT BE DISMISSED LIGHTLY. APART FROM THAT THE INFORMATION CONTAINED THEREIN, IT ALSO SATISFIES THE ONUS OF PROVING THE GENUINENESS OF TRANSACTION, EXISTENCE OF PARTY A ND CAPACITY OF THE PARTY TO LEND. THUS IN ANY CASE, THE AMOUNT ADVANCED BY SHRI MAHESH BAPAT CANNOT BE TREATED AS UNEXPLAINED CREDIT IN THE HANDS OF THE APPELLANT. THE AR HAS FURTHER RELIED UPON THE RULING IN THE CASE OF MEHTA PARIKH & CO.(1956) 30 ITR 181 (SC) AND CIT VS. LAUL TRANSPORT CORPORATION (2009) 180 TAXMAN 185 (P&H) 2) M/S NAMAN HORN MAKERS RS. 8 ,25 , 00 0 / - NAMAN HOME MAKERS, WAS DULY REPRESENTED BY SHRI VIJAY H. GALA WHO HAD ADVANCED THE LOAN IN HIS INDIVIDUAL CAPACITY AS WELL AS THE FIRM A ND HE CONFIRMED THE LOAN. HE ALSO PLACED ON RECORD THE FOLLOWING DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS, WHICH WERE SUBMITTED BEFORE ME. (I) CONFIRMATION LETTER (II) COPY OF BALANCE SHEET (III) COPY OF PARTNERSHIP DEED (IV) BANK STATEMENT REPAYMENT DETAILS (V) COPY OF RETURN OF INCOME/APPEARING AT PAGES 66 - 90 OF PAPERBOOK FILED ON 21.1.2011. THE AO ACCEPTED THE LOAN FROM SHRI VIJAY GALA INDIVIDUALLY BUT BY MISTAKE DID NOT GIVE CREDIT TO HIS APPEARANCE AND ERRONEOUSLY OBSERVED THAT NO ONE ATTENDED FROM M/S NAMAN HOME MAKERS MOREOVER THE AMOUNT OF FRESH CREDIT IS RS.4,75,000/ - AND NOT RS.8,25,00/ - . THE APPELLANT HAS ALSO FILED A RECTIFICATION PETITION DATED 11.01.2011 AGAINST THE AO'S ORDER AND THE SAME HAS BEEN PLACED ON RECORD ON PAGE 91 - 96 OF PAPERBOOK FILED ON 21.01.2011. THE AR SUBMITTED THAT THE ABOVE ADDITIONS HAVE BEEN MADE BY AO ONLY ON THE GROUND THAT THE SAID PARTIES DID NOT ATTEND PERSONALLY TO CONFIRM THE TRANSACTION AND THAT IT WAS NOT WITHIN THE APPELLANT'S CONTROL TO FORCE THE PEOPLE TO ATTEND THE PROCEEDINGS BEFORE AO. EVEN THE LAW DOES NOT COMPEL THE ASSESSEE TO PRODUCE THESE PARTIES. IF THE PARTY DOES NOT RESPOND TO ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 4 SUMMONS, HOWEVER, IF ALL DOCUMENTARY EVIDENCES ARE ON RECORD, THEN NO ADVERSE INFERENCE CAN BE DR AWN IN THE CASE OF BORROWER. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS OF THE HON'BLE DELHI HIGH COURT IN THE FOLLOWING CASES: (A) CIT VS. DWARKA DHISH INVESTMENTS PVT.LTD. (194 TAXMAN 43(DEL.) (B) CIT VS. SAMEER BIO TECH (2009) 26(1} TTCL 55 (DEL.) (C) CIT V. ORBITAL COMMUNICATION P. LIMITED [2010] 327 ITR 560 (DEL.) REGARDING THE UNSECURED LOANS, IN THE NAMES OF 1) BIPIN J.THAKKAR RS. 3,00,000/ - 2) HARESHK.MARU RS. 5,75,000/ - 3) MAHENDRA FREIGHT CARRIER RS.12,00,000/ - 4) VARSHABEN V. UTHEKAR RS. 5,00,000/ - 5) GALA CORPORATION RS. 5,55,000/ - 6) ALPAJADHAVJIDEDHIA RS. 2,00,000/ - 7) DEEPAK LEELADHAR SAVLA RS. 2,75,000/ - THE AR HAS SUBMITTED THAT VOLUMINOUS EVIDENCES PROVING IDENTITY, CAPACITY AND GENUINENESS OF THESE LOAN PARTIES ARE APPEARING AT PAGES 97 - 161 OF THE PAPERBOOK FILED ON 21.01.2011. THE AR HAS ALSO PLACED RELIANCE UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SUSHILADEVI KHADARIA (2009) 27(1) ITCL 278 (BOM) WHEREIN THE HON 'BLE BOMBAY HIGH COURT, AFTER CONSIDERING THE FACT THAT THE LOANS TAKEN THROUGH CHEQUE WERE REPAID THROUGH CHEQUE, INTEREST WAS DULY PAID AND THE LOAN WAS CONFIRMED BY THE PARTIES, HAS HELD THAT NO ADDITION U/S 68 OF THE ACT COULD BE MADE. APART FROM THAT, THE AR HAS ALSO BROUGHT TO NOTICE AND PLACED ON RECORD SEVERAL JUDGMENTS THAT HAVE BEEN PASSED BY VARIOUS BENCHES OF THE HON'BLE TRIBUNAL - INCLUDING THE JURISDICTIONAL BENCH IN THE CONTEXT OF VALIDITY OF ASSESSMENT U/S 153A AND ADDITIONS MADE THEREIN. A B RIEF SUMMARY THEREOF IS AS FOLLOWS: (I) M/S ALL CARGO GLOBAL LOGISTICS LTD. DATED 6/7/2012 (SPECIAL BENCH, MUMBAI). IN THIS MATTER, IT WAS HELD AT PARA 58(B) THAT IN CASE WHERE THE ASSESSMENT HAS BECOME FINAL, THE ASSESSMENT U/S 153A SHALL BE FRAME D ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE RELEVANT PARAGRAPH IS REPRODUCED AS UNDER : - 'IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSE SSMENT U/S 153A SHALL BE MADE ON THE BASIS OF I NCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 5 IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH.' IN THE PRESENT CASE, THE ORDER, U/S 143(3) WAS PASSED ON 24/12/2008, I.E. PRIOR TO THE DATE OF SEARCH, I.E. 7/1/2009. THUS, THE PRESENT CASE FALLS IN THE CATEGORY OF THE CASES WHERE THE ASSESSMENT STANDS FINALIZED PRIOR TO THE DATE OF SEARCH. THEREFORE, THE ASSESSMENT U/S 153A COULD ONLY BE MADE WITH REGARD TO THE INCRIMINATING MATERIAL FOUND. IN THE PRESENT CASE, THE ADDITIONS MADE IN THE ASSESSMENT ORDER U/S 153A ARE WITH REGARD TO THE UNSECURED LOAN TAKEN TO THE TUNE OF RS.44,65,000 AND THE INTEREST THEREON OF RS.248,154/ - . THIS LOAN STOOD DISCLOSED IN THE BOOKS OF ACCOUNT OF THE APPELLANT AND FOR WHICH NO INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THEREFORE, THESE ADDITIONS SQUARELY DESERVE TO BE DELETED. (II) M/S P RATIBHA INDUSTRIES LTD. (2013) 23 ITR (T) 766( MUM TRIB.) IN THIS CASE RESPECTFULLY F OLLO W ING M/'S A L L CARGO GLOBAL LOGISTICS LTD. (SUPRA), IT WAS HELD THAT IN CASE OF COMPLETED ASSESSMENT, AN ORDER U/S 153A IS IN THE NATURE OF REASSESSMENT ORDER WHICH HAS TO BE BASED UPON THE INCRIMINATING MATERIAL FOUND. THE RELEVANT PARAGRAPHS ARE SECTION 49 AND 50.' (III) MGF AUTOMOBILES LTD. (2013) (9) TMI439 ITAT (DELHI). IN THIS CASE, IT HAS BEEN HELD THAT 'THEREFORE FOLLOWING JUDICIAL PRECEDENTS, WE ARE OF T H E OPINION THAT THOUGH ASSESSMENTS FOR THE ABOVE YEARS WERE BOUND T O BE REOPENED BUT ADDITIONS COULD BE MADE ONLY IF SOME INCRIMINATING DOCUMENTS WAS FOUND DURING SEARCH'. THE RELEVANT PARAGRAPHS ARE 14,15 & 16. (IV) SCOPE (P) LTD. (2013) 33 TAXMANN.COM 167 (MUMBAI - TRIB) IN THIS JUDGMENT, WHILE FOLLOWING THE EARLIER JUDGMENTS OF M/S. ALL CARGO GLOBAL LOGISTICS LTD. AND M/S PRATIBHA INDUSTRIES LTD. (SUPRA) THE HON'BLE BENCH HAS FURTHER OPINED AT PARA 13 THAT 'BEFORE PARTING WITH THE ISSUE, WE MAKE IT DEAR THAT HAVING HELD THAT INITIATION OF PROCEEDINGS U/S 153A IS VALID, THE ASSESSING OFFICER, CANNOT RESORT TO A ROVING AND FISHING ENQUIRY TO FIND OUT WHETHER ANY INCOME HAS ESCAPED ASSESSMENT DURING THE REASSESSMENT PROCEEDINGS WHEN THERE IS NO INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH ACTION U/S 132'. 6. AFTER CONSIDERING THE ABOVE SUBMISSIONS, THE CIT(A) DELETED THE ADDITION AFTER OBSERVING AS UNDER: - ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 6 I HAVE CAREFULLY PERUSED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE A.O. IT IS A FACT THAT IN THE REGULAR ASSESSMENT THE SAME UNSECURED LOANS WERE ACCEPTED BY THE DEPARTMENT. DURING THE COURSE OF SEARCH, NO EVIDENCE RELATING TO SUCH UNSECURED LOANS WERE FOUND BY THE DEPARTMENT. ALL THE TRANSACTIONS ARE BY 'A/C PAYEE' CHEQU ES. ALL THE PARTIES HAVE PAN, ARE REGULARLY FILING RETURNS AND BOTH THE ENTRIES REGARDING THE ISSUE AS WELL AS THE RECEIPT OF THE LOAN IS REFLECTED IN THEIR REGULAR BANK ACCOUNT AS WELL AS THE BANK ACCOUNT OF THE APPELLANT. THERE IS NO CASH DEPOSIT BEFORE THE ISSUE OF LOAN AND THESE LOANS HAVE BEEN REPAID. IN THESE CIRCUMSTANCES, JUST BECAUSE THE REPLIES WERE NOT SENT DIRECTLY BUT THROUGH THE APPELLANT IS NOT A GROUND FOR MAKING DISALLOWANCE. IN VIEW THE ABOVE, I DO NOT SEE ANY MERIT IN SUSTAINING THE ADDIT ION WHICH DESERVES TO BE DELETED. IT HAS ALSO RECENTLY BEEN HELD IN.THE CASE OF CIT VS. COMPUTER FORCE (2011) 48 DTK (AHD) (TRIB) 298 THAT IF THE RECEIPT AND REPAYMENT OF THE LOAN IS CORROBORATED BY THE LEDGER ACCOUNTS AND BANK ENTRIES, ADDITIONS IN RESPEC T OF SUCH CREDITS CANNOT BE MADE. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE A.O. OF THE UNSECURED LOANS IS DELETED AND THE GROUNDS OF THE APPEA L OF THE APPELLANT ARE ALLOWED. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORD ERS OF THE AUTHORITIES BELOW AND FOUND THAT CIT(A) HAS GIVEN CATEGORICAL FINDING WITH REGARD TO IDENTITY, GENUINENESS AND CREDITWORTHINESS OF LOAN CREDITORS WITH RESPECT TO THE DOCUMENTS FILED BEFORE THE AO AND HAS DELETED THE SAME. LEARNED DR COULD NOT CONTROVERT THE FINDINGS OF CIT(A). MOREOVER, WE FOUND THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS IN THE CASE OF GROUP CONCERNS OF THE ASSESSEE WHEREIN SIMILAR ADDITIONS SO MADE BY THE AO WAS DELETED BY THE CIT(A) AND THE TRIBUNAL VIDE ITS ORDER DATED 18/01/2017 FOR A.Y.2009 - 10 IN THE CASE OF LILADHAR MAJETHIA, ON 06/05/2016 IN THE CASE OF SHRI LILADHAR RAVJI MAJETHIA FOR THE A.Y. 2010 - 11 AND IN THE CASE OF LILADHAR MAJETHIA FOR A.Y.2011 - 12 VIDE ORDER DATED 18/11/2016 CONFIRMED THE ORDER PASSED BY CIT(A) . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, AS WELL AS FINDING GIVEN BY CIT(A), WITH ITA NO . 3 0 45 /MUM/201 5 SHRI HARESH R MAJETHIA . 7 REGARD T O IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITORS , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON D AY OF 28 / 02 /2018 . SD/ - SD/ - ( RAVISH SOOD ) ( R C SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: / / 2018 SA/KARUNA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, A BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR I NCOME T AX A PPELLATE T RIBUNAL , MUMBAI