ACIT 24(3), MUMBAI V. RAMESH RAMSWARUPDAS JINDAL, MUMBAI

ITA 3095/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3126 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CIRCUMSTANCES OF CASE
• Keywords: Accommodation entries; Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 3095 /MUM/201 7 ( / ASSESSMENT YEAR: 20 1 2 - 13 ) ACIT - 24 ( 3 ) R. NO.413, 4 TH FLOOR, PIR AMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 . / VS. SHRI RAMESH RAMSWARUPDAS JINDAL B/2/601, GREENLAND CHS LTD., J.B. NAGAR, ANDHERI (E), MUMBAI - 400059. ./ ./ PAN/GIR NO. : AADPJ1 1 24F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 14 / 11 / 201 9 / DATE OF PRONOUNCEMENT : 27 /11 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 23 . 0 2 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 51 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 1 2 - 1 3 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS OF RS.1,30,00,000/ - AND INTEREST ON UNEXPLAINED UNSECURED LOANS OF RS.21,72,459/ - FOR A.Y. 2012 - 13, WITHOUT APPRECIATING THE FACT THAT SHRI PRAVEEN KUMAR JAIN, IN REVENUE BY : SHRI DROP SINGH MEENA (SR. AR) ASSESSEE BY: SHRI HARIDAS BHATT ITA NO. 3095 /M/201 7 A.Y.20 12 - 13 2 HIS STATEMENT RECORDED ON OATH U/S. 132(4) OF THE I.T. ACT ON 01 - 10 - 2013 ADMITTED THAT HE IS INDULGED IN PROVIDIN G ACCOMMODATION ENTRIES AND ALSO EXPLAINED THE COMPLETE MODUS OPERANDI OF PROVIDING SUCH ENTRIES.' 2. ' WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED UNSECURED BANS AND INTEREST ON UNEXPLAINED UNSECURED LOANS FOR AY. 2012 - 13 WITHOUT APPRECIATING THE FACT THAT IN THE STATEMENTS RECORDED U/S. 132(4)/131 OF THE I.T. ACT THE DIRECTORS/ PROPRIETORS OF THE RELATED CONCERNS WHO PROVIDED ACCOMMODATION ENTRIES ADMITT ED THAT THEY WERE MERELY DUMMY DIRECTORS AND USED TO SIGN DIFFERENT PAPERS FOR NOMINAL CONSIDERATION GIVEN BY SHRI PRAVEEN KUMAR JAIN'. 3. ' WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS AND INTEREST ON UNEXPLAINED UNSECURED LOANS FOR A.Y. 2012 - 13 WITHOUT APPRECIATING THE FACT THAT IT WAS ESTABLISHED BEYOND DOUBT THAT PRAVEEN JAIN GROUP IS INDULGED IN PROVIDING ACCOMMODATION ENTRIES IN THE NAT URE OF LOANS/ADVANCES/LTCG/SALE/PURCHASES.' 4. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE IN A.Y.2012 - 13 ON ACCOUNT OF DISALLOWANCE OF LOSS ON ADVANCES CLAIMED BY THE ASSESSEE OF RS .53,57,232/ - WITHOUT APPRECIATING THE FACT THAT IN THE INSTANT CASE THE DEBT HAS NOT BECOME BAD AND THE ASSESSEE HAD HOPES OF RECOVERING THE ADVANCES BACK THROUGH COURT OF LAW.' 5. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(APPEALS) ON THE ABOVE GR OUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED.' 6. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY.' 3 . BEFORE DISCUSSING FURTHER, IT IS NECESSARY TO BROUGHT INTO NOTICE OF CERTAIN FA CTS ON RECORD. IN FACT, THE PRESENT APPEAL HAS BEEN DECIDED BY THE HONBLE ITAT BY VIRTUE OF ORDER DATED 15.11.2017 . AT THE TIME OF DECIDING THE SAID APPEAL, THE GROUND NO.4 WAS NOT DISCUSSED AND DECIDED, THEREFORE, THE REVENUE MOVED AN APPLICATION TO RECA LL THE MATTER AND AFTER THE NOTICE TO ITA NO. 3095 /M/201 7 A.Y.20 12 - 13 3 THE APPELLANT, THE APPEAL WAS RECALLED TO THE EXTENT OF ADJUDICATION OF THE ISSUE NO.4 IN THE APPEAL BY VIRTUE OF ORDER DATED 09.05.2019 . N OW THE CASE HAS COME BEFORE US FOR HEARING. THE BRIEF FACTS NOWHERE REQUIRED TO BE REPEATED BECAUSE THE SAME HAS BEEN NARRATED IN THE ORDER PASSED BY HONBLE ITAT DATED 15.11.2017 . THE AO DECLINED THE CLAIM OF RS.53,57,232/ - TOWARDS LO SS ON ADVANCES GIVEN BY THE ASSESSEE. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE R EVENUE HAS FILED PRESENT APPEAL BEFORE US. ISSUE NO. 4 4 . UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE IN SUM OF RS.53,57,232/ - TOWARDS LOSS ON ADVANCE GIVEN. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE GAV E THE ADVANCES IN SUM OF RS. 75 LACS TO THE PARTY AGAINST WHICH SUPPLIES WERE MADE. THE SUPPLIER COULD NOT DELIVER G OODS AGAINST THE BALANCE MONEYS DUE TO THE FINANCIAL CRUNCH. THE SUPPLIER SUBMITS CHEQUES FOR THE BALANCE MONEY WHICH WERE BOUNCED. THE ASSES SEE FILED THE SUIT U/S 138 OF THE NEGOTIABLE INSTRUMENT ACT WHICH WERE PENDING BEFORE THE COURT FOR THE DISPOSAL. THE AO DECLINED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THIS FACT THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF MONEY L E NDING BECAUSE THE ASS ESSEE WAS IN THE BUSINESS OF TRADING IN STEEL AND OTHER PRODUCTS. SUBSEQUENTLY, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECO RD: - 24.2. HELD: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, IMPUGNED / ASSESSMENT ORDER -- AND - WRITTEN SUBMISSION OF THE APPELLANT. I FIND FORCE IN THE ARGUMENT PUT - FORTH - BY THE APPELLANT T THE FIRST PLACE, ITA NO. 3095 /M/201 7 A.Y.20 12 - 13 4 THE APPELLANT HAS GIVEN - ADVANCES TO ITS SUPPLIERS WHICH IS HIS NORMAL TRADE PRACTICES. THE APPELLANT HAS ALSO GIVEN AN ADVANCE OF RS.75 LACS TO MIS DYNAMIXURJA LTD AGAINST WHICH PART SUPPLIES WERE MADE. THE SUPPLIER COULD NOT DELIVER GOODS AGAINST THE BALANCE MONEYS, DUE TO THE FINANCIAL CRUNCH AND CHEQUES GIVEN BY THE SUPPLIER FOR THE BALANCE MONEYS BOUNCED. APPELLANT WRITTEN OFF RS.53,57,232/ - IN HIS BOOKS OF ACCOUNTS IN THE NATURE OF GENERAL BUSINESS LOSS. HE HAS ALSO FILED SUIT U/S 138 OF THE IPC IN THE 201.0 TO RECOVER THE ADVANCE. THEREAFT ER, THE APPELLANT HAD AN OUT OF COURT SETTLEMENT WITH THE SAID PARTY IN OCTOBER 214 AND HAS RECEIVED BACK/RECOVERED RS.28,00,000/ - AND TREATED THE SAME AS RECEIPTS IN HIS P&L ACCOUNT UNDER THE HEAD 'RECOVERY OF ADVANCES WRITTEN OFF'. THIS PROVES GENUINENES S - 516 - USINESS LOSS WHICH APPEARS TO BE A BONAFIDE BUSINESS TRANSACTION. I AM OF CONSIDERED OPINION THAT APPELLANT AT THE FIRST PLACE IS ENTITLED TO WRITE OFF THE AMOUNT IN DISPUTE AS BUSINESS LOSS. THIS FACT IS FURTHER STRENGTHENED WHEN HE HAS OFFERED THE RECOVERED AMOUNT FOR TAX IN THE A.Y.2015 - 16 IN HIS RETURN. HENCE, ADDITION MADE BY THE AO CANNOT BE SUSTAINED. THE GROUNDS OF APPEAL ARE ALLOWED . 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSEE HAS GIVEN THE ADVANCE TO ITS SUP PLIER WHICH WAS NORMAL TRADE OR PRAC TICES. THE ASSESSEE HAD GIVEN ADVANCE OF RS.75 LACS TO M/S. DYNAMIX URJA LTD. AGAINS T WHICH PART SUPPLIES WERE MADE. THE CHEQUES ISSUED BY DYNAMIX URJA LTD. WERE BOUNCED WHICH WERE IN CONNECTION WITH THE RETURN OF ADVANC E . THE APPELLANT WRITTEN OFF AN AMOUNT OF RS. 53,57,232/ - IN HIS BOOKS OF ACCOUNTS. HE HAS ALSO FILED COMPLAINT U/S 138 OF THE NEGOTIABLE INSTRUMENTS ACT WHICH WERE PENDING FOR THE RECOVERY OF THE ADVANCE /DISPOSAL . THEREAFTER, THE MATTER WAS SETTLED BY ASSE SSEE IN OCTOBER, 2014 AND RECOVERED AN AMOUNT OF RS.28 LACS AND TREATED THE SAME AS RECEIPT IN HIS P & L ACCOUNT UNDER THE HEAD ADVANCE WRITTEN OFF. IT IS CLEARLY BUSINESS LOSS AND SEEMS BONA FIDE TRANSACTIONS. THE SAID AMOUNT WAS OFFERED TO TAX IN THE A.Y .2015 - 16 IN THE RETURN OF INCOME . ON APPRAISAL OF THE FINDING GIVEN BY CIT(A) WE NOWHERE FIND ANY ILLEGALITY AND INFIRMITY . TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, WE ITA NO. 3095 /M/201 7 A.Y.20 12 - 13 5 AFFIRM THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE T HIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 /11 /2019 . SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 27 /11 /2019 V IJAY PAL SINGH /SR. PS ITA NO. 3095 /M/201 7 A.Y.20 12 - 13 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI