ITO, New Delhi V. Shri Parth Mehrotra, New Delhi

ITA 3333/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86773 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM JAIN
• Assessee Lawyers: VIKRAM SAHAY
• Keywords: Unexplained investment
• Section: 144; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A. NO. 3333/DEL/2011 ASSESSMENT YEAR : 2005 - 06 ITO VS. PARTH MEHROTRA, WARD 46(1), ROOM NO. 427 - B, E - 326, (2 ND FLOOR) MAYUR BHAWAN, GREATER KAILASH NEW DELHI. NEW DELHI (PAN ADEPM9614M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN, FCA RESPONDENT BY : SHRI VIKRAM SAHAY, SR. DR O R D E R PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 6.4.2011 PASSED BY THE CIT(A) XX X, NEW DELHI PERTAINING TO 2005 - 06 ASSESSMENT YEAR ON THE FOLLOWING G ROUNDS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN I) DELETING THE ADDITION AMOUNTING TO RS. 28,50,000/ - RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN MUTUAL FUNDS ; II) NOT CONSIDERING THE FACT THAT IN THE CASES OF U NSECURED LOANS, THE CREDITWORTHINESS OF THE PERSONS ADVANCING LOANS NEEDS TO BE VERIFIED AND IN THE PRESENT CASE, THE CREDITWORTHINESS OF THE PERSONS ADVANCING LOAN TO THE ASSES S EE COULD NOT BE ESTABLISHED DESPITE ATTEMPTS MADE BY THE AO IN THIS REGARD; III) IGNORING THE FACT THAT IN THE CASE OF SMT. BHAMTI MEHROTRA (ONE OF THE PERSONS ADVANCING LOAN TO THE ASSESSEE), THE ASSESSEE DELIBERATELY DIDN T PROVIDE HER LATEST ADDRESS TO THE AO DESPITE BEING ASKED SPECIFICALLY , AND ITA 3 333/DEL/2011 2 MORE SO, DURING THE APPELLATE PRO CEEDINGS CLAIMED BEFORE THE CIT(A) THAT HE WAS NOT GIVEN THE OPPORTUNITY BY THE AO TO PROVIDE THE LATEST ADDRESS OF SMT. BHAMTI MEHROTRA; IV) THAT FROM THE STATEMENT OF BIRLA SUN LIFE MUTUAL FUND, IT IS EVIDENT THAT THE ASSESSEE HAD EARNED SHORT TERM CAP ITAL GAIN ON ITS REDEMPTION, WHEREAS THE SAME HAD BEEN CLAIMED AS LONG TERM CAPITAL GAIN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DECLAR ED AN INCOME BY FILING ITS RETURN. THE SAI D RETURN WAS SELECTED F OR SCRUTINY THROUGH CASS ON THE BASIS OF AIR . A SSESSMENT U/S 144 WA S MADE , RESULTING IN AN ADDITION OF RS. 28,50,000/ - AS THE ASSESSEE WAS FOUND TO HAVE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT IN THE FOLLOWING MUTUAL FUNDS : - DETAIL OF INVESTMENT DATE AMOUNT (RS.) HSBC MUTUAL FUND 12.04.2004 10,00,000/ - HSBC MUTUAL FUND 08.04.2004 5,00 ,000/ - HSBC MUTU AL FUND 06.04.2004 9,00,000/ - HSBC MUTUAL FUND 08.04.2004 4,50,000/ - _______________ 28,50,000/ - 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE EXPLAINED THAT INVESTMENTS HAD BE EN SOURCED PARTLY OUT OF THE REDEMPTION AMOUNT OF RS. 19,09,029/ - OF BIRLA SUN LIFE MUTUAL FUND AND PARTLY OUT OF LO ANS OF RS. 17,00,000/ - FROM CLOSE FRIENDS AND RELATIONS. IN SUPPORT OF ITS CLAIM THE AS SESSEE IS FOUND TO HAVE P L A CED THE FOLLOWING FACTS BEFORE THE CIT( A) : - ITA 3 333/DEL/2011 3 4. THE APPELLANT FILED THE PHOTOCOPIES OF THE STATEMENTS IN RESPECT OF THE INVESTMENTS OF RS. 17,65,000/ - ISSUED BY BIRLA SUN LIFE MUTUAL FUND FOR THE MONTHS OF JULY TO NOVEMBER, 2003 AND FEBRUARY, 2004, WHICH HAD BEEN REDEEMED FOR RS. 19,09, 029/ - ON 1.4.2004. THE PROCEEDS OF THE SAID MUTUAL FUND HAD BEEN CREDITED IN THE BANK ACCOUNT OF HSBC BANK OF THE APPELLANT ON 1.4.2004. 5. THE APPELLANT NEXT SUBMITTED THAT HE HAD RECEIVED LOAN OF RS. 8,00,000/ - FROM SHRI AJAY SOOD BY MEANS OF ACCOUNT PAYEE CHEQUE DATED 6.4.2004. SHRI AJAY SOOD IS BEING ASSESSED AS PER PAN: AIFPS5515B. HE BECAME FATHER IN - LAW OF THE APPELLANT S SISTER MS. BHAMTI MEHROTRA ON HER MARRIAGE TO SH R I ANIL SOOD, SON OF SHRI AJAY SOOD IN NOVEMBER, 2008. THE APPELLANT HAD FILE D THE CONFIRMATION IN RESPECT OF THE SAID LOAN FROM SHRI AJAY SOOD. 6. THE APPELLANT FURTHER STATED THAT HE HAD RECEIVED LOAN OF RS. 4,00,000/ - BY MANS OF ACCOUNT PAYEE CHEQUE FROM HIS SISTER MS. BHAMTI MEHROTRA, SHE IS BEING ASSESSED TO INCOME TAX AS P ER PAN: ARBPM7429B. SHE HAD FILED HER CONFIRMATION IN SUPPORT OF THE SAID LOAN. AFTER HER MARRIAGE, SHE IS SETTLED IN USA. THE APPELLANT IS THE CLASS FELLOW AND FRIEND OF SHRI ANIL SOOD. 7. THE APPELLANT NEXT SUBMITTED THAT HE HAD RECEIVED TWO LOANS OF RS. 2.5 LAKHS EACH FROM HIS CLOSE FRIEND SHRI SATISH VOHRA AND HIS WIFE SMT. ROHINI VOHRA BY MEANS OF TWO ACCOUNT PAYEE CHEQUES. THEY ARE BEING ASSESSED TO INCOME - TAX AS PER PANS: ACMPV234 2 L AND ABUPV5370K RESPECTIVELY. THEY HAD FILED THEIR CONFIRMATIONS I N SUPPORT OF THE SAID LOANS. 8. THE APPELLANT HAS FILED COPY OF HIS BANK ACCOUNT OF HSBC WHEREIN THE SAID LOANS WERE REFLECTED. THE APPELLANT HAS, THEREFORE, SUBMITTED THAT HE HAD DISCHARGED THE BURDEN IN RESPECT OF THE SAID LOANS. 3.1 . THE CIT(A ) F ORWARDED THESE SUBMISSIONS AND FACTS TO THE AO AND A REMAND REPORT WA S INVITED . C ONSIDERING THE SAME , THE CIT(A) AFTER HEARING THE ASSE S SEE DELETED THE ADDITIONS MADE . A GGRIEVED BY TH IS, R EVENUE IS IN APPEAL BEFORE THE TRIBUN A L . 4 . LD. SR. DR IN VITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT NO DOUBT THE ASSE S SEE DID NOT APPEAR BEFORE THE AO IN VIEW OF CHANGE OF ADDRESS ETC. HOWEVER , MERELY BECAUSE AN EXPLANATION HAS BEEN OFFERED IT CANNOT BE ACCEPTED WITHOUT ANY CONCLUSIVE FINDING OF THE C IT(A) . I N THE PRESENT CASE IT WAS HIS SUBMISSION THAT THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN ACCEPTED . ITA 3 333/DEL/2011 4 T HE ARGUMENT S THAT THE INVESTMENT WITH THE MUTUAL FUN D WAS MADE FROM THE FUNDS RECEI VED FROM THE SISTER ON LOAN WHICH WAS REPAID BACK BY INCURRING TH E EXPENDITURE ON HER MARRIAGE , ITSELF SHOWS THE FALLACY OF THE ARGUMENT. IT WAS ALSO HIS ARGUMENT THAT THE SISTER WHO IS IN THE USA HER ADDRE S S WAS NEVER SUPPLIED BY THE ASSE S SEE . IN THE CIRCUMSTANCES THE ONUS CANNOT BE SAID TO HAVE BEEN DISCHARGED. THE A SSESSEE IN THE FACTS OF THE PRESENT CASE IT WAS HIS SUBMISSION HAS NOT P L ACED ALL NECESSARY FAC TS. 5 . LD. AR ON THE OTHER HAND INVITING ATTENTION TO PARA 5 TO 7 OF THE IMPUGNED ORDER WHICH HAS BEEN REPRODUCED IN THE EARLIER PART OF THIS OR DER SUBMIT TED THAT FULL FACTS WERE MADE AVAILABLE AND A REMAND REPORT HAS BEEN CALLED FOR BY THE CIT(A). I NVITING ATTENTION TO PARA S 11,12,13 OF THE IMPUGNED ORDER , IT WAS HIS SUBMISSION THAT THE AO HAS ISSUED REQUISITIONS U/S 133 (6) OF THE ACT TO THE LOAN CREDITOR S AND ALL THE PARTIES HAVE CONFIRMED AND PROVIDED EVIDENCES OF THE FACTS THAT THEY HAD ADVANCED LOANS TO THE ASSE SS EE ON THE SPECIFIC DATES AND THE LOAN HAD BEEN PAID BACK BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE ; THESE FACTS WERE DEMONSTR AT ED BY THE STATEMENT S OF THE RESPECTIVE BANK ACCOUNT S . I T WAS ELABORATED THAT HIS SISTER WAS MARRIED TO THE ASSESSEE S CLASSMATE AND SHIR AJAY SOOD WAS THE FATHER IN LAW OF HIS SISTER WHO HAS ACCEPTED THE FACT THAT HE HAS GIVEN A LOAN OF THE STATED AMOUNT WHICH HAS BEEN PAID BACK . SIMILARLY SH R I S ATISH VOHRA AND SMT. ROHINI VOHRA , REFERRING TO THE IMPUGNE D ORDER IT WAS SUBMITTED SPECIF IC PARA 13 OF THE IMPUGNED ORDER WHICH WOULD ALSO SHOW THAT THEY ALSO REPLIED TO THE NOTICE U/S 133 (6) TO AO IN THE REMAND PROCEEDI NGS AND FILED THE ITA 3 333/DEL/2011 5 CONFIRMATIONS AND COPIES OF THE IR BANK ACCOUNT S EVIDENCING THE FACT THAT THEY HAVE RECEI VED BACK THE SAID LOAN BY ACCOUNT PAYEE CHEQUES , SIMILARLY QUA THE ASSESSEE S LOAN FROM HIS SISTER BHAMTI MEHROTRA, MARRIED TO THE ASSESSEE S CLASS F ELLOW IN USA THE AO IN THE REMAND PROCEEDINGS DID NOT QUESTION ABOUT THE ADDRESS. THE FACT REMAIN S THAT THE LOAN IS AC KNOWLEDGED . 6 . W E HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I T IS SEEN THAT QUA THE AMOUNTS OF RS. 8 LACS AS LOAN FROM SHRI AJAY SOOD FATHER - IN - LAW OF ASSESSEE S SISTER AND RS. 2.5 LAC EACH FROM SHRI S ATISH VOHRA AND HIS WIFE WE FIND THAT CONSIDERING THE NATURE OF EVIDENCES PLACED BY THE ASSES S EE ON RECORD WHICH HAVE NOT BEEN REBUTTED WE FIND THA T THE REVENUE S ARGUMENTS HAVE NO MERITS. IT IS FURTHER SEEN THAT THE FACTUM OF LOAN FROM MS. BHAM T I MEHROTRA THE ASSESS E E S SISTER WHO WAS MARRIED IN NOVEMBER 2008 THE ARGUMENTS THAT IT WAS RETURNED BY INCURRING EXPENDITURE ON HER MARRIAGE IN NOVEMBER 200 8 CANNOT BE DOUBTED. THE MATERIAL FACT IS THAT THE LOAN WAS ADVANCED BY HER. SIMILAR L Y WE FIND MERIT IN THE ARGUMENTS OF LD. AR WHO WHILE ADDRESSING GROUND 4 RAISED BY THE REVENUE HA S CONTENDED THAT THE F ACTU M OF REDEMPTION OF BIRLA SUN LIFE MUTUAL FUND IS NOT DOUB TED BY THE REVENUE AND THE GROU ND ITSELF SUGGEST THAT THE GRIEVANCE IS BASED ONLY TO THE FACT THAT WHETHER IT WA S SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN : THUS THE FACTUM OF REDEMPTION STANDS ACCEPTED AND HAS NOT REBUTTED BEFORE US . C O NSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES WE FIND THAT THE SAID GROUND OF THE REVENUE ALSO DOES NOT HAVE ANY MERIT. IN VIEW OF THE ABOVE MENTIONED ITA 3 333/DEL/2011 6 PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE , WE FIND OURSELVES IN AGREEME N T WITH THE FOLLOWING FINDINGS OF THE CIT(A) RECORDED IN PARA 15 TO 18 AND HO LD THAT THE DEPARTMENTAL APPEAL , BEING DEVOID OF MERIT DESERVES TO BE DISMISSED . THE RELEVANT FIND INGS ARE REPRODUCED HEREIN : - 15. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE DOCUMENTARY EVIDENCE IN RESPECT OF THE SAID ISSUES. THE PURCHASES OF BIRLA SUN LIFE MUTUAL FUND HAD BEEN CLEARLY PROVED IN THE PREVIOUS YEAR ENDING ON 31 ST MARCH, 2004 FOR RS. 17,65,000/ - AS PER THE STATEMENTS ISSUED BY BIRLA SUN LIFE MUTUAL FUND COPIES WHEREOF WERE F ILED BEFORE THE ASSESSING OFFICER. THE SAME HAD BEEN REDEEMED FOR RS. 19,09,029/ - ON 1.4.2004 AS PER THE COPY OF STATEMENT ISSUED BY THE SAID MUTUAL FUND. THE PROCEEDS OF THE SAID MUTUAL FUND WERE REFLECTED IN THE BANK ACCOUNT OF THE APPELLANT OF HSBC BANK ON 1.4.2004. THE PURCHASE AND REDEMPTION OF THE SAID MUTUAL FUND STAND CLEARLY PROVED WITH THE HELP OF THE STATEMENTS ISSUED BY THE BIRLA SUN LIFE MUTUAL FUND. IT APPEARS THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE SAID STATEMENTS NOR THE BANK ACCOU NT OF THE APPELLANT ON THIS ACCOUNT. HE PROCEEDED WRONGLY IN ASSUMING THAT THE PROCEEDS OF THE SAID MUTUAL FUND OF RS. 19,09,029/ - WERE NOT BONAFIDE. THE STAND OF THE ASSESSING OFFICER IS APPARENTLY CONTRARY TO THE STATEMENTS ISSUED BY THE SAID MUTUAL FUND . IN VIEW OF THE SAID STATEMENTS ISSUED BY THE MUTUAL FUND I AM OF THE OPINION THAT THE PROCEEDS OF THE SAID MUTUAL FUND OF RS. 19,09,029/ - STAND FULLY PROVED. 16. I HAVE CONSIDERED THE STATEMENTS FILED BY S/SHRI AJAY SOOD, SATISH VOHRA AND HIS WIFE SM T. ROHINI VOHRA IN RESPONSE TO THE REQUISITIONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 133(6) OF THE INCOME TAX ACT. THEIR STATEMENTS CLEARLY PROVED THE ADVANCE OF THE SAID LOANS TO THE APPELLANT AND THE REPAYMENT THEREOF WITHIN A FEW DAYS. THE LOAN S AND THE REPAYMENTS THEREOF BY MEANS OF ACCOUNT PAYEE CHEQUES STAND PROVED F R OM THE TWO BANK ACCOUNTS OF THE APPELLANT. IN THE LIGHT OF THE SAID DOCUMENTS, IT COULD NOT BE MADE OUT THAT THE SAID LOANS WERE NOT BONAFIDE. I AM, THEREFORE, OF THE VIEW THAT T HE SAID LOANS WERE BONAFIDE. 17. SO FAR AS THE LOAN FROM MS. BHAMTI MEHROTRA (NEE BHAMTI SOOD) IS CONCERNED, THE SAID LOAN HAD BEEN RECEIVED BY MEANS OF ACCOUNT PAYEE CHEQUE AND THE SAME HAD BEEN UTILIZED AT THE TIME OF HERE MARRIAGE IN NOVEMBER, 20 08. THE REQUISITION HAD BEEN ISSUE D TO HER AT THE OLD ADDRESS WITHOUT APPRECIATING THAT SHE WAS MARRIED IN NOVEMBER, 2008 AND HAS BEEN RESIDING THEREAFTER WITH HER HUSBAND IN USA. THE ASSESSING OFFICER DID NOT REQUIRE THE APPELLANT TO FURNISH THE LATEST WHERE ABOUTS OF HIS SISTER. IN THESE CIRCUMSTANCES, IT COULD NOT BE MADE OUT THAT THE SAID LOAN WAS NOT BONAFIDE. 18. THE APPELLANT HAS SUBMITTED THAT HE HAD RECEIVED THE REDEMPTION AMOUNT OF RS. 19,09,029/ - IN RESPECT OF BIRLA SUN LIFE MUTUAL FUND ON 1.4.2 004. FURTHER HE HAD RECEIVED LOANS OF RS. 17,00,000 FROM SHRI AJAY SOOD, MS. BHAMTI MEHROTRA ITA 3 333/DEL/2011 7 (NEE BHAMTI SOOD), SHRI SATISH VOHRA AND HIS WIFE SMT. ROHINI VOHRA, ALL OF WHICH STAND PROVED AS MENTION ED HEREINABOVE. THE APPELLANT SUBMITTED THAT OUT OF THE S AID TOTAL AMOUNT OF RS. 36,09,029/ - (RS. 19,09,029 + RS. 17,00,000), HE HAD MADE INVESTMENT OF RS. 28,50,000 IN THE MUTUAL FUNDS IN THE MONTH OF APRIL, 2004. THUS THE INVESTMENTS OF RS. 28,50,000 IN THE MUTUAL FUNDS STAND PROVED OUT OF THE REDEMPTION AMOUN T OF BIRLA SUN LIFE MUTUAL FUND AND THE SAID LOANS. THE ADDITION OF RS. 28,50,000, THEREFORE, CANNOT BE SUSTAINED. THE SAME IS, THEREFORE, DELETED. 7 . IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT O N 18 TH FEBRUARY, 2 015 . SD/ - SD/ - ( R.S. SYAL ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH FEBRUARY, 2015 VEENA COPY OF TH E ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER DEPUTY REGISTRAR, ITAT.