ACIT 24(1), MUMBAI V. LAXMI C. MISTYRY, MUMBAI

ITA 3393/MUM/2013

• Counselvise Citation: 339319914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A JAIKARAN
• Assessee Lawyers: S C AGRAWAL
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Reasonable cause
• Section: 68

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. . , ! '#$% , # &' BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.3393/MUM/2013, ( ( ( ( / ASSESSMENT YEAR-2009-10 ACIT 24(1), C-13, R.NO. 503, PRATYAKSHKAR BHAVAN, BANDRA(E), MUMBAI-400051 VS. LAXMI C. MISTRY, 401, MEGHRAJ, SARASWATI BAUG SOCIETY, JOGESHWARI (E), MUMBAI-400060 PAN:AAEPM2534R ( )* / APPELLANT) ( +,)* / RESPONDENT) '' - . # / REVENUE BY : SHRI A.JAIKARAN /0 /0 /0 /0 . . . . # ## # / ASSESSEE BY : SHRI S.C.AGRAWAL - -- - 0 0 0 0 / DATE OF HEARING : 03-09-2014 1( - 0 / DATE OF PRONOUNCEMENT : 03-09-2014 , 1961 1961 1961 1961 - - - - 254 254 254 254( (( (1 11 1) )) )# $0;0 &#< # $0;0 &#< # $0;0 &#< # $0;0 &#< ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # ## # &' &' &' &' '#$% '#$% '#$% '#$% # ## # : CHALLENGING THE ORDER DTD.27.02.2013 OF THE CIT(A)- 34,MUMBAI,ASSESSING OFFICER(AO)HAD RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 20,00,000/- MADE BY THE AO U/S. 68 OF THE ACT BY ACCEPTI NG ADDITIONAL EVIDENCES, WHICH WERE NOT PRODUCED AT ASSESSMENT STAGE, IN CONTRAVENTION TO RULE 46A OF TH E ACT. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,22,538/- MADE BY THE AO IN RESPECT OF DISCREPANCY OF LAB OUR RECEIPTS BY ACCEPTING ADDITIONAL EVIDENCES, WHICH WERE NOT PRODUCED AT ASSESSMENT STAGE, IN CONTRAV ENTION TO RULE 46A OF THE ACT. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) BE SET ASIDE AND MAT TER MAY BE DECIDED ACCORDING TO LAW. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE,AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF I NTERIOR DESIGNING CONTRACTOR AND PROPRIETOR OF JANGID INTERIOR,FILED HER RETURN OF INCOME ON 30. 09.2009,DECLARING TOTAL INCOME OF RS.25,36,445/- .AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT, ON 18.11.2011, DETERMINING THE TOTAL INCOME AT RS.51,61,980/-. 2. GROUND NO.1 IS DIRECTED AGAINST THE ADDITION OF RS. 20 LACS AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THERE WAS A DIFFERENCE IN INTEREST RECEIVED BETWEEN THE TDS CERTIFICATE AND THE CREDIT SHOWN IN THE P & L ACCOUNT,THAT THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE OF RS.2,02,235/- .THE AO ADDED IT TO HER TOTAL INCOME.HE FURTHER FOUND THAT THE ABOVE SUM INCLUDED RECEIPT OF INTERE ST OF RS.1,80,000/- FROM M/S.AAI JI GROUP (AJG),THAT THE ASSESSEE HAD NOT SHOWN THE LOAN ADVA NCED TO THE ABOVE CONCERN WAS IN THE BALANCE- SHEET OF THE EARLIER YEARS. HE DIRECTED THE ASSESSE E TO SHOW CAUSE AS TO WHY THE PRINCIPAL AMOUNT ADVANCED SHOULD NOT BE TREATED AS UNEXPLAINED INVES TMENT. IN RESPONSE TO THE QUERY RAISED BY HIM THE ASSESSEE FILED CONFIRMATION OF REPAYMENT FOR TH E LOAN ALONG WITH INTEREST BY THE AJG.THE AO HELD THAT THE PRINCIPAL AMOUNT OF RS.20 LAKHS HAD T O BE TREATED UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 2.1. AGAINST THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).BEFORE HIM IT WAS ARGUED THAT THE ASSESSEE HA D GIVEN LOAN OF RS.20,00,000/- TO AJG IN THE AY. 2007-08 ON INTEREST,THAT NO LOAN WAS ADVANCED DURING THE YEAR,THAT SHE HAD RECEIVED INTEREST OF RS.1,80,000/- AND TDS OF RS.18,000/- WAS ALSO DE DUCTED BY THE AJG,THAT IN THE COURSE OF 2 ITA NO.3393/M/2013 LAXMI C. MISTRY ASSESSMENT THE AO HAD NOT ASKED ABOUT THE EXPLANATI ON FROM THE ASSESSEE,THAT SHE HAD BY OVERSIGHT NOT SHOWN INTEREST IN THE INCOME,THAT IN THE ASSESSMENT PROCEEDINGS SHE OFFERED THE INTEREST FOR TAXATION,THAT SHE HAD ADVANCED LOAN TO AJG, THAT SAME COULD NOT BE TREATED AS CASH CREDIT,THAT SHE HAD SHOWN INTEREST INCOME RECEIVED FROM AJG IN THE COMPUTATION OF INCOME FOR AY. 2007-08 AND 2008-09,THAT THE ASSESSMENT FOR BOT H THE YEAR WAS COMPLETED UNDER SEC.143(3) OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER SHE HELD THAT THE AO HAD MADE ADDITION U/S 68 AS UNEXPLAINED CASH CREDIT ,THAT THE ADDITION MADE BY HIM WAS BASICALLY WRONG,THAT ASSESSEES BOOKS OF ACCOUNTS WERE NOT C REDITED WITH THE SUM OF RS.20 LACS,THAT SHE HAD ADVANCED A LOAN OF RS.20 LACS TO AJG DURING THE A.Y . 2007-08 ON INTEREST,THAT SHE HERSELF HAD AGREED THAT BY OVERSIGHT THE INTEREST INCOME(RS.1,8 0,000/-)EARNED DURING THE YEAR WAS NOT ADMITTED IN THE RETURN OF INCOME,THAT SAME WAS OFFE RED FOR TAXATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THAT SHE HAD BEEN DECLARING THE INTEREST INCOME RECEIVED FROM AJG IN THE EARLIER YEARS VIZ.,A.Y. 2007-08 AND 2008-09,THAT FR OM THE PERUSAL OF ASSESSMENT ORDER FOR THE AY.S. 2007-08 AND 2008-09 IT WAS CLEAR THAT INTERES T RECEIVED FROM AJG WAS ADMITTED AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES,THAT SHE HAD BEEN MAINTAINING TWO BALANCE-SHEETS ONE FOR THE PROPRIETARY CONCERN M/S.JANGID INTERIOR S AND THE OTHER WAS THE PERSONAL BALANCE- SHEET,THAT THE AO HAD EXAMINED THE BALANCE-SHEET OF ONLY M/S. JANGID INTERIORS,THAT ON THAT BASIS HE HAD CAME TO A WRONG CONCLUSION THAT THE ENTIRE P RINCIPAL AMOUNT WAS NOT DISCLOSED TO THE DEPARTMENT,THAT THE PERSONAL BALANCE-SHEET OF THE A SSESSEE ,AS ON 31/03/2007,REVEALED LOAN ADVANCED RS.24 LAC TO AJG,THAT THE INTEREST RECEIVE D ON LOANS ADVANCED HAD BEEN DISCLOSED TO THE DEPARTMENT AND THE INTEREST INCOME OFFERED HAD BEEN ASSESSED IN THE EARLIER YEAR,THAT IT WAS NOT OPEN TO THE AO TO ASSESS THE PRINCIPLE AMOUNT RS.2 0 LACS AS UNEXPLAINED INVESTMENT,THAT WHILE PAYING INTEREST AJG HAD BEEN DEDUCTING THE TDS PROM PTLY,THAT SHE HAD DISCLOSED THE FACT OF ADVANCING THE LOAN AND THE RECEIPT OF INTEREST AS I NCOME IN THE EARLIER YEARS.FINALLY,THE FAA DELETED THE ADDITION MADE BY THE AO. 2.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) REFERRED TO THE ORDER OF THE AO AND LEFT THE ISSUE TO BE DECIDED BY THE BENCH ON MERITS.AUTHORISED REP RESENTATIVE(AR) STATED THAT THE ASSESSEE HAD NOT RECEIVED ANY LOAN DURING THE YEAR UNDER APPEAL, THAT SHE HAD ADVANCED LOAN IN EARLIER YEAR,THAT INTEREST RECEIVED WAS OFFERED FOR TAXATION .HE REFE RRED TO THE PAGES NO.3,9, 8,11, 18,27 OF THE PAPER BOOK. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.THE UNDISPUTED FACT OF THE CASE ARE THAT THE ASSESSEE HAD ADVANCED RS.2 4 LAKHS OF AJG IN THE AY.2007-08,THAT SHE WAS RECEIVING INTEREST ON THE LOAN AMOUNT,THAT THE PAY ER OF INTEREST WAS DEDUCTION TAX AT SOURCE BEFORE MAKING PAYMENT TO THE ASSESSEE,THAT THE ASSESSEE HA D SHOWN THE LOAN ADVANCED IN HER PERSONAL BALANCE SHEET,THAT ASSESSMENTS FOR THE EARLIER TWO AY.S.WAS COMPLETED U/S.143(3)OF THE ACT,THAT INTEREST RECEIVED BY HER WAS TAXED BY THE AO IN THE RESPECTIVE YEARS,THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD RECEIVED RS.20 LAKHS AND INTEREST DUE ON THE SAID AMOUNT.WE ARE UNABLE TO UNDERSTAND AS TO HOW THE PROVISIONS OF SE CTION 68 OF THE ACT CAN BE INVOKED FOR RECEIVING AN AMOUNT.IT CAN BE ANYTHING BUT NOT UNEX PLAINED CASH CREDIT,AS HELD BY THE AO.WE FIND THAT THE FAA HAS ANALYSED FACTS OF THE CASE IN DETA ILS AND HAS ARRIVED AT A LOGICAL CONCLUSION THAT THE ADDITION MADE BY THE AO WERE AGAINST THE PROVIS IONS OF LAW.WE HAVE GONE THROUGH THE BALACE-SHEETS OF EARLIER YEARS FILED BY THE ASSESSE E,THE STATEMENTS OF INCOME,TDS CERTIFICATES AND THE ASSESSMENT ORDERS OF EARLIER YEARS.AFTER PERUSI NG THEM WE ARE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIR MITY.THEREFORE,CONFIRMING THE ORDER OF THE FAA,WE DECIDE GROUND NO.1 AGAINST THE AO. 3. NEXT GROUND OF APPEAL PERTAINS TO ADDITION OF RS.3, 22,538/- ON ACCOUNT OF DIFFERENCE IN TDS. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE RE WAS A DISCREPANCY BETWEEN THE TOTAL CONTRACT/LABOUR RECEIPTS AS PER THE AIR/TDS CERTIFI CATE AND AS WHAT WAS ADMITTED IN THE BOOKS OF 3 ITA NO.3393/M/2013 LAXMI C. MISTRY ACCOUNTS.AS PER THE AO THE ASSESSEE WAS NOT ABLE T O RECONCILE THE DIFFERENCE OF RS.3,33,538/-. HENCE HE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FAA.BEFORE HER IT WAS ARGUED THAT SHE HAD RAISED A BILL AT RS.1,66,52,444 /-,THAT TAX WAS ALSO DEDUCTED ON THE SAID AMOUNT BY THE ANA DESIGN P. LTD.(ANADPL),THAT SHE HAD RECE IVED RS.1,64,55,186/- WHILE FINALISING THE BILL,THAT THE ASSESSEE HAD RECEIVED RS.1,97,260/-LE SS FROM THE ANADPL,THAT RS.1, 97,260/- WERE DEBITED TO CONTRACT RECEIPT ACCOUNT,THAT IN THE COU RSE OF ASSESSMENT PROCEEDINGS SHE HAD SUBMITTED THE RECONCILIATION STATEMENT,THAT SHE HAD RAISED AN OTHER BILL OF RS.13,75,278/- AND TDS WAS DEDUCTED ON SAID AMOUNT BY CHOICEST ENTERPRISES(CE) ,THAT SHE HAD RECEIVED RS.1, 25,278/- LESS FROM CE,THAT RS.1,25,278/-WERE ALSO DEBITED TO CONT RACT RECEIPT ACCOUNT,THAT SHE HAD DEBITED RS.97,260/ TO CONTRACT RECEIPT ACCOUNT IN CASE OF A NADPL AND RS.1,25,278/ IN CASE OF CE ,THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.3 ,22,538/-. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBM ISSIONS OF THE ASSESSEE,THE FAA HELD THAT THE ASSESSEE HAD RAISED A BILL OF RS.1,66,52,444/- ON A NADPL AND TDS WAS DEDUCTED BY THE ABOVE GROUP ON THE BILL AMOUNT,THAT THE ASSESSEE HAD RECE IVED ONLY RS.1,64,55186/- AFTER THE FINAL BILL,THAT THE DIFFERENCE RS.1,97,260/ WAS DEBITED T O THE CONTRACT RECEIPT ACCOUNT,THAT THE AR OF THE ASSESSEE HAD FILED A STATEMENT OF RECONCILIATION BE FORE THE AO IN THIS CONNECTION,THAT SIMILARLY IN THE CASE OF CE THEY HAD RAISED A BILL OF RS.13,75,2 78/ ON WHICH TDS WAS DEDUCTED,THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF SHE HAD CLE ARLY CLARIFIED THE DIFFERENCE BETWEEN THE AMOUNT SHOWN IN THE TDS CERTIFICATE AND THE RECEIPT ACCOUNTED IN THE P & L ACCOUNT BY FILING A RECONCILIATION STATEMENT,THAT THE AO HAD ADMITTED T HAT THE RECONCILIATION STATEMENT WAS FILED BEFORE HER IN PARA-5 OF THE ORDER,THAT THE DIFFEREN CE STOOD EXPLAINED,THAT NO ADDITION IS CALLED FOR. COPY OF THE SAME PRODUCED BEFORE ME WHICH IS AVAILA BLE IN PAGE 20 & 21 OF THE PAPER BOOK.FAA DELETED THE ADDITION MADE BY THE AO. 3.3. THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENC H.AR STATED THAT THE RECONCILIATION STATEMENT WAS FILED BEFORE THE AO.WE HAVE HEARD THE RIVAL SUB MISSION AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD EXPLAINED THE REAS ONS OF DIFFERENCE IN THE TDS CERTIFICATES AND THE ENTRIES IN THE BOOKS OF ACCOUNTS.A RECONCILIATI ON STATEMENT WAS ALSO FILED IN THIS REGARD.WE DO NOT FIND ANYTHING IN THE ORDER OF THE AO AS TO WHY THE RECONCILIATION WAS NOT ACCEPTABLE.IT IS A KNOWN BUSINESS PRACTICE THAT THERE COULD BE DIFFERE NCE IN THE BILLS RAISED INITIALLY AND THE FINAL AMOUNT RECEIVED BY AN FROM HIS CLIENT.SO,IF THE ASS ESSEE HAD MADE NECESSARY ENTRIES IN THE BOOKS OF ACCOUNTS ABOUT THE DIFFERENCE IN QUESTION,THE AO SHOULD HAVE ACCEPTED IT OR SHOULD HAVE REJECTED ON GIVING SOME REASONABLE CAUSE.THEREFORE, IN OUR OPINION THE ORDER OF THE FAA,WHEREIN ALL THE NECESSARY FACTS HAVE BEEN TAKEN TO A LOGICA L END IS AS PER LAW.WE DO NOT WANT TO DISTURB HER FINDINGS.CONFIRMING HER ORDER WE DECIDE GROUND NO.2 AGAINST THE AO. 4. BEFORE PARTING WE WILL LIKE TO MENTION THAT WE ARE AT LOSS TO UNDERSTAND THE JUSTIFICATION AND LOGIC BEHIND FILING THE SECOND APPEAL IN THE PRESEN T CASE.THOUGH IN THE GROUND OF APPEALS IT HAS BEEN MENTIONED THAT THE FAA HAD ADMITTED ADDITIONAL EVIDENCES,BUT NOWHERE IT IS MENTIONED AS TO WHICH ADDITIONAL EVIDENCES WERE ADMITTED BY HER.WE FIND THAT THE FAA HAD NOT ADMITTED ANY NEW EVIDENCE WHILE DECIDING THE APPEAL.WE WANT TO ADD T HAT IN THE CASE BEFORE US THE AO/CIT HAD SENT THE SCRUTINY REPORT/APPROVED THE FILING OF SECOND A PPEAL IN A VERY CASUAL MANNER.IT IS A SORRY STATE OF AFFAIRS THAT ON ONE HAND THE CBDT IS DIRECTING T HE OFFICERS OF FIELD FORMATION TO REDUCE LITIGATION AND NOT TO FILE FRIVOLOUS APPEALS AND ON THE OTHER HAND WE COME ACROSS APPEALS THAT CLEARLY SHOW THAT THE ORDERS OF SENIOR OFFICERS OF THE LEVEL OF CIT(A) ARE BEING CHALLENGED ON VERY VERY FLIMSY GROUNDS.PRESENT APPEAL IS ONE OF SUCH C ASES.WE DO NOT WISH TO COMMENT FURTHER ABOUT IT,EXCEPT SAYING THAT THE ASSESSEE HAS BEEN DRAGGED TO THE TRIBUNAL UNNECESSARILY. AS A RESULT,APPEAL FILED BY THE AO STANDS A LLOWED. =0> =0> =0> =0> /0 /0 /0 /0 VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH ? ? ? ? &@ &@ &@ &@ - -- - ; ;; ; 'A0 'A0 'A0 'A0 - -- - '0 '0 '0 '0 B BB B . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD ,SEPTEMBER,2014 . 4 ITA NO.3393/M/2013 LAXMI C. MISTRY &#< &#< &#< &#< - -- - 1( 1( 1( 1( # # # # $ $ $ $ C CC C D& D& D& D& 03 0E 0E 0E 0E , 201 4 - -- - ; ;; ; F FF F SD/- SD/- ( . / D.MANMOHAN) ( '#$% '#$% '#$% '#$% / RAJENDRA) ! / VICE PRESIDENT # # # # &' &' &' &' /ACCOUNTANT MEMBER / MUMBAI, D& /DATE: 03.09.2014. SK &#< &#< &#< &#< - -- - +0G +0G +0G +0G H#G(0 H#G(0 H#G(0 H#G(0 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT(A)/ I J , 4. THE CONCERNED CIT / I J 5. DR A BENCH, ITAT, MUMBAI / GK; +0 , , . . $ . 6. GUARD FILE/ ; = ,G0 ,G0 ,G0 ,G0 +0 +0+0 +0 //TRUE COPY// &#< / BY ORDER, / ' DY./ASST. REGISTRAR , /ITAT, MUMBAI