DINESH L. AGARWAL(HUF), MUMBAI V. ITO WD 20(2)(1), MUMBAI

ITA 356/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3780 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: KISHORE K PODDAR
• Keywords: Unexplained cash credit
• Section: 44AD; 80C; 143(3); 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D KARUNAKARA RAO, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.:356/MUM/2012 ASSESSMENT YEAR: 2006-07 SHRI DINESH L AGARWAL (HUF), VS. THE ITO WARD 20( 2)(1), 210 BAJSONS INDL. ESTATE, MUMBAI CHAKALA ROAD, ANDHERI (E), MUMBAI- 400 069 PAN AACHD0534N (APPELLANT) (RESPONDENT) APPELLANT BY : MR.KISHORE K PODDAR RESPONDENT BY : MR. JITENDRA YADAV DATE OF HEARING : 19.03.2013 DATE OF PRONOUNCEMENT : 15.05.2013 ORDER PER SANJAY GARG, JM : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE CIT(A) DATED 14.11.2011 RELEVANT TO A.Y. 2006-0 7. THE GROUNDS OF APPEAL IN BRIEF ARE REPRODUCED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN RETAINING ADDITION TO T HE EXTENT OF RS.21,68,295/- MADE BY THE LD. A.O. U/S 68 OF THE I NCOME TAX ACT, IN- SPITE OF THE FACT THAT THE APPELLANT IS NOT MAINTAI NING ANY BOOKS OF ACCOUNTS AND HAS FILED ITS RETURN OF INCOME U/S. 44 AD OF THE THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION OF ITA NO. 356/MUM/2012 AY : 2006-07 2 RS.1,00,000/- CLAIMED U/S 80C OF THE INCOME TAX ACT FOR THE INVESTMENT MADE IN PAYMENT OF LIC PREMIUM MERELY BE CAUSE THE PREMIUM RECEIPT WAS IN THE NAME OF THE KARTA OF THE HUF. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, A HUF, FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 DECLARING TOTAL INCOME AT R S.1,99,933/-. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) THE AO NOTICED T HAT THE ASSESSEE, ENGAGED IN THE BUSINESS OF SUPPLY OF LABOUR FOR CONSTRUCTION A CTIVITY, DECLARED PROFITS U/S. 44AD OF THE I.T.ACT. THE ASSESSEE HAD CLAIMED TURNOVER OF RS.24,99,169/- UPON WHICH INCOME OF RS.1,99,933/- WAS DECLARED BY APPLYING TH E TAXABILITY RATE OF 8% OF THE TURNOVER. THE ASSESSEE WAS ASKED TO FURNISH THE DE TAILS OF THE GROSS RECEIPTS ALONG WITH PARTY-WISE BREAK-UP AND ALSO CONFIRMATION OF T HE RECEIPTS FROM THE SAID PARTIES. THE AO NOTICED THAT THE DETAILS PROVIDED BY THE ASS ESSEE WERE INCOMPLETE AND THE ONUS WAS ON THE ASSESSEE TO PROVE THE CORRECTNESS O F THE GROSS RECEIPTS COMPUTED FOR THE PURPOSE OF SECTION 44AD OF THE ACT. THE AS SESSEE WAS UNDER MANDATORY OBLIGATION TO PROVIDE ALL THE DETAILS AND CONFIRMAT IONS OF RECEIPTS. SINCE THE ASSESSEE FAILED TO DO SO, THE AO CONSIDERED THE ENTIRE GROSS RECEIPTS OF RS.24,99,169/- AS UNEXPLAINED CASH CREDITS OF THE ASSESSEE U/S. 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, THE L EARNED CIT(A) ASKED THE ASSESSEE TO FURNISH THE PARTY-WISE DETAILS, CONTACT NUMBERS, FULL ADDRESS ALONG WITH TDS DEDUCTED ETC., OF THE PERSONS FROM WHOM THE PAYMENT WAS RECEIVED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE SUBMITTE D REQUIRED DETAILS AND THE LEARNED CIT(A) REMANDED THE MATTER BACK TO THE AO T O CARRY OUT FURTHER ENQUIRIES. THE AO RECORDED THE STATEMENTS OF VARIOUS PARTIES P RODUCED BY THE ASSESSEE AND ALSO OBTAINED COPIES OF BANK ACCOUNT STATEMENTS, RE TURNS OF INCOME, ETC., OF THE RESPECTIVE PARTIES. HOWEVER, THE AO DID NOT RECORD HIS FINDINGS OR THE COMMENTS ON THE ENQUIRIES CONDUCTED BY HIM. HE SIMPLY FORWARDE D THE STATEMENTS RECORDED DURING THE REMAND PROCEEDINGS. THE LEARNED CIT(A), WHILE GOING THROUGH THE STATEMENT OF THE PARTIES, NOTICED THAT OUT OF 16 PE RSONS, 14 PERSONS HAD STATED THAT ITA NO. 356/MUM/2012 AY : 2006-07 3 THEY HAD RECEIVED CASH AGGREGATING 18,98,908/- FROM THE ASSESSEE INSTEAD OF MAKING THE PAYMENT TO THE ASSESSEE. THE LEARNED CIT(A) HA S REPRODUCED IN HIS ORDER THE STATEMENT OF ONE OF THE PARTIES NAMELY SACHIN SHRIK ANT KULKARNI PROP. M/S. S.KULKARNI & CO., WHICH IS AGAIN REPRODUCED AS UNDER: Q.9. HAVE YOU DONE ANY BUSINESS WITH DINESH AGRAW AL KARTA OF DINESH AGARWAL (HUF) DURING THE FY 05-06? ANS. YES. I HAVE DONE BUSINESS WITH DINESH AGRAWAL KARTA OF DINESH AGRAWAL (HUF) DURING THE FY 05-06, THE NATURE OF WO RK WAS CIVIL CONSTRUCTION WORK. AND I HAVE BEEN PAID OF RS.86,1 92/- IN CASH FOR THE SAID WORK. 3. THE LEARNED AR BEFORE US HAS SUBMITTED THAT ALL THE PARTIES BEFORE THE AO HAD CONFIRMED THAT THEY HAD DONE BUSINESS WITH THE ASSE SSEE BUT DUE TO TYPOGRAPHICAL ERROR IT CAME TO BE PRINTED AS I HAVE BEEN PAID RS.XX,XXX/- IN CASH FOR HE SAID W ORK INSTEAD OF I HAVE PAID RS.XX,XXX/- IN CASH FOR THE SAID WORK. HE HAS FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS MISREAD THE S TATEMENTS AND THAT EVEN THE AO FAILED TO RECORD HIS FINDINGS OR COMMENTS ON THE EN QUIRIES CONDUCTED BY HIM AND THAT IS WHY THE LEARNED CIT(A) HAS MISTAKEN HIMSELF WHIL E GOING THROUGH THE STATEMENT OF THE PARTIES. THERE SEEMS TO BE SOME FORCE IN THE ARGUMENTS OF T HE LEARNED AR. THE PARTIES BEFORE THE AO HAVE CONFIRMED THAT THEY HAD DONE BUSINESS WITH THE ASSESSEE AND THE REASONABLE PRESUMPTION WHICH COMES OUT FROM THE STATEMENT IS THAT THERE MIGHT BE SOME TYPOGRAPHICAL ERROR IN RECORDING THE STATEMENT OF THE PARTIES PRODUCED BY THE ASSESSEE. EVEN IN THE ABSENCE OF HI S FINDINGS ON THE ENQUIRIES CONDUCTED BY THE AO, IT WAS NOT REASONABLE FOR THE CIT(A) TO TAKE A VIEW HIMSELF IGNORING THE CONTENTION OF THE ASSESSEE THAT THERE WAS SOME TYPOGRAPHICAL/CLERICAL ERROR IN RECORDING THE STATEMENTS. UNDER SUCH CIRC UMSTANCES, WE DEEM IT FIT TO REMAND BACK THE CASE TO THE FILE OF THE AO TO RE-AP PRECIATE EVIDENCES PRODUCED BY THE ASSESSEE DURING THE REMAND PROCEEDINGS. ACCORD INGLY, THE CASE FILE IS REMANDED ITA NO. 356/MUM/2012 AY : 2006-07 4 TO THE AO FOR A FRESH ASSESSMENT AFTER DULY CONSIDE RING THE STATEMENTS AND EVIDENCES PRODUCED BY THE ASSESSEE IN THE REMAND PR OCEEDINGS. IT IS ALSO MADE CLEAR THAT THE AO WILL GRANT SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND ALSO ADMIT EVIDENCES, IF ANY, IF THE ASSESSEE W ANTS TO LEAD IN SUPPORT OF HIS CLAIMS. 4. SO FAR AS THE 2 ND GROUND RELATING TO DISALLOWANCE OF CLAIM OF RS.1 L AC U/S. 80C IS CONCERNED, IT MAY BE OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80C ON ACCOUNT OF PAYMENT OF LIC PREMIUM. THE AO DISAL LOWED THE SAID CLAIM OBSERVING THAT THE PAYMENT RECEIPT WAS ISSUED IN THE NAME OF DINESH AGRAWAL AND NOT DINESH AGRAWAL (HUF) AND HELD THAT THE POLICY WAS ISSUED I N THE NAME OF DINESH AGRAWAL IN HIS INDIVIDUAL CAPACITY AND NOT IN THE CAPACITY OF HUF. THE LEARNED CIT(A) CONFIRMED THE SAID ADDITION. 5. BEFORE US, THE LEARNED AR HAS SUBMITTED THAT LIF E INSURANCE POLICY CAN BE OBTAINED IN THE NAME OF A LIVING PERSON I.E. AN IND IVIDUAL AND NOT IN THE NAME OF ANY ORGANIZATION OR HUF, WHICH ARE LEGAL PERSONS BUT NO T LIVING PERSONS. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HUF DOES NOT OWN ANY BANK ACCOUNT IN ITS NAME. THE PAYMENT FOR THE PREMIUM FOR LIFE INSURANCE POLICY W AS THEREFORE MADE IN CASH BY THE KARTA OF THE HUF. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D AR. IT MAY BE OBSERVED THAT AS PER SECTION 80C(4) OF THE I.T ACT, LIFE INS URANCE POLICY CAN BE OBTAINED IN CASE OF HINDU UNDIVIDED FAMILY IN THE NAME OF ANY MEMBER OF THE SAME HUF. IT IS OBVIOUS THAT THE NAME OF THAT MEMBER WILL APPEAR ON THE POLICY DOCUMENTS OR THE PREMIUM RECEIPTS IN WHOSE NAME THE POLICY IS PURCHA SED BY THE HUF. THE AUTHORITIES BELOW HAVE WRONGLY DISALLOWED THE CLAIM OF THE ASSESSEE U/S. 80C OF THE IT ACT. THE FINDING OF THE CIT(A) IN THIS RESPECT IS HEREBY SET ASIDE AND IT IS HELD THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEDUCTION OF RS.1 LAC ON ACCOUNT OF LIFE INSURANCE ITA NO. 356/MUM/2012 AY : 2006-07 5 PREMIUM IN THE NAME OF ITS KARTA- DINESH AGRAWAL AN D AS SUCH THE CLAIM OF THE ASSESSEE IN RESPECT OF GROUND NO.2 OF THE PRESENT A PPEAL IS HEREBY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY 2013. SD/- SD/- (D KARUNAKARA RAO) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 15 TH MAY, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, D - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI