ACIT 25(1), MUMBAI V. DINANATH M. DABHADE, MUMBAI

ITA 3601/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2814 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWIN S CHHAG
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER . ITA. NO. 3 601 / M UM /20 1 3 (ASSESSMENT YEAR: 2 00 8 - 09 ) ACIT - 25 ( 1 ) , MUMBAI 400 0 51 APPELLANT VS. SHRI DINANATH M. DABHADE PROP. OF M/S HEMANT MECHANICAL INDUSTRIES, 21, JATIN INDUSTRIAL ESTATE, 3 RD CARTER ROAD, BORIVALI (E), MUMBAI - 66 RESPONDENT PAN: A ABPD9536H / BY APPELLANT : SHRI VIVEK ANAND OJHA , D.R. / BY RESPONDENT : SHRI ASHWIN S. CHHAG, A.R. / DATE OF HEARING : 07 . 1 0.2015 / DATE OF PRONOUNCEMENT : 28 . 1 0 .201 5 ORDER PER SHAILEN DRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 35 , MUMBAI , DATED 1 0 . 0 2 . 20 1 3 FOR A.Y. 200 8 - 09 ON FOLLOWING GROUND S : I T A NO . 3 601 / M UM / 1 3 A.Y. 0 8 - 09 [ AC IT VS. SHRI DINANATH M. DABHADE ] PAGE 2 (I) O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS OF RS.40,44,486/ - MADE BY THE A.O., EVEN THOUGH THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM EITHER AT THE TIME OF ASSESSMENT PROCEEDINGS NOR AT THE TIME OF REMAND PROC EEDINGS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS OF RS.40,44,486/ - MADE BY THE AO., BY STATING THAT SINCE THE SALES MADE TO THESE PARTIES HAVE BEE N ACCEPTED, THE PURCHASES CANNOT BE TREATED AS BOGUS, INSPITE OF THE FACT THAT THE LIABILITY CANNOT BE ACCEPTED UNLESS CONFIRMED BY THE THIRD PARTY AS THIS IS A CASE OF CESSATION OF LIABILITY U/S 41(1) OF THE I.T. ACT, 1961 AND TAXABLE AS HIS INCOME. 2. ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN ON 29.09.2008, DECLARING TOTAL INCOME OF RS.12,28,260/ - . ASSESSEE HAD SHOWN INCOME FROM BUSINESS AND INCOME FOR OTHER SOURCES. ASSESSEE IS A PROPRIETOR OF M/S MECHANICAL INDUSTRIES AND ENGAGED IN MANUFACTURING AND TRADING IN SHEET METAL COMPONENT. DURING COURSE OF SCRUTINY , ASSESSING OFFICER COMPLETED ASSESSMENT AT A FIGURE OF RS.1,05,39,100/ - . 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF AS SESSEE AND, CIT(A) AFTER CALLING FOR REMAND REPORT AND COMMENT OF ASSESSEE IN RESPONSE TO SAME, GRANTED RELIEF TO ASSESSEE. SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE , INTER ALIA STATING THAT CIT(A) ERRED IN DELETING ADDITION MADE ON ACCOUNT OF SUNDRY CR EDITORS OF RS.40,44,486/ - MADE BY ASSESSING OFFICER , EVEN I T A NO . 3 601 / M UM / 1 3 A.Y. 0 8 - 09 [ AC IT VS. SHRI DINANATH M. DABHADE ] PAGE 3 THOUGH ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM EITHER AT THE TIME OF ASSESSMENT PROCEEDINGS NOR AT THE TIME OF REMAND PROCEEDINGS . ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSE SSING OFFICER BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 4 . AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT DURING COURSE OF SCRUTINY PROCEEDINGS, ASSESSING OFFICER I N ABSENCE OF ANY DETAILS, HAD ADDED BACK THE UNSECURED LOANS AT RS.7,33,731/ - AND CREDITORS AMOUNTING TO RS.40,44,686/ - AS UNEXPLAINED CASH CREDIT. IN APPELLATE PROCEEDING, REMAND REPORT WAS CALLED FOR IN RESPONSE TO SUPPLIER OF ASSESSEE. ASSESSING OFFIC ER VIDE HIS REMAND REPORT DATED 17.12.2012, HAS CONFIRMED THAT UNSECURED LOANS PERTAINED TO EARLIER YEARS AND NOT PERTAINED TO IMPUGNED ASSESSMENT YEAR. ASSESSING OFFICER FURTHER SUBMITTED THAT ASSESSEE WAS UNABLE TO PROVIDE CONFIRMATIONS FROM CREDITORS A ND HAS PROVIDED DOCUMENTARY EVIDENCES, WITH RESPECT TO OTHER LIABILITIES. IN RELEVANT PARA OF REMAND REPORT, ASSESSING OFFICER HAS STATED THAT: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THE DETAILS OF SUNDRY CREDITORS. DURING T HE COURSE OF REMAND REPORT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE THIRD PARTY CONFIRMATION FOR THE FOLLOWING PARTIES. I) M/S CLASSIC ENTERPRISES II) M/S I.T INTERNATIONAL III) M/S ASNA ENTERPRISES I T A NO . 3 601 / M UM / 1 3 A.Y. 0 8 - 09 [ AC IT VS. SHRI DINANATH M. DABHADE ] PAGE 4 IV) M/S YASHOBHOOMI V) M/S OM ENTERPRISES HOW EVER, THE ASSESSEE HAS FAILED TO FURNISH THE THIRD PARTY CONFIRMATION AND VIDE ORDER - SHEET ENTRY DATED 19.11.2012 HAS SUBMITTED THAT THESE PARTIES HAVE CLOSED THEIR BUSINESS AND FURNISHING OF THIRD PARTY CONFIRMATION COULD NOT BE MADE. AS FAR AS OTHER LIA BILITIES, THE ASSESSEE HAS PROVIDED DOCUMENTARY EVIDENCE FOR THE SAME. AS FAR AS UNSECURED LOANS ARE CONCERNED, IT IS SEEN THAT THE LOANS PERTAINED TO EARLIER YEARS AND NOT PERTAINED TO THE IMPUGNED A.Y. DURING POST REMAND PROCEEDING, STAND OF ASSESSEE HAS BEEN THAT ABOVE PARTIES HAD ACTUALLY CLOSED THEIR BUSINESS AND HENCE, OBTAINING CONFIRMATIONS FROM PARTIES WERE NOT POSSIBLE. HOWEVER, HE SUBMITTED THAT IN CASE THE PURCHASES WERE BOGUS, THEN ASSESSING OFFICER COULD NOT HAVE PLACED RELIANCE ON SALES M ADE, AS ASSESSEE WAS A TRADER AND HENCE MATERIALS PURCHASED WERE SOLD BY ASSESSEE. THE COPIES OF BANK STATEMENTS REVEAL THAT BANK PAYMENTS WERE MADE TO CREDITORS. THUS, IT WAS STATED ON BEHALF OF ASSESSEE THAT EVEN THOUGH, NO CONFIRMATIONS COULD BE PROVI DED, TRANSACTIONS IN CREDITORS LEDGER HAD BEEN EXPLAINED. IN THIS BACKGROUND, AFTER CONSIDERING THE REMA N D REPORT OF ASSESSING OFFICER AND ASSESSEES SUBMISSIONS, CIT(A) OBSERVED THAT UNSECURED LOAN AND OTHER LIABILITIES HAD BEEN EXPLAINED BY ASSESSEE AN D THEY DID NOT PERTAIN TO A.Y. 2009 - 10. IN VIEW OF THIS, IN RESPECT OF CREDITORS, ASSESSEE HAD CLEARLY EXPLAINED THE TRANSACTIONS I T A NO . 3 601 / M UM / 1 3 A.Y. 0 8 - 09 [ AC IT VS. SHRI DINANATH M. DABHADE ] PAGE 5 REFLECTING IN CREDITORS ACCOUNTS DURING YEAR. UNDER THE FACTS AND CIRCUMSTANCES, CIT(A) WAS JUSTIFIED IN OBSERVING THAT PUR CHASES COULD NOT BE TREATED AS BOGUS. ACCORDINGLY, CREDITORS COULD NOT BE TREATED AS UNEXPLAINED, EVEN IF, CONFIRMATION COULD NOT BE PROVIDED AT RELEVANT POINT OF TIME. ACCORDINGLY, HE RIGHTLY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.4 0,44,686/ - . SAME IS UPHELD. 5 . AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28TH DAY OF OCTO BER , 201 5 . SD/ - SD/ - ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 28 / 1 0 /2015 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4 . - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , / , ,