OSIANS CONNOISSEURS OF ART P.LTD, MUMBAI V. DCIT CEN CIR 11, MUMBAI

ITA 3641/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0237 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 06-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 12-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: S M KAPOOR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 3641/MUM./2015 (ASSESSMENT YEAR: 2010 - 11 ) M/S. OSIANS CONNOISSEURS OF ART PVT. LTD., G - 2B, NARIMAN BHAVAN, GROUND FLOOR, NARIMAN POINT MUMBAI 400 021 PAN NO. AAACO3687L . APPELLANT V/S DCIT CEN CIR 11 COG BLDG., ANNEXE, 8 TH FLOOR, MUMBAI 400 020 . RESPONDENT ASSESSEE BY : SHRI. S.M. KAPOOR REVENUE BY : SHRI. V. VIDHYADHAR DATE OF HEARING 08.08.2017 DATE OF ORDER - 18 .08 .2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT - A DATED 24.04.2015 AND PERTA INS TO ASSESSMENT YEAR 2010 - 11. 2. THE GROUNDS OF APPEAL ARE AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ADDITION OF RS.7,94,96,277/ - . ITA NO.3641/MUM/2015 M/S. OSIANS CONNOISSEURS ART PVT. LTD., 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ADDITION OF RS.12,71,00,000/ - U/S.68 OF THE INCOME TAX ACT. 3. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING FOR GROUND NO.1. HENCE THE SAME IS DEEMED AS NOT PRESSED. APROPOS G ROUND IN RELATION TO ADD ITION OF RS.12,71,00,000/ - U/S.68 OF THE IT ACT. ON THIS ISSUE, THE ASSESSING OFFICER MADE AN ADDITION U/S.68 FOR CERTAIN UNSECURED LOANS BY OBSERVING AS UNDER: - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO SUBMIT CONFIRMATION OF UNS ECURED LOAN, BALANCE SHEET, I.T. RETURN COPY OF LENDER AND DETAILS OF INTEREST PAID TO THE LENDER FROM WHICH ASSESSEE HAS TAKEN UNSECURED LOANS TO VERIFY GENUINENESS, IDENTITY, CREDIT WORTHINESS OF THE LENDER. FROM THE TAX AUDIT REPORT ASSESSEE HAS TAKEN L OAN FROM SEVERAL LENDERS WHICH AMOUNTS TO RS.12,71,00,000/ - , IN RESPONSE TO WHICH THE ASSESSEE HAS FAILED TO SUBMIT ANY DETAILS SUCH AS CONFIRMATION, BALANCE SHEET, I.T. RETURN OF THE LENDER. IN SUCH CIRCUMSTANCES THE ASSESSEE HAS FAILED TO SUBMIT ADEQUATE AND COMPLETE INFORMATION IN RESPECT OF UNSECURED LOAN TAKEN DURING THE YEAR. HENCE, THE AMOUNT OF UNSECURED LOAN OF RS.12,71,00,000/ - TAKEN DURING THE YEAR IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UN E X PLAINED CREDIT U/S 68 OF THE I.T.ACT, 1961. 4. AG AINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE THE LEARNED CIT(A) . A SSESSEE SUBMITTED THAT THE LOANS INCLUDED SOME WHICH WERE COMING FROM EARLIER YEARS. SOME CONFIRMATIONS WERE ALSO SUBMITTED. ASSESSEE ALSO REQUESTED AUTHORITIES TO ISSUE SUMMONS TO THE PARTIES AS IT WAS NOT IN A POSITION TO PRODUCE THE SAME. HOWEVER, NO SUMMONS WERE ISSUED. LEARNED CIT(A) CONFIRMED THE ADDITION HOLDING AS UNDER: - ITA NO.3641/MUM/2015 M/S. OSIANS CONNOISSEURS ART PVT. LTD., 3 5.4. IN RESPECT OF THE SECOND ADDITION, WHICH IS OF RS.12,71,00,000/ - U/S.68 OF THE I .T. ACT, THE A.R. SUBMITTED IN THE HEARING HELD ON 12.2.2015 THAT THE DETAILS OF THE LOANS ARE AS FOLLOWS: A. MALANG RS. 10,00,000 B. MAHALAXMI GLASS WORKS PVT. LTD RS. 3,00,00.000 C. MR. NEVILLE TULI RS. 1,71,00,000 D. MIRANI PHARMA MARKETING PVT. LTD RS. 50,00,000 E. MR. RAJENDRA SAH RS. 6,70,00,000 F. OMEGA LIFESTYLE & TECHNOLOGIES PVT. LTD RS. 50,00,000 TOTAL RS. 12,51,00,000 5.5. AS REGARDS THE ADDITION U/S 68, IT IS SEEN THAT THESE ARE NOT OLD LOANS AS CLAIMED BY THE ASSESSEE. THESE AMOUNTS REPRESENT THE ADDITIONAL MONEY RECEIVED DURING THE YEAR. SINCE NO CONFIRMATION WAS FILED, NO RELIEF CAN BE GIVEN TO THE ASSESSEE, EXCEPT IN THE CASE OF NEVILLE TULI, WHO IS ASSESSED WITH THE SAME ASSESSING OFFICER. YET THERE IS NO EXPLANATION AS TO WHY THE CONFIRMATION IS NOT FILED. FILING OF CONFIRMATION IS ONLY THE FIRST STEP. THE GENUINENESS OF CREDIT WORTHINESS OF THE LOAN TRANSACTIONS IS NOT PROVED. ACCORDINGLY, GROUND OF APPEAL NO.2 IS DISMISSED. 5. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACTUAL TOTAL OUTSTAN DING IS RS.12,51,00,000/ - , HOWEVER, IT HAS BEEN ERRONEOUSLY NOTED AS 12,71,00,000/ - . LEARNED COUNSEL SUBMITTED THAT ASSESSEE HAS SUBMITTED SOME OF THE CONFIRMATIONS AND WAS NOT IN A POSITION TO PRODUCE THE LENDERS. HE FURTHER SUBMITTED THAT ASSESSEE HAS DU LY REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMONS TO THE PARTIES BUT NO SUCH SUMMONS WERE ISSUED. HE FURTHER SUBMITTED THAT LARGE PORTION OF LOANS WERE COMING FROM EARLIER PERIODS ITA NO.3641/MUM/2015 M/S. OSIANS CONNOISSEURS ART PVT. LTD., 4 WERE ACCEPTED EARLIER. HENCE, HE PLEADED THAT THE SAME CANNOT BE ADDED U/S .68. 7. LEARNED COUNSEL FURTHER PLEADED THAT ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE NECESSARY EVIDENCES REGARDING THE CREDIT WORTHINESS. HE REQUESTED THAT AN OPPORTUNITY MAY BE GRANTED TO THE ASSESSEE BY REMITTING THE MATTER TO THE ASSESSING OFFICER SO THAT THE ASSESSEE MAY BE IN A POSITION TO PROPERLY CANVASS THE CASE. 8. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ASSESSEE HAS NOT DISCHARGE D ITS ONUS. ASSESSEE HAS NOT BEEN ABLE PRO DUCE THE PARTIES, HENCE, ADDITION SHOULD BE CONFIRMED. 9. UPON CAREFUL CONSIDERATION, WE FIND THAT IN THE TOTAL AMOUNT OF LOANS HAS BEEN ADDED U/S.68. A GOOD PORTION OF LOANS ARE OUTSTANDING FROM EARLIER PERIOD. WE FAIL TO UNDERSTAND AS TO HOW DESPITE THIS BEING POINTED OUT , LOWER AUTHORITIES HAVE NOT BOTHERED TO CONSIDER THE SAME. FURTHERMORE, WE FIND THAT DESPITE REQUEST BY THE ASSESSEE, ASSESSING OFFICER HAS NOT BOTHERED TO ISSUE SUMMON S TO THE PARTIES . E XCEPT OBSERVING THAT ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE PARTIES, NO COGENT REASONING HAS BEEN ADDUCED IN SUSTAINING THE ADDITION BY THE LEARNED CIT(A). THE LEARNED CIT(A) HAS NOT BEEN EVEN BOTHERED TO IDENTIFY THE LOANS THAT WERE COMING FROM EARLIER YEARS AND THAT WHICH WAS TAKEN DURING THE CURRENT YEAR. IN OUR CONSIDERED OPINION, THERE IS CONSIDERABLE LACK OF APPLICATION OF MIND BY THE AUTHORITIES BELOW. ITA NO.3641/MUM/2015 M/S. OSIANS CONNOISSEURS ART PVT. LTD., 5 10. LEARNED DR IN THIS REGARD HAS ALSO REQUESTED THAT THE MATTER MAY BE REMITTED TO THE ASSESSING OFFICER SO THAT THE CASE MAY BE PROPERLY ADJUDIC ATED. 11. WE HAVE ALSO OBSERVED THAT ASSESSEES CONDUCT HAS ALSO BEEN NON - COOPERATIVE AS ONE OF THE LENDERS MR. NEVILLE TULI IS THE CHAIRMAN / MANAGING DIRECTOR OF THE SAME COMPANY AND HOW HE CANNOT APPEAR BEFORE THE ASSESSING OFFICER IS BEYOND OUR APPREHENSION. 12. UPON CAREFUL CONSIDERATION AS AGREED BY BOTH THE PARTIES, WE REMIT THE ISSUE RAISED IN THIS APPEAL TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CONSIDER THE ISSUE AFRESH AFTER GIVING ASSESSEE PROPER OPPORTUNITY OF BE ING HEARD. LEARNED COUNSEL OF THE ASSESSEE HAS ALSO AGREED TO COOPERATE WITH THE ASSESSING OFFICER. 13 . IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 .0 8 .2017 S D / - S D / - SANDEEP GOSAIN SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 8 .0 8 .2017 ITA NO.3641/MUM/2015 M/S. OSIANS CONNOISSEURS ART PVT. LTD., 6 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI