AXIOM FINSOL (INDIA) P. LTD, MUMBAI V. ITO 14(1)(2), MUMBAI

ITA 3753/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9524 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMLATHA
• Assessee Lawyers: RISHABH S HAH
• Keywords: Unexplained cash credit; Onus to prove
• Section: 133(6); 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 375 3 /MUM/ 2017 (ASSESSMENT YEAR 20 1 2 - 13 ) M/S. AXIOM FINSOL (INDIA) PVT. LTD. A - 612, EXPRESS ZONE OFF WESTERN EXPRESS HIGHWAY, MALAD EAST MUMBAI - 400 097. PAN :AAKCA7547H VS. ITO 14(1)(2) MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RISHABH SHAH DEPARTMENT BY MS. N. HEMLATHA DATE OF HEARING 24.8 . 201 7 DATE OF PRONOUNCEMENT 15 . 9 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER DATED 06 - 03 - 2017 PASSED BY LD CIT(A) - 22, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2013 - 14. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS.20.00 LAKHS MADE BY THE AO U/S 68 OF THE ACT. 2 . I HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED LOAN OF RS.20.00 LAKHS FROM M/S RAJSHREE ENTERPRISES. IN ORDER TO VERIFY THE GENUINENESS, HE ISSUED NOTICE U/S 133(6) OF THE ACT TO THE ABOVE SAID PARTY, BUT THE SAME WAS RETURNED BACK UNSERVED. WHEN QUESTIONED, THE ASSESSEE EXPLAINED THAT M/S RAJSHREE ENTERPRISES IS A SISTER CONCERN OF M/S NAVASRAJAN DEVELOPERS. IT WAS STATED THAT THE ASSESSEE HAS PAID A SUM OF RS.10.00 LAKHS AS CONTRACT PERFORMANCE DEPOSIT TO M/S NAVASRAJAN DEVELOPERS. WHEN THE ASSESSEE ASKED FOR ITS RETURN, THE SISTER CONCERN M/S RAJSHREE ENTERPRISES HAS RETURNED BACK RS.20.00 LAKHS. IT WAS STATED THAT M/S NAVASRAJAN DEVELOPERS HAS ASKED FOR REFUND OF EXCESS PAYMENT OF RS.10.00 LAKHS. H ENCE THE AO CALLED FOR CONFIRMATION FROM M/S 2 NAVASRAJAN DEVELOPERS, BUT IT CONFIRMED THE TRANSACTION OF RS.10.00 LAKHS RECEIVED FROM THE ASSESSEE, I.E., M/S NAVASRAJAN DEVELOPERS DID NOT CONFIRM THE TRANSACTIONS ENTERED BETWEEN THE ASSESSEE AND M/S RAJSHRE E ENTERPRISES. THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE CONTRADICTIONS AND HENCE THE AO ASSESSED THE LOAN AMOUNT OF RS.20.00 LAKHS RECEIVED FROM M/S RAJSHREE ENTERPRISES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 3. IN THE APPELLATE PRO CEEDINGS, THE LD CIT(A) CONFIRMED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: - 4.7 I HAVE CONSIDERED THE FACTS OF THE CASE A ND THE APPELLANT'S SUBMISSIONS 4.8 AS REGARDS THE UNSECURED LOAN OF RS. 20,00,000/ - FROM M/S RAJSHREE ENTERPRISES, THE NOTICE U/S 133(6) ISSUED TO M/S RAJSHREE ENTERPRISES WAS RETURNED UNSERVED, ON BEING CONFRONTED WITH THIS FACT, THE APPELLANT HAD NEITHER GIVEN ANY EXPLANATION AS TO WHY THE PARTY WAS NOT AVAILABLE AT THE GIVEN ADDRESS NOR PRODUCED THE PARTY TO PROVE ITS IDENTITY . INSTEAD, IT SOUGHT TO EXPLAIN THAT THE AMOUNT WAS A BUSINESS ADVANCE GIVEN BY M/S NAVSRAJAN DEVELOPERS THROUGH M!S RAJSHREE ENTERPRISES. ON ENQUIRIES MADE WITH M/S NAVSRAJAN DEVELOPERS, IT HAD REPLIED AS UNDER; 'WITH REFERENCE TO QUERY NO. I OF YOUR GOOD SELFS NOTICE WE SUBMIT THAT YOUR ASSESSEE AND ITS DIRECTORS AGREED AND ASSURED US TO GIVE LOANS AND/OR ARRANGE AND/OR PROCURE LOANS OF ABOUT TEN CRORE FOR OUR BUILDING PROJECT IN PLACE OF OLD EXISTING BUILDING, UNDERTAKEN BY OUR FIRM AT PAVWALA STREET NOW KNOWN AS JAL BAL STREET AT GRAND ROAD AT MUMBAI AND AS A TOKEN OF CONTRACT PERFORMANCE DEPOSIT PAID TO US RS 10,00,000/ - AS LOAN AND ADVANCE. THE COPY OF CONFIRMATION FOR FINANCIAL YEAR 2012 - 13 IS ENCLOSED HEREWITH FOR YOUR GOODSEIF'S READY REFERENCE.' THE ABOVE REPLY GIVEN BY M/S NAVSRAJAN ENTERPRISES IS CORROBORATED BY THE ENTRIES IN ITS BALANCE SHEET AS WELL AS THAT OF THE APPELLANT'S. THE APPELLANT'S CONTENTION THAT THE AMOUNT SHOWN AS LOAN FROM M/S RAJSHREE ENTERPRISES WAS BUSINESS ADVANCE RECEIVED FRO M M/S NAVSRAJAN DEVELOPERS STANDS CONTROVERTED BY THE REPLY GIVEN BY M/S NAVSRAJAN DEVELOPERS. NO MENTION HAS BEEN MADE OF ANY BUSINESS ADVANCE GIVEN TO THE APPELLANT THROUGH ITS SISTER CONCERN M/S RAJSHREE ENTERPRISES. THE APPELLANT HAS STATED THAT M/S NA VSRAJAN DEVELOPERS AND M/S RAJSHREE ENTERPRISES ARE SISTER CONCERNS. IF THE APPELLANT'S CONTENTION THAT THE AMOUNT SHOWN AS LOAN FROM M/S RAJSHREE ENTERPRISES WAS IN FACT A 3 BUSINESS ADVANCE FROM M/S NAVSRAJAN DEVELOPERS IS CORRECT, THERE IS NO REASON WHY T HE SAME WOULD NOT HAVE BEEN CONFIRMED BY M/S NAVSRAJAN DEVELOPERS. EVEN DURING APPELLATE PROCEEDINGS, NO SUCH CLARIFICATION OR CONFIRMATION FROM M/S NAVSRAJAN DEVELOPERS HAS BEEN FURNISHED. EXCEPT FOR A PAPER CONFIRMATION, THE APPELLANT HAS NOT BEEN ABLE T O SUBSTANTIVELY ESTABLISH THE IDENTITY OF M/S RAJSHREE ENTERPRISES. NO RETURN OF INCOME HAS ALSO BEEN FILED BY M/S RAJSHREE ENTERPRISES FOR AY. 2013 - 14. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN TOTALITY, THE ADDITION OF RS. 20,00,000/ - MADE B Y THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDITS ON ACCOUNT OF LOAN RECEIVED FROM M/S RAJSHREE ENTERPRISES IS SUSTAINED. 4. IT IS A WELL SETTLED PROPOSITION OF LAW THAT THE INITIAL BURDEN OF PROOF IS PLACED BY SEC. 68 OF THE ACT UPON THE SHOULDERS OF THE ASSESSEE, I.E., THE ASSESSEE IS REQUIRED TO PROVE THREE MAIN INGREDIENTS IN ORDER TO DISCHARGE HIS BURDEN PLACED U/S 68 OF THE ACT. THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE CREDITOR, THE CREDIT WORTHINESS OF THE CREDITOR AND GENUINENES S OF TRANSACTION. ALL THE THREE INGREDIENTS HAVE TO BE PROVED CUMULATIVELY. IN THE INSTANT CASE, IN MY VIEW, THE ASSESSEE HAS FAILED TO PROVE ALL THE THREE INGREDIENTS. AT THE TIME OF HEARING, THE LD A.R SOUGHT TO FILE A BANK STATEMENT AS ADDITIONAL EVID ENCE. BUT I HAVE DECLINED TO ADMIT THE SAME, SINCE NO PURPOSE WOULD BE SERVED BY ADMITTING IT, IN THE ABSENCE OF ANY MATERIAL TO PROVE THE IDENTITY OF THE CREDITOR AND CREDIT WORTHINESS OF CREDITOR. UNDER THESE SET OF FACTS, I HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER PASSED BY LD CIT(A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 15 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 15 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. RE GISTRAR) PS ITAT, MUMBAI