UMANG HOUSING P. LTD, MUMBAI V. ITO 4(3)(3), MUMBAI

ITA 3807/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4101 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-11-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NARESH KUMAR IRS RETD
• Keywords: Unexplained cash credit
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.3807/M/2013 ASSESSMENT YEAR: 2001-02 M/S. UMANG HOUSING PVT. LTD., FLAT 201, SHANGRILA BUILDING, EVERSHINE NAGAR, MALAD WEST, MUMBAI 400 064 PAN: AAACU4581B VS. ITO 4(3)(3), AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NARESH KUMAR (IRS RETD.), A.R REVENUE BY : SHRI SANJEEV KASHYAP, D.R. DATE OF HEARING : 30.12.2015 DATE OF PRONOUNCEMENT : 03.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 08.10.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2001-02. 2. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS AGAINST THE ADDITION OF RS.25,94,800/- INTO THE INCOME OF THE ASSESSEE A S UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT. THE ASSESS EE HAS CLAIMED TO HAVE RECEIVED A SUM OF RS.24.93 LAKHS AS SHARE APPLICATI ON MONEY. THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 22 .08.03 BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) ASSESSI NG THE TOTAL INCOME OF THE ASSESSEE AT NIL. HOWEVER, SUBSEQUENTLY AT THE OR DERS OF THE COMMISSIONER OF INCOME TAX (HEREINAFTER REFERRED TO AS THE CIT) PAS SED UNDER SECTION 263, ASSESSMENT WAS SET ASIDE AND THE AO WAS DIRECTED TO VERIFY THE NEW RESERVES ITA NO.3807/M/2013 M/S. UMANG HOUSING PVT. LTD. 2 AND SURPLUS OF RS.24,95,000/-. THE AO ACCORDINGLY CALLED FOR THE NECESSARY DETAILS. THE ASSESSEE SUBMITTED THE REQUIRED DETAI LS SUCH AS NAMES OF SHAREHOLDERS, ADDRESS AND PAN OF THE PARTIES TO WHO M THE SHARES WERE ALLOTTED AT PREMIUM. IT WAS ALSO CLAIMED THAT THE SHARE APP LICATION MONEY WAS RECEIVED THROUGH PROPER BANKING CHANNELS AND FURTHER THAT AL L THE PARTIES HAD CONFIRMED THE TRANSACTIONS IN QUESTION. HOWEVER, THE AO AFTE R ANALYZING THE INDIVIDUAL TRANSACTIONS HELD THAT THE ASSESSEE HAD FAILED TO E STABLISH THE GENUINENESS OF THE TRANSACTION. HE, THEREFORE, HELD THAT THE ADDITION OF RESERVE AND SURPLUS OF RS.25,94,800/- WAS TO BE CONSIDERED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HE, HOWEVER, OBSERVED THAT SINCE MO ST OF THE DEPOSITS HAD BEEN CARRIED OVER FROM THE EARLIER YEAR, THE ADDITIONS W ERE REQUIRED TO BE MADE ON PROTECTIVE BASIS. HE ACCORDINGLY MADE THE ADDITION OF THE IMPUGNED AMOUNT OF RS.25,94,800/-UNDER SECTION 68 OF THE ACT ON PROTEC TIVE BASIS FOR THE YEAR UNDER CONSIDERATION. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 3. IN APPEAL, THE LD. CIT(A) CALLED FOR REMAND REPO RT FROM THE AO REGARDING THE TRANSACTIONS IN QUESTION. IN THE REM AND REPORT, THE AO OBSERVED THAT THE ASSESSEE HAD FAILED TO FURNISH THE BANK ST ATEMENTS FOR FINANCIAL YEAR 2000-01. THE LD. CIT(A), THEREFORE, DOUBTED THAT I T WAS NOT CLEAR WHETHER THE SHARE APPLICATION MONEY WAS CARRIED FORWARD FROM TH E EARLIER YEAR OR THE FRESH AMOUNTS WERE RECEIVED DURING THE YEAR. HE OBSERVED THAT ALTHOUGH THE AMOUNTS HAVE BEEN SHOWN AS OPENING BALANCE IN THE C ONFIRMATION FURNISHED BY THE SHAREHOLDERS BUT THE ASSESSEE HAD FAILED TO PRO VE THE GENUINENESS OF THE TRANSACTIONS IN QUESTION. HE, FURTHER, OBSERVED TH AT FROM THE AUDITED BALANCE SHEET OF THE ASSESSEE IN THE PERIOD ENDING ON 31.03 .2000 AND 31.03.2001, THE AMOUNT OF ADDITION TO SHARE PREMIUM ACCOUNT HAS BEE N SHOWN AT RS.24,95,000/- AS ON 31.03.01 WHICH WAS NIL ON 31 .03.2000. HE OBSERVED THAT THIS CLEARLY ESTABLISHED THAT THE AMOUNT OF RS .24,95,000/- HAD BEEN RECEIVED BY THE ASSESSEE DURING THE PERIOD ENDING O N 31.03.2001. HE FURTHER ITA NO.3807/M/2013 M/S. UMANG HOUSING PVT. LTD. 3 OBSERVED THAT EVEN THE ASSESSEE HAD FAILED TO PROVE THE CAPACITY AND CREDITWORTHINESS OF THE PERSONS FROM WHOM THE ASSES SEE HAD RECEIVED THE IMPUGNED AMOUNT. HE, THEREFORE, CONFIRMED THE IMPU GNED ADDITION ON SUBSTANTIVE BASIS AS AGAINST DONE ON PROTECTIVE BAS IS BY THE AO. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE HAS COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE HAS INVITED O UR ATTENTION TO PAGE 2 OF THE PAPER BOOK WHICH IS A CHART OF SHARE APPLICATION MO NEY AS ON 31.03.2001 WHEREIN THE OPENING BALANCE HAS BEEN SHOWN AT RS.25 ,57,400/-. THE ONLY ADDITION DURING THE YEAR IS OF RS.37,400/- IN RELAT ION TO SHARE APPLICATION MONEY RECEIVED FROM EMPIRE ADVISOR SERVICES PVT. LT D. THE TOTAL ALLOTMENTS, THUS, HAVE BEEN SHOWN AT RS.25,94,800/- AND THE CLO SING BALANCE HAS BEEN SHOWN AT NIL. THE LD. A.R. HAS FURTHER INVITED O UR ATTENTION TO THE BALANCE SHEET FOR THE YEAR ENDING ON 31.03.2001 WHEREIN AT PAGE 101 OF THE PAPER BOOK, SHARE APPLICATION MONEY RECEIVED AS ON 31.03.2000 H AS BEEN MENTIONED AT RS.25,57,400/- WHICH WAS TRANSFERRED TO THE SHARE P REMIUM ACCOUNT DURING THE YEAR UNDER CONSIDERATION AS SHOWN AT PAGE 103 OF TH E PAPER BOOK. HE, THEREFORE, HAS STRESSED THAT THE OBSERVATION OF THE LD. CIT(A) THAT THE OPENING BALANCE IN THE SHARE PREMIUM ACCOUNT WAS NIL AS O N 31.03.2000 AND IT WAS RS.24,95,000/- AS ON 31.03.2001 AND THEREFORE IT SH OWED THAT THE MONEY WAS RECEIVED DURING THE YEAR, WAS NOT CORRECT. HE HAS EXPLAINED THAT SHARE APPLICATION MONEY WAS RECEIVED DURING THE EARLIER Y EARS, WHICH WAS DULY SHOWN IN THE BALANCE SHEET AND WHICH THEREAFTER WAS TRANSFERRED TO SHARE PREMIUM ACCOUNT AND THE SHARES WERE ALLOTTED AT PRE MIUM DURING THE YEAR UNDER CONSIDERATION. EVEN THE AO HAS ALSO OBSERVED THAT THE DEPOSITS WERE MADE DURING THE EARLIER ASSESSMENT YEARS AND HENCE THE ADDITION FOR THE YEAR UNDER CONSIDERATION WAS MADE ON PROTECTIVE BASIS. THE LD. A.R. HAS FURTHER ITA NO.3807/M/2013 M/S. UMANG HOUSING PVT. LTD. 4 SUBMITTED THAT FOR THE IMMEDIATE EARLIER ASSESSMENT YEAR I.E. 2000-01, THE ASSESSMENT WAS REOPENED BY THE AO UNDER SECTION 147 OF THE ACT AND INQUIRIES WERE MADE REGARDING THE RECEIPT OF THE SHARE APPLIC ATION MONEY. HOWEVER, AFTER EXAMINATION OF THE RECORDS, THE AO FOUND THAT THE SHARE APPLICATION MONEY IN QUESTION WAS ALSO NOT RECEIVED BY THE ASSE SSEE IN THE PREVIOUS FINANCIAL YEAR RELATING TO ASSESSMENT YEAR 2000-01. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO PAGE 132 OF THE PAPER BOOK WHICH IS THE BALANCE SHEET AS ON 31.03.98 TO SHOW THAT THE SHARE APPLICATION M ONEY WAS SHOWN AT RS.15,57,400/- AS ON 31.03.97 WHICH WAS AT RS.25,57 ,400/- AS ON 31.03.98. HE, THEREFORE, HAS SUBMITTED THAT THE SHARE APPLICA TION MONEY IN QUESTION HAS NEITHER BEEN RECEIVED DURING THE YEAR UNDER CONSIDE RATION NOR DURING THE PREVIOUS ASSESSMENT YEAR BUT IT PERTAINED TO THE FI NANCIAL YEAR ENDING ON 31.03.98. THE AO, AFTER ENQUIRIES HAD ACCEPTED THE RETURNS OF THE INCOME FOR THE EARLIER ASSESSMENT YEAR 2000-01. THERE IS NOTH ING BROUGHT ON RECORD BY THE AO OR THE LD. CIT(A) THAT THE IMPUGNED SHARE APPLIC ATION MONEY WAS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . THE LD. CIT(A) HAS CONFIRMED THE ADDITIONS ON SUBSTANTIVE BASIS HOLDIN G THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE MONEY IN QUESTION WAS NOT RECEIVED DURING THE YEAR. HOWEVER, FROM THE RECORD, IT REVEALED THAT THE AO H AS GIVEN A FINDING THAT MOST OF THE AMOUNTS WERE CARRIED OVER FROM THE EARL IER ASSESSMENT YEAR AND THE ASSESSEE HAS ALSO PROVED BEFORE THE AO IN REOPENED ASSESSMENT PROCEEDINGS FOR THE EARLIER YEAR A.Y. 2000-01 THAT THE SHARE AP PLICATION MONEY WAS CARRIED OVER FROM EARLIER ASSESSMENT YEARS. THE ASSESSEE W AS NOT SUPPOSED TO PROVE THE NEGATIVE AS HAS BEEN DISCUSSED BY THE LD. CIT(A ). THE LD. CIT(A) HAS FAILED TO BRING ON FILE ANY DOCUMENT TO NEGATE THE CLAIM OF THE ASSESSEE THAT NO SHARE APPLICATION MONEY HAS BEEN RECEIVED DURING TH E YEAR, EXCEPT RS.37,400/-, HENCE, NO ADDITIONS UNDER SECTION 68 ARE WARRANTED SO FAR AS THE ASSESSMENT YEAR 2001-02 IS CONCERNED. THE IMPUGNED ADDITIONS MADE BY THE LD. CIT(A) ARE THEREFORE ORDERED TO BE DELETED. ITA NO.3807/M/2013 M/S. UMANG HOUSING PVT. LTD. 5 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2016. SD/- SD/- (RAMIT KOCHAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 03.02.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.