INDUMATI M. BANSAL, MUMBAI V. ITO 30(1)(5), MUMBAI

ITA 3842/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8450 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Reopening of assessment; Unexplained cash credit; Business expenditure; Accommodation entries; Retraction
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 3842/ MUM/20 17 ( ASSESSMENT YEAR : 2007 - 08 ) INDUMATI M BANSAL B - 401, SANKALP 2 A.K. VAIDYA MARG MALAD EAST MUMBAI 400 097 VS. ITO 30 (1)(5) MUMBAI PAN/GIR N O. ADWPB2027M APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI PRATEEK JAIN & SHRI SHAILESH REVENUE BY MS. N. HEMALATHA DATE OF HEARING 03 / 10 /201 7 DATE OF PRONOUNCEME NT 15 / 11 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 41, MUMBAI DATED 12/04/2017 FOR A.Y.2007 - 08 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE BEEN TAK EN BY THE ASSESSEE: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE ID. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF LD. AO IN RE - OPENING OF THE ASSESSMENT U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT/1961 . 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE ID. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF ID. AO FOR MAKING AN ADDITION OF RS.10,00,000/ - ON ACCOUNT OF ACCOMMODATION ENTRY TREATING THE SAME AS U NEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE U/S 68/69A OF THE INCOME TAX ACT/1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW THE ID. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ITA NO. 3842/MUM/2017 INDUMATI M BANSAL 2 THE ACTION OF ID. AO FOR DISAL LOWING THE INTEREST PAID AMOUNTING TO RS.30,400/ - ON THE ALLEGED ACCOMMODATION LOAN OF RS.10,00,000/ - , BY TREATING THE SAME AS NON BUSINESS EXPENDITURE. 4. THE APPELLANT CRAVES LEAVES TO ADD, TO AMEND, ALTER, MODIFY AND / OR WITHDRAW ANY OR ALL OF THE ABO VE GROUNDS OF APPEAL, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. 3. IN THIS APPEAL, ASSESSEE IS AGGRIEVED FOR ADDITION OF RS.10 LAKHS ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68/69A OF THE IT ACT. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THIS CASE ASSESSMENT WAS RE - OPENED BASED ON THE INFORMATION RECEIVED FROM DIRECTOR OF INCOME - TAX (INV.), MUMBAI REGARDING SHARING OF INFORMATION IN THE CASES OF BENEFICIARIES OF ACCOMMODATION ENTRIES CONSEQUENT TO THE SEARCH ACTION CONDUCTED O N SHRI PRAVEEN KUMAR JAIN AND HIS GROUP CONCERNS. THE ASSESSES WAS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES BY WAY OF OBTAINING BOGUS ENTRIES IN THE FORM OF UNSECURED LOANS OF RS. 10,30,904/ - FROM M/S. FAST STONE TRADING CO, ONE OF THE ENTITY CONTRO LLED BY SHRI PRAVEEN KUMAR JAIN. 5. BEFORE THE AO THE ASSESSEE HAD SUBMITTED THE BANK STATEMENT AS EVIDENCE TO SHOW THE RECEIPT OF LOAN AS WELL AS THE REPAYMENT OF THE SAID LOAN. THE ASSESSEE STATED THAT M/S. FAST STONE TRADING CO WAS OPERATING IN THE NAME OF M/S. ATHARV BUSINESS PVT.LTD., THE AO FOUND THAT M/S. ATHARV BUSINESS PVT. LTD WAS ALSO ONE OF THE CONCERNS OF SHRI PRAVEEN KUMAR JAIN . BASED ON THE ABOVE, THE AO TREATED THE ALLEGED LOAN OF RS. 10,00,000/ - AS UNEXPLAINED INVESTMEN T U/S 69/69A OF THE I T ACT AND ALSO DISALLOWED THE INTEREST OF RS. 30,400/ - PAID ON THE LOAN . ITA NO. 3842/MUM/2017 INDUMATI M BANSAL 3 6. BEFORE THE CIT(A) IT WAS SUBMITTED BY ASSESSEE THAT THE A.O. HAS PURELY RELIED UPON THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN AND FORMED A BELIEF THAT THE ASSES SEE TOOK ACCOMMODATION ENTRY. THE A,O. FAILED TO PROVIDE THE COPY OF THE SAID STATEMENT TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR THE OPPORTUNITY OF CROSS EXAMINING THE SAID PERSON. THE SATISFACTION RECORDED BY THE A.O. WHILE REOPENIN G THE SAID ASSESSMENT WAS WITHOUT JURISDICTION AS IT IS NOT MENTIONED ANYWHERE IN THE ASSESSMENT ORDER THAT SHRI PRAVEEN KUMAR JAIN HAS SPECIFICALLY STATED THAT HE HAS GIVEN ACCOMMODATION ENTRY TO THE ASSESSEE . THE ASSESSEE 'S CASE HAS BEEN REOPENED MERELY ON THE BASIS OF THE STATEMENT OF A PERSON WITHOUT ANY CLEAR REFERENCE OF THE ASSESSEE 'S NAME BY THE SAID PERSON. THE CORE CONDITION FOR EXERCISE OF JURISDICTION U/S 147 OF THE ACT HAS NOT BEEN FULFILLED AS THE AO HAS FORMED OPINION MERELY BASED ON INFORMAT ION RECEIVED FROM DGIT. THE REOPENING OF ASSESSMENT WAS INVALID IN LAW AS IT WAS BASED ON MERE SUSPICION AND THEREFORE LIABLE TO BE QUASHED. 7. ON THE MERIT IT WAS SUBMITTED THAT T HE LOAN TAKEN BY THE ASSESSEE WAS GENUINE WHICH WAS TAKEN BY PROPER LEGAL CH ANNELS AND DOCUMENTS SUCH AS CONFIRMATION LEDGER, FTR COPY, BANK STATEMENT AND THE BALANCE SHEET OF THE CREDITOR WERE SUBMITTED WHICH PROVE BEYOND DOUBT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITORS. FURTHERMORE, IT IS IMPORTANT TO P OINT OUT THAT THE M/S, FASTSTONE TRADING COMPANY PVT. LTD. HAS SHOWN TURNOVER OF RS.39,65,55,651/ - . THE ASSESSEE HAS REPAID THE ITA NO. 3842/MUM/2017 INDUMATI M BANSAL 4 SAID LOAN AMOUNT IN THE SUBSEQUENT YEARS. THE DETAILS ARE ENCLOSED IN THE PAPER BOOK. 8. FURTHER CONTENTION OF LEARNED AR BEFORE THE CIT(A) WAS AS UNDER: - 4.3 THE COPY OF THE ROC CERTIFICATE FOR CHANGE IN NAME FROM M/S. FASTSTONE TRADING CO. PVT. LTD. TO M/S. ATHARV BUSINESS PVT. LTD WAS SUBMITTED BEFORE THE A.O. AND THE COMPANY WAS OPERATING FROM THE SAME ADDRESS. THE AO FAILED TO MAKE ANY ENQUIRIES TO VERIFY THE SAID FACT. 4.4 THE ALLEGATION OF THE A.O. THAT THE COMPANY, M/S. FASTSTONE TRADING CO. PVT. LTD. WAS CONTROLLED BY PRAVIN KURNAR JAIN WAS UNFOUNDED AND BASELESS. FURTHER, THE RETRACTION AFFIDAVIT OF PRAVIN KUMAR JAIN CLEA RLY STATED THAT THE STATEMENT GIVEN BY HIM AT THE TIME OF SEARCH WAS UNDER COERCION AND FORCE. THEREFORE, THE RELIANCE OF THE A.O. UPON THE STATEMENT OF PRAVIN KUMAR JAIN IS INCORRECT IN LIGHT OF HIS RETRACTION AFFIDAVIT. 4.5 NON APPEARANCE OF THE SAID PA RTY BEFORE THE LD. A.O. FOR VERIFICATION COULD NOT LEAD TO A CONCLUSION THAT THE SAID PARTY WAS NON - GENUINE. 4.6 RELIANCE IS PLACED ON THE JUDGMENT OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF M/S. SHAF BROADCAST PVT . LTD. VS. ACIT VIDE TTA NO. 1819/MUM/ 2012, IN THE CASE OF THE HON'BLE KOLKATA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. V. ASSISTANT COMMISSIONER OF INCOME - TAX (266 ITR 462), THE HON'BLE AMRITSAR BENCH OF ITAT IN THE CASE OF PYRAMID SOFTWARE AND TECHNOLOGIES VS. DCIT (105 ITD 305) AN D VARIOUS OTHER JUDGMENTS. 9. HOWEVER, CIT(A) DID NOT AGREE WITH THE ASSESSEES CONTENTION AND UPHELD THE ADDITION MADE BY THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 10. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AU THORITIES AND CONTENDED THAT AO WAS JUSTIFIED IN ADDING THE LOAN AMOUNT IN ASSESSEES INCOME U/S.68, IN SO FAR AS ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF THE LENDER. ITA NO. 3842/MUM/2017 INDUMATI M BANSAL 5 11. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . SO FAR AS REOPENING IS CONCERNED I FOUND THAT AO HAS SUFFICIENT REASON TO BELIEF THAT INCOME HAD ESCAPED ASSESSMENT TO THE EXTENT OF LOAN AMOUNT. ACCORDINGLY, GROUND NO.1 IS DISMISSED. 12. FROM THE RECORD I FOUND THAT TO SUBSTANTIAT E THE LOAN TRANSACTION, ASSESSEE HAD NOT ONLY SUBMITTED LOAN CONFIRMATION BUT ALSO BANK STATEMENT TO SHOW THE RECEIPT OF LOAN AS WELL AS R EPAYMENT OF THE SAID LOAN. AS PER THE DOCUMENT PLACED ON RECORD I.E., LOAN CONFIRMATION, F T R COPY, BANK STATEMENT, BAL ANCE SHEET OF THE CREDITOR, I FOUND THAT ALL THE THREE CONDITIONS OF IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF LOAN CREDITOR ARE FULLY ESTABLISHED. THIS LOAN WAS ALSO REPAID THROUGH CHEQUE WHICH THE AO HIMSELF HAD VERIFIED AND FOUND THE SAME IN ORDER . UNDER THESE FACTS AND CIRCUMSTANCES, I DO NOT FIND ANY MERIT IN THE ADDITION SO MADE. 1 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 15 / 11 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 11 / 201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//