ASST CIR 32(3), MUMBAI V. VINAY JAYANTILAL SHAH, MUMBAI

ITA 3875/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9798 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS LD
• Assessee Lawyers: DIVYESH I SHAH LD
• Keywords: Unexplained cash credit; Additional evidence; Onus to prove
• Section: 143(3); 68

Judgement Text

ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3875/MUM/2016 ( / ASSESSMENT YEAR: 2012-13) ASSISTANT COMMISSIONER OF INCOME TAX-32(3) R.NO.108, 1 ST FLOOR,BDG. NO. C-11 PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (EAST), MUMBAI-400 051. / VS. SHRI VINAY JAYANTILAL SHAH A/23, KRISHNA KUTIR 5 TH FLOOR, FACTORY LANE OPP. M.K. ROAD BORIVALI (W) MUMBAI-400 092 ./ ./PAN/GIR NO. AAFPS-6736-A ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : DIVYESH I SHAH- LD.AR REVENUE BY : B. SRINIVAS-LD. CIT-DR / DATE OF HEARING : 12/11/2018 / DATE OF PRONOUNCEMENT : 11/12/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-44, MUMBAI [CIT(A)], APPEAL NO.CIT(A)-44/ACIT-32(3)/ITA-316/15-16 DATED 31/03/2016 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID.CIT(A) ERRED IN DELETING THE ADDITION MADE U/S. 68 OF RS.1 7,32,47,702/- BY THE AO WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 2 ONUS OF PROVING THE GENUINENESS OF THE WILL OF LATE MR. PRAKASH CHANDRA SHAH. THE LD. CIT (A) ALSO ERRED IN HOLDING THAT TH E COPY OF THE WILL OF SHRI PRAKASH CHANDRA SHAH DATED 05.07.2011 WAS COPY OF A GENUINE WILL DESPITE THE FACT THAT THE AO HAS BROUGHT ON RECORD A NUMBER OF DEFECTS THEREIN. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THAT THE ASSESSEE'S CLAIM OF BUSIN ESS LOSS OF RS.4,00,25,218/- WAS ALLOWABLE DESPITE THE FACT THA T THE ASSESSEE HAS NOT SUFFERED A LOSS FROM SHARE TRANSACTIONS AND THE ASS ESSEE HAS CLAIMED LOSS DUE TO VALUATION OF SHARES RECEIVED THROUGH WILL OF SHRI PRAKASH CHANDRA SHAH. THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ASSESSED FOR IMPUGNED AY IN SCRUTINY ASSESSMENT U/S 143(3) ON 31/03/2015 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-32(3), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.17.33 CRORES AFTER SOLE ADDITION OF RS.17.32 CRORE U/S 68 AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 13/09/2012. THE BUSINESS LOSS OF RS.4 CRORES CLAIME D BY THE ASSESSEE WAS ALSO NOT ALLOWED TO BE SET-OFF AND CARRIED FORW ARD FOR THE REASONS STATED IN THE QUANTUM ASSESSMENT ORDER. 2.1 DURING ASSESSMENT PROCEEDINGS, UPON PERUSAL OF FINANCIAL STATEMENTS, IT TRANSPIRED THAT THE ASSESSEE INTRODU CED CAPITAL OF RS.17.32 CRORES IN HIS BOOKS OF ACCOUNT AND ACCORDINGLY, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE SAME. THE ASSESSEE CLA IMED THAT HIS BROTHER MR. PRAKASHCHANDRA SHAH [MR. SHAH] HAD EXPIRED AND THE ENTIRE PROPERTY BELONGING TO HIS BROTHER WAS BEQUEATHED TO HIM UNDER A WILL WHICH WAS INTRODUCED IN THE BOOKS OF ACCOUNT. 2.2 IN SUPPORT, THE ASSESSEE SUBMITTED A COPY OF TH E PURPORTED LAST WILL AND TESTAMENT OF MR. PRAKASHCHANDRA SHAH DATED 05/07/2011, THE PERUSAL OF WHICH REVEALED THAT THE ASSESSEE WAS STA TED TO BE HIS BEST FRIEND AND AS PER THE WILL, 66% OF THE PROPERTY WAS TO BE BEQUEATHED TO ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 3 THE ASSESSEE WHEREAS BALANCE 34% OF THE PROPERTY WA S TO BE USED FOR GOOD CAUSE. IT WAS NOTED THAT MR. SHAH WAS A PERSON OF INDIAN ORIGIN BUT HAD ACQUIRED CITIZENSHIP OF TANZANIA AND HOLD RESIDENTIAL VISA FOR INDIA FOR A PERIOD OF 15 YEARS. AS PER THE WILL, THERE WA S SEPARATE WILL FOR ALL THE PROPERTIES HELD BY MR. SHAH IN TANZANIA WHICH HAVE BEEN BEQUEATHED IN FAVOUR OF MR. SHAHS FAMILY CONSISTIN G OF HIS WIFE SMT. VARSHA PRAKASHCHANDRA SHAH, AKASH [SON] & AMISHA [D AUGHTER]. THE EXECUTOR OF THE PURPORTED LAST WILL WAS MR. CHANDRA KANT M. SHAH AND THE WITNESSES WERE MR. JITENDRA D.SHAH & ARVIND M. JOSH I. 2.3 THE FURTHER PERUSAL OF THE WILL REVEALED THAT I T DID NOT CONTAIN THE DETAILS OF THE PROPERTIES OF THE DECEASED AND EVEN THE ASSESSEE FAILED TO PROVIDE THE SAID DETAILS. IT WAS EXPLAINED THAT THE ASSESSEE WAS A JOINT HOLDER AND NOMINEE OF VARIOUS INVESTMENTS, BANKS AC COUNTS, MUTUAL FUNDS ETC. OF THE DECEASED AND ENTIRE PROPERTIES OF THE DECEASED WERE INTRODUCED IN HIS BOOKS OF ACCOUNT AS AGAINST 66% M ENTIONED IN THE PURPORTED LAST WILL, WHICH COULD NOT BE EXPLAINED B Y THE ASSESSEE. ACCORDINGLY, THE ASSESSEE WAS ASKED TO PRODUCE THE WITNESSES, THE EXECUTORS, NOTARY AND ALSO FURNISH THE WILL PERTAIN ING TO HIS ASSETS SITUATED IN TANZANIA . THE TWO WITNESSES ATTENDED THE PROCEEDINGS AND THEIR STATEMENTS WERE RECORDED ON 09/03/2015, THE R ELEVANT PORTION OF WHICH HAS ALREADY BEEN EXTRACTED IN THE QUANTUM ASS ESSMENT ORDER. THE PERUSAL OF STATEMENTS LED THE LD. AO TO CONCLUDE TH AT THE WITNESSES HAD NO KNOWLEDGE ABOUT PROPERTIES OR FINANCIAL STANDING OF THE DECEASED AND ALSO DID NOT HAVE KNOWLEDGE ABOUT ASSESSEE OR HIS B USINESS AFFAIRS. THE EXECUTOR DID NOT ATTEND THE PROCEEDINGS AND THE SO- CALLED WILL FOR ASSETS SITUATED IN TANZANIA COULD ALSO NOT BE PRODUCED BY THE ASSESSEE. ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 4 2.4 SUBSEQUENTLY, THE ASSESSEE SUBMITTED THAT A LET TER DATED 03/03/2015 HAS BEEN RECEIVED FROM THE WIFE OF THE D ECEASED IN WHICH SHE CLAIMED THAT SHE WAS IN POSSESSION OF ANOTHER W ILL DATED 02/08/2011 EXECUTED BY THE DECEASED AND SHE AND HER SON WERE T HE MAJOR BENEFICIARIES OF THE ESTATE OF THE DECEASED. SHE AL SO SOUGHT PROBATE FOR THE ESTATE OF THE DECEASED AND THE ASSESSEE WAS INS TRUCTED TO TRANSFER ALL THE BENEFITS RECEIVED BY HIM UNDER THE WILL. TH E ASSESSEE OFFERED TO REVERT BACK THE CAPITAL INTRODUCED IN HIS BOOKS TO THE WIFE OF THE DECEASED IN FUTURE. 2.5 THE ENTIRE GAMUT OF FACTUAL MATRIX, EVENTS, & O THER DOCUMENTARY EVIDENCES LED THE LD. AO TO BELIEVE THE PURPORTED L AST WILL DATED 05/07/2011 WAS FAKE AND NON-GENUINE AND THE ASSESSE E ATTEMPTED TO DEFRAUD THE REVENUE BY INTRODUCING HIS OWN UNACCOUN TED INCOME IN HIS BOOKS OF ACCOUNTS THROUGH A FAKE WILL. FINALLY, THE AMOUNT OF RS.17.32 CRORES INTRODUCED BY THE ASSESSEE IN THE BOOKS WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68. WITHOUT PREJUDICE, IT WAS ALSO CONCLUDED THAT THE AFORESAID AMOUNT WAS LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 56(2)(VII) . THE LD. AO ALSO HELD THAT LOSS OF RS.4 CRORES CLAIMED BY THE ASSESS EE WAS NOT ALLOWABLE SINCE THE SHARES WERE HELD AS INVESTMENTS AND TRANS FERRED TO THE ASSESSEE FROM THE BOOKS OF THE DECEASED AND NEITHER THERE WAS OPENING STOCK AND NOR WERE THESE SHARES PURCHASED. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 31/03/2016 WHE REIN LD. CIT(A) DREW CERTAIN CONCLUSIONS WHICH ARE GIVEN ON PAGES 2 5 TO 39 OF THE IMPUGNED ORDER. THE BRIEF CRUX OF THE SAME IS THAT LD. CIT(A) CONCLUDED ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 5 THAT ORIGINAL WILL WAS PRODUCED BY THE ASSESSEE & I T WAS GENUINE. IT WAS FURTHER CONCLUDED THAT ADVERSE VIEW COULD NOT BE DR AWN DUE TO NON- APPEARANCE OF THE EXECUTOR OR THE NOTARY. A CONCLUS ION WAS ALSO DRAWN THAT SINCE THE CREDIT OF AMOUNT STOOD EXPLAINED BY THE STATED WILL, ADDITION U/S 68 WERE NOT CALLED FOR. FINALLY, LD. C IT(A) TREATING THE WILL DATED 05/07/2011 AS VALID WILL AND MAKING SEVERAL O THER OBSERVATIONS CONCLUDED THAT THE ADDITIONS U/S 68 COULD NOT BE SU STAINED AND SINCE THE PROPERTIES WERE RECEIVED UNDER WILL, THE PROVISIONS OF SECTION 56(2)(VII) HAD NO APPLICABILITY. THE MATTER OF CARRY FORWARD O F BUSINESS LOSS WAS SET ASIDE FOR RE-ADJUDICATION. AGGRIEVED, THE REVENUE I S IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI DIVYESH I.SHAH, AT THE OUTSET, SOUGHT ADMISSION OF ADDITIONAL EVIDE NCES UNDER RULE-29 ON THE GROUND THAT THE SAME COULD NOT BE SU BMITTED AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS UNDER APPELLAT E PROCEEDINGS. THE ADDITIONAL EVIDENCES ARE IN THE SHAPE OF PROBATE OF WILL DATED 02/08/2011 STATED TO BE EXECUTED BY THE DECEASED, AS OBTAINED BY THE WIFE OF THE DECEASED FROM HONBLE BOMBAY HIGH COURT ON 29/04/2016. IT HAS BEEN SUBMITTED THAT IN TERMS OF THE PROBATE, THE ASSET A ND PROPERTIES WERE TO BE BEQUEATHED TO THE WIFE AND THE SON OF THE DECEAS ED AND THE ASSESSEE HAS SUBSEQUENTLY RETURNED THE ASSETS TO TH E WIFE IN ACCORDANCE WITH THE WILL DATED 02/08/2011. THE COPI ES OF THE PROBATE AND OTHER DOCUMENTARY EVIDENCES, IN THIS REGARD, HA S BEEN PLACED IN THE PAPER-BOOK. IT HAS BEEN SUBMITTED THAT THE AFORESAID DOCUMENTS DEMONSTRATE THE TRANSFER OF ASSETS FROM THE ASSESSE E TO THE WIFE AND WERE IMPERATIVE IN DECIDING THE ISSUE AND GOES TO T HE ROOT OF THE MATTER. ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 6 PER CONTRA, LD. CIT-DR, SHRI B.SRINIVAS, SUBMITTED THAT THE COMPLETE ONUS TO PROVE THE FACTUAL MATRIX WAS ON ASSESSEE. 5. UPON PERUSAL OF MATERIAL ON RECORD, IT APPEARS T HAT THE WIFE OF THE ASSESSEE HAS OBTAINED PROBATE OF WILL OF THE DECEAS ED FROM HONBLE BOMBAY HIGH COURT SUBSEQUENT TO THE CONCLUSION OF APPELLATE PROCEEDINGS. THIS PROBATE HAS MATERIAL BEARING ON T HE ISSUE UNDER HAND AND GERMANE TO ADJUDICATE THE DISPUTE BEFORE US. TH EREFORE, WITHOUT DELVING MUCH DEEPER INTO THE ISSUE, THE IMPUGNED OR DER IS SET-ASIDE. THE MATTER STAND REMITTED BACK TO THE FILE OF LD. AO FO R RE-ADJUDICATION IN TERMS OF ADDITIONAL EVIDENCES AS WELL AS OTHER DOCU MENTARY EVIDENCES SUBMITTED BY THE ASSESSEE, WHO IN TURN, IS DIRECTED TO SUBSTANTIATE HIS STAND AND EXPLAIN THE CREDIT TAKEN BY HIM IN HIS BO OKS OF ACCOUNTS. NEEDLESS TO ADD THAT REASONABLE OPPORTUNITY OF BEIN G HEARD SHALL BE GRANTED TO THE ASSESSEE. 6. THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH DECEMBER , 2018. SD/- SD/- (PAWAN SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/12/2018 SR.PS, JAISY VARGHESE ITA NO.3875/MUM/2016 VINAY JAYANTILAL SHAH AY: 2012-13 7 !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. * +!$, , , , / DR, ITAT, MUMBAI 6. + -. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.