ITO 12(1)(4), MUMBAI V. HARJI RAVJI PATEL, MUMBAI

ITA 39/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75882 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Keywords: Unexplained cash credit; Additional evidence; Assessment record
• Section: 68; 133(6)

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. , ! ! ! ! '# '# '# '# , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & AMIT SHUK LA,JUDICIAL MEMBER /. ITA NO.39/MUM/2013, $ $ $ $ % % % % / ASSESSMENT YEAR-2008-09 ITO 12(1)(4), R.NO.115, 1 ST FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS HARJI RAVJI PATEL, 14, MACKAWEE MANSION, 7 GUNBOW STREET, FORT, MUMBAI-400001 PAN: AAKPG156 1C ( &' / APPELLANT) ( ()&' / RESPONDENT) * + / REVENUE BY : SHRI PITAMBER DAS $,! $,! $,! $,! + + + + / ASSESSEE BY : NONE $ $ $ $ * ** * !- !- !- !- / DATE OF HEARING : 18-03-2014 ./% * !- / DATE OF PRONOUNCEMENT : 18-03-2014 $ $ $ $ , 1961 * ** * 254 )1( !0! !0! !0! !0! ' ' ' ' ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM $ $ $ $ : CHALLENGING THE ORDER DT.18.10.2012 OF THE CIT(A)-2 3,MUMBAI,ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 22,46,422/- MADE U/S.68 ON ACCOUNT OF UNEXPL AINED CASH CREDIT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE ISSUED BEARER CHEQUE TO HIS LOAN CREDITORS AND THE SAME WERE DEPOSITED IN THE ACCOUNTS OF TWO PERSONS WHO ARE OTHER THAN THE LOAN CREDITORS OF THE ASSESSEE. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.THE APPELLANT CRAVES LEAVE AMEND OR ALTER ANY GRO UND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE,AN INDIVIDUAL,FILED HIS RETURN OF INCOME O N 14.09.2008 DECLARING TOTAL INCOME AT RS. 1.33 LACS. AO FINALISED THE ASSESSMENT ON 30.12.201 0,DETERMINING THE INCOME OF THE ASSESSEE AT RS.23.80 LACS.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD SHOWN UNSECURED LOANS OF RS. 27.95 LACS IN THE NAME OF FO LLOWING PARTIES. SR. NO. NAME OF THE PERSONS AMOUN T (RS.) 1. AMBA V. BANGARI 1,00,984.05 2. BACHUBEN L. PATEL 6,62,403.90 3. KAILASH COPY CENTRE 5,00,000 4. K. J. GHOKASHI 48,933.90 5. LAXMAN R. PATEL 1,27,219.25 6. LAXMAN VISHRAM 1,01,468.75 2 ITA NO. 39/MUM/2013 HARJI RAVJI PATEL. 7. M. D. BATHI 97,028 8. RAJIV D. BATHI 8,34,954 9. R. RANCHOD 1,48,113.85 10. RUDA R. RAVARIA 73,265.08 11. R. V. RAVARIA 1,00,985.05 TOTAL 29,95,355.83 HE DIRECTED THE ASSESSEE TO FURNISH CONFIRMATION OF UNSECURED LOAN FROM THE PARTIES CONCERNED. IN RESPONSE TO HIS DIRECTIONS ASSESSEE, FILED LOAN CON FIRMATION SHOWING OPENING BALANCE OF LOANS IN ALL THE CASES. FROM THE CONFIRMATIONS FILED, AO NOT ICED THAT PAN OF THE PARTIES WERE WRITTEN BUT SAME WERE NOT SIGNED. AS PER THE AO ASSESSEE DID NO T FILE INFORMATION IN REGARD. HE ISSUED NOTICE U/S. 133(6) OF THE ACT TO ALL THE PARTIES;AT THEIR ADDRESSES GIVEN BY THE ASSESSEE;TO FILE INFORMATION REGARDING THE LOAN. AFTER CONSIDERING THE MATERIAL AVAILABLE ON THE FILE,AO HELD THAT ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE LOAN OF RS. 22.46 LACS OUT OF THE TOTAL LOAN TAKEN OF RS. 27.95 LACS, THAT AMOUNTS SO CREDITED IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE WERE UNEXPLAINED CASH CREDITS. HE PROPOSED TO MAKE AN ADDITION U/S. 68 OF THE ACT AMOUNTING TO RS. 22,46,422/- TO THE TOTAL INCOME OF THE ASSESSEE. VIDE HIS LETTER D ATED, 27.12.2010, ASSESSEE SUBMITTED THAT ALL THE ABOVE LOANS HAD BEEN ACCEPTED BY HIM MORE THAN 10/1 2 YEARS BACK, THAT NONE OF THE ABOVE LOANS HAD BEEN ACCEPTED DURING THE YEAR UNDER CONSIDERATI ON, THAT ADDITION U/S. 68 OF THE ACT COULD NOT BE MADE FOR THE YEAR CONCERNED,THAT ALL THE PARTIES TO WHOM NOTICES U/S. 133(6) OF THE ACT WERE ISSUED HAD REPLIED ON 07.12.2010, THAT ALL OF THEM HAD CONFIRMED THE LOAN TRANSACTIONS, THAT THERE WAS NO JUSTIFICATION TO INVOKE THE PROVISIONS OF SE CTION 68 OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AO HELD THAT ASSESSEE H AD NOT FILED SATISFACTORY EXPLANATION AND FINALLY HE MADE AN ADDITION OF RS. 22.46 LACS U/S. 68 OF THE ACT. 3 .ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY (FAA). BEFORE HIM ASSESSEE SUBMITTED AS UNDER: AS SUCH THE AMOUNT OF RS. 22,46,422/- WAS ADDED U/ S 68 OF I.T.ACT, 1961 ON ACCOUNT OF CASH CREDIT. TH E ASSESSING OFFICER ISSUED NOTICES U/S 133(6) OF I.T. ACT, 1961 TO THE CREDITORS CALLING FOR INFORMATION WHICH IS STATED IN PARA 5.3 OF PAGE NO.7 OF THE ASSESSMENT O RDER. THE CREDITORS CONFIRMED THE TRANSACTION BY REPLYING TO THE QUESTIONNAIRE. THE COPY OF REPLY SU BMITTED BY THE CREDITORS IS ENCLOSED IN THE PAPER B OOK. THE ASSESSING OFFICER ALSO ISSUED A NOTICE U/S 133( 6) TO THE BANK MANAGER OF ABHYUDAYA CO-OP. BANK LIMITED CALLING FROM HIM THE BANK STATEMENTS FROM O PENING OF THE ACCOUNT TILL DATE. THE BANK MANAGER FURNISHED A SOFT COPY OF THE STATEMENTS FROM 1999 O NLY AND ACCORDINGLY THE ASSESSING OFFICER CONCLUDED THAT THE BANK ACCOUNT WAS OPENED FROM 1999 ONWARDS. AS SUCH HE HAS NEGATED THE CLAIM OF THE APPELLANT THAT THE LOANS WERE RECEIVED THROUGH BANK DRAFT IN OCTOBER 1998. THIS FACT OF THE A.O. ISSUING NOTICE U/S 133(6) TO THE BANK MANAGER CAM TO THE KNOWLEDGE OF THE APPELLANT ONLY ON THE RECEIPT OF THE ASSESSMENT ORDER. THE APPELLANT HAD ALSO MADE AN APPLICATION D ATED 13 TH DECEMBER, 2010 REQUESTING ABHYUDAYA CO- OP. BANK LTD. TO INTIMATE THE DETAILS OF DRAFT DEPO SITED IN MY ACCOUNT IN THE YEAR OCTOBER 1998 FOR WH ICH THE BANK VIDE LETTER DATED 22 ND DECEMBER 2010 EXPRESSED THEIR INABILITY TO FURNISH THE DETAILS DUE TO UPGRADATION OF COMPUTER SOFTWARE SYSTEM AND TIME LA PSE. THE COPY OF THE REPLY IS ENCLOSED IN THE PAPER BOOK. SUBSEQUENT TO THE RECEIPT OF THE ORDER THE AP PELLANT ONCE AGAIN MADE AN APPLICATION TO THE BANK REQUIRING THEM TO INTIMATE THE DATE OF OPENING THE BANK ACCOUNT. THE BANK STATED THE DATE OF OPENING T HE BANK ACCOUNT AS 17 TH FEBRUARY 1998. THE COPY OF THE LETTER ENCLOSED IN THE PAPER BOOK. THE APPELLANT FURTHER STATES THAT THE LOANS HAVE BEEN REPAID SUBS EQUENTLY AS WILL BE EVIDENCED FROM THE DETAILS THAT ARE BEING FURNISHED BEFORE YOUR HONOUR. THE LETTER AND THE EVIDENCE WITH REGARD TO REPAYMENTS OF LOAN CONSTITUTES ADDITIONAL EVIDENCE. 3 ITA NO. 39/MUM/2013 HARJI RAVJI PATEL. IN THE LIGHT OF THE ASSESSEES SUBMISSIONS REGARDIN G PAYMENTS MADE TO THE LOAN CREDITORS HE DIRECTED THE AO,VIDE HIS LETTER DATED 14.10.2011,TO MAKE ENQUIRIES IN THIS REGARD. HE ALSO DIRECTED THE AO TO VERIFY THE ASSESSMENT RECORDS TO FIND OUT THE TRUTH ABOUT THE CLAIM MADE BY THE ASSESSEE THAT UNSECURED LOANS WERE VERY OLD AND THAT SAME WE RE VERIFIED BY THE THEN AOS FOR ASSESSMENT YEAR 2003-04/2004-05.IN THE REMAND REPORT,DATED 01. 05.2012,AO REPORTED THAT ASSESSEE HAD ISSUED BEARER CHEQUES TO HIS LOAN CREDITORS AND SAM E WERE DEPOSITED IN THE ACCOUNTS OF TWO PERSONS WHO WERE OTHER THAN THE LOAN CREDITORS. AS REGARDS THE VERIFICATION OF ASSESSMENT RECORDS OF AY 2003-04 AND 2004-05 AO REPORTED THAT SAID REC ORDS WERE AVAILABLE. 3.1. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND REMAND REPORT HE HELD THAT ASSESSEE WAS CONSISTENT IN HIS ARGUMENT BEFORE THE AO AS WELL AS BEFORE HIM THAT THE SAID UNSECURED LOANS WERE TAKEN BY HIM FROM THE AGRICULTURISTS ABOUT 10/12 YE ARS AGO, THAT FOR MAKING ADDITION U/S. 68 OF THE ACT SUM IN QUESTION HAD TO BE FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE MAINTAINED FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YE AR, THAT THERE WAS A DISPUTE ON THE BASIC FACT AS TO WHETHER CASH CREDITS PERTAINED TO THE YEAR UNDER CONSIDERATION OR PRIOR TO THE RELEVANT YEAR. AFTER CONSIDERING THE COPIES OF THE AUDITED BALANCE -SHEET FOR THE YEARS ENDING ON 31.03.2003, 31.04.2003, 31.03.2005, 31.03.2006 AND 31.03.2007, ALONG WITH THE LIST OF LOAN CREDITORS HE HELD THAT SAME CREDITORS APPEARED IN THE LIST OF THE LOA N CREDITORS, IN THE EARLIER AYS ALSO, THAT SAID MATTER WAS RAISED BEFORE THE AO IN THE ASSESSMENT P ROCEEDINGS, THAT THE RECORDS DID NOT REVEAL AS WHICH WAS THE FIRST PREVIOUS YEAR WHEN THE SUM OF R S. 22.46 LACS WAS CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THAT AO HAD NOWHERE MENTI ONED THAT DISPUTED AMOUNTS WERE CREDITED IN THE BOOKS FOR THE FIRST TIME IN THE YEAR UNDER APPE AL, THAT THE CREDIT BALANCE OF RS. 22.46 LACS WAS BEING REFLECTED IN THE ACCOUNTS OF THE ASSESSEE OVE R PAST 4/5 YEARS, THAT THE SAID AMOUNT COULD NOT BE TREATED FRESH CREDITS, THAT CREDIT ENTRIES WERE ALREADY MADE AND ACCOUNTED FOR IN THE AYS 2003- 04 AND 2005-06, THAT THE CREDIT BALANCE APPEARED IN THE ACCOUNTS OF THE ASSESSEE DID NOT PERTAIN TO THE YEAR UNDER APPEAL, THAT AO WAS NOT JUSTIFIED MA KING THE IMPUGNED ADDITION U/S. 68 OF THE ACT. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMIT TED THAT ASSESSEE HAD NOT FILED THE DETAILS OF THE CREDITORS, MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL BEFORE US. WE FIND THAT NOWHERE AO HAS MENTIONED THE FACT THAT ASSESSEE HAD TAKEN L OAN OF RS. 22.46 LACS DURING THE YEAR UNDER CONSIDERATION. WE FURTHER FIND THAT FAA HAS GIVEN A FINDING OF FACT THAT THE SAID LOAN AMOUNTS WERE TAKEN AS LOAN BY THE ASSESSEE IN THE EARLIER A YS AND THEY WERE OPENING BALANCES FOR THE YEAR UNDER CONSIDERATION. PROVISIONS OF SECTION 68 OF TH E ACT ARE VERY CLEAR FOR INVOKING THE SAID SECTION-THE FIRST AND FOREMOST CONDITION IS THE CRE DIT OF SOME AMOUNTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR A PARTICULAR YEAR. IF THE ASSESSEE DOES NOT OFFER ANY EXPLANATION ABOUT SUCH CREDIT OR EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY, THEN ONLY AO CAN MAKE ADDITIONS FOR SUCH CASH CREDITS. IN THE CASE BEFORE US, AS STATED BY THE FA A,THERE IS NO FINDING THAT ASSESSEE HAD TAKEN LOAN OF RS. 22.46 LACS DURING THE UNDER APPEAL. THEREFOR E, IN OUR OPINION, ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. IN THESE CIRCUMSTA NCES, WE DECIDED THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APP EAL FILED BY THE AO STANDS DISMISSED. 1!2 $,! - * $ 3 * ! 45. 4 ITA NO. 39/MUM/2013 HARJI RAVJI PATEL. ORDER PRONOUNC ED IN THE OPEN COURT ON 18 TH MARCH, 2014 . ' * ./% 7 8$ 18 EKPZ EKPZ EKPZ EKPZ , 201 4 / * 0 9 SD/- SD/- ( ! '# / AMIT SHUKLA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8$ /DATE: 18 TH MARCH,2014. SK ' ' ' ' * ** * (!: (!: (!: (!: ;:%! ;:%! ;:%! ;:%! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR H BENCH, ITAT, MUMBAI / :>0 (!$ ,P ,P,P ,P , . . . 6. GUARD FILE/ 0 1 ):! ):! ):! ):! (! (!(! (! //TRUE COPY// '$ / BY ORDER, ? / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI