M/s. MUKTA ARTS LTD., MUMBAI V. DCIT CENT. CIR-30, MUMBAI

ITA 3933/MUM/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7807 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2000-2001
• Appeal Filed On: 21-06-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL HAKARI
• Assessee Lawyers: VIRENDRA OJHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI D. MANMOHAN (V.P.) AND SHRI RAJENDRA SI NGH (A.M.) ITA NO.3933/MUM/2006 ASSESSMENT YEAR : 2004-2005 INCOME-TAX OFFICER 16(3)(3), MATRU MANDIR, 2ND FL., R.NO.206, TARDEO RD., MUMBAI 400 007. VS. VISHAL DIAMOND 1304, PANCHRATNA, OPERA HOUSE, MUMBAI 400 004. PAN : AACFV2883L (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI. VIRENDRA OJHA RESPONDENT BY : SHRI. RAHUL HAKARI O R D E R PER RAJENDRA SINGH THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER DATED 12.03.2009 OF CIT (A)-XVII, MUMBAI FOR THE ASSESSMENT YEAR 200 4-05. 2. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS A PPEAL IS REGARDING ADDITION ON ACCOUNT OF OVERSTATED CREDIT IN THE BOO KS OF ASSESSEE IN THE NAME OF THE PARTNERS. 3. BRIEFLY STATED, FACTS OF THE CASE ARE THAT THE A SSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTED THAT LIABILITY IN THE BOOKS OF THE ASSESSEE IN THE NAME OF THE PARTNER SHRI CHETAN K. GANDHI AS ON 31.03.2004 WAS RS.29,76,140/- WHEREAS AS PER BALANCE SHEET OF THE PARTNER THE DEBIT BALANCE IN THE NAME OF THE ASSESSEE WAS ONLY RS.22, 76,140/-. THERE WAS THUS, EXCESS LIABILITY OF RS.7,00,000/- SHOWN IN TH E BOOKS OF THE ASSESSEE. SIMILAR DIFFERENCE OF RS.7,00,000/- WAS ALSO NOTED BY HIM IN THE OPENING BALANCE OF SAID PARTNER AS ON 01.04.2003. SIMILA R EXAMINATION WAS MADE BY HIM IN RESPECT OF OTHER PARTNER I.E. SMT. SEJAL K. GANDHI AND THE ASSESSING OFFICER NOTED THAT LIABILITY IN THE BOOKS OF THE ASSESSEE AS ON ITA NO.3933/MUM/2006 A.Y.: 2004-2005 2 31.03.2004 IN THE NAME OF PARTNER WAS RS.47,04,681/ - WHEREAS AS PER THE BOOKS OF PARTNER THE DEBIT BALANCE IN THE NAME OF T HE ASSESSEE FIRM WAS RS.40,54,681/-. THERE WAS THUS, EXCESS LIABILITY SHOWN TO THE TUNE OF RS.6,50,000/-. ON BEING ASKED TO EXPLAIN THE DIS CREPANCIES THE ASSESSEE VIDE LETTER DATED 15.12.2006 SUBMITTED THAT THE PAR TNERS HAD SUCH ADVANCES AND LOANS TO THE FIRM BOTH IN THE INDIVIDUAL CAPACI TY AND FROM PROPRIETARY CONCERN. WHILE SUBMITTING INFORMATION TO THE ASS ESSING OFFICER, PARTNERS HAD GIVEN DETAILS OF LOANS AND ADVANCES ONLY IN RES PECT OF THE PROPRIETARY BUSINESS CONCERN. IN CASE TOTAL LOANS AND ADVANC ES BOTH AS AN INDIVIDUAL AND AS A PROPRIETOR WERE TAKEN TOGETHER THERE WAS N O DISCREPANCY. THE ASSESSEE HAD ENCLOSED THE LEDGER COPIES OF BOTH THE ACCOUNTS I.E. AS AN INDIVIDUAL AS WELL AS A PROPRIETOR. THE ASSESSIN G OFFICER, HOWEVER, REJECTED THE EXPLANATION AS MAKE BELIEF STORY AND DID NOT ACCEPT THE SAME AND ADDED RS.13,50,000/- AS INCOME OF THE ASSESSEE. 4. IN APPEAL THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE ASSESSING OFFICER THAT THE DISCREPANCY HAD ARISEN B ECAUSE THE PARTNERS HAD GIVEN INFORMATION ONLY IN RESPECT OF LOAN FROM PROP RIETARY CONCERN THOUGH THE LOAN HAD ALSO BEEN GIVEN FROM THE PERSONNEL ACC OUNT. THE ASSESSEE VIDE LETTER DATED 15.12.2006 HAD GIVEN DETAIL OF BOTH TH E ACCOUNTS AND IS CONSIDERED TOGETHER, THERE WAS NO DIFFERENCE. TH E ASSESSEE ALSO POINTED OUT THAT DIFFERENCE WAS BOTH IN THE OPENING BALANCE AS WELL AS CLOSING BALANCE I.E. RS.7,00,000/- IN CASE OF SHRI CHETAN K . GANDHI AND RS.6,50,000/-IN THE CASE OF SMT SEJAL K. GANDHI AND THE SAME OPENING BALANCE WAS ACCEPTED BY THE ASSESSING OFFICER IN TH E EARLIER YEAR AS CLOSING BALANCE. THEREFORE, NO ADDITION COULD BE MADE IN THIS YEAR. THE LEARNED CIT (A) AFTER EXAMINING THE DETAILS WAS SATISFIED T HAT THE PARTNERS HAD GIVEN LOANS BOTH AS AN INDIVIDUAL AND AS A PROPRIETOR THA T THERE WAS NO DIFFERENCE IN THE TRANSACTION IF BOTH THE ACCOUNTS WERE CONSID ERED TOGETHER. IT WAS ALSO NOTED THAT TRANSACTION HAD BEEN CARRIED OUT BY ACCOUNT PAYEE CHEQUES. MOREOVER THE OPENING BALANCE OF THE YEAR HAD BEEN A CCEPTED IN CLOSING BALANCE OF THE EARLIER YEAR. THEREFORE THE LEARN ED CIT (A) DELETED THE ITA NO.3933/MUM/2006 A.Y.: 2004-2005 3 ADDITIONS MADE BY THE ASSESSING OFFICER AGGRIEVED B Y WHICH REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD AND CONSIDERED THE MATERIAL CAREFULLY. T HE ADDITION HAD BEEN MADE ON ACCOUNT OF EXCESS CREDIT BALANCE IN THE NAM E OF THE PARTNERS IN THE BOOKS OF ASSESSEE COMPARED TO DEBIT BALANCES SHOWN IN THE BOOKS OF THE PARTNERS. THE ASSESSEE HAD EXPLAINED THAT PARTNER S HAD ADVANCED MONEY TO THE FIRM BOTH FROM INDIVIDUAL ACCOUNT AS WELL AS FROM PROPRIETARY CONCERN. WHILE GIVING CONFIRMATION TO THE ASSESSING OFFICER, THE PARTNERS HAD GIVEN INFORMATION ONLY IN RESPECT OF PROPRIETARY CONCERN WHICH WAS THE REASON FOR DISCREPANCY. THE ASSESSEE HAD FILED BEFORE THE A SSESSING OFFICER THE COPIES OF ACCOUNT BOTH AS AN INDIVIDUAL AS WELL AS A PROPR IETOR AND BOTH TAKEN TOGETHER, THERE WAS NO DIFFERENCE. THE DETAILS WER E AVAILABLE BEFORE THE ASSESSING OFFICER AND HE HAD NOT POINTED OUT ANY DI SCREPANCY AND HAS REJECTED THE SAME WITHOUT GIVING ANY REASON. THE CIT (A) HAS FOUND THE CLAIM TO BE IN ORDER THAT BOTH THE ACCOUNTS TAKEN T OGETHER, THERE IS NO DISCREPANCY. MOREOVER, THE SAME AMOUNT OF DIFFER ENCE I.E. RS.7,00,000/- AND RS.6,50,000/- ARE THERE BOTH IN THE OPENING BAL ANCE AS WELL AS IN CLOSING BALANCE. FURTHER, THE OPENING BALANCE IS C OMING FROM EARLIER YEAR IN WHICH THE SAME HAS BEEN ACCEPTED AND THERE IS NO MA TERIAL PLACED BEFORE US TO CONTROVERT THIS CLAIM OF THE ASSESSEE. THEREFOR E, EVEN IF THERE WAS DIFFERENCE, THE ADDITION COULD NOT BE MADE IN THIS YEAR. THUS IN ANY CASE NO ADDITION CAN BE MADE IN CASE OF THE ASSESSEE IN THE ASSESSMENT YEAR CONCERNED. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF LEARNED CIT (A) DELETING THE ADDITION AND THE SAME IS THEREFORE UPH ELD. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON THIS DAY OF 16 TH FEBRUARY, 2010 SD/- (D. MANMOHAN) (VICE PRESIDENT) SD/- (RAJENDRA SINGH) (ACCOUNTANT MEMBER) MUMBAI, DATED 16.02.2010. JANHAVI ITA NO.3933/MUM/2006 A.Y.: 2004-2005 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-VII, MUMBA I 4. COMMISSIONER OF INCOME TAX, CITY-VII, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH F, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI DATE INITIALS 1. DRAFT DICTATED ON 09-02-2010 PS 2. DRAFT PLACED BEFORE AUTHOR 09-02-2010 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER