WALLSTREET FINANCE LTD., MUMBAI V. DCIT 13 (3)(1), MUMBAI

ITA 3938/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8768 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA L D
• Assessee Lawyers: MADHUR AGARWALLD
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 201; 113; 147; 68; 148

Judgement Text

ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE JUSTICE SHRI P . P . BHATT, PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 3938 /MUM/ 20 19 ( / ASSESSMENT YEAR: 2010 - 11 ) M/S WALLSTREET FINANCE LTD. CHINTAMANI PLAZA, OFFICE NO. 113 - 122 1 ST FLOOR, A - W ING, CTS NO. 294C, ANDHERI KURLA ROAD, CHAKALA ANDHERI (EAST), MUMBAI - 400 099. / VS. DCIT 1 3 (3 ) (1) R. NO. 229, M. K. ROAD, AA YKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. A AACW - 1258 - P ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI MADHUR AGARWAL , LD. AR REVENUE BY : SHRI T. S. KHALSA , LD. DR / DATE OF HEARING : 29 / 06 /2021 / DATE OF PRONOUNCEMENT : 29/07/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 201 0 - 11 ARISES OUT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 21 , MUM BAI [CIT(A)], DATED 05/03 /20 19 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) ON 05 /12 /2017 . T HE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE REOPEN ING O F ASSESSMENT U/S. 147 OF THE IT ACT MADE BY THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.25,03,023 U/S. 68 OF THE ITA ERRONEOUSLY INVOKED BY THE ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 2 ASSESSING OFFICER WITHOUT APPRECIA TING THAT THE SAID SUMS WERE SALES OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT APPELLANT HAS IN ITS COURSE OF BUSINESS OF BUYING AND SELLING FOREIGN CURRENCY ACCOUNTED THE RECEIPT FROM MR. HANSRAJ YADA V AS SALE OF CURRENCY, FOR WHICH THERE WAS A CORRESPONDING PURCHASE, AND IT WAS NOT A CASE OF CASH CREDIT IN BOOKS. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS AS PLACED IN THE PAPER BOOK. O UR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. 1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE IS STATED TO BE ENGAGED AS FORE IGN CURRENCY DEALER. THE ORIGINAL RETURN OF INCOME WAS SCRUTINIZED U/S 143(3) ON 29/ 12 / 2012. HOWEVER, THE CASE WAS REOPENED AND ANOTHER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 ON 05/12/2017 WHEREIN THE ASSESSEE WAS SADDLED WITH IMPUGNED ADDITIONS U/S 68 FOR RS.25 .03 LACS. 3.2 THE CASE WAS REOPENED SINCE I NFORMATION WAS RECEIVED FROM ITO - 35(1)(4), MUMBAI THAT DURING THE COURSE OF CERTAIN APPELLATE PROCEEDINGS, LD. CIT(A) HAD SOUGHT ENQUIRY REPORT WITH REGARD TO NATURE AND PURPOSE OF PAYMENTS MADE BY ONE SHRI HANSRAJ YADAV FROM HIS BANK ACCOUNT TO THE ASSESS EE FOR RS.2 5 .03 LACS. NOTICE U/S 133(6) WAS ISSUED BY LD. AO TO THE ASSESSEE SPECIFICALLY ASKING THE ASSESSEE TO FURNISH THE PARTICULARS OF AMOUNT RECEIVED FROM SHRI HANSRAJ YADAV, NATURE & PURPOSE OF PAYMENT RECEIVED, LEDGER COPY ETC. HOWEVER, THE ASSESSE E HAD NOT SUBMITTED ANY REPLY AND THEREFORE AN OPINION WAS FORMED THAT THE SAID AMOUNT AS RECEIVED BY THE ASSESSEE REMAINED UNEXPLAINED CASH CREDIT IN ITS HAND. ACCORDINGLY, THE CASE WAS REOPENED ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 3 AND A NOTICE WAS ISSUED U/S 148 ON 31/03/2017 DIRECTING ASSE SSEE TO EXPLAIN THE NATURE OF CREDIT SO RECEIVED IN ITS BOOKS OF ACCOUNTS. 3.3 THE ASSESSEE SUBMITTED THAT THE PAYMENT WAS RECEIVED FROM SHRI HANSRAJ YADAV ON BEHALF OF INDIAN EXPRESS NEWSPAPER LTD. (IENPL) TOWARDS SALE OF FOREIGN CURRENCY. HOWEVER, THE AS SESSEE COULD NOT PRODUCE CONFIRMATION FROM IENPL. IN RESPONSE TO NOTICE U/S 133(6), IENPL SUBMITTED THAT SHRI HAN S RAJ YADAV WAS NOT IN ANY WAY EMPLOYED OR ASSOCIATED WITH THE M AND THEY HAD NO TRANSACTIONS WITH HIM. 3.4 THE ASSESSEE CONTROVERTED THE SAME BY SUBMITTING THAT THE REPLY COULD NOT BE RELIED UPON S INCE THE AMOUNT AS RE C EIVED FROM SHRI HANSRA J YADAV WAS IN RESPECT OF SALE OF FOREIGN CURRENCIES TO I ENPL. HOWE VER, NOT CONVINCED, LD. AO OPINED THAT THE CREDIT COULD NOT BE EXPLAIN ED SATISFACTORILY AND NO REVENUE WAS RECOGNIZED BY THE ASSESSEE ON ACCOUNT OF RECEIPTS FROM SHRI HAN SRAJ YADAV. ACCORDINGLY, THE RECEIPTS WERE ADDED TO THE INCOME OF THE ASSESSEE A S UNEXPLAINED CASH CREDIT U/S 68. APPELLATE PROCEEDINGS 4.1 DURING APPELLATE PROCEEDINGS, THE ASS ESSEE REITERATED THAT THE ASSESSEE HAD BUSINESS TRANSACTIONS WITH IENPL AND THE AMOUNTS WERE RECEIVED AGAINST SALE OF FOREIGN CURRENCY TO IENPL WHICH WAS EVI DENT FROM IENPL REQUEST LETTERS FOR PURCHASE OF FOREIGN CURRENCY, COPY OF PASSPORTS OF PARTIES FOR WHOM THE FOREIGN CURRENCY WAS BEING PURCHASED, CASH MEMOS ETC. THE ASSESSEE ALSO SUBMITTED THAT THE FOREIGN CURRENCY THUS SOLD WAS OFFERED AS SALES WHICH COULD BE VERIFIED FROM THE LEDGER EXTRACT OF IENPL AS APPEARING IN ASSESSEES BOOKS . THE PURCHASE S WER E ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 4 SETTLED B Y IENPL VIA RTGS FROM THE ACCOUNT OF SHRI HANSRAJ YADAV AND THEREFORE, THE ADDITION U/S 68 WAS NOT JUSTIFIED. 4.2 HOWEVER, LD. CIT(A), INTER - ALIA, NOTED THAT THE ASSESSEE FAILED TO FILE CONFIRMATION OF IENPL AND THEREFORE, IT COULD NOT DISCHARG E THE ONUS AS CASTE D ON IT IN TERMS OF THE REQUIREMENTS OF SEC.68. MERE RECEIPT OF MONEY THROUGH BANKING CHANNEL WAS NOT SACROSANCT. THEREFORE, THE ADDITIONS WERE JUSTIFIED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. OUR FINDINGS AND ADJUDICAT ION 5. UPON PERUSAL OF DOCUMENTS ON RECORD, WE FIND THAT THE CASE WAS REOPENED ON THE ALLEGATION THAT THE ASSESSEE DID NOT REPLY TO THE NOTICE U/S 133(6) WITH RESPECT TO RECEIPT OF SUM OF RS.25.03 LACS FROM SHRI HANSRAJ YADAV. THE REASONS WERE RECORDED ON 22/03/2017. HOWEVER, WE FIND THAT THE SUMMONS DATED 10/02/2017 ISSUED BY CIT(A) - 46, MUMBAI W AS DULY RESPONDED TO BY THE ASSESSEE AND REPLIES WERE FILED ON 20/02/2017 & 22/02/2017 . ALONG WITH THE REPLY, THE ASSESSEE HAS FURNISHED RELEVANT PART OF B OOKS OF A CCOUNTS, BANK ACCOUNT AND LEDGER STATEMENTS RELEVANT TO AY 2010 - 11 COVERING EIGHT CREDIT TRANSACTIONS CARRIED OUT BY IT WITH SHRI HANSRAJ YADAV. I T WAS CONFIRMED BY THE ASSESSEE THAT THE CREDITS WERE RECEIVED ON BEHALF OF IENPL. THUS , THE ALLEGATIONS THAT THE SUMMONS / NOTICES REMAINED TO BE RESPONDED BY THE ASSESSEE, COULD NOT BE SAID TO BE CORRECT. 6. PROCEEDING FURTHER, WE FIND THAT IENPL HAS PLACED REQUEST FOR PURCHASE OF FOREIGN CURRENCY FROM ASSESSEE FROM TIME TO TIME ON DIFFERENT DATES. THE REQUEST LETTERS ISSUED BY IENPL BEARS THE PARTICULARS OF PERSON UNDERTAKING THE TRIP INCLUDING HIS PASSPORT NUMBER AND THE ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 5 AMOUNT OF CURRENCY REQUIRED. T HE COPY OF THE PASS PORT OF THE CONCERNED PERSON WAS ALSO ENCLOSED WITH THE REQUEST LETTER. AS PER THE REQUEST, THE ASSESSEE HAS SOLD FOREIGN CURRENCY AND HAS RAISE D INVOICES AS APPLICABLE. THE A S SESSE E MAINTAIN S RUNNING LEDGER ACCOUNT OF IENPL WHERE ALL THE SALE TRANSACTIONS ARE REFLECTED AND THE ACCOUNT HAS BEEN SETTLED PARTLY AGAINST RTGS PAYMENT RECEIVED FROM TI ME TO TIME APPARENTLY THROUGH THE ACCOUNT OF SHRI HANSRAJ YADAV. THE CLOSING OUTSTANDING BALANCE AT YEAR END IS NIL. THE SALE OF FOREIGN CURRENCY HAS BEEN BOOKED AS SALES AS THERE IS NO CONTRARY EVIDENCE ON RECORD. SO FAR AS THE REPLY OF IENPL IS CONCERNE D, WE FIND THAT IENPL HAS DENIED HAVING EMPLOYED SHRI HANSRAJ YADAV AND DENIED HAVING ANY RELATION WITH SHRI HANS RAJ YADAV. BUT THE REPLY IS NOT IN CORRECT PERSPECTIVE AND DO NOT ADDRESS THE ISSUE UNDER CONSIDERATION. ON THE BASIS OF ALL THESE FACTS AND C IRCUMSTANCES, THE CREDIT COULD NOT BE TERMED AS UNEXPLAINED CASH CREDIT. BY DELETING THE SAME, WE ALLOW THE APPEAL. THE LD. AO IS DIRECTED TO RECOMPUTE ASSESSEES INCOME IN TERMS OF THIS ORDER. 7. RESULTANTLY, THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON 29 TH JULY 2021. SD/ - SD/ - (JUSTICE P.P. BHATT) (MANOJ KUMAR AGGARWAL) PRESIDENT ACCOUNTANT MEMBER MUMBAI; DATED : 29.07.2021 SR.PS , JAISY VARGHESE / 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 ITA NO.3938/MUM/2019 M/S WALL STREET FINANCE LIMITED ASS ESSMENT YEAR: 2010 - 11 6 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI .