SUJATA N SHAH, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 4009/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2925 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BEHARILAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 4009/MUM/2014 (ASSESSMENT YEAR:2010-11) SUJATA N. SHAH C/O K.M.KAPADIA & ASSOCIATES 49, 1 ST FLOOR, ASHOKA SHOPPING CENTRE, L. T. MARG, MUMBAI -01 APPELLANT VS. INCOME TAX OFFICER 16(1)(4), MUMBAI RESPONDENT PAN: AAACF2986P /BY APPELLANT : SHRI BEHARILAL, A.R. /BY RESPONDENT : SHRI VACHASPATI TRIPATHI, D.R. /DATE OF HEARING : 09.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-27, MUMBAI, DA TED 17.02.2014 FOR A.Y. 2010-11 ON THE POINT OF UNEXPLA INED CASH CREDIT OF RS.1,19,45,000/-. ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 2 2. ASSESSEE IS AN INDIVIDUAL FILED HER RETURN OF IN COME FOR A.Y. 2010-11 DECLARING TOTAL INCOME OF RS.2,79,425/ -. ASSESSMENT WAS COMPLETED BY ASSESSING OFFICER ON 26 .03.2013 DETERMINING TOTAL INCOME OF RS.1,22,24,430/-. DURI NG ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ON PERUSA L OF BANK SUMMARY OF BANK OF INDIA S.B.A/C. NO.20216 AND STAT E BANK OF INDIA SAVING ACCOUNT OBSERVED THAT ASSESSEE HAD MADE TOTAL PAYMENTS OF RS.1,12,95,000/- FROM HER SAVING ACCOUN T WITH BANK OF INDIA AND REMAINING RS.12,05,000/- FROM HER SAVING ACCOUNT WITH STATE BANK OF INDIA TO HER HUSBAND FOR SALE OF HIS 50% OWNERSHIP RIGHT TO HER. FURTHER, SHE HAD PAID STAMP DUTY AND REGISTRATION CHARGES OF RS.6,47,955/- IN RESPEC T OF THE SALE DEED RELATED TO ABOVE TRANSFER. OUT OF TOTAL PAYME NTS MADE FROM BANK OF INDIA AGGREGATING TO RS.1,19,42,955/-, ASSESSEE CLAIMED TO HAVE RECEIVED UNSECURED LOANS FROM 35 PA RTIES, ALL OF THEM WERE CLAIMED FROM SURAT AT AN INTEREST RATE RANGING FROM 0% TO 6% TOTALING TO RS.1,19,42,000/-. TO EXAM INE THE GENUINENESS OF CLAIM, ASSESSING OFFICER SOUGHT INFO RMATION U/S.133(6) OF THE ACT FROM EACH OF THE 35 PARTIES. OUT OF THESE, ONLY 8 PARTIES REPLIED AND REMAINING 27 PARTIES WER E EITHER NOT FOUND AT THE ADDRESSES GIVEN BY ASSESSEE OR THEY CH OSE NOT TO RESPOND. REPLIES FROM 8 PARTIES WERE FOUND EVASIVE BY ASSESSING OFFICER. HE ALSO OBSERVED FROM THE BANK STATEMENTS THAT THE LOAN AMOUNTS RECEIVED BY ASSESSEE WERE NOT PAID TO THE BUILDER, BUT WAS TRANSFERRED TO THE ACCOUNT OF HER HUSBAND. SO, ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM THAT SHE HAD TAKEN UNSECURED LOANS AMOUNTING TO RS.1,19,45,000/- FOR ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 3 PURCHASE OF 50% OWNERSHIP RIGHT TO HER HUSBAND AND ACCORDINGLY, TREATED THE SAME AS UNEXPLAINED CASH C REDIT U/S.68 OF THE ACT. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED BY ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) CONFIRMED THE AD DITION MADE BY ASSESSING OFFICER. SAME HAS BEEN OPPOSED BY ASSESSEE BEFORE US INTER ALIA SUBMITTING THAT ASSES SING OFFICER IGNORED THE FACTS THAT 8 OF 35 LOAN CREDITORS RESPO NDED TO THE SUMMONS. THE COPIES OF RETURN OF INCOME, BANK STAT EMENTS ETC. OF OTHER 27 LOAN CREDITORS WERE PROVIDED TO TH E ASSESSING OFFICER BEFORE THE COMPLETION OF ASSESSMENT PROCEED INGS WHICH WERE IGNORED BY ASSESSING OFFICER. ASSESSEE HAS NE ITHER CONTROL NOR SHE CAN FORCE THESE 27 PARTIES TO RESPO ND TO THE NOTICE U/S.133(6) OF THE ACT. BY PROVIDING LOAN CO NFIRMATIONS, COPIES OF FINANCIALS, COPIES OF RETURN OF INCOME AN D SIGNATURE OF LENDERS ON THE LEDGER ACCOUNTS OF ASSESSEE, ASSESSE E HAS DISCHARGED HIS LIABILITY OF EXISTENCE OF THE PARTIE S FROM WHOM SHE HAS TAKEN THESE LOANS. MERELY BECAUSE 8 PARTIE S HAVE REPLIED, ASSESSING OFFICER COULD NOT DOUBT ON THEIR IDENTITY AND GENUINENESS OF THE TRANSACTIONS. ASSESSEE IS MAINL Y CONCERNED WITH THE LOAN AMOUNT AND NOT WITH THE SOURCE OF INC OME OF RESPECTIVE PARTIES WHICH IS SIMPLY DEVIATION OF INV ESTIGATION. AS STATED ABOVE, THE IDENTITY AND TRANSACTION HAS NOT BEEN DISPUTED BY REVENUE. REGARDING CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF TRANSACTION, LD. AUTHO RIZED ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 4 REPRESENTATIVE STATED THAT ALL THESE LOANS TAKEN BY ASSESSEE HAVE BEEN REPAID BACK BY ASSESSEE. ACCORDING TO CI T(A) WHO HAS CONFIRMED THE ADDITION OBSERVING THAT BY FILING CONFIRMATION LETTERS AND GIVING PAN, IDENTITY OF LOAN CREDITORS HAS BEEN ESTABLISHED. THE SAME CANNOT BE SAID IN SO FAR AS T HEIR OWN CREDITWORTHINESS IS CONCERNED. ALL LOAN CREDITORS WERE BASED IN SURAT AND HAD ADVANCED THE ALLEGED LOANS FOR A MEAG ER INTEREST OF 6% WHICH IS NOT THE REGULAR MARKET RATE OF INTER EST FOR AN UNSECURED LOAN. CIT(A) ALSO OBSERVED THAT ASSESSEE HAS FAILED TO PRODUCE THE CREDITORS FOR PROVING THEIR CREDITWO RTHINESS AND MERE FILING OF CONFIRMATIONS WAS NOT ENOUGH. HOWEV ER, CIT(A) IGNORED THE FACT THAT APART FROM THE CONFIRMATIONS, ASSESSEE ALSO PRODUCED BEFORE HIM THE STATEMENT OF FINANCIAL S, RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AS WELL AS TWO EARLIER YEARS, BANK STATEMENT OF ALL LOAN CREDITORS AND LAS TLY AND MOST IMPORTANTLY THE DETAILS OF REPAYMENT OF ALL THESE L OANS BACK TO THESE LOAN CREDITORS. CIT(A) HAS BRUSHED ASIDE THE SE EVIDENCES PRODUCED BY ASSESSEE WHICH IS NOT JUSTIFIED. ACCOR DING TO LD. AUTHORIZED REPRESENTATIVE, THE ADDITION IN QUESTION IS DIRECTED TO BE DELETED. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD, WE FIND THAT THE ONLY ISSUE IS BEFORE US REGARDING ADDITION OF RS.1,19,45,000/- ON ACCOUNT O F UNEXPLAINED CASH CREDIT. AS STATED ABOVE, ASSESSEE , SMT. SUJATA NIKESH SHAH, IS AN INDIVIDUAL WHO DURING THE PREVIOUS ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 5 YEAR RELEVANT TO A.Y. 2010-11 BORROWED UNSECURED LO AN OF RS.1,19,45,000/- FROM 35 DIFFERENT PARTIES. THE DE TAILS OF CREDITORS HAVE BEEN FILED AT PAGE NOS.116 TO 488 OF THE PAPER BOOK. TO EXAMINE THE GENUINENESS OF THE ASSESSEES CLAIM, ASSESSING OFFICER CALLED INFORMATION U/S.133(6) OF THE ACT FROM ALL THE LOAN CREDITORS. ASSESSEE PROVIDED THE LOAN CONFIRMATIONS, COPIES OF FINANCIALS OF LOAN CREDITO RS, COPIES OF RETURN OF INCOME AND THE COPIES OF BANK PASS BOOKS OF ALL THE 35 PARTIES BEFORE THE ASSESSING OFFICER. IN SPITE OF THIS FACT, ASSESSING OFFICER DOUBTED THE GENUINENESS OF TRANSA CTIONS AND TREATED THE ENTIRE AMOUNT AS UNSECURED LOAN OF RS.1,19,45,000/- AS UNEXPLAINED CASH CREDIT AND ADD ED THE SAID AMOUNT. THE STAND OF ASSESSEE HAS BEEN THAT S HE WAS CO- OWNER TO THE EXTENT OF 50% OF THE OWNERSHIP PREMISE S SITUATED AT KAILASH, 50, PEDDAR ROAD, MUMBAI -06 BY VIRTUE O F SALE DEED DATED 28.04.2006 ENTERED INTO BETWEEN SMT. KALPANA N. SHAH AND SUCHITRA N. SHAH (TRANSFEROR) AND SHRI NIKESH S HAH (HUSBAND OF ASSESSEE) AND SUJATA N. SHAH (ASSESSEE) . DURING PREVIOUS YEAR RELEVANT TO A.Y. 2010-11, ASSESSEE AC QUIRED HER HUSBANDS SHARE OF 50% OWNERSHIP OF ABOVE SAID PREM ISES FOR CONSIDERATION OF RS.1,25,00,000/- VIDE SALE DEED DA TED 25.05.2009. ASSESSEE HAD PAID RS.1,12,95,000/- FRO M HER SAVING ACCOUNT WITH BANK OF INDIA AND REMAINING RS.12,05,000/- FROM HER SAVING ACCOUNT WITH STATE B ANK OF INDIA TO HER HUSBAND FOR PURCHASE OF HIS 50% OWNERS HIP RIGHT TO HER. OUT OF TOTAL PAYMENT MADE FROM BANK OF IND IA AGGREGATING TO RS.1,19,42,955/-, ASSESSEE CLAIMED T O HAVE ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 6 RECEIVED UNSECURED LOAN FROM 35 PARTIES FROM BANKIN G CHANNEL (COPIES OF ASSESSEES BANK ACCOUNT ARE ENCLOSED AT PAGE NOS. 14 TO 31 OF THE PAPER BOOK), ALL OF THEM WERE LOCATED IN SURAT, GUJARAT AT AN INTEREST RANGING FROM 0% TO 6%. 2.3 ASSESSING OFFICER CALLED FOR INFORMATION U/S.13 3(6) OF THE ACT FROM EACH OF THE 35 PARTIES. ACCORDING TO ASSE SSING OFFICER, ONLY 8 PARTIES REPLIED AS MENTIONED IN HIS ORDER. ACCORDING TO HIM, REMAINING 27 PARTIES WERE EITHER NOT FOUND AT THE ADDRESSES GIVEN BY ASSESSEE NOR THEY RESPONDED. AS SESSING OFFICER ASKED TO PRODUCE THE SAID 27 PARTIES IN HIS OFFICE FOR EXAMINATION. ASSESSEE COULD NOT PRODUCE THE PARTIE S, HOWEVER, ASSESSEE FILED CONFIRMATION, COPY OF RETURN OF INCO ME AND BANK STATEMENT (COPY ENCLOSED AT PAGE NO.115 TO 488 OF T HE PAPER BOOK). ACCORDING TO ASSESSING OFFICER, REPLIES REC EIVED FROM 8 PARTIES WERE FOUND EVASIVE AND UNSUBSTANTIATED ONE. 2.4 ASSESSEE CLAIMED THAT SHE HAD TAKEN UNSECURED L OAN OF RS.1,19,45,000/- FOR PURCHASE OF 50% OWNERSHIP RIGH T TO HER HUSBAND AND SAME WAS REJECTED BY ASSESSING OFFICER ON VARIOUS GROUNDS AS DISCUSSED ABOVE. ACCORDING TO A SSESSING OFFICER, ASSESSEE FAILED TO ESTABLISH THE GENUINENE SS OF LOANS FROM 35 PARTIES AGGREGATING TO RS.1,19,45,000/- AND HENCE, SHE TREATED THIS AMOUNT AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. IN APPEAL, CIT(A) STATED THAT ASSESSEE HA S SUBMITTED CONFIRMATIONS FROM ALL PARTIES. ACCORDING TO CIT(A ), ASSESSEE BY FILING CONFIRMATION LETTERS AND GIVING OF THEIR PAN, IDENTITY OF LOAN CREDITORS HAS BEEN ESTABLISHED, THE SAME CANNO T BE SAID ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 7 IN SO FAR AS THEIR OWN CREDITWORTHINESS IS CONCERNE D. GENUINENESS OF TRANSACTION AND CREDITWORTHINESS IS TAKEN CARE BY FACT THAT ASSESSEE HAS REPAID ALL LOANS WHICH IS NOT DISPUTED. OTHER POINT WHICH CREATED DOUBT IN THE M IND OF ASSESSING OFFICER THAT THIS AMOUNT HAS NOT BEEN ADV ANCED ON MEAGER INTEREST OF 6% WHICH IS NOT THE REGULAR MARK ET RATE OF INTEREST FOR AN UNSECURED LOAN THAT TOO FOR BUYING A RESIDENTIAL HOUSE BY ASSESSEE. IT IS SUBJECTIVE UNDERSTANDING BETWEEN ASSESSEE AND CREDITORS WHICH SHOULD NOT BE INTERFER ED BY REVENUE OFFICER. THEY CAN LOOK INTO THE MATTER AS PER PROVISIONS OF SECTION 68 OF THE ACT ONLY. CIT(A) C ONCLUDED ON THE BASIS OF SURROUNDING CIRCUMSTANCES THAT ASSESSE E HAS FAILED TO PRODUCE THE CREDITORS FOR PROVING THEIR CREDITWORTHINESS AND MERE FILING OF CONFIRMATIONS W AS NOT ENOUGH. ASSESSEE HAS COOPERATED WITH REVENUE AUTHO RITIES TO PRODUCE CREDITORS BUT SHE CANNOT FORCE THEM TO ATTE ND BEFORE ASSESSING OFFICER. REST WAS UPTO ASSESSING OFFICER TO PROBE INTO THE MATTER AS PER LAW WHICH HAS NOT BEEN PROPE RLY DONE BY THEM. 2.5 THE MAIN POINT FOR CONSIDERATION IN THIS CASE I S WHETHER THE LOAN AMOUNT OF RS.1,19,45,000/- RECEIVED BY ASS ESSEE FROM 35 PARTIES WAS GENUINE OR NOT. TO ESTABLISH THE GE NUINENESS OF THE CREDITORS, ASSESSEE PROVIDED CONFIRMATIONS, COP Y OF RETURNS OF INCOME WITH COPIES OF BALANCE SHEETS AND STATEME NT OF INCOME AND COPIES OF BANK STATEMENTS OF ALL LOAN CR EDITORS AS STATED ABOVE. ASSESSING OFFICER IN ORDER TO EXAMIN E THE ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 8 GENUINENESS OF LOANS CALLED FOR INFORMATION U/S.133 (6) OF THE ACT FROM ALL THE LOAN CREDITORS, 8 OF THESE LOAN CR EDITORS RESPONDED DIRECTLY TO THE ASSESSING OFFICER. IN SP ITE OF THE FACT THAT REQUIRED INFORMATION TO PROVE THE GENUINENESS OF THE CREDITORS WAS FILED BY ASSESSEE, ASSESSING OFFICER TREATED THE ENTIRE AMOUNT OF UNSECURED LOANS AS UNEXPLAINED CAS H CREDITS AND ADDED TO THE INCOME OF ASSESSEE. ACCORDING TO US, ASSESSEE HAS ESTABLISHED THE EXISTENCE OF LOAN CRED ITORS BY VIRTUE OF PROVIDING LOAN CONFIRMATIONS, COPY OF LED GER ACCOUNT OF ASSESSEE IN THE BOOKS OF ACCOUNT OF LOAN CREDITO RS, RETURNS OF INCOME OF LOAN CREDITORS AND THEIR COMPUTATION OF I NCOME WITH BALANCE SHEET AND INCOME AND EXPENDITURE ACCOUNT AL ONG WITH PAN OF LOAN CREDITORS. THOUGH, THESE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER BUT HE IGNORED THE SAI D SUBMISSIONS. THIS INFORMATION WAS ALSO FILED BEFOR E THE LD. CIT(A), BUT HE DID NOT CONSIDER THIS INFORMATION. ASSESSING OFFICER AS WELL AS CIT(A) IGNORED THE FACTS THAT AL L THE LOANS WERE TAKEN BY ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE S AND THE CONFIRMATIONS WERE FILED. HENCE, ASSESSEE HAD DISCHARGED HER ONUS OF ESTABLISHING THE AUTHENTICITY OF THESE LOAN CREDITORS. ONE OF THE MAIN POINT OF ASSESSING OFFI CER IN REJECTING THE CLAIM OF ASSESSEE WAS NON ATTENDANCE OF 27 PARTIES IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT . ASSESSEE HAS NO POWERS TO FORCE THE CREDITORS TO ATTEND BEFO RE THE ASSESSING OFFICER. THE NOTICES WERE SERVED ON THES E PARTIES WHICH ITSELF PROVED THE EXISTENCE. THE DEPARTMENT IS FULLY ARMED TO FORCE THE ATTENDANCE OF THESE PARTIES BY I SSUING ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 9 SUMMONS U/S.131 OF THE ACT. REGARDING THE REPLIES GIVEN BY 8 PARTIES, LD. AUTHORIZED REPRESENTATIVE DREW OUR ATT ENTION THAT ACTUALLY 12 REPLIES WERE GIVEN WITHOUT GOING TO THA T CONTROVERSY, WE FIND THAT ASSESSING OFFICER HAS NOT DISCUSSED IN HER ORDER HOW THEIR REPLIES WERE EVASIVE AND UNSUBSTANTIATED. ASSESSING OFFICER MADE ADDITION W ITHOUT MAKING COMPLETE ENQUIRIES AND WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE. IT IS NOT IN DISPUTE THAT ASSESSEE HAS FILED CONFIRMATIONS, COPIES OF RETURN OF INCOME AND BANK STATEMENTS. AS STATED ABOVE, ASSESSEE HAS NOT POW ER TO ENFORCE THE ATTENDANCE OF LOAN CREDITORS BEFORE THE REVENUE AUTHORITIES. ASSESSING OFFICER HAS DOUBTED THE CRED ITWORTHINESS OF THE CREDITORS ON THE BASIS OF THEIR LOCATION AND NATURE OF BUSINESS WHICH IS NOT JUSTIFIED. SO FAR AS CHARGIN G OF INTEREST AT LOWER RATE AS STATED, IT DEPENDS ON MUTUAL UNDER STANDING BETWEEN TWO PARTIES. REVENUE AUTHORITIES CANNOT SIT INTO THAT DECISION OF THE CREDITORS AND SAME CANNOT BE THE BA SIS OF REJECTION OF CLAIM OF ASSESSEE. AS STATED ABOVE, A SSESSEE HAS PROVIDED LOAN CONFIRMATIONS, COPIES OF RETURN OF IN COME, SIGNATURES OF LENDERS ON THE LEDGER ACCOUNT OF THE ASSESSEE AND THE COPIES OF FINANCIALS OF EACH CREDITORS. THUS, ASSESSEE DISCHARGED HER ONUS FOR PROVIDING GENUINENESS OF TH E LOAN. IN THIS CASE, IDENTITY OF CREDITORS, CAPABILITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN ESTABLISH ED. IN THIS CASE, INTEREST INCOME HAS BEEN ACCOUNTED FOR AND NO T DISPUTED BY REVENUE AUTHORITIES. IN THESE FACTS AND CIRCUMST ANCES OF THE CASE, ASSESSING OFFICER WAS NOT JUSTIFIED IN MA KING ADDITION ITA NO.4009/MUM/14 A.Y. 10-11 [SUJATA N. SHAH VS.IT O] PAGE 10 IN QUESTION. ASSESSING OFFICER IS DIRECTED TO DELE TE THE SAME FOR THE REASON DISCUSSED ABOVE. 3. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&