ITO 11(3)(2), MUMBAI V. VALUKKO INDUSRIES P.LTD, MUMBAI

ITA 4053/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6379 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Unexplained cash credit; Set aside
• Section: 133(6); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 4053 /MUM/20 1 7 (ASSESSMENT YEAR 20 11 - 12 ) ITO - 11(3)(2) 428, AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. VALUKKO INDUSTRIES P. LTD. 30, SATGURU NANIK INDUSTRIAL ESTATE WESTERN EXPRESS HIGHWAY, GOREGAON MUMBAI - 400 063. PAN :AABCK0076A ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SUNIL TALATI DEPARTMENT BY SHRI RAJIV GUBGOTRA DATE OF HEARING 6 . 2 . 201 9 DATE OF PRONOU NCEMENT 6 . 2 . 201 9 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 24.2.2917 PASSED BY LEARNED CIT(A) - 18, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE REVENUE IS AGGRIEVED BY THE DECISION OF LEAR NED CIT(A) RENDERED ON FOLLOWING ISSUES : - (A) ADDITION OF UNSECURED LOAN RS.339.85 LAKHS (B) DISALLOWANCE OF SUNDRY BALANCE WRITTEN OFF RS.55.05 LAKHS (C) DISALLOWANCE OF BANK AND FINANCIAL CHARGES - RS.23.95 LAKHS (D) DISALLOWANCE OF BUSINESS PROMOTION EXPENSES R S.1.50 LAKHS (E) DISALLOWANCE OF MACHINE RENT EXPENSES RS. 6.07 LAKHS (F) ADDITION OF UNEXPLAINED CASH CREDIT RS. 14.48 LAKHS 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FLEXIBLE PACKAGING MATER IAL AND GREY M/S. VALUKKO INDUSTRIES P. LTD . 2 SUITING AND SHIRTING. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING A TOTAL INCOME OF RS. 9.47 LAKHS. 3. FIRST ISSUE RELATES TO ADDITION OF RS. 339.85 LAKHS MADE U/S. 68 OF THE ACT . D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DISCLOSED UN SECURED LOAN OF RS. 1822.96 LAKHS IN ITS BOOKS OF ACCOUNTS . THE ASSESSING OFFICER ASKED THE ASSESSEE TO OFFER EXPLANATION S AND SUBSTANTIATE CREDITORS. IN THE MEANTIME, HE ISSUED NOTICE U/S. 133(6) OF THE ACT TO 8 PERSONS. HOWEVER, HE RECEIVED REPLY AND CONFIRMATION LETTER FROM ONE PARTY ONLY, NAMED M/S. KHETAN OVERSEAS CORPORATION. THE ASSESSING OFFICER DID NOT RECEIVE REPLY FROM A PARTY NAMED M/S. RUSH A B FLEXIPACK LIMIT ED. IN RESPECT OF REMAINING PARTIES, REPLIES WERE GIVEN IN A STEREOTYPE MANNER STATING THAT THEY HAVE GIVEN UNSECURED LOANS TO THE ASSESSEE . B EFORE THE ASSESSING OFFICER THE ASSESSEE DID NOT FURNISH ANY DOCUMENT TO PROVE CREDITS AND HENCE THE ASSESSING OFF ICER ASSESSED SUM OF RS. 339.85 LAKHS RELATING TO SEVEN PARTIES AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 4. BEFORE LEARNED CIT(A), THE ASSESSEE FURNISHED CERTAIN DETAILS AND HENCE THE LEARNED CIT(A) CALLED FOR A REMAND REPORT. HOWEVER, IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS FILED CERTAIN DETAILS AND DID NOT APPEAR BEFORE HIM TO EXPLAIN CREDITS. THE LEARNED CIT(A), HOWEVER, DELETED THE ADDITIO N BY HOLDING THAT ALL LOANS ARE SUPPORTED BY PROPER DOCUMENTS. THE LEARNED C IT(A) ALSO OBSERVED THAT THESE LOANS WERE NOT TAKEN DURING THE YEAR AND HENCE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE APPLIED. ACCORDINGLY, HE DELETED THE ADDITION. 5. AT THE TIME OF HEARING, LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ALL THE NECESSARY DOCUMENTS IN ORDER TO PROVE CASH CREDIT S AND HENCE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. ON THE CONTRARY, THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS TAKEN THESE LOANS IN M/S. VALUKKO INDUSTRIES P. LTD . 3 THE EARLIER YEAR S AND HENCE THE ASSESSING O FFICER C OULD NOT HAVE MADE ADDITION U/S. 68 OF THE ACT DURING THE YEAR UNDER CONSIDERATION. 6. WE FIND MERIT IN THE CONTENTIONS OF THE LD A.R. THERE SHOULD NOT BE ANY DOUBT THAT THE ADDITION U/S. 68 OF THE ACT DURING THE YEAR UNDER CONSIDERATION IS NOT C ALLED FOR , IF THE LOANS WERE TAKEN IN ANY OF THE EARLIER YEAR S, I.E., THE CAUSE OF ACTION SHALL ARISE ONLY IN THE YEAR IN WHICH THE LOAN WAS TAKEN . FROM THE PAPER BOOK, WE NOTICED THAT THE ASSESSEE HAS FURNISHED LEDGER ACCOUNT COPY OF ONLY ONE PARTY M/S. R USBAH FLEXIPACK LIMITED. IN RESPECT OF REMAINING PARTIES, ONLY CONFIRMATION HAS BEEN FILED, INTER ALIA, STATING THAT THERE ARE NO TRANSACTIONS IN THE ACCOUNT DURING THE FINANCIAL YEAR 2010 - 11. WE NOT ICED THAT THE CLAIM OF THE ASSESSEE THAT THE LOANS WERE N OT TAKEN DURING THE YEAR UNDER CONSIDERATION , BUT IN THE EARLIER YEARS HAS NOT BEEN EXAMINED AND THE SAME REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE S AME TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF EXAMINATION AS TO WHETHER LOANS WERE TAKEN DURING THE YEAR OR IN THE EARLIER YEAR. IF THE ASSESSING OFFICER FINDS THAT LOANS WERE TAKEN IN THE EARLIER YEAR S , WE DIRECT HIM NOT TO MAKE ANY ADDITION U/S. 68 OF THE ACT. 7. THE N EXT ISSUE RELATES TO DISALLOWANCE OF CLAIM OF WRIT ING OFF OF SUNDRY BALANCES AMOUNTING TO RS. 55.05 LAKHS. THE ASSESSING OFFICER DISALLOWED THE SAME FOR THE REASON THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS TO SHOW THAT T HE AMOUNT SO WRITTEN OFF WAS OFFERED AS INCOME. WE NOTICED THAT LEARNED CIT(A) DELETED THE SAME WITH OBSERVATION THAT THE SAME WAS OFFERED TO THE REVENUE IN THE EARLIER YEAR. ACCORDING TO LEARNED DR, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS WHICH WOULD H AVE ENABLED LEARNED CIT(A) TO COME TO THE CONCLUSION THAT THE IMPUGNED AMOUNT WAS OFFERED TO REVENUE IN ANY OF THE YEAR. FROM THE PAPER BOOK ALSO, WE NOTICED THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT TO PROVE ITS CLAIM THAT THE AMOUNT SO WRITTEN OFF WAS OFFERED TO TAX IN ANY OF THE YEAR . UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. M/S. VALUKKO INDUSTRIES P. LTD . 4 ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME T O THE FILE OF THE ASSESSING OFFICER FOR EXAMINING IT AFRESH. 8. IN RESPECT OF REMAINING ISSUES ALSO, WE NOTICED THAT THE ASSESSEE HAS FAILED TO FURNISH DETAILS BEFORE THE ASSESSING OFFICER, AND LEARNED CIT(A) HAS DELETED THE ADDITIONS WITHOUT CONSIDERING THE DETAILS THAT WERE REALLY REQUIRED TO ALLOW THE CLAIM OF THE ASSESSEE. UNDER THESE SET OF FACTS, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) IN RESPECT OF REMAINING ISSUES ALSO AND RESTORE THEM TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THEM AFRESH. WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL THE DETAILS TO PROVE THE CLAIM OF VARIOUS EXP E NSES AND CASH CREDIT ADDITION OF RS.14.48 LAKHS TO THE SATISFACTION OF THE ASSESSING OFFICER. AFTER EXAMINING THE DETAILS AND AFTER HEARING THE ASSESSEE, THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 6 . 2 .201 9 . SD/ - SD/ - (SANDEEP GOSAI N ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 6 / 2 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI