ASST CIT CEN CIR 15 & 16, MUMBAI V. RASHMIKANT M. SHAH, MUMBAI

ITA 4490/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101188 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure
• Section: 153A; 68; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND AMARJIT SINGH, JM ./ I.T.A. NO. 3950 / MUM/20 11 ( / ASSESSMENT YEAR : 2000 - 01 ) RASHMIKANT M SHAH, 477, BABYLON, 1 ST FLOOR, ADENWALA ROAD, MATUNGA, MUMBAI - 400019. / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 15 AND 16, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 4490/ MU M/20 11 ( / ASSESSMENT YEAR : 2005 - 06 ) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 15 AND 16, ROOM NO.401,4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD MUMBAI - 400020. / VS. RASHMIKANT M SHAH, 477, BABYLON, 1 ST FLOOR, ADENWALA ROAD, MATUNGA, MUMBAI - 400019 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AALPS8009L / APPELLANT BY SHRI J P BAIRAGRA / RESPONDENT BY SHRI JAYANT KUMAR / DATE OF HEARING : 3.9. 201 5 / DATE OF PRONOUNCEMENT : 23. 9. . 201 5 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS APPEAL FOR THE ASSESSMENT YEAR 2000 - 01 AND THE REVENUE HAS F ILED THE APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 AGAINST THE ORDER S PASSED BY THE LD. CIT(A) - 39, MUMBAI. BOTH THE APPEALS ITA NO. 3950 / MUM/20 11 AND ITA 4490/MUM/2011 2 WERE HEARD TOGETHER AND HENCE , THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. WE SHALL TAKE THE APP EAL FILED BY THE ASSESSEE FOR THE YEARS 2000 - 01. THE REVENUE CARRIED SEARCH AND SEIZURE ACTION UNDER SECTION 132 (1) OF THE INCOME TAX ACT , 1961 ON 22.9.2005 AT THE RESIDENTIAL PREMISES OF THE DIRECTOR/PARTNERS AND ALSO THE BUSINESS PREMISES OF THE CONCERN S BELONG ING TO THE VIJAY GROUP . CONSEQUENT THERETO , THE PRESENT ASSESSMENT WAS COMPLETED U/S 153A OF THE ACT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE DID NOT FILE BALANCE - SHEET ALONG WITH THE RETURN OF INCOME FILED U/ S 139(1) AND ALSO UNDER SECTION 153A OF THE ACT . ON BEING CALLED BY THE AO, THE ASSESSEE FILED THE BALANCE SHEET WHEREIN UNSECURED LOANS WAS SHOWN TO THE TUNE OF RS.1,37,36,115/ - AND HENCE THE AO CALLED FOR THE DETAILS RELATING THERETO. SINCE THE DETAILS WERE NOT FORTHCOMING, THE AO ASSESSED THE ENTIRE AMOUNT OF UNSECURED LOANS AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 3. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED THE DETAILS RELATING TO UNSECU R ED LOANS AND HENCE THE LD.CIT(A) CAL LED FOR THE REMAND REPORT FROM THE AO. IN THE REMAND REPO R T, THE AO SUBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATIONS LETTERS IN RESPECT OF FOLLOWING TWO CREDITORS , BUT DID NOT PRODUCE THEM FOR EXAMINATION : A) ANGEL MARKETING AND FINANCE PVT.LTD. RS.1 0 LAKHS; AND B) DE OGIRI TRANSPORT RS.6 LAKHS THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE REMAND REPORT OF THE AO , CONFIRMED THE ADDITION TO THE EXTENT OF RS.16 LAKHS RELATING TO THE ABOVE SAID TWO PARTIES. IT IS PERTINENT T O NOTE THE LD CIT(A) DELETED THE ADDITIONS RELATING TO OPENING BALANCE OF SUNDRY CREDITORS AND ALSO THE ADDITION RELATING TO CREDITORS WHO HAD APPEARED ITA NO. 3950 / MUM/20 11 AND ITA 4490/MUM/2011 3 BEFORE THE AO IN THE REMAND PROCEEDINGS. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS FIL ED THIS APPEAL BEFORE US. 4. THE LD.AR SUBMITTED THAT THE ASSESSEE HAS TAKEN LOAN FROM THESE TWO PARTIES LONG BACK IN THE YEAR 2000. DURING THE COURSE OF REMAND PROCEEDINGS , THE ASSESSEE FURNISHED THE COPIES OF CHEQUES, COPIES OF BANK PAY - IN - SLIPS DEPOSI TING THE CHEQUES, CONFIRMATION LETTERS OBTAINED FROM THESE PARTIES ALONG WITH THEIR RESPECTIVE ADDRESSES AND PAN NUMBER . THE AO HAS RECOMMENDED FOR ADDITION OF THESE AMOUNT S ONLY FOR THE REASONS THAT BOTH THE PARTIES DID NOT APPEAR BEFORE HIM. THE LD. CO UNSEL SUBMITTED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS CONT AINI NG THE ADDRESS OF THE CREDITOR ALONG WITH PAN AND HE HAS REQUESTED THE PARTIES TO APPEAR BEFORE THE AO . HOWEVER , THEY HAVE FAILED TO APPEAR BEFORE THE AO DESPITE THE REQUEST MADE BY ASSESSEE. THE LD. AR ALSO SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THESE LOANS IN THE SUBSEQUENT YEARS THROUGH ACCOUNT PAYEE CHEQUES. SINCE THE MATTER WAS VERY OLD AND SINCE THE ASSESSEE HAD ALREADY REPAID THE LOAN , THEY DID NOT COOPERATE WITH THE AS SESSEE. T HE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAS OTHERWISE DISCHARGED THE INITIAL BURDEN PLACED UPON HIM BY FURNISHING NECESSARY EVIDENCE S . SINCE THE ASSESSEE COULD NOT ENFORCE THE ATTENDANCE OF THESE PARTIES, WHICH WAS BEY OND THE CONTROL OF THE ASSESSEE, THE LD A.R SUBMITTED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN TAK ING ADVERSE VIEW AGAINST THE ASSESSEE. ACCORDINGLY, HE PRAYED THAT THE IMPUGNED ADDITION SHOULD BE DELETED. THE LD. COUNSEL ALSO PLACED HIS RELIANCE ON VARIOUS DECISION S RENDERED BY THE HONBLE HIGH COURTS, BESIDES PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS . ORISSA CORPORATION PVT LTD REPORTED IN 159 ITR 78 ( SC) . HE ALSO PLACED RELIANCE ON THE DECISION REN DERED BY HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS . CREATIVE WORLD TELEFILMS LTD.(2011) 333 ITR 100 (BOM). ITA NO. 3950 / MUM/20 11 AND ITA 4490/MUM/2011 4 5 . ON THE CONTRARY, THE LD. DR SUBMITTED THA T THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE ABOVE SAID TWO CREDITORS AND HE NCE THE LD . CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION. 6. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE INQUIRY WITH REGARD TO THE CREDITORS HAVE TAKE N PLACE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) IN T HE YEAR 2011. ADMITTEDLY , THESE LOANS WERE TAKEN IN THE YEAR 2000, HENCE, WE FIND MERITS IN THE SUBMISSIONS OF THE LD. AR THAT THE CREDITORS DID NOT CO - OPERATE WITH THE ASSESSEE AND HENCE THEY DID NOT APPEAR BEFORE THE AO , SINCE THE ASSESSEE HAD REPAID THE LOANS. WE FURTHER NOTICE THAT THE ASSESSEE HAS FILED COPIES OF CHEQUE/PAY - IN - SLIPS AND CONFIRMATION LETTERS OBTAINED FROM THESE CREDITORS. THE CONFIRMATION LETTERS CONTAIN ED THE ADDRESS OF THE CREDITORS AND ALSO THEIR RESPECTIVE PAN . THUS, WE NOTICE TH AT THE CREDITORS HAVING RECEIVED BACK THE LOANS FROM THE ASSESSEE DID NOT MIND TO CO - OPERATE WITH THE ASSESSEE BY WAY OF APPEARING BEFORE THE AO , S INCE THE TRANSACTIONS WERE 10 YEARS OLD . W E ALSO NOTICE THAT THE AO ALSO DID NOT ENFORCE THE ATTENDANCE OF TH ESE CREDITORS BY ISSUING SUMMONS TO THEM AND HE DID NOT VERIFY THEIR INCOME TAX RETURNS ALSO, EVEN THOUGH THE ASSESSEE HAS FILED NECESSARY DETAILS . UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT TAX AUTHORITIES COULD NOT DRAW ADVERSE INFERENCE IN RESPE CT OF INABILITY OF THE ASSESSEE TO PRODUCE THE CREDITORS. A CAREFUL PERUSAL OF THE PROVISION S OF SEC. 68 WOULD SHOW THAT THE ADDIT ION ON ACCOUNT OF UNPROVED CASH CREDIT IS NOT AU TOMATIC , BUT IT GIVES DISCRETION TO THE AO NOT TO MAKE ANY ADDITION, SINCE THE EXPRESSION MAY IS USED IN SEC. 68 OF THE ACT. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD NOT BE PUNISHED FOR HIS INABILITY TO ENFORCE THE ATTENDANCE OF THE CREDITORS. WE HAVE ALREADY NOTICED THA T THERE IS FAILURE ON THE PART OF THE AO ALSO IN NOT ENFORCING THE ATTENDANCE OF THE CREDITORS BY ISSUING SUMMONS TO THEM. UNDER THESE SET OF FACTS AND BY RESPECTFULLY FOLLOWING ITA NO. 3950 / MUM/20 11 AND ITA 4490/MUM/2011 5 THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S ORISSA CORPORAT ION PVT LTD (SUPRA), WE ARE OF THE VIEW THAT THE ADDITION CONFIRMED BY THE LD.CIT(A) TO THE TUNE OF RS.16 LAKHS PERTAINING TO THE ABOVE SAID TWO CREDITORS IS NOT CALLED FOR. ACCORDINGLY , WE SET ASIDE THE O R DER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT T HE AO TO DELETE THE ABOVE SAID ADDITION OF RS. 16 LAKHS. 7 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE FOR THE AY 2005 - 06. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN DIRECTING THE AO TO DELETE THE ENTIRE ADDITION OF RS.21.36 LA KHS. 8 . WE HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAS MAINTAINED A BANK ACCOUNT WITH CITI BANK IN WHICH THE CHEQUES WERE FOUND TO HAVE BE EN DEPOSITED ON VARIOUS DATES. THE AGGREGATING AMOUNT SO DEPOSIT ED W AS RS.21,36, 766 / - . THE AO ALSO MADE AN ADDITION OF RS.3 LAKHS U/S 68 OF THE ACT. H ENCE BY GIVING TELESCOPING BENEFIT OF RS.3.00 LAKHS REFERRED ABOVE AGAINST THE AMOUNT OF RS.21,36,766/ - , THE AO ASSESSED THE BALANCE AMOUNT OF RS.18,36,766/ - AS INCOME OF THE ASSESSEE TOWARDS UNEXPLAINED BANK DEPOSITS. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE GAVE CERTAIN EXPLANATIONS AND ALSO CLAIMED THAT MOST OF THE DEPOSITS ARE RECORDED IN THE BOOKS OF ACCOUNT. THE LD. CIT(A) GAVE DEFINITE FINDING THAT THE DEPOSITS TO THE TUNE OF RS.15 LAKHS STANDS EXPLAINED AND ACCORDINGLY DIRECT ED THE AO TO DELETE THE ADDITION OF RS.15 LAKHS. THE ASSESSEE EXPLAINED THAT A SUM OF RS.9,39,935/ - WAS EARNED BY HIM AS COMMISSION INCOME . IT APPEARS THAT THE ASSESSEE HAS EXPLAINED THE SOURCES OF BAL ANCE AMOUNT OF DEPOSITS AS HIS COMMISSION INCOME. ACCORDINGLY, THE LD.CIT(A) RESTORED THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE CLAIM OF T HE ASSESSEE AND MAKE TH E ADDITION, IF THE COMMISSION AMOUNT WAS NOT OFFERED AS ITA NO. 3950 / MUM/20 11 AND ITA 4490/MUM/2011 6 INCOME. THE R EV ENUE IS AGGRIEVED BY THE SAID DIRECTION GIVEN BY THE LD.CIT(A). 9 . HAVING HEARD BOTH THE PAR TIES , WE NOTICE THAT THE LD.CIT(A) HAS SIMPLY RESTO R ED THE MATTER TO THE FILE OF THE AO TO EXAMINE THE CLAIM OF THE ASSESEE . HENCE, WE ARE OF THE VIEW TH A T THE REV ENUE COULD NOT BE CONSIDERED AS HAVING AGGRIEVED BY THE SAID DIRECTION GIVEN BY THE LD.CIT(A). ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE . 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT Y E AR 2000 - 01 I S ALLOWED AND THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2005 - 06 IS DISMISSED. PRONOUNCED ACCORDINGLY ON 23RD SEPT , 2015. 23RD SEPT , 2015 SD SD (AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 23RD SEPT ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT( A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI