SHANTADEVI RAMESH JAIN, MUMBAI V. INCOME TAX OFFICER 19(3)(3), MUMBAI

ITA 4685/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4686 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 02-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 4685 & 4686/MUM/2018 (ASSESSMENT YEARS: 2013-14 & 2014-15) SHANTADEVI RAMESH JAIN 58/8, GANESH KRUPA, MUGHBHAT LANE, THAKURWADI, GIRGAON, MUMBAI-400 004 PAN : ACOPJ7162L VS ITO, 19(3)(3), ROOM NO.219, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007. APPELLANT RESPONDEDNT APPELLANT BY NONE RESPONDENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 30-07-2019 DATE OF PRONOUNCEMENT 30-07-2019 O R D E R PER PAWAN SINGH, JM : THESE TWO APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF CIT(A)-53, MUMBAI, BOTH DATED 16 -05-2018 FOR AYS 2013-14 & 2015-16. THE ASSESSEE HAS RAISED CERTAIN COMMON GROUNDS OF APPEAL IN BOTH THE APPEALS; THERE FORE, BOTH THE APPEALS WERE CLUBBED TOGETHER, HEARD AND ARE DE CIDED BY COMMON ORDER. THE APPEAL FOR AY 2013-14 IS TREATED AS LEAD CASE. 2. IN APPEAL FOR ASSESSMENT YEAR 2013-14, THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 2 ITAS 4685 & 4686/MUM/2018 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) IS BAD IN LAW A ND VOID-AB- INITIO WITHOUT CONSIDERING CONTENTIONS SUBMITTED BY ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER LEGALLY ERRED IN TAKING UNSECURED LOS RS.7, 16,900/- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ASSESSING OFFICER LEGALLY ERRED IN PAYING THE INTER EST OF UNSECURED LOAN AMOUNTING TO RS. 4,58,325/-. 4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ASSESSING OFFICER LEGALLY ERRED IN CHARGING THE INTEREST U/S 234A,B&C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF FERROUS AND NON FERROUS METALS, FILED HER RETURN OF INCOME FOR AY 2013-14 ON 20-09-2013 D ECLARING INCOME OF RS.8,62,790. THE RETURN WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT, THE AO, FROM THE BALANCE-SHE ET OF ASSESSEE NOTED THAT ASSESSEE HAS TAKEN UNSECURED LO AN FROM VARIOUS PERSONS. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF UNSECURED LOANS AVAILED DURING THE YEAR ALONG WI TH IDENTITY AND CREDITWORTHY OF THE PERSONS AND TO PROVE THE GE NUINENESS OF TRANSACTION. THE ASSESSEE FILED ITS DETAILED RE PLY TO VARIOUS QUERIES RAISED BY AO. ON PERUSAL OF REPLY AND CONF IRMATION FILED BY ASSESSEE, THE AO NOTED THAT THERE ARE CERTAIN PA RTIES AND THE LOANS DETAILS WHICH REQUIRE FURTHER INVESTIGATION B Y AO WHICH WAS TABULATED IN THE FOLLOWING MANNER:- SL.NO. NAME OF THE PARTY LOAN AMOUNT PAID INTEREST DURING THE YEAR 1. REENA R JAIN RS.1,20,000/- RS.78,250/- 3 ITAS 4685 & 4686/MUM/2018 2. NIKITA R JAIN RS.1,70,000/- RS.95,900/- 3. DIMPLE R JAIN RS.1,55,000/- RS.1,19,000/- 4. D.B. RATHOD R.83,000/- RS.42,000/- 5. B.P. SINGH RS.1,28,000/- RS.42,000/- 6. RAISINGH B RATHOD RS.60,000/- RS.81,75/- TOTAL RS.7,16,000/- RS.4,58,325/- 4. THE ASSESSEE WAS ASKED TO FURNISH INCOME-TAX RET URN, BANK STATEMENT OF THE ABOVE SIX PARTIES. THE AO AL SO ISSUED SUMMONS TO FOUR PARTIES NAMELY REENA JAIN, NITIKA J AIN, DIMPLE JAIN AND D.B. RATHOD TO ATTEND HIS OFFICE PERSONALL Y. THE AO NOTED THAT ONLY NIKITA JAIN AND DIMPLE R JAIN ATTEN DED DATE AND THE OTHER TWO PERSONS DID NOT ATTEND HIS OFFICE. T HE AO FURTHER NOTED THAT NIKITA JAIN AND DIMPLE JAIN ARE THE DAUG HTERS OF ASSESSEE. THE AO RECORDED THEIR STATEMENTS. AFTER RECORDING STATEMENT OF BOTH THE PERSONS, HE CONCLUDED THAT TH EY HAD NO IDEA ABOUT THE CHEQUE ISSUED TO THE ASSESSEE AS THE IR BANK ACCOUNTS WERE HANDLED BY THEIR FATHER. THE NOTICE ISSUED TO DB RATHOD WAS SERVED, BUT HE DID NOT APPEAR FOR GIVING HIS STATEMENT. THE CONFIRMATION WAS SENT BY HIM THROUG H POST. THE AO NOTED THAT BP SINGH AND RAISING B RATHOD DID NOT HAVE ANY PAN AND THEY WERE NOT FILING THEIR INCOME-TAX R ETURN. ON THE ENQUIRY CONDUCTED BY AO, THE AO CONCLUDED THAT ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF TRANSACTION WITH BP SINGH, RB RATHOD, DIMPLE JAI N AND NIKITA JAIN. THE AO CONCLUDED THAT THEY COULD NOT EXPLAIN THE SOURCE OF DEPOSIT OF CASH IN THEIR BANK ACCOUNT. THEREFORE , THE AO TREATED THE LOAN AMOUNT AS UNEXPLAINED CASH CREDITS AND MADE 4 ITAS 4685 & 4686/MUM/2018 AN ADDITION OF RS.7,16,000. THE AO ALSO DISALLOWED THE INTEREST PAID TO THOSE PARTIES. 5. ON APPEAL BEFORE THE CIT(A), THE ACTION OF AO WA S CONFIRMED. HENCE, FURTHER AGGRIEVED BY THE ORDER O F CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE TH E TRIBUNAL. 6. NONE, APPEARED ON BEHALF OF THE ASSESSEE WHEN MA TTER WAS TAKEN UP FOR HEARING. PERUSAL OF RECORDS REVEA LS THAT ASSESSEE WAS DULY SERVED WITH THE NOTICE OF HEARING OF THE APPEAL. THEREFORE, WE ARE LEFT WITH NO OPTION EXCE PT TO HEAR THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATI VE (DR) FOR THE REVENUE AND TO DECIDE THE APPEAL ON THE BASIS O F MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE SU PPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUB MITTED THAT ASSESSEE FAILED TO SUBSTANTIATE THE CREDITWORTHINES S OF TWO CREDITORS, VIZ. NIKITA JAIN AND DIMPLE JAIN. THE A SSESSEE FURTHER FAILED TO PROVE THE IDENTITY OF REMAINING TWO PERSO NS, VIZ. D.B RATHORD AND SHRI RAI SINGH RATHOD AS THE ASSESSEE F AILED TO PROVE THE CREDITWORTHINESS OF CREDITORS AND GENUINE NESS OF TRANSACTION, THEREFORE, THE ADDITION WAS CONFIRMED. 7. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND GONE THROUGH THE ORDER OF THE LOWER AUT HORITIES. DURING THE ASSESSMENT, THE AO IDENTIFIED THAT THE A SSESSEE HAS AVAILED UNSECURED LOAN FROM SIX PARTIES. THE AO AS KED THE ASSESSEE TO FILE INCOME-TAX RETURN, BANK STATEMENT OF FOUR PARTIES, VIZ. REENA JAIN, NIKITA JAIN, DIMPLE JAIN AND D.B. RATHOD. THE AO ALSO ISSUED NOTICE TO ALL FOUR PART IES TO ATTEND 5 ITAS 4685 & 4686/MUM/2018 THE HEARING BEFORE AO. IN RESPONSE TO THE NOTICE OF AO, NIKITA JAIN AND DIMPLE JAIN, WHO ARE DAUGHTERS OF THE ASSE SSEE APPEARED BEFORE THE ASSESSING OFFICER. THE ASSESSIN G OFFICER RECORDED THEIR STATEMENT. THE ASSESSING OFFICER NOT ED THAT NITIKA JAIN COULD NOT GIVE SATISFACTORY DETAIL REGA RDING HER EARNING FROM TUITION. SIMILAR FINDING WAS RECORDED WITH REGARD TO DIMPLE JAIN. FOR DB RATHORE THE ASSESSING OFFICE R NOTED THAT HE DID NOT APPEAR BEFORE HIM. DB RATHORE WAS NOT HA VING PAN BLISTER HE WAS NOT FILING RETURN OF INCOME. THE ASS ESSING OFFICER CONCLUDED THAT THE ASSESSEE COULD NOT PROVE THE IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF LOAN. 8. BEFORE THE LD. COMMISSIONER (APPEALS) THE ASSESS EE EXPLAINED THAT REENA JAIN NOT FILED RETURN OF INCOM E FOR ASSESSMENT YEAR 2013-14 HOWEVER, THE RETURN FOR ASS ESSMENT YEAR 14-15 WAS FURNISHED. COPY OF BANK STATEMENT OF REENA JAIN WAS ALSO FILED. SIMILARLY, THE RETURN OF INCO ME OF DB RATHOD FOR ASSESSMENT YEAR 2014-15 WAS ALSO FURNISH ED. THE STATEMENT OF BANK ACCOUNT OF DB RATHOD RATHOD WAS A LSO FURNISHED. FOR BP SINGH THE ASSESSEE STATED THAT HE HAS NO TAXABLE INCOME. SIMILARLY FOR RAIBSINGH RATHORE, TH E ASSESSEE STATED THAT NO INCOME TAX RETURN WAS FILED AS HIS I NCOME WAS BELOW TAXABLE LIMIT. FOR DIMPLE JAIN AND NITIKA JAI N THE ASSESSEE STATED THAT THEY HAVE DISCHARGE THEIR OBLI GATION TO PROVE THE IDENTITY AND CREDITWORTHINESS BY FURNISHI NG BANK STATEMENT AND LEDGER CONFIRMATION. THE CONTENTION O F ASSESSEE WAS NOT ACCEPTED BY LEARNED COMMISSIONER (APPEALS). THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE ACTION OF 6 ITAS 4685 & 4686/MUM/2018 ASSESSING OFFICER IN MAKING ADDITION UNDER SECTION 68 OF THE ACT. THE LD. COMMISSIONER (APPEALS) CONCLUDED THAT CREDI TWORTHY OF THE PARTIED ARE NOT PROVED. WE HAVE NOTED THAT THE LD. COMMISSIONER (APPEALS) HAS NOT DISPUTED THE IDENTIT Y OF THE PARTIES AND GENUINENESS OF TRANSACTION. THE LD. COM MISSIONER (APPEALS) DOUBTED THE CREDITWORTHINESS OF THE PARTI ES. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION ON THE AMOUNT OF LOAN AVAILED FROM ALL THE CREDITORS. ALL THE CREDITORS H AVE GIVEN A VERY SMALL AMOUNT. THE ASSESSEE HAS PAID INTEREST. THE PAYMENT OF INTEREST IS NOT DISPUTED. THE INTEREST W AS DISALLOWED AS THE LOAN WAS TREATED AS UNEXPLAINED CREDIT. CONS IDERING THE PECULIARITY OF THE FACT THAT OUT OF CREDITOR/LENDER S, THREE OF THEM ARE FAMILY MEMBER OF ASSESSEE AND REMAINING THREE H AVE GAVE THE CONFIRMATION OF LOANS. THE LOAN GIVEN BY THREE LENDER ARE VERY SMALL AMOUNT I.E. RS. 83,000/- BY D.B. RATHOD, RS. 1,28,000/- BY B.P. SINGH AND ONLY RS. 60,000/- BY R AISINGH B. RATHOD. 9. CONSIDERING THE SMALLNESS OF THE AMOUNT, FOR WHI CH THEY ARE ALSO NOT REQUIRED TO MAINTAIN CASH BOOK OR AUDI TED ACCOUNT. MOREOVER, CONFIRMATIONS WERE FILED BY ALL REMAINING THREE CREDITORS. FURTHER, ALL THE CREDITS WERE RECEIVED BY ASSESSEE THROUGH BANKING CHANNEL. THE ASSESSEE HAS PAID INT EREST DURING THE YEAR. THEREFORE, GENUINENESS OF TRANSAC TIONS OF LOAN WAS PROVED AS THE ASSESSEE HAS PAID DUE INTEREST TO THE CREDITOR. THEREFORE, IN OUR VIEW, THE ASSESSEE HAS PROVED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANS ACTION. THEREFORE, IN SUCH CIRCUMSTANCES, THE AO WAS NOT JU STIFIED IN 7 ITAS 4685 & 4686/MUM/2018 MAKING ADDITION ON SMALL UNSECURED BORROWINGS; HENC E, THE GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED. 10. GROUND 2 RELATES TO DISALLOWANCE OF INTEREST ON UNSECURED LOAN. CONSIDERING THE FACT THAT WE HAVE ALLOWED GR OUND 1 PERTAINING TO LOAN ON WHICH INTEREST WAS PAID BY TH E ASSESSEE. THEREFORE, THIS GROUND BEING DIRECTLY RELATED TO GR OUND 1 AND RELATES TO CONSEQUENTIAL INTEREST; HENCE, THIS GROU ND IS ALSO ALLOWED. ITA 4686/MUM/2018 FOR AY 2014-15 11. THE ASSESSEE HAS RAISED IDENTICAL GROUND OF APP EAL. THE LENDERS FROM WHOM THE ASSESSEE HAS AVAILED THE LOAN ARE COMMON. THE INTEREST IS ALSO PAID TO THOSE COMMON L ENDERS. THEREFORE, CONSIDERING THE FACT THAT WE HAVE ALLOWE D SIMILAR GROUNDS OF APPEAL IN APPEAL FOR AY 2013-14, THEREFO RE, THE GROUNDS OF APPEAL RAISED IN THE THIS APPEAL, ARE AL SO ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-07-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT: 30 TH JULY , 2019 PK/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 8 ITAS 4685 & 4686/MUM/2018 BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI