ITO 11(3)(2), MUMBAI V. PURAN C. CHHAJED, MUMBAI

ITA 4718/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1276 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 23-03-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 18-06-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Section: 234B; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAMLAL NEGI , JM ITA NO. 4718 / MUM/20 1 3 ( ASSESSMENT YEAR : 2001 - 02 ) ITO 11(3)(2), MUMBAI VS. MR. PURAN C.CHHAJED 5, 1 ST FLOOR, NOBLE APT., LBS M ARG, KURLA (WEST) MUMBAI 400 070 PAN/GIR NO. AABPC2464R APPELLANT ) .. RESPONDENT ) & ITA NO.4410/MUM/2013 ( ASSESSMENT YEAR : 2001 - 02 ) MR. PURAN C.CHHAJED 5, 1 ST FLOOR, NOBLE APT., LBS MARG, KURLA (WEST) MUMBAI 400 070 VS. ITO 11 (3)(2), MUMBAI PAN/GIR NO. AABPC2464R APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI RAJAT MITTAL ASSESSEE BY DR. K. SHIVRAM ALONGWITH MS. NEELAM JADHAV DATE OF HEARING 12 / 01 /201 7 DATE OF PRONOUNCEME NT 10 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THE SE ARE THE CROSS APPEALS FILED B Y THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 2, MUMBAI DATED 08/04/2013 FOR THE A.Y.2001 - 02 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE FOLLOWING GROU NDS HAVE BEEN TAKEN BY REVENUE: - 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), MUMBAI HAS ERRED IN ALLOWING RELIEF TO THE EXTENT OF ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 2 RS.70,37,636/ - OUT OF THE ADDITION MADE BY THE AO OF RS.1,05,92,913/ - ON ACCOUNT OF UNSECURED LOANS WHICH WERE NOT ESTABLISHED AS GENUINE AND WHICH WERE ADDED TO THE TOTAL INCOME U/S.68 OF THE I.T. ACT BY THE A.O. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (APPEALS) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTOR ED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY . 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER: - 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 68 OF LOANS OF RS.32,49,415/ - FROM VARIO US PARTIES, WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD PROVED BEYOND DOUBTS THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE PARTIES WHO ARE ASSESSED TO TAX, BY FILING THE CONFIRMATIONS, PAN DETAILS, BANK STATEMENTS, INCOME TAX RETURNS, STAT EMENTS U/S 131, ETC., OF EACH AND EVERY LENDER, AND HENCE ADDITION OF RS.32,49,415/ - MAY BE DELETED. 2. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF LOAN OF RS.19,91,800/ - AND RS.12,38,615/, ON THE GROUND THAT THE LENDER S HAD RECEIVED MONEY FROM SOFTFIN INVESTMENT PVT. LTD. AND FROM S. J AGANNATH TIBREWALA, AND TREATED THEM AS NOT GENUINE, WITHOUT CONSIDERING THE EVIDENCES ON RECORD, AND FAILED TO APPRECIATE THE FACT THAT HE HAD NOT DOUBTED THE LENDERS AS SUCH, BUT,THE GE NUINENESS OF SOURCE TO SOURCE OF THE LENDERS. HENCE, THE ADDITION OF RS.19,91,800/ - AND 12,38,615/ - MAY BE DELETED. 3. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF LOAN OF RS.19,000/ - FROM LALITA S. JAIN ON THE GROUND TH AT SHE HAD RECEIVED RS.19,000/ - IN CASH, WITHOUT APPRECIATING THE FACT THAT SHE HAD RECEIVED THE RS.19,000/ - FROM HER HUSBAND, AGAINST WHI CH SHE HAD ADVANCED ONLY RS.12,500 / - , AND THUS FAILED TO APPRECIATE THE FACT THAT HE HAD NOT DOUBTED THE LENDER AS SUC H, BUT, THE GENUINENESS OF SOURCE TO SOURCE OF THE LENDERS. HENCE, ADDITIONS CONFIRMED MAY BE DELETED. 4. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRED IN WRONGLY MAKING THE ADDITION OF RS.2,07,445 / - WHICH IS MISTAKE APPARENT FROM RECORD, A ND HENCE AD DITION OF RS.2,07,445 / - MAY BE DELETED. 5. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.L,16,183/- BEING INTEREST EXPENDITURE INCURRED ON THE ABOVE LOANS. 6. ON MERI TS THE APPELLANT DENIES ITS LIABILITY TO THE LEVY OF PENAL INTEREST U/S, 234A, 234B AND 234C. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 3 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS A CHARTERED ACCOUNTANT BY PROFESSION AND THE MAIN SOURCE OF INCOME WAS PROFESSIONAL INCOME, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO ASKED SOURCE AND GENUINENESS OF THE UNSECURED LOANS RECEIVED BY HIM DURING THE RELE VANT ACCOUNTING PERIOD . I N RESPONS E TO THESE , ASSESSEE FURNISHED COPIES OF LOAN CONFIRMATION WITH PROOF OF BANK STATEMENTS, BALANCE SHEET ETC., ASSESSMENT WAS FRAMED U/S.143 (3) ON 26/03/2004 BY TREATING LOA NS RECEIVED DURING THE YEAR AS UNDISCLOSED INCOME U/S68. IN AN APPEAL FILED BEFORE THE CIT(A) , T HE CIT(A) CALLED FOR A REMAND REPORT. D U RING THE REMAND PROCEEDINGS THE A.O. SUMMONED 106 LENDERS OUT OF THE 106 LENDERS, 104 LENDERS PERSONALLY ATTENDED AND FILED ALL DOCUMENTS. ALL CONFIRMED TO HAVE GIVEN LOANS TO THE ASSESSEE. ALL LOANS ARE GIVEN THROUGH BANKING CHANNELS AND NO CASH WAS DEPOSITED IN THE CORRESPONDING LENDERS BANK ACCOUNT. THE REMAINING 2 LENDERS WHO DID NOT ATTEND WAS FOUND TO HAVE NOT GIVEN ANY LOAN DURING THE YEAR. ALL LOANS ARE SQUARED OFF IN SUBSEQUENT YEARS. THUS, ALL P ARTIES HAVE GIVEN THE LOAN CONFIRMATION, BANK PASS BOOKS, DETAILS OF PAN NUMBERS AND INCOME TAX RETURN FILES. ALL PARTIES ARE ASSESSED TO TAX. AFT ER CONSIDERING THE SAME THE CIT (A) VIDE ORDER DATED 0 8 - 04 - 2103, CONFIRMED THE ADDITION OF RS. 32,49,415/ - AND DELETED THE BALANCE ADDITION. 4. AGAINST THE ABOVE ORDER OF CIT(A) BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 4 5. LEARNED AR RELIED ON THE DECISION OF GUJARAT HIGH COURT IN CASE OF APEX THERM PACKAGING (P) LTD., 222 TAXMAN 125 IN SUPPORT OF THE PROPOSITION THAT WHERE FULL PARTICULARS INCLUDING CONFIRMATION WITH NAME, ADDRESS AND PAN NUMBER, COPY OF INCOME TAX RETURNS, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND COMPUTATION OF TOTAL INCOME IN RESPECT OF LENDERS WERE FURNISHED AND WHEN IT I S FOUND T HAT LOANS WERE GIVEN BY ACCOUNT PAYEE CHEQUES AND DULY REFLECTED IN BALANCE SHEET, NO ADDITION U/S.68 IS CALLED FOR. RELIANCE WAS ALSO PLACED ON THE DECISION OF ALLAHABAD HIGH COURT IN CASE OF KAPOOR CHAND MANGESH CHAND 218 TAXMAN 157 IN SUPPORT OF THE PRO POSITION THAT WHEN LOANS ARE ADVANCED AND REPAID THROUGH ACCOUNT PAYEE CHEUQES, PAN NO. OF LENDERS WERE FURNISHED AND LENDERS HAD SUFFICIENT FUNDS IN THEIR BANK ACCOUNTS AND CASH WAS NOT DEPOSITED ON DATE PRECEDING TO OR AT THE TIME WHEN CHEQUES WERE ISSUE D BY THE LENDERS, NO ADDITION SHOULD BE MADE U/S.68. RELIANCE WAS ALSO PLACED ON THE DECISION OF DELHI HIGH COURT IN CASE OF SHIV DHOOTI PEARLS & INVESTMENT LTD., 237 TAXMAN.104. LEARNED AR ALSO DRAWN OUR ATTENTION TO THE FOLLOWING DOCUMENTS FILED BEFORE THE LOWER AUTHORITIES. A) LOAN CONFIRMATION, B) RATION CARD, C) PAN CARD, D) COPY OF AIC IN THE LENDERS BOOKS OF AIC FOR F.Y. 2000 - 2001, E) COPY OF BANK PASS BOOK/ STATEMENTS, F) EXTRACTS OF BANK/ CASH TRANSACTION WITH DETAILS OF EACH TRANSACTION, G) COPY OF INCOME TAX RETURN FILED FOR A.Y.2000 - 2001 TO 2003 - 2004 ALONG WI TH COPY OF COMPUTATION OF TOTAL INCOME, BALANCE SHEET, CAPITAL A/C ETC., ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 5 H) SALE BILL OF PRINCIPAL PHARMACEUTICALS AND CHEMICALS LTD. FOR INVESTMENT IN SHARES DULY REFLECTED IN THE BALANCE SHEET OF SOFTFIN INVESTMENTS PVT. LTD. FOR 31/3/2000. COPY OF ACCOUNTS OF SOFTFIN INVESTMENTS PVT. LTD. A.Y.2000 - 2001/2001 - 200 2 - , (WHEREVER TRANSACTIONS) I) BILL OF S. JAGANNATH TIBREWALA (WHEREVER TRANSACTIONS) J) STATEMENT U/ S. 131 LENDER HAS CONFIRM ED HAVING GIVEN LOAN TO ASSESSEE BY CHEQUE. ALL PARTIES ASSESSED TO TAX 6. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE AO AND CONTENDED THAT ADDITION SO MADE BY AO SHOULD BE CONFIRMED. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY G ONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED BEFORE US. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FOUND THAT IN RESPECT OF THE LOANS TAKE N BY THE ASSESSEE, THE A SSESSEE HAD PRODUCED THE FOLLOWING DOCUMENTS BEFORE THE LOWER AUTHORITIES. A. CONFIRMATION LETTERS FROM ALL THE PARTIES B. BANK PASSBOOK AND BALANCE SHEET OF ALL THE PARTIES C. ALL THE PARTIES ARE ASSESSED TO TAX D. SUMMONSES W ERE SERVED TO ALL THE 106 PARTIES. E. 104 PARTIES ATTENDED IN RESPONSE TO THE SUMMONS THEIR STATEMENT WAS RECORDED AND THEIR DETAILS WERE FILED. F. ALL PARTIES CONFIRMED THE LOANS AND ALSO EXPLAINED THE SOURCE OF THE LOANS AND S OURCE OF SOURCE. 8. WE AL SO FOUND THAT ASSESSEE HAS ALSO EXPLAINED THE SOURCE OF SOURCE OF THE LENDERS AND THE LOANS WERE REPAID WITH INTEREST . I N SUPPORT OF IT BANK STATEMENT SHOWING LOANS ALONGWITH INTEREST PAYMENT WERE FURNISHED BEFORE THE LOWER AUTHORITIES. ALL REPAYMENT S WER E MADE THROUGH CHEQUE S , INTEREST PAID IN CHEQUE. INTEREST IS PAID MORE THAN THE BANK RATE. ONCE THE AMOUNT WAS ADVANCED BY THE CREDITORS BY ACCOUNT PAYEE CHEQUE FROM THEIR ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 6 RESPECTIVE BANK ACCOUNTS AND THE SAID CREDITORS WERE BEING ASSESSED TO INCOME TAX, T HEN CAPACITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS STOOD PROVED AND IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT MONEY ACTUALLY BELONGED TO THE ASSESSEE HIMSELF, ADDITIONS UNDER SECTION 68 WAS NOT SUSTAINABLE IN VIEW OF THE DECISION OF RAJAS THAN HIGH COURT IN CASE OF JAI KUMAR BAKLIWAL 366 ITR 217. AS THE ASSESSEE HAS PRIMAFACILY PROVED THE IDENTITY, CAPACITY, GENUINENESS, PARTIES WHO ARE ASSESSED TO TAX, ADDITIONS CONFIRMED BY THE CIT(A) WAS NOT JUSTIFIED. 9. WE ALSO FOUND THAT IN RESPONSE T O THE SUMMONS SO ISSUED BY THE AO, LENDERS APPEARED AND FILED THE LOAN CONFIRMATION, BANK PASS BOOK, PAN NUMBER AND COPY OF RETURN ALONGWITH BALANCE SHEET AND P & L ACCOUNT AND CAPITAL ACCOUNT. THEIR STATEMENTS WERE ALSO RECORDED BY AO U/S.131. ALL THE LOA NS WERE EITHER RE PAID IN THE SAME YEAR OR IN THE SUBSEQUENT YEAR. 10. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT FOR THE ADDITION UPHELD BY THE CIT(A) IN RESPECT OF LENDER CREDITORS FOR WHICH ABOVE DOCUMENTARY EVIDENCES WERE FILED BEFORE THE REVENUE AUTHORITIES. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 / 04 /2017 S D/ - ( RAMLAL NEGI ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 10 / 04 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. ITA NO S . 4718/MUM/2013 & 4410/MUM/2013 MR. PURAN C. CHHAJED 7 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBA I 6. GUARD FILE. //TRUE COPY//