ITO 19(3)(1), MUMBAI V. DECCAN ENTERPRISES, MUMBAI

ITA 4748/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2281 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Tax effect; Revised return
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO 4156/MUM/2013 ASSESSMENT YEAR: 2008-09 M/S. DECCAN ENTERPRISES, FLAT NO. 1A, HILL TOP SOCIETY, PALI HILL ROAD, BANDRA(WEST), MUMBAI- 400 050. PAN:- AAAFD2751M VS. THE ITO 19 ( 3 )(1), PIRAMAL CHAMBERS, LALBAUG, MUMBAI- 400 012. (APPELLANT) (RESPONDENT) & ITA NO 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 THE ITO 19(3)(1), ROOM NO. 307, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI- 400 012. VS. M/S. DECCAN ENTERPRISES, FLAT NO. 1A, HILL TOP SOCIETY, PALI HILL ROAD, BANDRA(WEST), MUMBAI- 400 050. PAN:- AAAFD2751M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. K.GOPAL. RESPONDENT BY : SHRI. NITIN WAGHMODE. DATE OF HEARING: 21 /07/ 2016 DATE OF PRONOUNCEMENT: 27/07/20 16 O R D E R PER RAM LAL NEGI, JM THESE CROSS APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AND THE REVENUE AGAINST ORDER DATED 17/04/2013 PASSED BY THE LD. CI T(APPEALS)-30 MUMBAI FOR THE ASST. YEAR 2008-09. 2 ITA NO 4156 & 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUNDS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ASSESSMEN T ORDER PASSED U/S 143 OF THE I.T. ACT, WHICH IS INVALID AND BAD I N LAW. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF A N AMOUNT OF RS. 15,00,000/- AS RECEIPT FROM MRS. BHARTI GANDHI/DOS HI TREATED AS UNEXPLAINED CASH CREDIT U/S. 68. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME FOR THE ASST. YEAR 2008-09 ON 29.7.2008 DECLARING THE T OTAL INCOME AS NIL. SINCE A SURVEY ACTION U/S 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) HAD BEEN CONDUCTED ON 12/09/2007, THE AO SOUGHT EXPLANA TION OF ASSESSEE DURING THE ASSESSMENT PROCEEDINGS REGARDING PAYMENT OF RS. 15,00,000/- MADE TO BHARTI GANDHI/DOSHI AND AFTER HEARING THE PLEA OF T HE ASSESSEE THE A.O INTER- ALIA MADE AN ADDITION OF RS. 15,00,000/- AS UNEXPLAIN ED CASH CREDIT U/S 68 OF THE ACT TO THE INCOME OF THE ASSESSEE. THE ASSES SMENT ORDER WAS CHALLENGED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORIT Y. THE SAID APPELLATE AUTHORITY CONFIRMED THE ADDITION THOUGH NOT UNDER SECTION 68 OF THE ACT. AGAINST THE SAID ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEF ORE US THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AS THE SAME HAS NOT BEEN PASSED ON THE BASIS OF EVIDENCE O N RECORD AND IN ACCORDANCE WITH LAW. AS REGARDS THE SECOND GROUND T HE LD. COUNSEL CONTENDED BEFORE US THAT THE TRANSACTION FOUND IN THE DOCUMEN T RELATED TO THE PARTNER OF THE ASSESSEE AND NOT TO THE ASSESSEE. IT WAS FURTHE R SUBMITTED THAT AMOUNT WAS REPAYMENT OF LOAN TAKEN BY THE PARTNER OF THE A SSESSEE IN HIS INDIVIDUAL CAPACITY AS IS CLEAR FROM REPLY TO QUESTION NO 7 PU T TO THE ASSESSEE BY AO 3 ITA NO 4156 & 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 DURING THE ASSESSMENT PROCEEDING. MOREOVER, THE TRA NSACTION PERTAINS TO THE ASSESSMENT YEAR 2007-08 WHEREAS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2008-09. HENCE, THE ADDITION OF RS. 15,00,000/- TO THE INCOME OF THE ASSESSEE IS NOT JUSTIFIED. ON THE OTHER HAND THE LD. DEPART MENTAL REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF AUTHORITIES B ELOW SUBMITTED THAT THERE IS NO SCOPE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO EX AMINED THE DOCUMENTS PLACED ON RECORD. THE ONLY GRIEVANCE OF THE ASSESSE E IS THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE ADDITION IN QUESTION MADE BY THE AO. THE LD. CIT(A) HAS UPHELD THE FINDINGS OF THE AO HOLDING AS UNDER:- ACCORDING TO AO, AS OBSERVED IN PARA 6.1 OF THE OR DER OF ASSESSMENT, NO DOCUMENTARY EVIDENCE HAS BEEN FILED TO EXPLAIN THE ENTRY. IN THE APPELLATE PROCEEDINGS IT IS CONTENDED THAT THE AMOUNT UNDER CONSIDERATION IS ACTUALLY PAYMENT BY THE ASSE SSEE AND NOT RECEIPT AS UNDERSTOOD BY THE AO. THE CONTENTION OF THE LD. COUNSEL THAT THE AO HAS NOT UNDERSTOOD NATURE OF THE TRANSA CTION IS NOT CORRECT. PERUSAL OF THE REPRODUCTION OF QUESTION NO . 38 OF THE STATEMENT RECORDED IN THE COURSE OF SURVEY AS CONTA INED IN PAGE NO. 10 OF ORDER OF ASSESSMENT REVEALS THAT THE QUESTION IS VERY SPECIFIC AND THE RESPONSE CATEGORICALLY CONFIRMS THAT THE AM OUNT UNDER CONSIDERATION IS PAYMENT BY THE ASSESSEE. THE LD. W AS COUNSEL QUESTIONED IN THE APPELLATE PROCEEDINGS ABOUT THE S OURCE OF THIS PAYMENT. THE COUNSEL HAS NOT BEEN ABLE TO GIVE ANY SPECIFIC SOURCE OF THE PAYMENT UNDER CONSIDERATION. EVEN IN THE ASS ESSMENT PROCEEDINGS, NO DOCUMENTARY EVIDENCE HAS BEEN GIVEN ABOUT THE SOURCE OF PAYMENT OF THE AMOUNT UNDER CONSIDERATION . AT THE APPELLATE STAGE ALSO, THE COUNSEL HAS DECLINED TO O FFER ANY SOURCE OF PAYMENT OF THIS AMOUNT. IN SUCH A SITUATION, THE AD DITION OF RS. 15 LAKHS TO INCOME OF THE ASSESSEE IS JUSTIFIED AND IS UPHELD IT IS A DIFFERENT MATTER THAT AO HAS INVOKED SECTION 68 OF THE ACT IN THE ORDER OF ASSESSMENT, WHICH IS NOT CORRECT IN THE FA CTS OF THE CASE. TO THIS EXTENT, THE ORDER STANDS MODIFIED. HOWEVER, TH E ADDITION IS CONFIRMED. 4 ITA NO 4156 & 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 6. IN THE OPINION OF THE LD. CIT(A), THE ASSESSEE H AS FAILED TO EXPLAIN THE SOURCE OF AMOUNT IN QUESTION PAID TO THE PARTY CONCERNED TO THE SATISFACTION OF THE AO. EVEN THE ASSESSEE HAS FAILE D TO DISCHARGE ITS BURDEN DURING THE APPELLATE PROCEEDINGS. HOWEVER, WE NOTICE THAT AS PER THE COPY OF RECEIPT AT PAGE 12 OF THE PAPER BOOK, T HE PAYMENT IN QUESTION WAS MADE BY THE ASSESSEE ON 17 MAY, 2006, THE ASSES SMENT YEAR OF WHICH WAS 2007-08. HOWEVER, THE AO HAS TAKEN THE SA ME IN THE ASSESSMENT YEAR UNDER CONSIDERATION I.E., 2008-09. AS PER THE PROVISIONS OF THE INCOME TAX ACT, ALL TRANSACTIONS OF PREVIOUS YEAR ARE TAKEN INTO CONSIDERATION WHILE ASSESSING INCOME OF AN ASSESSEE FOR ANY ASSESSMENT YEAR. IN THE PRESENT CASE THE AO HAS TAKEN INTO CON SIDERATION THE TRANSACTION PERTAINING TO FINANCIAL YEAR 2006-07 WH ILE ASSESSING THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 -09. THEREFORE, THE IMPUGNED ORDER IS ERRONEOUS AND BAD IN LAW. WE ACCO RDINGLY, SET ASIDE THE IMPUGNED ORDER AND DIRECT THE AO TO DELETE THE QUESTIONED ADDITION. ITA NO. 4748/MUM/2013 A.Y. 2008-09 THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON F OLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 22 ,50,000/- ON ACCOUNT OF SALE OF PROPERTY AND CONFIRMED THE ADDIT ION OF RS. 2,50,000/- AS 10% OF PROFIT, DESPITE THE FACT THAT THE ASSESSEE HAS FAILED TO FURNISH DETAILS OF EXPENSES TO WORK OUT T HE PROFIT AND WITHOUT THERE BEING A FINDING THAT ANY EXPENDITURE OVER AND ABOVE THAT ALREADY DEDUCTED IN ACCOUNTS HAD BEEN INCURRED . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO APPLY PROFIT RATE OF 15% ON SALE OF CAR PARKING DESPITE THE FACT THAT THE ASSESSEE HAD AGRE ED TO OFFER THE SAME DURING THE COURSE OF SURVEY, BUT HE FAILED TO DO SO AND WITHOUT 5 ITA NO 4156 & 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 THERE BEING A FINDING THAT ANY EXPENDITURE OVER AND ABOVE THAT ALREADY DEDUCTED IN ACCOUNTS HAD BEEN INCURRED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2 LAKHS U/S 68 OF THE I T ACT DESPITE THE FACT DURING THE SURVEY PROCEED INGS THE ASSESSEE WAS CONFRONTED WITH THE ISSUE OF SOURCE OF CASH AMO UNTING TO RS. 2 LAKHS HOWEVER ASSESSEE HAS NOT FILED ANY SUPPORTING DOCUMENTARY EVIDENCES EITHER DURING THE COURSE OF SURVEY NOR DU RING THE ASSESSMENT PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2, 57,833/- ON ACCOUNT OF INTEREST PAYMENT AND DIRECTING TO REDUCED WIP BY RS. 2,57,833/- DESPITE THE FACT THAT THE ASSESSEE HAS NOT SHOWN AN Y WORK IN PROGRESS IN THE ORIGINAL RETURN FILED AND HAD NOT FILED ANY REVISED RETURN OF INCOME. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O BE RESTORED . 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE TAX EFFECT IN THIS CASE IS BELOW RS.10,00,000/-,THEREFORE, AS PER THE CBDT CIRCULAR NO. 21 OF 2015, DATED 10/12/2015, THE PRESENT APPEAL IS NO T MAINTAINABLE. 3. THE LD. DR FAIRLY ADMITTED THAT THE TAX EFFECT IN DEPARTMENTS APPEAL IS BELOW RS.10 LAKHS, WE FIND THAT THE ISSUE RAISED IN APPEAL DOES NOT FALL UNDER ANY OF THE EXCEPTIONS SPECIFIED IN PARA 8 OF THE C IRCULAR. SINCE, IT HAS BEEN SPECIFICALLY CLARIFIED IN THE CIRCULAR AFORESAID TH AT THE INSTRUCTION WILL APPLY RETROSPECTIVELY TO ALL THE PENDING APPEALS; THE PRE SENT APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. WE, THEREFORE, DISMIS S THE SAME IN LIMINE . IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6 ITA NO 4156 & 4748/MUM/2013 ASSESSMENT YEAR: 2008-09 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 27/07/2016 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA