DCIT 14(3)(2), MUMBAI V. SIDMARK SALES P.LTD, MUMBAI

ITA 4885/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0604 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOMNATH S UKKALIDR
• Assessee Lawyers: AVINASH CHAVAN
• Keywords: Unexplained investment; Additional evidence
• Section: 131; 68

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./4885/MUM/2015, /ASSESSMENT YEAR: 2011-12 DCIT-14(3)(2) 455, AAYAKAR BHAVAN 4 TH FLOOR, M.K. MARG MUMBAI-400 020. VS. SIDMARK SALES PVT.LTD. ATUR HOUSE, 87, DR.ANNIE BESANT RD. WORLI, MUMBAI-18. PAN:AAACS 8831 N ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI SOMNATH S. UKKALI-DR ASSESSEE BY: SHRI AVINASH CHAVAN / DATE OF HEARING: 01.06.2017 / DATE OF PRONOUNCEMENT: 01.06.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 15/06/2015,OF THE CIT(A )-22 MUMBAI THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL. ASSESSEE- COMPANY , ENGAGED IN THE BUSINESS OF INTENDING AGENTS., FILED ITS RETURN OF INCOME ON 23.11.2011 D ECLARING TOTAL INCOME OF RS.93,89,255/- . THE AO COMPLETED THE ASSESSMENT U/S.143(3)OF THE AC T,ON 21/3/2014,DETERMINING ITS INCOME OF THE ASSESSEE AT RS.2.09 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE A DDITION MADE BY THE AO U/S. 68 OF THE ACT ON ACCOUNT OF UNSECURED LOAN OF RS.40.00 LAKHS BORROWED FROM M/S. LUMINOUS VENTURE PVT.LTD.(LVPL).DURING THE ASSESSMENT PROCEEDINGS,TH E AO FOUND THAT THE ASSESSEE HAD OBTAINED UNSECURED LOANS OF RS.40.00 LAKHS FROM LVP L. AS THE DETAILS ABOUT THE LOANS WERE NOT AVAILABLE IN THE AUDIT REPORT.SO,HE DIRECTED TH E ASSESSEE TO SUBMIT THE DETAILS OF UNSECURED LOANS ALONGWITH THE CONFIRMATION IN RESPECT OF LOAN /SHARE CAPITAL, SHARES APPLICATION MONEY RECEIVED DURING THE YEAR.HE ASKED IT TO SUBMIT DOCU MENTARY EVIDENCE TO PROVE IDENTITY, CREDIT WORTHINESS AND CAPACITY OF THE INVESTOR. AS PER THE AO THE ASSESSEE PROVIDED ONLY THE NAME AND ADDRESSES ALONG WITH THE PAN OF THE CREDITOR.BU T IT DID NOT FILE ANY DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY OF THE CREDITOR. HE ISSUED SUMMONS U/S. 131 TO LVPL WHICH RETURNED BACK WITH THE REMARK LEFT BY THE POSTAL AUTHORITIES. HE DIRECTED THE ASSESSEE TO PRODUCE THE CREDITOR BEFORE HIM FOR VERIFICATION TO PROVE THE GENUINENESS OF THE TRANSACTION. THE AO WAS INFORMED THAT LVPL HAD CHANGED ITS ADDRE SS .THE ASSESSEE PROVIDED COPY OF 4885/M/15(11-12) SIDMARK SALES PVT.LTD. 2 RETURN AND THE BANK STATEMENT OF THE CREDITOR.AFTER VERIFYING THE ITR-5 THE AO OBSERVED THAT THE LOAN CREDITOR HAD DECLARED TOTAL INCOME AT NIL AND HAD PAID NOMINAL TAX OF RS.7,552/- ONLY, THAT CREDITWORTHINESS OF LOAN CREDITOR TO ADV ANCE LOAN OF RS.40.00 LAKHS WAS NOT ESTABLISHED, THAT VERIFICATION OF BANK STATEMENT RE VEALED THAT CREDITOR WAS HAVING VERY LOW BALANCES PRIOR TO ADVANCING OF LOAN, THAT IT DID NO T HAVE ANY MAJOR SOURCE OF INCOME, IN THESE CIRCUMSTANCES HE AGAIN DIRECTED THE ASSESSEE TO PRO DUCE THE LENDER AND TO FURNISH LEDGER CONFIRMATION, CAPITAL ACCOUNT, BALANCE SHEET AND P& L ACCOUNT FOR LAST THREE YEARS. REFERRING TO THE PROVISIONS OF SECTION 68 OF THE ACT, HE HELD THAT IT WAS THE DUTY OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION. HE REFERRED TO CERTAIN CASE LAWS AND HELD THAT THE ASSESSEE HAD FAILED TO DISCHARGE ITS BURDEN OF ESTABLISHING THE CREDIT WORTHINESS OF THE LOAN CREDITOR, THAT THE AMOUNT OF RS.40.00 LAKHS FOUND TO BE CREDI TED IN THE BOOKS OF ACCOUNTS WAS UNEXPLAINED INVESTMENT.FINALLY, HE ADDED THE SAID A MOUNT TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMIS SIONS BEFORE HIM.IT SUBMITTED CERTAIN DOCUMENTS.AFTER CONSIDERING THE ASSESSMENT ORDER AN D SUBMISSION OF THE ASSESSEE HE HELD THAT THE ASSESSEE HAD FILED LOAN CONFIRMATION OF T HE CREDITORS, LEDGER ACCOUNT OF LOAN CREDITOR, COPY OF IT RETURN, BANK STATEMENT OF LOAN PARTY WIT H HDFC BANK, BALANCE SHEET OF LVPL, DURING THE APPELLATE PROCEEDINGS.HE HELD THAT THE A SSESSEE HAD ESTABLISHED GENUINENESS OF TRANSACTION,IDENTITY OF CREDITOR AND ITS CREDITWORT HINESS.HE FURTHER OBSERVED THAT THE ASSESSEE HAD DISCHARGED ITS DUTY BY PROVING THE TEST LAID DO WN IN SECTION 68 OF THE ACT.FINALLY, HE DELETED THE ADDITION MADE BY AO. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) ARGUED THAT THE ASSESSEE HAD NOT FILED ANY DOCUMENTARY EVIDENCE TO PROVE GENUINENESS OF THE TR ANSACTION.THE LENDER DID NOT APPEAR BEFORE THE AO/FAA, THAT STATEMENT OF RESPONSIBLE PE RSON OF LVPL WERE NEVER RECORDED, THAT THE DOCUMENTARY SUBMITTED BEFORE THE FAA WERE NOT M ADE AVAILABLE TO THE AO. THE AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE BEFORE US. WE FIND THAT AO HAD ISSUED SUMMONS TO CREDITOR ON TWO OCCAS IONS,THAT IT DID NOT APPEAR BEFORE THE AO, THAT CONFIRMATION AND LEDGER ACCOUNTS WERE NEVE R MADE AVAILABLE TO THE AO, CERTAIN NEW DOCUMENTS WERE FURNISHED DURING APPELLATE PROCEEDIN GS, THAT THE FAA DID NOT CALL FOR REMAND REPORT IN THAT REGARD,THAT HE ALLOWED THE APPEAL FI LED BY ASSESSEE AFTER CONSIDERING THOSE DOCUMENTS.FROM THE ORDER IT IS CLEAR THAT THESE DOC UMENTS WERE NOT ADMITTED BY HIM UNDER RULE 46A(4) OF THE IT RULE,1962. WE ARE UNABLE TO C OMPREHEND AS TO WHAT PREVENTED HIM 4885/M/15(11-12) SIDMARK SALES PVT.LTD. 3 FROM FORWARDING THE ADDITIONAL EVIDENCES TO THE AO FOR COMMENTS OR TO ADMIT THE EVIDENCES AS PER RULES.THE AO HAD NO OCCASION TO VERIFY THE C ORRECTNESS OF THE GENUINENESS OF THE TRANSACTION APPEARING IN THE SAID DOCUMENTS. THEREF ORE, IN THE INTEREST OF JUSTICE, WE ARE REFERRING BACK THE ISSUE TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE WOULD DECIDE THE ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF HEA RING TO AO TO EXAMINE THE DETAILS FILED BY THE ASSESSEE.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF AO IN PART. AS A RESULT, APPEAL FILED BY AO STANDS PARTLY ALLOW ED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST , JUNE, 2017. , 2017 ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :01.06 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.