MOHMED SIDDIK GULMOHMED BHATHA, MUMBAI V. ITO WD 20(2)(2), MUMBAI

ITA 4901/MUM/2010

• Counselvise Citation: 490119914 RSA 2010
• Duration Of Justice: 5 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH KAMAT SR
• Assessee Lawyers: S M AGARWAL
• Keywords: Unexplained cash credit; Source of fund
• Section: 80C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.4901/M/2010 ASSESSMENT YEAR: 2006-07 SHRI MOHD. SIDDIK GULMOHMED BHATHA, FLAT NO.4, 1 ST FLOOR, AGHADI NAGAR -9, PUMP HOUSE, RAJMATA JIJIBHAI ROAD, ANDHERI (E), MUMBAI 400 093 PAN: AAKPB 9254B VS. ITO 20( 2)(2 ), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.M. AGARWAL, A.R. REVENUE BY : SHRI YOGESH KAMAT, SR. A.R. DATE OF HEARING : 21.05.2015 DATE OF PRONOUNCEMENT : 29.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREIN AFTER REFERRED TO AS THE CIT(A)] DATED 22.03.2010. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING TH E ADDITION OF RS.586000/- ON ACCOUNT OF INVESTMENT IN PURCHASE OF FLAT AT PAT EL TERRACE B BUILDING FROM M/S S M DEVELOPERS AND NOT CONSIDERING THAT AP PELLANT HAD TAKEN LOANS FROM THE FOLLOWING PERSONS INCLUDING RETURN OF LOAN OF RS.300000/- FROM HIS FATHER GULMOHMED GIVEN IN EARLIER YEAR. (A) SMT SUNEHRA MOHMED SIDDIK 101000 (B) SMT SANJEEDA A.MUJEEB 35000 (C) A. MUJEEB 150000 (D) GULMOHMED 300000 ITA NO.4901/M/2010 SHRI MOHD. SIDDIK GULMOHMED BHATHA 2 ======= TOTAL RS. 586000 ======= 2. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THAT APPELLANT HAS FILED CONFORMATION OF LOANS TAKEN ALONG WITH PERMANENT AC COUNT NUMBER AND ALSO FILED COPIES OF THE ACKNOWLEDGEMENTS WHERE THE RETURNS HA VE BEEN FILED. NAME PAN JURISDICTION WHERE THE RETURNS HAVE BEEN FILED (A) SMT SUNEHRA SMT M. SIDDIK AHCPB5929N WARD 1(4) KALYAN SANJEEDA A.MUJEEB AHCPB5928P WARD 1(4) KALYAN A. MUJEEB AAKPB9255A WARD 20(1)(1) MUMBAI GULMOHMED AAIPB 5753F WARD 20(1)(2) MUMBAI 3. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE OF RS.97940/- INCURRED AS DAY TO DAY EXPENSES FOR E ARNING BROKERAGE INCOME OVERLOOKING THAT ASSESSEE HAD TO INCUR EXPENDITURE WHILE GOING TO TAMBA-KANTA (MARKET AT PYDHUNI) AS WELL AS GOING TO BHIVANDI TO MEET WEAVERS AND EXPENSES WERE INCURRED DAY TO DAY OUT OF BROKERAGE INCOME WE RE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE APPELLANT AND F URTHER ERRED IN CONSIDERING THAT BUSINESS CAN BE CARRIED OUT WITHOUT INCURRING ANY E XPENDITURE. 4 THE LEARNED A.O. AS WELL AS LEARNED CIT(A) HAVE E RRED IN OVERLOOKING THAT THE APPELLANT IS STAYING JOINTLY WITH HIS BROTHERS AND HIS FATHER AND THERE WAS ONE COMMON KITCHEN FOR THE FAMILY AND EXPENSES WERE SHA RED BY ALL OF THEM AND THEREFORE BROKERAGE INCOME WAS PARTLY UTILISED IN M EETING DAY TO DAY BUSINESS EXPENSE AND PARTLY IN HOUSEHOLD EXPENSES AND FURTHE R ERRED IN OVERLOOKING THAT LOAN OF RS.101000 TAKEN FROM HIS WIFE AND RS 35000 FROM BROTHERS WIFE WERE UTILIZED IN INVESTMENT IN PURCHASE OF FLAT INCLUDING STAMP DUTY PAID FOR THE SAME. 5. THE LEARNED A.O. AS WELL AS CIT(A) HAS ERRED IN DISALLOWING CLAIM OF RS.45,000/- ON ACCOUNT OF INVESTMENT IN PURCHASE OF UNITS OF HDFC MUTUAL FUND U/S 80C OF THE I.T. ACT, 1961. 6. APPELLANT CRAVES LEAVE TO ADD AND/OR ALTER THE A BOVE GROUNDS OF APPEAL. GROUNDS NOS.1 &2: 3. FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER (H EREINAFTER REFERRED TO AS THE AO) RECEIVED AIR INFORMATION THAT THE ASSESSEE DURING THE YEAR HAD RECEIVED A SUM OF RS. 3000000/- ON SALE OF IMMOVABL E PROPERTY. THE AO NOTED ITA NO.4901/M/2010 SHRI MOHD. SIDDIK GULMOHMED BHATHA 3 THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAIL IN T HIS RESPECT. ASSESSMENT WAS COMPLETED EX-PARTE BY THE AO MAKING ADDITION OF RS. 30 LAKH AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SU BMITTED THAT THE ASSESSEE HAD NOT SOLD ANY IMMOVABLE PROPERTY DURING THE YEAR UNDER CONSIDERATION, RATHER THE ASSESSEE HAD PURCHASED A RESIDENTIAL FL AT FOR A CONSIDERATION OF RS.2880000/-. HE SUBMITTED THE NECESSARY DETAILS IN THIS RESPECT TO THE LD. CIT(A). THE LD. CIT(A) CALLED REMAND REPORT FROM TH E AO IN THIS RESPECT. DURING THE REMAND PROCEEDINGS THE AO VERIFIED THE S OURCE OF FUNDS FOR PURCHASING THE FLAT. HE NOTED THAT OUT OF TOTAL CON SIDERATION PAID OF RS.28.80 LAKHS, THE ASSESSEE HAD RECEIVED LOANS OF RS.586000 /- FROM THE RELATIVES AS DETAILED IN GROUND NO. 1 AS REPRODUCED ABOVE. APART FROM THAT THE ASSESSEE HAD RECEIVED HOUSING LOAN OF RS. 18 LAKHS FROM SCB. THE BALANCE AMOUNT WAS PAID OUT OF THE BROKERAGE INCOME ACCUMULATED OVER T HE YEARS. THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT OBSERVED THAT THE ASSESSEE HAD FAILED TO FURNISH THE NECESSARY EVIDENCES, CONFIRMATION REGAR DING THE LOAN TAKEN FROM HIS BROTHER OF RS. 1.5 LAKH, FROM HIS FATHER OF RS. 3 LAKH, FROM HIS WIFE OF RS. 1.01 LAKH AND FROM HIS BROTHERS WIFE OF RS. 35 TH OUSANDS AS MENTIONED ABOVE. HE THEREFORE ADDED THE SAID AMOUNT INTO THE INCOME OF THE ASSESSEE AS UNEXPLAINED UNDER SECTION 69B OF THE ACT. BEING AGG RIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE LD. AR OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE PAPER BOOK PAGES 28 TO 45 TO SHOW THAT THE CONFIRMA TIONS FROM THE PAYERS, WHO HAPPEN TO BE HIS VERY CLOSE RELATIVES, WERE DULY FI LED. FURTHER ALL THE ABOVE STATED PERSONS HAVE BEEN ASSESSED TO INCOME TAXES; COPIES OF THE ITR FILED BY THEM FOR EARLIER ASSESSMENT YEARS BEING ON THE RECO RD. THE AMOUNT OF RS. 3 LAKH BY THE FATHER OF THE ASSESSEE WAS PAID/RETURNE D OUT OF ADVANCE RECEIVED ITA NO.4901/M/2010 SHRI MOHD. SIDDIK GULMOHMED BHATHA 4 EARLIER AND THE AMOUNT OF RS. 1.5 LAKHS BY THE BROT HER OF THE ASSESSEE WAS GIVEN AS LOAN, BOTH AMOUNTS RECEIVED THROUGH CHEQUE. THE ASSESSEE HAS ALSO FILED THE BANK ACCOUNT STATEMENT. AFTER GOING THROUGH THE ABO VE STATED EVIDENCES ON THE FILE, WE FIND THAT THE OBSERVATION OF THE CIT(A) TH AT THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCES IN THIS RESPECT WAS NOT COR RECT. THE ASSESSEE HAD FULLY DISCHARGED HIS BURDEN OF PROVING THE SOURCE OF LOAN S/DEPOSITS. MOREOVER THE AO IN THE REMAND REPORT HAS ALSO NOT DOUBTED THE RE CEIPT OF THE ABOVE STATED PAYMENT, WHICH OTHERWISE ARE SMALL AMOUNTS, FROM TH E RELATIVES. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS MADE BY THE AO ON THIS ISSUE ARE NOT SUSTAINABLE AND THE SAME ARE, THEREFORE, SET ASIDE. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO.3&4: 6. THIS ISSUE IS RELATING TO THE CONFIRMATION OF DI SALLOWANCE OF EXPENDITURE OF RS.97940/-. THE LD. AR HAS SUBMITTED THAT THE AS SESSEE IS A TEXTILE BROKER. THE ASSESSEE HAS TO FREQUENTLY VISIT TO VARIOUS CUS TOMERS AT PHYDHUNI AND TO WEAVERS AT BHIVANDI AND HIS RESIDENCE AT ANDHERI. T HE EXPENSES CLAIMED BY THE ASSESSEE WERE MAINLY TRANSPORT EXPENSES FOR VIS ITING THE ABOVE STATED PERSONS THE NAMES OF WHOM ALSO FIND MENTION IN THE BROKERAGE INCOME LIST. THE LD. AR HAS FURTHER INVITED OUR ATTENTION TO THE PAGE 57 OF THE PAPER BOOK TO SHOW THAT SIMILAR TYPE OF EXPENDITURE HAVE ALSO BEEN CLAIMED BY THE ASSESSEE DURING THE EARLIER ASSESSMENT YEARS WHICH HAD BEEN ALLOWED BY THE INCOME TAX AUTHORITIES. 7. WE FIND THAT THE LD. CIT(A) HAS CONFIRMED THE AD DITION IN RELATION TO DISALLOWANCE OF EXPENSES MAINLY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO FURNISH EVIDENCE IN RELATION TO LOAN TAKEN FROM HIS WIFE AS THE SOURCE OF THE SAID EXPENDITURE WAS STATED TO THE SAID LOAN. IN OU R VIEW, ONCE THE LD. CIT(A) HAD MADE ADDITIONS AS UNEXPLAINED CASH CREDITS PERT AINING TO THE LOAN FROM THE WIFE, THE LD. CIT(A) SHOULD NOT HAVE MADE THE DISAL LOWANCE OF EXPENDITURE ITA NO.4901/M/2010 SHRI MOHD. SIDDIK GULMOHMED BHATHA 5 DOUBTING THE SAME SOURCE OF FUNDS AS IT WOULD AMOUN T TO DOUBLE ADDITION IN RELATION TO THE SAME AMOUNT ONLY FOR ITS DIFFERENT APPLICATION. WE, HOWEVER, AS OBSERVED ABOVE, HAVE ALREADY DELETED THE ADDITIONS MADE BY THE CIT(A) IN RELATION TO UNEXPLAINED SOURCE OF INCOME RELATING T O LOANS TAKEN BY THE ASSESSEE FROM HIS WIFE HOLDING THAT THE ASSESSEE HAS PROVED THE GENUINENESS OF THE TRANSACTION OF LOAN FROM WIFE. MOREOVER THE AO HAS NOT MADE ANY ADVERSE COMMENT REGARDING THE GENUINENESS OF THE EXPENDITUR E IN HIS REMAND REPORT EXCEPT THAT THE EXPENDITURE WAS MET OUT OF THE CASH LOAN TAKEN FROM HIS WIFE BY THE ASSESSEE. TAKING INTO CONSIDERATION THE NATURE OF THE BUSINESS ACTIVITY OF TEXTILE BROKER OF THE ASSESSEE AND THE FACT THAT TH E ASSESSEE HAS TO MAKE EXTENSIVE VISITS TO CUSTOMERS AND THE WEAVERS AT DI FFERENT PLACES AND ALSO THAT THE ASSESSEE HAS BEEN ALLOWED SIMILAR TYPE OF EXPEN DITURE IN THE EARLIER ASSESSMENT YEARS, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE. THE ORD ER OF THE CIT(A) ON THIS ISSUE IS THEREFORE SET ASIDE AND THE ADDITION SO MA DE IS ORDERED TO BE DELETED. GROUND NO. 5: 8. THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF RS .45000/- CLAIMED U/S 80C ON ACCOUNT OF INVESTMENTS IN PURCHASE OF UNITS OF HDFC MUTUAL FUNDS. THE LOWER AUTHORITIES HAVE MADE THE ABOVE STATED DI SALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH THE EVIDENC E THAT THE ABOVE STATED UNITS OF MUTUAL FUND WERE ELIGIBLE FOR DEDUCTION U/S 80C. TH E LD. AR BEFORE US, HAS PRODUCED THE RELEVANT BROCHURE/PAMPHLET OF THE SCHE ME TO SHOW THAT THE INVESTMENTS MADE BY THE ASSESSEE IN THE ABOVE STATE D MUTUAL FUNDS WAS ELIGIBLE FOR DEDUCTION. HE HAS FURTHER STATED THAT THE ASSES SEE COULD NOT FURNISH THE SAID DOCUMENT BEFORE THE LOWER AUTHORITIES AS THE SAME W AS NOT AVAILABLE WITH THE ASSESSEE AT THAT TIME. IN OUR VIEW, IF THE ASSESSEE HAD MADE INVESTMENTS IN MUTUAL FUNDS DURING THE YEAR WHICH WERE ELIGIBLE FO R CLAIM OF DEDUCTION U/S 80C, THEN THE ASSESSEE SHOULD NOT BE DENIED THE BEN EFIT MERELY BECAUSE THE RELEVANT BROCHURE WAS NOT PRODUCED BY THE ASSESSEE BEFORE THE LOWER ITA NO.4901/M/2010 SHRI MOHD. SIDDIK GULMOHMED BHATHA 6 AUTHORITIES ESPECIALLY WHEN THE ASSESSEE HAD PRODUC ED THE EVIDENCE OF MAKING THE INVESTMENTS. THE AO HIMSELF, COULD HAVE MADE EN QUIRES TO KNOW WHETHER THESE INVESTMENTS WERE ELIGIBLE FOR DEDUCTION U/S 8 0C. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF AO FOR THE PURPOSE OF VER IFICATION OF THE CLAIM OF THE ASSESSEE ON THIS ISSUE. IF THE AO WILL FIND THAT TH E INVESTMENTS MADE BY THE ASSESSEE WERE ELIGIBLE FOR CLAIM OF DEDUCTION, THEN THE AO TO ALLOW THE CLAIM ACCORDINGLY. 9. IN VIEW OF THE OBSERVATIONS MADE ABOVE, THE APPE AL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 29.07.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.