ASST CIT 25(3), MUMBAI V. VASANT SHETTY, MUMBAI

ITA 4902/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3827 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KUMARAN
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 147; 68; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SRI JASON P. BOAZ, AM AND SRI SANDEEP GOSAIN , JM ITA NO.4902/MUM/2011 (ASSESSMENT YEAR: 2005-06) THE ASST. COMMISSIONER OF INCOME TAX-25(3), C-11, R. NO.308, PRATYAKSHA KAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 VS. SHRI VASANT SSHETTY, 19-B, TOWER-B, VICTORY PARK, THAKUR VILLAGE, KANDIVALI (E), MUMBAI-400 101 PAN: A ACPS 5929 C APPELLANT .. RESPONDENT APPELLANT BY MR. S. S. KUMARAN, DR RESPONDENT BY MR. HARIOM TULSIYAN, AR DATE OF HEARING 30 - 05 - 2016 DATE OF PRONOUNCEMENT 10-08-2016 O R D E R PER SANDEEP GOSAIN, (JUDICIAL MEMBER) : THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT (A)-35, MUMBAI DATED 15-04 -2011 PASSED IN APPEAL NO.CIT(A)-35/ACIT-25(3)/10-11 FOR ASSESSMENT YEAR 2005-06. 2. GROUNDS NO.(II) AND (III) RAISED BY THE REVENUE IN THIS APPEAL ARE GENERAL IN NATURE REQUIRING NO SPECIFIC ADJUDICATIO N AND THE SOLE EFFECTIVE GROUND NO.(I) OF THE REVENUES APPEAL READS AS UNDE R:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) HAS GROSSLY ERRED IN CONCLUDING THA T THERE WAS NO VALID GROUND FOR REOPENING OF ASSESSMENT WITHOUT CONSIDERING THAT THE ASSESSEE FAILED TO FILE LOAN C ONFIRMATION FOR AN AMOUNT OF RS.1,05,00,000/- CREDITED DURING T HE A. Y. 2005-06. ITA NO.4902/MUM/2011 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECLARING TOTAL INCOME OF THE ASSESSEE AT RS.18,74,087/- WAS FILED ON 31-1 0-2005 BY THE ASSESSEE INDIVIDUAL BEING PROPRIETOR OF M/S. ROYAL COUNTRY BAR ENGAGED IN THE BUSINESS OF RUNNING A COUNTRY LIQUOR BAR. SU BSEQUENTLY THE RETURN WAS PROCESSED AND THEREAFTER THE CASE OF THE ASSESS EE WAS SELECTED FOR SCRUTINY. ASSESSMENT ORDER U/S 143(3) OF THE ACT WA S PASSED BY THE AO ON 16-12-2010 ASSESSING THE TOTAL INCOME OF THE ASS ESSEE AT RS.20,92,670/-. IT WAS FOUND BY THE AO THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2007-08, THE ASSESSEE WAS NOT ABLE TO FILE LOAN CONFIRMATION OF ONE OF THE PA RTIES NAMELY MR. M. R. TANDON FOR AN AMOUNT OF RS.1,05,00,000/-. AS THIS A MOUNT WAS CREDITED DURING THE ASSESSMENT YEAR 2005-06, THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS REOPENED. IN THE BALANCE SHEET FIL ED BY THE ASSESSEE TOTAL UNSECURED LOAN WAS SHOWN AT RS.2,05,77,066.50 . OUT OF THIS AMOUNT, RS.1,05,00,000/- HAS BEEN RECEIVED BY MR. M. R. TAN DON. IN THIS REGARD, THE AO HAS GIVEN OPPORTUNITY TO THE LEARNED AR OF T HE ASSESSEE TO FILE THE DETAILS VIDE ORDER SHEET ENTRY DATED 25-11-2010 AND AFTER RECEIPT OF THE REPLY FROM THE LEARNED AR, THE AO FOUND THE SAME AS NOT ACCEPTABLE AND CONSEQUENTLY HE HELD THAT HE HAS REASON TO BELIEVE THAT A SUM OF RS.1,05,00,000/- WAS CREDITED IN THE ASSESSMENT YEA R 2005-06 AND THE ASSESSEE DID NOT OFFER ANY EXPLANATION REGARDING SO URCE OF THE SAID AMOUNT. THEREFORE, THE AO ADDED BACK RS.1,05,00,000 /- TO THE TOTAL INCOME OF THE ASSESSEE. IN ADDITION, THE ASSESSEE A LSO CLAIMED INTEREST AMOUNTING TO RS.1,40,569/- AS DEDUCTION U/S 24 OF T HE ACT ON THE GROUND ITA NO.4902/MUM/2011 3 THAT THE LOAN REPAYMENT IS BORNE BY THE ASSESSEE AL ONE; BUT THIS CLAIM OF HOUSE PROPERTY LOSS OF RS.1,40,569/- WAS FOUND TO B E INCORRECT BY THE AO ON THE GROUND THAT THE ASSESSEES WIFE WAS CO-OWNER AND CO-BORROWER OF 50% OF THE LOAN AMOUNT AS IS EVIDENT FROM THE BANK CERTIFICATE. IN VIEW OF THE SAME, THE AO HELD THAT THE ASSESSEE WAS LIABLE ONLY FOR HALF OF THE LIABILITIES AND THEREFORE, HE DISALLOWED THE SAME A ND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDE R OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT (A) AND THE LEARNED CIT (A) AFTER HEARING THE PARTIES AND CONSI DERING THE FACTS OF THE CASE HAS ALLOWED THE APPEAL OF THE ASSESSEE VIDE OR DER DATED 15 TH APRIL, 2011. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT (A ), THE REVENUE IS NOW IN APPEAL BEFORE US ON THE ABOVE GROUNDS. 4. FURTHER, THE REVENUE HAS ALSO VIDE LETTER DARTED 10-09-2014 FILED BY THE LEARNED DR STATED THAT ON VERIFICATION OF RECOR D IT WAS SEEN THAT ONE OF THE GROUNDS WAS NOT MENTIONED IN THE APPEAL MEMO AN D HENCE HE REQUESTED TO ADMIT THE SAME AS ADDITIONAL GROUND FO R DUE JUSTIFICATION. THE ADDITIONAL GROUND RAISED BY THE REVENUE AS UNDE R:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) HAS GROSSLY ERRED IN CONCLUDING THA T THERE WAS NO VALID GROUND FOR REOPENING OF ASSESSMENT WITHOUT CONSIDERING THAT THE ASSESSEE FAILED TO FILE LOAN C ONFIRMATION FOR AN AMOUNT OF RS.1,05,00,000/- CREDITED DURING T HE A. Y. 2005-06. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS GROUND AN D WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL GROUND NOW RAIS ED BY THE REVENUE VIDE LETTER DATED 10-09-2014 IS PURELY OF LEGAL NAT URE AND NO NEW FACTS ARE ITA NO.4902/MUM/2011 4 INVOLVED AND THIS ISSUE CAN BE DECIDED ON THE BASIS OF THE MATERIALS ALREADY AVAILABLE ON RECORD AND THEREFORE, KEEPING IN VIEW THE PRINCIPLES LAID DOWN IN THE DECISION RENDERED BY THE HONBLE A PEX COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. REPORTED IN (1998) 229 ITR 383, THE ADDITIONAL GROUND RAISED BY THE REVENUE IS ADMITTED FOR ADJUDICATION. 7. THE LEARNED DR APPEARING ON BEHALF OF THE REVENU E SUBMITTED THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN CONCLUDING THAT THERE WAS NO VALID GROUND FOR REOPENING OF THE ASSESSMENT WITHOU T CONSIDERING THE FACT THAT THE ASSESSEE FAILED TO FILE LOAN CONFIRMATION FOR A SUM OF RS.1,05,00,000/- AND RELIED UPON THE ORDER OF THE A O. 8. ON THE OTHER HAND, THE LEARNED AR RELIED UPON TH E ORDER OF THE LEARNED CIT (A) AND SUBMITTED THAT THE AO ERRED IN REOPENING THE ASSESSMENT WITHOUT ANY VALID GROUND AND FURTHER SUB MITTED THAT THE ASSESSEES REPRESENTATIVES OBJECTIONS TO THE REOPE NING OF THE ASSESSMENT WHICH WAS REFUSED TO BE ACCEPTED BY THE AO AND SUBSEQUENTLY THE SAME WAS SENT BY SPEED POST. IT WA S CONTENDED THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT ON 26-12-2 007, THE AO RECORDED IN THE ASSESSMENT ORDER THAT THE ASSESSEE FURNISHED THE LOAN CONFIRMATION. THE LEARNED AR FURTHER SUBMITTED THAT THE AO WHILE COMPLETING THE ORIGINAL ASSESSMENT EXAMINED THE SOU RCE OF NEW LOANS BASED ON THE EXPLANATION OF THE ASSESSEE AND THE SA ME WAS ALSO ACCEPTED AS NO NEW LOAN WAS TAKEN. IT WAS FURTHER S UBMITTED BY HIM THAT ITA NO.4902/MUM/2011 5 THE ASSESSMENT U/S 143(3) OF THE ACT WAS ALREADY CO MPLETED ON 26-12- 2007 AND IT IS SEEN FROM THE RECORD THAT DURING THE ASSESSMENT PROCEEDINGS THE AO RAISED QUERIES WITH REGARD TO (I ) LOAN CONFIRMATION FROM SHRI M. R. TANDON, (II) CHANNEL (BANKING OR OT HERWISE) THROUGH WHICH THE LOAN WAS RECEIVED, (III) PURPOSE OF THE LOAN TA KEN AND (IV) PRESENT STATUS OF OUTSTANDING AMOUNT WITH REPAYMENT SCHEDUL E. THEREFORE, WHILE CONSIDERING ALL THOSE FACTS THE LEARNED CIT (A) HAS RIGHTLY HELD THAT THERE WAS NO VALID GROUND FOR REOPENING OF THE ASSESSMENT . 9. BEFORE WE COME TO DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO ANALYZE THE ORDER OF THE LEARNED CIT (A) WHILE DEAL ING WITH THE SAID GROUND. THE LEARNED CIT (A) HAS DEALT WITH THE GROU ND OF VALIDITY OF REOPENING VIDE PARA 4.2 OF HIS ORDER. THE SAME ARE REPRODUCED HEREIN BELOW:- 4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A. O. ADMITTEDLY, IN THIS CA SE ASSESSMENT U/S 143(3) WAS ALREADY COMPLETED ON 26.12.2007. IT IS SEEN FROM THE RECORDS THAT THE A. O. HAS SPECIFICALLY RAISED THE QUERY IN THE NOTICE U/S 142(1) DT. 15.2.2007 DURING THE COURSE O F ORIGINAL ASSESSMENT PROCEEDINGS. 8. LOAN CONFIRMATIONS IN RESPECT OF NEW, ADDITIONA L AND SQUARED UP LOAN AND ADDRESS OF BROUGHT FORWARD LOAN S. IN CASE OF PERSONS WHO DO NOT HAVE PAN, PLEASE FURNISH COPY OF BANK PASSBOOK HIGHLIGHTING THE RELEVANT ENTRIES FOR LOANS TAKEN DURING THE YEAR. FROM THE ABOVE, IT COULD BE SEEN THAT THE A.O. SPEC IFICALLY RAISED THE ISSUE OF NATURE AND SOURCE OF ALL NEW LO ANS TAKEN BY THE APPELLANT DURING THIS YEAR. FURTHER AS SEEN FROM TH E ASSESSMENT ORDER, THE A. O. HAS RECORDED AS UNDER:- THE ASSESSEES REPRESENTATIVE HAS FURNISHED DETAIL S OF LONG TERM CAPITAL GAINS, DETAILS OF PURCHASES SALES EXPE NSES, LOAN ITA NO.4902/MUM/2011 6 CONFIRMATIONS AND OTHER DETAILS CALLED FROM TIME TO TIME AND THE SAME ARE PLACED ON RECORD. FROM THE ABOVE, IT COULD BE SEEN THAT THE A. O. WHI LE COMPLETING THE ORIGINAL ASSESSMENT EXAMINED ALL THE NEW LOANS AND OBTAINED LOAN CONFIRMATIONS. HOWEVER, THE SUCCESSOR A. O., WHILE SCRUTINIZING THE RETURN FOR A. Y. 2007-08 RECORDED A FINDING THAT THE APPELLANT COULD NOT PROVE THE IDENTITY, CREDITWORTH INESS AND GENUINENESS OF LOAN OF RS.1,05,00,000/- TAKEN FROM M. R. TANDON DURING THIS ASSESSMENT YEAR AND BASED ON THE ABOVE FINDING, THE ASSESSMENT FOR THIS ASSESSMENT YEAR WAS REOPENED. T HE REASONS RECORDED DO NOT INDICATE HOW THE FINDING RECORDED B Y THE A. O. IN THE ASSESSMENT ORDER U/S 143(3) DT. 26.12.2007 WAS NOT CORRECT. IT IS QUITE NATURAL THAT THE APPELLANT EXPLAINED ALL T HE LOAN TRANSACTIONS DURING THE COURSE OF ORIGINAL PROCEEDINGS AS SEEN F ROM THE QUERY RAISED AND THE FINDING IN THE ASSESSMENT ORDER THAT THE LOAN CONFIRMATIONS WERE FILED. AS SUCH THE SUCCESSOR OFF ICER CANNOT REOPEN THE ASSESSMENT STATING THAT THE APPELLANT CO ULD NOT FILE CONFIRMATION FOR LOAN RECEIVED DURING THIS YEAR WHE N HE SCRUTINIZED THE ASSESSMENT FOR A. Y. 2007-08 WHICH WOULD AMOUNT TO CHANGE OF OPINION. IN THE CIRCUMSTANCES, I ACCEPT THE PLEA OF THE REPRESENTATIVE THAT THERE WAS NO VALID GROUND FOR R EOPENING OF ASSESSMENT. 4.2.1 REGARDING THE CONTENTION OF THE REPRESENTATIV E THAT THE NOTICE U/S 148 DT. 31.3.2010 WAS SERVED ON THE APPELLANT O NLY ON 07.4.2010 WHICH IS AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, I FIND THAT THE A. O. ISS UED AND DISPATCHED THE NOTICE U/S. 148 ON 31.3.2010. THE A. O. SUBMITTED A COPY OF DISPATCH REGISTER FROM WHICH IT IS SEEN THA T THE NOTICE U/S. 148 DT. 31.3.2010 WAS DISPATCHED ON THE SAME DATE. THIS MEANS THAT THE NOTICE U/S 148 WAS ISSUED WITHIN 4 YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREBY THE CONDIT ION OF FAILURE OF THE APPELLANT TO DISCLOSE THE MATERIAL FACTS FULLY AND TRULY AS PER PROVISO TO SECTION 147 NEED NOT BE FULFILLED. THE R EPRESENTATIVE RAISED THIS ISSUE ON THE REASONING THAT THE ASSESSM ENT WAS REOPENED AFTER 4 YEARS AS THE NOTICE U/S. 148 WAS S ERVED ON THE APPELLANT ON 07.4.2010. HOWEVER, WHEN THE NOTICE U/ S. 148 IS HANDED OVER TO THE POST OFFICE ON 31.3.2010, THE PO ST OFFICE BECAME THE AGENT OF THE APPELLANT AND THEREBY THE NOTICE I S DEEMED TO HAVE BEEN SERVED ON THE APPELLANT ON 31.3.2010 ITSELF. A CCORDINGLY, I DOO NOT FIND MERIT IN THE CONTENTION OF THE REPRESENTAT IVE THAT THE NOTICE U/S. 148 WAS ISSUED AFTER 4 YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR WITHOUT TAKING APPROVAL FROM CIT AN D WITHOUT POINTING OUT THE MATERIAL PARTICULARS WHICH THE APP ELLANT FAILED TO DISCLOSE EITHER IN THE RETURN OF INCOME OR DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, I HAVE ALREADY HEL D THAT EVEN THOUGH THE ASSESSMENT WAS REOPENED WITHIN THE PERIO D OF 4 YEARS ITA NO.4902/MUM/2011 7 FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE S AME WAS ON ACCOUNT OF CHANGE OF OPINION AND, THEREFORE, THE RE OPENING OF ASSESSMENT WAS NOT VALID. 4.2.1 WITHOUT PREJUDICE TO THE ABOVE, IT IS FURTHER SEEN FROM THE LEDGER ACCOUNT OF M. R. TANDON IN THE BOOKS OF ACCO UNTS OF THE APPELLANT THAT THE FOLLOWING JOURNAL ENTRY WAS PASS ED ON 31.3.2005:- DATE PARTICULARS VCH TYPE DEBIT CREDIT 31.3.2005 BY M/S. JVD DEVELOPERS PVT. LTD. BEING ADV. RECEIVED FROM M. R. TANDON ON BEHALF OF VASANT A/C JVD DEV. PVT. LTD. JOURNAL 80,00,000/- SIMILARLY, AS SEEN FROM THE LEDGER ACCOUNT OF M/S. J.V.P. DEVELOPERS PVT. LTD. IN THE BOOKS OF ACCOUNTS OF TH E APPELLANT THE FOLLOWING JOURNAL ENTRY WAS PASSED ON 31.3.2005:- DATE PARTICULARS VCH TYPE VEH NO. DEBIT CREDIT 31.3.2005 TO M. R. TANDON ON BEING AMOUNT TRANSFERRED TO VASANT SHETTY. JOURNAL 18 80,00,000 FROM THE ABOVE LEDGER ACCOUNTS WHICH WERE FORMING P ART OF THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE APPELLAN T, IT IS CLEAR THAT JOURNAL ENTRY WAS PASSED ON 31.3.2005 BY THE APPELL ANT BY CREDITING M. R. TANDON AND BY DEBITING M/S. J. V. P. DEVELOPE RS PVT. LTD. THUS IT IS CLEAR THAT IT IS ONLY A JOURNAL ENTRY FO R RS.80,00,000/- ON 31.3.2005 AND WHEN THE SAME WAS EXPLAINED BY THE AP PELLANT BEFORE THE A. O. HE REJECTED THE SAME HOLDING THAT THE APPELLANT FAILED TO FILE THE CONFIRMATION FROM M. R. TANDON A ND IF THE ACCOUNTANT WRONGLY PASSED THE JOURNAL ENTRY, THE BA LANCE SHEET WOULD NOT TALLY TO THE EXTENT OF RS.1,05,00,000/-. THE ABOVE OBSERVATION OF THE A. O. IS INCORRECT IN AS MUCH AS WHEN THE JOURNAL ENTRY WAS PASSED BY CREDITING M. R. TANDON AND DEBI TING M/S. J. V. P. DEVELOPERS PVT. LTD., THE BALANCE SHEET WOULD TA LLY AS BOTH SIDES OF THE BALANCE SHEET ARE INCREASED BY EQUAL AMOUNT WHICH THE A. O. COULD NOT APPRECIATE CORRECTLY. THE A. O. FURTHER I NSISTED ON CONFIRMATION FROM M. R. TANDON FROM THE BEGINNING A S PER HIS ORDER SHEET NOTING ON 25.11.2010 AND ARRIVED AT HIS CONCL USION ONLY BASED ON THE FACT THAT THE APPELLANT DID NOT FILE C ONFIRMATION FROM M. R. TANDON, EVEN THOUGH THE APPELLANT EXPLAINED THAT THE LOAN WAS RECEIVED BY ACCOUNT PAYEE CHEQUES BY M/S.J. V. P. D EVELOPERS PVT. ITA NO.4902/MUM/2011 8 LTD. FROM M/S. MAINA DEALERS PVT. LTD., WHO WAS ASS ESSED TO INCOME TAX IN PAN (AAFCM3129A) AND EVEN FILED A BAN K ACCOUNT COPY OF M/S. J.V.P. DEVELOPERS PVT. LTD. FROM WHICH IT IS SEEN THAT THE ABOVE AMOUNT OF RS.80,00,000/- IS APPEARING ON VARIOUS DATES AS SHOWN BELOW:- DATE PARTICULAR DEBIT CREDIT (RS.) 17.5.2004 OCLG 25,00,000/- 20.7.2004 OCLG 5,00,000/- 20.7.2004 OCLG 5,00,000/- 26.7.2004 OCLG 5,00,000/- 26.7.2004 OCLG 5,00,000/- 29.7.2004 OCLG 5,00,000/- 29.7.2004 OCLG 5,00,000/- 30.7.2004 INWARD RETURN 5,00,000/- 5,00,000/- 31.7.2004 OCLG 5,00,000/- 31.7.2004 OCLG 5,00,000/- 06.8.2004 OCLG 5,00,000/- 10.8.2004 OCLG 5,00,000/- 10.8.2004 OCLG 5,00,000/- 13.8.2004 OCLG 5,00,000/- 5,00,000/- 85,00,000/- NET AMOUNT 80,00,000/- FROM THE ABOVE, IT COULD BEEN SEEN THAT THE LOAN AM OUNTS WERE DIRECTLY RECEIVED BY M/S. J. V. P. DEVELOPERS PVT. LTD. IN THE MONTHS OF MAY, JULY AND AUGUST, 2004 WHEREAS THE JO URNAL ENTRY WAS PASSED ON 31.3.2005 BY THE APPELLANT IN HIS BOO KS OF ACCOUNT. FURTHER THE APPELLANTS REPRESENTATIVE FILED CONFIR MATION FROM M/S. MAINA DEALERS PVT. LTD. IN SUPPORT OF THE CONTENTIO N RAISED BEFORE THE A. O. THE ABOVE CONFIRMATION LETTER READS AS UN DER:- SUB: CONFIRMATION OF LOAN WE HEREBY CONFIRM THAT WE HAVE SUBSCRIBED TOWARDS T HE SHARE CAPITAL OF JVD DEVELOPERS PVT. LTD., MUMBAI A SUM OF RS.80,00,000/- PAID VIDE VARIOUS CHEQUES DETAILED A S BELOW:- DATE CHEQUE NO. AMOUNT (RS.) 07.8.2004 092747 5,00,000/- 19.7.2004 092732 5,00,000/- 19.7.2004 092730 5,00,000/- 23.7.2004 092736 5,00,000/- 23.7.2004 092734 5,00,000/- 27.7.2004 092737 5,00,000/- 28.7.2004 092742 5,00,000/- 30.7.2004 092743 5,00,000/- 05.8.2004 092740 5,00,000/- 06.8.2004 092746 5,00,000/- ITA NO.4902/MUM/2011 9 07.8.2004 092744 5,00,000/- 16.5.2004 214413 25,00,000 TOTAL 80,00,000/- THAT THE COMPANY IS ASSESSED TO TAX AT PAN NO.AAMFM6674Q. THE ABOVE AMOUNT WAS INVESTED FOR PU RCHASE OF SHARES AND HAVS BEEN DULY REFLECTED IN ACCOUNTS. IN THE ABOVE CIRCUMSTANCES, THERE IS NO CASE FOR AD DITION OF RS.80,00,000/- AS THE APPELLANT DID NOT RECEIVE ANY LOAN EITHER FROM M. R. TANDON OR FROM M/S. MAINA DEALERS PVT. LTD. B UT PASSED ONLY JOURNAL ENTRY ON 31.3.2005. 4.2.2 REGARDING THE BALANCE RS.25,00,000/-, IT IS S EEN FROM THE LEDGER ACCOUNT OF M. R. TANDON IN THE BOOKS OF ACCO UNT OF THE APPELLANT THAT ON 20.4.2004 CHEQUE NO.241013 WAS RE CEIVED FOR RS.25,00,000/- AND FURTHER AS SEEN FROM THE BANK AC COUNT OF T HE APPELLANT WHICH IS FORMING PART OF THE REGULAR BOOK S OF ACCOUNT THAT A SUM OF RS.25,00,000/- WAS CLEARED ON 29.4.2004 BY CHEQUE NO.241013. FROM THE ABOVE, IT IS CLEAR THAT THE AMO UNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUE BUT AS THE A. O. I NSISTED ON CONFIRMATION FROM M. R. TANDON, THE APPELLANT EXPLA INED BEFORE THE A. O. THAT THE LOAN WAS RECEIVED FROM M/S. MAINA DE ALERS PVT. LTD. THE APPELLANT FILED A LETTER FROM M/S. MAINA DEALER S PVT. LTD. WHICH READS AS UNDER:- SUB: CONFIRMATION OF LOAN GIVEN TO MR. VASANT SHE TTY WE HEREBY CONFIRM TO HAVE GIVEN A LOAN TO MR. VASA NT SHETTY HAVING PAN NO.AACPS5929C. THE AMOUNT OF RS.25,00,00 0/- WAS PAID VIDE ACCOUNT PAYEE CHEQUE BEARING NO.241013 DA TED 20.4.2004. THE AMOUNT WAS GIVEN FOR PURCHASE OF SHA RES OF JVD DEVELOPERS PVT. LTD., MUMBAI. HOWEVER, AS INFORMED THE AMOUNT WAS WRONGLY TAKEN BY VASANT SHETTY AS LOAN ACCOUNT OF ONE M. R. TANDON. M. R. TANDON WAS THE EMPLOYEE OF THE COMPAN Y WHO HAS LEFT THE COMPANY LONG BACK. MAINA DEALERS PVT. LTD. SD/- DIRECTOR FROM THE ABOVE, IT IS CLEAR THAT M/S. MAINA DEALERS PVT. LTD. INTENDED TO PAY RS.25,00,000/- TO M/S. J. V. P. DEV ELOPERS PVT. LTD. TOWARDS SHARE APPLICATION MONEY BUT THE S AME WAS ACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT BY THE ACCOUNTANT. IN ANY CASE M/S. MAINA DEALERS PVT. LTD . IS ASSESSED TO INCOME TAX AND FURTHER GIVEN RS.80,00,0 00/- TO M/S. J. V. P. DEVELOPERS PVT. LTD. AND THE SAME WAS PAID BY ACCOUNT PAYEE CHEQUES. IN THE CIRCUMSTANCES, THERE IS NO ITA NO.4902/MUM/2011 10 CASE FOR ADDITION U/S. 68 ON THE GROUND THAT THE NA TURE AND SOURCE OF CREDIT OF RS.25,00,000/- IS NOT PROVED. T HE A. O. IS DIRECTED TO DELETE THE ADDITION. 4.3 IN VIEW OF THE ABOVE DISCUSSION, THE A. O. IS D IRECTED TO DELETE THE ENTIRE ADDITION OF RS.1,05,00,000/-. 10. WE HAVE HEARD BOTH THE PARTIES AND HAVE CONSIDE RED THE MATERIALS PLACED ON RECORD. ON CAREFUL PERUSAL OF THE ORDER O F THE LEARNED CIT (A), WE FIND THAT WHILE DEALING WITH THE ISSUE IN QUESTI ON THE LEARNED CIT (A) HAS CONSIDERED THE SUBMISSIONS OF THE PARTIES AND A FTER DISCUSSIONS HE HAS RIGHTLY COME TO THE CONCLUSION THAT ONCE THE AS SESSEE HAD EXPLAINED THE DETAILS OF ALL LOAN TRANSACTIONS DURING THE COU RSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND HAD FILED LOAN CONFIRMAT IONS, THEREFORE, THE SUCCESSOR ASSESSING OFFICER CANNOT REOPEN THE ASSES SMENT MERELY STATING THAT THE ASSESSEE COULD NOT FILE THE CONFIR MATIONS OF LOANS RECEIVED DURING THIS YEAR WHEN HE SCRUTINIZED THE ASSESSMENT FOR ASSESSMENT YEAR 2007-08 WHICH WOULD OBVIOUSLY AMOUNT TO CHANGE OF O PINION. THE LEARNED CIT (A) HAS ALSO CONSIDERED THE FACT THAT LOANS GIV EN TO MR. SHETTY WAS CONFIRMED BY M/S. MAINA DEALERS PVT. LTD. AND FOUND THAT FROM THE CONFIRMATION IT IS CLEAR THAT M/S. MAINA DEALERS PV T. LTD. INTENDED TO PAY RS.25,00,000/- TO M/S. J. V. P. DEVELOPERS PVT. LTD . TOWARDS SHARE APPLICATION MONEY BUT THE SAME WAS ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BY HIS ACCOUNTANT AND IT WAS FURTHER N OTED BY THE LEARNED CIT (A) THAT IN ANY CASE M/S. MAINA DEALERS PVT. LT D. WAS ASSESSED TO INCOME TAX AND FURTHER PAID RS.80,00,000/- BY ACCOU NT PAYEE CHEQUES. THEREFORE, AFTER CONSIDERING THE SAID FACTS THE LEA RNED CIT (A) HAS RIGHTLY COME TO THE CONCLUSION THAT THERE WAS NO REASON FOR ADDITION OF THE ITA NO.4902/MUM/2011 11 AMOUNT U/S 68 OF THE ACT. IN VIEW OF THE ABOVE FACT S AND CIRCUMSTANCES BROUGHT ON RECORD, WE FIND NO REASON TO DEVIATE FRO M AND/OR TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT (A) AND WE UPH OLD THE SAME. RESULTANTLY, THE ADDITIONAL GROUND OF THE REVENUE S TANDS DISMISSED. 11. THROUGH THE MAIN EFFECTIVE GROUND BEING GROUND NO. (I) THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT (A) IN CONCLUDING THE REOPENING OF THE ASSESSMENT AS INVALID AND THEREBY DELETING THE ADDITION OF RS.1,05,00,000/- MADE BY THE AO ON ACCOUNT OF UN EXPLAINED CREDIT. SINCE, THIS ISSUE HAS ALREADY BEEN DISCUSSED AND DE CIDED BY US HEREINABOVE WHILE DEALING WITH THE ADDITIONAL GROUN D NO.(I) RAISED BY THE REVENUE BY UPHOLDING THE FINDINGS OF THE LEARNED CI T (A), THEREFORE, THE FINDINGS RECORDED BY US HEREINABOVE IN THIS REGARD WOULD APPLY WITH EQUAL FORCE IN RESPECT OF THE MAIN GROUND NO.(I) OF THE R EVENUE. RESULTANTLY, REVENUES MAIN GROUND NO.(I) WOULD ALSO STAND DISMI SSED. 12. THE MAIN GROUND NO.(II) OF THE REVENUES APPEAL RELATES TO DELETION OF ADDITION OF RS.70,284/- MADE BY THE AO ON ACCOUN T OF HOUSE PROPERTY LOSS. 13. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS PLACED ON RECORD AS WELL AS THE ORDERS OF THE REVEN UE AUTHORITIES. THE LEARNED CIT (A) HAS DEALT WITH THIS ISSUE IN PARA 5 .2 OF HIS ORDER. THE SAME IS REPRODUCED HEREIN BELOW:- 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A.O. A PERUSAL OF THE ASSESS MENT ORDER SHOWS THAT THE A. O. DID NOT REQUIRE THE APPELLANT OR HIS ITA NO.4902/MUM/2011 12 REPRESENTATIVE TO SUBMIT ANY EXPLANATION ON THIS IS SUE. IT IS APPARENT THAT THE A. O. ON HIS OWN MADE ASSUMPTION THAT THE LOAN WAS COMMON AND DIVIDED THE INTEREST AMOUNT BETWEEN THE APPELLANT AND HIS SPOUSE AND DISALLOWED 50% OF THE INTEREST. BUT IT IS SEEN THAT THE APPELLANT HAS TAKEN SEPARATE LOANS WITH HIS SPOUSE AS CO-BORROWER AND SIMILARLY THE APPELLANTS SPOUSE HAS TAKEN A SEPARATE LOAN WITH THE APPELLANT AS CO-BORROWER. TH E APPELLANT HAS FILED A CERTIFICATE DT. 20.9.2005 FROM CENTRAL BANK OF INDIA, DADAR BRANCH CERTIFYING THAT THE LOAN TAKEN BY THE APPELL ANT BY HL-52/16 WHEREAS THE LOAN TAKEN BY THE APPELLANTS WIFE WAS HL-52/17 AND THEY HAVE PAID RS.140569/- TOWARDS INTEREST BY EACH OF THEM. IN THE CIRCUMSTANCES, I ACCEPT THE PLEA OF THE REPRESENTAT IVE THAT THE A. O. MADE THIS ADDITION ON THIS ASSUMPTION WITHOUT EXAMI NING THE CORRECT FACTS. FURTHER AS SEEN FROM THE BANK ACCOUNT OF THE APPELLANT, THE INTEREST PAID AND LOAN REPAYMENT TOWARDS HOUSING LO AN IS APPEARING AND, THEREFORE, THE ADDITION MADE BY THE A. O. IS N OT CORRECT. FURTHER THE APPELLANTS WIFE SMT. JYOTI V. SHETTY (PAN NO.A AMPS8299P) HAS SEPARATELY CLAIMED INTEREST OF RS.1,40,569/- IN HER COMPUTATION OF TOTAL INCOME. IN THE CIRCUMSTANCES, THE A. O. IS DIRECTED TO DELETE THE ADDITION OF RS.70,284/-. 14. FROM THE CONJOINT READING OF THE ABOVE MENTIONE D FINDINGS AS WELL AS THE ORDERS OF THE AO IN THIS RESPECT, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT (A) WHILE DEALING WITH THIS ISSUE H AS TAKEN INTO CONSIDERATION THE FACT THAT THE AO DID NOT REQUIRE THE ASSESSEE OR HIS REPRESENTATIVE TO SUBMIT ANY EXPLANATION ON THIS IS SUE. IN VIEW OF THIS, THE LEARNED CIT (A) HAS RIGHTLY DECIDED THAT THE AO ON HIS OWN MADE ASSUMPTION THAT THE LOAN WAS COMMON AND DIVIDED THE INTEREST BETWEEN THE ASSESSEE AND HIS WIFE, BUT AFTER ANALYZING THE RECORD, THE LEARNED CIT (A) HAS RIGHTLY CONCLUDED THAT THE ASSESSEE HAS TAK EN SEPARATE LOAN WITH HIS SPOUSE AS CO-BORROWER AND HIS WIFE HAS TAKEN LO AN SEPARATELY WHICH IS EVIDENT FROM THE COPY OF THE CERTIFICATE DATED 20-0 9-2005 FILED BY THE ASSESSEE FROM CENTRAL BANK OF INDIA, DADAR BRANCH C ERTIFYING THE LOAN ACCOUNT OF THE ASSESSEE BEING HL-52/16 AND HIS WIFE BEING HL-52/17 AND THAT THEY HAVE PAID THE INTEREST. THEREFORE, THE LE ARNED CIT (A) AFTER ITA NO.4902/MUM/2011 13 CONSIDERING THOSE DOCUMENTS HAS ACCEPTED THE PLEA O F THE ASSESSEE THAT THE AO MADE THE ADDITION ON THE BASIS OF ASSUMPTION WITHOUT EXAMINING THE CORRECT FACTS. THE LEARNED CIT (A) HAS RIGHTLY CONCLUDED THAT THE ASSESSEES WIFE SMT. JYOTI V. SHETTY HAVING NO. PAN NO.AAMPS8299P HAS SEPARATELY CLAIMED INTEREST OF RS.1,40,569/- IN HER COMPUTATION OF INCOME. THEREFORE, CONSIDERING THESE FACTS THE LEAR NED CIT (A) HAS RIGHTLY DIRECTED THE AO TO DELETE THE ADDITION OF RS.70,284 /-. NO NEW MATERIAL WAS BROUGHT ON RECORD BY THE LEARNED DR TO REBUT TH E ABOVE FINDING OF THE LEARNED CIT (A). IN VIEW OF THE ABOVE, WE FIND NO R EASON TO DEVIATE FROM AND/OR TO INTERFERE WITH THE FINDINGS OF THE LEANED CIT (A) ON THIS ISSUE. ACCORDINGLY, WE CONFIRM THE SAME AND DISMISS THE GR OUND OF APPEAL OF THE REVENUE. 15. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/8/2016. SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 10/8/2016 LAKSHMIKANTA DEKA/SR.PS LAKSHMIKANTA DEKA/SR.PS LAKSHMIKANTA DEKA/SR.PS LAKSHMIKANTA DEKA/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//