MEGA MANAGEMENT SERVISES P.LTD, MUMBAI V. DCIT CC-6(4), MUMBAI

ITA 4913/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4763 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 21-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NAVNIT CHOUDHARY
• Keywords: Reopening of assessment; Opportunity of being heard; Source of fund; Tangible material; Accommodation entries; Borrowed satisfaction; TDS
• Section: 133A; 143(1); 147

Judgement Text

1 ITA 4913/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A. NO.4913/MUM/2018 (ASSESSMENT YEAR 2009-10) M/S MEGA MANAGEMENT SERVICES PVT LTD, 302, LEVEL-3, CEEJAY HOUSE SHIV SAGAR ESTATE, F-BLOCK, DR. ANNIE BESANT ROAD, WORLI, MUMBAI-400 018 PAN : AAACM4143K VS THE DCIT-CENTRAL CIRCLE-6(4) MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI NAVNIT CHOUDHARY, AR RESPONDENT BY SHRI BHARAT ANDHLE, DR DATE OF HEARING 06-09-2021 DATE OF PRONOUNCEMENT 29-09-2021 O R D E R PER SAKTIJIT DEY (JM) THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DAT ED 14-05-2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-54, MUMBAI FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMORA NDUM OF APPEAL ARE CONCERNING THE ADDITION OF RS.6,20,000/-, BEING THE COMMISSION INCOME FOR PROVIDING ACCOMMODATION ENTRIES THROUGH UNSECURED L OANS TO TWO PARTIES. OF 2 ITA 4913/MUM/2018 COURSE, SUBSEQUENTLY, THE ASSESSEE, VIDE LETTER DAT ED 01-12-2020 HAS FILED ADDITIONAL GROUND CHALLENGING THE VALIDITY OF REOPE NING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 AND ALSO CL AIMING SET OFF OF LOSS AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDEN T COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF CAR RENTAL. FOR THE ASSE SSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 27-07-2009. SUBSEQUENTLY, THE RETURN OF INCOME SO FILED WAS REVISED BY FILING A REVISED RET URN OF INCOME ON 30-09-2009 DECLARING LOSS OF R.4,26,445/-. THE RETURN OF INCOM E FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQU ENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING TH AT IN COURSE OF A SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT IN CASE OF M/S NINA CONCRETE SYSTEMS PVT LTD IT WAS FOUND THAT THE SAID PARTY AND M/S. M EKAUL CONSTRUCTION TECHNOLOGY PRIVATE LTD. HAVE TAKEN ACCOMMODATION ENTRIES FROM THE ASSESSEE BY WAY OF BOGUS UNSECURED LOANS TO THE EXTENT OF RS1,55,00,00 0/-. BASED ON SUCH INFORMATION, THE ASSESSING OFFICER REOPENED THE ASS ESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF THE ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF L OANS ADVANCED TO THE CONCERNED ENTITIES AND FURTHER, TO EXPLAIN WHY THE LOAN ADVANCED SHOULD NOT BE TREATED AS ACCOMMODATION ENTRIES PROVIDED ON COMMIS SION BASIS. THOUGH, THE ASSESSEE FURNISHED ITS REPLY DENYING THE ALLEGATION ; HOWEVER, ASSESSING OFFICER WAS NOT CONVINCED. ULTIMATELY, HE CONCLUDED THAT UNSECU RED LOAN PROVIDED TO THE ABOVE NAMED ENTITIES ARE NON GENUINE AND ARE IN THE NATURE OF ACCOMMODATION ENTRIES. HAVING DONE SO, THE ASSESSING OFFICER EST IMATED THE COMMISSION INCOME AT 4% ON THE ALLEGED UNSECURED LOAN OF RS.1,55,00,0 00/- AND ADDED AN AMOUNT OF 3 ITA 4913/MUM/2018 RS.6,20,000/-. AGAINST THE ASSESSMENT ORDER SO PASS ED, ASSESSEE PREFERRED AN APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). HOWEV ER, LEARNED COMMISSIONER (APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESS ING OFFICER. 4. AT THIS STAGE, WE MUST DEAL WITH THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. IN GROUND 1 OF ADDITIONAL GROUNDS, THE A SSESSEE HAS CHALLENGED THE VALIDITY OF THE REOPENING OF ASSESSMENT UNDER SECTI ON 147 OF THE ACT. IT IS THE CONTENTION OF LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT NO TANGIBLE MATERIAL WAS AVAILABLE BEFORE THE ASSESSING OFFICER TO COME TO A CONCLUSION THAT THE UNSECURED LOAN PROVIDED BY THE ASSESSEE IS IN T HE NATURE OF ACCOMMODATION ENTRY. HE SUBMITTED, MERELY RELYING UPON THE INFORM ATION RECEIVED FROM THE INVESTIGATION WING THE ASSESSING OFFICER REOPENED T HE ASSESSMENT. THUS, HE SUBMITTED, THE REOPENING OF ASSESSMENT SINCE IS BAS ED ON BORROWED SATISFACTION, IS INVALID. HE SUBMITTED, IN COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER HAS NOT REFERRED TO ANY STATEMENT OF THE DE BTORS, BUT HELD THAT THE LOANS PROVIDED ARE BOGUS. THUS, HE SUBMITTED, THE REOPEN ING OF ASSESSMENT BEING INVALID, THE ASSESSMENT ORDER SHOULD BE QUASHED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS) SUBM ITTED THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT BASED ON CONCRE TE EVIDENCE. THEREFORE, THE REOPENING OF ASSESSMENT IS VALID. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. SINCE, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSE E ARE ON JURISDICTIONAL AND LEGAL ISSUES NOT REQUIRING INVESTIGATION INTO FRESH FACTS , WE ADMIT THEM FOR ADJUDICATION ON MERIT. AS REGARDS THE ISSUE RELATING TO VALIDIT Y OF REOPENING OF ASSESSMENT, ADMITTEDLY, THE RETURN OF INCOME FILED BY THE ASSES SEE WAS NOT SUBJECTED TO 4 ITA 4913/MUM/2018 SCRUTINY AND WAS SIMPLY PROCESSED UNDER SECTION 143 (1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED SPECIFIC INFORMATION FROM THE INVESTIGATION WING INDICATING THAT CERTAIN UNSECURED LOANS ADVANCED BY THE ASSESSEE DURING THE YEAR ARE NON GENUINE. BASED ON SUCH OPINION, THE ASSESSI NG OFFICER REOPENED THE ASSESSMENT. THUS, IT IS VERY MUCH CLEAR SINCE THE R ETURN OF INCOME FILED BY THE ASSESSEE WAS SIMPLY PROCESSED UNDER SECTION 143(1) OF THE ACT, THE ASSESSING OFFICER HAD NO OCCASION TO VERIFY THE GENUINENESS O F THE LOAN TRANSACTION. THEREFORE, WHEN THE ASSESSING OFFICER RECEIVED SPEC IFIC INFORMATION CONCERNING THE GENUINENESS OF THE LOAN TRANSACTION, HE HAD TAN GIBLE MATERIAL AVAILABLE BEFORE HIM TO REOPEN THE ASSESSMENT. WHILE RECORDING THE R EASONS FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO PRIMA FACI E FORM A BELIEF THAT THE MATERIAL ON RECORD INDICATE ESCAPEMENT OF INCOME. AT THE STA GE OF REOPENING, THE ASSESSING OFFICER IS NOT REQUIRED TO RECORD ANY CON CLUSIVE FINDING REGARDING THE ESCAPEMENT OF INCOME, AS, THAT IS A MATTER WHICH CA N BE ASCERTAINED IN COURSE OF ASSESSMENT PROCEEDINGS. THUS, IN THE FACTS OF THE P RESENT CASE, THE ASSESSING OFFICER HAD TANGIBLE MATERIAL TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THAT BEING THE CASE, IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER HAS VALIDLY INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT. ADDITIONAL GROUND 1 IS DISMISSED. 7. ADDITIONAL GROUND 2 WOULD BE DEALT WITH AT A LAT ER STAGE. 8. AS FAR AS THE MERITS OF THE ADDITION IS CONCERNE D, LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED BEFORE US THAT AS ENTI RE LOAN TRANSACTION WAS DONE THROUGH BANKING CHANNEL, THEREFORE, THERE IS NO REA SON TO DOUBT THE GENUINENESS OF SUCH TRANSACTION. FURTHER, HE SUBMITTED, THE AS SESSEE HAD SUFFICIENT FUND AVAILABLE WITH IT TO ADVANCE THE LOAN. THEREFORE, THE GENUINENESS OF THE LOAN 5 ITA 4913/MUM/2018 TRANSACTION CANNOT BE DOUBTED. FURTHER, HE SUBMITT ED, THE ASSESSEE HAS ALSO RECEIVED INTEREST ON THE LOAN ADVANCED ON WHICH TDS WAS DEDUCTED AND THE ASSESSEE HAS ALSO CLAIMED THE TDS. FINALLY, HE SUB MITTED, IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2010-11, LEARNED COMMISSIONER (A PPEALS), WHILE DECIDING SIMILAR NATURE OF DISPUTE INVOLVING ADVANCING OF LO AN TO TWO PARTIES INCLUDING M/S NINA CONCRETE SYSTEMS PVT LTD, HAS HELD THE LOAN TR ANSACTION AS GENUINE AND DELETED THE ESTIMATED ADDITION OF COMMISSION INCOME MADE BY THE ASSESSING OFFICER. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRONGL Y RELYING UPON THE OBSERVATIONS OF ASSESSING OFFICER AND LEARNED COMMI SSIONER (APPEALS) SUBMITTED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUI NENESS OF THE LOAN TRANSACTION. DRAWING OUR ATTENTION TO THE BANK STATEMENT OF THE ASSESSEE, HE SUBMITTED, IMMEDIATELY PRIOR TO ADVANCEMENT OF LOAN, HUGE FUND S HAVE COME TO ASSESSEES ACCOUNT. THUS, HE SUBMITTED, THE LOAN TRANSACTION C ANNOT BE CONSIDERED AS GENUINE. 10. WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, THE ISSUE ARISING FOR CONSIDERATION I S CONCERNING GENUINENESS OF UNSECURED LOAN ADVANCED OF RS.1,55,00,000/- TO TWO PARTIES. ON A PERUSAL OF THE BANK STATEMENT OF THE ASSESSEE, A COPY OF WHICH IS AT PAGE 31 OF THE PAPER BOOK, IT IS OBSERVED THAT PRIOR TO ADVANCEMENT OF LOANS, HUGE AMOUNT OF FUNDS HAVE BEEN TRANSFERRED TO ASSESSEES ACCOUNT. ON AN EXAMI NATION OF THE BANK STATEMENT, A REGULAR PATTERN, WHICH HAS COME TO OUR NOTICE, IS, IMMEDIATELY BEFORE ADVANCEMENT OF LOAN, THE CREDIT BALANCE IN T HE ACCOUNT INCREASES AND IMMEDIATELY AFTER THE LOAN IS ADVANCED, THE BALANCE SUBSTANTIALLY DIMINISHES. THE SOURCE FROM WHICH THE ASSESSEE HAD RECEIVED SUCH FU NDS HAS NOT BEEN PROPERLY 6 ITA 4913/MUM/2018 EXPLAINED EITHER BEFORE THE DEPARTMENTAL AUTHORITIE S OR EVEN BEFORE US. THEREFORE, THIS ASPECT NEEDS TO BE FACTUALLY VERIFI ED AS IT RAISES DOUBT REGARDING THE LOAN TRANSACTION. HOWEVER, MERELY BASED ON SUC H DOUBT AND SUSPICION, NO ADDITION CAN BE MADE AS THE ISSUE REQUIRES FURTHER ENQUIRY AND INVESTIGATION. AT THIS STAGE, IT IS NECESSARY TO OBSERVE, IN ASSESSEE S OWN CASE IN ASSESSMENT YEAR 2010-11, LEARNED COMMISSIONER (APPEALS) HAS ACCEPTE D SIMILAR LOAN TRANSACTION ENTERED BY THE ASSESSEE WITH TWO PARTIES, INCLUDING , A COMMON PARTY AS GENUINE AND THE ADDITION OF COMMISSION INCOME HAS BEEN DELE TED. THUS, THESE ASPECTS WILL ALSO HAVE SOME BEARING ON THE ISSUE. CONSIDERING TH E FACT THAT PROPER ENQUIRY HAS NOT BEEN MADE WITH REGARD TO THE SOURCE OF FUNDS AV AILABLE IN ASSESSEES BANK ACCOUNT, WE ARE INCLINED TO RESTORE THE ISSUE TO TH E ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER PROPER ENQUIRY AND ONLY AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND 2 IS ALLOWED FOR STATISTIC AL PURPOSES. 11. IN VIEW OF OUR DECISION IN GROUND 2, THE ISSUE RAISED IN ADDITIONAL GROUND 2, FOR THE FIRST TIME BEFORE US, IS ALSO RESTORED BACK TO THE ASSESSING OFFICER FOR ADJUDICATION IN ACCORDANCE WITH LAW AFTER DUE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 12. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON 29/09/2021. SD/- SD/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 29/09/2021 PAVANAN 7 ITA 4913/MUM/2018 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI