HUZAIFA ABDUL HAMID MERCHANT, MUMBAI V. ITO-13(3)-2, MUMBAI

ITA 4929/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8185 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 01-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-06-2011
• Court: TRIBUNAL
• Department Lawyers: SAME OU G; ASSESSING OFFICER ULS OF ACT
• Keywords: Unexplained cash credit; Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; ,OA ,OA ,OA ,OA JH MH D:.KKDJ JKO] YS[KK LNL; JH MH D:.KKDJ JKO] YS[KK LNL; JH MH D:.KKDJ JKO] YS[KK LNL; JH MH D:.KKDJ JKO] YS[KK LNL; DS LE{K DS LE{K DS LE{K DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.4929/MUM/2011 ASSESSMENT YEAR: - 2007-08 HUZAIFA ABDUL HAMID MERCHANT 4 TH FLOOR, R. NO 41, ISMAIL DOSA BUILDING, 177 SHAIDA MARG, DONGRI, MUMBAI. VS.` INCOME TAX OFFICER 13(3)-2, AAYAKAR BHAVAN, MAHARISHI KARVE ROAD, CHURCHGATE MUMBAI 400009. PAN: AFUPM2858P APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 18.3.2011 OF CIT(A) FOR THE A.Y. 2007-08. THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS IN THIS APPEAL:- I. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI, (HEREINAFTER, FO R THE SAKE OF BREVITY, REFERRED TO AS 'CIT(A)') ERRED IN CONFIRMING THE AD DITION OF RS. 310000/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961, (HERE INAFTER, FOR THE SAKE OF BREVITY, REFERRED TO AS 'THE ACT'), AND THE SAME OU GHT TO BE DELETED. 2. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT DELETING THE ADDITION OF RS. 310000 MADE BY THE ASSESSING OFFICER ULS 68 OF THE ACT AND THE SAME OU GHT TO BE DELETED. ASSESSEE BY RAKESH K. MILWANI REVENUE BY SHRI JITENDRA KUMAR DATE OF HEARING 16-10-2014 DATE OF PRONOUNCEMENT 16.10.2014 HUZAIFA ABDUL HAMID MERCHANT 2 | P A G E 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE CASH SUMMARY AND CASH BOOK AS WELL AS TO EXPLAI N THE SOURCE OF CASH DEPOSITED WITH SUBSTANTIAL EVIDENCE. THE ASSESSEE EXPLAINED THAT I N THE NATURE OF ASSESSEES TRADING IN ALL KINDS OF SEA FOODS. THE ASSESSEE WITHDRAW CASH FROM THE BANK FOR AUCTION PURPOSES AND SOMETIME IF AUCTION DOES NOT TAKE PLACE THE CAS H HAS TO BE DEPOSITED BACK INTO ACCOUNT. 3. THE ASSESSING OFFICER CONSIDERED THE EXPLANATION OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS EXPLAINED ONLY THE CASH WITHDRAWN FROM BANK AND CASH RE-DEPOSITED. HOWEVER, THE INTRODUCTION OF CASH IN HIS PERSONAL N AME WAS NOT EXPLAINED. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE AND SOURCES OF CASH GENERATED AND INCORPORATED IN CASH BOOK BY ENTRIES ADVANCES & DEPOSITS AN AM OUNT OF RS. 3,10,000/- WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE U/S 68. 4. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE FILED CERTAIN DETAILS REGARDING THE PERSONS WHO HAD MADE THE ABOVE DEPOSITS. ACCORDING LY THE CIT(A) ISSUED A REMAND ORDER VIDE LETTER DATED 15.12.2010 AND AFTER RECEIV ING THE REMAND REPORT FROM THE ASSESSING OFFICER, CONFIRMED THE ADDITION MADE BY T HE ASSESSING OFFICER. 5. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT ALL THE THIRTY PARTIES FROM WHOM THE ASSESSEE HAS TAKEN SMALL LOANS AND SUBSEQUENTLY PAID ON VARIOUS DATED WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER RECORDED THEIR STATEMENTS WHEREIN THEY HAVE CONFIRM ED THE LOAN TRANSACTION TO THE ASSESSEE. THUS THE LD. AUTHORIZED REPRESENTATIVE HA S SUBMITTED THAT THE ASSESSEE HAS PROVED THE GENUINENESS OF THE TRANSACTION BY PRODUC ING THE PARTIES BEFORE THE ASSESSING OFFICER WHO HAVE CONFIRMED THE SAME. SINC E THE LOAN AMOUNT WAS VERY SMALL, THEREFORE, IT WAS IN CASH. ALTERNATIVELY, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT AT THE MOST ONLY PEAK CREDIT IN THE ACCOUNT CAN BE CONSIDERED FOR ADDITION AND NOT THE ENTIRE DEPOSIT. HUZAIFA ABDUL HAMID MERCHANT 3 | P A G E 6. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSING OFFICER HAS RECORDED T HE STATEMENT AND OBSERVED THAT THESE PARTIES HAVE NO BUSINESS RELATION WITH THE AS SESSEE AND THEY DO NOT HAVE THE FINANCIAL STATUS TO ADVANCE LOAN TO THE ASSESSEE. F URTHER ALL THESE PARTIES ARE TOO SMALL EARNING HAND TO MOUTH AND HAVING MINIMUM TWO TO FOU R DEPENDENTS, THEREFORE, THE CREDITWORTHINESS OF THE PARTIES FROM WHOM THE ALLEG ED LOAN WAS TAKEN BY THE ASSESSEE WAS NOT PROVED. HE HAS FURTHER POINTED OUT THAT SO ME OF THE PARTIES EVEN DO NOT HAVE THE BANK ACCOUNT AND, THEREFORE, IT IS AN AFTERTHOU GHT EXERCISE OF THE ASSESSEE TO CLAIM THE LOAN FROM THESE PARTIES. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER EXAMINED THE PAR TIES AND FOUND THAT THEIR FINANCIAL STATUS DO NOT WARRANT ANY LOAN TRANSACTION WITH THE ASSESSEE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ACCEPT THE ALTERN ATIVE CONTENTION OF THE ASSESSEE THAT ONLY THE PEAK CREDIT ENTRIES IN THE ACCOUNTS CAN BE ADDED AS AN UNEXPLAINED CREDIT. THE ASSESSEE HAS PRODUCED THE STATEMENT OF ACCOUNT AND CALCULATION OF BOOK DEPOSITS BEFORE US SHOWING THE PEAK CREDIT AT RS. 1,80,000/-. ACCOR DINGLY, WE CONFIRM THE ADDITION TO THE EXTENT OF PEAK CREDIT OF RS. 1,80,000/- OUT OF THE TOTAL ADDITION OF RS. 3,10,000/-. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 16 -1 0-2014 SD/- SD/- (D. KARUNAKARA RAO) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 16-10 -2014 SKS SR. P.S, HUZAIFA ABDUL HAMID MERCHANT 4 | P A G E COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI