Sita Malpani, Hyderabad V. Income Tax Officer, Ward-8(2), Hyderabad

ITA 498/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4624 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-07-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 497/HYD/18 2013-14 SRI RAJESH KUMAR MALPANI, PROP: M/S. RAJESH SILK HOUSE, HYDERABAD [PAN: AFJPM8763L] INCOME TAX OFFICER, WARD-8(2), HYDERABAD 498/HYD/18 2013-14 SMT. SITA MALPANI, PROP: M/S. R.M. SILKS, HYDERABAD [PAN: AKSPM4697H] FOR ASSESSEE : SHRI K. C. DEVDAS, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 23-07-2018 DATE OF PRONOUNCEMENT : 03-08-2018 O R D E R THESE TWO APPEALS ARE FILED BY ASSESSEES AGAINST TH E COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-2, (I/C), HYDERABAD, DATED 13-12-2017. THE ISSUE IN THE SE APPEALS IS WITH REFERENCE TO LOANS RECEIVED BY ASSES SEES TO AN EXTENT OF RS. 26,45,000/- BY SHRI RAJESH KUMAR MALPA NI AND RS. 9,40,000/- BY SMT. SITA MALPANI. 2. BRIEFLY STATED FACTS ARE THAT BOTH THE ASSESSEES ARE I N THE BUSINESS OF TRADING IN TEXTILES AND HAVE RECEIVED UNSE CURED LOANS FROM NINE PERSONS IN THE CASE OF SHRI RAJESH KUMAR MALPANI AND FROM FOUR PERSONS IN THE CASE OF SMT. SITA MALPANI. ON ENQUIRY BY ASSESSING OFFICER (AO) ABOUT THE I.T.A. NOS. 497 & 498/HYD/2018 :- 2 - : CREDITS OF THE ABOVE AMOUNT, ASSESSEES SUBMITTED THAT THEY ARE FAMILY MEMBERS, INCOME TAX ASSESSEES THEMSELVES AND H AVE THEIR OWN SOURCES OF INCOME, ADVANCED TO ASSESSEES BY WAY OF CHEQUES. IN SUPPORT, ASSESSEES HAVE FILED CONFIRMATIO N LETTERS, COPIES OF THE BANK ACCOUNTS AND THEIR ACKNOWLEDGMENTS HAVING FILED RETURNS ALONG WITH RESPECTIVE STATEMENTS OF INCOME AND BALANCE SHEETS, INDICTING THE LOANS TO ASSESSEES. AO NOTICED THAT IN THE SAME CASES, THERE ARE CASH DEPOSITS BEFORE ISSUANCE OF CHEQUES TO ASSESSEES. AO ISSUED SUMMONS TO THE PARTIES. ASSESSEES EXPLAINED THAT THREE OF THE PERSONS WERE IN ABROAD AND THREE OF THEM ARE LADIES WHO GENERALLY WO NT COME OUT OF THEIR HOME AND AUTHORISED PERSONS MAY BE PERMITTE D TO REPRESENT THEM. ONE MR. ROOPESH KUMAR MALPANI AND NAN D KISHORE MALPANI IN THEIR HUF STATUS HAVE APPEARED BEF ORE THE AO. EVEN THOUGH STATEMENT OF MR. ROOPESH KUMAR MALPANI HAS NOT BEEN RELIED UPON, AO RELIED ON THE (UNSIGNED ) STATEMENT OF MR. NAND KISHORE MALPANI TO COME TO A CONCLUSION THAT ASSESSEES FAILED TO DISCHARGE THE ONUS CAST ON THEM AND ADDED THE ABOVE AMOUNTS AS INCOME OF THE ABOV E ASSESSEES. 3. BEFORE THE LD.CIT(A), ASSESSEES HAVE FILED SAME DOCUMENTS, WHICH WERE FILED BEFORE THE AO TO CONTEND TH AT ALL CREDITS ARE GENUINE, RECEIVED FROM FAMILY MEMBERS, R ECEIVED BY WAY OF CHEQUES AND ALSO SUBMITTED THAT THEY ARE REPAID I N THE LATER YEAR. LD.CIT(A), HOWEVER, CONSIDERED THEM AS A DDITIONAL EVIDENCE AND SINCE THERE IS NO PRAYER UNDER RULE 46A , THEY WERE NOT ADMITTED. LD.CIT(A) ALSO NOTED THAT AR HAS SUBM ITTED I.T.A. NOS. 497 & 498/HYD/2018 :- 3 - : THAT AO ISSUED SUMMONS TO THE UNSECURED CREDITORS AN D THREE CREDITORS WERE OUT OF INDIA AND THREE OF THEM APPEARED BEFORE THE AO. AS AO ASKED KEY QUESTIONS AND WAS COMING TO A CONCLUSION WITHOUT THE CONSENT OF UNSECURED CREDITORS, TH EY DID NOT EVEN SIGN THE STATEMENT. THE OTHER UNSECURED CR EDITORS ARE HESITATING TO COME TO THE INCOME TAX OFFICE FOR CROS S- EXAMINATION. IT WAS FURTHER SUBMITTED THAT IF THERE WERE CA SH DEPOSITS IN THE BANK ACCOUNT OF UNSECURED CREDITORS BEF ORE GIVING THE CHEQUES TO ASSESSEES, THEN IT SHOULD BE AS SESSED AS INCOME IN THE HANDS OF UNSECURED CREDITORS AND NOT THA T OF ASSESSEES. IT WAS FURTHER CONTENDED THAT ASSESSEES ARE NOT BOUND TO PROVE THE SOURCE OF THE SOURCE AND AO EXCEED ED THE JURISDICTION BY MAKING IN THE SAID AMOUNTS AS UNEXPLA INED CASH CREDITS. 4. LD.CIT(A), HOWEVER, CONFIRMED THE ACTION OF AO AN D RELIED ON VARIOUS CASE LAW TO STATE THAT AO MADE ENQUIRIES AND HAS ANALYSED THE EXPLANATION OR EVIDENCES FURNISHED AND ACCORDINGLY, CONFIRMED THE ACTION OF AO. 5. IT WAS CONTENDED THAT ASSESSEE RECEIVED THE AMOUNTS B Y WAY OF CHEQUES AND ALL OF THEM ARE FAMILY MEMBERS, W HO HAVE THEIR OWN BUSINESSES/SOURCE OF FUNDS AND THREE OF THEM ARE EMPLOYEES IN THE SOFTWARE SECTOR EARNING SUBSTANTIAL I NCOMES AND THEREFORE, THE SAME CANNOT BE DOUBTED. IT WAS FURTHE R SUBMITTED THAT AO WITH A PRE-JUDGED MIND HAS STARTED QUESTIONING ASSESSEES. THEREFORE, MR. NAND KISHORE MALPANI, DID NOT SIGN THE STATEMENT AND OTHERS HAVE NOT APPEARED. IT I.T.A. NOS. 497 & 498/HYD/2018 :- 4 - : WAS SUBMITTED THAT THE EVIDENCE ON RECORD CERTAINLY PROVE S THAT THOSE PEOPLE HAVE THEIR OWN SOURCES OF FUNDS. IT WA S FURTHER SUBMITTED THAT IN THE CASE OF SMT. SITA MALPANI, A N AMOUNT OF RS. 1,40,000/- RECEIVED FROM GULAB MALPANI IS IN FACT A TRADE CREDIT, WRONGLY RECEIVED AND REFERRED TO TH E EXPLANATION GIVEN BEFORE THE AO (PAPER BOOK PAGE 42). 6. LD.DR, HOWEVER, REITERATED THE CONTENTIONS OF AO A ND SUBMITTED THAT MR. NAND KISHORE MALPANI HAS APPEARED AN D REFUSED TO SIGN THE STATEMENT, THEREFORE, THE CREDITWORTH INESS OF THE PARTIES WAS NOT ESTABLISHED. 6.1. THE DR WAS SPECIFICALLY ASKED WHETHER ANY PENAL TY U/S. 272A OF THE ACT HAS BEEN LEVIED FOR NOT SIGNING THE STATEMENT FOR WHICH LD.DR SUBMITTED THAT NO PENALTY WAS LEVIED. COPY OF THE STATEMENT WAS PLACED ON RECORD WHICH INDICATES THAT A O HAS NOT EVEN ADMINISTERED THE OATH AND HAS NOT TAKEN AN Y SIGNATURE OF ASSESSEE AFTER ADMINISTERING THE OATH AN D THERE WERE NO WITNESSES. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. IT IS TRUE THAT ASSESSEES H AVE FURNISHED THE CONFIRMATION LETTERS, BANK STATEMENTS, ACKNOWLEDGMENT OF HAVING FILED RETURNS ALONG WITH ENC LOSURES BEFORE THE AO. THERE IS NO DISPUTE THAT ALL CREDITORS AR E INCOME TAX ASSESSEES AND THEY HAVE THEIR OWN SOURCES OF INCO ME. THEY ARE ALSO REGULARLY FILING THEIR RETURNS OFFERING INCOMES. THREE OF THE CREDITORS ARE EMPLOYEES AS WELL. IT IS A LSO I.T.A. NOS. 497 & 498/HYD/2018 :- 5 - : EXPLAINED THAT BECAUSE THEY ARE ALL FAMILY MEMBERS, ON E PERSON MR. ROOPESH KUMAR MALPANI WHO HAS DONE ARTICL ES AND HAS KNOWLEDGE OF ACCOUNTING TRANSACTIONS AND THEREFORE MOST OF THE TRANSACTIONS ARE LOOKED AFTER BY HIM ON BEHALF OF THE FAMILY MEMBERS. AS SEEN FROM THE SUBMISSIONS BEFORE THE AO DT. 21-03-2016, AN AMOUNT OF RS. 1,40,000/- RECEIVED FROM SMT. GULAB MALPANI, WHO IS PROPRIETOR OF M/S. RAJESH SILK HOUSE EXQUISITE, AMEER PET, WAS WRONGLY RECEIVED BY M/S. R.M. SILKS I.E., PROPRIETARY CONCERN OF ASSESSEE, S ITA MALPANI, WHEREAS SAME SHOULD HAVE BEEN RECEIVED BY M/S. RAJE SH SILKS HOUSE EXQUISITE FROM M/S. BHUVANAGERI SELECTIONS AND THESE ARE TRANSFER ENTRIES ONLY. EVEN THIS FACTUAL ASPECT HAS NOT BEEN CONSIDERED BY THE AO AND TOOK THIS TRADE CREDIT OF RS. 1,40,000/- ALSO AS CASH CREDIT IN THE CASE OF SMT. SITA MALPANI. 7.1. COMING TO THE SO CALLED STATEMENT OF SHRI NAND KI SHORE MALPANI, COPY OF THE UNSIGNED STATEMENT PLACED ON RECO RD BY THE DR, IT INDICATES THAT EVEN THOUGH OATH ADMINISTERED A ND OATH TAKEN WERE TYPED IN THE BEGINNING OF A STATEMENT, THERE WAS NO SIGNATURE OF DEPONENT WHICH WAS GENERALLY TAK EN AT THE TIME OF ADMINISTERING THE OATH AND ALSO THE SIGNATURE OF OFFICER WHO ADMINISTERED THE OATH. GENERALLY, AFTER ASKING FEW GENERAL QUESTIONS, THE SIGNATURES ARE TAKEN ON EVERY PAGE OF THE STATEMENT. TILL THE END OF FIRST PAGE, THERE ARE NO TRICK Y QUESTIONS. AT THE END OF THE FIRST PAGE, THE DEPONENT WOU LD NOT HAVE ANY OBJECTION TO SIGN THE STATEMENT. SINCE THERE WER E NO SIGNATURES OF EITHER DEPONENT OR THE OFFICER, AT ANY STA GE OR OF WITNESSES ON THE COPY OF THE STATEMENT FILED, THE VERACI TY OF THE I.T.A. NOS. 497 & 498/HYD/2018 :- 6 - : STATEMENT ITSELF IS DOUBTFUL. WHEN THE PARTY (DEPONENT) R EFUSES TO SIGN THE STATEMENT, THE OFFICER WHO RECORDS THE STATEME NT HAS TO CERTIFY THAT THE PARTY HAS REFUSED TO SIGN THE STATE MENT, PUT HIS SIGNATURE AT THE END OF THE STATEMENT. PENALTY PROCEEDINGS SHOULD HAVE BEEN INITIATED FOR REFUSAL O F THE SIGNING THE STATEMENT. NOTHING HAS BEEN DONE BY AO. THEREFORE, THE STATEMENT ON WHICH BOTH AO AND CIT(A) RE LIED UPON CANNOT BE ACCEPTED AS GENUINE ONE. 7.2. SINCE THE MONEYS WERE RECEIVED FROM THE FAMILY MEMBERS, WHO ARE ALSO ASSESSEES OF THEIR OWN AND HAV E BUSINESSES/SOURCES OF INCOME, I AM OF THE OPINION THA T ASSESSEES HAVE DISCHARGED THEIR ONUS BY PROVIDING TH E NECESSARY CONFIRMATIONS. IN CASE THERE ARE ANY CASH DEPOSITS BEFORE ISSUANCE OF CHEQUES TO ASSESSEES, THE SAME HAS TO BE ASSESSED IN THEIR HANDS AS THEY ARE HAVING THEIR OWN TRADE/BUSINESS ACTIVITIES. BUT THE DEPOSIT OF CASH ALON E DOES NOT PROVE ANYTHING AGAINST ASSESSEES. SINCE ASSESSEES DISCHARGED THEIR ONUS OF FURNISHING CONFIRMATION LETTE RS AND AS THOSE PEOPLE ARE FAMILY MEMBERS AND HAVE CREDITWORTHI NESS, I DIRECT THE AO TO ACCEPT THE CREDITS AS GENUINE. THE GROU NDS ARE ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 3 RD AUGUST, 2018 TNMM I.T.A. NOS. 497 & 498/HYD/2018 :- 7 - : COPY TO : 1. SHRI RAJESH KUMAR MALPANI, PROP: M/S. RAJESH SIL K HOUSE, C/O. SHYAM BAHETI & ASSOCIATES, CHARTERED ACCOUNTANTS, 11-4-649/2/2, SREE VILAS APARTMENTS, F LAT NO.2, GROUND FLOOR, LAKDI KA PUL, A.C. GUARDS, HYDERABAD. 2. SMT SITA MALPANI, PROP: M/S. R.M. SILKS, C/O. SH YAM BAHETI & ASSOCIATES, CHARTERED ACCOUNTANTS, 11-4-649/2/2, SREE VILAS APARTMENTS, FLAT NO.2, GRO UND FLOOR, LAKDI KA PUL, A.C. GUARDS, HYDERABAD. 3. THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD. 4. CIT (APPEALS)-2, HYDERABAD. 5. PR.CIT-2, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.