ITO-22(2)(1), MUMBAI V. MAHESH LUTHRIA FAMILY PRIVATE LIMITED, MUMBAI

ITA 517/MUM/2023

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the CIT (A) which deleted the addition of Rs. 10 Crores to the income of Mahesh Luthria Family Private Trust for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer (AO) under section 68 read with section 115BBE of the Income Tax Act, alleging that the source of the capital introduced into the trust was not explained. The trust, formed by Mr. Mahesh Luthria, had declared 'Nil' income in its return. The AO rejected the explanation provided by the trust regarding the source of the capital, which was claimed to be from Mr. Mahesh Luthria's own income. The CIT (A), however, found merit in the trust's arguments and evidence, leading to the deletion of the addition, a decision which the Tribunal upheld.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302360 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 20-02-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Earning of tax free income; Liquidation
• Section: 68; 143(3); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.517/Mum/2023 (Assessment Year :2017-18) ITO-22(2)(1) Mumbai Vs. Mahesh Luthria Family Private Trust 208, Ceejay House Shivsagar Estate Dr. Annie Besant Road Mumbai – 400 018 PAN/GIR No.AAETM8651P (Appellant) .. (Respondent) Assessee by Shri Rakesh Joshi Revenue by Smt. Riddhi Mishra Date of Hearing 07/06/2023 Date of Pronouncement 28/06/2023 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 23/12/2022 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for A.Y.2017-18. 2. In the grounds of appeal, revenue has challenged deletion of addition of Rs.10 Crores made u/s.68 r.w.s. 115BBE of the Act. ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 2 3. The brief facts are that assessee is a private trust which has filed the return of income on 31/07/2017, declaring ‘Nil’ income. The ld. AO noted that during the year, capital was introduced into the trust for a sum of Rs. 10 Crores and accordingly, the ld. AO required the assessee to explain the source of credit. In response, the assessee submitted that during the year trust named as Mahesh Luthria Family Pvt. Ltd was founded by Mr. Mahesh Luthria who has contributed Rs.10 Crores from his own income which was offered to tax in his return of income. In support of which, assessee has filed the copy of income tax return of Mr. Mahesh Luthria, his balance sheet and bank statement. The ld. AO has rejected the explanation of the assessee and confirmed the said addition. 4. AO has noted that the opening bank balance of the trustee as on 01-03-2017 was Rupees 338/-only. On 07-03-2017, one RTGS receipt of Rs. 5,00,000/- comes from ICICI Bank and another RTGS of Rs. 25,00,000/- is credited on 09-03- 2017. The total credit amount is transferred to Birla Sun Life. Again the balance remains at Rs. 338/- On 27/03/2017, one RTGS of Rs. 45,00,000/-from HDFC bank is credited to the account and another RTGS of Rs. 10,41,36,633/- from ICICI bank is credited to the account and the very same day the amount of Rs. 10,00,00,000/- is transferred to the Trust as Capital introduction and balance of Rs. 86,36,000/- is transferred to Birla Sunlife. Leaving the closing bank balance to Rs. 5,226/-. Thus, it can be seen that the opening and closing balance are negligible. Money is credited by way of ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 3 RTGS and being invested in the Trust as Capital. No source and credit worthiness is established. According to him, credit of such huge amount through RTGS and transfer of the same as Capital on the same day triggers suspicion. 5. In his Show Cause issued to the assessee on 07-12-2019, whereby the assessee was required to explain and Show cause as to why the amount of Rs. 10,00,01,000/- should not be added to the income of the assessee in absence of document establishing the genuineness of transaction and creditworthiness of the contributor; the assessee has furnished the submission wherein it has been stated that during the year, Mahesh Luthria Family Private Trust has been formed and Mr. Mahesh Luthria having PANABHPL9376L has contributed Rs. 10 Cr. From his own declared income. However, he still proceeded to make the addition. Accordingly, addition u/s.68 r.w.s. 115BBE was made. 6. The ld. CIT (A) has deleted the said addition in the following manner:- 5.5. After duly considering the details mentioned in the order u/s 143(3) dated 15.12.2019 of ITO ward 22(2) (5), Mumbai, the written submission uploaded by the appellant, various case laws relied on by the appellant, the details mentioned in the confirmation of account for the period 01.04.2016 to 31.03.2017, signed by Mahesh Luthria, ITR -V-of ITR 3 dated 26.10.2017 for the A.Y 2017-18 of Mahesh Udharam Luthria- ABHPL9376L, Balance sheet & Profit and loss account as on 31.03.2017 of Mahesh Luthria, Bank statement of settler- Barclays Wealth Savings Account No. 3531864 of Mahesh Luthria, Bank statement of appellant -Barclays Wealth ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 4 current Account No. 041233591944 of MAHESH LUTHRIA FAMILY PRIVATE TRUST, it is hereby held that there is no merit in the addition made of Rs.10 crores in the order u/s 143(3) dated 15.12.2019 by the ITO Ward 22(2)(5) Mumbai and the same is hereby DELETED. 7. After hearing both the parties and on perusal of the material place on record, we find that, it is an undisputed fact that Shri Mahesh Luthria has formed Mahesh Luthria Family Pvt. Ltd trust and has made contribution of Rs.10 Crores in the said trust. Before the ld. AO assessee had furnished the details of the trustee, i.e. Mahesh Luthria, his balance sheet, bank account statement and income tax returns. The ld. CIT (A) has noted the following documents which were filed before him:- 5.2.1 On 22 12.2022, the appellant has also uploaded copy of paper book (19 pages), which contain the following (i) Name, address and PAN of the Settler-Mahesh Luthria (ii) ITR -V -of ITR 3 dated 26.10.2017 for the A.Y 2017-18 of Mahesh Udharam Luthria-ABHPL9376L with a Total income of Rs 4,27,020/- & Exempt income of Rs. 4.90/71,131/- Balance sheet as on 31.03 2017 of Mahesh Luthria as per which the total asset/liability is Rs 50 15,00 902741& Profit and loss account as on 31.03 2017 of Mahesh Luthria as per which total credit is Rs 47,40 22.757/-] These Balance sheet & Profit and loss account have been signed by the CA. Shri Bharat Joshi, Membership No 130863 of Shah & Taparia, C As, Mumbai.) (iii)Copy of Bank statement of settler-Barclays Wealth Savings Account No.3531864 of Mahesh Luthria [ as per which, on 29.03.2017, Rs 10 crores has been transferred to Account No:041233591944.] (iv)Copy of Bank statement of appellant -Barclays Wealth current Account No. 041233591944 of MAHESH LUTHRIA ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 5 FAMILY PRIVATE TRUST [ as per which, on 29.03.2017, Rs 10 crores has been credited from account No. 3531864.] (v) Copy of ledger confirmation of account for the period 01.04.2016 to 31.03.2017, signed by Mahesh Luthria, Din- 00247140[ as per which on 29.03.2017 Rs.10 crores received by MAHESH LUTHRIA FAMILY PRIVATE TRUST ] (vi) copy of Mutual fund statement as per which on 27.03.2017 Rs. 10,41,36,633/- has been received by RTGS-by Mahesh Luthria. 5.3. The written submission and the documentary evidence have duly been considered. The ITR filed by filed Mahesh Luthria, the confirmation given by Mahesh Luthria, the bank statement of Mahesh Luthria and the bank statement of MAHESH LUTHRIA FAMILY PRIVATE TRUST do prove the identity, genuineness and creditworthiness of the transaction. In fact, the AO/ITO has also mentioned in the assessment order these facts. But despite mentioning these facts, he has added Rs.10 crores as unexplained cash credit u/s 68 of the Act. As may be seen from the confirmation given by Mahesh Luthria, the bank statement of Mahesh Luthria and the bank statement of MAHESH LUTHRIA FAMI FAMILY PRIVATE TRUST, the capital contribution of Rs.10 Crores -the identity genuineness and creditworthiness of the transaction-have clearly been explained by the appellant assessee before the ITO as well as during this appeal proceedings. 5.4. As per e filing portal, the appellant has electronically uploaded ITR from A.Y.2017-18 to A.Y.2020-21. 8. Apart from that it has been clearly brought on record that Shri Mahesh Luthria had given the source of credits in his bank account which had come from mutual funds of Rs.10,41,36,633/-. Once the settler has himself given the ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 6 money and explained the source of the deposit and without examining the settler, the ld. AO could not have made the addition. He has not even properly examined the documents submitted before him that immediate source of deposit was liquidation of Mutual fund statement which as per Mutual fund statement on 27.03.2017, was Rs. 10,41,36,633/-. In view of the aforesaid facts recorded by the ld. CIT (A) which has not been controverted, we do not find any reason to deviate from such finding and accordingly, the order of the ld. CIT (A) is confirmed and consequently, the appeal filed by the Revenue is dismissed. 9. In the result, appeal of the Revenue is dismissed. Order pronounced on 28 th June, 2023. Sd/- (GAGAN GOYAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 28/06/2023 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No.517/Mum/2023 Mahesh Luthria Family Pvt. Ltd 7 BY ORDER, (Asstt. Registrar) ITAT, Mumbai