ITO WD 22(3)(2), NAVI MUMBAI V. KARUNAKAR N. SHETTY, NAVI MUMBAI

ITA 5194/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3725 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: Unexplained investment; Bogus loan
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI SANJAY ARORA (AM) AND SHRI RAM LAL NEGI (J M) ITA NO.5194/MUM/2012 ASSESSMENT YEAR: 2009-10 THE ITO, WD - 22(3) - 2, VASHI RLY. STATION COMPLEX, TOWER NO. 6, 3 RD FLOOR, VASHI , NEW MUMBAI. VS. SHRI. KARUNAKAR N. SHETTY. 2:2, C- 6/7, SECTOR-3, CBD, BELAPUR, NAVI MUMBAI- 400 614 PAN:- AGPPS8774C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. R.P.RASTOGI RESPONDENT BY : NONE DATE OF HEARING: 0 5/05/2016 DATE OF PRONOUNCEMENT: 03/08/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST ORDER DATED 25/06/2012 PASSED BY THE LD CIT(APPEALS)-33, MUMBAI , FOR THE ASSESSMENT YEAR 2009-10, WHEREBY THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 07/12/2011. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME FOR THE A.Y. 2009-10 DECLARING THE TOTAL INCOME OF RS. 7,30,210/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) DETERMINING TOTAL INCOME OF RS. 1,05,30,869/- AFTER MAKING INTER-ALIA ADDITION OF RS. 31,15,000/- ON ACCOUNT OF UNEXPLAINED LOAN A ND RS. 30,24,249/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. IN APPEAL, THE L D. CIT(A) DELETED THE 2 ITA NO. 5194/MUM/2012 ASSESSMENT YEAR: 2009-10 ADDITION OF RS. 15,50,000/- OUT OF THE TOTAL DISALL OWANCE OF RS. 31,15,000/- MADE ON ACCOUNT OF UNEXPLAINED LOAN AND RS. 30,24,2 49/- MADE ON ACCOUNT UNEXPLAINED INVESTMENT. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 15,50, 000/- BEING BOGUS LOAN WITHOUT VERIFYING THE GENUINENESS OF LOAN. 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT SAME PERSONS W HO ADVANCED LOAN IN PREVIOUS YEARS CONTINUED DURING THE RELEV ANT F.Y. IN WHICH ADDITIONS WERE MADE WITHOUT VERIFYING THE DETAILS O F PERSONS FROM WHOM LOANS ARE TAKEN. 3) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 30,24,249/- AS UNEXPLAINED INVESTMENT WITHOUT VERIFYING THE SOURCE OF INVESTME NT AS NO DETAILS OF LOAN TAKEN FROM M/S. DIWAN HOUSING FINANCE PRODU CED DURING ASSESSMENT PROCEEDINGS. 4) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE CASE WAS CALLED FOR HEARING, HOWEVER, NE ITHER THE APPELLANT/ASSESSEE HIMSELF NOR ANY AUTHORIZED REPRESENTATIVE APPEARED ON HIS BEHALF. WE FIND THAT THE NOTICE HAS BEEN SERVED UPON THE ASSESSEE THROUG H REGISTERED POST WELL IN TIME. HENCE, WE ARE SATISFIED THAT THE ASSESSEE HAS NOT APPEARED DESPITE SERVICE OF NOTICE, WHICH GIVES RISE TO THE CONCLUSI ON THAT THE ASSESSEE IS NO 3 ITA NO. 5194/MUM/2012 ASSESSMENT YEAR: 2009-10 MORE INTERESTED IN PURSUING THE APPEAL. ACCORDINGL Y, WE DECIDED TO PROCEED EX-PARTE AGAINST THE APPELLANT AND DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, AFTER HEARING THE DEP ARTMENTAL REPRESENTATIVE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE (DR), RELYI NG HEAVILY ON THE ASSESSMENT ORDER, SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITION OF RS. 15,50,000/-MADE BY THE A.O ON ACCOU NT OF BOGUS LOAN WITHOUT VERIFYING THE GENUINENESS OF LOAN. SIMILARLY, THE L D. CIT(A) HAS WRONGLY DELETED THE ADDITION OF RS. 30,24,249/- MADE BY THE A.O AS UNEXPLAINED INVESTMENT WITHOUT VERIFYING THE SOURCE THEREOF. 5. WE HAVE CAREFULLY GONE THROUGH THE MATERIAL PL ACED ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW. THE A.O HAS TREATED THE AMOUNT OF RS. 31,15,000/- AS UNEXPLAINED LOANS HOLDING THAT T HE ASSESSEE HAS FAILED TO SUBMIT THE DETAILS OF THE LOANS STATED AS RECEIVED FROM FRIEND AND RELATIVES. BUT THE LD. CIT(A) HAS DELETED RS. 15,15,000/- OUT OF THE TOTAL AMOUNT OF RS. 31,15,000/- ON THE GROUND THAT THE ASSESSEE HAS ES TABLISHED ON THE BASIS OF DOCUMENTARY EVIDENCES THAT THE AMOUNT OF RS. 15,15 ,000/- WAS PART OF THE OLD LOANS RECEIVED FROM FRIENDS AND RELATIVES DURI NG THE FINANCIAL YEAR 2007- 08, AND THE SAME WERE BROUGHT FORWARD TO THE ASSESS MENT YEAR UNDER CONSIDERATION. THERE CAN BE NO DISPUTE WITH THE PRO POSITION THAT IF SOME OF THE IMPUGNED CREDITS DO NOT ARISE DURING THE CURRENT YE AR, BUT IN THE IMMEDIATELY PRECEDING YEAR, THE SAME CANNOT BE BROUGHT TO TAX F OR THE CURRENT YEAR. NO DETAILS WERE ADMITTEDLY FURNISHED BEFORE THE A.O., WHILE THE LD. CIT(A) HAS ADMITTED EVIDENCE WITHOUT ALLOWING OPPORTUNITY TO T HE A.O. TO EXAMINE AND/OR REBUT THE SAME. EVEN AS WE AGREE WITH THE LD. CIT(A ) IN PRINCIPLE, THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR ADJUDI CATION AFRESH IN ACCORDANCE WITH LAW AFTER HEARING THE ASSESSEE. WE DECIDE ACCO RDINGLY. 4 ITA NO. 5194/MUM/2012 ASSESSMENT YEAR: 2009-10 6. AS REGARDS THE SECOND GROUND THE A.O. HAS MADE ADDITION OF RS. 30,24,249/- AS UNEXPLAINED SOURCE OF INVESTMENT HOL DING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF PAYMENT MADE FO R NRI FLAT. HOWEVER, THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING THAT TH E ASSESSEE HAS EXPLAINED THE SOURCE OF INVESTMENT IN QUESTION. AS PER THE AGREEM ENT EXECUTED/REGISTERED ON 24.3.2009, THE ASSESSEE PURCHASED THE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 67 LACS. PAYMENTS OF RS. 7,70,250/-, RS. 5,00,000/- AND RS. 7,79,250/-WERE MADE BY THE ASSESSEE VIDE CHEQUE NO 014388 DATED 0 9/03/2009, CHEQUE NO. 014319 DATED 23/03/2009 AND CHEQUE NO. 0143920 DATE D 27/03/2009, ALL DRAWN ON ABHUDHAYA CO-OPERATIVE BANK. THE ASSESSEE HAD ALSO TAKEN LOAN OF RS. 51,19,856/-FROM DIVAN FINANCE CORPORATION AND T HE ASSESSEE HAS BEEN DEPOSITING MONTHLY INSTALLMENT OF RS.61,815/-. SO, ON THE BASIS OF THE DOCUMENTARY EVIDENCE AFORESAID, THE LD.CIT(A) HAS C OME TO THE CONCLUSION THAT THE TOTAL AMOUNT OF RS. 67,00,000/-WAS PARTLY MET OUT OF THE FUNDS OBTAINED FROM DIVAN FINANCE CORPORATION AND BALANCE OF RS. 15,80,144/- WAS PAID FROM THE LOANS TAKEN FROM THE FRIENDS AND RELA TIVES. 7. THE FINDINGS BY THE LD. CIT(A) MAY BE BASED O N APPRECIATION OF EVIDENCE ADDUCED BEFORE HIM, BUT NONE WAS DURING THE ASSESSM ENT PROCEEDINGS. THIS IS PRECISELY THE REVENUES GRIEVANCE PER GROUND 3 OF I TS APPEAL. RULE 46A OF THE INCOME TAX RULES, 1962 IS, AS HELD BY THE HONBLE C OURTS, MANDATORY. WE, ACCORDINGLY, ARE IN AGREEMENT WITH THE REVENUE THAT THE IMPUGNED ORDER STANDS PASSED WITHOUT OBSERVING THE DUE PROCESS OF LAW. REFERENCE IN THIS CONTEXT MAY ALSO BE MADE TO THE DECISION IN TIN BOX COMPANY VS. CIT [2001] 249 ITR 216 (SC). WE, ACCORDINGLY, CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR ADJUDICATIN G AFRESH IN ACCORDANCE WITH LAW AFTER HEARING THE ASSESSEE. WE DECIDE ACCORDING LY. 8. IN THE RESULT APPEAL BY THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. 5 ITA NO. 5194/MUM/2012 ASSESSMENT YEAR: 2009-10 ORDER PRONOUNCED IN THE OPEN COURT 3RDAUGUST, 2016. SD/- SD/- ( SANJAY ARORA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 03/08/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA