ITO WD 22(3)-4, NAVI MUMBAI V. VIMAL D DIWATE, NAVI MUMBAI

ITA 5198/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75778 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Keywords: Unexplained investment; Assessment record
• Section: 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F B ENCH, MUMBAI . , !'# , , $% &'() , $* +, $ # BEFORE SHRI D.MANMOHAN, VP AND SHRI N.K. BILLAIY A, AM ./ I.T.A. NO.5198/MUM/2012 ( - - - - / ASSESSMENT YEAR :2009-10 THE ITO, WARD 22(3)-4, VASHI RAILWAY STATION COMPLEX, TOWER NO. 6, 3 RD FLOOR, VASHI, NAVI MUMBAI / VS. SHRI VIMAL D. DIWATE, FLAT NO. 3/3, PLOT NO. 15, SHANTIVAN CHS LTD. SECTOR 16,VASHI, NAVI MUMBAI-400 705 ,. $* ./ /0 ./ PAN/GIR NO. : AEOPO 3516J ( .1 / APPELLANT ) .. ( 23.1 / RESPONDENT ) .1 4 $ / APPELLANT BY: SHRI R.K. SAHU 23.1 5 4 $ / RESPONDENT BY: SHRI PRAYAG JHA 5 6* / DATE OF HEARING :20.02.2014 7- 5 6* / DATE OF PRONOUNCEMENT:26.02.2014 +$8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-33, MUMBAI DT.9.5.2012 PERTAINING TO A.Y. 2 009-10. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN TREATING THE LOAN RECEIVED BY THE ASSESSEE AS GENU INE DISREGARDING THE FACT THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT J UST PRIOR TO ISSUING CHEQUE TO THE ASSESSEE. ITA NO. 5198/MUM/2012 2 3. FACTS OF THE CASE ARE THAT DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS PURCHASED A PROPERTY JOINTLY WITH FOUR OTHER PE RSONS AMOUNTING TO RS. 33,00,000/-. THE ASSESSEES SHARE IN PROPERTY WAS 50% AND ACCORDINGLY SHE PAID RS. 16,50,000/- APART FROM THE STAMP DUTY AND REGISTRATION CHARGES. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOU RCE OF INVESTMENTS. IT WAS EXPLAINED THAT THE ASSESSEE HAS BORROWED UNSECU RED LOAN FROM 7 PERSONS NAMELY AS UNDER: S. NO. NAME OF LENDER DATE OF BORROWING AMOUNT 1. P.A. BESRANI 1.4.2009 3,00,000/- 2. KRISHNA CLOTH STORE 1.4.2009 3,00,000/- 3. GIRISH ROHIDA 1.4.2009 50,000/- 4. RANI BAJAJI 1.4.2009 2,50,000/- 5. RANI BAJAJI 1.4.2009 2,50,000/- 6. RANI BAJAJI 1.4.2009 2,50,000/- 7. MURLI A. BAJAJI 1.4.2009 2,50,000/- TOTAL 16,50,000/- 4. THE ASSESSEE WAS ASKED TO PROVE THE IDENTITY, GE NUINENESS, CREDIT WORTHINESS OF THE LOAN CREDITORS . THE ASSESSEE FIL ED COPIES OF THE INCOME TAX RETURN AND ALSO THE BANK STATEMENT IN RESPECT O F THE AFORESTATED PARTIES. ON PERUSING THE BANK STATEMENTS, THE AO NOTICED THA T THESE PARTIES HAVE DEPOSITED CASH ONE DAY BEFORE OR ON THE SAME DAY OF ISSUING CHEQUE TO THE ASSESSEE. THE AO WAS OF THE OPINION THAT THE ASSES SEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THESE PARTIES. THE ASSESSE E WAS ASKED TO SHOW CAUSE WHY THIS AMOUNT SHOULD NOT BE TREATED AS UNEX PLAINED INVESTMENT ITA NO. 5198/MUM/2012 3 AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON RECEIVING NO REPLY, THE AO WENT ON TO TREAT RS. 16,50,000/- AS UNEXPLAINED INVESTMENT. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). A PERUSAL OF FORM NO. 35 SHOWS THAT THE ASSESSEE HAS CHALLENG ED THE ADDITION TREATING THE SAME AS MADE U/S. 68 OF THE ACT. BEF ORE THE LD. CIT(A), THE ASSESSEE RELYING UPON THE DOCUMENTS SUBMITTED BEFOR E THE LD. CIT(A) CONTENDED THAT THE ASSESSEE HAS DISCHARGED THE BURD EN OF PROOF CAST UPON HER QUA SECTION 68 OF THE ACT. AFTER CONSIDERING T HE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) OBSERVED THAT THE LOAN CREDITORS ARE HAVING INCOME FOR WHICH REGULAR RETURNS HAVE BEEN FILED. THE AO HAS DOUBTED YET NOT MADE ANY ENQUIRY TO SUBSTANTIATE IT WITH AN Y FINDING IN THE CASE. THE LD. CIT(A) WENT ON TO PROCEED WITH THE CASE IN THE LIGHT OF THE PROVISIONS OF SEC. 68. THE LD. CIT(A) FINALLY CONC LUDED THAT THOUGH AO THOUGHT THAT LOANS ARE NOT GENUINE, HE DID NOT PROVE IT AND THUS FAILED TO DISCHARGE ONUS ON HIS PART AND D UE TO THAT IN THE GIVEN CIRCUMSTANCES ON LEGAL ISSUE THE CASE OF THE APPELLANT IS SUPPORTED BY THE DECISIONS AS RELIED UPON , HENCE T HE ADDITION MADE U/S. 68 OF THE ACT BEING NOT SUSTAINABLE AND IS DEL ETED HEREWITH. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE PUT FORTH HIS SUBMISSION IN THE LIGH T OF THE PROVISIONS OF SEC. 68. WHEN IT WAS POINTED OUT TO THE LD. DR THA T THE AO HAS MADE ADDITION OF RS. 16,50,000/- AS UNEXPLAINED INVESTME NT WHICH APPEARS TO BE MADE U/S. 69 OF THE ACT. IT IS THE SAY OF THE L D. DR THAT THERE IS NO DIFFERENCE BETWEEN SEC. 68 AND 69 OF THE ACT. IT I S AN UNDISPUTED FACT THAT THE AO HAS NOT MENTIONED ANY SECTION UNDER WHICH SH E IS MADE THE ADDITION THOUGH THE WORDING OF THE ASSESSMENT ORDE R CLEARLY SUGGEST THAT ITA NO. 5198/MUM/2012 4 THE ADDITIONS HAVE BEEN MADE AS UNEXPLAINED INVESTM ENT. . THE LD. CIT(A) HAS DECIDED THE APPEAL IN FAVOUR OF THE ASSE SSEE IN THE LIGHT OF THE PROVISIONS OF SEC. 68 BECAUSE THE SAME WAS CHALLENG ED BEFORE THE LD. CIT(A). 7. A PERUSAL OF THE ORDER OF THE LD. CIT(A) SHOWS THAT HE HAS DECIDED THE APPEAL WITHOUT GOING THROUGH / CALLING FOR THE ASSESSMENT RECORDS. EVEN BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE CUT A SORRY FIGURE WHEN ASKED FOR TO SHOW ON WHAT BASIS THE AO HAS PRO CEEDED IN THE ASSESSMENT PROCEEDINGS, THE DR WAS WITHOUT THE ASSE SSMENT RECORD. EVEN THE AR COULD NOT THROW ANY LIGHT ON THE ASSESS MENT PROCEEDINGS. IT IS A FACT THAT THE PERSONS WHO HAVE GIVEN LOANS TO THE ASSESSEE HAVE DEPOSITED CASH PRIOR TO THE ISSUE OF CHEQUE. BUT I T IS ALSO A FACT THAT IN THEIR RESPECTIVE BANK ACCOUNTS, THERE ARE MANY OTHE R DEPOSITS. THE AO HAS NOT EXAMINED THESE PERSONS AND THERE IS NOTHING TO SHOW THAT SUMMONS WERE ISSUED TO THESE 7 PARTIES. WHEN THE A O STARTED THE PROCEEDINGS, QUESTIONING THE ASSESSEE TO EXPLAIN TH E SOURCE OF INVESTMENTS AND FINALLY CONCLUDING IT AS UNEXPLAINE D INVESTMENT, THE AO SHOULD HAVE EXHAUSTED ALL THE LEGAL REMEDIES FOR MA KING SUCH ADDITION. ISSUING SUMMONS TO THESE 7 PARTIES IS ONE OF THEM. WE ARE LEFT WITH NO CHOICE BUT TO RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY THE LOAN TRANSACTIONS BY ISSUING SUMMONS TO ALL THE PARTIES AND AFTER THOROUGH EXAMINATION DECIDE THIS ISSUE AFRESH CLEARLY STATING UNDER WHICH PROVISION OF THE ACT HE WANT TO MAKE THE ADDITION, IF ANY. THE ASSESSEE IS EXPECTED TO CO-OPERATE WITH T HE AO AND SUBSTANTIATE HER CLAIM AND FILE ALL NECESSARY DETAILS. ITA NO. 5198/MUM/2012 5 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26.2.2014 . +$8 5 - * $ 9 :+ ; 26.2.2014 5 < SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) !'# / VICE PRESIDENT $* +, / ACCOUNTANT MEMBER MUMBAI; :+ DATED 26.2.2014 . . ./ RJ , SR. PS +$8 +$8 +$8 +$8 5 55 5 26& 26& 26& 26& =$&-6 =$&-6 =$&-6 =$&-6 / COPY OF THE ORDER FORWARDED TO : 1. .1 / THE APPELLANT 2. 23.1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. &?< 26 , , / DR, ITAT, MUMBAI 6. < / GUARD FILE. +$8 +$8 +$8 +$8 / BY ORDER, 3&6 26 //TRUE COPY// ! !! ! / / / / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI