ACIT 8(3)(OSD), MUMBAI V. VARSHRAJ EXPORTS P. LTD, MUMBAI

ITA 526/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75679 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K PANDA
• Section: 68

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.526/MUM/2010 ( - - - - / ASSESSMENT YEAR :2006-07 THE ACIT-8(3)(OSD), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. VARSHRAJ EXPORTS PVT. LTD., 7,C SENIOR ESTATE, NEAR SONEX UDYOG, PARSI PANCHAYAT ROAD, ANDHERI (E), MUMBAI-400 059 ,. $* ./ /0 ./ PAN/GIR NO. :AAACV 4644E ( .1 / APPELLANT ) .. ( 23.1 / RESPONDENT ) .1 4 $ / APPELLANT BY: SHRI B.P.K. PANDA 23.1 5 4 $ / RESPONDENT BY: NONE 5 6* / DATE OF HEARING :18.02.2014 7- 5 6* / DATE OF PRONOUNCEMENT:21.02.2014 +$8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-18, MUMBAI DT.05.11.2009 PERTAINING TO A.Y. 2006-07. 2. THE GRIEVANCE OF THE REVENUE READS AS UNDER: ITA NO. 526/M/2010 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF UNEXPLAINED LOAN U/S. 68 AMOUNTING TO RS. 1,20,00,0 00/- AND RS. 54,50,000/- AS SHARE APPLICATION MONEY WITHOUT APPRECIATING THE FACTS OF THE CASE. 3. NONE APPEARED FOR THE ASSESSEE THOUGH ON THE PRE VIOUS OCCASION THE ASSESSEE WAS IN THE KNOWLEDGE OF THE DATE OF H EARING. THEREFORE, WE HAVE DECIDED TO PROCEED EX-PARTE. 4. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF READ YMADE GARMENTS AND TRADING OF READYMADE GARMENTS AND OTHER ITEMS. THE RETURN OF INCOME WAS FILED ON 30.11.2006 DECLARING TOTAL LOSS AT RS. 34,08,280/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACC ORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED RS. 1.20 CRORES AS LOAN A ND RS. 54,50,000/- AS SHARE APPLICATION MONEY FROM SHRI RAJAN B. SUJNANI WHO HAPPENS TO BE ONE OF THE DIRECTORS. THE ASSESSEE WAS ASKED TO PR OVE THE CREDITWORTHINESS OF SHRI RAJAN B. SUJNANI. THE ASSESSEE FURNISHED THE COPIES OF INCOME TAX RETURN AND BANK STATEMENTS OF SHRI RAJAN B. SUJNANI, IT WAS EXPLAINED THAT SHRI RAJAN B. SUJNANI WAS A NON RESIDENT INDIAN HAVING INCOME FROM HOUSE PROPERTY AND INCOME FROM O THER SOURCES IN INDIA. THE ASSESSEE WAS ASKED TO PROVIDE THE SOUR CE OF CREDIT ENTRIES IN THE BANK ACCOUNT OF SHRI RAJAN B. SUJNANI. THE AS SESSEE FILED A DETAILED REPLY WHICH IS INCORPORATED BY THE AO AT PARA 3.1 O F THE ASSESSMENT ORDER. AFTER CONSIDERING THE SUBMISSIONS AND THE DE TAILS FURNISHED BY THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE HAS FAI LED TO FURNISH THE COPY OF BALANCE SHEET OF SHRI RAJAN B. SUJNANI. THE AO ALSO DISREGARDED THE CERTIFICATE OF A CHARTERED ACCOUNTANT STATING THE C REDITWORTHINESS OF SHRI ITA NO. 526/M/2010 3 RAJAN B. SUJNANI. AFTER CONSIDERING CERTAIN JUDICI AL DECISIONS, THE AO WENT ON TO MAKE THE ADDITIONS OF RS. 1.20 CRORES AN D RS. 54.50 LAKHS U/S. 68 OF THE ACT. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS EXPLAINED THAT SHRI RAJAN B. SUJNANI IS STAYING IN DUBAI FOR MORE THAN 25 YEARS AND DOING BUSINESS IN THE NAME AND STYLE OF M /S. BHAGWANDAS TRADING CO. LTD. THE ASSESSEE FILED DOCUMENTS IN S UPPORT OF ITS CONTENTION. THE DETAILS FILED BY THE ASSESSEE HAVE BEEN INCORPORATED BY THE LD. CIT(A) IN HIS APPELLATE ORDER AT PARA-3.2. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) CONSIDERED THE NET PROFIT OF M/S. BHAGWANDAS TRADIN G CO., FOR THE YEARS 2001 TO 2006 WHICH FIND PLACE AT PARA 3.3. OF THE F IRST APPELLATE ORDER. THE LD. CIT(A) FURTHER OBSERVED THAT SHRI RAJAN B. SUJNANI IS ALSO ASSESSED TO INCOME TAX IN INDIA CONSISTING OF INCOM E FROM HOUSE PROPERTY AND INTEREST INCOME. THE DETAILS OF DIVIDEND, REMUN ERATION AND INTEREST RECEIVED BY SHRI RAJAN B. SUJNANI FROM 2001 TO 200 7 HAVE BEEN INCORPORATED BY THE LD. CIT(A) AT PARA 3.3.2 OF HIS APPELLATE ORDER. 5.1. AFTER CONSIDERING ALL THESE DETAILS, THE LD. C IT(A) FINALLY CONCLUDED THAT: I CONSIDER THAT THE APPELLANT SUBMITTED ALL THE IN FORMATION IN HIS POSSESSION TO EXPLAIN THE CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION AND HAS SATISFACTORILY EXPLAINED THE SOURCES FOR THE AMOUNT OF LOAN AND SHARE APPLICATION GIVEN. I FIND THERE IS NO MERIT IN THE ADDITION MADE BY AO AND SUCH ADDITION MADE BY THE AO U/S. 68 AMOUNTING TO RS. 1,74,50,000/- IS DELETE D. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO. 526/M/2010 4 7. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE FINDINGS OF THE AO. IT IS THE SAY OF THE LD. DR TH AT THE ASSESSEE HAS GROSSLY FAILED TO ESTABLISH THE CREDITWORTHINESS OF SHRI RAJAN B. SUJNANI . WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. DR AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE I DENTITY AND THE GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN DOUBT ED BY THE AO. THE AO HAS MADE THE ADDITIONS QUESTIONING THE CREDIT WO RTHINESS OF SHRI RAJAN B. SUJNANI . A PERUSAL OF THE ORDER OF THE L D. CIT(A) SHOWS THAT THE LD. CIT(A) HAS CONSIDERED THE INCOME OF SHRI R AJAN B. SUJNANI FROM THE YEAR 2001 TO 2007. IT IS ALSO AN UNDISPUTED FA CT THAT THE ENTIRE TRANSACTIONS HAVE BEEN DONE THROUGH BANKING CHANNEL S. THE BANK DETAILS WERE FURNISHED BEFORE THE AO. THE AO HAS DONE NOTH ING TO VERIFY FROM THE BANK DETAILS. HOWEVER, AT THE SAME TIME, THE A O HAS SIMPLY DISBELIEVED WHAT HAS BEEN EXPLAINED BY THE ASSESSEE . THE LD. CIT(A) HAS JUDICIOUSLY CONSIDERED ALL THE RELEVANT DOCUMENTS BROUGHT ON RECORD BEFORE DELETING THE ADDITION U/S. 68 OF THE ACT. W E, THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD . CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST FEBRUARY , 2014 +$8 5 - * $ 9 :+ ; 21.2.2014 5 < (D.MANMOHAN ) (N.K. BILLAIYA) !'# / VICE PRESIDENT $* +, / ACCOUNTANT MEMBER MUMBAI; :+ DATED 21.2.2014 . . ./ RJ , SR. PS ITA NO. 526/M/2010 5 +$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