MINTU SAYERMAL JAIN, MUMBAI V. ITO WD 16(3)(1), MUMBAI

ITA 5302/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3743 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: R K BOTHRA
• Section: 142(1); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 5302 /MUM / 201 2 ( / ASSESSMENT YEAR : 20 0 7 - 08 ) MRS.MINTU SAYERMAL JAIN, 435 , PATTHE BAPURAO MARG, SOMAJI BUILDING, OPP ISLAMPURA ST. MUMBAI - 400024 / VS. INCOME TAX OFFICER 16(3)(1), MUMBAI . ./ PAN : AD CPJ3983C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R K BOTHRA / RESPONDENT BY : SHRI NAVEEN GUPTA / DATE OF HEARING : 1 4 .1.2016 / DATE OF PRONOUNCEMENT : 15. 3. 2016 / O R D E R PER RAJESH KUMAR , AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1.6.2012 OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 6 , MUMBAI (HEREINAFTER CALLED A S THE CIT(A) FOR ASSESSMENT YEAR 200 7 - 08 . ITA NO. 5302 / MUM/20 1 2 2 2. THE ISSUE RAISED IN THE REVISED GROUNDS OF APPEAL NO.1,2 AND 3 ARE AGAINST THE CONFIRMATION OF ADDITION OF RS.1,40,43,154/ - , RS.10,00,000/ - AND RS.26,00,000/ - AS INCOME FROM UNEXPLAINED /UNDISCLOSED SOURCE S. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME ON 31.10.2007 DECLARING AN INCOME OF RS.3,96,505 / - . THE ASSESSEE IS A PROPRIETOR OF M/S MILLENIUM METALS AND WAS A ENGAGED IN THE BUSINESS OF TRADING IN STEELS AND METALS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE NOTICE S U/S 142(1) AND 143(2) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD ENTERED INTO CERTAIN TRANSACTIONS WHICH WERE NOT CONF IRMED OR PARTLY CONFIRMED BY THOSE PARTIES AND THUS MADE THE ADDITIONS OF RS.1,40,43,154/ - VIDE 5(A), RS.10,00,000/ - VIDE PARA 5(B) AND VIDE PARA 5(C) OF THE ASSESSMENT ORDER RESPECTIVELY. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND IN THE SAID REMAND REPORT THE AO STATED THAT THE ASSESSEE WAS AFFORDED AN OPPORTUNITY TO APPEAR BEFORE HIM, HOWEVER NONE APPEARED BEFORE THE AO. THE REAFTER, THE AO ISSUED SUMMONS U/S 131 OF THE ACT TO THE THREE PARTIES WHICH WERE RETURNED UNNERVED WITH THE REMARK OF POSTAL AUTHORITIES NOT KNOWN OR LEFT PLACE . THUS, THE AO HELD THAT THE IDENTITY OF THE LOAN CREDITORS AND THEIR EXISTENCE COULD NOT BE SATISFACTORILY VERIFIED. THE AO FURTHER OBSERVED AND HELD THAT NONE OF THE LOAN CREDITORS SEEMS TO HAVE CREDITWORTHINESS TO OFFER THE AMOUNT OF LOANS TO THE ASSESSEE. THE LD. CIT(A) ALSO FURNISHED A COPY OF THE REMAND REPORT, WHICH WAS REPLIED BY THE ASSESSEE VIDE HER REPLY DATED 24.1.2012. THE LD. CIT(A) FINALLY OBSERVED AND HELD THAT THE ASSESSEE WAS NOT ABLE TO REBUT THE STAND OF THE AO ON THE REMAND REPORT AND SIMPLY STATED THAT ALL THESE TRANSACTIONS WERE THROUGH BANKING CHANNELS AND WERE FULLY ACCOMMODATED ITA NO. 5302 / MUM/20 1 2 3 FOR. THE LD. CIT(A) ALSO OBSERVED THAT ALL THE SUBMISSIONS MADE BY THE ASSESSEE WERE WITHOUT ANY DOCUMENTARY EVIDENCE AND THEREFORE WERE NOT TENABLE AND RELIABLE IN LAW. HENCE, THE LD. CIT(A), DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE DECISION OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD. AR SUBMITTED BEFORE US THAT NEITHER THE AO NOR THE CIT(A) HAD APPLIED THEIR MIND TO THE VARIOUS FACTS AND RECORD PRODUCED BEFORE THEM AND THE ASSESSMENT WAS MADE ON HYPOTHETICAL BASIS BY THE AO AND IN THE SAME FASHION THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 5. ON THE GROUND NO.1, THE LD. AR SUBMITTED THAT DURING THE YEAR, THE ASSESSEE RECEIVED AN AMOUNT OF RS.35 LAKHS FROM M/S SERA ORGANICS PVT LTD ON 24.1.2007 BY CHEQUE WHICH WAS DULY CONFIRMED BY THE PARTIES BY A CONFIRMATION LETTER DATED 1.4.2007, WHICH IS SUPPORTED BY A LETTER PLACED AT PAGE 13 OF THE PAPER BOOK. THE LD. AR FURTHER SUBMITTED THAT THE AO WRONGLY OBSERVED AS S TATED IN PARA 5(A) OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS ADVANCED RS.1,75,43,154/ - TO SERA ORGANIC PVT LTD ON VARIOUS DATES WHICH WERE NOT ACCOUNTED FOR WHICH IS TOTALLY WRONG AND AGAINST THE FACTS OF THE CASE OF THE ASSESSEE. THE AO HAD WRONGL Y TAKEN THE ENTRIES ON 15.1.2007 FOR RS.15 LAKHS, 20.1.2007 FOR RS.35 LAKHS, 24.1.2007 FOR RS.32 LAKHS, 30.1.2007 FOR RS.40 LAKHS HAS GIVEN BY THE ASSESSEE TO M/S SERA ORGANICS PVT LTD. , WHICH WERE IN FACT, THE PAYMENT RECEIVED BY THAT COMPANY FROM ITS VARIOUS CLIENTS ON ACCOUNTS OF SALES MADE AS IS CLEAR FROM THE CERTIFICATE ISSUED BY CHARTERED ACCOUNTANT OF M/S HARESH KARVAT AND CO, DATED NIL, WHICH IS PLACED AT PAGE 24 OF THE ASSESSEES PAPER BOOK . AS PER THE CERTIFICATE RS. 1 09.50 LAK HS WAS RECEIVED BY M/S SERA ORGANICS PRIVATE LIMITED FROM M/S CHINTAMANI IRON BANK STATEMENT OF M/S SERA ORGANICS PVT LTD , RS. 7.50 LACS FROM ITA NO. 5302 / MUM/20 1 2 4 JAMMUDEEP METAL AND TUBES PVT LTD AND RS. 7.00 FROM LIFE LINES METALS AND TUBES PVT LTD THE ASSESSEE ALSO FILED A COPY OF LEDGER ACCOUNT OF SERA ORGANICS PVT LTD IN THE BOOKS OF ASSESSEE, BANK STATEMENT OF M/S MILLENNIUM METAL ISSUED BY THE CENTURIAN BANK PLACED AT PAGE 14 TO 22 OF ASSESSEES PAPER BOOK, IN SUPPORT OF HIS CONTENTION IN WHICH ONLY RS.35 LA KHS APPEARING ON 24.1.2007 . THUS, THE LD. COUNSEL SUBMITTED THAT BOTH THE LD.AO AND THE LD.CIT(A) HAS RECORDED WRONG FINDINGS OF THE FACTS WITH RESPECT OF ADDITION OF RS.35 LAKHS THAT T HE ASSESSEE HA D NOT PLACED ANY DOCUMENT S AND THE DETAILS OF CUSTOMERS W ITH WHOM M/S SERA ORGANICS PVT.LTD ENTERED INTO VARIOUS SALES TRANSACTIONS. SIMILARLY, WITH RESPECT TO THE ADDITION OF RS.10 LAKHS, THE AO OBSERVED THAT RS.14 LAKHS WERE RECEIVED FROM M/S CHINTAMANI IRON AND STEEL CO.PVT.LTD AND RS.4 LAKHS ADVANC ED WHICH WAS NOT REFLECTED IN THE BANK STATEMENT AND THEREFORE, HE DISALLOWED RS.10 LAKHS WHICH IS ALSO TOTALLY WRONG AND AGAINST THE FACTS. BEFORE THE AO AND THE LD. CIT(A), THE LD.AR SUBMITTED A CONFIRMATION LETTER DATED 1.4.2007 CONFIRMING RS.18 LAKHS PAYABLE TO M/S CHINTAMANI IRON AND STEEL CO. PVT. LTD. THE LD. COUNSEL SUBMITTED THAT DURING THE YEAR, THE ASSESSEE RECEIVED AN AMOUNT OF RS.8 LAKHS ON 8.9.2006 AND RS.14 LAKHS ON 22.11.2006 BY ACCOUNT PAYEE CHEQUES FROM THE ABOVE PARTIES AND RETURN ED RS.4 LAKHS ON 4.11.2006. THUS, NET OUTSTANDING OF THE ABOVE PARTIES WAS RS.18 LAKHS WHICH WAS CONFIRMED BY THAT PARTY BY FILING THE CONFIRMATION , BANK STATEMENTS AND COPY OF LEDGER ACCOUNT AS PLACED AT PAGE 28 TO 32 OF THE PAPER BOOK. THE LD. CO UNSEL DREW OUR ATTENTION TO THE PAGE 48 OF THE PAPER BOOK WHICH SHOWS THAT RS. 30 LAKHS DEPOSITED IN BOTH BANK ACCOUNT BY THREE CHEQUES OF RS.14 LAKHS , TWO TIMES RS.8 LAKHS. OUT OF THE THREE CHEQUES RS.14 LAKHS WAS FROM M/S CHINTAMANI IRON AND STEEL CO.PVT.LTD AND REST OF THE TWO CHEQUES WERE FROM OTHER PARTIES NAMELY M/S DELITE TUBS AND ALLOYS PVT LTD AND JAMMUDEEP METAL AND TUBES PVT LTD. WHICH HAS BEEN MENTIONED BACKSIDE ITA NO. 5302 / MUM/20 1 2 5 OF THE PAGE 48 OF THE PAPER BOOK. SIMILARLY, AT PAGE 47, THE ASSESSEE RE CEIVED RS.8 LAKHS FROM M/S CHINTAMANI IRON AND STEEL CO.PVT.LTD ON 18.9.2006 AGAINST CHEQUE OF RS.8 LAKHS WAS RECEIVED FROM JAMMUDEEP METAL AND TUBES PVT LTD, WHICH WAS ALSO DULY REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD.AR DREW OUR AT TENTION THAT THE CH EQUE OF RS.14 LAKHS WAS NOT APPEARING IN THE BANK ACCOUNT OF THE ASSESSEE . HE FAILED TO APPRECIATE THAT INSTEAD OF ONE THERE WERE THREE CHEQUES DEPOSITED ON 22.11.2006 IN THE SAME PAY - IN - SLIP IN THE CENTURIAN BANK OF PUNJAB WHICH I S PLACED AT PAGE 48 OF THE PAPER BOOK, AND THUS THE ADDITION S MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) WERE WRONG AND WITHOUT BASIS . IN RESPECT OF THIRD ADDITION OF RS.26 LAKHS ,T HE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR THE ASSESSEE RECEIVED VARIOUS CHEQUES FROM THE SAID PARTY AND ALSO REPAID AT THE END OF THE YEAR AS PER COPY OF ACCOUNT FILED AT PAGE 37 OF THE PAPER BOOK AND NET BALANCE OUTSTANDING TO M/S JAMMUDEEP METAL AND TUBES P LTD WA S RS.26 LAKHS WHICH WAS CONFIRMED BY THE PARTY IN THE C ONFIRMATION LETTER PLACED AT PAGE 36 OF THE PAPER BOOK. THE A O ALSO OBSERVED THA T THE ASSESSEE HAD ADVANCED RS.26 LAKHS TO M/S JAMMUDEEP METAL AND TUBES P LTD WHICH WAS NOT REFLECTED IN THE CONFIRMATION OF THE SAID PARTY AND AT THE SAME TIME THE AO OBSERVED THAT THE ASSESSEE HAD RECEIVE D AN AMOUNT OF RS.23 LAKHS WHICH WAS REFLECTED IN THE STATEMENT OF BANK ACCOUNT OF THE ASSESSEE AND THUS, RS.26 LAKHS WAS ADDED AS UNEXPLAINED TRANSACTION AND UNDISCLOSED AMOUNT. THE LD. COUNS EL SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO VARIOUS TR A N SA CTION OF BORROWING S AND REPAYING THE ADVANCES BY ACCOUNT PAYEE CH E Q UES TO THESE PARTIES ON VARIOUS DATES AS IS CLEAR FROM PAGE 37 OF THE PAPER BOOK WHICH WAS DULY CONFIRMED BY THE CONFIRMATION LETTER WHICH IS PLACED AT PAGE 36 OF THE PAPER BOOK. THE COPY OF THE BANK STATEMENT OF TO M/S JAMMUDEEP METAL AND TUBES P LTD WAS ALSO PLACED AT PAGES 38 TO 40 OF THE PAPER BOOK, IN WHICH THE ITA NO. 5302 / MUM/20 1 2 6 TRANSACTION S BETWEEN THE ASSESSEE AND THE SAID PARTIES WE RE DULY REFLECTED AS BEING RECEIVED AND REPAID ON VARIOUS DATE AND THUS THE LD. COUNSEL FINALLY SUBMITTED THAT ALL THESE ADDITION S MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) WERE OUT OF MERELY IMAGINATION AND WERE NOT BASED ON THE THE RECORD S PRODUC ED DURING THE COURSE OF SCRUTINY PROCEEDINGS AND DURING THE APPEAL PROCEEDINGS. THE LD. COUNSEL FINALLY SUBMITTED T HAT THE ADDITION AS MADE BY T HE AO AND CONFIRMED BY T HE LD.CIT(A) BE DELETED AS IT HAD CA U S E D A LOT OF HARASSMENT TO THE ASSESSEE D UE TO GROSS NEGLIGENCE AND NOT APPLICATION O F MIND ON THE PART OF THE AO AND THE LD. CIT(A) AND ALSO PASS STRICTURE AGAINST THE SAID AUTHORITIES BESIDE IMPOSING COST . 6 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAI LABLE BEFORE US. W E HAVE ALSO PERUSED VARIOUS CERTIFICATES AND BANK STATEMENTS WHICH WERE BROUGHT TO OU R NOTICE DURING THE COURSE OF HEARING FROM PAGE NO 13 TO 42 OF THE PAPER BOOK . AS DISCUSSED ABOVE W E FIND IT IS A CLASSICAL CASE WHERE VARIOUS ADDITI ONS HAVE BEEN MADE BY THE AO WITHOUT PROPER APPLICATION OF MIND AND HAS NO DISTAN T CONNECTION WITH THE MATERIAL ON RECORD. WE FIND THAT THE THIRD PARTY TRANSACTIONS WERE ADDED IN THE HANDS OF THE ASSESSEE WITHOUT WITHOUT ANY BASIS OR MATERIAL AND T HUS, THE AO FRAMED THE ASSESSMENT IN A HYPOTHETICAL WAY PUTTING THE ASSESSEE TO ENORMOUS HARASSMENT AND INCONVENIENCE . SIMILARLY, THE LD. CIT(A) CONFIRMED THE ADDITION WITHOUT LOOKING INTO THE MERITS AND FACTS OF THE CASES WHICH ARE VERY CLEAR AND AP PARENT FROM THE RECORD S PRODUCED. THEREFORE, IN VIEW OF THESE FACTS , THE ADDITION S OF RS.1,40,43,154 / - IN GROUND NO.1 , RS.10 LAKHS IN GROUND NO 2 AND RS.26 LAKHS IN GROUND NO.3 ON ACCOUNT OF UNEXPLAINED/UNDISCLOSED INCOME ARE ORDERED TO BE DELETED BY REVERSING THE ORDER OF FIRST APPELLATE AUTHORITY. AO IS DIRECTED ACCORDINGLY . ITA NO. 5302 / MUM/20 1 2 7 7 . IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH MAR CH , 2016 . ( /AMIT SHUKLA) ( /RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15 /0 3 /2016 . . ./ SRL , SR. PS / 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, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI