ITO-9(2)(2), MUMBAI V. LALANI ESTATE & CONSTRUCTION PVT. LTD, MUMBAI

ITA 5723/MUM/2010

• Counselvise Citation: 572319914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARTHSARTHI NAIK
• Assessee Lawyers: RAJESH B GUPTE
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 5723/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 9(2)(2) M/S. LALANI ESTATE & C ONSTRUCTION P. LTD. ROOM NO. 25, AAYAKAR BHAVAN PLOT NO. 421A, PRARBADH , 1ST ROAD M.K. ROAD, MUMBAI 400020 VS. KHAR (W), MUMBAI 400050 PAN - AAACL 0769 N APPELLANT RESPONDENT APPELLANT BY: SHRI PARTHSARTHI NAIK RESPONDENT BY: SHRI RAJESH B. GUPTE DATE OF HEARING: 17.10.2011 DATE OF PRONOUNCEMENT: 25.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XX, MUMBAI DATED 12.05.2010 DELETING THE ADDITION AGGRE GATING TO ` 8,40,860/- PERTAINING TO CREDITS IN THE NAME OF NIGAM V. SHAH AND JIGNA V. SHAH. 2. ASSESSEE IS A BUILDER AND DEVELOPER AND THE A.O. NO TICED THAT ASSESSEE HAS TAKEN HUGE UNSECURED LOANS DURING THE YEAR. HE HOWEVER DID NOT STATE THE AMOUNT OF UNSECURED LOANS OBTAINED DURING THE Y EAR. TO VERIFY THE GENUINENESS OF THE SAME HE ISSUED NOTICES UNDER SEC TION 133(6) TO SOME LOAN CREDITORS, WHICH STATED TO HAVE BEEN SERVED. H OWEVER, THE DETAILS OF NOTICES SERVED AND THE AMOUNT OF CREDITS OBTAINED W ERE ALSO NOT ON RECORD. HE OBSERVED THAT SOME OF THE NOTICES WERE NOT REPLI ED. HOWEVER HE NOTES THAT THE LEARNED A.R. OF THE ASSESSEE FILED DETAILS ON BEHALF OF THE SAID LOAN CREDITORS. OUT OF THE SAID LOAN CREDITORS HE TOOK U P TWO CASES OF NIGAM V. SHAH WHO HAS ADVANCED A LOAN OF ` 4,00,000/- TO ASSESSEE AND ANOTHER LOAN CREDITOR , JIGNA V. SHAH WHO HAS ADVANCED AN AMOUNT OF ` 4,40,860/-. HE MADE AN ADDITION OF ` 8,40,860/- STATING THAT THE CREDITWORTHINESS HAS NO T BEEN PROVED AND THE LOANS RECEIVED WERE BOGUS. ITA NO. 5723/MUM/2010 M/S. LALANI ESTATE & CONSTRUCTION P. LTD. 2 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT ASSESSEE HA S FURNISHED DETAILS AND THE A.O. REFERRED TO THOSE DETAILS IN THE ASSES SMENT ORDER. IT WAS SUBMITTED THAT THE CREDITORS HAVE REPLIED AND CONFI RMED ON ENQUIRY AND EXPLAINED THE SOURCE AND THE ONUS WAS DISCHARGED, THEREFORE THE ADDITION CANNOT BE SUSTAINED. THE CIT(A) DELETED THE ADDITIO N BY STATING AS UNDER: - 4. I HAVE CONSIDERED THE DISPUTE, I FIND LOT OF IN CONSISTENCIES IN THE OBSERVATIONS MADE BY THE AO. THE AO SAYS HE GOT ENQUIRY LETTERS PERSONALLY SERVED ON THE LOAN CREDITORS. HE DOES NO T NAME A SINGLE CREDITOR. HE THEN SAYS THAT SOME WERE NOT FOUND ON THE GIVEN ADDRESS. HE AGAIN DOES NOT NAME EVEN ONE PERSON. HE FURTHER SAYS THAT THOSE LETTERS WHICH WERE SERVED REMAINED NOT R ESPONDED. THEN HE REFERS TO THE CASES OF NIGAM V SHAH AND JIGNA V SHAH AND SAYS THAT THEY WERE ALSO NOT FOUND AT THEIR ADDRESSES. T HEN HE REFERS TO THEIR CAPITAL ACCOUNTS AND BALANCE SHEETS AND DESCR IBES INCONSISTENCIES IN THEM. THE APPELLANT HAS PRODUCED COPIES OF THE LETTERS SENT BY BOTH THE CREDITORS ADDRESSED TO THE AO WHICH HAVE BEEN DULY ACKNOWLEDGED BY THE AO PUTTING HIS INITIA L ON 28-11-2008. BOTH THE CREDITORS HAVE CONFIRMED THE LOANS, STATED THE MODE AND DETAILS OF PAYMENT, SOURCE OF INCOME AND FURNISHED COPIES OF THEIR RETURNS AND INTIMATIONS ISSUED U/S 143(1). I FIND T HAT THE AO HAS BASED HIS CONCLUSIONS WITHOUT COGENT MATERIALS. THE AGGREGATE ADDITION MADE OF RS.8,40,860/- LACKS FOUNDATION AND I DELETE THE SAME. 4. THE LEARNED D.R., WHILE ADMITTING THAT THE A.O. HAD NOT STATED COMPLETE DETAILS OF UNSECURED LOANS RECEIVED, EXAMI NED OR CONFIRMED BUT SUBMITTED THAT THE CIT(A) ALSO WITHOUT ANY REASON D ELETED THE ADDITION INSTEAD OF REFERRING THE MATTER TO THE A.O. FOR EXA MINATION AND CONFIRMATION OF CREDITS. IT WAS THE CONTENTION THAT CIT(A) HAS S IMPLY DELETED WITHOUT ANY BASIS. 5. THE LEARNED A.R. SUBMITTED THAT THE DETAILS WERE FI LED BEFORE THE A.O. ON THE BASIS OF WHICH THE CIT(A) DELETED THE SAME. THEREFORE, THERE IS NO NEED TO RECONSIDER OR RE-EXAMINE THE ISSUE. 6. WE HAVE EXAMINED THE RECORD AND RIVAL CONTENTIONS O F THE PARTIES. BOTH THE ASSESSING OFFICERS ORDER AS WELL AS CIT(A)S O RDER SUFFER FROM VARIOUS DEFICIENCIES. THE A.O. NEITHER MENTIONED THE AMOUNT OF UNSECURED LOANS TAKEN DURING THE YEAR NOR THE DETAILS OF ENQUIRIES MADE BY HIM AND RESULT THEREOF. HE, HOWEVER, TOOK UP ONLY TWO CREDITORS, W HOSE DETAILS WERE EXAMINED ITA NO. 5723/MUM/2010 M/S. LALANI ESTATE & CONSTRUCTION P. LTD. 3 AND OUT OF THAT IN THE CASE OF SHRI NIGAM V. SHAH I T WAS STATED THAT THE ENTIRE CAPITAL WAS OF ` 4,41,433/- OUT OF WHICH HE ADVANCED AN AMOUNT OF ` 4,00,000/-. SIMILAR WITH THE CREDIT OF JIGNA V SHAH . THERE WERE NO FURTHER DETAILS FROM THE ASSESSMENT ORDER. SURPRISINGLY THE CIT(A) IN HIS VERY BRIEF ORDER STATED THAT THERE ARE INCONSISTENCIES IN THE ASSESSMENT ORDER AND WITHOUT SPECIFYING WHETHER THE LOANS ARE GENUINE OR NOT OR EVEN WITHOUT EXAMINING WHETHER THE CONFIRMATION FILED SATISFIES THE CONDITIONS, DELETED THE ADDITION ON THE REASON THAT THE A.O. HAS BASED HIS CONCLUSIONS WITHOUT COGENT MATERIALS. WE ARE UNABLE TO AGREE WITH THE O RDER OF THE CIT(A) ALSO. IF THE A.O. GIVES INSUFFICIENT REASONS FOR MAKING THE ADDITION, IT IS FOR THE CIT(A), WHO HAS CO-TERMINUS POWERS OF ASSESSMENT TO EXAMINE WHETHER THE CREDITS ARE GENUINE OR NOT. JUST BECAUSE CERTAIN DETAILS WE RE FILED BEFORE THE A.O. IT DOES NOT MEAN THAT THE CREDITS ARE GENUINE. THEREFO RE, WITHOUT GOING INTO THE MERITS OR DEMERITS OF THE ADDITION MADE BY THE A.O. AND DELETION MADE BY THE CIT(A), WE ARE OF THE OPINION THAT THE ISSUE REQUIR ES RE-EXAMINATION BY THE A.O. ASSESSEE ALSO HAS NOT PLACED ON RECORD ANY OF THE DETAILS FILED BEFORE THE A.O. TO EXAMINE WHETHER THE DETAILS FILED BEFORE TH E A.O. SATISFIES THE CONDITIONS FOR ACCEPTANCE OF THE CREDITS. IN THE AB SENCE OF ANYTHING ON RECORD BEFORE US, WE DO NOT INTENT TO GIVE ANY FINDING ON THIS ISSUE. THEREFORE, IN THE INTEREST OF JUSTICE WE RESTORE THE MATTER OF EXAMIN ATION OF THE ABOVE TWO CREDITS BACK TO THE FILE OF THE A.O. WHO IS DIRECTE D TO EXAMINE THE INFORMATION ON RECORD AND MAKE NECESSARY ENQUIRIES AND DECIDE T HE ISSUE AFTER DUE EXAMINATION. WITH THESE DIRECTIONS, THE ORDERS OF T HE A.O. AND THE CIT(A) ARE SET ASIDE AND THE ISSUE OF CREDITS IN THE ABOVE CAS ES ARE RESTORED TO THE FILE OF THE A.O. TO DO IT ACCORDING TO THE LAW AND FACTS. 7. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH OCTOBER 2011 ITA NO. 5723/MUM/2010 M/S. LALANI ESTATE & CONSTRUCTION P. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XX, MUMBAI 4. THE CIT IX, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.