RAJEDNRA V. SHAH, MUMBAI V. ACIT (INV) CIR 27(1), MUMBAI

ITA 5734/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0933 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-07-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 27-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: AJAY C GOSALIA
• Keywords: Revision of order
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 5734/M/2009 ASSESSMENT YEAR: 2005-06 RAJENDRA V. SHAH, APPELLANT 7, MODI KUNJ, 3 RD FLOOR, N.S. ROAD, NO.5, JVPD SCHEME, VILE PARLE (WEST) MUMBAI 400 056 (PAN AKRPS6891E) VS. ASSTT. COMMISSIONER OF INCOME TAX(INV), RES PONDENT CIRCLE 27(1), MUMBAI. APPELLANT BY : MR. AJAY C. GOSALIA RESPONDENT BY : MR. S.K. SINGH ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDERS OF CIT(A)-VIII, MUMBAI, PASSED ON 10.08.2009 FOR THE ASSESSMENT YEAR 1993-94, WHEREIN THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT (A) ERRED IN UPHOLDING THE ADDITI ON U/S 68 MADE BY THE LD AO OF LOAN OF RS 1,00,000 TAKEN BY T HE APPELLANT FROM SHRI DEVENDRA AGARWAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT (A) ERRED IN UPHOLDING THE ORDER OF THE LD AO DISALLOWING RS 106,156 OUT OF INTEREST EXPENDITU RE INCURRED BY THE APPELLANT. 2. THE BRIEF FACTS OF THE FIRST GROUND ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS SHOWN LOANS AND ADVANCES OF RS 1,02,81 ,655/-. THE ASSESSING OFFICER FURTHER NOTICED THAT THE LOAN TAKEN DURING THE YEAR WAS RS 1 LAKH FROM MR DEVENDRA AGARWAL. T HE ASSESSEE DID NOT FILE CONFIRMATION OF LOAN CREDITOR BEFORE T HE ASSESSING ITA NO. 5734/M/09 RAJENDRA V. SHAH 2 OFFICER AND EXPLAINING THE REASON THAT THE SAID CRE DITOR REFUSED TO GIVE CONFIRMATION LETTER TO THE ASSESSEE AS THE ASSESSEE DID NOT PAY INTEREST TO HIM, WHICH WAS DUE TO THE CREDI TOR. THE ASSESSEE REQUESTED THE ASSESSING OFFICER, AFTER GIV ING COMPLETE ADDRESS TO ISSUE SUMMONS U/S 131 OF THE ACT TO THE CREDITOR. THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 ALONG WITH LETTER DATED 4TH DECEMBER 1995, WHICH WAS SENT TO THE ASSE SSEE BY RPAD FIXING THE DATE OF HEARING ON 15TH DECEMBER 19 95. ON THE APPOINTED DATE, THE SAID CREDITOR MR AGARWAL NEITHE R APPEARED TO GIVE ANY EVIDENCE NOR HE HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS, THEREF ORE, THE LOAN WAS NOT GENUINE AND SAME WAS ADDED U/S 68. THE ASS ESSEE FILED THE APPEAL BEFORE THE CIT (A), WHO PASSED EX-PARTE ORDER AND DISMISSED THE APPEAL. AGGRIEVED, THE ASSESSEE FILE D APPEAL BEFORE THE ITAT, THE ITAT VIDE ITS ORDER IN ITA 57 65/MUM/1996 DATED 3RD JULY 2000 SENT BACK THE MATTER TO THE FI LE OF THE CIT (A) WITH THE DIRECTION TO DECIDE THE APPEAL DE NOVO AFTER GIVING REASONABLE OPPORTUNITY OF HEARING AND AFTER CONSIDE RING CONFIRMATORY LETTER, WHICH THE ASSESSEE HAS BEEN AB LE TO OBTAIN FROM THE CREDITOR AFTER COMPLETION OF THE ASSESSMEN T. IN PURSUANCE TO THE DIRECTION OF THE ITAT, THE CIT (A) PROVIDED OPPORTUNITY TO BOTH THE SIDES. CIT (A) CALLED THE REMAND REPORT FROM THE ASSESSING OFFICER, WHICH WAS ALSO GIVEN TO THE ASSESSEE BY THE CIT(A) ON REQUEST. IN REPLY TO THE REMAND R EPORT, THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE DID NOT PAY THE INTEREST TO THE CREDITOR, MR AGARWAL, HE WAS NOT C O-OPERATING WITH THE ASSESSEE IN RESPECT OF THE LOAN TRANSACTIO N. THE ASSESSEE FURNISHED STATEMENT OF HIS LOAN ACCOUNT FR OM 1.4.1993 TO 31.3.2008. THE CIT (A) HELD THAT MERELY SUBMITT ING AN AFFIDAVIT WILL NOT BE DISCHARGED THE ONUS OF THE AS SESSEE. HE FURTHER HELD THAT THE ASSESSEE HAS FAILED TO DISCHA RGE ITS ONUS BY PRODUCING THE CREDITOR BEFORE THE ASSESSING OFFI CER FOR EXAMINATION AND ALSO FAILED TO SUBMIT BANK STATEMEN T, INCOME- TAX RETURN AND BALANCE-SHEET ETC OF MR DEVENDRA AGA RWAL. THE CIT (A), ACCORDINGLY, UPHELD THE ORDER OF THE ASSES SING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ITA NO. 5734/M/09 RAJENDRA V. SHAH 3 ASSESSEE HAS FILED CONFIRMATION FROM MR AGARWAL OF WHICH COPY HAS BEEN PLACED AT PAGE 6 OF THE PAPER BOOK. IN TH E CONFIRMATION, COMPLETE ADDRESS OF CREDITOR ALONG WI TH GIR NO / PAN WAS ALSO GIVEN. HE FURTHER SUBMITTED THAT AN A FFIDAVIT OF CREDITOR MR AGARWAL HAS ALSO BEEN FILED OF WHICH CO PY HAS BEEN PLACED AT PAGE NOS 7 & 8 OF THE ASSESSEES PAPER BO OK. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN THE AFFIDAVIT MR AGARWAL HAS CLEARLY STATED IN PARA 4, HIS PAN, AND IN PARA 5 OF THE AFFIDAVIT MR AGARWAL HAS STATED TH AT HE HAS FILED RETURN OF INCOME FOR ASSESSMENT YEAR 1993-94 ON 12T H AUGUST 1993. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT (A) 3. I HAVE HEARD THE LEARNED REPRESENTATIVE OF THE PART IES, RECORD PERUSED IN RESPECT OF THE CASE OF CREDIT. I T IS SETTLED POSITION OF THE LAW THAT THE ONUS IS ON THE ASSESSE E TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. ONCE THE ASSESSEE DISCHARGED THIS ONUS, THE ADDITION CANNOT BE MADE U/S 68. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS DISCHARGED HI S ONUS REGARDING IDENTITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE LOAN WAS TAKEN THROUGH BANKING CH ANNEL. THE CREDITOR WAS NOT COORDINATING TO THE ASSESSEE. THE ASSESSEE REQUESTED TO ISSUE SUMMONS U/S 131. WHEN THE ASSES SEE, UNDER THE FACTS AND CIRCUMSTANCES LIKE THE CASE UND ER CONSIDERATION MAKING REQUEST TO THE REVENUE AUTHORI TIES, THE REVENUE AUTHORITIES IS DUTY-BOUND TO ISSUE SUMMON U /S 131, AS SUCH POWER TO REVENUE AUTHORITIES ARE CLEARLY PROVI DED IN THE ACT. ONCE THE ASSESSEE DISCHARGED THE PRELIMINARY ONUS THEN THE ONUS SHIFTS TO THE REVENUE. IN THE CASE UNDER CONSIDERATION, I AM SATISFIED THAT THE ASSESSEE HAS DISCHARGED PRE LIMINARY ONUS AND ONUS SHIFTED TO THE REVENUE AUTHORITIES. THE C IT (A) IS NOT CORRECT IN OBSERVING THAT MERELY FILING CONFIRMATIO N AND AFFIDAVIT IS NOT SUFFICIENT. ONCE THE ASSESSEE HAS FILED THE CONFIRMATION AND AFFIDAVIT, THE REVENUE AUTHORITIES BOUND TO EX AMINE THOSE DOCUMENTS. WHEN THE REVENUE AUTHORITIES HAVE NOT CHOSEN TO ITA NO. 5734/M/09 RAJENDRA V. SHAH 4 EXAMINE THOSE CONFIRMATION AND AFFIDAVIT, IT CANNOT BE BLAMED TO THE ASSESSEE THAT THE ASSESSEE HAS FAILED TO DISCHA RGE ITS ONUS. THE CIT (A) IS ALSO NOT CORRECT IN OBSERVING THAT T HE ASSESSEE HAS FAILED TO PRODUCE THE CREDITOR, PARTICULARLY, WHEN THE ASSESSEE HAS EXPRESSED HIS INABILITY IN THIS REGARD. THE IT AT HAS CLEARLY DIRECTED THE CIT (A) TO DECIDE THE APPEAL DE NOVO AFTER GIVING REASONABLE OPPORTUNITY OF HEARING AND AFTER CONSIDE RING THE CONFIRMATORY LETTER, WHICH THE ASSESSEE HAS BEEN AB LE TO OBTAIN FROM THE CREDITOR AFTER COMPLETION OF THE ASSESSMEN T. I NOTICE THAT THE CIT (A) IGNORED THAT DIRECTION OF ITAT. HE HAS NOT EXAMINED AND CONSIDERED THE CONFIRMATION AND AFFIDA VIT FILED BY THE ASSESSEE, THEREFORE, THERE IS GROSS VIOLATION O F THE DIRECTION OF THE ITAT AND BASED ON THE DETAILED FACTS ITSELF, THE ORDER OF THE CIT (A) IS LIABLE TO BE SET ASIDE. ACCORDINGLY , I SET ASIDE THE ORDER OF THE CIT (A) ON THE ISSUE AND SINCE THE CIT (A) HAS FAILED TO CARRY OUT THE COMPLIANCE AND THE DIRECTIONS OF T HE ITAT CONSIDERING THAT FACT, I DELETE THE ADDITION OF RS 1 LAKH AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 4. AS REGARDS GROUND NO.2, THE AO DISALLOWED INTERE ST ON OLD LOANS, THE DETAILS OF WHICH ARE REPRODUCED BELOW FR OM THE PAGE 3 OF AOS ORDER:- SL.NO. NAME OF THE LOAN CREDITOR INTEREST DISALLOWED DATE OF LOAN 1. M/S ANUVARTH DRILLING CO. 8,870/- 28.8.1989 2. MRS. MANUVATI S. PAREKH 9,264/- 19.1.1990 3. SHRI S.P. MEHTA 9,837/- 24.4.1990 4. M/S BHOR HIRING SERVICES 34,110/- AY 92-93 5. SHRI SHANTILAL S. SHAH 3,135/- AY 92-93 6. SHRI MAHENDRA S. SHAH 3,750/- AY 92-93 7. SHRI PARESH S. THAKKAR 3,827/- AY 92-93 8. M/S SPARK INDIA 21,347/- AY 92-93 9. SHRI DEVENDRA AGARWAL 12,000/- AY 93-94 (NEW LOAN ITA NO. 5734/M/09 RAJENDRA V. SHAH 5 5. IT HAS BEEN NOTICED THAT THE CIT(A) HAS DECIDED THE ISSUE WITHOUT APPRECIATING THE FACTS ON RECORD AS THE CIT (A) SIMPLY CONFIRMED THE ADDITION IN RESPECT OF RS. 1,00,000/- , WHEREAS THE ASSESSEE RAISED THE GROUNDS OF APPEAL BEFORE THE IT AT IN FORM NO. 36, WHICH READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) XXIX, MUMBAI ERRED IN PASSING THE ORDER EXPARTE, PARTICUL ARLY WHEN THE APPELLANT HAD SOUGHT AN ADJOURNMENT ON JUL Y 5, 1996 VIDE AUTHORIZED REPRESENTATIVES LETTER NO. 82/IT/144/9697, SINCE THE AUTHORIZED REPRESENTATIVE COULD NOT ATTEND ON JULY 3, 1996, AS HE WAS BUSY IN TRIBU NAL FOR SOME OTHER MATTER. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE SAID LEARNED COMMISSIONER OF INCOME TAX HAS ALSO ER RED IN PASSING THE EXPARTE ORDER WITHOUT GIVING PROPER OPP ORTUNITY FOR HEARING IS ON JULY 3, 1996, THE AUTHORIZED REPRESENTATIVE WAS BUSY IN TRIBUNAL FOR SOME OTHER MATTER. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX HAS ALSO ERRED I N CONFIRMING THE ADDITION OF RS. 1 LAKH IN RESPECT OF LOAN TAKEN FROM SHRI DEVENDRA ALIAS DEBU AGARWAL, WHOSE CONFIRMATION WAS SUBMITTED WITH THE STATEMENT OF FA CTS, WHICH WAS APPENDED WITH THE GROUNDS OF APPEAL AND T HE LOANEE IS ASSESSED TO TAX UNDER P.A.NO. 34-046-PY-2 893. 4. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX HAS ALSO ERRED I N CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN RE SPECT OF INTEREST OF RS. 12000/- ON THE AFORESAID LOAN AND L OAN AMOUNT RS. 94158/- IN RESPECT OF LOAN TAKEN IN THE EARLIER YEARS. 6. THE ITAT VIDE ITA NO. 5765/M/96 DATED 3 RD JULY, 2000 HAS SENT THE MATTER BACK TO THE FILE OF THE CIT(A). 7. THE LEARNED AR SUBMITTED THAT THE AO HAS DISALLO WED THE INTEREST CLAIM OF THE ASSESSEE ON THE BASIS THAT IN EARLIER YEAR THE DISALLOWANCE WAS MADE. THE LEARNED AR SUBMITTED THAT INTEREST PERTAINING TO SL.NO. 1 & 2 RELATED TO AY 9 0-91 AND SL.NO. 3 RELATED TO AY 91-92 OF THE ABOVE TABLE, WH EREIN THE AO HIMSELF HAS ALLOWED THE CLAIM OF THE ASSESSEE. HE F URTHER SUBMITTED THAT SL. NO. 5 & 7 HAS BEEN ALLOWED BY TH E AO IN ITA NO. 5734/M/09 RAJENDRA V. SHAH 6 ASSESSEES PURSUANCE ORDER U/S 264 OF THE ACT. SL.N O. 4 & 8 HAVE BEEN ALLOWED BY THE CIT(A) IN EARLIER YEAR. TH E LEARNED AR SUBMITTED THAT IN EARLIER YEAR ALL THE EXPENSES AT SL.NO. 1 TO 9 HAVE BEEN ALLOWED EITHER BY THE AO HIMSELF OR IN PU RSUANCE TO ORDER U/S 264 OR BY THE CIT(A) EXCEPT SL.NO. 6 WHER E THE CIT(A) HAS UPHELD THE DISALLOWANCE. I FIND THAT WHEN THE A SSESSEE RAISED GROUND OF APPEAL BEFORE THE ITAT AND THE ITA T SENT THE MATTER BACK TO THE FILE OF THE CIT(A) AND THE CIT(A ) OUGHT TO HAVE CONSIDERED THAT GROUND OF APPEAL. SINCE THE CIT(A) HAS NOT PROPERLY APPRECIATED THE FACTS OF THE CASE, THE SUB MISSION OF THE LEARNED AR IS SUBJECT TO VERIFICATION AND IN THIS V IEW OF THE MATTER, I DEEM IT FIT AND PROPER TO REMIT THE MATTE R BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO VERIFY THE L EARNED ARS CONTENTION AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2010. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER DATED: 30 TH JULY, 2010. ITA NO. 5734/M/09 RAJENDRA V. SHAH 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, SMC BEN CH, I.T.A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTALS 1. DRAFT DICTATED ON 13.07.2010 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 14.07.2010 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER