KSHIRSAGAR CONSTRUCTION CO. P.LTD, MUMBAI V. DCIT 5(2), MUMBAI

ITA 574/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9637 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.574/MUM/2016 (ASSESSMENT YEAR: 2010-11) M/S. KSHIRSAGAR CONSTRUCTION VS. DEPUTY COMMISSIONER COMPANY PVT. LTD. C-20/A, BHARAT NAGAR GRAND ROAD (EAST) MUMBAI 400007 OF INCOME TAX 5(2 ) MUMBAI PAN AAACK1671N APPELLANT RESPONDENT ASSESSEE BY: SHRI SHAILESH PARMAR REVENUE BY: MS. N. HEMALATHA DATE OF HEARING: 10.08.2017 DATE OF PRONOUNCEMENT: 22.09.2017 O R D E R PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A)-10, MUMBAI DATED 28.10.2015 FOR A.Y. 2010-11 . 2. IN THIS APPEAL THE SOLITARY GRIEVANCE OF THE ASSESS EE IS AGAINST THE ACTION OF THE INCOME TAX AUTHORITIES IN TREATING TH E LOANS RAISED FROM FOUR PARTIES TOTALLING TO ` 14,00,000/- AS UNACCOUNTED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. 3. BRIEFLY PUT THE RELEVANT FACTS ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF PROPERTIE S AND IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESS EE HAS RECEIVED LOANS DURING THE YEAR FROM THE FOLLOWING PARTIES: - SR. NO. NAME OF THE PERSON AMOUNT ( ` ) 1 R.K. ENTERPRISES 10,00,000 2 SUMIT K. BAFNA 1,50,000 3 YOGESH BAFNA 1,00,000 4 AKSHITA K. BAFNA 1,50,000 TOTAL 14,00,000 ======== ITA NO. 574/MUM/2016 M/S. KSHIRSAGAR CONSTRUCTION CO. P. LTD. 2 IN THE ASSESSMENT ORDER THE AO NOTED THAT SO FAR A S THE LOAN OF ` 10,00,000/- TAKEN FROM M/S. R.K. ENTERPRISES IS CONCERNED THE A SSESSEE HAS NOT FURNISHED ANY DETAILS AND, THEREFORE, HE TREATED IT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. WITH REGARD TO THE OTH ER THREE CREDITORS, NAMELY SUMIT BAFNA, YOGESH BAFNA AND AKSHITA BAFNA IT WAS NOTICED THAT THEY WERE MINORS AND THE RELATIVES OF THE DIRECTORS OF THE AS SESSEE COMPANY. THE AO NOTED FROM THE BANK STATEMENTS OF THE THREE CREDITO RS THAT CASH WAS DEPOSITED IN THEIR BANK ACCOUNTS JUST BEFORE ISSUIN G OF LOAN CHEQUES. THE AO WAS NOT SATISFIED WITH THE CREDIT WORTHINESS OF THE THREE CREDITORS AND THEREFORE HE ASSESSED THE UNSECURED LOANS OF ` 1,50,000/-, ` 1,00,000/- AND ` 1,50,000/- IN THE NAMES OF SUMIT BAFNA, YOGESH BAF NA AND AKSHITA BAFNA RESPECTIVELY AS UNEXPLAINED CASH DEPOSITS UNDER SEC TION 68. HENCE AN ADDITION OF ` 14,00,000/- UNDER SECTION 68 OF THE ACT. 4. THE CIT(A) NOTED THAT THE CASH DEPOSITS IN THE ACC OUNTS OF THE THREE MINOR CREDITORS WERE NOT APPROPRIATELY SUBSTANTIATE D. ACCORDING TO HIM THOUGH THE ASSESSEE CLAIMED THAT GIFTS HAVE BEEN RE CEIVED BY THE MINORS BUT THERE WAS NO EVIDENCE TO SHOW THE RECEIPT OF GI FTS AND THEIR DEPOSITS IN THE RESPECTIVE BANK ACCOUNTS. IN THE CASE OF R.K. E NTERPRISES THE CIT(A) NOTED THAT IN THE ABSENCE OF ANY DETAILS THE ADDITI ON WAS JUSTIFIED. ACCORDINGLY THE ENTIRE ADDITION OF ` 14,00,000/- BY THE AO UNDER SECTION 68 OF THE ACT HAS BEEN AFFIRMED. 5. BEFORE ME THE LEARNED A.R. OF THE ASSESSEE POINTED THAT BEFORE THE LOWER AUTHORITIES THE ASSESSEE COULD NOT OBTAIN THE REQUISITE CONFIRMATION FROM R.K. ENTERPRISES. BY REFERRING TO PAGES 13 TO 17 OF THE PAPER BOOK THE LEARNED A.R. POINTED OUT THAT R.K. ENTERPRISES HAS DULY CONFIRMED THE STATEMENT OF ACCOUNT AND ALSO THE ACCOUNT OF SUBSEQ UENT PERIOD WHERE THE LOAN HAS BEEN REPAID BY THE ASSESSEE THROUGH BANKIN G CHANNELS. THE LEARNED A.R. POINTED OUT THAT THE ENTIRE TRANSACTIO NS ARE VERIFIABLE AND R.K. ENTERPRISES HAS ALSO COMMUNICATED THE PAN IN THE CO NFIRMATION FILED. THE LEARNED A.R. PRAYED THAT THE AFORESAID ADDITIONAL E VIDENCE MAY KINDLY BE ADMITTED AND THAT THE MATTER MAY BE SET ASIDE FOR P ROPER VERIFICATION. WITH REGARD TO THE THREE MINOR CREDITORS THE LEARNED A.R . HAS REFERRED TO THEIR ITA NO. 574/MUM/2016 M/S. KSHIRSAGAR CONSTRUCTION CO. P. LTD. 3 CONFIRMATION POINTING OUT THE RESPECTIVE PAN AND TH E FACT THAT THEY HAVE RECEIVED GIFTS AGAINST WITH THE IMPUGNED LOANS TO A SSESSEE HAS SOUGHT TO BE EXPLAINED. 6. ON THE OTHER HAND, THE LEARNED D.R. APPEARED FOR TH E REVENUE POINTED OUT THAT THE LOWER AUTHORITIES HAVE DECIDED THE ISSUE ON THE BASIS OF THE MATERIAL BEFORE THEM AND THAT IT WAS FOR THE ASSESSEE TO PROPERLY EXPLAIN THE CREDITS APPEARING IN THE ACCOUNT BOOKS. 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN SO FAR AS THE LOANS OF ` 4,00,000/- RECEIVED FROM THE THREE MINORS ARE CONCE RNED, I FIND THAT NO SPECIFIC EXPLANATIONS REGARDING THE SOURCE OF INCOME HAVE BEEN GIVEN. APART FROM MAKING A GENERALISED OBSERVATION ABOUT THE MINORS RECEIVING THE GIFTS AT DIFFERENT POINTS OF TIME NO SPECIFIC INSTANCES HAVE BEEN BROUGHT OUT. THEREFORE, IN MY VIEW THE CIT(A) MADE NO MISTAKE IN TREATING THE LOANS OF ` 4,00,000/- FROM THE THREE MINORS AS UNEXPLAINED CASH CREDITS WITHIN THE MEANING OF SECTION 68 OF TH E ACT. 8. IN SO FAR AS THE RECEIPT OF ` 10,00,000/- FROM R.K. ENTERPRISES IS CONCERNED I HAVES PERUSED THE ADDITIONAL EVIDENCE N OW SOUGHT TO BE RELIED UPON BY THE ASSESSEE. OSTENSIBLY, CONFIRMATION OBTA INED FROM R.K. ENTERPRISE IS A VERIFIABLE DOCUMENT AND IS RELEVANT TO DECIDE THE TAX LIABILITY OF THE ASSESSEE AND THEREFORE I DEEM IT F IT AND PROPER TO DIRECT THE AO TO CONSIDER THE SAME AND THEREAFTER DECIDE THE I SSUE AFRESH AS PER LAW. NEEDLESS TO MENTION THAT THE AO SHALL ALLOW THE ASS ESSEE REASONABLE OPPORTUNITY OF BEING HEARD AND TO PRODUCE SUCH MATE RIAL IN SUPPORT OF THE CREDIT OF ` 10,00,000/- APPEARING IN THE NAME OF R.K. ENTERPRIS ES. THUS, ON THIS ASPECT THE ASSESSEE SUCCEEDS. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATED: 22 ND SEPTEMBER, 2017 ITA NO. 574/MUM/2016 M/S. KSHIRSAGAR CONSTRUCTION CO. P. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -10, MUMBAI 4. THE PR. CIT 5, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.