GOLD STAR METALS LTD, MUMBAI V. ACIT 9(1), MUMBAI

ITA 5747/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62672 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 25-06-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 15-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K NAYAK
• Assessee Lawyers: K K LALKAKA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI . . , ! ! ! ! ' , . BEFORE SHRI G E VEERABHADRAPPA , PRESIDENT & SHRI VIJAY PAL RAO, JM ./ I.T.A. NO. 5747/MUM/2010 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR : 2004-05 ) M/S GOLD STAR METALS LTD 1 ANANDI COOP HG SOC LTD NADIADWALA COLONY NO.2 S V ROAD, MALAD(W) MUMBAI 64 $ $ $ $ / VS. THE ASST COMMR OF INCOME TAX 9(1), MUMBAI &' () ./ * ./ PAN/GIR NO . : AABCG0330M ( '+ / APPELLANT ) .. ( ,-'+ / RESPONDENT ) '+ . ( / APPELLANT BY : SHRI K K LALKAKA ,-'+ / . ( / RESPONDENT BY : SH K NAYAK $ / 0) / DATE OF HEARING : 25 TH JUNE 2012 12% / 0) / DATE OF PRONOUNCEMENT : 29 TH JUNE 2012 3(4 / O R D E R PER : ' , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.5. 2010 OF CIT( A) FOR THE ASSESSMENT YEAR 2004 05. 2 THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS IN THIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN SUSTAINING THE ORDER OF THE INCOME TAX OFFICER BY ERRONEOUSLY HOLDING THAT THE DIRECTORS REMUNERATION OF RS.3,60,0 00/- PAID TO SHRI RAJMAL JAM WAS NOT A PERMISSIBLE DEDUCTION UNDER THE PROVISIO NS OF THE INCOME TAX ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) FAILED ! TO APPRECIATE THAT ALTHOUGH THE APPELLANT HAS ESTABLISHED THE M/S GOLD STAR METALS LTD ITA NO.5747/M/10 2 IDENTITY, CREDITWORTHINESS AND BONAFIDE OF LOAN TRAN SACTION TAKEN BY THE APPELLANT OF RS.3,3 1,498/-, THE LEARNED CIT(A) HAD CONFIRMED THE ADDITION OF LOAN OF RS.3,31,498/- ON THE ALLEGED GROUND THAT TH E SAID LOANS WERE NOT EXPLAINED SATISFACTORILY. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN DISALLOWING INTEREST PAID TO VARIOUS PAR TIES OF RS.1,08,551/- ON THE ALLEGED GROUND THAT THE GENUINENESS OF THE LOAN GIV EN TO THE APPELLANT IN RESPECT OF WHICH THE INTEREST WAS PAID WAS NOT PROVED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST U /S. 234A, 234B & 234C OF THE INCOME TAX ACT, ALTHOUGH THE SAID INTEREST IS N OT LEVIABLE. 3 THE ASSESSEE HAS ALSO FILED AN APPLICATION FOR AD MISSION OF ADDITIONAL EVIDENCE ALONG WITH THE ADDITIONAL EVIDENCE IN SUPP ORT OF THE GROUNDS RAISED IN THIS APPEAL. 4 WE HAVE HEARD THE LEARNED A.R OF THE ASSESSEE AS WELL AS THE LEARNED DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LEA RNED A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAD CLAIMED DIRECTORS REMUNERATION OF RS. 3,60,000/- PAID TO SHRI RAJMAL JAIN. THE ASSESSING OFFICER HAD DISALLOWED THE SAID CLAIM OF RS. 3,60,000/- ON THE GROUND THAT THE ASSESSEE HIMS ELF HAS ADMITTED THAT MR ASHOK P SHAH WAS REQUIRED TO HANDLE THE SALES AS WELL AS CO LLECTION FROM THE PARTIES DUE TO MR RAJMAL JAIN WAS NOT IN A POSITION TO ATTEND THE OFFICE BECAUSE OF OTHER COMMITMENTS. THE LEARNED A.R. HAS SUBMITTED THAT TH E SAID OBSERVATION OF THE ASSESSING OFFICER IS TOTALLY OUT OF CONTEXT AND CON TRARY TO THE ACTUAL FACTS. IN SUPPORT OF THE CLAIM THE ASSESSEE HAS FILED THE ADDITIONAL EVIDENCE TO DEMONSTRATE THE FACT THAT MR RAJMAL JAIN WAS ACTIVELY INVOLVED IN RUNNIN G OF AFFAIRS OF THE COMPANY. THE LD AR HAS REFERRED THE DOCUMENTS FROM PAGE NUMBER 1 TO 6 OF THE PAPER BOOK BEING THE ADDITIONAL EVIDENCE TO SHOW THAT THE ALL DOCUME NTS WERE ENDORSED AND SIGNED AS WELL AS PREPARED WITH THE INVOLVEMENT OF MR RAJM AL JAIN. M/S GOLD STAR METALS LTD ITA NO.5747/M/10 3 5 AS REGARDS THE DISALLOWANCE OF LOAN OF RS. 3,31,4 98/-, THE LEARNED A.R. OF THE ASSESSEE HAS SUBMITTED THAT OUT OF TOTAL 68 PARTIES , THE ASSESSEE COULD NOT PRODUCE PAN NUMBER AND THE PARTIES WITH RESPECT TO 10 OF TH E CREDITORS AND THEREFORE, THE ASSESSING OFFICER DISALLOWED RS. 3,31,498/- ON AC COUNT OF LOAN AND RS. 1, 08, 551/- ON ACCOUNT OF INTEREST BEING UNEXPLAINED CREDIT. THE LEARNED A.R. HAS FURTHER SUBMITTED THAT DUE TO SHORT SPAN OF TIME, IT WAS NOT POSSIBLE TO PRODUCE ALL THE DETAILS AS WELL AS THE PARTIES BEFORE THE ASSESSING OFFICER. HE HAS FU RTHER SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE EVI DENCE, WHICH RESULTED UNWARRANTED ADDITION OF RS. 4, 40, 049/- ON ACCOUNT OF LOAN AS WELL AS INTEREST. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ALSO SUMMAR ILY DISMISSED THE ASSESSEE'S CONTENTION FOR ADMITTING THE ADDITIONAL EVIDENCE WI THOUT GOING INTO THE FACTS OF THE CASE. HE HAS REFERRED THE LETTER DATED 12,12,.2006 WHEREBY FURNISHING THE EXPLANATION REGARDING LOAN TAKEN AND ALSO INFORMING THE ASSESSING OFFICER THAT IT IS NOT POSSIBLE TO PRODUCE THE PARTIES WITHIN SUCH A S HORT SPAN OF TIME. THE LD A.R OF THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSE E HAS THE ALREADY REPAID THESE LOANS AND MOST OF THE LOANS PERTAINS TO EARLIER YEA RS AND NOT TAKEN DURING THE YEAR UNDER CONSIDERATION. THUS, THE LEARNED A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE LOAN TAKEN IN THE EARLIER YEARS CANNOT BE DISALLOWE D AS UNEXPLAINED CREDIT UNDER SECTION 68 FOR THE YEAR UNDER CONSIDERATION. IN SUP PORT OF HIS CONTENTION, THE LD AR OF THE ASSESSEE HAS REFERRED THE ADDITIONAL EVIDENCE F ILED FROM PAGE NO. 7 TO 29 OF THE PAPER BOOK WHICH CONSISTS THE CONFIRMATION OF THE P ARTIES, BANK STATEMENT ETC., THUS, THE LD AR OF THE ASSESSEE HAS PLEADED THAT TH E ADDITIONAL EVIDENCE MAY BE ADMITTED IN SUPPORT OF THE CLAIM OF THE ASSESSEE AN D THE ADDITION MADE BY THE AUTHORITIES BELOW MAY BE DELETED. 5.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT DESPITE SUFFICIENT OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER, THE A SSESSEE COULD NOT PRODUCE THE M/S GOLD STAR METALS LTD ITA NO.5747/M/10 4 EVIDENCE, WHICH IS PROPOSED TO FILE NOW. THE LD D R HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNISH AND PRODUCE THE CONF IRMATION, PAN NUMBER AND THE PARTIES TO PROVE THE GENUINENESS, IDENTITY AND CRED ITWORTHINESS OF THE LOAN CREDITORS THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED TO M AKE THE ADDITION ON THIS ACCOUNT. HE HAS FURTHER SUBMITTED THAT ALL THESE EVIDENCES ARE REQUIRED TO BE EXAMINED AND VERIFIED BY THE ASSESSING OFFICER; THEREFORE, THE S AME CANNOT BE CONSIDERED AT THIS STAGE. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE DID NOT EXPLAIN THIS FACT THAT THE LOAN CREDITORS ARE PERTAINING TO THE EARLIER YEARS. HE HAS REFERRED THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSING OFFICER HAS MENTIONED THAT AS PER THE AUDIT REPORT THE LOANS ARE SHOWN AS TAKEN BY THE ASSESSEE IN CLAUSE 10 OF THE SAID REPORT WHICH SHOWS THAT THESE LOANS ARE TAKEN IN THE YEAR UNDER CONSIDERATION. 6 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL A S RELEVANT MATERIAL ON RECORDS. AS REGARDS THE DISALLOWANCE OF DIRECTORS REMUNERATION OF RS. 3,60,000/-PAID TO SHRI RAJMAL JAIN, THE ASSESSING OFFICER DISALLO WED THE SAME ON THE GROUND THAT THE SAID DIRECTOR HAS NOT HANDLED THE AFFAIRS OF TH E ASSESSEE COMPANY. NOW THE ASSESSEE HAS FILED THE ADDITIONAL EVIDENCE TO SHOW THAT MR RAJMALL JAIN WAS ACTIVELY INVOLVED IN THE AFFAIRS OF THE ASSESSEE COMPANY. SINCE THIS ADDITIONAL EVIDENCE HAS NOT BEEN EXAMINED AND VERIFIED BY THE AUTHORITIES B ELOW; THEREFORE, IN THE INTEREST OF JUSTICE, WE ADMIT THE SAME AND REMAND THE ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO DECIDE THE SAME AFTER CONSIDERING THE AD DITIONAL EVIDENCE FILED BY THE ASSESSEE. 7 AS REGARDS THE DISALLOWANCE OF LOAN OF RS. 3,31, 498/-, IT IS BORNE OUT FROM RECORD THAT OUT OF 68 LOAN CREDITORS, THE ASSESSE E COULD NOT FURNISH THE CONFIRMATION, PAN AND THE PARTIES OF 10 LOAN CREDITORS. NOW THE ASSESSEE HAS FILED THE CONFIRMATION AND BANK STATEMENTS IN THE SHAPE OF AD DITIONAL EVIDENCE, WHICH PRIMA M/S GOLD STAR METALS LTD ITA NO.5747/M/10 5 FACIE DEMONSTRATE THAT THE ASSESSEE HAS REPAID THE LOAN AMOUNT AS WELL AS INTEREST THEREUPON IN MOST OF THE CASES. WE FIND MERIT IN T HE CONTENTION OF THE LD AR THAT, IF SOME OF THE LOANS ARE PERTAINING TO THE EARLIER YEA RS, THAN THE ADDITION UNDER SECTION 68 CANNOT BE MADE IN RESPECT OF THOSE LOANS. 7.1 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO THE RECORD O F THE ASSESSING OFFICER TO DECIDE THE SAME AFTER CONSIDERING THE ADDITIONAL EVIDENCE FILE D BY THE ASSESSEE. IT IS PERTINENT TO MENTION THAT, IF SOME OF THE LOANS ARE FOUND TO BE RELATED TO THE EARLIER YEARS, THAN THE ADDITION UNDER SECTION 68 CANNOT BE MADE A S THE CREDIT IN RESPECT OF THOSE LOANS ARE NOT MADE DURING THE YEAR UNDER CONSIDERAT ION. ACCORDINGLY, THE ISSUES RAISED BY THE ASSESSEE IN THE APPEAL ARE SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFTER CONSIDERING THE ADDITIONAL EVIDENCE AND IN THE LIGHT OF OUR OBSERVATIONS. 8 THE NEXT GROUND RAISED BY THE ASSESSEE IS REGARDI NG LEVY OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE I T ACT, WHICH I S CONSEQUENTIAL IN NATURE AND THEREFORE NO SPECIFIC FINDING IS REQUIRED. 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 6 07 #$ 60 / 8/ 9:(; (? ORDER PRONOUNCED IN THE OPEN COURT ON 29.6.2012 . 3(4 / 2% )( @ A3$7 29.6.2012 2 / B SD/- SD/- ( . . , / G.E. VEERBHADRAPPA ) ( ' / VIJAY PAL RAO ) / PRESIDENT ) # 3& / JUDICIAL MEMBER MUMBAI ; A3$ DATED 29 /06/2012 RAJ@ M/S GOLD STAR METALS LTD ITA NO.5747/M/10 6 COPY FORWARDED TO:69 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBA