AJAY SWAMINATH IYER, MUMBAI V. ITO 25(3)(3), MUMBAI

ITA 5840/MUM/2013

• Counselvise Citation: 584019914 RSA 2013
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: JAYESH DADIA
• Keywords: Additional evidence; Assessment record
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 5840 / MUM./ 2013 ( / ASSESSMENT YEAR : 20 0 9 10 ) MR. AJAY SWAMINATHA IYER SVITLAND NEAR SAIDHAM WESTERN EXPRESS HIGH WAY KANDIVALI (E), MUMBAI 400 101 .. / APPELLANT V/S INCOME TAX OFFICER WARD 25(3)(3), MUMBAI .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER A AA PI1776K / ASSESSEE BY : MR. JAY ESH DADIA / REVENUE BY : MR. PITAMBER DAS / DATE OF HEARING 06 . 01 .201 4 / DATE OF ORDER 15.01.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DA TED 16 TH JULY 2013 , PASSED BY THE COMMISSIONER (APPEALS) XXXV, MUMBAI, UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 200 9 10. THE SOLE GROUND RAISED BY THE ASSESSEE RELATES TO CONFIRMATION OF UNDISCLOSED MR. AJAY SWAMINATHAN IYER 2 CON SULTANCY RECEIPTS OF ` 18,78,500 INSTEAD OF TREATING THE SAID AMOUNT AS LOAN. 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PROVIDING I.T. RELATED SERVICES IN THE NAME AND STYLE OF SARAL INFOTECH . THE PROFIT FROM THE PROPRIET ARY BUSINESS WAS SHOWN AT ` 6,20,950 AND AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA, THE ASSESSEE HAS SHOWN NET TAXABLE INCOME OF ` 5,21,864. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN UNSECURED LO AN RECEIPTS AND ACCORDINGLY, HE REQUIRED THE ASSESSEE TO FILE CONFIRMATION OF ALL THE LOANS REQUIRED FROM THE FOLLOWING PERSONS: I ) M/S. SAI ASSOCIATES ` 15,18,000 II ) MR. SANTOSH SHAH ` 1,50,000 III ) MR. S.S. IYER ` 2,10,500 3 . IN RESPONSE TO THE ABOVE , THE ASSES SEE FILED CONFIRMATION LETTERS FROM THESE PERSONS WHEREIN IT WAS MENTIONED THAT THEY HAVE GIVEN THE AMOUNT AS CONSULTANCY CHARGES . THE ASSESSING OFFICER HELD THAT IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD SHOWN UNSECURED LOANS WHEREAS THE PERSONS FROM WH OM THE MONEY WAS RECEIVED HAVE CONFIRMED THAT THE SAME WAS TOWARDS CONSULTANCY CHARGES. ACCORDINGLY, HE DISALLOWED THE UNSECURED LOAN AGGREGATING TO ` 18,78,500 AND BROUGHT TO TAX AS UNDISCLOSED CONSULTANCY RECEIPTS IN THE HANDS OF THE ASSESSEE. 4 . THE ASSES SEE, B EFORE THE FIRST APPELLATE AUTHORITY , SUBMITTED FRESH CONFIRMATION OF LOAN ALONG WITH COPY OF BANK STATEMENT AND RETURN OF INCOME IN CASE OF M/S. SAI ASSOCIATES AND MR. S.S. IYER. BESIDES THIS, MR. AJAY SWAMINATHAN IYER 3 THE LEDGER EXTRACTS OF THE BOOKS OF ACCOUNT OF THESE PERS ONS WERE PRODUCED GIVING THE FULL DESCRIPTION OF THE ENTRIES AS LOAN WAS PASSED IN THE BOOKS OF ACCOUNT. I N CASE OF MR. S.S. IYER AND MR. SANTOSH SHAH, IT WAS ALSO SHOWN THAT THE LO ANS WERE OBTAINED BY THE ASSESSEE IN THE EARLIER YEARS AND THE BALANCE AS P ER THE BOOKS OF ACCOUNT WERE THE OPENING BALANCE IN THIS YEAR AND IT WAS BY MISTAKE THAT THESE LOANS WERE SHOWN AS CONSULTANCY CHARGES IN THE CONFIRMATION LETTER. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE SAID ADDITION AFTER OBSERVING AND H OLDING AS UNDER: I HAVE GONE THROUGH THE CONTENTIONS OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THE ONUS OF PROVING THE NATURE OF CREDITS IN HIS ACCOUNTS LAY ENTIRELY ON THE APPELLANT. THE CONFIRMATIONS THAT THE APPELLANT PRODUCED FOR EXAMINATION O F THE ASSESSING AUTHORITY CLEARLY BEAR THE ENTRY CONSULTANCY CHARGES. THE APPELLANT HAS ONLY COME UP WITH THE EXPLANATION THAT THIS IS A CASE OF MIS - PRINT BECAUSE OF MERGING OF THE TRIAL BALANCE. THE AO PROVIDED AN OPPORTUNITY TO THE APPELLANT TO EXPLAIN AS TO HOW THE ALLEGED LOANS WERE ACTUALLY BEING CONFIRMED AS CONSULTANCY CHARGES. THE APPELLANT HAS SUBMITTED COPIES OF BANK ACCOUNT OF MIS SAI ASSOCIATES, THE ITR - V OF MR. S.S. LYER AND COPY OF LEDGER ACCOUNT OF SANTOSH SHAH APART FROM THE CONFIRMATIONS. THE APPELLANT HAS NOT BEEN ABLE TO GET ANY CONFIRMATION FROM EITHER OF THE PARTIES CLEARLY STATING THAT THESE PAYMENTS ARE IN THE NATURE OF LOANS. EVEN THE LEDGER ACCOUNTS SUBMITTED ARE UNSIGNED. IN ANY CASE, THE ISSUE BEFORE THE ASSESSING AUTHORITY WAS NOT THE GENUINENESS OF THE ACTUAL RECEIPT OF PAYMENT BUT THE NATURE OF THE SAID RECEIPT. AT NEITHER THE ASSESSMENT STAGE NOR AT THE APPELLATE STAGE THE APPELLANT HAS DISCHARGED ITS PRIMARY ONUS OF PRODUCING LOGICAL AND CONCRETE EVIDENCE TO SUGGEST AS TO WH Y THE CONFIRMATIONS MADE AS CONSULTANCY CHARGES SHOULD BE HELD AS LOANS. 5 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE FILED A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES WHICH ARE IN THE FORM OF AFFIDAVIT OF THE ASSESSEE ALONG WITH THE AFFIDAVIT OF MR. S.S. IYER, WHO IS FATHER OF THE ASSESSEE, CONFIRMATION OF MR. SANTOSH SHAH AND A COPY OF RETURN OF INCOME OF THESE PERSONS ALONG WITH BALANCE SHEET. THE LEARNED COUNSEL SUBMITTED THAT THESE DOCUMENTS HAVE A VERY VITAL BEARING AND ONLY GO TO CORROBORAT E THE ASSESSEES CONTENTION THAT THE MONEY WHICH HAS BEEN RECEIVED BY THESE PERSONS ARE IN FACT A LOAN AND IT WAS BY A MR. AJAY SWAMINATHAN IYER 4 MISTAKE OF THE COUNSEL THAT THE CONFIRMATION OF THE LOAN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS MENTIONED AS CONSULTANCY CHARGES . HE SUBMITTED THAT IN THE RETURN OF INCOME AND THE BALANCE SHEET OF M/S. SAI ASSOCIATE (PROPRIETOR MR. S.S. IYER) AND THE BALANCE SHEET OF MR. S.S. IYER ( IN THE INDIVIDUAL CAPACITY ) HAVE CLEARLY SHOWN THE AMOUNT GIVEN TO THE ASSESSEE AS LOAN. THES E ARE THE PART OF THE ASSESSMENT RECORDS ONLY . IN THE WAKE OF THESE DOCUMENTS, THE MATER CAN BE RE EXAMINED BY THE ASSESSING OFFICER. 6 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE OBJECTED TO FILING OF THE ADDITIONAL EVIDENCE AND SUBMITTED TH AT MR. S.S. IYER IS THE FATHER OF THE ASSESSEE THEN WHAT PREVENTED THE ASSESSEE TO FILE THESE DOCUMENTS BEFORE THE ASSESSING OFFICER. NO COGENT REASON HAS BEEN GIVEN BY THE ASSESSEE FOR NOT FURNISHING THESE DOCUMENTS BEFORE THE AUTHORITIES BELOW. THUS, NOT ONLY THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) SHOULD BE CONFIRMED BUT ALSO THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE SHOULD NOT BE ADMITTED. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AS WELL AS THE M ATERIAL AVAILABLE ON RECORD. THE ASSESSEE, IN HIS BOOKS OF ACCOUNT, HAS SHOWN UNSECURED LOANS IN HIS BOOKS OF ACCOUNT FROM THREE PERSONS NAMELY SAI ASSOCIATES, WHICH IS A PROPRIETARY CONCERN OF S.S. IYER, SANTOSH SHAH AND S.S. IYER (FROM PERSONAL ACCOUNT) WHO IS THE FATHER OF THE ASSESSEE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE CONFIRMATION FILED BY THE AFORESAID PERSONS MENTIONED THE RECEIPTS AS CONSULTANCY CHARGES . BASED ON THIS CONFIRMATION, THE ASSESSING OFFICER HAS TAKEN A VIEW THAT IT IS NOT A LOAN BUT UNDISCLOSED CONSULTANCY RECEIPTS. BEFORE THE LEARNED COMMISSIONER (APPEALS), IT WAS CLARIFIED THAT THE AMOUNT RECEIVED WAS ON ACCOUNT OF LOAN ONLY AND THIS IS EVIDENT FROM THE COPY OF LEDGER MR. AJAY SWAMINATHAN IYER 5 ACCOUNT APPEARING IN THEIR BOOKS OF ACCOUNT. NO W, BEFORE US, THE ASSESSEE HAS FILED AFFIDAVIT IN CASE OF S.S. IYER, CONFIRMATION FROM THESE PERSONS ALONG WITH ACKNOWLEDGEMENT OF RETURN OF INCOME AND BALANCE SHEET TO SHOW THAT THESE WERE IN THE NATURE OF LOANS AND NOT CONSULTANCY CHARGES AND THE EARLIER CONFIRMATION WHICH WAS FILED WAS DUE TO SOME MISTAKE ON THE PART OF THE CHARTERED ACCOUNTANT. SINCE THE DISPUTE IS WITH REGARD TO THE NATURE OF RECEIPTS , WHETHER IT IS ON ACCOUNT OF LOAN OR ON ACCOUNT OF CONSULTANCY CHARGES, THE SAME CAN BE VERY WELL VERI FIED FROM THESE DOCUMENTS WHICH ARE MOSTLY PART OF THE ASSESSMENT RECORDS OF THESE PERSONS. THEREFORE, IN THE INTEREST OF JUSTICE, WE ADMIT THESE ADDITIONAL EVIDENCES FILED BEFORE US AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND DIREC T HIM TO VERIFY AND EXAMINE THESE DOCUMENTS AND THEN ONLY DRAW CONCLUSION ABOUT THE NATURE OF RECEIPTS. THUS, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8 . 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 15 TH JANUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY 2014 SD / - . . P.M. JAGTAP ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 15 TH JANUARY 2014 MR. AJAY SWAMINATHAN IYER 6 / COPY OF THE OR DER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI