ITO WD 2(3), THANE V. RADHIKA C. MALHOTRA, MUMBAI

ITA 597/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1091 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SOMUGYAN PAL
• Assessee Lawyers: SUBODH RATNAPARKE
• Keywords: Additional evidence; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 597/MUM/2009 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER - 2(3) SMT. RADHIKA C. MALHOTRA QURESHI MANSION, GOKHALE ROAD PROP. M/S. SHREE SAI AGENCY NAUPADA, THANE 400062 VS. FLAT NO. 704, BLDG. NO. 7/B EDEN ROASE BEVERLY PARK MIRA ROAD401107 PAN - ACRPM 4493 L APPELLANT RESPONDENT APPELLANT BY: SHRI SUBODH RATNAPARKE RESPONDENT BY: SMT. SOMUGYAN PAL O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A)-II, THANE DATED 23.10.2008. 2. REVENUE IS AGGRIEVED THAT THE CIT(A) HAS ADMITTED A DDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A. GROUND NO. 1 RAISED B Y THE REVENUE ON THIS ISSUE IS AS UNDER: - 1. IN THE COURSE OF APPELLATE PROCEEDINGS, THE LEA RNED CIT(A) HAS ADMITTED FRESH EVIDENCE, AND THE AO HAS BEEN DENIED THE OPPORTUNITY TO EXAMINE AND REBUT THE ADDITIONAL EVI DENCE. THE SAID ACTION OF THE CIT(A) IS IN CONTRAVENTION OF RULE 46 A OF THE INCOME TAX ACT. THE ASSESSEE HAS PRODUCED FRESH EVIDENCE I N RESPECT OF THE FOLLOWING DISALLOWANCES. A) LIABILITIES IN THE PERSONAL BALANCE SHEET OF TH E ASSESSEE AMOUNTING TO RS.11.71 LACS, WHICH REMAINED TO BE PR OVEN GENUINE DUE TO FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THE NATURE AND GENUINENESS OF THE TRANSACTIONS. B) LIABILITIES AMOUNTING TO RS.1.15 LACS IN THE BA LANCE SHEET OF I.P. KIDZ WHEREIN THE ASSESSEE FAILED TO PROVE THE NATURE AND GENUINENESS OF THE TRANSACTION RESULTING IN SUCH LI ABILITIES. C) UNEXPLAINED SOURCES OF CAPITAL INTRODUCTION OF RS.14.08 LACS BY THE ASSESSEE. ITA NO. 597/MUM/2009 SMT. RADHIKA C. MALHOTRA 2 3. IN ORDER TO EXAMINE WHETHER THERE WAS ANY ADDITIONA L EVIDENCE FURNISHED BEFORE THE CIT(A) WHICH WAS NOT FURNISHED BEFORE THE A.O., AS THERE ARE FINDINGS BY THE CIT(A) THAT ALL EVIDENCE WERE PRODUCED BEFORE THE A.O., THE LEARNED D.R. WAS DIRECTED TO PRODUCE THE ASSESSMENT RECORD VIDE HEARING DATED 22.01.2010 AND THE LEARNED D.R. HAS P RODUCED THE RECORD. IT WAS THE CONTENTION OF THE LEARNED COUNSEL THAT ALL THE CONFIRMATIONS, CLARIFICATIONS AND ACCOUNT COPIES WERE FURNISHED BE FORE THE A.O. AT THE TIME OF ASSESSMENT AND THE A.O. HAS PASSED THE ORDER WIT HOUT MENTIONING THEM OR WITHOUT REFERRING TO THE DETAILS. BEFORE THE CIT (A) THE ASSESSEE HAS FURNISHED THE SAME AGAIN AND IN SUPPORT OF THE CONF IRMATIONS FILED WITH REFERENCE TO CERTAIN TRANSACTIONS THE ASSESSEE HAS FURNISHED COPIES OF THE RETURNS AND BALANCE SHEET WHICH ARE ALREADY ON RECO RD WITH THE DEPARTMENT AND THERE WAS NO ADDITIONAL EVIDENCE FURNISHED. HE REFERRED TO THE ORDER OF THE CIT(A) IN THIS REGARD. THERE WERE NO CONTENTION S ON MERIT EXCEPT THAT RULE 46A WAS VIOLATED. 4. THE LEARNED D.R. SQUARELY ADMITTED THAT THE ASSESSE E HAS FILED CONFIRMATIONS BEFORE THE A.O. ON THE SAME ISSUE AND SOME CLARIFICATORY DETAILS WERE FILED, PARTICULARLY WITH REFERENCE TO CAPITAL BALANCE OF I.P. KIDZ CONTESTED IN GROUND NO. 1(B)/(C). HOWEVER, IT IS TH E PRAYER OF THE LEARNED D.R. THAT IF PERMITTED THEY WOULD RAISE THE ISSUES ON MERIT. 5. WE HAVE CONSIDERED THE ISSUE. THE CITS AUTHORIZATI ON FOR APPEAL IS ONLY WITH REFERENCE TO VIOLATION OF RULE 46A BY THE CIT(A) AND THERE IS NO CONTENTIONS ON MERITS ON THE RELIEF GIVEN BY THE CI T(A). AS SEEN FROM THE ORDER OF THE CIT(A), HE HAS CONSIDERED THE ISSUES O N MERIT AND THERE IS NO NEED TO DIFFER FROM THE FINDINGS OF THE CIT(A) AS T HE A.O. HAS MADE ADDITIONS IGNORING THE CONFIRMATIONS ON RECORD. NOW WITH REFE RENCE TO THE SO CALLED ADDITIONAL EVIDENCE CONTESTED IN THE GROUND THE FIN DINGS OF THE CIT(A) ARE WORTH EXTRACTING. WITH REFERENCE TO GROUND NO. 1(A) ON LIABILITIES IN THE BALANCE SHEET THE ORDER OF THE CIT(A) IN PARA 4.2 I S AS UNDER: - 4.2 THE LEARNED A.R. HAS EXPLAINED VARIOUS CREDITS WITH NECESSARY DETAILS AND EVIDENCE WITH NECESSARY ENTRIES WITH BO OKS OF ACCOUNT. IT IS ALSO STATED BY THE LEARNED A.R. THAT THE APPELLANT HAS SUBMITTED THE CONFIRMATION OF CREDITORS IN ALL THE CASES EXCEPT M /S. PREMIUM FOODS OF ITA NO. 597/MUM/2009 SMT. RADHIKA C. MALHOTRA 3 RS.1,00,000/- DURING THE COURSE OF ASSESSMENT PROCE EDINGS. IN THIS REGARD, THE LEARNED A.R. HAS PRODUCED A COPY OF THE LETTER DATED 31.10.2007 WHEREIN THE CONFIRMATION AS MENTIONED AB OVE PLACED ON RECORDS OF THE A.O. FROM THE ABOVE, IT WILL BE SEEN THAT THE APPELLANT HAS DISCHARGED THE ONUS OF SUBSTANTIATING THE CREDITS. THE APPELLANT HAS ALSO PRODUCED BOOKS OF ACCOUNT IN SUPPORT OF SUCH CREDIT S. THE LEARNED A.R. HA ALSO FURTHER SUBSTANTIATED THE CREDITS WITH SUPP ORTING EVIDENCES LIKE COPY OF I.T. RETURNS, BALANCE SHEET OF THE CREDITOR S WHEREVER NECESSARY. IT COULD BE SEEN FROM THE SUPPORTIVE EVIDENCES THAT LOAN FROM CITY BANK TIMES CARDS ARE ALSO RECEIVED BY CHEQUE PAYMENTS. A S MENTIONED EARLIER, ALL THESE EVIDENCES HAVE ALREADY BEEN SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF VIDE AP PELLANTS LETTER DATED 31.10.2007. IN VIEW OF THE ABOVE, THE ADDITION ON A CCOUNT OF CREDITS OF SHRI GANESH AGENCY PVT. LTD. RS.1,31,973/-, OUTSTAN DING EXPENSES OF RS.2,53,4652/-, SHRI CHETAN MALHOTRA RS.6,38,677/-, CITY BANK TIMES CARDS RS.1,47,872/- ARE INCORRECT AND HENCE DELETED . HOWEVER, SINCE THE LEARNED A.R. IS NOT ABLE TO PRODUCE ANY EVIDENCE FO R THE ADDITION MADE OF RS.1,00,000/- TOWARDS ADVANCE FROM M/S. PREMIUM FOO DS, THE SAME IS CONFIRMED. 6. AS SEEN FROM THE ABOVE THE CIT(A) HAS GIVEN A FINDI NG THAT ALL THESE EVIDENCE HAVE BEEN SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF VIDE LETTER DATED 30. 10.2007 HENCE, WE ARE OF THE VIEW THAT THE GROUND TAKEN BY THE A.O. WITH REF ERENCE TO GROUND NO. 1(A) IS NOT PROPER AS THERE IS NO ADDITIONAL EVIDENCE AT ALL FURNISHED BEFORE THE CIT(A). ACCORDINGLY THIS GROUND IS REJECTED. 7. WITH REFERENCE TO GROUND 1(B) REGARDING LIABILITIES AMOUNTING TO RS.1.15 LAKHS IN THE BALANCE OF I.P. KIDZ, THE CIT( A)S FINDINGS ARE AS UNDER:- 4.3. OUT OF THE ABOVE, LOAN OF RS.1,00,000/- HAS R ECEIVED FROM M/S. KESHAV INTERNATIONAL, PROPRIETARY FIRM OF K.K. MALH OTRA (HUF). THE KARTA OF THE HUF IS STATED TO THE FATHER-IN LAW OF THE AP PELLANT. IT COULD BE SEEN FROM THE APPELLANTS LETTER DATED 31.10.2007 THAT D URING THE COURSE OF ASSESSMENT PROCEEDING ITSELF, THE APPELLANT HAS PRO DUCED THE CONFIRMATION FROM THE SAID CREDITOR AND HENCE DISCH ARGED THE ONUS OF SUBSTANTIATE THE CREDIT. IT IS ALSO SEEN THAT THE A PPELLANT HAS FURNISHED COPY OF I.T. RETURN OF THE SAID CREDITOR. IN VIEW O F THE ABOVE MENTIONED FACTS, ADDITION OF RS.1,00,000/- ON ACCOUNT OF CRED IT BALANCE IS DELETED. 8. HEREIN ALSO THERE IS NO ADDITIONAL EVIDENCE FURNIS HED BEFORE THE CIT(A) AND ALL THE EVIDENCE ARE FURNISHED BEFORE THE A.O. ITSELF. ACCORDINGLY THIS GROUND ALSO DOES NOT MERIT ANY CONSIDERATION, HENCE , REJECTED. ITA NO. 597/MUM/2009 SMT. RADHIKA C. MALHOTRA 4 9. GROUND NO. 1(C) OF UNEXPLAINED SOURCE OF CAPITAL OF RS.14.08 LAKHS, THE CIT(A)S FINDINGS IN PARA 4.4 ARE AS UNDER: - 4.4 IT IS SEEN FROM THE RECORDS THAT THE APPELLANT IS PROPRIETOR OF TWO FIRMS M/S. I.P. KIDZ & SHREE SAI AGENCY. IT IS EXPL AINED BY THE LEARNED A.R. THAT THE APPELLANT HAS MADE CERTAIN PAYMENTS O N THE BANK ACCOUNT OF SHREE SAI AGENCY AND THESE PAYMENTS WERE RELATED TO BE M/S. I.P. KIDZ PLACE AND NECESSARY BOOK ENTRIES HAVE BEEN MAD E AND IN THE CAPITAL ACCOUNT OF PROPRIETARY CONCERN SHREE SAI AG ENCY AN AMOUNT OF RS.5,49,872/- HAS BEEN DEBITED TOWARDS CAPITAL ACCO UNTS AND THE SAME AMOUNT HAS BEEN INTRODUCED IN M/S. I.P. KIDZ PLACE AS CAPITAL. ULTIMATE EFFECT OF THE ABOVE TRANSACTION IS THAT THE APPELLA NTS CAPITAL IN ONE PROPRIETARY FIRM IS REDUCED AND THAT IN THE OTHER F IRM IS INCREASED BY THE SAME AMOUNT AND HENCE ADDITION MADE ON THIS ACCOUNT NOT BEEN JUSTIFIED IS DELETED. THE RECEIPT OF RS.6,38,677/- FROM APPELLANTS HUSBAND, SHRI CHETAN MALHOTRA IS SUPPORTED BY CONFI RMATION FROM SHRI CHETAN MALHOTRA AND FURTHER SUBSTANTIATED BY PRODUC ING COPIES OF RETURN OF INCOME AND BANK STATEMENT. SIMILARLY, CREDIT OF RS.98,739/- BEING PAYMENT BY SHRI GANESH AGENCY IN THE HANDS OF APPEL LANT IS ALSO NOT WARRANTED AS THE SAME IS SUBSTANTIATED BY CONFIRMAT ION LETTER AND BANK STATEMENT. IT IS AGAIN REITERATED THAT THE EVIDENCE S SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS ARE NOT IN THE NATU RE OF ADDITIONAL EVIDENCES BUT SUBSTANTIATING WHAT IS ALREADY BEEN P LACED ON THE RECORD OF THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS . IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION OF RS.14,08,611/- IS DELET ED. 10. AS SEEN FROM THE ABOVE, WITH REFERENCE TO AN AMOUNT OF RS.5,49,872/- NO ADDITIONAL EVIDENCE HAVE BEEN FILED. WITH REFERE NCE TO RECEIPT OF RS.63,86,677/- FROM ASSESSEES HUSBAND THE CONFIRMA TION FILED BEFORE THE A.O., WHICH WAS SUBSTANTIATED BY COPY OF THE RETURN AND BANK STATEMENT. WITH REFERENCE TO CREDIT OF RS.98,739/- THE CONFIRM ATION LETTER IS ALSO AVAILABLE AND ONLY BANK STATEMENT WAS SUBSTANTIATED . AT BEST IT CAN BE CONSIDERED THAT ONLY THE BANK STATEMENT FILED BEFOR E THE CIT(A) WITH REFERENCE TO THE CONFIRMATION ALREADY ON RECORD MAY BE CONSIDERED IN THE NATURE OF ADDITIONAL EVIDENCE BUT THE OTHER DOCUMEN TS WERE ALSO AVAILABLE WITH THE A.O. WHO SIMPLY IGNORED THE CONFIRMATIONS WHILE MAKING THE ADDITIONS. HE DID NOT EVEN BOTHER TO VERIFY OR ENQU IRE BEFORE MAKING THE ADDITION. IT IS ALSO THE FINDING OF THE CIT(A) THAT THE EVIDENCE SUBMITTED ARE NOT IN THE NATURE OF ADDITIONAL EVIDENCE BUT SUPPOR TING DOCUMENTS LIKE RETUNS, BANK STATEMENTS. ITA NO. 597/MUM/2009 SMT. RADHIKA C. MALHOTRA 5 11. WE AGREE WITH THE ABOVE FINDINGS OF THE CIT(A). THE CIT(A) HAS POWERS TO ADMIT EVIDENCE FOR PROPER DISPOSAL OF THE APPEAL . THE PRINCIPLES WERE ESTABLISHED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE CIT VS. SURETECH HOSPITAL & RESEARCH CENTRE LTD. 293 ITR 53 AND IN T HE CASE OF SMT. PRABHAVATI S. SHAH VS. CIT 231 ITR 1. SINCE THESE S UPPORTING BANK STATEMENTS WERE ONLY NECESSARY FOR SUBSTANTIATING T HE CONFIRMATIONS WHICH WERE ALREADY BEFORE THE A.O., WE ARE OF THE VIEW TH AT THESE CANNOT BE CONSIDERED AS ADDITIONAL EVIDENCE AND EVEN IF THEY ARE IN THE NATURE OF ADDITIONAL EVIDENCE, THERE IS NO VIOLATION OF RULE 46A AS THE CIT(A) HAS PROPERLY CONSIDERED THEM FOR DISPOSING OF THE APPEA L. AS ALREADY STATED ABOVE, THERE IS NO CASE FOR THE REVENUE ON MERITS. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI, DATED: 16 TH JULY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) THANE II 4. THE CIT THANE I 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.