RATILAL PATODIA, MUMBAI V. DY CIT CC-1(1), MUMBAI

ITA 6018/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9198 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA JANG PA NGI LD
• Assessee Lawyers: HIRAL SEJPAL LD
• Keywords: Gift; Tax effect
• Section: 143(3); 153A; 201; 11

Judgement Text

SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJ IT SINGH , JM AND HONBLE SHRI MANO J KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 601 8 /MUM/201 8 ( / ASSESSMENT YEAR : 2014 - 15 ) & ./ I.T.A. NO. 601 9 /MUM/2018 ( / ASSESSMENT YEAR : 2015 - 16 ) SHRI RATILAL P AT ODIA 1802/1803, MILLENIUM GRAND PLOT NO.71B, SECTOR - 11 KHARGHAR, NAVI MUMBAI 410 210 / VS. DCIT CC 1(1), R. NO. 903, 9 TH FLOOR, OLD CGO BUILDING, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO . A ARPP - 5561 - P ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MS. HIRAL SEJPAL LD. AR REVENUE BY : SHRI NARENDRA JANG PA NGI LD. CIT - DR / DATE OF HEARING : 26 /07 /2021 / DATE OF PRONOUNCEMENT : 06/08/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. 1 THE GRIEVANCE OF THE ASSESSEE IN AFORESAID APPEALS FOR ASSESSMENT YEARS (AY) 2014 - 15 & 2015 - 16 IS COMMON. IT IS ADMITTED POSITION THAT ADJUDICATION OF ANY ONE APPEAL SHALL EQUALLY APPLY TO THE OTHER APPEAL ALSO. THESE APPEALS WERE HEARD ON 26/07/2021 ALONG WITH APPEALS OF OTHER FAMILY MEMBERS OF THE GROUP SINCE ISSUES WERE SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 2 COMMON. FOR THE PURPOSE OF ADJUDICATION, THE APPEAL FOR AY 2014 - 15 IS TAKEN AS THE LEAD YEAR WHICH ARISES OUT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - 47 , MUMBAI [CIT(A)], DATED 31/07 /20 18 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) R.W.S. 153A OF THE ACT ON 2 1 /12/2016. THE ASSESSEE IS AGGRIEVED BY CONFIRMATION OF CERTAIN ADDITIONS IN THE IMPUGNED ORDER. 1. 2 HAVI NG HEARD RIVAL SUBMISSIONS AND UPON PERUSAL OF RELEVANT MATERIAL ON RECORD, OUR ADJUDICATION WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 2. THE MATERIAL FACTS ARE THAT PURSUANT TO SEARCH ACTION ON BALAJI GROUP ON 28/01/2015, THE PREMISES OF THE ASSESSEE WE RE ALSO COVERED UNDER THE SEARCH. IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE OFFERED RETURNED INCOME OF RS. 5 . 35 LACS WHICH WAS THE SAME AS OFFERED U/S 139(1). THE ASSESSEE WAS SADDLED WITH VARIOUS ADDITIONS WHICH ARE ADJUDICATED AS UNDER: - 3. GIFTS 3.1 THE ASSESSEE RECEIVED GIFTS OF RS.0.9 9 LACS FROM H ER COUSIN BROTHER SHRI MAHESH PATODIA. IN THE ABSENCE OF RETURN OF INCOME AND BANK STATEMENT OF THE DONOR, THE GIFT WAS ADDED TO THE INCOME OF THE DONOR. THE ADDITION, UPON CONFIRMATION BY LD. CIT(A), IS IN CHALLENGE BEFORE US. 3.2 UPON PERUSAL OF DOCUMENTS ON RECORD, WE FIND THAT THE GIFT IS DULY SUPPORTED BY THE AFFIDAVIT OF THE DONOR. THE DONOR HAS DECLARED INCOME OF RS.2.23 LACS IN THE RETURN OF INCOME. THE GIFT IS SUPPORTED BY BANK STATEMENT OF THE DONO R. THUS, GIFTS ARE WELL SUBSTANTIATED. THIS BEING SO, WE DELETE THE IMPUGNED ADDITION AND ALLOW THIS GROUND OF APPEAL. SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 3 4. LOW HOUS EHOLD DRAWINGS 4.1 UPON PERUSAL OF DRAWINGS DETAILS, IT TRANSPIRED THAT THE FAMILY DECLARED AGGREGATE DRAWINGS OF RS.2.52 LACS WHICH INCLUDE CHILDRENS EDUCATION EXPENSES AND LIC PAYMENTS, THE ASSESSEE DID NOT FURNISH COMPLETE DETAILS OF EXPENSES ON VARIOUS ITEMS, EXPENSES DURING FUNCTIONS AND FESTIVALS, TRAVELLING ETC. IT WAS CONCLUDED THAT THE OVERALL DRAWINGS WERE TOO LOW TO R UN A FAMILY. ACCORDINGLY, THE YEARLY DRAWINGS WERE ESTIMATED AT RS.5 LACS AND THE DIFFERENCE OF RS.2.47 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. 4.2 WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY US IN ASSESSEES FAVOR IN ITA NO.6012/MUM/2018 AS FOLLO WS: - 4.4 AFTER GOING THROUGH THE OBSERVATIONS OF LD. CIT(A) AND MATERIAL ON RECORD AND IN VIEW OF OUR OBSERVATIONS IN PRECEDING PARA 3.5, WE ARE OF THE VIEW THAT THE DRAWINGS MADE BY THE MOTHER AS WELL AS GIFTS GIVEN BY HER ARE DULY SUPPORTED BY HER BALAN CE SHEET AS ON 31/03/2014. IT COULD BE SEEN THAT SHE HAS CAPITAL BALANCE OF RS.1287.32 LACS WHICH HAS BEEN INVESTED IN VARIOUS FORMS. THIS CAPITAL BALANCE IS ARRIVED AT AFTER REDUCING GIFTS OF RS.4.94 LACS AND WITHDRAWALS OF RS.10.47 LACS. THE ASSESSEES D RAWINGS IN ALL THE EARLIER YEARS ARE LESS THAN RS.2 LACS WHICH IS EVIDENT FROM DETAIL OF HOUSEHOLD EXPENSES AS PLACED ON RECORD FOR VARIOUS YEARS. THIS BEING THE CASE, THIS ADDITION IS NOT SUSTAINABLE AND HENCE, WE DELETE THE SAME. FACTS BEING PARI - MATERI A THE SAME, WE DELETE THE IMPUGNED ADDITION AND ALLOW THIS GROUND OF APPEAL. 5. UNSECURED LOANS & INTEREST THEREON 5.1 THE ASSESSEE OBTAINED UNSECURED LOANS FROM VARIOUS PARTIES. HOWEVER, OBSERVING THAT GRANT OF LOAN WAS PRECEDED BY CASH DEPOSITS, THE SAME WERE ADDED TO THE INCOME OF THE ASSESSEE TO THE EXTENT OF RS.15.32 LACS. CONSEQUENTLY, INTEREST PAID FOR RS.10. 25 LACS WAS ALSO ADDED BACK. THESE ADDITIONS, UPON CONFIRMATION BY LD. CIT(A), IS IN FURTHER CHALLENGE BEFORE US. SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 4 5.2 UPON CONSIDERATION OF REL EVANT MATERIAL ON RECORD, O UR ADJUDICATION WOULD BE AS FOLLOWS. (I) HARSHA RATILAL BHALLA OUT OF LOAN OF RS.5.35 LACS, PARTIAL AMOUNT OF RS.2.75 LACS HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE WHICH IS NOTHING BUT CASH DEPOSIT IN THE ACCOUNT OF LENDER. W E FIND THAT THE LENDER HAS FILED CONFIRMATION OF ACCOUNT. THE LENDER HAS DECLARED INCOME OF RS.3.04 LACS. THIS BEING SO, PART LOAN COULD NOT BE HELD TO BE NON - GENUINE. THIS ADDITION IS NOT SUSTAINABLE. (II) KANUBHAI MANJIBHAI KOTHADIA HUF THIS LOAN HAS ADD ED BACK ON THE SAME REASONING I.E. CASH DEPOSIT IN THE ACCOUNT OF THE LENDER. HOWEVER, WE FIND THAT THE LOANS ARE DULY SUPPORTED BY THE CONFIRMATION OF LENDER AND BANK STATEMENT. THE ASSESSEE HAS PAID INTEREST THROUGH CHEQUE TO THIS LENDER DURING JULY, 201 3. THE LENDER HAS ADVANCED LOANS IN EARLIER YEAR ALSO WHICH IS EVIDENT FROM OPENING BALANCE OF THE LENDER. THE LENDER IS AN INCOME TAX PAYEE. MOREOVER, THERE IS OPENING BALANCE IN THE ACCOUNT WHICH WOULD SHOW THAT IT IS RUNNING LOAN. THEREFORE, THE SAME CO ULD NOT BE HELD TO BE NON - GENUINE IN THE ABSENCE OF ANY ADVERSE MATERIAL. (III) KEVAL KANTILAL S H ING A LA THIS LOAN HAS ADDED BACK ON THE SAME REASONING I.E. CASH DEPOSIT IN THE ACCOUNT OF THE LENDER. HOWEVER, WE FIND THAT THE LOANS ARE DULY SUPPORTED BY THE CONFIRMATION OF LENDER AND BANK STATEMENT. THE LENDERS INCOME TAX RETURN COPY AND BALANCE SHEET HAS BEEN PLACED ON RECORD. THE LOAN ADVANCED TO THE ASSESSEE HAS BEEN SHOWN IN THE SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 5 BALANCE SHEET. THEREFORE, THE SAME COULD NOT BE HELD TO BE NON - GENUINE IN T HE ABSENCE OF ANY ADVERSE MATERIAL. (IV) RANJANBEN KISHOREBHAI SORATHI A THIS LOAN HAS ADDED BACK ON THE SAME REASONING I.E. CASH DEPOSIT IN THE ACCOUNT OF THE LENDER. HOWEVER, WE DELETE THE SAME SINCE SIMILAR DOCUMENTS HAVE BEEN PLACED ON RECORD AS PLACED FOR OTHER LENDERS. (V) INTEREST ON LOANS THE ASSESSEE HAS PAID INTEREST ON LOANS FOR RS.10.25 LACS WHICH INCLUDED INTEREST PAID TO ABOVE 4 PARTIES. THE DISALLOWANCE WAS CONSEQUENTIAL IN NATURE SINCE THE LOANS WERE HELD TO BE NON - GENUINE. SINCE WE HAVE DEL ETED THE ADDITIONS OF LOANS WITH RESPECT TO ABOVE 4 PARTIES, THE INTEREST DISALLOWANCE , TO THAT EXTENT, WOULD ALSO BE NOT SUSTAINABLE. THE INTEREST PAID TO OTHER PARTIES WAS DISALLOWED SINCE THESE LOANS TAKEN IN EARLIER YEARS FROM THESE PARTIES WERE HELD T O BE NON - GENUINE. UPON PERUSAL OF APPELLATE ORDERS FROM AYS 2009 - 10 TO 2013 - 14, AS PLACED ON RECORD, WE FIND THAT THE ADJUDICATION OF SUCH ADDITIONS OF UNSECURED LOANS HAVE BEEN HELD TO BE ACADEMIC IN NATURE IN VIEW OF THE FACT THAT THE ASSESSEES LEGAL GR OUND WAS ALLOWED. THE DEPARTMENT COULD NOT PREFER ANY FURTHER APPEAL DUE TO LOW TAX EFFECT. THUS, THERE ARE NO CONCRETE FINDINGS ON THE ISSUE OF QUANTUM ADDITIONS OF UNSECURED LOANS TAKEN IN EARLIER YEARS. NEVERTHELESS, THE ISSUE OF QUANTUM ADDITION OF UNS ECURED LOANS HAS ATTAINED FINALITY IN EARLIER YEARS IN ASSESSEES FAVOR. THEREFORE, THE CONSEQUENTIAL ADDITION OF INTEREST, AS MADE IN THIS YEAR, STANDS DELETED. THIS GROUND STAND ALLOWED. 5.3 THE APPEAL STAND ALLOWED. SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 6 6. ITA NO.6019/MUM/2018, AY 2015 - 16 6 .1 THE FACTS AS WELL AS ISSUES ARE SUBSTANTIALLY THE SAME IN THIS YEAR. THE ASSESSEE WAS SADDLED WITH ADDITION OF LOW HOUSEHOLD DRAWINGS, UNSECURED LOANS AND INTEREST ON UNSECURED LOANS. ALL THESE ISSUES HAVE BEEN DECIDED BY US IN ASSESSEES FAVOR IN AY 20 14 - 15. TAKING THE SAME VIEW, THESE ADDITIONS STAND DELETED. 6.2 THE LAST ADDITION IS FOR GIFT OF RS.0.98 LACS RECEIVED FROM COUSIN BROTHER SHRI VINODBHAI GORDHANBHAI PATODIA. THE SAME WAS ADDED TO THE INCOME IN THE ABSENCE OF RETURN OF INCOME AND BANK STAT EMENT OF DONOR. THIS ADDITION STAND DELETED IN VIEW OF THE FACT THAT THE DONOR HAS FILED AFFIDAVIT & PROOF OF LAND HOLDINGS. THE COPY OF BANK STATEMENT IS ON RECORD. KEEPING IN VIEW THE AMOUNT OF GIFT, THE DONOR WOULD NOT BE REQUIRED TO FILE INCOME TAX RET URN. THIS GROUND STAND ALLOWED. THE APPEAL STAND ALLOWED. CONCLUSION 7 . BOTH THE APPEALS STAND ALLOWED. ORDER PRONOUNCED ON 6 TH AUGUST, 2021. SD/ - SD/ - ( AMARJIT SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIA L MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06/08/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / T HE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE SHRI RATILAL PATODIA ASSESSMENT YEARS: 2014 - 15 & 2015 - 16 7 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.