RAM NITESH KOTAK, MUMBAI V. ITO 1(2)(4), MUMBAI

ITA 6065/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9761 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR LD
• Assessee Lawyers: MUKESH B ADVANI LD
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 68; 56

Judgement Text

ITA NO.6065/MUM/2016 RAM NITESH KOTAK ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 6065/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) RAM NITESH KOTAK OM KOTAK VILLA 36, 3 RD FLOOR LOKHANDWALA COMPLEX ANDHERI (W) MUMBAI 400 053 / VS. INCOME TAX OFFICER - 1(2)(4) ROOM NO. 582, 5 TH FLOOR M.K.ROAD MUMBAI-400 020 ./ ./PAN/GIR NO. AEOPK-8657-D ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ASSESSEE BY : MUKESH B.ADVANI, LD. AR REVENUE BY : V.VIDHYADHAR, LD. DR / DATE OF HEARING : 13/03/2018 / DATE OF PRONOUNCEMENT : 21/03/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)- 2 [CIT(A)], MUMBAI APPEAL NO.CIT(A)-2/IT/323/2011-12 DATED 15/07/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS . THE ASSESSMENT ITA NO.6065/MUM/2016 RAM NITESH KOTAK ASSESSMENT YEAR 2009-10 2 FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICE R-1(2)(4) ON 26/12/2011 U/S 143(3) OF THE INCOME TAX ACT, 1961. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL AND DIRECTOR OF A CORPORATE ENTITY NAMELY KASHI INFOTECH PRIVATE LIMITED [KIPL] WAS ASSESSED FOR IMPUGNED AY AT RS.1,21,99,430/- AFTER CERTAIN ADDITIONS / DISALLOW ANCES AS AGAINST RETURNED INCOME OF RS.8,84,133/- FILED BY THE ASSES SEE ON 31/03/2010. THE ASSESSEE HAS SUFFERED QUANTUM ADDITION OF RS.56 ,96,750/- ON ACCOUNT OF UNPROVED LIABILITIES WITH RESPECT TO THE FOLLOWING PARTIES AND THE SAME ARE THE SUBJECT MATTER OF THIS APPEAL:- NO. NAME AMOUNT (RS.) 1. TIJARAT IMPEX 39,50,000/- 2. B.DATWANI 12,46,750/- 3. INFODRIVE SOFTWARE LTD. 5,00,000/- TOTAL 56,96,750/- 2.2 DURING ASSESSMENT PROCEEDINGS, UPON PERUSAL OF STATEMENT OF ASSESSEES ASSETS AND LIABILITIES, IT WAS NOTED THA T THE ABOVE LIABILITIES WERE NEW LIABILITIES AND THEREFORE, THE ONUS WAS ON ASSESSEE TO FILE NECESSARY CONFIRMATIONS AND DOCUMENTARY EVIDENCES T O SUBSTANTIATE THE SAME. WITH RESPECT TO FIRST TWO PARTIES, THE ASSESS EE POINTED OUT THAT THESE LIABILITIES WERE TRANSFERRED BY WAY OF BOOK / JOURNAL ENTRIES FROM KIPL TO THE ASSESSEE IN THE IMPUGNED AY AND THE SAID AMO UNTS WERE ACTUALLY PAYABLE BY THE ASSESSEE. THE ASSESSEE, IN SUPPORT OF BALANCE OF THIRD PARTY NAMELY INFODRIVE SOFTWARE PRIVATE LTD., FILED A LETTER DATED 01/12/2011 CONFIRMING THE REMITTANCE OF RS.5 LACS I N THE PERSONAL ITA NO.6065/MUM/2016 RAM NITESH KOTAK ASSESSMENT YEAR 2009-10 3 ACCOUNT OF THE ASSESSEE TOWARDS UNSECURED LOAN TO B E ADVANCED TO KIPL . HOWEVER, NOT CONVINCED WITH ASSESSEES EXPLANATIO N, LD. AO CONCLUDED THAT THE ASSESSEE COULD NEITHER PRODUCE A NY CONFIRMATION NOR ANY OTHER DOCUMENTARY EVIDENCES TO PROVE THE LIABIL ITY FROM THE RESPECTIVE PARTIES AND THE PRIMARY INGREDIENTS VIZ. IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S HAVE REMAINED UNFULFILLED WHICH CALLED FOR ADDITION THEREOF AS UNPROVED LIABILITIES . THE STAND OF REVENUE, UPON BEING CONFIRMED BY LD. CIT(A ) VIDE IMPUGNED ORDER DATED 15/07/2016, IS BEING CONTESTED BEFORE U S BY THE ASSESSEE. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR] DRAWING OUT ATTENTION TO DOCUMENTS PLACED IN THE PAPER BOOK SUBMITTED THAT THE IMPUGNED ADDITIONS COULD BE MADE BY THE REVENUE ONL Y U/S 68 SINCE THE PROVISIONS OF SECTION 41(1) AND SECTION 56 WERE CLE ARLY NOT APPLICABLE ON THE FACTS OF THE CASE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE TOOK OVER THE LIABILITIES OF KIPL BY WAY OF JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS AND THEREFORE, THERE WAS NO UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 AND THEREFORE, THE IMPUGNED A DDITIONS COULD NOT BE SUSTAINED. OUR ATTENTION IS DRAWN TO THE ASSESSM ENT ORDER OF KIPL FOR IMPUGNED AY TO SUBMIT THAT NO SUCH ADDITIONS HAVE B EEN MADE THEREIN AGAINST THESE ITEMS AND THEREFORE, THE SAID ADDITIO NS IN THE HANDS OF THE ASSESSEE WERE NOT JUSTIFIED. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITTED THAT COMPLETE ONUS WA S ON ASSESSEE TO PROVE THE TRANSACTIONS WITH DOCUMENTARY EVIDENCES A ND THEREFORE, THE FAILURE TO DO SO HAS RIGHTLY RESULTED INTO THE IMPU GNED ADDITIONS. 4. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. PRIMA FACIE, IT APPEARS THAT THE PROVISIONS OF SECTION ITA NO.6065/MUM/2016 RAM NITESH KOTAK ASSESSMENT YEAR 2009-10 4 41(1) OR SECTION 56 DO NOT APPLY TO THE FACTS OF TH E CASE SINCE THE IMPUGNED AMOUNTS HAVE BEEN SHOWN AS LOANS (LIABILITIES) IN THE BOOKS OF THE ASSESSEE AS PLACED BEFORE US. HOWEVER, SO FAR A S THE PROVISIONS OF SECTION 68 ARE CONCERNED, WE AGREE WITH THE SUBMISS ION OF THE REVENUE THAT ONUS TO DEMONSTRATE THE FULFILLMENT OF PRIMARY CONDITIONS VIZ. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS COMPLETELY LIE ON THE ASSESSEE, WHATEVER IS THE CAS E. THE LD. AR HAS STRESSED THE POINT THAT THE ASSESSEE HAS TAKEN OVER THE LIABILITIES OF KIPL BY WAY OF JOURNAL ENTRIES AND THEREFORE, THE IMPUGN ED ADDITIONS COULD NOT BE SUSTAINED IN TERMS OF SECTION 68. WE DO NOT AGREE WITH THE SAME SINCE UPON PERUSAL OF THE LEDGER EXTRACTS OF KIPL IN ASSESSEES BOOKS, WE FIND THAT THE ASSESSEE IS CARRYING NUMEROUS TRAN SACTIONS INCLUDING CASH & BANK TRANSACTIONS ON BEHALF OF KIPL THOUGH HIS PERSONAL ACCOUNTS WHEREAS THE ASSESSEE AND KIPL ARE SEPARATE LEGAL / TAXABLE ENTITIES IN THE EYES OF LAW AND THE ONUS TO SUBSTAN TIATE THE TRANSACTIONS CARRIED OUT IN THEIR RESPECTIVE ACCOUNTS LIES ON TH EM. MOREOVER, IT IS NOT THE CASE THAT THE ASSESSEE HAS SIMPLY TAKEN OVER TH E LIABILITIES OF KIPL UNDER ANY CONTRACTUAL TERMS. TO THAT EXTENT, WE DO NOT FIND ANY STRENGTH IN THE SUBMISSIONS OF LD. AR. 5. HAVING FOUND THAT THE COMPLETE ONUS TO SUBSTANTI ATE THE IMPUGNED TRANSACTIONS THROUGH DOCUMENTARY EVIDENCES RESTED O N THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS MISERABLY FAILED TO D EMONSTRATE THE SAME EVEN DURING REMAND PROCEEDINGS AND ASSAILING THE ADDITIONS MERELY HARPING ON THE POINT THAT THE SAID LIABILITIES BELO NGED TO KIPL WHICH HAS BEEN TAKEN OVER BY THE ASSESSEE AND THEREFORE, THE ADDITIONS THEREOF IN THE HANDS OF THE ASSESSEE COULD NOT BE MADE. ITA NO.6065/MUM/2016 RAM NITESH KOTAK ASSESSMENT YEAR 2009-10 5 6. HENCE, AFTER DUE CONSIDERATION OF FACTUAL MATRIX AND KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. AO FOR RE-ADJUDICATION WITH A DIRECTION TO THE ASSESSEE TO DEMONSTRATE THE FULFILLMENT OF PRIMARY CONDITIONS OF SECTION 68 QUA IMPUGNED LIABILITIES FAILING WHICH LD. AO SHALL BE AT LIBERTY TO DECIDE AS PER LAW ON THE BASIS OF MATERIAL AVAILABL E ON RECORD. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21. 03.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. $, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI