ACIT CEN CIR 2, MUMBAI V. LILADHAR MAJETHIA, MUMBAI

ITA 6140/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8752 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 01-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Court: TRIBUNAL
• Keywords: Loose papers; Validity of assessment
• Section: 143(3); 133A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 6140 / MUM/20 1 2 ( ASSESSMENT YEAR : 2009 - 10 ) ACIT CC - 2, MUMBAI VS. SHRI LILADHAR MAJETHIA, 7,2 ND FLOOR, PATHAIBAPA NIWAS N.S.ROAD, MUL UND(W), MUMBAI - 400080 PAN/GIR NO. ABYPT7683B APPELLANT ) .. RESPONDENT ) CO NO. 261/ MUM/20 13 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI LILADHAR MAJETHIA, 7,2 ND FLOOR, PATHAIBAPA NIWAS N.S.ROAD, MULUND(W), MUMBAI - 400080 VS. ACIT CC - 2, MUMBAI PAN/GIR NO. ABYPT7683B APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI. RAMACHANDRAN ASSESSEE BY MS. RITIKA AGAWAL DATE OF HEARING 08/11 /2016 DATE OF PRONOUNCEME NT 18 / 01 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE A ND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 2 3 . THE FAC TS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS OPERATING TWO PROPRIETARY CONCERNS IN THE NAME OF EKTA TRADING AND K.M. DEVELOPERS. HE HAD FILED HIS RETURN OF INCOME DECLARING A LOSS OF RS.7,39,7521 - UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' . THE RETURN WAS SELECTED FOR SCRUTINY BY THE AO WHICH CULMINATED INTO AN ORDER U/S 143(3) DETERMINING TOTAL INCOME AT RS.63,30,2481 - THEREBY MAKING A TOTAL ADDITION OF RS.70,70,000/ - . IN THE ASSESSMENT FRAMED U/S.143(3), AO MADE VARIOUS ADDITION S ON ACC OUNT OF UNSECURED LOANS U/S.68. 4. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION MADE U/S.68 OF RS.4,51,000/ - AND RS.16,20,000/ - . HOWEVER, CIT(A) CONFIRMED THE ADDITION OF RS.50 LAKHS DECLARED BY THE ASSESSEE IN HIS STATEMENT RECORDED U/S.131 OF THE IT ACT. THE CIT(A) ALSO UPHELD THE VALIDITY OF IMPUGNED ASSESSMENT ORDER. REVENUE IS IN APPEAL FOR THE DELETION OF ADDITION OF RS.4,51,000/ - AND 16,20,000/ - , HOWEVER ASSESSEE HAS FILED CROSS OBJECTION CHALLENGING THE ACTION OF CIT(A) UPHOLDING THE VALIDITY OF ASSESSMENT ORDER SO FRAMED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT A SEARCH ACTION U /S 132 OF THE I. T. ACT, 1961 WAS CARRIED OUT AT THE RESIDENTIAL PREMISE OF SHRI HARESH MAJETHIYA, BROTHER OF THE ASSESSEE ON 07.01.2009. A SURVEY ACTION U/S 133A OF THE L.T. ACT, 1961 WAS ALSO CARRIED OUT IN THE CASE OF M/S JALARAM ENTERPRISES, A PROPRIETARY CONCERN OF SHRI HARESH MAJETHIYA, BROTHER OF THE ASSESSEE ON 07.01.20 09. CERTAIN LOOSE PAPERS AND DOCUMENTS WERE IMPOUNDED FROM THE SURVEY PREMISE ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 3 SOME OF WHICH WERE FOUND TO BE BELONGING TO THE ASSESSEE. DURING THE COURSE OF SEARCH ACTION CASH WAS ALSO FOUND TO BE BELONGING TO THE ASSESSEE . 6. THE ADDITION OF RS.4,51,000/ - HAS BEEN DEALT BY AO IN PARA 5 OF THE ASSESSMENT ORDER. DURING THE COURSE OF SEARCH AN AMOUNT OF RS.13,02, 2 40 / - WAS FOUND FROM THE RESIDENTIAL PREMISES OF THE APPELLANT. IN THE STATEMENT OF THE ASSESSEE RECORDED ON JANUARY 7, 2009, THE ASSESSEE IN REPLY T O QUESTION NO 4 OF THE ST ATEMENT STATED THAT RS.4,51 ,000/ - OUT OF THE AMOUNT FOUND BELONGED TO HIM. IN THE NEXT QUESTION, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE SAME WHICH THE APPELLANT COULD NOT EXPLAIN. THE ASSESSEE LATER EXPLAINED THAT THE AMOUNT HAS BEEN ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF HIS BROTHER, SHRI HARESH MAJETHIA, AS PER PARA 8.5 OF HIS ASSESSMENT ORDER FOR AY 2009 - 10. THE A O MADE THE ADDITION AS THERE WAS 110 EVIDENCE THAT THE SAME AMOUNT WAS ADDED IN THE HANDS OF SHRI HAR ESH MAJETHIA ON SUBSTANTIVE BASIS. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE SOURCE OF THE CASH AND HENCE THE ADDITION WAS MAD E. 7. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION MADE U/S.68 OF RS.4,51,000/ - BY OBSERVING AS UNDER: - 7. 3 I HAVE CONSIDERED THE SUBMISSIONS OF THE A PPELLANT AND THE ORDER OF THE AO . THE A O HAS HELD THAT THE APPELLANT H AS IN HIS STATEMENT RECORDED U/ S 132(4) ADMITTED TO THE FACT THAT THE CASH FOUND WAS UNEXPLAINED. THE APPELLANT HAS AT THE FIRST INSTANCE PROD UCED THE COPY OF BALANCE SHEET AS ON MARCH 31, 2008 WHICH WAS FILED WITH THE DEPARTMENT BEFORE THE SURVEY ACTION AND WHICH CLEARLY REFLECTS THE SAME CASH BALANCE AS DISCLOSED IN THE BALANCE SHEET. I AGREE WITH THE APPELLANT'S CONTENTION THAT ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 4 THE PROVISIONS OF SECTION 69A OF THE ACT TREATS THAT CASH WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY OR WHICH REMAINS UNEXPLAINED. THE APPELLANT HAS' DULY EXPLAINED THE SOURCE OF SUCH CASH AND THE SAME WAS WITHIN THE KNOWLEDGE OF DEPARTMENT EVEN PRIOR TO SUR VEY. FURTHER, NO ALTERNATIVE USE OF SU CH CASH HAS BEEN FOUND BY THE AO BETWEEN THE PERIOD APRIL 1, 2008 AND TILL DATE OF SURVEY. THE APPELLANT HAS EXPLAINED THE NEED OF HOLDING SO MUCH CASH ON HAND WHICH HAS NOT BEEN REBUTTED BY A O . HENCE, THE CASH FOUND D URING SURVEY ACTION AND AS EVIDENCED BY FILED BALANCE SHEET' CANNOT BE TREATED AS 'UNEXPLAINED'. THEREFORE, THE A O IS DIRECTED TO DELETE THE ADDITION OF RS.4,50,000 / - . HENCE, THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 8 . WE FOUND THAT THE CIT(A) H AD DELETED THE ADDITION AFTER OBSERVING THAT ASSESSEE HAS DULY EXPLAINED THE SOURCE OF CASH AND SAME WAS WITHIN THE KNOWLEDGE OF DEPARTMENT EVEN PRIOR TO THE DATE OF SURVEY. IT IS ALSO NOT THE CASE OF AO THAT THIS CASH BALANCE WAS SPENT OR USED BY ASSESSEE SOMEWHERE ELSE. DETAILED FINDING RECORDED BY CIT(A) TO THE SE EFFECTS AT PARA 7.3 HAVE NOT BEEN CONTROVERTED, ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION OF RS.4,51,000/ - . 9 . ISSUE REGARDING ADDITION OF RS.16,20,000/ - HAS BEEN DEALT BY AO IN PARA 6 OF THE ASSESSMENT ORDER. IT WAS FOUND THAT THE ASSESSEE HAD TAKEN LOAN FROM THE F OLLOWING FIVE PARTIES: SHARDA THAKKAR - 2,70,000/ - DILIP NAGDA - 3,00,000/ - INDUMATI MEHTA - 2,25,000/ - KALPANA BH ANUSHALI - 4,50,000/ - BHARTI BHANUSHALI - 3,75,000/ - ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 5 10 . THE ASSESSEE WAS ASKED TO PRODUCE THE LOAN LENDER AND ALSO THEIR INCOME TAX RETURN, PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND BANK STATEMENT. THE ASSESSEE SUBMITTED THE LOAN CONFIRMATION, BANK STATEMENT, INCOM E TAX RETURN COPY, COPY OF PAN CARD, BALANCE SHEET AND CAPITAL ACCOUNT OF THE LENDER. THE A O SENT SUMMONS FOR ATTENDANCE OF THESE ENTITIES. THE SUMMONSES ISSUED TO BOTH THE BHANUSHALI'S WERE RETURNED UNSERVED AND SHRI NAGDA DID NOT COMPLY W ITH THE SUMMONS. THE CREDIT WORTHINESS OF SMT THAKKAR COULD NOT BE ESTABLISHED FROM THE DETAILS SUBMITTED. THE AO THEREFORE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE WHICH WAS REPLIED STATING THAT ALL THE NECESSARY DETAILS HAVE BEEN PRODUCED BEFORE THE AO. THE AO MADE THE ADDITION AS THE SUMMONS CAME BACK UNSERVED OR NOT HAVE BEEN RESPONDED. THE BANK ACCOUNTS SHOW THAT THERE IS NOT MUCH CASH BALANCE. HENCE, THE AO MADE THE ADDITIONS OF THESE UNSE CURED LOANS. 1 1 . THE CIT(A) HAS DELETED THE ADDITION OF RS.16,2 0,000/ - MADE U/S.68 AFTER OBSERVING AS UNDER: - 8.4 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ORDER OF THE AO. IT IS AN UNDISPUTED FACT THAT THE APPELLANT HAS PROVIDED COMPLETE DETAILS OF LENDERS INCLUDING THEIR ADDRESS, PAN NO., COPY OF BAN K STATEMENTS, RETURNS OF INCOME, CONFIRMATION, DETAILS OF REPAYMENT, INTEREST PAYMENT DETAILS ETC. THESE DETAILS ARE SUFFICIENT TO DISCHARGE THE ONUS THAT LAY ON THE APPELLANT. THE AO HAS GIVEN TWO REASONS FOR NOT ACCEPTING THE SUBMISSION OF THE ASSESSEE. THE FIRST IS THAT SUMMONS EITHER COULD NOT BE SERVED OR NOT COMPLIED BY LENDER AND HENCE INDEPENDENT VERIFICATION COULD NOT BE DONE. I AM UNABLE TO AGREE WITH THIS FIRST REASON BY THE AO. HE HAD ALL DETAILS OF LENDERS LIKE THEIR PAN NO., THEIR RETURN COPY ETC. EVEN IF THE LENDERS DID NOT RESPOND, HE COULD HAVE WRITTEN TO THE AO OF THE LENDERS AND SOUGHT DETAILS. IN THIS CASE MERELY BECAUSE ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 6 THE LENDERS HAVE NOT RESPONDED TO THE AOS QUERY DOES NOT MEAN THAT THE LOANS CAN BE TREATED AS UNEXPLAINED, PARTICULAR LY WHEN THE SAID LOANS STAND DULY PAID OFF AND SUCH REPAYMENT HAVING BEEN ACCEPTED BY THE AO. RECENTLY, THE GUJARAT HIGH COURT HAS IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA 21 TAXMANN.COM 159 (GUJ.) HEL D THAT UNDER SECTION 68 THE ONUS OF THE ASSESSE E STANDS DISCHARGED W HEN THE ASSESSEE PROVIDES THE NAME, ADDRESS, PAN NO AND DETAILS OF ACCOUNT PAYEE CHEQUE OF LENDER. THEREAFTER, IT IS THE DUTY OF THE AO TO CALL FOR RELEVANT DETAILS FROM LENDERS AO. THE AO CANNOT SHIFT SUCH DUTY ON THE ASSESSEE. IN THE INSTANT CASE ON HAND THE APPELLANT HAS EVEN SUBMITTED THE COPY OF RETURN OF LENDERS AS WELL AS THEIR BALANCE SHEETS WHERE THESE AMOUNTS ARE APPEARING. FURTHER, MUMBAI HIGH COURT HAS IN THE CASE OF CIT VS. SHAH UM (90 ITR 196 (BOM) WHEREIN THE HON'B1E COURT HAS HELD THAT IF THE CREDITORS DID NOT PRESENT THEMSELVES BEFORE THE AO THE ASSESSEE COULD NOT BE BLAMED FOR THE SAME. SECONDLY, THE AO STATES THAT BEFORE ADVANCING MONEY THE LENDER HAS RECEIVED THE AMOUNT IN HIS BANK ACCOUNT. I DON'T THINK THAT THIS IN ANYWAY RAISES DOUBT ON GENUINENESS OF TRANSACTION . IT IS OBVIOUS FROM BANK STATEMENT OF LENDERS THAT THEY HAVE ENCASHED S ORNE OTHER INVESTMENT AND THE AMOUNT RECEIVED HAS BEEN REINVESTED IN FORM OF LOAN TO A P PELLANT. IT IS RATIONAL FOR ANY INVESTOR TO ROT ATE HIS INVESTMENT. IN ANY CASE LAW DOES NOT LAY DOWN ONUS ON APPELLANT TO EXPLAIN SOURCE OF LENDERS MONEY. IT IS ALSO ALLEGED BY AO THAT IN THE BANK STATEMENT OF KALPANA BHANUSHALI AND BHARATI BAHNUSHALI THE RE ARE CASH DEPOSITS IN THE ACCOUNT. HOWEVER, WH AT A O HAS MISSED IS THAT IN CASE OF K ALPANA BHANUSHALI THE SOURCE OF MONEY IS CHEQUES RECEIVED FROM PADMAVATI AND RASHRNI BHANUSHALI. IN CASE OF BHARATI BHANUSHALI, THE SOURCE OF LOAN IS CHEQUE DEPOSIT BEING MONEY RETURNED BY SHRI RAJAL ENTERPRISE AND THER E ARE NO SUCH CASH DEPOSITS AS ALLEGED. HENCE, THERE CAN BE NO DOUBT ABOUT THE GENUINENESS, CAPACITY AND IDENTITY THE THREE LIMBS OF SECT ION 68. THE ONLY GRIEVANCE OF AO IS THAT THE LENDERS DID NOT RESPOND TO HIS SUMMONS. BUT FOR THAT THE ASSESSEE CANNOT B E PENALISED ESPECIALLY WHERE THE LENDERS HAD NOTHING MORE TO DO WITH THE ASSESSEE . SECTION 68 OF THE ACT DOES NOT LAY DOWN THAT THE ASSESSEE HAS TO PROVE THE GENUINENESS OF LOAN TILL THE HILT. SECTION 68 DEALS WITH SHIFTING ONUS AND ONCE THE ASSESSEE HA S ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 7 PROVIDED SUFFICIENT DETAILS THE ONUS SHIFTS ON THE A O TO DISPROVE THE SAID EVIDENCES BEFORE SHIFTING THE ONUS BACK ON THE ASSESSEE. HENC E, THE ADDITION OFRS.16,20,000/ - MADE U / S 68 IS DELETED AND THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 1 2 . FR OM THE RECORD WE FOUND THAT IN RESPECT OF ALL THE CASH CREDITORS CIT(A) HAS RECORDED A FINDING TO THE EFFECT THAT IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF ALL THESE CREDITORS WERE DULY DISCHARGED BY THE ASSESSEE. CIT(A) ALSO OBSERVED THAT THESE LOAN S WERE DULY REPAID AND AO HAS ACCEPTED THE SAME. AFTER APPLYING THE DECISION OF BOMBAY HIGH COURT AND GUJARAT HIGH COURT TO THE FACTS OF THE CASE, THE CIT(A) DELETED THE ADDITION AFTER RECORDING DETAILED FINDING AT PARA 8.4 WHICH HAS NOT BEEN CONTROVERTED B Y THE DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.16,20,000/ - . 13. HOWEVER, CIT(A) UPHELD THE VALIDITY OF THE ASSESSMENT ORDER WHICH WAS CHALLENGED B Y THE ASSESSEE THROUGH HIS CROSS OBJECTION. 14 . IN THE CROSS OBJECTION, ASSESSEE IS AGGRIEVED FOR UPHOLDING THE VALIDITY OF THE ASSESSMENT SO FRAMED. HOWEVER, NO REASON WAS ADVANCED BY THE AR IN SUPPORT OF ITS CONTENTION. ACCORDINGLY, WE CONFIRM THE ACTION OF CIT(A) UPHOLDING THE VALIDITY OF ASSESSMENT. 15. THE CIT(A) HAS VERY JUDICIALLY UPHELD THE ADDITION OF RS.50 LAKHS AS DECLARED BY THE ASSESSEE IN H IS STATEMENT RECORDED U/S.131. ASSESSEE IS NOT IN APPEAL BEFORE US AGAINST THIS ADDITION. I T APPEARS THA T REVENUE HAS WRONGLY TAKEN THE GROUND TO THE EFFECT THAT CIT(A) HAS DELETED THE ITA NO. 6140 - 2012 & CO NO.261/M/2013 SHRI LILADHAR MAJETHIA 8 ADDITION OF RS.50 LAKHS. SINCE THE CIT(A) HAS UPHELD THE ADDITION OF RS.50 LAKH S , THE GROUND TAKEN BY REVENUE IS MISCONCEIVED. 1 6 . IN THE RESULT, APPEAL OF THE REVENUE AS WE LL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 18 / 01 /201 7 SD/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI ; DATED 18 / 01 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//