CHANDRASHEKHAR C. HINGHAR, MUMBAI V. ITO 8(2)(2), MUMBAI

ITA 6658/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8562 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2014
• Court: TRIBUNAL
• Assessee Lawyers: PIYUSH CHHAYED
• Keywords: Unexplained investment; Unexplained expenditure; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ITA NO. 6658 / MUM/20 1 4 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI CHANDRASHEKHAR C. HINGHAR, 007, MADHUPARAG, 4/5, N.M.ROAD, 69, SWASTIC SOCIETY, JUHU, VILE PARLE(W), MUMBAI - 400056 VS. ITO 8(2)(2), MUMBAI PAN/GIR NO. AAAPH3243A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI PIYUSH CHHAYED REVENUE BY SHRI AKHILENDRA PRATAP YADAV DATE OF HEARING 04/11/2016 DATE OF PRONOUNCE ME NT 03 / 02 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 17, MUMBAI DATED 26/08/2014 FOR THE ASSESSMENT YEAR 2009 - 201 0 , IN THE MATTER OF ORDER PASSED U/S.144 OF IT ACT, 1961 . 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY ASSESSEE: - 1) ON THE FACTS AND CIRCUMSTANCES OF - THE CASE, THE COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN CONFIRMING AN ADDITION OF RS.2,54,94,229/ - TOWARDS UNEXPLAINED INVESTMENTS WITHOUT APPRECIATING THAT THE APPELLANT HAD SUBMITTED COMPLETE DOCURNENTARY EVIDENCE FOR THE SOURCE OF FUNDS. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING AN ADDITION OF RS.6,82,510/ - TOWARDS PAYMENTS MADE TO CREDIT CARD COMPANY WITHOUT APPRECIATING THAT THE SAME ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 2 WERE MADE BY THE COMPANY IN WHICH THE APPELLANT IS THE D IRECTOR AND COMPLETE DETAILS OF THE SAME WERE FILED BEFORE BOTH THE AUTHORITIES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY SERVICES IN THE FIELD OF ARCHITECTURE. THE ASSESSEE IS ALSO A PARTNER OF THE PARTNERSHIP FIRM, SHRADHA REALTORS, WHICH IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND A DIRECTOR IN KONARK REALTORS PVT. LTD., WHICH IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND PROVIDING ARCHITECTURAL SERVICES. 5. RETURN OF INCOME WAS FILED ON 06/02 /2010 DECLARING TOTAL INCOME OF RS.5,65,260/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE WAS ISSUED U/S.143(2). THEREAFTER, AO ISSUED VARIOUS NOTICES ASKING FOR VARIOUS DETAILS U/S.142(1), HOWEVER, THERE WAS NO RESPONSE ON THE PART OF ASSESSEE. AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(B) FOR NOT FILING THE DETAILS ASKED FOR. SI NCE THERE WAS NO REPLY FROM THE ASSESSEE, THE AO PASSED ORDER U/S.144. IN THE ORDER U/S.144 , AO OBSERVED THAT A S PER THE PURCHASE AGREEMENT, ASSESSEE HAS PURCHASED 25% U NDI VIDED SHARE OF A PROPERTY KNOWN AS 'REWA HOUSE' AT MALABAR HILL, -- MURNBAI FOR A CO NSIDERATION OF RS.1,00,00 ,000/ - AS AGAINST THE MARKET VALUE OF RS.2,94,87,000 / - . THE ASSESSEE' HAS PAID THE SALE CONSIDERATION OF RS.1.00, 00,000 / - TO MS. PRAVIN KUMARI SINGH. FROM THE LEDGER ACCOUNT FOR RESIDENTIAL PLOT AT REWA, IT IS FOUND THAT DURING THE PREVIO US YEAR RELEVANT TO AY. 2009 - '10, THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.2,54,94,229/ - WHICH INCLUDES THE PAYMENT OF RS. 1 CRORE TO MS. PRAVIN ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 3 KUMAR SINGH TOWARDS THE PURCHASE OF THE SAID PROPERTY. IN ABSENCE OF BANK STATEMENT, CAPITAL ACCO UNT. BALANCE SHEET AND OTHER DETAIL S, THE SOURCE OF FUND FOR ACQUIRING THE PROPERTY COULD NOT BE VERIFIED. HENCE, AN AMOUNT OF RS.2,54,94,229/ - WHICH HAS BEEN INCURRED BY THE ASSESSEE TOWARDS THE PURCHASE OF PROPERTY WHICH REMAINED UNEXPLAINED INVESTMENT I N THE HANDS OF T HE ASSESSEE, WAS ADDED IN ASSESSEES HAND. 6. BEFORE THE CIT(A), ASSESSEE FILED BANK STATEMENTS, CASH FLOW STATEMENT, BALANCE CONFIRMATION. CIT(A) ASKED THE REMAND REPORT AND SENT ALL THESE DOCUMENTS TO THE AO FOR HIS VERIFICATION AND REPOR T THEREON. HOWEVER , THE AO WAS NOT SATISFIED WITH THE GENUINENESS OF TRANSACTION AND THE SOURCE OF FUNDS, S ENT A NEGATIVE REMAND REPORT. 7. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AFTER OBSERVING AS UNDER: - FURTHER, THE LD.AO HAS ADDED AN AMOUNT OF R. 2,54,95,229/ - TOWARD INVESTMENT IN THE PROPERTY KNOWN 'REWA HOUSE'. THE LD.AO OBSERVED THAT APPELLANT HAD ACQUIRED 25 % OF UNDIVIDED RIGHT IN THE PROPERTY KNOWN AS 'REWA HOUSE' FOR A CONSIDERATION OF RS. 1 CRORE. IT WAS ALSO ALLEGED BY THE LD.AO THAT APPELLANT HAD PAID RS. 1 CRORE TO MAHARANI PRAVEEN KUMARI OF 'REWA HOUSE'. IT IS ALSO A MATTER OF FACT THAT THE APPELLANT PRODUCES SHOWING THE COST OF RESIDENTIAL PLOT AT RS.2,54,95,229/ - . THE LD.AO PRESUMED THAT THE ENTIRE AMOUNT OF MONEY WAS PAID TO MAHARANI PRAVEEN KUMARI AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT AS UNEXPLAINED INVESTMENT. ACCORDING TO THE APPELLANT THE LD.AO HAS FAILED TO APPRECIATE THAT THE APPELLANT HAD SUBMITTED A LEDGER ACCOUNT SHOWING INVESTMENT MADE IN T HE 'REWA HOUSE'. IT WAS NEVER THE CASE OF THE LEARNED AR OF THE APPELLANT THAT THE ENTIRE MONEY WAS PAID TO MAHARANI PRAVEEN KUMARI, FURTHER, IT IS ALSO A MATTER OF FACT THAT THE APPELLANT HAD RECORDED THE ENTIRE TRANSACTION IN ITS BOOKS OF ACCOUNT AND THE SOURCE OF THE MANY ARE EXPLAINED AND THEREFORE THE SAID MONEY CANNOT BE TREATED AS UNEXPLAINED INVESTMENT. IT IS ALSO STATED BY THE APPELLANT THAT THE ENTIRE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUES ONLY AND THE APPELLANT HAD EXPLAINED THE SOURCE OF THE FUNDS FOR MAKING INVESTMENT IN THE SAID ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 4 PROPERTY. IN SUPPORT OF THE SAME THE APPELLANT ADDUCED THE COPY OF THE AGREEMENT WHEREIN IT IS CLEARLY MENTIONED THAT THE APPELLANT ACQUIRED 25% UNDIVIDED RIGHT FROM MAHARANI PRAVEEN KUMARI IN 'REWA HOUSE. AS PE R THE AGREEMENT THE APPELLANT HAD TO PAY RS. 1 CRORE TO PRAVEEN KUMARI TOWARDS 25% INTEREST IN THE SAID PROPERTY. FURTHER, IT IS ALSO ABUNDANTLY CLEAR FROM THE SAID AGREEMENT THAT THE APPELLANT HAD PAID RS. 1.02 CRORE TO MR BANU P. SINGH FOR FACILITATING T HE TRANSACTION WITH PRAVEEN KUMARI. THEREFORE, THE APPELLANT SUBMITTED THAT THE TOTAL COST OF THE PROPERTY COMES TO RS. 2,54,95,229/ - WHICH ALSO INCLUDES THE PAYMENT TO THE OTHER FACILITATOR AND THE STAMP DUTY. I FIND THAT THE APPELLANT EXPLAINED THAT THE SOURCE OF INVESTMENT IN THE SAID PROPERTY IS FROM SHRADHA REALTORS, WHERE THE APPELLANT IS A PARTNER AND IN FACT THE LOAN CONFIRMATION WAS CONFIRMED BY THE APPELLANT ITSELF, SECONDLY M/ S. CELLO FINANCE CORPORATION AND THIRDLY FROM M/ S. KONARK REALTORS PV T LTD .. I FIND THAT EXCEPT THE CASE OF M/ S. CELLO FINANCE CORPORATION, THE OTHER TWO LOAN CONFIR MATIONS WERE SIGNED BY THE APPELLANT ITSELF THE CAPACITY OF THE PARTNER OR THE DIRECTOR OF THE SAID COMPA NY, IT IS ONLY IN THE CASE OF M/ S. CELLO FINANCE CORP ORATION, THE CONFIRMATION WAS SIGNED BY SOMEONE WHO HAPPEN TO BE A PARTNER IN THAT FIRM. I FIND THAT THE LOAN CONFIRMATION GIVEN BY THE APPELLANT ARE NOT IN ORDER AS THE APPELLANT HAS NOT PROVIDED THE DETAILS OF THE VARIOUS ENTRIES. THERE IS THUS AN ELEMEN T OF DOUBT ON THE SOURCE AS THE APPELLANT IS THE RECIPIENT AND THE GIVER OF THE LOAN. MERELY BECAUSE THE TRANSACTIONS ARE ROOTED THROUGH BANK IS NOT SUFFICIENT TO EXPLAIN THE CREDITWORTHINESS OF THE PARTIES ADVANCING THE LOAN AND SECONDLY IT IS ALSO NOT CL EAR AS TO HOW AND FOR WHAT PURPOSES THE LOAN WAS ADVANCED BY THESE PARTIES. THE SUSPICION GETS FURTHER DEEPENED BY THE FACT THAT IN RESPECT OF THE TWO PARTIES THE CONFIRMATIONS WERE SIGNED BY NONE OTHER THAN THE APPELLANT. IN VIEW OF THE FOREGOING, I FIND THAT THE EVIDENCE ADDUCED BY THE APPELLANT ARE NOT SATISFACTORY AND DOES NOT DISCHARGE THE ONUS PLACED ON THE APPELLANT TO EXPLAIN THE SOURCES OF THE PARTIES ADVANCING THE LOAN. IN VIEW OF THE FOREGOING THE ADDITION MADE BY TH E LD.AO IS ACCORDINGLY CONFIRM ED. 8. LEARNED AR APPEARING FOR ASSESSEE INVITED OUR ATTENTION TO THE BANK STATEMENT INDICATING VARIOUS PAYMENTS MADE FOR ACQUIRING THE PROPERTY AND THE SOURCE OF CREDIT BALANCE IN THE RESPECTIVE BANK ACCOUNT. OUR ATTENTION WAS ALSO INVITED TO THE SOURCE OF FUNDS PLACED IN THE PAPER BOOK INDICATING AVAILABILITY OF SUFFICIENT FUNDS IN THE ACCOUNT FOR MEETING THE PAYMENTS SO MADE. AS PER LEARNED AR, ALL THE TRANSACTIONS WERE ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 5 RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, NO ADDITION WAS WARRANTED ON THE PLEA OF UNEXPLAINED INVESTMENTS. 9. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 10. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT DURING THE YEAR UN DER CONSIDERATION, ASSESSEE HAS PURCHASED 25% OF UNDIVIDED RIGHT IN THE PROPERTY KNOWN AS REWA HOUSE FOR A CONSIDERATION OF RS.1 CRORE. TOTAL INVESTMENT IN THE SAID PROPERTY WAS SHOWN AT RS.2.54 CRORES. HOWEVER, BEFORE THE AO ASSESSEE COULD NOT FILE ANY DOCUMENTARY EVIDENCE TO PROVE THE SOURCE OF FUNDS. ACCORDINGLY, ORIGINAL ASSESSMENT WAS FRAMED U/S.144 SINCE INSPITE OF GIVING SO MANY OPPORTUNITIES, ASSESSEE DID NOT PRODU CE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SOURCE OF THE FUNDS AND INVESTMENT S SO MAD E IN THE PROPERTY. HOWEVER, BEFORE THE CIT(A), ASSESSEE HAS FILED DOCUMENTS BUT WITHOUT APPRECIATING THE SAME, IN THE REMAND REPORT, AO AGAIN REACHED TO THE CONCLUSION THAT GENUINENESS OF TRANSACTION WAS NOT ESTABLISHED. AS PER PAPER BOOK PLACED ON RECORD IT APPEARS THAT BEFORE CIT(A) THE ASSESSEE HAD FILED BANK STATEMENT CONFIRMATION AND CASH FLOW STATEMENT TO JUSTIFY THE SOURCE OF PAYMENT. IT APPEARS THAT BOTH THE LOWER AUTHORITIES HAD NOT PROPERLY APPRECIATED THESE DOCUMENTS WHICH GOES TO THE ROOT OF ISS UE. MERELY ON THE GROUND OF SUSPICION THE CIT(A) HAS DECLINED THE SOURCE OF FUNDS EXPLAINED BY THE ASSESSEE IN SO FAR AS BOTH THE CONCERN WHO ADVANCED THE LOAN TO ASSESSEE WAS GROUP CONCERN OF ASSESSEE. ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 6 KEEPING IN VIEW TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE SET ASIDE BOTH THE ORDERS OF THE LOWER AUTHORITIES AND THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING ALL THESE DOCUMENTS AS STATED ABOVE IN SUPPORT OF ITS SOURCE OF THE FUNDS AND CONFIRMATION FILED BY THE VA RIOUS AUTHORITIES ACCEPTING THE PAYMENT HAVE BEEN MADE TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 11 . NEXT GRIEVANCE OF ASSESSEE RELATES TO ADDITION OF RS.6,82,510/ - TOWARDS PAYMENT MADE TO CREDIT CARD COMPANY. IN THE ASSESSMENT ORDER, AO OBSERVED THAT AS PER THE AIR DETAILS, THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS. 6,82,510/ - AGAINST CREDIT CARD BILLS. IN ABSENCE OF ANY DETAILS FURNISHED BY THE ASSESSEE , THE SOURCE OF FUND OF CREDIT CARD EXPENSES COULD NOT BE VERIFIED. ACCORDINGLY, RS.6,82,510/ - WAS ADD ED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE. 1 2 . BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. 1 3 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM RECORD THAT THE ASSESSEE IS THE DIRECTOR OF M/S. KONARK REALTORS PVT . LTD., AND THEREFORE THE SAID PAYMENTS WERE MADE BY M/S. KONARK REALTORS PVT. LD., HENCE THERE COULD HAVE BEEN NO ADDITION U/S.69 IN THE HANDS OF THE ASSESSEE AND SINCE THE ASSESSEE HAD NOT CLAIMED ANY EXPENDITURE, THE QUESTION OF PROVING WHETHER IT WAS F OR THE PURPOSE OF BUSINESS DO NOT ARISE IN THE CASE OF THE ASSESSEE. FURTHER ON PERUSAL OF THE LEDGER ACCOUNT IN THE BOOKS OF M/S.KONARK REALTORS PVT. LTD., WE FOUND THAT THE SAID AMOUNTS WERE ALSO FINALLY DEBITED TO THE ASSESSEES PERSONAL ACCOUNT WHEREBY ITA NO. 6658/ MUM/ 2014 SHRI CHANDRASHEKHAR C. HINGHAR 7 EVEN THE COMPANY HAS NOT CLAIMED ANY EXPENDITURE. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR THE ADDITION MADE ON ACCOUNT OF PAYMENT MADE ON ACCOUNT OF CREDIT CARD EXPENDITURE. 14 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 03 / 02 /201 7 S D/ - ( PAWAN SINGH ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 03 / 02 /2 01 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//