ITO 5(2)(3), MUMBAI V. MUNAS INVESMENT P. LTD, MUMBAI

ITA 6691/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4436 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6691/MUM/2016 ASSESSMENT YEAR: 2012 - 13 THE ITO - 5(2)(3), ROOM NO. 566, AAYAKARBHAVAN, MUMBAI - 400020. VS. M/S MUNAS INVESTMENT PRIVATE LTD. 29, LANDS END DOORNGERSI ROAD, MUMBAI - 400006 PAN NO. AAHCM6971C APPELLANT RESPONDENT REVENUE BY : MR. MANISH KUMAR SINGH, DR ASSESSEE BY : NONE DATE OF HEARING : 10/10/2018 DATE OF PRONOUNCEMENT : 23/10/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2012 - 13. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 10 [IN SHORT CIT(A)], MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1 I) WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEES APPEAL BY DELETING THE ADDITION OF M/S MUNAS INVESTESTMENT ITA NO. 6691/MUM/2016 2 RS.2,01,03,168/ - (OLD FIGURE) BY MERELY RELYING ON THE PAPER SUBMISSIONS MADE BY THE ASSESSEE BEFORE T HEM. II) THE LD. CIT(A) FURTHER ERRED IN NOT REMANDING THE MATTER BACK TO AO FOR CROSS VERIFICATION WHETHER SUCH TRANSACTION HAD FROM NIRMAL GLASS FACTORY (P.C. MUDRA) OR FROM M/S NIRMAL GLASSTECH INDUSTRIES - PARTNERSHIP FIRM OR SOMEONE ELSE. 2 THE LD. CIT( A) ERRED IN RECOGNIZING M/S NIRMAL GLASS FACTORY ( H AVING PARTNERS - SHRI NIRMAL MUDRA AND MRS. PARMESHWARI DEVI) AS PER RECORDED SUBMISSION (PARA 4.1.1. OF ITS APPELLATE ORDER) AND M/S NIRMAL GLASSTECH INDUSTRIES ( H AVING PARTNERS - SHRI PREM CHANDRA MUNDRA A ND SHRI NIRMAL MUNDRA) AS PER DETAILS OF TEEMAC DEVELOPERS PVT. LTD. AS ONLY ONE CONCERNS I.E. NIRMAL GLASSTECH INDUSTRIES. 3 THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(APPEALS) BE SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 3. WE FIND THAT THOUGH THE CASE WAS FIXED FOR HEARING ON 17.05.2018, 19.09.2018 AND 10.10.2018 BEFORE THE TRIBUNAL, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED IN THE ABOVE DATES. THEREFORE, WE DISPOSE OF THE CASE AFTER HEARING THE LD. DR AND EXAMINING THE MATERIALS AVAILABLE ON RECORD. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE - COMPANY HAD SHOWN UNSECURED LOAN OF RS.2,01,03,168/ - FROM PREM CHANDRA MUNDRA IN ITS ACCOUNTS DURING THE FINANCIAL YEAR 2011 - 12. HE ASKED THE ASSESSEE TO SUBMIT THE LEDGER CONFIRMATION OF AMOUNT RECEIVED FROM PREM CHANDRA MUNDRA ALONG WITH IT S BALANCE SHEET, PROFIT AND LOSS ACCOUNT, ITR FORM AND BANK STATEMENT. IN RESPONSE TO IT, THE ASSESSEE - COMPANY SUBMITTED A CONFIRMATION FROM NIRMAL GLASS FACTORY M/S MUNAS INVESTESTMENT ITA NO. 6691/MUM/2016 3 (P.C. MUNDRA) ON WHICH RUBBER STAMP OF NIRMAL GLASSTECH INDUSTRIES HAS BEEN FIXED. ALSO THE AS SESSEE FILED THE RELEVANT PAN AS AAGFN8138G ALONG WITH BANK STATEMENT OF NIRMAL GLASSTECH INDUSTRIES. THE ASSESSEE COULD NOT FILE BEFORE THE AO CLARIFICATION FOR MISMATCH. THE AO ALSO NOTED THAT THE ASSESSEE - COMPANY COULD NOT SUBMIT ITR, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE PARTY FROM WHOM LOAN WAS TAKEN. AS THE ASSESSEE FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF LOAN TRANSACTION WITH PREM CHANDRA MUNDRA, THE AO MADE AN ADDITION OF RS.2,01,03,168/ - U/S 68 OF THE ACT. 5 . A GGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE FINDING OF THE LD. CIT(A) AT PARA 4.2 OF HIS ORDER DATED 29.08.2016 IS PRODUCED BELOW: 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUB MISSION MADE BY THE LD. AR. AS SEEN FROM THE DETAILS FILED THE AMOUNT OF LOAN OF RS.2.01 CRORES HAS COME FROM NIRMAL GLASSTECH INDUSTRIES, IN COMMON PARLANCE KNOWN AS NIRMAL GLASS FACTORY, BELONGING TO THE FAMILY GROUP OF PC MUNDRA. SINCE PC MUNDRA IS MANA GING THE AFFAIRS OF THE COMPANY THE ENTRY WAS MADE IN THE BALANCE SHEET OF THE APPELLANT COMPANY AS IF THE LOAN WAS TAKEN FROM MR. PC MUNDRA. AS THE CONFIRMATION L ETTER FILED BEFORE THE AO WAS IN THE NAME OF NIRMAL GLASS FACTORY, THE AO HAS DISBELIEVED THE CREDIT AND BROUGHT TO TAX THE SAME AMOUNT UNDER SECTION 68 OF THE ACT SINCE THE APPELLANT HAS NOT CLARIFIED THE MISMATCH OF THE NAMES. SINCE THE TRANSACTION HAS ROOTED THROUGH BANKING CHANNELS AND REFLECTED IN THE BOOKS OF APPELLANT COMPANY AS WELL AS THE LENDER COMPANY I.E. NIRMAL GLASSTECH INDUSTRIES, THE IDENTITY, THE GENUINENESS AND THE CREDITWORTHINESS OF THE LENDER I.E. NIRMAL GLASSTECH INDUSTRIES IS ESTABLISHED. THE ONLY CONFUSION IS WITH REGARD TO THE NAME OF THE CREDITOR, IT IS EVIDENT FROM THE CL ARIFICATION GIVEN BY THE ID.AR M/S MUNAS INVESTESTMENT ITA NO. 6691/MUM/2016 4 VIDE HIS LETTER DATED 29/08/2016 THAT THE AMOUNT WAS RECEIVED FROM NIRMAL GLASSTECH INDUSTRIES WHICH IS COMMONLY KNOWN AS NIRMAL GLASS FACTORY AND THERE IS NO NIRMAL GLASS FACTORY AS SUCH. IN SUPPORT OF WHICH THE ID.AR HAS FI LED PARTNERSHIP DEED NIRMAL GLASSTECH INDUSTRIES DATED 01/04/2008. SINCE NIRMAL GLASSTECH INDUSTRIES BELONGED TO THE FAMILY GROUP OF PC MUNDRA THE NAME OF PC MUNDRA IS ALSO APPEARING IN THE BALANCE SHEET OF THE APPELLANT COMPANY AND EVEN THOUGH THE CONFIRM ATION LETTER WAS IN THE NAME OF NIRMAL GLASS FACTORY, THE RUBBER STAMP USED IS OF NIRMAL GLASSTECH INDUSTRIES. FURTHER AS THE TRANSACTION HAS NEVER BEEN DENIED BY THE AO IT CANNOT BE TAKEN AS UNEXPLAINED CREDIT, IN VIEW OF THE A B OVE DISCUSSION I HEREBY DIR ECT THE AO TO ALLOW THE CREDIT. THE GROUND IS ALLOWED. 6 . BEFORE US THE LD. DR SUBMITS THAT THE LD. CIT(A) SHOULD HAVE REMANDED THE MATTER TO THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE SUBMITTED VIDE LETTER DATED 29.08.2016 BEFORE HIM THAT THE AMOUN T WAS RECEIVED FROM NIRMAL GLASSTECH INDUSTRIES WHICH WAS COMMONLY KNOWN AS NIRMAL GLASS FACTORY AND THERE WAS NO NIRMAL GLASS FACTORY AS SUCH. 7 . WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS MENTIONED BY THE AO THE ASSESSEE - COM PANY FAILED TO SUBMIT THE ITR, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE PARTY FROM WHOM LOAN WAS TAKEN. DURING THE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE CLARIFIED THAT THE AMOUNT WAS RECEIVED FROM NIRMAL GLASSTECH INDUSTRIES WHICH WAS COM MONLY KNOWN AS NIRMAL GLASS FACTORY. IN SUPPORT OF HIS CONTENTIONS, A COPY OF THE PARTNERSHIP DEED DATED 01.04.2008 OF NIRMAL GLASSTECH INDUSTRIES WAS FILED BEFORE THE LD. CIT(A). THE OTHER DETAILS IN SUPPORT OF HIS CONTENTIONS WERE FILED BY THE ASSESSEE B EFORE THE LD. CIT(A) AS DELINEATED AT PARA 4 HEREINBEFORE. M/S MUNAS INVESTESTMENT ITA NO. 6691/MUM/2016 5 WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) SHOULD HAVE REMANDED THE MATTER TO THE FILE OF THE AO U/S 250(4) OF THE ACT TO MAKE INQUIRY TO FIND OUT THE CORRECTNESS OF THE CLAIM OF THE ASSES SEE. HE HAS NOT DONE SO. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEV ANT DOCUMENTS/EVIDENCE BEFORE THE AO. 8 . IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2018. SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 23/10/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI