M/S. M.A. TEXTILES PVT LTD., MUMBAI V. INCOME TAX OFFICER-6(3)(3), MUMBAI

ITA 6752/MUM/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83954 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 24-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Unexplained expenditure; Search and seizure; Loose papers; Onus to prove

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, AM AND SHRI VIVEK VARMA, JM ./ I.T.A. NO.6752/ MUM/2008 ( / ASSESSMENT YEAR : 2000-01 M/S M.A. TEXTILES PVT. LTD., 28, RAMESH BHAVAN, 89, TAMBA KATTA, PAYDHUNI, MUMBAO 400 003. / VS. INCOME TAX OFFICER 6(3)(3), MUMBAI. ./ PAN : AAACM9949H ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI RAJIV KHANDELWAL DEPARTMENT BY SHRI LOVE KUMAR / DATE OF HEARING : 16-10-2014 / DATE OF PRONOUNCEMENT : 20-10-2014 [ !' / O R D E R PER N.K. BILLAIYA, A.M . : #. . $%&', ! THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A) VO, MUMBAI DATED 23-09-2008 PERTAINING TO THE A.Y. 2000-01. 2. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUND S OF APPEAL. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT PRESSING GROUND NO. 1 & 2. GROUND NO. 1 & 2 ARE AC CORDINGLY DISMISSED AS NOT PRESSED. ITA 6752/M/08 2 4. THE ONLY SURVIVING GROUND RELATES TO THE ADDITIO N OF RS. 18,74,029 MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNEXPLAINED EXPEN DITURE U/S 69-C OF THE INCOME TAX ACT, 1961. 5. THE RETURN FOR THE YEAR WAS FILED ON 30-11-2000 DECLARING INCOME OF RS. 15,870/-. THE A.O. RECEIVED INTIMATION FROM ASSTT. DIRECTOR OF INVESTIGATION II, UDAIPUR. AS PER THE INTIMATION, A SEARCH AND SE IZURE 0PERATION WAS CARRIED OUT AT THE RESIDENCE OF SHRI MAHESH AGARWAL WHO HAP PENS TO BE A DIRECTOR OF M/S BHARTIYA SPINNERS LTD., GANESHPURA, RAJASTHAN. IN ADDITION, SHRI MAHESH AGARWAL IS ALSO ENGAGED IN TRADING OF YARN. IT WAS FURTHER MENTIONED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERAT ION, CERTAIN DOCUMENTARY EVIDENCES WERE FOUND AND SEIZED. ONE OF THE LOOSE PAPERS SHOW THAT INTEREST OF RS. 18,74,029/- WAS EARNED DURING THE YEAR BY SH RI MAHESH AGARWAL FROM M/S SHREE RAM TEXTILES, WHICH IS A BRANCH OF THE AS SESSEE. ACCORDING TO THE REVENUE AUTHORITIES, THE SAME WAS NOT REFLECTED IN THE BOOKS OF THE ASSESSEE. THE A.O. PROPOSED TO MAKE THE ADDITION U/S 69-C OF THE ACT AS UNEXPLAINED EXPENDITURE. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE EXPLAINED THAT THE LOOSE PAPER HAS NOT BEEN FOUND F ROM THE OFFICE OF THE ASSESSEE. THE DIRECTOR FROM WHOSE RESIDENCE THE SA ID LOOSE PAPER WAS FOUND IS DIRECTOR AND SHAREHOLDER IN OTHER COMPANY ALSO, THEREFORE, IT CANNOT BE ASSUMED THAT THE PAPER REFLECT THE ACCOUNT OF THE D IRECTOR IN THE BOOKS OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT NO REASON HAS BEEN GIVEN FOR TREATING THE SAID PAPER AS BELONGING TO THE ASSESSEE. FURTHE R THERE IS NO EVIDENCE TO PROVE THAT THE ASSESSEE HAS ACTUALLY PAID THE AMOUN T. THIS EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. THE A.O. WAS OF THE OPINION THAT THE DIRECTOR FROM WHOSE RESIDENCE THE LOOSE PAPER I S FOUND IS ALSO DIRECTOR OF THE ASSESSEE. THE A.O. FURTHER OBSERVED THAT IT IS UPTO THE ASSESSEE TO PROVE WHETHER THIS WAS NOT THE ACCOUNT OF SHRI MAHESH AGA RWAL AND WHETHER ANY EVIDENCE COULD BE FURNISHED TO SHOW THAT THE ACTUAL PAYMENT FROM THE ASSESSEE WAS BROUGHT ON RECORD OR NOT. THE A.O. PRO CEEDED BY TREATING RS. ITA 6752/M/08 3 18,74,029/- AS UNEXPLAINED EXPENDITURE U/S 69-C OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOU T ANY SUCCESS. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE LOOSE PAPER EXHIBITED AT PAGE 1 OF THE PAPER BOOK. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT NOWHERE IN THE LOOSE PAPER IT CAN BE ASSUMED THAT THE ASSESSEE HAS ACTUALLY PAID INTEREST TO SHRI MAHESH AGARWAL. FURTHER, THERE IS NO EVIDENCE ON RECORD TO SHOW THAT SHRI MAHESH AGAR WAL ACTUALLY RECEIVED INTEREST FROM THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT PROVISIONS OF SECTION 69-C OF THE AC T ARE NOT AT ALL APPLICABLE ON THE FACTS OF THE CASE. 7. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 8. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CARE FULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT DO CUMENTARY EVIDENCE BROUGHT ON RECORD BEFORE US. THE ADDITION HAS BEEN MADE U/S 69-C OF THE ACT WHICH READ AS UNDER:- WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURR ED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SU CH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED B Y HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, T HE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY B E, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 9. A PERUSAL OF THE LOOSE SHEET ON PAGE 1 OF THE PA PER BOOK DOES NOT SHOW WHETHER SHRI MAHESH AGARWAL HAS RECEIVED INTEREST O R HE HAS PAID INTEREST. MERELY MENTION OF CERTAIN FIGURE WITH A PREFIX INT WOULD NOT CONCLUSIVELY PROVE THAT SHRI MAHESH AGARWAL HAS RECEIVED INTERES T FROM THE ASSESSEE. IT CAN BE OTHER WAY ROUND ALSO. THERE IS NO CORROBORAT IVE EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE HAS ACTUALLY PAID INTEREST WHICH IS THE SINE QUA NON ITA 6752/M/08 4 FOR THE APPLICABILITY OF SECTION 69-C OF THE ACT. THE BURDEN OF PROOF IS ON THE REVENUE TO PROVE THE ASSESSEE HAS INCURRED ANY EXPE NDITURE DURING THE YEAR UNDER CONSIDERATION. IN THE CASE IN HAND, THE REVEN UE HAS FAILED TO DISCHARGE THIS BURDEN OF PROOF. THE ORDER OF THE AUTHORITIES BELOW, NOWHERE MENTIONED THAT SHRI MAHESH AGARWAL HAS ACCEPTED OF HAVING REC EIVED ANY INTEREST FROM THE ASSESSEE. THE ENTIRE ADDITION HAS BEEN MADE SOL ELY ON THE BASIS OF PRESUMPTION AND SURMISES. IN OUR UNDERSTANDING OF LAW, ADDITION MADE ON THE BASIS OF CONJUNCTIONS AND SURMISES CANNOT BE SU STAINED. WE, THEREFORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 1874,029/-. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER, 2014. !' ) *+ ,! - 20 -10-2014 . / SD/- SD/- (VIVEK VARMA) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER * % MUMBAI ; ,! DATED - 20-10-2014. [ .@../ R.K. , SR. PS ..0 !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. A () / THE CIT)A)VI, MUMBAI 4. A / CIT CITY -6, MUMBAI 5. DE. @@FG , FG , * % / DR, ITAT, MUMBAI B BENCH 6. .HI J / GUARD FILE. !' ) / BY ORDER, D @ //TRUE COPY// */)+ , ( DY./ASSTT. REGISTRAR) , * % / ITAT, MUMBAI