ITO 25(2)(2), MUMBAI V. PRITI B MEHTA, MUMBAI

ITA 6798/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92695 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PREMANAND J
• Keywords: Unexplained expenditure; Accommodation entries
• Section: 69C; 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO. 7035/MUM/2014 ( / ASSESSMENT YEAR : 2009 - 10 SMT. PRITI BANSIDHAR MEHTA, 102, VISHAL BLDG., OPP. SONIWADI, BORIVALI (W), MUMBAI - 400 092 / VS. THE ITO 25(2)(2), BKC MUMBAI / I .T.A. NO . 6798 /MUM/2014 ( / ASSESSMENT YEAR : 2009 - 10 THE ITO 25(2)(2), BKC MUMBAI / VS. SMT. PRITI BANSIDHAR MEHTA, 102, VISHAL BLDG., OPP. SONIWADI BORIVALI (W), MUMBAI - 400 092 ./ ./ PAN/GIR NO. : AHPPM 5882L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI MS. AARTI VISSANJI / RESPONDENT BY : SHRI PREMANAND J / DATE OF HEARING : 0 2 . 0 6 .2015 / DATE OF PRONOUNCEMENT : 0 2 .0 6 .2015 / O R D E R PER N.K. BILLAIYA, AM: ITA. NO. 7035 & 6798/M/2014 2 THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE AGAINST THE VERY SAME ORDER OF THE LD. CIT(A) - 35 ,MUMBAI DT. 12.8.2014 PERTAINING TO ASSESSMENT YEAR 2009 - 10. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ORIGINAL ASSESSMENT MADE IN THE CASE OF THE ASSESSEE TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DT. 29.8.2012 IN ITA NO. 4000/ M/2012 HAD SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE MATTER BACK TO HIM FOR PASSING A FRESH ORDER. THE TRIBUNAL ALSO DIRECTED THE LD. CIT(A) FOR REMANDING THE MATTER TO THE AO FOR NECESSARY ENQUIRY. 3. THE DISPUTE REVOLVES AROUND THE VERIFI CATION OF PURCHASE AND GENUINENESS THEREOF. THE IMPUGNED PARTIES ARE AS UNDER: S. NO. NAME OF THE PARTY PURCHASE (RS.) SUNDRY CREDITORS (RS.) 1. VIJAY TRANSPORT --- - 374960 2. SIDDHIVINAYAK CORPORATION 2051744 2004953 3. HETAL SALES CORPORATION - -- 624721 4. NAMAN ENTERPRISES 1269911 1269911 5. PARVATI TRANSPORT -- - 564895 6. PSANDA TRANSPORT ---- 564796 7. VISHAL TRANSPORT --- 695510 8. IRFAN TRANSPORT ---- 629091 9. SHAKTI TRADING CO. 128894 980384 10. K.J. TRANSPORT ---- 480000 11. SANDESH SALES CORPN. 368508 666977 12. MAHESH TRANSPORT --- 631088 13. NAVDEEP TRADING CO. 2455711 2307571 ITA. NO. 7035 & 6798/M/2014 3 14. PADMAVATI CORPORATION 1117212 1117212 15. OM CORPORATION 1615935 1145482 16. VAIBHAV TRANSPORT 438901 3.1. NOTICES U/S. 133(6) OF THE ACT WERE ISSUED TO THESE PARTIES WHICH WERE RETURNED BACK UNSERVED. THE ASSESSEE WAS ASKED TO ESTABLISH THE GENUINENESS OF THE PURCHASES. IN THIS REGARD, THE ASSESSEE SUBMITTED CONFIRMATION OF THESE PARTIES. THE ASSESSEE HAS ALSO PROVIDED BILLS/VOUCHERS. THE AO WAS OF THE OPINION THAT THE PURCHASES HAVE BEEN MADE FROM THE PARTIES WHICH ARE SUSPICIOUS AND ARE PROVIDING ACCOMMODATION ENTRIES AND ARE NOT DOING ANY REAL BUSINESS. THE AO FURTHER FOUND THAT SOME OF THE PARTIES INV OLVED IN THE TRANSACTION ARE THE PARTIES WHOSE NAME APPEARED IN THE LIST OF SUSPICIOUS PARTIES VAT NO. OF SOME OF THESE PARTIES ARE ALREADY BEEN CANCELLED. TO MAKE FURTHER VERIFICATION, THE AO DEPUTED WARD INSPECTOR WHO SUBMITTED THAT THE FOLLOWING PARTIES DO NOT EXIST. S. NO. NAME OF THE PARTY SERIAL NUMBER IN THE LIST AVAILABLE WITH THIS OFFICE REMARKS 1. SIDDHIVINAYAK CORPORATION 578 VAT CANCELLED 2. HETAL SALES CORPORATION 201 VAT CANCELLED 3. NAMAN ENTERPRISES 333 VAT CANCELLED 4. SHAKTI TRADING CO. 515 VAT CANCELLED 5. SANDESH SALES CORPN. VAT CANCELLED 6. NAVDEEP TRADING CO. 337 VAT CANCELLED 7. PADMAVATI CORPORATION VAT CANCELLED 8. OM CORPORATION 359 VAT CANCELLED ITA. NO. 7035 & 6798/M/2014 4 3.2. THE AO FORMED A BELIEF THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES . R ELYING UPON CERTAIN JUDICIAL DECISIONS , T HE AO AT PARA 4.7 OF HIS ORDER FINALLY CONCLUDED THAT THE TOTAL PURCHASES CLAIMED BY THE ASSESSEE AMOUNTING TO RS. 90,07,915/ - IS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT AND ADDED THE SAME. THE AO FURTHER TREATED RS. 61,53,921/ - BEING SUNDRY CREDITORS AS INCOME OF THE ASSESSEE U/S. 41(1) OF THE ACT. 4. AGGRIEVED BY THESE TWO ADDITIONS, THE ASSESSEE CARRIED THE MATTER BEFORE TH E LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THAT SHE HAD GENUINELY MADE THE PURCHASES, MADE THE PAYMENTS FOR THE SAME AND HAD USED THE SAME TO MAKE SALES TO PARTIES. AFTER CONSIDERIN G THE FACTS AND THE SUBMISSIONS AND THE PAST HISTORY OF THE CASE IN THE FIRST ROUND OF APPEAL, THE LD. CIT(A) WAS CONVINCED THAT IN SO FAR AS THE PURCHASES FROM THE LISTED 7 PARTIES ARE CONCERNED, THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THAT PURCHA SES WERE GENUINE AND PAYMENTS HAVE BEEN MADE FROM THE BANK ACCOUNT. THE LD. CIT(A) FURTHER OBSERVED THAT THE AO HAS NOT DOUBTED THE SOURCE OF PAYMENT OR THE FACT THAT THE SAID PURCHASES WERE ACTUALLY PART OF THE INVENTORY OF THE ASSESSEE WHICH HAVE BEEN U SED TO MAKE FURTHER SALES. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAS CERTIFIED THE GENUINENESS OF THE PURCHASES BY GIVING THE CONFIRMATIONS. HAVING BEEN CONVINCED, THE LD. CIT(A) DIRECTED FOR THE DELETION OF THE ADDITION OF RS. 90,07,915/ - . 4.1. IN SO FAR AS THE ADDITION ON ACCOUNT OF REMISSION OF LIABILITY IS CONCERNED, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD BALANCE OUTSTANDING WITH THE PARTIES. THE LD. CIT(A) FURTHER OBSERVED THAT DURING THE COURSE OF THE LAST 3 YEARS THE ASSESS EE HAS BEEN MAKING PAYMENTS FOR ITA. NO. 7035 & 6798/M/2014 5 WHICH EVIDENCE HAS BEEN PROVIDED AND THE BALANCE THAT IS LEFT TO BE PAID IS ONLY RS. 36,29,281/ - . SINCE THE ASSESSEE HAS NOT BROUGHT ANY CONFIRMATION WITH RESPECT TO THESE BALANCES, THE LD. CIT(A) AGREED WITH THE VIEW OF T HE AO THAT THIS IS A CASE OF REMISSION OF LIABILITY . HOWEVER, CONSIDERING ALSO THE FACT THAT THE PART PAYMENTS HAVE BEEN MADE, THE LD. CIT(A) GAVE RELIEF OF RS. 25,24,640/ - AND CONFIRMED THE ADDITION TO THE EXTENT OF RS. 36,29,281/ - . 5. AGGRIEVED BY THE SE DECISION OF THE LD. CIT(A) BOTH REVENUE AND ASSESSEE IS BEFORE US. 5.1 LET US FIRST TAKE THE APPEAL OF THE REVENUE. THE SOLE GRIEVANCE RELATES TO THE DELETION OF THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C IN RELATION TO THE PU RCHASES OF RS. 90,07,915/ - . SECTION 69C READ AS UNDER: WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE (ASSESSING) OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 5.2. THE FIRST LIMB OF THIS SECTION DO NOT APPLY AS THE ASSESSEE HAS OFFERED EXPLANATION AND EXPLAINED ABOUT THE SOURCE OF EXPENDITURE. COMING TO THE SECOND LIMB OF SECTION WHICH IS THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT TO THE SATISFACTION OF THE AO. 5.3. A CAREFUL PERUS AL OF THE ORDER OF THE AUTHORITIES BELOW WITH THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK, WE FIND THAT ALL THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUE , WHICH ITA. NO. 7035 & 6798/M/2014 6 HAVE BEEN DULY CERTIFIED BY THE IDBI BANK. THE CERTIFICATE IS PLACED AT PAGES 40 & 41 OF THE PAPER BOOK. WE ALSO FIND THAT THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO DISBELIEVE THE EXPLANATION OF THE ASSESSEE. THE ONLY EVIDENCE/REFERENCE MADE BY THE AO IS THAT THE ASSESSEE HAS NOT PROVIDED PAN NO. OF THE PARTIES. THIS CANNOT BE THE SOLE REASON FOR DISBELIEVING THE EXPLANATION OF THE ASSESSEE, WHEN THE PAYMENTS HAVE BEEN MADE BY CHEQUE DULY REFLECTED IN THE BANK STATEMENT OF THE ASSESSEE, THE CLAIM OF EXPENDITURE CANNOT BE BRUSHED ASIDE LIGHTLY. W E, THEREFORE, DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REVENUE IS DISMISSED. 5.4. COMING TO THE APPEAL FILED BY THE ASSESSEE , WHICH IS IN RELATION TO THE CREDITORS ADDED AS CESSATION OF LIABILITY U/S. 41(1) OF THE AC T. THE LIST OF CREDITORS READ AS UNDER: S. NO. NAME OF CREDITOR CREDITORS ADDED TO INCOME. SHREE ENTERPRISES 1. HETAL SALES CORPORATION 624,721 2. SANDESH SALES CORPN. 298,469 3. SHAKTI TRADING CO. 851,490 1,774,680/ - GAJANAN TRANSPORT 1. IRFAN TRANSPORT 629,091 2. K.J. TRANSPORT 480,000 3. MAHESH TRANSPORT 631,088 4. PANDA TRANSPORT 564,796 5. PARVATI TRANSPORT 564,895 6. VAIBHAV TRANSPORT 438,901 7. VIJAY TRANSPORT 374,960 8. VISHAL TRANSPORT 695,510 4,379,241 CREDITORS ADDED TO THE INCOME CESSATION OF LIABILITY U/S. 41(1) OF THE ACT 6,153,921/ - ITA. NO. 7035 & 6798/M/2014 7 5.5 A PERUSAL OF THE LEDGER ACCOUNT OF THESE PARTIES SHOW THAT OUT OF THE BALANCE SHOWN IN THE NAME OF HETAL SALES CORPORATION AMOUNTING TO RS. 6,24,721/ - , RS. 3,00,000/ - HAVE BEEN MADE ON 18.2.2010, RS. 3,24,721/ - WAS PAID ON 12.10.2010. SIMILARLY IN THE CASE OF SANDESH SALES CORPORATION, THE PAYMENT HAS BEEN MADE ON 31.12.2009, SHAKTI TRADING COMPANY THE PAYMENT HAS BEEN MADE ON 2.5.2009, 29.5.2009, 18.12.2009 AND 3.2.2010. SIMILARLY , ALL THE TRANSPORTERS MENTIONED HEREINABOVE HAVE BEEN PAID IN SUBSEQUENT YEARS . THE PAYMENT MADE IS EVIDENT FROM THE COPIES OF THE LEDGER ACCOUNT EXHIBITED AT PAGES 71 TO 79 OF THE PAPER BOOK . AS THE CREDITORS HAVE BEEN PAID IN THE SUBSEQUENT YEARS , I T CANNOT BE SAID THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS A CESSATION OF LIABILITY, PROVISIONS OF SEC. 41(1) DO NOT APPLY ON THE FACTS OF THE CASE. WE, ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 36,29,281/ - . APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 2 ND JUNE , 2015 SD/ - SD/ - ( JOGINDER SING H ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 ND JUNE , 2015 . . ./ RJ , SR. PS ITA. NO. 7035 & 6798/M/2014 8 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI