KAVITA GODBOLE, MUMBAI V. ITO CIR 18(1)(4), MUMBAI

ITA 6918/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0474 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2014
• Court: TRIBUNAL
• Department Lawyers: AJAI PRADEEP SINGH
• Assessee Lawyers: R C JAIN
• Keywords: Unexplained cash credit; Gift; Source of fund; Application of stay; Question of law; Deemed dividend; Reason to believe; Reassessment proceedings
• Section: 143(3); 68; 148

Judgement Text

' IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI G . S. P ANNU , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 7139 /MUM/201 3 , (A.Y : 20 0 5 - 06 ) ITA NO. 7140 /MUM/201 3 , (A.Y : 20 0 6 - 07 ) ITA NO. 7141 /MUM/201 3, (A.Y : 20 08 - 09 ) ITA NO. 6918 /MUM/201 4, (A.Y : 20 09 - 10 ) STAY APPLICATION NO.210/MUM/ 2017 ARISING OUT OF ITA NO. 7140/MUM/2013, A.Y. 2006 - 07 STAY APPLICATION NO.211/MUM/ 2017 ARISING OUT OF ITA NO. 7141/MUM/2013, A.Y. 2008 - 09 STAY APPLICATION NO.212/MUM/ 2017 ARISING OUT OF ITA NO. 6918/MUM/2014, A.Y. 2009 - 10 MS. KAVITA GODBOLE 3 08, UNIQUE, INDUSTRIAL ESTATE BOMBAY DYEING COMPOUND MUMBAI 400 0 25 PAN : AA GPG0339N VS. ITO CIR 18(1)(4) 1 ST FLOOR, PIRAMAL CHAMBER LALBAG, PAREL MUMBAI 400 012 ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI R.C.JAIN / RE SPONDENT BY : SHRI AJAI PRADEEP SINGH / DATE OF HEARING : 30 . 5 . 2017 / DATE OF PRONOUNCEMENT : 31 . 5 . 2017 2 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE / O R D E R PER G.S.PANNU , ACCOUNTANT MEMBER : THE CAPTIONED FOUR APPEAL S BY THE A SSESSEE PERTAIN TO ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2008 - 09 AND 2009 - 10 AND SINCE THE Y INVOLVE CERTAIN COMMON ISSUES, THEY HAVE BEEN CLUBBED , HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PAS SED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN SO FAR AS THE APPEALS FOR THE ASSESSMENT YEAR S 2005 - 06, 200 6 - 0 7 AND 2008 - 09 ARE CONCERNED , A PRELIMINARY COMMON ISSUE HAS BEEN RAISED BY THE ASSESSEE , CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER. SINCE IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTA NCES ARE IDENTICAL IN THE THREE YEARS, WE MAY TAKE - UP THE APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 AS A LEAD CASE. 3. THE APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 IS DIRECTED AGAINST THE ORDER OF THE CIT (APPEALS) - 29, MUMBAI , WHICH IN TURN , HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE ACT DATED 30.12.2011. 4. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WH O IS , INTER ALIA , ENGAGED IN THE BUSINESS OF TRADING IN GARMENTS, COMMISSION AND CONSULTANCY. FOR THE ASSESSMENT YEAR 2005 - 06, THE ASSESSEE FILED A RETURN OF INCOME ON 2 4 .10.2005 DECLARING A TOTAL INCOME OF RS.5,57,93 4 / - . SUBSEQUENTLY, 3 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE ASSESSING OFFICER ISSUED NOTICE U/S 1 48 OF THE ACT DATED 4.11.2011 REOPENING THE ASSESSMENT ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DG INVESTIGATIONS ( MUMBAI ) WITH RESPECT TO INVESTMENT MADE IN A FLAT AT ADARSH COOPERATIVE HOUSING SOCIETY LIM ITED, MUMBAI. IN THIS CONTEXT, THE REASONS RECORDED BY THE ASSESSING OFFICER FOR ISSUING NOTICE U/S 148 OF THE ACT HAVE BEEN ADVERTED TO AT THE TIME OF HEARING , WHICH READ S AS UNDER : THE ABOVE OBJECTION OF THE APPELLANT IS NOT A VALID FOR THE YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS REOPENED ON THE ISSUE OF VERIFICATION OF INVESTMENT OF RS.5,00,000/ - IN FLAT W ITH ADARSH CHS LTD. BY THE APPE LLANT DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, ONE OF THE SUBJ ECT MATTER OF THE INVESTIGATION IS THE INVESTMENT MADE BY THE APPELLANT IN THE FLAT WITH ADARSH CHS LTD. AND AS A PART OF THOSE INVESTIGATIONS, THE AO INQUIRED INTO THE VARIOUS LOANS TAKEN BY THE APPELLANT DURING THE PERIOD UNDER CONSIDERATION AND THE INVE STMENT OF RS.5,00,000/ - IN THE FLAT IS ALSO A PART OF THOSE INVESTIGATION OF LOANS RECEIVED BY THE APPELLANT. THEREFORE , TO SAY THAT THE AO HAS NOT MADE THE ADDITION OF INVESTMENT IN THE FLAT AMOUNT RS.5,00,000/ - HAS VITIATED THE REASSESSMENT PROCEEDINGS, IS NOT CORRECT. THE MATTER OF INVESTMENT IN THE FLAT HAS BEEN INVESTIGATED BY THE A.O. DURING THE REASSESSMENT PROCEEDINGS. MAKING ADDITION ON THIS MATTER OF INVESTIGATION IS NOT NECESSARY IF THE EXPLANATION FURNISHED BY THE APPELLANT IS FOUND TO BE IN ORDER/SATISFACTORY. 5. IN THE ENSUING ASSESSMENT, THE TOTAL INCOME HAS BEEN DETERMINED AT RS.28,06,740/ - BY MAKING THREE ADDITIONS TO THE RETURNED INCOME. FIRSTLY, THE ASSESSING OFFICER PERUSED THE BALANCE SHEET OF THE ASSESSEE AND NOTED LOANS OF RS.24,04,115/ - OUT OF WHICH HE TREATED THE LOAN FROM THREE PARTIES OF RS.9,24,000/ - AS UNEXPLAINED CREDITS U/S 68 OF THE ACT. SECONDLY , THE ASSESSING OFFICER EXAMINED THE FINANCIAL STATEMENT OF THE PROPRIETARY CONCERNS OF THE ASSESSEE AND RECORD ED THAT ASS ESSEE COULD NOT PRODUCE SUPPORTING DOCUMENT S OF PURCHASES OR EXPENSES SHOWN THEREIN . THE TOTAL CASH SALES SHOWN BY THE ASSESSEE WAS TREATED AS UNEXPLAINED MONEY AND THE OPENING STOCK OF 4 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE RS.12,8 4,640 / - WAS TREATED AS NIL THEREBY RESULTING IN ADDITION OF RS .12, 8 4,640 / - . THIRDLY, THE ASSESSING OFFICER DISALLOWED 20% OF THE EXPENSES CLAIMED IN PROFIT & LOSS ACCOUNT THUS MAKING ADDITION OF RS.40,168/ - . 6. BEFORE US, THE LD. REPRESENTATIVE OF THE ASSESSEE POINTED OUT THAT THE AFORESAID THREE ADDITIONS MADE TO THE RETURN ED INCOME WERE NOT FORMING PART OF THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 147/148 OF THE ACT. IT HAS BEEN POINTED OUT THAT IN THE FINAL ASSESSMENT, THE ASSESSING OF FICER HAS NOT MADE ANY ADDITION WITH RESPECT TO THE INCOME REFERRED TO I N THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 147/148 OF THE ACT. THEREFORE, IT IS CONTENDE D THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE THE AFORESAID THREE ADDITIONS AND FOR THAT PROPOSITION, RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. [ 331 ITR 236 (MUM) ] . 7. ON THE OTHER HAND, THE LD. DR APPEARING FOR TH E REVENUE HAS DEFENDED THE ORDER OF THE ASSESSING OFFICER TO MAKE THE IMPUGNED ADDITIONS, BY POINTING OUT THAT THE INCOME REFERRED TO IN THE REASONS RECORDED PERTAIN TO INVESTMENT IN A FLAT AT ADARSH COOPERATIVE HOUSING SOCIETY LTD AND IT IS ONLY IN THE CO URSE OF SUCH VERIFICATION THAT THE AFORESAID ISSUES CAME TO THE NOTICE OF THE ASSESSING OFFICER. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE CRUX OF THE CONTROVERSY BEFORE US REVOLVES AROUND THE SCOPE OF THE POWER OF THE ASSESSING OFFICER TO MAKE ADDITIONS, WHEN RE ASSESSMENT HAS BEEN INITIATED BY ISSUANCE OF 5 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE NOTICE U/S 147/148 OF THE ACT. IN THE PRESENT CASE, AS THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 SHOWS, THE ASSESSMENT WAS REOPENED IN ORDER TO VERIFY THE INVESTMENT MADE BY THE ASSESSEE OF RS.5,00,000/ - FOR THE FLAT AT ADARSH COOPERATIVE HOUSING SOCIETY LTD. FACTUALLY SPEAKING , IN THE ENSUING ASSESSMENT, WHICH IS THE SUBJECT MATTER OF CONTROVERSY BEFORE US, THE AFORESAID INCOME HAS NOT BEEN ASSESSED , WHICH IMPLIES THAT THE EXPLANATION FURNISHED BY THE ASSESSEE WAS FOUND SATISFACTORY. THE ASSESSING OFFICER HAS MADE THREE OTHER ADDITIONS , WHICH WE HAVE DETAILED EARLIER. THE QUESTION IS WHETHER THE ASSESSING OFFICER HAS THE POWER TO ASSESS SUCH OTHER INCOMES IN A SITUATION WHERE HE HAS NOT ASSESSED THE INCOME, WHICH HAD PREVAILED WITH HIM TO FORM AN OPINION OF ESCAPEMENT OF INCOME IN THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT. AN IDENTICAL SITUATION HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HI GH COURT IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA). I N THE CASE BEFORE HONBLE HIGH COURT, THE QUESTION OF LAW RAISED WAS AS UNDER : 'WHERE UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961 READ WITH SECTION 147, THE ASSESSING OF FICER DOES NOT ASSESS OR, AS THE CASE MAY BE, REASSESS THE INCOME WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND WHICH FORMED THE BASIS OF A NOTICE UNDER SECTION 148, IS IT OPEN TO THE ASSESSING OFFICER TO ASSESS OR REASSESS INDEPENDENTLY ANY OT HER INCOME, WHICH DOES NOT FORM THE SUBJECT - MATTER OF THE NOTICE ? 9. ACCORDING TO THE HONBLE HIGH COURT, AFTER CONSIDERING EXPLANATION 3 TO SECTION 147 OF THE ACT , INSERTED BY THE FINANCE ( NO.2 ) ACT OF 2009 , W.E.F. 1.4.19 8 9, THE ASSESSING OFFICER CAN ASSESS OTHER INCOMES N O T REFERRED TO IN THE NOTICE OF THE RE ASSESSMENT ONLY IF THE INCOME REFERRED TO IN THE NOTICE OF REASSESSMENT HAS BEEN BROUGHT TO TAX. IN THIS CONTEXT, THE FOLLOWING DISCUSSION IN THE HONBLE HIGH COURT I S WORTHY OF NOTICE : - 6 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIA LLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALIT Y OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSE E. 10. FOLLOWING THE RATIO OF THE ABOVE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT, IT HAS TO BE HELD THAT IN THE PRESENT CASE, THE ASSESSING OFFICER WAS PRECLUDED FROM MAKING THE AFORE SAID ADDITIONS TO THE RETURNED INCOME , CONSIDERING THE FACT THAT THE INCOME REFERRED TO IN THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 147/148 OF THE ACT HAS NOT BEEN ASSESSED. THEREFORE, THE ADDITION S OF RS .22,48,808/ - MADE TO THE RETURNED INCOME DURING THE REASSESSMENT PROCEEDINGS ARE BEYOND THE JURISDICTION OF THE ASSESSING OFFICER AND DESERVE TO BE SET ASIDE. WE HOLD SO . 11. BEFORE PARTING, WE REFER TO THE ARGUMENT RAISED BY THE LD. DR WHICH IS ESSENTIALLY BASED O N THE REASONING TAKEN BY THE CIT (APPEALS) IN PARA 19 OF HIS ORDER. AS PER THE CIT (APPEALS), EVEN IF THE ASSESSING OFFICER DID NOT MAKE AN ADDITION ON ACCOUNT OF INVESTMENT IN FLAT AMOUNTING TO RS.5,00,000/ - , THE IMPUG N ED REASSESSMENT DOES NOT GET VITIA TED BECAUSE THE THREE ADDITIONS IN QUESTION ARE PART OF THE INVESTIGATION CARRIED OUT BY THE ASSESSING OFFICER IN RELATION TO THE INVESTMENT IN FLAT AT ADARSH COOPERATIVE HOUSING SOCIETY LTD. IN OUR CONSIDERED OPINION, THE AFORESAID REASONING IS UNTENABLE IN VIEW OF THE LAW 7 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE ON THE SUBJECT ENUNCIATED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (SUPRA) AND THEREFORE IT DESERVES TO BE REPELLED . W E HOLD SO. 12. IN THE RESULT, AS FAR AS THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 IS CONCERNED, THE SAME IS ALLOWED , AS ABOVE. 13. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SO FAR AS THE ASSESSMENT YEAR S 2006 - 07 AND 2008 - 09 ARE CONCERNED, THE FACTS AND CIRCUMSTANCE S ARE PAR I MATERIA TO THOSE CONSIDERED BY US IN EARLIER PARAS IN THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 AND THEREFORE OUR DECISION IN THE APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 APPLIES MUTATIS MUTANDIS IN THE APPEAL FOR THE ASSESSMENT YEAR S 2006 - 07 AND 2008 - 09. AS A CONSEQUENCE, THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 AND 2008 - 09 ARE ALLOWED , AS ABOVE. 14. NOW, WE MAY TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 WHICH IS DIRECTED AGAINST THE ORDER OF THE CIT (APPEALS) WHICH IN - TURN , HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT DATED 30.12.2011. IN THIS APPEAL, ASSESSEE HAS RAISED THREE GROUNDS OF APPEAL WHICH WE SHALL DEAL IN CERTAINTY. 15. IN SO FAR AS THE FIRST ISSUE IS CONCERNED, THE SAME RELATES TO ADDITION OF RS.5,00,000/ - MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 68 OF THE ACT. THE RELEVANT FACTS IN THIS REGARD ARE THAT WHEN AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CAPITAL OF RS.5,00,000 INTRODUCED IN HER PROPRIETARY CONCERN , T HE ASSESSEE EXPLAINED THAT SUCH AMOUNT WAS RECEIVED AS GIFT FROM HER MOTHER 8 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE MRS.MEENA GODBOLE. IN SUPPORT, AN AFFIDAVIT OF MRS MEENA GODBOLE WAS FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE AFFIDAVIT FILED BY THE DONOR DID NOT SPECIFY TH E MODE AND SOURCE OF ADVANCING THE GIFTS AND EVEN THE CREDIT WORTHINESS OF THE DONOR WAS NOT PROVED. ACCORDINGLY, HE TREATED THE SUM OF RS.5,00,000/ - AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE BY INVOKING SECTION 68 OF THE ACT. THE CIT (A PPEALS) HAS ALSO AFFIRMED THE AFORESAID STAND OF THE ASSESSING OFFICER. 16. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS TAKEN US THROUGH THE AFFIDAVIT OF THE MOTHER AND POINTED OUT THAT SHE HAS BEEN ADVANCING MONIES TO THE ASSESSEE DURING THE P ERIOD 2001 TO 2011 AS LOANS. BY WAY OF AFFIDAVIT DATED 26.11.2011, THE SAID LOANS WERE CONVERTED INTO GIFTS TO THE ASSESSEE. ACCORDINGLY, THE LD. REPRESENTATIVE POINTED OUT THAT THE SUM OF RS.5,00,000/ - IN QUESTION WAS EXPLAINED TO BE IN THE NATURE OF GI FT RECEIVED FROM THE MOTHER OF THE ASSESSEE. 17. ON THE OTHER HAND, THE LD. DR APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE AUTHORITIES BELOW BY POINTING OUT THAT THE ASSESSEE H AS N EITHER ESTABLISHED THE CREDIT WORTHINESS OF THE DONOR AND NOR THE GENUINENESS OF THE TRANSACTION. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THE CONTEXT OF THE IMPUGNED SUM OF RS.5,00,000/ - THE EXPLANATION OF THE ASSESSEE IS PURELY BASED 9 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE ON THE AFFIDAVIT OF THE MOTHER, A COPY OF WHICH HAS BEEN PLACE D IN THE P APER B OOK FILED BEFORE US. WE HAVE PERUSED THE SAID AFFIDAVIT OF THE ASSESSEES MOTHER, MRS MEENA GODBOLE AND FIND THAT APART FROM MAKING GENERAL AVERMENTS OF HAVING ADVANCED MONIES TO THE ASSESSEE DURING THE PERIOD 2001 TO 20 11, NO SPECIFIC DET AILS HAVE BEEN PROVIDED. IT IS ALSO NOT STATED AS TO THE MANNER IN WHICH THE AMOUNTS HAVE BEEN ADVANCED TO THE ASSESSEE. THE AFFIDAVIT ALSO DOES NOT BRING OU T ANY CONCRETE SOURCE S OF INCOME AVAILABLE WITH MRS MEENA GODBOLE TO JUSTIFY THE GIFTING OF AMOUN TS TO THE ASSESSEE. THEREFORE, IT IS A CASE WHERE THE EXPLANATION FURNISHED BY THE ASSESSEE IS NEITHER AMENABLE TO ANY VERIFICATION AND NOR IT REFERS TO ANY SPECIFIC SOURCE OF FUNDS . THEREFORE, IN OUR CONSIDERED OPINION, CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE , THE I NCOME T AX AUTHORITIES HAVE RIGHTLY CONSIDERED THE SUM OF RS.5,00,000/ - AS UNEXPLAINED CASH C REDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. THUS, ON THIS ASPECT, ASSESSEE FAILS. 19. THE NEXT ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO THE ADDITION OF RS.3,93,445/ - MADE BY THE ASSESSING OFFICER AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD RECEIVED A LOAN F ROM M/S APEKSHA IMPEX PVT. LTD TO THE TUNE OF RS.3,93,445/ - WHICH WAS TO BE ASSESSED AS DEEMED DIVIDEND IN TERMS OF SECTION 2(22)(E) OF THE ACT SINCE ASSESSEE WAS ONE OF THE SHAREHOLDERS IN THE SAID COMPANY HAVING 25% OF THE VOTING POWERS. THE CIT(APPEA LS) HAS ALSO AFFIRMED THE STAND OF THE ASSESSING OFFICER. 10 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE 20. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS NOT SERIOUSLY DISPUTED THE INVOKING OF SECTION 2(22)(E) OF THE ACT IN PRINCIPLE. HOWEVER, IT IS SOUGHT TO BE POINTED OUT , BASED ON THE ST ATEMENT OF ACCOUNT WITH THE SAID COMPANY FOR THE YEAR UNDER CONSIDERATION, THAT ONLY A SUM OF RS.1,50,000/ - COULD BE ASSESSED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. AT THE TIME OF HEARING, OUR ATTENTION WAS INVITED TO THE STATEMENT OF ACCOUNT OF TH E ASSESSEE MAINTAINED IN THE ACCOUNT BOOKS OF THE SAID COMPANY FOR DIFFERENT YEARS TO DEMONSTRATE THAT IT WAS A RUNNING ACCOUNT AND ASSESSEE WAS PAYING MONIES TO THE COMPANY AS WELL AS RECEIVING THE AMOUNTS ON DIFFERENT DATES. IT IS SOUGHT TO BE CANVASSED THAT SUCH TRANSACTIONS WERE NOT TO BE CONSIDERED AS LOANS AND ADVANCES FOR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT. 21. IN OUR CONSIDERED OPINION, THE AFORESAID PLEA OF THE ASSESSEE IS NOT TENABLE IN AS MUCH AS NO BUSINESS CONSIDERATIONS HAVE BEEN EXP LAINED FOR THE GIVING AND RECEIPT OF MONIES FROM THE COMPANY. THEREFORE, WE UPHOLD THE INVOKING OF SECTION 2(22)(E) OF THE ACT BY THE ASSESSING OFFICER , IN PRINCIPLE. WITH REGARD TO THE QUANTUM OF AMOUNT ASSESSABLE U/S 2(22)(E) OF THE ACT , WE HAVE PERUSE D THE STATEMENT OF ACCOUNT PERTAINING TO THE PERIOD UNDER CONSIDERATION AND IN TERMS THERE OF, IT IS QUITE CLEAR THAT THE OPENING BALANCE OF RS.6,52,674/ - CANNOT BE CONSTRUED AN AMOUNT RECEIVED DURING THE YEAR , AND THUS THE SAME CANNOT BE ASSESSED U/S 2(22 )(E) OF THE ACT IN THIS YEAR . THE ASSESSING OFFICER HAS ASSESSED AN AMOUNT OF RS.3,93,445/ - WHICH IS THE CLOSING BALANCE AT THE END OF THE YEAR, A PART OF WHICH IS FROM THE OPENING BALANCE . THE ONLY AMOUNT WHICH CAN BE ASSESSED U/S 2(22)( E) OF THE ACT IS A SUM OF 11 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE RS.1,50,000/ - ADVANCED TO THE ASSESSEE ON 17.7.2008 AS IS EVIDENT FROM THE STATEMENT OF ACCOUNT PLACED AT PAGE 9 OF THE P APER B OOK. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT TO RS.1,50,000/ - AS AGAINST RS.3,93,445/ - MADE BY HIM. THUS, ON THIS ASPECT , ASSESSEE PARTLY SUCCEEDS. 22. THE LAST ISSUE IN THIS APPEAL IS WITH REGARD TO AN ADHOC DISALLOWANCE MADE OUT OF THE EXPENSES DEBITED TO THE P ROFIT AND L OSS A CCOUNT ON ACCOUNT OF THE TELEPHONES, CAR, COMPUTER EXPENSES ETC. THE ASSESSING OFFICER DISALLOWED 20% OF THE TOTAL EXPENSES , BEING RS.18,662/ - AND THE SAME HAS BEEN REDUCED BY THE CIT(APPEALS) TO 10%. IT IS QUITE CLEAR FROM THE ORDER OF THE AUTHORITIES BELOW THAT THE DISALLOWANCE IS PURELY ADHOC , BASED ON MERE SURMISES AND CONJECTURES AND THEREFORE THE SAME IS DIREC TED TO BE DELETED IN ITS ENTIRETY. THUS, O N THIS ASPECT ALSO , ASSESSEE SUCCEEDS. 23. THE APPEAL FOR THE ASSESSMENT YEAR 2009 - 10 IS , THUS, PARTLY ALLOWED. 2 4 . IN THE RESULT, THE APPEALS FOR THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2008 - 09 ARE ALLOWED , AND THAT FOR THE ASSESSMENT YEAR 2009 - 10 IS PARTLY ALLOWED. 12 ITA NOS. 7 1 3 9 - 7141 /MUM/201 3 AND 6918 /MUM/201 4 SA NOS.210 - 212/MUM/2017 MS. KAVITA GODBOLE 2 5 . IN SO FAR AS THE CAPTIONED STAY APPLICATIONS ARE CONCERNED, THE SAME HAVE BEEN RENDERED INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON THE 31 ST DAY OF MAY 2017 . SD / - SD/ - ( RAVISH SOOD) ( G.S.PANNU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 31 .5.2017 LR, SPS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /