GIRISH PRADHAN ( HUF), THANE V. ITO WD 2(1), THANE

ITA 6933/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3067 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 06-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V TRIPATHI
• Assessee Lawyers: VIRAG SHAH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER / I .T.A. NO.6933/MUM/2011 ( / ASSESSMENT YEAR:2006-07 SHRI GIRISH PRADHAN (HUF), 204, SAHAKAR JYOT, ABOVE TDC BANK, BHAYANDAR (W), DIST. THANE -404 101 / VS. THE ITO, WARD 2(1), QUERSHI MANSION, GOKHALE ROAD, NAUPADA THANE(W) ./ ./ PAN/GIR NO. : AABHG 7084D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VIRAG SHAH / RESPONDENT BY: SHRI V. TRIPATHI / DATE OF HEARING :06 .10.2015 ! / DATE OF PRONOUNCEMENT :16.10.2015 '# / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-11, THANE DATED 27.06.2011 PERTAINI NG TO ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS AGGRIEVED BY TWO ADDITIONS. FIR ST ADDITION ON ACCOUNT OF REMISSION OF LIABILITY U/S. 41(1) AMOUNT ING TO RS. 1,20,000/- AND SECOND ADDITION ON ACCOUNT OF CASH C REDITS AMOUNTING TO RS. 10,00,000/-. ITA. NO.6933/M/2011 2 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASS ESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN M/S. REAL SOFTW ARE AS LOAN CREDITOR FOR RS. 11,20,000/-. HOWEVER, THE ASSESSE E HAS REPAID RS. 10,00,000/- DURING FINANCIAL YEAR 2005-06. THE ASS ESSING OFFICER DID NOT FIND ANY LOAN AMOUNT OUTSTANDING AS ON 31.3.200 6 IN THE NAME OF M/S. REAL SOFTWARE. ON RECEIVING NO PLAUSIBLE REPL Y, THE AO FORMED A BELIEF THAT THE LIABILITY HAS CEASED TO EXIST AND T HEREFORE TREATED RS. 1,20,000/- AS THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE LIST OF SUNDRY LOAN FOR THE ACCOUNTING YEAR 2004-05 AND POINTED OUT THAT THE AMOUNT OUTSTANDING IN THE NAME OF M/S. REAL SOFTWARE IS RS. 12,71,200/-. THE LIST IS EXHIBITED AT PAGE-10 OF THE PAPER BOOK. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO PAGE- 20 OF THE PAPER BOOK AND POINTED OUT THAT RS. 5,00,000/- WAS PAID T O REAL SOFTWARE ON 27.9.2006, RS. 5,00,000/- ON 4.10.2006 AND ON 14 .3.2007 CASH WAS PAID FOR RS. 2,71,200/-. THUS THE ACCOUNT OF REAL SOFTWARE STOOD NIL AS AT THE END OF THE YEAR. 7. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CO NTROVERT TO THESE FACTS. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE EXHIBITS REFERRED TO HEREINABOVE. WE FIND FORCE IN THE CONT ENTION OF THE LD. COUNSEL. THE TOTAL OUTSTANDING OF RS. 12,71,200/- HAS BEEN REPAID BY ITA. NO.6933/M/2011 3 CHEQUE RS. 5,00,000/- EACH ON TWO OCCASIONS AND BY CASH OF RS. 2,71,200/- MAKING THE ACCOUNT OF REAL SOFTWARE NIL. SINCE THE TRANSACTIONS HAVE BEEN EXPLAINED, WE DO NOT FIND AN Y REASON IN MAKING THE ADDITION OF RS. 1,20,000/-. ORDER OF TH E LD. CIT(A) IS SET ASIDE AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 1,20,000/-. 9. THE SECOND ADDITION RELATES TO THE ADDITION OF R S. 10,00,000/- U/S. 68 OF THE ACT. 9.1. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO FOUND THAT AS ON 31.3.2005, THE ASSESSEE HAS SHOWN CAPITAL OF RS. 13,07,571/-. HOWEVER, IN THE CAPITAL ACCOUNT FILED ALONGWITH THE RETURN OF INCOME FOR THE A.Y. 2006-07, THE OPENING CAPITAL WAS SHOWN AT RS. 23,07,571/-. THUS, THERE WAS AN INCREASE OF CAPITA L BY RS. 10,00,000/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. ON RECEIVING NO PLAUSIBLE REPLY, THE AO MADE AN ADDITI ON OF RS. 10,00,000/-. 10. THE ASSESSEE AGITATED THE ISSUE BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT AFTER THE CLOSE OF THE ACCOUNTING YEAR 2004-05, THE ASSESSEE BROUGHT CERTAIN ASSETS IN ITS BALANCE SHEET BECAUSE OF WHICH THE OP ENING CAPITAL OF THE ASSESSEE WAS INCREASED. IT IS THE SAY OF THE LD. COUNSEL THAT INVESTMENT IN PPF, NSC AND PLOT OF LAND AT NAVGHAR REMAINED OUTSIDE THE BALANCE SHEET IN EARLIER YEARS AND THE SAME WER E INCORPORATED IN THE BALANCE SHEET OF THE ASSESSEE BY A JOURNAL ENTR Y WHICH INCREASED ITA. NO.6933/M/2011 4 THE CAPITAL. THE LD. COUNSEL FURTHER STATED THAT I F GIVEN AN OPPORTUNITY, HE CAN EXPLAIN THE TRANSACTION BEFORE THE AO. 12. THE LD. DR FAIRLY CONCEDED TO THIS. 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FINDINGS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED OPINION, THES E ARE FACTUAL ERRORS WHICH NEED TO BE RECONSIDERED BY THE AO. THEREFORE , IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO EXPLAIN THE ASSETS BROUGHT IN THE BALANCE SHEET TO JUSTIFY THE INCREASE IN THE CAPITAL. THE AO IS DIRECTED TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF THE DETAIL S FILED BY THE ASSESSEE. ADDITION OF RS. 10,00,000/- IS TREATED AS ALLOWED F OR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) $% ' /JUDICIAL MEMBER ' / ACCOUNTANT MEMBER & ' MUMBAI; (' DATED : 16 TH OCTOBER, 2015 . % . ./ RJ , SR. PS ITA. NO.6933/M/2011 5 !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+, %%-. , -.! , & ' / DR, ITAT, MUMBAI 6. ,/0 1 / GUARD FILE. $ / BY ORDER, * % //TRUE COPY// % / $& ' (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI