SILVERLINE INVEESTMET COMPANY LTD, MUMBAI V. ACIT (OSD) 2(3), MUMBAI

ITA 6988/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8735 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 25-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Keywords: Corroborative evidences
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.6988/MUM/2010 (ASSESSMENT YEAR: 2007-08) SILVERLINE INVESTMENT CO. LTD. ACIT (OSD), CIRCLE 2 (3) ORION HOUSE, 4TH FLOOR AAYAKAR BHAVAN, M.K. ROAD RAMPART ROW, FORT VS. MUMBAI 400020 MUMBAI 400023 PAN - AACCS 0039 E APPELLANT RESPONDENT APPELLANT BY: SHRI NITESH JOSHI RESPONDENT BY: SHRI V. KRISHNAMOORTHY DATE OF HEARING: 25.10.2012 DATE OF PRONOUNCEMENT: 25.10.2012 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE COMPANY AND IT PERTAINS TO A.Y. 2007-08. 2. ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF LETT ING OUT OF PROPERTY, TRANSPORTATION BUSINESS, TRADING IN FILM RIGHTS, POWER GENERATION, ETC. FOR THE YEAR UNDER CONSIDERATION ASSESSEE DECL ARED LOSS OF ` 54,12,229 UNDER THE HEAD BUSINESS AFTER SETTING OFF BUSINES S LOSS OF ` 75,05,733/- AGAINST THE INCOME UNDER THE HEAD PROPERTY INCOME . 3. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COUR SE OF THE PROCEEDINGS THE AO ISSUED A NOTICE UNDER SECTION 14 2(1) OF THE ACT (PAGE 16 OF THE PAPER BOOK) CALLING UPON THE ASSESSEE TO FUR NISH CERTAIN DETAILS AS PER ANNEXURE TO THE NOTICE UNDER SECTION 142(1) (PA GE 17 OF THE PAPER BOOK). AS COULD BE NOTICED FROM PARA 12 OF ANNEXURE , ASSESSEE WAS CALLED UPON TO FURNISH SUPPORTING EVIDENCES WITH REGARD TO LOAN TAKEN DURING THE YEAR, INCLUDING SQUARED UP ACCOUNTS. AS PER THE QU ESTIONNAIRE THE ITA NO.6988/MUM/2010 SILVERLINE INVESTMENT CO. LTD. 2 ASSESSEE WAS CALLED UPON TO FURNISH ONLY THE LOANS TAKEN DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2007-08. PAGE 14 OF THE PAPER BOOK CONTAINS A SUMMARY OF UNSECURED LOANS FROM WHICH IT COULD BE NOTICED THAT THE CLOSING BALANCE AS ON 31.03.2007 WAS ` 3,13,58,308/-. THE CLAIM OF THE ASSESSEE WAS THAT EXCEPT IN THE CASE OF THREE CREDI TORS, I.E. DUNCANS INDUSTRIES LTD, GOODWARE DISTRIBUTORS PVT. LTD. AND RICHA PROPERTIES LTD., ASSESSEE FURNISHED NECESSARY DETAILS AND CONFIRMATI ON LETTERS IN PROOF OF THE LOANS TAKEN. THE ABOVE MENTIONED THREE CREDITOR S, REFERRED TO ABOVE, DEPICTS THE LOANS TAKEN IN THE PRECEDING YEAR. IN O THER WORDS, FRESH LOANS WERE NOT TAKEN DURING THE FINANCIAL YEAR 2006-07 AN D IN FACT THE AO CALLED UPON THE ASSESSEE TO FURNISH CONFIRMATION COPIES OF THE ACCOUNTS IN SUPPORT OF THE LOANS TAKEN DURING THIS YEAR ONLY. A S COULD BE NOTICED FROM PARA 7 OF THE ASSESSMENT ORDER, THE AO OBSERVED THA T THE ASSESSEE FURNISHED CONFIRMATION LETTERS IN SUPPORT OF SOME O F THE PARTIES AND STATED THAT THE CONFIRMATION LETTERS OF REMAINING PARTIES SHALL BE SUBMITTED DURING THE NEXT HEARING BUT DURING THE COURSE OF HEARING F URTHER CONFIRMATION LETTERS WERE NOT FILED. ACCORDING TO THE AO THE ASS ESSEE COULD NOT FURNISH DETAILS OF UNSECURED LOANS TO THE TUNE OF ` 2,90,26,981/- OUT OF THE TOTAL UNSECURED LOANS OUTSTANDING AS ON 31.03.2007 OF ` 3,13,58,308/-. THE DIFFERENCE BETWEEN THE TWO WORKS OUT TO ` 23,31,327/- WHICH WAS TREATED AS UNEXPLAINED INCOME ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE C REDITORS. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A), AS COULD BE NOTICED FROM THE STATEMENT OF FACTS FILED BEFORE THE LEARNE D CIT(A), THAT THE DETAILS SUCH AS NAMES, ADDRESSES, PAN, ETC. WERE ALREADY FU RNISHED ALONGWITH THE LETTERS OF LOAN CONFIRMATION FROM ALL THE PARTIES E XCEPT WITH REGARD TO THREE LOAN CREDITORS AND THE TOTAL OF THOSE THREE LOAN CR EDITORS WORKS OUT TO ` 4,05,718/-. IN FACT THE ABOVE MENTIONED LOANS ARE T HE OPENING BALANCES CARRIED FORWARD FROM THE PREVIOUS YEAR AND THUS THE Y CANNOT BE TREATED AS LOANS TAKEN DURING THE YEAR. WITH REGARD TO OTHER C REDITORS, CONFIRMATION LETTERS, ETC. WERE ALREADY FILED. STRANGELY THE AO CONSIDERED THE LOANS AMOUNTING TO ` 2,90,26,891/- ONLY AS GENUINE AND BALANCE OF ` 23,32,327/- AS NON-GENUINE WITHOUT LISTING OUT THE LOANS CONSIDERED AS ITA NO.6988/MUM/2010 SILVERLINE INVESTMENT CO. LTD. 3 NON-GENUINE SO AS TO ENABLE THE ASSESSEE TO RECONCI LE THE BASIS ON WHICH LOANS WERE CONSIDERED AS NON-GENUINE. DESPITE RAISI NG A SPECIFIC PLEA BEFORE THE CIT(A), THE FIRST APPELLATE AUTHORITY ME RELY CONFIRMED THE ACTION OF THE AO. AS COULD BE NOTICED FROM PARA 8.2 OF THE ORDER PASSED BY THE CIT(A), A SPECIFIC PLEA WAS TAKEN THAT COMPLETE DET AILS WITH REGARD TO ALL THE LOANS TAKEN IN THIS YEAR WERE FURNISHED AND REG ARDING THREE PARTIES, WHICH ARE HIGHLIGHTED IN PAGE 14 OF THE PAPER BOOK, THE LOANS HAVING BEEN TAKEN IN THE PRECEDING YEAR THEY CANNOT BE CONSIDER ED AS CURRENT YEARS LOANS AND HENCE NOTHING CAN BE ADDED WITH REGARD TO THE OPENING BALANCES. IT WAS ALSO SUBMITTED THAT THE ADDITION W AS MADE BY THE AO WITHOUT GIVING ANY REASON FOR THE PROPOSED ADDITION IN THE CASE OF EACH OF THE PARTY. THE LEARNED CIT(A), HOWEVER, IGNORED THE SPECIFIC PLEA RAISED IN THE STATEMENT OF FACTS IN PARTICULAR AND THE ARGUME NTS ADVANCED BEFORE HIM IN GENERAL AND PROCEEDED TO DISPOSE OF THE MATT ER BY OBSERVING AS UNDER: - 8.3. I HAVE CONSIDERED THE FACTS OF THE ISSUE AND THE SUBMISSIONS MADE BY THE AR BUT DO NOT FIND MERIT IN THEM. THE A R HAS GIVEN SUFFICIENT REASONS FOR MAKING THE ADDITIONS. HE HAS CLEARLY MENTIONED IN THE ORDER THAT THE APPELLANT FAILED TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS A ND ALSO FAILED TO FURNISH THEIR CONFIRMED COPIES OF ACCOUNT. IT IS NO TED THAT THE AR OF THE APPELLANT DID NOT FURNISH EVEN DURING THE APPELLATE PROCEEDINGS ANY CONFIRMATION LETTERS OR ANY EVIDENCE TO ESTABLI SH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE S AID CREDITORS. HENCE, THE ADDITION, MADE BY THE AO IS CONFIRMED A ND THIS GROUND IS DISMISSED. 5. FURTHER AGGRIEVED, ASSESSEE COMPANY IS IN APPEAL BE FORE US. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTEN TION TO PAGES 16 & 17 [NOTICE ISSUED UNDER SECTION 142(1)] TO HIGHLIGHT T HAT THE AO MERELY CALLED FOR DETAILS WITH SUPPORTING EVIDENCES WITH REGARD T O THE LOANS TAKEN DURING THE YEAR AND HE NEVER CALLED UPON THE ASSESSEE TO FURNISH D ETAILS WITH REGARD TO THE OPENING BALANCES. IN THE INSTANT CASE THE ASSESSEE FURNISHED CONFIRMATION LETTERS, ETC. FROM ALL THE PARTIES EXC EPT WITH REGARD TO THE THREE LOANS WHICH WERE TAKEN IN THE PRECEDING YEAR. UNDER THESE CIRCUMSTANCES IT IS FOR THE AO TO POINT OUT AS TO WHERE THE ASSESSEE COULD NOT PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS. UNLESS SUCH LOAN CREDITORS WERE ITA NO.6988/MUM/2010 SILVERLINE INVESTMENT CO. LTD. 4 SPECIFIED IT IS NOT POSSIBLE FOR THE ASSESSEE TO FU RNISH ANY DETAILS. DESPITE POINTING OUT BEFORE THE LEARNED CIT(A) THAT THE AO PASSED THE ORDER ARBITRARILY WITHOUT FURNISHING DETAILS AS TO HOW HE HAS ARRIVED AT A SUM OF ` 23,31,327/-, THE LEARNED CIT(A) HAS PASSED AN ORDER CONFIRMING THE ADDITION MADE BY THE AO WITHOUT APPLYING HIS MIND T O THE SPECIFIC ISSUE RAISED BEFORE HIM. WHEN THIS WAS POINTED TO THE LEA RNED D.R. HE COULD NOT POINT OUT THE DETAILS OF THE SO CALLED NON-GENUINE LOANS AND THUS MERELY RELIED UPON THE ORDER PASSED BY THE AO/CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT IS UNFORTUNATE THAT THE AO PASSED A CRYP TIC ORDER WITHOUT FURNISHING THE DETAILS AS TO HOW HE ARRIVED AT THE FIGURE OF ` 23,31,327/-. WHEN A SPECIFIC ISSUE WAS RAISED BEFORE THE LEARNED CIT(A) HE MERELY OVERLOOKED THE ISSUE RAISED IN THE STATEMENT OF FAC TS AND CONFIRMED THE ADDITION BY MAKING A CASUAL REMARK THAT THE AR OF T HE APPELLANT DID NOT FURNISH ANY CONFIRMATION LETTERS OR EVIDENCES TO ES TABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SAID CREDI TORS. IT IS DIFFICULT TO UNDERSTAND AS TO WHERE FROM THE LEARNED CIT(A) HAS GOT THE DETAILS OF THE SAID CREDITORS WHEN THE AO HAS NOT MENTIONED IT A NYWHERE AND THE LEARNED D.R. ALSO COULD NOT FURNISH SUCH DETAILS OF THE SA ID CREDITORS. UNDER THESE CIRCUMSTANCES WE ARE CONSTRAINED TO HOLD THAT THE A O AS WELL AS THE CIT(A) HAS COMMITTED A GRAVE ERROR IN MAKING AN ARBITRARY ADDITION UNDER SECTION 68 OF THE ACT. AS DECLARED IN THE OPEN COURT, WE SE T ASIDE THE ADDITION AND DIRECT THE AO TO DELETE THE ADDITION OF ` 23,31,327/-. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2012. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 25 TH OCTOBER, 2012 ITA NO.6988/MUM/2010 SILVERLINE INVESTMENT CO. LTD. 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 6, MUMBAI 4. THE CIT 2, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.