ITO 15(3)(4), MUMBAI V. JANHAVI DEVELOPERS, NAVI MUMBAI

ITA 704/MUM/2010

• Counselvise Citation: 70419914 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: SUNIL A MORE
• Keywords: Additional evidence
• Section: 68; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI P.M. JAGTAP (ACCOUNTANT MEMBER) ITA NO. 704/MUM/2010 ASSESSMENT YEAR-2006-07 THE ITO 15(3)94), MATRU MANDIR, 1 ST FLOOR, NO. 115 TARDEOP ROAD, GRANT ROAD, MUMBAI-400 007 VS. M/S. JANHAVI DEVELOPERS, A/310, 3 RD FLOOR, SHREE NANDA DHAM, PLOT NO. 59, SECTOR 11,BEHIND SAKAL BHAVAN, CBD BELAPUR, NAVI MUMBAI-400 614 PAN-AABCJ 4452F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SHANTAM BOSE RESPONDENT BY: SHRI SUNIL A MORE DATE OF HEARING :03.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER B.R. MITTAL, JM : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST ORDER OF LD. CIT(A) DT.25.11.2009 ON FOLLOW ING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/ S. 68 OF THE I.T. ACT OF RS. 77,31,874/- BY ADMITTING FRESH EVI DENCE AND NOT GIVING OPPORTUNITY TO THE AO, AS PROVIDED IN RULE 46A OF THE I.T. RULES, 1962. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/ S. 68 OF THE I.T. ACT OF RS. 77,31,874/- WITHOUT APPRECIATING T HE FACT THAT MERE RECEIPTS OF LOAN BY CHEQUE NEITHER PROVE GEN UINITY OF THE TRANSACTIONS NOR ESTABLISH THE CREDITWORTHINESS O F THE LENDER AND ONUS SQUARELY LIES ON THE ASSESSEE TO PROVE GENUI NITY OF AND ESTABLISH CREDITWORTHINESS OF THE CREDITORS, WHIC H THE ASSESSEE HAS CLEARLY FAILED IN THIS CASE. ITA NO. 704/M/2010 2 2. THE RELEVANT FACTS ARE THAT ASSESSING OFFICER DU RING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAD N OT FILED CONFIRMATION OF FOLLOWING PARTIES TOTALING RS. 77,31,874/- OUT OF U NSECURED LOANS OF RS. 1,00,76,589/-. S. NO. NAME OF PARTY AMOUNT 1. BABASAHEB CHAVAN RS. 1,50,000/ - 2. D.B. NAGARE RS. 5,00,000/ - 3. JANHAVI TRINITY DEVELOPES RS.25,27,700/ - 4. SANIA DEVELOPERS RS. 15,000/ - 5. SATELLITE TELECOM RS. 3,21,167/ - 6. SFS HOMES RS.25,36,340/ - 7. SHYAM GAUD RS. 1,50,000/ - 8. SUDARSHAN REALITY RS. 1,00,000/ - 9. SUYASH CONSTRUCTION RS. 6,81,667/ - 10. TUKARAM PAWAR RS. 5,50,000/ - 11. VIVEK BABER RS. 2,00,000/ - TOTAL RS.77,31,874/ - 3. THE AO HAS STATED THAT ASSESSEE WAS ASKED TO FIL E CONFIRMATION VIDE NOTICE U/S. 142(1) DT. 3 RD MARCH, 2008 ALONGWITH QUESTIONNAIRE AND ALSO VIDE ORDER SHEET NOTINGS DT. 16.9.2008, 17.11.2008 AND 8 .12.2008. HOWEVER, ASSESSEE FAILED TO FILE CONFIRMATION IN RESPECT OF ABOVE PARTIES AND THEREFORE AO CONSIDERED SAID AMOUNT OF LOAN AGGREGATING TO RS . 77,31,874/- AS INCOME OF ASSESSEE FROM OTHER SOURCES AND MADE ADDITION U/ S. 68 OF I.T. ACT, 1961. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE FIRST APPELLATE AUTHORITY. 4. ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT ASS ESSEE ARRANGED FUNDS FROM FRIENDS, RELATIVES, ASSOCIATED BUSINESS ETC. A S PER NEED OF BUSINESS. THAT ALL THE UNSECURED LOANS WERE TAKEN THROUGH ACCOUNT PAYEE CROSS CHEQUES AND ALL PARTIES FROM WHOM LOANS WERE TAKEN WERE HAVING PAN NUMBERS AND WERE DULY ASSESSED TO TAX. IT WAS FURTHER CONTENDED THA T PERIOD IN WHICH ASSESSMENT WAS ON, THE MAIN PARTNER SHRI BABASAHEB SANAP WAS NOT ITA NO. 704/M/2010 3 ATTENDING OFFICE REGULARLY DUE TO ILL HEALTH OF HIS WIFE. HOWEVER, ON 31 ST DECEMBER, 2008, HE WAS ABLE TO COMPLETE FORMALITIES OF OBTAINING CONFIRMATION AND GAVE THEM TO HIS CHARTERED ACCOUNT ANTS. IT WAS CONTENDED THAT AO TOLD HIM TO REACH BY 3.00 P.M. IN THE OFFIC E OF INCOME TAX AND THEREFORE AO DID NOT ACCEPT SAID LOAN CONFIRMATIONS AND COMPLETED THE ASSESSMENT. IT WAS FURTHER CONTENDED ALL LOANS ARE GENUINE LOANS AND NON ACCEPTANCE OF CONFIRMATION LETTERS AND NON CONSIDER ATION OF SAME HAS CAUSED INJUSTICE TO ASSESSEE AND HIS FAMILY. IT WAS FURTHE R CONTENDED THAT AO MUST FORM HIS OPINION REGARDING CASH CREDITS U/S. 68 BY APPLYING HIS MIND. SINCE ALL THE RELEVANT INFORMATIONS WERE AVAILABLE WITH AO EX CEPT CONFIRMATION LETTERS WHICH WERE DELAYED DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF ASSESSEE, AO WAS NOT JUSTIFIED TO MAKE SUCH ADDITION. 5. THE LD. CIT(A) ACCEPTED THE ABOVE CONTENTION OF ASSESSEE AND STATED THAT AO HAS MADE ADDITION IN RESPECT OF 11 PARTIES AND ACCEPTED GENUINENESS OF UNSECURED LOANS OUT OF TOTAL LOAN OF RS. 1,00,76 ,589/-. THE LD. CIT(A) HAS STATED THAT AO HAS MADE ADDITION WITHOUT GOING INTO DEEP OF THE MATTER AND ANALYZING BALANCE SHEET. HE FURTHER STATED THAT OU T OF 11 CREDITORS, SOME OF THE CREDITORS ARE OLD ONE. LD. CIT(A) STATED THAT LOAN APPEARING IN THE NAME OF JANHAVI TRINITY DEVELOPERS AND SFS HOMES OF RS. 25,27,700/- AND RS. 25,36,340/- RESPECTIVELY ARE FROM SISTER CONCERNS O R RELATED CONCERNS AND THEREFORE THESE LOANS ARE NOT FROM UNEXPLAINED SOU RCE AS ALL THESE PARTIES ARE DULY ASSESSED TO TAX. CONSIDERING ABOVE FACTS, LD. CIT(A) HAS DELETED THE ADDITION MADE BY AO. HENCE, DEPARTMENT IS IN APPEA L BEFORE TRIBUNAL. 6. DURING THE COURSE OF HEARING, LD. DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT AO COULD NOT EXAMINE GENUINENESS OF LOANS AS ASSESSEE FAILED TO FURNISH REQUISITE CONFIRMATION LETTERS BEFORE HI M. HE FURTHER SUBMITTED THAT LD. CIT(A) HAS GONE ON THE BASIS OF PRESUMPTIONS TO ACCEPT GENUINENESS OF LOANS EVEN THOUGH ASSESSEE FAILED TO DISCHARGE ONUS . THE LD. DR FURTHER SUBMITTED THAT MERE ACCEPTANCE OF LOAN BY CHEQUE DO ES NOT PROVE CREDITWORTHINESS OF LOAN CREDITORS AND/OR GENUINENE SS OF LOANS. HE FURTHER SUBMITTED THAT MERELY BECAUSE SOME LOANS WERE FROM SISTER CONCERNS IT DOES ITA NO. 704/M/2010 4 NOT ESTABLISH CREDIT WORTHINESS OF SISTER CONCERNS WERE. HE SUBMITTED THAT LD. CIT(A) HAS VIOLATED RULE 46 OF I.T. RULE, 1962 BY AC CEPTING ADDITIONAL EVIDENCES WITHOUT GIVING OPPORTUNITY TO AO. 7. ON THE OTHER HAND, LD. AR SUBMITTED THAT AO DID NOT ACCEPT LETTERS OF CONFIRMATIONS WHICH WERE PROPOSED TO BE FILED BY CH ARTERED ACCOUNTANT OF ASSESSEE. HE SUBMITTED THAT SOME OF THE LOANS WERE OLD LOANS. IN REPLY TO A QUERY FROM BENCH, LD. AR SUBMITTED THAT HE HAS NO O BJECTION IF MATTER IS RESTORED TO AO TO DECIDE THE GENUINENESS OF LOANS A S WELL AS CREDIT WORTHINESS OF CREDITORS AFTER GIVING DUE OPPORTUNITY TO ASSES SEE. 8. WE HAVE CAREFULLY CONSIDERED ORDERS OF AUTHORITI ES BELOW AND SUBMISSION OF LD. REPRESENTATIVES OF PARTIES. THER E IS NO DISPUTE TO THE FACT THAT ASSESSEE COULD NOT FILE CONFIRMATION LETTERS I N RESPECT OF 11 CREDITORS AGGREGATING TO RS. 77,31,874/- OF UNSECURED LOANS. WE OBSERVE THAT LD. CIT(A) HAS STATED THAT SOME OF THE LOAN CREDITORS A RE OLD ONE BUT NO DETAILS THEREOF HAVE BEEN STATED BY LD. CIT(A). THAT LD. CIT(A) STATES THAT LOANS OF RS. 25,27,700/- AND RS. 25,36,340/- ARE IN THE NAME OF JANHAVI TRINITY DEVELOPERS AND SFS HOMES RESPECTIVELY, WHO ARE SIST ER CONCERNS OR RELATED CONCERNS OF ASSESSEE AND THEREFORE AO COULD HAVE EV ALUATED AND THOSE LOANS WERE NOT FROM UNEXPLAINED SOURCE AS ALL THESE PART IES ARE DULY ASSESSED TO TAX. WE OBSERVE THAT LD. CIT(A) HIMSELF HAS ALSO N OT EXAMINED AS TO WHETHER SAID LOANS WERE REFLECTED IN BALANCE OF LOAN CREDI TORS AND THEIR CREDIT WORTHINESS. NO FINDINGS HAVE BEEN GIVEN BY LD. CIT (A). THEREFORE WE FIND SUBSTANCE IN THE SUBMISSION OF LD. DR THAT LD. CIT( A) HAS ACCEPTED GENUINENESS OF LOANS ON PRESUMPTIONS AND WITHOUT CO NSIDERING THE FACT THAT ASSESSEE FAILED TO PRODUCE REQUISITE DOCUMENTS BEFO RE AO, WHICH WERE CALLED FOR BY HIM. CONSIDERING THE FACTS OF THE FACE, WE ARE OF THE CONSIDERED VIEW THAT MATTER SHOULD BE RESTORED TO AO TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING SUCH EVIDENCES AS MAY BE FILED BY ASSES SEE AND AFTER GIVING DUE OPPORTUNITY OF HEARING AS PER LAW. HENCE WE SET AS IDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE ISSUE TO THE FILE OF AO TO DECIDE THE SAME AFRESH AS PER LAW. ITA NO. 704/M/2010 5 9. IN THE RESULT, GROUND OF APPEAL TAKEN BY DEPARTME NT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 18 TH DAY OF NOVEMBER, 2011 SD/- SD/- ( P.M. JAGTAP) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 18 TH NOVEMBER, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI