ITO 13(2)-3, MUMBAI V. LATE MANJULABEN A. SHAH, MUMBAI

ITA 714/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6150 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 25-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABANI K NAYAK
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence; Capital receipt
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 714/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 13(2)-3 LATE MANJULABEN A SHA H (ESTATE) ROOM NO. 425/277, 4TH FLOOR AKLANKAR, 3RD FLOOR, J. MEHTA ROAD AAYAKAR BHAVAN, M.K. ROAD VS. MUMBAI 400006 MUMBAI 400020 PAN - ANPJP 3167 J APPELLANT RESPONDENT APPELLANT BY: SHRI ABANI K. NAYAK RESPONDENT BY: SHRI APURVA SHAH O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A)-XXIV, MUMBAI DATED 30.11.2009. 2. REVENUE HAS RAISED THE FOLLOWING TWO GROUNDS: - (1) (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO DELETE THE ADDITION MADE U/S. 69 OF THE I.T. ACT AMOUNTING TO RS.76,41, 965/- BEING UNEXPLAINED INVESTMENT. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT ALLOWING OPPORTUNIT Y TO AO UNDER RULE 45A, NOR CALLING REMAND REPORT. 2 (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO DEL ETE THE ADDITION MADE U/S. 69 OF I.T. ACT AMOUNTING TO RS.1 ,00,000/- BEING UNEXPLAINED LOANS OR ADVANCES. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT ALLOWING OPPORTUNIT Y TO AO UNDER RULE 45A, NOR CALLING REMAND REPORT. 3. BRIEFLY STATED, THE ESTATE OF LATE MANJULABEN A. SH AH WAS MANAGED BY THE EXECUTORS AND THE RETURN WAS FILED BY THE EXECU TORS OF LATE MANJULABEN A. SHAH DECLARING INTEREST INCOME ON LOAN AND BANK INTEREST. IN THE COURSE OF ASSESSMENT PROCEEDINGS A.O. NOTICED THAT THERE W AS A DIFFERENCE OF ITA NO. 714/MUM/2010 LATE MANJULABEN A SHAH (ESTATE) 2 ` 76,41,965/- BETWEEN THE ORIGINAL BALANCE SHEET FILE D AND THE ONE FILED 02.07.2008 AND THIS DISCREPANCY WAS BROUGHT TO NOTI CE OF THE ASSESSEE TO FILE OBJECTIONS. IT WAS EXPLAINED THAT DURING A.Y. 2006-07 THEY HAVE PASSED A JOURNAL ENTRY CREDITING ` 75,00,000/- RECEIVED EARLIER, WHICH WAS OMITTED AND THE DEBIT WAS TO LOANS AND ADVANCES AS THE AMOUNT W AS DISTRIBUTED TO THE BENEFICIARIES AS PER THE WILL EARLIER. WHILE NOTICI NG THAT THE AMOUNTS WERE RECEIVED DURING THE FINANCIAL YEAR 2000-01 AND 2001 -02 THE A.O., HOWEVER, FOUND THE EXPLANATION GIVEN BY THE ASSESSEE AS NOT RELEVANT, CONVINCING AND SUPPORTED BY DOCUMENTARY EVIDENCES, HENCE HE TREATE D THE DIFFERENCE OF ` 76,41,965/- AS UNEXPLAINED INVESTMENT UNDER SECTION 69A OF THE I.T. ACT. IN ADDITION TO THE ABOVE AMOUNT, THE A.O. ALSO NOTI CED LOANS AND ADVANCES IN RESPECT OF SIDDHAKSHETRA FOR ` 1,00,000/-. IT WAS SUBMITTED TO THE A.O. THAT THIS AMOUNT WAS NOT LOAN OR ADVANCE BUT DONATI ON GIVEN TO AN ASHRAM. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE A.O. ALSO TREATED THE AMOUNT OF ` 1,00,000/- AS UNEXPLAINED INVESTMENT UNDER SECTION 69A. BEFORE THE CIT(A) IT WAS SUBMITTED THAT AN AMOUNT O F ` 75,00,000/- WAS RECEIVED AT THE TIME OF ENTERING INTO AGREEMENT FOR SALE OF THE PROPERTY WITH M/S. MAHAVIR BUILDERS ON BEHALF OF THE ESTATE WAY B ACK IN FEBRUARY 2001 TO JULY 2001 AND FURNISHED THE DETAILS OF ` 75,00,000/- RECEIVED BY VARIOUS CHEQUES DURING THE PERIOD AND IT WAS FURTHER INFORM ED THAT THESE AMOUNTS WERE RECEIVED BY THE EXECUTOR, WHICH WAS ACCOUNTED IN HIS PERSONAL BOOK AS RECEIVED ON BEHALF OF THE ESTATE AND HE IN TURN ISS UED CHEQUES TO VARIOUS BENEFICIARIES AS ADVANCES PENDING FINAL DISTRIBUTIO N OF THE ESTATE. DUE TO INADVERTENT ERROR THE SAID ADVANCE RECEIVED FROM M/ S. MAHAVIR BUILDERS BY SHRI DHARAMDAS DOSHI WHICH IN TURN ADVANCED TO THE BENEFICIARIES WAS NOT LISTED IN THE BOOKS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE SAID MOU WAS CONVERTED INTO DEVELOPMENT AGREEMENT AND PO SSESSION OF THE PROPERTY WAS GIVEN DURING A.Y. 2005-06 AND THE GAIN WAS OFFERED TO TAX. WHEN IT WAS NOTICED THAT THE RECEIPT OF ` 75,00,000/- AGAINST THE TOTAL CONSIDERATION OF ` 251 LAKHS WAS NOT RECORDED IN THE BOOKS OF THE ESTA TE JOURNAL ENTRIES WERE PASSED IN THE YEAR INCREASING THE CAPITAL AND SHOWING LOANS AND ADVANCES TO THE SAME EXTENT. IT WAS FURTH ER SUBMITTED THAT THE BALANCE AMOUNT OF ` 1,41,965/- WAS THE DIFFERENCE OF ENTRIES PERTAINING TO ITA NO. 714/MUM/2010 LATE MANJULABEN A SHAH (ESTATE) 3 THE PROPERTY TAX AND ` 1,00,000/- WAS DONATION GIVEN, WHICH WAS EXPLAINED TO THE CIT(A) AND FURTHER PROVISIONS OF SECTION 69A ARE NOT APPLICABLE TO THE INVESTMENT ACCOUNTED IN THE BOOKS OF ACCOUNT. THE C IT(A), AFTER CONSIDERING THE ISSUE, GAVE THE FOLLOWING DIRECTIONS WITH REFER ENCE TO THE ABOVE THREE AMOUNTS: - 2.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE VERIFICATION OF THE RELEVANT FACTS SHOWS THAT A SUM OF RS.75 LAKHS WAS ACTUALLY RECEIVED BY THE EXECUTORS DIRECTLY ON BEHA LF OF THE APPELLANT ESTATE. HENCE I AGREE WITH THE EXPLANATION GIVEN BY THE LEARNED COUNSEL THAT THE SAME IS A CAPITAL RECEIPT AND THAT THE CRE DIT IN THE BOOKS THIS YEAR ONLY REPRESENTS THE SUM RECEIVED IN EARLIER YE ARS ON BEHALF OF THE APPELLANT ESTATE. ACCORDINGLY I AM OF THE VIEW THAT THE SAME IS NOT AN UNEXPLAINED CREDIT WHICH CAN BE ADDED U/S 69A AND H ENCE I DELETE THE SAID ADDITION AND THIS GROUND OF APPEAL IS ALLOWED . 2.3 AS REGARDS THE BALANCE UNEXPLAINED CREDIT OF RS.141 ,965, IT IS SEEN THAT THESE ARE EXPENSES RELATED TO PROPERTY TA XES AND OTHER TAXES FOR WHICH THE ASSESSING OFFICER HAS BY MISTAKE CLUB BED THESE ALONG WITH THE RS.75 LAKHS RECEIVED FROM MAHAVIR BUILDERS BY T HE EXECUTOR DIRECTLY ON BEHALF OF THE APPELLANT ESTATE. 4.2 I HAVE CONSIDERED THE SAID EXPLANATION AND AM I NCLINED TO HOLD THAT THE SAID AMOUNT HAS BEEN PAID BY A CHEQUE THOU GH THE BANK ACCOUNT OF THE APPELLANT ASSESSEE AND HAS BEEN PAID TO AN APPROVED TRUST AND HENCE THE SAME CANNOT BE TREATED AS UNEXP LAINED MONEY U/S 69A OF THE ACT. IN MY VIEW THE SAID TRANSACTION IS PART OF THE BANKING TRANSACTIONS OF THE APPELLANT AND THE TRANSACTION H AS BEEN ADEQUATELY EXPLAINED AND HENCE THE SAID ADDITION IS DELETED. A CCORDINGLY THIS GROUND IS ALLOWED . REVENUE IS AGGRIEVED AND RAISED THE GROUNDS. 4. THE LEARNED D.R. REFERRED TO THE FACTS OF THE CASE AND OBJECTED THAT THE A.O. HAS NOT BEEN GIVEN ANY OPPORTUNITY IN THE COUR SE OF APPELLATE PROCEEDINGS IN VIOLATION OF RULE. 5. THE LEARNED COUNSEL PLACED ON RECORD THE ASSESSMENT ORDER FOR A.Y. 2005-06 WHERE THE ENTIRE SALES CONSIDERATION ` 251 LAKHS WAS OFFERED AND THE PROPERTY SUBJECTED TO CAPITAL GAIN TAX. HE RELI ED ON THE ORDER OF CIT(A). 6. AFTER CONSIDERING THE FACTS AND EXAMINING THE RECOR D, WE ARE OF THE OPINION THAT THE CIT(A) HAS CORRECTLY CAME TO THE C ONCLUSION THAT NO ADDITIONS WERE CALLED FOR IN THIS CASE. FIRST OF AL L IT IS NOT THE CASE THAT THE ITA NO. 714/MUM/2010 LATE MANJULABEN A SHAH (ESTATE) 4 ASSESSEE MADE ANY INVESTMENT OUTSIDE THE BOOKS OF A CCOUNT. THE ENTRIES ARE MADE IN THE BOOKS OF ACCOUNT, SO INVOKING PROVISIO NS OF SECTION 69A ITSELF IS NOT WARRANTED. EVEN THE A.O. HAS BROUGHT TO TAX AN AMOUNT OF ADVANCE /DONATION GIVEN BY THE ASSESSEE JUST BECAUSE THERE WAS NO CONFIRMATION. THE PROVISIONS OF SECTION 69 PERMITS ANY CREDIT REC EIVED WHICH ARE NOT EXPLAINED, BUT THERE IS NO SUCH PROVISION TO BRING TO TAX ANY AMOUNT WHICH WAS A DEBIT. AO CAN ONLY DISALLOW ANY CLAIM OF EXPE NDITURE IF MADE. INSTEAD OF SHOWING THE DONATION AS AN EXPENDITURE THE ASSES SEE HAS SHOWN IT WRONGLY UNDER THE HEAD ADVANCE AND THERE IS NO CL AIM FOR THIS AMOUNT. WE ARE UNABLE TO UNDERSTAND HOW THE REVENUE CAN CONTES T THIS AMOUNT UNDER SECTION 69 OF THE ACT. EVEN THE GROUND RAISED WITH REFERENCE TO RULE 45A WAS ALSO NOT CORRECT AS THERE IS NO SUCH RULE AS 45A BU T RULE 46A COVERS ADDITIONAL EVIDENCES. WE DO NOT FIND ANY ADDITIONAL EVIDENCE BEING ACCEPTED BY THE CIT(A). ALL THE AGREEMENTS WERE FILED BEFORE THE A.O. AND THE CIT(A) DELETED THE AMOUNT AS PROVISIONS OF SECTION 69/69A ARE NOT APPLICABLE TO THE FACTS OF THE CASE. EVEN THE GROUNDS RAISED IS WITH REFERENCE TO SECTION 69 WHERE AS THE AO MADE ADDITION U/S 69A. IN THESE CIR CUMSTANCES WE ARE OF THE VIEW THAT THERE IS NO NEED TO INTERFERE WITH TH E ORDER OF THE CIT(A). EVEN WITH REFERENCE TO THE AMOUNT OF ` 1,41,965/- THE CIT(A) HAS CORRECTLY ANALYSED BUT STILL DIRECTED THE A.O. TO EXAMINE THE FACTS THE THEN ALLOW. SINCE THERE SHOULD BE NO GRIEVANCE ON THIS ISSUE AS IT WAS IN FACT RESTORED TO THE A.O. FOR EXAMINATION, INCLUDING THIS AMOUNT IN THE GROUND RAISED BY THE REVENUE SHOWS NON-APPLICATION OF MIND, ON ALL THE I SSUES. THERE IS NO MERIT IN REVENUE CONTENTIONS. THEREFORE THE GROUNDS ARE R EJECTED. 7. IN THE RESULT, APPEAL DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 3 RD DECEMBER 2010 ITA NO. 714/MUM/2010 LATE MANJULABEN A SHAH (ESTATE) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIV, MUMBAI 4. THE CIT XIII, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.