SURESH KUMAR FATECHAND JAIN, MUMBAI V. ITO WD 14(3)(3), MUMBAI

ITA 7145/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3163 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Unexplained cash credit; Unexplained expenditure; Wrong claim
• Section: 69C; 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI B. R. BASKARAN, AM ITA NO . 7145 /MUM/201 3 (A.Y: 2009 - 10 ) SURESH KUMAR FATE C HAND JAIN, 2 ND FLOOR, 257/259, B. B. BHAWAN, DR. C. H. STREET, DHOBI TALAO, MUMBAI 40000 2 PAN:AABPJ 2930 K VS. THE INCOME TAX OFFICER, WARD - 14(3) (3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021 APPELLANT .. RESPONDENT APPELLANT BY .. SHRI K. GOPAL, AR RESPONDENT BY .. MS. BEENA SANTOSH, DR DATE OF HEARING .. 01 - 09 - 201 6 DATE OF PRONOUNCEMENT .. 01 - 09 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDER OF CIT ( A) - , MUMBAI IN AP PEAL NO. CIT (A ) - 25, MUMBAI DATED 30 - 08 - 2013 . ASSESSMENT WAS FRAMED BY IT O , WARD - 14(3) ( 3), MUMBAI FOR ASSESSMENT YEAR 2009 - 10 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) VIDE HIS ORDER DATED 30 - 12 - 2011 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF THE CIT ( A) CONFIRMING THE ACTION OF THE AO IN MAKING ADDI TION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AMOUNTING TO RS.65,66,244/ - AND CONSEQUENTIAL DISALLOWANCE U/S 69C OF THE ACT AMOUNTING TO RS.3,42,340/ - . 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE REVENUE RECEIVED AIR INFORMATION THAT T HE ASSESSEE HAS PURCHASED IMMOVABLE PROPERTY I.E. FLAT NO.A - 7 AT POONAM APARTMENT FOR A SUM OF RS.65 LACS ON 25 - 08 - 2008. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PAYMENT OF THE PROPERTY INCLUDING STAMP DUTY AND REGISTRATION FEE AND OTHER INCIDENTAL EXPENSES. THE ASSESSEE SUBMITTED COPY OF THE SALE DEED AND RECTIFICATION DEED IN RESPECT OF THE SAID FLAT BEFORE THE AO. AS REGARDS THE SOURCES OF INVESTMENT, THE ASSESSEE FURNISHED COPY OF SEVERAL DEMAND DRAFTS AMOUNTING TO RS.65 LACS ISSUED BY VIJAYA BA NK IN FAVOUR OF THE SELLER. ON GOING THROUGH THE DEMAND DRAFTS THE AO NOTICED THAT THE REMITTER OF THE SAID ITA NO. 7 145 /MUM/20 1 3 2 DEMAND DR AFTS WAS M/S. KS HIPRA ENTERPRISE S . THE AO NOTICED FROM THE PERSONAL BALANCE SHEET OF THE ASSESSEE THAT IT HAS SHOWN AN AMOUNT OF RS.65,66 ,1 79/ - AS LOAN TAKEN FROM M/S. KS HIPRA ENTERPRISE S . THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION ALONG WITH COPY OF RETURN OF INCOME, BALANCE SHEET AND CAPITAL ACCOUNT OF LOAN OF M/S. KS HIPRA ENTERPRISE S . NOTHING WAS PRODUCED BEFORE THE AO. HENCE, THE AO MADE ADDITION OF THIS AMOUNT OF RS.65,66,247/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. FURTHER, THE AO ALSO MADE ADDITION OF STAMP DUTY, REGISTRATION CHARGES AND REGISTRATION FEE ETC. OF SALE DEED AND DEED OF RECTIFICATION AND MADE ADDITION OF RS. 3,42,340/ - U/S 69C OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A). 4. THE CIT (A) AFTER TAKING REMAND REPORT FROM THE AO AND EVIDENCES FROM THE ASSESSEE NOTED THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS, GENUINENESS O F THE LOAN TRANSACTION OF M/S. KS HIPRA ENTERPRISE S AND CONFIRMED THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. SIMILARLY, THE CIT (A) IN RESPECT TO UNEXPLAINED EXPENDITURE U/S 69 C OF THE ACT AMOUNTING TO RS.3,42,340/ - WAS ALSO CONFIRME D. AGGRIEVED, NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE RECEIVED LOAN FROM M/S. KSHIPRA ENTERPRISES OF RS.65,66,179/ - , W HICH CONSISTS OF DIRECT PAYMENT IN REGARD TO PURCHASE OF FLAT FOR A SUM OF RS.65,08,444/ - TO THE SELLER OF THE FLAT THROUGH THE ACCOUNT OF M/S. KSHIPRA ENTERPRISES. WE FIND FROM THE FACTS OF THE CASE THAT M/S. KSHIPRA ENTERPRISES IS A SISTER CONCERN IN WHI CH WIFE, BROTHER AND FATHER OF THE ASSESSEE ARE PARTNERS. THE ASSESSEE PURCHASED THIS FLAT AND THE PAYMENT WAS ROUTED THROUGH M/S. KSHIPRA ENTERPRISES, WHICH HAS PAID PAYEES ACCOUNT DEMAND DRAFT AS INSTRUCTED BY THE ASSESSEE TO THE SELLER OF THE FLAT AS U NDER: - DATE OF PAYMENT AMOUNT (RS) PARTICULARS OF PAYMENT 18/08/2008 15,01,935/ - D.D. TO BANKER OF SELLER 21/08/2008 10,01,290/ - D. D. TO SELLER 21/08/2008 10,01,290/ - D.D. TO SELLER 21/08.2008 2,50,323/ - D.D. TO SELLER 21/08/208 10,01,290/ - D.D. TO SELLER 23/08/2008 5,00,645/ - D.D. TO SELLER 23/08/2008 5,00,645/ - D.D. TO SELLER 23/08/2008 7,50,968/ - D.D. TO SELLER TOTAL 65,08,386 ITA NO. 7 145 /MUM/20 1 3 3 FURTHER, THE ASSESSEE HAD ALSO TAKEN AN ADDITIONAL LOAN OF RS.55,000/ - ON 28 - 07 - 2008, WHICH IS REFLECTED I N THE BANK STATEMENT OF M/S. KSHIPRA ENTERPRISES. THE TOTAL LOAN AMOUNT FROM M/S. KSHIPRA ENTERPRISES TO T HE ASSESSEE WAS TO THE EXTENT OF RS.65,66,179/ - . THE FOLLOWING IS THE LOAN ACCOUNT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS ON 31 - 03 - 2009: - LOAN A/ C DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT 31/03/2009 TO. CL. BAL C/D 65,66,179 01/04/2008 28/07/2008 31/03/2008 BY OP BAL B/D BY BANK BY FLAT 1,935 55,800 65,08,444 THE ASSESSEE BEFORE THE AO AS WELL AS BE FORE THE CIT (A) SUBMITTED THE F OLLOWING DOCUMENTS TO PROVE THE GENUINENESS OF TRANSACTION, CREDITWORTHINESS AND SOURCE: - I) BANK ACCOUNT STATEMENT OF M/S. KSHIPRA ENTERPRISES II) AGREEMENT FOR PURCHASE OF FLAT III) TAX AUDIT REPORT OF M/S. KSHIPRA ENTERPRISES IV) LOAN CONFIRMATION ACCOUNT STATEMENT O F M/S. KSHIPRA ENTERPRISES V) CONFIRMATION LETTER FROM VENDOR FOR PAYMENT OF STAMP DUTY AND REGISTRATION FEE OF FLAT 6. WE FIND FROM THE ORDER OF THE CIT (A) BEFORE WHOM THESE DOCUMENTS WERE SUBMITTED BY THE ASSESSEE AND THE SAME WERE REFERRED TO THE AO FOR HIS REMAND REPORT AND THE AO IN HIS REMAND REPORT ADMITTED THAT M/S. KSHIPRA ENTERPRISES HAS ADMITTED THE TRANSACTION AND SUBMITTED THE SUPPORTING DOCUMENTARY EVIDENCES. THE RELEVANT REMAND REPORT READS AS UNDER: - 1. IN THE CASE THE SCRUTINY U/S 1`43( 3) HAS BEEN COMPLETED ASSESSING TOTAL INCOME AT RS.70,11,310 AGAINST THE RETURNED INCOME OF RS.1,35,552/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A. O. CALLED FOR THE DETAILS OF PAYMENTS MADE FOR PURCHASE OF IMMOVABLE PROPERTY VALUED AT RS.65,00,000/ - . THE ASSESSEE SUBMITTED THAT THE PAYMENT WER E MADE OUT OF LOAN OF RS.65,66, 179 / - TAKEN FROM M/S. KSHIPRA ENTERPRISES. THE ABOVE PAYMENT WAS MADE DIRECTLY TO THE PARTIES THROUGH DEMAND DRAFT. THE SAME WAS RECORDED IN THE BOOKS OF M/S. SEVEN SR ARTEX INDUSTR IES, A PROPRIETARY CONCERN OF SHRI SURESHKUMAR F. JAIN AND SHOWN IN HIS PERSONAL BALANCE SHEET ON 31.03.2009. THE ABOVE SAID LOAN OF RS.65,66,179/ - WAS ADDED TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE FAILED TO FURNISH PROPER LOAN CONFIRMATION, BANK ACC OUNT STATEMENT, RETURN OF INCOME AND BALANCE SHEET OF THE ABOVE SAID CREDITOR. THE MATTER IS NOW SUBJUDICE WITH YOUR GOOD SELF AND THE ASSESSEE VIDE HIS LETTER DATED 04.07.2012 CLAIMED BEFORE YOU THAT HE ITA NO. 7 145 /MUM/20 1 3 4 HAD ALREADY SUBMITTED FOLLOWING DOCUMENTS BEFORE UNDERSIGNED DURING THE ASSESSMENT PROCEEDINGS: - 1. BANK ACCOUNT STATEMENT OF M/S. KSHIPRA ENTERPRISES. 2. AGREEMENT OF PURCHASE OF FLAT. 3. TAX AUDIT REPORT OF M/S. KSHIPRA ENTERPRISES. 4. LOAN CONFIRMATION A/C STATEMENT OF M/S. KSHIPRA ENTERPRISES. 5. CONFIRMATION LETT ER FROM VENDOR OF FLAT FOR PAYMENT OF STAMP DUTY AND REGISTRATION FEE. 6. LEDGER EXTRACT OF MEDICLAIM PREMIUM A/C. 2. THE UNDERSIGNED WOULD LIKE TO DRAW ATTENTION OF YOUR GOOD SELF TOWARDS THE DATE OF CONFIRMATION OF LOAN A/C STATEMENT FROM M/S. KSHIPRA EN TERPRISES FURNISHED BY T HE ASSESSEE BEFORE YOU, I.E. 01.04.2009. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED THE SAME CONFIRMATION OF LOAN A/C FROM M/S. KSHIPRA ENTERPRISES ON 16.12.2011, BUT THE SAME CONFIRMATION OF LOAN A/C STATEMENT DID NO T BEAR SIGNATURE OF THE EITHER PARTY. IN VIEW OF THE ABOVE FACT IT CAN BE EASILY CONCLUDED THAT THE CONFIRMATION FILED BEFORE YOUR GOOD SELF HAS BEEN SIGNED BY THE PARTIES POST 16.12.2011 THOUGH IT BEARS A DATE I.E. 01.04.2009 AND IT APPEARS AN AFTERTHO UGHT ARRANGEMENT. IF IT IS NOT SO, WHAT PREVENTED ASSESSEE TO FILE THE PROPER CONFIRMATION A/C BEFORE THE UNDERSIGNED DURING ASSESSMENT PROCEEDINGS. WITHOUT PREJUDICE TO THE ABOVE CONCLUSION THE UNDERSIGNED WOULD REGISTER HER RESERVATION AND PRAY YOUR GO OD SELF NOT TO CONSIDER THE ABOVE CONFIRMATION UNDER RULE 46A AS THE SAME WAS NOT FURNISHED BEFORE THE UNDERSIGNED DURING ASSESSMENT PROCEEDINGS IN ITS CURRENT FORM DESPITE GIVEN SEVERAL OPPORTUNITIES AND WITHOUT ANY JUSTIFIED/SUFFICIENT CAUSE. 3. BANK A CCOUNT STATEMENT OF M/S. KSHIPRA ENTERPRISES, CONFIRMATION FROM VENDOR OF FLAT REGARDING PAYMENT OF STAMP DUTY AND REGISTRATION FEE HAVE BEEN NEVER FURNISHED BEFORE UNDERSIGNED AND THE ASSESSEE IS MAKING A FALSE CLAIM BEFORE YOUR GOOD SELF THAT HE HAS ALRE ADY SUBMITTED THE SAME BEFORE THE UNDERSIGNED DURING ASSESSMENT PROCEEDINGS. IN VIEW OF THE ABOVE UNDERSIGNED PRAYS TO YOUR GOOD SELF NOT TO CONSIDER THE ABOVE EVIDENCES AS THE SAME WAS NOT PRODUCED BEFORE THE UNDERSIGNED DESPITE GIVEN OPPORTUNITIES AND WITHOUT ANY JUSTIFIED/SUFFICIENT CAUSE.. 4. YOUR GOOD SELF IS REQUESTED TO DECIDE THE MATTER ON MERIT. FURTHER, THE AO SUBMITTED ANOTHER REMAND REPORT IN RESPECT TO EXPLANATION OF THE ASSESSEE VIDE LETTER DATED 12 - 03 - 2013 AS UNDER: - ITA NO. 7 145 /MUM/20 1 3 5 1. IN THIS CONNE CTION VIDE LETTER DATED 07.11.2012 YOUR GOOD SELF HAS DIRECTED THE UNDERSIGNED TO VERIFY THE TRANSACTION OF THE ABOVE REFERRED ASSESSEE WITH M/S. KSHIPRA ENTERPRISES AND REPORT ACCORDINGLY. WITHOUT PREJUDICE TO THE CONCLUSION SUBMITTED VIDE EARLIER REMAN D REPORT DATED 20.09.2012 THAT THE ASSESSEE DID NOT SUBMIT PROPER CONFIRMATION OF THE TRANSACTION DESPITE GIVEN SEVERAL OPPORTUNITIES AND WITHOUT ANY JUSTIFIED / SUFFICIENT CAUSE, THE TRANSACTION WAS VERIFIED FROM M/S. KSHIPRA ENTERPRISES VIDE NOTICE U/S 1 33 (6) OF THE IT ACT, 1961 DATED 07.12.2012. IN RESPONSE TO NOTICE U9/S 133 (6) OF THE IT ACT, 1961 M/S. KSHIPRA ENTERPRISES CONFIRMED THE TRANSACTION AND SUBMITTED THE SUPPORTING DOCUMENTARY EVIDENCES . 2. YOUR GOOD SELF IS REQUESTED TO DECIDE THE MATTE R ON MERIT. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS PRODUCED THE BANK STATEMENT OF M/S. KSHIPRA ENTERPRISES AND OTHER DETAILS TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS AND IDENTITY OF M/S. KSHIPRA ENTERPRISES. FROM THE AB OVE, WE FIND THAT THE AO HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACT ION AND THE FACT THAT THE PAYMENTS TO SELLER WERE MADE BY ACCOUNT PAYEE DDS DIRECTLY FROM THE ACCOUNT OF M/S. KSHIPRA ENTERPRISES. THESE PAYMENTS ARE CLEARLY DEPICTED IN THE BANK STATE MENT OF M/S. KSHIPRA ENTERPRISES IN THE COPY OF BANK STATEMENT WITH MARKING OF EACH PAYMENT AND WE HAVE VERIFIED THE SAME. THERE IS AMPLE CASH BALANCE AVAILABLE IN THE BANK ACCOUNT OF M/S. KSHIPRA ENTERPRISE, THE COPY OF WHICH IS ENCLOSED IN THE ASSESSEES PAPER BOOK. THE ASSESSEE HAS ALSO FILED COPY OF AUDITED BALANCE SHEETS, RECONCILIATION OF FLAT PAYMENTS WITH THE ACCOUNT OF M/S. KSHIPRA ENTERPRISES AND CONFIRMATION FROM M/S. KSHIPRA ENTERPRISES. THE COPY OF BANK STATEMENT OF VIJAYA BANK CHIRABAZAR, MUMB AI, A/C. NO.501500300005201 IS ENCLOSED IN ASSESSEES PAPER BOOK AT PAGES 7 TO 9. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT THE ASSESSEE IS ABLE TO PROVE THAT THE LOAN OF M/S. KSHIPRA ENTERPRISES IS A GENUINE LOAN AND THE SOURCES ARE EXPLAINED., AND H ENCE, WE DELETE THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT (A) BY TREATING THIS LOAN AS UNEXPLAINED U/S 68 OF THE ACT. THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 7. IN REGARD TO ADDITION MA DE BY THE AO AND CONFIRMED BY THE CIT (A) U/S 69C OF THE ACT OF STAMP DUTY PAID BY THE SELLER AMOUNTING TO RS.3,42,340/ - , WE FIND FROM THE FACTS OF THE CASE THAT THE SELLER PARTY HAS CONFIRMED THE PAYMENT OF STAMP DUTY AND CONFIRMATION WAS FILED BEFORE THE AO AS WELL AS BEFORE THE CIT ITA NO. 7 145 /MUM/20 1 3 6 (A). THIS FACT IS ALSO RECORDED IN THE SALE DEED I.E. THE DEED OF RECTIFICATION THAT THE STAMP DUTY WAS PAID BY THE SELLER AND THIS FACT HAS NOT BEEN NEGATED BY THE LOWER AUTHORITIES. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ADDITION DESERVES TO BE DELETED. WE ORDER ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 - 09 - 2016 . BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SR.NO. PARTICULARS DATE INITIALS MEMBER CONCERNE D 1 DICTATION GIVEN ON 06 /09/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 0 8 /09/16 09/09/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNC EMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER SD/ - (B. R. BASKARAN) ACCONTANT MEMBER MUMBAI, DATED: 01 - 09 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. TH E CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//