ITO 24(2)(2), MUMBAI V. SURESH M VADECH, MUMBAI

ITA 7186/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3090 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Assessee Lawyers: RASHMIKANT D KUNDALIA

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMB ER & SANJAY GARG,JUDICIAL MEMBER /. ITA NO. 7186 /MUM/201 0 , / ASSESSMENT YEAR - 20 07 - 08 THE INCOME TAX OFFICER - 24(2)(2) ROOM NO.604, 6 TH FLOOR PRATYAKSHAKAR BHAVAN BANDRA - KURLA COMPLEX MUMBAI - 400 051. VS SHRI SURESH M. VADECH A 25 - B, AJANTA SHOPPING CENTRE DAFTARI ROAD MALAD (E) , MUMBAI - 400 097 . PAN: AABPV 5530 P ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI RASHMIKANT D. KUNDALIA / REVENUE BY :MS. VINITA MENON / DATE OF HEARING : 15 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 30 - 09 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLEN GING THE ORDER,DATED 24 .0 8 .201 0 OF THE CIT(A ) - 34 ,MUMBAI THE ASSESS ING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE AMOUNTING TO RS.23,15,547/ - U/S.41(L) OF THE LT. ACT, WITHOUT CONSIDERING THE FACT THAT THE A SSESSEE HAS NOT PROVIDED ANY DETAIL OF THE CREDITOR M/S. CRYSTAL GEMS TO WHOM THE NOTICE U/S.133(6) SENT BY THE AO WAS RETURNED BACK UNSERVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ABOVE AD DITION WITHOUT APPRECIATING THAT THE CREDITOR WAS QUITE OLD AND EVEN ASSESSEE WAS NOT AWARE OF WHEREABOUT OF THE CREDITOR. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUND BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE A PPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE,AN INDIVIDUAL,DERIVING INCOME FROM S ALARY, FILED HIS RETURN OF INCOME ON 0 9 .0 8 . 200 7 ,DECLARING INCOME OF RS. 1.78 LAKHS.COMPLETING THE ASSESSMENT ON 23 .1 1 .200 9 ,U/S.143 (3)OF THE ACT,THE ASSESSING OFFICER(AO) DETERMINED HIS INCOME AT RS.2 4,94,542/ - . 2. EFFECTIVE GROUND OF APPEAL DEALS WITH DELETING THE ADDITION OF RS.20 LAKHS MADE BY THE AO U/S.41(1)OF THE ACT.D URING THE ASSESSMENT PROCEEDINGS,THE AO FOUND T HAT THE ASSESSEE HAD SHOWN LIABILITY ON ACCOUNT OF SUNDRY CREDITORS AT RS.23.15 LAKHS IN THE NAME OF CRYSTAL GEMS. HE DIRECTED THE ASSESSEE TO PRODUCE LIST OF CREDITORS WITH FULL ADDRESSES.AS PER THE AO,THE ASSESSEE DID NOT FILE ANY DETAILS IN SPITE OF THE FACT THAT NOTICES ISSUED U/S.142(1)/143(2)WERE SERVED UPON THE ASSESSEE AND THE ASSESSEE HAD BEEN GIVEN MORE THAN ONE CHANCE TO SUPPORT HIS CLAIM. THE AO ISSUED A NOTICE U/S.133(6)OF THE ACT FOR VERIFICATION ON 03.11.2009 TO CRYSTAL GEMS ON THE ADDRESS AVA ILABLE ON RECORD.HOWEVER,THE NOTICE WAS RECEIVED BACK UNSERVED.CONSIDERING THE ABOVE FACTS,HE HELD THAT WHEREABOUTS OF CRYSTAL GEMS,PROP:CHETAN KOTHARI,WERE NOT TO THE ASSESSEE ,THAT PRIMARY DETAILS LIKE PAN OF CHETAN KOTHARI WERE NOT FILED,THAT IT WAS NOT KNOWN AS TO WHEN THE LIABILITY HAD ARISEN,THAT THE TRANSACTION APPEARING IN THE NAME OF CHETAN KOTHARI WAS NOT GENUINE,THAT THE LIABILITY SHOWN ON ACCOUNT OF SUNDRY CREDITORS CEASED TO EXIST,THAT WAS NOT ASCERTAINABLE AND NON GENUINE.INVOKING THE PROVISION OF SECTION 41(1)OF THE ACT,HE TREATED THE SAID SUM AS THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. SM VADECHA - 7186/MUM/10 - AY.07 - 08 2 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) . AFTER CONSIDERING THE ASSESSMENT ORDER AN D THE SUBMISSIONS OF THE ASSESSEE ,THE FAA HELD THE AO COULD HAVE INVOKED THE PROVISIONS OF SECTION 41(1)ONLY IF THE LIABILITY WAS GENUINE BUT HAD CEASED BY WAY OF REMISSION THEREOF,THAT THE AO HAD OPINED THAT THE LIABILITY WAS NOT GENUINE AND UNASCERTAINED ,THAT HE SHOULD NOT HAVE MADE ADDITION U/S,41(1)OF THE ACT, THAT CHETAN KOTHARI WAS REGULAR ASSESSEE,THAT HE WAS A TRADE CREDITOR,THAT HE WAS NOT A LOAN CREDITOR,THAT THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED.FINALLY,HE DELETED THE ADDITION MADE BY THE AO. 4 . BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE AO AND STATED THAT THE ASSESSEE HAD NOT FILED ANY DETAILS BEFORE THE AO,THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE WAS A TRADE CREDITOR. THE AUTHORISED REPRESENTATIVE(AR)RELIED UP ON THE ORDER OF THE FAA. ON A SPECIFIC QUERY BY THE BENCH,HE ADMITTED THAT CERTAIN PAPERS WERE PRODUCED BEFORE THE FAA,THAT THOSE DOCUMENT WERE NOT MADE AVAILABLE TO THE AO,THAT HE WAS NOT AWARE AS TO WHETHER SAME WERE FORWARDED TO THE AO BY THE FAA OR NOT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT THE AO HAD APPLIED THE PROVISIONS OF SECTION 41(1) OF THE ACT AS THE ASSESSEE HAD NOT FILED REQUISITE DETAILS ASKED FOR BY THE AO,THAT THE FAA HAD DELETED THE ADDITION MADE BY TH E AO,THAT HE HAD ADMITTED FRESH EVIDENCES FROM THE ASSESSEE WITHOUT AFFORDING AN OPPORTUNITY TO THE AO TO VERIFY THE GENUINENESS OF THOSE DOCUMENTS.THEREFORE,IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUD ICATION.HE IS DIRECTED TO FORWARD THE DOCUMENTS PRODUCED BEFORE HIM AND BEFORE US TO THE AO AND TO DECIDE THE ISSUE AFRESH.EFFECTIVE GROUND OF APPEAL FILED BY THE AO IS DECIDED IN HIS FAVOUR,IN PART. AS A RESULT,APPEAL FIL ED BY THE AO STAND S PARTLY ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER,2015. 30 , 2015 SD/ - SD/ - ( / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 30 .09.2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.