M/S NARAYAN POLYURETHANE INDUSTRIES, MUMBAI V. PR CIT 30, MUMBAI

ITA 7304/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5657 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Revision of order
• Section: 68; 263; 144; 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH MUMBAI BEFORE : HON BLE JUSTICE P P BHATT, PRESIDENT & SHRI M.BALAGANESH, AM ITA NO. 7304 /MUM/ 20 1 9 ( ASSESSMENT YEAR : 20 15 - 16 ) M/S. NARAYAN POLYURETHANE INDUSTRIES 6, SOMAIYA CHAMBE RS S. V ROAD, MALAD (W) MUMBAI - 400064 VS. PR. COMMISSIONER OF INCOME TAX ROOM NO.541, 5 TH FLOOR KAUTILYA BHAVAN BANDRA KURLA COMPLEX MUMBAI - 400051 PAN /GIR NO. A ABFN5259M (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI ASHOK MEHTA REVENUE BY SHRI RAHUL RA MA N DATE OF HEARING 1 0 / 02 /202 1 DATE OF PRONOUNCEMENT 27 / 04 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 7304/MUM /20 1 9 FOR A.Y. 20 1 5 - 1 6 PREFERRED BY THE ORDER AGAINST THE REVISION ORDER OF THE LD. PRINCIPAL C OMMI SSIONER OF INCOME TAX - 3 0 , MUMBAI U/S.263 OF THE ACT DATED 18 / 10 /2019 FOR THE A.Y. 201 5 - 1 6 . 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD PCIT WAS JUSTIFIED IN ASSUMING REVISION JURISDICTION U/S 263 OF THE ACT IN RESPECT ITA NO . 7304/MUM/2019 M/S. NARAYAN P OLYURETHANE INDUSTRIES 2 OF LOANS RE CEIVED BY THE ASSESSEE WHICH WERE ALSO SQUARED UP BY THE ASSESSEE, IN THE FACTS AND CIRCUMS TANCES OF THE CASE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED I N THE BUSINESS OF MANUFACTURING AND SELLING OF POLYURETHANE FLEXIPUFF FOAM AND ALSO PROVIDI NG SERVICES LIKE FINDING MARKET COURSE IN THEIR FIELD OR PROVIDING COMMISSION BASIS SERVICES TO THEIR CUSTOMERS. WE FIND THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2015 - 16 ON 31.10.2015 DECLARING TOTAL INCOME OF RS 63,88,660/ - . T HE ASSESSMENT FOR THE ASST YEAR 2015 - 16 WAS COMPLETED U/S 14 4 OF THE ACT ON 8.12.2017 DETERMINING TOTAL INCOME AT RS 6,09,22,060/ - AFTER MAKING ADDITIONS TOWARDS LOA NS RECEIVED IN THE SUM OF RS 5,45,33,400/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. W E FIND THAT ONE OF THE REASONS FOR SELECTING THE CASE FOR SCRUTINY IS VERIFICATION OF SQUARED UP LOANS BY THE ASSESSEE. THIS FACT IS CLEARLY MENTIONED IN PAGE 2 OF THE ASSESSMENT ORDER. THE LD AO OBSERVED THAT THE ASSESSEE HAD RECEIVED LOANS IN THE SUM OF RS 5,45,33,400/ - AND HAD DULY SQUARED UP THE SAME DURING THE YEAR UNDER CONSIDERATION. THIS ASSESSMENT COMPLETED U/S 14 4 OF THE ACT ON 8.12.2017 WAS SOUGHT TO BE R EVISED BY THE LD PCIT INVOKING REVISION JURISDICTION U/S 263 OF THE ACT ON THE GROUND THAT THE ORDER PASSED BY THE LD AO IS ERRONEOUS IN AS MUCH AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE FIND THAT THE LD PCIT HAD OBSERVED THAT APART FROM AF ORESAID LOANS OF RS 5,45,33,400/ - , THE ASSESSEE HAD ALSO SQUARED UP THE LOAN OF RS 11,30,0 00/ - DURING THE YEAR WHICH FACT IS MENTIONED IN FORM 3CD BY THE ASSESSEE. HENCE ACCORDING TO LD PCIT, THIS AMOUNT ALSO SHOULD HAVE BEEN ADDED BY THE LD AO WHILE FRA MING THE ASSESSMENT. ACCORDING TO LD PCIT, NON - CONSIDERATION OF THE SAME HAD MADE THE ORD ER OF THE LD AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF ITA NO . 7304/MUM/2019 M/S. NARAYAN P OLYURETHANE INDUSTRIES 3 THE REVENUE WARRANTING INVOKING REVISIONARY JURISDICTION U/S 263 OF THE ACT. THE LD PCIT OBSERVED THAT T HE LD AO HAD FAILED TO MAKE NECESSARY INQUIRY AND EXAMINATION OF THE AFORESAID SQUARED UP L OANS OF RS 11,30,000/ - WHILE FRAMING THE ASSESSMENT. 4. WE FIND THAT THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT HAD RESPONDED BEFORE T HE LD PCIT THAT IT HAD RECEIVED A FRESH LOAN FROM SHRI NILESH PATEL DURING THE YEAR UNDER C ONSIDERATION OF RS 11,30,000/ - AND THE SAME WAS NOT SQUARED UP DURING THE YEAR. IT WAS SPECIFICALLY POINTED OUT BEFORE THE LD PCIT THAT A SUM OF RS 30,38,000/ - WAS OUTSTANDING AT THE END OF THE YEAR. IT WAS ALSO POINTED OUT THAT THE RECEIPT OF THE SAID LOAN IN THE SUM OF RS 11,30,000/ - WAS DULY DISCLOSED IN THE TAX AUDIT REPORT OF THE ASSESSEE AND IT WAS ALSO MENTIONED THAT THE SAID LOAN WAS NOT SQUARED UP DURING THE YEAR. IT WAS SPECIFICALLY POINTED OUT BEFORE THE LD AO THAT ONLY TWO LOANS IN THE SUMS OF RS 5,45,33,400/ - WERE SQUARED UP DURING THE YEAR AND HENCE THE SAME ALONE WAS THE SUBJECT MATTER OF ADDITION BY THE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS. SINCE THIS LOAN OF RS 11,30,000/ - FROM SHRI NILESH PATEL WAS NOT SQUARED UP DURING THE Y EAR, THE LD AO HAD RIGHTLY NOT MADE ANY ADDITION TOWARDS THE SAME. WE FIND THAT THE ASSESSEE HAD DULY FURNISHED THE FOLLOWING DOCUMENTS BEFORE THE LD PCIT IN SECT ION 263 PROCEEDINGS : - ITA NO . 7304/MUM/2019 M/S. NARAYAN P OLYURETHANE INDUSTRIES 4 A) CONFIRMATION FROM SHRI NILESH PATEL B) COPY OF BANK ACCOUNT WHERE IN THE SAID TRANSACTIONS ARE DULY REFLECTED SUGGESTING THAT THE SAME ARE THROUGH REGULAR BANKING CHANNELS. 5. WE FIND THAT THE LD PCIT HAD ASSUMED REVISION J URISD ICTION U/S 263 OF THE ACT ON INCORRECT ASSUMPTION OF FACT ON THE GROUND THAT THE SUM OF RS 11 ,30,000/ - REPRESENT LOAN SQUARED UP DURING THE YEAR BY THE ASSESSEE. WHEREAS, FROM THE AFORESAID FACTS NARRATED AND FROM THE TAX AUDIT REPORT SUBMITTED BY TH E ASS ESSEE BEFORE THE LD AO, WHICH ARE FORMING PART OF THE RECORDS, WE FIND THAT THE SAID LOAN REC EIVED FROM SHRI NILESH PATEL IS NOT AT ALL SQUARED UP DURING THE YEAR. WE FIND FROM THE FINANCIAL STATEMENT AS ON 31.3.2015 UNDER THE HEAD UNSECURED LOANS, THE P ARTY SHRI NILESH PATEL IS SHOWN AS OUTSTANDING LOAN PAYABLE AT RS 30,38,000/ - . 5.1. WE AL SO FIND FROM PAGE 46 OF THE PAPER BOOK CONTAINING LETTER DATED 11.12.2017 FILED BEFORE THE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE COMPLETE DETAILS OF LO ANS RECEIVED BY THE ASSESSEE, SQUARED UP DURING THE YEAR, TOGETHER WITH THEIR NAME AND ADDRES S OF THE LENDERS, THEIR PAN, MODE OF RECEIPT, PURPOSE OF LOAN , THEIR ASSESSMENT PARTICULARS, THEIR INCOME TAX RETURNS ETC. ADMITTEDLY , THESE DETAILS WERE F ILED BY THE ASSESSEE AFTER THE COMPLETION OF ASSESSMENT U/S 144 OF THE ACT ON 8.12.2017. HENCE IT COULD BE SAFELY CONCLUDED THAT THESE DOCUMENTS WERE VERY MUCH AVAILABLE ON RECORD WHEN THE LD PCIT EXAMINED THIS ASSESSMENT FOLDER. WHEN ALL THESE DET AILS WERE ALREADY ON RECORD, IT IS REASONABLY EXPECTED FROM LD PCIT TO LOOK INTO THOSE DETAILS (AS ALREADY FORMING PART OF RECORD) BEFORE ARRIVING AT ANY CONCLUSION THAT WHETHER THE SAID LOAN FROM SHRI NILESH PATEL WAS SQUARED UP DURING THE YEAR OR NOT. AT THE COST OF REPETITION, WE HOLD THAT THE LD PCIT HAD TOTALLY PROCEEDED ON INCORRECT ASSUMPTION OF FACT. HENCE WE HAVE NO HESITATION IN QUASHING ITA NO . 7304/MUM/2019 M/S. NARAYAN P OLYURETHANE INDUSTRIES 5 THE REVISION ORDER PASSED BY THE LD PCIT U/S 263 OF THE ACT AT ONCE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSES SEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27 / 04 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( JUSTICE P P BHATT ) SD/ - (M.BALAGANESH) PRESI DENT ACCOUNTAN T M EMBER MUMBAI ; DATED 27 / 04 / 2 021 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//