KUSUM D.PAREKH, MUMBAI V. ITO 16(2)(2), MUMBAI

ITA 7515/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93139 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2014
• Court: TRIBUNAL
• Department Lawyers: NEELIMA V NADKARNI
• Assessee Lawyers: MAYUR A SHAH
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.7515/M/2014 (AY:2009 - 2010 ) MRS. KUSUM D P AREKH, 73/8, JEHANGIR MANSION, HUGHES ROAD, MUMBAI 400 007. / VS. ITO 16(2)(2), MUMBAI - 07. ./ PAN : AAFPP5367AG ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MAYUR A SHAH / RESPONDENT BY : MS. NEELIMA V. NADKARNI, DR / DATE OF HEARING : 25.06.2015 / DATE OF PRONOUNCEMENT : 08 .07.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.12.2014 IS AGAINST THE ORDER OF THE CIT (A) - 27, MUMBAI DATED 17.10.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: THE LD CIT (A) ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ADDING A SUM OF RS. 1,20,000/ - U/S 68 OF THE ACT. IT IS PRAYED THAT THE SAID ADDITION BE DIRECTED TO BE DELETED. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE, WHO IS AN INDIVIDUAL, FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 3,49,985/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AN D THE ASSESSED INCOME WAS DETERMINED AT RS. 4,69,990/ - WHICH INCLUDES AS ADDITION OF 1,20,000/ - U/S 68 OF THE ACT. DURING THE ASSESSMENT, AO NOTICED THAT THE ASSESSEE GAVE SOME ADVANCES OF RS. 2 LAKHS TO PRAKASH ENTERPRISES IN THE FY 2004 - 05 AT THE RECOMM ENDATION / GUARANTEE OF SHRI DILIPBHAI SARAIYA (REFERRED AS DS). SIMILAR ADVANCE OF RS. 2 LAKHS WAS ALSO GIVEN BY THE ASSESSEES HUSBAND TO SHRI PRAKASH SHAH. CONSIDERING THE NON - PAYMENT OF THE SAID ADVANCE TO THE ASSESSEE, IN VIEW OF THE FINANCIAL URGEN CY, MR. DS RETURNED THE MONEY ON BEHALF OF MR. PRAKASH SHAH IN NOVEMBER - 2006 BY ISSUING A CHEQUE . SUBSEQUENTLY, IN THE YEAR UNDER CONSIDERATION, MR. DS TRACED WHEREABOUTS OF MR. PRAKAHS SHAH AND ENSURED REPAYMENT OF THE SAID ADVANCE TAKEN 2 BY SHRI PRAKASH SHAH. IN THE YEAR UNDER CONSIDERATION, MR. PRAKASH SHAH RETURNED SUM OF RS. 1.2 LAKHS AND THE BALANCE OF THE AMOUNT WAS REPAID IN THE NEXT ASSESSMENT YEAR. CONSIDERING THE BACKGROUND OF THE TRANSACTION, ASSESSEE INSISTED THE REPAYMENT IN CASH. FURTHER, THE A SSESSEE RETURNED THE SAID AMOUNT OF RS. 2 LAKHS TO MR. DS. THUS, THE ASSESSEE RECEIVED HER MONEY TO THE EXTENT OF RS. 2 LAKHS IN THE YEAR UNDER CONSIDERATION AND THE ASSESSEE RETURNED THE SUM OF RS. 2 LAKHS PAID BY MR. DS. IN THE SCRUTINY ASSESSMENT , ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE CONFIRMATIONS FROM MR. PRAKASH SHAH. ASSESSEE COULD NOT COMPLY WITH THE SAME CONSIDERING THE UNTRACEABILITY OF MR. PRAKASH SHAH. HOWEVER, ASSESSEE FURNISHED A CONFIRMATION FROM SHRI DS, A COPY OF WHICH I S AVAILABLE AT PAGE 8 OF THE PAPER BOOK. SHRI DS IS ASSESSED TO TAX AT PAN - AACPS 2378 F. THE SAID LETTER INFORMS THE ABOVE FACTS. THE CONTENTS OF THE SAID LETTER WERE NOT SUSPECTED BY THE AO. CONSIDERING THE ABSENCE OF DOCUMENTARY EVIDENCE, ASSESSING OFFICER PROCEEDED TO MAKE ADDITION OF RS. 1.2 LAKHS IN THE YEAR UNDER CONSIDERATION INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. NO SIMILAR ADDITION WAS MADE IN RESPECT OF THE RECEIPT OF RS. 80,000/ - IN THE SUBSEQUENT ASSESSMENT YEAR. ON APPEAL, CIT (A) CONFIRMED THE AFORESAID ADDITION OF RS. 1.2 LAKHS MADE BY THE AO WITHOUT GIVING ANY DISCUSSION AND RELYING ON THE ASSESSMENT ORDER. PARA 2.4.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND. 3. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE REASONED THAT THERE IS NO CASE TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT AS THIS IS THE YEAR OF RE PAYMENT OF THE LOAN GIVEN BY THE ASSESSEE IN THE YEAR 2004 - 05. ASSESSEE HAS RECEIVED THE LOANS ON DIFFERENT DATES IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE PROVISIONS OF SECTION 68 ARE WRONGLY INVOKED IN THE YEAR UNDER CONSIDERATION. FURTHER, HE S UBMITTED THAT THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE INVOKED WHEN THE PAYMENTS ARE RECEIVED BY THE ASSESEE TO SQUARE UP THE LOAN ACCOUNT. FOR THIS PROPOSITION, HE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. DILSA DISTRIBUTERS COMINES VS. ITO IN ITA NO.5849/MUM/2011 (AY 1997 - 1998), DATED 6.9.2013. REVENUE AUTHORITIES DID NOT APPRECIATE THE FACT THAT TH E CREDITOR WAS UNTRACEABLE FOR A LONG TIME, BUT FOR THE INTERVENTION OF SHRI DS, WHO 3 HAPPENED TO HAVE BEEN RECOMMENDED THE ASSESSEE TO RECEIVE LOAN IN THE YEAR 2004 - 05. ASSESSEE COULD NOT RECEIVE THE LOAN IN CASH. CONSIDERING THIS SUSPECT NATURE OF THE L OAN CREDITOR, ASSESSEE HAS TO SETTLE FOR THE CASH PAYMENT FOR FEAR OF BOUNCING OF THE CHEQUES. CONSIDERING THE SPECIAL REASONS, WHICH ARE UNDISPUTED BY THE ASSESSIG OFFICER, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT (A) SHOULD BE DELETED. 4. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE FACTS PECULIAR TO THE PRESENT CASE, I AM OF THE OPINION THAT THE ADDITION MADE BY THE AO U/S 68 OF THE ACT IN THE Y EAR UNDER CONSIDERATION IS UNSUSTAINABLE IN LAW. THE TRANSACTION OF RS. 2 LAKHS TO SHRI PRAKASH SHAH WAS NOT DISPUTED BY THE AO. THE RECEIPT OF RS. 1.2 LAKHS IS THE REPAYMENT OF ABOVE LOAN. ON THESE FACTS, THE AO CANNOT MAKE ADDITION INVALIDLY IN THE YE AR OF REPAYMENT OF THE LOAN WITHOUT DISPUTING THE TRANSACTIONS RELATING TO LOAN ORIGINALLY GIVEN. THE LOAN WAS ORIGINALLY GIVEN BY THE ASSESSEE THROUGH BANKING TRANSACTION. IN ANY CASE, THE IMPUGNED TRANSACTIONS ARE ONLY TO SQUARE UP SO FAR AS THE ASSESS EE IS CONCERNED AS SHE RECEIVED THE LOAN GIVEN TO MR. PRAKASH SHAH. SIMILARLY, THE PAYMENT OF RS. 2 LAKHS MADE BY MR. DS, WHO HAPPENED TO BE THE GUARANTOR, THE SAME WAS ALSO REPAID BY THE ASSESSEE. THEREFORE, IN MY OPINION, THE ADDITION MADE BY THE AO AN D SUSTAINED BY THE CIT (A) IS REQUIRE TO BE REVERSED. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN T HE OPEN COURT ON 8 TH JULY, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 8 .7 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 4 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI