MARVE BEACH RESORTS P.LTD, MUMBAI V. DCIT CC 37, MUMBAI

ITA 754/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9800 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: MAHESH R AJORA; A T JAIN SHRI JITENDRA JAIN
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 754 / MUM/20 17 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. MARVE BEACH RESORTS PVT. LTD., 301, 3 RD FLOOR, PLATINA PLOT NO. C - 59, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 VS. DCIT, CC - 37, MUMBAI PAN/GIR NO. AACCM3701D ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI A.T. JAIN, SHRI JITENDRA JAIN AND SHRI. MAHESH RAJORA REVENUE BY SHRI CHAITANYA ANJARIA DATE OF HEARING 12 /09/2018 DATE OF PRONOUNCEMENT 06 / 12 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 53, MUMBAI DATED 30/09/2016 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF IT A CT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. (A) THE COMMISSIONER OF INCOME TAX(APPEALS) - 53, MUMBAI [CIT(A)] ERRED CONFIRMING THE ADDITION OF RS.1,21,50,000/ - BEING SHARE APPLICATION MONEY RECEIVED FROM VARIOUS PARTIES, IN EARLIER Y EARS, AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 2 THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW, SHARE APPLICATION MONEY RECEIVED FROM VARIOUS PARTIES, IN EARLIER YEARS, CANNOT BE TREATED AS UNEXP LAINED CASH CREDIT U/S 68 OF THE I.T. ACT; HENCE ADDITION MADE BY THE AO SHALL BE DELETED. (B) THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,21,50,000/ - U/S 68 OF THE ACT WITHOUT APPRECIATING THAT THE APPELLANT HAS DULY PROVED THE IDENTITY AND CREDI TWORTHINESS OF VARIOUS PARTIES AND GENUINENESS OF TRANSACTION; HENCE ON THE FACTS AND CIRCUMSTANCE OF THE CASE OF THE APPELLANT AND IN LAW NO ADDITION IS ATTRACTED U/S 68 OF THE ACT. YOUR APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR TO AMEND THE AFORESAID G ROUND OF APPEAL. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN BUSINESS OF REAL ESTATE DEVELOPMENT OF PROPERTIES. THE ASSESSEE IS REGULARLY ASSESSED TO TAX. ITS BO OKS OF ACCOUNTS ARE DULY AUDITED UNDER THE STATUTORY PROVISIONS OF COMPANIES ACT. THE ASSESSEE , FOR THE SUBJECTED YEAR, FILED ITS THE RETURN OF INCOME ON 30.9.2011 DECLARING TOTAL LOSS AT RS. 225,750/ - WHICH HAS BEEN SUBSEQUENTLY REVISED ON 12.06.2012 AT R S 210,682/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT, AO MADE ADDITION U/S.68 ON ACCOUNT OF SHARE APPLICATION MONE Y AMOUNTING TO RS.2,14,14,659/ - . BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ADDITION OF RS.1,21,50,000 U/S.68 AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT IN ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 3 EARLIER YEARS, THE ASSESSEE HAS RECEIVED DEPOSITS FROM VARIOUS PARTIES WHICH WERE SHOWN UNDER CURRENT LIABILITIES IN ITS AUDITED ACCOUNTS OF EARLIER YEARS. DURING THE UNDER CONSIDERAT ION TH E OUTSTANDING AMOUNT OF RS.2,14, 14,659/ - OUT OF SUCH DEPOSITS FROM VARIOUS PARTIES IN EARLIER YEARS WERE TRANSFERRED TO 'SHARE APPLICATION MONEY ' UNDER THE HEAD LIABILITIES IN ITS BALANCE SHEET. DURING THE ASSESSMENT PROCEEDING ASSESSEE FILED THE DETAILS OF SHARE APPL ICATION MONEY OF RS.2, 14 , 14,659/ - APPEARING IN ITS BOOKS OF ACCOUNTS AS ON 31.03.2011. THE ASSESSEE SUBMITTED BEFORE THE AO THAT SINCE SHARES C OULD NOT BE ALLOTTED TO THESE PARTIES A SUM OF RS.1,77 , 80,000/ - WERE REFUNDED TO THESE PARTIES IN SUBSEQUENT YEARS AND BALANCE AMOUNT OF RS.36 , 34 , 659 / - IS ALSO DUE FOR REFUND TO THESE PARTIES. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE A ND MADE ADDITION OF ENTIRE SUM OF RS. 1,77,80,000 / - BEING SHARE APPLICATION MONEY TREATING ABOVE AMOUNT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE ADDITION OF RS.1 ,77, 80 ,000/ - (RS.2, 14 ,14,659 - RS.36,34,659) MADE BY THE A O IN RESPECT OF THREE PAR TIES TREATING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT WAS CHALLENGED BY THE ASSESSEE BE FORE THE C1T(A). ON APPEAL, THE CIT(A) DELET ED THE ADDITION OF RS.56,30,000/ - IN RESPECT OF ONE PARTY NAMELY SHRI A. SETHU MADHAVAN HOLD ING THAT THE ASSESSEE HAS SATISFACTORILY DISCHARGED ITS ONUS U/S 68 OF THE ACT. HOWEVER, THE LD.CIT(A) CONFIRMED THE ADDITION AGGREGATING TO RS.1,21 , 50,000/ - U/S 68 OF THE ACT IN RESPECT OF TWO PARL IES SHRI SANJAY ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 4 CHHABARIA RS.86, 50,000/ - AND SMT. POOJA KA NDHARI/SHRI THAKUR SEN KANDHARI RS.35,00,000/ - . 6. IT WAS CONTENTION OF LEARNED AR THAT IMPUGNED SUM OF RS.1,21,50,000/ - WAS RECEIVED BY THE ASSESSEE AS DEPOSITS FROM RESPECTIVE PARTIES IN EARLIER YEARS AND SAME WAS SHOWN UNDER THE HEAD 'CURRENT LIABILITI ES 7 IN ITS BALANCE SHEET YEAR AFTER YEAR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS TRANSFERRED THE OUTSTANDING A MOUNT ON 31.03.2011 OF RS. 1,21,50,000 / - FROM DEPOSITS TO 'SHARE APPLICATION MONEY' AND SHOWN UNDER THE HEAD LIABILITIES IN ITS BAL ANCE SHEET. THE ASSESSEE HAS FILED LEDGER A/C OF THESE PARTIES ALONGWITH BANK STATEMENTS REFLECTING THE PAYMENTS RECEIVED IN EARLIER YEARS . 7. LEARNED AR READ THE PROVISIONS OF SECTION 68 AND CONTENDED THAT THERE WAS NO CREDIT IN THE BOOKS OF ACCOUNTS DURI NG THE YEAR UNDER CONSIDERATION WITH RESPECT TO THE TRANSFER OF DEPOSIT UNDER THE HEAD SHARE APPLICATION MONEY, THEREFORE, N O ADDITION IS WARRANTED DURING THE YEAR UNDER CONSIDERATION. 8. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHO RITIES AND CONTENDED THAT AO HAS JUSTIFIABLY MADE ADDITION IN RESPECT OF SHARE APPLICATION MONEY WHICH HAS BEEN MODIFIED BY THE CIT(A) TO THE EXTENT OF RS.36,34,659/ - . 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. WE HAD ALSO DELIBERATED ON THE ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 5 JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD, WE FOUND THAT ON EARLIER YEARS A SSESSEE WAS IN RECEIPT OF DEPOSIT FROM THREE PARTIES AMOUNTING TO RS.2,14,14,659/ - IT WAS CONTENTION OF LEARNED AR THAT BEFORE AO ASSESSEE HAS ALREADY SUBMITTED THAT SINCE SHARES CANNOT BE ALLOTTED TO THESE PARTIES, A SUM OF RS.1,77,88,000/ - WERE REFUNDED TO THESE PARTIES IN THE SUBSEQUENT YEARS. OUT OF THE THREE DEPOSITS, THE CIT(A) HAS DELETED ONE DEPOSIT AFTER OBSERVING THAT SAME WAS PROPERLY EXPLAINED. THUS, THE ADDITION OF RS.1 ,77, 80 ,000/ - (RS.2, 14 ,14,659 - RS.36,34,659) MADE BY THE A O IN RESPECT O F THREE PARTIES TREATING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT WAS CHALLENGED BY THE ASSESSEE BE FORE THE C1T(A). ON APPEAL, THE CIT(A) D ELETED FURTHER ADDITION OF RS.56,30, 000 / - IN RESPECT OF ONE PARTY NAMELY SHRI A. SET HU MADHAVAN HOLDING THAT THE ASSESSEE HAS SATISFACTORILY DISCHARGED ITS ONUS U/S 68 OF THE ACT. HOWEVER, THE LD.CIT(A) CONFIRMED THE ADDITION AGGREGATING TO RS.1,21 , 50,000/ - U/S 68 OF THE ACT IN RESPECT OF TWO PARL IES SHRI SANJAY CHHABARIA RS.86, 50,000/ - A ND SMT. POOJA KANDHARI/SHRI THAKUR SEN KANDHARI RS.35,00,000/ - . THE CRUSIAL ISSUE BEFORE US IS WHETHER ADD ITION IS WARRANTED U/S.68 A S DONE BY THE AO FOR THE YEAR UNDER CONSIDERATION. THE PROVISIONS OF SECTION 68 READS AS UNDER: WHERE ANY SUM IS FOUND CRE DITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 6 THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDI TED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR: ' 9. IT IS EVIDENT FROM ABOVE THAT SECTION 68 OF THE ACT PROVIDES THAT IF 'ANY SUM' IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE FOR ANY 'PREVIOUS YEAR' THEN IF THE AS SESSING OFFICER IS NOT SATISFIED ABOUT THE NATURE AND SOURCE THEREOF THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR'. THUS, SECTION 68 OF THE ACT IS APPLICABLE ONLY IF ANY SUM IS FOUND TO BE CREDITED IN BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE PREVIOUS YEAR. THE SHARE APPLICATION MONEY OF RS.1,21,50,000/ - WAS NOT CREDITED TO BOOKS OF ACCOUNTS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE IMPUGNED SUM OF RS.1,21,50,000/ - WAS RECEIVED BY THE ASS ESSEE AS DEPOSITS IN EARLIER YEARS AND WAS SHOWN UNDER THE HEAD LIABILITIES YEAR AFTER YEAR IN EARLIER YEARS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ONLY PASSED A JOURNAL ENTRY IN RESPECTIVE PARTIES ACCOUNTS AND TREATED THE DEPOSITS AS SHARE APPLICATION MONEY, WHICH ALSO IS GROUPED UNDER THE HEAD LIABILITIES IN ITS BALANCE SHEET. IN THIS CONNECTION, THE ASSESSEE HAS PLACED ON RECORD THE LEDGER ACCOUNT OF THE PARTIES FROM THE YEAR IN WHICH DEPOSITS WERE RECEIVED FROM THEM TILL THE YEAR UNDER C ONSIDERATION WHEN THE SUM WAS TRANSFERRED TO SHARE APPLICATION MONEY. UNDER THE CIRCUMSTANCES, IMPUGNED SUM OF RS.1,21,50,000/ - WAS RECEIVED BY THE ASSESSEE IN ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 7 EARLIER YEARS AND HENCE PROVISIONS OF SECTION 68 OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE , FOR THE YEARS UNDER CONSIDERATION. 10. IN SUPPORT OF THE ABOVE PROPOSITION, LEARNED AR HAS ALSO RELIED ON THE DECISION OF ITAT DELHI BENCH IN CASE OF SURAJ BHAN BAJAJ 102 TTJ 605, WHEREIN THE TRIBUNAL HELD AS UNDER: - ' ...EACH ASSESSMENT YEAR IS SEPARATE AND THERE IS NO REASON FOR MAKING ADDITION IN RESPECT OF GIFTS RECEIVED IN YEARS EARLIER TO THE YEAR FOR WHICH ASSESSMENT IS BEING FRAMED. EVEN WHILE INVOKING DEEMING PROVISIONS FOR MAKING ADDITION, IT ACT DOES NOT EMPOWER THE REVENUE AUTHORITIES TO INCLUDE CERTAIN RECEIPTS AS INCOME OF THE YEAR, WHICH ACTUALLY PERTAINS TO SOME OTHER YEARS. THE CIT(A), THEREFORE, CORRECTLY DELETED THE ADDITION IN RESPECT OF PART OF THE GIFTS AND LOANS WHICH WAS NOT PERTAINING TO THE YEAR UNDER CONSIDERATION, AND WA S RECEIVED BY THE ASSESSEE IN EARLIER YEARS....' 11. FROM THE RECORD WE ALSO FOUND THAT THE ASSESSEE HAS FILED VARIOUS DETAILS VIZ NAME AND ADDRESS OF PARTIES, CONFIRMATION AND PAN NO, BANK STATEMENT OF POOJA KANDHARI/THAKUR SEN KANDHARI REFLECTING PAYME NT MADE BY THEM TO ASSESSEE. BANK STATEMENT OF ASSESSEE REFLECTING PAYMENT RECEIVED FROM POOJA KANDHARI / THAKUR SEN KANDHARI AND SANJAY CHHABRIA . SINCE ASSESSEE COMPANY COULD NOT ALLOT SHARES TO THESE PARTIES IT HAS REFUNDED AMOUNT RECEIVED FROM THESE PAR TIES IN SUBSEQUENT YEARS. IN THIS REGARD, THE ASSESSEE FILED THE COPIES OF LEDGER A/C OF SUBSEQUENT YEARS ALONGWITH COPY OF BANK STATEMENT REFLECTING PAYMENT MADE TO THESE PARTIES . 12. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY JUSTIFICATION FOR T HE ADDITION MADE BY AO U/S.68. ITA NO. 754/MUM/2017 M/S. MARVE BEACH RESORTS PVT. LTD., 8 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 12 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 12 /201 8 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//