DEVSHARDA DEVELOPERS P. LTD, MUMBAI V. ITO RG 9(1)-3, MUMBAI

ITA 7809/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0373 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-11-2011
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Unexplained expenditure
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 7 80 9 / MUM/20 1 1 ( ASSESSMENT YEAR : 2003 - 04 ) M/S. DEVSHARDA DEVELOPERS PVT. LTD., OFFICE NO.2, LAXMI NIWAS NO.5, CHANDAVARKAR LANE, BOR IVALI (W), MUMBAI 400 092 VS. ITO RG 9 (1) - 3 MUMBAI PAN/GIR NO. AABCD4640B APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI KIRAN MEHTA REVENUE BY SHRI SAURABH DESHPANDE DATE OF HEARING 29 / 03 /201 7 DATE OF PRONOUNCEME NT 09 / 06 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 19, MUMBAI DATED 20/09/2011 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY T HE ASSESSEE: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.LT.(A) ERRED IN CONFIRMING THE ADDITION OF RS. 5,72,9301 - BEING INTEREST PAID TO FOUR PARTIES AS UNEXPLAINED EXPENDITURE U/S 69C. (2) IN DOING SO, THE LD CIT(A) FAI LED TO APPRECIATE THAT THE APPELLANT HAD TAKEN NO LOAN FROM ANY OF THESE PARTIES AND THEREFORE THE APPELLANT WAS UNDER NO LIABILITY TO PAY INTEREST TO THEM. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) FAILED TO APPRECIATE THAT LO ANS FROM THESE PARTIES WERE TAKEN BY THE M/S CHARKOP SHANTIDOOT CO - OP HOUSING SOCIETY AND THEREFORE THE PAYMENT OF INTEREST AND ITS EXPLANATION OUGHT TO HAVE BEEN CONSIDERED IN THE CASE OF THE SOCIETY AND NOT IN THE CASE OF THE APPELLANT. ITA NO. 7809/MUM/2011 M/S. DEVSHARDA DEVELOPERS PVT. LTD., 2 3. THE ONLY SUBS TANTIVE ISSUE INVOLVED IN THIS APPEAL IS AN ADDITION OF RS.572,930 MADE U/S 69C. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THERE WAS A SURVEY ON THE BUSINESS PREMISES OF THE ASSESSEE. BASED ON THE PAPERS SEIZED IN TH E COURSE OF SURVEY OPERATIONS , THE LEARNED AO CAME TO A VIEW THAT: (A) THE A SSESSEE HAD PAID INTEREST AGGREGATING RS. 572,930 TO FOUR PARTIES AND (B) SINCE THESE INTEREST PAYMENTS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AN ADDITION WAS MADE U/S 69C OF R S. 572,930. 5 . BY THE IMPUGNED ORDER , CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW , CONTENTION OF LEARNED AR WAS THAT BEFORE THE LOWER AUTHORITIES T HE ASSESSEE HAD SUBMITTED THAT THE PAPERS SEIZED FROM HIM ONLY REPRESENTED INTEREST WORKING. THE LOANS IN REFERENCE WERE TAKEN BY CHARKOP SH A NTIDOOT CO - OP. HSL (HEREINAFTER CALLED SOCIETY) AND THE INTEREST WAS ALSO PAID BY THE SAID SOCIETY AND SUCH INTERE ST PAYMENTS AS ALSO CONCERNED LOANS WERE INDEED REFLECTED IN THE BOOKS OF THE SOCIETY. IN SUPPORT OF THIS CONTENTION, LEARNED AR INVITED OUR ATTENTION TO THE COPIES OF LEDGER ACCOUNTS OF THE PARTIES IN THE BOOKS OF THE SOCIETY SHOWING LOAN RECEIPTS AND INT EREST PAYMENTS, COPIES OF BANK ACCOUNT OF THE SOCIETY REFLECTING THE INTEREST PAYMENTS AND LOAN REPAYMENTS, TDS RETURNS FILED AND TDS CERTIFICATES ISSUED BY THE SOCIETY, AS PLACED ON RECORD. LEARNED AR ALSO EXPLAINED THAT THE A SSESSEE HAD ENTERED INTO A DE VELOPMENT AGREEMENT WITH THE ITA NO. 7809/MUM/2011 M/S. DEVSHARDA DEVELOPERS PVT. LTD., 3 SOCIETY AND HENCE IN TERMS OF THE DEVELOPMENT AGREEMENT, THE LOANS WERE ARRANGED BY THE A SSESSEE ON BEHALF OF THE SOCIETY. SINCE THE LOANS WERE ARRANGED FOR AND MANAGED BY THE A SSESSEE , THE A SSESSEE HAD DONE THE DETAILED COMPUT ATION OF INTEREST PAYABLE TO THE PARTIES AND THUS THE PAPERS SEIZED, ONLY REPRESENTED THE INTEREST COMPUTATION AND DID NOT MEAN THAT THE A SSESSEE HAD PAID THE SAID INTEREST WITHOUT RECORDING THE SAME IN HIS BOOKS OF ACCOUNTS . 7. AS PER LEARNED A.R, THE A SS ESSEE HAD PRODUCED CLINCHING AND SUBSTANTIAL EVIDENCE IN SUPPORT OF HIS CONTENTION AND THE LEARNED LOWER AUTHORITIES MERELY BRUSHED ASIDE THE CONTENTION OF THE A SSESSEE WITHOUT EVEN GOING THROUGH THE SAME AND WITHOUT SAYING ONE WORD ON HOW THIS EVIDENCE WA S NOT RELIABLE . FROM THE ORDER OF THE LOWER AUTHORITIES IT IS NOT CLEAR AS TO WHETHER AO HAS CALLED FOR THE CONCERN ED PERSON S TO WHOM INTEREST WAS ALLEGED TO BE PAID AND FROM WHOM LOAN WAS ALLEGED TO BE RECEIVED BY THE ASSESSEE. MERELY ON THE BASIS OF PAPER S EIZED, THE AO CAME TO THE CONCLUSION THAT ASSESSEE HAD PAID THE INTEREST WITHOUT RECORDING THE SAME IN ITS REGULAR BOOKS OF ACCOUNTS. IN VIEW OF THE ABOVE DISCUSSION, W E SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND THE MATTER IS RESTORED BACK TO THE FI LE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE IN SUPPORT OF THE FACT THAT INTEREST WAS PAID BY THE SOCIETY AND TDS WAS ALSO DEDUCTED THEREON BY THE SOCIETY ITSELF AND NOT BY THE ASSESSEE. WE ALSO DIRECT THE AO TO CA LL THE CONCERN ED PARTIES TO WHOM ASSESSEE HAS BEEN ALLEGED TO BE PAID INTEREST SO AS TO VERIFY THE GENUINENESS OF THE TRANSACTION OF INTEREST HAVING ITA NO. 7809/MUM/2011 M/S. DEVSHARDA DEVELOPERS PVT. LTD., 4 ACTUALLY BEEN PAID AND THE LOAN ACTUALLY HAVING BEEN RECEIVED. WE DIRECT ACCORDINGLY. 8 . IN THE RESULT, APPE AL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 / 06 /2017 S D/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI ; DATED 09 / 06 /201 7 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//