DCIT CEN CIR 8(1), MUMBAI V. BHUTA INVESTMENT P.LTD, MUMBAI

ITA 810/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0111 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Opportunity of being heard; Additional evidence
• Section: 142(1); 68

Judgement Text

1 M/S BHUTA INVESTMENTS PVT LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.810 /MUM /2015 (ASSESSMENT YEAR 2011-12 ) DCIT, CENT.CIR.8(1), MUMBAI VS M/S BHUTA INVESTMEN T PVT LTD 901, RAHEJA CHAMBERS, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI 400 021 PAN : AAACB2194B APPELLANT RESPONDENT APPELLANT BY SHRI SUMAN KUMAR RESPONDENT BY ANUJ KISNADWALA DATE OF HEARING 19-06-2017 DATE OF PRONOUNCEMENT 23-06-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-47, MUMBAI DAT ED 24-11-2014 AND IT PERTAINS TO AY 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY HAS FILED ITS RETURN OF INCOME FOR THE AY 2011-12 ON 24-09-2011 DECLARING T OTAL LOSS OF RS.5,79,273. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTI CES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILE D THE DETAILS AND OTHER INFORMATION, AS CALLED FOR. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS RAISED FRESH UNSECURE D LOAN OF RS. 87 LAKHS, THEREFORE, ASKED THE ASSESSEE TO FURNISH CONFIRMATION FROM THE PARTY ALONG WITH THE CORRESPONDING BANK STATEMENT, INCOME-TAX RETURNS FI LED FOR THE LAST 3 YEARS AND OTHER 2 M/S BHUTA INVESTMENTS PVT LTD DOCUMENTARY EVIDENCE TO PROVE THE IDENTITY, GENUINE NESS OF TRANSACTION AND CREDITWORTHINESS OF THE LOAN CREDITOR. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FURNISHED THE CONFIRMATION ALONG WITH BANK STATEMEN T; HOWEVER, FAILED TO PROVIDE OTHER DETAILS CALLED FOR BY THE AO. THE AO, AFTER CONSIDERING THE CONFIRMATION LETTER FILED BY THE ASSESSEE, OBSERVED THAT THE ASSESSEE H AS FAILED TO PROVE THE CREDITWORTHINESS OF THE LOAN CREDITOR BY FILING NEC ESSARY DOCUMENTARY EVIDENCE IN THE FORM OF INCOME-TAX RETURNS TO PROVE THE CAPACITY OF THE LOAN CREDITOR TO EXPLAIN THE LOAN GIVEN TO THE ASSESSEE. THE AO FURTHER OBSERVE D THAT MERELY PROVING THE IDENTITY OF THE CREDITOR DOES NOT DISCHARGE THE ONUS OF THE ASSESSEE, IF THE CAPACITY OR CREDITWORTHINESS OF THE CREDITOR IS NOT PROVED, THE N THE ASSESSEE HAS NOT FULLY DISCHARGED THE ONUS CAST UPON IT U/S 68 OF THE ACT. ACCORDINGLY, HE MADE ADDITION OF RS.87 LAKHS U/S 68 OF THE ACT AS UNEXPLAINED CASH C REDIT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A), THE ASSESSEE HAS SUBMITTED THAT IT HAS FILED NECESSARY CONFIRMATION LETTERS ALONG WITH THE BANK STATEMENTS TO PROVE THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE LOAN CREDITOR. THE LOAN CREDITOR IS ASSOCIATE OF THE ASSESSEE AND HIS CASE IS ASSESSED BY THE SAME AO, THEREFORE, REQUESTED TO THE AO TO EXAMINE THE D ETAILS FROM THE RECORDS AVAILABLE FROM THE OFFICE OF THE AO. BUT, THE AO, WITHOUT AP PRECIATING THE FACTS SIMPLY MADE ADDITION BY HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITOR DESPITE THE FACT THAT THE CREDITOR IS ASSE SSED IN HIS OWN JURISDICTION. THE CIT(A), AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO HAS FAILED TO MAKE RECOURSE TO THE BOOKS OF ACCO UNT OF THE ASSESSEE COMPANY AND MR. RAMAKANT GAGGAR, WHO WAS ASSESSED UNDER HIS OWN JURISDICTION. HAD THE AO CHECKED THE BOOKS OF ACCOUNT AND VERIFIED THE LO AN CONFIRMATIONS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THE SCENARIO OF THE UNSECURED LOANS FROM THE ASSESSEE AND GAGGAR GROUP WOULD HAVE BEEN CLEAR AND THERE WOULD HAVE BEEN NO NEED TO CALL FOR EVERY DETAILS REPEATE DLY. FURTHER, THE ASSESSEE COMPANY HAS TIME AND AGAIN SUBMITTED THE FACT ABOUT THE INTER-GROUP LOANS FROM THE ASSESSEE, WHICH ARE ALSO ASSESSED BY THE SAME AO AN D REQUESTED TO CROSS VERIFY THE BOOKS OF ACCOUNT OF THOSE INTER GROUP ASSESSEES FOR SUCH TRANSACTIONS. THE AO ERRED IN NOT CONSIDERING THE FACTS AND EXPLANATIONS FURNISHED BY THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS AND MADE ADDITIONS U/S 68 ON THE BASIS OF HIS ASSUMPTION 3 M/S BHUTA INVESTMENTS PVT LTD THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN IS NOT ESTABLISHED. THE CIT(A) FURTHER OBSERVED THAT AFTER VERIFYING TH E DOCUMENTS SUBMITTED BY THE ASSESSEE WHICH WERE ALREADY SUBMITTED IN THE ASSESS MENT PROCEEDINGS, IT CAN BE CONCLUDED THAT THE ASSESSEE COMPANY HAD PROVED BEYO ND ANY REASONABLE DOUBT GENUINENESS APART FROM IDENTITY AND CAPACITY OF THE LENDER OF THE LOANS. THUS, THE ADDITIONS MADE U/S 68 ON ACCOUNT OF UNEXPLAINED LOA NS WERE UNWARRANTED. ACCORDINGLY, HE DIRECTED THE AO TO DELETE THE ADDIT ION MADE TOWARDS UNSECURED LOAN U/S 68 OF THE ACT. AGGRIEVED BY THE ORDER OF CIT(A ), THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD.DR SUBMITTED THAT THE LD.CIT(A) ERRED IN DEL ETING THE ADDITION MADE U/S 68 OF THE ACT TOWARDS LOANS CLAIMED TO HAVE BEEN AC CEPTED FROM MR. RAMAKANT GAGGAR OF RS.87 LAKHS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ON HIM U/S 68 OF THE ACT TO ESTABLISH ALL THE THREE INGREDIENTS, I.E. GENUINENESS OF THE TRANSACTION, I DENTITY OF THE PARTY AND CREDITWORTHINESS OF THE CREDITOR. THE LD.DR FURTHE R SUBMITTED THAT THE LD.CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF PROVISIONS OF RULE 46A BY NOT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE AO. 5. ON THE OTHER HAND, THE LD.AR FOR THE ASSESSEE STRON GLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS PROV ED BEYOND DOUBT THE GENUINENESS OF THE TRANSACTION, IDENTITY OF THE PAR TY AND CREDITWORTHINESS OF THE CREDITOR BY FILING NECESSARY CONFIRMATION LETTER AL ONG WITH BANK STATEMENT AND ITR COPIES. THE LD.AR FURTHER SUBMITTED THAT THE AO IG NORED ALL THE EVIDENCES FILED BY THE ASSESSEE, MADE ADDITION ON ASSUMPTION THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST ON HIM U/S 68 OF THE ACT. THE CIT(A), AFTER CONSIDERING NECESSARY EVIDENCE FILED BY THE ASSESSEE HAS RIGHTL Y DELETED THE ADDITION MADE BY THE AO AND HIS ORDER SHOULD BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE AO. THE AO MADE ADDI TIONS OF RS.87 LAKHS AS UNEXPLAINED LOANS BORROWED FROM MR. RAMAKANT GAGGAR ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F THE CREDITOR BY FILING NECESSARY EVIDENCE. ACCORDING TO THE AO MERE FILING OF CONFI RMATION LETTERS WILL NOT ABSOLVE THE ASSESSEE OF HIS RESPONSIBILITY TO PROVE THE THREE I NGREDIENTS, I.E. GENUINENESS OF THE TRANSACTION, IDENTITY OF THE PARTY AND CREDITWORTHI NESS OF THE CREDITOR. THE ASSESSEE, 4 M/S BHUTA INVESTMENTS PVT LTD THOUGH FILED CONFIRMATION LETTERS, FAILED TO FILE B ANK STATEMENT AND ITR COPIES OF THE CREDITOR TO PROVE THE CAPACITY OF THE CREDITOR TO E XPLAIN THE LOAN GIVEN TO THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THA T IT HAS FILED NECESSARY DETAILS INCLUDING CONFIRMATION LETTERS ALONG WITH BANK STAT EMENTS AND ITR RETURNS OF THE CREDITORS TO PROVE THE IDENTITY, GENUINENESS AND CR EDITWORTHINESS OF THE CREDITOR. THE AO, DESPITE FURNISHING ALL THE DETAILS MADE ADDITIO N ON ASSUMPTION BASIS THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF T HE CREDITOR. 7. HAVING HEARD BOTH THE SIDES, WE FIND FORCE IN THE A RGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS DISCHARGED ITS INI TIAL ONUS CAST UPON IT BY FILING CONFIRMATION LETTER FROM THE LOAN CREDITOR ALONG WI TH BANK STATEMENT AND ALSO COPIES OF INCOME-TAX RETURNS FILED FOR THE RELEVANT ASSESS MENT YEARS. ONCE THE INITIAL BURDEN IS DISCHARGED, THEN THE BURDEN SHIFTS TO THE AO TO PROVE IT OTHERWISE. IN THIS CASE, THE ASSESSEE HAS FILED CONFIRMATION LETTER AND ALSO BANK STATEMENT TO EXPLAIN THE LOAN BORROWED FROM MR. RAMAKANT GAGGAR. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE WE FIND THAT THE LOAN HAS BEEN BORROWED BY CHEQUE AND THE CREDITOR IS HAVING SUFFICIENT SOURCE OF INCOME TO EXPLAIN THE L OAN. WE FURTHER OBSERVE THAT THE ASSESSEE HAS TAKEN LOAN FROM MR. RAMAKANT GAGGAR, W HO IS ASSESSED TO TAX BY THE SAME AO AS THAT OF THE ASSESSEE. THE ASSESSEE HAS FILED NECESSARY DETAILS AND REQUESTED THE AO TO CROSS VERIFY THE DETAILS FILED BEFORE HIM WITH THE IT RETURNS OF THE LOAN CREDITOR. THE AO WITHOUT APPRECIATING THE FAC TS SIMPLY MADE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE GE NUINENESS OF THE CREDITORS. THE CIT(A), AFTER CONSIDERING THE RELEVANT FACTS HAS RI GHTLY DELETED THE ADDITION MADE BY THE AO. WE DO NOT FIND ANY REASON TO INTERFERE WIT H THE ORDER OF THE CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) A ND DISMISS THE APPEAL FILED BY THE REVENUE. ACCORDINGLY WE DO SO. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2017. SD/- SD/- (D.T. GARASIA) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 23 RD JUNE, 2017 5 M/S BHUTA INVESTMENTS PVT LTD COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI