AUM ADITYA REALTORS, MUMBAI V. ITO 15(1)(3), MUMBAI

ITA 8130/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3535 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAS S SAVLA
• Keywords: Source of fund; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI .. , ! , '# ' $ BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 8130/MUM/2011 ( & ' (' & ' (' & ' (' & ' (' / / / / ASSESSMENT YEAR: 2007-08) AUM ADITYA REALTORS 601, RAJYOG SOCIETY, SAKHARAM KEER ROAD, MAHIM, MUMBAI-400 016 & & & & / VS. I.T.O. 15(1)(3), MATRUMANDIR, TARDEO ROAD, MUMBAI-400 007 ) '# ./ * ./ PAN/GIR NO. : AAJFA 8922 E ( )+ / APPELLANT ) : ( ,-)+ / RESPONDENT ) )+ . ' / APPELLANT BY : SHRI PARAS S. SAVLA ,-)+ / . ' / RESPONDENT BY : SHRI MANOJ KUMAR & / 01# / // / DATE OF HEARING : 12.06.2013 2 ( / 01 # / DATE OF PRONOUNCEMENT : 12.06.2013 '3 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI (C IT(A) FOR SHORT) DATED 26.10.2011, DISMISSING THE ASSESSEES APPEAL CONTES TING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TH E ASSESSMENT YEAR (A.Y.) 2007-08 VIDE ORDER DATED 23.11.2009. 2 ITA NO.8130/MUM/2011 (A.Y. 2007-08) AUM ADITYA REALTORS VS. ITO 2. THE ONLY ISSUE ARISING IN THE INSTANT APPEAL, CO NSEQUENT TO THE ONLY ADJUSTMENT TO THE ASSESSEES RETURNED INCOME OF NIL, IS IN RESPEC T OF THE ADDITION IN THE SUM OF RS.9 LACS U/S.68 OF THE ACT IN RESPECT OF CASH CREDITS FROM F OUR INDIVIDUALS, AS UNDER: 1. SHRI SHAILESH J. MARU RS.1,50,000/- 2. SHRI VASANJI PREMJI NAGDA RS.2,50,000/- 3. SHRI ASHWINI UMESH HARIA RS.3,50,000/- 4. SHRI RAJESH J. GOGRI RS.1,50,000/- GROSS TOTAL INCOME: RS.9,00,000/- RS.NIL ---------------- TOTAL INCOME: RS.9,00,000/- 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ASSESSEES CASE BEFORE US IS THAT IT HAS DI SCHARGED THE PRIMARY ONUS ON IT BY FURNISHING THE CONFIRMATION FROM THE CREDITORS, WHO ARE ASSESSEES UNDER THE ACT, AS WELL AS THEIR BANK ACCOUNTS. AS SUCH, NO ADVERSE INFEREN CE UNDER THE CIRCUMSTANCES COULD BE DRAWN FROM THE NON-RESPONDING TO THE SUMMONS ISSUED BY THE ASSESSING AUTHORITY TO THE SAID CREDITORS. THE ASSESSEE HAS IN FACT EVEN RETUR NED THE AMOUNTS ADVANCED IN THE SUBSEQUENT YEAR/S. WE FAIL TO OBSERVE ANY MERIT IN THE ASSESSEES CASE AS MADE OUT BEFORE US. IN THE ABSENCE OF PROPER CONFIRMATIONS, ALSO ST ATING THE SOURCE OF FUNDS LEND TO THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAS F URNISHED PROPER CONFIRMATIONS, AND WHICH IS THE FIRST AND THE PRIMARY DOCUMENT FOR THE PURPOSE OF PROVING A CREDIT U/S.68. THE ACKNOWLEDGMENT OF THE RETURN IN THE CASE OF ASH WINI UMESH HARIA, WHICH WAS ADVERTED TO LD. AR DURING HEARING, DOES NOT BEAR HI S SIGNATURE AND NEITHER IS VERIFIED TO BE A TRUE COPY OF THE RETURN FILED BY THE SAID CREDITO R. FURTHER, THE INCOME DISCLOSED THEREBY, I.E., RS.1.13 LACS, ALSO DOES NOT INSPIRE CONFIDENC E WITH REGARD TO THE CREDITWORTHINESS OF THE CREDITOR, WHICH HAS ALSO BEEN IMPUGNED BY THE R EVENUE. IN FACT, THE LOAN HAVING BEEN ADVANCED BY HIM MID-YEAR, IT IS THE RETURN/S FOR TH E PRECEDING YEAR(S) - WHEREAT THE BORROWED CAPITAL WOULD HAVE BEEN BUILT UP OR ACCUMU LATED, AND NOT FOR AY 2007-08, THAT WOULD BE RELEVANT IN ESTABLISHING THE CAPACITY; THE SUM BEING AVAILABLE WITH THE ASSESSEE 3 ITA NO.8130/MUM/2011 (A.Y. 2007-08) AUM ADITYA REALTORS VS. ITO BY JULY-AUG.06. THE COPY OF THE BANK ACCOUNT OF TH E SAID CREDITOR (PB PG.12) REVEALS THE DEPOSITS IN CASH TO THE TUNE OF RS.2.37 LACS, THE S OURCE OF WHICH, AS WELL AS OF THE BALANCE BROUGHT FORWARD, I.E., RS.1.14 LACS (THE COPY ON RE CORD BEING ONLY W.E.F. 27.07.2006), HAS NEITHER BEEN EXPLAINED BY THE ASSESSEE AT ANY STAGE , NOR COULD BE EXPLAINED BY THE LD. AR ON THE SAME BEING QUESTIONED BY THE BENCH DURING HE ARING. THE ASSESSING OFFICER (AO), WHOSE ORDER STANDS CONFIRMED BY THE FIRST APPELLATE AUTHORITY, HAS DISCUSSED THE BANK ACCOUNTS OF EACH OF THE CREDITORS, EXPLICITLY STATI NG THAT THE BANK ACCOUNTS REVEALED MEAGER BALANCES, BOTH PRIOR AND SUBSEQUENT TO THE I MPUGNED CREDITS, WHICH STAND BUILT THROUGH CASH DEPOSITS, AND WITHDRAWN SOON AFTER. NO EXPLANATION STANDS OFFERED AT ANY STAGE, EVEN AS THE LAW ENJOINS THE ASSESSEE TO EXPL AIN THE SAME BEFORE THE ASSESSING AUTHORITY. IT IS NOT A QUESTION OF SOURCE OF SOURCE , AS THE ASSESSEE WOULD PUT IT, BUT OF THE ACTUAL SOURCE ITSELF; THE BANK ACCOUNT OF THE OSTEN SIBLE CREDITOR OR THE CREDITOR HIMSELF BEING MERELY A CONDUIT FOR THE ROUTING OF FUNDS. TH E ASSESSEE IS ONLY A PRIVATE FIRM SO THAT ONLY PERSONS KNOWN TO IT AND HAVING CONFIDENCE THER EIN WOULD RISK ADVANCING THEIR HARD EARNED CAPITAL THERETO, PARTICULARLY ON UNSECURED B ASIS. THE SATISFACTION OF THE ASSESSING AUTHORITY HAS TO BE WITH REGARD TO THE NATURE AND T HE SOURCE OF THE FUNDS, AND WHICH, THEREFORE, REMAINS UNEXPLAINED, SO THAT WE FIND NO BASIS TO THE ASSESSEE IMPUGNING THE SAME WITH RATHER THE REVENUE SUPPORTING ITS CASE BY RELYING ON CELEBRATED CASE LAW IN THE MATTER VIZ. KALE KHAN MOHAMMAD HANIF VS. CIT [1963] 50 ITR 01 (SC) AND CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC), WHICH STANDS SUPPLEMENTED BY THE LD. DR BY PLACING A COPY OF THE DECISION IN THE CASE OF BLESSING CONSTRUCTION V. ITO [2013] 32 TAXMANN.COM 366 (GUJ.) ON RECORD. 3.2 SO HOWEVER, IT WAS PRAYED BY THE LD. AR THAT TH E ASSESSEE BE ALLOWED ONE MORE OPPORTUNITY TO PROVE ITS CASE, AS HE WAS CONFIDENT OF BEING ABLE TO DEMONSTRATE THE GENUINENESS OF THE TRANSACTIONS BEFORE THE ASSESSIN G AUTHORITY. THE LD. DR NOT CONTESTING THE SAID PROPOSITION, WE, IN THE INTEREST OF JUSTIC E, RESTORE THE MATTER TO THE FILE OF THE ASSESSING AUTHORITY TO ALLOW THE ASSESSEE ONE FINAL OPPORTUNITY TO PRESENT ITS CASE BEFORE HIM IN THE MATTER, EVEN AS PRONOUNCED ON THE CONCLU SION OF THE HEARING. NEEDLESS TO ADD, 4 ITA NO.8130/MUM/2011 (A.Y. 2007-08) AUM ADITYA REALTORS VS. ITO THE BURDEN TO PROVE THE IMPUGNED CREDITS ON THE PAR AMETERS OF IDENTITY AND CAPACITY OF THE CREDITORS, AND THE GENUINENESS OF THE CREDITS, WOULD ONLY BE ON THE ASSESSEE. THE FACT THAT THE CREDITORS ARE ASSESSEES, OR THAT THE CREDI TS HAVE BEEN REPAID SUBSEQUENTLY, AS HELD OUT BEFORE US - WITHOUT EVIDENCE THOUGH, IS BY ITSE LF OF LITTLE CONSEQUENCE, APART FROM THAT IT MAY CONTRIBUTE OR WEIGH IN THE OVERALL ASSESSMEN T TOWARD ESTABLISHING THE NATURE AND SOURCE OF THE CREDITS. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. 4 05 & '40 / 6/ 78'9 ' :0 / 0 ;< ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 12, 2013 '3 / 2 ( #' =&5>& 12 , 2013 / C SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER '# / ACCOUNTANT MEMBER MUMBAI; =& DATED : 12.06.2013 .&../ ROSHANI , SR. PS '3 / ,0D E'D(0 '3 / ,0D E'D(0 '3 / ,0D E'D(0 '3 / ,0D E'D(0/ COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT 3. F ( ) / THE CIT(A) 4. F / CIT - CONCERNED 5. DIC ,0& , , / DR, ITAT, MUMBAI 6. CJ' K / GUARD FILE '3& '3& '3& '3& / BY ORDER, 7 77 7/ // /; ; ; ; (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI