ACIT 24(1), MUMBAI V. GURDEEP SINGH A BIRDI, MUMBAI

ITA 8328/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79573 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI . . , , ' ' ' ' BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER /. ITA NO.8328/MUM/2010 / ASSESSMENT YEAR: 2007-08. A.C.I.T. -24(1) C-13, R.NO.503, PRATYAKSHKAR BHAVAN MUMBAI / / / / VS. GURDEEP SINGH A BIRDI 1503/4, FARM MANOR, ADARSH DUGHDALAYA LANE, MARVE ROAD, MALAD(W), MUMBAI-400 064 . .. ./ // / PAN : AAAPB8784E (APPLICANT) .. RESPONDENT) REVENUE BY: CAPT. PRADEEP ARYA (DR) RESPEONDENT BY : SHRI TARUN GHIA ) + ) + ) + ) + / // / DATE OF HEARING : 23-07-2014 ) + ) + ) + ) + / DATE OF PRONOUNCEMENT : 31 -07 -2014 / / / / O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS PREFERRED BY THE REVENUE AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] DATED 14.09.2010 RELEVANT TO ASSESSMENT YEAR 2007-2008. ITA NO.832 8 /MUM/2010 . 2 2. THROUGH THE GROUNDS OF APPEAL, THE REVENUE HAS A GITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.9387596/- MADE BY AO AS UNEXPLAINED INVESTMENTS U/S 69 OF THE INCOME TAX ACT. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN LONG TERM INVESTMENTS IN GOVT. & OTHER SECURITIES-QUOTED AT RS.22,74,487/-. HOWEVER, UNDER THE HEAD INCOME FRO M OTHER SOURCES THE ASSESSEE HAD DECLARED AN INTEREST INCOME OF RS.16,62,533/- W HICH SEEMED TO BE DISPROPORTIONATE TO THE INVESTMENTS. HE FURTHER NOT ED THAT THE ASSESSEE HAD ADVANCED LOAN OF RS.28,97,887/- TO ONE CHARKOP SAI SIDDHI CH S LTD. AT THE BEGINNING OF THE RELEVANT PREVIOUS YEAR OUT OF WHICH RS.23,00,000/- WAS RETURNED BY THE SAID SOCIETY DURING THE SAID PREVIOUS YEAR AND THEREFORE, THE CL OSING LOAN BALANCE WAS AT RS.5,97,887/- 4. THE RATE OF INTEREST ON WHICH INTEREST HAD BEEN RECEIVED BY THE ASSESSEE WAS SHOWN AT 21% WHICH WAS VERY HIGH AND EXCESSIVE IN C OMPARISON WITH THE RATE OF INTEREST ON WHICH LOANS ARE ADVANCED TO OTHER PARTI ES. HE FURTHER NOTED THAT THE INVESTMENT OF RS.28,97,887/- HAD REMAINED WITH THE PARTY ONLY FOR SIX MONTHS AND RS.5,97,887/- REMAINED WITH THE PARTY FOR THE LAST SIX MONTHS OF THE YEAR. HENCE THE INTEREST SHOWN TO BE RECEIVED BY THE ASSESSEE @ 21% FROM THE SAID SOCIETY WAS NOT CORRESPONDING TO THE INVESTMENT SHOWN AS THE SAME COULD BE WORKED OUT AT RS.3,67,056/- [3,04,278+62,778] AS AGAINST THE CLAI M OF RECEIPT OF INTEREST OF RS.1474258/- FROM THE SAID SOCIETY. HE FURTHER OBSE RVED THAT THE INTEREST RECEIVED FROM OTHER PARTIES WAS 11% %12%. HE ACCORDINGLY PRE SUMED THAT THE LOAN TO THE SAID SOCIETY HAD ALSO BEEN ADVANCED @12% PER ANNUM. HE T HEREAFTER ASSUMED THAT IF THE ASSESSEE HAD RECEIVED RS.14,74,258/- AS INTEREST, T HEN THE CORRESPONDING LOAN ADVANCED TO THE SOCIETY WOULD AMOUNT TO RS.1,22,85, 483/- WHEREAS THE LOAN ADVANCED BY THE ASSESSEE WAS SHOWN AT ONLY RS.28,97,887/-. H E THEREFORE TREATED THE DIFFERENCE ITA NO.832 8 /MUM/2010 . 3 BETWEEN THE LOAN AMOUNTS SO CALCULATED BY HIM AS U NDISCLOSED INCOME OF THE ASSESSEE AMOUNTING TO RS.93,87,596/- AND ADDED THE SAME INTO THE INCOME OF THE ASSESSEE. ASSESSEE THUS PREFERRED APPEAL BEFORE THE CIT(A). 5. THE LD. CIT(A) DELETED THE ADDITION SO MADE BY T HE AO HOLDING THAT NO UNEXPLAINED INVESTMENTS WERE FOUND BY THE AO AT THE HANDS OF THE ASSESSEE. THE SAID ADDITIONS WERE MADE BY THE AO ON THE BASIS OF HIS OWN ASSUMPTIONS. THE RELEVANT FINDINGS OF THE LD. CIT(A), FOR THE SAKE O F CONVENIENCE ARE EXTRACTED AS UNDER: 2.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER, STATEMENT OF FACTS, SUBMISSIONS OF THE APPELLANT AS WELL AS MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ACTION OF LD. ASSESSING OFF ICER IS NOT SUSTAINABLE IN LAW. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE APP ELLANT HAD ADVANCED THE IMPUGNED LOAN OF RS.93,87,596/- AS PRESUMED BY THE ASSESSING OFFICER. THE ADDITION MADE ON ASSUMPTIONS AND PRESUMPTIONS CAN N EVER BE SUSTAINED IN LAW AS THERE IS NO PROVISION UNDER THE I.T. ACT TO THIS EFFECT. WHAT THE ASSESSING OFFICER HAS DONE IS HE HAS DOUBTED THE INTEREST REC EIVED FROM CHARKOP SAI SIDDHI CHS LTD. @ 21% ON AN AMOUNT OF RS.28,97,887/ - AND THEREAFTER ON THE PRESUMPTION THAT THIS RATE IS VERY HIGH AND EXCESSI VE IN COMPARISON WITH THE RATE OF INTEREST ON WHICH LOANS ARE ADVANCED TO OTH ER PARTIES, ESTIMATED A NOTIONAL AMOUNT OF INTEREST ON RS.1,22,85,483/- IN PLACED OF ACTUAL AMOUNT OF RS.28,97,887/- TO REPLACE THE LOAN AMOUNT AND TREAT ED THE DIFFERENCE OF THESE TWO FIGURES I.E. RS.93,87,596/- TO BE THE CONCEALED ADVANCE TO CHARKOP SAI SIDHI CHS LTD. TO MATCH THE RATE OF INTEREST OF 12% PER ANNUM THAT ACCORDING TO HIM, GIVES THE SAME AMOUNT OF INTEREST ACTUALLY RECEIVED AND DISCLOSED BY THE APPELLANT TO THE TUNE OF RS.14,74,258/- SUCH AN AMOUNT ARRIVED AT ON UNWARRANTED EXERCISE AND ABSURD CONCLUSION WITHOUT ANY COGENT REASONS AND BRINGING ANY CONCRETE AND ADVERSE MATERIAL ON RECOR D BY WAS OF ENQUIRIES TO DISTURB APPELLANTS FIGURES OF ACTUAL ADVANCE OR LO AN BEING BASELESS, CANNOT BE CONCURRED WITH BY ANY AUTHORITY. HENCE, I FIND FORC E IN THE ARGUMENTS AND SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE ON THIS ISSUE AND I FIND THAT SUCH AN ADDITION IS UNCALLED FOR, UNJUSTIFIED AND W ITHOUT JURISDICTION. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION AND FA CTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE IMPUGNED ADDITION IS DELETED. ITA NO.832 8 /MUM/2010 . 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. R EPRESENTATIVES OF THE PARTIES. IT HAD BEEN EXPLAINED BY THE LD. AR BEFORE THE CIT(A) THAT INTEREST AMOUNT OF RS.14,74,258/- PAID BY THE SOCIETY TO THE ASSESSEE WAS FOR THE PAST MANY YEARS AND THAT IT WAS ACCOUNTED ON RECEIPT BASIS AND IN RESPE CT OF SUCH INTEREST INCOME TAX WAS DEDUCTED AT SOURCE BY THE SAID SOCIETY. THE ASSESSI NG OFFICER HAD ALSO GIVEN CREDIT FOR SUCH TAX DEDUCTED AT SOURCE FROM SUCH INTEREST BY THE SAID SOCIETY. FURTHER, THAT ALL TRANSACTIONS WERE MADE BY ACCOUNT PAYEE CHEQUES AND THERE WAS NO ALLEGATION OF ANY CASH TRANSACTION BETWEEN THE ASSESSEE AND THE S AID SOCIETY. THE LD. CIT(A) AFTER DUE CONSIDERATION OF THE MATTER HAD CONCLUDED THAT THE ADDITIONS MADE BY THE AO WERE NOT JUSTIFIED. 7. ADMITTEDLY, NO UNEXPLAINED INVESTMENTS WERE FOUN D BY THE AO AT THE HANDS OF THE ASSESSEE. THE ENTIRE ADDITIONS HAD BEEN BY T HE AO ON JUST ASSUMPTIONS AND PRESUMPTIONS BY WAY OF OVERSTRETCHING HIS IMAGINATI ON OF FACTS. WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONED ORDER OF THE CIT(A) WHILE DELETING THE ADDITIONS MADE BY THE AO. THERE IS NO MERIT IN THE APPEAL OF THE R EVENUE AND THE SAME IS HEREBY DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS HER EBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07. 2014 . ) . 31.07.2014 ) SD/- SD/- ( R.C.SHARMA) (SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; . DATED 31.07.2014 .../ A.K.PATEL , PS ITA NO.832 8 /MUM/2010 . 5 ) 01 21/ COPY OF THE ORDER FORWARDED TO : 1. 3 / THE APPELLANT 2. 043 / THE RESPONDENT. 3. 5() / THE CIT(A)- MUMBAI CONCERNED 4. 5 / CIT MUMBAI CONCERNED 5. 1 0, , / DR, ITAT, MUMBAI G BENCH 6. / GUARD FILE. / BY ORDER, 41 0 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI