SIDMARK SALES P.LTD, MUMBAI V. DCIT 14(3)(2), MUMBAI

MA 700/MUM/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 5781 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 29-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Assessee Lawyers: SUBODH L RATNAPARKHIAR
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER / MA NO.700/MUM/2017 (ARISING OUT OF / / ITA NO.4885/MUM/2015, /ASSESSMENT YEAR-2011-12) SIDMARK SALES PVT.LTD. ATUR HOUSE, 87, DR.ANNIE BESANT RD. WORLI, MUMBAI-18. PAN:AAACS 8831 N VS. DCIT-14(3)(2) 455, AAYAKAR BHAVAN 4 TH FLOOR, M.K. MARG MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REV ENUE BY: SHRI V. JANARDHANAN SR. DR ASS ESSEE BY: SHRI SUBODH L. RATNAPARKHI-AR / DATE OF HEARING: 16.03.2018 / DATE OF PRONOUNCEMENT: 27.04.2018 /ORDER , - PER RAJENDRA A.M. - VIDE ITS APPLICATION,DATED 29/08/2017,THE ASSESSEE HAS STATED THAT THERE WERE CERTAIN MISTAKES IN THE ORDER OF THE TRIBUNAL,DATED 01/06/2017, THAT SAME WERE TO BE RECTIFIED AS PER THE PROVISIONS OF SECTION 254 (2) OF THE ACT, THAT THE AO HAD FILED AN APPEAL AGAINST THE ORDER OF THE FIRST APPELLATE AUTHORITY (FAA) WITH REGARD TO UNSECURED LOAN OF RS. 40 LAKHS BORROWED BY THE ASSESSEES, THAT WHILE DECIDING THE APPEAL TH E TRIBUNAL HAD OBSERVED THAT SOME DOCUMENTS WERE FURNISHED DURING THE APPELLATE PROCE EDINGS AND THAT THE FAA DID NOT CALL FOR REMAND REPORT, THAT THE OBSERVATION OF THE TRIBUNAL WAS NOT CORRECT, THAT NO NEW DOCUMENTS/EVIDENCES WERE FILED BEFORE THE FAA, THAT THERE WAS NO GROUND OF APPEAL ABOUT VIOLATION OF RULE 46 A OF THE RULES, THAT THE ASSES SEE HAD,IN THE PAPER BOOK,CERTIFIED THAT ALL THE PAPERS WERE FILED BEFORE THE AO,THAT THE FAA HA D NOT ENTERTAINED ANY NEW DOCUMENTS, THAT THE ORDER PASSED BY THE TRIBUNAL ON 01/06/2017 SHOULD BE RE-CALLED. 2. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) REITERATED THE SUBMISSIONS THAT ARE PART OF MISCELLANEOUS APPLICAT ION FILED BY THE ASSESSEE.THE DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT THERE WAS NO MISTAK E IN THE ORDER OF TRIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE COMPLETING ASSESSMENT,THE AO HAD FOUND THAT THE ASS ESSEE HAD OPTED UNSECURED LOAN OF RS. 40 LAKHS FROM LUMINOUS VENTURE PRIVATE LTD (LVPL),T HAT NO DETAILS WITH REGARD TO THE LOAN CREDITORS,SUCH AS THE ADDRESS,WAS PROVIDED IN THE A UDIT REPORT, THAT VIDE NOTICE U/S.142 (1) MA/700/M/17- SIDMARK SALES PVT. LTD. 2 DATED 30/07/2013 THE ASSESSEE WAS ASKED TO SUBMIT T HE DETAILS OF UNSECURED LOANS SHARE CAPITAL RAISED ETC. ALONG WITH THE CONFIRMATION IN RESPECT OF LOAN/SHARE CAPITAL/SHARE APPLICATION MONEY RECEIVED DURING THE YEAR, THAT AS PER THE AO THE ASSESSEE MERELY PROVIDED THE NAME, ADDRESS AND PAN OF THE LOAN CREDITORS, TH AT THE AO OBSERVED THAT NO DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY OF THE LOAN CRED ITORS,GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS/CAPACITY OF THE CREDITOR TO LEND T HE MONEY WAS FILED BY THE ASSESSEE COMPANY, THAT SUMMONS U/S.131 WAS ISSUED TO LVPL ON 17/02/2014, THAT THE SUMMONS COULD NOT BE SERVED ON THE ADDRESS GIVEN BY THE ASSESSEE, THAT THE SUMMONS WERE RETURNED BACK WITH THE REMARK LEFT, THAT VIDE HIS LETTER, DATED 18/0 2/2014, THE AO ASKED THE ASSESSEE TO FURNISH NEW ADDRESS OF THE CREDITOR AND TO PERSONALLY PRODU CE THE CREDITOR BEFORE HIM FOR VERIFICATION, THAT HE FURTHER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY LOAN ADVANCED BY THE ABOVE PARTY SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/ S.68 OF THE ACT, THAT THE ASSESSEE VIDE ITS LETTER DATED 28/02/2014 FURNISHED THE NEW ADDRESS O F THE CREDITOR ALONG WITH THE COPY OF THE BANK STATEMENT AND ITR- 5,THAT THE AO ISSUED FRESH SUMMONS TO THE CREDITOR FOR PERSONAL APPEARANCE,THAT AS PER THE AO LAST KNOWN ADDRESS OF THE CREDITOR NOR ANY DETAILS WERE FILED. ON VERIFICATION OF ITR 5, THE AO NOTED THAT THE C REDITOR HAD DECLARED TOTAL INCOME AT RS. NIL AND ALSO PAID NOMINAL TAX OF RS.7, 552/-. CONSIDER ING THESE FACTS,HE OBSERVED THAT CREDITWORTHINESS OF THE LOAN CREDITOR TO ADVANCE AL ONE OF RS. 40 LAKHS TO THE ASSESSEE HAD NOT BEEN ESTABLISHED. HE FURTHER OBSERVED THAT BANK STA TEMENT SUBMITTED PROVED THAT THE CREDITOR WAS HAVING VERY LOW BALANCES PRIOR TO ADVANCING OF LOAN, THAT THE PATTERN OF DEPOSIT AND WITHDRAWAL OF THE MONEY SHOWED THAT CREDITWORTHINES S WAS IN DOUBT. CONSIDERING THESE FACTS HE REQUIRED THE ASSESSEE TO PRODUCE THE CREDITOR FO R VERIFICATION. HE OBSERVED THAT ASSESSEE COMPANY HAD FAILED TO ESTABLISH THAT CREDITWORTHINE SS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION WITH NECESSARY SUFFICIENT DOCUMENTA RY EVIDENCES INCLUDING LEDGER CONFIRMATION, CAPITAL ACCOUNT, BALANCE SHEET, PROFI T AND LOSS ACCOUNT FOR THREE YEARS, THAT HAVING TEMPORARY BALANCE AND BANK ACCOUNT DID NOT A UTOMATICALLY LEAD TO THE DIFFERENCE THAT THE PERSON ADVANCING LOAN IS CREDITWORTHY. HE FURTH ER OBSERVED THAT BURDEN OF PROOF-TO ESTABLISH THE THREE FUNDAMENTAL TESTS LAID DOWN BY VARIOUS DECISIONS, AS PER THE PROVISIONS OF SECTION 68-WAS ON THE ASSESSEE. THE AO REFERRED TO CERTAIN CASE LAWS INCLUDING THE CASE OF SUMATI DAYAL (214 ITR 801) AND HELD THAT THE ASSESS EE HAD FAILED TO DISCHARGE ITS BURDEN OF ESTABLISHING THE CREDITWORTHINESS OF THE LOAN CREDI TOR. FINALLY,HE ADDED AN AMOUNT OF RS. 40 LAKHS TO THE INCOME OF THE ASSESSEE INVOKING THE PR OVISIONS OF SECTION 68 OF THE ACT.FROM THE ORDER OF THE AO,IT IS CLEAR THAT THE ASSESSEE HAD F ILED BANK STATEMENT AND THE COPY OF THE ITR- MA/700/M/17- SIDMARK SALES PVT. LTD. 3 5 DURING THE ASSESSMENT PROCEEDINGS. THE FAA IN HIS ORDER AT PARAGRAPH NUMBER 5.3, HAS OBSERVED AS UNDER; DURING APPELLATE PROCEEDINGS, THE APPELLANT HAD FI LED LOAN CONFIRMATION OF THE CREDITOR WHICH IS IN PAGE NUMBER 53 OF THE PAPER BOOK, LASER ACCOUNT OF LOAN CREDITOR IN PAGE 54, IN PAGE NUMBER 55 65 OF THE PAPER BOOK, BANK STATEME NT OF LOAN PARTY WITH HDFC BANK IN PAGE 66, BALANCE SHEET OF LUMINOUS VENTURE P LIMITE D IN PAGE 62, PRINTOUT OF WEBSITE OF MINISTRY OF CORPORATE AFFAIRS IN PAGE 60 TO 67 AND VERIFICATION LETTER FILED BY THE CHARTERED ACCOUNTANT WHILE ATTENDED FOR THE SUMMONS U/S.131 I N PAGE 68 AND 69 OF THE PAPER BOOK. ONCE WE EXAMINE THE TESTS LAID OUT FOR ACCEPTING TH E CASH CREDIT TO BE PROVED GENUINE, THE TESTS ARE IDENTITY OF THE CREDITOR, GENUINENESS OF THE CREDITOR AND CREDITWORTHINESS OF THE CREDITORS 4. WE FIND THAT THE ASSESSEE HAD NOT FILED AN APPLICAT ION U/S.154 OF THE ACT BEFORE THE AO OF FILING VARIOUS PAPERS, THAT FIND PLACE IN THE ORDER OF THE FAA. THE AO HAD GIVEN A CATEGORICAL FINDING OF FACT THAT THE ASSESSEE COMPANY HAD FAILE D TO ESTABLISH THAT CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION WIT H NECESSARY SUFFICIENT DOCUMENTARY EVIDENCES INCLUDING LEDGER CONFIRMATION, CAPITAL AC COUNT, BALANCE SHEET, PROFIT AND LOSS ACCOUNT FOR THREE YEARS. 4.1. IF THE ASSESSEE HAD FILED THE ALL THE DOCUMENTS AS REQUIRED BY THE AO, IT SHOULD HAVE FILED THE RECTIFICATION APPLICATION BEFORE HIM STATING TH AT FACTS NARRATED BY HIM,ABOUT PRODUCTION OF CERTAIN DOCUMENTS,WERE FACTUALLY INCORRECT.THE FAA HAS ALSO NOT DISCUSSED THE NON- PRODUCTION OF DOCUMENTARY EVIDENCES BEFORE THE AO. HE HAS SIMPLY STATED THAT CERTAIN DOCUMENTS WERE FILED DURING THE APPELLATE PROCEEDIN GS.WHEN THE AO HAD GIVEN A CATEGORICAL FINDING OF FACT ABOUT NON-PRODUCTION OF CERTAIN DOC UMENTS AND SUBMISSION OF ONLY A FEW DOCUMENTS, IT WAS DUTY OF THE FAA TO CLARIFY THE TH INGS BEFORE PASSING AN ORDER. 4.2. CONSIDERING THE ABOVE CIRCUMSTANCES,WE FOUND IT FIT TO RESTORE BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. HOWEVER, CONSIDE RING THE SUBMISSIONS MADE BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION WE WOULD LIKE THAT THE CONCLUDING PARAGRAPH OF OUR ORDER SHOULD BE READ AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE FOR US. WE FIND THAT THE AO HAD ISSUED SUMMONS TO THE CREDITOR ON T WO OCCASIONS, THAT IT DID NOT APPEAR BEFORE THE AO, THAT AS PER THE AO COPY OF ITR-5 AND BANK STATEMENT WERE PRODUCED BEFORE HIM, THAT DOCUMENTARY EVIDENCES LIKE LEDGER CONFIRM ATION, CAPITAL ACCOUNT, BALANCE SHEET, PROFIT AND LOSS ACCOUNT FOR THREE YEARS WERE NOT SU BMITTED DURING THE ASSESSMENT PROCCEDINGS,THAT THE ASSESSEE HAD NOT CHALLENGED TH E SAID FINDING OF FACTS GIVEN BY THE AO ABOUT FURNISHING OF CERTAIN DOCUMENTS ONLY,THAT THE FAA IN HIS ORDER AT PARAGRAPH 5.3 HAS MENTIONED THAT VARIOUS DOCUMENTS WERE FILED DURING THE APPELLATE PROCEEDINGS.WE ARE NOT CLEAR AS TO WHICH PAPERS WERE FILED BEFORE WHOM ESPECIALLY IN THE BACKGROUND OF THE CERTIFICATE ISSUED BY THE ASSESSEE IN THE PAPER BOO K.CONSIDERING THESE FACTS,WE ARE OF THE OPINION THAT MATTER NEEDS FURTHER VERIFICATION.SO,I N THE INTEREST OF JUSTICE,WE RESTORE BACK THE MA/700/M/17- SIDMARK SALES PVT. LTD. 4 MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATIO N.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.THE AO IS DI RECTED TO SUBMIT A REPORT TO THE FAA CLEARLY STATING THAT AS TO WHICH OF THE PAPERS MEN TIONED BY THE FAA IN HIS ORDER WERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS.HE IS AL SO DIRECTED TO OFFER COMMENTS ABOUT THE CERTIFICATE ISSUED BY THE ASSESSEE ALONG WITH THE P APER BOOK ABOUT PRODUCTION OF DOCUMENTS BEFORE THE DEPARTMENTAL AUTHORITIES. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. LAST PARAGRAPH OF THE ORDER IS MODIFIED ACCORDINGLY .AS THE FINAL RESULT,REMAINS SAME,SO,WE ARE OF THE OPINION THAT THE APPLICATION FILED BY TH E ASSESSEE DESERVES TO BE REJECTED. AS A RESULT,MA FILED BY THE ASS ESSEE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27.04.2018. SD/- SD/- ( / RAMLAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 27.04.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.