M/S. SUNIL K. MEHTA, v. THE ITO 21(2)(1),

ITA 1133/MUM/2005 | 2001-2002
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 113319914 RSA 2005
Assessee PAN AAQPM8336F
Bench Mumbai
Appeal Number ITA 1133/MUM/2005
Duration Of Justice 6 year(s) 15 day(s)
Appellant M/S. SUNIL K. MEHTA,
Respondent THE ITO 21(2)(1),
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2011
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 2001-2002
Appeal Filed On 10-02-2005
Judgment Text
1 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER I.T.A. NO. 1133/MUM/2005. ASSESSMENT YEAR : 2001-02. SUNIL K. MEHTA THE INCOME-TAX OFFICER PLOT NO. 95 FLAT NO.1 VS. 21(2)(1) MUMBAI. SHIV KAILASH SION (W) MUMBAI-22. PAN : AAQPM 8336F. APPELLANT. RESPONDENT. APPELLANT BY : SHRI M.M. SUBRAMANIAN. RESPONDENT BY : SHRI HARI GOVIND SINGH. O R D E R PER J. SUDHAKAR REDDY A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-XXI MUMBAI DATED 13-12-2004 FOR THE A SSESSMENT YEAR 2001-02. 2. FACTS IN BRIEF : THE ASSESSEE IS IN THE BUSINESS OF TRADING IN IRON & STEEL FERROUS AND NON FERROUS METALS UNDER THE NAME AND STYLE OF TRADE WELL. HE FILED HIS RETURN OF INCOME ON 31-10-2001 DECLARING A TOTAL INCOME OF R S.6 01 644/-. THE AO INTER ALIA MADE ADDITIONS ON ACCOUNT OF NEW LOANS LOANS TO S.R. INDUSTRIES ADDITION TO CAPITAL ACCOUNT ETC. AND ASSESSED THE INCOME AT RS .52 92 208/-. AGGRIEVED THE 2 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. ASSESSEE CARRIED THE MATTER IN APPEAL. THE CIT(APPE ALS) GRANTED PART RELIEF. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE AGAINS T : A) CONFIRMATION OF ADDITION OF NEW LOANS OF RS.24 48 0 30/-. B) CONFIRMATION OF ADDITION OF NEW LOANS OF RS.1 70 00 0/-. C) CONFIRMATION OF ADDITION OF LOANS IN S.R. INDUSTRIE S OF RS.5 LAKHS. D) CONSEQUENTIAL DISALLOWANCE ON INTEREST OF LOANS OF RS.1 56 382/-. E) CONFIRMATION OF ADDITION TO CAPITAL ACCOUNT. 3. THE ASSESSEE FILED AN APPLICATION UNDER RULE 29 OF THE ITAT RULES SEEKING ADMISSION OF ADDITIONAL EVIDENCES. THE MAIN PLEA OF THE ASSESSEE IS THAT THESE PAPERS COULD NOT BE PRODUCED BEFORE THE AO FOR THE REASON THAT THE ASSESSMENT WAS TAKEN UP AT THE FAG END OF THE TIME BARRING PERIOD AND THUS THE ASSESSEE WAS PREVENTED FROM REASONABLE CAUSE IN PRODUCING THESE EVIDENCES. HE SUBMITTED THAT THOUGH THE ASSESSEE RECEIVED NOTICE U/S 143(2) ON 4 -11-2002 THERE WAS NO ENQUIRY ON THE LOANS THE LOAN CONFIRMATION WERE FILED ON 3 0-11-2002 AND SUBMITTED THAT AFTER A LAPSE OF ONE YEAR THE CASE WAS TAKEN UP BY THE NEW INCUMBENT DCIT IN AUGUST 2002. THEREAFTER THERE WAS A LULL AND ONLY IN DECEMBER 2003 THE ASSESSMENT WAS TAKEN UP SERIOUSLY. MEANWHILE HE SUB MITTED THAT THE ASSESSEE SUFFERED CRISES IN ITS BUSINESS HAD TO VACATE HIS OFFICE PREMISES SALE OF THE COMPUTERS RETRENCH STAFF AND OPERATE THE BUSINESS FROM HIS RESIDENCE. HE SUBMITTED THAT HE WAS NOT IN A POSITION TO REGULARL Y SETTLE THE OVERDRAFT FACILITY TAKEN AGAINST HIS RESIDENTIAL FLAT AND UNDER THOSE CIRCUMSTANCES HE WAS NOT ABLE TO REPAY THE LOANS TAKEN THROUGH A FINANCIAL BROKER N AMELY M/S VINOD PRADEEP & CO. 12/14 RAVJI MANSION KHAJI SAYYED STREET MUMB AI 400 009. HE POINTED OUT THAT HE REQUESTED THE AO TO SUMMON THE ABOVE FI NANCIAL BROKER AND EXAMINE HIM ON OATH AS THAT ALL THE LOANS IN QUESTION WERE ARRANGED BY HIS FINANCE BROKER 3 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. AND THERE WERE TRACTIONS MADE BY WAY OF CROSS CHEQE S AND INTEREST HAS BEEN PAID AFTER MAKING TAX DEDUCTION AT SOURCE AND THAT PRINC IPAL AMOUNT WAS ALSO REPAID. WHEN THE MATTER CAME UP BEFORE THE CIT(APPEALS) NO OPPORTUNITY WAS GIVEN TO FILE DETAILS OF UNSECURED LOANS ALONG WITH CONFIRMA TION LETTERS AND THAT IN THOSE CIRCUMSTANCES THESE ADDITIONAL EVIDENCES HAVE BEEN FILED. HE TOOK THIS BENCH THROUGH THE PAPERS FILED BY WAY OF ADDITIONAL EVIDE NCES AND SUBMITTED THAT GRATE INJUSTICE WOULD BE CAUSED TO THE ASSESSEE IF THESE EVIDENCES ARE NOT ADMITTED. HE FURTHER POINTED OUT THAT IN THE CASE OF 15 LOAN CRE DITORS OPENING BALANCES WERE ADDED AND THAT BORROWINGS DID NOT ENTIRELY PERTAIN TO THE CURRENT YEAR. HE POINTED OUT THAT CONSEQUENTIAL INTEREST WAS ALSO NOT ALLOWE D. THESE SUBMISSIONS WERE MADE AS FAR AS GROUND NOS. 1 AND 2 ARE CONCERNED AND IT WAS PLEADED THAT THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE AO AFTER AD MITTING ADDITIONAL EVIDENCES FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 4. COMING TO GROUND NO. 3 MR. SUBRAMANIAN LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS TWO PROPRIETARY CON CERNS ONE IS TRADE WELL AND THE OTHER IS S.R. INDUSTRIES AND THE CIT(APPEALS) REFUSED TO ENTERTAIN RE- CONCILIATION STATEMENT AND PARTLY CONFIRMED THE ADD ITION. HE PLEADED THAT THE FRESH MATERIAL SHOULD HAVE BEEN ADMITTED BY THE CIT(APPEA LS) AND THE VALIDITY OF THE ADDITION SHOULD HAVE BEEN EXAMINED. HE PRAYED THAT THIS ISSUE MAY ALSO BE SET ASIDE. 5. COMING TO GROUND NO. 4 WHICH IS A DISALLOWANCE OF INTEREST HE SUBMITTED THAT THIS IS A CONSEQUENTIAL DISALLOWANCE. 6. ON THE LAST ISSUE OF ADDITION TO CAPITAL ACCOUNT HE SUBMITTED THAT THE ASSESSEE HAD A VALID CERTIFICATE ISSUED UNDER THE V DIS SCHEME AND IN THOSE CIRCUMSTANCES THE SALE CANNOT BE DOUBTED AS HELD BY THE HONBLE BOMBAY HIGH 4 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. COURT IN THE CASE REPORTED IN 26 DTR 23. ON A QUERY FROM THE BENCH HE SUBMITTED THAT AT PAGE 97 THE PURCHASER OF THE JEWELLERY HAS GIVEN A CONFIRMATION LETTER AND THE AO MAY BE DIRECTED TO VERIFY THE SAME. 7. MR. HARI GOVIND SINGH LEARNED DR OPPOSED THE A DMISSION OF THE ADDITIONAL EVIDENCES AND POINTED OUT THAT THE ASSESSEE HAS NOT AVAILED NUMEROUS OPPORTUNITY GIVEN TO HIM BY THE AO. HE SUBMITTED THAT THESE EVI DENCES SHOULD HAVE BEEN SUBMITTED AT LEAST BEFORE THE FIRST APPELLATE AUTHO RITY. HE RELIED ON THE ORDER OF THE AO AS WELL AS THE FIRST APPELLATE AUTHORITY. 8. ON THE ADDITION MADE TO CAPITAL ACCOUNT THE LEA RNED DR SUBMITTED THAT IT IS A FACTUAL ISSUE AS TO WHETHER THE ASSESSEE SOLD JEWEL LERY OR NOT AND THAT THE ASSESSEE HAS NOT FURNISHED CONFIRMATION FROM THE BUYER. 9. AFTER HEARING RIVAL CONTENTIONS PERUSING THE PA PERS ON RECORDS AND THE ORDERS OF THE AUTHORITIES BELOW WE ARE OF THE CONS IDERED OPINION THAT THE ADDITIONAL EVIDENCES HAS TO BE ADMITTED FOR THE REASON THAT IT GOES TO THE ROOT OF THE MATTER AND THE ASSESSEE IN OUR OPINION WAS PREVENTED FROM SU FFICIENT CAUSE IN FILING THESE EVIDENCES BEFORE THE AO. WE ALSO OBSERVE THAT IN TH E CASE OF 15 LOAN CREDITORS THE LOANS WERE GIVEN IN THE EARLIER YEARS OR IN THE SUB SEQUENT YEAR AND DESPITE THE CREDIT NOT BEING IN THE CURRENT YEAR AN ADDITION H AS BEEN MADE U/S 68 AND CONFIRMED BY THE CIT(APPEALS). UNDER THESE CIRCUMST ANCES WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE SET ASI DE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. WE ADMIT THE ADDITIONAL EVIDENCES AND DIRECT THE AO TO EXAMINE THE SAME. WE ALSO DIRECT THE AO TO SUMMON THE FINANCE B ROKER WHOSE ADDRESS THE CIT(APPEALS) HAS CLEARLY BROUGHT OUT AT PARA 3 PAGE 2 OF HIS ORDER THOUGH IN THE LATER PART OF HIS ORDER HE HAS WRONGLY STATED THAT THE ASSESSEE HAS FAILED TO GIVE THE ADDRESS OF THE FINANCE BROKER. 5 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. 10. THUS GROUND NOS 1 AND 2 AND 4 ARE SET ASIDE TO THE FILE OF THE AO. 11. COMING TO GROUND NO. 3 WHICH PERTAINS TO THE AD DITION ON LOAN OBTAINED FROM S.R. INDUSTRIES WE FIND THAT THE CIT(APPEALS) AT PARA 8 PAGE 5 HELD THAT THERE IS NO JUSTIFICATION IN THE ASSESSEE FILING ADDITION AL EVIDENCE. WE DO NOT AGREE WITH THESE FINDINGS IN VIEW OF THE FACTS AND CIRCUMSTANC ES WHILE DISPOSING OF GROUND NOS. 1 AND 2. THUS WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 12. COMING TO THE LAST ADDITION WE FIND THAT THE A SSESSEE HAS PRODUCED CONFIRMATION LETTER WHICH IS AT PAGE 97 OF THE ASSE SSEES PAPER BOOK. THE ISSUE IS A FACTUAL MATTER AND ALL THAT IS REQUIRED TO BE VERIF IED IS WHETHER THE ASSESSEE HAS SOLD THE SAID JEWELLDERY OR NOT. THE EXISTENCE OF THE JE WELLERY CANNOT BE DOUBTED IN VIEW OF THE SUBSISTING CERTIFICATE UNDER THE VDIS S CHEME. AS THIS FACTUAL VERIFICATION HAS TO BE DONE WE SET ASIDE THE MATTE R TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY 2011. SD/- SD/- (N.V. VASUDEVAN) (J. SUDH AKAR REDDY) JUDICIAL MEMBER. A CCOUNTANT MEMBER MUMBAI DATED: 25 TH FEBRUARY 2011. WAKODE 6 ITA NO.1133/MUM2005 ASSESSMENT YEAR:2001-02. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR B-BENCH (TRUE COPY) BY ORDER ASSTT. REGIST RAR ITAT MUMBAI.