ITO WD 3(2`), KALYAN v. MANOJ M. PATEL, NAVI MUMBAI

ITA 2006/MUM/2010 | 2006-2007
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 200619914 RSA 2010
Assessee PAN AMBPP2837K
Bench Mumbai
Appeal Number ITA 2006/MUM/2010
Duration Of Justice 11 month(s) 14 day(s)
Appellant ITO WD 3(2`), KALYAN
Respondent MANOJ M. PATEL, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 25-02-2011
Assessment Year 2006-2007
Appeal Filed On 12-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI P.M. JAGTAP AM AND SHRI N.V. VASUDEV AN JM I.T.A.NO. 2006/MUM/2010 ASSESSMENT YEAR : 2006-07 THE INCOME-TAX OFFICER WARD 3(1) 2 ND FLOOR RANI MANSION MURBAD ROAD KALYAN. VS. SHRI MANOJ J. PATEL 502 DAMODAR SHANTY PL.NO.10C & D SECTOR 20 KHARGHAR NAVI MUMBAI 410 210. PAN: AMBPP 2837 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : NONE O R D E R PER P.M. JAGTAP AM : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I THANE DATE D 30.11.2009 FOR THE ASSESSMENT YEAR 2006-07 WHEREBY HE DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 ON ACCOUNT OF LOAN AMOUNT RECEIVED BY THE ASSESSEE AS WELL AS CONSEQUENTIAL DISALLOWANCE MADE ON ACCOUNT OF INTEREST PAID ON THE SAID LOANS. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVID UAL WHO CARRIES ON THE BUSINESS AS A LABOUR CONTRACTOR. THE RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 19.10.2006 DECLA RING TOTAL INCOME OF RS.1 14 270/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER FROM THE BALANCE SHEET FILED ALON G WITH THE RETURN OF INCOME THAT THE ASSESSEE HAS INVESTED A SUM OF RS.12 65 000/- A S CAPITAL IN THE PARTNERSHIP FIRM OF CITIZEN HOMES. HE ALSO NOTICED THAT THE SA ID SUM WAS INVESTED BY THE ASSESSEE FROM THE FUNDS BORROWED IN THE FORM OF UNS ECURED LOANS. THE ASSESSEE THEREFORE WAS CALLED UPON BY THE ASSESSING OFFICER TO ESTABLISH THE IDENTITY AND ITA NO.2006/M/2010 SHRI MANOJ J. PATEL. 2 CAPACITY OF THE LENDERS AS WELL AS THE GENUINENESS OF THE LOAN TRANSACTION. IN REPLY THE ASSESSEE FILED CONFIRMATION LETTERS ISSUED BY T HE CONCERNED LOAN CREDITORS ALONG WITH DOCUMENTARY EVIDENCE IN THE FORM OF 7/12 EXTRA CT OF THEIR AGRICULTURAL LAND TO SHOW THEIR AGRICULTURAL ACTIVITIES. THE ASSESSING OFFICER HOWEVER FOUND THAT THE SAID EXTRACTS WERE PERTAINING TO THE YEAR 2007-08 A ND NOT TO THE YEAR UNDER CONSIDERATION. HE THEREFORE REQUIRED THE ASSESSEE TO PRODUCE THE CONCERNED LOAN CREDITORS ALONG WITH NECESSARY DOCUMENTARY EVIDENCE TO PROVE THEIR IDENTITY AS WELL AS CAPACITY TO GIVE THE LOANS IN QUESTION TO THE ASSESSEE. THE ASSESSEE HOWEVER DID NOT PRODUCE THE CONCERNED LOAN CREDITO RS OR THE DOCUMENTARY EVIDENCE TO ESTABLISH THEIR IDENTITY AND CAPACITY. THE ASSESSING OFFICER THEREFORE PROCEEDED TO TREAT THE UNSECURED LOAN OF RS. 12 00 000/- AS UNEXPLAINED CASH CREDITS AND THE SAID AMOUNT WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE ACT. INTEREST AMOUNTING TO RS. 79 66 9/- CLAIMED TO BE PAID ON THE SAID LOANS WAS ALSO DISALLOWED BY THE ASSESSING OFF ICER IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE HIS ORDER DATED 28.11.2008. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R U/S.143(3) AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CI T(A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT OUT OF THE TOTAL LOAN AMOUNT OF R S. 12 00 000/- LOAN OF RS. 1 00 000/- WAS RECEIVED BY THE ASSESSEE IN THE EARL IER YEARS AND NOT IN THE YEAR UNDER CONSIDERATION. AS REGARDS THE BALANCE LOAN A MOUNTING TO RS. 11 00 000/- TAKEN FROM FOUR PERSONS THE FOLLOWING SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(A) IN ORDER TO EXPL AIN THE RELEVANT CASH CREDIT TRANSACTIONS IN TERM OF SECTION 68: SMT. DAMYANTI J. PATEL SHE IS THE MOTHER OF THE APPELLANT. SHE OWNS 5.1 H ECTRE OF AGRICULTURAL LANDS. RS. 1 00 000/- IS THE LOAN ADVA NCED BY THIS PERSON TO THE APPELLANT DURING THE PERIOD RELEVANT TO THE AY UNDER CONSIDERATION. THE LOAN HAS BEEN ADVANCED BY WAY OF DD DRAWN ON ITA NO.2006/M/2010 SHRI MANOJ J. PATEL. 3 DENA BANK AND THE DD IS GIVEN ON 09/12/05. PRIOR TO THE DRAWING OF DD FROM THE ACCOUNT THERE ARE CASH DEPOSITS LIKE R S.50 000/- MADE ON 08/12/05 RS.40 000/- MADE ON 10/09/05 RS. 30 0 00/- MADE ON 08/08/05 AND RS. 1 00 000/- MADE ON 26/05/05. IT I S FURTHER SEEN FROM THE BANK ACCOUNT THAT SIMILAR CASH DEPOSITS A RE MADE IN THE PREVIOUS YEAS AS WELL. SHRI RATILAL PATEL THIS PERSON IS THE UNCLE OF THE APPELLANT. HE HAS ADVANCED A LOAN OF RS.2 00 000/- BY WAY OF DD. THIS PERSON IS A FARMER CULTIVATING 3.07 HECTRES OF AGRICULTURAL LAND. HE HAS NOT FILED RETURN OF INCOME. A PERUSAL OF THE BANK ACCOUNT INDICATES THAT THE FUND FOR THE DD(LOAN) HAS COME FROM TRANSFER OF FUNDS FROM SB A/C.NO.1152 . SHRI JAYANTIBHAI PATEL HE IS THE FATHER OF THE APPELLANT AND HE HAS ADVANC ED A LOAN OF RS.3 50 000/- BY WAY OF DD ON DENA BANK. THIS PERSO N OWNS 5.6 HECTRES OF AGRICULTURAL LANDS. THE SOURCE APPEARS T O HAVE COME FROM TRANSFER OF RS. 4 00 000/- FROM OTHER ACCOUNTS. SUB STANTIAL CASH DEPOSITS AND CHEQUE DEPOSITS ARE FOUND IN THIS ACCO UNT DURING THE PREVIOUS YEARS AS WELL. M/S. J.S. PATEL CONSTRUCTION CO . RS.4 50 000/- IS THE LOAN ADVANCED BY THIS FIRM BY WAY OF DD TO THE APPELLANT. RETURN IS FILED IN RESPECT OF THIS CASE AT IT OFFICE HIMMATNAGAR. THE SOURCE IS EXPLAINED TO BE TRANSFER OF FUNDS FROM OTHER ACCOUNTS. THERE ARE NO CASH DEPOSITS. THE BAN K ACCOUNT ALSO REFLECTS SUBSTANTIAL AMOUNT OF TRANSACTION IN THIS ACCOUNT. 4. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM THE LEARNED CIT(A) FOUND THAT THE LOAN OF RS. 1 00 000/- RECEIVED BY THE ASSESSEE IN THE EARLIER YEAR WAS OUTSIDE THE PURVIE W OF SECTION 68. HE THEREFORE HELD THAT THE SAID AMOUNT COULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S.68. HE ALSO HELD THAT OUT OF THE REMAINING LOA N OF RS. 11 000 000/- THE ASSESSEE HAS EXPLAINED SATISFACTORILY THE LOANS TAK EN FROM THREE PARTIES AGGREGATING TO RS. 10 00 000/- IN TERMS OF SECTION 68. THE REASONS GIVEN BY HIM TO COME TO THIS CONCLUSION IN PARAGRAPH NOS. 4.5 TO 4. 7 WERE AS UNDER: 4.5 AS REGARDS THE LOAN OF RS. 2 00 000/- OBTAI NED FROM SHRI RATILAL PATEL I TAKE THE VIEW THAT THIS IS A GENUINE LOAN AND THE SAID SHRI RATILAL PATEL HAS SUFFICIENT SOURCE. MOREOVER THERE ARE NO CASH DEPO SITS WHICH PRECEDE THE ISSUE OF DD AND THE SOURCE FOR THE DD HAS COME FROM TRANSFER ENTRIES. I ITA NO.2006/M/2010 SHRI MANOJ J. PATEL. 4 THEREFORE HOLD THAT THIS LOAN STANDS EXPLAINED. AC CORDINGLY I DIRECT THE AO TO DELETE THE ADDITION. 4.6 AS REGARDS THE LOAN OF RS. 3 50 000/- CLAIMED TO HA VE BEEN RECEIVED FROM SHRI JAYANTIBHAI PATEL I FOUND THAT HE IS THE FATHER OF THE APPELLANT AND HE HAS CULTIVATED 5.64 HECTRES OF LAN DS. I DO NOT FIND ANY CASH DEPOSITS PRECEDING ISSUE OF DD IN FAVOUR OF THE APP ELLANT. I FURTHER FIND THAT THE SOURCE FOR THE LOAN HAS FLOWN FROM OTHER ACCOUN T BY WAY OF TRANSFER. IN THE CIRCUMSTANCES I AM INCLINED TO HOLD THAT THE S OURCE FOR THE LOAN STANDS SATISFACTORILY EXPLAINED AND ACCORDINGLY I DIRECT THE A.O. TO DELETE THE ADDITION. 4.7 AS REGARDS THE LOAN OF RS. 4 50 000/- OBTAINED FR OM M/S. J.S. PATEL CONSTRUCTION CO. IT IS SUBMITTED THAT THIS C ONCERN IS ASSESSED TO TAX IN HIMATNAGAR AND THE SOURCE FOR THE DD HAS COME FROM TRANSFER FROM OTHER ACCOUNTS/ACCOUNT. THERE ARE NO CASH DEPOSITS FUND I N THE BANK ACCOUNT PRIOR TO ISSUE OF DD. I THEREFORE HOLD THIS IS A GENUI NE AND THE SAME STANDS EXPLAINED SATISFACTORILY. 5. THE LOAN AMOUNT OF RS. 1 00 000/- SHOWN TO BE RE CEIVED BY THE ASSESSEE FROM SMT. DAMAYANTI S. PATEL HOWEVER WAS FOUND TO BE NOT PROPERLY EXPLAINED ON BEHALF OF THE ASSESSEE BY THE LEARNED CIT(A) IN VIE W OF CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNT OF THE SAID LOAN CREDITOR AND THE ADDITION MADE BY THE ASSESSING OFFICER TREATING THE SAID LOAN AMOUNT AS UNEXPLAINED CASH CREDIT U/S.68 WAS CONFIRMED BY THE LEARNED CIT(A) OBSERVING THAT MERELY HOLDING OF AGRICULTURAL LAND WAS NOT CONCLUSIVE EVIDENCE TO ESTABLISH THE S OURCE OF INCOME FOR ADVANCING THE LOAN TO THE ASSESSEE. ACCORDINGLY THE ADDITION OF RS.12 00 000/- MADE BY THE ASSESSING OFFICER U/S.68 WAS CONFIRMED BY THE LEARN ED CIT(A) ONLY TO THE EXTENT OF RS. 1 00 000/- ALLOWING A RELIEF OF RS.11 00 000/- TO THE ASSESSEE. HE ALSO ALLOWED CONSEQUENTIAL RELIEF TO THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF T HE LEARNED CIT(A) THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US NOBODY HAS PUT IN APPEARANCE ON BEHALF OF THE ASSESSEE DESPITE THE FACT THAT NOTICE OF THE SAID HEARING SENT TO THE ASSESSEE BY R.P.A/D HAS BEEN DULY SERVED PROOF OF WHICH IS AVAILABLE ON RECORD. THIS APPEAL OF THE REVENUE IS THEREFORE BEING DIS POSED OF EX PARTE QUA THE ITA NO.2006/M/2010 SHRI MANOJ J. PATEL. 5 RESPONDENT-ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RELEVANT MATERIAL O N RECORD. 7. IT IS OBSERVED THAT EVEN THOUGH THE CONFIRMATION LETTERS ISSUED BY THE CONCERNED LOAN CREDITORS WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THE NECESSARY DOCUMENTARY EVIDENCE TO SUPPORT AND S UBSTANTIATE THEIR SOURCE OF INCOME FROM AGRICULTURE WAS NOT FILED. THE ONLY DOC UMENTARY EVIDENCE FILED IN THE FORM OF 7/12 EXTRACT WAS PERTAINING TO OTHER YEAR A ND NOT TO THE YEAR UNDER CONSIDERATION AND THE ASSESSING OFFICER THEREFORE COULD NOT ASCERTAIN THE CAPACITY OF THE CONCERNED LOAN CREDITORS TO ADVANCE THE AMOU NTS IN QUESTION TO THE ASSESSEE. IT APPEARS FROM THE ORDER OF THE LEARNED CIT(A) THAT SOME ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENTS OF THE CONC ERNED LOAN CREDITORS WAS FILED BY THE ASSESSEE AND RELYING ON THE SAID EVIDENCE FI LED FOR THE FIRST TIME BEFORE HIM THE LEARNED CIT(A) ALLOWED RELIEF TO THE ASSESSEE B Y DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 TO THE EXTENT OF RS. 1 1 00 000/- WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAID EVIDENCE. PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT(A) ALSO SHOWS THA T HE HAS DECIDED THE ISSUE RELATING TO THE CAPACITY OF THE CONCERNED LOAN CRED ITORS MAINLY ON THE BASIS THAT THE DEPOSITS IN THE ACCOUNT OF THE LOAN CREDITORS WERE MADE BY TRANSFER ENTRIES AND NOT BY CASH DEPOSITS WHICH IN OUR OPINION IS NOT CORRECT. WE THEREFORE DEEM IT FAIR AND PROPER AND IN THE INTEREST OF JUST ICE TO SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THE ISSUE UNDER CONS IDERATION AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DI RECTION A TO DECIDE THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE ADDITION AL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND AFTER AFFORDING SUFFI CIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.2006/M/2010 SHRI MANOJ J. PATEL. 6 8. IN THE RESULT THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY 2011. SD. SD. (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 25 TH FEBRUARY 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT.I THANE 4. THE CIT(A)-I THANE 5. THE DR G BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI