ACIT 25(3), MUMBAI v. SHAH & MODY DEVELOPERS, MUMBAI

ITA 248/MUM/2010 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 24819914 RSA 2010
Assessee PAN AANFS7217A
Bench Mumbai
Appeal Number ITA 248/MUM/2010
Duration Of Justice 1 year(s) 6 month(s) 11 day(s)
Appellant ACIT 25(3), MUMBAI
Respondent SHAH & MODY DEVELOPERS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 22-07-2011
Date Of Final Hearing 12-07-2011
Next Hearing Date 12-07-2011
Assessment Year 2006-2007
Appeal Filed On 11-01-2010
Judgment Text
1 ITA NO. 248/MUM/2010 (ASST YEAR 2006-07 ) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI PRAMOD KUMAR AM & SHRI VIJAY PAL RAO JM ITA NO. 248/MUM/2010 (ASST YEAR 2006-07 ) THE ASST COMMR OF INCOME TAX 25(3) MUMBAI VS SHAH & MODY DEVELOPERS 8 SAHYOG -3 RD FLOOR M G CROSS ROAD NO.3 KANDIVALI (W) MUMBAI 67 (APPELLANT) (RESPONDENT) PAN NO. AANFS7217A ASSESSEE BY SHRI KETAN PANCHMIA REVENUE BY HRI B JAYAKUAMR PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER 30.10.2009 OF THE CIT(A) FOR THE AY 2006-07. 2 THE REVENUE HAS RAISED THE FOLLOWING GROUND IN TH IS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER OF RS.3 48 51 460/- BEING CEASED LOAN LIABILITY OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT FURN ISH CONFIRMATIONS FROM THE LENDERS TO ESTABLISH THEIR IDENTITY AND CREDITWORTHI NESS SO AS TO PROVE THE GENUINENESS OF THE LOAN TRANSACTIONS AND IN THE ABS ENCE OF LOAN CONFIRMATIONS THE ASSESSEES LIABILITY TO REPAY THE SE LOANS REMAINED UNCERTAIN. 3 DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT AS PR THE BALANCE SHEET A SUM OF RS. 5 27 95 226/- WAS OUTST ANDING AS LIABILITY UNDER THE HEAD BILLS OF EXCHANGE REPRESENTING UNSECURED LOANS. THE ASSESSING OFFICER OBSERVED FROM THE PERUSAL OF LAST THREE YEARS BALANCE SHEETS AND P& L ACCOUNT THAT BILLS OF EXCHANGE ARE STATIC AND THERE IS NO TRANSACTION IN THE ACCOUNTS OF THE PARTIES AS THE OPENING AND CLOSING BALANCES ARE SAME YEAR AFTER YEAR. THE ASSESSEE ASKED TO 2 ITA NO. 248/MUM/2010 (ASST YEAR 2006-07 ) PRODUCE THE CONFIRMATION OR TO PRODUCE THE PERSONS FOR VERIFICATION OF THE IDENTITY CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIO NS. THE ASSESSEE PRODUCED CONFIRMATION IN RESPECT OF 79 PARTIES OUT OF MORE T HAN 100 PARTIES. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE FAILED TO P RODUCE THE CONFIRMATIONS FROM THE REMAINING PARTIES OR TO PRODUCE THE PERSONS FOR VER IFICATION OF THE IDENTITY CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS THU S THESE AMOUNTS COMES UNDER CEASED LIABILITY. ACCORDINGLY THE ASSESSING OFFI CER DISALLOWED A SUM OF RS.3 48 51 460/- BY INVOKING PROVISIONS OF SEC. 68 AS WELL AS SEC.41(1) OF THE I T ACT. 4 ON APPEAL THE CIT(A) DELETED THE ADDITION MADE B Y THE ASSESSING OFFICER ON THIS ACCOUNT. 5 BEFORE US THE LD DR HAS SUBMITTED THAT THE ASSES SEE FAILED TO ESTABLISH THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. MOREOVER WHEN THESE TRANSACTIONS ARE RELATED TO THE BILLS OF EXCH ANGE THEN IN THE ABSENCE OF NECESSARY DETAILS TO SHOW THAT THESE BILLS OF EXCH ANGE LIABILITIES ARE STILL ALIVE; THE ASSESSING OFFICER HAS RIGHTLY TREATED THE SAME AS CEASED LIABILITY. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 5.1 ON THE OTHER HAND THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT IT IS NOT DISPUTED BY THE ASSESSING OFFICER THAT THESE BALANC ES ARE NOT INTRODUCED IN THE YEAR UNDER CONSIDERATION BUT BROUGHT FORWARD FROM EARLIE R YEARS; THEREFORE PROVISIONS OF SEC. 68 CANNOT BE INVOKED WHEN THESE TRANSACTIONS O F LOANS TAKEN AGAINST BILLS OF EXCHANGE IN THE EARLIER YEARS AND NOT INTRODUCED DU RING THE YEAR UNDER CONSIDERATION. HE FURTHER CONTENDED THAT WHEN THE A SSESSEE IS SHOWING THESE 3 ITA NO. 248/MUM/2010 (ASST YEAR 2006-07 ) LIABILITIES IN THE BOOKS OF ACCOUNT AND THE BALANCE SHEET THEN THE PROVISIONS OF SEC. 41(1) CANNOT BE APPLIED. HE HAS SUPPORTED THE ORDER OF THE CIT(A). 6 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. IT IS NOT A SIMPLE CASE OF LOAN TAKEN BY THE ASSESSEE IN THE EARLIER YEARS AND THE SAME IS STANDING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THESE AMOUNTS REPRESENT BILLS OF EXCHANGE LIABILITY AND STANDING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR A LONG TIME. THE ASSESSING OFFICER CON CLUDED THAT THESE AMOUNTS COME UNDER CEASED LIABILITY AND ACCORDINGLY MADE THE ADD ITION THOUGH BY INVOKING THE PROVISIONS OF SEC. 68 AS WELL AS SEC. 41(1) OF THE I T ACT. THE CIT(A) HAS HELD THAT THE ADDITION MADE U/S 68 S INCORRECT AND AGAINST THE P ROVISIONS OF LAW AS THESE LOANS WERE TAKEN IN THE EARLIER YEARS. HE HAS FURTHER OBS ERVED THAT EVEN THOUGH THE BILLS OF EXCHANGE REPRESENT OLD UNSECURED LOAN THE APPELLANT FURNISHED CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER FROM 79 PARTIES AND ONL Y DUE TO INADEQUATE TIME GRANTED THE APPELLANT COULD NOT FILE THE BALANCE C ONFIRMATION LETTERS. AS IN ANY CASE NO ADDITION CAN BE MADE DURING THIS YEAR U/S 68 THE SAME IS DELETED. 7 IT IS TO BE NOTED THAT THE ASSESSEE CLAIMED IN TH E STATEMENT OF FACTS BEFORE THE CIT(A) THAT THESE AMOUNTS PERTAIN TO THE PERIOD 1994 TO 1998 AND DURING THE YEAR UNDER CONSIDERATION SIX NEW LOANS WERE ACCEPTED AM OUNTING TO RS. 3 95 000/-. THESE BILLS OF EXCHANGE ARE VERY OLD AND THE ASSESS EE COULD NOT FURNISH THE CONFIRMATION IN RESPECT OF THE REMAINING PARTIES DU E TO INADEQUATE TIME GRANTED BY THE ASSESSING OFFICER. WHEN THESE BILLS OF EXCHANG E PERTAINS TO1994 TO 1998 WHICH MEANS THESE AMOUNTS ARE RELATED TO THE BILLS OF EXC HANGE OF MORE THAN 16 YEARS IN SOME OF THE CASE AND MORE THAN 13 YEARS IN OTHER CA SES. THE ASSESSEE HAS NOT 4 ITA NO. 248/MUM/2010 (ASST YEAR 2006-07 ) FURNISHED THE DETAILS OF THESE BILLS OF EXCHANGE AS TO WHETHER THESE ARE SILL ENFORCEABLE AND PAYABLE BY THE ASSESSEE. ACCORDIN GLY IN THE INTEREST OF JUSTICE WE SET ASIDE THE ISSUE TO THE RECORD OF THE ASSESSI NG OFFICER FOR VERIFICATION AND EXAMINATION OF THE ISSUE AFRESH. THE ASSESSEE IS D IRECTED TO FURNISH THE RELEVANT DETAILS AND MATERIALS TO SHOW THAT THESE BILLS OF E XCHANGE ARE STILL ENFORCEABLE AND PAYABLE BY THE ASSESSEE AND ALSO TO FURNISH THE DET AILS OF REPAYMENTS OF THESE AMOUNT IF ANY BY THE ASSESSEE. NEEDLESS TO SAY THE ASSESSING OFFICER SHALL GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 8 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 22 ND DAY OF JULY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:22 ND JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI