M/s. Ajeet Construction Co., Mumbai v. Assessing Officer 30(2), Mumbai

ITA 5500/MUM/2004 | 1998-1999
Pronouncement Date: 25-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 550019914 RSA 2004
Bench Mumbai
Appeal Number ITA 5500/MUM/2004
Duration Of Justice 5 year(s) 7 month(s) 3 day(s)
Appellant M/s. Ajeet Construction Co., Mumbai
Respondent Assessing Officer 30(2), Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 25-02-2010
Date Of Final Hearing 22-12-2009
Next Hearing Date 22-12-2009
Assessment Year 1998-1999
Appeal Filed On 22-07-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI. BEFORE SHRI R.V.EASWAR SR.VP AND SHRI T.R. SOOD AM I.T.A. NO.5500/MUM/2004 (ASSESSMENT YEAR : 1998-99) M/S. AJEET CONSTRUCTION COMPANY 5 RUPAM SION CIRCLE MUMBAI-400 022. GIR:A.C. CIR.30(2)/92-A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIR.30(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. P.K.PARIDA & ANIL N.MISHRA RESPONDENT BY : MR.A.R.BAIWAR DR O R D E R PER R.V.EASWAR SENIOR VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 1998-99 RE LEVANT FOR THE PREVIOUS YEAR ENDED 31.03.1998. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN BUSINESS IN CERAMICS AN D SANITARY WARE. THOUGH SEVERAL GROUNDS ARE TAKEN BEFORE US T HE ONLY ISSUE RELATES TO THE ADDITION UNDER SECTION 68 OF T HE INCOME TAX ACT. 2. WHILE COMPLETING THE ASSESSMENT UNDER SECTION 14 3(3) OF THE ACT THE ASSESSING OFFICER ADDED RS.29 10 000/- BEING THE LOANS TAKEN BY THE ASSESSEE AND ALSO DISALLOWED THE INTEREST OF RS.73 012/- PAID ON THE LOANS. THE MAIN REASON FOR THE ADDITION WAS THAT THE ASSESSEE WAS NOT ABLE TO FURNISH CONFI RMATION LETTERS FROM THE CREDITORS. ON APPEAL THE CIT(A) S USTAINED AN ADDITION OF RS.19 80 000/- AS WELL AS THE DISALLOWA NCE OF INTEREST OF RS.49 431/-. BEFORE THE CIT(A) THE ASS ESSEE SOUGHT TO FURNISH CERTAIN CONFIRMATION LETTERS. THE CIT(A) WOULD APPEAR TO HAVE CONSIDERED THIS AS ADDITIONAL EVIDENCE AND IN ACCORDANCE WITH RULE 46A OF INCOME TAX RULES CALLE D FOR THE ITA NO.5500/MUM/04 2 COMMENTS OF THE ASSESSING OFFICER. THE ASSESSING OF FICER SUBMITTED HIS REPORT STATING THAT OUT OF THE 38 CON FIRMATIONS FILED BY THE ASSESSEE SUMMONS WERE ISSUED TO ALL O F THEM OUT OF WHICH 9 SUMMONS RETURNED UNSERVED 14 CREDITORS DID NOT REPLY THOUGH SERVED AND 15 CREDITORS SUBMITTED THEIR REPL Y. THE REMAND REPORT WAS PLACED BEFORE THE ASSESSEE FOR CO MMENTS. THE ASSESSEE SUBMITTED THAT ALL THE LOANS EXCEPT ON E WERE PROCURED THROUGH BROKERS AND THAT THESE BROKERS HAD CONFIRMED BY MEANS OF BROKERS SLIPS AND THEREFORE THERE WAS N O JUSTIFICATION FOR THE ADDITION. THE CIT(A) ON CONS IDERATION OF THE ASSESSEES SUBMISSIONS AND THE REPORT OF THE ASSESS ING OFFICER NOTED THAT OUT OF 50 TRANSACTIONS THE ASSESSEE WAS ABLE TO FURNISH CONFIRMATIONS LETTERS ONLY FROM 38 PARTIES. HE DIVIDED THE LOANS INTO THREE CATEGORIES - RS.7 70 000/- I N RESPECT OF WHICH NO CONFIRMATION LETTERS WERE FILED BUT ONLY B ROKERS SLIPS WERE FILED RS.4 20 000/- FROM 8 PARTIES IN RESPECT OF WHICH CONFIRMATION AS WELL AS BROKERS SLIPS WERE FILED AN D RS.7 90 000/- FROM 14 PARTIES IN RESPECT OF WHICH S UMMONS WERE SERVED BUT NO REPLY WAS RECEIVED. THE AGGREGA TE OF THESE WERE CAME TO RS.19 80 000/- AND THE CORRESPONDING I NTEREST CAME TO RS.49 431/-. THESE WERE CONFIRMED AND THE L OANS AGGREGATING TO RS.9 30 000/- ON WHICH INTEREST OF R S.23 581/- WAS PAID WERE DELETED. 3. THE REVENUE APPEARS TO HAVE ACCEPTED THE DECISIO N OF THE CIT(A). THE ASSESSEE IS HOWEVER AGGRIEVED AND HAS COME IN APPEAL BEFORE THE TRIBUNAL QUESTIONING THE ADDITION OF RS.19 80 000/- AND DISALLOWANCE OF INTEREST OF RS.4 9 431/-. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT IN RESPECT OF ALL THE PARTIES FROM WHOM THE ASSESSEE H AD TAKEN LOANS CONFIRMATION LETTERS WERE FILED BEFORE THE A SSESSING OFFICER UNDER A COVER OF LETTER DATED 21 ST JANUARY 2004 A COPY OF WHICH IS AT PAGES 30 TO 33 OF THE PAPER BOOK AND SUBMITTED ITA NO.5500/MUM/04 3 THAT SINCE THE LOANS WERE ALL CONFIRMED THE ADDITI ON WAS NOT JUSTIFIED. HE ALSO POINTED OUT THAT THE ASSESSEE FI LED BROKERS SLIPS BEFORE THE CIT(A) WHICH SHOULD BE SUFFICIENT CONFIRMATION ESPECIALLY NONE OF THE BROKERS HAS BEEN EXAMINED BY THE ASSESSING OFFICER OR THE CIT(A). THIRDLY IT IS SUB MITTED THAT ALL THE LOANS WERE TAKEN BY ACCOUNT PAYEE CHEQUES AND W ERE ALSO REPAID IN THE SAME MANNER. IT IS FINALLY SUBMITTED THAT ONLY FOUR PARTIES REMAINED UNPAID THAT TOO BECAUSE OF DISPUTE S AND THEY HAVE ALSO TAKEN STEPS AGAINST THE ASSESSEE TO RECOV ER THE LOANS AS HAS BEEN POINTED OUT IN THE LETTER WRITTEN TO TH E ASSESSING OFFICER. IT IS THUS CONTENDED THAT ALL THE CREDITOR S WERE IDENTIFIABLE THAT THEY WERE ALSO CREDITWORTHY AND THE TRANSACTIONS WERE ALSO PROVED TO BE GENUINE. ACCORD INGLY IT IS PRAYED THAT THE CIT(A) SHOULD HAVE DELETED THE ADDI TION OF RS.19 80 000/- AND THE CONSEQUENTIAL INTEREST. 4. ON BEHALF OF THE DEPARTMENT IT HAS BEEN POINTED OUT THAT THERE WAS NO CONFIRMATION FROM 13 PARTIES WHO HAD A DVANCED AN AGGREGATE OF RS.7 70 000/- TO THE ASSESSEE THAT IN RESPECT OF 8 PARTIES FROM WHOM LOANS AGGREGATING TO RS.4 20 000/ - WERE TAKEN ONLY BROKERS SLIPS WERE FILED WHICH CANNOT A MOUNT TO CONFIRMATION AND IN RESPECT OF THE 14 PARTIES FROM WHOM THE ASSESSEE HAD TAKEN AN AGGREGATE LOAN OF RS.7 90 000 /- THERE IS NO PROOF OF CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS THOUGH IT CAN BE SAID THAT THE ID ENTITY OF THE CREDITORS HAS BEEN PROVED BECAUSE OF THE CONFIRMATI ONS. IT IS FURTHER CONTENDED BY THE DEPARTMENT THAT THE CONFIR MATIONS ONLY PROVE THE IDENTITY BUT NOT THE CREDITWORTHINES S OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACTIONS AN D THAT THE MERE FACT THAT THE LOANS WERE TAKEN AND REPAID THRO UGH ACCOUNT PAYEE CHEQUES DOES NOT NECESSARILY ESTABLISH THEIR GENUINENESS. AS REGARDS THE CLAIM THAT ALL THE LOANS EXCEPT FOUR HAVE BEEN REPAID BY THE ASSESSEE IT IS CONTENDED THAT THE GE NUINENESS OF THE REPAYMENT IS ALSO A MATTER TO BE EXAMINED AND N OT TAKEN TO ITA NO.5500/MUM/04 4 BE CORRECT. FOR THESE REASONS IT WAS PRAYED BY THE DEPARTMENT THAT THE ASSESSEE WAS NOT ENTITLED TO ANY RELIEF. 5. ON A CAREFUL CONSIDERATION OF THE RIVAL SUBMISSI ONS IT SEEMS TO US THAT THE ENTIRE ADDITION HAS NOT BEEN S USTAINED ON STRONG GROUNDS. IT IS TRUE THAT WHEN THE ASSESSMEN T WAS FINALISED ON 28.03.2001 THE ASSESSEE HAD NOT SUBMI TTED ANY CONFIRMATION LETTER FROM THE CREDITORS BECAUSE OF W HICH THE ASSESSING OFFICER MADE AN ADDITION OF RS.29 10 000/ - AND ALSO DISALLOWED INTEREST OF RS.73 012/-. A PERUSAL OF TH E ASSESSMENT ORDER SHOWS THAT THERE IS NO OTHER DISCUSSION THERE IN EXCEPT TO POINT OUT THAT THE ASSESSEE DID NOT DISCHARGE THE P RIMARY ONUS OF FILING CONFIRMATION LETTERS. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A) THE ASSESSEE WOULD APPEAR TO HAVE ADDUCED ADDITIONAL EVIDENCE IN THE FORM OF BROKERS SLIPS AND IT WAS TO VERIFY THIS THE CIT(A) HAD DIRECTED THE ASS ESSING OFFICER TO SUBMIT A REMAND REPORT. IN THE COURSE OF REMAND PROCEEDINGS THE ASSESSEE SUBMITTED 38 CONFIRMATION S LETTERS FROM THE CREDITORS VIDE LETTER DATED 21 ST JANUARY 2004 ALREADY REFERRED TO BY US. THE ASSESSING OFFICER WANTED TO VERIFY THE CREDITORS AND THEREFORE ISSUED SUMMONS UNDER SECTI ON 131 OF THE ACT. NINE OF THEM RETURNED UNSERVED. OUT OF THE 29 SUMMONS SERVED 14 PARTIES DID NOT SUBMIT ANY REPLY . THE BALANCE OF 15 PARTIES SUBMITTED THEIR REPLY. THE PO SITION WAS THAT OUT OF THE TOTAL CREDITS FROM 50 PARTIES THER E WAS NO CONFIRMATION FROM 13 PARTIES FROM WHOM THE ASSESSEE TOOK AN AGGREGATE OF RS.7 70 000/- AS LOAN AND PAID INTERES T OF RS.22 703/-. THE ASSESSEE WAS ONLY ABLE TO FURNISH THE BROKERS SLIPS. THESE 13 PARTIES INCLUDED 4 PARTIES WHO HAD TAKEN LEGAL PROCEEDINGS AGAINST THE ASSESSEE FOR RECOVERY OF TH E LOAN. THEY ARE NAND KISHORE NEELAM A.BIJLANI NEETA A.AHUJA A ND PRAMOUNT ENTERPRISES. THE CIT(A) HAS NOT DISPUTED T HE FACT THAT THESE FOUR PERSONS HAVE TAKEN LEGAL PROCEEDINGS AGA INST THE ITA NO.5500/MUM/04 5 ASSESSEE FOR RECOVERY OF THE AMOUNT. THIS ITSELF SH OWS THAT THE LOANS FROM THESE PERSONS WERE GENUINE. THEREFORE O UT OF THE AGGREGATE OF RS.7 70 000/- RECEIVED FROM 13 PARTIES AS PER ANNEXURE-I TO THE ORDER OF THE CIT(A) THE LOANS T AKEN FROM THE AFORESAID FOUR PARTIES AGGREGATING TO RS.2 50 000/- CANNOT BE ADDED. THEY ARE DELETED AS WELL AS THE DISALLOWANCE OF THE INTEREST PAID TO THEM. AS REGARDS THE BALANCE OF NINE PERSONS IN THE LIST THE ASSESSEE COULD NOT OBTAIN LOAN CON FIRMATION FROM BOMBAY BARODA ROADWAYS (RS.50 000/-) BOMBAY SILK INDUSTRIES (RS.1 00 000/-) JYOTI TEXTILES (RS.50 000/-) SANJIV THAKUR (RS.20 000/-) ISHU K.NASTA (RS.50 000/-) AN D VINAY K.NASTA (RS.50 000/-). THE ASSESSEE HAS STATED THA T NO CONFIRMATION COULD BE OBTAINED FROM THESE PARTIES I N ITS LETTER DATED 21.01.2004 FILED BEFORE THE ASSESSING OFFICER . WE THEREFORE SUSTAIN THE ADDITION OF THESE LOANS WHICH AMOUNTS TO RS.3 20 000/- AND THE CONSEQUENTIAL INTEREST. IN TH E CASE OF B.J. INTERNATIONAL (RS.50 000/-) THE ASSESSEE HAS FURNI SHED THE CONFIRMATION LETTER. SO ALSO IN THE CASE OF ROMA AH UJA (RS.50 000/-) THE ASSESSEE HAS FILED CONFIRMATION LETTER. THESE TWO ADDITIONS ARE THEREFORE DELETED. THERE IS NO M ENTION OF LAKSHMI GANSHANI FROM WHOM LOAN OF RS.1 00 000/- WA S TAKEN IN THE ASSESSEES LETTER DATED 21.01.2004. THE CIT( A) HAS THEREFORE RIGHTLY ADDED THIS AMOUNT. ULTIMATELY FR OM THE ADDITION OF RS.7 70 000/- SUSTAINED BY THE CIT(A) A S PER ANNEXURE I WE DELETE THE AGGREGATE ADDITION OF RS. 3 50 000/- AND THE CONSEQUENTIAL INTEREST. 6. COMING NOW TO ANNEXURE-II TO THE ORDER OF THE CI T(A) WHICH GIVES A LIST OF LOANS AGGREGATING TO RS.4 20 000/- SUSTAINED BY HIM THESE ARE PARTIES FROM WHOM THE A SSESSEE WAS ABLE TO OBTAIN CONFIRMATION AND SUBMIT BEFORE T HE ASSESSING OFFICER IN THE COURSE OF THE REMAND PROCE EDINGS. THE CIT(A) HIMSELF HAS STATED THAT THE ASSESSEE HAS FIL ED THE BROKER ITA NO.5500/MUM/04 6 SLIPS IN SOME OF THE CASES. ANNEXURE-II CONTAINS TH E NAMES OF 8 PARTIES TO WHOM THE SUMMONS WERE ISSUED BY THE ASSE SSING OFFICER BUT THEY WERE RETURNED UNSERVED. IT SHOUL D BE REMEMBERED THAT THE LOANS WERE TAKEN FROM THE ABOVE PARTIES DURING THE YEAR ENDED 31.03.1998 AND IT IS QUITE PO SSIBLE THAT WHEN THE SUMMONS WERE ISSUED IN FEBRUARY 2004 THE Y MIGHT HAVE SHIFTED THEIR ADDRESSES AND THEREFORE THE SUMM ONS COULD NOT BE SERVED. HAVING REGARD TO THE FACT THAT CONFI RMATION LETTERS WERE FILED BY THE ASSESSEE ALONG WITH THE COPIES OF BROKERS SLIPS AND ALSO TAKING NOTE OF THE FACT THAT THE LOANS WER E TAKEN AND REPAID BY CHEQUES WE ARE OF THE VIEW THAT THE ADDI TION OF RS.4 20 000/- AND THE INTEREST OF RS.7 769/- REQUIR E TO BE DELETED. WE HOLD ACCORDINGLY. 7. COMING NOW TO ANNEXURE-III TO THE ORDER OF THE C IT(A) WHICH CONSISTS OF NAMES OF 14 PARTIES FROM WHOM THE ASSESSEE TOOK LOANS AGGREGATING TO RS.7 90 000/- ON WHICH IN TEREST OF RS.18 959/- WAS PAID THESE ARE NAMES OF THE PARTIE S TO WHOM SUMMONS WERE ISSUED ON THE BASIS OF THE CONFIRMATIO N LETTERS FILED BEFORE THE ASSESSING OFFICER DURING THE REMAN D PROCEEDINGS THEY WERE ALSO SERVED ON THEM BUT FRO M WHOM NO REPLY WAS RECEIVED. THE CIT(A) HAS STATED THAT THE BROKERS SLIPS WERE ALSO FILED IN SOME OF THESE CASES. IF SUMMONS WERE SERVED THE ASSESSEE CANNOT BE FAULTED IF THE CREDITORS DI D NOT TURN UP BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE SUM MONS. TAKING NOTE OF THE FACT THAT THE RECEIPT AND REPAYM ENT OF THE LOANS WERE THROUGH ACCOUNT PAYEE CHEQUES AND THE L OANS WERE ALSO CONFIRMED AND THE BROKERS SLIPS WERE ALSO FIL ED IN SOME OF THESE CASES WE ARE OF THE VIEW THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.7 90 000/- AND THE CONSEQUENTIAL INTEREST OF RS.18 959/-. WE DELETE T HEM. ITA NO.5500/MUM/04 7 8. IN THE RESULT THE ADDITION OF RS.4 20 000/- AND THE CONSEQUENTIAL INTEREST OF RS.2 960/- ARE SUSTAINED AS FOLLOWS:- S.NO. NAME OF THE PARTY LOAN AMT. RS. INTEREST AMT. RS. 1. BOMBAY BARODA ROADWAYS 50 000/ - NIL 2. BOMBAY SILK INDUSTRIES 1 00 000/ - NIL 3. JYOTI TEXTILES 50 000/ - 2 960/ - 4. SANJIV THAKUR 20 000/ - NIL 5. ISHU K.NASTA 50 000/ - NIL 6. LAKSHMI GANSHANI 1 00 000/ - NIL 7. VINAY K.NASTA 50 000/ - NIL T O T A L RS.4 20 000/ - RS.2 960/ - 9. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWE D IN PART. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- ( T.R. SOOD) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI DATED 25 TH FEBRUARY 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CITY-XXI MUMBAI. 4. THE CIT(A)-XXI MUMBAI 5. THE DR C BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR I.T.A.T MUMBAI