SHREE DURGA ( CHEERS ) RESTAURANT & BAR, MUMBAI v. ITO 21(2)(4), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.7137/MUM/2010 (ASSESSMENT YEAR: 2007-08) SHREE DURGA (CHEERS) RESTAURANT & BAR KAMDAR SHOPPING CENTRE V.S. KHANDEKAR ROAD OPP. WESTERN RAILWAY STATION VILE PARLE (E) MUMBAI -400 057 ASSESSEE VS ITO-21(2)(4) BANDRA-KURLA COMPLEX BANDRA MUMBAI ....REVENUE PAN: ABFFS 7008 E ASSESSEE BY: SHRI B.P. PUROHIT REVENUE BY: SMT MALTHI R. SRIDHARAN O R D E R IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDE R OF THE LD. CIT (A)-XXXII MUMBAI DATED 24.8.2010 FOR THE A.Y. 2007- 08. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS BUT THE ONLY ISSUE IS WHETHER THE A.O. IS JUSTIFIED IN MAKING THE ADDITION OF ` 3 85 000/- U/S.68 OF THE ACT IN RESPECT OF 21 LOAN CREDITORS CLAIMED BY THE ASSESSE E AS NON-GENUINE AND NOT BONA FIDE . 2. THE FACTS RELEVANT TO THE ISSUE ARE AS UNDER. T HE ASSESSEE-FIRM IS RUNNING RESTAURANT AND BAR. THE ASSESSEE FILED THE RETURN OF INCOME FOR ITA 7137/M/2010 SHREE DURGA (CHEERS) RESTAURANT & BAR 2 THE A.Y. 2007-08 DECLARING THE TOTAL INCOME AT ` 5 108/-. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSES SMENT WAS COMPLETED U/S.143(3). THE ISSUE IN CONTROVERSY IS IN RESPECT OF THE ADDITION OF ` 3 85 000/- WHICH WAS MADE BY INVOKING THE PROVISIO NS OF SECTION 68 OF THE ACT. IT WAS NOTICED BY THE A.O. THAT THE ASSES SEE HAS SHOWN UNSECURED LOANS FROM 21 PARTIES AMOUNTING TO ` 2 85 000/-. THE A.O. ASKED THE ASSESSEE TO FURNISH CONFIRMATION LETTERS FROM THE LOAN CREDITORS AS WELL AS THE COPIES OF THERE BANK PASS-BOOKS. TH E ASSESSEE FILED THE LOAN CONFIRMATION BUT DID NOT PRODUCE ANY BANK STAT EMENT OF ANY LOAN CREDITORS. THE A.O. HAS NOTED THAT THE LOAN CONFIR MATIONS WERE WITHOUT ANY ADDRESS PAN NUMBERS OF ANY PERSON FROM WHOM TH E ASSESSEE HAS ALLEGEDLY TAKEN THE LOANS. MOREOVER ALL THE LOANS WERE BELOW ` 20 000/- AND CLAIMED TO HAVE BEEN RECEIVED IN CASH. THE A.O . SOUGHT THE DETAILS OF THE LOAN CREDITORS FROM WHOM THE LOANS WERE RECE IVED BY THE ASSESSEE. THE A.O. MADE THE ADDITION OF ` 3 85 000/- AS THE ASSESSEE COULD NOT EXPLAIN IN A PROPER WAY THE GENUINENESS OF THE SAI D LOANS. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS. NOW THE ASSESSEE IS IN APPEAL BEFORE ME. 3. I HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIE S AND PERUSED THE RECORD. THE LD. COUNSEL ARGUES THAT THOUGH THE LO AN CREDITORS ARE ILLITERATE PERSONS AND SMALL MEANS AND LEAVING IN S HADES AND CHAWALS AND WORKING AS WAITERS IN THE HOTELS. HE FURTHER S UBMITS THAT THOSE PERSONS HAD GIVEN THE SAID CASH TO THE ASSESSEE FOR THE SAFE CUSTODY OF THEIR SAVINGS AS THEY DID NOT HAVE ANY BANK ACCOUNT . HE FURTHER SUBMITS THAT IDENTITY OF THE LOAN CREDITORS WAS DI SCLOSED BY THE ASSESSEE AND AMOUNTS WERE SO SMALL THAT GENUINENESS OF THE S AME SHOULD NOT HAVE BEEN DOUBTED. PER CONTRA THE LD. D.R. SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. ITA 7137/M/2010 SHREE DURGA (CHEERS) RESTAURANT & BAR 3 4. I FIND THAT THE ASSESSEE FILED THE CONFIRMATION LETTERS BEFORE THE A.O. ADMITTEDLY THE LOAN AMOUNTS ARE SMALLER LIKE ` 15 000/- TO ` 18 000/-. THE ASSESSEE DID NOT FILE ANY AFFIDAVIT OF THE LOAN CREDITORS. THE LD. COUNSEL PLEADED THAT IF ONE MORE OPPORTUNIT Y IS GIVEN TO THE ASSESSEE THEN HE CAN FILE THE RELEVANT INFORMATION TO THE A.O. IN MY OPINION THE PRAYER OF THE ASSESSEE IS REASONABLE AS TRIBUNAL BEING THE LAST FACT FINDING AUTHORITY THE ASSESSEE WILL BE W ITHOUT ANY REMEDY IF PRAYER OF THE ASSESSEE IS NOT CONSIDERED. I ACCOR DINGLY RESTORE THE ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME DE NOVO CONSIDERING THE FACT THAT THE LOAN AMOUNTS ARE QUITE SMALLER. THE ASSESSEE I S ALSO DIRECTED TO FILE THE RELEVANT PROOF BEFORE THE A.O. GIVING THE PROPE R DETAILS OF THE LOAN CREDITORS. NEEDLESS TO SAY THE A.O. IS DIRECTED T O GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH FEBRUARY 2011. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 15TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 32 MUMBAI. 4) THE CIT CITY-21 MUMBAI. 5) THE D.R. SMC BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 7137/M/2010 SHREE DURGA (CHEERS) RESTAURANT & BAR 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 09.02.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 09.02.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER