ITO 19(1)(3), MUMBAI v. DOLSON JEWELS, MUMBAI

ITA 8558/MUM/2010 | 2006-2007
Pronouncement Date: 31-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 855819914 RSA 2010
Assessee PAN AADFD4312K
Bench Mumbai
Appeal Number ITA 8558/MUM/2010
Duration Of Justice 2 year(s) 7 month(s) 22 day(s)
Appellant ITO 19(1)(3), MUMBAI
Respondent DOLSON JEWELS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 31-07-2013
Date Of Final Hearing 30-07-2013
Next Hearing Date 30-07-2013
Assessment Year 2006-2007
Appeal Filed On 09-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI .. ! ' # $ ' % BEFORE SHRI R.S.SYAL AM AND SHRI VIVEK VARMA JM ITA NO.8755/MUM/2010 : ASST.YEAR 2006-2007 M/S.DOLSUN JEWELS 36 TURNER ROAD BANDRA (WEST) MUMBAI 400 050. PAN :AADFD4312K THE INCOME TAX OFFICER WARD 19(1)(3) MUMBAI. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) ITA NO.8558/MUM/2010 : ASST.YEAR 2006-2007 THE INCOME TAX OFFICER WARD 19(1)(3) MUMBAI. M/S.DOLSUN JEWELS 36 TURNER ROAD BANDRA (WEST) MUMBAI 400 050. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) - -- - . . . . / REVENUE BY : SHRI KISHAN VYAS $) /0 $) /0 $) /0 $) /0 - . - . - . - . / ASSESSEE BY : DR.K.SHIVARAM ) - 0! / / / / DATE OF HEARING : 30.07.2013 123 - 0! / DATE OF PRONOUNCEMENT : 31.07.2013 ' 4 ' 4 ' 4 ' 4 / / / / O R D E R PER R.S.SYAL (AM) : THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND T HE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 15.09.2010 IN RELATION TO T HE ASSESSMENT YEAR 2006-2007. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN ITS AP PEAL IS AGAINST THE CONFIRMATION OF ADDITION OF ` 3 50 000 U/S 68 OF THE INCOME-TAX ACT 1961 (HEREINAFTER CALLED `THE ACT). BRIEFLY S TATED THE FACTS OF THIS ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 2 GROUND ARE THAT THE ASSESSEE RECEIVED UNSECURED LOA N INTER ALIA OF ` 3 50 000 FROM U.S.CHAWLA HUF. ON BEING CALLED UPON TO FURNISH EVIDENCE ABOUT THE GENUINENESS OF THE TRANSACTIONS THE ASSESSEE PLACED ON RECORD CERTAIN DETAILS OF U.S.CHAWLA HUF SUCH AS RETURN OF INCOME BANK STATEMENT . THE ASSESSING OFFICER O BSERVED THAT THE CREDITOR HAS A MEAGER INCOME OF ` 1 48 080 FROM COMMISSION AND IT WAS NOT POSSIBLE TO ADVANCE LOAN OF ` 3 50 000 TO THE ASSESSEE. IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT U.S.CHAWLA HUF RECEIVED REPAYMENT OF LOAN OF ` 2 50 000 FROM AMRIT CHAWLA ON 28.10.2005 AND THE SAME AMOUNT WAS TRANSFERRED TO THE ASSESSEE ON 29.10.2005. SIMILARLY U.S.CHAWLA HUF RECEIVED AN AMOUNT OF ` 1 08 242 FROM MONARCH AS COMMISSION AND ON THE SAME DAY A SUM OF ` 1 00 000 WAS TRANSFERRED AS LOAN TO THE ASSESSEE. NOT CONVINCED WITH THE ASSESSEES CONTENTIONS THE A.O. MADE ADDITION OF ` 3 50 000 U/S 68 OF THE ACT. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ADDITION OF ` 3 50 000 HAS BEEN MADE BY THE AUTHORITIES BELOW ON THE PREMISE THAT U .S.CHAWLA HUF HAD A MEAGER INCOME OF ` 1.42 LAKH AND HENCE THERE WAS NO POSSIBILITY OF ADVANCING LOAN OF ` 3 50 000 TO THE ASSESSEE. ON THE CONTRARY IT IS SEEN THAT THE SOURCE OF ` 2 50 000 LOAN ADVANCED TO THE ASSESSEE IS RECEIPT OF LOAN FROM AMRIT CHAWLA ON 28 .10.2005. IT IS FURTHER RELEVANT TO NOTE THAT U.S.CHAWLA HUF FILED ITS RETURN OF INCOME WITHIN THE TIME AVAILABLE U/S 139(1) DISCLOS ING THESE TRANSACTIONS. NO MATERIAL HAS BEEN BROUGHT ON RECO RD BY THE LD. DR ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 3 TO INDICATE THAT TRANSACTIONS DECLARED WERE NOT ACC EPTED BY THE REVENUE. HAVING ACCEPTED THE RETURN OF U.S.CHAWLA HUF FOR THIS YEAR AND EARLIER YEARS IN WHICH SUCH LOAN WAS ADVAN CED AND THE REPAYMENT WAS RECEIVED IN THE CURRENT YEAR WE FAIL TO UNDERSTAND AS TO HOW THE SOURCE OF THE SAID MONEY CAN BE DISPUTED . IT HAS NEVER BEEN THE CASE OF THE ASSESSEE THAT U.S.CHAWLA HUF D EPOSITED THE AMOUNT WITH IT OUT OF CURRENT INCOME. THERE IS NO BAR IN ADVANCING LOAN OUT OF OTHER AMOUNTS LEGALLY AVAILABLE. AS RE GARDS THE REMAINING AMOUNT OF ` 1 00 000 IT IS SEEN THAT U.S.CHAWLA HUF RECEIVED A N AMOUNT OF ` 1.08 LAKH FROM MONARCH AS COMMISSION WHICH WAS OFFERED FOR TAXATION. IT IS FROM SUCH AMOUNT THAT T HE LOAN OF ` 1 LAKH WAS ADVANCED TO THE ASSESSEE. IN OUR CONSIDERED OP INION THE ASSESSEE HAS FULLY DISCHARGED THE ONUS CAST UPON IT TO PROVE THE GENUINENESS OF THE LOAN TRANSACTION OF ` 3.50 LAKH FROM U.S.CHAWLA HUF. THE IMPUGNED ORDER ON THIS ISSUE IS OVERTURNED AND THE ASSESSEES CONTENTION IS ACCEPTED. 4. FIRST GROUND OF THE REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF ` 15 15 000 ON ACCOUNT OF ADVANCES APPEARING IN THE BALANCE SHEET. THE FACTS APROPOS THIS GROUND ARE TH AT THE ASSESSEE CLAIMED ADVANCES RECEIVED FROM THREE PARTIES AS UND ER:- (I) K.CHADHA ` 4 00 000 (II) RAHUL GUPTA ` 10 00 000 (III) RENU ` 1 15 000 -------------- ` 15 15 000 ======== ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 4 5. IT WAS CLAIMED THAT THE ADVANCES RECEIVED DURING THE YEAR UNDER CONSIDERATION WERE SETTLED BY WAY OF SUPPLY OF GOOD S IN THE SUBSEQUENT YEAR. THE ASSESSEE FILED COPIES OF BILLS ISSUED TO THESE THREE PARTIES AGAINST THEIR RESPECTIVE ADVANCES. TH E ASSESSING OFFICER NOTICED FROM THE PERUSAL OF THESE BILLS THAT THERE WAS NO MENTION OF CARATS OF THE JEWELLERY SOLD IN RESPECT OF SALES MA DE TO K.CHADHA AND RENU WHEREAS IN THE CASE OF JEWELLERY SOLD TO RAHU L GUPTA THERE WAS NO MENTION OF THE WEIGHT. HE THEREFORE HELD THAT THE BILLS DID NOT APPEAR TO BE GENUINE. RESULTANTLY SECTION 68 WAS IN VOKED AND THE ADDITION OF ` 15.15 LAKH WAS MADE. THE LEARNED CIT(A) DELETED THE SAID ADDITION. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT THE AS SESSEE RECEIVED ADVANCES OF ` 15.15 LAKH FROM THE ABOVE REFERRED THREE PERSONS DU RING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION. SUCH ADVANCES WERE RECEIVED AGAINST THE GOODS TO BE SOLD IN THE SUBSEQUENT YEAR FOR WHICH THE COPIES OF ACTUAL BILL S WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER. WE FAIL TO A PPRECIATE AS TO HOW THE AMOUNT OF ADVANCES CAN BE TAXED IN THE YEAR UNDER CONSIDERATION WHEN THE EQUAL AMOUNT OF SALE EFFECTE D BY THE ASSESSEE IN THE SUBSEQUENT YEAR HAS BEEN ACCEPTED. IF THE AM OUNT OF ADVANCE IS TAXED IN THIS YEAR AND THE SALES ARE TAKEN AS RECEI PT IN THE SUBSEQUENT YEAR IT WOULD AMOUNT TO DOUBLE TAXATION OF INCOME. APART FROM THAT IT IS RELEVANT TO NOTE THAT THE ADVANCES WERE RECEI VED BY CHEQUE AND THE ADDRESSES OF PERSONS WHO GAVE THE ADVANCES WERE DULY SUPPLIED AT ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 5 THE ASSESSMENT STAGE. THE ASSESSING OFFICER DID NOT FIND ANY INFIRMITY IN SUCH DETAILS FURNISHED BY THE ASSESSEE . WE THEREFORE UPHOLD THE DELETION OF ADDITION OF ` 15.15 LAKH. THIS GROUND IS NOT ALLOWED. 7. THE ONLY OTHER EFFECTIVE GROUND IS AGAINST THE D ELETION OF ADDITION OF ` 19 84 000 ON ACCOUNT OF LOANS TAKEN FROM VARIOUS PARTIES. THE ASSESSEE SHOWED OUTSTANDING LOANS OF ` 5.84 LAKH FROM SMT. AMRIT CHAWLA ` 7.50 LAKH FROM KARAMJYOT SINGH (MINOR) AND ` 6 50 000 FROM SARABJYOT SINGH (MINOR). IT WAS SEEN THAT AMRIT CHAWLA WAS HAVING ONLY SALARY INCOME AND INCOME FRO M OTHER SOURCES TOTALING ` 1 30 613. ON THE PERUSAL OF BANK STATEMENT OF AMRIT CHAWLA THE A.O. NOTICED THAT THE ASSESSEE TRANSFER RED AN AMOUNT OF ` 8.23 LAKH FROM HIS BANK ACCOUNT OF AMRIT CHAWLA AND FURTHER AMRIT CHAWLA RECEIVED GIFT OF ` 5 00 000 FROM SUKHJIT BAGGA. OUT OF THIS AMOUNT SHE GAVE LOAN OF ` 5 84 000 TO THE ASSESSEE. THE ASSESSING OFFICER HELD THAT THE ASSESSEE USED SMT. AMRIT CHAW LA AS CONDUIT FOR GIVING LOANS. HE THEREFORE MADE ADDITION U/S 68 O F THE ACT. THE LEARNED CIT(A) GOT CONVINCED WITH THE ASSESSEES SU BMISSION AND DELETED THE ADDITION. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS APPARENT FROM TH E IMPUGNED ORDER THAT THERE WAS OUTSTANDING LOAN OF ` 8.23 LAKH PAYABLE BY THE ASSESSEE TO MRS.AMRIT CHAWLA WHICH WAS IN FACT PAID ON 02.08 .2005. THIS LOAN OF ` 8.23 LAKH WAS TAKEN BY THE ASSESSEE FROM MRS.AMRIT CHAWLA ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 6 IN EARLIER YEAR AS THE SAME WAS APPEARING AS OPENIN G CREDIT. FURTHER MRS. AMRIT CHAWLA RECEIVED A GIFT OF ` 5 LAKH FROM SUKHJITKAUR BAGGA (REAL SISTER). ACOPY OF THE GIFT DEED ALONG WITH HE R ADDRESS AND PERMANENT ACCOUNT NUMBER WAS ALSO GIVEN TO THE ASSE SSING OFFICER. MRS.AMRIT CHAWLA FURNISHED HER RETURN DECLARING ALL THE RELEVANT PARTICULARS WHICH WAS DULY ACCEPTED BY THE A.O. SH E ACKNOWLEDGED THE DEPOSIT OF LOAN OF ` 5.84 LAKH WITH THE ASSESSEE BY WAY OF PROPER RECEIPT. IN VIEW OF THESE FACTS WE ARE OF THE CONS IDERED OPINION THAT THE ASSESSEE WAS SUCCESSFUL IN DISCHARGING THE ONUS CAST UPON IT TO PROVE THE GENUINENESS OF THE LOAN RECEIVED FROM MRS .AMRIT CHAWLA. THE IMPUGNED ORDER IS THEREFORE UPHELD ON THIS I SSUE. 9. THE OTHER TWO DISPUTED LOANS ARE - ` 7 50 000 RECEIVED BY THE ASSESSEE FROM KARAMJYOT SINGH (MINOR) AND ` 6 50 000 RECEIVED FROM SARABJYOT SINGH (MINOR). THE ASSESSING OFFICER OBSE RVED THAT KARAMJYOT SINGHS (MINOR) BANK ACCOUNT DEPICTED THE RECEIPTS OF ` 2 50 000 FROM PALINDER SINGH CHAWLA GRANDMOTHER A S GIFT ON 19.10.2005 WHICH WAS TRANSFERRED TO THE ASSESSEE-F IRM. A SUM OF ` 1 40 000 WAS RECEIVED FROM ONE SHRI JAI ON 14.12.20 05 WHICH WAS TRANSFERRED TO THE ASSESSEE AS LOAN. THE OTHER AMOU NT OF ` 5 00 000 WAS RECEIVED AS GIFT FROM IQBAL ANAND GRANDFATHER WHICH WAS TRANSFERRED TO THE ASSESSEE- FIRM AS LOAN. THE A.O. DID NOT ACCEPT THE GENUINENESS OF THIS CREDIT AND MADE ADDITION U/S 68 OF THE ACT. AS REGARDS SARABJYOT SINGH (MINOR) HE ALLEGEDLY CLAIM ED TO HAVE RECEIVED GIFTS OF ` 2 50 000 FROM PALINDER SINGH CHAWLA GRANDMOTHER AND ` 4 00 000 FROM SURINDER KAUR GRANDMOTHER WHICH WAS ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 7 TRANSFERRED TO THE ASSESSEE-FIRM. THE A.O. MADE ADD ITION U/S 68 IN RESPECT OF THESE TWO AMOUNTS AS WELL. THE LEARNED C IT(A) DELETED THESE TWO ADDITIONS WITH THE FOLLOWING REASONING:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT AND THE FACTS OF THE CASE. IN MY CONSIDERED VIEW THE GIFTS RECEIVED BY SARABJYOT SINGH HAVE NOT BEEN QUESTIONE D BY THE DEPARTMENT AND NO ADDITION HAVE BEEN MADE ON ACCOUNT OF GIFTS RECEIVED BY THE MINOR SARABJYOT S INGH. SO LONG AS THE GIFTS ARE NOT TREATED AS BOGUS THE APPLICATION OF THE GIFTS BY WAY OF GIVING LOANS ETC . CANNOT BE QUESTIONED. FURTHER ALL THE NECESSARY DE TAILS OF THE DONOR HAVE BEEN GIVEN BY THE APPELLANT TO TH E A.O. THE LOAN CONFIRMATIONS BANK STATEMENT DETAILS ETC. OF THE MINOR SARABJYOT SINGH WERE ALSO PROVIDED BY THE APPELLANT. THEREFORE IN MY CONSIDERED VIEW THE ADDITION SO MADE BY THE A.O. CANNOT BE SUSTAINED. T HE A.O. IS DIRECTED TO DELETE THE SAME. 10. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ADDITION U/S 6 8 WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THESE TWO ALLEGED L OANS RECEIVED FROM TWO MINORS. THE LEARNED CIT(A) CHOSE TO DELETE THE ADDITION BY OBSERVING THAT THE GIFTS RECEIVED BY THESE TWO MINO RS WERE NOT QUESTIONED BY THE DEPARTMENT AND NO ADDITION WAS MA DE IN THEIR HANDS. HE FURTHER OBSERVED THAT AS LONG AS THE GIFT S WERE NOT TREATED AS BOGUS THE APPLICATION OF THE GIFTS BY WAY OF GI VING LOANS CANNOT BE QUESTIONED. WE ARE UNABLE TO ACCEPT THE LINE OF REA SONING ADOPTED BY THE LEARNED CIT(A). IT IS AN ADMITTED FACT THAT BOT H THE CREDITORS NAMELY KARAMJYOT SINGH AND SARABJYOT SINGH WERE M INORS. IN THAT ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 8 VIEW OF THE MATTER THERE WAS NO QUESTION OF FILING THEIR SEPARATE RETURNS. NO MATERIAL HAS BEEN PLACED ON RECORD TO I NDICATE THAT THE GIFTS SHOWN TO HAVE BEEN RECEIVED BY THEM FROM RELA TIVES AND OTHERS WERE EVER DISCLOSED IN THE HANDS OF THEIR FATHER. A S SUCH THE QUESTION OF ACCEPTING THE GENUINENESS OF GIFTS COULD NOT ARI SE. AS THE ENTIRE CIT(A)S ORDER ON THIS ISSUE IS BASED ON THE PREMIS E THAT THE GENUINENESS OF THE GIFTS WAS ACCEPTED BY THE REVENU E AND HENCE NO ADDITION WAS SUSTAINABLE IN THE HANDS OF THE ASSESS EE HAS NO FOUNDATION WE CANNOT UPHOLD THE SAME. IN OUR CONSI DERED OPINION THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IM PUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF CIT(A). WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THE G ENUINENESS OR OTHERWISE OF THESE TWO CREDITORS AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 11. / 05 $) /0 6 0 - 0 78 9 - 6 :- ;< = > >4 0 9 - 0 78 IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED AND THAT OF THE REVENUE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 31 ST DAY OF JULY 2013. ' 4 - 123 ?')5 SD/- SD/- (VIVEK VARMA) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; ?') DATED : 31 ST JULY 2013. DEVDAS* ITA NOS.8755 & 8558/MUM/2010. M/S.DOLSON JEWELS. 9 ' 4 - *$0># @ #30 ' 4 - *$0># @ #30 ' 4 - *$0># @ #30 ' 4 - *$0># @ #30/ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. *+&' / THE RESPONDENT. 3. A () / THE CIT THANE. 4. A / CIT(A) 30 MUMBAI. 5. #DE *$0$) / DR ITAT MUMBAI 6. E F / GUARD FILE. ' 4) ' 4) ' 4) ' 4) / BY ORDER +#0 *$0 //TRUE COPY// ; ; ; ;/ // /7 7 7 7 ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI