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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI AMIT SHUKLA, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLEShri Anil Thakrar Smt Shailaja Rai
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against order of Learned Principal Commissioner of Income Tax–33, Mumbai [hereinafter in short “Ld. Pr.CIT)”] dated 06.05.2020 for the A.Y.2015-16 passed u/s. 263 of Income-tax Act, 1961 (in short “Act”).
(A.Y: 2015-16) AD WISE MEDIA WORKS 2. At the outset, we observe that this appeal was filed on 04.07.2022 after corona pandemic period. After considering the Hon'ble Supreme Court decision on extension of limitation period, the delayed period of filing the appeal is condoned.
Brief facts of the case are, Ld. Pr.CIT while verifying the assessment records passed u/s.143(3) of the Act for the A.Y. 2015-16 observed that assessee is a firm, carrying on business to buy, sell, films, TV serials, to produce treat process prepare, alter, develop, expose, edit, exhibit, make, remake, display print reprint. convert, duplicate finish buy, sell run, import, export cine films. TV serials, advertising films, telefilms, documentary films etc. and to act as agent, broker distributor, proprietor owners of copy rights, audio rights. Ld. Pr.CIT observed that Assessee has filed its return of income on 04.08.2015 declaring the total income at ₹.32,07,540/- and Assessing Officer has accepted the above return as income of the assessee in order passed u/s. 143(3) of the Act.
4. Ld. Pr.CIT observed that the case was selected for Limited Scrutiny for the following reasons: -
(i). Unsecured loans from the persons who have not filed their return of Income (Form 3CD)
(A.Y: 2015-16) AD WISE MEDIA WORKS (ii). Receipts u/s 194C and 1943 (as per 26AS) are more than the receipts Shown in ITR 4/5/6 (iii). Tax credit claimed in ITR is less than tax credit available in 26AS (iv). Mismatch in sales turnover reported in Audit Report and ITR (v). Higher turnover reported in Services Tax Return as compared in ITR
Further, Ld. Pr.CIT observed that in the case of unsecured lenders like Vardhman Services and Jesal Madlani, only ledger is kept in the file and the other informations, Balance Sheet and Bank Statement of the lenders are not found in the record: Further, he observed that in the case of lender Ravi Goenka no details were found in the record. The assessee was also aware of the reasons for scrutiny selection during the course of assessment proceedings and it is a settled law that the primary onus lies on the assessee to establish the identity, creditworthiness and genuineness of the transactions duly claimed by the assessee in its return of income. Therefore, the assessee failed to discharge the primary onus of submitting necessary and relevant documents before the department. On the basis of the above fact that necessary/relevant documents needed to prove the veracity of the transaction have not been provided by the assessee and the Assessing Officer has passed the Assessment Order in absence of the necessary details on record is considered as erroneous and (A.Y: 2015-16) AD WISE MEDIA WORKS prejudicial to the interest of the revenue. Accordingly, Ld. Pr.CIT issued notice u/s. 263 of the Act and the following reasons were recorded and supplied to the assessee: -
“1. Subsequently, Remedial action in this regard was initiated by way of notice u's 263 of the Act dated 03.01.2020 The relevant extract of the notice is reproduced hereunder- On going through the details of Unsecured Loan it is seen that the assessee has taken loan of Rs 19,00,0000 from Vardhaman Service Rs 500 000 from Jesal Madlani and Rs 5,00,000 from Ravi Goenka However, on perusal of case record, it is found that there are no details of the Unsecured lender Raw Goenka such as ledger, ITR Balance Sheet and bank statement available in the file. In the case of lenders like Jesal Madlani only ledger is there in the file, but ITR Balance sheet and Bank Statement of the lenders are not on record Hence, the identity of the lenders and genuineness and creditworthiness of the transaction was not established by the assessee during the course of assessment proceedings it is also pertinent to mention that the relevant extract to bank statement has not been provided for any of the unsecured lenders. In this regard, it is to state that the primary onus lies upon the assessee to establish the identity, genuineness & creditworthiness of the transaction and the assessee drastically failed to discharge the same. In the case of M/s. Ravi Goenka, no document whatsoever has been submitted by the assessee, during the course of assessment proceedings to establish the identity of the unsecured lender genuineness of the transaction and the creditworthiness of the concerned party which was a primary requirement as one of the reasons for scrutiny selection was the Unsecured loans from persons who have not filed return of income Form (3CD) The Unsecured lenders from whom fresh loan have been received during the year are as under (as per the closing balance reported in financial statements) 1. Radhey Realty 2. Ravi Goenka
(A.Y: 2015-16) AD WISE MEDIA WORKS 3. Vardhman Services 4. AtulRajani 5. DilipDatwani 6. Jesal Madlanı 7. Mitul Shah 8. Nitinkhakhar, HUF 9. Ramniklal Bathia 10. Sandeep Rajani In view of the above stated facts, you were requested to provide the following details in case of the unsecured lenders (as stated above)- 1. Copy of the Acknowledgement of Return of Income of unsecured lender along with computation of income 2. Running ledger account of the unsecured lender with assessee 3. Source of fund for transaction for unsecured loan Relevant extract of bank statement of unsecured lender showing payment to M/s AD WISE MEDIA 4. Capital Account or Balance Sheet of the unsecured lender.”
In response to various notices issued by Ld. Pr.CIT, assessee on 28.02.2020 submitted that the details of all loan creditors have been uploaded in ITBA Portal on 27.02.2020 wherein all the required details such as loan confirmations, bank statements, PAN, RoI have been uploaded except RoI of Jesal Median & Radhe Realty. After verifying the same and the details submitted by the assessee, Ld. Pr.CIT observed as under: -
“1. The source of fund of the unsecured lender has not been provided in any of the pares/unsecured lenders. In some cases bank statement of the unsecured lender has been provided which only (A.Y: 2015-16) AD WISE MEDIA WORKS shows the payment entry to the assessee but the source of fund for the same has not been provided 2. The copy of return of income alongwith computation of income has not been provided in the case of M/s. Radhey Realty & Jesal Madiani which needs to be further examined in view of the conditions of section 68 of the Act wherein identity, genuineness and creditworthiness has to be established 3. In the case of Radhey Realty, no bank statement has been provided. Thus it can be inferred that the source of the unsecured loan received from it remains unexplained.
More importantly the assessee has not been able to provide the documents specifically asked for in the questionnaire during the proceeding.”
With the above observations, Ld. Pr.CIT observed that the submissions of the assessee is not found to be acceptable, further observed that assessment order passed by the Assessing Officer is found to the erroneous and prejudicial to the interest of the revenue. Accordingly, the Assessing officer is directed to verify the details submitted by the assessee during the course of review proceedings. Since the source of fund has not been provided by the assesse in most of the cases the Assessing Officer as required to call for further details in this regard and directed the Assessing Officer to examine the identity, creditworthiness and genuineness of the transactions within the ambit of section 68 of the Act in particular Jesal Madlani and Radhe Realty, after giving opportunity of being heard to the assessee.
(A.Y: 2015-16) AD WISE MEDIA WORKS 8. Aggrieved assessee preferred appeal before us raising following grounds in its appeal: -
“1.) The Ld CIT is erred in passing the order U/S 263 of the Act in spite of the fact that the Assessment was already framed U/s 143(3) of the Act. 2.) The Ld CIT is also erred in directing the A.O. to proceed for Assessment U/s 143(3) r.w.s 263 in spite of the fact that, all the details were submitted at the time of original assessment proceeding U/s 143(3) as well as at the time of proceeding U/S 263 of the Act establishing credit worthiness, genuineness & capacity of the Lender. 3.) The Ld CIT is erred in passing the order U/s 263 of the Act 4.) The appellant request to delete the addition confirmed by the CIT (A). 5.) The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.”
9. At the time of hearing, Ld. AR of the assessee brought to our notice, section 143(2) notice issued by the Assessing Officer dated 20.09.2016 and a physical copy was filed before us and he brought to our notice various issues raised by the Assessing Officer for the purpose of examination and one of the item is unsecured loans. In this regard as per the direction of the Assessing Officer assessee has filed all the informations relating to unsecured loans along with the loan confirmation, bank statements, RoI and computation of income and balance sheet of all the parties and with regard to two parties mentioned by the Ld. Pr.CIT
(A.Y: 2015-16) AD WISE MEDIA WORKS i.e., Jesal Median and Radhe Realty. He submitted that assessee has submitted all the informations except the RoI which is not available with the assessee at the time of assessment as well as during revision proceedings u/s. 263 of the Act. He submitted that it is fact on record that assessee has complied with all the informations to prove the identity, creditworthiness and genuineness of the transactions except not able to file the RoI of the above said two parties. It cannot be the reason to review the Assessment Order at this stage.
On the other hand, Ld.DR with reference to Paper Book he submitted that it is no discernable from the Paper Book that it has filed details before the Assessing Officer. He brought to our notice Page No. 12 and 13 of the Paper Book to highlight that information of the papers were not available on record.
In the rejoinder Ld. AR filed confirmation that assessee has not filed only RoI for the above said two parties and rest of all the informations were filed before the Assessing Officer as well as Ld. Pr.CIT. Further, he submitted that the genuineness were proved before the Ld. Pr.CIT in revision proceedings by submitting all the relevant information to counter
(A.Y: 2015-16) AD WISE MEDIA WORKS the submissions made by the Ld.DR that all the informations were not available on record.
Considered the rival submissions and material placed on record, we observe that Ld. Pr.CIT initiated the revision proceedings u/s. 263 of the Act by observing that the assessment record does not contain the informations and various documents relating to unsecured loans. He observed that it is the duty of the assessee to substantiate the relevant details submitted before the Assessing Officer particularly when the assessment proceedings initiated mainly to verify the unsecured loans. However, we observe that assessee has submitted that all these informations were submitted through ITBA Portal and since Ld. Pr.CIT could not trace the above said documents he asked the assessee to submit hard copy during the revision proceedings. In the revision proceedings Ld. Pr.CIT verified all the informations and found that RoI was not available with regard to two parties i.e., Jesal Median and Radhe Realty from whom assessee has taken loans outstanding amount of ₹.5 lakhs and ₹.11.75 lakhs respectively. From the record submitted before us clearly indicate that assessee has submitted all the documents relating to the various transactions undertaken by the assessee with regard to (A.Y: 2015-16) AD WISE MEDIA WORKS unsecured loans. From the Paper Book submitted before us it contains confirmations, bank statements, RoI and financial statements were submitted for all the unsecured loans parties, except RoI was not filed with regard to Jesal Median and Radhe Realty. Since all the other details are filed before tax authorities except return of income of the above said two parties does not make the transactions as non-genuine. In our considered view the other documents submitted by the assessee like confirmations, bank statements, and financial statements clearly prove that assessee has taken unsecured loans from these two parties. Therefore, assessee has already proved the genuineness of the transactions. Therefore, without clearly bringing on record how the above said transactions is non-genuine the Ld. Pr.CIT has merely remitted the issue back to the file of the Assessing Officer to redo the assessment as per the above said direction. Accordingly, in our considered view the revision order passed u/s. 263 of the Act is not proper when the primary reason for initiating the review proceedings was relevant supporting documents were not available on record. However, on finding that these were filed through ITBA portal and subsequent filing of the various documents in support of the transaction, Ld. Pr.CIT cannot send back one
(A.Y: 2015-16) AD WISE MEDIA WORKS more time to the Assessing Officer to redo the assessment and accordingly, it is set-aside.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 15th March, 2023